5 Must-Read Analyst Questions From Lennox's Q1 Earnings Call
Lennox's first quarter results were marked by ongoing transitions in its product lineup and significant external cost pressures. While revenue and non-GAAP earnings per share both exceeded Wall Street expectations, the market responded negatively, reflecting concerns over margin compression and supply chain challenges. Management attributed the 140 basis point decline in operating margin primarily to higher input costs from new tariffs and inefficiencies tied to the regulatory shift to low-global warming potential (GWP) refrigerants. CEO Alok Maskara explained, 'BSC margins were impacted due to short-term inefficiencies related to the manufacturing transition and new factory start-up,' highlighting that much of the margin pressure was expected and internal in nature.
Is now the time to buy LII? Find out in our full research report (it's free).
Revenue: $1.07 billion vs analyst estimates of $1.03 billion (2.4% year-on-year growth, 4.6% beat)
Adjusted EPS: $3.37 vs analyst estimates of $3.25 (3.6% beat)
Management slightly raised its full-year Adjusted EPS guidance to $22.88 at the midpoint
Operating Margin: 14.5%, down from 15.9% in the same quarter last year
Organic Revenue rose 2.4% year on year (4.2% in the same quarter last year)
Market Capitalization: $19.3 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Ryan Merkel (William Blair) asked about commercial order delays and whether the worst was over. CEO Alok Maskara responded that order rates had improved and most inefficiencies were likely a one-time event, though some challenges may persist into the second quarter.
Tommy Moll (Stephens) pressed on the rationale for lowering volume assumptions and the timing of price increases. Maskara clarified that the company had not yet seen a slowdown, but built conservatism into the outlook due to macroeconomic uncertainty and tariff impacts.
Joe O'Dea (Wells Fargo) inquired about the inflation guidance increase and how pricing would respond if tariffs changed. CFO Quenzer explained that recent surcharges could be rolled back if tariff rates were reduced, and that much of the inflation was driven by Chinese component costs.
Julian Mitchell (Barclays) questioned the operating margin trajectory and how volume and pricing changes would balance out. Management reiterated that margin improvement would be driven by internal operational fixes, and that tariff-related price increases were expected to roughly offset volume declines.
Steve Tusa (JPMorgan) sought clarification on the impact of refrigerant shortages and whether recent price hikes from suppliers would affect volumes. Maskara stated Lennox had no supply issues for production, and the shortages were limited to service canisters, not expected to impact overall demand.
In the coming quarters, the StockStory team will monitor (1) the effectiveness of tariff mitigation efforts and the potential for any easing in trade policy, (2) the pace at which manufacturing inefficiencies are resolved as new product lines and factories mature, and (3) signs of demand stabilization or recovery in both Home Comfort and Building Climate Solutions segments, particularly as the emergency replacement business expands. The adoption rate of new digital and supply chain initiatives will also be a key area of focus.
Lennox currently trades at $543.96, down from $558.85 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it's free).
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
25 minutes ago
- Business Insider
Platinum draws fresh interest from China's jewelers as gold prices test buyers' wallets
Chinese jewelers are snapping up platinum as they seek to bounce back from a slump in gold jewelry sales, an industry group said. Surging gold prices, which hit a record high above $3,500 an ounce in April, have deterred even buyers from China, who have a cultural attachment to the yellow metal. In the first quarter of the year, gold jewelry sales in China tanked nearly 27% from a year ago to 134.5 tons, according to the China Gold Association. Meanwhile, gold bar and coin consumption surged nearly 30%, showing that investor demand for haven assets remains strong. "Jewelry fabricators and distributors are trying to save themselves because gold jewelry sales are falling off a cliff. They need to find a new metal for jewelry so that they can survive," Weibin Deng, the regional head for Asia Pacific at the World Platinum Investment Council, told Business Insider. China imported 11.5 metric tons of platinum in April, its highest monthly intake in a year. That demand has helped push global platinum prices up around 40% year-to-date, with spot prices near $1,265 per ounce. Spot gold prices have also surged, up roughly 30% over the same period. The price of platinum is still about one-third of gold, making the white precious metal a compelling proposition for Chinese consumers. In China, jewelry is generally priced by weight rather than on a per-piece basis, said Deng. "It cannot be too expensive, otherwise people wouldn't buy it," he said of the price-sensitive Chinese market. Goldman Sachs analysts wrote on Tuesday that platinum's blistering rally lacks fundamental support. They said the metal's issues include price-sensitive Chinese demand, slowing auto demand, and the expectation that there will be no significant decline in supply. The analysts attributed strong gains in the platinum market to speculative demand and high gold prices, which are keeping investors away from trading in the yellow metal. "This hesitancy likely stems from investors believing they missed the initial rally," wrote the Goldman analysts, referring to the blistering gold rally earlier. "Instead, interest has shifted to other precious metals as investors seek catch-up opportunities," they wrote. How the World Platinum Council plans to boost demand The WPIC is stepping up marketing and public education to position platinum as a precious metal that has investment value and room to run, Deng said. Deng said the council is also working with Chinese jewelers to be more efficient in terms of fabrication and market operations to lower prices for consumers Deng said it's more expensive to work on platinum than gold as it requires more energy to melt the white metal. But reducing production costs is key to making platinum jewelry more accessible to consumers, he added. Another challenge: The gold market is far more liquid. It's easier for consumers to sell or trade in gold jewelry with a small discount. WPIC is partnering with jewelers in China to develop similar resale channels for platinum pieces. Platinum isn't just for jewelry. It's used in everything from car parts to electronics. That broad demand helps support its value. But according to Deng, it's platinum's visibility in jewelry that plays a crucial role in how consumers perceive it as a precious metal. "Gold and silver have long been seen as currencies and stores of value around the world. To make the platinum jewelry market sustainable, consumers need to view platinum the same way — as a store of value," he said. Deng acknowledged that gold is likely to remain the ultimate store of value in the eyes of the consumer, but even a small demand switch from gold to platinum would be significant. The BofA analysts wrote last week that even a 1% switch in gold to platinum jewelry could help double the white metal's supply deficit to 1.6 million ounces, which would help support prices.
Miami Herald
2 hours ago
- Miami Herald
Beloved American toymaker cuts 150 jobs over tariffs
The US jobs market has taken another hit because of newly enacted tariffs. The toymaker Hasbro, one of the largest U.S. toy companies, has announced it will lay off 150 workers in a cost-cutting move designed to offset some of the bite associated with increased import costs. Hasbro's decision continues an alarming layoff trend. So far this year, over 696,000 people have been laid off through May, up 80% from last year. The move is the latest by Hasbro to keep its business in the black amid a host of challenges associated with tariffs impact on its bottom line. Many companies pulled some imports forward this year to avoid President Trump's tariff announcements. Still, that inventory is expected to have been mostly sold to customers soon, increasing the likelihood of layoffs and price increases. The President enacted 25% tariffs on Canada and Mexico in February, but the tariffs placed on China have dealt the biggest blow to the toy industry in 2025. Related: Google delivers a harsh message to loyal employees In February, a 10% tariff was imposed on Chinese imports, which increased to 20% in March. In April, an additional 34% tariff was levied on China, kickstarting a trade war that, at its peak, lifted US-China tariffs to 145% and China tariffs on US goods to 125%; essentially shutting down trade between the two countries. In May, the tit-for-tat tariff tussle de-escalated to allow for trade negotiations. However, 30% tariffs remain on China, and coupled with tariffs enacted during Donald Trump's first term, Chinese tariffs exceed 50%. The tariffs will likely push costs higher on many items, given that the US has increasingly turned to low-cost China as a source of goods since China's admission into the World Trade Organization in 2001. Many industries, from clothing to car parts and electronics, have been hard hit, but toymakers are among those businesses that have suffered the most significant blow. According to S&P Global, Mattel and Hasbro source 50% and 40% of their toys from mainland China, despite moves in recent years to shift production elsewhere. Unsurprisingly, Hasbro discussed the impact of tariffs during their recent first-quarter earnings conference calls with shareholders. Related: Walmart makes surprise cuts as it looks at tariff price hikes "Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs and reduced profits for our shareholders," said Hasbro CEO Chris Cocks in April. S&P Global doesn't expect the toy industry to grow this year, so demand isn't likely to insulate Hasbro from the hit to its profit margin delivered by tariffs. Most companies have said that mitigating higher import taxes will require three major moves: supplier concessions, higher customer prices, and lower profitability. Related: Procter & Gamble sends stern warning to employees as sales slip In Q1, Hasbro said tariff impacts would range between $100 million and $300 million in 2025, with most of the effects felt during the final two quarters of 2025. After accounting for efforts to offset tariffs, Hasbro expects them to ding profits by $60 million to $180 million. Hasbro plans to shave $1 billion in costs over the next few years, including via job cuts. Since 2023, Hasbro has reduced its headcount by 1,900 workers. The latest round of cuts involves 150 workers, or roughly 3% of Hasbro's employees. However, the job losses aren't likely to fully absorb the tariffs hit. "Targeted pricing actions remain likely," said CEO Chris Cocks on Hasbro's conference call. "Even with Hasbro's relative strength and flexibility, logistics are becoming more complex…Ultimately, tariffs translate into higher consumer prices, potential job losses as we adjust to absorb increased costs and reduced profits for our shareholders." The layoff decision comes after Hasbro's consumer products revenue decreased 4% year over year to $398 million in the first quarter. The segment's adjusted operating loss totaled $31 million during the quarter. Among the bright spots helping Hasbro navigate the challenges are Magic: The Gathering, which saw sales soar 45% year over year in the quarter, and digital games. Most of Hasbro's Wizards products are produced in North Carolina and Texas, with the remainder from Kyoto, Japan. Monopoly Go! strength helped its Digital Gaming segment grow 56% in Q1. Net revenue in the first quarter was $887 million, up 17% from the prior year, while adjusted earnings per diluted share rose 70% to $1.04. Related: Veteran fund manager sends dire message on stocks The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Hamilton Spectator
2 hours ago
- Hamilton Spectator
Eby says Ferries' deal with Chinese shipyard not ‘preferred' but won't interfere
VICTORIA - British Columbia Premier David Eby said he shares the concerns of unions that have criticized the BC Ferries' decision to build four large ships in China. The premier said Tuesday he doesn't believe the decision will alienate the NDP from the unions — a key component of his government's support. 'We work very closely with the labour movement to create good, high-quality, family supporting jobs here in British Columbia, and we share the concerns, frankly, of labour leaders who have expressed that they are dismayed, to say the least, that ferries are not getting built, at least in Canada, if not in British Columbia.' Eby said he will not interfere with the company's decision to contract a Chinese shipyard owned by the Communist government to build the 'urgently needed' vessels, despite the deal not being his 'preferred outcome.' Cancelling the contract at this stage would come with several costs, the premier said. 'The decision to reopen, revisit, a five-year-procurement process … re-award contracts is not just a billion-dollar decision,' he said. 'It's well in excess of that, when you are retendering again in an inflationary environment, in addition to the time it would take.' The decision by BC Ferries, the company that operates independently of the provincial government but is wholly owned by it, has drawn widespread criticism from groups including the BC Federation of Labour. It has called the contract a 'colossal mistake' and a 'short-sighted decision' that will send hundreds of millions of dollars out of province and into the pockets of a 'brutal authoritarian regime.' BC Building Trades said the agreement 'will forever be a stain' on BC Ferries, while the BC Ferry & Marine Workers' Union has called on BC Ferries and the provincial government to 'reconsider' the decision and support domestic industry. 'If buying local matters, it should matter for ferries too,' the ferry workers union said in a statement. The anger from the unions have raised questions about the long-term relationship between the NDP and unions, but Geoff Meggs, a former chief of staff to the late John Horgan, said does not foresee any long-term damage. 'I think there's a greater risk of alienating union support in the new bargaining process with the public sector unions and how the budget plays out in terms of job protection and service protection,' Meggs said. 'This is more of a blow to morale for parts of the union movement.' Meggs said he understands why the unions successfully sponsored a non-binding resolution at the B.C. New Democrats provincial council last Saturday questioning the decision. 'The shipyard workers in B.C. have been campaigning for decades to increase the capacity of the yards here,' Meggs said. Meggs said that his former boss would have been 'very angry and frustrated' if BC Ferries had made the decision under his watch. Ferry workers' president Eric McNeely acknowledged that BC Ferries is an independent company, but he called for a review of its governance to ensure better oversight, public input and transparency when it comes to awarding large contracts such as this one. 'I think there should be controls in place and those controls should be tested occasionally to ensure that they still meet the public's interest on massive infrastructure projects,' he said. McNeely also questioned Eby's argument that cancelling the contract would come with costs. It's 'hard to have a really good response when British Columbians don't know what the contract looks like,' he said. McNeely acknowledged that China is a trading partner and noted that his wife and daughter purchased iPhones made in China. 'But I didn't use taxpayers money to buy those iPhones.' Eby said it was 'not ideal' that the ferry contract went to China, when asked whether the deal was not giving China the capacity to expand its military. 'But reopening would mean a delay in delivering ferries for British Columbians, who are desperate for them,' Eby said. Eby noted no Canadian company bid for the contract, and B.C. shipyards currently lack the necessary capacity — highlighting the hollowing out of the provincial shipbuilding industry. But Eby, who was speaking for the first time after returning from his trade mission to Asia, said the province will be working with the federal government to ensure that the next major vessels for BC Ferries will be built in the province — or at the very least in Canada. 'But it's equally vital to me, that when there is no Canadian company willing to bid on a contract, that we don't leave families sitting on the tarmac, waiting for a ferry because the propeller fell off, because it's 50 years old,' he said. This report by The Canadian Press was first published June 17, 2025. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
