“We need to make sure that we have the right level as we hit summer season in the second quarter. And right now, those inventory levels in December approximately align with what we’ll need in summer season,” said Quenzer. He added that Lennox plans to modestly ramp down production in the first quarter to manage absorption, while avoiding sharp factory slowdowns that could disrupt operations as demand ramps up in the second quarter. He said that this is the best approach to mitigate some of the destocking issues they are currently experiencing. 

The inventory mix has also shifted significantly as the refrigerant transition enters its second year. In 2025, Lennox estimated that roughly 40% of its residential mix still involved R-410A equipment, with the balance moving to R-454B. In 2026, that dynamic changes entirely.  

“That 40% of R-410A is gone, and it’s all going to be R-454B,” said Alok Maskara, CEO of Lennox. 

As for pricing, Lennox expects mid-single-digit price and mix contribution in 2026, driven partly by new pricing actions but also by carryover from last year’s regulatory transition. Quenzer noted that new price initiatives will be launched in Q1 and into Q2. 

Maskara reinforced that pricing discipline remains consistent across the industry.  

“Based on everything we have seen so far, we see our competitors aiming at similar price increases,” he said, adding that Lennox continues to compete on availability, service, and technology rather than chasing aggressive low-end pricing. 

Repair Or Replace 

Another issue raised during the earnings call was the industry’s apparent shift toward repair over replacement — a trend that intensified during the refrigerant transition and a downturn in consumer confidence. Maskara described the dynamic less as a permanent shift and more as delayed demand.  

“We look at that dynamic more as deferred replacement,” he said. “Because anything that you repair will come back for replacement, typically in 12 to 24 months.”  

That pattern was evident in Lennox’s 2025 results. “Parts have been growing more than equipment in pretty much most of 2025,” said Maskara, pointing to both internal data and broader industry indicators.  

He added that contractor feedback suggests initial uncertainty about new R-454B products — compounded by refrigerant cylinder shortages — weighed heavily on dealer confidence last year, in addition to falling consumer sentiment. Heading into 2026, however, he said dealer confidence has improved, which could support a gradual shift back toward replacement activity. 

For that reason, the company does not expect the repair trend to increase in 2026.  

“So far, we have assumed it's not going to get any worse,” said Maskara. “We haven't assumed that it’s going to get better either. We think it'll remain at the 2025 level, which had heightened repair versus previous replace.” 

Quenzer suggested that economics may also gradually push homeowners back toward replacement.  

“On the repair side, we expect the input costs to be up significantly more than systems starting this year and into the next few years,” he said, citing the higher cost of R-410A and increasing labor complexities. As a result, he expects customers to lean more toward system replacements over the next year or two. 

Higher electricity costs could also influence the repair-versus-replacement decision, said Quenzer, noting that newer systems can deliver significant savings on the monthly utility bill. “The minimum system efficiency has increased significantly over the last few years,” he said, adding that homeowners can realize substantial cost savings by upgrading to a new system. 

Those savings can apply even when homeowners opt for minimum-SEER equipment, which Maskara said accounts for roughly 70% of Lennox’s sales. 

The Year Ahead 

Looking ahead, Lennox issued guidance calling for total company revenue growth of 6% to 7% in 2026, with much of that growth weighted toward the second half of the year. Quenzer cautioned that volumes will remain under pressure early on, noting that “sales volumes in the first half, especially the first quarter, are expected to be down more than the full-year decline, followed by growth in the second half.” 

The company also expects continued divergence between its two main segments. Home Comfort Solutions is expected to grow roughly 2%, weighed down by softer residential volumes in the first half, while Building Climate Solutions is projected to grow approximately 15%, supported by emergency replacement activity, national account growth, and recent acquisitions. 

Despite near-term caution, Maskara struck an optimistic tone about Lennox’s post-transition footing.  

“People are now looking at 2026 as a fresh start with R-454B,” he said. “That's probably the best news out there, given all the other potential headwinds — including consumer confidence numbers that don't seem to be improving.” 

Lennox will share updated long-term targets at its 2026 Investor Day on March 4, where the company plans to provide deeper visibility into its strategic growth initiatives.