“Our response is that the matter is a pending legal complaint,” he said. “The lawsuit contains only the plaintiff's allegation, and there has been no finding of wrongdoing. We dispute the accuracy of the allegation and will actively and vigorously defend our position through proper legal channels.” 

Maskara added that while he would like to elaborate further, he was constrained by the ongoing litigation. 

First Quarter Results 

Turning to the earnings results, performance in Home Comfort Solutions (HCS) remained under pressure, with revenue down 10% and organic volumes declining 21%, though that marked an improvement from a 32% drop in 2025. One-step channel results continued to be impacted by weak new home construction, while sentiment in the two-step channel improved as distributors began restocking ahead of the summer season. 

According to chief financial officer Michael Quenzer, “Mix and price realization contributed positively to results, driven primarily by the full conversion to new R-454B products. Product costs were a $23 million headwind, driven by materials inflation and under-absorption due to lower production levels.” 

On the other hand, Building Climate Solutions (BCS) reported record quarterly performance. Organic sales increased 26%, with volumes up 17%, driven by emergency replacement activity and new customer wins across both equipment and service offerings. 

“Price and mix delivered 9% revenue growth, driven by the full transition of light commercial products to the new R-454B refrigerant,” said Quenzer, “Similar to HCS, BCS experienced absorption pressure as we optimized inventory levels, but manufacturing cost efficiencies offset this impact.” 

Price Increases 

Price increases were a key theme in the call, as executives pointed to inflation and tariffs driving higher costs across materials and transportation. Quenzer noted that cost inflation is now expected to be up approximately 5%, revised from an earlier estimate of 2%, driven by recent increases in tariffs and input costs for aluminum, steel, copper, and fuel. 

“Since our last guidance, aluminum is up 25%, steel is up 20%-25%, diesel is up 50%, and copper is up 10%-15%,” he said. “We have hedging programs that delay some of that, but overall, these input costs are up significantly.” 

In addition, tariffs continue to evolve with little notice, noted Quenzer, pointing to the new Section 232 tariffs that were recently announced. He added that Lennox is looking to mitigate both input cost and tariff-related pressures. 

“We still have a lot of levers that take time on the supply chain and the manufacturing processes to be able to continue to mitigate that cost,” he said. “Our goal is to keep focusing on cost mitigation. Some of these efforts just take a little longer.” 

Maskara said mid-single-digit price increases for the year, including recent and earlier actions, have been necessary to offset rising costs. He noted that a new increase took effect earlier this week, following similar pricing actions from other competitors. 

As for the impact on homeowners, Maskara noted that equipment, parts, and supplies only account for 30% to 40% of the total installation cost.  

“I don't think it changes the consumer price elasticity in any meaningful way. We are sensitive to the market demand-supply agreement, but remain convinced that equipment pricing is the least of the variables in that equation.” 

Repair Vs Replace 

In their last earnings call, Lennox noted that the industry’s shift toward repair over replacement would likely not be as big of an issue this year. That trend appears to be playing out, as Maskara said the dynamics have stabilized, with early signs that some of last year’s delayed replacement demand is starting to come back. 

“Last year, we were hearing a lot more hesitancy, even within our contractors, to recommend replacement versus repair. They were short on [refrigerant] canisters, and they were not fully trained on R-454B,” he said. “Now the contractors are more confident, and consumers are going back to making the economic decision, which is not repairing a 10- or 12-year-old system, but replacing it.” 

He added that consumers are looking for new systems that offer better efficiency, better warranty, and better financing. “[Repair] is definitely not getting worse. It’s definitely stable with some green shoots in terms of confidence among dealers and consumers returning to more economically driven decisions.” 

Looking Ahead 

Lennox expects gradual improvement in the industry this year, with pricing, productivity initiatives, and supply chain adjustments helping offset cost pressures. At the same time, Maskara noted that “consumer sentiment remains cautious, contributing to continued softness in new home construction and remodel activity.” 

Even taking that into account, Lennox has raised its full-year outlook, now expecting about 8% revenue growth, up from earlier guidance of 6% to 7%, driven mainly by modestly higher pricing and product mix. Segment expectations were also bumped up, with HCS now expected to grow 4% and BCS about 16%, while organic volumes are still expected to decline in the low single digits. 

“Overall, we feel good about the underlying momentum in the business, while recognizing that the external environment remains dynamic and will require continuous focus and execution,” said Quenzer.