Good morning. Two of the biggest names in HVAC reported their second-quarter results within a week of each other, and together they draw a clean map of where 2026 demand is and isn’t. Carrier’s was the margin story. Lennox’s is the demand story — and it points straight at the difference between new-construction work and replacement work.
Top story — Lennox’s sales rose 3%, but it cut its full-year outlook — and the split tells you why
Lennox (NYSE: LII) reported second-quarter 2026 revenue of $1.5 billion, up 3%, with GAAP diluted earnings per share flat at $7.72, on July 29 (Lennox / PRNewswire). The headline that moved the stock: Lennox lowered its full-year EPS guidance to a range of $23.00–$24.00, down from $23.50–$25.00 (same release). Note the direction — a week after Carrier raised its outlook, Lennox trimmed its own. But the useful part is underneath the headline. Lennox’s two halves went in opposite directions: its residential-facing Home Comfort Solutions segment revenue fell 7% to $936 million (segment profit down 12%, margin down 130 basis points), while its commercial Building Climate Solutions segment revenue jumped 24% to $610 million (segment profit up 29%). CEO Alok Maskara said commercial strength and acquisitions “mitigated the continued softness in the residential end market.” That’s the biggest residential HVAC name in the country telling you, on the record, which side of the business is hard right now.
Quick hits
The soft spot is new construction — not replacement. Lennox was specific: residential demand actually “improved sequentially from the first quarter” and improved “across both distribution channels,” but ”residential new construction activity remained a meaningful headwind” (Lennox Q2 2026 release). That squares with Carrier’s own quarter, whose replacement-heavy Residential line was up 9%. The takeaway for a trades owner: the weakness isn’t “homeowners stopped spending” — it’s the new-build pipeline. If your book leans on builder and new-construction work, that’s the exposure to watch this year; if it leans on replacement and service, you’re standing in the part of the market the OEMs say is holding.
Commercial and emergency-replacement work is where the growth is. Lennox credited its 24% commercial jump to “national account customers, healthy emergency replacement activity, and growth in service offerings” (release). Two of those three — emergency replacement and service — are wide open to independent shops, not just national brands. Light-commercial service contracts and same-day replacement capacity are looking like the strongest lanes into next year.
Tariff refunds gave a one-time lift — don’t bank on it repeating. Lennox’s quarter included about $30 million in tariff refunds ($25M in the residential segment, $5M in commercial) that it called “earlier than expected” (release). That’s a reminder for your own numbers: separate one-time items from the underlying trend when you judge a good month, or you’ll price off a level you can’t hold.
The Tip — Sort your pipeline by new-construction vs. replacement/service, and defend the resilient half
Pull your last 90 days of booked work and tag each job one of two ways: new construction/new-build, or replacement/repair/service. Two OEMs just told you the first bucket is the soft one and the second is the resilient one — so know your own split before you plan hiring, inventory, or marketing spend for the fall. If you’re overweight new construction, this is the quarter to rebalance: put marketing dollars into replacement and maintenance-agreement offers, sharpen your emergency-replacement response time (that’s the demand that’s actually growing), and chase light-commercial service accounts, which renew and don’t swing with the housing cycle. If you’re already replacement-and-service heavy, protect it — a maintenance plan that locks in repeat visits is worth more in a soft-construction year than any single install.
Tool watch — [Not sponsored]
You can run the new-construction-vs-replacement split in whatever you already have. Every major field-service platform — Jobber, Housecall Pro, ServiceTitan — lets you tag jobs by type and pull revenue by tag; if you’re on spreadsheets, one extra column does it. What matters is that you can answer “what share of my revenue depends on new construction?” in under a minute, because that’s the number the last two earnings reports just made important. No one paid for this mention.
That’s the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today’s Tool watch is our own honest read — no one paid for it.
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Sources: Lennox International — Lennox Reports 2026 Second Quarter Results (PRNewswire, 29 Jul 2026): https://www.prnewswire.com/news-releases/lennox-reports-2026-second-quarter-results-302836916.html