Climate Change Boosts Lennox International
This year is on track to be the fourth warmest on record, and the effects are being felt across the globe from Northern Europe to the Pacific Northwest. People are dying of heat exhaustion in Japan, and nuclear reactors are being shut down in France, Germany and Switzerland due to the extreme temperatures.
But where there is excessive heat, there is demand for air conditioning.
For our purposes today, let’s focus on the U.S. In July alone, according to Brandon Miller, meteorologist for CNN International, we broke 41 heat records across the United States and are well on our way to breaking more. California is suffering from the largest wildfire in state history, and we’re seeing record-breaking highs in places like Oregon that aren’t prepared for consecutive weeks of 90-plus-degree weather.
With that in mind, air conditioning supplier Lennox International (NYSE: LII) is having a fantastic year. In the most recent quarter, Lennox posted earnings of $3.67, well beyond the $3.56 that analysts predicted.
Chairman and CEO Tobb Bluedorn announced the following as well:
Revenue and profit hit new highs on strength in both replacement and new construction business. Residential revenue was up 9% at constant currency, and profit rose 9% as segment margin remained at the record 21.5% level.
Lennox is seeing strong numbers out of the commercial sector as well, hitting a new record of $292 million in revenue for the second quarter. Everything is pointing toward record business and growth.
If the average temperature around the world continues to rise the way it has for the last 10 or so years, so will the value of air conditioner suppliers. And Lennox stands to make their shareholders very happy for the foreseeable future.