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Lennox International's CEO Presents At Bank Of America Merrill Lynch Global Industrials & Materials Conference (Transcript)

Second point is, even when we’ve been doing this aggressive cost reduction actions we’ve continued to invest in the business, research and development to differentiate our product, investments like our India Research Center. So continue to differentiate product, also making significant investments in our physical distribution, this is the business where having physical distribution on the ground, drives market share gains.

Some of you may have heard us talk about our residential distribution strategy where we’re increasing the number of physical distribution points doubling it over a three-year period. We ended the year at 75 of these. We’re going to end this year over 100 and we’ll be over 125 next year. Have a similar strategy on the commercial side of the business as we leverage the investments we’re making in residential to also grow physical distribution for our commercial business.

Third is, after four, five years of being in the absolute wrong place at the wrong time, being in North America, tied to housing is probably not a bad place to be. And so this pent-up demand that we talked about of people have been, on the replacement side of the business, have been repairing units rather than replacing them. We think that’s an opportunity going forward. We talked about macroeconomic conditions to support that unleashing in the pent-up demand as things like stabilization of existing home values, consumer confidence and unemployment.

I think home values have started to make the turn. The other two metrics, I think, are still flashing yellow, maybe red. First half of this year for the first time in a long time, we saw our equipment sales grow faster than our part sales. And we think that’s sort of positive sign, which is an early sign of sort of unwinding of some of this pent-up demand.

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