What is an income statement waterfall?

An income statement waterfall is a bar chart that walks from total revenue down to net income, with each step showing how much a cost or tax line removes (or adds). Subtotals — gross profit, operating income, pre-tax income — are anchored to zero so the cascade reconciles exactly to the bottom line.

How much of Lennox International (LII) revenue becomes net income?

For TTM through Q1 2026, Lennox International turned $5.26B of revenue into $783M of net income — a net margin of 14.9%. The waterfall shows where the rest goes: cost of revenue, operating expenses, non-operating items, and taxes.

What are Lennox International (LII) gross, operating, and net margins?

For TTM through Q1 2026, Lennox International reported a gross margin of 33.1%, an operating margin of 19.5%, and a net margin of 14.9%. Each subtotal in the waterfall corresponds to one of these margins.

Why does Lennox International (LII) have such a high (or low) gross margin?

Gross margin (gross profit ÷ revenue) reflects how much of each revenue dollar remains after direct production costs. Capital-light software and platform businesses often show gross margins above 60–80% because their cost of revenue is mainly hosting and support. Hardware, retail, and commodity businesses show lower gross margins because raw materials and manufacturing costs are significant. The waterfall makes this visible at a glance — the size of the "Cost of Revenue" bar relative to Revenue is the gross margin complement.

What is the difference between gross, operating, and net margin?

Gross margin = (Revenue − Cost of Revenue) ÷ Revenue. It measures production efficiency. Operating margin = Operating Income ÷ Revenue. It adds operating expenses (R&D, S&M, G&A) and measures the profitability of core operations. Net margin = Net Income ÷ Revenue. It also includes interest, other income/expense, and taxes, and represents the shareholder take after everything.

Lennox International (LII) Income Statement Waterfall

Revenue

$5.26B

Gross Margin

+33.1%

Operating Margin

+19.5%

Net Margin

+14.9%

Income statement waterfall for Lennox International (LII) — TTM through Q1 2026

Net income: $783M

Margin breakdown for Lennox International (LII) — TTM through Q1 2026

Line item	Amount	Running total
Revenue	$5.26B	$5.26B
Cost of Revenue	-$3.52B	$1.74B
Gross Profit	$1.74B	$1.74B
Operating Expenses	-$712M	$1.03B
Operating Income	$1.03B	$1.03B
Other Income / Expense	-$56.7M	$969M
Pre-tax Income	$969M	$969M
Income Tax	-$186M	$783M
Net Income	$783M	$783M

Revenue$5.26B
Cost of Revenue-$3.52B
Gross Profit$1.74B
Operating Expenses-$712M
Operating Income$1.03B
Other Income / Expense-$56.7M
Pre-tax Income$969M
Income Tax-$186M
Net Income$783M

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