Ladies and gentlemen, thank you for standing by. Welcome to the Lennox International Q4 conference call. At the request of your host, all lines are currently in a listen-only mode. There will be a question-and-answer session at the end of the presentation. You may enter the queue to ask a question by pressing one and zero on your telephone keypad. Pressing one and zero again exits the queue. As a reminder, this call is being recorded. I will now turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.
Good morning, everyone. Thank you for joining us for this review of Lennox International's financial performance for the Q4 and full year 2021. I'm here today with Chairman and CEO, Todd Bluedorn, and CFO, Joe Reitmeier. Todd will review key points for the quarter. Joe will take you through the company's financial performance for the quarter and year, as well as the outlook for 2022. To give everyone time to ask questions during the Q&A, please limit yourself to a couple of questions or follow-ups and re-queue for any additional questions. In the earnings release we issued this morning, we have included the necessary reconciliation of the non-GAAP financial measures that will be discussed to GAAP measures. All comparisons mentioned today are against the prior year period. You can find a direct link to the webcast of today's conference call on our website at www.lennoxinternational.com.
The webcast will be archived on the site for replay. I'd like to remind everyone that in the course of this call, to give you a better understanding of our operations, we will be making certain forward-looking statements. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Lennox International's publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Now, let me turn the call over to Chairman and CEO, Todd Bluedorn.
Thanks, Steve. Good morning, everyone, and thanks for joining us. Let me start with the financial highlights for 2021 overall and then walk through the Q4 as the company closed out a year of record revenue and earnings per share. Overall, for 2021, revenue rose 15% to a record $4.2 billion. At constant currency, revenue is up 14%. GAAP operating income rose 23% to $590 million. GAAP EPS from continuing operations rose 34% to a record $12.39. Total segment profit for the full year rose 19% to $604 million, and the total segment margin expanded 50 basis points to 14.4%. Adjusted EPS from continuing operations rose 27% to a record $12.60.
Turning to the Q4, financial results were impacted by 6% fewer days than the prior year quarter, as well as the continued impact from COVID-19 and supply chain disruptions that significantly impacted performance. As a benefit to the quarter, tax timing and one-time tax benefits lowered the effective tax rate to 7% on a GAAP basis and 8% on an adjusted basis. That brought the effective tax rate for the full year to 17% on a GAAP basis and 18% on an adjusted basis. Company revenue in the quarter was up 6% to a Q4 record $965 million. GAAP operating income was $98 million compared to $139 million in the prior year quarter.
GAAP EPS from continuing operations was $2.27 compared to $2.91 in the prior year quarter. Total segment profit for the Q4 was $102 million compared to $139 million in the prior year quarter, and total segment margin was 10.6% compared to 15.2% in the Q4 a year ago. Adjusted EPS from continuing operations was $2.35 compared to $2.89 in the prior year quarter. Looking at our business segments for the Q4, in residential revenue was up 12% to a Q4 record $620 million. Again, I'll underline that's on 6% fewer days. Both replacement and new construction business were up double digits.
Residential segment profit was down 5%, and segment margin was down 310 basis points to 17.8% from the prior year quarter. In Commercial, the business continued to be hit the hardest by COVID-19 and global supply chain disruptions in the Q4. Revenue was down 11%, segment profit was down 64%, and segment margin was down 1,170 basis points to 7.7%. Commercial equipment revenue was down mid-teens in the quarter. Within this, replacement revenue was down mid-teens with planned replacement down low single digits and emergency replacement down more than 40%. New construction revenue was down high teens in the quarter. Breaking out revenue another way, regional and local business revenue was down mid-teens. National equipment revenue was down high teens.
On the service side, Lennox National Account Services revenue was up low single digits, again on 6% fewer days. While the commercial business continued to work through significant disruptions and constraints in the Q4, looking ahead, we expect revenue to resume year-over-year growth in the Q1 and profitability to be up by mid-2022 and for the full year. In refrigeration for the Q4, revenue was up 6% as reported and up 8% at constant currency. North America revenue was up more than 20%. Europe refrigeration revenue was down low single digits as reported, up low single digits at constant currency. Europe HVAC revenue was down mid-teens as reported and down low double digits at constant currency.
Refrigeration segment profit rose 50%, with segment margin expanded 190 basis points to 8.9%. For the company overall in 2022, we are reiterating guidance for revenue growth of 5%-10%. We are raising guidance for GAAP and adjusted EPS from continuing operations from a range of $13.40-$14.40 to a new range of $13.50-$14.50 for the full year. This reflects the net benefit of lower effective tax rate of 18%-20% and higher interest rate expense assumptions. We are reiterating plans for $400 million of stock repurchases in 2022. HVAC and refrigeration market demand remains high, and as COVID-19 and the global supply chain improve Lennox International's position to further capitalize on the growth opportunities and higher profitability. Now I'll turn it over to Joe.
Thank you, Todd, and good morning, everyone. I'll provide some additional comments and financial details on the business segments for the Q4 and the year overall, starting with Residential Heating and Cooling. In the Q4, revenue from Residential Heating and Cooling was a Q4 record, $620 million, up 12%. Volume was up 3%, price was up 8%, and mix was up 1%. Foreign exchange was neutral to revenue. Residential profit was $110 million, down 5%. Segment margin was 17.8%, down 310 basis points. Segment profit was primarily impacted by 6% fewer days than the prior year quarter, the COVID-19 pandemic, global supply chain disruptions, higher material, freight, and other product costs, and higher SG&A.
Positive impacts included higher volume, favorable price, mix, foreign exchange and warranty, and distribution efficiency programs. For the full year, Residential segment revenue was a record $2.78 billion, up 18%. Volume was up 13%, price was up 4%, and mix was flat, with foreign exchange being a 1% favorable benefit to revenue. Residential profit was a record $540 million, up 26%. Segment margin was 19.5%, up 140 basis points. Now turning to our Commercial heating and cooling business. In the Q4, Commercial revenue was $201 million, down 11%. Volume was down 21%, price was up 2%, and mix was up 8%. Foreign exchange was neutral to revenue. Commercial segment profit was $16 million, down 64%.
Segment margin was 7.7%, down 1,170 basis points. Segment profit was primarily impacted by 6% fewer days than the prior quarter, the COVID-19 pandemic, global supply chain disruptions, lower volume, higher material, warranty, tariff, freight, and other product costs, and higher SG&A. Partial offsets included favorable price and mix. For the full year, Commercial revenue was $865 million, up 8%. Volume was up 3%, price was up 1%, and mix was up 3%. Foreign exchange was a 1% favorable benefit to revenue. Segment profit was $111 million, down 19%, and segment margin was 12.8%, down 430 basis points. In Refrigeration, revenue was a Q4 record, $143 million, up 6%.
Volume was up 4%, price was up 1%, and mix was down 1%. Foreign exchange had a favorable 2% impact on revenue. Refrigeration segment profit was $13 million in the Q4, which was up 29%. Segment margin was 9.2%, up 170 basis points. Segment profit was positively impacted by higher volume, favorable price and mix, and lower SG&A. Partial offsets included 6% fewer days than the prior year quarter, the COVID-19 pandemic, global supply chain disruptions and higher material, freight, and other product costs. For the full year, refrigeration revenue was $554 million, up 17%. Volume was up 13%, price was up 3%, and mix was flat. Foreign exchange had a favorable 1% impact.
Segment profit was $49 million, up 50%, and segment profit margin was 8.9%, up 190 basis points. Regarding special items, the company had net after-tax charges of $3.2 million for the Q4 and $7.4 million for the full year. Corporate expenses were $37 million in the Q4 and $96 million for the full year. Overall, SG&A was $152 million in the Q4 or 15.7% of revenue, the same as the prior quarter. For 2021, overall, SG&A was $599 million or 14.3% of revenue, down from 15.3% in the prior year.
Our 2021 income tax rate declined year over year, attributable to geographic mix, year-end adjustments of taxes on export sales, and finalization and settlement of our prior tax obligations. For 2021, the company had cash from operations of $516 million compared to $612 million in the prior year as working capital increased, primarily due to sales growth increasing accounts receivable and inventory increasing due to mitigation strategies to combat supply chain disruptions, along with inflationary effects year- over- year on product costs. Capital expenditures were $106 million for the full year compared to $77 million in the prior year.
Free cash flow was $410 million for the year compared to $535 million in the prior year. In 2021, the company paid approximately $127 million in dividends and repurchased $600 million of company stock. Total debt was $1.24 billion at the end of the Q4, and we ended the year with a debt-to-EBITDA ratio of 1.8. Cash and cash equivalents were $31 million at the end of the year. Now, before I turn it over to Q&A, I'll review our outlook for 2022. Our underlying market assumptions for the year remain the same. We expect the industry to see low single-digit shipment growth in residential and mid-single digit shipment growth in commercial unitary and refrigeration markets in North America.
Our guidance for 2022 revenue growth remains 5%-10% with neutral foreign exchange impact, and we are raising our guidance for GAAP and adjusted EPS from continuing operations from a range of $13.40-$14.40 to a new range of $13.50-$14.50. This reflects the net of a lower expected effective tax rate of 18%-20% compared to our prior guidance of approximately 20%, as well as higher interest and other expense of approximately $40 million compared to prior guidance of $35 million. Now let me run you through some of the other key assumptions in our guidance and the puts and takes for 2022, all of which are unchanged.
Price is expected to be a benefit of $235 million for the year, which is about a 5% yield. Factory productivity and production from our third Mexico plant is expected to be a $20 million benefit. We are guiding for residential mix to be neutral. Tariffs are also expected to be neutral, and we assume neutral foreign exchange impact. For the headwinds in 2022, we still expect a $110 million headwind from commodities, a headwind of $60 million from components, half offset by $30 million of cost takeouts for a net $30 million headwind. Freight is still expected to be a $5 million headwind. We will be at a more normal run rate with distribution investments this year with 30 new Lennox stores planned.
SG&A is expected to be up $45 million this year, including our investments in research and development and information technology. A few other points. Corporate expenses are still targeted at $95 million, and we are planning capital expenditures to be approximately $125 million this year. Free cash flow is targeted at $400 million. Finally, we expect the weighted average diluted share count for the full year to be between 36 to 37 million shares, which incorporates our plans to repurchase $400 million of stock this year. With that, let's go to Q&A.
Ladies and gentlemen, just a quick reminder, if you would like to ask a question, please press one then zero on your telephone keypad. You may withdraw your question at any time by repeating the one-zero command. First, go to line of Nicole DeBlase with Deutsche Bank. Please go ahead.
Yeah. Thanks. Good morning.
Morning, Nicole.
I guess maybe we could start with, you know, looking across 2022, seems like it might be a bit of an unusual year. Any update on your thoughts on the quarterly cadence and earnings? Maybe just like categorize it relative to the normal seasonality you would see in your business.
You know, the way we plan right now and the way we expect it to be is. Well, the last couple of years have been abnormal. Well, the last two or three go all the way back to tornado. I think if you go back past pre-COVID, pre-tornado, I think it's more of a normal cadence. Our best guess is that's how it's gonna lay out, sort of normal to prior years.
Okay. Got it. Thanks, Todd. I guess from a commodity perspective, I saw that you guys maintained exactly what you said at the Analyst Day last month. Commodity costs have continued to tail off a little bit. Is that a potential source of upside if that trend continues? Or is the advanced purchases hedging you guys do, does that make that difficult for 2022?
No. If commodities go down, especially steel, which is our largest and we don't hedge it'll certainly be a benefit. I mean, we're not changing it 'cause it sort of wiggles one way or another. We take guesses on what the balance of the year is based on what the futures are predicted to be. Short answer is, if commodities goes down, that's good news.
Got it. Thanks. I'll pass it on.
Thanks.
Next, we'll go to Julian Mitchell with Barclays. Please go ahead.
Thanks very much. Good morning.
Hey, Julian.
Maybe, Todd, just starting out with, you know, your sort of views around, volume growth, in residential, over the year. You know, any commentary on how the year has started out for your resi volumes, and any kind of major, cadence as we go through the year, I think relative to your kind of low to mid-single digit volume growth at resi that's in the guide.
You know, the short answer is we're starting out strong. I mean, we've got lots of quote-unquote orders and backlog, although that's tough in this business. Given supply constraints, we have sort of lots of people telling us they need things. The orders remain strong. You, as you well know, it's tough to predict much from January. I think the short answer is consumers seem strong, still buying. We get a warm summer, I think it's gonna be another record year.
Thanks very much. In commercial, maybe a couple of things. One is just, you know, any finer points on the confidence on that profit expansion by midyear other than sort of easy comps on profitability? How do you see that kind of backlog in commercial playing out? I think in a lot of, you know, industrial facing and commercial businesses, backlogs may be peaking right now and then start to bleed down a bit. Do you see that as likely to happen this year?
I don't think so. Again, I get the years confused, but in 2020, the industry was down 20%, and so it sort of, the HVAC discretionary spending went way down. It's come back partway this year, and I expect it to continue to grow in 2022. We certainly have record backlog, again driven by supply constraints, production constraints. Everything we can see, it still feels very strong and very solid when we talk to our large national accounts. You know, obviously commercial had a tough Q4, had a tough year on the margins. You know, there's a couple reasons for that. One is we have one factory, it's in Stuttgart, Arkansas. It has been very hard hit by COVID.
There were days in Q4 where, you know, over 25%, over a quarter of the hourly workers didn't come in 'cause of COVID. Either they had it or they were close contacts. Similar impact we had with Omicron in January. I think the good news is that's starting. You know, we're—it's like a python swallowing the rat. I think it's now going through the system, and we're on the downside. We've also been hit by supply chain issues, harder there than anywhere else, and I think we worked through those. We have a strong production team there. I think we're focused on the right things. You're right, I mean, we've got a lower baseline to come from.
I feel pretty confident we'll be back at year-over-year growth and profitability by midyear.
Great. Thank you.
Thanks.
Our next question is from Jeff Hammond with KeyBanc. Please go ahead.
Hey, good morning, everyone.
Morning, Jeff.
Hey, Jeff.
Hey, Jeff.
Hey. Just, maybe just update us on, you know, your inventory levels, what you think, you know, channel inventories look like. I know, you know, these seasonal weaker periods you've been trying to catch up.
Yeah. I mean, we're still low on inventory, both in residential and specifically in commercial. That's why you saw emergency replacement down 40%, our ability to sort of have the inventory on the ground. We're focused on driving it up. I mean, people who look at the detailed sort of charts will see our inventory levels are up year-over-year for Q4, but that's driven by a couple things. That's driven by the increased cost of components and labor, so the inflationary pressures, and also we have a lot of WIP and raw material. We're sort of pulling together material, and we'll miss a piece or a part, and we won't be able to finish the unit. Some of that's built in there. But
I think the distributor channel through our Allied business. I still think that's relatively lean. I don't think we've peaked out in any way. I think they're in our sell into competitors, Carrier and Trane. I think their distribution's the same way. I don't think Watsco has too much inventory yet. I think people are still buying.
Okay. Just on supply chain, can you talk about where you think you're starting to see some stabilization or relief, versus maybe where's, you know, things are still very problematic?
You know, it's a continually changing picture, if you will. Back in December when we spoke, I was confident and remain confident, but Omicron sort of, I know had an impact, sort of backed everybody up a bit. Specifically in our factories, Omicron hit hard in January. You know, we still feel confident for the quarter, but had an impact in January. The supply chain is healing, although I would tell you there's still a card or two on Omicron that has to be turned over on the impact that it's had on the supply chain. You know, we're having fewer issues on the things we had big issues with, controls, steel, aluminum, packaging, sort of all those things I think are in the rearview mirror.
We have a great team focused on this. We're doing all the things you'd expect us to do and I talked about. We're in suppliers' locations. We're investing in inventory. You know, we're spending millions of dollars air freighting in components from Asia to make sure we have safety stocks. We're doing all the right things. I just think every time I want to declare victory, Omicron or excuse me, COVID takes a slightly different direction or a large direction. I think if Omicron's the last piece, I think that's now behind us in our factories. I think it's broadly behind our supply base, and I think we heal quickly. Because again, what our factories have seen with Omicron is what everyone's seen in New York Times story. It went up like a rocket. It's coming down like a rocket.
You tell me what COVID's gonna do, then I'll be certain what supply chain's gonna do.
Okay. Appreciate the color, Todd. Thanks.
Thanks.
Next, we'll go to Ryan Merkel with William Blair. Please go ahead.
Hey, good morning. Thanks. First question, Todd. It looks like production was sort of right down the middle in Q4. Any change to the outlook for production in the first half either way?
I'm not sure I understand the question.
Production rates, meaning factory productivity. I was thinking about that for the first half.
No. I mean, our guide's the guide. I mean, and again, it's sort of, as you know, a multivariable equation. We hope to do better, but we'll see.
Got it. Okay. What are sort of the key focus points and opportunities you're looking at over the next couple of quarters? I assume supply chain and solving that's number one, but what else is there?
Supply chain, price, drive productivity in our factories as we stabilize the production and inventory rates. third is our strategic investments, whether it's a product, and we have some great new product coming out over the next 18 months, digitization, which you know a lot about, and then continuing to build out our distribution, our store strategy in North America. that our team is laser-focused on keeping the product flowing or improving production, driving productivity, getting price, and continuing to focus on strategic investments.
Perfect. Thanks.
Thanks.
Next question from Tommy Moll with Stephens. Please go ahead.
Morning, and thanks for taking my questions.
Hey, Tommy.
Todd, I wanted to focus on labor and wages today. What context can you give us on the level of wage inflation you're seeing here in the U.S. versus maybe in Mexico as well, and the level of difficulty in hiring new employees at this point? What update could you give us there?
You know, we've been fighting that battle for a year and a half, maybe even two years. You know, we've raised wages in our factories pretty significantly, you know, 10, 15%, depending on the factory, some even more. We pay premiums to sort of get people to work second and third shifts in our factories, both in Mexico and in North America. I think it's all pretty stabilized at this point. I think the one factory that we've had the most issues with, but I think we're now focused on the right levers, is the one that's been hit hardest in the margins, which is our Stuttgart, Arkansas factory. That may be the most rural of our factories, and it's just sort of hard to get the employees.
I think we've balanced the wage rates to get that. That's obviously all in the guide. Again, as you know, our cost of goods sold is, you know, less than 10% direct labor, so we have some flexibility to pay what we need to do to get people in.
Thanks. That's helpful, Todd. Just to follow up on your stores rollout this year. I think you said 30 earlier. Can you give us any sense of the timing across the quarters and what, if any, revenue benefit from those new locations is embedded in your guidance?
I don't think much revenue. I think mathematically and mechanically, people sort of back some in. I think it's more the stores we opened this year start to kick in and have some revenue impact. Or excuse me, in 2021, kick in and have some revenue impact. You know, we typically are back-end loaded on stores just because, you know, we start to freeze things up in March as we prepare for the summer selling season, and we don't wanna distract the sales force. I don't have the list in front of me, but historically, it's been two-thirds or so second half of the year, and my guess is that's what it'll be this year.
Appreciate it, and I'll turn it back.
Thanks.
Next question's from Gautam Khanna with Cowen. Please go ahead.
Todd, I gotta ask, where are we on the CEO search, if you can say anything?
Yeah. I mean, it's the same placeholder answer that I've been giving since it began, right? It will be, you know, it's the independent directors are engaged in the search. When they have somebody as my replacement, we'll announce it. You know, Adam Schefter may say something different, but when we have somebody, we'll announce. That's for the football fans out there.
Yes. It was just confirmed, it turns out. I think Brady just announced it.
Oh, he announced it? Okay. Well, I have no announcement.
Yeah. Okay. Just related to the commercial business, can you update us on your views on IAQ and sort of what the pace of inquiry has been around that? Do you have any view that's changed on kinda what the average ticket size can be in the commercial space and in the resi space relative to the cost of the system? Thanks.
No. I'll answer the second part of the question first. Our point of view or my point of view personally hasn't changed. I think it's an important product offering to have. I think it's important to talk to your customers about. I think when you sell it can improve the ticket by, you know, 10, 15, 20%. But it's not every application. I think as we get through the pandemic, and if it becomes an epidemic or whatever the right phrase is, you know, I think some of the focus on this will start to pass. I think it's important that we have it. You know, I'll be honest with you, over the last quarter or two, we're so focused on taking care of core customer requirements, given the production issues.
You know, we talk about IAQ, and we're selling it, but I would tell you the sales force is spending a lot of time just taking care of base requirements.
Thank you.
Thanks.
Next, we'll go to Nigel Coe with Wolfe Research. Please go ahead.
Oh, hi. Good morning. Thanks, Todd. So just going back to Nicole's question on normal seasonality, quote-unquote, "normal." You mentioned obviously pre-COVID, pre, you know, tornado. Just scanning the numbers suggest 10% or below. Is that, is that what you're thinking, Todd, in terms of normal seasonality? The spirit of my question really is, any expectations we should have around Q1 margins, you know, the recovery, the sequential ramp from Q4? Or do you expect Q4 to be sort of very normal as Q1? If that question makes any sense. Just wondering expectations around margins and that seasonality for Q1 specifically.
Yeah. I mean, I understand the specific question. I'm not gonna give too tight an answer because I just don't wanna get in the habit of giving quarterly guidance. I just think if I was building a model, I would sort of normalize it based on sort of our track record pre-COVID, pre-tornado. That's roughly what it's gonna be. I mean, I think Q4 may have some strength compared to prior Q4s if there's any kind of pre-buy. Right now I don't. You know, my best guess is there won't be much of one. Q1, demand's strong, but we're supply constrained, and so I think that will sort of hinder what we can do in Q1, and some will bleed into Q2.
I think it's as always with us, it's gonna be a second and Q3 game.
Okay. Just my follow-on is around the mix neutral in residential for FY 2022. I think we had some mix down during 2021, so I thought we might get some relief on that, especially with semi supply theoretically getting better, so just curious, you know, what's driving that assumption for neutral mix. I'm just wondering if the pre-buy factors into that.
No, I don't think the pre-buys factors in a major way, well, because I just said we're not counting much on that. I think, you know, maybe there's some conservatism in that number. I mean, we just gotta get our, you know, as you know, or at least what I've spoken about, our Mexico factories performed the best for us, and that's where we tend to have more of the entry-level product. We've turned on some of our mid-tier and high-tier product that we hadn't allowed certain dealers to buy, that's now turned on. If we continue to ramp up in our Marshalltown factory, then maybe we have some positive news on mix.
Great. Thanks, Todd.
Thanks.
Next question's from Jeff Sprague with Vertical Research. Please go ahead.
Hey, thanks. Good morning, everyone. Just wondering if we could just touch on price a little bit more. Todd, looks like on kind of the exit rate on resi, you're gonna be in the ballpark of what you're anticipating for the year. I just wonder how much incremental price relative to your exit rate do you actually, you know, kind of need to get in the market to hit that, you know, what is it, $235 million or so for the year?
I think what happens is you lap part of that, right? Part of the price that we got in the Q4 on a sort of a year-over-year comp goes away as we go into 2022 because it was a price increase that we announced in early Q1 of 2021. The answer is we still gotta go stick to price, and we've announced it, and we're confident we're sticking it. So if, again, the numbers we're giving you are Q4 numbers, Q1, we're confident that we're gonna get the price that we need. As you suggested, you know, we had 8% or so in Q4 in resi, and that's order of magnitude the number for 2022.
Full year, we need to get 6%. I think Joe said 5%. I have 6% in my notes, so it's probably 5.5%, price in 2022, and we're confident we're gonna be able to do that.
Yeah. It is 5.5%, Todd.
Okay, great.
Okay, good.
Just one little peculiarity, and maybe I heard it wrong, but it looks like refrigeration got less price in the quarter than in the year. Is that correct? Everything else seemed to be building over the course of the year.
I'm gonna punt on that one.
I think Joe said price up one.
Joe, do you know that one?
Joe said price up 1%, I think, for the quarter and up 3% for the year. Maybe I wrote that down wrong.
What's your question about that?
I just want to confirm that's correct.
Yeah.
It is. Okay.
Joe, do you know that?
Yeah, that's correct.
I mean, what I have in my notes is for the year, we got about 5% price in refrigeration, and excuse me, 2022, we need to get 5% price in refrigeration, and we're confident we're gonna be able to do that. But I think they're confirming the numbers, $1 million in Q4, $3 million for the year.
Right. Okay. Thank you.
Mm-hmm.
Next, we'll go to Joe Ritchie with Goldman Sachs. Please go ahead.
Thanks. Good morning, everyone.
Hey, Joe.
Guys, can you help me maybe just parse out the margin headwinds in Q4 and resi, just, you know, given you did exit with eight points of price. Just trying to understand, you know, what you felt the impact in, and then, like, should we be anticipating a similar impact in Q1 in the resi business?
Well, you know, I think one thing to think about is, on a year-over-year basis, we had 6% fewer days. That was worth order of magnitude $10 million of EBIT. The other impact in resi was the COVID impact, and I think that will be less in Q1 than it was in Q4. That was order of magnitude another $10 million. There's sort of $20 million of headwind between COVID and 6% fewer days on a year-over-year basis that don't impact Q1.
Okay, great. That's helpful. Then I guess maybe just kind of thinking through, you know, the commercial business and you know, getting back to like, you know, pre-COVID margins in that business. Is kind of like the expectation for 2022, I mean, we don't quite get there, but you know, you'll see meaningful improvement in the second half, and maybe we start to see those kind of rates in 2H?
I think that's right. I don't think we get back to where we were pre-COVID in commercial in one year. I think it'll take a couple years. As I said, it will be mid-year when we start the improvement. Again, I think all the pieces are there. We got the product. We have customer demand. We just gotta get the factory humming.
Got it. Helpful. Thank you.
Thanks.
Our final question will be from Josh Pokrzywinski with Morgan Stanley. Please go ahead.
Hi, this is Breindy on for Josh. How are you?
Good. How are you?
Question on commercial market share. I know the timing and business differences make it a little hard to compare the businesses, but do you have a sense for how your commercial business did in 2021 versus your comparable light unitary markets?
Oh, I think we lost share. I don't think there's any doubt about that. I see the numbers. I won't give the exact numbers, but we lost share. You know, it's less than a point of share 'cause share moves slowly in commercial, but we lost share. I think in our residential businesses, we were flat to slightly up. The production issues in commercial hurt us.
Okay, that's helpful. On resi mix up 1%, do you have an idea of what mix was within replacement and, you know, how 2021 mix within replacement compares to a typical year?
No, I don't. I don't have that in front of me. I'll have Steve dig that up and get back to you. I think the answer is, without having the math in front of me, is we didn't have the normal mix-up in replacement with that we typically would because we were able to produce more product in our Mexico facility, which is more entry-level. We steered customers to more entry-level product than we typically would. I think on a full year basis, replacement mix was probably flat to slightly down.
Great. Thanks. Appreciate it.
Okay. Thank you.
I'll turn it back to Steve.
That's it on here?
Yeah.
Okay, great.
Go ahead with any closing comments.
Okay. Thanks everyone for joining us. To wrap up, in challenging conditions, Lennox International team is executing well to capitalize on market opportunities, and we look forward to a year of strong growth and profitability in 2022. Thanks everyone again for joining us.
Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.