DALLAS, Oct. 17, 2016 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII) today reported financial results for
the third quarter of 2016. All comparisons are against the
prior-year quarter unless otherwise noted.
Revenue for the third quarter was $1.01
billion, up 6%. Foreign exchange was neutral to revenue in
the quarter. GAAP operating income increased 24% to a third-quarter
record $157 million. GAAP earnings
per share from continuing operations was a third-quarter record
$2.33, up 32%. Adjusted earnings per
share from continuing operations was a third-quarter record
$2.33, up 28%.
"Lennox International set new third-quarter records for
operating margin and profit on strong revenue growth, led by our
Residential business," said Chairman and CEO Todd Bluedorn. "We continued to drive
significant margin expansion across all three of our businesses in
the third quarter. Overall, total segment profit margin rose 190
basis points to a third-quarter record 15.6%.
"Our Residential business set third-quarter records for sales,
margin and profit. Residential revenue was up 11% on strength in
both replacement and new construction business. Residential profit
rose 25% as segment margin expanded 230 basis points to 19.7%. Our
Commercial business established new highs for margin and profit on
2% revenue growth. Commercial profit rose 9%, and segment margin
expanded 130 basis points to 19.5%. In Refrigeration, profit rose
13% as segment margin expanded 160 basis points to 12.3%.
Refrigeration revenue was down 2%, primarily on the timing of
national account business and soft market conditions in
Europe."
Looking ahead for the company overall, Bluedorn said, "As part
of our ongoing strategy to de-risk the company's pension plan
obligations, we expect to complete a one-time, lump sum pension
buyout in the fourth quarter for certain vested participants.
This action is expected to reduce the company's pension obligations
by approximately $50 million. We
expect to take a non-cash charge of approximately $20 million after-tax, and our updated 2016
guidance for GAAP EPS from continuing operations incorporates
this.
"For adjusted EPS from continuing operations, we are raising
2016 guidance based on the company's strong operational performance
and outlook, and we continue to expect strong margin expansion and
profit growth as momentum continues."
FINANCIAL HIGHLIGHTS
Revenue: Revenue for the third quarter was $1.01 billion, up 6%. Foreign exchange was
neutral to revenue. Volume and price/mix were up on a revenue
basis.
Gross Profit: Gross profit in the third quarter was
$310 million, up 13%. Gross margin
was 30.7%, up 210 basis points. Gross profit was positively
impacted by higher volume, higher factory productivity, and lower
material costs, with partial offsets from investments in
distribution expansion and other product costs.
Income from Continuing Operations: On a GAAP basis,
income from continuing operations for the third quarter was
$101.7 million, or $2.33 per share, compared to $80.3 million, or $1.76 per share, in the prior-year quarter.
Adjusted income from continuing operations in the third quarter
was $101.9 million, or $2.33 per share, compared to $83.2 million, or $1.82 per share, in the prior-year quarter.
Adjusted earnings from continuing operations for the third quarter
of 2016 excludes $0.2 million in net
after-tax charges: a $0.7 million
gain for the net change in unrealized gains on unsettled future
contracts, a charge of $0.4 million
for restructuring activities, and charges of $0.5 million for other items, net.
Free Cash Flow and Total Debt: In the third quarter, net
cash from operations was $148
million, capital expenditures totaled $18 million, and free cash flow was $130 million. This includes a $50 million use of cash for a discretionary
pension contribution. In the prior-year quarter, net cash from
operations was $159 million, capital
expenditures totaled $14 million, and
free cash flow was $145 million.
Total debt at the end of the third quarter was $1.06 billion. Total cash and cash equivalents
were $48 million at the end of the
quarter. The company paid $19 million
in dividends in the third quarter and paid $100 million in conjunction with an accelerated
share repurchase program over the third and fourth quarters.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the Residential Heating & Cooling business segment
was a third-quarter record $573
million, up 11%. Foreign exchange was neutral to revenue.
Segment profit was a third-quarter record $113 million, up 25%. Segment profit margin was a
third-quarter record 19.7%, up 230 basis points. Results were
impacted by higher volume, favorable price/mix, lower material
costs, and higher factory productivity, with partial offsets from
investments in SG&A, distribution expansion, and other product
costs.
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment
was $251 million in the third
quarter, up 2%. Foreign exchange was neutral to revenue. Segment
profit was a record $49 million, up
9%. Segment profit margin was a record 19.5%, up 130 basis points.
Results were impacted by higher volume, lower material costs, and
lower freight costs, with partial offsets from factory productivity
and other product costs, and investments in SG&A.
Refrigeration
Revenue in the Refrigeration business
segment was $186 million in the third
quarter, down 2%. Foreign exchange was neutral to revenue. Segment
profit was $23 million, up 13%.
Segment profit margin was 12.3%, up 160 basis points. Results were
impacted by lower material costs, lower factory costs and higher
productivity, with partial offsets from lower volume, unfavorable
price/mix, unfavorable foreign exchange, and higher SG&A.
FULL-YEAR OUTLOOK
For 2016, the company is updating guidance for revenue growth
and EPS from continuing operations.
- Narrowing guidance for 2016 revenue growth from 3-7% to 4-6%.
The company still expects foreign exchange to be neutral to revenue
on a full-year basis.
- Updating guidance for 2016 GAAP EPS from continuing operations
from $6.45-$6.85 to a range of
$6.25-$6.45, including special items
to-date and the approximate $20
million after-tax ($30 million
pre-tax) pension charge expected in the fourth quarter as a result
of the one-time, lump-sum pension buyout program to certain vested
participants.
- Raising guidance for 2016 adjusted EPS from continuing
operations from $6.50-$6.90 to a
range of $6.75-$6.95.
- Reiterating effective tax rate guidance of approximately 31% on
a full-year basis for 2016 and 32% for future years.
- Reiterating fully diluted share count guidance of approximately
44 million shares on a full-year basis.
- Reiterating 2016 capital expenditure guidance of approximately
$95 million.
CONFERENCE CALL INFORMATION
A conference call to discuss the company's third-quarter results
will be held this morning at 8:30 a.m.
Central time. To listen, call the conference call line at
612-288-0340 at least 10 minutes prior to the scheduled start time
and use reservation number 403686. The conference call also will be
webcast on Lennox International's web site at
www.lennoxinternational.com. A replay will be available from
11:00 a.m. Central time on
October 17 through midnight
October 31, 2016 by dialing
800-475-6701 (U.S.) or 320-365-3844 (international) and using
access code 403686. The call also will be archived on the company's
web site.
About Lennox International
Lennox International Inc. is a global leader in the heating, air
conditioning, and refrigeration markets. Lennox International is
listed on the New York Stock Exchange and traded under the symbol
"LII". Additional information is available at:
www.lennoxinternational.com or by contacting Steve Harrison, Vice President, Investor
Relations, at 972-497-6670.
Forward-Looking Statements
The statements in this news release that are not historical
statements, including statements regarding the 2016 full-year
outlook, expected financial results for 2016, and the expected
pension buyout and its related effects, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
information currently available as well as management's assumptions
and beliefs today. These statements are subject to numerous risks
and uncertainties that could cause actual results to differ
materially from the results expressed or implied by these
statements, and investors should not place undue reliance on them.
Risks and uncertainties that could cause actual results to differ
materially from such statements include, but are not limited to:
the impact of higher raw material prices, LII's ability to
implement price increases for its products and services, economic
conditions in our markets, regulatory changes, the impact of
unfavorable weather, and a decline in new construction activity and
related demand for products and services. For information
concerning these and other risks and uncertainties, see LII's
publicly available filings with the Securities and Exchange
Commission. LII disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
(Amounts in
millions, except per share data)
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
sales
|
$
|
1,010.0
|
|
|
$
|
955.0
|
|
|
$
|
2,744.4
|
|
|
$
|
2,633.3
|
|
Cost of goods
sold
|
699.7
|
|
|
681.6
|
|
|
1,935.5
|
|
|
1,913.5
|
|
Gross
profit
|
310.3
|
|
|
273.4
|
|
|
808.9
|
|
|
719.8
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
156.5
|
|
|
143.8
|
|
|
456.2
|
|
|
430.0
|
|
Losses and other
expenses, net
|
0.7
|
|
|
6.0
|
|
|
5.5
|
|
|
14.9
|
|
Restructuring charges
(gains)
|
0.6
|
|
|
(0.4)
|
|
|
1.2
|
|
|
1.8
|
|
Income from equity
method investments
|
(4.4)
|
|
|
(3.0)
|
|
|
(15.3)
|
|
|
(11.8)
|
|
Operating
income
|
156.9
|
|
|
127.0
|
|
|
361.3
|
|
|
284.9
|
|
Interest expense,
net
|
7.0
|
|
|
5.7
|
|
|
19.6
|
|
|
17.9
|
|
Other income,
net
|
—
|
|
|
(0.7)
|
|
|
(0.2)
|
|
|
(0.7)
|
|
Income from
continuing operations before income taxes
|
149.9
|
|
|
122.0
|
|
|
341.9
|
|
|
267.7
|
|
Provision for income
taxes
|
48.2
|
|
|
41.7
|
|
|
104.0
|
|
|
91.9
|
|
Income from
continuing operations
|
101.7
|
|
|
80.3
|
|
|
237.9
|
|
|
175.8
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
Loss from
discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
(0.9)
|
|
|
(0.9)
|
|
Benefit from income
taxes
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.4)
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.6)
|
|
|
(0.5)
|
|
Net
income
|
$
|
101.7
|
|
|
$
|
80.3
|
|
|
$
|
237.3
|
|
|
$
|
175.3
|
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.35
|
|
|
$
|
1.78
|
|
|
$
|
5.46
|
|
|
$
|
3.92
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Net income
|
$
|
2.35
|
|
|
$
|
1.78
|
|
|
$
|
5.45
|
|
|
$
|
3.91
|
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.33
|
|
|
$
|
1.76
|
|
|
$
|
5.39
|
|
|
$
|
3.86
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
(0.01)
|
|
Net income
|
$
|
2.33
|
|
|
$
|
1.76
|
|
|
$
|
5.38
|
|
|
$
|
3.85
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
43.2
|
|
|
45.0
|
|
|
43.6
|
|
|
44.9
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
43.7
|
|
|
45.6
|
|
|
44.2
|
|
|
45.6
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$
|
0.43
|
|
|
$
|
0.36
|
|
|
$
|
1.22
|
|
|
$
|
1.02
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Segment Net Sales
and Profit (Loss)
|
(Unaudited)
|
|
(Amounts in
millions)
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net
sales
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
572.7
|
|
|
$
|
517.9
|
|
|
$
|
1,524.5
|
|
|
$
|
1,435.6
|
|
Commercial
Heating & Cooling
|
251.4
|
|
|
246.8
|
|
|
674.7
|
|
|
660.3
|
|
Refrigeration
|
185.9
|
|
|
190.3
|
|
|
545.2
|
|
|
537.4
|
|
|
$
|
1,010.0
|
|
|
$
|
955.0
|
|
|
$
|
2,744.4
|
|
|
$
|
2,633.3
|
|
|
|
|
|
|
|
|
|
Segment Profit
(Loss) (1)
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
112.7
|
|
|
$
|
90.1
|
|
|
$
|
266.9
|
|
|
$
|
221.3
|
|
Commercial
Heating & Cooling
|
48.9
|
|
|
44.8
|
|
|
110.6
|
|
|
95.5
|
|
Refrigeration
|
22.9
|
|
|
20.3
|
|
|
53.2
|
|
|
37.5
|
|
Corporate and
other
|
(27.3)
|
|
|
(24.0)
|
|
|
(65.7)
|
|
|
(57.4)
|
|
Total segment
profit
|
157.2
|
|
|
131.2
|
|
|
365.0
|
|
|
296.9
|
|
Reconciliation
to Operating income:
|
|
|
|
|
|
|
|
Special product
quality adjustments
|
—
|
|
|
0.7
|
|
|
(0.4)
|
|
|
(0.6)
|
|
Items in Losses
(gains) and other expenses, net that are excluded from segment
profit (loss) (1)
|
(0.3)
|
|
|
3.9
|
|
|
2.9
|
|
|
10.8
|
|
Restructuring
charges
|
0.6
|
|
|
(0.4)
|
|
|
1.2
|
|
|
1.8
|
|
Operating
income
|
$
|
156.9
|
|
|
$
|
127.0
|
|
|
$
|
361.3
|
|
|
$
|
284.9
|
|
(1) The Company defines segment profit and loss
as a segment's operating income included in the accompanying
Consolidated Statements of Operations, excluding:
- Special product quality adjustments;
- The following items in Losses (gains) and other expenses, net:
- Net change in unrealized gains and/or losses on unsettled
futures contracts,
- Special legal contingency charges,
- Asbestos-related litigation,
- Contractor tax payments,
- Environmental liabilities, and
- Other items, net;
- Restructuring charges; and,
- Goodwill, long-lived asset, and equity method investment
impairments.
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Consolidated Balance Sheets
|
|
(Amounts in
millions, except shares and par values)
|
As of September
30,
2016
|
|
As of December
31,
2015
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
47.8
|
|
|
$
|
38.9
|
|
Accounts and notes
receivable, net of allowances of $7.7 and $6.3 in 2016 and 2015,
respectively
|
570.4
|
|
|
422.8
|
|
Inventories,
net
|
474.0
|
|
|
418.8
|
|
Other
assets
|
74.3
|
|
|
57.7
|
|
Total current
assets
|
1,166.5
|
|
|
938.2
|
|
Property, plant and
equipment, net of accumulated depreciation of $718 and $682.9 in
2016 and 2015, respectively
|
346.2
|
|
|
339.6
|
|
Goodwill
|
198.5
|
|
|
195.1
|
|
Deferred income
taxes
|
147.4
|
|
|
145.7
|
|
Other assets,
net
|
68.0
|
|
|
58.8
|
|
Total
assets
|
$
|
1,926.6
|
|
|
$
|
1,677.4
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Short-term
debt
|
$
|
327.8
|
|
|
$
|
204.1
|
|
Current maturities of
long-term debt
|
215.6
|
|
|
31.0
|
|
Accounts
payable
|
371.7
|
|
|
320.1
|
|
Accrued
expenses
|
272.2
|
|
|
242.6
|
|
Income taxes
payable
|
0.8
|
|
|
26.0
|
|
Total current
liabilities
|
1,188.1
|
|
|
823.8
|
|
Long-term
debt
|
512.5
|
|
|
506.0
|
|
Post-retirement
benefits, other than pensions
|
2.2
|
|
|
4.1
|
|
Pensions
|
72.9
|
|
|
120.8
|
|
Other
liabilities
|
126.7
|
|
|
121.1
|
|
Total
liabilities
|
1,902.4
|
|
|
1,575.8
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock, $.01
par value, 25,000,000 shares authorized, no shares issued or
outstanding
|
—
|
|
|
—
|
|
Common stock, $.01
par value, 200,000,000 shares authorized, 87,170,197 shares
issued
|
0.9
|
|
|
0.9
|
|
Additional paid-in
capital
|
1,017.5
|
|
|
1,002.4
|
|
Retained
earnings
|
1,331.1
|
|
|
1,146.7
|
|
Accumulated other
comprehensive loss
|
(187.0)
|
|
|
(204.7)
|
|
Treasury stock, at
cost, 44,126,432 shares and 42,491,910 shares as of September 30,
2016 and December 31, 2015, respectively
|
(2,138.7)
|
|
|
(1,844.1)
|
|
Noncontrolling
interests
|
0.4
|
|
|
0.4
|
|
Total
stockholders' equity
|
24.2
|
|
|
101.6
|
|
Total liabilities
and stockholders' equity
|
$
|
1,926.6
|
|
|
$
|
1,677.4
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
(Amounts in
millions)
|
For the Nine
Months Ended
September 30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
237.3
|
|
|
$
|
175.3
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Income from equity
method investments
|
(15.3)
|
|
|
(11.8)
|
|
Dividends from
affiliates
|
3.9
|
|
|
7.4
|
|
Restructuring (gains)
expenses, net of cash paid
|
(0.8)
|
|
|
(0.2)
|
|
Provision for bad
debts
|
3.4
|
|
|
2.1
|
|
Unrealized (gains)
losses on derivative contracts
|
(2.2)
|
|
|
1.3
|
|
Stock-based
compensation expense
|
24.8
|
|
|
18.5
|
|
Depreciation and
amortization
|
43.4
|
|
|
46.6
|
|
Deferred income
taxes
|
(2.6)
|
|
|
(0.2)
|
|
Pension
expense
|
4.8
|
|
|
8.1
|
|
Pension
contributions
|
(52.6)
|
|
|
(3.8)
|
|
Other items,
net
|
0.4
|
|
|
0.3
|
|
Changes in assets and
liabilities, net of effects of divestitures:
|
|
|
|
Accounts and notes
receivable
|
(146.2)
|
|
|
(135.9)
|
|
Inventories
|
(49.9)
|
|
|
(41.0)
|
|
Other current
assets
|
(6.6)
|
|
|
(2.8)
|
|
Accounts
payable
|
56.4
|
|
|
23.4
|
|
Accrued
expenses
|
40.7
|
|
|
15.1
|
|
Income taxes payable
and receivable
|
(35.0)
|
|
|
(0.9)
|
|
Other
|
3.0
|
|
|
5.4
|
|
Net cash provided
by operating activities
|
106.9
|
|
|
106.9
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of
property, plant and equipment
|
(59.4)
|
|
|
(47.0)
|
|
Net cash used in
investing activities
|
(59.4)
|
|
|
(47.0)
|
|
Cash flows from
financing activities:
|
|
|
|
Short-term
borrowings, net
|
(2.1)
|
|
|
0.8
|
|
Asset securitization
borrowings
|
145.0
|
|
|
40.0
|
|
Asset securitization
payments
|
(20.0)
|
|
|
(40.0)
|
|
Long-term debt
payments
|
(30.9)
|
|
|
(23.5)
|
|
Borrowings from
credit facility
|
1,715.0
|
|
|
1,401.0
|
|
Payments on credit
facility
|
(1,493.0)
|
|
|
(1,385.0)
|
|
Payments of deferred
financing costs
|
(0.9)
|
|
|
—
|
|
Proceeds from
employee stock purchases
|
1.9
|
|
|
1.8
|
|
Repurchases of common
stock
|
(300.0)
|
|
|
—
|
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(26.3)
|
|
|
(23.5)
|
|
Excess tax benefits
related to share-based payments
|
20.0
|
|
|
18.6
|
|
Cash dividends
paid
|
(50.5)
|
|
|
(43.1)
|
|
Net cash used in
financing activities
|
(41.8)
|
|
|
(52.9)
|
|
Increase in cash and
cash equivalents
|
5.7
|
|
|
7.0
|
|
Effect of exchange
rates on cash and cash equivalents
|
3.2
|
|
|
(9.4)
|
|
Cash and cash
equivalents, beginning of period
|
38.9
|
|
|
37.5
|
|
Cash and cash
equivalents, end of period
|
$
|
47.8
|
|
|
$
|
35.1
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
|
17.0
|
|
|
$
|
15.9
|
|
Income taxes paid
(net of refunds)
|
$
|
120.9
|
|
|
$
|
73.4
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Reconciliation to
U.S. GAAP (Generally Accepted Accounting Principles)
Measures
|
(Unaudited, in
millions, except per share and ratio data)
|
|
Use of Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
To supplement the
Company's consolidated financial statements and segment net sales
and profit presented in accordance with U.S. GAAP, additional
non-GAAP financial measures are provided and reconciled in the
following tables. In addition to these non-GAAP measures, the
Company also provides rates of revenue change at constant currency
on a consolidated and segment basis if different than the
reported measures. The Company believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results. The
Company believes that these non-GAAP financial measures enhance the
ability of investors to analyze the Company's business trends and
operating performance.
|
|
Reconciliation of
Income from Continuing Operations, a GAAP measure, to Adjusted
Income from Continuing Operations, a Non-GAAP
measure
|
|
|
For the Three
Months Ended September 30,
|
|
2016
|
|
2015
|
|
Pre-Tax
|
Tax Impact
(c)
|
After
Tax
|
|
Pre-Tax
|
Tax Impact
(c)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
149.9
|
|
$
|
(48.2)
|
|
$
|
101.7
|
|
|
$
|
122.0
|
|
$
|
(41.7)
|
|
$
|
80.3
|
|
Restructuring
charges
|
0.6
|
|
(0.2)
|
|
0.4
|
|
|
(0.4)
|
|
0.1
|
|
(0.3)
|
|
Special product
quality adjustments (b)
|
—
|
|
—
|
|
—
|
|
|
0.7
|
|
(0.2)
|
|
0.5
|
|
Special legal
contingency charges (a)
|
0.5
|
|
(0.2)
|
|
0.3
|
|
|
1.3
|
|
(0.5)
|
|
0.8
|
|
Asbestos-related
litigation (a)
|
0.4
|
|
(0.1)
|
|
0.3
|
|
|
0.4
|
|
(0.1)
|
|
0.3
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
(1.2)
|
|
0.5
|
|
(0.7)
|
|
|
0.8
|
|
(0.3)
|
|
0.5
|
|
Environmental
liabilities(a)
|
—
|
|
(0.1)
|
|
(0.1)
|
|
|
0.3
|
|
—
|
|
0.3
|
|
Contractor tax payments (a)
|
—
|
|
—
|
|
—
|
|
|
0.8
|
|
(0.1)
|
|
0.7
|
|
Other items, net
(a)
|
—
|
|
—
|
|
—
|
|
|
0.3
|
|
(0.2)
|
|
0.1
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
150.2
|
|
$
|
(48.3)
|
|
$
|
101.9
|
|
|
$
|
126.2
|
|
$
|
(43.0)
|
|
$
|
83.2
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
2.33
|
|
|
|
|
$
|
1.76
|
|
Restructuring
charges
|
|
|
0.01
|
|
|
|
|
(0.01)
|
|
Special product
quality adjustments (b)
|
|
|
—
|
|
|
|
|
0.01
|
|
Special legal
contingency charges(a)
|
|
|
0.01
|
|
|
|
|
0.02
|
|
Asbestos-related
litigation(a)
|
|
|
0.01
|
|
|
|
|
0.01
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
|
|
(0.02)
|
|
|
|
|
0.01
|
|
Environmental
liabilities (a)
|
|
|
(0.01)
|
|
|
|
|
0.01
|
|
Contractor tax payments (a)
|
|
|
—
|
|
|
|
|
0.01
|
|
Other items, net
(a)
|
|
|
—
|
|
|
|
|
—
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
2.33
|
|
|
|
|
$
|
1.82
|
|
|
(a) Recorded in
Losses (gains) and other expenses, net in the Consolidated
Statements of Operations
|
(b) Recorded in Cost
of goods sold in the Consolidated Statements of
Operations
|
(c) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
|
|
|
|
For the Nine
Months Ended September 30,
|
|
2016
|
|
2015
|
|
Pre-Tax
|
Tax Impact
(c)
|
After
Tax
|
|
Pre-Tax
|
Tax Impact
(c)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
341.9
|
|
$
|
(104.0)
|
|
$
|
237.9
|
|
|
$
|
267.7
|
|
$
|
(91.9)
|
|
$
|
175.8
|
|
Restructuring
charges
|
1.2
|
|
(0.4)
|
|
0.8
|
|
|
1.8
|
|
(0.6)
|
|
1.2
|
|
Special product
quality adjustments (b)
|
(0.4)
|
|
0.1
|
|
(0.3)
|
|
|
(0.6)
|
|
0.2
|
|
(0.4)
|
|
Special legal
contingency charges (a)
|
0.5
|
|
(0.2)
|
|
0.3
|
|
|
5.5
|
|
(2.1)
|
|
3.4
|
|
Asbestos-related
litigation (a)
|
2.3
|
|
(0.8)
|
|
1.5
|
|
|
1.0
|
|
(0.3)
|
|
0.7
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
(1.9)
|
|
0.7
|
|
(1.2)
|
|
|
0.9
|
|
(0.4)
|
|
0.5
|
|
Environmental
liabilities (a)
|
1.1
|
|
(0.3)
|
|
0.8
|
|
|
0.7
|
|
(0.1)
|
|
0.6
|
|
Contractor tax payments (a)
|
0.5
|
|
(0.1)
|
|
0.4
|
|
|
2.4
|
|
(0.6)
|
|
1.8
|
|
Other items
(a)
|
0.4
|
|
(0.2)
|
|
0.2
|
|
|
0.3
|
|
(0.2)
|
|
0.1
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
345.6
|
|
$
|
(105.2)
|
|
$
|
240.4
|
|
|
$
|
279.7
|
|
$
|
(96.0)
|
|
$
|
183.7
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
5.39
|
|
|
|
|
$
|
3.86
|
|
Restructuring
charges
|
|
|
0.02
|
|
|
|
|
0.02
|
|
Special product
quality adjustments (b)
|
|
|
(0.01)
|
|
|
|
|
—
|
|
Special legal
contingency charges (a)
|
|
|
0.01
|
|
|
|
|
0.08
|
|
Asbestos-related
litigation (a)
|
|
|
0.03
|
|
|
|
|
0.02
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
|
|
(0.03)
|
|
|
|
|
0.01
|
|
Environmental
liabilities (a)
|
|
|
0.02
|
|
|
|
|
0.02
|
|
Contractor tax payments (a)
|
|
|
0.01
|
|
|
|
|
0.03
|
|
Other items, net
(a)
|
|
|
—
|
|
|
|
|
—
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
5.44
|
|
|
|
|
$
|
4.04
|
|
|
(a) Recorded in
Losses (gains) and other expenses, net in the Consolidated
Statements of Operations
|
(b) Recorded in Cost
of goods sold in the Consolidated Statements of
Operations
|
(c) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Components of
Losses and other expenses, net (pre-tax):
|
|
|
|
|
|
|
|
Realized losses on
settled future contracts (a)
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
$
|
1.2
|
|
|
$
|
1.3
|
|
Foreign currency
exchange losses (a)
|
0.5
|
|
|
1.4
|
|
|
1.1
|
|
|
2.7
|
|
Loss on disposal of
fixed assets (a)
|
0.2
|
|
|
0.1
|
|
|
0.3
|
|
|
0.1
|
|
Net change in
unrealized (gains) losses on unsettled futures contracts
(b)
|
(1.2)
|
|
|
0.8
|
|
|
(1.9)
|
|
|
0.9
|
|
Special legal
contingency (gains) charges (b)
|
0.5
|
|
|
1.3
|
|
|
0.5
|
|
|
5.5
|
|
Asbestos-related
litigation (b)
|
0.4
|
|
|
0.4
|
|
|
2.3
|
|
|
1.0
|
|
Environmental
liabilities (benefits) (b)
|
—
|
|
|
0.3
|
|
|
1.1
|
|
|
0.7
|
|
Contractor tax
payments (b)
|
—
|
|
|
0.8
|
|
|
0.5
|
|
|
2.4
|
|
Acquisition costs
(b)
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
Other items, net
(b)
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Losses and other
expenses, net (pre-tax)
|
$
|
0.7
|
|
|
$
|
6.0
|
|
|
$
|
5.5
|
|
|
$
|
14.9
|
|
|
(a)
Included in both segment profit (loss) and Adjusted income from
continuing operations
|
(b)
Excluded from both segment profit (loss) and Adjusted income from
continuing operations
|
Reconciliation of
Estimated Adjusted Earnings per Share from Continuing Operations -
Diluted, a Non-GAAP measure, to Earnings per Share from Continuing
Operations - Diluted, a GAAP measure
|
|
|
|
|
|
|
|
|
For the Year
Ended
December 31,
2016
ESTIMATED
|
Adjusted
Earnings per share from continuing operations - diluted, a Non-GAAP
measure
|
$6.75 -
$6.95
|
Pension buyout and
other items
|
(0.50)
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
$6.25-$6.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Cash Provided by Operating Activities, a GAAP measure, to Free
Cash Flow, a Non-GAAP measure (dollars in millions)
|
|
|
For the
Three Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash provided
by (used in) operating activities, a GAAP measure
|
$
|
147.9
|
|
|
$
|
159.1
|
|
|
$
|
106.9
|
|
|
$
|
106.9
|
Purchases of
property, plant and equipment
|
$
|
(17.7)
|
|
|
$
|
(13.9)
|
|
|
$
|
(59.4)
|
|
|
$
|
(47.0)
|
Free cash
flow, a Non-GAAP measure
|
$
|
130.2
|
|
|
$
|
145.2
|
|
|
$
|
47.5
|
|
|
$
|
59.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
|
|
|
|
|
|
Trailing
Twelve
Months to
September 30,
2016
|
Adjusted EBIT
(a)
|
|
|
|
|
|
|
$
|
445.8
|
Depreciation
and amortization expense (b)
|
|
|
|
|
|
|
59.5
|
EBITDA (a +
b)
|
|
|
|
|
|
|
$
|
505.3
|
Total debt at
September 30, 2016 (c)
|
|
|
|
|
|
|
1,055.9
|
Total Debt
to EBITDA ratio ((c / (a + b))
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBIT, a Non-GAAP measure, to Income From Continuing
Operations Before Income Taxes, a GAAP measure (dollars in
millions)
|
|
|
|
|
|
|
|
|
Trailing
Twelve
Months to
September 30,
2016
|
Adjusted
EBIT per above, a Non-GAAP measure
|
$
|
445.8
|
Special product
quality adjustments
|
(1.9)
|
Items in Losses
(gains) and other expenses, net that are excluded from segment
profit
|
7.7
|
Restructuring
charges
|
2.6
|
Interest
expense, net
|
25.3
|
Special
inventory write down
|
5.6
|
Goodwill
impairment
|
5.5
|
Asset
impairment
|
44.5
|
Other expenses,
net
|
(0.4)
|
Income from
continuing operations before income taxes, a GAAP
measure
|
$
|
356.9
|
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SOURCE Lennox International Inc.