DALLAS, Oct. 21, 2019 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII) today reported financial results for
the third quarter of 2019. All comparisons are to the prior-year
period. The company's tornado references relate to the July 2018 tornado damage at a Residential
manufacturing facility in Iowa.
Adjusted revenue and profit exclude non-core Refrigeration
businesses divested in 2018 and 2019.
Lennox International reported third-quarter GAAP and adjusted
revenue of $1,033 million. GAAP
revenue was up slightly, including 7% of negative impact from the
tornado and divestitures. Adjusted revenue, excluding the impact
from divestitures, was up 6% to a new third-quarter high. GAAP and
adjusted revenue included 2% of negative tornado impact.
GAAP operating income was $157
million, up 8%. GAAP earnings per share from continuing
operations was up 11% to a third-quarter record $2.94. Total adjusted segment profit rose 15% to
a third-quarter record $175 million,
and total adjusted segment margin expanded 140 basis points to a
third-quarter record 17.0%. Adjusted earnings per share from
continuing operations rose 26% to a third-quarter record
$3.34.
"Adverse weather conditions continued in the third quarter with
cooler weather than last year in key swing regions and for the U.S.
overall," said Chairman and CEO Todd
Bluedorn. "This was a major headwind to our Residential
business following the significantly cooler and wetter weather of
the second quarter. On a reported basis, Residential segment
revenue was a third-quarter record $638
million, up 7% compared to the third quarter a year ago in
which a tornado damaged a major manufacturing facility and
disrupted our highest-end business. Residential segment margin for
the third quarter of 2019 expanded 80 basis points to a
third-quarter record 19.8%, and segment profit rose 12% to a
third-quarter record $127 million.
Residential revenue was negatively impacted $23 million or 4% from business not recovered
following the tornado. Segment profit was negatively impacted
$12 million, offset by $16 million of insurance recovery for lost
profits. The net $4 million benefit
to segment profit was $3 million
below guidance. For 2019 overall, we continue to expect
$99 million of negative tornado
impact to Residential revenue, a negative $54 million impact to segment profit, and
insurance recovery for lost profits of $94
million. The resulting $40
million of net benefit to Residential segment profit in 2019
is unchanged.
"In our Commercial business, revenue was up 7% in the third
quarter, led by double-digit growth in National Account equipment
revenue, and we added 13 new National Account customers in the
quarter. Segment margin was down 30 basis points to 18.6%. Segment
profit rose 5%. In Refrigeration, adjusted segment revenue was flat
at constant currency, with North
America up mid-single digits and Europe down mid-single digits. Adjusted
segment profit was down 10% as segment margin declined 130 basis
points to 13.9%.
"Overall for the company in 2019, we now expect revenue growth
of 2-4% and adjusted EPS from continuing operations of $11.15-$11.45.
Moving into the heating season, the fourth quarter is off to a
solid start, and we look forward to finishing the year strong with
continued momentum into 2020."
FINANCIAL HIGHLIGHTS
Revenue: On a GAAP and adjusted basis, revenue was
$1,033 million. GAAP revenue was up
slightly, and adjusted revenue was up 6% to a new third-quarter
high. Foreign exchange was neutral to revenue. Volume was up, and
price was favorable. Mix was neutral to revenue.
Gross Profit: On a GAAP and adjusted basis, gross profit
was approximately $298 million. GAAP
gross margin was 28.9%, and adjusted gross margin was 28.8%. GAAP
gross profit was down 1%, and adjusted gross profit was up 2%
excluding the impact from divestitures. Gross profit benefitted
from higher volume, favorable price, and lower material costs.
Partial offsets included the tornado impact, cooler third-quarter
weather and factory productivity and other product costs,
unfavorable mix, higher distribution and freight expenses, and
unfavorable foreign exchange. On a GAAP basis, divestitures also
had a negative impact on gross profit.
Income from Continuing Operations: On a GAAP basis,
income from continuing operations for the third quarter was
$114.7 million, or $2.94 per share, compared to $108.0 million, or $2.65 per share, in the prior-year quarter.
Adjusted income from continuing operations in the third quarter
was $130.0 million, or $3.34 per share, compared to $108.0 million, or $2.66 per share, in the prior-year quarter.
Adjusted earnings from continuing operations for the third quarter
of 2019 excludes net after-tax charges of $15.3 million: $5.9
million for the partial advance in the second quarter of
2019 of insurance recoveries related to lost profits, $4.8 million for restructuring activities,
$2.7 million for other tax items,
net, and a net charge of $1.9 million
for various other items.
Cash from Operations, Free Cash Flow and Total
Debt: Net cash from operations in the third quarter was
$236 million compared to $266 million in the prior-year quarter. Net cash
used in investing activities was $25
million compared to $9 million
in the prior-year quarter. Free cash flow was $211 million compared to $253 million in the third quarter a year ago.
Total debt at the end of the third quarter was $1.45 billion. Total cash and cash equivalents
were $46 million at the end of
September. In the third quarter, the company repurchased
$150 million of stock and paid
$30 million in
dividends.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the
Residential Heating & Cooling business was up 7% to a
third-quarter record $638 million.
Foreign exchange was neutral. Segment margin expanded 80 basis
points to a third-quarter record 19.8%. Segment profit rose 12% to
a third-quarter record $127 million.
Residential results were impacted by higher volume, favorable
price, lower material costs, favorable warranty, tariff rebates,
and insurance proceeds for lost profits. Partial offsets included
cooler weather, tornado impact, lower factory efficiency and higher
other product costs, unfavorable mix, and higher distribution,
freight, and SG&A expenses.
Commercial Heating & Cooling
Revenue in the
Commercial Heating & Cooling business segment was up 7% to
$253 million. Foreign exchange was
neutral. Segment margin contracted 30 basis points to 18.6%.
Segment profit rose 5% to $47
million. Commercial results were impacted by higher volume,
favorable price and mix, and sourcing and engineering-led cost
reductions. Offsets included higher commodity and other product
costs, tariffs, lower factory efficiency, and higher distribution,
freight and SG&A expenses.
Refrigeration
Adjusted revenue in the Refrigeration
business segment was $142 million,
down 2%. Foreign exchange had a negative 2% impact on revenue.
Adjusted segment profit was $20
million, down 10%, and margin contracted 130 basis points to
13.9%. Refrigeration results were impacted by lower factory
efficiency, unfavorable mix, higher commodities and other product
costs, tariffs, and higher SG&A expenses. Partial offsets
included higher volume, favorable price, sourcing and
engineering-led cost reductions, and lower freight
costs.
FULL-YEAR OUTLOOK
- Updating 2019 guidance for adjusted revenue growth from 2-5% to
2-4%.
- Updating guidance for GAAP EPS from continuing operations from
$11.91-$12.51 to $10.65-$10.95,
including a non-cash pension settlement charge of approximately
$28.9 million after-tax, or
$0.73 per share, in the fourth
quarter of 2019.
- Updating guidance for adjusted EPS from continuing operations
from $11.30-$11.90 to $11.15-$11.45.
- Updating guidance for corporate expenses from approximately
$90 million to $85 million.
- Reiterating guidance for an effective tax rate of 22-23% on an
adjusted basis for the full year.
- Reiterating guidance for 2019 capital expenditures of
approximately $155 million, including
$55 million funded by insurance
proceeds.
- Updating guidance for free cash flow from approximately
$390 million to $320 million for the full year.
- $400 million of stock repurchased
in 2019.
A chart of the company's current view on the tornado financial
impact and insurance recovery for 2018-2019 is posted on the
company's website at www.lennoxinternational.com.
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 472904. 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 21 through November
4, 2019 by dialing 800-475-6701 (U.S.) or 320-365-3844
(international) and using access code 472904. The call also will be
archived on the company's website.
About Lennox International
Lennox International Inc.
is a global leader in the heating, air conditioning, and
refrigeration markets. Lennox International stock 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 2019 full-year outlook, expected consolidated and
segment financial results for 2019, and the financial and
operational impact of the tornado damage to LII's manufacturing
facility in Marshalltown, Iowa,
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 the 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, the impact of
new trade tariffs, 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. With respect to financial and operational
impact of the tornado, the risks and uncertainties include, but are
not limited to: (1) the impact on LII's results of operations and
financial condition resulting from the tornado damage, (2) the cost
and timing to rebuild the Marshalltown manufacturing facility and to
repair or replace the necessary manufacturing equipment, (3) the
timing of the receipt of insurance proceeds for property damage and
business interruption losses and the dollar amount of these
insurance proceeds, and (4) the accounting treatment and related
financial statement impact resulting from the tornado damage and
insurance recoveries. 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,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net
sales
|
$
|
1,032.9
|
|
|
$
|
1,030.2
|
|
|
$
|
2,922.2
|
|
|
$
|
3,040.4
|
|
|
Cost of goods
sold
|
734.6
|
|
|
728.3
|
|
|
2,090.3
|
|
|
2,153.8
|
|
|
Gross
profit
|
298.3
|
|
|
301.9
|
|
|
831.9
|
|
|
886.6
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
143.4
|
|
|
149.4
|
|
|
441.6
|
|
|
466.1
|
|
|
Losses (gains) and
other expenses, net
|
2.2
|
|
|
2.7
|
|
|
5.3
|
|
|
10.0
|
|
|
Restructuring
charges
|
6.1
|
|
|
0.5
|
|
|
6.5
|
|
|
1.9
|
|
|
Loss (gain), net on
sale of businesses and related property
|
0.2
|
|
|
6.2
|
|
|
9.1
|
|
|
25.8
|
|
|
(Gain) loss from
insurance recoveries, net of losses incurred
|
(7.1)
|
|
|
0.3
|
|
|
(85.4)
|
|
|
0.3
|
|
|
Income from equity
method investments
|
(3.3)
|
|
|
(2.4)
|
|
|
(10.5)
|
|
|
(10.8)
|
|
|
Operating
income
|
156.8
|
|
|
145.2
|
|
|
465.3
|
|
|
393.3
|
|
|
Pension
settlement
|
—
|
|
|
—
|
|
|
60.6
|
|
|
—
|
|
|
Interest expense,
net
|
12.5
|
|
|
10.3
|
|
|
36.5
|
|
|
28.5
|
|
|
Other expense
(income), net
|
0.6
|
|
|
1.1
|
|
|
1.7
|
|
|
2.4
|
|
|
Income from
continuing operations before income taxes
|
143.7
|
|
|
133.8
|
|
|
366.5
|
|
|
362.4
|
|
|
Provision for income
taxes
|
29.0
|
|
|
25.8
|
|
|
71.5
|
|
|
77.3
|
|
|
Income from
continuing operations
|
114.7
|
|
|
108.0
|
|
|
295.0
|
|
|
285.1
|
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
|
(Loss) income from
discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
0.4
|
|
|
Income tax
expense
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
2.1
|
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(1.7)
|
|
|
Net
income
|
$
|
114.7
|
|
|
$
|
108.0
|
|
|
$
|
294.7
|
|
|
$
|
283.4
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.97
|
|
|
$
|
2.68
|
|
|
$
|
7.54
|
|
|
$
|
6.98
|
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
(0.04)
|
|
|
Net income
|
$
|
2.97
|
|
|
$
|
2.68
|
|
|
$
|
7.53
|
|
|
$
|
6.94
|
|
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.94
|
|
|
$
|
2.65
|
|
|
$
|
7.46
|
|
|
$
|
6.90
|
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.04)
|
|
|
Net income
|
$
|
2.94
|
|
|
$
|
2.65
|
|
|
$
|
7.46
|
|
|
$
|
6.86
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
38.6
|
|
|
40.3
|
|
|
39.1
|
|
|
40.8
|
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
39.0
|
|
|
40.7
|
|
|
39.5
|
|
|
41.3
|
|
|
|
|
|
|
|
|
|
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Adjusted Segment
Net Sales and Profit (Loss)
|
(Unaudited)
|
|
(Amounts in
millions)
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Adjusted Net
Sales
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
637.6
|
|
|
$
|
594.7
|
|
|
$
|
1,792.2
|
|
|
$
|
1,764.4
|
|
Commercial
Heating & Cooling
|
253.3
|
|
|
236.9
|
|
|
687.9
|
|
|
668.1
|
|
Refrigeration
(1)
|
142.0
|
|
|
145.0
|
|
|
407.8
|
|
|
409.8
|
|
|
$
|
1,032.9
|
|
|
$
|
976.6
|
|
|
$
|
2,887.9
|
|
|
$
|
2,842.3
|
|
Adjusted Segment
Profit (Loss) (2)
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
126.5
|
|
|
$
|
113.0
|
|
|
$
|
366.6
|
|
|
$
|
317.9
|
|
Commercial
Heating & Cooling
|
47.1
|
|
|
44.8
|
|
|
116.0
|
|
|
117.6
|
|
Refrigeration
(1)
|
19.8
|
|
|
22.1
|
|
|
48.3
|
|
|
57.4
|
|
Corporate and
other
|
(18.1)
|
|
|
(28.1)
|
|
|
(54.3)
|
|
|
(61.8)
|
|
Total adjusted
segment profit
|
175.3
|
|
|
151.8
|
|
|
476.6
|
|
|
431.1
|
|
Reconciliation to
Operating Income:
|
|
|
|
|
|
|
|
Special inventory
write down
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Special product
quality adjustment
|
(0.5)
|
|
|
—
|
|
|
(1.0)
|
|
|
—
|
|
Loss (gain), net on
sale of businesses and related property
|
0.2
|
|
|
6.2
|
|
|
9.1
|
|
|
25.8
|
|
Loss (gain) from
insurance recoveries, net of losses incurred
|
1.2
|
|
|
0.3
|
|
|
(11.6)
|
|
|
0.3
|
|
Prior quarter partial
advance of insurance recoveries related to lost profits
|
8.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Items in losses
(gains) and other expenses, net that are excluded from segment
profit (loss) (2)
|
3.5
|
|
|
2.4
|
|
|
7.3
|
|
|
9.3
|
|
Restructuring
charges
|
6.1
|
|
|
0.5
|
|
|
6.5
|
|
|
1.9
|
|
Operating loss
(income) from non-core businesses (1)
|
—
|
|
|
(2.8)
|
|
|
1.0
|
|
|
0.3
|
|
Operating
income
|
$
|
156.8
|
|
|
$
|
145.2
|
|
|
$
|
465.3
|
|
|
$
|
393.3
|
|
|
|
(1)
|
Excludes the non-core
business results related to Kysor Warren, which was sold in March
2019 and the Company's business operations in Australia, Asia and
South America, which were sold in 2018.
|
(2)
|
We define segment
profit (loss) as a segment's operating income included in the
accompanying Consolidated Statements of Operations,
excluding:
|
|
• The following items in Losses (gains) and other
expenses, net:
|
|
◦
Net change in unrealized
losses (gains) on unsettled futures contracts,
|
|
◦
Special legal contingency
charges,
|
|
◦
Asbestos-related litigation,
|
|
◦
Environmental
liabilities,
|
|
◦
Other items, net,
|
|
• Special inventory write down,
|
|
• Special product quality adjustment,
|
|
• Loss (gain), net on sale of businesses and related
property,
|
|
• Prior quarter partial advance of insurance recoveries
related to lost profits,
|
|
• Loss (gain) from insurance recoveries, net of losses
incurred,
|
|
• Operating loss (income) from non-core businesses;
and
|
|
• Restructuring charges.
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Balance Sheets
|
|
|
(Amounts in
millions, except shares and par values)
|
As of September
30,
2019
|
|
As of December
31,
2018
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
46.1
|
|
|
$
|
46.3
|
|
Short-term
investments
|
2.4
|
|
|
—
|
|
Accounts and notes
receivable, net of allowances of $7.1 and $6.3 in 2019 and 2018,
respectively
|
622.2
|
|
|
472.7
|
|
Inventories,
net
|
585.3
|
|
|
509.8
|
|
Other
assets
|
61.3
|
|
|
60.6
|
|
Total current
assets
|
1,317.3
|
|
|
1,089.4
|
|
Property, plant and
equipment, net of accumulated depreciation of $807.0 and $778.5 in
2019 and 2018, respectively
|
418.8
|
|
|
408.3
|
|
Right-of-use assets
from operating leases
|
172.9
|
|
|
—
|
|
Goodwill
|
186.4
|
|
|
186.6
|
|
Deferred income
taxes
|
47.6
|
|
|
67.0
|
|
Other assets,
net
|
71.8
|
|
|
65.9
|
|
Total
assets
|
$
|
2,214.8
|
|
|
$
|
1,817.2
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Current maturities of
long-term debt
|
394.3
|
|
|
300.8
|
|
Current operating
lease liabilities
|
51.6
|
|
|
—
|
|
Accounts
payable
|
393.0
|
|
|
433.3
|
|
Accrued
expenses
|
271.0
|
|
|
272.3
|
|
Income taxes
payable
|
—
|
|
|
2.1
|
|
Total current
liabilities
|
1,109.9
|
|
|
1,008.5
|
|
Long-term
debt
|
1,056.8
|
|
|
740.5
|
|
Long-term operating
lease liabilities
|
123.0
|
|
|
—
|
|
Pensions
|
72.5
|
|
|
82.8
|
|
Other
liabilities
|
129.9
|
|
|
135.0
|
|
Total
liabilities
|
2,492.1
|
|
|
1,966.8
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
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
|
1,090.0
|
|
|
1,078.8
|
|
Retained
earnings
|
2,064.4
|
|
|
1,855.0
|
|
Accumulated other
comprehensive loss
|
(127.2)
|
|
|
(188.8)
|
|
Treasury stock, at
cost, 48,642,428 shares and 47,312,248 shares for 2019 and 2018,
respectively
|
(3,305.4)
|
|
|
(2,895.5)
|
|
Total
stockholders' deficit
|
(277.3)
|
|
|
(149.6)
|
|
Total liabilities
and stockholders' deficit
|
$
|
2,214.8
|
|
|
$
|
1,817.2
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
(Amounts in
millions)
|
For the Nine
Months Ended
September 30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
294.7
|
|
|
$
|
283.4
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Loss (gain), net on
sale of businesses and related property
|
9.1
|
|
|
25.8
|
|
Gain from insurance
recoveries, net of losses incurred
|
(11.6)
|
|
|
—
|
|
Income from equity
method investments
|
(10.5)
|
|
|
(10.8)
|
|
Dividends from
Affiliates
|
9.3
|
|
|
6.6
|
|
Restructuring
charges, net of cash paid
|
6.0
|
|
|
0.5
|
|
Provision for bad
debts
|
4.0
|
|
|
3.8
|
|
Unrealized losses on
derivative contracts
|
(0.1)
|
|
|
1.4
|
|
Stock-based
compensation expense
|
15.6
|
|
|
21.0
|
|
Depreciation and
amortization
|
53.1
|
|
|
49.4
|
|
Deferred income
taxes
|
17.0
|
|
|
(5.6)
|
|
Pension
expense
|
65.9
|
|
|
6.5
|
|
Pension
contributions
|
(1.7)
|
|
|
(20.3)
|
|
Other items,
net
|
(0.4)
|
|
|
0.3
|
|
Changes in assets and
liabilities, net of effects of divestitures:
|
|
|
|
Accounts and notes
receivable
|
(178.2)
|
|
|
(114.0)
|
|
Inventories
|
(107.0)
|
|
|
(73.7)
|
|
Other current
assets
|
1.5
|
|
|
(8.6)
|
|
Accounts
payable
|
(24.5)
|
|
|
46.9
|
|
Accrued
expenses
|
7.6
|
|
|
35.6
|
|
Income taxes payable
and receivable
|
(8.2)
|
|
|
(1.4)
|
|
Other
|
(17.1)
|
|
|
(15.5)
|
|
Net cash provided
by operating activities
|
124.5
|
|
|
231.3
|
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
1.2
|
|
|
0.1
|
|
Purchases of
property, plant and equipment
|
(77.0)
|
|
|
(60.9)
|
|
Net proceeds from
sale of businesses
|
43.5
|
|
|
115.9
|
|
Purchases of
short-term investments
|
(2.4)
|
|
|
—
|
|
Insurance recoveries
received for property damage incurred from natural
disaster
|
11.6
|
|
|
4.2
|
|
Net cash (used in)
provided by investing activities
|
(23.1)
|
|
|
59.3
|
|
Cash flows from
financing activities:
|
|
|
|
Short-term debt
payments
|
(5.3)
|
|
|
(41.1)
|
|
Short-term debt
proceeds
|
5.3
|
|
|
39.6
|
|
Asset securitization
borrowings
|
155.5
|
|
|
155.0
|
|
Asset securitization
payments
|
(58.0)
|
|
|
(53.7)
|
|
Long-term debt
payments
|
(35.0)
|
|
|
(32.9)
|
|
Borrowings from
credit facility
|
1,938.5
|
|
|
1,820.0
|
|
Payments on credit
facility
|
(1,608.5)
|
|
|
(1,766.5)
|
|
Proceeds from
employee stock purchases
|
2.5
|
|
|
2.5
|
|
Repurchases of common
stock
|
(400.0)
|
|
|
(350.2)
|
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(16.9)
|
|
|
(21.1)
|
|
Cash dividends
paid
|
(80.9)
|
|
|
(68.2)
|
|
Net cash used in
financing activities
|
(102.8)
|
|
|
(316.6)
|
|
Decrease in cash and
cash equivalents
|
(1.4)
|
|
|
(26.0)
|
|
Effect of exchange
rates on cash and cash equivalents
|
1.2
|
|
|
3.9
|
|
Cash and cash
equivalents, beginning of period
|
46.3
|
|
|
68.2
|
|
Cash and cash
equivalents, end of period
|
$
|
46.1
|
|
|
$
|
46.1
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
|
31.5
|
|
|
$
|
25.9
|
|
Income taxes paid
(net of refunds)
|
$
|
78.7
|
|
|
$
|
87.2
|
|
Insurance recoveries
received
|
$
|
138.0
|
|
|
$
|
45.0
|
|
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. During the first quarter of 2019, the
Company completed the sale of its Kysor Warren business. In the
first quarter of 2018, the Company announced the planned sales of
its businesses in Australia, Asia, and South America. The sale of
the Company's business in Australia and Asia and the related
property was completed in the second quarter of 2018 and sale of
the Company's business in South America was completed in the third
quarter of 2018. The results from operations for these businesses
have been shown in the tables below as "Non-core business results".
The prior period results have been updated to provide
period-over-period comparability.
|
|
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,
|
|
(Unaudited)
|
|
2019
|
|
2018
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
143.7
|
|
$
|
(29.0)
|
|
$
|
114.7
|
|
|
$
|
133.8
|
|
$
|
(25.8)
|
|
$
|
108.0
|
|
Restructuring
charges
|
6.1
|
|
(1.3)
|
|
4.8
|
|
|
0.5
|
|
(0.1)
|
|
0.4
|
|
Special product
quality adjustments (b)
|
(0.5)
|
|
0.1
|
|
(0.4)
|
|
|
—
|
|
—
|
|
—
|
|
Special legal
contingency charges (a)
|
0.3
|
|
(0.1)
|
|
0.2
|
|
|
0.1
|
|
—
|
|
0.1
|
|
Asbestos-related
litigation (a)
|
1.5
|
|
(0.3)
|
|
1.2
|
|
|
1.4
|
|
(0.4)
|
|
1.0
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
0.1
|
|
(0.1)
|
|
—
|
|
|
0.2
|
|
(0.1)
|
|
0.1
|
|
Environmental
liabilities (a)
|
1.1
|
|
(0.2)
|
|
0.9
|
|
|
0.2
|
|
—
|
|
0.2
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(1.7)
|
|
(1.7)
|
|
|
—
|
|
(1.7)
|
|
(1.7)
|
|
Other tax items, net
(c)
|
—
|
|
2.7
|
|
2.7
|
|
|
—
|
|
(1.4)
|
|
(1.4)
|
|
Loss on sale of
businesses
|
0.2
|
|
—
|
|
0.2
|
|
|
6.2
|
|
(3.8)
|
|
2.4
|
|
Prior quarter partial
advance of insurance recoveries related to lost profits
(g)
|
8.0
|
|
(2.1)
|
|
5.9
|
|
|
—
|
|
—
|
|
—
|
|
Loss (gain) from
insurance recoveries, net of losses incurred
|
1.2
|
|
(0.2)
|
|
1.0
|
|
|
0.3
|
|
(0.1)
|
|
0.2
|
|
Other items, net
(a)
|
0.6
|
|
(0.1)
|
|
0.5
|
|
|
0.5
|
|
—
|
|
0.5
|
|
Non-core business
results (f)
|
—
|
|
—
|
|
—
|
|
|
(2.3)
|
|
0.5
|
|
(1.8)
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
162.3
|
|
$
|
(32.3)
|
|
$
|
130.0
|
|
|
$
|
140.9
|
|
$
|
(32.9)
|
|
$
|
108.0
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
2.94
|
|
|
|
|
$
|
2.65
|
|
Restructuring
charges
|
|
|
0.12
|
|
|
|
|
0.01
|
|
Special product
quality adjustments (b)
|
|
|
(0.01)
|
|
|
|
|
—
|
|
Special legal
contingency charges (a)
|
|
|
0.01
|
|
|
|
|
—
|
|
Asbestos-related
litigation (a)
|
|
|
0.03
|
|
|
|
|
0.02
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
|
|
—
|
|
|
|
|
—
|
|
Environmental
liabilities (a)
|
|
|
0.02
|
|
|
|
|
0.01
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.04)
|
|
|
|
|
(0.04)
|
|
Other tax items, net
(c)
|
|
|
0.07
|
|
|
|
|
(0.03)
|
|
Loss on sale of
businesses
|
|
|
0.01
|
|
|
|
|
0.06
|
|
Prior quarter partial
advance of insurance recoveries related to lost profits
(g)
|
|
|
0.15
|
|
|
|
|
—
|
|
Loss (gain) from
insurance recoveries, net of losses incurred
|
|
|
0.03
|
|
|
|
|
0.01
|
|
Other items, net
(a)
|
|
|
0.01
|
|
|
|
|
0.01
|
|
Non-core business
results (f)
|
|
|
—
|
|
|
|
|
(0.05)
|
|
Change in share
counts from share-based compensation (d)
|
|
|
—
|
|
|
|
|
0.01
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
3.34
|
|
|
|
|
$
|
2.66
|
|
|
|
(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)
|
Recorded in Provision
for income taxes in the Consolidated Statements of
Operations
|
(d)
|
The impact of excess
tax benefits from the change in share-based compensation also
impacts the Company's diluted share counts. The
reconciliation of average outstanding diluted shares on a GAAP and
non-GAAP basis is included in this document.
|
(e)
|
Tax impact based on
the applicable tax rate relevant to the location and nature of the
adjustment.
|
(f)
|
Non-core business
results represent activity related to the Company's business
operations in South America and the Kysor Warren business, not
included elsewhere in the reconciliation.
|
(g)
|
During the second
quarter of 2019, the Company received a partial advance of $8
million related to lost profits incurred in the second quarter. The
Company included this amount in adjusted income in the third
quarter now that the lost profits related to the second quarter are
collected in full.
|
|
|
|
For the Nine
Months Ended September 30,
|
|
(Unaudited)
|
|
2019
|
|
2018
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
366.5
|
|
$
|
(71.5)
|
|
$
|
295.0
|
|
|
$
|
362.4
|
|
$
|
(77.3)
|
|
$
|
285.1
|
|
Restructuring
charges
|
6.5
|
|
(1.4)
|
|
5.1
|
|
|
1.9
|
|
(0.5)
|
|
1.4
|
|
Pension
settlement
|
60.6
|
|
(15.1)
|
|
45.5
|
|
|
—
|
|
—
|
|
—
|
|
Special product
quality adjustments (b)
|
(1.0)
|
|
0.2
|
|
(0.8)
|
|
|
—
|
|
—
|
|
—
|
|
Special legal
contingency charges (a)
|
0.5
|
|
(0.1)
|
|
0.4
|
|
|
1.8
|
|
(0.4)
|
|
1.4
|
|
Asbestos-related
litigation (a)
|
3.3
|
|
(0.7)
|
|
2.6
|
|
|
3.3
|
|
(0.8)
|
|
2.5
|
|
Net change in
unrealized (gains) losses on unsettled future contracts
(a)
|
(0.2)
|
|
—
|
|
(0.2)
|
|
|
1.4
|
|
(0.3)
|
|
1.1
|
|
Inventory write down
(b)
|
—
|
|
—
|
|
—
|
|
|
0.2
|
|
—
|
|
0.2
|
|
Environmental
liabilities (a)
|
2.4
|
|
(0.5)
|
|
1.9
|
|
|
1.4
|
|
(0.3)
|
|
1.1
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(7.0)
|
|
(7.0)
|
|
|
—
|
|
(6.6)
|
|
(6.6)
|
|
Other tax items, net
(c)
|
—
|
|
3.3
|
|
3.3
|
|
|
—
|
|
(4.7)
|
|
(4.7)
|
|
Loss (gain), net on
sale of businesses and related property
|
9.1
|
|
(3.5)
|
|
5.6
|
|
|
25.8
|
|
0.3
|
|
26.1
|
|
(Gain) loss from
insurance recoveries, net of losses incurred
|
(11.6)
|
|
2.9
|
|
(8.7)
|
|
|
0.3
|
|
(0.1)
|
|
0.2
|
|
Other items, net
(a)
|
1.3
|
|
(0.2)
|
|
1.1
|
|
|
1.4
|
|
(0.7)
|
|
0.7
|
|
Non-core business
results (f)
|
1.3
|
|
(0.3)
|
|
1.0
|
|
|
1.7
|
|
(0.3)
|
|
1.4
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
438.7
|
|
$
|
(93.9)
|
|
$
|
344.8
|
|
|
$
|
401.6
|
|
$
|
(91.7)
|
|
$
|
309.9
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
7.46
|
|
|
|
|
$
|
6.90
|
|
Restructuring
charges
|
|
|
0.13
|
|
|
|
|
0.03
|
|
Pension
settlement
|
|
|
1.15
|
|
|
|
|
—
|
|
Special product
quality adjustments (b)
|
|
|
(0.02)
|
|
|
|
|
—
|
|
Special legal
contingency charges (a)
|
|
|
0.01
|
|
|
|
|
0.03
|
|
Asbestos-related
litigation (a)
|
|
|
0.07
|
|
|
|
|
0.06
|
|
Net change in
unrealized (gains) losses on unsettled future contracts
(a)
|
|
|
(0.01)
|
|
|
|
|
0.03
|
|
Inventory write down
(b)
|
|
|
—
|
|
|
|
|
—
|
|
Environmental
liabilities (a)
|
|
|
0.05
|
|
|
|
|
0.03
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.18)
|
|
|
|
|
(0.16)
|
|
Other tax items, net
(c)
|
|
|
0.08
|
|
|
|
|
(0.11)
|
|
Loss (gain), net on
sale of businesses and related property
|
|
|
0.14
|
|
|
|
|
0.64
|
|
(Gain) loss from
insurance recoveries, net of losses incurred
|
|
|
(0.22)
|
|
|
|
|
—
|
|
Other items, net
(a)
|
|
|
0.03
|
|
|
|
|
0.02
|
|
Non-core business
results (f)
|
|
|
0.03
|
|
|
|
|
0.03
|
|
Change in share
counts from share-based compensation (d)
|
|
|
0.02
|
|
|
|
|
0.03
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
8.74
|
|
|
|
|
$
|
7.53
|
|
|
|
(a)
|
Recorded in
Losses and other expenses, net in the Consolidated Statements of
Operations
|
(b)
|
Recorded in Cost of
goods sold in the Consolidated Statements of Operations
|
(c)
|
Recorded in Provision
for income taxes in the Consolidated Statements of
Operations
|
(d)
|
The impact of excess
tax benefits from the change in share-based compensation also
impacts the Company's diluted share counts. The
reconciliation of average outstanding diluted shares on a GAAP and
non-GAAP basis is included in this document.
|
(e)
|
Tax impact based on
the applicable tax rate relevant to the location and nature of the
adjustment.
|
(f)
|
Non-core business
results represent activity related to the Company's business
operations in Australia, Asia, and South America and the Kysor
Warren business, not included elsewhere in the
reconciliation.
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Components of
Losses (gains) and other expenses, net
(pre-tax):
|
|
|
|
|
|
|
|
Realized losses
(gains) on settled future contracts (a)
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.4
|
|
|
$
|
(0.6)
|
|
Foreign currency
exchange (gains) losses (a)
|
(0.3)
|
|
|
0.1
|
|
|
(1.0)
|
|
|
1.2
|
|
(Gain) loss on
disposal of fixed assets (a)
|
—
|
|
|
—
|
|
|
(0.2)
|
|
|
0.1
|
|
Other operating
(gains) losses (a)
|
(1.2)
|
|
|
—
|
|
|
(1.2)
|
|
|
—
|
|
Net change in
unrealized losses (gains) on unsettled futures contracts
(b)
|
0.1
|
|
|
0.2
|
|
|
(0.2)
|
|
|
1.4
|
|
Special legal
contingency charges (b)
|
0.3
|
|
|
0.1
|
|
|
0.5
|
|
|
1.8
|
|
Asbestos-related
litigation (b)
|
1.5
|
|
|
1.4
|
|
|
3.3
|
|
|
3.3
|
|
Environmental
liabilities (b)
|
1.1
|
|
|
0.2
|
|
|
2.4
|
|
|
1.4
|
|
Other items, net
(b)
|
0.6
|
|
|
0.5
|
|
|
1.3
|
|
|
1.4
|
|
Losses (gains) and
other expenses, net (pre-tax)
|
$
|
2.2
|
|
|
$
|
2.7
|
|
|
$
|
5.3
|
|
|
$
|
10.0
|
|
|
|
(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
Earnings per Share from Continuing Operations - Diluted, a GAAP
measure, to Estimated Adjusted Earnings per Share from Continuing
Operations - Diluted, a Non-GAAP measure
|
|
|
For the Year
Ended
December 31, 2019
ESTIMATED
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
$10.65-$10.95
|
Insurance recovery
from tornado impact for damaged property, net of other non-core
EBIT charges, and fourth quarter non-cash pension settlement
charge
|
|
0.50
|
Adjusted
Earnings per share from continuing operations - diluted, a Non-GAAP
measure
|
|
$11.15-$11.45
|
|
|
Reconciliation of
Average Shares Outstanding - Diluted, a GAAP measure, to Adjusted
Average Shares Outstanding - Diluted, a Non-GAAP measure (shares in
millions):
|
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Average shares
outstanding - diluted, a GAAP measure
|
39.0
|
|
|
40.7
|
|
|
39.5
|
|
|
$
|
41.3
|
|
Impact on diluted
shares from excess tax benefits from share-based
compensation
|
(0.1)
|
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
Adjusted average
shares outstanding - diluted, a Non-GAAP measure
|
38.9
|
|
|
40.6
|
|
|
39.5
|
|
|
41.2
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Sales, a GAAP measure, to Adjusted Net Sales, a Non-GAAP
measure (dollars in millions)
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended September 30,
|
|
For the Three
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales, a GAAP
measure
|
$
|
142.0
|
|
|
$
|
198.6
|
|
|
$
|
1,032.9
|
|
|
$
|
1,030.2
|
|
Net sales from
non-core businesses (a)
|
—
|
|
|
53.6
|
|
|
—
|
|
|
53.6
|
|
Adjusted net
sales, a Non-GAAP measure
|
$
|
142.0
|
|
|
$
|
145.0
|
|
|
$
|
1,032.9
|
|
|
$
|
976.6
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in South
America and the Kysor Warren business.
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Nine
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales, a GAAP
measure
|
$
|
442.1
|
|
|
$
|
607.9
|
|
|
$
|
2,922.2
|
|
|
$
|
3,040.4
|
|
Net sales from
non-core businesses (a)
|
34.3
|
|
|
198.1
|
|
|
34.3
|
|
|
198.1
|
|
Adjusted net
sales, a Non-GAAP measure
|
$
|
407.8
|
|
|
$
|
409.8
|
|
|
$
|
2,887.9
|
|
|
$
|
2,842.3
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
Reconciliation of
Gross Profit, a GAAP measure, to Adjusted Gross Profit, a Non-GAAP
measure (dollars in millions)
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended September 30,
|
|
For the Three
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross profit, a
GAAP measure
|
$
|
47.4
|
|
|
$
|
58.6
|
|
|
$
|
298.3
|
|
|
$
|
301.9
|
|
Non-GAAP adjustments
to gross profit
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
Gross profit from
non-core businesses (a)
|
—
|
|
|
9.1
|
|
|
—
|
|
|
9.1
|
|
Adjusted Gross
profit, a Non-GAAP measure
|
$
|
47.4
|
|
|
$
|
49.5
|
|
|
$
|
297.8
|
|
|
$
|
292.8
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in South
America and the Kysor Warren business.
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Nine
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross profit, a
GAAP measure
|
$
|
135.6
|
|
|
$
|
175.0
|
|
|
$
|
831.9
|
|
|
$
|
886.6
|
|
Non-GAAP adjustments
to gross profit
|
—
|
|
|
(0.2)
|
|
|
1.0
|
|
|
(0.2)
|
|
Gross profit from
non-core businesses (a)
|
3.6
|
|
|
34.0
|
|
|
3.6
|
|
|
34.0
|
|
Adjusted Gross
profit, a Non-GAAP measure
|
$
|
132.0
|
|
|
$
|
141.2
|
|
|
$
|
827.3
|
|
|
$
|
852.8
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
Reconciliation of
Segment Profit, a GAAP measure, to Adjusted Segment
profit, a Non-GAAP measure (dollars in
millions)
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended September 30,
|
|
For the Three
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
profit, a GAAP measure
|
$
|
19.8
|
|
|
$
|
24.9
|
|
|
$
|
175.3
|
|
|
$
|
154.6
|
|
(Loss) profit from
non-core businesses (a)
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
Adjusted Segment
profit, a Non-GAAP measure
|
$
|
19.8
|
|
|
$
|
22.1
|
|
|
$
|
175.3
|
|
|
$
|
151.8
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in South
America and the Kysor Warren business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Nine
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
profit, a GAAP measure
|
$
|
47.3
|
|
|
$
|
57.1
|
|
|
$
|
475.6
|
|
|
$
|
430.8
|
|
(Loss) profit from
non-core businesses (a)
|
(1.0)
|
|
|
(0.3)
|
|
|
(1.0)
|
|
|
(0.3)
|
|
Adjusted Segment
profit, a Non-GAAP measure
|
$
|
48.3
|
|
|
$
|
57.4
|
|
|
$
|
476.6
|
|
|
$
|
431.1
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
Reconciliation of
Selling, general and administrative expenses, a GAAP measure, to
Adjusted Selling, general and administrative expenses, a Non-GAAP
measure (dollars in millions)
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended September 30,
|
|
For the Three
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Selling, general
and administrative expenses, a GAAP measure
|
$
|
30.4
|
|
|
$
|
37.2
|
|
|
$
|
143.4
|
|
|
$
|
149.4
|
|
Selling, general and
administrative expenses from non-core businesses (a)
|
—
|
|
|
6.2
|
|
|
—
|
|
|
6.2
|
|
Adjusted Selling,
general and administrative expenses, a Non-GAAP
measure
|
$
|
30.4
|
|
|
$
|
31.0
|
|
|
$
|
143.4
|
|
|
$
|
143.2
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in South
America and the Kysor Warren business.
|
|
|
|
|
|
|
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Nine
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Selling, general
and administrative expenses, a GAAP measure
|
$
|
96.3
|
|
|
$
|
129.1
|
|
|
$
|
441.6
|
|
|
$
|
466.1
|
|
Selling, general and
administrative expenses from non-core businesses (a)
|
4.6
|
|
|
34.6
|
|
|
4.6
|
|
|
34.6
|
|
Adjusted Selling,
general and administrative expenses, a Non-GAAP
measure
|
$
|
91.7
|
|
|
$
|
94.5
|
|
|
$
|
437.0
|
|
|
$
|
431.5
|
|
|
|
|
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash provided
by operating activities, a GAAP measure
|
$
|
235.5
|
|
|
$
|
266.3
|
|
|
$
|
124.5
|
|
|
$
|
231.3
|
|
Purchases of
property, plant and equipment
|
(23.5)
|
|
|
(17.5)
|
|
|
(77.0)
|
|
|
(60.9)
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.4
|
|
|
—
|
|
|
1.2
|
|
|
0.1
|
|
Insurance recoveries
received for property damage incurred from natural
disaster
|
(1.2)
|
|
|
4.2
|
|
|
11.6
|
|
|
4.2
|
|
Free cash flow, a
Non-GAAP measure
|
211.2
|
|
|
253.0
|
|
|
60.3
|
|
|
174.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
|
|
|
|
|
|
Trailing
Twelve
Months to
September
30, 2019
|
Adjusted EBIT
(b)(a)
|
|
|
|
|
|
|
$
|
588.9
|
|
Depreciation and
amortization expense (c)
|
|
|
|
|
|
|
68.8
|
|
EBITDA (b +
c)
|
|
|
|
|
|
|
$
|
657.7
|
|
Total debt at
September 30, 2019 (d)
|
|
|
|
|
|
|
$
|
1,451.1
|
|
Total Debt to
EBITDA ratio ((d / (b + c))
|
|
|
|
|
|
|
2.2
|
|
|
(a) Excludes Non-Core
business results representing the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
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, 2019
|
Income from
continuing operations before income taxes, a GAAP
measure
|
$
|
472.0
|
|
Items in Losses
(gains) and other expenses, net that are excluded from segment
profit
|
8.9
|
|
Special product
quality adjustments
|
(1.0)
|
|
Restructuring
charges
|
7.6
|
|
Interest expense,
net
|
46.3
|
|
Pension
settlement
|
61.0
|
|
Loss (gain), net on
sale of businesses and related property
|
10.9
|
|
(Gain) loss from
insurance recoveries, net of losses incurred
|
(22.8)
|
|
Non-core business
results (a)
|
3.4
|
|
Other expense
(income), net
|
2.6
|
|
Adjusted EBIT per
above, a Non-GAAP measure
|
$
|
588.9
|
|
|
(a) Non-core
businesses results represent activity related to the Company's
business operations in Australia, Asia, and South America and the
Kysor Warren business, not included elsewhere in the
reconciliation.
|
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SOURCE Lennox International Inc.