DALLAS, Oct. 25, 2021 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII), a global leader in energy-efficient
climate-control solutions, today reported financial results for the
third quarter of 2021. All comparisons are to the prior-year
period.
Lennox International reported record third-quarter revenue of
$1.06 billion, up slightly from the
prior-year quarter. Foreign exchange was neutral. GAAP operating
income was $163 million, down 3%.
GAAP earnings per share from continuing operations was $3.41 compared to $3.42 in the prior-year quarter.
Total segment profit was $165
million, down 7%, and total segment margin was 15.5%, down
120 basis points. Adjusted earnings per share from continuing
operations was $3.40, down 4%.
"Demand remained strong across all our end markets in the third
quarter, but global supply chain and Covid-19 disruptions to
production and our labor force materially impacted financial
performance," said Chairman and CEO Todd
Bluedorn. "The company had negative impact of approximately
$75 million to revenue and
$25 million to operating profit from
these constraints in the third quarter, and we currently expect a
similar level in the fourth quarter.
"For our Residential business in the third quarter, revenue was
down 2%. Residential profit was down 6%, and segment margin was
down 90 basis points to 20.3%. Our Commercial business was hit
especially hard by Covid-19 in its Arkansas factory in the quarter, on top of
supply chain disruptions. Segment margin was down 800 basis points
to 10.7%. Commercial profit declined 42% on 2% revenue growth. In
Refrigeration, revenue was up 10%, led by more than 20% growth in
North America. Europe revenue was down. Refrigeration profit
rose 12% as segment margin expanded 20 basis points to 10.6%.
"Looking ahead for the company overall, demand remains strong.
But global supply chain bottlenecks and shortages are not expected
to be resolved soon, and Covid-19 adds more complexity to labor and
production disruptions. We are narrowing our 2021 guidance and now
expect revenue growth of 13-15% and adjusted EPS from continuing
operations of $12.10-$12.30 for the full year."
FINANCIAL HIGHLIGHTS
Revenue: Revenue was a third-quarter record $1.06 billion, up slightly. Volume was down, and
price was up. Mix and foreign exchange were neutral to revenue.
Gross Profit: Gross profit was $295 million, down 9%. Gross margin was 27.9%,
down 270 basis points. Gross profit was negatively impacted by
lower volume due to global supply chain and Covid-19 disruptions to
production, factory inefficiencies, unfavorable mix, and higher
material, freight, distribution, tariffs, warranty and other
product costs. Favorable price was a partial offset.
Income from Continuing Operations: On a GAAP basis,
income from continuing operations for the third quarter was
$126.3 million, or $3.41 per share, compared to $131.7 million, or $3.42 per share, in the prior-year quarter.
Adjusted income from continuing operations in the third quarter
was $125.8 million, or $3.40 per share, compared to $136.1 million, or $3.53 per share, in the prior-year quarter.
Adjusted income from continuing operations for the third quarter of
2021 excludes a net after-tax benefit of $0.5 million, consisting of: a benefit of
$2.7 million for excess tax benefits
from share-based compensation, a net charge of $2.4 million for items excluded from segment
profit, and a net benefit of $0.2
million for other items.
Cash from Operations, Free Cash Flow and Total
Debt: Net cash from operations in the third quarter was
$222 million compared to $440 million in the prior-year quarter. Capital
expenditures were $23 million in the
third quarter compared to approximately $12
million in the prior-year quarter. Free cash flow was
$199 million compared to $428 million in the third quarter a year ago.
Total debt at the end of the third quarter was $1.28 billion. Total cash, cash equivalents and
short-term investments were $44
million at the end of the quarter. The company paid
$34 million in dividends in the third
quarter and repurchased $200 million
of stock.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the
Residential Heating & Cooling business segment was $711 million, down 2%. Foreign exchange was
neutral to revenue. Segment profit was $144
million, down 6%, and segment margin was 20.3%, down 90
basis points. Residential results were primarily impacted by lower
volume due to global supply chain and Covid-19 disruptions to
production, factory inefficiencies, unfavorable mix, higher
material, freight, distribution, tariffs and other product costs.
Partial offsets included favorable price and lower SG&A
expenses.
Commercial Heating & Cooling
Revenue in the
Commercial Heating & Cooling business segment was up 2% to
$212 million. Foreign exchange was
neutral to revenue. Segment profit was $23
million, down 42%, and segment margin was 10.7%, down 800
basis points. Commercial results were primarily impacted by lower
volume due to global supply chain and Covid-19 disruptions to
production, factory inefficiencies, higher material, freight,
distribution, tariffs and other product costs. Partial offsets
included favorable price and mix.
Refrigeration
Revenue in the Refrigeration business
segment was up 10% to $137 million.
Foreign exchange was neutral to revenue. Segment profit rose 12% to
$15 million. Segment margin expanded
20 basis points to 10.6%. Global supply chain and Covid-19
disruptions to production constrained revenue and profit growth.
Refrigeration results were negatively impacted by factory
inefficiencies and higher material, freight and SG&A costs.
Results were positively impacted by higher volume and favorable
price.
FULL-YEAR GUIDANCE
- Narrowing 2021 guidance for revenue growth from 12-16% to
13-15%; foreign exchange is still expected to be 1% favorable to
revenue growth for the full year.
- Narrowing 2021 guidance for GAAP EPS from continuing operations
from $11.97-$12.57 to $11.97-$12.17.
- Narrowing 2021 guidance for adjusted EPS from continuing
operations from $12.10-$12.70 to $12.10-$12.30.
- Updating 2021 corporate expense guidance from approximately
$100 million to $95 million.
- Reiterating 2021 effective tax rate guidance of approximately
20% on an adjusted basis for the full year.
- Reiterating 2021 capital expenditures guidance of approximately
$135 million.
- Reiterating 2021 free cash flow guidance of approximately
$400 million.
CONFERENCE CALL INFORMATION
A conference call to
discuss the company's third-quarter results and outlook will be
held this morning at 8:30 a.m. Central
time. To listen, call the conference call line at
844-291-6362 (U.S.) or 234-720-6995 (international) at least 10
minutes prior to the scheduled start time and use participant code
2176247. The conference call also will be webcast on Lennox
International's web site at www.lennoxinternational.com. A replay
will be available from approximately 11:00
a.m. Central time on October 25
through November 8, 2021 by dialing 866-207-1041 (U.S.) or
402-970-0847 (international) and using access code 7923655. The
call also will be archived on the company's website.
ABOUT LENNOX INTERNATIONAL
Lennox International Inc.
is a global leader in energy-efficient climate-control solutions.
Dedicated to sustainability and creating comfortable and healthier
environments for our residential and commercial customers while
reducing their carbon footprint, we lead the field in innovation
with our air conditioning, heating, indoor air quality, and
refrigeration systems. Lennox International stock is listed on the
New York Stock Exchange and traded under the symbol "LII".
Additional information on Lennox International 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 2021 full-year outlook and expected consolidated and
segment financial results for 2021, 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 risks that the North American unitary
HVAC and refrigeration markets perform worse than current
assumptions. Additional risks include, but are not limited to: the
impact of higher raw material prices, availability and timely
delivery of raw materials and other components, the impact of new
or increased 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, a
decline in new construction activity and related demand for
products and services, and any resurgence of the COVID-19 pandemic
and its economic impact on the company and its employees and
customers. 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,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
sales
|
$
|
1,059.9
|
|
|
$
|
1,055.0
|
|
|
$
|
3,229.3
|
|
|
$
|
2,720.1
|
|
Cost of goods
sold
|
764.7
|
|
|
731.7
|
|
|
2,294.5
|
|
|
1,955.3
|
|
Gross
profit
|
295.2
|
|
|
323.3
|
|
|
934.8
|
|
|
764.8
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
134.2
|
|
|
151.8
|
|
|
447.4
|
|
|
412.7
|
|
Losses (gains) and
other expenses, net
|
2.1
|
|
|
3.4
|
|
|
4.7
|
|
|
5.6
|
|
Restructuring
charges
|
0.3
|
|
|
0.1
|
|
|
1.6
|
|
|
10.6
|
|
Loss from natural
disasters, net of insurance recoveries
|
—
|
|
|
4.9
|
|
|
—
|
|
|
7.6
|
|
Income from equity
method investments
|
(4.1)
|
|
|
(4.0)
|
|
|
(11.6)
|
|
|
(11.2)
|
|
Operating
income
|
162.7
|
|
|
167.1
|
|
|
492.7
|
|
|
339.5
|
|
Pension
settlements
|
0.3
|
|
|
0.3
|
|
|
1.1
|
|
|
0.3
|
|
Interest expense,
net
|
6.5
|
|
|
6.5
|
|
|
18.8
|
|
|
22.2
|
|
Other expense
(income), net
|
1.1
|
|
|
1.1
|
|
|
2.9
|
|
|
3.3
|
|
Income from continuing
operations before income taxes
|
154.8
|
|
|
159.2
|
|
|
469.9
|
|
|
313.7
|
|
Provision for income
taxes
|
28.5
|
|
|
27.5
|
|
|
89.4
|
|
|
68.8
|
|
Income from
continuing operations
|
126.3
|
|
|
131.7
|
|
|
380.5
|
|
|
244.9
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
Loss from discontinued
operations before income taxes
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
(0.9)
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6)
|
|
Loss from discontinued
operations
|
—
|
|
|
—
|
|
|
(0.1)
|
|
|
(0.3)
|
|
Net
income
|
$
|
126.3
|
|
|
$
|
131.7
|
|
|
$
|
380.4
|
|
|
$
|
244.6
|
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
|
3.43
|
|
|
$
|
3.44
|
|
|
$
|
10.17
|
|
|
$
|
6.39
|
|
Loss from discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Net income
|
$
|
3.43
|
|
|
$
|
3.44
|
|
|
$
|
10.17
|
|
|
$
|
6.38
|
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
|
3.41
|
|
|
$
|
3.42
|
|
|
$
|
10.10
|
|
|
$
|
6.35
|
|
Loss from discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Net income
|
$
|
3.41
|
|
|
$
|
3.42
|
|
|
$
|
10.10
|
|
|
$
|
6.34
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
36.8
|
|
|
38.3
|
|
|
37.4
|
|
|
38.3
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
37.0
|
|
|
38.6
|
|
|
37.7
|
|
|
38.6
|
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
Sales
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
711.0
|
|
|
$
|
722.0
|
|
|
$
|
2,155.3
|
|
|
$
|
1,808.8
|
|
Commercial
Heating & Cooling
|
211.5
|
|
|
207.9
|
|
|
663.4
|
|
|
574.6
|
|
Refrigeration
|
137.4
|
|
|
125.1
|
|
|
410.6
|
|
|
336.7
|
|
|
$
|
1,059.9
|
|
|
$
|
1,055.0
|
|
|
$
|
3,229.3
|
|
|
$
|
2,720.1
|
|
Segment Profit
(Loss) (1)
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
144.0
|
|
|
$
|
153.0
|
|
|
$
|
430.1
|
|
|
$
|
312.8
|
|
Commercial
Heating & Cooling
|
22.6
|
|
|
38.8
|
|
|
95.3
|
|
|
93.1
|
|
Refrigeration
|
14.5
|
|
|
13.0
|
|
|
35.8
|
|
|
22.6
|
|
Corporate and
other
|
(16.3)
|
|
|
(28.3)
|
|
|
(59.2)
|
|
|
(61.3)
|
|
Total segment
profit
|
164.8
|
|
|
176.5
|
|
|
502.0
|
|
|
367.2
|
|
Reconciliation to
Operating Income:
|
|
|
|
|
|
|
|
Special product
quality adjustments
|
(1.1)
|
|
|
—
|
|
|
(1.0)
|
|
|
(1.0)
|
|
Loss from natural
disasters, net of insurance recoveries
|
—
|
|
|
4.9
|
|
|
—
|
|
|
7.6
|
|
Items in Losses
(gains) and other expenses, net which are excluded from
segment profit (loss) (1)
|
2.9
|
|
|
4.4
|
|
|
8.7
|
|
|
10.5
|
|
Restructuring
charges
|
0.3
|
|
|
0.1
|
|
|
1.6
|
|
|
10.6
|
|
Operating
income
|
$
|
162.7
|
|
|
$
|
167.1
|
|
|
$
|
492.7
|
|
|
$
|
339.5
|
|
|
(1)
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,
|
|
|
◦
|
Charges incurred
related to COVID-19 pandemic; and
|
|
|
◦
|
Other items,
net,
|
|
|
|
|
•
|
Special product
quality adjustments
|
|
•
|
Loss from natural
disasters, net of insurance recoveries; and
|
|
•
|
Restructuring
charges.
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Consolidated
Balance Sheets
|
|
|
(Amounts in
millions, except shares and par values)
|
As of
September
30, 2021
|
|
As of December
31,
2020
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
39.4
|
|
|
$
|
123.9
|
|
Short-term
investments
|
4.9
|
|
|
5.1
|
|
Accounts and notes
receivable, net of allowances of $10.6 and $9.6 in 2021 and
2020,
respectively
|
580.6
|
|
|
448.3
|
|
Inventories,
net
|
461.0
|
|
|
439.4
|
|
Other
assets
|
99.0
|
|
|
70.9
|
|
Total current
assets
|
1,184.9
|
|
|
1,087.6
|
|
Property, plant and
equipment, net of accumulated depreciation of $918.2 and $880.6
in
2021 and 2020, respectively
|
480.3
|
|
|
464.3
|
|
Right-of-use assets
from operating leases
|
177.1
|
|
|
194.4
|
|
Goodwill
|
186.7
|
|
|
186.9
|
|
Deferred income
taxes
|
10.3
|
|
|
13.2
|
|
Other assets,
net
|
84.2
|
|
|
86.1
|
|
Total
assets
|
$
|
2,123.5
|
|
|
$
|
2,032.5
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
|
300.6
|
|
|
$
|
9.9
|
|
Current operating
lease liabilities
|
54.2
|
|
|
55.0
|
|
Accounts
payable
|
401.6
|
|
|
340.3
|
|
Accrued
expenses
|
344.0
|
|
|
296.1
|
|
Total current
liabilities
|
1,100.4
|
|
|
701.3
|
|
Long-term
debt
|
977.6
|
|
|
970.7
|
|
Long-term operating
lease liabilities
|
126.2
|
|
|
142.8
|
|
Pensions
|
99.3
|
|
|
92.5
|
|
Other
liabilities
|
154.8
|
|
|
142.3
|
|
Total
liabilities
|
2,458.3
|
|
|
2,049.6
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Preferred stock, $0.01
par value, 25,000,000 shares authorized, no shares issued or
outstanding
|
—
|
|
|
—
|
|
Common stock, $0.01
par value, 200,000,000 shares authorized, 87,170,197 shares
issued
|
0.9
|
|
|
0.9
|
|
Additional paid-in
capital
|
1,127.5
|
|
|
1,113.2
|
|
Retained
earnings
|
2,669.1
|
|
|
2,385.8
|
|
Accumulated other
comprehensive loss
|
(101.4)
|
|
|
(97.2)
|
|
Treasury stock, at
cost, 50,581,517 shares and 48,820,969 shares for 2021 and
2020,
respectively
|
(4,030.9)
|
|
|
(3,419.8)
|
|
Total
stockholders' deficit
|
(334.8)
|
|
|
(17.1)
|
|
Total liabilities
and stockholders' deficit
|
$
|
2,123.5
|
|
|
$
|
2,032.5
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
(Amounts in
millions)
|
For the Nine
Months Ended
September 30,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$380.4
|
|
$244.6
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Income from equity
method investments
|
(11.6)
|
|
(11.2)
|
Dividends from
affiliates
|
9.1
|
|
9.3
|
Restructuring charges,
net of cash paid
|
1.1
|
|
3.5
|
Provision for credit
losses
|
4.3
|
|
5.0
|
Unrealized losses on
derivative contracts
|
(0.2)
|
|
0.5
|
Stock-based
compensation expense
|
16.8
|
|
18.4
|
Depreciation and
amortization
|
53.3
|
|
55.4
|
Deferred income
taxes
|
(2.2)
|
|
5.6
|
Pension
expense
|
8.4
|
|
7.7
|
Pension
contributions
|
(1.1)
|
|
(2.8)
|
Other items,
net
|
0.1
|
|
2.0
|
Changes in assets and
liabilities:
|
|
|
|
Accounts and notes
receivable
|
(139.5)
|
|
(69.3)
|
Inventories
|
(21.1)
|
|
137.6
|
Other current
assets
|
(13.1)
|
|
2.0
|
Accounts
payable
|
65.0
|
|
(2.4)
|
Accrued
expenses
|
49.4
|
|
29.6
|
Income taxes payable /
(receivable), net
|
(10.3)
|
|
6.8
|
Other, net
|
7.5
|
|
3.9
|
Net cash provided
by operating activities
|
396.3
|
|
446.2
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.7
|
|
0.7
|
Purchases of property,
plant and equipment
|
(68.5)
|
|
(55.9)
|
Proceeds from
(purchases of) short-term investments
|
0.2
|
|
(1.3)
|
Net cash used in
investing activities
|
(67.6)
|
|
(56.5)
|
Cash flows from
financing activities:
|
|
|
|
Short-term debt
payments
|
—
|
|
(4.6)
|
Short-term debt
borrowings
|
—
|
|
4.6
|
Asset securitization
borrowings
|
504.0
|
|
91.0
|
Asset securitization
payments
|
(214.0)
|
|
(376.0)
|
Long-term debt
borrowings
|
—
|
|
600.0
|
Long-term debt
payments
|
(3.0)
|
|
(5.4)
|
Borrowings from credit
facility
|
1,021.4
|
|
1,509.5
|
Payments on credit
facility
|
(1,012.5)
|
|
(1,980.5)
|
Payments of deferred
financing costs
|
—
|
|
(7.1)
|
Proceeds from employee
stock purchases
|
2.5
|
|
2.2
|
Repurchases of common
stock
|
(600.0)
|
|
(100.0)
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(16.1)
|
|
(10.1)
|
Cash dividends
paid
|
(92.8)
|
|
(88.6)
|
Net cash used in
financing activities
|
(410.5)
|
|
(365.0)
|
(Decrease) increase
in cash and cash equivalents
|
(81.8)
|
|
24.7
|
Effect of exchange
rates on cash and cash equivalents
|
(2.7)
|
|
(7.0)
|
Cash and cash
equivalents, beginning of period
|
123.9
|
|
37.3
|
Cash and cash
equivalents, end of period
|
$39.4
|
|
$55.0
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$17.7
|
|
$19.0
|
Income taxes paid (net
of refunds)
|
$101.6
|
|
$55.1
|
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,
|
|
(Unaudited)
|
|
2021
|
|
2020
|
|
Pre-Tax
|
Tax Impact (d)
|
After
Tax
|
|
Pre-Tax
|
Tax Impact (d)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
154.8
|
|
$
|
(28.5)
|
|
$
|
126.3
|
|
|
$
|
159.2
|
|
$
|
(27.5)
|
|
$
|
131.7
|
|
Restructuring
charges
|
0.3
|
|
(0.1)
|
|
0.2
|
|
|
0.1
|
|
—
|
|
0.1
|
|
Pension
settlements
|
0.3
|
|
(0.1)
|
|
0.2
|
|
|
0.3
|
|
(0.1)
|
|
0.2
|
|
Special product
quality adjustments (b)
|
(1.1)
|
|
0.2
|
|
(0.9)
|
|
|
—
|
|
—
|
|
—
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
2.9
|
|
(0.5)
|
|
2.4
|
|
|
4.4
|
|
(1.2)
|
|
3.2
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(2.7)
|
|
(2.7)
|
|
|
—
|
|
(2.8)
|
|
(2.8)
|
|
Other tax items, net
(c)
|
—
|
|
0.3
|
|
0.3
|
|
|
—
|
|
0.1
|
|
0.1
|
|
Loss from natural
disasters, net of insurance recoveries (e)
|
—
|
|
—
|
|
—
|
|
|
4.9
|
|
(1.3)
|
|
3.6
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
157.2
|
|
$
|
(31.4)
|
|
$
|
125.8
|
|
|
$
|
168.9
|
|
$
|
(32.8)
|
|
$
|
136.1
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
3.41
|
|
|
|
|
$
|
3.42
|
|
Restructuring
charges
|
|
|
0.01
|
|
|
|
|
—
|
|
Pension
settlements
|
|
|
0.01
|
|
|
|
|
0.01
|
|
Special product
quality adjustments (b)
|
|
|
(0.02)
|
|
|
|
|
—
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
|
|
0.06
|
|
|
|
|
0.08
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.08)
|
|
|
|
|
(0.07)
|
|
Other tax items, net
(c)
|
|
|
0.01
|
|
|
|
|
—
|
|
Loss from natural
disasters, net of insurance recoveries (e)
|
|
|
—
|
|
|
|
|
0.09
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
3.40
|
|
|
|
|
$
|
3.53
|
|
|
(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) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(e) Recorded in Loss
from natural disasters, net of insurance recoveries in the
Consolidated Statement of Operations.
|
|
|
|
For the Nine
Months Ended September 30,
|
|
(Unaudited)
|
|
2021
|
|
2020
|
|
Pre-Tax
|
Tax
Impact (d)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (d)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
469.9
|
|
$
|
(89.4)
|
|
$
|
380.5
|
|
|
$
|
313.7
|
|
$
|
(68.8)
|
|
$
|
244.9
|
|
Restructuring
charges
|
1.6
|
|
(0.3)
|
|
1.3
|
|
|
10.6
|
|
(2.4)
|
|
8.2
|
|
Pension
settlements
|
1.1
|
|
(0.2)
|
|
0.9
|
|
|
0.3
|
|
(0.1)
|
|
0.2
|
|
Special product
quality adjustments (b)
|
(1.0)
|
|
0.2
|
|
(0.8)
|
|
|
(1.0)
|
|
0.2
|
|
(0.8)
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
8.7
|
|
(1.7)
|
|
7.0
|
|
|
10.5
|
|
(2.4)
|
|
8.1
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(6.4)
|
|
(6.4)
|
|
|
|
(2.8)
|
|
(2.8)
|
|
Other tax items, net
(c)
|
—
|
|
2.3
|
|
2.3
|
|
|
—
|
|
8.2
|
|
8.2
|
|
Loss from natural
disasters, net of insurance recoveries (e)
|
—
|
|
—
|
|
—
|
|
|
7.6
|
|
(1.9)
|
|
5.7
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
480.3
|
|
$
|
(95.5)
|
|
$
|
384.8
|
|
|
$
|
341.7
|
|
$
|
(70.0)
|
|
$
|
271.7
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
10.10
|
|
|
|
|
$
|
6.35
|
|
Restructuring
charges
|
|
|
0.03
|
|
|
|
|
0.21
|
|
Pension
settlements
|
|
|
0.02
|
|
|
|
|
0.01
|
|
Special product
quality adjustments (b)
|
|
|
(0.02)
|
|
|
|
|
(0.02)
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
|
|
0.20
|
|
|
|
|
0.21
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.17)
|
|
|
|
|
(0.07)
|
|
Other tax items, net
(c)
|
|
|
0.06
|
|
|
|
|
0.21
|
|
Loss from natural
disasters, net of insurance recoveries (e)
|
|
|
—
|
|
|
|
|
0.15
|
|
Change in share counts
from share-based compensation (f)
|
|
|
0.01
|
|
|
|
|
—
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
10.23
|
|
|
|
|
$
|
7.05
|
|
|
(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) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(e) Recorded in Loss
from natural disasters, net of insurance recoveries in the
Consolidated Statement of Operations.
|
(f) The impact of
excess tax benefits from the change in stock-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.
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(Unaudited)
|
|
(Unaudited)
|
Components of
Losses (gains) and other expenses, net
(pre-tax):
|
|
|
|
|
|
|
|
Realized (gains)
losses on settled future contracts (a)
|
$
|
(0.2)
|
|
|
$
|
—
|
|
|
$
|
(0.9)
|
|
|
$
|
0.2
|
|
Foreign currency
exchange gains (a)
|
—
|
|
|
(0.4)
|
|
|
(1.6)
|
|
|
(3.0)
|
|
Gain on disposal of
fixed assets (a)
|
(0.1)
|
|
|
(0.2)
|
|
|
(0.6)
|
|
|
(0.4)
|
|
Other operating
income (a)
|
(0.5)
|
|
|
(0.4)
|
|
|
(0.9)
|
|
|
(1.7)
|
|
Net change in
unrealized losses (gains) on unsettled futures contracts
(b)
|
0.2
|
|
|
(1.4)
|
|
|
0.1
|
|
|
—
|
|
Special legal
contingency charges (b)
|
0.1
|
|
|
0.2
|
|
|
1.0
|
|
|
0.9
|
|
Asbestos-related
litigation (b)
|
1.8
|
|
|
2.4
|
|
|
4.5
|
|
|
1.9
|
|
Environmental
liabilities (b)
|
0.3
|
|
|
0.3
|
|
|
1.8
|
|
|
1.5
|
|
Charges incurred
related to COVID-19 pandemic (b)
|
0.8
|
|
|
3.0
|
|
|
1.9
|
|
|
6.4
|
|
Other items, net
(b)
|
(0.3)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(0.2)
|
|
Losses (gains) and
other expenses, net (pre-tax)
|
$
|
2.1
|
|
|
$
|
3.4
|
|
|
$
|
4.7
|
|
|
$
|
5.6
|
|
|
(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 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, 2021
ESTIMATED
|
Estimated Earnings
per share from continuing operations - diluted, a GAAP
measure
|
|
$11.97-$12.17
|
Other non-core EBIT
charges and other non-core tax items
|
|
(0.13)
|
Estimated Adjusted
Earnings per share from continuing operations - diluted, a Non-GAAP
measure
|
|
$12.10-$12.30
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Average shares
outstanding - diluted, a GAAP measure
|
37.0
|
|
38.6
|
|
|
37.7
|
|
38.6
|
|
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
|
37.0
|
|
38.5
|
|
|
37.6
|
|
38.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided
by operating activities
|
$
|
221.8
|
|
|
$
|
439.7
|
|
|
$
|
396.3
|
|
|
$
|
446.2
|
|
Purchases of property,
plant and equipment
|
(23.0)
|
|
|
(12.4)
|
|
|
(68.5)
|
|
|
(55.9)
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.1
|
|
|
0.4
|
|
|
0.7
|
|
|
0.7
|
|
Free cash flow, a
Non-GAAP measure
|
$
|
198.9
|
|
|
$
|
427.7
|
|
|
$
|
328.5
|
|
|
$
|
391.0
|
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
|
|
|
|
|
|
Trailing
Twelve
Months to
September 30,
2021
|
Adjusted EBIT
(a)
|
|
|
|
|
|
|
$
|
641.5
|
|
Depreciation and
amortization expense (b)
|
|
|
|
|
|
|
68.3
|
|
EBITDA (a +
b)
|
|
|
|
|
|
|
$
|
709.8
|
|
Total debt at
September 30, 2021 (c)
|
|
|
|
|
|
|
$
|
1,278.2
|
|
Total Debt to
EBITDA ratio ((c / (a + b))
|
|
|
|
|
|
|
1.8
|
|
|
|
|
|
|
|
Reconciliation of
Income From Continuing Operations Before Income Taxes, a GAAP
measure to Adjusted EBIT, a Non-GAAP measure
|
|
|
|
|
|
|
|
Trailing
Twelve
Months to
September 30,
2021
|
Income from
continuing operations before income taxes, a GAAP
measure
|
$
|
601.4
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit
|
11.5
|
|
Special product
quality adjustments
|
1.0
|
|
Restructuring
charges
|
1.8
|
|
Interest expense,
net
|
24.9
|
|
Pension
settlements
|
1.4
|
|
Loss from natural
disasters, net of insurance recoveries
|
(4.5)
|
|
Other expense
(income), net
|
4.0
|
|
Adjusted EBIT per
above, a Non-GAAP measure
|
$
|
641.5
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/lennox-international-reports-third-quarter-results-301406977.html
SOURCE Lennox International Inc.