Lennox International Reports First Quarter Earnings; Revenues Increase 46%
DALLAS, April 25 /PRNewswire/ -- Lennox International Inc. (NYSE: LII) announced earnings for first quarter 2000 today. Total consolidated sales for first quarter 2000 increased 46% to $716 million, up from $489 million in first quarter 1999. Company-wide organic sales growth, adjusted for sales to company-owned dealers and currency fluctuations, was 4%. International revenues outside of the U.S. and Canada grew by 47% in the quarter, representing 15% of total corporate sales.
Quarterly operating income for the consolidated company grew by 18.6% from $19.8 million in first quarter 1999 to $23.5 million. As a percentage of sales, operating income was 4.0% for 1999 and 3.3% for first quarter 2000. EBITDA in first quarter was $44.1 million, a 32% increase from EBITDA in the same period a year ago.
Net income for the quarter decreased to $5.7 million from $6.6 million in 1999. Net income was impacted by incremental interest expenses of $6.2 million mainly due to increased borrowing to fund acquisitions, lower revenues at the company's Armstrong unit that had inflated first quarter 1999 sales in anticipation of a second quarter work stoppage, and one-time inventory cost adjustments. Diluted earnings per share were $0.10. The pro forma calculation, assuming a January 1 initial public offering (IPO), shows earnings per share at $0.18 for the same quarter last year.
"As we mentioned in our last earnings conference call, the first quarter has traditionally been a seasonally softer quarter for Lennox, although we did see exceptionally strong performance from our commercial refrigeration unit," said John Norris, chairman and CEO. "We are continuing to manage all of our businesses for long-term earnings growth and to build shareholder value.
"Today, Lennox is firmly established in five business segments: North American Residential, North American Retail, Commercial Air Conditioning, Commercial Refrigeration, and Heat Transfer. While we have grown rapidly through acquisition, our focus throughout 2000 is on integrating and strengthening the businesses we have acquired."
Norris also said that management believed Lennox stock was undervalued throughout the first quarter, and that 1.55 million shares of stock were repurchased on forward purchase contracts. "The balance sheet impact will be realized when the shares are returned to Lennox later this year," he said. "The forward purchase contracts allow us to secure shares at current prices, while maintaining an appropriate amount of cash for working capital needs and available debt capacity as we head into our busiest season."
Selling heating, ventilation, air conditioning, and refrigeration (HVACR) equipment in over 70 countries worldwide, Lennox International Inc. is a world leader in climate control solutions. It is the parent company of Lennox Industries Inc., Armstrong Air Conditioning Inc., Heatcraft Inc., and Lennox Global Ltd. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information about Lennox International is available at www.lennoxinternational.com or by contacting Bill Moltner, Director, Investor Relations, at 972-497-6670.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see Lennox' publicly available filings with the Securities and Exchange Commission. Lennox disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands, except per share data)
For the
Three Months Ended
March 31,
2000 1999
NET SALES $716,324 $489,059
COST OF GOODS SOLD 487,561 337,481
Gross Profit 228,763 151,578
OPERATING EXPENSES:
Selling, general and administrative 205,280 131,786
Income from operations 23,483 19,792
INTEREST EXPENSE, net 12,750 6,558
OTHER 229 (211)
MINORITY INTEREST (546) (516)
Income before income taxes 11,050 13,961
PROVISION FOR INCOME TAXES 5,310 7,331
Net income $ 5,740 $ 6,630
REPORTED EARNINGS PER SHARE(A):
Basic $ 0.10 $ 0.19
Diluted $ 0.10 $ 0.18
PRO FORMA EARNINGS PER SHARE (B):
Diluted $ 0.10 $ 0.18
(A) 8,088,490 additional shares issued in Lennox IPO August 3, 1999
(B) Pro forma EPS assumes IPO occurred January 1, each fiscal year.
(Interest expense, income tax, and number of shares have been
adjusted.)
For the
Three Months Ended
March 31,
Net Sales 2000 1999
North American residential $291,780 $271,474
North American retail 194,528 16,680
Commercial air conditioning 95,084 92,468
Commercial refrigeration 91,672 61,598
Heat transfer 65,447 50,069
Eliminations (22,187) (3,230)
$716,324 $489,059
For the
Three Months Ended
March 31,
Income (Loss) from Operations 2000 1999
North American residential $ 20,765 $ 23,956
North American retail 5,426 901
Commercial air conditioning (3,053) (1,934)
Commercial refrigeration 7,050 2,306
Heat transfer 4,934 3,239
Corporate and other (9,905) (8,408)
Eliminations (1,734) (268)
$ 23,483 $ 19,792
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(In thousands, except share data)
ASSETS
March 31, December 31,
2000 1999
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 31,965 $ 29,174
Accounts and notes receivable, net 537,074 443,107
Inventories 409,464 345,424
Deferred income taxes 28,874 25,367
Other assets 52,708 44,526
Total current assets 1,060,085 887,598
INVESTMENTS IN JOINT VENTURES 12,029 12,434
PROPERTY, PLANT AND EQUIPMENT, net 371,267 329,966
GOODWILL, net 638,561 394,252
OTHER ASSETS 56,161 59,423
TOTAL ASSETS $2,138,103 $1,683,673
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 29,655 $ 22,219
Current maturities of long-term debt 30,141 34,554
Accounts payable 263,573 196,143
Accrued expenses 243,037 200,221
Income taxes payable 6,258 9,859
Total current liabilities 572,664 462,996
LONG-TERM DEBT 726,733 520,276
DEFERRED INCOME TAXES 518 928
POSTRETIREMENT BENEFITS, OTHER
THAN PENSIONS 14,980 15,125
OTHER LIABILITIES 71,816 72,377
Total liabilities 1,386,711 1,071,702
MINORITY INTEREST 12,907 14,075
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, 59,456,566 shares
and 46,161,607 shares issued and outstanding
for 2000 and 1999, respectively $ 595 $ 462
Additional paid-in capital 366,743 215,523
Retained earnings 410,138 409,851
Accumulated other comprehensive loss (21,665) (12,706)
Deferred compensation (4,843) (2,848)
Treasury stock, at cost, 1,182,975 and
1,172,200 shares for 2000 and
1999 respectively (12,483) (12,386)
Total stockholders' equity 738,485 597,896
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,138,103 $1,683,673
SOURCE Lennox International Inc.
Web site: http: //www.lennoxinternational.com
Company News On-Call: http: //www.prnewswire.com/comp/140632.html or fax, 800-758-5804, ext. 140632
CONTACT: Bill Moltner, Director, Investor Relations of Lennox International Inc., 972-497-6670