Release Details

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited, in millions, except per share data)

For the Three Months
Ended March 31,

2013

2012

Net sales

$

668.4

$

614.4

Cost of goods sold

506.4

473.5

   Gross profit 

162.0

140.9

Operating expenses:

Selling, general and administrative expenses 

135.6

123.2

Losses (gains) and other expenses, net 

1.1

(1.4)

Restructuring charges 

0.5

2.6

Income from equity method investments 

(3.1)

(2.4)

   Operational income from continuing operations  

27.9

18.9

Interest expense, net 

3.4

4.7

Other expense, net

0.1

-

Income from continuing operations before income taxes

24.4

14.2

Provision for income taxes

8.6

4.9

Income from continuing operations 

15.8

9.3

Discontinued operations:

 Loss from discontinued operations 

(13.4)

(23.5)

 Benefit from income taxes

(5.6)

(8.1)

Loss from discontinued operations 

(7.8)

(15.4)

Net income (loss)

$

8.0

$

(6.1)

Earnings per share - Basic:

 Income from continuing operations 

$

0.32

$

0.18

 Loss from discontinued operations 

(0.16)

(0.30)

Net income (loss)

$

0.16

$

(0.12)

Earnings per share - Diluted:

 Income from continuing operations 

$

0.31

$

0.18

 Loss from discontinued operations 

(0.15)

(0.30)

Net income (loss)

$

0.16

$

(0.12)

Average shares outstanding: 

 Basic

50.3

50.9

 Diluted

51.0

50.9

Cash dividends declared per share 

$

0.20

$

0.18

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

SEGMENT NET SALES AND PROFIT (LOSS) 

(Unaudited, in millions)

For the Three Months
Ended March 31,

2013

2012

Net Sales

Residential Heating & Cooling 

$

314.5

$

272.6

Commercial Heating & Cooling 

163.0

156.7

Refrigeration 

190.9

185.1

$

668.4

$

614.4

Segment Profit (Loss) (A) 

Residential Heating & Cooling 

$

20.5

$

11.0

Commercial Heating & Cooling 

11.1

8.3

Refrigeration 

16.7

14.2

Corporate and other 

(18.9)

(13.9)

   Subtotal that includes segment profit and eliminations 

29.4

19.6

Reconciliation to income  from continuing operations before income taxes:

Special product quality adjustment

(0.2)

(0.4)

Items in Losses (gains) and other expenses, net that are excluded from segment profit (loss) (B) 

1.3

(1.5)

Restructuring charges 

0.5

2.6

Interest expense, net 

3.4

4.7

Other Expense, net

-

-

Income from continuing operations before income taxes

$

24.4

$

14.2

(A) The Company defines segment profit and loss as a segment's Income or Loss from continuing operations before income taxes included in the accompanying Consolidated Statements of Operations: 

      Excluding:

•  Special product quality adjustments;

•   Items within Losses (gains) and other expenses, net that are noted in (B);

•   Restructuring charges;

•   Goodwill, long-lived assets and and equity method investment impairments;

•   Interest expense, net;

•   Other expense, net;

(B) Items in Losses (gains) and other expenses, net that are excluded from segment profit or loss are asset impairments, net change in unrealized gains and/or losses on open future contracts, special legal contingency charges, and other items.

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and par value)

As of
March 31,
 2013

As of
December 31,
 2012

(unaudited)

ASSETS

Current assets:

  Cash and cash equivalents

$

34.9

$

51.8

  Accounts and notes receivable, net of allowances of $10.0 and $9.5 in 2013 and 2012, respectively

407.0

373.4

  Inventories, net 

464.3

374.8

  Deferred income taxes 

29.7

27.5

  Other assets 

68.2

61.0

  Assets of discontinued operations

-

98.6

Total current assets 

1,004.1

987.1

Property, plant and equipment, net of accumulated depreciation of $593.0 and $584.8 in 2013 and 2012, respectively

295.1

298.2

Goodwill

223.4

223.8

Deferred income taxes 

109.9

102.8

Other assets, net 

81.6

80.0

Total assets 

$

1,714.1

$

1,691.9

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Short-term debt 

$

26.0

$

34.9

  Current maturities of long-term debt 

0.6

0.7

  Accounts payable 

312.4

284.7

  Accrued expenses 

222.6

259.6

  Income taxes payable

0.8

4.5

  Liabilities of discontinued operations

-

55.2

Total current liabilities 

562.4

639.6

Long-term debt 

489.8

351.0

Postretirement benefits, other than pensions 

5.8

6.1

Pensions 

135.7

134.4

Other liabilities 

68.4

64.0

  Total liabilities 

1,262.1

1,195.1

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 

906.7

898.3

  Retained earnings 

742.4

744.4

  Accumulated other comprehensive loss

(71.6)

(22.3)

  Treasury stock, at cost, 36,785,644 shares and 36,937,632 shares for 2013 and 2012, respectively

(1,126.4)

(1,124.5)

 Total stockholders' equity 

452.0

496.8

Total liabilities and stockholders' equity 

$

1,714.1

$

1,691.9

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

For the Three Months
Ended March 31,

2013

2012

Cash flows from operating activities:

Net income (loss)

$

8.0

$

(6.1)

Net loss from discontinued operations

7.8

15.4

Adjustments to reconcile net income to net cash provided by operating activities:

   Income from equity method investments

(3.1)

(2.4)

   Restructuring expenses, net of cash paid 

(1.4)

1.7

   Provision for bad debts

1.2

1.5

   Unrealized loss (gain) on derivative contracts

0.5

(0.5)

   Stock-based compensation expense 

7.7

3.8

   Depreciation and amortization 

14.1

13.9

   Deferred income taxes 

(1.6)

(0.6)

   Other items, net 

9.0

0.5

Changes in assets and liabilities, net of effects of acquisitions and divestures:

   Accounts and notes receivable 

(35.8)

3.7

   Inventories 

(100.9)

(75.2)

   Other current assets 

(3.5)

3.4

   Accounts payable 

18.8

34.3

   Accrued expenses 

(42.1)

(15.4)

   Income taxes payable and receivable

(9.6)

(8.6)

   Other    

5.6

1.9

Net cash used in discontinued operations 

(12.0)

(5.6)

       Net cash used in operating activities 

(137.3)

(34.3)

Cash flows from investing activities:

   Proceeds from the disposal of property, plant and equipment 

-

0.1

   Purchases of property, plant and equipment 

(12.1)

(6.6)

   Net proceeds from sale of business

5.3

-

   Net cash used in discontinued operations

(0.1)

(0.3)

       Net cash used in investing activities 

(6.9)

(6.8)

Cash flows from financing activities:

   Short-term borrowings, net

1.2

6.6

   Asset securitization borrowings

130.0

170.0

   Asset securitization payments

(140.0)

(170.0)

   Long-term debt payments

(0.2)

(0.2)

   Borrowings from revolving credit facility

435.5

267.5

   Payments on revolving credit facility

(296.5)

(215.5)

   Proceeds from stock option exercises 

0.5

0.1

   Repurchases of common stock 

(4.2)

(1.9)

   Excess tax benefits related to share-based payments 

2.3

0.8

   Cash dividends paid 

-

(9.2)

       Net cash provided by financing activities 

128.6

48.2

Increase (decrease) in cash and cash equivalents 

(15.6)

7.1

Effect of exchange rates on cash and cash equivalents 

(1.3)

2.6

Cash and cash equivalents, beginning of period

51.8

45.0

Cash and cash equivalents, end of period

$

34.9

$

54.7

Supplementary disclosures of cash flow information:

Cash paid during the period for:

   Interest, net 

$

1.2

$

2.3

   Income taxes (net of refunds) 

$

11.9

$

5.1

 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.  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 March 31,

2013

2012

Income from continuing operations, a GAAP measure

$ 15.8

$   9.3

  Restructuring charges, after tax

0.3

1.7

  Special product quality adjustments, after tax (b)

(0.1)

(0.3)

  Special legal contingency charges, after tax (a)

0.2

-

  Net change in unrealized losses (gains) on open future contracts, after tax (a)

0.7

(1.1)

  Other items, net, after tax (a)

0.1

0.2

Adjusted income from continuing operations, a non-GAAP measure

$ 17.0

$   9.8

Income per share from continuing operations - diluted, a GAAP measure

$ 0.31

$ 0.18

  Restructuring charges, after tax

0.01

0.03

  Special product quality adjustments, after tax (b)

-

-

  Special legal contingency charges, after tax (a)

-

-

  Net change in unrealized losses (gains) on open future contracts, after tax (a)

0.01

(0.02)

  Other items, net, after tax (a)

-

-

Adjusted earnings per share from continuing operations - diluted, a non-GAAP measure

$ 0.33

$ 0.19

  (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

 For The Three Months 

Ended March 31,

Components of Losses (gains) and other expenses, net (pre-tax):

2013

2012

  Realized loss on settled future contracts (a)

$      -

$ 0.3

  Foreign currency exchange gain (a)

(0.2)

(0.2)

  Net change in unrealized losses (gains) on open futures contracts (b)

1.0

(1.7)

  Special legal contingency charge (b)

0.2

-

  Other items, net (b)

0.1

0.2

Losses (gains) and other expenses, net (pre-tax)

$   1.1

$  (1.4)

(a) Included in segment profit (loss) and adjusted income from continuing operations

(b) Excluded from segment profit (loss) and adjusted income from continuing operations

Reconciliation of Estimated Adjusted Income per Share from Continuing Operations - Diluted, a Non-GAAP Measure, to Income per Share from Continuing Operations - Diluted, a GAAP Measure

 For the  

 Year Ended 

 December 31, 

2013

 ESTIMATED 

Adjusted income per share from continuing operations - diluted, a Non-GAAP measure 

 $3.25 - $3.55 

Restructuring charges and net change in unrealized losses on open future contracts 

(0.02)

Income per share from continuing operations - diluted, a GAAP measure 

 $3.23 - $3.53 

 Reconciliation of Net Cash Used in Operating Activities, a GAAP Measure, to Free Cash Flow, a Non-GAAP Measure 

 For the Three Months  

 Ended March 31, 

2013

2012

Net cash used in operating activities, a GAAP measure 

$  (137.3)

$                  (34.3)

Purchases of property, plant and equipment 

(12.1)

(6.6)

Proceeds from the disposal of property, plant and equipment 

-

0.1

 Free cash flow, a Non-GAAP measure 

$ (149.4)

$                (40.8)

Calculation of Debt to EBITDA Ratio: 

 Trailing Twelve 

 Months to 

 March 31, 

2013

EBIT (a) 

$                 234.0

Depreciation and amortization expense (b) 

55.6

EBITDA (a + b) 

$                 289.6

Total debt at March 31, 2013 (c) 

$                 516.4

 Total Debt to EBITDA ratio ((c / (a + b)) 

1.8

Reconciliation of EBIT, a Non-GAAP Measure, to Income From Continuing Operations Before Income Taxes, a GAAP measure

 Trailing Twelve 

 Months to 

 March 31, 

2013

EBIT per above, a Non-GAAP measure 

$                234.0

Special product quality adjustments 

1.3

Items in Losses (gains) and other expenses, net that are excluded from segment profit 

2.6

Restructuring charges 

2.1

Interest expense, net 

15.8

Other expenses, net 

0.3

Income from continuing operations before income taxes, a GAAP measure 

$                211.9