Release Details

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,

2023

2022

2023

2022

Net sales

$          1,366.3

$          1,244.9

$        3,827.1

$        3,624.6

Cost of goods sold

937.8

910.7

2,634.1

2,625.1

Gross profit

428.5

334.2

1,193.0

999.5

Operating Expenses:

Selling, general and administrative expenses

178.9

147.3

527.6

472.2

Losses (gains) and other expenses, net

3.5

3.3

5.2

5.4

Restructuring charges

0.3

0.2

0.2

1.2

Impairment on assets held for sale

63.2

—

63.2

—

Income from equity method investments

(4.2)

(2.4)

(8.0)

(3.9)

Operating income

186.8

185.8

604.8

524.6

Pension settlements

0.3

—

0.4

0.3

Interest expense, net

11.2

10.5

40.4

26.1

Other expense (income), net

0.1

0.7

(0.1)

1.9

Net income before income taxes

175.2

174.6

564.1

496.3

Provision for income taxes

44.8

32.7

118.5

93.6

Net income

$             130.4

$             141.9

$            445.6

$            402.7

Earnings per share – Basic:

$                3.67

$                4.00

$            12.55

$            11.25

Earnings per share – Diluted:

$                3.65

$                3.99

$            12.51

$            11.22

Weighted Average Number of Shares Outstanding - Basic

35.5

35.4

35.5

35.8

Weighted Average Number of Shares Outstanding - Diluted

35.7

35.5

35.6

35.9

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,

2023

2022⁽²⁾

2023

2022⁽²⁾

Net Sales

Residential

$       896.3

$       835.3

$    2,513.6

$    2,494.9

Commercial ⁽²⁾

405.5

352.3

1,121.5

959.2

Corporate and other ⁽²⁾

64.5

57.3

192.0

170.5

$    1,366.3

$    1,244.9

$    3,827.1

$    3,624.6

Segment Profit (Loss) ⁽¹⁾

Residential

$       181.4

$       153.8

$       495.2

$       477.7

Commercial ⁽²⁾

97.3

52.4

250.3

117.4

Corporate and other ⁽²⁾

(23.4)

(16.9)

(65.2)

(61.4)

Total segment profit

255.3

189.3

680.3

533.7

Reconciliation to Operating income:

Impairment on assets held for sale

63.2

—

63.2

—

Items in Losses (gains) and other expenses, net which are excluded from
segment profit (loss) ⁽¹⁾

5.0

$            3.3

12.1

7.9

Restructuring charges

0.3

0.2

0.2

1.2

Operating income

$       186.8

$       185.8

$       604.8

$       524.6

⁽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 (gains) losses on unsettled futures contracts,
  • Environmental liabilities and special litigation charges, and;
  • Other items, net
• Restructuring charges, and;
• Impairment on assets held for sale

⁽²⁾

Previously, we operated in three reportable business segments. In November 2022, we announced the decision to explore strategic alternatives for our European portfolio and that we would continue to invest in our Heatcraft Worldwide Refrigeration business, all of which were previously in our Refrigeration segment.  On January 1, 2023, we adjusted our segment presentation to better align with how the segments are managed and evaluated after the change in portfolio.  Heatcraft Worldwide Refrigeration is now part of the Commercial segment while the European portfolio is presented with Corporate and Other until disposition. Amounts presented in this table have been recast to reflect the revised segment presentation. 

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(Amounts in millions, except shares and par values)

As of September 30, 2023

As of December 31, 2022

ASSETS

(Unaudited)

Current Assets:

Cash and cash equivalents

$                                 132.0

$                                  52.6

Short-term investments

9.6

8.5

Accounts and notes receivable, net of allowances of $15.3 and $15.5 in
2023 and 2022, respectively

694.8

608.5

Inventories, net

747.9

753.0

Assets held for sale

92.8

—

Other assets

65.3

73.9

Total current assets

1,742.4

1,496.5

Property, plant and equipment, net of accumulated depreciation of $897.5
and $920.8 in 2023 and 2022, respectively

602.1

548.9

Right-of-use assets from operating leases

214.1

219.9

Goodwill

181.7

186.3

Deferred income taxes

50.1

27.5

Other assets, net

99.7

88.5

Total assets

$                              2,890.1

$                             2,567.6

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

Current maturities of long-term debt

$                                 361.6

$                                710.6

Current operating lease liabilities

60.2

63.3

Accounts payable

345.8

427.3

Accrued expenses

408.7

376.9

Liabilities held for sale

69.7

—

Income taxes payable

9.0

17.6

Total current liabilities

1,255.0

1,595.7

Long-term debt

1,121.6

814.2

Long-term operating lease liabilities

162.5

161.8

Pensions

33.9

40.1

Other liabilities

157.6

158.9

Total liabilities

2,730.6

2,770.7

Commitments and contingencies

Stockholders' equity (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

1,178.9

1,155.2

Retained earnings

3,400.3

3,070.6

Accumulated other comprehensive loss

(77.0)

(90.6)

Treasury stock, at cost, 51,633,264 shares and 51,700,260 shares for
2023 and 2022, respectively

(4,343.6)

(4,339.2)

Total stockholders' equity (deficit)

159.5

(203.1)

Total liabilities and stockholders' equity (deficit)

$                              2,890.1

$                             2,567.6

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows 

(Unaudited)

(Amounts in millions)

For the Nine Months
Ended September 30,

2023

2022

Cash flows from operating activities:

Net income

$          445.6

$          402.7

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

Income from equity method investments

(8.0)

(3.9)

Impairment on assets held for sale

63.2

—

Dividends from affiliates

—

1.2

Restructuring charges, net of cash paid

—

0.7

Provision for credit losses

4.7

4.3

Unrealized losses, net on derivative contracts

5.6

0.8

Stock-based compensation expense

23.5

16.4

Depreciation and amortization

62.0

56.2

Deferred income taxes

(24.9)

(16.6)

Pension expense

2.4

5.1

Pension contributions

(2.8)

(0.7)

Other items, net

(1.4)

(1.4)

Changes in assets and liabilities:

Accounts and notes receivable

(142.5)

(214.9)

Inventories

(44.9)

(245.7)

Other current assets

(0.5)

(5.1)

Accounts payable

(10.9)

78.7

Accrued expenses

69.4

36.0

Income taxes payable and receivable, net

(6.7)

35.5

   Leases, net

3.4

0.8

Other, net

(7.3)

20.0

Net cash provided by operating activities

429.9

170.1

Cash flows from investing activities:

Proceeds from the disposal of property, plant and equipment

1.6

1.2

Purchases of property, plant and equipment

(125.0)

(67.0)

Purchases of short-term investments

(1.1)

(2.4)

Net cash used in investing activities

(124.5)

(68.2)

Cash flows from financing activities:

Asset securitization borrowings

190.0

382.0

Asset securitization payments

(540.0)

(232.0)

Long-term debt payments

(10.6)

(9.8)

Issuance of senior unsecured notes

500.0

Borrowings from credit facility

1,547.5

1,967.5

Payments on credit facility

(1,739.5)

(1,752.0)

Payments of deferred financing costs

(5.4)

—

Proceeds from employee stock purchases

2.9

2.7

Repurchases of common stock

—

(300.0)

Repurchases of common stock to satisfy employee withholding tax obligations

(7.1)

(5.5)

Cash dividends paid

(153.4)

(142.0)

Net cash used in financing activities

(215.6)

(89.1)

Increase in cash and cash equivalents

89.8

12.8

Cash balances classified as assets held for sale

(7.6)

—

Effect of exchange rates on cash and cash equivalents

(2.8)

(3.1)

Cash and cash equivalents, beginning of period

52.6

31.0

Cash and cash equivalents, end of period

$          132.0

$            40.7

Supplemental disclosures of cash flow information:

Interest paid

$            42.0

$            23.2

Income taxes paid (net of refunds)

$          151.3

$            75.4

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Reconciliation to U.S. GAAP (Generally Accepted Accounting Principles) Measures

(Unaudited, in millions, except per share and ratio data)

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements and segment net sales and profit (loss) 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 and enhance the ability of investors to analyze the Company's business trends and operating performance.

In November 2022, we announced the decision to explore strategic alternatives for our European portfolio. 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 Net income, a GAAP measure, to Adjusted Net income, a Non-GAAP measure

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2023

2022

2023

2022

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Net income, a GAAP measure

$     130.4

$       3.65

$     141.9

$       3.99

$     445.6

$     12.51

$     402.7

$     11.22

Restructuring charges

0.3

0.01

0.2

—

0.2

0.01

1.0

0.03

Pension settlements

0.2

0.01

—

—

0.3

0.01

0.2

0.01

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

4.3

0.11

3.0

0.09

9.6

0.26

6.7

0.18

Excess tax benefit from share-based
compensation (b)

(2.3)

(0.06)

(0.2)

—

(2.4)

(0.07)

0.3

0.01

Other tax items, net (b)

—

—

0.7

0.02

0.4

0.01

(0.8)

(0.02)

Impairment on assets held for sale

62.0

1.74

—

—

62.0

1.74

—

—

Non-core business results (c)

(3.3)

(0.09)

1.2

0.03

(4.8)

(0.13)

6.2

0.17

Adjusted net income, a non-GAAP measure

$      191.6

$        5.37

$     146.8

$        4.13

$      510.9

$      14.34

$     416.3

$      11.60

(a) Recorded in Losses (gains) and other expenses, net in the Consolidated Statements of Operations

(b) Recorded in Provision for income taxes in the Consolidated Statements of Operations

(c) Non-core business results represent activity related to our business operations in Europe not included elsewhere in the reconciliations

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,

2023

2022

2023

2022

Net cash provided by operating activities

$          313.2

$          170.9

$          429.9

$          170.1

Purchases of property, plant and equipment

(39.7)

(20.3)

(125.0)

(67.0)

Proceeds from the disposal of property, plant and equipment

0.1

0.7

1.6

1.2

Free cash flow, a Non-GAAP measure

$          273.6

$          151.3

$          306.5

$          104.3

Reconciliation of Net sales, a GAAP measure to Core net sales, a Non-GAAP measure

For the Three Months Ended September 30,

Corporate and other

Consolidated

2023

2022

2023

2022

Net sales, a GAAP measure

$                     64.5

$                     57.3

$                1,366.3

$                1,244.9

Net sales from non-core businesses (a)

(64.5)

(57.3)

(64.5)

(57.3)

Core net sales, a Non-GAAP measure

$                        —

$                        —

$                1,301.8

$                1,187.6

(a) Non-Core businesses represent our business operations in Europe

For the Nine Months Ended September 30,

Corporate and other

Consolidated

2023

2022

2023

2022

Net sales, a GAAP measure

$                   192.0

$                   170.5

$                3,827.1

$                3,624.6

Net sales from non-core businesses (a)

(192.0)

(170.5)

(192.0)

(170.5)

Core net sales, a Non-GAAP measure

$                        —

$                        —

$                3,635.1

$                3,454.1

(a) Non-Core businesses represent our business operations in Europe

Reconciliation of Segment profit (loss), a Non-GAAP measure to Adjusted Segment profit (loss), a Non-GAAP measure

For the Three Months Ended September 30,

Corporate and other

Consolidated

2023

2022

2023

2022

Segment profit (loss), a Non-GAAP measure

$                   (23.4)

$                   (16.9)

$                   255.3

$                   189.3

Profit (loss) from non-core businesses (a)

3.9

(0.4)

3.9

(0.4)

Adjusted Segment profit (loss), a Non-GAAP measure

$                   (27.3)

$                   (16.5)

$                   251.4

$                   189.7

(a) Non-Core businesses represent our business operations in Europe

For the Nine Months Ended September 30,

Corporate and other

Consolidated

2023

2022

2023

2022

Segment profit (loss), a Non-GAAP measure

$                   (65.2)

$                   (61.4)

$                   680.3

$                   533.7

Profit (loss) from non-core businesses (a)

6.1

(4.4)

6.1

(4.4)

Adjusted Segment profit (loss), a Non-GAAP measure

$                   (71.3)

$                   (57.0)

$                   674.2

$                   538.1

(a) Non-Core businesses represent our business operations in Europe