Lennox International Reports Record Second Quarter Earnings; Net Income Increases 37%
DALLAS, July 25 /PRNewswire/ -- Lennox International Inc. (NYSE: LII) announced record earnings for second quarter 2000 today. Total consolidated sales for second quarter 2000 increased 51% to $894 million, up from $592 million in second quarter 1999. Company-wide organic sales growth, adjusted for sales to company-owned dealers and currency fluctuations, was 7%. Outside of the U.S. and Canada, international revenues grew by 14% in the quarter, representing 13% of total corporate sales.
Quarterly operating income for the consolidated company grew by 49% from $47 million in second quarter 1999 to $70 million. EBITDA in second quarter was $91 million, a 49% increase from EBITDA in the same period a year ago.
Net income for the second quarter increased 37% to $32 million from $24 million in 1999 and set a new quarterly record in the company's 105-year history, despite being impacted by higher interest expenses of more than $6 million due mainly to increased borrowing to fund acquisitions. Diluted earnings per share were $0.56. The pro forma calculation, assuming a January 1 initial public offering (IPO), shows earnings per share at $0.55 for the same quarter last year.
"Lennox International had a strong performance in the second quarter," said John Norris, chairman and CEO. "Our core businesses continue to perform soundly, and the operational improvements we are making in our acquired businesses are beginning to pay off."
Four of the company's five business segments achieved double-digit revenue growth for the quarter. North American retail, the company's newest business segment, increased its operating margins to 6.7% for the quarter. "Our progress integrating our retail operations is very encouraging," Norris said. "For the first half of this year, our retail sales exceeded $480 million, putting us right on track to achieve our objective of $1 billion in revenues for the full year 2000."
Norris also said that management believes Lennox stock is undervalued. The company continued its share repurchase program during the second quarter, entering into a forward purchase agreement for approximately 850,000 shares of stock at an average price of $11.20 per share. "Early in the third quarter, the first forward purchase contract matured and approximately 1.5 million shares were returned to Lennox treasury stock, which will have a positive impact on our earnings per share moving forward," he said.
Selling heating, ventilation, air conditioning, and refrigeration equipment in over 70 countries, Lennox International Inc. is a global leader in climate control solutions. Lennox operates in five key business segments: North American residential, North American retail, worldwide commercial refrigeration, worldwide commercial air conditioning, and worldwide heat transfer. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information 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 and Six Months Ended June 30, 2000 and 1999
(Unaudited, in thousands, except per share data)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
NET SALES $894,200 $591,841 $1,610,524 $1,080,900
COST OF GOODS SOLD 595,868 405,519 1,083,429 743,000
Gross Profit 298,332 186,322 527,095 337,900
OPERATING EXPENSES:
Selling, general and
administrative 228,608 139,416 433,888 271,202
Income from operations 69,724 46,906 93,207 66,698
INTEREST EXPENSE, net 15,242 8,542 27,992 15,100
OTHER 517 (570) 746 (781)
MINORITY INTEREST 31 (104) (515) (620)
Income before income
taxes 53,934 39,038 64,984 52,999
PROVISION FOR INCOME TAXES 21,657 15,467 26,967 22,798
Net income $32,277 $23,571 $38,017 $30,201
REPORTED EARNINGS PER SHARE(A):
Basic $0.56 $0.65 $0.68 $0.84
Diluted $0.56 $0.64 $0.68 $0.82
PRO FORMA EARNINGS PER SHARE (B):
Diluted $0.56 $0.55 $0.68 $0.74
(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 For the
Three Months ended Six Months Ended
June 30, June 30,
Net Sales 2000 1999 2000 1999
North American residential $353,890 $317,610 $645,670 $589,084
North American retail 288,938 27,041 483,466 43,721
Commercial air conditioning 122,938 117,595 218,022 210,063
Commercial refrigeration 93,508 82,577 185,180 144,175
Heat transfer 64,334 53,290 129,781 103,359
Eliminations (29,408) (6,272) (51,595) (9,502)
$894,200 $591,841 $1,610,524 $1,080,900
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
Income (Loss) from Operations 2000 1999 2000 1999
North American residential $42,203 $39,032 $62,968 $62,988
North American retail 19,234 1,575 24,660 2,476
Commercial air conditioning 4,733 3,081 1,680 1,147
Commercial refrigeration 8,445 6,864 15,495 9,170
Heat transfer 4,333 4,218 9,267 7,457
Corporate and other (8,035) (7,319) (17,940) (15,727)
Eliminations (1,189) (545) (2,923) (813)
$69,724 $46,906 $93,207 $66,698
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of June 30, 2000 and December 31, 1999
(In thousands, except share data)
ASSETS
June 30, December 31,
2000 1999
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $47,323 $29,174
Accounts and notes receivable, net 505,998 443,107
Inventories 395,056 345,424
Deferred income taxes 36,192 25,367
Other assets 51,617 44,526
Total current assets 1,036,186 887,598
INVESTMENTS IN JOINT VENTURES 11,610 12,434
PROPERTY, PLANT AND EQUIPMENT, net 369,965 329,966
GOODWILL, net 653,015 394,252
OTHER ASSETS 52,292 59,423
TOTAL ASSETS $2,123,068 $1,683,673
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $31,662 $22,219
Current maturities of long-term debt 30,815 34,554
Accounts payable 270,728 196,143
Accrued expenses 228,389 200,221
Income taxes payable 32,970 9,859
Total current liabilities 594,564 462,996
LONG-TERM DEBT 676,344 520,276
DEFERRED INCOME TAXES 879 928
POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS 14,802 15,125
OTHER LIABILITIES 75,541 72,377
Total liabilities 1,362,130 1,071,702
MINORITY INTEREST 2,055 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, 59,481,140 shares
and 46,161,607 shares issued for
2000 and 1999, respectively 595 462
Additional paid-in capital 366,841 215,523
Retained earnings 436,962 409,851
Accumulated other comprehensive loss (29,187) (12,706)
Deferred compensation (4,127) (2,848)
Treasury stock, at cost, 1,156,221
and 1,172,200 shares for 2000
and 1999 respectively (12,201) (12,386)
Total stockholders' equity 758,883 597,896
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,123,068 $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