Lennox International Reports First Quarter Results
- Adjusted loss per share from continuing operations of
$0.23 and GAAP loss per share from continuing operations of$0.33 in seasonally lowest quarter
- Generated
$16 million in cash from operations and$6 million in free cash flow
- In weak global market environment, re-setting 2009 revenue guidance from
down 8-12% to down 15-19%
- Re-setting 2009 adjusted EPS from continuing operations guidance from
$2.10-$2.50 to$1.65-$2.05 ; GAAP guidance now$1.38-$1.78
- Additional cost reduction and operational efficiency measures in progress
Revenue for the first quarter was
"End markets were weak in the first quarter, compounding the effects of
our seasonally lightest quarter," said Todd Bluedorn, Chief Executive Officer.
"However, cash generation and free cash flow remained strong with a
(Note: See attached schedules for financial details, reconciliations of non-GAAP financial measures, and a description of adjusting items.)
FINANCIAL HIGHLIGHTS
Revenue: Revenue for the first quarter was
Gross Profit: Gross profit for the first quarter was
Loss from Continuing Operations: Adjusted loss from continuing operations
in the first quarter was
Adjusted loss from continuing operations for the first quarter of 2009 excludes the following items (after-tax):
$7.5 million charge from restructuring activities.$1.7 million gain from the net change in unrealized gains on open futures contracts.
Free Cash Flow and Total Debt: Net cash provided by operations in the
first quarter was
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
First quarter 2009 revenue from the Residential Heating & Cooling business
segment was
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment was
Revenue in the
Refrigeration
Revenue in the Refrigeration business segment was
FULL-YEAR OUTLOOK
Faced with weaker end markets and economic conditions globally, the company is re-setting its financial guidance for 2009.
- Reducing 2009 revenue guidance to a range of down 15-19%, including a negative 4 point impact from foreign exchange, versus the previous range of down 8-12%, including a negative 5 point impact from foreign exchange.
- Reducing 2009 adjusted EPS guidance from continuing operations to a
range of
$1.65-$2.05 versus the previous range of$2.10-$2.50 . - GAAP earnings per share guidance from continuing operations for 2009
is now
$1.38-$1.78 versus the previous target of$1.91-$2.31 , reflecting the full-year impact of$5.4 million after tax of additional restructuring charges from projects announced in the first quarter. - Corporate expense guidance remains approximately
$60 million for 2009. - Lowering 2009 capital spending guidance to approximately
$75 million compared to previous guidance of$80 million .
CONFERENCE CALL INFORMATION
A conference call to discuss the company's first quarter results will be
held this morning at
A replay will be available from
Through its subsidiaries,
The statements in this news release that are not historical statements,
including statements regarding expected financial results for 2009, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are subject to numerous risks
and uncertainties, many of which are beyond LII's control, which could cause
actual results to differ materially from the results expressed or implied by
the statements. These risks and uncertainties include, but are not limited to:
the impact of higher raw material prices, LII's ability to implement price
increases for its products and services, the impact of unfavorable weather,
and a decline in new construction activity in the demand for products and
services that could cause actual results to differ materially from such
statements. For information concerning these and other risks and
uncertainties, see LII's publicly available filings with the
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters Ended March 31, 2009 and 2008
(Unaudited, in millions, except per share data)
For the
Quarters Ended
March 31,
--------------
2009 2008
----- -----
NET SALES $585.4 $764.5
COST OF GOODS SOLD 446.7 570.8
----- -----
Gross profit 138.7 193.7
OPERATING EXPENSES:
Selling, general and
administrative expenses 156.8 184.0
Gains and other expenses, net (0.8) (3.4)
Restructuring charges 11.2 2.8
Income from equity method
investments (1.3) (3.1)
---- ----
Operational (loss) income from
continuing operations (27.2) 13.4
INTEREST EXPENSE, net 1.7 2.7
--- ---
(Loss) income from continuing
operations before income taxes (28.9) 10.7
(BENEFIT FROM) PROVISION FOR
INCOME TAXES (10.7) 4.0
----- ---
(Loss) income from continuing
operations (18.2) 6.7
DISCONTINUED OPERATIONS:
(Income) loss from discontinued
operations (0.2) 0.7
Income tax provision (benefit) 0.1 (0.3)
--- ----
(Income) loss from discontinued
operations (0.1) 0.4
---- ---
Net (loss) income $(18.1) $6.3
====== ====
(LOSS) EARNINGS PER SHARE - BASIC:
(Loss) income from continuing
operations $(0.33) $0.11
Income (loss) from discontinued
operations - (0.01)
--- -----
Net (loss) income $(0.33) $0.10
====== =====
(LOSS) EARNINGS PER SHARE -
DILUTED:
(Loss) income from continuing
operations $(0.33) $0.11
Income (loss) from discontinued
operations - (0.01)
--- -----
Net (loss) income $(0.33) $0.10
====== ====
AVERAGE SHARES OUTSTANDING:
Basic 55.2 60.3
Diluted 55.2 62.7
CASH DIVIDENDS DECLARED PER SHARE $0.14 $0.14
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
SEGMENT NET SALES AND (LOSS) PROFIT
For the Quarters Ended March 31, 2009 and 2008
(Unaudited, in millions)
For the
Quarters Ended
March 31,
---------------
2009 2008
----- -----
Net Sales
Residential Heating & Cooling $246.3 $329.2
Commercial Heating & Cooling 131.5 165.2
Service Experts 109.2 137.5
Refrigeration 113.7 154.8
Eliminations (A) (15.3) (22.2)
----- -----
$585.4 $764.5
====== ======
Segment (Loss) Profit (B)
Residential Heating & Cooling $(4.8) $13.2
Commercial Heating & Cooling 2.0 6.2
Service Experts (7.9) (6.9)
Refrigeration 6.5 14.8
Corporate and other (13.9) (12.2)
Eliminations (A) (0.4) (1.7)
---- ----
Subtotal that includes segment (loss) profit
and eliminations (18.5) 13.4
Reconciliation to (loss) income from
continuing operations before income taxes:
Gains and other expenses, net of gain on sale
of fixed assets (0.8) (3.3)
Restructuring charges 11.2 2.8
Interest expense, net 1.7 2.7
Less: Realized (losses) gains on settled
futures contracts (1.9) 0.4
Less: Foreign currency exchange gains 0.2 0.1
--- ---
$(28.9) $10.7
====== =====
(A) Eliminations consist of intercompany sales between business segments,
such as products sold to Service Experts by the Residential Heating &
Cooling segment.
(B) 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:
-- Gains and/or losses and other expenses, net except for
gains and/or losses on the sale of fixed assets.
-- Restructuring charges.
-- Goodwill and equity method investment impairments.
-- Interest expense, net.
-- Other expense, net.
Less amounts included in Gains and Other Expenses, net:
-- Realized gains and/or losses on settled futures
contracts.
-- Foreign currency exchange gains and/or losses.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2009 and December 31, 2008
(In millions, except share and per share data)
March 31, December 31,
2009 2008
----------- ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $101.9 $122.1
Short-term investments 32.3 33.4
Accounts and notes receivable, net 334.5 369.6
Inventories, net 321.1 298.3
Deferred income taxes 18.5 24.2
Other assets 80.4 87.4
---- ----
Total current assets 888.7 935.0
PROPERTY, PLANT AND EQUIPMENT, net 324.3 329.5
GOODWILL, net 229.4 232.3
DEFERRED INCOME TAXES 105.0 113.5
OTHER ASSETS 51.2 49.2
---- ----
TOTAL ASSETS $1,598.6 $1,659.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $8.3 $6.1
Current maturities of long-term debt 0.4 0.6
Accounts payable 258.2 234.5
Accrued expenses 291.9 331.1
Income taxes payable - 3.7
--- ---
Total current liabilities 558.8 576.0
LONG-TERM DEBT 396.4 413.7
POSTRETIREMENT BENEFITS, OTHER THAN
PENSIONS 12.3 12.5
PENSIONS 110.8 107.7
OTHER LIABILITIES 88.3 91.0
---- ----
Total liabilities 1,166.6 1,200.9
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,
84,856,990 shares and 84,215,904
shares issued for 2009
and 2008, respectively 0.8 0.8
Additional paid-in capital 808.0 805.6
Retained earnings 512.9 538.8
Accumulated other comprehensive
loss (99.3) (98.8)
Treasury stock, at cost, 29,210,131
shares and 29,109,058 shares for
2009 and 2008, respectively (790.4) (787.8)
------ ------
Total stockholders' equity 432.0 458.6
----- -----
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,598.6 $1,659.5
======== ========
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation to U.S. GAAP (Generally Accepted Accounting Principles)
Measures
(Unaudited, in millions, except per share and ratio data)
Reconciliation of Loss From Continuing Operations to Adjusted Loss From
Continuing Operations
For the Quarter Ended March 31, 2009
------------------------------------
Net Change
in
Unrealized
Gains on
Open
As Futures Restructuring As
Reported Contracts Charges Adjusted
-------- ---------- ------------ ---------
NET SALES $585.4 $- $- $585.4
COST OF GOODS SOLD 446.7 - - 446.7
----- --- --- -----
Gross profit 138.7 - - 138.7
OPERATING EXPENSES:
Selling, general
and administrative
expenses 156.8 - - 156.8
(Gains) losses and
other expenses,
net (1) (0.8) 2.7 - 1.9
Restructuring charges 11.2 - (11.2) -
Income from equity
method investments (1.3) - - (1.3)
----- --- --- -----
Operational
(loss) income
from continuing
operations (27.2) (2.7) 11.2 (18.7)
INTEREST EXPENSE, net 1.7 - - 1.7
--- --- --- ---
(Loss) income
from continuing
operations before
income taxes (28.9) (2.7) 11.2 (20.4)
(BENEFIT FROM)
PROVISION FOR
INCOME TAXES (10.7) (1.0) 3.7 (8.0)
------ ----- --- -----
(Loss) income
from continuing
operations $(18.2) $(1.7) $7.5 $(12.4)
======= ====== ==== =======
(LOSS) EARNINGS
PER SHARE FROM
CONTINUING OPERATIONS
- DILUTED $(0.33) $(0.04) $0.14 $(0.23)
======= ======= ===== =======
Note: Management uses adjusted (loss) income from continuing operations,
which is not defined by U.S. GAAP, to measure the Company's operating
performance and to analyze period-over-period changes in operating income
with and without the effects of certain (gains) losses and other expenses,
net and restructuring charges. Management believes that excluding these
effects is helpful in assessing the overall performance of the Company.
(1) (Gains) losses and other expenses, net include the following:
For the Quarter Ended March 31, 2009
------------------------------------
Pre-tax Tax (Benefit) After-tax
Loss (Gain) Provision Loss (Gain)
----------- --------- ----------
Realized losses on settled
futures contracts $1.9 $(0.7) $1.2
Net change in unrealized
gains on open futures
contracts (2.7) 1.0 (1.7)
Foreign currency exchange
gain (0.2) 0.1 (0.1)
Discount fee on accounts
sold 0.2 (0.1) 0.1
--- ----- ---
(Gains) losses and other
expenses, net $(0.8) $0.3 $(0.5)
====== ====== =====
For the Quarter Ended March 31, 2008
------------------------------------
Net Change
in
Unrealized
Gains on
Open
As Futures Restructuring As
Reported Contracts Charges Adjusted
-------- ---------- ------- ---------
NET SALES $764.5 $- $- $764.5
COST OF GOODS SOLD 570.8 - - 570.8
----- --- --- -----
Gross profit 193.7 - - 193.7
OPERATING EXPENSES:
Selling, general
and administrative
expenses 184.0 - - 184.0
(Gains) losses
and other
expenses, net (2) (3.4) 2.8 - (0.6)
Restructuring charges 2.8 - (2.8) -
Income from equity
method investments (3.1) - - (3.1)
---- --- --- ----
Operational
income (loss)
from continuing
operations 13.4 (2.8) 2.8 13.4
INTEREST EXPENSE, net 2.7 - - 2.7
--- --- --- ---
Income (loss)
from continuing
operations before
income taxes 10.7 (2.8) 2.8 10.7
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES 4.0 (1.0) 1.0 4.0
--- ---- --- ---
Income (loss)
from continuing
operations $6.7 $(1.8) $1.8 $6.7
==== ===== ==== ====
EARNINGS (LOSS)
PER SHARE FROM
CONTINUING OPERATIONS
- DILUTED $0.11 $(0.03) $0.03 $0.11
===== ====== ===== =====
(2) (Gains) losses and other expenses, net include the following:
For the Quarter Ended March 31, 2008
------------------------------------
Pre-tax Tax After-tax
Gain Provision Gain
---- --------- ----
Realized gains on settled
futures contracts $(0.4) $0.2 $(0.2)
Net change in unrealized
gains on open futures
contracts (2.8) 1.0 (1.8)
Gain on disposal of fixed
assets, net (0.1) - (0.1)
Foreign currency exchange
gain (0.1) - (0.1)
----- --- -----
(Gains) losses and other
expenses, net $(3.4) $1.2 $(2.2)
====== ====== ======
Reconciliation of Estimated Adjusted to GAAP Income per Share from
Continuing Operations - Diluted
For the Year
Ended
December 31,
2009
ESTIMATED
---------
Adjusted income per share from continuing operations
- diluted $1.65 - $2.05
Restructuring charges (0.33)
Net change in unrealized gains on open futures
contracts 0.06
----
GAAP income per share from continuing operations -
Diluted $1.38 - $1.78
=============
Free Cash Flow
For the Quarter For the Quarter
Ended Ended
March 31, 2009 March 31, 2008
-------------- --------------
Net cash provided by (used in)
operating activities $16.3 $(32.6)
Purchase of property, plant and
equipment (9.9) (9.8)
----- -----
Free cash flow $6.4 $(42.4)
==== =======
Operational Working Capital
March 31, March 31,
2009 2008
Trailing Trailing
March 31, 12 Mo. March 31, 12 Mo.
2009 Avg. 2008 Avg.
--------- --------- --------- --------
Accounts and Notes
Receivable, Net $334.5 $490.4
Asset Securitization 30.0 -
Allowance for Doubtful Accounts 19.3 19.1
---- ----
Accounts and Notes
Receivable, Gross 383.8 $497.6 509.5 $578.9
Inventories 321.1 379.1
Excess of Current
Cost Over Last-in,
First-out 75.1 73.0
---- ----
Inventories as Adjusted 396.2 419.7 452.1 442.4
Accounts Payable (258.2) (308.3) (329.9) (336.7)
------ ------ ------ ------
Operating Working
Capital (a) 521.8 609.0 631.7 684.6
===== ===== ===== =====
Net Sales, Trailing
Twelve Months (b) 3,302.3 3,302.3 3,711.4 3,711.4
------- ------- ------- -------
Operational Working
Capital Ratio (a/b) 15.8% 18.4% 17.0% 18.4%
===== ===== ===== =====
Note: Management uses free cash flow and operational working capital,
which are not defined by U.S. GAAP, to measure the Company's operating
performance. Free cash flow and operational working capital are also two
of several measures used to determine incentive compensation for certain
employees.
Debt to Earnings Before Interest, Taxes, Depreciation and Amortization
Expense ("EBITDA") Ratio
Trailing Twelve
Months to
March 31, 2009
---------------
Earnings before interest and taxes ("EBIT") (a) $233.0
Depreciation and amortization expense ("DA") (b) 50.7
------
EBITDA (EBIT excluding DA) (a + b) $283.7
======
Total debt at March 31, 2009 (c) $405.1
======
Total debt to EBITDA ratio ((c / (a + b)) 1.4
======
Reconciliation of EBIT to income from continuing
operations before income taxes:
EBIT per above (non-GAAP) $233.0
Losses and other expenses, net of gain on sale of
fixed assets 5.5
Impairment of equity method investment 9.1
Restructuring charges 38.8
Other expense, net 0.1
Interest expense, net 12.7
------
Subtotal 166.8
Less: Realized losses on settled futures contracts (3.2)
Less: Foreign currency exchange gains 3.3
------
Income from continuing operations before
income taxes (GAAP) $166.7
======
SOURCE:
CONTACT:
+1-972-497-6670
Web Site:
http://www.lennoxinternational.com/