Lennox International Reports Third Quarter Results
- Adjusted EPS from continuing operations $0.72, and GAAP EPS from continuing operations $0.59
- Generated record $118 million in free cash flow, up 18%
- Narrowing 2009 revenue guidance from down 17-19% to down approximately 19%
- Narrowing 2009 adjusted EPS from continuing operations guidance from $1.65-$1.80 to a range of $1.65-$1.70; GAAP guidance from continuing operations now $1.31-$1.36
DALLAS, Oct 21, 2009 /PRNewswire-FirstCall via COMTEX/ -- Lennox International Inc. (NYSE: LII) today reported financial results for the third quarter of 2009.
Revenue for the third quarter was $750 million, 22% below the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 20%. Diluted earnings per share from continuing operations on an adjusted basis, a non-GAAP measure, was $0.72, compared to $1.10 in the record third quarter a year ago. Diluted earnings per share from continuing operations on a GAAP basis was $0.59, compared to $0.96 in the year-ago quarter.
"The company's strong operational execution led to record free cash flow generation of $118 million in the third quarter, up 18% from a year ago, and gross margin improved 170 basis points," said Todd Bluedorn, Chief Executive Officer. "The cost reduction actions we have taken over the last year are providing significant benefit, and additional restructuring activities are underway. As expected, end market conditions continued to be difficult in the third quarter, and commercial markets were down significantly. While residential and refrigeration markets were also down from a year ago, we saw the rate of decline slow in the third quarter. Looking ahead, we remain focused on further lowering our cost structure and executing on our strategic initiatives to drive increased earnings leverage as markets recover."
(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 third quarter was $750 million, 22% below the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 20%. Lower volume across all business segments impacted revenue. Price and mix were flat with the year-ago quarter.
Gross Profit: Gross profit for the third quarter was $223 million, down 17% from $269 million in the year-ago quarter. Gross margin was 29.8% compared to 28.1% in the year-ago quarter, up 170 basis points. Gross margin benefited primarily from lower component and commodity costs, as well as savings from manufacturing rationalization.
Income from Continuing Operations: Adjusted income from continuing operations in the third quarter was $41.1 million, or $0.72 diluted earnings per share, compared to $62.7 million, or $1.10 diluted earnings per share in the third quarter of 2008. Adjusted income from continuing operations for the third quarter of 2009 excludes an $8.2 million after-tax charge from restructuring activities and a $0.8 million after-tax gain from the net change in unrealized gains on open futures contracts and other items, net.
On a GAAP basis, income from continuing operations for the third quarter of 2009 was $33.7 million, or $0.59 diluted earnings per share, compared to $54.8 million, or $0.96 diluted earnings per share in the prior-year quarter.
New restructuring activity in the third quarter of 2009 includes a significant headcount reduction at the Europe HVAC manufacturing facility in Mions, France, and the transfer of Commercial rooftop production to the Longvic, France, facility. The company expects total charges of approximately $9.7 million, including $7.5 million taken in the third quarter. In addition, in Residential, the company is relocating the headquarters and other operations of its Hearth business in California to Tennessee. The company expects total restructuring charges of approximately $4.3 million, including $1.2 million taken in the third quarter. Annualized savings of approximately $6 million are expected upon completion of both projects in the first half of 2010.
In the third quarter, the company had a loss from discontinued operations of $2.7 million after-tax ($2.1 million impairment), or $0.05 diluted earnings per share, as a result of plans to exit the business of five unprofitable Service Experts centers.
Free Cash Flow and Total Debt: Net cash provided by operations in the third quarter was $131 million compared to $116 million in the prior-year quarter. The company invested approximately $13 million in capital assets resulting in free cash flow of $118 million for the quarter, compared to $100 million in the year-ago quarter. Total debt at the end of September 2009 was $201 million after the company paid down $119 million in the quarter. Total cash, cash equivalents and short-term investments were $102 million.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Third quarter 2009 revenue from the Residential Heating & Cooling business segment was $347 million, a decrease of 16% from $414 million in the year-ago quarter. Excluding the negative effect of foreign exchange, revenue would have been down 15%. Segment profit was $39 million and segment profit margin was 11.2%, compared to segment profit of $55 million and segment profit margin of 13.4% a year ago. Results were impacted by lower volume and mix, with offsets from lower component and commodity costs, and SG&A salaried headcount savings. Product pricing was flat.
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment was $154 million, down 39% from $251 million in the year-ago quarter. Excluding the negative effect of foreign exchange, revenue would have been down 36%. Total segment profit was $17 million and segment profit margin was 11.1%, compared to segment profit of $40 million and segment profit margin of 16.0% in the year-ago quarter. Results were impacted by lower volume, with offsets from favorable product mix, lower component and commodity costs, and SG&A reductions. Product pricing was flat.
Service Experts
Revenue in the Service Experts business segment was $137 million in the third quarter, down 11% from $154 million in the year-ago quarter. Excluding the negative impact of foreign exchange, revenue would have been down 9%. Segment profit was $8 million and segment profit margin was 5.7%, compared to segment profit of $5 million and segment profit margin of 2.9% in the year-ago quarter. Results were impacted by lower volume, with offsets from SG&A savings, higher technician productivity, and lower fuel costs.
Refrigeration
Revenue in the Refrigeration business segment was $134 million in the third quarter, down 18% from $163 million in the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 15%. Segment profit was $17 million and segment profit margin was 12.6%, compared to segment profit of $17 million and segment profit margin of 10.3% in the third quarter a year ago. Results were impacted by lower volume, with offsets from lower component and commodity costs, lower SG&A expenses, and savings from manufacturing rationalization. Pricing was favorable compared to the third quarter a year ago.
FULL-YEAR OUTLOOK
The company is narrowing its 2009 guidance for revenue and adjusted EPS from continuing operations.
- Narrowing 2009 revenue guidance from down 17-19% to down approximately 19%, including a negative 2 point impact from foreign exchange.
- Narrowing 2009 adjusted EPS from continuing operations guidance from $1.65-$1.80 to a range of $1.65-$1.70.
- Updating 2009 GAAP EPS from continuing operations guidance from $1.38-$1.53 to a range of $1.31-$1.36, reflecting the narrower adjusted EPS guidance range and additional restructuring charges.
- Reiterating corporate expense guidance of approximately $60 million for 2009.
- Lowering 2009 capital spending guidance from approximately $75 million to $65 million.
CONFERENCE CALL INFORMATION
A conference call to discuss the company's third quarter results will be held this morning at 9:30 a.m. Central time. To listen, please call the conference call line at 651-291-5254 at least 10 minutes prior to the scheduled start time and use reservation number 117174. This conference call will also be webcast on Lennox International's web site at http://www.lennoxinternational.com.
A replay will be available from 12:00 p.m. Central time on October 21 through October 28, 2009, by dialing 800-475-6701 (U.S.) or 320-365-3844 (international) and using access code 117174. This call will also be archived on the company's web site.
Through its subsidiaries, Lennox International Inc. is a global leader in the heating, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII." Additional information is available at: http://www.lennoxinternational.com or by contacting Steve Harrison, Vice President, Investor Relations, at 972-497-6670.
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 Securities and Exchange Commission. LII 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 OPERATIONS
(Unaudited, in millions, except per share data)
For the For the
Quarters Nine Months
Ended Ended
September 30, September 30,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
NET SALES $749.5 $959.9 $2,114.0 $2,702.8
COST OF GOODS SOLD 526.4 690.6 1,525.7 1,967.7
----- ----- ------- -------
Gross profit 223.1 269.3 588.3 735.1
OPERATING EXPENSES:
Selling, general and
administrative expenses 158.4 168.6 477.8 535.0
(Gains) losses and other
expenses, net (2.1) 3.2 (2.3) (4.8)
Restructuring charges 11.5 8.4 27.4 18.9
Impairment of equity method
investment - - - 2.3
Income from equity method
investments (2.4) (2.0) (5.6) (8.0)
---- ---- ---- ----
Operational income from
continuing operations 57.7 91.1 91.0 191.7
INTEREST EXPENSE, net 2.2 3.9 6.1 10.7
OTHER EXPENSE, net 0.1 0.1 0.2 0.2
--- --- --- ---
Income from continuing
operations before income
taxes 55.4 87.1 84.7 180.8
PROVISION FOR INCOME TAXES 21.7 32.3 32.8 68.9
---- ---- ---- ----
Income from continuing
operations $33.7 $54.8 $51.9 $111.9
DISCONTINUED OPERATIONS:
Loss (income) from
discontinued operations 2.9 (0.1) 10.2 (0.5)
Income tax benefit (0.2) - (3.0) -
---- --- ---- ---
Loss (income) from
discontinued operations 2.7 (0.1) 7.2 (0.5)
--- ---- --- ----
Net income $31.0 $54.9 $44.7 $112.4
===== ===== ===== ======
EARNINGS PER SHARE - BASIC:
Income from continuing
operations $0.60 $0.99 $0.94 $1.96
Loss from discontinued
operations (0.05) - (0.13) -
----- ---- ----- ---
Net income $0.55 $0.99 $0.81 $1.96
===== ===== ===== =====
EARNINGS PER SHARE - DILUTED:
Income from continuing
operations $0.59 $0.96 $0.92 $1.89
(Loss) income from
discontinued operations (0.05) - (0.13) 0.01
----- --- ----- ----
Net income $0.54 $0.96 $0.79 $1.90
===== ===== ===== =====
AVERAGE SHARES OUTSTANDING:
Basic 55.8 55.3 55.5 57.2
Diluted 57.1 57.0 56.3 59.1
CASH DIVIDENDS DECLARED PER SHARE $0.14 $0.14 $0.42 $0.42
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
SEGMENT NET SALES AND PROFIT
(Unaudited, in millions)
For the For the
Quarters Nine Months
Ended Ended
September 30, September 30,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Residential Heating & Cooling $347.1 $414.0 $972.7 $1,193.9
Commercial Heating & Cooling 154.4 251.4 448.6 646.1
Service Experts 137.3 154.0 389.0 449.9
Refrigeration 133.6 162.9 369.4 486.8
Eliminations (A) (22.9) (22.4) (65.7) (73.9)
----- ----- ----- -----
$749.5 $959.9 $2,114.0 $2,702.8
====== ====== ======== ========
Segment Profit (Loss) (B)
Residential Heating & Cooling $39.0 $55.3 $73.5 $118.5
Commercial Heating & Cooling 17.1 40.3 38.4 73.2
Service Experts 7.9 4.5 9.6 10.6
Refrigeration 16.8 16.7 32.9 48.9
Corporate and other (13.4) (16.3) (42.0) (37.2)
Eliminations (A) 0.2 1.6 (0.2) (0.4)
--- --- ---- ----
Subtotal that includes segment
profit and eliminations 67.6 102.1 112.2 213.6
Reconciliation to income from
continuing operations before
income taxes:
(Gains) losses and other
expenses, net of gain on sale
of fixed assets (1.6) 3.1 (1.7) (4.6)
Restructuring charges 11.5 8.4 27.4 18.9
Impairment of equity method
investment - - - 2.3
Interest expense, net 2.2 3.9 6.1 10.7
Other expense, net 0.1 0.1 0.2 0.2
Less: Realized (losses) gains on
settled derivative contracts (0.4) - (3.6) 1.0
Less: Foreign currency exchange
gains (losses) 0.4 (0.5) (0.9) 4.3
--- ---- ---- ---
Income from continuing
operations before income
taxes $55.4 $87.1 $84.7 $180.8
===== ===== ===== ======
(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) Losses and Other Expenses, net:
- Realized gains and/or losses on settled derivative contracts.
- Foreign currency exchange gains and/or losses.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
As of As of
September 30, December 31,
2009 2008
--------- --------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $101.9 $122.1
Short-term investments - 33.4
Accounts and notes receivable, net 387.3 363.4
Inventories, net 274.6 297.3
Deferred income taxes 9.5 24.2
Other assets 51.9 94.8
---- ----
Total current assets 825.2 935.2
PROPERTY, PLANT AND
EQUIPMENT, net 329.9 329.4
GOODWILL 253.1 232.3
DEFERRED INCOME TAXES 104.9 113.5
OTHER ASSETS, net 49.5 49.1
---- ----
TOTAL ASSETS $1,562.6 $1,659.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $5.6 $6.1
Current maturities of long-term debt 35.6 0.6
Accounts payable 279.7 234.1
Accrued expenses 315.4 331.5
Income taxes payable - 3.7
--- ---
Total current liabilities 636.3 576.0
LONG-TERM DEBT 159.9 413.7
POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS 11.9 12.5
PENSIONS 101.7 107.7
OTHER LIABILITIES 75.3 91.0
---- ----
Total liabilities 985.1 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, 85,193,639 shares and
84,215,904 shares issued for 2009 and 2008,
respectively 0.9 0.8
Additional paid-in capital 831.9 805.6
Retained earnings 560.1 538.8
Accumulated other comprehensive loss (24.5) (98.8)
Treasury stock, at cost, 29,223,965 shares
and 29,109,058 shares for 2009 and 2008,
respectively (790.9) (787.8)
------ ------
Total stockholders' equity 577.5 458.6
----- -----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,562.6 $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 Income From Continuing Operations to Adjusted Income
From Continuing Operations
For the Quarter Ended September 30, 2009
----------------------------------------
Net Change in
Unrealized
Gains
on Open
Futures
Contracts
As and Other Restructuring As
Reported Items, Net Charges Adjusted
--------- ---------- -------------- --------
NET SALES $749.5 $- $- $749.5
COST OF GOODS SOLD 526.4 - - 526.4
----- --- --- -----
Gross Profit 223.1 - - 223.1
OPERATING EXPENSES:
Selling, general and
administrative
expenses 158.4 - - 158.4
(Gains) losses and
other expenses, net(1) (2.1) 1.4 - (0.7)
Restructuring charges 11.5 - (11.5) -
Income from equity
method investments (2.4) - - (2.4)
---- --- --- ----
Operational income
(loss) from
continuing operations 57.7 (1.4) 11.5 67.8
INTEREST EXPENSE, net 2.2 - - 2.2
OTHER EXPENSE, net 0.1 - - 0.1
--- --- --- ---
Income (loss) from
continuing operations
before income taxes 55.4 (1.4) 11.5 65.5
PROVISION FOR (BENEFIT
FROM) INCOME TAXES 21.7 (0.6) 3.3 24.4
---- ---- --- ----
Income (loss) from
continuing operations $33.7 $(0.8) $8.2 $41.1
===== ===== ==== =====
EARNINGS (LOSS) PER SHARE
FROM CONTINUING
OPERATIONS - DILUTED $0.59 $(0.01) $0.14 $0.72
===== ====== ===== =====
Note: Management uses adjusted 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, impairment of equity method investment 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 September 30, 2009
----------------------------------------
Pre-tax Tax After-tax
Loss (Benefit) Loss
(Gain) Provision (Gain)
------- --------- ---------
Realized losses on settled futures
contracts $0.4 $(0.2) $0.2
Net change in unrealized gains on open
futures contracts (1.2) 0.5 (0.7)
Foreign currency exchange gain (0.4) 0.1 (0.3)
Discount fee on accounts sold 0.1 - 0.1
Gain on disposal of fixed assets (0.5) 0.2 (0.3)
Realized gain on marketable securities (0.3) 0.1 (0.2)
Other items, net (0.2) 0.1 (0.1)
---- --- ----
(Gains) losses and other expenses, net $(2.1) $0.8 $(1.3)
===== ==== =====
For the Quarter Ended September 30, 2008
----------------------------------------
Net Change in
Unrealized
Losses
on Open
Futures
Contracts
As and Other Restructuring As
Reported Items, Net Charges Adjusted
----------- ----------- -------------- --------
NET SALES $959.9 $- $- $959.9
COST OF GOODS SOLD 690.6 - - 690.6
----- --- --- -----
Gross Profit 269.3 - - 269.3
OPERATING EXPENSES:
Selling, general and
administrative
expenses 168.6 - - 168.6
Losses (gains) and
other expenses, net(2) 3.2 (2.7) - 0.5
Restructuring charges 8.4 - (8.4) -
Impairment of equity
method investment - - - -
Income from equity
method investments (2.0) - - (2.0)
---- --- --- ----
Operational income
from continuing
operations 91.1 2.7 8.4 102.2
INTEREST EXPENSE, net 3.9 - - 3.9
OTHER EXPENSE, net 0.1 - - 0.1
--- --- --- ---
Income from
continuing operations
before income taxes 87.1 2.7 8.4 98.2
PROVISION FOR INCOME TAXES 32.3 1.0 2.2 35.5
---- --- --- ----
Income from continuing
operations $54.8 $1.7 $6.2 $62.7
===== ==== ==== =====
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS -
DILUTED $0.96 $0.03 $0.11 $1.10
===== ===== ===== =====
(2) Losses (gains) and other expenses, net include the following:
For the Quarter Ended September 30, 2008
----------------------------------------
Tax
Pre-tax (Benefit) After-tax
Loss (Gain) Provision Loss (Gain)
---------- --------- ----------
Net change in unrealized losses on
open futures contracts $2.8 $(1.0) $1.8
Foreign currency exchange loss 0.5 (0.3) 0.2
Other items, net (0.1) - (0.1)
---- --- ----
Losses (gains) and other
expenses, net $3.2 $(1.3) $1.9
==== ===== ====
For the Year-to-Date Period Ended September 30, 2009
----------------------------------------------------
Net Change in
Unrealized
Gains
on Open
Futures
Contracts
As and Other Restructuring As
Reported Items, Net Charges Adjusted
---------- ----------- ------------- ---------
NET SALES $2,114.0 $- $- $2,114.0
COST OF GOODS SOLD 1,525.7 - - 1,525.7
------- --- --- -------
Gross Profit 588.3 - - 588.3
OPERATING EXPENSES:
Selling, general
and administrative
expenses 477.8 - - 477.8
(Gains) losses and
other expenses,
net(3) (2.3) 6.2 - 3.9
Restructuring charges 27.4 - (27.4) -
Income from equity
method investments (5.6) - - (5.6)
---- --- --- ----
Operational income
(loss) from
continuing
operations 91.0 (6.2) 27.4 112.2
INTEREST EXPENSE, net 6.1 - - 6.1
OTHER EXPENSE, net 0.2 - - 0.2
--- --- --- ---
Income (loss) from
continuing operations
before income taxes 84.7 (6.2) 27.4 105.9
PROVISION FOR (BENEFIT
FROM) INCOME TAXES 32.8 (2.3) 8.3 38.8
---- ---- --- ----
Income (loss) from
continuing operations $51.9 $(3.9) $19.1 $67.1
===== ===== ===== =====
EARNINGS (LOSS) PER
SHARE FROM CONTINUING
OPERATIONS - DILUTED $0.92 $(0.07) $0.34 $1.19
===== ====== ===== =====
(3) (Gains) losses and other expenses, net include the following:
For the Year-to-Date Period Ended
September 30, 2009
---------------------------------
Pre-tax Tax (Benefit) After-tax
Loss (Gain) Provision Loss (Gain)
---------- ------------ ----------
Realized losses on settled
futures contracts $3.6 $(1.3) $2.3
Net change in unrealized gains
on open futures contracts (6.4) 2.3 (4.1)
Foreign currency exchange loss 0.9 (0.5) 0.4
Discount fee on accounts sold 0.3 (0.1) 0.2
Gain on disposal of fixed assets (0.6) 0.2 (0.4)
Realized gain on marketable
securities (0.3) 0.1 (0.2)
Other items, net 0.2 - 0.2
--- --- ---
(Gains) losses and other
expenses, net $(2.3) $0.7 $(1.6)
===== ==== =====
For the Year-to-Date Period Ended September 30, 2008
----------------------------------------------------
Net Change in
Unrealized
Losses
on Open
Futures
Contracts Impairment
and of
Other Equity
As Items, Restructuring Method As
Reported Net Charges Investment Adjusted
-------- --- ------------ ---------- --------
NET SALES $2,702.8 $- $- $- $2,702.8
COST OF GOODS SOLD 1,967.7 - - - 1,967.7
------- --- --- --- -------
Gross Profit 735.1 - - - 735.1
OPERATING EXPENSES:
Selling, general
and administrative
expenses 535.0 - - - 535.0
(Gains) losses and
other expenses, net(4) (4.8) (0.7) - - (5.5)
Restructuring charges 18.9 - (18.9) - -
Impairment of equity
method investment 2.3 - - (2.3) -
Income from equity
method investments (8.0) - - - (8.0)
---- --- --- --- ----
Operational income
from continuing
operations 191.7 0.7 18.9 2.3 213.6
INTEREST EXPENSE, net 10.7 - - - 10.7
OTHER EXPENSE, net 0.2 - - - 0.2
--- --- --- --- ---
Income from
continuing operations
before income taxes 180.8 0.7 18.9 2.3 202.7
PROVISION FOR INCOME TAXES 68.9 0.2 5.9 - 75.0
---- --- --- --- ----
Income from
continuing operations $111.9 $0.5 $13.0 $2.3 $127.7
====== ==== ===== ==== ======
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
- DILUTED $1.89 $0.01 $0.22 $0.04 $2.16
===== ===== ===== ===== =====
(4) (Gains) losses and other expenses, net include the following:
For the Year-to-Date Period Ended
September 30, 2008
----------------------------------
Tax
Pre-tax Provision After-tax
(Gain) Loss (Benefit) (Gain) Loss
----------- --------- -----------
Realized gains on settled
futures contracts $(1.0) $0.4 $(0.6)
Net change in unrealized gains
on open futures contracts 0.4 (0.1) 0.3
Foreign currency exchange gain (4.3) - (4.3)
Gain on disposal of fixed assets (0.2) 0.1 (0.1)
Other items, net 0.3 (0.1) 0.2
--- ---- ---
(Gains) losses and other
expenses, net $(4.8) $0.3 $(4.5)
===== ==== =====
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 - $1.70
Restructuring charges (0.41)
Net change in unrealized gains on open futures
contracts and other items, net 0.07
----
GAAP income per share from continuing
operations - diluted $1.31 - $1.36
===============
Free Cash Flow
For the For the
For the For the Year-to-Date Year-to-Date
Quarter Quarter Period Period
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
----------- ------------ ------------ ------------
Net cash provided
by operating
activities $130.6 $116.2 $213.3 $139.8
Purchase of
property, plant
and equipment (12.3) (15.8) (33.9) (38.3)
----- ----- ----- -----
Free cash flow $118.3 $100.4 $179.4 $101.5
====== ====== ====== ======
Operational Working Capital
September 30, September 30,
2009 2008
September 30, Trailing September 30, Trailing
2009 12 Mo. Avg. 2008 12 Mo. Avg.
------------- ---------- ------------ ----------
Accounts and Notes
Receivable, Net $387.3 $542.7
Asset
Securitization 30.0 -
Allowance for
Doubtful Accounts 20.4 18.5
---- ----
Accounts and Notes
Receivable, Gross 437.7 $422.0 561.2 $546.6
Inventories 274.6 351.3
Excess of Current
Cost Over Last-in,
First-out 72.5 73.8
---- ----
Inventories
as Adjusted 347.1 375.8 425.1 435.9
Accounts Payable (279.7) (258.3) (347.0) (334.0)
------ ------ ------ ------
Operating Working
Capital (a) 505.1 539.5 639.3 648.5
===== ===== ===== =====
Net Sales, Trailing
Twelve Months (b) 2,852.3 2,852.3 3,572.7 3,572.7
------- ------- ------- -------
Operational Working
Capital Ratio (a/b) 17.7% 18.9% 17.9% 18.2%
==== ==== ==== ====
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
September 30,
2009
------------
Earnings before interest and taxes ("EBIT") (a) $161.9
Depreciation and amortization expense ("DA") (b) 51.4
----
EBITDA (EBIT excluding DA) (a + b) $213.3
======
Total debt at September 30, 2009 (c) $201.1
======
Total debt to EBITDA ratio ((c / (a + b)) 0.9
===
Reconciliation of EBIT to income from continuing
operations before income taxes:
EBIT per above (non-GAAP) $161.9
Losses and other expenses, net of gain on sale
of fixed assets 5.8
Impairment of equity method investment 6.8
Restructuring charges 38.9
Other expenses, net 0.1
Interest expense, net 9.6
---
Subtotal 100.7
Less: Realized losses on settled futures contracts (5.5)
Less: Foreign currency exchange losses (2.0)
----
Income from continuing operations before income
taxes (GAAP) $108.2
======
SOURCE Lennox International Inc.