07/26/2021 | Press release | Distributed by Public on 07/26/2021 06:37
(Amounts in millions, except per share data) |
For the Three Months Ended June 30,
|
For the Six Months Ended June 30, | ||||||
2021 | 2020 | 2021 | 2020 | |||||
Net sales | $ | 1,239.0 | $ | 941.3 | $ | 2,169.4 | $ | 1,665.1 |
Cost of goods sold | 855.8 | 665.6 | 1,529.7 | 1,223.7 | ||||
Gross profit | 383.2 | 275.7 | 639.7 | 441.4 | ||||
Operating Expenses: | ||||||||
Selling, general and administrative expenses | 167.8 | 129.5 | 313.2 | 260.8 | ||||
Losses (gains) and other expenses, net | 2.3 | 3.6 | 2.6 | 2.3 | ||||
Restructuring charges | 1.2 | 10.0 | 1.3 | 10.5 | ||||
Loss from natural disasters, net of insurance recoveries | - | 1.0 | - | 2.7 | ||||
Income from equity method investments | (4.1) | (4.4) | (7.4) | (7.2) | ||||
Operating income | 216.0 | 136.0 | 330.0 | 172.3 | ||||
Pension settlement | - | - | 0.7 | - | ||||
Interest expense, net | 6.4 | 6.9 | 12.3 | 15.6 | ||||
Other expense (income), net | 0.9 | 1.1 | 1.9 | 2.2 | ||||
Income from continuing operations before income taxes | 208.7 | 128.0 | 315.1 | 154.5 | ||||
Provision for income taxes | 38.7 | 27.4 | 60.9 | 41.4 | ||||
Income from continuing operations | 170.0 | 100.6 | 254.2 | 113.1 | ||||
Discontinued Operations: | ||||||||
Loss from discontinued operations before income taxes | - | (0.8) | - | (0.8) | ||||
Income tax benefit | - | (0.2) | - | (0.6) | ||||
Loss from discontinued operations | - | (0.6) | - | (0.2) | ||||
Net income | $ | 170.0 | $ | 100.0 | $ | 254.2 | $ | 112.9 |
Earnings per share - Basic: | ||||||||
Income from continuing operations | $ | 4.55 | $ | 2.63 | $ | 6.74 | $ | 2.95 |
Loss from discontinued operations | - | (0.01) | - | - | ||||
Net income | $ | 4.55 | $ | 2.62 | $ | 6.74 | $ | 2.95 |
Earnings per share - Diluted: | ||||||||
Income from continuing operations | $ | 4.51 | $ | 2.62 | $ | 6.70 | $ | 2.93 |
Loss from discontinued operations | - | (0.02) | - | - | ||||
Net income | $ | 4.51 | $ | 2.60 | $ | 6.70 | $ | 2.93 |
Weighted Average Number of Shares Outstanding - Basic | 37.4 | 38.2 | 37.7 | 38.3 | ||||
Weighted Average Number of Shares Outstanding - Diluted | 37.7 | 38.4 | 38.0 | 38.6 |
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES |
Segment Net Sales and Profit (Loss) |
(Unaudited) |
(Amounts in millions) |
For the Three Months Ended June 30,
|
For the Six Months Ended June 30, | ||||||
2021 | 2020 | 2021 | 2020 | |||||
Net Sales | ||||||||
Residential Heating & Cooling | $ | 838.0 | $ | 644.8 | $ | 1,444.2 | $ | 1,086.9 |
Commercial Heating & Cooling | 252.8 | 188.3 | 452.0 | 366.7 | ||||
Refrigeration | 148.2 | 108.2 | 273.2 | 211.5 | ||||
$ | 1,239.0 | $ | 941.3 | $ | 2,169.4 | $ | 1,665.1 | |
Segment Profit (Loss) (1)
|
||||||||
Residential Heating & Cooling | $ | 189.7 | $ | 127.3 | $ | 286.1 | $ | 159.8 |
Commercial Heating & Cooling | 45.3 | 35.6 | 72.6 | 54.3 | ||||
Refrigeration | 13.5 | 8.9 | 21.4 | 9.6 | ||||
Corporate and other | (26.9) | (18.8) | (42.9) | (33.1) | ||||
Total segment profit | 221.6 | 153.0 | 337.2 | 190.6 | ||||
Reconciliation to Operating Income: | ||||||||
Special product quality adjustments | - | (1.0) | - | (1.0) | ||||
Loss from natural disasters, net of insurance recoveries | - | 1.0 | - | 2.7 | ||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (1)
|
4.4 | 7.0 | 5.9 | 6.1 | ||||
Restructuring charges | 1.2 | 10.0 | 1.3 | 10.5 | ||||
Operating income | $ | 216.0 | $ | 136.0 | $ | 330.0 | $ | 172.3 |
(Amounts in millions, except shares and par values) | As of June 30, 2021 | As of December 31, 2020 | ||
(Unaudited) | ||||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ | 44.5 | $ | 123.9 |
Short-term investments | 2.8 | 5.1 | ||
Accounts and notes receivable, net of allowances of $10.4 and $9.6 in 2021 and 2020, respectively | 692.5 | 448.3 | ||
Inventories, net | 433.8 | 439.4 | ||
Other assets | 86.8 | 70.9 | ||
Total current assets | 1,260.4 | 1,087.6 | ||
Property, plant and equipment, net of accumulated depreciation of $907.7 and $880.6 in 2021 and 2020, respectively | 476.0 | 464.3 | ||
Right-of-use assets from operating leases | 183.3 | 194.4 | ||
Goodwill | 186.8 | 186.9 | ||
Deferred income taxes | 12.1 | 13.2 | ||
Other assets, net | 86.1 | 86.1 | ||
Total assets | $ | 2,204.7 | $ | 2,032.5 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Current Liabilities: | ||||
Current maturities of long-term debt | 265.9 | 9.9 | ||
Current operating lease liabilities |
54.6 | 55.0 | ||
Accounts payable | 404.9 | 340.3 | ||
Accrued expenses | 332.4 | 296.1 | ||
Total current liabilities | 1,057.8 | 701.3 | ||
Long-term debt | 977.4 | 970.7 | ||
Long-term operating lease liabilities | 131.5 | 142.8 | ||
Pensions | 96.9 | 92.5 | ||
Other liabilities | 154.4 | 142.3 | ||
Total liabilities | 2,418.0 | 2,049.6 | ||
Commitments and contingencies | ||||
Stockholders' 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 | 1,128.9 | 1,113.2 | ||
Retained earnings | 2,576.6 | 2,385.8 | ||
Accumulated other comprehensive loss | (93.1) | (97.2) | ||
Treasury stock, at cost, 50,006,069 shares and 48,820,969 shares for 2021 and 2020, respectively | (3,826.6) | (3,419.8) | ||
Total stockholders' deficit | (213.3) | (17.1) | ||
Total liabilities and stockholders' deficit | $ | 2,204.7 | $ | 2,032.5 |
(Amounts in millions) | For the Six Months Ended June 30, | |||
2021 | 2020 | |||
Cash flows from operating activities: | ||||
Net income | $ | 254.2 | $ | 112.9 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Income from equity method investments | (7.4) | (7.2) | ||
Dividends from affiliates | 3.7 | 2.5 | ||
Restructuring charges, net of cash paid | 1.4 | 5.9 | ||
Provision for credit losses | 3.5 | 3.1 | ||
Unrealized losses on derivative contracts | 0.3 | 1.1 | ||
Stock-based compensation expense | 17.5 | 10.4 | ||
Depreciation and amortization | 35.6 | 37.9 | ||
Deferred income taxes | (3.6) | 6.6 | ||
Pension expense | 5.4 | 4.9 | ||
Pension contributions | (0.8) | (1.2) | ||
Other items, net | (0.3) | 0.7 | ||
Changes in assets and liabilities: | ||||
Accounts and notes receivable | (248.2) | (151.5) | ||
Inventories | 7.0 | 43.1 | ||
Other current assets | (9.7) | (1.1) | ||
Accounts payable | 67.4 | (66.2) | ||
Accrued expenses | 33.7 | (11.9) | ||
Income taxes payable / (receivable), net | 1.6 | 10.2 | ||
Leases, net | (0.6) | 1.5 | ||
Other, net | 13.8 | 4.8 | ||
Net cash provided by operating activities | 174.5 | 6.5 | ||
Cash flows from investing activities: | ||||
Proceeds from the disposal of property, plant and equipment | 0.6 | 0.3 | ||
Purchases of property, plant and equipment | (45.5) | (43.5) | ||
Proceeds from (purchases of) short-term investments | 2.3 | (1.1) | ||
Net cash used in investing activities | (42.6) | (44.3) | ||
Cash flows from financing activities: | ||||
Short-term debt payments | - | (1.9) | ||
Short-term debt borrowings | - | 1.9 | ||
Asset securitization borrowings | 299.0 | 91.0 | ||
Asset securitization payments | (44.0) | (70.0) | ||
Long-term debt payments | (3.1) | (2.6) | ||
Borrowings from credit facility | 753.0 | 1,060.5 | ||
Payments on credit facility | (748.5) | (863.5) | ||
Proceeds from employee stock purchases | 1.6 | 1.6 | ||
Repurchases of common stock | (400.0) | (100.0) | ||
Repurchases of common stock to satisfy employee withholding tax obligations | (10.2) | (5.6) | ||
Cash dividends paid | (58.6) | (59.1) | ||
Net cash (used in) provided by financing activities | (210.8) | 52.3 | ||
(Decrease) increase in cash and cash equivalents | (78.9) | 14.5 | ||
Effect of exchange rates on cash and cash equivalents | (0.5) | (7.0) | ||
Cash and cash equivalents, beginning of period | 123.9 | 37.3 | ||
Cash and cash equivalents, end of period | $ | 44.5 | $ | 44.8 |
Supplemental disclosures of cash flow information: | ||||
Interest paid | $ | 11.8 | $ | 16.9 |
Income taxes paid (net of refunds) | $ | 62.6 | $ | 22.8 |
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. 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. 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 June 30, | ||||||||||||
(Unaudited) | ||||||||||||
2021 | 2020 | |||||||||||
Pre-Tax | Tax Impact (e) | After Tax | Pre-Tax | Tax Impact (e) | After Tax | |||||||
Income from continuing operations, a GAAP measure | $ | 208.7 | $ | (38.7) | $ | 170.0 | $ | 128.0 | $ | (27.4) | $ | 100.6 |
Restructuring charges | 1.2 | (0.2) | 1.0 | 10.0 | (2.1) | 7.9 | ||||||
Special product quality adjustments (b) | - | - | - | (1.0) | 0.2 | (0.8) | ||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (a) | 4.4 | (1.0) | 3.4 | 7.0 | (1.4) | 5.6 | ||||||
Excess tax benefits from share-based compensation (c) | - | (2.5) | (2.5) | - | (0.1) | (0.1) | ||||||
Other tax items, net (c) | - | 0.1 | 0.1 | - | - | - | ||||||
Loss from natural disasters, net of insurance recoveries (f) | - | - | - | 1.0 | (0.2) | 0.8 | ||||||
Adjusted income from continuing operations, a non-GAAP measure | $ | 214.3 | $ | (42.3) | $ | 172.0 | $ | 145.0 | $ | (31.0) | $ | 114.0 |
Earnings per share from continuing operations - diluted, a GAAP measure | $ | 4.51 | $ | 2.62 | ||||||||
Restructuring charges | 0.03 | 0.21 | ||||||||||
Special product quality adjustments (b) | - | (0.02) | ||||||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (a) | 0.09 | 0.14 | ||||||||||
Excess tax benefits from share-based compensation (c) | (0.07) | - | ||||||||||
Other tax items, net (c) | - | - | ||||||||||
Loss from natural disasters, net of insurance recoveries (f) | - | 0.02 | ||||||||||
Change in share counts from share-based compensation (d) | 0.01 | - | ||||||||||
Adjusted earnings per share from continuing operations - diluted, a non-GAAP measure | $ | 4.57 | $ | 2.97 | ||||||||
(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 | ||||||||||||
(c) Recorded in Provision for income taxes in the Consolidated Statements of Operations | ||||||||||||
(d) The impact of excess tax benefits from the change in share-based compensation also impacts the Company's diluted share counts. The reconciliation of average outstanding diluted shares on a GAAP and non-GAAP basis is included in this amount.. | ||||||||||||
(e) Tax impact based on the applicable tax rate relevant to the location and nature of the adjustment. |
||||||||||||
(f) Recorded in Loss from natural disasters, net of insurance recoveries in the Consolidated Statement of Operations. | ||||||||||||
For the Six Months Ended June 30, | ||||||||||||
(Unaudited) | ||||||||||||
2021 | 2020 | |||||||||||
Pre-Tax | Tax Impact (e) | After Tax | Pre-Tax | Tax Impact (e) | After Tax | |||||||
Income from continuing operations, a GAAP measure | $ | 315.1 | $ | (60.9) | $ | 254.2 | $ | 154.5 | $ | (41.4) | $ | 113.1 |
Restructuring charges | 1.3 | (0.3) | 1.0 | 10.5 | (2.2) | 8.3 | ||||||
Pension settlement | 0.7 | (0.1) | 0.6 | - | - | - | ||||||
Special product quality adjustments (b) | - | - | - | (1.0) | 0.2 | (0.8) | ||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (a) | 5.9 | (1.1) | 4.8 | 6.1 | (1.3) | 4.8 | ||||||
Excess tax benefits from share-based compensation (c) | - | (3.8) | (3.8) | - | - | |||||||
Other tax items, net (c) | - | 2.1 | 2.1 | - | 8.1 | 8.1 | ||||||
Loss from natural disasters, net of insurance recoveries (f) | - | - | - | 2.7 | (0.6) | 2.1 | ||||||
Adjusted income from continuing operations, a non-GAAP measure | $ | 323.0 | $ | (64.1) | $ | 258.9 | $ | 172.8 | $ | (37.2) | $ | 135.6 |
Earnings per share from continuing operations - diluted, a GAAP measure | $ | 6.70 | $ | 2.93 | ||||||||
Restructuring charges | 0.03 | 0.21 | ||||||||||
Pension settlement | 0.02 | - | ||||||||||
Special product quality adjustments (b) | - | (0.02) | ||||||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (a) | 0.13 | 0.14 | ||||||||||
Excess tax benefits from share-based compensation (c) | (0.10) | - | ||||||||||
Other tax items, net (c) | 0.05 | 0.21 | ||||||||||
Loss from natural disasters, net of insurance recoveries (f) | - | 0.05 | ||||||||||
Change in share counts from share-based compensation (d) | - | - | ||||||||||
Adjusted earnings per share from continuing operations - diluted, a non-GAAP measure | $ | 6.83 | $ | 3.52 | ||||||||
(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 | ||||||||||||
(c) Recorded in Provision for income taxes in the Consolidated Statements of Operations | ||||||||||||
(d) The impact of excess tax benefits from the change in share-based compensation also impacts the Company's diluted share counts. The reconciliation of average outstanding diluted shares on a GAAP and non-GAAP basis is included in this document.
|
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(e) Tax impact based on the applicable tax rate relevant to the location and nature of the adjustment. | ||||||||||||
(f) Recorded in Loss from natural disasters, net of insurance recoveries in the Consolidated Statement of Operations. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Components of Losses (gains) and other expenses, net (pre-tax):
|
||||||||
Realized (gains) losses on settled future contracts (a)
|
$ | (0.4) | $ | 0.1 | $ | (0.6) | $ | 0.2 |
Foreign currency exchange gains (a)
|
(1.3) | (2.1) | (1.6) | (2.6) | ||||
Gain on disposal of fixed assets (a)
|
(0.2) | (0.2) | (0.5) | (0.1) | ||||
Other operating income (a)
|
(0.2) | (1.2) | (0.6) | (1.3) | ||||
Net change in unrealized losses (gains) on unsettled futures contracts (b)
|
0.1 | 0.8 | (0.2) | 1.4 | ||||
Special legal contingency charges (b)
|
0.7 | 0.7 | 0.9 | 0.7 | ||||
Asbestos-related litigation (b)
|
1.7 | 1.2 | 2.8 | (0.5) | ||||
Environmental liabilities (b)
|
0.8 | 1.1 | 1.5 | 1.3 |
Charges incurred related to COVID-19 pandemic (b)
|
0.5 | 3.4 | 1.1 | 3.4 | ||||
Other items, net (b)
|
0.6 | (0.2) | (0.2) | (0.2) | ||||
Losses (gains) and other expenses, net (pre-tax)
|
$ | 2.3 | $ | 3.6 | $ | 2.6 | $ | 2.3 |
(a) Included in both segment profit (loss) and Adjusted income from continuing operations |
(b) Excluded from both segment profit (loss) and Adjusted income from continuing operations |
Reconciliation of Estimated Earnings per Share from Continuing Operations - Diluted, a GAAP measure, to Estimated Adjusted Earnings per Share from Continuing Operations - Diluted, a Non-GAAP measure | |
For the Year Ended December 31, 2021 ESTIMATED |
|
Estimated Earnings per share from continuing operations - diluted, a GAAP measure | $11.97-$12.57 |
Other non-core EBIT charges and other non-core tax items | (0.13) |
Estimated Adjusted Earnings per share from continuing operations - diluted, a Non-GAAP measure | $12.10-$12.70 |
Reconciliation of Average Shares Outstanding - Diluted, a GAAP measure, to Adjusted Average Shares Outstanding - Diluted, a Non-GAAP measure (shares in millions): | ||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Average shares outstanding - diluted, a GAAP measure | 37.7 | 38.4 | 38.0 | 38.6 | ||||
Impact on diluted shares from excess tax benefits from share-based compensation | (0.1) | - | (0.1) | (0.1) | ||||
Adjusted average shares outstanding - diluted, a Non-GAAP measure | 37.6 | 38.7 | 37.9 | 38.5 | ||||
Reconciliation of Net Cash Used in Operating Activities, a GAAP measure, to Free Cash Flow, a Non-GAAP measure (dollars in millions) | ||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
2021 | 2020 | 2021 | 2020 | |||||
Net cash provided by operating activities | $ | 192.0 | $ | 105.3 | $ | 174.5 | $ | 6.5 |
Purchases of property, plant and equipment | (20.8) | (18.8) | (45.5) | (43.5) | ||||
Proceeds from the disposal of property, plant and equipment | 0.2 | 0.2 | 0.6 | 0.3 | ||||
Free cash flow, a Non-GAAP measure | $ | 171.4 | $ | 86.7 | $ | 129.6 | $ | (36.7) |
Calculation of Debt to EBITDA Ratio (dollars in millions): |
Trailing Twelve Months to June 30, 2021
|
|
Adjusted EBIT (a) | $ | 653.3 |
Depreciation and amortization expense (b) | 68.0 | |
EBITDA (a + b) | $ | 721.3 |
Total debt at June 30, 2021 (c)
|
$ | 1,243.3 |
Total Debt to EBITDA ratio ((c / (a + b)) | 1.7 | |
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Reconciliation of Adjusted EBIT, a Non-GAAP measure, to Income From Continuing Operations Before Income Taxes, a GAAP measure (dollars in millions) | ||
Trailing Twelve Months to June 30, 2021
|
||
Income from continuing operations before income taxes, a GAAP measure | $ | 605.8 |
Items in Losses (gains) and other expenses, net which are excluded from segment profit | 13.1 | |
Special product quality adjustments | 2.0 | |
Restructuring charges | 1.6 | |
Interest expense, net | 25.0 | |
Pension settlements | 1.3 | |
Loss from natural disasters, net of insurance recoveries | 0.4 | |
Other expense (income), net | 4.1 | |
Adjusted EBIT per above, a Non-GAAP measure | $ | 653.3 |