- 4Q09 adjusted EPS from continuing operations of $0.58, up 12% -
2009 adjusted EPS from continuing operations of $1.77, above
guidance range of $1.65-$1.70 - 4Q09 GAAP EPS from continuing
operations of $0.17 after restructuring and other charges; 2009
GAAP EPS from continuing operations of $1.09 - 2009 free cash flow
of $167 million, up 38% - Reiterate 2010 guidance of adjusted EPS
from continuing operations of $1.85-$2.25 DALLAS, Feb. 4
/PRNewswire-FirstCall/ -- Lennox International Inc. (NYSE: LII)
today reported fourth quarter and full year 2009 results. For the
fourth quarter, revenue was $733 million, down 1% from the prior
year, including a 5 point positive impact from foreign exchange.
Segment profit margin was up 40 basis points to 7.1%. Diluted
earnings per share from continuing operations on an adjusted basis,
a non-GAAP measure, was $0.58, up 12% from $0.52 in the year-ago
quarter. Diluted earnings per share from continuing operations on a
GAAP basis was $0.17 compared to $0.21 in the year-ago quarter. For
the full year, revenue was $2.8 billion, down 17% from the prior
year, including a negative 1 point impact from foreign exchange.
Segment profit margin was down 190 basis points to 5.8%. Diluted
earnings per share from continuing operations on an adjusted basis,
a non-GAAP measure, was $1.77 compared to $2.69 in the prior year.
Diluted earnings per share from continuing operations on a GAAP
basis was $1.09 compared to $2.12 in the prior year. "End markets
continued to show improvement in the fourth quarter, with our
residential HVAC end markets seeing strong growth," said Todd
Bluedorn, Chief Executive Officer. "The commercial HVAC and
refrigeration markets were still down from a year ago, but the rate
of decline continued to slow in the fourth quarter. Overall for the
company, our continued strong focus on productivity drove our
margin expansion and 12% adjusted EPS growth in the quarter. For
2010, we reiterate the outlook provided in December and expect
adjusted EPS from continuing operations of $1.85 to $2.25 for the
full year." FOURTH QUARTER 2009 FINANCIAL HIGHLIGHTS Revenue:
Revenue for the fourth quarter was $733 million, down 1% from the
prior year. At constant currency, revenue was down 6%. Gross
Profit: Gross profit in the fourth quarter was $205 million, up 3%,
and gross margin was 28.0%, up 100 basis points. Excluding an $18
million pre-tax charge in the fourth quarter for a vendor-supplied
materials quality issue, gross margin would have been 30.5%, up 350
basis points. Gross margin increased primarily due to lower
sourcing and commodity costs, and productivity initiatives. Income
from Continuing Operations: For the fourth quarter, adjusted income
from continuing operations was $33 million, or $0.58 diluted
earnings per share, compared to $29 million, or $0.52 diluted
earnings per share from continuing operations in the fourth quarter
of 2008. On a GAAP basis, fourth quarter 2009 income from
continuing operations was $10 million, or $0.17 diluted earnings
per share, compared to $12 million, or $0.21 diluted earnings per
share, in the fourth quarter of 2008. Adjusted income from
continuing operations for the fourth quarter of 2009 excludes net
after-tax charges of $23.2 million, which are derived from: --
$11.3 million charge for a vendor-supplied materials quality issue
-- $10.9 million charge for restructuring activities -- $1.3
million net charge related to the sale of a non-core European HVAC
business -- $0.5 million for the net change in unrealized gains on
open future contracts -- $0.2 million charge for other items FULL
YEAR 2009 FINANCIAL HIGHLIGHTS Revenue: For the full year, revenue
was $2.8 billion, down 17% from the prior year. At constant
currency, revenue was down 16%. Gross Profit: Gross profit for the
full year was $793 million, down 15%, and gross margin was 27.9%,
up 70 basis points. Excluding an $18 million pre-tax charge in the
fourth quarter for a vendor-supplied materials quality issue, 2009
gross margin would have been 28.5%, up 130 basis points. Gross
margin increased primarily due to lower sourcing and commodity
costs, productivity initiatives, and improved price and mix. Income
from Continuing Operations: Adjusted income from continuing
operations for 2009 was $100 million, or $1.77 diluted earnings per
share, compared to $157 million, or $2.69 diluted earnings per
share in the prior year. On a GAAP basis, income from continuing
operations for 2009 was $62 million, or $1.09 diluted earnings per
share, compared to $124 million, or $2.12 diluted earnings per
share in the prior year. Adjusted income from continuing operations
for 2009 excludes net after-tax charges of $38.5 million, which are
derived from: -- $30.0 million charge for restructuring activities
-- $11.3 million charge for a vendor-supplied materials quality
issue -- $4.5 million for the net change in unrealized gains on
open future contracts -- $1.3 million net charge related to the
sale of a non-core European HVAC business -- $0.4 million charge
for other items Free Cash Flow and Total Debt: Cash generated from
operations for the year was $225 million. The company invested
approximately $58 million in capital assets, resulting in free cash
flow of $167 million, up 38% from the prior year. Total debt as of
December 31, 2009 was $232 million, down $189 million from a year
ago. Total cash and cash equivalents were $124 million ending the
year. BUSINESS SEGMENT FINANCIAL HIGHLIGHTS Residential Heating and
Cooling -- 4Q09 revenue of $321 million, up 7% from $299 million in
the prior-year quarter; up 5% at constant currency -- 4Q09 segment
profit of $38 million, up 40% from $27 million in 4Q08 -- 4Q09
segment profit margin of 11.9%, up 280 basis points from 9.1% in
4Q08 -- 2009 revenue of $1,293 million, down 13% from $1,493
million in 2008, with no impact from foreign exchange -- 2009
segment profit of $112 million, down 23% from $146 million in 2008
-- 2009 profit margin of 8.6%, down 120 basis points from 9.8% in
2008 Fourth quarter results were positively impacted by higher
volume, foreign exchange, lower sourcing and commodity costs, and
productivity initiatives. The Hearth business within Residential
continued to be down significantly. Full year results were
negatively impacted by lower volume, with offsets from price, mix,
lower sourcing and commodity costs, and productivity initiatives.
Commercial Heating and Cooling -- 4Q09 revenue of $146 million,
down 23% from $189 million in the prior-year quarter; down 26% at
constant currency -- 4Q09 segment profit of $11 million, down 46%
from $20 million in 4Q08 -- 4Q09 segment profit margin of 7.5%,
down 310 basis points from 10.6% in 4Q08 -- 2009 revenue of $595
million, down 29% from $835 million in 2008; down 26% at constant
currency -- 2009 segment profit of $49 million, down 47% from $93
million in 2008 -- 2009 profit margin of 8.3%, down 290 basis
points from 11.2% in 2008 Fourth quarter results were negatively
impacted by lower volume, with offsets from mix, foreign exchange,
lower sourcing and commodity costs, and productivity initiatives.
Full year results were negatively impacted by volume, with offsets
from mix, price, lower sourcing and commodity costs, and
productivity initiatives. Service Experts (Continuing Operations)
-- 4Q09 revenue of $146 million, up 7% from $136 million in the
prior-year quarter; up 3% at constant currency -- 4Q09 segment
profit of $7 million, down 10% from $8 million in 4Q08 -- 4Q09
segment profit margin of 4.8%, down 100 basis points from 5.8% in
4Q08 -- 2009 revenue of $535 million, down 9% from $586 million in
2008; down 8% at constant currency -- 2009 segment profit of $17
million, down 10% from $18 million in 2008 -- 2009 profit margin of
3.1%, down 10 basis points from 3.2% in 2008 Fourth quarter results
were positively impacted by higher volume and mix. Segment margin
was down primarily due to the timing of expenses between the third
and fourth quarter of 2009. Segment margin was up in the second
half of 2009 versus the same period in the prior year. Full year
2009 results were negatively impacted by volume, with offsets from
mix and productivity initiatives. In discontinued operations, the
company exited the business of 5 unprofitable service centers in
2009. Refrigeration -- 4Q09 revenue of $143 million, up 9% from
$131 million in the prior-year quarter; down 7% at constant
currency -- 4Q09 segment profit of $16 million, up 42% from $11
million in 4Q08 -- 4Q09 segment profit margin of 11.2%, up 260
basis points from 8.6% in 4Q08 -- 2009 revenue of $513 million,
down 17% from $618 million in 2008; down 14% at constant currency
-- 2009 segment profit of $49 million, down 19% from $60 million in
2008 -- 2009 profit margin of 9.5%, down 20 basis points from 9.7%
in 2008 Fourth quarter results were positively impacted by foreign
exchange, price, lower sourcing and commodity costs, and
productivity initiatives, with an offset from volume. Full year
results were negatively impacted by volume, with offsets from
price, mix, lower sourcing and commodity costs, and productivity
initiatives. 2010 FULL YEAR OUTLOOK The company reiterates its 2010
outlook originally provided on December 16, 2009: -- Revenue up
3-7%, including 2 points of positive foreign exchange impact --
Adjusted EPS from continuing operations of $1.85 to $2.25 -- GAAP
EPS from continuing operations of $1.75 to $2.15 -- Capital
expenditures of approximately $75 million -- Tax rate of 35-36%
CONFERENCE CALL INFORMATION A conference call to discuss the
company's fourth quarter results will be held this morning at 9:00
a.m. (Central). To listen, please call the conference call line at
612-288-0337 at least 10 minutes prior to the scheduled start time
and use reservation number 142810. 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) February 4 through February 11, 2010, by
dialing 800-475-6701 (U.S.) or 320-365-3844 (International) and
using access code 142810. This call will also be archived on the
company's web site. 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 2010,
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.
Risks and uncertainties that could cause actual results to differ
materially from such statements 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. 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 Three For the Twelve
Months Ended Months Ended December 31, December 31, -------------
-------------- 2009 2008 2009 2008 ---- ---- ---- ---- NET SALES
$733.5 $738.3 $2,847.5 $3,441.1 COST OF GOODS SOLD 528.4 538.9
2,054.1 2,506.6 ----- ----- ------- ------- Gross profit 205.1
199.4 793.4 934.5 OPERATING EXPENSES: Selling, general and
administrative expenses 172.4 151.8 650.2 686.9 (Gains) losses and
other expenses, net (4.4) 2.9 (6.6) (1.9) Restructuring charges
14.1 11.5 41.5 30.4 Impairment of assets 6.4 6.9 6.4 9.1 Income
from equity method investments (1.7) (0.6) (7.3) (8.6) ---- ----
---- ---- Operational income from continuing operations 18.3 26.9
109.2 218.6 INTEREST EXPENSE, net 2.1 3.5 8.2 14.2 OTHER EXPENSE,
net - (0.1) 0.1 0.1 --- ---- --- --- Income from continuing
operations before income taxes 16.2 23.5 100.9 204.3 PROVISION FOR
INCOME TAXES 6.3 11.6 39.1 80.5 --- ---- ---- ---- Income from
continuing operations $9.9 $11.9 $61.8 $123.8 DISCONTINUED
OPERATIONS: Loss from discontinued operations 2.9 2.3 13.1 1.8
Income tax expense (benefit) 0.5 (0.8) (2.4) (0.8) --- ---- ----
---- Loss from discontinued operations 3.4 1.5 10.7 1.0 --- ---
---- --- Net income $6.5 $10.4 $51.1 $122.8 ==== ===== ===== ======
EARNINGS PER SHARE - BASIC: Income from continuing operations $0.18
$0.22 $1.11 $2.18 Loss from discontinued operations (0.06) (0.03)
(0.19) (0.01) ----- ----- ----- ----- Net income $0.12 $0.19 $0.92
$2.17 ===== ===== ===== ===== EARNINGS PER SHARE - DILUTED: Income
from continuing operations $0.17 $0.21 $1.09 $2.12 Loss from
discontinued operations (0.06) (0.03) (0.19) (0.01) ----- -----
----- ----- Net income $0.11 $0.18 $0.90 $2.11 ===== ===== =====
===== AVERAGE SHARES OUTSTANDING: Basic 56.1 55.3 55.6 56.7 Diluted
57.3 56.7 56.6 58.3 CASH DIVIDENDS DECLARED PER SHARE $0.14 $0.14
$0.56 $0.56 LENNOX INTERNATIONAL INC. AND SUBSIDIARIES SEGMENT NET
SALES AND PROFIT (Unaudited, in millions) For the Three For the
Twelve Months Ended Months Ended December 31, December 31,
------------ --------------- 2009 2008 2009 2008 ---- ---- ----
---- Net Sales Residential Heating & Cooling $320.7 $299.4
$1,293.5 $1,493.4 Commercial Heating & Cooling 146.0 189.2
594.6 835.3 Service Experts 146.5 136.4 535.4 586.3 Refrigeration
143.3 131.5 512.7 618.2 Eliminations (A) (23.0) (18.2) (88.7)
(92.1) ----- ----- ----- ----- $733.5 $738.3 $2,847.5 $3,441.1
====== ====== ======== ======== Segment Profit (Loss) (B)
Residential Heating & Cooling $38.2 $27.3 $111.7 $145.8
Commercial Heating & Cooling 10.9 20.1 49.3 93.3 Service
Experts 7.1 7.9 16.6 18.5 Refrigeration 16.0 11.3 48.9 60.2
Corporate and other (20.5) (16.7) (62.5) (53.8) Eliminations (A)
0.7 (0.1) 0.5 (0.7) --- ---- --- ---- Subtotal that includes
segment profit and eliminations 52.4 49.8 164.5 263.3
Reconciliation to income from continuing operations before income
taxes: Special product quality adjustment 18.3 - 18.3 - Items in
(gains) losses and other expenses, net that are excluded from
segment profit (C) (4.7) 4.5 (10.9) 5.2 Restructuring charges 14.1
11.5 41.5 30.4 Impairment of assets 6.4 6.9 6.4 9.1 Interest
expense, net 2.1 3.5 8.2 14.2 Other expense, net - (0.1) 0.1 0.1
--- ---- --- --- Income from continuing operations before income
taxes $16.2 $23.5 $100.9 $204.3 ===== ===== ====== ====== (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: -
Special product quality adjustment. - Items within Gains and/or
losses and other expenses, net that are noted in (C). -
Restructuring charges. - Goodwill and equity method investment
impairments. - Interest expense, net. - Other expense, net. (C)
Items in Gains and/or losses and other expenses, net that are
excluded from segment profit are net change in unrealized gains on
open future contracts, discount fee on accounts sold, realized gain
on marketable securities, and other items. LENNOX INTERNATIONAL
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions,
except share and per share data) As of As of December 31, December
31, 2009 2008 ------------ ----------- (unaudited) ASSETS CURRENT
ASSETS: Cash and cash equivalents $124.3 $122.1 Short-term
investments - 33.4 Accounts and notes receivable, net 357.0 363.4
Inventories, net 250.2 297.3 Deferred income taxes 34.9 24.2 Other
assets 67.5 94.8 ---- ---- Total current assets 833.9 935.2
PROPERTY, PLANT AND EQUIPMENT, net 329.6 329.4 GOODWILL 257.4 232.3
DEFERRED INCOME TAXES 74.6 113.5 OTHER ASSETS, net 48.4 49.1 ----
---- TOTAL ASSETS $1,543.9 $1,659.5 ======== ======== LIABILITIES
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $2.2
$6.1 Current maturities of long-term debt 35.5 0.6 Accounts payable
238.2 234.1 Accrued expenses 317.9 331.5 Income taxes payable - 3.7
--- --- Total current liabilities 593.8 576.0 LONG-TERM DEBT 193.8
413.7 POSTRETIREMENT BENEFITS, OTHER THAN PENSIONS 13.4 12.5
PENSIONS 66.7 107.7 OTHER LIABILITIES 71.8 91.0 ---- ---- Total
liabilities 939.5 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, 85,567,485
shares and 84,215,904 shares issued for 2009 and 2008, respectively
0.9 0.8 Additional paid-in capital 839.1 805.6 Retained earnings
558.6 538.8 Accumulated other comprehensive loss (0.8) (98.8)
Treasury stock, at cost, 29,292,512 shares and 29,109,058 shares
for 2009 and 2008, respectively (793.4) (787.8) ------ ------ Total
stockholders' equity 604.4 458.6 ----- ----- TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,543.9 $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 Three For The Twelve Months Ended Months Ended
December 31, December 31, ------------ ------------ 2009 2008 2009
2008 ---- ---- ---- ---- Income from continuing operations, a GAAP
measure $9.9 $11.9 $61.8 $123.8 Restructuring charges, after tax
10.9 7.7 30.0 20.7 Net change in unrealized (gains) losses on open
future contracts, after tax (a) (0.5) 3.0 (4.5) 3.2 Gain on sale of
entity, after tax (a) (3.0) - (3.0) - Impairment of assets, after
tax 4.3 6.9 4.3 9.1 Special product quality adjustment, after tax
(b) 11.3 - 11.3 - Other items, after tax (a) 0.2 (0.1) 0.4 0.2 ---
---- --- --- Adjusted income from continuing operations, a non-GAAP
measure $33.1 $29.4 $100.3 $157.0 ===== ===== ====== ======
Earnings (loss) per share ("EPS") from continuing operations -
diluted, a GAAP measure $0.17 $0.21 $1.09 $2.12 Restructuring
charges 0.19 0.14 0.53 0.35 Net change in unrealized (gains) losses
on open future contracts (a) (0.01) 0.05 (0.08) 0.06 Gain on sale
of entity (a) (0.05) - (0.05) - Impairment of assets 0.08 0.12 0.08
0.16 Special product quality adjustment (b) 0.20 - 0.20 - Other
items (a) - - - - --- --- --- --- Adjusted EPS from continuing
operations - diluted, a non-GAAP measure $0.58 $0.52 $1.77 $2.69
===== ===== ===== ===== (a) Recorded in (Gains) losses and other
expenses, net in the Consolidated Statements of Operations (b)
Recorded in Cost of Goods Sold in the Consolidated Statements of
Operations For The Three For The Twelve Months Ended Months Ended
December 31, December 31, ------------ ------------ Components of
(Gains) losses and other expenses, net (pre-tax): 2009 2008 2009
2008 -------------------------------------- ---- ---- ---- ----
Realized losses on settled future contracts (a) - 1.9 3.7 0.9
Foreign currency exchange (gain) loss (a) (0.2) 1.1 0.7 (3.2) Loss
(gain) on disposal of fixed assets (a) 0.5 (4.6) (0.1) (4.8)
Discount fee on accounts sold (b) - - 0.3 - Realized gain on
marketable securities (b) - - (0.3) - Net change in unrealized
(gains) losses on open futures contracts (c) (0.7) 4.6 (7.1) 5.1
Gain on sale of entity (c) (4.1) - (4.1) - Other items, net (c) 0.1
(0.1) 0.3 0.1 --- ---- --- --- (Gains) losses and other expenses
net (pre-tax) $(4.4) $2.9 $(6.6) $(1.9) ===== ==== ===== ===== (a)
Included in segment profit and adjusted income from continuing
operations (b) Included in adjusted income from continuing
operations but excluded from segment profit (c) Excluded from
segment profit and adjusted income from continuing operations
Reconciliation of Estimated Adjusted to GAAP Income per Share from
Continuing Operations - Diluted For the Year Ended December 31,
2010 ESTIMATED ----------- Adjusted income per share from
continuing operations - diluted $1.85 - $2.25 Restructuring charges
(0.10) ----- GAAP income per share from continuing operations -
diluted $1.75 - $2.15 ============= Free Cash Flow For the Three
For the Twelve Months Ended Months Ended December 31, December 31,
------------- -------------- 2009 2008 2009 2008 ---- ---- ----
---- Net cash provided by operating activities $12.2 $43.4 $225.5
$183.2 Purchase of property, plant and equipment (24.9) (23.8)
(58.8) (62.1) ----- ----- ----- ----- Free cash flow $(12.7) $19.6
$166.7 $121.1 ====== ===== ====== ====== Operational Working
Capital December 31, December 31, 2009 2008 December 31, Trailing
December 31, Trailing 2009 12 Mo. Avg. 2008 12 Mo. Avg.
------------ ----------- ------------ ----------- Accounts and
Notes Receivable, Net $357.0 $363.4 Asset Securitization - 30.0
Allowance for Doubtful Accounts 15.6 17.9 ---- ---- Accounts and
Notes Receivable, Gross 372.6 $409.3 411.3 $519.0 Inventories 250.2
297.3 Excess of Current Cost Over Last-in, First-out 71.7 75.8 ----
---- Inventories as Adjusted 321.9 363.8 373.1 429.1 Accounts
Payable (238.2) (254.0) (234.1) (323.1) ------ ------ ------ ------
Operating Working Capital (a) 456.3 519.1 550.3 625.0 ===== =====
===== ===== Net Sales, Trailing Twelve Months (b) 2,847.5 2,847.5
3,441.1 3,441.1 ------- ------- ------- ------- Operational Working
Capital Ratio (a/b) 16.0% 18.2% 16.0% 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 December 31, 2009
------------ Earnings before interest and taxes ("EBIT") (a) $164.5
Depreciation and amortization expense ("DA") (b) 52.9 ---- EBITDA
(EBIT excluding DA) (a + b) $217.4 ====== Total debt at December
31, 2009 (c) $231.5 ====== Total debt to EBITDA ratio ((c / (a +
b)) 1.1 === Reconciliation of EBIT to income from continuing
operations before income taxes: EBIT per above (non-GAAP) $164.5
Special product quality adjustment 18.3 Items in (gains) losses and
other expenses, net that are excluded from segment profit (10.9)
Impairment of assets 6.4 Restructuring charges 41.5 Other expenses,
net 0.1 Interest expense, net 8.2 --- Income from continuing
operations before income taxes (GAAP) $100.9 ======
http://www.newscom.com/cgi-bin/prnh/20020304/DAM053LOGO
http://photoarchive.ap.org/ DATASOURCE: Lennox International Inc.
CONTACT: Steve Harrison, Vice President, Investor Relations of
Lennox International Inc., +1-972-497-6670 Web Site:
http://www.lennoxinternational.com/
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