DALLAS, Feb. 2, 2015 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII) today reported fourth quarter and
full year 2014 results. Financial results in prior periods have
been revised to reflect sold businesses in discontinued
operations.
For the fourth quarter, revenue was $813
million, up 8% from the prior-year quarter. At constant
currency, revenue was up 10%. Total segment profit margin was a
fourth-quarter record 9.4%, up 120 basis points from the prior-year
quarter. Diluted earnings per share from continuing operations on
an adjusted basis was a fourth-quarter record $1.02, up 32% from $0.77 in the prior-year quarter. On a GAAP basis,
diluted earnings per share from continuing operations was a
fourth-quarter record $1.00, up 47%
from $0.68 in the prior-year
quarter.
For the full year, revenue was $3.4
billion, up 5% from the prior year. At constant currency,
revenue was up 6%. Total segment profit margin was a record 10.1%,
up 70 basis points from the prior year. Diluted earnings per share
from continuing operations on an adjusted basis was a record
$4.38, up 18% from $3.70 in the prior year. On a GAAP basis, diluted
earnings per share from continuing operations was a record
$4.28, up 21% from $3.55 in the prior year.
"2014 was a year of strong growth and record profitability for
Lennox International, led by 10% revenue growth at constant
currency and 31% profit growth in our Residential business," said
Chairman and CEO Todd Bluedorn. "In
the fourth quarter, the company's momentum continued, with revenue
up 10% at constant currency and total segment profit up 24%. Growth
in the quarter continued to be led by Residential, with revenue up
14% at constant currency and profit up 57% from the prior-year
quarter. In Commercial, revenue rose 8% at constant currency.
Commercial profit was essentially flat with the prior-year quarter
on headwinds from customer mix, foreign exchange, and investments
related to our entrance in the VRF market. In Refrigeration,
revenue was up 8% at constant currency. As expected, Refrigeration
profit was down from the prior-year quarter by 45% due to the
repeal of the carbon tax in Australia, North
America product mix, and a negative impact from foreign
exchange. We continue to expect Refrigeration revenue, margin and
profit to be up in 2015 on continued growth in North America and improvement in Australia in the second half of the year. For
the company overall in 2015, we expect another strong year of
growth and record profitability, with strong cash generation for
investments to drive growth as well as to return cash to
shareholders."
FOURTH QUARTER 2014 FINANCIAL HIGHLIGHTS
Revenue: Revenue for the fourth quarter was $813 million, up 8% from the prior-year quarter.
At constant currency, revenue was up 10%. Volume and price/mix were
up from the fourth quarter a year ago.
Gross Profit: Gross profit in the fourth quarter was
$225 million, up 9% from $208 million in the prior-year quarter. Gross
margin was 27.7%, flat with the fourth quarter a year ago. Gross
profit was positively impacted by higher volume, lower material
costs, and favorable warranty expense, with partial offsets from
unfavorable foreign exchange, lower mix, the repeal of the carbon
tax in Australia, and investments
in distribution expansion.
Income from Continuing Operations: For the fourth
quarter, adjusted income from continuing operations was
$47 million, or $1.02 diluted earnings per share, compared to
$38 million, or $0.77 diluted earnings per share, in the
prior-year quarter. On a GAAP basis, fourth quarter income from
continuing operations was $46
million, or $1.00 diluted
earnings per share, compared to $34
million, or $0.68 diluted
earnings per share, in the prior-year quarter.
Adjusted income from continuing operations for the fourth
quarter of 2014 excludes net after-tax charges of $0.8 million, which are derived from a
$0.4 million charge related to
restructuring activities, $0.3
million for the net change in unrealized losses on unsettled
future contracts, and $0.1 million in
charges, net, for other items.
FULL YEAR 2014 FINANCIAL HIGHLIGHTS
Revenue: For the full year, revenue was $3.4 billion, up 5%. At constant currency,
revenue was up 6%. Volume and price/mix were up from the prior
year.
Gross Profit: Gross profit for the full year was
$903 million, up 5% from $861 million in the prior year. Gross margin was
26.8% compared to 26.9% in the prior year. Gross profit was
negatively impacted by unfavorable foreign exchange, lower mix, and
investments in distribution expansion, with partial offsets from
higher volume, favorable price, and lower material costs.
Income from Continuing Operations: Adjusted income from
continuing operations for 2014 was $213
million, or $4.38 diluted
earnings per share, compared to $187
million, or $3.70 diluted
earnings per share, in the prior year. On a GAAP basis, income from
continuing operations for 2014 was $208
million, or $4.28 diluted
earnings per share, compared to $180
million, or $3.55 diluted
earnings per share, in the prior year.
Adjusted income from continuing operations for 2014 excludes net
after-tax charges of $5.0 million,
which are derived from a $1.8 million
charge related to restructuring activities, $0.4 million for the net change in unrealized
losses on unsettled futures contracts, and $2.8 million in charges, net, for other
items.
Free Cash Flow and Total Debt: Cash from operations for
the fourth quarter was $161 million,
compared to $145 million in the
prior-year quarter. Capital expenditures were approximately
$28 million in the fourth quarter
compared to $37 million in the
prior-year quarter. Including $1
million in proceeds from the disposal of property, plant and
equipment (PP&E), free cash flow was $134 million, compared to $110 million in the prior-year quarter. As
previously announced for the fourth quarter, the company
strategically built $77 million of
inventory to support customers in the minimum-efficiency regulatory
transition taking effect at the start of 2015 for certain
products.
For the full year, cash from operations was $185 million, compared to $210 million in the prior year. Capital
expenditures were $88 million in 2014
compared to $78 million in 2013.
Including $1 million from the
disposal of PP&E, free cash flow was $98
million for the full year, compared to $134 million in the prior year. The company paid
$53 million in dividends for the year
and $550 million related to its stock
repurchase programs. Total debt at the end of 2014 was $926 million. Total cash and cash equivalents
were $38 million ending the year.
BUSINESS SEGMENT FINANCIAL HIGHLIGHTS
Residential Heating and Cooling
- 4Q14 revenue of $404 million, up
13% from $359 million in 4Q13; up 14%
at constant currency
- 4Q14 segment profit a fourth-quarter record $57 million, up 57% from $36 million in 4Q13
- 4Q14 segment profit margin a fourth-quarter record 14.1%, up
390 basis points from 10.2% in 4Q13
- 2014 revenue of $1,737 million,
up 10% from $1,583 million in 2013;
up 11% at constant currency
- 2014 segment profit a record $236
million, up 31% from $180
million in 2013
- 2014 profit margin a record 13.6%, up 220 basis points from
11.4% in 2013
Fourth quarter and full year results were positively impacted by
higher volume, favorable price/mix, lower material costs, and
favorable warranty expense, with partial offsets from unfavorable
foreign exchange, higher SG&A, and strategic investments in
distribution expansion.
Commercial Heating and Cooling
- 4Q14 revenue of $223 million, up
5% from $213 million in 4Q13; up 8%
at constant currency
- 4Q14 segment profit of $33
million, flat with 4Q13
- 4Q14 segment profit margin of 14.6%, down 110 basis points from
15.7% in 4Q13
- 2014 revenue a record $879
million, up 4% from $844
million in 2013; up 5% at constant currency
- 2014 segment profit a record $124
million, up 5% from $118
million in 2013
- 2014 segment profit margin a record 14.1%, up 10 basis points
from 14.0% in 2013
Fourth quarter and full year results were positively impacted by
higher volume, favorable price, and lower material costs, with
partial offsets from unfavorable mix, unfavorable foreign exchange,
and strategic investments to enter the VRF market and distribution
expansion in North America.
Refrigeration
- 4Q14 revenue of $186 million, up
4% from $178 million in 4Q13; up 8%
at constant currency
- 4Q14 segment profit of $13
million, down 45% from $24
million in 4Q13
- 4Q14 segment profit margin of 7.0%, down 630 basis points from
13.3% in 4Q13
- 2014 revenue of $752 million,
down 2% from $772 million in 2013;
flat at constant currency
- 2014 segment profit of $55
million, down 39% from $90
million in 2013
- 2014 segment profit margin of 7.4%, down 430 basis points from
11.7% in 2013
Fourth quarter and full year results were negatively impacted by
lower mix, the repeal of the carbon tax in Australia, unfavorable foreign exchange, and
investments for future growth, with partial offsets from higher
volume, favorable price, and lower material costs.
FULL-YEAR OUTLOOK
- Reiterating revenue growth of 4-8% at constant currency; the
company now expects a negative 3 point impact from foreign exchange
on a full-year basis for a revenue growth range of 1-5% at actual
currency
- Reiterating adjusted and GAAP EPS from continuing operations of
$5.20-$5.60
- Reiterating an effective tax rate of 34-35%
- Reiterating capital expenditures of approximately $85 million
- Reiterating the completion of the company's previously
announced $450 million accelerated
share repurchase program in the second half of 2015
CONFERENCE CALL INFORMATION
A conference call to discuss the company's fourth quarter and
full year 2014 results will be held this morning at 8:30 a.m. Central time. To listen, call the
conference call line at 612-288-0340 at least 10 minutes prior to
the scheduled start time and use reservation number 350261. The
conference call will also be webcast on Lennox International's web
site at www.lennoxinternational.com.
A replay will be available from 11:00
a.m. Central time on February 2
through February 9, 2015, by dialing 800-475-6701 (U.S.) or
320-365-3844 (international) and using access code 350261. The 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 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 the 2015 full-year
outlook and expected financial results for 2015, 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 that 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, economic conditions in our markets, regulatory changes
such as the repeal of the carbon tax in Australia, the impact of unfavorable weather,
and a decline in new construction activity and related 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
|
|
(Amounts in
millions, except per share data)
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net
sales
|
$
|
812.8
|
|
|
$
|
749.5
|
|
|
$
|
3,367.4
|
|
|
$
|
3,199.1
|
|
Cost of goods
sold
|
587.4
|
|
|
541.8
|
|
|
2,464.1
|
|
|
2,337.9
|
|
Gross
profit
|
225.4
|
|
|
207.7
|
|
|
903.3
|
|
|
861.2
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
148.2
|
|
|
146.0
|
|
|
573.7
|
|
|
570.1
|
|
Losses and other
expenses, net
|
3.3
|
|
|
6.4
|
|
|
6.8
|
|
|
9.3
|
|
Restructuring
charges
|
0.6
|
|
|
1.8
|
|
|
1.9
|
|
|
5.0
|
|
Income from equity
method investments
|
(1.8)
|
|
|
(1.4)
|
|
|
(13.8)
|
|
|
(12.2)
|
|
Operational income
from continuing operations
|
75.1
|
|
|
54.9
|
|
|
334.7
|
|
|
289.0
|
|
Interest expense,
net
|
6.2
|
|
|
3.8
|
|
|
17.2
|
|
|
14.5
|
|
Other expense
(income), net
|
(0.1)
|
|
|
0.3
|
|
|
(0.1)
|
|
|
0.2
|
|
Income from
continuing operations before income taxes
|
69.0
|
|
|
50.8
|
|
|
317.6
|
|
|
274.3
|
|
Provision for income
taxes
|
22.9
|
|
|
16.8
|
|
|
109.5
|
|
|
94.4
|
|
Income from
continuing operations
|
46.1
|
|
|
34.0
|
|
|
208.1
|
|
|
179.9
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations before income taxes
|
(2.4)
|
|
|
2.4
|
|
|
(3.7)
|
|
|
(13.3)
|
|
Provision for
(benefit from) income taxes
|
(0.9)
|
|
|
1.2
|
|
|
(1.4)
|
|
|
(5.2)
|
|
Income (loss) from
discontinued operations
|
(1.5)
|
|
|
1.2
|
|
|
(2.3)
|
|
|
(8.1)
|
|
Net
income
|
$
|
44.6
|
|
|
$
|
35.2
|
|
|
$
|
205.8
|
|
|
$
|
171.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.01
|
|
|
$
|
0.69
|
|
|
$
|
4.35
|
|
|
$
|
3.61
|
|
Income (loss) from
discontinued operations
|
(0.03)
|
|
|
0.03
|
|
|
(0.05)
|
|
|
(0.16)
|
|
Net income
|
$
|
0.98
|
|
|
$
|
0.72
|
|
|
$
|
4.30
|
|
|
$
|
3.45
|
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.00
|
|
|
$
|
0.68
|
|
|
$
|
4.28
|
|
|
$
|
3.55
|
|
Income (loss) from
discontinued operations
|
(0.04)
|
|
|
0.02
|
|
|
(0.05)
|
|
|
(0.16)
|
|
Net income
|
$
|
0.96
|
|
|
$
|
0.70
|
|
|
$
|
4.23
|
|
|
$
|
3.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
45.5
|
|
|
49.2
|
|
|
47.9
|
|
|
49.8
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
46.2
|
|
|
50.1
|
|
|
48.6
|
|
|
50.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$
|
0.30
|
|
|
$
|
0.24
|
|
|
$
|
1.14
|
|
|
$
|
0.92
|
|
LENNOX INTERNATIONAL INC. AND
SUBSIDIARIES Segment Net
Sales and Profit (Loss)
|
|
(Amounts in
millions)
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
404.0
|
|
|
$
|
358.6
|
|
|
$
|
1,736.5
|
|
|
$
|
1,583.2
|
|
Commercial
Heating & Cooling
|
222.9
|
|
|
212.6
|
|
|
878.5
|
|
|
844.4
|
|
Refrigeration
|
185.9
|
|
|
178.3
|
|
|
752.4
|
|
|
771.5
|
|
|
$
|
812.8
|
|
|
$
|
749.5
|
|
|
$
|
3,367.4
|
|
|
$
|
3,199.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Profit
(Loss) (1)
|
|
|
|
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
57.0
|
|
|
$
|
36.4
|
|
|
$
|
235.8
|
|
|
$
|
180.1
|
|
Commercial
Heating & Cooling
|
32.6
|
|
|
33.3
|
|
|
124.0
|
|
|
118.1
|
|
Refrigeration
|
13.1
|
|
|
23.7
|
|
|
55.4
|
|
|
90.2
|
|
Corporate and
other
|
(26.4)
|
|
|
(31.8)
|
|
|
(74.3)
|
|
|
(87.9)
|
|
Subtotal that
includes segment profit and eliminations
|
76.3
|
|
|
61.6
|
|
|
340.9
|
|
|
300.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
income from continuing operations before income
taxes:
|
|
|
|
|
|
|
|
|
|
|
|
Special product
quality adjustments
|
(1.4)
|
|
|
(1.9)
|
|
|
(1.4)
|
|
|
(2.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items in Losses and
other expenses, net that are excluded from segment
profit (loss) (1)
|
2.0
|
|
|
6.8
|
|
|
4.7
|
|
|
8.8
|
|
Restructuring
charges
|
0.6
|
|
|
1.8
|
|
|
1.9
|
|
|
5.0
|
|
Interest expense,
net
|
6.2
|
|
|
3.8
|
|
|
17.2
|
|
|
14.5
|
|
Special inventory
write down
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
Other expense
(income), net
|
(0.1)
|
|
|
0.3
|
|
|
(0.1)
|
|
|
0.2
|
|
Income from
continuing operations before income taxes
|
$
|
69.0
|
|
|
$
|
50.8
|
|
|
$
|
317.6
|
|
|
$
|
274.3
|
|
(1)
|
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 adjustments;
• The following items in Losses
and other expenses, net:
º Net change in unrealized gains and/or losses on
unsettled futures contracts,
º Special legal contingency
charges,
º Asbestos-related litigation,
º Environmental liabilities, and
º Other items, net;
• Restructuring charges;
• Goodwill, long-lived asset, and
equity method investment impairments;
• Interest expense, net;
• Special inventory write down;
and
• Other expense, net.
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Balance Sheets
|
|
(Amounts in
millions, except shares and par values)
|
As of December
31, 2014
|
|
As of December 31,
2013
|
|
|
|
|
|
|
ASSETS
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
37.5
|
|
|
$
|
38.0
|
|
Accounts and notes
receivable, net of allowances of $7.9 and $9.8 in 2014 and 2013,
respectively
|
421.4
|
|
|
408.1
|
|
Inventories,
net
|
463.3
|
|
|
378.8
|
|
Deferred income
taxes, net
|
32.5
|
|
|
24.5
|
|
Other
assets
|
59.3
|
|
|
53.0
|
|
Total current
assets
|
1,014.0
|
|
|
902.4
|
|
Property, plant and
equipment, net
|
358.6
|
|
|
335.5
|
|
Goodwill
|
209.4
|
|
|
216.8
|
|
Deferred income
taxes
|
97.5
|
|
|
88.5
|
|
Other assets,
net
|
84.8
|
|
|
83.5
|
|
Total
assets
|
$
|
1,764.3
|
|
|
$
|
1,626.7
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
|
|
Short-term
debt
|
$
|
226.6
|
|
|
$
|
165.9
|
|
Current maturities of
long-term debt
|
24.0
|
|
|
1.3
|
|
Accounts
payable
|
324.3
|
|
|
283.1
|
|
Accrued
expenses
|
239.0
|
|
|
232.1
|
|
Income taxes
payable
|
13.4
|
|
|
31.6
|
|
Total current
liabilities
|
827.3
|
|
|
714.0
|
|
Long-term
debt
|
675.0
|
|
|
233.2
|
|
Post-retirement
benefits, other than pensions
|
4.5
|
|
|
4.6
|
|
Pensions
|
129.9
|
|
|
70.0
|
|
Other
liabilities
|
118.6
|
|
|
119.2
|
|
Total
liabilities
|
1,755.3
|
|
|
1,141.0
|
|
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, 87,170,197 shares
issued
|
0.9
|
|
|
0.9
|
|
Additional paid-in
capital
|
824.9
|
|
|
912.7
|
|
Retained
earnings
|
1,022.1
|
|
|
870.5
|
|
Accumulated other
comprehensive loss
|
(153.5)
|
|
|
(61.1)
|
|
Treasury stock, at
cost, 42,535,126 shares and 38,066,794 shares for 2014 and 2013,
respectively
|
(1,686.0)
|
|
|
(1,238.1)
|
|
Noncontrolling
interests
|
0.6
|
|
|
0.8
|
|
Total
stockholders' equity
|
9.0
|
|
|
485.7
|
|
Total liabilities
and stockholders' equity
|
$
|
1,764.3
|
|
|
$
|
1,626.7
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
|
|
(Amounts in
millions)
|
For the Years
Ended December 31,
|
|
2014
|
|
|
2013
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
$
|
205.8
|
|
|
$
|
171.8
|
|
Net loss from
discontinued operations
|
2.3
|
|
|
8.1
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Income from equity
method investments
|
(13.8)
|
|
|
(12.2)
|
|
Dividends from
affiliates
|
9.1
|
|
|
10.3
|
|
Restructuring
expenses, net of cash paid
|
0.2
|
|
|
0.1
|
|
Provision for bad
debts
|
2.6
|
|
|
3.6
|
|
Unrealized losses on
derivative contracts
|
0.3
|
|
|
0.3
|
|
Stock-based
compensation expense
|
23.3
|
|
|
29.3
|
|
Depreciation and
amortization
|
60.8
|
|
|
58.9
|
|
Deferred income
taxes
|
6.1
|
|
|
3.5
|
|
Pension costs in
excess of (less than) contributions
|
(8.0)
|
|
|
1.7
|
|
Other items,
net
|
0.1
|
|
|
4.5
|
|
Changes in assets and
liabilities, net of effects of acquisitions and
divestitures:
|
|
|
|
|
|
Accounts and notes
receivable
|
(32.6)
|
|
|
(49.0)
|
|
Inventories
|
(96.7)
|
|
|
(19.5)
|
|
Other current
assets
|
(8.3)
|
|
|
(16.3)
|
|
Accounts
payable
|
46.1
|
|
|
(10.9)
|
|
Accrued
expenses
|
6.7
|
|
|
15.4
|
|
Income taxes payable
and receivable
|
(15.9)
|
|
|
21.9
|
|
Other, net
|
(1.0)
|
|
|
4.4
|
|
Net cash used in
discontinued operations
|
(2.3)
|
|
|
(15.6)
|
|
Net cash provided by
operating activities
|
184.8
|
|
|
210.3
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
1.1
|
|
|
2.4
|
|
Purchases of
property, plant and equipment
|
(88.4)
|
|
|
(78.3)
|
|
Net proceeds from
sale of businesses
|
—
|
|
|
8.6
|
|
Net cash used in
investing activities
|
(87.3)
|
|
|
(67.3)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Short-term
borrowings, net
|
1.5
|
|
|
2.0
|
|
Asset securitization
borrowings
|
100.0
|
|
|
330.0
|
|
Asset securitization
payments
|
(40.0)
|
|
|
(200.0)
|
|
Term loan borrowings
from credit facility
|
300.0
|
|
|
—
|
|
Long-term debt
payments
|
(2.3)
|
|
|
(1.0)
|
|
Borrowings from
revolving credit facility
|
2,073.5
|
|
|
1,425.5
|
|
Payments on revolving
credit facility
|
(1,908.5)
|
|
|
(1,543.5)
|
|
Payments of deferred
financing costs
|
(2.2)
|
|
|
—
|
|
Additional investment
in subsidiary
|
—
|
|
|
(0.5)
|
|
Proceeds from
employee stock purchases
|
2.0
|
|
|
1.8
|
|
Repurchases of common
stock
|
(550.3)
|
|
|
(125.0)
|
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(22.4)
|
|
|
(12.0)
|
|
Excess tax benefits
related to share-based payments
|
11.8
|
|
|
6.5
|
|
Cash dividends
paid
|
(52.6)
|
|
|
(34.0)
|
|
Net cash used in
financing activities
|
(89.5)
|
|
|
(150.2)
|
|
Increase (decrease)
in cash and cash equivalents
|
8.0
|
|
|
(7.2)
|
|
Effect of exchange
rates on cash and cash equivalents
|
(8.5)
|
|
|
(6.6)
|
|
Cash and cash
equivalents, beginning of year
|
38.0
|
|
|
51.8
|
|
Cash and cash
equivalents, end of year
|
$
|
37.5
|
|
|
$
|
38.0
|
|
Supplementary
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid during the
year for:
|
|
|
|
|
|
Interest,
net
|
$
|
17.6
|
|
|
$
|
15.7
|
|
Income taxes (net of
refunds)
|
$
|
105.3
|
|
|
$
|
56.8
|
|
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. 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
December 31,
|
|
For the Years
Ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Income from
continuing operations, a GAAP measure
|
$
|
46.1
|
|
|
$
|
34.0
|
|
|
$
|
208.1
|
|
|
$
|
179.9
|
|
Restructuring
charges, after tax
|
0.4
|
|
|
1.3
|
|
|
1.8
|
|
|
3.4
|
|
Special product
quality adjustments, after tax (b)
|
(0.8)
|
|
|
(1.1)
|
|
|
(0.9)
|
|
|
(1.5)
|
|
Special legal
contingency charges, after tax (a)
|
0.2
|
|
|
0.1
|
|
|
0.6
|
|
|
0.7
|
|
Asbestos-related
litigation, after tax (a)
|
—
|
|
|
3.9
|
|
|
0.6
|
|
|
3.9
|
|
Net change in
unrealized losses (gains) on unsettled future contracts, after
tax(a)
|
0.3
|
|
|
(0.2)
|
|
|
0.4
|
|
|
0.3
|
|
Special inventory
write down, after tax (b)
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
Environmental
liabilities, after tax (a)
|
0.7
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
Other items, net,
after tax (a)
|
—
|
|
|
0.3
|
|
|
0.5
|
|
|
0.6
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
46.9
|
|
|
$
|
38.3
|
|
|
$
|
213.1
|
|
|
$
|
187.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share
from continuing operations - diluted, a GAAP measure
|
$
|
1.00
|
|
|
$
|
0.68
|
|
|
$
|
4.28
|
|
|
$
|
3.55
|
|
Restructuring
charges, after tax
|
0.01
|
|
|
0.03
|
|
|
0.03
|
|
|
0.07
|
|
Special product
quality adjustments, after tax (b)
|
(0.02)
|
|
|
(0.02)
|
|
|
(0.02)
|
|
|
(0.03)
|
|
Special legal
contingency charges, after tax (a)
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
Asbestos-related
litigation, after tax (a)
|
—
|
|
|
0.08
|
|
|
0.01
|
|
|
0.08
|
|
Net change in
unrealized losses (gains) on unsettled future contracts, after
tax(a)
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
Special inventory
write down, after tax (b)
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
Environmental
liabilities, after tax (a)
|
0.02
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Other items, net,
after tax (a)
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
$
|
1.02
|
|
|
$
|
0.77
|
|
|
$
|
4.38
|
|
|
$
|
3.70
|
|
|
(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
|
|
For the Three
Months
Ended December 31,
|
|
For the Years
Ended
December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Components of
Losses and other expenses, net (pre-tax):
|
|
|
|
|
|
|
|
|
|
|
|
Realized losses on
settled future contracts (a)
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.8
|
|
|
$
|
1.0
|
|
Foreign currency
exchange losses (a)
|
1.5
|
|
|
0.4
|
|
|
1.6
|
|
|
0.5
|
|
Gain on disposal of
fixed assets (a)
|
(0.3)
|
|
|
(1.0)
|
|
|
(0.3)
|
|
|
(1.0)
|
|
Net change in
unrealized losses (gains) on unsettled futures contracts
(b)
|
0.5
|
|
|
(0.2)
|
|
|
0.6
|
|
|
0.4
|
|
Special legal
contingency charges (b)
|
0.3
|
|
|
0.1
|
|
|
0.9
|
|
|
1.2
|
|
Asbestos-related
litigation (b)
|
—
|
|
|
6.3
|
|
|
0.9
|
|
|
6.3
|
|
Environmental
liabilities (b)
|
1.2
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
Other items, net
(b)
|
—
|
|
|
0.6
|
|
|
0.3
|
|
|
0.9
|
|
Losses and other
expenses, net (pre-tax)
|
$
|
3.3
|
|
|
$
|
6.4
|
|
|
$
|
6.8
|
|
|
$
|
9.3
|
|
|
(a)
Included in segment profit (loss) and Adjusted income from
continuing operations
|
(b)
Excluded from segment profit (loss) and Adjusted income from
continuing operations
|
Reconciliation of
Estimated Adjusted Income per Share from Continuing Operations -
Diluted, a Non-GAAP measure, to Income per Share from Continuing
Operations - Diluted, a GAAP measure
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended
December 31, 2015
ESTIMATED
|
Adjusted income
per share from continuing operations - diluted, a Non-GAAP
measure
|
$5.20 -
$5.60
|
Restructuring and
other items
|
0.00
|
Income per
share from continuing operations - diluted, a GAAP
measure
|
$5.20 -
$5.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Cash Provided by Operating Activities, a GAAP measure, to Free
Cash Flow, a Non-GAAP measure (dollars in millions)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December
31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net cash provided
by operating activities, a GAAP measure
|
$
|
161.3
|
|
|
$
|
145.3
|
|
|
$
|
184.8
|
|
|
$
|
210.3
|
|
Purchases of
property, plant and equipment
|
(28.5)
|
|
|
(37.3)
|
|
|
(88.4)
|
|
|
(78.3)
|
|
Proceeds from
the disposal of property, plant and equipment
|
0.9
|
|
|
2.3
|
|
|
1.1
|
|
|
2.4
|
|
Free cash
flow, a Non-GAAP measure
|
$
|
133.7
|
|
|
$
|
110.3
|
|
|
$
|
97.5
|
|
|
$
|
134.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
|
|
|
|
Trailing
Twelve Months to December 31, 2014
|
Adjusted EBIT
(a)
|
|
|
|
|
|
|
|
|
$
|
340.9
|
|
Depreciation
and amortization expense (b)
|
|
|
|
|
|
60.8
|
|
EBITDA (a +
b)
|
|
|
|
|
|
|
|
|
$
|
401.7
|
|
Total debt at
December 31, 2014 (c)
|
|
|
|
|
|
|
|
$
|
925.6
|
|
Total Debt
to EBITDA ratio ((c / (a + b))
|
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
December 31, 2014
|
Adjusted
EBIT per above, a Non-GAAP measure
|
$
|
340.9
|
|
Special product
quality adjustments
|
(1.4)
|
|
Items in Losses
and other expenses, net that are excluded from segment
profit
|
4.7
|
|
Restructuring
charges
|
1.9
|
|
Interest
expense, net
|
17.2
|
|
Special
inventory write down
|
1.0
|
|
Other expenses,
net
|
(0.1)
|
|
Income from
continuing operations before income taxes, a GAAP
measure
|
$
|
317.6
|
|
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SOURCE Lennox International Inc.