DALLAS, July 22, 2019 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII) today reported financial results for
the second quarter of 2019. All comparisons are to the prior-year
period. The company's tornado references relate to the July 2018 tornado damage at a Residential
manufacturing facility in Iowa.
Adjusted revenue and profit exclude non-core Refrigeration
businesses divested in 2018 and 2019.
For the second quarter, Lennox International reported GAAP and
adjusted revenue of $1,099 million.
GAAP revenue was down 6%. At constant currency, GAAP revenue was
down 5%. Adjusted revenue, excluding the impact from divestitures,
was down 1%. At constant currency, adjusted revenue was flat,
including 3% of negative tornado impact.
GAAP operating income was $214
million, up 10%. GAAP earnings per share from continuing
operations was $2.81, down 17%,
including a non-cash pension settlement charge of $1.14. Total adjusted segment profit declined 2%
to $202 million in the second
quarter, and total segment margin was relatively flat at 18.4%.
Adjusted earnings per share from continuing operations was up 2% to
$3.74.
"Significantly cooler temperatures and higher precipitation
across the United States adversely
impacted the HVAC market in the second quarter, and especially in
key Central regions where cooling degree days were down over 30%
and precipitation was up over 60%," said Chairman and CEO
Todd Bluedorn. "Residential segment
revenue was down 3% at constant currency and down 4% on a reported
basis in the quarter, profit was flat, and margin expanded 80 basis
points to 22.3%. Residential price yield was 3.6% in the quarter.
Our Residential business had negative tornado impact of
$28 million to revenue in the second
quarter and $16 million to segment
profit offset by $18 million of
insurance recovery. Adjusting for the net impact from the tornado
and insurance proceeds, Residential revenue was flat, profit was
down 1%, and margin was down 40 basis points to 21.1%.
"Slower moving shipments in the industry due to adverse weather
has slowed regaining market share following the tornado and extends
our recovery timeline to include the fourth quarter," Bluedorn
added. "For 2019 overall, we now expect $99
million of negative tornado impact to Residential revenue,
up from $70 million previously; a
negative $54 million impact to
segment profit, up from $40 million
previously; and insurance recovery for lost profits of $94 million, up from $80
million previously. The resulting $40
million of net benefit to Residential segment profit in 2019
is unchanged.
"Our Commercial business hit a new second-quarter high for
revenue and set new records for segment profit and margin.
Commercial revenue was up 4%, led by high-single digit growth in
National Account equipment business. Segment profit rose 6% to a
record $54 million, and segment
margin expanded 50 basis points to a record 20.6%. In
Refrigeration, adjusted segment revenue rose 5% at constant
currency with volume up in Europe
and down in North America.
Adjusted segment profit was down 19%, and adjusted segment margin
declined 340 basis points to 12.8%, due in part to lower mix and
the timing of the sale of refrigerant allocations in Europe compared to the prior-year quarter. We
continue to expect revenue growth for both of these businesses in
the second half but have reduced the outlook on commercial and
refrigeration end markets.
"For the company overall, we are updating 2019 guidance to
adjusted revenue growth of 2-5% and adjusted EPS from continuing
operations of $11.30-$11.90 and reiterate stock repurchases of
$400 million for the full year."
FINANCIAL HIGHLIGHTS
Revenue: On a GAAP and adjusted basis,
second-quarter revenue was $1,099
million. GAAP revenue was down 6%, and adjusted revenue was
down 1%. Foreign exchange was unfavorable to revenue growth by 1%.
Volume was down, and price and mix were favorable.
Gross Profit: On a GAAP and adjusted basis, gross profit
was $332 million and gross margin was
30.2%. Gross profit was down 8% on a GAAP basis and down 6% on an
adjusted basis. Gross margin was down 60 basis points on a GAAP
basis and down 140 basis points on an adjusted basis. Gross profit
was impacted by the tornado, cooler and wetter weather and factory
productivity, unfavorable mix, higher commodity, freight, tariff
and other product costs, distribution investments, and unfavorable
foreign exchange. On a GAAP basis, divestitures also had a negative
impact on gross profit. Partial offsets to gross profit included
favorable price and warranty, and sourcing and engineering-led cost
reductions.
Income from Continuing Operations: On a GAAP basis,
income from continuing operations for the second quarter was
$111.0 million, or $2.81 per share, compared to $139.2 million, or $3.39 per share, in the prior-year quarter.
Adjusted income from continuing operations in the second quarter
was $147.6 million, or $3.74 per share, compared to $150.6 million, or $3.67 per share, in the prior-year quarter.
Adjusted earnings from continuing operations for the second quarter
of 2019 excludes net after-tax charges of $36.6 million: a charge of $45.5 million for pension settlement, a net
charge of $1.5 million for various
other items, and a gain of $10.4 million from insurance
recoveries, net of losses incurred.
Cash from Operations, Free Cash Flow and Total
Debt: Net cash from operations in the second quarter was
$30 million compared to $49 million in the prior-year quarter. Capital
expenditures and purchases of short-term investments were
$18 million compared to $21 million in the prior-year quarter. Insurance
recoveries for damage to property and proceeds from the disposal of
property, plant and equipment were approximately $6 million in the second quarter of 2019. Free
cash flow was $20 million compared to
$28 million in the second quarter a
year ago. Total debt at the end of the second quarter was
$1.47 billion. Total cash and cash
equivalents were $36 million at the
end of June. In the second quarter, the company repurchased
$150 million of stock and paid
$25 million in dividends.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the
Residential Heating & Cooling business segment declined 4% to
$689 million. Foreign exchange had a
negative 1% impact on revenue. Segment profit was flat at
$153 million. Segment margin expanded
80 basis points to 22.3%. Residential results were impacted by
favorable price, sourcing and engineering-led cost reductions,
favorable warranty, and insurance proceeds. Offsets included cooler
and wetter weather, tornado impact, factory productivity,
unfavorable mix, higher commodity, freight, tariff and other
product costs, distribution and SG&A investments, and
unfavorable foreign exchange.
Commercial Heating & Cooling
Revenue in the
Commercial Heating & Cooling business segment was a
second-quarter record $261 million,
up 4%. Foreign exchange was neutral to revenue. Segment profit was
a record $54 million, up 6%, and
segment margin was a record 20.6%, up 50 basis points. Results were
impacted by favorable price, favorable mix, and sourcing and
engineering-led cost reductions. Partial offsets included lower
volume, higher commodity and other product costs, tariffs, freight,
and distribution and SG&A investments.
Refrigeration
Adjusted revenue in the Refrigeration
business segment was $149 million in
the second quarter, up 2%. Foreign exchange had a negative 3%
impact on revenue. Refrigeration adjusted profit was $19 million, down 19%, and adjusted segment
margin was 12.8%, down 340 basis points. Results were impacted by
lower mix and the timing on the sale of refrigerant allocations in
Europe compared to the prior-year
quarter, higher commodity, freight, distribution, tariffs and other
product costs, and unfavorable foreign exchange. Partial offsets
included higher volume, favorable price, sourcing and
engineering-led cost reductions, and lower SG&A expenses.
FULL-YEAR OUTLOOK
- Updating 2019 guidance for adjusted revenue growth from 3-7% to
2-5%.
- Updating guidance for GAAP EPS from continuing operations from
$12.65-$13.25 to $11.91-$12.51.
- Updating guidance for adjusted EPS from continuing operations
from $12.00-$12.60 to $11.30-$11.90.
- Reiterating guidance for corporate expenses of approximately
$90 million.
- Reiterating guidance for an effective tax rate of 22-23% on an
adjusted basis for the full year.
- Updating guidance for 2019 capital expenditures from
approximately $195 million to
$155 million as $40 million of capital to fully reconstruct the
Iowa manufacturing facility
damaged by the tornado moved from 2019 to 2020.
- Updating guidance for free cash flow from approximately
$420 million to $390 million for the full year.
- Reiterating guidance for stock repurchases of $400 million in 2019.
A chart of the company's current view on the tornado financial
impact and insurance recovery for 2018-2019 is posted on the
company's website at www.lennoxinternational.com.
CONFERENCE CALL INFORMATION
A conference call to
discuss the company's second-quarter results will be held this
morning at 8:30 a.m. Central time. To
listen, call the conference call line at 612-288-0337 at least 10
minutes prior to the scheduled start time and use reservation
number 469736. The conference call also will 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 July 22 through August 5,
2019 by dialing 800-475-6701 (U.S.) or 320-365-3844
(international) and using access code 469736. The call also will be
archived on the company's website.
About Lennox International
Lennox International Inc.
is a global leader in the heating, air conditioning, and
refrigeration markets. Lennox International stock is listed on the
New York Stock Exchange and traded 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.
FORWARD-LOOKING STATEMENTS
The statements in this news
release that are not historical statements, including statements
regarding the 2019 full-year outlook, expected consolidated and
segment financial results for 2019, the financial and operational
impact of the tornado damage to LII's manufacturing facility in
Marshalltown, Iowa, and expected
share repurchases, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on information currently
available as well as management's assumptions and beliefs today.
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, and investors
should not place undue reliance on them. 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, the impact of new trade tariffs, LII's
ability to implement price increases for its products and services,
economic conditions in our markets, regulatory changes, the impact
of unfavorable weather, and a decline in new construction activity
and related demand for products and services. With respect to
financial and operational impact of the tornado, the risks and
uncertainties include, but are not limited to: (1) the impact on
LII's results of operations and financial condition resulting from
the tornado damage, (2) the cost and timing to rebuild the
Marshalltown manufacturing
facility and to repair or replace the necessary manufacturing
equipment, (3) the timing of the receipt of insurance proceeds for
property damage and business interruption losses and the dollar
amount of these insurance proceeds, and (4) the accounting
treatment and related financial statement impact resulting from the
tornado damage and insurance recoveries. 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, except as required by law.
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Statements of Operations
(Unaudited)
|
|
|
(Amounts in
millions, except per share data)
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net
sales
|
$
|
1,099.1
|
|
|
$
|
1,175.4
|
|
|
$
|
1,889.4
|
|
|
$
|
2,010.2
|
|
|
Cost of goods
sold
|
767.0
|
|
|
813.8
|
|
|
1,355.8
|
|
|
1,425.5
|
|
|
Gross
profit
|
332.1
|
|
|
361.6
|
|
|
533.6
|
|
|
584.7
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
152.4
|
|
|
161.4
|
|
|
298.2
|
|
|
316.6
|
|
|
Losses (gains) and
other expenses, net
|
2.1
|
|
|
0.2
|
|
|
3.2
|
|
|
7.5
|
|
|
Restructuring
charges
|
(0.1)
|
|
|
0.5
|
|
|
0.4
|
|
|
1.3
|
|
|
Loss (gain) on sale
of businesses and related property
|
0.4
|
|
|
(22.1)
|
|
|
8.8
|
|
|
(11.8)
|
|
|
Loss on assets held
for sale
|
—
|
|
|
31.4
|
|
|
—
|
|
|
31.4
|
|
|
Insurance proceeds
for lost profits
|
(26.0)
|
|
|
—
|
|
|
(65.5)
|
|
|
—
|
|
|
Gain from insurance
recoveries, net of losses incurred
|
(5.9)
|
|
|
—
|
|
|
(12.8)
|
|
|
—
|
|
|
Income from equity
method investments
|
(4.6)
|
|
|
(4.9)
|
|
|
(7.2)
|
|
|
(8.4)
|
|
|
Operating
income
|
213.8
|
|
|
195.1
|
|
|
308.5
|
|
|
248.1
|
|
|
Pension
settlement
|
60.6
|
|
|
—
|
|
|
60.6
|
|
|
—
|
|
|
Interest expense,
net
|
13.1
|
|
|
9.8
|
|
|
23.9
|
|
|
18.2
|
|
|
Other expense
(income), net
|
0.3
|
|
|
0.8
|
|
|
1.2
|
|
|
1.4
|
|
|
Income from continuing
operations before income taxes
|
139.8
|
|
|
184.5
|
|
|
222.8
|
|
|
228.5
|
|
|
Provision for income
taxes
|
28.8
|
|
|
45.3
|
|
|
42.4
|
|
|
51.4
|
|
|
Income from
continuing operations
|
111.0
|
|
|
139.2
|
|
|
180.4
|
|
|
177.1
|
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
|
(Loss) income from
discontinued operations before income taxes
|
(0.3)
|
|
|
0.4
|
|
|
(0.4)
|
|
|
0.4
|
|
|
Income tax
expense
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
Loss from
discontinued operations
|
(0.3)
|
|
|
(1.6)
|
|
|
(0.4)
|
|
|
(1.6)
|
|
|
Net
income
|
$
|
110.7
|
|
|
$
|
137.6
|
|
|
$
|
180.0
|
|
|
$
|
175.5
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.84
|
|
|
$
|
3.42
|
|
|
$
|
4.58
|
|
|
$
|
4.31
|
|
|
Loss from
discontinued operations
|
(0.01)
|
|
|
(0.04)
|
|
|
(0.01)
|
|
|
(0.04)
|
|
|
Net income
|
$
|
2.83
|
|
|
$
|
3.38
|
|
|
$
|
4.57
|
|
|
$
|
4.27
|
|
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
2.81
|
|
|
$
|
3.39
|
|
|
$
|
4.53
|
|
|
$
|
4.26
|
|
|
Loss from
discontinued operations
|
(0.01)
|
|
|
(0.04)
|
|
|
(0.01)
|
|
|
(0.04)
|
|
|
Net income
|
$
|
2.80
|
|
|
$
|
3.35
|
|
|
$
|
4.52
|
|
|
$
|
4.22
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
39.1
|
|
|
40.7
|
|
|
39.4
|
|
|
41.1
|
|
|
Weighted Average
Number of Shares Outstanding - Diluted
|
39.5
|
|
|
41.1
|
|
|
39.8
|
|
|
41.6
|
|
|
|
|
|
|
|
|
|
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Adjusted Segment
Net Sales and Profit (Loss)
|
(Unaudited)
|
|
(Amounts in
millions)
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Adjusted Net
Sales
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
689.1
|
|
|
$
|
716.0
|
|
|
$
|
1,154.6
|
|
|
$
|
1,169.7
|
|
Commercial
Heating & Cooling
|
261.3
|
|
|
252.1
|
|
|
434.7
|
|
|
431.2
|
|
Refrigeration
(1)
|
148.7
|
|
|
145.5
|
|
|
265.8
|
|
|
264.7
|
|
|
$
|
1,099.1
|
|
|
$
|
1,113.6
|
|
|
$
|
1,855.1
|
|
|
$
|
1,865.6
|
|
Adjusted Segment
Profit (Loss) (2)
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
|
153.4
|
|
|
$
|
153.6
|
|
|
$
|
240.1
|
|
|
$
|
204.9
|
|
Commercial
Heating & Cooling
|
53.9
|
|
|
50.8
|
|
|
68.9
|
|
|
72.8
|
|
Refrigeration
(1)
|
19.1
|
|
|
23.6
|
|
|
28.5
|
|
|
35.2
|
|
Corporate and
other
|
(24.1)
|
|
|
(22.5)
|
|
|
(36.2)
|
|
|
(33.7)
|
|
Total adjusted
segment profit
|
202.3
|
|
|
205.5
|
|
|
301.3
|
|
|
279.2
|
|
Reconciliation to
Operating Income:
|
|
|
|
|
|
|
|
Special inventory
write down
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Special product
quality adjustment
|
(0.5)
|
|
|
—
|
|
|
(0.5)
|
|
|
—
|
|
Loss (gain) on sale
of businesses
|
0.4
|
|
|
(22.1)
|
|
|
8.8
|
|
|
(11.8)
|
|
Loss on assets held
for sale
|
—
|
|
|
31.4
|
|
|
—
|
|
|
31.4
|
|
Gain from insurance
recoveries, net of losses incurred
|
(5.9)
|
|
|
—
|
|
|
(12.8)
|
|
|
—
|
|
Partial advance of
insurance recoveries related to lost profits
|
(8.0)
|
|
|
—
|
|
|
(8.0)
|
|
|
—
|
|
Items in losses
(gains) and other expenses, net that are excluded from segment
profit (loss) (2)
|
2.6
|
|
|
0.4
|
|
|
3.9
|
|
|
6.9
|
|
Restructuring
charges
|
(0.1)
|
|
|
0.5
|
|
|
0.4
|
|
|
1.3
|
|
Operating loss from
non-core businesses (1)
|
—
|
|
|
0.2
|
|
|
1.0
|
|
|
3.1
|
|
Operating
income
|
$
|
213.8
|
|
|
$
|
195.1
|
|
|
$
|
308.5
|
|
|
$
|
248.1
|
|
|
|
(1)
|
Excludes the non-core
business results related to Kysor Warren, which was sold in March
2019 and the Company's business operations in Australia, Asia and
South America, which were sold in 2018.
|
(2)
|
We define segment
profit (loss) as a segment's operating income included in the
accompanying Consolidated Statements of Operations,
excluding:
|
|
•
The following items in Losses (gains) and
other expenses, net:
|
|
|
â—¦
Net change in unrealized losses (gains) on
unsettled futures contracts,
|
|
|
â—¦
Special legal contingency
charges,
|
|
|
â—¦
Asbestos-related litigation
|
|
|
â—¦
Environmental liabilities,
|
|
|
â—¦
Divestiture costs,
|
|
|
â—¦ Other items,
net,
|
|
•
Special inventory write down,
|
|
•
Special product quality
adjustment,
|
|
•
Loss on sale of business,
|
|
•
Loss on assets held for sale,
|
|
•
Gain from insurance recoveries, net of
losses incurred,
|
|
•
Partial advance of insurance recoveries
related to lost profits, and
|
|
•
Restructuring charges.
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Balance Sheets
|
|
|
(Amounts in
millions, except shares and par values)
|
As of June
30,
2019
|
|
As of December
31,
2018
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
36.4
|
|
|
$
|
46.3
|
|
Short-term
investments
|
1.8
|
|
|
—
|
|
Accounts and notes
receivable, net of allowances of $6.1 and $6.3 in 2019 and 2018,
respectively
|
718.8
|
|
|
472.7
|
|
Inventories,
net
|
630.2
|
|
|
509.8
|
|
Other
assets
|
56.7
|
|
|
60.6
|
|
Total current
assets
|
1,443.9
|
|
|
1,089.4
|
|
Property, plant and
equipment, net of accumulated depreciation of $795.8 and $778.5 in
2019 and 2018, respectively
|
418.0
|
|
|
408.3
|
|
Right-of-use assets
from operating leases
|
166.2
|
|
|
—
|
|
Goodwill
|
186.6
|
|
|
186.6
|
|
Deferred income
taxes
|
49.2
|
|
|
67.0
|
|
Other assets,
net
|
76.5
|
|
|
65.9
|
|
Total
assets
|
$
|
2,340.4
|
|
|
$
|
1,817.2
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Current maturities of
long-term debt
|
311.0
|
|
|
300.8
|
|
Current operating
lease liabilities
|
49.6
|
|
|
—
|
|
Accounts
payable
|
473.6
|
|
|
433.3
|
|
Accrued
expenses
|
240.8
|
|
|
272.3
|
|
Income taxes
payable
|
—
|
|
|
2.1
|
|
Total current
liabilities
|
1,075.0
|
|
|
1,008.5
|
|
Long-term
debt
|
1,155.8
|
|
|
740.5
|
|
Long-term operating
lease liabilities
|
117.6
|
|
|
—
|
|
Pensions
|
79.6
|
|
|
82.8
|
|
Other
liabilities
|
129.9
|
|
|
135.0
|
|
Total
liabilities
|
2,557.9
|
|
|
1,966.8
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
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
|
1,085.8
|
|
|
1,078.8
|
|
Retained
earnings
|
1,979.4
|
|
|
1,855.0
|
|
Accumulated other
comprehensive loss
|
(129.6)
|
|
|
(188.8)
|
|
Treasury stock, at
cost, 48,144,394 shares and 47,312,248 shares for 2019 and 2018,
respectively
|
(3,154.0)
|
|
|
(2,895.5)
|
|
Total
stockholders' deficit
|
(217.5)
|
|
|
(149.6)
|
|
Total liabilities
and stockholders' deficit
|
$
|
2,340.4
|
|
|
$
|
1,817.2
|
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
(Amounts in
millions)
|
For the Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
180.0
|
|
|
$
|
175.5
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Loss on sale of
businesses
|
8.8
|
|
|
12.0
|
|
Gain on sale of
Australian Property
|
—
|
|
|
(23.8)
|
|
Loss on Brazil assets
held for sale
|
—
|
|
|
31.4
|
|
Gain from insurance
recoveries, net of losses incurred
|
(12.8)
|
|
|
—
|
|
Income from equity
method investments
|
(7.2)
|
|
|
(8.4)
|
|
Dividend from
Affiliates
|
2.0
|
|
|
2.2
|
|
Restructuring
charges, net of cash paid
|
(0.2)
|
|
|
0.6
|
|
Provision for bad
debts
|
2.2
|
|
|
3.3
|
|
Unrealized losses on
derivative contracts
|
(0.2)
|
|
|
1.3
|
|
Stock-based
compensation expense
|
11.4
|
|
|
13.6
|
|
Depreciation and
amortization
|
34.9
|
|
|
32.8
|
|
Deferred income
taxes
|
15.7
|
|
|
(6.2)
|
|
Pension
expense
|
64.2
|
|
|
4.2
|
|
Pension
contributions
|
(1.0)
|
|
|
(2.2)
|
|
Other items,
net
|
(0.1)
|
|
|
0.2
|
|
Changes in assets and
liabilities, net of effects of divestitures:
|
|
|
|
Accounts and notes
receivable
|
(270.0)
|
|
|
(272.1)
|
|
Inventories
|
(149.9)
|
|
|
(115.5)
|
|
Other current
assets
|
10.2
|
|
|
(2.2)
|
|
Accounts
payable
|
52.6
|
|
|
109.2
|
|
Accrued
expenses
|
(21.0)
|
|
|
3.2
|
|
Income taxes payable
and receivable
|
(11.5)
|
|
|
15.1
|
|
Other
|
(19.1)
|
|
|
(9.2)
|
|
Net cash used in
operating activities
|
(111.0)
|
|
|
(35.0)
|
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.8
|
|
|
0.1
|
|
Purchases of
property, plant and equipment
|
(53.5)
|
|
|
(43.4)
|
|
Net proceeds from
sale of businesses
|
43.6
|
|
|
111.8
|
|
Purchases of
short-term investments
|
(1.8)
|
|
|
—
|
|
Insurance recoveries
received for property damage incurred from natural
disaster
|
12.8
|
|
|
—
|
|
Net cash provided
by investing activities
|
1.9
|
|
|
68.5
|
|
Cash flows from
financing activities:
|
|
|
|
Short-term debt
payments
|
(2.1)
|
|
|
(18.4)
|
|
Short-term debt
proceeds
|
2.1
|
|
|
21.3
|
|
Asset securitization
borrowings
|
65.5
|
|
|
65.0
|
|
Asset securitization
payments
|
(43.5)
|
|
|
(51.0)
|
|
Long-term debt
payments
|
(33.3)
|
|
|
(17.8)
|
|
Borrowings from
credit facility
|
1,459.5
|
|
|
1,391.0
|
|
Payments on credit
facility
|
(1,037.5)
|
|
|
(1,042.0)
|
|
Proceeds from
employee stock purchases
|
1.6
|
|
|
1.2
|
|
Repurchases of common
stock
|
(250.0)
|
|
|
(350.2)
|
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(14.5)
|
|
|
(18.6)
|
|
Cash dividends
paid
|
(50.8)
|
|
|
(42.4)
|
|
Net cash provided
by (used in) financing activities
|
97.0
|
|
|
(61.9)
|
|
Decrease in cash and
cash equivalents
|
(12.1)
|
|
|
(28.4)
|
|
Effect of exchange
rates on cash and cash equivalents
|
2.2
|
|
|
(0.4)
|
|
Cash and cash
equivalents, beginning of period
|
46.3
|
|
|
68.2
|
|
Cash and cash
equivalents, end of period
|
$
|
36.4
|
|
|
$
|
39.4
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
|
23.5
|
|
|
$
|
18.3
|
|
Income taxes paid
(net of refunds)
|
$
|
54.2
|
|
|
$
|
45.0
|
|
Insurance recoveries
received
|
$
|
128.0
|
|
|
$
|
—
|
|
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. During the first quarter of 2019, the
Company completed the sale of its Kysor Warren business. In the
first quarter of 2018, the Company announced the planned sales of
its businesses in Australia, Asia, and South America. The sale of
the Company's business in Australia and Asia and the related
property was completed in the second quarter of 2018 and sale of
the Company's business in South America was completed in the third
quarter of 2018. The results from operations for these businesses
have been shown in the tables below as "Non-core business results".
The prior period results have been updated to provide
period-over-period comparability.
|
|
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)
|
|
2019
|
|
2018
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
139.8
|
|
$
|
(28.8)
|
|
$
|
111.0
|
|
|
$
|
184.5
|
|
$
|
(45.3)
|
|
$
|
139.2
|
|
Restructuring
charges
|
(0.1)
|
|
—
|
|
(0.1)
|
|
|
0.5
|
|
(0.1)
|
|
0.4
|
|
Loss on assets held
for sale
|
—
|
|
—
|
|
—
|
|
|
31.4
|
|
—
|
|
31.4
|
|
Pension
settlement
|
60.6
|
|
(15.1)
|
|
45.5
|
|
|
—
|
|
—
|
|
—
|
|
Special product
quality adjustments (b)
|
(0.5)
|
|
0.1
|
|
(0.4)
|
|
|
—
|
|
—
|
|
—
|
|
Special legal
contingency charges (a)
|
(0.1)
|
|
—
|
|
(0.1)
|
|
|
1.5
|
|
(0.3)
|
|
1.2
|
|
Asbestos-related
litigation (a)
|
0.4
|
|
(0.1)
|
|
0.3
|
|
|
(0.2)
|
|
0.2
|
|
—
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
0.1
|
|
—
|
|
0.1
|
|
|
0.1
|
|
—
|
|
0.1
|
|
Environmental
liabilities (a)
|
1.3
|
|
(0.3)
|
|
1.0
|
|
|
0.9
|
|
(0.3)
|
|
0.6
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(1.0)
|
|
(1.0)
|
|
|
—
|
|
(0.6)
|
|
(0.6)
|
|
Other tax items, net
(c)
|
—
|
|
0.6
|
|
0.6
|
|
|
—
|
|
(2.3)
|
|
(2.3)
|
|
(Gain) loss, net on
sale of business and related property
|
0.4
|
|
(0.1)
|
|
0.3
|
|
|
(22.1)
|
|
4.1
|
|
(18.0)
|
|
Divestiture costs (a)
(g)
|
—
|
|
—
|
|
—
|
|
|
(2.5)
|
|
0.6
|
|
(1.9)
|
|
Partial advance of
insurance recoveries related to lost profits (h)
|
(8.0)
|
|
2.3
|
|
(5.7)
|
|
|
—
|
|
—
|
|
—
|
|
Gain from insurance
recoveries, net of losses incurred
|
(5.9)
|
|
1.2
|
|
(4.7)
|
|
|
—
|
|
—
|
|
—
|
|
Other items, net
(a)
|
0.9
|
|
(0.1)
|
|
0.8
|
|
|
0.6
|
|
(0.6)
|
|
—
|
|
Non-core business
results (f)
|
—
|
|
—
|
|
—
|
|
|
0.7
|
|
(0.2)
|
|
0.5
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
188.9
|
|
$
|
(41.3)
|
|
$
|
147.6
|
|
|
$
|
195.4
|
|
$
|
(44.8)
|
|
$
|
150.6
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
2.81
|
|
|
|
|
$
|
3.39
|
|
Restructuring
charges
|
|
|
—
|
|
|
|
|
0.01
|
|
Loss on assets held
for sale
|
|
|
—
|
|
|
|
|
0.77
|
|
Pension
settlement
|
|
|
1.14
|
|
|
|
|
—
|
|
Special product
quality adjustments (b)
|
|
|
(0.01)
|
|
|
|
|
—
|
|
Special legal
contingency charges (a)
|
|
|
—
|
|
|
|
|
0.03
|
|
Asbestos-related
litigation (a)
|
|
|
0.01
|
|
|
|
|
—
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
|
|
—
|
|
|
|
|
—
|
|
Environmental
liabilities (a)
|
|
|
0.03
|
|
|
|
|
0.01
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.03)
|
|
|
|
|
(0.01)
|
|
Other tax items, net
(c)
|
|
|
0.02
|
|
|
|
|
(0.05)
|
|
(Gain) loss, net on
sale of business and related property
|
|
|
0.01
|
|
|
|
|
(0.44)
|
|
Divestiture costs (a)
(g)
|
|
|
—
|
|
|
|
|
(0.05)
|
|
Partial advance of
insurance recoveries related to lost profits (h)
|
|
|
(0.14)
|
|
|
|
|
—
|
|
Gain from insurance
recoveries, net of losses incurred
|
|
|
(0.13)
|
|
|
|
|
—
|
|
Other items, net
(a)
|
|
|
0.02
|
|
|
|
|
—
|
|
Non-core business
results (f)
|
|
|
—
|
|
|
|
|
0.01
|
|
Change in share
counts from share-based compensation (d)
|
|
|
0.01
|
|
|
|
|
—
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
3.74
|
|
|
|
|
$
|
3.67
|
|
|
(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.
|
(e) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(f) Non-core business
results represent activity related to the Company's business
operations in Australia, Asia, and South America and the Kysor
Warren business, not included elsewhere in the
reconciliation.
|
(g) Divestiture costs
incurred in Q1 2018 related to the sales of the Australia and Asia
business and the related property were reclassified to (Gain) loss,
net on sale of business and related property in Q2 2018.
|
(h) During the second
quarter of 2019, the Company received a partial advance of $8
million related to lost profits incurred in the second quarter. The
Company will include the full recovery of the second quarter lost
profits in adjusted income in the period in which the second
quarter lost profits are collected in full.
|
|
|
|
For the Six Months
Ended June 30,
|
|
(Unaudited)
|
|
2019
|
|
2018
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (e)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
|
222.8
|
|
$
|
(42.4)
|
|
$
|
180.4
|
|
|
$
|
228.5
|
|
$
|
(51.4)
|
|
$
|
177.1
|
|
Restructuring
charges
|
0.4
|
|
(0.1)
|
|
0.3
|
|
|
1.3
|
|
(0.3)
|
|
1.0
|
|
Loss on assets held
for sale
|
—
|
|
—
|
|
—
|
|
|
31.4
|
|
—
|
|
31.4
|
|
Pension
settlement
|
60.6
|
|
(15.1)
|
|
45.5
|
|
|
—
|
|
—
|
|
—
|
|
Special product
quality adjustments (b)
|
(0.5)
|
|
0.1
|
|
(0.4)
|
|
|
—
|
|
—
|
|
—
|
|
Special legal
contingency charges (a)
|
0.2
|
|
(0.1)
|
|
0.1
|
|
|
1.7
|
|
(0.4)
|
|
1.3
|
|
Asbestos-related
litigation (a)
|
1.8
|
|
(0.4)
|
|
1.4
|
|
|
1.9
|
|
(0.4)
|
|
1.5
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
(0.3)
|
|
0.1
|
|
(0.2)
|
|
|
1.3
|
|
(0.3)
|
|
1.0
|
|
Inventory write down
(b)
|
—
|
|
—
|
|
—
|
|
|
0.2
|
|
—
|
|
0.2
|
|
Environmental
liabilities (a)
|
1.3
|
|
(0.3)
|
|
1.0
|
|
|
1.2
|
|
(0.3)
|
|
0.9
|
|
Excess tax benefits
from share-based compensation (c)
|
—
|
|
(5.3)
|
|
(5.3)
|
|
|
—
|
|
(4.9)
|
|
(4.9)
|
|
Other tax items, net
(c)
|
—
|
|
0.6
|
|
0.6
|
|
|
—
|
|
(3.2)
|
|
(3.2)
|
|
(Gain) loss, net on
sale of business and related property
|
8.8
|
|
(3.5)
|
|
5.3
|
|
|
(11.8)
|
|
4.1
|
|
(7.7)
|
|
Partial advance of
insurance recoveries related to lost profits (g)
|
(8.0)
|
|
2.3
|
|
(5.7)
|
|
|
—
|
|
—
|
|
—
|
|
Gain from insurance
recoveries, net of losses incurred
|
(12.8)
|
|
2.9
|
|
(9.9)
|
|
|
—
|
|
—
|
|
—
|
|
Other items, net
(a)
|
0.9
|
|
(0.2)
|
|
0.7
|
|
|
0.8
|
|
(0.6)
|
|
0.2
|
|
Non-core business
results (f)
|
1.3
|
|
(0.3)
|
|
1.0
|
|
|
4.0
|
|
(0.9)
|
|
3.1
|
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
|
276.5
|
|
$
|
(61.7)
|
|
$
|
214.8
|
|
|
$
|
260.5
|
|
$
|
(58.6)
|
|
$
|
201.9
|
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
|
4.53
|
|
|
|
|
$
|
4.26
|
|
Restructuring
charges
|
|
|
0.01
|
|
|
|
|
0.03
|
|
Loss on assets held
for sale
|
|
|
—
|
|
|
|
|
0.76
|
|
Pension
settlement
|
|
|
1.14
|
|
|
|
|
—
|
|
Special product
quality adjustments (b)
|
|
|
(0.01)
|
|
|
|
|
—
|
|
Special legal
contingency charges (a)
|
|
|
—
|
|
|
|
|
0.03
|
|
Asbestos-related
litigation (a)
|
|
|
0.04
|
|
|
|
|
0.04
|
|
Net change in
unrealized losses (gains) on unsettled future contracts
(a)
|
|
|
(0.01)
|
|
|
|
|
0.02
|
|
Inventory write down
(b)
|
|
|
—
|
|
|
|
|
0.01
|
|
Environmental
liabilities (a)
|
|
|
0.03
|
|
|
|
|
0.02
|
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.13)
|
|
|
|
|
(0.12)
|
|
Other tax items, net
(c)
|
|
|
0.02
|
|
|
|
|
(0.07)
|
|
(Gain) loss, net on
sale of business and related property
|
|
|
0.13
|
|
|
|
|
(0.19)
|
|
Partial advance of
insurance recoveries related to lost profits (g)
|
|
|
(0.14)
|
|
|
|
|
—
|
|
Gain from insurance
recoveries, net of losses incurred
|
|
|
(0.26)
|
|
|
|
|
—
|
|
Other items, net
(a)
|
|
|
0.02
|
|
|
|
|
—
|
|
Non-core business
results (f)
|
|
|
0.03
|
|
|
|
|
0.07
|
|
Change in share
counts from share-based compensation (d)
|
|
|
0.01
|
|
|
|
|
0.01
|
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
|
5.41
|
|
|
|
|
$
|
4.87
|
|
|
(a) Recorded in
Losses 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.
|
(e) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(f) Non-core business
results represent activity related to the Company's business
operations in Australia, Asia, and South America and the Kysor
Warren business, not included elsewhere in the
reconciliation.
|
(g) During the second
quarter of 2019, the Company received a partial advance of $8
million related to lost profits incurred in the second quarter. The
Company will include the full recovery of the second quarter lost
profits in adjusted income in the period in which the second
quarter lost profits are collected in full.
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Components of
Losses (gains) and other expenses, net
(pre-tax):
|
|
|
|
|
|
|
|
Realized losses
(gains) on settled future contracts (a)
|
$
|
0.1
|
|
|
$
|
(0.2)
|
|
|
$
|
0.2
|
|
|
$
|
(0.7)
|
|
Foreign currency
exchange (gains) losses (a)
|
(0.2)
|
|
|
(0.1)
|
|
|
(0.7)
|
|
|
1.2
|
|
(Gain) loss on
disposal of fixed assets (a)
|
(0.4)
|
|
|
0.1
|
|
|
(0.2)
|
|
|
0.1
|
|
Net change in
unrealized losses (gains) on unsettled futures contracts
(b)
|
0.1
|
|
|
0.1
|
|
|
(0.3)
|
|
|
1.3
|
|
Special legal
contingency charges (b)
|
(0.1)
|
|
|
1.5
|
|
|
0.2
|
|
|
1.7
|
|
Asbestos-related
litigation (b)
|
0.4
|
|
|
(0.2)
|
|
|
1.8
|
|
|
1.9
|
|
Environmental
liabilities (b)
|
1.3
|
|
|
0.9
|
|
|
1.3
|
|
|
1.2
|
|
Divestiture costs
(b) (c)
|
—
|
|
|
(2.5)
|
|
|
—
|
|
|
—
|
|
Other items, net
(b)
|
0.9
|
|
|
0.6
|
|
|
0.9
|
|
|
0.8
|
|
Losses (gains) and
other expenses, net (pre-tax)
|
$
|
2.1
|
|
|
$
|
0.2
|
|
|
$
|
3.2
|
|
|
$
|
7.5
|
|
|
(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
|
(c) Divestiture costs
incurred in Q1 2018 related to the sales of the Australia and Asia
business and the related property were reclassified to (Gain) loss,
net on sale of business and related property in Q2 2018.
|
Reconciliation of
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, 2019
ESTIMATED
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
$11.91-$12.51
|
Insurance recovery,
net of other non-core EBIT charges, from tornado impact to damaged
property and second quarter non-cash pension settlement
charge
|
|
0.61
|
Adjusted
Earnings per share from continuing operations - diluted, a Non-GAAP
measure
|
|
$11.30-$11.90
|
|
|
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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Average shares
outstanding - diluted, a GAAP measure
|
39.5
|
|
|
41.1
|
|
|
39.8
|
|
|
$
|
41.6
|
|
Impact on diluted
shares from excess tax benefits from share-based
compensation
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.2)
|
|
Adjusted average
shares outstanding - diluted, a Non-GAAP measure
|
39.4
|
|
|
41.0
|
|
|
39.7
|
|
|
41.4
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net Sales, a GAAP measure, to Adjusted Net Sales, a Non-GAAP
measure (dollars in millions)
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended June 30,
|
|
For the Three
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales, a GAAP
measure
|
$
|
148.7
|
|
|
$
|
207.3
|
|
|
$
|
1,099.1
|
|
|
$
|
1,175.4
|
|
Net sales from
non-core businesses (a)
|
—
|
|
|
61.8
|
|
|
—
|
|
|
61.8
|
|
Adjusted net
sales, a Non-GAAP measure
|
$
|
148.7
|
|
|
$
|
145.5
|
|
|
$
|
1,099.1
|
|
|
$
|
1,113.6
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Six
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales, a GAAP
measure
|
$
|
300.1
|
|
|
$
|
409.3
|
|
|
$
|
1,889.4
|
|
|
$
|
2,010.2
|
|
Net sales from
non-core businesses (a)
|
34.3
|
|
|
144.6
|
|
|
34.3
|
|
|
144.6
|
|
Adjusted net
sales, a Non-GAAP measure
|
$
|
265.8
|
|
|
$
|
264.7
|
|
|
$
|
1,855.1
|
|
|
$
|
1,865.6
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
Reconciliation of
Gross Profit, a GAAP measure, to Adjusted Gross Profit, a Non-GAAP
measure (dollars in millions)
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended June 30,
|
|
For the Three
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross profit, a
GAAP measure
|
$
|
45.7
|
|
|
$
|
61.7
|
|
|
$
|
332.1
|
|
|
$
|
361.6
|
|
Non-GAAP adjustments
to gross profit
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
Gross profit from
non-core businesses (a)
|
—
|
|
|
10.3
|
|
|
—
|
|
|
10.3
|
|
Adjusted Gross
profit, a Non-GAAP measure
|
$
|
45.7
|
|
|
$
|
51.4
|
|
|
$
|
331.6
|
|
|
$
|
351.3
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Six
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross profit, a
GAAP measure
|
$
|
88.3
|
|
|
$
|
116.4
|
|
|
$
|
533.6
|
|
|
$
|
584.7
|
|
Non-GAAP adjustments
to gross profit
|
—
|
|
|
(0.2)
|
|
|
0.5
|
|
|
(0.2)
|
|
Gross profit from
non-core businesses (a)
|
3.6
|
|
|
24.9
|
|
|
3.6
|
|
|
24.9
|
|
Adjusted Gross
profit, a Non-GAAP measure
|
$
|
84.7
|
|
|
$
|
91.7
|
|
|
$
|
529.5
|
|
|
$
|
560.0
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
Reconciliation of
Segment Profit, a GAAP measure, to Adjusted Segment
profit, a Non-GAAP measure (dollars in
millions)
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended June 30,
|
|
For the Three
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
profit, a GAAP measure
|
$
|
19.1
|
|
|
$
|
23.4
|
|
|
$
|
202.3
|
|
|
$
|
205.3
|
|
Gross (loss) profit
from non-core businesses (a)
|
—
|
|
|
(0.2)
|
|
|
—
|
|
|
(0.2)
|
|
Adjusted Segment
profit, a Non-GAAP measure
|
$
|
19.1
|
|
|
$
|
23.6
|
|
|
$
|
202.3
|
|
|
$
|
205.5
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Six
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
profit, a GAAP measure
|
$
|
27.5
|
|
|
$
|
32.1
|
|
|
$
|
300.3
|
|
|
$
|
276.1
|
|
Gross profit from
non-core businesses (a)
|
(1.0)
|
|
|
(3.1)
|
|
|
(1.0)
|
|
|
(3.1)
|
|
Adjusted Segment
profit, a Non-GAAP measure
|
$
|
28.5
|
|
|
$
|
35.2
|
|
|
$
|
301.3
|
|
|
$
|
279.2
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
Reconciliation of
Selling, general and administrative expenses, a GAAP measure, to
Adjusted Selling, general and administrative expenses, a Non-GAAP
measure (dollars in millions)
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Three
Months
Ended June 30,
|
|
For the Three
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Selling, general
and administrative expenses, a GAAP measure
|
$
|
29.5
|
|
|
$
|
42.8
|
|
|
$
|
152.4
|
|
|
$
|
161.4
|
|
Selling, general and
administrative expenses from non-core businesses (a)
|
—
|
|
|
10.9
|
|
|
—
|
|
|
10.9
|
|
Adjusted Selling,
general and administrative expenses, a Non-GAAP
measure
|
$
|
29.5
|
|
|
$
|
31.9
|
|
|
$
|
152.4
|
|
|
$
|
150.5
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
|
Refrigeration
Segment
|
|
Consolidated
|
|
For the Six
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Selling, general
and administrative expenses, a GAAP measure
|
$
|
65.9
|
|
|
$
|
92.0
|
|
|
$
|
298.2
|
|
|
$
|
316.6
|
|
Selling, general and
administrative expenses from non-core businesses (a)
|
4.6
|
|
|
28.4
|
|
|
4.6
|
|
|
28.4
|
|
Adjusted Selling,
general and administrative expenses, a Non-GAAP
measure
|
$
|
61.3
|
|
|
$
|
63.6
|
|
|
$
|
293.6
|
|
|
$
|
288.2
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net cash used in
operating activities, a GAAP measure
|
$
|
30.0
|
|
|
$
|
48.5
|
|
|
$
|
(111.0)
|
|
|
$
|
(35.0)
|
|
Purchases of
property, plant and equipment
|
(16.3)
|
|
|
(20.7)
|
|
|
(53.5)
|
|
|
(43.4)
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.5
|
|
|
—
|
|
|
0.8
|
|
|
0.1
|
|
Insurance recoveries
received for property damage incurred from natural
disaster
|
5.9
|
|
|
—
|
|
|
12.8
|
|
|
—
|
|
Free cash flow, a
Non-GAAP measure
|
20.1
|
|
|
27.8
|
|
|
(150.9)
|
|
|
(78.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
|
Trailing
Twelve
Months to
June 30,
2019
|
Adjusted EBIT
(b)(a)
|
|
$
|
565.4
|
|
Depreciation and
amortization expense (c)
|
|
69.8
|
|
EBITDA (b +
c)
|
|
$
|
635.2
|
|
Total debt at June
30, 2019 (d)
|
|
$
|
1,466.8
|
|
Total Debt to
EBITDA ratio ((d / (b + c))
|
|
2.3
|
|
(a) Non-Core
businesses represent the Company's business operations in
Australia, Asia, and South America and the Kysor Warren
business.
|
|
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,
2019
|
Income from
continuing operations before income taxes, a GAAP
measure
|
$
|
462.2
|
|
Items in Losses
(gains) and other expenses, net that are excluded from segment
profit
|
7.8
|
|
Special product
quality adjustments
|
(0.5)
|
|
Restructuring
charges
|
2.0
|
|
Interest expense,
net
|
44.1
|
|
Pension
settlement
|
61.0
|
|
Loss (gain), net on
sale of businesses and related property
|
17.0
|
|
Gain from insurance
recoveries, net of losses incurred
|
(23.8)
|
|
Partial advance of
insurance recoveries related to lost profits
|
(8.0)
|
|
Non-core business
results (a)
|
0.5
|
|
Other expense
(income), net
|
3.1
|
|
Adjusted EBIT per
above, a Non-GAAP measure
|
$
|
565.4
|
|
|
(a) Non-core
businesses results represent activity related to the Company's
business operations in Australia, Asia, and South America and the
Kysor Warren business, not included elsewhere in the
reconciliation.
|
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SOURCE Lennox International Inc.