DALLAS, Feb. 1, 2022 /PRNewswire/ -- Lennox
International Inc. (NYSE: LII), a global leader in energy-efficient
climate-control solutions, today reported fourth-quarter and
full-year 2021 results. All comparisons are to the prior-year
period.
For the fourth quarter of 2021, revenue was a fourth-quarter
record $965 million, up 6%. Foreign
exchange was neutral to revenue. GAAP operating income was
$98 million compared to $139 million in the prior-year quarter.
Fourth-quarter GAAP earnings per share from continuing operations
was $2.27 compared to $2.91 in the prior-year quarter.
Total segment profit in the fourth quarter was $102 million compared to $139 million in the prior-year quarter, and total
segment margin was 10.6% compared to 15.2% in the prior-year
quarter. Adjusted earnings per share from continuing operations was
$2.35 compared to $2.89 in the prior-year quarter.
For the full year, revenue was up 15% to a record $4.19 billion. Foreign exchange had a 1% benefit
to revenue growth. GAAP operating income rose 23% to $590 million. GAAP earnings per share from
continuing operations rose 34% to a record $12.39.
Total segment profit for the full year rose 19% to $604 million, and total segment margin expanded
50 basis points to 14.4%. Adjusted earnings per share from
continuing operations rose 27% to a record $12.60.
"Covid-19 and global supply chain disruptions continued to have
a significant impact on operations in the fourth quarter as
expected, and reported financial results were also impacted from
having 6% fewer days than in the prior-year quarter," said Chairman
and CEO Todd Bluedorn. "In the face
of these challenges, the team performed extremely well.
"In Residential, revenue was up 12% on double-digit growth in
both replacement and new construction business. Segment profit was
down 5%, and segment margin was down 310 basis points to 17.8%. The
Commercial business continued to be hit the hardest by Covid-19 and
global supply chain disruptions in the fourth quarter. Commercial
revenue was down 11%, segment profit was down 64%, and segment
margin contracted 1170 basis points to 7.7%. Market demand remains
strong, and we expect Commercial revenue to resume growth in the
first quarter and profitability to be up by mid-2022 and for the
full year. In Refrigeration, revenue was up 6% as reported and up
8% at constant currency, led by more than 20% growth in
North America. Segment profit rose
29%, and segment margin expanded 170 basis points to 9.2%.
"For the year overall, Lennox International posted record
revenue and EPS. Revenue was up 15%, and adjusted EPS from
continuing operations was up 27%. For 2022, we are reiterating
guidance for revenue growth of 5-10% and raising guidance for EPS
to $13.50-$14.50, reflecting the net benefit of a lower
effective tax rate and higher interest expense. We are reiterating
plans for $400 million of stock
repurchases for the year."
FOURTH QUARTER 2021 FINANCIAL HIGHLIGHTS
Revenue: Revenue for the fourth quarter was
$965 million, up 6%. Foreign exchange
was neutral to revenue. Volume was down, price was up, and mix was
favorable.
Gross Profit: For the fourth quarter, gross profit
was $254 million compared to
$275 million in the prior-year
quarter. Gross margin was 26.3% compared to 30.1% in the prior-year
quarter. Gross profit was primarily impacted by 6% fewer days than
the prior-year quarter, the Covid-19 pandemic, global supply chain
disruptions, lower volume, and higher material, freight, and other
product costs. Partial offsets included favorable price and mix,
distribution efficiency initiatives, and favorable foreign
exchange.
Income from Continuing Operations: On a GAAP basis,
fourth quarter income from continuing operations was $83.5 million, or $2.27 diluted earnings per share, compared to
$112.2 million, or $2.91 diluted earnings per share, in the
prior-year quarter.
On an adjusted basis, fourth quarter income from continuing
operations was $86.7 million, or
$2.35 diluted earnings per share,
compared to $111.4 million, or
$2.89 diluted earnings per share, in
the prior-year quarter. Adjusted income from continuing operations
for the fourth quarter of 2021 excludes net after-tax charges of
$3.2 million.
FULL YEAR 2021 FINANCIAL HIGHLIGHTS
Revenue: For the full year, revenue was $4.19 billion, up 15%. Foreign exchange was 1%
favorable to revenue growth. Volume was up, and price and mix were
both favorable.
Gross Profit: Gross profit for the full year was
$1.19 billion, up 14%. Gross margin
was 28.3%, down 30 basis points. Gross profit benefitted from
higher volume, favorable price and mix, and favorable foreign
exchange. Partial offsets included the impact from the Covid-19
pandemic, global supply chain disruptions, and higher material,
warranty, tariffs, freight, distribution, and other product
costs.
Income from Continuing Operations: On a GAAP basis,
income from continuing operations for 2021 was $464.0 million, or $12.39 diluted earnings per share, compared to
$357.1 million, or $9.26 diluted earnings per share, in the prior
year.
On an adjusted basis, income from continuing operations for 2021
was $471.4 million, or $12.60 diluted earnings per share, compared to
$383.1 million, or $9.94 diluted earnings per share, in the prior
year. Adjusted income from continuing operations for 2021 excludes
net after-tax charges of $7.4
million.
Free Cash Flow and Total Debt: For the full year,
cash from operations was $516 million
compared to $612 million in the prior
year. Capital expenditures were approximately $106 million compared to approximately
$77 million in the prior year. Free
cash flow was $410 million for the
full year compared to $535 million in
the prior year. In 2021, the company paid approximately
$127 million in dividends and
repurchased $600 million of company
stock. Ending the year, total debt was $1.24
billion, and the company's debt-to-EBITDA ratio stood at
1.8. Total cash and cash equivalents were $31 million at the end of the year.
BUSINESS SEGMENT FINANCIAL HIGHLIGHTS
Residential Heating and Cooling
- 4Q21 revenue a fourth-quarter record $620 million, up 12%; neutral foreign
exchange
- 4Q21 segment profit of $110
million, down 5%
- 4Q21 segment margin of 17.8%, down 310 basis points
- 2021 revenue a record $2.78
billion, up 18%; up 17% at constant currency
- 2021 segment profit a record $540
million, up 26%
- 2021 segment margin of 19.5%, up 140 basis points
Fourth-quarter results were negatively impacted by 6% fewer days
than the prior-year quarter, the Covid-19 pandemic, global supply
chain disruptions, higher material, freight and other product
costs, and higher SG&A. Positive impacts included higher
volume, favorable price, mix, foreign exchange and warranty, and
distribution efficiency programs.
Full-year results were positively impacted by higher volume and
factory productivity, favorable price, sourcing and engineering-led
cost reductions, and favorable foreign exchange. Partial offsets
included the Covid-19 pandemic, global supply chain disruptions,
unfavorable mix, higher commodity, tariff, warranty, freight,
distribution, and other product costs, and higher SG&A
including R&D and IT investments.
Commercial Heating and Cooling
- 4Q21 revenue of $201 million,
down 11%; neutral foreign exchange
- 4Q21 segment profit of $16
million, down 64%
- 4Q21 segment margin 7.7%, down 1170 basis points
- 2021 revenue of $865 million, up
8%; up 7% at constant currency
- 2021 segment profit of $111
million, down 19%
- 2021 segment margin of 12.8%, down 430 basis points
Fourth-quarter results were negatively impacted by 6% fewer days
than the prior-year quarter, the Covid-19 pandemic, global supply
chain disruptions, lower volume, higher material, warranty, tariff,
freight and other product costs, and higher SG&A. Partial
offsets included favorable price and mix.
Full-year results were negatively impacted by the Covid-19
pandemic, global supply chain disruptions, higher material, tariff,
freight, distribution and other product costs, higher SG&A, and
unfavorable foreign exchange. Partial offsets included higher
volume and favorable price and mix.
Refrigeration
- 4Q21 revenue a fourth-quarter record $143 million, up 6%; up 8% at constant
currency
- 4Q21 segment profit of $13
million, up 29%
- 4Q21 segment margin of 9.2%, up 170 basis points
- 2021 revenue of $554 million, up
17%; up 16% at constant currency
- 2021 segment profit of $49
million, up 50%
- 2021 segment margin of 8.9%, up 190 basis points
Fourth-quarter results were positively impacted by higher
volume, favorable price and mix, and lower SG&A. Partial
offsets included 6% fewer days than the prior-year quarter, the
Covid-19 pandemic, global supply chain disruptions, and higher
material, freight and other product costs.
Full-year results were positively impacted by higher volume and
factory productivity, favorable price, and joint-venture
equity-method income. Partial offsets included the Covid-19
pandemic, global supply chain disruptions, higher material, tariff,
freight and other product costs, and higher SG&A.
2022 FULL-YEAR OUTLOOK
- Reiterating guidance for revenue growth of 5-10%
- Raising guidance for GAAP and adjusted EPS from continuing
operations from $13.40-$14.40 to $13.50-$14.50
- Reiterating guidance for corporate expenses of approximately
$95 million
- Updating effective tax rate guidance from approximately 20% to
a range of 18-20% on an adjusted basis for the full year
- Raising guidance for interest expense and other from
approximately $35 million to
$40 million
- Reiterating guidance for capital expenditures of approximately
$125 million
- Reiterating guidance for stock repurchases of $400 million
CONFERENCE CALL INFORMATION
A conference call to discuss the company's fourth-quarter and
full-year 2021 results and 2022 outlook will be held this morning
at 8:30 a.m. Central time. To listen,
call the conference call line at 844-291-6362 (U.S.) or
234-720-6995 (international) at least 10 minutes prior to the
scheduled start time and use participant code 7814058. The
conference call also will be webcast on Lennox International's web
site at www.lennoxinternational.com. A replay will be available
from approximately 11:00 a.m. Central
time on February 1 through February
15, 2022 by dialing 866-207-1041 (U.S.) or 402-970-0847
(international) and using access code 1725607. The call also will
be archived on the company's website.
ABOUT LENNOX INTERNATIONAL
Lennox International Inc. is a global leader in energy-efficient
climate-control solutions. Dedicated to sustainability and creating
comfortable and healthier environments for our residential and
commercial customers while reducing their carbon footprint, we lead
the field in innovation with our air conditioning, heating, indoor
air quality, and refrigeration systems. Lennox International stock
is listed on the New York Stock Exchange and traded under the
symbol "LII". Additional information on Lennox International 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 2022 full-year
outlook and expected consolidated and segment financial results for
2022, 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 risks that the North American unitary HVAC and
refrigeration markets perform worse than current assumptions.
Additional risks include, but are not limited to: the impact of
higher raw material prices, availability and timely delivery of raw
materials and other components, the impact of new or increased
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, a decline in
new construction activity and related demand for products and
services, and any resurgence of the COVID-19 pandemic and its
economic impact on the company and its employees and customers. 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
|
|
(Amounts in
millions, except per share data)
|
For the Three
Months Ended December 31,
(Unaudited)
|
|
For the Years
Ended December 31,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
sales
|
$
964.8
|
|
$
914.0
|
|
$
4,194.1
|
|
$
3,634.1
|
Cost of goods
sold
|
711.2
|
|
638.7
|
|
3,005.7
|
|
2,594.0
|
Gross
profit
|
253.6
|
|
275.3
|
|
1,188.4
|
|
1,040.1
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
151.5
|
|
143.3
|
|
598.9
|
|
555.9
|
Losses (gains) and
other expenses, net
|
4.5
|
|
1.7
|
|
9.2
|
|
7.4
|
Restructuring
charges
|
0.2
|
|
0.2
|
|
1.8
|
|
10.8
|
(Gain) loss from
natural disasters, net of insurance recoveries
|
—
|
|
(4.5)
|
|
—
|
|
3.1
|
Income from equity
method investments
|
(0.2)
|
|
(4.4)
|
|
(11.8)
|
|
(15.6)
|
Operating
income
|
97.6
|
|
139.0
|
|
590.3
|
|
478.5
|
Pension
settlements
|
0.1
|
|
0.3
|
|
1.2
|
|
0.6
|
Interest expense,
net
|
6.2
|
|
6.3
|
|
25.0
|
|
28.3
|
Other expense
(income), net
|
1.1
|
|
1.0
|
|
4.0
|
|
4.4
|
Income from continuing
operations before income taxes
|
90.2
|
|
131.4
|
|
560.1
|
|
445.2
|
Provision for income
taxes
|
6.7
|
|
19.2
|
|
96.1
|
|
88.1
|
Income from
continuing operations
|
83.5
|
|
112.2
|
|
464.0
|
|
357.1
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations before income taxes
|
0.2
|
|
(0.6)
|
|
—
|
|
(1.5)
|
Income tax expense
(benefit)
|
0.1
|
|
(0.1)
|
|
—
|
|
(0.7)
|
Income (loss) from
discontinued operations
|
0.1
|
|
(0.5)
|
|
—
|
|
(0.8)
|
Net
income
|
$
83.6
|
|
$
111.7
|
|
$
464.0
|
|
$
356.3
|
|
|
|
|
|
|
|
|
Earnings per
share – Basic:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
2.28
|
|
$
2.93
|
|
$
12.47
|
|
$
9.32
|
Loss from discontinued
operations
|
—
|
|
(0.01)
|
|
—
|
|
(0.02)
|
Net income
|
$
2.28
|
|
$
2.92
|
|
$
12.47
|
|
$
9.30
|
Earnings per
share – Diluted:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
2.27
|
|
$
2.91
|
|
$
12.39
|
|
$
9.26
|
Loss from discontinued
operations
|
—
|
|
(0.02)
|
|
—
|
|
(0.02)
|
Net income
|
$
2.27
|
|
$
2.89
|
|
$
12.39
|
|
$
9.24
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares Outstanding - Basic
|
36.6
|
|
38.3
|
|
37.2
|
|
38.3
|
Weighted Average
Number of Shares Outstanding - Diluted
|
36.8
|
|
38.6
|
|
37.5
|
|
38.6
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Segment Net Sales
and Profit (Loss)
|
|
(Amounts in
millions)
|
For the Three
Months Ended December 31,
(Unaudited)
|
|
For the Years
Ended December 31,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
Sales
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
620.3
|
|
$
552.7
|
|
$
2,775.6
|
|
$
2,361.5
|
Commercial
Heating & Cooling
|
201.4
|
|
226.2
|
|
864.8
|
|
800.9
|
Refrigeration
|
143.1
|
|
135.1
|
|
553.7
|
|
471.7
|
|
$
964.8
|
|
$
914.0
|
|
$
4,194.1
|
|
$
3,634.1
|
Segment Profit
(Loss) (1)
|
|
|
|
|
|
|
|
Residential
Heating & Cooling
|
$
110.3
|
|
$
115.6
|
|
$
540.3
|
|
$
428.5
|
Commercial
Heating & Cooling
|
15.6
|
|
43.8
|
|
110.9
|
|
136.9
|
Refrigeration
|
13.2
|
|
10.2
|
|
49.1
|
|
32.8
|
Corporate and
other
|
(37.2)
|
|
(30.3)
|
|
(96.4)
|
|
(91.5)
|
Total segment
profit
|
101.9
|
|
139.3
|
|
603.9
|
|
506.7
|
Reconciliation to
Operating Income:
|
|
|
|
|
|
|
|
Special product
quality adjustments
|
(1.4)
|
|
2.0
|
|
(2.5)
|
|
1.0
|
(Gain) loss from
natural disasters, net of insurance recoveries
|
—
|
|
(4.5)
|
|
—
|
|
3.1
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (1)
|
5.5
|
|
2.6
|
|
14.3
|
|
13.3
|
Restructuring
charges
|
0.2
|
|
0.2
|
|
1.8
|
|
10.8
|
Operating
income
|
$
97.6
|
|
$
139.0
|
|
$
590.3
|
|
$
478.5
|
|
|
(1)
|
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:
-
- Net change in unrealized losses (gains) on unsettled futures
contracts,
- Special legal contingency charges,
- Asbestos-related litigation,
- Environmental liabilities,
- Charges incurred related to COVID-19 pandemic; and
- Other items, net,
- Special product quality adjustments
- (Gain) loss from natural disasters, net of insurance
recoveries; and
- Restructuring charges.
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated
Balance Sheets
|
|
(Amounts in
millions, except shares and par values)
|
As of December 31,
2021
|
|
As of December 31,
2020
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
31.0
|
|
$
123.9
|
Short-term
investments
|
5.5
|
|
5.1
|
Accounts and notes
receivable, net of allowances of $10.7 and $9.6 in 2021 and 2020,
respectively
|
508.3
|
|
448.3
|
Inventories,
net
|
510.9
|
|
439.4
|
Other
assets
|
119.7
|
|
70.9
|
Total current
assets
|
1,175.4
|
|
1,087.6
|
Property, plant and
equipment, net of accumulated depreciation of $888.8 and $880.6 in
2021 and 2020, respectively
|
515.1
|
|
464.3
|
Right-of-use assets
from operating leases
|
196.1
|
|
194.4
|
Goodwill
|
186.6
|
|
186.9
|
Deferred income
taxes
|
11.3
|
|
13.2
|
Other assets,
net
|
87.4
|
|
86.1
|
Total
assets
|
$
2,171.9
|
|
$
2,032.5
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Current maturities of
long-term debt
|
$
11.3
|
|
$
9.9
|
Current operating
lease liabilities
|
54.8
|
|
55.0
|
Accounts
payable
|
402.1
|
|
340.3
|
Accrued
expenses
|
358.9
|
|
296.1
|
Total current
liabilities
|
827.1
|
|
701.3
|
Long-term
debt
|
1,226.5
|
|
970.7
|
Long-term operating
lease liabilities
|
145.0
|
|
142.8
|
Pensions
|
83.3
|
|
92.5
|
Other
liabilities
|
159.0
|
|
142.3
|
Total
liabilities
|
2,440.9
|
|
2,049.6
|
Commitments and
contingencies
|
|
|
|
Stockholders'
deficit:
|
|
|
|
Preferred stock, $0.01
par value, 25,000,000 shares authorized, no shares issued or
outstanding
|
—
|
|
—
|
Common stock, $0.01
par value, 200,000,000 shares authorized, 87,170,197 shares
issued
|
0.9
|
|
0.9
|
Additional paid-in
capital
|
1,133.7
|
|
1,113.2
|
Retained
earnings
|
2,719.3
|
|
2,385.8
|
Accumulated other
comprehensive loss
|
(88.1)
|
|
(97.2)
|
Treasury stock, at
cost, 50,536,125 shares and 48,820,969 shares for 2021 and 2020,
respectively
|
(4,034.8)
|
|
(3,419.8)
|
Total
stockholders' deficit
|
(269.0)
|
|
(17.1)
|
Total liabilities
and stockholders' deficit
|
$
2,171.9
|
|
$
2,032.5
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
|
|
(Amounts in
millions)
|
For the Years
Ended December 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
464.0
|
|
$
356.3
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Income from equity
method investments
|
(11.8)
|
|
(15.6)
|
Dividends from
affiliates
|
9.1
|
|
12.3
|
Restructuring charges,
net of cash paid
|
1.1
|
|
3.4
|
Provision for credit
losses
|
4.9
|
|
8.1
|
Unrealized (gains)
losses on derivative contracts
|
(0.6)
|
|
0.3
|
Stock-based
compensation expense
|
24.3
|
|
24.3
|
Depreciation and
amortization
|
72.4
|
|
72.6
|
Deferred income
taxes
|
(5.4)
|
|
7.2
|
Pension
expense
|
11.3
|
|
10.5
|
Pension
contributions
|
(1.5)
|
|
(3.3)
|
Other items,
net
|
0.3
|
|
0.2
|
Changes in assets and
liabilities:
|
|
|
|
Accounts and notes
receivable
|
(68.8)
|
|
26.5
|
Inventories
|
(71.0)
|
|
110.3
|
Other current
assets
|
(19.2)
|
|
5.3
|
Accounts
payable
|
55.2
|
|
(31.7)
|
Accrued
expenses
|
64.2
|
|
35.4
|
Income taxes payable
and receivable, net
|
(26.5)
|
|
(5.7)
|
Leases,
net
|
0.2
|
|
2.1
|
Other, net
|
13.3
|
|
(6.1)
|
Net cash provided
by operating activities
|
515.5
|
|
612.4
|
Cash flows from
investing activities:
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.9
|
|
1.0
|
Purchases of property,
plant and equipment
|
(106.8)
|
|
(78.5)
|
Proceeds from
(purchases of) short-term investments, net
|
(0.5)
|
|
(2.2)
|
Net cash (used in)
provided by investing activities
|
(106.4)
|
|
(79.7)
|
Cash flows from
financing activities:
|
|
|
|
Short-term debt
payments
|
—
|
|
(4.6)
|
Short-term debt
borrowings
|
—
|
|
4.6
|
Asset securitization
borrowings
|
627.0
|
|
91.0
|
Asset securitization
payments
|
(377.0)
|
|
(376.0)
|
Long-term debt
borrowings
|
—
|
|
600.0
|
Long-term debt
payments
|
(12.3)
|
|
(10.8)
|
Borrowings from credit
facility
|
1,162.5
|
|
1,576.0
|
Payments on credit
facility
|
(1,156.0)
|
|
(2,081.5)
|
Payments of deferred
financing costs
|
2.4
|
|
(7.5)
|
Proceeds from employee
stock purchases
|
3.3
|
|
3.0
|
Repurchases of common
stock
|
(600.0)
|
|
(100.0)
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(22.1)
|
|
(17.9)
|
Cash dividends
paid
|
(126.5)
|
|
(118.1)
|
Net cash used in
financing activities
|
(498.7)
|
|
(441.8)
|
(Decrease) increase
in cash and cash equivalents
|
(89.6)
|
|
90.9
|
Effect of exchange
rates on cash and cash equivalents
|
(3.3)
|
|
(4.3)
|
Cash and cash
equivalents, beginning of period
|
123.9
|
|
37.3
|
Cash and cash
equivalents, end of period
|
$
31.0
|
|
$
123.9
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
23.8
|
|
$
25.3
|
Income taxes paid (net
of refunds)
|
$
128.5
|
|
$
90.3
|
LENNOX
INTERNATIONAL INC. AND SUBSIDIARIES
|
Reconciliation to
U.S. GAAP (Generally Accepted Accounting Principles)
Measures
|
(Unaudited, in
millions, except per share and ratio data)
|
Use of Non-GAAP
Financial Measures
|
To supplement the
Company's consolidated financial statements and segment net sales
and profit presented in accordance with U.S. GAAP, additional
non-GAAP financial measures are provided and reconciled in the
following tables. In addition to these non-GAAP measures, the
Company also provides rates of revenue change at constant currency
on a consolidated and segment basis if different than the
reported measures. The Company believes that these non-GAAP
financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors
in understanding period-over-period operating results. The
Company believes that these non-GAAP financial measures enhance the
ability of investors to analyze the Company's business trends and
operating performance.
|
|
Reconciliation of
Income from Continuing Operations, a GAAP measure, to Adjusted
Income from Continuing Operations, a Non-GAAP
measure
|
|
|
For the Three
Months Ended December 31,
|
|
(Unaudited)
|
|
2021
|
|
2020
|
|
Pre-Tax
|
Tax Impact (d)
|
After
Tax
|
|
Pre-Tax
|
Tax Impact (d)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
90.2
|
$
(6.7)
|
$
83.5
|
|
$
131.4
|
$
(19.2)
|
$
112.2
|
Restructuring
charges
|
0.2
|
—
|
0.2
|
|
0.2
|
—
|
0.2
|
Pension
settlements
|
0.1
|
(0.1)
|
—
|
|
0.3
|
(0.1)
|
0.2
|
Special product
quality adjustments (b)
|
(1.4)
|
0.4
|
(1.0)
|
|
2.0
|
(0.5)
|
1.5
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
5.5
|
(2.2)
|
3.3
|
|
2.6
|
(0.8)
|
1.8
|
Excess tax expense
(benefits) from share-based compensation (c)
|
—
|
0.7
|
0.7
|
|
—
|
(1.5)
|
(1.5)
|
Other tax items, net
(c)
|
—
|
—
|
—
|
|
—
|
0.4
|
0.4
|
Gain from natural
disasters, net of insurance recoveries (e)
|
—
|
—
|
—
|
|
(4.5)
|
1.1
|
(3.4)
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
94.6
|
$
(7.9)
|
$
86.7
|
|
$
132.0
|
$
(20.6)
|
$
111.4
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
2.27
|
|
|
|
$
2.91
|
Restructuring
charges
|
|
|
—
|
|
|
|
0.01
|
Pension
settlements
|
|
|
—
|
|
|
|
0.01
|
Special product
quality adjustments (b)
|
|
|
(0.03)
|
|
|
|
0.04
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
|
|
0.09
|
|
|
|
0.05
|
Excess tax expense
(benefits) from share-based compensation (c)
|
|
|
0.02
|
|
|
|
(0.04)
|
Other tax items, net
(c)
|
|
|
—
|
|
|
|
0.01
|
Gain from natural
disasters, net of insurance recoveries (e)
|
|
|
—
|
|
|
|
(0.10)
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
2.35
|
|
|
|
$
2.89
|
|
(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) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(e) Recorded in (Gain)
loss from natural disasters, net of insurance recoveries in the
Consolidated Statement of Operations.
|
|
|
|
For the Years
Ended December 31,
|
|
(Unaudited)
|
|
2021
|
|
2020
|
|
Pre-Tax
|
Tax
Impact (d)
|
After
Tax
|
|
Pre-Tax
|
Tax
Impact (d)
|
After
Tax
|
Income from
continuing operations, a GAAP measure
|
$
560.1
|
$
(96.1)
|
$
464.0
|
|
$
445.2
|
$
(88.1)
|
$
357.1
|
Restructuring
charges
|
1.8
|
(0.4)
|
1.4
|
|
10.8
|
(2.4)
|
8.4
|
Pension
settlements
|
1.2
|
(0.3)
|
0.9
|
|
0.6
|
(0.2)
|
0.4
|
Special product
quality adjustments (b)
|
(2.5)
|
0.7
|
(1.8)
|
|
1.0
|
(0.2)
|
0.8
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
14.3
|
(3.8)
|
10.5
|
|
13.3
|
(3.5)
|
9.8
|
Excess tax benefits
from share-based compensation (c)
|
—
|
(5.7)
|
(5.7)
|
|
|
(4.2)
|
(4.2)
|
Other tax items, net
(c)
|
—
|
2.1
|
2.1
|
|
—
|
8.5
|
8.5
|
Loss from natural
disasters, net of insurance recoveries (e)
|
—
|
—
|
—
|
|
3.1
|
(0.8)
|
2.3
|
Adjusted income
from continuing operations, a non-GAAP measure
|
$
574.9
|
$
(103.5)
|
$
471.4
|
|
$
474.0
|
$
(90.9)
|
$
383.1
|
|
|
|
|
|
|
|
|
Earnings per share
from continuing operations - diluted, a GAAP measure
|
|
|
$
12.39
|
|
|
|
$
9.26
|
Restructuring
charges
|
|
|
0.04
|
|
|
|
0.22
|
Pension
settlements
|
|
|
0.02
|
|
|
|
0.01
|
Special product
quality adjustments (b)
|
|
|
(0.05)
|
|
|
|
0.02
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
|
|
0.29
|
|
|
|
0.25
|
Excess tax benefits
from share-based compensation (c)
|
|
|
(0.15)
|
|
|
|
(0.11)
|
Other tax items, net
(c)
|
|
|
0.06
|
|
|
|
0.23
|
Loss from natural
disasters, net of insurance recoveries (e)
|
|
|
—
|
|
|
|
0.06
|
Adjusted earnings
per share from continuing operations - diluted, a non-GAAP
measure
|
|
|
$
12.60
|
|
|
|
$
9.94
|
|
(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) Tax impact based
on the applicable tax rate relevant to the location and nature of
the adjustment.
|
(e) Recorded in (Gain)
loss from natural disasters, net of insurance recoveries in the
Consolidated Statement of Operations.
|
|
For the Three
Months Ended December 31,
|
|
For the Years
Ended December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Components of
Losses (gains) and other expenses, net
(pre-tax):
|
|
|
|
|
|
|
|
Realized (gains)
losses on settled futures contracts (a)
|
$
(0.3)
|
|
$
(0.1)
|
|
$
(1.2)
|
|
$
0.1
|
Foreign currency
exchange gains (a)
|
(0.6)
|
|
(0.5)
|
|
(2.2)
|
|
(3.6)
|
Loss (gain) on
disposal of fixed assets (a)
|
0.4
|
|
0.2
|
|
(0.2)
|
|
(0.2)
|
Other operating
income (a)
|
(0.5)
|
|
(0.5)
|
|
(1.5)
|
|
(2.2)
|
Net change in
unrealized gains on unsettled futures contracts
(b)
|
—
|
|
(0.4)
|
|
—
|
|
(0.3)
|
Special legal
contingency charges (b)
|
0.4
|
|
0.2
|
|
1.3
|
|
1.1
|
Asbestos-related
litigation (b)
|
0.9
|
|
3.7
|
|
5.4
|
|
5.6
|
Environmental
liabilities (b)
|
1.2
|
|
(2.9)
|
|
2.9
|
|
(1.4)
|
Charges incurred
related to COVID-19 pandemic (b)
|
0.3
|
|
1.8
|
|
2.2
|
|
8.3
|
Other items, net
(b)
|
2.7
|
|
0.2
|
|
2.5
|
|
—
|
Losses (gains) and
other expenses, net (pre-tax)
|
$
4.5
|
|
$
1.7
|
|
$
9.2
|
|
$
7.4
|
|
(a) Included in both
segment profit (loss) and Adjusted income from continuing
operations
|
(b) Excluded from
both segment profit (loss) and Adjusted income from continuing
operations
|
Reconciliation of
Estimated Earnings per Share from Continuing Operations - Diluted,
a GAAP measure, to Estimated Adjusted Earnings per Share from
Continuing Operations - Diluted, a Non-GAAP measure
|
|
|
|
For the Year Ended
December 31, 2022
ESTIMATED
|
Estimated Earnings
per share from continuing operations - diluted, a GAAP
measure
|
|
$13.50-$14.50
|
Other non-core EBIT
charges and other non-core tax items
|
|
—
|
Estimated Adjusted
Earnings per share from continuing operations - diluted, a Non-GAAP
measure
|
|
$13.50-$14.50
|
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 December 31,
|
|
For the Years
Ended December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Average shares
outstanding - diluted, a GAAP measure
|
36.8
|
|
38.6
|
|
37.5
|
|
38.6
|
Impact on diluted
shares from excess tax benefits from share-based
compensation
|
—
|
|
—
|
|
(0.1)
|
|
(0.1)
|
Adjusted average
shares outstanding - diluted, a Non-GAAP measure
|
36.8
|
|
38.6
|
|
37.4
|
|
38.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net cash provided
by operating activities
|
$
119.2
|
|
$
166.1
|
|
$
515.5
|
|
$
612.4
|
Purchases of property,
plant and equipment
|
(38.3)
|
|
(22.6)
|
|
(106.8)
|
|
(78.5)
|
Proceeds from the
disposal of property, plant and equipment
|
0.2
|
|
0.3
|
|
0.9
|
|
1.0
|
Free cash flow, a
Non-GAAP measure
|
$
81.1
|
|
$
143.8
|
|
$
409.6
|
|
$
534.9
|
|
|
|
|
|
|
|
|
Calculation of
Debt to EBITDA Ratio (dollars in millions):
|
Trailing
Twelve Months to December 31, 2021
|
Adjusted EBIT
(a)
|
$
603.9
|
Depreciation and
amortization expense (b)
|
69.9
|
EBITDA (a +
b)
|
$
673.8
|
Total debt at
December 31, 2021 (c)
|
$
1,237.8
|
Total Debt to
EBITDA ratio ((c / (a + b))
|
1.8
|
|
Reconciliation of
Income From Continuing Operations Before Income Taxes, a GAAP
measure to Adjusted EBIT, a Non-GAAP measure
|
|
|
|
Trailing
Twelve Months to December 31, 2021
|
Income from
continuing operations before income taxes, a GAAP
measure
|
560.1
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit
|
14.3
|
Special product
quality adjustments
|
(2.5)
|
Restructuring
charges
|
1.8
|
Interest expense,
net
|
25.0
|
Pension
settlements
|
1.2
|
Other expense
(income), net
|
4.0
|
Adjusted EBIT per
above, a Non-GAAP measure
|
603.9
|
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SOURCE Lennox International Inc.