Q4 Results Summary
(All comparisons are year-over-year, unless otherwise noted)
- Revenue up 6% to $1.2 billion;
core revenue excluding European Operations up 7% to $1.1 billion
- GAAP diluted EPS up 52% to $4.04;
adjusted diluted EPS up 41% to $3.63
- Operating cash flow up 132% to $306
million
2023 Full Year Highlights
(All comparisons are year-over-year, unless otherwise noted)
- Revenue up 6% to $5 billion; core
revenue excluding European Operations up 6% to $4.7 billion
- GAAP diluted EPS up 19% to $16.54; adjusted diluted EPS up 27% to
$17.96
- Operating cash flow up 144% to $736
million
DALLAS, Jan. 31,
2024 /PRNewswire/ -- Lennox (NYSE: LII), a
leader in energy-efficient climate-control solutions, today
reported record fourth quarter revenue of $1.2 billion. Operating income was $185 million for the fourth quarter. Operating
margin was 16% and GAAP diluted earnings per share was $4.04.
Core revenue, excluding European Operations, grew 7% to
$1.1 billion. Adjusted segment profit
rose 34% to $175 million. Adjusted
segment margin was up 320 basis points to 15.9%. Adjusted earnings
per share rose 41% to $3.63.
"In 2023, relentless execution of our Lennox transformation
strategy yielded significant financial successes even as we
navigated challenging residential end-markets. We successfully
implemented the new minimum efficiency regulatory change, improved
our factory production, built supply chain resiliency, and
initiated our pricing excellence programs," said Chief Executive
Officer, Alok Maskara. "As we step
into 2024, we carry a positive momentum and remain committed to
overcoming end market uncertainties through disciplined
execution."
In the fourth quarter, our Home Comfort Solutions segment
(formerly the Residential segment) experienced a 1% revenue growth.
This growth was a result of favorable mix of higher-efficiency
products and effective pricing execution, that was partially offset
by volume declines. Sales volumes through the 2-step distribution
channel continue to experience significant inventory destocking and
were down more than 20% but direct-to-contractor sales volumes
remained resilient indicating a stable consumer demand
environment.
The Building Climate Solutions segment (formerly the Commercial
segment) continues to achieve outstanding performance. In the
fourth quarter, revenue increased 19%, driven by both pricing and
sales volume gains. Revenue growth helped restore previously
depressed profit margins, as did productivity through increased
factory output and strengthened supply chain resiliency. The AES
acquisition integration is advancing smoothly, and customers are
expressing strong interest in the full lifecycle value
proposition.
FOURTH QUARTER 2023 FINANCIAL HIGHLIGHTS
(All
comparisons are year-over-year, unless otherwise noted)
Revenue: $1.2 billion; Core
revenue, which excludes European operations, was $1.1 billion, up 7%. Revenue growth was
driven by price and favorable mix and partially offset by lower
sales volume.
Operating Income: $185
million, up 41%, with operating profit margin of 16.0%, up
400 bps.
Adjusted Segment Profit: $175
million, up 34%, and adjusted segment profit margin of
15.9%, up 320 basis points. Adjusted segment profit increased
$44 million as $69 million of price/mix benefits and
$15 million in product costs were
partially offset by lower sales volumes and inflation and
investment in SG&A and distribution.
Net Income: $145 million,
or $4.04 per share, compared to
$94 million, or $2.65 per share, in the prior year quarter.
Adjusted Net Income: $130 million,
or $3.63 per share, compared to
$92 million, or $2.58 per share, in the prior year quarter.
Cash: Operating cash flow was $306
million compared to $132
million in the prior-year quarter. Capital expenditures were
$125 million compared to $34 million in the prior-year quarter with the
increase driven by the new commercial HVAC factory investment in
Saltillo, Mexico. Total debt at
the end of the fourth quarter was approximately $1.3 billion. Total cash, cash equivalents and
short-term investments were $69
million at the end of the quarter.
Home Comfort Solutions: Business segment revenue was
$709 million, up 1%. Segment profit
was $115 million, down 4%, and
segment margin was 16.2%, down 70 basis points. Segment profit
decreased $4 million compared to the
prior-year quarter. The decrease was attributed to a $9 million decrease in sales volumes and
$25 million impact from inflation and
investments in distribution and selling. However, partially
offsetting these factors were the benefits of $30 million in price/mix.
Building Climate Solutions: Business segment revenue was
$390 million, up 19%. Segment profit
was $91 million, up 98%, and segment
margin expanded 930 basis points to 23.2%. Segment profit
increased $45 million compared to
prior-year quarter. This improvement was driven by $39 million of price/mix benefits, $3 million in higher sales volumes and
$16 million in product cost
tailwinds, partially offset by inflationary wage and distribution
impacts.
Corporate and Other: Late in the quarter we successfully
completed the divestiture of our European operations which had
revenue of $56 million and profit of
$1.6 million in the quarter.
Corporate expenses were $30 million,
or down $3 million.
FULL YEAR 2023 FINANCIAL HIGHLIGHTS
(All comparisons
are year-over-year, unless otherwise noted)
Revenue: $5 billion; Core revenue, which excludes
European operations, was $4.7
billion, up 6%. Revenue growth was driven by price and
favorable mix and partially offset by lower sales volume.
Operating Income: $790 million, up 20%, with
operating profit margin of 15.9%, up 195 bps. Operating income
includes a one-time net charge of $49
million for the combined divestitures of the European HVAC
and Refrigeration businesses.
Adjusted Segment Profit: $850 million, up 27%, and adjusted
segment profit margin of 17.9%, up 300 basis points. Adjusted
segment profit increased $180 million
as $348 million of price and mix
benefits were partially offset by lower sales volumes and the
impact of inflation and growth investments on SG&A and
distribution.
Net Income: $590 million, or $16.54 per share, compared to $497 million, or $13.88 per share, in the prior year.
Adjusted Net Income: $641 million,
or $17.96 per share, compared to
$508 million, or $14.18 per share, in the prior year.
Cash: Operating cash flow was $736
million compared to $302
million in the prior year. Capital expenditures were
$250 million compared to $101 million in the prior year with the increase
driven by the new commercial factory investment in Saltillo, Mexico, as well as investments
required for the low GWP transition.
Home Comfort Solutions: Business segment revenue was
$3.2 billion, up 1%. Segment profit
was $610 million, up 2%, and segment
margin expanded 20 basis points to 18.9%. Segment profit increased
$13 million compared to prior year.
The increase was primarily driven by $154
million in price/mix benefits, partially offset by
$71 million lower volume.
Additionally, there were headwinds of $73
million due to the impact of inflation on salary wages,
distribution rent escalation and sales force investments.
Building Climate Solutions: Business segment revenue
was $1.5 billion, up 18%. Segment
profit was $341 million, up 109%, and
segment margin expanded 980 basis points to 22.5%. Segment
profit increased $178 million
compared to prior year, driven by $194
million of price/mix benefits and $3
million generated by higher sales volumes. Offsetting
some of these gains were elevated product costs associated with
materials inflation, as well as increased incentive compensation
and salary wage inflation.
Corporate and Other: Revenue from European
operations was $248 million, up 6%.
European operations had $7.6 million
in profit compared to a $3.3 million
loss in the prior year. Corporate expenses were $102 million, or up $11
million compared to the prior year as a result of higher
incentive compensation and wage inflation.
FULL YEAR 2024 GUIDANCE
For full year 2024, core
revenue is anticipated to increase by approximately 7% mostly due
to price and mix as sales volumes are forecasted to be relatively
flat.
Adjusted earnings per share is expected to be within the range
of $18.50 to $20.00.
Capital expenditures are projected to be approximately
$175 million, and Free Cash Flow is
estimated to fall within the range of $500
million to $600 million.
CONFERENCE CALL INFORMATION
A conference call to
discuss the company's fourth quarter and full year results, as well
as 2024 full year guidance, will be held this morning at
8:30 a.m. Central Time. To
participate in the earnings conference, please call 800-274-8461
(U.S.) or +1 203-518-9765 (international) at least 10 minutes prior
to the scheduled start time and use conference ID LIIQ423. The
conference call also will be webcast live on the company's investor
relations web site at investor.lennox.com. A replay of the
conference call will be available until February 14, 2024, by calling toll-free
800-839-3736 (U.S.) or +1 402-220-2978 (international). The call
will also be archived on the company's investor relations website
at investor.lennox.com.
ABOUT LENNOX
Lennox (NYSE: LII) is a 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 cooling,
heating, indoor air quality, and refrigeration systems. Additional
information on Lennox is available at www.lennox.com or by
contacting investor@lennox.com.
FORWARD-LOOKING STATEMENTS & NON-GAAP FINANCIAL
MEASURES
The statements in this document that are not
historical statements, including statements regarding the 2024
full-year outlook and expected consolidated and segment financial
results, as well as financial targets for future years, 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 competition in the HVACR business; our ability to successfully
execute our business strategy; our ability to meet customer demand;
a decline in new construction activity and related demand for
products and services; the impact of unfavorable weather; the
impact of higher raw material prices and supply interruptions;
regulatory or tax changes; the impact of new or increased trade
tariffs; general economic conditions; and extraordinary events
beyond our control, such as natural disasters and public health
crises. 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.
A reconciliation of non-GAAP financial measures appearing in
this document to financial measures prepared in accordance with
U.S. Generally Accepted Accounting Principles (GAAP) are included
in the Annex to this document.
This document includes forward-looking statements regarding core
revenue, segment profit, adjusted segment profit, adjusted net
income, adjusted earnings per share, free cash flow and Debt to
EBITDA, which are non-GAAP financial measures. These non-GAAP
financial measures are derived by excluding certain amounts from
the corresponding financial measures determined in accordance with
GAAP. The determination of the amounts excluded is a matter of
management judgment and depends upon, among other factors, the
nature of the underlying expense or income amounts recognized in a
given period and the high variability of certain amounts, such as
unusual gains and losses, the ultimate outcome of pending
litigation, fluctuations in foreign currency exchange rates,
changes in environmental liabilities, the impact and timing of
potential acquisitions and divestitures, future restructuring
costs, and other structural changes or their probable significance.
Core revenue, adjusted segment profit, and adjusted earnings per
share exclude net sales and profit/(loss) from our European
portfolio, which was sold in 4Q 2023. We are unable to
present a quantitative reconciliation of the aforementioned
forward-looking non-GAAP financial measures to their most directly
comparable forward-looking GAAP financial measures because such
information is not available, and management cannot reliably
predict the necessary components of such GAAP measures without
unreasonable effort or expense. The unavailable information could
have a significant impact on LII's full year GAAP financial
results.
|
|
LENNOX INTERNATIONAL
INC. AND SUBSIDIARIES
|
|
Consolidated
Statements of Operations
|
|
(Unaudited)
|
|
|
(Amounts in millions, except per share
data)
|
For the Three Months Ended
December 31,
|
|
For the Years Ended
December 31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net sales
|
$
1,154.8
|
|
$
1,093.8
|
|
$
4,981.9
|
|
$
4,718.4
|
|
Cost of goods
sold
|
800.0
|
|
808.6
|
|
3,434.1
|
|
3,433.7
|
|
Gross
profit
|
354.8
|
|
285.2
|
|
1,547.8
|
|
1,284.7
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
177.8
|
|
155.0
|
|
705.5
|
|
627.2
|
|
Losses (gains) and
other expenses, net
|
3.4
|
|
(0.6)
|
|
8.5
|
|
4.9
|
|
Restructuring
charges
|
2.9
|
|
0.3
|
|
3.1
|
|
1.5
|
|
Impairment on assets
held for sale
|
—
|
|
—
|
|
63.2
|
|
—
|
|
Gain on sale of
businesses
|
(14.1)
|
|
—
|
|
(14.1)
|
|
—
|
|
Income from equity
method investments
|
(0.5)
|
|
(1.3)
|
|
(8.5)
|
|
(5.1)
|
|
Operating income
|
185.3
|
|
131.8
|
|
790.1
|
|
656.2
|
|
Pension
settlements
|
0.2
|
|
(0.4)
|
|
0.8
|
|
(0.2)
|
|
Interest expense,
net
|
11.3
|
|
12.7
|
|
51.7
|
|
38.7
|
|
Other expense (income),
net
|
0.4
|
|
—
|
|
0.1
|
|
1.9
|
|
Income before income
taxes
|
173.4
|
|
119.5
|
|
737.5
|
|
615.8
|
|
Provision for income
taxes
|
28.9
|
|
25.1
|
|
147.4
|
|
118.7
|
|
Net income
|
$
144.5
|
|
$
94.4
|
|
$
590.1
|
|
$
497.1
|
|
|
|
|
|
|
|
|
|
Earnings per share – Basic:
|
$
4.07
|
|
$
2.66
|
|
$
16.61
|
|
$
13.92
|
|
|
|
|
|
|
|
|
|
Earnings per share –
Diluted:
|
$
4.04
|
|
$
2.65
|
|
$
16.54
|
|
$
13.88
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding -
Basic
|
35.6
|
|
35.4
|
|
35.5
|
|
35.7
|
|
Weighted Average Number of Shares Outstanding -
Diluted
|
35.8
|
|
35.6
|
|
35.7
|
|
35.8
|
|
LENNOX INTERNATIONAL INC. AND
SUBSIDIARIES
|
|
Segment Net Sales and Profit
(Loss)
|
|
(Unaudited)
|
|
|
(Amounts in millions)
|
For the Three Months Ended
December 31,
|
|
For the Years Ended
December 31,
|
|
|
|
2023
|
|
2022(2)
|
|
2023
|
|
2022(2)
|
|
Net Sales
|
|
|
|
|
|
|
|
|
Home Comfort
Solutions
|
$
709.4
|
|
$
703.4
|
|
$
3,222.9
|
|
$
3,198.3
|
|
Building Climate
Solutions (2)
|
390.0
|
|
327.2
|
|
1,511.4
|
|
1,286.4
|
|
Corporate and other
(2)
|
55.4
|
|
63.2
|
|
247.6
|
|
233.7
|
|
$
1,154.8
|
|
$
1,093.8
|
|
$
4,981.9
|
|
$
4,718.4
|
|
Segment Profit (Loss)
(1)
|
|
|
|
|
|
|
|
|
Home Comfort
Solutions
|
$
115.0
|
|
$
119.2
|
|
$
610.2
|
|
$
596.9
|
|
Building Climate
Solutions (2)
|
90.5
|
|
45.6
|
|
340.8
|
|
162.9
|
|
Corporate and
other (2)
|
(28.7)
|
|
(32.6)
|
|
(93.9)
|
|
(94.0)
|
|
Total segment
profit
|
176.8
|
|
132.2
|
|
857.1
|
|
665.8
|
|
Reconciliation to Operating
income:
|
|
|
|
|
|
|
|
|
Gain on sale of
businesses
|
(14.1)
|
|
—
|
|
(14.1)
|
|
—
|
|
Impairment of net
assets held for sale
|
—
|
|
—
|
|
63.2
|
|
—
|
|
Items in Losses (gains)
and other expenses, net which are excluded from segment
profit (loss) (1)
|
2.7
|
|
$
0.1
|
|
14.8
|
|
8.1
|
|
Restructuring
charges
|
2.9
|
|
0.3
|
|
3.1
|
|
1.5
|
|
Operating income
|
$
185.3
|
|
$
131.8
|
|
$
790.1
|
|
$
656.2
|
|
|
|
|
|
|
|
|
|
(1)
|
We define segment
profit (loss) as a segment's operating income (loss) included in
the accompanying Consolidated Statements of Operations,
excluding:
|
|
•
|
The following items in
Losses (gains) and other expenses, net:
|
|
|
•
|
Net change in
unrealized (gains) losses on unsettled futures
contracts,
|
|
|
•
|
Environmental
liabilities and special litigation charges, and;
|
|
|
•
|
Other items,
net
|
|
•
|
Restructuring
charges,
|
|
•
|
Impairment on assets
held for sale, and;
|
|
•
|
Gain on sale of
businesses
|
|
|
|
|
|
(2)
|
Previously, we operated
in three reportable business segments. In November 2022, we
announced the decision to explore strategic alternatives for our
European portfolio and that we would continue to invest in our
Heatcraft Worldwide Refrigeration business, all of which were
previously in our Refrigeration segment. On January 1, 2023,
we adjusted our segment presentation to better align with how the
segments are managed and evaluated after the change in
portfolio. Heatcraft Worldwide Refrigeration is now part of
the Business Climate Solutions segment while the European portfolio
is presented with Corporate and Other until disposition. Amounts
presented in this table have been recast to reflect the revised
segment presentation. In 4Q 2023, we successfully completed the
divestiture of our European operations.
|
|
|
|
|
|
|
LENNOX INTERNATIONAL
INC. AND SUBSIDIARIES
|
|
Consolidated Balance
Sheets
|
|
(Unaudited)
|
|
|
|
|
(Amounts in millions, except shares and par
values)
|
As of December 31, 2023
|
|
As of December 31, 2022
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
60.7
|
|
$
52.6
|
|
Short-term
investments
|
8.4
|
|
8.5
|
|
Accounts and notes
receivable, net of allowances of $14.4 and $15.5 in 2023 and 2022,
respectively
|
594.6
|
|
608.5
|
|
Inventories,
net
|
699.1
|
|
753.0
|
|
Other
assets
|
70.7
|
|
73.9
|
|
Total current
assets
|
1,433.5
|
|
1,496.5
|
|
Property, plant and
equipment, net of accumulated depreciation of $910.8 and $920.8 in
2023 and 2022, respectively
|
720.4
|
|
548.9
|
|
Right-of-use assets
from operating leases
|
213.6
|
|
219.9
|
|
Goodwill
|
222.1
|
|
186.3
|
|
Deferred income
taxes
|
51.8
|
|
27.5
|
|
Other assets,
net
|
156.9
|
|
88.5
|
|
Total assets
|
$
2,798.3
|
|
$
2,567.6
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Commercial
paper
|
$
150.0
|
|
$
—
|
|
Current maturities of
long-term debt
|
12.1
|
|
710.6
|
|
Current operating
lease liabilities
|
57.5
|
|
63.3
|
|
Accounts
payable
|
374.7
|
|
427.3
|
|
Accrued
expenses
|
416.1
|
|
376.9
|
|
Income taxes
payable
|
4.2
|
|
17.6
|
|
Total current
liabilities
|
1,014.6
|
|
1,595.7
|
|
Long-term
debt
|
1,143.1
|
|
814.2
|
|
Long-term operating
lease liabilities
|
164.6
|
|
161.8
|
|
Pensions
|
22.5
|
|
40.1
|
|
Other
liabilities
|
168.2
|
|
158.9
|
|
Total liabilities
|
2,513.0
|
|
2,770.7
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders' equity
(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
|
1,184.6
|
|
1,155.2
|
|
Retained
earnings
|
3,506.2
|
|
3,070.6
|
|
Accumulated other
comprehensive loss
|
(56.9)
|
|
(90.6)
|
|
Treasury stock, at
cost, 51,588,103 shares and 51,700,260 shares for 2023 and 2022,
respectively
|
(4,349.5)
|
|
(4,339.2)
|
|
Total stockholders' equity
(deficit)
|
285.3
|
|
(203.1)
|
|
Total liabilities and stockholders' equity
(deficit)
|
$
2,798.3
|
|
$
2,567.6
|
|
|
LENNOX INTERNATIONAL
INC. AND SUBSIDIARIES
|
|
Consolidated
Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
(Amounts in millions)
|
For the Years Ended
December 31,
|
|
2023
|
|
2022
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
$
590.1
|
|
$
497.1
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Gain on sale of
businesses
|
(14.1)
|
|
—
|
|
Impairment on net
assets held for sale
|
63.2
|
|
—
|
|
Income from equity
method investments
|
(8.5)
|
|
(5.1)
|
|
Dividends from
affiliates
|
0.5
|
|
1.7
|
|
Restructuring charges,
net of cash paid
|
2.6
|
|
1.0
|
|
Provision for credit
losses
|
9.8
|
|
6.9
|
|
Unrealized losses, net
on derivative contracts
|
6.0
|
|
1.7
|
|
Stock-based
compensation expense
|
30.1
|
|
21.8
|
|
Depreciation and
amortization
|
86.0
|
|
77.9
|
|
Deferred income
taxes
|
(26.0)
|
|
(15.2)
|
|
Pension
expense
|
3.2
|
|
6.0
|
|
Pension
contributions
|
(15.0)
|
|
(22.5)
|
|
Other items,
net
|
(0.5)
|
|
(1.1)
|
|
Changes in assets and
liabilities, net of effects of acquisitions and
divestitures:
|
|
|
|
|
Accounts and notes
receivable
|
(32.7)
|
|
(112.4)
|
|
Inventories
|
11.1
|
|
(249.3)
|
|
Other current
assets
|
7.1
|
|
(7.3)
|
|
Accounts
payable
|
(29.2)
|
|
28.2
|
|
Accrued
expenses
|
65.0
|
|
13.7
|
|
Income taxes payable
and receivable, net
|
(24.1)
|
|
56.4
|
|
Leases,
net
|
3.1
|
|
1.7
|
|
Other, net
|
8.5
|
|
1.1
|
|
Net cash provided by operating
activities
|
736.2
|
|
302.3
|
|
Cash flows from investing
activities:
|
|
|
|
|
Proceeds from the
disposal of property, plant and equipment
|
2.1
|
|
1.6
|
|
Purchases of property,
plant and equipment
|
(250.2)
|
|
(101.1)
|
|
Acquisition of
business
|
(94.9)
|
|
—
|
|
Net proceeds from sale
of businesses
|
23.2
|
|
—
|
|
Proceeds from
(purchases of) short-term investments
|
0.1
|
|
(3.5)
|
|
Net cash used in investing
activities
|
(319.7)
|
|
(103.0)
|
|
Cash flows from financing
activities:
|
|
|
|
|
Commercial paper
borrowings
|
150.0
|
|
—
|
|
Asset securitization
borrowings
|
190.0
|
|
407.0
|
|
Asset securitization
payments
|
(540.0)
|
|
(307.0)
|
|
Long-term debt
payments
|
(364.4)
|
|
(12.9)
|
|
Issuance of senior
unsecured notes
|
500.0
|
|
—
|
|
Borrowings from credit
facility
|
1,721.0
|
|
2,537.5
|
|
Payments on credit
facility
|
(1,893.0)
|
|
(2,352.0)
|
|
Payments of deferred
financing costs
|
(5.4)
|
|
—
|
|
Proceeds from employee
stock purchases
|
3.9
|
|
3.6
|
|
Repurchases of common
stock
|
—
|
|
(300.0)
|
|
Repurchases of common
stock to satisfy employee withholding tax obligations
|
(14.9)
|
|
(8.3)
|
|
Cash dividends
paid
|
(153.4)
|
|
(142.0)
|
|
Net cash used in financing
activities
|
(406.2)
|
|
(174.1)
|
|
Increase in cash and
cash equivalents
|
10.3
|
|
25.2
|
|
Effect of exchange
rates on cash and cash equivalents
|
(2.2)
|
|
(3.6)
|
|
Cash and cash
equivalents, beginning of period
|
52.6
|
|
31.0
|
|
Cash and cash equivalents, end of
period
|
$
60.7
|
|
$
52.6
|
|
|
|
|
|
Supplemental disclosures of cash flow
information:
|
|
|
|
|
Interest
paid
|
$
50.2
|
|
$
35.4
|
|
Income taxes paid (net
of refunds)
|
$
197.8
|
|
$
77.2
|
|
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 (loss) 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 and enhance
the ability of investors to analyze the Company's business trends
and operating performance.
In November 2022, we
announced the decision to explore strategic alternatives for our
European portfolio. 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 Net income, a GAAP measure, to
Adjusted net income, a Non-GAAP measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December
31,
|
|
For the Years Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Amount
after tax
|
Per
Diluted
Share
|
|
Amount
after tax
|
Per
Diluted
Share
|
|
Amount
after tax
|
Per
Diluted
Share
|
|
Amount
after tax
|
Per
Diluted
Share
|
|
Net income, a GAAP measure
|
$ 144.5
|
$
4.04
|
|
$
94.4
|
$
2.65
|
|
$ 590.1
|
$ 16.54
|
|
$ 497.1
|
$ 13.88
|
|
Restructuring
charges
|
2.2
|
0.06
|
|
0.2
|
0.01
|
|
2.4
|
0.07
|
|
1.2
|
0.03
|
|
Pension
settlements
|
—
|
—
|
|
(0.3)
|
(0.01)
|
|
0.3
|
0.01
|
|
(0.1)
|
—
|
|
Items in Losses
(gains) and other expenses, net which are excluded from segment
profit (loss) (a)
|
1.5
|
0.05
|
|
—
|
—
|
|
11.1
|
0.31
|
|
6.6
|
0.19
|
|
Excess tax benefit
from share-based compensation (b)
|
(2.8)
|
(0.08)
|
|
(0.9)
|
(0.03)
|
|
(5.2)
|
(0.15)
|
|
(0.6)
|
(0.02)
|
|
Other tax items, net
(b)
|
(4.1)
|
(0.11)
|
|
0.2
|
0.01
|
|
(3.7)
|
(0.10)
|
|
(0.5)
|
(0.01)
|
|
Impairment on assets
held for sale
|
—
|
—
|
|
—
|
—
|
|
62.0
|
1.74
|
|
—
|
—
|
|
Gain on sale of
businesses
|
(11.1)
|
(0.31)
|
|
—
|
—
|
|
(11.1)
|
(0.31)
|
|
—
|
—
|
|
Non-core business
results (c)
|
(0.6)
|
(0.02)
|
|
(1.9)
|
(0.05)
|
|
(5.4)
|
(0.15)
|
|
4.3
|
0.11
|
|
Adjusted net income, a non-GAAP
measure
|
$
129.6
|
$
3.63
|
|
$
91.7
|
$
2.58
|
|
$
640.5
|
$
17.96
|
|
$ 508.0
|
$
14.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Recorded in Losses
(gains) and other expenses, net in the Consolidated Statements of
Operations
|
|
|
(b) Recorded in
Provision for income taxes in the Consolidated Statements of
Operations
|
|
|
(c) Non-core business
results represent activity related to our business operations in
Europe not included elsewhere in the reconciliations
|
|
|
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,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net cash provided by operating
activities
|
$
306.3
|
|
$
132.2
|
|
$
736.2
|
|
$
302.3
|
|
Purchases of property,
plant and equipment
|
(125.2)
|
|
(34.1)
|
|
(250.2)
|
|
(101.1)
|
|
Proceeds from the
disposal of property, plant and equipment
|
0.5
|
|
0.4
|
|
2.1
|
|
1.6
|
|
Free cash flow, a Non-GAAP
measure
|
$
181.6
|
|
$
98.5
|
|
$
488.1
|
|
$
202.8
|
|
Reconciliation of Net sales, a GAAP measure to Core
net sales, a Non-GAAP measure
|
|
|
For the Three Months Ended December
31,
|
|
Corporate and other
|
|
Consolidated
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net sales, a GAAP
measure
|
$
55.4
|
|
$
63.2
|
|
$
1,154.8
|
|
$
1,093.8
|
|
Net sales from non-core
businesses (a)
|
(55.4)
|
|
(63.2)
|
|
(55.4)
|
|
(63.2)
|
|
Core net sales, a
Non-GAAP measure
|
$
—
|
|
$
—
|
|
$
1,099.4
|
|
$
1,030.6
|
|
|
|
|
|
|
|
|
|
(a) Non-Core businesses
represent our business operations in Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December
31,
|
|
Corporate and other
|
|
Consolidated
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net sales, a GAAP
measure
|
$
247.6
|
|
$
233.7
|
|
$
4,981.9
|
|
$
4,718.4
|
|
Net sales from non-core
businesses (a)
|
(247.6)
|
|
(233.7)
|
|
(247.6)
|
|
(233.7)
|
|
Core net sales, a
Non-GAAP measure
|
$
—
|
|
$
—
|
|
$
4,734.3
|
|
$
4,484.7
|
|
|
|
|
|
|
|
|
|
(a) Non-Core businesses
represent our business operations in Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Segment profit (loss), a Non-GAAP
measure to Adjusted Segment profit (loss), a Non-GAAP
measure
|
|
|
For the Three Months Ended December
31,
|
|
Corporate and other
|
|
Consolidated
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Segment profit (loss),
a Non-GAAP measure
|
$
(28.7)
|
|
$
(32.6)
|
|
$
176.8
|
|
$
132.2
|
|
Profit from non-core
businesses (a)
|
1.6
|
|
1.1
|
|
1.6
|
|
1.1
|
|
Adjusted Segment profit
(loss), a Non-GAAP measure
|
$
(30.3)
|
|
$
(33.7)
|
|
$
175.2
|
|
$
131.1
|
|
|
|
|
|
|
|
|
|
(a) Non-Core businesses
represent our business operations in Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December
31,
|
|
Corporate and other
|
|
Consolidated
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Segment profit (loss),
a Non-GAAP measure
|
$
(93.9)
|
|
$
(94.0)
|
|
$
857.1
|
|
$
665.8
|
|
Profit (loss) from
non-core businesses (a)
|
7.6
|
|
(3.3)
|
|
7.6
|
|
(3.3)
|
|
Adjusted Segment profit
(loss), a Non-GAAP measure
|
$
(101.5)
|
|
$
(90.7)
|
|
$
849.5
|
|
$
669.1
|
|
|
|
|
|
|
|
|
|
(a) Non-Core businesses
represent our business operations in Europe
|
|
|
|
|
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SOURCE Lennox International Inc.