GRC - Free Research Report as Lennox Delivered Record Revenues; Adjusted Earnings Surged 30%
Stock Monitor: Gorman-Rupp Post Earnings Reporting
LONDON, UK / ACCESSWIRE / July 30, 2018 / If you want access to our free earnings report on Lennox International Inc. (NYSE: LII) (“Lennox”), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=LII. The Company reported its second quarter fiscal 2018 operating and financial results on July 23, 2018. The manufacturer of furnaces, air conditioners, and other products outperformed top- and bottom-line expectations. Additionally, the Company raised its earnings guidance for FY18. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the second quarter of the fiscal year 2018, Lennox generated record GAAP revenues of $1.18 billion, up 7% compared to $1.10 billion in Q2 2017. The Company's adjusted revenues were up 9% to a record $1.16 billion on a y-o-y basis in the reported quarter. Lennox's revenue numbers beat analysts' estimates of $1.13 billion.
On a GAAP basis, Lennox's gross profit was $362 million, up 6% on a y-o-y basis. The Company's gross margin was 30.8%, down 10 basis points (bps). On an adjusted basis, Lennox's gross profit was $357 million, up 7% on a y-o-y basis, while its adjusted gross margin was 30.8%, down 70 bps. The Company's gross profit on a GAAP and adjusted basis was positively impacted by higher volume, favorable price, sourcing, and engineering-led cost reductions, as well as a favorable foreign exchange.
For Q2 2018, Lennox's GAAP operating income was a record $195.1 million, up 11% from $175.4 million in Q2 2017.
On a GAAP basis, Lennox's income from continuing operations was $139.2 million, or $3.39 per share, in Q2 2018 compared to $116.4 million, or $2.71 per share, in Q2 2017. The Company's adjusted income from continuing operations was $150.5 million, or $3.67 per share, in the reported quarter compared to $121.0 million, or $2.83 per share, in the prior year's same quarter. Lennox's earnings beat Wall Street's estimates of $3.56 per share.
For Q2 2018, Lennox's adjusted earnings from continuing operations excluded net after-tax charges of $11.3 million; a $31.4 million asset write-down associated with Refrigeration divestitures; a net gain of $18.0 million from the sale of the Australia and Asia businesses and Sydney-area real estate; and a net gain of $2.1 million for various other items.
Segment Results
During Q2 2018, Lennox's Residential Heating & Cooling business segment's revenues rose 10% to a record $716 million. The segment's profit was a record $154 million, up 9%; while its margin remained flat at the record level of 21.5%. The segment's results were positively impacted by a higher volume; a higher price; sourcing and engineering-led cost reductions; lower selling, general, and administrative expenses (SG&A); and a favorable foreign exchange.
For Q2 2018, Lennox's Commercial Heating & Cooling business segment's revenues advanced 13% to a record $292 million. The segment's profit rose 18% to a record $53 million, while its margin expanded 70 bps to 18.0%. The segment's results were positively impacted by a higher volume; a higher price; sourcing and engineering-led cost reductions; and a favorable warranty.
Lennox's Refrigeration business segment's revenues were $150 million on an adjusted basis in Q2 2018, up 2%. The segment's profit was up 5% to $22 million, while its margin expanded 40 bps to 14.9%. The segment's results were positively impacted by a higher volume; a higher price; engineering-led cost reductions; sourcing benefits, including selling refrigerant allocations in Europe; and a favorable foreign exchange.
Cash Matters
During Q2 2018, Lennox's net cash from operations was $49 million compared to $59 million in Q2 2017. The Company's capital expenditure was $21 million in the reported quarter versus $19 million in the prior year's comparable quarter. For Q2 2018, Lennox free cash flow was $28 million compared to approximately $41 million in Q2 2017.
Lennox's total debt was $1.35 billion at the end of Q2 2018. The Company's total cash and cash equivalents were $39 million at the end of June 2018. During Q2 2018, Lennox paid $21 million in dividends and $200 million for stock repurchases.
Outlook for FY18
For FY18, Lennox updated its guidance for GAAP revenue growth from 4% - 8%, with a benefit of 1% from foreign exchange, to 4% - 6%; in order to reflect the timing of Refrigeration divestitures and neutral foreign exchange. The Company also raised its guidance for adjusted revenue growth from 4% - 8%, with a benefit of 1% from foreign exchange, to 6% - 8%, with a neutral foreign exchange.
Lennox raised its GAAP earnings per share from continuing operations guidance from $8.79 - $9.39 to $9.43 - $9.83, and also raised its adjusted earnings per share from continuing operations guidance from $9.75 - $10.35 to $9.95 - $10.35. Additionally, Lennox raised its stock repurchase guidance from $350 million to $450 million.
Stock Performance Snapshot
July 27, 2018 - At Friday's closing bell, Lennox International's stock slightly climbed 0.70%, ending the trading session at $211.12.
Volume traded for the day: 272.09 thousand shares.
Stock performance in the last month — up 8.92%; previous three-month period — up 6.50%; past twelve-month period — up 22.68%; and year-to-date — up 1.37%
After last Friday's close, Lennox International's market cap was at $8.47 billion.
Price to Earnings (P/E) ratio was at 24.80.
The stock has a dividend yield of 1.21%.
The stock is part of the Industrial Goods sector, categorized under the Diversified Machinery industry.
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