USA – Lennox International today reported financial results for the first quarter of 2016.
Revenue for the first quarter was $715 million, up 4% from the prior-year quarter including the negative impact from foreign exchange. At constant currency, revenue was up 6%. Adjusted earnings per share from continuing operations was a first-quarter record $0.60, up 62% from the prior-year quarter. On a GAAP basis, earnings per share from continuing operations was a first-quarter record $0.56, up 81% from the prior-year quarter.

“Lennox International realized strong revenue growth and margin expansion across all three of our businesses in the first quarter,” said Chairman and CEO Todd Bluedorn. “For the company overall, total segment profit rose 50% from the prior-year quarter to a new first-quarter high, and profit margin expanded 200 basis points to a first-quarter record of 6.5%. In our Residential business, segment profit was up 23% on 5% revenue growth at constant currency. Residential margin rose 160 basis points to a first-quarter record of 10.2%. In our Commercial business, segment profit rose 84% to a new first-quarter high. Commercial revenue was up 8% at constant currency, and segment margin expanded 350 basis points to a new first-quarter high of 8.3%. In Refrigeration, revenue was up 6% at constant currency, led by double-digit growth in North America. Refrigeration profit rose 125% as segment margin expanded 300 basis points to 5.4%.

“Looking ahead for the company overall, it is early in the year and the largest seasonal quarters are still in front of us, but 2016 is off to a strong start, and we continue to expect another record year. While our underlying business expectations for the full year remain consistent with previous adjusted EPS from continuing operations guidance of $6.10-$6.60, we are raising guidance to $6.30-$6.80 to reflect a new full-year effective tax rate of approximately 32% versus prior guidance of 34-35%. We are reiterating guidance for revenue growth of 4-8% at constant currency for the year. The company is well-positioned for continued momentum in 2016, and we remain focused on capitalizing on end market growth, capturing additional market share, and driving operational initiatives for higher profitability.”

Revenue: Revenue for the first quarter was $715 million, up 4% from the prior-year quarter. At constant currency, revenue was up 6%. Volume was up, and price/mix was flat on a revenue basis from the prior-year quarter.

Gross Profit: Gross profit in the first quarter was $184 million, up 13% from $163 million in the prior-year quarter. Gross margin was 25.7%, up 190 basis points from 23.8% in the prior-year quarter. Gross profit was positively impacted by higher volume, lower material costs, and higher productivity, with partial offsets from negative price/mix and unfavorable foreign exchange.

Income from Continuing Operations: Adjusted income from continuing operations in the first quarter was $27.0 million, or $0.60 per share, compared to $16.8 million, or $0.37 per share, in the prior-year quarter. Adjusted earnings from continuing operations for the first quarter of 2016 excludes $2.1 million in after-tax charges: $1.2 million for special legal contingency charges and $0.9 million, net, for other items.

On a GAAP basis, income from continuing operations for the first quarter was $24.9 million, or $0.56 per share, compared to $14.0 million, or $0.31 per share, in the prior-year quarter.

Free Cash Flow and Total Debt: Net cash from operations in the first quarter was ($113) million compared to ($122) million in the prior-year quarter. Capital expenditures were $24 million in the first quarter compared to $18 million in the first quarter a year ago. Free cash flow was ($137) million compared to ($140) million in the prior-year quarter. Total debt at the end of the first quarter was $1,099 million. Total cash and cash equivalents were $41 million at the end of the quarter. The company paid $16 million in dividends in the first quarter. The company’s previously announced $200 million accelerated stock repurchase program continues and will be completed in the second quarter of 2016.