Delaware | 001-15149 | 42-0991521 | ||||||||||||
(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
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Common Stock, par value $0.01 per share | LII | New York Stock Exchange |
Item 2.02 | Results of Operations and Financial Condition.* |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
EXHIBIT
NUMBER
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DESCRIPTION | |||||||
99.1 |
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104 | Inline XBRL for the cover page of this Current Report on Form 8-K. |
* | The information contained in Item 2.02 and Exhibit 99.1 of this report, is being “furnished” with the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that section. Furthermore, such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless specifically identified as being incorporated therein by reference. |
Date: July 27, 2023 | ||||||||
By: | /s/ Monica M. Brown |
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Name: | Monica M. Brown |
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Title: | Assistant Secretary |
(Amounts in millions, except per share data) | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net sales | $ | 1,411.4 | $ | 1,366.3 | $ | 2,460.7 | $ | 2,379.7 | |||||||||||||||
Cost of goods sold | 953.6 | 969.2 | 1,696.2 | 1,714.4 | |||||||||||||||||||
Gross profit | 457.8 | 397.1 | 764.5 | 665.3 | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Selling, general and administrative expenses | 181.3 | 169.6 | 348.8 | 324.9 | |||||||||||||||||||
Losses (gains) and other expenses, net | 0.8 | 1.6 | 1.1 | 2.0 | |||||||||||||||||||
Restructuring charges | — | 0.5 | — | 1.0 | |||||||||||||||||||
Income from equity method investments | (3.1) | (1.5) | (3.8) | (1.4) | |||||||||||||||||||
Operating income | 278.8 | 226.9 | 418.4 | 338.8 | |||||||||||||||||||
Pension settlements | 0.1 | 0.2 | 0.3 | 0.3 | |||||||||||||||||||
Interest expense, net | 15.0 | 8.7 | 29.2 | 15.6 | |||||||||||||||||||
Other expense (income), net | — | 0.7 | — | 1.2 | |||||||||||||||||||
Net income before income taxes | 263.7 | 217.3 | 388.9 | 321.7 | |||||||||||||||||||
Provision for income taxes | 46.5 | 40.1 | 73.7 | 60.9 | |||||||||||||||||||
Net income | $ | 217.2 | $ | 177.2 | $ | 315.2 | $ | 260.8 | |||||||||||||||
Earnings per share – Basic: | $ | 6.12 | $ | 4.97 | $ | 8.88 | $ | 7.25 | |||||||||||||||
Earnings per share – Diluted: | $ | 6.10 | $ | 4.96 | $ | 8.85 | $ | 7.23 | |||||||||||||||
Weighted Average Number of Shares Outstanding - Basic | 35.5 | 35.6 | 35.5 | 36.0 | |||||||||||||||||||
Weighted Average Number of Shares Outstanding - Diluted | 35.6 | 35.7 | 35.6 | 36.1 | |||||||||||||||||||
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES | |||||||||||
Segment Net Sales and Profit (Loss) | |||||||||||
(Unaudited) |
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(Amounts in millions) | For the Three Months Ended June 30, |
For the Six Months Ended June 30, | |||||||||||||||||||||
2023 | 2022(2) |
2023 | 2022(2) |
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Net Sales | |||||||||||||||||||||||
Residential | $ | 936.2 | $ | 977.5 | $ | 1,617.2 | $ | 1,659.6 | |||||||||||||||
Commercial (2) |
407.5 | 327.4 | 716.1 | 606.9 | |||||||||||||||||||
Corporate and other (2) |
67.7 | 61.4 | 127.4 | 113.2 | |||||||||||||||||||
$ | 1,411.4 | $ | 1,366.3 | $ | 2,460.7 | $ | 2,379.7 | ||||||||||||||||
Segment Profit (Loss) (1) |
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Residential | $ | 202.6 | $ | 216.3 | $ | 313.7 | $ | 324.0 | |||||||||||||||
Commercial (2) |
103.0 | 41.2 | 153.0 | 64.9 | |||||||||||||||||||
Corporate and other (2) |
(22.5) | (27.7) | (41.9) | (44.5) | |||||||||||||||||||
Total segment profit | 283.1 | 229.8 | 424.8 | 344.4 | |||||||||||||||||||
Reconciliation to Operating income: | |||||||||||||||||||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (1) |
4.3 | $ | 2.4 | 6.4 | 4.6 | ||||||||||||||||||
Restructuring charges | — | 0.5 | — | 1.0 | |||||||||||||||||||
Operating income | $ | 278.8 | $ | 226.9 | $ | 418.4 | $ | 338.8 |
(Amounts in millions, except shares and par values) | As of June 30, 2023 | As of December 31, 2022 | |||||||||
ASSETS | (Unaudited) |
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Current Assets: | |||||||||||
Cash and cash equivalents | $ | 51.4 | $ | 52.6 | |||||||
Short-term investments | 7.2 | 8.5 | |||||||||
Accounts and notes receivable, net of allowances of $17.0 and $15.5 in 2023 and 2022, respectively |
843.6 | 608.5 | |||||||||
Inventories, net | 856.0 | 753.0 | |||||||||
Other assets | 68.6 | 73.9 | |||||||||
Total current assets | 1,826.8 | 1,496.5 | |||||||||
Property, plant and equipment, net of accumulated depreciation of $953.4 and $920.8 in 2023 and 2022, respectively |
608.5 | 548.9 | |||||||||
Right-of-use assets from operating leases | 214.2 | 219.9 | |||||||||
Goodwill | 186.4 | 186.3 | |||||||||
Deferred income taxes | 46.3 | 27.5 | |||||||||
Other assets, net | 99.1 | 88.5 | |||||||||
Total assets | $ | 2,981.3 | $ | 2,567.6 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Current Liabilities: | |||||||||||
Current maturities of long-term debt | $ | 761.3 | $ | 710.6 | |||||||
Current operating lease liabilities |
63.2 | 63.3 | |||||||||
Accounts payable | 470.1 | 427.3 | |||||||||
Accrued expenses | 425.5 | 376.9 | |||||||||
Income taxes payable | 21.8 | 17.6 | |||||||||
Total current liabilities | 1,741.9 | 1,595.7 | |||||||||
Long-term debt | 817.7 | 814.2 | |||||||||
Long-term operating lease liabilities | 159.6 | 161.8 | |||||||||
Pensions | 39.6 | 40.1 | |||||||||
Other liabilities | 159.9 | 158.9 | |||||||||
Total liabilities | 2,918.7 | 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 | 1,169.3 | 1,155.2 | |||||||||
Retained earnings | 3,309.0 | 3,070.6 | |||||||||
Accumulated other comprehensive loss | (75.8) | (90.6) | |||||||||
Treasury stock, at cost, 51,658,951 shares and 51,700,260 shares for 2023 and 2022, respectively |
(4,340.8) | (4,339.2) | |||||||||
Total stockholders' equity (deficit) | 62.6 | (203.1) | |||||||||
Total liabilities and stockholders' equity (deficit) | $ | 2,981.3 | $ | 2,567.6 |
(Amounts in millions) | For the Six Months Ended June 30, | ||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 315.2 | $ | 260.8 | |||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Income from equity method investments | (3.8) | (1.4) | |||||||||
Restructuring charges, net of cash paid | — | 0.5 | |||||||||
Provision for credit losses | 3.8 | 2.7 | |||||||||
Unrealized losses, net on derivative contracts | 3.9 | 2.0 | |||||||||
Stock-based compensation expense | 13.8 | 10.6 | |||||||||
Depreciation and amortization | 40.5 | 37.8 | |||||||||
Deferred income taxes | (18.9) | (11.6) | |||||||||
Pension expense | 1.4 | 3.5 | |||||||||
Pension contributions | (2.0) | (0.5) | |||||||||
Other items, net | (1.2) | (0.9) | |||||||||
Changes in assets and liabilities: | |||||||||||
Accounts and notes receivable | (236.5) | (281.6) | |||||||||
Inventories | (100.4) | (187.3) | |||||||||
Other current assets | 8.7 | 1.2 | |||||||||
Accounts payable | 45.4 | 93.7 | |||||||||
Accrued expenses | 45.6 | 14.8 | |||||||||
Income taxes payable and receivable, net | 4.1 | 39.4 | |||||||||
Leases, net | 3.3 | 0.9 | |||||||||
Other, net | (6.2) | 14.6 | |||||||||
Net cash provided by (used in) operating activities | 116.7 | (0.8) | |||||||||
Cash flows from investing activities: | |||||||||||
Proceeds from the disposal of property, plant and equipment | 1.5 | 0.5 | |||||||||
Purchases of property, plant and equipment | (85.3) | (46.7) | |||||||||
Proceeds from short-term investments, net | 1.5 | — | |||||||||
Net cash used in investing activities | (82.3) | (46.2) | |||||||||
Cash flows from financing activities: | |||||||||||
Asset securitization borrowings | 140.0 | 211.0 | |||||||||
Asset securitization payments | (90.0) | (61.0) | |||||||||
Long-term debt payments | (7.3) | (6.4) | |||||||||
Borrowings from credit facility | 1,182.0 | 1,331.0 | |||||||||
Payments on credit facility | (1,182.0) | (1,029.0) | |||||||||
Proceeds from employee stock purchases | 1.9 | 1.8 | |||||||||
Repurchases of common stock | — | (300.0) | |||||||||
Repurchases of common stock to satisfy employee withholding tax obligations | (3.2) | (5.1) | |||||||||
Cash dividends paid | (75.2) | (66.9) | |||||||||
Net cash (used in) provided by financing activities | (33.8) | 75.4 | |||||||||
Increase in cash and cash equivalents | 0.6 | 28.4 | |||||||||
Effect of exchange rates on cash and cash equivalents | (1.8) | (2.0) | |||||||||
Cash and cash equivalents, beginning of period | 52.6 | 31.0 | |||||||||
Cash and cash equivalents, end of period | $ | 51.4 | $ | 57.4 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Interest paid | $ | 27.1 | $ | 14.2 | |||||||
Income taxes paid (net of refunds) | $ | 88.4 | $ | 32.9 | |||||||
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. |
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Reconciliation of Net income, a GAAP measure, to Adjusted Net income, a Non-GAAP measure | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
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 | $ | 217.2 | $ | 6.10 | $ | 177.2 | $ | 4.96 | $ | 315.2 | $ | 8.85 | $ | 260.8 | $ | 7.23 | |||||||||||||||||||
Restructuring charges | — | — | 0.4 | 0.01 | — | — | 0.8 | 0.02 | |||||||||||||||||||||||||||
Pension settlements | 0.1 | — | 0.1 | — | 0.3 | 0.01 | 0.2 | 0.01 | |||||||||||||||||||||||||||
Items in Losses (gains) and other expenses, net which are excluded from segment profit (loss) (a) | 2.9 | 0.09 | 2.0 | 0.06 | 3.5 | 0.10 | 3.7 | 0.10 | |||||||||||||||||||||||||||
Excess tax (benefit) expense from share-based compensation (b) | (0.1) | — | 0.1 | — | (0.1) | — | 0.5 | 0.01 | |||||||||||||||||||||||||||
Other tax items, net (b) | 0.1 | — | (1.4) | (0.03) | 0.4 | 0.01 | (1.4) | (0.04) | |||||||||||||||||||||||||||
Non-core business results (c) | (1.4) | (0.04) | 1.2 | 0.03 | — | — | 4.9 | 0.14 | |||||||||||||||||||||||||||
Adjusted net income, a non-GAAP measure | $ | 218.8 | $ | 6.15 | $ | 179.6 | $ | 5.03 | $ | 319.3 | $ | 8.97 | $ | 269.5 | $ | 7.47 | |||||||||||||||||||
(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 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, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Average shares outstanding - diluted, a GAAP measure | 35.6 | 35.7 | 35.6 | 36.1 | |||||||||||||||||||
Impact on diluted shares from excess tax benefits from share-based compensation | — | — | — | — | |||||||||||||||||||
Adjusted average shares outstanding - diluted, a Non-GAAP measure | 35.6 | 35.7 | 35.6 | 36.1 | |||||||||||||||||||
Net Cash Provided by (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, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 195.5 | $ | 97.1 | $ | 116.7 | $ | (0.8) | |||||||||||||||
Purchases of property, plant and equipment | (49.9) | (20.9) | (85.3) | (46.7) | |||||||||||||||||||
Proceeds from the disposal of property, plant and equipment | 1.2 | 0.2 | 1.5 | 0.5 | |||||||||||||||||||
Free cash flow, a Non-GAAP measure | $ | 146.8 | $ | 76.4 | $ | 32.9 | $ | (47.0) | |||||||||||||||
Reconciliation of Net sales, a GAAP measure to Core net sales, a Non-GAAP measure | |||||||||||||||||||||||
For the Three Months Ended June 30, | |||||||||||||||||||||||
Corporate and other | Consolidated | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net sales, a GAAP measure | $ | 67.7 | $ | 61.4 | $ | 1,411.4 | $ | 1,366.3 | |||||||||||||||
Net sales from non-core businesses (a) |
(67.7) | (61.4) | (67.7) | (61.4) | |||||||||||||||||||
Core net sales, a Non-GAAP measure | $ | — | $ | — | $ | 1,343.7 | $ | 1,304.9 | |||||||||||||||
(a) Non-Core businesses represent our business operations in Europe | |||||||||||||||||||||||
For the Six Months Ended June 30, | |||||||||||||||||||||||
Corporate and other | Consolidated | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net sales, a GAAP measure | $ | 127.4 | $ | 113.2 | $ | 2,460.7 | $ | 2,379.7 | |||||||||||||||
Net sales from non-core businesses (a) | (127.4) | (113.2) | (127.4) | (113.2) | |||||||||||||||||||
Core net sales, a Non-GAAP measure | $ | — | $ | — | $ | 2,333.3 | $ | 2,266.5 | |||||||||||||||
(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 June 30, | |||||||||||||||||||||||
Corporate and other | Consolidated | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Segment profit (loss), a Non-GAAP measure | $ | (22.5) | $ | (27.7) | $ | 283.1 | $ | 229.8 | |||||||||||||||
Profit (loss) from non-core businesses (a) | 2.4 | (0.6) | 2.4 | (0.6) | |||||||||||||||||||
Adjusted Segment profit (loss), a Non-GAAP measure | $ | (24.9) | $ | (27.1) | $ | 280.7 | $ | 230.4 | |||||||||||||||
(a) Non-Core businesses represent our business operations in Europe | |||||||||||||||||||||||
For the Six Months Ended June 30, | |||||||||||||||||||||||
Corporate and other | Consolidated | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Segment profit (loss), a Non-GAAP measure | $ | (41.9) | $ | (44.5) | $ | 424.8 | $ | 344.4 | |||||||||||||||
Profit (loss) from non-core businesses (a) | 2.1 | (4.0) | 2.1 | (4.0) | |||||||||||||||||||
Adjusted Segment profit (loss), a Non-GAAP measure | $ | (44.0) | $ | (40.5) | $ | 422.7 | $ | 348.4 | |||||||||||||||
(a) Non-Core businesses represent our business operations in Europe |