The diversified machinery company,
Lennox International, Inc.
) released its first quarter 2013 results on Apr 22. Earnings per
share for the quarter were recorded at 33 cents, rising 73.7%
from the 19 cents recorded in the year-ago quarter, led by
increased revenues and margins. Earnings also beat the Zacks
Consensus Estimate of 27 cents by 22.2%.
Revenues in the reported period grew 8.8% year over year to
$668.4 million as a result of better volumes and price mix. Sales
beat the Zacks Consensus Estimate of $638.0 million by 4.8%.
Lennox's cost of sales in the quarter increased 6.9% to $506.4
million. Gross margin in the quarter was 24.2%, up 130 basis
points from 22.9% in the prior-year quarter, due to better
volumes and low material costs. Selling, general and
administrative expenses represented 20.3% of sales at $135.6
million. Operating margin was 4.2% in the reported quarter, up
109 basis points year-over-year.
Residential Heating & Cooling segment generated revenues
of $314.5 million against $272.6 million in the year-ago quarter.
The rise was brought about by better volumes and favorable price
mix, thus improving the operating profit margin of the segment by
250 basis points to 6.5%.
Commercial Heating & Cooling segment's sales improved 4.0%
year-over-year to $163.0 million, resulting from better volumes
and favorable price mix as well. Operating profit margin
increased 150 basis points to 6.8%.
Revenue from the Refrigeration segment was recorded at $190.9
million, increasing 3.1% year-over-year. Operating profit margin
grew 100 basis points 8.7%.
Balance Sheet/Cash Flow
Exiting the first quarter, Lennox's cash and cash equivalents
were $34.9 million, against $51.8 million at the close of the
preceding quarter. Long-term debt rose to $489.8 million from
$351.0 million at the end of fourth quarter 2012.
Lennox's cash used in operating activities was recorded at
$137.3 million in the quarter, against $34.3 million used in the
year-ago quarter. Capital expenditures in the quarter were
recorded at $12.1 million, against $6.6 million in the first
quarter of 2012.
Based on the current performance of the business, Lennox's
management increased its lower end guidance for revenue and
earnings for the year 2013. Core sales in the year 2013 are now
expected to grow by 3% to 6% against previously announced 2% to
6%. Moreover, earnings per share for the year are currently
expected to be in the range of $3.25-$3.55 against $3.15-$3.55
expected earlier. Lennox also reiterated its tax rate guidance to
be 34%-35% for the full year. Capital expenditure guidance for
the year is maintained at $60.0 million along with stock
repurchase plans worth $100.0 million in 2013.
Stocks to Consider
Lennox currently carries a Zacks Rank #3 (Hold). Other stocks
to watch out for in the industry are
Broadwind Energy, Inc.
); each carrying a Zacks Rank #2 (Buy).
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