The diversified machinery company,
Lennox International, Inc.
) reported strong second quarter 2013 results with earnings per
share of $1.31, increasing 33.7% from the 98 cents recorded in
the year-ago quarter, led by increased revenues and margins.
Earnings also beat the Zacks Consensus Estimate of $1.19 by
Revenues in the reported period grew 8.7% year over year to
$913.1 million as a result of better volumes and price/mix.
Foreign currency impacts were neutral. Sales also beat the Zacks
Consensus Estimate of $887.0 million by a comfortable margin.
Lennox's gross profit margin in the quarter was 27.8%, up 300
basis points year over year, due to better volumes, favorable
price/mix and low material costs. Selling, general and
administrative expenses represented 16.6% of sales at $151.3
million. Adjusted income from continuing operations in the
quarter reached $66.5 million, increasing 31.4% year over
Residential Heating & Cooling segment generated revenues
of $476.2 million against $411.9 million in the year-ago quarter.
The rise was brought about by better volumes and favorable price
mix along with lower material costs, thus improving the operating
profit margin of the segment by 370 basis points to 13.9%.
Commercial Heating & Cooling segment's sales improved 3.7%
year-over-year to $229.6 million, resulting from better volumes
and favorable price mix as well. The margins, however, were
negatively impacted by higher SG&A costs and investments in
distribution expansion. Operating profit margin increased 10
basis points to 15.1%.
Revenue from the Refrigeration segment was recorded at $207.3
million, almost flat compared with the year-ago quarter.
Operating profit margin grew 220 basis points to 12.4%.
Exiting the second quarter, Lennox's cash and cash equivalents
were $45.3 million, against $34.9 million at the close of the
preceding quarter. Long-term debt decreased to $410.8 million
from $489.8 million at the end of first quarter 2013.
Moreover, in the reported quarter, Lennox paid a quarterly
dividend of 20 cents a share to shareholders as of Jun 28, 2013.
The dividend represents a 20% hike year over year. The company
repurchased $33.0 million stock in the quarter.
Based on the current performance of the business, Lennox's
management increased its expected revenues and earnings for the
year 2013. Core sales in the year 2013 are now expected to grow
by 6% to 8%, against the previously announced 3% to 6%. Moreover,
earnings per share for the year are currently expected to be in
the range of $3.45-$3.75 against $3.25-$3.55 expected
Lennox also reiterated its tax rate guidance to be 34%-35% for
the full year. Capital expenditures guidance for the year is
maintained at $60.0 million along with stock repurchase plans
worth $100.0 million in 2013.
The new construction as well as replacement businesses of the
company are performing well, and are expected to continue growing
in the coming quarters. Lennox continues to have stronger
foothold in South America and Asia Pacific, although, the
European market still makes us cautious.
Other Stocks to Consider
) released its second quarter results on Jul 18, 2013. The
company reported earnings per share of $1.48, beating the Zacks
Consensus Estimate of $1.41 by 5.0%.
Chart Industries Inc.
) is expected to release its second quarter results before the
market open on Jul 30, 2013. The Zacks Consensus Estimate for the
quarter is 77 cents.
Macquarie Infrastructure Company LLC
) is expected to release its second quarter results after the
market close on Jul 31, 2013. The Zacks Consensus Estimate for
the quarter is 97 cents.
Lennox currently carries a Zacks Rank #3 (Hold).
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