Diversified machinery company,
Lennox International, Inc.
), reported mixed third-quarter 2013 results with adjusted
earnings per share of $1.30. The figure increased 34.0% year over
year led by increased revenues and margins. Earnings also beat
the Zacks Consensus Estimate of $1.26 per share by 3.2%.
On a constant currency basis, revenues in the reported period
grew 8% year over year to $868.0 million, as a result of better
volumes and price/mix. Foreign currency transactions negatively
impacted revenues by 1%. However, revenues missed the Zacks
Consensus Estimate of $875.0 million.
Lennox's gross profit margin in the quarter was 27.4%, up 210
basis points (bps) year over year, due to lower material costs,
better volumes and favorable price/mix. Selling, general and
administrative (SG&A) expenses represented 15.8% of sales at
$136.9 million. Adjusted income from continuing operations in the
quarter reached $65.5 million, increasing 31.8% year over
Residential Heating & Cooling
segment generated revenues of $433.9 million, increasing 12.3%
year over year. 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 330 bps
Commercial Heating & Cooling
segment's sales improved 8.8% year over year to $239.1 million,
resulting from better volumes and lower material costs as well.
The margins, however, were negatively impacted by higher SG&A
costs and distribution expansion investments. Operating profit
margin increased 160 bps to 16.4%.
Revenues from the
segment came in at $195.0 million declining 4.3% year over year.
Results were negatively impacted by lower volumes combined with
higher SG&A costs, which were partially offset by lower
material costs. Operating profit margin was flat at 12.3%.
Exiting the third quarter, Lennox's cash and cash equivalents
were $37.8 million, against $45.3 million at the close of the
preceding quarter. Long-term debt decreased to $266.2 million
from $410.8 million at the end of second-quarter 2013.
Cash flow from operations amounted to $153.3 million in the
quarter, against cash generation of $75.0 million in the third
quarter of 2012. Capital expenditure incurred in the third
quarter increased to $17.6 million, compared with $11.6 million
in the year-ago quarter.
Moreover, in the reported quarter, Lennox paid dividends
totaling $12.0 million and repurchased $33.0 million worth of
Based on the current performance of the business, Lennox's
management maintained the revenue guidance while increasing the
lower end of expected earnings per share for the year 2013. Sales
in the year 2013 are expected to grow by 6% to 8%. Also, adjusted
earnings per share for the year are currently expected to be in
the range of $3.50-$3.75 against $3.45-$3.75 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 now worth $125.0 million in 2013.
Other Stocks to Consider
Lennox currently carries a Zacks Rank #4 (Sell). Other stocks
worth a watch in the industry include
Shiloh Industries Inc.
Armstrong World Industries, Inc.
). While Shiloh Industries carries a Zacks Rank #1 (Strong Buy),
Armstrong World Industries and Masco Corp. carry a Zacks Rank #2
ARMSTRONG WORLD (AWI): Free Stock Analysis
LENNOX INTL INC (LII): Free Stock Analysis
MASCO (MAS): Free Stock Analysis Report
SHILOH INDS INC (SHLO): Get Free Report
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