Diversified machinery company,
Lennox International, Inc.
) reported adjusted earnings per share of 77 cents in the fourth
quarter 2014, up 37.5% year over year and above the Zacks
Consensus Estimate of 73 cents.
Earnings per share, including one-time items in the quarter, were
68 cents, up from 52 cents reported in the year-ago quarter.
In 2013, adjusted earnings per share were $3.70, up 37.0% from
$2.70 recorded in 2012. The bottom line was also above the Zacks
Consensus Estimate of $3.67.
Net sales generated in the reported quarter were $749.5
million, up 9.4% year over year due to volume gains. The
price/mix impact was neutral in the quarter.
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Lennox International reports its top-line results under three
heads, the fourth quarter results of which are discussed below.
Net sales generated by the Residential Heating & Cooling
segment were $358.6 million, up 17.6% over the year-ago
comparable quarter. Commercial Heating & Cooling segment
recorded net sales of $212.6 million, reflecting year-over-year
increase of 13.4%. The Refrigeration segment generated net sales
of $178.3 million in the quarter, down 7.3% year over year.
In 2013, Lennox International generated net sales of $3,199.1
million, up 8.5% year over year.
Lennox International's cost of goods sold in the fourth quarter
2013 went up 4.9% year over year and represented 72.3% of total
revenue, down from 75.4% in the year-ago quarter. Gross margin in
the quarter was 27.7%, up 310 basis points year over year.
Selling, general and administrative expenses, as a percentage of
total revenue, stood at 19.5%, up 90 basis points year over year.
Balance Sheet/Cash Flow
Exiting the fourth quarter of 2013, Lennox International's cash
and cash equivalents were $38.0 million, flat with $37.8 million
recorded in the preceding quarter. Long-term debt was $233.2
million versus $266.2 million in the previous quarter.
In the fourth quarter 2013, Lennox International's cash flow from
operating activities was $145.3 million, down 7.5% year over
year. Spending on purchase of property, plant and equipments
increased 68.0% to $37.3 million.
In 2013, cash flow generation from operating activities was down
5.0% while capital expenditure was up 56.0% to $210.3 million and
$78.3 million, respectively. The company repurchased shares worth
$125.0 million and paid dividends of $34.0 million.
Lennox International maintained its guidance for 2014. Revenue is
expected to grow in the 3%-7% range, including the negative
impact from foreign currency translation. Adjusted earnings per
share are predicted in the $4.20-$4.60 range.
The effective tax rate is anticipated within 34%-35%. The company
intends to spend $90 million as capital expenditure and
repurchase shares worth $150 million.
Lennox International currently has a $4.2 billion market
capitalization and carries a Zacks Rank #2 (Buy). Other stocks
worth considering in the industry include
CommScope Holding Company, Inc.
). All these three companies carry the same Zacks Rank as