Lennox International Q1 Profit More Than Doubles, Results Beat View

(RTTNews) - Climate control products maker Lennox International Inc. (LII) on Monday reported a profit for the first quarter that more than doubled from last year, reflecting higher revenues at its residential and commercial segments. This was partly offset by lower revenues at the company's refrigeration business.

Looking ahead, Lennox reaffirmed its adjusted earnings as well as adjusted revenue guidance for fiscal 2014, while lowering its outlook for reported earnings and revenue.

Todd Bluedorn, Chairman and CEO of Lennox said, "First quarter performance was led by our Residential business, with revenue up 10% at constant currency and segment profit up 19%. In Residential, as well as in Commercial, replacement business was strong, while new construction business was notably impacted by severe weather in the quarter."

Bluedorn affirmed that Lennox will continue to invest in the business for growth, maintain a competitive dividend and repurchase $150 million of its stock in 2014.

The Richardson, Texas-based company's net income for the first quarter was $19.9 million or $0.40 per share, up from $8.0 million or $0.16 per share in the year-ago period.

Excluding one-time items, adjusted earnings per share from continuing operations was $0.42, compared with $0.33 per share in the prior-year period. On average, twelve analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the first quarter increased 4 percent to $695.4 million from $668.4 million in the prior-year period. Analysts had a consensus revenue estimate of $692.30 million for the quarter.

Foreign exchange had a negative 2 point impact on revenue growth. At constant currency, net sales for the quarter increased 6 percent.

Gross profit margin for the quarter was flat with the year-ago period at 24.2 percent. Gross profit was primarily impacted by higher volume, favorable price and mix as well as lower material costs, partially offset by negative foreign exchange and investments in distribution.

Net sales at the company's residential heating and cooling business grew 9 percent year-over-year to $342.1 million, while sales at the commercial heating and cooling business increased 6 percent to $173.0 million. However, sales at the refrigeration business declined 6 percent to $180.3 million.

Looking ahead to fiscal 2014, Lennox reiterated its outlook for adjusted earnings from continuing operations in a range of $4.20 to $4.60 per share and revenue growth of 3 percent to 7 percent at constant currency.

The company now expects 1 point of negative impact from foreign exchange on a full-year basis, for full-year revenue growth of 2 percent to 6 percent at actual currency.

Lennox also lowered its full-year outlook for reported earnings from continuing operations to a range of $4.18 to $4.58 per share from the prior range of $4.20 to $4.60 per share, incorporating charges in the first quarter.

Analysts currently expect the company to earn $4.54 per share for the year on revenue growth of 5.6 percent to $3.38 billion.

Lennox shares closed Thursday's trading at $89.29, up $0.82 or 0.93 percent on a volume of 0.94 million shares.