Lennox International Q3 Profit Rises, Beats View

(RTTNews) - Climate control products maker Lennox International, Inc. (LII) on Monday reported a 5 percent increase in profit for the third quarter from last year, reflecting higher revenues at the company's residential and commercial segments.

Adjusted earnings per share beat analysts' expectations, while quarterly sales missed their estimates. Looking ahead to fiscal 2014, the company reiterated its adjusted earnings and sales growth guidance, but lowered its full-year reported earnings outlook.

Further, the company announced plans for a new $450 million accelerated share repurchase program in October.

Todd Bluedorn, Chairman and CEO of Lennox said, "Led by our Residential and Commercial businesses, the company's 12.3% total segment margin set a third-quarter record, expanding 40 basis points over the prior-year quarter. Our Residential business was negatively impacted by cooler summer weather than last year, but revenue still grew 7%."

The Richardson, Texas-based company's net income for the third quarter was $67.4 million or $1.38 per share, up from $64.3 million or $1.27 per share in the prior-year quarter.

Excluding items, adjusted income from continuing operations for the quarter was $70.3 million or $1.44 per share, compared to $65.5 million or $1.30 per share in the year-ago quarter. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $1.42 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 4 percent to $898.4 million from $868 million in the same quarter last year, but missed analysts' consensus revenue estimate of $910.15 million.

Lennox noted that foreign exchange was neutral to revenue growth in the quarter. Volume and price increased, while mix was down from the prior-year quarter.

Gross margin for the quarter increased 10 basis points from the year-ago period to 27.5 percent. Gross profit was favorably impacted by higher volume, lower material costs and favorable price, partially offset by negative mix, Australian refrigerant profitability, foreign exchange, and investments in distribution expansion.

Sales at the residential heating & cooling segment grew 7 percent year-over-year to $462.6 million, while commercial heating & cooling sales edged up 1 percent from last year to $241.6 million. Refrigeration sales were flat with last year at $194.2 million.

Looking ahead to fiscal 2014, Lennox reaffirmed its outlook for adjusted income from continuing operations in a range of $4.30 to $4.50 per share and revenue growth of 5 percent to 7 percent.

However, Lennox lowered its full-year net earnings guidance to a range of $4.21 to $4.41 per share from the prior range of $4.27 to $4.47 per share. Street is currently looking for full-year 2014 earnings of $4.37 per share for the year on revenues of $3.36 billion.

LII is currently trading at $83.60, up $7.25 or 9.50 percent on a volume of 674,122 shares.