Lennox International reported a 4.82 percent rise in profit for the quarter ended Sep. 30, 2014. The company has earned $67.40 million, or $1.38 a share in the quarter, compared with $64.30 million, or $1.27 a share for the same period last year.
Revenue during the quarter grew 3.50 percent to $898.40 million from $868 million in the previous year period. Gross margin for the quarter expanded 15 basis points over the previous year period to 27.50 percent. Total expenses were 88.13 percent of quarterly revenues, up from 88.04 percent for the same period last year. That has resulted in a contraction of 9 basis points in operating margin to 11.87 percent.
Operating income for the quarter was $106.60 million, compared with $103.80 million in the previous year period.
"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," said chairman and CEO Todd Bluedorn.
"Our Residential business was negatively impacted by cooler summer weather than last year, but revenue still grew 7%. Residential margin and profit set third-quarter records. Segment margin expanded 190 basis points to 15.0%, and profit rose 22%. Commercial revenue was up 1%, facing headwinds from the timing of national account business between the third and fourth quarters, the cooler summer in North America, and a soft market environment in Europe. Commercial margin and profit set record levels. Segment margin expanded 110 basis points to 17.5%, and profit rose 8%. In Refrigeration, revenue was down 1% at constant currency and margin declined 380 basis points from the prior-year quarter to 8.5%. As expected, business was negatively impacted by the July repeal of the carbon tax in Australia. North America refrigeration revenue was flat in the third quarter. We continue to expect improvement in that business on the ramp up of new national account business in the fourth quarter and into 2015.
"Looking ahead for the company overall, we reiterate our revenue and adjusted EPS guidance for 2014 and maintain our outlook for a year of strong growth and record profitability. With our solid balance sheet and view on the company’s strong market position and prospects, we have repurchased $100 million of stock year-to-date and are announcing plans for a new $450 million accelerated share repurchase program in October."
For 2014, the company reiterates revenue and adjusted EPS from continuing operations guidance. "Reiterating revenue growth guidance of 5-7% for the full year. Reiterating adjusted EPS from continuing operations guidance of $4.30-$4.50. Updating GAAP EPS from continuing operations guidance from $4.27-$4.47 to $4.21-$4.41," the company said on guidance.
Cash Flow
Lennox International has generated cash of $23.50 million from operating activities during the nine month period, down 63.85 percent or $41.50 million, when compared with the last year period.
The company has spent $59.70 million cash to meet investing activities during the nine month period as against cash outgo of $32.90 million in the last year period.
Cash flow from financing activities was $49.70 million for the nine month period as against cash outgo of $42.20 million in the last year period.
Cash and cash equivalents stood at $48.10 million as on Sep. 30, 2014, up 27.25 percent or $10.30 million from $37.80 million on Sep. 30, 2013.
Working Capital
Lennox International has recorded an increase in the working capital over the last year. It stood at $311.60 million as at Sep. 30, 2014, up 29.03 percent or $70.10 million from $241.50 million on Sep. 30, 2013. Current ratio was at 1.38 as on Sep. 30, 2014, up from 1.30 on Sep. 30, 2013. Days sales outstanding were almost stable at 55 days for the quarter, when compared with the last year period.
