Lennox (LII) Tops Q4 EPS by 26c, Revenues Beat; Offers FY21 EPS Guidance

Lennox (NYSE: LII) reported Q4 EPS of $2.91, $0.26 better than the analyst estimate of $2.65. Revenue for the quarter came in at $914 million versus the consensus estimate of $881.47 million.

• Fourth-quarter record company revenue of $914 million, up 3%
• Fourth-quarter GAAP EPS from continuing operations of $2.91 compared to $2.92 in the prior-year quarter; adjusted EPS from continuing operations up 18% to a fourth-quarter record of $2.89
• Generated record $612 million of cash from operations and record $535 million of free cash flow, paid $118 million in dividends and repurchased $100 million of stock in 2020
• Reiterating 2021 guidance for adjusted revenue growth of 4-8%
• Reiterating 2021 guidance for GAAP and adjusted EPS from continuing operations of $10.55-$11.15 Reiterating 2021 guidance for $400 million of stock repurchases

"Lennox International posted new fourth-quarter highs for revenue, total segment profit and margin, and adjusted EPS from continuing operations in the fourth quarter, led by the continued strength in our Residential business," said Chairman and CEO Todd Bluedorn. "Residential posted new fourth-quarter records for revenue and segment profit and margin. Residential revenue rose 11% on double-digit growth in both replacement and new construction business. Segment profit rose 18% and margin expanded 130 basis points to 20.9%. From an operational perspective, adjusted for the $25 million of insurance benefit in the prior-year quarter, Residential profit rose 58% and margin expanded 630 basis points.

"In the fourth quarter for Commercial, revenue was down 13%, and segment profit was down 11%. Segment margin expanded 40 basis points to a fourth-quarter record 19.4%. Both replacement and new construction business reflected year-over-year improvement from the prior quarter this year, as did national account and regional and local business. In Refrigeration, revenue was up 3% at constant currency. Segment profit declined 28% and margin contracted 360 basis points to 7.5% on the timing of expenses in the quarter and unfavorable mix with Europe HVAC growing high-single digits at constant currency. For both our Refrigeration and Commercial businesses, backlog is up double-digits.

"Looking ahead, there is economic and market uncertainty, but momentum continues for the company, and we are well-positioned for a year of strong growth and profitability. We reiterate guidance for 2021, including $400 million of stock repurchases."

GUIDANCE:

Lennox sees FY2021 EPS of $10.55-$11.15, versus the consensus of $10.99.

The company reiterates its financial guidance for 2021:

• Revenue growth of 4-8%
• GAAP and adjusted EPS from continuing operations of $10.55-$11.15
• Corporate expenses of approximately $90 million
• Effective tax rate of approximately 21% on an adjusted basis for the full year
• Capital expenditures of approximately $135 million, including $25 million funded by insurance proceeds previously received
• Stock repurchases of $400 million

For earnings history and earnings-related data on Lennox (LII) click here.

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