Lennox (NYSE: LII) reported Q4 EPS of $1.93, in-line with the analyst estimate of $1.93. Revenue for the quarter came in at $844 million versus the consensus estimate of $848.25 million.

"Lennox International posted a record year for revenue, profitability, and cash generation in 2018 while working through the challenges from tornado damage at a large manufacturing facility and further focusing our business portfolio with refrigeration divestitures in Australia, Asia and South America," said Chairman and CEO Todd Bluedorn. "We plan another divestiture in 2019 with the sale of the Kysor Warren business within our Refrigeration segment to focus on our businesses that have strong market positions and fit our growth profile.

"In the fourth quarter, Residential reported tornado-impacted financial results of revenue down 3%, segment margin up 170 basis points to 17.7%, and segment profit up 7%. Residential revenue had $69 million of tornado impact in the fourth quarter, a 14% hit to top-line growth. Segment profit had $40 million of negative tornado impact in the fourth quarter, partially offset by $27 million of insurance proceeds received for third-quarter lost profits. We continue to expect fourth-quarter 2018 and 2019 lost profits from business interruption to be fully offset by insurance proceeds in 2019.

"In Commercial, revenue set a new fourth-quarter high and was up 9% at constant currency on strong and broad growth in North America. Segment margin declined 240 basis points in the fourth quarter and profit was down 7%, primarily from the timing of other product costs in the quarter, as well as labor inefficiencies and lower factory productivity. We expect these factors to be largely behind us in the first quarter and segment margin to expand in 2019.

"In Refrigeration for the fourth quarter, revenue at constant currency was up 1%, adjusted for the divestitures. Kysor Warren revenue was down significantly from the prior-year quarter, while the remainder of our North America revenue was up high-single digits. Europe revenue was up mid-teens at constant currency. Refrigeration segment margin declined 310 basis points to 9.2%, and profit was down 25% in the fourth quarter on mix and the timing of certain expenses and other products costs. As in Commercial, we expect organic margin expansion in 2019 for Refrigeration.

"Looking ahead for the company overall, the first quarter is off to a solid start, and we reiterate guidance for 2019. The company is well-positioned for a year of strong growth and profitability, and we will continue to invest in the business to drive future performance, grow the dividend with earnings over time, and repurchase stock, with $350 million planned for 2019."

GUIDANCE:

Lennox sees FY2019 EPS of $12.00-$12.60, versus the consensus of $12.33.

2019 FULL-YEAR OUTLOOK The company reiterates its financial guidance for 2019:

• Revenue growth of 3-7%
• GAAP EPS from continuing operations of $14.30-$14.90
• Adjusted EPS from continuing operations of $12.00-$12.60
• Corporate expenses of approximately $90 million
• Effective tax rate of 22-23% on an adjusted basis for the full year
• Capital expenditures of approximately $215 million, including $115 million in 2019 to complete the reconstruction of the Iowa manufacturing facility, funded by insurance proceeds
• $350 million of stock repurchases

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