LENNOX INTERNATIONAL INC. DALLAS, Oct. 23, 2017 /PRNewswire/ -- Lennox International Inc. (NYSE: LII) today reported financial results for the third quarter of 2017. All comparisons are to the prior-year period.
Revenue was a third-quarter record $1.052 billion, up 4%. At constant currency, revenue was up 3%. GAAP operating income was $155 million, down 1%. GAAP earnings per share from continuing operations was a third-quarter record $2.45, up 5%. On an adjusted basis, total segment profit increased 2% to a third-quarter record $161 million. Total segment margin was 15.3%, down 30 basis points from the record third-quarter level of a year ago. Adjusted EPS from continuing operations rose 9% to a third-quarter record $2.53.
"While underlying economic conditions remain strong, the third quarter was materially impacted by significantly cooler weather than a year ago and the near-term market disruption from the hurricanes that hit Texas and Florida," said Chairman and CEO Todd Bluedorn. "These dynamics negatively impacted the company's growth and margin performance in the quarter -- specifically for our residential replacement, commercial emergency replacement, and refrigeration wholesale businesses. That being said, the company posted record third-quarter revenue, total segment profit, and EPS.
"In Residential, revenue and profit hit new third-quarter highs. Revenue rose 3% on high-single digit growth in new construction and low-single digit growth in replacement. Segment margin was off 30 basis points to 19.4%. Residential profit rose 2% in the quarter.
"Our Commercial business set new all-time highs for revenue and profit. Commercial revenue was up 6% at constant currency, led by nearly 20% growth in National Accounts and mid-teen growth in National Account Services. Planned replacement revenue was up 20%, while emergency replacement revenue was relatively flat. Europe was down double digits. Commercial margin was off 90 basis points to 18.6%. Commercial profit rose 2%.
"In Refrigeration, revenue was up 2% at constant currency. North America, our most profitable region, was flat, while Europe, Asia Pacific, and South America were up. Refrigeration margin was down 190 basis points to 10.4%, and segment profit was down 13%.
"Looking ahead for the company overall with the recovery in key regions underway, we are well-positioned to close out a year of record revenue, margin and profit in 2017 and to drive strong growth and profitability over the coming year."
FINANCIAL HIGHLIGHTS
Revenue: Revenue was a third-quarter record $1.052 billion, up 4%. Foreign exchange was a 1 percentage point benefit to revenue growth. Volume and price were up. Mix was unfavorable in the quarter.
Gross Profit: Gross profit in the third quarter was $314 million, up 1%. Gross margin was 29.8%, down 90 basis points. Gross profit was positively impacted by higher volume, favorable price, sourcing and engineering-led cost reductions, and foreign exchange, with offsets from higher commodity and other product costs, unfavorable mix, and investments in distribution expansion.
Income from Continuing Operations: On a GAAP basis, income from continuing operations for the third quarter was $104.0 million, or $2.45 per share, compared to $101.7 million, or $2.33 per share, in the prior-year quarter.
Adjusted income from continuing operations in the third quarter was $106.9 million, or $2.53 per share, compared to $101.9 million, or $2.33 per share, in the prior-year quarter. Adjusted earnings from continuing operations for the third quarter of 2017 excludes net after-tax charges of $2.9 million: $1.3 million of special legal contingency charges, $1.1 million of restructuring charges, $1.0 million for asbestos-related litigation, a total of $1.0 million for other items, and a benefit of $1.5 million for excess tax benefits from share-based compensation.
Free Cash Flow and Total Debt: Net cash from operations in the third quarter was $177 million, up from $152 million in the prior-year quarter. Capital expenditures were $17 million compared to $18 million in the prior-year quarter. Free cash flow was $160 million, up from approximately $134 million in the third quarter a year ago. Total debt at the end of the third quarter was $1.124 billion. Total cash and cash equivalents were $61 million at the end of September. In the third quarter, the company paid approximately $22 million in dividends and $75 million for stock repurchases.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the Residential Heating & Cooling business segment rose 3% to a third-quarter record $591 million. Foreign exchange was neutral on a revenue basis. Segment profit was a third-quarter record $115 million, up 2%. Segment profit margin was 19.4%, down 30 basis points from the third-quarter record margin a year ago. Results were positively impacted by higher volume, favorable price, sourcing and engineering-led cost reductions, and foreign exchange, with offsets from higher commodity and other product costs, unfavorable mix, investments in research and development, information technology and other SG&A, and investments in distribution expansion.
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment was a record $269 million, up 7%. At constant currency, revenue was up 6%. Segment profit was a record $50 million, up 2%. Segment margin was 18.6%, down 90 basis points from the third-quarter record a year ago. Results were positively impacted by higher volume, favorable price, sourcing and engineering-led cost reductions, lower SG&A expenses, and favorable foreign exchange. Offsets included unfavorable mix, higher commodity and other product costs, and higher freight and distribution expenses.
Refrigeration
Revenue in the Refrigeration business segment was $192 million, up 3%. At constant currency, revenue was up 2%. Segment margin was down 190 basis points to 10.4%, and segment profit declined 13% to $20 million. Results were impacted by unfavorable mix, higher commodity costs, higher freight and distribution expenses, and investments in research and development, information technology, and other SG&A. Sourcing and engineering-led cost reductions were a partial offset.
FULL-YEAR OUTLOOK
For 2017, the company is updating guidance for revenue and EPS from continuing operations.
-- Updating 2017 guidance for revenue growth from 4-7% with neutral foreign
exchange to 5-7% with a 0.5% benefit from foreign exchange.
-- Updating guidance for GAAP EPS from continuing operations from
$7.73-$8.13 to $7.67-$7.97.
-- Updating guidance for adjusted EPS from continuing operations from
$7.75-$8.15 to $7.75-$8.05.
-- Reiterating corporate expenses of approximately $85 million.
-- Reiterating guidance for an effective tax rate of 31-32% on an adjusted
basis for the full year.
-- Reiterating capital expenditures of approximately $100 million.
-- Reiterating guidance for a weighted average diluted share count of 42-43
million shares on a full-year basis.
CONFERENCE CALL INFORMATION
A conference call to discuss the company's third quarter results will be held this morning at 8:30 a.m. Central time. To listen, call the conference call line at 612-288-0329 at least 10 minutes prior to the scheduled start time and use reservation number 431566. The conference call also will be webcast on Lennox International's web site at www.lennoxinternational.com. A replay will be available from 11:00 a.m. Central time on October 23 through November 6, 2017 by dialing 800-475-6701 (U.S.) or 320-365-3844 (international) and using access code 431566. The call also will be archived on the company's website.
About Lennox International
Lennox International Inc. is a global leader in the heating, air conditioning, and refrigeration markets. Lennox International stock is listed on the New York Stock Exchange and traded under the symbol "LII". Additional information is available at: www.lennoxinternational.com or by contacting Steve Harrison, Vice President, Investor Relations, at 972-497-6670.
Forward-Looking Statements
The statements in this news release that are not historical statements, including statements regarding the 2017 full-year outlook, expected consolidated and segment financial results for 2017, and expected share repurchases, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on information currently available as well as management's assumptions and beliefs today. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the statements, and investors should not place undue reliance on them. Risks and uncertainties that could cause actual results to differ materially from such statements include, but are not limited to: the impact of higher raw material prices, LII's ability to implement price increases for its products and services, economic conditions in our markets, regulatory changes, the impact of unfavorable weather, and a decline in new construction activity and related demand for products and services. For information concerning these and other risks and uncertainties, see LII's publicly available filings with the Securities and Exchange Commission. LII disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(Amounts in millions,
except per share data) For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net sales $1,052.3 $1,010.0 $2,947.9 $2,744.4
Cost of goods sold 738.6 699.7 2,082.4 1,935.5
----- ----- ------- -------
Gross profit 313.7 310.3 865.5 808.9
Operating Expenses:
Selling, general and
administrative expenses 158.7 156.5 479.6 456.2
Losses and other
expenses, net 3.0 0.7 8.5 5.5
Restructuring charges 1.9 0.6 2.1 1.2
Income from equity
method investments (4.5) (4.4) (15.5) (15.3)
---- ---- ----- -----
Operating income 154.6 156.9 390.8 361.3
Interest expense, net 7.6 7.0 23.3 19.6
Other income, net - - (0.2) (0.2)
Income from continuing
operations before
income taxes 147.0 149.9 367.7 341.9
Provision for income
taxes 43.0 48.2 103.8 104.0
---- ---- ----- -----
Income from continuing
operations 104.0 101.7 263.9 237.9
Discontinued Operations:
Loss from discontinued
operations before
income taxes (0.8) - (2.3) (0.9)
Benefit from income
taxes (0.3) - (0.9) (0.3)
---- --- ---- ----
Loss from discontinued
operations (0.5) - (1.4) (0.6)
---- --- ---- ----
Net income $103.5 $101.7 $262.5 $237.3
====== ====== ====== ======
Earnings per share - Basic:
Income from continuing
operations $2.48 $2.35 $6.23 $5.46
Loss from discontinued
operations (0.01) - (0.03) (0.01)
----- --- ----- -----
Net income $2.47 $2.35 $6.20 $5.45
===== ===== ===== =====
Earnings per share - Diluted:
Income from continuing
operations $2.45 $2.33 $6.15 $5.39
Loss from discontinued
operations (0.01) - (0.03) (0.01)
----- --- ----- -----
Net income $2.44 $2.33 $6.12 $5.38
===== ===== ===== =====
Weighted Average Number
of Shares Outstanding -
Basic 41.9 43.2 42.3 43.6
Weighted Average Number
of Shares Outstanding -
Diluted 42.4 43.7 42.9 44.2
Cash dividends declared
per share $0.51 $0.43 $1.45 $1.22
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Segment Net Sales and Profit (Loss)
(Unaudited)
(Amounts in millions) For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net sales
Residential Heating &
Cooling $590.5 $572.7 $1,663.8 $1,524.5
Commercial Heating &
Cooling 269.4 251.4 723.5 674.7
Refrigeration 192.4 185.9 560.6 545.2
$1,052.3 $1,010.0 $2,947.9 $2,744.4
======== ======== ======== ========
Segment Profit (Loss) (1)
Residential Heating &
Cooling $114.7 $112.7 $297.6 $266.9
Commercial Heating &
Cooling 50.0 48.9 113.8 110.6
Refrigeration 20.0 22.9 55.7 53.2
Corporate and other (23.7) (27.3) (58.5) (65.7)
----- ----- ----- -----
Total segment profit 161.0 157.2 408.6 365.0
Reconciliation to Operating income:
Special product
quality adjustments 0.5 - 5.7 (0.4)
Items in Losses and
other expenses, net
that are excluded
from segment profit
(loss) (1) 4.0 (0.3) 10.0 2.9
Restructuring charges 1.9 0.6 2.1 1.2
Operating income $154.6 $156.9 $390.8 $361.3
====== ====== ====== ======
(1) We define segment
profit (loss) as a
segment's operating
income included in
the accompanying
Consolidated
Statements of
Operations,
excluding:
-- Special product
quality
adjustments;
-- The following
items in Losses
(gains) and
other expenses,
net:
? Net change in unrealized losses
(gains) on unsettled futures
contracts,
? Special legal contingency charges,
? Asbestos-related litigation,
? Contractor tax payments,
? Environmental liabilities,
? Acquisition costs,
? Other items, net; and,
-- Restructuring
charges.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in millions, except
shares and par values) As of September 30, As of December 31,
2017 2016
---- ----
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $60.7 $50.2
Accounts and notes receivable,
net of allowances of $6.9 and
$6.7 in 2017 and 2016,
respectively 598.1 469.8
Inventories, net 530.9 418.5
Other assets 80.9 67.4
---- ----
Total current assets 1,270.6 1,005.9
Property, plant and equipment,
net of accumulated
depreciation of $767.8 and
$717.2 in 2017 and 2016,
respectively 374.6 361.4
Goodwill 200.6 195.1
Deferred income taxes 143.3 136.7
Other assets, net 66.6 61.2
---- ----
Total assets $2,055.7 $1,760.3
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt $326.0 $52.4
Current maturities of long-
term debt 22.4 200.1
Accounts payable 394.5 361.2
Accrued expenses 278.4 265.9
Income taxes payable 2.4 9.0
--- ---
Total current liabilities 1,023.7 888.6
Long-term debt 775.7 615.7
Post-retirement benefits,
other than pensions 1.9 2.8
Pensions 90.2 87.5
Other liabilities 131.7 127.7
----- -----
Total liabilities 2,023.2 1,722.3
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par
value, 25,000,000 shares
authorized, no shares issued
or outstanding - -
Common stock, $.01 par value,
200,000,000 shares
authorized, 87,170,197 shares
issued 0.9 0.9
Additional paid-in capital 1,048.0 1,046.2
Retained earnings 1,554.4 1,353.0
Accumulated other
comprehensive loss (157.0) (195.1)
Treasury stock, at cost,
45,401,841 shares and
44,195,250 shares as of
September 30, 2017 and
December 31, 2016,
respectively (2,414.2) (2,167.4)
Noncontrolling interests 0.4 0.4
--- ---
Total stockholders' equity 32.5 38.0
---- ----
Total liabilities and
stockholders' equity $2,055.7 $1,760.3
======== ========
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in
millions) For the Nine Months Ended
September 30,
2017 2016
---- ----
Cash flows from operating
activities:
Net income $262.5 $237.3
Adjustments to reconcile net
income to net cash provided
by operating activities:
Income from
equity method
investments (15.5) (15.3)
Dividends from
affiliates 7.8 3.9
Restructuring
charges
(gains), net
of cash paid 1.0 (0.8)
Provision for
bad debts 3.2 3.4
Unrealized
gains on
derivative
contracts (0.7) (2.2)
Stock-based
compensation
expense 18.8 24.8
Depreciation
and
amortization 48.1 43.4
Deferred
income taxes (3.9) (2.6)
Pension
expense 4.1 4.7
Pension
contributions (1.4) (52.5)
Other items,
net 1.0 0.4
Changes in assets and
liabilities, net of effects
of divestitures:
Accounts and
notes
receivable (118.3) (146.2)
Inventories (102.6) (49.9)
Other current
assets (7.3) (6.6)
Accounts
payable 31.0 56.4
Accrued
expenses 7.6 40.7
Income taxes
payable and
receivable (9.9) (15.0)
Other 3.5 3.0
Net cash
provided by
operating
activities 129.0 126.9
Cash flows from investing
activities:
Proceeds from
the disposal
of property,
plant and
equipment 0.2 -
Purchases of
property,
plant and
equipment (60.5) (59.4)
----- -----
Net cash used
in investing
activities (60.3) (59.4)
Cash flows from financing
activities:
Short-term
borrowings,
net (1.4) (2.1)
Asset
securitization
borrowings 275.0 145.0
Asset
securitization
payments - (20.0)
Long-term
debt payments (200.8) (30.9)
Borrowings
from credit
facility 1,883.0 1,715.0
Payments on
credit
facility (1,701.0) (1,493.0)
Payments of
deferred
financing
costs - (0.9)
Proceeds from
employee
stock
purchases 2.3 1.9
Repurchases of
common stock (250.0) (300.0)
Repurchases of
common stock
to satisfy
employee
withholding
tax
obligations (16.0) (26.3)
Cash dividends
paid (58.4) (50.5)
----- -----
Net cash used
in financing
activities (67.3) (61.8)
Increase in
cash and cash
equivalents 1.4 5.7
Effect of
exchange
rates on cash
and cash
equivalents 9.1 3.2
Cash and cash
equivalents,
beginning of
period 50.2 38.9
---- ----
Cash and cash
equivalents,
end of period $60.7 $47.8
===== =====
Supplemental disclosures of
cash flow information:
Interest paid $22.5 $17.0
===== =====
Income taxes
paid (net of
refunds) $115.5 $120.9
====== ======
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation to U.S. GAAP (Generally Accepted Accounting Principles) Measures
(Unaudited, in millions, except per share and ratio data)
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements and segment net sales and profit presented in accordance with U.S. GAAP, additional non-GAAP financial measures are provided and reconciled in the following tables. In addition to these non-GAAP
measures, the Company also provides rates of revenue change at constant currency on a consolidated and segment basis if different than the reported measures. The Company believes that these non-GAAP financial measures, when considered together with the GAAP
financial measures, provide information that is useful to investors in understanding period-over-period operating results. The Company believes that these non-GAAP financial measures enhance the ability of investors to analyze the Company's business trends
and operating performance.
Reconciliation of Income from Continuing Operations, a GAAP measure, to Adjusted Income from Continuing Operations, a Non-GAAP measure
For the Three Months Ended September 30,
2017 2016
Pre-Tax Tax Impact (e) After Tax Pre-Tax Tax Impact (e) After Tax
------- ------------- --------- ------- ------------- ---------
Income from continuing
operations, a GAAP
measure $147.0 $(43.0) $104.0 $149.9 $(48.2) $101.7
Restructuring charges 1.9 (0.8) 1.1 0.6 (0.2) 0.4
Special product
quality adjustments
(b) 0.5 (0.2) 0.3 - - -
Special legal
contingency charges
(a) 1.5 (0.2) 1.3 0.5 (0.2) 0.3
Asbestos-related
litigation (a) 1.5 (0.5) 1.0 0.4 (0.1) 0.3
Net change in
unrealized losses
(gains) on unsettled
future contracts (a) 0.2 (0.1) 0.1 (1.2) 0.5 (0.7)
Environmental
liabilities(a) 0.5 (0.1) 0.4 - (0.1) (0.1)
Excess tax benefits
from share-based
compensation (c) - (1.5) (1.5) - - -
Contractor tax
payments (a) - - - - - -
Other items, net (a) 0.3 (0.1) 0.2 - - -
--- ---- --- --- --- ---
Adjusted income from
continuing
operations, a non-
GAAP measure $153.4 $(46.5) $106.9 $150.2 $(48.3) $101.9
====== ====== ====== ====== ====== ======
Earnings per share from continuing
operations -diluted, a GAAP measure $2.45 $2.33
Restructuring charges 0.03 0.01
Special product quality adjustments
(b) 0.01 -
Special legal contingency charges(a) 0.03 0.01
Asbestos-related litigation(a) 0.02 0.01
Net change in unrealized losses
(gains) on unsettled future contracts
(a) - (0.02)
Environmental liabilities (a) 0.01 (0.01)
Excess tax benefits from share-based
compensation (c) (0.03) -
Contractor tax payments (a) - -
Other items, net (a) - -
Change in share counts from share-
based compensation (d) 0.01 -
Adjusted earnings per share from
continuing operations - diluted, a
non-GAAP measure $2.53 $2.33
===== =====
(a) Recorded in Losses and other
expenses, net in the Consolidated
Statements of Operations
(b) Recorded in Cost of goods sold in
the Consolidated Statements of
Operations
(c) Recorded in Provision for income
taxes in the Consolidated
Statements of Operations
(d) The impact of excess tax benefits
from the change in share-based
compensation also impacts our
diluted share counts. The
reconciliation of average
outstanding diluted shares on a
GAAP and non-GAAP basis is
included in this document.
(e) Tax impact based on the applicable
tax rate relevant to the location
and nature of the adjustment.
For the Nine Months Ended September 30,
2017 2016
Pre-Tax Tax Impact (e) After Tax Pre-Tax Tax Impact (e) After Tax
------- ------------- --------- ------- ------------- ---------
Income from continuing
operations, a GAAP
measure $367.7 $(103.8) $263.9 $341.9 $(104.0) $237.9
Restructuring charges 2.1 (0.8) 1.3 1.2 (0.4) 0.8
Special product
quality adjustments
(b) 5.7 (2.0) 3.7 (0.4) 0.1 (0.3)
Special legal
contingency charges
(a) 3.6 (0.4) 3.2 0.5 (0.2) 0.3
Asbestos-related
litigation (a) 3.9 (1.3) 2.6 2.3 (0.8) 1.5
Net change in
unrealized losses
(gains) on unsettled
future contracts (a) 1.0 (0.4) 0.6 (1.9) 0.7 (1.2)
Environmental
liabilities (a) 1.2 (0.3) 0.9 1.1 (0.3) 0.8
Excess tax benefits
from share-based
compensation (c) - (9.6) (9.6) - - -
Contractor tax
payments (a) - - - 0.5 (0.1) 0.4
Other items (a) 0.3 (0.1) 0.2 0.4 (0.2) 0.2
--- --- ---- ---
Adjusted income from
continuing
operations, a non-
GAAP measure $385.5 $(118.7) $266.8 $345.6 $(105.2) $240.4
====== ======= ====== ====== ======= ======
Earnings per share
from continuing
operations -diluted,
a GAAP measure $6.15 $5.39
Restructuring charges 0.03 0.02
Special product
quality adjustments
(b) 0.09 (0.01)
Special legal
contingency charges
(a) 0.07 0.01
Asbestos-related
litigation (a) 0.06 0.03
Net change in
unrealized losses
(gains) on unsettled
future contracts (a) 0.01 (0.03)
Environmental
liabilities (a) 0.02 0.02
Excess tax benefits
from share-based
compensation (c) (0.22) -
Contractor tax
payments (a) - 0.01
Other items, net (a) - -
Change in share counts
from share-based
compensation (d) 0.02 -
---- ---
Adjusted earnings per
share from continuing
operations -
diluted, a non-GAAP
measure $6.23 $5.44
===== =====
(a) Recorded in
Losses and
other
expenses, net
in the
Consolidated
Statements of
Operations
(b) Recorded in
Cost of goods
sold in the
Consolidated
Statements of
Operations
(c) Recorded in
Provision for
income taxes
in the
Consolidated
Statements of
Operations
(d) The impact of excess tax benefits
from the change in share-based
compensation also impacts our
diluted share counts. The
reconciliation of average
outstanding diluted shares on a
GAAP and non-GAAP basis is
included in this document.
(e) Tax impact based on the applicable
tax rate relevant to the location
and nature of the adjustment.
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
Components of Losses
and other expenses,
net (pre-tax):
Realized (gains)
losses on settled
future contracts
(a) $(0.5) $0.3 $(1.3) $1.2
Foreign currency
exchange (gains)
losses (a) (0.6) 0.5 (0.3) 1.1
Loss on disposal of
fixed assets (a) 0.1 0.2 0.1 0.3
Net change in
unrealized losses
(gains) on
unsettled futures
contracts (b) 0.2 (1.2) 1.0 (1.9)
Special legal
contingency charges
(b) 1.5 0.5 3.6 0.5
Asbestos-related
litigation (b) 1.5 0.4 3.9 2.3
Environmental
liabilities (b) 0.5 - 1.2 1.1
Contractor tax
payments (b) - - - 0.5
Acquisition costs
(b) - - - 0.4
Other items, net (b) 0.3 - 0.3 -
--- ---
Losses and other
expenses, net (pre-
tax) $3.0 $0.7 $8.5 $5.5
==== ==== ==== ====
(a) Included in both segment
profit (loss) and Adjusted
income from continuing
operations
(b) Excluded from both segment
profit (loss) and Adjusted
income from continuing
operations
Reconciliation of Earnings per Share from Continuing Operations - Diluted, a GAAP measure, to Estimated Adjusted Earnings per Share from Continuing Operations - Diluted, a Non-GAAP measure
For the Year
Ended
December 31,
2017
ESTIMATED
---------
Earnings per share from continuing operations - diluted, a GAAP measure $7.67 - $7.97
Special product quality adjustments and other items partially offset by excess tax benefits from share-based compensation 0.08
Adjusted Earnings per share from continuing operations - diluted, a Non-GAAP measure $7.75 - $8.05
=============
Reconciliation of Average Shares Outstanding - Diluted, a GAAP measure, to Adjusted Average Shares Outstanding - Diluted, a Non-GAAP measure (shares in millions):
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Average shares
outstanding -
diluted, a GAAP
measure 42.4 43.7 42.9 44.2
Impact on diluted
shares from excess
tax benefits from
share-based
compensation (0.1) - (0.1) -
Adjusted average
shares outstanding -
diluted, a Non-
GAAP measure 42.3 43.7 42.8 44.2
==== ==== ==== ====
Reconciliation of Net Cash Used in Operating Activities, a GAAP measure, to Free Cash Flow, a Non-GAAP measure (dollars in millions)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net cash provided by
(used in) operating
activities, a GAAP
measure $177.3 $152.2 $129.0 $126.9
Purchases of
property, plant and
equipment (17.1) (17.7) (60.5) (59.4)
Proceeds from the
disposal of
property, plant and
equipment - - 0.2 -
--- --- --- ---
Free cash flow, a
Non-GAAP measure $160.2 $134.5 $68.7 $67.5
====== ====== ===== =====
Calculation of Debt to EBITDA Ratio
(dollars in millions): Trailing
Twelve
Months to
September
30,2017
-------
Adjusted EBIT (a) $513.3
Depreciation and amortization expense
(b) 61.8
EBITDA (a + b) $575.1
------
Total debt at September 30, 2017 (c) $1,124.1
--------
Total Debt to EBITDA ratio ((c /(a +
b)) 2.0
===
Reconciliation of Adjusted EBIT, a Non-GAAP measure, to Income From Continuing Operations Before Income Taxes, a GAAP measure (dollars in millions)
Trailing
Twelve
Months to
September
30,2017
-------
Adjusted EBIT per above, a Non-GAAP measure $513.3
Special product quality adjustments 5.7
Items in Losses and other expenses, net that are excluded from segment profit 14.5
Restructuring charges 2.7
Interest expense, net 30.7
Pension Settlement 31.4
Other expenses, net (0.2)
Income from continuing operations before income taxes, a GAAP measure $428.5
======
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SOURCE Lennox International Inc.
