Research Desk Line-up: Graco Post Earnings Coverage
LONDON, UK / ACCESSWIRE / July 31, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Lennox International Inc. (NYSE: LII) ("Lennox"), which can be viewed by registering at http://protraderdaily.com/optin/'symbol=LII, following the Company's reporting of its second quarter fiscal 2017 earnings results on July 24, 2017. The manufacturer of furnaces, air conditioners, and other products outperformed top- and bottom-line expectations. Lennox also raised its lower-end earnings and revenue guidance for FY17. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Get more of our free earnings reports coverage from other constituents of the Diversified Machinery industry. Pro-TD has currently selected Graco Inc. (NYSE: GGG) for due-diligence and potential coverage as the Company announced on July 26, 2017, its financial results for Q2 and six months which ended on June 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Graco when we publish it.
At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on LII; also brushing on GGG. With the links below you can directly download the report of your stock of interest free of charge at:
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Earnings Reviewed
For the three months ended June 30, 2017, Lennox reported record revenue of $1.10 billion, up 8% compared to revenue of $1.02 billion in Q2 2016, led by 14% residential growth. The Company's volume increased, while rice/mix was flat on a revenue basis. Lennox's revenue numbers surpassed analysts' expectations of $1.09 billion.
For Q2 2017, Lennox's gross profit totaled $341 million, up 8% compared to $315.0 million in Q2 2016. The Company's gross profit was positively impacted by higher volume, favorable price/mix, and sourcing and engineering-led cost reductions, with offsets from higher commodity costs, investments in distribution expansion, and foreign exchange. Lennox's gross margin was flat at 30.9%
On a GAAP basis, Lennox's income from continuing operations for Q2 2017 was $116.4 million, or $2.71 per share, compared to $111.2 million, or $2.52 per share, in Q2 2016. The Company's earnings from continuing operations for the reported quarter included net after-tax charges of $4.6 million. Lennox's adjusted income from continuing operations in Q2 2017 was $121.0 million, or $2.83 per share, compared to $111.5 million, or $2.53 per share, in the prior year's corresponding quarter. The Company's earnings numbers exceeded Wall Street's expectations of $2.76 per share.
Segment Details
During Q2 2017, Lennox's Residential Heating & Cooling business segment's revenue rose 14% to a record $654 million. This segment's profit for the reported quarter surged 21% to a record $141 million. The segment's profit margin expanded 130 basis points to a record 21.5%. Results were impacted by higher volume, favorable price/mix, sourcing, and engineering-led cost reductions, and favorable warranty, and other product costs.
Lennox's Q2 2017 revenue from the Commercial Heating & Cooling business segment was a record $259 million, up 2% on a y-o-y basis. The segment's revenue grew 3% on a y-o-y basis. This segment's margin was down 140 basis points to 17.3%, and the segment's profit declined 6% to $45 million. Results were impacted by unfavorable mix, higher commodity costs, investments in research and development, information technology, and other selling, general, and administrative expenses (SG&A), partially offset by included higher volume, sourcing and engineering-led cost reductions, and favorable price.
For Q2 2017, Lennox's Refrigeration business segment generated revenue of $190 million, down 1% on a y-o-y basis. This segment's margin expanded 30 basis points to 11.4% in the reported quarter, and this segment's profit rose 1% to $22 million. Results were impacted by favorable price/mix and sourcing and engineering-led cost reductions, with partial offsets from factory productivity, investments in research and development, information technology, and other SG&A.
Cash Matters
Lennox's net cash from operations in Q2 2017 was $59 million compared to $76 million in Q2 2016. The Company's capital expenditures for the reported totaled $18 million, flat on a y-o-y basis. For Q2 2017, Lennox's free cash flow was $41 million compared to $58 million in the prior-year's same quarter.
As the end of Q2 2017, the Company's total debt was $1.19 billion. Total cash and cash equivalents were $61 million as of June 30, 2017. In Q2 2017, Lennox paid $18 million in dividends and $100 million for stock repurchases.
Outlook
For FY17, Lennox raised the low-end of its guidance for revenue and adjusted EPS from continuing operations.
For FY17, Lennox is forecasting revenue growth in the range of 4% to 7% from the previous forecast of 3% to 7%. The Company expects a minimal impact from foreign exchange.
Lennox narrowed its GAAP EPS from continuing operations projections from $7.65-$8.25 to $7.73-$8.13, while it also raised the low-end of its adjusted EPS from continuing operations guidance from $7.55-$8.15 to $7.75-$8.15. Lennox is estimating corporate expenses of approximately $85 million and capital expenditures of approximately $100 million.
Stock Performance
On Friday, July 28, 2017, the stock closed the trading session at $171.02, slightly falling 0.62% from its previous closing price of $172.09. A total volume of 370.00 thousand shares have exchanged hands, which was higher than the 3-month average volume of 353.26 thousand shares. Lennox's stock price advanced 3.40% in the last three months, 9.09% in the past six months, and 7.58% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 11.65%. The stock is trading at a PE ratio of 24.51 and has a dividend yield of 1.19%. At Friday's closing price, the stock's net capitalization stands at $7.26 billion.
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