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Mar 31, 2020
Lennox Q1 2020 Earnings Report
Lennox International reported first quarter results, impacted by adverse weather and the COVID-19 pandemic, and updated financial outlook for the year based on current market assumptions.
Key Takeaways
Lennox International's first-quarter GAAP revenue was $724 million, down 8%. GAAP EPS from continuing operations was $0.32, compared to $1.73 in the prior-year quarter. Adjusted EPS from continuing operations was $0.56 compared to $1.68 in the prior-year quarter.
First-quarter revenue on a GAAP basis was down 8%; excluding the impact from prior-year divestitures, adjusted revenue was down 4%.
GAAP EPS from continuing operations was $0.32 compared to $1.73 in the prior-year quarter, which included $0.87 of insurance benefit related to the tornado.
Adjusted EPS from continuing operations was $0.56 compared to $1.68 in the prior-year quarter, which included $0.75 of insurance benefit related to the tornado.
The company repurchased $100 million of stock in the first quarter.
Revenue by Segment
Forward Guidance
For 2020, the company currently assumes a negative 20% impact from COVID-19 on the North America unitary HVAC and refrigeration market. 2020 adjusted revenue is expected to be down 11-17% from the prior year versus previous guidance for 4-8% growth. The company is currently estimating 2020 GAAP EPS from continuing operations of $7.07-$8.07 and adjusted EPS from continuing operations of $7.50-$8.50.
Positive Outlook
- Lennox has a focused and seasoned team with experience managing through economic downturns.
- The company has already taken cost reduction actions to realize $115 million in SG&A savings for the balance of the year.
- Cash generation this year is expected to remain strong as working capital requirements shrink.
- The company is taking action to reduce capital expenditures.
- The company expects to strengthen its position in the market as it emerges in the recovery.
Challenges Ahead
- Significant challenges lie ahead in uncertain market conditions.
- The company expects a negative 20% impact from the pandemic.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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