Lennox International, Inc. · NYSE:LII
Lennox International — Q2 2024 Earnings Presentation
16 slides from Lennox International's earnings presentation, Jul 24, 2024
Slide 1: Second Quarter 2024 Earnings Release
I N T E G R I T Y | R E S P E C T | E X C E L L E N C E {{{{ SECOND QUARTER 2024 EARNINGS RELEASE JULY 24, 2024
Slide 2: Forward-Looking Statements & Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS & NON-GAAP FINANCIAL MEASURES The statements in this presentation that are not historical statements, including statements regarding the 2024 full-year outlook and expected consolidated and segment financial results, as well as financial targets for future years, are forwa
Slide 3: Q2 2024 Results Highlights
Q2 2024 RESULTS HIGHLIGHTS Record Quarterly Margins | Consistent Management Execution Core Revenue* Adjusted Segment Adjusted Segment Profit* Profit Margin * $1.5B $319M 21.9% +8% YoY +13% YoY +100 bps YoY Raising Full Year Profit Guidance Operating Return On Adjusted EPS* Cash Flow Invested Capital
Slide 4: New Joint Venture for Heat Pump Growth
NEW JOINT VENTURE FOR HEAT PUMP GROWTH Winning Combination Heat Pump & Ductless Growth Enhanced Technology • Mutually exclusive ductless HVAC • Heat pumps are 30% of the • Samsung’s SmartThings controls channels in North America market; JV enables more reach and home automation platform • Integrated
Slide 5: Q2 2024 Lennox Financial Results
Q2 2024 LENNOX FINANCIAL RESULTS Core Revenue* Adjusted Segment Profit* (US$ Millions) (US$ Millions) Adjusted EPS * +8% +$38M or +13% +11% to $6.83 ROS 2% $1,451 12.3% 3% 0% 3% $1,344 $44 $319 $14 ($6) $281 ($14) • Volume: BCS markets remain solid, Neutral HCS end markets ROS ROS 20.9% 21.9% • Pric
Slide 6: Q2 2024 Home Comfort Solutions
Q2 2024 HOME COMFORT SOLUTIONS Revenue Segment Profit (US$ Millions) (US$ Millions) $982 $936 $229 $203 ROS ROS 21.6% 23.3% • Volume: Industry destocking ended • Price / Mix: Initiatives progressing well 2023 2024 2023 2024 • Other Cost: Wages, inflation, and + 5% + $26 investments in distribution a
Slide 7: Q2 2024 Building Climate Solutions
Q2 2024 BUILDING CLIMATE SOLUTIONS Revenue Segment Profit (US$ Millions) (US$ Millions) $469 $408 $114 $103 ROS ROS 25.3% 24.3% • Volume: Improving, but not meeting demand • Product Cost: New factory ramp-up 2023 2024 2023 2024 • Other: SG&A investments and + 15% + $11 inflation offset by gain from
Slide 8: Q2 Cash Flow and Capital Deployment
Q2 CASH FLOW AND CAPITAL DEPLOYMENT Operating Cash Flow Investing for Growth Capital Second Quarter ROIC* Net Debt to Adjusted EBITDA* (US$ Millions) 1.8x 1.2x 1.5x $196 $184 43% 44% 1.0x 2023 2024 2023 2024 2023 2024 LT Target YTD through June Industry leading ROIC Sustain a healthy balance sheet •
Slide 9: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE Core Revenue Other Guidance Items Current Prior Volume Price / Mix Acquisition Total Earnings Per Share $19.50 - $20.25 $19.00 − $20.00 Home Comfort Solutions + LSD + MSD + ~5% Free Cash Flow $500M - $600M $500M - $600M Building Climate Product & Other Cost Assumptions Soluti
Slide 10: Drivers of 2024 Business Success
DRIVERS OF 2024 BUSINESS SUCCESS End Market LII Share Opportunity • Uncertain repair vs replace trends • Successful refrigerant transition Home Comfort • Product mix concerns due to inflation • Improving fulfillment rate Solutions • Channel inventory levels near normal • Go-To-Market excellence • DO
Slide 11: Attractive Investment Opportunity
ATTRACTIVE INVESTMENT OPPORTUNITY Execution Consistency and Disciplined Capital Deployment Advanced Technology Resilient Margin Solutions with business focused on Direct-to-Dealer Network sustainable HVACR Talent & Culture driven by Growth End Core Values, Guiding Markets with Strong Behaviors and P
Slide 12: Appendix
I N T E G R I T Y | R E S P E C T | E X C E L L E N C E {{{{ APPENDIX JULY 24, 2024
Slide 13: Core Revenue and Adjusted Segment Profit
CORE REVENUE AND ADJUSTED SEGMENT PROFIT Change Year-over-Year Net Sales Q2 2024 Q2 2023 Volume Price Mix Other Total Home Comfort Solutions $ 982 $ 936 1% 4% 0% - 5% Building Climate Solutions 469 408 9% 2% (2%) 6% 15% Corporate and other (1) - 68 - - - (100%) (100%) Net sales, a GAAP measure $ 1,4
Slide 14: Adjusted EPS
ADJUSTED EPS For the Three Months Ended June 30, (Unaudited) 2024 2023 After Tax Per Diluted After Tax Per Diluted Amount Share Amount Share Net income, a GAAP measure $ 245.9 $ 6.87 $ 217.2 $ 6.10 Pension settlements - - $ 0.1 - Items in Losses (gains) and other expenses, net which are excluded fro
Slide 15: Net Debt to EBITDA and Free Cash Flow
NET DEBT TO EBITDA Q3 Q4 Q1 Q2 LTM Q3 Q4 Q1 Q2 LTM 2023 2023 2024 2024 2024 2022 2022 2023 2023 2023 Income before taxes, a GAAP Measure $ 175.2 $ 173.4 $ 154.2 $ 307.0 $ 809.8 $ 174.6 $ 119.5 $ 125.1 $ 263.7 $ 682.9 Items in losses (gains) and other expenses, net before taxes 5.6 2.7 - - 8.3 3.3 0.
Slide 16: Return on Invested Capital (ROIC)
RETURN ON INVESTED CAPITAL (ROIC) Q3 Q4 Q1 Q2 LTM Q3 Q4 Q1 Q2 LTM 2023 2023 2024 2024 2024 2022 2022 2023 2023 2023 Operating income, a GAAP Measure $ 186.8 $ 185.3 $ 166.8 $ 320.1 $ 859.0 $ 185.8 $ 131.8 $ 139.5 $ 278.8 $ 656.2 Restructuring Charges, before tax 0.3 2.9 - - 3.2 0.2 0.3 - - 0.5 Item