Lennox International, Inc. · NYSE:LII
Lennox International — Q3 2024 Earnings Presentation
17 slides from Lennox International's earnings presentation, Oct 23, 2024
Slide 1: Third 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 {{{{ THIRD QUARTER 2024 EARNINGS RELEASE OCTOBER 23, 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 outlook for 2024 full-year and beyond and expected consolidated and segment financial results, as well as financial targets for future y
Slide 3: Q3 2024 Results Highlights
Q3 2024 RESULTS HIGHLIGHTS Record Results | Consistent Execution Core Revenue* Adjusted Segment Adjusted Segment Profit* Profit Margin * $1.5B $303M 20.2% +15% YoY +21% YoY +90 bps YoY Strong Cash Flow • Operating Return On Adjusted EPS* Cash Flow Invested Capital* Raising Guidance $6.68 ($114M) $45
Slide 4: Chief Legal Officer Transition
CHIEF LEGAL OFFICER TRANSITION John Torres – Outgoing CLO Monica Brown – Incoming CLO • Electing to retire effective February 28, 2025, after • Appointed EVP, Chief Legal Officer and Secretary 16 outstanding years effective January 1, 2025 • Led multiple acquisitions and divestitures • 12 years at L
Slide 5: Q3 2024 Lennox Financial Results
Q3 2024 LENNOX FINANCIAL RESULTS Core Revenue* Adjusted Segment Profit* (US$ Millions) (US$ Millions) Adjusted EPS* +15% +$52M or +21% +24% to $6.68 ROS 12.3% 2% $1,498 3% 0% 10% $43 $43 $303 $1,302 ($15) Driving double-digit $251 ($19) adjusted EPS ROS 19.3% ROS 20.2% growth while investing for the
Slide 6: Q3 2024 Home Comfort Solutions
Q3 2024 HOME COMFORT SOLUTIONS Revenue Segment Profit (US$ Millions) (US$ Millions) $1,033 $896 $227 $181 • Volume: Distributor channel up 30% ROS ROS and contractor channel up LSD% 20.2% 21.9% • Price / Mix: R410-A pricing initiatives achieved, and new R454-B pricing initiatives are progressing wel
Slide 7: Q3 2024 Building Climate Solutions
Q3 2024 BUILDING CLIMATE SOLUTIONS Revenue Segment Profit (US$ Millions) (US$ Millions) $465 $406 $106 $97 ROS ROS 24.0% 22.8% • Volume: Consistent, but still not meeting demand • Product Cost: New factory ramp-up 2023 2024 2023 2024 and manufacturing inefficiencies + 15% + $9 • Other: Investments a
Slide 8: Q3 2024 Cash Flow and Capital Deployment
Q3 2024 CASH FLOW AND CAPITAL DEPLOYMENT Operating Cash Flow Investing for Growth Leverage Third Quarter ROIC* Net Debt to Adjusted EBITDA* (US$ Millions) 1.5x $452 0.8x $313 43% 47% 2023 2024 2023 2024 2023 2024 YTD through September Industry leading ROIC Sustain a healthy balance sheet • Investmen
Slide 9: 2024 Financial Guidance
2024 FINANCIAL GUIDANCE Core Revenue Other Guidance Items Current Prior Volume Price / Mix Acquisition Total Earnings Per Share $20.75 - $21.00 $19.50 − $20.25 Home Comfort Solutions + MSD + MSD + ~8% Free Cash Flow $575M - $650M $500M - $600M Building Climate Product & Other Cost Assumptions Soluti
Slide 10: Low GWP Transition
LOW GWP TRANSITION Q4 2024 2025 2026+ New Product Launch* Demand Longer Term (Expect Minimal 2024 Demand) Grows Impacts • • • Limited pre-buy in two-step channel 1H destock of 2024 R-410A pre-buy R-410A refrigerant pricing will increase • • • R-454B priced 10%+ above R-410A products * R-454B: ~65% o
Slide 11: 2025 Early Thinking
2025 EARLY THINKING Revenue Growth Margin Expansion Low GWP Mix Share Gains Price & Cost Productivity • Favorable R454B • BCS Saltillo and • +30% Incremental • Distribution fill rate mix; 10%+ Price Stuttgart output on low GWP mix and efficiencies • Competitive gains • Emergency • Benefit from price
Slide 12: 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 13: 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 OCTOBER 23, 2024
Slide 14: Core Revenue and Adjusted Segment Profit
CORE REVENUE AND ADJUSTED SEGMENT PROFIT Change Year-over-Year Net Sales Q3 2024 Q3 2023 Volume Price Mix Other Total Home Comfort Solutions $ 1,033 $ 896 11% 4% 0% - 15% Building Climate Solutions 465 406 7% 2% 0% 6% 15% Corporate and other (1) - 65 - - - (100%) (100%) Net sales, a GAAP measure $ 1
Slide 15: Adjusted EPS
ADJUSTED EPS For the Three Months Ended September 30, (Unaudited) 2024 2023 After Tax Per Diluted After Tax Per Diluted Amount Share Amount Share Net income, a GAAP measure $ 239.0 $ 6.68 $ 130.4 $ 3.65 Restructuring charges - - $ 0.3 0.01 Pension settlements - - $ 0.2 0.01 Items in Losses (gains) a
Slide 16: Net Debt to EBITDA and Free Cash Flow
NET DEBT TO EBITDA Q4 Q1 Q2 Q3 LTM Q4 Q1 Q2 Q3 LTM 2023 2024 2024 2024 2024 2022 2023 2023 2023 2023 Income before taxes, a GAAP Measure $ 173.4 $ 154.2 $ 307.0 $ 293.9 $ 928.5 $ 119.5 $ 125.1 $ 263.7 $ 175.2 $ 683.5 Items in losses (gains) and other expenses, net before taxes 2.7 - - - 2.7 0.1 2.2
Slide 17: Return on Invested Capital (ROIC)
RETURN ON INVESTED CAPITAL (ROIC) Q4 Q1 Q2 Q3 LTM Q4 Q1 Q2 Q3 LTM 2023 2024 2024 2024 2024 2022 2023 2023 2023 2023 Operating income, a GAAP Measure $ 185.3 $ 166.8 $ 320.1 $ 303.3 $ 975.5 $ 131.8 $ 139.5 $ 278.8 $ 186.8 $ 736.9 Restructuring Charges, before tax 2.9 - - - 2.9 0.3 - - 0.3 0.6 Items