Lennox Reaches New High With Third Quarter Profit

Lennox International Inc. reported Monday that its third quarter earnings jumped 26 percent from the same period last year, thanks to strong growth in its home heating and cooling businesses.

The company, which sells heating, cooling, and refrigeration systems to homeowners and businesses, came out with a total revenue of $955 million, up 11 percent from the same period in 2014, according to its earnings conference call on October 19.

“The company is well-positioned for continued momentum in the fourth quarter,” Chairman and CEO Todd Bluedorn said.

Revenue from its commercial heating and cooling business generated $247 million, up 8 percent from 2014, while residential heating and cooling business segment climbed to $518 million, up 13 percent from the third quarter of 2014.

The company’s total profit margin — profitability ratio calculated as net income divided by revenue — expanded to a record 13.7 percent, contributed by home heating and cooling segment’s 17.4 percent.

“[Residential] Segment profit was positively impacted by higher volume, favorable price and mix, lower material costs and higher productivity,” said Joseph W. Reitmeier, CFO of Lennox.

The company also posted record-high earnings of $1.82 per share — beating analysts’ estimates of $1.79 per share, and surpassing last year’s $1.44 per share. Despite strong growth and margin expansion in the third quarter, Lennox downgraded its forecast for future earnings.

The heating and cooling equipment producer adjusted its estimates for annual earnings to a range of $5.25 to $5.40 per share, down from its previous estimate of $5.25 to $5.50 per share. Company executives cautioned that Lennox could face weakness in sales outside of the U.S. in coming quarters.

“Looking ahead, we expect more choppiness in international markets and are applying additional caution to our outlook in those regions,” Bluedorn said. “Given the uncertain retail sales environment this year we expect national account equipment business to continue to be soft in the fourth quarter.”

Lennox International Inc. has 175 stores across North America. The company expects 184 total stores by the end of 2015 and 250 locations by 2017. Its $450-million accelerated stock repurchase program, which the company rolled out in 2014, will be completed by the end of 2015, according to the earnings call.