Lennox International Reports Second Quarter Results
For the second quarter,
GAAP operating income was
"Significantly cooler temperatures and higher precipitation across
"Slower moving shipments in the industry due to adverse weather has slowed regaining market share following the tornado and extends our recovery timeline to include the fourth quarter," Bluedorn added. "For 2019 overall, we now expect
"Our Commercial business hit a new second-quarter high for revenue and set new records for segment profit and margin. Commercial revenue was up 4%, led by high-single digit growth in National Account equipment business. Segment profit rose 6% to a record
"For the company overall, we are updating 2019 guidance to adjusted revenue growth of 2-5% and adjusted EPS from continuing operations of
FINANCIAL HIGHLIGHTS
Revenue: On a GAAP and adjusted basis, second-quarter revenue was
Gross Profit: On a GAAP and adjusted basis, gross profit was
Income from Continuing Operations: On a GAAP basis, income from continuing operations for the second quarter was
Adjusted income from continuing operations in the second quarter was
Cash from Operations, Free Cash Flow and Total Debt: Net cash from operations in the second quarter was
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Revenue in the Residential Heating & Cooling business segment declined 4% to
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment was a second-quarter record
Refrigeration
Adjusted revenue in the Refrigeration business segment was
FULL-YEAR OUTLOOK
- Updating 2019 guidance for adjusted revenue growth from 3-7% to 2-5%.
- Updating guidance for GAAP EPS from continuing operations from
$12.65-$13.25 to$11.91-$12.51 . - Updating guidance for adjusted EPS from continuing operations from
$12.00-$12.60 to$11.30-$11.90 . - Reiterating guidance for corporate expenses of approximately
$90 million . - Reiterating guidance for an effective tax rate of 22-23% on an adjusted basis for the full year.
- Updating guidance for 2019 capital expenditures from approximately
$195 million to$155 million as$40 million of capital to fully reconstruct theIowa manufacturing facility damaged by the tornado moved from 2019 to 2020. - Updating guidance for free cash flow from approximately
$420 million to$390 million for the full year. - Reiterating guidance for stock repurchases of
$400 million in 2019.
A chart of the company's current view on the tornado financial impact and insurance recovery for 2018-2019 is posted on the company's website at www.lennoxinternational.com.
CONFERENCE CALL INFORMATION
A conference call to discuss the company's second-quarter results will be held this morning at
About
FORWARD-LOOKING STATEMENTS
The statements in this news release that are not historical statements, including statements regarding the 2019 full-year outlook, expected consolidated and segment financial results for 2019, the financial and operational impact of the tornado damage to LII's manufacturing facility in
Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
(Amounts in millions, except per share data) |
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Net sales |
$ |
1,099.1 |
$ |
1,175.4 |
$ |
1,889.4 |
$ |
2,010.2 |
||||||||
Cost of goods sold |
767.0 |
813.8 |
1,355.8 |
1,425.5 |
||||||||||||
Gross profit |
332.1 |
361.6 |
533.6 |
584.7 |
||||||||||||
Operating Expenses: |
||||||||||||||||
Selling, general and administrative expenses |
152.4 |
161.4 |
298.2 |
316.6 |
||||||||||||
Losses (gains) and other expenses, net |
2.1 |
0.2 |
3.2 |
7.5 |
||||||||||||
Restructuring charges |
(0.1) |
0.5 |
0.4 |
1.3 |
||||||||||||
Loss (gain) on sale of businesses and related property |
0.4 |
(22.1) |
8.8 |
(11.8) |
||||||||||||
Loss on assets held for sale |
— |
31.4 |
— |
31.4 |
||||||||||||
Insurance proceeds for lost profits |
(26.0) |
— |
(65.5) |
— |
||||||||||||
Gain from insurance recoveries, net of losses incurred |
(5.9) |
— |
(12.8) |
— |
||||||||||||
Income from equity method investments |
(4.6) |
(4.9) |
(7.2) |
(8.4) |
||||||||||||
Operating income |
213.8 |
195.1 |
308.5 |
248.1 |
||||||||||||
Pension settlement |
60.6 |
— |
60.6 |
— |
||||||||||||
Interest expense, net |
13.1 |
9.8 |
23.9 |
18.2 |
||||||||||||
Other expense (income), net |
0.3 |
0.8 |
1.2 |
1.4 |
||||||||||||
Income from continuing operations before income taxes |
139.8 |
184.5 |
222.8 |
228.5 |
||||||||||||
Provision for income taxes |
28.8 |
45.3 |
42.4 |
51.4 |
||||||||||||
Income from continuing operations |
111.0 |
139.2 |
180.4 |
177.1 |
||||||||||||
Discontinued Operations: |
||||||||||||||||
(Loss) income from discontinued operations before income taxes |
(0.3) |
0.4 |
(0.4) |
0.4 |
||||||||||||
Income tax expense |
— |
2.0 |
— |
2.0 |
||||||||||||
Loss from discontinued operations |
(0.3) |
(1.6) |
(0.4) |
(1.6) |
||||||||||||
Net income |
$ |
110.7 |
$ |
137.6 |
$ |
180.0 |
$ |
175.5 |
||||||||
Earnings per share – Basic: |
||||||||||||||||
Income from continuing operations |
$ |
2.84 |
$ |
3.42 |
$ |
4.58 |
$ |
4.31 |
||||||||
Loss from discontinued operations |
(0.01) |
(0.04) |
(0.01) |
(0.04) |
||||||||||||
Net income |
$ |
2.83 |
$ |
3.38 |
$ |
4.57 |
$ |
4.27 |
||||||||
Earnings per share – Diluted: |
||||||||||||||||
Income from continuing operations |
$ |
2.81 |
$ |
3.39 |
$ |
4.53 |
$ |
4.26 |
||||||||
Loss from discontinued operations |
(0.01) |
(0.04) |
(0.01) |
(0.04) |
||||||||||||
Net income |
$ |
2.80 |
$ |
3.35 |
$ |
4.52 |
$ |
4.22 |
||||||||
Weighted Average Number of Shares Outstanding - Basic |
39.1 |
40.7 |
39.4 |
41.1 |
||||||||||||
Weighted Average Number of Shares Outstanding - Diluted |
39.5 |
41.1 |
39.8 |
41.6 |
||||||||||||
|
|||||||||||||||
Adjusted Segment |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(Amounts in millions) |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Adjusted |
|||||||||||||||
Residential Heating & Cooling |
$ |
689.1 |
$ |
716.0 |
$ |
1,154.6 |
$ |
1,169.7 |
|||||||
Commercial Heating & Cooling |
261.3 |
252.1 |
434.7 |
431.2 |
|||||||||||
Refrigeration (1) |
148.7 |
145.5 |
265.8 |
264.7 |
|||||||||||
$ |
1,099.1 |
$ |
1,113.6 |
$ |
1,855.1 |
$ |
1,865.6 |
||||||||
Adjusted Segment Profit (Loss) (2) |
|||||||||||||||
Residential Heating & Cooling |
$ |
153.4 |
$ |
153.6 |
$ |
240.1 |
$ |
204.9 |
|||||||
Commercial Heating & Cooling |
53.9 |
50.8 |
68.9 |
72.8 |
|||||||||||
Refrigeration (1) |
19.1 |
23.6 |
28.5 |
35.2 |
|||||||||||
Corporate and other |
(24.1) |
(22.5) |
(36.2) |
(33.7) |
|||||||||||
Total adjusted segment profit |
202.3 |
205.5 |
301.3 |
279.2 |
|||||||||||
Reconciliation to Operating Income: |
|||||||||||||||
Special inventory write down |
— |
— |
— |
0.2 |
|||||||||||
Special product quality adjustment |
(0.5) |
— |
(0.5) |
— |
|||||||||||
Loss (gain) on sale of businesses |
0.4 |
(22.1) |
8.8 |
(11.8) |
|||||||||||
Loss on assets held for sale |
— |
31.4 |
— |
31.4 |
|||||||||||
Gain from insurance recoveries, net of losses incurred |
(5.9) |
— |
(12.8) |
— |
|||||||||||
Partial advance of insurance recoveries related to lost profits |
(8.0) |
— |
(8.0) |
— |
|||||||||||
Items in losses (gains) and other expenses, net that are excluded from segment profit (loss) (2) |
2.6 |
0.4 |
3.9 |
6.9 |
|||||||||||
Restructuring charges |
(0.1) |
0.5 |
0.4 |
1.3 |
|||||||||||
Operating loss from non-core businesses (1) |
— |
0.2 |
1.0 |
3.1 |
|||||||||||
Operating income |
$ |
213.8 |
$ |
195.1 |
$ |
308.5 |
$ |
248.1 |
(1) |
Excludes the non-core business results related to |
||
(2) |
We define segment profit (loss) as a segment's operating income included in the accompanying Consolidated Statements of Operations, excluding: |
||
• The following items in Losses (gains) and other expenses, net: |
|||
◦ Net change in unrealized losses (gains) on unsettled futures contracts, |
|||
◦ Special legal contingency charges, |
|||
◦ Asbestos-related litigation |
|||
◦ Environmental liabilities, |
|||
◦ Divestiture costs, |
|||
◦ Other items, net, |
|||
• Special inventory write down, |
|||
• Special product quality adjustment, |
|||
• Loss on sale of business, |
|||
• Loss on assets held for sale, |
|||
• Gain from insurance recoveries, net of losses incurred, |
|||
• Partial advance of insurance recoveries related to lost profits, and |
|||
• Restructuring charges. |
Consolidated Balance Sheets |
|||||||
(Amounts in millions, except shares and par values) |
As of 2019 |
As of |
|||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Current Assets: |
|||||||
Cash and cash equivalents |
$ |
36.4 |
$ |
46.3 |
|||
Short-term investments |
1.8 |
— |
|||||
Accounts and notes receivable, net of allowances of |
718.8 |
472.7 |
|||||
Inventories, net |
630.2 |
509.8 |
|||||
Other assets |
56.7 |
60.6 |
|||||
Total current assets |
1,443.9 |
1,089.4 |
|||||
Property, plant and equipment, net of accumulated depreciation of |
418.0 |
408.3 |
|||||
Right-of-use assets from operating leases |
166.2 |
— |
|||||
|
186.6 |
186.6 |
|||||
Deferred income taxes |
49.2 |
67.0 |
|||||
Other assets, net |
76.5 |
65.9 |
|||||
Total assets |
$ |
2,340.4 |
$ |
1,817.2 |
|||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|||||||
Current Liabilities: |
|||||||
Current maturities of long-term debt |
311.0 |
300.8 |
|||||
Current operating lease liabilities |
49.6 |
— |
|||||
Accounts payable |
473.6 |
433.3 |
|||||
Accrued expenses |
240.8 |
272.3 |
|||||
Income taxes payable |
— |
2.1 |
|||||
Total current liabilities |
1,075.0 |
1,008.5 |
|||||
Long-term debt |
1,155.8 |
740.5 |
|||||
Long-term operating lease liabilities |
117.6 |
— |
|||||
Pensions |
79.6 |
82.8 |
|||||
Other liabilities |
129.9 |
135.0 |
|||||
Total liabilities |
2,557.9 |
1,966.8 |
|||||
Commitments and contingencies |
|||||||
Stockholders' deficit: |
|||||||
Preferred stock, |
— |
— |
|||||
Common stock, |
0.9 |
0.9 |
|||||
Additional paid-in capital |
1,085.8 |
1,078.8 |
|||||
Retained earnings |
1,979.4 |
1,855.0 |
|||||
Accumulated other comprehensive loss |
(129.6) |
(188.8) |
|||||
|
(3,154.0) |
(2,895.5) |
|||||
Total stockholders' deficit |
(217.5) |
(149.6) |
|||||
Total liabilities and stockholders' deficit |
$ |
2,340.4 |
$ |
1,817.2 |
Consolidated Statements of Cash Flows (Unaudited) |
|||||||
(Amounts in millions) |
For the Six Months Ended |
||||||
2019 |
2018 |
||||||
Cash flows from operating activities: |
|||||||
Net income |
$ |
180.0 |
$ |
175.5 |
|||
Adjustments to reconcile net income to net cash used in operating activities: |
|||||||
Loss on sale of businesses |
8.8 |
12.0 |
|||||
Gain on sale of Australian Property |
— |
(23.8) |
|||||
Loss on |
— |
31.4 |
|||||
Gain from insurance recoveries, net of losses incurred |
(12.8) |
— |
|||||
Income from equity method investments |
(7.2) |
(8.4) |
|||||
Dividend from Affiliates |
2.0 |
2.2 |
|||||
Restructuring charges, net of cash paid |
(0.2) |
0.6 |
|||||
Provision for bad debts |
2.2 |
3.3 |
|||||
Unrealized losses on derivative contracts |
(0.2) |
1.3 |
|||||
Stock-based compensation expense |
11.4 |
13.6 |
|||||
Depreciation and amortization |
34.9 |
32.8 |
|||||
Deferred income taxes |
15.7 |
(6.2) |
|||||
Pension expense |
64.2 |
4.2 |
|||||
Pension contributions |
(1.0) |
(2.2) |
|||||
Other items, net |
(0.1) |
0.2 |
|||||
Changes in assets and liabilities, net of effects of divestitures: |
|||||||
Accounts and notes receivable |
(270.0) |
(272.1) |
|||||
Inventories |
(149.9) |
(115.5) |
|||||
Other current assets |
10.2 |
(2.2) |
|||||
Accounts payable |
52.6 |
109.2 |
|||||
Accrued expenses |
(21.0) |
3.2 |
|||||
Income taxes payable and receivable |
(11.5) |
15.1 |
|||||
Other |
(19.1) |
(9.2) |
|||||
Net cash used in operating activities |
(111.0) |
(35.0) |
|||||
Cash flows from investing activities: |
|||||||
Proceeds from the disposal of property, plant and equipment |
0.8 |
0.1 |
|||||
Purchases of property, plant and equipment |
(53.5) |
(43.4) |
|||||
Net proceeds from sale of businesses |
43.6 |
111.8 |
|||||
Purchases of short-term investments |
(1.8) |
— |
|||||
Insurance recoveries received for property damage incurred from natural disaster |
12.8 |
— |
|||||
Net cash provided by investing activities |
1.9 |
68.5 |
|||||
Cash flows from financing activities: |
|||||||
Short-term debt payments |
(2.1) |
(18.4) |
|||||
Short-term debt proceeds |
2.1 |
21.3 |
|||||
Asset securitization borrowings |
65.5 |
65.0 |
|||||
Asset securitization payments |
(43.5) |
(51.0) |
|||||
Long-term debt payments |
(33.3) |
(17.8) |
|||||
Borrowings from credit facility |
1,459.5 |
1,391.0 |
|||||
Payments on credit facility |
(1,037.5) |
(1,042.0) |
|||||
Proceeds from employee stock purchases |
1.6 |
1.2 |
|||||
Repurchases of common stock |
(250.0) |
(350.2) |
|||||
Repurchases of common stock to satisfy employee withholding tax obligations |
(14.5) |
(18.6) |
|||||
Cash dividends paid |
(50.8) |
(42.4) |
|||||
Net cash provided by (used in) financing activities |
97.0 |
(61.9) |
|||||
Decrease in cash and cash equivalents |
(12.1) |
(28.4) |
|||||
Effect of exchange rates on cash and cash equivalents |
2.2 |
(0.4) |
|||||
Cash and cash equivalents, beginning of period |
46.3 |
68.2 |
|||||
Cash and cash equivalents, end of period |
$ |
36.4 |
$ |
39.4 |
|||
Supplemental disclosures of cash flow information: |
|||||||
Interest paid |
$ |
23.5 |
$ |
18.3 |
|||
Income taxes paid (net of refunds) |
$ |
54.2 |
$ |
45.0 |
|||
Insurance recoveries received |
$ |
128.0 |
$ |
— |
|
|||||||||||||||||||
Reconciliation to |
|||||||||||||||||||
(Unaudited, in millions, except per share and ratio data) |
|||||||||||||||||||
Use of Non-GAAP Financial Measures |
|||||||||||||||||||
To supplement the Company's consolidated financial statements and segment net sales and profit presented in accordance with |
|||||||||||||||||||
Reconciliation of Income from Continuing Operations, a GAAP measure, to Adjusted Income from Continuing Operations, a Non-GAAP measure |
|||||||||||||||||||
For the Three Months Ended |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
2019 |
2018 |
||||||||||||||||||
Pre-Tax |
Tax |
After Tax |
Pre-Tax |
Tax |
After Tax |
||||||||||||||
Income from continuing operations, a GAAP measure |
$ |
139.8 |
$ |
(28.8) |
$ |
111.0 |
$ |
184.5 |
$ |
(45.3) |
$ |
139.2 |
|||||||
Restructuring charges |
(0.1) |
— |
(0.1) |
0.5 |
(0.1) |
0.4 |
|||||||||||||
Loss on assets held for sale |
— |
— |
— |
31.4 |
— |
31.4 |
|||||||||||||
Pension settlement |
60.6 |
(15.1) |
45.5 |
— |
— |
— |
|||||||||||||
Special product quality adjustments (b) |
(0.5) |
0.1 |
(0.4) |
— |
— |
— |
|||||||||||||
Special legal contingency charges (a) |
(0.1) |
— |
(0.1) |
1.5 |
(0.3) |
1.2 |
|||||||||||||
Asbestos-related litigation (a) |
0.4 |
(0.1) |
0.3 |
(0.2) |
0.2 |
— |
|||||||||||||
Net change in unrealized losses (gains) on unsettled future contracts (a) |
0.1 |
— |
0.1 |
0.1 |
— |
0.1 |
|||||||||||||
Environmental liabilities (a) |
1.3 |
(0.3) |
1.0 |
0.9 |
(0.3) |
0.6 |
|||||||||||||
Excess tax benefits from share-based compensation (c) |
— |
(1.0) |
(1.0) |
— |
(0.6) |
(0.6) |
|||||||||||||
Other tax items, net (c) |
— |
0.6 |
0.6 |
— |
(2.3) |
(2.3) |
|||||||||||||
(Gain) loss, net on sale of business and related property |
0.4 |
(0.1) |
0.3 |
(22.1) |
4.1 |
(18.0) |
|||||||||||||
Divestiture costs (a) (g) |
— |
— |
— |
(2.5) |
0.6 |
(1.9) |
|||||||||||||
Partial advance of insurance recoveries related to lost profits (h) |
(8.0) |
2.3 |
(5.7) |
— |
— |
— |
|||||||||||||
Gain from insurance recoveries, net of losses incurred |
(5.9) |
1.2 |
(4.7) |
— |
— |
— |
|||||||||||||
Other items, net (a) |
0.9 |
(0.1) |
0.8 |
0.6 |
(0.6) |
— |
|||||||||||||
Non-core business results (f) |
— |
— |
— |
0.7 |
(0.2) |
0.5 |
|||||||||||||
Adjusted income from continuing operations, a non-GAAP measure |
$ |
188.9 |
$ |
(41.3) |
$ |
147.6 |
$ |
195.4 |
$ |
(44.8) |
$ |
150.6 |
|||||||
Earnings per share from continuing operations - diluted, a GAAP measure |
$ |
2.81 |
$ |
3.39 |
|||||||||||||||
Restructuring charges |
— |
0.01 |
|||||||||||||||||
Loss on assets held for sale |
— |
0.77 |
|||||||||||||||||
Pension settlement |
1.14 |
— |
|||||||||||||||||
Special product quality adjustments (b) |
(0.01) |
— |
|||||||||||||||||
Special legal contingency charges (a) |
— |
0.03 |
|||||||||||||||||
Asbestos-related litigation (a) |
0.01 |
— |
|||||||||||||||||
Net change in unrealized losses (gains) on unsettled future contracts (a) |
— |
— |
|||||||||||||||||
Environmental liabilities (a) |
0.03 |
0.01 |
|||||||||||||||||
Excess tax benefits from share-based compensation (c) |
(0.03) |
(0.01) |
|||||||||||||||||
Other tax items, net (c) |
0.02 |
(0.05) |
|||||||||||||||||
(Gain) loss, net on sale of business and related property |
0.01 |
(0.44) |
|||||||||||||||||
Divestiture costs (a) (g) |
— |
(0.05) |
|||||||||||||||||
Partial advance of insurance recoveries related to lost profits (h) |
(0.14) |
— |
|||||||||||||||||
Gain from insurance recoveries, net of losses incurred |
(0.13) |
— |
|||||||||||||||||
Other items, net (a) |
0.02 |
— |
|||||||||||||||||
Non-core business results (f) |
— |
0.01 |
|||||||||||||||||
Change in share counts from share-based compensation (d) |
0.01 |
— |
|||||||||||||||||
Adjusted earnings per share from continuing operations - diluted, a non-GAAP measure |
$ |
3.74 |
$ |
3.67 |
(a) Recorded in Losses (Gains) and other expenses, net in the Consolidated Statements of Operations |
|||||||||||||||||||
(b) Recorded in Cost of goods sold in the Consolidated Statements of Operations |
|||||||||||||||||||
(c) Recorded in Provision for income taxes in the Consolidated Statements of Operations |
|||||||||||||||||||
(d) The impact of excess tax benefits from the change in share-based compensation also impacts the Company's diluted share counts. The reconciliation of average outstanding diluted shares on a GAAP and non-GAAP basis is included in this document. |
|||||||||||||||||||
(e) Tax impact based on the applicable tax rate relevant to the location and nature of the adjustment. |
|||||||||||||||||||
(f) Non-core business results represent activity related to the Company's business operations in |
|||||||||||||||||||
(g) Divestiture costs incurred in Q1 2018 related to the sales of the |
|||||||||||||||||||
(h) During the second quarter of 2019, the Company received a partial advance of |
For the Six Months Ended |
|||||||||||||||||||
(Unaudited) |
|||||||||||||||||||
2019 |
2018 |
||||||||||||||||||
Pre-Tax |
Tax Impact (e) |
After Tax |
Pre-Tax |
Tax Impact (e) |
After Tax |
||||||||||||||
Income from continuing operations, a GAAP measure |
$ |
222.8 |
$ |
(42.4) |
$ |
180.4 |
$ |
228.5 |
$ |
(51.4) |
$ |
177.1 |
|||||||
Restructuring charges |
0.4 |
(0.1) |
0.3 |
1.3 |
(0.3) |
1.0 |
|||||||||||||
Loss on assets held for sale |
— |
— |
— |
31.4 |
— |
31.4 |
|||||||||||||
Pension settlement |
60.6 |
(15.1) |
45.5 |
— |
— |
— |
|||||||||||||
Special product quality adjustments (b) |
(0.5) |
0.1 |
(0.4) |
— |
— |
— |
|||||||||||||
Special legal contingency charges (a) |
0.2 |
(0.1) |
0.1 |
1.7 |
(0.4) |
1.3 |
|||||||||||||
Asbestos-related litigation (a) |
1.8 |
(0.4) |
1.4 |
1.9 |
(0.4) |
1.5 |
|||||||||||||
Net change in unrealized losses (gains) on unsettled future contracts (a) |
(0.3) |
0.1 |
(0.2) |
1.3 |
(0.3) |
1.0 |
|||||||||||||
Inventory write down (b) |
— |
— |
— |
0.2 |
— |
0.2 |
|||||||||||||
Environmental liabilities (a) |
1.3 |
(0.3) |
1.0 |
1.2 |
(0.3) |
0.9 |
|||||||||||||
Excess tax benefits from share-based compensation (c) |
— |
(5.3) |
(5.3) |
— |
(4.9) |
(4.9) |
|||||||||||||
Other tax items, net (c) |
— |
0.6 |
0.6 |
— |
(3.2) |
(3.2) |
|||||||||||||
(Gain) loss, net on sale of business and related property |
8.8 |
(3.5) |
5.3 |
(11.8) |
4.1 |
(7.7) |
|||||||||||||
Partial advance of insurance recoveries related to lost profits (g) |
(8.0) |
2.3 |
(5.7) |
— |
— |
— |
|||||||||||||
Gain from insurance recoveries, net of losses incurred |
(12.8) |
2.9 |
(9.9) |
— |
— |
— |
|||||||||||||
Other items, net (a) |
0.9 |
(0.2) |
0.7 |
0.8 |
(0.6) |
0.2 |
|||||||||||||
Non-core business results (f) |
1.3 |
(0.3) |
1.0 |
4.0 |
(0.9) |
3.1 |
|||||||||||||
Adjusted income from continuing operations, a non-GAAP measure |
$ |
276.5 |
$ |
(61.7) |
$ |
214.8 |
$ |
260.5 |
$ |
(58.6) |
$ |
201.9 |
|||||||
Earnings per share from continuing operations - diluted, a GAAP measure |
$ |
4.53 |
$ |
4.26 |
|||||||||||||||
Restructuring charges |
0.01 |
0.03 |
|||||||||||||||||
Loss on assets held for sale |
— |
0.76 |
|||||||||||||||||
Pension settlement |
1.14 |
— |
|||||||||||||||||
Special product quality adjustments (b) |
(0.01) |
— |
|||||||||||||||||
Special legal contingency charges (a) |
— |
0.03 |
|||||||||||||||||
Asbestos-related litigation (a) |
0.04 |
0.04 |
|||||||||||||||||
Net change in unrealized losses (gains) on unsettled future contracts (a) |
(0.01) |
0.02 |
|||||||||||||||||
Inventory write down (b) |
— |
0.01 |
|||||||||||||||||
Environmental liabilities (a) |
0.03 |
0.02 |
|||||||||||||||||
Excess tax benefits from share-based compensation (c) |
(0.13) |
(0.12) |
|||||||||||||||||
Other tax items, net (c) |
0.02 |
(0.07) |
|||||||||||||||||
(Gain) loss, net on sale of business and related property |
0.13 |
(0.19) |
|||||||||||||||||
Partial advance of insurance recoveries related to lost profits (g) |
(0.14) |
— |
|||||||||||||||||
Gain from insurance recoveries, net of losses incurred |
(0.26) |
— |
|||||||||||||||||
Other items, net (a) |
0.02 |
— |
|||||||||||||||||
Non-core business results (f) |
0.03 |
0.07 |
|||||||||||||||||
Change in share counts from share-based compensation (d) |
0.01 |
0.01 |
|||||||||||||||||
Adjusted earnings per share from continuing operations - diluted, a non-GAAP measure |
$ |
5.41 |
$ |
4.87 |
(a) Recorded in Losses and other expenses, net in the Consolidated Statements of Operations |
|||||||||||||||||||
(b) Recorded in Cost of goods sold in the Consolidated Statements of Operations |
|||||||||||||||||||
(c) Recorded in Provision for income taxes in the Consolidated Statements of Operations |
|||||||||||||||||||
(d) The impact of excess tax benefits from the change in share-based compensation also impacts the Company's diluted share counts. The reconciliation of average outstanding diluted shares on a GAAP and non-GAAP basis is included in this document. |
|||||||||||||||||||
(e) Tax impact based on the applicable tax rate relevant to the location and nature of the adjustment. |
|||||||||||||||||||
(f) Non-core business results represent activity related to the Company's business operations in |
|||||||||||||||||||
(g) During the second quarter of 2019, the Company received a partial advance of |
For the Three Months Ended |
For the Six Months Ended |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Components of Losses (gains) and other expenses, net (pre-tax): |
|||||||||||||||
Realized losses (gains) on settled future contracts (a) |
$ |
0.1 |
$ |
(0.2) |
$ |
0.2 |
$ |
(0.7) |
|||||||
Foreign currency exchange (gains) losses (a) |
(0.2) |
(0.1) |
(0.7) |
1.2 |
|||||||||||
(Gain) loss on disposal of fixed assets (a) |
(0.4) |
0.1 |
(0.2) |
0.1 |
|||||||||||
Net change in unrealized losses (gains) on unsettled futures contracts (b) |
0.1 |
0.1 |
(0.3) |
1.3 |
|||||||||||
Special legal contingency charges (b) |
(0.1) |
1.5 |
0.2 |
1.7 |
|||||||||||
Asbestos-related litigation (b) |
0.4 |
(0.2) |
1.8 |
1.9 |
|||||||||||
Environmental liabilities (b) |
1.3 |
0.9 |
1.3 |
1.2 |
|||||||||||
Divestiture costs (b) (c) |
— |
(2.5) |
— |
— |
|||||||||||
Other items, net (b) |
0.9 |
0.6 |
0.9 |
0.8 |
|||||||||||
Losses (gains) and other expenses, net (pre-tax) |
$ |
2.1 |
$ |
0.2 |
$ |
3.2 |
$ |
7.5 |
(a) Included in both segment profit (loss) and Adjusted income from continuing operations |
(b) Excluded from both segment profit (loss) and Adjusted income from continuing operations |
(c) Divestiture costs incurred in Q1 2018 related to the sales of the |
Reconciliation of Earnings per Share from Continuing Operations - Diluted, a GAAP measure, to Estimated Adjusted Earnings per Share from Continuing Operations - Diluted, a Non-GAAP measure |
|||||||||||||||
For the Year Ended |
|||||||||||||||
Earnings per share from continuing operations - diluted, a GAAP measure |
|
||||||||||||||
Insurance recovery, net of other non-core EBIT charges, from tornado impact to damaged property and second quarter non-cash pension settlement charge |
0.61 |
||||||||||||||
Adjusted Earnings per share from continuing operations - diluted, a Non-GAAP measure |
|
||||||||||||||
Reconciliation of Average Shares Outstanding - Diluted, a GAAP measure, to Adjusted Average Shares Outstanding - Diluted, a Non-GAAP measure (shares in millions): |
|||||||||||||||
For the Three Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Average shares outstanding - diluted, a GAAP measure |
39.5 |
41.1 |
39.8 |
$ |
41.6 |
||||||||||
Impact on diluted shares from excess tax benefits from share-based compensation |
(0.1) |
(0.1) |
(0.1) |
(0.2) |
|||||||||||
Adjusted average shares outstanding - diluted, a Non-GAAP measure |
39.4 |
41.0 |
39.7 |
41.4 |
|||||||||||
Reconciliation of |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Three Months |
For the Three Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net sales, a GAAP measure |
$ |
148.7 |
$ |
207.3 |
$ |
1,099.1 |
$ |
1,175.4 |
|||||||
Net sales from non-core businesses (a)
|
— |
61.8 |
— |
61.8 |
|||||||||||
Adjusted net sales, a Non-GAAP measure |
$ |
148.7 |
$ |
145.5 |
$ |
1,099.1 |
$ |
1,113.6 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Six Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net sales, a GAAP measure |
$ |
300.1 |
$ |
409.3 |
$ |
1,889.4 |
$ |
2,010.2 |
|||||||
Net sales from non-core businesses (a)
|
34.3 |
144.6 |
34.3 |
144.6 |
|||||||||||
Adjusted net sales, a Non-GAAP measure |
$ |
265.8 |
$ |
264.7 |
$ |
1,855.1 |
$ |
1,865.6 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Reconciliation of Gross Profit, a GAAP measure, to Adjusted Gross Profit, a Non-GAAP measure (dollars in millions) |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Three Months |
For the Three Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Gross profit, a GAAP measure |
$ |
45.7 |
$ |
61.7 |
$ |
332.1 |
$ |
361.6 |
|||||||
Non-GAAP adjustments to gross profit |
— |
— |
0.5 |
— |
|||||||||||
Gross profit from non-core businesses (a) |
— |
10.3 |
— |
10.3 |
|||||||||||
Adjusted Gross profit, a Non-GAAP measure |
$ |
45.7 |
$ |
51.4 |
$ |
331.6 |
$ |
351.3 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Six Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Gross profit, a GAAP measure |
$ |
88.3 |
$ |
116.4 |
$ |
533.6 |
$ |
584.7 |
|||||||
Non-GAAP adjustments to gross profit |
— |
(0.2) |
0.5 |
(0.2) |
|||||||||||
Gross profit from non-core businesses (a) |
3.6 |
24.9 |
3.6 |
24.9 |
|||||||||||
Adjusted Gross profit, a Non-GAAP measure |
$ |
84.7 |
$ |
91.7 |
$ |
529.5 |
$ |
560.0 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Reconciliation of Segment Profit, a GAAP measure, to Adjusted Segment profit, a Non-GAAP measure (dollars in millions) |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Three Months |
For the Three Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Segment profit, a GAAP measure |
$ |
19.1 |
$ |
23.4 |
$ |
202.3 |
$ |
205.3 |
|||||||
Gross (loss) profit from non-core businesses (a) |
— |
(0.2) |
— |
(0.2) |
|||||||||||
Adjusted Segment profit, a Non-GAAP measure |
$ |
19.1 |
$ |
23.6 |
$ |
202.3 |
$ |
205.5 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Six Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Segment profit, a GAAP measure |
$ |
27.5 |
$ |
32.1 |
$ |
300.3 |
$ |
276.1 |
|||||||
Gross profit from non-core businesses (a) |
(1.0) |
(3.1) |
(1.0) |
(3.1) |
|||||||||||
Adjusted Segment profit, a Non-GAAP measure |
$ |
28.5 |
$ |
35.2 |
$ |
301.3 |
$ |
279.2 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Reconciliation of Selling, general and administrative expenses, a GAAP measure, to Adjusted Selling, general and administrative expenses, a Non-GAAP measure (dollars in millions) |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Three Months |
For the Three Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Selling, general and administrative expenses, a GAAP measure |
$ |
29.5 |
$ |
42.8 |
$ |
152.4 |
$ |
161.4 |
|||||||
Selling, general and administrative expenses from non-core businesses (a) |
— |
10.9 |
— |
10.9 |
|||||||||||
Adjusted Selling, general and administrative expenses, a Non-GAAP measure |
$ |
29.5 |
$ |
31.9 |
$ |
152.4 |
$ |
150.5 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Refrigeration Segment |
Consolidated |
||||||||||||||
For the Six Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Selling, general and administrative expenses, a GAAP measure |
$ |
65.9 |
$ |
92.0 |
$ |
298.2 |
$ |
316.6 |
|||||||
Selling, general and administrative expenses from non-core businesses (a) |
4.6 |
28.4 |
4.6 |
28.4 |
|||||||||||
Adjusted Selling, general and administrative expenses, a Non-GAAP measure |
$ |
61.3 |
$ |
63.6 |
$ |
293.6 |
$ |
288.2 |
|||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Reconciliation of |
|||||||||||||||
For the Three Months |
For the Six Months |
||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net cash used in operating activities, a GAAP measure |
$ |
30.0 |
$ |
48.5 |
$ |
(111.0) |
$ |
(35.0) |
|||||||
Purchases of property, plant and equipment |
(16.3) |
(20.7) |
(53.5) |
(43.4) |
|||||||||||
Proceeds from the disposal of property, plant and equipment |
0.5 |
— |
0.8 |
0.1 |
|||||||||||
Insurance recoveries received for property damage incurred from natural disaster |
5.9 |
— |
12.8 |
— |
|||||||||||
Free cash flow, a Non-GAAP measure |
20.1 |
27.8 |
(150.9) |
(78.3) |
|||||||||||
Calculation of Debt to EBITDA Ratio (dollars in millions): |
Trailing |
||||||||||||||
Adjusted EBIT (b)(a) |
$ |
565.4 |
|||||||||||||
Depreciation and amortization expense (c) |
69.8 |
||||||||||||||
EBITDA (b + c) |
$ |
635.2 |
|||||||||||||
Total debt at |
$ |
1,466.8 |
|||||||||||||
Total Debt to EBITDA ratio ((d / (b + c)) |
2.3 |
||||||||||||||
(a) Non-Core businesses represent the Company's business operations in |
|||||||||||||||
Reconciliation of Adjusted EBIT, a Non-GAAP measure, to Income From Continuing Operations Before Income Taxes, a GAAP measure (dollars in millions) |
|||||||||||||||
Trailing |
|||||||||||||||
Income from continuing operations before income taxes, a GAAP measure |
$ |
462.2 |
|||||||||||||
Items in Losses (gains) and other expenses, net that are excluded from segment profit |
7.8 |
||||||||||||||
Special product quality adjustments |
(0.5) |
||||||||||||||
Restructuring charges |
2.0 |
||||||||||||||
Interest expense, net |
44.1 |
||||||||||||||
Pension settlement |
61.0 |
||||||||||||||
Loss (gain), net on sale of businesses and related property |
17.0 |
||||||||||||||
Gain from insurance recoveries, net of losses incurred |
(23.8) |
||||||||||||||
Partial advance of insurance recoveries related to lost profits |
(8.0) |
||||||||||||||
Non-core business results (a) |
0.5 |
||||||||||||||
Other expense (income), net |
3.1 |
||||||||||||||
Adjusted EBIT per above, a Non-GAAP measure |
$ |
565.4 |
|||||||||||||
(a) Non-core businesses results represent activity related to the Company's business operations in |
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