Lennox International(US:LII)2024-07-24 18:45Part I - Financial Information Item 1. Financial Statements Q2 2024 financial statements show growth in assets, equity, net sales, net income, and operating cash flow Consolidated Balance Sheet Highlights (as of June 30, 2024 vs. Dec 31, 2023) | Account | June 30, 2024 (M) | Dec 31, 2023 (M) | Change (M) | | :--- | :--- | :--- | :--- | | Total current assets | $1,765.3 | $1,433.5 | +$331.8 | | Total assets | $3,221.9 | $2,798.3 | +$423.6 | | Total current liabilities | $1,104.5 | $1,014.6 | +$89.9 | | Total liabilities | $2,644.5 | $2,513.0 | +$131.5 | | Total stockholders' equity | $577.4 | $285.3 | +$292.1 | Consolidated Statement of Operations Highlights | Metric (in millions, except EPS) | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,451.1 | $1,411.4 | $2,498.2 | $2,460.7 | | Gross profit | $488.2 | $457.8 | $828.2 | $764.5 | | Operating income | $320.1 | $278.8 | $486.9 | $418.4 | | Net income | $245.9 | $217.2 | $370.2 | $315.2 | | Diluted EPS | $6.87 | $6.10 | $10.34 | $8.85 | Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $161.2 | $116.7 | | Net cash used in investing activities | $(57.2) | $(82.3) | | Net cash used in financing activities | $(118.3) | $(33.8) | | Cash and cash equivalents, end of period | $47.6 | $51.4 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong Q2 2024 financial performance, highlighting sales growth, margin expansion, and improved liquidity Financial Overview and Results of Operations Q2 2024 consolidated net sales and gross profit margin improved, driven by pricing, volume, and acquisition contributions Q2 2024 vs Q2 2023 Consolidated Results (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,451.1 | $1,411.4 | 2.8% | | Gross profit | $488.2 | $457.8 | 6.6% | | Operating income | $320.1 | $278.8 | 14.8% | - Q2 2024 net sales increase was driven by favorable price (+3%), higher sales volumes (+3%), and the AES acquisition (+2%), partially offset by the European business divestiture (-5%)91 Q2 2024 Segment Performance (in millions) | Segment | Net Sales | % Change YoY | Profit | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Home Comfort Solutions | $982.3 | 5% | $228.5 | 13% | | Building Climate Solutions | $468.8 | 15% | $114.0 | 11% | - Year-to-date gross profit margin increased by 210 bps to 33.2% compared to 31.1% in the prior year, primarily due to favorable pricing105 Liquidity and Capital Resources The company maintains strong liquidity, with improved debt-to-capital ratio and sufficient capacity for operational and strategic needs - Net cash provided by operating activities for the first six months of 2024 was $161.2 million, up from $116.7 million in the same period of 2023, reflecting higher net income and changes in working capital119 - The company's debt-to-total-capital ratio decreased to 69% as of June 30, 2024, from 82% as of December 31, 2023127 - As of June 30, 2024, the company had $147.0 million in outstanding commercial paper and no outstanding borrowings under its $1.1 billion revolving credit facility, with $951.3 million available for future borrowings123124 - The company returned $78 million to shareholders through dividend payments in the first six months of 2024121 Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk exposure, including commodity, interest rate, and foreign currency, remains materially unchanged since December 31, 2023 - There have been no material changes in the company's exposure to market risk since the fiscal year ended December 31, 2023136 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2024, with no material changes to internal financial reporting controls - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective137 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls138 Part II - Other Information Item 1. Legal Proceedings The company is involved in various claims and lawsuits, which management believes will not materially affect its financial position - Management opines that none of the ongoing claims or lawsuits will have a material adverse effect on the company's financial condition, results of operations, or cash flows139 Item 1A. Risk Factors No material changes to risk factors have occurred since those disclosed in the Annual Report on Form 10-K for December 31, 2023 - No material changes to risk factors have occurred since those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023140 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock in Q2 2024, with $546 million remaining available under its share repurchase plans - The company did not repurchase any of its common stock in the second quarter of 2024141 - As of June 30, 2024, $546 million was available for repurchase under the company's Share Repurchase Plans44 Item 5. Other Information No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the second quarter of 2024 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the second quarter of 2024142 Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL data