Lennox International(US:LII)2025-02-11 20:23Sales Performance - In 2024, net sales increased by 7% to $5,341 million compared to $4,982 million in 2023, driven by higher sales volumes and favorable pricing [145]. - The Home Comfort Solutions segment saw an 11% increase in net sales to $3,577.1 million, with segment profit rising by 25% to $759.7 million [155]. - The Building Climate Solutions segment experienced a 17% increase in net sales to $1,764.2 million, with segment profit increasing by 16% to $396.9 million [157]. - The company completed the sale of its European businesses in Q4 2023, which impacted sales by a 5% reduction in 2024 [145]. - Corporate and Other segment net sales decreased by $248 million in 2024, resulting in a total loss of $120.3 million, an increase of 28% compared to 2023 [159]. - Consolidated net sales increased by 6% in 2023 compared to 2022, driven by a favorable mix of 5% and favorable price of 5, partially offset by a 4% unfavorable sales volume [160]. - Home Comfort Solutions segment net sales increased by 1% in 2023, totaling $3,222.9 million, with a profit of $610.2 million, up 2% from 2022 [171]. - Building Climate Solutions segment net sales increased by 18% in 2023, reaching $1,511.4 million, with a profit of $340.8 million, a 109% increase compared to 2022 [173]. - The company reported net sales of $5,265.6 million for the year ended December 31, 2024, an increase from $4,626.8 million in 2023 [204]. Profitability - Gross profit margin improved by 210 basis points to 33.2% in 2024, up from 31.1% in 2023, primarily due to higher pricing and favorable mix [146]. - Operating income rose to $1,034.8 million in 2024, compared to $790.1 million in 2023, reflecting a significant increase in profitability [144]. - Net income for 2024 increased to $806.9 million, up from $590.1 million in 2023, resulting in diluted earnings per share of $22.54 [145]. - Gross profit for the year ended December 31, 2024, was $1,363.8 million, compared to $1,157.8 million in 2023 [204]. - Net income increased to $1,792.5 million in 2024 from $1,331.1 million in 2023 [204]. - Gross profit margins for 2023 increased by 390 basis points to 31.1% compared to 27.2% in 2022, with contributions from favorable pricing and lower commodity costs [160]. Cash Flow and Capital Management - Cash flow from operating activities was $946 million in 2024, an increase from $736 million in 2023, indicating improved operational efficiency [145]. - Net cash provided by operating activities increased by $210 million to $945.7 million in 2024, primarily due to a $217 million increase in net income [179]. - Capital expenditures were $164 million in 2024, down from $250 million in 2023, primarily related to manufacturing capacity expansion [180]. - The company expects capital expenditures of approximately $150 million in 2025 for general capital improvement projects [194]. - The company returned $160 million to shareholders through dividend payments in 2024 [145]. - Dividend payments increased to $160 million in 2024 from $153 million in 2023, with a 4.5% increase in quarterly dividends approved [192]. - The company repurchased $54 million in shares as part of its Share Repurchase Plans in 2024, compared to no repurchases in 2023 [181]. Debt and Financial Position - Total debt as of December 31, 2024, was $1,147.6 million, with $833.1 million classified as long-term debt [182]. - As of December 31, 2024, the company's debt-to-total-capital ratio decreased to 57% from 82% at December 31, 2023 [189]. - The company reported a decrease in net interest expense to $39 million in 2024 from $52 million in 2023, attributed to reduced borrowings [153]. - The company issued $500 million of senior unsecured notes in September 2023, maturing in September 2028, with a 5.50% interest rate [186]. - As of December 31, 2024, the company had cash and cash equivalents of $415 million, including $14 million held in foreign locations [191]. - The company maintained senior credit ratings of Baa2 with a positive outlook and BBB with a stable outlook from Moody's and S&P, respectively [190]. Accounting and Risk Management - The company has no off-balance sheet arrangements that may materially affect its financial condition [205]. - The company periodically reviews assumptions for product warranties and related contingencies, adjusting based on actual failure rates and cost experiences [220]. - Factors affecting actual failure rates include new product introductions, manufacturing changes, and supplier variations [220]. - The company may need to adjust liabilities and record expenses in future periods if actual costs differ from estimates [220]. - Recent accounting pronouncements may impact the company's financial statements and disclosures [221]. - Market risk disclosures are included under the "Market Risk" section in the financial statements [222]. Expenses - Selling, General and Administrative (SG&A) expenses rose by $78 million in 2023, increasing as a percentage of net sales from 13.3% to 14.2% [161].