Yahoo Finance Lennox International Inc (LII) (Q1 2024) Earnings Call Transcript Highlights: Strong ...
Core Revenue Growth: 6% increase
Adjusted Segment Margin: Expanded by 157 basis points to 15.9%
Adjusted Earnings Per Share: Increased 23% to $3.47
Operating Cash Usage: Improved to $23 million from $79 million in the prior year
Home Comfort Solutions Revenue: Slight decline
EBIT Growth: Moderate increase in Home Comfort Solutions
Building Climate Solutions Margin: Record Q1 margins with both revenue and profit growth
Fiscal Guidance: Updated earnings per share range for the year
Low GWP Product Transition: Prepared for upcoming regulatory changes with a planned price increase of over 10%
Geographical Coverage: Over 250 outlets and more than 25 regional distribution centers
Digital Sales: Nearly 45% of residential sales through lennoxpros.com
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Alok, could you specify the areas to focus on this year for early signs of progress in strengthening the distribution network, and can you quantify the investments behind these efforts? A: Alok Maskara, CEO, President & Director of Lennox International Inc., noted that investments are already reflected in the Q1 SG&A and are included in the guidance. He highlighted focusing on fulfillment rate and net promoter score as early indicators of market share gain. Additionally, pricing excellence is embedded in the numbers, providing a clear area to monitor progress.
Q: Michael, could you clarify the raised EPS guidance midpoint and the assumptions regarding corporate expense? A: Michael P. Quenzer, Executive VP & CFO of Lennox International Inc., explained that the seasonality from a revenue perspective remains about 50% for each half of the year. He detailed that previously categorized noncore adjustments are now included in adjusted earnings to improve the quality of earnings reported.
Q: Alok, can you discuss the negative mix in residential and the outlook for repair versus replace dynamics? A: Alok Maskara responded that the negative mix refers to the subdued residential new construction returning, which is lower margin compared to replacement. Regarding repair versus replace, he noted that there hasn't been a significant change, but it remains a potential concern depending on consumer health.
Q: Regarding the refrigerant transition pricing, has there been any change in the expected price increase? A: Alok Maskara clarified that there has been no change in the expected price increase for the new low GWP refrigerant product, which remains at about 10% for the upcoming year, following a previously stated total increase of about 15% over two years.
Q: Can you provide insights into the expected market adoption of the new low GWP product in 2025 and the pricing strategy for both residential and commercial segments? A: Michael P. Quenzer, CFO, mentioned that the adoption of the new low GWP product is expected to be about 50% to 65% in 2025, with pricing likely to be similar in both residential and commercial segments, potentially above 10%.
Q: What are the expectations for residential volumes and the impact of destocking ending? A: Alok Maskara indicated that residential volumes are expected to be up low single digits for the rest of the year, with destocking effects concluding, which should positively impact the volumes moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
