Q2 2024 Lennox International Inc Earnings Call Transcript
Key Points
- Lennox International Inc (LII) achieved six consecutive quarters of double-digit EPS growth, demonstrating strong execution of their transformation plan.
- Core revenue grew by 8%, and adjusted segment margin expanded by 100 basis points to a record 21.9%, resulting in an 11% increase in adjusted earnings per share to $6.83.
- The company generated $184 million in operating cash flow, and their industry-leading ROIC grew to 44%.
- The joint venture with Samsung is expected to significantly enhance Lennox International Inc (LII)'s heat pump market share, leveraging Samsung's global reach and brand strength.
- Strong first-half results led to an increase in full-year EPS guidance, raising it to a range of $19.50 to $20.25.
- The new commercial factory in Saltillo, Mexico, is expected to cause second-half inefficiencies as it ramps up production.
- Wage inflation, new factory ramp-up costs, and investments in SG&A and distribution partially offset profit gains.
- The company anticipates temporary increases in working capital in the second half due to the ramp-up of the new factory and the transition to new low GWP products.
- Component cost inflation is expected to be up low-single digits, with anticipated increases in R410A refrigerant and commodity inflation.
- SG&A expenses are expected to increase due to inflationary pressures and investments, impacting overall profitability.
Welcome to the Lennox second-quarter 2024 earnings conference call. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the conference over to Chelsey Pulcheon from the Lennox Investor Relations team. Chelsey, please go ahead.
Thank you, Madison. Good morning, and thank you for joining us today. We are excited to share our 2024 second-quarter results. Joining me as CEO, Alok Maskara; and CFO, Michael Quenzer. Each will share their prepared remarks before we move to the Q&A session.
Turning to slide 2, a reminder that during today's call, we will be making certain forward-looking statements, which are subject to numerous risks and uncertainties as outlined on this page. We may also refer to certain non-GAAP financial measures that management considers relevant indicator of underlying business performance. Please refer to our SEC filings available on our Investor Relations website for additional details, including a reconciliation of all GAAP to
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