lii-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

_________________________________________________

FORM 10-Q

_________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to ______

Commission file number 001-15149

_________________________________________________

LENNOX INTERNATIONAL INC.

Incorporated pursuant to the laws of the State of Delaware

_________________________________________________

Internal Revenue Service Employer Identification No. 42-0991521

2140 LAKE PARK BLVD., RICHARDSON, Texas, 75080

(972) 497-5000

_________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	LII	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 14, 2023, the number of shares outstanding of the registrant’s common stock, par value $0.01 per share, was 35,514,352.

LENNOX INTERNATIONAL INC.

FORM 10-Q

For the three and six months ended June 30, 2023

INDEX


		Page
Part I	Financial Information
	Item 1. Financial Statements
	Consolidated Balance Sheets - June 30, 2023 (Unaudited) and December 31, 2022	1
	Consolidated Statements of Operations (Unaudited) - Three and Six Months Ended June 30, 2023 and 2022	2
	Consolidated Statements of Comprehensive Income (Unaudited) - Three and Six Months Ended June 30, 2023 and 2022	3
	Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - Three and Six Months Ended June 30, 2023 and 2022	4
	Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2023 and 2022	6
	Notes to Consolidated Financial Statements (Unaudited)	7
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	20
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4. Controls and Procedures	29
Part II	Other Information
	Item 1. Legal Proceedings	29
	Item 1A. Risk Factors	30
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 5. Other Information	30
	Item 6. Exhibits	31

Part I - Financial Information

Item 1. Financial Statements

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Balance Sheets


(Amounts in millions, except shares and par values)	As of June 30, 2023		As of December 31, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	51.4	$	52.6
Short-term investments	7.2		8.5
Accounts and notes receivable, net of allowances of $17.0 and $15.5 in 2023 and 2022, respectively	843.6		608.5
Inventories, net	856.0		753.0

Other assets	68.6		73.9
Total current assets	1,826.8		1,496.5
Property, plant and equipment, net of accumulated depreciation of $953.4 and $920.8 in 2023 and 2022, respectively	608.5		548.9
Right-of-use assets from operating leases	214.2		219.9
Goodwill	186.4		186.3
Deferred income taxes	46.3		27.5
Other assets, net	99.1		88.5
Total assets	$	2,981.3	$	2,567.6

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:

Current maturities of long-term debt	$	761.3	$	710.6
Current operating lease liabilities	63.2		63.3
Accounts payable	470.1		427.3
Accrued expenses	425.5		376.9

Income taxes payable	21.8		17.6
Total current liabilities	1,741.9		1,595.7
Long-term debt	817.7		814.2
Long-term operating lease liabilities	159.6		161.8

Pensions	39.6		40.1
Other liabilities	159.9		158.9
Total liabilities	2,918.7		2,770.7
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock, $0.01 par value, 200,000,000 shares authorized, 87,170,197 shares issued	0.9		0.9
Additional paid-in capital	1,169.3		1,155.2
Retained earnings	3,309.0		3,070.6
Accumulated other comprehensive loss	(75.8)		(90.6)
Treasury stock, at cost, 51,658,951 shares and 51,700,260 shares for 2023 and 2022, respectively	(4,340.8)		(4,339.2)
Total stockholders' equity (deficit)	62.6		(203.1)
Total liabilities and stockholders' equity (deficit)	$	2,981.3	$	2,567.6

The accompanying notes are an integral part of these consolidated financial statements.

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)


(Amounts in millions, except per share data)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	1,411.4	$	1,366.3	$	2,460.7	$	2,379.7
Cost of goods sold	953.6		969.2		1,696.2		1,714.4
Gross profit	457.8		397.1		764.5		665.3
Operating Expenses:
Selling, general and administrative expenses	181.3		169.6		348.8		324.9
Losses (gains) and other expenses, net	0.8		1.6		1.1		2.0
Restructuring charges	—		0.5		—		1.0



Income from equity method investments	(3.1)		(1.5)		(3.8)		(1.4)
Operating income	278.8		226.9		418.4		338.8
Pension settlements	0.1		0.2		0.3		0.3
Interest expense, net	15.0		8.7		29.2		15.6
Other expense (income), net	—		0.7		—		1.2
Net income before income taxes	263.7		217.3		388.9		321.7
Provision for income taxes	46.5		40.1		73.7		60.9





Net income	$	217.2	$	177.2	$	315.2	$	260.8




Earnings per share – Basic:	$	6.12	$	4.97	$	8.88	$	7.25



Earnings per share – Diluted:	$	6.10	$	4.96	$	8.85	$	7.23

Weighted Average Number of Shares Outstanding - Basic	35.5		35.6		35.5		36.0

SEC Form 10-Q filed by Lennox International Inc.