lii-20210331

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 March 31, 2021


☐			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 April 16, 2021, the number of shares outstanding of the registrant’s common stock, par value $0.01 per share, was 37,776,653.

LENNOX INTERNATIONAL INC.

FORM 10-Q

For the three months ended March 31, 2021

INDEX


		Page
Part I	Financial Information
	Item 1. Financial Statements
	Consolidated Balance Sheets - March 31, 2021 (Unaudited) and December 31, 2020	1
	Consolidated Statements of Operations (Unaudited) - Three Months Months Ended March 31, 2021 and 2020	2
	Consolidated Statements of Comprehensive Income (Unaudited) - Three Months Months Ended March 31, 2021 and 2020	3
	Consolidated Statements of Stockholders' Deficit (Unaudited) - Three Months Months Ended March 31, 2021 and 2020	4
	Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2021 and 2020	5
	Notes to Consolidated Financial Statements (Unaudited)	6
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4. Controls and Procedures	26
Part II	Other Information
	Item 1. Legal Proceedings	26
	Item 1A. Risk Factors	26
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 6. Exhibits	27

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 March 31, 2021		As of December 31, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	35.5	$	123.9
Short-term investments	4.5		5.1
Accounts and notes receivable, net of allowances of $9.2 and $9.6 in 2021 and 2020, respectively	522.6		448.3
Inventories, net	502.3		439.4

Other assets	73.3		70.9
Total current assets	1,138.2		1,087.6
Property, plant and equipment, net of accumulated depreciation of $891.6 and $880.6 in 2021 and 2020, respectively	466.4		464.3
Right-of-use assets from operating leases	190.7		194.4
Goodwill	186.7		186.9
Deferred income taxes	7.6		13.2
Other assets, net	85.4		86.1
Total assets	$	2,075.0	$	2,032.5

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:

Current maturities of long-term debt	$	165.0	$	9.9
Current operating lease liabilities	54.9		55.0
Accounts payable	372.9		340.3
Accrued expenses	254.5		296.1

Income taxes payable	1.8		—
Total current liabilities	849.1		701.3
Long-term debt	1,007.9		970.7
Long-term operating lease liabilities	138.5		142.8

Pensions	94.8		92.5
Other liabilities	145.4		142.3
Total liabilities	2,235.7		2,049.6
Commitments and contingencies
Stockholders' 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	1,090.3		1,113.2
Retained earnings	2,440.9		2,385.8
Accumulated other comprehensive loss	(99.2)		(97.2)
Treasury stock, at cost, 49,396,668 shares and 48,820,969 shares for 2021 and 2020, respectively	(3,593.6)		(3,419.8)
Total stockholders' deficit	(160.7)		(17.1)
Total liabilities and stockholders' deficit	$	2,075.0	$	2,032.5

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 March 31,
	2021		2020
Net sales	$	930.5	$	723.8
Cost of goods sold	674.0		558.1
Gross profit	256.5		165.7
Operating Expenses:
Selling, general and administrative expenses	145.3		131.1
Losses (gains) and other expenses, net	0.3		(1.0)
Restructuring charges	0.1		0.5


Loss from natural disasters, net of insurance recoveries	—		1.6
Income from equity method investments	(3.3)		(2.9)
Operating income	114.1		36.4
Pension settlement	0.7		—
Interest expense, net	6.0		8.7
Other expense (income), net	1.0		1.2
Income from continuing operations before income taxes	106.4		26.5
Provision for income taxes	22.2		14.0
Income from continuing operations	84.2		12.5
Discontinued Operations:
Loss from discontinued operations before income taxes	—		—
Income tax benefit	—		(0.4)
Income from discontinued operations	—		0.4
Net income	$	84.2	$	12.9

Earnings per share – Basic:
Income from continuing operations	$	2.22	$	0.33
Income from discontinued operations	—		0.01
Net income	$	2.22	$	0.34
Earnings per share – Diluted:
Income from continuing operations	$	2.20	$	0.32
Income from discontinued operations	—		0.01
Net income	$	2.20	$	0.33

Weighted Average Number of Shares Outstanding - Basic	38.0		38.4
Weighted Average Number of Shares Outstanding - Diluted	38.2		38.7

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

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)


(Amounts in millions)	For the Three Months Ended March 31,
	2021		2020
Net income	$	84.2	$	12.9
Other comprehensive income (loss):
Foreign currency translation adjustments	(2.5)		(20.3)

Net change in pension and post-retirement liabilities	(3.0)		(0.8)
Reclassification of pension and post-retirement benefit losses into earnings	2.2		1.5
Pension settlement	0.7		—

Net change in fair value of cash flow hedges	9.6		(14.6)
Reclassification of cash flow hedge (gains) losses into earnings	(4.4)		1.2
Other comprehensive income (loss) before taxes	2.6		(33.0)
Tax (expense) benefit	(4.6)		3.7
Other comprehensive income (loss), net of tax	(2.0)		(29.3)
Comprehensive income (loss)	$	82.2	$	(16.4)

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

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the three months ended March 31, 2021 and 2020 (Unaudited)

(In millions, except per share data)


	Common Stock Issued		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock at Cost			Total Stockholders' Deficit
(For the three months ended March 31, 2021)									Shares	Amount
Balance as of December 31, 2020	$	0.9	$	1,113.2	$	2,385.8	$	(97.2)	48.8	$	(3,419.8)	$	(17.1)

Net income	—		—		84.2		—		—	—		84.2
Dividends, $0.77 per share	—		—		(29.1)		—		—	—		(29.1)
Foreign currency translation adjustments	—		—		—		(2.5)		—	—		(2.5)
Pension and post-retirement liability changes, net of tax expense of $3.5	—		—		—		(3.6)		—	—		(3.6)

Stock-based compensation expense	—		8.5		—		—		—	—		8.5
Change in cash flow hedges, net of tax expense of $1.1	—		—		—		4.1		—	—		4.1
Treasury shares reissued for common stock	—		(1.4)		—		—		—	2.2		0.8
Treasury stock purchases	—		(30.0)		—		—		0.6	(176.0)		(

SEC Form 10-Q filed by Lennox International, Inc.