Company Announcements

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

(Amounts in millions, except per share data)

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2024

2023

2024

2023

Net sales

$        1,345.0

$        1,154.8

$        5,341.3

$        4,981.9

Cost of goods sold

889.7

800.0

3,569.4

3,434.1

Gross profit

455.3

354.8

1,771.9

1,547.8

Operating Expenses:

Selling, general and administrative expenses

207.0

177.8

730.6

705.5

Losses and other expenses, net

2.4

3.4

12.9

8.5

Restructuring charges

—

2.9

—

3.1

Loss (gain) on sale from previous dispositions

3.1

(14.1)

1.5

(14.1)

Impairment on assets held for sale

—

—

—

63.2

Income from equity method investments

(1.8)

(0.5)

(7.9)

(8.5)

Operating income

244.6

185.3

1,034.8

790.1

Pension settlements

—

0.2

0.4

0.8

Interest expense, net

5.5

11.3

38.7

51.7

Other expense (income), net

0.4

0.4

1.9

0.1

Income before income taxes

238.7

173.4

993.8

737.5

Provision for income taxes

41.0

28.9

186.9

147.4

Net income

$            197.7

$            144.5

$            806.9

$            590.1

Earnings per share – Basic:

$              5.55

$              4.07

$            22.67

$            16.61

Earnings per share – Diluted:

$              5.52

$              4.04

$            22.54

$            16.54

Weighted Average Number of Shares Outstanding - Basic

35.6

35.6

35.6

35.5

Weighted Average Number of Shares Outstanding - Diluted

35.8

35.8

35.8

35.7

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Segment Net Sales and Profit (Loss)

(Unaudited)

(Amounts in millions)

For the Three Months
Ended December 31,

For the Years Ended
December 31,

2024

2023

2024

2023

Net Sales

Home Comfort Solutions

$       887.4

$       709.4

$    3,577.1

$    3,222.9

Building Climate Solutions

457.6

390.0

1,764.2

1,511.4

Corporate and other ⁽¹⁾

—

55.4

—

247.6

Total segment sales

$    1,345.0

$    1,154.8

$    5,341.3

$    4,981.9

Segment Profit (Loss) ⁽²⁾

Home Comfort Solutions

$       192.6

$       115.0

$       759.7

$       610.2

Building Climate Solutions

98.8

90.5

396.9

340.8

Corporate and other

(43.7)

(28.7)

(120.3)

(93.9)

Total segment profit

247.7

176.8

1,036.3

857.1

Reconciliation to Operating income:

Loss (gain) on sale from previous dispositions

3.1

(14.1)

1.5

(14.1)

Impairment of net assets held for sale

—

—

—

63.2

Items in Losses and other expenses, net which are excluded from segment profit (loss) ⁽²⁾

—

2.7

—

14.8

Restructuring charges

—

2.9

—

3.1

Operating income

$       244.6

$       185.3

$    1,034.8

$       790.1

⁽¹⁾

The Corporate and Other segment included our European portfolio. In the fourth quarter of 2023 we completed the divestiture of our European operations.

⁽²⁾

We define segment profit (loss) as a segment's operating income (loss) included in the accompanying Consolidated Statements of Operations, excluding:

•  The following items in Losses and other expenses, net:

◦  Net change in unrealized losses (gains) on unsettled futures contracts,

◦  Environmental liabilities and special litigation charges, and;

◦  Other items, net

•  Restructuring charges,

•  Impairment on assets held for sale, and;

•  Loss (Gain) on sale of previous dispositions

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

(Amounts in millions, except shares and par values)

As of December 31, 2024

As of December 31, 2023

ASSETS

Current Assets:

Cash and cash equivalents

$                                 415.1

$                                  60.7

Short-term investments

7.2

8.4

Accounts and notes receivable, net of allowances of $17.8 and $14.4 in 2024 and 2023, respectively

661.1

594.6

Inventories, net

704.8

699.1

Other assets

96.0

70.7

Total current assets

1,884.2

1,433.5

Property, plant and equipment, net of accumulated depreciation of $956.8 and $910.8 in 2024 and 2023, respectively

800.1

720.4

Right-of-use assets from operating leases

327.2

213.6

Goodwill

220.0

222.1

Deferred income taxes

75.1

51.8

Other assets, net

165.2

156.9

Total assets

$                              3,471.8

$                             2,798.3

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$                                 490.0

$                                374.7

Accrued expenses

435.4

416.1

Income taxes payable

—

4.2

Commercial paper

—

150.0

Current maturities of long-term debt

314.5

12.1

Current operating lease liabilities

73.4

57.5

Total current liabilities

1,313.3

1,014.6

Long-term debt

833.1

1,143.1

Long-term operating lease liabilities

267.6

164.6

Pensions

18.9

22.5

Other liabilities

188.7

168.2

Total liabilities

2,621.6

2,513.0

Commitments and contingencies

Stockholders' equity:

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

1,213.3

1,184.6

Retained earnings

4,150.8

3,506.2

Accumulated other comprehensive loss

(93.7)

(56.9)

Treasury stock, at cost, 51,573,986 shares and 51,588,103 shares for 2024 and 2023, respectively

(4,421.1)

(4,349.5)

Total stockholders' equity

850.2

285.3

Total liabilities and stockholders' equity

$                              3,471.8

$                             2,798.3

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in millions)

For the Years Ended December 31,

2024

2023

Cash flows from operating activities:

Net income

$                       806.9

$                     590.1

Adjustments to reconcile net income to net cash provided by operating activities:

Loss (gain) on sale from previous dispositions

1.5

(14.1)

Income from equity method investments

(7.9)

(8.5)

Dividends from affiliates

3.0

0.5

Impairment on assets held for sale

—

63.2

Restructuring charges, net of cash paid

—

2.6

Provision for credit losses

8.0

9.8

Unrealized (gains) losses, net on derivative contracts

(2.3)

6.0

Stock-based compensation expense

28.5

30.1

Depreciation and amortization

95.1

86.0

Deferred income taxes

(24.5)

(26.0)

Pension expense

4.2

3.2

Pension contributions

(9.3)

(15.0)

Other items, net

—

(0.5)

Changes in assets and liabilities, net of effects of acquisitions and divestitures:

Accounts and notes receivable

(80.4)

(32.7)

Inventories

(10.1)

11.1

Other current assets

(8.3)

7.1

Accounts payable

115.0

(29.2)

Accrued expenses

30.4

65.0

Income taxes payable and receivable, net

(21.9)

(24.1)

Leases, net

5.5

3.1

Other, net

12.3

8.5

Net cash provided by operating activities

945.7

736.2

Cash flows from investing activities:

Proceeds from the disposal of property, plant and equipment

2.5

2.1

Purchases of property, plant and equipment

(163.6)

(250.2)

Net proceeds from previous disposition

(7.7)

23.2

Acquisitions, net of cash

1.8

(94.9)

(Purchases of) proceeds from investments

(7.4)

0.1

Net cash used in investing activities

(174.4)

(319.7)

Cash flows from financing activities:

Commercial paper borrowings

424.1

150.0

Commercial paper payments

(574.1)

—

Borrowings from debt arrangements

156.7

1,911.0

Payments on debt arrangements

(194.3)

(2,797.4)

Issuance of senior unsecured notes

—

500.0

Payments of deferred financing costs

—

(5.4)

Proceeds from employee stock purchases

4.5

3.9

Repurchases of common stock

(53.6)

—

Repurchases of common stock to satisfy employee withholding tax obligations

(21.6)

(14.9)

Cash dividends paid

(160.3)

(153.4)

Net cash used in financing activities

(418.6)

(406.2)

Increase in cash and cash equivalents

352.7

10.3

Effect of exchange rates on cash and cash equivalents

1.7

(2.2)

Cash and cash equivalents, beginning of period

60.7

52.6

Cash and cash equivalents, end of period

$                       415.1

$                       60.7

Supplemental disclosures of cash flow information:

Interest paid

$                         45.2

$                       50.2

Income taxes paid (net of refunds)

$                       231.9

$                     197.8

LENNOX INTERNATIONAL INC. AND SUBSIDIARIES

Reconciliation to U.S. GAAP (Generally Accepted Accounting Principles) Measures

(Unaudited, in millions, except per share and ratio data)

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements and segment net sales and profit (loss) presented in accordance with U.S. GAAP, additional non-GAAP financial measures are provided and reconciled in the following tables. The Company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results and enhance the ability of investors to analyze the Company's business trends and operating performance.

In our reconciliation of Net Income, a GAAP measure, to Adjusted net income, a Non-GAAP measure, certain items are no longer excluded from GAAP net income for the periods related to 2024 in the table presented below.

Reconciliation of Net income, a GAAP measure, to Adjusted net income, a Non-GAAP measure

For the Three Months Ended December 31,

For the Years Ended December 31,

2024

2023

2024

2023

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Amount
after tax

Per
Diluted
Share

Net income, a GAAP measure

$  197.7

$  5.52

$   144.5

$    4.04

$  806.9

$ 22.54

$ 590.1

$  16.54

Restructuring charges

—

—

2.2

0.06

—

—

2.4

0.07

Loss (gain) on sale from previous dispositions

3.1

0.08

(11.1)

(0.31)

1.5

0.04

(11.1)

(0.31)

Pension settlements

—

—

—

—

—

—

0.3

0.01

Items in Losses and other expenses, net which are excluded
from segment profit (loss) (a)

—

—

1.5

0.05

—

—

11.1

0.31

Excess tax benefit from share-based compensation (b)

—

—

(2.8)

(0.08)

—

—

(5.2)

(0.15)

Other tax items, net (b)

—

(4.1)

(0.11)

—

—

(3.7)

(0.10)

Impairment on assets held for sale (c)

—

—

—

—

—

—

62.0

1.74

Non-core business results (d)

—

—

(0.6)

(0.02)

—

—

(5.4)

(0.15)

Adjusted net income, a non-GAAP measure

$   200.8

$   5.60

$    129.6

$     3.63

$  808.4

$ 22.58

$  640.5

$          17.96

(a) Recorded in Losses and other expenses, net in the Consolidated Statements of Operations

(b) Recorded in Provision for income taxes in the Consolidated Statements of Operations

(c) Impairment on assets held for sale relate to the divestiture of our European operations that was completed in the fourth quarter of 2023.

(d) Non-core business results represent activity related to our business operations in Europe not included elsewhere in the reconciliations.

Reconciliation of Net Cash Provided by Operating Activities, a GAAP measure, to Free Cash Flow, a Non-GAAP measure

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2024

2023

2024

2023

Net cash provided by operating activities

$        332.4

$        306.3

$        945.7

$        736.2

Purchases of property, plant and equipment

(60.2)

(125.2)

(163.6)

(250.2)

Proceeds from the disposal of property, plant and equipment

0.6

0.5

2.5

2.1

Free cash flow, a Non-GAAP measure

$        272.8

$        181.6

$        784.6

$        488.1

Reconciliation of Net sales, a GAAP measure to Core net sales, a Non-GAAP measure

For the Three Months Ended December 31,

Corporate and Other

Consolidated

2023

2023

Net sales, a GAAP measure

$                                     55.4

$                                1,154.8

Net sales from non-core businesses (a)

(55.4)

(55.4)

Core net sales, a Non-GAAP measure

$                                        —

$                                1,099.4

(a) Non-Core businesses represent our business operations in Europe, which were sold in the fourth quarter of 2023.

Reconciliation of Net sales, a GAAP measure to Core net sales, a Non-GAAP measure

For the Years Ended December 31,

Corporate and Other

Consolidated

2023

2023

Net sales, a GAAP measure

$                                   247.6

$                                4,981.9

Net sales from non-core businesses (a)

(247.6)

(247.6)

Core net sales, a Non-GAAP measure

$                                        —

$                                4,734.3

(a) Non-Core businesses represent our business operations in Europe, which were sold in the fourth quarter of 2023.

Reconciliation of Segment profit (loss), a Non-GAAP measure to Adjusted Segment profit (loss), a Non-GAAP measure

For the Three Months Ended December 31,

Corporate and Other

Consolidated

2023

2023

Segment profit (loss), a Non-GAAP measure

$                                   (28.7)

$                                   176.8

Profit from non-core businesses (a)

1.6

1.6

Adjusted Segment profit (loss), a Non-GAAP measure

$                                   (30.3)

$                                   175.2

(a) Non-Core businesses represent our business operations in Europe, which were sold in the fourth quarter of 2023.

Reconciliation of Segment profit, a Non-GAAP measure to Adjusted Segment profit, a Non-GAAP measure

For the Years Ended December 31,

Corporate and Other

Consolidated

2023

2023

Segment profit (loss), a Non-GAAP measure

$                                   (93.9)

$                                   857.1

Profit from non-core businesses (a)

7.6

7.6

Adjusted Segment profit (loss), a Non-GAAP measure

$                                 (101.5)

$                                   849.5

(a) Non-Core businesses represent our business operations in Europe, which were sold in the fourth quarter of 2023.