Lennox International, Inc. (NYSE:LII) Q4 2014 Earnings Conference Call - Final Transcript

Feb 02, 2015 • 09:30 am ET


Lennox International, Inc. (NYSE:LII) Q4 2014 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the Lennox International Fourth quarter Quarter 2014 Earnings Conference Call. At the request of your host, all lines are in a listen-only mode. There will be a question-and-answer session at the end of the presentation. As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.

Steve Harrison

Good morning. Thank you for joining us for this review of Lennox International's financial performance for the fourth quarter and full year 2014. I am here today with Chairman and CEO, Todd Bluedorn; and CFO, Joe Reitmeier. Todd will review key points for the quarter and year and Joe will take you through the company's financial performance and outlook.

Financial results in prior periods have been revised to reflect sold businesses and discontinued operations. In the earnings release we issued this morning, we have included the necessary reconciliation of the financial metrics that will be discussed to GAAP measures. You can find a direct link to the webcast of today's conference call on our website at www.lennoxinternational.com. We will archive the webcast on that site for replay.

I'd like to remind everyone that in the course of this call to give you a better understanding of our operations, we will be making certain forward-looking statements. These statements are subject to numerous risk and uncertainties that could cause actual results to differ materially from such statements. For information concerning these risk and uncertainties, see Lennox International's publicly available filings with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Now, let me turn the call over to Chairman and CEO, Todd Bluedorn.

Todd Bluedorn

Thanks, Steve good morning, and thank you for joining us. Lennox International's strong business momentum continued in 2014, with record margin and profit, revenue was up 5% and EBIT margin expanded 70 basis points to a record 10.1%. Adjusted EPS from continuing operations rose 18% to $4.38 and GAAP EPS from continuing operations rose 21% to $4.28.

Throughout 2014 revenue growth was led by our residential business followed by our commercial business. Both businesses set records for segment margin and profit for the year. And residential revenue was up 11% at constant currency and profit increased 31%, but the replacement and new construction business saw strong growth in 2014 and we capture price and realized improved mix.

Unidentified Speaker

In Commercial revenue is up 5% in constant currency. Profit was also up 5% in a year of significant investments for future growth including entrance in the VRF market as well as FX headwinds.

Commercial growth was led by strength in national account, equipment and service as loss from our continuing expansion in emergency replacement market. In North America, our high single digit shipment growth doubled the pace of the commercial unitary market. North America revenue was up high single-digits for