Lennox International, Inc. (NYSE:LII) Q4 2017 Earnings Conference Call - Final Transcript

Feb 06, 2018 • 09:30 am ET


Lennox International, Inc. (NYSE:LII) Q4 2017 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to the Lennox International Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.

Steve L. Harrison

Good morning. Thank you for joining us for this review of Lennox International's financial performance for the fourth quarter and full-year 2017. I'm here today with Chairman and CEO, Todd Bluedorn; and CFO, Joe Reitmeier. Todd will review key points for the quarter and the year, and Joe will take you through the Company's financial performance and outlook. To give everyone time to ask questions during the Q&A, please limit yourself to a couple of questions or follow-ups and re-queue for any additional questions. In the earnings release we issued this morning we have included the necessary reconciliation of the non-GAAP financial measures that will be discussed to GAAP measures.

All comparisons mentioned today are against the prior-year period unless otherwise noted. You can find a direct link to the webcast of today's conference call on our website at www.lennoxinternational.com. The webcast will be archived on that site for replay. I would 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 risks and uncertainties that could cause actual results to differ materially from such statements.

For information concerning these risks 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 M. Bluedorn

Thanks, Steve. Good morning, everyone, and thanks for joining us. Let me start with a quick review of 2017 overall and then discuss some fourth quarter highlights and thoughts on 2018. Lennox International posted another record year in 2017 as the Company set new highs for revenue, operating margin and profit. Revenue was up 5% for the year to a record $3.84 billion. GAAP operating income rose 15% to a record $495 million. GAAP EPS from continuing operations was up 13% to a record $7.17. On an adjusted basis, total segment profit rose 10% to a record $515 million and total segment margin expanded 50 basis points to a new high of 13.4%. Adjusted EPS from continuing operations was up 14% to a record $7.92.

Our Residential business led the Company's performance in 2017 as it set new highs for revenue, segment margin and profit. Commercial hit new highs for revenue and margin and Refrigeration continued to show improvement with segment margin and profit up for the second consecutive year. Residential revenue and profit were up 7% for the full-year and segment margins ticked up 10 basis points to 17.5%. Revenue from replacement business was up mid single-digits and new construction was up mid-teens for the year.