Lennox International, Inc. (NYSE:LII) Q3 2019 Earnings Conference Call - Final Transcript
Oct 21, 2019 • 09:30 am ET
Todd M. Bluedorn
margin expanded 140 basis points to a third quarter record, up 17%. Adjusted EPS from continuing operations was up 26% to a third quarter record $3.34. In our Residential business revenue hit a new third quarter high of $638 million. Revenue was up 7% from the third quarter a year ago and which a tornado damaged a major manufacturing facility and disrupted our high-end business.
Revenue from the replacement business was up high-single digits, and revenue from new construction is up mid-single digits. Residential segment margin expanded 80 basis points to a third quarter record 19.8% and segment profit rose 12% to a third quarter record of $127 million. Residential business in the third quarter continue to face adverse weather conditions with cooler weather than last year in key swing regions and for the U.S. overall. This was a significant headwind to residential performance from the cooler and winter [Phonetic] weather of the second quarter.
Residential revenue was negatively impacted $23 million or 4% from business not recovered following the tornado. Segment profit was negatively impacted $12 million, offset by $16 million of insurance recovery for lost profits. The net $4 million benefit to segment profit was $3 million below our guidance. For the full year of 2019 we continue to expect $99 million of negative tornado impact to Residential revenue, a negative $54 million impact to segment profit, and insurance recovery for lost profits of $94 million. The resulting $40 million of net benefit to Residential segment profit in 2019 is unchanged.
For the fourth quarter we continue to expect an impact of approximately $14 million to revenue. We expect an $8 million negative impact on segment profit, offset by approximately $20 million of insurance recovery for lost profits, for net benefit to segment profit of $12 million in the quarter.
Taking a step back and looking at the big picture for both core and non-core related to the tornado, we continue to expect total insurance proceeds of approximately $372 million. We have received $262 million of that as of the end of third quarter, and we are working towards receiving a remainder by the end of 2019. The 2019 non-core gain expected for the difference in book value and replacement value of assets remains approximately $91 million or a benefit of approximately $1.73 per share to GAAP EPS. A tornado financial chart is posted on the front page of the Company website summarizing the guidance I just discussed.
Turning to Commercial in the third quarter, revenue was up 7% to $253 million. Commercial profit was up 5% to $47 million and segment margin was down 30 basis points to 18.6%. Commercial revenue in the third quarter was led by double-digit growth in National Account equipment business. We want 13 new National Account customers in the quarter across medical, fitness, entertainment, education, hospitality and retail end markets. Regional and local equipment revenue was up mid-single digits.
Breaking out the business in another way, commercial new construction revenue was up