Lennox Q1 Earnings Beat Estimates; Margin Contracts On Supply Chain Woes

Lennox International Inc LII reported first-quarter FY22 revenue growth of 9% year-on-year to $1.01 billion, beating the consensus of $961.61 million.
Revenue in the Residential Heating & Cooling business segment increased 13% Y/Y to $682 million, Commercial Heating & Cooling business declined 6% to $188 million, and the Refrigeration business jumped 15% to $144 million.
Adjusted EPS of $2.36 beat the analyst consensus of $2.04.
Gross profit rose 5% Y/Y to $268 million, and the margin contracted 110 basis points Y/Y to 26.5%.
Selling, general and administrative expenses rose 6.8% Y/Y to $155.3 million.
The operating margin for the quarter contracted 122 basis points to 11%.
Total segment profit fell 1% to $115 million, and the segment margin declined 110 basis points to 11.3%.
The company held $40 million in cash and equivalents as of March 31, 2022.
"In Commercial, demand remained strong, but the business continued to be hit the hardest on the production front with labor constraints and global supply chain disruptions," said interim CEO Todd Teske.
Outlook: Lennox raised FY22 sales growth guidance to 7% – 11% from 5% - 10%.
It reiterated the FY22 EPS outlook of $13.50 - $14.50 against the consensus of $14.09.
The company also reiterated stock repurchase guidance of $400 million for the full year.
Price Action: LII shares closed lower by 2.06% at $247.09 on Friday.

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