Lennox International Inc. (LII) provided partial estimated results for the first quarter of 2004, which are still subject to review by the company's external auditors. The company expects revenue of about U.S. $670 million for the quarter, and anticipates a net loss for the first quarter caused by two charges relative to the Service Experts segment.
The loss is expected to be approximately $190 million after-tax in goodwill impairment, and a $17 million after-tax loss on the operations of approximately 47 Service Experts service centers being divested and accounted for as discontinued operations.
Heating & Cooling revenue is expected to be approximately $440 million for the first quarter. Both the Commercial and Residential Heating & Cooling segments are expected to outperform their markets for the first quarter. Industry data indicate that North American unit shipments of residential and commercial products were up approximately 7 percent in the first quarter.
The company expects revenue for its Residential Heating & Cooling segment to be about $330 million for the quarter. As the cooling season begins, the market for residential equipment has been solid, including sustained new construction demand.
Revenue in the Commercial Heating & Cooling segment is expected to be about $110 million. LII commented that demand is increasing in its commercial end markets.
The company anticipates its Refrigeration segment will post a solid performance for the first quarter. Refrigeration segment revenue is expected to be approximately $110 million.
In the company's Service Experts business, revenue for continuing operations is expected to be approximately $140 million for the first quarter. LII continues to move aggressively on the turnaround plan announced on April 5. "We are proceeding with the previously announced divestitures and turnaround plan to make Service Experts a contributor to LII's profitability," said Bob Schjerven, CEO.
The company indicated it remains comfortable with previously issued guidance for 2004 diluted earnings per share to be in the range of $1.38 to $1.48 from continuing operations and before goodwill impairment charges, or a loss per share of $1.60 to $1.70 after goodwill impairment charges.
According to the company, LII's ability to achieve the results will depend on a continuation of the solid start to the year, its ability to offset rising metals prices with pricing actions and cost saving measures, and by the typical business factors in the company's industry that may affect operations, including general economic conditions and weather patterns.
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