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Lennox Reports Record Q4, Full-Year Results
Feb 21, 2006
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HVAC manufacturer Lennox International Inc. announced sales for the full-year of 2005 increased 13 percent to a record U.S. $3.4 billion, with all company business segments contributing to the growth. The company reported record net income of $151 million, or $2.11 per diluted share. Fourth quarter sales increased 17 percent to $871 million and net income was $42 million, or $0.55 per share.

"2005 was a record-breaking year for Lennox International," said Bob Schjerven, CEO. "Supported by enhanced operational efficiencies, improved pricing, favorable weather patterns, and sustained strength in the residential new construction market, Lennox set several key performance records for the year."

In the fourth quarter, Lennox reported revenue in its Residential Heating & Cooling segment increased 33 percent to $443 million. While market demand was strong for cooling equipment in advance of the Jan. 23, 2006 deadline for the 13 SEER standard, the company also achieved double-digit growth in heating equipment shipments. Lennox said segment profit increased 30 percent to $48 million due to higher volumes and improved pricing.

The company's Commercial Heating & Cooling revenue grew 5 percent to $162 million. Profit declined from $13 million in 2004 to $9 million. Lennox said sales and profitability improvements in North America were more than offset by a loss in European operations, due in part to expenses related to organizational changes and the inability to offset cost increases through higher prices. To improve performance in Europe, Lennox said its strengthened its management team and realigned its organization to a more pan-European structure.

Lennox's refrigeration segment revenue increased 3 percent, led by strong sales growth in the Americas. Segment profit increased 4 percent to $12 million, due to improved volume and pricing in the Americas and Europe.

Lennox said it expects 2006 full-year diluted earnings per share to be in the range of $2.00 to $2.10.

As previously announced, LII will close its current operations in Bellevue, Ohio, U.S. and consolidate manufacturing, distribution, research and development, and administration for Allied Air Enterprises operations in South Carolina, in a phased process expected to be completed by the end of first quarter 2007.

Capital expenditures in 2006 are projected to be approximately $70 million including 13 SEER equipment costs carried over from 2005, the costs for a warehouse as part of the recently announced consolidation program, factory expansion to accommodate continued domestic Commercial Heating & Cooling growth, and IT investments for CRM software and the implementation of SAP in Europe.

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