Lennox International Inc. (LII) said first quarter 2007 revenue decreased 2 percent to U.S. $791 million. The HVAC OEM, based in Dallas, Texas, U.S., reported net income was $9 million, or $0.12 per diluted share, down from $21 million or $0.28 per share the previous year. Adjusted net income, a non-GAAP measure, was $10 million, or $0.14 per share. In the first quarter of 2006, adjusted net income was $19 million, or $0.26 per share.
"We had previously indicated a slow start to the year, and expected our first quarter earnings to be below those of 2006," said CEO Todd Bluedorn. "Despite the lack of momentum in residential demand in the first quarter and erosion in the outlook for housing starts, we remain optimistic the upcoming cooling season will provide more normal demand for replacement sales, which accounts for the majority of our revenue. The outlook for demand in the commercial heating and cooling and refrigeration markets is very much on track with our expectations."
- Residential Heating & Cooling revenue decreased 14 percent to $361 million, reflecting a final boost from 13 SEER transition activity in the first quarter last year combined with this year's soft end market demand for furnaces. Segment profit decreased from $42 million to $20 million primarily as a result of lower volumes. The impact of the sales decline was most pronounced in the hearth business, which is more exposed to residential new construction than the company's heating and cooling equipment.
- Commercial Heating & Cooling sales grew 18 percent to $163 million, with growth in both domestic and European markets. Segment profit increased to $9 million, driven by improved results in Europe and lower variable domestic freight costs due to the company's regional distribution center initiative.
- Service Experts sales were up 2 percent to $144 million, despite the soft residential end market.
- Refrigeration revenue rose 12 percent to $141 million, driven by strong sales growth in Europe and South America. Segment profit was practically flat at $12 million. Solid demand from wholesale, OEM and national accounts channels in the domestic market was offset by weakness in the supermarket and cold storage segments. Strong sales growth in Europe reflected improved demand in mature markets, as well as continued growth in central and eastern Europe.
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