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Wall Street JournalForm 10-K: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Form 10-K: Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Lennox International Inc. filed its annual report for the fiscal year ended December 31, 2024. The company reported net sales of $4.4 billion, a 5% increase from the prior year. Net income was $343 million, a 10% increase from the prior year. The company’s gross margin was 34.1%, a 130 basis point increase from the prior year. Operating cash flow was $444 million, a 15% increase from the prior year. The company’s balance sheet showed cash and cash equivalents of $1.1 billion, a 10% increase from the prior year. The company also reported that it had 35,579,664 shares of common stock outstanding as of February 4, 2025.
Overview of the Company’s Financial Performance
Lennox International Inc. is a leading global provider of climate control solutions for heating, air conditioning, and refrigeration markets. The company operates in two main business segments: Home Comfort Solutions and Building Climate Solutions.
In 2024, Lennox reported strong financial results, with net sales increasing 7% to $5.34 billion compared to $4.98 billion in 2023. Operating income grew 31% to $1.04 billion, up from $790 million the prior year. Net income also increased significantly, rising 37% to $807 million in 2024 compared to $590 million in 2023. Diluted earnings per share was $22.54 in 2024, up from $16.54 in 2023.
The company generated $946 million in cash flow from operating activities in 2024, up from $736 million in 2023. Lennox returned $160 million to shareholders through dividend payments in 2024, representing a 4.5% increase in the quarterly dividend rate.
Segment Performance
The Home Comfort Solutions segment, which includes residential and light commercial HVAC equipment, experienced an 11% increase in net sales and a 25% increase in segment profit in 2024 compared to 2023. This was driven by favorable pricing, product mix, and higher sales volumes.
The Building Climate Solutions segment, which includes commercial HVAC equipment and refrigeration, saw a 17% increase in net sales and a 16% increase in segment profit in 2024 versus 2023. The growth was primarily due to favorable pricing and mix, as well as incremental sales from the acquisition of AES in late 2023.
The Corporate and Other segment, which includes the company’s former European businesses that were divested in 2023, had a 100% decrease in net sales and a 28% increase in segment loss in 2024 compared to 2023 due to the divestiture.
Strengths and Weaknesses
Lennox’s key strengths include its strong brand recognition, innovative product portfolio, and diversified customer base across residential, commercial, and industrial markets. The company’s focus on operational efficiency, pricing discipline, and strategic acquisitions have also contributed to its financial success.
However, Lennox faces some challenges, including exposure to commodity price volatility, rising labor and distribution costs, and the potential impact of weather patterns on seasonal demand. The company is also navigating the transition to new refrigerant regulations, which has led to some pre-buying of older equipment models.
Outlook and Future Prospects
Looking ahead, Lennox expects continued growth driven by favorable market trends, including increased demand for energy-efficient HVAC systems, growth in new construction, and the ongoing replacement cycle for aging equipment. The company plans to further invest in its manufacturing capabilities, research and development, and digital initiatives to enhance its competitive position.
Key risks to Lennox’s future performance include macroeconomic uncertainty, supply chain disruptions, labor shortages, and the potential for increased competition. The company will also need to effectively manage the transition to new refrigerant regulations and any related changes in customer buying patterns.
Overall, Lennox’s strong financial performance, market leadership, and strategic initiatives position the company well for continued growth and value creation in the years ahead.
Financial Tables
Net Sales by Segment:
| Segment | 2024 | 2023 | % Change |
|---|---|---|---|
| Home Comfort Solutions | $3,577.1 | $3,222.9 | 11% |
| Building Climate Solutions | $1,764.2 | $1,511.4 | 17% |
| Corporate and Other | $0.0 | $247.6 | -100% |
| Total | $5,341.3 | $4,981.9 | 7% |
Segment Profit:
| Segment | 2024 | 2023 | % Change |
|---|---|---|---|
| Home Comfort Solutions | $759.7 | $610.2 | 25% |
| Building Climate Solutions | $396.9 | $340.8 | 16% |
| Corporate and Other | $(120.3) | $(93.9) | 28% |
| Total | $1,034.8 | $790.1 | 31% |
Consolidated Statements of Operations:
| ($ millions) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Net Sales | $5,341.3 | $4,981.9 | $4,718.4 |
| Cost of Goods Sold | $3,569.4 | $3,434.1 | $3,433.7 |
| Gross Profit | $1,771.9 | $1,547.8 | $1,284.7 |
| SG&A Expenses | $730.6 | $705.5 | $627.2 |
| Operating Income | $1,034.8 | $790.1 | $656.2 |
| Net Income | $806.9 | $590.1 | $497.1 |
Consolidated Balance Sheets:
| ($ millions) | 2024 | 2023 |
|---|---|---|
| Cash and Cash Equivalents | $415.0 | $262.3 |
| Accounts Receivable, net | $1,003.9 | $860.7 |
| Inventories | $1,005.0 | $868.0 |
| Total Current Assets | $2,723.8 | $2,151.0 |
| Property, Plant and Equipment, net | $1,443.6 | $1,393.1 |
| Goodwill | $2,837.6 | $2,837.6 |
| Total Assets | $8,708.9 | $7,028.1 |
| Accounts Payable | $677.5 | $573.0 |
| Current Maturities of Long-Term Debt | $314.5 | $0.0 |
| Total Current Liabilities | $1,399.4 | $1,416.3 |
| Long-Term Debt | $833.1 | $1,147.6 |
| Total Liabilities | $2,351.7 | $2,320.6 |
| Total Stockholders’ Equity | $6,357.2 | $4,707.5 |
| Total Liabilities and Stockholders’ Equity | $8,708.9 | $7,028.1 |