Lennox International Inc. (NYSE: LII) announced financial results for the second quarter. The company reported revenue of USD 941 Million, down 14%. GAAP operating income amounted to USD 136 Million compared to USD 214 Million the same period a year ago. Total adjusted segment profit reached USD 153 Million in q2 compared to USD 202 Million a year ago.
“The COVID-19 pandemic significantly impacted all our businesses in the second quarter, but our Residential business improved each month through the quarter and was up 7% year-over-year in June as the economy continued to re-open and weather heated up,” said Todd Bluedorn, Chairman and CEO. “With hot weather continuing month-to-date in July, we are seeing strong Residential growth on excellent operational execution by the team to capitalize on market opportunities.
“In total for the second quarter, Residential revenue was down 6%. Segment profit was $127 million, down 17% as reported. From an operational perspective excluding $18 million of insurance benefit in the prior-year quarter, segment profit was down 6%. Segment margin was 19.7%, down 260 basis points as reported. On an operational basis, segment margin was up 10 basis points.
“As expected, our commercial-facing businesses were more heavily impacted from the pandemic. In our Commercial business segment, revenue was down 28%, driven primarily by national account customers pushing out orders as previously discussed. Regional and local business was also down significantly in the quarter. Commercial segment profit was down 34%, and segment margin contracted 170 basis points to 18.9%. In the Refrigeration segment, adjusted revenue was down broadly across our businesses in North America and Europe, declining 26% at constant currency. Segment profit was down 53%, and segment margin contracted 460 basis points to 8.2%.
“We continue to face highly uncertain market conditions in the second half of the year, and the company’s stock repurchase program currently remains on hold. Lennox International maintains a strong balance sheet and continues to expect a strong year of cash generation, targeting approximately $340 million of free cash flow. The company has executed well on its $115 million of in-year SG&A savings for 2020 and managed decremental total adjusted segment profit margin of 20% on an operational basis in the second quarter. We are raising our financial guidance for 2020 and now expect adjusted revenue to be down 10-15% and adjusted EPS from continuing operations of $7.90-$8.70. Lennox has a focused and seasoned team with experience managing through economic downturns while continuing to invest and advance the company’s position to capitalize on share gains and market opportunities.”