Lennox International Reports Second Quarter Results
- Adjusted EPS from continuing operations $0.67, and GAAP EPS from continuing operations $0.63 - Generated $55 million in free cash flow, up 26% - Narrowing 2009 revenue guidance from down 15-19% to down 17-19% - Narrowing 2009 guidance for adjusted EPS from continuing operations from $1.65-$2.05 to $1.65-$1.80; GAAP guidance from continuing operations now $1.38-$1.53
* Press Release
* Source: Lennox International Inc.
* On Wednesday July 22, 2009, 8:30 am EDT
DALLAS, July 22 /PRNewswire-FirstCall/ -- Lennox International Inc. (NYSE: LII - News) today reported financial results for the second quarter of 2009.
(Logo: newscom.com
Revenue for the second quarter was $791 million, 21% below the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 17%. Diluted earnings per share from continuing operations on an adjusted basis, a non-GAAP measure, was $0.67, compared to $1.02 in the record second quarter a year ago. Diluted earnings per share from continuing operations on a GAAP basis was $0.63, compared to $0.89 in the year-ago quarter.
"End market conditions remained difficult in the second quarter, but strong operational execution enabled Lennox to generate $55 million of free cash flow in the quarter, up 26% from last year," said Todd Bluedorn, Chief Executive Officer. "While the residential market continued to decline from a year ago, we saw the rate of decline slow in the second quarter. In the commercial and refrigeration markets, however, we saw the rate of decline increase in the quarter. Looking ahead at the full year, we are narrowing our revenue and adjusted EPS guidance to the low end of our previous range. We continue to execute on our cost reduction programs and strategic initiatives as offsets to the challenging end markets we expect through 2009."
(Note: See attached schedules for financial details, reconciliations of non-GAAP financial measures, and a description of adjusting items.)
FINANCIAL HIGHLIGHTS
Revenue: Revenue for the second quarter was $791 million, 21% below the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 17%. Lower volume across all business segments impacted revenue, with offsets from improved price and mix over the year-ago quarter.
Gross Profit: Gross profit for the second quarter was $229 million, down 18% from $278 million in the year-ago quarter. Gross margin was 29.0% compared to 27.8% in the year-ago quarter, up 120 basis points. Second quarter 2009 gross margin includes a net positive warranty adjustment of $10 million compared to a positive adjustment of $4 million in the prior-year quarter. Gross margin also benefited from improvements in product price, mix, and manufacturing rationalization.
Income from Continuing Operations: Adjusted income from continuing operations in the second quarter was $38.0 million, or $0.67 diluted earnings per share, compared to adjusted income of $59.4 million, or $1.02 diluted earnings per share in the second quarter of 2008. Adjusted income from continuing operations for the second quarter of 2009 excludes a $3.4 million after-tax charge from previously announced restructuring activities and a $1.3 million after-tax gain from the net change in unrealized gains on open futures contracts and other items, net.
On a GAAP basis, income from continuing operations for the second quarter of 2009 was $35.9 million, or $0.63 diluted earnings per share, compared to income of $51.4 million, or $0.89 diluted earnings per share in the prior-year quarter.
In discontinued operations, the company took an after-tax charge of $4.2 million, or $0.07 per share, related to a legal judgment involving a Service Experts service center that had been sold in 2004.
Free Cash Flow and Total Debt: Net cash provided by operations in the second quarter was $66 million compared to $56 million in the prior-year quarter. The company invested approximately $11 million in capital assets resulting in free cash flow of $55 million for the quarter, compared to $44 million in the year-ago quarter. Total debt at the end of June 2009 was $320 million after the company paid down $85 million in the quarter. Total cash, cash equivalents and short-term investments were $99 million.
BUSINESS SEGMENT HIGHLIGHTS
Residential Heating & Cooling
Second quarter 2009 revenue from the Residential Heating & Cooling business segment was $379 million, a decrease of 16% from $451 million in the year-ago quarter. Excluding the negative effect of foreign exchange, revenue would have been down 14%. Segment profit was $39 million and segment profit margin was 10.4%, compared to segment profit of $50 million and segment profit margin of 11.1% a year ago. Results were impacted by lower volume, with offsets from favorable product pricing and mix, warranty adjustments, and overall cost reductions.
Commercial Heating & Cooling
Revenue in the Commercial Heating & Cooling business segment was $163 million, down 29% from $229 million in the year-ago quarter. Excluding the negative effect of foreign exchange, revenue would have been down 24%. Total segment profit was $19 million and segment profit margin was 11.9%, compared to segment profit of $27 million and segment profit margin of 11.6% in the year-ago quarter. Results were impacted by lower volume, with offsets from favorable product pricing and mix, warranty adjustments, and overall cost reductions.
Service Experts
Revenue in the Service Experts business segment was $154 million in the second quarter, down 14% from $180 million in the year-ago quarter. Excluding the negative impact of foreign exchange, revenue would have been down 12%. Segment profit was $9 million and segment profit margin was 5.7%, compared to segment profit of $14 million and segment profit margin of 8.0% in the year-ago quarter. Results were impacted by lower volume, with offsets from overall cost reduction initiatives, lower fuel costs, and a favorable business mix compared to a year ago.
Refrigeration
Revenue in the Refrigeration business segment was $122 million in the second quarter, down 28% from $169 million in the prior-year quarter. Excluding the negative impact of foreign exchange, revenue would have been down 19%. Segment profit was $10 million and segment profit margin was 7.9%, compared to segment profit of $17 million and segment profit margin of 10.3% in the second quarter a year ago. Results were impacted by lower volume, with offsets from overall cost reductions and favorable pricing versus a year ago.
FULL-YEAR OUTLOOK
The company is narrowing its revenue and adjusted EPS from continuing operations guidance for 2009 to the low end of its previous guidance ranges.
* The revenue guidance range for 2009 is narrowed from down 15-19% to down 17-19%, including a negative 3 point impact from foreign exchange.
* Adjusted EPS from continuing operations guidance for 2009 is narrowed to $1.65-$1.80, the low end of the previous range of $1.65-$2.05.
* GAAP EPS from continuing operations guidance for 2009 is now a range of $1.38-$1.53 versus the previous target of $1.38-$1.78, reflecting the narrower adjusted EPS guidance range.
* Corporate expense guidance remains approximately $60 million for 2009.
* Capital spending guidance remains approximately $75 million for 2009.
CONFERENCE CALL INFORMATION
A conference call to discuss the company's second quarter results will be held this morning at 9:30 a.m. (Central). To listen, please call the conference call line at 612-332-0637 at least 10 minutes prior to the scheduled start time and use reservation number 103908. This conference call will also be webcast on Lennox International's web site at lennoxinternational.com.
A replay will be available from 12:00 p.m. (Central) on July 22 through July 29 by dialing 800-475-6701 (US) or 320-365-3844 (International) and using access code 103908. This call will also be archived on the company's web site.
Through its subsidiaries, Lennox International Inc. is a global leader in the heating, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII." Additional information is available at: lennoxinternational.com or by contacting Steve Harrison, Vice President, Investor Relations, at 972-497-6670.
The statements in this news release that are not historical statements, including statements regarding expected financial results for 2009, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous risks and uncertainties, many of which are beyond LII's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: the impact of higher raw material prices, LII's ability to implement price increases for its products and services, and the impact of unfavorable weather, and a decline in new construction activity in the demand for products and services that could cause actual results to differ materially from such statements. For information concerning these and other risks and uncertainties, see LII's publicly available filings with the Securities and Exchange Commission. LII disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share data)
For the For the Year-to-
Quarters Date Period
Ended June 30, Ended June 30,
-------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
NET SALES $790.5 $999.6 $1,375.9 $1,764.1
COST OF GOODS SOLD 561.6 721.5 1,008.2 1,292.3
----- ----- ------- -------
Gross profit 228.9 278.1 367.7 471.8
OPERATING EXPENSES:
Selling, general and
administrative expenses 165.8 187.2 322.8 371.1
Losses (gains) and other
expenses, net 0.7 (4.6) (0.1) (7.9)
Restructuring charges 4.7 7.7 15.9 10.5
Impairment of equity method
investment - 2.3 - 2.3
Income from equity method
investments (1.8) (2.9) (3.2) (6.0)
---- ---- ---- ----
Operational income from
continuing operations 59.5 88.4 32.3 101.8
INTEREST EXPENSE, net 1.9 3.8 3.6 6.5
OTHER EXPENSE, net 0.1 0.1 0.1 0.1
--- --- --- ---
Income from continuing
operations before
income taxes 57.5 84.5 28.6 95.2
PROVISION FOR INCOME TAXES 21.6 33.1 10.9 37.0
---- ---- ---- ----
Income from
continuing operations $35.9 $51.4 $17.7 $58.2
DISCONTINUED OPERATIONS:
Loss from discontinued
operations 6.8 0.3 6.6 1.1
Income tax
benefit (2.6) (0.1) (2.5) (0.4)
---- ---- ---- ----
Loss from discontinued
operations 4.2 0.2 4.1 0.7
--- --- --- ---
Net income $31.7 $51.2 $13.6 $57.5
===== ===== ===== =====
EARNINGS PER SHARE - BASIC:
Income from continuing
operations $0.65 $0.92 $0.32 $1.00
Loss from discontinued
operations (0.08) (0.01) (0.07) (0.01)
----- ----- ----- -----
Net income $0.57 $0.91 $0.25 $0.99
===== ===== ===== =====
EARNINGS PER SHARE - DILUTED:
Income from continuing
operations $0.63 $0.89 $0.32 $0.97
Loss from discontinued
operations (0.07) (0.01) (0.08) (0.02)
----- ----- ----- -----
Net income $0.56 $0.88 $0.24 $0.95
===== ===== ===== =====
AVERAGE SHARES OUTSTANDING:
Basic 55.4 56.2 55.3 58.2
Diluted 56.6 58.0 55.9 60.2
CASH DIVIDENDS DECLARED
PER SHARE $0.14 $0.14 $0.28 $0.28
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
SEGMENT NET SALES AND PROFIT
(Unaudited, in millions)
For the For the Year-to-
Quarters Date Period Ended
Ended June 30, June 30,
-------------- ------------------
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
Residential Heating & Cooling $379.3 $450.7 $625.6 $779.9
Commercial Heating & Cooling 162.7 229.5 294.2 394.7
Service Experts 153.7 179.6 262.9 317.1
Refrigeration 122.1 169.1 235.8 323.8
Eliminations (A) (27.3) (29.3) (42.6) (51.4)
----- ----- ----- -----
$790.5 $999.6 $1,375.9 $1,764.1
====== ====== ======== ========
Segment Profit (Loss) (B)
Residential Heating & Cooling $39.3 $50.0 $34.5 $63.2
Commercial Heating & Cooling 19.3 26.7 21.3 32.9
Service Experts 8.7 14.3 0.7 7.4
Refrigeration 9.6 17.5 16.1 32.2
Corporate and other (14.7) (8.7) (28.6) (20.9)
Eliminations (A) - (0.5) (0.4) (2.1)
--- ---- ---- ----
Subtotal that includes segment
profit and eliminations 62.2 99.3 43.6 112.7
Reconciliation to income
from continuing operations
before income taxes:
Losses (gains) and other
expenses, net of gain on sale
of fixed assets 0.8 (4.4) - (7.8)
Restructuring charges 4.7 7.7 15.9 10.5
Impairment of equity method
investment - 2.3 - 2.3
Interest expense, net 1.9 3.8 3.6 6.5
Other expense, net 0.1 0.1 0.1 0.1
Less: Realized (losses)
gains on settled derivative
contracts (1.3) 0.6 (3.3) 1.1
Less: Foreign currency
exchange (losses) gains (1.5) 4.7 (1.3) 4.8
---- --- ---- ---
Income from continuing
operations before
income taxes $57.5 $84.5 $28.6 $95.2
===== ===== ===== =====
(A) Eliminations consist of intercompany sales between business segments,
such as products sold to Service Experts by the Residential Heating &
Cooling segment.
(B) The Company defines segment profit and loss as a segment's income or
loss from continuing operations before income taxes included in the
accompanying Consolidated Statements of Operations:
Excluding:
- Gains and/or losses and other expenses, net except for gains and/or
losses on the sale of fixed assets.
- Restructuring charges.
- Goodwill and equity method investment impairments.
- Interest expense, net.
- Other expense, net.
Less amounts included in Losses (Gains) and Other Expenses, net:
- Realized gains and/or losses on settled derivative contracts.
- Foreign currency exchange gains and/or losses.
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
As of As of
June 30, December 31,
2009 2008
--------- --------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $65.4 $122.1
Short-term investments 33.5 33.4
Accounts and notes receivable, net 431.4 369.6
Inventories, net 268.5 298.3
Deferred income taxes 27.3 24.2
Other assets 47.7 87.4
---- ----
Total current assets 873.8 935.0
PROPERTY, PLANT AND EQUIPMENT, net 328.8 329.5
GOODWILL 243.5 232.3
DEFERRED INCOME TAXES 102.4 113.5
OTHER ASSETS, net 51.5 49.2
---- ----
TOTAL ASSETS $1,600.0 $1,659.5
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $7.5 $6.1
Current maturities of long-term debt 35.3 0.6
Accounts payable 268.2 234.5
Accrued expenses 308.0 331.1
Income taxes payable - 3.7
--- ---
Total current liabilities 619.0 576.0
LONG-TERM DEBT 276.9 413.7
POSTRETIREMENT BENEFITS, OTHER THAN
PENSIONS 12.1 12.5
PENSIONS 111.5 107.7
OTHER LIABILITIES 73.7 91.0
---- ----
Total liabilities 1,093.2 1,200.9
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
25,000,000 shares authorized, no shares
issued or outstanding - -
Common stock, $.01 par value,
200,000,000 shares authorized,
84,705,778 shares and 84,215,904
shares issued for 2009 and 2008,
respectively 0.8 0.8
Additional paid-in capital 813.1 805.6
Retained earnings 536.9 538.8
Accumulated other comprehensive loss (53.5) (98.8)
Treasury stock, at cost, 29,213,699
shares and 29,109,058 shares for
2009 and 2008, respectively (790.5) (787.8)
------ ------
Total stockholders' equity 506.8 458.6
----- -----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,600.0 $1,659.5
======== ========
LENNOX INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation to U.S. GAAP (Generally Accepted Accounting
Principles) Measures
(Unaudited, in millions, except per share and ratio data)
Reconciliation of Income From Continuing Operations to Adjusted Income
From Continuing Operations
For the Quarter Ended June 30, 2009
-----------------------------------
Net Change
in
Unrealized
Gains on
Open Futures
Contracts
As and Other Restructuring
Reported Items, Net Charges As Adjusted
---------- -------------- -------------- ----------
NET SALES $790.5 $- $- $790.5
COST OF GOODS
SOLD 561.6 - - 561.6
----- --- --- -----
Gross Profit 228.9 - - 228.9
OPERATING EXPENSES:
Selling, general
and administrative
expenses 165.8 - - 165.8
Losses (gains) and
other expenses,
net(1) 0.7 2.1 - 2.8
Restructuring
charges 4.7 - (4.7) -
Income from equity
method investments (1.8) - - (1.8)
---- --- --- ----
Operational income
(loss) from
continuing
operations 59.5 (2.1) 4.7 62.1
INTEREST EXPENSE,
net 1.9 - - 1.9
OTHER EXPENSE, net 0.1 - - 0.1
--- --- --- ---
Income (loss) from
continuing
operations before
income taxes 57.5 (2.1) 4.7 60.1
PROVISION FOR (BENEFIT
FROM) INCOME TAXES 21.6 (0.8) 1.3 22.1
---- ---- --- ----
Income (loss) from
continuing
operations $35.9 $(1.3) $3.4 $38.0
===== ===== ==== =====
EARNINGS (LOSS) PER
SHARE FROM CONTINUING
OPERATIONS - DILUTED $0.63 $(0.02) $0.06 $0.67
===== ====== ===== =====
Note: Management uses adjusted income from continuing operations, which
is not defined by U.S. GAAP, to measure the Company's operating
performance and to analyze period-over-period changes in operating income
with and without the effects of certain losses (gains) and other expenses,
net, impairment of equity method investment and restructuring charges.
Management believes that excluding these effects is helpful in assessing
the overall performance of the Company.
(1) Losses (gains) and other expenses, net include the following:
For the Quarter Ended June 30, 2009
-------------------------------------
Pre-tax Tax (Benefit) After-tax
Loss (Gain) Provision Loss (Gain)
------------- ----------- -------------
Realized losses on settled
futures contracts $1.3 $(0.5) $0.8
Net change in unrealized
gains on open futures
contracts (2.5) 0.8 (1.7)
Foreign currency exchange
loss 1.5 (0.7) 0.8
Discount fee on accounts sold 0.1 - 0.1
Gain on disposal of
fixed assets (0.1) - (0.1)
Other items, net 0.4 - 0.4
--- --- ---
Losses (gains) and other
expenses, net $0.7 $(0.4) $0.3
==== ===== ====
For the Quarter Ended June 30, 2008
-----------------------------------
Net Change
in
Unrealized
Losses on
Open
Futures
Contracts Impairment
and Other of Equity
As Items, Restructuring Method As
Reported Net Charges Investment Adjusted
---------- ------ ----------- ---------- ----------
NET SALES $999.6 $- $- $- $999.6
COST OF
GOODS SOLD 721.5 - - - 721.5
----- --- --- --- -----
Gross Profit 278.1 - - - 278.1
OPERATING EXPENSES:
Selling, general
and
administrative
expenses 187.2 - - - 187.2
(Gains) losses
and other
expenses,
net(2) (4.6) (0.9) - - (5.5)
Restructuring
charges 7.7 - (7.7) - -
Impairment
of equity method
investment 2.3 - - (2.3) -
Income from
equity method
investments (2.9) - - - (2.9)
---- --- --- --- ----
Operational
income from
continuing
operations 88.4 0.9 7.7 2.3 99.3
INTEREST EXPENSE,
net 3.8 - - - 3.8
OTHER EXPENSE,
net 0.1 - - - 0.1
--- --- --- --- ---
Income from
continuing
operations
before income
taxes 84.5 0.9 7.7 2.3 95.4
PROVISION FOR
INCOME TAXES 33.1 0.3 2.6 - 36.0
---- --- --- --- ----
Income from
continuing
operations $51.4 $0.6 $5.1 $2.3 $59.4
===== ==== ==== ==== =====
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS -
DILUTED $0.89 $0.01 $0.08 $0.04 $1.02
===== ===== ===== ===== =====
(2) (Gains) losses and other expenses, net include the following:
For the Quarter Ended June 30, 2008
-----------------------------------
Tax
Pre-tax Provision After-tax
(Gain) Loss (Benefit) (Gain) Loss
------------- ----------- -------------
Realized gains on settled
futures contracts $(0.6) $0.2 $(0.4)
Net change in unrealized
losses on open futures
contracts 0.4 (0.2) 0.2
Foreign currency
exchange gain (4.7) 0.3 (4.4)
Gain on disposal of
fixed assets (0.2) 0.1 (0.1)
Other items, net 0.5 (0.1) 0.4
--- ---- ---
(Gains) losses and
other expenses, net $(4.6) $0.3 $(4.3)
===== ==== =====
For the Year-to-Date Period Ended June 30, 2009
-------------------------------------------------
Net Change
in
Unrealized
Gains on
Open
Futures
Contracts
and Other
As Items, Restructuring As
Reported Net Charges Adjusted
-------- --------- ------------ --------
NET SALES $1,375.9 $- $- $1,375.9
COST OF GOODS SOLD 1,008.2 - - 1,008.2
------- --- --- -------
Gross Profit 367.7 - - 367.7
OPERATING EXPENSES:
Selling, general and
administrative expenses 322.8 - - 322.8
(Gains) losses and
other expenses, net(3) (0.1) 4.8 - 4.7
Restructuring
charges 15.9 - (15.9) -
Income from equity
method investments (3.2) - - (3.2)
---- --- --- ----
Operational income
(loss) from continuing
operations 32.3 (4.8) 15.9 43.4
INTEREST
EXPENSE, net 3.6 - - 3.6
OTHER EXPENSE, net 0.1 - - 0.1
--- --- --- ---
Income (loss) from
continuing operations
before income taxes 28.6 (4.8) 15.9 39.7
PROVISION FOR (BENEFIT
FROM) INCOME TAXES 10.9 (1.7) 5.0 14.2
---- ---- --- ----
Income (loss) from
continuing
operations $17.7 $(3.1) $10.9 $25.5
===== ===== ===== =====
EARNINGS (LOSS) PER
SHARE FROM CONTINUING
OPERATIONS - DILUTED $0.32 $(0.05) $0.19 $0.46
===== ====== ===== =====
(3) (Gains) losses and other expenses, net include the following:
For the Year-to-Date Period Ended
June 30, 2009
---------------
Pre-tax Tax (Benefit) After-tax
Loss (Gain) Provision Loss (Gain)
------------- ----------- -------------
Realized losses on
settled futures
contracts $3.3 $(1.2) $2.1
Net change in
unrealized gains on
open futures contracts (5.2) 1.8 (3.4)
Foreign currency
exchange loss 1.3 (0.6) 0.7
Discount fee on
accounts sold 0.2 (0.1) 0.1
Gain on disposal of
fixed assets (0.1) - (0.1)
Other items, net 0.4 (0.1) 0.3
--- ---- ---
(Gains) losses and
other expenses, net $(0.1) $(0.2) $(0.3)
===== ===== =====
For the Year-to-Date Period Ended June 30, 2008
-----------------------------------------------
Net Change
in
Unrealized
Gains on
Open
Futures
Contracts Impairment
and Other of Equity
As Items, Restructuring Method As
Reported Net Charges Investment Adjusted
-------- ------- --------- ----------- ---------
NET SALES $1,764.1 $- $- $- $1,764.1
COST OF GOODS
SOLD 1,292.3 - - - 1,292.3
------- --- --- --- -------
Gross Profit 471.8 - - - 471.8
OPERATING EXPENSES:
Selling, general
and
administrative
expenses 371.1 - - - 371.1
(Gains) losses
and other
expenses,
net(4) (7.9) 1.9 - - (6.0)
Restructuring
charges 10.5 - (10.5) - -
Impairment of
equity
method
investment 2.3 - - (2.3) -
Income from
equity
method
investments (6.0) - - - (6.0)
---- --- --- --- ----
Operational
income
(loss) from
continuing
operations 101.8 (1.9) 10.5 2.3 112.7
INTEREST EXPENSE,
net 6.5 - - - 6.5
OTHER EXPENSE, net 0.1 - - - 0.1
--- --- --- --- ---
Income (loss)
from
continuing
operations
before
income taxes 95.2 (1.9) 10.5 2.3 106.1
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES 37.0 (0.7) 3.7 - 40.0
---- ---- --- --- ----
Income (loss)
from
continuing
operations $58.2 $(1.2) $6.8 $2.3 $66.1
===== ===== ==== ==== =====
EARNINGS (LOSS)
PER SHARE FROM
CONTINUING
OPERATIONS
- DILUTED $0.97 $(0.02) $0.11 $0.04 $1.10
===== ====== ===== ===== =====
(4) (Gains) losses and other expenses, net include the following:
For the Year-to-Date Period Ended
June 30, 2008
----------------------------------
Tax
Pre-tax Provision After-tax
(Gain) Loss (Benefit) (Gain) Loss
------------- ----------- -------------
Realized gains on
settled futures
contracts $(1.0) $0.4 $(0.6)
Net change in
unrealized gains
on open futures
contracts (2.3) 0.8 (1.5)
Foreign currency
exchange gain (4.8) 0.3 (4.5)
Gain on disposal
of fixed assets (0.2) 0.1 (0.1)
Other items, net 0.4 (0.1) 0.3
--- ---- ---
(Gains) losses and
other expenses, net $(7.9) $1.5 $(6.4)
===== ==== =====
Reconciliation of Estimated Adjusted to GAAP Income per Share from
Continuing Operations - Diluted
For the
Year Ended
December 31,
2009
ESTIMATED
-----------
Adjusted income per share from continuing
operations - diluted $1.65 - $1.80
Restructuring charges (0.33)
Net change in unrealized gains on open futures
contracts and other items, net 0.06
----
GAAP income per share from continuing
operations - diluted $1.38 - $1.53
=============
Free Cash Flow
For the For the For the For the
Quarter Quarter Year-to-Date Year-to-Date
Ended Ended Period Ended Period Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net cash provided
by operating
activities $66.4 $56.2 $82.7 $23.6
Purchase of
property, plant
and equipment (11.7) (12.7) (21.6) (22.5)
----- ----- ----- -----
Free cash flow $54.7 $43.5 $61.1 $1.1
===== ===== ===== ====
Operational Working Capital
June 30, June 30,
2009 2008
June 30, Trailing June 30, Trailing
2009 12 Mo. Avg. 2008 12 Mo. Avg.
---- ------------- ---- -------------
Accounts and Notes
Receivable, Net $431.4 $604.2
Asset Securitization 30.0 -
Allowance for Doubtful
Accounts 20.9 20.0
---- ----
Accounts and Notes
Receivable, Gross 482.3 $463.1 624.2 $570.9
Inventories 268.5 367.4
Excess of Current
Cost Over Last-in,
First-out 75.4 73.0
---- ----
Inventories as
Adjusted 343.9 399.6 440.4 439.7
Accounts Payable (268.2) (283.4) (376.9) (334.2)
------ ------ ------ ------
Operating Working
Capital (a) 558.0 579.3 687.7 676.4
===== ===== ===== =====
Net Sales, Trailing
Twelve Months (b) 3,093.2 3,093.2 3,673.2 3,673.2
------- ------- ------- -------
Operational Working
Capital Ratio (a /b) 18.0% 18.7% 18.7% 18.4%
==== ==== ==== ====
Note: Management uses free cash flow and operational working capital,
which are not defined by U.S. GAAP, to measure the Company's operating
performance. Free cash flow and operational working capital are also
two of several measures used to determine incentive compensation for
certain employees
Debt to Earnings Before Interest, Taxes, Depreciation and
Amortization Expense ("EBITDA") Ratio
Trailing
Twelve
Months to
June 30,
2009
----
Earnings before interest and taxes ("EBIT") (a) $195.8
Depreciation and amortization expense ("DA") (b) 53.2
----
EBITDA (EBIT excluding DA) (a + b) $249.0
======
Total debt at June 30, 2009 (c) $319.7
======
Total debt to EBITDA ratio ((c / (a + b) 1.3
===
Reconciliation of EBIT to income from continuing
operations before income taxes:
EBIT per above (non-GAAP) $195.8
Losses and other expenses, net of gain on sale of
fixed assets 10.8
Impairment of equity method investment 6.8
Restructuring charges 35.8
Other expenses, net 0.1
Interest expense, net 10.8
----
Subtotal 131.5
Less: Realized losses on settled futures contracts (5.3)
Less: Foreign currency exchange losses (2.9)
----
Income from continuing operations before
income taxes (GAAP) $139.7
======
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