LENNOX INTERNATIONAL : Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) – marketscreener.com

This Quarterly Report on Form 10-Q contains forward-looking statements withinthe meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, that are basedon information currently available to management as well as management'sassumptions and beliefs as of the date such statements were made. Allstatements, other than statements of historical fact, included in this QuarterlyReport on Form 10-Q constitute forward-looking statements, including but notlimited to statements identified by forward-looking terminology, such as thewords "may," "will," "should," "plan," "anticipate," "believe," "intend,""estimate" and "expect" and similar expressions. Such statements reflect ourcurrent views with respect to future events, based on what we believe arereasonable assumptions; however, such statements are subject to certain risksand uncertainties.In addition to the specific uncertainties discussed elsewhere in this QuarterlyReport on Form 10-Q, the risk factors set forth in Part I, "Item 1A. RiskFactors" in our Annual Report on Form 10-K for the year ended December 31, 2019,and those set forth in Part II, "Item 1A. Risk Factors" of this report, if any,may affect our performance and results of operations. Should one or more ofthese risks or uncertainties materialize, or should underlying assumptions proveincorrect, actual results may differ materially from those in theforward-looking statements. We disclaim any intention or obligation to update orreview any forward-looking statements or information, whether as a result of newinformation, future events or otherwise, except as required by law.

Business Overview

Impact of COVID-19 Pandemic and the Resulting Changes to our 2020 FinancialPerformance

Additionally, certain of our manufacturing facilities experienced short-termsuspensions of operations for COVID-19 employee health concerns during thesecond and third quarters of 2020.

Financial Overview

Third Quarter of 2020 Compared to Third Quarter of 2019 - Consolidated Results

The following table provides a summary of our financial results, includinginformation presented as a percentage of net sales:

Net sales increased 2% in the third quarter of 2020 compared to the thirdquarter of 2019 driven by higher sales volumes of 1% and favorable combinedprice and mix of 1%.

Gross Profit

Selling, General and Administrative Expenses

Losses (gains) and Other Expenses, Net

Losses (gains) losses and other expenses, net for the third quarter of 2020 and2019 included the following (in millions):

Net change in unrealized (gains) losses on unsettled futurescontracts

3.4 $ 2.2

Gains and Losses related to Natural Disasters

See Note 4 in the Notes to the Consolidated Financial Statements for additionalinformation.

Income from Equity Method Investments

Interest Expense, net

Third Quarter of 2020 Compared to Third Quarter of 2019 - Results by Segment

Residential Heating & Cooling

Net sales increased 13% in the third quarter of 2020 compared to the thirdquarter of 2019. Sales volumes increased 11% and combined price and mixincreased 2%.

Commercial Heating & Cooling

Net sales decreased 18% in the third quarter of 2020 compared to the thirdquarter of 2019. Sales volumes declined 15% and mix was unfavorable 3%.

Refrigeration

The following table presents our Refrigeration segment's net sales and profitfor the third quarter of 2020 and 2019 (dollars in millions):

Corporate and Other

Year-to-Date through September 30, 2020 Compared to Year-to-Date throughSeptember 30, 2019 - Consolidated Results

The following table provides a summary of our financial results, includinginformation presented as a percentage of net sales:

For the Nine Months Ended September 30,

Net Sales

Selling, General and Administrative Expenses

Losses (gains) and Other Expenses, Net

Losses (gains) and other expenses, net for the nine months ended September 30,2020 and 2019 included the following (in millions):

Nine Months Ended September 30,

Net change in unrealized losses (gains) on unsettled futures contracts

5.6 $ 5.3

Loss on Sale of Business

Gains and Losses related to Natural Disasters

Income from Equity Method Investments

Interest Expense, net

Income Taxes

Year-to-Date through September 30, 2020 Compared to Year-to-Date throughSeptember 30, 2019 - Results by Segment

Residential Heating & Cooling

Net sales increased 1% in the nine months ended September 30, 2020 compared tothe nine months ended September 30, 2019. Price increased 1% and mix wasfavorable by 1%, partially offset by lower sales volumes of 1%.

Refrigeration

Corporate and Other

Corporate and other expenses increased $7 million in the nine months endedSeptember 30, 2020 compared to the nine months ended September 30, 2019 due tohigher incentive compensation costs.

Liquidity and Capital Resources

Our working capital and capital expenditure requirements are generally metthrough internally generated funds, bank lines of credit and an assetsecuritization arrangement. Working capital needs are generally greater in thefirst and second quarters due to the seasonal nature of our business cycle.

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LENNOX INTERNATIONAL : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) - marketscreener.com