Lennox reports mixed Q3 results
Lennox International reported third-quarter net income of $33.8 million, down 19% from $41.8 million in the same period last year. Revenue for the third quarter was $923 million, up 13% from $818.2 million in the third quarter of 2010.
"Revenue from our residential business was up slightly in the third quarter, led by a 4% increase in shipments as well as price realization, although product mix was down from a year ago when the federal government’s $1,500 tax credit for high-efficiency cooling and heating products was still in place," said Todd Bluedorn, CEO of Lennox International. “Overall, the company had strong cash generation in the third quarter with free cash flow of $132 million and repurchased $55 million of stock and paid out $10 million in dividends.
“For 2011, we now expect company revenue growth of 7% to 9% and are narrowing our guidance range for adjusted EPS to $2.00 to $2.15 for the year."
Third-quarter revenue in the Residential Heating and Cooling business segment was $374 million, up 1% from $371 million in the prior-year quarter. Segment profit totaled $29 million, compared with segment profit of $39 million in the prior-year quarter.
Revenue in the Commercial Heating and Cooling business segment was $199 million, up 13% from $176 million in the prior-year quarter. Total segment profit was $29 million, compared with segment profit of $25 million in the prior-year quarter.
Sherwin-Williams settles IRS tax dispute
Cleveland-based Sherwin-Williams reached a settlement of the Internal Revenue Service’s audit of Sherwin-Williams’ employee stock ownership plan ("ESOP") that will lead to a charge of $75 million.
Sherwin-Williams has fully resolved all IRS issues for the 2003 through 2009 tax years, the company said.
Sherwin-Williams received a Notice of Proposed Adjustment from the IRS on May 20, 2011, challenging the ESOP-related federal income tax deductions claimed by Sherwin-Williams and proposing substantial excise taxes and penalties.
The settlement, which resolves all ESOP-related tax issues (including interest), will result in an after-tax charge relating to federal and state incomes taxes totaling approximately $75 million ($0.72 per diluted common share). The settlement also includes a reduction in shareholders’ equity of approximately $51.2 million in Sherwin-Williams’ fourth quarter.
These amounts were not included in Sherwin-Williams’ previous fourth-quarter and full-year 2011 earnings guidance.
Masco swings to profit in third quarter
Taylor, Mich.-based Masco Corp. reported third-quarter sales of $2 billion, up 3% from the same quarter last year. Masco’s net income was $36 million for the quarter, compared with a net loss of $5 million in the third quarter of 2010.
CEO Tim Wadhams said the top line was lifted by "strong sales of plumbing-related products driven by share gains of our Hansgrohe and Delta brands, share gains in our Installation segment and foreign currency translation."
Growth for the home products manufacturer came despite near-record lows in residential construction and the general deferral of big-ticket items for the home, Wadhams said. The company expects housing starts will finish the year at about the same level as 2010, when the Commerce Department’s tally was 585,000.
"Longer-term, however, we are confident about the fundamentals for the new-home construction and home improvement markets, and we are optimistic about the future," Wadhams said.