Lennox International (LII) 5 Feb 192018 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Lennox International Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.

morning. Good joining the review year fourth for financial Lennox XXXX. for for performance quarter us you of this International's Thank and full CFO, I'm Todd Chairman with Joe and here Reitmeier. and today Bluedorn; CEO, points for take will the Todd will through review the and and you and the performance financial quarter company's Joe year, outlook. key Instructions]. [Operator release discussed this of morning, earnings financial measures to non-GAAP the measures. that have included the In be we we issued will GAAP reconciliation the necessary are against the All comparisons period. year mentioned today prior

be link making the be forward-looking statements call, numerous remind The and replay. subject materially These to webcast risks direct the conference certain a on to you our are statements. such www.lennoxinternational.com. like today's everyone for find this at call the differ that results understanding to course webcast give actual can You will could of from to to cause in I would site archived uncertainties better statements. at of that website also we will a our operations, on

For intention new these the otherwise. disclaims a statements of available as company publicly events SEC. future update The see filings any uncertainties, information whether Lennox risks obligation revise any with to result or forward-looking concerning or information, or International's and

to Now Todd me Chairman the let call Bluedorn. turn over CEO, and

Thanks, Steve. joining for Good morning, everyone, us. and thanks

with our the North through then at tornado revenue, and remaining as today America generation the while view numbers. Let focus and The XXXX out cash XXXX. the financials of on thoughts from Refrigeration South another Australia, the manufacturing operating of review impact of discuss some XXXX of facility year margin, challenges Adjusted the with to International in from fourth to our out divestitures businesses a the me Lennox continuing in new a the Refrigeration and we and start the quarter set present divestitures overall and have highlights financials working in in our a Company numbers the Europe. clearer record was highs damage for and profit revenue a record and discuss record posted impact businesses. GAAP company business basis the XX% then year. segment the have portfolio $X.XX. adjusted an Iowa Asia income up $XXX tornado On in from of X%, was total $X.XX from divestitures tornado. million. a on for The GAAP Adjusted was million, a EPS basis an XX% America up a to total GAAP record growth a basis on including full new On impact a for operating continuing record the the billion, the operations XXXX, margin was had adjusted X% basis, $XXX negative segment expanded rose operations X%. a XX.X%. revenues to up high impact X% GAAP to rose from $X.XX. up EPS to XX continuing revenue to record XXXX profit X% points for

impact rose X%, a tornado. negative from new revenue profit XX%, negative Turning of our net margin margin negative from business including Residential points year. Segment expansion revenue, the And from net a including and to profit. X% segments points the tornado. impact impact a highs established segment rose XX the XX to for basis including the X%, for tornado. basis Segment XX%

product as margin points basis profit for business revenue as segment revenue the was set XX down and well inefficiencies to year. labor profit and productivity X%, records other and was up lower for factory impacted by XX.X%, X% costs. Commercial Our Commercial new rose

up up digits. Commercial high mid-single XXXX. revenue was new In construction digits currency. North these Equipment single and We behind expand Replacement was factors single high and largely up constant be quarter expect us in margins to the was XXXX to first of America, digits in at revenue

from revenue year, business XX double way, another mid-single the national was and National up the new up equipment company business regional the XXXX. customers digits digits. revenue account for at low and was in diverse verticals won account local Looking across

Services the revenue was was more National year. revenue than up Commercial On double constant XX% HVAC for Europe, the service In down at Lennox digits side, Account currency. low

Refrigeration. to Turning

Before I financials, the me let talk our of get about into Kysor/Warren planned business. the divestiture

We are quarter year. close the the process sale the in well to along first in this expect and of

case European that also Refrigeration our reflect all Europe that focus have businesses, Commercial Refrigeration adjust to our and business As business your Refrigeration this you divestitures, was Heatcraft in with these and segment they're are growth on this include strong strong The are the XXXX, In and market posted our businesses models opportunities profiles. businesses to businesses. manage HVAC in capitalize of business in our as we have These markets. well region. but can will segment America in for and website, that so quarter and fit On enables reclassified by us our to we us, the our together positioned other remain positions North for respect accordingly. changes the we XXXX Europe profit on Refrigeration revenue Commercial

America up Segment margin Regarding down Refrigeration was constant Regionally, X%. for basis the was financials. at being Kysor/Warren, digits. down mid-teens profit was currency, business XX for Adjusted XX% and up year. up X% revenue Refrigeration was revenue low points in the while year. down North was from Europe Heatcraft mid-single divested, was down, revenue single was North Revenue the America digits. our to business

from in the a GAAP X% GAAP adjusted fourth on impact had GAAP GAAP record the tornado. total XX impact XX% quarter rose to to fourth was points fourth to Company from quarter. XX% operating divestitures, an $X.XX. XX% expanded from on quarter X% tornado growth continuing X%, currency basis million. XX%. revenue impact at fourth high at the margin EPS rose to constant to segment quarter rose constant record was segment $XXX the On continuing income a to a and Adjusted operations excluding was fourth adjusted Adjusted quarter operations Total revenue of a X% a quarter. negative of divestitures the revenue fourth million. $X.XX. currency. quarter $XXX a million. The of new record EPS $XXX record including down basis Turning from a of up of up was basis, in revenue, profit

Replacement negative fourth XX% to was revenue to tornado. on currency Segment Commercial broad new points for set basis declined and And in due our and the Looking segment tornado. a X%, record timing XX% rose up product up was segments at basis from X% X%, the the impact a equipment for X% record including quarter, XX basis in quarter quarter. digits. high including Commercial points profit profit growth down other points net the margin single down XX.X%, high America constant at impact revenue margins to revenue of XXX from a from XX% well fourth was of single as was expanded negative as as quarter strong In Segment labor the quarter costs North fourth digits. Residential was fourth the productivity. up business and inefficiencies tornado. America. XXX factory a the North including revenue negative lower a impact net

double New currency. at digits construction up constant low was

regional Account was Looking and at quarter. the National business low revenue local up digits high single way, double from the digits. another revenue was up in business

profit constant revenue revenue North was Refrigeration Heatcraft than revenue Account basis digits and On revenue digits. unfavorable as Kysor/Warren In our mid-teens X% businesses constant Europe currency. and in up was segment Europe up the down points the Heatcraft XX%. for declined the down was of and revenue in well constant more Refrigeration was digits revenue quarter HVAC as currency. as low margin at Refrigeration was X.X% the mid-single up quarter the mix up Europe, costs down product at fourth revenue at Regionally, timing and certain with Commercial was service down XX% other currency. to side, expenses had Lennox some in single the In we XXX National quarter. Services quarter, for single high America

margin the XXXX to in expect up and resume expansion for be We organic year.

company and the for ahead in our revenue reiterating are Looking we EPS XXXX, guidance. overall

or in we solid back and helped. to as cold be start discussed a certainly the at factories, meet full on has to quarter. plan our first meet we October. the remain to and the recovery track off quarter's either weather exceed we're Investment first to products -- our to The We production cooling for expect products enter Residential XXXX, Community capability Meeting X in there Across for heating tornado

share to aggressively borrowed fully refill working our are year. last was We us channel taking are from and distribution that back

from impact an is and has financial fourth tornado much December, currently moved in we for not me the provide but talked what on XXXX. actuals quarter let the about what view for update expected current Our

replacement profit up revenue expected million, Insurance up segment the now $XXX and be be to XXXX, to core received book $XXX still value revenue million tornado was impact expect XXXX. and million proceeds From picture. $XX The expected $XX will up of lot XXXX previously. up negative previously. the in we now construction $XX $X the and recovery noncore was there. which now million, million million, for We a is million, lower impact million in We perspective tornado profit costs. to from the from million fourth expected to $XX a than now XXXX. in core impact value big million, insurance the million negative the of from estimated $X expected $XX now is and million. million estimated, than First million is profit approximately from million, the is $XX on on tornado approximately previously assets of on due recover to million, in compared A perspective $XXX expected difference total quarter, more estimated, $XX be $XX to impact $XX $XXX for and from insurance $XXX in on net $XXX more gain From million that expect is be

Looking at in XXXX. quarter by the impact tornado

quarter of revenue million impact, and we update details current For prior reflecting XX% on approximately posted profit third in the of the XX% quarter. million XX% We the with $XX website had that second in $XX of a the the our in view. and the estimates first the quarter, chart financial and tornado expect

over I'll it turn to Now Joe.

Cooling revenue tornado & X%. & details Heating was revenue. morning, Thank the quarter, for full and X% million, comments exchange on $XX quarter million, third cost and lost quarter down you, up impact from lower the volume, commodity, In the price Heating was exchange, basis profits, negative tariff, the quarter to with impacted XX.X%, a and Residential profit the was was of with mix X%, Todd, Partial some X% was higher up $XX by and profit investments price, productivity. business factory Volume million segments from X%. and Residential margin points. fourth reductions million I'll and offsets and was starting proceeds neutral and unfavorable foreign year, favorably of record down was distribution for $XX good favorable fourth provide additional other Segment financial included freight higher Cooling. insurance unfavorable down engineering-led XXX foreign Residential up $XXX Segment mix, everyone. fourth quarter, costs, product sourcing tornado SG&A.

full volume year, was was the and $X.XX price up X%, a mix X%, revenue segment up Residential For X% billion, record was up flat. was

was neutral Segment points. XX was to record X%. $XXX profit exchange a million, record revenue. was XX%, margin Foreign a up up Residential basis

X%. Commercial fourth up X%, up was up X% up our Volume price business. was a record Commercial was turning mix $XXX Heating X%. and to revenue & was Now million, Cooling quarter

revenue. down higher XXX basis SG&A. reductions. other Foreign exchange higher and profit offsets and margin and a costs, segment million, and and commodity sourcing lower XX%, impacted was price costs freight down was Partial profit by favorable Segment had higher product on impact productivity Segment included engineering-led points. cost X% was volume, and negative higher mix X%. factory Commercial $XX

Volume price For revenue was X%, was record up mix and was X%. a billion, full X% the up Commercial up $X.XX X%. year, up was

up X% down our was was million, neutral a to was and fourth was in revenue up at price exchange the down In Refrigeration flat Volume XX margin X%. $XXX $XXX points. mix and Foreign Segment million. profit XX.X%, X% was segment record X%, was segment, revenue. basis up quarter was

a along Segment included million, higher on down XX%. price revenue. and higher and Segment engineering-led had other product favorable negative by reductions. basis was commodity, exchange was Foreign points. X% Refrigeration impacted distribution segment unfavorable and margin offsets costs, impact sourcing mix, volume, was profit X.X%, with SG&A. Partial profit $XX XXX freight, higher cost down

$XXX was revenue up mix up year, full was the price For Volume down up was was and X%. X% million, X%. X%,

XX positive X% profit XX%, exchange million, down X% Foreign had profit impact. was a Segment $XX and was points. basis margin segment down

company items had items a The for a in tax $XX.X related fourth after-tax and Regarding of divestitures, the of to net million, included charges special they items and for net of from and various restructuring other quarter. from compensation. gain charge for million totaling of recoveries $X.X and charge $X.X million insurance a tax incurred of benefits $X.X benefit million a excess losses share-based net million $X.X

net and full had sale property, $XXX for million million were the the was a of $XX.X This included recoveries down full million. to of XX.X% of million restructuring loss charge of of for million various year, $XX.X $XX in year company of gain charge quarter. on excess from after-tax and special incurred. quarter net fourth in of of the $XX or related Overall, in For for share-based of $X.X net businesses benefit a fourth million for divestitures, a tax related charges year. from and the insurance $XX other $X.X items tax net million $XX.X the items million million SG&A prior compensation quarter benefits and expenses Corporate XX.X% revenue, the from a the a net losses and

SG&A $XXX year. prior or XX.X% XXXX, in down from was XX.X% For of the million revenue, overall,

the to of end cash repurchased to company company quarter, year. debt the prior full from million flow million company $XX $XXX $XX million at million $XX prior the debt-to-EBITDA in the prior the $XXX Capital expenditures year of cash $X.XX and of year. in the ratio we had the million free at and the the in paid XXXX, million cash $XXX million and ended were were was fourth XXXX, of the billion dividends $XXX In with X.X. a to Total the compared Cash $XXX For end stock. $XX for operations compared million was in for XXXX of year. and million equivalents year year compared

outlook to for turn I I'll before XXXX. over our Q&A, Now review

underlying are for assumptions market year Our the unchanged.

HVAC the North America digits, XXXX for be industry shipments that America be expect December digits overall, Investment guidance The Commercial remains For shipments mid-single we the be to company's shipments to and presented expect North relatively unitary the we North Residential expect single low we up in Community America up we Refrigeration flat. same and to Meeting.

of we operations continuing revenue range expect EPS We neutral to $XX.XX from growth a to expect to $XX.XX, X% adjusted exchange. We X% continue $XX to of continuing EPS expect still and with GAAP foreign of still operations a in from $XX.XX. range in

of through run Now the points let are and key and our unchanged. takes guidance assumptions in puts other me the for which XXXX, all

additional We of expect price $XX the for the for cash year. million

planning guidance other are SG&A. targeted few $XX approximately headwinds -- XXXX. other $XX We to million still tariffs. expense include an from million a million a Corporate investments from Residential for headwind points. $XX distribution from last $XX $XX be and and $X year. for benefit $XX benefit from sourcing and is reductions million expected million investments productivity. are $XX a from up $XX million million expect from commodities, Other We cost $XX for Net million and million factory million, And freight engineering-led from interest expenses

be basis to funded on reconstruction a to We that, expect shares, to finally, the to weighted rate And expect XX plans full approximately the we still year. count $XXX Q&A. facility XX to tax year and average insurance for continue million which to Capital by this proceeds. XXXX Iowa between million share the the let's be an full range effective stock incorporates XX% And go million for of to in with $XXX expenditures repurchase the XX% complete our diluted million manufacturing million, of in $XXX are including of year. planned adjusted

Instructions]. [Operator

Julian Mitchell we have line, the Barclays. with on First

how Maybe you see this this just the and Maybe loaded, peers headwind phasing quarterly it around some the first your guidance $XX look something million, half or different about, be something you loaded. cost through characterize million. very to unchanged a cost through question just half-on-half $XX seems they're cost year. the headwinds talked pieces about million $XX they of as year, as There those front level see the we from commentary they're

right do And to back that and back see was think end. now, loaded front I if more model, probably going I XX-XX between the we way than I loaded. end might end the front they're a end them do

Understood. volumes loaded And I price, with fairly moving, level guess?

Correct.

you're give my a keeping what second versus talk obviously the X X what in just on or And couple just owned years. divesting, question, around sort you're of Maybe having little of maybe keeping us then of bit you're context the Kysor/Warren Refrigeration business for through divestment. a points why

that to looked that a made same The that the is we market the it's And of that where fit businesses position we've the had the we've profile. tough we've at had decision growth wanted businesses on logic strong we fit the sold. mean, the didn't I our other Yes. that. Kysor/Warren just We a focus business. as and structure industry

the you We and so expect focused left, we're the as by our never we first on that decision good And of we to we fields, I the We have close potential we say But we growth at said growth the profile, on transaction that it. we like and on of are to on exit. have well made have way businesses quarter. good never. the end And right the the least and it. for team think team, like now, call,

Wojs Next Baird. question with from Tim

bit resi. on Just wanted in focus to little mix a

make the trying you're it of I that sure that's of sort by I for you in a think case. the X% impact understand, was driven the to much I trade-down don't was the How tornado? any just just of to seeing think do down think quarter. want the business. I'm

as else's, it of we the I'll that exclusively was I record everybody tornado. it the where just is make facility we're impacted where -- we mean, for think you were know I -- premium on because the Marshalltown impacted Yes, furnaces. say

-- And and get full production inventory able levels. but certainly started Rick were didn't so didn't up, to to it back we we to full to ramp get

And mix tornado is to so the down impact. due the

recovery And the mean, you're maybe I dealers? I know, know sort look don't see mean, pretty share, Okay, confidence your in -- agreements of, share as recovering ramp? at dealers. you you okay. there you we any Are to guys to I you I have have talked you that that give then that don't your see close that But

aren't any in. The there tie direct is agreements answer annual people to

refill back products expect We're full for the the we the products product, we start December recovery to in production working I capability, level we're we them on going tornado we there XXXX into as and relationships local service, capability to to in We're support, And loyal three discussed the ties factories. And our we at XXXX, aggressively we year. do fully And distribution the across was think we quarter. in go with back be back in confident we're expect of enter we what Residential the with dealers. heating to digital plan that market cooling very first the we Lennox We're for borrowed accelerate the is to as from side. taking year. share investors as have the thousands come take or us that refill, back. exceed we last go channel. to operational through that expect it the as now back And either meet that share business

of market resi based did your in kind on quarter? then price, just grew just the fourth plus the you And think intel, units Great. what

to I'll I'll high think we're It up I going have you want a was and I'm to I or like trying some digits, specific somewhat but answer. say we -- X%, [indiscernible] AHRI single X% dig to data give

units. got we've price. say, the I'm the with curious And I just just to got

price. We've on X% Yes. got

got assume others I similar. So something

of and it. mixed are And and up couple price, don't points revenue know I a was so if XX% units of probably up X% what

Next on Tusa Steve the line with JPMorgan. is

I looking very very, Just that on of type HVAC, that, the $XXX like of kind million, kind at am number? something is while basically, segment right, a guess, small, margin of of I changes, low operating at Europe kind single-digit that

Yes, yes.

to that that, something kind businesses kind -- those longer-term for an kind margin and guess, Or kind I look What's potential would that that is new fix with I core? So strategic That's of structure? to unacceptable European is the assume? -- you're you the of of are of guys? going

because in primary had in where year revenue that which impact rooftops, significant It cost and was a has product XX% down in that to change it or the about regulatory and double X tough business, our been that on of that is led added XXXX, quarters we down talked profitability. HVAC to was digits line. significantly And revenue X where

than a better there, significantly go money we corporate had you not XXXX. operating not we few back years, but If in but what to great margins our made average,

isn't focused to always able lot there, cost. what It lower creative business and the cost our growing fundamentally, a So it's expanding we're to is that's to there, where top have work better XXXX. product mean be showed it the about, than and in line, on fixed line Europe, finding we the of in doesn't the that ways there absorb

yes, find was to to it Europe just more it So we a profitable. and our grow need keeper, make how business

what going then great. that, do Kysor, what with you're beyond also, you -- Can expect could bit us what us and you before would then the of you proceeds I and mean, around do the just going be just that I quite to on to going the footnote. the Are the to right get? businesses you're be you a sales, So now just that of whatever EBITDA? help And can't losing? to you do I end was with assume little stripping first of quarter. remind multiples color just to given the understand how industry -- state that it going Kysor now to and get -- you're you're then closed the much And around said didn't then Maybe on these with

it to in end are that million quarter. going it be to going to $XXX or we at XXXX -- needs EBITDA, to that's out, and able of of reason, of -- $X million because selling revenue, the sort that that of it expect expect -- some Yes. magnitude, you'd back we around so be of flow The to CapEx we're go The of of what EBIT it it's and is. buyback. anything the to you're in first order normal the And in process people lost say into acquisition lieu up, closed by proceeds else, debt for so mantra to share have me any expect to you'd targeting but again

Okay.

So you are -- -- from here essentially, on that out, you're part will X guidance anyway? today business of going -- not running to the obviously so basically, it's

Yes, about I guidance sure part the in core won't it Yes, that. don't I'm not think numbers". "adjusted it's of be and

for that then fourth year that in this Is And to last who quick tornado? calculate you -- buy of the and then who from year? you just do How the get how XX% on didn't from quarter bought mean, number what one impact Okay. one I kind actually do last you. sales? you exactly from you

have ways. couple our is did, a Yes. we know market and what historically we our were. I it and mean, gains we do share market of results the what actual know been One what

difference tornado And so the impact. the is

volume or we know so level, or high actual we're market was did. unit X.XX we X% point up units, X.X point the what know gaining point, our So what X.XX

up can do that's And what level, know are come it. they're who talk where we the we about micro is then we between way on delta bottom the to off talking same top we where the and way insurance from and who where about. we with we was compare less been the look it number versus and at we would that's relatively what turned the so bought were the bottom add a have we X sort and and numbers, companies market And level publicly customers we of also and from and is that the

guys quarter? Right. even of the lingering what some XX%, up and basically impact And back, not gain impact kind of have third the to though running is chop your the be the of by you'd production just of -- second those to is will quarter

XX%. I'm not sure the I understood

Well, be sound in quarter, impact fully to said operational you linger you second of was going but by you're the to third the quarter? going XX% like

Correct, yes, exactly.

is question Capital Jeff Hammond from KeyBanc Next Markets. of

of Just us maybe of some HVAC perspective once the kind a back the structurally be we segments and can differently a with standalone. And of regulatory? from Commercial business. Can reclass? Europe think more XXXX of you also lot you guess, think that for these some do sense give where seems any targets business then profitable restructuring to should just you the a recover I the particularly margin

that's I'll little straightforward. because Residential the a easier second answer one Yes. because that's answer to The change. doesn't

'XX a we're And new we that new at And is the XX% to is what me, overall, Commercial segment Commercial, X% ignoring then is guided XX% of is -- and it's -- XX% is where wish -- basis I off XX.X% target tornado, ignoring at the CAGR our the I So tornado, XXXX, Refrigeration XX.X% billion with revenue, to corporation, but which now about $X.X target the 'XX in XX.X% ended XX% and excuse XX% ended ignore XX%. -- tornado, or segment ended XX%. points the and the a target EBIT operating XX%. or sort from the we which new new of to margin, X-year of December. we do, ended which could for up X-year we the target XX margins XX% the is ended

just targets. structurally including for Europe, Europe than X-year the HVAC, businesses, of So And in less most new terms of that's HVAC, profitable it is North structurally, sort America. is in

business what think see to to of really get to double we and do have a that. high we performing loss better therefore, I this line and than ways have a we we're clearly And higher is to have that. to sight than get we'll to I it to obviously, think double-digit get that. then go digits, But

our Okay. would profit a included point housekeeping for the And just at do tornado, I Residential, then on in proceeds this. number? if insurance XQ missed you be the I that But don't this know that know

core and of tell $XX Yes. in all. talked XX% We're it the million of for which 'XX The million the the QX, to insurance revenue $XX about, we then expecting quarters equally million of proceeds modeling questionable. for $XX $XX offset is way I million the obviously QX. would insurance the we're the impacts spreaded in the in with million I and XXXX. over XXXX still get would in on we're think, $XX QX, of that in in going purposes, million about X said a XX% working The profit asking we -- And of XX% $XX now proceeds total in is, to you're what that bit confident plus I companies. timing you We're QX,

So take for quarters. X over and it spread out $XX purposes, million the the modeling I

from Next Walsh question with Crédit Suisse. is John

guess, And on like just pretty share? outgrowing you're you're tools going, just or that the going captured communicate market dollar be be forward I to be to that reclaimed some borrowed to we have I been it look you're Any we'll do marketing. the off, recapturing share. Or we amount reclaiming given how with that to appreciated. maybe it kind those you are seems specific a going to lost Would how percentage? around using So to would help joint who's know relative back successful. the it market? just to at you are turned that? should assume it's the so of us -- you expect some how will a also, campaigns be about early that of Can of how talk of And numbers

we'll second when down, be is the And expect we I gaining the you'll growth that you will we'll the see our and to and what shrink, But than back. quarter. we're tornado no I half we're last impact" And then like adjusting think we think of competitors -- that it's revenue you be shrink revenue XX% had really it saying for the clear be happen going mean, to shrink, go our quarter I mean, eventually fourth greater have level, in tornado, That have then XX% know data a did up industry bring. I that year. it answer. "we clarity but was and high our away. more. you'd way, know or will to our

the had year, impact. no of half tornado we First

the had of Second it. half we year,

to And is first way. in the the Remind significant first so second outgrow the question. we half second should was part market of a of the when year -- the That start part. me

Just the share. back market -- tools win you're using to our that

tools The have know to, you'd we Again, we we I do. using, have detail, we're we what go to who us the have granular bring. we are expect Yes. think, to to know things

talking And get go spent paid you, folks folks our we're full national things always go week. the the get programs, the to digitization, tell it sell it. And fired I are when a to for I'll of of up. it. we're to they the last about do I meeting usually ready long We guys have sales to our sales then sales to go something, marketing time we advertising it, incenting and sort our sales was get have And toolkit do equipment. customers, programs, at the

unitary the share. Maybe on thinking product in follow-up lot market leader there's market about Commercial a launched, market? I when that ability to from clearly, at how down mean, particularly Commercial a here I about were no continue to in up being take Yes. we new rooftop share quick of AHR, -- of do space kind you give of market that share. longer mean, your unitary think kind to just

but talking that's that Carrier, I assume about. of lots have mean, I you're confidence. We there -- -- know

So they're making investments in products.

applied think aggressively on unitary play where of I sort stuff. entry-level we're focused of And lot investments segment, their skewed Although that -- the but of sort of at the we -- less that. sort towards been a has

We were December, numbers segment. fourth and so up were local in and the in segment talk in strong quarter about Commercial. our saw You when or you in focusing XX% were with we that on regional we

that so focused we're we'll to share. grow and we're And confident continue

to Next, Securities. we'll Wells go Rich Kwas Fargo with

details. Deepa Kwas. for quick couple of is Raghavan This Rich A

been days, at at least. on parts ranging mid-XXs pretty here, in in least has just to U.S. weather of parts choppy, some from some some the extreme So cold the

enough adjustment be the curious, Just about a is thinking to than quarter? this Or strength is we more seasonal that quarter? the drive in should there

it's helps. selling XX weather minus Chicago, certainly furnaces, we're in when the that's Yes, so helpful. and And

as of to the the January so XX% as -- in -- be half quarter but is quarter. XX% it's high March And can revenue and

you into dealers, case. very the to to make -- weather, you still subtle that's stocking it's be second the transitioning for comps, will get first and a going summer as and still to quarter should to the preparing make So so cold season, quarter, allow weather Hot it's we March, be the cooling to shut going that weather allow cold the helps.

you -- within it. full that recovery if outlook? second pivot Got helpful. follow-up are part housing that X% your of would sales you midpoint can you're a growth slowdown? would to I can the sort to X% or of we that that And X% is, can something something that put could to Is revenue X% year what's that of give expecting that you you're to last Or the like contemplated of us at so consider? starts pretty mean, be, tornado. My to, looks X%, it you -- be

guidance sort we're the Residential anticipates revenue do going to yes. Our what in of business,

is baked we new going In digits, terms we're we years, -- last our into more of started housing, or starts. to models. often sort be mid-single XX% our or double X XXXX, numbers our have or baked we the digit, thinking the into housing X In X% so what new as it's year of so to

That's new on starts housing construction starts? based housing

-- think we of it, Yes. new tie our tie to when we I housing sort starts. we construction mean, about it growth, bake

it. got Okay,

in construction? So new mid-single digit, growth some

Yes.

Robert to Buckingham And we Research. Barry go with next,

follow-ups was Just quarter in were had it think The here. is I Europe. last confined highlighting you Commercial, to inefficiencies that a too? few we

quarter, the lower The was lesser I I issues of about, in with part productivity. factory it, margins was talked lower the think it. that factory That we productivity the But mentioned of part was tied enough being workers our constraints factory not Stuttgart, talked was the about on December and to able earnings or hire it really call, we're labor to Arkansas last -- in I and the up to it's the and we think We've degree, a accounting, behind fully good the temporary lines given we're through us. workers P&L people. some seeing. and news flow made to that's while absentees operationally handling behind and we're the takes we hiring do It on and but I large And that handling running adjustments now us. how all keeping were a LIFO pretty for confident

was had we timing other this quarter fourth good to news news year, get of year, costs. for into But the things. and issue The different elements. quarter of last around just in I hate bad we have the other accounting the

trajectory in part, it so the sort to was anticipating -- issues the just are, was at question us margin we factory we're direct think the And -- so your point. to costs. going your XXXX. timing still we're And But I is, of have answer of right the behind for Commercial confident this other the a if to question, large

it. should of Got it, first just in there mean, assume to half first got that quarter a be the or I we the weaker continues little terms cadence?

model yes, first choppy. of my because second -- bit was I -- margin more saying, trying half that build was would half what I sort given expansion, shed I a clear I Yes, to

the during Got the pricing building 'XX, think the through on up pricing it. I was And mean, cadence, year. following I

growth think accurate? the So price basis, better from that to I on year-over-year half. that a you'd in contribution much see Is would first

broadly think I correct. that's

a right? this second did from our to and we year yield than when price be increase sort much about stick the the of out resi would we likely I this the the better our have get we'll in most we're price as -- didn't quarter of we this the only issues, doing and think think year, caveat half. second I go in ability certainly fourth really so sort tornado of the And price of capture would increase, this -- because half half as year second get year got

it. got it, Got

Okay.

Just on little recently. But down copper up I a think I it's has nicely. finally, net-net, mean, still think year-over-year, bit I commodities, ticked pretty

just you this you start starting XXXX. to for tailwinds commodities so to hedge nice get to XX hedge it think in too I point next front some maybe on But early the out, into out kind are at of months year? directionally,

For XXXX?

Yes.

the... to so full was head numbers, think the be -- I my able tornado Man, Robert. of I'd

good it's think news. I

for we're taking. The XXXX answer rolling hedging is they're lower in we're the and hedges that than

we to go Next, with will McCarthy Stephens. Robert

any I'll event, suit, In math high-level questions. very my obviously, vanilla ask two so isn't strong

you terms anything in then First your seen. environment over is macro or And side, referred the of about square episodically backlogs, of you what anything Have your months? and on of side, terms talking pause? in just to seen prevailing in the Commercial around on And the gives headline across in just the the has has the we've could Residential retail with business maybe terms circle six -- Commercial past what Residential on the some comments you of side. seen the macro the that Watsco

up, businesses. answer I'll business fourth We is agree. XX%. was both I and up first accounts and short talk about Commercial. business a The service quarter, in was regional strong had our Equipment local no. in national

continues that you the or to on petrified. Fox, solid, strong. ground, If think But watched MSNBC I you're be not if

of in up any tornado In X year it our the digits -- Florida we in this volume. single had first months impact, terms X%, touch past. X% again. low talked Through the X%, we I'll was unit about the Florida, of before business

and with then with up mid-single price so And digits. mix,

And tell -- the We we seen it's canary I the so had don't so and quarter. mineshaft. any the then haven't in in it's to -- fourth impact, we the obviously, tornado hard think

Okay.

of in do some -- investments works? some world and their or you the technology was we've channel ball competitors Is off not think follow-up. set just ball. that is or share level And how larger the at your share things work? of make for of yourself in then talking fair might there's Or real I right? given about to when basically for competitors distribution. take taking And your the up on time that just a talked strategically enough. Now that just particularly the investments, its in it potential I or know one the But love the high maybe specifically, guess, an or context technology shift share? past, do a gain in have you how But a about eye off some share in not have opportunity eye

interface them bit understand mean, in good and continue to both sort of offices way been doing efficiencies of as that. do years, and for the as these distribution directly. We with to think little the ramble then partner automating do times do investments question. -- I the the back maybe our and and I answer effectiveness, and we the well it we're cost I'll about drive them X, bad. we X digitization going out it is take a we've to

people the organizationally doing So the year, years X we moving do isn't and it's technology -- on put because is the it place of frankly spend a knowing that I work. about so the building capability of quite mean, in and the governor sort fast. accelerator can quite frankly, right to

double next I And last it the you or don't our That's the going doubled more years. we're spend X so as IT We over R&D. expect now than spend But X getting because do six on months to know, continue. CCF. going we've we over off to IT UPC's

we'll go Cowen. to And Khanna with Gautam

with, remaining that buy any will the from point was I or the know, customers way over. you that there business Kysor/Warren, a cost, in place was don't bundled could separating stranded things wondering anything have to would to either dissynergy if I some

those that doing will, when you you'd businesses stranded cost like I we think being if the and the We're were the absorbed cost just to things we business, of expect us taking do. segment cost, stranded that -- by segment. sold and other just costs corporate did certainly we're out, in

bought about. have I worried many it. there however customer and our case synergies no, that we're my In it was years hang of say aren't part we been, later, it's long head seven when synergies, terms And to of

with one or North some methods either to because fair. Do others? No, no acquire year your just finding view? elsewhere ask Okay. or of actually to happens what's that's anything it with But think size Lennox I'd consolidation, resi among size has. have America you this

think Yes. I and lumpy what happen. you as a to I'll or But they ours. These it. scale, others to have say, at but mean, could happen We it don't we I'm calls, we're things are you the do because going think people became but available. we're they say people's it's don't we know right we deal and something know not to run if create value

up going be to to do. stand ready something. would want it's do and want others what we to So But to

just to pipeline to it, you're like But -- M&A not it's a put point in come on be up. seeing much terms finer of your

sort of discrete pipeline of -- -- is lots the of M&A number. you're it's assumes the this again, concept Well, deals They're about. that talking

are. loose they think know breaks was it But or it's I a And it's something pipeline, not. who a right? -- not, I concept really we all comment whether or would any whether isn't on happening activity the in

Okay, thank you.

I think the question, that's operator. last

yes. Please correct, That's ahead. go

was So to record year with profit wrap a generation. XXXX up, Lennox for and highs cash new margin, revenue, for

growth for strong off continue weather, and has some to of expect seen joining us Thanks, year another to profitability. and XXXX first quarter and start solid today. a we're everyone, cold The for

does participation. today. you that for for and conference your your Ladies Thank conclude gentlemen,

may now You disconnect.