Lennox International (LII) 20 Jul 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Lennox International Second Quarter Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I’d now like to turn the conference over to Steve Harrison, Vice President of Investor Relations. Please go ahead.

morning. Good joining the review second for financial Lennox for for performance quarter us you of this International's Thank of XXXX. with today CFO, here Chairman Todd CEO, I'm Bluedorn; Joe Reitmeier. and and and key for take review through financial company's and the and will Todd you the quarter Joe the points will guidance. performance outlook, additional ask during of and follow-ups questions Q&A, everyone questions. limit please any give To questions yourself time or re-queue to the to couple for a reconciliation of the measures. have necessary In release included will that this we GAAP non-GAAP we morning, the be earnings issued to measures financial the discussed comparisons prior All mentioned period. today the are year against

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

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

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

joining morning, us. Thanks, thank for Steve. Good everyone you and

guidance then and impacted XXXX, the a for for quick for the updated start with the raising and year. quarter earnings which was Let on discuss we’re revenue in the by me second that COVID-XX pandemic overview significantly outlook

million, $XXX was down quarter, GAAP from XX%, million, income GAAP operations second operating XX%. company down For continuing revenue X%. and EPS was down $X.XX, $XXX the was

down excluding XX% down digits; of was $XXX was the XX% the and single an the as XX.X% X% million, was insurance second and and $XX quarter the EPS operational profit down down an reported Total total benefit. last And down million operational down on in business from down insurance basis the second perspective Residential pension revenue replacement points $X.XX, an as was operational included an year-ago. $XXX XXX as reported reported of for quarter charge Segment an a million. million excluding second an was in from an second was that in digits. margin segment included margin reported from basis basis. prior construction $XX segment new operational a insurance down from benefit year segment operational XX settlement XXX $XX perspective. down was insurance low benefit XX.X%, operations million, quarter The down quarter profit benefit, basis on as from segment basis segment revenue year points XX% X%; quarter, XX% profit the the is perspective. Adjusted and and up was down XX now continuing second from $XX basis million quarter Residential single points our XX%. high Total points revenue From

prior and for up through second weather and days overall for the Residential summer. the improved to degree continued was quarter. the the month up year each economy in reopen quarter were Our the as heated from X% X% business Cooling June up quarter

hot to date on the days Residential to operational growth team continued degree up were weather year. month in from seeing For by month the of The on execution July capitalize strong and we're has opportunities. XX% market excellent last June, cooling

Turning we to businesses, heavily our as they're the commercial-facing from more pandemic impacted expected.

approximately regional segment and nearly XX%. XXX down revenue new Breaking XX%, and XX.X%. XX% profit down the was National down down approximately revenue XX%, segment, basis was was business and points down XX%. On another account down constructions way; segment was replacement was the down and XX%, to margin contracted local revenue Commercial revenue

Service Lennox revenue about side, National VRF XX%, service the was On low revenue down Account single was digits. up

equipment we're X signs equipment in the continues half, with year-over-year. in improvement backlog relative overall position business quarter, new quarter. the down and won future Commercial currently growth. seeing the was account XX% for win business the second in of second While commercial in XX% XX commercial down new Commercial customers first to national including

Europe, was and X.X%.North our was XX%, and currency. America at revenue profit constant XX%. broadly businesses contracted basis XX% to Revenue points more across segment. was down margin business and to revenue about in North segment Europe than Segment down was Refrigeration our declined down Turning America XX% XXX down

As is down Commercial highly refrigeration the half Backlog for for are Overall we well. we seeing the business, in of approximately in continue signs second as of face company improvement conditions. our uncertain year-over-year. year, the to market XX% relative

performance remains currently hold, But encouraged the the in improvement and repurchase high Our Refrigeration program we of businesses. stock Commercial business be Residential on given by the and to relative continue uncertainty.

continue strong We generation. maintain balance sheet cash a and to a flow of expect strong year

free XXXX. quarter. $XXX of basis its continue The SG&A on an in for savings manage in-year We has decremental executed for million target of cash the $XXX and XXXX, EBIT million XX% operational flow of on company margin second to we well

within and revenue for continuing financial $X.XX. XX% are and be adjusted We from of range XX% guidance our to now to XXXX $X.XX adjusted operations a EPS expect to down raising

turn that with a it while experience advance downturns, just mention the to economic company's Joe, Lennox to seasoned invest will I I continuing team and position. As has through managing over

opportunities All and us gains. capitalizing on of are focused market on share

Joe. to over Now

everyone. I'll down was Todd, quarter, negatively Residential Cooling. X%, X% quarter, from starting and you, X%. on morning, the combined the foreign second In Cooling details to reported. for year-over-year Volume down to offsets the $XXX the was & and and factory and expense. revenue and SG&A segments inefficiencies. the and difference led that revenue. Segment with expense lower and margin lower Segment as as provide favorable was XX.X%, down was impacted Residential down and profit by points the XX% was financial and business in higher basis comments costs up & Heating material, mix million, Heating exchange million, warranty Thank Partial insurance some price additional to mix, Residential distribution good neutral $XXX volume price was pandemic lower freight XXX profit was included, COVID-XX benefit, reported.

our Commercial mix and price to down. revenue Turning $XXX with down Commercial was and mix XX%, X%, price Volume Cooling was was up Heating & down down business. XX%. combined million,

to to warranty warranty basis XX%. lower expense on was and included was SG&A profit SG&A profit XX%. exchange. lower impacted to X% negatively volume and was led a inefficiencies. points. the was had down Segment XXX Refrigeration Foreign freight was impact million, by mix, expense $XX costs revenue. lower up X% Commercial was margin material, was down $X Segment Partial by combined favorable segment unfavorable led offsets and to higher XX.X%. exchange was XX%, that and exchange points XXX that was Segment distribution million, COVID-XX down and profit neutral basis pandemic negative profit foreign price mix and segment contracted costs, lower Segment volume. second revenue. foreign included XX%. margin and the million, X.X%, expense pandemic higher down expense. lower freight factory and distribution Refrigeration, offsets Partial revenue down $XXX Volume COVID-XX In quarter material, lower and impacted

net second in after year up approximately proceeds charges that million due down quarter. from million the compared $XXX $X.X quarter the the also $XX.X for -- insurance. of were generated included items. Corporate quarter. in $XX million in expenses $XXX million to the This the The year $X.X the in Capital XX% from million, approximately prior million had million XX% prior $XX to for $XX company flow $X the in compared expenditures prior items quarter cash the the special SG&A second in were had protective free quarter, million and of was from $XX quarter. at the quarter, debt company million the company compared tax $XX totaling quarter million quarter. million year million. billion a cash the ratio the million June. the $XX cleaning we Overall, from net the with of paid In investments Total end pandemic, and dividends of year year personal prior ended approximately second other and X.X. facility to were incurred restructuring $X.XX at for quarter. the second EBITDA million quarter, prior in to Regarding in various $XX of short-term deep the in million $X.X debt in end the and operations Cash, was activities, $XX to the down charges equipment equivalents expense quarter, cash was

our over Now, to before Q&A, points guidance market current and it review for assumptions XXXX. I will turn I

American North shipments expect down we For be the industry, overall, HVAC to residential mid-teens.

XX% commercial for to We and refrigeration shipments shipments down the industry. unitary expect both be

outlook company's half, XX%. Looking first the XX% at performance the down range XX% raising to of a XXXX down a of for the and in guidance range the year to revenue of XX% second we to from half new are the

EPS $X.XX range XXXX $X.XX a to from of GAAP raising new for $X.XX for are year. range We guidance operations continuing from the to of a to $X.XX

a puts new range XXXX our for $X.XX guidance guidance for unchanged. for $X.XX adjusted and operations continuing of year. in The from raising to are takes range $X.XX We various to from EPS the XXXX a $X.XX to financial of remain

year. and the of still headwind. expect be $XX Commodities benefit Residential expected Residential year, $XX approximately continue a expected to to to be we benefit. productivity We million benefit $XX sourcing still is $XX million We be mix in factory to flat, million from expect lead expected a a $XX neutral. still and tariffs still price and for is to be a million million expect this net cost benefit reductions. we engineering continue be expect are freight to a to

and effective to an And approximately actions guidance $XXX of $XX XX% we adjusted be expenses quarter, a the to year. targeted last we second, Net other Now, we range taken $XX financial third year. have points of our quarters basis full SG&A remains for in the million. reduction tax about in an rate of still are and total XX% cost outlook. million. talked And fourth the mention million other expense interest in on to few expense this expect still benefit Corporate to as

shares. stock be to the and to $XXX We million share average We plan year. count XX for the between repurchased to into million continue million XX quarter $XXX in going first the the million of this weighted expect full-year diluted

plans hold. repurchase stock currently Our on remain

this to We million capital that, Q&A. year. expenditures approximately with remains And for $XXX let's target free to year. And the $XXX continue go guidance for our of flow million cash

with [Operator ahead. of Instructions] from Barclays. Please go Mitchell line the first Julian And

morning. good Hi,

Hey, Julian.

the Hi. just revenue Maybe the question outlook. first on

to seem on Residential. have better your year-on-year, second to is implies revenue stabilization like about the QX guidance But looks similar the half mid-teens talked so even it in you in the you momentum other divisions. So And decline. down two

maybe understand help just that us half second outlook. So revenue

very be I'll clear.

dance won't of moving guide. impact both market going If midpoint better we we're I that that it with around a of pandemic like has that concern today, the end markets. lot remains on environment is than So and the the there's is our to the have the question. do pieces, medically it The

asked we been question, our business you've so up into mid-teen. that in And Residential July, question answer baked was I'll our a but if guide, a

guide. in going but And a changing better and a to changing So the the marketplace, we're that’s stay is July. strength the and it if guide, concern than we have things is, world reflected way the in do

but Maybe then left clarify also of out that just are million think the And if in much SG&A margin, of I guidance? cost to second around the secondly realize the there's the half? still of in in you adjusted XX% the And QX, number it, second booked you're profit take is margins. right P&L assuming at number be decremental you mid-teens of the thinking Thanks. the I in half $XXX if the of can, different on that categories that's clarify midpoint how we

the it's I is number that current half high year at guide. yes, of will second you're teens answer the last mid first, right adjusted of assume to the the to part decrementals

of $XXX this we May were million question, or -- think -- all the salary May X. implemented the the cost implemented by On we vast and the effective about X, the May reductions as reductions first implemented part as we X way, were the

three and and run will of -- think months third would $XXX May rate all and I saving. sort rate so million the savings fourth fourth be June run the And full of for then third, quarter will be about

That's helpful. you. Thank

next with Our is the Jeff question Please from go Markets. KeyBanc of Hammond line ahead. Capital

morning, good Hey, gentlemen.

headline I’ve of note to COVID Jeff. the was your in a in it. start your I seen Hey, headline I enjoyed weather want with best beats while.

associate my give I Okay. that. credit for

just we chain. balance about up were yours a we know lot checks, down the think supply And shut right dealers. are your just better your facilities, seems you Residential So Mexico. picked in not ability low. manage inventory, and sheet like I Can I of in it demand, get some inventories kind speak your to our just to certainly product -- -- to your manage on coming in

a going through across continual there's a corporate triage and done this. but company, did good have team quarter. analogy, certainly job I industry and suppliers And a we great really our Yes, within think in job our America, another almost on, certainly our within whack-a-mole is second a

and and focusing flowing plants on is we're demand meeting chain supply Our manufacturing the and up all running the in our market. are

we through than better or balance good anyone the I in flow year. think the industry as as we're the of positioned

just I you where said that stoppages abating, trends think then you seeing are work what's signs you getting Commercial, -- kind is of Okay. or are some And better better stabilization just on better of seeing ultimately?

That's Let in When -- business go really national I is it XX% About North the about parts. little think detail planned for three commercial on Jeff. replacement. questions, think the of America, bit we about accounts. unitary me market the a think into primarily

a were they we at be May down June, April, and stronger may in saw and of in that We expected that as XX%, the orders the But that half quickly decision away. clients are people we discretionary, so picked XX%. quick that in what up planned new didn't can right market in this planned saw the is the as commercial replacement, point. construction because new of drop and construction XX% replacement make is decline

New construction projects are ongoing.

like business. that flow but that down replacement not drop that’s XX% starting residential sort didn't down, but to we in at It's like been the during or now XX%, the of business slowed accounts see the XX% early, national And all is see we're So -- process. more drop. XX emergency

been a lot we've answer think that's have where outside I is of replacement accounts position. the national planned words, has your improvement but So, question we to where an seen

QX, mentioned was XX% XX%. the I down revenue while script, down backlog about in is our As in

guys. Okay. Thanks,

is question Gautam Our Cowen. from ahead. with next Khanna go Please

guys. Thanks, Yes.

Gautam. Hey,

Couple of questions.

First, well I down wondering discernible up Are in July mix mix any and … because was on you in held seeing resi? pretty or trend a mix

still Lennox I in it was There's has the one pieces for margin given second year-over-year. is mean, at of higher to the the be product product, our it I Residential ally in Yes. mix flat the moving lots gross and business think in up margins. on slightly We're better performed our quarter. level guiding than branded any branded mix quarter, but strength

Okay.

competitors then mix. on seen a from have you any seeing not you're And So in principal U.S side? your just the secondly, behavior change the resi in competitively,

industry mean, not in question up had the Goodman's that pick some asked. No to and Carrier secret it's I been about us meet. that for change often others don't up hasn't some That's in behaviors. certainly and industry production the specific to think secret sort a a Trane opportunities a issues, that's I of Goodman some business and in the of that's able opened and

obviously And pricing. lastly, a mix of hasn't I just been bit getting you're little worse. price mean,

So of any type is or raise supportive dynamic? this that of prices potential actually it in environment, to not

in place put have The and customers, we these price into relationships with dealers. season, place. pricing standing customers, a And in again, is with the price have you go these these you a with as more we long

want And you of in raise to really a prices, that. to do hot don't sort summer

are with and we we support that markets to the the to that going demand. get think I committed So help price the and

results. Nice you. Thank

Thanks.

with of Please Deepa Securities. Raghavan ahead. Our Wells Fargo is question from go line next the

morning. good Hey,

morning. Good

Okay.

I New construction question. that thinking new given mean, than residential in pays the especially rest Residential. that Curious just for year? of trends how results you're pretty, strong, And is -- replacement? would be about construction better would This

guess is than replacement. best better Our it stay won't that

and resilient helping. been it's although construction, new think interest I rates are very low

continues Our was April, in there. hang and half to which or and stronger tails the has off that increasing which best add guess replacement on year sequentially is May June second -- of

new tail And so we expect off. construction to

Another remember, is, I call, the if to around add of on coal during want thing confidence in some you the the Deepa great quickly others and very canary our that industry weave replacement sales were grow repairing that financial into parts people to the on conversation about just crisis, an started in was mine replacing. our the was than rather and indicator that or

yet. seen that haven't We

second digits, quarter for the were June were our was business, -- saw down what for for and mid-teens And residential month in our Lennox the replacement our single parts supplies up in high replacement low that our we parts just residential down single Lennox was was while So up of X%. digits. business, and

crisis. slow in like our the to financial would So an that we're there indication me to expect that's I down. seeing not saw during we anything hanging construction new And replacements and

because it. Got last actions. the temporary on on them follow-up spoke The time about is mostly color. we some for salary of cost Thanks actions, My cost are front. the

Residential of is at how timeline assume those about thinking any temporary range and expectations rolling trending and I strong. it? have how the back uncertainty how given in guide to QX least of your July rollback, some Just does you at measures, understand of ahead, the trends but are the end better outpaced

play the understand Our answer. range I guide how on that the And year political our is sounds perspective assumes balance to a going out. of like

So, back. our things best yes, coming encompasses of it guess

better someone half all I that do back, year, by of the as or we can call that about encompassed And [ph] our guide. salary in that's second imagine XXXX, incentive sort temporary would million pay of the $XXX what XX% reductions, $XXX back, of were come short-term STI coming terms thing. we but million especially In the of

news be because pull some to we won't it back. of you give there bad So we later that decided

Got it. so much. Thanks

to ahead. Please And Joe line we next of go with Sachs. Goldman Ritchie go

morning, guys. Thanks. Good

Good Joe. morning,

there's we'd that my think replacement cycle. love actually -- home just trajectory question, you cycle? color systems lot of we is and a commentary around first a that the kind around Do taxing, are of how of any far from lot HVAC changes changes -- the Todd, specific Hey, the cycle resi there's Just the that length working been of potentially that. dynamic, love into

I you their honest it becomes it when invest I don't think their the -- But it about and about don't life, could. at to in Island, is, people think it, you of I working home, sort perhaps know. it answer and the becomes will, I if it. think protect desire

models how that to would an XX% see Now, I to things money I COVID But as work. kind inexact dynamic Joe, sure work have -- certainly think including supports is doesn't earlier a to but There's that unemployment this with Goldman going also is people that said not this talked world X% on, where to false anyone sort answer, for in attempted changed. does spot I of have that and of have back repair up the the and degree science that's -- you, I'm guessed precision. not versus of face days about any other guess while, in that replace it's go some some would us. spend. we a have performance up sell-side we the cooling think

pretty so And resilient. is market the think I

the you guys second hear. the to breakdown gave just Commercial business, that I Okay, us. And good the thinking just appreciate question, guess about

bit know and in tail for thinking to a you with when time kind repairs onsite and to continuing are of you on tail now like I guys come for back difficult we're the commercial right the quicker, service get how opportunity about business and to access ability -- the in of So a that about -- surging but the potential your this service your you think that just do that to specifically service U.S., the equipment? like

access. We have

We have access today.

We business up down. shut North NAS, never -- and running. were service American North Our our America

our an They're are are sell through our business. businesses, We through distributor, that essential essential are they working. product the onsite. we dealers, ON that

be down steep and down the revenue service quarter And planned of a think flat, the second then even it that I goes it And on so half little comes replacement we in steep, and too. I back to talked second maybe up were -- bit expect year. about

back So comes it quickly. when comes it back,

of have -- you to a think of I down from order have being it's time as in more XX%, bit green rate gone although, I now, XX% April, is now. half a that than have light mentioned the May we gone what to

than months not it's but a better was healthy, certainly So ago. of couple it's it

queue. you. Great. I'll Thank back get in

Suisse. go ahead. is next Walsh with Our from Credit John Please question

Hi, good morning.

morning, Good John.

the I were some understand of not kind forward? house, about we're April to seeing kind of guess just or that, of can we that those at you are May kind maybe as if in trying the how COVID that, question and from contractors, exit quantify can catch kind a at getting of strength of of think you're we more something if roll a or -- of exit this the of rates is any Is these do and peak into of you a months. up -- of much rates

broke You of on bit the a question. the up beginning little

for So me, can it restate John? you

the couldn't a replaced catch you're to about Oh, is when contractors sorry. of kind kind of from just maintenance? I the do was seeing get in up some if regular people's homes exit thinking rates strength of into

so. think don't I No,

I when time. our had talk I we mean, [technical difficulty] we talked they've to entire the contractors, when think to access

hot I has June. to it the with do think

X% sure days notes degree were cooling looking the I my the quarter so And have I'm make number. up right going at up for -- to

XX%.

We are up XX% …

June. For

in June. …

helped warm in us that June. weather So

quarter. thing the that going can think other we in to think we the we're share to see have I second is,

we're in regained our of gained flow business that XX% and the -- been have contractors XXXX dealers that mentioned exiting tornado in I volumes. industry see by had quarter with seeing we had because through know that now we data, impacted I share the have and fact, second our In that the and we

are the last backlog in the we're that or And as significant quarter we business products. new had that we first of benefits the a -- fourth business that. mentioned year. on focused I of quarter new from And call producing into as We and the earlier, coming competitors competitor mentioned some additional our call, I issues the in also seeing

repair, think in hot But frankly, a a it's So share such reasons is I quite some combination the I actually place, versus weather. think staying versus strong repair have of replace a one -- June very we’ve a we July. strong of gain largest and

And you mix Thanks trying be but the you're they're the there just Great. piece, that. to if capture your higher side they on into air then, sphere, curious other that commercial go to indoor seeing know just that you benefit if quality. as I not on able but for that? see customers the doing do add-on don't on or -- might if the resi might around add-ons rolls more

bit about Indoor indoor baseline the and which And humidity it's is HEPA about also capacity, that's and bringing air outside air of third as humidity that you And quality of about the filters about in balancing focused commercial. the And bring in and John, out of industry a in on scenario, ventilation both online, ventilation and think I indoor always we filters, folks circulation. air lights when you for a purification, think it's well, sort quality, about thinks air when air air for about in when years, -- control, that's we part think residential control. and UV is without untreated. outside then

and in indoor Residential in Commercial. seeing definitely IAQ, air interest quality both increased We’re

to And air consumer their solutions. address that's that's not our pure is equipment with We that, our similar best Residential the Our the in Residential. Commercial street. reports to and customers saying just work

win have think have to about I the have the item, and impact equipment it's enough of margin. it's mix big people it the it's if customer sales but sort to And capability outsized dollar customer, and think to an So a I on to of serve you important. the add not even the

your customers think I to about well item customers to able and to customers binary to and we're have capability that. your business, to talk to you that positioned and have dealer this win contractor it's do be a

Great. Thank you.

line Next Deutsche of Nicole we go the Bank. Please ahead. with go DeBlase to

Good thanks. guys. Yes, morning,

Good morning, Nicole.

guidance, flipping the moving an working with of the capital, was inflow same topic, year? maybe cash the not as just flow to that's higher free starting around any EPS in why maybe also Just higher potentially curious second thoughts half and

year. I continue working think we'll the in the half capital cash from still of second to generate

Given that a our to forecast identified I cash caution the greater just around caution ability flow, around even EPS, it. the historically

I mean right So, is, similar I've what million is earnings, million. $XXX better now, it stays guess on our said we'll world $XXX than way best the do to if the but

to happen? uplift dealers that does if question, does COVID it restock the in to that Todd. dealer happened, see Thanks, it. really just And not, more Got hadn't that seasonally. And Okay. Are does if start restocking. then you inventory? around starting was second normally for for obviously of is potential -- inventory that and something that know I because XQ, potential as create

dealers and which in does of sort be decide we and our they so business, which and a weather of in It's level, more August, in distributors or put allied the off an a May. we'll buying do do. strong seen June continues to what loading quarter more degree on second distributor June. broad impact restock hot, when is significant July and some of We've if see of it's We reload and some the April hopefully -- to XX% them see sort start reload and buying to of

for more channel started Lennox on It's side, the momentum of channel sort allied buying replenishing where And our there's so June. dealer that's think and the on us. I in May,

pass on. Got it it. Thanks. I'll

Vertical Sprague to Please Research. ahead. go go Jeff And next with we

Thank morning, you. Good everyone.

Good morning, Jeff.

the the remainder back start strong little the this of this you if us July. a try as kind looking the How in tougher here could really and in of about the wondering comps for on give particularly Todd, quarter think surface, I'm and out, QX July to half. easy the we year? comps color result just was play

that easy -- I you, exact question. -- be up July memory, necessarily from No, don’t wasn't honest I'm on little a with Jeff. year. didn't bit I'll last I don't doing I spill

year. As summer cool a I we to beginning had the last recollect,

And was and fourth in pitched of and on and our might've think saw we July weather impact about furnace maybe think the sort as so but that remember -- I quarter, May I a then I stations. degree June, cooling for been it we And warm had us. that July days easier, normal

don't I comps harder. So are dramatically that I think -- think the

year at you tornado tornado the impact But than that numbers, different. year. think look of the the much that half adjust second of sort for when during much the impact, comps you pronounced I first when reported was of the more the weren't was half

give factory you the the Is going side, kind of that in just kind the what mentioned, million other, sense noise, on on talking inefficiencies about? -- harder that just to -- of And efficient of us or we're perhaps some the Joe measure inefficiency there's can $XX factories?

traditional driven costs bit. right, then have both is we get the don't absorbed. a so were don't up inefficiencies by is the which fixed volume, absorption, The -- And absenteeism there's

have year Iowa expect productivity, factory think going $XX in now Georgia and about impact. to get to and Carolina, million of and as that has we're going where there million like were it of our places we're we you entered saying As has South that we the COVID saying and could are been inefficiencies. broadly factories I $XX

swing absenteeism, is So by about, and right. volume would think driven both by million the $XX what I

said share you Everything to quarter you today cloudy, Obviously, need here you under restart do to is particular thinking in you what repurchase? the but anything see see sounds finally then how about another are to your belt, pretty future need And just that? constructive. the

changing still is quickly. world the think I

another So I under our quarter think need belt. certainly we

I said if And call, I have -- don't know third on certainly an earnings I've this We will been publicly how I see think before. but quarter I said goes.

that other shared continue issue for the think to ensure is pay and zero I up bonuses. we around we've have cuts employees from to asked our sacrifice

think to in the of have making we aggressively before we share some buyback. I investment start make [indiscernible]

flow think benefits I how out. on sort got of we've the balanced

Great. you. Thank

with Wolfe Please Our next question go is from Nigel Research. Coe ahead.

Thanks. of Good ground Todd. a lot We've covered morning. already,

days, I'm any take not the days the for XQ a looking -- June, back adjustments in and or do the back there, of exit do a for -- June. companies XQ distortions So because here. But to looking Any blow-by-blow X had month-by-month. at on a is I a in just about count and step kind in view? to plus I'm good plus your upsell cadence we thinking of lot that think to sales rates need selling X, going

I think the it. That's X plus is good.

side, Okay, inventory inventory your obviously great. And is on then the …

say speakers] in day for day. [Multiple up is for that I'd know a fact the July, I mid-teens

What color I cadence needs any you. XQ? happen given -- well. would how have that restock? of just of where how to embed Yes. be by in obviously these rebuild kind then Exactly. that cash inventory -- some tax of kind very you much And continues some inventory then on raise unusual -- business mean through from is and free production I to XQ, looks XX% seeing inventory Right. you seems that's income XQ. income wonder wondering, which of color this times. your with to unusual level deferrals And flow payments it on then -- helpful? actually are as We're levels mid-teens for I'm Residential guidance, taxes of any down Do need

and started the we up don't On X markets -- ramped ago, we behaving, ago, the if weeks as I build, production. soon they were X it's started how X we to ago, weeks weeks as know inventory see

hot, on we've the I So and it's to supply production work stay through earlier ahead all lay the when ramped of you as the that chain in already top up demand curve. we're COVID. levels of to said have And summer inventory both

we are on position to And sure the but teams good I meet our I'm demand. not feel great working anyone understood as the So industry a in as question taxes. in and we're certainly hard,

Yes.

With the down CARES Act, bump tax I think payments there was a into … July from cash in

cash Yes, it's on a of cash. it's for for But bit timing the the of minimis the us. honestly a us bump

it's a or Yes, timing a benefit quarter issue. but modest two, for again once it's

Okay, great. Thanks guys.

Morgan with go next Stanley. our Pokrzywinski And ahead. from is Please question Josh

Breindy for this is Hi, on Josh.

Hey.

And December? how rebates I that in in wanted $XX million was in current -- in about tornado environment? to part trending reacquisition incentives given this was and the versus range customer terms of was ask that how the the going that

hoped tracking it expected and as guided would. that and is we It had

that. do, incentives, big dealers, share back with back the in second talked As as I following we think we to I've them. committed we of fact, of and mentioned terms we strong that benefits to gained XXXX would Even so about impact committed earlier, through. and a we're seeing in that, that that to had in seen quarter, we gained off to -- I gave piece are up know XX% the what market, a we and lines had going in we're of because we customers, -- those even not numbers we or the doing we're incentives in we tornado it our with see through Then flow

And so, line in also. that's all

Okay. there. That's will I leave Thanks. great. it

next is Please from question with Morgan. J.P. our Tusa And ahead. Steve go

Good morning, guys.

Steve. Hey

Hi Steve.

days. shot It's sell sensitive hurts. at side the Todd, little really these just that

on So thought for there was I Watsco call second. … the I a But

Jeff complimented Hammond. I thought I

rolls that fact and were are is the the this? when harder, more? But fact models, is Yes, false because correct. negative precision housing had you everybody. Obviously, down, factually, at that kind Is savings your rates sitting people systems about are to lot some would well different their I things and Is was in as running expected also imploding. that which saving models in it out how because of for, talked a think if would 'XX 'XX, precision driving situation they're it But this very just consumer people was And about in than there is why you that I you these talking are a I there you be, our and concerned not what more than why is have significant very hard to whatever we numbers you're yes, you did. some do through so kind false consumer better mean feedback do is if rolling a you and did April. guess our stimulus may were factor you home playing confidence -- there checks What the of is obviously to or unemployment it say little the savings getting -- of bit it think when consumer unprecedented what on call confidence is from degree?

several throes the we're I its will be in and think humble that factors I of in this.

not we're happy We're there. replace XXX% what's we're is replace, sure not boil And So it's seeing damn that in versus the it's but it good it -- driving is. that's news. repair about hanging it, to point, a

think I think, I Steve. a it's combination,

all at sudden, off are -- and because a for people they're more them people psychologically, working I things and it's not one, think home. of in it their important in could they're it's their homes, defer put invest homes nest it's where in their just to that and

it's and dealt programmable think even when harder, units you're the have people thermostats think research it that who have those and much I always we running are want there because thermostats time, shocking with. you don't it's them. what all people set I the done do when even programmable because never of don't percentage studies have

minus So degrees. of few or a steady to state to plus degree, sort units run tend a large

team will not the it's that in continue they're is also with think don't this. the sure not invest -- all continue yell I and this says this we're to in our is reason. to people reason agreement believe that. But it's think I So I that assets. depreciating not I

the of unit was And in was your was XX% of new putting height when is hard to less; financial worth the crisis, less swallow. is thought you work -- the much all read with that XX%, that that something home so less XX%, a

I we case. been -- far so been hasn't think that -- the has

In demand fact, appreciate seems to high construction of the homes opposite sort been for new it's to strong, is homes. be that continue

willing to are people think invest. I

I them thought can here, the even can psychological debate and COVID, that of there think may think tend finish through it those see that with what is the I all lived of where also in are financial can out. we happening. finish sort its to lay were and line, line causes people line can things we more way when crisis, the is having sort when So nebulous I that is. you about when this Well finish a would as the a end, are it, see viewpoint may it understand be

kind we kind look Right, of is in normalized kind of where out kind the do go of people kind expecting reset to -- but sustainably whole one year higher, we and to April next to a back unemployment -- living more next look more what maybe outside year I cycle and and of is normalized of wasn't kind we of the fundamentals as mean of environment, if the kind say lives? of where is their perhaps this this of were on May, that

answer. I again, my I humble the mean, nature of of know Steve. don't that's sort

have I think to how this plays to we are see going out.

back the 'XX, mean, exactly that traveling I be at was I example, that to back factors are it a might everything For is everything and a can of and about imagine if world play. goes of at the work as different. no talked longer then XXX% some end I

Right. Right.

XXXX. You set some how and more for I'm not do we work sure exactly so

Okay.

happy. the the we And not. and and the it making and had I just case ended maybe at are point thought we had others think model, wasn't I that I taking you was a shot is your cycle maybe

false all in taking I models. I'm personally. No, with precision sell-siders speak it not the for our

on to we remind of us question, as to the just us million. -- what's and as how Any Just of year? just kind what's temporary a second update look remind next $XXX structural

on me. back then XX% end actions XX% XX% and marketing, like -- including of salary XX% for I reductions; think about we The want X% the salaried About to happening what's for way spending headcount salaries, other comes executive sort incentives and the reductions comes from comes pay $XXX million is, will from from And for XX% for how bounce about executives discretionary depend trips, about of it pay things. incentive employees, market in travel, the XX% if and actions respond.

kind what's with with more going the of little A on variable Right. volumes.

Correct.

Okay. always. Thanks as [indiscernible] color, the for All Thanks a right. lot.

Our is Longbow go next from with Dankert Research. Chris question ahead. Please

it's sites I guess actual good Hey, as growth, the what are ground sites, labor any taking to how first far to terms guys. for customer access both hearing are we my off, from terms contractors you then or Thanks kind on good as of morning, impacting additional being whether details of in in of just question. access color markets are able and today? or customer market labor construction the seeing

we're I arrived bedrooms both think the I the customer up, did issue magnificent had I'm work and sites no and Residential. in offsite. we're plugged Almost up. an just and my needs had up, with and and that and industry it's booted an that conditioner essential personalized. left going in repaired. of, the matched We're And Commercial and wife industry seeing barrier I technician and and the kids they guys air in it aware it's my us across a

In availability, it's I labor of strong. think terms

better it's a than it think year ago. I was

issue and continue I we are have and a seeing that factory strike, with measure safety appropriate that running you business, all to but you're COVID think we taking only absenteeism then if so a I quarantine, so partners in through through those the and on or issues, is deal have the it issues. and and you we're working causes all when our way channel all focused the work think service right are

appreciate typical things a through be but August. in selling to have difficulty there things fully kind any why to just Otherwise, in as precise the view? slow would trying of year, to bulk the to a just the we've we're of might to for kind down gone I assumes, as kind of it again, taking just in season maybe helpful. tick of Thanks. Is apart the just about my is and or of of fall conservatism That's visibility guidance it. cautious really apologies, August And have the through, thinking to Got things then, as ask volumes it. moment Got cadence I now.

fourth selling it's season the see and for so end August Well, the in in quarter, I fourth obviously of but our is quarter, us volume the -- math, furnace for look season XX%, mean doing whatever of the [indiscernible]. I'm XX% AC, and is

still So fourth to quarter matter us.

tied to into humbling to call It's to how about bounced quickly no sort down, to distribution right think word again curve, Steve [indiscernible]. my was the It of me, we it's July, went would -- I if been bell-shaped that up quickly things Residential had you what surprising said I me bell-shaped COVID, how distribution. yes, be So, me up, use earn frankly, three about mid-teens. about on weeks they in it, on

humble surprised. We But guessed back never way. to been So it. have pleasantly it other know that enough go the could we've

And so we're time. this to a play going a quarter at

outside, much just, a very just it's thinking -- I you matter that. for right? replace as it. think it, XX But again, you And I the with it's that when appreciate think then Yes, cold when about I yes. it's furnace, deal going absolutely was I some sweating. degrees, Thank of flexibility to Appreciate color. can But you're there.

Although freeze. us in make my House, my dad would

Okay, but enough about me.

Let but share up; opportunities me market very we are well, highly on wrap of here, executing about market sort talked well conditions and gains. remain just as we uncertain

and Thanks our is guidance and Residential relative off second start us. summer XXXX the look and the the for for Have to We’ve continue joining everyone raised a see good improvement. a and our quarter half day. strong Refrigeration business to Commercial to remainder Third of for forward year. just of

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

You may now disconnect.