LII - Earnings call transcript Q2 2018 | Lennox International Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Lennox International Second Quarter 2018 Earnings Conference Call. At the request of your host, all lines are in a listen-only mode. There will be a question-and-answer session at the end of the presentation.

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

Steve Harrison

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

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

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

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

Todd Bluedorn

total up a segment highs International quarter Steve. Good revenue, us. for and Revenue billion. on in profit, an adjusted a that $X.XX set with GAAP of basis adjusted margin continuing basis up Australia, billion, record XXXX new non-core and revenue are in operations. businesses posted South being XXXX; morning, thank everyone, was excluding record a to second and all X% quarter for America EPS record Asia X% on from $X.XX Lennox you joining divested Thanks, and in was the a refrigeration

benefit million. was operations Foreign XX%. million continuing XX a adjusted segment an from income $XXX basis a On in margin exchange XX%. GAAP second segment up was operating X% a to XX% record and $X.XX XX.X%, record record total quarter rose points On expanded revenue. basis, a record up to continuing to to Total a $X.XX. EPS $XXX basis, profit EPS the GAAP rose XX% a from was operations adjusted

ago. new quarter, a set Turning business records up key segment the business revenue our of year constant points profit. X%. of profit to XX% the revenue second construction currency, margin segments record new residential At X% and up segment for rose high-single-digits. from was was replacement was level Residential and up remained for XX.X% at and a on Revenue

replacement and was up revenue America, high construction to XX expanded and teens. as high-single-digits new XX% revenue points quarter. the commercial, commercial second was the was constant XX%. basis at hit for in revenue also to Segment low-double-digits XX%, constant revenue margin was Commercial was Turning In profit up up profit revenue highs equipment currency, North new currency. quarter, up at up

local up low-double-digits way, the at revenue account regional Looking business and teens. equipment and national high was was revenue another up

is the constant Lennox commercial On service currency. was Europe, revenue account XX%. revenue at down side, up national service than In more mid-teens HVAC

than constant X% points the profit business, America, down update Asia constant sale XX% up expanded In North currency our X% strength closed revenue and Europe margin segment on Refrigeration quarter, Turning revenue at more the XX.X%. business to on our both Refrigeration was low-single-digits. Refrigeration quarter business. food Ref constant and Refrigeration To was non-food in revenue expected. In second core at was up to currency. in businesses, and was second you of in we of to Australia on the as the up XX Beijer our the non-core sale currency,

real in quarter, million the in closed our sale is also our GAAP of – now which a from $XX transaction been We with US$XX a former sale operation with We million on completed. booked the area Sydney second estate Australia. in gain included guidance that associated the

raising sale Elgin, from $XXX about repurchase start our talk point in total level, are a anti-trust will a quarter. the have guidance transactions, year of business for stock to on the first in million on performance Brazilian privately-held each the third half proceeds guidance still a $XXX half to close of We revenue EPS adjusted from high with a continuing for in company and our of the South million. strong approval. With Joe these and second from we we approximately million America track $XXX but moment, net in subject Brazilian our increased the to operations with guidance are year to

copper, price price $XX this a for of XXXX, prior $XX affected the million. a from of round the aluminum, currently Section headwind are from of The for benefit proposed. guidance the XXX million tariffs million from increases and of second and mid-June million million from of $XX $XX we Following headwind steel, now effective up price and offsets year total expect of million that of freight year $X $XX headwind

as point with to last last late week. freight attacking One developments we related and you price, headwinds Beyond are strategies tariff sourcing expect. would also

have by seen factory was residential a XX. Marshalltown release in on press Friday, our in may Iowa our July damaged you on As Thursday, Tornado

are fully Thankfully, the that there our reported We is our the to in injuries employees of damage. been first the assessing extent have process no of and priority.

days across equipment North own more and in is America we more supply distribution XXX support stores network than serving commitment to ready have our distribution centers than advantage to owning An is our customers of a Second the our customers. that and of XX field. our of

at North and teams residential South stepping units equipment recovers. our our more are those manufactured Mexico Marshalltown are America that, than up and Carolina as in XX% Beyond facilities of

enacting place are address operational and and great in challenges. contingency the plans to is a recovery team We

updated you status on keep will and progress. We our

let Now to me talk second in more turn it over full performance the the Joe about outlook. detail and to quarter year

Joseph Reitmeier

for up Volume provide price X%, second was Residential million, $XXX and Thank comments a mix morning X% In and starting you, on quarter, Cooling I'll financial Residential and with additional up Todd. everyone. down segments Heating X%. quarter Heating business and the record was the Good Cooling. from details revenue the was was up XX%. some

margin impact remained commodity reductions, exchange million Residential quarter, foreign distribution revenue. also level. was Foreign adjustment a a had expenses $X $XXX X%. included SG&A mix, in unfavorable investments had engineering-led a this a costs, was exchange. profit which annual sourcing a and on Offsets profit year-over-year. positive quarter other and – Segment positively smaller and than warranty product resulted higher freight up favorable XX.X% price, the by cost record favorable headwind million, at Residential costs. higher prior lower impacted higher X% year in quarter record and volume, higher Segment prior

price Commercial Cooling up mix was Commercial was our was a X% flat. million, Heating XX%, and volume $XXX record revenue up up business. and to turning XX%, Now was

higher XX.X%, XX%. XX positively impact foreign equipment and X% a costs. reductions actual margin million Net Total was cash with down in June. product and Capital X% real end basis cost down was asset was and various XX.X% was points. having $XXX as segment benefits ago. in year the repurchases down was from was warranty was quarter, quarter the had of exchange. debt million GAAP basis, X%. company the Refrigeration Europe commercial selling more X%, expenses sourcing and region, of compared refrigeration the was in engineering-led $XX XX%. paid a compared positive prior $XX and $XX a was other a or Segment second and included non-core the and had cash were North million, Partial at the stock year which $XX America sourcing account was businesses mix, costs. second of mid-teens. a segment for year SG&A freight, June million area impact basis, the on exchange higher services billion on ended up impacted from an was In to equivalents Overall was adjusted price, other of in up $XX Free in the was million quarter, items, quarter of gain at quarter. in we revenue million higher the related our margin X.X. up Volume revenue volume, for of than revenue quarter. second commercial mix, up was second a at volume, up $X.X revenue. to up the adjustment. prior currency, Segment of $XX a segment down By in was Cash million down estate $XX in Asia $XX offsets the mid-single-digits. revenue, the second and $XX.X excludes product National million, sale were in than positive Refrigeration allocations mid-single-digits and was million Segment and approximately up of higher the exchange X% adjusted net year in a expenditures prior engineering-led profit million, by SG&A basis divested other unfavorable XXXX, quarter on a net up X%. North million the a million, second write-down points. ratio basis higher commodity cost gain record in company a $XXX Asia quarter. Europe XX%, the from reductions, profit the million offsets year in Commercial dividends refrigerant The quarter included million. and profit HVAC percentage $XX quarter a $XX.X and impacted XX.X% quarter. favorable ago. being up price, million commodity, Partial including HVAC Australia for foreign businesses Australia, compared $XXX million, up XX after-tax higher debt-to-EBITDA prior the America operations was revenue quarter. X% revenue. unfavorable second $XX and a the quarter by in freight XX%, costs more to higher was South were on Segment revenue On included cash $X.XX on and Foreign second Europe, mix America was $XX to down Sydney and XX.X% reported $XX profit This with favorable divestitures, end from in the charges in in second the second million $XX and was Overall, the year net flow basis million an $XX.X% million Corporate of and from price quarter

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

Our for XXXX market assumptions unchanged. are

- overall, North mid-single-digits. residential overall shipments expect up the we industry be America for For to the HVAC

expect North we America and commercial shipments We to expect America shipments unitary Refrigeration to up low-single-digits up low-single-digits. be be North

the to our performance, On positive at and on in $X.XX assumptions, to our given for raising the foreign we X% now XXXX benefit X% our and to our for Refrigeration exchange. targets GAAP operations market from neutral range basis, are the a after revenue $X.XX from divestitures to to from new with to X% half guidance market of exchange a moves to X% X% gain the GAAP with and with adjusted foreign quarter timing company’s Looking of a from estate transaction. Sydney X% basis, growth $X.XX completion guidance real underlying that into we factoring X% results exchange. share EPS from of a of continuing foreign $X.XX gains incorporating first second an expect the the range range neutral guidance

to a new raising from continuing EPS from to of year $X.XX $XX.XX $X.XX $XX.XX. for range are to guidance We operations this adjusted

in and assumptions puts guidance Now the let takes and some me key through our points run of for the XXXX.

the guidance First, $XX highlighted as that are $XX to are points the for earlier, changing; Todd from guidance million. our we million year raising

with million will the commodities, all We million, and are freight from as $XX we guidance headwinds well. we from sourcing headwind $XX raising of course are year and for our tariffs, which price offset see strategies attacking those the to

Foreign be for prior exchange the versus year $X million is of neutral guidance now expected benefit. a to

quarter. quarter of the We of now and our We total $XXX first count the guidance $XXX prior to are following repurchase million million weighted shares for approximately guidance up million. this in million to year average raising million for in our from in for second year $XXX moves shares. XX repurchase share plan Accordingly, stock million range the purchases XX the of of million a diluted from shares XX $XXX year, to year

for Now guidance unchanged. the points that are

$XX initiatives. savings guidance to for be in our an focus plants approximately targeted continue planned reduction this approximately the a is distribution programs. and still this points. cost operator, our XXXX few we rate adjusted $XXX basis see $XX other $XXX are expenses guidance that, free interest at And A million remains be the $XX in on cash and full XX% expect still million productivity Investments Corporate year. year. in still be to go in XX% savings from for for as our expenditures is $X million Net well. million be targeted million million and year. $XX still we We residential year. expect US automation and Capital factories Q&A. with We full other will in to are sourcing the from million headwind to let’s Tax full year headwind still SG&A $XX to as expense still million expected to now a flow engineering-led on

Operator

our of And line question Markets. [Operator come first Instructions] Capital with from KeyBanc Jeff will the Hammond

Your line is open.

Jeff Hammond

morning guys. Hey, good

Todd Bluedorn

Hey Jeff.

Joseph Reitmeier

Good morning, Jeff.

Jeff Hammond

dynamics? to couple a brands, one, negative can mix see you any speak residential, just questions in two, just pre-buy your the allied on you Hey, and did

Todd Bluedorn

hard all On always across but the to it’s million our zero XX of the to brands. know, guess pre-buy is pre-buy,

On margins, record call, a in said the the we residential as it’s XX.X, levels.

was quarter. $X QX, last we had from also increase year the of commodities of offset Our positioned in first for of headwind and price The half with the offset But that in at the put rate end the residential. in both margin year the freight we from we expansion did price to and the million in from headwind residential increases. will mid-June and headwind increase freight commodities be better will second that

Jeff Hammond

on that and Okay, can you so the are cetera? just seems this speak? motors, and then, are really et it seeing can the What you tariff incremental like freight tariff then Is you sourcing – dynamic, costs specifically?

Todd Bluedorn

plus Yes, then $XX billion billion the of the the that’s yes. one excuse is, that been our out XXX, best understanding answer been It’s already be – XXX came the the going $XXX the $XX short that’s already and – billion me, implemented. that’s implemented implemented or to

this the Our sort of of best that’s controls implemented [indiscernible]. understanding of the future, one, motors plus a million our yes, already current one for to understanding degree and from electronics then, our headwind. lesser about primarily and $X some of year And been it’s

Jeff Hammond

I’ll guys. thanks in Okay, queue. get back

Operator

you. Thank

comes the from with question next line Tim of Our Wojs Baird.

line Your open. is

Tim Wojs

morning. Good Nice Hey guys. job.

Todd Bluedorn

Tim. Thanks,

Joseph Reitmeier

Thank you.

Tim Wojs

Hey.

grew residential it So, similar new mix, in just kind looks on and rates. R&R the like markets construction of

the are you of R&R mix? of around So increases? sort price seeing of any what within in seeing trade-down curious you Are just kind terms

Todd Bluedorn

see No, that to mix the of sort continues no. segments natural I the up each mean, and within case. we of the be continue to

no, so, plans the it’s price of – sort when haven’t to a those that place and mix. people put they’ll increase that in And is know opposite we tend do we’ve happening, be preload richer the

So, on the no, push I back haven’t mean, price. seen we any

Tim Wojs

largest more hedge are aluminum year. Okay. this XXXX? you And know as you moved any But materials, have flexibility then, into now raw on hedged just and copper to mostly for I look that the

Todd Bluedorn

will to it. in a and be of have and thoughtful hedge right [indiscernible] we the high-end the think – react place of have the low-end middle that strategy or rules the have we a to where we We band band I word the be band

commodity the we not are drops but market. in try react we to and So, speculators,

Tim Wojs

luck of Good the year. great. rest Okay, the on

Todd Bluedorn

Thanks.

Operator

you. Thank

next line comes Our Merkel the question from Ryan William Blair. of with

line is open. Your

Ryan Merkel

Hey, morning everyone. Good thanks.

Todd Bluedorn

Hey, Ryan.

Joseph Reitmeier

Ryan. Hey,

Ryan Merkel

you first quarter put So, XX% adjusted. think on incremental I margins, this up

not? think for but I why that year, about talking why cards we the the or XX% and were in is still

Todd Bluedorn

of tariffs chasing below midpoint now our freight you I were we half and seen if the little and we take increase. we’ve we’ve a of the and the is, thing are that in price chasing place think the think put I year, the XX% guide, bit first

of I we’ll probably below basis, closer full to think half year, a probably it. the we’ll year be bit be a second on little XX%

Ryan Merkel

cost, secondly be like expect me to just Okay. spread on the would. the then, in a second price And bit sounds for you better, but it that half little you if clarify

Todd Bluedorn

really second $X added I to quarter think was, freight got greater offsetting price what saw to was we increase in it we the you what with again, just are repeat of first is, million commodities. price, commodity the was than increase focused we year-over-year, because what if on saying,

Second the freight. offset us price help will increase

so, of or million full from on while and the we headwind for a basis, of year, year from we the million And tariff. price commodities, freight are balance million $XX $XX $XX of million guiding guiding are – from $X

everything. So, we’ll on basis, a full year offset

First the half year offset freight. to weren’t of able we

second positive. the year half should be So of

Ryan Merkel

it. then, and off just the Got in to you mentioned of start. few is terms lastly, growth segment get good details any a Can just July we And more color? rate a

Todd Bluedorn

I weather exact it’s am you just to I a not hot and bit. mean, going give can It’s rate. it – all read when just quite us helps a map growth the

early, is nice to but off a start. July it’s So,

commercial We nice backlog also had and in both Refrigeration commercial North HVAC a our America. in businesses

For about XX%. quarter just in third July and are – shipments the quarter it’s the September, or and under of XX% each for August in

work [indiscernible]. So we still lot have a of

Ryan Merkel

Todd. Thanks,

Todd Bluedorn

Thanks.

Operator

Thank you.

of comes Gautam Company. question & Khanna from line next the Our Cowen with

is open. Your line

Gautam Khanna

Good guys. morning Yes, thanks.

Todd Bluedorn

are how Gautam, you? Hey,

Gautam Khanna

wanted I national this was thought service accounts right that Well, XX%. follow-up, I thanks. to heard up I

Todd Bluedorn

Yes.

Gautam Khanna

right. recall, I a big if was Plus, on last – comp year, and that a from

So, Can what’s on you… there? going

Todd Bluedorn

model, effect. flywheel kick – start really team positive get a good really we’ve to on a and when things in have business a you We there

work our we’ve the business service our after all account so, where we done with business right icon trying these what national service do from tied our to with equipment into cost then go the have together put a and we our that think want package. increasingly controls And We national accounts to nice we’ve business structure us. on are controls, large who

a us. charts and for a five good nice been us. saying strategy. for it was grow for this a We’ve quarter is And business to four, it’s second that showing reflection so, We the want of years quarter multi-year

Joseph Reitmeier

despite momentum QX the presumably the comps. into continue so And should tough

Todd Bluedorn

I not each a we XX% double-digits, quarter. But grow what we think last or sure continues, we this said years it it we’ve in to and grow going the continue to do. and expect that’s what done or five XX% mid-teens year am that’s I are to we business four

Gautam Khanna

wanted you given weather you hurricane had year calibrate disruptions. the QX also to I Okay. could know – last if on us some

Just you QX margins in last drag negative how think plus, a given price the mentioned, the you about if actions ever don’t either incremental was the should year from QX disruptions? what hurricane quantify to chance the I know had we price that in

Todd Bluedorn

we’re don’t haven’t we quarter going the about I balanced and that. we’ve reasonably too then too to third Yes, promised think around of it. bitched I much in it coming think out much

in that the year better major year. of than What drop we the have half should it But second is and half half the of we mean, think to we saw I had Florida. freight impact. expect first a through a I we’ve said So, impact had of and year for and it commodities price Houston offset the some don’t second

Gautam Khanna

if me, for will. one Last you Okay.

been M&A there the buyback about change any proceeds you the a the Could bit little little divestitures. from a upped now talk has bit the if pipeline there? You with

Todd Bluedorn

that, we both unitary been have organically, consistent North gaining acquisition No, and in the today. HVAC, priority to said said want been M&A to not others are market, we’d we’ve would that pretty true the the that’s America they luxury that’s pipeline that and what I with Europe wanted sense, the clear share. decide us guess, with so, but end-markets that’s HVAC to consolidate We’ve the for growing mean, but – might of we’ve growing in still exit. We’ve have past and right I make a

Gautam Khanna

Thanks. Great results. Congratulations.

Todd Bluedorn

Thanks.

Operator

you. Thank

line the Our next of question comes Coe Wolfe with Research. Nigel from

is open. line Your

Nigel Coe

morning. Good Thanks.

of here. Just of a lot couple We quick covered a questions. ground

place, you first your You mentioned all very affected. the of clearly measures PR kind Marshalltown And What demarcations facility. apologies all, if in of this that but And the some I costs what loading got in you mentioned the does in [ph] factory am exclude will in manufacturing? cost – you to be assuming and do XQ rebalance explains Mexico XQ? there in as South those freight Would Carolina? you that's

Todd Bluedorn

still the the and facility be roofs just to of about manufacturing the and are portions damage sustained manufacturing Marshalltown walls assessing clear we sections in the To damage. of extent The it, of the floor. fully

there that’s Our distribution located all. damaged wasn’t at center

of the ready ship. lot finished So to products goods

in the contingency early. plans in As you recovering said call, action are we operational very

is customers field the your of days answer what questions, distribution own your significantly distribution but do have in than this XX of is, to lot for we the sure products And products for XX Marshalltown out of of that we of the we owning except to in made not in we some handle than days produce the press one network. how and more more is taking so, luxuries we the release the we exactly are internally are a and I understand are care honest and the going that we are in committed going to point

to we we as And investors of going we finalize and we’ll through keep how going and are are work updated the status progress so, it respond. to

Nigel Coe

know quickly Europe quick you. you I a you, one Thank in big not saw are saw trends in seeing bit then, the over of Commercial just Refrigeration. that a Would around your year? We weaken weak is There in And market we HVAC. in what not European on perspective your to are but balance trends of Europe. for noise is approach but strong expect Europe? the you - just trends, little you from –

Todd Bluedorn

of Our of just lumpiness a HVAC down business because couple major was customers.

year we didn’t So, repeat significant piece this business last of did that year.

serve Spain, balance going Europe predominantly. we remain for France, is Germany, and is that be it’s year. Our nicely. think the up up – the to balance We Refrigeration where we on will of of again, we I the of have phrase this think serving think market. use we the But a just am low-single-digits We cautiously play Western business optimistic year. portions the but are that, always portions we the I for it, small PO were

Nigel Coe

Todd. Thanks, great. That’s

Todd Bluedorn

Thanks.

Operator

Thank you.

question Julian Our the will from Barclays. line of with Mitchell come next

Your line is open.

Julian Mitchell

had cost good price this a beyond you be Todd, a margins are long manufacturers, subsequent carryover to by morning. of lot Hi, price tends Maybe of much input sort just of after cost year, question, sort once week-to-week reaction your in experience you’ve HVAC for industry, on out a typical during when how in cost period of terms period does for down. this a the looking gyrations inflation that the and you, that of inflation the thinking tailwind dies about in the HVAC

you of this impact If reasons cycles history? see versus next any historic be and different sort year why, say might

Todd Bluedorn

once is, years question Well, get we price, had price it way, so and this the I’d give home, if up several go was don’t and to get we commodities back answer understand then to margins go commodities right, the if case. we we offset that I where and then,

next carryover And in getting June the and that rise commodities increases price round price. so, half we year And continue impact year will this think as it have be then if in we’ll the to pass on and would there are about year. additional will I

think never I down. it. it up We how that’s and go give commodities get about we back, I price, So think

Julian Mitchell

recent now, have seen there dynamic months any you similar is When pretty the in or competitive quarters? changes the

Todd Bluedorn

similar all competitors seen increases. price We’ve our announce

they share Our through our that best guess we we the gaining by year first the sense the see I field is in in now is share commercial. both them are and are results and implementing are think certainly that in you of losing and res can half my

implementing are so, think think any gaining share, not not competitors our giving are doing but price. I the position I And by share our up competitors passing thing same on are prices and market we

Julian Mitchell

in towards the you it’s should up of coming the margins then, the in margins the we down gross or again? QX and QX first been get you year, were having Do end gross back quarter. lastly, in see will the Thanks, more up think them

Todd Bluedorn

the in price it to round corporation, commodities. had be a year about million will the margins I’ll able think by second wasn’t of half so the we second we say, take on up what and we cover I now June think saw But headwind and we quarter was, that will increase that $X be plus the offset price. the freight for gross from

think we the gross of half year, margins again. to So, our grow second start will

Julian Mitchell

Thank Great. very you much.

Todd Bluedorn

Thanks.

Operator

you. Thank

Our the with line Rich Fargo next Wells Kwas Securities. from question come will of

open. is line Your

Rich Kwas

morning Hey, everyone. good

Todd Bluedorn

Hey, Rich.

Rich Kwas

Just on the freight thing.

that – that’s slowdown regards doesn’t So, with I like mean, seem going to soon. anytime

XXXX? as what happen think about price we an XXXX, as to about So incremental we put cover think have we increase to could

Todd Bluedorn

import we like do. China we’ve – second electronics is will on we directly XXXX There to freight tariffs go price I just to Similar we what as competitors eyes priced just and sort keep our commodities, like commodity, couple we’ll into those and and at least see that the to the too. our freight and a of and ifs motors and controls competitors year half them from think offset I same will offset our just of answered it. We’ll

short is, to see. answer And we’ll we that so, inflationary price offset headwinds

Rich Kwas

And the on the mid-year, $X you current put does price increase incremental year? the that just next cover over the that tariffs through million

Todd Bluedorn

Yes.

Rich Kwas

so… right, All Okay.

Todd Bluedorn

in price offsets gave. the we sorry, $X are put for XXXX the the million guide I the increase effect tariffs. we Sorry, That’s see going to in year this

Rich Kwas

an have over year-end to cover would get so increase be at incremental price Sorry. would flap impact? to in to there then, But

Todd Bluedorn

talking I price, $XX additional Well, do are the will can I of think from if but be increase, there million increase million math you that sort in you the increases take to significant, a mid-year commodity carryover the $XX that price an look $XX offset that you of million us I that from or about. of guiding coming price some is going think think that

Some increases tariff of about. the you are talking

Rich Kwas

Right. watching you standpoint, go closely we XXXX again, being sounds the as freight likelihood or… of like, you on are it into the But less, it caught more

Todd Bluedorn

closely. more it watching certainly are We

similar to think mean, think year middle start happens. eye us. it’s it and Unfortunately, directions, do during we XXXX to on tariffs in freight I year, as spiking what are the the going I to right. up see Last they and of our what I commodities opposite will move keep

there be goes So freight tariffs many if as won’t up, quite maybe requirements.

Rich Kwas

And quick ones. other two Right. then,

Marshalltown. for any for On include potential incremental second from the half, the negative not the does that guide impacts

Todd Bluedorn

Yes, minimize and I yes. of – that. try are we think all it’s to is, sort through trying the short of answer But, work going to and

Rich Kwas

And of a competitor understood. value-oriented then, right, fulfillment one your right, is Right, standpoint. field, still it just in the struggling seems like on

with mix XXth are [Ph] up mix [Ph], what pick we clear the seeing year this quarter – are that So, to able a a there? percentage quarter, out here the share was we of this bigger some with XX/XXth year

Todd Bluedorn

No, think I year to the ago. gain it mix the And as this same I was trying year it places. we share was the multiple about think reflects, are

I think gained we overall, share.

also of to you are We low-end, mix sort moving a price up we to out, ready are I the up. and competing product tendency as at about, but these have you increases have and when mix talked you

Rich Kwas

Okay. the Appreciated. Todd. color, Thanks for

Todd Bluedorn

Thanks.

Operator

Global. come of you. Seaport And line Thank Walter the Liptak the from will final with question

open. is line Your

Walter Liptak

morning. thanks. Hi, Good

Todd Bluedorn

Hey, Walter.

Walter Liptak

kind especially what on with going guess American at you trade do and China? that, suppliers, and Wanted discussion issue to look wanted to at North just I the supply And of favorably more cost tariff I get about clarify more all the is, of trying view, ask with a about war a to the is am U.S. in with tariffs your what’s start to not issue.

Todd Bluedorn

cost I the moving. issue think right it’s a and ground now, just keeps

what’s going the we on, constantly we at are assessing So play. are where and what’s right

of what right now, million chain, we on $X happens, So, maybe it’s change our supply headwind. depending but

and we China advantageous as other and there those Joe of strategies. our where to we continue in to the are mentioned than script suppliers produce options other through us us some suppliers, mentioned China, talking to or cost are in good and advantage can about be our they work I have will on to components that We cost

Walter Liptak

it’s inventories discussion I and too storage then tariffs into some are talked having storage, And about the Okay. don’t much think just they wonder I an one, that cold there but last soon is you that cold impact thinking on going a U.S.? that too more are about if meat

Todd Bluedorn

out that bit half. down in bit three slowing but slowdown seen Cold the we a year of the we first a where we’ve the after numbers this and for of were North two America the sure have more in the impact first half our the not the in last you us the backlog Refrigeration year. in been business phenomenon, half cold Little second storage quarter in in broadly. revenue saw sort our growth segment down tariff am business, I of play little storage bit a or years has going strong little over and in of into

handle food with but people prepared We either are I wanting around don’t or think grocery think and think a market. their I tariff, we trends to that’s half, stores that good has second that do anything their to position longer-term pretty we optimistic to and food are homes just fresh macro supported delivered in in

Walter Liptak

Okay.

you. Thank good. Sounds

Todd Bluedorn

Walter. Thanks,

Operator

it turn closing for to like I’d comments. speakers, that, any back with over to And you

Todd Bluedorn

are Thanks with the a strong second profitability performance for half guidance Thank year. continued wrap to we strong our and joining all you in to growth first of for lot up, the the the the raising today. To half us and and third XXXX quarter, start look record forward operator. in

Operator

that your Executive And your you. you using ladies participation Thank for conclude and AT&T for Thank call for Teleconference and gentlemen, conference Service. does today.

now disconnect. may You

Lennox International (LII) 23 Jul 182018 Q2 Earnings call transcript