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LILENNOX INTERNATIONAL Lennox International Reports Third Quarter Results October 25 , 2021 - Global supply chain and Covid - 19 disruptions to production and labor force negatively impacted third - quarter revenue by approximately $ 75 million and operating profit by approximately $ 25 million - Demand strong , but production constraints limited growth ; revenue up slightly to third - quarter record $ 1.06 billion - GAAP EPS from continuing operations relatively flat at $ 3.41 - Adjusted EPS from continuing operations down 4 % to $ 3.40 , including approximately $ 0.55 of negative impact from global supply chain and Covid - 19 disruptions - Repurchased $ 200 million of stock in the quarter - Narrowing 2021 guidance for revenue growth from 12-16 % to 13-15 % - Narrowing 2021 guidance for GAAP EPS from continuing operations from $ 11.97- $ 12.57 to $ 11.97- $ 12.17 - Narrowing 2021 guidance for adjusted EPS from continuing operations from $ 12.10- $ 12.70 to $ 12.10- $ 12.30 DALLAS , Oct. 25 , 2021 / PRNewswire / -- Lennox International Inc. ( NYSE : LII ) , a global leader in energy - efficient climate - control solutions , today reported financial results for the third quarter of 2021. All comparisons are to the prior - year period . Lennox International reported record third - quarter revenue of $ 1.06 billion , up slightly from the prior - year quarter . Foreign exchange was neutral . GAAP operating income was $ 163 million , down 3 % . GAAP earnings per share from continuing operations was $ 3.41 compared to $ 3.42 in the prior - year quarter . Total segment profit was $ 165 million , down 7 % , and total segment margin was 15.5 % , down 120 basis points . Adjusted earnings per share from continuing operations was $ 3.40 , down 4 % . " Demand remained strong across all our end markets in the third quarter , but global supply chain and Covid - 19 disruptions to production and our labor force materially impacted financial performance , " said Chairman and CEO Todd Bluedorn . " The company had negative impact of approximately $ 75 million to revenue and $ 25 million to operating profit from these constraints in the third quarter , and we currently expect a similar level in the fourth quarter . " For our Residential business in the third quarter , revenue was down 2 % . Residential profit was down 6 % , and segment margin was down 90 basis points to 20.3 % . Our Commercial business was hit especially hard by Covid - 19 in its Arkansas factory in the quarter , on top of supply chain disruptions . Segment margin was down 800 basis points to 10.7 % . Commercial profit declined 42 % on 2 % revenue growth . In Refrigeration , revenue was up 10 % , led by more than 20 % growth in North America . Europe revenue was down . Refrigeration profit rose 12 % as segment margin expanded 20 basis points to 10.6 % . " Looking ahead for the company overall , demand remains strong . But global supply chain bottlenecks and shortages are not expected to be resolved soon , and Covid - 19 adds more complexity to labor and production disruptions . We are narrowing our 2021 guidance and now expect revenue growth of 13-15 % and adjusted EPS from continuing operations of $ 12.10- $ 12.30 for the full year . " FINANCIAL HIGHLIGHTS Revenue : Revenue was a third - quarter record $ 1.06 billion , up slightly . Volume was down , and price was up . Mix and foreign exchange were neutral to revenue . Gross Profit : Gross profit was $ 295 million , down 9 % . Gross margin was 27.9 % , down 270 basis points . Gross profit was negatively impacted by lower volume due to global supply chain and Covid - 19 disruptions to production , factory inefficiencies , unfavorable mix , and higher material , freight , distribution , tariffs , warranty and other product costs . Favorable price was a partial offset . Income from Continuing Operations : On a GAAP basis , income from continuing operations for the third quarter was $ 126.3 million , or $ 3.41 per share , compared to $ 131.7 million , or $ 3.42 per share , in the prior - year quarter . Adjusted income from continuing operations in the third quarter was $ 125.8 million , or $ 3.40 per share , compared to $ 136.1 million , or $ 3.53 per share , in the prior - year quarter . Adjusted income from continuing operations for the third quarter of 2021 excludes a net after - tax benefit of $ 0.5 million , consisting of : a benefit of $ 2.7 million for excess tax benefits from share - based compensation , a net charge of $ 2.4 million for items excluded from segment profit , and a net benefit of $ 0.2 million for other items . Cash from Operations , Free Cash Flow and Total Debt : Net cash from operations in the third quarter was $ 222 million compared to $ 440 million in the prior - year quarter . Capital expenditures were $ 23 million in the third quarter compared to approximately $ 12 million in the prior - year quarter . Free cash flow was $ 199 million compared to $ 428 million in the third quarter a year ago . Total debt at the end of the third quarter was $ 1.28 billion . Total cash , cash equivalents and short - term investments were $ 44 million at the end of the quarter . The company paid $ 34 million in dividends in the third quarter and repurchased $ 200 million of stock . BUSINESS SEGMENT HIGHLIGHTS Residential Heating & Cooling Revenue in the Residential Heating & Cooling business segment was $ 711 million , down 2 % . Foreign exchange was neutral to revenue . Segment profit was $ 144 million , down 6 % , and segment margin was 20.3 % , down 90 basis points . Residential results were primarily impacted by lower volume due to global supply chain and Covid - 19 disruptions to production , factory inefficiencies , unfavorable mix , higher material , freight , distribution , tariffs