Air-conditioner maker Lennox cuts forecast, citing ‘significantly cooler temperatures’

From CNBC

Published Mon, Jul 22 2019 10:48 AM EDT Updated Mon, Jul 22 2019 12:57 PM EDT

Kate Rooney@Kr00ney

Key Points

  • Lennox International lowers its 2019 guidance, partially based on colder temperatures.
  • “Significantly cooler temperatures and higher precipitation across the United States adversely impacted the HVAC market in the second quarter,” says Chairman and CEO Todd Bluedorn.
  • The guidance cut comes after a heat wave swept through the United States this weekend. June was the hottest since the National Oceanic and Atmospheric Administration began recording temperatures in the 1800s and July is on track to break its own record.

lennox

Lennox International Air Conditioner systems

Source: Lennox International.

Despite a blistering heat wave across the East Coast this weekend, air-conditioner maker Lennox International pointed to colder weather as a key reason for cutting guidance and underperforming in the second quarter.

The Texas-based company brought in second-quarter earnings per share of $3.74 — about 9% below analysts’ consensus FactSet estimate of $4.12. Sales came in about 4% below Wall Street consensus. The company also said adjusted revenue growth for 2019 would be just 2% to 5% and adjusted EPS from continuing operations would be $11.30 to $11.90 this year. Previous guidance was for earnings per share of at least $12.

“Significantly cooler temperatures and higher precipitation across the United States adversely impacted the HVAC market in the second quarter, and especially in key Central regions where cooling degree days were down over 30% and precipitation was up over 60%,” Lennox International Chairman and CEO Todd Bluedorn said in a press release Monday.

Shares of Lennox fell 3.3% Monday.

While the company highlighted colder second-quarter temperatures, weather in more recent months is hitting new records. June was the hottest since the National Oceanic and Atmospheric Administration began recording temperatures in the 1800s. July is also on track to break a record after the National Weather Service issued a national advisory due to dangerous heat and humidity over the weekend.

Full article here.

HT/Mike B

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64 thoughts on “Air-conditioner maker Lennox cuts forecast, citing ‘significantly cooler temperatures’

  1. “Despite a blistering heat wave across the East Coast this weekend, air-conditioner maker Lennox International pointed to colder weather as a key reason for cutting guidance and underperforming in the second quarter.”
    Non sequitur. “This weekend” is not part of second quarter. And Lennox may be forecasting profits, but they aren’t forecasting weather. They are just commenting that April-June was cool in the US, which we knew.

    • These were not forecasts. These were results that were below forecast hence the share price drop.

    • This is not a non-sequitur but rather an ironic coincidence. It merely demonstrates that neither the weather nor the climate follows economic predictions, political convictions or irrational desires, and that humanity’s ability to make predictions based upon flawed science is at best humorous and at worse more dangerous than an ignorant lynch mob.

      • I’ll take “more dangerous than an ignorant lynch mob” for $100 Alex.

        Once Antifa ratifies the “Green New Deal’ to their socialist agenda, blood will run in the streets.

    • Mr. Stokes: Thank you for admitting April-June was cool in U.S. Maybe you could tell GISSTEMP, it says June was hottest June ever. Wonder why you never try to find non sequiters and other lies from Gavin and the team.

      • “Thank you for admitting April-June was cool in U.S. Maybe you could tell GISSTEMP, it says June was hottest June ever”
        The usual careless indifference to what it is the temperature of. GISS says that last month globally was the hottest June ever (it was). GISS does not do monthly estimates for the US, but the NOAA does. They said it was just 0.2°F above the 20th century average, with a corresponding middle ranking.

        • It’s called averaging mirthness .. the average household has 2 and a bit children which is also true. It is the conditions under the calculation and what you are trying to do with the average that matter, well it does in science but not so much in climate science.

        • Nick, the phrase in the article you linked to is ‘…the warmest June in the record’ not ‘… the hottest June ever’. The difference is important.

          • ” the phrase in the article you linked to is”
            Yes, I wrote it :). But GISS didn’t say it was the hottest ever. That was Paul Courtney’s phrase, which I reflected. But it was the hottest in the GISS record.

        • “The average global temperature in June was 1.71 degrees F above the 20th-century average of 59.9 degrees, making it the hottest June in the 140-year record, according scientists to NOAA’s National Centers for Environmental Information. Nine of the 10 hottest Junes have occurred since 2010.”

          The hottest June ever in the 140 years record.

          The next nitpick discussion here.

          What means “ever” to NOAA!

          https://www.google.com/search?q=hottest+June+ever+contiguous+US&oq=hottest+June+ever+contiguous+US&aqs=chrome.

        • Mr. Stokes: Usual indifference, yes, but not careless. Just reading the news tells us that spring through June was wet, cloudy, and not hot in other countries. I don’t recall hearing of heatwaves in Europe, or India, or Asia. Not scientific enough for you, I’m sure, but if your friends at GISS expect people to believe GISS instead of our lying eyes, please make it credible. Calling it the hottest on record is absurd and only serves to remind us not to take GISS seriously.

    • The issue might be that Schmidt might have been so confident because his thumb was resting on the scales.

    • I have to agree 100% with Mr Stokes on this one (which is not a common occurrence and I know we don’t often hear him call out the other side, but still…). Pretty ridiculous post for this site with a misleading headline that would make the legacy media jealous, IMHO.

  2. When you’re selling stock in your company, you have to list all the things that could negatively affect the value of your stock. That’s what they’re talking about when they talk about guidance.

    In light of the above, activists want oil companies to explicitly mention climate change as a hazard to the value of their stocks. If the oil companies actually believed that, they would say so.

    Misstating the hazards facing a company’s stock is a serious offense and can result in jail time. That is a huge reality filter. If Lennox noticed, or even anticipated, a drop in sales due to cooler weather, that’s what it had to say.

    • So, all things being equal, how many companies list the fact that the world could come to an end next weekend by an Asteroid Strike?
      Hey…it could happen…/sarc

      • BryanA, there is this thing called Failure Modes Effects and Analysis, or FMEA.

        Basically you list all the things that could go wrong, or in this case, things that could cause a business to not meet its targets. Then you determine the potential possibility of occurrence and finally you determine effect. Each of these things have a number. Some people use basic 1-10 with 10 being the highest.

        I know you were being sarcastic but there are two reasons an asteroid strike is never mentioned in a business forecast. First, the odds are astronomically low but second, the effects are astronomically high as in, it won’t matter because functional society will be smashed to bits.

        So…. an asteroid strike would be 10(effect) times 1(chance of occurrence) which would be 10. Whereas downturn in because of lower temperatures would be (arbitrary numbers) 3(effect) times 6(chance of occurrence) which is 18.

        Oh and there is no way to mitigate against an asteroid strike, at least not on a corporate business level. That’s for governments to stress over. So….downturn in business from lower temperatures is what they will focus on.

        Right now all guidance from governmental authorities is for higher temperatures. No engineer is going to go against that so that is the base assumption for business FMEA’s. So…when it doesn’t happen, guess what, companies have to report releases like this.

    • Yes company executives face the legal system consequences for there decisions, guidance and words. Scientists in general including Climate scientists can say whatever the hell they like and there is no repercussions for making even the most stupid claims.

  3. Is “automobile” maker Tesla cutting their forecast of buyers as the pool,of virtue signalers shrinks?

    I would like to see a statistic comparing ICE drivers dying from a car fire as a percentage of all ICE drivers -vs- Tesla drivers dying from a car fire as a percentage of all Tesla drivers.

  4. Meanwhile in cloud cookoo land Gavin Schmidt … is demanding that NASA closes until it finds a way to stop using fossil start using electric space launchers.

    But of course he isn’t because like all the Climate Cult he suffers from EHS (Extreme Hypocrisy Syndrome)

    Come on Gavin! Let’s here you say it!

    NASA … a massive consumer of fossil fuels … should close down!

  5. Could it be that such economic data are a better proxy for temperature than, eh, tree rings?

  6. NASA is just one of the most public users of fossil fuel, just look at that
    column of flame as they lift off. But wait, what about all of the motor
    vehicles in the USA, makes NASA look tiny in comparison.

    MJE VK5ELL

    • Quite so. And the space shuttle burnt hydrogen and oxygen in the main engines, and ammonium percholate and aluminium in the solid boosters. Not much carbon there.

      But I dare say all of NASA, and GISS too, will be making full use of their air conditioning at the moment. Powered by carbon free rhetoric in New York City, of course – where Columbia Uni and GISS are, I believe.

      • And how does the hydrogen, oxygen, ammonium percholate and aluminum get made, transported, processed, refrigerated and loaded into the boosters (and how are they made)? All by carbon free processes I am sure./s

      • Ah ha! Prevailing winds from the ‘Cape are to the West, across Central Florida. Solid boosters are not 100% efficient, and perchlorate limits in ground water are around 2 PP Billion! The net effect can be a serious rise in hypothyroidism.
        After I had my thyroid removed, I discovered all this…I live near Tampa.

    • That flame usually is from an engine burning liquid hydrogen and oxigen. Not really fossil fuels.

      • The highly visible flame when the shuttle launched was from the solid fuel boosters. The main H2/O2 engine flame was a pale blue.

      • From Wikipedia “Liquid Rocket Propellant” article, “Steam reforming of natural gas is the most common method of producing commercial bulk hydrogen at about 95% of the world production”

        Also don’t forget that Elon Musk’s rockets so far mostly use kerosene and liquid oxygen.

        Natural gas. Kerosene. Fossil fuels.

    • It’s perCHLORate, damn my fat fingers. Which gives me the opportunity to stress I was agreeing with Michael commenting that all of NASA’s CO2 emissions are dwarfed by the cars on the road in the US alone (or even the manufacture and use of air conditioners in Florida, probably). Besides pointing out that rockets do not necessarily emit CO2 at all.

      But, yes, some do use kerosene or other carbon based fuels. Every single rocket (and process to make them) could have been powered by burning pure graphite for all the difference it makes. Who cares?

    • The Delta rockets are hydrogen/oxygen fueled. I think they would be accepted as non-polluter, as long as you don’t look too closely at how the hydrogen is obtained.

      Station-keeping motors are usually hypergolic. They don’t count because 1) they aren’t fossil fuels, and 2) they don’t burn in the atmosphere.

  7. Berkshire-Hathaway expects little, if any, future loss from climate related issues. Insurance companies are the real bell-cow in all this. Warren Buffet didn’t make his last 10 billion by ignoring the realities of reality

    • Only if people wake up to what a huge scam “climate change” is and the subisidies for the environmentally damaging wind farce are removed. He’s a master at taxpayer ripoffs. Technically, if the climate of ignorance in Congress changes…..

      • That just means Berkshire-Hathaway should expect increasing profits from climate change alarm.

  8. Huh?
    From the article:
    “June was the hottest since the National Oceanic and Atmospheric Administration began recording temperatures in the 1800s and July is on track to break its own record.”

    From NOAA NCEI (formerly NCDC):
    “•The June contiguous U.S. temperature was 68.7°F, 0.2°F above the 20th century average, ranking in the middle third of the 125-year record.”
    •As of July 10, there were 2,062 cold daily high (1,154) and low (908) temperature records tied or broken during June. This was roughly 80% of the approximately 2,557 daily warm high (809) and low (1,748) temperature records set during the month.

    https://www.ncdc.noaa.gov/sotc/national/201906

    • They are referring globally when they talk records. The funny thing is, adjusting past temperatures downward to make the present seem anomalously warmer does not in reality make people use their AC more often.

  9. Lennox apparently doesn’t rely on Gavin Schmidt for earnings guidance advice…

    DALLAS, July 22, 2019 /PRNewswire/ — Lennox International Inc. (NYSE: LII) today reported financial results for the second quarter of 2019. All comparisons are to the prior-year period. The company’s tornado references relate to the July 2018 tornado damage at a Residential manufacturing facility in Iowa. Adjusted revenue and profit exclude non-core Refrigeration businesses divested in 2018 and 2019.

    .

    For the second quarter, Lennox International reported GAAP and adjusted revenue of $1,099 million. GAAP revenue was down 6%. At constant currency, GAAP revenue was down 5%. Adjusted revenue, excluding the impact from divestitures, was down 1%. At constant currency, adjusted revenue was flat, including 3% of negative tornado impact.

    .

    GAAP operating income was $214 million, up 10%. GAAP earnings per share from continuing operations was $2.81, down 17%, including a non-cash pension settlement charge of $1.14. Total adjusted segment profit declined 2% to $202 million in the second quarter, and total segment margin was relatively flat at 18.4%. Adjusted earnings per share from continuing operations was up 2% to $3.74.

    .

    “Significantly cooler temperatures and higher precipitation across the United States adversely impacted the HVAC market in the second quarter, and especially in key Central regions where cooling degree days were down over 30% and precipitation was up over 60%,” said Chairman and CEO Todd Bluedorn. “Residential segment revenue was down 3% at constant currency and down 4% on a reported basis in the quarter, profit was flat, and margin expanded 80 basis points to 22.3%. Residential price yield was 3.6% in the quarter. Our Residential business had negative tornado impact of $28 million to revenue in the second quarter and $16 million to segment profit offset by $18 million of insurance recovery. Adjusting for the net impact from the tornado and insurance proceeds, Residential revenue was flat, profit was down 1%, and margin was down 40 basis points to 21.1%.

    .

    “Slower moving shipments in the industry due to adverse weather has slowed regaining market share following the tornado and extends our recovery timeline to include the fourth quarter,” Bluedorn added. “For 2019 overall, we now expect $99 million of negative tornado impact to Residential revenue, up from $70 million previously; a negative $54 million impact to segment profit, up from $40 million previously; and insurance recovery for lost profits of $94 million, up from $80 million previously. The resulting $40 million of net benefit to Residential segment profit in 2019 is unchanged.

    .

    “Our Commercial business hit a new second-quarter high for revenue and set new records for segment profit and margin. Commercial revenue was up 4%, led by high-single digit growth in National Account equipment business. Segment profit rose 6% to a record $54 million, and segment margin expanded 50 basis points to a record 20.6%. In Refrigeration, adjusted segment revenue rose 5% at constant currency with volume up in Europe and down in North America. Adjusted segment profit was down 19%, and adjusted segment margin declined 340 basis points to 12.8%, due in part to lower mix and the timing of the sale of refrigerant allocations in Europe compared to the prior-year quarter. We continue to expect revenue growth for both of these businesses in the second half but have reduced the outlook on commercial and refrigeration end markets.

    .

    “For the company overall, we are updating 2019 guidance to adjusted revenue growth of 2-5% and adjusted EPS from continuing operations of $11.30-$11.90 and reiterate stock repurchases of $400 million for the full year.”

    .
    […]
    .

    https://lennoxinternational.gcs-web.com/news-releases/news-release-details/lennox-international-reports-second-quarter-results-2

  10. From the article: “June was the hottest since the National Oceanic and Atmospheric Administration began recording temperatures”

    There’s the problem, right there: NOAA in charge of determining the temperatures.

    • re: “June was the hottest since ..”

      Ummmm … yeah- not here in this part of Texas. We had a reasonable start to summer this year.

      These guys, with their “hottest since” are, delusional …

      PS Was down to 72 degrees this AM owing to a nice cool front making its way through Dallas …

      • “PS Was down to 72 degrees this AM owing to a nice cool front making its way through Dallas ”

        The forecast here in Eastern Oklahoma is for a possible record low temperature in the morning for this time of year (60F). 🙂

        I wonder if NOAA will take note of that?

  11. I’m just curious, where is the actual evidence that June and July of this year are the hottest on record? Is that just coming from one source or is it multiple sources? I’m a newbie at this stuff, so go easy on me. ☺

    • Kent, I personally have NO confidence in the temperature numbers NOAA and NASA put out. They have been manipulating the global temperature records for decades in an effort to sell the CAGW (Catastrophic Anthropogenic Global Warming) fraud. If you are new to this and have an open mind, you are going to be appalled at the behavior of some of the people doing the selling of the “hotter and hotter” meme.

      Before NASA, NOAA and others started bastardizing the temperature records, the unmodified temperature records from around the world showed that the 1930’s were as hot or hotter than present day temperatures. Mother Nature caused the high temperatures of the 1930’s, so it would be natural to assume that Mother Nature is causing the similar warming of the present, judging by this past.

      But the Keepers of the Temperature Data at NASA and NOAA and elsewhere got together and conspired to change the historic temperature record with the goal of erasing the significance of the warmth of the 1930’s, and erasing every other warm period behind it in history.

      By cooling the past, that made the present look much warmer and those who are promoting the CAGW fraud want us to believe that we are currently today experiencing “unprecedented” heat and that extra heat can only come from CO2. If there was no “extra heat”, no warmer than the 1930’s, then they couldn’t make the claim that CO2 was responsible because there is no unprecedented heating going on that has to be accounted for.

      Here’s an example fo what these conspirators did, it’s a comparison of the U.S. surface temperature chart (Hansen 1999) with the bastardized, modern-era Hockey Stick chart:

      http://www.giss.nasa.gov/research/briefs/hansen_07/

      The chart on the left is the U.S. surface temperature chart. It shows the 1930’s as being warmer than present day temperatures. All unmodified temperature charts I have seen from around the world resemble the temperature profile of the U.S. chart, with the 1930’s showing to be as warm as current-day temperatures. That is your true global temperature profile. There is no unpredented warming which means there is no CO2 problem.

      The chart on the right is the bogus, bastardized modern-era Hockey Stick chart. It is science fiction (See the Climategate link at the top of the page). Notice how the Hockey Stick chart has changed the temperature profile from the U.S. profile to one that presents the 1930’s as insignificant and presents everything going forward as getting “hotter and hotter” with the hottest temperatures being today. This was all done to sell the CAGW fraud. Notably, I have seen NO unmodified temperature chart that resembles the temperature profile of the bogus Hockey Stick chart. It’s all by itself. An outliar.

      Read the Climategate emails. These guys conspired to change the temperature record and it’s all written down.

      Here is a little more about temperature data manipulation:

      NASA bastardizing the U.S. temperature record

      https://realclimatescience.com/wp-content/uploads/2018/06/NASA-US-1999-2016-2.gif

      NASA bastardizing individual state temperature records

      https://realclimatescience.com/2019/04/plummeting-temperatures-in-ohio/#comments

  12. Gavin Schmidt will just do “adjustments” again? Which is why he is so sure of a new record?

  13. If I invested in single stock (which I don’t), it seems prudent to invest in companies that use or manufacture tree and brush removal equipment in times of increased CO2 concentrations. On July 14th, I personally witnessed a very green great plains and flooding along the Missouri River in much of Iowa and Missouri (complete with irrigation wheels in flooded fields and collapsed grain silos). Much of the flooding is due to the record snows that we were told by some climate profit our children would never see.

  14. I checked the financial statement, their second quarter did indeed end on June 30.

    While the company highlighted colder second-quarter temperatures, weather in more recent months is hitting new records.

    Umm, how many months is that? My fingers seem to be having trouble counting this morning.

  15. You can believe what Lennox AC is saying as their money is directly involved. The same cannot be said for many scientists, journalists, politicians and academics as other peoples’ money is involved.

  16. Gotta love that Gavin Schmidt, the prognosticator of prognosticators, conjuring statistics out of thin air.

    Meanwhile in the real world, NOAA’s Climate Prediction Center is predicting a transition to ENSO-neutral by September-ish. Translation: it doesn’t appear likely that there will be a monster El Niño next year like 1998 or 2016 to push temperatures anywhere near a record. Dr. Roy Spencer has published his latest global temperature update which stands in stark contrast to Gavin’s Goofy Graphs.

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