Lennox International Inc. (NYSE:LII) Q3 2024 Earnings Conference Call October 23, 2024 9:30 AM ET

Company Participants

Chelsey Pulcheon - IR
Alok Maskara - CEO
Michael Quenzer - CFO

Conference Call Participants

Tommy Moll - Stephens
Ryan Merkel - William Blair
Joseph O'Dea - Wells Fargo
Jeffrey Hammond - KeyBanc
Jeff Sprague - Vertical Research
Stephen Volkmann - Jefferies
Joe Ritchie - Goldman Sachs
Julian Mitchell - Barclays
Noah Kaye - Oppenheimer
Deane Dray - RBC Capital Markets
Brett Linzey - Mizuho
Steve Tusa - JPMorgan
Nigel Coe - Wolfe Research

Operator

Welcome to the Lennox Third Quarter 2024 Earnings Conference. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference over to Chelsey Pulcheon from Lennox Investor Relations team. Chelsey, please go ahead.

Chelsey Pulcheon

Thank you, Margo. Good morning, everyone. Thank you for joining us today as we share a remarkable 2024 third quarter results. Joining me is CEO, Alok Maskara, and CFO, Michael Quenzer. Each will share their prepared remarks before we move to the Q&A session.

Turning to Slide 2, a reminder that during today's call, we will be making certain forward-looking statements, which are subject to numerous risks and uncertainties as outlined on this page. We may also refer to certain non-GAAP financial measures that management considers relevant indicators of underlying business performance. Please refer to our SEC filings available on our Investor Relations website for additional details, including a reconciliation of all GAAP to non-GAAP measures. The earnings release, today's presentation, and the webcast archived link for today's call are available on our Investor Relations website at investor.lennox.com.

Now please turn to Slide 3 as I turn the call over to our CEO, Alok Maskara.

Alok Maskara

Thank you, Chelsey. Good morning, everyone.

Lennox delivered another record quarter, highlighted by double-digit revenue growth, operating margin exceeding 20%, and strong free cash flow. We also made solid progress on multiple key initiatives as part of our ongoing transformation plan. I am grateful for our talented team and the growth mindset of our customers who enabled these exceptionally strong results.

Let's turn to Slide 3 for the highlights of this quarter. Core revenue grew 15% and our adjusted segment margin expanded 90 basis points to a Q3 record of 20.2%, resulting in adjusted earnings per share increase of 24% to $6.68.

We generated an impressive $452 million in operating cash flow this quarter, which is $139 million or approximately 44% increase over the same quarter last year. Our industry-leading ROIC also grew to 47%. Both our segments, HCS and BCS, achieved 15% revenue growth in the quarter and both continued to deliver strong segment profit.