Total segment profit margin expanded 20 basis points to 8.5% in the second quarter. Adjusted EPS from continuing operations was $0.96, up 12%. GAAP EPS from continuing operations was $0.93, up 9%.
Cash generation was strong, with free cash flow $18 million better than second quarter last year and $133 million better in the first half than the same period a year ago. In addition to our quarterly dividend payout, we are set to repurchase a minimum of $50 million of stock in the second half of this year.
In our Residential business, segment profit was up 19% on the 11% revenue growth. Residential capitalized on the significant growth opportunities in new construction for us in the second quarter as well as in the replacement market, where we saw above average temperatures in the quarter but comparable overall to the second quarter last year.
Equipment revenue from residential new construction was up more than 30% in the second quarter. Equipment revenue from replacement business was up mid-teens. For the second quarter in a row, equipment sales outpaced parts, supplies and accessories.R22 shipments were comparable to what we saw last year in the second quarter, but R22 shipments spike up in the key summer months of June, July and August, and we still expect R22 shipments to be up year-over-year. Overall, we saw 13 SEER shipments increase 2 points about the prior year quarter to 68% of cooling product shipments. So based on the second quarter and so far in July, we continue to expect about $15 million of headwind to EBIT from Residential mix in 2012.Overall, it was another nice quarter for Residential. We’ve been outpacing the market and continue to aggressively move forward with our strategic initiatives for growth. We’re off to a strong start to the third quarter on continued strength in residential new construction, and July has been hot. That being said, the month of September makes up one-third of the quarter for the industry, and this is a transitional period to the heating season. Some caution is warranted with the consumer confidence still fragile and the political and economic uncertainties ahead in the second half of the year.Read the rest of this transcript for free on seekingalpha.com
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