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Lennox International's CEO Presents At Bank Of America Merrill Lynch Global Industrials & Materials Conference (Transcript)

And then finally, we have been extremely disciplined with a focus on shareholder value and our free cash flow. We think about, one, investing in the business first to doing focused targeted M&A like we did with our Kysor/Warren deal, where we play in the businesses that we or spend in the businesses we know well. We’ll have dividends grow with earnings over time and then we give money back to shareholders with share buyback. Our target debt to EBITDA levels too and over the last five years, we’ve returned over $750 million to shareholders through share buyback.

Let me talk a little bit about the four businesses. This is a breakout in revenue and earnings of our four segments. Maybe let me talk a bit about each of them. First overall, we had a good first half of the year with revenue up 4% at constant FX, earnings up 11%. We also exited the Hearth business, which was a non-core business that we sold to private equity earlier in the year.

Our Residential business, revenue up 10% through the first half of the year, constant FX, earnings up 30%. We’re winning in the marketplace. Market’s not growing as fast as we are. I think that’s a couple things. One is we have more exposure to residential new construction than many of our peers. We have a strong share with the major homebuilders as well as regional homebuilders. And that segment of the market has grown faster than the replacement segment and so that sort of mix shift, if you will, has helped us.

The other is within each segment, both add-on and replacement and new construction, we think we’re winning in the marketplace. We think our investments that I talked about and our physical distribution parts plus, as well as our investments in a fuller product line, most namely a furnace line that we launched last year or finished last year, is helping us.

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