UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________ FORM 10-Q ______________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |-------------------------------------|-------------------------------- ...

Financial Data and Key Metrics - Q3 sales and earnings decreased compared to last year due to weaker consumer demand in China and North America water heater demand [5] - China third-party sales declined 17% in local currency [5] - North America water heater sales decreased 4% [5] - North America boiler sales grew 15% and water treatment sales increased 16% [7] - North America segment sales were $703 million, a 1% decline compared to 2023 [10] - North America segment earnings decreased 4% to $163 million, with a segment margin of 23.1% [10] - Rest of the world segment sales decreased 10% to $210 million [11] - Rest of the world segment earnings were $14 million with a segment margin of 6.5% [12] - Free cash flow for the first nine months of 2024 was $283 million, a decrease from the same period last year [12] - Cash balance totaled $256 million at the end of September, with a net cash position of $136 billion [12] Business Line Data and Key Metrics - North America water heater business saw softer orders in both residential and commercial segments [6] - North America boiler sales grew 15% due to strong performance in commercial condensing boilers [7] - North America water treatment sales increased 16% due to acquisition-related dealer sales and organic growth [7] - India sales increased 12% in local currency [11] - The company launched a tankless water heater product in Q2, with two additional models planned for early 2025 [7] Market Data and Key Metrics - China market experienced weaker consumer demand, with increased pricing and promotional pressure in the mid-price sector [6] - North America residential water heater orders were weaker than expected, with reduced inventories [16] - U.S. residential industry unit volumes are projected to be flat in 2024 [17] - U.S. commercial water heater industry volumes are expected to be flat, with a shift from gas to electric units [17] Company Strategy and Industry Competition - The company is focused on long-term growth through capacity expansion projects, including a new facility in Juárez for gas tankless water heaters [8] - The company is on track to acquire Pureit from Unilever for $120 million, enhancing its water treatment portfolio in South Asia [13] - The company increased its dividend by 6%, marking 32 consecutive years of dividend increases [5] - The company is investing in innovation and new product development across all product lines and geographies [13] Management Commentary on Operating Environment and Future Outlook - Management expects consumer demand softness in China to persist through the remainder of 2024, with potential positive impact from government stimulus programs in 2025 [6] - The company reaffirmed its 2024 EPS outlook to a range of $3.70 to $3.85 per share [14] - Management expects North America segment margin to be approximately 24.5% and rest of the world segment margin to be 8% [18] - The company is cautious about end-market demand but expects quarter-over-quarter improvement in North America water heater volumes [19] Other Important Information - The company repurchased approximately 2.9 million shares of common stock in the first nine months of 2024 for a total of $237 million [13] - Capital expenditures are expected to be between $105 million and $115 million in 2024 [14] - The company expects to generate operating cash flow of $525 million and free cash flow of approximately $415 million in 2024 [14] Q&A Session Summary Question: North America Residential Water Heater Segment Performance - The company attributed the weaker performance to inventory imbalances and timing issues related to a price increase in Q2 [22][23] - Management expects the market to stabilize, with flat to slightly down industry volumes for the rest of 2024 [24] Question: Stickiness of March Price Increase in North America - The price increase was executed as planned, and the company remains competitive in the market [28] Question: Long-term Strategy for China Business - The company remains committed to the China market, citing long-term upside from urbanization and middle-class growth [30] Question: Impact of Tankless Water Heater Factory Switch - The transition of tankless water heater production from China to Juárez will create a headwind in 2025, but the company remains positive about the long-term outlook [39] Question: Sellout Dynamics in North America Water Heater Market - Sellout dynamics vary by market, with some distributors reporting low single-digit growth or decline [46] - Proactive replacement demand remains stable [48] Question: Steel Costs and Price-Cost Trends - Steel costs are favorable in Q4, but overall material costs are expected to be flat [50] Question: North America Commercial Water Heater Outlook - The company expects the commercial water heater market to remain flat, with a shift from gas to electric units [82] Question: Free Cash Flow Reduction - The reduction in free cash flow is primarily due to higher inventory balances and lower customer deposits in China [87]

3rd Quarter 2024 Earnings Presentation 1 Third Quarter 2024 Results October 22, 2024 Kevin J. Wheeler Chairman and Chief Executive Officer Charles T. Lauber Executive Vice President and Chief Financial Officer Helen E. Gurholt Vice President - Investor Relations, Financial Planning & Analysis °C 0 C @ 3rd Quarter 2024 Earnings Presentation 2 0 ACSmith. Forward Looking Statements This presentation contains statements that we believe are "forward-looking statements" within the meaning of the Private Securitie ...

A. O. Smith Corporation’s (AOS) third-quarter 2024 adjusted earnings of 82 cents per share matched the Zacks Consensus Estimate. The bottom line decreased 8.9% on a year-over-year basis.Net sales of $902.6 million missed the consensus estimate of $913 million. The top line decreased 4% year over year due to lower sales in China and decreased volumes of water heaters in North America.Segmental DetailsA. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased ...

For the quarter ended September 2024, A.O. Smith (AOS) reported revenue of $902.6 million, down 3.7% over the same period last year. EPS came in at $0.82, compared to $0.90 in the year-ago quarter.The reported revenue represents a surprise of +0.12% over the Zacks Consensus Estimate of $901.55 million. With the consensus EPS estimate being $0.82, the company has not delivered EPS surprise.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectation ...

A.O. Smith (AOS) came out with quarterly earnings of $0.82 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.90 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this maker of water heaters and boilers would post earnings of $1.07 per share when it actually produced earnings of $1.06, delivering a surprise of -0.93%.Over the last four quarters, the company has surpassed consensus EPS estimates two times.A.O. Smith ...

News Release Media Relations: Curt Selby 414-359-4100 curt.selby@aosmith.com | --- | |------------------------------| | | | | | Investor Relations: | | Helen Gurholt 414-359-4157 | FOR IMMEDIATE RELEASE October 11, 2024 A. O. Smith Announces Preliminary Third Quarter Results and Provides Revised 2024 Full Year Guidance Summary (Comparisons are year-over-year ("YoY"), unless otherwise noted) • Preliminary third quarter sales of $903 million, a decrease of 4%, due to lower sales in China and North America wat ...

Financial Performance - Company reported third quarter 2024 net sales of $902.6 million, a decrease of 4% year-over-year from $937.5 million [1] - Net earnings for the quarter were $120.1 million, down 11% from $135.4 million in the same period last year [1] - Diluted earnings per share (EPS) decreased by 9% to $0.82 compared to $0.90 in Q3 2023 [1] Segment Performance - North America sales were $703.3 million, a decline of 1% year-over-year, primarily due to lower residential and commercial water heater volumes [1][2] - Rest of World segment sales decreased by 10% to $210.3 million, with a 17% decline in China due to weak consumer demand, while India saw a 12% increase [3] - Segment earnings in North America were $162.5 million with a margin of 23.1%, down from $170.0 million and 23.9% in 2023 [2] Cash Flow and Capital Allocation - Cash provided by operations was $359.9 million, with free cash flow at $282.5 million for the first nine months of 2024, both showing a decrease year-over-year [4][19] - Company repurchased 2.9 million shares for $237.1 million in the first nine months of 2024, with an expected total of approximately $300 million for the year [4] - The company has cash and marketable securities totaling $255.6 million and total debt of $119.7 million as of September 30, 2024 [3] Dividend and Outlook - Company announced a 6% increase in its dividend, marking 32 consecutive years of dividend increases [1][5] - The revised EPS outlook for 2024 is between $3.70 and $3.85, reflecting a cautious stance on consumer demand in China and North America [5][20]

Core Viewpoint - A. O. Smith Corporation (AOS) is expected to report a decline in both revenue and earnings for the third quarter of 2024, with significant challenges in its North America and Rest of the World segments [2][3][4]. Financial Performance - The Zacks Consensus Estimate for revenues is $901.1 million, reflecting a 4% decline year-over-year [2] - The consensus estimate for earnings is 86 cents per share, indicating an 8.5% decrease over the past 60 days and a 4.4% decline from the previous year's quarter [2] - The company's bottom line missed the Zacks Consensus Estimate by one cent in the last quarter, with an average earnings surprise of 3.8% over the trailing four quarters [2] Segment Performance - The North America segment is projected to report revenues of $703 million, down 1% year-over-year, primarily due to reduced orders for residential and commercial water heater products [3] - The Rest of the World segment is expected to show revenues of $210 million, a 10% decline year-over-year, impacted by decreasing demand for residential water treatment and lower volumes of water heating products in China [3] Cost and Expenses - The company is facing rising costs, with the cost of sales anticipated to increase by 1.5% to $589.8 million and SG&A expenses expected to rise by 3.6% to $181.1 million compared to the previous year [4] - Foreign currency headwinds are likely to negatively affect profitability due to the company's significant international operations [4] Strategic Acquisitions - Recent acquisitions, such as Impact Water Products in March 2024 and Atlantic Filter in June 2022, are expected to positively influence AOS's top line by expanding its water treatment footprint in North America [5] Earnings Prediction - The current model does not predict an earnings beat for AOS, as the Earnings ESP is 0.00% with both the Most Accurate Estimate and Zacks Consensus Estimate at 82 cents [6] - AOS holds a Zacks Rank of 5 (Strong Sell), indicating a challenging outlook for the upcoming earnings report [6]

Core Viewpoint - A.O. Smith (AOS) is expected to report a decline in quarterly earnings and revenues, with significant downward revisions in earnings projections by analysts [1][2]. Financial Performance - The anticipated quarterly earnings per share (EPS) for A.O. Smith is $0.82, reflecting an 8.9% decrease year-over-year [1]. - Analysts forecast revenues of $901.55 million, indicating a 3.8% decline compared to the previous year [1]. - The consensus EPS estimate has been revised down by 12.7% in the last 30 days, highlighting a reassessment by covering analysts [1]. Geographic Revenue Insights - North America revenue is projected to be $708.50 million, showing a slight decrease of 0.2% from the year-ago quarter [2]. - Revenue from the Rest of the World is expected to be $215.40 million, reflecting a year-over-year decline of 7.7% [2]. Segment Operating Earnings - Segment Operating Earnings (NON-GAAP) for North America is estimated at $161.92 million, down from $170 million in the same quarter last year [2]. - Segment Operating Earnings (NON-GAAP) for the Rest of the World is forecasted to be $18.38 million, compared to $23.20 million reported in the previous year [3]. - Segment Operating Earnings (GAAP) for North America is expected to reach $170.42 million, consistent with the year-ago figure [3]. - Segment Operating Earnings (GAAP) for the Rest of the World is projected at $16.90 million, down from $23.20 million in the same quarter last year [3]. Stock Performance - A.O. Smith shares have experienced a return of -3.2% over the past month, contrasting with a +3.8% change in the Zacks S&P 500 composite [3]. - The company holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance relative to the overall market in the near future [3].