MILWAUKEE, July 2, 2024 /PRNewswire/ -- A. O. Smith Corporation (NYSE: AOS) will release its second quarter 2024 financial results before the market opens on Tuesday, July 23, and has scheduled an investor conference call to follow at 10:00 a.m. (Eastern Time). The call can be heard live on the company's website, www.aosmith.com. An audio replay of the call will be available on the company's website after the live event. To access the archived audio replay, go to the "Investors" page and select the "Second ...

Core Insights - The article emphasizes the importance of utilizing Zacks Premium for investors to enhance their stock market strategies and confidence in investing [1] Zacks Style Scores - Zacks Style Scores are indicators designed to help investors select stocks with the highest potential to outperform the market within a 30-day timeframe [1] - Each stock is rated from A to F based on value, growth, and momentum characteristics, with A being the highest score [1] Value Score - The Value Style Score focuses on identifying undervalued stocks by analyzing ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [2] Growth Score - The Growth Style Score assesses a company's future prospects and financial health by examining projected and historical earnings, sales, and cash flow [3] Momentum Score - The Momentum Style Score identifies optimal times to invest based on trends in stock price and earnings outlook, utilizing factors like one-week price change and monthly earnings estimate changes [3] VGM Score - The VGM Score combines the three Style Scores to highlight stocks with attractive value, strong growth forecasts, and promising momentum, serving as a useful indicator alongside the Zacks Rank [4] Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to assist investors in building successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988 [5] - There are over 800 top-rated stocks available, making it essential for investors to choose wisely [5] Stock to Watch: A.O. Smith (AOS) - A.O. Smith Corporation is a leading manufacturer of water heating and treatment products, known for innovative and energy-efficient solutions [7] - AOS holds a 3 (Hold) Zacks Rank and a VGM Score of B, with a Momentum Style Score of B and a 1.6% increase in shares over the past four weeks [7] - The Zacks Consensus Estimate for AOS's fiscal 2024 earnings has risen to $4.08 per share, with an average earnings surprise of 6.7% [7]

Core Viewpoint - A. O. Smith Corporation is experiencing strong demand for water heater products and anticipates sales growth in various segments for 2024, despite facing challenges in the Chinese market and rising costs [1][3][4]. Group 1: Sales and Growth Outlook - The company expects sales from North America boiler and water treatment businesses to grow approximately 8-10% in 2024 [1]. - Overall sales for A. O. Smith are projected to increase approximately 3-5% from the previous year [1]. - The Rest of the World business is benefiting from healthy demand for tankless water heaters and kitchen appliances in China [1]. Group 2: Acquisitions and Shareholder Returns - A. O. Smith is focused on acquiring businesses to expand its customer base and product lines, including the acquisition of Impact Water Products in Q1 2024 for $21.1 million [2]. - The company has also strengthened its position in the water treatment industry through previous acquisitions, such as Atlantic Filter [2]. - In Q1 2024, A. O. Smith paid dividends of $47.3 million and repurchased shares worth $74.5 million, with a 7% increase in dividends to 32 cents per share announced in October 2023 [2]. Group 3: Financial Position and Market Performance - As of the end of Q1 2024, A. O. Smith had cash and cash equivalents of $251.6 million, significantly higher than its total debt of $119.7 million [3]. - Over the past year, the company's stock has gained 18.2%, while the industry has seen a growth of 33.8% [3]. Group 4: Cost Challenges - The company faces rising costs, with selling, general, and administrative expenses increasing by 8.4% year over year in Q1 2024 [4]. - Commodity costs, particularly steel, are expected to rise by 20% sequentially in Q2 2024, which may impact margins and profitability [4].

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1][4] Style Scores Overview - Zacks Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score, each designed to help investors identify stocks with the best potential for market outperformance [2][3] - The Value Score focuses on identifying undervalued stocks using financial ratios like P/E and Price/Sales [2] - The Growth Score assesses a company's financial health and future growth potential based on earnings and sales projections [2] - The Momentum Score evaluates stocks based on price trends and earnings estimate changes to identify favorable buying opportunities [2] Zacks Rank and Style Scores Interaction - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors in stock selection, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988 [4][5] - To optimize returns, investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B, while also considering earnings outlook changes [5] Company Spotlight: A.O. Smith Corporation (AOS) - A.O. Smith Corporation, based in Milwaukee, WI, is a leading manufacturer of water heating and treatment products, focusing on innovative and energy-efficient solutions [6] - AOS currently holds a Zacks Rank of 3 (Hold) with a VGM Score of B and a Momentum Style Score of B, indicating potential for upward movement [6] - Recent upward revisions in earnings estimates by analysts suggest a consensus estimate of $4.08 per share for fiscal 2024, with an average earnings surprise of 6.7% [6]

Core Points - A. O. Smith Corporation announced the retirement of Mark Petrarca, senior vice president of human resources and public affairs, effective August 1, 2024, with Curt Selby named as his successor [1][2] - Curt Selby has a strong background in human resources, having previously served in various roles at A. O. Smith and most recently as Chief Operating Officer at Board & Brush Creative Studio, where he helped expand the business significantly [2][3] - The transition is expected to be seamless, with Selby poised to continue executing the company's human resources strategy and vision [3] Company Overview - A. O. Smith Corporation is celebrating its 150th year in business and is headquartered in Milwaukee, Wisconsin [4] - The company is a global leader in innovative technology and energy-efficient solutions, manufacturing residential and commercial water heating equipment, boilers, and water treatment products [4] - A. O. Smith is listed on the New York Stock Exchange under the ticker symbol AOS [4]

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 March 31, 2024. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | |-------------------------------------|------------------------------------ ...

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Financial Data and Key Metrics Changes - The company reported sales of $979 million for Q1 2024, with adjusted EPS of $1, representing a 6% increase over 2023 adjusted EPS [7][8] - North America sales increased by 2%, with segment margins rising by 80 basis points due to a positive mix, higher commercial volumes, and lower material costs [8][11] - Free cash flow for the first quarter was $85 million, a decrease from the previous year, primarily due to higher incentive payments and increased inventory levels [13] Business Line Data and Key Metrics Changes - North America water heater sales grew by 2%, driven by higher commercial volumes and a favorable product mix [9][11] - Sales of CREST commercial boilers increased over 30% in Q1 2024 [9] - The Rest of the World segment saw sales of $227 million, a 4% increase year-over-year, with significant growth in India at 16% in local currency [12] Market Data and Key Metrics Changes - In China, third-party sales increased by 6% in local currency, with new kitchen products contributing significantly to growth [10] - The company lowered its 2024 third-party sales growth guidance in China to flat to 3% in local currency due to weak economic conditions [18][42] - North America water treatment sales grew by 4%, driven by acquisition-related sales growth and pricing [9] Company Strategy and Development Direction - The company is focused on innovation and operational performance to enhance shareholder value, with strategic acquisitions like Impact Water Products to expand its water treatment business [14] - Capital expenditures for 2024 are projected to be between $105 million and $115 million, aimed at capacity expansion projects [16] - The company plans to launch gas tankless products manufactured in China until North American capacity is completed in 2025, which will impact margins initially [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2024 sales growth of 3% to 5% compared to 2023, despite challenges in the residential market [17] - The outlook for North America segment margin is approximately 25%, with expectations of pressure from rising steel costs in the latter half of the year [19][30] - Management noted that consumer confidence in China remains weak, impacting demand for core products [18][42] Other Important Information - The company expects to generate strong free cash flow between $525 million and $575 million for the year [16] - The effective tax rate is estimated to be between 24% to 24.5% [16] - The company plans to repurchase approximately $300 million of its shares, resulting in outstanding diluted shares of 147 million at year-end [16] Q&A Session Summary Question: Water heater demand in Q1 - Management noted that January and February shipments were higher than expected due to prebuy activity, with March returning to more normalized levels [24] Question: Margin expectations for North America - Management increased the North America segment margin expectation to approximately 25% due to strong performance in Q1 and operational efficiencies [27] Question: Channel inventories coming into Q2 - Distributors reported inventories in line with expectations, with some pull forward expected to be worked off in Q2 [34] Question: Commercial business strength - The commercial market showed positive growth, with gas products performing well, and management remains optimistic about low single-digit growth [37] Question: China sales growth guidance - The company lowered its guidance for China sales growth due to market pressures, but remains confident in its product categories [41][42] Question: Steel pricing variability - Management indicated that visibility on steel pricing extends 90 to 120 days, with the fourth quarter being the biggest risk for changes [83]

Core Viewpoint - A. O. Smith Corporation reported strong adjusted earnings for Q1 2024, exceeding estimates, while net sales slightly missed expectations but showed year-over-year growth driven by demand for commercial water heaters in North America [1]. Financial Performance - Adjusted earnings per share for Q1 2024 were $1.00, surpassing the Zacks Consensus Estimate of 99 cents, marking a 6% increase year-over-year [1]. - Net sales totaled $978.8 million, missing the consensus estimate of $995 million, but reflecting a 1% year-over-year increase [1]. Segmental Details - North America sales rose 2% year-over-year to $766.3 million, supported by higher volumes of commercial water heaters and a shift towards high-efficiency models [2]. - Earnings from the North American segment increased 5.4% year-over-year to $198.7 million due to higher sales volumes [2]. - Sales in the Rest of the World segment grew 4% year-over-year to $226.9 million, driven by increased sales of tankless water heaters and kitchen appliances in China, with India sales up 16% in local currency [2][3]. Margin and Cost Analysis - Cost of sales was $594.1 million, up 0.3% year-over-year, while selling, general, and administrative expenses rose 2.7% to $192.2 million [4]. - Gross profit increased 2.8% year-over-year to $384.7 million, resulting in a gross margin of 39.3%, up from 38.7% in the previous year [4]. - Interest expenses decreased to $1 million from $4 million in the year-ago quarter [4]. Liquidity and Cash Flow - As of March 31, 2024, cash and cash equivalents were $251.6 million, down from $339.9 million at the end of December 2023 [5]. - Long-term debt decreased to $109.7 million from $117.3 million at the end of December 2023 [5]. - Cash provided by operating activities in Q1 2024 totaled $106.6 million, compared to $119.9 million in the same period last year [5]. Share Repurchases - In Q1 2024, A. O. Smith repurchased 0.9 million shares for $74.5 million, with 4.6 million shares remaining under the current repurchase authorization [6]. - The board authorized an additional 2 million shares for repurchase in January 2024, with a total expected repurchase of $300 million in 2024 [6]. 2024 Outlook - A. O. Smith reaffirmed its sales outlook, expecting net sales between $3,970 million and $4,050 million, an increase from $3,853 million in 2023 [7]. - The company projects adjusted earnings per share in the range of $3.90 to $4.15, indicating a 5.6% increase at the mid-point from 2023 [8].

Quarterly results provide no indication this stock is reaching boiling temperature.Water heater manufacturer A.O. Smith (AOS -6.76%) had a solid first quarter, but warned some of those sales were likely pulled forward from future quarters.Investors are focused on what is to come, sending A.O. Smith shares down 7% as of 11:30 a.m. ET.A lukewarm quarterA.O. Smith is one of the world's largest manufacturers of commercial and residential water heaters and water treatment products. The company earned $1 per shar ...