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 | --- | --- | |-------------------------------------|------------------------------------ ...

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum characteristics [2][3][4] Zacks Style Scores - The Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score, each assessing different investment characteristics [2][3][4] - Value Score identifies attractive stocks using ratios like P/E and Price/Sales [2] - Growth Score focuses on a company's financial health and future outlook, analyzing earnings and cash flow [3] - Momentum Score evaluates price trends and earnings estimates to identify favorable buying opportunities [3] - VGM Score combines all three styles to highlight stocks with the best overall potential [4] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building [5] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [5] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal success [6] Company Spotlight: A.O. Smith Corporation (AOS) - A.O. Smith Corporation is a leading manufacturer of water heating and treatment products, known for innovative and energy-efficient solutions [7] - AOS currently holds a Zacks Rank of 3 (Hold) with a VGM Score of B, indicating potential for growth [7][8] - The company is forecasted to achieve year-over-year earnings growth of 7.4% for the current fiscal year, with upward revisions in earnings estimates [7]

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 ...

For the quarter ended March 2024, A.O. Smith (AOS) reported revenue of $978.8 million, up 1.3% over the same period last year. EPS came in at $1.00, compared to $0.94 in the year-ago quarter.The reported revenue represents a surprise of -1.62% over the Zacks Consensus Estimate of $994.87 million. With the consensus EPS estimate being $0.99, the EPS surprise was +1.01%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their ...

First Quarter 2024 Results April 25, 2024 1st Quarter 2024 Earnings Presentation | 1 Kevin J. Wheeler Charles T. Lauber Helen E. Gurholt Chairman and Executive Vice President Vice President - Investor Relations, Chief Executive Officer andChief Financial Officer Financial Planning & Analysis ...

Exhibit 99.1 News Release Media Relations: Mark Petrarca 414-359-4100 mpetrarca@aosmith.com Investor Relations: Helen Gurholt 414-359-4157 hgurholt@aosmith.com FOR IMMEDIATE RELEASE April 25, 2024 A. O. Smith Reports Strong First Quarter Performance First Quarter 2024 Highlights (Comparisons are year-over-year ("YoY"), unless otherwise noted) • Sales of $979 million, an increase of 1% • Earnings per share (EPS) of $1.00, a YoY increase of 19% and an increase of 6% compared to prior year adjusted EPS • Stron ...