Core Viewpoint - A.O. Smith (AOS) is positioned well for potential earnings beats in upcoming reports, supported by a strong history of exceeding earnings estimates and positive analyst sentiment [1][2]. Group 1: Earnings Performance - A.O. Smith has a solid track record of beating earnings estimates, with an average surprise of 12.46% over the last two quarters [1]. - In the last reported quarter, A.O. Smith achieved earnings of $0.90 per share, surpassing the Zacks Consensus Estimate of $0.79 per share by 13.92% [1]. - For the previous quarter, the company reported earnings of $1.01 per share against an expected $0.91 per share, resulting in a surprise of 10.99% [1]. Group 2: Analyst Estimates and Predictions - Recent estimates for A.O. Smith have been trending upward, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [2][3]. - The current Earnings ESP for A.O. Smith is +1.02%, reflecting increased analyst optimism regarding its near-term earnings potential [3]. - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a high probability of another earnings beat in the upcoming report [3]. Group 3: Earnings ESP Insights - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being more reflective of recent analyst revisions [3]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have historically produced positive surprises nearly 70% of the time [2].

The struggle continues for the U.S. manufacturing sector, but the picture is finally looking brighter with the sector making a solid effort to stage a rebound. Cooling inflation is once again driving demand that has seen orders at U.S. factories picking up lately.New orders for U.S.-made factory goods increased 2.6% in November, surpassing economists’ expectations of a rise of 2.1%, the Census Bureau said on Jan 5. The rebound came after a 3.4% decline in October.Year over year, factory orders increased 0.7 ...

North America Segment Performance - North America segment sales increased by $57.0 million in Q3 2023 compared to Q3 2022, driven by higher residential water heater volumes[91] - North America segment earnings rose 19.9% in Q3 2023 to $170.0 million, with segment margins improving to 23.9%[91] - North America segment earnings for Q3 2023 were $170.0 million, a 19.9% increase from $141.8 million in Q3 2022[104] - North America water treatment product sales are anticipated to grow 5-7% in 2023, primarily driven by pricing[87] - Commercial water heater industry volumes in 2023 are expected to increase mid-teens compared to 2022[87] - Boiler sales in North America decreased 11% in the first nine months of 2023, with a revised outlook of a high single-digit decrease for the full year[87] - The company recorded pre-tax pension settlement income of $5.0 million in the North America segment and $1.0 million in Corporate expenses[109] - The company incurred pre-tax pension settlement expense of $346.8 million in the North America segment and $70.5 million in Corporate expenses[109] - The company reported pre-tax pension expense of $9.7 million in the North America segment and $2.0 million in Corporate expenses[109] Rest of World Segment Performance - Rest of World segment sales in Q3 2023 were $233.4 million, up $3.2 million (1.4%) compared to $230.2 million in Q3 2022, driven by higher volumes in China, partially offset by $11 million unfavorable foreign currency translation[93] - Rest of World segment earnings in Q3 2023 were $23.2 million, up from $21.8 million in Q3 2022, with segment margins improving to 9.9% from 9.5%[93] - Adjusted Rest of World segment earnings for the first nine months of 2023 were $69.3 million, with an adjusted segment margin of 9.9%, excluding a $12.5 million impairment expense[93] - Rest of World segment earnings for Q3 2023 were $23.2 million, a 6.4% increase from $21.8 million in Q3 2022[104] - The company reported a pre-tax impairment expense of $12.5 million in the Rest of World segment and $3.1 million in Corporate expenses[109] Financial Performance and Projections - Company-wide gross profit margin increased to 38.0% in Q3 2023 from 34.9% in Q3 2022, primarily due to lower material costs[89] - The company expects 2023 consolidated sales to increase by 2% compared to 2022, excluding potential future acquisitions[87] - The company expects 2023 consolidated sales to increase by 2% compared to 2022, driven by a 4% increase in residential unit volumes, higher commercial water heater volumes, and increased water treatment sales[94] - Adjusted earnings for the first nine months of 2023 were $430.4 million, compared to $357.1 million in the same period last year, with adjusted EPS of $2.84 versus $2.28 in 2022[101] - Earnings Before Provision for Income Taxes (GAAP) for Q3 2023 was $176.4 million, compared to $144.7 million in Q3 2022, representing a 21.9% increase[104] - Total Segment Earnings (non-GAAP) for Q3 2023 was $193.2 million, up 18.1% from $163.6 million in Q3 2022[104] - Adjusted EPS guidance for 2023 is $3.70 to $3.80, compared to 2022 adjusted EPS of $3.14[108] Cash Flow and Debt Management - Cash provided by operating activities in the first nine months of 2023 was $439.0 million, up from $214.7 million in the same period last year, with free cash flow of $396.3 million compared to $163.8 million in 2022[97] - The company expects 2023 cash provided by operating activities to be between $640 million and $665 million, with free cash flow projected between $575 million and $600 million[97] - Total debt decreased by $214.9 million in the first nine months of 2023, with the leverage ratio improving to 6.4% from 16.5% at the end of 2022[97] - Free cash flow (non-GAAP) for the first nine months of 2023 was $396.3 million, a 141.9% increase from $163.8 million in the same period of 2022[107] Share Repurchases and Tax Rates - The company repurchased 2,388,000 shares in the first nine months of 2023 at a total cost of $161.4 million, with plans to spend approximately $300 million on stock repurchases in 2023[97] - Effective income tax rate for the nine months ended September 30, 2023 was 24.7%, with an estimated annual rate of approximately 24% for 2023[89] China Market and Currency Impact - Sales in China are projected to grow 3-5% in 2023 in local currency, but currency translation is expected to negatively impact sales by approximately 6%[87] Impairment and Pension Expenses - The company recognized a non-cash impairment charge of $15.6 million in Q1 2023 related to the sale of its business in Turkey[87] - The company reported a pre-tax impairment expense of $12.5 million in the Rest of World segment and $3.1 million in Corporate expenses[109] - The company recorded pre-tax pension settlement income of $5.0 million in the North America segment and $1.0 million in Corporate expenses[109] - The company incurred pre-tax pension settlement expense of $346.8 million in the North America segment and $70.5 million in Corporate expenses[109] - The company reported pre-tax pension expense of $9.7 million in the North America segment and $2.0 million in Corporate expenses[109]

A. O. Smith Corporation (NYSE:AOS) Q3 2023 Results Conference Call October 26, 2023 10:00 AM ET Company Participants Helen Gurholt - VP, IR and Financial Planning & Analysis Kevin Wheeler - Chairman and CEO Chuck Lauber - CFO Conference Call Participants Saree Boroditsky - Jefferies Nathan Jones - Stifel Bryan Blair - Oppenheimer Susan Maklari - Goldman Sachs Andy Kaplowitz - Citigroup Matt Summerville - D.A. Davidson & Company Damian Karas - UBS Operator Welcome to the A. O. Smith’s Third Quarter 2023 Earn ...

Second Quarter 2023 Results Participants Kevin J. Wheeler Charles T. Lauber Helen E. Gurholt Chairman and Executive Vice President Vice President - Investor Relations, Chief Executive Officer and Chief Financial Officer Financial Planning & Analysis ...

Financial Data and Key Metrics Changes - The company reported record adjusted EPS of $1.01 for Q2 2023, driven by strong performance in its operating segments [5] - Free cash flow for the first half of 2023 was $236 million, higher than the same period in 2022, attributed to higher earnings and lower working capital cash outlays [12] - The cash balance at the end of June was $410 million, with a net cash position of $204 million and a leverage ratio of 9.8% [12] Business Line Data and Key Metrics Changes - North America segment sales were $722 million, a 3% decline year-over-year, primarily due to lower boiler sales and pricing [10] - Adjusted segment earnings for North America increased 19% to $194 million, with an adjusted operating margin of 26.9%, up 510 basis points from the previous year [10] - Rest of World segment sales increased 6% year-over-year to $244 million, with a 12% increase on a constant currency basis, driven by higher consumer demand in China and India [11] Market Data and Key Metrics Changes - Sales in China increased 15% in local currency, with strong demand for residential and commercial water treatment products [8] - India sales grew 15% in local currency in Q2 2023 compared to the previous year [11] - North America water treatment sales decreased 2% in Q2 2023, impacted by lower sales in specialty wholesale and dealer channels [7] Company Strategy and Development Direction - The company aims to capitalize on trends of decarbonization and sustainability through innovation and new product development [13] - The company is focused on strategic acquisitions to support organic growth and enhance its market position [13] - The company plans to repurchase approximately $300 million of its shares in 2023 [12] Management's Comments on Operating Environment and Future Outlook - Management increased the 2023 adjusted EPS outlook to a range of $3.45 to $3.60, representing a 12% increase compared to 2022 [14] - The company expects North America full-year margin guidance to be between 24% and 24.25%, despite anticipated higher steel costs in the second half of the year [14] - Management noted that consumer confidence in China is expected to take time to strengthen, impacting the water heater business [16] Other Important Information - The company announced a quarterly dividend of $0.30 per share and repurchased approximately 1,075,000 shares for a total of $70 million in the first half of 2023 [12] - The U.S. Department of Energy's proposal to raise minimum energy efficiency standards for residential water heaters is being monitored by the company [19] Q&A Session Summary Question: Margin cadence in North America for the second half - Management indicated that margin compression will primarily come from a 20% increase in steel costs, with additional pressure from residential water heater volume [21][22] Question: Sustainability of water treatment demand in China - Management reported strong sellout trends and emphasized the importance of clean water for Chinese consumers, with ongoing demand for water treatment products [23][24] Question: Context on North America margins - Management explained that the 20% increase in steel costs is based on a 90 to 120-day lag in pricing, impacting margins in the third quarter [27][28] Question: Capital allocation priorities - The company plans to invest in new product development, maintain dividends, and pursue stock buybacks, while also exploring M&A opportunities [47][48] Question: Pricing trends in North America - Management noted year-over-year pricing improvements in boilers and water treatment, with expectations of modest price fade in water heaters due to steel indexing [50][51] Question: Normalized demand for residential water heaters - Management expects a return to a growth rate of 1% to 2%, driven by emergency replacements and new construction [56][57]

North America Segment Performance - North America segment sales in Q2 2023 were $722.3 million, a decrease of 2.9% compared to $744.1 million in Q2 2022, primarily due to lower boiler volumes and unfavorable pricing[90] - North America segment earnings in Q2 2023 increased by 24.5% to $199.1 million, driven by lower material costs and higher water heater volumes[90] - North America segment margin in Q2 2023 improved to 27.6%, up from 21.5% in Q2 2022[90] - North America segment earnings (non-GAAP) for Q2 2023 were $199.1 million, up 24.5% from $159.9 million in Q2 2022[102] - Adjusted North America segment earnings (non-GAAP) for the first six months of 2023 were $382.7 million, up 20.8% from $316.9 million in the same period of 2022[102] - North America water treatment product sales are expected to increase 5-7% in 2023, driven by pricing and consumer demand[86] - Pension settlement income for the first six months of 2023 included $5.0 million in the North America segment[107] Rest of World Segment Performance - Rest of World segment sales in Q2 2023 were $244.2 million, up $14.3 million (6.2%) compared to Q2 2022, driven by strong demand in China for water treatment products[91] - Rest of World segment earnings in Q2 2023 were $28.3 million, up 56.4% from $18.1 million in Q2 2022, with segment margin improving to 11.6% from 7.9%[91] - Adjusted Rest of World segment earnings for the first six months of 2023 were $46.1 million, with an adjusted segment margin of 10.0%, excluding a $12.5 million impairment expense[91] - Rest of World segment earnings (non-GAAP) for Q2 2023 grew to $28.3 million, a 56.4% increase from $18.1 million in Q2 2022[102] - The company reported a pre-tax impairment expense of $12.5 million in the Rest of World segment for the first six months of 2023[107] Consolidated Financial Performance - Consolidated sales in Q2 2023 were $960.8 million, a slight decrease of 0.5% compared to $965.9 million in Q2 2022[88] - Gross profit margin in Q2 2023 increased to 40.0%, up from 34.6% in Q2 2022, primarily due to lower material costs[88] - The company expects 2023 consolidated sales to be approximately flat to up 2% compared to 2022, excluding potential future acquisitions[86] - The company expects 2023 consolidated sales to be flat to up 2% compared to 2022, with full-year adjusted EPS guidance of $3.45 to $3.60[92] - Adjusted earnings for the first six months of 2023 were $295.0 million, up 17.8% from $250.5 million in the same period last year[99] - Adjusted EPS for the first six months of 2023 was $1.94, up 22.0% from $1.59 in the same period last year[99] - Earnings Before Provision for Income Taxes (GAAP) for Q2 2023 increased to $208.9 million, up from $165.3 million in Q2 2022, representing a 26.4% growth[102] - Total Segment Earnings (non-GAAP) for Q2 2023 reached $227.4 million, compared to $178.0 million in Q2 2022, a 27.8% increase[102] - Adjusted EPS guidance for 2023 is projected to be between $3.45 and $3.60, compared to the 2022 adjusted EPS of $3.14[107] Cash Flow and Debt Management - Cash provided by operating activities in the first six months of 2023 was $260.2 million, up 378.3% from $54.4 million in the same period last year[95] - The company expects 2023 free cash flow to be between $550 million and $600 million, with capital expenditures projected at $70 to $75 million[95] - Total debt decreased by $138.5 million in the first six months of 2023, with leverage ratio improving to 9.8% from 16.5% at the end of 2022[95] - The company repurchased 1,075,000 shares in the first six months of 2023 at a total cost of $69.6 million, with plans to spend approximately $300 million on stock repurchases in 2023[95] - Free cash flow (non-GAAP) for the first six months of 2023 was $236.0 million, a significant increase from $23.7 million in the same period of 2022[105] - The company's cash provided by operating activities (GAAP) for the first six months of 2023 was $260.2 million, compared to $54.4 million in the same period of 2022[105] Impairment and Tax Expenses - The company recognized a non-cash impairment charge of $15.6 million in Q1 2023 related to the sale of its business in Turkey[86] - The company's effective income tax rate for the six months ended June 30, 2023 was 25.3%, up from 23.6% in the same period last year[89] - The company reported a pre-tax impairment expense of $12.5 million in the Rest of World segment and $3.1 million in Corporate expenses for the first six months of 2023[107] - Pension settlement income for the first six months of 2023 included $1.0 million in Corporate expenses[107] China Market Outlook - In China, the company projects 2023 sales growth of 3-5% in local currency, but expects a negative currency translation impact of approximately 5%[86]

A. O. Smith Corporation (NYSE:AOS) Q1 2023 Earnings Conference Call April 27, 2023 10:00 AM ET Company Participants Helen Gurholt - Vice President, Investor Relations and Financial Planning and Analysis Kevin Wheeler - Chairman and CEO Chuck Lauber - Chief Financial Officer Conference Call Participants Michael Halloran - Baird Saree Boroditsky - Jefferies Susan Maklari - Goldman Sachs Matt Summerville - D.A. Davidson & Co. Damian Karas - UBS Andrew Kaplowitz - Citigroup Jeff Hammond - KeyBanc Capital Market ...

First Quarter 2023 Results Participants 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 2 Forward Looking Statements This presentation contains statements that we believe are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of wo ...

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2023, and 2022, including Statements of Earnings, Comprehensive Earnings, Balance Sheets, Cash Flows, and Stockholders' Equity, with detailed notes on accounting policies and financial data [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) For the three months ended March 31, 2023, Net Sales slightly decreased to $966.4 million from $977.7 million year-over-year, while Net Earnings increased to $126.9 million, or $0.84 per diluted share, compared to $119.8 million, or $0.76 per diluted share, in the prior-year period, despite a $15.6 million impairment expense Consolidated Statements of Earnings (Q1 2023 vs Q1 2022) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Net sales** | $966.4 million | $977.7 million | | **Gross profit** | $374.1 million | $341.6 million | | **Impairment expense** | $15.6 million | $0.0 million | | **Earnings before income taxes** | $171.3 million | $156.6 million | | **Net Earnings** | $126.9 million | $119.8 million | | **Diluted Net Earnings Per Share** | $0.84 | $0.76 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets increased slightly to $3,336.3 million from $3,332.3 million at December 31, 2022, while total liabilities decreased to $1,546.1 million from $1,584.6 million, and total stockholders' equity rose to $1,790.2 million from $1,747.7 million Balance Sheet Summary | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,643.8 million | $1,633.7 million | | **Total Assets** | $3,336.3 million | $3,332.3 million | | **Total Current Liabilities** | $895.7 million | $934.2 million | | **Total Liabilities** | $1,546.1 million | $1,584.6 million | | **Total Stockholders' Equity** | $1,790.2 million | $1,747.7 million | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2023, cash provided by operating activities significantly increased to $119.9 million from $16.5 million in the prior-year period, with cash used in investing activities at $9.8 million and financing activities at $97.5 million, resulting in a period-end cash balance of $406.2 million Cash Flow Summary (Q1 2023 vs Q1 2022) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | **Cash Provided by Operating Activities** | $119.9 million | $16.5 million | | **Cash (Used in) Provided by Investing Activities** | $(9.8) million | $2.1 million | | **Cash Used in Financing Activities** | $(97.5) million | $(56.1) million | | **Net increase (decrease) in cash** | $15.0 million | $(37.5) million | | **Cash and Cash Equivalents - End of Period** | $406.2 million | $405.8 million | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures supporting the financial statements, including revenue disaggregation, a **$15.6 million** impairment expense from the Turkey business sale, segment performance, stock-based compensation, and pension plan termination details Disaggregation of Net Sales (Q1 2023 vs Q1 2022) | Segment / Product Line | Q1 2023 (millions) | Q1 2022 (millions) | | :--- | :--- | :--- | | **North America** | | | | Water heaters and related parts | $637.3 | $615.8 | | Boilers and related parts | $58.4 | $57.5 | | Water treatment products | $57.0 | $56.8 | | *Total North America* | *$752.7* | *$730.1* | | **Rest of World** | | | | China | $190.2 | $228.3 | | All other Rest of World | $28.9 | $27.7 | | *Total Rest of World* | *$219.1* | *$256.0* | | **Total Net Sales** | **$966.4** | **$977.7** | - In Q1 2023, the company recorded a **$15.6 million** impairment expense related to the planned sale of its business in Turkey, with **$12.5 million** allocated to the Rest of World segment and **$3.1 million** to Corporate Expense[31](index=31&type=chunk) - The company's largest defined benefit pension plan was terminated as of December 31, 2021, with liabilities settled in Q4 2022, significantly reducing pension-related expenses in Q1 2023[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial performance, noting a slight sales decrease but improved gross margins due to lower material costs, with North America showing strength while the Rest of World segment was impacted by lower demand in China and an impairment charge, maintaining strong liquidity and providing a full-year 2023 outlook of flat sales and adjusted EPS between $3.30 and $3.50 [Overview and Outlook](index=20&type=section&id=Overview%20and%20Outlook) The company reports stable supply chains and resilient demand in North America residential water heaters, recorded a non-cash impairment of **$15.6 million** for the Turkey business sale, and expects full-year 2023 consolidated sales to be approximately **flat** with adjusted earnings between **$3.30 and $3.50 per share** - The company committed to selling its business in Turkey, resulting in a non-cash impairment charge of **$15.6 million** in Q1 2023[77](index=77&type=chunk) - Full-year 2023 consolidated sales are expected to be approximately **flat to 2022** (range of +/- 2%)[77](index=77&type=chunk)[82](index=82&type=chunk) - Full-year 2023 adjusted earnings are guided to be between **$3.30 and $3.50 per share**[82](index=82&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 2023 sales were $966.4 million, a 1.2% decrease from Q1 2022, driven by lower sales in China partially offset by higher water heater volumes in North America, while gross profit margin improved significantly to **38.7%** due to lower material costs, and net earnings increased to **$126.9 million** despite a **$15.6 million** impairment charge - Gross profit margin increased to **38.7%** in Q1 2023 from **34.9%** in Q1 2022, primarily due to lower steel and other material costs[79](index=79&type=chunk) - SG&A expenses increased by **$7.4 million** year-over-year to **$187.2 million**, driven by higher selling expenses in North America on higher volumes[79](index=79&type=chunk) - The effective income tax rate rose to **25.9%** from **23.5%** in the prior year, mainly due to a change in geographical earnings mix and the non-tax-deductible impairment expense[79](index=79&type=chunk) [Segment Performance](index=22&type=section&id=Segment%20Performance) The North America segment saw sales increase to $752.7 million and segment margin expand to **25.1%**, driven by higher water heater volumes and lower material costs, while the Rest of World segment experienced a **14%** sales decline to $219.1 million, impacted by lower demand in China and unfavorable currency translation, with segment earnings falling sharply to **$5.3 million** due to a **$12.5 million** impairment charge North America Segment Performance (Q1 2023 vs Q1 2022) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Net Sales** | $752.7 million | $730.1 million | | **Segment Earnings** | $188.6 million | $151.8 million | | **Segment Margin** | 25.1% | 20.8% | Rest of World Segment Performance (Q1 2023 vs Q1 2022) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | **Net Sales** | $219.1 million | $256.0 million | | **Segment Earnings** | $5.3 million | $24.8 million | | **Segment Margin** | 2.4% | 9.7% | - Rest of World adjusted segment earnings, excluding the **$12.5 million** impairment charge, were **$17.8 million** with an adjusted margin of **8.1%** for Q1 2023[81](index=81&type=chunk) [Liquidity & Capital Resources](index=23&type=section&id=Liquidity%20%26%20Capital%20Resources) The company's liquidity position strengthened, with working capital increasing to $748.1 million, and cash from operations surged to **$119.9 million** for the quarter, a substantial increase from **$16.5 million** in the prior year, while the company repurchased **$53.1 million** of its stock and paid **$45.4 million** in dividends, maintaining a total debt to capitalization ratio of **16.0%** - Cash provided by operating activities was **$119.9 million** in Q1 2023, compared to **$16.5 million** in Q1 2022, leading to free cash flow of **$109.2 million**[84](index=84&type=chunk) - During Q1 2023, the company repurchased **821,000 shares** for **$53.1 million**, and expects to spend approximately **$300 million** on stock repurchases in 2023[85](index=85&type=chunk) - As of March 31, 2023, the company had an available borrowing capacity of **$288.9 million** under its revolving credit facility[85](index=85&type=chunk) [Non-GAAP Financial Information](index=24&type=section&id=Non-GAAP%20Financial%20Information) This section provides reconciliations of GAAP to non-GAAP financial measures, showing Q1 2023 adjusted earnings of **$142.5 million**, or **$0.94 per share**, after excluding a **$15.6 million** pre-tax impairment expense, with free cash flow for the quarter at **$109.2 million**, and also presents adjusted segment earnings and its 2023 adjusted EPS guidance Reconciliation of Net Earnings to Adjusted Earnings (Q1 2023) | Metric | Amount (millions) | | :--- | :--- | | **Net Earnings (GAAP)** | $126.9 | | Impairment expense, before tax | $15.6 | | **Adjusted Earnings (non-GAAP)** | **$142.5** | Reconciliation of Diluted EPS to Adjusted EPS (Q1 2023) | Metric | Amount | | :--- | :--- | | **Diluted EPS (GAAP)** | $0.84 | | Impairment expense per share | $0.10 | | **Adjusted EPS (non-GAAP)** | **$0.94** | Reconciliation to Free Cash Flow (Q1 2023) | Metric | Amount (millions) | | :--- | :--- | | **Cash provided by operating activities (GAAP)** | $119.9 | | Less: Capital expenditures | $(10.7) | | **Free cash flow (non-GAAP)** | **$109.2** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that its exposure to market risks, including currency and commodity risks, has not materially changed since its 2022 Annual Report on Form 10-K, and it continues to use derivative contracts, primarily with terms of less than one year, to manage these exposures without engaging in speculative trading - The company's quantitative and qualitative disclosures about market risk have not materially changed since the year-ended December 31, 2022 Form 10-K[102](index=102&type=chunk) - The company uses forward and futures contracts to minimize currency and commodity risk exposures, with the majority of contracts having a duration of less than one year[102](index=102&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2023, with no material changes in the company's internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were **effective** as of March 31, 2023[103](index=103&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[105](index=105&type=chunk) [Part II. OTHER INFORMATION](index=27&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material changes in legal and environmental matters from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes in legal and environmental matters since the 2022 Form 10-K filing[106](index=106&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2023, the Board of Directors authorized an additional **7,500,000 shares** for the company's discretionary share repurchase program, with **821,000 shares** repurchased for a total cost of **$53.1 million**, leaving **7,057,462 shares** available as of March 31, 2023 - The Board of Directors approved adding **7,500,000 shares** to the existing share repurchase authority in Q1 2023[107](index=107&type=chunk) Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2023 | 315,000 shares | $60.14 | | Feb 2023 | 230,000 shares | $67.29 | | Mar 2023 | 276,000 shares | $67.52 | | **Total Q1** | **821,000 shares** | **$64.63 (average)** | - As of March 31, 2023, **7,057,462 shares** remained available for repurchase under the company's plans[108](index=108&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section references the Exhibit Index, which lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and financial statements formatted in XBRL (Exhibit 101)[110](index=110&type=chunk)