A. O. Smith(US:AOS)2025-02-11 22:28Share Repurchase and Stockholder Information - In 2024, the company repurchased 3,755,337 shares at an average price of $81.43 per share, totaling $305.8 million[78]. - As of December 31, 2024, there were 1,746,125 shares remaining on the existing repurchase authorization, with an additional 5,000,000 shares approved for repurchase on January 26, 2025[78]. - The company intends to spend approximately $400 million to repurchase Common Stock in 2025 through a combination of 10b5-1 plans and open-market purchases[78]. - As of January 31, 2025, there were approximately 471 stockholders of record for Common Stock[78]. Financial Performance - In 2024, the company's net sales were $3,818.1 million, a decrease of $34.7 million compared to 2023 sales of $3,852.8 million, primarily due to lower water heater volumes in North America and unfavorable currency translation of approximately $18 million[92]. - The North America segment reported net sales of $2,950.1 million in 2024, an increase of $27.2 million from $2,922.9 million in 2023, driven by pricing actions and higher boiler sales[99]. - The Rest of World segment's net sales were $918.6 million in 2024, a decrease of $38.3 million from $956.9 million in 2023, primarily due to decreased sales in China and unfavorable currency translation of approximately $13 million[102]. - The company's gross profit margin in 2024 was 38.1%, down from 38.5% in 2023, attributed to higher production costs and operational inefficiencies[93]. - Net sales for the year ended December 31, 2024, were $3,818.1 million, a decrease from $3,852.8 million in 2023[149]. - Gross profit for 2024 was $1,456.1 million, compared to $1,484.8 million in 2023, indicating a decline in profitability[149]. - Net earnings for 2024 were $533.6 million, down from $556.6 million in 2023, resulting in diluted earnings per share of $3.63[149]. - The company reported comprehensive earnings of $505.9 million for 2024, down from $554.8 million in 2023[150]. Cash Flow and Capital Expenditures - Cash provided by operating activities in 2024 was $581.8 million, down from $670.3 million in 2023, primarily due to higher incentive payments and lower earnings[106]. - Free cash flow for 2024 was $473.8 million, compared to $597.7 million in 2023, with expectations for 2025 to be between $500 million and $550 million[106]. - Capital expenditures totaled $108.0 million in 2024, up from $72.6 million in 2023, primarily due to capacity expansion projects in Mexico and South Carolina[107]. Debt and Equity - Total debt increased by $65.9 million in 2024, resulting in a leverage ratio of 9.3% compared to 6.5% in 2023[109]. - Dividends paid were $1.30 per share in 2024, a 6% increase from $1.22 per share in 2023, marking 85 consecutive years of dividend payments[112]. - Total stockholders' equity increased to $1,883.5 million in 2024, up from $1,844.4 million in 2023, representing a growth of 2.1%[154]. Acquisitions and Goodwill - Acquisitions in 2024 amounted to $145.9 million, significantly higher than $16.8 million in 2023[152]. - The company’s goodwill increased to $761.7 million in 2024 from $633.4 million in 2023, reflecting recent acquisitions[148]. Risks and Future Outlook - The company faced risks including potential recession impacts, supply chain issues, and foreign currency fluctuations that could affect future performance[133]. - The company anticipates 2025 consolidated sales to be approximately flat to up 2% compared to 2024, excluding impacts from potential future acquisitions[89]. - The effective income tax rate for 2025 is estimated to be approximately 24% to 24.5%[97]. Cybersecurity - The company has a robust cybersecurity program, integrating risk management into its overall enterprise risk management program[67]. - The Board of Directors receives annual updates on cybersecurity risk management processes and trends, with real-time updates for material events[64]. - The company has established a committee of executive leadership to consider cybersecurity risks and mitigation strategies[65]. - The company has experienced cybersecurity incidents in the past, but none have materially affected its financial position or operations[67]. Pension and Employee Benefits - The net pension liability at the end of 2024 was $9.1 million, an increase from $6.4 million in 2023[235]. - The accumulated benefit obligation (ABO) for pension benefits increased to $(27.3) million in 2024 from $(26.3) million in 2023[235]. - The Company matched 100% of the first 1% and 50% of the next 5% of employee contributions in its defined contribution plan[230]. Inventory and Assets - The Company's inventory at LIFO cost increased from $497.4 million in 2023 to $532.1 million in 2024[209]. - Total assets increased to $3,240.0 million in 2024 from $3,213.9 million in 2023[148]. - Total liabilities decreased slightly to $1,356.5 million in 2024 from $1,369.5 million in 2023[148].