A. O. Smith Q4 Earnings Miss Estimates, Sales Decline Y/Y

Core Insights - A. O. Smith Corporation (AOS) reported fourth-quarter 2024 adjusted earnings of 85 cents per share, missing the Zacks Consensus Estimate of 89 cents, and reflecting a 12% year-over-year decrease [1] - Net sales for the quarter were $912.4 million, also below the consensus estimate of $952 million, marking an 8% decline year over year due to lower water heater volumes and decreased sales in China [1] Financial Performance - For the full year 2024, AOS reported net sales of $3.82 billion, a decrease of 1% year over year, with adjusted earnings of $3.73 per share, down 2% year over year [2] - Quarterly sales in North America decreased 7% year over year to $689.8 million, missing the estimated $724.0 million, primarily due to lower water heater volumes [3] - Sales in the Rest of the World segment declined 9% year over year to $236.6 million, with significant declines in China, although sales in India increased by 11% in local currency [4] Margin and Cost Analysis - A. O. Smith's cost of sales was $574.3 million, down 7.1% year over year, while selling, general, and administrative expenses were $182.0 million, down 1.6% [5] - Gross profit decreased 8.6% year over year to $338.1 million, resulting in a gross margin of 37.1%, slightly down from 37.4% in the previous year [5] Liquidity and Cash Flow - As of December 31, 2024, AOS had cash and cash equivalents of $239.6 million, down from $339.9 million at the end of December 2023 [6] - Long-term debt increased to $183.2 million from $117.3 million at the end of December 2023, while cash provided by operating activities totaled $581.8 million, down from $670.3 million in the previous year [6] Share Repurchase Activity - In 2024, A. O. Smith repurchased 3.8 million shares for $305.8 million, with 1.7 million shares remaining under the existing repurchase authorization as of December 2024 [7] - In January 2025, the board authorized an additional repurchase of 5 million shares [7] 2025 Outlook - A. O. Smith expects net sales for 2025 to be in the range of $3.8 billion to $3.9 billion, with adjusted earnings per share projected between $3.60 and $3.90 [9]