Core Insights - A.O. Smith reported Q4 2024 earnings that missed analyst expectations, with adjusted EPS of $0.85 compared to the forecast of $0.89 and revenue of $912.4 million below the anticipated $956 million, indicating a challenging quarter for the company [2][3] Financial Performance - Adjusted EPS for Q4 2024 was $0.85, down 12.4% from $0.97 in Q4 2023 [3] - Revenue for Q4 2024 was $912.4 million, a decline of 7.7% from $988.1 million in Q4 2023 [3] - Net earnings decreased to $109.7 million, down 20.1% from $137.3 million in Q4 2023 [3] Company Overview and Strategy - A.O. Smith holds a strong position in North America's water heater and boiler market, contributing approximately 75% of total sales [3] - The company is focusing on energy efficiency and product diversification to maintain competitiveness, including launching innovative high-efficiency products [4] - A.O. Smith is expanding into water treatment markets through acquisitions and geographic diversification, particularly in growing regions like India [4] Market Performance - In North America, boiler sales increased by 8% year over year, but overall sales declined by 7.7% due to reduced water heater volumes [5] - Revenue in the Rest of the World segment decreased by 4% year over year, primarily due to weak demand in China, while India experienced a 13% sales increase driven by water heaters and treatment products [6] Strategic Developments - The company acquired Pureit in November 2024 to enhance its position in the water treatment industry, with expected benefits to be realized in future periods [7] - A.O. Smith has maintained a commitment to returning capital to shareholders, evidenced by a 6% increase in dividends, marking 32 consecutive years of dividend growth [8] Future Outlook - Management projects EPS for the upcoming year to be between $3.60 and $3.90, with flat to slightly increased sales anticipated [9] - The company expects continued sales decline in China but anticipates ongoing growth in India, highlighting the importance of navigating international challenges and leveraging North America's strengths [9]

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]

Full Year & Fourth Quarter 2024 Results January 30, 2025 Full Year & Fourth Quarter 2024 Earnings Presentation | 1 Kevin J. Wheeler Chairman and Chief Executive Officer Stephen M. Shafer President and Chief Operating Officer Charles T. Lauber Executive Vice President and Chief Financial Officer Helen E. Gurholt Vice President - Investor Relations, Financial Planning & Analysis Full Year & Fourth Quarter 2024 Earnings Presentation | 2 Forward Looking Statements This presentation contains statements that we b ...

Core Insights - A.O. Smith reported $912.4 million in revenue for Q4 2024, a year-over-year decline of 7.7% and a surprise of -4.17% compared to the Zacks Consensus Estimate of $952.05 million [1] - The company's EPS for the same period was $0.85, down from $0.97 a year ago, with an EPS surprise of -4.49% against the consensus estimate of $0.89 [1] Financial Performance - Revenue from North America was $689.80 million, below the estimated $730.99 million, reflecting a -6.5% change year-over-year [4] - Inter-segment sales reported at -$14 million, slightly worse than the average estimate of -$12.80 million, but showing a significant year-over-year increase of +38.6% [4] - Revenue from the Rest of World segment was $236.60 million, slightly above the average estimate of $234.62 million, but down -9.1% year-over-year [4] - Segment Operating Earnings (GAAP) for corporate expenses were reported at -$8.20 million, better than the average estimate of -$15.72 million [4] Market Performance - A.O. Smith's shares returned +1.5% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - A.O. Smith reported quarterly earnings of $0.85 per share, missing the Zacks Consensus Estimate of $0.89 per share, and showing a decline from $0.97 per share a year ago, indicating an earnings surprise of -4.49% [1][2] Financial Performance - The company posted revenues of $912.4 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 4.17%, and down from $988.1 million year-over-year [2] - Over the last four quarters, A.O. Smith has surpassed consensus EPS estimates only once [2] Stock Performance - A.O. Smith shares have increased by approximately 1.5% since the beginning of the year, compared to a 2.7% gain in the S&P 500 [3] - The current Zacks Rank for A.O. Smith is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.98 on revenues of $993.81 million, and for the current fiscal year, it is $4.02 on revenues of $3.96 billion [7] - The trend of estimate revisions for A.O. Smith is mixed, which could change following the recent earnings report [6] Industry Context - The Manufacturing - Electronics industry, to which A.O. Smith belongs, is currently in the bottom 28% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Net sales for 2024 were $3.818 billion, a decrease of 1% compared to 2023, primarily due to lower sales in China[3] - Net earnings for 2024 were $533.6 million, with diluted earnings per share (EPS) of $3.63, reflecting a 2% decrease year-over-year[3] - Adjusted earnings for 2024 were $548.0 million, resulting in adjusted EPS of $3.73, also a decrease of 2%[3] - Fourth quarter 2024 net sales were $912.4 million, an 8% decrease compared to Q4 2023, driven by lower water heater volumes[4] - North America net sales for Q4 2024 were $689.8 million, down 6.5% from $738.0 million in Q4 2023[30] - Adjusted earnings for Q4 2024 were $124.1 million, compared to $144.4 million in Q4 2023, a decrease of 14.1%[31] - Total Segment Earnings (non-GAAP) for Q4 2024 was $155.7 million, compared to $195.1 million in Q4 2023, reflecting a decline of 20.2%[33] - Total Segment Earnings (non-GAAP) for the twelve months ended December 31, 2024, was $771.6 million, down from $809.6 million in 2023, a decrease of 4.7%[33] Regional Sales Performance - In North America, full year 2024 sales were $3.0 billion, slightly increasing due to water heater pricing benefits despite lower volumes[5] - The Rest of World segment reported sales of $918.6 million for 2024, a 4% decrease year-over-year, impacted by lower sales in China[9] Shareholder Returns - The company returned $496 million to shareholders through dividends and share repurchases in 2024[3] - A. O. Smith repurchased 3.8 million shares at a cost of $305.8 million in 2024, with plans to increase repurchases to approximately $400 million in 2025[14] Future Projections - For 2025, the company projects net sales to be between $3.800 billion and $3.900 billion, indicating flat to 2% growth compared to 2024[16] - The company expects diluted EPS for 2025 to range from $3.60 to $3.90, slightly higher than 2024 at the mid-point[16] - Adjusted EPS (non-GAAP) guidance for 2025 is projected to be between $3.60 and $3.90, while the adjusted EPS for 2024 was $3.73[36] Operating Cash Flow and Expenses - Cash provided by operating activities for the twelve months ended December 31, 2024, was $581.8 million, down from $670.3 million in 2023, a decline of 13.2%[28] - Free Cash Flow (non-GAAP) for the twelve months ended December 31, 2024, was $473.8 million, a decrease from $597.7 million in 2023, representing a decline of 20.8%[34] - The company incurred capital expenditures of $108.0 million in 2024, up from $72.6 million in 2023, an increase of 48.7%[28] Debt and Assets - Total assets increased to $3,240.0 million as of December 31, 2024, compared to $3,213.9 million in 2023, an increase of 0.8%[26] - Long-term debt increased to $183.2 million in 2024 from $117.3 million in 2023, reflecting a significant increase of 56.2%[26] Earnings Analysis - Gross profit for the twelve months ended December 31, 2024, was $1,456.1 million, down from $1,484.8 million in 2023, reflecting a decrease of 1.9%[24] - Net earnings for the twelve months ended December 31, 2024, were $533.6 million, compared to $556.6 million in 2023, a decline of 4.1%[24] - Diluted earnings per share for Q4 2024 were $0.75, down from $0.92 in Q4 2023, representing a decrease of 18.5%[24] - Earnings Before Provision for Income Taxes (GAAP) for Q4 2024 was $145.1 million, down from $176.9 million in Q4 2023, representing a decrease of 17.5%[33] Segment Earnings - North America segment earnings for Q4 2024 were $147.9 million, down 12.3% from $169.0 million in Q4 2023[33] - Adjusted North America (non-GAAP) earnings for Q4 2024 were $154.2 million, down from $173.3 million in Q4 2023, a decrease of 11.8%[33] - Adjusted Rest of World (non-GAAP) earnings for Q4 2024 were $19.1 million, compared to $29.8 million in Q4 2023, reflecting a decline of 35.1%[33] Restructuring and Impairment - The company incurred pre-tax restructuring and impairment expenses of $11.3 million in the Rest of World segment and $6.3 million in the North America segment[36]

Core Insights - A. O. Smith Corporation reported a decline in net sales and earnings for the full year and fourth quarter of 2024, primarily due to weak consumer demand in China and soft water heater demand in North America [1][2][3] - The company faced challenges with restructuring and impairment expenses, impacting earnings per share [2][3] - Despite these challenges, A. O. Smith remains focused on optimizing its business and investing for future growth, including the acquisition of Pureit [2][3] Financial Performance - Full Year 2024: - Net sales decreased by 1% to $3,818 million from $3,853 million in 2023 [2] - Net earnings fell by 4% to $533.6 million, with diluted earnings per share down 2% to $3.63 [2][3] - Adjusted earnings also decreased by 5% to $548.0 million, with adjusted earnings per share at $3.73 [2][3] - Fourth Quarter 2024: - Net sales were $912.4 million, an 8% decrease from $988.1 million in Q4 2023 [2] - Net earnings dropped by 20% to $109.7 million, with diluted earnings per share down 18% to $0.75 [2][3] - Adjusted earnings for the quarter were $124.1 million, a 14% decrease from $144.4 million in Q4 2023 [2][3] Segment Performance - North America: - Full year sales were $3.8 billion, a decrease of 1% primarily due to lower sales in China [3] - Segment earnings were $707.5 million with a margin of 24.0%, down from $726.7 million and 24.9% in 2023 [5] - Rest of World: - Sales decreased by 4% to $918.6 million, impacted by unfavorable currency translation and lower volumes in China [8][9] - Segment earnings fell to $64.5 million with a margin of 7.0%, down from $83.4 million and 8.7% in 2023 [9] Balance Sheet and Capital Allocation - As of December 31, 2024, cash and marketable securities totaled $276.1 million, with total debt at $193.2 million [12] - The company returned $496 million to shareholders through dividends and share repurchases in 2024 [3][13] - A. O. Smith repurchased 3.8 million shares at a cost of $305.8 million, with plans to increase repurchases to approximately $400 million in 2025 [13][17] 2025 Outlook - The company projects flat to 2% growth in consolidated sales for 2025, with diluted earnings per share expected between $3.60 and $3.90 [16][17] - Anticipated challenges include a single-digit sales decline in China and flat water heater industry unit volumes in North America [16][17]

Core Viewpoint - A. O. Smith Corporation (AOS) is expected to report a decline in both revenue and earnings for the fourth quarter of 2024, influenced by various market factors and recent acquisitions [1][2][4]. Financial Performance Expectations - The Zacks Consensus Estimate for AOS's revenues is $952.2 million, reflecting a 3.6% decrease from the previous year [2] - The consensus estimate for earnings is 89 cents per share, which is an 8.3% decline compared to the same quarter last year [2] - AOS's earnings performance in the last reported quarter matched the Zacks Consensus Estimate, with a trailing four-quarter earnings surprise of 0.3% on average [3] Segment Analysis - The North American segment is anticipated to generate revenues of $731 million, a slight decrease of 0.9% year over year, driven by strong demand for commercial boilers and water treatment products, but offset by weakness in the residential and commercial water heater markets [4] - The Rest of the World segment is projected to see revenues of $235 million, down 9.6% year over year, primarily due to weak consumer demand in China, although demand for water treatment products in India is expected to provide some support [6] Impact of Acquisitions - Recent acquisitions, including the Pureit business from Unilever and Impact Water Products, are expected to positively influence AOS's top line by enhancing its water treatment solutions and expanding its market presence [7] Cost and Expense Challenges - A. O. Smith has faced challenges from high costs and expenses, including labor shortages and increased material costs, despite some moderation in supply-chain constraints [8] Earnings Outlook - AOS has an Earnings ESP of +0.93%, indicating a potential earnings beat, with the Most Accurate Estimate at 90 cents per share, higher than the Zacks Consensus Estimate [10]

Core Viewpoint - The market anticipates a year-over-year decline in A.O. Smith's earnings due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - A.O. Smith is expected to report quarterly earnings of $0.89 per share, reflecting an 8.3% decrease year-over-year, with revenues projected at $952.23 million, down 3.6% from the previous year [3]. - The consensus EPS estimate has been revised 0.26% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for A.O. Smith is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.93% [10][11]. - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. Historical Performance - In the last reported quarter, A.O. Smith met the expected earnings of $0.82 per share, showing no surprise [12]. - Over the past four quarters, the company has beaten consensus EPS estimates twice [13]. Conclusion - A.O. Smith is viewed as a compelling candidate for an earnings beat, but investors should consider other factors influencing stock performance beyond earnings results [16].

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