A. O. Smith Corporation (AOS - Free Report) has reported better-than-expected first-quarter 2022 results, wherein adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 75 cents. The bottom line also increased 30.5% from the year-ago figure of 59 cents.
Top-Line Details
The company’s first-quarter net sales increased 27% year over year to $977.7 million. The increase was driven by higher sales in North America and China, supported by its pricing actions. The top line surpassed the Zacks Consensus Estimate of $965 million.
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada water heaters and boilers) moved up 32% year over year to $730.1 million. The segment’s results were primarily driven by higher sales of boilers and water treatment products and the company’s pricing actions.
Segmental operating earnings were up 16.4% to $151.8 million on a year-over-year basis. The jump was on account of inflation-related price increases, partially offset by a rise in material and logistics costs.
Quarterly sales in the Rest of the World (including China, India and Europe) grew 15.2% year over year to $256 million. The increase was primarily backed by a positive mix in water treatment and water heater products in China and solid demand for commercial water treatment products and replacement filters.
The segment’s operating earnings were $24.8 million, reflecting a 110.2% increase year over year. A favorable product mix, higher volumes and lower advertising and selling expenses benefited the segment’s income.
Margin Details
In the quarter, A.O. Smith’s cost of sales was $636.1 million, up 32.4% on a year-over-year basis. Selling, general & administrative expenses were $179.8 million, up 8%.
Gross profit increased 18.4% year over year to $341.6 million with a margin of 34.9%, down 260 basis points. Interest expenses increased 50% to $1.5 million.
Liquidity & Cash Flow
On Mar 31, 2022, A.O. Smith’s cash and cash equivalents totaled $405.8 million compared with $443.3 million in the previous quarter.
At the end of the reported quarter, long-term debt was $288.6 million, up 52% from $189.9 million sequentially.
In the first three months of 2022, cash provided by the operating activities totaled $16.5 million compared with $104.4 million in the year-ago period.
Share Repurchases
In the first three months of 2022, the company repurchased shares worth $107.9 million compared with $67 million in the year-ago period. It paid dividends worth $44.2 million compared with $42.2 million a year ago.
Guidance
The company provided revenue and earnings guidance for 2022. It anticipates revenues to lie in the range of $4,030-$4,105 million.
It currently expects adjusted earnings of $3.35-$3.55.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies are discussed below.
AZZ Inc. (AZZ - Free Report) presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise for the last four quarters was 22.25%, on average.
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have gained 1.5% in the past three months.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 11.5%, on average.
In the past 60 days, AA’s earnings estimates have increased 72.1% for 2022. The stock has rallied 21.9% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 7% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 14.2% in the past three months.
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A. O. Smith Corporation (AOS - Free Report) has reported better-than-expected first-quarter 2022 results, wherein adjusted earnings of 77 cents per share beat the Zacks Consensus Estimate of 75 cents. The bottom line also increased 30.5% from the year-ago figure of 59 cents.
Top-Line Details
The company’s first-quarter net sales increased 27% year over year to $977.7 million. The increase was driven by higher sales in North America and China, supported by its pricing actions. The top line surpassed the Zacks Consensus Estimate of $965 million.
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada water heaters and boilers) moved up 32% year over year to $730.1 million. The segment’s results were primarily driven by higher sales of boilers and water treatment products and the company’s pricing actions.
Segmental operating earnings were up 16.4% to $151.8 million on a year-over-year basis. The jump was on account of inflation-related price increases, partially offset by a rise in material and logistics costs.
Quarterly sales in the Rest of the World (including China, India and Europe) grew 15.2% year over year to $256 million. The increase was primarily backed by a positive mix in water treatment and water heater products in China and solid demand for commercial water treatment products and replacement filters.
The segment’s operating earnings were $24.8 million, reflecting a 110.2% increase year over year. A favorable product mix, higher volumes and lower advertising and selling expenses benefited the segment’s income.
Margin Details
In the quarter, A.O. Smith’s cost of sales was $636.1 million, up 32.4% on a year-over-year basis. Selling, general & administrative expenses were $179.8 million, up 8%.
Gross profit increased 18.4% year over year to $341.6 million with a margin of 34.9%, down 260 basis points. Interest expenses increased 50% to $1.5 million.
Liquidity & Cash Flow
On Mar 31, 2022, A.O. Smith’s cash and cash equivalents totaled $405.8 million compared with $443.3 million in the previous quarter.
At the end of the reported quarter, long-term debt was $288.6 million, up 52% from $189.9 million sequentially.
In the first three months of 2022, cash provided by the operating activities totaled $16.5 million compared with $104.4 million in the year-ago period.
Share Repurchases
In the first three months of 2022, the company repurchased shares worth $107.9 million compared with $67 million in the year-ago period. It paid dividends worth $44.2 million compared with $42.2 million a year ago.
Guidance
The company provided revenue and earnings guidance for 2022. It anticipates revenues to lie in the range of $4,030-$4,105 million.
It currently expects adjusted earnings of $3.35-$3.55.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies are discussed below.
AZZ Inc. (AZZ - Free Report) presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise for the last four quarters was 22.25%, on average.
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have gained 1.5% in the past three months.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 11.5%, on average.
In the past 60 days, AA’s earnings estimates have increased 72.1% for 2022. The stock has rallied 21.9% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 7% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 14.2% in the past three months.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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