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A. O. Smith (AOS) Q1 Earnings Top Estimates, Sales Rise Y/Y
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A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 2% year over year to $766.3 million. This uptick was aided by higher volumes of commercial water heaters and a favorable mix shift toward high efficiency water heaters. Our estimate for sales in the North American segment was $770.6 million.
Segmental earnings increased 5.4% year over year to $198.7 million due to higher sales volumes of water heaters.
Quarterly sales in the Rest of the World (including China, India and Europe) segment increased 4% year over year to $226.9 million. Notably, segmental sales exactly matched with our estimate. The year-over-year increase in sales was primarily driven by higher sales volumes of tankless water heaters and kitchen appliance products in China. Sales in India increased 16% in local currency.
The segment’s earnings were $17.2 million, up 224.5% year over year, driven by higher sales volumes of kitchen products in China.
A. O. Smith Corporation Price, Consensus and EPS Surprise
In the reported quarter, A.O. Smith’s cost of sales was $594.1 million, up 0.3% year over year. Selling, general & administrative expenses were $192.2 million, up 2.7%.
Gross profit increased 2.8% year over year to $384.7 million. The gross margin was 39.3% compared with 38.7% in the year-ago period. Interest expenses were $1 million, down from $4 million from the year-ago quarter.
Liquidity & Cash Flow
As of Mar 31, 2024, AOS’ cash and cash equivalents totaled $251.6 million compared with $339.9 million at the end of December 2023.
At the end of the reported quarter, long-term debt was $109.7 million compared with $117.3 million at the end of December 2023.
In the first three months of 2024, cash provided by operating activities totaled $106.6 million compared with $119.9 million in the year-ago period.
Share Repurchases
In the first three months of 2024, A.O. Smith repurchased 0.9 million shares for $74.5 million. Exiting March 2024, 4.6 million shares were left to be repurchased under the existing share repurchase authorization. In January 2024, AOS’ board boosted the existing share buyback program by authorizing the repurchase of an additional 2 million shares. The company expects to repurchase $300 million worth of shares in 2024.
2024 Outlook
A.O. Smith reaffirmed its earnings and sales outlook. The company expects net sales in the range of $3,970-$4,050 million. The figure indicates an increase from $3,853 million reported in 2023.
Management projects adjusted earnings per share in the band of $3.90-$4.15. The metric was $3.81 in 2023. AOS’ adjusted earnings guidance indicates a 5.6% increase at the mid-point from a year ago.
Zacks Rank & Other Stocks to Consider
A.O. Smith currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 0.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Luxfer Holdings (LXFR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 82.7%.
In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.4%.
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A. O. Smith (AOS) Q1 Earnings Top Estimates, Sales Rise Y/Y
A. O. Smith Corporation’s (AOS - Free Report) first-quarter 2024 adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 2% year over year to $766.3 million. This uptick was aided by higher volumes of commercial water heaters and a favorable mix shift toward high efficiency water heaters. Our estimate for sales in the North American segment was $770.6 million.
Segmental earnings increased 5.4% year over year to $198.7 million due to higher sales volumes of water heaters.
Quarterly sales in the Rest of the World (including China, India and Europe) segment increased 4% year over year to $226.9 million. Notably, segmental sales exactly matched with our estimate. The year-over-year increase in sales was primarily driven by higher sales volumes of tankless water heaters and kitchen appliance products in China. Sales in India increased 16% in local currency.
The segment’s earnings were $17.2 million, up 224.5% year over year, driven by higher sales volumes of kitchen products in China.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A. O. Smith Corporation price-consensus-eps-surprise-chart | A. O. Smith Corporation Quote
Margin Details
In the reported quarter, A.O. Smith’s cost of sales was $594.1 million, up 0.3% year over year. Selling, general & administrative expenses were $192.2 million, up 2.7%.
Gross profit increased 2.8% year over year to $384.7 million. The gross margin was 39.3% compared with 38.7% in the year-ago period. Interest expenses were $1 million, down from $4 million from the year-ago quarter.
Liquidity & Cash Flow
As of Mar 31, 2024, AOS’ cash and cash equivalents totaled $251.6 million compared with $339.9 million at the end of December 2023.
At the end of the reported quarter, long-term debt was $109.7 million compared with $117.3 million at the end of December 2023.
In the first three months of 2024, cash provided by operating activities totaled $106.6 million compared with $119.9 million in the year-ago period.
Share Repurchases
In the first three months of 2024, A.O. Smith repurchased 0.9 million shares for $74.5 million. Exiting March 2024, 4.6 million shares were left to be repurchased under the existing share repurchase authorization. In January 2024, AOS’ board boosted the existing share buyback program by authorizing the repurchase of an additional 2 million shares. The company expects to repurchase $300 million worth of shares in 2024.
2024 Outlook
A.O. Smith reaffirmed its earnings and sales outlook. The company expects net sales in the range of $3,970-$4,050 million. The figure indicates an increase from $3,853 million reported in 2023.
Management projects adjusted earnings per share in the band of $3.90-$4.15. The metric was $3.81 in 2023. AOS’ adjusted earnings guidance indicates a 5.6% increase at the mid-point from a year ago.
Zacks Rank & Other Stocks to Consider
A.O. Smith currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 10.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 0.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Luxfer Holdings (LXFR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 82.7%.
In the past 60 days, the Zacks Consensus Estimate for LXFR’s 2024 earnings has increased 111.4%.