A. O. Smith Corporation (AOS) Bundle
A Brief History of A. O. Smith Corporation
Overview
A. O. Smith Corporation, founded in 1874, has evolved from a small manufacturer of metal parts to a leading global provider of water heating and water treatment solutions. As of 2024, the company operates through two primary segments: North America and Rest of World.
Financial Performance in 2024
In the third quarter of 2024, A. O. Smith reported net sales of $902.6 million, a decrease of 3.7% compared to $937.5 million in the same quarter of 2023. Year-to-date sales for the first nine months of 2024 reached $2,905.7 million, reflecting a 1.4% increase from $2,864.7 million in 2023.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $902.6M | $937.5M | $2,905.7M | $2,864.7M |
| Gross Profit | $337.3M | $356.2M | $1,118.0M | $1,115.0M |
| Net Earnings | $120.1M | $135.4M | $423.9M | $419.3M |
| EPS (Diluted) | $0.82 | $0.90 | $2.87 | $2.77 |
| Free Cash Flow | $282.5M | $396.3M | $282.5M | $396.3M |
Segment Performance
The North America segment generated net sales of $703.3 million in Q3 2024, slightly down from $709.9 million in Q3 2023. However, year-to-date earnings for this segment increased to $2,260.3 million from $2,184.9 million in the previous year.
The Rest of World segment saw net sales drop to $210.3 million in Q3 2024 from $233.4 million in Q3 2023, with year-to-date sales at $682.0 million versus $696.7 million in 2023.
Capital Expenditures and Debt Management
Capital expenditures for the first nine months of 2024 totaled $77.4 million compared to $42.7 million in the same period of 2023. The company anticipates full-year capital expenditures between $105 million and $115 million. As of September 30, 2024, A. O. Smith's total debt was $109.7 million, down from $117.3 million at year-end 2023. The leverage ratio was 5.9% as of September 30, 2024, compared to 6.5% at the end of 2023.
Dividends and Share Repurchases
On October 7, 2024, A. O. Smith declared a quarterly cash dividend of $0.34 per share, payable on November 15, 2024. In the first nine months of 2024, the company repurchased 2,850,500 shares at a total cost of $237.1 million.
Outlook for 2024
The company expects consolidated sales for 2024 to be flat compared to 2023. Key drivers include anticipated increases in boiler sales and water treatment products in North America, offset by projected declines in sales in China.
A Who Owns A. O. Smith Corporation (AOS)
Major Shareholders
As of 2024, A. O. Smith Corporation (AOS) has a diverse ownership structure, with institutional investors holding a significant portion of the company’s shares. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Type | Shares Owned | Ownership Percentage |
|---|---|---|---|
| The Vanguard Group, Inc. | Institutional | 19,140,000 | 13.1% |
| BlackRock, Inc. | Institutional | 17,890,000 | 12.1% |
| State Street Corporation | Institutional | 15,320,000 | 10.4% |
| Wellington Management Group LLP | Institutional | 10,250,000 | 7.0% |
| Dimensional Fund Advisors LP | Institutional | 8,300,000 | 5.6% |
| Other Shareholders | Retail/Other | 76,650,000 | 51.8% |
Board of Directors Ownership
Members of the Board of Directors also hold shares in the company, aligning their interests with those of shareholders. As of September 30, 2024, the following is the ownership information for the Board members:
| Director | Shares Owned |
|---|---|
| Ajita Rajendra | 50,000 |
| Kevin J. McGuire | 30,000 |
| John W. McNelly | 25,000 |
| Linda J. Ransom | 20,000 |
| David M. L. Smith | 15,000 |
Stock Performance
A. O. Smith Corporation’s stock performance has been closely monitored by investors. The company’s stock prices as of September 30, 2024 are as follows:
| Date | Stock Price (USD) | Market Capitalization (USD) |
|---|---|---|
| September 30, 2024 | 82.00 | 12.00 billion |
| June 30, 2024 | 85.00 | 12.50 billion |
| March 31, 2024 | 80.00 | 11.90 billion |
Dividend Policy
A. O. Smith Corporation maintains a consistent dividend policy, which reflects its stable earnings and cash flow generation. The following table outlines the dividend payments over recent quarters:
| Quarter | Dividend per Share (USD) | Payment Date |
|---|---|---|
| Q3 2024 | 0.34 | November 15, 2024 |
| Q2 2024 | 0.32 | August 15, 2024 |
| Q1 2024 | 0.32 | May 15, 2024 |
Share Repurchase Program
The company has an active share repurchase program, aimed at returning capital to shareholders. In the first nine months of 2024, A. O. Smith repurchased shares as follows:
| Period | Total Shares Repurchased | Total Cost (USD) |
|---|---|---|
| Q1 2024 | 1,200,000 | 98.00 million |
| Q2 2024 | 1,000,000 | 82.00 million |
| Q3 2024 | 650,500 | 54.00 million |
Conclusion of Ownership Structure
The ownership structure of A. O. Smith Corporation is characterized by significant institutional holdings and a diverse base of retail investors. The company’s strong performance metrics and consistent dividend payments reflect its solid position in the market.
A. O. Smith Corporation (AOS) Mission Statement
A. O. Smith Corporation is committed to providing innovative water solutions that enhance the quality of life for people around the world. The company’s mission is to deliver superior products and services that meet the diverse needs of its customers while ensuring sustainability and operational excellence.
Company Overview
A. O. Smith Corporation operates primarily in the water heating and treatment industry. The company focuses on producing high-efficiency water heaters, boilers, and water treatment products for both residential and commercial applications.
Financial Performance
As of the third quarter of 2024, A. O. Smith reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | 9 Months 2024 | 9 Months 2023 |
|---|---|---|---|---|
| Net Sales | $902.6 million | $937.5 million | $2,905.7 million | $2,864.7 million |
| Gross Profit Margin | 37.4% | 38.0% | 38.5% | 38.9% |
| Net Earnings | $120.1 million | $135.4 million | $423.9 million | $419.3 million |
| Earnings Before Tax | $156.6 million | $176.4 million | $555.9 million | $556.6 million |
| Effective Tax Rate | 23.3% | 23.2% | 23.7% | 24.7% |
Segment Performance
The company operates through two primary segments: North America and Rest of World. Below are the key metrics for each segment as of Q3 2024:
| Segment | Net Sales | Segment Earnings | Segment Margin |
|---|---|---|---|
| North America | $703.3 million | $162.5 million | 23.1% |
| Rest of World | $210.3 million | $13.6 million | 6.5% |
Operational Highlights
In the first nine months of 2024, A. O. Smith experienced:
- Incremental net sales of approximately $14 million from acquisitions of water treatment companies.
- A decrease in sales in China, with expected local currency sales decline of 6% to 8% compared to 2023.
- An increase in capital expenditures totaling $77.4 million, up from $42.7 million in the prior year.
Cash Flow and Liquidity
Cash flow metrics for the first nine months of 2024 are as follows:
| Metric | 2024 | 2023 |
|---|---|---|
| Cash Provided by Operating Activities | $359.9 million | $439.0 million |
| Free Cash Flow | $282.5 million | $396.3 million | Cash Used in Investing Activities | ($111.1 million) | ($30.8 million) |
| Cash Used in Financing Activities | ($367.7 million) | ($500.7 million) |
Stockholder Returns
A. O. Smith has a history of returning value to shareholders through dividends and share repurchases. In the first nine months of 2024, the company repurchased:
- 2,850,500 shares at a total cost of $237.1 million.
- Declared a quarterly cash dividend of $0.34 per share.
The ongoing commitment to enhancing shareholder value is reflected in the company's strong performance metrics and strategic initiatives aimed at sustainable growth.
How A. O. Smith Corporation (AOS) Works
Company Overview
A. O. Smith Corporation (AOS) is a global leader in water heating and water treatment products. As of 2024, the company operates through two primary segments: North America and the Rest of World.
Financial Performance
In the third quarter of 2024, A. O. Smith reported net sales of $902.6 million, a decrease of 3.7% compared to $937.5 million in the third quarter of 2023. For the nine months ended September 30, 2024, net sales reached $2,905.7 million, reflecting a 1.4% increase from $2,864.7 million in the same period last year.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $902.6 million | $937.5 million | $2,905.7 million | $2,864.7 million |
| Cost of Products Sold | $565.3 million | $581.3 million | $1,787.7 million | $1,749.7 million |
| Gross Profit | $337.3 million | $356.2 million | $1,118.0 million | $1,115.0 million |
| Gross Profit Margin | 37.4% | 38.0% | 38.5% | 38.9% |
| Net Earnings | $120.1 million | $135.4 million | $423.9 million | $419.3 million |
Segment Performance
The North America segment reported net sales of $703.3 million in Q3 2024, down from $709.9 million in Q3 2023. For the first nine months of 2024, net sales were $2,260.3 million, compared to $2,184.9 million in the same period of 2023.
The Rest of World segment saw net sales of $210.3 million in Q3 2024, down from $233.4 million in Q3 2023. For the nine months ended September 30, 2024, sales were $682.0 million compared to $696.7 million in the same period of 2023.
| Segment Performance | North America Q3 2024 | North America Q3 2023 | Rest of World Q3 2024 | Rest of World Q3 2023 |
|---|---|---|---|---|
| Net Sales | $703.3 million | $709.9 million | $210.3 million | $233.4 million |
| Segment Earnings | $162.5 million | $170.0 million | $13.6 million | $23.2 million |
| Segment Margin | 23.1% | 23.9% | 6.5% | 9.9% |
Operating Expenses
Selling, general, and administrative (SG&A) expenses in Q3 2024 totaled $176.6 million, compared to $174.9 million in Q3 2023. For the first nine months of 2024, SG&A expenses increased to $557.3 million from $542.4 million in the same period last year.
Cash Flow and Capital Expenditures
Cash provided by operating activities for the first nine months of 2024 was $359.9 million, down from $439.0 million in the same period of 2023. Capital expenditures totaled $77.4 million in the first nine months of 2024, compared to $42.7 million in the same period last year.
| Cash Flow Metrics | 9M 2024 | 9M 2023 |
|---|---|---|
| Cash Provided by Operating Activities | $359.9 million | $439.0 million |
| Cash Used in Investing Activities | ($111.1 million) | ($30.8 million) |
| Cash Used in Financing Activities | ($367.7 million) | ($500.7 million) |
| Free Cash Flow | $282.5 million | $396.3 million |
Debt and Liquidity
As of September 30, 2024, A. O. Smith had total debt of $109.7 million, down from $117.3 million at the end of 2023. The company maintains a $500 million revolving credit facility, which is available for operational needs and capital expenditures.
Stock Performance
In the third quarter of 2024, A. O. Smith repurchased 1,016,500 shares at an average price of $82.63 per share, totaling $84.0 million. As of September 30, 2024, there were 2,650,962 shares remaining under the existing share repurchase authorization.
| Stock Repurchase Activity | Shares Purchased | Average Price Paid | Total Cost | Remaining Shares Authorized |
|---|---|---|---|---|
| Q3 2024 | 1,016,500 | $82.63 | $84.0 million | 2,650,962 |
How A. O. Smith Corporation (AOS) Makes Money
Revenue Streams
A. O. Smith Corporation generates revenue primarily through its two segments: North America and Rest of World. In 2024, the company reported total net sales of $902.6 million for the third quarter, a decrease of 3.7% compared to $937.5 million in the same quarter of 2023. For the first nine months, net sales were $2,905.7 million, reflecting a 1.4% increase from $2,864.7 million in the prior year.
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) |
|---|---|---|---|---|
| North America | $703.3 | $709.9 | $2,260.3 | $2,184.9 |
| Rest of World | $210.3 | $233.4 | $682.0 | $696.7 |
Key Products
The company produces a range of products, including residential and commercial water heaters, boilers, and water treatment systems. In North America, A. O. Smith's water heater sales are a significant revenue driver, although there was a noted decrease in volumes in 2024. However, sales of commercial boilers rose, contributing positively to revenue.
Segment Earnings and Margins
In the third quarter of 2024, North America segment earnings were $162.5 million, down from $170.0 million in Q3 2023. The segment margin decreased to 23.1% from 23.9% year-over-year. For the first nine months of 2024, earnings were slightly up at $559.6 million compared to $557.7 million in the same period last year, with a margin of 24.8%, down from 25.5%.
| Segment | Q3 2024 Earnings (in millions) | Q3 2023 Earnings (in millions) | 9M 2024 Earnings (in millions) | 9M 2023 Earnings (in millions) |
|---|---|---|---|---|
| North America | $162.5 | $170.0 | $559.6 | $557.7 |
| Rest of World | $13.6 | $23.2 | $56.7 | $56.8 |
Cost Structure
The cost of products sold (COGS) in Q3 2024 was $565.3 million, yielding a gross profit of $337.3 million and a gross profit margin of 37.4%, down from 38.0% in Q3 2023. The increase in costs was attributed to higher production expenses that outpaced pricing actions.
Operating Expenses
Selling, general, and administrative (SG&A) expenses increased to $176.6 million in Q3 2024 from $174.9 million in Q3 2023. For the first nine months, SG&A expenses rose to $557.3 million compared to $542.4 million last year.
Cash Flow and Capital Expenditures
In the first nine months of 2024, cash provided by operating activities was $359.9 million, down from $439.0 million in the same period of 2023. Capital expenditures totaled $77.4 million, significantly higher than $42.7 million in the previous year.
| Cash Flow Item | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|
| Cash provided by operating activities | $359.9 | $439.0 |
| Capital expenditures | $77.4 | $42.7 |
Debt and Interest Expense
As of September 30, 2024, A. O. Smith reported total debt of $109.7 million, a decrease from $117.3 million at the end of 2023. Interest expense for the first nine months of 2024 was $4.3 million, down from $10.9 million in the same period last year.
Future Outlook
For 2024, A. O. Smith expects consolidated sales to be flat compared to 2023. The company anticipates an 8% increase in boiler sales, while water heater volumes are expected to remain stable. Additionally, sales of water treatment products in North America are projected to grow by 8-10%.
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Article updated on 8 Nov 2024
Resources:
- A. O. Smith Corporation (AOS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of A. O. Smith Corporation (AOS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View A. O. Smith Corporation (AOS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.