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Mar 31, 2023
A O Smith Q1 2023 Earnings Report
A. O. Smith experienced a strong first quarter, driven by resilient water heater demand and lower steel costs.
Key Takeaways
A. O. Smith reported a 1% decrease in sales to $966 million, but net earnings increased by 6% to $126.9 million, resulting in record first quarter EPS of $0.84. Adjusted EPS was $0.94, excluding a non-cash impairment charge. The company raised its 2023 outlook to flat sales and adjusted EPS between $3.30 and $3.50.
Sales decreased 1% to $966 million, with North America increasing 3% and Rest of World decreasing 14%.
Net earnings increased 6% to $126.9 million, with EPS increasing 11% to $0.84.
Adjusted earnings were $142.5 million, excluding a non-cash impairment charge, resulting in adjusted EPS of $0.94.
The company raised its 2023 outlook to flat sales and adjusted EPS between $3.30 and $3.50.
A O Smith
A O Smith
A O Smith Revenue by Segment
A O Smith Revenue by Geographic Location
Revenue by Segment
North America Revenue
CapyFin.comRest of World Revenue
CapyFin.comRevenue by Geographic Location
North America Revenue
CapyFin.com Forward Guidance
A. O. Smith projects flat sales and adjusted EPS between $3.30 and $3.50 for the full year 2023.
Positive Outlook
- Strong start to 2023, particularly in North America water heating.
- Outperformed the market in North America water heating.
- Price cost relationship resulted in a strong operating margin.
- China's reopening is progressing as expected with sequential month-over-month demand improvement.
- Strong balance sheet and free cash flow provide liquidity for capital allocation priorities.
Challenges Ahead
- Meaningful rise in steel index prices will translate into higher input costs.
- Higher input costs will put pressure on water heater margins in the second half of the year.
- Potential impacts from future acquisitions are excluded from guidance.
- Further softening in U.S. residential water heater demand.
- Negative impacts to the company resulting from global inflationary pressures or a potential recession.
Revenue & Expenses
Visualization of income flow from segment revenue to net income