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Jun 30, 2020
A O Smith Q2 2020 Earnings Report
A. O. Smith reported a decrease in sales and net earnings for Q2 2020 due to the impact of COVID-19 and restructuring activities.
Key Takeaways
A. O. Smith reported second-quarter net earnings of $67.8 million, or $0.42 per share, on sales of $663.9 million. Sales decreased by 13% compared to the same quarter in 2019, and net earnings also declined from $102.1 million, or $0.61 per share, in the previous year. Adjusted earnings were $72.8 million, or $0.45 per share, excluding severance and restructuring charges.
Second quarter sales were $663.9 million, a 13% decrease compared to 2019.
Net earnings were $67.8 million, or $0.42 per share, down from $102.1 million, or $0.61 per share, in 2019.
North America segment sales were $480.5 million, an 8% decrease compared to 2019, while Rest of World segment sales were $189.7 million, a 24% decrease.
The company is providing full year 2020 earnings guidance of $1.69 to $1.83 per share and adjusted earnings guidance of $1.72 to $1.86 per share.
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 is providing full year 2020 earnings guidance of $1.69 to $1.83 per share and adjusted earnings guidance of $1.72 to $1.86 per share, assuming business conditions remain similar to current experiences and do not deteriorate due to further restrictions or shutdowns.
Positive Outlook
- U.S. and China restrictions and closures eased and mobility improved as the quarter progressed
- North American water treatment sales thrived
- China business stabilized and improved
- North America residential water heater markets stabilized and improved
- Company believes it continues to have ample liquidity and flexibility to meet the needs of its business and return cash to shareholders
Challenges Ahead
- Much uncertainty remains about the duration and long-term implications of the pandemic
- Uncertainty about the impact on U.S. commercial construction
- Negative impacts to the Company’s business, including demand for its products, operations and work-force dislocation and disruption, supply chain disruption and liquidity as a result of the severity and duration of the COVID-19 pandemic
- A failure to recover or a further weakening of the Chinese economy and/or a failure to recover or a further decline in the growth rate of consumer spending or housing sales in China
- Negative impact to the Company’s businesses from international tariffs and trade disputes
Revenue & Expenses
Visualization of income flow from segment revenue to net income