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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.
Revenue by Segment
Revenue by Geographic Location
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
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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