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Sep 30, 2023
A O Smith Q3 2023 Earnings Report
A. O. Smith delivered strong Q3 2023 results, driven by North America segment and China's new products.
Key Takeaways
A. O. Smith reported a strong third quarter with EPS of $0.90. The North America segment performed particularly well, with resilient demand for residential water heaters and improved operating margin. China's new kitchen appliance products drove year-over-year improvement, despite a challenging economic backdrop. India experienced sales growth of 17% in local currency, and the company acquired Water Tec to expand its water treatment business in the U.S.
North America water heater sales increased 13% due to strength in residential water heater demand.
China's third quarter sales increased 9% in local currency, driven by newly introduced dishwasher and steam oven products.
India delivered year-to-date sales growth of 17% in local currency with new product introductions.
Company acquired Water Tec, an Arizona-based water treatment company.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
A. O. Smith increased its 2023 outlook with an expected adjusted earnings per share range of $3.70 to $3.80. Sales are expected to grow approximately 2% compared to 2022. North America full year margin guidance is approximately 25%, and Rest of the World margin guidance remains unchanged at approximately 10%. Strong free cash flow is expected between $575 million and $600 million.
Positive Outlook
- Residential water heater orders remained strong through October.
- 2023 residential water heater industry volumes will increase approximately 4% compared to last year.
- Demand for commercial electric water heaters greater than 55-gallon continue to be robust.
- Sales in China will grow 2% to 5% local currency in 2023.
- Sales in India will grow 15% this year.
Challenges Ahead
- Stable supply chain with limited disruption
- Q4 material costs will be similar to Q3 material costs.
- CapEx should be approximately $65 million
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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