A. O. Smith (AOS) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 4% year-over-year to $903 million, mainly due to weaker consumer demand in China (down 17% in local currency) and lower North America water heater volumes, while India sales grew 12%.

• Net earnings for Q3 were $120.1 million, down from $135.4 million last year; diluted EPS declined 9% to $0.82.

• North America boiler and water treatment businesses delivered double-digit growth, partially offsetting declines.

• Dividend increased by 6%, marking 32 consecutive years of annual increases.

• Acquisition of Pureit from Unilever for $120 million is on track to close by year-end 2024.

Financial highlights

• North America Q3 sales were $703.3 million (down 1%); segment earnings fell to $162.5 million with a margin of 23.1%.

• Rest of World Q3 sales were $210.3 million (down 10%); China sales declined 17% in local currency, India sales up 12%.

• Q3 2024 net earnings were $120.1 million, down from $135.4 million in Q3 2023; adjusted EPS was $0.82, compared to $0.90.

• Free cash flow for the first nine months was $282.5 million, down from $396.3 million in 2023.

• Cash balance at quarter-end was $256 million; net cash position $136 million; leverage ratio 5.9%.

Outlook and guidance

• 2024 consolidated sales expected to be flat versus 2023, in the range of $3.8–$3.9 billion.

• Full-year EPS guidance reaffirmed at $3.70–$3.85.

• China third-party sales guidance lowered to a 6–8% decrease in local currency; North America water heater industry volumes projected flat.

• Boiler sales growth guidance revised to approximately 8%; water treatment sales growth guidance unchanged at 8–10%.

• Free cash flow for 2024 projected at $415 million; capital expenditures $105–$115 million.