Q2 2024 A O Smith Corp Earnings Call Transcript
Key Points
- A.O. Smith Corp (AOS) delivered record quarterly sales of $1 billion and an EPS of $1.6, a 5% increase from 2023 adjusted EPS.
- North American water heater and boiler sales increased by 10% due to higher volumes and pricing actions.
- India achieved double-digit growth for the 10th consecutive quarter, driven by strong performance in e-commerce, retail, and commercial end-markets.
- A.O. Smith Corp (AOS) signed an agreement to acquire Pureit, a leading water purification business in South Asia, which will double their market penetration in the region.
- The company received several awards in 2024, including being named one of the world's most ethical companies by Ethisphere and receiving the Energy Star Sustained Excellence Partner of the Year award from the EPA for the sixth year in a row.
- Segment margin in North America decreased by 180 basis points year over year, primarily due to higher steel costs and higher selling expenses.
- Rest of the World segment sales were flat compared to last year, with unfavorable currency translation impacting results.
- China's market for core products remains challenged, with pricing and promotion pressures particularly in the mid-price sector.
- Free cash flow decreased to $119 million during the first half of 2024, primarily due to higher inventory and accounts receivable balances.
- The company experienced some softness in orders in July, attributed to normal seasonality and a pre-buy ahead of price increases.
Good day. Thank you for standing by. Welcome to 2024 second quarter A. O. Smith earnings call. (Operator Instructions) Please be advised that today's conference is being recorded. I'd now like to hand the call over to your first speaker today, Helen Gurholt. Please go ahead.
Thank you, Marvin. Good morning, and welcome to the A.O. Smith second-quarter conference call. I'm Helen Gurholt, Vice President, Investor Relations, and Financial Planning and Analysis. Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer; and Chuck Lauber, Chief Financial Officer.
In order to provide improved transparency into the operating results of our business, we provide non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures, adjusted earnings, adjusted earnings per share, adjusted segment earnings, and adjusted corporate expenses exclude the impact of pension settlement income and restructuring and impairment
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