17 slides from A.o. Smith's earnings presentation, Apr 27, 2023
Slide 1: First Quarter 2023 Results
(<eSmith. Innovation has a name. First Quarter 2023 Results
Slide 2: Participants
Participants Kevin J. Wheeler Charles T. Lauber Helen E. Gurholt Chairman and Executive Vice President Vice President - Investor Relations, Chief Executive Officer and Chief Financial Officer Financial Planning & Analysis 2
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation contains statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “i
Slide 4: First Quarter Messages
First Quarter Messages Sales of $966M Higher North Strong North Sales in India grew and record America sales due America margins 28% and China adjusted EPS of to strong demand driven by water showed consistent $0.94 for commercial heater volumes performance and residential and lower steel water heat
Slide 5: First Quarter Performance and Highlights
First Quarter Performance and Highlights Sales Adjusted EPS Segment Sales Adjusted Segment Earnings $978M $966M $0.94 $753M $0.77 200 $189M 150 -1% 22% YOY YOY 3% YOY 100 $219M -14% 50 $18M YOY 0 Q1 2022 Q1 2023 Q1 2022 Q1 2023 North America Rest of World North America Rest of World Highlights North
Slide 6: Our Commitment to Sustainability
Our Commitment to Sustainability 6
Slide 7: First Quarter North America Segment
First Quarter North America Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) 3% 25.1% YOY 21.1% • Sales increased primarily due to higher commercial and residential • Earnings increased due to higher water heater volumes and lower steel water heater volumes costs • Lower pricing p
Slide 8: First Quarter Rest of World Segment
First Quarter Rest of World Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) 11% YOY -14% YOY 9.7% 8.1% • Lower volumes in China due to consumer demand headwinds; • Income lower due to YOY volumes declines partially offset by lower currency translation reduced sales by $17 million
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity1 Free Cash Flow ($M) $109 $496M 16.0% Cash balance2 Debt to capital ratio $155M ~821K $4 Net cash Shares repurchased Q1 2022 Q1 2023 position in Q1 2023 totaling ~$53M Cash Flow from Operations ($M) $120 $17 1. As of March 31, 2023 Q1 2022 Q1 2023 9 2. Includes cash, cash equ
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Priority Comments Organic Growth • Opportunities for organic growth in all our businesses and geographies Acquisitions • Disciplined focus on transactions that enable geographic growth, expand/grow the core, establish adjacencies • Recent transactions include Atlantic F
Slide 11: 2023 Outlook and Assumptions
2023 Outlook and Assumptions* ($M, except per share data) • North American segment margin expected to be between 23% and Revenue Increase Flat +/- 2% 23.5% U.S. Residential Water Heater Industry Flat • Rest of World segment margin expected to be approximately 10%, excluding impairment expense 2023 G
Slide 12: Compelling Investment Thesis
Compelling Investment Thesis Market Leader Stable/growing U.S. Strength of premium brand, Strong balance sheet and replacement market; distribution, manufacturing cash flow to support future operating leverage from and innovation provide growth, share repurchase incremental new construction signific
Slide 13: A. O. Smith - Innovation has a name.
(X6 Smith. Innovation has a name.
Slide 14: Adjusted Earnings and Adjusted EPS
Adjusted Earnings and Adjusted EPS ($ in Millions, except per share data) The following is a reconciliation of net earnings and diluted EPS to adjusted earnings (non-GAAP) Three Months Ended and adjusted EPS (non-GAAP): March 31, 2023 2022 Net Earnings (GAAP) $ 126.9 $ 119.8 Impairment expense, befo
Slide 15: Adjusted Segment Earnings
Adjusted Segment Earnings ($ in Millions) The following is a reconciliation of earnings before provision for income taxes to total segment earnings (non-GAAP) and adjusted Three Months Ended March 31, segment earnings (non-GAAP): 2023 2022 Earnings Before Provision for Income Taxes (GAAP) $ 171.3 $
Slide 16: Free Cash Flow
Free Cash Flow ($ in Millions) The following is a reconciliation of reported cash flow from operating activities to free cash flow (non-GAAP):): Three Months Ended March 31, 2023 2022 Cash provided by operating activities (GAAP) $119.9 $ 16.5 Less: Capital expenditures (10.7) (12.9) Free cash flow (
Slide 17: 2023 Adjusted EPS Guidance and 2022 Adjusted EPS
2023 Adjusted EPS Guidance and 2022 Adjusted EPS ($ in Millions, except per share data) The following is a reconciliation of diluted EPS to adjusted EPS (non-GAAP) (all items are net of tax): 2023 2022 Guidance Diluted EPS (GAAP) $ 3.20 – 3.40 $ 1.51 Impairment expense 0.10(1) - Pension settlement c