A.o. Smith Corporation · NYSE:AOS
A.o. Smith — Smith A O — Deutsche Bank 7th Annual Global Industrials & Materials Summit (June 2016)
18 slides from A.o. Smith's conference presentation, Jun 8, 2016
Slide 1: Deutsche Bank 7th Annual Global Industrials & Materials Summit
Deutsche Bank 7th Annual Global Industrials & Materials Summit Ajita Rajendra, Chairman & CEO Exhibit 99.1
Slide 2: 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 3: Investment Case
Investment Case Market share leader in major businesses Stable/Growing North American replacement market; operating leverage as new construction recovers Strong balance sheet and cash flow to support future growth & share repurchase Strength of our brand, distribution, manufacturing and innovation p
Slide 4: Growth Strategy: Organic Growth
Growth Strategy: Organic Growth China: 30% of sales growing 15% (local currency) Lochinvar brands: 12% of sales growing 10% NA water heaters: 58% of sales growing 4% 4.5% 1.2% 2.3% Total annual sales growth 8.0%
Slide 5: Sales & Adjusted Operating Margin
Sales & Adjusted Operating Margin* Sales in millions *excludes corporate expenses 11% CAGR
Slide 6: Adjusted Earnings Per Share
Adjusted Earnings Per Share 27% CAGR
Slide 7: U.S. Water Heater Market Segment: Residential Market
U.S. Water Heater Market Segment Residential Market Other 2015 market share data AHRI data + tankless: AOS actual shipments and AOS estimates of competitors’shipments
Slide 8: U.S. Water Heater Market Segment: Commercial Market
U.S. Water Heater Market Segment Commercial Market* Other 2015 market share data AHRI data: AOS actual shipments and AOS estimates of competitors’ shipments *Commercial water heater segment as defined by AHRI, total 2015 commercial units as reported by AHRI = 185,500
Slide 9: Lochinvar End Markets
Lochinvar End Markets 2/3 commercial end markets; 1/3 residential end markets
Slide 10: China now 31% of Sales & Growing
China now 31% of Sales & Growing China sales have grown 25% (CAGR) over the last 10 years US$ millions
Slide 11: Nanjing AOS China
Nanjing AOS China Built on: Premium Brand Extensive Distribution and Service Network Innovative New Products & World Class Manufacturing Local Management Team and Organizational Development
Slide 12: Ten-Year + Market Share Trend
Ten-Year + Market Share Trend Leading residential brands measured in currency; Tier One Market: GFK - CMM data sampling several thousand largest retail stores, November 2015
Slide 13: Growth Strategy: Organic Growth
Growth Strategy: Organic Growth China: 30% of sales growing 15% (local currency) Lochinvar brands: 12% of sales growing 10% NA water heaters: 58% of sales growing 4% 4.5% 1.2% 2.3% Total annual sales growth 8.0%
Slide 14: China Growth Model
China Growth Model Approx 15% growth in local currency Water Heater Market Growth Market Share Gains & Average Selling Price Increases Fast Growing Ancillary Products
Slide 15: A. O. Smith's Capital Allocation Options
A. O. Smith’s Capital Allocation Options Organic growth (capital expenditures) Acquisitions $354 million net cash 16 percent leverage ratio (debt/total capital) Return cash to shareholders: approximately $260 million projected in 2016 Dividends Increased 26 percent in first quarter 2016 Share repurc
Slide 16: Steel Update
Steel costs have continued to increase since our earnings call in April. In response we announced a 5 - 8 % price increase on our U.S. wholesale water heaters, effective August 1, 2016 Steel Update
Slide 17: Growth and Stability
Growth and Stability Offense Organic growth of 8 % China growing approximately 15 percent in local currency Lochinvar branded products growing approximately 10% Call option on NA new construction Significant cash and borrowing capacity for “value creating” acquisitions and share buyback Defense NA w
Slide 18: Investor Contact
Vice President, Investor Relations and Treasurer Direct: 414-359-4130 Email: packerman@aosmith.com Investor Contact Patricia Ackerman
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