A.o. Smith Corporation · NYSE:AOS
A.o. Smith — Q4 2020 Earnings Presentation
19 slides from A.o. Smith's earnings presentation, Jan 28, 2021
Slide 1: Full Year 2020 Results
(<6 Smith. Innovation has a name. Full Year 2020 Results
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: Notice Regarding Financial Information
Notice Regarding Financial Information • This presentation contains non-GAAP financial information. Reconciliations from GAAP to non-GAAP measures are contained in the appendix of this presentation. • All information should be read in conjunction with the historical financial statements and financia
Slide 4: 2020 Commentary
2020 Commentary NA Water US residential U.S. China Employee Restructuring 2020 CRS Treatment industry commercial consumer safety top charges of report grows 14 water heater industry demand priority; $0.04 per published, percent, demand up water heater progressively Minimal share 2025 GHG organically
Slide 5: Full Year Results
Full Year Results $ in millions except per share data 2020 2019 Change % Change Sales $2,895.3 $2,992.7 $ (97.4) -3% Net Earnings $ 344.9 $ 370.0 $ (25.1) -7% Severance and Restructuring Expenses 6.3 - Adjusted Earnings $ 351.2 $ 370.0 $ (18.8) -5% EPS $ 2.12 $ 2.22 $ (0.10) -5% Severance and Restru
Slide 6: Full Year Sales
Full Year Sales $ in millions 2020 2019 Change % Change North America $2,118.3 $2,083.5 $ 34.8 2% Rest of World 800.3 935.8 (135.5) -14% Intersegment (23.3) (26.6) 3.3 Total $2,895.3 $2,992.7 $ (97.4) -3% 6
Slide 7: Full Year Adjusted Earnings
Full Year Adjusted Earnings $ in millions 2020 2019 Change % Change Adjusted Segment Earnings North America $ 506.2 $ 488.9 $ 17.3 4% Rest of World 5.0 40.2 (35.2) -88% Intersegment (0.3) - (0.3) Total Segment Adjusted Earnings 510.9 529.1 (18.2) -3% Corporate (52.0) (46.0) (6.0) -13% Interest Expen
Slide 8: Fourth Quarter Results
Fourth Quarter Results $ in millions except per share data 2020 2019 Change % Change Sales $ 834.5 $ 750.9 $ 83.6 11% Net Earnings $ 120.0 $ 91.3 $ 28.7 31% EPS $ 0.74 $ 0.56 $ 0.18 32% 8
Slide 9: Fourth Quarter Sales
Fourth Quarter Sales $ in millions 2020 2019 Change % Change North America $ 560.9 $ 523.1 $ 37.8 7% Rest of World 279.0 234.3 44.7 19% Intersegment (5.4) (6.5) 1.1 Total $ 834.5 $ 750.9 $ 83.6 11% 9
Slide 10: Fourth Quarter Earnings
Fourth Quarter Earnings $ in millions 2020 2019 Change % Change Segment Earnings North America $ 137.9 $ 128.4 $ 9.5 7% Rest of World 31.3 1.5 29.8 significant Total Segment Earnings 169.2 129.9 39.3 30% Corporate (16.3) (11.9) (4.4) 37% Interest Expense (1.0) (2.5) 1.5 150% Pre-tax Earnings 151.9 1
Slide 11: Strong Capital Position
Strong Capital Position1 Cash Flow from Operations $ in millions $562M 5.8% $690M $600 $562 $500 Cash provided Debt to Cash balance2 $456 by operations capital ratio $400 $300 $576M ~1.3M $200 Net cash position Shares repurchased totaling ~$57M $100 $0 1 as of December 31, 2020 2 includes cash, cash
Slide 12: 2021 EPS Guidance and Assumptions
2021 EPS Guidance and Assumptions ($ in millions) 2021 Projections Adjusted EPS $2.40 to $2.50 per share Operating Cash Flow $450 - $475 Capital Expenditures $85 - $90 Depreciation & Amortization Approximately $80 Corporate/Other Expense Approximately $51 Effective Tax Rate 22.5 - 23 percent Stock R
Slide 13: 2021 Outlook
2021 Outlook % Revenue1 2021 Assumptions U.S. residential water heater industry volumes down approximately two percent, or 200,000 NA Water Heaters 60% units; commercial water heater industry volumes down approximately four percent China 24% China sales increase 14 – 15 percent in local currency NA
Slide 14: 2021 Outlook
2021 Outlook • Revenue increased approximately 10 percent, including $45 million China FX benefit • North America segment margin expected to be between 23 to 23.5 percent • Rest of World segment margin expected to be between seven and eight percent As of January 28, 2021 14
Slide 15: Compelling Investment Thesis
Compelling Investment Thesis Market leader Stable/growing U.S. Strength of premium 5-year dividend CAGR Strong balance sheet replacement market; brand, distribution, through 2020 = 22% and cash flow to operating leverage manufacturing and support future 5-year cumulative from incremental new innovat
Slide 16: (<6Smith.
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Slide 17: Adjusted Earnings and Adjusted EPS
Adjusted Earnings and Adjusted EPS (dollars in millions, except per share data) Three Months Ended Twelve Months Ended The following is a reconciliation of net earnings and diluted EPS to December 31, December 31, adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP): 2020 2019 2020 2019 Net Earn
Slide 18: Adjusted Segment Earnings
Adjusted Segment Earnings (dollars in millions) Three Months Ended Twelve Months Ended The following is a reconciliation reported segment December 31, December 31, earnings to adjusted segment earnings (non-GAAP): 2020 2019 2020 2019 Segment Earnings (Losses) (GAAP) North America $137.9 $ 128.4 $503
Slide 19: 2021 Adjusted EPS Guidance and 2020 EPS
2021 Adjusted EPS Guidance and 2020 EPS The following is a reconciliation of diluted EPS to 2021 adjusted EPS (non-GAAP)( all items are net of tax): Guidance 2020 Diluted EPS (GAAP) $2.40 – 2.50 $ 2.12 Severance and restructuring expenses, per diluted share - 0.04 Adjusted EPS $2.40 – 2.50 $ 2.16 19