A.o. Smith Corporation · NYSE:AOS
A.o. Smith — FY2023 Earnings Presentation
18 slides from A.o. Smith's earnings presentation, Jan 30, 2024
Slide 1: Full Year 2023 Results
Full Year 2023 Results January 30, 2024 Full Year 2023 Earnings Presentation | 1
Slide 2: Presenters
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 Full Year 2023 Earnings Presentation | 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,” “
Slide 4: Full Year Messages
Full Year Messages 1 2 3 4 5 Record sales of Higher North China achieved Strong free cash Returned $490 $3.9B and America sales local currency flow of $598 million of capital adjusted EPS of due to resilient sales growth of million driven by to shareholders $3.81 water heater 4% despite a record ear
Slide 5: Full Year Performance and Highlights
Full Year Performance and Highlights Sales Adjusted EPS Segment Sales Adjusted Segment Earnings $3.81 $2,923M $726M $3.8B $3.9B $3.14 3% 21% YOY YOY $957M $99M TY 2022 TY 2023 TY 2022 TY 2023 North America Rest of World North America Rest of World Highlights North America Rest of World • Net sales u
Slide 6: Full Year North America Segment
Full Year North America Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) 4% YOY 21.7% 24.8% • Sales increase primarily due to higher volumes of residential and • Income increase driven by higher water heater volumes and lower commercial water heaters partially offset by boilers an
Slide 7: Full Year Rest of World Segment
Full Year Rest of World Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) -1% YOY 10.0% 10.4% • China sales grew 4% in local currency driven by kitchen appliance and • Earnings increase driven by higher volumes in China water treatment sales • Structural cost reductions and improve
Slide 8: Fourth Quarter Performance and Highlights
Fourth Quarter Performance and Highlights Sales Adjusted EPS Segment Sales Adjusted Segment Earnings $0.97 $738M $988M $936M $0.86 $173M 6% 13% YOY YOY $260M $30M Q4 2022 Q4 2023 Q4 2022 Q4 2023 North America Rest of World North America Rest of World Highlights North America Rest of World • Net sale
Slide 9: Fourth Quarter North America Segment
Fourth Quarter North America Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) 7% 23.3% 23.5% YOY • Sales increased primarily due to higher water heater volumes partially • Earnings improvement driven higher water heater volumes partially offset by lower boiler sales offset by high
Slide 10: Fourth Quarter Rest of World Segment
Fourth Quarter Rest of World Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) 4% YOY 12.7% 11.5% • Higher volumes in China due recently introduced kitchen appliance • Operating earnings impacted by promotional spending and product mix products • Adjusted segment margin decrease of
Slide 11: Cash Flow and Liquidity
Cash Flow and Liquidity1 $363M Free Cash Flow ($M) Cash Flow From Operations ($M) Cash balance2 $598 $670 6.5% Debt to capital ratio $391 $321 $236M Net cash position ~4.4M 2022 2023 2022 2023 Shares repurchased in 2023 totaling ~$307M 1As of December 31, 2023 2Includes cash, cash equivalents and ma
Slide 12: Capital Allocation Priorities
Capital Allocation Priorities • Opportunities for organic growth in all our businesses and geographies Organic Growth • Invested $73 million in capital expenditures in 2023 • R&D totaled $98 million, versus $89 million 2022 • Disciplined focus on transactions that expand/grow the core, enable geogra
Slide 13: 2024 Outlook and Assumptions
2024 Outlook and Assumptions1 Revenue Increase ~3% to 5% 2024 Guidance 2023 U.S. Residential Water Heater Industry Flat Commercial Water Heater Industry + LSD China Sales Growth (Local Currency) ~3% to 5% Diluted EPS (GAAP) $3.90 - $4.15 $3.69 North American Boiler Sales Growth ~8% to 10% North Amer
Slide 14: Executing a Clear Strategy
Executing a Clear Strategy Innovate and Expand Execute Research & Development Profitable Growth Operational Excellence • New technologies • Stable & profitable core business • A. O. Smith operating system • Product development • Global water treatment footprint • Safety, quality and delivery Industr
Slide 15: A. O. Smith. Innovation has a name.
(X6 Smith. Innovation has a name.
Slide 16: Adjusted Earnings and Adjusted EPS
Adjusted Earnings and Adjusted EPS ($ in Millions, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, The following is a reconciliation of net earnings and diluted earnings (loss) per share to adjusted earnings (non- 2023 2022 2023 2022 GAAP) and adjusted EPS (no
Slide 17: Adjusted Segment Earnings
Adjusted Segment Earnings ($ in Millions, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, The following is a reconciliation of earnings (loss) before provision for income taxes to total segment earnings (non- 2023 2022 2023 2022 GAAP) and adjusted segment earn
Slide 18: Free Cash Flow
Free Cash Flow Twelve Months Ended December 31, ($ in Millions) The following is a reconciliation of reported cash flow from operating activities 2023 2022 to free cash flow (non‐GAAP): Cash provided by operating activities (GAAP) $670.3 $391.4 Less: Capital expenditures (72.6) (70.3) Free cash flow