A.o. Smith Corporation · NYSE:AOS
A.o. Smith — Q2 2023 Earnings Presentation
18 slides from A.o. Smith's earnings presentation, Jul 27, 2023
Slide 1: Second Quarter 2023 Results
(<eSmith. Innovation has a name. Second 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: Second Quarter Messages
Second Quarter Messages Sales of $961M Higher North Record North Sales in China and and record America water America margins India grew 15% in adjusted EPS of heater volumes driven by lower local currency $1.01 were offset by steel costs and lower boiler sales higher water and pricing heater volumes
Slide 5: Second Quarter Performance and Highlights
Second Quarter Performance and Highlights Sales Adjusted EPS Segment Sales Adjusted Segment Earnings $1.01 $966M $961M $722M $0.82 200 $194M 150 -1% 23% YOY YOY -3% YOY 100 $244M 6% 50 $28M YOY 0 Q2 2022 Q2 2023 Q2 2022 Q2 2023 North America Rest of World North America Rest of World Highlights North
Slide 6: A. O. Smith Water Filtration Systems Certified to Filter Microplastics
A. O. Smith Water Filtration Systems Certified to Filter Microplastics • Aquasana’s patented technology uses Claryum® filtration to remove up to 99.9% of 78 contaminants, up from just 77, which includes lead, microplastics, herbicides, pesticides and PFAS.
Slide 7: Second Quarter North America Segment
Second Quarter North America Segment Segment Sales ($M) Adjusted Segment Operating Earnings ($M) -3% 26.9% YOY 21.8% • Higher water heater volumes more than offset by lower boiler sales • Earnings increased primarily due to lower steel costs and higher water and pricing heater volumes • Lower volume
Slide 8: Second Quarter Rest of World Segment
Second Quarter Rest of World Segment Segment Sales ($M) Segment Operating Earnings ($M) 11% YOY 6% YOY 11.6% 7.9% • Higher volumes in China due to stronger consumer demand; currency • Income higher due to YOY volume growth and favorable mix in China translation reduced sales by $14 million • Operati
Slide 9: Cash Flow and Liquidity
Cash Flow and Liquidity1 Free Cash Flow ($M) $236 $410M 9.8% Cash balance2 Debt to capital ratio $204M ~1.1M $24 Net cash Shares repurchased 2022 2023 position in YTD 2023 totaling ~$70M Cash Flow from Operations ($M) $260 $54 1. As of June 30, 2023 2022 2023 9 2. Includes cash, cash equivalents and
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Priority Comments Organic Growth • Opportunities for organic growth in all our businesses and geographies Acquisitions • Disciplined focus on transactions that enable geographic growth, expand/grow the core, establish adjacencies • Recent transactions include Atlantic F
Slide 11: 2023 Outlook and Assumptions
2023 Outlook and Assumptions* • North American segment margin expected to be between 24% and 24.25%, ($M, except per share data) excluding pension settlement income Revenue Increase Flat to + 2% • Rest of World segment margin expected to be approximately 10%, excluding impairment expense U.S. Reside
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: Save The Date
Save The Date A. O. Smith to Host Investor Day In Chicago on Monday, November 6, 2023 12:00 noon – 5:00 p.m. CT Invitations to register will be emailed in September
Slide 14: (X6 Smith.
(X6 Smith. Innovation has a name.
Slide 15: 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): June 30, 2023 2022 Net Earnings (GAAP) $ 157.0 $ 126.2 Pension settlement income
Slide 16: 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 segment Three Months Ended June 30, earnings (non-GAAP): 2023 2022 Earnings Before Provision for Income Taxes (GAAP) $ 208.9 $ 1
Slide 17: 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):): Six Months Ended June 30, 2023 2022 Cash provided by operating activities (GAAP) $260.2 $ 54.4 Less: Capital expenditures (24.2) (30.7) Free cash flow (non
Slide 18: 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) $ 3.38 – 3.53 $ 1.51 Impairment expense 0.10 (1) - Pension settlement