A.o. Smith Corporation · NYSE:AOS
A.o. Smith — Q3 2020 Earnings Presentation
16 slides from A.o. Smith's earnings presentation, Oct 29, 2020
Slide 1: Third Quarter 2020 Results
Third Quarter 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: Third Quarter Commentary
Third Quarter Commentary NA Water US NA China Minimal Restructuring Treatment residential commercial consumer operational carryover grows 19 water heater water heater demand disruptions from second percent demand and boiler slightly quarter positive YOY demand positive YOY down 9 - 10 percent 4
Slide 5: Third Quarter Results
Third Quarter Results $ in millions except per share data 2020 2019 Change % Change Sales $ 760.0 $ 728.2 $ 31.8 4% Net Earnings $ 105.4 $ 87.3 $ 18.1 21% Severance and Restructuring Expenses 1.3 - Adjusted Earnings $ 106.7 $ 87.3 $ 19.4 22% EPS $ 0.65 $ 0.53 $ 0.12 23% Severance and Restructuring E
Slide 6: Third Quarter Sales
Third Quarter Sales $ in millions 2020 2019 Change % Change North America $ 544.0 $ 514.6 $ 29.4 6% Rest of World 221.4 220.3 1.1 flat Intersegment (5.4) (6.7) 1.3 Total $ 760.0 $ 728.2 $ 31.8 4% 6
Slide 7: Third Quarter Adjusted Earnings
Third Quarter Adjusted Earnings $ in millions 2020 2019 Change % Change Adjusted Segment Earnings North America $ 133.6 $ 121.6 $ 12.0 10% Rest of World 17.8 4.1 13.7 334% Total Adjusted Earnings 151.4 125.7 25.7 20% Corporate (10.9) (9.8) (1.1) -11% Interest Expense (1.6) (3.1) 1.5 48% Adjusted Pre
Slide 8: Strong Capital Position
Strong Capital Position1 Cash Flow from Operations $ in millions $330M 6.1% $509M $350 $325 $330 $300 $280 Cash provided Debt to Cash balance2 $275 by operations capital ratio $250 $225 $200 $175 $395M ~1.3M $150 $125 $100 Net cash position Stock repurchase; $75 shares totaling ~$57M $50 $25 $0 1 as
Slide 9: 2020 EPS Guidance and Assumptions
2020 EPS Guidance and Assumptions ($ in millions) 2020 Projections Adjusted EPS $1.95 to $1.98 per share Operating Cash Flow Approximately $400 Capital Expenditures $50 - $55 Depreciation & Amortization Approximately $80 Corporate/Other Expense Approximately $50 Effective Adjusted Tax Rate 23 to 23.
Slide 10: 2020 Outlook
2020 Outlook % Q3 YOY Revenue1 sales Full Year Assumptions U.S. residential water heater industry volumes up 4 percent; commercial NA Water Heaters 58% 6.5% water heater industry volumes down approximately ten percent China local currency sales decline 18 to 19 percent; mid single digit China 25% +1
Slide 11: 2020 Outlook
2020 Outlook • Revenue declines of 6 to 7 percent • North America segment margin expected to be 23 to 23.5 percent • Rest of World segment margin expected to be -1 to -2 percent As of October 29, 2020 11
Slide 12: Compelling Investment Thesis
Compelling Investment Thesis Market leader Stable/growing U.S. Strength of premium 5 year adjusted EPS Strong balance sheet replacement market; brand, distribution, CAGR through 2019 and cash flow to operating leverage manufacturing and = 12.7% support future from incremental new innovation provide
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 (dollars in millions, except per share data) Three Months Ended Nine Months Ended The following is a reconciliation of net earnings and diluted EPS to September 30, September 30, adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP): 2020 2019 2020 2019 Net Earn
Slide 15: Adjusted Segment Earnings
Adjusted Segment Earnings (dollars in millions) Three Months Ended Nine Months Ended The following is a reconciliation reported segment September 30, September 30, earnings to adjusted segment earnings (non‐GAAP): 2020 2019 2020 2019 Segment Earnings (Losses) (GAAP) North America $133.1 $121.6 $365.
Slide 16: 2020 Adjusted EPS Guidance and 2019 EPS
2020 Adjusted EPS Guidance and 2019 EPS The following is a reconciliation of diluted EPS to 2020 adjusted EPS (non‐GAAP)( all items are net of tax): Guidance 2019 Diluted EPS (GAAP) $1.91 – 1.94 $ 2.22 Severance and restructuring expenses, per diluted share 0.04 ‐ Adjusted EPS $1.95 – 1.98 $ 2.22 16