A. O. Smith Corporation, a global water technology company, announced its second-quarter 2024 results, reporting record sales of $1 billion, a 7% increase year-over-year. This growth was driven by higher water heater volumes, particularly in North America, including sales of their newly launched gas-tankless products. Diluted earnings per share (EPS) reached $1.06, representing a 2% increase year-over-year and a 5% improvement compared to the prior year’s adjusted EPS.
The company reaffirmed its 2024 sales outlook, projecting a 3% to 5% increase year-over-year. Additionally, A. O. Smith narrowed its EPS guidance to a range of $3.95 to $4.10. This performance reflects strong demand for their products, especially in the North American market, where water heater and commercial boiler sales were particularly robust. A. O. Smith also highlighted the continued growth of their North American boiler business and the successful launch of their gas-tankless products.
Kevin J. Wheeler, chairman and chief executive officer of A. O. Smith, expressed satisfaction with the company’s performance, emphasizing the team’s commitment to meeting customer needs and achieving record topline results. He also expressed excitement about welcoming the Pureit team to the A. O. Smith family later this year.
The company’s North American segment achieved sales of $790.7 million in the second quarter, an improvement of 9% compared to the same period last year. This growth was attributed to increased water heater and commercial boiler volumes, as well as pricing actions. However, segment earnings and margin decreased year-over-year due to higher material costs, primarily steel, and increased selling expenses related to sales growth initiatives.
In the Rest of World segment, sales reached $244.8 million, essentially flat compared to the prior year. This included inter-segment sales related to the recently launched tankless water heaters manufactured in China for the North American market. Despite unfavorable currency translation impacts, particularly in China, local currency third-party sales in China increased by 2% due to higher volumes of kitchen products and combi boilers, offset by lower sales of residential water treatment products. Sales in India witnessed a 16% increase in local currency, fueled by strong continued demand.
A. O. Smith demonstrated its commitment to returning capital to shareholders by repurchasing 1.8 million shares in the first half of 2024 at a cost of $153.2 million. The company also announced a $0.32 per share dividend for shareholders of record on July 31, payable on August 15. A. O. Smith’s financial strategy includes growing through acquisitions and penetrating high-potential markets. Earlier this month, the company signed an agreement to acquire Pureit from Unilever for $120 million. Pureit, a leading water purification business in South Asia, offers a range of residential water purification solutions and generates approximately USD $60 million in annual sales, primarily in India. This acquisition aligns with A. O. Smith’s core capabilities and doubles its market penetration in South Asia.
A. O. Smith expects to continue its growth trajectory in the future, supported by strong demand, particularly in North America. However, they remain cautious about the second half of the year due to potential economic headwinds in China. The company is focused on continuing to meet customer needs, expanding its market presence, and delivering shareholder value.
