A. O. Smith Corporation reported its third-quarter 2024 results, revealing a 4% decrease in net sales to $902.6 million compared to the same period last year. The company's net earnings also experienced a decline, falling by 11% to $120.2 million, with diluted earnings per share (EPS) decreasing by 9% to $0.82.
In the North America segment, sales declined by 1% to $703.3 million, primarily due to lower residential and commercial water heater volumes, although offset by higher boiler and water treatment sales. Segment earnings in North America were $162.5 million, with a segment margin of 23.1% in 2024, compared to $170.0 million and a 23.9% segment margin in 2023.
The Rest of World segment saw a 10% decrease in sales, amounting to $210.3 million, attributed to weak consumer demand in China, resulting in lower volumes of core water heater and water treatment products. However, sales in India increased by 12% year-over-year.
The company's cash and marketable securities balances totaled $255.6 million as of September 30, 2024, with debt totaling $119.7 million, resulting in a leverage ratio of 5.9%. Cash provided by operations was $359.9 million, and free cash flow was $282.5 million in the first nine months of 2024, reflecting a decrease year-over-year.
A. O. Smith's recently announced acquisition of Pureit from Unilever for $120 million is on track to close by the end of 2024. The company also repurchased 2.9 million shares at a cost of $237.1 million in the first nine months of 2024, with approximately 2.7 million additional shares authorized for repurchase as of September 30, 2024. Additionally, the board of directors approved a 6% increase in the dividend rate.
Looking ahead, the company revised its 2024 outlook, lowering the sales forecast to approximately flat compared to the previous year and adjusting the full-year EPS outlook to a range of $3.70 to $3.85, representing a year-over-year decline of 1% at the midpoint. CEO Kevin J. Wheeler cited cautiousness about the North America residential and commercial water heater end-market demand and the expectation of continued challenges in consumer demand in China through the end of the year as reasons for the revised outlook.
The company will host a webcasted conference call to discuss its third-quarter 2024 results and outlook for the remainder of the year. Following these announcements, the company's shares moved 0.0%, and are now trading at a price of $78.6. For the full picture, make sure to review A. O. Smith's 8-K report.
