A.O. Smith Corp. reported third quarter net earnings of $46.2 million, or 50 cents per share, up from $36 million, or 40 cents per share, at the same time a year ago.
The Milwaukee-based company’s adjusted earnings did not include $1 million in after-tax costs from the transfer of residential water heater manufacturing from the Ontario plant and $3.2 million in non-operating pension costs.
Sales were $536.2 million for the quarter, up 16 percent from $462.2 million in the same period a year earlier.
The company’s North American segment sales were up 10 percent, while the rest of the world segment experienced 31 percent sales growth.
“A. O. Smith continued to benefit from improvement in several key sectors of the economy in the U. S.,” said Ajita Rajendra, president and chief executive officer. “A growing home construction market created demand for residential water heaters, and we saw evidence that replacement demand improved, as well…Our team in China continued to do an excellent job of growing the business and serving our customers in that important region of the world. Market growth for water heaters and increased consumer demand for A. O. Smith branded water treatment products are having a favorable impact. Overall, A. O. Smith branded product sales in China increased approximately 35 percent in the quarter.”
Because the company’s free cash flow is expected to top $100 million this year, the board of directors increased A.O. Smith’s authorization to repurchase shares, to 2.5 million shares.
Rajendra also gave an outlook for the remainder of the year.
“Our A. O. Smith team continues to execute at a very high level, and their focus on customer satisfaction and cost management can be seen in our strong financial performance to date,” Rajendra said. “With improved market conditions in our major markets, and good customer acceptance of our new, higher-value A. O. Smith branded products in China, we feel confident about our company’s prospects for the remainder of this year.”