Milwaukee-based water heater manufacturer A.O. Smith Corp. today reported second quarter net income of $71.1 million, or 79 cents per share, up from $57.3 million, or 63 cents per share, in the second quarter of 2014.
The company reported record revenue of $653.5 million, up 10 percent from $595.4 million in the same period a year ago. The increase was attributed to higher prices in North America, higher U.S. boiler sales and continued Chinese demand for its water heating and treatment products.
A.O. Smith recently redesigned almost 80 percent of its residential product offering to comply with the National Appliance Energy Conservation Act, which mandated increasing the minimum energy efficiency standards for residential water heaters in the U. S. Commonly referred to as NAECA III, it went into effect on April 16. As a result of the redesigns, A.O. Smith raised the prices on many of its products.
“We have successfully navigated through the NAECA III regulatory transition. Our team is continuing to provide our customers with the support they need as the market acclimates to the NAECA III compliant water heaters,” said Ajita Rajendra, chairman and chief executive officer. “Our 15 percent growth in China continues to be resilient and outperform China’s overall GDP growth.”
Based on performance in the first half of the year, A.O. Smith raised its guidance to $3.04 to $3.09 per share for the full year.
“We had a very strong first half of the year, primarily driven by continued success in our U. S. business,” Rajendra said. “We expect an improvement in full year residential and commercial water heater demand in the U. S. compared with last year, as well as continued lower material costs.”
“We believe sales of Lochinvar branded products are on track to grow 10 percent again this year. We expect sales in China to grow twice the rate of China’s GDP growth in 2015. We estimate our organic worldwide revenue growth will be over 11 percent in 2015.”
