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A. O. Smith Corporation AOS has reported better-than-expected fourth-quarter 2021 results, wherein adjusted earnings of 87 cents per share beat the Zacks Consensus Estimate of 77 cents. The bottom line also increased 17.6% from the year-ago figure of 74 cents.
In 2021, the company’s adjusted earnings came in at $3.02, up 42% year over year.
Top-Line Details
The company’s fourth-quarter net sales increased 19.3% year over year to $995.5 million. The increase was driven by higher sales in North America and China, supported by its pricing actions. The top line surpassed the Zacks Consensus Estimate of $966 million.
In 2021, the company’s net sales were $3,538.9 million, up 22% on a year-over-year basis.
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada water heaters and boilers) moved up 27% year over year to $714.8 million. The segment’s results were primarily driven by the company’s pricing actions.
Segmental operating earnings were up 21% to $166.9 million on a year-over-year basis. The jump was on account of inflation-related price increases, partially offset by a rise in material and logistics costs.
Quarterly sales in the Rest of the World (including China, India and Europe) grew 3% year over year to $287.9 million. The increase was primarily backed by a positive mix in water treatment and water heater products in China.
The segment’s operating earnings were $30.5 million, reflecting a marginal decline year over year. Lower sales volume, partially offset by favorable product mix, affected the segment’s income.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A. O. Smith Corporation price-consensus-eps-surprise-chart | A. O. Smith Corporation Quote
Margin Details
In the quarter, A.O. Smith’s cost of sales was $634.9 million, up 24.4% on a year-over-year basis. Selling, general & administrative expenses were $184.2 million, up 7.6%.
Gross profit increased 11.3% year over year to $360.6 million with a margin of 36.2%, down 260 basis points. Interest expenses increased 40% to $1.4 million.
Liquidity & Cash Flow
On Dec 31, 2021, A.O. Smith’s cash and cash equivalents totaled $443.3 million compared with $486.1 million in the previous quarter.
At the end of the reported quarter, long-term debt was $189.9 million, up 90.7% from $99.6 million sequentially.
In 2021, cash provided by the operating activities totaled $641.1 million compared with $562.1 million a year ago.
Share Repurchases
In 2021, the company repurchased shares worth $366.5 million compared with $56.7 million in 2020. It paid dividends worth $170.1 million compared with $158.7 million a year ago.