Press Releases
<< BackJanuary 19, 1998 at 12:00 AM EST
A.O. Smith 1997 Earnings Increase 68% to $2.00 Per Share
A.O. Smith 1997 Earnings Increase 68% to $2.00 Per Share
Earnings per share of $2.00 (diluted) were 68 percent higher than the $1.19 per share earned in 1996, underscoring the additional benefit of the company's share repurchase program. Sales of $833 million were $52 million higher than 1996 sales of $781 million.
For the fourth quarter, earnings from continuing operations were $9.7 million or $.56 per share (diluted), significantly higher than the $6.0 million or $.28 per share earned during the same period in 1996. Sales of $206 million represented a seven percent increase over fourth quarter 1996 sales of $192 million.
During the fourth quarter, the company completed the sale of its Mexican automotive affiliate, Metalsa, bringing the divestiture of its automotive operations to a conclusion.
"The company was able to achieve its earnings objectives despite recurring challenges in several of our major markets," Robert J. O'Toole, chairman and chief executive officer, observed. "The acquisition of UPPCO, reductions in general and administrative expense and higher interest income contributed to the significant improvement in earnings."
Sales in the Electric Motor Technologies platform increased nearly 16 percent to a record $391 million. The March 31 acquisition of UPPCO, a manufacturer of subfractional horsepower electric motors, added approximately $57 million to 1997 sales. The company was able to overcome a nearly 10 percent decline in the domestic air conditioning industry, with sales of fractional horsepower and hermetic motors approximately the same as in the prior year. Operating profits were moderately higher than 1996 due to contributions from the UPPCO acquisition.
Water Systems Technologies' sales of $287 million were slightly lower than 1996 sales of $291 million. Higher sales of commercial water heaters and boilers were offset by second-half weakness in the residential water heater market. 1997 marked the sixth consecutive year that A.0. Smith has increased its sales in the important commercial water heating market segment. Profits were essentially unchanged compared with 1996.
Sales of the Storage and Fluid Handling Technologies platform of $155 million were slightly higher than 1996 sales of $153 million. Improved performance by the Smith Fiberglass unit was partially offset by lower sales of liquid storage tanks. Operating profits were essentially flat in 1997.
The company also announced that its Board of Directors approved an authorization to repurchase an additional $50 million of its Common Stock and Class A Common Stock. The company reported that it has nearly completed the previous authorization to repurchase $80 million of common stock granted on June 10, 1997. Since the inception of the program in January of last year, the company has repurchased approximately 4.9 million shares for $181 million, representing 23 percent of the total shares outstanding. As of January 19, 1998, there were 16.2 million shares of Common Stock and Class A Common Stock issued and outstanding.
The Board of Directors also today declared a regular quarterly cash dividend of $.17 per share on Common Stock and Class A Common Stock. The dividend is payable February 17 to shareholders of record January 31, 1998.
A.0. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis. Its major product lines include fractional horsepower, subfractional horsepower, and hermetic electric motors; residential and commercial water heaters; industrial storage tanks; and fiberglass reinforced plastic pipe.
A.O. SMITH CORPORATION AND SUBSIDIARIES
(condensed consolidated financial statements --
$000 omitted except per share data)
Statement of Earnings
Three Months ended Year ended
Continuing December 31 December 31
Sales 1997 1996 1997 1996
Electric Motor Technologies $91,970 $73,094 $390,749 $337,138
Water Systems Technologies 76,240 79,943 287,458 291,281
Storage & Fluid Handling Technologies 37,577 38,777 154,730 152,774
Net Sales 205,787 191,814 832,937 781,193
Costs and Expenses
Cost of Products Sold 165,421 150,546 662,227 614,218
Selling, General and Administrative 24,748 25,734 106,999 107,350
Interest Expense 1,160 2,231 7,762 8,114
Interest Income (2,665) (153) (9,035) (341)
Other Expense 1,243 2,192 3,328 5,629
Tax Provision 5,356 3,848 21,359 17,080
Total Costs and Expenses 195,263 184,398 792,640 752,050
Earnings Before Equity in
Loss of Joint Ventures 10,524 7,416 40,297 29,143
Equity in Loss of Joint Ventures (779) (1,385) (2,744) (3,894)
Earnings from Continuing Operations 9,745 6,031 37,553 25,249
Discontinued
Earnings from Operations (less related
income tax (1997 - $O & $7,698;
1996 - $4,880 & $19,988)) -- 10,778 15,231 40,168
Gain on Disposition (less related income
tax of $13,482 & $71,538) 6,430 -- 101,046 --
Net Earnings $16,175 $16,809 $153,830 $65,417
Basic Earnings Per Share of Common Stock
Continuing Operations $0.58 $0.29 $2.04 $1.21
Discontinued Operations $0.38 $0.51 $6.31 $1.92
Net Earnings $0.96 $0.80 $8.35 $3.13
Average Common Shares
Outstanding 16,880,268 20,929,264 18,422,871 20,922,195
Diluted Earnings Per Share of Common Stock
Continuing Operations $0.56 $0.28 $2.00 $1.19
Discontinued Operations $0.37 $0.51 $6.19 $1.90
Net Earnings $0.93 $0.79 $8.19 $3.09
Average Common Shares
Outstanding 17,278,684 21,200,534 18,794,190 21,156,193
A.0. SMITH CORPORATION
STATEMENT OF CASH FLOWS
Year Ended
December 31
1997 1996
Operating Activities
Continuing
Net earnings $37,553 $25,249
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation & amortization 26,286 23,601
Deferred income taxes (2,262) (3,345)
Equity in loss of joint ventures 2,744 3,894
Net change in current assets and liabilities 10,797 24,320
Net change in noncurrent assets and liabilities 3,635 4,083
Other 1,495 2,630
Cash Provided by Operating Activities 80,248 80,432
Investing Activities
Capital expenditures (44,886) (37,804)
Capitalized purchased software costs (1,295) (2,567)
Investment in joint ventures (13,719) (15,147)
Acquisition of business (net of cash acquired) (60,918) (1,111)
Cash Used by Investing Activities (120,818) (56,629)
Cash Flow Provided / (Used) by Continuing
Operations before Financing Activities (40,570) 23,803
Discontinued
Cash Provided / (used) by operating activities (106,132) 113,644
Cash used by investing activities (52,456) (177,116)
Proceeds from disposition 773,090 --
Tax payments associated with disposition (106,039) --
Cash Flow Provided / (Used) by Discontinued
Operations before Financing Activities 508,463 (63,472)
Financing Activities
Long-term debt incurred -- 58,507
Long-term debt retired (143,816) (4,000)
Purchase of common stock held in treasury (176,550) --
Proceeds from common stock options exercised 3,757 539
Tax benefit from exercise of stock options 884 28
Dividends paid (12,677) (13,807)
Cash Provided/(Used) by Financing Activities (328,402) 41,267
Net increase in cash and cash equivalents 139,491 1,598
Cash and cash equivalents - beginning of period 6,405 4,807
Cash and Cash Equivalents - End of Period $145,896 $6,405
A.0. SMITH CORPORATION
Balance Sheet
December 31 December 31
1997 1996
ASSETS:
Cash and cash equivalents $145,896 $6,405
Receivables 126,232 121,571
Inventories 79,049 80,445
Deferred income taxes 11,849 12,416
Other current assets 2,702 4,537
Total Current Assets 365,728 225,374
Net property, plant and equipment 207,756 182,600
Investments in and advances to joint ventures 25,605 14,579
Prepaid pension asset 37,468 46,628
Goodwill 51,783 6,540
Other assets 28,176 37,777
Net long-term assets - discontinued operations -- 357,654
Total Assets $716,516 $871,152
LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade payables $61,299 $66,514
Accrued payroll and benefits 26,397 27,362
Product warranty 7,972 7,563
Income taxes 6,607 1,351
Long-term debt due within one year 5,590 11,932
Other current liabilities 13,556 7,228
Net current liabilities - discontinued operations 6,461 2,602
Total Current Liabilities 127,882 124,552
Long-term debt 100,972 238,446
Product warranty 18,349 17,109
Other liabilities 24,410 18,135
Deferred income taxes 28,442 31,271
Postretirement benefit obligation 16,756 17,000
Stockholders' equity 399,705 424,639
Total Liabilities and Stockholders' Equity $716,516 $871,152