Press Releases
<< BackJuly 15, 1998 at 12:00 AM EDT
A.O. Smith Second Quarter Earnings Per Share Increase 28 Percent to $.78 Per Share
A.O. Smith Second Quarter Earnings Per Share Increase 28 Percent to $.78 Per Share
Second quarter sales of the Milwaukee-based manufacturer of $227 million were comparable to 1997 sales of $225 million.
"Improved performance at the Water Systems Technologies platform and reduced general and administrative expense combined to generate the improved second quarter results," Robert J. O'Toole, chairman and chief executive officer, observed.
For the first six months of 1998, A.0. Smith earned $1.40 per share, a 49 percent increase over 1997 earnings of $.94 per share. Earnings from continuing operations were $22.8 million, a 21 percent increase over 1997 first half earnings of $18.8 million.
Second quarter sales of Electric Motor Technologies, A.0. Smith's largest platform, were $3 million higher than the second quarter of 1997. Stronger sales of pump, subfractional, and air-moving motors helped offset lower international sales resulting from the Asian economic situation. Second quarter operating profit was lower than the prior year primarily due to lower pricing in some segments of the market.
Stronger sales of both residential and commercial water heaters enabled the Water Systems Technologies platform to increase its sales four percent to more than $74 million in the second quarter. Unit volumes for residential and commercial water heaters were stronger compared with the second quarter of 1997. Improved pricing for commercial helped generate higher operating profit.
The sales of the Storage & Fluid Handling Technologies platform declined nearly 10 percent in the second quarter to approximately $38 million as a result of significantly lower sales of fiberglass pipe to chemical and petroleum production markets and lower sales of storage products for municipal and agricultural applications. Despite the decline in sales, second quarter operating profits were comparable to the same period in 1997, reflecting cost-reduction actions taken during the second half of last year.
On June 9, A.O. Smith's board of directors declared a three-for-two stock split to be paid on August 17 to shareholders of record on July 31. Second quarter earnings per share, adjusted for the stock split, would be $.52 compared with $.40 earned in the second quarter of 1997. At the June 9 meeting, the board also increased the quarterly cash dividend to $.12 per share (post-split).
On July 1, the company completed the acquisition of the General Electric's domestic compressor motor business for $120 million. Sales and earnings of that operation will be reflected in the third quarter results of the Electric Motor Technologies platform. The acquisition includes a 250,000 square foot manufacturing facility located in Scottsville, Ky., employing approximately 875 people. The business's annual sales are approximately $130 million, making A.0. Smith North America's leading manufacturer of compressor motors for the air conditioning industry.
Earlier this month, the company signed a five-year agreement with York International, the largest independent U.S. manufacturer of heating and air conditioning equipment, to supply York and its Bristol Compressors subsidiary with compressor, fan, and blower motors. Under this agreement, A.0. Smith becomes a Tier 1 supplier and now will provide product for all of York's HVAC motor applications.
A.0. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis., and total sales of $833 million in 1997. Its major product lines include fractional horsepower, hermetic, and subfractional horsepower electric motors; residential and commercial water heaters; municipal, industrial, and agricultural storage tanks; and fiberglass reinforced piping systems.
A.O. SMITH CORPORATION AND SUBSIDIARIES
(condensed consolidated financial statements -
$000 omitted except per share data)
Statement of Earnings
Three Months ended Six Months ended
Continuing June 30 June 30
Sales 1998 1997 1998 1997
Electric Motor Technologies $113,765 $110,771 $225,604 $204,698
Water Systems Technologies 74,295 71,374 148,849 142,346
Storage & Fluid
Handling Technologies 38,620 42,793 75,182 74,142
Net Sales 226,680 224,938 449,635 421,186
Costs and Expenses
Cost of Products Sold 178,827 176,296 356,013 329,746
Selling, General
and Administrative 26,381 29,845 54,281 57,238
Interest Expense 1,593 2,445 3,217 4,689
Interest Income (1,309) (3,302) (3,021) (3,360)
Other Expense 692 701 1,414 1,691
Tax Provision 7,193 6,694 13,231 11,085
Total Costs and Expenses 213,377 212,679 425,135 401,089
Earnings Before Equity
In Loss of Joint Ventures 13,303 12,259 24,500 20,097
Equity In Loss of Joint Ventures (674) (581) (1,693) (1,298)
Earnings from Continuing
Operations 12,629 11,678 22,807 18,799
Continuing Earnings Per
Share of Common Stock (Diluted) $.78 $.61 $1.40 $.94
Average Common Shares
Outstanding (000s omitted) 16,190 19,246 16,332 19,974
Adjusted for 3 for 2 Stock Split $.52 $.40 $.93 $.63
Payable August 17 to shareholders
of record July 31
Average Common Shares
Outstanding (000s omitted) 24,285 28,869 24,498 29,961
A.0. SMITH CORPORATION
Balance Sheet
June 30 December 31
1998 1997
ASSETS:
Cash and cash equivalents $99,672 $145,896
Receivables 146,764 126,232
Inventories 78,159 79,049
Deferred income taxes 9,707 11,849
Other current assets 4,190 2,702
Total Current Assets 338,492 365,728
Net property, plant and equipment 207,737 207,756
Investments in and advances
to joint ventures 29,660 25,605
Goodwill 50,925 51,783
Other assets 69,809 65,644
Total Assets $696,623 $716,516
LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade payables $57,137 $61,299
Accrued payroll and benefits 24,948 26,397
Product warranty 7,492 7,972
Income taxes 282 6,607
Long-term debt due within one year 5,566 5,590
Other current liabilities 22,757 20,017
Total Current Liabilities 118,182 127,882
Long-term debt 100,190 100,972
Other liabilities 55,120 59,515
Deferred income taxes 30,264 28,442
Stockholders' equity 392,867 399,705
Total Liabilities and Stockholders' Equity $696,623 $716,516
A.0. SMITH CORPORATION
STATEMENT OF CASH FLOWS
Six Months ended
June 30
1998 1997
Operating Activities
Continuing
Net earnings $22,807 $18,799
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation & amortization 13,443 12,708
Deferred income taxes 3,964 (1,455)
Equity in loss of joint ventures 1,693 1,298
Net change in current assets and liabilities (28,549) (18,318)
Net change in noncurrent assets and liabilities (9,441) 656
Other 537 491
Cash Provided by Operating Activities 4,454 14,179
Investing Activities
Capital expenditures (12,367) (23,801)
Capitalized purchased software costs (547) (730)
Investment in joint ventures (5,748) (7,436)
Acquisition of business (net of cash acquired) 0 (59,897)
Cash Used by Investing Activities (18,662) (91,864)
Cash Used by Continuing Operations
before Financing Activities (14,208) (77,685)
Discontinued
Cash Provided / (Used) by Discontinued Operations
before Financing Activities (1,196) 536,178
Financing Activities
Long-term debt incurred 819 0
Long-term debt retired (1,625) (139,406)
Purchase of common stock held in treasury (24,860) (101,579)
Proceeds from common stock options exercised 202 2,880
Tax benefit from exercise of stock options 69 334
Dividends paid (5,425) (6,798)
Cash Used by Financing Activities (30,820) (244,569)
Net increase / (decrease) in cash and
cash equivalents (46,224) 213,924
Cash and cash equivalents - beginning of period 145,896 6,405
Cash and Cash Equivalents - End of Period $99,672 $220,329