A.O. Smith First Quarter Earnings Increase 20 Percent to $.60 Per Share
14 April 2000
A.O. Smith First Quarter Earnings Increase 20 Percent to $.60 Per Share
MILWAUKEE, April 14 Benefiting from strong demand in its
major electric motor markets and the continued international expansion of its
water heater business, A.O. Smith Corporation (NYSE: AOS)(AMEX: SMC) today
announced first quarter earnings from continuing operations of $14.2 million
or $.60 per share.
Earnings were 20 percent higher than the $12.0 million or $.50 per share
earned in the first quarter of 1999. First quarter sales from continuing
operations increased more than 45 percent to $335.0 million compared with
$229.9 million for the same period last year. First quarter 2000 results
include sales and profits from the former MagneTek electric motor operations
acquired in August of last year.
For the quarter ended March 31, the Electric Motor Technologies platform
reported sales of $247.9 million, more than 67 percent higher than
first-quarter 1999 sales of $147.9 million. The former MagneTek motor
operations contributed approximately $90 million in first-quarter sales. The
base motor business grew seven percent, positively influenced by strong
customer demand in its heating, ventilating, and air conditioning (HVAC),
pump, and garage door opener markets.
Operating profits increased substantially due to higher volumes as well as
favorable factory performance throughout the operation. Electric Motor
Technologies continues on schedule integrating the former MagneTek motors
operations into the business.
Sales of Water Systems Technologies, a leading manufacturer of commercial
and residential water heaters, increased more than six percent in the first
quarter to $87.2 million, with strength in the international and water systems
tank segments of the business. The combination of sales growth and good plant
performance enabled operating profits to increase more than 11 percent
compared with the first quarter of 1999.
"Concerning our discontinued Storage & Fluid Handling Technologies
platform, the sale process is going well, and we remain confident we will
conclude the sale of these two businesses by the end of the third quarter of
this year," Robert J. O'Toole, chairman and chief executive officer, said.
"The outlook for the remainder of 2000 looks very positive," O'Toole
continued. "The continued expansion of the domestic economy is creating
strong demand for motors and water heaters. Consequently, we are comfortable
with analysts' earnings estimates of around $2.50 per share this year."
A.O. Smith Corporation has scheduled a conference call to discuss first
quarter results for 9:30 a.m. (C.D.T.) on April 14. A live webcast of the
conference call will be available on its corporate site:
http://www.aosmith.com . An audio archive will be available approximately one
hour after the call.
A.O. Smith Corporation, with headquarters in Milwaukee, Wis., is a leading
marketer and manufacturer of electric motors and water heaters, serving
customers world wide. It is one of North America's largest manufacturers of
electric motors, with a comprehensive line of fractional horsepower, integral
horsepower, and hermetic motors. The company also is North America's largest
manufacturer of commercial water heating equipment and a leading supplier of
residential water heaters and hydronic boilers. The company has facilities in
the United States, Mexico, Canada, England, Ireland, Hungary, the Netherlands,
and China and employs more than 15,000 people.
Forward-Looking Statements
Certain statements in this report are "forward-looking statements." These
forward-looking statements can generally be identified as such because the
context of the statement will include words such as the company "believes,"
"anticipates," "expects," "projects," or words of similar import.
Although the company believes that its expectations are based upon
reasonable assumptions within the bounds of its knowledge of its business,
there can be no assurance that its financial goals will be realized. Although
a significant portion of the company's sales are derived from the replacement
of previously installed product, and such sales are therefore less volatile,
numerous factors may affect actual results and cause results to differ
materially from those expressed in forward-looking statements made by, or on
behalf of, the company. The company considers most important among such
factors, the stability in its electric motor and water products markets, the
timely and proper integration of the MagneTek motors acquisition, and the
implementation of associated cost reduction programs.
All subsequent written and oral forward-looking statements attributable to
the company, or persons acting on its behalf, are expressly qualified in their
entirety by these cautionary statements.
A.O. SMITH CORPORATION AND SUBSIDIARIES
(condensed consolidated financial statements --
$000 omitted except per share data)
Statement of Earnings
Three Months ended
Continuing March 31
Sales 2000 1999
Electric Motor Technologies $247,876 $147,875
Water Systems Technologies 87,167 81,988
Net Sales 335,043 229,863
Costs and Expenses
Cost of products sold 267,648 183,936
Selling, general and administrative 35,652 23,752
Interest expense 5,431 1,978
Interest income (97) (324)
Other expense 4,030 1,780
Tax provision 8,224 6,789
Total costs and expenses 320,888 217,911
Earnings from Continuing Operations 14,155 11,952
Discontinued
Earnings (loss) from operations less related
income tax (benefit) of $297 and $(313) 456 (550)
Net Earnings $14,611 $11,402
Net Earnings (Loss) Per Share of Common Stock
(Diluted)
Continuing Operations $0.60 $0.50
Discontinued Operations $0.02 $(0.02)
Net Earnings $0.62 $0.48
Average Common Shares Outstanding (000's omitted) 23,698 23,742
A. O. SMITH CORPORATION
Balance Sheet
March 31 December 31
2000 1999
ASSETS:
Cash and cash equivalents $5,132 $14,761
Receivables 224,351 183,442
Inventories 170,002 163,443
Deferred income taxes 11,047 11,323
Other current assets 6,550 5,253
Net current assets-discontinued operations 16,116 10,405
Total Current Assets 433,198 388,627
Net property, plant and equipment 284,216 283,493
Goodwill and other intangibles 249,771 251,085
Other assets 96,200 88,990
Net long-term assets - discontinued operations 50,509 51,791
Total Assets $1,113,894 $1,063,986
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $644 $ --
Trade payables 101,346 81,221
Accrued payroll and benefits 28,427 32,272
Product warranty 11,020 10,847
Income taxes 8,992 7,170
Long-term debt due within one year 9,629 9,629
Other current liabilities 28,849 27,301
Total Current Liabilities 188,907 168,440
Long-term debt 364,785 351,251
Other liabilities 66,044 64,536
Deferred income taxes 51,966 48,675
Stockholders' equity 442,192 431,084
Total Liabilities and Stockholders' Equity $1,113,894 $1,063,986
A.O. SMITH CORPORATION
STATEMENT OF CASH FLOWS
Three Months ended
March 31
2000 1999
Operating Activities
Continuing
Net earnings $14,155 $11,952
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation & amortization 11,320 7,846
Net change in current assets and liabilities (25,677) (13,860)
Net change in noncurrent assets and
liabilities (3,933) (5,661)
Other 414 124
Cash Provided by (Used in) Operating Activities (3,721) 401
Investing Activities
Capital expenditures (11,660) (8,657)
Capitalized purchased software costs (360) (369)
Cash Used in Investing Activities (12,020) (9,026)
Cash Used in Operating and Investment Activities (15,741) (8,625)
Discontinued
Cash Used in Discontinued Operations (5,340) (6,381)
Financing Activities
Debt incurred 14,178 332
Purchase of treasury stock -- (2,691)
Other stock transactions 81 46
Dividends paid (2,807) (2,795)
Cash Provided by (Used in) Financing Activities 11,452 (5,108)
Net decrease in cash and cash equivalents (9,629) (20,114)
Cash and cash equivalents - beginning of
period 14,761 37,666
Cash and Cash Equivalents - End of Period $5,132 $17,552