Press Releases
<< BackJuly 16, 1999 at 12:00 AM EDT
A.O. Smith Second Quarter Earnings Increase 13 Percent To $.59 Per Share
A.O. Smith Second Quarter Earnings Increase 13 Percent To $.59 Per Share
A.O. Smith Second Quarter Earnings Increase 13 Percent To $.59 Per Share
MILWAUKEE, Wis., July 16 -- Record-setting performance by the company's Electric Motor Technologies platform enabled A.O. Smith Corporation (NYSE: AOS(Amex: SMC) to earn $.59 per share in the second quarter.
Net earnings for the Milwaukee-based manufacturer increased to $13.9 million compared with 1998 second quarter net earnings of $12.6 million or $.52 per share. Sales for the three-month period ending June 30 were $263 million, a 16 percent increase over sales of $227 million for the same period in 1998.
"Good growth in nearly all of our electric motor markets was instrumental in the company's second quarter performance," Robert J. O'Toole, chairman and chief executive officer, observed. "In addition, Water Systems Technologies contributed improved sales and profits over last year."
"Another important accomplishment during the quarter was the definitive agreement to purchase MagneTek's world-wide motor operations, a strategic acquisition that will significantly strengthen our presence in the fractional horsepower motor market," O'Toole pointed out. "We intend to close this sale on August 2 and project a neutral effect on earnings during the second half of 1999. We expect earnings to benefit by between $.30 and $.35 per share next year."
For the first six months of 1999, A.O. Smith sales were $520 million, compared with first-half 1998 sales of $450 million. Net earnings for the same period in 1999 were $25.3 million compared with $22.8 million during the first six months of 1998. Earnings per share increased 15 percent to $1.07 per share, compared with $.93 per share earnings during the first half of 1998.
Second quarter sales for Electric Motor Technologies, A.O. Smith's largest operating unit, were a record $157 million, a more than $40 million increase over second quarter 1998 sales of $114 million. Strong performance in the pump and the heating, ventilating, and air conditioning (HVAC) markets contributed to the sales increase.
Sales of hermetic motors more than doubled during the quarter, as the company benefited from strong demand from air conditioning compressor manufacturers as well as the GE hermetic motor operations acquired in July, 1998.
Operating profits improved significantly when compared with the second quarter of 1998 due to higher volumes and improved operating efficiencies.
Continued strength in the residential and commercial water heating markets and progress in the company's Chinese water heater operation contributed to Water Systems Technologies' second quarter sales of $79 million, a six percent increase over the 1998 second quarter. The Chinese operations contributed approximately $3 million to second quarter sales. Operating profits increased over the second quarter of 1998, primarily due to the higher sales volume.
Persistent weakness in the petroleum production, chemical processing, dry bulk storage and agricultural markets resulted in significatnly lower second quarter sales and profits for the Storage & Fluid Handling Technologies platform.
Forward-Looking Statements
This press release contains forward-looking statements. 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. Among such numerous factors, the company includes the continued growth of the world-wide air conditioning, heating, and refrigeration market; the weather and its impact on the HVAC, pool and spa pump markets; and the timely and proper implementation of future cost reduction programs.
A.O. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis. Its major product lines include: fractional horsepower, hermetic, and subfractional horsepower electric motors; commercial and residential water heaters; municipal, industrial, and agricultural storage tanks; and fiberglass piping systems.
Net earnings for the Milwaukee-based manufacturer increased to $13.9 million compared with 1998 second quarter net earnings of $12.6 million or $.52 per share. Sales for the three-month period ending June 30 were $263 million, a 16 percent increase over sales of $227 million for the same period in 1998.
"Good growth in nearly all of our electric motor markets was instrumental in the company's second quarter performance," Robert J. O'Toole, chairman and chief executive officer, observed. "In addition, Water Systems Technologies contributed improved sales and profits over last year."
"Another important accomplishment during the quarter was the definitive agreement to purchase MagneTek's world-wide motor operations, a strategic acquisition that will significantly strengthen our presence in the fractional horsepower motor market," O'Toole pointed out. "We intend to close this sale on August 2 and project a neutral effect on earnings during the second half of 1999. We expect earnings to benefit by between $.30 and $.35 per share next year."
For the first six months of 1999, A.O. Smith sales were $520 million, compared with first-half 1998 sales of $450 million. Net earnings for the same period in 1999 were $25.3 million compared with $22.8 million during the first six months of 1998. Earnings per share increased 15 percent to $1.07 per share, compared with $.93 per share earnings during the first half of 1998.
Second quarter sales for Electric Motor Technologies, A.O. Smith's largest operating unit, were a record $157 million, a more than $40 million increase over second quarter 1998 sales of $114 million. Strong performance in the pump and the heating, ventilating, and air conditioning (HVAC) markets contributed to the sales increase.
Sales of hermetic motors more than doubled during the quarter, as the company benefited from strong demand from air conditioning compressor manufacturers as well as the GE hermetic motor operations acquired in July, 1998.
Operating profits improved significantly when compared with the second quarter of 1998 due to higher volumes and improved operating efficiencies.
Continued strength in the residential and commercial water heating markets and progress in the company's Chinese water heater operation contributed to Water Systems Technologies' second quarter sales of $79 million, a six percent increase over the 1998 second quarter. The Chinese operations contributed approximately $3 million to second quarter sales. Operating profits increased over the second quarter of 1998, primarily due to the higher sales volume.
Persistent weakness in the petroleum production, chemical processing, dry bulk storage and agricultural markets resulted in significatnly lower second quarter sales and profits for the Storage & Fluid Handling Technologies platform.
Forward-Looking Statements
This press release contains forward-looking statements. 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. Among such numerous factors, the company includes the continued growth of the world-wide air conditioning, heating, and refrigeration market; the weather and its impact on the HVAC, pool and spa pump markets; and the timely and proper implementation of future cost reduction programs.
A.O. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis. Its major product lines include: fractional horsepower, hermetic, and subfractional horsepower electric motors; commercial and residential water heaters; municipal, industrial, and agricultural storage tanks; and fiberglass piping systems.
A.O. SMITH CORPORATION STATEMENT OF CASH FLOWS
Six Months ended June 30 1999 1998 Operating Activities Continuing Net earnings $25,317 $22,807
Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation & amortization 18,242 13,977 Equity in loss of joint ventures -- 1,693 Net change in current assets and liabilities (10,298) (26,407) Net change in noncurrent assets and liabilities (8,904) (7,619) Other (302) 3
Cash Provided by Operating Activities 24,055 4,454
Investing Activities Capital expenditures (19,375) (12,367) Capitalized purchased software costs (824) (547) Investment in joint ventures -- (5,748) Acquisition of business (531) -- Cash Used by Investing Activities (20,730) (18,662)
Cash Used by Continuing Operations before Financing Activities 3,325 (14,208)
Discontinued Cash Used by Discontinued Operations before Financing Activities (1,156) (1,196)
Financing Activities Long-term debt incurred 1,609 819 Long-term debt retired (1,600) (1,625) Purchase of common stock held in treasury (2,691) (24,860) Proceeds from common stock options exercised 78 202 Tax benefit from exercise of stock options 50 69 Dividends paid (5,578) (5,425) Cash Used by Financing Activities (8,132) (30,820)
Net decrease in cash and cash equivalents (5,963) (46,224) Cash and cash equivalents - beginning of period 37,666 145,896
Cash and Cash Equivalents - End of Period $31,703 $99,672
A.O. SMITH CORPORATION Balance Sheet
June 30 December 31 1999 1998 ASSETS:
Cash and cash equivalents $ 31,703 $ 37,666 Receivables 165,335 133,764 Inventories 102,392 99,984 Deferred income taxes 10,343 11,376 Other current assets 5,932 4,599
Total Current Assets 315,705 287,389
Net property, plant and equipment 254,482 248,770 Goodwill 145,551 146,901 Other assets 92,250 84,372
Total Assets $ 807,988 $ 767,432
LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade payables $ 83,223 $ 57,429 Accrued payroll and benefits 28,255 31,385 Product warranty 7,749 7,892 Income taxes 6,063 6,786 Long-term debt due within one year 4,629 4,629 Other current liabilities 23,609 24,036
Total Current Liabilities 153,528 132,157
Long-term debt 131,212 131,203 Other liabilities 58,347 60,636 Deferred income taxes 47,286 42,343 Stockholders' equity 417,615 401,093
Total Liabilities and Stockholders' Equity $ 807,988 $ 767,432
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 June 30 June 30 Sales 1999 1998 1999 1998
Electric Motor Technologies $156,664 $113,765 $304,539 $225,604 Water Systems Technologies 78,751 74,295 160,739 148,849 Storage & Fluid Handling Technologies 27,355 38,620 54,828 75,182 Net Sales 262,770 226,680 520,106 449,635
Costs and Expenses Cost of Products Sold 208,844 178,827 415,847 356,013 Selling, General and Administrative 28,456 26,381 56,966 54,281 Interest Expense 2,168 1,593 4,499 3,217 Interest Income (214) (1,309) (554) (3,021) Other Expense 1,584 692 3,539 1,414 Tax Provision 8,017 7,193 14,492 13,231 Total Costs and Expenses 248,855 213,377 494,789 425,135
Earnings Before Equity in Loss of Joint Ventures 13,915 13,303 25,317 24,500 Equity in Loss of Joint Ventures -- (674) -- (1,693) Net Earnings $13,915 $12,629 $25,317 $22,807
Net Earnings Per Share of Common Stock (Diluted) $.59 $.52 $1.07 $.93
Average Common Shares Outstanding (000's omitted) 23,727 24,285 23,734 24,498