A.O. Smith Announces First Quarter Earnings of $.36 per Share

Apr 12, 2001, 01:00 ET from A.O. Smith Corporation

    MILWAUKEE, April 12 /PRNewswire/ --
     A.O. Smith Corporation (NYSE:   AOS) (Amex:   SMCA) today announced first
 quarter net earnings of $8.5 million or $.36 per share on sales of
 $318 million.
     This performance represented significant improvement from the fourth
 quarter of 2000 and exceeded analysts' first-quarter estimates.
     Sales of $318.2 million increased 17 percent from the 2000 fourth quarter,
 influenced by stabilizing heating and air conditioning inventories, firmness
 in water heater demand, and seasonal trends in a number of markets.  The
 first-quarter profit of $8.5 million exceeded fourth-quarter profit by
 $6 million.
     Compared with the record first quarter of 2000, sales decreased
 7.6 percent.  Profits were lower than the $.60 per share reported during the
 comparable period last year.
     "Earnings showed a notable turnaround compared with the fourth quarter of
 2000," Robert J. O'Toole, chairman and chief executive officer, noted.  "Our
 operating units are adjusting to lower demand levels, and, during the first
 quarter, we began to experience the benefits of the cost reduction activities
 initiated last year."
     Sales for Electric Motor Technologies, the company's largest operating
 unit, were $226.3 million. This was substantially improved from sales of
 $185.1 million in the fourth quarter of 2000, due to seasonal buying patterns
 of customers and decreased inventory levels in the market channels.  Compared
 with the first quarter of 2000, sales were down $26.3 million, primarily due
 to the higher level of demand for heating and air conditioning products in
 early 2000.
     Electric Motors' operating profit improved to $14 million, substantially
 higher than the $5.4 million earned in the 2000 fourth quarter, due to higher
 sales volume and the resulting improved absorption of fixed cost.  First
 quarter operating profit was $26.1 million in 2000.  Year-over-year profits
 declined principally due to lower sales volume, with increased utility costs
 and Mexican labor inflation also having an impact.
     First-quarter sales of $92.0 million for the Water Systems Technologies
 Platform were essentially unchanged when compared with the same quarter in
 2000.  Lower sales of commercial water heaters were offset by higher sales in
 the China market.
     Operating profit for the quarter ended March 31 was moderately higher due
 to improved performance in China.
 
     Company discusses 2001 outlook
     "We anticipate further improvement in sales and profit in the second
 quarter," O'Toole said.  "This is traditionally the strongest season for HVAC
 sales, and inventories appear to be trending down from the higher levels last
 summer and fall.  We expect second-quarter earnings to be in the range of
 $.45 to $.50 per share."
     "For the full year, we continue to anticipate 2001 earnings will exceed
 the 2000 results of $1.76 per share.  We recognize that the economy is
 currently very volatile, making market and sales projections more difficult.
 However, we believe that our ongoing cost reduction efforts and capacity
 rationalization will continue to contribute to profitability as the year
 progresses."
     A.O. Smith Corporation will broadcast a live conference call this morning
 to discuss first-quarter 2001 results.  The call can be heard on the company's
 website, http://www.aosmith.com beginning at 10:00 a.m. (eastern time).
     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 approximately 14,000 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," "estimates," "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 the results expressed in forward-looking
 statements 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
 factors are the stability in its electric motor and water products markets,
 the state of the domestic economy, and the successful implementation of 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 Operations                                   March 31
     Net Sales                                         2001              2000
        Electric Motor Technologies                $226,253          $252,343
        Water Systems Technologies                   91,982            92,223
                                                    318,235           344,566
 
     Costs and Expenses
        Cost of products sold                       259,440           271,195
        Selling, general and
         administrative                              38,123            42,991
        Interest expense                              4,801             5,431
        Amortization of intangibles                   1,733             1,727
        Other expense                                   599               843
        Tax provision                                 5,010             8,224
           Total costs and expenses                 309,706           330,411
 
     Earnings from Continuing Operations              8,529            14,155
 
     Discontinued operations less related
      income tax of $297                                 --               456
 
     Net Earnings                                    $8,529           $14,611
 
     Net Earnings Per Share of Common
      Stock (Diluted)
        Continuing Operations                         $0.36             $0.60
        Discontinued Operations                        $--              $0.02
             Net Earnings                             $0.36             $0.62
 
        Average Common Shares Outstanding
         (000's omitted)                             23,828            23,698
 
 
 
                              A.O. SMITH CORPORATION
                                   Balance Sheet
 
 
                                                   March 31        December 31
                                                     2001              2000
     ASSETS:
 
         Cash and cash equivalents                  $13,058           $15,287
         Receivables                                202,718           169,117
         Inventories                                169,809           169,630
         Deferred income taxes                        6,488             7,215
         Other current assets                        22,431            22,199
         Net current assets-discontinued
          operations                                     --            22,651
 
            Total Current Assets                    414,504           406,099
 
         Net property, plant and equipment          282,305           282,835
         Goodwill and other intangibles             243,088           244,821
         Other assets                               112,254           107,928
         Net long-term assets --
          discontinued operations                        --            17,493
 
         Total Assets                            $1,052,151        $1,059,176
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY:
 
         Trade payables                             $97,682           $91,780
         Accrued payroll and benefits                23,615            27,388
         Product warranty                            12,130            11,574
         Income taxes                                 2,301             1,695
         Long-term debt due within one
          year                                       11,129            11,129
         Other current liabilities                   29,630            26,865
 
            Total Current Liabilities               176,487           170,431
 
         Long-term debt                             295,706           316,372
         Other liabilities                           62,509            61,856
         Deferred income taxes                       64,742            62,122
         Stockholders' equity                       452,707           448,395
 
         Total Liabilities and
          Stockholders' Equity                   $1,052,151        $1,059,176
 
 
 
                             A.O.  SMITH CORPORATION
                              STATEMENT OF CASH FLOWS
 
 
                                                         Three Months ended
                                                              March 31
                                                      2001              2000
     Operating Activities
     Continuing
          Net earnings                               $8,529           $14,155
 
          Adjustments to reconcile net
           earnings
            to net cash provided by
             operating activities:
               Depreciation & amortization           11,411            11,320
               Net change in current
                assets and liabilities              (29,185)          (25,677)
               Net change in noncurrent
                assets and liabilities               (4,258)           (3,890)
               Other                                    307               414
     Cash Used in Operating Activities              (13,196)           (3,678)
 
     Investing Activities
          Capital expenditures                       (9,520)          (11,660)
          Capitalized purchased software
           costs                                        (88)             (360)
     Cash Used in Investing Activities               (9,608)          (12,020)
 
 
     Cash Flow before Financing                     (22,804)          (15,698)
 
 
     Financing Activities
          Debt incurred                                  --            14,178
          Debt retired                              (20,666)               --
          Other stock transactions                      101                38
          Dividends paid                             (3,061)           (2,807)
     Cash Provided by (Used in) Financing
      Activities                                    (23,626)           11,409
 
     Discontinued
     Cash Provided by (Used in)
      Discontinued Operations                        44,201            (5,340)
 
          Net decrease in cash and cash
           equivalents                               (2,229)           (9,629)
          Cash and cash equivalents --
           beginning of period                       15,287            14,761
 
     Cash and Cash Equivalents -- End of
      Period                                        $13,058            $5,132
 
 

SOURCE A.O. Smith Corporation
    MILWAUKEE, April 12 /PRNewswire/ --
     A.O. Smith Corporation (NYSE:   AOS) (Amex:   SMCA) today announced first
 quarter net earnings of $8.5 million or $.36 per share on sales of
 $318 million.
     This performance represented significant improvement from the fourth
 quarter of 2000 and exceeded analysts' first-quarter estimates.
     Sales of $318.2 million increased 17 percent from the 2000 fourth quarter,
 influenced by stabilizing heating and air conditioning inventories, firmness
 in water heater demand, and seasonal trends in a number of markets.  The
 first-quarter profit of $8.5 million exceeded fourth-quarter profit by
 $6 million.
     Compared with the record first quarter of 2000, sales decreased
 7.6 percent.  Profits were lower than the $.60 per share reported during the
 comparable period last year.
     "Earnings showed a notable turnaround compared with the fourth quarter of
 2000," Robert J. O'Toole, chairman and chief executive officer, noted.  "Our
 operating units are adjusting to lower demand levels, and, during the first
 quarter, we began to experience the benefits of the cost reduction activities
 initiated last year."
     Sales for Electric Motor Technologies, the company's largest operating
 unit, were $226.3 million. This was substantially improved from sales of
 $185.1 million in the fourth quarter of 2000, due to seasonal buying patterns
 of customers and decreased inventory levels in the market channels.  Compared
 with the first quarter of 2000, sales were down $26.3 million, primarily due
 to the higher level of demand for heating and air conditioning products in
 early 2000.
     Electric Motors' operating profit improved to $14 million, substantially
 higher than the $5.4 million earned in the 2000 fourth quarter, due to higher
 sales volume and the resulting improved absorption of fixed cost.  First
 quarter operating profit was $26.1 million in 2000.  Year-over-year profits
 declined principally due to lower sales volume, with increased utility costs
 and Mexican labor inflation also having an impact.
     First-quarter sales of $92.0 million for the Water Systems Technologies
 Platform were essentially unchanged when compared with the same quarter in
 2000.  Lower sales of commercial water heaters were offset by higher sales in
 the China market.
     Operating profit for the quarter ended March 31 was moderately higher due
 to improved performance in China.
 
     Company discusses 2001 outlook
     "We anticipate further improvement in sales and profit in the second
 quarter," O'Toole said.  "This is traditionally the strongest season for HVAC
 sales, and inventories appear to be trending down from the higher levels last
 summer and fall.  We expect second-quarter earnings to be in the range of
 $.45 to $.50 per share."
     "For the full year, we continue to anticipate 2001 earnings will exceed
 the 2000 results of $1.76 per share.  We recognize that the economy is
 currently very volatile, making market and sales projections more difficult.
 However, we believe that our ongoing cost reduction efforts and capacity
 rationalization will continue to contribute to profitability as the year
 progresses."
     A.O. Smith Corporation will broadcast a live conference call this morning
 to discuss first-quarter 2001 results.  The call can be heard on the company's
 website, http://www.aosmith.com beginning at 10:00 a.m. (eastern time).
     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 approximately 14,000 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," "estimates," "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 the results expressed in forward-looking
 statements 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
 factors are the stability in its electric motor and water products markets,
 the state of the domestic economy, and the successful implementation of 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 Operations                                   March 31
     Net Sales                                         2001              2000
        Electric Motor Technologies                $226,253          $252,343
        Water Systems Technologies                   91,982            92,223
                                                    318,235           344,566
 
     Costs and Expenses
        Cost of products sold                       259,440           271,195
        Selling, general and
         administrative                              38,123            42,991
        Interest expense                              4,801             5,431
        Amortization of intangibles                   1,733             1,727
        Other expense                                   599               843
        Tax provision                                 5,010             8,224
           Total costs and expenses                 309,706           330,411
 
     Earnings from Continuing Operations              8,529            14,155
 
     Discontinued operations less related
      income tax of $297                                 --               456
 
     Net Earnings                                    $8,529           $14,611
 
     Net Earnings Per Share of Common
      Stock (Diluted)
        Continuing Operations                         $0.36             $0.60
        Discontinued Operations                        $--              $0.02
             Net Earnings                             $0.36             $0.62
 
        Average Common Shares Outstanding
         (000's omitted)                             23,828            23,698
 
 
 
                              A.O. SMITH CORPORATION
                                   Balance Sheet
 
 
                                                   March 31        December 31
                                                     2001              2000
     ASSETS:
 
         Cash and cash equivalents                  $13,058           $15,287
         Receivables                                202,718           169,117
         Inventories                                169,809           169,630
         Deferred income taxes                        6,488             7,215
         Other current assets                        22,431            22,199
         Net current assets-discontinued
          operations                                     --            22,651
 
            Total Current Assets                    414,504           406,099
 
         Net property, plant and equipment          282,305           282,835
         Goodwill and other intangibles             243,088           244,821
         Other assets                               112,254           107,928
         Net long-term assets --
          discontinued operations                        --            17,493
 
         Total Assets                            $1,052,151        $1,059,176
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY:
 
         Trade payables                             $97,682           $91,780
         Accrued payroll and benefits                23,615            27,388
         Product warranty                            12,130            11,574
         Income taxes                                 2,301             1,695
         Long-term debt due within one
          year                                       11,129            11,129
         Other current liabilities                   29,630            26,865
 
            Total Current Liabilities               176,487           170,431
 
         Long-term debt                             295,706           316,372
         Other liabilities                           62,509            61,856
         Deferred income taxes                       64,742            62,122
         Stockholders' equity                       452,707           448,395
 
         Total Liabilities and
          Stockholders' Equity                   $1,052,151        $1,059,176
 
 
 
                             A.O.  SMITH CORPORATION
                              STATEMENT OF CASH FLOWS
 
 
                                                         Three Months ended
                                                              March 31
                                                      2001              2000
     Operating Activities
     Continuing
          Net earnings                               $8,529           $14,155
 
          Adjustments to reconcile net
           earnings
            to net cash provided by
             operating activities:
               Depreciation & amortization           11,411            11,320
               Net change in current
                assets and liabilities              (29,185)          (25,677)
               Net change in noncurrent
                assets and liabilities               (4,258)           (3,890)
               Other                                    307               414
     Cash Used in Operating Activities              (13,196)           (3,678)
 
     Investing Activities
          Capital expenditures                       (9,520)          (11,660)
          Capitalized purchased software
           costs                                        (88)             (360)
     Cash Used in Investing Activities               (9,608)          (12,020)
 
 
     Cash Flow before Financing                     (22,804)          (15,698)
 
 
     Financing Activities
          Debt incurred                                  --            14,178
          Debt retired                              (20,666)               --
          Other stock transactions                      101                38
          Dividends paid                             (3,061)           (2,807)
     Cash Provided by (Used in) Financing
      Activities                                    (23,626)           11,409
 
     Discontinued
     Cash Provided by (Used in)
      Discontinued Operations                        44,201            (5,340)
 
          Net decrease in cash and cash
           equivalents                               (2,229)           (9,629)
          Cash and cash equivalents --
           beginning of period                       15,287            14,761
 
     Cash and Cash Equivalents -- End of
      Period                                        $13,058            $5,132
 
 SOURCE  A.O. Smith Corporation