A. O. Smith (NYSE:AOS) is trading largely flat on Thursday following Q3 results, which came in line with estimates, after the company had already warned of decline in sales earlier in the month.
Q3 adjusted EPS fell -14.8% Y/Y to $0.69, while net sales fell -4% Y/Y to $874.2M.
The company said the sales decline was mainly due to greater than expected residential water heater de-stocking activity.
"As we announced on October 13, lower North America residential water heater industry demand challenged our results in the third quarter due to greater than anticipated wholesale inventory de-stocking activity, the impact of which more than offset the benefits of our 2021 price increases and higher volumes of commercial water heaters," said Chairman and CEO Kevin Wheeler.
North America segment sales were flat at $652.9M. Meanwhile, Rest of World sales fell 13% Y/Y to $230.2M, including an unfavorable currency translation impact of ~$16M, of which $12M related to sales in China.
As of Sept. 30, cash and marketable securities were $417.1M, while debt was $287.8M.
Buyback: A. O. Smith said it bought back ~4.47M shares worth $282M in the first nine months of 2022. As of Sept. 30, it had authority remained to buyback an additional ~2.6M shares. The company expects to spend $400M repurchasing shares in 2022.
Outlook:
A. O. Smith reaffirmed its full year 2022 outlook provided on Oct. 13. The company expects FY22 adjusted EPS to be between $3.05 to $3.15 (consensus of $3.08). Net sales between $3.715B and $3.785B (consensus of $3.75B).
GAAP EPS expected in the range of $1.29 to $1.39.