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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/06/19 Smith AO Corp 10-Q 9/30/19 83:8.1M Donnelley … Solutions/FA |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 844K 2: EX-31.1 Certification -- §302 - SOA'02 HTML 29K 3: EX-31.2 Certification -- §302 - SOA'02 HTML 29K 4: EX-32.1 Certification -- §906 - SOA'02 HTML 23K 5: EX-32.2 Certification -- §906 - SOA'02 HTML 23K 42: R1 Cover Page HTML 81K 70: R2 Condensed Consolidated Statements of Earnings HTML 68K 61: R3 Condensed Consolidated Statements of Comprehensive HTML 42K Earnings 16: R4 Condensed Consolidated Statements of Comprehensive HTML 29K Earnings (Parenthetical) 43: R5 Condensed Consolidated Balance Sheets HTML 123K 72: R6 Condensed Consolidated Balance Sheets HTML 31K (Parenthetical) 63: R7 Condensed Consolidated Statements of Cash Flows HTML 81K 19: R8 Condensed Consolidated Statements of Stockholders' HTML 72K Equity 41: R9 Basis of Presentation HTML 33K 20: R10 Revenue Recognition HTML 92K 28: R11 Acquisitions HTML 41K 78: R12 Leases HTML 80K 47: R13 Restructuring and Impairment Expenses HTML 59K 21: R14 Inventories HTML 43K 29: R15 Product Warranties HTML 55K 79: R16 Long-Term Debt HTML 27K 48: R17 Earnings per Share of Common Stock HTML 47K 22: R18 Stock Based Compensation HTML 87K 27: R19 Pensions HTML 56K 73: R20 Segment Results HTML 90K 59: R21 Fair Value Measurements HTML 37K 17: R22 Derivative Instruments HTML 139K 39: R23 Income Taxes HTML 28K 74: R24 Commitments and Contingencies HTML 29K 60: R25 Changes in Accumulated Other Comprehensive Loss by HTML 147K Component 18: R26 Basis of Presentation (Policies) HTML 28K 40: R27 Revenue Recognition (Tables) HTML 81K 71: R28 Acquisitions (Tables) HTML 54K 62: R29 Leases (Tables) HTML 79K 46: R30 Restructuring and Impairment Expenses (Tables) HTML 59K 76: R31 Inventories (Tables) HTML 45K 31: R32 Product Warranties (Tables) HTML 53K 24: R33 Earnings per Share of Common Stock (Tables) HTML 44K 45: R34 Stock Based Compensation (Tables) HTML 82K 75: R35 Pensions (Tables) HTML 55K 30: R36 Segment Results (Tables) HTML 90K 23: R37 Fair Value Measurements (Tables) HTML 33K 44: R38 Derivative Instruments (Tables) HTML 133K 77: R39 Changes in Accumulated Other Comprehensive Loss by HTML 145K Component (Tables) 58: R40 Revenue Recognition - Additional Information HTML 34K (Detail) 67: R41 Segment Sales Disaggregated by Major Product Line HTML 43K (Detail) 35: R42 Acquisitions - Additional Information (Detail) HTML 65K 12: R43 Summary of Preliminary Allocation of Fair Value of HTML 46K Assets Acquired and Liabilities Assumed at Date of Acquisition (Detail) 57: R44 Leases supplemental balance sheet (Detail) HTML 41K 66: R45 Components of lease expense (Detail) HTML 33K 34: R46 Maturities of lease liabilities (Detail) HTML 42K 11: R47 Restructuring and Impairment Expenses - Additional HTML 42K Information (Detail) 56: R48 Analysis of Company's Restructuring Reserve HTML 33K (Detail) 68: R49 Schedule of Inventories (Detail) HTML 37K 82: R50 Company's Warranty Liability Activity (Detail) HTML 32K 49: R51 Long-Term Debt - Additional Information (Detail) HTML 32K 25: R52 Schedule of Computation of Basic and Diluted HTML 33K Weighted-Average Shares Used in Earnings per Share Calculations (Detail) 32: R53 Stock Based Compensation - Additional Information HTML 76K (Detail) 83: R54 Changes in Option Awards All of Which Related to HTML 61K Common Stock (Detail) 51: R55 Schedule of Weighted-Average Fair Value per Option HTML 34K at Date of Grant (Detail) 26: R56 Summary of Share Unit Activity Under Plan (Detail) HTML 47K 33: R57 Components of Company's Net Pension Income HTML 42K (Detail) 81: R58 Schedule of Segment Earnings (Detail) HTML 61K 52: R59 Schedule of Segment Earnings (Parenthetical) HTML 29K (Detail) 13: R60 Assets and Liabilities Measured at Fair Value on HTML 32K Recurring Basis (Detail) 37: R61 Schedule of Summary by Currency of Foreign HTML 39K Currency Forward Contracts (Detail) 64: R62 Derivative Instruments - Additional Information HTML 37K (Detail) 53: R63 Impact of Derivative Contracts on Company's HTML 45K Financial Statements (Detail) 14: R64 Schedule of Effect of Derivatives Instruments on HTML 39K Consolidated Statement of Earnings (Detail) 38: R65 Income Taxes - Additional Information (Detail) HTML 50K 65: R66 Commitment and Contingencies - Additional HTML 30K Information (Detail) 55: R67 Changes in Accumulated Other Comprehensive Loss by HTML 51K Component (Detail) 15: R68 Changes in Accumulated Other Comprehensive Loss by HTML 45K Component (Parenthetical) (Detail) 54: XML IDEA XML File -- Filing Summary XML 148K 69: XML XBRL Instance -- d816891d10q_htm XML 2.22M 80: EXCEL IDEA Workbook of Financial Reports XLSX 68K 7: EX-101.CAL XBRL Calculations -- aos-20190930_cal XML 135K 8: EX-101.DEF XBRL Definitions -- aos-20190930_def XML 874K 9: EX-101.LAB XBRL Labels -- aos-20190930_lab XML 971K 10: EX-101.PRE XBRL Presentations -- aos-20190930_pre XML 947K 6: EX-101.SCH XBRL Schema -- aos-20190930 XSD 134K 50: JSON XBRL Instance as JSON Data -- MetaLinks 314± 466K 36: ZIP XBRL Zipped Folder -- 0001193125-19-285763-xbrl Zip 164K
10-Q |
i ☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
i ☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
i Delaware |
|
|
i 39-0619790 | |
(State or other jurisdiction of incorporation or organization) |
|
|
(I.R.S. Employer Identification No.) | |
|
|
|||
i 11270 West Park Place, i Milwaukee, i Wisconsin
|
|
|
i 53224-9508 | |
(Address of principal executive office) |
|
|
(Zip Code) |
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which Registered | ||
i Common Stock (par value $1.00 per share) |
i AOS |
i New York Stock Exchange |
i Large accelerated filer |
☒ |
Accelerated Filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
i ☐ | |||
Emerging growth company |
i ☐ |
Page |
||||||
Part I. |
||||||
3 |
||||||
3 |
||||||
4 |
||||||
5 |
||||||
6 |
||||||
7- 23 |
||||||
Item 2. |
24- 30 |
|||||
Item 3. |
31 |
|||||
Item 4. |
31 |
|||||
Part II. |
||||||
Item 1. |
32 |
|||||
Item 2. |
32 |
|||||
Item 6. |
32 |
|||||
33 |
||||||
34 |
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net sales |
$ | i 728.2 |
$ | i 754.1 |
$ | i 2,241.8 |
$ | i 2,375.4 |
||||||||
Cost of products sold |
i 444.0 |
i 448.1 |
i 1,356.1 |
i 1,406.9 |
||||||||||||
Gross profit |
i 284.2 |
i 306.0 |
i 885.7 |
i 968.5 |
||||||||||||
Selling, general and administrative expenses |
i 172.3 |
i 177.6 |
i 535.7 |
i 567.7 |
||||||||||||
Restructuring and impairment expenses |
i — |
i — |
i — |
i 6.7 |
||||||||||||
Interest expense |
i 3.1 |
i 2.0 |
i 8.5 |
i 6.6 |
||||||||||||
Other income |
( i 4.0 |
) | ( i 5.1 |
) | ( i 15.1 |
) | ( i 15.5 |
) | ||||||||
Earnings before provision for income taxes |
i 112.8 |
i 131.5 |
i 356.6 |
i 403.0 |
||||||||||||
Provision for income taxes |
i 25.5 |
i 26.9 |
i 77.9 |
i 85.1 |
||||||||||||
Net Earnings |
$ | i 87.3 |
$ | i 104.6 |
$ | i 278.7 |
$ | i 317.9 |
||||||||
Net Earnings Per Share of Common Stock |
$ | i 0.53 |
$ | i 0.61 |
$ | i 1.68 |
$ | i 1.86 |
||||||||
Diluted Net Earnings Per Share of Common Stock |
$ | i 0.53 |
$ | i 0.61 |
$ | i 1.66 |
$ | i 1.84 |
||||||||
Dividends Per Share of Common Stock |
$ | i 0.22 |
$ | i 0.18 |
$ | i 0.66 |
$ | i 0.54 |
||||||||
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net earnings |
$ | i 87.3 |
$ | i 104.6 |
$ | i 278.7 |
$ | i 317.9 |
||||||||
Other comprehensive (loss) earnings |
||||||||||||||||
Foreign currency translation adjustments |
( i 21.9 |
) | ( i 20.7 |
) | ( i 16.1 |
) | ( i 33.3 |
) | ||||||||
Unrealized net (losses) gains on cash flow derivative instruments, less related income tax benefit (provision) of $ i 0.1 and ($ i 0.1)
in 2019, ($ i 0.6) and ($ i 0.9)
in 2018 |
( i 0.3 |
) | i 1.3 |
i 0.3 |
i 2.1 |
|||||||||||
Adjustment to pension liability, less related income tax benefit (provision) of $ i 0.3 and ($ i 1.6)
in 2019 and ($ i 1.7) and ($ i 3.9)
in 2018 |
( i 1.0 |
) | i 5.6 |
i 5.0 |
i 12.5 |
|||||||||||
Comprehensive Earnings |
$ | i 64.1 |
$ | i 90.8 |
$ | i 267.9 |
$ | i 299.2 |
||||||||
(unaudited) |
||||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | i 219.4 |
$ | i 259.7 |
||||
Marketable securities |
i 294.4 |
i 385.3 |
||||||
Receivables |
i 614.1 |
i 647.3 |
||||||
Inventories |
i 310.0 |
i 304.7 |
||||||
Other current assets |
i 66.5 |
i 41.5 |
||||||
Total Current Assets |
i 1,504.4 |
i 1,638.5 |
||||||
Property, plant and equipment |
i 1,137.5 |
i 1,096.8 |
||||||
Less accumulated depreciation |
( i 593.9 |
) | ( i 556.8 |
) | ||||
Net property, plant and equipment |
i 543.6 |
i 540.0 |
||||||
Goodwill |
i 547.4 |
i 513.0 |
||||||
Other intangibles |
i 339.5 |
i 293.1 |
||||||
Operating lease assets |
i 48.3 |
— |
||||||
Other assets |
i 84.7 |
i 86.9 |
||||||
Total Assets |
$ | i 3,067.9 |
$ | i 3,071.5 |
||||
Liabilities |
||||||||
Current Liabilities |
||||||||
Trade payables |
$ | i 483.1 |
$ | i 543.8 |
||||
Accrued payroll and benefits |
i 61.8 |
i 79.4 |
||||||
Accrued liabilities |
i 135.9 |
i 120.4 |
||||||
Product warranties |
i 42.8 |
i 41.7 |
||||||
Debt due within one year |
i 6.8 |
— |
||||||
Total Current Liabilities |
i 730.4 |
i 785.3 |
||||||
Long-term debt |
i 312.4 |
i 221.4 |
||||||
Pension liabilities |
i 36.5 |
i 49.4 |
||||||
Long-term operating lease liabilities |
i 39.6 |
— |
||||||
Other liabilities |
i 292.8 |
i 298.4 |
||||||
Total Liabilities |
i 1,411.7 |
i 1,354.5 |
||||||
Stockholders’ Equity |
||||||||
Class A Common Stock, $ i i 5 /
par value: authorized i i 27,000,000 /
shares; issued i 26,183,365 and i 26,190,163 |
i 130.9 |
i 131.0 |
||||||
Common Stock, $ i i 1 /
par value: authorized i i 240,000,000 / shares; issued i 164,524,227
and i 164,517,431 |
i 164.5 |
i 164.5 |
||||||
Capital in excess of par value |
i 507.3 |
i 496.7 |
||||||
Retained earnings |
i 2,271.5 |
i 2,102.8 |
||||||
Accumulated other comprehensive loss |
( i 361.6 |
) | ( i 350.8 |
) | ||||
Treasury stock at cost |
( i 1,056.4 |
) | ( i 827.2 |
) | ||||
Total Stockholders’ Equity |
i 1,656.2 |
i 1,717.0 |
||||||
Total Liabilities and Stockholders’ Equity |
$ | i 3,067.9 |
$ | i 3,071.5 |
||||
Nine Months Ended |
||||||||
2018 |
||||||||
Operating Activities |
||||||||
Net earnings |
$ | i 278.7 |
$ | i 317.9 |
||||
Adjustments to reconcile net earnings to cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
i 58.1 |
i 53.2 |
||||||
Stock based compensation expense |
i 12.3 |
i 9.7 |
||||||
Net changes in operating assets and liabilities: |
||||||||
Current assets and liabilities |
( i 43.8 |
) | ( i 70.9 |
) | ||||
Noncurrent assets and liabilities |
( i 25.3 |
) | ( i 20.7 |
) | ||||
Cash Provided by Operating Activities |
i 280.0 |
i 289.2 |
||||||
Investing Activities |
||||||||
Capital expenditures |
( i 50.3 |
) | ( i 58.5 |
) | ||||
Acquisition |
( i 107.0 |
) | — |
|||||
Investments in marketable securities |
( i 237.3 |
) | ( i 345.4 |
) | ||||
Net proceeds from sale of marketable securities |
i 318.8 |
i 418.3 |
||||||
Cash (Used in) Provided by Investing Activities |
( i 75.8 |
) | i 14.4 |
|||||
Financing Activities |
||||||||
Long-term debt incurred (repaid) |
i 97.9 |
( i 217.1 |
) | |||||
Common stock repurchases |
( i 230.0 |
) | ( i 106.0 |
) | ||||
Payment of contingent consideration |
( i 1.0 |
) | ( i 2.3 |
) | ||||
Net (payments) proceeds from stock option activity |
( i 1.4 |
) | i 0.7 |
|||||
Dividends paid |
( i 110.0 |
) | ( i 92.5 |
) | ||||
Cash Used In Financing Activities |
( i 244.5 |
) | ( i 417.2 |
) | ||||
Net decrease in cash and cash equivalents |
( i 40.3 |
) | ( i 113.6 |
) | ||||
Cash and cash equivalents - beginning of period |
i 259.7 |
i 346.6 |
||||||
Cash and Cash Equivalents - End of Period |
$ | i 219.4 |
$ | i 233.0 |
||||
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Class A Common Stock |
||||||||||||||||
Balance at the beginning of period |
$ | i 130.9 |
$ | i 131.0 |
$ | i 131.0 |
$ | i 131.2 |
||||||||
Conversion of Class A Common Stock |
i — |
i — |
( i 0.1 |
) | ( i 0.2 |
) | ||||||||||
Balance at end of period |
$ | i 130.9 |
$ | i 131.0 |
$ | i 130.9 |
$ | i 131.0 |
||||||||
Common Stock |
||||||||||||||||
Balance at the beginning of period |
$ | i 164.5 |
$ | i 164.5 |
$ | i 164.5 |
$ | i 164.5 |
||||||||
Conversion of Class A Common Stock |
i — |
i — |
i — |
i — |
||||||||||||
Balance at end of period |
$ | i 164.5 |
$ | i 164.5 |
$ | i 164.5 |
$ | i 164.5 |
||||||||
Capital in Excess of Par Value |
||||||||||||||||
Balance at the beginning of period |
$ | i 506.7 |
$ | i 494.2 |
$ | i 496.7 |
$ | i 486.5 |
||||||||
Conversion of Class A Common Stock |
i — |
i — |
i 0.1 |
i 0.2 |
||||||||||||
Issuance of share units |
i — |
( i 0.2 |
) | ( i 6.2 |
) | ( i 6.0 |
) | |||||||||
Vesting of share units |
i — |
— |
( i 2.0 |
) | ( i 2.3 |
) | ||||||||||
Stock based compensation expense |
i 1.1 |
i 1.3 |
i 11.6 |
i 9.0 |
||||||||||||
Exercises of stock options |
( i 0.5 |
) | i 0.3 |
i 0.1 |
i 1.5 |
|||||||||||
Stock incentives |
i — |
i 0.2 |
i 7.0 |
i 6.9 |
||||||||||||
Balance at end of period |
$ | i 507.3 |
$ | i 495.8 |
$ | i 507.3 |
$ | i 495.8 |
||||||||
Retained Earnings |
||||||||||||||||
Balance at the beginning of period |
$ | i 2,220.2 |
$ | i 1,940.1 |
$ | i 2,102.8 |
$ | i 1,788.7 |
||||||||
Net earnings |
i 87.3 |
i 104.6 |
i 278.7 |
i 317.9 |
||||||||||||
Cash dividends on stock |
( i 36.0 |
) | ( i 30.7 |
) | ( i 110.0 |
) | ( i 92.6 |
) | ||||||||
Balance at end of period |
$ | i 2,271.5 |
$ | i 2,014.0 |
$ | i 2,271.5 |
$ | i 2,014.0 |
||||||||
Accumulated Other Comprehensive Loss (see Note 17) |
$ | ( i 361.6 |
) | $ | ( i 318.2 |
) | $ | ( i 361.6 |
) | $ | ( i 318.2 |
) | ||||
Treasury Stock |
||||||||||||||||
Balance at the beginning of period |
$ | ( i 958.8 |
) | $ | ( i 695.1 |
) | $ | ( i 827.2 |
) | $ | ( i 626.5 |
) | ||||
Exercise of stock options |
( i 0.2 |
) | i 0.5 |
( i 1.5 |
) | ( i 0.9 |
) | |||||||||
Stock incentives and directors’ compensation |
i — |
— |
i 0.2 |
i 0.1 |
||||||||||||
Shares repurchased |
( i 97.4 |
) | ( i 36.3 |
) | ( i 230.0 |
) | ( i 106.0 |
) | ||||||||
Vesting of share units |
i — |
i — |
i 2.1 |
i 2.4 |
||||||||||||
Balance at end of period |
$ | ( i 1,056.4 |
) | $ | ( i 730.9 |
) | $ | ( i 1,056.4 |
) | $ | ( i 730.9 |
) | ||||
Total Stockholders’ Equity |
$ | i 1,656.2 |
$ | i 1,756.2 |
$ | i 1,656.2 |
$ | i 1,756.2 |
||||||||
1. |
Basis of Presentation |
2. |
Revenue Recognition |
(dollars in millions) |
||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
North America |
||||||||||||||||
Water heaters and related parts |
$ | i 415.9 |
$ | i 405.2 |
$ | i 1,310.5 |
$ | i 1,318.1 |
||||||||
Boilers and related parts |
i 60.2 |
i 58.6 |
i 150.8 |
i 143.0 |
||||||||||||
Water treatment products (1) |
i 38.5 |
i 23.1 |
i 99.1 |
i 61.7 |
||||||||||||
Total North America |
i 514.6 |
i 486.9 |
i 1,560.4 |
i 1,522.8 |
||||||||||||
Rest of World |
||||||||||||||||
China |
$ | i 189.6 |
$ | i 246.2 |
$ | i 626.8 |
$ | i 806.4 |
||||||||
All other Rest of World |
i 30.7 |
i 27.9 |
i 74.7 |
i 69.6 |
||||||||||||
Total Rest of World |
i 220.3 |
i 274.1 |
i 701.5 |
i 876.0 |
||||||||||||
Inter-segment sales |
( i 6.7 |
) | ( i 6.9 |
) | ( i 20.1 |
) | ( i 23.4 |
) | ||||||||
Total Net Sales |
$ | i 728.2 |
$ | i 754.1 |
$ | i 2,241.8 |
$ | i 2,375.4 |
||||||||
(1) |
Includes the results of Water-Right, Inc. from April 8, 2019, the date of acquisition |
3. |
Acquisitions |
April 8, 2019 (dollars in millions) |
||||
Current assets, net of cash acquired |
$ | i 9.7 |
||
Property, plant and equipment |
i 8.6 |
|||
Intangible assets |
i 57.6 |
|||
Goodwill |
i 33.7 |
|||
Total assets acquired |
i 109.6 |
|||
Current liabilities |
( i 2.6 |
) | ||
Total liabilities assumed |
( i 2.6 |
) | ||
Net assets acquired |
$ | i 107.0 |
||
4. |
Leases |
(dollars in millions) |
||||
Liabilities |
||||
Short term: Accrued liabilities |
$ | i 12.2 |
||
Long term: Operating lease liabilities |
i 39.6 |
|||
Total operating lease liabilities |
$ | i 51.8 |
||
Less: Rent incentives and deferrals |
( i 3.5 |
) | ||
Assets |
||||
Operating lease assets |
$ | i 48.3 |
||
Lease Term and Discount Rate |
||||
Weighted-average remaining lease term |
i 10 years |
|||
Weighted-average discount rate |
i 4.00 |
% |
(dollars in millions) |
||||||||||
Three months ended |
Nine months ended |
|||||||||
Lease Expense |
Classification |
|||||||||
Operating lease expense (1) |
Cost of products sold |
$ |
i 0.7 |
$ |
i 2.0 |
|||||
Selling, general and administrative expenses |
i 4.3 |
i 13.3 |
(1) |
Includes short-term lease expense of $ i 0.4 million and $ i 1.4 million for the three and nine months ended September 30, 2019, respectively. Includes variable lease cost of $ i 0.4 million and $ i 1.4 million for the three and nine months ended September 30, 2019, respectively. |
(dollars in millions) |
||||
2019 |
$ | i 3.1 |
||
2020 |
i 13.4 |
|||
2021 |
i 9.9 |
|||
2022 |
i 8.5 |
|||
2023 |
i 4.4 |
|||
After 2023 |
i 26.2 |
|||
Total lease payments |
i 65.5 |
|||
Less: imputed interest |
( i 13.7 |
) | ||
Present value of operating lease liabilities |
$ | i 51.8 |
||
5. |
Restructuring and Impairment Expenses |
(dollars in millions) |
||||||||||||
Severance Costs |
Lease Exit Costs |
Total |
||||||||||
Balance at January 1, 2019 |
$ | i 0.2 |
$ | i 1.3 |
$ | i 1.5 |
||||||
Cash payments |
i — |
( i 0.1 |
) | ( i 0.1 |
) | |||||||
Balance at March 31, 2019 |
i 0.2 |
i 1.2 |
i 1.4 |
|||||||||
Cash payments |
i — |
( i 0.1 |
) | ( i 0.1 |
) | |||||||
Balance at June 30, 2019 |
$ | i 0.2 |
$ | i 1.1 |
$ | i 1.3 |
||||||
Cash payments |
( i 0.2 |
) | i — |
( i 0.2 |
) | |||||||
Balance at September 30, 2019 |
$ | i — |
$ | i 1.1 |
$ | i 1.1 |
||||||
6. |
Inventories |
(dollars in millions) |
||||||||
Finished products |
$ | i 140.2 |
$ | i 137.6 |
||||
Work in process |
i 24.6 |
i 23.3 |
||||||
Raw materials |
i 175.7 |
i 174.4 |
||||||
Inventories, at FIFO cost |
i 340.5 |
i 335.3 |
||||||
LIFO reserve |
( i 30.5 |
) | ( i 30.6 |
) | ||||
Net inventory |
$ | i 310.0 |
$ | i 304.7 |
||||
7. |
Product Warranties |
Three September 30, |
||||||||
(dollars in millions) |
||||||||
2019 |
2018 |
|||||||
Balance at July 1, |
$ | i 134.0 |
$ | i 141.6 |
||||
Expense |
i 11.0 |
i 8.7 |
||||||
Claims settled |
( i 11.6 |
) | ( i 9.8 |
) | ||||
Balance at September 30, |
$ | i 133.4 |
$ | i 140.5 |
||||
Nine September 30, |
||||||||
(dollars in millions) |
||||||||
2019 |
2018 |
|||||||
Balance at January 1, |
$ | i 139.4 |
$ | i 141.2 |
||||
Expense |
i 31.8 |
i 31.4 |
||||||
Claims settled |
( i 37.8 |
) | ( i 32.1 |
) | ||||
Balance at September 30, |
$ | i 133.4 |
$ | i 140.5 |
||||
8. |
Long-Term Debt |
9. |
Earnings per Share of Common Stock |
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Denominator for basic earnings per share - weighted average shares |
i 164,298,458 |
i 170,507,922 |
i 166,296,444 |
i 171,030,747 |
||||||||||||
Effect of dilutive stock options and share units |
i 1,244,787 |
i 1,576,694 |
i 1,265,777 |
i 1,687,050 |
||||||||||||
Denominator for diluted earnings per share |
i 165,543,245 |
i 172,084,616 |
i 167,562,221 |
i 172,717,797 |
||||||||||||
10. |
Stock Based Compensation |
Weighted- PerAvg. Share Exercise Price |
Number of Options |
Average Remaining Contractual Life |
Aggregate Intrinsic Value (dollars in millions) |
|||||||||||||
Outstanding at January 1, 2019 |
$ | i 33.05 |
i 2,432,689 |
|||||||||||||
Granted |
i 49.49 |
i 557,045 |
||||||||||||||
Exercised |
i 15.97 |
( i 177,306 |
) | |||||||||||||
Forfeited |
i 54.29 |
( i 8,704 |
) | |||||||||||||
Outstanding at September 30, 2019 |
i 37.33 |
i 2,803,724 |
i 7 years |
$ | i 36.0 |
|||||||||||
Exercisable at September 30, 2019 |
i 29.89 |
i 1,894,160 |
i 6 years |
$ | i 36.0 |
Nine Months Ended |
||||||||
2018 |
||||||||
Expected life (years) |
i 5.5 |
i 5.7 |
||||||
Risk-free interest rate |
i 2.7 |
% | i 2.9 |
% | ||||
Dividend yield |
i 1.6 |
% | i 1.0 |
% | ||||
Expected volatility |
i 22.8 |
% | i 22.1 |
% |
10. |
Stock Based Compensation (continued) |
Number of Units |
Weighted-Average Grant Date Value |
|||||||
Issued and unvested at January 1, 2019 |
i 379,601 |
$ | i 42.93 |
|||||
Granted |
i 139,892 |
i 49.52 |
||||||
Vested |
( i 147,642 |
) | i 31.35 |
|||||
Forfeited |
( i 4,509 |
) | i 55.57 |
|||||
Issued and unvested at September 30, 2019 |
i 367,342 |
i 50.05 |
||||||
11. |
Pensions |
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Service cost |
$ | i 0.4 |
$ | i 0.5 |
$ | i 1.3 |
$ | i 1.5 |
||||||||
Interest cost |
i 8.0 |
i 7.2 |
i 23.7 |
i 21.7 |
||||||||||||
Expected return on plan assets |
( i 14.3 |
) | ( i 14.5 |
) | ( i 43.1 |
) | ( i 43.6 |
) | ||||||||
Amortization of unrecognized loss |
i 4.4 |
i 4.9 |
i 12.4 |
i 14.2 |
||||||||||||
Amortization of prior service cost |
( i 0.2 |
) | ( i 0.2 |
) | ( i 0.4 |
) | ( i 0.4 |
) | ||||||||
Defined benefit plan income |
$ | ( i 1.7 |
) | $ | ( i 2.1 |
) | $ | ( i 6.1 |
) | $ | ( i 6.6 |
) | ||||
12. |
Segment Results |
(dollars in millions) |
||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net sales |
||||||||||||||||
North America |
$ | i 514.6 |
$ | i 486.9 |
$ | i 1,560.4 |
$ | i 1,522.8 |
||||||||
Rest of World |
i 220.3 |
i 274.1 |
i 701.5 |
i 876.0 |
||||||||||||
Inter-segment |
( i 6.7 |
) | ( i 6.9 |
) | ( i 20.1 |
) | ( i 23.4 |
) | ||||||||
$ | i 728.2 |
$ | i 754.1 |
$ | i 2,241.8 |
$ | i 2,375.4 |
|||||||||
Segment earnings |
||||||||||||||||
North America (1) |
$ | i 121.6 |
$ | i 105.6 |
$ | i 360.5 |
$ | i 336.5 |
||||||||
Rest of World |
i 4.1 |
i 39.1 |
i 38.8 |
i 109.8 |
||||||||||||
Inter-segment |
— |
— |
( i 0.1 |
) | — |
|||||||||||
i 125.7 |
i 144.7 |
i 399.2 |
i 446.3 |
|||||||||||||
Corporate expense |
( i 9.8 |
) | ( i 11.2 |
) | ( i 34.1 |
) | ( i 36.7 |
) | ||||||||
Interest expense |
( i 3.1 |
) | ( i 2.0 |
) | ( i 8.5 |
) | ( i 6.6 |
) | ||||||||
Earnings before income taxes |
i 112.8 |
i 131.5 |
i 356.6 |
i 403.0 |
||||||||||||
Provision for income taxes |
i 25.5 |
i 26.9 |
i 77.9 |
i 85.1 |
||||||||||||
Net earnings |
$ | i 87.3 |
$ | i 104.6 |
$ | i 278.7 |
$ | i 317.9 |
||||||||
(1) includes restructuring and impairment expenses of: |
$ | i — |
$ | i — |
$ | i — |
$ | i 6.7 |
13. |
Fair Value Measurements |
(dollars in millions) |
||||||||
Fair Value Measurement Using |
||||||||
Quoted prices in active markets for identical assets (Level 1) |
$ | i 294.4 |
$ | i 385.3 |
||||
Significant other observable inputs (Level 2) |
i 8.4 |
i 7.5 |
14. |
Derivative Instruments |
14. |
Derivative Instruments (continued) |
(dollars in millions) |
||||||||||||||||
Buy |
Sell |
Buy |
Sell |
|||||||||||||
British pound |
$ | — |
$ | i 0.3 |
$ | — |
$ | i 1.0 |
||||||||
Canadian dollar |
— |
i 39.4 |
— |
— |
||||||||||||
Euro |
i 44.7 |
— |
i 32.0 |
— |
||||||||||||
Mexican peso |
i 23.0 |
— |
i 27.8 |
— |
||||||||||||
Total |
$ | i 67.7 |
$ | i 39.7 |
$ | i 59.8 |
$ | i 1.0 |
||||||||
14. |
Derivative Instruments (continued) |
(dollars in millions) |
||||||||||||
Balance |
2019 |
2018 |
||||||||||
Foreign currency contracts |
Other |
$ | i 10.3 |
$ | i 3.9 |
|||||||
Other non-current assets |
— |
i 5.1 |
||||||||||
Accrued liabilities |
( i 1.9 |
) | ( i 0.6 |
) | ||||||||
Commodities contracts |
Accrued liabilities |
— |
( i 0.9 |
) | ||||||||
Total derivatives designated as hedging instruments |
$ | i 8.4 |
$ | i 7.5 |
||||||||
Derivatives in ASC 815 cash flow hedging relationships |
Amount of gain (loss) recognized in other comprehensive on derivative |
Location of gain (loss) reclassified from accumulated other comprehensive loss into |
Amount of gain (loss) reclassified from accumulated other comprehensive into earnings |
|||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
Foreign currency contracts |
$ | ( i 1.1 |
) | $ | i 1.9 |
Cost of products sold |
$ | ( i 0.1 |
) | $ | — |
|||||||||
Commodities contracts |
— |
— |
Cost of products sold |
( i 0.6 |
) | — |
||||||||||||||
$ | ( i 1.1 |
) | $ | i 1.9 |
$ | ( i 0.7 |
) | $ | — |
|||||||||||
Derivatives in ASC 815 cash flow hedging relationships |
Amount of gain (loss) recognized in other comprehensive on derivative |
Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings |
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings |
|||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
Foreign currency contracts |
$ | ( i 0.6 |
) | $ | i 3.3 |
Cost of products sold |
$ | ( i 0.1 |
) | $ | i 0.1 |
|||||||||
Commodities contracts |
( i 0.5 |
) | — |
Cost of products sold |
( i 1.4 |
) | i 0.3 |
|||||||||||||
$ | ( i 1.1 |
) | $ | i 3.3 |
$ | ( i 1.5 |
) | $ | i 0.4 |
|||||||||||
15. |
Income Taxes |
16. |
Commitments and Contingencies |
17. |
Changes in Accumulated Other Comprehensive Loss by Component |
(dollars in millions) |
||||||||
|
||||||||
2018 |
||||||||
Cumulative foreign currency translation |
||||||||
Balance at beginning of period |
$ | ( i 59.1 |
) | $ | ( i 39.1 |
) | ||
Other comprehensive (loss) income before reclassifications |
( i 21.9 |
) | ( i 20.7 |
) | ||||
Balance at end of period |
( i 81.0 |
) | ( i 59.8 |
) | ||||
Unrealized net gain on cash flow derivatives |
||||||||
Balance at beginning of period |
( i 0.1 |
) | ( i 0.1 |
) | ||||
Other comprehensive (loss) gain before reclassifications |
( i 0.8 |
) | i 1.3 |
|||||
Realized losses (gains) on derivatives reclassified to cost of products sold (net of income tax (benefit) provision of ($ i 0.2) and $ i -
in 2019 and 2018, respectively) |
i 0.5 |
— |
||||||
Balance at end of period |
( i 0.4 |
) | i 1.2 |
|||||
Pension liability |
||||||||
Balance at beginning of period |
( i 279.2 |
) | ( i 265.2 |
) | ||||
Other comprehensive (loss) gain before reclassifications |
( i 4.1 |
) | i 2.0 |
|||||
Amounts reclassified from accumulated other comprehensive loss: (1) |
i 3.1 |
i 3.6 |
||||||
Balance at end of period |
( i 280.2 |
) | ( i 259.6 |
) | ||||
Accumulated other comprehensive loss, end of period |
$ | ( i 361.6 |
) | $ | ( i 318.2 |
) | ||
(1) Amortization of pension items: |
||||||||
Actuarial losses |
$ | i 4.4 |
(2) |
$ | i 4.9 |
(2) | ||
Prior year service cost |
( i 0.2 |
) (2) |
( i 0.2 |
) (2) | ||||
i 4.2 |
i 4.7 |
|||||||
Income tax benefit |
( i 1.1 |
) | ( i 1.1 |
) | ||||
Reclassification net of income tax benefit |
$ | i 3.1 |
$ | i 3.6 |
||||
(2) |
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details |
17. |
Changes in Accumulated Other Comprehensive Loss by Component (continued) |
(dollars in millions) |
||||||||
|
||||||||
2018 |
||||||||
Cumulative foreign currency translation |
||||||||
Balance at beginning of period |
$ | ( i 64.9 |
) | $ | ( i 26.5 |
) | ||
Other comprehensive income (loss) before reclassifications |
( i 16.1 |
) | ( i 33.3 |
) | ||||
Balance at end of period |
( i 81.0 |
) | ( i 59.8 |
) | ||||
Unrealized net gain on cash flow derivatives |
||||||||
Balance at beginning of period |
( i 0.7 |
) | ( i 0.9 |
) | ||||
Other comprehensive (loss) gain before reclassifications |
( i 0.8 |
) | i 2.4 |
|||||
Realized losses (gains) on derivatives reclassified to cost of products sold (net of income tax (benefit) provision of ($ i 0.4) and $ i 0.1 in 2019 and |
i 1.1 |
( i 0.3 |
) | |||||
Balance at end of period |
( i 0.4 |
) | i 1.2 |
|||||
Pension liability |
||||||||
Balance at beginning of period |
( i 285.2 |
) | ( i 272.1 |
) | ||||
Other comprehensive (loss) gain before reclassifications |
( i 4.1 |
) | i 2.0 |
|||||
Amounts reclassified from accumulated other comprehensive loss: (1) |
i 9.1 |
i 10.5 |
||||||
Balance at end of period |
( i 280.2 |
) | ( i 259.6 |
) | ||||
Accumulated other comprehensive loss, end of period |
$ | ( i 361.6 |
) | $ | ( i 318.2 |
) | ||
(1) Amortization of pension items: |
||||||||
Actuarial losses |
$ | i 12.4 |
(2) |
$ | i 14.2 |
(2) | ||
Prior year service cost |
$ |
( i 0.4 |
) (2) |
( i 0.4 |
) (2) | |||
i 12.0 |
i 13.8 |
|||||||
Income tax benefit |
( i 2.9 |
) | ( i 3.3 |
) | ||||
Reclassification net of income tax benefit |
$ | i 9.1 |
$ | i 10.5 |
||||
(2) |
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details |
Three Months Ended September 30, |
Nine Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net Earnings (GAAP) |
$ | 87.3 |
$ | 104.6 |
$ | 278.7 |
$ | 317.9 |
||||||||
Restructuring and impairment expenses, before tax |
— |
— |
— |
6.7 |
||||||||||||
Tax effect of restructuring and impairment expenses |
— |
— |
— |
(1.7 |
) | |||||||||||
Adjusted Earnings |
$ | 87.3 |
$ | 104.6 |
$ | 278.7 |
$ | 322.9 |
||||||||
Diluted EPS (GAAP) |
$ | 0.53 |
$ | 0.61 |
$ | 1.66 |
$ | 1.84 |
||||||||
Restructuring and impairment expenses per diluted share |
— |
— |
— |
0.04 |
||||||||||||
Tax effect of restructuring and impairment expenses per diluted share |
— |
— |
— |
(0.01 |
) | |||||||||||
Adjusted EPS |
$ | 0.53 |
$ | 0.61 |
$ | 1.66 |
$ | 1.87 |
||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2018 (2) |
2019 |
2018 |
||||||||||||||
Segment Earnings (GAAP) |
||||||||||||||||
North America |
$ | 121.6 |
$ | 105.6 |
$ | 360.5 |
$ | 336.5 |
||||||||
Rest of World |
4.1 |
39.1 |
38.8 |
109.8 |
||||||||||||
Inter-segment earnings elimination |
— |
— |
(0.1 |
) | — |
|||||||||||
Total Segment Earnings (GAAP) |
$ | 125.7 |
$ | 144.7 |
$ | 399.2 |
$ | 446.3 |
||||||||
Adjustments |
||||||||||||||||
North America (1) |
$ | — |
$ | — |
$ | — |
$ | 6.7 |
||||||||
Rest of World |
— |
— |
— |
— |
||||||||||||
Inter-segment earnings elimination |
— |
— |
— |
— |
||||||||||||
Total Adjustments |
$ | — |
$ | — |
$ | — |
$ | 6.7 |
||||||||
Adjusted Segment Earnings |
||||||||||||||||
North America |
$ | 121.6 |
$ | 105.6 |
$ | 360.5 |
$ | 343.2 |
||||||||
Rest of World |
4.1 |
39.1 |
38.8 |
109.8 |
||||||||||||
Inter-segment earnings elimination |
— |
— |
(0.1 |
) | — |
|||||||||||
Total Adjusted Segment Earnings |
$ | 125.7 |
$ | 144.7 |
$ | 399.2 |
$ | 453.0 |
||||||||
(1) |
The Company recognized $6.7 million of restructuring and impairment expenses in connection with the move of manufacturing operations from its Renton, Washington facility to other U.S. facilities. For additional information, see Note 5 of the notes to the financial statements. |
(2) |
On October 29, 2019, the Company filed a Form 8-K with the Securities and Exchange Commission, with a news release attached as Exhibit 99.1, announcing its results for the quarter ended September 30, 2019 which included the table above. The Company later identified that balances presented in the table for the Three Months Ended September 30, 2018 incorrectly presented the results for Three Months Ended June 30, 2018. The presentation above has been adjusted to reflect the correct amounts and therefore does not agree to the news release. |
2019 Guidance |
2018 |
|||||||
Diluted EPS (GAAP) |
$ | 2.25 - 2.28 |
$ | 2.58 |
||||
Restructuring and impairment expenses per diluted share, net of tax |
— |
0.03 |
||||||
Adjusted EPS |
$ | 2.25 - 2.28 |
$ | 2.61 |
||||
ISSUER PURCHASES OF EQUITY SECURITIES |
||||||||||||||||
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that may yet be Purchased Under the Plans or Programs |
||||||||||||
July 1 – July 31, 2019 |
1,166,600 |
$ | 45.16 |
1,166,600 |
5,114,653 |
|||||||||||
August 1 – August 31, 2019 |
489,500 |
45.25 |
489,500 |
4,625,153 |
||||||||||||
September 1 – September 30, 2019 |
471,438 |
47.73 |
471,438 |
4,153,715 |
Exhibit Number |
Description | |||
31.1 |
||||
31.2 |
||||
32.1 |
||||
32.2 |
||||
101 |
The following materials from A. O. Smith Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 are filed herewith, formatted in XBRL (Extensive Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and nine months ended September 30, 2019 and 2018, (ii) the Condensed Consolidated Statement of Comprehensive Earnings for the three and nine months ended September 30, 2019 and 2018, (iii) the Condensed Consolidated Balance Sheets as of September 30, 2019, and December 31,
2018 (iv) the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2019 and 2018 (v) the Condensed Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018 (vi) the Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |||
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
A. O. SMITH CORPORATION | ||||||
/s/ Helen E. Gurholt | ||||||
Vice President and Controller | ||||||
Executive Vice President and Chief Financial Officer |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/15/21 | ||||
1/1/20 | ||||
11/15/19 | ||||
Filed on: | 11/6/19 | |||
10/31/19 | ||||
10/29/19 | 8-K | |||
10/10/19 | 8-K | |||
For Period end: | 9/30/19 | |||
8/31/19 | ||||
8/20/19 | ||||
7/31/19 | ||||
6/30/19 | 10-Q | |||
5/28/19 | ||||
4/8/19 | 8-K | |||
3/31/19 | 10-Q | |||
2/15/19 | 10-K | |||
1/1/19 | ||||
12/31/18 | 10-K, 11-K, SD | |||
9/30/18 | 10-Q | |||
6/30/18 | 10-Q | |||
3/21/18 | ||||
4/16/12 | 4, 8-K, DEF 14A | |||
1/1/07 | ||||
List all Filings |