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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/08/19 Smith AO Corp 10-Q 6/30/19 84:8.5M Donnelley … Solutions/FA |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 914K 2: EX-10.1 Material Contract HTML 22K 3: EX-31.1 Certification -- §302 - SOA'02 HTML 29K 4: EX-31.2 Certification -- §302 - SOA'02 HTML 29K 5: EX-32.1 Certification -- §906 - SOA'02 HTML 23K 6: EX-32.2 Certification -- §906 - SOA'02 HTML 23K 13: R1 Document and Entity Information HTML 81K 14: R2 Condensed Consolidated Statements of Earnings HTML 68K 15: R3 Condensed Consolidated Statements of Comprehensive HTML 42K Earnings 16: R4 Condensed Consolidated Statements of Comprehensive HTML 28K Earnings (Parenthetical) 17: R5 Condensed Consolidated Balance Sheets HTML 123K 18: R6 Condensed Consolidated Balance Sheets HTML 31K (Parenthetical) 19: R7 Condensed Consolidated Statements of Cash Flows HTML 77K 20: R8 Condensed Consolidated Statements of Stockholders' HTML 71K Equity 21: R9 Basis of Presentation HTML 34K 22: R10 Revenue Recognition HTML 95K 23: R11 Acquisitions HTML 43K 24: R12 Leases HTML 75K 25: R13 Restructuring and Impairment Expenses HTML 50K 26: R14 Inventories HTML 43K 27: R15 Product Warranties HTML 55K 28: R16 Long-Term Debt HTML 28K 29: R17 Earnings per Share of Common Stock HTML 49K 30: R18 Stock Based Compensation HTML 93K 31: R19 Pensions HTML 56K 32: R20 Segment Results HTML 103K 33: R21 Fair Value Measurements HTML 38K 34: R22 Derivative Instruments HTML 140K 35: R23 Income Taxes HTML 29K 36: R24 Commitments and Contingencies HTML 29K 37: R25 Changes in Accumulated Other Comprehensive Loss by HTML 150K Component 38: R26 Basis of Presentation (Policies) HTML 28K 39: R27 Revenue Recognition (Tables) HTML 82K 40: R28 Acquisitions (Tables) HTML 55K 41: R29 Leases (Tables) HTML 74K 42: R30 Restructuring and Impairment Expenses (Tables) HTML 48K 43: R31 Inventories (Tables) HTML 44K 44: R32 Product Warranties (Tables) HTML 52K 45: R33 Earnings per Share of Common Stock (Tables) HTML 46K 46: R34 Stock Based Compensation (Tables) HTML 87K 47: R35 Pensions (Tables) HTML 55K 48: R36 Segment Results (Tables) HTML 102K 49: R37 Fair Value Measurements (Tables) HTML 32K 50: R38 Derivative Instruments (Tables) HTML 136K 51: R39 Changes in Accumulated Other Comprehensive Loss by HTML 149K Component (Tables) 52: R40 Revenue Recognition - Additional Information HTML 34K (Detail) 53: R41 Segment Sales Disaggregated by Major Product Line HTML 43K (Detail) 54: R42 Acquisitions - Additional Information (Detail) HTML 64K 55: R43 Summary of Preliminary Allocation of Fair Value of HTML 46K Assets Acquired and Liabilities Assumed at Date of Acquisition (Detail) 56: R44 Leases supplemental balance sheet (Detail) HTML 41K 57: R45 Components of lease expense (Detail) HTML 34K 58: R46 Maturities of lease liabilities (Detail) HTML 42K 59: R47 Restructuring and Impairment Expenses - Additional HTML 42K Information (Detail) 60: R48 Analysis of Company's Restructuring Reserve HTML 32K (Detail) 61: R49 Schedule of Inventories (Detail) HTML 37K 62: R50 Company's Warranty Liability Activity (Detail) HTML 32K 63: R51 Long-Term Debt - Additional Information (Detail) HTML 32K 64: R52 Schedule of Computation of Basic and Diluted HTML 32K Weighted-Average Shares Used in Earnings per Share Calculations (Detail) 65: R53 Stock Based Compensation - Additional Information HTML 73K (Detail) 66: R54 Changes in Option Awards All of Which Related to HTML 61K Common Stock (Detail) 67: R55 Schedule of Weighted-Average Fair Value per Option HTML 34K at Date of Grant (Detail) 68: R56 Summary of Share Unit Activity Under Plan (Detail) HTML 47K 69: R57 Components of Company's Net Pension Income HTML 41K (Detail) 70: R58 Schedule of Segment Earnings (Detail) HTML 61K 71: R59 Schedule of Segment Earnings (Parenthetical) HTML 26K (Detail) 72: R60 Assets and Liabilities Measured at Fair Value on HTML 31K Recurring Basis (Detail) 73: R61 Schedule of Summary by Currency of Foreign HTML 38K Currency Forward Contracts (Detail) 74: R62 Derivative Instruments - Additional Information HTML 37K (Detail) 75: R63 Impact of Derivative Contracts on Company's HTML 45K Financial Statements (Detail) 76: R64 Schedule of Effect of Derivatives Instruments on HTML 39K Consolidated Statement of Earnings (Detail) 77: R65 Income Taxes - Additional Information (Detail) HTML 50K 78: R66 Commitment and Contingencies - Additional HTML 30K Information (Detail) 79: R67 Changes in Accumulated Other Comprehensive Loss by HTML 50K Component (Detail) 80: R68 Changes in Accumulated Other Comprehensive Loss by HTML 45K Component (Parenthetical) (Detail) 82: XML IDEA XML File -- Filing Summary XML 148K 12: XML XBRL Instance -- d19237d10q_htm XML 2.24M 81: EXCEL IDEA Workbook of Financial Reports XLSX 68K 8: EX-101.CAL XBRL Calculations -- aos-20190630_cal XML 135K 9: EX-101.DEF XBRL Definitions -- aos-20190630_def XML 867K 10: EX-101.LAB XBRL Labels -- aos-20190630_lab XML 968K 11: EX-101.PRE XBRL Presentations -- aos-20190630_pre XML 944K 7: EX-101.SCH XBRL Schema -- aos-20190630 XSD 134K 83: JSON XBRL Instance as JSON Data -- MetaLinks 311± 466K 84: ZIP XBRL Zipped Folder -- 0001193125-19-216951-xbrl Zip 170K
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. |
FINANCIAL INFORMATION |
|||||
3 |
||||||
3 |
||||||
4 |
||||||
5 |
||||||
6 |
||||||
Item 2. |
24-30 |
|||||
Item 3. |
31 |
|||||
Item 4. |
31 |
|||||
Part II. |
OTHER INFORMATION |
|||||
Item 1. |
32 |
|||||
Item 2. |
32 |
|||||
Item 6. |
33 |
|||||
34 |
||||||
34 |
Three Months Ended June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net sales |
$ | i 765.4 |
$ | i 833.3 |
$ | i 1,513.6 |
$ | i 1,621.3 |
||||||||
Cost of products sold |
i 456.7 |
i 492.3 |
i 912.1 |
i 958.8 |
||||||||||||
Gross profit |
i 308.7 |
i 341.0 |
i 601.5 |
i 662.5 |
||||||||||||
Selling, general and administrative expenses |
i 178.7 |
i 197.2 |
i 363.4 |
i 390.1 |
||||||||||||
Restructuring and impairment expenses |
i — |
i — |
i — |
i 6.7 |
||||||||||||
Interest expense |
i 3.4 |
i 2.3 |
i 5.4 |
i 4.6 |
||||||||||||
Other income |
( i 5.6 |
) | ( i 4.6 |
) | ( i 11.1 |
) | ( i 10.4 |
) | ||||||||
Earnings before provision for income taxes |
i 132.2 |
i 146.1 |
i 243.8 |
i 271.5 |
||||||||||||
Provision for income taxes |
i 30.1 |
i 31.6 |
i 52.4 |
i 58.2 |
||||||||||||
Net Earnings |
$ | i 102.1 |
$ | i 114.5 |
$ | i 191.4 |
$ | i 213.3 |
||||||||
Net Earnings Per Share of Common Stock |
$ | i 0.61 |
$ | i 0.67 |
$ | i 1.14 |
$ | i 1.25 |
||||||||
Diluted Net Earnings Per Share of Common Stock |
$ | i 0.61 |
$ | i 0.66 |
$ | i 1.14 |
$ | i 1.23 |
||||||||
Dividends Per Share of Common Stock |
$ | i 0.22 |
$ | i 0.18 |
$ | i 0.44 |
$ | i 0.36 |
||||||||
Three Months Ended June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net earnings |
$ | i 102.1 |
$ | i 114.5 |
$ | i 191.4 |
$ | i 213.3 |
||||||||
Other comprehensive (loss) earnings |
||||||||||||||||
Foreign currency translation adjustments |
( i 10.1 |
) | ( i 31.0 |
) | i 5.8 |
( i 12.6 |
) | |||||||||
Unrealized net gains (losses) on cash flow derivative instruments, less related income tax (provision) $benefit of ( 0.2) and ($0.1) in 2019, $ i 0.3 and ($0.2) in 2018 |
i 0.7 |
( i 1.2 |
) | i 0.6 |
i 0.8 |
|||||||||||
Adjustment to pension liability, less related income tax benefit of $ i 0.8 and $ i 1.8
in 2019 and $ i 1.0 and $ i 2.2
in 2018 |
i 3.1 |
i 3.5 |
i 6.0 |
i 6.9 |
||||||||||||
Comprehensive Earnings |
$ | i 95.8 |
$ | i 85.8 |
$ | i 203.8 |
$ | i 208.4 |
||||||||
(unaudited) |
||||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | i 281.6 |
$ | i 259.7 |
||||
Marketable securities |
i 296.2 |
i 385.3 |
||||||
Receivables |
i 634.8 |
i 647.3 |
||||||
Inventories |
i 323.1 |
i 304.7 |
||||||
Other current assets |
i 60.9 |
i 41.5 |
||||||
Total Current Assets |
i 1,596.6 |
i 1,638.5 |
||||||
Property, plant and equipment |
i 1,138.3 |
i 1,096.8 |
||||||
Less accumulated depreciation |
( i 584.4 |
) | ( i 556.8 |
) | ||||
Net property, plant and equipment |
i 553.9 |
i 540.0 |
||||||
Goodwill |
i 547.9 |
i 513.0 |
||||||
Other intangibles |
i 343.7 |
i 293.1 |
||||||
Operating lease assets |
i 48.4 |
i — |
||||||
Other assets |
i 85.1 |
i 86.9 |
||||||
Total Assets |
$ | i 3,175.6 |
$ | i 3,071.5 |
||||
Liabilities |
||||||||
Current Liabilities |
||||||||
Trade payables |
$ | i 488.4 |
$ | i 543.8 |
||||
Accrued payroll and benefits |
i 55.6 |
i 79.4 |
||||||
Accrued liabilities |
i 137.0 |
i 120.4 |
||||||
Product warranties |
i 42.8 |
i 41.7 |
||||||
Debt due within one year |
i 6.8 |
— |
||||||
Total Current Liabilities |
i 730.6 |
i 785.3 |
||||||
Long-term debt |
i 351.8 |
i 221.4 |
||||||
Pension liabilities |
i 37.0 |
i 49.4 |
||||||
Long-term operating lease liabilities |
i 39.9 |
— |
||||||
Other liabilities |
i 291.2 |
i 298.4 |
||||||
Total Liabilities |
i 1,450.5 |
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 164,524,229
and i 164,517,431 |
i 164.5 |
i 164.5 |
||||||
Capital in excess of par value |
i 506.7 |
i 496.7 |
||||||
Retained earnings |
i 2,220.2 |
i 2,102.8 |
||||||
Accumulated other comprehensive loss |
( i 338.4 |
) | ( i 350.8 |
) | ||||
Treasury stock at cost |
( i 958.8 |
) | ( i 827.2 |
) | ||||
Total Stockholders’ Equity |
i 1,725.1 |
i 1,717.0 |
||||||
Total Liabilities and Stockholders’ Equity |
$ | i 3,175.6 |
$ | i 3,071.5 |
||||
Six Months Ended |
||||||||
2018 |
||||||||
Operating Activities |
||||||||
Net earnings |
$ | i 191.4 |
$ | i 213.3 |
||||
Adjustments to reconcile net earnings to cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
i 38.4 |
i 35.4 |
||||||
Stock based compensation expense |
i 10.8 |
i 7.9 |
||||||
Net changes in operating assets and liabilities: |
||||||||
Current assets and liabilities |
( i 75.9 |
) | ( i 62.6 |
) | ||||
Noncurrent assets and liabilities |
( i 21.0 |
) | ( i 20.8 |
) | ||||
Cash Provided by Operating Activities |
i 143.7 |
i 173.2 |
||||||
Investing Activities |
||||||||
Capital expenditures |
( i 36.5 |
) | ( i 39.5 |
) | ||||
Acquisition |
|
|
( i 107.0 |
) | |
|
— |
|
Investments in marketable securities |
( i 202.3 |
) | ( i 248.5 |
) | ||||
Net proceeds from sale of marketable securities |
i 293.8 |
i 322.1 |
||||||
Cash (Used in) Provided by Investing Activities |
( i 52.0 |
) | i 34.1 |
|||||
Financing Activities |
||||||||
Long-term debt incurred (repaid) |
i 137.3 |
( i 162.3 |
) | |||||
Common stock repurchases |
( i 132.6 |
) | ( i 69.7 |
) | ||||
Net payments from stock option activity |
( i 0.5 |
) | ( i 0.1 |
) | ||||
Dividends paid |
( i 74.0 |
) | ( i 61.8 |
) | ||||
Cash Used In Financing Activities |
( i 69.8 |
) | ( i 293.9 |
) | ||||
Net increase (decrease) in cash and cash equivalents |
i 21.9 |
( i 86.6 |
) | |||||
Cash and cash equivalents - beginning of period |
i 259.7 |
i 346.6 |
||||||
Cash and Cash Equivalents - End of Period |
$ | i 281.6 |
$ | i 260.0 |
||||
Three Months Ended June 30, |
|
|
Six Months Ended |
| ||||||||||||
2018 |
|
|
2019 |
|
|
|
2018 |
| ||||||||
Class A Common Stock |
|
|
|
|
|
|
|
| ||||||||
Balance at the beginning of period |
$ |
i 131.0 |
$ |
i 131.0 |
|
$ |
i 131.0 |
|
|
$ |
i 131.2 |
| ||||
Conversion of Class A Common Stock |
( i 0.1 |
) |
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 503.5 |
$ |
i 491.6 |
|
$ |
i 496.7 |
|
|
$ |
i 486.5 |
| ||||
Conversion of Class A Common Stock |
i 0.1 |
i — |
|
|
i 0.1 |
|
|
|
i 0.2 |
| ||||||
Issuance of share units |
( i 0.1 |
) |
( i 0.4 |
) |
|
|
( i 6.2 |
) |
|
|
( i 5.8 |
) | ||||
Vesting of share units |
( i 0.1 |
) |
— |
|
|
( i 2.0 |
) |
|
|
( i 2.3 |
) | |||||
Stock based compensation expense |
i 1.9 |
i 1.4 |
|
|
i 10.5 |
|
|
|
i 7.7 |
| ||||||
Exercises of stock options |
i 0.5 |
i 0.3 |
|
|
i 0.6 |
|
|
|
i 1.2 |
| ||||||
Stock incentives |
i 0.9 |
i 1.3 |
|
|
i 7.0 |
|
|
|
i 6.7 |
| ||||||
Balance at end of period |
$ |
i 506.7 |
$ |
i 494.2 |
|
$ |
i 506.7 |
|
|
$ |
i 494.2 |
| ||||
Retained Earnings |
|
|
|
|
|
|
|
| ||||||||
Balance at the beginning of period |
$ |
i 2,155.0 |
$ |
i 1,856.5 |
|
$ |
i 2,102.8 |
|
|
$ |
i 1,788.7 |
| ||||
Net earnings |
i 102.1 |
i 114.5 |
|
|
i 191.4 |
|
|
|
i 213.3 |
| ||||||
Cash dividends on stock |
( i 36.9 |
) |
( i 30.9 |
) |
|
|
( i 74.0 |
) |
|
|
( i 61.9 |
) | ||||
Balance at end of period |
$ |
i 2,220.2 |
$ |
i 1,940.1 |
|
$ |
i 2,220.2 |
|
|
$ |
i 1,940.1 |
| ||||
Accumulated Other Comprehensive Loss (see Note 17) |
$ |
( i 338.4 |
) |
$ |
( i 304.4 |
) |
|
$ |
( i 338.4 |
) |
|
$ |
( i 304.4 |
) | ||
Treasury Stock |
|
|
|
|
|
|
|
| ||||||||
Balance at the beginning of period |
$ |
( i 872.7 |
) |
$ |
( i 659.5 |
) |
|
$ |
( i 827.2 |
) |
|
$ |
( i 626.5 |
) | ||
Exercise of stock options |
i 0.6 |
i 0.8 |
|
|
( i 1.3 |
) |
|
|
( i 1.4 |
) | ||||||
Stock incentives and directors’ compensation |
|
|
i 0.2 |
|
|
|
— |
|
|
|
i 0.2 |
|
|
|
i 0.1 |
|
Shares repurchased |
( i 87.0 |
) |
( i 36.6 |
) |
|
|
( i 132.6 |
) |
|
|
( i 69.7 |
) | ||||
Vesting of share units |
i 0.1 |
i 0.2 |
|
|
i 2.1 |
|
|
|
i 2.4 |
| ||||||
Balance at end of period |
$ |
( i 958.8 |
) |
$ |
( i 695.1 |
) |
|
$ |
( i 958.8 |
) |
|
$ |
( i 695.1 |
) | ||
Total Stockholders’ Equity |
$ |
i 1,725.1 |
$ |
i 1,730.3 |
|
$ |
i 1,725.1 |
|
|
$ |
i 1,730.3 |
|
1. |
Basis of Presentation |
2. |
Revenue Recognition |
2. |
Revenue Recognition (continued) |
2. |
Revenue Recognition (continued) |
(dollars in millions) |
||||||||||||||||
Three Months Ended June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
North America |
||||||||||||||||
Water heaters and related parts |
$ | i 438.9 |
$ | i 466.1 |
$ | i 894.6 |
$ | i 912.9 |
||||||||
Boilers and related parts |
i 48.0 |
i 47.5 |
i 90.6 |
i 84.4 |
||||||||||||
Water treatment products (1) |
i 37.1 |
i 20.6 |
i 60.6 |
i 38.6 |
||||||||||||
Total North America |
i 524.0 |
i 534.2 |
i 1,045.8 |
i 1,035.9 |
||||||||||||
Rest of World |
||||||||||||||||
China |
$ | i 224.2 |
$ | i 284.4 |
$ | i 437.2 |
$ | i 560.2 |
||||||||
All other Rest of World |
i 24.9 |
i 23.7 |
i 44.0 |
i 41.7 |
||||||||||||
Total Rest of World |
i 249.1 |
i 308.1 |
i 481.2 |
i 601.9 |
||||||||||||
Inter-segment sales |
( i 7.7 |
) | ( i 9.0 |
) | ( i 13.4 |
) | ( i 16.5 |
) | ||||||||
Total Net Sales |
$ | i 765.4 |
$ | i 833.3 |
$ | i 1,513.6 |
$ | i 1,621.3 |
||||||||
(1) |
Includes the results of Water-Right, Inc. from April 8 , 2019 , the date of acquisition |
3. |
Acquisitions |
3. |
Acquisitions (continued) |
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 |
4. |
Leases (continued) |
(dollars in millions) |
||||
Liabilities |
||||
Short term: Accrued liabilities |
$ | i 12.0 |
||
Long term: Operating lease liabilities |
i 39.9 |
|||
Total operating lease liabilities |
$ | i 51.9 |
||
Less: Rent incentives and deferrals |
( i 3.5 |
) | ||
Assets |
||||
Operating lease assets |
$ | i 48.4 |
||
Lease Term and Discount Rate |
||||
Weighted-average remaining lease term |
i 10 years |
|||
Weighted-average discount rate |
i 4.04% |
(dollars in millions) |
||||||||||
Three months ended |
Six months ended |
|||||||||
Lease Expense |
Classification |
|||||||||
Operating lease expense (1) |
Cost of products sold |
$ | i 0.7 |
$ | i 1.3 |
|||||
Selling, general and administrative expenses |
i 4.1 |
i 9.0 |
(1) |
Includes short-term lease expenses of $ i 0.5 million and $ i 1.0 million for the three and six months ended June 30, 2019, respectively. Includes variable lease cost of $ i 0.2 million and $ i 1.0 million for the three and six months ended June 30, 2019, respectively. |
(dollars in millions) |
||||
2019 |
$ | i 7.8 |
||
2020 |
i 12.2 |
|||
2021 |
i 8.9 |
|||
2022 |
i 7.7 |
|||
2023 |
i 3.7 |
|||
After 2023 |
i 25.8 |
|||
Total lease payments |
i 66.1 |
|||
Less: imputed interest |
( i 14.2 |
) | ||
Present value of operating lease liabilities |
$ | i 51.9 |
||
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 |
||||||
6. |
Inventories |
(dollars in millions) |
||||||||
Finished products |
$ | i 154.5 |
$ | i 137.6 |
||||
Work in process |
i 21.4 |
i 23.3 |
||||||
Raw materials |
i 177.8 |
i 174.4 |
||||||
Inventories, at FIFO cost |
i 353.7 |
i 335.3 |
||||||
LIFO reserve |
( i 30.6 |
) | ( i 30.6 |
) | ||||
Net inventory |
$ | i 323.1 |
$ | i 304.7 |
||||
7. |
Product Warranties |
Three Months Ended June 30, |
||||||||
(dollars in millions) |
2019 |
2018 |
||||||
Balance at April 1, |
$ | i 136.2 |
$ | i 141.6 |
||||
Expense |
i 11.4 |
i 11.2 |
||||||
Claims settled |
( i 13.6 |
) | ( i 11.2 |
) | ||||
Balance at June 30, |
$ | i 134.0 |
$ | i 141.6 |
||||
Six Months Ended June 30, |
||||||||
(dollars in millions) |
2019 |
2018 |
||||||
Balance at January 1, |
$ | i 139.4 |
$ | i 141.2 |
||||
Expense |
i 20.8 |
i 22.8 |
||||||
Claims settled |
( i 26.2 |
) | ( i 22.4 |
) | ||||
Balance at June 30, |
$ | i 134.0 |
$ | i 141.6 |
||||
8. |
Long-Term Debt |
9. |
Earnings per Share of Common Stock |
Three Months Ended June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Denominator for basic earnings per share—weighted average shares |
i 166,825,601 |
i 171,063,565 |
i 167,311,995 |
i 171,296,492 |
||||||||||||
Effect of dilutive stock options and share units |
i 1,260,667 |
i 1,666,601 |
i 1,276,451 |
i 1,742,515 |
||||||||||||
Denominator for diluted earnings per share |
i 168,086,268 |
i 172,730,166 |
i 168,588,446 |
i 173,039,007 |
||||||||||||
10. |
Stock Based Compensation |
Weighted- Avg. Per 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 21.48 |
( i 92,106 |
) | |||||||||||||
Forfeited |
i 54.55 |
( i 5,264 |
) | |||||||||||||
Outstanding at June 30, 2019 |
i 36.54 |
i 2,892,364 |
i 7 years |
$ | i 38.3 |
|||||||||||
Exercisable at June 30, 2019 |
i 28.95 |
i 1,973,625 |
i 6 years |
$ | i 38.3 |
|||||||||||
Six Months Ended June 30, |
||||||||
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 22.2 |
% |
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 2,405 |
) | i 55.48 |
|||||
Issued and unvested at June 30, 2019 |
i 369,446 |
i 50.37 |
||||||
11. |
Pensions |
Three Months Ended June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Service cost |
$ | i 0.5 |
$ | i 0.5 |
$ | i 0.9 |
$ | i 1.0 |
||||||||
Interest cost |
i 7.8 |
i 7.3 |
i 15.7 |
i 14.5 |
||||||||||||
Expected return on plan assets |
( i 14.4 |
) | ( i 14.6 |
) | ( i 28.7 |
) | ( i 29.1 |
) | ||||||||
Amortization of unrecognized loss |
i 4.0 |
i 4.6 |
i 8.0 |
i 9.3 |
||||||||||||
Amortization of prior service cost |
( i 0.1 |
) | ( i 0.1 |
) | ( i 0.2 |
) | ( i 0.2 |
) | ||||||||
Defined benefit plan income |
$ | ( i 2.2 |
) | $ | ( i 2.3 |
) | $ | ( i 4.3 |
) | $ | ( i 4.5 |
) | ||||
12. |
Segment Results |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(dollars in millions) |
2019 |
2018 |
2019 |
2018 |
||||||||||||
Net sales |
||||||||||||||||
North America |
$ | i 524.0 |
$ | i 534.2 |
$ | i 1,045.8 |
$ | i 1,035.9 |
||||||||
Rest of World |
i 249.1 |
i 308.1 |
i 481.2 |
i 601.9 |
||||||||||||
Inter-segment |
( i 7.7 |
) | ( i 9.0 |
) | ( i 13.4 |
) | ( i 16.5 |
) | ||||||||
$ | i 765.4 |
$ | i 833.3 |
$ | i 1,513.6 |
$ | i 1,621.3 |
|||||||||
Segment earnings |
||||||||||||||||
North America (1) |
$ | i 122.9 |
$ | i 124.9 |
$ | i 238.9 |
$ | i 230.9 |
||||||||
Rest of World |
i 22.4 |
i 34.7 |
i 34.7 |
i 70.7 |
||||||||||||
Inter-segment |
( i 0.1 |
) | — |
( i 0.1 |
) | — |
||||||||||
i 145.2 |
i 159.6 |
i 273.5 |
i 301.6 |
|||||||||||||
Corporate expense |
( i 9.6 |
) | ( i 11.2 |
) | ( i 24.3 |
) | ( i 25.5 |
) | ||||||||
Interest expense |
( i 3.4 |
) | ( i 2.3 |
) | ( i 5.4 |
) | ( i 4.6 |
) | ||||||||
Earnings before income taxes |
i 132.2 |
i 146.1 |
i 243.8 |
i 271.5 |
||||||||||||
Provision for income taxes |
i 30.1 |
i 31.6 |
i 52.4 |
i 58.2 |
||||||||||||
Net earnings |
$ | i 102.1 |
$ | i 114.5 |
$ | i 191.4 |
$ | i 213.3 |
||||||||
(1) includes restructuring and impairment expenses of: |
$ | — |
$ | — |
$ | — |
$ | 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 296.2 |
$ | i 385.3 |
||||
Significant other observable inputs (Level 2) |
i 6.0 |
i 7.5 |
14. |
Derivative Instruments |
14. |
Derivative Instruments (continued) |
(dollars in millions) |
Buy |
Sell |
Buy |
Sell |
||||||||||||
British pound |
$ | — |
$ | i 0.5 |
$ | — |
$ | i 1.0 |
||||||||
Canadian dollar |
— |
i 15.1 |
— |
— |
||||||||||||
Euro |
i 37.8 |
— |
i 32.0 |
— |
||||||||||||
Mexican peso |
i 19.2 |
— |
i 27.8 |
— |
||||||||||||
Total |
$ | i 57.0 |
$ | i 15.6 |
$ | i 59.8 |
$ | i 1.0 |
||||||||
14. |
Derivative Instruments (continued) |
|
|
|||||||||||
(dollars in millions) |
|
Balance Sheet Location |
|
2019 |
||||||||
Foreign currency contracts |
|
Other current assets |
|
$ | i 6.9 |
$ | i 3.9 |
|||||
|
Other non-current assets |
|
— |
i 5.1 |
||||||||
|
Accrued liabilities |
|
( i 0.9 |
) | ( i 0.6 |
) | ||||||
Commodities contracts |
|
Accrued liabilities |
|
— |
( i 0.9 |
) | ||||||
|
|
|||||||||||
Total derivatives designated as hedging instruments |
|
$ | i 6.0 |
$ | i 7.5 |
|||||||
|
|
|
Amount of gain (loss) recognized in other comprehensive loss 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 |
||||||||||||||
Derivatives in ASC 815 cash flow hedging relationships |
2019 |
2018 |
|
2019 |
2018 |
|||||||||||||
Foreign currency contracts |
$ | i 0.5 |
$ | ( i 1.3 |
) | |
Cost of products sold |
$ | — | $ | i 0.1 |
|||||||
Commodities contracts |
( i 0.3 |
) | — |
|
Cost of products sold |
( i 0.8 |
) | i 0.3 |
||||||||||
|
||||||||||||||||||
$ | i 0.2 |
$ | ( i 1.3 |
) | |
$ | ( i 0.8 |
) | $ | i 0.4 |
||||||||
|
|
Amount of gain (loss) recognized in other comprehensive loss 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 |
|||||||||||||||
Derivatives in ASC 815 cash flow hedging relationships |
2019 |
2018 |
2019 |
2018 |
||||||||||||||
Foreign currency contracts |
$ | i 0.6 |
$ | i 1.4 |
Cost of products sold |
$ | — |
$ | i 0.1 |
|||||||||
Commodities contracts |
( i 0.5 |
) | — |
Cost of products sold |
( i 0.8 |
) | i 0.3 |
|||||||||||
$ | i 0.1 |
$ | i 1.4 |
$ | ( i 0.8 |
) | $ | i 0.4 |
||||||||||
15. |
Income Taxes |
16. |
Commitments and Contingencies |
17. |
Changes in Accumulated Other Comprehensive Loss by Component |
(dollars in millions) |
||||||||
Three Months Ended June 30, |
||||||||
2018 |
||||||||
Cumulative foreign currency translation |
||||||||
Balance at beginning of period |
$ | ( i 49.0 |
) | $ | ( i 8.1 |
) | ||
Other comprehensive ( loss) income before reclassifications |
( i 10.1 |
) | ( i 31.0 |
) | ||||
Balance at end of period |
( i 59.1 |
) | ( i 39.1 |
) | ||||
Unrealized net gain on cash flow derivatives |
||||||||
Balance at beginning of period |
( i 0.8 |
) | i 1.1 |
|||||
Other comprehensive gain (loss) before reclassifications |
i 0.1 |
( i 0.9 |
) | |||||
Realized losses (gains) on derivatives reclassified to cost of products sold (net of income tax (benefit) provision of ($ i 0.2 ) and $ i 0.1
in 2019 and 2018, respectively) |
i 0.6 |
( i 0.3 |
) | |||||
Balance at end of period |
( i 0.1 |
) | ( i 0.1 |
) | ||||
Pension liability |
||||||||
Balance at beginning of period |
( i 282.3 |
) | ( i 268.7 |
) | ||||
Other comprehensive loss before reclassifications |
— |
— |
||||||
Amounts reclassified from accumulated other comprehensive loss: (1) |
i 3.1 |
i 3.5 |
||||||
Balance at end of period |
( i 279.2 |
) | ( i 265.2 |
) | ||||
Accumulated other comprehensive loss, end of period |
$ | ( i 338.4 |
) | $ | ( i 304.4 |
) | ||
(1) Amortization of pension items: |
||||||||
Actuarial losses |
$ | i 4.0 |
(2) |
$ | i 4.6 |
(2) | ||
Prior year service cost |
( i 0.1 |
) (2) |
( i 0.1 |
) (2) | ||||
i 3.9 |
i 4.5 |
|||||||
Income tax benefit |
( i 0.8 |
) | ( i 1.0 |
) | ||||
Reclassification net of income tax benefit |
$ | i 3.1 |
$ | i 3.5 |
||||
(2) |
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11—Pensions for additional details |
17. |
Changes in Accumulated Other Comprehensive Loss by Component (continued) |
(dollars in millions) |
||||||||
Six Months Ended June 30, |
||||||||
2018 |
||||||||
Cumulative foreign currency translation |
||||||||
Balance at beginning of period |
$ | ( i 64.9 |
) | $ | ( i 26.5 |
) | ||
Other comprehensive income (loss) before reclassifications |
i 5.8 |
( i 12.6 |
) | |||||
Balance at end of period |
( i 59.1 |
) | ( i 39.1 |
) | ||||
Unrealized net gain on cash flow derivatives |
||||||||
Balance at beginning of period |
( i 0.7 |
) | ( i 0.9 |
) | ||||
Other comprehensive gain before reclassifications |
— |
i 1.1 |
||||||
Realized losses (gains) on derivatives reclassified to cost of products sold (net of income tax (benefit) provision of ($ i 0.2 ) and $ i 0.1
in 2019 and 2018, respectively) |
i 0.6 |
( i 0.3 |
) | |||||
Balance at end of period |
( i 0.1 |
) | ( i 0.1 |
) | ||||
Pension liability |
||||||||
Balance at beginning of period |
( i 285.2 |
) | ( i 272.1 |
) | ||||
Other comprehensive loss before reclassifications |
— |
— |
||||||
Amounts reclassified from accumulated other comprehensive loss: (1) |
i 6.0 |
i 6.9 |
||||||
Balance at end of period |
( i 279.2 |
) | ( i 265.2 |
) | ||||
Accumulated other comprehensive loss, end of period |
$ | ( i 338.4 |
) | $ | ( i 304.4 |
) | ||
(1) Amortization of pension items: |
||||||||
Actuarial losses |
$ | i 8.0 |
(2) |
$ | i 9.3 |
(2) | ||
Prior year service cost |
( i 0.2 |
) (2) |
( i 0.2 |
) (2) | ||||
i 7.8 |
i 9.1 |
|||||||
Income tax benefit |
( i 1.8 |
) | ( i 2.2 |
) | ||||
Reclassification net of income tax benefit |
$ | i 6.0 |
$ | i 6.9 |
||||
(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 June 30, |
Six Months Ended |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Net Earnings (GAAP) |
$ | 102.1 |
$ | 114.5 |
$ | 191.4 |
$ | 213.3 |
||||||||
Restructuring and impairment expenses, before tax |
— |
— |
— |
6.7 |
||||||||||||
Tax effect of restructuring and impairment expenses |
— |
— |
— |
(1.7 |
) | |||||||||||
Adjusted Earnings |
$ | 102.1 |
$ | 114.5 |
$ | 191.4 |
$ | 218.3 |
||||||||
Diluted EPS (GAAP) |
$ | 0.61 |
$ | 0.66 |
$ | 1.14 |
$ | 1.23 |
||||||||
Restructuring and impairment expenses per diluted share |
— |
— |
— |
0.04 |
||||||||||||
Tax effect of restructuring and impairment expenses per diluted share |
— |
— |
— |
(0.01 |
) | |||||||||||
Adjusted EPS |
$ | 0.61 |
$ | 0.66 |
$ | 1.14 |
$ | 1.26 |
||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2018 |
2019 |
2018 |
||||||||||||||
Segment Earnings (GAAP) |
||||||||||||||||
North America |
$ | 122.9 |
$ | 124.9 |
$ | 238.9 |
$ | 230.9 |
||||||||
Rest of World |
22.4 |
34.7 |
34.7 |
70.7 |
||||||||||||
Inter-segment earnings elimination |
(0.1 |
) | — |
(0.1 |
) | — |
||||||||||
Total Segment Earnings (GAAP) |
$ | 145.2 |
$ | 159.6 |
$ | 273.5 |
$ | 301.6 |
||||||||
Adjustments |
||||||||||||||||
North America (1) |
$ | — |
$ | — |
$ | — |
$ | 6.7 |
||||||||
Rest of World |
— |
— |
— |
— |
||||||||||||
Inter-segment earnings elimination |
— |
— |
— |
— |
||||||||||||
Total Adjustments |
$ | — |
$ | — |
$ | — |
$ | 6.7 |
||||||||
Adjusted Segment Earnings |
||||||||||||||||
North America |
$ | 122.9 |
$ | 124.9 |
$ | 238.9 |
$ | 237.6 |
||||||||
Rest of World |
22.4 |
34.7 |
34.7 |
70.7 |
||||||||||||
Inter-segment earnings elimination |
(0.1 |
) | — |
(0.1 |
) | — |
||||||||||
Total Adjusted Segment Earnings |
$ | 145.2 |
$ | 159.6 |
$ | 273.5 |
$ | 308.3 |
||||||||
(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 |
2019 Guidance |
2018 |
|||||||
Diluted EPS (GAAP) |
$ | 2.35 – 2.41 |
$ | 2.58 |
||||
Restructuring and impairment expenses per diluted share, net of tax |
— |
0.03 |
||||||
Adjusted EPS |
$ | 2.35 – 2.41 |
$ | 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 |
||||||||||||
April 1 – April 30, 2019 |
210,700 |
$ | 55.01 |
210,700 |
4,952,753 |
|||||||||||
May 1 – May 31, 2019 |
402,000 |
48.33 |
402,000 |
4,550,753 |
||||||||||||
June 1 – June 30, 2019 |
1,269,500 |
44.16 |
1,269,500 |
6,281,253 |
Exhibit Number |
Description | |||
10.1 |
||||
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 June 30, 2019 are filed herewith, formatted in XBRL (Extensive Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2019 and 2018, (ii) the Condensed Consolidated Statement of Comprehensive Earnings for the three and six months ended June 30, 2019 and 2018, (iii) the Condensed Consolidated Balance Sheets as of June 30, 2019, and December 31, 2018 (iv) the Condensed Consolidated
Statement of Cash Flows for the six months ended June 30, 2019 and 2018 (v) the Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 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. |
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 | ||||
8/26/19 | 3/A | |||
8/15/19 | ||||
Filed on: | 8/8/19 | |||
8/2/19 | ||||
7/31/19 | ||||
7/8/19 | 4 | |||
For Period end: | 6/30/19 | |||
5/31/19 | ||||
5/28/19 | ||||
4/30/19 | 8-K | |||
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 | |||
6/30/18 | 10-Q | |||
3/21/18 | ||||
4/16/12 | 4, 8-K, DEF 14A | |||
1/1/07 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/12/21 A.O. Smith Corp. 10-K 12/31/20 125:13M |