aos-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q

______________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number 1-475

________________________________

A. O. Smith Corporation

(Exact name of registrant as specified in its charter)

________________________________

Delaware

(State of Incorporation)

11270 West Park Place, Milwaukee, Wisconsin

(Address of Principal Executive Office)

39-0619790

(I.R.S. Employer

Identification No.)

53224-9508

(Zip Code)

(414) 359-4000

(Registrant’s telephone number, including area code)

_________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading
Symbol

Name of Each Exchange
on Which Registered

Common Stock (par value $1.00 per share)

AOS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated Filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) ☐ Yes ☒ No

Class A Common Stock Outstanding as of October 27, 2021 - 25,975,075 shares

Common Stock Outstanding as of October 27, 2021 - 133,187,027 shares

Index

A. O. Smith Corporation


		Page
Part I.	FINANCIAL INFORMATION

	Condensed Consolidated Statements of Earnings - Three and Nine Months Ended September 30, 2021 and 2020	3

	Condensed Consolidated Statements of Comprehensive Earnings - Three and Nine Months Ended September 30, 2021 and 2020	3

	Condensed Consolidated Balance Sheets - September 30, 2021 and December 31, 2020	4

	Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity - Three and Nine Months Ended September 30, 2021 and 2020	6

	Notes to Condensed Consolidated Financial Statements - September 30, 2021	7-18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19-24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	25

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	26

Index to Exhibits		27

Signatures		28

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

A. O. SMITH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in millions, except for per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net sales	$	914.6	$	760.0	$	2,543.4	$	2,060.8
Cost of products sold	574.3		462.9		1,593.1		1,276.7
Gross profit	340.3		297.1		950.3		784.1
Selling, general and administrative expenses	177.6		159.4		517.2		489.1
Severance and restructuring expenses	—		1.6		—		7.7
Interest expense	1.0		1.6		2.9		6.3
Other income	(4.7)		(2.8)		(13.6)		(11.0)
Earnings before provision for income taxes	166.4		137.3		443.8		292.0
Provision for income taxes	34.8		31.9		96.3		67.1
Net Earnings	$	131.6	$	105.4	$	347.5	$	224.9
Net Earnings Per Share of Common Stock	$	0.83	$	0.65	$	2.17	$	1.39
Diluted Net Earnings Per Share of Common Stock	$	0.82	$	0.65	$	2.15	$	1.38
Dividends Per Share of Common Stock	$	0.26	$	0.24	$	0.78	$	0.72

A. O. SMITH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(dollars in millions)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net earnings	$	131.6	$	105.4	$	347.5	$	224.9
Other comprehensive (loss) earnings
Foreign currency translation adjustments	(2.4)		15.7		1.1		1.4
Unrealized net gains (losses) on cash flow derivative instruments, less related income tax (provision) benefit of $(0.1) and $0.2 in 2021, $(0.3) and $(0.1) in 2020	0.4		0.7		(0.7)		0.2
Adjustment to pension liability, less related income tax provision of ($1.2) and $(3.8) in 2021, ($0.9) and $(3.3) in 2020	3.9		2.9		11.5		10.2
Comprehensive Earnings	$	133.5	$	124.7	$	359.4	$	236.7

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

A. O. SMITH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions)


	(unaudited) September 30, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	486.1	$	573.1
Marketable securities	199.1		116.5
Receivables	623.8		585.0
Inventories	357.7		300.1
Other current assets	71.4		43.3
Total Current Assets	1,738.1		1,618.0
Property, plant and equipment	1,260.5		1,222.6
Less accumulated depreciation	(721.0)		(681.3)
Net property, plant and equipment	539.5		541.3
Goodwill	551.8		546.8
Other intangibles	315.2		323.9
Operating lease assets	39.3		41.6
Other assets	116.1		89.1
Total Assets	$	3,300.0	$	3,160.7
Liabilities
Current Liabilities
Trade payables	$	649.6	$	595.2
Accrued payroll and benefits	94.6		74.6
Accrued liabilities	177.5		161.9
Product warranties	54.1		47.8
Debt due within one year	6.8		6.8
Total Current Liabilities	982.6		886.3
Long-term debt	99.6		106.4
Product warranties	97.4		94.5
Long-term operating lease liabilities	31.4		34.4
Other liabilities	192.5		190.8
Total Liabilities	1,403.5		1,312.4
Stockholders’ Equity
Class A Common Stock, $5 par value: authorized 27,000,000 shares; issued, 26,111,147 and

SEC Form 10-Q filed by A.O Smith Corporation