Net earnings (USD, millions)

Depreciation and amortization (USD, millions)

Stock based compensation expense (USD, millions)

Net changes in operating assets and liabilities, net of acquisitions: Current assets and liabilities (USD, millions)

Net changes in operating assets and liabilities, net of acquisitions: Noncurrent assets and liabilities (USD, millions)

Cash Provided by Operating Activities (USD, millions)

Capital expenditures (USD, millions)

Acquisitions of business (USD, millions)

Investments in marketable securities (USD, millions)

Net proceeds from sales of marketable securities (USD, millions)

Cash (Used in) Provided by Investing Activities (USD, millions)

Long-term debt incurred (repaid) (USD, millions)

Common stock repurchases (USD, millions)

Net proceeds (payments) from stock option activity (USD, millions)

Dividends paid (USD, millions)

Cash Used in Financing Activities (USD, millions)

Effect of exchange rate changes on cash and cash equivalents (USD, millions)

Net decrease in cash and cash equivalents (USD, millions)

Deferred income taxes (USD, millions)

Cash and cash equivalents - beginning of period (USD, millions)

Cash and Cash Equivalents - End of Period (USD, millions)

624caff3d509620252b801e6bcb91c72b579ca66d2844ae5f93cabed39e09b52

The decline in cash levels in Q1 2024 was mainly due to a combination of lower cash provided by operating activities, significantly higher cash used in investing activities, and increased cash used in financing activities. **Operating cash flow** was lower compared to Q1 2023 due to factors like higher incentive payments and increased inventory levels. Meanwhile, **investing cash outflows** surged because of larger capital expenditures and a business acquisition, and **financing outflows** increased due to higher common stock repurchases and dividend payments, with additional pressure from adverse exchange rate changes.  **[0000091142-24-000132_aos-20240331.htm:3]** **[0000091142-24-000132_aos-20240331.htm:20]** 

Why did cash levels drop so sharply in Q1 2024?

The documents do not provide a definitive explanation for the low long-term debt in Q1 2024. It is noted that A. O. Smith maintained access to a **$500 million multi-year multi-currency revolving credit agreement** and complied with its financial covenants as of March 31, 2024, which suggests the company had flexibility in managing its debt levels. However, the exact factors driving the lower long-term debt remain unclear from the provided information.  **[0000091142-24-000132_aos-20240331.htm:2]** **[0000091142-24-000132_aos-20240331.htm:8]** 

What drove long-term debt to be so low in Q1 2024?

The jump in **long-term debt** in Q4 2024 was caused by several factors: **(1)** The company took on **$30 million** under its revolving credit agreement in 2024, which had not been utilized in 2023, at an average year-end interest rate of **5.3%**; **(2)** There was an increase in fixed-rate debt from **$127.3 million in 2023** to **$163.2 million in 2024**, along with a rise in the average year-end interest rate from **3.1% to 4.6%**; and **(3)** The renewal and amendment of its **$500 million multi-year multi-currency revolving credit agreement** extended the facility’s expiration to **August 23, 2029**. These factors together contributed to the significant increase in long-term debt.  **[0000091142-25-000036_aos-20241231.htm:66]** 

What caused the jump in long-term debt in Q4 2024?

8984613fbbde4f3be5a82f36b2c17ca0ed5dc195d1e23dfc3a1d1a74eccd334e

The increase in **Net Sales** for Q2 2024 was primarily driven by a combination of factors including **higher volumes of residential and commercial water heaters**, **pricing actions** that boosted revenues, resumed growth in the **North America boiler business**, the successful **launch of gas tankless products**, and robust **sales growth in India**. These drivers collectively resulted in a significant sales boost, even though there were some offsetting negative factors such as **unfavorable currency translation** and **lower sales of residential water treatment products in China**.  **[20240723CG67111:0]** **[0000091142-24-000147_a6302024exhibit991.htm:0]** **[0000091142-24-000151_aos-20240630.htm:21]** **[0000091142-24-000151_aos-20240630.htm:23]** **[0000091142-24-000151_aos-20240630.htm:24]** **[AOS_3393925_3]** 

What drove the increase in Net Sales in Q2 2024?

In Q4 2024, **Earnings before provision for income taxes** were significantly affected by several factors. **Lower net sales**—driven by reduced water heater volumes in North America and weakened sales in China due to poor consumer demand and adverse economic conditions—directly impacted overall earnings. Additionally, **restructuring and impairment expenses** of **$17.6 million**, including **$11.3 million** in China's severance costs and **$6.3 million** related to the North American water treatment business, further reduced earnings. These issues, coupled with **higher operating costs** and lower gross profit margins resulting from operational inefficiencies and increased production costs, culminated in a decrease in earnings relative to prior periods.  **[20250130CG07831:4]** **[20250130CG07831:0]** **[AOS_3413739_3]** **[20250130CG07831:1]** **[0000091142-25-000036_aos-20241231.htm:35]** 

Why was Earnings before provision for income taxes so low in Q4 2024?

The decline in Net Earnings in Q4 2024 was attributed primarily to **lower net sales**, **restructuring and impairment expenses**, and **challenging market conditions**. Specifically, net sales decreased by **8%**, largely due to lower water heater volumes in North America and reduced sales in China. Additionally, the company incurred **restructuring and impairment expenses**—with **$6.3 million** recorded in North America and **$11.3 million** in China related to severance costs—that further impacted overall profitability. Lastly, the weak economic conditions, particularly in China, contributed to diminished consumer demand, affecting water heater and water treatment product sales.  **[20250130CG07831:0]** **[0000091142-25-000002_a12312024exhibit991.htm:0]** **[AOS_3413739_3]** **[AOS_3413739_2]** 

What factors contributed to the decline in Net Earnings in Q4 2024?

29be778f1e347b06a38a856891c711beffff36a9731654d64eadd56dbb816de8

Net Sales (USD, millions)

Cost of products sold (USD, millions)

Gross profit (USD, millions)

Selling, general and administrative expenses (USD, millions)

Interest expense (USD, millions)

Other (income) expense, net (USD, millions)

Earnings before provision for income taxes (USD, millions)

Provision for (benefit from) income taxes (USD, millions)

Net Earnings (USD, millions)

aa142b1d9e129b0d6fb645f80b9457da57462d702152f34680f5284429486811

Cash and cash equivalents (USD, millions)

Marketable securities (USD, millions)

Receivables (USD, millions)

Inventories (USD, millions)

Other current assets (USD, millions)

Total Current Assets (USD, millions)

Net property, plant and equipment (USD, millions)

Operating lease assets (USD, millions)

Other assets (USD, millions)

Total Assets (USD, millions)

Trade payables (USD, millions)

Accrued payroll and benefits (USD, millions)

Accrued liabilities (USD, millions)

Long-term debt due within one year (USD, millions)

Total Current Liabilities (USD, millions)

Long-term debt (USD, millions)

Other liabilities (USD, millions)

Total Stockholders’ Equity (USD, millions)

Total Liabilities and Stockholders’ Equity (USD, millions)

791a5867b1afab379718bd318d219c834558bb26d8d01db1f03f17af6838998e

935f3493b9de47598fe57486b17a0752eba9063cce5e1228f925e7d66c89e606

a50d4147f3d414daa68f090d43b70eaa353f6f8d283fa411627cb194d202be62

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

9867db13d02ac17451bddfd41e2fb88c1d264bd5c1be6a27f0a55cb6396aa653

Industry residential water heater volumes growth in North America (percent)

Projected sales growth of boilers in North America (percent)

Projected sales growth of North America water treatment products (percent)

Projected sales decline in China (percent)

3a6e7f44780f4bd7ac7f11a0e90a5827371efc7f8e51c8fc1802192eef89750f

North America

- United States

- Canada

Rest of World

- China

- Other Foreign

Inter-segment Sales

Total Revenue

e375e3e0fd7f2629785e2046f15d309312136e42c164dfde7e7f344f69079591

- Water Heaters

- Boilers

- Water Treatment

- All other Rest of World

2667d41bdfda5dc2775d0e1bae1474ef492d9e7892fe59967fc0987e53d2a1ff

SMITH A O (AOS)

Financials