Executive Summary
A O Smith reported QQ3 2024 revenue of $902.6 million with a gross margin of 37.37% and net income of $120.1 million ($EPS $0.83). Year-over-year revenue declined 3.7% and quarterly revenue fell 11.9% sequentially, reflecting softer demand and typical seasonality in the period. Despite the top-line softness, the company maintained margin discipline, delivering EBITDA of $178.4 million and an operating margin of 17.8%. Free cash flow remained robust at $163.4 million, supported by operating cash flow of $195.9 million and disciplined capital expenditure. A O Smith finished QQ3 with a strong balance sheet: cash and cash equivalents of $219.3 million, net debt of $(76.1) million, and total liquidity that supports ongoing deleveraging and capital returns. The company continued to allocate capital toward buybacks ($83.9 million) and dividends ($46.7 million), underscoring a constructive shareholder-friendly stance. Management commentary did not publish explicit forward guidance in the provided data, but the results highlight price realization and mix management as partial mitigants to volume declines. The balance of risks remains tied to macro demand cycles in residential construction, currency dynamics across Rest of World channels, and raw material cost volatility. Overall, the QQ3 print supports a cautiously constructive view: durable profitability, strong cash generation, and capable capital allocation execution against a backdrop of modest near-term demand headwinds.
Key Performance Indicators
QoQ: -11.88% | YoY:-3.72%
QoQ: -14.65% | YoY:-5.31%
QoQ: -22.25% | YoY:-11.36%
QoQ: -23.11% | YoY:-11.30%
QoQ: -22.43% | YoY:-7.78%
Key Insights
Revenue: $902.6m, YoY -3.72%, QoQ -11.88%
Gross Profit: $337.3m, Gross Margin 37.37%, YoY -5.31%, QoQ -14.65%
Operating Income: $160.7m, Operating Margin 17.80%, YoY -11.36%, QoQ -22.25%
Net Income: $120.1m, Net Margin 13.31%, YoY -11.30%, QoQ -23.11%
EPS: $0.83, Diluted $0.82, YoY -7.78%, QoQ -22.43%
EBITDA: $178.4m, EBITDA Margin ~19.8%
Cash Flow: Net cash from operating activities $195.9m; Free cash flow $163.4m; Capex $32.5m
Balance & Leverage: Total assets $3.1542b; Total liabili...
Financial Highlights
Revenue: $902.6m, YoY -3.72%, QoQ -11.88%
Gross Profit: $337.3m, Gross Margin 37.37%, YoY -5.31%, QoQ -14.65%
Operating Income: $160.7m, Operating Margin 17.80%, YoY -11.36%, QoQ -22.25%
Net Income: $120.1m, Net Margin 13.31%, YoY -11.30%, QoQ -23.11%
EPS: $0.83, Diluted $0.82, YoY -7.78%, QoQ -22.43%
EBITDA: $178.4m, EBITDA Margin ~19.8%
Cash Flow: Net cash from operating activities $195.9m; Free cash flow $163.4m; Capex $32.5m
Balance & Leverage: Total assets $3.1542b; Total liabilities $1.2375b; Shareholders’ equity $1.9167b; Net debt $(76.1)m; Debt $143.2m; Interest coverage ~107x
Liquidity & Efficiency: Current ratio 1.673; Quick ratio 1.016; Cash ratio 0.26; DSO 55.66 days; DIO 88.34 days; DPO 88.50 days; CCC 144 days; ROE 6.27%; ROA 3.81%; ROCE 6.96%
Valuation Context: P/E ~27.6, P/B ~6.9, P/S ~14.7; EV/EBITDA ~83.1; Dividend yield ~0.35% (perferred to USD metrics)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
902.60M |
-3.72% |
-11.88% |
| Gross Profit |
337.30M |
-5.31% |
-14.65% |
| Operating Income |
160.70M |
-11.36% |
-22.25% |
| Net Income |
120.10M |
-11.30% |
-23.11% |
| EPS |
0.83 |
-7.78% |
-22.43% |
Key Financial Ratios
operatingProfitMargin
17.8%
operatingCashFlowPerShare
$1.34
freeCashFlowPerShare
$1.11
dividendPayoutRatio
38.9%
Management Commentary
No earnings call transcript data provided in the supplied document. In the absence of direct quotes, management commentary themes typically revolve around sustaining margins, cost discipline, pricing and mix management, and capital allocation. Investors should monitor: (1) North America and Rest of World demand evolution, (2) product mix shifts toward higher-margin water heating and water treatment solutions, and (3) ongoing capital allocation decisions (buybacks, dividends, and potential capex cadence).
Forward Guidance
No explicit forward guidance was included in the provided materials. Given the QQ3 results, the key drivers likely to influence the near-term trajectory include: (1) demand stabilization in residential replace-and-upgrade cycles, (2) continued pricing discipline to protect margins amid input cost volatility, (3) continued investment in high-margin product lines (e.g., filtration, water treatment, commercial/industrial offerings), and (4) capital returns and balance sheet strength supporting flexibility. Investors should monitor macro housing demand, currency dynamics affecting Rest of World sales, and raw material costs as potential catalysts or headwinds.