Executive Summary
A. O. Smith reported Q4 2024 revenue of $912.4 million, a year-over-year decline of 7.7%, with net income of $109.7 million and diluted earnings per share (EPS) of $0.75. The quarter featured a healthy gross margin of 37.06% but a compressing operating margin (16.9–17.1%), contributing to a 20% YoY drop in net income and a 19% YoY decline in EPS. Sequentially, revenue rose 1.1% QoQ to $912.4 million, while operating income declined modestly QoQ (-2.9%), reflecting ongoing cost discipline amid a softer top line. Cash generation remained robust, with net cash provided by operating activities of $221.9 million and free cash flow of $191.3 million. The company used discretionary cash for capital allocation, including $68.7 million in share repurchases and $49.5 million in dividends, while reducing debt slightly and maintaining a strong cash balance of $239.6 million at period end. Balance sheet positioning is solid, with net cash of approximately $22.9 million and an investment-grade profile indicated by modest leverage (total debt to capitalization around 10.8%). Management commentary is not available in the provided transcript, limiting incorporation of qualitative guidance or quotes in this report. Overall, the quarter reinforces A. O. Smith’s ability to generate durable cash flow and sustain a shareholder-friendly capital allocation framework even as the near-term revenue cycle faces macro headwinds in residential construction and housing markets.
Key Performance Indicators
QoQ: -2.86% | YoY:-13.85%
QoQ: -8.66% | YoY:-20.10%
QoQ: -9.64% | YoY:-19.35%
Key Insights
Revenue in Q4 2024: $912.4 million, down 7.66% YoY and up 1.09% QoQ. Gross profit: $338.1 million; gross margin 37.06% (YoY margin −0.53 percentage points). Operating income: $156.1 million; operating margin 17.11% (YoY and QoQ around −1 percentage point YoY/−0.8–0.9 ppts QoQ). Net income: $109.7 million; net margin 12.02% (YoY −20.1%, QoQ −8.7%). EPS: $0.75 (YoY −19.35%, QoQ −9.64%). EBITDA: $157.7 million; EBITDA margin ~17.28%. Operating cash flow: $221.9 million; free cash fl...
Financial Highlights
Revenue in Q4 2024: $912.4 million, down 7.66% YoY and up 1.09% QoQ. Gross profit: $338.1 million; gross margin 37.06% (YoY margin −0.53 percentage points). Operating income: $156.1 million; operating margin 17.11% (YoY and QoQ around −1 percentage point YoY/−0.8–0.9 ppts QoQ). Net income: $109.7 million; net margin 12.02% (YoY −20.1%, QoQ −8.7%). EPS: $0.75 (YoY −19.35%, QoQ −9.64%). EBITDA: $157.7 million; EBITDA margin ~17.28%. Operating cash flow: $221.9 million; free cash flow: $191.3 million. Balance sheet highlights include cash & cash equivalents of $239.6 million, total assets of $3.24 billion, and net debt of about −$22.9 million (net cash). Dividend payout ratio: 45.1%, dividend yield ~0.5%. Valuation metrics: Price-to-earnings ~22.5x, price-to-book ~5.25x, price-to-sales ~10.8x. Cash conversion cycle approximately 44.5 days, with a constructive cash flow profile and disciplined capital allocation. This set of metrics indicates a high-quality cash-generating operation with near-term topline headwinds but compelling optionality from cost controls and capital returns.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
912.40M |
-7.66% |
1.09% |
| Gross Profit |
338.10M |
-8.57% |
0.24% |
| Operating Income |
156.10M |
-13.85% |
-2.86% |
| Net Income |
109.70M |
-20.10% |
-8.66% |
| EPS |
0.75 |
-19.35% |
-9.64% |
Key Financial Ratios
operatingProfitMargin
17.1%
operatingCashFlowPerShare
$1.54
freeCashFlowPerShare
$1.33
dividendPayoutRatio
45.1%
Management Commentary
Notes: The earnings transcript data block is empty in the provided dataset. Consequently, no management quotes or interpretive themes from an earnings call can be cited. If a transcript or quotes are supplied, they can be incorporated here to enrich themes around strategy execution, market conditions, and guidance.
Forward Guidance
No formal forward guidance was included in the supplied data. Given the cash generation strength and ongoing capital allocation, potential catalysts for 2025 include continued execution on efficiency programs, selective price/mix actions to bolster margins, and strategic investments in Rest of World markets. Investors should monitor: (1) NA housing market demand and order flow for residential water heaters and boilers; (2) raw material and energy costs influencing gross margins; (3) the pace of share repurchases and dividend sustainability relative to capex needs; (4) currency and inflationary dynamics impacting international markets. In the absence of explicit guidance, the company’s ability to sustain free cash flow and modest leverage implies a constructive setup for capital returns if demand stabilizes.