Friday, A.O. Smith Corp. (AOS), a manufacturer and seller of water heating equipment and electric motors, reported an increase in earnings for the third quarter, which topped analysts' forecast, helped by strong growth in China, aggressive cost cutting initiatives, and a temporary decline in raw material costs. The company also lifted its earnings outlook for 2009.
Net income for the quarter surged to $34.6 million from $5.8 million in the same period last year. Earnings per share advanced to $1.14 from $0.61 per share in the corresponding period last year. Average common share outstanding rose to 30.4 million from 9.48 million a year-earlier.
Net earnings for the quarter included $3 million non-taxable net gain associated with the sale of a motor manufacturing plant in Shenzhen, China, and a $1.5 million tax benefit related to closure of the 2005 and 2006 federal income tax returns. These one-time items added $0.15 per share to third quarter results.
On average, six analysts polled by Thomson Financial expected the company to report earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales declined 17% to $501.5 million from $603 million in the year-ago quarter, impacted by the effect of the U.S. Housing marker slow-down and reduced commercial construction activity. Three Street analysts expected the company to report sales of $508.60 million for the quarter.
Water Products segment third quarter sales were $336.7 million, down about 10% compared to the same period last year. Electrical Products segment third quarter sales declined about 29% to $165.9 million compared with the same period one year ago.
For the nine-month period, net earnings declined to $66.9 million or $2.69 per share from $72.9 million or $2.29 per share in the corresponding period last year. Net sales declined to $1.48 billion from $1.8 billion in the same period last year.
Looking ahead, for 2009 the company boosted its earnings forecast to a range of $2.95 - $3.10 per share on a GAAP basis and $2.60 and $2.75 per share on a non-GAAP basis. Earlier, the company expected GAAP earnings in the range of $2.15 - $2.35 per share and non-GAAP earnings between $2.05 and $2.25 per share. Currently, analysts expect the company to earn $2.33 per share for 2009.
In addition, the company said for the twelve-month period it expects to generate between $190 million and $200 million in operating cash flow compared to $107 million last year.
"We remain concerned about the economic recovery, particularly in the housing and commercial construction markets, and by significant increases in raw material costs in the last few months," Paul Jones, chairman and chief executive cautioned. "These factors will continue to present challenges to our operating units as we conclude the year."
AOS closed Thursday's regular trading at $43.56.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.