Water technology company A. O. Smith announced record sales and earnings from continuing operations for 2012.
Sales from continuing operations for 2012 totaled $1.94 billion, up 13% from $1.71 billion recorded in 2011. The Lochinvar business, acquired in August 2011, added $225.7 million to sales compared with $75.9 million in 2011, and sales of A. O. Smith branded products in China grew 20% to about $448 million for the year.
Earnings from continuing operations for 2012 of $162.6 million included an after-tax gain of $16.8 million related to the sale of shares of Regal Beloit Corp., which were received from the 2011 divestiture of the electric motor business. Earnings also included an after-tax gain of $2.9 million related to a settlement with a component supplier in Canada and an after-tax gain of $2.0 million from revisions to the company’s estimate of the Lochinvar earn-out. Earnings from continuing operations for 2011 were $111.2 million.
In the fourth quarter of 2012, the company earned $43.2 million from continuing operations on sales of $524.3 million. Earnings from continuing operations for the same three-month period in 2011 were $31.5 million on sales of $475.8 million.
“With a strong fourth quarter and solid performance for the full year, the A. O. Smith team did an excellent job again in 2012 driving the company to achieve record sales and net earnings,” said Ajita Rajendra, president and CEO. “We are very pleased with Lochinvar’s performance, and our China business’ growth was more than two and one-half times that country’s GDP growth last year. Although our North American new construction business continued to be affected by the slow economic recovery, we were able to take advantage of our strength in the replacement portion of the water heater and boiler markets.”
Full-year sales for the North America segment, which includes the United States and Canadian water heaters and boilers, were $1.43 billion, an 11% increase over 2011 sales of $1.29 billion. Fourth quarter sales for the North American segment increased 6% over the prior year’s fourth quarter to $375.9 million.
Sales for the rest of the world, which includes China, India and Europe, increased 19% in 2012 to $542.5 million. Sales of A. O. Smith branded products in China grew more than 20% to about $448 million.
“Our pipeline of possible acquisition candidates remains active,” said Paul Jones, executive chairman. “We continue to pursue water heating and water-related investments all over the world, but we will remain selective and only make acquisitions that we believe will increase shareholder value. With more than $400 million in cash and a meaningful amount of incremental borrowing capacity, we are confident we have the resources available to take advantage of global opportunities that add long-term value.”