Water technology company A. O. Smith Corp. reported third-quarter earnings from continuing operations of $37.0 million, up 38% from $26.9 million in the prior-year third quarter.
Sales for the three-month period ended Sept. 30 were $462.2 million, up 12% from third-quarter 2011 sales of $412.0 million, driven by incremental Lochinvar sales and strong organic growth in China.
The company’s third-quarter performance included a full quarter of Lochinvar’s results, which was acquired in late August last year, as well as a non-cash, pre-tax gain of $6.4 million from a change to the company’s estimate of the Lochinvar earn-out, which is based on revenue targets.
“The factors that have been influencing our business throughout 2012 continued during the third quarter,” said chairman and CEO Paul Jones. “Our A. O. Smith-branded sales in China grew over 20% in the quarter, driven by new distribution, market share gains and new products, despite the slowdown in that country’s economy.
“The Lochinvar acquisition continues to meet the high end of our profit expectations,” he added. “Lochinvar’s new line of CREST ® high-efficiency, higher BTU input condensing boilers, which was introduced last year, has received excellent market acceptance; and we plan to launch new, larger input models of this product later this year.”
Third-quarter sales of the North America segment, which includes U. S. and Canadian water heaters and boilers, increased to $335.7 million compared with third-quarter 2011 sales of $310.2 million.
Operating earnings from the segment of $50.7 million included a gain of $6.4 million related to the adjustment to the company’s estimate of the Lochinvar earn-out, compared with $30.9 million earned during the third quarter of 2011.
Third-quarter sales from the rest of the world, which includes China, India and Europe, increased more than $23 million to $133.8 million compared with sales of $110.5 million in the third quarter of 2011.