A. O. Smith reports record 2012 sales and earnings
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.”
Existing-home sales slip in December
Total existing-home sales declined 1.0% to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million in November, according to the National Association of Realtors. They are 12.8% above the 4.38 million-unit level in December 2011.
The preliminary annual total for existing-home sales in 2012 was 4.65 million, up 9.2% from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million.
"Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," said Lawrence Yun, NAR chief economist. "The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013."
Total housing inventory at the end of December fell 8.5% to 1.82 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace, down from 4.8 months in November.
Regionally, existing-home sales in the Northeast rose 3.2% to an annual rate of 640,000 in December and are 10.3% above December 2011. Existing-home sales in the Midwest fell 5.9% in December to a pace of 1.12 million but are 15.5% higher than a year ago. In the South, existing-home sales declined 3.0% to an annual level of 1.95 million in December but are 14.7% above December 2011. Existing-home sales in the West rose 5.1% to a pace of 1.23 million in December and are 8.8% higher than a year ago.
Lowe’s meets demand with seasonal hires
Lowe’s is gearing up for increased demand this spring, by hiring approximately 45,000 seasonal employees at its stores in the United States. The company will also add 9,000 permanent part-time employees.
Seasonal jobs available are focused on customer support and include cashiers, lawn and garden specialists, loaders, and stockers. The number of hours worked per week will vary based on the needs of individual stores, but, on average, seasonal employees could work an estimated 20 to 25 hours per week.
The permanent part-time positions include store associates focused on direct interaction and expertise for customers. Employees in the permanent positions will be scheduled to work during peak weekday shopping times.
“We are focused on providing customers with outstanding service,” said Scott Purvis, VP human resources, operations. “We are looking for candidates who are experienced in any of the home improvement trades, and, most importantly, those who are committed to providing Lowe’s customers an exceptional service experience.”