A O Smith Stock Surges On Q3 Beat, Stellar Outlook

A O Smith Corp AOS reported third-quarter net sales growth of 20% year-over-year to $914.6 million, beating the consensus of $852.25 million.
North America segment sales rose 21% to $658.2 million, driven by price increases, mainly on water heaters, along with higher volumes of water heaters, boilers, and water treatment products.
Rest of World segment sales totaled $263.1 million (+19% Y/Y), with ~55% of the increase driven by constant currency growth in China.
EPS improved 26% Y/Y to $0.82, beating the consensus of $0.68.
The gross margin contracted 189 bps to 37.2%.
A O Smith generated cash from operating activities year-to-date of $376.8 million, compared to $330.4 million a year ago. Free cash flow of $331.5 million.
It held cash and equivalents of $685.2 million with total debt of $106.4 million, resulting in a leverage ratio of 5.3%.
FY21 Outlook: A O Smith expects net sales of $3.474 billion - $3.503 billion, above the consensus of $3.41 billion.
EPS of $2.86 - $2.90 (prior expectation $2.70 - $2.76), above the consensus of $2.76.
Price Action: AOS shares are trading higher by 9.97% at $70.65 on the last check Thursday.

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