A.O. Smith reports preliminary Q3 EPS 82c, consensus 95c

Reports preliminary Q3 revenue $903M, consensus $957.73M. “As discussed on our second quarter earnings call, we saw increasing consumer demand headwinds in July which led us to be cautious about the back half of the year in China. Those headwinds were more challenging than we expected through the third quarter and, as a result, our constant currency sales to third parties declined 17% compared to last year. In North America, residential and commercial water heater orders were lower than expected in the third quarter and while we anticipated a quarter-over-quarter decline, order demand was weaker than expected in both the wholesale and retail channels. We believe our order demand was impacted by a larger than expected price increase-related pre-buy in the first half of the year and was also negatively influenced by our improved lead times. However, we entered the third quarter with solid residential water heater backlogs, which drove July shipments and partially offset the weak third quarter orders,” noted Kevin Wheeler, chairman and chief executive officer. “While disappointed in the volumes in the quarter and the associated negative impact on our operational efficiencies, I’m pleased with our strong and stable customer relationships, our improved lead times and the actions that our teams initiated in response to market conditions.”