A O Smith Corporation (AOS) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 27, 2023 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the A. O. Smith Corporation Q2 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. Please be advised that today's conference is being recorded. Without further ado, I'll hand the conference over to your first speaker, Helen Gurholt. Helen, please go ahead.

Helen Gurholt

Thank you, Eric, and good morning, everyone, and welcome to the A.O. Smith Second Quarter Conference Call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer; and Chuck Lauber, Chief Financial Officer.

In order to provide improved transparency into the operating results of our business, we provide non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures, adjusted earnings, adjusted earnings per share, adjusted segment earnings and adjusted corporate expenses exclude the impact of impairment charges nonoperating noncash pension income and expenses as well as legal judgment income and terminated acquisition-related expenses. We also provide total segment earnings. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website.

A friendly reminder that some of our comments and answers during this conference call will be forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include matters that we described in this morning's press release, among others. Also, as a courtesy to others in the question queue, please limit yourself to 1 question and 1 follow-up per turn. If you have multiple questions, please rejoin the queue. We will be using slides as we move through today's call. You can access them on our website at investors.aosmith.com.

I will now turn the call over to Kevin to begin our prepared remarks. Please turn to the next slide.

Kevin Wheeler

Thank you, Helen, and good morning, everyone. I'm on Slide 4, and we'll review a few highlights of our second quarter results. Our team delivered record adjusted EPS of $1.01 in the second quarter, driven by strong performance in our operating segment. We saw margin expansion in our North America segment, primarily due to a more favorable price cost relationship as well as robust demand for our commercial and residential water heaters. Our Rest of World segment delivered improved performance in the second quarter even as headwinds in the economy and currency exchange continue in China. Both China and India delivered sales growth of 15% local currency in the second quarter.