A.O. Smith Corporation (AOS) CEO Kevin Wheeler on Q1 2022 Results - Earnings Call Transcript

A.O. Smith Corporation (NYSE:AOS) Q1 2022 Earnings Conference Call April 28, 2022 10:00 AM ET

Company Participants

Helen Gurholt - VP, Financial Planning and Analysis

Kevin Wheeler - Chairman, President & CEO

Charles Lauber - EVP & CFO

Conference Call Participants

Matt Summerville - D.A. Davidson

Scott Graham - Loop Capital Markets

Susan Maklari - Goldman Sachs

Nathan Jones - Stifel

Andy Kaplowitz - Citigroup

Damian Karas - UBS

David MacGregor - Longbow Research

Operator

Good day and thank you for standing by. Welcome to the First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to Helen Gurholt. Ma'am, please go ahead.

Helen Gurholt

Thank you, Catherine. Good morning and welcome to the A.O. Smith first 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; Chuck Lauber, Chief Financial Officer. In order to provide improved transparency to our operating results, we provide non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures.

We will be using slides as we move through today's call. You can access them on our website at investor.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. Thank you for joining us today. I'm on Slide Four and our first quarter results. Our team performed extremely well throughout the quarter, despite a turbulent macro environment and delivered strong sales and EPS performance. First quarter sales improved 27% year-over-year driven by our 2021 inflation related price increases and acquisition of giant factories like late year in international volume growth.

Excluding acquisitions, first quarter sale grew 23%. Our Rest of World segment performance was strong with margins improvement over 440 basis point year-over-year, driven by China improving its operating margins to over 11%. We delivered strong results despite supply chain challenges and component shortages throughout the quarter. Weather challenges and Omicron related labor constraints impacted our North American production in the first half of the quarter.