A. O. Smith announced its fourth quarter 2023 results.
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North America
2023 sales of $2,922.9 million improved 4% over 2022, primarily driven by strong demand for water heater products, which was partially offset by lower boiler volumes and pricing.
Segment earnings were $726.7 million and segment margin was 24.9% in 2023 compared to segment earnings of $266.0 million and segment margin of 9.4% in 2022.
The significant year-over-year increases in segment earnings and segment margin were primarily due to a 2022 pre-tax non-cash pension settlement expense of $346.8 million.
2023 adjusted segment earnings were $726.0 million and adjusted segment margin was 24.8%. 2022 adjusted segment earnings and adjusted segment margin were $611.0 million and 21.7%, respectively.
The higher adjusted segment earnings and adjusted segment margin in 2023 compared to 2022 were primarily driven by higher water heater volumes and lower material costs that were partially offset by higher selling, general and administrative expenses.
Fourth quarter sales of $738.0 million increased 7% compared to fourth quarter sales in the prior year as higher water heater volumes were partially offset by lower boiler sales.
Segment earnings were $169.0 million and segment margin was 22.9% in 2023 compared to segment losses of $187.5 million and segment margin of -27.1% in 2022.
The significant year-over-year increases in segment earnings and segment margin were primarily due to a 2022 pre-tax non-cash pension settlement expense of $346.8 million.
Fourth quarter 2023 adjusted segment earnings were $173.3 million and adjusted segment margin was 23.5%, compared to adjusted segment earnings of $161.2 million and adjusted segment margin of 23.3% in 2022.
The year-over-year increase in adjusted segment earnings and adjusted segment margin was primarily due to higher water heater volumes.
Rest of World
Rest of World sales of $956.9 million decreased 1% year-over-year, including an unfavorable currency translation impact of $44 million primarily related to sales in China. In local currency, segment sales increased by approximately 4% year-over-year.
The increase in local currency sales in 2023 was primarily driven by higher volumes in China, particularly of water treatment products and recently introduced kitchen products.
Sales in India increased 15% in local currency in 2023 due to strong demand for water heater and water treatment products.
Segment earnings were $83.4 million and segment margin was 8.7% in 2023 compared to segment earnings of $96.3 million and segment margin of 10.0% in the prior year. 2023 adjusted segment earnings and adjusted segment margin were $99.1 million and 10.4%, respectively.
The higher adjusted segment earnings and adjusted segment margin in 2023 compared to 2022 were primarily driven by higher sales in China.
Fourth Quarter 2023
Rest of World sales of $260.2 million increased 4% year-over-year, including an unfavorable currency translation impact of approximately $3 million related to sales in China.
The increase in sales in the fourth quarter of 2023 was primarily driven by sales of recently introduced products in China.
Sales in India increased 11% in local currency.
Segment earnings were $26.6 million and segment margin was 10.2% in the fourth quarter of 2023, compared to segment earnings of $31.6 million and segment margin of 12.7% in the same period of 2022.
Adjusted segment earnings and adjusted segment margin were $29.8 million and 11.5%, respectively, in the fourth quarter of 2023.
The lower adjusted segment earnings and adjusted segment margin compared to the prior year were primarily due to promotions and advertising supporting the launch of new kitchen products in China. ■