Milwaukee-based A.O. Smith Corp. today announced first quarter earnings of $8.7 million, or 29 cents per share, down 60 percent from 2008 first quarter earnings of $21.9 million, or 72 cents per share.
The company' sales for the first quarter were $481.6 million, approximately 16 percent lower than first quarter 2008 sales of $571.4 million.
The slumping residential and commercial real estate markets have hurt A.O. Smith.
"The market trends we experienced in the fourth quarter carried over into the first quarter of this year," said the company's chairman and chief executive officer, Paul W. Jones. "The latest data indicate the housing contraction will be deeper and longer than last year, affecting a number of important electric motor market segments as well as our residential water heater market. In addition, the weakness in commercial construction that we saw materializing in the fourth quarter has continued into this year."
"Faced with inventory destocking during the prolonged recession and no sign of the normal seasonal inventory build in our selling channels, we are adjusting the company's earnings outlook for the year to $1.80 to $2.10 per share," Jones said.
"Despite the weak market conditions, the company's balance sheet remains strong, and our cash conservation programs are bearing results. In the first quarter, our cash flow from operations was $6.0 million, a $20.9 million swing from the $14.9 million cash used in last year's first quarter. We were able to accomplish this despite the fact that earnings were $13.2 million lower than a year ago."
"Our operating units have aggressively reduced costs in response to the global recession and have programs to decrease inventories worldwide, postpone or reduce capital expenditures, and reduce overall expenses," Jones continued. "I am confident the company will manage its way through these economic challenges, by maintaining substantial profitability and continuing to expand our new product development."
"Since the beginning of the year, we have significantly reduced our hourly and salaried workforce around the world. And we have and will continue to implement significant cost reduction programs."
A.O. Smith first quarter earnings down 60 percent
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