Water heater and motor manufacturer A. O. Smith Corporation announced first-quarter earnings of U.S. $10.8 million or $0.36 per share compared with first quarter 2003 earnings of $13.7 million or $0.46 per share.
Revenues for the quarter ended March 31 increased approximately seven percent to $416.5 million when compared with revenues of $387.9 million for the same period last year.
"Both of our operating units were faced with higher-than-expected cost increases, particularly for steel," Robert J. O'Toole, chairman and CEO, said in a statement. "In addition, our Water Systems unit experienced manufacturing inefficiencies, logistics cost increases, and an adjustment to inventory that were caused by multiple conversion programs," he continued.
Mr. O'Toole noted that the company has announced price increases to help offset the higher steel costs, but said that the price increases will not have an impact until the latter half of the second quarter.
"We will continue to closely monitor steel and other costs and initiate appropriate pricing actions as necessary," he said.
Electric motor sales were $223.6 million in the first quarter, about 5 percent higher than in the first quarter of 2003. Sales increased in all served markets except heating, ventilation, and air-conditioning (HVAC), which declined 5 percent due to the loss of a sales contract by an OEM customer.
Water Systems first-quarter sales of $192.9 million were 10 percent higher than sales in the first quarter of 2003. Improved revenue for residential water heaters was due to the launch of new products to address regulatory standards changes and higher sales in China contributed to the sales increase, the company said.
Mr. O'Toole said the company expects second-quarter earnings to range between $0.50 and $0.54 per share compared with the $0.67 per share earned in the second quarter of last year. As a result of lower first-quarter earnings and the decrease in the second-quarter estimate, the company earlier this month lowered its full-year forecast to between $1.90 and $2.00 per share.
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