A.O. Smith Corporation

This speaker's presentation will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Helen Gorholt. Please go ahead.

Thank you, Marvin. Good morning, and welcome to the A.O. Smith Second Quarter Conference Call. I'm Helen Gerholtz, 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 plus capital expenditures, adjusted earnings, adjusted earnings per share, Adjusted segment earnings and adjusted corporate expenses exclude the impact of pension settlement income and restructuring and impairment expenses. 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 risk 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 one question and one 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 investor.aosmith.com. I will now turn the call over to Kevin to begin our prepared remarks.

Thank you, Helen, and good morning, everyone. I'm on slide four and our second quarter results. I'm very pleased with our second quarter performance and how we are tracking for the year. In the second quarter, our global A.O. Smith team delivered record quarterly sales of $1 billion and an EPS of $1.06, a 5% increase over 2023 adjusted EPS. North American water heater and boiler sales increased 10% due to higher volumes and pricing action. China third-party sales grew 2% in local currency. India achieved double-digit growth in local currency for the 10th consecutive quarter. And last week, we announced that we signed an agreement to acquire PURIT, a leading water purification business in South Asia. We look forward to welcoming the PURIT team to the A.O. Smith family later this year. Please turn to slide five. North America water heater sales grew 10% in the second quarter due to higher residential and commercial volumes and pricing actions. We began shipping our internally developed and manufactured gas tankless products in the quarter, and we are very pleased with market acceptance. Our North American boiler sales grew 10% compared to the second quarter of last year, driven by higher commercial volumes. I am pleased to see a return to growth as channel inventory levels normalized We are on track to achieve our boiler sales forecast of 8% to 10% for the year. Sales of our commercial boilers, particularly our Crest boilers with Hellcat technology, continue to outperform the market. North America water treatment sales increased 8% in 2024 as acquisition-related dealer sales increases were partially offset by weakness in the retail channel. In China, second quarter third-party sales increased 2% in local currency, as a result of sales of kitchen products as well as HVAC products that were partially offset by lower volumes of residential water treatment. While markets for our core products remain challenged, we are pleased with our market share in the premium portion of the water heater and water treatment product categories. However, we have seen pricing and promotion pressures, particularly in the mid-price sector of the market. I'm now on slide six. This year, we are celebrating our 150th anniversary. It's a time to reflect on those 150 years of living our values, of achieving profitable growth, emphasizing innovation, preserving our good name, being a good place to work, and being a good citizen. It is also gratifying to be recognized for the continuation of those values. So far in 2024, our team has received several honors that reflect our employees' dedication to our core values. Early this year, AO Smith was named one of the world's most ethical companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices. In addition, our commitment to innovation and energy management has resulted in our Nanjing China plant being selected as one of the 2024 Nanjing Environment Protection Model Enterprises in recognition of our waste and emission reduction efforts. We also received a 2024 Energy Star Sustained Excellence Partner of the Year Award from the EPA for the sixth year in a row for our long-term commitment to energy management through our products. In addition, we were named 2024 U.S. News Best Companies to Work For in Manufacturing by U.S. News & World Report. While the reward is the satisfaction our team receives for doing the right thing and living our values, These honors validate our values as a differentiator for our employees and stakeholders. I'll now turn the call over to Chuck, who will provide more details on our second quarter performance.