AO Smith's 3Q profit soars, boosts outlook

AO Smith's 3rd-qtr profit soars, shares jump and company boosts its 2009 outlook

• On 8:46 am EDT, Friday October 16, 2009

MILWAUKEE (AP) -- A.O. Smith Corp., which makes water heaters and electric motors, said Friday its third-quarter earnings soared as cost cutting, cheaper raw materials and a pair of unusual gains offset declining overall sales.

The company also raised its 2009 earnings outlook, and shares rose sharply in premarket trading.

Net income for the three months ended in September surged to $34.6 million, or $1.14 per share, from $5.8 million, or 61 cents per share, a year earlier.

Excluding one-time gains, the company earned 99 cents per share. The gains included $3 million associated with the sale of a motor manufacturing plant in Shenzhen, China, and a $1.5 million tax benefit related to 2005 and 2006 federal income tax returns.

Analysts polled by Thomson Reuters expected, on average, earnings per share of 69 cents. Such expectations typically exclude one-time gains and charges.

Sales fell to $501.5 million from $602.7 million. Analysts expected revenue of $503.6 million.

The cost of products sold declined to $363 million from $479.1 million, and CEO Paul Jones said the company's expense reduction programs "are having the desired impact on our financial performance."

It raised its estimate of 2009 earnings per share to between $2.60 and $2.75, excluding one-time charges and gains. Analysts expect, on average, earnings of $2.33 per share.

Shares jumped $2.44, or 5.6 percent, to $46. In the last 52 weeks the stock has ranged from $20.95 to $43.66.

Buzz up!