Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - SMITH A O CORP | d8k.htm |
| EX-99.1 - NEWS RELEASE OF A. O. SMITH CORPORATION, DATED DECEMBER 13, 2010 - SMITH A O CORP | dex991.htm |
 Repositioning for Global Growth
Exhibit 99.2 |
 This presentation contains
statements that we believe are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements generally can be identified
by the use of words such as “may,” “will,” “expect,”
“intend,” “estimate,” “anticipate,” “believe,”
“continue,” “guidance”, or words of similar meaning. These forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially from those
anticipated as of the date of this release. Actual results may differ materially
from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from
these expectations include, among other things, the following: the failure to receive, on a
timely basis or otherwise, the required approvals from government or regulatory agencies
(including the terms of such approvals); and the risk that a condition to closing of the sale may not be satisfied.
Factors that could cause such a variance include the following: significant volatility in
raw material prices; competitive pressures on the company’s businesses; inability
to implement pricing actions; negative impact of future pension contributions on the company’s cash flow; instability in the
company’s electric motor and water products markets; further weakening in housing
construction; further weakening in commercial construction; timing of any recoveries in
housing or commercial construction; a slowdown in the Chinese economy; further adverse changes in customer liquidity
and general economic and capital market conditions; the impact of acquisition accounting or
Non-GAAP financial measures on the company’s financial statements; difficulties
integrating the water treatment acquisition or the North American tankless water heater joint venture; difficulties in
realizing future growth and profit expectations for the water treatment acquisition or the
North American tankless water heater venture and potential negative impacts on the
company that the flooding of its Ashland City, Tenn., water heater manufacturing plant may have.
Forward-looking statements included in this press release are made only as of the date of
this presentation, and the company is under no obligation to update these statements to
reflect subsequent events or circumstances. All subsequent written and oral forward-looking
statements attributed to the company, or persons acting on its behalf, are qualified entirely
by these cautionary statements. This presentation contains certain non-GAAP
financial measures as that term is defined by the SEC. Non-GAAP financial measures are generally identified by
“Adjusted” (Adj.), “Non-GAAP” or “Before
Restructuring”.
Forward Looking Statements |
 Two
– Step Transformation
Step 1: Sale of Electric Motor Business to Regal Beloit
Step 2: Build a Globally Diversified Company |
 Why
Sell? Why Now? •
Motor industry continues to consolidate manifesting in
several interested global buyers presenting compelling
offers
•
Remaking of profitable motor business complete
•
Regal Beloit and A. O. Smith motor combination
provides scale and new energy efficient technologies
to succeed in globally competitive industry
•
Proceeds fund company transformation through high-
growth, high-margin acquisitions |
 Step
1:
Sale
of
Motor
Segment
to
Regal
Beloit |
 Transaction Highlights
Regal Beloit made the best offer for our shareholders,
customers and employees in a competitive bid process
with several contenders
•
Total consideration: $875 million ($700 million in cash
and approximately $175 million in stock)
•
Over 8 times 2010E EBITDA
•
Approved by both boards of directors
•
Closing expected in first half of 2011 |
 AOS
Motor Segment •
$690 million in revenue (2010 E)
•
End markets based on 2009 revenue:
•
7,800 employees
•
20 manufacturing plants
•
Headquarters in Tipp City, OH
China/Asia
9%
General
Industries
10%
Distribution
23%
Pump
16%
HVAC&R
17%
Hermetic
25% |
 Use
of Proceeds Cash Proceeds
Pay down Debt
Taxes
Cash Remaining
Stock Consideration (approximately)
$ 700 million
$(145) million
$(165) million
$ 390 million
$ 175 million |
 Step
2:
Build
a
Globally
Diversified
Company |
 Acquisition Strategy: Leverage Core
Competencies
•
Acquisitions will achieve ROIC hurdle within two years
World class global manufacturing and
engineering platform
Leading distribution relationships in North
America and Asia
Premium brand equity in Asia |
 Mega Trend One |
 Mega Trend Two |
 Mega Trend Three
Average Annual Forecasted 2010 –
2015 GDP Growth
Source: US EIA website, International Monetary Fund, World Economic
Outlook Database, October 2010
3.3%
4.0%
4.2%
4.3%
4.4%
4.5%
4.5%
4.7%
8.4%
9.7%
Australia
Poland
Russia
Saudi Arabia
Mexico
Korea
Turkey
Brazil
India
China |
 Answers to your Questions |