Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 26, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-475 | |
Entity Registrant Name | A. O. Smith Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 39-0619790 | |
Entity Address, Address Line One | 11270 West Park Place | |
Entity Address, City or Town | Milwaukee | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53224-9508 | |
City Area Code | 414 | |
Local Phone Number | 359-4000 | |
Title of 12(b) Security | Common Stock (par value $1.00 per share) | |
Trading Symbol | AOS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Entity Central Index Key | 0000091142 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 25,903,736 | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 124,537,812 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 966.4 | $ 977.7 |
Cost of products sold | 592.3 | 636.1 |
Gross profit | 374.1 | 341.6 |
Selling, general and administrative expenses | 187.2 | 179.8 |
Impairment expense | 15.6 | 0 |
Interest expense | 4 | 1.5 |
Other (income) expense, net | (4) | 3.7 |
Earnings before provision for income taxes | 171.3 | 156.6 |
Provision for income taxes | 44.4 | 36.8 |
Net Earnings | $ 126.9 | $ 119.8 |
Basic Net Earnings Per Share of Common Stock (in USD per share) | $ 0.84 | $ 0.76 |
Diluted Net Earnings Per Share of Common Stock (in USD per share) | 0.84 | 0.76 |
Dividends Per Share of Common Stock (in USD per share) | $ 0.30 | $ 0.28 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 126.9 | $ 119.8 |
Other comprehensive earnings (loss) | ||
Foreign currency translation adjustments | 2.5 | 0.6 |
Unrealized losses on cash flow derivative instruments, less related income tax benefit of $0.0 in 2023 and $0.2 in 2022 | (0.1) | (0.6) |
Adjustment to pension liability, less related income tax provision of zero in 2023 and $(1.2) in 2022 | 0 | 3.8 |
Comprehensive Earnings | $ 129.3 | $ 123.6 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Income tax benefit on cash flow derivative instruments | $ 0 | $ 0.2 |
Income tax provision on adjustment to pension liability | $ 0 | $ (1.2) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 406.2 | $ 391.2 |
Marketable securities | 89.8 | 90.6 |
Receivables | 586.8 | 581.2 |
Inventories | 503.7 | 516.4 |
Other current assets | 57.3 | 54.3 |
Total Current Assets | 1,643.8 | 1,633.7 |
Property, plant and equipment | 1,375.9 | 1,364.8 |
Less accumulated depreciation | (790.4) | (774.1) |
Net property, plant and equipment | 585.5 | 590.7 |
Goodwill | 619.9 | 619.7 |
Other intangibles | 344.8 | 347.9 |
Operating lease assets | 32.3 | 29.8 |
Other assets | 110 | 110.5 |
Total Assets | 3,336.3 | 3,332.3 |
Current Liabilities | ||
Trade payables | 550.4 | 625.8 |
Accrued payroll and benefits | 59.9 | 75.7 |
Accrued liabilities | 213.6 | 159.1 |
Product warranties | 61.8 | 63.6 |
Debt due within one year | 10 | 10 |
Total Current Liabilities | 895.7 | 934.2 |
Long-term debt | 330.8 | 334.5 |
Product warranties | 119.4 | 118.9 |
Long-term operating lease liabilities | 25.1 | 22.4 |
Other liabilities | 175.1 | 174.6 |
Total Liabilities | 1,546.1 | 1,584.6 |
Stockholders’ Equity | ||
Capital in excess of par value | 564.3 | 555.9 |
Retained earnings | 2,966.5 | 2,885 |
Accumulated other comprehensive loss | (80) | (82.4) |
Treasury stock at cost | (1,955.5) | (1,905.7) |
Total Stockholders’ Equity | 1,790.2 | 1,747.7 |
Total Liabilities and Stockholders’ Equity | 3,336.3 | 3,332.3 |
Class A Common Stock | ||
Stockholders’ Equity | ||
Common Stock, value | 130.2 | 130.2 |
Common Stock | ||
Stockholders’ Equity | ||
Common Stock, value | $ 164.7 | $ 164.7 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class A Common Stock | ||
Common Stock, shares issued (in shares) | 26,034,116 | 26,035,656 |
Common Stock | ||
Common Stock, shares issued (in shares) | 164,673,478 | 164,671,938 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating Activities | ||
Net earnings | $ 126.9 | $ 119.8 |
Adjustments to reconcile net earnings to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 19.2 | 20.3 |
Stock based compensation expense | 7 | 7.6 |
Non-cash impairment | 15.6 | 0 |
Net changes in operating assets and liabilities: | ||
Current assets and liabilities | (50.6) | (137.8) |
Noncurrent assets and liabilities | 1.8 | 6.6 |
Cash Provided by Operating Activities | 119.9 | 16.5 |
Investing Activities | ||
Capital expenditures | (10.7) | (12.9) |
Investments in marketable securities | (14.7) | (16.9) |
Net proceeds from sale of marketable securities | 15.6 | 31.9 |
Cash (Used in) Provided by Investing Activities | (9.8) | 2.1 |
Financing Activities | ||
Long-term debt repaid | (3.7) | |
Long-term debt incurred | 98.7 | |
Common stock repurchases | (53.1) | (107.9) |
Net proceeds (payments) from stock option activity | 4.7 | (2.7) |
Dividends paid | (45.4) | (44.2) |
Cash Used in Financing Activities | (97.5) | (56.1) |
Effect of exchange rate changes on cash and cash equivalents | 2.4 | 0 |
Net increase (decrease) in cash and cash equivalents | 15 | (37.5) |
Cash and cash equivalents - beginning of period | 391.2 | 443.3 |
Cash and Cash Equivalents - End of Period | $ 406.2 | $ 405.8 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock Class A Common Stock | Common Stock Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock |
Balance at the beginning of period at Dec. 31, 2021 | $ 130.5 | $ 164.7 | $ 545.2 | $ 2,826.6 | $ (1,503.4) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Class A Common Stock | 0 | 0 | |||||
Issuance of share units | (5.8) | ||||||
Vesting of share units | (2.4) | 2.4 | |||||
Stock based compensation expense | 7.7 | ||||||
Exercise of stock options | 0.4 | (2.9) | |||||
Issuance of share based compensation | 5.8 | ||||||
Net earnings | $ 119.8 | 119.8 | |||||
Dividends on stock | (44.2) | ||||||
Shares repurchased | (107.9) | ||||||
Balance at end of period at Mar. 31, 2022 | 1,808.9 | 130.5 | 164.7 | 550.9 | 2,902.2 | $ (327.6) | (1,611.8) |
Balance at the beginning of period at Dec. 31, 2022 | 1,747.7 | 130.2 | 164.7 | 555.9 | 2,885 | (1,905.7) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of Class A Common Stock | 0 | 0 | |||||
Issuance of share units | (10.1) | ||||||
Vesting of share units | (3.1) | 3.1 | |||||
Stock based compensation expense | 6.8 | ||||||
Exercise of stock options | 4.7 | 0.2 | |||||
Issuance of share based compensation | 10.1 | ||||||
Net earnings | 126.9 | 126.9 | |||||
Dividends on stock | (45.4) | ||||||
Shares repurchased | (53.1) | ||||||
Balance at end of period at Mar. 31, 2023 | $ 1,790.2 | $ 130.2 | $ 164.7 | $ 564.3 | $ 2,966.5 | $ (80) | $ (1,955.5) |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results expected for the full year. It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 14, 2023. Recent Accounting Pronouncements No recent accounting pronouncements are expected to have an impact on our condensed consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. Each unit sold is considered an independent, unbundled performance obligation. The Company’s sales arrangements do not include other performance obligations that are material in the context of the contract. The nature, timing and amount of revenue for a respective performance obligation are consistent for each customer. The Company measures the sales transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Sales and value added taxes are excluded from the measurement of the transaction price. The Company’s payment terms for the majority of its customers are 30 to 90 days from shipment. Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $70.3 million and $85.7 million at March 31, 2023 and December 31, 2022, respectively. Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt. The Company assesses the collectability of customer receivables based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history. In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs. In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables. The Company’s allowance for credit losses was $10.2 million at March 31, 2023 and $9.5 million at December 31, 2022. Rebates and incentives are based on pricing agreements and are tied to sales volume. The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and are based on program specific factors such as expected rebate percentages based on expected volumes. In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience. Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold and are activities performed to fulfill the promise to transfer products. Disaggregation of Net Sales The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, heat pump and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channels regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment. The North America segment's major product lines are defined as the following: Water heaters The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 1,000 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products. Boilers The Company’s boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The Company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums. The Company’s boiler distribution channel is comprised primarily of manufacturer representative firms, with the remainder of its boilers distributed through wholesale channels. The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction. Water treatment products The Company’s water treatment products range from point-of-entry water softeners, solutions for problem well water, and whole-home water filtration products to on-the-go filtration bottles and point-of-use carbon and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. The Company sells water treatment products through its retail and wholesale distribution channels, similar to water heater products and related parts. The Company’s water treatment products are also sold through independent water quality dealers as well as directly to consumers including through e-commerce sales channels. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters. The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World: (dollars in millions) Three Months Ended 2023 2022 North America Water heaters and related parts $ 637.3 $ 615.8 Boilers and related parts 58.4 57.5 Water treatment products 57.0 56.8 Total North America 752.7 730.1 Rest of World China $ 190.2 $ 228.3 All other Rest of World 28.9 27.7 Total Rest of World 219.1 256.0 Inter-segment sales (5.4) (8.4) Total Net Sales $ 966.4 $ 977.7 |
Impairment Expense
Impairment Expense | 3 Months Ended |
Mar. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Impairment Expense | Impairment Expense In the first quarter of 2023, the Company entered into negotiations to sell its business in Turkey (disposal group), which is included in the Company's Rest of World segment. The Company determined that the fair value of the disposal group, less cost to sell, was lower than its carrying amount. As a result, in the first quarter of 2023, the Company recorded an impairment expense of $15.6 million of which $12.5 million was recorded in the Rest of World segment and $3.1 million was recorded in Corporate Expense. The impairment was recorded as a net reduction of $4.5 million to the assets and liabilities and $11.1 million for the anticipated liquidation of the cumulative foreign currency translation adjustment associated with the disposal group. The accrual for the impairment is recorded in Accrued liabilities in the condensed consolidated balance sheet. As of March 31, 2023, the disposal group did not meet the requirements to be classified as discontinued operations as the sale will not have a material effect on the Company's operations and does not represent a shift in the Company's strategy. Accordingly, the remaining carrying value of the disposal group as of March 31, 2023, was $0.6 million and classified as held for sale. The sale of the disposal group was completed in April 2023. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company’s lease portfolio consists of operating leases for buildings and equipment, such as forklifts and copiers, primarily in the United States and China. The Company defines a lease as a contract that gives the Company the right to control the use of a physical asset for a stated term. The Company pays the lessor for that right, with a series of payments defined in the contract and a corresponding right of use operating lease asset and liability are recorded. The Company has elected not to record leases with an initial term of 12 months or less on its condensed consolidated balance sheet. To determine balance sheet amounts, required legal payments are discounted using the Company’s incremental borrowing rate as of the inception of the lease. The incremental borrowing rate is the rate of interest that the Company would incur if it were to borrow, on a collateralized basis, an amount equal to the value of the leased item over a similar term, in a similar economic environment. Variable lease components not based on an index or rate are excluded from the measurement of the lease asset and liability and expensed as incurred for all asset classes. Certain leases include one or more options to renew or terminate. Renewal terms can extend the lease term from one Supplemental balance sheet information related to leases is as follows: (dollars in millions) March 31, December 31, 2022 Liabilities Short term: Accrued liabilities $ 9.4 $ 9.9 Long term: Operating lease liabilities 25.1 22.4 Total operating lease liabilities $ 34.5 $ 32.3 Less: Rent incentives and deferrals (2.2) (2.5) Assets Operating lease assets $ 32.3 $ 29.8 Lease Term and Discount Rate March 31, 2023 Weighted-average remaining lease term 7.4 years Weighted-average discount rate 3.71 % The components of lease expense were as follows: (dollars in millions) Three months ended Lease Expense Classification 2023 (1) 2022 (2) Operating lease expense Cost of products sold $ 1.3 $ 1.0 Selling, general and administrative expenses 4.1 3.9 (1) 2023 includes short-term and variable lease expenses of $1.1 million and $1.2 million, respectively. (2) 2022 includes short-term and variable lease expenses of $0.5 million and $0.8 million, respectively. Maturities of lease liabilities were as follows: (dollars in millions) March 31, 2023 $ 8.1 2024 8.2 2025 5.8 2026 4.0 2027 2.4 After 2027 11.7 Total lease payments 40.2 Less: Imputed interest (5.7) Present value of operating lease liabilities $ 34.5 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The following table presents the components of the Company’s inventory balances: (dollars in millions) March 31, December 31, 2022 Finished products $ 175.5 $ 174.4 Work in process 44.4 42.1 Raw materials 331.0 349.2 Inventories, at FIFO cost 550.9 565.7 LIFO reserve (47.2) (49.3) Inventories, at LIFO cost $ 503.7 $ 516.4 |
Product Warranties
Product Warranties | 3 Months Ended |
Mar. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Product Warranties | Product Warranties The Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims. The following table presents the Company’s warranty liability activity: (dollars in millions) Three Months Ended 2023 2022 Balance at January 1, $ 182.5 $ 184.4 Expense 18.4 13.9 Claims settled (19.7) (15.4) Balance at March 31, $ 181.2 $ 182.9 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | DebtIn 2021, the Company renewed and amended its $500 million multi-year multi-currency revolving credit agreement with a new expiration date of April 1, 2026. The facility has an accordion provision that allows it to be increased up to $850 million if certain conditions (including lender approval) are satisfied. Borrowings under the Company's bank credit lines and commercial paper borrowings are supported by a $500 million revolving credit agreement. As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at March 31, 2023. At its option, the Company either maintains cash balances or pays fees for bank credit and services. The facility requires the Company to maintain two financial covenants, a leverage ratio test and an interest coverage test. The Company was in compliance with the covenants as of March 31, 2023. |
Earnings per Share of Common St
Earnings per Share of Common Stock | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per Share of Common Stock | Earnings per Share of Common Stock The numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations: Three Months Ended 2023 2022 Denominator for basic earnings per share - weighted average shares 150,897,302 157,018,566 Effect of dilutive stock options and share units 1,003,545 1,299,133 Denominator for diluted earnings per share 151,900,847 158,317,699 |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007. The Incentive Plan was most recently reapproved by stockholders on April 15, 2020. The Incentive Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of share units at March 31, 2023 was 2,491,654. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation expense recognized in the three months ended March 31, 2023 and 2022 was $7.0 million and $7.6 million, respectively. Stock Options The Company decided to no longer grant stock options beginning with fiscal year 2023. Stock options previously granted have a three year pro rata vesting from the date of grant. Stock options were issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant. For active employees, all options granted expire ten years after the date of grant. The Company’s stock options are expensed ratably over the three year vesting period; however, included in the stock option expense for the three months ended March 31, 2022 was expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period. Stock based compensation expense attributable to stock options in the three months ended March 31, 2023 and 2022 was $0.3 million and $3.9 million, respectively. Changes in options, all of which relate to the Company’s Common Stock, were as follows for the three months ended March 31, 2023: Weighted- Number of Average Aggregate Outstanding at January 1, 2023 $ 51.22 2,481,606 Exercised 45.47 (191,054) Forfeited 61.09 (3,605) Outstanding at March 31, 2023 51.69 2,286,947 6 years $ 41.5 Exercisable at March 31, 2023 48.72 1,952,622 6 years $ 40.4 There were no stock options granted in 2023. The weighted-average fair value per option at the date of grant during the three months ended March 31, 2022 using the Black-Scholes option-pricing model was $17.59. Assumptions were as follows: Three Months Ended 2022 Expected life (years) 5.7 Risk-free interest rate 1.9 % Dividend yield 1.5 % Expected volatility 26.8 % The expected lives of options for purposes of these models are based on historical exercise behavior. The risk-free interest rates for purposes of these models are based on the U.S. Treasury yield in effect on the date of grant for the respective expected lives of the option. The expected dividend yields for purposes of these models are based on the dividends paid in the preceding four quarters divided by the grant date market value of the Common Stock. The expected volatility for purposes of these models are based on the historical volatility of the Common Stock. Share Units Participants of the Incentive Plan may also be awarded share units. Share units vest three years after the date of grant. The Company granted 165,686 and 88,894 share units under the Incentive Plan in the three months ended March 31, 2023 and 2022, respectively. The share units were valued at $11.1 million and $6.6 million at the date of issuance in 2023 and 2022, respectively, based on the price of the Company’s Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period; however, included in share unit expense in the three months ended March 31, 2023 and 2022 was expense associated with accelerated vesting of share unit awards for certain employees who are retirement eligible or will become retirement eligible during the vesting period. Stock based compensation expense attributable to share units of $6.6 million and $3.7 million was recognized in the three months ended March 31, 2023 and 2022, respectively. Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period. A summary of share unit activity under the Incentive Plan is as follows for the three months ended March 31, 2023: Number of Units Weighted-Average Issued and unvested at January 1, 2023 379,919 $ 52.92 Granted 165,686 67.14 Vested (156,173) 49.42 Forfeited (2,449) 64.50 Issued and unvested at March 31, 2023 386,983 63.16 Performance Stock Units Beginning in 2023, certain executives may also be awarded performance stock units under the Incentive Plan. Performance stock units vest over three years following the date of the grant. Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Environmental, Social, and Governance targets. Potential payouts range from zero to 150% of the target awards and changes from target amounts are reflected as performance adjustments. The Company granted 24,580 performance stock units under the Incentive Plan in the three months ended March 31, 2023. The performance stock units were valued at $1.7 million at the date of issuance in 2023, based on the price of the Company’s Common Stock at the date of grant. The weighted average grant date value for the units granted was $67.14. The performance stock units are recognized as compensation expense ratably over the three-year vesting period. Stock based compensation expense attributable to performance stock units of $0.1 million was recognized in the three months ended March 31, 2023. Certain non-U.S.-based executives receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period. |
Pensions
Pensions | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Pensions | Pensions The following table presents the components of the Company’s net pension expense: (dollars in millions) Three Months Ended 2023 2022 Service cost $ 0.3 $ 0.4 Interest cost 0.3 3.6 Expected return on plan assets (0.3) (5.4) Amortization of unrecognized loss — 5.1 Amortization of prior service cost — (0.1) Defined benefit plan expense $ 0.3 $ 3.6 The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension expense are reflected in other expense. The Company was not required to and did not make a contribution to its U.S. pension plan in 2022. The Company is not required to make a contribution in 2023. In 2021, the Company's Board of Directors approved the termination of the Company's largest defined benefit pension plan (the Plan) with a termination date of December 31, 2021. The Plan represented over 95 percent of the Company's pension plan liability. In the fourth quarter of 2022, the Company settled Plan liabilities through lump-sum payments from existing plan assets to eligible participants who elected to receive them and through the purchase of annuities from Mass Mutual Life Insurance Company (MML). As of March 1, 2023, MML assumed the future annuity payments for those eligible active and former employees and their beneficiaries. Remaining pension assets associated with the Plan at March 31, 2023 are $21.5 million. The Company intends to use the remaining assets to fund future non-elective contributions to the Company’s defined contribution plan. For additional information regarding the termination of the Plan and the Company’s defined contribution plan, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 14, 2023. |
Segment Results
Segment Results | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment Results | Segment Results The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The following table presents the Company’s segment results: (dollars in millions) Three Months Ended 2023 2022 Net sales North America $ 752.7 $ 730.1 Rest of World 219.1 256.0 Inter-segment (5.4) (8.4) $ 966.4 $ 977.7 Segment earnings North America (1) $ 188.6 $ 151.8 Rest of World (2) 5.3 24.8 Inter-segment earnings elimination — (0.1) 193.9 176.5 Corporate expense (3) (18.6) (18.4) Interest expense (4.0) (1.5) Earnings before income taxes 171.3 156.6 Provision for income taxes 44.4 36.8 Net earnings $ 126.9 $ 119.8 Additional Information (1) Adjustments: North America includes pension expense of: $ — $ 2.6 (2) Adjustments: Rest of World includes impairment expense of: $ 12.5 $ — (3) Adjustments: Corporate expense includes impairment expense of: $ 3.1 $ — includes pension expense of: $ — $ 0.3 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Accounting Standards Codification (ASC) 820, Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets (liabilities) measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value Measurement Using Balance Sheet Location March 31, December 31, 2022 Quoted prices in active markets for identical assets (Level 1) Marketable Securities $ 89.8 $ 90.6 Significant other observable inputs (Level 2) Other current assets 7.0 6.5 Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2). There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis during the three months ended March 31, 2023. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company utilizes certain derivative instruments to enhance its ability to manage currency exposure as well as raw materials price risk. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes. The contracts are executed with major financial institutions with no credit loss anticipated for failure of the counterparties to perform. Cash Flow Hedges With the exception of its net investment hedges, the Company designates all of its hedging instruments as cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Foreign Currency Forward Contracts The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases, sales and certain intercompany transactions in the normal course of business. Principal currencies for which the Company utilizes foreign currency forward contracts include the British pound, Canadian dollar, Euro and Mexican peso. Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the consolidated statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective. The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year. The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts that are designated as cash flow hedges: (dollars in millions) March 31, 2023 December 31, 2022 Buy Sell Buy Sell British pound $ — $ 1.2 $ — $ — Canadian dollar — 57.6 — 76.8 Euro 22.7 1.8 30.2 — Mexican peso 15.5 — 15.7 — Total $ 38.2 $ 60.6 $ 45.9 $ 76.8 Net Investment Hedges The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S. subsidiaries. These hedges are determined to be effective. The Company recognized $0.5 million of after-tax gains associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended March 31, 2023. The Company recognized $0.3 million of after-tax losses associated with hedges of a net investment in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended March 31, 2022. The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges was $25.0 million as of March 31, 2023. The following tables present the impact of derivative contracts on the Company’s financial statements. Fair value of derivatives designated as hedging instruments under ASC 815: (dollars in millions) Balance Sheet Location March 31, December 31, Foreign currency contracts Other current assets $ 7.0 $ 6.4 Accrued liabilities — — Total derivatives designated as hedging instruments $ 7.0 $ 6.4 The effect of cash flow hedges on the condensed consolidated statement of earnings: Three Months Ended March 31 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other Location of gain Amount of gain 2023 2022 2023 2022 Foreign currency contracts $ 1.7 $ (0.7) Cost of products sold $ 1.9 $ 0.1 Balance Sheet Hedges Foreign Exchange Contracts The Company periodically enters into foreign exchange contracts to mitigate the foreign currency volatility relative to certain intercompany loans. These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings. The fair value of the foreign exchange contracts was zero as of March 31, 2023. The fair value of the foreign exchange contracts was an asset balance of $0.1 million as of December 31, 2022 and recorded in Other current assets within the consolidated balance sheet. The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges: (dollars in millions) March 31, 2023 December 31, 2022 Buy Sell Buy Sell Canadian dollar $ — $ 76.4 $ — $ 81.5 The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below. Three Months Ended March 31 (dollars in millions): Derivatives not designated as hedging instruments: Location of loss within the consolidated statements of earnings 2023 2022 Foreign exchange contracts Other (income) expense - net $ (0.1) $ 1.3 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company’s effective income tax rate for the three months ended March 31, 2023 was 25.9 percent compared to 23.5 percent for the three months ended March 31, 2022. The Company estimates that its annual effective income tax rate for the full year 2023 will be approximately 24.0 percent. The change in the effective income tax rate for the three months ended March 31, 2023 compared to the effective income tax rate for the three months ended March 31, 2022 was primarily due to a change in geographical earnings mix as well as a $15.6 million impairment expense recorded with no associated tax benefit. Refer to Note 3 for additional information regarding the impairment expense. As of March 31, 2023, the Company had $15.0 million of unrecognized tax benefits of which $2.9 million would affect its effective income tax rate if recognized. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company’s U.S. federal income tax returns and its U.S. state and local income tax returns are subject to audit for the years 2017-2023 and 2009-2023, respectively. The Company is subject to examinations in foreign tax jurisdictions for the years 2017-2023. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company maintains a commercial relationship with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offers order-entry, warehousing and logistics support. The Provider also offers asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider has collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to repurchase inventory if both requested by the banks and certain defined conditions are met, primarily related to the aging of the distributors’ notes. The Provider is required to indemnify the Company for any losses the Company would incur in the event of an inventory repurchase under these arrangements. Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of product plus costs incurred in the process, less related distributor rebates. Before considering any reduction of distributor rebate accruals of $1.2 million and $1.1 million as of March 31, 2023 and December 31, 2022, respectively, and from the resale of the related inventory, the gross amount the Company would be obligated to repurchase, which would be contingent on the default of all of the outstanding loans, was approximately $2.3 million as of March 31, 2023 and $2.4 million as of December 31, 2022. The Company’s reserves for estimated losses under repurchase arrangements were immaterial as of March 31, 2023 and December 31, 2022. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss by Component | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss by Component | Changes in Accumulated Other Comprehensive Loss by Component Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Three Months Ended 2023 2022 Cumulative foreign currency translation Balance at beginning of period $ (84.1) $ (44.7) Other comprehensive gain before reclassifications 2.5 0.6 Balance at end of period (81.6) (44.1) Unrealized net gain (loss) on cash flow derivatives Balance at beginning of period 4.9 0.6 Other comprehensive gain (loss) before reclassifications 1.3 (0.5) Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.5 and $— in 2023 and 2022, respectively) (1.4) (0.1) Balance at end of period 4.8 — Pension liability Balance at beginning of period (3.2) (287.3) Amounts reclassified from accumulated other comprehensive loss: (1) — 3.8 Balance at end of period (3.2) (283.5) Accumulated other comprehensive loss, end of period $ (80.0) $ (327.6) (1) Amortization of pension items: Actuarial losses $ — $ 5.1 (2) Prior year service cost — (0.1) (2) — 5.0 Income tax benefit — (1.2) Reclassification net of income tax benefit $ — $ 3.8 (2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 10 - Pensions for additional details. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncement | Recent Accounting Pronouncements No recent accounting pronouncements are expected to have an impact on our condensed consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Net Sales Disaggregated by Segment and Major Product Line | The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World: (dollars in millions) Three Months Ended 2023 2022 North America Water heaters and related parts $ 637.3 $ 615.8 Boilers and related parts 58.4 57.5 Water treatment products 57.0 56.8 Total North America 752.7 730.1 Rest of World China $ 190.2 $ 228.3 All other Rest of World 28.9 27.7 Total Rest of World 219.1 256.0 Inter-segment sales (5.4) (8.4) Total Net Sales $ 966.4 $ 977.7 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Related to Leases | Supplemental balance sheet information related to leases is as follows: (dollars in millions) March 31, December 31, 2022 Liabilities Short term: Accrued liabilities $ 9.4 $ 9.9 Long term: Operating lease liabilities 25.1 22.4 Total operating lease liabilities $ 34.5 $ 32.3 Less: Rent incentives and deferrals (2.2) (2.5) Assets Operating lease assets $ 32.3 $ 29.8 Lease Term and Discount Rate March 31, 2023 Weighted-average remaining lease term 7.4 years Weighted-average discount rate 3.71 % |
Schedule of Components of Lease Expense | The components of lease expense were as follows: (dollars in millions) Three months ended Lease Expense Classification 2023 (1) 2022 (2) Operating lease expense Cost of products sold $ 1.3 $ 1.0 Selling, general and administrative expenses 4.1 3.9 (1) 2023 includes short-term and variable lease expenses of $1.1 million and $1.2 million, respectively. (2) 2022 includes short-term and variable lease expenses of $0.5 million and $0.8 million, respectively. |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities were as follows: (dollars in millions) March 31, 2023 $ 8.1 2024 8.2 2025 5.8 2026 4.0 2027 2.4 After 2027 11.7 Total lease payments 40.2 Less: Imputed interest (5.7) Present value of operating lease liabilities $ 34.5 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | The following table presents the components of the Company’s inventory balances: (dollars in millions) March 31, December 31, 2022 Finished products $ 175.5 $ 174.4 Work in process 44.4 42.1 Raw materials 331.0 349.2 Inventories, at FIFO cost 550.9 565.7 LIFO reserve (47.2) (49.3) Inventories, at LIFO cost $ 503.7 $ 516.4 |
Product Warranties (Tables)
Product Warranties (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Guarantees and Product Warranties [Abstract] | |
Schedule of Warranty Liability Activity | The following table presents the Company’s warranty liability activity: (dollars in millions) Three Months Ended 2023 2022 Balance at January 1, $ 182.5 $ 184.4 Expense 18.4 13.9 Claims settled (19.7) (15.4) Balance at March 31, $ 181.2 $ 182.9 |
Earnings per Share of Common _2
Earnings per Share of Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Weighted Average Shares Used in EPS Calculations | The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations: Three Months Ended 2023 2022 Denominator for basic earnings per share - weighted average shares 150,897,302 157,018,566 Effect of dilutive stock options and share units 1,003,545 1,299,133 Denominator for diluted earnings per share 151,900,847 158,317,699 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Changes in Options | Changes in options, all of which relate to the Company’s Common Stock, were as follows for the three months ended March 31, 2023: Weighted- Number of Average Aggregate Outstanding at January 1, 2023 $ 51.22 2,481,606 Exercised 45.47 (191,054) Forfeited 61.09 (3,605) Outstanding at March 31, 2023 51.69 2,286,947 6 years $ 41.5 Exercisable at March 31, 2023 48.72 1,952,622 6 years $ 40.4 |
Schedule of Assumptions | Assumptions were as follows: Three Months Ended 2022 Expected life (years) 5.7 Risk-free interest rate 1.9 % Dividend yield 1.5 % Expected volatility 26.8 % |
Schedule of Share Unit Activity | A summary of share unit activity under the Incentive Plan is as follows for the three months ended March 31, 2023: Number of Units Weighted-Average Issued and unvested at January 1, 2023 379,919 $ 52.92 Granted 165,686 67.14 Vested (156,173) 49.42 Forfeited (2,449) 64.50 Issued and unvested at March 31, 2023 386,983 63.16 |
Pensions (Tables)
Pensions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Components of Net Pension Expense (Income) | The following table presents the components of the Company’s net pension expense: (dollars in millions) Three Months Ended 2023 2022 Service cost $ 0.3 $ 0.4 Interest cost 0.3 3.6 Expected return on plan assets (0.3) (5.4) Amortization of unrecognized loss — 5.1 Amortization of prior service cost — (0.1) Defined benefit plan expense $ 0.3 $ 3.6 |
Segment Results (Tables)
Segment Results (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Results | The following table presents the Company’s segment results: (dollars in millions) Three Months Ended 2023 2022 Net sales North America $ 752.7 $ 730.1 Rest of World 219.1 256.0 Inter-segment (5.4) (8.4) $ 966.4 $ 977.7 Segment earnings North America (1) $ 188.6 $ 151.8 Rest of World (2) 5.3 24.8 Inter-segment earnings elimination — (0.1) 193.9 176.5 Corporate expense (3) (18.6) (18.4) Interest expense (4.0) (1.5) Earnings before income taxes 171.3 156.6 Provision for income taxes 44.4 36.8 Net earnings $ 126.9 $ 119.8 Additional Information (1) Adjustments: North America includes pension expense of: $ — $ 2.6 (2) Adjustments: Rest of World includes impairment expense of: $ 12.5 $ — (3) Adjustments: Corporate expense includes impairment expense of: $ 3.1 $ — includes pension expense of: $ — $ 0.3 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets (Liabilities) Measured at Fair Value on a Recurring Basis | Assets (liabilities) measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value Measurement Using Balance Sheet Location March 31, December 31, 2022 Quoted prices in active markets for identical assets (Level 1) Marketable Securities $ 89.8 $ 90.6 Significant other observable inputs (Level 2) Other current assets 7.0 6.5 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Contractual Amounts for Derivative Contracts | The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts that are designated as cash flow hedges: (dollars in millions) March 31, 2023 December 31, 2022 Buy Sell Buy Sell British pound $ — $ 1.2 $ — $ — Canadian dollar — 57.6 — 76.8 Euro 22.7 1.8 30.2 — Mexican peso 15.5 — 15.7 — Total $ 38.2 $ 60.6 $ 45.9 $ 76.8 The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges: (dollars in millions) March 31, 2023 December 31, 2022 Buy Sell Buy Sell Canadian dollar $ — $ 76.4 $ — $ 81.5 |
Schedule of Impact of Derivative Contracts on the Company's Financial Statements | The following tables present the impact of derivative contracts on the Company’s financial statements. Fair value of derivatives designated as hedging instruments under ASC 815: (dollars in millions) Balance Sheet Location March 31, December 31, Foreign currency contracts Other current assets $ 7.0 $ 6.4 Accrued liabilities — — Total derivatives designated as hedging instruments $ 7.0 $ 6.4 |
Schedule of Effect of Derivatives on the Statement of Earnings | The effect of cash flow hedges on the condensed consolidated statement of earnings: Three Months Ended March 31 (dollars in millions): Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other Location of gain Amount of gain 2023 2022 2023 2022 Foreign currency contracts $ 1.7 $ (0.7) Cost of products sold $ 1.9 $ 0.1 The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below. Three Months Ended March 31 (dollars in millions): Derivatives not designated as hedging instruments: Location of loss within the consolidated statements of earnings 2023 2022 Foreign exchange contracts Other (income) expense - net $ (0.1) $ 1.3 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Loss by Component (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Changes to Accumulated Other Comprehensive Loss by Component | Changes to accumulated other comprehensive loss by component are as follows: (dollars in millions) Three Months Ended 2023 2022 Cumulative foreign currency translation Balance at beginning of period $ (84.1) $ (44.7) Other comprehensive gain before reclassifications 2.5 0.6 Balance at end of period (81.6) (44.1) Unrealized net gain (loss) on cash flow derivatives Balance at beginning of period 4.9 0.6 Other comprehensive gain (loss) before reclassifications 1.3 (0.5) Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.5 and $— in 2023 and 2022, respectively) (1.4) (0.1) Balance at end of period 4.8 — Pension liability Balance at beginning of period (3.2) (287.3) Amounts reclassified from accumulated other comprehensive loss: (1) — 3.8 Balance at end of period (3.2) (283.5) Accumulated other comprehensive loss, end of period $ (80.0) $ (327.6) (1) Amortization of pension items: Actuarial losses $ — $ 5.1 (2) Prior year service cost — (0.1) (2) — 5.0 Income tax benefit — (1.2) Reclassification net of income tax benefit $ — $ 3.8 (2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 10 - Pensions for additional details. |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) distributor in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment distributor | Dec. 31, 2022 USD ($) | |
Disaggregation of Revenue [Line Items] | ||
Customer deposits liability | $ 70.3 | $ 85.7 |
Allowance for credit losses | $ 10.2 | $ 9.5 |
Number of reporting segments | segment | 2 | |
Water Heaters | North America | ||
Disaggregation of Revenue [Line Items] | ||
Number of wholesale distributors (more than) | distributor | 1 | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Payment terms | 30 days | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Payment terms | 90 days |
Revenue Recognition - Segment S
Revenue Recognition - Segment Sales Disaggregated by Major Product Line (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 966.4 | $ 977.7 |
Operating Segments | North America | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 752.7 | 730.1 |
Operating Segments | Rest of World | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 219.1 | 256 |
Operating Segments | Rest of World | China | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 190.2 | 228.3 |
Operating Segments | Rest of World | All other Rest of World | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 28.9 | 27.7 |
Operating Segments | Water heaters and related parts | North America | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 637.3 | 615.8 |
Operating Segments | Boilers and related parts | North America | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 58.4 | 57.5 |
Operating Segments | Water treatment products | North America | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 57 | 56.8 |
Inter-segment | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ (5.4) | $ (8.4) |
Impairment Expense (Details)
Impairment Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | $ 15.6 | $ 0 |
Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | 15.6 | |
Carrying value of disposal group | 0.6 | |
Impairment Recorded As Net Reduction To Assets And Liabilities | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | 4.5 | |
Impairment Recorded For Anticipated Liquidation Of Cumulative Foreign Currency Translation Adjustment Recorded In Accrued Liabilities | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | 11.1 | |
Corporate | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | 3.1 | $ 0 |
Corporate | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | 3.1 | |
Rest of World | Operating Segments | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment expense | $ 12.5 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Lessee, Lease, Description [Line Items] | |
Operating lease termination period | 1 year |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease renewal term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease renewal term | 5 years |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Liabilities | ||
Current operating lease liability, statement of financial position [Extensible List] | Accrued liabilities | Accrued liabilities |
Short term: Accrued liabilities | $ 9.4 | $ 9.9 |
Long term: Operating lease liabilities | 25.1 | 22.4 |
Total operating lease liabilities | 34.5 | 32.3 |
Less: Rent incentives and deferrals | (2.2) | (2.5) |
Assets | ||
Operating lease assets | $ 32.3 | $ 29.8 |
Lease Term and Discount Rate | ||
Weighted-average remaining lease term | 7 years 4 months 24 days | |
Weighted-average discount rate | 3.71% |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Lessee, Lease, Description [Line Items] | ||
Short-term lease expenses | $ 1.1 | $ 0.5 |
Variable lease expenses | 1.2 | 0.8 |
Cost of products sold | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | 1.3 | 1 |
Selling, general and administrative expenses | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | $ 4.1 | $ 3.9 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 | $ 8.1 | |
2024 | 8.2 | |
2025 | 5.8 | |
2026 | 4 | |
2027 | 2.4 | |
After 2027 | 11.7 | |
Total lease payments | 40.2 | |
Less: Imputed interest | (5.7) | |
Present value of operating lease liabilities | $ 34.5 | $ 32.3 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Finished products | $ 175.5 | $ 174.4 |
Work in process | 44.4 | 42.1 |
Raw materials | 331 | 349.2 |
Inventories, at FIFO cost | 550.9 | 565.7 |
LIFO reserve | (47.2) | (49.3) |
Inventories | $ 503.7 | $ 516.4 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of year | $ 182.5 | $ 184.4 |
Expense | 18.4 | 13.9 |
Claims settled | (19.7) | (15.4) |
Balance at end of year | $ 181.2 | $ 182.9 |
Debt (Details)
Debt (Details) $ in Millions | Dec. 31, 2021 USD ($) covenant |
Debt Disclosure [Abstract] | |
Multi-currency revolving credit agreement, maximum borrowing capacity | $ 500 |
Accordion feature, higher borrowing capacity option | $ 850 |
Number of required financial covenants | covenant | 2 |
Earnings per Share of Common _3
Earnings per Share of Common Stock (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Denominator for basic earnings per share - weighted average shares (in shares) | 150,897,302 | 157,018,566 |
Effect of dilutive stock options and share units (in shares) | 1,003,545 | 1,299,133 |
Denominator for diluted earnings per share (in shares) | 151,900,847 | 158,317,699 |
Stock Based Compensation - Narr
Stock Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 7 | $ 7.6 |
Weighted-average fair value per option at the date of grant (in USD per share) | $ / shares | $ 17.59 | |
Granted (in shares) | shares | 0 | |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 0.3 | $ 3.9 |
Award vesting period | 3 years | |
Award expiration period | 10 years | |
Share Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Number of units granted (in shares) | shares | 165,686 | 88,894 |
Value of units share units granted | $ 11.1 | $ 6.6 |
Share based compensation expense attributable to share units | $ 6.6 | $ 3.7 |
Granted (in USD per share) | $ / shares | $ 67.14 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock based compensation expense | $ 0.1 | |
Award vesting period | 3 years | |
Number of units granted (in shares) | shares | 24,580 | |
Value of units share units granted | $ 1.7 | |
Granted (in USD per share) | $ / shares | $ 67.14 | |
Performance Shares | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Potential payouts range | 0 | |
Performance Shares | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Potential payouts range | 1.50 | |
A.O. Smith Combined Compensation Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares available for granting of options or share units (in shares) | shares | 2,491,654 |
Stock Based Compensation - Chan
Stock Based Compensation - Changes in Options (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Weighted- Avg. Per Share Exercise Price | |
Beginning balance (in USD per share) | $ / shares | $ 51.22 |
Exercised (in USD per share) | $ / shares | 45.47 |
Forfeited (in USD per share) | $ / shares | 61.09 |
Ending balance (in USD per share) | $ / shares | $ 51.69 |
Number of Options | |
Beginning balance (in shares) | shares | 2,481,606 |
Exercised (in shares) | shares | (191,054) |
Forfeited (in shares) | shares | (3,605) |
Ending balance (in shares) | shares | 2,286,947 |
Stock option activity, additional disclosures | |
Outstanding, Average Remaining Contractual Life | 6 years |
Outstanding, Aggregate Intrinsic Value | $ | $ 41.5 |
Exercisable, Weighted-Avg. Per Share Exercise Price (in USD per share) | $ / shares | $ 48.72 |
Exercisable, Number of Options (in shares) | shares | 1,952,622 |
Exercisable, Average Remaining Contractual Life | 6 years |
Exercisable, Aggregate Intrinsic Value | $ | $ 40.4 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Weighted-average Fair Value per Option at Date of Grant (Details) - Employee Stock Option | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life (years) | 5 years 8 months 12 days |
Risk-free interest rate | 1.90% |
Dividend yield | 1.50% |
Expected volatility | 26.80% |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Share Unit Activity Under Plan (Details) - Share Units - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Number of Units | ||
Beginning balance (in shares) | 379,919 | |
Granted (in shares) | 165,686 | 88,894 |
Vested (in shares) | (156,173) | |
Forfeited (in shares) | (2,449) | |
Ending balance (in shares) | 386,983 | |
Weighted-Average Grant Date Value | ||
Beginning balance (in USD per share) | $ 52.92 | |
Granted (in USD per share) | 67.14 | |
Vested (in USD per share) | 49.42 | |
Forfeited (in USD per share) | 64.50 | |
Ending balance (in USD per share) | $ 63.16 |
Pensions - Components of Net Pe
Pensions - Components of Net Pension Income (Details) - Pension Plan - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 0.3 | $ 0.4 |
Interest cost | 0.3 | 3.6 |
Expected return on plan assets | (0.3) | (5.4) |
Amortization of unrecognized loss | 0 | 5.1 |
Amortization of prior service cost | 0 | (0.1) |
Defined benefit plan expense | $ 0.3 | $ 3.6 |
Pensions - Narrative (Details)
Pensions - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2023 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Percentage of the pension plan liability (over) | 95% | ||
Pension assets | $ 21,500,000 | ||
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer contributions | $ 0 | ||
Expected current year employer contributions | $ 0 |
Segment Results (Details)
Segment Results (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment Reporting [Abstract] | ||
Number of reporting segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 966.4 | $ 977.7 |
Segment earnings | 193.9 | 176.5 |
Corporate expense | 4 | (3.7) |
Interest expense | (4) | (1.5) |
Earnings before income taxes | 171.3 | 156.6 |
Provision for income taxes | 44.4 | 36.8 |
Net Earnings | 126.9 | 119.8 |
Impairment expense | 15.6 | 0 |
Pension Plan | ||
Segment Reporting Information [Line Items] | ||
Pension expense (income) | 0.3 | 3.6 |
Inter-segment | ||
Segment Reporting Information [Line Items] | ||
Net sales | (5.4) | (8.4) |
Segment earnings | 0 | (0.1) |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Corporate expense | (18.6) | (18.4) |
Impairment expense | 3.1 | 0 |
Corporate | Pension Plan | ||
Segment Reporting Information [Line Items] | ||
Pension expense (income) | 0 | 0.3 |
North America | ||
Segment Reporting Information [Line Items] | ||
Impairment expense | 12.5 | 0 |
North America | Pension Plan | ||
Segment Reporting Information [Line Items] | ||
Pension expense (income) | 0 | 2.6 |
North America | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Net sales | 752.7 | 730.1 |
Segment earnings | 188.6 | 151.8 |
Rest of World | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Net sales | 219.1 | 256 |
Segment earnings | $ 5.3 | $ 24.8 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) measured at fair value | $ 89.8 | $ 90.6 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) measured at fair value | $ 7 | $ 6.5 |
Derivative Instruments - Schedu
Derivative Instruments - Schedule of Summary by Currency of Foreign Currency Forward Contracts (Details) - Foreign currency forward contracts - Designated as hedging instrument - Cash flow hedging - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Buy | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 38.2 | $ 45.9 |
Buy | British pound | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 0 | 0 |
Buy | Canadian dollar | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 0 | 0 |
Buy | Euro | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 22.7 | 30.2 |
Buy | Mexican peso | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 15.5 | 15.7 |
Sell | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 60.6 | 76.8 |
Sell | British pound | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 1.2 | 0 |
Sell | Canadian dollar | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 57.6 | 76.8 |
Sell | Euro | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | 1.8 | 0 |
Sell | Mexican peso | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total | $ 0 | $ 0 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Trading Activity, Gains and Losses, Net [Line Items] | |||
After-tax gains (losses) associated with currency translation adjustment in other comprehensive income | $ 2.5 | $ 0.6 | |
Designated as hedging instrument | Foreign currency contracts | Other current assets | |||
Trading Activity, Gains and Losses, Net [Line Items] | |||
Fair value of derivative instruments, assets | 7 | $ 6.4 | |
Not Designated as Hedging Instrument | Foreign currency contracts | Other current assets | |||
Trading Activity, Gains and Losses, Net [Line Items] | |||
Fair value of derivative instruments, assets | 0 | $ 0.1 | |
Net Investment Hedges | Non-U.S. | Designated as hedging instrument | Foreign currency forward contracts | |||
Trading Activity, Gains and Losses, Net [Line Items] | |||
After-tax gains (losses) associated with currency translation adjustment in other comprehensive income | 0.5 | $ (0.3) | |
Contractual amounts | $ 25 |
Derivative Instruments - Impact
Derivative Instruments - Impact of Derivative Contracts on Company's Financial Statements (Details) - Designated as hedging instrument - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Total derivatives designated as hedging instruments | $ 7 | $ 6.4 |
Foreign currency contracts | Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, assets | 7 | 6.4 |
Foreign currency contracts | Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative instruments, liabilities | $ 0 | $ 0 |
Derivative Instruments - Sche_2
Derivative Instruments - Schedule of Effect of Cash Flow Hedges on Consolidated Statement of Earnings (Details) - Foreign currency contracts - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Derivative [Line Items] | ||
Amount of gain (loss) recognized in other comprehensive loss on derivatives | $ 1.7 | $ (0.7) |
Cost of products sold | ||
Derivative [Line Items] | ||
Amount of gain reclassified from accumulated other comprehensive loss into earnings | $ 1.9 | $ 0.1 |
Derivative Instruments - Summar
Derivative Instruments - Summary of Contractual Amounts for Balance Sheet Hedges (Details) - Canadian dollar - Foreign currency contracts - Fair Value Hedging - Designated as hedging instrument - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Buy | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts | $ 0 | $ 0 |
Sell | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contractual amounts | $ 76.4 | $ 81.5 |
Derivative Instruments - Effect
Derivative Instruments - Effect of Foreign Exchange Contracts on the Statement of Earnings (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Foreign currency contracts | Other (income) expense - net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative loss | $ (0.1) | $ 1.3 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2023 | |
Income Tax Contingency [Line Items] | |||
Effective tax rate | 25.90% | 23.50% | |
Impairment expense | $ 15.6 | $ 0 | |
Unrecognized tax benefits | 15 | ||
Unrecognized tax benefits that would affect the effective tax rate, if recognized | 2.9 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Income Tax Contingency [Line Items] | |||
Impairment expense | $ 15.6 | ||
Forecast | Maximum | |||
Income Tax Contingency [Line Items] | |||
Effective tax rate | 24% |
Commitment and Contingencies (D
Commitment and Contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Commitments and Contingencies [Line Items] | ||
Distributor rebate accruals | $ 1.2 | $ 1.1 |
Repurchase of inventory | ||
Commitments and Contingencies [Line Items] | ||
Other commitment | $ 2.3 | $ 2.4 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of period | $ 1,747.7 | |
Balance at end of period | 1,790.2 | $ 1,808.9 |
Accumulated Other Comprehensive Loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at end of period | (80) | (327.6) |
Cumulative foreign currency translation | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of period | (84.1) | (44.7) |
Other comprehensive gain (loss) before reclassifications | 2.5 | 0.6 |
Balance at end of period | (81.6) | (44.1) |
Unrealized net gain (loss) on cash flow derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of period | 4.9 | 0.6 |
Other comprehensive gain (loss) before reclassifications | 1.3 | (0.5) |
Reclassifications, net of tax | (1.4) | (0.1) |
Balance at end of period | 4.8 | 0 |
Income tax provision (benefit) | 0.5 | 0 |
Pension liability | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of period | (3.2) | (287.3) |
Reclassifications, net of tax | 0 | 3.8 |
Balance at end of period | (3.2) | (283.5) |
Reclassification, before income tax benefit | 0 | 5 |
Income tax provision (benefit) | 0 | (1.2) |
Actuarial losses | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification, before income tax benefit | 0 | 5.1 |
Prior year service cost | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Reclassification, before income tax benefit | $ 0 | $ (0.1) |