ASHLAND CITY, TENN. — Production at A. O. Smith's largest water heater facility in Ashland City, Tenn., is up and running faster than expected since the flooding of the Cumberland River in early May. That production, combined with the shifting of residential water heater production to the company's other North American operations, will allow residential water heater backlogs to return to their normal lead times in early July.
The company estimates one-time net after-tax direct damages from the flooding, including clean up expenses, damaged inventory and repair or replacement of over 2,000 machines, to be $.60 to $.70 per share in the second quarter. The damage estimate is net of the recovery of approximately $32 million in property and business interruption insurance.
“I am very proud of the teams that are executing a remarkably quick recovery to this natural disaster,” said Paul Jones, chairman and chief executive officer. “Bringing a flooded plant back on line is an extraordinarily complicated process, not to mention the complexities of simultaneously relocating production to our other plants. To accomplish this feat in such a short period of time is a testament to our commitment to customers, all of whom have been supportive during this difficult time.
“Based upon what we know today, the improvements we expect in our operating performance for the year could substantially offset the one-time costs from the flood,” Jones commented. “As a result, we have modified our 2010 full-year earnings guidance to $3.05 to $3.25 per share.”
A.O. Smith Corp., with 2009 sales of $2.0 billion, is one of the world's leading manufacturers of residential and commercial water heating equipment. A. O. Smith is also one of the largest manufacturers of electric motors for residential and commercial applications in North America.