MILWAUKEE, May 17, 2019 /PRNewswire/ -- Global water
technology company A. O. Smith Corporation (NYSE-AOS) today issued
the following statement in response to a report issued on
May 16, 2019 by self-proclaimed short
seller J Capital Research:
A. O. Smith, founded 145 years ago, has a long track record of
operating with integrity across the world. A recent report by short
seller J Capital Research makes inaccurate, unfounded and
misleading allegations designed to negatively impact A. O. Smith's
share price for J Capital's own benefit.
Much of the misinformation contained in the report centers
around the company's longstanding operations in China. We have done business in China for more than 20 years, serving millions
of consumers across the country.
As is common for many companies who do similar business in
China, we utilize a distribution
channel where third-party supply-chain partners, such as Jiangsu
UTP Supply Chain (UTP) and other supply chain partners, purchase
product from us which they subsequently distribute to distributers
and ultimate end-users. We understand our supply chain partners do
similar services for other global companies with whom they work.
All revenue associated with UTP and others was appropriately
recognized in accordance with U. S. GAAP in our financial
statements. Our financial statements and internal controls
over financial reporting are annually audited by Ernst & Young
LLP. While we value all of our distribution relationships, we do
not have debt or equity interests in UTP and maintain appropriate
independent commercial agreements.
Given we have significant longstanding operations in
China, a significant portion of
our $633 million of cash, cash
equivalents and marketable securities as of March 31, 2019 was held by our foreign
subsidiaries, including $457 million
of cash denominated in local currency in China, in A. O. Smith-owned, unencumbered bank
accounts. We executed a $150 million
dividend from China in 2018, and
we expect to dividend approximately $150
million in the first half of 2019. We continue to
review our capital allocation strategy, which includes repatriation
of foreign cash as appropriate, while complying with local
regulatory policies.
We remain focused on enhancing value for our shareholders and
executing our strategy to deliver sustainable profit growth across
our global footprint, consistent with our values. We have a strong
balance sheet that provides financial flexibility to invest in both
organic and inorganic growth opportunities and continue returning
capital to our shareholders. We look forward to continuing to drive
financial and operational performance, and our Board of Directors
and management team remain committed to acting in the best
interests of our company and our shareholders.
Forward-looking statements
This release contains statements that the company believes
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," "forecast," "continue," "guidance" or words of similar
meaning. All 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. Important factors that could cause actual results to
differ materially from these expectations include, among other
things, the following: a further weakening of the Chinese economy
and/or a further decline in the growth rate of consumer spending or
housing sales in China; negative
impact to the company's businesses from international tariffs and
trade disputes; potential weakening in the high efficiency boiler
segment in the U.S.; significant volatility in raw material prices;
inability of the company to implement or maintain pricing actions;
potential weakening in U.S. residential or commercial construction
or instability in the company's replacement markets; foreign
currency fluctuations; the company's inability to successfully
integrate or achieve its strategic objectives resulting from
acquisitions; competitive pressures on the company's businesses;
the impact of potential information technology or data security
breaches; changes in government regulations or regulatory
requirements; and adverse developments in general economic,
political and business conditions in key regions of the world.
Forward-looking statements included in this press release are made
only as of the date of this release, 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.
About A. O. Smith
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is a global leader applying
innovative technology and energy-efficient solutions to products
manufactured and marketed worldwide. Listed on the New York Stock
Exchange (NYSE), the company is one of the world's leading
manufacturers of residential and commercial water heating equipment
and boilers, as well as a manufacturer of water treatment and air
purification products. For more, information visit
www.aosmith.com.
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SOURCE A. O. Smith Corporation