A. O. Smith Corporation stock research
FY2023 Q2
A. O. Smith (AOS) Gross Margin — Quarter Ended Jun 30, 2023
Revenue was roughly stable compared to the prior quarter and the same quarter last year, while gross profit increased notably from both periods, driven by a larger decline in cost of revenue. The gross margin improved significantly compared to both the preceding quarter and the year-ago quarter, reflecting a widening spread between revenue and cost of revenue.
Gross margin takeaway
Quarter ended Jun 30, 2023 · FY2023 Q2
Revenue was roughly stable compared to the prior quarter and the same quarter last year, while gross profit increased notably from both periods, driven by a larger decline in cost of revenue. The gross margin improved significantly compared to both the preceding quarter and the year-ago quarter, reflecting a widening spread between revenue and cost of revenue.
- The strongest observable margin driver is the reduction in cost of revenue, which declined from both the preceding quarter and the year-ago quarter, even as revenue remained nearly flat. This allowed gross profit and gross margin to strengthen despite stable top-line performance.
- Compared to the immediately preceding quarter, gross margin improved, supported by higher gross profit on slightly lower revenue. Versus the same quarter one year earlier, gross margin strengthened substantially, with revenue essentially unchanged but cost of revenue notably lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
40.0%
Gross profit
$384.7M
Revenue
$960.8M
Cost of revenue
$576.1M
Quarter-over-quarter change
+1.3 pts
Year-over-year change
+5.4 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $966.4M | $374.1M | $592.3M | 38.7% |
| Jun 30, 2023 | $960.8M | $384.7M | $576.1M | 40.0% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2023
+1.3 pts
Year-over-year change
Jun 30, 2022
+5.4 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the reduction in cost of revenue, which declined from both the preceding quarter and the year-ago quarter, even as revenue remained nearly flat. This allowed gross profit and gross margin to strengthen despite stable top-line performance.
Compared to the immediately preceding quarter, gross margin improved, supported by higher gross profit on slightly lower revenue. Versus the same quarter one year earlier, gross margin strengthened substantially, with revenue essentially unchanged but cost of revenue notably lower.
Monitor changes in allowances for credit losses and customer rebate accruals, as adjustments tied to actual sales volumes and return rates could affect reported revenue and cost estimates.