A. O. Smith Corporation stock research
FY2023 Q3
A. O. Smith (AOS) Gross Margin — Quarter Ended Sep 30, 2023
Revenue decreased from the prior quarter, while gross profit and gross margin also declined, as cost of revenue remained relatively stable. Compared to the same period one year earlier, revenue, gross profit, and gross margin all improved, reflecting a weaker cost of revenue position relative to the prior year.
Gross margin takeaway
Quarter ended Sep 30, 2023 · FY2023 Q3
Revenue decreased from the prior quarter, while gross profit and gross margin also declined, as cost of revenue remained relatively stable. Compared to the same period one year earlier, revenue, gross profit, and gross margin all improved, reflecting a weaker cost of revenue position relative to the prior year.
- The gross profit change was primarily driven by the relationship between revenue and cost of revenue; revenue fell from the prior quarter but rose versus the year-ago quarter, while cost of revenue moved more moderately in both comparisons.
- Compared to the immediately preceding quarter, gross margin weakened, as cost of revenue decreased less than revenue. Versus the same quarter one year earlier, gross margin improved, with revenue growth outpacing the increase in cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
38.0%
Gross profit
$356.2M
Revenue
$937.5M
Cost of revenue
$581.3M
Quarter-over-quarter change
-2.0 pts
Year-over-year change
+3.1 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% |
| Sep 30, 2023 | $937.5M | $356.2M | $581.3M | 38.0% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2023
-2.0 pts
Year-over-year change
Sep 30, 2022
+3.1 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The gross profit change was primarily driven by the relationship between revenue and cost of revenue; revenue fell from the prior quarter but rose versus the year-ago quarter, while cost of revenue moved more moderately in both comparisons.
Compared to the immediately preceding quarter, gross margin weakened, as cost of revenue decreased less than revenue. Versus the same quarter one year earlier, gross margin improved, with revenue growth outpacing the increase in cost of revenue.
Monitor the trajectory of cost of revenue relative to revenue, as the current quarter's decline in margin was linked to cost of revenue not declining proportionally with revenue.