What factors drove the changes in A. O. Smith's revenue and profit?

What is A. O. Smith's latest dividend and current dividend yield?

What is the revenue and EPS growth rate for A. O. Smith year over year?

What is the market's earnings forecast for A. O. Smith next quarter?

What were the key takeaways from A. O. Smith's earnings call?

What is A. O. Smith's gross profit margin?

What does A. O. Smith do and what are its main business segments?

What guidance did A. O. Smith's management provide for the next earnings period?

- **Record Performance**: 2025 EPS of $3.85, up 6%, driven by North America margin expansion (24.4%) and China restructuring (130 bps margin improvement).
- **Strategic Acquisitions**: Leonard Valve acquisition ($70M 2026 sales) expands into water management with 30% digital product mix, aligning with core business.
- **Challenges & Growth**: 2026 China sales down mid-single digits (H1 tough, H2 recovery). U.S. residential volumes flat/down due to new home construction slowdown, offset by 6-8% boiler growth.
- **Profitability Focus**: Water treatment margins to expand 200 bps to 15%, targeting 100+ bps annual growth. 2026 steel prices up 10%, but pricing actions and cost control mitigate impact.

**【CEO Summary Section】**
- **2025 Financial Highlights**: Revenue remained flat year-over-year, with EPS reaching a record $3.85. North America segment margin improved by 20 basis points to 24.4%, driven by water treatment profitability. Rest of World segment margin expanded 40 basis points to 8.7% despite China sales decline.
- **China Restructuring**: 2024 restructuring actions reduced China sales impact, with margin improvement of 130 basis points. 2026 outlook projects mid-single-digit China sales decline, with recovery expected in H2.
- **Leonard Valve Acquisition**: $70 million in 2026 sales expected, expanding into water management with digital capabilities. Strategic fit with A.O. Smith's core business and cultural alignment.
- **Market Outlook**: U.S. residential volumes flat/down in 2026 due to new home construction slowdown. Commercial water heater volumes projected to grow mid-single digits on regulatory buy-ahead. Boiler sales growth 6-8% from pricing and energy efficiency trends.

**【CFO Financial Commentary】**
- **2025 Financials**: GAAP net income $420 million, Non-GAAP EPS $3.85 (up 6%). Free cash flow $546 million (15% YoY increase). Share repurchases $401 million, dividend $0.36 per share.
- **2026 Guidance**: EPS $3.85-$4.15 (4% midpoint growth). Free cash flow $525-$575 million. Steel prices expected to rise 10%, offset by pricing actions and cost control.
- **Segment Margins**: North America 24-24.5%, Rest of World 8-9%. Capital expenditures $70-80 million.

**【Q&A Highlights】**
- **Residential Market Dynamics**: Wholesale channel competitive intensity from retailers expanding into professional installers. Retail channel growth offsetting wholesale challenges. 2026 proactive replacement demand resilient, but new construction drag persists.
- **China Recovery**: H1 2026 tough due to subsidy program lapses, but H2 recovery expected. Leonard Valve's digital products (30% of sales) driving growth in water management.
- **Steel Cost Management**: Historical ability to protect price/cost relationship. 2026 steel prices up 10%, but pricing actions and restructuring mitigating impact.
- **Water Treatment Growth**: 10-12% 2026 sales growth via dealer network expansion. Margin improvement 200 basis points to 15% by end of year, targeting 100+ basis points annual expansion.


A. O. Smith Corporation (AOS) Q4 2025 Earnings Call Transcript

- **Revenue resilience**: Q3 2025 revenue up 4% YoY, driven by North America (+6%) despite China challenges.
- **Margin expansion**: North America segment margin +110bps to 24.2%, offsetting 5% input cost increases.
- **China strategy**: 2025 sales outlook revised to -10% local currency, with restructuring initiatives mitigating margin impact.
- **Tariff mitigation**: 5% COGS impact from tariffs, with pricing actions covering margin and cost, but Q4 margin pressure expected.
- **Sustainability success**: Water recycling and glass reuse initiatives reduce waste by 100,000 gallons/year and 100 tons/year.

**【CEO Summary】**
- Q3 2025 revenue: $943 million (+4% YoY), driven by North America (+6%) and India (+13% local currency). China sales declined 12% due to economic challenges and reduced subsidies.
- North America: Commercial water heater and boiler volumes up, with pricing actions offsetting 5% YoY input cost increases. Segment margin expanded 110bps to 24.2%.
- China: Restructuring initiatives offset 12% sales decline, with margin improving 90bps. Strategic assessment underway to address market challenges.
- Sustainability: Water recycling and glass reuse initiatives reduce waste by 100,000 gallons/year and 100 tons/year respectively.
- New leadership: Chris Howe appointed Chief Digital Information Officer to drive AI and generative tech adoption.

**【CFO Financial Commentary】**
- Free cash flow: $381 million (9M 2025, +35% YoY). Net debt: $13 million. Dividend increased 6% to $0.36/share.
- Guidance update: 2025 EPS narrowed to $3.70-$3.85 (prev $3.70-$3.90) due to tariffs (+5% COGS impact) and steel costs (+15-20% H2 2025). Free cash flow target: $500 million.
- Tariff impact: Q4 North America margin expected to decline 20bps. Mitigation strategies include footprint optimization and pricing actions.
- Pureit integration: 2025 sales $55 million, no bottom-line contribution as integration continues.

**【Q&A Highlights】**
- **China Market**: Competitive promotional activity offset by strong brand equity. 2025 sales outlook revised to -10% local currency.
- **Commercial Water Heaters**: FLEX product launch and production efficiency program drove Q3 share gains. 2025 industry volume growth revised to low single digits.
- **Boiler Sales**: Q3 up 10%, with potential prebuy ahead of Q2 price increases. 2025 guidance unchanged at +4-6%.
- **Tariffs & Costs**: 2025 steel costs expected to rise 15-20% YoY. Pricing actions cover margin and cost, but 20bps margin pressure expected in Q4.
- **Capital Allocation**: $400 million buyback target (9M 2025: $335M). Focus on M&A for core business adjacencies and new growth platforms.

A. O. Smith Corporation (AOS) Q3 2025 Earnings Call Transcript

- **North America Resilience**: 6% boiler growth and 25.4% operating margin highlight strategic channel focus. Water treatment priority channels offset retail declines.
- **China Restructuring**: $15M annual savings offset sales decline, but strategic review signals potential business model shift.
- **Tariff Mitigation**: Price increases and footprint optimization limit 5% COGS tariff impact, but H2 steel costs up 15%–20%.
- **Innovation Momentum**: New products like Adapt SC and HomeShield drive differentiation, with CTO-led R&D acceleration.
- **M&A Ambition**: $400M buyback and active pipeline signal capital discipline, with focus on growth platforms.

**【CEO Summary Section】**
- **North America Performance**: Q2 revenue decreased 1% YoY, driven by lower water heater volumes but offset by 6% growth in high-efficiency boilers and slight growth in water treatment. North America operating margin expanded 30bps to 25.4% due to channel mix and high-efficiency product growth.
- **China Challenges**: Sales down 11% YoY in local currency due to economic weakness and limited subsidies. Operating margin held steady at 8%–10% through restructuring savings, but China sales expected to decline 5%–8% YoY. Company announced strategic review of China business to explore alternatives.
- **Innovation Highlights**: Launched Adapt SC tankless heater, HomeShield PFAS filter, and Cyclone Flex commercial heater. New CTO Ming Cheng to lead R&D efforts.
- **Guidance Update**: Full-year sales raised to 1%–3% growth (from flat to 2%), driven by boiler strength and market share recovery. North America margin expected to remain stable at 24%–24.5%.

**【CFO Financial Commentary】**
- **Q2 Results**: Sales $1B (-1% YoY), EPS $1.07 (+1% YoY). Free cash flow $140M (6M period), net debt $126M. Dividend increased to $0.34Q, with $400M buyback target for 2025.
- **Tariff Impact**: Annualized tariff impact on COGS 5%, partially offset by price increases. Steel costs expected to rise 15%–20% in H2, with full tariff impact.
- **Segment Margins**: North America 25.4%, Rest of World 10.5%. China restructuring saves $15M annually, but sales decline pressures margins.
- **2025 Outlook**: EPS narrowed to $3.70–$3.90 (midpoint +2%), free cash flow $500M–$525M. CapEx $90M–$100M for regulatory readiness.

**【Q&A Key Highlights】**
- **China Strategy**: CEO emphasized long-term potential but acknowledged need to explore alternatives. Restructuring saves $15M, but stimulus inconsistent outside Tier 1/2 cities.
- **North America Margins**: H2 pressure from steel/tariffs offset by price increases. Water heater cadence 51% front half, 49% back half. Boiler sales guide raised to 4%–6% YoY.
- **M&A Focus**: CEO prioritizes deals strengthening core or building new platforms. Active pipeline with potential 2025 transactions. Open to transformational deals but cautious.
- **Innovation Pipeline**: New product center in Tennessee to accelerate R&D. Focus on tankless, PFAS filtration, and commercial efficiency. CTO to drive tech integration.


A. O. Smith Corporation (AOS) Q2 2025 Earnings Call Transcript

- **CEO Transition & Buybacks**: Steve Shafer to lead, $400M share buyback for 2025.
- **Q1 Results**: $964M revenue, 2% YoY decline; China sales down 4% on weak demand.
- **Tariff Mitigation**: 6%-9% price hikes offset 6%-8% COGS tariff impact.
- **China Restructuring**: 8%-10% margin target despite 5%-8% sales decline.
- **Boiler Growth**: 3%-5% YoY boiler sales growth to offset channel shift.
- **2025 Outlook**: Flat to +2% sales, $3.60-$3.90 EPS guidance maintained.

**【CEO Opening Remarks】**
- Announced Steve Shafer as CEO effective July 1, 2025, with a smooth transition plan.
- Q1 2025 revenue was $964M, down 2% YoY, driven by North America water heater volume decline (4%) offset by boiler growth (10%).
- Repurchased $121M of shares in Q1, with full-year buyback target of $400M.
- China third-party sales declined 4% in local currency due to weak consumer demand.

**【CFO Financial Details】**
- GAAP EPS: $0.95 (down 5% YoY), Non-GAAP EPS: $1.08 (exceeded expectations).
- North America segment margin: 24.7% (down 120bps YoY due to lower water heater volumes).
- Free cash flow: $17M (lower than prior year due to higher Q1 sales and lower collections).
- Full-year EPS guidance maintained at $3.60-$3.90, with 6%-8% COGS impact from tariffs.

**【Steve Shafer's Market Update】**
- Tariff response: 6%-9% price increases on water heaters, strategic sourcing, and accelerated Mexico production for tankless units.
- North America boiler sales expected to grow 3%-5% YoY, offsetting water treatment channel shift.
- China restructuring to achieve 8%-10% margin despite 5%-8% sales decline.
- 2025 capex: $90M-$100M for R&D and regulatory compliance.

**【Q&A Highlights】**
- **Tariff Impact**: 6%-8% COGS increase from tariffs, partially mitigated by pricing and Mexico production shift.
- **China Stimulus**: Slow consumer recovery; stimulus programs stabilize but don't drive growth.
- **Capacity Utilization**: U.S. plants optimized for 80%+ replacement business; Mexico tankless ramp to begin Q2.
- **Regulatory Compliance**: Preparing for 2026 low-efficiency boiler phaseout, with 55% product impact.


A. O. Smith (AOS)-29 Apr 25-2025 Q1 Earnings call transcript

- **2024 Results**: Flat sales ($3.8B) with North America growth offset by China decline. Adjusted EPS $3.73 (-2% YoY). Free cash flow $474M (89% conversion), returning $496M to shareholders.
- **2025 Outlook**: EPS $3.60-$3.90, flat to up. North America water heaters flat, China sales -5% to -8% in local currency, India growth 13%+.
- **Strategic Moves**: China restructuring saves $15M, India Pureit acquisition adds $15M in 2025. Tankless production shift to Mexico adds 50bps margin headwind.
- **Key Risks**: China consumer recovery timing, North America volume headwinds in H1, tariff uncertainties.


**【CEO Summary Section】**
- **2024 Performance Overview**: Total sales of $3.8 billion (-1% YoY), driven by North America's slight increase offset by China's 6% decline. Adjusted EPS of $3.73 (-2% YoY). North America water heater volumes declined due to lower residential and commercial demand, while boiler sales (+8%) and water treatment (+10%) offset losses. China faced weak consumer demand, with third-party sales down 6% in local currency.
- **Strategic Initiatives**: Completed Pureit acquisition in India, launched new tankless water heaters, and restructured China operations to reduce costs. Free cash flow of $474 million (89% conversion), with $496 million returned to shareholders via dividends and buybacks.
- **2025 Outlook**: EPS guidance of $3.60-$3.90, flat to slightly up. North America water heater volumes expected flat, with pricing benefits offsetting volume declines. China sales projected to decline 5%-8% in local currency, but restructuring to improve margins to 8%-10%.

**【CFO Financial Commentary】**
- **North America Segment**: Sales $3 billion (flat YoY), adjusted segment margin 24.2% (-60bps). Boiler and water treatment growth offset water heater volume decline. Fourth-quarter segment earnings $154 million (-11% YoY) due to lower volumes.
- **Rest of World Segment**: Sales $919 million (-4% YoY), adjusted segment margin 8.3% (-210bps). India grew 13% in local currency, while China's restructuring led to $11 million charge.
- **Free Cash Flow**: $474 million (89% conversion), with 2025 guidance of $500-$550 million. Capital expenditures expected to decrease to $90-$100 million.

**【Q&A Highlights】**
- **China Market**: Restructuring to save $15 million annually, with 2025 sales decline 5%-8% in local currency. Appliance stimulus program shows early demand but uncertain sustainability.
- **North America Water Treatment**: 5% top-line decline in 2025 due to channel rebalancing, but margin expansion of 250bps through focusing on dealer and DTC channels.
- **Tariffs and Supply Chain**: North America manufacturing footprint (80% U.S.) provides flexibility against tariffs. Tankless production transition from China to Mexico adds 50bps margin headwind in 2025.
- **India Expansion**: Pureit acquisition adds $15 million in 2025 sales, with long-term growth potential in water treatment. India legacy business expected mid-teens growth.


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