#USA #Milwaukee #A. O. Smith #Leonard Valve

A. O. Smith Reports Robust Performance in 2025

A. O. Smith Corporation, a leading global water technology company, has recorded substantial financial gains for the year 2025, highlighted by achieving diluted earnings per share (EPS) of $3.85. This marks a significant 6% increase compared to the previous year, emphasizing the resilience and strategic focus of the company even amidst market challenges.

Key Highlights of 2025

In 2025, A. O. Smith generated impressive sales amounting to $3.8 billion, coupled with net earnings of $546.2 million, representing a 2% increase year over year. The positive momentum can be attributed to various factors including operational efficiencies that led to an 80 basis points improvement in operating margin, reinforcing the company’s financial stability.

The year was characterized by strong execution in the market, allowing A. O. Smith to release significant capital back to shareholders with approximately $597 million directed towards dividends and share repurchases. This initiative not only strengthens shareholder trust but also reflects the company’s commitment to delivering value to its investors.

Furthermore, the company recently expanded its portfolio by acquiring Leonard Valve in January 2026. This move aims to enhance their water management capabilities and open new avenues for future growth.

Performance Breakdown by Segment

For the North American segment, A. O. Smith’s 2025 sales reached $3.0 billion, showing a slight increase from the previous year. The growth was primarily driven by price benefits from water heater sales and increased volumes in boilers and commercial water heaters, although these were partially offset by lower residential water heater volumes due to fluctuating market conditions. The reported segment earnings were $727.9 million, with a margin of 24.4%.

On the international front, the Rest of World segment saw sales of $880.4 million, reflecting a 4% decline year over year. This is mainly attributed to decreased sales in China, despite favorable growth in India where organic sales increased by 13% in local currency. The restructuring initiatives taken in the latter part of 2024 began to show benefits, contributing to higher earnings which grew to $76.4 million for this segment.

Looking Ahead to 2026

With a strong foundation laid in 2025, A. O. Smith is optimistic about its outlook for 2026. The company anticipates a sales increase of 2% to 5% over the previous year, predicting consolidated sales between $3.9 billion and $4.0 billion. The forecasted EPS for 2026 is estimated to range from $3.85 to $4.15.

The new projected growth is partially attributed to the recently acquired Leonard Valve, which is expected to contribute sales of approximately $70 million. While challenges in the China market persist, A. O. Smith expects improvements throughout the year thanks to market recovery efforts and strategic actions.

CEO Steve Shafer commented on the company's robust performance and future strategy, stating, "Our strong balance sheet and positive cash flow empower us to support growth, maintain dividends, and facilitate share repurchases while targeting strategic acquisitions that align with our focus on portfolio management."

Conclusion

The year 2025 was a remarkable period for A. O. Smith, with notable achievements paving the way for a promising 2026. As the company consolidates its position in the competitive water tech industry, its strategic acquisitions and commitment to shareholder returns stand out as key indicators of future success. Stakeholders can look forward to continued transparency and updates through A. O. Smith’s upcoming conference call, further highlighting its ongoing trajectory of growth and innovation.