Q4 2025 A O Smith Corp Earnings Call Transcript

Jan 29, 2026 / 03:00PM GMT

Release Date Price: €57.76 (-1.70%)

Transcript 10-K8-K

Key Points

Positve

A.O. Smith Corp (AOS) achieved a record EPS of $3.85 in 2025, marking a 6% increase from the previous year.
The North America segment saw a margin improvement of 20 basis points, driven by profitability improvements in the water treatment business and higher commercial sales.
The acquisition of Leonard Valve is expected to expand A.O. Smith Corp (AOS)'s water management market reach and digital capabilities.
A.O. Smith Corp (AOS) returned $597 million to shareholders through dividends and share repurchases in 2025.
The company generated strong free cash flow of $546 million in 2025, a 15% increase over 2024.

Negative

Sales in China decreased by 12% in local currency due to economic weakness and the discontinuation of government subsidy programs.
The wholesale residential channel faced challenges due to a slowdown in new construction and increased competitive intensity.
North America water treatment sales decreased by 2% in 2025 due to a strategic shift away from the on-the-shelf retail channel.
The Rest of the World segment saw a 4% decrease in sales, primarily driven by lower sales in China.
A.O. Smith Corp (AOS) anticipates continued headwinds in China for 2026, projecting a mid-single-digit sales decrease.

Operator

Welcome to A. O. Smith Corporation fourth quarter 2025 earnings conference call. (Operator Instructions) I would now like to hand the call over to Helen Gurholt. You may begin.

Helen Gurholt

A O Smith Corp - Vice President - Investor Relations and Financial Planning & Analysis

Good morning, everyone, and welcome to the A.O. Smith full year and fourth quarter conference call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Joining me today are Steve Shafer, Chief Executive Officer; and Chuck Lauber, Chief Financial Officer.

In order to provide improved transparency into the operating results of our business, we provided non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures. Adjusted earnings adjusted earnings per share and adjusted segment earnings exclude the impact of restructuring and impairment expenses. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation on our website. A friendly reminder that

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