BALTIMORE, Dec. 05, 2025 (GLOBE NEWSWIRE) -- The Golden Arm Educational Foundation, along with presenting sponsor A. O. Smith Corporation, proudly announces Diego Pavia, quarterback for the Vanderbilt University Commodores, as the recipient of the 2025 Johnny Unitas Golden Arm Award®, presented annually to the nation’s top upper-class collegiate quarterback who excels on the field, in the classroom, and in the community. With this honor, Pavia becomes the first Vanderbilt Commodore in program history to win ...

Core Insights - A. O. Smith Corporation (AOS) is experiencing strong demand for commercial water heaters and boilers in North America, with organic sales in India increasing by 12.9% year over year in Q3 2025 [1]. - The company anticipates a sales growth of approximately 4-6% in its North America boiler business and low-single-digit growth in the commercial water heater business for the year [1]. Business Acquisitions - A. O. Smith is focused on acquiring businesses to expand its customer base, regions, and product lines, exemplified by its acquisition of LVC Holdco LLC (Leonard Valve) for $470 million, expected to close in Q1 2026 [2]. - The acquisition of Pureit from Unilever in November 2024 has enhanced A. O. Smith's offerings in water treatment solutions and strengthened its market position in India [3]. Financial Performance and Shareholder Returns - In the first nine months of 2025, A. O. Smith paid dividends totaling $145.1 million and repurchased shares worth $335.4 million, with a 6% increase in dividends to 36 cents per share announced in October 2025 [4]. - The company reported cash and cash equivalents of $152.7 million at the end of Q3 2025, significantly higher than its current debt of $19 million [4]. Market Challenges - The company faced challenges in its Rest of the World segment, particularly in China, where revenues declined by 1% year over year in Q3 2025, with a projected 10% decrease in sales for 2025 in local currency [7]. - Rising operating expenses, with costs of sales and selling, general, and administrative expenses increasing by 2.2% and 7% year over year, respectively, are putting pressure on A. O. Smith's profitability [8].

Core Insights - A. O. Smith Corporation (AOS) has a market capitalization of $8.9 billion and specializes in manufacturing and marketing water heating and treatment products under various brands [1] Performance Overview - AOS shares have underperformed the broader market, declining 11.9% over the past 52 weeks, while the S&P 500 Index has gained 10.5% [2] - Year-to-date, AOS stock is down 7.3%, compared to an 11.2% increase in the S&P 500 [2] - AOS has also lagged behind the Invesco Global Water ETF, which gained 6.4% over the past 52 weeks [3] Recent Earnings Report - Following the Q3 earnings release, AOS shares fell 2.6% despite better-than-expected performance [4] - Total revenue for the quarter increased 4.4% year-over-year to $942.5 million, slightly exceeding consensus estimates [4] - Earnings per share (EPS) rose 14.6% from the previous year to $0.94, surpassing analyst expectations of $0.89 [4] Market Challenges - Sales in China decreased by nearly 12% in local currency year-over-year, with expectations of continued challenges in this market [5] - The company anticipates that a weakening new home construction market will negatively impact residential water heating in North America [5] - AOS has lowered its fiscal 2025 sales outlook to a projection of flat to up 1%, and adjusted its EPS outlook to a range of $3.70 to $3.85, which has affected investor confidence [5] Analyst Expectations - For the current fiscal year ending in December, analysts expect AOS' EPS to grow 1.6% year-over-year to $3.79 [6] - AOS has a mixed earnings surprise history, beating consensus estimates in three of the last four quarters [6] - Among 13 analysts covering the stock, the consensus rating is a "Moderate Buy," with four "Strong Buy," eight "Hold," and one "Strong Sell" rating [6]

Core Viewpoint - A. O. Smith Corporation has signed a definitive agreement to acquire LVC Holdco LLC (Leonard Valve) for $470 million, which is expected to close in the first quarter of 2026, enhancing A. O. Smith's presence in the water management market [1][3][7] Financial Summary - The acquisition is valued at approximately $412 million after adjusting for estimated tax benefits, representing an adjusted multiple of about 12 times forecasted 2026 EBITDA [1][7] - A. O. Smith expects the transaction to be accretive to its earnings per share in 2026, with strong growth, margins, and free cash flow generation [7] Strategic Fit - The acquisition establishes a new growth platform in the fast-growing water management category, complementing A. O. Smith's core water heater and boiler businesses [4][7] - Leonard Valve's advanced digital mixing technology and Heat-Timer platform will accelerate A. O. Smith's digital and connected water strategy, creating leading smart water building management capabilities [7] Market Positioning - Leonard Valve's products serve critical sectors such as healthcare, education, and industrial markets, which will broaden A. O. Smith's commercial exposure and strengthen relationships with specifying engineers [7] - The acquisition aligns with A. O. Smith's disciplined acquisition framework, meeting key financial thresholds [7] Leadership Perspectives - A. O. Smith's CEO emphasized the strategic fit and alignment of values between the two companies, highlighting the potential for delivering integrated, high-performance systems [3][5] - Leonard Valve's CEO expressed excitement about the partnership, noting significant opportunities to accelerate the adoption of digital water-management technologies [5]

Core Insights - Lowe's has a target payout ratio of 35% and currently operates at approximately 38%, indicating potential for dividend growth aligned with net income increases [1][2] - The company has significantly outpaced inflation with its dividend growth, having more than quintupled the inflation rate since the pandemic [2] - Lowe's has maintained a streak of over 60 consecutive years of dividend increases, earning it the status of both Dividend Aristocrat and Dividend King [3][4] Dividend Growth and Strategy - Lowe's dividend growth has doubled since 2021, with a 4% increase planned for 2025, which still exceeds inflation [2][3] - The company has made strategic acquisitions, spending over $10 billion on Artisan Design Group and Foundation Building Materials to enhance its market position and product offerings [6] - Analysts project an 8% growth for Lowe's in the coming year, although they have historically underestimated the company's earnings growth [6] Market Position and Comparisons - Lowe's is part of a select group of companies known as Dividend Aristocrats, with fewer than 70 companies achieving this status [4][5] - The article highlights other companies with strong dividend growth, such as A. O. Smith and Automatic Data Processing, which also have impressive long-term dividend increase records [5][13] - A. O. Smith has increased its dividends by 1,600% since 2000, while Automatic Data Processing has raised its payouts by 2,100% in the same period [8][13] Financial Metrics - Lowe's current market capitalization is approximately $136 billion [3] - A. O. Smith has a payout ratio of 37%, lower than Lowe's, indicating potential for future dividend growth [8] - Automatic Data Processing has a higher payout ratio of 60%, but it has maintained a strong earnings growth rate of 9.8% [14]

Acquisition and Sales - The company acquired Pureit from Unilever for approximately $125 million, contributing $45 million to sales in the first nine months of 2025 and expected to generate $55 million in sales for the full year 2025[73]. - Net sales for the third quarter of 2025 were $942.5 million, an increase of 4.4% from $902.6 million in the same quarter of 2024; year-to-date sales reached $2,917.7 million, slightly up from $2,905.7 million[79]. - North America segment sales increased to $742.8 million in Q3 2025, up from $703.3 million in Q3 2024, with segment earnings rising to $179.7 million from $162.5 million[85][86]. - Rest of World segment sales decreased by 1.1% to $207.9 million in Q3 2025 compared to $210.3 million in Q3 2024, with segment earnings increasing to $15.4 million from $13.6 million[87][88]. - The company expects consolidated sales in 2025 to be flat to up 1% compared to 2024, driven by projected growth in boiler sales of 4-6% and low single-digit growth in commercial industry volumes[89]. Financial Performance - Gross profit margin improved to 38.7% in Q3 2025 from 37.4% in Q3 2024, and to 39.0% for the first nine months of 2025 compared to 38.5% in the same period last year[80]. - The effective income tax rate for Q3 2025 was 23.2%, slightly down from 23.3% in Q3 2024, with an estimated annual effective tax rate of approximately 24% for 2025[84]. - The company anticipates full-year earnings per share between $3.70 and $3.85 for 2025, excluding impacts from potential future acquisitions and outcomes of the assessment of the China business[89]. - Diluted EPS guidance for 2025 is projected to be between $3.70 and $3.85, compared to an adjusted EPS of $3.73 for 2024[101]. Cash Flow and Capital Management - Cash provided by operating activities for the first nine months of 2025 was $433.7 million, up from $359.9 million in the same period of 2024, primarily due to lower inventory balances[91]. - Free cash flow for the first nine months of 2025 was $380.5 million, compared to $282.5 million in 2024, with expectations of approximately $500 million for the full year 2025[91][99]. - Capital expenditures totaled $53.2 million in the first nine months of 2025, down from $77.4 million in the same period last year, with projections of approximately $75 million for the full year 2025[92]. - Total debt decreased by $7.4 million in the first nine months of 2025, resulting in a leverage ratio of 9.2% as of September 30, 2025, compared to 9.3% at the end of 2024[94]. - The company repurchased 4,976,377 shares at an average price of $67.39 per share for a total cost of $335.4 million during the first nine months of 2025, with an expected total repurchase expenditure of approximately $400 million for the full year[95]. - The company declared a regular quarterly cash dividend of $0.36 per share, payable on November 17, 2025[96]. - The company expects cash provided by operating activities to be approximately $600 million in 2025[91]. - The company has a renewed $500 million revolving credit facility expiring on August 23, 2029, with an available borrowing capacity of $470 million as of September 30, 2025[93]. - The company is in compliance with financial covenants related to its credit facility and expects to maintain compliance in the foreseeable future[93]. Restructuring and Expenses - The company recognized restructuring and impairment expenses of $17.6 million in 2024, including $11.3 million in severance expenses in China[75]. - Working capital decreased to $463.6 million as of September 30, 2025, from $495.7 million at the end of 2024, primarily due to lower inventory and cash balances[90].

Core Insights - A. O. Smith Corporation (AOS) reported third-quarter 2025 adjusted earnings of 94 cents per share, exceeding the Zacks Consensus Estimate of 89 cents, marking a 15% year-over-year increase [1][8] - Net sales reached $942.5 million, surpassing the consensus estimate of $936 million, with a 4% year-over-year growth driven by higher water heater and boiler sales in North America [1][8] Segmental Performance - North America sales increased by 6% year-over-year to $742.8 million, outperforming the estimated $722.2 million, attributed to higher commercial water heater and boiler volumes [2] - Earnings from North America were $179.7 million, reflecting an 11% year-over-year increase [2] - Sales in the Rest of the World segment totaled $207.9 million, down 1% year-over-year, with China sales decreasing by 12%, while organic sales in India grew by 13% [3] - The Rest of the World segment's earnings rose by 13.2% year-over-year to $15.4 million due to cost reduction measures [3] Financial Metrics - A. O. Smith's cost of sales was $578.0 million, up 2.2% year-over-year, while selling, general, and administrative expenses increased by 7% to $188.9 million [4] - Gross profit increased by 8.1% year-over-year to $364.5 million, resulting in a gross margin of 38.7%, up from 37.4% in the previous year [4] - Interest expenses rose to $3.6 million from $1.5 million in the year-ago quarter [4] Liquidity and Cash Flow - As of September 30, 2025, cash and cash equivalents totaled $152.7 million, down from $239.6 million at the end of December 2024 [5] - Long-term debt decreased to $166.8 million from $183.2 million at the end of December 2024 [5] - Cash provided by operating activities for the first nine months of 2025 was $433.7 million, compared to $359.9 million in the same period last year [5] Share Repurchase Activity - In the first nine months of 2025, A. O. Smith repurchased 5 million shares for $335.4 million, with approximately 1.8 million shares remaining under the current repurchase authorization as of September 2025 [6] 2025 Outlook - A. O. Smith updated its 2025 sales outlook, now expecting net sales in the range of $3.50-$3.80 billion, down from the previous estimate of $3.85-$3.93 billion [9] - The company projects adjusted earnings per share (EPS) to be between $3.70-$3.85, slightly revised from the earlier expectation of $3.70-$3.90 [9]

Financial Performance - The company reported third-quarter sales of $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024 [5][11] - North America sales grew 6%, primarily due to pricing actions and strong commercial water heater and boiler volumes [5][11] - Operating cash flow grew 21% to $434 million, and free cash flow grew 35% to $381 million during the first nine months of 2025 compared to the same period last year [12] Business Line Performance - North America water heater sales increased 6%, driven by pricing actions and higher commercial water heater volumes [7][11] - North America boiler sales increased by 10% compared to the third quarter of 2024, led by pricing actions and higher volumes [8][11] - North America water treatment sales decreased 5% in the third quarter, with growth in priority channels offset by a decrease in the retail channel [8][11] Market Performance - Local currency sales in China decreased by 12% due to economic challenges and reduced government subsidy programs [6][11] - The legacy India business continued strong growth, delivering 13% growth in local currency [6][11] - The company expects a decline of approximately 10% in local currency sales in China for 2025 [18][20] Company Strategy and Industry Competition - The company is committed to sustainability, integrating it into operational excellence and innovation [9][10] - The board approved a 6% increase in the quarterly dividend, marking the 32nd consecutive year of dividend increases [13] - The company is actively assessing strategic opportunities and has sufficient resources for acquisitions that meet its criteria [14] Management Commentary on Operating Environment and Future Outlook - Management noted ongoing economic challenges in China and a cautious outlook for the U.S. residential water heater market, projecting flat to slightly down industry volumes [17][18] - The company remains confident in navigating tariff and competitive landscapes in core water heater and boiler businesses [25] - Management emphasized the importance of operational excellence and innovation as key focus areas for future growth [22][83] Other Important Information - The company plans to generate free cash flow of approximately $500 million in 2025 [16] - The company has lowered its full-year sales outlook from 2% to 3% growth to a range of flat to up 1% compared to last year [20][21] Q&A Session Summary Question: Could you talk about your performance versus the overall market in China? - Management indicated that the market continues to face challenges, with increased competitive intensity and promotional activities due to the discontinuation of government subsidies [27][28] Question: What is driving the strength in North America commercial water heater sales? - Management attributed the strength to a strong market backdrop and competitive product offerings, including the launch of the Flex commercial water heater [29][30] Question: Can you provide an update on the China strategic review? - Management stated that it is still early in the process and no outcomes have been narrowed down yet [36] Question: How do you see the U.S. residential water heater market playing out? - Management noted a slight decrease in expectations due to pressures from new home construction completions [44][45] Question: What is the outlook for tariffs and material costs? - Management mentioned that tariff costs are expected to increase total company cost of goods sold by approximately 5% [15][48] Question: What is the current state of inventories across residential channels? - Management indicated that inventory levels are at normal levels, but there may be prudence in managing inventories due to hesitancy in new home construction [84][85] Question: Can you discuss the CapEx guidance for the year? - Management has lowered the CapEx outlook slightly, pushing some investments into early next year [89] Question: How do you prioritize capital allocation going forward? - Management emphasized the importance of maintaining a strong core business while also looking for acquisition opportunities [90][91]

Financial Performance - The company reported third-quarter sales of $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024 [5][11] - North America sales grew 6%, primarily due to pricing actions and strong commercial water heater and boiler volumes [5][11] - Operating cash flow grew 21% to $434 million, and free cash flow grew 35% to $381 million during the first nine months of 2025 compared to the same period last year [12] Business Line Performance - North America water heater sales increased 6%, driven by pricing actions and higher commercial water heater volumes [7][11] - North America boiler sales increased by 10% compared to the third quarter of 2024, led by pricing actions and higher volumes of high-efficiency boilers [8][11] - North America water treatment sales decreased 5% in the third quarter, with growth in priority channels offset by a decrease in the retail channel [8][11] Market Performance - Local currency sales in China decreased by 12% due to economic challenges and reduced government subsidy programs [6][11] - The legacy India business continued strong growth, delivering 13% growth in local currency [6][11] - The company expects a decline of approximately 10% in local currency sales in China for 2025 [18][20] Company Strategy and Industry Competition - The company is committed to sustainability, integrating it into operational excellence and innovation [9][10] - The board approved a 6% increase in the quarterly dividend, marking the 32nd consecutive year of dividend increases [13] - The company is actively assessing strategic opportunities and has sufficient resources for acquisitions that meet its strategic and financial criteria [14] Management Commentary on Operating Environment and Future Outlook - Management noted ongoing economic challenges in China and a cautious outlook for the U.S. residential market due to lower new home construction completions [17][18] - The company is encouraged by resilient demand in the commercial water heater market and has increased projections for commercial water heater industry volumes [17] - Management expressed confidence in navigating tariff and competitive landscapes in core water heater and boiler businesses [25] Other Important Information - The company plans to generate free cash flow of approximately $500 million in 2025 [16] - The company has lowered its full-year sales outlook from 2%-3% growth to a range of flat to up 1% compared to last year [20] Q&A Session Summary Question: Could you talk about your performance versus the overall market in China? - Management indicated that the market continues to face challenges, with increased competitive intensity and promotional activities due to the discontinuation of government subsidies [27][28] Question: What is driving the strength in North America commercial water heater sales? - Management attributed the strength to a strong market backdrop and competitive product offerings, including the launch of the Flex commercial water heater [29][30] Question: Can you provide an update on the China strategic review? - Management stated that it is still early in the process and no outcomes have been narrowed down yet [36] Question: How do you see the U.S. residential water heater market playing out? - Management noted a slight decrease in expectations due to pressure from new home construction completions [45] Question: What is the outlook for the fourth quarter in China? - Management expects an uptick in volume compared to the third quarter, but overall conditions remain uncertain due to the subsidy program discontinuation [75]

Financial Performance - The company reported third-quarter sales of $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024 [4][10] - North America sales grew 6%, primarily due to pricing actions and strong commercial water heater and boiler volumes [4][10] - Operating cash flow grew 21% to $434 million, and free cash flow grew 35% to $381 million during the first nine months of 2025 compared to the same period last year [11] Business Line Performance - North America water heater sales increased by 6%, driven by pricing actions and higher commercial water heater volumes [5][10] - North America boiler sales increased by 10% compared to the third quarter of 2024, led by pricing actions and higher volumes of high-efficiency boilers [6][10] - North America water treatment sales decreased by 5% in the third quarter, as growth in priority channels was offset by a decrease in the retail channel [6][10] Market Performance - Local currency sales in China decreased by 12% due to economic challenges and reduced government subsidy programs [5][10] - The legacy India business continued strong growth, delivering 13% growth in local currency [5][10] - The company expects a decline of approximately 10% in local currency sales in China for 2025 [17][19] Company Strategy and Industry Competition - The company is committed to sustainability and plans to publish a sustainability progress report [8][9] - The company is actively assessing strategic opportunities and has sufficient resources for acquisitions that meet its strategic and financial criteria [12][19] - The company is focusing on operational excellence and innovation to drive future growth [64] Management Commentary on Operating Environment and Future Outlook - Management noted ongoing economic challenges in China and a cautious outlook for the U.S. residential water heater market due to lower new home construction completions [16][34] - The company is encouraged by resilient demand in the commercial water heater market and has increased its projection for commercial water heater industry volumes [16][19] - Management expressed confidence in navigating the tariff and competitive landscape in core water heater and boiler businesses [24] Other Important Information - The board approved a 6% increase in the quarterly dividend to $0.36 per share, marking the 32nd consecutive year of dividend increases [12] - The company repurchased approximately 5 million shares of common stock for a total of $335 million in the first nine months of 2025 [12] Q&A Session Summary Question: Could you talk about your performance versus the overall market in China? - Management indicated that the market continues to face challenges, with increased competitive intensity and promotional activities due to the discontinuation of government subsidies [26] Question: What is driving the strength in North America commercial water heater sales? - Management attributed the strength to a strong market backdrop and competitive product offerings, including the launch of the Flex commercial water heater [27][29] Question: Can you provide an update on the China strategic review? - Management stated that it is still early in the process and no outcomes have been narrowed down yet [31] Question: How do you see the U.S. residential water heater market playing out? - Management noted a slight decrease in expectations due to pressures from new home construction completions [34] Question: What are the expectations for the fourth quarter in China? - Management expects an uptick in volume compared to the third quarter, but overall outlook remains cautious due to the discontinuation of the subsidy program [58]