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]

Financial Performance - Sales increased by 4% year-over-year, reaching $943 million in Q3 2025, compared to $903 million in Q3 2024[11] - Earnings Per Share (EPS) increased by 15% year-over-year, reaching $0.94 in Q3 2025, compared to $0.82 in Q3 2024[11] - North America segment sales increased by 6% year-over-year[22] - China third-party sales declined 12% in local currency[28] - Legacy India business grew 13% and Pureit added $17 million to the quarter[28] - Free cash flow year-to-date September 2025 was $381 million, compared to $283 million for the same period in 2024[30] Segment Performance - North America segment earnings were $180 million in Q3 2025, compared to $163 million in Q3 2024[23] - Rest of World segment sales decreased by 1% year-over-year to $208 million in Q3 2025, from $210 million in Q3 2024[25] - Rest of World segment operating margin expanded 90 basis points[28] - North America segment margin increased 110 bps to 242 percent[15] Sustainability - Achieved a 30% reduction in greenhouse gas intensity by 2024, exceeding the 2025 goal of 10% reduction[16] - Achieved annual water savings of 36 million gallons, progressing towards the 2030 goal of 40 million gallons[18]

Financial Performance - A.O. Smith reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.89 per share, and up from $0.82 per share a year ago, representing an earnings surprise of +5.62% [1] - The company posted revenues of $942.5 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.69% and increasing from $902.6 million year-over-year [2] Market Performance - A.O. Smith shares have increased by approximately 0.6% since the beginning of the year, while the S&P 500 has gained 16.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.92 on revenues of $964.08 million, and for the current fiscal year, it is $3.83 on revenues of $3.88 billion [7] - The outlook for the Manufacturing - Electronics industry, where A.O. Smith operates, is currently in the top 26% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Core Insights - Aquasana is committed to enhancing contaminant reduction in drinking water, particularly against PFAS and microplastics, in response to growing health concerns [1][2] - The new Claryum® under sink systems achieve up to 99.99% reduction of 78 contaminants, including lead and PFAS, and meet stricter NSF certification standards [1][3] Product Features - The Claryum® technology employs four advanced filtration methods: activated carbon, catalytic carbon, ion-exchange, and sub-micron filtration, while preserving beneficial minerals [3] - The new under sink filters offer aesthetic options with premium metal faucets in various finishes and a no-faucet option for customization [2] Market Availability - The enhanced Claryum® under sink filters are available nationwide, starting at $99.99 for the no-faucet option and $124.99 for systems with dedicated faucets [4] Company Overview - Aquasana, a subsidiary of A. O. Smith Corporation, focuses on providing high-quality water filtration systems to improve health and wellness at home [5]

Financial Performance - A. O. Smith reported third quarter 2025 net sales of $942.5 million, a 4% increase compared to $902.6 million in Q3 2024[2] - Net earnings for the third quarter increased by 10% to $132 million, with diluted earnings per share rising 15% to $0.94[3] - North America sales grew 6%, with an operating margin expansion of 110 basis points to 24.2%[3] - The company experienced a 12% decline in local currency sales in China, contributing to a 1% decrease in the Rest of World segment[3] - Net earnings for the nine months ended September 30, 2025, were $420.8 million, a slight decrease from $423.9 million in the same period of 2024[27] - Earnings before income taxes for the nine months ended September 30, 2025, were $554.5 million, slightly down from $555.9 million in 2024[27] Cash Flow and Capital Expenditures - Cash provided by operations increased by 21% to $434 million, while free cash flow grew 35% to $381 million in the first nine months of 2025[3] - Cash provided by operating activities increased to $433.7 million for the nine months ended September 30, 2025, compared to $359.9 million in 2024, representing a growth of approximately 20.5%[28] - Free cash flow for the nine months ended September 30, 2025, was $380.5 million, up from $282.5 million in 2024, indicating a significant increase of 34.7%[28] - Capital expenditures for the nine months ended September 30, 2025, were $53.2 million, a decrease from $77.4 million in 2024, reflecting a reduction of approximately 31.2%[28] Shareholder Returns - A. O. Smith repurchased 5 million shares for $335.4 million in the first nine months of 2025, with an expected total of approximately $400 million for the year[11] - The company approved a 6% increase in the dividend rate, marking over 30 consecutive years of dividend increases[12] - The company repurchased $335.4 million in common stock during the nine months ended September 30, 2025, compared to $237.1 million in 2024, representing an increase of 41.5%[25] Financial Position - As of September 30, 2025, total cash and marketable securities were $172.8 million, with total debt at $185.8 million, resulting in a leverage ratio of 9.2%[9] - The total cash and cash equivalents at the end of the period were $152.7 million, down from $219.3 million at the end of September 2024[25] Guidance and Outlook - The full year 2025 sales outlook has been adjusted to a range of flat to up 1%, with diluted EPS guidance narrowed to $3.70 to $3.85[3] - The company reported a diluted EPS guidance for 2025 of $3.70-3.85, compared to an adjusted EPS of $3.73 for 2024[30]

Core Insights - A. O. Smith Corporation reported a 4% increase in net sales for Q3 2025, reaching $942.5 million compared to $902.6 million in Q3 2024, with net earnings rising by 10% to $132 million [1][5] - The North America segment experienced a 6% sales growth, driven by pricing actions and strong demand for commercial water heaters and boilers, while the China market faced a 12% decline in local currency sales [1][2][5] - The company has adjusted its full-year sales outlook to a range of flat to up 1% and narrowed its diluted EPS guidance to $3.70 to $3.85 [5][12] Key Financial Metrics - Q3 2025 net sales: $942.5 million, up from $902.6 million in Q3 2024, representing a 4% YoY increase [1][5] - Net earnings for Q3 2025 were $132 million, compared to $120.1 million in Q3 2024, marking a 10% increase [1][5] - Diluted earnings per share rose to $0.94 from $0.82, reflecting a 15% increase YoY [1][5] Segment Performance - North America segment sales reached $742.8 million, a 6% increase YoY, primarily due to pricing actions and higher volumes of commercial water heaters and boilers [2][5] - Segment earnings for North America were $179.7 million, an 11% increase from $162.5 million in the prior year, with an operating margin of 24.2%, up 110 basis points [3][22] - The Rest of World segment saw sales decrease by 1% to $207.9 million, with a 12% decline in China sales offset by a 13% growth in India [6][7] Cash Flow and Capital Allocation - Cash provided by operations increased by 21% to $434 million, while free cash flow grew by 35% to $381 million in the first nine months of 2025 [5][9] - The company repurchased 5 million shares for $335.4 million in the first nine months of 2025, with an expected total repurchase of approximately $400 million for the year [10][11] Dividend and Shareholder Returns - A. O. Smith's board approved a 6% increase in the dividend rate, continuing a trend of over 30 consecutive years of dividend increases [11][24]

Core Insights - A. O. Smith Corporation (AOS) is set to release its third-quarter 2025 results on October 28, with earnings estimates remaining stable over the past 60 days [1][9] - The Zacks Consensus Estimate for AOS's revenues is $936 million, reflecting a 3.7% increase year-over-year, while adjusted earnings are expected to be 89 cents per share, indicating an 8.5% rise from the previous year [2][9] Revenue Expectations - The North America segment is anticipated to see a revenue increase of 2.7% year-over-year to $722.2 million, despite a decline in orders for residential water heater products, with strong demand for boilers expected to support performance [3] - The Rest of the World segment's revenues are projected to rise by 3.4% year-over-year to $217.4 million, aided by incremental sales from the Pureit business, despite challenges in the Chinese real estate market affecting water treatment and heater product volumes [4] Challenges and Opportunities - A. O. Smith has faced negative impacts from supply-chain constraints, particularly for engineered components, which have increased costs and delayed product deliveries [5] - The company's international operations expose it to foreign currency headwinds, potentially affecting profitability [5] - Recent acquisitions, including Pureit from Unilever and Impact Water Products, are expected to positively influence revenue and enhance AOS's position in the water treatment industry [6][7] Earnings Predictions - The current Earnings ESP for AOS is -1.31%, with the Most Accurate Estimate at 88 cents per share, which is below the Zacks Consensus Estimate of 89 cents, indicating uncertainty regarding an earnings beat this quarter [8][10]

Core Viewpoint - A.O. Smith is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended September 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on October 28, with a consensus EPS estimate of $0.89, reflecting an 8.5% increase year-over-year. Revenues are projected to be $936.17 million, up 3.7% from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has been revised down by 0.86% over the last 30 days, indicating a collective reassessment by analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - A.O. Smith has a negative Earnings ESP of -1.31%, suggesting that analysts have recently become bearish on the company's earnings outlook. However, the stock holds a Zacks Rank of 2, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, A.O. Smith exceeded the expected EPS of $0.97 by delivering $1.07, resulting in a surprise of +10.31%. Over the past four quarters, the company has beaten consensus EPS estimates twice [13][14]. Conclusion - A.O. Smith does not currently appear to be a strong candidate for an earnings beat, and investors should consider additional factors when evaluating the stock ahead of its earnings release [17].