A. O. Smith(US:AOS)2026-01-29 11:57Financial Performance - A. O. Smith reported record diluted earnings per share (EPS) of $3.85 for 2025, a 6% increase from $3.63 in 2024[2] - Net sales for 2025 were $3.83 billion, slightly up from $3.82 billion in 2024, with net earnings increasing 2% to $546.2 million[3] - Net earnings for 2025 were $546.2 million, up from $533.6 million in 2024, representing a growth of 2.4%[28] - Earnings before income taxes increased to $715.1 million in 2025 from $701.0 million in 2024, a rise of 2.0%[33] - North America net sales for 2025 were $2,984.2 million, slightly up from $2,950.1 million in 2024, a growth of 1.2%[30] Cash Flow and Shareholder Returns - Free cash flow (FCF) for 2025 was $546 million, representing 100% of net earnings[3] - The company returned $597 million to shareholders through dividends and share repurchases in 2025[3] - Cash provided by operating activities increased to $616.8 million in 2025 from $581.8 million in 2024, an increase of 6.0%[35] - Free cash flow for 2025 was reported at $546.0 million, compared to $473.8 million in 2024, reflecting a growth of 15.3%[35] Balance Sheet and Assets - A. O. Smith's balance sheet as of December 31, 2025, showed cash and marketable securities of $193.2 million and total debt of $155.0 million, resulting in a leverage ratio of 7.7%[13] - Total assets decreased from $3,240.0 million in 2024 to $3,142.8 million in 2025, a decline of approximately 3.0%[26] - Total current liabilities decreased from $897.2 million in 2024 to $862.5 million in 2025, a decline of 3.9%[26] - The company’s cash and cash equivalents decreased from $239.6 million at the beginning of the period to $174.5 million at the end of 2025, a decrease of 27.2%[28] Future Projections - For 2026, A. O. Smith projects net sales between $3.90 billion and $4.02 billion, reflecting a 2% to 5% increase compared to 2025[16] - The company anticipates diluted EPS for 2026 to be between $3.85 and $4.15, indicating a potential 4% increase at the mid-point[16] Market Conditions - In North America, residential water heater industry unit volumes are expected to be flat to down year-over-year[16] - The Rest of World segment is forecasted to experience a mid-single digit sales decline, primarily due to ongoing challenges in the China market[16] Acquisitions - The Leonard Valve acquisition, which closed in January 2026, is expected to enhance A. O. Smith's water management platform[3] Capital Expenditures - Capital expenditures decreased from $108.0 million in 2024 to $70.8 million in 2025, a reduction of 34.3%[35]