A. O. Smith(AOS) ZACKS·2025-03-20 16:40Core Viewpoint - A. O. Smith Corporation is facing significant operational challenges, particularly in its Rest of the World segment, due to supply-chain issues and adverse foreign exchange impacts [1][5][7] Group 1: Operational Performance - The company's shares have declined by 24.8% over the past year, underperforming the industry average decline of 17.7% [2] - The North America segment experienced a 7% year-over-year sales decline, primarily due to reduced orders for residential and commercial water heaters [5] Group 2: Business Weakness - A. O. Smith's performance is closely linked to the construction market, with ongoing challenges in the Chinese real estate market negatively affecting sales volumes of water heaters and water treatment products [5] - The Rest of the World segment is particularly impacted by lower demand in China [5] Group 3: Supply-Chain Constraints - The company relies on various raw materials, including steel, copper, and aluminum, and faces potential cost inflation and delivery delays due to supply-chain disruptions [6] Group 4: Foreign Exchange Impact - A. O. Smith's revenues are adversely affected by fluctuations in foreign currency values, with the Rest of the World segment's revenues decreasing by 44 million in 2023 due to unfavorable forex movements [7]