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A. O. Smith Q2 Earnings Surpass Estimates, Sales Decline Y/Y
A. O. SmithA. O. Smith(US:AOS) ZACKSยท2025-07-24 15:21

Core Insights - A. O. Smith Corporation (AOS) reported adjusted earnings of $1.07 per share for Q2 2025, exceeding the Zacks Consensus Estimate of 97 cents, with a year-over-year increase of 1% [1] - Net sales reached $1.01 billion, surpassing the consensus estimate of $990.9 million, although this represented a 1% decline year-over-year due to lower water heater volumes and decreased sales in China [1] Segmental Details - North America sales decreased by 1% year-over-year to $779 million, compared to an estimated $758.9 million, primarily due to lower water heater volumes [2] - Segmental earnings remained flat year-over-year at $198.1 million [2] - Sales in the Rest of the World segment totaled $240.1 million, down 2% year-over-year, with China sales decreasing by 11% and India sales increasing by 19% in local currency [3] Margin Details - Cost of sales was $614.2 million, down 2.2% year-over-year, while selling, general & administrative expenses rose by 1.5% to $191.3 million [4] - Gross profit increased by 0.3% year-over-year to $397.1 million, resulting in a gross margin of 39.3%, up from 38.7% in the previous year [4] - Interest expenses rose to $4.6 million from $1.8 million in the year-ago quarter [4] Liquidity & Cash Flow - As of June 30, 2025, cash and cash equivalents totaled $177.9 million, down from $239.6 million at the end of December 2024 [5] - Long-term debt increased to $284.2 million from $183.2 million at the end of December 2024 [5] - Cash provided by operating activities for the first half of 2025 was $178.3 million, compared to $164 million in the same period last year [5] Share Repurchases - In the first half of 2025, A. O. Smith repurchased 3.8 million shares for $251.3 million, with 3 million shares remaining under the existing repurchase authorization as of June 2025 [6] 2025 Outlook - A. O. Smith raised its sales outlook for 2025 to a range of $3.85-$3.93 billion, up from the previous estimate of $3.8-$3.9 billion, with reported sales of $3.82 billion in 2024 [7] - Adjusted earnings per share (EPS) forecast for 2025 is now projected to be between $3.70-$3.90, compared to the earlier expectation of $3.60-$3.90 [8]