A. O. Smith Reports Record 2025 Diluted Earnings Per Share (EPS) of $3.85 and Introduces 2026 Guidance

Core Insights - A. O. Smith Corporation reported a slight increase in net sales and earnings for the full year 2025, with net sales reaching $3.83 billion and net earnings at $546.2 million, marking a 2% increase year-over-year [2][5] - The company achieved a record diluted earnings per share (EPS) of $3.85, reflecting a 6% increase from the previous year [2][5] - The acquisition of Leonard Valve is expected to enhance the company's growth opportunities in the water management sector [3][5] Financial Performance - Full Year 2025: - Net sales: $3,830 million, up from $3,818 million in 2024 - Net earnings: $546.2 million, a 2% increase from $533.6 million in 2024 - Diluted EPS: $3.85, up 6% from $3.63 in 2024 [2][5] - Fourth Quarter 2025: - Net sales: $912.5 million, slightly up from $912.4 million in Q4 2024 - Net earnings: $125.4 million, a 14% increase from $109.7 million in Q4 2024 - Diluted EPS: $0.90, a 20% increase from $0.75 in Q4 2024 [3][5] Segment Performance - North America: - Full Year 2025 sales: $3.0 billion, with segment earnings of $727.9 million and a margin of 24.4%, up from 24.0% in 2024 [6][7] - Fourth Quarter 2025 sales: $713.7 million, a 3% increase year-over-year, with segment earnings of $164.9 million and a margin of 23.1% [8][9] - Rest of World: - Full Year 2025 sales: $880.4 million, down 4% year-over-year, primarily due to a 12% decrease in sales in China [10][11] - Fourth Quarter 2025 sales: $205.7 million, a 13% decrease year-over-year, with segment earnings of $16.0 million and a margin of 7.8% [12][13] Cash Flow and Capital Allocation - Free cash flow for 2025 was $546 million, representing 100% of net earnings, with cash provided by operations at $616.8 million [5][15] - The company returned $597 million to shareholders through dividends and share repurchases in 2025 [5][16] - A dividend of $0.36 per share was approved, marking 86 consecutive years of dividend payments [17] Outlook for 2026 - The company projects net sales for 2026 to be between $3.9 billion and $4.02 billion, with EPS guidance between $3.85 and $4.15 [18][19] - Anticipated challenges in the China market are expected to continue, with a forecasted mid-single digit sales decline, while double-digit sales growth is projected in India [18][19]