Core Insights - A. O. Smith Corporation (AOS) reported fourth-quarter 2025 adjusted earnings of 90 cents per share, exceeding the Zacks Consensus Estimate of 84 cents, marking a 6% year-over-year increase [1] - The company's net sales for the quarter were $912.5 million, falling short of the consensus estimate of $923 million, but remained stable year over year due to strong performance in the commercial water heater and boiler markets in North America [1] Financial Performance - For the full year 2025, A. O. Smith generated revenues of $3.83 billion, reflecting a 0.3% increase year over year, with adjusted earnings at $3.85 per share, up from $3.73 in 2024 [2] - North America sales increased by 3.5% year over year to $713.7 million, surpassing the estimated $702.5 million, driven by effective pricing strategies [3] - The Rest of the World segment reported sales of $205.7 million, down 13.1% year over year, with notable declines in China, although India saw an 18% increase in organic sales [4] Margin and Cost Analysis - A. O. Smith's cost of sales decreased by 2.1% year over year to $562.1 million, while selling, general, and administrative expenses rose by 2.5% to $186.6 million [5] - Gross profit increased by 3.6% year over year to $350.4 million, resulting in a gross margin of 38.4%, up from 37.1% in the previous year [5] Liquidity and Cash Flow - As of December 31, 2025, A. O. Smith's cash and cash equivalents totaled $174.5 million, down from $239.6 million at the end of December 2024 [6] - Long-term debt decreased to $112.7 million from $183.2 million at the end of December 2024, while cash provided by operating activities increased to $616.8 million from $581.8 million year over year [6] Share Repurchase and Future Outlook - In 2025, A. O. Smith repurchased 5.9 million shares for $400.8 million, with approximately 0.8 million shares remaining under the repurchase authorization [9] - The company expects to repurchase shares worth approximately $200 million in 2026, following a board decision to increase the buyback program by an additional 5 million shares [9] - A. O. Smith projects net sales for 2026 to be in the range of $3.90-$4.02 billion, with adjusted earnings per share expected between $3.85 and $4.15 [10]