Core Viewpoint - A. O. Smith Corporation (AOS) is expected to report second-quarter 2025 results on July 24, with mixed performance indicators suggesting potential challenges and opportunities ahead [1][9]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for A. O. Smith's revenues is $987.3 million, reflecting a 3.6% decline from the previous year [2]. - The consensus estimate for adjusted earnings is 97 cents per share, indicating an 8.4% decline year-over-year [2]. Segment Performance - The North-American segment is anticipated to benefit from strong demand for commercial boilers and water treatment products, although a decline of 3.4% year-over-year to $764 million is expected due to softness in the residential and commercial water heater industry [3]. - The Rest of World segment is projected to generate revenues of $234 million, down 4.5% from the prior year, primarily due to challenges in the Chinese real estate market affecting residential water treatment and gas water heating products [4]. Cost and Acquisition Impact - A. O. Smith has faced high costs and expenses, with labor shortages and increased material costs negatively impacting performance, despite some moderation in supply-chain constraints [5]. - Recent acquisitions, such as the Pureit business from Unilever and Impact Water Products, are expected to positively influence the company's top line and enhance its position in the water treatment industry [6][7]. Earnings Expectations - A. O. Smith has an Earnings ESP of +4.48%, with the Most Accurate Estimate at $1.01 per share, suggesting a potential earnings beat despite the projected decline in EPS [8][9].

Financial Performance - Sales decreased by 2% to $964 million[17], compared to $979 million in Q1 2024[17] - Earnings per share (EPS) decreased by 5% to $0.95[17], compared to $1.00 in Q1 2024[17] - Free cash flow decreased from $85 million in Q1 2024 to $17 million in Q1 2025[29] Segment Performance - North America sales decreased by 2% year-over-year[14, 17] - North America segment margin decreased to 24.7%[17, 23], a decrease of 120 bps[23] - Rest of World sales were flat[17, 25], with Pureit adding $12 million to sales[16, 25] - China sales decreased 4% in local currency due to weak consumer demand[14, 28] - Rest of World segment margin increased by 110 basis points[17] Outlook and Assumptions for 2025 - The company expects revenue to be approximately flat to a 2% increase[35] - The company anticipates free cash flow between $500 million and $550 million[35] - The company projects share repurchases of approximately $400 million[32, 35]