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A. O. Smith (AOS) FY2025 results: revenue $3.8 billion, up 0.3% on the year

A. O. Smith Corp. (AOS) reported revenue of $3.8 billion for fiscal 2025, the year ended 31 December 2025, up 0.3% on the year before. Net income was $546 million, up 2.4%, and diluted earnings per share $3.85. The figures are the company's own, from the 10-K it filed with the SEC on 10 February 2026.

Revenue
$3.8 billion
+0.3% on the year
FY2018FY2025
Operating margin
19.0%
18.5% a year earlier
FY2018FY2025
Net income
$546 million
+2.4% on the year
FY2018FY2025
Diluted EPS
$3.85
+6.1% on the year
FY2018FY2025

this yearthe year beforeHover a bar for its figure.

The year in brief

What management said about the year

Guidance figures: 6 new.

  • Full-year diluted EPS rose 6%: Full-year 2025 diluted EPS was $3.85 against $3.63, up 6%. Net sales were $3,830 million against $3,818 million, flat. Net earnings were $546.2 million, up 2%.
  • Operating margin up 80 basis points: Management attributed 80 basis points of full-year operating margin improvement to execution. Segment results cite pricing and commercial volumes as the main drivers.
  • North America sales edged up: Full-year North America sales were $3.0 billion. Segment earnings were $727.9 million against $707.5 million. Segment margin was 24.4% against 24.0%, or 24.2% adjusted for 2024.
  • Rest of World sales fell 4%: Full-year Rest of World sales were $880.4 million, down 4%, mainly on lower China sales. China third-party sales fell 12%. India organic sales rose 13% in local currency. Segment margin was 8.7% against 7.0%.
  • Free cash flow equal to net earnings: Free cash flow was $546.0 million, against $473.8 million, equal to 100% of net earnings. Capital expenditures were $70.8 million, against $108.0 million.
Read the Q4 FY2025 earnings call summary

From this 10-K

A. O. Smith makes and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. It reports two segments, North America and Rest of World, each of which mostly manufactures and sells in its own region, with Rest of World made up primarily of China, India and Europe. North America was approximately 78% of total sales in 2025 and Rest of World approximately 22%.

A. O. Smith Corp., the 10-K for 2025

A. O. Smith makes and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. It reports two segments, North America and Rest of World, each of which mostly manufactures and sells in its own region, with Rest of World made up primarily of China, India and Europe. North America was approximately 78% of total sales in 2025 and Rest of World approximately 22%.

North America

Water heaters mostly run from 40 to 80 gallon models, with sizes from 2.5 gallon point-of-use units up to 2,500 gallon products, in electric, natural gas and liquid propane tank types as well as tankless, heat pump and solar, used in homes, restaurants, hotels, offices, laundries, car washes and schools. Boilers run from 45,000 British Thermal Units to 6.0 million, closed loop systems used mainly for space or hydronic heating in hospitals, schools, hotels and other large commercial buildings and in homes and apartments. Water treatment covers point-of-entry softeners, solutions for problem well water, whole-home filtration and point-of-use carbon and reverse osmosis products, plus a commercial line. A large share of North American sales comes from replacing existing products.

How North America sells

The company states that it is the largest manufacturer and marketer of water heaters in North America, with a leading share in both the residential and commercial parts of the market. Wholesale distribution, mainly under the A. O. Smith and State brands, runs through approximately 800 independent wholesale plumbing distributors. Residential water heaters also go through retail and maintenance, repair and operations channels, with customers including four of the six largest national hardware and home centre chains and a long-standing exclusive relationship with Lowe's for A. O. Smith branded products. The Lochinvar brand covers residential and commercial boilers, with approximately 45% of its sales in water heaters and the remaining 55% mostly boilers and parts, distributed largely through manufacturer representative firms. Water treatment goes through the water quality dealer network and Amazon for A. O. Smith branded products, direct e-commerce for Aquasana, and dealers, contractors and regional home centres for the Hague, Water-Right, Master Water and other softener brands.

Efficiency and competition

Energy-efficient products remain a sales driver, with condensing commercial water heaters and boilers offering a short payback through energy savings, alongside residential heat pumps and condensing tank-type and tankless units. The ADAPT condensing gas tankless water heater and the VERITUS air source commercial heat pump water heater launched in 2024 and were expanded in 2025, and the Cyclone Flex commercial condensing water heater was launched ahead of a Department of Energy rule, due in October 2026, under which all commercial water heaters must be condensing. Competition turns on product design, reliability, quality, technology, energy efficiency, maintenance costs and price, with Rheem, Bradford White, Rinnai, Aerco and Navien named in water heating and boilers and Culligan, Kinetico, Pentair and Ecowater in water treatment.

Rest of World

Most Rest of World sales are in China, where the company has operated for 30 years, making and selling residential water heaters, reverse osmosis water treatment and commercial dispensing water treatment, and designing and marketing kitchen products such as range hoods, cooktops, steam ovens and dishwashers along with connected product technology. It sells through approximately 8,700 points of sale in China, of which approximately 3,800 are retail outlets in tier one to tier three cities and approximately 1,400 sell its products exclusively, plus e-commerce. Competitors there are Haier and Casarte, Midea and COLMO, Rinnai in water heaters, and Angel, Haier, Midea and Truliva in water treatment. In the third quarter of 2025 the company began assessing strategic opportunities for the China business, including partnerships and other alternatives. In India it opened a sales office in 2008, began making water heaters in 2010 and water treatment products in 2015, and in 2024 acquired Pureit, formerly a Unilever business selling residential water purification in India and other South Asian markets; competitors there are Racold, Bajaj and Havells in water heaters and Eureka Forbes and Kent in water treatment.

Materials and people

Raw materials, primarily steel, are generally available in adequate quantities, some customers are contractually obliged to accept price changes as steel prices move, and tariffs have added to input volatility. The businesses are short-cycle, so backlogs do not normally build up. The company employed approximately 11,500 people at 31 December 2025, approximately 6,500 in North America and 5,000 in Rest of World.

From A. O. Smith's annual report on Form 10-K for the year ended 31 December 2025. The filing

Written from the 10-K filed 10 February 2026: read the full 10-K.

The four quarters: Q1 FY2025 · Q2 FY2025 · Q3 FY2025 · Q4 FY2025

Income statement (profit and loss)

$ millionFY2025FY2024FY2023On the yearLast 8 years
Revenue3,8303,8183,853+0.3%
Cost of revenue2,3432,3622,368-0.8%
Gross profit1,4871,4561,485+2.1%
Gross margin38.8%38.1%38.5%
Research and development95.010297.5-6.6%
Selling, general and administrative759739727+2.7%
Operating income729708746+3.0%
Operating margin19.0%18.5%19.3%
Interest expense13.56.712.0+101.5%
Pre-tax income715701734+2.0%
Income tax169167177+0.9%
Effective tax rate23.6%23.9%24.1%
Net income546534557+2.4%
Net margin14.3%14.0%14.4%
Diluted EPS$3.85$3.63$3.69+6.1%
$ million except per share.
Read moreFree cash flow is operating cash flow less capital expenditure; the effective tax rate is income tax over pre-tax income; margins are the line over revenue. Gross profit is revenue less cost of revenue, and operating income is revenue less the company's own total costs, where the statement does not print those lines. Those four are arithmetic on the filed numbers; everything else is as filed. Money is in $ million as the company files it, or in $ billion by the switch above the tables; per share figures and share counts are as they are.

Cash flow

$ millionFY2025FY2024FY2023On the yearLast 8 years
Operating cash flow617582670+6.0%
Capital expenditure70.810872.6-34.4%
Free cash flow546474598+15.2%
Free cash flow margin14.3%12.4%15.5%
Cash from investing-53.0-267-24.1
Cash from financing-633-408-685
Depreciation and amortisation85.178.878.3+8.0%
Share-based compensation13.814.911.5-7.4%
Buybacks401306306+31.1%
Dividends paid196190184+2.8%
Dividend per share$1.38$1.30$1.22+6.2%
Diluted shares, weighted142m147m151m-3.5%

Balance sheet

$ millionFY2025FY2024FY2023On the yearLast 8 years
Shareholders' equity1,8581,8841,844-1.4%
Debt155193127-19.8%
Operating lease liabilities37.123.527.9+57.9%
Other liabilities1,0931,1401,214-4.1%
Total liabilities and equity3,1433,2403,214-3.0%
Fixed assets635629598+1.0%
Goodwill711762633-6.7%
Intangible assets362321337+12.8%
Investments18.736.523.5-48.8%
Cash and equivalents174240340-27.2%
Receivables582541596+7.6%
Inventory479532497-9.9%
Other assets180179190+0.6%
Total assets3,1433,2403,214-3.0%

10-K for the year ended 31 December 2025, filed 10 February 2026: the filing.