A. O. Smith (AOS) Q4 2025 earnings summary

Executive summary

• Achieved record diluted EPS of $3.85 in 2025, up 6% year-over-year, driven by profitability improvements and margin expansion in both North America and Rest of World segments, with net earnings up 2% to $546.2 million on $3.8 billion in sales.

• Fourth quarter 2025 net sales were flat at $913 million, while adjusted EPS rose 6% to $0.90, reflecting strong pricing actions and cost management.

• Strategic focus remains on portfolio management, innovation, and operational excellence, with growth platforms in boilers, water treatment, and India positioned for 2026.

• Closed the Leonard Valve acquisition in January 2026, expanding the water management platform.

Financial highlights

• 2025 sales: $3.8 billion, with adjusted EPS of $3.85, up from $3.63 in 2024; net earnings (GAAP) were $546.2 million.

• Free cash flow reached $546 million, up from $474 million in 2024, representing 100% of net earnings.

• Returned $597 million to shareholders via dividends and share repurchases; 5.9 million shares repurchased in 2025.

• North America segment margin: 24.4%, up 20 basis points; Rest of World margin: 8.7%, up 40 basis points.

• Cash and marketable securities at year-end: $193 million; net cash position: $38 million; leverage ratio: 7.7%.

Outlook and guidance

• 2026 EPS guidance: $3.85–$4.15, with sales expected to increase 2%–5% to $3.9–$4.02 billion.

• Free cash flow projected at $525–$575 million; capital expenditures expected at $70–$100 million.

• North America segment margin expected at 24%–24.5%; Rest of World at 8%–10%.

• Leonard Valve projected to contribute $70 million in 2026 sales.

• Share repurchases projected at $200 million for 2026; projected 2026 diluted shares: 138 million.