AOSNYSEHousehold AppliancesUS GAAP · USD

A.O. Smith Corporation

A. O. Smith is a U.S.-based manufacturer of water heaters, boilers, heat pumps, tanks, and water treatment products for residential and commercial use. The company operates through two reporting segments, North America and Rest of World, with manufacturing and sales activities concentrated in the United States, China, India, and Europe.

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Revenue3,830m USD
−0.6 %y/y
Operating profit (EBIT)729m USD
−10.0 %y/y
EBIT margin19.0%
−2.0 ppy/y
Net income546m USD
−1.9 %y/y
Free cash flow546m USD
−8.6 %y/y

Fiscal year 2025 · change from previous year

Development 2019–2025

01,0002,0003,0004,000m USD2019: 2,993 m USD2019: EBIT 529 m USD20192020: 835 m USD2020: EBIT 503 m USD20202021: 3,539 m USD2021: EBIT 682 m USD20212022: 3,754 m USD2022: EBIT 362 m USD20222023: 3,853 m USD2023: EBIT 810 m USD20232025: 3,830 m USD2025: EBIT 729 m USD20253,830729
RevenueOperating profit (EBIT)
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Business

Share of revenue
Water heaters55 %

Gas, electric, tankless, heat pump, and solar water heaters for homes and businesses.

Boilers15 %

Residential and commercial boiler systems and related parts, especially under Lochinvar.

Water treatment20 %

Residential, commercial, and point-of-use water purification and treatment products.

Heat pumps and tanks7 %

Heat pump water heaters and storage tanks used in residential and commercial applications.

Kitchen and connected products3 %

Kitchen appliances and connected product technology sold primarily in China.

Customers

A. O. Smith sells to residential homeowners, commercial building operators, and replacement-market buyers that need water heating, boiler, and water treatment equipment. Its channels include wholesale plumbing distributors, retail and MRO customers, manufacturer representative firms, and direct relationships with large home-center chains. The business is also exposed to large-customer concentration, with a meaningful share of sales coming from a small number of customers.

Residential replacement customers

Homeowners and property owners buying replacement water heaters and water treatment products through wholesale and retail channels.

Commercial end markets

Operators of hotels, schools, offices, restaurants, laundries, and other facilities buying boilers and high-capacity water heating systems.

Wholesale plumbing distributors

Independent distributors that stock A. O. Smith and State branded products for local contractors and installers.

Retail and MRO channels

Home-center chains and maintenance/repair channels that buy branded residential products for consumer and service demand.

China and Rest of World consumers

Households and businesses buying water heaters, reverse osmosis systems, and kitchen products in China and other overseas markets.

Strategy

The company is focused on expanding its core water heating and water treatment franchise while adding adjacent products in selected geographies. It is also using product innovation, channel breadth, and regional manufacturing to defend share in competitive markets and to participate in higher-growth categories such as tankless, heat pump, and connected products. Overseas, the business is emphasizing China, South Asia, and other Rest of World markets where its brand and product portfolio can be extended.

Grow core water heating and boiler categoriesMedium term

These are the company’s largest product lines and anchor its channel relationships.

Expand water treatment and purificationMedium term

Water treatment broadens the addressable market and deepens customer relationships.

Increase exposure to higher-efficiency technologiesMedium term

Tankless and heat pump products support product differentiation and regulatory alignment.

Strengthen Rest of World growth platformsLong term

China, India, and Europe provide geographic diversification and brand extension opportunities.

Geography

North America is the company’s largest market, while Rest of World is primarily China, India, and Europe. The company manufactures and markets products in the regions where it sells them, which ties demand closely to local housing, replacement cycles, and commercial construction trends. China is a particularly important overseas market because it contributes a meaningful share of sales and includes water heaters, reverse osmosis systems, and kitchen products.

Risks

The business is exposed to cyclical demand in housing, replacement, and commercial construction, especially in North America and China. It also faces customer concentration, intense price and technology competition, tariff and sourcing pressure, and supply-chain dependence on materials and components. Because the company sells through a limited number of large channels and operates across regions, changes in customer behavior, trade policy, or local economic conditions can quickly affect volumes and mix.

Sorted by severity
LowMediumHighLowMediumHighImpact →Likelihood →China demand and competitive pressure1Customer concentration2Housing and replacement-cycle sensitivity3Input cost and supplier concentration4Cybersecurity and systems disruption5
Impact is the risk’s severity and likelihood how probable it is over the next few years, both assessed from the company’s reports. Numbers match the list.
  1. China demand and competitive pressureImpact: HighLikelihood: High

    A meaningful share of sales comes from China, where consumer sentiment, competition, and local brands can affect volumes and mix.

    ExposureRest of World segmentEspecially China
  2. Customer concentrationImpact: HighLikelihood: Medium

    A small number of customers account for a large portion of sales, so lost accounts or delayed orders can materially reduce revenue.

    Exposure: Five largest customers represented approximately 41% of sales in 2025.

  3. Housing and replacement-cycle sensitivityImpact: HighLikelihood: Medium

    Water heaters and boilers are tied to residential replacement and commercial construction activity.

    Exposure: North America residential and commercial end markets

  4. Input cost and supplier concentrationImpact: MediumLikelihood: High

    Material and component price swings or supplier disruptions can affect production and margins.

    ExposureMetalsComponentsOutsourced supply chain
  5. Cybersecurity and systems disruptionImpact: MediumLikelihood: Low

    Operations rely on information systems that store sensitive customer, supplier, and employee data.

    Exposure: Enterprise IT and third-party providers

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Accounting

Judgemental items
Goodwill and indefinite-lived intangible assets

Impairment testing relies on assumptions about future cash flows and discount rates, which can materially change reported asset values.

Impact: Could create large non-cash charges if business outlook weakens

Product warranty reserves

The company sells durable equipment with warranty obligations, so reserve estimates affect cost of sales and liabilities.

Impact: Affects gross margin and accrued liabilities

Restructuring and impairment charges

These items are excluded from adjusted earnings and can distort year-to-year comparability.

Impact: Impacts GAAP earnings and non-GAAP reconciliation

Foreign currency translation

A large Rest of World business means reported results can move with exchange rates and local currency trends.

Impact: Affects revenue, segment earnings, and cash balances

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Last updated: 24/09/2026