Company Reports

A.O. Smith reported a mixed set of results in the second quarter, as adjusted EPS was reported at $1.03 per share, down 4% compared with the previous year. The North American segment held up well due to pricing action and boiler growth, but the international segment remains under severe pressure.

A.O. Smith is a pure-play water technology company with a leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the firm’s leading market position. The firm bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. The water heater and boiler market in North America is a rational oligopoly, but the market is mature with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith has leading North American water heater market share of 36% in residential and 52% in commercial. The firm gets about 20% of revenue from its international business, which is mostly in China.

A.O. Smith is a pure-play water technology company with a leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the firm’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. The water heater and boiler market in North America is a rational oligopoly, but the market is mature with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

We will discontinue analyst coverage of A.O. Smith on or about Nov. 7.

A.O. Smith is a pure-play water technology company with leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith's second-quarter revenue declined 1% year over year as continued weakness in China and lower North America water heater volumes offset higher boiler sales. New CEO Stephen Shafer announced a strategic review of the firm's China operations.

Heating, ventilation, and air-conditioning manufacturer Lennox will form a joint venture with Italy-based Ariston Group to sell Lennox-branded residential water heaters in North America. This is a new product category for Lennox, but Ariston has been in North America since 2016.

A.O. Smith is a pure-play water technology company with leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith is a pure-play water technology company with leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith's first-quarter sales declined 2% year over year due to softer North America water heater volumes and lower sales in China. Earnings per share declined 5% to $0.95. Management maintained 2025 guidance, noting it does not include the impact of tariffs and subsequent price increases.

A.O. Smith is a pure-play water technology company with leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith is a pure-play water technology company with leading market share in residential and commercial water heaters in North America. Acquisitions in the early to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. To boost its growth prospects, the company entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.

A.O. Smith posted disappointing fourth-quarter results, due to continued economic weakness in China and softer demand for water heaters in North America. Consolidated revenue fell 8% year over year to $912 million and adjusted earnings per share dropped 12% to $0.85.

We are initiating coverage of A.O. Smith, a pure-play water technology firm and the largest manufacturer of water heaters in North America. Outside of the mature North America water heater market, expansion in foreign markets and water treatment products provide runways for growth.

A.O. Smith Corporation is a pure-play water technology company, with leading market share for both residential and commercial water heaters in North America. Acquisitions in the early- to mid-2000s consolidated the North American water heater market and cemented the company’s leading market position. A.O. Smith bolstered its boiler market share with its 2011 acquisition of Lochinvar. This was a savvy move, in our view, as the company paid a fair price to expand in an adjacent market with a margin-accretive product line. Still, water heaters and boilers are a mature market in North America with limited growth potential. As such, to boost the firm’s growth prospects, management entered China in 1995, India in 2008, and the water treatment market in 2016 with its acquisition of Aquasana.