| Metric | Value ($ M) | Q1 FY25 |
|---|---|---|
| Revenue | 945.60 | 1.9% |
| Total Income | 945.60 | 1.9% |
| Expenditure | 783.80 | 0.5% |
| PBT | 154.70 | 14.6% |
| Net Profit | 118.00 | 13.6% |
| OPM | 17.11% | 1.98pp |
| NPM | 12.48% | 1.69pp |
| EPS | 0.85 | 10.5% |
A. O. Smith Reports Q1 2026 Sales of $945.6 Million, Lowers Full Year Outlook
30 Apr 2026 · 30 Apr, 4:33 pm
Summary
A. O. Smith Corporation announced its first quarter 2026 results, reporting sales of $945.6 million, a 2% decrease year-over-year, and net earnings of $118.0 million, down 14%. Diluted earnings per share stood at $0.85, an 11% decline from the previous year. While the North America segment saw a modest 1% sales increase to $753.4 million, driven by an acquisition and pricing, the Rest of World segment faced an 11% decline to $200.7 million due to persistent challenges in the China consumer appliance market. Consequently, the company lowered its full-year 2026 diluted EPS guidance to a range of $3.60 to $3.90, and adjusted EPS guidance to $3.70 to $4.00, primarily attributing this revision to the ongoing difficult market conditions in China and increased uncertainty regarding North American regulatory changes.
Key Highlights
- 1
A. O. Smith Corporation reported first quarter 2026 sales of $945.6 million, representing a 2% decrease year-over-year.
- 2
Net earnings for Q1 2026 declined by 14% to $118.0 million, resulting in diluted earnings per share of $0.85, an 11% decrease from the prior year.
- 3
North America segment sales increased by 1% to $753.4 million, benefiting from the Leonard Valve acquisition and pricing actions, despite softer residential water heater industry volumes.
- 4
The Rest of World segment experienced an 11% sales decrease to $200.7 million, primarily attributed to continued weak consumer demand in China.
- 5
Operating cash flow showed strong growth, reaching $129.4 million, and free cash flow increased significantly to $118.9 million in the first three months of 2026.
- 6
The company lowered its full-year 2026 diluted EPS guidance to a range of $3.60 to $3.90, and adjusted EPS guidance to between $3.70 and $4.00, citing ongoing challenges in China.
- 7
A. O. Smith repurchased 0.7 million shares at a cost of $51.3 million during the first quarter and approved a $0.36 per share dividend payable in May.
Management Comments
Steve Shafer
Our team executed with focus and agility in the first quarter, continuing to support our customers well in the face of a continued soft macro environment. As we anticipated, softer demand in China impacted results. In North America, results were impacted by residential water heater industry demand that was modestly below our expectations, compounded by temporary weather-related disruptions at our Ashland City, Tennessee facility. Separately, in April, we took another step in our business simplification and margin enhancement efforts within our North America water treatment business by announcing a targeted restructuring plan that will be recognized in the second quarter. We believe these actions are an important step in advancing a stronger business model to achieve a higher level of profitable growth.
Steve Shafer
Primarily based on our latest view of our China business and partially due to increased uncertainty around regulatory changes scheduled to take effect later this year in North America, we have updated our full-year expectations. In China, we expect market conditions to remain challenging through the year and have identified several actions to improve performance. These actions are pending the conclusion of our assessment of the business. In North America, we remain confident in our competitive positioning and the underlying strength of the business despite a slower-than-expected start to the year driven by softer macro conditions.
Steve Shafer
We believe our strong balance sheet and free cash flow give us the flexibility to support organic growth, dividends and share repurchases while continuing to pursue strategic acquisitions to support our focus on portfolio management.
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