In This Article:
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Revenue: $964 million in Q1 2025, a decrease of 2% year-over-year.
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Earnings Per Share (EPS): $0.95, a decrease of 5% compared to the prior period.
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North America Segment Sales: $749 million, decreased 2% year-over-year.
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North America Segment Earnings: $185 million, decreased 7% year-over-year.
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North America Segment Margin: 24.7%, a decrease of 120 basis points year-over-year.
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Rest of World Segment Sales: $227 million, essentially flat year-over-year.
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Rest of World Segment Earnings: $20 million, increased 15% year-over-year.
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Rest of World Segment Margin: 8.7%, an increase of 110 basis points year-over-year.
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Operating Cash Flow: $39 million in Q1 2025.
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Free Cash Flow: $17 million in Q1 2025.
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Share Repurchases: $121 million in Q1 2025.
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2025 EPS Guidance: Expected range of $3.60 to $3.90 per share.
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Dividend: $0.34 per share approved for the next quarter.
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Net Debt Position: $70 million at the end of March 2025.
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Leverage Ratio: 12.7% as measured by total debt to total capital.
Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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A.O. Smith Corp (NYSE:AOS) delivered a solid first-quarter performance with volumes tracking expectations and sequential quarter-over-quarter improvement.
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North America boiler sales increased by 10% compared to the first quarter of 2024, driven by high-efficiency commercial boilers.
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The company repurchased $121 million of shares in the first quarter, front-loading a portion of the full-year 2025 repurchase outlook of $400 million.
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A.O. Smith Corp (NYSE:AOS) maintained its 2025 EPS outlook with an expected range of $3.60 to $3.90 per share, indicating confidence in managing costs and pricing.
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The company was recognized as one of the world's most ethical companies by Ethisphere for the second year in a row, highlighting its commitment to ethical business practices.
Negative Points
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North America segment sales declined by 2% due to lower water heater volumes, despite higher boiler sales.
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China third-party sales decreased by 4% in local currency, reflecting ongoing economic weakness and soft consumer demand.
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First-quarter earnings per share decreased by 5% compared to the prior period, with sales down 2% year-over-year.
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The Rest of World segment sales were flat, with China sales declines offset by the Pureit acquisition.
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The company faces uncertainty around tariffs, which could increase the total cost of goods sold by approximately 6% to 8%, impacting profitability.
Q & A Highlights
Q: With the current pricing actions, do you expect to see demand destruction, and will the price increases cover incremental inflation? A: Charles Lauber, CFO, stated that the pricing actions are expected to be EPS neutral, covering costs rather than increasing margins. The company is fortunate to have a stable replacement business, which helps stabilize demand despite pricing actions.