Smith AO Corporation (NYSE:AOS) reported second-quarter results on Thursday that outperformed analyst forecasts, delivering adjusted earnings per share of $1.07, $0.09 above estimates.
The global water technology firm posted revenue of $1.01 billion, slightly surpassing the consensus of $994.93 million, although sales declined 1% compared to the prior year. Following the release, the stock dropped 1.22%.
In North America, sales fell 1% to $779 million as stronger boiler sales were offset by reduced water heater volumes. Nevertheless, operating margin in the segment improved by 30 basis points to 25.4%, thanks to a favorable product mix in water treatment and growth in high-efficiency water heaters.
“During the second quarter, our team delivered continued steady growth in commercial boilers and achieved another sequential quarter of North America water heater volume growth,” said Steve Shafer, Chief Executive Officer.
“While we believe we benefited from some pre-tariff and price increase pull ahead, we actively worked with our customers to limit the impact to help enable greater operational efficiencies.”
Sales in the Rest of the World segment decreased 2% to $240.1 million, with China sales declining 11% in local currency. Conversely, organic sales in India rose 19%, and the recent acquisition of Pureit contributed $16 million to quarterly revenue.
A.O. Smith raised its full-year 2025 guidance, now forecasting sales growth between 1% and 3% and adjusted EPS of $3.70 to $3.90, compared to analyst consensus of $3.78.
The company also announced it has begun a strategic review of its China operations, exploring options including partnerships and other alternatives.
“We have raised our full year sales outlook and the mid-point of our full year EPS guidance. These increases reflect our confidence in managing tariffs, expected improved relative market share performance in the back half of the year due to our level loading production initiatives, and ongoing benefits from restructuring actions taken in 2024,” Shafer added.
During the first half of 2025, the company repurchased 3.8 million shares for $251.3 million and expects to spend about $400 million on buybacks for the full year.
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