A.O. Smith Corporation (NYSE:AOS) beat Wall Street’s earnings expectations for the third quarter, even as revenue came in slightly below forecasts and economic pressures in China weighed on sales.
The global water technology company reported earnings per share of $0.94, ahead of analyst estimates of $0.90. Revenue was $942.5 million, narrowly missing the $947.09 million consensus. The stock was little changed after the results, edging up just 0.03%.
Sales rose 4% year over year, led by a 6% increase in the North America segment thanks to pricing actions and higher demand for commercial water heaters and boilers. Ongoing macroeconomic weakness in China, however, caused a 12% sales decline in local currency in that market. Net earnings climbed 10% to $132 million, while diluted EPS rose 15% from the same period a year earlier.
“I am pleased with the performance of our North America segment on both the top and bottom lines,” said Steve Shafer, Chief Executive Officer. “The North America segment delivered 6% growth driven by the benefits of pricing actions implemented earlier this year to address increased costs and continued demand resiliency for our commercial water heaters and boilers.”
Operating margin in North America expanded by 110 basis points to 24.2%, while the Rest of World segment improved by 90 basis points despite weaker sales in China. Cash from operations increased 21% to $434 million in the first nine months of 2025.
Looking ahead, A.O. Smith narrowed its full-year earnings guidance to $3.70–$3.85 per share, compared with the analyst consensus of $3.84, and expects consolidated sales to remain flat to up 1% for the year. The company cited ongoing headwinds in China and softening new home construction in North America as key challenges for residential water heating demand.
The board of directors approved a 6% dividend increase, marking more than three decades of consecutive dividend growth. A.O. Smith plans to spend roughly $400 million on share repurchases in 2025, having already bought back 5 million shares for $335.4 million during the first nine months of the year.