Company: AOS
Filing Date: 2025-07-24
Form Type: 10-Q
Source: 0000091142-25-000100
Chunk: 30

Company: SMITH A O CORP
Filing Date: 2025-07-24
Form: 10-Q
Item: Part I, Item 8
Chunk 30
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 pull ahead, we actively worked with our customers to limit the impact to help enable greater operational efficiencies, a key 2025 company initiative. 2024 residential industry unit volumes were flat compared to the prior year and we project 2025 industry residential unit volumes will be flat as well. We anticipate that commercial water heater industry volumes will also be approximately flat in 2025 after minimal growth in 2024. In response to higher steel and other input costs, including tariffs, we announced price increases on most of our water heater and boiler products in the first half of 2025. In addition to pricing, we intend to mitigate the impact of tariffs through footprint optimization, strategic sourcing actions and other cost containment initiatives. We expect our boiler sales to grow between four and six percent in 2025 compared to 2024 as we continue to benefit from the transition to higher efficiency boilers. We anticipate sales of our North America water treatment products will be between $235 million and $245 million, a year-over-year decrease of approximately five percent as we de-emphasize certain channels and focus on our more profitable channels.

In our Rest of World segment, China sales declined eight percent in the first half of 2025 due to continued weak consumer demand. For the full year 2025, we project our third-party sales in China to decrease between five to eight percent in local currency compared to 2024 as we expect economic challenges will persist in 2025. We are initiating an assessment of strategic opportunities for our China business, including strategic partnerships and other alternatives. We believe the China market has substantial long-term prospects and are committed to realizing the potential upside inherent in our China business. 

Combining all of these factors, we expect our 2025 consolidated sales to increase between one to three percent compared to 2024. Our guidance excludes the impacts from potential future acquisitions and any potential outcomes of the assessment of the China business.

20

Results of Operations

(dollars in millions)Three Months EndedJune 30,Six Months EndedJune 30,2025202420252024Net sales$1,011.3 $1,024.3 $1,975.2 $2,003.1 Cost of products sold614.2 628.3 1,202.7 1,222.4 Gross profit397.1 396.0 772.5 780.7 Gross profit margin %39.3 %38.7 %39.1