Company: AOS
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0000091142-25-000075
Chunk: 40

Company: SMITH A O CORP
Filing Date: 2025-04-29
Form: 10-Q
Item: Part I, Item 2
Chunk 40
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 sales.   

North America segment earnings were $185.2 million in the first quarter of 2025, or $13.5 million lower than segment earnings of $198.7 million in the first quarter of 2024. Segment margins were 24.7 percent and 25.9 percent in the first quarter of 2025 and 2024, respectively. Lower segment earnings and margin in the first quarter of 2025 compared to the prior year quarter were primarily due to lower water heater volumes, lower volume-related absorption, and continued strategic investments, which were partially offset by higher boiler volumes. We estimate our 2025 North America segment margin will be approximately 24 to 24.5 percent.

Rest of World Segment

(dollars in millions)Three Months EndedMarch 31,20252024Net Sales$226.7 $226.9 Segment Earnings19.7 17.2 Segment margin8.7 %7.6 %

Sales in the Rest of World segment were $226.7 million in the first quarter of 2025, essentially flat to sales of $226.9 million in the first quarter of 2024. Compared to the prior year quarter, essentially flat sales were primarily due to lower volumes of our residential water treatment and gas water heater products in China and unfavorable currency translation of approximately $3 million that fully offset incremental sales related to our 2024 acquisition of Pureit that added approximately $12 million in net sales.  

Rest of World segment earnings were $19.7 million in the first quarter of 2025, or $2.5 million higher compared to $17.2 million in the first quarter of 2024. Segment margins were 8.7 percent and 7.6 percent in the first quarter of 2025 and 2024, respectively. The higher segment earnings and segment margin in 2025 compared to last year were primarily driven by cost controlling measures and benefits from our Q4 2024 restructuring actions which more than offset lower volumes in China. We estimate our 2025 Rest of World segment margin will be approximately eight to nine percent.

Outlook

We expect our consolidated sales in 2025 to be approximately flat to up two percent compared to 2024. Our projection is driven by expected flat industry residential and commercial volumes in North America. In our Rest of the World segment, after a challenging 2024, we expect consumer demand softness will persist in 2025 in China and a decline