Company: AOS
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0000091142-25-000075
Chunk: 28

Company: SMITH A O CORP
Filing Date: 2025-04-29
Form: 10-Q
Item: Part I, Item 8
Chunk 28
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 percent in the first quarter of 2024. The decrease in gross profit margin was primarily due to lower sales volumes.

Selling, general, and administrative (SG&A) expenses in the first quarter of 2025 were essentially flat compared to the first quarter of 2024. 

Interest expense in the first quarter of 2025 was $2.9 million compared to $1.0 million in the same period last year. The increase in interest expense in the first quarter of 2025 was primarily due to higher debt levels.

Other income, net was $1.2 million in the first quarter of 2025 and flat to the first quarter of 2024. 

Our effective income tax rate for the three months ended March 31, 2025 was 24.6 percent. The effective income tax rate for the three months ended March 31, 2024 was 23.4 percent. The change in the effective income tax rate for the three months ended March 31, 2025 compared to the prior year quarter was primarily due to a change in geographical earnings mix. We estimate that our annual effective income tax rate for the full year of 2025 will be approximately 24 to 24.5 percent.

19

North America Segment

(dollars in millions)Three Months EndedMarch 31,20252024Net Sales$748.7 $766.3 Segment Earnings185.2 198.7 Segment margin24.7 %25.9 %

Sales in our North America segment were $748.7 million in the first quarter of 2025, or $17.6 million lower than sales of $766.3 million in the first quarter of 2024. Compared to the prior year quarter, our net sales decrease was driven by lower residential and commercial water heater volumes, which more than offset our higher boiler 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 202