Company: AOS
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0000091142-25-000150
Chunk: 30

Company: SMITH A O CORP
Filing Date: 2025-10-28
Form: 10-Q
Item: Part I, Item 8
Chunk 30
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performed the market in the third quarter and we expect to continue to strengthen our share through the fourth quarter. 2024 residential industry unit volumes were flat compared to the prior year and we project 2025 industry residential unit volumes will be flat to slightly down as new construction completions  leads to softness  in the wholesale  residential channel. We anticipate that commercial water heater industry volumes will increase low single digits 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 less attractive channels and focus on our more profitable channels.

In our Rest of World segment, China sales declined nine percent in local currency in the first nine months of 2025 due to continued weak consumer demand and the cessation of the appliance  government subsidy programs  in the third quarter. For the full year 2025, we project our third-party sales in China to decrease approximately 10 percent in local currency compared to 2024 as we expect economic challenges will persist in 2025. In the third quarter, we initiated 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 be flat to up one 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 EndedSeptember 30,Nine Months EndedSeptember 30,2025202420252024Net sales$942.5 $902.6 $2,917.7 $2,905.7 Cost of products sold578.0 565.3 1,780.7 1,787.7 Gross profit364.5