Shares of A.O. Smith (AOS) were little changed Thursday as broader markets sold off, after the water heater and boiler maker posted better-than-expected quarterly earnings but reported revenue that came in below Wall Street forecasts.
Adjusted earnings of $0.90 a share beat the consensus estimate of $0.84, while fourth-quarter revenue was $912.5 million, missing analysts’ expectations of about $928 million.
Net income rose to $125.4 million, or $0.90 a share, from $109.7 million, or $0.75 a share, a year earlier, reflecting improved profitability despite flat sales.
Margins and regional performance
The company benefited from higher pricing and stronger results in commercial water heaters and boilers, particularly in North America. Segment margins expanded year over year, supported by pricing actions and cost controls that offset higher input costs.
Results outside North America remained pressured by weak demand in China, though margins improved following restructuring actions taken last year. Growth in India and contributions from recent acquisitions partially offset lower China volumes.
“I am pleased with the resilience and focus our team showed through the fourth quarter,” A.O. Smith (AOS) Chief Executive Officer Steve Shafer said in a statement, citing profitability gains and continued strength in commercial markets.
Cash flow and capital returns
A.O. Smith (AOS) generated $616.8 million in operating cash flow and $546.0 million in free cash flow during 2025, both higher than the prior year. The company repurchased 5.9 million shares for $400.8 million and approved a quarterly dividend of $0.36 per share, extending its dividend payment streak to 86 years.
2026 outlook
Looking ahead, A.O. Smith (AOS) forecast 2026 net sales of $3.9 billion to $4.02 billion and earnings per share of $3.85 to $4.15, ahead of the consensus estimate of $3.80. Management expects continued challenges in China, stable to softer residential demand in North America and double-digit sales growth in India.