A. O. Smith Corporation (AOS) Q3 2026 Earnings Report

The call was broadly positive, led by the China transaction, stronger portfolio focus, raised boiler guidance, North American growth, cash generation, shareholder returns, and continued investment in water treatment and water management. These positives were tempered by flat consolidated sales, weak China and residential water heater demand, elevated steel and freight costs, lower water treatment and Leonard Valve guidance, margin pressure, and near-term production and project timing challenges.

For full year 2026, sales excluding China are expected to grow approximately 4%, with adjusted EPS between $3.42 and $3.52 per share; the residential water heater industry outlook remains down low single digits, the commercial water heater industry flat to 2025, full year boiler sales are expected to grow 10% to 12%, North America water treatment sales approximately 3% to 4%, priority dealer channel sales approximately 10%, and Leonard Valve sales approximately $55 million compared with approximately $70 million previously; excluding currency impacts, India sales are expected to grow double digits in local currency, while foreign currency translation is expected to be a meaningful headwind to Rest of World businesses excluding China, full year steel and freight costs are expected to each increase approximately 15% compared to 2025, adding approximately 5% to full year North America segment cost of goods sold, North America margin guidance remains approximately 24%, annual water treatment savings are expected to be approximately $6 million to $8 million with approximately $1 million realized in the second half of 2026, and pricing includes a 4% to 7% increase on most North America water heater and boiler products and an additional price increase of up to 9.5% on most water heater products effective in December.