A. O. Smith Corporation reported its financial results for the second quarter and first half of 2026, revealing a decline in net sales and earnings compared to the same periods in 2025. For the three months ended June 30, 2026, the company recorded net sales of $1,004.3 million, a decrease of 0.7% from $1,011.3 million in the prior year. Net earnings for the quarter were $124.9 million, down 17.8% from $152.2 million in the same quarter of 2025. For the first half of 2026, net sales totaled $1,949.9 million, a decline of 1.3% from $1,975.2 million in the first half of 2025, while net earnings decreased to $242.9 million from $288.8 million.
The decline in sales and profitability was attributed primarily to lower sales in China, which faced challenging market conditions, including the cessation of government appliance subsidy programs. This was partially offset by contributions from the recent acquisition of Leonard Valve, which added approximately $16 million and $32 million to sales in the second quarter and first half of 2026, respectively. The company also announced a restructuring plan in its North America water treatment business, incurring $22.6 million in restructuring and impairment expenses during the quarter, aimed at increasing operational efficiency and optimizing its footprint.
In terms of operational metrics, A. O. Smith's North America segment saw a 5% increase in water heater sales in the second quarter, although overall residential volumes remained flat. The company anticipates a slight decline in residential industry unit volumes for the full year 2026 due to softness in new construction. Conversely, boiler sales grew by 21% in the second quarter, driven by pricing benefits and strong pre-buy responses. The Rest of World segment, particularly in China, experienced a significant decline, with third-party sales down 28% in local currency during the second quarter.
Looking ahead, A. O. Smith has narrowed its full-year sales growth outlook to an increase of 2% to 3% compared to 2025, with diluted earnings per share projected between $3.60 and $3.75. The company expects to continue facing challenges in the residential water heater market but remains optimistic about the long-term prospects in China. The ongoing assessment of strategic opportunities in that market is expected to yield insights that could enhance future performance. The company also reported a strong cash position, with cash provided by operating activities reaching $253.8 million in the first half of 2026, up from $178.3 million in the same period last year.
About SMITH A O CORP
A. O. Smith Corporation is a global manufacturer of water heating, boilers, and water treatment products for residential and commercial markets. Its core segments include North America and Rest of World, serving industries such as hospitality, healthcare, and industrial sectors. The company emphasizes energy-efficient, innovative solutions, leveraging extensive R&D, a broad distribution network, and a focus on sustainability and quality to maintain competitive advantage.
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