A. O. Smith Corporation reported a decline in financial performance for the first quarter of 2025, with net sales of $963.9 million, down from $978.8 million in the same period last year. The decrease in revenue was attributed to lower sales volumes in residential and commercial water heaters in North America, as well as a decline in sales in China. The company's gross profit margin also fell to 38.9%, compared to 39.3% in the prior year, primarily due to reduced sales volumes. Net earnings for the quarter were $136.6 million, down from $147.6 million in the first quarter of 2024, resulting in diluted earnings per share of $0.95, compared to $1.00 in the previous year.
In terms of operational developments, A. O. Smith's North America segment saw sales decrease to $748.7 million from $766.3 million, driven by lower water heater volumes. Conversely, the Rest of World segment's sales remained relatively stable at $226.7 million, slightly down from $226.9 million, with the acquisition of Pureit contributing approximately $12 million to sales. The company also reported an increase in interest expense to $2.9 million, up from $1.0 million, reflecting higher debt levels. The total debt increased by $76.6 million in the first quarter, primarily due to stock repurchases.
Strategically, A. O. Smith completed the acquisition of Pureit, a residential water purification business in South Asia, for approximately $125 million. This acquisition is expected to enhance the company's market presence in the region and is projected to contribute annual sales of about $50 million. The company also introduced new products, including gas tankless water heaters in North America, and is expanding its commercial water heater capacity in anticipation of new efficiency regulations set to take effect in 2026.
Looking ahead, A. O. Smith anticipates consolidated sales for 2025 to be flat to up 2% compared to 2024, with expectations of stable industry volumes in North America and continued softness in consumer demand in China. The company projects full-year earnings per share to range between $3.60 and $3.90. A. O. Smith is also focusing on cost containment initiatives and strategic sourcing actions to mitigate the impact of tariffs and inflationary pressures. The company remains committed to its stock repurchase program, having repurchased 1.8 million shares at a total cost of $120.6 million in the first quarter.
About SMITH A O CORP
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