A. O. Smith (AOS) Q4 2024 earnings summary

Executive summary

• 2024 sales declined 1% to $3.8 billion, with adjusted EPS at $3.73, both down year-over-year; North America sales were stable, China sales fell 6% in local currency, and India sales grew 13% in local currency.

• Adjusted EPS for 2024 was $3.73, down from $3.81 in 2023; Q4 adjusted EPS was $0.85, down 12% year-over-year.

• $496 million was returned to shareholders via dividends and share repurchases in 2024.

• Strategic actions included restructuring in China and North America water treatment, acquisition of Pureit, and continued investment in innovation and capacity.

• North America boiler sales grew 8% in 2024, offsetting weaker water heater demand.

Financial highlights

• Net sales down 1% to $3.8 billion; adjusted EPS down 2% to $3.73; Q4 net sales decreased 8% to $912 million; adjusted Q4 EPS was $0.85, down 12% year-over-year.

• Free cash flow for 2024 was $474 million, with a conversion rate of 89%, down from $598 million in 2023.

• Cash balance at year-end was $276 million; net cash position $83 million; debt was $193.2 million.

• North America segment sales were $3 billion, up slightly year-over-year; adjusted segment earnings fell 2% to $714 million, with a margin of 24.2%.

• Rest of World segment sales were $919 million, down 4% year-over-year; adjusted segment earnings dropped 24% to $76 million, with a margin of 8.3%.

Outlook and guidance

• 2025 EPS guidance is $3.60–$3.90, with the midpoint slightly above 2024 adjusted EPS.

• 2025 sales expected to be flat to up 2%; North America and Rest of World segment margins projected at 24–24.5% and 8–9%, respectively.

• North America water heater and boiler markets expected to be flat; China sales projected to decline 5–8% in local currency; India to see double-digit growth.

• North America water treatment sales expected to decline ~5% due to portfolio repositioning, but with a 250 bps margin expansion.

• Free cash flow guidance for 2025 is $500–$550 million; CapEx $90–$100 million.