On this page of StockholderLetter.com we present the latest annual shareholder letter from SMITH A O CORP — ticker symbol AOS. Reading current and past AOS letters to shareholders can bring important insights into the investment thesis.
INNOVATION HAS A NAME 2025 ANNUAL REPORT
A. O. SMITH Corporate Profile A. O. Smith is a global leader applying innovative technologies and energy-efficient solutions to products manufactured and marketed worldwide. The company is one of the world s leading manufacturers of residential and commercial water heating equipment and boilers, as well as a manufacturer of water treatment products for residential and light commercial applications. A. O. Smith is headquartered in Milwaukee, Wisconsin, with approximately 11,500 employees at operations in the United States, Bangladesh, Canada, China, India, Mexico, the Netherlands, Sri Lanka and the United Kingdom. A. O. Smith Corporation is listed on the New York Stock Exchange and is part of the S&P 500 Index. The company has paid cash dividends on its common stock every year since 1940. Registrar. Stock Transfer Agent, Dividend Reinvestment Agent (for both classes of stock) EQ Shareowner Services 1110 Centre Pointe Curve, Suite 101 Mendota Heights, MN 55120 800-468-9716 651-450-4064 www.shareowneronline.com
Stephen M. Shafer, President and Chief Executive Officer MARCH 2026 Letter to Shareholders Dear Shareholders, I m honored to write my first letter to you as A. O. Smith s 11th Chief Executive Officer. In July, I had the privilege of succeeding Kevin Wheeler, and on behalf of A. O. Smith, I would like to express my sincere appreciation for his more than 30 years of dedicated service and leadership. His counsel and continued support remain invaluable in his new role as Executive Chairman. In July, we also introduced our refreshed company purpose To Find A Better Way a statement that captures the inventive and transformative spirit that has powered A. O. Smith for more than 151 years. It also represents our future, as we remain committed to leading with purpose, innovating boldly and finding new ways to serve our customers in a rapidly changing environment. In 2025, A. O. Smith delivered another year of solid performance, achieving $3.8 billion in sales. Despite mixed market conditions and the uncertainties of tariffs, our teams remained focused, disciplined and committed to strengthening the business for the long term. In North America, we expanded margins by 20 basis points through strong execution. While residential water heater demand softened as new home construction slowed, we saw healthy gains in our commercial water heater and boiler categories, particularly with highefficiency products that continue to differentiate us in the marketplace.
Performance in our North America Water Treatment business was resilient. We saw improved profitability, despite slightly decreased sales as we de-emphasized less profitable channels. This reflects the benefit of our streamlined portfolio, as well as growth across remaining product lines. Sales in our priority dealer, e-commerce and direct-to-consumer channels grew 10%. Internationally, we continued to navigate a dynamic environment. We strengthened our Rest of World segment profitability, with margins up 40 basis points, even with sales in China down 12% as the business was impacted by a challenging market environment. This underscores the effectiveness of the restructuring actions we took at the end of 2024 and the ongoing cost-saving initiatives that have strengthened our competitive position. Our organic India business experienced 13% sales growth, driven by strong performance across our portfolio, and Pureit contributed $54 million in sales. The Pureit integration remains on track, and we are encouraged by the opportunities this business brings to the broader region. I would be remiss if I didn t mention tariffs. Navigating the constantly evolving landscape required a tremendous team effort, demonstrating strong operational discipline and our ability to adapt quickly while minimizing disruptions for our customers. I m proud of how we ve responded, and we ll continue to innovate and collaborate to overcome future challenges. Driving value creation We have successfully reshaped our portfolio at pivotal moments in our history, and we are doing it again deliberately and with discipline. In January, we acquired Leonard Valve Corporation of Cranston, Rhode Island. Leonard Valve, together with its Heat-Timer brand, is a pioneer in water management technologies. This move adds capabilities that complement our core strengths and opens attractive adjacencies. Innovation remains a defining advantage for A. O. Smith. In 2025, we added several stateof-the-art products to our portfolio, including the Adapt + premium condensing gas tankless water heater, the Cyclone Flex commercial gas water heater with adaptive gas technology, and the HomeShield whole house water filter each designed to offer superior performance and user experience. We also welcomed Dr. Ming Cheng as Chief Technology Officer in September, adding leadership depth and a clear innovation mandate across our engineering and product teams. Operational excellence is part of our DNA. Through disciplined practices and new technologies, we continue to find a better way to move the company forward. This approach reduces waste, expands margins and enhances agility as markets and technologies evolve. In October, we welcomed Chris Howe as Chief Digital Information Officer to help lead our digital transformation and unlock productivity through modern tools like artificial intelligence and data analytics. Adapt + premium condensing gas tankless water heater with X3 Scale Prevention Technology
Celebrating our culture and employee growth At the foundation of everything we do are our unwavering values and the way we do business the SmithWay. In 2025, we were recognized as a World s Most Ethical Company by Ethisphere for the second year in a row and reaffirmed our Guiding Principles across the company. We also appointed Paul Jones to the position of General Counsel and Chief Compliance Officer, ensuring our values are upheld and our governance remains strong. Great companies are built by great people. At A. O. Smith we take pride in attracting, retaining and developing talented teams who deliver innovative, high-quality solutions for our customers. This is foundational to how we operate and grow. That people-first focus is a core lever in our value creation strategy driving organic growth, margin expansion and ROIC improvements toward top quartile total shareholder return. As we look ahead, we remain confident in the strength of our strategy, our commitment to disciplined execution and the dedication of our global teams. Together, we are building a stronger, more resilient A. O. Smith one that continues to find a better way for our customers, our communities and our future. Thank you for your continued support and confidence. Sincerely, Stephen M. Shafer President and Chief Executive Officer For more than 30 years, we ve increased our dividend to shareholders. In October, we announced a 6% increase in the dividend rate that resulted in a five-year compound annual dividend growth rate of roughly 7%. We also repurchased approximately 5.9 million shares of common stock, totaling approximately $400 million in 2025. Executives celebrate the grand opening of our new Product Development Center in Lebanon, Tennessee Released Ninth Edition of the A. O. Smith Guiding Principles in October
 • shareholder letter icon 3/4/2026 Letter Continued (Full PDF)
 • stockholder letter icon 3/2/2023 AOS Stockholder Letter
 • stockholder letter icon 2/29/2024 AOS Stockholder Letter
 • stockholder letter icon 2/27/2025 AOS Stockholder Letter
 • stockholder letter icon More "Consumer Goods" Category Stockholder Letters
 • Benford's Law Stocks icon AOS Benford's Law Stock Score = 79


AOS Shareholder/Stockholder Letter Transcript:

INNOVATION HAS A NAME
2025 ANNUAL REPORT

A. O. SMITH
Corporate
Profile
A. O. Smith is a global leader
applying innovative technologies
and energy-efficient solutions to
products manufactured and marketed
worldwide. The company is one of
the world   s leading manufacturers
of residential and commercial water
heating equipment and boilers, as
well as a manufacturer of water
treatment products for residential
and light commercial applications.
A. O. Smith is headquartered
in Milwaukee, Wisconsin, with
approximately 11,500 employees
at operations in the United States,
Bangladesh, Canada, China,
India, Mexico, the Netherlands, Sri
Lanka and the United Kingdom.
A. O. Smith Corporation is listed on the
New York Stock Exchange and is part
of the S&P 500 Index. The company
has paid cash dividends on its
common stock every year since 1940.
Registrar. Stock Transfer Agent,
Dividend Reinvestment Agent
(for both classes of stock)
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120
800-468-9716
651-450-4064
www.shareowneronline.com

Stephen M. Shafer,
President and Chief Executive Officer
MARCH 2026
Letter to Shareholders
Dear Shareholders,
I   m honored to write my first letter
to you as A. O. Smith   s 11th Chief
Executive Officer. In July, I had
the privilege of succeeding Kevin
Wheeler, and on behalf of A. O. Smith,
I would like to express my sincere
appreciation for his more than 30
years of dedicated service and
leadership. His counsel and continued
support remain invaluable in his
new role as Executive Chairman.
In July, we also introduced our
refreshed company purpose   
To Find A Better Way   a statement
that captures the inventive and
transformative spirit that has powered
A. O. Smith for more than 151 years.
It also represents our future, as we
remain committed to leading with
purpose, innovating boldly and finding
new ways to serve our customers in
a rapidly changing environment.
In 2025, A. O. Smith delivered
another year of solid performance,
achieving $3.8 billion in sales.
Despite mixed market conditions
and the uncertainties of tariffs, our
teams remained focused, disciplined
and committed to strengthening
the business for the long term.
In North America, we expanded
margins by 20 basis points through
strong execution. While residential
water heater demand softened as
new home construction slowed,
we saw healthy gains in our
commercial water heater and boiler
categories, particularly with highefficiency products that continue to
differentiate us in the marketplace.

Performance in our North America Water
Treatment business was resilient. We saw
improved profitability, despite slightly
decreased sales as we de-emphasized
less profitable channels. This reflects the
benefit of our streamlined portfolio, as well
as growth across remaining product lines.
Sales in our priority dealer, e-commerce and
direct-to-consumer channels grew 10%.
Internationally, we continued to navigate
a dynamic environment. We strengthened
our Rest of World segment profitability, with
margins up 40 basis points, even with sales
in China down 12% as the business was
impacted by a challenging market environment.
This underscores the effectiveness of the
restructuring actions we took at the end of 2024
and the ongoing cost-saving initiatives that
have strengthened our competitive position.
Our organic India business experienced 13% sales
growth, driven by strong performance across
our portfolio, and Pureit contributed $54 million
in sales. The Pureit integration remains on track,
and we are encouraged by the opportunities
this business brings to the broader region.
I would be remiss if I didn   t mention tariffs.
Navigating the constantly evolving landscape
required a tremendous team effort,
demonstrating strong operational discipline and
our ability to adapt quickly while minimizing
disruptions for our customers. I   m proud of how
we   ve responded, and we   ll continue to innovate
and collaborate to overcome future challenges.
Driving value creation
We have successfully reshaped our portfolio
at pivotal moments in our history, and we are
doing it again   deliberately and with discipline. In
January, we acquired Leonard Valve Corporation
of Cranston, Rhode Island. Leonard Valve,
together with its Heat-Timer   brand, is a pioneer
in water management technologies. This move
adds capabilities that complement our core
strengths and opens attractive adjacencies.
Innovation remains a defining advantage for
A. O. Smith. In 2025, we added several stateof-the-art products to our portfolio, including
the Adapt  + premium condensing gas tankless
water heater, the Cyclone   Flex    commercial gas
water heater with adaptive gas technology, and
the HomeShield    whole house water filter   each
designed to offer superior performance and user
experience. We also welcomed Dr. Ming Cheng
as Chief Technology Officer in September, adding
leadership depth and a clear innovation mandate
across our engineering and product teams.
Operational excellence is part of our DNA.
Through disciplined practices and new
technologies, we continue to find a better
way to move the company forward. This
approach reduces waste, expands margins and
enhances agility as markets and technologies
evolve. In October, we welcomed Chris Howe
as Chief Digital Information Officer to help
lead our digital transformation and unlock
productivity through modern tools like
artificial intelligence and data analytics.
Adapt  + premium condensing gas
tankless water heater with X3   Scale
Prevention Technology

Celebrating our culture and employee growth
At the foundation of everything we do are
our unwavering values and the way we do
business   the SmithWay. In 2025, we were
recognized as a World   s Most Ethical Company
by Ethisphere for the second year in a row
and reaffirmed our Guiding Principles across
the company. We also appointed Paul Jones
to the position of General Counsel and Chief
Compliance Officer, ensuring our values are
upheld and our governance remains strong.
Great companies are built by great people.
At A. O. Smith we take pride in attracting,
retaining and developing talented teams who
deliver innovative, high-quality solutions
for our customers. This is foundational to
how we operate and grow. That people-first
focus is a core lever in our value creation
strategy   driving organic growth, margin
expansion and ROIC improvements toward
top quartile total shareholder return.
As we look ahead, we remain confident in the
strength of our strategy, our commitment to
disciplined execution and the dedication of
our global teams. Together, we are building a
stronger, more resilient A. O. Smith   one that
continues to find a better way for our customers,
our communities and our future. Thank you for
your continued support and confidence.
Sincerely,
Stephen M. Shafer
President and Chief Executive Officer
For more than 30 years, we   ve increased
our dividend to shareholders. In October, we
announced a 6% increase in the dividend
rate that resulted in a five-year compound
annual dividend growth rate of roughly 7%.
We also repurchased approximately 5.9
million shares of common stock, totaling
approximately $400 million in 2025.
Executives celebrate the grand opening of our new
Product Development Center in Lebanon, Tennessee
Released Ninth Edition of the A. O. Smith
Guiding Principles in October


shareholder letter icon 3/4/2026 Letter Continued (Full PDF)
 

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