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.

 •  2/27/2025 Letter Continued (Full PDF)
 •  3/2/2023 AOS Stockholder Letter
 •  2/29/2024 AOS Stockholder Letter
 •  More "Consumer Goods" Category Stockholder Letters
 •  AOS Benford's Law Stock Score = 100

AOS Shareholder/Stockholder Letter Transcript:

Letter to
Shareholders
Dear Shareholders:
2024 was a milestone year for A. O. Smith as we celebrated
the company   s 150th anniversary     a true testament to our
values and the strength of the organization. We completed
two acquisitions, made significant investments in our North
American operations, emphasized our focus on continuous
improvement and continued our dedication to the development
of new sustainable technologies   all while honoring our
rich history and the milestones that led us to today.
We celebrated our anniversary with more than 12,000 employees,
Smith family members and community partners in more
than 30 locations around the world. It was a time to celebrate
our company values, highlight our relentless commitment
to innovation and emphasize our position as a global water
technology leader. We also celebrated by making two significant
donations through the A. O. Smith Foundation to high-impact
service organizations in the communities where we operate. It
was certainly a year that reconnected us all to the history and
culture that makes A. O. Smith such a special company.
As we look to the future, our commitment to leading
the industry forward and supporting our customers
through an ever-changing business environment remains
steadfast. In 2024, we delivered $3.8 billion in sales.
Kevin J. Wheeler (left)
Chairman & Chief Executive Officer
Stephen M. Shafer
President & Chief Operating Officer
Sales in our North America segment increased slightly compared
to last year. The water heating business saw a strong first half
of the year and was balanced out by a lower second half as
volumes were influenced by a first-quarter price increase. Our
boiler business increased 8%, and we are particularly pleased
with the strong demand for the Crest   commercial boiler with
Hellcat    Combustion Technology. North America Water Treatment
sales increased 10%, mainly driven by acquisition-related dealer
growth. In addition, we have actions in place this year to focus
on higher growth and more profitable water treatment channels
with a profit improvement plan to expand margins in 2025.
Our business in China is experiencing one of the most difficult
economic times in decades. With sales down 6% in local currency,
our teams are taking the necessary steps to reduce costs by
optimizing the business structure and maximizing our resources
to ensure we have the right products in place to meet customer
needs. With these actions, we are confident we   re positioning
ourselves for profitable growth when the economy improves.

Our India operations outperformed the market
with a 13% increase in local currency. Consumers
are looking for products that combine technology,
modern aesthetics and state-of-the-art features,
which continue to be the focus of our products
in India. The acquisition of Pureit, which offers
a broad range of residential water purification
solutions, will further strengthen our brand and
expand our reach in India and across South Asia.
We continue to bring innovative products to market,
including the Adapt   gas tankless water heater with
X3   Scale Prevention Technology, an ENERGY STAR  certified product that prevents scale buildup. We also
launched the Voltex   MAX heat pump water heater
(HPWH), an addition to our growing residential HPWH
line. Within our commercial business, we launched
the Veritus   commercial HPWH and the Lectrus  
commercial boiler, which have allowed us to pave
the way for a more sustainable and efficient future.
A. O. Smith 2024 Sustainability Report
Making critical investments to prepare the company
for the future has long been part of our strategy.
We are investing more than $80 million in capital,
roughly half of which was spent in 2024, in Ciudad
Ju  rez, Mexico; Lebanon, Tennessee; and McBee,
South Carolina. These investments will further
position us to lead the industry through upcoming
regulatory changes and drive innovation within our
core products. We are bringing our newly launched
gas tankless water heater production to North
America for the first time, which will shorten the
supply chain and improve service levels. We   ve
increased production of our commercial HPWHs
and doubled our residential HPWH capacity to meet
growing demand. We are increasing our capacity to
produce high-efficiency, condensing water heaters.
We   ve also made investments in our operations
through automation, robotics and other testing
capabilities to ensure the products we   re producing
continue to exceed our customers    expectations.
We are proud to share that for more than 30
consecutive 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 approximately 8%. We also repurchased
approximately 3.8 million shares of common stock,
totaling approximately $306 million in 2024.
We published our fourth Sustainability Report in
November, highlighting our enduring commitment to
sustainability and water stewardship, and announced
our first public water goal   an annual water savings of
40 million gallons by 2030. We are also proud to share
that we surpassed our greenhouse gas emissions
reduction goal set in 2021 by 17%. This report further
demonstrates our commitment to providing our
customers with sustainable, efficient solutions.
In March, we were recognized as a 2024 World   s
Most Ethical Company by Ethisphere, a global
leader in defining and advancing the standards
of ethical business practices. We have long
believed our culture   namely our values and
guiding principles   is a differentiator for our
employees and customers. We are proud to
be one of the top global water technology
companies leading the market through uncertainty,
growth and change with ethics top of mind.
In today   s environment of constant change, one
thing will always remain   A. O. Smith will continue to
build things that matter and will always do business
with honesty and integrity. We truly believe these
values will sustain us for another 150 years!
Sincerely,
Kevin J. Wheeler
Chairman and Chief Executive Officer
Stephen M. Shafer
President and Chief Operating Officer

A third plant in Ciudad Ju  rez, Mexico, opened in September 2024, and has started producing tankless water heaters.
Growing Our North
American Footprint
Our plant in Ciudad Ju  rez, Mexico, not only celebrated the company   s 150th
anniversary but also the opening of its third plant and an additional building expansion
in September 2024. The new plant will shorten the supply chain for faster response
and allow the company to manufacture tankless units for the first time in North
America, further strengthening our position as a leader in water heating. An additional
line was also added to double our heat pump water heater production capacity.
To help us further prepare for upcoming commercial regulatory changes, we   re also
expanding our operations in McBee, South Carolina. Updates will include a new coil line
furnace, a robotic weld cell for the coil line, a coil line blaster, coil forming machines
and other material handling equipment. These additions will increase production
of our condensing commercial water heaters and storage capacity to quickly meet
customers    needs. This project is being conducted in two phases with the first phase
completion scheduled for Q3 2025 and the second phase in Q3 2026.
A heat pump water heater rolls off the new
line in Ciudad Ju  rez, Mexico.
The robotic welding cell for the new coil line
in McBee, South Carolina, was installed in
February 2025.



 2/27/2025 Letter Continued (Full PDF)