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A. O. Smith Q2 Earnings Beat Estimates on Boiler Growth, Pricing
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Key Takeaways
A. O. Smith beat Q2 earnings and sales estimates despite lower year-over-year profit and revenues.
AOS saw North America sales rise 5%, while China sales fell 28% in local currency, weighing on results.
A. O. Smith raised its 2026 share repurchase target to $300 million and narrowed adjusted EPS guidance.
A. O. Smith Corporation (AOS - Free Report) reported second-quarter 2026 adjusted earnings of $1.03 per share, beating the Zacks Consensus Estimate of 96 cents by 7.3%. The bottom line declined 4% year over year, as weaker China volumes and higher input costs weighed on profitability.
Net sales of $1 billion surpassed the consensus estimate of $986.45 million by 1.8% but fell 1% year over year. North America sales rose 5%, supported by 21% boiler sales growth, carryover pricing and Leonard Valve, while China sales dropped 28% in local currency.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 5% year over year to $820.5 million. Our estimate for segmental revenues was $781.4 million. This uptick was caused by higher boiler volumes, benefits from carryover pricing and a $16 million contribution from the Leonard Valve buyout, partially offset by lower residential water heater volumes.
Segmental earnings were $177.2 million, down 10.6% year over year.
Quarterly sales in the Rest of the World (including China, India and Europe) segment were $194.9 million, down 19% year over year. Our estimate for segmental revenues was $223.8 million. Sales in China fell 28% in local currency.
The segment’s earnings were $10.2 million, down 59.7% year over year due to lower China sales volumes, which were partially offset by continued cost-management actions.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A.O. Smith’s cost of sales was $616.5 million, up 0.4% year over year. Selling, general & administrative expenses were $197.7 million, up 3.3%.
Gross profit decreased 2.3% year over year to $387.8 million. The gross margin was 38.6% compared with 39.3% in the year-ago period. Interest expenses were $8.1 million compared with $4.6 million in the year-ago quarter.
A.O. Smith’s Liquidity & Cash Flow
As of June 30, 2026, AOS’ cash and cash equivalents totaled $181.3 million compared with $174.5 million at the end of December 2025.
At the end of the second quarter, long-term debt was $598 million compared with $112.7 million at the end of December 2025. The increase in debt level was attributable to cash borrowed by the company under a new term loan for the acquisition of Leonard Valve.
In the first six months of 2026, cash provided by operating activities totaled $253.8 million compared with $178.3 million in the year-ago period.
AOS’ Share Repurchases
In the first six months of 2026, A.O. Smith repurchased 2.6 million shares for $162.4 million. As of second quarter-end, approximately 3.2 million shares were left to be repurchased under the share repurchase authorization.
Supported by strong cash flow performance in the first half of 2026, AOS increased its full-year share repurchase target by 50% to $300 million from $200 million.
A.O. Smith’s 2026 Outlook
A.O. Smith expects 2026 net sales in the range of $3.90-$3.95 billion, implying growth of 2-3%. The company had previously projected sales growth of 2-4%.
Management currently projects adjusted earnings per share in the band of $3.70-$3.85, narrowed from the previous range of $3.70-$4.00.
AOS’ Zacks Rank
The company currently carries a Zacks Rank #4 (Sell).
Constellium SE (CSTM - Free Report) came out with quarterly earnings of $1.04 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $0.91 per share. This compares with earnings of $0.25 per share a year ago.
Constellium posted revenues of $2.75 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $2.1 billion.
Generac Holdings Inc. (GNRC - Free Report) came out with quarterly earnings of $2.91 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.95 per share. This compares with earnings of $1.65 per share a year ago.
Generac Holdings posted revenues of $1.17 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.37%. This compares with year-ago revenues of $1.06 billion.
Graco Inc. (GGG - Free Report) reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.
The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025.
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A. O. Smith Q2 Earnings Beat Estimates on Boiler Growth, Pricing
Key Takeaways
A. O. Smith Corporation (AOS - Free Report) reported second-quarter 2026 adjusted earnings of $1.03 per share, beating the Zacks Consensus Estimate of 96 cents by 7.3%. The bottom line declined 4% year over year, as weaker China volumes and higher input costs weighed on profitability.
Net sales of $1 billion surpassed the consensus estimate of $986.45 million by 1.8% but fell 1% year over year. North America sales rose 5%, supported by 21% boiler sales growth, carryover pricing and Leonard Valve, while China sales dropped 28% in local currency.
Segmental Details
A. O. Smith’s quarterly sales in North America (comprising the United States and Canada operations) increased 5% year over year to $820.5 million. Our estimate for segmental revenues was $781.4 million. This uptick was caused by higher boiler volumes, benefits from carryover pricing and a $16 million contribution from the Leonard Valve buyout, partially offset by lower residential water heater volumes.
Segmental earnings were $177.2 million, down 10.6% year over year.
Quarterly sales in the Rest of the World (including China, India and Europe) segment were $194.9 million, down 19% year over year. Our estimate for segmental revenues was $223.8 million. Sales in China fell 28% in local currency.
The segment’s earnings were $10.2 million, down 59.7% year over year due to lower China sales volumes, which were partially offset by continued cost-management actions.
A. O. Smith Corporation Price, Consensus and EPS Surprise
A. O. Smith Corporation price-consensus-eps-surprise-chart | A. O. Smith Corporation Quote
AOS’ Margin Details
A.O. Smith’s cost of sales was $616.5 million, up 0.4% year over year. Selling, general & administrative expenses were $197.7 million, up 3.3%.
Gross profit decreased 2.3% year over year to $387.8 million. The gross margin was 38.6% compared with 39.3% in the year-ago period. Interest expenses were $8.1 million compared with $4.6 million in the year-ago quarter.
A.O. Smith’s Liquidity & Cash Flow
As of June 30, 2026, AOS’ cash and cash equivalents totaled $181.3 million compared with $174.5 million at the end of December 2025.
At the end of the second quarter, long-term debt was $598 million compared with $112.7 million at the end of December 2025. The increase in debt level was attributable to cash borrowed by the company under a new term loan for the acquisition of Leonard Valve.
In the first six months of 2026, cash provided by operating activities totaled $253.8 million compared with $178.3 million in the year-ago period.
AOS’ Share Repurchases
In the first six months of 2026, A.O. Smith repurchased 2.6 million shares for $162.4 million. As of second quarter-end, approximately 3.2 million shares were left to be repurchased under the share repurchase authorization.
Supported by strong cash flow performance in the first half of 2026, AOS increased its full-year share repurchase target by 50% to $300 million from $200 million.
A.O. Smith’s 2026 Outlook
A.O. Smith expects 2026 net sales in the range of $3.90-$3.95 billion, implying growth of 2-3%. The company had previously projected sales growth of 2-4%.
Management currently projects adjusted earnings per share in the band of $3.70-$3.85, narrowed from the previous range of $3.70-$4.00.
AOS’ Zacks Rank
The company currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Constellium SE (CSTM - Free Report) came out with quarterly earnings of $1.04 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $0.91 per share. This compares with earnings of $0.25 per share a year ago.
Constellium posted revenues of $2.75 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $2.1 billion.
Generac Holdings Inc. (GNRC - Free Report) came out with quarterly earnings of $2.91 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.95 per share. This compares with earnings of $1.65 per share a year ago.
Generac Holdings posted revenues of $1.17 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.37%. This compares with year-ago revenues of $1.06 billion.
Graco Inc. (GGG - Free Report) reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.
The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025.