A. O. Smith Reports Flat Q3 2026 Revenue Amid China Divestiture and Rising Input Costs

A. O. Smith (AOS) reported third-quarter net sales of $940.5 million, remaining flat year-over-year as growth in North America was offset by a significant decline in international markets, particularly China. Diluted earnings per share fell slightly to $0.93 from $0.94 in the prior year period. The company is undergoing a strategic shift, including the divestiture of an 81% interest in its China business for approximately $400 million, with total transaction value expected to exceed $500 million via future royalties. While North American sales grew by 3%, margins were pressured by a 60-basis point decrease due to rising steel and freight costs. To combat these inflationary pressures, the company announced a 9.5% price increase for most water heater products effective December 2026. Despite headwinds in residential volumes and certain segments like Leonard Valve, A. O. Smith maintains strong free cash flow and continues its share repurchase program.

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