A.O. Smith Q1 Revenue Falls to $945.6M, EPS $0.85; Outlook Cut
A.O. Smith reported Q1 net income of $118 million, or $0.85 per share, on revenue of $945.6 million, missing estimates of $0.94 EPS and $969.2 million in sales. The company narrowed its 2026 adjusted EPS outlook to $3.70–$4.00, citing weaker China demand and weather disruptions.
1. Q1 Financial Results
A.O. Smith posted net income of $118.0 million in Q1 2026, or $0.85 per diluted share, on revenue of $945.6 million. These figures missed analyst expectations of $0.94 EPS and $969.2 million in sales, representing an 11% decline in EPS and a 2% revenue drop compared to Q1 2025.
2. Segment Performance
North America sales reached $753.4 million, up 1% year-over-year, boosted by a $16 million contribution from Leonard Valve and pricing gains that offset softer water heater volumes and weather-related production and shipping constraints. Rest of World sales fell 11% to $200.7 million, with China sales down 17% in local currency due to weak consumer demand.
3. Outlook and Capital Allocation
The company lowered its 2026 full-year GAAP EPS guidance to $3.60–$3.90 and adjusted EPS to $3.70–$4.00 while forecasting 2%–4% sales growth. Operating cash flow rose to $129.4 million and free cash flow to $118.9 million; the board approved repurchasing $200 million of shares in 2026 and declared a $0.36 per share dividend.