AOS

Our level of indebtedness may increase in the future if we finance acquisitions with debt, which would cause us to incur additional interest expense and 10 Table of Contents could increase our vulnerability to general adverse economic and industry conditions and limit our ab

impacts to the Company, particularly the demand for its products, resulting from global inflationary pressures or a potential recession in one or more of the markets in which the Company participates

$ 945.6 $ 963.9 Cost of products sold 579.9 588.5 Gross profit 365.7 375.4 Gross profit margin % 38.7 % 38.9 % Selling, general and administrative expenses 203.9 192.6 Interest expense 7.1 2.9 Other expense (income), net — (1.2) Earnings before provision for income taxes 154.7 181.1 Provision for income taxes 36.7 44.5 Net Earnings $ 118.0 $ 136.6 Our sales in the first quarter of 2026 were $945.6 million and were lower than the first quarter of 2025 sales of $963.9 million. Compared to the prior year quart

Ended March 31, 2026 2025 Net sales $ 945.6 $ 963.9 Cost of products sold 579.9 588.5 Gross profit 365.7 375.4 Selling, general and administrative expenses 203.9 192.6 Interest expense 7.1 2.9 Other income, net — ( 1.2 ) Earnings before provision for income taxes 154.7 181.1 Provision for income taxes 36.7 44.5 Net Earnings $ 118.0 $ 136.6 Basic Net Earnings Per Share of Common Stock $ 0.85 $ 0.95 Diluted Net Earnings Per Share of Common Stock $ 0.85 $ 0.95 Dividends Per Share of Common Stock $ 0.36 $ 0.34

456.1 1,484.8 Gross profit margin % 38.8 % 38.1 % 38.5 % Selling, general and administrative expenses 759.4 739.3 727.4 Restructuring and impairment expenses — 17.6 18.8 Interest expense 13.5 6.7 12.0 Other income-net (0.6) (8.5) (6.9) Earnings before provision for income taxes 715.1 701.0 733.5 Provision for income taxes 168.9 167.4 176.9 Net Earnings $ 546.2 $ 533.6 $ 556.6 Our sales in 2025 were $3,830.2 million, an increase of $12.1 million compared to 2024 sales of $3,818.1 million. Our net sales increase

As a result, we are subject to risks associated with operating in foreign countries, including fluctuations in currency exchange rates and interest rates, or global exchange rate instability or volatility that strengthens the U

The interest rate on the loan is variable based on the SOFR (secured overnight financing rate) plus 0

impacts to the Company, particularly the demand for its products, resulting from global inflationary pressures or a potential recession in one or more of the markets in which the Company participates

impacts to the Company, particularly the demand for its products, resulting from global inflationary pressures or a potential recession in one or more of the markets in which the Company participates

The interest rate on the loan is variable based on the SOFR (secured overnight financing rate) plus 0

As a result, we are subject to risks associated with operating in foreign countries, including fluctuations in currency exchange rates and interest rates, or global exchange rate instability or volatility that strengthens the U

■ Import tariffs, taxes, customs duties and other trading regulations imposed by the U

in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC)

5 Table of Contents GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS Our operations, including the manufacture, packaging, labeling, storage, distribution, advertising and sale of our products, are subject to various federal, state, local and foreign laws and regulations

impact of changes in government regulations or regulatory requirements

impact of changes in government regulations or regulatory requirements

in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC)

impact of changes in government regulations or regulatory requirements

5 Table of Contents GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS Our operations, including the manufacture, packaging, labeling, storage, distribution, advertising and sale of our products, are subject to various federal, state, local and foreign laws and regulations

impact of changes in government regulations or regulatory requirements

■ Import tariffs, taxes, customs duties and other trading regulations imposed by the U

of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; potential weakening in the high-efficiency gas boiler segment in the U.S.; substantial defaults in payment by, material reducti

of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; the failure to realize the expected benefits of restructuring actions; further weakening in the high-efficiency gas boiler segm

with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offered order-entry, warehousing and logistics support. The Provider also offered asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider had collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to

new construction activity in North America declined in 2025 and industry-wide replacement-related volume of water heaters was flat compared to 2024. New residential housing starts in the U.S. are projected to be approximately flat and housing completions are expected to decrease in 2026 compared to 2025. Commercial construction activity in North America grew in 2025. We believe that the significant majority of the markets we serve are for the replacement of existing products, and residential water heater r

with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offered order-entry, warehousing and logistics support. The Provider also offered asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider had collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to

of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; the failure to realize the expected benefits of restructuring actions; further weakening in the high-efficiency gas boiler segm

new construction activity in North America declined in 2025 and industry-wide replacement-related volume of water heaters was flat compared to 2024. New residential housing starts in the U.S. are projected to be approximately flat and housing completions are expected to decrease in 2026 compared to 2025. Commercial construction activity in North America grew in 2025. We believe that the significant majority of the markets we serve are for the replacement of existing products, and residential water heater r

of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; potential weakening in the high-efficiency gas boiler segment in the U.S.; substantial defaults in payment by, material reducti

In addition, tariffs have increased volatility in input materials

■ Import tariffs, taxes, customs duties and other trading regulations imposed by the U

In response to higher steel and other input costs, including tariffs, we announced price increases on most of our water heater and boiler products in the first half of 2025

We anticipate sales of our North America water treatment products will grow between five and six percent primarily due to tariff-related pricing benefits and as we continue to expand our dealer network, partially offset by softness in our consumer channels

■ Import tariffs, taxes, customs duties and other trading regulations imposed by the U

In response to higher steel and other input costs, including tariffs, we announced price increases on most of our water heater and boiler products in the first half of 2025

In addition, tariffs have increased volatility in input materials

We anticipate sales of our North America water treatment products will grow between five and six percent primarily due to tariff-related pricing benefits and as we continue to expand our dealer network, partially offset by softness in our consumer channels

prices; inability of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; the failure to realize the expected benefits of restructuring actions; further weakening in the high-effic

events, including natural disasters, political disruptions, terrorist attacks, public health issues, and acts of war, could significantly disrupt production, or impact consumer spending As a global company with a large international footprint, we are subject to increased risk of damage or disruption to us and our employees, facilities, suppliers, distributors, or customers. Extraordinary events, including natural disasters, resulting from but not limited to climate change, political disruptions, terrorist att

In our Rest of World segment, China third-party sales declined 12 percent in local currency in 2025 due to continued weak consumer demand and the cessation of the government appliance subsidy programs in the second half of the year

prices; inability of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; the failure to realize the expected benefits of restructuring actions; further weakening in the high-effic

events, including natural disasters, political disruptions, terrorist attacks, public health issues, and acts of war, could significantly disrupt production, or impact consumer spending As a global company with a large international footprint, we are subject to increased risk of damage or disruption to us and our employees, facilities, suppliers, distributors, or customers. Extraordinary events, including natural disasters, resulting from but not limited to climate change, political disruptions, terrorist att

In our Rest of World segment, China third-party sales declined 12 percent in local currency in 2025 due to continued weak consumer demand and the cessation of the government appliance subsidy programs in the second half of the year

Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs, including the recent volatility in fuel and other material prices

Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs

to climate change, political disruptions, terrorist attacks, public health issues and acts of war may disrupt our business and operations and impact our supply chain and access to necessary raw materials or could adversely affect the economy generally, resulting in a loss of sales and customers

to climate change, political disruptions, terrorist attacks, public health issues and acts of war may disrupt our business and operations and impact our supply chain and access to necessary raw materials or could adversely affect the economy generally, resulting in a loss of sales and customers

Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs, including the recent volatility in fuel and other material prices

Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs

retain our customer base or improve or maintain our profit margins on sales to our customers

retain our customer base or improve or maintain our profit margins on sales to our customers

of steel, are generally available in adequate quantities. A portion of our customers are contractually obligated to accept price changes based on fluctuations in steel prices. There has been volatility in steel costs over the last several years. In addition, tariffs have increased volatility in input materials. BACKLOG Due to the short-cycle nature of our businesses, our operations do not normally sustain significant backlogs. RESEARCH AND DEVELOPMENT To improve our competitiveness by generating new pro

as a replacement for gas, or significant shifts in industry standards, may substantially increase manufacturing costs, capital expenditures, transportation costs and raw material costs, alter distribution channels, attract new competitors, impact the size and timing of demand for our products, affect the types of products we are able to offer or put us at a competitive disadvantage, any of which could harm our business and have a material adverse effect on our financial condition, results of operations and

The adoption of ASU 2023-09 did not affect the Company’s financial position or its results of operations. Refer to Note 12, Income Taxes, for additional disclosures. 2. Revenue Recognition Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of

(dollars in millions) 2025 2024 2023 Net sales $ 3,830.2 $ 3,818.1 $ 3,852.8 Cost of products sold 2,342.8 2,362.0 2,368.0 Gross profit 1,487.4 1,456.1 1,484.8 Gross profit margin % 38.8 % 38.1 % 38.5 % Selling, general and administrative expenses 759.4 739.3 727.4 Restructuring and impairment expenses — 17.6 18.8 Interest expense 13.5 6.7 12.0 Other income-net (0.6) (8.5) (6.9) Earnings before provision for income taxes 715.1 701.0 733.5 Provision for income taxes 168.9 167.4 176.9 Net Earnings $ 546.2 $ 533.6

Operations (dollars in millions) Three Months Ended March 31, 2026 2025 Net sales $ 945.6 $ 963.9 Cost of products sold 579.9 588.5 Gross profit 365.7 375.4 Gross profit margin % 38.7 % 38.9 % Selling, general and administrative expenses 203.9 192.6 Interest expense 7.1 2.9 Other expense (income), net — (1.2) Earnings before provision for income taxes 154.7 181.1 Provision for income taxes 36.7 44.5 Net Earnings $ 118.0 $ 136.6 Our sales in the first quarter of 2026 were $945.6 million and were lower than the

industries, could result in a consumer shift away from the products we offer, including electing to purchase lower priced models, which could adversely affect our revenues and, at the same time, increase our costs. A deterioration in economic conditions also could negatively impact our vendors and customers, which could result in an increase in bad debt expense, customer and vendor bankruptcies, interruption or delay in supply of materials, or increased material prices, which could negatively impact our

state agencies. Compliance with government regulations and environmental laws has not had and is not expected to have a material effect upon the capital expenditures, earnings, or competitive position of our company. See Item 3. AVAILABLE INFORMATION We maintain a website with the address www.aosmith.com. The information contained on our website is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Rep

state agencies. Compliance with government regulations and environmental laws has not had and is not expected to have a material effect upon the capital expenditures, earnings, or competitive position of our company. See Item 3. AVAILABLE INFORMATION We maintain a website with the address www.aosmith.com. The information contained on our website is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. We make available free of charge through our website our Annual Rep

The adoption of ASU 2023-09 did not affect the Company’s financial position or its results of operations. Refer to Note 12, Income Taxes, for additional disclosures. 2. Revenue Recognition Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of

Operations (dollars in millions) Three Months Ended March 31, 2026 2025 Net sales $ 945.6 $ 963.9 Cost of products sold 579.9 588.5 Gross profit 365.7 375.4 Gross profit margin % 38.7 % 38.9 % Selling, general and administrative expenses 203.9 192.6 Interest expense 7.1 2.9 Other expense (income), net — (1.2) Earnings before provision for income taxes 154.7 181.1 Provision for income taxes 36.7 44.5 Net Earnings $ 118.0 $ 136.6 Our sales in the first quarter of 2026 were $945.6 million and were lower than the

(dollars in millions) 2025 2024 2023 Net sales $ 3,830.2 $ 3,818.1 $ 3,852.8 Cost of products sold 2,342.8 2,362.0 2,368.0 Gross profit 1,487.4 1,456.1 1,484.8 Gross profit margin % 38.8 % 38.1 % 38.5 % Selling, general and administrative expenses 759.4 739.3 727.4 Restructuring and impairment expenses — 17.6 18.8 Interest expense 13.5 6.7 12.0 Other income-net (0.6) (8.5) (6.9) Earnings before provision for income taxes 715.1 701.0 733.5 Provision for income taxes 168.9 167.4 176.9 Net Earnings $ 546.2 $ 533.6

industries, could result in a consumer shift away from the products we offer, including electing to purchase lower priced models, which could adversely affect our revenues and, at the same time, increase our costs. A deterioration in economic conditions also could negatively impact our vendors and customers, which could result in an increase in bad debt expense, customer and vendor bankruptcies, interruption or delay in supply of materials, or increased material prices, which could negatively impact our

6 Other comprehensive (loss) earnings Foreign currency translation adjustments ( 3

of pricing actions in 2025 as mentioned above, incremental sales of approximately $16 million from the 2026 acquisition of Leonard Valve, and a favorable foreign currency translation impact of approximately $11 million resulting from the appreciation of foreign currencies compared to the U

of our subsidiaries enters into a purchase or sale transaction using a currency different from the operating subsidiaries’ functional currency

The decrease in other income - net was driven by lower foreign currency translation losses compared to the prior year and lower interest income from lower average cash balances

6 Other comprehensive (loss) earnings Foreign currency translation adjustments ( 3

The decrease in other income - net was driven by lower foreign currency translation losses compared to the prior year and lower interest income from lower average cash balances

of our subsidiaries enters into a purchase or sale transaction using a currency different from the operating subsidiaries’ functional currency

of pricing actions in 2025 as mentioned above, incremental sales of approximately $16 million from the 2026 acquisition of Leonard Valve, and a favorable foreign currency translation impact of approximately $11 million resulting from the appreciation of foreign currencies compared to the U

&A) expenses were $759.4 million in 2025, or $20.1 million higher than in 2024. The increase in SG&A expenses in 2025 compared to the prior year was primarily due to higher employee costs, partially offset by benefits of our 2024 China restructuring actions. We recognized $17.6 million of restructuring and impairment expenses during the year ended December 31, 2024. Of these expenses, $6.3 million was related to our water treatment business in the North America segment and was a result of a profitability improveme

3 million compared to the first quarter of 2025. The increases in SG&A expenses in the first quarter of 2026 compared to the prior year period were primarily due to higher employee costs and transaction costs related to the acquisition of Leonard Valve. Interest expense in the first quarter of 2026 was $7.1 million compared to $2.9 million in the same period last year. The increase in interest expense in the first quarter 2026 was primarily due to higher debt levels as a result of the Leonard Valve acquisition. O

as of December 31, 2025 with approximately 6,500 in North America and 5,000 in Rest of World. A small portion of our workforce in the U.S. is represented by a labor union, while outside the U.S., we have employees in certain countries that are represented by employee representative organizations, such as an employee association, union, or works council. Our Guiding Principles and Values . The foundation of how we conduct business and interact with our employees is outlined in A. O. Smith Corporation’s Gu

&A) expenses were $759.4 million in 2025, or $20.1 million higher than in 2024. The increase in SG&A expenses in 2025 compared to the prior year was primarily due to higher employee costs, partially offset by benefits of our 2024 China restructuring actions. We recognized $17.6 million of restructuring and impairment expenses during the year ended December 31, 2024. Of these expenses, $6.3 million was related to our water treatment business in the North America segment and was a result of a profitability improveme

3 million compared to the first quarter of 2025. The increases in SG&A expenses in the first quarter of 2026 compared to the prior year period were primarily due to higher employee costs and transaction costs related to the acquisition of Leonard Valve. Interest expense in the first quarter of 2026 was $7.1 million compared to $2.9 million in the same period last year. The increase in interest expense in the first quarter 2026 was primarily due to higher debt levels as a result of the Leonard Valve acquisition. O

as of December 31, 2025 with approximately 6,500 in North America and 5,000 in Rest of World. A small portion of our workforce in the U.S. is represented by a labor union, while outside the U.S., we have employees in certain countries that are represented by employee representative organizations, such as an employee association, union, or works council. Our Guiding Principles and Values . The foundation of how we conduct business and interact with our employees is outlined in A. O. Smith Corporation’s Gu

quarter of 2026 as pricing benefits were more than offset by lower residential volumes. Our first quarter sales were impacted by softer water heater industry volumes and weather-related production and shipping constraints. We project that full year 2026 residential industry unit volumes will be flat to slightly down, due to softness in new construction and a slower than expected start to the year. Due to a recent announcement from the Department of Energy indicating a one-year enforcement delay of the October 2

On January 29, 2026, the Company identified damage to a portion of the roof structure at its Ashland City, Tennessee facility as a result of a severe ice and snow weather event. For safety reasons, production in the affected area was temporarily suspended while remediation activities were performed. During this period, the Company shifted certain production activities to other facilities to mitigate the operational impact. The Company maintains insurance coverage for property damage, as well as business

our operations or the operations of our suppliers and key distributors could affect our business negatively, harming operating results. Natural disasters and extreme weather conditions may disrupt the productivity of our facilities. For example, two of our manufacturing plants are located within a floodplain that has experienced past flooding events. We also have other manufacturing facilities located in hurricane and earthquake zones. We maintain insurance coverage and have taken steps to mitigate physical

quarter of 2026 as pricing benefits were more than offset by lower residential volumes. Our first quarter sales were impacted by softer water heater industry volumes and weather-related production and shipping constraints. We project that full year 2026 residential industry unit volumes will be flat to slightly down, due to softness in new construction and a slower than expected start to the year. Due to a recent announcement from the Department of Energy indicating a one-year enforcement delay of the October 2

On January 29, 2026, the Company identified damage to a portion of the roof structure at its Ashland City, Tennessee facility as a result of a severe ice and snow weather event. For safety reasons, production in the affected area was temporarily suspended while remediation activities were performed. During this period, the Company shifted certain production activities to other facilities to mitigate the operational impact. The Company maintains insurance coverage for property damage, as well as business

our operations or the operations of our suppliers and key distributors could affect our business negatively, harming operating results. Natural disasters and extreme weather conditions may disrupt the productivity of our facilities. For example, two of our manufacturing plants are located within a floodplain that has experienced past flooding events. We also have other manufacturing facilities located in hurricane and earthquake zones. We maintain insurance coverage and have taken steps to mitigate physical

Such deterioration in economic conditions could arise from many factors or fears including public health crises, further deterioration in the property market, political instability or risk of government default

Whether at the federal, state, or local level, these laws are intended to improve energy efficiency and product safety, and protect public health and the environment

Whether at the federal, state, or local level, these laws are intended to improve energy efficiency and product safety, and protect public health and the environment

Such deterioration in economic conditions could arise from many factors or fears including public health crises, further deterioration in the property market, political instability or risk of government default

and have documented our corporate governance practices by adopting the A. O. Smith Corporate Governance Guidelines. The Corporate Governance Guidelines, Criteria for Selection of Directors, Financial Code of Ethics, the A. O. Smith Guiding Principles, as well as the charters for the Audit, Personnel and Compensation, Nominating and Governance and the Investment Policy Committees of the Board of Directors and other corporate governance materials, may be viewed on the Company’s website. Any waiver of or amen

Our information systems are susceptible to outages due to system failures, cybersecurity threats, failures on the part of third-party information system providers, natural disasters, power loss, telecommunications failures, viruses, fraud, theft, malicious actors or breaches of security

changes; competitive pressures on the Company’s businesses, including new technologies and new competitors; the impact of potential information technology or data security breaches; negative impact of changes in government regulations or regulatory requirements; the inability to respond to secular trends toward decarbonization and energy efficiency; and adverse developments in general economic, political and business conditions in key regions of the world. A more detailed description of these risks is co

changes; competitive pressures on the Company’s businesses, including new technologies and new competitors; the impact of potential information technology or data security breaches; negative impact of changes in government regulations or regulatory requirements; the inability to respond to secular trends toward decarbonization and energy efficiency; and adverse developments in general economic, political and business conditions in key regions of the world. A more detailed description of these risks is co

We offer electric, natural gas and liquid propane tank-type models as well as tankless (gas and electric), heat pump and solar tank units

We offer electric, natural gas and liquid propane tank-type models as well as tankless (gas and electric), heat pump and solar tank units

based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history. In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs. In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incu

leadership development programs, front-line leadership development programs, continuous improvement skill-building programs, core process technology councils and tuition reimbursement for degree programs or trade schools. To maintain our focus on career development all our salaried employees worldwide are required to have career conversations with their manager. Globally, all office and professional employees also have formal performance reviews and development plans with a focus on learning by doing. We expect

Our Rest of World segment is primarily comprised of China, India, and Europe

China, and other regions in the world in which we do business, could further adversely affect consumer confidence and spending patterns which could result in decreased demand for the products we sell, a delay in purchases, increased price competition, or slowe

Our Rest of World segment is primarily comprised of China, India, and Europe

Our Rest of World segment is primarily comprised of China, India, and Europe

Revenue Recognition (continued) customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $ 28