Executive Summary
AO Smith reported a solid QQ2 2025, delivering a sequential revenue uptick amid a modest year-over-year decline. Revenue rose to $1.011 billion in Q2 2025, up 4.9% QoQ from $0.964 billion in Q1 2025, while YoY decreased 1.3%. The company maintained a robust profitability profile with gross margin at 39.27%, operating margin at 20.35%, and a net margin of 15.05%, supported by stable pricing and favorable mix. Free cash flow remained strong at $122.5 million for the quarter, with operating cash flow of $139.6 million and capital expenditures of $17.1 million, underscoring efficient cash conversion and disciplined capital allocation.
Key Performance Indicators
Key Insights
Revenue: $1,011.3m, YoY -1.27%, QoQ +4.92%
Gross Profit: $397.1m, Margin 39.27%, YoY +0.48%, QoQ +5.78%
Operating Income: $205.8m, Margin 20.35%, YoY -0.44%, QoQ +12.58%
Net Income: $152.2m, Margin 15.05%, YoY -2.56%, QoQ +11.42%
EPS: $1.07, YoY 0%, QoQ +12.63%
Cash Flow: Net cash from operating activities $139.6m; Free cash flow $122.5m; Capex $17.1m; D&A $20.5m
Debt & Liquidity: Cash & equivalents $177.9m; Net debt $153.7m; Current ratio 1.65x; Quick ratio 1.03x; Debt to capitaliza...
Financial Highlights
Revenue: $1,011.3m, YoY -1.27%, QoQ +4.92%
Gross Profit: $397.1m, Margin 39.27%, YoY +0.48%, QoQ +5.78%
Operating Income: $205.8m, Margin 20.35%, YoY -0.44%, QoQ +12.58%
Net Income: $152.2m, Margin 15.05%, YoY -2.56%, QoQ +11.42%
EPS: $1.07, YoY 0%, QoQ +12.63%
Cash Flow: Net cash from operating activities $139.6m; Free cash flow $122.5m; Capex $17.1m; D&A $20.5m
Debt & Liquidity: Cash & equivalents $177.9m; Net debt $153.7m; Current ratio 1.65x; Quick ratio 1.03x; Debt to capitalization 15.2%; Interest coverage 44.7x
Capital Allocation: Common stock repurchased $130.7m; Dividends paid $48.3m; Net cash provided by financing activities -$146.0m; Net change in cash $4.9m
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.01B |
-1.27% |
4.92% |
| Gross Profit |
397.10M |
0.48% |
5.78% |
| Operating Income |
205.80M |
-0.44% |
12.58% |
| Net Income |
152.20M |
-2.56% |
11.42% |
| EPS |
1.07 |
0.00% |
12.63% |
Key Financial Ratios
operatingProfitMargin
20.4%
operatingCashFlowPerShare
$0.97
freeCashFlowPerShare
$0.85
dividendPayoutRatio
31.7%
Management Commentary
Transcript data for QQ2 2025 is not provided in the input. Consequently, specific management quotes or call themes could not be extracted. The analysis relies on the disclosed financial results and standard industry themes (margin resilience, cost control, and capital allocation) that typically accompany AO Smith communications.
Forward Guidance
No explicit quarterly or full-year guidance was provided in the available data. Given the quarter-to-quarter momentum and a strong balance sheet, the company may continue leveraging its price/mix discipline and cost productivity to support margins. Monitoring points for the next release include: housing recovery and replacement cycle in North America, rest-of-world growth (Europe/Asia), input costs (steel, energy, freight), currency effects given the global footprint, and any changes to regulatory standards affecting water heating and filtration product lines.