A. O. Smith Stock

A. O. Smith Corporation (A. O. Smith) manufactures and markets comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks and water treatment products.

Segments

The company operates through two reporting segments: North America and Rest of World. Both segments primarily manufacture and market in their respective regions of the world. The company’s Rest of World segment is primarily consisted of China, Europe and India.

North America

This segment serves residential and commercial end markets with a broad range of products, including:

Water Heaters: The company’s residential and commercial water heaters, primarily come in sizes ranging from 40 to 80 gallon models, however, the company also offers sizes as low as 2.5 gallon (point-of-use) and as high as 2,500 gallon products with varying efficiency ranges. The company offers electric, natural gas and liquid propane tank-type models, as well as tankless (gas and electric), heat pump and solar tank units. Typical applications for the company’s water heaters include residences, restaurants, hotels, office buildings, laundries, car washes, schools and small businesses.

Boilers: The company’s residential and commercial boilers range in size from 45,000 British Thermal Units (BTUs) to 6.0 million BTUs. Boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums.

Water Treatment Products: With the acquisition of Aquasana, Inc. (Aquasana) in 2016 the company entered the water treatment market. The company expanded its product offerings and geographic footprint with the acquisitions of Hague Quality Water International (Hague) in 2017, Water-Right, Inc. (Water-Right) in 2019, Master Water Conditioning Corporation (Master Water) in 2021, Atlantic Filter Corporation (Atlantic Filter) in 2022 and Water Tec of Tucson, Inc (Water Tec) in 2023. The company’s water treatment products range from point-of-entry water softeners, solutions for problem well water, whole-home water filtration products and point-of-use carbon and reverse osmosis products. The company also offers a comprehensive line of commercial water treatment and filtration products. Typical applications for the company’s water treatment products include residences, restaurants, hotels and offices.

Other: In the company’s North America segment, the company also manufactures expansion tanks, commercial solar water heating systems, swimming pool and spa heaters, related products and parts.

A significant portion of the company’s North America sales is derived from the replacement of existing products.

The company is the largest manufacturer and marketer of water heaters in North America with a leading share in both the residential and commercial portions of the market. The company expanded its presence in North America with its acquisition of Giant Factories, Inc., (Giant) a Canada-based manufacturer of residential and commercial water heaters, which the company acquired in late 2021. In the commercial portions of the market for both water heating and space heating, the company’s comprehensive product lines and its high-efficiency products give the company a competitive advantage. The company’s wholesale distribution channel, where the company sells its products primarily under the A. O. Smith and State brands, includes more than 900 independent wholesale plumbing distributors serving residential and commercial end markets. The company also sells its residential water heaters through the retail and maintenance, repair and operations (MRO) channels. In the retail channel, the company’s customers include four of the six largest national hardware and home center chains, including a long-standing exclusive relationship with Lowe’s where the company sells A. O. Smith branded products.

The company’s Lochinvar brand is one of the leading residential and commercial boiler brands in the U.S. Approximately 40 percent of Lochinvar branded sales consist of residential and commercial water heaters while the remaining 60 percent of Lochinvar branded sales consist primarily of boilers and related parts. The company’s commercial boiler distribution channel is primarily consisted of manufacturer representative firms with the remainder of the company’s Lochinvar branded products being distributed through wholesale channels.

The company sells its A. O. Smith branded water treatment products through Lowe's and Amazon. The company’s Aquasana branded products are primarily sold directly to consumers through e-commerce channels. The company’s water softener products and problem well water solutions, which include the Hague, Water-Right, Master Water, Atlantic Filter, and Water Tec brands are sold through water quality dealers and contractors. The company’s water softener products are also sold through home center retail chains.

The company’s energy-efficient product offerings continue to be a sales driver for the company’s business. The company’s condensing commercial water heaters and boilers continue to be an option for commercial customers looking for high-efficiency water and space heating with a short payback period through energy savings. The company offers residential heat pumps, condensing tank-type and tankless water heaters in North America, as well as other higher efficiency water heating solutions to round out the company’s energy-efficient product offerings. The company recently launched its newly designed ADAPT condensing gas tankless water heater and VERITUS air source commercial heat pump water heater to align with greenhouse gas emission reduction trends across the U.S.

The company’s principal water heating and boiler competitors in North America include Rheem, Bradford White, Rinnai, Aerco and Navien. The company’s principal water treatment competitors in the U.S. are Culligan, Kinetico, Pentair, Franklin Electric and Ecowater, as well as numerous regional assemblers.

Rest Of World

The company manufactures and markets residential water heater and water treatment products, primarily incorporating reverse osmosis technology, and commercial water treatment products. The company is one of the market leaders of water heaters and reverse osmosis water treatment products to the residential market in China in dollar terms. The company also designs and markets kitchen products (range hoods, cooktops, steam ovens, and dishwashers) in China.

The company sells its products in approximately 9,900 points of sale in China, of which approximately 4,600 are retail outlets in tier one through tier three cities and approximately 1,800 exclusively sell the company’s products. The company also sells its products through e-commerce channels. The company’s primary competitors in China in the water heater market segment are Haier, Midea, and Rinnai. The company’s principal competitors in the water treatment market are Angel, Midea, Truliva, and Xiaomi.

In 2008, the company established a sales office in India and began importing products specifically designed for India. The company began manufacturing water heaters in India in 2010 and water treatment products in 2015. The company continues to expand the company’s product offerings and sales in this country, primarily through wholesale, e-commerce and retail channels. The company’s primary competitors in India are Racold, Bajaj and Havells in the water heater market and Eureka Forbes, Kent and Hindustan Unilever in the water treatment market.

The company also sells water heaters in the European and Middle and Far Eastern markets and water treatment products in Vietnam, all of which combined comprised less than 13 percent of total Rest of World sales in 2023.

Patents and Trademarks

The company’s trade name is important with respect to its products, particularly in China, India, and North America.

Government Regulations and Environmental Matters

In the U.S., many of the company’s products are regulated by the Department of Energy, the Consumer Product Safety Commission, and the Federal Trade Commission.

The company is subject to regulations of the U.S. Environmental Protection Agency and the Occupational Health and Safety Administration and their counterpart state agencies.

Research and Development

The company’s total expenditures for research and development were $97.5 million in 2023.

History

A. O. Smith Corporation was founded in 1874.