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
Revenue
Decreasing
1.01B
QoQ: 4.92% | YoY: -1.27%
Gross Profit
Increasing
397.10M
39.27% margin
QoQ: 5.78% | YoY: 0.48%
Operating Income
Decreasing
205.80M
QoQ: 12.58% | YoY: -0.44%
Net Income
Decreasing
152.20M
QoQ: 11.42% | YoY: -2.56%
EPS
Stable
1.07
QoQ: 12.63% | YoY: 0.00%
Revenue Trend
Margin Analysis
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
Gross Profit Margin
Fair
39.30%
Gross profit margin is moderate, room for improvement in cost management
Operating Profit Margin
Good
20.40%
Operating margin is healthy and competitive within industry standards
Net Profit Margin
Good
15.00%
Net profit margin is healthy and competitive within industry standards
Return on Assets
Fair
4.69%
Return on assets is acceptable but below top-tier companies
Return on Equity
Fair
8.25%
Return on equity is acceptable but below top-tier companies
Current Ratio
Healthy
1.65
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
Conservative
0.18
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Fair Value
15.45x
P/E ratio in line with market averages
Price to Book
Premium
5.10x
Trading at premium to book value, reflects strong intangibles or growth
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