A. O. Smith

The company has demonstrated the ability to implement price increases to offset steel, tariff, and other input inflation while sustaining segment margins in the mid‑20s in North America.

Q2 2025 commentary notes announced price increases across most water heater and boiler products in the first half of 2025. Consolidated gross margin was ~39% in 1H25 and North America’s segment margin was 25.4% in Q2. Pricing is not unconstrained because of capable competitors and large channel partners, but the emergency/replacement nature of demand and the company’s service/warranty reputation enable rational price realization.

Longer‑term, mix shift to higher‑efficiency and heat pump products can expand unit ASPs and potentially margins.