A. O. Smith Corporation Q1 FY2026 earnings call

Prepared Remarks: Actions to improve profitability and accelerate growth through footprint optimization and brand rationalization, expecting $20M restructuring charge in Q2 with $6 - $8M annual savings from 2027; team responded well in Q1 with market share improvement in residential water heating, Leonard Valve's double - digit sales growth, and strong free cash flow. Management Statements: Discussed channel inventories in residential, regulatory change for commercial water heater DOE rule pushed to Oct 2027, water treatment business reset, China business assessment, margin and price cost outlook, earnings cadence, competitive dynamics, capacity plans for commercial water heating, tariffs, boilers demand, and M&A pipeline.

Expected restructuring charge of ~$20M in Q2, projected annual savings $6 - $8M from 2027; China business expected to be down low double digits; margin cadence with costs in Q2, pricing in 3Q; commercial volume flat year over year; EPS outlook with various factors affecting cadence.

Q: On channel inventories in residential and pricing pull forward; A: No meaningful pull forward from this year's pricing yet, channel inventories in line with expectations.

Q: On commercial regulatory change; A: DOE commercial rule pushed to Oct 2027 due to legal uncertainty.

Q: On water treatment business reset and China business market share; A: Water treatment business ~250M, next step in reset; China business saw challenging Q1, no meaningful market share loss currently.

Q: On market share in key regions and Leonard Valve integration; A: China Q1 no meaningful market share loss, US water heater wholesale share stabilized, retail share strong; Leonard Valve integration on track.

Q: On margin and price cost outlook; A: Q2 to see cost pressure before 3Q pricing, margin cadence through quarters.

Q: On commercial water heater industry outlook; A: Biggest driver is regulatory change.

Q: On earnings cadence; A: China Q2 down, North America cost headwind in Q2, DOE impact softened, EPS cadence through quarters.

Q: On EPS offsets and competitive dynamics; A: Cost control as near - term lever, won't comment on competitor pricing.

Q: On commercial water heating capacity and tariffs; A: Ready for commercial water heating capacity transition, tariff outlook net neutral with other cost headwinds.

Q: On boilers demand and M&A pipeline; A: Boilers growth has price component, M&A focus on water management platform including Leonard Valve.