A. O. Smith (AOS) 10-K risk factor changes: FY2024 vs FY2023

A decline in economic activity, such as a recession or economic downturn, in the [removed: U.S.] [added: U.S., China,] and other regions in the world in which we do business, could further adversely affect consumer confidence and spending patterns which could result in decreased demand for the products we sell, a delay in purchases, increased price competition, [added: or] slower adoption of energy-efficient water heaters and boilers, or high-quality water treatment products, which could negatively impact our profitability and cash flows.

Such deterioration in economic conditions could arise from many factors or fears including public health crises, [added: further deterioration in the property market,] political instability or risk of government default.

In addition, an increase in price levels generally or in particular [removed: industries (such as the inflation in steel prices in 2021 and the recent inflation in other material and logistics costs),] [added: industries,] could result in a consumer shift away from the products we offer, [added: including trading down to lower priced models,] which could adversely affect our revenues and, at the same time, increase our costs.

Extraordinary events, including natural disasters, resulting from but not limited to climate change, political disruptions, terrorist attacks, public health [removed: issues, such as the COVID-19 pandemic,] [added: issues] and acts of war may disrupt our business and operations and impact our supply chain and access to necessary raw materials or could adversely affect the economy generally, resulting in a loss of sales and customers.

[removed: Although we installed an approximately 7,000-foot-long berm, flood gates, and pumping stations around our Ashland City, Tennessee facility, our largest manufacturing facility, to] mitigate the risk of flooding, there is still the potential for natural disasters and extreme weather conditions to disrupt the productivity of our facilities.

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Consumer preferences for products and the methods in which they purchase products are constantly changing based on, among other factors, cost, performance, convenience, [added: availability of government incentives,] environmental and social concerns and perceptions.

[removed: Consumer] [added: As consumer confidence changes,] purchasing behavior may shift the product mix [added: to lower priced models] in the markets in which we participate or result in a shift to other distribution channels, for example e-commerce.

The market prices for certain materials and components we purchase, primarily steel, [removed: have been] [added: can be] volatile.

In recent [removed: years] [added: years,] we have also experienced inflation-related increases in our transportation and other costs.

■*Because approximately [removed: 22] [added: 21] percent of our sales in [removed: 2023] [added: 2024] were attributable to China, adverse economic conditions or changes in consumer behavior in China could impact our business*

Our [added: third-party] sales in China [removed: increased four] [added: decreased six] percent in local currency in [removed: 2023] [added: 2024] compared to [removed: 2022.][added: 2023.]

Changes in consumer preferences and purchasing behaviors including preferences for e-commerce and manufacturer emphasis on brand ecosystems and connectivity, weakening consumer confidence and sentiment, as well as economic uncertainty, sociopolitical and demographic risks, [removed: and increased competition from Chinese-based companies may prompt Chinese consumers to postpone purchases, choose lower-priced products or different alternatives, or lengthen the cycle] [added: availability] of [removed: replacement purchases.]

Approximately [removed: 33] [added: 32] percent of our sales in [removed: 2023] [added: 2024] were attributable to products sold outside of the U.S., primarily in China and Canada, and to a lesser extent in Europe and India.

Approximately 5,000 of our [removed: 12,000] [added: 12,700] employees as of December 31, [removed: 2023] [added: 2024] were located in China.

At December 31, [removed: 2023,] [added: 2024,] approximately [removed: $292] [added: $206] million of cash and marketable securities were held by our foreign subsidiaries, substantially all of which were located in China.

Sales to our five largest customers represented approximately 42 percent of our sales in [removed: 2023.][added: 2024.]

Residential new construction activity in North America and industry-wide replacement-related volume of water heaters [removed: had growth] [added: were flat] in [removed: 2023] [added: 2024] after [removed: a decline] [added: growth] in [removed: 2022.][added: 2023.]

New residential housing starts in the U.S. are projected to be approximately flat in [removed: 2024 compared to 2023.][added: 2025.]

Commercial construction activity in North America grew in [removed: 2023,] [added: 2024,] although at a slower rate than [removed: 2022.][added: 2023.]

We believe that the significant majority of the markets we serve are for the replacement of existing products, and residential water heater replacement volume [removed: have] [added: has] been strong.

[removed: As a result of the COVID-19 pandemic,] [added: In recent years,] businesses and commercial spaces have experienced and may experience in the future, fluctuation in demand and in occupancy that may reduce demand for our products, and commercial sectors, such as the restaurant and hospitality industries in which we have customers, may experience long-term shifts in consumer behavior which could negatively impact demand or capacity and may not return to pre-pandemic levels.

Our information systems are susceptible to outages due to system failures, cybersecurity threats, failures on the part of third-party information system providers, natural disasters, power loss, telecommunications failures, viruses, fraud, theft, malicious [removed: actors or breaches of security.]

We may experience such incidents and attacks in the future, potentially with increasing frequency [added: from increasingly sophisticated cyber threats.]

In addition, [removed: as a result of the COVID-19 pandemic,] remote work and remote access to our systems have [removed: increased,] [added: increased in recent years,] which may heighten these risks.

We have a significant presence outside of the U.S., primarily in China and Canada and to a lesser extent Europe, Mexico, and India, and therefore, hold assets, including [removed: $197] [added: $119] million of cash and marketable securities denominated in Chinese renminbi, incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar.

In [removed: 2023,] [added: 2024,] the change in foreign currencies negatively impacted our sales and cash and cash equivalents by approximately [removed: $56] [added: $18] million and [removed: $13] [added: $7] million, respectively.

For example, the Department of Energy (DOE) has adopted a new efficiency rule for commercial water heaters that will take effect in [removed: 2026.][added: 2026 and for our residential water heaters that will take effect in 2029.]

In addition, [removed: there are proposed federal rule makings that would require our residential water heater product line to be more energy efficient as well as the establishment of a] [added: new] national drinking water [removed: standard] [added: standards] regulating per- and poly-fluoroalkyl substances (PFAS), [removed: which] [added: as well as lead,] could affect the demand for our water filtration products.

There are also a number of federal, foreign, state and local governments adopting laws, regulations and codes in response to climate change that require a transition to non-fossil fuel based sources of energy production as well as significantly reducing or eliminating the on-site combustion of fossil fuels in the building [removed: sector, such as limiting or prohibiting the delivery of natural gas in new construction.][added: sector.]

However, a significant change to regulatory or code requirements that [removed: promote] [added: promotes] a transition to alternative energy sources as a replacement for gas, or a significant shift in industry standards, could substantially increase manufacturing costs, capital expenditures, transportation costs and raw material costs, alter distribution channels, attract new competitors, impact the size and timing of demand for our products, affect the types of products we are able to offer or put us at a competitive disadvantage, any of which could harm our business and have a material adverse effect on our financial condition, results of operations and cash flow.

■*Our [removed: Environmental, Social, and Governance (ESG)] [added: sustainability] commitments could result in additional costs, and our inability to achieve them could have an adverse impact on our reputation and performance*

We periodically communicate our strategies, commitments and targets related to [removed: ESG] [added: sustainability] matters, including carbon emissions, water usage, [removed: diversity] and [removed: inclusion, and] human [removed: rights] [added: rights,] through the issuance of our [removed: ESG] [added: sustainability] report.

Although we intend to meet these strategies, commitments and targets and are committed to advancing sustainable innovations in our industry, we may be unable to achieve them due to [removed: impacts on] [added: availability of] resources, [added: significant increases in] operational costs, and technological [removed: advancements.][added: changes.]

In addition, standards and processes for measuring and reporting carbon [removed: emissions] [added: emissions, water usage,] and other sustainability metrics may change over time, result in inconsistent data, or result in significant revisions to our strategies, commitments and targets, or our ability to achieve them.

If future operating performance at our businesses does not meet expectations, we may be required to reflect non-cash charges to operating results for goodwill or [added: indefinite-lived intangible asset impairments.]

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations [removed: –] [added: -] Critical Accounting [removed: Policies—Goodwill] [added: Policies - Goodwill] and Indefinite-lived Intangible Assets” included in Item 7 of this Annual Report on Form 10-K.

As of December 31, [removed: 2023,] [added: 2024,] through the voting trust, these members of the Smith Family own approximately [removed: 66.2] [added: 66.8] percent of the total voting power of our outstanding shares of Class A Common Stock and Common Stock, taken together as a single class, and approximately 96.9 percent of the voting power of the outstanding shares of our Class A Common Stock, as a separate class.

*■Import tariffs, taxes, customs duties and other trading regulations imposed by the U.S. government and retaliatory responses from other countries, could significantly increase the prices we pay for raw materials that are critical to our ability to manufacture our products*

Import tariffs, taxes, customs duties and other trading regulations imposed by the U.S. government on foreign countries, or by foreign countries on the U.S., could significantly increase the prices we pay for raw materials that are critical to our ability to manufacture our products.

And, we may be unable to find a domestic supplier to provide the necessary raw materials on an economical basis in the amounts we require.

Also, the current U.S. administration has expressed a desire to impose substantial new or increased tariffs.

Any widespread imposition of new or increased tariffs could increase the cost of and reduce the demand for our products and any cost increases will either require us to increase prices, foreclose our sales into impacted markets or negatively impact our profit margins.

Any new or increased tariffs could also trigger retaliatory responses from other countries which may decrease the competitiveness of our products in foreign markets.

New or increased tariffs could also negatively affect U.S. national or regional economies, which could negatively affect the demand for our products.

Unfavorable changes to import tariffs, taxes, customs duties and other trading regulations could have a material adverse effect on our financial condition, results of operations and cash flows.

Although we have taken steps to

In addition tariffs could potentially increase volatility in steel and other input materials.

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government incentives, and increased competition from Chinese-based companies may prompt Chinese consumers to postpone purchases, choose lower-priced products or different alternatives, or lengthen the cycle of replacement purchases.

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actors or breaches of security.

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Our 2022 sales in China were impacted by lower consumer demand driven by COVID-19 related disruptions.

from increasingly sophisticated cyber threats.

indefinite-lived intangible asset impairments.

[removed: We will also] [added: Also, we] continue to look for opportunities to add to our existing [removed: operations] [added: product portfolio] in high growth regions demonstrated by our previous introductions of [removed: water treatment products in India and] kitchen products [removed: including our recently introduced dishwashers] and [removed: steam ovens,] [added: connected product technologies] in China.

We also [removed: launched] [added: recently introduced] our internally designed and manufactured gas tankless water heaters in [removed: early 2024.][added: North America.]

Proactive replacement [removed: remained] [added: has been] above historical levels [removed: in 2023] [added: for the last several years] and we project that will continue in [removed: 2024.][added: 2025.]

We believe that new home construction remains in a deficit and [removed: we expect it] will be flat [removed: in 2024] compared to [removed: 2023.][added: 2024.]

We expect [removed: to see an eight to ten percent increase in] our [removed: sales of] boilers [added: sales to grow between three and five percent] in [removed: 2024] [added: 2025] compared to [removed: 2023] [added: 2024] as we continue to benefit from the transition to higher efficiency boilers.

Combining all of these factors, we expect our [removed: 2024] [added: 2025] consolidated sales to [removed: increase between three and five] [added: be approximately flat to up two] percent compared to [removed: 2023.][added: 2024.]

Our guidance excludes the impacts [removed: from] [added: of] potential future acquisitions.

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In this section, we discuss the results of our operations for [removed: 2023] [added: 2024] compared with [removed: 2022.][added: 2023.]

We discuss our cash flows and current financial condition under “Liquidity and Capital Resources.” For a discussion related to [removed: 2022] [added: 2023] compared with [removed: 2021,] [added: 2022,] please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the Year Ended December 31, [removed: 2022,] [added: 2023,] which was filed with the United States Securities and Exchange Commission (SEC) on February [removed: 14, 2023,] [added: 13, 2024,] and is available on the SEC's website at www.sec.gov.

| (dollars in millions) | | | [removed: 2023] [added: 2024] | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | |

| Net sales | | | $ | [removed: 3,852.8] [added: 3,818.1] | | | | | $ | [removed: 3,753.9] [added: 3,852.8] | | | | | $ | [removed: 3,538.9] [added: 3,753.9] | |

| Cost of products sold | | | [removed: 2,368.0] [added: 2,362.0] | | | | | | [removed: 2,424.3] [added: 2,368.0] | | | | | | [removed: 2,228.0] [added: 2,424.3] | | |

| Gross profit | | | [removed: 1,484.8] [added: 1,456.1] | | | | | | [removed: 1,329.6] [added: 1,484.8] | | | | | | [removed: 1,310.9] [added: 1,329.6] | | |

| *Gross profit margin %* | | | [removed: *38.5*] [added: *38.1*] | | *%* | | | | [removed: *35.4*] [added: *38.5*] | | *%* | | | | [removed: *37.0*] [added: *35.4*] | | *%* |

| Selling, general and administrative expenses | | | [removed: 727.4] [added: 739.3] | | | | | | [removed: 670.9] [added: 727.4] | | | | | | [removed: 701.4] [added: 670.9] | | |

| Restructuring and impairment expenses | | | [removed: 18.8] [added: 17.6] | | | | | | [removed: —] [added: 18.8] | | | | | | — | | |

| Interest expense | | | [removed: 12.0] [added: 6.7] | | | | | | [removed: 9.4] [added: 12.0] | | | | | | [removed: 4.3] [added: 9.4] | | |

| Other (income) expense-net | | | [removed: (6.9)] [added: (8.5)] | | | | | | [removed: 425.6] [added: (6.9)] | | | | | | [removed: (20.4)] [added: 425.6] | | |

| Earnings before provision for income taxes | | | [removed: 733.5] [added: 701.0] | | | | | | [removed: 223.7] [added: 733.5] | | | | | | [removed: 625.6] [added: 223.7] | | |

| Provision for (benefit from) income taxes | | | [removed: 176.9] [added: 167.4] | | | | | | [removed: (12.0)] [added: 176.9] | | | | | | [removed: 138.5] [added: (12.0)] | | |

| Net Earnings | | | $ | [removed: 556.6] [added: 533.6] | | | | | $ | [removed: 235.7] [added: 556.6] | | | | | $ | [removed: 487.1] [added: 235.7] | |

[removed: Higher sales] [added: Our decrease] in [removed: 2023 were] [added: net sales was primarily] driven by [removed: higher] [added: lower water heater] volumes [removed: of residential] [added: in North America, lower sales in China,] and [removed: commercial water heaters, which more than offset] unfavorable [removed: foreign] currency [removed: impacts] [added: translation] of approximately [removed: $56 million, lower] [added: $18 million due to the depreciation of foreign currencies compared to the U.S. dollar, which more than offset our higher] boiler sales and [removed: unfavorable] pricing [removed: in our North America segment.][added: actions.]

Our [added: 2024] gross profit margin [removed: in 2023] of [removed: 38.5] [added: 38.1] percent [removed: increased] [added: decreased] compared to [removed: 35.4] [added: 38.5] percent in [removed: 2022.][added: 2023.]

Selling, general, and administrative (SG&A) expenses were [removed: $727.4] [added: $739.3] million in [removed: 2023,] [added: 2024,] or [removed: $56.5] [added: $11.9] million higher than in [removed: 2022.][added: 2023.]

Restructuring and impairment expenses in 2023 were $18.8 million, of which [removed: $15.6] [added: $15.7] million [added: was recorded in the Rest of World segment and $3.1 million was recorded in Corporate Expense and] related [added: primarily] to the sale of our business in [removed: Turkey which was included in our Rest of World segment.][added: Turkey.]

Interest expense was [removed: $12.0] [added: $6.7] million in [removed: 2023,] [added: 2024,] compared to [removed: $9.4] [added: $12.0] million in [removed: 2022.][added: 2023.]

Other (income) expense, net was [removed: income of $6.9] [added: $8.5] million [added: of income] in [removed: 2023] [added: 2024] compared to [removed: expense] [added: income] of [removed: $425.6] [added: $6.9] million in [removed: 2022.][added: 2023.]

[removed: Our effective income tax rate] [added: The change] in [removed: 2023 was higher than our] [added: the] effective income tax rate in [removed: 2022] [added: 2024 compared to the prior year was] primarily due to the [removed: tax effects of the pension settlement expense associated with the termination of the Plan] [added: restructuring] and [removed: a change] [added: impairment expense recorded] in [removed: geographic earnings mix.][added: 2023 with no associated tax benefit.]

We estimate that our annual effective income tax rate for the full year of [removed: 2024] [added: 2025] will be approximately 24 to 24.5 percent.

We are providing non-U.S. Generally Accepted Accounting Principles (GAAP) measures (adjusted earnings, adjusted earnings per share (EPS), total segment earnings, adjusted segment earnings, and adjusted corporate expense) that exclude the impact of restructuring and impairment [removed: expenses, pension settlement income] [added: expenses] and [removed: expenses, non-operating] pension [removed: expenses, income from a legal judgment and expenses associated with a terminated acquisition.][added: settlement income.]

Reconciliations from GAAP measures [added: to non-GAAP measures are provided in the *Non-GAAP Measures* section below.]

[removed: to] [added: Free cash flow is a] non-GAAP [removed: measures are provided] [added: measure described] in [added: more detail in] the *Non-GAAP Measures* section below.

| Years ended December 31 (dollars in millions) | | | [removed: 2023] [added: 2024] | | | | | | [removed: 2022] [added: 2023] | | |

| Net Sales | | | $ | [removed: 2,922.9] [added: 2,950.1] | | | | | $ | [removed: 2,819.1] [added: 2,922.9] | |

| Segment Earnings | | | [removed: 726.7] [added: 707.5] | | | | | | [removed: 266.0] [added: 726.7] | | |

| *Segment Margin* | | | [removed: *24.9*] [added: *24.0*] | | *%* | | | | [removed: *9.4*] [added: *24.9*] | | *%* |

Sales in our North America segment were [removed: $2,922.9] [added: $2,950.1] million in [removed: 2023,] [added: 2024,] or [removed: $103.8] [added: $27.2] million higher than sales of [removed: $2,819.1] [added: $2,922.9] million in [removed: 2022.][added: 2023.]

North America segment earnings were [removed: $726.7] [added: $707.5] million in [removed: 2023,] [added: 2024,] or [removed: $460.7] [added: $19.2] million [removed: higher] [added: lower] than segment earnings of [removed: $266.0] [added: $726.7] million in [removed: 2022.][added: 2023.]

Segment margins were [removed: 24.9] [added: 24.0] percent and [removed: 9.4] [added: 24.9] percent in [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] respectively.

On November 1, 2024, we acquired Pureit from Unilever for approximately $125 million, subject to customary adjustments.

Pureit, a leading water purification business in South Asia, offers a broad range of residential water purification solutions and has annual sales of approximately USD $60 million.

The acquisition fits squarely in our core capabilities and doubles our market penetration in the South Asia region.

In the first quarter of 2024, we acquired Impact Water Products, a privately-held water treatment company.

The acquisition supports our geographic expansion and growth strategy by expanding the West Coast presence of our water treatment business.

In addition, we are expanding our commercial water heater capacity in North America in preparation for the new efficiency rule for commercial water heaters that the Department of Energy (DOE) has adopted that will take effect in 2026.

In 2024, we recognized restructuring and impairment expenses of $17.6 million.

In China, severance expenses of $11.3 million related to the right sizing of that business for current market conditions.

The remaining $6.3 million related to the restructuring of our water treatment business in North America as a part of a profitability improvement strategy that prioritizes improving our cost structure and emphasizes our more profitable channels.

In our North America segment, we saw soft residential and commercial water heater order demand in the second half of 2024 after a strong first half of the year.

We believe that a pre-buy ahead of our March 1st price increase pulled forward some demand into the first half of the year.

We also believe our second half order demand was negatively impacted by our improved lead times.

Those factors along with caution around softening of end market demand may have driven some customers to reduce their inventory levels.

2024 residential industry unit volumes were flat compared to the prior year and we project 2025 industry residential unit volumes will be flat as well.

We anticipate that commercial water heater industry volumes will be approximately flat in 2025 after minimal growth in 2024 driven by growth in commercial electric water heaters greater than 55 gallons which was offset by lower shipments of commercial gas water heaters.

We anticipate sales of our North America water treatment products will be between $235 million and $245 million, a year-over-year decrease of approximately five percent as we de-emphasize certain channels and focus on our more profitable channels.

In our Rest of World segment, after sales growth of three percent in the first half of the year, our full-year 2024 third-party sales in China declined six percent due to a further weakening of consumer demand in the second half of the year.

In 2025, we project our third-party sales in China to decrease between five to eight percent in local currency compared to 2024 as we expect consumer demand softness will persist in 2025.

Our sales in 2024 were $3,818.1 million, a decrease of $34.7 million compared to 2023 sales of $3,852.8 million.

Our 2024 and 2023 acquisitions of water treatment companies in North America added approximately $18 million of incremental net sales in 2024.

The lower gross profit margin in 2024 compared to 2023 was primarily due to higher production costs and operational inefficiencies associated with volume volatility, which outpaced our pricing actions.

The increase in SG&A expenses in 2024 compared to the prior year was primarily due to higher employee costs from increased wages and higher selling and advertising expenses to support our strategic initiatives.

We recognized $17.6 million of restructuring and impairment expenses during the year ended December 31, 2024.

Of these expenses, $6.3 million was related to our water treatment business in the North America segment and was a result of a profitability improvement strategy that prioritizes improving our cost structure and emphasizes our more profitable channels.

In the Rest of World segment, restructuring included severance costs in China of $11.3 million and was related to the right sizing of that business for current market conditions.

The decrease in interest expense in 2024 compared to last year was primarily due to lower average debt levels.

The increase in other income was driven by lower foreign currency translation losses compared to last year, partially offset by lower interest income from lower average cash balances.

Our effective income tax rate in 2024 was lower compared to 2023.

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Compared to the prior year, pricing actions, higher boiler sales, and approximately $18 million of incremental net sales from our 2024 and 2023 acquisitions of water treatment companies primarily drove our net sales increase and more than offset lower water heater volumes.

Lower segment earnings and margins in 2024 were primarily due to lower water heater volumes, higher production costs and higher SG&A expenses associated with strategic investments that outpaced our pricing actions and higher boiler volumes.

Segment earnings and margin in 2024 also included restructuring and impairment expenses of $6.3 million related to our water treatment business and a result of a profitability improvement strategy that prioritizes improving our cost structure and emphasizes our more profitable channels.

Adjusted segment earnings and adjusted segment margin in 2024 were $713.8 million and 24.2 percent, respectively, which excludes $6.3 million of pre-tax restructuring and impairment expenses.

| Years ended December 31 (dollars in millions) | | | 2024 | | | | | | 2023 | | |

Compared to the prior year, lower net sales in 2024 were primarily driven by decreased sales of our core water heating and water treatment products in China and included approximately $13 million of unfavorable currency translation.

The decline in sales in 2024 was partially offset by higher volumes of kitchen products in China and included increased inter-segment sales of approximately $16 million related to our tankless water heaters manufactured in China and shipped to the U.S. market.

Lower volumes of our core water heating and water treatment products and an unfavorable product mix and sales promotions in China primarily drove lower segment earnings and segment margin in 2024, partially offset by lower SG&A costs.

Segment earnings and margin in 2024 and 2023 included restructuring and impairment expenses of $11.3 million and $15.7 million, respectively.

Restructuring and impairment expenses in 2024 were severance costs in China related to the right sizing of that business for current market conditions, and 2023 expenses were primarily associated with the sale of our business in Turkey.

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We saw improvement in our supply chain during 2022, particularly in the second half of the year, which continued through 2023.

We remain in close contact with our suppliers and logistics providers to resolve supply chain constraints as they arise.

In addition we are expanding our commercial water heater capacity in preparation for the 2026 commercial regulatory change.

In our North America segment, we saw resilient demand in the residential water heater industry in 2023 after three years of uneven growth, primarily related to the impacts of COVID-19-related supply chain constraints.

Considering these factors, we project 2024 industry residential unit volumes will be approximately flat after approximately six percent growth in 2023.

We believe that commercial water heater industry volumes will grow low single digits in 2024 compared to 2023 as demand for commercial electric water heaters greater than 55 gallon continues a positive trend toward pre-2022 levels.

Sales of our boilers and water treatment products were negatively impacted by elevated channel inventories in 2023.

We believe that channel inventories were at near normal levels at the end of 2023 for both product categories.

We anticipate sales of our North America water treatment products will increase approximately ten to 12 percent in 2024, compared to 2023, as we expect our sales to grow at approximately two times the market.

In our Rest of World segment, we saw a return to growth in China as our sales increased four percent in local currency in 2023.

We project our sales in China will grow three to five percent in 2024 in local currency compared to 2023 driven by innovative new products and resilient demand for our core products.

Our guidance assumes that the currency translation impact on sales will be minimal in 2024.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Our sales in 2023 were $3,852.8 million, or 2.6 percent higher than 2022 sales of $3,753.9 million.

The higher gross profit margin in 2023 was primarily due to lower material costs.

The increase in SG&A expenses was primarily due to higher employee costs, which includes management incentive expenses related to higher earnings, and compensation increases.

In 2022 SG&A included the recognition of an $11.5 million favorable judgment against a competitor related to its infringement of one of our patents, which reduced SG&A expenses, and was partially offset by a $4.3 million expense associated with a terminated acquisition.

Of the $18.8 million restructuring and impairment expenses, $15.7 million was recorded in the Rest of World segment and $3.1 million in Corporate Expense.

The increase in interest expense in 2023 was primarily due to higher debt levels and interest rates.

The change in Other (income) expense, net was primarily due to a reduction in pension expenses and pension settlement expense associated with the termination of our defined benefit pension plan (the Plan).

In 2022, we recorded a $417.3 million pension settlement expense related to the termination of the Plan which represented over 95 percent of our pension plan liability.

The service cost component of our pension expense is reflected in cost of products sold and SG&A expenses.

All other components of our pension expense (income) are reflected in other (income) expense-net.

The increased sales in 2023 compared to the prior year were primarily driven by higher residential and commercial water heater volumes, partially offset by lower volumes of boilers and unfavorable pricing.

Higher segment earnings and margins in 2023 were primarily due to higher volumes of residential and commercial water heaters and lower material costs that were partially offset by higher SG&A expenses.

Additionally in 2022, we realized pre-tax pension settlement expense of $346.8 million.

Adjusted segment earnings and adjusted segment margin in 2022 were $611.0 million and 21.7 percent, respectively and exclude pension settlement expense of $346.8 million, pension expense of $9.7 million and the recognition of the $11.5 million patent infringement judgment.

The decrease in sales in 2023 was primarily driven by the approximately $44 million unfavorable impact of foreign currency translation, partially offset by favorable volumes in China, particularly in our water treatment and kitchen products.

Lower segment earnings and segment margin in 2023 were primarily driven by restructuring and impairment expenses of $15.7 million, of which $12.5 million was associated with the sale of our business in Turkey.

Movements in working capital consisted of lower Cash and cash equivalents, and Marketable securities due to the paydown of our Long-term debt and Trade payables.

In 2023, we repatriated approximately $100 million of cash from our foreign subsidiaries through dividends and approximately $200 million through our global cash pooling arrangement.

We used the proceeds to pay down outstanding debt balances.

Cash provided by operating activities in 2023 was $670.3 million compared with $391.4 million during 2022.

The increase in operating cash flows in 2023 compared with the prior year is due to increased earnings and a more favorable working capital contribution primarily related to lower inventory levels and incentive payments.

Free cash flow is a non-GAAP measure and is described in more detail in the *Non-GAAP Measures* section below.

Our capital expenditures were $72.6 million in 2023 and $70.3 million in 2022.

Our total debt decreased by $217.2 million in 2023 primarily due to the use of operating cash flows to pay down debt.

Our remaining U.S. pension plan continues to meet all funding requirements under ERISA regulations.

We were not required to make a contribution to our pension plan in 2023.

Sales in our North America segment accounted for approximately [removed: 75] [added: 77] percent of our total sales in [removed: 2023.][added: 2024.]

Our residential and commercial water [removed: heaters,] [added: heaters] primarily come in sizes ranging from 40 to 80 gallon models, however, we also offer sizes as low as 2.5 gallon (point-of-use) and as high as 2,500 gallon products with varying efficiency ranges.

We expanded our 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 [removed: 2022 and] [added: 2022,] Water Tec of Tucson, Inc (Water Tec) in [removed: 2023.][added: 2023 and Impact Water Products (Impact) in 2024.]

Typical applications for our water treatment products include residences, restaurants, [removed: hotels] [added: schools] and offices.

We expanded our presence in North America with our acquisition of Giant Factories, [removed: Inc., (Giant)] [added: Inc. (Giant),] a Canada-based manufacturer of residential and commercial water heaters, which we acquired in late 2021.

In the commercial [removed: portions] [added: segments] of the market for both water heating and space heating, we believe our comprehensive product lines and our high-efficiency products give us a competitive advantage.

Our wholesale distribution channel, where we sell our products primarily under the A. O. Smith and State brands, includes [removed: more than] [added: approximately] 900 independent wholesale plumbing distributors serving residential and commercial end markets.

[removed: Our Lochinvar brand is one of the leading residential and commercial boiler brands in the U.S.] Approximately [removed: 40] [added: 45] percent of Lochinvar branded sales consist of residential and commercial water heaters while the remaining [removed: 60] [added: 55] percent of Lochinvar branded sales consist primarily of boilers and related parts.

We sell our A. O. Smith branded water treatment products [added: primarily] through [removed: Lowe's] [added: our water quality, dealer network] and Amazon.

[removed: Our water softener products and problem well water solutions, which] include the Hague, Water-Right, Master Water, Atlantic Filter, [added: Impact,] and Water Tec [removed: brands] [added: brands,] are sold through water quality dealers and contractors.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

Sales in our Rest of World segment accounted for approximately [removed: 25] [added: 23] percent of our total sales in [removed: 2023,] [added: 2024,] a majority of which [removed: was] [added: were] in China.

We manufacture and market residential water heater and water treatment products, primarily incorporating reverse osmosis technology, and commercial [added: dispensing] water treatment products.

We also design and market kitchen products (range hoods, cooktops, steam ovens, and dishwashers) [added: and connected product technology] in China.

We sell our products in approximately [removed: 9,900] [added: 9,400] points of sale in China, of which approximately [removed: 4,600] [added: 4,400] are retail outlets in tier one through tier three cities and approximately [removed: 1,800] [added: 1,600] exclusively sell our products.

Our primary competitors in China in the water heater market segment are [removed: Haier, Midea,] [added: Haier/Casarte, Midea/COLMO,] and Rinnai.

Our principal competitors in the water treatment market are Angel, [removed: Midea,] [added: Haier/Casarte, Midea/COLMO,] Truliva, and Xiaomi.

We continue to [removed: expand] [added: increase] our product offerings and sales in this country, primarily through wholesale, e-commerce and retail channels.

Our primary competitors in India are Racold, Bajaj and Havells in the water heater market and Eureka [removed: Forbes, Kent] [added: Forbes] and [removed: Hindustan Unilever] [added: Kent] in the water treatment market.

We also sell water heaters in the [removed: European and] [added: European,] Middle [added: East,] and Far [removed: Eastern] [added: East] markets and water treatment products in Vietnam, all of which combined comprised less than [removed: 13] [added: 14] percent of total Rest of World sales in [removed: 2023.][added: 2024.]

Our total expenditures for research and development in [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021] [added: 2022] were [removed: $97.5] [added: $101.7] million, [removed: $89.0] [added: $97.5] million and [removed: $94.2] [added: $89.0] million, respectively.

Although we believe our trademarks, trade names, patents, trade secrets, and licenses to constitute a valuable asset in the aggregate, we do not regard our business as being materially dependent on any [removed: single trademark, trade name, patent, trade secret, license or any group of related such rights.]

We employed approximately [removed: 12,000] [added: 12,700] employees as of December 31, [removed: 2023] [added: 2024] with approximately [removed: 7,000] [added: 7,200] in North America and [removed: 5,000] [added: 5,500] in Rest of World.

Participation in our most recent survey in [removed: 2022] [added: 2024] was [removed: 97] [added: 93] percent, which we believe reflects our employees’ desire to share their perspectives and a commitment to continuous improvement.

Survey results help shape action plans to further improve our culture and we will conduct the survey again in [removed: 2024.][added: 2026.]

*Diversity and Inclusion.* As reflected in our Guiding Principles, we strive to create a workplace where people from [removed: diverse] [added: all] backgrounds can thrive and achieve their fullest potential.

[removed: A. O. Smith’s] [added: Our] commitment to this objective starts at the top with [removed: its] [added: our] Board of Directors, which is [removed: 44] [added: 40] percent [removed: diverse.][added: diverse from either a gender or ethnic/racial perspective.]

To [removed: encourage additional] [added: maintain our focus on] career [removed: development, in 2023,] [added: development] all our salaried employees worldwide [removed: had at least one] [added: are required to have] career [removed: conversation] [added: conversations] with their manager.

We are confident that our continued emphasis on product design and [removed: innovation] [added: innovation, including energy efficiency,] will keep us well positioned to deliver products demanded by customers, regardless of fuel source.

Consistent with this commitment, we [removed: issue] [added: issued] our sustainability report biennially detailing our company’s [removed: historic] [added: historical] and current efforts.

We issued our [removed: third] [added: fourth] report, the [removed: 2022 Environmental, Social and Governance ("ESG") Report] [added: 2024 sustainability report,] in [removed: December 2022,] [added: November 2024,] documenting our [removed: ESG] [added: environmental, social, and governance (ESG)] activities over the past two years.

This report details the positive impact of our highly efficient products, highlights our company’s commitment to employees and the communities in which we operate, [removed: and] reports on our progress toward our greenhouse gas emissions [added: intensity] reduction goal of 10 percent by [removed: 2025.][added: 2025 (2019 baseline) and announced a new water goal to achieve an annual water savings of 40 million gallons by 2030 (2023 baseline).]

We have made significant progress toward our [removed: ESG] emission reduction goal and prevented [removed: almost 500,000] [added: over 560,000] metric tons of carbon emissions in [removed: 2021] [added: 2023] through the sale of our high efficiency water heaters and boilers.

Our [removed: scorecard] [added: ESG Scorecard (scorecard)] reflecting our progress is available on our website.

Our [removed: ESG report] [added: Sustainability Report] and [removed: ESG] scorecard are available on our website and not included as part of, or incorporated by reference into, this Annual Report on Form 10-K.

Our Lochinvar brand is one of the leading residential and commercial boiler brands in North America.

In our water treatment business we sell through a variety of channels.

Our water softener products and problem well water solutions, which

In 2024, we expanded our product offerings and geographic footprint with the acquisition of Pureit, a Unilever PLC business.

Pureit offers a broad range of residential water purification solutions in India and other South Asian markets.

In addition tariffs could potentially increase volatility in steel and other input materials.

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

single trademark, trade name, patent, trade secret, license or any group of related such rights.

In 2024, we were named by Ethisphere on the list of the World’s Most Ethical Companies.

The annual list recognizes global companies dedicated to integrity, sustainability, governance, and community with a commitment to ethical behavior, accountability, and driving positive change.

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

A. O. Smith monitors the gender and racial composition of its workforce in the U.S. at various levels within the organization, and also tracks pay equity on an ongoing basis.

We have also achieved WAVE water stewardship verification and achieved our fourth consecutive Energy Star Partner of the Year Award.

For the fiscal year ended December 31, [removed: 2023][added: 2024]

[removed: 53224-9508][added: 53224]

| Title of Each Class | | | | | | Trading Symbol(s) | | | | | | Shares of Stock Outstanding January 31, [removed: 2024] [added: 2025] | | | | | | Name of Each Exchange on Which Registered | | |

| Class A Common Stock (par value $5.00 per share) | | | | | | None | | | | | | [removed: 25,887,352] [added: 25,870,069] | | | | | | Not listed | | |

| Common Stock (par value $1.00 per share) | | | | | | AOS | | | | | | [removed: 121,307,743] [added: 118,089,097] | | | | | | New York Stock Exchange | | |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated [removed: filer or] [added: filer,] a smaller reporting company, or [added: an] emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting [removed: company,”] [added: company”] and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule [removed: 12b-2of] [added: 12b-2 of] the Act.) ☐ Yes ☒ No

The aggregate market value of voting stock held by non-affiliates of the registrant was [removed: $60,137,459] [added: $66,240,083] for Class A Common Stock and [removed: $8,915,599,927] [added: $9,664,355,425] for Common Stock as of June 30, [removed: 2023.][added: 2024.]

| 1. | | | Portions of the company’s definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of the registrant’s fiscal year and, upon such filing, to be incorporated by reference in Part III). | | |

Year Ended December 31, [removed: 2023][added: 2024]

| [Item [removed: 1.](#i69ead51464fb48f3add5240f00d8931c_13)] [added: 1.](#i962149cd359f490c80491d251f1f6a6f_13)] | | | [removed: [Business](#i69ead51464fb48f3add5240f00d8931c_13)] [added: [Business](#i962149cd359f490c80491d251f1f6a6f_13)] | | | [removed: [3](#i69ead51464fb48f3add5240f00d8931c_13)] [added: [3](#i962149cd359f490c80491d251f1f6a6f_13)] | | |

| [Item [removed: 1A.](#i69ead51464fb48f3add5240f00d8931c_16)] [added: 1A.](#i962149cd359f490c80491d251f1f6a6f_16)] | | | [Risk [removed: Factors](#i69ead51464fb48f3add5240f00d8931c_16)] [added: Factors](#i962149cd359f490c80491d251f1f6a6f_16)] | | | [removed: [7](#i69ead51464fb48f3add5240f00d8931c_16)] [added: [7](#i962149cd359f490c80491d251f1f6a6f_16)] | | |

| [Item [removed: 1B.](#i69ead51464fb48f3add5240f00d8931c_19)] [added: 1B.](#i962149cd359f490c80491d251f1f6a6f_19)] | | | [Unresolved Staff [removed: Comments](#i69ead51464fb48f3add5240f00d8931c_19)] [added: Comments](#i962149cd359f490c80491d251f1f6a6f_19)] | | | [removed: [12](#i69ead51464fb48f3add5240f00d8931c_19)] [added: [12](#i962149cd359f490c80491d251f1f6a6f_19)] | | |

| [Item [removed: 2.](#i69ead51464fb48f3add5240f00d8931c_22)] [added: 2.](#i962149cd359f490c80491d251f1f6a6f_25)] | | | [removed: [Properties](#i69ead51464fb48f3add5240f00d8931c_22)] [added: [Properties](#i962149cd359f490c80491d251f1f6a6f_25)] | | | [removed: [14](#i69ead51464fb48f3add5240f00d8931c_22)] [added: [14](#i962149cd359f490c80491d251f1f6a6f_25)] | | |

| [Item [removed: 3.](#i69ead51464fb48f3add5240f00d8931c_25)] [added: 3.](#i962149cd359f490c80491d251f1f6a6f_28)] | | | [Legal [removed: Proceedings](#i69ead51464fb48f3add5240f00d8931c_25)] [added: Proceedings](#i962149cd359f490c80491d251f1f6a6f_28)] | | | [removed: [14](#i69ead51464fb48f3add5240f00d8931c_25)] [added: [14](#i962149cd359f490c80491d251f1f6a6f_28)] | | |

| [Item [removed: 4.](#i69ead51464fb48f3add5240f00d8931c_28)] [added: 4.](#i962149cd359f490c80491d251f1f6a6f_31)] | | | [Mine Safety [removed: Disclosures](#i69ead51464fb48f3add5240f00d8931c_28)] [added: Disclosures](#i962149cd359f490c80491d251f1f6a6f_31)] | | | [removed: [14](#i69ead51464fb48f3add5240f00d8931c_28)] [added: [14](#i962149cd359f490c80491d251f1f6a6f_31)] | | |

| [Item [removed: 5.](#i69ead51464fb48f3add5240f00d8931c_34)] [added: 5.](#i962149cd359f490c80491d251f1f6a6f_37)] | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i69ead51464fb48f3add5240f00d8931c_34)] [added: Securities](#i962149cd359f490c80491d251f1f6a6f_37)] | | | [removed: [17](#i69ead51464fb48f3add5240f00d8931c_34)] [added: [17](#i962149cd359f490c80491d251f1f6a6f_37)] | | |

| [Item [removed: 6.](#i69ead51464fb48f3add5240f00d8931c_37)] [added: 6.](#i962149cd359f490c80491d251f1f6a6f_40)] | | | [Selected Financial [removed: Data](#i69ead51464fb48f3add5240f00d8931c_37)] [added: Data](#i962149cd359f490c80491d251f1f6a6f_40)] | | | [removed: [18](#i69ead51464fb48f3add5240f00d8931c_37)] [added: [18](#i962149cd359f490c80491d251f1f6a6f_40)] | | |

| [Item [removed: 7.](#i69ead51464fb48f3add5240f00d8931c_40)] [added: 7.](#i962149cd359f490c80491d251f1f6a6f_43)] | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i69ead51464fb48f3add5240f00d8931c_40)] [added: Operations](#i962149cd359f490c80491d251f1f6a6f_43)] | | | [removed: [19](#i69ead51464fb48f3add5240f00d8931c_40)] [added: [19](#i962149cd359f490c80491d251f1f6a6f_43)] | | |

| [Item [removed: 7A.](#i69ead51464fb48f3add5240f00d8931c_55)] [added: 7A.](#i962149cd359f490c80491d251f1f6a6f_58)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i69ead51464fb48f3add5240f00d8931c_55)] [added: Risk](#i962149cd359f490c80491d251f1f6a6f_58)] | | | [removed: [28](#i69ead51464fb48f3add5240f00d8931c_55)] [added: [28](#i962149cd359f490c80491d251f1f6a6f_58)] | | |

| [Item [removed: 8.](#i69ead51464fb48f3add5240f00d8931c_58)] [added: 8.](#i962149cd359f490c80491d251f1f6a6f_61)] | | | [Financial Statements and Supplementary [removed: Data](#i69ead51464fb48f3add5240f00d8931c_58)] [added: Data](#i962149cd359f490c80491d251f1f6a6f_61)] | | | [removed: [28](#i69ead51464fb48f3add5240f00d8931c_58)] [added: [28](#i962149cd359f490c80491d251f1f6a6f_61)] | | |

| [Item [removed: 9.](#i69ead51464fb48f3add5240f00d8931c_133)] [added: 9.](#i962149cd359f490c80491d251f1f6a6f_136)] | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i69ead51464fb48f3add5240f00d8931c_133)] [added: Disclosure](#i962149cd359f490c80491d251f1f6a6f_136)] | | | [removed: [58](#i69ead51464fb48f3add5240f00d8931c_133)] [added: [59](#i962149cd359f490c80491d251f1f6a6f_136)] | | |

| [Item [removed: 9A.](#i69ead51464fb48f3add5240f00d8931c_136)] [added: 9A.](#i962149cd359f490c80491d251f1f6a6f_139)] | | | [Controls and [removed: Procedures](#i69ead51464fb48f3add5240f00d8931c_136)] [added: Procedures](#i962149cd359f490c80491d251f1f6a6f_139)] | | | [removed: [58](#i69ead51464fb48f3add5240f00d8931c_136)] [added: [59](#i962149cd359f490c80491d251f1f6a6f_139)] | | |

| [Item [removed: 9B.](#i69ead51464fb48f3add5240f00d8931c_139)] [added: 9B.](#i962149cd359f490c80491d251f1f6a6f_142)] | | | [Other [removed: Information](#i69ead51464fb48f3add5240f00d8931c_139)] [added: Information](#i962149cd359f490c80491d251f1f6a6f_142)] | | | [removed: [59](#i69ead51464fb48f3add5240f00d8931c_139)] [added: [60](#i962149cd359f490c80491d251f1f6a6f_142)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i69ead51464fb48f3add5240f00d8931c_142)] [added: Inspections](#i962149cd359f490c80491d251f1f6a6f_145)] | | | [removed: [59](#i69ead51464fb48f3add5240f00d8931c_142)] [added: [60](#i962149cd359f490c80491d251f1f6a6f_145)] | | |

| [Item [removed: 10.](#i69ead51464fb48f3add5240f00d8931c_151)] [added: 10.](#i962149cd359f490c80491d251f1f6a6f_154)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#i69ead51464fb48f3add5240f00d8931c_151)] [added: Governance](#i962149cd359f490c80491d251f1f6a6f_154)] | | | [removed: [61](#i69ead51464fb48f3add5240f00d8931c_151)] [added: [62](#i962149cd359f490c80491d251f1f6a6f_154)] | | |

| [Item [removed: 11.](#i69ead51464fb48f3add5240f00d8931c_154)] [added: 11.](#i962149cd359f490c80491d251f1f6a6f_157)] | | | [Executive [removed: Compensation](#i69ead51464fb48f3add5240f00d8931c_154)] [added: Compensation](#i962149cd359f490c80491d251f1f6a6f_157)] | | | [removed: [61](#i69ead51464fb48f3add5240f00d8931c_154)] [added: [62](#i962149cd359f490c80491d251f1f6a6f_157)] | | |

| [Item [removed: 12.](#i69ead51464fb48f3add5240f00d8931c_157)] [added: 12.](#i962149cd359f490c80491d251f1f6a6f_160)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i69ead51464fb48f3add5240f00d8931c_157)] [added: Matters](#i962149cd359f490c80491d251f1f6a6f_160)] | | | [removed: [62](#i69ead51464fb48f3add5240f00d8931c_157)] [added: [63](#i962149cd359f490c80491d251f1f6a6f_160)] | | |

| [Item [removed: 13.](#i69ead51464fb48f3add5240f00d8931c_160)] [added: 13.](#i962149cd359f490c80491d251f1f6a6f_163)] | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i69ead51464fb48f3add5240f00d8931c_160)] [added: Independence](#i962149cd359f490c80491d251f1f6a6f_163)] | | | [removed: [62](#i69ead51464fb48f3add5240f00d8931c_160)] [added: [63](#i962149cd359f490c80491d251f1f6a6f_163)] | | |

| [Item [removed: 14.](#i69ead51464fb48f3add5240f00d8931c_163)] [added: 14.](#i962149cd359f490c80491d251f1f6a6f_166)] | | | [Principal Accounting Fees and [removed: Services](#i69ead51464fb48f3add5240f00d8931c_163)] [added: Services](#i962149cd359f490c80491d251f1f6a6f_166)] | | | [removed: [62](#i69ead51464fb48f3add5240f00d8931c_163)] [added: [63](#i962149cd359f490c80491d251f1f6a6f_166)] | | |

| [Item [removed: 15.](#i69ead51464fb48f3add5240f00d8931c_169)] [added: 15.](#i962149cd359f490c80491d251f1f6a6f_172)] | | | [Exhibits, Financial Statement [removed: Schedules](#i69ead51464fb48f3add5240f00d8931c_169)] [added: Schedules](#i962149cd359f490c80491d251f1f6a6f_172)] | | | [removed: [63](#i69ead51464fb48f3add5240f00d8931c_169)] [added: [64](#i962149cd359f490c80491d251f1f6a6f_172)] | | |

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

| [Part I](#i962149cd359f490c80491d251f1f6a6f_10) | | | | | | | | |

| [Item 1C.](#i962149cd359f490c80491d251f1f6a6f_22) | | | [Cybersecurity](#i962149cd359f490c80491d251f1f6a6f_22) | | | [13](#i962149cd359f490c80491d251f1f6a6f_22) | | |

| [Part II](#i962149cd359f490c80491d251f1f6a6f_34) | | | | | | | | |

| [Part III](#i962149cd359f490c80491d251f1f6a6f_151) | | | | | | | | |

| [Part IV](#i962149cd359f490c80491d251f1f6a6f_169) | | | | | | | | |

| [Part I](#i69ead51464fb48f3add5240f00d8931c_10) | | | | | | | | |

| [Item 1](#i69ead51464fb48f3add5240f00d8931c_1602)[C](#i69ead51464fb48f3add5240f00d8931c_1602)[.](#i69ead51464fb48f3add5240f00d8931c_1602) | | | [Cybersecurity](#i69ead51464fb48f3add5240f00d8931c_1602) | | | [13](#i69ead51464fb48f3add5240f00d8931c_1602) | | |

| [Part II](#i69ead51464fb48f3add5240f00d8931c_31) | | | | | | | | |

| [Part III](#i69ead51464fb48f3add5240f00d8931c_148) | | | | | | | | |

| [Part IV](#i69ead51464fb48f3add5240f00d8931c_166) | | | | | | | | |

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

Our Chief Information Officer (CIO) oversees our information systems and cybersecurity function and reports to our Chief [removed: Executive] [added: Operating] Officer [removed: (CEO).][added: (COO).]

Our CIO and ISD are supported by a direct and [removed: a] cross-functional team of professionals with broad experience and expertise in threat assessment and detection, mitigation technologies, training, incident response, and regulatory compliance.

The full Board receives an update on our cyber risk management process and trends related to cybersecurity at least [removed: annually.][added: annually, or real-time if a material event occurs.]

[removed: The Audit Committee of the Board assists the full Board in its oversight of cybersecurity risks and as] [added: As] part of its oversight, the Audit Committee receives [added: regular] reports from management on information systems and [removed: security at each meeting,] [added: security,] including metrics and [removed: controls,] [added: controls at each meeting,] and other items [removed: from time to time such as] [added: at least annually including] risk assessments, security software, [removed: and] incident response [removed: plans.][added: plans, and key updates to the cybersecurity program and its effectiveness.]

We have also established a committee of our executive leadership team to consider cybersecurity [removed: risk, mitigation strategies,] [added: risks] and to consider [removed: trends and developments] [added: mitigation strategies] in managing the risk.

Depending on the nature and severity of the incident, the plan requires escalating notifications up to our [removed: CEO] [added: CEO, Audit Committee] and our Board.

Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program [removed: in a similar fashion to] [added: consistent with] other legal, compliance, strategic, operational, and financial risk areas.

For more information regarding the risks we face from cybersecurity threats, please see [removed: “Risk Factors – Business, Operational, and Strategic Risks.”][added: Item 1A - Risk Factors.]

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

The Audit Committee of the Board assists the full Board in its oversight of cybersecurity risks.

The Company has a robust cybersecurity program to assess, identify and manage material risk from cybersecurity threats and to prevent, detect and respond to cybersecurity threats, including those associated with the use of third-party service providers.

Properties utilized by us at December 31, [removed: 2023] [added: 2024] were as follows:

In this segment, we have [removed: 22] [added: 23] manufacturing [added: and assembly] plants located in [removed: 12] [added: 13] states and two non-U.S. countries, of which 18 are owned directly by us or our subsidiaries and [removed: four] [added: five] are leased from outside parties.

The terms of leases in effect at December 31, [removed: 2023,] [added: 2024,] expire between 2025 and 2028.

In this segment, we have five manufacturing plants located in three non-U.S. countries, of which four are owned directly by us or our subsidiaries and one is leased from [added: an] outside [removed: parties.][added: party.]

The terms of [removed: leases] [added: the lease] in effect at December 31, [removed: 2023,] [added: 2024,] expire in 2035.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

Pursuant to General Instruction of G(3) of Form 10-K, the following is a list of our executive officers which is included as an unnumbered Item in Part I of this report in lieu of being included in our Proxy Statement for our [removed: 2024] [added: 2025] Annual Meeting of Stockholders.

| Robert J. Heideman [removed: (57)] [added: (58)] | | | | | | Senior Vice President – Chief Technology Officer | | | | | | 2013 to Present | | |

| D. Samuel Karge [removed: (49)] [added: (50)] | | | | | | Senior Vice President | | | | | | 2018 to Present | | |

| Parag Kulkarni [removed: (56)] [added: (57)] | | | | | | Senior Vice President, International | | | | | | 2022 to Present | | |

| Charles T. Lauber [removed: (61)] [added: (62)] | | | | | | Executive Vice President and Chief Financial Officer | | | | | | 2019 to Present | | |

| Stephen D. O'Brien [removed: (55)] [added: (56)] | | | | | | Senior Vice President | | | | | | [removed: 2022] [added: 2024] to Present | | |

| | | | | | | President - Lochinvar, LLC | | | | | | [removed: 2022] [added: 2024] to Present | | |

| | | | | | | Senior Vice President - Mitsubishi Electric Trane US [added: (manufacturer of heating and air-conditioning systems)] | | | | | | [removed: 2015] [added: 2017] to 2021 | | |

| [removed: Mark A. Petrarca (60)] [added: Curtis E. Selby (57)] | | | | | | Senior Vice President - Human Resources and Public Affairs | | | | | | [removed: 2006] [added: 2024] to Present | | |

| Jack Qiu [removed: (51)] [added: (52)] | | | | | | Senior Vice President | | | | | | 2020 to Present | | |

| S. Melissa Scheppele [removed: (61)] [added: (62)] | | | | | | Senior Vice President - Chief Information Officer | | | | | | 2020 to Present | | |

| James F. Stern [removed: (61)] [added: (62)] | | | | | | Executive Vice President, General Counsel and Secretary | | | | | | 2007 to Present | | |

| | | | | | | Partner – Foley & Lardner LLP [added: (law firm)] | | | | | | 1997 to 2007 | | |

| [removed: David R. Warren (60)] [added: Darrell W. Schuh (56)] | | | | | | Senior Vice President | | | | | | [removed: 2017] [added: 2024] to Present | | |

| | | | | | | President and General Manager [removed: –] [added: -] North America Water Heating | | | | | | [removed: 2017] [added: 2024] to Present | | |

| Kevin J. Wheeler [removed: (64)] [added: (65)] | | | | | | Chairman | | | | | | 2020 to Present | | |

| | | | | | | [removed: President and] Chief Executive Officer | | | | | | 2018 to Present | | |

| | | | | | | Senior Vice President; President - Lochinvar, LLC | | | | | | 2022 to 2024 | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| | | | | | | Vice President and General Manager - APCOM and Water Systems | | | | | | 2017 to 2024 | | |

| | | | | | | Vice President - Product Engineering | | | | | | 2012 to 2017 | | |

| | | | | | | Chief Operating Officer - Board & Brush Creative Studio (painting workshops) | | | | | | 2015 to 2024 | | |

| | | | | | | CHRO - Gardner Denver (manufacturer of compressors, blowers and vacuum pumps) | | | | | | 2014 to 2015 | | |

| | | | | | | Vice President of International Human Resources - Regal Beloit (manufacturer of electric motors) | | | | | | 2011 to 2014 | | |

| | | | | | | Vice President of Global Human Resources - A. O. Smith Electrical Products Company | | | | | | 2005 to 2011 | | |

| | | | | | | Director of Human Resources - A. O. Smith Electrical Products Company | | | | | | 2001 to 2005 | | |

| Stephen M. Shafer (49) | | | | | | President and Chief Operating Officer | | | | | | 2024 to Present | | |

| | | | | | | | | | | | | | | |

| | | | | | | President - Automotive and Aerospace Solutions Division of 3M Company (manufacturer of specialized materials and products used in the manufacturing, maintenance and repair of vehicles and aircraft) | | | | | | 2020 to 2024 | | |

| | | | | | | | | | | | | | | |

| | | | | | | Senior Vice President and Chief Strategy Officer - 3M Company (manufacturer of building materials, adhesives, medical and home cleaning supplies) | | | | | | 2019 to 2020 | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | President | | | | | | 2017 to 2024 | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| | | | | | | Vice President – Human Resources and Public Affairs | | | | | | 2005 to 2006 | | |

| | | | | | | Various A. O. Smith Management Positions | | | | | | 1999 to 2005 | | |

| | | | | | | Vice President – International | | | | | | 2008 to 2017 | | |

| | | | | | | Various A. O. Smith Management Positions | | | | | | 1989 to 2008 | | |

EQ Shareowner Services, P.O. Box 64874, St. Paul, Minnesota, 55164-0874 serves as the registrar, stock transfer agent and [removed: the] dividend reinvestment agent for our Common Stock and Class A Common Stock.

As of January 31, [removed: 2024,] [added: 2025,] the approximate number of stockholders of record of Common Stock and Class A Common Stock were [removed: 503] [added: 471] and [removed: 136,] [added: 131,] respectively.

In [removed: 2023,] [added: 2024,] the Board of Directors approved adding [removed: 7,500,000] [added: 2,000,000] shares of Common Stock to an existing discretionary share repurchase authority.

In [removed: 2023,] [added: 2024,] we repurchased [removed: 4,377,000] [added: 3,755,337] shares at an average price of [removed: $70.03] [added: $81.43] per share and at a total cost of [removed: $306.5] [added: $305.8] million.

As of December 31, [removed: 2023,] [added: 2024,] there were [removed: 3,501,462] [added: 1,746,125] shares remaining on the existing repurchase authorization.

On January 26 [removed: 2024,] [added: 2025,] the Board of Directors approved adding [removed: 2,000,000] [added: 5,000,000] shares of common stock to the existing discretionary share repurchase authority.

Including the additional shares, we have [removed: 5,202,462] [added: 6,476,677] shares available for repurchase as of the date of the Board of Directors' approval.

We intend to spend approximately [removed: $300] [added: $400] million to repurchase Common Stock in [removed: 2024] [added: 2025] through a combination of 10b5-1 plans and open-market purchases.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

[removed: ][added: ]

| Company/Index | | | [removed: 12/31/18] [added: 12/31/19] | | | | | | [removed: 12/31/19] [added: 12/31/20] | | | | | | [removed: 12/31/20] [added: 12/31/21] | | | | | | [removed: 12/31/21] [added: 12/31/22] | | | | | | [removed: 12/31/22] [added: 12/31/23] | | | | | | [removed: 12/31/23] [added: 12/31/24] | | |

From December 31, 2019 to December 31, 2024

| A. O. Smith Corporation | | | 100.0 | | | | | | 117.4 | | | | | | 186.9 | | | | | | 126.8 | | | | | | 186.1 | | | | | | 156.5 | | |

| S&P 500 Index | | | 100.0 | | | | | | 118.4 | | | | | | 152.4 | | | | | | 124.8 | | | | | | 157.6 | | | | | | 197.0 | | |

| S&P 500 Select Industrial Index | | | 100.0 | | | | | | 111.0 | | | | | | 134.5 | | | | | | 127.1 | | | | | | 150.2 | | | | | | 176.4 | | |

From December 31, 2018 to December 31, 2023

| A. O. Smith Corporation | | | 100.0 | | | | | | 113.6 | | | | | | 133.4 | | | | | | 212.3 | | | | | | 144.0 | | | | | | 211.4 | | |

| S&P 500 Index | | | 100.0 | | | | | | 131.5 | | | | | | 155.7 | | | | | | 200.4 | | | | | | 164.1 | | | | | | 207.2 | | |

| S&P 500 Select Industrial Index | | | 100.0 | | | | | | 129.4 | | | | | | 143.6 | | | | | | 174.0 | | | | | | 164.4 | | | | | | 194.3 | | |

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

We have audited the accompanying consolidated balance sheets of A. O. Smith Corporation (the Company) as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] the related consolidated statements of earnings, comprehensive earnings, stockholders’ [removed: equity,] [added: equity] and cash flows for each of the three years in the period ended December 31, [removed: 2023,] [added: 2024,] and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2023,] [added: 2024,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on criteria established in Internal [removed: Control - Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 13, 2024] [added: 11, 2025] expressed an unqualified opinion thereon.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the [removed: account] [added: accounts] or [removed: disclosure] [added: disclosures] to which it relates.

| *Description of the Matter* | | | | | | At December 31, [removed: 2023,] [added: 2024,] the Company’s product warranty liability was [removed: $188.1] [added: $190.4] million. As discussed in Note 1 of the consolidated financial statements, the Company records a liability for the expected cost of warranty-related claims at the time of sale. The product warranty liability is estimated based upon warranty loss experience using actual historical failure rates and estimated cost of product replacement. Products generally carry warranties from one to twelve years. The Company performs separate warranty calculations based on the product type and the warranty term and aggregates them. | | |

| | | | [added: 2024 | | | | | |] 2023 | | | | | | 2022 | | |

| Cash and cash equivalents | | | $ | [removed: 339.9] [added: 239.6] | | | | | $ | [removed: 391.2] [added: 339.9] | |

| Marketable securities | | | [removed: 23.5] [added: 36.5] | | | | | | [removed: 90.6] [added: 23.5] | | |

| Receivables | | | [removed: 596.0] [added: 541.4] | | | | | | [removed: 581.2] [added: 596.0] | | |

| Inventories | | | [removed: 497.4] [added: 532.1] | | | | | | [removed: 516.4] [added: 497.4] | | |

| Other current assets | | | [removed: 43.5] [added: 43.3] | | | | | | [removed: 54.3] [added: 43.5] | | |

| Total Current Assets | | | [removed: 1,500.3] [added: 1,392.9] | | | | | | [removed: 1,633.7] [added: 1,500.3] | | |

| Net property, plant and equipment | | | [removed: 597.5] [added: 628.7] | | | | | | [removed: 590.7] [added: 597.5] | | |

| Goodwill | | | [removed: 633.4] [added: 761.7] | | | | | | [removed: 619.7] [added: 633.4] | | |

| Other intangibles | | | [removed: 336.7] [added: 321.1] | | | | | | [removed: 347.9] [added: 336.7] | | |

| Operating lease assets | | | [removed: 37.3] [added: 32.8] | | | | | | [removed: 29.8] [added: 37.3] | | |

| Other assets | | | [removed: 108.7] [added: 102.8] | | | | | | [removed: 110.5] [added: 108.7] | | |

| Total Assets | | | $ | [removed: 3,213.9] [added: 3,240.0] | | | | | $ | [removed: 3,332.3] [added: 3,213.9] | |

| Trade payables | | | $ | [removed: 600.4] [added: 588.7] | | | | | $ | [removed: 625.8] [added: 600.4] | |

| Accrued payroll and benefits | | | [removed: 92.2] [added: 78.5] | | | | | | [removed: 75.7] [added: 92.2] | | |

| Accrued liabilities | | | [removed: 177.4] [added: 153.0] | | | | | | [removed: 159.1] [added: 177.4] | | |

| Product warranties | | | [removed: 65.3] [added: 67.0] | | | | | | [removed: 63.6] [added: 65.3] | | |

| Total Current Liabilities | | | [removed: 945.3] [added: 897.2] | | | | | | [removed: 934.2] [added: 945.3] | | |

| Long-term debt | | | [removed: 117.3] [added: 183.2] | | | | | | [removed: 334.5] [added: 117.3] | | |

| Product warranties | | | [removed: 122.8] [added: 123.4] | | | | | | [removed: 118.9] [added: 122.8] | | |

| Pension liabilities | | | [removed: 10.5] [added: 11.0] | | | | | | [removed: 9.9] [added: 10.5] | | |

| Long-term operating lease liabilities | | | [removed: 27.9] [added: 23.5] | | | | | | [removed: 22.4] [added: 27.9] | | |

| Other liabilities | | | [removed: 145.7] [added: 118.2] | | | | | | [removed: 164.7] [added: 145.7] | | |

| Total Liabilities | | | [removed: 1,369.5] [added: 1,356.5] | | | | | | [removed: 1,584.6] [added: 1,369.5] | | |

| Class A Common Stock (shares issued [removed: 26,023,132] [added: 26,014,825] and [removed: 26,035,656] [added: 26,023,132] as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] respectively) | | | 130.1 | | | | | | [removed: 130.2] [added: 130.1] | | |

| Common Stock (shares issued [removed: 164,684,460] [added: 164,692,769] and [removed: 164,671,938] [added: 164,684,460] as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] respectively) | | | 164.7 | | | | | | 164.7 | | |

| Capital in excess of par value | | | [removed: 578.2] [added: 601.3] | | | | | | [removed: 555.9] [added: 578.2] | | |

| Retained earnings | | | [removed: 3,258.1] [added: 3,601.3] | | | | | | [removed: 2,885.0] [added: 3,258.1] | | |

| Accumulated other comprehensive loss | | | [removed: (84.2)] [added: (111.9)] | | | | | | [removed: (82.4)] [added: (84.2)] | | |

| Treasury stock at cost | | | [removed: (2,202.5)] [added: (2,502.0)] | | | | | | [removed: (1,905.7)] [added: (2,202.5)] | | |

| Total Stockholders’ Equity | | | [added: $ | 1,883.5 | | | | | $ |] 1,844.4 | | | | | [added: $] | 1,747.7 | | [removed: |]

| Total Liabilities and Stockholders’ Equity | | | $ | [removed: 3,213.9] [added: 3,240.0] | | | | | $ | [removed: 3,332.3] [added: 3,213.9] | |

| | | | [removed: 2023] [added: 2024] | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | |

| Net sales | | | $ | [removed: 3,852.8] [added: 3,818.1] | | | | | $ | [removed: 3,753.9] [added: 3,852.8] | | | | | $ | [removed: 3,538.9] [added: 3,753.9] | |

February 11, 2025

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| | | | 2024 | | | | | | 2023 | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| Foreign currency translation adjustments | | | (24.0) | | | | | | 3.8 | | | | | | (39.4) | | |

| Unrealized net (loss) gain on cash flow derivative instruments, less related income tax benefit (provision) of $0.7 in 2024, $1.4 in 2023 and $(1.4) in 2022 | | | (2.2) | | | | | | (4.2) | | | | | | 4.3 | | |

| Change in pension liability less related income tax benefit (provision) of $0.5 in 2024, $0.5 in 2023 and $(179.0) in 2022 | | | (1.5) | | | | | | (1.4) | | | | | | 284.1 | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| Years ended December 31 (dollars in millions) | | | 2024 | | | | | | 2023 | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 “Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses.” The ASU requires additional disclosures by disaggregating the costs and expense line items that are presented on the face of the income statement.

The ASU is effective for the Company beginning with its 2027 annual disclosures and subsequent interim periods.

Early adoption is permitted.

This ASU requires a public company to apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

1.

Organization and Significant Accounting Policies (continued)

with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

The adoption of ASU 2023-07 did not affect the Company’s financial position or its results of operations.

Refer to Note 17, Operations by Segment, for additional disclosures.

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

*2024 Acquisitions*

During the fourth quarter of 2024, the Company acquired Pureit, a residential water purification business in South Asia, from Unilever for an aggregate purchase price of $124.6 million.

The purchase price consists of an initial cash payment of $117.9 million upon the closing of the transaction and a separate payment of $6.7 million made under a transitional supply agreement with Unilever.

Due to the close proximity of the acquisition date and the Company's filing of its annual report on Form 10-K for the year ended December 31, 2024, the initial accounting for the business combination is incomplete and is pending identification and measurement of the assets acquired and liabilities assumed.

Therefore, the Company is unable to disclose the information required by ASC 805, *Business Combinations*.

Such information will be included in the Company's subsequent Form 10-Q.

At December 31, 2024, the purchase price allocated to Goodwill was $117.9 million and the payment of $6.7 million was included in Other current assets within the Company’s consolidated financial statements.

The acquired company is included in the Rest of World segment.

During the first quarter of 2024, the Company acquired a privately-held water treatment company.

The Company paid an aggregate cash purchase price of $21.3 million, net of cash acquired.

The Company also agreed to make contingent payments based on the amount by which sales of products increase over the next three years.

The addition of the acquired company expanded the Company's water treatment footprint in North America.

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| (dollars in millions) | | | December 31, 2024 | | |

| 2025 | | | $ | 12.4 | |

February 13, 2024

2.

Revenue Recognition (continued)

shipment.

(1)Includes the results of Giant Factories, Inc. (Giant) from October 19, 2021, the date of acquisition.

*2021 Acquisitions*

On October 19, 2021, the Company acquired 100 percent of the shares and related assets of Giant, a Canada-based manufacturer of residential and commercial water heaters for $198.6 million, net of cash acquired.

The Company paid $2.5 million of the purchase price in the second quarter of 2022 as a result of final working capital adjustments.

The Company incurred acquisition costs of approximately $1.3 million in 2021.

Under the Giant purchase agreement, approximately $8 million of the purchase price was set aside as an escrow to satisfy any potential obligations of the former owners of Giant, should they arise.

The allocation of the purchase price to goodwill decreased by $4.3 million in 2022 due to the net impact of a measurement period adjustment, primarily related to income tax matters, partially offset by the final working capital adjustment.

The addition of Giant increased the Company's North America market penetration, created additional capacity and enhanced the Company's distribution capabilities.

The following table summarizes the allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition.

Of the $53.8 million of acquired identifiable intangible assets, $43.9 million was assigned to trademarks that are not subject to amortization and $9.2 million was assigned to customer relationships which are amortized over 22 years, and the remaining $0.7 million was assigned to non-compete agreements which are amortized over five years.

The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The following table summarizes the estimated fair values of Giant's assets acquired and liabilities assumed at the date of acquisition:

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| October 19, 2021 (dollars in millions) | | | | | |

| Current assets, net of cash acquired | | | $ | 60.1 | |

| Intangible assets | | | 53.8 | | |

| Goodwill | | | 77.6 | | |

| Total assets acquired | | | 247.3 | | |

| Current liabilities | | | (39.2) | | |

| Long Term liabilities | | | (9.5) | | |

| Net assets acquired | | | $ | 198.6 | |

| 2024 | | | $ | 13.0 | |

| 2025 | | | 9.5 | | |

| 2026 | | | 5.4 | | |

| 2027 | | | 3.6 | | |

| 2028 | | | 2.3 | | |

| After 2028 | | | 12.6 | | |

| | | | 1,418.6 | | | | | | 1,364.8 | | |

| Balance at December 31, 2021 | | | $ | 568.9 | | | | | $ | 58.9 | | | | | $ | 627.8 | |

| Currency translation adjustment | | | (7.8) | | | | | | (0.3) | | | | | | (8.1) | | |

10.

| Commercial paper, average year-end interest rate of 4.6% for 2022 | | | — | | | | | | 22.6 | | |

| | | | 127.3 | | | | | | 344.5 | | |

Debt (continued)

obligations of $16.6 million on outstanding debt as of December 31, 2023.

Based on this evaluation, our management has concluded that, as of December 31, [removed: 2023,] [added: 2024,] our internal control over financial reporting was effective.

Ernst & Young LLP, an independent registered public accounting firm, has audited our consolidated financial statements and the effectiveness of internal controls over financial reporting as of December 31, [removed: 2023] [added: 2024] as stated in their report which is included herein.

There have been no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the year ended December 31, [removed: 2023] [added: 2024] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

Consistent with guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting in the year of acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to Pureit.

The acquisition constituted 3.8 percent and 6.5 percent of total assets and net assets, respectively, as of December 31, 2024 and less than 0.5 percent of net sales and net earnings for the year then ended.

During the three months ended December 31, [removed: 2023,] [added: 2024,] none of our directors or Section 16 officers adopted or terminated a “Rule 10b5-1trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

We have audited A. O. Smith Corporation’s internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, A. O. Smith Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] the related consolidated statements of earnings, comprehensive earnings, stockholders’ [removed: equity,] [added: equity] and cash flows for each of the three years in the period ended December 31, [removed: 2023,] [added: 2024,] and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February [removed: 13, 2024] [added: 11, 2025] expressed an unqualified opinion thereon.

As indicated in the accompanying Management Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Pureit, which is included in the 2024 consolidated financial statements of the Company and constituted 3.8 percent and 6.5 percent of total assets and net assets, respectively, as of December 31, 2024 and less than 0.5 percent of net sales and net earnings for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Pureit.

February 11, 2025

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

February 13, 2024

The information included under the headings “Election of Directors” and “Board Committees” in our definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the Securities and Exchange Commission (SEC) under Regulation 14A within 120 days after the end of the registrant’s fiscal year) is incorporated herein by reference.

We have a separately designated Audit Committee on which [removed: Idelle K.][added: Michael M.]

All members are independent under applicable SEC and New York Stock Exchange rules; the Board of Directors of the Company has concluded that Mr. [removed: Larsen] [added: Larsen, Mr. Fister] and Ms. [removed: Wolf] [added: Martin] are “audit committee financial experts” in accordance with SEC rules.

The information included under the heading “Compliance with Section 16(a) of the Securities Exchange Act” in our definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the SEC under Regulation 14A within 120 days after the end of the registrant’s fiscal year) is incorporated herein by reference.

Larsen, Todd W.

Fister, Christopher L.

Mapes, and Lois M.

Martin serve, with Mr. Larsen, as Chairperson.

Wolf, Michael M.

Larsen and Christopher L.

Mapes serve, with Ms. Wolf, as Chairperson.

The information included under the headings [removed: “Executive Compensation,” “Director Compensation,” “Report] [added: "Executive Compensation," "Director Compensation," and "Report] of the Personnel and Compensation [removed: Committee” and “Compensation Committee Interlocks and Insider Participation”] [added: Committee"] in the [removed: Company’s definitive] [added: Company's Definitive] Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the SEC under Regulation 14A within 120 days after the end of the registrant’s fiscal year) is incorporated herein by reference.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

The information included under the headings “Principal Stockholders” and “Security Ownership of Directors and Management” in our definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the SEC under Regulation 14A within 120 days after the end of the registrant’s fiscal year) is incorporated herein by reference.

The following table provides information about our equity compensation plans as of December 31, [removed: 2023.][added: 2024.]

(1)Consists of [removed: 1,872,553] [added: 1,395,841] shares subject to stock options, [removed: 345,407] [added: 428,234] shares subject to employee share [removed: units and 232,260] [added: units, 215,741] shares subject to director share [added: units and 74,398 shares subject to performance stock] units.

| Equity compensation plans approved by security holders | | | 2,114,214 | | | (1) | | | | | | $ | 55.07 | | (2) | | | | | | 2,291,099 | | | (3) | | |

| Total | | | 2,114,214 | | | | | | | | | 55.07 | | | | | | | | | 2,291,099 | | | | | |

| Equity compensation plans approved by security holders | | | 2,450,220 | | | (1) | | | | | | $ | 52.93 | | (2) | | | | | | 2,479,897 | | | (3) | | |

| Total | | | 2,450,220 | | | | | | | | | 52.93 | | | | | | | | | 2,479,897 | | | | | |

The information included under the headings “Director Independence and Financial Literacy”, “Compensation Committee Interlocks and Insider Participation” and “Procedure for Review of Related Party Transactions” in our definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the SEC under Regulation 14A within 120 days after the end of the registrant’s fiscal year) is incorporated herein by reference.

The information included under the heading “Report of the Audit Committee” in our definitive Proxy Statement for the [removed: 2024] [added: 2025] Annual Meeting of Stockholders (to be filed with the SEC under Regulation 14A within 120 days after the end of the registrant’s fiscal year) required by this Item 14 is incorporated herein by reference.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

| [Consolidated Balance Sheets at December 31, [removed: 202](#i69ead51464fb48f3add5240f00d8931c_61)[3](#i69ead51464fb48f3add5240f00d8931c_61)] [added: 202](#i962149cd359f490c80491d251f1f6a6f_64)[4](#i962149cd359f490c80491d251f1f6a6f_64)] [and [removed: 20](#i69ead51464fb48f3add5240f00d8931c_61)[2](#i69ead51464fb48f3add5240f00d8931c_61)[2](#i69ead51464fb48f3add5240f00d8931c_61)] [added: 202](#i962149cd359f490c80491d251f1f6a6f_64)[3](#i962149cd359f490c80491d251f1f6a6f_64)] | | | [removed: [30](#i69ead51464fb48f3add5240f00d8931c_61)] [added: [30](#i962149cd359f490c80491d251f1f6a6f_64)] | | |

| For each of the three years in the period ended December 31, [removed: 2023:] [added: 2024:] | | | | | |

| [‑ Consolidated Statement of [removed: Earnings](#i69ead51464fb48f3add5240f00d8931c_64)] [added: Earnings](#i962149cd359f490c80491d251f1f6a6f_67)] | | | [removed: [31](#i69ead51464fb48f3add5240f00d8931c_64)] [added: [31](#i962149cd359f490c80491d251f1f6a6f_67)] | | |

| [‑ Consolidated Statement of Comprehensive [removed: Earnings](#i69ead51464fb48f3add5240f00d8931c_67)] [added: Earnings](#i962149cd359f490c80491d251f1f6a6f_70)] | | | [removed: [31](#i69ead51464fb48f3add5240f00d8931c_67)] [added: [31](#i962149cd359f490c80491d251f1f6a6f_70)] | | |

| [‑ Consolidated Statement of Cash [removed: Flows](#i69ead51464fb48f3add5240f00d8931c_70)] [added: Flows](#i962149cd359f490c80491d251f1f6a6f_73)] | | | [removed: [32](#i69ead51464fb48f3add5240f00d8931c_70)] [added: [32](#i962149cd359f490c80491d251f1f6a6f_73)] | | |

| [‑ Consolidated Statement of Stockholders’ [removed: Equity](#i69ead51464fb48f3add5240f00d8931c_73)] [added: Equity](#i962149cd359f490c80491d251f1f6a6f_76)] | | | [removed: [33](#i69ead51464fb48f3add5240f00d8931c_73)] [added: [33](#i962149cd359f490c80491d251f1f6a6f_76)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i69ead51464fb48f3add5240f00d8931c_76)] [added: Statements](#i962149cd359f490c80491d251f1f6a6f_79)] | | | [removed: [34](#i69ead51464fb48f3add5240f00d8931c_76)\-58] [added: [34](#i962149cd359f490c80491d251f1f6a6f_79)\-59] | | |

| [Schedule II—Valuation and Qualifying [removed: Accounts](#i69ead51464fb48f3add5240f00d8931c_175)] [added: Accounts](#i962149cd359f490c80491d251f1f6a6f_178)] | | | [removed: [67](#i69ead51464fb48f3add5240f00d8931c_175)] [added: [68](#i962149cd359f490c80491d251f1f6a6f_178)] | | |

3.Exhibits - see the Index to Exhibits on pages [removed: 64-65] [added: 65-66] of this report.

[Table of [removed: Contents](#i69ead51464fb48f3add5240f00d8931c_7)][added: Contents](#i962149cd359f490c80491d251f1f6a6f_7)]

| | | | [removed: (f)] [added: (g)] | | | The corporation has instruments that define the rights of holders of long-term debt that are not being filed with this Registration Statement in reliance upon Item 601(b)(4)(iii) of Regulation S-K. The Registrant agrees to furnish to the SEC, upon request, copies of these instruments. | | |

| (21) | | | | | | [removed: [Subsidiaries.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex21.htm)] [added: [Subsidiaries.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex21.htm)] | | |

| (23) | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex23.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex23.htm)] | | |

| (31.1) | | | | | | [Certification by the Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated February [removed: 1](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex311.htm)[3](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex311.htm)[, 202](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex311.htm)[4](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex311.htm)[.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex311.htm)] [added: 1](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex311.htm)[1](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex311.htm)[, 202](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex311.htm)[5](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex311.htm)[.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex311.htm)] | | |

| (31.2) | | | | | | [Certification by the Executive Vice-President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated February [removed: 1](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex312.htm)[3](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex312.htm)[, 202](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex312.htm)[4](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex312.htm)[.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex312.htm)] [added: 1](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex312.htm)[1](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex312.htm)[, 202](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex312.htm)[5](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex312.htm)[.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex312.htm)] | | |

| (32.1) | | | | | | [Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C. Section [removed: 1350.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex321.htm)] [added: 1350.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex321.htm)] | | |

| (32.2) | | | | | | [Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C. Section [removed: 1350.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000041/aos-20231231xex322.htm)] [added: 1350.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex322.htm)] | | |

| (101) | | | | | | The following materials from A. O. Smith Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2023] [added: 2024] are filed herewith, formatted in XBRL (Extensive Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] (ii) the Consolidated Statement of Earnings for the three years ended December 31, [removed: 2023,] [added: 2024,] (iii) the Consolidated Statement of Comprehensive Earnings for the three years ended December 31, [removed: 2023,] [added: 2024,] (iv) the Consolidated Statement of Cash Flows for the three years ended December 31, [removed: 2023,] [added: 2024,] (v) the Consolidated Statement of Stockholders’ Equity for the three years ended December 31, [removed: 2023] [added: 2024] and (vi) the Notes to Consolidated Financial Statements. | | |

| Date: February [removed: 13, 2024] [added: 11, 2025] | | | By: | | | | | | /s/ Kevin J. Wheeler | | |

| | | | | | | | | | Kevin J. Wheeler [removed: Chairman, President] [added: Chairman] and Chief Executive Officer | | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of February [removed: 13, 2024] [added: 11, 2025] by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| [removed: Chairman, President] [added: Chairman] and Chief Executive Officer | | | | | | | | |

Years ended December 31, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021][added: 2022]

| Valuation allowance for trade and notes receivable | | | $ | [removed: 5.6] [added: 10.1] | | | | | $ | [removed: 4.2] [added: 3.1] | | | | | $ | [removed: 0.8] [added: —] | | | | | $ | [removed: (1.1)] [added: (0.3)] | | | | | $ | [removed: 9.5] [added: 12.9] | |

| Valuation allowance for deferred tax assets | | | [removed: 13.0] [added: 11.7] | | | | | | — | | | | | | — | | | | | | [removed: (5.9)] [added: (5.6)] | | | | | | [removed: 7.1] [added: 6.1] | | |

| | | | (f) | | | [Amendment No. 4 dated as of August 23, 2024, to the Amended and Restated Credit Agreement dated as of December 12, 2012, among A. O. Smith Corporation, A. O. Smith Enterprises Ltd., A.O. Smith International Holdings B.V. and the financial institutions and agents party thereto, incorporated by reference to Exhibit 10.01 in the quarterly report on Form 10-Q for the quarter ended September 30, 2024.](https://www.sec.gov/Archives/edgar/data/91142/000009114224000171/aos-20240930xex101.htm) | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| (19) | | | | | | [A.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm) [](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm)[O.](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm) [Smith Corporation In](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm)[sider Tra](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm)[ding Comp](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm)[liance Policy](https://www.sec.gov/Archives/edgar/data/91142/000009114225000036/aos-20241231xex19.htm) | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| TODD W. FISTER | | | | | | /s/ Todd W. Fister | | |

| Director | | | | | | Todd W. Fister | | |

| | | | | | | | | |

| LOIS M. MARTIN | | | | | | /s/ Lois M. Martin | | |

| Director | | | | | | Lois M. Martin | | |

| | | | | | | | | |

| | | | | | | | | |

[Table of Contents](#i962149cd359f490c80491d251f1f6a6f_7)

| 2024: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| IDELLE K. WOLF | | | | | | /s/ Idelle K. Wolf | | |

| Director | | | | | | Idelle K. Wolf | | |

| 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |