Financial Analysis

Acquisitions 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 acquired company is included in the Rest of World segment. 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. The Company incurred acquisition costs of approximately $1.4 million. The following table summarizes the final allocation of the fair value of the assets acquired and liabilities assumed at the date of acquisition. Of the $56.4 million of acquired identifiable intangible assets, $48.5 million was assigned to trademarks that are not subject to amortization, $3.7 million was assigned to patents which are amortized over 15 years, and the remaining $4.2 million million was assigned to customer relationships which are amortized over two to three 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 allocation of the purchase price to goodwill decreased by $0.8 million in 2025 due to valuation adjustments related to identifiable intangible assets. (dollars in millions) Current assets $ 5.6 Property, plant and equipment 0.6 Intangible assets 56.4 Goodwill 63.9 Total assets acquired 126.5 Current liabilit …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Environmental Contingencies The Company is a potentially responsible party in judicial and administrative proceedings seeking to clean up sites which have been environmentally impacted. In each case, the Company has established reserves, insurance proceeds and/or a potential recovery from third parties. The Company believes any environmental claims will not have a material effect on its financial position or results of operations. Product Liability The Company is subject to various claims and pending lawsuits for product liability and other matters arising out of the conduct of the Companys business. For product liability claims, the Company self insures a portion of its product liability loss exposure. The Company has established reserves and insurance coverage that it believes are adequate to cover incurred claims. For the years ended December 31, 2025 and 2024, the Company had $125 million of product liability insurance for individual losses in excess of $7.5 million. At December 31, 2025 and 2024, the reserve for product liability was $26.6 million and $26.3 million, respectively. The Company periodically reevaluates its exposure on claims and lawsuits and makes adjustments to its reserves as appropriate. The Company believes, based on current knowledge, consultation with counsel, adequate reserves and insurance coverage that the outcome of such claims and lawsuits will not have a material adverse effect on the Companys financial position, re …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt The Company was obligated under the following debt instruments: December 31 (dollars in millions) 2025 2024 Revolving credit agreement borrowings, average year-end interest rates of 5.3% for 2024 $ $ 30.0 Variable rate agreements, expiring 2029, average year-end interest rates of 7.4% for 2025 and 8.0% for 2024 46.6 49.0 Fixed rate agreements, expiring 2026-2034, average year-end interest rates of 3.3% for 2025 and 3.1% for 2024 108.4 114.2 155.0 193.2 Long-term debt due within one year (42.3) (10.0) Long-term debt $ 112.7 $ 183.2 In 2024, the Company renewed and amended its $500 million multi-year multi-currency revolving credit agreement with a new expiration date of August 23, 2029. The facility has an accordion provision which allows it to be increased up to $1 billion if certain conditions (including lender approval) are satisfied. Borrowings under the Companys bank credit lines and commercial paper borrowings are supported by the $500 million revolving credit agreement. As a result of the long-term nature of this facility, the Companys credit line borrowings are classified as long-term debt at December 31, 2024 (no credit line borrowings existed at December 31, 2025). At its option, the Company either maintains cash balances or pays fees for bank credit and services. The Company has interest expense obligations of $15.3 million on outstanding debt as of December 31, 2025. Scheduled maturities of long-term debt within each of the five years subsequent to December 31 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table disaggregates the Companys net sales by segment. As described above, the Companys North America segment sales are further disaggregated by major product line. In addition, the Companys Rest of World segment sales are disaggregated by China and all other Rest of World. Years ended December 31 (dollars in millions) 2025 2024 2023 North America Water heaters and related parts $ 2,460.1 $ 2,441.7 $ 2,456.9 Boilers and related parts 281.0 260.0 240.1 Water treatment products 243.1 248.4 225.9 Total North America 2,984.2 2,950.1 2,922.9 Rest of World China $ 689.5 $ 791.9 $ 835.1 All other Rest of World (1) 190.9 126.7 121.8 Total Rest of World 880.4 918.6 956.9 Inter-segment sales (34.4) (50.6) (27.0) Total Net Sales $ 3,830.2 $ 3,818.1 $ 3,852.8 (1) Includes the results of Pureit from the fourth quarter 2024, the period of acquisition. …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Stock Based Compensation The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007, and the Incentive Plan was most recently reapproved by stockholders on April 15, 2020. The Incentive Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of options or share units at December 31, 2025, was 2,028,442 which includes 2,400,000 additional shares that were authorized on April 15, 2020 at the Company's annual meeting of stockholders. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation expense recognized in 2025, 2024 and 2023 was $13.8 million, $14.9 million and $11.5 million, respectively. Stock Options Beginning in 2023, the Company no longer grants stock options. For active employees, all options granted expire ten years after the date of grant. Stock based compensation expense attributable to stock options for 2025, 2024 and 2023 was $0.1 million, $0.6 million and $1.2 million, respectively. Changes in options, all of which relate to the Companys Common Stock, were as follows: Years Ended December 31 2025 2024 2023 Number of Options Weighted Avg. Per Share Exercise Price Number of Options Weighted Avg. Per Share Exercise Price Number of Options Weighted Avg. Per Share Exercise Price Number of shares under options: Outs …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill during the years ended December 31, 2025 and 2024 consisted of the following: (dollars in millions) North America Rest of World Total Balance at December 31, 2023 $ 574.9 $ 58.5 $ 633.4 Currency translation adjustment (8.7) (1.4) (10.1) Acquisitions 20.5 117.9 138.4 Balance at December 31, 2024 586.7 175.0 761.7 Currency translation adjustment 4.8 (2.0) 2.8 Acquisition adjustments (1) (53.9) (53.9) Balance at December 31, 2025 $ 591.5 $ 119.1 $ 710.6 (1) Measurement period adjustments related to the 2024 acquisitions which impacted the amount of goodwill originally reported. The carrying amount of other intangible assets consisted of the following: 2025 2024 December 31 (dollars in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Patents $ 7.4 $ (4.2) $ 3.2 $ 3.7 $ (3.7) $ Customer lists 291.7 (201.6) 90.1 287.5 (187.3) 100.2 Total amortizable intangible assets 299.1 (205.8) 93.3 291.2 (191.0) 100.2 Indefinite-lived intangible assets: Trade names 269.0 269.0 220.9 220.9 Total intangible assets $ 568.1 $ (205.8) $ 362.3 $ 512.1 $ (191.0) $ 321.1 Amortization expenses of other intangible assets of $14.8 million, $12.7 million, and $12.6 million were recorded in 2025, 2024 and 2023, respectively. In the future, excluding the impact of any future acquisitions, the Company expects amortization expense of appro …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes The components of the provision for income taxes consisted of the following: Years ended December 31 (dollars in millions) 2025 2024 2023 Current: Federal $ 99.8 $ 124.3 $ 124.9 State 25.4 25.2 28.3 International 34.8 22.5 27.5 Deferred: Federal 11.9 (4.4) (4.8) State 2.1 (0.5) (1.8) International (5.1) 0.3 2.8 $ 168.9 $ 167.4 $ 176.9 The provision for income taxes differs from the U.S. federal statutory rate due to the following items: Years ended December 31 2025 2024 2023 Dollars Percentages Dollars Percentages Dollars Percentages U.S. federal statutory tax rate $ 150.2 21.0 % $ 147.2 21.0 % $ 154.0 21.0 % State and local income tax, net of federal (national) benefit (1) 21.0 2.9 18.1 2.6 21.0 2.9 Foreign tax effects China Tax benefit from research and development expenditures (8.5) (1.2) (7.9) (1.1) (10.1) (1.4) Other 4.2 0.6 3.2 0.5 5.3 0.7 Other foreign jurisdictions 6.8 1.0 1.5 0.2 6.2 0.9 Other Adjustments (4.8) (0.7) 5.3 0.7 0.5 0.0 $ 168.9 23.6 % $ 167.4 23.9 % $ 176.9 24.1 % (1) The state and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Florida, Illinois, Massachusetts, Maryland, New Jersey, New York and New York City for 2025, California, Illinois, Maryland, Michigan, New Jersey, New York, Pennsylvania and Tennessee for 2024 and California, Florida, Illinois, Massachusetts, New Jersey, New York, Pennsylvania and Tennessee for 2023. Components of earnings before income tax …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases The Companys lease portfolio consists of operating leases for buildings and equipment, such as forklifts and copiers, primarily in the United States and China. The Company defines a lease as a contract that gives the Company the right to control the use of a physical asset for a stated term. The Company pays the lessor for that right, with a series of payments defined in the contract and a corresponding right of use operating lease asset and liability are recorded. The Company has elected not to record leases with an initial term of 12 months or less on its consolidated balance sheet. To determine balance sheet amounts, required legal payments are discounted using the Companys incremental borrowing rate as of the inception of the lease. The incremental borrowing rate is the rate of interest that the Company would incur if it were to borrow, on a collateralized basis, an amount equal to the value of the leased item over a similar term, in a similar economic environment. Variable lease components not based on an index or rate are excluded from the measurement of the lease asset and liability and expensed as incurred for all asset classes. Certain leases include one or more options to renew or terminate. Renewal terms can extend the lease term from one to five years and options to terminate can be effective within one year. The exercise of lease renewal or termination is at the Companys discretion and when it is determined to be reasonably certain to renew or terminate, t …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which modernizes the accounting guidance for internal-use software costs by eliminating the requirement to assess software development stages and introduces a new capitalization threshold. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of reviewing the guidance and evaluating its impact on its financial statements. 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. The Company is currently evaluating the impact of adopting this ASU on its disclosures. In December 2023, the FASB amended ASC 740 (issued under ASU 2023-09, …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Revenue Recognition Substantially all of the Companys sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. Each unit sold is considered an independent, unbundled performance obligation. The Companys sales arrangements do not include other performance obligations that are material in the context of the contract. The nature, timing and amount of revenue for a respective performance obligation are consistent for each customer. The Company measures the sales transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Sales and value added taxes are excluded from the measurement of the transaction price. The Companys payment terms for the majority of its customers are 30 to 90 days from shipment. Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $34.2 million and $54.4 million at December 31, 2025 and December 31, 2024, respectively. Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Operations by Segment The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, India, and Europe. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Companys Chief Executive Officer (CEO) is the Chief Operating Decision Maker (CODM). The CODM allocates resources and makes operating decisions based on the financial information presented by the two reporting segments. The measures regularly reviewed by our CODM include segment sales, earnings, and segment margin. Segment earnings, defined by the Company as earnings before interest expense, taxes, corporate expense, and corporate research and development expenses, were used to measure the performance of the segments. Our CODM uses these financial measures to evaluate and allocate capital and company resources as critical determinants of segment performance. The accounting policies of the reportable segments are the same as those described in the Summary of Significant Accounting Policies outlined in Note 1 - Organization and Significant Accounting Policies. December 31, 2025 (dollars in millions) North America Rest of World Inter-segment Elimination Total Segments Less: Corporate Expenses Total Sales from external customers $ 2,964.4 $ 865.8 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Stockholders Equity The Companys authorized capital consists of three million shares of Preferred Stock $1 par value, 27 million shares of Class A Common Stock $5 par value, and 240 million shares of Common Stock $1 par value. The Common Stock has equal dividend rights with Class A Common Stock and is entitled, as a class, to elect one-third of the Board of Directors and has 1/10th vote per share on all other matters. Class A Common Stock is convertible to Common Stock on a one for one basis. There were 21,286 shares during 2025, 8,307 shares during 2024 and 12,524 shares during 2023, of Class A Common Stock converted into Common Stock. Regular dividends paid on the A. O. Smith Corporation Class A Common Stock and Common Stock amounted to $1.38, $1.30 and $1.22 per share in 2025, 2024 and 2023, respectively. In 2025, the Board of Directors approved adding 5,000,000 shares of Common Stock to an existing discretionary share repurchase authority. Under the share repurchase program, the Common Stock may be purchased through a combination of Rule 10b5-1 automatic trading plan and discretionary purchases in accordance with applicable securities laws. The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as working capital requirements, general business conditions and other factors, including alternative investment opportunities. The stock repurchase authorizatio …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Events On January 6, 2026, the Company completed the acquisition of LVC Holdco LLC (Leonard Valve). The transaction was completed for $470.0 million, subject to customary adjustments. The all-cash transaction is valued at approximately $412.0 million after adjusting for estimated tax benefits and was funded with cash borrowed under a new credit agreement. The Company has not completed the analysis of identifying and estimating the fair value of identifiable intangible assets acquired. We anticipate preparing a preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the second quarter of fiscal 2026. The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but not to exceed 12 months following the acquisition date. Adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined. On January 29, 2026, the Company identified a compromise to a portion of the Ashland City, Tennessee facility roof structure due to a severe ice and snow weather event. For safety purposes, production has been halted temporarily in the area of the facility impacted while remediation activities are underway. The Company has shifted certain production activities to other facilities to address the temporary imp …

SubsequentEventsTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies On January 29, 2026, the Company identified damage to a portion of the roof structure at its Ashland City, Tennessee facility as a result of a severe ice and snow weather event. For safety reasons, production in the affected area was temporarily suspended while remediation activities were performed. During that period, the Company shifted certain production activities to other facilities to mitigate the operational impact. The Company maintains insurance coverage for property damage, as well as business interruption losses, including lost profits and certain incremental costs incurred as a result of the event. During the second quarter of 2026, the Company submitted an insurance claim for property damage and business interruption losses related to the event, and the Company continues to work with its insurance carrier through the claims process. The Company does not expect this matter to have a material effect on its financial position, results of operations, or cash flows, as the related costs and losses are expected to be recoverable under its insurance coverage. The Company maintained a commercial relationship with a supply-chain service provider (the Provider) in connection with the Companys business in China. In this capacity, the Provider offered order-entry, warehousing and logistics support. The Provider also offered asset-backed financing to certain of the Companys distributors in China to facilitate their working capital needs. To facil …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following table disaggregates the Companys net sales by segment. As described above, the Companys North America segment sales are further disaggregated by major product line. The Companys Rest of World segment sales are disaggregated by China and all other Rest of World: (dollars in millions) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 North America Water heaters and related parts $ 656.4 $ 644.4 $ 1,268.2 $ 1,269.0 Boilers, related parts, and components (1) 101.7 71.2 183.2 135.6 Water treatment products and related parts 62.4 63.4 122.5 123.1 Total North America 820.5 779.0 1,573.9 1,527.7 Rest of World China $ 152.4 $ 192.3 $ 314.8 $ 379.5 All other Rest of World 42.5 47.8 80.8 87.3 Total Rest of World 194.9 240.1 395.6 466.8 Inter-segment sales (11.1) (7.8) (19.6) (19.3) Total Net Sales $ 1,004.3 $ 1,011.3 $ 1,949.9 $ 1,975.2 (1) Includes sales of $15.9 million and $31.8 million in the three and six months ended June 30, 2026, respectively, related to the January 6, 2026 acquisition of Leonard Valve. …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Share-Based Compensation The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007, and the Incentive Plan was most recently reapproved by stockholders on April 15, 2020. The Incentive Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of share-based compensation at June 30, 2026 was 1,890,715. Upon vesting or exercise of share-based compensation, shares are issued from treasury stock. Share Units Participants in the Incentive Plan may be awarded share units. Share units vest three years after the date of grant. The Company granted 199,163 and 211,010 share units under the Incentive Plan in the six months ended June 30, 2026 and 2025, respectively. The share units were valued at $15.5 million and $13.8 million at the date of issuance in 2026 and 2025, respectively, based on the price of the Companys Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period. Included in share unit expense in the six months ended June 30, 2026 and 2025 was expense associated with accelerated vesting of share unit awards for certain employees who are retirement eligible or will become retirement eligible during the vesting period. Share-based compensation expense attributable to share units of $2.0 million and $1.8 million was …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value Measurements ASC 820, Fair Value Measurements , among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets (liabilities) measured at fair value on a recurring basis are as follows (dollars in millions): Fair Value …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The Companys effective income tax rate for the three and six months ended June 30, 2026 was 20.9 percent and 22.3 percent, respectively. The Company estimates that its annual effective income tax rate for the full year 2026 will be approximately 24.0 percent. The effective income tax rate for both the three and six months ended June 30, 2025 was 24.5 percent. The change in the effective income tax rate for the three and six months ended June 30, 2026 compared to the effective income tax rate for the three and six months ended June 30, 2025 was primarily due to a discrete tax benefit recognized during the period ended June 30, 2026 related to U.S. cross border tax elections. As of June 30, 2026, the Company had $13.0 million of unrecognized tax benefits of which $4.9 million would affect its effective income tax rate if recognized. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Companys U.S. federal income tax returns and its U.S. state and local income tax returns are subject to audit for the years 2022-2026 and 2010-2026, respectively. The Company is subject to examinations in foreign tax jurisdictions for the years 2020-2026. …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Debt In 2024, the Company renewed and amended its $500 million multi-year, multi-currency revolving credit agreement with a new expiration date of August 23, 2029. The facility has an accordion provision that allows it to be increased up to $1 billion if certain conditions (including lender approval) are satisfied. Borrowings under the Company's bank credit lines and commercial paper borrowings are supported by a $500 million revolving credit agreement. As a result of the long-term nature of this facility, the Companys commercial paper and credit line borrowings are classified as long-term debt at June 30, 2026. At its option, the Company either maintains cash balances or pays fees for bank credit and services. The facility requires the Company to maintain two financial covenants, a leverage ratio test and an interest coverage test. The Company was in compliance with the covenants as of June 30, 2026. On January 5, 2026, the Company entered into an agreement for a new three-year, $470 million term loan with a group of eight banks. The Company borrowed the full available amount on January 5, 2026, and used the proceeds to finance the purchase of Leonard Valve. The term loan matures in January 2029, and the terms of the agreement outline a balloon payment at maturity. The interest rate on the loan is variable based on the SOFR (secured overnight financing rate) plus 0.88 percent. For the three and six month periods ending June 30, 2026, the interest rate was 4.52 percent and 4. …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recent Accounting Pronouncements In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11. In September 2025, the FASB issued ASU No. 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which modernizes the accounting guidance for internal-use software costs by eliminating the requirement to assess software development stages and introduces a new capitalization threshold. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of reviewing the guidance and evaluating the impact of adopting this ASU on its financial statements. In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. The …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Revenue Recognition Substantially all of the Companys sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. Each unit sold is considered an independent, unbundled performance obligation. The Companys sales arrangements do not include other performance obligations that are material in the context of the contract. The nature, timing and amount of revenue for a respective performance obligation are consistent for each customer. The Company measures the sales transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Sales and value added taxes are excluded from the measurement of the transaction price. The Companys payment terms for the majority of its customers are 30 to 90 days from shipment. Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $24.3 million and $34.2 million at June 30, 2026 and December 31, 2025, respectively. Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt. Th …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Results The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Companys Chief Executive Officer (CEO) is the Chief Operating Decision Maker (CODM). The CODM allocates resources and makes operating decisions based on the financial information presented by the two reporting segments. The measures regularly reviewed by the CODM include segment sales, earnings, and segment margin. Segment earnings, defined by the Company as earnings before interest expense, taxes, corporate expense, and corporate research and development expenses, were used to measure the performance of the segments. The CODM uses these financial measures to evaluate and allocate capital and company resources as critical determinants of segment performance. Three Months Ended June 30, 2026 (dollars in millions) North America Rest of World Total Segments Corporate Expenses Total Sales from external customers $ 816.3 $ 188.0 $ 1,004.3 $ $ 1,004.3 Inter-segment sales 4.2 6.9 11.1 11.1 820.5 194.9 1,015.4 1,015.4 Elimination of Inter-segment sales (4.2) (6.9) (11.1) (11.1) Net Sales 816.3 188.0 1,004.3 1,004.3 Cost of products sold 496.0 120.5 616.5 61 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing