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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________
FORM 10-Q
______________________________________________________
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024.
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-475
________________________________
A. O. Smith Corporation
(Exact name of registrant as specified in its charter)
________________________________

Delaware
(State of Incorporation)
11270 West Park Place, Milwaukee, Wisconsin
(Address of Principal Executive Office)
39-0619790
(I.R.S. Employer
Identification No.)
53224-9508
(Zip Code)
(414) 359-4000
(Registrant’s telephone number, including area code)
_________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading
Symbol		Name of Each Exchange
on Which Registered
Common Stock (par value $1.00 per share)AOSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated Filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) ☐ Yes ☒ No
Class A Common Stock Outstanding as of July 22, 2024 - 25,886,364 shares
Common Stock Outstanding as of July 22, 2024 - 119,958,980 shares



Index
A. O. Smith Corporation
Page
7-19
20-28
28-29
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
A. O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in millions, except for per share data)
(unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales$1,024.3 $960.8 $2,003.1 $1,927.2 
Cost of products sold628.3 576.1 1,222.4 1,168.4 
Gross profit396.0 384.7 780.7 758.8 
Selling, general and administrative expenses188.5 180.3 380.7 367.5 
Impairment expense— — — 15.6 
Interest expense1.8 4.5 2.8 8.5 
Other income, net(0.9)(9.0)(2.1)(13.0)
Earnings before provision for income taxes206.6 208.9 399.3 380.2 
Provision for income taxes50.4 51.9 95.5 96.3 
Net Earnings$156.2 $157.0 $303.8 $283.9 
Basic Net Earnings Per Share of Common Stock(1)
$1.07 $1.04 $2.07 $1.88 
Diluted Net Earnings Per Share of Common Stock(1)
$1.06 $1.04 $2.05 $1.87 
Dividends Per Share of Common Stock$0.32 $0.30 $0.64 $0.60 
(1)Earnings per share amounts are calculated discretely and, therefore, may not add up to the total due to rounding.


A. O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(dollars in millions)
(unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net earnings$156.2 $157.0 $303.8 $283.9 
Other comprehensive earnings (loss)
Foreign currency translation adjustments(2.4)(1.0)(7.2)1.5 
Unrealized losses on cash flow derivative instruments, less related income tax benefit of $0.5 and $0.2 in 2024, $0.5 and $0.5 in 2023
(1.7)(1.5)(0.7)(1.6)
Adjustment to pension liability, less related income tax provision of $0.0 and $0.1 in 2024, $0.1 and $0.1 in 2023
— 0.1 0.1 0.1 
Comprehensive Earnings$152.1 $154.6 $296.0 $283.9 
See accompanying notes to unaudited condensed consolidated financial statements.
3
A. O. SMITH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(unaudited)
June 30,
2024
December 31,
2023
Assets
Current Assets
Cash and cash equivalents$216.1 $339.9 
Marketable securities17.2 23.5 
Receivables649.9 596.0 
Inventories544.7 497.4 
Other current assets53.4 43.5 
Total Current Assets1,481.3 1,500.3 
Property, plant and equipment1,447.1 1,418.6 
Less accumulated depreciation(843.9)(821.1)
Net property, plant and equipment603.2 597.5 
Goodwill650.4 633.4 
Other intangibles329.8 336.7 
Operating lease assets33.6 37.3 
Other assets99.3 108.7 
Total Assets$3,197.6 $3,213.9 
Liabilities
Current Liabilities
Trade payables$574.6 $600.4 
Accrued payroll and benefits70.4 92.2 
Accrued liabilities152.7 177.4 
Product warranties64.7 65.3 
Debt due within one year10.0 10.0 
Total Current Liabilities872.4 945.3 
Long-term debt130.4 117.3 
Product warranties122.9 122.8 
Long-term operating lease liabilities24.7 27.9 
Other liabilities135.6 156.2 
Total Liabilities1,286.0 1,369.5 
Stockholders’ Equity
Class A Common Stock (shares issued, 26,016,744 and 26,023,132 as of June 30, 2024 and December 31, 2023, respectively)
130.1 130.1 
Common Stock (shares issued 164,690,848 and 164,684,460 as of June 30, 2024 and December 31, 2023, respectively)
164.7 164.7 
Capital in excess of par value593.1 578.2 
Retained earnings3,467.6 3,258.1 
Accumulated other comprehensive loss(92.0)(84.2)
Treasury stock at cost(2,351.9)(2,202.5)
Total Stockholders’ Equity1,911.6 1,844.4 
Total Liabilities and Stockholders’ Equity$3,197.6 $3,213.9 
See accompanying notes to unaudited condensed consolidated financial statements.
4
A. O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
Six Months Ended
June 30,
20242023
Operating Activities
Net earnings$303.8 $283.9 
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization39.2 38.1 
Stock based compensation expense10.4 8.6 
Deferred income taxes(1.5)— 
Non-cash impairment— 15.6 
Pension settlement income— (6.0)
Pension settlement income non-cash taxes— 1.5 
Net changes in operating assets and liabilities:
Current assets and liabilities(173.2)(66.4)
Noncurrent assets and liabilities(14.7)(15.1)
Cash Provided by Operating Activities164.0 260.2 
Investing Activities
Capital expenditures(44.9)(24.2)
Acquisition of business(21.3)— 
Investments in marketable securities(50.9)(14.7)
Net proceeds from sale of marketable securities57.0 72.7 
Cash (Used in) Provided by Investing Activities(60.1)33.8 
Financing Activities
Long-term debt incurred (repaid)14.3 (139.3)
Common stock repurchases(153.2)(69.6)
Net proceeds from stock option activity9.4 8.3 
Dividends paid(94.2)(90.6)
Cash Used in Financing Activities(223.7)(291.2)
Effect of exchange rate changes on cash and cash equivalents(4.0)(15.1)
Net decrease in cash and cash equivalents(123.8)(12.3)
Cash and cash equivalents - beginning of period339.9 391.2 
Cash and Cash Equivalents - End of Period$216.1 $378.9 
See accompanying notes to unaudited condensed consolidated financial statements.
5
A. O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(dollars in millions)
(unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Class A Common Stock
Balance at the beginning of period$130.1 $130.2 $130.1 $130.2 
Conversion of Class A Common Stock— — — — 
Balance at end of period$130.1 $130.2 $130.1 $130.2 
Common Stock
Balance at the beginning of period$164.7 $164.7 $164.7 $164.7 
Conversion of Class A Common Stock— $— — $— 
Balance at end of period$164.7 $164.7 $164.7 $164.7 
Capital in Excess of Par Value
Balance at the beginning of period$589.5 $564.3 $578.2 $555.9 
Issuance of share units(0.4)(0.2)(15.0)(10.3)
Vesting of share units— — (1.8)(3.1)
Stock based compensation expense1.7 1.3 9.4 8.1 
Exercises of stock options0.9 1.8 6.3 6.5 
Issuance of share based compensation1.4 1.1 16.0 11.2 
Balance at end of period$593.1 $568.3 $593.1 $568.3 
Retained Earnings
Balance at the beginning of period$3,358.6 $2,966.5 $3,258.1 $2,885.0 
Net earnings156.2 157.0 303.8 283.9 
Dividends on stock(47.2)(45.1)(94.3)(90.5)
Balance at end of period$3,467.6 $3,078.4 $3,467.6 $3,078.4 
Accumulated Other Comprehensive Loss (see Note 15)$(92.0)$(82.4)$(92.0)$(82.4)
Treasury Stock
Balance at the beginning of period$(2,273.2)$(1,955.5)$(2,202.5)$(1,905.7)
Exercise of stock options0.5 1.6 3.2 1.8 
Stock incentives and directors’ compensation0.2 0.3 0.2 0.3 
Shares repurchased(78.7)(17.1)(153.2)(69.6)
Excise tax on repurchases of common stock(0.8)(0.1)(1.5)(0.7)
Vesting of share units0.1 — 1.9 3.1 
Balance at end of period$(2,351.9)$(1,970.8)$(2,351.9)$(1,970.8)
Total Stockholders’ Equity$1,911.6 $1,888.4 $1,911.6 $1,888.4 
See accompanying notes to unaudited condensed consolidated financial statements.
6
A. O. SMITH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2024
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year. It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 13, 2024.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740, Income Taxes (issued under Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures”). This ASU requires added disclosures related to the tax rate reconciliation and income taxes paid and includes other amendments intended to improve effectiveness and comparability. The amendment is effective for the Company beginning with its 2025 annual disclosures with early adoption permitted and should be applied on a prospective basis. The Company is currently evaluating the impact the adoption of ASU 2023-09 will have on its annual disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for the Company beginning with its 2024 annual disclosures and interim periods beginning in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2023-07 will have on its annual and interim disclosures.
2. Revenue Recognition
Substantially all of the Company’s 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 Company’s 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 Company’s 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 $47.6 million and $59.7 million at June 30, 2024 and December 31, 2023, respectively. Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt. The Company assesses the collectability of customer receivables based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history. In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs. In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables. The Company’s allowance for credit losses was $12.9 million and $10.1 million at June 30, 2024 and December 31, 2023, respectively.
7
2. Revenue Recognition (continued)
Rebates and incentives are based on pricing agreements and are tied to sales volume. The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and are based on program specific factors such as expected rebate percentages based on expected volumes. In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience. Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold and are activities performed to fulfill the promise to transfer products.
Disaggregation of Net Sales
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, heat pump and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world.
As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channels regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment.
The North America segment's major product lines are defined as the following:
Water heaters The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 900 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products.
Boilers The Company’s boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The Company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums. The Company’s boiler distribution channel is comprised primarily of manufacturer representative firms, with the remainder of its boilers distributed through wholesale channels. The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction.
Water treatment products The Company’s water treatment products range from point-of-entry water softeners, solutions for problem well water, and whole-home water filtration products to on-the-go filtration bottles, point-of-use carbon, and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. The Company sells water treatment products through its retail and wholesale distribution channels, similar to water heaters. The Company’s water treatment products are also sold through independent water quality dealers as well as directly to consumers including through e-commerce sales channels. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters.

8
2. Revenue Recognition (continued)
The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s 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,
2024202320242023
North America
Water heaters and related parts$660.2 $602.6 $1,308.5 $1,239.9 
Boilers and related parts67.4 61.3 126.1 119.7 
Water treatment products and related parts63.1 58.4 122.4 115.4 
Total North America790.7 722.3 1,557.0 1,475.0 
Rest of World
China$218.2 $217.7 $418.8 $407.9 
All other Rest of World26.6 26.5 52.9 55.4 
Total Rest of World244.8 244.2 471.7 463.3 
Inter-segment sales(11.2)(5.7)(25.6)(11.1)
Total Net Sales$1,024.3 $960.8 $2,003.1 $1,927.2 
3. Acquisition and Dispositions
Acquisition
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 expands the Company's water treatment footprint in North America. The acquired company is included in the North America segment.
As required under ASC 805 Business Combinations, results of operations have been included in the Company’s consolidated financial statements from the date of acquisition.
Dispositions
During the second quarter of 2024, the Company continued the process of exiting its operations in Vietnam. The restructuring expense associated with the exit was recorded in the fourth quarter of 2023 and did not have a material impact on the Company's consolidated financial statements.
During the second quarter of 2023, the Company sold its business in Turkey (disposal group), which was included in the Company's Rest of World segment, for an amount that approximated the carrying value of the net assets. In the first quarter of 2023, the Company determined that the disposal group met the criteria to be classified as held for sale and that the fair value of the disposal group, less cost to sell, was lower than its carrying amount. As a result, in the first quarter of 2023, the Company recorded an impairment expense of $15.6 million, of which $12.5 million was recorded in the Rest of World segment, and $3.1 million was recorded in Corporate Expense. The impairment was recorded as a net reduction of $4.5 million to the assets and liabilities and $11.1 million for the anticipated liquidation of the cumulative foreign currency translation adjustment associated with the disposal group.

9
4. Inventories
The following table presents the components of the Company’s inventory balances:
(dollars in millions)June 30,
2024		December 31, 2023
Finished products$215.1 $177.7 
Work in process48.4 44.2 
Raw materials329.1 322.6 
Inventories, at FIFO cost592.6 544.5 
LIFO reserve(47.9)(47.1)
Inventories, at LIFO cost$544.7 $497.4 
5. Product Warranties
The Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims. The following table presents the Company’s warranty liability activity:
(dollars in millions)Three Months Ended
June 30,
20242023
Balance at April 1,$185.0 $181.2 
Expense22.8 18.3 
Claims settled(20.2)(18.8)
Balance at June 30,$187.6 $180.7 
(dollars in millions)Six Months Ended
June 30,
20242023
Balance at January 1,$188.1 $182.5 
Expense42.5 36.7 
Claims settled(43.0)(38.5)
Balance at June 30,$187.6 $180.7 
6. Debt
In 2021, the Company renewed and amended its $500 million multi-year multi-currency revolving credit agreement with a new expiration date of April 1, 2026. The facility has an accordion provision that allows it to be increased up to $850 million 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 Company’s commercial paper and credit line borrowings are classified as long-term debt at June 30, 2024. 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, 2024.
10
7. Earnings per Share of Common Stock
The numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Denominator for basic earnings per share - weighted average shares146,465,276 150,475,003 146,822,116 150,684,986 
Effect of dilutive stock options and share units1,134,309 1,066,097 1,126,443 1,034,859 
Denominator for diluted earnings per share147,599,585 151,541,100 147,948,559 151,719,845 
8. 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 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 units at June 30, 2024 was 2,288,859. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation expense recognized in the three months ended June 30, 2024 and 2023 was $2.1 million and $1.6 million, respectively. Total stock based compensation expense recognized in the six months ended June 30, 2024 and 2023 was $10.4 million and $8.6 million, respectively.
Stock Options
Beginning in 2023, the Company no longer grants stock options. Stock options previously granted have a three year pro rata vesting from the date of grant. Stock options were issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant. For active employees, all options granted expire ten years after the date of grant. The Company’s stock options are expensed ratably over the three year vesting period. Stock based compensation expense attributable to stock options in the three months ended June 30, 2024 and 2023 was $0.1 million and $0.3 million, respectively. Stock based compensation expense attributable to stock options in the six months ended June 30, 2024 and 2023 was $0.3 million and $0.6 million, respectively.

Changes in options, all of which relate to the Company’s Common Stock, were as follows for the six months ended June 30, 2024:
Weighted-
Avg. Per
Share
Exercise
Price		Number of
Options		Average
Remaining
Contractual
Life		Aggregate
Intrinsic
Value
(dollars in
millions)
Outstanding at January 1, 2024$52.93 1,872,553 
Exercised45.63 (267,441)
Forfeited74.27 (3,875)
Outstanding at June 30, 202454.10 1,601,237 6 years$44.3 
Exercisable at June 30, 202452.76 1,501,072 6 years$43.6 

11
8. Stock Based Compensation (continued)
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 194,668 and 168,044 share units under the Incentive Plan in the six months ended June 30, 2024 and 2023, respectively.
The share units were valued at $16.0 million and $11.3 million at the date of issuance in 2024 and 2023, respectively, based on the price of the Company’s Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period; however, included in share unit expense in the three and six months ended June 30, 2024 and 2023 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. Stock based compensation expense attributable to share units of $1.4 million and $1.0 million was recognized in the three months ended June 30, 2024 and 2023, respectively. Stock based compensation expense attributable to share units of $9.2 million and $7.6 million was recognized in the six months ended June 30, 2024 and 2023, respectively. Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of share unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 2024381,189 $63.33 
Granted194,668 82.32 
Vested(92,882)60.80 
Forfeited(9,266)72.17 
Issued and unvested at June 30, 2024473,709 71.30 
Performance Stock Units
Beginning in 2023, certain executives may be awarded performance stock units under the Incentive Plan. Performance stock units vest over three years following the date of the grant. Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Environmental, Social, and Governance targets. Potential payouts range from zero to 150% of the target awards and changes from target amounts are reflected as performance adjustments. The Company granted 29,475 and 24,580 performance stock units under the Incentive Plan in the six months ended June 30, 2024 and 2023, respectively.
The performance stock units were valued at $2.4 million and $1.7 million at the date of issuance in 2024 and 2023, respectively, based on the price of the Company’s Common Stock at the date of grant. The performance stock units are recognized as compensation expense ratably over the three-year vesting period. Stock based compensation expense attributable to performance stock units of $0.6 million and $0.2 million was recognized in the three months ended June 30, 2024 and 2023, respectively. Stock based compensation expense attributable to performance stock units of $0.9 million and $0.3 million was recognized in the six months ended June 30, 2024 and 2023, respectively. Certain non-U.S.-based executives receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of performance stock unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 202434,758 $67.14 
Granted29,475 82.19 
Forfeited(3,426)75.33 
Performance adjustments16,289 80.76 
Issued and unvested at June 30, 202477,096 75.41 
12
9. Pensions
The following table presents the components of the Company’s net pension expense:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Service cost$0.2 $0.2 $0.5 $0.5 
Interest cost0.4 0.3 0.7 0.6 
Expected return on plan assets(0.3)(0.3)(0.6)(0.6)
Amortization of unrecognized loss— 0.1 0.1 0.1 
Amortization of prior service cost0.1 0.1 0.1 0.1 
Defined benefit plan expense before settlement income0.4 0.4 0.8 0.7 
Settlement income— (6.0)— (6.0)
Total pension expense (income)$0.4 $(5.6)$0.8 $(5.3)
The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension expense are reflected in other (income) expense, net. The Company was not required to and did not make a contribution to its U.S. pension plan in 2023. The Company is not required to make a contribution in 2024.
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10. 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 following table presents the Company’s segment results:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales
North America$790.7 $722.3 $1,557.0 $1,475.0 
Rest of World244.8 244.2 471.7 463.3 
Inter-segment(11.2)(5.7)(25.6)(11.1)
$1,024.3 $960.8 $2,003.1 $1,927.2 
Segment earnings
North America(1)
$198.4 $199.1 $397.1 $387.7 
Rest of World(2)
25.9 28.3 43.1 33.6 
Inter-segment earnings elimination(0.1)— (0.4)— 
224.2 227.4 439.8 421.3 
Corporate expense(3)
(15.8)(14.0)(37.7)(32.6)
Interest expense(1.8)(4.5)(2.8)(8.5)
Earnings before income taxes206.6 208.9 399.3 380.2 
Provision for income taxes50.4 51.9 95.5 96.3 
Net earnings$156.2 $157.0 $303.8 $283.9 
Additional Information
(1) Adjustments: North America
includes pension settlement income of:$— $(5.0)$— $(5.0)
(2) Adjustments: Rest of World
includes impairment expense of:— — — 12.5 
(3) Adjustments: Corporate expense
includes pension settlement income of:— (1.0)— (1.0)
includes impairment expense of:— — — 3.1 
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11. Fair Value Measurements
Accounting Standards Codification (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 Measurement UsingBalance Sheet LocationJune 30,
2024		December 31, 2023
Quoted prices in active markets for identical assets (Level 1)Marketable Securities$17.2 $23.5 
Significant other observable inputs (Level 2)Other current assets / (Accrued liabilities)3.2 (4.1)
Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2). There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis during the six months ended June 30, 2024.
12. Derivative Instruments
The Company utilizes certain derivative instruments to enhance its ability to manage currency exposure as well as raw materials price risk. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes. The contracts are executed with major financial institutions with no credit loss anticipated for failure of the counterparties to perform.
Cash Flow Hedges
With the exception of its net investment hedges, the Company designates all of its hedging instruments as cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.
Foreign Currency Forward Contracts
The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases, sales and certain intercompany transactions in the normal course of business. Principal currencies for which the Company utilizes foreign currency forward contracts from time to time include the British pound, Canadian dollar, Euro and Mexican peso.
Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the consolidated statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective. The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year.
The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year. The combined fair value of the foreign currency forward contracts was an asset balance of $0.1 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The combined fair value of the foreign currency forward contracts was an asset balance of $0.9 million as of December 31, 2023 which was recorded in Other current assets within the consolidated balance sheet.
15
12. Derivative Instruments (continued)

The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts as of the dates indicated that were designated as cash flow hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $40.1 $— $80.5 
Euro26.1 — 24.1 — 
Mexican peso26.6 — 14.2 — 
Total$52.7 $40.1 $38.3 $80.5 
Net Investment Hedges
The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S. subsidiaries. These hedges are determined to be effective. The Company recognized $1.4 million and $0.8 million of after-tax gains associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended June 30, 2024 and June 30, 2023, respectively. The Company recognized $5.4 million and $(1.3) million of after-tax gains (losses) associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the six months ended June 30, 2024 and June 30, 2023, respectively. The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges was $204.0 million as of June 30, 2024. The combined fair value of the net investment hedges was an asset balance of $2.9 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The combined fair value of the net investment hedges was a liability balance of $(4.2) million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.
The effect of cash flow hedges on the condensed consolidated statement of earnings:
Three Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of (loss) gain recognized in other
comprehensive
loss on derivatives		Location of (loss) gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$(1.3)$0.4 Cost of products sold$0.8 $2.3 
Six Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of gain  recognized in other
comprehensive
loss on derivatives		Location of gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain 
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$0.5 $2.1 Cost of products sold$1.4 $4.2 
Balance Sheet Hedges
Foreign Exchange Contracts
The Company periodically enters into foreign exchange contracts to mitigate the foreign currency volatility relative to certain intercompany loans. These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings. The fair value of the foreign exchange contracts was an asset balance of $0.2 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The fair value of
16
12. Derivative Instruments (continued)
the foreign exchange contracts was a liability balance of $(0.8) million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.
The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $28.7 $44.1 $— 
Chinese yuan201.2 — 206.8 — 
Total$201.2 $28.7 $250.9 $— 
The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.
Three Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$1.7 $0.1 
Six Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$5.7 $— 
13. Income Taxes
The Company’s effective income tax rate for the three and six months ended June 30, 2024 was 24.4 percent and 23.9 percent, respectively. The Company estimates that its annual effective income tax rate for the full year 2024 will be approximately 24 percent. The effective income tax rate for the three and six months ended June 30, 2023 was 24.8 percent and 25.3 percent, respectively. The change in the effective income tax rate for the three months ended June 30, 2024 compared to the effective income tax rate for the three months ended June 30, 2023 was primarily due to geographical earnings mix. The change in the effective income tax rate for the six months ended June 30, 2024 compared to the effective income tax rate for the six months ended June 30, 2023 was primarily due to geographical earnings mix and a $15.6 million impairment expense recorded in the prior year period with no associated tax benefit. Refer to Note 3 - Acquisition and Dispositions for additional information regarding the impairment expense.
As of June 30, 2024, the Company had $17.2 million of unrecognized tax benefits of which $3.5 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 Company’s U.S. federal income tax returns and its U.S. state and local income tax returns are subject to audit for the years 2017-2024 and 2007-2024, respectively. The Company is subject to examinations in foreign tax jurisdictions for the years 2018-2024.
14. Commitments and Contingencies
The Company maintains a commercial relationship with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offers order-entry, warehousing and logistics support. The Provider also offers asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider has collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to repurchase inventory if both requested by the banks and certain defined conditions are met, primarily related to the aging of the distributors’ notes.
The Provider is required to indemnify the Company for any losses the Company would incur in the event of an inventory repurchase under these arrangements. Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of the product plus costs incurred in the process, less related distributor
17
14. Commitments and Contingencies (continued)
rebates. The Company’s reserves for estimated losses under these repurchase arrangements were immaterial as of June 30, 2024 and December 31, 2023.
15. Changes in Accumulated Other Comprehensive Loss by Component
Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Three Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(85.1)$(81.6)
Other comprehensive loss before reclassifications(2.4)(1.0)
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period1.7 4.8 
Other comprehensive (loss) gain before reclassifications(1.0)0.3 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.2 and $0.5 in 2024 and 2023, respectively)
(0.7)(1.8)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.5)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
— 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$— $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.1 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$— $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.

18
15. Changes in Accumulated Other Comprehensive Loss by Component (continued)

Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Six Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(80.3)$(84.1)
Other comprehensive (loss) gain before reclassifications(7.2)1.5 
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period0.7 4.9 
Other comprehensive gain before reclassifications0.4 1.6 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.3 and $1.0 in 2024 and 2023, respectively)
(1.1)(3.2)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.6)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
0.1 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$0.1 $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.2 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$0.1 $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.
16. Subsequent Event
On July 15, 2024, the Company signed an agreement to acquire Pureit, a residential water purification business in South Asia, from Unilever for approximately $120 million, subject to customary adjustments. The Company expects to complete the acquisition of Pureit by the end of 2024 and does not expect the acquisition to have a material impact on earnings in the first year.
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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Our company is comprised of two reporting segments: North America and Rest of World. Our Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas, heat pump and electric water heaters, boilers, tanks, and water treatment products. Both segments primarily manufacture and market in their respective region of the world.
Our supply chain has been relatively stable. However, we continue to monitor potential disruptions and increase our safety stock of key components when we believe it is warranted. We remain in close contact with our suppliers and logistics providers to resolve supply chain constraints as they arise.
We continue to seek acquisitions that enable geographic growth, expand our core business, and establish adjacencies. On July 15, 2024, we signed an agreement to acquire Pureit from Unilever for $120 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, primarily in India. The acquisition fits squarely in the Company’s core capabilities and doubles the Company’s market penetration in the South Asia region. In the first quarter of 2024, we acquired Impact Water Products, a California-based water treatment company. The acquisition supports our growth strategy by expanding the West Coast presence of our water treatment business.
Also, we continue to look for opportunities to add to our existing product portfolio in high growth regions demonstrated by our previous introductions of kitchen products in China. We also recently introduced our internally designed and manufactured gas tankless water heaters in North America. In addition, we are expanding our commercial water heater capacity 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 our North America segment, we saw strong water heater demand through June. We believe that a prebuy ahead of our March 1st price increase pulled forward some demand into the first half of the year and we have seen some softness in orders in July. We project 2024 industry residential unit volumes will be flat after approximately six percent growth in 2023. Proactive replacement has been above historical levels for the last several years and we project that will continue in 2024. We believe that new home construction remains in a deficit and will be flat compared to 2023. We anticipate 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 returned to near normal levels at the beginning of 2024 for both product categories and we saw a return to growth in the second quarter. We expect to see an eight to ten percent increase in our sales of boilers in 2024 compared to 2023 as we continue to benefit from the transition to higher efficiency boilers. We anticipate sales of our North America water treatment products will increase approximately eight to ten percent in 2024, compared to 2023, as we continue our geographic expansion.
In our Rest of World segment, we saw local currency third-party sales growth in China of four percent in the first half of 2024, however due to continued economic headwinds, we remain cautious about the second half of the year. We project our third-party sales in China will be flat to up three percent in 2024 in local currency compared to 2023 driven by innovative new products and resilient demand for our core products. Our guidance assumes an unfavorable currency translation impact on sales of approximately two percent in 2024.
Combining all of these factors, we expect our 2024 consolidated sales to increase between three and five percent compared to 2023. Our guidance excludes the impacts from potential future acquisitions.

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Results of Operations
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales$1,024.3 $960.8 $2,003.1 $1,927.2 
Cost of products sold628.3 576.1 1,222.4 1,168.4 
Gross profit396.0 384.7 780.7 758.8 
Gross profit margin %38.7 %40.0 %39.0 %39.4 %
Selling, general and administrative expenses188.5 180.3 380.7 367.5 
Impairment expense— — — 15.6 
Interest expense1.8 4.5 2.8 8.5 
Other income, net(0.9)(9.0)(2.1)(13.0)
Earnings before provision for income taxes206.6 208.9 399.3 380.2 
Provision for income taxes50.4 51.9 95.5 96.3 
Net Earnings$156.2 $157.0 $303.8 $283.9 
Our sales in the second quarter of 2024 were $1,024.3 million, or seven percent higher than the second quarter 2023 sales of $960.8 million. Sales in the first six months of 2024 were $2,003.1 million, or approximately four percent higher than $1,927.2 million in the same period last year. Compared to the prior year quarter, the increased sales were primarily driven by higher volumes of residential and commercial water heaters and pricing actions in North America partially offset by approximately $8 million due to the depreciation of foreign currencies compared to the U.S. dollar. In the first six months of 2024, our sales increased due to higher volumes of residential and commercial water heaters and pricing actions in North America and higher sales in China, partially offset by unfavorable foreign currency translations of approximately $17 million.
Our gross profit margin in the second quarter of 2024 was 38.7 percent and decreased compared to 40.0 percent in the second quarter of 2023. Gross profit margin in the first six months of 2024 was 39.0 percent compared to the gross profit margin of 39.4 percent in the first six months of 2023. The lower gross profit margin in the second quarter and first six months of 2024 compared to the same period last year was primarily due to higher material costs.
Selling, general, and administrative (SG&A) expenses in the second quarter of 2024 increased by $8.2 million compared to the second quarter of 2023. SG&A expenses increased $13.2 million in the first six months of 2024 compared to the prior year. The increase in SG&A expenses in the second quarter and first six months of 2024 compared to the prior year periods was primarily due to higher employee costs from increased wages and management incentives in addition to higher selling expenses to support our sales growth initiatives.
Impairment expense in the first six months of 2023 was $15.6 million related to the sale of our business in Turkey. Of the $15.6 million impairment, $12.5 million was recorded in the Rest of World segment and $3.1 million in Corporate Expense. There was no impairment expense recorded in the second quarter of 2024 or the first six months of 2024.
Interest expense in the second quarter of 2024 was $1.8 million compared to $4.5 million in the same period last year. Interest expense in the first six months of 2024 was $2.8 million compared to $8.5 million in the same period the previous year. The decrease in interest expense in the second quarter and first six months of 2024 compared to the same period last year was primarily due to lower average debt levels.
Other income, net was $0.9 million in the second quarter of 2024 compared to $9.0 million in the second quarter of 2023. Other income, net was $2.1 million in the first six months of 2024 compared to $13.0 million in the same period last year. The decrease in Other income, net was primarily due to the absence of non-recurring pension settlement income of $6.0 million realized in the second quarter of 2023, higher foreign currency translation losses and lower interest income.
Our effective income tax rate for the three and six months ended June 30, 2024 was 24.4 percent and 23.9 percent, respectively. The effective income tax rate for the three and six months ended June 30, 2023 was 24.8 percent and 25.3 percent, respectively. The change in the effective income tax rate for the three and six months ended June 30, 2024 compared to the effective income tax rate for the three and six months ended June 30, 2023 was primarily due to a change in geographical earnings mix and the $15.6 million impairment expense recorded in the prior year period with no associated tax benefit. We estimate that our annual effective income tax rate for the full year of 2024 will be approximately 24 percent.
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We are providing non-U.S. Generally Accepted Accounting Principles (GAAP) measures (adjusted earnings, adjusted EPS, total segment earnings, adjusted segment earnings, and adjusted corporate expense) that exclude the impact of the 2023 impairment expense and pension settlement income. Reconciliations from GAAP measures to non-GAAP measures are provided in the Non-GAAP Measures section below. We believe that the measures of adjusted earnings, adjusted EPS, total segment earnings, adjusted segment earnings, and adjusted corporate expense provide useful information to investors about our performance and allow management and our investors to better understand our performance between periods without regard to items that we do not consider to be a component of our core operating performance.
North America Segment
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net Sales$790.7 $722.3 $1,557.0 $1,475.0 
Segment Earnings198.4 199.1 397.1 387.7 
Segment margin25.1 %27.6 %25.5 %26.3 %
Sales in our North America segment were $790.7 million in the second quarter of 2024, or $68.4 million higher than sales of $722.3 million in the second quarter of 2023. Sales in the first six months of 2024 were $1,557.0 million, or $82.0 million higher than sales of $1,475.0 million in the same period last year. Higher residential and commercial water heater and commercial boiler volumes and pricing actions primarily drove higher sales in the second quarter of 2024 and first six months of 2024 compared to the prior year periods.
North America segment earnings were $198.4 million in the second quarter of 2024 and lower than segment earnings of $199.1 million in the second quarter of 2023. Segment earnings in the first six months of 2024 were $397.1 million, an increase of $9.4 million compared to segment earnings of $387.7 million in the first six months of 2023. Segment margins were 25.1 percent and 27.6 percent in the second quarter of 2024 and 2023, respectively. Segment margins were 25.5 percent and 26.3 percent in the first six months of 2024 and 2023, respectively.
Lower segment earnings and margins in the second quarter of 2024 compared to the prior year were primarily due to higher material costs, mainly steel, higher selling expenses to support our sales growth initiatives and the absence of non-recurring pension settlement income of $5.0 million, partially offset by higher residential and commercial water heater and commercial boiler volumes and pricing actions. Higher segment earnings and margins in the first six months of 2024 compared to the prior year period were primarily due to higher volumes of residential and commercial water heaters and pricing actions partially offset by higher selling expenses to support our sales growth initiatives. We estimate our 2024 North America segment margin will be approximately 25 percent.
Adjusted segment earnings and adjusted segment margin in the second quarter of 2023 were $194.1 million and 26.9 percent, respectively. Adjusted segment earnings and adjusted segment margin in the first six months of 2023 were $382.7 million and 25.9 percent, respectively. Adjusted segment earnings and adjusted segment margin in the second quarter and first six months of 2023 exclude $5.0 million of pension settlement income.
Rest of World Segment
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net Sales$244.8 $244.2 $471.7 $463.3 
Segment Earnings25.9 28.3 43.1 33.6 
Segment margin10.6 %11.6 %9.1 %7.3 %
Sales in the Rest of World segment were $244.8 million in the second quarter of 2024 and slightly higher than sales of $244.2 million in the second quarter of 2023. Sales in the first six months of 2024 were $471.7 million, or $8.4 million higher than sales of $463.3 million in the same period last year. Compared to the prior year periods, sales in the second quarter and first six months of 2024 were higher due to increased volumes of kitchen products and combi boilers in China and included increased inter-segment sales of approximately $2 million and $10 million, respectively, related to our recently introduced tankless water heaters manufactured in China and shipped to the U.S. market. Higher sales in the second quarter and first six months of 2024
22
were partially offset by lower sales of residential water treatment products in China and unfavorable foreign currency translations of approximately $7 million and $16 million, respectively.
Rest of World segment earnings were $25.9 million in the second quarter of 2024, compared to $28.3 million in the second quarter of 2023. Segment earnings in the first six months of 2024 were $43.1 million, compared to $33.6 million in the first six months of 2023. Segment margins were 10.6 percent and 11.6 percent in the second quarter of 2024 and 2023, respectively. Segment margins were 9.1 percent and 7.3 percent in the first six months of 2024 and 2023, respectively.
Lower segment earnings and segment margin in the second quarter of 2024 were primarily driven by unfavorable product mix and sales promotions in China.
Higher segment earnings and segment margin in the first six months of 2024 were primarily driven by the absence of the nonrecurring impairment expense of $12.5 million associated with the sale of our business in Turkey recorded in the first quarter of 2023, partially offset by an unfavorable product mix and sales promotions in China in the second quarter and the first half of 2024. We estimate our 2024 Rest of World segment margin will be approximately ten percent.
Adjusted segment earnings and adjusted segment margin in the first six months of 2023 were $46.1 million and 10.0 percent, respectively. Adjusted segment earnings and adjusted segment margin in the first six months of 2023 exclude the $12.5 million of impairment expense.
Outlook
We expect our consolidated sales to increase in 2024 between three and five percent. Our sales projection is driven by expected continued end-market demand in water heating and the rebound that we expect in boiler and water treatment volumes after 2023 corrections in end-market inventories in North America. In our Rest of the World segment, we expect sales to be flat to up three percent in 2024 in local currency compared to 2023 driven by innovative new products and resilient demand for our core products. We expect to achieve full-year earnings of between $3.95 and $4.10 per share. Our guidance excludes the impacts from potential future acquisitions.
Liquidity & Capital Resources
Our working capital was $608.9 million at June 30, 2024, compared with $555.0 million at December 31, 2023. The increase in working capital was primarily related to higher receivable and inventory balances, lower accounts payable and lower payroll-related accruals partially offset by lower cash balances. As of June 30, 2024, cash balances were negatively impacted by $4.0 million due to changes in foreign currency during the year. Cash and cash equivalents used to fund our operations are primarily generated through operating activities and our existing credit facilities. We believe our available cash and existing credit facilities are sufficient to cover our cash needs for the foreseeable future. We use a global cash pooling arrangement, intercompany borrowing, and some local credit lines to meet funding needs and allocate capital resources among various entities. We have historically made and anticipate future cash repatriations from certain foreign subsidiaries. In the first six months of 2024, we repatriated approximately $88 million of cash from our foreign subsidiaries and used the proceeds to pay down outstanding debt balances and fund an acquisition.
(dollars in millions)Six Months Ended
June 30,
20242023
Cash provided by operating activities$164.0 $260.2 
Cash (used in) provided by investing activities(60.1)33.8 
Cash used in financing activities(223.7)(291.2)
Cash provided by operations decreased from $260.2 million in the first six months of 2023 compared to $164.0 million in the in the first six months of 2024, primarily as a result of higher inventory and accounts receivable balances, higher incentive payments associated with record sales and profits earned in 2023 which more than offset higher earnings and lower trade accounts payable balances. Our free cash flow in the second quarter of 2024 and 2023 was $119.1 million and $236.0 million, respectively. We expect cash provided by operating activities to be between $640 million and $690 million in 2024. We expect free cash flow to be between $525 million and $575 million in 2024. Free cash flow is a non-GAAP measure described in more detail in the Non-GAAP Measures section below.
Capital expenditures totaled $44.9 million in the six months of 2024 compared with $24.2 million in the same period last year. We project 2024 capital expenditures will be between $105 million and $115 million and full-year depreciation and amortization expense will be approximately $80 million.
23
We have a $500 million revolving credit facility which expires on April 1, 2026. The facility is with a group of nine banks and has an accordion provision that allows it to be increased up to $850 million if certain conditions (including lender approval) are satisfied. Borrowing rates under the facility are determined by our leverage ratio. The facility requires us to maintain two financial covenants, a leverage ratio test and an interest coverage test, and we were in compliance with the covenants as of June 30, 2024, and expect to be in compliance for the foreseeable future. The facility backs up commercial paper and credit line borrowings. At June 30, 2024, we had $21.2 million of borrowings outstanding under the facility and an available borrowing capacity of $478.8 million. We believe the combination of available borrowing capacity and operating cash flows will provide sufficient funds to finance our existing operations for the foreseeable future.
Our total debt increased by $13.1 million in the first six months of 2024 primarily due to the repurchase of our common stock. Our leverage, as measured by the ratio of total debt to total capitalization, was 6.8 percent at June 30, 2024, compared with 6.5 percent at December 31, 2023.
In the first quarter of 2024, our Board of Directors approved adding 2,000,000 shares of common stock to our existing discretionary share repurchase authority. Under our share repurchase program, we may purchase our common stock through a combination of a Rule 10b5-1 automatic trading plan and discretionary purchases in accordance with applicable securities laws. The stock repurchase authorization remains effective until terminated by our Board of Directors, which may occur at any time, subject to the parameters of any Rule 10b5-1 automatic trading plan that we may then have in effect. During the first six months of 2024, we repurchased 1,834,000 shares of our stock at a total cost of $153.2 million. At June 30, 2024, we had 3,667,462 shares remaining on the share repurchase authority. Depending on factors such as stock price, working capital requirements, and alternative investment opportunities, we expect to spend approximately $300 million on stock repurchases in 2024 through a combination of any renewed Rule 10b5-1 automatic trading plan and open market repurchases.
On July 8, 2024, our Board of Directors declared a regular quarterly cash dividend of $0.32 per share on our Common Stock and Class A common stock. The dividend is payable on August 15, 2024, to shareholders of record on July 31, 2024.
24
Non-GAAP Financial Information
We provide non-GAAP measures of free cash flow, adjusted earnings, adjusted EPS, total segment earnings, adjusted segment earnings, and adjusted corporate expense. We define free cash flow as cash provided by operating activities less capital expenditures. Our adjusted earnings, adjusted EPS, adjusted segment earnings, and adjusted corporate expenses exclude the impact of the 2023 impairment expense and pension settlement income.
We believe that free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. We believe that the measure of adjusted earnings, adjusted EPS, adjusted segment earnings and adjusted corporate expense provides useful information to investors about our performance and allows management and our investors to better understand our performance between periods without regard to items we do not consider to be a component of our core operating performance.
A. O. SMITH CORPORATION
Adjusted Earnings and Adjusted Earnings Per Share
(dollars in millions, except per share data)
(unaudited)
The following is a reconciliation of net earnings and diluted earnings per share to adjusted earnings (non-GAAP) and adjusted earnings per share (non-GAAP):
 
Three Months Ended
June 30,		Six Months Ended
June 30,
 2024202320242023
Net Earnings (GAAP)$156.2 $157.0 $303.8 $283.9 
Impairment expense, before tax— — — 15.6 
Pension settlement income, before tax— (6.0)— (6.0)
Tax effect on above items— 1.5 — 1.5 
Adjusted Earnings (non-GAAP)$156.2 $152.5 $303.8 $295.0 
Diluted Earnings Per Share (GAAP)(1)
$1.06 $1.04 $2.05 $1.87 
Impairment expense per diluted share, before tax— — — 0.10 
Pension settlement income per diluted share, before tax— (0.04)— (0.04)
Tax effect on above items per diluted share— 0.01 — 0.01 
Adjusted Earnings Per Share (non-GAAP)(1)
$1.06 $1.01 $2.05 $1.94 
(1)Earnings per share amounts are calculated discretely and, therefore, may not add up to the total due to rounding.



25
A. O. SMITH CORPORATION
Adjusted Segment Earnings
(dollars in millions)
(unaudited)
The following is a reconciliation of reported earnings before provision for income taxes to total segment earnings (non-GAAP) and adjusted segment earnings (non-GAAP):
 
Three Months Ended
June 30,		Six Months Ended
June 30,
 2024202320242023
Earnings Before Provision for Income Taxes (GAAP)$206.6 $208.9 $399.3 $380.2 
Add: Corporate expense(1)
15.8 14.0 37.7 32.6 
Add: Interest expense1.8 4.5 2.8 8.5 
Total Segment Earnings (non-GAAP)$224.2 $227.4 $439.8 $421.3 
North America(2)
$198.4 $199.1 $397.1 $387.7 
Rest of World(3)
25.9 28.3 43.1 33.6 
Inter-segment earnings elimination(0.1)— (0.4)— 
Total Segment Earnings (non-GAAP)$224.2 $227.4 $439.8 $421.3 
Additional Information
(1)Corporate expense
$(15.8)$(14.0)$(37.7)$(32.6)
Pension settlement income, before tax— (1.0)— (1.0)
Impairment expense, before tax— — — 3.1 
Adjusted Corporate expense (non-GAAP)$(15.8)$(15.0)$(37.7)$(30.5)
(2)North America
$198.4 $199.1 $397.1 $387.7 
Pension settlement income, before tax— (5.0)— (5.0)
Adjusted North America (non-GAAP)$198.4 $194.1 $397.1 $382.7 
(3)Rest of World
$25.9 $28.3 $43.1 $33.6 
Impairment expense, before tax— — — 12.5 
Adjusted Rest of World (non-GAAP)$25.9 $28.3 $43.1 $46.1 
26
A. O. SMITH CORPORATION
Free Cash Flow
(dollars in millions)
(unaudited)

The following is a reconciliation of reported cash flow from operating activities to free cash flow (non-GAAP):

Six Months Ended
June 30,
20242023
Cash provided by operating activities (GAAP)$164.0 $260.2 
Less: Capital expenditures(44.9)(24.2)
Free cash flow (non-GAAP)$119.1 $236.0 

A. O. SMITH CORPORATION
2024 Adjusted EPS Guidance and 2023 Adjusted EPS
(unaudited)

The following is a reconciliation of diluted EPS to adjusted EPS (non-GAAP) (all items are net of tax):

2024
Guidance		2023
Diluted EPS (GAAP)$3.95 - 4.10$3.69 
Restructuring and impairment expense— 0.12 
(1)
Adjusted EPS (non-GAAP)$3.95 - 4.10$3.81 
(1)Includes pre-tax restructuring and impairment expenses of $15.7 million and $3.1 million, within the Rest of World segment and Corporate expenses, respectively.
27
Critical Accounting Policies
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the U.S., which requires the use of estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The critical accounting policies that we believe could have the most significant effect on our reported results or require complex judgment by management are contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2023. We believe that at June 30, 2024, there was no material change to this information.
Recent Accounting Pronouncements
Refer to Recent Accounting Pronouncements in Note 1 – Basis of Presentation in the notes to our condensed consolidated financial statements included in Part 1 Financial Information.
Forward Looking Statements
This filing contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “continue,” “guidance,” “outlook” or words of similar meaning. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this filing. Important factors that could cause actual results to differ materially from these expectations include, among other things, the following: softening in U.S. residential water heater demand; negative impacts to the Company, particularly the demand for its products, resulting from global inflationary pressures or a potential recession in one or more of the markets in which the Company participates; the Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs; negative impacts to demand for the Company’s products, particularly commercial products, as a result of changes in commercial property usage that followed the COVID-19 pandemic; further weakening in U.S. residential or commercial construction or instability in the Company's replacement markets; inability of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; negative impact to the Company’s businesses from international tariffs, trade disputes and geopolitical differences, including the conflicts in Ukraine, the Middle East and attacks on commercial shipping vessels in the Red Sea; potential further weakening in the high-efficiency gas boiler segment in the U.S.; substantial defaults in payment by, material reduction in purchases by or the loss, bankruptcy or insolvency of a major customer; foreign currency fluctuations; the Company’s inability to successfully integrate or achieve its strategic objectives resulting from acquisitions; the possibility that the parties will fail to obtain necessary regulatory approvals or to satisfy any of the other conditions to the proposed acquisition; failure to realize the expected benefits of acquisitions or expected synergies; competitive pressures on the Company’s businesses; including new technologies and new competitors; the impact of potential information technology or data security breaches; changes in government regulations or regulatory requirements; the inability to respond to secular trends toward decarbonization and energy efficiency and adverse developments in general economic, political and business conditions in key regions of the world. A more detailed description of these risks is contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Forward-looking statements included in this filing are made only as of the date of this filing, and the Company is under no obligation to update these statements to reflect subsequent events or circumstances. All subsequent written and oral forward-looking statements attributed to the Company, or persons acting on its behalf, are qualified entirely by these cautionary statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As is more fully described in our Annual Report on Form 10-K for the year ended December 31, 2023, we are exposed to various types of market risks, including currency and certain commodity risks. Our quantitative and qualitative disclosures about market risk have not materially changed since that report was filed. We monitor our currency and commodity risks on a continuous basis and generally enter into forward and futures contracts to minimize these exposures. The majority of the contracts are for periods of less than one year. Our Company does not engage in speculation in our derivative strategies. It is important to note that gains and losses from our forward and futures contract activities are offset by changes in the underlying costs of the transactions being hedged.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
28
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon this evaluation of these disclosure controls and procedures, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of June 30, 2024 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding disclosure.
Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There have been no material changes in the legal and environmental matters discussed in Part 1, Item 3 and Note 16 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
In the first quarter of 2024, our Board of Directors approved adding 2,000,000 shares of common stock to the 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 authorization remains effective until terminated by our Board of Directors which may occur at any time, subject to the parameters of any Rule 10b5-1 automatic trading plan that we may then have in effect. In the second quarter of 2024, we repurchased 928,000 shares at an average price of $84.77 per share and at a total cost of $78.7 million. As of June 30, 2024, there were 3,667,462 shares remaining on the existing repurchase authorization.
ISSUER PURCHASES OF EQUITY SECURITIES
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that may yet be Purchased Under the Plans or Programs
April 1 - April 30, 2024310,000 $86.78 310,000 4,285,462 
May 1 - May 31, 2024333,000 84.81 333,000 3,952,462 
June 1 - June 30, 2024285,000 82.53 285,000 3,667,462 
The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable.
ITEM 5 - OTHER INFORMATION
During the three months ended June 30, 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.
ITEM 6 - EXHIBITS
Refer to the Exhibit Index on page 30 of this report.
29
INDEX TO EXHIBITS
Exhibit
Number
Description
31.1
31.2
32.1
32.2
101The following materials from A. O. Smith Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 are filed herewith, formatted in XBRL (Extensive Business Reporting Language): (i) the Condensed Consolidated Statement of Earnings for the three and six months ended June 30, 2024 and 2023, (ii) the Condensed Consolidated Statement of Comprehensive Earnings for the three and six months ended June 30, 2024 and 2023, (iii) the Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023 (iv) the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023 (v) the Condensed Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 (vi) the Notes to Condensed Consolidated Financial Statements.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has authorized this report to be signed on its behalf by the undersigned.
A. O. SMITH CORPORATION
July 24, 2024/s/ Benjamin A. Otchere
Benjamin A. Otchere
Vice President and Controller
/s/ Charles T. Lauber
Charles T. Lauber
Executive Vice President and Chief Financial Officer
31

Exhibit 31.1
CERTIFICATION
I, Kevin J. Wheeler, certify that:
1.I have reviewed this quarterly report on Form 10-Q of A. O. Smith Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
July 24, 2024
/s/ Kevin J. Wheeler
Kevin J. Wheeler
Chairman and Chief Executive Officer


Exhibit 31.2
CERTIFICATION
I, Charles T. Lauber, certify that;
1.    I have reviewed this quarterly report on Form 10-Q of A. O. Smith Corporation;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
July 24, 2024
/s/ Charles T. Lauber
Charles T. Lauber
Executive Vice President and Chief Financial Officer


Exhibit 32.1
Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, the undersigned certifies that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of A. O. Smith Corporation for the quarter ended June 30, 2024 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of A. O. Smith Corporation.
July 24, 2024
/s/ Kevin J. Wheeler
Kevin J. Wheeler
Chairman and Chief Executive Officer


Exhibit 32.2
Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, the undersigned certifies that to the best of my knowledge:
(1)the Quarterly Report on Form 10-Q of A. O. Smith Corporation for the quarter ended June 30, 2024 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of A. O. Smith Corporation.
July 24, 2024
/s/ Charles T. Lauber
Charles T. Lauber
Executive Vice President and Chief Financial Officer

v3.24.2
Cover Page - shares
 6 Months Ended
Jun. 30, 2024
Jul. 22, 2024
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Document Transition Report false  
Entity File Number 1-475  
Entity Registrant Name A. O. Smith Corporation  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 39-0619790  
Entity Address, Address Line One 11270 West Park Place  
Entity Address, City or Town Milwaukee  
Entity Address, State or Province WI  
Entity Address, Postal Zip Code 53224-9508  
City Area Code 414  
Local Phone Number 359-4000  
Title of 12(b) Security Common Stock (par value $1.00 per share)  
Trading Symbol AOS  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Amendment Flag false  
Entity Central Index Key 0000091142  
Document Fiscal Period Focus Q2  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2024  
Class A Common Stock    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   25,886,364
Common Stock    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   119,958,980
v3.24.2
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Income Statement [Abstract]        
Net sales $ 1,024.3 $ 960.8 $ 2,003.1 $ 1,927.2
Cost of products sold 628.3 576.1 1,222.4 1,168.4
Gross profit 396.0 384.7 780.7 758.8
Selling, general and administrative expenses 188.5 180.3 380.7 367.5
Impairment expense 0.0 0.0 0.0 15.6
Interest expense 1.8 4.5 2.8 8.5
Other income, net (0.9) (9.0) (2.1) (13.0)
Earnings before provision for income taxes 206.6 208.9 399.3 380.2
Provision for income taxes 50.4 51.9 95.5 96.3
Net Earnings $ 156.2 $ 157.0 $ 303.8 $ 283.9
Basic Net Earnings Per Share of Common Stock (in USD per share) [1] $ 1.07 $ 1.04 $ 2.07 $ 1.88
Diluted Net Earnings Per Share of Common Stock (in USD per share) [1] 1.06 1.04 2.05 1.87
Dividends Per Share of Common Stock (in USD per share) $ 0.32 $ 0.30 $ 0.64 $ 0.60
[1] Earnings per share amounts are calculated discretely and, therefore, may not add up to the total due to rounding.
v3.24.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Net earnings $ 156.2 $ 157.0 $ 303.8 $ 283.9
Other comprehensive earnings (loss)        
Foreign currency translation adjustments (2.4) (1.0) (7.2) 1.5
Unrealized losses on cash flow derivative instruments, less related income tax benefit of $0.5 and $0.2 in 2024, $0.5 and $0.5 in 2023 (1.7) (1.5) (0.7) (1.6)
Adjustment to pension liability, less related income tax provision of $0.0 and $0.1 in 2024, $0.1 and $0.1 in 2023 0.0 0.1 0.1 0.1
Comprehensive Earnings $ 152.1 $ 154.6 $ 296.0 $ 283.9
v3.24.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Statement of Comprehensive Income [Abstract]        
Income tax benefit on cash flow derivative instruments $ 0.5 $ 0.5 $ 0.2 $ 0.5
Income tax provision on adjustment to pension liability $ 0.0 $ 0.1 $ 0.1 $ 0.1
v3.24.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Current Assets    
Cash and cash equivalents $ 216.1 $ 339.9
Marketable securities 17.2 23.5
Receivables 649.9 596.0
Inventories 544.7 497.4
Other current assets 53.4 43.5
Total Current Assets 1,481.3 1,500.3
Property, plant and equipment 1,447.1 1,418.6
Less accumulated depreciation (843.9) (821.1)
Net property, plant and equipment 603.2 597.5
Goodwill 650.4 633.4
Other intangibles 329.8 336.7
Operating lease assets 33.6 37.3
Other assets 99.3 108.7
Total Assets 3,197.6 3,213.9
Current Liabilities    
Trade payables 574.6 600.4
Accrued payroll and benefits 70.4 92.2
Accrued liabilities 152.7 177.4
Product warranties 64.7 65.3
Debt due within one year 10.0 10.0
Total Current Liabilities 872.4 945.3
Long-term debt 130.4 117.3
Product warranties 122.9 122.8
Long-term operating lease liabilities 24.7 27.9
Other liabilities 135.6 156.2
Total Liabilities 1,286.0 1,369.5
Stockholders’ Equity    
Capital in excess of par value 593.1 578.2
Retained earnings 3,467.6 3,258.1
Accumulated other comprehensive loss (92.0) (84.2)
Treasury stock at cost (2,351.9) (2,202.5)
Total Stockholders’ Equity 1,911.6 1,844.4
Total Liabilities and Stockholders’ Equity 3,197.6 3,213.9
Class A Common Stock    
Stockholders’ Equity    
Common Stock, value 130.1 130.1
Common Stock    
Stockholders’ Equity    
Common Stock, value $ 164.7 $ 164.7
v3.24.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Jun. 30, 2024
Dec. 31, 2023
Class A Common Stock    
Common Stock, shares issued (in shares) 26,016,744 26,023,132
Common Stock    
Common Stock, shares issued (in shares) 164,690,848 164,684,460
v3.24.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Operating Activities    
Net earnings $ 303.8 $ 283.9
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:    
Depreciation and amortization 39.2 38.1
Stock based compensation expense 10.4 8.6
Deferred income taxes (1.5) 0.0
Non-cash impairment 0.0 15.6
Pension settlement income 0.0 (6.0)
Pension settlement income non-cash taxes 0.0 1.5
Net changes in operating assets and liabilities:    
Current assets and liabilities (173.2) (66.4)
Noncurrent assets and liabilities (14.7) (15.1)
Cash Provided by Operating Activities 164.0 260.2
Investing Activities    
Capital expenditures (44.9) (24.2)
Acquisition of business (21.3) 0.0
Investments in marketable securities (50.9) (14.7)
Net proceeds from sale of marketable securities 57.0 72.7
Cash (Used in) Provided by Investing Activities (60.1) 33.8
Financing Activities    
Long-term debt incurred 14.3  
Long-term debt repaid   (139.3)
Common stock repurchases (153.2) (69.6)
Net proceeds from stock option activity 9.4 8.3
Dividends paid (94.2) (90.6)
Cash Used in Financing Activities (223.7) (291.2)
Effect of exchange rate changes on cash and cash equivalents (4.0) (15.1)
Net decrease in cash and cash equivalents (123.8) (12.3)
Cash and cash equivalents - beginning of period 339.9 391.2
Cash and Cash Equivalents - End of Period $ 216.1 $ 378.9
v3.24.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Millions
Total
Common Stock
Class A Common Stock
Common Stock
Common Stock
Capital in Excess of Par Value
Retained Earnings
Accumulated Other Comprehensive Loss
Treasury Stock
Balance at the beginning of period at Dec. 31, 2022   $ 130.2 $ 164.7 $ 555.9 $ 2,885.0   $ (1,905.7)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Conversion of Class A Common Stock   0.0 0.0        
Issuance of share units       (10.3)      
Vesting of share units       (3.1)     3.1
Stock based compensation expense       8.1      
Exercise of stock options       6.5     1.8
Issuance of share based compensation       11.2      
Net earnings $ 283.9       283.9    
Dividends on stock         (90.5)    
Stock incentives and directors’ compensation             0.3
Shares repurchased             (69.6)
Excise tax on repurchases of common stock             (0.7)
Balance at end of period at Jun. 30, 2023 1,888.4 130.2 164.7 568.3 3,078.4 $ (82.4) (1,970.8)
Balance at the beginning of period at Mar. 31, 2023   130.2 164.7 564.3 2,966.5   (1,955.5)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Conversion of Class A Common Stock   0.0 0.0        
Issuance of share units       (0.2)      
Vesting of share units       0.0     0.0
Stock based compensation expense       1.3      
Exercise of stock options       1.8     1.6
Issuance of share based compensation       1.1      
Net earnings 157.0       157.0    
Dividends on stock         (45.1)    
Stock incentives and directors’ compensation             0.3
Shares repurchased             (17.1)
Excise tax on repurchases of common stock             (0.1)
Balance at end of period at Jun. 30, 2023 1,888.4 130.2 164.7 568.3 3,078.4 (82.4) (1,970.8)
Balance at the beginning of period at Dec. 31, 2023 1,844.4 130.1 164.7 578.2 3,258.1   (2,202.5)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Conversion of Class A Common Stock   0.0 0.0        
Issuance of share units       (15.0)      
Vesting of share units       (1.8)     1.9
Stock based compensation expense       9.4      
Exercise of stock options       6.3     3.2
Issuance of share based compensation       16.0      
Net earnings 303.8       303.8    
Dividends on stock         (94.3)    
Stock incentives and directors’ compensation             0.2
Shares repurchased             (153.2)
Excise tax on repurchases of common stock             (1.5)
Balance at end of period at Jun. 30, 2024 1,911.6 130.1 164.7 593.1 3,467.6 (92.0) (2,351.9)
Balance at the beginning of period at Mar. 31, 2024   130.1 164.7 589.5 3,358.6   (2,273.2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Conversion of Class A Common Stock   0.0 0.0        
Issuance of share units       (0.4)      
Vesting of share units       0.0     0.1
Stock based compensation expense       1.7      
Exercise of stock options       0.9     0.5
Issuance of share based compensation       1.4      
Net earnings 156.2       156.2    
Dividends on stock         (47.2)    
Stock incentives and directors’ compensation             0.2
Shares repurchased             (78.7)
Excise tax on repurchases of common stock             (0.8)
Balance at end of period at Jun. 30, 2024 $ 1,911.6 $ 130.1 $ 164.7 $ 593.1 $ 3,467.6 $ (92.0) $ (2,351.9)
v3.24.2
Basis of Presentation
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year. It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 13, 2024.
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740, Income Taxes (issued under Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures”). This ASU requires added disclosures related to the tax rate reconciliation and income taxes paid and includes other amendments intended to improve effectiveness and comparability. The amendment is effective for the Company beginning with its 2025 annual disclosures with early adoption permitted and should be applied on a prospective basis. The Company is currently evaluating the impact the adoption of ASU 2023-09 will have on its annual disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for the Company beginning with its 2024 annual disclosures and interim periods beginning in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2023-07 will have on its annual and interim disclosures.
v3.24.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Substantially all of the Company’s 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 Company’s 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 Company’s 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 $47.6 million and $59.7 million at June 30, 2024 and December 31, 2023, respectively. Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt. The Company assesses the collectability of customer receivables based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history. In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs. In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables. The Company’s allowance for credit losses was $12.9 million and $10.1 million at June 30, 2024 and December 31, 2023, respectively.
Rebates and incentives are based on pricing agreements and are tied to sales volume. The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and are based on program specific factors such as expected rebate percentages based on expected volumes. In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience. Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold and are activities performed to fulfill the promise to transfer products.
Disaggregation of Net Sales
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, heat pump and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world.
As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channels regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment.
The North America segment's major product lines are defined as the following:
Water heaters The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 900 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products.
Boilers The Company’s boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The Company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums. The Company’s boiler distribution channel is comprised primarily of manufacturer representative firms, with the remainder of its boilers distributed through wholesale channels. The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction.
Water treatment products The Company’s water treatment products range from point-of-entry water softeners, solutions for problem well water, and whole-home water filtration products to on-the-go filtration bottles, point-of-use carbon, and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. The Company sells water treatment products through its retail and wholesale distribution channels, similar to water heaters. The Company’s water treatment products are also sold through independent water quality dealers as well as directly to consumers including through e-commerce sales channels. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters.
The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s 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,
2024202320242023
North America
Water heaters and related parts$660.2 $602.6 $1,308.5 $1,239.9 
Boilers and related parts67.4 61.3 126.1 119.7 
Water treatment products and related parts63.1 58.4 122.4 115.4 
Total North America790.7 722.3 1,557.0 1,475.0 
Rest of World
China$218.2 $217.7 $418.8 $407.9 
All other Rest of World26.6 26.5 52.9 55.4 
Total Rest of World244.8 244.2 471.7 463.3 
Inter-segment sales(11.2)(5.7)(25.6)(11.1)
Total Net Sales$1,024.3 $960.8 $2,003.1 $1,927.2 
v3.24.2
Acquisition and Dispositions
 6 Months Ended
Jun. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisition and Dispositions Acquisition and Dispositions
Acquisition
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 expands the Company's water treatment footprint in North America. The acquired company is included in the North America segment.
As required under ASC 805 Business Combinations, results of operations have been included in the Company’s consolidated financial statements from the date of acquisition.
Dispositions
During the second quarter of 2024, the Company continued the process of exiting its operations in Vietnam. The restructuring expense associated with the exit was recorded in the fourth quarter of 2023 and did not have a material impact on the Company's consolidated financial statements.
During the second quarter of 2023, the Company sold its business in Turkey (disposal group), which was included in the Company's Rest of World segment, for an amount that approximated the carrying value of the net assets. In the first quarter of 2023, the Company determined that the disposal group met the criteria to be classified as held for sale and that the fair value of the disposal group, less cost to sell, was lower than its carrying amount. As a result, in the first quarter of 2023, the Company recorded an impairment expense of $15.6 million, of which $12.5 million was recorded in the Rest of World segment, and $3.1 million was recorded in Corporate Expense. The impairment was recorded as a net reduction of $4.5 million to the assets and liabilities and $11.1 million for the anticipated liquidation of the cumulative foreign currency translation adjustment associated with the disposal group.
v3.24.2
Inventories
 6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Inventories Inventories
The following table presents the components of the Company’s inventory balances:
(dollars in millions)June 30,
2024		December 31, 2023
Finished products$215.1 $177.7 
Work in process48.4 44.2 
Raw materials329.1 322.6 
Inventories, at FIFO cost592.6 544.5 
LIFO reserve(47.9)(47.1)
Inventories, at LIFO cost$544.7 $497.4 
v3.24.2
Product Warranties
 6 Months Ended
Jun. 30, 2024
Guarantees and Product Warranties [Abstract]  
Product Warranties Product Warranties
The Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims. The following table presents the Company’s warranty liability activity:
(dollars in millions)Three Months Ended
June 30,
20242023
Balance at April 1,$185.0 $181.2 
Expense22.8 18.3 
Claims settled(20.2)(18.8)
Balance at June 30,$187.6 $180.7 
(dollars in millions)Six Months Ended
June 30,
20242023
Balance at January 1,$188.1 $182.5 
Expense42.5 36.7 
Claims settled(43.0)(38.5)
Balance at June 30,$187.6 $180.7 
v3.24.2
Debt
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
In 2021, the Company renewed and amended its $500 million multi-year multi-currency revolving credit agreement with a new expiration date of April 1, 2026. The facility has an accordion provision that allows it to be increased up to $850 million 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 Company’s commercial paper and credit line borrowings are classified as long-term debt at June 30, 2024. 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, 2024.
v3.24.2
Earnings per Share of Common Stock
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Earnings per Share of Common Stock Earnings per Share of Common Stock
The numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Denominator for basic earnings per share - weighted average shares146,465,276 150,475,003 146,822,116 150,684,986 
Effect of dilutive stock options and share units1,134,309 1,066,097 1,126,443 1,034,859 
Denominator for diluted earnings per share147,599,585 151,541,100 147,948,559 151,719,845 
v3.24.2
Stock Based Compensation
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock Based Compensation 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 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 units at June 30, 2024 was 2,288,859. Upon stock option exercise or share unit vesting, shares are issued from treasury stock. Total stock based compensation expense recognized in the three months ended June 30, 2024 and 2023 was $2.1 million and $1.6 million, respectively. Total stock based compensation expense recognized in the six months ended June 30, 2024 and 2023 was $10.4 million and $8.6 million, respectively.
Stock Options
Beginning in 2023, the Company no longer grants stock options. Stock options previously granted have a three year pro rata vesting from the date of grant. Stock options were issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant. For active employees, all options granted expire ten years after the date of grant. The Company’s stock options are expensed ratably over the three year vesting period. Stock based compensation expense attributable to stock options in the three months ended June 30, 2024 and 2023 was $0.1 million and $0.3 million, respectively. Stock based compensation expense attributable to stock options in the six months ended June 30, 2024 and 2023 was $0.3 million and $0.6 million, respectively.

Changes in options, all of which relate to the Company’s Common Stock, were as follows for the six months ended June 30, 2024:
Weighted-
Avg. Per
Share
Exercise
Price		Number of
Options		Average
Remaining
Contractual
Life		Aggregate
Intrinsic
Value
(dollars in
millions)
Outstanding at January 1, 2024$52.93 1,872,553 
Exercised45.63 (267,441)
Forfeited74.27 (3,875)
Outstanding at June 30, 202454.10 1,601,237 6 years$44.3 
Exercisable at June 30, 202452.76 1,501,072 6 years$43.6 
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 194,668 and 168,044 share units under the Incentive Plan in the six months ended June 30, 2024 and 2023, respectively.
The share units were valued at $16.0 million and $11.3 million at the date of issuance in 2024 and 2023, respectively, based on the price of the Company’s Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period; however, included in share unit expense in the three and six months ended June 30, 2024 and 2023 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. Stock based compensation expense attributable to share units of $1.4 million and $1.0 million was recognized in the three months ended June 30, 2024 and 2023, respectively. Stock based compensation expense attributable to share units of $9.2 million and $7.6 million was recognized in the six months ended June 30, 2024 and 2023, respectively. Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of share unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 2024381,189 $63.33 
Granted194,668 82.32 
Vested(92,882)60.80 
Forfeited(9,266)72.17 
Issued and unvested at June 30, 2024473,709 71.30 
Performance Stock Units
Beginning in 2023, certain executives may be awarded performance stock units under the Incentive Plan. Performance stock units vest over three years following the date of the grant. Performance stock units vest under a set of measurement criteria which are based upon achievement of certain Environmental, Social, and Governance targets. Potential payouts range from zero to 150% of the target awards and changes from target amounts are reflected as performance adjustments. The Company granted 29,475 and 24,580 performance stock units under the Incentive Plan in the six months ended June 30, 2024 and 2023, respectively.
The performance stock units were valued at $2.4 million and $1.7 million at the date of issuance in 2024 and 2023, respectively, based on the price of the Company’s Common Stock at the date of grant. The performance stock units are recognized as compensation expense ratably over the three-year vesting period. Stock based compensation expense attributable to performance stock units of $0.6 million and $0.2 million was recognized in the three months ended June 30, 2024 and 2023, respectively. Stock based compensation expense attributable to performance stock units of $0.9 million and $0.3 million was recognized in the six months ended June 30, 2024 and 2023, respectively. Certain non-U.S.-based executives receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of performance stock unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 202434,758 $67.14 
Granted29,475 82.19 
Forfeited(3,426)75.33 
Performance adjustments16,289 80.76 
Issued and unvested at June 30, 202477,096 75.41 
v3.24.2
Pensions
 6 Months Ended
Jun. 30, 2024
Retirement Benefits [Abstract]  
Pensions Pensions
The following table presents the components of the Company’s net pension expense:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Service cost$0.2 $0.2 $0.5 $0.5 
Interest cost0.4 0.3 0.7 0.6 
Expected return on plan assets(0.3)(0.3)(0.6)(0.6)
Amortization of unrecognized loss— 0.1 0.1 0.1 
Amortization of prior service cost0.1 0.1 0.1 0.1 
Defined benefit plan expense before settlement income0.4 0.4 0.8 0.7 
Settlement income— (6.0)— (6.0)
Total pension expense (income)$0.4 $(5.6)$0.8 $(5.3)
The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension expense are reflected in other (income) expense, net. The Company was not required to and did not make a contribution to its U.S. pension plan in 2023. The Company is not required to make a contribution in 2024.
v3.24.2
Segment Results
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Segment Results 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 following table presents the Company’s segment results:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales
North America$790.7 $722.3 $1,557.0 $1,475.0 
Rest of World244.8 244.2 471.7 463.3 
Inter-segment(11.2)(5.7)(25.6)(11.1)
$1,024.3 $960.8 $2,003.1 $1,927.2 
Segment earnings
North America(1)
$198.4 $199.1 $397.1 $387.7 
Rest of World(2)
25.9 28.3 43.1 33.6 
Inter-segment earnings elimination(0.1)— (0.4)— 
224.2 227.4 439.8 421.3 
Corporate expense(3)
(15.8)(14.0)(37.7)(32.6)
Interest expense(1.8)(4.5)(2.8)(8.5)
Earnings before income taxes206.6 208.9 399.3 380.2 
Provision for income taxes50.4 51.9 95.5 96.3 
Net earnings$156.2 $157.0 $303.8 $283.9 
Additional Information
(1) Adjustments: North America
includes pension settlement income of:$— $(5.0)$— $(5.0)
(2) Adjustments: Rest of World
includes impairment expense of:— — — 12.5 
(3) Adjustments: Corporate expense
includes pension settlement income of:— (1.0)— (1.0)
includes impairment expense of:— — — 3.1 
v3.24.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Accounting Standards Codification (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 Measurement UsingBalance Sheet LocationJune 30,
2024		December 31, 2023
Quoted prices in active markets for identical assets (Level 1)Marketable Securities$17.2 $23.5 
Significant other observable inputs (Level 2)Other current assets / (Accrued liabilities)3.2 (4.1)
Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2). There were no changes in the Company's valuation techniques used to measure fair values on a recurring basis during the six months ended June 30, 2024.
v3.24.2
Derivative Instruments
 6 Months Ended
Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
The Company utilizes certain derivative instruments to enhance its ability to manage currency exposure as well as raw materials price risk. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes. The contracts are executed with major financial institutions with no credit loss anticipated for failure of the counterparties to perform.
Cash Flow Hedges
With the exception of its net investment hedges, the Company designates all of its hedging instruments as cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.
Foreign Currency Forward Contracts
The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases, sales and certain intercompany transactions in the normal course of business. Principal currencies for which the Company utilizes foreign currency forward contracts from time to time include the British pound, Canadian dollar, Euro and Mexican peso.
Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the consolidated statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective. The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year.
The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year. The combined fair value of the foreign currency forward contracts was an asset balance of $0.1 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The combined fair value of the foreign currency forward contracts was an asset balance of $0.9 million as of December 31, 2023 which was recorded in Other current assets within the consolidated balance sheet.
The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts as of the dates indicated that were designated as cash flow hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $40.1 $— $80.5 
Euro26.1 — 24.1 — 
Mexican peso26.6 — 14.2 — 
Total$52.7 $40.1 $38.3 $80.5 
Net Investment Hedges
The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S. subsidiaries. These hedges are determined to be effective. The Company recognized $1.4 million and $0.8 million of after-tax gains associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended June 30, 2024 and June 30, 2023, respectively. The Company recognized $5.4 million and $(1.3) million of after-tax gains (losses) associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the six months ended June 30, 2024 and June 30, 2023, respectively. The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges was $204.0 million as of June 30, 2024. The combined fair value of the net investment hedges was an asset balance of $2.9 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The combined fair value of the net investment hedges was a liability balance of $(4.2) million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.
The effect of cash flow hedges on the condensed consolidated statement of earnings:
Three Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of (loss) gain recognized in other
comprehensive
loss on derivatives		Location of (loss) gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$(1.3)$0.4 Cost of products sold$0.8 $2.3 
Six Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of gain  recognized in other
comprehensive
loss on derivatives		Location of gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain 
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$0.5 $2.1 Cost of products sold$1.4 $4.2 
Balance Sheet Hedges
Foreign Exchange Contracts
The Company periodically enters into foreign exchange contracts to mitigate the foreign currency volatility relative to certain intercompany loans. These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings. The fair value of the foreign exchange contracts was an asset balance of $0.2 million as of June 30, 2024 which was recorded in Other current assets within the consolidated balance sheet. The fair value of
the foreign exchange contracts was a liability balance of $(0.8) million as of December 31, 2023 which was recorded in Accrued liabilities within the consolidated balance sheet.
The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $28.7 $44.1 $— 
Chinese yuan201.2 — 206.8 — 
Total$201.2 $28.7 $250.9 $— 
The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.
Three Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$1.7 $0.1 
Six Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$5.7 $— 
v3.24.2
Income Taxes
 6 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s effective income tax rate for the three and six months ended June 30, 2024 was 24.4 percent and 23.9 percent, respectively. The Company estimates that its annual effective income tax rate for the full year 2024 will be approximately 24 percent. The effective income tax rate for the three and six months ended June 30, 2023 was 24.8 percent and 25.3 percent, respectively. The change in the effective income tax rate for the three months ended June 30, 2024 compared to the effective income tax rate for the three months ended June 30, 2023 was primarily due to geographical earnings mix. The change in the effective income tax rate for the six months ended June 30, 2024 compared to the effective income tax rate for the six months ended June 30, 2023 was primarily due to geographical earnings mix and a $15.6 million impairment expense recorded in the prior year period with no associated tax benefit. Refer to Note 3 - Acquisition and Dispositions for additional information regarding the impairment expense.
As of June 30, 2024, the Company had $17.2 million of unrecognized tax benefits of which $3.5 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 Company’s U.S. federal income tax returns and its U.S. state and local income tax returns are subject to audit for the years 2017-2024 and 2007-2024, respectively. The Company is subject to examinations in foreign tax jurisdictions for the years 2018-2024.
v3.24.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
The Company maintains a commercial relationship with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offers order-entry, warehousing and logistics support. The Provider also offers asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider has collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to repurchase inventory if both requested by the banks and certain defined conditions are met, primarily related to the aging of the distributors’ notes.
The Provider is required to indemnify the Company for any losses the Company would incur in the event of an inventory repurchase under these arrangements. Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of the product plus costs incurred in the process, less related distributor
rebates. The Company’s reserves for estimated losses under these repurchase arrangements were immaterial as of June 30, 2024 and December 31, 2023.
v3.24.2
Changes in Accumulated Other Comprehensive Loss by Component
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Changes in Accumulated Other Comprehensive Loss by Component Changes in Accumulated Other Comprehensive Loss by Component
Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Three Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(85.1)$(81.6)
Other comprehensive loss before reclassifications(2.4)(1.0)
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period1.7 4.8 
Other comprehensive (loss) gain before reclassifications(1.0)0.3 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.2 and $0.5 in 2024 and 2023, respectively)
(0.7)(1.8)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.5)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
— 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$— $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.1 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$— $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.
Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Six Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(80.3)$(84.1)
Other comprehensive (loss) gain before reclassifications(7.2)1.5 
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period0.7 4.9 
Other comprehensive gain before reclassifications0.4 1.6 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.3 and $1.0 in 2024 and 2023, respectively)
(1.1)(3.2)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.6)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
0.1 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$0.1 $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.2 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$0.1 $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.
v3.24.2
Subsequent Event
 6 Months Ended
Jun. 30, 2024
Subsequent Events [Abstract]  
Subsequent Event Subsequent Event
On July 15, 2024, the Company signed an agreement to acquire Pureit, a residential water purification business in South Asia, from Unilever for approximately $120 million, subject to customary adjustments. The Company expects to complete the acquisition of Pureit by the end of 2024 and does not expect the acquisition to have a material impact on earnings in the first year.
v3.24.2
Pay vs Performance Disclosure - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure        
Net earnings $ 156.2 $ 157.0 $ 303.8 $ 283.9
v3.24.2
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2
Basis of Presentation (Policies)
 6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740, Income Taxes (issued under Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures”). This ASU requires added disclosures related to the tax rate reconciliation and income taxes paid and includes other amendments intended to improve effectiveness and comparability. The amendment is effective for the Company beginning with its 2025 annual disclosures with early adoption permitted and should be applied on a prospective basis. The Company is currently evaluating the impact the adoption of ASU 2023-09 will have on its annual disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for the Company beginning with its 2024 annual disclosures and interim periods beginning in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of ASU 2023-07 will have on its annual and interim disclosures.
v3.24.2
Revenue Recognition (Tables)
 6 Months Ended
Jun. 30, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Net Sales Disaggregated by Segment and Major Product Line
The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s 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,
2024202320242023
North America
Water heaters and related parts$660.2 $602.6 $1,308.5 $1,239.9 
Boilers and related parts67.4 61.3 126.1 119.7 
Water treatment products and related parts63.1 58.4 122.4 115.4 
Total North America790.7 722.3 1,557.0 1,475.0 
Rest of World
China$218.2 $217.7 $418.8 $407.9 
All other Rest of World26.6 26.5 52.9 55.4 
Total Rest of World244.8 244.2 471.7 463.3 
Inter-segment sales(11.2)(5.7)(25.6)(11.1)
Total Net Sales$1,024.3 $960.8 $2,003.1 $1,927.2 
v3.24.2
Inventories (Tables)
 6 Months Ended
Jun. 30, 2024
Inventory Disclosure [Abstract]  
Schedule of Inventories
The following table presents the components of the Company’s inventory balances:
(dollars in millions)June 30,
2024		December 31, 2023
Finished products$215.1 $177.7 
Work in process48.4 44.2 
Raw materials329.1 322.6 
Inventories, at FIFO cost592.6 544.5 
LIFO reserve(47.9)(47.1)
Inventories, at LIFO cost$544.7 $497.4 
v3.24.2
Product Warranties (Tables)
 6 Months Ended
Jun. 30, 2024
Guarantees and Product Warranties [Abstract]  
Schedule of Warranty Liability Activity The following table presents the Company’s warranty liability activity:
(dollars in millions)Three Months Ended
June 30,
20242023
Balance at April 1,$185.0 $181.2 
Expense22.8 18.3 
Claims settled(20.2)(18.8)
Balance at June 30,$187.6 $180.7 
(dollars in millions)Six Months Ended
June 30,
20242023
Balance at January 1,$188.1 $182.5 
Expense42.5 36.7 
Claims settled(43.0)(38.5)
Balance at June 30,$187.6 $180.7 
v3.24.2
Earnings per Share of Common Stock (Tables)
 6 Months Ended
Jun. 30, 2024
Earnings Per Share [Abstract]  
Schedule of Computation of Basic and Diluted Weighted Average Shares Used in EPS Calculations The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Denominator for basic earnings per share - weighted average shares146,465,276 150,475,003 146,822,116 150,684,986 
Effect of dilutive stock options and share units1,134,309 1,066,097 1,126,443 1,034,859 
Denominator for diluted earnings per share147,599,585 151,541,100 147,948,559 151,719,845 
v3.24.2
Stock Based Compensation (Tables)
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Changes in Options
Changes in options, all of which relate to the Company’s Common Stock, were as follows for the six months ended June 30, 2024:
Weighted-
Avg. Per
Share
Exercise
Price		Number of
Options		Average
Remaining
Contractual
Life		Aggregate
Intrinsic
Value
(dollars in
millions)
Outstanding at January 1, 2024$52.93 1,872,553 
Exercised45.63 (267,441)
Forfeited74.27 (3,875)
Outstanding at June 30, 202454.10 1,601,237 6 years$44.3 
Exercisable at June 30, 202452.76 1,501,072 6 years$43.6 
Schedule of Share Unit Activity
A summary of share unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 2024381,189 $63.33 
Granted194,668 82.32 
Vested(92,882)60.80 
Forfeited(9,266)72.17 
Issued and unvested at June 30, 2024473,709 71.30 
Schedule of Stock Unit Activity
A summary of performance stock unit activity under the Incentive Plan is as follows for the six months ended June 30, 2024:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 202434,758 $67.14 
Granted29,475 82.19 
Forfeited(3,426)75.33 
Performance adjustments16,289 80.76 
Issued and unvested at June 30, 202477,096 75.41 
v3.24.2
Pensions (Tables)
 6 Months Ended
Jun. 30, 2024
Retirement Benefits [Abstract]  
Schedule of Components of Net Pension Expense (Income)
The following table presents the components of the Company’s net pension expense:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Service cost$0.2 $0.2 $0.5 $0.5 
Interest cost0.4 0.3 0.7 0.6 
Expected return on plan assets(0.3)(0.3)(0.6)(0.6)
Amortization of unrecognized loss— 0.1 0.1 0.1 
Amortization of prior service cost0.1 0.1 0.1 0.1 
Defined benefit plan expense before settlement income0.4 0.4 0.8 0.7 
Settlement income— (6.0)— (6.0)
Total pension expense (income)$0.4 $(5.6)$0.8 $(5.3)
v3.24.2
Segment Results (Tables)
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Schedule of Segment Results The following table presents the Company’s segment results:
(dollars in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales
North America$790.7 $722.3 $1,557.0 $1,475.0 
Rest of World244.8 244.2 471.7 463.3 
Inter-segment(11.2)(5.7)(25.6)(11.1)
$1,024.3 $960.8 $2,003.1 $1,927.2 
Segment earnings
North America(1)
$198.4 $199.1 $397.1 $387.7 
Rest of World(2)
25.9 28.3 43.1 33.6 
Inter-segment earnings elimination(0.1)— (0.4)— 
224.2 227.4 439.8 421.3 
Corporate expense(3)
(15.8)(14.0)(37.7)(32.6)
Interest expense(1.8)(4.5)(2.8)(8.5)
Earnings before income taxes206.6 208.9 399.3 380.2 
Provision for income taxes50.4 51.9 95.5 96.3 
Net earnings$156.2 $157.0 $303.8 $283.9 
Additional Information
(1) Adjustments: North America
includes pension settlement income of:$— $(5.0)$— $(5.0)
(2) Adjustments: Rest of World
includes impairment expense of:— — — 12.5 
(3) Adjustments: Corporate expense
includes pension settlement income of:— (1.0)— (1.0)
includes impairment expense of:— — — 3.1 
v3.24.2
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Schedule of Assets (Liabilities) Measured at Fair Value on a Recurring Basis
Assets (liabilities) measured at fair value on a recurring basis are as follows (dollars in millions):
Fair Value Measurement UsingBalance Sheet LocationJune 30,
2024		December 31, 2023
Quoted prices in active markets for identical assets (Level 1)Marketable Securities$17.2 $23.5 
Significant other observable inputs (Level 2)Other current assets / (Accrued liabilities)3.2 (4.1)
v3.24.2
Derivative Instruments (Tables)
 6 Months Ended
Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Contractual Amounts for Derivative Contracts
The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts as of the dates indicated that were designated as cash flow hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $40.1 $— $80.5 
Euro26.1 — 24.1 — 
Mexican peso26.6 — 14.2 — 
Total$52.7 $40.1 $38.3 $80.5 
The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:
(dollars in millions)June 30, 2024December 31, 2023
BuySellBuySell
Canadian dollar$— $28.7 $44.1 $— 
Chinese yuan201.2 — 206.8 — 
Total$201.2 $28.7 $250.9 $— 
Schedule of Effect of Derivatives on the Statement of Earnings
The effect of cash flow hedges on the condensed consolidated statement of earnings:
Three Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of (loss) gain recognized in other
comprehensive
loss on derivatives		Location of (loss) gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$(1.3)$0.4 Cost of products sold$0.8 $2.3 
Six Months Ended June 30 (dollars in millions):
Derivatives in ASC 815 cash flow hedging relationshipsAmount of gain  recognized in other
comprehensive
loss on derivatives		Location of gain
reclassified from
accumulated other
comprehensive loss
into earnings		Amount of gain 
reclassified from
accumulated other
comprehensive
loss into earnings
2024202320242023
Foreign currency contracts$0.5 $2.1 Cost of products sold$1.4 $4.2 
The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.
Three Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$1.7 $0.1 
Six Months Ended June 30 (dollars in millions):
Derivatives not designated as hedging instruments:
Location of expense within the consolidated statements of earnings
20242023
Foreign exchange contractsOther income - net$5.7 $— 
v3.24.2
Changes in Accumulated Other Comprehensive Loss by Component (Tables)
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Schedule of Changes to Accumulated Other Comprehensive Loss by Component
Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Three Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(85.1)$(81.6)
Other comprehensive loss before reclassifications(2.4)(1.0)
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period1.7 4.8 
Other comprehensive (loss) gain before reclassifications(1.0)0.3 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.2 and $0.5 in 2024 and 2023, respectively)
(0.7)(1.8)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.5)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
— 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$— $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.1 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$— $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.
Changes to accumulated other comprehensive loss by component are as follows:
(dollars in millions)Six Months Ended
June 30,
20242023
Cumulative foreign currency translation
Balance at beginning of period$(80.3)$(84.1)
Other comprehensive (loss) gain before reclassifications(7.2)1.5 
Balance at end of period(87.5)(82.6)
Unrealized net gain on cash flow derivatives
Balance at beginning of period0.7 4.9 
Other comprehensive gain before reclassifications0.4 1.6 
Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.3 and $1.0 in 2024 and 2023, respectively)
(1.1)(3.2)
Balance at end of period— 3.3 
Pension liability
Balance at beginning of period(4.6)(3.2)
Amounts reclassified from accumulated other comprehensive loss:(1)
0.1 0.1 
Balance at end of period(4.5)(3.1)
Accumulated other comprehensive loss, end of period$(92.0)$(82.4)
(1) Amortization of pension items:
Actuarial losses$0.1 $0.1 
(2)
Prior year service cost0.1 0.1 
(2)
0.2 0.2 
Income tax benefit(0.1)(0.1)
Reclassification net of income tax benefit$0.1 $0.1 
(2)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 9 - Pensions for additional details.
v3.24.2
Revenue Recognition - Narrative (Details)
$ in Millions
 6 Months Ended
Jun. 30, 2024
USD ($)
segment
distributor
Dec. 31, 2023
USD ($)
Disaggregation of Revenue [Line Items]    
Customer deposits liability $ 47.6 $ 59.7
Allowance for credit losses $ 12.9 $ 10.1
Number of reporting segments | segment 2  
Water Heaters | North America    
Disaggregation of Revenue [Line Items]    
Number of wholesale distributors (more than) | distributor 900  
Minimum    
Disaggregation of Revenue [Line Items]    
Payment terms 30 days  
Maximum    
Disaggregation of Revenue [Line Items]    
Payment terms 90 days  
v3.24.2
Revenue Recognition - Segment Sales Disaggregated by Major Product Line (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Disaggregation of Revenue [Line Items]        
Net sales $ 1,024.3 $ 960.8 $ 2,003.1 $ 1,927.2
Operating Segments | North America        
Disaggregation of Revenue [Line Items]        
Net sales 790.7 722.3 1,557.0 1,475.0
Operating Segments | Rest of World        
Disaggregation of Revenue [Line Items]        
Net sales 244.8 244.2 471.7 463.3
Operating Segments | Rest of World | China        
Disaggregation of Revenue [Line Items]        
Net sales 218.2 217.7 418.8 407.9
Operating Segments | Rest of World | All other Rest of World        
Disaggregation of Revenue [Line Items]        
Net sales 26.6 26.5 52.9 55.4
Operating Segments | Water heaters and related parts | North America        
Disaggregation of Revenue [Line Items]        
Net sales 660.2 602.6 1,308.5 1,239.9
Operating Segments | Boilers and related parts | North America        
Disaggregation of Revenue [Line Items]        
Net sales 67.4 61.3 126.1 119.7
Operating Segments | Water treatment products and related parts | North America        
Disaggregation of Revenue [Line Items]        
Net sales 63.1 58.4 122.4 115.4
Inter-segment earnings elimination        
Disaggregation of Revenue [Line Items]        
Net sales $ (11.2) $ (5.7) $ (25.6) $ (11.1)
v3.24.2
Acquisition and Dispositions (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Impaired Long-Lived Assets Held and Used [Line Items]            
Aggregate cash purchase price, net of cash acquired         $ 21.3 $ 0.0
Impairment expense $ 0.0   $ 0.0   0.0 15.6
Privately-Held Water Treatment Company            
Impaired Long-Lived Assets Held and Used [Line Items]            
Aggregate cash purchase price, net of cash acquired   $ 21.3        
Contingent payment term   3 years        
Disposal Group, Held-for-sale, Not Discontinued Operations            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense       $ 15.6    
Impairment Recorded as Net Reduction to Assets and Liabilities | Disposal Group, Held-for-sale, Not Discontinued Operations            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense       4.5    
Impairment Recorded for Anticipated Liquidation of Cumulative Foreign Currency Translation Adjustment Recorded in Accrued Liabilities | Disposal Group, Held-for-sale, Not Discontinued Operations            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense       11.1    
Corporate expenses            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense 0.0   0.0   0.0 3.1
Corporate expenses | Disposal Group, Held-for-sale, Not Discontinued Operations            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense       3.1    
Rest of World | Operating Segments            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense $ 0.0   $ 0.0   $ 0.0 $ 12.5
Rest of World | Operating Segments | Disposal Group, Held-for-sale, Not Discontinued Operations            
Impaired Long-Lived Assets Held and Used [Line Items]            
Impairment expense       $ 12.5    
v3.24.2
Inventories (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Inventory Disclosure [Abstract]    
Finished products $ 215.1 $ 177.7
Work in process 48.4 44.2
Raw materials 329.1 322.6
Inventories, at FIFO cost 592.6 544.5
LIFO reserve (47.9) (47.1)
Inventories, at LIFO cost $ 544.7 $ 497.4
v3.24.2
Product Warranties (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward]        
Balance at beginning of year $ 185.0 $ 181.2 $ 188.1 $ 182.5
Expense 22.8 18.3 42.5 36.7
Claims settled (20.2) (18.8) (43.0) (38.5)
Balance at end of year $ 187.6 $ 180.7 $ 187.6 $ 180.7
v3.24.2
Debt (Details)
$ in Millions
Dec. 31, 2021
USD ($)
covenant
Debt Disclosure [Abstract]  
Multi-currency revolving credit agreement, maximum borrowing capacity $ 500
Accordion feature, higher borrowing capacity option $ 850
Number of required financial covenants | covenant 2
v3.24.2
Earnings per Share of Common Stock (Details) - shares
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Earnings Per Share [Abstract]        
Denominator for basic earnings per share - weighted average shares (in shares) 146,465,276 150,475,003 146,822,116 150,684,986
Effect of dilutive stock options and share units (in shares) 1,134,309 1,066,097 1,126,443 1,034,859
Denominator for diluted earnings per share (in shares) 147,599,585 151,541,100 147,948,559 151,719,845
v3.24.2
Stock Based Compensation - Narrative (Details)
$ in Millions
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2024
USD ($)
shares
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
shares
Jun. 30, 2023
USD ($)
shares
Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Stock based compensation expense $ 2.1 $ 1.6 $ 10.4 $ 8.6  
Employee Stock Option          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Stock based compensation expense 0.1 0.3 $ 0.3 $ 0.6  
Award vesting period         3 years
Award expiration period         10 years
Share Units          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Award vesting period     3 years    
Number of units granted (in shares) | shares     194,668 168,044  
Value of units share units granted     $ 16.0 $ 11.3  
Share based compensation expense attributable to share units 1.4 1.0 9.2 7.6  
Performance Shares          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Stock based compensation expense $ 0.6 $ 0.2 $ 0.9 $ 0.3  
Award vesting period     3 years    
Number of units granted (in shares) | shares     29,475 24,580  
Value of units share units granted     $ 2.4 $ 1.7  
Performance Shares | Minimum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Potential payouts range 0   0    
Performance Shares | Maximum          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Potential payouts range 1.50   1.50    
A.O. Smith Combined Compensation Plan          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of shares available for granting of options or share units (in shares) | shares 2,288,859   2,288,859    
v3.24.2
Stock Based Compensation - Changes in Options (Details)
$ / shares in Units, $ in Millions
 6 Months Ended
Jun. 30, 2024
USD ($)
$ / shares
shares
Weighted- Avg. Per Share Exercise Price  
Beginning balance (in USD per share) | $ / shares $ 52.93
Exercised (in USD per share) | $ / shares 45.63
Forfeited (in USD per share) | $ / shares 74.27
Ending balance (in USD per share) | $ / shares $ 54.10
Number of Options  
Beginning balance (in shares) | shares 1,872,553
Exercised (in shares) | shares (267,441)
Forfeited (in shares) | shares (3,875)
Ending balance (in shares) | shares 1,601,237
Stock option activity, additional disclosures  
Outstanding, Average Remaining Contractual Life 6 years
Outstanding, Aggregate Intrinsic Value | $ $ 44.3
Exercisable, Weighted-Avg. Per Share Exercise Price (in USD per share) | $ / shares $ 52.76
Exercisable, Number of Options (in shares) | shares 1,501,072
Exercisable, Average Remaining Contractual Life 6 years
Exercisable, Aggregate Intrinsic Value | $ $ 43.6
v3.24.2
Stock Based Compensation - Summary of Share Unit Activity Under Plan (Details) - Share Units - $ / shares
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Number of Units    
Beginning balance (in shares) 381,189  
Granted (in shares) 194,668 168,044
Vested (in shares) (92,882)  
Forfeited (in shares) (9,266)  
Ending balance (in shares) 473,709  
Weighted-Average Grant Date Value    
Beginning balance (in USD per share) $ 63.33  
Granted (in USD per share) 82.32  
Vested (in USD per share) 60.80  
Forfeited (in USD per share) 72.17  
Ending balance (in USD per share) $ 71.30  
v3.24.2
Stock Based Compensation - Schedule of Performance Stock Unit Activity (Details) - Performance Shares - $ / shares
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Number of Units    
Beginning balance (in shares) 34,758  
Granted (in shares) 29,475 24,580
Forfeited (in shares) (3,426)  
Performance adjustments (in shares) 16,289  
Ending balance (in shares) 77,096  
Weighted-Average Grant Date Value    
Beginning balance (in USD per share) $ 67.14  
Granted (in USD per share) 82.19  
Forfeited (in USD per share) 75.33  
Performance adjustments (in USD per share) 80.76  
Ending balance (in USD per share) $ 75.41  
v3.24.2
Pensions - Components of Net Pension Income (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Retirement Benefits [Abstract]        
Service cost $ 0.2 $ 0.2 $ 0.5 $ 0.5
Interest cost 0.4 0.3 0.7 0.6
Expected return on plan assets (0.3) (0.3) (0.6) (0.6)
Amortization of unrecognized loss 0.0 0.1 0.1 0.1
Amortization of prior service cost 0.1 0.1 0.1 0.1
Defined benefit plan expense before settlement income 0.4 0.4 0.8 0.7
Settlement income 0.0 (6.0) 0.0 (6.0)
Total pension expense (income) $ 0.4 $ (5.6) $ 0.8 $ (5.3)
v3.24.2
Pensions - Narrative (Details) - USD ($)
 12 Months Ended
Dec. 31, 2023
Jun. 30, 2024
Retirement Benefits [Abstract]    
Employer contributions $ 0  
Expected current year employer contributions   $ 0
v3.24.2
Segment Results (Details)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
segment
Jun. 30, 2023
USD ($)
Segment Reporting [Abstract]        
Number of reporting segments | segment     2  
Segment Reporting Information [Line Items]        
Net sales $ 1,024.3 $ 960.8 $ 2,003.1 $ 1,927.2
Segment earnings 224.2 227.4 439.8 421.3
Corporate expense 0.9 9.0 2.1 13.0
Interest expense (1.8) (4.5) (2.8) (8.5)
Earnings before income taxes 206.6 208.9 399.3 380.2
Provision for income taxes 50.4 51.9 95.5 96.3
Net Earnings 156.2 157.0 303.8 283.9
Pension settlement income 0.0 (6.0) 0.0 (6.0)
Impairment expense 0.0 0.0 0.0 15.6
Inter-segment earnings elimination        
Segment Reporting Information [Line Items]        
Net sales (11.2) (5.7) (25.6) (11.1)
Segment earnings (0.1) 0.0 (0.4) 0.0
Corporate expenses        
Segment Reporting Information [Line Items]        
Corporate expense (15.8) (14.0) (37.7) (32.6)
Impairment expense 0.0 0.0 0.0 3.1
Corporate expenses | Pension Plan        
Segment Reporting Information [Line Items]        
Pension settlement income 0.0 (1.0) 0.0 (1.0)
North America | Operating Segments        
Segment Reporting Information [Line Items]        
Net sales 790.7 722.3 1,557.0 1,475.0
Segment earnings 198.4 199.1 397.1 387.7
North America | Operating Segments | Pension Plan        
Segment Reporting Information [Line Items]        
Pension settlement income 0.0 (5.0) 0.0 (5.0)
Rest of World | Operating Segments        
Segment Reporting Information [Line Items]        
Net sales 244.8 244.2 471.7 463.3
Segment earnings 25.9 28.3 43.1 33.6
Impairment expense $ 0.0 $ 0.0 $ 0.0 $ 12.5
v3.24.2
Fair Value Measurements (Details) - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Quoted prices in active markets for identical assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assets (liabilities) measured at fair value $ 17.2 $ 23.5
Significant other observable inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assets (liabilities) measured at fair value $ 3.2 $ (4.1)
v3.24.2
Derivative Instruments - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Trading Activity, Gains and Losses, Net [Line Items]          
After-tax gains (losses) associated with currency translation adjustment in other comprehensive income $ (2.4) $ (1.0) $ (7.2) $ 1.5  
Commodity Futures Contracts          
Trading Activity, Gains and Losses, Net [Line Items]          
Reclassification period for effective portion of contract, in years     1 year    
Designated as Hedging Instrument | Foreign currency contracts          
Trading Activity, Gains and Losses, Net [Line Items]          
Fair value of derivative instruments, assets 0.1   $ 0.1   $ 0.9
Not Designated as Hedging Instrument | Foreign currency contracts          
Trading Activity, Gains and Losses, Net [Line Items]          
Fair value of derivative instruments, liability         0.8
Fair value of derivative instruments, assets 0.2   0.2    
Net Investment Hedges | Designated as Hedging Instrument | Foreign currency forward contracts          
Trading Activity, Gains and Losses, Net [Line Items]          
Fair value of derivative instruments, liability         $ 4.2
Fair value of derivative instruments, assets 2.9   2.9    
Net Investment Hedges | Non-U.S. | Designated as Hedging Instrument | Foreign currency forward contracts          
Trading Activity, Gains and Losses, Net [Line Items]          
After-tax gains (losses) associated with currency translation adjustment in other comprehensive income 1.4 $ 0.8 5.4 $ (1.3)  
Total $ 204.0   $ 204.0    
v3.24.2
Derivative Instruments - Schedule of Summary by Currency of Foreign Currency Forward Contracts (Details) - Foreign currency forward contracts - Designated as Hedging Instrument - Cash flow hedging - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Buy    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total $ 52.7 $ 38.3
Buy | Canadian dollar    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 0.0 0.0
Buy | Euro    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 26.1 24.1
Buy | Mexican peso    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 26.6 14.2
Sell    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 40.1 80.5
Sell | Canadian dollar    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 40.1 80.5
Sell | Euro    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 0.0 0.0
Sell | Mexican peso    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total $ 0.0 $ 0.0
v3.24.2
Derivative Instruments - Schedule of Effect of Cash Flow Hedges on Consolidated Statement of Earnings (Details) - Foreign currency contracts - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Derivative [Line Items]        
Amount of (loss) gain recognized in other comprehensive loss on derivatives $ (1.3) $ 0.4 $ 0.5 $ 2.1
Cost of products sold        
Derivative [Line Items]        
Amount of gain reclassified from accumulated other comprehensive loss into earnings $ 0.8 $ 2.3 $ 1.4 $ 4.2
v3.24.2
Derivative Instruments - Summary of Contractual Amounts for Balance Sheet Hedges (Details) - Foreign currency contracts - Fair Value Hedging - Designated as Hedging Instrument - USD ($)
$ in Millions
Jun. 30, 2024
Dec. 31, 2023
Buy    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total $ 201.2 $ 250.9
Sell    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 28.7 0.0
Canadian dollar | Buy    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 0.0 44.1
Canadian dollar | Sell    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 28.7 0.0
Chinese yuan | Buy    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total 201.2 206.8
Chinese yuan | Sell    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total $ 0.0 $ 0.0
v3.24.2
Derivative Instruments - Effect of Foreign Exchange Contracts on the Statement of Earnings (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Foreign currency contracts | Other income - net        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative expense $ 1.7 $ 0.1 $ 5.7 $ 0.0
v3.24.2
Income Taxes (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2024
Income Tax Contingency [Line Items]          
Effective tax rate 24.40% 24.80% 23.90% 25.30%  
Unrecognized tax benefits $ 17.2   $ 17.2    
Unrecognized tax benefits that would affect the effective tax rate, if recognized $ 3.5   $ 3.5    
Disposal Group, Held-for-sale, Not Discontinued Operations          
Income Tax Contingency [Line Items]          
Impairment expense       $ 15.6  
Forecast          
Income Tax Contingency [Line Items]          
Effective tax rate         24.00%
v3.24.2
Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Balance at the beginning of period     $ 1,844.4  
Balance at end of period $ 1,911.6 $ 1,888.4 1,911.6 $ 1,888.4
Accumulated Other Comprehensive Loss        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Balance at end of period (92.0) (82.4) (92.0) (82.4)
Cumulative foreign currency translation        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Balance at the beginning of period (85.1) (81.6) (80.3) (84.1)
Other comprehensive (loss) gain before reclassifications (2.4) (1.0) (7.2) 1.5
Balance at end of period (87.5) (82.6) (87.5) (82.6)
Unrealized net gain on cash flow derivatives        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Balance at the beginning of period 1.7 4.8 0.7 4.9
Other comprehensive (loss) gain before reclassifications (1.0) 0.3 0.4 1.6
Reclassifications, net of tax (0.7) (1.8) (1.1) (3.2)
Balance at end of period 0.0 3.3 0.0 3.3
Income tax benefit 0.2 0.5 0.3 1.0
Pension liability        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Balance at the beginning of period (4.5) (3.2) (4.6) (3.2)
Reclassifications, net of tax 0.0 0.1 0.1 0.1
Balance at end of period (4.5) (3.1) (4.5) (3.1)
Actuarial losses 0.1 0.2 0.2 0.2
Income tax benefit (0.1) (0.1) (0.1) (0.1)
Actuarial losses        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Actuarial losses 0.0 0.1 0.1 0.1
Prior year service cost        
AOCI Attributable to Parent, Net of Tax [Roll Forward]        
Actuarial losses $ 0.1 $ 0.1 $ 0.1 $ 0.1
v3.24.2
Changes in Accumulated Other Comprehensive Loss by Component - Parenthetical (Details) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Unrealized net gain on cash flow derivatives        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Income tax provision $ 0.2 $ 0.5 $ 0.3 $ 1.0
v3.24.2
Subsequent Event (Details)
$ in Millions
Jul. 15, 2024
USD ($)
Subsequent Event | Pureit  
Subsequent Event [Line Items]  
Price of acquisition $ 120
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