Q4 2024 A. O. Smith Corp Earnings Call

January 30, 2025

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Good day and thank you for standing by welcome to the H D. Smith Corporation fourth quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

After the Speakers' presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again, please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Helen Gerhold. Please go ahead.

Adjusted earnings adjusted earnings per share adjusted segment earnings and adjusted corporate expenses exclude the impact of restructuring and impairment expenses and pension settlement income and expense.

Helen Gerhold: Good morning, and welcome to the a O Smith full year and fourth quarter Conference call.

Speaker Change: I'm, Helen Gurgle, Vice President Investor Relations and financial planning and analysis.

Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website.

Speaker Change: Joining me today are Kevin Wheeler, Chairman and Chief Executive Officer, Steve Schaffer, President and Chief operating Officer, and Chuck Lauber, Chief Financial Officer.

A friendly reminder, that some of our comments and answers. During this conference call will be forward looking statements that are subject to risks that could cause actual results to be materially different.

Speaker Change: In order to provide improved transparency into the operating results of our business. We provided non-GAAP measures free cash flow is defined as cash from operations less capital expenditures.

Those risks include that.

Matters that we described in this morning's press release amongst others.

Also as a courtesy to others in the question queue. Please limit yourself to one question and one follow up per churn. If you have multiple questions. Please rejoin the queue.

Speaker Change: <unk> net earnings adjusted earnings per share adjusted segment earnings and adjusted corporate expenses exclude the impact of restructuring and impairment expenses and pension settlement income and expense.

We will be using slides as we move through today's call you can access them on our website at Investor <unk> Dot com.

Speaker Change: Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website.

Kevin: I will now turn the call over to Kevin to begin our prepared remarks. Please.

Speaker Change: A friendly reminder, that some of our comments and answers during this conference call will be forward looking statements.

Please turn to the next slide.

Kevin: Thank you Helen and good morning.

Speaker Change: Are subject to risks that could cause actual results to be materially different those.

Speaker Change: First I'd like to start off by saying that I'm pleased to have Steve Schaffer, joining us on the call today.

Those risks include that.

Kevin: Steve joined a O Smith in March of last year.

Speaker Change: Matters that we described in this morning's press release amongst others.

The last 10 months getting to know our business people customers and operations.

Speaker Change: Also as a courtesy to others in the question queue. Please limit yourself to one question and one follow up per turn if you have multiple questions. Please rejoin the queue.

Kevin: This global leadership experience and strategic acumen have brought a valuable perspective to our business as we continue to create value for our key stakeholders.

Speaker Change: We will be using slides as we move through today's call you can access them on our website at Investor <unk> Dot com.

Kevin: Pleased to have Steve as a member of our leadership team.

Kevin: Turning to slide four and our financial performance.

Kevin Wheeler: I will now turn the call over to Kevin to begin our prepared remarks. Please.

Kevin: After a record 2023, our sales and earnings decrease in 2024 and.

Speaker Change: Please turn to the next slide.

Speaker Change: Thank you Helen and good morning.

Speaker Change: First I would like to start off by saying that I'm pleased to have Steve Shea for joining us on the call today.

Kevin: North America sales increased slightly as higher boiler and water treatment sales as well as water heater pricing benefits were offset by lower <unk>.

Speaker Change: Steve joined a O Smith's in March of last year.

Speaker Change: The last 10 months getting to know our business people customers and operations.

Kevin: To your volumes.

Kevin: We experienced lower sales in China.

Speaker Change: His global leadership experience and strategic acumen have brought a valuable perspective to our business as we continue to create value for our key stakeholders.

Kevin: As a weak economy continued to negatively impact consumer demand.

Kevin: Led to a 4% price decrease in our rest of World segment local currency third party sales.

Speaker Change: I'm pleased to have Steve as a member of our leadership team.

Kevin: Our legacy India business sales grew 13% in local currency in 2024, which is approximately two times the market.

Speaker Change: Turning to slide four and our financial performance.

Speaker Change: After a record 2023, our sales and earnings decrease in 2024 and.

Kevin: We closed the period acquisition in the fourth quarter, which had a minimal impact on sales and earnings.

Speaker Change: North America sales increased slightly as higher boiler and water treatment sales as well as water heater pricing benefits were offset by lower.

Kevin: With the strong business climate and the addition of period.

Speaker Change: Funeral volumes.

Kevin: We continue to be excited about the long term prospects of our India business.

Speaker Change: We experienced lower sales in China.

Speaker Change: As a weak economy continued to negatively impact consumer demand.

Kevin: We returned $496 million of capital to shareholders with our dividend and share repurchases.

Speaker Change: Which led to a 4% price decrease in our rest of World segment local currency third party sales.

Kevin: And also in the fourth quarter, we completed construction of our tankers manufacturing facility.

Speaker Change: Our legacy India business sales grew 13% in local currency in 2024, which is approximately two times the market.

Kevin: We've put into action a strategy to improve margins the margin profile of our North America water treatment business we.

Speaker Change: We closed the <unk> acquisition in the fourth quarter, which had a minimal impact on sales and earnings.

Kevin: We began the process of reorganizing our China business to reduce cost and position us for profitable growth as the economy returns.

Speaker Change: With the strong business climate and the addition of period, we continue to be excited about the long term prospects of our India business.

Kevin: And we announced our new sustainability goals of our reduction in water usage of 40 million gallons of water by 23.

Speaker Change: We returned $496 million of capital to shareholders with our dividend and share repurchases.

This scorecard was our previously announced and already achieved 10% greenhouse gas emission reduction goals.

Speaker Change: And also in the fourth quarter, we completed construction of our tankers manufacturing facility.

Kevin: Please turn to slide five.

Kevin: North America water heater sales decreased 1% in 2024.

Speaker Change: Put into action a strategy to improve margins the margin profile of our North America water treatment business.

Kevin: Pricing benefits were more than offset by lower volumes.

Speaker Change: We began the process of reorganizing our China business to reduce cost and position us for profitable growth as the economy returns.

Kevin: Saw strong shipments in the first half of the year, which would then balanced out by lower second half as volumes were below our expectations.

Speaker Change: And we announced our new sustainability goals of our reduction in water usage of 40 million gallons of water by 23.

Kevin: We project full year residential industry unit volumes were roughly flat to 2023.

Kevin: We are confident in our stable retail and wholesale customer base.

Speaker Change: This scorecard was our previously announced and already achieved 10% greenhouse gas emission reduction goals.

Kevin: Partnerships and competitive products.

Kevin: Based on customer conversations and certain stocking programs that we track we believe our customers enter 2025 with water heater inventories and a normal to lead position.

Speaker Change: Please turn to slide five.

Speaker Change: North America water heater sales decreased 1% in 2024.

Speaker Change: Pricing benefits were more than offset by lower volumes.

Kevin: During 2024 residential new construction and replacement demand will be still compared to 2023.

Speaker Change: Saw strong shipments in the first half of the year, which was then balanced out by lower second half as volumes were below our expectations.

Kevin: We believe commercial industry unit shipments increased marginally year over year, driven by growth in commercial electric water heaters.

Speaker Change: We project full year residential industry unit volumes were roughly flat to 2023.

Speaker Change: We are confident in our stable retail and wholesale customer base.

Kevin: 55 gallons.

Kevin: We project industry commercial gas units were down 3% to 4% in 2024.

Speaker Change: Partnerships and competitive products.

Speaker Change: Based on customer conversations and certain stocking programs that we track we believe our customers entered 2025 with water heater inventories and a normal to being positioned.

Kevin: As a reminder, commercial gas has an average selling price of approximately three three times that of commercial electric units and therefore impacting our results more meaningful.

Kevin: Then the commercial electric growth.

Speaker Change: During 2024 residential new construction and replacement demand will resilient compared to 2023.

Kevin: Our North America boiler business performed as expected and sales increased 8% compared to 2023 led by our crest commercial boiler with <unk> technology as well as our night <unk> one of our commercial boilers that was impacted by the 2023 channel inventory Destocking.

Speaker Change: We believe commercial industry unit shipments increased marginally year over year, driven by growth in commercial electric water heaters greater than 55 gallons.

Speaker Change: We project industry commercial gas units were down 3% to 4% in 2024.

Kevin: <unk>.

Kevin: We are pleased with our 2024 boiler performance and with our market share growth in that category.

Speaker Change: As a reminder, commercial gas has an average selling price of approximately three three times that of commercial electric units and therefore impacting our results more meaningful.

Kevin: North America water treatment sales grew 10% in 2024, largely driven by acquisition related geographic expansion.

Speaker Change: Then the commercial electric growth.

Speaker Change: Our North America boiler business performed as expected and sales increased 8% compared to 2023 led by our crest commercial boiler with <unk> technology as well as our night SD XL one of our commercial boilers that was impacted by the 2023 channel inventory Destocking.

Kevin: We saw growth in our dealer.

Kevin: Direct to consumer and E Commerce channel.

Kevin: That were partially offset by lower sales in the retail channel.

Kevin: We have taken action to rebalance our product portfolio and improved profitability.

Kevin: In the fourth quarter, we took a restructuring and impairment charge of $6 million to allow us to focus on the more competitive and financially attractive channels of the business.

Speaker Change: <unk>.

Speaker Change: We are pleased with our 2024 boiler performance and with our market share growth in that category.

Kevin: And China full year third party sales decreased 6% in local currency as a result of a weaker economy and soft consumer demand, particularly in the second half of the year.

Speaker Change: North America water treatment sales grew 10% in 2024, largely driven by acquisition related geographic expansion.

We saw growth in our dealer.

Speaker Change: Direct to consumer and E Commerce channel.

Kevin: Higher sales of kitchen products were more than offset by lower volumes of our core water heater and water treatment products.

Speaker Change: That were partially offset by lower sales in the retail channel.

Speaker Change: We have taken action to rebalance our product portfolio and improved profitability.

Kevin: In the fourth quarter, we took a restructuring charge of $11 million.

Speaker Change: In the fourth quarter, we took a restructuring and impairment charge of $6 million to allow us to focus on the more competitive and financially attractive channels of the business.

Kevin: The actions taken will reduce costs by optimizing our business structure to better position us for profitable growth.

Kevin: The economy improves.

Kevin: In the fourth quarter, we have clients trade stimulus program generate generated increased demand for our products relative to the third quarter.

Speaker Change: And China full year third party sales decreased 6% in local currency as a result of the weaker economy and soft consumer demand, particularly in the second half of the year.

Kevin: This increased salt demand helped our customers reduce their inventory levels and improve working capital.

Speaker Change: Higher sales of kitchen products were more than offset by lower volumes of our core water heater and water treatment products.

Kevin: I'll now turn the call over to Chuck who will provide more details on our full year and fourth quarter performance.

Speaker Change: In the fourth quarter, we took a restructuring charge of $11 million.

Chuck: Thank you, Kevin and good morning, everyone.

Speaker Change: The actions taken will reduce costs by optimizing our business structure to better position us for profitable growth.

Chuck: We delivered sales of $3 8 billion in 2024, a decrease of 1% year over year higher boiler and water treatment sales and the benefits of pricing actions were more than offset by lower water heater volumes in North America, as well as lower sales in China.

Speaker Change: The economy improves.

Speaker Change: In the fourth quarter, we have clients treated stimulus program generate generated increased demand for our products relative to the third quarter.

Speaker Change: This increased solid demand helped our customers reduce their inventory levels and improve working capital.

Chuck: 2024, and adjusted earnings were $3 73 per share compared with adjusted earnings of $3 81 per share in 2023.

Speaker Change: I'll now turn the call over to Chuck who will provide more details on our full year and fourth quarter performance.

Chuck: Turning to slide six.

Chuck Lauber: Thank you, Kevin and good morning, everyone.

Chuck: Full year sales in the North America segment of $3 billion increased slightly compared to 2023 <unk>.

Chuck Lauber: We delivered sales of $3 8 billion in 2024, a decrease of 1% year over year higher boiler and water treatment sales and the benefits of pricing actions were more than offset by lower water heater volumes in North America, as well as lower sales in China.

Chuck: Pricing actions and higher boiler and water treatment sales were offset by lower volumes of water heaters.

Chuck: North America adjusted segment earnings of $714 million decreased 2% compared with 2023.

Chuck Lauber: 2024, and adjusted earnings were $3 73 per share compared with adjusted earnings of $3 81 per share in 2023.

Chuck: Adjusted segment margin was 24, 2% a decrease of 60 basis points year over year.

Chuck: The lower adjusted segment earnings and adjusted segment margin for primarily driven by pricing benefits and higher boiler and water treatment sales that were more than offset by lower water heater volumes and continued strategic investments.

Chuck Lauber: Turning to slide six.

Chuck Lauber: Full year sales in the North America segment of $3 billion increased slightly compared to 2023.

Chuck Lauber: Pricing actions and higher boiler and water treatment sales were offset by lower volumes of water heaters.

Chuck: Moving to slide seven.

Chuck Lauber: North America adjusted segment earnings of $714 million decreased 2% compared with 2023.

Chuck: Rest of the World segment sales of $919 million.

Chuck: Decreased 4% year over year, including unfavorable currency translation of $13 million primarily related to China.

Chuck Lauber: Adjusted segment margin was 24, 2% a decrease of 60 basis points year over year.

Chuck: Segment third party sales decreased 4% on a constant currency basis.

Chuck Lauber: The lower adjusted segment earnings and adjusted segment margin were primarily driven by pricing benefits and higher boiler and water treatment sales that were more than offset by lower water heater volumes and continued strategic investments.

Chuck: Our sales decrease was primarily driven by higher sales of kitchen products that were more than offset by lower sales of water heater and water treatment products in China.

Chuck: India sales grew 13% in local currency in 2024 due to strong market demand for our premium products.

Chuck Lauber: Moving to slide seven.

Chuck Lauber: Rest of the World segment sales of $919 million.

Chuck: Rest of the World adjusted segment earnings of $76 million decreased 24% compared to segment earnings in 2023, primarily due to lower sales in China adjust.

Chuck Lauber: Decreased 4% year over year, including unfavorable currency translation of $13 million, primarily related to China segment third party sales decreased 4% on a constant currency basis.

Chuck: Adjusted segment margin was eight 3% a decrease of 210 basis points compared to 2023.

Chuck Lauber: Our sales decrease was primarily driven by higher sales of kitchen products that were more than offset by lower sales of water heater and water treatment products in China.

Chuck: Please turn to slide eight.

Chuck: Turning to fourth quarter performance, we delivered sales of $912 million in the fourth quarter of 2024, a decrease of 8% year over year, primarily due to higher boiler and water treatment sales and the benefits of pricing actions that were more than offset by lower water heater volumes in North America and lower sales in China.

Chuck Lauber: India sales grew 13% in local currency in 2024 due to strong market demand for our premium products.

Chuck Lauber: Rest of the World adjusted segment earnings of $76 million decreased 24% compared to segment earnings in 2023, primarily due to lower sales in China adjust.

Chuck: Adjusted earnings in the fourth quarter.

Chuck: <unk> 85 per share.

Chuck Lauber: Adjusted segment margin was eight 3% a decrease of 210 basis points compared to 2023.

Chuck: Compared with adjusted earnings of <unk> 97 per share in the fourth quarter of 2023.

Chuck: Please turn to slide nine.

Chuck Lauber: Please turn to slide eight.

Chuck: Fourth quarter sales in the North America segment were $690 million, a 7% decrease compared to sales in the fourth quarter of 2023, as a result of higher boiler and water treatment sales as well as benefits of pricing actions that were more than offset by lower water heating gone.

Chuck Lauber: Turning to fourth quarter performance, we delivered sales of $912 million in the fourth quarter of 2024, a decrease of 8% year over year, primarily due to higher boiler and water treatment sales and the benefits of pricing actions that were more than offset by lower water heater volumes in North America and lower sales in China.

Chuck: North America adjusted segment earnings of $154 million decreased 11% compared to 2023.

Chuck Lauber: Adjusted earnings in the fourth quarter.

Chuck Lauber: Were <unk> 85 per share.

Chuck Lauber: Compared with adjusted earnings of <unk> 97 per share in the fourth quarter of 2023.

Chuck: Adjusted operating margin of 22, 4% decreased 110 basis points compared to last year.

Chuck Lauber: Please turn to slide nine.

Chuck: Lower adjusted segment earnings and adjusted segment margin were primarily due to lower water heater volumes that were partially offset by pricing benefits and lower material costs.

Chuck Lauber: Fourth quarter sales in the North America segment were $690 million, a 7% decrease compared to sales in the fourth quarter of 2023, as a result of higher boiler and water treatment sales as well as benefits of pricing actions that were more than offset by lower water heating costs.

Moving to slide 10.

Chuck: Fourth quarter rest of the World segment sales of $237 million decreased 9% year over year, primarily driven by lower sales in China.

Chuck Lauber: North America adjusted segment earnings of $154 million decreased 11% compared to 2023.

Chuck: <unk> sales grew 11% in local currency in 2024 compared to 2023.

Chuck Lauber: Adjusted operating margin of 22, 4% decreased 110 basis points compared to last year. The lower adjusted segment earnings and adjusted segment margin were primarily due to lower water heater volumes that were partially offset by pricing benefits and lower material costs.

Chuck: Rest of the World adjusted segment earnings of $19 million and our adjusted segment margin of eight 1% were lower than 2023 adjusted segment earnings and adjusted segment margin of $30 million and 11, 5% respectively.

Chuck Lauber: Moving to slide 10.

Chuck: The decreases were primarily due to lower sales in China.

Chuck Lauber: Fourth quarter rest of the World segment sales of $237 million decreased 9% year over year, primarily driven by lower sales in China.

Please turn to slide 11.

Chuck: We generated free cash flow of $474 million during 2024 lower than 2023, primarily driven by lower earnings and higher inventory balances that were partially offset by lower accounts receivable balances.

Chuck Lauber: India sales grew 11% in local currency in 2024 compared to 2023.

Chuck Lauber: Rest of the World adjusted segment earnings of $19 million and our adjusted segment margin of eight 1% lower than 2023 adjusted segment earnings and adjusted segment margin of $30 million and 11, 5% respectively.

Chuck: 2020 for free cash flow conversion was 89%.

Chuck: Excluding the impact of the higher capital spending for the investments we are making in 2024, our free cash flow conversion was 95%.

Chuck Lauber: The decreases were primarily due to lower sales in China.

Chuck: Our cash balance totaled $276 million at the end of December and our net cash position was $83 million.

Chuck Lauber: Please turn to slide 11.

Chuck Lauber: We generated free cash flow of $474 million during 2024 lower than 2023, primarily driven by lower earnings and higher inventory balances that were partially offset by lower accounts receivable balances too.

Chuck: Our leverage ratio was nine 3% as measured by total debt to total capital.

Chuck: Let's now turn to slide 12.

Chuck: In addition to returning capital to shareholders, we see opportunities for organic growth innovation, and new product development across all of our product lines and geographies and.

Chuck Lauber: <unk> 2020 for free cash flow conversion was 89%.

Chuck Lauber: Excluding the impact of the higher capital spending for the investments we are making in 2024, our free cash flow conversion was 95%.

Chuck: In addition to the strategic acquisitions, we made in 2020 for to grow our domestic and global water treatment footprint. We also increased investments in our business to ensure that we have the right product portfolio and capacity to continue strengthening our position as a leader across all the markets that we serve and providing them.

Chuck Lauber: Our cash balance totaled $276 million at the end of December and our net cash position was $83 million.

Chuck Lauber: Our leverage ratio was nine 3% as measured by total debt to total capital.

Chuck: Most value for our shareholders.

Chuck Lauber: Let's now turn to slide 12.

Chuck: Earlier this month, our board approved our next quarterly dividend of <unk> 34 per share.

Chuck Lauber: In addition to returning capital to shareholders, we see opportunities for organic growth innovation, and new product development across all of our product lines and geographies and.

Chuck: We have increased our dividend for over 30 consecutive years.

Chuck: We repurchased approximately three 8 million shares of common stock in 2024 for a total of $306 million.

Chuck Lauber: In addition to the strategic acquisitions, we made in 2024 to grow our domestic and global water treatment footprint. We also increased investments in our business to ensure that we have the right product portfolio and capacity to continue strengthening our position as a leader across all the markets that we serve and providing them.

Chuck: We continue our strong track record of delivering returns to shareholders over the last two years, we have returned almost $1 billion to shareholders through our dividends and share repurchases.

Chuck: Please turn to slide 13, and our 2025% earnings guidance and outlook.

Chuck Lauber: Most value for our shareholders.

Chuck Lauber: Earlier this month, our board approved our next quarterly dividend of <unk> 34 per share.

Chuck: Our 2025 outlook includes an expected EPS range of $3 60.

Chuck Lauber: We have increased our dividend for over 30 consecutive years.

Chuck Lauber: We repurchased approximately three 8 million shares of common stock in 2024 for a total of $306 million.

Chuck: To $3 90 per share the midpoint of the EPS range is slightly higher than our 2024 adjusted EPS.

Chuck Lauber: We continue our strong track record of delivering returns to shareholders over the last two years, we have returned almost $1 billion to shareholders through our dividends and share repurchases.

Chuck: Our outlook is based on a number of key assumptions, including.

Chuck: Our guidance assumes that steel prices and the full year 2025 will be similar to 2024 and that steel costs in the back half of the year will increase from where they are today.

Chuck Lauber: Please turn to slide 13, and our 2025 earnings guidance and outlook.

Chuck: We project that our 2025 non steel materials and freight costs will be roughly flat to 2024.

Chuck Lauber: Our 2025 outlook includes an expected EPS range of $3 60.

Chuck Lauber: To $3 90 per share the midpoint of the EPS range is slightly higher than our 2024 adjusted EPS.

Chuck: We project the launch of our Tankless products, including tariffs in place today and higher shipping and other costs will be a headwind of approximately 50 basis points to our North America margins.

Our outlook is based on a number of key assumptions, including.

Chuck: We estimate that 2025, capex will be between $90 million and $100 million.

Chuck Lauber: Our guidance assumes that steel prices in the full year 2025 will be similar to 2024 and that steel costs in the back half of the year will increase from where they are today.

Chuck: Decrease compared to 2024, but higher than our historical capex as we continue to invest in our engineering capabilities and prepare for upcoming regulatory changes.

Chuck Lauber: We project that our 2025 non steel materials and freight costs will be roughly flat to 2024.

Chuck: We expect to generate free cash flow of between $500 million and $550 million.

Chuck Lauber: We project the launch of our Tankless products, including tariffs in place today and higher shipping and other costs will be a headwind of approximately 50 basis points to our North America margins.

Chuck: Interest expense is projected to be between 15 and $20 million corporate and other expenses are expected to be approximately $75 million.

Chuck Lauber: We estimate that 2025, capex will be between $90 million and $100 million.

Chuck: Our effective tax rate is estimated to be between 24 to 24, 5%.

Chuck Lauber: A decrease compared to 2024, but higher than our historical capex as we continue to invest in our engineering capabilities and prepare for upcoming regulatory changes.

Chuck: Our board has approved 5 million additional shares of stock for repurchase and we expect to repurchase approximately $400 million of our shares of stock higher than previous years.

Chuck Lauber: We expect to generate free cash flow of between $500 million and $550 million.

Chuck: As we have confidence in our strong free cash flow generation and we believe our shares have been undervalued and recent months.

Chuck Lauber: Interest expense is projected to be between 15 and $20 million corporate and other expenses are expected to be approximately $75 million.

Chuck: We project our outstanding diluted shares will be $142 million at the end of 2025.

Chuck: Our outlook does not assume a change in tariffs with China, Mexico, or Canada potential increase in China tariffs will temporarily negatively impact us with regard to our gas tankless imports from our facility in Nanjing until that production is fully transitioned towards Mexico.

Chuck Lauber: Our effective tax rate is estimated to be between 24 to 24, 5%.

Chuck Lauber: Our board has approved 5 million additional shares of stock for repurchase and we expect to repurchase approximately $400 million of our shares of stock higher than previous years.

Chuck: Our north American manufacturing footprint, largely based in the U S gives us flexibility to competitively navigate potential future tariffs, which may impact trade between the U S, Mexico and Canada.

Chuck Lauber: As we have confidence in our strong free cash flow generation and we believe our shares have been undervalued and recent months.

We project our outstanding diluted shares will be $142 million at the end of 2025.

Chuck: I'll now turn the call over to Steve who will provide more color on our key markets and top line growth outlook and segment expectations for 2025, while still staying on slide 13, Steve.

Chuck Lauber: Our outlook does not assume a change in tariffs with China, Mexico, or Canada potential increase in China tariffs will temporarily negatively impact us with regard to our gas tankless imports from our facility in Nanjing until that production is fully transitioned whereas Mexico.

Steve: Thank you Chuck and good morning, everyone.

Steve: Before discussing our outlook on 2025 I wanted to start by briefly sharing some early thoughts on my first 10 months with a O Smith.

Chuck Lauber: Our north American manufacturing footprint, largely based in the U S gives us flexibility to competitively navigate potential future tariffs, which may impact trade between the U S, Mexico and Canada.

Steve: First and foremost I have been impressed with the culture of how we do things at a O Smith.

Steve: We are laser focused on doing business with lately.

Steve: Ethical way.

Steve: Midway.

Chuck Lauber: I'll now turn the call over to Steve who will provide more color on our key markets and top line growth outlook and segment expectations for 2025, while still staying on slide 13, Steve.

Steve: We also have a strong culture of innovation collaboration people development and driving performance that is a great fit to my own personal leadership style.

Steve: As I've gotten to know our business better we clearly have a portfolio of strong businesses and markets that we know well with very close customer partnerships and industry leading products.

Steve: Thank you Chuck and good morning, everyone.

Chuck Lauber: Before discussing our outlook on 2025.

Chuck Lauber: Wanted to start by briefly sharing some early thoughts on my first 10 months with a O Smith.

Steve: This positions us well to help lead the industry forward through future changes disruption.

Chuck Lauber: First and foremost I have been impressed with the culture of how we do things at a O Smith.

Steve: And opportunities.

Chuck Lauber: We are laser focused on doing business, the right way and ethical way.

Steve: I am energized and confident in the opportunities in front of US that first drew me to join this great leadership team.

Chuck Lauber: <unk>.

Chuck Lauber: We also have a strong culture of innovation collaboration.

Steve: Now turning to our 2025 guidance.

Chuck Lauber: <unk> development and driving performance that is a great fit to my own personal leadership style.

Speaker Change: I am positive about the future positioning of our business as Chuck highlighted in our guidance. We expect 2025 to be another year of relatively muted growth on both the top and bottom lines.

Chuck Lauber: As I've gotten to know our business better we clearly have a portfolio of strong businesses and markets that we know well with very close customer partnerships and industry leading products.

Speaker Change: Our outlook is influenced by a relatively flat industry growth expectation in our core North America water heater and boiler markets, while we expect to continue facing soft market environment in China.

Chuck Lauber: This positions us well to help lead the industry forward through future changes disruptions and opportunities.

Speaker Change: We are also taking some portfolio actions that will reduce.

Chuck Lauber: I am energized and confident in the opportunities in front of US that first drew me to join this great leadership team.

Speaker Change: In North America water treatment in the short term, but will better position our business going forward.

Chuck Lauber: Now turning to our 2025 guidance.

Speaker Change: On the bottom line, we anticipate the near term benefits of our restructuring and realignment actions to be mostly offset in 2025 by the continued strategic investments, we are making to launch and scale innovative new products in support of our North America water heating and boiler business.

Chuck Lauber: While I am positive about the future positioning of our business as Chuck highlighted in our guidance. We expect 2025 to be another year of relatively muted growth on both the top and bottom lines.

Chuck Lauber: Our outlook is influenced by a relatively flat industry growth expectation in our core North America water heater and boiler markets, while we expect to continue facing soft market environment in China.

Speaker Change: These investments will help ensure profitable growth over the long term and build upon our market leadership.

Speaker Change: Our topline outlook includes the following assumptions.

Chuck Lauber: We are also taking some portfolio actions that will reduce.

Speaker Change: We believe that U S. New home construction remains at a deficit and that new construction and proactive replacement will be similar to 2024.

Chuck Lauber: Growth in North America water treatment in the short term, but will better position our business going forward.

Chuck Lauber: On the bottom line, we anticipate the near term benefits of our restructuring and realignment actions to be mostly offset in 2025 by the continued strategic investments, we are making to launch and scale innovative new products in support of our North America water heating and boiler business.

Speaker Change: Based on those factors, we project that 2025 residential industry unit volumes will be approximately flat to last year.

Speaker Change: We project U S commercial water heater industry volumes to also be flat to 2024 as demand for our commercial electric products greater than 55 gallons has returned to pre 2022 levels.

Chuck Lauber: These investments will help ensure profitable growth over the long term and build upon our market leadership.

Speaker Change: In addition, our outlook includes carryover from our March 2024 price increases in North America up 4% on most of our water heater products and 8% on heat pumps.

Chuck Lauber: Our top line outlook includes the following assumptions.

We believe that U S. New home construction remains at a deficit and that new construction and proactive replacement will be similar to 2024.

Speaker Change: In China, we believe the economy remains challenged with low consumer confidence and a weak real estate market.

Chuck Lauber: Based on those factors, we project that 2025 residential industry unit volumes will be approximately flat to last year.

Speaker Change: While we see the stimulus programs as a positive we think it will take time to see real fundamental signs of recovery.

Chuck Lauber: We project U S commercial water heater industry volumes to also be flat to 2024 as demand for our commercial electric products greater than 55 gallons has returned to pre 2022 levels.

Speaker Change: As a result, we project that our sales in China will decreased 5% to 8% in local currency in 2025 is the decline in consumer demand that we experienced in the second half of 2024 carries over into 2025.

Chuck Lauber: In addition, our outlook includes carryover from our March 2024 price increases in North America up 4% on most of our water heater products and 8% on heat pumps.

Speaker Change: Our forecast assumes that the currency translation impact will be minimal in 2025.

Speaker Change: We anticipate that our restructuring program in China will be mostly implemented by the second quarter and we expect to realize annual savings of approximately $15 million.

Chuck Lauber: In China, we believe the economy remains challenged with low consumer confidence and a weak real estate market.

Chuck Lauber: While we see the stimulus programs as a positive we think it will take time to see real fundamental signs of recovery.

Speaker Change: This would result in a recovery of operating margins for the 8% to 10% range for 2025, even with lower volumes.

Chuck Lauber: As a result, we project that our sales in China will decrease 5% to 8% in local currency in 2025 as the decline in consumer demand that we experienced in the second half of 2024 carries over into 2025.

Speaker Change: I have worked closely with the team and feel confident the actions being taken will better position us to compete in the more mature and more competitive market environment, while still positioning us well to realize the benefits when the Chinese economy improves.

Chuck Lauber: Our forecast assumes that the currency translation impact will be minimal in 2025.

Speaker Change: While we are cautious about the near term market outlook, including the level of sustainable impact from the appliance discount trade in program, we remain confident in our team in China.

Chuck Lauber: We anticipate that our restructuring.

China, mostly implemented by the second quarter, and we expect to realize annual savings of approximately $15 million.

Speaker Change: We project, our North American boiler sales will grow between 3% to 5% in 2025.

Chuck Lauber: This would result in a recovery of operating margins for the 8% to 10% range for 2025, even with lower volumes.

Speaker Change: We expect to continue benefiting from the transition to higher energy efficient boilers, particularly as commercial buildings look to improve their overall carbon footprint.

Chuck Lauber: I have worked closely with the team and feel confident the actions being taken will better position us to compete in the more mature and more competitive market environment, while still positioning us well to realize the benefits when the Chinese economy improves.

Speaker Change: We expect North America water treatment sales to be between $235 million to $245 million.

Speaker Change: The decrease of approximately 5% as we execute a re prioritization of our business to more competitive and profitable channels and products support supported by our announced restructuring.

Chuck Lauber: While we are cautious about the near term market outlook, including the level of sustainable impact from the appliance discount trade in program, we remain confident in our team in China.

Speaker Change: We project, our North American boiler sales will grow between 3% to 5% in 2025.

Speaker Change: We project this shift will drive an operating margin expansion of approximately 250 basis points in 2025 2025 for the North America water treatment business.

Speaker Change: We expect to continue benefiting from the transition to higher energy efficient boilers, particularly as commercial buildings look to improve their overall carbon footprint.

Speaker Change: I am personally excited about the potential of the water treatment space in North America for a O Smith I believe the actions being taken by the team to focus on the most attractive opportunities will position us well going forward.

Speaker Change: We expect North America water treatment sales to be between 235 million to $245 million.

Speaker Change: <unk> of approximately 5% as we execute a re prioritization of our business to more competitive and profitable channels and products support supported by our announced restructuring.

Speaker Change: We project mid teens top line growth and our legacy India business as we continue to build out the a O Smith water franchise in this attractive market.

Speaker Change: We expect the addition of pure it will add approximately $15 million in sales in 2025.

Speaker Change: We project this shift will drive an operating margin expansion of approximately 250 basis points in 2025 2025 for the North America water treatment business.

Speaker Change: We do not expect here to have a significant bottom line contribution in 2025% as we work through the integration of this business.

Speaker Change: Based on these 2025 assumptions, we expect top line growth to be flat to up 2%.

Speaker Change: We expect our North America segment margin to be between 24, and 24, 5% and rest of world segment margins to be between eight and 9%.

Speaker Change: We project mid teens top line growth and our legacy India business as we continue to build out the a O Smith water franchise in this attractive market.

Speaker Change: As we exit 2024 and move into 2025, our commitment remains steadfast to lead the industry forward and support our customers.

Speaker Change: We expect the addition of pure it will add to that.

Speaker Change: At least $15 million in sales in 2025.

Speaker Change: We do not expect here to have a significant bottom line contribution in 2025 as we worked through the integration of this business.

Speaker Change: We are confident that our innovation and infrastructure investments position our business for profitable growth.

Speaker Change: We remain committed to driving the following top investment priorities from 2024 into 2025 to maintain this momentum.

Speaker Change: Based on these 2025 assumptions, we expect topline growth to be flat to up 2%.

Speaker Change: We expect our North America segment margin to be between 24, and 24, 5% and rest of world segment margins to be between eight and 9%.

Speaker Change: Our continued investment in the launch and scale up of the adapt gas tankless water heater with X three scale prevention technology.

Speaker Change: We are on schedule to introduce two additional <unk> products to round out the product line in the first half of 2025.

Speaker Change: As we exit 2024 and move into 2025, our commitment remains steadfast to lead the industry forward and support our customers.

Speaker Change: While there is a headwind to profitability today as we launched with production in China, and then transfer production to whereas Mexico, we firmly believe that our gas tankless product line sets us up for long term success in this product category.

Speaker Change: We are confident that our innovation and infrastructure investments position our business for profitable growth.

Speaker Change: We remain committed to driving the following top investment priorities from 2024 into 2025 to maintain this momentum.

Speaker Change: Also our near completed investment and a world class commercial R&D testing and lab facility in Lebanon, Tennessee.

Speaker Change: Our continued investment in the launch and scale up of the adapt gas tankless water heater with X three scale prevention technology.

Speaker Change: The New center will house, our commercial water heater and boiler engineers, where they will focus on the continued innovation of our commercial water heating and boiler portfolio the.

Speaker Change: We are on schedule to introduce two additional <unk> products to round out the product line in the first half of 2025.

Speaker Change: The collaboration and powerful exchange of ideas coming from this new facility will ensure that we continue to have leading edge products, including heat pump technology for today and into the future.

Speaker Change: While there is a headwind to profitability today as we launched with production in China, and then transfer production to Juarez, Mexico, we firmly believe that our gas tankless product line sets us up for long term success in this product category.

Speaker Change: And finally, our ongoing manufacturing capacity investments to serve the market as regulatory changes and federal state and local incentives drive demand higher for specific technologies.

Speaker Change: Also our near completed investment and the World class commercial R&D testing and lab facility in Lebanon, Tennessee.

Speaker Change: We have increased production of commercial heat pump water heaters and doubled our residential heat pump water heater capacity to meet this growing demand.

Speaker Change: We are also increasing our capacity to produce high efficiency condensing water heaters.

Speaker Change: Collaboration and powerful exchange of ideas coming from this new facility will ensure that we continue to have leading edge products, including heat pump technology for.

Speaker Change: To sum up while we expect some of the market challenges in China to continue and we anticipate growth headwinds in the first half of the year for the North American water heating business as we faced tough comps against last year's order pattern, we remain confident in our future.

Speaker Change: Today and into the future.

Speaker Change: The investments, we are making in our capacity footprint, our engineering capability and our product portfolio have us positioned well for the environment ahead, including any tariff or regulatory uncertainty.

Speaker Change: We have increased production of commercial heat pump water heaters and doubled our residential heat pump water heater capacity to meet growing demand.

Additionally, the restructuring actions, we have announced today will support our future growth.

Speaker Change: We are also increasing our capacity to produce high efficiency condensing water heaters.

Speaker Change: Create more space for investments in more attractive space.

Speaker Change: A O Smith has a long history of managing through many economic cycles and uncertainties. In this proven experience will continue to serve us well.

Speaker Change: While there are growth headwinds in 2025, our leader position our leadership position in all of the markets that we serve.

Speaker Change: Our stable, 80% to 85% replacement business in water heaters and boilers and our strong balance sheet allow us to continue to invest in our business make attractive strategic acquisition and maximize shareholder returns.

Speaker Change: Additionally, the restructuring actions, we have announced today will support our future growth and create more space for investments in more attractive spaces.

Speaker Change: With that we conclude our prepared remarks, and we are now available for your questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Speaker Change: A O Smith has a long history of managing through many economic cycles and uncertainties. In this proven experience will continue to serve us well.

Speaker Change: While there are growth headwinds in 2025, our leadership position our leadership position in all of the markets that we serve are stable, 80% to 85% replacement business in water heaters and boilers and our strong balance sheet allow us to continue to invest in our business make attractive strategic acquisition and maximize shareholder.

Speaker Change: And our first question comes from Mike Halloran of Baird. Your line is open.

Mike Halloran: Hey, good morning, everyone. Good morning.

Mike Halloran: Can you just help provide some thoughts on how you think demand cadence is out through the year.

Speaker Change: Sure.

Speaker Change: With that we conclude our prepared remarks, and we are now available for your questions.

Mike Halloran: Certainly understand some of the remarks, you made in the press release about.

Mike Halloran: Less volatile first half to second half in the North America water heater business, but.

Mike Halloran: Is this a year, where it's returned to relatively normal seasonality as you think quarter to quarter.

Mike Halloran: Any puts and takes we should think about and just kind of how that levels out through the year.

Mike Halloran: Sure Mike This is Chuck.

Speaker Change: And our first question comes from Mike Halloran of Baird. Your line is open.

Mike Halloran: It does.

Speaker Change: Our outlook for 2025 on the water heating side does return much more normal to the normal cadence. So we talk about 51% to 52% in the front half of the here the way we've laid out next year is about 51% in the front half of the year.

Mike Halloran: Hey, good morning, everyone.

Speaker Change: Good morning.

Speaker Change: Can you just help provide some thoughts on how you think demand cadence is out through the year.

Speaker Change: Certainly understand some of the remarks, you made in the press release about law.

Speaker Change: Less volatile first half to second half in the North America water heater business, but is this a year, where it's returned to relatively normal seasonality as you think quarter to quarter.

Speaker Change: What they're really recall is that in 2024, it didn't play out that way 2024 laid out a bit different.

Speaker Change: The residential market was up 3% at the end of June the commercial market was up 8% at the end of June. So in 2024. It was just not a normal cadence. So we'll have some difficult comps as we go through the first half of the year.

Speaker Change: Any puts and takes we should think about and just kind of how that levels out through the year.

Chuck Lauber: Sure Mike This is Chuck.

Speaker Change: It does.

Speaker Change: Our outlook for 2025 on the water heating side does return much more normal to the normal cadence so.

Speaker Change: Residential being up 3% last year means we're going to be probably see the industry down 3% to 4% in the first half.

Speaker Change: We talk about 51% to 52% in the front half of the year. The way we've laid out next year is about 51% in the front half of the year.

Speaker Change: And a little bit stronger on the commercial side, plus we had a bit of.

Speaker Change: Tailwind in 2024 in the first half for the commercial mix. So when you put it all together 2025, we've got the cadence in North America closer to normal maybe a little bit lighter on the front half of the year, but against some some pretty aggressive first half comps.

Speaker Change: What they're really recall is that in 2024, it didn't lay out that late 2024 laid out a bit different.

Speaker Change: The residential market was up 3% at the end of June the commercial market was up 8% at the end of June. So in 2024. It was just not a normal cadence. So we will have some difficult comps as we go through the first half of the year.

Speaker Change: And then when you look to China, China.

Speaker Change: We're talking about volume decrease of 5% to 8% I would say the first quarter, we're a little cautious around it.

Speaker Change: Residential being up 3% last year means we're going to be probably see the industry down 3% to 4% in the first half.

Speaker Change: Appliance discount trading program was paused for a bit now its back back in place pretty quickly and.

Speaker Change: And a little bit stronger on the commercial side, plus we had a bit of.

Speaker Change: And we have the Chinese festival, and as Steve outlined our restructuring program impacts us more in the back three quarters of the year. So just a couple of comments around around that I think boilers will play out pretty similar third quarter is typically pretty strong.

Speaker Change: Caution I would have is back to closer to normal than just a tough tough comps in the first half.

Speaker Change: And then when you look to China, China.

Speaker Change: We're talking about volume decrease of 5% to 8% I would say the first quarter, we're a little cautious around it.

Speaker Change: Yes, thanks for that and then on the North American margins kind of a twofold question.

Speaker Change: Appliance discount trading program was paused for a bit now its back back in place pretty quickly and.

Speaker Change: One maybe any incremental color on what the treatment portfolio moves that you referenced where and then secondarily. When you think about the 50 point drag from.

Speaker Change: The tankless production being China, when that moves to war as does that go away or do you need some scale or any timing around how that should cadence.

Speaker Change: Yeah, Let me, let me take the Tankless headwind for two.

Speaker Change: And just a tough tough comps in the first half.

Speaker Change: 2025, and I'll, let Steve talk a little bit about water treatment restructuring. So we'll start we'll start transitioning production.

Speaker Change: Yes, thanks for that and then on the North America margins kind of a twofold question.

Steve: From demand Gen two whereas during the early part of the year introducing two new models.

Speaker Change: One maybe any incremental color on what the treatment portfolio moves that you referenced where and then secondarily. When you think about the 50 point drag from.

Steve: And then Jane and then eventually moving to two words, so that'll be about mid year. So that we're going to see a headwind in 2025.

Speaker Change: The tankless production being China, when that moves to war as does that go away or do you need some scale or any timing around how that cadence.

Steve: About 50 basis points still we believe as we kind of go through the year when weight that much different than kind of ratably through the year, because we're going to be and we're going to be in flight on those transitions for the year.

Speaker Change: Let me, let me take the Tankless headwind for two.

Speaker Change: 2025, and I'll, let Steve talk a little bit about water treatment restructuring. So we'll start we'll start transitioning production and from.

Steve: And then.

Steve: The water treatment I'll turn it over to Steve I think regarding what we're doing on the portfolio in water treatment.

Speaker Change: We've been building out this growth platform over the last seven years, making a number of acquisitions. We've taken approach of kind of an omnichannel go to market approach and I think we've learned a lot about the business through that time and the <unk>.

<unk> NAND Gen II, whereas during the early part of the year, introducing two new models.

Speaker Change: Managing and then eventually moving to <unk>, so that will be about mid year. So that we're going to see a headwind in 2025.

Speaker Change: We're taking now I think are a natural progression to focusing on the parts of the market that we think are most most attractive where we can be most competitive and that are most profitable and so with that.

Speaker Change: About 50 basis points still we believe as we kind of go through the year when weight that much different than kind of ratably through the year, because we're going to be we're going to be in flight on those transitions for the year.

Speaker Change: Obviously, the restructuring is helping us to do that repositioning will be kind of rotating and getting a mix benefit to moving towards that areas that we think are more profitable and that we see as giving us about 250 basis points of margin improvement in the year, but I think also just positioning us more successfully for the future going forward about where we're going to grow and how we're going to do it.

Speaker Change: And then.

Speaker Change: The water treatment I'll turn it over to Steve, Yes, I think regarding what we're doing on the portfolio in water treatment.

We've been building out this growth platform over the last seven years, making a number of acquisitions. We've taken approach of kind of an omnichannel go to market approach and I think we've learned a lot about the business through that time.

Speaker Change: Thank you.

Speaker Change: Actions, we're taking now I think are a natural progression to focusing on the parts of the market that we think are most most attractive where we can be most competitive and that are most profitable and so with that obviously the restructuring is helping us to do that repositioning will be kind of rotating and getting a mix benefit to moving towards the areas that we think are more prop.

Speaker Change: Our next question comes from Matt Summerville of D. A Davidson your line is open.

Speaker Change: Couple of questions does what youre seeing in China, and really what you've experienced in China over the last.

Speaker Change: Several years does that change kind of the growth algorithm as you guys sort of presented it last and are you thinking differently about that business from a strategic standpoint, and then I have a follow up.

Speaker Change: Notable in that we see as giving us about 250 basis points of margin improvement in the year, but I think also just positioning us more successfully for the future going forward about where we're going to grow and how we're going to do it.

Thank you.

Speaker Change: Yes.

Speaker Change: China is a market that.

Speaker Change: As always moves fast and you have to be prepared and ready to respond and I think as we've looked at the market landscape over the last few years.

Speaker Change: Our next question comes from Matt Summerville of D. A Davidson your line is open.

Speaker Change: Couple of questions does what youre seeing in China, really what you've experienced in China over the last.

Speaker Change: Led us to make some strategic decisions about how we think about the business going forward we've talked about.

Speaker Change: Several years does that change kind of the growth algorithm.

Speaker Change: Watching into additional categories to help support our business and leverage our brand and I think going forward certainly the last few years Havent met the growth and recovery profile that we had anticipated.

Speaker Change: Guys sort of presented it last and are you thinking differently about that business from a strategic standpoint, and then I have a follow up.

Speaker Change: Yes.

Speaker Change: But it's given us a chance to sort of learn a little bit about our market positioning and again a restructuring that we're announcing here today is a chance for us to do some of that and I think really get more competitive now.

Speaker Change: China is a market that.

Speaker Change: No.

Speaker Change: Always move fast and you have to be prepared and ready to respond and I think as we've looked at the market landscape over the last few years.

Speaker Change: Will the market come back I think.

Speaker Change: Led us to make some strategic decisions about how we think about the business going forward, we've talked about launching.

Speaker Change: Feel confident it will the question really is when.

Speaker Change: And it's really going to come back to consumer confidence and I think when consumer confidence returns to China.

Speaker Change: Launching into additional categories to help support our business and leverage our brand and I think going forward certainly the last few years Havent met the growth and recovery profile that we had anticipated.

Speaker Change: We will be able to participate in that recovery and with a stronger portfolio to do so.

Speaker Change: Yes, maybe a little bit more on to that.

Speaker Change: <unk> always said that China was going to need some help from the economy.

Speaker Change: It's given us a chance to sort of learn a little bit about our market positioning and again a restructuring that we're announcing here today is a chance for us to do some of that and I think really get more competitive now.

Speaker Change: And frankly, we just haven't seen that materialize and we were talking about what we outlined was about a 5% to 6% growth.

Speaker Change: In our Investor day.

Speaker Change: First year, obviously, we're short of that but.

Speaker Change: Will the market come back I think.

Speaker Change: I think if you stood at three four more years to move it forward. There are some real policy changes that are being talked about but for us we haven't given up on the five or six but we do need help.

Speaker Change: We feel confident it will the question really is when.

Speaker Change: And it's really going to come back to consumer confidence and I think when consumer confidence returns to China.

Speaker Change: We will be able to participate in that recovery and with a stronger portfolio to do so yes.

Speaker Change: From the government some stimulus to get the economy, moving Steve's right on track with the consumer confidence. It is critical because that ties into new housing formation, which is a big part of our business as well as our premium products. So.

Speaker Change: Yes, maybe a little bit more onto that we've always said that China was going to need some help from the economy.

Speaker Change: Quite frankly, we just haven't seen that materialize and we were talking about what we outlined was about a 5% to 6% growth.

Speaker Change: Still some work to do we saw some really nice benefits from the appliance training program, but again, we're moving into 2025, a bit cautious because the scope and scale of these policies are still need to be more defined but we still feel really good about China, we feel good about the long term of herbs.

Speaker Change: In our Investor day that.

Speaker Change: First of all obviously, we're short of that but I.

Speaker Change: I think if you still have three or four more years to moving forward. There are some real policy changes that are being talked about but for us we haven't given up on the five or six but we do need help.

Speaker Change: Urbanization and a growing middle class, but we do need some help.

Speaker Change: From the economy too.

Speaker Change: From the government some stimulus to the economy moving Steve's right on track with the consumer confidence. It is critical because that ties into new housing formation, which is a big part of our business as well as our premium products. So.

Speaker Change: Move this business forward.

Speaker Change: Follow up on the water treatment side of the business, maybe it's not clear to me what channels, you're maybe deemphasizing a bit versus where youre, placing greater emphasis.

Speaker Change: Beyond this year kind of down mid single digits, what does the three to five year growth trajectory organically looked like in that business. Thank you.

Speaker Change: Yes.

Speaker Change: Places that we're really focusing on going forward are going to be our direct to consumer businesses as well as our dealer and our wholesale businesses and what we are deemphasizing as on the retail side and we just believe that can be more competitive and have a better offering and are financially more attractive business there.

Speaker Change: Organization, and a growing middle class, but we do need some help.

Speaker Change: From the economy too.

Speaker Change: Move this business forward.

The Colo the water treatment side of the business, maybe it's not clear to me what channels, you're maybe deemphasizing a bit versus where you are placing greater emphasis as you get beyond this year kind of down mid single digits, what does the three to five year growth trajectory organically.

Speaker Change: And I think we still view water treatment is a growth engine for a O Smith as I mentioned in my own comments I'm excited about the space.

Speaker Change: I think theres good megatrend tailwind there and I think this is a natural progression of repositioning ourselves and so.

Speaker Change: <unk> look like in that business. Thank you.

Speaker Change: R R.

David: Yes, David.

Speaker Change: Our early estimates of double digit growth I think we will get back to that at some point, but I think it's maybe we're evolving in terms of exactly how we'll do that and Thats part of what our process was all along is to learn about the space figure out where we compete and then focus on it going forward.

Speaker Change: Places that we're really focusing on going forward are going to be our direct to consumer.

Speaker Change: As well as our dealer and our wholesale businesses and what we are deemphasizing as on the retail side and we just believe we can be more competitive and have a better offering and are financially more attractive business there.

Speaker Change: I'll just add that when we when we talk about our growth rate into the water treatment. We've also talked about acquisitions and that continues to be our focus to grow not only grow faster than the market, but also bring into some additional.

Speaker Change: And I think we still view water treatment as a growth engine for a O Smith as I mentioned in my own comments I am excited about the space.

Speaker Change: I think theres good megatrend tailwind there and I think this is a natural progression of repositioning ourselves and so.

Speaker Change: Acquisitions to grow the water treatment.

Speaker Change: Accelerated rate that's still our focus.

Speaker Change: R R.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Damian Harris of UBS Securities. Your line is open.

Speaker Change: Hi, good morning, everyone and Steve Great to have you on the call.

Speaker Change: I'll just add that when we when we talk about our growth rate in the water treatment. We've also talked about acquisitions and that continues to be our focus to grow not only grow faster than the market, but also bring into some.

Speaker Change: Thank you.

Speaker Change: I was wondering if you could.

Speaker Change: Yes.

Speaker Change: I was wondering if perhaps you saw a falloff.

Speaker Change: In North American water heater shipments in December.

Speaker Change: Some additional acquisitions to grow water treatment.

Speaker Change: Because.

Speaker Change: Accelerated rate that's still our focus.

Speaker Change: The data that we are Privy to the October November HR shipments they did seem to show sequential improvement and I think with the normal seasonality.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Damian Harris of UBS Securities. Your line is open.

Speaker Change: That you see in the industry in December.

Speaker Change: North American water heater sales would have likely been.

Speaker Change: At least a few percent higher than the fourth quarter. So could you just maybe talk to the progression that you saw in water heater volumes over the course of the quarter.

Speaker Change: Hi, good morning, everyone and Steve Great to have you on the call.

Speaker Change: Thank you.

Speaker Change: I was wondering if you could.

Speaker Change: Let me just talk about that sequencing and I'm going to take you back to 2023 that was a record year for our business and that record was largely driven by our North America water heater business and so if you go back here because you're doing a comparison that you go back to 2023, we had a very strong back half of the year really outperformed.

Speaker Change: Yes.

Speaker Change: I was wondering if perhaps you saw a falloff.

Speaker Change: In North American water heater shipments in December.

Speaker Change: Because.

Speaker Change: The data that we're privy to the October or November HR shipments. They did seem to show sequential improvement and I think with the normal seasonality.

Speaker Change: The market.

Speaker Change: That you see in the industry in December.

Speaker Change: Remember, we had strong backlogs kind of lead times, we're really out there. So our residential sell in was strong our customers were kind of building some inventory to compensate for that.

Speaker Change: North American water heater sales would have likely been leased a few percent higher than the fourth quarter. So could you just maybe talk to the progression that you saw in water heater volumes over the course of the quarter.

Speaker Change: For the lead times in.

Speaker Change: And Conversely, now he come to 2024, and our back half and we entered the back half with our lead times back to normal we saw and we talked about this last quarter, we saw our wholesalers and our retailers adjust our order rates the order rates and their inventory levels and we had a lower back half volume so.

Speaker Change: Yes, let me just talk about that sequencing and I'm going to take you back to 2023 that was a record year for our business and that record was largely driven by our North America water heater business and so if you go back here because you're doing a comparison. If you go back to 2023, we had a very strong back half of the year really outperform.

Speaker Change: To me, it's about timing situation with regards to where our customers who are on the inventory side, but if you step back here with solid customers base still strong relationships no major customer launch there, but just because of that dynamic and that timing, yes, you're right, we did see lower volumes, but.

Speaker Change: The market.

Speaker Change: Remember, we had strong backlogs kind of lead times, we're really outdoor solar residential solar and was strong our customers were kind of building some inventory to compensate for that.

Speaker Change: For the lead times in.

Speaker Change: There is some reasons behind it that are more situational than they are ongoing.

Speaker Change: Okay got it.

Speaker Change: And then could you just confirm so you did see positive pricing in North American water heaters in the fourth quarter or was that comment more of a full year comment.

Speaker Change: To me, it's about timing situation with regards to where our customers were on the inventory side, but if you step back here with solid customers base still strong relationships no major customer launch there, but just because of that dynamic and that timing, yes, you're right, we did see lower volumes, but.

Speaker Change: And I'm just curious if kind of the industry in general has been pretty pretty disciplined on pricing or if you're seeing any.

Competitor discounting of note.

Speaker Change: What I will tell you is we saw yes, we had positive pricing and the pricing that we implemented the first quarter of last year, it's kind of played out.

Speaker Change: There is some reasons behind it that are more situational than they are ongoing.

Speaker Change: Way, we expected it and met our expectations. So we have positive pricing across all of our categories in 2024.

Speaker Change: Okay got it.

Speaker Change: And then could you just confirm so you did see positive pricing in North American water heaters in the fourth quarter or was that comment more of a full year comment.

Speaker Change: That's as far as we pretty much what we'll talk about pricing, there's always situational discounting here and markets that doesn't change, but what happens in may be Newark is the same thing that happens in.

Speaker Change: And I'm, just curious as kind of the industry in general has been pretty pretty disciplined on pricing or if you're seeing any.

Speaker Change: In Los Angeles, So I would just tell you we implemented it played out what we thought theres always a little bit of fade, but we had favorable pricing across all of our categories as we planned.

Speaker Change: Competitor discounting of note.

Speaker Change: What I will tell you is we saw yes, we had positive pricing.

Speaker Change: And the pricing that we implemented the first quarter of last year. It kind of played out the way we expected it and met our expectations. So we have positive pricing across all of our categories in 2024.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Bryan Blair of Oppenheimer. Your line is open.

Speaker Change: Thank you good morning, everyone. Good morning, Brian.

Speaker Change: Yes, that's as far as we pretty much what we'll talk about pricing, there's always situational discounting here and markets that doesn't change, but what happens in leaving Newark is the same thing that happens.

Speaker Change: I wanted to.

Speaker Change: Follow up.

Speaker Change: That's taken a little bit more on the <unk>.

Shifting your North American water treatment strategy and your team has.

Speaker Change: Touted the benefits of the Omnichannel kind of kind of presence historically.

Speaker Change: Has there been a meaningful <unk>.

Speaker Change: <unk> and competitive dynamics customer dynamics within retail over the recent past.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: That drove this decision or is it simply be.

Speaker Change: Our next question comes from Bryan Blair of Oppenheimer. Your line is open.

Speaker Change: Your math.

Speaker Change: Focusing more on.

Speaker Change: Wholesale.

Speaker Change: Thank you good morning, everyone. Good morning, Brian.

Speaker Change: Our dealer network direct to consumer.

Speaker Change: I wanted to.

Speaker Change: Having.

Speaker Change: Follow up.

Speaker Change: Stronger margin profile and then deemphasizing.

Speaker Change: Digging a little bit more on the shift in your North American water treatment strategy and your team has.

Speaker Change: Weaker.

Speaker Change: Excuse me economics at the retail strength.

Speaker Change: Touted the benefits of the Omnichannel kind of kind of presence historically.

Speaker Change: This is Steve I would say there is definitely different competitive dynamics and the market dynamics across those different channels.

Speaker Change: Has there been a meaningful.

Speaker Change: Part of having the omni channel approach is to learn about the consumer to learn about these channels learn about how you compete and learned about the competitors and I think as we've done that over the last few years, we've learned where we think our strengths our product portfolio and in our go to market model plagued us and it's not that we're exiting totally shutting down other <unk>.

Speaker Change: <unk> and competitive dynamics customer dynamics within retail over the recent past.

Speaker Change: What drove this decision or is it simply the.

Speaker Change: Your math.

Speaker Change: Focusing more on.

Speaker Change: Wholesale.

Speaker Change: Our dealer network direct to consumer.

Speaker Change: Having.

Speaker Change: Stronger margin profile and then deemphasizing.

Speaker Change: Donald I think were still part of the learning process, but I think we've got more clarity now.

Speaker Change: Weaker.

Speaker Change: Where we want to focus and where we think we can kind of win in the marketplace and Thats representative of the shift over time.

Speaker Change: Excuse me around the economics of the retail strength.

Speaker Change: This is Steve I would say there is definitely different competitive dynamics and the market dynamics across those different channels.

Speaker Change: Yes, I would just say our omni channel approach is still there it's just changing.

Speaker Change: Part of having the Omnichannel approach is to learn about the consumer to learn about these channels learn about how you compete and learn about the competitors and I think as we've done that over the last few years, we've learned where we think our strengths our product portfolio and in our go to market model plagued us and it's not that we're exiting totally shutting down other <unk>.

Speaker Change: Where we focus our time and energy I think early on someone mentioned the word deemphasize, we're not exiting any of the channels, but we are deemphasizing <unk>.

Speaker Change: One area and really kind of putting more energy and effort into areas, where we believe we have competitive advantage and we can drive greater sales and margin growth and we're excited about.

Speaker Change: Donald I think were still part of the learning process, but I think we've got more clarity now.

Speaker Change: Launching that this year and see what it would bring but very confident in those.

Speaker Change: Where we want to focus and where we think we can kind of win in the marketplace and Thats representative of the shift over time.

Speaker Change: Those parts of our business that really play well to our strengths.

Speaker Change: Understood.

Speaker Change: Yes, I would just say our omni channel approach is still there it's just changing.

Speaker Change: Margin benefit you've said in his.

Speaker Change: As notable.

Speaker Change: Where we focus our time and energy I think early on someone mentioned the word deemphasize, we're not exiting any of the channels, but we are deemphasizing <unk>.

Speaker Change: You mentioned topline expectations for <unk> can you remind us where.

Speaker Change: Where margins are on a run rate basis.

Having owned the asset for a little bit now.

Speaker Change: One area and really kind of putting more energy and effort into areas, where we believe we have competitive advantage and we can drive greater sales and margin growth.

Speaker Change: Where you think medium term.

Speaker Change: Profitability should shake out.

Speaker Change: We're excited about.

Speaker Change: Yes, I mean so.

Speaker Change: Launching that this year and see what it would bring but very confident in those.

Speaker Change: Roughly period is going to contribute in 2025 about $50 million in revenue.

Speaker Change: Those parts of our business that really play well to our strengths.

Speaker Change: The earnings profile very similar to our India business right now, we're really leaning into growth.

Speaker Change: Understood.

Speaker Change: Margin benefit you've said in his.

Speaker Change: In India, and so the operating margins.

Speaker Change: As notable.

Speaker Change: You mentioned top line expectations for <unk> can you remind us where.

Speaker Change: Mid single digits very similar to our business.

Speaker Change: Legacy business in India, I would say for 2025, and you've got a real focus on integrating <unk> in a way that will set us up for continued growth in India.

Speaker Change: Where margins are on a run rate basis.

Speaker Change: Having owned the asset for a little bit now.

Speaker Change: Thanks meta.

Speaker Change: Medium term.

Speaker Change: Profitability should shake out.

And that integration is going on track and spend a couple of months, but on track so far.

Speaker Change: Yes, I mean so.

Speaker Change: Roughly period is going to contribute in.

Speaker Change: 2025 about $50 million in revenue.

Speaker Change: Maybe just to touch base on weekend.

Speaker Change: We've been looking to scale, Indiana. This was a very important.

Speaker Change: The earnings profile very similar to our India business right now, we're really leaning into growth.

Speaker Change: Component for us to move forward.

Speaker Change: The pure business really complemented where we're at the very strong on the E Commerce and retail were really strong in retail.

Speaker Change: In India, and so the operating margins.

Speaker Change: Round mid single digits very similar to our business.

Speaker Change: Dealer side of the business or general trade as they call it but more importantly that scale brings us to the number three position in the market.

Speaker Change: Legacy business in India, I would say for 2025 that we've got a real focus on integrating period in a way that will set us up for continued growth in India.

Speaker Change: Thats.

Speaker Change: It was a nice step up and as Chuck mentioned and you guys can take some integration, but when you combine the business you double the size of it. It gives you some real optionality to continue to grow the business and drive cost and margin improvement.

Speaker Change: And that integration is going on track, it's been a couple of months, but on track so far.

Speaker Change: Maybe just to touch base on the.

Speaker Change: Thank you.

Speaker Change: We've been looking to scale, Indiana and this was a very important.

Speaker Change: Component for us to move forward.

Speaker Change: Our next question comes from Scott Graham of Seaport Research Partners. Your line is open.

Speaker Change: The period business really complemented where we're at the very strong on the E Commerce and retail were really strong retail.

Speaker Change: Hey, good morning, and welcome Steve.

Speaker Change: Dealer side of the business or general trade as they call it but more importantly that scale brings us to the number three position in the market.

Speaker Change: Thanks, Good morning, Scott I think I think Steve.

Speaker Change: You said up 4% water heater.

Speaker Change: <unk> was.

Speaker Change: It was a nice step up and as Chuck mentioned and you guys can take some integration, but when you combine the business you doubled the size of it. It gives you some real optionality to continue to grow the business and drive cost and margin improvement.

Speaker Change: Pricing.

Speaker Change: Heard you wrong. Please correct me and that that was a carryover number.

Speaker Change: 225, ending in March we went to the marketplace with a 4% water heater price that's March of 2024.

Speaker Change: Thank you.

Speaker Change: Of which and that will be carrying over into 2025.

Speaker Change: Okay, and then by extension if youre expecting.

Speaker Change: Our next question comes from Scott Graham of Seaport Research Partners. Your line is open.

Speaker Change: Steel prices to rise in the second half of the year like I think most of us are.

Scott Graham: Hey, good morning, and welcome Steve.

Speaker Change: Are we looking at another price increase sometime in the first or second quarter of this year.

Speaker Change: Thanks, Good morning, Scott I think I think Steve.

Scott Graham: You said up 4% water heater.

Speaker Change: Hey, Scott highest Kevin.

Speaker Change: Listen I think the way that we would frame this is that.

Scott Graham: Pricing.

Speaker Change: Heard you wrong. Please correct me and that that was a carryover number.

Speaker Change: How we manage pricing hasnt changed for multiple years and.

Speaker Change: 325, ending in March we went to the marketplace with a 4% water heater price that's March of 2024.

Speaker Change: As I mentioned before one of the things that we tried to do with our customers as we have credibility because we take the increases before we pass it onto them.

Speaker Change: Of which that will be carrying over into 2025.

Speaker Change: And we also wanted to the market very closely so we know when to take those actions and so I would just go back to historically, Scott we've been able to offset inflation given time, that's not going to change going forward I just don't want to give any specifics about hypothetical if steel goes up it doesn't go up I think if you just step back and look at our Biz.

Speaker Change: Okay, and then by extension if youre expecting.

Speaker Change: Steel prices to rise in the second half of the year like I think most of us are.

Speaker Change: Are we looking at another price increase sometime in the first or second quarter of this year.

Kevin Wheeler: Hey, Scott highest Kevin.

Kevin Wheeler: Listen I think the way we would frame this is that.

Speaker Change: And how we manage it in the past we have a really good track record of addressing any inflationary pressures, whether it's steel or any other type of products or components.

Kevin Wheeler: How we manage pricing hasnt changed for multiple years and.

Kevin Wheeler: As I mentioned before one of the things that we tried to do with our customers as we have credibility because we take the increases before we pass it onto them.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Susan Mcclary of Goldman Sachs. Your line is open.

Kevin Wheeler: And we also wanted to the market very closely so that we know when to take those actions and so I would just go back to historically, Scott we've been able to offset inflation given time, that's not going to change going forward I just don't want to give any specifics about hypotheticals. If steel goes up it doesn't go up I think if you just step back and look at our <unk>.

Speaker Change: Thank you good morning, everyone.

Speaker Change: Good morning, good morning.

Speaker Change: The next question is going back to the channel inventories in water heaters, how would you generally characterize the tone of the conversations that you're having with customers. What do you think their appetite is to restock over the course of this year are there any key points that you or your customers are watching for to kind of.

Kevin Wheeler: Business and how we manage it in the past we have a really good track record of addressing any inflationary pressures, whether it's steel or any other type of products or components.

Speaker Change: Chairman may be the path or the cadence for some of that restock that could come through.

Kevin Wheeler: Yeah.

Kevin Wheeler: Thank you.

Speaker Change: I, just think I'll, let others comment on because I just think that there is.

Speaker Change: Our next question comes from Susan Mcclary of Goldman Sachs. Your line is open.

Speaker Change: There is a it's a backdrop of uncertainty and so people are going to be pretty close to Washington in inventories and the driver is always going to be sell out whether you see it in new construction. There is still some questions about interest rates out there. So I think if.

Kevin Wheeler: Thank you good morning, everyone. Good.

Speaker Change: Good morning, good morning.

Speaker Change: My first question is going back to the channel inventories in water heaters, how would you generally characterize the tone of the conversations that youre, having with customers. What do you think their appetite is to restock over the course of this year are there any key points that you or your customers are watching for trying to do.

Speaker Change: When we're talking to customers they are a bit cautious going in I think the business is still good we called it ought to be flat on both residential and the commercial side of the business, but I think we're entering the first part of the year, just with a bit cautious in and let's see how things play outcome. There's just a lot of moving parts right now and there hasnt been a lot.

Speaker Change: Chairman may be the path or the cadence for some of that restock that could come through.

Speaker Change: I, just think I'll, let others comment on this I just think that there is there is a just a backdrop of uncertainty and so people are going to be pretty close to Washington.

Speaker Change: Fine, but overall I guess I'd come back to that particularly in the water heater side in the boiler side 80, 85% is that replacement and people just don't go without it and the other 50% I think is what youre talking about we will have to see how things play out that first quarter.

Speaker Change: Watching their inventories.

Speaker Change: The driver is always going to be sell out whether you see it in new construction. There is still some questions about interest rates out there. So I think if.

Speaker Change: And Susan this is Chuck I mean, when we track order rates and we said this on our last call.

Speaker Change: When we're talking to customers they are a bit cautious going in I think the business is still good we called it ought to be flat on both residential and commercial side of the business, but I think we're entering the first part of the year, just with a bit cautious in and let's see how things play outcome. There's just a lot of moving parts right now and there hasnt been a lot differ.

Susan Mcclary: Sequentially, our order rates were better in Q4 than Q3, So we did see an increase so.

Susan Mcclary: Our customers are probably in a better normal position they did increase orders and when we look into January of 2025.

Susan Mcclary: Not as large an increase that we saw in Q4 over Q3, but another increased slightly up on a daily order rate, which gives us some confidence that we're seeing that buying back in I will note like I said before we have some tough comps. So order rates, we're not back up to 2024 first quarter or January order rates yet.

Speaker Change: But overall I guess I'd come back to that particularly in the water heater side of the boiler side 80, 85% is that replacement and people just don't go without it and the other 15% I think is what youre talking about we will have to see how things play out that first quarter.

Speaker Change: Susan This is Chuck I mean, when we track order rates and we said this on our last call in our sequentially. Our order rates were better in Q4 than Q3. So we did see an increase so.

Susan Mcclary: And we probably wont see that for the quarter, but we will pleased that we saw a bit of an uptick in order rates in January.

Speaker Change: Okay, Alright, that's helpful. And then just wondering if you could talk a bit about the North America water treatment.

Susan Mcclary: As our customers are probably in a better normal position. They did increase orders and when we look into January of 2025.

Speaker Change: You guided for about a 5% decline there this year talk a bit about what you're seeing and what's driving that.

Susan Mcclary: Not as large an increase that we saw Q4 over Q3, but another increased slightly up on a daily order rate.

Speaker Change: The 5% decline on the top line is primarily driven by the repositioning of the portfolio that we've talked about so as we're deemphasizing.

Susan Mcclary: Which gives us some confidence that we're seeing that buyback in.

Susan Mcclary: We'll note like I said before we have some tough comps so order rates, we're not back up to 2024 first quarter or January order rates yet.

Speaker Change: Certain products and certain go to market model that.

Speaker Change: That will be a <unk>.

Susan Mcclary: And we probably wont see that for the quarter, but we were pleased that we saw a bit of an uptick in order rates in January.

Speaker Change: Wind to growth, but we are still confident in we see growth in the remaining focused areas. So the net net of that for 2025, which is a bit of a transition year for us will be.

Speaker Change: Okay, Alright, that's helpful. And then just wondering if you could talk a bit about the North America water treatment side, you guided for about a 5% decline there this year talk a bit about what you're seeing and what's driving that.

Speaker Change: Down about that 5%, but we feel confident that with our refocusing, we'll get back to growth.

Speaker Change: Thank you.

Nathan Jones: Our next question comes from Nathan Jones with Stifel. Your line is open.

Speaker Change: The 5% decline on the top line is primarily driven by the repositioning of the portfolio that we talked about so as we're deemphasizing.

Speaker Change: Good morning, everyone.

Good morning.

Speaker Change: Products and certain go to market models.

Speaker Change: Just maybe a question on the China.

Speaker Change: That will be a.

Speaker Change: Trading slash.

Headwind to growth, but we are still confident we see growth in the remaining focused areas of the <unk>.

Speaker Change: Stimulus programs out there.

Speaker Change: You said.

Speaker Change: Net net of that for 2025, which is a bit of a transition year for us will be.

Speaker Change: For Q impacting <unk> to allow year your distributors to reduce some of their inventory. So it doesn't sound like there was much impact for your business in the fourth quarter.

Speaker Change: Down about that 5%, but we feel confident that with our refocusing, we'll get back to growth.

Speaker Change: Just any more color you can give us on what you're expecting from that in 2025 kind of how you've addressed that in our guidance of down five days. It doesn't really sound like youre expecting it to have a lot of impact on the business. So just any color you can give us around your expectation for that.

Speaker Change: Thank you.

Nathan Jones: Our next question comes from Nathan Jones with Stifel. Your line is open.

Nathan Jones: Good morning, everyone.

Speaker Change: Hi, good morning, good morning.

Speaker Change: Okay.

Speaker Change: Just maybe a question on the China.

Speaker Change: This is Steve I'll start by maybe just getting some characterize the Q4, we did see the impact in our market right.

Speaker Change: Trading slash.

Speaker Change: Stimulus kind of programs out there.

Speaker Change: We've talked about.

Speaker Change: The channel and the retailers had a good solid performance actually had growth in the quarter.

Speaker Change: You said.

Speaker Change: The impact in <unk> to allow year your distributors to reduce some of their inventory. So it doesn't sound like there was much impact for your business in the fourth quarter.

Speaker Change: Didn't flow all the way back to our business, but it is a good indication that the trade in program did have some demand generation effect I think we're entering 2025, just cautious about what that sustainability looks like it has been extended.

Speaker Change: Just any more color you can give us on what you're expecting from that in 2025 kind of how you've addressed that in the guidance of down five days it doesn't really sound like youre expecting it to have a lot of impact on the business. So just any color you can give us around your expectations there.

Speaker Change: Province by Province, the execution of that program still kind of working working itself through some provinces. The program is off and running some are still working on how it's going to get executed obviously, they're in the holiday period right now, but we will see that in Q1 in terms of just sort of what kind of continued.

Speaker Change: Okay.

Speaker Change: This is Steve I'll start by maybe just getting some characterize the Q4, we did see the impact in our market right and as we've talked about.

Speaker Change: The channel and the retailers had a good solid performance actually had growth in the quarter.

Speaker Change: Impact its having we're cautious right now because we wanted to understand how much of it is true fundamental demand generation at the end of the day consumers need to be installing more equipment.

Speaker Change: Just didn't flow all the way back to our business, but it is a good indication that the trade in program did have some demand generation effect I think we're entering 2025, just cautious about what that sustainability looks like it has been extended.

Speaker Change: There might've been some pent up demand there as people were waiting for this program. So we're working through that it is encouraging.

Speaker Change: <unk> did have on Q4, it's encouraging that it has been extended through 2025, we're just cautious.

Speaker Change: We're following it very closely to see what that impact will actually look like for us.

Speaker Change: Is it fair to characterize the approach we've taken to guidance from that is that you're not really including any benefit from it.

Speaker Change: Right now because we wanted to understand how much of it is true fundamental demand generation at the end of the day consumers need to be installing more equipment.

Speaker Change: Maybe a little bit, but I'd say, we're very cautious right and it could swing, where we see that benefit early parts of the year later parts of the year, but we really want what we're really watching for us at the end of the day is more kitchen remodeling happening are people moving into new apartments are people actually investing in upgrading and when.

Speaker Change: There might have been some pent up demand there as people were waiting for this program. So we're working through that it's encouraging.

Speaker Change: It did have on Q4.

Speaker Change: Encouraging that it has been extended through 2025, we're just cautious.

Speaker Change: It starts happening fundamentally at the consumer level, that's why I think we'll have more confidence.

Speaker Change: The long term health of the business.

Speaker Change: We're following it very closely to see what that impact will actually look like for us.

Speaker Change: Thank you.

Speaker Change: Is it fair to characterize the approach we've taken to guidance from that is that you're not really including any benefit from it.

Speaker Change: Okay.

Speaker Change: Our next question comes from <unk> <unk>.

Speaker Change: At Jefferies. Your line is open.

Speaker Change: Hi, good morning, maybe a little bit longer term question with China down another year, how do you think about your long term guidance, 5% to 6% through 2019 sales.

Sales recovery stronger than that to make up for the weaker start.

Speaker Change: Yes, I think we talked a bit about that I mean, it's the first year in our guidance.

Speaker Change: What's happening fundamentally at the consumer level, that's where I think we'll have more confidence in the <unk>.

Speaker Change: Even in our guidance like I said, we were looking for some recovery. So yes, obviously you would have to recover at least.

Speaker Change: Long term health of the business.

Speaker Change: Thank you.

Speaker Change: At a higher rate as we go forward, but part of that also is not just the economy. Its our mix in our products and how we're growing our premium categories.

Speaker Change: Yeah.

Speaker Change: Our next question comes from <unk> <unk>.

Speaker Change: Jefferies. Your line is open.

Speaker Change: No.

Speaker Change: Right now we are.

Speaker Change: Hi, good morning, maybe a little bit longer term question with China down another year, how do you think about your long term guidance I believe the five 6%.

Speaker Change: <unk>.

Speaker Change: We're behind the first year, but as we look forward I mean, I think some of the things that we're seeing are positive, but again for us to get to that five or six number percent number we just see need to see real growth thats sustainable and that still needs to play out as Steve has mentioned.

Speaker Change: Thanks, Tim sales recover stronger than that to make up for the weaker start.

Speaker Change: Yes, I think we talked a bit about that I mean, it's the first year in our guidance.

Speaker Change: And I would just add as you think about 2025, we have two areas of growth for us in water treatment and in China that are going to we're anticipating right now to be.

Speaker Change: Even in our guidance like I said, we were looking for some recovery. So yes, obviously you would have to recover at least.

Speaker Change: At a higher rate as we go forward, but part of that also is not just the economy. Its our mix in our products and how we're growing our premium categories. So right.

Speaker Change: Repositioning years, and that's going to be a drag on our top line and then I think we're also making investments and have been.

Right now we're.

Speaker Change: Through last year, and we will continue this year, which is positioning us well I think for growth looking forward, but we've got to get through and get those.

Speaker Change:

Speaker Change: We're behind the first year, but as we look forward I mean, I think some of the things that we're seeing are positive, but again for us to get to that five or six number percent number we just see need to see real growth, that's sustainable and that still needs to play out as Steve has mentioned.

Speaker Change: Investments executed.

Speaker Change: I appreciate the color and then I know there's been a lot of talk on the North America water heater market, but just ask one more maybe for a little bit on the competitive environment and your position are you seeing any gains by competitors that are impacting the results and the volatility that we saw this year.

Speaker Change: And I would just add as you think about 2025, we.

Speaker Change: We have two areas of growth for us in water treatment and in China that are going to we're anticipating right now to be.

Speaker Change: Well, there's definitely some volatility out there.

Speaker Change: Repositioning years, and that's going to be a drag on our top line and then I think we're also making investments in and have been.

Speaker Change: And probably a bit more than normal, particularly up in the kind of the northeast Midwest area, but overall I'm going to speak from an Ao Smith perspective, we've navigated through that before.

Speaker Change: Through last year, and we will continue this year, which is positioning us well I think for growth looking forward, but we've got to get through and get those investments executed.

Speaker Change: And so.

Speaker Change: Nothing that I would consider to be new it's just some changes some did some distributor changes and any time theres a change in the market. There's always some disruption there's always opportunity.

Speaker Change: I appreciate the color and then I know there's been a lot.

Chuck Lauber: Chuck on the North America water heater market with just ask one more maybe for a little bit on the competitive environment and your position are you seeing any gains by competitors that are impacting the results and the volatility that we saw this year.

Speaker Change: But overall.

Speaker Change: We navigated through these in the past and we will continue to do that.

Speaker Change: Go back to our customer base is strong.

Chuck Lauber: Well, there's definitely some volatility out there.

Speaker Change: No loss of major customers in 2024.

Chuck Lauber: And probably a bit more than normal, particularly up in the kind of the northeast Midwest area, but overall I'm going to speak from an <unk> perspective, we've navigated through that before.

Speaker Change: And those partnerships are decades long and I think they'll continue to benefit both of us going forward, so nothing meaningful to a O Smith, but yes, some disruption in the market.

Chuck Lauber: And so.

Chuck Lauber: Nothing that I would consider to be new it's just some changes some some did some distributor changes and eight tenders a change in the market. There's always some disruption there's always opportunity.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jeff Hammond of Keybanc capital markets. Your line is open.

Chuck Lauber: But overall.

Jeff Hammond: Hi, good morning.

Chuck Lauber: <unk> navigated through these in the past and we will continue to do that.

Speaker Change: Hey, good morning, Hey, Jeff.

Jeff Hammond: Sure.

Jeff Hammond: I guess Steve.

Chuck Lauber: I'll go back to our customer base is strong.

Jeff Hammond: Good to have you on the call.

Speaker Change: I think in your prepared remarks, you talked about similar things that early observations and the things that impressed you about a O Smith, but just wondering.

Chuck Lauber: No loss of major customers in 2024, and those partnerships are decades long and I think they'll continue to benefit both of us going forward, so nothing meaningful to a O Smith, but yes, some disruption in the market.

Speaker Change: Where do you see opportunity for change whether it be commercial were opex once.

Speaker Change: Maybe you take a.

Speaker Change: And then when we look at your tenure here.

Chuck Lauber: Thank you.

Speaker Change: Sure as I said I've been really impressed with the quality of the businesses that a O Smith has.

Speaker Change: Our next question comes from Jeff Hammond of Keybanc capital markets. Your line is open.

Speaker Change: <unk>, leading position in market, leading products really great deep customer relationships.

Speaker Change: Hi, good morning.

Speaker Change: Hey, good morning, Hey, Jeff.

Speaker Change: Obviously, it's been a lot of the last 10 months getting to know those better but.

Speaker Change: I guess Steve.

Speaker Change: Good to have you on the call I think in your prepared remarks, you talked about similar things that early observations and the things that impressed you about a O Smith, but just wondering where you see opportunity for change whether it be commercial were opex once.

Speaker Change: And it's had a great cultural fit for me. So those are some of the positives I do see opportunities, where my experience and background has a chance to bring something new or add some value to a O. Smith I think I'd say right now.

Speaker Change: Three areas that I'm kind of leaning into one is Oreo Smith operating system, which is a great foundation here that we built around color.

Speaker Change: Maybe you take a.

Speaker Change: And then when we look at your tenure here.

Speaker Change: Sure.

Speaker Change: I said I've been really impressed with the quality of the businesses.

Speaker Change: Culture of problem solving on the plant floor.

Speaker Change: Smith has market, leading position and market, leading products really great deep customer relationships.

Speaker Change: I've got a personal experience in deploying and running different operating systems and I think there is an opportunity to expand it even further kind of take it to the next level being more focused on how we're driving waste elimination. So that's an area I'm leaning into <unk>.

Speaker Change: Obviously, it's been a lot over the last 10 months getting to know those better but.

Speaker Change: And it's had a great culture fit for me. So those are some of the positive I do see opportunities, where my experience and background has a chance to bring something new or add some value to a O. Smith I think I'd say right now.

Speaker Change: Second one is on the technology side.

Speaker Change: Built and deployed our ERP system over the last few years and that's also an area I have some experience of the previous employer I led the implementation of their ERP system and I think we're at the phase now about how do we get value out of both the investments. We've made and then it's also a space where technologies moving quite quick.

Speaker Change: There are three areas that I'm kind of leaning into one is Oreo Smith operating system, which is a great foundation here that we've built around <unk>.

Speaker Change: Culture of problem solving on the plant floor.

Speaker Change: I've got a personal experience in deploying and running different operating systems, and I think theres an opportunity to expand it even further kind of take it to the next level being more focused on how we're driving waste elimination. So that's an area I'm leaning into.

Speaker Change: And how do we just position ourselves for where technology is going to be more competitive as a company and I think initially that sort of internally how we how we run the company and eventually it could be more involved in how it how it interacts with our products and then the third area.

Speaker Change: Second one is on the technology side.

Speaker Change: It's been a lot of time on is just on the portfolio side and obviously some of the restructuring announcements today are an outcome of some of that work, but thinking through how do we get more competitive with our portfolio how do we drive innovation in that.

Speaker Change: Built and deployed our ERP system over the last few years and that's also an area I have some experience of the previous employer I led the implementation of their ERP system.

Speaker Change: We're at the phase now about how do we get value out of both the investments. We've made and then it's also a space where technologies moving quite quickly and how do we just positioning ourselves for where technology is going to be more competitive as a company and I think initially that sort of internally, how we how we run the company and eventually.

Speaker Change: Market spaces, where we're at and then thinking Big picture about where is the portfolio going in the future. So I'd say those are three areas that I've spent a lot of time on again, it taps into a little bit of sort of my own experience that I'm, bringing into a O Smith and I think theres a lot of a lot of opportunity to build out some good foundation and add more value.

Speaker Change: Okay, Great I appreciate the color there.

Speaker Change: Could be more involved in how it how it interacts with our products and then the third area.

Speaker Change: Just a couple cleanups one.

Speaker Change: The tariff dynamic.

Speaker Change: Spent a lot of time on is just on the portfolio side and obviously some of the restructuring announcements today are an outcome of some of that work, but thinking through how do we get more competitive with our portfolio how do we drive innovation in that.

Speaker Change: Mexico, Canada can you talk about your footprint versus.

Speaker Change: What you think your peers footprint does that put you maybe an advantage disadvantage in any way.

Speaker Change: Some of them the Mexico, Canada tariffs go in and then just last one on corporate expense, what's driving that.

Speaker Change: The market spaces, where we're at and then thinking big picture about where is the portfolio going in the future. So I'd say those are three areas that I've spent a lot of time on again, it taps into a little bit of sort of my own experience that I'm, bringing into a O Smith and I think theres a lot of a lot of opportunity to build us a good foundation and add more value.

Speaker Change: The $10 million increase.

Speaker Change: In 2025 in a tough environment.

Hello.

Speaker Change: Amtrak take the expense side of it but I'll take the.

Speaker Change: The Mexico, and the tariffs and so forth and our positioning in <unk>, Canada and as well because they are both in play in what I would tell you that asthma is positioned pretty well with regards to that.

Speaker Change: Yes.

Speaker Change: Okay, great appreciate the color there.

Speaker Change: Just a couple cleanups one on just the tariff dynamic.

Speaker Change: Mexico, Canada can you talk about your footprint versus.

Speaker Change: If you look at North America, and Mexico, We do have a facility down there that's about maybe 50% of our production. We have two large facilities in North America, which are in the U S, which gives us some optionality there if needed so and we're positioned well so having a having a small footprint, but also having some factories.

Speaker Change: What you think your peers footprint does that put you maybe an advantage disadvantage in any way.

Speaker Change: Some of them, the Mexico, Canada and the tariffs go in and then just last one on corporate expense, what's driving the $10 million increase.

Speaker Change: In 2025 in a tough environment.

Speaker Change: Is that can we can lever if we need to.

Speaker Change: I'm going to check take the expense side of it but I'll take the.

Speaker Change: Is it a comfort to us and I would say up in Canada.

Speaker Change: The Mexico, and the tariffs and so forth and our positioning in Embraco candidate in as well because they are both in play in what I would tell you that asthma is positioned pretty well with regards to that.

Speaker Change: Major water heater company that has it has water heater tank plant up in Montreal.

Speaker Change: So that gives us again, some optionality to to look at different views of capacity and manufacturing so.

Speaker Change: You look at North America, and Mexico, we can do.

Speaker Change: Facility down there that's about maybe 50% of our production we have two large facilities.

Speaker Change: I step back.

Speaker Change: Just from a manufacturing footprint.

Speaker Change: In North America, which are in the U S, which gives us some optionality there if needed so and we're positioned well so having a having a small footprint, but also having some factories that can we can lever if we need to.

Speaker Change: Pretty good shape.

Speaker Change: I think in some cases better than most of our competitors because we're not all in one area.

Speaker Change: And we have that flexibility.

Speaker Change: Flexibility number of plants and having.

Speaker Change: Is it a comfort to us and I would say up in Canada.

Speaker Change: Steve talked about the ERP system, but also haven't standardized products just allows us to move that around if necessary. So.

Speaker Change: <unk>.

Speaker Change: Major water heater company that has it has water heater tank plant up in Montreal.

Speaker Change: But we feel listen we don't know what is going to take but we feel we are in the <unk>.

Speaker Change: So that gives us again, some optionality to to look at different views of capacity and manufacturing so.

Speaker Change: A really solid position.

Speaker Change: For a O Smith, but also to be competitive long term.

Speaker Change: I step back just from a manufacturing footprint.

Speaker Change: And then on your question.

Speaker Change: Question on corporate expense.

Speaker Change: Pretty good shape.

Speaker Change: Up $10 million that's 25.

Speaker Change: I think in some cases better than most of our competitors because we're not all in one area.

Speaker Change: Versus 24, yes.

Speaker Change: Okay.

Speaker Change: Some puts and takes on it.

Speaker Change: And we have that flex.

Speaker Change: But rough roughly equally weighted.

Speaker Change: Flexibility number of plants and having.

Speaker Change: The two largest pieces our interest income that is less in 2025 is that's lumped into that category.

Speaker Change: Steve talked about the ERP system, but also haven't standardized products just allows us to move that around if necessary. So.

Speaker Change: As well as incentives that are at target versus lower than target in 2024.

But we feel listen we don't know what is going to take but we feel we're in the.

Speaker Change: A really solid position.

For a O Smith, but also to be competitive long term.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: And then on your question.

Speaker Change: Question on corporate expense.

Speaker Change: Our next question comes from Andrew Kaplowitz of Citi. Your line is open.

Speaker Change: $10 million that's 25.

Andrew Kaplowitz: Hey, good morning, everyone.

Speaker Change: Versus 24, yes.

Speaker Change: Good morning.

Speaker Change: Okay.

Speaker Change: Obviously, you have a very strong balance sheet and Steve I think you mentioned you're focused on where the AOS portfolio can go in the future I know you just closed but would you expect to get more aggressive in terms of portfolio management in the future whether it's wrapped up in may or is something else like how do you think about that moving forward.

Speaker Change: Some puts and takes on it.

Speaker Change: But rough roughly equally weighted.

Speaker Change: The two largest pieces our interest income that is less in 2025 is that's lumped into that category.

As well as incentives that are at target versus lower than target in 2024.

Speaker Change: And I think it's something that we always been looking at and I think we are a company that is exploring.

Speaker Change: Thank you.

Speaker Change: Where are we should go next in terms of our portfolio and yet at the same time still being disciplined about that so.

Speaker Change: Okay.

Speaker Change: Our next question comes from Andrew Kaplowitz of Citi. Your line is open.

Andrew Kaplowitz: Hey, good morning, everyone.

Speaker Change: Good morning.

Speaker Change: Obviously, you have a very strong balance sheet and Steve I think you mentioned you're focused on where the AOS portfolio can go in the future I know you just closed but would you expect to get more aggressive in terms of portfolio management in the future whether it's wrapped up in may or something else like how do you think about that moving forward.

Speaker Change: Paul I think we can move that forward, but I think it is a lever available to us, but we're going to continue to be disciplined about how we pursue it.

Speaker Change: Very helpful. And then if I go back to last quarter. I think you said you saw a modest slowdown in quoting activity in boilers, but your guidance for this year is still for three years to 5% growth.

Speaker Change: And I think it's something that we always been looking at and I think we are a company that is exploring.

Speaker Change: Any color there on the boiler side still looks like you're pretty confident about another growth year for that side of the business.

Speaker Change: Where are we should go next in terms of our portfolio and yet at the same time still being disciplined.

Speaker Change: That so.

Speaker Change: This is Kevin I would say looking at three 5% that we have out there.

Speaker Change: In terms of being aggressive or more aggressive or an electric Arthur I'd, just say it continues to be on our radar screen and it's on my radar screen and certainly trying to bring my own sort of lens of how I think we can move that forward, but I think it is a lever available to us, but we're going to continue to be disciplined about how we pursue it.

Speaker Change: A driver for US is always our quoting activity that seems degree really stable.

Speaker Change: Quite frankly, some of our product categories.

Speaker Change: The head count.

Speaker Change: The cross border is doing exceptionally well so.

Speaker Change: That's a market that tends to grow 1% to 2% units were going 3% to five and I think a lot of it has to deal with with our products and also that continuing transition for me.

Speaker Change: For me, it's not efficient to our high efficient product line and 90% of what.

Speaker Change: Any color there on the boiler side still looks like you're pretty confident about another growth year for that side of the business.

Speaker Change: Our boiler business does itself high efficient products. So it's a nice space to be in and we think we'll get more than our fair share.

Kevin Wheeler: This is Kevin I would say looking at three 5% that we have out there.

Kevin Wheeler: The driver for US is always our quoting activity that seems degree really stable.

Speaker Change: Thank you.

Kevin Wheeler: Quite frankly, some of our product categories.

Speaker Change: Our next question comes from David Macgregor of Longbow Research. Your line is open.

Kevin Wheeler: We have passed the.

Kevin Wheeler: The cross border is doing exceptionally well so.

David Macgregor: Hey, good morning, everyone and thanks for squeezing me in here I guess just on China. The restructuring could you just talk about the timing of the benefits of that restructuring and when do you expect to see the first signs of success.

Kevin Wheeler: That's a market that tends to grow 1% to 2% units were going 3% to five and I think a lot of it has to do with our products and also that continuing transition for me.

David Macgregor: And then maybe where within that Chinese sort of mix of businesses would we expect to see the greatest impact.

Kevin Wheeler: For me, it's not efficient to our high efficient product line and 90% of what.

Kevin Wheeler: Our boiler business does it sell high efficient products. So it's a nice space to be in and we think we'll get more than our fair share.

David Macgregor: So.

David Macgregor: We've already we're already underway with the restructuring so we're a bit more than halfway through it already.

David Macgregor: So we'll start seeing benefits right now and then we've got more to go so we'll finish off the rest of the restructuring over this quarter and the following quarter and as I mentioned by the end of Q2, we'll expect it to be pretty much fully implemented at that point.

Kevin Wheeler: Thank you.

Speaker Change: Our next question comes from David Macgregor of Longbow Research. Your line is open.

David Macgregor: <unk>.

David Macgregor: I would say a lot of it is just getting us more streamlined and better positioned to compete in China. So obviously our business today is not the same size. It was a few years ago, we had to think differently about how we're organized.

David Macgregor: And then maybe where within that Chinese sort of mix of businesses, we expect to see the greatest impact.

David Macgregor: So we've already we're already underway with the restructuring so we're a bit more than halfway through it already.

David Macgregor: So from that standpoint different than how we've characterized water treatment, maybe less about major portfolio shifts and more about just getting more competitive and getting more streamlined about what we need to focus on going forward to compete in the China market.

David Macgregor: So we will start seeing benefits right.

David Macgregor: Right now and then.

David Macgregor: We've got more to go so we'll finish off the rest of the restructuring over this quarter and the following quarter and as I mentioned by the end of Q2, we'll expect it to be pretty much fully implemented at that point.

Speaker Change: So if I'm hearing you correctly, you're saying the benefits are more kind of SG&A benefits than Cogs benefits, yes, theres a lot of structural cost I think they would say we're getting more efficient.

Chuck: I mean, this is Chuck but thats specific to the restructuring we always.

Chuck: We have initiatives to reduce cost productivity improvements cost outs and that that will continue next year also and there is a focus on certain parts of the portfolio that had more work to do there than others and that's also low wind I think where we're focused going forward.

David Macgregor: So from that standpoint different than how we'd characterize water treatment, maybe less about major portfolio shifts and more about just getting more competitive and getting more streamlined about what we need to focus on going forward.

Chuck: Got it and as a follow up question is just on the balance sheet I guess inventories.

Chuck: What is kind of the target in terms of days of inventory what would you like to get that down to yes.

David Macgregor: The market.

David Macgregor: So if I'm hearing you correctly, you're saying the benefits are more kind of SG&A benefits and Cogs benefits, yes, theres a lot of structural cost I think they would say we're getting more efficient.

Chuck: We're a little higher than we'd like to be I mean, if you look at our inventories are up about $35 million year over year.

Chuck: There's a couple of reasons one is we did invest a bit in tankless inventory as we're rolling out those initiatives have a longer lead time, we're also.

Chuck Lauber: This is Chuck but thats specific to the restructuring we always.

Chuck Lauber: Have initiatives to reduce costs productivity improvements cost outs and that that will continue next year also and there is a focus on certain parts of the portfolio that had more work to do there than others and that's also low wind I think where we're focused going forward.

Chuck: Looking at.

Chuck: Sure.

Chuck: Overall, just a little higher inventories as the volume was a little lighter than what we expected during the last quarter of the year, which will take that out. So our initiative on overall days when you kind of look at overall days on hand, when you take receivables inventory.

Speaker Change: Got it and a follow up question is just on the balance sheet I guess inventories what is kind of a target in terms of days of inventory what would you like to get that down to yes, we're a little higher than we'd like to be I mean, if you look at our inventories are up about $35 million year over year.

Chuck: And.

Chuck: And payables is to be below that 40 day level and we're targeting to be below that 40% level as we come into the end of 2025.

Speaker Change: There's a couple of reasons one is we did invest a bit in tankless inventory as we're rolling out those initiatives have a longer lead time. We're also looking at.

Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to Helen Kurt Hall for closing remarks.

Speaker Change: Thank you everyone for joining us today, let me conclude by reminding you that our global <unk> team continued to invest in ourselves even while navigating many challenges in 2024, and we look forward to updating you on our progress in the quarters to come. In addition, please mark your calendars to join our presentations at two conferences this quarter.

Speaker Change: Overall, just a little higher inventories as the volume was a little lighter than what we expected during the last quarter of the year, which will take that out. So our initiative on overall days when you kind of look at overall days on hand, when you take receivables inventory and.

Speaker Change: And payables is to be below that 40 day level and we're targeting to be below that 40% level as we come into the end of 2025.

City on February 18, and Northcoast on March six.

Speaker Change: You and enjoy the rest of your day.

Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.

Helen Gerhold: Thank you I'm showing no further questions at this time I would now like to turn it back to Helen <unk> for closing remarks.

Helen Gerhold: Thank you everyone for joining us today, let me conclude by reminding you that our global <unk> team continued to invest in ourselves even while navigating many challenges in 2024, we look forward to updating you on our progress in the quarters to come. In addition, please mark your calendars to join our presentations at two conferences this quarter.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Helen Gerhold: City on February 18, and Northcoast on March six thank.

Speaker Change: Yes.

Speaker Change: Okay.

Helen Gerhold: Thank you and enjoy the rest of your day.

Speaker Change: Okay.

Speaker Change: [music].

Helen Gerhold: This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Q4 2024 A. O. Smith Corp Earnings Call

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