A.O. Smith raising prices amid higher input costs, execs say

A.O. Smith is raising prices due to higher input costs, company execs said during its Q1 earnings call on Friday.

What’s happening: “In response to rising steel, freight and other input cost inflation, we have announced price increases for most of our water heater and boiler products… ranging from approximately four percent to seven percent,” said CEO Stephen Shafer.

• CFO Charles Lauber predicted that steel costs this year will rise 15 percent compared to 2025.
• “We now project that freight, non-steel material costs, and tariffs will increase our overall total company cost of goods sold by approximately three percent in 2026,” he said.  
• Meanwhile, boiler sales are projected to grow between six and eight percent in 2026, “due to pricing benefits and a strengthening backlog in commercial and residential boilers,” Shafer added. 

Go deeper: The company is also facing headwinds. 

• “North America water heater sales decreased two percent year-over-year [during the quarter],” Shafer said on the call, also predicting that “full year 2026 industry shipments will be flat to down, as softness in new construction persists and proactive replacement remains steady.” 
• He described challenges in the company’s wholesale residential business, including a soft new construction market and competition from retailers expanding into serving contractors. 
• In consumer-facing channels, he added, growth was flat, “with a general trend towards a trade-down to lower-priced products.” 

Yes, but: A.O. Smith saw “double-digit valve sales growth” from its January acquisition of Leonard Valve, Shafer said.