A.O. Smith Sells China Business and Resets Full-Year Guidance
As seen on the 24/7 Wall St. homepage on October 29, 2026.
A.O. Smith is selling 81% of its China business to CPE at roughly a $400 million valuation, and full-year guidance now excludes China entirely: adjusted EPS of $3.42 to $3.52 on sales of $3.27 billion to $3.29 billion. That reset outweighs the quarter, where earnings topped expectations while revenue missed on a 17% local-currency China decline. Proceeds go first to buybacks, already running near $300 million this year.
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A.O. Smith is selling an 81% stake in its China operation to CPE at a valuation of roughly $400 million, with total value expected to exceed $500 million once a long-term brand licensing arrangement is included. The company retains a 19% stake, so it keeps a foot in the door while freeing up capital to concentrate on North America, water treatment, water management, and India.
The deal reshapes how investors should read the numbers going forward. Full-year 2026 guidance now strips China out entirely, implying roughly 4% sales growth against the China-free 2025 base, a cleaner picture than the headline results suggest.
The quarter itself was mixed. Adjusted EPS of $0.93 came in above expectations, helped by 13% boiler growth and pricing actions in North America. Revenue missed expectations, largely because China sales dropped 17% in local currency amid weak consumer demand and disruption from the strategic review itself.
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Proceeds from the China sale are headed primarily toward buybacks, with full-year repurchases projected at about $300 million. The China business moves to discontinued operations beginning in Q4 2026, with prior periods recast, and the transaction is expected to close in the first half of 2027.
The board also approved a 6% increase in the dividend rate, extending a streak of more than 30 consecutive years of dividend growth. That combination of a strategic exit, buyback momentum, and a higher dividend makes this quarter a structural pivot for the company.
Mentioned: AOS