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About State Industries, LLC

Water-heating company A.O. Smith makes equipment for residential and commercial users. Its products include home gas and electric water heaters and large-scale commercial water heating systems. Its Lochinvar subsidiary specializes in high efficiency water heaters, boilers, pool heaters, and storage tanks. Some of A.O. Smith's most prominent brands include American Water Heaters, Aquasana, and GSW. A.O. Smith sells its products in North America and China, where it generates the majority of its revenue, through a network of more than 1,300 wholesale distributors, as well as large hardware and home center retail chains, such as Lowe's.


A. O. Smith operates two segments, based on geography.

The North America segment generates around 65% of revenue and makes and sells specialty commercial water heating equipment, condensing and non-condensing boilers, and water system tanks.

The Rest of World segment carries out similar activities in China, India, and Europe. Additionally, it markets water treatment and in-home air purification units products, primarily in China. The segment accounts for more than 35% of sales.

Geographic Reach

Milwaukee, Wisconsin-based A.O. Smith is a global company, with manufacturing operations in the US, Canada, Mexico, China, France, India, Turkey, Vietnam, Hong Kong, and the Netherlands. It boasts sales and distribution offices in more than 60 countries. More than 55% of its revenue is generated in the US, while China contributes about 35%.

Of A.O. Smith's 20-plus manufacturing plants, about 15 are located in North America (in six US states plus Canada and Mexico) and six are in four other countries outside the US.

Sales and Marketing

A.O. Smith sells its products through a network of wholesale distributors that serve both residential and commercial customers. It also sells its residential water heaters through retailers, such as Lowe's.

In China alone, A.O. Smith sells water heaters through more than 9,000 retail outlets, of which more than 2,800 exclusively sell the company's products. Its water treatment products and air purification products are also sold in over 7,500 and 3,500 retail outlets respectively in China.

A.O. Smith's client base is fairly concentrated. Its top five customers account for roughly 40% of its total sales.

Financial Performance

A. O. Smith has enjoyed rising revenue and profits for the past few years thanks to new home building in the US and its aggressive growth strategy in China.

In 2018 the company's sales grew 6% to $3.2 billion as it passed higher steel costs on to customers. It also benefited from increased demand for boilers and residential water heaters in the US and for water treatment products in China.

Net income rose 50% to $444.2 due partly to higher operating income but mainly due to a lower income tax expense, which fell roughly half to $113.6 million. The changed related to the 2017 US Tax Cuts and Jobs Act, which resulted in a one-off tax expense of $81.8 million.

A. O. Smith's cash on hand fell $86.9 million during 2018, ending the year at $259.7 million. The company's operations generated $448.9 million, offset by $12.7 million used in its investing activities and $523.1 million used in financing. A. O. Smith's main cash uses were capital expenditures, dividends, share repurchases, and long-term debt repayments.


A. O. is intent on rapid expansion outside the US, particularly in China. While the rate of growth outside North America declined somewhat in 2018 due to slack demand from the Chinese residential market (A. O. Smith expects 2019 to be similarly sluggish), the company continues to expand aggressively in China. It grew the number of retail outlets selling its water heaters by roughly 1,000 in 2018, taking the total past 9,000. Sales in India are also growing quickly, albeit from a small base.

A. O. Smith also uses acquisitions to expand its product portfolio and broaden its customer base.


Mergers and Acquisitions

A.O. Smith has been using select acquisitions to enhance its product portfolio (mainly its water treatment business) and attract additional customers.

The company purchased Wisconsin-based water treatment company Water-Right in 2019 for $107 million. Water-Right's residential and commercial product brands include Evolve, WaterCare, Sanitizer Series, Impression Series, and CustomCare.

State Industries, LLC

Ashland City, TN 37015-1299
Phone: 1 (615) 792-4371

Firm Stats

Employer Type: Privately Owned
Vice President Manufacturing: Steve Anderson
Vice President: Jim Margoni
Vice President: Jane Sanford
Employees (This Location): 1,800
Employees (All Locations): 1,811

Major Office Locations

Ashland City, TN

Other Locations

Charlotte, NC
Ashland City, TN
Cookeville, TN