0001193125-20-210347 | 10-Q | XBRL Viewer

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Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2020	Jul. 31, 2020
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Entity Registrant Name	SMITH A O CORP
Entity Small Business	false
Entity Central Index Key	0000091142
Entity Emerging Growth Company	false
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Document Period End Date	Jun. 30, 2020
Entity File Number	1-475
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	39-0619790
Entity Address, Address Line One	11270 West Park Place
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53224-9508
Entity Address, City or Town	Milwaukee
Security Exchange Name	NYSE
Trading Symbol	AOS
Title of 12(b) Security	Common Stock
Entity Filer Category	Large Accelerated Filer
City Area Code	414
Local Phone Number	359-4000
Document Fiscal Year Focus	2020
Common Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		26,038,133
Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		135,375,099

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net sales	$ 663.9	$ 765.4	$ 1,300.8	$ 1,513.6
Cost of products sold	416.4	456.7	813.8	912.1
Gross profit	247.5	308.7	487.0	601.5
Selling, general and administrative expenses	155.9	178.7	329.7	363.4
Severance and restructuring expenses	6.1	0.0	6.1	0.0
Interest expense	2.5	3.4	4.7	5.4
Other income	(4.0)	(5.6)	(8.2)	(11.1)
Earnings before provision for income taxes	87.0	132.2	154.7	243.8
Provision for income taxes	19.2	30.1	35.2	52.4
Net Earnings	$ 67.8	$ 102.1	$ 119.5	$ 191.4
Net Earnings Per Share of Common Stock	$ 0.42	$ 0.61	$ 0.74	$ 1.14
Diluted Net Earnings Per Share of Common Stock	0.42	0.61	0.74	1.14
Dividends Per Share of Common Stock	$ 0.24	$ 0.22	$ 0.48	$ 0.44

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net earnings	$ 67.8	$ 102.1	$ 119.5	$ 191.4
Other comprehensive earnings (loss)
Foreign currency translation adjustments	3.7	(10.1)	(14.3)	5.8
Unrealized net (losses) gains on cash flow derivative instruments, less related income tax benefit (provision) of $0.3 and $0.2 in 2020, ($0.2) and ($0.1) in 2019	(0.8)	0.7	(0.5)	0.6
Adjustment to pension liability, less related income tax provision of ($1.2) and ($2.4) in 2020 and ($0.8) and ($1.8) in 2019	3.7	3.1	7.3	6.0
Comprehensive Earnings	$ 74.4	$ 95.8	$ 112.0	$ 203.8

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Unrealized net (losses) gains on cash flow derivative instruments, less related income tax benefit (provision)	$ 0.3	$ (0.2)	$ 0.2	$ (0.1)
Adjustment to pension liability, less related income tax provision	$ (1.2)	$ (0.8)	$ (2.4)	$ (1.8)

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 442.7	$ 374.0
Marketable securities	126.0	177.4
Receivables	515.9	589.5
Inventories	306.0	303.0
Other current assets	53.8	56.5
Total Current Assets	1,444.4	1,500.4
Property, plant and equipment	1,170.5	1,156.9
Less accumulated depreciation	(636.7)	(611.5)
Net property, plant and equipment	533.8	545.4
Goodwill	544.0	546.0
Other intangibles	329.5	338.4
Operating lease assets	45.2	46.9
Other assets	87.3	80.9
Total Assets	2,984.2	3,058.0
Liabilities
Trade payables	435.7	509.6
Accrued payroll and benefits	59.7	64.6
Accrued liabilities	188.4	143.7
Product warranties	44.8	41.8
Debt due within one year	6.8	6.8
Total Current Liabilities	735.4	766.5
Long-term debt	274.3	277.2
Pension liabilities	13.8	27.8
Long-term operating lease liabilities	37.5	38.7
Other liabilities	265.1	281.0
Total Liabilities	1,326.1	1,391.2
Stockholders' Equity
Common Stock, value	164.5	164.5
Capital in excess of par value	517.1	509.0
Retained earnings	2,365.1	2,323.4
Accumulated other comprehensive loss	(355.8)	(348.3)
Treasury stock at cost	(1,163.7)	(1,112.7)
Total Stockholders' Equity	1,658.1	1,666.8
Total Liabilities and Stockholders' Equity	2,984.2	3,058.0
Common Class A
Stockholders' Equity
Common Stock, value	130.9	130.9
Total Stockholders' Equity	$ 130.9	$ 130.9

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Common Stock, Par or Stated Value Per Share	$ 1	$ 1
Common Stock, Shares Authorized	240,000,000	240,000,000
Common Stock, shares issued	164,534,881	164,526,709
Common Class A
Common Stock, Par or Stated Value Per Share	$ 5	$ 5
Common Stock, Shares Authorized	27,000,000	27,000,000
Common Stock, shares issued	26,172,713	26,180,885

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities
Net earnings	$ 119.5	$ 191.4
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization	40.0	38.4
Stock based compensation expense	10.4	10.8
Net changes in operating assets and liabilities:
Current assets and liabilities	35.9	(75.9)
Noncurrent assets and liabilities	(26.5)	(21.0)
Cash Provided by Operating Activities	179.3	143.7
Investing Activities
Capital expenditures	(24.8)	(36.5)
Acquisition		(107.0)
Investments in marketable securities	(91.1)	(202.3)
Net proceeds from sale of marketable securities	140.1	293.8
Cash Provided by (Used in) Investing Activities	24.2	(52.0)
Financing Activities
Long-term debt (repaid) incurred	(2.9)	137.3
Common stock repurchases	(56.7)	(132.6)
Net payments from stock option activity	2.6	(0.5)
Dividends paid	(77.8)	(74.0)
Cash Used In Financing Activities	(134.8)	(69.8)
Net increase in cash and cash equivalents	68.7	21.9
Cash and cash equivalents - beginning of period	374.0	259.7
Cash and Cash Equivalents - End of Period	$ 442.7	$ 281.6

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Total	Common Class A	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock
Balance at Dec. 31, 2018		$ 131.0	$ 164.5	$ 496.7	$ 2,102.8		$ (827.2)
Conversion of Class A Common Stock		(0.1)		0.1
Net earnings	$ 191.4				191.4
Issuance of share units				(6.2)
Cash dividends on stock					(74.0)
Vesting of share units				(2.0)			2.1
Stock based compensation expense				10.5
Exercises of stock options				0.6			(1.3)
Stock incentives and directors' compensation				7.0			0.2
Shares repurchased							(132.6)
Balance at Jun. 30, 2019	1,725.1	130.9	164.5	506.7	2,220.2	$ (338.4)	(958.8)
Balance at Mar. 31, 2019		131.0	164.5	503.5	2,155.0		(872.7)
Conversion of Class A Common Stock		(0.1)		0.1
Net earnings	102.1				102.1
Issuance of share units				(0.1)
Cash dividends on stock					(36.9)
Vesting of share units				(0.1)			0.1
Stock based compensation expense				1.9
Exercises of stock options				0.5			0.6
Stock incentives and directors' compensation				0.9			0.2
Shares repurchased							(87.0)
Balance at Jun. 30, 2019	1,725.1	130.9	164.5	506.7	2,220.2	(338.4)	(958.8)
Balance at Dec. 31, 2019	1,666.8	130.9	164.5	509.0	2,323.4		(1,112.7)
Conversion of Class A Common Stock		0.0		0.0
Net earnings	119.5				119.5
Issuance of share units				(6.5)
Cash dividends on stock					(77.8)
Vesting of share units				(1.6)			1.6
Stock based compensation expense				10.2
Exercises of stock options				(1.2)			3.7
Stock incentives and directors' compensation				7.2			0.4
Shares repurchased							(56.7)
Balance at Jun. 30, 2020	1,658.1	130.9	164.5	517.1	2,365.1	(355.8)	(1,163.7)
Balance at Mar. 31, 2020		130.9	164.5	516.1	2,336.1		(1,168.9)
Conversion of Class A Common Stock		0.0		0.0
Net earnings	67.8				67.8
Issuance of share units				0.0
Cash dividends on stock					(38.8)
Vesting of share units				0.0			0.0
Stock based compensation expense				1.4
Exercises of stock options				(1.1)			4.8
Stock incentives and directors' compensation				0.7			0.4
Shares repurchased							0.0
Balance at Jun. 30, 2020	$ 1,658.1	$ 130.9	$ 164.5	$ 517.1	$ 2,365.1	$ (355.8)	$ (1,163.7)

Basis of Presentation

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results expected for the full year. It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form

10-K

for the year ended December 31, 2019 filed with the SEC on February 24, 2020.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740,

Income Taxes

(issued under Accounting Standards Update (ASU)

2019-12,

“Simplifying the Accounting for Income Taxes”). This amendment removes certain exceptions to the general principles of ASC 740 and clarifies and amends existing guidance to improve consistent application. The amendment requires adoption on January 1, 2021, with early adoption permitted. The Company does not expect that the adoption of ASU

2019-12

will have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

In January 2017, the FASB amended ASC 350,

Intangibles –

Goodwill

and Other

(issued under ASU

2017-04,

“Simplifying the Test for Goodwill Impairment”). This amendment simplifies the test for goodwill impairment by only requiring an entity to perform an annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount that the carrying amount exceeds the reporting unit’s fair value. Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted the amendment on January 1, 2020 and the adoption of ASU

2017-04

did not have an impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

In June 2016, the FASB issued ASC 326,

Financial Instruments – Credit Losses

(issued under ASU

2016-13)

which modifies the measurement of expected credit losses on certain financial instruments. The Company adopted

ASU

2016-13

on January 1, 2020 and the adoption did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

Revenue Recognition

6 Months Ended

Jun. 30, 2020

Revenue Recognition Disclosure [Text Block]

2.	Revenue Recognition

Substantially all of the Company’s sales are from contracts with customers for the purchase of its products. Contracts and customer purchase orders are used to determine the existence of a sales contract. Shipping documents are used to verify shipment. For substantially all of its products, the Company transfers control of products to the customer at the point in time when title and risk are passed to the customer, which generally occurs upon shipment of the product. Each unit sold is considered an independent, unbundled performance obligation. The Company’s sales arrangements do not include other performance obligations that are material in the context of the contract.

The nature, timing and amount of revenue for a respective performance obligation are consistent for each customer. The Company measures the sales transaction price based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Sales and value added taxes are excluded from the measurement of transaction price. The Company’s payment terms for the majority of its customers are 30 to 90 days from shipment.

Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $43.0 million and $49.6 million at June 30, 2020 and December 31, 2019, respectively. The Company assesses the collectability of customer receivables based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history. In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs. In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for doubtful accounts, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables. The Company’s allowance for doubtful accounts was $6.7 million at both June 30, 2020 and December 31, 2019.

Rebates and incentives are based on pricing agreements and are tied to sales volume. The amount of revenue is reduced for variable consideration related to customer rebates which are calculated using expected values and are based on program specific factors such as expected rebate percentages based on expected volumes. In situations where the customer has the right to return eligible products, the Company reduces revenue for its estimates of expected product returns, which are primarily based on an analysis of historical experience. Changes in such accruals may be required if actual sales volume differs from estimated sales volume or if future returns differ from historical experience. Shipping and handling costs billed to customers are included in net sales and the related costs are included in cost of products sold and are activities performed to fulfill the promise to transfer products.

Disaggregation of Net Sales

The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Rest of World segment also manufactures and markets

in-home

air purification products in China.

As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channel regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment.

The North America segment major product lines are defined as the following:

Water heaters

The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels and motels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 1,300 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products.

Boilers

The Company’s boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The Company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums. The Company’s boiler distribution channel is comprised primarily of manufacturer representative firms, with the remainder of

its

boilers distributed through wholesale channels. The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction.

Water treatment

products

The Company’s water treatment products range from

point-of-entry

water softeners, solutions for problem well water, and whole-home water filtration products to

on-the-go

filtration bottles and

point-of-use

carbon and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. The Company sells water treatment products through its retail and wholesale distribution channels, similar to water heater products and related parts. The Company’s water treatment products are also sold through independent water quality dealers as well as directly to consumers including through internet sales channels. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters.

The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America

segment

sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World.


(dollars in millions)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
North America
Water heaters and related parts	$	396.8		$	438.9		$	844.6		$	894.6
Boilers and related parts		41.0			48.0			82.5			90.6
Water treatment products (1)		42.7			37.1			86.3			60.6

Total North America		480.5			524.0			1,013.4			1,045.8
Rest of World
China	$	172.7		$	224.2		$	263.7		$	437.2
All other Rest of World		17.0			24.9			36.2			44.0

Total Rest of World		189.7			249.1			299.9			481.2
Inter-segment sales		(6.3	)		(7.7	)		(12.5	)		(13.4	)

Total Net Sales	$	663.9		$	765.4		$	1,300.8		$	1,513.6

(1)	Includes the results of Water-Right, Inc. and its affiliated entities (Water-Right) from April 8, 2019, the date of acquisition

Acquisitions

6 Months Ended

Jun. 30, 2020

Acquisitions

3.	Acquisition

On April 8, 2019, the Company acquired 100 percent of the shares of Water-Right, a Wisconsin-based water treatment company. With the addition of Water-Right, the Company grew its North America water treatment platform. Water-Right is included in the Company’s North America segment for reporting purposes.

The Company paid an aggregate cash purchase price of $107.0 million, net of cash acquired. In addition, the Company established a $4.0 million escrow to satisfy any potential obligations of the former owners of Water-Right, should they arise. During the three months ended June 30, 2020 the

ompany

released $2.0 million of the escrow to the previous owners of Water-Right. The remaining balance of the escrow has scheduled disbursements of $1.9 million in the fourth quarter of 2020 and $0.1 million in the second quarter of 2021.

The following table summarizes the allocation of the fair value of the assets acquired and liabilities assumed at the date of acquisition of Water-Right for purposes of allocating the purchase price. Significant assumptions used to estimate the fair value of intangible assets acquired include discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates, attrition rates and royalty rates. The $60.4 million of acquired identifiable intangible assets was comprised of the following: $40.2 million of customer relationships being amortized over 20 years, $19.0 million of trademarks not subject to amortization, and $1.2 million of

non-compete

agreements being amortized over 7.5 years.


April 8, 2019 (dollars in millions)
Current assets, net of cash acquired	$	9.7
Property, plant and equipment		8.6
Intangible assets		60.4
Goodwill		31.0

Total assets acquired		109.7
Current liabilities		(2.7	)

Net assets acquired	$	107.0

As required under ASC 805 Business Combinations, Water-Right’s results of operations have been included in the Company’s consolidated financial statements from April 8, 2019, the date of acquisition.

Severance and Restructuring Expenses

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Severance and Restructuring Expenses

4.	Severance and Restructuring Expenses

During the three months ended June 30, 2020, to align our business to current market conditions, the

ompany recognized $6.1 million of

pre-tax

severance and restructuring expenses, comprised of $5.2 million severance costs and $0.9 million of other restructuring expenses, as well as a corresponding $1.1 million tax benefit related to these charges. Of the $6.1

million

expen

recognized, $2.2 million was related to the North America segment and $3.9 million was related to the Rest of World segment.

The Company’s severance and restructuring actions were largely completed in the three months ended June 30, 2020.

The following table summarizes the activity in the Company’s accrual for severance and restructuring expenses incurred during the three months ended June 30, 2020:


(dollars in millions)
	Severance Expenses			Restructuring Expenses			Total
Accrued severance and restructuring expenses, March 31, 2020	$	—		$	—		$	—
Charges		5.2			0.9			6.1
Cash Payments		(2.2	)		(0.3	)		(2.5	)

Accrued severance and restructuring expenses, June 30, 2020	$	3.0		$	0.6		$	3.6

Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

The Company’s lease portfolio consists of operating leases for buildings and equipment, such as forklifts and copiers, primarily in the United States and China. The Company defines a lease as a contract that gives the Company the right to control the use of a physical asset for a stated term. The Company pays the lessor for that right, with a series of payments defined in the contract and a corresponding right of use operating lease asset and liability are recorded. The Company has elected not to record leases with an initial term of 12 months or less on its condensed consolidated balance sheet. To determine balance sheet amounts, required legal payments are discounted using the Company’s incremental borrowing rate as of the inception of the lease. The incremental borrowing rate is the rate of interest that the Company would incur if it were to borrow, on a collateralized basis, an amount equal to the value of the leased item over a similar term, in a similar economic environment. Variable lease components not based on an index or rate are excluded from the measurement of the lease asset and liability and expensed as incurred for all asset classes.

Certain leases include one or more options to renew or terminate. Renewal terms can extend the lease term from one to five years and options to terminate can be effective within one year. The exercise of lease renewal or termination is at the Company’s discretion and when it is determined to be reasonably certain to renew or terminate, the option is reflected in the measurement of lease asset and liability. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants or material subleases. Cash flows associated with leases are materially consistent with the expense recorded in the condensed consolidated statement of earnings.

Supplemental balance sheet information related to leases was as follows:


(dollars in millions)
	June 30, 2020			December 31, 2019
Liabilities
Short term: Accrued liabilities	$	11.5		$	12.0
Long term: Operating lease liabilities		37.5			38.7

Total operating lease liabilities	$	49.0		$	50.7
Less: Rent incentives and deferrals		(3.8	)		(3.8	)

Assets
Operating lease assets	$	45.2		$	46.9


Lease Term and Discount Rate	June 30, 2020
Weighted-average remaining lease term		9.8 years
Weighted-average discount rate		3.83	%

The components of lease expense were as follows:


(dollars in millions)
		Three months ended June 30,
Lease Expense	Classification	2020 (1)		2019 (2)
Operating lease expense	Cost of products sold	$	0.8	$	0.7
	Selling, general and administrative expenses	$	4.2	$	4.1

(1)	2020 includes short-term and variable lease expenses of $0.6 million and $0.5 million, respectively.

(2)	2019 includes short-term and variable lease expenses of $0.5 million and $0.2 million, respectively.


(dollars in millions)
		Six months ended June 30,
Lease Expense	Classification	2020 (1)		2019 (2)
Operating lease expense	Cost of products sold	$	1.5	$	1.3
	Selling, general and administrative expenses	$	8.2	$	9.0

(1)	2020 includes short-term and variable lease expenses of $1.0 million and $0.9 million, respectively.

(2)	2019 includes short-term and variable lease expenses of $1.0 million and $1.0 million, respectively.

Maturities of lease liabilities were as follows:


(dollars in millions)
	June 30, 2020
2020	$	7.0
2021		11.7
2022		9.9
2023		5.5
2024		4.4
After 2024		23.0

Total lease payments		61.5
Less: imputed interest		(12.5	)

Present value of operating lease liabilities	$	49.0

Inventories

6 Months Ended

Jun. 30, 2020

Inventories

6.	Inventories

The following table presents the components of the Company’s inventory balances:


(dollars in millions)
	June 30, 2020			December 31, 2019
Finished products	$	134.3		$	136.8
Work in process		22.7			21.7
Raw materials		172.8			168.3

Inventories, at FIFO cost		329.8			326.8
LIFO reserve		(23.8	)		(23.8	)

Net inventory	$	306.0		$	303.0

Product Warranties

6 Months Ended

Jun. 30, 2020

Product Warranties Disclosures [Abstract]

Product Warranties

7.	Product Warranties

The Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims. The following table presents the Company’s warranty liability activity.


	Three Months Ended June 30,
(dollars in millions)
	2020			2019
Balance at April 1,	$	135.3		$	136.2
Expense		12.3			11.4
Claims settled		(11.6	)		(13.6	)

Balance at June 30,	$	136.0		$	134.0


	Six Months Ended June 30,
(dollars in millions)
	2020			2019
Balance at January 1,	$	134.3		$	139.4
Expense		25.8			20.8
Claims settled		(24.1	)		(26.2	)

Balance at June 30,	$	136.0		$	134.0

Long-Term Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

8.	Long-Term Debt

The Company has a $500 million multi-year multi-currency revolving credit agreement with a group of nine banks, which expires on December 15, 2021. The facility has an accordion provision which allows it to be increased up to $700 million if certain conditions (including lender approval) are satisfied.

Borrowings under bank credit lines and commercial paper borrowings are supported by the $500 million revolving credit agreement. As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at June 30, 2020. At its option, the Company either maintains cash balances or pays fees for bank credit and services.

Earnings per Share of Common Stock

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings per Share of Common Stock

9.	Earnings per Share of Common Stock

The numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Denominator for basic earnings per share - weighted average shares		161,208,194		166,825,601		161,539,991		167,311,995
Effect of dilutive stock options and share units		965,648		1,260,667		995,675		1,276,451

Denominator for diluted earnings per share		162,173,842		168,086,268		162,535,666		168,588,446

Stock Based Compensation

6 Months Ended

Jun. 30, 2020

Stock Based Compensation

10.	Stock Based Compensation

The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Plan) effective January 1, 2007. The Plan was

most recently

eapproved by stockholders on April 15, 2020. The Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of options or share units at June 30, 2020 was 3,410,323 which includes 2,400,000 additional shares that were authorized on April 15, 2020 at the Company’s annual meeting of stockholders. Upon stock option exercise or share unit vesting, shares are issued from treasury stock.

Total stock based compensation expense recognized in the three months ended June 30, 2020 and 2019 was $1.4 million and $2.1 million, respectively. Total stock based compensation expense recognized in the six months ended June 30, 2020 and 2019 was $10.4 million and $10.8 million, respectively.

Stock Options

The stock options granted in the six months ended June 30, 2020 and 2019 have three year pro rata vesting from the date of grant. Stock options are issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant. For active employees, all options granted in 2020 and 2019 expire ten years after the date of grant. The Company’s stock options are expensed ratably over the three year vesting period; however, included in stock option expense for the three and six months ended June 30, 2020 and 2019 was expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period. Stock based compensation expense attributable to stock options in the three months ended June 30, 2020 and 2019 was $0.7 million and $0.9 million, respectively. Stock based compensation expense attributable to stock options in the six months ended June 30, 2020 and 2019 was $5.2 million, respectively. Changes in options, all of which

relate

to the Company’s Common Stock, were as follows for the six months ended June 30, 2020:


	Weighted- Avg. Per Share Exercise Price		Number of Options			Average Remaining Contractual Life		Aggregate Intrinsic Value (dollars in millions)
Outstanding at January 1, 2020	$	37.64		2,728,350
Granted		42.39		784,300
Exercised		14.79		(271,844	)
Forfeited		48.50		(68,654	)

Outstanding at June 30, 2020		40.54		3,172,152			7 years	$	28.2

Exercisable at June 30, 2020		38.42		1,922,832			7 years	$	28.2

The weighted-average fair value per option at the date of grant during the six months ended June 30, 2020 and 2019 using the Black-Scholes option-pricing model was $8.15 and $10.83, respectively. Assumptions were as follows:


	Six Months Ended June 30,
	2020			2019
Expected life (years)		5.7			5.5
Risk-free interest rate		1.6	%		2.7	%
Dividend yield		2.1	%		1.6	%
Expected volatility		23.6	%		22.8	%

The expected lives of options for purposes of these models are based on historical exercise behavior. The risk-free interest rates for purposes of these models are based on the U.S. Treasury yield curve in effect on the date of grant for the respective expected lives of the option. The expected dividend yields for purposes of these models are based on the dividends paid in the preceding four quarters divided by the grant date market value of the Common Stock. The expected volatility for purposes of these models are based on the historical volatility of the Common Stock.

Restricted Stock and Share Units

Participants may also be awarded shares of restricted stock or share units under the Plan. Share units vest three years after the date of grant. The Company granted 169,539 and 139,892 share units under the plan in the six months ended June 30, 2020 and 2019, respectively. The share units were valued at $7.2 million and $6.9 million at the date of issuance in 2020 and 2019, respectively, based on the price of the Company’s Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period; however, included in share unit expense in the three and six months ended June 30, 2020 and 2019 was expense associated with accelerated vesting of share unit awards for certain employees who either are retirement eligible or will become retirement eligible during the vesting period. Stock based compensation expense attributable to share units of $0.7 million and $1.2 million was recognized in the three months ended June 30, 2020 and 2019, respectively. Stock based compensation expense attributable to share units of $5.2 million and $5.6 million was recognized in the six months ended June 30, 2020 and 2019, respectively. Certain

non-U.S.-based

employees receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period. A summary of share unit activity under the plan is as follows for the six months ended June 30, 2020:


	Number of Units			Weighted-Average Grant Date Value
Issued and unvested at January 1, 2020		366,102		$	49.92
Granted		169,539			42.39
Vested		(100,735	)		49.21
Forfeited		(10,656	)		52.48

Issued and unvested at June 30, 2020		424,250			46.93

Pensions

6 Months Ended

Jun. 30, 2020

Pensions

11.

Pensions

The following table presents the components of the Company’s net pension income.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Service cost	$	0.3		$	0.5		$	0.7		$	0.9
Interest cost		5.8			7.8			11.5			15.7
Expected return on plan assets		(13.0	)		(14.4	)		(26.0	)		(28.7	)
Amortization of unrecognized loss		5.0			4.0			9.9			8.0
Amortization of prior service cost		(0.1	)		(0.1	)		(0.2	)		(0.2	)

Defined benefit plan income	$	(2.0	)	$	(2.2	)	$	(4.1	)	$	(4.3	)

The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension income are reflected in other income. The Company was not required to and did not make a contribution to its U.S. pension plan in 2019. The Company is not required to make a contribution in 2020.

- Definition

The entire disclosure for retirement benefits.

+ References

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+ Details

Segment Results

6 Months Ended

Jun. 30, 2020

Segment Results

12.	Segment Results

The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The Rest of World segment also manufactures and markets

in-home

air purification products in China.

The following table presents the Company’s segment results:


(dollars in millions)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net sales
North America	$	480.5		$	524.0		$	1,013.4		$	1,045.8
Rest of World		189.7			249.1			299.9			481.2
Inter-segment		(6.3	)		(7.7	)		(12.5	)		(13.4	)

	$	663.9		$	765.4		$	1,300.8		$	1,513.6

Segment earnings
North America (1)	$	105.4		$	122.9		$	232.5		$	238.9
Rest of World (2)		(5.8	)		22.4			(48.0	)		34.7
Inter-segment		(0.3	)		(0.1	)		(0.3	)		(0.1	)

		99.3			145.2			184.2			273.5
Corporate expense		(9.8	)		(9.6	)		(24.8	)		(24.3	)
Interest expense		(2.5	)		(3.4	)		(4.7	)		(5.4	)

Earnings before income taxes		87.0			132.2			154.7			243.8
Provision for income taxes		19.2			30.1			35.2			52.4

Net earnings	$	67.8		$	102.1		$	119.5		$	191.4

(1) includes severance and restructuring expenses of:	$	2.2		$	—		$	2.2		$	—
(2) includes severance and restructuring expenses of:	$	3.9		$	—		$	3.9		$	—

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Measurements

13.	Fair Value Measurements

ASC 820,

Fair Value Measurements

, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on the market approach which are prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The following table presents assets measured at fair value on a recurring basis.


(dollars in millions)
Fair Value Measurement Using	June 30, 2020			December 31, 2019
Quoted prices in active markets for identical assets (Level 1)	$	126.0		$	177.4
Significant other observable inputs (Level 2)		(0.4	)		6.9

Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2). There were no changes in the Company’s valuation techniques used to measure fair values on a recurring basis during the six months ended June 30, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Derivative Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments

14.	Derivative Instruments

The Company utilizes certain derivative instruments to enhance its ability to manage currency exposure as well as raw materials price risk. Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes. The contracts are executed

with

major financial institutions with no credit loss anticipated for failure of the counterparties to perform.

Cash Flow Hedges

With the exception of its net investment hedges, the Company designates that all of its hedging instruments are cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), gains or losses on the derivative instrument are reported as a component of other comprehensive loss, net of tax, and are reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings.

Foreign Currency Forward Contracts

The Company is exposed to foreign currency exchange risk as a result of transactions in currencies other than the functional currency of certain subsidiaries. The Company utilizes foreign currency forward purchase and sale contracts to manage the volatility associated with foreign currency purchases, sales and certain intercompany transactions in the normal course of business. Principal currencies for which the Company utilizes foreign currency forward contracts include the British pound, Canadian dollar, Euro and Mexican peso.

Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the consolidated statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective.

The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year. The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts that are designated as cash flow hedges.


(dollars in millions)
	June 30, 2020				December 31, 2019
	Buy		Sell		Buy		Sell
British pound	$	—	$	0.6	$	—	$	1.3
Canadian dollar		—		39.6		—		49.7
Euro		24.6		—		36.0		—
Mexican peso		23.6		—		18.6		—

Total	$	48.2	$	40.2	$	54.6	$	51.0

Commodity Futures Contracts

In addition to entering into supply arrangements in the normal course of business, the Company also enters into futures contracts to fix the cost of certain raw material purchases, principally steel, with the objective of minimizing changes in cost due to market price fluctuations. The hedging strategy for achieving this objective is to purchase steel futures contracts on the New York Metals Exchange (NYMEX) and copper futures contracts on the open market of the London Metals Exchange (LME) or over the counter contracts based on the LME.

With NYMEX, the Company is required to make cash deposits on unrealized losses on steel derivative contracts.

The

after-tax

gains and losses of the contracts as of June 30, 2020 were recorded in accumulated other comprehensive loss and will be reclassified into cost of products sold in the period in which the underlying transaction is recorded in earnings. The

after-tax

gains and losses on the contracts will be reclassified within one year.

Net Investment Hedges

The Company enters into certain foreign currency forward contracts to hedge the exposure to a portion of the Company’s net investments in certain

non-U.S.

subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its

non-U.S.

subsidiaries. These hedges are determined to be effective. The Company recognized ($0.1) million and $0.7 million of

after-tax

(losses) gains associated with hedges of a net investment in

non-U.S.

subsidiaries in currency translation adjustment in other comprehensive income in the three and six months ended June 30, 2020, respectively. The Company recognized $- and $1.3 million of

after-tax

gains associated with hedges of a net investment in

non-U.S.

subsidiaries in currency translation adjustment in other comprehensive income in the three and six months ended June 30, 2019, respectively. As of June 30, 2020, the Company had no foreign currency forward contracts designated as net investment hedges outstanding.

The following tables present the impact of derivative contracts on the Company’s financial statements.

Fair value of derivatives designated as hedging instruments under ASC 815:


(dollars in millions)
	Balance Sheet Location	June 30, 2020			December 31, 2019
Foreign currency contracts	Other current assets	$	1.6		$	8.4
	Accrued liabilities		(1.9	)		(1.5	)
Commodities contracts	Accrued liabilities		(0.1	)		—

Total derivatives designated as hedging instruments		$	(0.4	)	$	6.9

The effect of cash flow hedges on the condensed consolidated statement of earnings:

Three Months Ended June 30 (dollars in millions):


Derivatives in ASC 815 cash flow hedging relationships	Amount of gain (loss) recognized in other comprehensive loss on derivatives						Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings		Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings
	2020			2019					2020		2019
Foreign currency contracts	$	(0.6	)	$	0.5			Cost of products sold	$	0.5	$	—
Commodities contracts		0.1			(0.3	)		Cost of products sold		—		(0.8	)

	$	(0.5	)	$	0.2				$	0.5	$	(0.8	)

Six Months Ended June 30 (dollars in millions):


Derivatives in ASC 815 cash flow hedging relationships	Amount of gain (loss) recognized in other comprehensive loss on derivatives						Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings		Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings
	2020			2019					2020		2019
Foreign currency contracts	$	0.8		$	0.6			Cost of products sold	$	1.3	$	—
Commodities contracts		(0.1	)		(0.5	)		Cost of products sold		—		(0.8	)

	$	0.7		$	0.1				$	1.3	$	(0.8	)

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Taxes

15.	Income Taxes

The Company’s effective income tax rates for the three and six months ended June 30, 2020 were 22.1 percent and 22.8 percent, respectively. The Company estimates that its annual effective income tax rate for the full year 2020 will be between 23.0 and 23.5 percent. The effective income tax rates for the three and six months ended June 30, 2019 were 22.8 percent and 21.5 percent, respectively. The change in the effective income tax rate for the six months ended June 30, 2020 compared to the effective income tax rate for the six months ended June 30, 2019 was primarily due to a change in geographic earnings mix.

As of June 30, 2020, the Company had $9.7 million of unrecognized tax benefits of which $0.8 million would affect its effective income tax rate if recognized. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Company’s U.S. federal income tax returns for 2016-2020 are subject to audit. The Company is subject to state and local income tax audits for tax years 2002-2020. The Company is subject to

non-U.S.

income tax examinations for years 2014-2020.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

16.	Commitments and Contingencies

The Company maintains a commercial relationship with a supply-chain service provider (the Provider) in connection with the Company’s business in China. In this capacity, the Provider offers order-entry, warehousing and logistics support. The Provider also offers asset-backed financing to certain of the Company’s distributors in China to facilitate their working capital needs. To facilitate its financing support business, the Provider has collateralized lending facilities in place with multiple Chinese banks under which the Company has agreed to repurchase inventory if both requested by the banks and certain defined conditions are met, primarily related to the aging of the distributors’ notes.

The Provider is required to indemnify the Company for any losses the Company would incur in the event of an inventory repurchase under these arrangements. Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of product plus costs incurred in the process, less related distributor rebates.

Before considering any reduction of distributor rebate accruals of $7.2 and $14.1 million as of June 30, 2020 and December 31, 2019, respectively, and from the resale of the related inventory, the gross amount the Company would be obligated to repurchase, which would be contingent on the default of all of the outstanding loans, was approximately $10.8 million and $23.1 million as of June 30, 2020 and December 31, 2019, respectively. The Company’s reserves for estimated losses under repurchase arrangements were immaterial as of June 30, 2020 and December 31, 2019.

Changes in Accumulated Other Comprehensive Loss by Component

6 Months Ended

Jun. 30, 2020

Changes in Accumulated Other Comprehensive Loss by Component

17.	Changes in Accumulated Other Comprehensive Loss by Component

Changes to accumulated other comprehensive loss by component are as follows:


(dollars in millions)
	Three Months Ended June 30,
	2020			2019
Cumulative foreign currency translation
Balance at beginning of period	$	(84.2	)	$	(49.0	)
Other comprehensive income (loss) before reclassifications		3.7			(10.1	)

Balance at end of period		(80.5	)		(59.1	)

Unrealized net gain (loss) on cash flow derivatives
Balance at beginning of period		0.5			(0.8	)
Other comprehensive (loss) gain before reclassifications		(0.4	)		0.1
Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $0.1 and ($0.2) in 2020 and 2019, respectively)		(0.4	)		0.6

Balance at end of period		(0.3	)		(0.1	)

Pension liability
Balance at beginning of period		(278.7	)		(282.3	)
Amounts reclassified from accumulated other comprehensive loss: (1)		3.7			3.1

Balance at end of period		(275.0	)		(279.2	)

Accumulated other comprehensive loss, end of period	$	(355.8	)	$	(338.4	)


(1) Amortization of pension items:
Actuarial losses	$	5.0	(2)	$	4.0	(2)
Prior year service cost		(0.1	) (2)		(0.1	) (2)

		4.9			3.9
Income tax benefit		(1.2	)		(0.8	)

Reclassification net of income tax benefit	$	3.7		$	3.1

(2)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details

Changes to accumulated other comprehensive loss by component are as follows:


(dollars in millions)
	Six Months Ended June 30,
	2020			2019
Cumulative foreign currency translation
Balance at beginning of period	$	(66.2	)	$	(64.9	)
Other comprehensive (loss) income before reclassifications		(14.3	)		5.8

Balance at end of period		(80.5	)		(59.1	)

Unrealized net gain on cash flow derivatives
Balance at beginning of period		0.2			(0.7	)
Other comprehensive gain before reclassifications		0.5			—
Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $0.3 and ($0.2) in 2020 and 2019, respectively)		(1.0	)		0.6

Balance at end of period		(0.3	)		(0.1	)

Pension liability
Balance at beginning of period		(282.3	)		(285.2	)
Amounts reclassified from accumulated other comprehensive loss: (1)		7.3			6.0

Balance at end of period		(275.0	)		(279.2	)

Accumulated other comprehensive loss, end of period	$	(355.8	)	$	(338.4	)


(1) Amortization of pension items:
Actuarial losses	$	9.9	(2)	$	8.0	(2)
Prior year service cost		(0.2	) (2)		(0.2	) (2)

		9.7			7.8
Income tax benefit		(2.4	)		(1.8	)

Reclassification net of income tax benefit	$	7.3		$	6.0

(2)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details

Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2020

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) 740,

Income Taxes

(issued under Accounting Standards Update (ASU)

2019-12,

2019-12

will have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

In January 2017, the FASB amended ASC 350,

Intangibles –

Goodwill

and Other

(issued under ASU

2017-04,

2017-04

did not have an impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

In June 2016, the FASB issued ASC 326,

Financial Instruments – Credit Losses

(issued under ASU

2016-13)

which modifies the measurement of expected credit losses on certain financial instruments. The Company adopted

ASU

2016-13

on January 1, 2020 and the adoption did not have a material impact on its consolidated balance sheets, statements of earnings or statements of cash flows.

Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2020

Revenue Recognition [Abstract]

Segment Sales Disaggregated by Major Product Line

The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America

segment

sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World.


(dollars in millions)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
North America
Water heaters and related parts	$	396.8		$	438.9		$	844.6		$	894.6
Boilers and related parts		41.0			48.0			82.5			90.6
Water treatment products (1)		42.7			37.1			86.3			60.6

Total North America		480.5			524.0			1,013.4			1,045.8
Rest of World
China	$	172.7		$	224.2		$	263.7		$	437.2
All other Rest of World		17.0			24.9			36.2			44.0

Total Rest of World		189.7			249.1			299.9			481.2
Inter-segment sales		(6.3	)		(7.7	)		(12.5	)		(13.4	)

Total Net Sales	$	663.9		$	765.4		$	1,300.8		$	1,513.6

(1)	Includes the results of Water-Right, Inc. and its affiliated entities (Water-Right) from April 8, 2019, the date of acquisition

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2020

Summary of Preliminary Allocation of Fair Value of Assets Acquired and Liabilities Assumed at Date of Acquisition


April 8, 2019 (dollars in millions)
Current assets, net of cash acquired	$	9.7
Property, plant and equipment		8.6
Intangible assets		60.4
Goodwill		31.0

Total assets acquired		109.7
Current liabilities		(2.7	)

Net assets acquired	$	107.0

Severance and Restructuring Expenses (Tables)

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Summary of accrual for severance and restructuring expenses incurred

The following table summarizes the activity in the Company’s accrual for severance and restructuring expenses incurred during the three months ended June 30, 2020:


(dollars in millions)
	Severance Expenses			Restructuring Expenses			Total
Accrued severance and restructuring expenses, March 31, 2020	$	—		$	—		$	—
Charges		5.2			0.9			6.1
Cash Payments		(2.2	)		(0.3	)		(2.5	)

Accrued severance and restructuring expenses, June 30, 2020	$	3.0		$	0.6		$	3.6

Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Schedule of Leases Supplemental Balance Sheet

Supplemental balance sheet information related to leases was as follows:


(dollars in millions)
	June 30, 2020			December 31, 2019
Liabilities
Short term: Accrued liabilities	$	11.5		$	12.0
Long term: Operating lease liabilities		37.5			38.7

Total operating lease liabilities	$	49.0		$	50.7
Less: Rent incentives and deferrals		(3.8	)		(3.8	)

Assets
Operating lease assets	$	45.2		$	46.9


Lease Term and Discount Rate	June 30, 2020
Weighted-average remaining lease term		9.8 years
Weighted-average discount rate		3.83	%

Schedule of Components of Lease Expense

The components of lease expense were as follows:


(dollars in millions)
		Three months ended June 30,
Lease Expense	Classification	2020 (1)		2019 (2)
Operating lease expense	Cost of products sold	$	0.8	$	0.7
	Selling, general and administrative expenses	$	4.2	$	4.1

(1)	2020 includes short-term and variable lease expenses of $0.6 million and $0.5 million, respectively.

(2)	2019 includes short-term and variable lease expenses of $0.5 million and $0.2 million, respectively.


(dollars in millions)
		Six months ended June 30,
Lease Expense	Classification	2020 (1)		2019 (2)
Operating lease expense	Cost of products sold	$	1.5	$	1.3
	Selling, general and administrative expenses	$	8.2	$	9.0

(1)	2020 includes short-term and variable lease expenses of $1.0 million and $0.9 million, respectively.

(2)	2019 includes short-term and variable lease expenses of $1.0 million and $1.0 million, respectively.

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities were as follows:


(dollars in millions)
	June 30, 2020
2020	$	7.0
2021		11.7
2022		9.9
2023		5.5
2024		4.4
After 2024		23.0

Total lease payments		61.5
Less: imputed interest		(12.5	)

Present value of operating lease liabilities	$	49.0

Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Inventories

The following table presents the components of the Company’s inventory balances:


(dollars in millions)
	June 30, 2020			December 31, 2019
Finished products	$	134.3		$	136.8
Work in process		22.7			21.7
Raw materials		172.8			168.3

Inventories, at FIFO cost		329.8			326.8
LIFO reserve		(23.8	)		(23.8	)

Net inventory	$	306.0		$	303.0

Product Warranties (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Product Warranty Liability Activity

The following table presents the Company’s warranty liability activity.


	Three Months Ended June 30,
(dollars in millions)
	2020			2019
Balance at April 1,	$	135.3		$	136.2
Expense		12.3			11.4
Claims settled		(11.6	)		(13.6	)

Balance at June 30,	$	136.0		$	134.0


	Six Months Ended June 30,
(dollars in millions)
	2020			2019
Balance at January 1,	$	134.3		$	139.4
Expense		25.8			20.8
Claims settled		(24.1	)		(26.2	)

Balance at June 30,	$	136.0		$	134.0

Earnings per Share of Common Stock (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Computation of Basic and Diluted Weighted Average Shares Used in EPS Calculations

The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Denominator for basic earnings per share - weighted average shares		161,208,194		166,825,601		161,539,991		167,311,995
Effect of dilutive stock options and share units		965,648		1,260,667		995,675		1,276,451

Denominator for diluted earnings per share		162,173,842		168,086,268		162,535,666		168,588,446

Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Changes in Option Shares

Changes in options, all of which

relate

to the Company’s Common Stock, were as follows for the six months ended June 30, 2020:


	Weighted- Avg. Per Share Exercise Price		Number of Options			Average Remaining Contractual Life		Aggregate Intrinsic Value (dollars in millions)
Outstanding at January 1, 2020	$	37.64		2,728,350
Granted		42.39		784,300
Exercised		14.79		(271,844	)
Forfeited		48.50		(68,654	)

Outstanding at June 30, 2020		40.54		3,172,152			7 years	$	28.2

Exercisable at June 30, 2020		38.42		1,922,832			7 years	$	28.2

Schedule of Weighted Average Fair Value per Option at Date of Grant


	Six Months Ended June 30,
	2020			2019
Expected life (years)		5.7			5.5
Risk-free interest rate		1.6	%		2.7	%
Dividend yield		2.1	%		1.6	%
Expected volatility		23.6	%		22.8	%

Schedule of Share Unit Activity Under Plan

A summary of share unit activity under the plan is as follows for the six months ended June 30, 2020:


	Number of Units			Weighted-Average Grant Date Value
Issued and unvested at January 1, 2020		366,102		$	49.92
Granted		169,539			42.39
Vested		(100,735	)		49.21
Forfeited		(10,656	)		52.48

Issued and unvested at June 30, 2020		424,250			46.93

Pensions (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Components of Net Pension Income

The following table presents the components of the Company’s net pension income.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Service cost	$	0.3		$	0.5		$	0.7		$	0.9
Interest cost		5.8			7.8			11.5			15.7
Expected return on plan assets		(13.0	)		(14.4	)		(26.0	)		(28.7	)
Amortization of unrecognized loss		5.0			4.0			9.9			8.0
Amortization of prior service cost		(0.1	)		(0.1	)		(0.2	)		(0.2	)

Defined benefit plan income	$	(2.0	)	$	(2.2	)	$	(4.1	)	$	(4.3	)

Segment Results (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Segment Earnings

The following table presents the Company’s segment results:


(dollars in millions)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net sales
North America	$	480.5		$	524.0		$	1,013.4		$	1,045.8
Rest of World		189.7			249.1			299.9			481.2
Inter-segment		(6.3	)		(7.7	)		(12.5	)		(13.4	)

	$	663.9		$	765.4		$	1,300.8		$	1,513.6

Segment earnings
North America (1)	$	105.4		$	122.9		$	232.5		$	238.9
Rest of World (2)		(5.8	)		22.4			(48.0	)		34.7
Inter-segment		(0.3	)		(0.1	)		(0.3	)		(0.1	)

		99.3			145.2			184.2			273.5
Corporate expense		(9.8	)		(9.6	)		(24.8	)		(24.3	)
Interest expense		(2.5	)		(3.4	)		(4.7	)		(5.4	)

Earnings before income taxes		87.0			132.2			154.7			243.8
Provision for income taxes		19.2			30.1			35.2			52.4

Net earnings	$	67.8		$	102.1		$	119.5		$	191.4

(1) includes severance and restructuring expenses of:	$	2.2		$	—		$	2.2		$	—
(2) includes severance and restructuring expenses of:	$	3.9		$	—		$	3.9		$	—

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents assets measured at fair value on a recurring basis.


(dollars in millions)
Fair Value Measurement Using	June 30, 2020			December 31, 2019
Quoted prices in active markets for identical assets (Level 1)	$	126.0		$	177.4
Significant other observable inputs (Level 2)		(0.4	)		6.9

Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Summary by Currency of Foreign Currency Forward Contracts

The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts that are designated as cash flow hedges.


(dollars in millions)
	June 30, 2020				December 31, 2019
	Buy		Sell		Buy		Sell
British pound	$	—	$	0.6	$	—	$	1.3
Canadian dollar		—		39.6		—		49.7
Euro		24.6		—		36.0		—
Mexican peso		23.6		—		18.6		—

Total	$	48.2	$	40.2	$	54.6	$	51.0

Schedule of Impact of Cash Flow Hedges on Company's Financial Statements

The following tables present the impact of derivative contracts on the Company’s financial statements.

Fair value of derivatives designated as hedging instruments under ASC 815:


(dollars in millions)
	Balance Sheet Location	June 30, 2020			December 31, 2019
Foreign currency contracts	Other current assets	$	1.6		$	8.4
	Accrued liabilities		(1.9	)		(1.5	)
Commodities contracts	Accrued liabilities		(0.1	)		—

Total derivatives designated as hedging instruments		$	(0.4	)	$	6.9

Schedule of Effect of Derivatives Instruments on Condensed Consolidated Statement of Earnings

The effect of cash flow hedges on the condensed consolidated statement of earnings:

Three Months Ended June 30 (dollars in millions):


Derivatives in ASC 815 cash flow hedging relationships	Amount of gain (loss) recognized in other comprehensive loss on derivatives						Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings		Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings
	2020			2019					2020		2019
Foreign currency contracts	$	(0.6	)	$	0.5			Cost of products sold	$	0.5	$	—
Commodities contracts		0.1			(0.3	)		Cost of products sold		—		(0.8	)

	$	(0.5	)	$	0.2				$	0.5	$	(0.8	)

Six Months Ended June 30 (dollars in millions):


Derivatives in ASC 815 cash flow hedging relationships	Amount of gain (loss) recognized in other comprehensive loss on derivatives						Location of gain (loss) reclassified from accumulated other comprehensive loss into earnings		Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings
	2020			2019					2020		2019
Foreign currency contracts	$	0.8		$	0.6			Cost of products sold	$	1.3	$	—
Commodities contracts		(0.1	)		(0.5	)		Cost of products sold		—		(0.8	)

	$	0.7		$	0.1				$	1.3	$	(0.8	)

Changes in Accumulated Other Comprehensive Loss by Component (Tables)

6 Months Ended

Jun. 30, 2020

Changes to Accumulated Other Comprehensive Loss by Component

Changes to accumulated other comprehensive loss by component are as follows:


(dollars in millions)
	Three Months Ended June 30,
	2020			2019
Cumulative foreign currency translation
Balance at beginning of period	$	(84.2	)	$	(49.0	)
Other comprehensive income (loss) before reclassifications		3.7			(10.1	)

Balance at end of period		(80.5	)		(59.1	)

Unrealized net gain (loss) on cash flow derivatives
Balance at beginning of period		0.5			(0.8	)
Other comprehensive (loss) gain before reclassifications		(0.4	)		0.1
Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $0.1 and ($0.2) in 2020 and 2019, respectively)		(0.4	)		0.6

Balance at end of period		(0.3	)		(0.1	)

Pension liability
Balance at beginning of period		(278.7	)		(282.3	)
Amounts reclassified from accumulated other comprehensive loss: (1)		3.7			3.1

Balance at end of period		(275.0	)		(279.2	)

Accumulated other comprehensive loss, end of period	$	(355.8	)	$	(338.4	)


(1) Amortization of pension items:
Actuarial losses	$	5.0	(2)	$	4.0	(2)
Prior year service cost		(0.1	) (2)		(0.1	) (2)

		4.9			3.9
Income tax benefit		(1.2	)		(0.8	)

Reclassification net of income tax benefit	$	3.7		$	3.1

(2)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details

Changes to accumulated other comprehensive loss by component are as follows:


(dollars in millions)
	Six Months Ended June 30,
	2020			2019
Cumulative foreign currency translation
Balance at beginning of period	$	(66.2	)	$	(64.9	)
Other comprehensive (loss) income before reclassifications		(14.3	)		5.8

Balance at end of period		(80.5	)		(59.1	)

Unrealized net gain on cash flow derivatives
Balance at beginning of period		0.2			(0.7	)
Other comprehensive gain before reclassifications		0.5			—
Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $0.3 and ($0.2) in 2020 and 2019, respectively)		(1.0	)		0.6

Balance at end of period		(0.3	)		(0.1	)

Pension liability
Balance at beginning of period		(282.3	)		(285.2	)
Amounts reclassified from accumulated other comprehensive loss: (1)		7.3			6.0

Balance at end of period		(275.0	)		(279.2	)

Accumulated other comprehensive loss, end of period	$	(355.8	)	$	(338.4	)


(1) Amortization of pension items:
Actuarial losses	$	9.9	(2)	$	8.0	(2)
Prior year service cost		(0.2	) (2)		(0.2	) (2)

		9.7			7.8
Income tax benefit		(2.4	)		(1.8	)

Reclassification net of income tax benefit	$	7.3		$	6.0

(2)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details

Revenue Recognition - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) Segment Distributor	Dec. 31, 2019 USD ($)
Customer deposits liability	$ 43.0	$ 49.6
Allowance for doubtful accounts	$ 6.7	$ 6.7
Number of reporting segments \| Segment	2
Water Heaters \| North America
Number of wholesale distributors \| Distributor	1,300

Segment Sales Disaggregated by Major Product Line (Detail) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Net sales

$ 663.9

$ 765.4

$ 1,300.8

$ 1,513.6

Inter-segment

Net sales

(6.3)

(7.7)

(12.5)

(13.4)

Operating Segments [Member] | North America

Net sales

480.5

524.0

1,013.4

1,045.8

Operating Segments [Member] | North America | Water Heaters And Related Parts [Member]

Net sales

396.8

438.9

844.6

894.6

Operating Segments [Member] | North America | Boilers And Related Parts [Member]

Net sales

41.0

48.0

82.5

90.6

Operating Segments [Member] | North America | Water Treatment Products [Member]

Net sales

^[1]

42.7

37.1

86.3

60.6

Operating Segments [Member] | Rest of World [Member]

Net sales

189.7

249.1

299.9

481.2

Operating Segments [Member] | Rest of World [Member] | China

Net sales

172.7

224.2

263.7

437.2

Operating Segments [Member] | Rest of World [Member] | All Other Rest Of World [Member]

Net sales

$ 17.0

$ 24.9

$ 36.2

$ 44.0

[1]	Includes the results of Water-Right, Inc. and its affiliated entities (Water-Right) from April 8, 2019, the date of acquisition

Acquisitions - Additional Information (Detail) - USD ($) $ in Millions		3 Months Ended			6 Months Ended
	Apr. 08, 2019	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Business Acquisition [Line Items]
Aggregate cash purchase price, net of cash acquired						$ 107.0
Water-Right, Inc
Business Acquisition [Line Items]
Percentage of ownership interest acquired	100.00%
Aggregate cash purchase price, net of cash acquired	$ 107.0
Acquired intangible assets	60.4
Effective Date Of Acquisition					Apr. 08, 2019
Water-Right, Inc \| Escrow Deposit [Member]
Business Acquisition [Line Items]
consideration to former owners					$ 4.0
Payment of contingent consideration				$ 2.0
Water-Right, Inc \| Escrow Deposit [Member] \| Scenario, Forecast
Business Acquisition [Line Items]
Payment of contingent consideration		$ 0.1	$ 1.9
Water-Right, Inc \| Trademarks [Member]
Business Acquisition [Line Items]
Acquired intangible assets, not subject to amortization	19.0
Water-Right, Inc \| Noncompete agreements
Business Acquisition [Line Items]
Acquired intangible assets, subject to amortization	$ 1.2
Acquired intangible assets, amortization period, in years	7 years 6 months
Water-Right, Inc \| Customer relationships
Business Acquisition [Line Items]
Acquired intangible assets, subject to amortization	$ 40.2
Acquired intangible assets, amortization period, in years	20 years

Summary of Preliminary Allocation of Fair Value of Assets Acquired and Liabilities Assumed at Date of Acquisition (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019	Apr. 08, 2019
Business Acquisition [Line Items]
Goodwill	$ 544.0	$ 546.0
Water-Right, Inc
Business Acquisition [Line Items]
Current assets, net of cash acquired			$ 9.7
Property, plant and equipment			8.6
Intangible assets			60.4
Goodwill			31.0
Total assets acquired			109.7
Current liabilities			(2.7)
Net assets acquired			$ 107.0

Severance and Restructuring Expenses - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disclosure of Accrual for Severance and Restructuring Expenses Incurred [Line Items]
Restructuring Charges, Total	$ 6.1	$ 0.0	$ 6.1	$ 0.0
Severance Costs	5.2
Other Restructuring Costs	0.9
Income Tax Expense (Benefit)	19.2	$ 30.1	$ 35.2	$ 52.4
Other Restructuring
Disclosure of Accrual for Severance and Restructuring Expenses Incurred [Line Items]
Income Tax Expense (Benefit)	1.1
North America
Disclosure of Accrual for Severance and Restructuring Expenses Incurred [Line Items]
Restructuring Charges, Total	2.2
Rest of World
Disclosure of Accrual for Severance and Restructuring Expenses Incurred [Line Items]
Restructuring Charges, Total	$ 3.9

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Summary of Accrual for Severance And Restructuring Expenses Incurred (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disclosure Of Accrual For Severance And Restructuring Expenses Incurred [Abstract]
Beginning balance, Severance Expenses
Severance Expenses, Charges	5.2
Severance Expenses, Cash Payments	(2.2)
Ending balance, Severance Expenses	3.0		$ 3.0
Beginning balance, Restructuring Expenses
Restructuring Expenses, Charges	0.9
Restructuring Expenses, Cash Payments	(0.3)
Ending balance, Restructuring Expenses	0.6		0.6
Beginning balance, Accrued and restructuring Charges
Accrued and restructuring Charges, Charges	6.1	$ 0.0	6.1	$ 0.0
Accrued and restructuring Charges, Cash Payments	(2.5)
Ending balance, Accrued and restructuring Charges	$ 3.6		$ 3.6

Leases - Additional Information (Detail)	6 Months Ended
Leases - Additional Information (Detail)	Jun. 30, 2020
Operating lease termination option	options to terminate can be effective within one year
Minimum [Member]
Operating lease term of extension	1 year
Maximum [Member]
Operating lease term of extension	5 years

Leases supplemental balance sheet (Detail) - USD ($) $ in Millions		12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Liabilities
Short term: Accrued liabilities	$ 11.5	$ 12.0
Long term: Operating lease liabilities	37.5	38.7
Total Operating Lease Liabilities	49.0	50.7
Less:Rent incentives and deferrals	(3.8)	(3.8)
Assets
Operating lease assets	$ 45.2	$ 46.9
Lease Term and Discount Rate
Weighted-average remaining lease term	9 years 9 months 18 days
Weighted-average discount rate	3.83%

Components of lease expense (Detail) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Short term lease expense

$ 0.6

$ 0.5

$ 1.0

Variable lease expenses

0.5

0.2

0.9

1.0

Cost of products sold [Member]

Operating lease expense

0.8

^[1]

0.7

^[2]

1.5

^[3]

1.3

^[4]

Selling, general and administrative expenses [Member]

Operating lease expense

$ 4.2

^[1]

$ 4.1

^[2]

$ 8.2

^[3]

$ 9.0

^[4]

[1]	2020 includes short-term and variable lease expenses of $0.6 million and $0.5 million, respectively.
[2]	2019 includes short-term and variable lease expenses of $0.5 million and $0.2 million, respectively.
[3]	2020 includes short-term and variable lease expenses of $1.0 million and $0.9 million, respectively.
[4]	2019 includes short-term and variable lease expenses of $1.0 million and $1.0 million, respectively.

Maturities of lease liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 7.0
2021	11.7
2022	9.9
2023	5.5
2024	4.4
After 2024	23.0
Total lease payments	61.5
Less: imputed interest	(12.5)
Present value of operating lease liabilities	$ 49.0	$ 50.7

Schedule of Inventories (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Inventories
Finished products	$ 134.3	$ 136.8
Work in process	22.7	21.7
Raw materials	172.8	168.3
Inventories, at FIFO cost	329.8	326.8
LIFO reserve	(23.8)	(23.8)
Net inventory	$ 306.0	$ 303.0

Company's Warranty Liability Activity (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Product Warranties Disclosures [Abstract]
Balance at beginning of year	$ 135.3	$ 136.2	$ 134.3	$ 139.4
Expense	12.3	11.4	25.8	20.8
Claims settled	(11.6)	(13.6)	(24.1)	(26.2)
Balance at end of year	$ 136.0	$ 134.0	$ 136.0	$ 134.0

Long-Term Debt - Additional Information (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) Banks
Debt Disclosure [Abstract]
Multi-currency revolving credit agreement	$ 500
Number of banks involved in multi-year multi-currency revolving credit agreement \| Banks	9
Revolving credit facility, expiration date	Dec. 15, 2021
Multi-currency revolving credit agreement, maximum amount	$ 700

Schedule of Computation of Basic and Diluted Weighted-Average Shares Used in Earnings per Share Calculations (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Denominator for basic earnings per share - weighted average shares	161,208,194	166,825,601	161,539,991	167,311,995
Effect of dilutive stock options and share units	965,648	1,260,667	995,675	1,276,451
Denominator for diluted earnings per share	162,173,842	168,086,268	162,535,666	168,588,446

Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Additional Shares Authorized	2,400,000
Total stock based compensation cost recognized		$ 1.4	$ 2.1	$ 10.4	$ 10.8
Stock option compensation expense recognized		0.7	0.9	$ 5.2	$ 5.2
Weighted-average fair value per option at the date of grant				$ 8.15	$ 10.83
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years	3 years
Award expiration period				10 years	10 years
Restricted Stock And Share Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years	3 years
Number of Units - Granted				169,539	139,892
Value of share units at the date of issuance				$ 7.2	$ 6.9
Share based compensation expense attributable to share units		$ 0.7	$ 1.2	$ 5.2	$ 5.6
A.O. Smith Combined Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for granting of options, restricted stock or share units	3,410,323	3,410,323		3,410,323

Changes in Option Awards All of Which Related to Common Stock (Detail) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-Avg. Per Share Exercise Price, beginning period \| $ / shares	$ 37.64
Weighted-Avg. Per Share Exercise Price - Granted \| $ / shares	42.39
Weighted-Avg. Per Share Exercise Price - Exercised \| $ / shares	14.79
Weighted-Avg. Per Share Exercise Price - Forfeited \| $ / shares	48.50
Weighted-Avg. Per Share Exercise Price, ending period \| $ / shares	40.54
Weighted-Average Per Share Exercise Price, Exercisable \| $ / shares	$ 38.42
Number of Options Outstanding, Beginning Balance \| shares	2,728,350
Number of Options, Granted \| shares	784,300
Number of Options, Exercised \| shares	(271,844)
Number of Options, Forfeited \| shares	(68,654)
Number of Options Outstanding, Ending Balance \| shares	3,172,152
Number of Options, Exercisable at End of Period \| shares	1,922,832
Average remaining contractual life for outstanding options, in years	7 years
Average Remaining Contractual Life, Exercisable at End of Period, Years	7 years
Aggregate Intrinsic Value, Outstanding at End of Period \| $	$ 28.2
Aggregate Intrinsic Value, Exercisable at End of Period \| $	$ 28.2

Schedule of Weighted-Average Fair Value per Option at Date of Grant (Detail)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Stock Based Compensation [Abstract]
Expected life (years)	5 years 8 months 12 days	5 years 6 months
Risk-free interest rate	1.60%	2.70%
Dividend yield	2.10%	1.60%
Expected volatility	23.60%	22.80%

Summary of Share Unit Activity Under Plan (Detail) - Restricted Stock And Share Units - $ / shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Units Issued and unvested, Beginning of Period	366,102
Number of Units - Granted	169,539	139,892
Number of Units - Vested	(100,735)
Number of Units - Forfeited/cancelled	(10,656)
Number of Units Issued and unvested, End of Period	424,250
Weighted-Average Grant Date Value, Beginning of Period	$ 49.92
Weighted-Average Grant Date Value - Granted	42.39
Weighted-Average Grant Date Value - Vested	49.21
Weighted-Average Grant Date Value - Forfeited/cancelled	52.48
Weighted-Average Grant Date Value, End of Period	$ 46.93

Components of Company's Net Pension Income (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Pensions [Abstract]
Service cost	$ 0.3	$ 0.5	$ 0.7	$ 0.9
Interest cost	5.8	7.8	11.5	15.7
Expected return on plan assets	(13.0)	(14.4)	(26.0)	(28.7)
Amortization of unrecognized loss	5.0	4.0	9.9	8.0
Amortization of prior service cost	(0.1)	(0.1)	(0.2)	(0.2)
Defined benefit plan income	$ (2.0)	$ (2.2)	$ (4.1)	$ (4.3)

Schedule of Segment Earnings (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Net sales	$ 663.9	$ 765.4	$ 1,300.8	$ 1,513.6
Segment earnings (losses)	99.3	145.2	184.2	273.5
Other income (expense)	4.0	5.6	8.2	11.1
Interest expense	(2.5)	(3.4)	(4.7)	(5.4)
Earnings before provision for income taxes	87.0	132.2	154.7	243.8
Provision for income taxes	19.2	30.1	35.2	52.4
Net Earnings	67.8	102.1	119.5	191.4
Restructuring Charges, Total	6.1	0.0	6.1	0.0
Inter-segment
Segment Reporting Information [Line Items]
Net sales	(6.3)	(7.7)	(12.5)	(13.4)
Segment earnings (losses)	(0.3)	(0.1)	(0.3)	(0.1)
Corporate
Segment Reporting Information [Line Items]
Other income (expense)	(9.8)	(9.6)	(24.8)	(24.3)
North America
Segment Reporting Information [Line Items]
Restructuring Charges, Total	2.2	0.0	2.2	0.0
North America \| Operating Segments
Segment Reporting Information [Line Items]
Net sales	480.5	524.0	1,013.4	1,045.8
Segment earnings (losses)	105.4	122.9	232.5	238.9
Rest of World
Segment Reporting Information [Line Items]
Restructuring Charges, Total	3.9	0.0	3.9	0.0
Rest of World \| Operating Segments
Segment Reporting Information [Line Items]
Net sales	189.7	249.1	299.9	481.2
Segment earnings (losses)	$ (5.8)	$ 22.4	$ (48.0)	$ 34.7

Schedule of Segment Earnings - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2020 Segment
Segment Reporting Information [Line Items]
Number of reporting segments	2

Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Quoted Prices In Active Markets For Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on recurring basis	$ 126.0	$ 177.4
Significant other observable inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities measured at fair value on recurring basis	$ (0.4)	$ 6.9

Derivative Instruments - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Trading Activity, Gains and Losses, Net [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	$ 3.7	$ (10.1)	$ (14.3)	$ 5.8
Net Investment Hedging [Member] \| Non-US [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0.1	$ 0.0	$ 0.7	$ 1.3
Commodity Futures Contracts
Trading Activity, Gains and Losses, Net [Line Items]
Reclassification period for effective portion of contract, in years			1 year
Commodity Futures Contracts \| Non-US [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Derivative, Notional Amount	$ 0.0		$ 0.0

Schedule of Summary by Currency of Foreign Currency Forward Contracts (Detail) - Foreign currency forward contracts - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Buy
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	$ 48.2	$ 54.6
Buy \| Euro
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	24.6	36.0
Buy \| Mexican peso
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	23.6	18.6
Sell
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	40.2	51.0
Sell \| British pound
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	0.6	1.3
Sell \| Canadian dollar
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Contractual amounts of foreign currency forward contracts	$ 39.6	$ 49.7

Impact of Derivative Contracts on Company's Financial Statements (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Fair value of derivative instruments, total	$ (0.4)	$ 6.9
Designated as Hedging Instrument \| Foreign Currency Contracts \| Other Current Assets
Derivatives, Fair Value [Line Items]
Fair value of derivative instruments, assets	1.6	8.4
Designated as Hedging Instrument \| Foreign Currency Contracts \| Accrued Liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative instruments, liabilities	(1.9)	$ (1.5)
Designated as Hedging Instrument \| Commodities Contracts \| Accrued Liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative instruments, liabilities	$ (0.1)

Schedule of Effect of Derivatives Instruments on Consolidated Statement of Earnings (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative [Line Items]
Amount of gain (loss) recognized in other comprehensive loss on derivative	$ (0.5)	$ 0.2	$ 0.7	$ 0.1
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings	0.5	(0.8)	1.3	(0.8)
Foreign Currency Contracts
Derivative [Line Items]
Amount of gain (loss) recognized in other comprehensive loss on derivative	(0.6)	0.5	0.8	0.6
Foreign Currency Contracts \| Cost Of Products Sold
Derivative [Line Items]
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings	0.5	0.0	1.3	0.0
Commodities Contracts
Derivative [Line Items]
Amount of gain (loss) recognized in other comprehensive loss on derivative	0.1	(0.3)	(0.1)	(0.5)
Commodities Contracts \| Cost Of Products Sold
Derivative [Line Items]
Amount of gain (loss) reclassified from accumulated other comprehensive loss into earnings	$ 0.0	$ (0.8)	$ 0.0	$ (0.8)

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Contingency [Line Items]
Effective tax rates	22.10%	22.80%	22.80%	21.50%
Unrecognized tax benefits	$ 9.7		$ 9.7
Unrecognized tax benefits that would affect the effective tax rate, if recognized	$ 0.8		$ 0.8
Maximum
Income Tax Contingency [Line Items]
Effective tax rates			23.50%
Minimum
Income Tax Contingency [Line Items]
Effective tax rates			23.00%
State and local \| Earliest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2002
State and local \| Latest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2020
Non-U.S. \| Earliest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2014
Non-U.S. \| Latest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2020
U.S. federal \| Earliest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2016
U.S. federal \| Latest Tax Year
Income Tax Contingency [Line Items]
Income tax examinations, years under examination			2020

Commitment and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Commitments and Contingencies [Line Items]
Distributor Rebate Accruals	$ 7.2	$ 14.1
Repurchase Of Inventory [Member]
Commitments and Contingencies [Line Items]
Default In outstanding loans	$ 10.8	$ 23.1

Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Accumulated Other Comprehensive Income (Loss) [Line Items]

Balance

$ 1,666.8

Balance

$ 1,658.1

$ 1,725.1

1,658.1

$ 1,725.1

Cumulative foreign currency translation

Accumulated Other Comprehensive Income (Loss) [Line Items]

Balance

(84.2)

(49.0)

(66.2)

(64.9)

Other comprehensive (loss) income before reclassifications

3.7

(10.1)

(14.3)

5.8

Balance

(80.5)

(59.1)

(80.5)

(59.1)

Unrealized net gain on cash flow derivatives

Accumulated Other Comprehensive Income (Loss) [Line Items]

Balance

0.5

(0.8)

0.2

(0.7)

Other comprehensive (loss) income before reclassifications

(0.4)

0.1

0.5

0.0

Realized gains on derivatives reclassified to cost of products sold (net of income tax provision of $0.2 and $- in 2020 and 2019, respectively)

(0.4)

0.6

(1.0)

0.6

Balance

(0.3)

(0.1)

(0.3)

(0.1)

Pension liability

Accumulated Other Comprehensive Income (Loss) [Line Items]

Balance

(278.7)

(282.3)

(285.2)

Amounts reclassified from accumulated other comprehensive loss

^[1]

3.7

3.1

7.3

6.0

Balance

(275.0)

(279.2)

(275.0)

(279.2)

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income (Loss) [Line Items]

Balance

$ (355.8)

$ (338.4)

$ (355.8)

$ (338.4)

[1]	Amortization of pension items:

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

Changes in Accumulated Other Comprehensive Loss by Component (Parenthetical) (Detail) - USD ($)
$ in Millions

3 Months Ended

6 Months Ended

Jun. 30, 2020

Jun. 30, 2019

Jun. 30, 2020

Jun. 30, 2019

Unrealized net gain on cash flow derivatives

Accumulated Other Comprehensive Income (Loss) [Line Items]

Realized gains on derivatives reclassified to cost of products sold, tax provision

$ 0.1

$ 0.2

$ 0.3

$ 0.2

Pension liability

Accumulated Other Comprehensive Income (Loss) [Line Items]

Reclassification, before income tax benefit

4.9

3.9

9.7

7.8

Income tax benefit

(1.2)

(0.8)

(2.4)

(1.8)

Reclassification net of income tax benefit

^[1]

3.7

3.1

7.3

6.0

Actuarial losses

Accumulated Other Comprehensive Income (Loss) [Line Items]

Reclassification, before income tax benefit

^[2]

5.0

4.0

9.9

8.0

Prior year service cost

Accumulated Other Comprehensive Income (Loss) [Line Items]

Reclassification, before income tax benefit

^[2]

$ (0.1)

$ (0.2)

[1]	Amortization of pension items:
[2]	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 - Pensions for additional details