A.O. Smith adds to water treatment business with Lowe’s deal

Minimal benefit to earnings expected this year

Posted by Arthur Thomas from BizTimes on April 16, 2018

A.O. Smith’s efforts to expand its North American water treatment business received a boost Monday as the company announced a deal making it the primary supplier of residential water treatment products for Lowe’s U.S. home improvement stores.

Milwaukee-based A.O. Smith Corp. will be supplying more than 20 A.O. Smith-branded water treatment products to Lowe’s starting in mid-August. The company will also be providing merchandising support through branded displays and an improved online experience.

A.O. Smith has long been known for its water heating business, but the company entered the North American water treatment market in 2016 with the acquisition of water filter maker Aquasana. It then expanded its presence with the acquisition of water softener company Hauge last year.

The company is projecting around $86 million in revenue for its North American water treatment business this year, up from $57 million last year and $18 million in 2016.

The deal with Lowe’s is expected to have minimal impact on A.O. Smith’s earnings this year because of start-up costs. The company did not disclose the potential impact of the deal on revenue and will discuss it in greater detail on its earnings call next week.

“We are excited to extend our partnership with Lowe’s from water heaters to water treatment products,” said Kevin Wheeler, A.O. Smith president and chief operating officer.

Wheeler said the company recently completed “an extensive” consumer study of its water treatment business marketing.

“We are confident our products and educational programs will meet customers’ filtration needs and provide them with peace of mind knowing their water is clean and safe,” Wheeler said.

A.O. Smith has also created a new water treatment business unit and named D. Samuel Karge as the unit’s president last month.

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