A.O. Smith Corp. will increase the price of its water heaters for the fourth time this year citing rising costs in transportation, materials and steel.
The Milwaukee-based company says a price increase “generally in the low double-digit range” will impact a majority of its residential and commercial water heater products and service parts in the United States beginning Aug.1, according to a U.S. Securities and Exchange Commission Filing.
The latest price increase is the fourth and largest increase on water heaters for the company this year – A.O. Smith increased prices on select water heaters by 8.5% in June, which followed increases in February and April, A.O Smith chairman and chief executive officer Kevin Wheeler said during an earnings call.
The cumulative impact of the first three increases is expected to be between 24% to 27%, according to an April report filed with the SEC. Even if the latest increase is just 10%, the four increases would push prices up by at least 36% depending on the type of water heater.
A.O. Smith reported $769 million in sales in the first quarter of 2021, about 21% higher than sales of $637 million in the first quarter of 2020.
The increase in first quarter of 2021 sales compared to the same period last year was primarily due to a 119% increase in sales in China and higher sales of boilers, water heaters in Canada, and water treatment products in North America, the company said.
North America sales were $553 million during the first quarter of 2021 or $20 million higher than sales during the first quarter of 2020. The company reported weather-related challenges and supply chain constraints for its North America water heater business during the first quarter.
“If not for the limited production, based on a surge in customer orders in the first quarter of 2021, we believe our U.S. residential water heater shipments would have increased compared to the same quarter last year,” A.O. Smith said in the report.
[caption id="attachment_436797" align="aligncenter" width="770"]
The A.O. Smith headquarters in Milwaukee.[/caption]
