A. O. Smith (NYSE: AOS) adds $470M term debt to fund Leonard Valve acquisition

Rhea-AI Filing Summary

A. O. Smith Corporation entered into a new unsecured term loan credit agreement for $470 million maturing on January 5, 2029 and borrowed the full amount to fund its acquisition of LVC Holdco LLC (Leonard Valve) and related fees. The company completed the Leonard Valve acquisition on January 6, 2026, adding a leading designer and manufacturer of thermostatic and digital mixing valves and temperature control solutions used in commercial and institutional applications.

The term loan bears variable interest, at the company’s election, based on Term SOFR plus a margin of 0.875%–1.375% or a Base Rate plus a margin of 0%–0.375%, with margins tied to the company’s leverage ratio, and can be prepaid without penalty. The agreement includes financial covenants requiring a maximum leverage ratio of 0.60 (with the ability to increase to 0.65 for certain material acquisitions) and a minimum interest coverage ratio of 3.00 to 1.00, along with customary restrictions, events of default, and a 2.0% default interest rate premium.

Insights

Corporate finance analyst

A. O. Smith adds $470M term debt to fund Leonard Valve acquisition under covenant-based credit agreement.

A. O. Smith Corporation obtained an unsecured term loan of $470 million maturing on January 5, 2029 and drew the full amount to pay the purchase price for Leonard Valve and related costs. The interest is variable, based on either Term SOFR plus a margin of 0.875%–1.375% or a Base Rate plus 0%–0.375%, so the company’s interest expense will move with benchmark rates and its leverage profile.

The agreement is unsecured but includes financial covenants: a maximum leverage ratio of 0.60, with the ability to step up to 0.65 for certain material acquisitions, and a minimum interest coverage ratio of 3.00 to 1.00. These covenants and customary restrictions on liens, mergers, asset sales, and additional subsidiary indebtedness create clear balance sheet guardrails. An event of default can accelerate the loan, and during certain defaults the rate increases by 2.0% above the otherwise applicable rate.

The acquisition of Leonard Valve, completed on January 6, 2026, expands A. O. Smith into thermostatic and digital mixing valves and temperature control solutions for commercial and institutional markets. The loan is prepayable without penalty, giving flexibility to reduce debt using future cash flows or refinancing if conditions allow.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 5, 2026

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A. O. Smith Corporation

(Exact name of registrant as specified in its charter)

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Delaware

1-475

39-0619790

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

11270 West Park Place, Milwaukee, Wisconsin 53224

(Address of principal executive offices, including zip code)

(414) 359-4000

(Registrant’s telephone number)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐			Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13-e4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock (par value $1.00 per share)

AOS

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On January 5, 2026, A. O. Smith Corporation (the “Company”) entered into a Credit Agreement (the “Credit Agreement”) among the Company, the various lenders party thereto, and Bank of America, N.A., as administrative agent (the “Agent”). The Credit Agreement provided for an unsecured term loan in the amount of $470 million that matures on January 5, 2029. The Company borrowed the full available amount under the Credit Agreement on January 5, 2026 and used the proceeds to finance the purchase price for the Company’s acquisition of LVC Holdco LLC (“Leonard Valve”) and associated fees and expenses on January 6, 2026. The term loan can be prepaid in whole or in part without penalty.

The term loan under the Credit Agreement bears interest at a variable rate per annum equal to, at the Company’s election: (i) Term SOFR (the forward-looking secured overnight financing rate) plus an applicable margin ranging from 0.875% to 1.375%; or (ii) the Base Rate (which is the highest of (x) the Agent’s prime rate, (y) the federal funds rate plus 0.50% or (z) the sum of 1.00% plus one-month Term SOFR) plus an applicable margin ranging from 0% to 0.375%. The applicable margin in each case varies depending on the Company’s leverage ratio.

The Credit Agreement contains various customary restrictions and covenants, including a requirement that the Company maintain a leverage ratio and an interest coverage ratio at certain levels (as detailed below); restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, and incur additional subsidiary indebtedness; and a restriction on the disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole.

The Credit Agreement requires the Company to maintain: (i) a maximum leverage ratio (defined as the ratio of the Company’s consolidated funded net debt to the sum of the Company’s consolidated funded net debt plus consolidated net worth) as of the last day of any fiscal quarter of 0.60, subject to the Company’s right to temporarily increase the maximum leverage ratio to up to 0.65 in connection with certain material acquisitions; and (ii) a minimum interest coverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated net income before interest, taxes, depreciation, amortization and certain other items to the Company’s consolidated cash interest charges) as of the last day of any fiscal quarter of 3.00 to 1.00.

The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, upon the occurrence of an actual or deemed entry of an order for relief with respect to the Company under the bankruptcy code, all outstanding obligations under the Credit Agreement shall automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.0% per annum in excess of the otherwise applicable rate during the continuance of certain payment or insolvency related events of default and, at the request of the required lenders, during the continuance of any other event of default.

The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, filed herewith as Exhibit 4.1 and incorporated herein by reference.

Item 8.01. Other Events.

On November 12, 2025, the Company disclosed that it had signed a definitive agreement to acquire Leonard Valve. Leonard Valve, together with its Heat-Timer brand, is a leading designer and manufacturer of thermostatic and digital mixing valves and temperature control solutions used in commercial and institutional applications. On January 6, 2026, the Company consummated the acquisition of Leonard Valve. A copy of the Company's news release relating to the consummation is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 9.01     Financial Statements and Exhibits

The following exhibit is being filed herewith:

4.1    Credit Agreement dated as of January 5, 2026, among A. O. Smith Corporation, the various lenders party thereto, and Bank of America, N.A., as administrative agents.

(99.1)    News Release of A. O. Smith Corporation, dated January 6, 2026

104    Cover Page Interactive Data File (embedded with the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

A. O. SMITH CORPORATION

Date: January 6, 2026

By:

/s/James F. Stern

James F. Stern

Executive Vice President, Corporate Development, Strategy and Secretary

FAQ

What new debt did A. O. Smith (AOS) incur in this 8-K?

A. O. Smith entered into an unsecured term loan credit agreement for $470 million that matures on January 5, 2029. The company borrowed the full amount on January 5, 2026.

How will A. O. Smith (AOS) use the $470 million term loan proceeds?

The company used the full $470 million term loan proceeds to fund the purchase price of its acquisition of LVC Holdco LLC (Leonard Valve) and to pay associated fees and expenses.

What are the key interest terms of A. O. Smith’s new credit agreement?

The term loan bears variable interest at the company’s election: either Term SOFR plus a margin of 0.875%–1.375% or a Base Rate plus a margin of 0%–0.375%, with the margin determined by A. O. Smith’s leverage ratio.

What financial covenants are included in A. O. Smith’s new term loan?

The credit agreement requires a maximum leverage ratio of 0.60, with the option to temporarily increase it to 0.65 for certain material acquisitions, and a minimum interest coverage ratio of 3.00 to 1.00 as of each fiscal quarter-end.

When did A. O. Smith (AOS) complete the Leonard Valve acquisition and what does Leonard Valve do?

A. O. Smith consummated the acquisition of Leonard Valve on January 6, 2026. Leonard Valve, including its Heat-Timer brand, designs and manufactures thermostatic and digital mixing valves and temperature control solutions for commercial and institutional applications.

Can A. O. Smith prepay the new term loan, and what happens in a default?

The term loan can be prepaid in whole or in part without penalty. If certain events of default occur and continue, lenders may declare the obligations immediately due, and outstanding loans bear interest at 2.0% per annum above the otherwise applicable rate.