Baird 2009 Industrial Conference

Exhibit 99.1

2

This presentation contains statements that we believe are “forward-looking statements” within the meaning of the

Private Securities Litigation Reform Act of 1995.  Forward-looking statements generally can be identified by the use of words

such as  “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” “guidance”, or words of similar

meaning.  These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ

materially from those anticipated as of the date of this release.  Factors that could cause such a variance include the following:

significant volatility in raw material prices; competitive pressures on the company’s businesses; inability to implement pricing

actions; negative impact of future pension contributions on the company’s cash flow; instability in the company’s electric motor

and water products markets; further weakening in housing construction; further weakening in commercial construction; timing

of any recoveries in housing or commercial construction; a slowdown in the Chinese economy; expected restructuring savings

realized; further adverse changes in customer liquidity and general economic and capital market conditions; the impact of

acquisition accounting or non-GAAP financial measures on the company’s financial statements or difficulties in closing on and

integrating the proposed China acquisition, and realizing future growth and profit expectations.

Forward-looking statements included in this press release are made only as of the date of this presentation, and the

company is under no obligation to update these statements to reflect subsequent events or circumstances.  All subsequent

written and oral forward-looking statements attributed to the company, or persons acting on its behalf, are qualified entirely

by these cautionary statements.

This presentation contains certain non-GAAP financial measures as that term is defined by the SEC.  Non-GAAP

financial measures are generally identified by “Adjusted” (Adj.), “Non-GAAP” or “Before Restructuring”.  

Forward Looking Statements

3

Investment Case

•

Leader in Commercial and

Residential Water Heaters

•

2009 Margin Expansion, in

spite of Significant Volume

Declines

•

Strong Balance Sheet and

Cash Flow

•

China/Asia

•

Energy Efficient Products

4

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

$2.75

$3.00

$3.25

2007

2008

2009 GAAP

Forecast

2009 Non-

GAAP forecast

2009 EPS Forecast

$2.70

$2.85

$.15 Range

$2.60 -

$2.75

$2.95 -

$3.13

$.18 Range

5

Sales

1,481.9

$ 

1,796.3

$ 

(314.4)

$

-18%

Net Earnings

67.0

$     

75.2

$     

(8.2)

$    

-11%

EPS

2.21

$     

2.48

$     

(0.27)

$  

-11%

(in millions, except per share)

2009

2008

change

% chg.

Financial

Results

–

9

months

YTD

Earnings and EPS are Non-GAAP

6

Water Products

1,012.8

$

1,105.0

$

(92.2)

$  

-8%

Electrical Products

472.0

694.9

(222.9)

-32%

Intersegment

(2.9)

(3.6)

0.7

Total Sales

1,481.9

$

1,796.3

$

(314.4)

$ 

-18%

Segment

Sales

–

9

months

YTD

2009

2008

change

% chg.

(in millions)

7

Water Products

104.3

$   

105.1

$   

(0.8)

$    

-1%

Electrical Products

27.4

44.3

(16.9)

-38%

Corporate

(35.8)

(36.9)

1.1

3%

Total Operating Profit

95.9

$    

112.5

$   

(16.6)

$  

-15%

Margin

Water Products

10.3%

9.5%

Electrical Products

5.8%

6.4%

Operating

Profit

–

9

months

YTD

2009

2008

change

% chg.

(in millions, except margins)

8

•

Operating cash flow of

$198 million

•

Expect operating cash

flow of approximately

$190 to $200 million in

2009

•

Balance Sheet remains

strong

•

Debt to Capital ratio of

24%

197. 8

75.0

0

20

40

60

80

100

120

140

160

180

200

Nine Month Cash Flow from Operations

9/30/08

9/30/09

9

A. O. Smith

*EBITDA Excludes $8.7M for restructuring

$1.4B

$.9B

Water Products

Electrical Products*

Sales

EBITDA

31%

69%

10

0

200

400

600

800

1000

1200

1400

1600

2004

2005

2006

2007

2008

2009 thru

Sept

0%

2%

4%

6%

8%

10%

12%

Sales

EBIT Margin

Water Products –

Sales & Earnings

11

U. S. Water Heater Market Segment

0%

10%

20%

30%

40%

50%

Tankless

Residential Market

Commercial Market

0%

10%

20%

30%

40%

50%

60%

Standard Commercial

12

NA Commercial

11%

NA Residential

74%

China

15%

Water Products

End Markets

13

0

100

200

300

400

500

600

700

800

900

1000

2004

2005

2006

2007

2008

2009 thru

Septmber

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Sales

EBIT Margin

Electrical Products–Sales & Earnings

EBIT Margin shown is Non-GAAP

14

HVAC & R

17%

Pump

16%

Distribution

23%

General

Industries

  10%

China/Asia

9%

Hermetic

25%

Trane

Carrier

Scroll Tech

York

Copeland

Pentair

Waterway

Hayward

Broan

Grainger

Johnstone

SCP

Major Customers

Electrical Products

Market Segments Served

15

Electrical Products

End Markets

China

9%

NA Residential

61%

NA Commercial

30%

16

China/Asia now 13% of Sales and Growing

0

50

100

150

200

250

300

2003

2004

2005

2006

2007

2008

Electrical Products

Water Products

Sales have grown 35% (CAGR) over the last 5 years

17

Mega Trends -

China

Data: (The Value of China's Emerging Middle Class)

Share of Chinese Urban Households, %

18

China Motor Manufacturing

Commercial hermetic motors for air conditioning & refrigeration

$0

$20

$40

$60

$80

$100

$120

2004

2005

2006

2007

2008

Suzhou

Yueyang

19

•

Since 1995

•

Products designed for Chinese

consumers

•

Experienced Chinese managers

•

Double digit margin

•

Strong retail presence

•

Consistent strong growth

•

Doubled capacity to 2M units -

2010

Nanjing, China

20

A. O. Smith 20%

Haier 19%

Makro 7%

Wanhe 7%

Ariston 6%

Rinnai 5%

Noritz 4%

Siemens 2%

> 100 Others 30%

> 100  Others

30%

Leading

Electric

Brands:

A.O. Smith, Haier, Ariston, Siemens

Leading

Gas

Instantaneous

Brands:

Makro,  Wanhe, Rinnai, Noritz

Source: GFK-2009 (by Value)

Leading residential brands measured in currency; Tier One Market

China Residential Share

21

Retail channel Expansion

2008 to 2010

900

800

500

721

335

777

1100

750

0

200

400

600

800

1000

1200

1400

2008

2009P

2010P

Distribution Channel Expansion

•

Suning currently has 800

stores and plans to reach

900 stores by year end

•

Guomei is down sizing for

store efficiencies

•

We have been assisting

distributors opening

specialty stores, and

developing service

oriented dealers network

22

Specialty Stores

23

Hierarchy of Global Drinking Water Needs

Source:

AO Smith/MBK/2008

Availability

Desalinization, Well drilling, Pumping, Point-of-Egress

Security, Health, Hygiene

Chlorination, Heating/Boiling, Point of Entry

Access

Infrastructure, Home Plumbing

Taste/Convenience

Filtration, Bottled water, POU

Africa,

Middle East,

(Water Scarcity)

Sustainability

water recycling, bottled alternatives

Aesthetics

soft, carbonated, flavored

China, Eastern

Europe, India

(Water Quality/Health)

North America

W. Europe

(Custom Water)

24

China Water Purification Landscape

•

Economic Growth

–

GDP growth of 8-10%

–

Retail and appliance sales +20% YOY

–

Water Purification sales +10-15%/year

–

Reverse Osmosis and Point of Use sales forecasted at +30%

•

Improvement of Living Standards

–

“Feature rich”

apartment options

–

Growing awareness of water health and quality

–

In home product –

10% market penetration

•

Declining Water Quality

–

70% of source water unsafe to drink

•

Fragmented market

25

Chinese Water Purification Terminology

•

Water Dispenser

–

free standing unit, dispenses purchased

water from jugs, may dispense either hot or cold

•

Drinking

Machines

–

free

standing

units

that

filters

tap

water and may dispense either hot or cold

•

Water Jugs

–

carafe units, typically counter top, that allow

gravity filtration of tap water

•

Water Purifiers/Cleaners

–

stand alone, or multi-

component filtration.  Purifiers typically includes RO, typically

piped-in and under sink.

26

Tianlong Acquisition

•

Acquire leading product in China water purification

market

•

Leverage A. O. Smith brand and water heater

presence in appliance stores and building centers

•

Other benefits:

–

Existing parallel channels and brands for distribution sales

in China

–

Existing quality manufacturing base for export sales (India)

27

Tianlong Profile

•

Leading supplier of RO systems to the China market

–

Domestic market share leader

–

Exports to 30 countries

•

Market channels

–

3200 franchise shops

–

8000 mom and pop stores

•

Product Types

–

Residential RO machines, RO membranes, filters, water softeners,

Commercial/Industrial

equipment,

Components

of

residential

RO

machines

•

Profitability

–

Accretive day 1

–

ROIC greater than cost of capital in first full year under AOS ownership

•

2010 Preliminary Look

–

Revenues greater than $75 million

–

Operating margins in upper teens

–

Accretion: $.10 to $.15 per share

28

•

Bangalore

•

Establish brand & position

product

•

Develop manufacturing

capability

–

Greenfield manufacturing facility

–

Indian management team

•

Focus on storage electric

water heaters

•

Focus on top metropolitan

cities

India: Currently “Made in China”

29

Energy Efficiency

30

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

CAGR = 20.8%

Cyclone Sales Growth

20% of commercial revenues in 2008

31

A. O. Smith Tankless Gas Water Heaters

•

A comprehensive line of tankless water heaters

•

Residential and Commercial designs

•

Indoor and Outdoor installation options

•

Available in Natural Gas or Propane

•

Energy Efficient –

up to 84% thermal efficiency

32

Heat Pump Water Heating

•

Acquisition of AERS –

Specialty commercial

manufacturer

•

Additional, new distribution

channel

•

Introducing heat pump 

water heater in China

33

Solar Water Heating

•

Balcony mount system for

China

•

Commercial system for

Europe

•

Residential water heater

for North America

34

New Centurion Pro Pump Motor

•

Single-Speed, Two-Speed, Three Phase

•

Improved cooling

longer life

•

Better bearing protection

longer life

•

Better wiring access

easier installation

•

Business

–

Won 12,000 units ($1.2M) at Hayward

–

Working with Pentair and Jandy for 2010 season

35

Energy Efficiency Strategy

* Average Selling Price

Premium 2 Speed

Efficiency Gains of 12%

running longer on Low

Speeds

Operating Savings of

30~65% over Single

Speed Motors

Variable Speed

90%

over Single Speed

Flexible

–

Can

be

run

at

Optimum Speed

Efficiency range 80%

Operating Savings of 30-

Motors

$70*

$125*

$425*

Traditional Single Speed

Single Speed

Avg. Efficiency = 68%

36

AOS Comfort Series

37

Residential Hermetic Variable Speed

•

59 frame IPM for Bristol

–

Completed

in

just

3

weeks

and

delivered

March

2

–

Seeking IP protection on design

–

Preliminary tests found 2 SEER point improvement

nd

38

Energy Efficient Products

•

40% of China water heater sales are highest energy

efficiency rating!

•

25% of water products sales exceed minimum

energy efficiency standards

•

9% of electrical products sales exceed minimum

energy efficiency standards

39

Investment Case

•

Leader in Commercial and

Residential Water Heaters

•

Margin Expansion, in spite of

Significant Volume Declines

•

Strong Balance Sheet and

Cash Flow

•

China/Asia

•

Energy Efficient Products

Thank you!

41

Investor Contact

Patricia Ackerman

Vice President, Investor Relations and Treasurer

414-359-4130

packerman@aosmith.com