A. O. Smith Corporation Reports Unaudited Consolidated Financial Results for the Fourth Quarter and Full Year Ended December 31, 2017; Provides Financial Guidance for the Year 2018
For the full year, the company reported net sales of $2,996.7 million compared to $2,685.9 million a year ago. Earnings before provision for income taxes was $520.8 million compared to $462.5 million a year ago. Net earnings were $296.5 million or $1.70 diluted earnings per share of common stock compared to $326.5 million or $1.85 diluted earnings per share of common stock a year ago. Cash provided by operating activities was $326.4 million compared to $446.6 million a year ago. Capital expenditures were $94.2 million compared to $80.7 million a year ago. Adjusted earnings were $378.3 million or $2.17 per share compared to $326.5 million or $1.85 per share a year ago. The decrease in earnings was due to estimated one-time charges associated with U.S. Tax Reform, totaling $81.8 million or $0.47 per share.
The company believes their growth drivers are intact and that their replacement demand remains substantial, which leads to expect 2018 earnings to be between $2.50 and $2.58 per share. The company's guidance includes the benefit related to their lower projected tax rate under U.S. Tax Reform. The midpoint of their 2018 earnings guidance represents a 17% increase over 2017 adjusted earnings per share. Effective income tax rate in 2018 is expected to be between 22% and 22.5%. The company expects cash flow from operations in 2018 to be between $475 million and $500 million, which is much higher than the $326 million generated in 2017. The company expects higher earnings and lower outlays for working capital this year, specifically lower inventory levels. The company's 2018 capital spending plans of approximately $100 million includes $30 million related to completion of this plant. The company's depreciation and amortization expense is expected to be approximately $80 million in 2018. The company's effective income tax rate is lower than previous years due to U.S. tax reform. The company projects revenue growth will be between 8.5% and 9.5%.