A.O. Smith Corporation

Good day, ladies and gentlemen, and welcome to A.O. Smith Corporation's fourth quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference, you may press star then zero on your touchtone phone. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Patricia Ackerman, Senior Vice President of Investor Relations. Please begin.

Thank you, Norma. Good morning, ladies and gentlemen, and thank you for joining us on our 2018 results conference call. With me participating in the call are Ajita Rajendra, Executive Chairman, Kevin Wheeler, Chief Executive Officer, and John Keated, Chief Financial Officer. Before we begin with Kevin's remarks, I would like to remind you that some of the comments that will be made during this conference call, including answers to your questions, will constitute forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in this morning's press release. In order to provide improved transparency into the operating results of our business, we provided non-GAAP measures, adjusted net earnings, adjusted earnings per share, and adjusted effective income tax rates for 2017 that exclude the estimate of our total that exclude the total tax expense related to U.S. tax reform. And for 2018, that excludes the restructuring and impairment costs associated with our plant closure in Renton, Washington. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and also on our website. Also, as a courtesy to others in the question queue, please limit yourself to one question and one follow-up per turn. If you have multiple questions, please rejoin the queue. I will now turn the call over to Kevin, who will begin our prepared remarks on slide four.

Thank you, Pat, and good morning, ladies and gentlemen. Our mid-single-digit sales growth in 2018 was driven by positive end markets for our boilers, residential water heaters in the U.S., and continued demand for our water treatment products in China. Here are a few highlights. Record sales of $3.2 billion grew over 6%. Record adjusted earnings per share grew 20%. We are proud of the global water treatment platform we have built over the last seven years. Beginning in 2011, with about $35 million of water treatment sales in China, we significantly grew to approximately $400 million in 2018. As we experienced rapid organic water treatment growth in China, we added several bolt-on acquisitions in the U.S. and in Europe, launched water treatment products in India and Vietnam, and added water treatment engineers and technologists to our global engineering centers. We achieved exclusive supplier status for Lowe's water treatment business in the U.S. We continue to review our capital allocation and dedicate a portion of our cash to return to shareholders. In 2018, we repurchased nearly 4 million shares for approximately $200 million. We announced two dividend increases in 2018, and the five-year compound annual growth rate of our dividend is 30 percent. We repatriated over $300 million in overseas cash to the U.S., increasing the flexibility of our balance sheet. John will now describe our results in more detail, beginning with slide five.