In the americas group revenue rose 9 from the prior

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In the Americas Group, revenue rose 9% from the prior year to $2.19 billion, while operating profit rose 22% to $406 million, reflecting higher architectural paint sales across all end markets and higher prices. The segment profit margin improved to 19.4% from 19.1% a year earlier. We expect this segment to perform well this year, as professional customers continue to report large project backlogs. In the Consumer Brands Group, revenue grew 89% from the prior year to $572 million, while operating profit fell 54% to $23.6 million. The increase in revenue was primarily the result of the inclusion of Valspar. However, Consumer sales were weak in most product categories and market segments and the division also experienced higher raw material costs. Management noted again that strong sales to professional customers may have reduced demand in the do-it-yourself market. The company looks for slowly improving results in the Consumer segment in 2018. In the Performance Coatings Group, revenue rose 160% to $1.22 billion, while operating profit increased 81% to $119.4 million. The higher sales reflected a full quarter contribution from Valspar, higher paint sales, and higher selling prices. The improvement in earnings was driven by Valspar contributions and positive currency translation effects, which increased profit by 9.6% in the quarter. As noted in previous reports, Sherwin-Williams completed its acquisition of Valspar on June 1. Under the terms of the agreement, Valspar shareholders received $113 per share in cash. Sherwin-Williams continues to project $320 million of annual run-rate synergies within three years of the closing. Finally, on October 3, 2017, Sherwin-Williams provided its strategic outlook to the financial community in a NYC analyst meeting, highlighting how its recent acquisition of Valspar Corp. will accelerate earnings growth and dividend payments through the end of the decade. Expanding sales to new markets outside of North America (industrial and residential), along with cost and revenue synergies, should reach about $400 million by 2020, contributing to wider profit margins and higher profit rates. Altogether, SHW anticipates spending $3.9 billion on debt reduction, $1.9 billion on dividends, $1.6 billion in capital expenditures and $1.2 billion on acquisitions through 2020. On the profit side, the company expects earnings to rise by 12% a year through 2020. For all of 2017, the company reported adjusted net income of $1.772 billion or $15.04 per diluted share, compared to adjusted net income of $1.133 billion or $12.41 per diluted share in 2016.
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M ARKET U PDATE - 5 - EARNINGS & GROWTH ANALYSIS Along with its 4Q17 earnings report, management provided a 2018 EPS outlook of $18.80-$19.30 per diluted share, which includes costs related to the acquisition of Valspar of approximately $3.45 per diluted share. The company indicated that it will no longer provide quarterly EPS guidance going forward. The consensus estimate prior to the earnings release was $18.69.
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