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  "docSlug": "e4e33ebca0cb",
  "documentTitle": "A.O. Smith Corporation (AOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-05-16 00:00:00",
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  "notes": "The slide uses a table to demonstrate a recurring discrepancy between forecasted and actual capex, framing it as a potential red flag.",
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      "text": "We went back to compare its actual Capex spend vs. forecasted, particularly as it relates to its China capacity expansion, and found a consistent and repeated pattern of over-estimating Capex.",
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      "text": "Capex underspending: $17.0",
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      "text": "In the past, Spruce Point has found a strong linkage between companies that have unusually high gross margins, and capex spending (e.g. Caesarstone and Gentex). AOS regularly provides Capex guidance in its 10-K annual report. We went back to compare its actual Capex spend vs. forecasted, particularly as it relates to its China capacity expansion, and found a consistent and repeated pattern of over-estimating Capex.",
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      "text": "Source: AOS financial statements",
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      "text": "Table comparing Expected vs Actual China Capex from 2015-2018, showing the delta and % mis-forecast.",
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      "kind": "title",
      "text": "Gross Margin + Capex Irregularities Usually Linked",
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