04.29.24
The Sherwin-Williams Company announced its financial results for the first quarter ended March 31, 2024.
SUMMARY
• Consolidated net sales decreased 1.4% in the quarter to $5.37 billion
• Net sales from stores in the Paint Stores Group open more than twelve calendar months were approximately flat in the quarter
• Diluted net income per share increased 7.1% to $1.97 per share in the quarter compared to $1.84 per share in the first quarter 2023
• Adjusted diluted net income per share increased 6.4% to $2.17 per share in the quarter compared to $2.04 per share in the first quarter 2023
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in the quarter increased 2% to $896.2 million, or 16.7% of net sales
• Reaffirming full year 2024 diluted net income per share guidance in the range of $10.05 to $10.55 per share, including acquisition-related amortization expense of $0.80 per share
• Reaffirming full year 2024 adjusted diluted net income per share guidance in the range of $10.85 to $11.35 per share
"In what is a seasonally smaller first quarter and with continued demand choppiness in several end markets, Sherwin-Williams delivered consolidated sales within our guided range, gross margin expansion and diluted earnings per share and EBITDA growth," said Heidi G. Petz, president and CEO. "We also continued to execute our capital allocation strategy by investing $546 million in share repurchases and increasing our dividend 18.2% in the quarter.
"Paint Stores Group sales were up slightly against a strong double-digit comparison, driven by a modest contribution from our February 1 price increase which will reach greater realization in the second quarter,”Petz added. “Our recent growth investments helped drive above-market growth in Residential Repaint. Commercial and Protective & Marine sales also grew.
“New Residential sales were down as anticipated, though we are seeing momentum with our homebuilder customers. Delayed capex projects impacted Property Maintenance sales. In Consumer Brands Group, North America DIY paint demand remained soft, which was partially offset by international growth. Segment margin improved, primarily driven by higher manufacturing and distribution fixed cost absorption, lower raw material costs and improved results in Latin America and Europe.
“Performance Coatings Group sales were in line with expectations as demand remained variable by business and region. Sales grew in Industrial Wood and Coil,” Petz noted. “Sales were flat in Auto Refinish against a mid-teens comparison, and Packaging sales were down, as expected. General Industrial demand was soft in all regions. Segment margin improved year-over-year for the fifth consecutive quarter. In all segments, we continued to execute on our priorities which we expect will drive increasing momentum as the year progresses."
Consolidated net sales decreased primarily due to lower sales volumes in the Consumer Brands Group, inclusive of the impact from the divestiture of the China architectural business in the prior year, and the Performance Coatings Group in North America. Net sales in the Paint Stores Group was essentially flat in the quarter.
Net sales in the Paint Stores Group (PSG) were $2.873 billion, with the increase primarily due to a modest impact from the recently announced price increase with sales volume approximately flat year-over-year.
Net sales in the Consumer Brands Group (CBG) were $811 million, decreasing primarily due to a mid-single digit percentage sales volume decline and a 2.6% impact of divestitures in 2023. CBG segment profit increased primarily due to higher fixed cost absorption in the manufacturing and distribution operations within the segment, moderating raw material costs and improved results in Latin America and Europe, partially offset by lower North America sales volume.
Net sales in the Performance Coatings Group (PCG) were $1.681 billion, and decreased primarily due to lower sales volume in North America and Latin America, partially offset by higher sales volumes in Europe, inclusive of acquisition impact, and Asia. Performance was led by the Industrial Wood and Coil businesses, offset by decreases in the General Industrial and Packaging businesses.
PCG segment profit increased by 18.8%, primarily as a result of moderating raw material costs, partially offset by lower sales volume in North America.
"We remain highly confident in our customer focused strategy and are extremely well-positioned as the painting season begins," said Petz. "While uncertainties persist in the macroeconomic environment, we see growing opportunity, and we are encouraged by pro architectural demand and sentiment in April. Our team is aggressive, determined and focused on the right priorities. We expect share gains and returns to become more and more evident as the year progresses. We continue to have high expectations and are committed to meeting or exceeding our targets.”
SUMMARY
• Consolidated net sales decreased 1.4% in the quarter to $5.37 billion
• Net sales from stores in the Paint Stores Group open more than twelve calendar months were approximately flat in the quarter
• Diluted net income per share increased 7.1% to $1.97 per share in the quarter compared to $1.84 per share in the first quarter 2023
• Adjusted diluted net income per share increased 6.4% to $2.17 per share in the quarter compared to $2.04 per share in the first quarter 2023
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in the quarter increased 2% to $896.2 million, or 16.7% of net sales
• Reaffirming full year 2024 diluted net income per share guidance in the range of $10.05 to $10.55 per share, including acquisition-related amortization expense of $0.80 per share
• Reaffirming full year 2024 adjusted diluted net income per share guidance in the range of $10.85 to $11.35 per share
"In what is a seasonally smaller first quarter and with continued demand choppiness in several end markets, Sherwin-Williams delivered consolidated sales within our guided range, gross margin expansion and diluted earnings per share and EBITDA growth," said Heidi G. Petz, president and CEO. "We also continued to execute our capital allocation strategy by investing $546 million in share repurchases and increasing our dividend 18.2% in the quarter.
"Paint Stores Group sales were up slightly against a strong double-digit comparison, driven by a modest contribution from our February 1 price increase which will reach greater realization in the second quarter,”Petz added. “Our recent growth investments helped drive above-market growth in Residential Repaint. Commercial and Protective & Marine sales also grew.
“New Residential sales were down as anticipated, though we are seeing momentum with our homebuilder customers. Delayed capex projects impacted Property Maintenance sales. In Consumer Brands Group, North America DIY paint demand remained soft, which was partially offset by international growth. Segment margin improved, primarily driven by higher manufacturing and distribution fixed cost absorption, lower raw material costs and improved results in Latin America and Europe.
“Performance Coatings Group sales were in line with expectations as demand remained variable by business and region. Sales grew in Industrial Wood and Coil,” Petz noted. “Sales were flat in Auto Refinish against a mid-teens comparison, and Packaging sales were down, as expected. General Industrial demand was soft in all regions. Segment margin improved year-over-year for the fifth consecutive quarter. In all segments, we continued to execute on our priorities which we expect will drive increasing momentum as the year progresses."
Consolidated net sales decreased primarily due to lower sales volumes in the Consumer Brands Group, inclusive of the impact from the divestiture of the China architectural business in the prior year, and the Performance Coatings Group in North America. Net sales in the Paint Stores Group was essentially flat in the quarter.
Net sales in the Paint Stores Group (PSG) were $2.873 billion, with the increase primarily due to a modest impact from the recently announced price increase with sales volume approximately flat year-over-year.
Net sales in the Consumer Brands Group (CBG) were $811 million, decreasing primarily due to a mid-single digit percentage sales volume decline and a 2.6% impact of divestitures in 2023. CBG segment profit increased primarily due to higher fixed cost absorption in the manufacturing and distribution operations within the segment, moderating raw material costs and improved results in Latin America and Europe, partially offset by lower North America sales volume.
Net sales in the Performance Coatings Group (PCG) were $1.681 billion, and decreased primarily due to lower sales volume in North America and Latin America, partially offset by higher sales volumes in Europe, inclusive of acquisition impact, and Asia. Performance was led by the Industrial Wood and Coil businesses, offset by decreases in the General Industrial and Packaging businesses.
PCG segment profit increased by 18.8%, primarily as a result of moderating raw material costs, partially offset by lower sales volume in North America.
"We remain highly confident in our customer focused strategy and are extremely well-positioned as the painting season begins," said Petz. "While uncertainties persist in the macroeconomic environment, we see growing opportunity, and we are encouraged by pro architectural demand and sentiment in April. Our team is aggressive, determined and focused on the right priorities. We expect share gains and returns to become more and more evident as the year progresses. We continue to have high expectations and are committed to meeting or exceeding our targets.”
