CLEVELAND, July 25,
2023 /PRNewswire/ -- The Sherwin-Williams Company
(NYSE: SHW) announced its financial results for the second quarter
ended June 30, 2023. All comparisons are to the second quarter
of the prior year, unless otherwise noted.
SUMMARY
- Consolidated net sales increased 6.3% in the quarter to a
record $6.24 billion
-
- Net sales from stores in U.S. and Canada open more than twelve calendar months
increased 9.5% in the quarter
- Diluted net income per share increased 38.9% to $3.07 per share in the quarter compared to
$2.21 per share in the second quarter
2022
-
- Adjusted diluted net income per share increased 36.5% to
$3.29 per share in the quarter
compared to $2.41 per share in the
second quarter 2022
- Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) increased 31.4% to $1.28
billion in the quarter and was 20.6% of net sales
- Increasing full year 2023 diluted net income per share guidance
to a range of $8.46 to $8.86 per share, including acquisition-related
amortization expense of $0.81 per
share and restructuring expense of $0.03 per share
-
- Increasing full year 2023 adjusted diluted net income per share
guidance to a range of $9.30 to
$9.70 per share
CEO REMARKS
"Our team delivered very strong results in the second quarter,
as sales exceeded expectations in all three segments," said
Chairman and Chief Executive Officer, John
G. Morikis. "My thanks goes to our 64,000 employees, who
continue to execute on our strategy of providing unique and
differentiated value, service and solutions for our customers.
Gross margin improved sequentially and year-over-year to 46%,
driven by strong sales volume in our Paint Stores Group as well as
moderating raw material costs. We leveraged the strong sales growth
to drive solid margin expansion across all our segments, while also
investing in growth initiatives that will propel sustained future
performance. In addition, we delivered strong double digit
percentage growth in earnings per share and EBITDA. We generated
strong cash flow and continued our disciplined approach to capital
allocation, including returning $849
million to shareholders through dividends and share
repurchases year to date.
"In our reportable segments, growth in our Paint Stores Group
was led by double digit percentage growth in protective and marine,
commercial and property maintenance. Residential repaint sales were
up a high-single digit percentage. New residential sales were flat,
as completions slowed as expected. Sales in our Consumer Brands
Group increased by a low-single digit percentage in North America and a strong double digit
percentage in Latin America and
Europe. In the Performance
Coatings Group, our Automotive Refinish business grew by a
high-single digit percentage. We also generated growth in our
General Industrial and Industrial Wood businesses. Coil and
Packaging sales were down against very difficult comparisons."
SECOND QUARTER CONSOLIDATED
RESULTS
|
|
Three Months Ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
6,240.6
|
|
$
5,872.3
|
|
$
368.3
|
|
6.3 %
|
Income before income
taxes
|
$
1,012.1
|
|
$
739.9
|
|
$
272.2
|
|
36.8 %
|
As a % of
sales
|
16.2 %
|
|
12.6 %
|
|
|
|
|
Net income per share -
diluted
|
$
3.07
|
|
$
2.21
|
|
$
0.86
|
|
38.9 %
|
Adjusted net income per
share - diluted
|
$
3.29
|
|
$
2.41
|
|
$
0.88
|
|
36.5 %
|
Consolidated net sales increased primarily due to selling price
increases, which impacted sales by a mid-single digit percentage,
and mid-single digit volume growth due to higher architectural
sales volume in the Paint Stores Group. This growth was
offset by lower volume in industrial businesses. Acquisitions
increased consolidated net sales by 1.4%.
Income before income taxes increased primarily due to selling
price increases in all segments and higher sales volume in the
Paint Stores Group, as well as moderating raw material costs. These
factors were partially offset by lower sales volume in the
Performance Coatings Group, increased investments in long-term
growth initiatives, and higher employee-related costs.
As part of a previously announced restructuring plan
(Restructuring Plan) to simplify the Company's operating model and
reduce costs, the Company completed the divestiture of a non-core
domestic aerosol business and announced it had signed a definitive
agreement to divest the China
architectural business within the Consumer Brands Group during the
second quarter of 2023. Diluted net income per share in the quarter
included a $0.05 per share impairment
charge related to the pending divestiture of the China architectural business, as well as
severance and other charges totaling $0.03 per share, offset by a $0.06 per share gain from the divestiture of the
non-core domestic aerosol business. In addition, diluted net income
per share included a charge of $0.20
per share for acquisition-related amortization expense.
SECOND QUARTER
SEGMENT RESULTS
Paint Stores Group
(PSG)
|
|
Three Months Ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
3,498.7
|
|
$
3,181.0
|
|
$
317.7
|
|
10.0 %
|
Same-store sales
(1)
|
9.5 %
|
|
6.4 %
|
|
|
|
|
Segment
profit
|
$
849.3
|
|
$
684.0
|
|
$
165.3
|
|
24.2 %
|
Reported segment
margin
|
24.3 %
|
|
21.5 %
|
|
|
|
|
(1)
|
Same-store sales
represents net sales from stores open more than twelve calendar
months.
|
Net sales in PSG increased primarily due to mid-single digit
volume growth across most end markets, as well as selling price
increases, which impacted sales by a mid-single digit percentage.
PSG segment profit increased due primarily to higher paint sales
volume, selling price increases and moderating raw material costs,
partially offset by continued investments in long-term growth
strategies and higher employee-related costs.
Consumer Brands
Group (CBG)
|
|
Three Months Ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
945.8
|
|
$
900.0
|
|
$
45.8
|
|
5.1 %
|
Segment
profit
|
$
110.3
|
|
$
79.9
|
|
$
30.4
|
|
38.0 %
|
Reported segment
margin
|
11.7 %
|
|
8.9 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
148.3
|
|
$
99.0
|
|
$
49.3
|
|
49.8 %
|
Adjusted segment
margin
|
15.7 %
|
|
11.0 %
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment profit excluding the impact of restructuring costs,
impairment charges, and acquisition-related amortization expense.
Restructuring costs were approximately $13.2 million and
impairment charges were $6.9 million in the second quarter of
2023. Acquisition-related amortization expense was
$17.9 million and $19.1 million in the second quarter of
2023 and 2022, respectively.
|
Net sales in CBG increased primarily due to selling price
increases, which impacted sales by a mid-single digit
percentage. Higher sales volume growth in Latin America and Europe was offset by lower sales volume in
North America and Asia. CBG segment profit increased primarily
due to selling price increases and moderating raw material costs
and good cost control, partially offset by inflation in wages and
other employee-related costs. Acquisition-related amortization
expense reduced segment profit as a percent of net external sales
by 190 basis points in the second quarter of 2023, compared to 210
basis points in the second quarter of 2022. Restructuring expense
and impairment charges reduced segment profit as a percent of net
external sales by 210 basis points in the second quarter of
2023.
Performance Coatings
Group (PCG)
|
|
Three Months Ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
1,794.9
|
|
$
1,790.3
|
|
$
4.6
|
|
0.3 %
|
Segment
profit
|
$
272.7
|
|
$
196.8
|
|
$
75.9
|
|
38.6 %
|
Reported segment
margin
|
15.2 %
|
|
11.0 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
322.3
|
|
$
247.1
|
|
$
75.2
|
|
30.4 %
|
Adjusted segment
margin
|
18.0 %
|
|
13.8 %
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment profit excluding the impact of acquisition-related
amortization expense. Acquisition-related amortization expense was
$49.7 million and $50.3 million in the second quarter of
2023 and 2022, respectively.
|
Net sales in PCG increased primarily due to selling price
increases in all end markets, which increased net sales by a
mid-single digit percentage, and incremental sales from
acquisitions, largely offset by lower sales volumes in most
regions. Acquisitions increased PCG's net sales by 4.5% in the
quarter. PCG segment profit increased primarily as a result of
selling price increases, moderating raw material costs and
effective cost control, partially offset by higher employee-related
costs. Acquisition-related amortization expense reduced segment
profit as a percent of net external sales by 280 basis points in
both the second quarter of 2023 and 2022.
LIQUIDITY AND CASH FLOW
The Company generated $1.29
billion in net operating cash during the first six months of
2023, an increase of 102% compared to the same period in 2022,
primarily as a result of higher profit. This strong cash generation
allowed the Company to return cash of $848.7
million to our shareholders in the form of dividends and
repurchases of 2.3 million shares of its common stock during the
first six months of 2023. At June 30,
2023, the Company had remaining authorization to purchase
42.9 million shares of its common stock through open market
purchases.
2023
GUIDANCE
|
|
Third
Quarter
|
|
Full
Year
|
|
2023
|
|
2023
|
Net sales
|
Up or down low-single
digit %
|
|
Up low-single digit
%
|
Effective tax
rate
|
|
|
Low twenty
percent
|
Diluted net income per
share
|
|
|
$8.46
|
-
|
$8.86
|
Adjusted diluted net
income per share (1)
|
|
|
$9.30
|
-
|
$9.70
|
(1)
|
Excludes $0.81 per
share of acquisition-related amortization expense and $0.03 per
share of restructuring expense.
|
"As a result of our better than expected first half results, and
our current visibility into the second half, we are increasing our
sales and earnings guidance for the full year," said Mr. Morikis.
"At the same time, our second half comparisons remain challenging,
and demand is likely to vary widely by region and end market,
leading us to focus even more intensely on our new account and
share of wallet initiatives. In the Paint Stores Group, we expect
demand to remain solid in commercial, property maintenance,
protective and marine and residential repaint. We expect new
residential demand to remain soft due to continued slowing of
completions, though share gains should enable us to outperform the
market. In the Consumer Brands Group, North America DIY demand
remains soft, Europe demand has
stabilized and Latin America
markets are mixed. In the Performance Coatings Group, North America demand has slowed, and
Europe and Asia remain choppy. Even in challenging
environments like the current one, we remain confident in our
strategy, and we will continue to invest in stores, sales and
technical reps, innovation, digital and other growth initiatives to
press our advantages now as well as when markets recover more
fully. We expect to continue delivering above market growth and
returns.
"As for our guidance, we expect 2023 third quarter consolidated
net sales growth to be up or down a low-single digit percentage
compared to the third quarter of 2022. For the full year 2023, we
are increasing both sales and net income per share guidance. We now
expect full year consolidated net sales to be up a low-single digit
percentage compared to 2022, versus our prior guidance of flat to
down a mid-single digit percentage. Our full year diluted net
income per share guidance is now $8.46 to $8.86 per
share, versus our prior guidance of $6.79 to $7.59 per
share. This includes acquisition-related amortization expense of
$0.81 per share and net expense
related to the Restructuring Plan of $0.03 per share. Full year 2023 adjusted diluted
net income per share is now expected to be in the range of
$9.30 to $9.70 per share, compared to our prior guidance
of $7.95 to $8.65 per share and $8.73 per share in 2022."
CONFERENCE CALL INFORMATION
The Company will conduct a conference call to discuss its
financial results for the second quarter, and its outlook for the
third quarter and full year 2023, at 11:00
a.m. EDT on Tuesday, July 25, 2023. Participating on
the call will be Chairman and Chief Executive Officer, John Morikis, along with other senior
executives.
The conference call will be webcast simultaneously in the listen
only mode by Issuer Direct. To listen to the webcast on the
Sherwin-Williams website, click on
https://investors.sherwin-williams.com/financials/quarterly-results/,
then click on the webcast icon following the reference to the Q2
webcast. An archived replay of the webcast will be available at
https://investors.sherwin-williams.com/financials/quarterly-results/
beginning approximately two hours after the call ends.
ABOUT THE SHERWIN-WILLIAMS COMPANY
Founded in 1866, The Sherwin-Williams Company is a global leader
in the manufacture, development, distribution, and sale of paint,
coatings and related products to professional, industrial,
commercial, and retail customers. The Company manufactures products
under well-known brands such as Sherwin-Williams®,
Valspar®, HGTV HOME® by Sherwin-Williams,
Dutch Boy®, Krylon®, Minwax®,
Thompson's®
WaterSeal®, Cabot® and many more. With global
headquarters in Cleveland, Ohio,
Sherwin-Williams® branded products are sold exclusively
through a chain of more than 5,000 Company-operated stores and
branches, while the Company's other brands are sold through leading
mass merchandisers, home centers, independent paint dealers,
hardware stores, automotive retailers, and industrial distributors.
The Sherwin-Williams Performance Coatings Group supplies a broad
range of highly-engineered solutions for the construction,
industrial, packaging and transportation markets in more than 120
countries around the world. Sherwin-Williams shares are traded on
the New York Stock Exchange (symbol: SHW). For more information,
visit www.sherwin.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This press release contains certain "forward-looking
statements," as defined under U.S. federal securities laws, with
respect to sales, earnings and other matters. These statements can
be identified by the use of forward-looking terminology such as
"believe," "expect," "may," "will," "should," "project," "could,"
"plan," "goal," "target," "potential," "seek," "intend," "aspire,"
"strive" or "anticipate" or the negative thereof or comparable
terminology. These forward-looking statements are based upon
management's current expectations, predictions, estimates,
assumptions and beliefs concerning future events and conditions.
Readers are cautioned not to place undue reliance on any
forward-looking statements. Forward-looking statements are
necessarily subject to risks, uncertainties and other factors, many
of which are outside the control of the Company that could cause
actual results to differ materially from such statements and from
the Company's historical performance, results and experience. These
risks, uncertainties and other factors include such things as:
general business conditions, strengths of retail and manufacturing
economies and growth in the coatings industry; changes in general
economic conditions; changes in raw material and energy supplies
and pricing; disruptions in the supply chain; adverse weather
conditions or natural disasters, including those that may be
related to climate change or otherwise; losses of or changes in the
Company's relationships with customers and suppliers; competitive
factors; the Company's ability to successfully integrate past and
future acquisitions into its existing operations, as well as the
performance of the businesses acquired; the Company's ability to
achieve expected benefits of restructuring and productivity
initiatives; public health crises; damages to our business,
reputation, image or brands due to negative publicity; and other
risks, uncertainties and factors described from time to time in the
Company's reports filed with the Securities and Exchange
Commission. Since it is not possible to predict or identify all of
the risks, uncertainties and other factors that may affect future
results, the above list should not be considered a complete list.
Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
INVESTOR RELATIONS CONTACTS:
Jim Jaye
Senior Vice President, Investor Relations & Corporate
Communications
Direct: 216.515.8682
investor.relations@sherwin.com
Eric Swanson
Vice President, Investor Relations
Direct:
216.566.2766
investor.relations@sherwin.com
MEDIA CONTACT:
Julie Young
Vice President, Global Corporate Communications
Direct: 216.515.8849
corporatemedia@sherwin.com
The Sherwin-Williams Company and
Subsidiaries
|
Statements of Consolidated Income
(Unaudited)
|
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
6,240.6
|
|
$
5,872.3
|
|
$
11,683.0
|
|
$
10,871.0
|
Cost of goods
sold
|
3,368.3
|
|
3,423.3
|
|
6,389.8
|
|
6,369.1
|
Gross profit
|
2,872.3
|
|
2,449.0
|
|
5,293.2
|
|
4,501.9
|
Percent to net sales
|
46.0 %
|
|
41.7 %
|
|
45.3 %
|
|
41.4 %
|
Selling, general and
administrative expenses
|
1,760.0
|
|
1,597.6
|
|
3,453.0
|
|
3,083.1
|
Percent to net sales
|
28.2 %
|
|
27.2 %
|
|
29.6 %
|
|
28.4 %
|
Other general (income)
expense - net
|
(32.5)
|
|
4.4
|
|
(22.0)
|
|
6.9
|
Impairment
|
34.0
|
|
—
|
|
34.0
|
|
—
|
Interest
expense
|
111.7
|
|
92.9
|
|
221.0
|
|
181.3
|
Interest
income
|
(7.2)
|
|
(1.3)
|
|
(10.7)
|
|
(2.2)
|
Other (income) expense
- net
|
(5.8)
|
|
15.5
|
|
(9.0)
|
|
31.8
|
Income before income
taxes
|
1,012.1
|
|
739.9
|
|
1,626.9
|
|
1,201.0
|
Income taxes
|
218.4
|
|
162.0
|
|
355.8
|
|
252.3
|
Net income
|
$
793.7
|
|
$
577.9
|
|
$
1,271.1
|
|
$
948.7
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
3.10
|
|
$
2.24
|
|
$
4.96
|
|
$
3.67
|
Diluted
|
$
3.07
|
|
$
2.21
|
|
$
4.90
|
|
$
3.61
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
256.0
|
|
258.1
|
|
256.3
|
|
258.5
|
Diluted
|
258.9
|
|
261.8
|
|
259.3
|
|
262.5
|
The Sherwin-Williams Company and Subsidiaries
Business Segments (Unaudited) (millions of dollars)
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
Net
|
|
Segment
|
|
Net
|
|
Segment
|
|
External
|
|
Profit
|
|
External
|
|
Profit
|
|
Sales
|
|
(Loss)
|
|
Sales
|
|
(Loss)
|
Three Months Ended June 30:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
3,498.7
|
|
$
849.3
|
|
$ 3,181.0
|
|
$
684.0
|
Consumer Brands
Group
|
945.8
|
|
110.3
|
|
900.0
|
|
79.9
|
Performance Coatings
Group
|
1,794.9
|
|
272.7
|
|
1,790.3
|
|
196.8
|
Administrative
|
1.2
|
|
(220.2)
|
|
1.0
|
|
(220.8)
|
Consolidated
totals
|
$
6,240.6
|
|
$
1,012.1
|
|
$ 5,872.3
|
|
$
739.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
6,357.8
|
|
$
1,376.0
|
|
$ 5,672.3
|
|
$ 1,112.8
|
Consumer Brands
Group
|
1,818.5
|
|
204.1
|
|
1,752.2
|
|
161.4
|
Performance Coatings
Group
|
3,504.7
|
|
491.6
|
|
3,444.4
|
|
341.3
|
Administrative
|
2.0
|
|
(444.8)
|
|
2.1
|
|
(414.5)
|
Consolidated
totals
|
$
11,683.0
|
|
$
1,626.9
|
|
$
10,871.0
|
|
$ 1,201.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Sherwin-Williams Company and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited) (millions of dollars)
|
|
|
|
|
|
June 30,
|
|
2023
|
|
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
209.4
|
|
$
312.6
|
Accounts receivable,
net
|
3,117.8
|
|
2,982.5
|
Inventories
|
2,439.0
|
|
2,411.6
|
Other current
assets
|
584.4
|
|
552.8
|
Total current
assets
|
6,350.6
|
|
6,259.5
|
Property, plant and
equipment, net
|
2,442.5
|
|
1,961.9
|
Goodwill
|
7,446.5
|
|
7,106.1
|
Intangible
assets
|
3,934.4
|
|
3,955.1
|
Operating lease
right-of-use assets
|
1,869.2
|
|
1,842.4
|
Other assets
|
1,122.9
|
|
927.8
|
Total assets
|
$
23,166.1
|
|
$ 22,052.8
|
|
|
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
806.2
|
|
$
2,012.0
|
Accounts
payable
|
2,489.7
|
|
2,992.9
|
Compensation and taxes
withheld
|
700.5
|
|
587.6
|
Accrued
taxes
|
308.0
|
|
185.6
|
Current portion of
long-term debt
|
499.5
|
|
0.6
|
Current portion of
operating lease liabilities
|
436.1
|
|
418.1
|
Other
accruals
|
1,099.1
|
|
1,001.4
|
Total current
liabilities
|
6,339.1
|
|
7,198.2
|
Long-term
debt
|
9,095.7
|
|
8,593.6
|
Postretirement benefits
other than pensions
|
139.3
|
|
257.5
|
Deferred income
taxes
|
710.9
|
|
754.0
|
Long-term operating
lease liabilities
|
1,503.2
|
|
1,483.1
|
Other long-term
liabilities
|
1,746.8
|
|
1,541.8
|
Shareholders'
equity
|
3,631.1
|
|
2,224.6
|
Total liabilities and
shareholders' equity
|
$
23,166.1
|
|
$ 22,052.8
|
Regulation G Reconciliations
Management of the Company utilizes certain financial measures
that are not in accordance with U.S. generally accepted accounting
principles (US GAAP) to analyze and manage the performance of the
business. Management provides non-GAAP information in reporting its
financial results to give investors additional data to evaluate the
Company's operations. Management does not, nor does it suggest
investors should, consider such non-GAAP measures in isolation
from, or in substitution for, financial information prepared in
accordance with US GAAP.
Management believes that investors' understanding of the
Company's operating performance is enhanced by the disclosure of
diluted net income per share excluding Valspar acquisition-related
amortization expense and items related to the previously announced
Restructuring Plan. This adjusted earnings per share measurement is
not in accordance with US GAAP. It should not be considered a
substitute for earnings per share computed in accordance with US
GAAP and may not be comparable to similarly titled measures
reported by other companies. The following tables reconcile diluted
net income per share computed in accordance with US GAAP to
adjusted diluted net income per share.
|
|
|
|
|
|
|
|
|
Year Ending
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
December 31,
2023
|
|
June 30,
2023
|
|
June 30,
2023
|
|
(after-tax
guidance)
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-Tax
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-Tax
|
|
Low
|
|
High
|
Diluted net income per
share
|
|
|
$ 3.07
|
|
|
|
$ 4.90
|
|
$ 8.46
|
|
$ 8.86
|
|
|
|
|
|
|
|
|
|
|
|
|
Items Related to
Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
other
|
$ 0.06
|
$ 0.03
|
0.03
|
|
$ 0.06
|
$ 0.03
|
0.03
|
|
|
|
|
Impairment of assets
held for sale
|
0.13
|
0.08
|
0.05
|
|
0.13
|
0.08
|
0.05
|
|
|
|
|
Gain on divestiture of
domestic aerosol business
|
(0.08)
|
(0.02)
|
(0.06)
|
|
(0.08)
|
(0.02)
|
(0.06)
|
|
|
|
|
Total
|
0.11
|
0.09
|
0.02
|
|
0.11
|
0.09
|
0.02
|
|
0.03
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
amortization expense (2)
|
0.26
|
0.06
|
0.20
|
|
0.53
|
0.11
|
0.42
|
|
0.81
|
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share
|
|
|
$ 3.29
|
|
|
|
$ 5.34
|
|
$ 9.30
|
|
$ 9.70
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Year Ended
|
|
June 30,
2022
|
|
June 30,
2022
|
|
December 31,
2022
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-Tax
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-Tax
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-Tax
|
Diluted net income per
share
|
|
|
$
2.21
|
|
|
|
$
3.61
|
|
|
|
$
7.72
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expense:
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
other
|
|
|
—
|
|
|
|
—
|
|
$
0.18
|
$
0.03
|
0.15
|
Impairment
|
|
|
—
|
|
|
|
—
|
|
0.06
|
0.01
|
0.05
|
Total
|
—
|
—
|
—
|
|
—
|
—
|
—
|
|
0.24
|
0.04
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
amortization expense (2)
|
$
0.27
|
$
0.07
|
0.20
|
|
$
0.53
|
$
0.12
|
0.41
|
|
1.06
|
0.25
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share
|
|
|
$
2.41
|
|
|
|
$
4.02
|
|
|
|
$
8.73
|
(1)
|
The tax effect is
calculated based on the statutory rate and the nature of the
item.
|
(2)
|
Acquisition-related
amortization expense consists primarily of the amortization of
intangible assets related to the Valspar acquisition and is
included within Selling, general and administrative
expenses.
|
Management believes that investors' understanding of the
Company's operating performance is enhanced by the disclosure of
EBITDA, which is a non-GAAP financial measure defined as net income
before income taxes and interest expense, depreciation and
amortization, as well as Adjusted EBITDA, which is a non-GAAP
financial measure that excludes certain adjustments, such as items
related to the previously announced Restructuring Plan. Management
considers EBITDA and Adjusted EBITDA useful in understanding the
operating performance of the Company. The reader is cautioned that
the Company's EBITDA and Adjusted EBITDA should not be compared to
other entities unknowingly. Further, EBITDA and Adjusted EBITDA
should not be considered alternatives to net income or net
operating cash as an indicator of operating performance or as a
measure of liquidity. The following tables reconcile net income
computed in accordance with US GAAP to EBITDA and Adjusted EBITDA,
as applicable.
(millions of
dollars)
|
|
|
|
|
|
|
Three Months
|
|
Three Months
|
|
Six Months
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2023
|
|
June 30,
2023
|
|
June 30,
2023
|
Net income
|
$
477.4
|
|
$
793.7
|
|
$
1,271.1
|
Interest
expense
|
109.3
|
|
111.7
|
|
221.0
|
Income taxes
|
137.4
|
|
218.4
|
|
355.8
|
Depreciation
|
70.4
|
|
75.7
|
|
146.1
|
Amortization
|
83.7
|
|
83.0
|
|
166.7
|
EBITDA
|
$
878.2
|
|
$
1,282.5
|
|
$
2,160.7
|
Restructuring
expense
|
0.9
|
|
8.7
|
|
9.6
|
Impairment of assets
held for sale
|
—
|
|
34.0
|
|
34.0
|
Gain on divestiture of
domestic aerosol business
|
—
|
|
(20.1)
|
|
(20.1)
|
Adjusted
EBITDA
|
$
879.1
|
|
$
1,305.1
|
|
$
2,184.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Three Months
|
|
Six Months
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2022
|
|
June 30,
2022
|
|
June 30,
2022
|
Net income
|
$
370.8
|
|
$
577.9
|
|
$
948.7
|
Interest
expense
|
88.4
|
|
92.9
|
|
181.3
|
Income taxes
|
90.3
|
|
162.0
|
|
252.3
|
Depreciation
|
65.5
|
|
64.8
|
|
130.3
|
Amortization
|
78.0
|
|
78.5
|
|
156.5
|
EBITDA
|
$
693.0
|
|
$
976.1
|
|
$
1,669.1
|
The Sherwin-Williams Company and Subsidiaries
Selected Information (Unaudited) (millions of dollars, except store count
data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
|
|
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Depreciation
|
$
75.7
|
|
$
64.8
|
|
$
146.1
|
|
$ 130.3
|
Capital
expenditures
|
206.1
|
|
129.5
|
|
416.0
|
|
235.8
|
Cash
dividends
|
156.3
|
|
156.2
|
|
312.8
|
|
307.1
|
Amortization of
intangibles
|
83.0
|
|
78.5
|
|
166.7
|
|
156.5
|
|
|
|
|
|
|
|
|
Significant components of Other general (income)
expense - net:
|
|
|
|
|
Provisions for
environmental matters - net
|
$
0.6
|
|
$
4.1
|
|
$
13.3
|
|
$
4.7
|
(Gain) on divestiture
of domestic aerosol business
|
(20.1)
|
|
—
|
|
(20.1)
|
|
—
|
(Gains) losses on sale
or disposition of assets
|
(16.2)
|
|
0.3
|
|
(20.8)
|
|
2.2
|
|
|
|
|
|
|
|
|
Significant components of Other (income) expense -
net:
|
|
|
|
|
Investment (gains)
losses
|
$
(15.5)
|
|
$
8.2
|
|
$
(18.7)
|
|
$
14.9
|
Net expense from
banking activities
|
3.9
|
|
3.0
|
|
7.8
|
|
5.9
|
Foreign currency
transaction related losses
|
16.8
|
|
6.2
|
|
23.6
|
|
10.3
|
Other
(1)
|
(11.0)
|
|
(1.9)
|
|
(21.7)
|
|
0.7
|
|
|
|
|
|
|
|
|
Store Count Data:
|
|
|
|
|
|
|
|
Paint Stores Group -
net new stores
|
16
|
|
16
|
|
20
|
|
23
|
Paint Stores Group -
total stores
|
4,644
|
|
4,572
|
|
4,644
|
|
4,572
|
Consumer Brands Group
- net new stores
|
6
|
|
(1)
|
|
6
|
|
(4)
|
Consumer Brands Group
- total stores
|
313
|
|
306
|
|
313
|
|
306
|
Performance Coatings
Group - net new branches
|
4
|
|
1
|
|
2
|
|
1
|
Performance Coatings
Group - total branches
|
319
|
|
283
|
|
319
|
|
283
|
(1)
|
Consists of items of
revenue, gains, expenses and losses unrelated to the primary
business purpose of the Company
|
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SOURCE The Sherwin-Williams Company