CLEVELAND, Oct. 24,
2023 /PRNewswire/ -- The Sherwin-Williams Company
(NYSE: SHW) announced its financial results for the third quarter
ended September 30, 2023. All comparisons are to the third
quarter of the prior year, unless otherwise noted.
SUMMARY
- Consolidated net sales increased 1.1% in the quarter to
$6.12 billion
- Net sales from stores in the U.S. and Canada open more than twelve calendar months
increased 3.0% in the quarter
- Diluted net income per share increased 12.6% to $2.95 per share in the quarter compared to
$2.62 per share in the third quarter
2022
- Adjusted diluted net income per share increased 13.1% to
$3.20 per share in the quarter
compared to $2.83 per share in the
third quarter 2022
- Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) in the quarter increased 12.6% to $1.27 billion, or 20.7% of net sales
- Generated net operating cash of $2.60
billion, or 14.6% of net sales, during the first nine months
of 2023
- Increasing full year 2023 diluted net income per share guidance
to a range of $9.21 to $9.41 per share, including acquisition-related
amortization expense of $0.80 per
share and restructuring-related net expense of $0.09 per share
- Increasing full year 2023 adjusted diluted net income per share
guidance to a range of $10.10 to
$10.30 per share
CEO REMARKS
"Sherwin-Williams delivered strong third quarter results in an
environment where demand remained highly variable by end market and
region, and against a challenging prior year comparison," said
Chairman and Chief Executive Officer, John
G. Morikis. "Consolidated net sales were within our guidance
range, and consolidated gross margin of 47.7% expanded
significantly both sequentially and year-over-year driven by
pricing discipline and moderating raw material costs. As we
previously indicated, we have deliberately chosen to continue
investing at this time in multiple growth initiatives and solutions
for our customers, which is reflected in higher SG&A costs in
the quarter compared to a year ago. While we executed on these
initiatives, we continued to create shareholder value as adjusted
diluted net income per share and EBITDA grew by double digit
percentages, and we returned $566
million to our shareholders through dividends and share
repurchases during the quarter.
"From a segment perspective, sales growth in Paint Stores Group
was led by protective and marine and commercial, with residential
repaint and property maintenance also delivering growth. As
expected, sales in new residential softened due to slowing
completions, though we are confident in continuing share gains.
Segment margin expanded, and we opened 16 new paint stores in the
quarter. The sales decrease in our Consumer Brands Group was
largely the result of the divestiture of the China architectural business and softer demand
in North America, as the DIY
consumer remained under pressure. Conversely, the Group's sales in
Latin America and Europe increased by double digit percentages.
In the Performance Coatings Group, the Industrial Wood and
Automotive Refinish businesses delivered growth. Sales decreased in
our General Industrial and Coil businesses and varied widely by
region. As expected, industry-wide destocking continued to impact
our Packaging business. Segment margin improved given pricing
discipline and moderating costs."
THIRD QUARTER CONSOLIDATED
RESULTS
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$ 6,116.7
|
|
$
6,047.4
|
|
$
69.3
|
|
1.1 %
|
Income before income
taxes
|
$
1,009.0
|
|
$
877.2
|
|
$
131.8
|
|
15.0 %
|
As a % of
sales
|
16.5 %
|
|
14.5 %
|
|
|
|
|
Net income per share -
diluted
|
$
2.95
|
|
$
2.62
|
|
$
0.33
|
|
12.6 %
|
Adjusted net income per
share - diluted
|
$
3.20
|
|
$
2.83
|
|
$
0.37
|
|
13.1 %
|
Consolidated net sales increased primarily due to selling price
increases in all segments, which impacted sales by a low-single
digit percentage, and modest net benefit from acquisitions and
divestitures and favorable currency translation rate changes.
This growth was mostly offset by a low-single digit volume decrease
primarily driven by the Consumer Brands and Performance Coatings
Groups.
Income before income taxes increased primarily due to benefits
from selling price increases in all segments and moderating raw
material costs. These factors were partially offset by lower fixed
cost absorption in Consumer Brands due to lower production volumes,
lower sales volumes in the Consumer Brands and Performance Coatings
Groups, continued investments in long-term growth strategies and
higher employee-related expense. Increased costs within the
Administrative Segment, including environmental expense and asset
disposals, also reduced Income before income taxes.
Diluted net income per share included a charge of $0.19 per share for acquisition-related
amortization expense and a charge of $0.06 per share related to discrete income tax
expense associated with the divestiture of the China architectural business.
THIRD QUARTER SEGMENT RESULTS
Paint Stores Group
(PSG)
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
3,537.1
|
|
$
3,414.0
|
|
$
123.1
|
|
3.6 %
|
Same-store sales
(1)
|
3.0 %
|
|
20.7 %
|
|
|
|
|
Segment
profit
|
$
917.5
|
|
$
741.3
|
|
$
176.2
|
|
23.8 %
|
Reported segment
margin
|
25.9 %
|
|
21.7 %
|
|
|
|
|
(1)
|
Same-store sales
represents net sales from stores open more than twelve calendar
months.
|
Net sales in PSG increased primarily due to benefits from
selling price increases, which impacted sales by a low-single digit
percentage. Sales volume was approximately flat
year-over-year, driven by higher pro architectural sales volume,
excluding new residential volume which decreased by a high-single
digit percentage. PSG segment profit increased due primarily to
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
September 30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
854.8
|
|
$
890.6
|
|
$
(35.8)
|
|
(4.0) %
|
Segment
profit
|
$
101.6
|
|
$
117.7
|
|
$
(16.1)
|
|
(13.7) %
|
Reported segment
margin
|
11.9 %
|
|
13.2 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
117.6
|
|
$
136.6
|
|
$
(19.0)
|
|
(13.9) %
|
Adjusted segment
margin
|
13.8 %
|
|
15.3 %
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment profit excluding the impact of acquisition-related
amortization expense. Acquisition-related amortization expense was
$16.0 million and $18.9 million in the third quarter of
2023 and 2022, respectively.
|
Net sales in CBG decreased primarily due to the divestiture of
the China architectural business,
which reduced sales by approximately 3.0% in the quarter.
Mid-single digit volume declines were partially offset by selling
price increases, which impacted sales by a mid-single digit
percentage. Lower sales volume growth in North America and Asia were partially offset by higher sales
volume growth in Latin America and
Europe. CBG segment profit
decreased primarily due to lower sales volume and lower fixed cost
absorption due to lower production volumes. This was partially
offset by benefits from selling price increases and moderating raw
material costs. Acquisition-related amortization expense reduced
segment profit as a percent of net external sales by 190 basis
points in the third quarter of 2023, compared to 210 basis points
in the third quarter of 2022.
Performance Coatings
Group (PCG)
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
1,724.2
|
|
$
1,741.7
|
|
$
(17.5)
|
|
(1.0) %
|
Segment
profit
|
$
279.7
|
|
$
236.3
|
|
$
43.4
|
|
18.4 %
|
Reported segment
margin
|
16.2 %
|
|
13.6 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
329.4
|
|
$
286.0
|
|
$
43.4
|
|
15.2 %
|
Adjusted segment
margin
|
19.1 %
|
|
16.4 %
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment profit excluding the impact of acquisition-related
amortization expense. Acquisition-related amortization expense was
$49.7 million in the third quarter of both 2023 and
2022.
|
Net sales in PCG decreased primarily due to high-single digit
volume declines, partially offset by selling price increases, which
increased net sales by a low-single digit percentage. Incremental
sales from acquisitions increased net sales by 3.1% in the quarter,
while currency translation rate changes added 1.9% to net sales.
PCG segment profit increased primarily as a result of moderating
raw material costs and selling price increases, partially offset by
lower sales volume and increases in selling costs.
Acquisition-related amortization expense reduced segment profit as
a percent of net external sales by 290 basis points in the third
quarter of 2023, compared to 280 basis points in the third quarter
of 2022.
LIQUIDITY AND CASH FLOW
The Company generated $2.60
billion in net operating cash during the first nine months
of 2023, an increase of 103% compared to the same period in 2022,
primarily as a result of higher profit and reduced working capital
requirements. This strong cash generation allowed the Company to
return cash of $1.41 billion to our
shareholders in the form of dividends and repurchases of 3.8
million shares of its common stock during the first nine months of
2023. At September 30, 2023, the
Company had remaining authorization to purchase 41.4 million shares
of its common stock through open market purchases.
2023 GUIDANCE
|
|
|
Fourth
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
|
|
|
$9.21
|
-
|
$9.41
|
Adjusted diluted net
income per share (1)
|
|
|
$10.10
|
-
|
$10.30
|
(1)
|
Excludes $0.80 per
share of acquisition-related amortization expense and $0.09 per
share of restructuring-related net expense.
|
"Given our strong third quarter results, we are increasing our
earnings guidance for the full year," said Mr. Morikis. "Our fourth
quarter is a seasonally smaller one, and we continue to expect
choppiness by region and end market. More importantly, we
continue to see opportunity amid uncertainty, and our businesses
are well-positioned. We remain confident in our proven strategy and
our differentiated customer-focused product and service solutions,
and we expect to continue to outgrow the market.
"Looking at our specific guidance, we expect 2023 fourth quarter
consolidated net sales growth to be up or down a low-single digit
percentage compared to the fourth quarter of 2022. For the full
year 2023, we are increasing net income per share guidance. We now
expect our full year diluted net income per share to be in the
range of $9.21 to $9.41 per share, versus our prior guidance of
$8.46 to $8.86 per share. This includes
acquisition-related amortization expense of $0.80 per share and net expense related to the
Restructuring Plan of $0.09 per
share. Full year 2023 adjusted diluted net income per share is now
expected to be in the range of $10.10
to $10.30 per share, compared to our
prior guidance of $9.30 to
$9.70 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 third quarter, and its outlook for the
fourth quarter and full year 2023, at 11:00
a.m. EDT on Tuesday, October 24, 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 Q3
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
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
6,116.7
|
|
$
6,047.4
|
|
$
17,799.7
|
|
$
16,918.4
|
Cost of goods
sold
|
3,200.5
|
|
3,458.0
|
|
9,590.3
|
|
9,827.1
|
Gross profit
|
2,916.2
|
|
2,589.4
|
|
8,209.4
|
|
7,091.3
|
Percent to
net sales
|
47.7 %
|
|
42.8 %
|
|
46.1 %
|
|
41.9 %
|
Selling, general and
administrative expenses
|
1,756.5
|
|
1,609.9
|
|
5,209.5
|
|
4,693.0
|
Percent to
net sales
|
28.7 %
|
|
26.6 %
|
|
29.3 %
|
|
27.7 %
|
Other general expense
(income) - net
|
61.9
|
|
(14.4)
|
|
39.9
|
|
(7.5)
|
Impairment
|
—
|
|
—
|
|
34.0
|
|
—
|
Interest
expense
|
101.9
|
|
101.2
|
|
322.9
|
|
282.5
|
Interest
income
|
(5.1)
|
|
(2.6)
|
|
(15.8)
|
|
(4.8)
|
Other (income) expense
- net
|
(8.0)
|
|
18.1
|
|
(17.0)
|
|
49.9
|
Income before income
taxes
|
1,009.0
|
|
877.2
|
|
2,635.9
|
|
2,078.2
|
Income taxes
|
247.5
|
|
192.1
|
|
603.3
|
|
444.4
|
Net income
|
$
761.5
|
|
$
685.1
|
|
$
2,032.6
|
|
$
1,633.8
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
2.98
|
|
$
2.66
|
|
$
7.94
|
|
$
6.33
|
Diluted
|
$
2.95
|
|
$
2.62
|
|
$
7.85
|
|
$
6.23
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
255.1
|
|
257.7
|
|
255.9
|
|
258.2
|
Diluted
|
258.4
|
|
261.1
|
|
258.8
|
|
262.2
|
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
September 30:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
3,537.1
|
|
$
917.5
|
|
$ 3,414.0
|
|
$
741.3
|
Consumer Brands
Group
|
854.8
|
|
101.6
|
|
890.6
|
|
117.7
|
Performance Coatings
Group
|
1,724.2
|
|
279.7
|
|
1,741.7
|
|
236.3
|
Administrative
|
0.6
|
|
(289.8)
|
|
1.1
|
|
(218.1)
|
Consolidated
totals
|
$
6,116.7
|
|
$
1,009.0
|
|
$ 6,047.4
|
|
$
877.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
9,894.9
|
|
$
2,293.5
|
|
$ 9,086.3
|
|
$ 1,854.1
|
Consumer Brands
Group
|
2,673.3
|
|
305.7
|
|
2,642.8
|
|
279.1
|
Performance Coatings
Group
|
5,228.9
|
|
771.3
|
|
5,186.1
|
|
577.6
|
Administrative
|
2.6
|
|
(734.6)
|
|
3.2
|
|
(632.6)
|
Consolidated
totals
|
$
17,799.7
|
|
$
2,635.9
|
|
$
16,918.4
|
|
$ 2,078.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Sherwin-Williams Company and Subsidiaries
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
September
30,
|
|
2023
|
|
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
503.4
|
|
$
130.5
|
Accounts receivable,
net
|
2,940.9
|
|
2,897.6
|
Inventories
|
2,244.3
|
|
2,547.8
|
Other current
assets
|
510.2
|
|
541.3
|
Total current
assets
|
6,198.8
|
|
6,117.2
|
Property, plant and
equipment, net
|
2,580.6
|
|
2,041.2
|
Goodwill
|
7,412.3
|
|
7,318.2
|
Intangible
assets
|
3,824.0
|
|
3,958.3
|
Operating lease
right-of-use assets
|
1,874.7
|
|
1,853.0
|
Other assets
|
1,114.1
|
|
957.9
|
Total assets
|
$
23,004.5
|
|
$ 22,245.8
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
338.6
|
|
$
945.2
|
Accounts
payable
|
2,424.8
|
|
2,808.4
|
Compensation and taxes
withheld
|
768.3
|
|
650.6
|
Accrued
taxes
|
379.8
|
|
205.3
|
Current portion of
long-term debt
|
1,098.2
|
|
0.6
|
Current portion of
operating lease liabilities
|
441.1
|
|
418.1
|
Other
accruals
|
1,172.4
|
|
1,067.8
|
Total current
liabilities
|
6,623.2
|
|
6,096.0
|
Long-term
debt
|
8,499.2
|
|
9,588.9
|
Postretirement benefits
other than pensions
|
139.3
|
|
256.5
|
Deferred income
taxes
|
648.4
|
|
691.8
|
Long-term operating
lease liabilities
|
1,502.9
|
|
1,492.4
|
Other long-term
liabilities
|
1,811.5
|
|
1,522.4
|
Shareholders'
equity
|
3,780.0
|
|
2,597.8
|
Total liabilities and
shareholders' equity
|
$
23,004.5
|
|
$ 22,245.8
|
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
|
|
Nine Months
Ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
September 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
|
|
|
$ 2.95
|
|
|
|
$ 7.85
|
|
$ 9.21
|
|
$ 9.41
|
|
|
|
|
|
|
|
|
|
|
|
|
Items Related to
Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
other
|
|
|
—
|
|
$ 0.06
|
$ 0.02
|
0.04
|
|
|
|
|
Impairment of assets
related to China divestiture
|
|
|
—
|
|
0.13
|
0.08
|
0.05
|
|
|
|
|
Gain on divestiture of
domestic aerosol business
|
|
|
—
|
|
(0.08)
|
(0.02)
|
(0.06)
|
|
|
|
|
Discrete income tax
expense related to China
divestiture (1)
|
$ —
|
$
(0.06)
|
0.06
|
|
|
(0.06)
|
0.06
|
|
|
|
|
Total
|
—
|
(0.06)
|
0.06
|
|
0.11
|
0.02
|
0.09
|
|
0.09
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
amortization expense (2)
|
0.25
|
0.06
|
0.19
|
|
0.78
|
0.18
|
0.60
|
|
0.80
|
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share
|
|
|
$ 3.20
|
|
|
|
$ 8.54
|
|
$
10.10
|
|
$
10.30
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Year Ended
|
|
September 30,
2022
|
|
September 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
|
|
|
$ 2.62
|
|
|
|
$ 6.23
|
|
|
|
$ 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)
|
$ 0.26
|
$ 0.05
|
0.21
|
|
$ 0.79
|
$ 0.18
|
0.61
|
|
1.06
|
0.25
|
0.81
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share
|
|
|
$ 2.83
|
|
|
|
$ 6.84
|
|
|
|
$ 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
|
|
Three Months
|
|
Nine Months
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2023
|
|
June 30,
2023
|
|
September 30,
2023
|
|
September 30,
2023
|
Net income
|
$
477.4
|
|
$
793.7
|
|
$
761.5
|
|
$
2,032.6
|
Interest
expense
|
109.3
|
|
111.7
|
|
101.9
|
|
322.9
|
Income taxes
|
137.4
|
|
218.4
|
|
247.5
|
|
603.3
|
Depreciation
|
70.4
|
|
75.7
|
|
71.9
|
|
218.0
|
Amortization
|
83.7
|
|
83.0
|
|
83.5
|
|
250.2
|
EBITDA
|
$
878.2
|
|
$
1,282.5
|
|
$
1,266.3
|
|
$
3,427.0
|
Restructuring
expense
|
0.9
|
|
8.7
|
|
—
|
|
9.6
|
Impairment of assets
related to China divestiture
|
—
|
|
34.0
|
|
—
|
|
34.0
|
Gain on divestiture of
domestic aerosol business
|
—
|
|
(20.1)
|
|
—
|
|
(20.1)
|
Adjusted
EBITDA
|
$
879.1
|
|
$
1,305.1
|
|
$
1,266.3
|
|
$
3,450.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Three Months
|
|
Three Months
|
|
Nine Months
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2022
|
|
June 30,
2022
|
|
September 30,
2022
|
|
September 30,
2022
|
Net income
|
$
370.8
|
|
$
577.9
|
|
$
685.1
|
|
$
1,633.8
|
Interest
expense
|
88.4
|
|
92.9
|
|
101.2
|
|
282.5
|
Income taxes
|
90.3
|
|
162.0
|
|
192.1
|
|
444.4
|
Depreciation
|
65.5
|
|
64.8
|
|
64.5
|
|
194.8
|
Amortization
|
78.0
|
|
78.5
|
|
81.3
|
|
237.8
|
EBITDA
|
$
693.0
|
|
$
976.1
|
|
$
1,124.2
|
|
$
2,793.3
|
The
Sherwin-Williams Company and Subsidiaries
|
Selected
Information (Unaudited)
|
(millions of
dollars, except store count data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Depreciation
|
$
71.9
|
|
$
64.5
|
|
$
218.0
|
|
$ 194.8
|
Capital
expenditures
|
152.9
|
|
174.9
|
|
568.9
|
|
410.7
|
Cash
dividends
|
155.6
|
|
155.8
|
|
468.4
|
|
462.9
|
Amortization of
intangibles
|
83.5
|
|
81.3
|
|
250.2
|
|
237.8
|
|
|
|
|
|
|
|
|
Significant
components of Other general expense (income) - net:
|
|
|
|
|
Provisions for
environmental matters - net
|
$
39.4
|
|
$
6.4
|
|
$
52.7
|
|
$
11.1
|
(Gain) on divestiture
of domestic aerosol business
|
—
|
|
—
|
|
(20.1)
|
|
—
|
Losses (gains) on sale
or disposition of assets
|
12.7
|
|
(20.8)
|
|
(8.1)
|
|
(18.6)
|
Other
(1)
|
9.8
|
|
—
|
|
15.4
|
|
—
|
|
|
|
|
|
|
|
|
Significant
components of Other (income) expense - net:
|
|
|
|
|
Investment (gains)
losses
|
$
(0.5)
|
|
$
1.1
|
|
$
(19.2)
|
|
$
16.0
|
Net expense from
banking activities
|
3.1
|
|
3.1
|
|
10.9
|
|
9.0
|
Foreign currency
transaction related losses
|
1.1
|
|
19.2
|
|
24.7
|
|
29.5
|
Other
(1)
|
(11.7)
|
|
(5.3)
|
|
(33.4)
|
|
(4.6)
|
|
|
|
|
|
|
|
|
Store Count
Data:
|
|
|
|
|
|
|
|
Paint Stores Group -
net new stores
|
16
|
|
13
|
|
36
|
|
36
|
Paint Stores Group -
total stores
|
4,660
|
|
4,585
|
|
4,660
|
|
4,585
|
Consumer Brands Group
- net new stores
|
3
|
|
—
|
|
9
|
|
(4)
|
Consumer Brands Group
- total stores
|
316
|
|
306
|
|
316
|
|
306
|
Performance Coatings
Group - net new branches
|
(1)
|
|
—
|
|
1
|
|
1
|
Performance Coatings
Group - total branches
|
318
|
|
283
|
|
318
|
|
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