CLEVELAND, Jan. 25,
2024 /PRNewswire/ -- The Sherwin-Williams Company
(NYSE: SHW) announced its financial results for the year and fourth
quarter ended December 31, 2023. All comparisons are to the
full year and fourth quarter of the prior year, unless otherwise
noted.
SUMMARY
- Consolidated net sales increased 4.1% in the year to a record
$23.05 billion
- Net sales from stores in the Paint Stores Group open more than
twelve calendar months increased 6.8% in the year
- Diluted net income per share increased 19.8% to $9.25 per share in the year compared to
$7.72 per share in the full year 2022
- Adjusted diluted net income per share increased to $10.35 per share in the year compared to
$8.73 per share in the full year
2022
- Diluted net income per share decreased 6.1% to $1.39 per share and adjusted diluted net income
per share decreased 4.2% to $1.81 per
share, in the fourth quarter of 2023
- Generated net operating cash of $3.52
billion, or 15.3% of net sales, in the year
- Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) increased 17.5% in the year to
$4.24 billion or 18.4% of net
sales
- 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
- Full year 2024 adjusted diluted net income per share guidance
in the range of $10.85 to
$11.35 per share
CEO REMARKS
"Sherwin-Williams delivered solid fourth quarter results, with
positive sales growth and significant year-over-year gross margin
improvement," said President and Chief Executive Officer,
Heidi G. Petz. "We continued our
accelerated growth investments in the quarter, which we are
confident will continue to drive profitable above-market growth in
future periods. Sales in all three reportable segments were within
or better than our guidance. In our architectural businesses,
commercial and residential repaint were the strongest performers,
while DIY remained challenging. In our industrial businesses,
growth varied by division and region, reflecting ongoing choppiness
in the market. Paint Stores Group and Performance Coatings Group
segment margins expanded year over year.
"For the full year, sales grew to a record $23.05 billion, gross margin expanded to 46.7%
(which is well within our current targeted range) and adjusted
diluted net income per share increased 18.6% to a record
$10.35 per share. We generated strong
net operating cash in the year, which enabled us to continue to
invest in customer-focused innovation, while returning $2.06 billion to shareholders through dividends
and share repurchases. From a segment perspective, Paint Stores
Group overcame a difficult demand environment characterized by
challenging conditions in new residential and existing home sales
markets to deliver high-single digit percentage growth against a
low-teens comparison, while also expanding its segment margin.
Consumer Brands Group faced weak DIY demand, but grew in its
targeted Pros Who Paint market and completed the divestiture of
non-core aerosol product lines and its China architectural business. Performance
Coatings Group generated sales growth in a market that was highly
variable by region and business, further integrated recent
acquisitions and delivered strong adjusted segment margin."
FOURTH QUARTER
CONSOLIDATED RESULTS
|
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
5,252.2
|
|
$
5,230.5
|
|
$
21.7
|
|
0.4 %
|
Income before income
taxes
|
$
474.0
|
|
$
494.9
|
|
$
(20.9)
|
|
(4.2) %
|
As a % of net
sales
|
9.0 %
|
|
9.5 %
|
|
|
|
|
Net income per share -
diluted
|
$
1.39
|
|
$
1.48
|
|
$
(0.09)
|
|
(6.1) %
|
Adjusted net income per
share - diluted
|
$
1.81
|
|
$
1.89
|
|
$
(0.08)
|
|
(4.2) %
|
Consolidated net sales increased primarily due to an increase in
Paint Stores Group net sales volume. This growth was partially
offset by lower net sales volumes in the Performance Coatings and
Consumer Brands Groups.
Income before income taxes decreased primarily due to continued
investments in long-term growth strategies, higher employee-related
expense, including incentive-based compensation expense, and higher
environmental expense, partially offset by moderating raw material
costs year-over-year. Higher non-operating costs including a loss
related to the significant devaluation of the Argentine Peso in
December 2023 as part of economic
reforms implemented by the government of Argentina (Argentine Devaluation) and
impairment related to trademarks, also decreased Income before
income taxes.
Diluted net income per share included charges of $0.19 per share for acquisition-related
amortization expense, $0.16 per share
related to the Argentine Devaluation and $0.07 associated with impairment related to
trademarks.
FOURTH QUARTER
SEGMENT RESULTS
|
|
Paint Stores Group
(PSG)
|
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
2,944.6
|
|
$
2,877.0
|
|
$
67.6
|
|
2.3 %
|
Same-store sales
(1)
|
2.1 %
|
|
15.5 %
|
|
|
|
|
Segment
profit
|
$
567.3
|
|
$
494.0
|
|
$
73.3
|
|
14.8 %
|
Reported segment
margin
|
19.3 %
|
|
17.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Same-store sales represents net sales
from stores open more than twelve calendar months.
|
Net sales in PSG increased primarily due to low-single digit
percentage net sales volume growth driven by protective and marine,
commercial and residential repaint end markets. PSG segment profit
increased due to growth in net sales volume and moderating raw
material costs, partially offset by continued investments in
long-term growth strategies and higher employee-related
expenses.
Consumer Brands
Group (CBG)
|
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
692.3
|
|
$
745.6
|
|
$
(53.3)
|
|
(7.1) %
|
Segment
profit
|
$
3.6
|
|
$
35.1
|
|
$
(31.5)
|
|
(89.7) %
|
Reported segment
margin
|
0.5 %
|
|
4.7 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
74.7
|
|
$
95.0
|
|
$
(20.3)
|
|
(21.4) %
|
Adjusted segment
margin
|
10.8 %
|
|
12.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment profit excluding the impact of acquisition-related
amortization expense, impairment related to trademarks, the
Argentine Devaluation and restructuring costs. In CBG,
acquisition-related amortization expense was $16.4 million and
$18.8 million in the fourth quarter of 2023 and 2022,
respectively, impairment related to trademarks and the loss related
to the Argentine Devaluation were $23.9 million and $30.8 million,
respectively, in the fourth quarter of 2023 and restructuring costs
(including associated impairment related to trademarks) were $41.1
million in the fourth quarter of 2022.
|
Net sales in CBG decreased primarily due to a mid-single digit
percentage decrease in net sales volume due to demand softness in
North America and the divestiture
of the China architectural
business which decreased net sales by approximately 3%
year-over-year, offset by increases in Latin America and Europe. CBG segment profit decreased primarily
due to lower net sales volume and higher foreign currency
transaction losses driven primarily by the Argentine Devaluation of
$30.8 million. These decreases were
offset by benefits from moderating raw material costs.
Acquisition-related amortization expense reduced segment profit as
a percent of net sales by 240 basis points compared to 250 basis
points in the fourth quarter of 2022, impairment related to
trademarks reduced segment profit as a percent of net sales by 340
basis points in the fourth quarter of 2023, the loss related to the
Argentine Devaluation reduced segment profit as a percent of net
sales by 450 basis points in the fourth quarter of 2023 and
restructuring costs reduced segment profit as a percent of net
sales by 550 basis points in the fourth quarter of 2022.
Performance Coatings
Group (PCG)
|
|
|
Three Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net sales
|
$
1,614.2
|
|
$
1,607.4
|
|
$
6.8
|
|
0.4 %
|
Segment
profit
|
$
220.3
|
|
$
157.3
|
|
$
63.0
|
|
40.1 %
|
Reported segment
margin
|
13.6 %
|
|
9.8 %
|
|
|
|
|
Adjusted segment profit
(1)
|
$
278.7
|
|
$
229.0
|
|
$
49.7
|
|
21.7 %
|
Adjusted segment
margin
|
17.3 %
|
|
14.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted segment profit
equals Segment Profit excluding the impact of acquisition-related
amortization expense, the Argentine Devaluation and restructuring
costs. In PCG, acquisition-related amortization expense was
$47.4 million and $49.5 million in the fourth quarter of
2023 and 2022, respectively, the loss related to the Argentine
Devaluation was $11.0 million in the fourth quarter of 2023
and restructuring costs were $22.2 million in the fourth
quarter of 2022.
|
Net sales in PCG increased primarily due to acquisitions and
favorable currency translation, which both increased net sales by a
low-single digit percentage. Growth was led by the Industrial Wood
including acquisitions, Coil and Automotive Refinish businesses,
offset by decreases in the Packaging and General Industrial
businesses. PCG segment profit increased primarily as a result of
moderating raw material costs, partially offset by lower net sales
volume, an increase in selling costs and the Argentine Devaluation
of $11.0 million. Acquisition-related
amortization expense reduced segment profit as a percent of net
sales by 300 basis points compared to 310 basis points in the
fourth quarter of 2022, the loss related to the Argentine
Devaluation reduced segment profit as a percent of net sales by 70
basis points in the fourth quarter of 2023 and restructuring costs
reduced segment profit as a percent of net sales by 130 basis
points in the fourth quarter of 2022.
LIQUIDITY AND CASH FLOW
The Company generated $3.52
billion in net operating cash during the year. This strong
cash generation allowed the Company to return cash of $2.06 billion to our shareholders in the form of
dividends and share repurchases, reduce short-term borrowings and
long-term debt and fund the acquisition of German-based SIC Holding
GmbH, a Peter Möhrle Holding venture comprised of Oskar Nolte GmbH
and Klumpp Coatings GmbH during the year. The Company purchased 5.6
million shares of its common stock during the year. At December 31, 2023, the Company had remaining
authorization to purchase 39.6 million shares of its common stock
through open market purchases.
2024 GUIDANCE
|
|
|
First
Quarter
|
|
Full
Year
|
|
2024
|
|
2024
|
Net sales
|
Up or down low-single
digit %
|
|
Up low to mid-single
digit %
|
Effective tax
rate
|
|
|
Low twenty
percent
|
Diluted net income per
share
|
|
|
$10.05
|
-
|
$10.55
|
Adjusted diluted net
income per share (1)
|
|
|
$10.85
|
-
|
$11.35
|
|
(1)
Excludes $0.80 per share of acquisition-related amortization
expense.
|
"We enter 2024 with confidence in our team's ability to
outperform the market given our customer-focused differentiated
services and solutions," said Ms. Petz. "These solutions drive
customer productivity and profitability and position us to create
value in any environment. Our strategy is proven and unchanged, and
we have the right people, the right culture and the right brands to
deliver. While the macro environment feels more encouraging than it
did a year ago, uncertainties remain. We expect to see some
recovery in new residential construction, moderation in commercial
construction, choppiness in repair and remodel and few catalysts in
DIY. We expect Auto Refinish and Protective & Marine demand to
remain strong and gradual improvement in Industrial Wood and
Packaging, with less clarity in General Industrial. As we look at
our entire cost basket, we see modest raw material deflation,
though continued escalation of wages and other costs has led us to
implement a 5% price increase in Paint Stores Group effective
February 1. We expect gross margin
expansion, and strong cash generation will enable us to remain
committed to our disciplined capital allocation approach.
"Against this backdrop, we expect first quarter 2024
consolidated net sales will be up or down a low-single digit
percentage compared to the first quarter of 2023. For the full year
2024, based on the indicators we see at this time, we expect
consolidated net sales to be up a low to mid single digit
percentage. With annual sales at this level, we are introducing
adjusted diluted net income per share guidance of $10.85 to $11.35
per share, which represents 7% growth from 2023 at the mid-point.
We remain steadfast in our focus on maximizing shareholder
value."
CONFERENCE CALL INFORMATION
The Company will conduct a conference call to discuss its
financial results for the fourth quarter and full year 2023, and
its outlook for the first quarter and full year 2024, at
11:00 a.m. EST on Thursday,
January 25, 2024. Participating on the call will be President
and Chief Executive Officer, Heidi G.
Petz, 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 Q4
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 "forward-looking statements," as
defined under U.S. federal securities laws, with respect to sales,
earnings and other matters. Forward-looking statements can be
identified by the use of forward-looking words such as "believe,"
"expect," "estimate," "may," "will," "should," "project," "could,"
"would," "plan," "goal," "target," "potential," "seek," "intend,"
"aspire," "strive" or "anticipate" or the negative thereof or
comparable words. Any statements that refer to expectations,
projections or other characterizations of future events or
conditions, are forward-looking statements. 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 subject to risks, uncertainties and other factors,
many of which are outside the control of the Company and actual
results may 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, including strength of retail and
manufacturing economies and growth in the coatings industry;
adverse changes in general economic conditions, including the
inflationary environment, global credit markets, and currency
fluctuations; any disruption in the availability of, or increases
in the price of, raw material and energy supplies; catastrophic
events, natural disasters or public health crises; losses of or
changes in the Company's relationships with customers and
suppliers; the Company's ability to successfully compete and
integrate past and future acquisitions; the Company's ability to
achieve expected benefits of restructuring and productivity
initiatives; cybersecurity incidents and other disruptions to our
information technology systems and operations; the Company's
ability to protect our reputation, image and brands by successfully
managing real or perceived issues, including successfully enforcing
our intellectual property rights; the Company's ability to attract
and retain a qualified global workforce; compliance with current,
new and evolving federal, state and local laws and regulations in
multiple jurisdictions; the Company's ability to execute on our
business strategies related to environmental, social, and
governance matters, and achieve related expectations; the nature,
cost, quantity and outcome of pending and future litigation and
other claims; 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)
|
(millions of
dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
$
5,252.2
|
|
$
5,230.5
|
|
$
23,051.9
|
|
$
22,148.9
|
Cost of goods
sold
|
2,703.5
|
|
2,996.7
|
|
12,293.8
|
|
12,823.8
|
Gross profit
|
2,548.7
|
|
2,233.8
|
|
10,758.1
|
|
9,325.1
|
Percent to
net sales
|
48.5 %
|
|
42.7 %
|
|
46.7 %
|
|
42.1 %
|
Selling, general and
administrative expenses
|
1,855.9
|
|
1,638.6
|
|
7,065.4
|
|
6,331.6
|
Percent to
net sales
|
35.3 %
|
|
31.3 %
|
|
30.6 %
|
|
28.6 %
|
Other general expense
(income) - net
|
27.2
|
|
(17.4)
|
|
67.1
|
|
(24.9)
|
Impairment
|
23.9
|
|
15.5
|
|
57.9
|
|
15.5
|
Interest
expense
|
94.6
|
|
108.3
|
|
417.5
|
|
390.8
|
Interest
income
|
(9.4)
|
|
(3.2)
|
|
(25.2)
|
|
(8.0)
|
Other expense (income)
- net
|
82.5
|
|
(2.9)
|
|
65.5
|
|
47.0
|
Income before income
taxes
|
474.0
|
|
494.9
|
|
3,109.9
|
|
2,573.1
|
Income taxes
|
117.8
|
|
108.6
|
|
721.1
|
|
553.0
|
Net income
|
$
356.2
|
|
$
386.3
|
|
$
2,388.8
|
|
$
2,020.1
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
1.40
|
|
$
1.50
|
|
$
9.35
|
|
$
7.83
|
Diluted
|
$
1.39
|
|
$
1.48
|
|
$
9.25
|
|
$
7.72
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
254.0
|
|
257.5
|
|
255.4
|
|
258.0
|
Diluted
|
256.9
|
|
260.4
|
|
258.3
|
|
261.8
|
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
December 31:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
2,944.6
|
|
$
567.3
|
|
$ 2,877.0
|
|
$
494.0
|
Consumer Brands
Group
|
692.3
|
|
3.6
|
|
745.6
|
|
35.1
|
Performance Coatings
Group
|
1,614.2
|
|
220.3
|
|
1,607.4
|
|
157.3
|
Administrative
|
1.1
|
|
(317.2)
|
|
0.5
|
|
(191.5)
|
Consolidated
totals
|
$
5,252.2
|
|
$
474.0
|
|
$ 5,230.5
|
|
$
494.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31:
|
|
|
|
|
|
|
|
Paint Stores
Group
|
$
12,839.5
|
|
$
2,860.8
|
|
$
11,963.3
|
|
$ 2,348.1
|
Consumer Brands
Group
|
3,365.6
|
|
309.3
|
|
3,388.4
|
|
314.2
|
Performance Coatings
Group
|
6,843.1
|
|
991.6
|
|
6,793.5
|
|
734.9
|
Administrative
|
3.7
|
|
(1,051.8)
|
|
3.7
|
|
(824.1)
|
Consolidated
totals
|
$
23,051.9
|
|
$
3,109.9
|
|
$
22,148.9
|
|
$ 2,573.1
|
|
|
|
|
|
|
|
|
The
Sherwin-Williams Company and Subsidiaries
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(millions of
dollars)
|
|
|
|
|
|
December 31,
|
|
2023
|
|
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
276.8
|
|
$
198.8
|
Accounts receivable,
net
|
2,467.9
|
|
2,563.6
|
Inventories
|
2,329.8
|
|
2,626.5
|
Other current
assets
|
438.4
|
|
518.8
|
Total current
assets
|
5,512.9
|
|
5,907.7
|
Property, plant and
equipment, net
|
2,836.8
|
|
2,207.0
|
Goodwill
|
7,626.0
|
|
7,583.2
|
Intangible
assets
|
3,880.5
|
|
4,002.0
|
Operating lease
right-of-use assets
|
1,887.4
|
|
1,866.8
|
Other assets
|
1,210.8
|
|
1,027.3
|
Total assets
|
$
22,954.4
|
|
$ 22,594.0
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Short-term
borrowings
|
$
374.2
|
|
$
978.1
|
Accounts
payable
|
2,315.0
|
|
2,436.5
|
Compensation and taxes
withheld
|
862.7
|
|
784.5
|
Accrued
taxes
|
197.4
|
|
197.4
|
Current portion of
long-term debt
|
1,098.8
|
|
0.6
|
Current portion of
operating lease liabilities
|
449.3
|
|
425.3
|
Other
accruals
|
1,329.5
|
|
1,138.3
|
Total current
liabilities
|
6,626.9
|
|
5,960.7
|
Long-term
debt
|
8,377.9
|
|
9,591.0
|
Postretirement benefits
other than pensions
|
133.2
|
|
139.3
|
Deferred income
taxes
|
683.1
|
|
681.6
|
Long-term operating
lease liabilities
|
1,509.5
|
|
1,512.9
|
Other long-term
liabilities
|
1,908.0
|
|
1,606.4
|
Shareholders'
equity
|
3,715.8
|
|
3,102.1
|
Total liabilities and
shareholders' equity
|
$
22,954.4
|
|
$ 22,594.0
|
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 items related to the
previously announced Restructuring Plan, impairment related to
trademarks, the loss related to the devaluation of the Argentine
Peso and Valspar acquisition-related amortization expense. 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 Ended
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
2024
|
|
December 31,
2023
|
|
December 31,
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
|
|
|
$ 1.39
|
|
|
|
$ 9.25
|
|
$ 10.05
|
|
$ 10.55
|
|
|
|
|
|
|
|
|
|
|
|
|
Items related to
Restructuring Plan:
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
other
|
$ —
|
$ —
|
—
|
|
$ .06
|
$ .02
|
.04
|
|
|
|
|
Impairment of assets
related to China
divestiture
|
—
|
—
|
—
|
|
.13
|
.08
|
.05
|
|
|
|
|
Gain on divestiture of
domestic aerosol
business
|
—
|
—
|
—
|
|
(.08)
|
(.02)
|
(.06)
|
|
|
|
|
Discrete income tax
expense related to
China divestiture (1)
|
—
|
—
|
—
|
|
—
|
(.06)
|
.06
|
|
|
|
|
Total
|
—
|
—
|
—
|
|
.11
|
.02
|
.09
|
|
—
|
|
—
|
Impairment related to
trademarks
|
.09
|
.02
|
.07
|
|
.09
|
.02
|
.07
|
|
|
|
|
Devaluation of the
Argentine Peso
|
.16
|
—
|
.16
|
|
.16
|
—
|
.16
|
|
|
|
|
Acquisition-related
amortization expense (2)
|
.25
|
.06
|
.19
|
|
1.03
|
.25
|
.78
|
|
.80
|
|
.80
|
Adjusted diluted net
income per share
|
|
|
$ 1.81
|
|
|
|
$
10.35
|
|
$ 10.85
|
|
$ 11.35
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
2022
|
|
December 31,
2022
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-
Tax
|
|
Pre-Tax
|
Tax
Effect
(1)
|
After-
Tax
|
Diluted net income per
share
|
|
|
$ 1.48
|
|
|
|
$ 7.72
|
|
|
|
|
|
|
|
|
Items related to
Restructuring Plan:
|
|
|
|
|
|
|
|
Severance and
other
|
$ .18
|
$ .03
|
.15
|
|
$ .18
|
$ .03
|
.15
|
Impairment
|
.06
|
.01
|
.05
|
|
.06
|
.01
|
.05
|
Total
|
.24
|
.04
|
.20
|
|
.24
|
.04
|
.20
|
Acquisition-related
amortization expense (2)
|
.26
|
.05
|
.21
|
|
1.06
|
.25
|
.81
|
Adjusted diluted net
income per share
|
|
|
$ 1.89
|
|
|
|
$ 8.73
|
|
|
(1)
|
The tax effect is
calculated based on the statutory rate and the nature of the item,
unless otherwise noted.
|
(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, impairment
related to trademarks and the loss related to the devaluation of
the Argentine Peso. 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 companies 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
|
|
Three Months
|
|
Year
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2023
|
|
June 30,
2023
|
|
September 30,
2023
|
|
December 31,
2023
|
|
December 31,
2023
|
Net income
|
$
477.4
|
|
$
793.7
|
|
$
761.5
|
|
$
356.2
|
|
$
2,388.8
|
Interest
expense
|
109.3
|
|
111.7
|
|
101.9
|
|
94.6
|
|
417.5
|
Income taxes
|
137.4
|
|
218.4
|
|
247.5
|
|
117.8
|
|
721.1
|
Depreciation
|
70.4
|
|
75.7
|
|
71.9
|
|
74.3
|
|
292.3
|
Amortization
|
83.7
|
|
83.0
|
|
83.5
|
|
80.0
|
|
330.2
|
EBITDA
|
$
878.2
|
|
$
1,282.5
|
|
$
1,266.3
|
|
$
722.9
|
|
$
4,149.9
|
Restructuring
expense
|
0.9
|
|
8.7
|
|
—
|
|
—
|
|
9.6
|
Impairment related
to
Restructuring Plan
|
—
|
|
34.0
|
|
—
|
|
—
|
|
34.0
|
Gain on divestiture
of
domestic aerosol business
|
—
|
|
(20.1)
|
|
—
|
|
—
|
|
(20.1)
|
Impairment related
to
trademarks
|
—
|
|
—
|
|
—
|
|
23.9
|
|
23.9
|
Devaluation of the
Argentine
Peso
|
—
|
|
—
|
|
—
|
|
41.8
|
|
41.8
|
Adjusted
EBITDA
|
$
879.1
|
|
$
1,305.1
|
|
$
1,266.3
|
|
$
788.6
|
|
$
4,239.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Three Months
|
|
Three Months
|
|
Three Months
|
|
Year
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
March 31,
2022
|
|
June 30,
2022
|
|
September 30,
2022
|
|
December 31,
2022
|
|
December 31,
2022
|
Net income
|
$
370.8
|
|
$
577.9
|
|
$
685.1
|
|
$
386.3
|
|
$
2,020.1
|
Interest
expense
|
88.4
|
|
92.9
|
|
101.2
|
|
108.3
|
|
390.8
|
Income taxes
|
90.3
|
|
162.0
|
|
192.1
|
|
108.6
|
|
553.0
|
Depreciation
|
65.5
|
|
64.8
|
|
64.5
|
|
69.2
|
|
264.0
|
Amortization
|
78.0
|
|
78.5
|
|
81.3
|
|
79.3
|
|
317.1
|
EBITDA
|
$
693.0
|
|
$
976.1
|
|
$
1,124.2
|
|
$
751.7
|
|
$
3,545.0
|
Restructuring
expense
|
—
|
|
—
|
|
—
|
|
47.3
|
|
47.3
|
Impairment related
to
Restructuring Plan
|
—
|
|
—
|
|
—
|
|
15.5
|
|
15.5
|
Adjusted
EBITDA
|
$
693.0
|
|
$
976.1
|
|
$
1,124.2
|
|
$
814.5
|
|
$
3,607.8
|
The
Sherwin-Williams Company and Subsidiaries
|
Selected
Information (Unaudited)
|
(millions of
dollars, except store count data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Depreciation
|
$
74.3
|
|
$
69.2
|
|
$
292.3
|
|
$ 264.0
|
Capital
expenditures
|
319.5
|
|
233.8
|
|
888.4
|
|
644.5
|
Cash
dividends
|
155.3
|
|
155.6
|
|
623.7
|
|
618.5
|
Amortization of
intangibles
|
80.0
|
|
79.3
|
|
330.2
|
|
317.1
|
|
|
|
|
|
|
|
|
Significant
components of Other general expense (income) - net
|
|
|
|
|
Provisions for
environmental related matters - net
|
$
28.0
|
|
$ (18.2)
|
|
$
80.7
|
|
$
(7.1)
|
(Gain) on divestiture
of businesses
|
—
|
|
—
|
|
(20.1)
|
|
—
|
Loss (gain) on sale or
disposition of assets
|
9.0
|
|
0.8
|
|
0.9
|
|
(17.8)
|
Other
|
(9.8)
|
|
—
|
|
5.6
|
|
—
|
|
|
|
|
|
|
|
|
Significant
components of Other expense (income) - net
|
|
|
|
|
Loss on extinguishment
of debt
|
$
12.8
|
|
$
—
|
|
$
12.8
|
|
$
—
|
Investment (gains)
losses
|
(3.7)
|
|
(6.3)
|
|
(22.9)
|
|
9.7
|
Net expense from
banking activities
|
4.1
|
|
3.2
|
|
15.0
|
|
12.2
|
Foreign currency
transaction related losses - net (1)
|
55.8
|
|
4.1
|
|
80.5
|
|
33.6
|
Other
(2)
|
13.5
|
|
(3.9)
|
|
(19.9)
|
|
(8.5)
|
|
|
|
|
|
|
|
|
Store Count
Data
|
|
|
|
|
|
|
|
Paint Stores Group -
net new stores
|
34
|
|
39
|
|
70
|
|
75
|
Paint Stores Group -
total stores
|
4,694
|
|
4,624
|
|
4,694
|
|
4,624
|
Consumer Brands Group
- net new stores
|
2
|
|
1
|
|
11
|
|
(3)
|
Consumer Brands Group
- total stores
|
318
|
|
307
|
|
318
|
|
307
|
Performance Coatings
Group - net new branches
|
4
|
|
34
|
|
5
|
|
35
|
Performance Coatings
Group - total branches
|
322
|
|
317
|
|
322
|
|
317
|
|
|
|
|
|
|
|
|
(1)
The three months and year ended December 31, 2023 includes the
$41.8 million loss related to the devaluation of the Argentine
Peso.
|
(2)
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