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The Sherwin-Williams Company 2018 First Quarter Financial Results

  • Consolidated net sales increased 43.6% in the quarter to a record $3.97 billion; Valspar sales increased consolidated net sales in the quarter by $1.07 billion, or 38.6%
  • Diluted net income per common share increased 3.6% to $2.62 per share in the quarter
  • Consolidated EPS in the first quarter of 2018 and 2017, excluding acquisition-related costs and purchase accounting impacts in both quarters, was $3.57 and $2.61 per share, respectively
  • Charges of $.95 and $.08 per share were recorded in the first quarter of 2018 and 2017, respectively, for acquisition-related costs and purchase accounting impacts
  • Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 44.0% in the quarter to $551.8 million
  • Revising FY18 EPS guidance to $14.95 to $15.45 per share to include an estimated $.40 per share net reduction related to an expanded customer agreement primarily impacting Valspar operations, compared to $18.67 per share in FY17
  • Consolidated FY18 EPS guidance, excluding one-time impacts and acquisition-related costs and purchase accounting impacts, is $18.35 to $18.95 per share, versus $15.07 per share on a comparable basis in FY17
  • Consolidated FY18 EPS guidance includes charges of $3.40 to $3.50 per share for acquisition-related costs and purchase accounting impacts
  • Consolidated FY17 EPS included a one-time benefit of $7.04 per share from deferred income tax reductions, partially offset by charges totaling $3.44 per share for discontinued operations, acquisition-related costs and purchase accounting impacts

The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the first quarter ended March 31, 2018. Compared to the same period in 2017, consolidated net sales increased $1.20 billion, or 43.6%, to $3.97 billion in the quarter due primarily to the addition of Valspar sales, selling price increases and higher paint sales volume in The Americas Group.

Excluding sales from Valspar, net sales from core Sherwin-Williams operations increased 4.9% in the quarter.

Diluted net income per common share in the quarter increased to $2.62 per share from $2.53 per share in 2017. First quarter 2018 diluted net income per common share included a $.95 per share charge from acquisition-related costs. Valspar operations increased EPS by $.68 per share in the quarter, including a $.40 per share charge from interest expense on new debt. Currency translation rate changes increased diluted net income per common share in the quarter by $.03 per share. First quarter 2017 diluted net income per common share included an $.08 per share charge from acquisition-related costs.

The Company purchased 600,000 shares of its common stock in the three months ended March 31, 2018. At March 31, 2018, the Company had remaining authorization to purchase 11.05 million shares of its common stock through open market purchases.

Commenting on the first quarter, John G. Morikis, Chief Executive Officer, said,

“The Company performed well in the first quarter despite some widely recognized headwinds, including a slow start to the painting season in North America, persistent raw material inflation and choppy global economic growth. The contribution of the Valspar business to our consolidated revenue and profit continues to build momentum, and we saw positive sales volume, pricing and improving operating results from each of our reportable segments.

The Americas Group posted another quarter of volume growth and profit improvement. Our Consumer Brands Group finalized a significantly expanded partnership with one of its largest retail customers (Lowe’s), which we expect will be accretive to net sales this year. The Performance Coatings Group had volume and sales growth across most of their businesses. Both Consumer Brands and Performance Coatings Groups have made great progress in integrating commercial teams and key business processes relating to pricing, selling and marketing programs.”

“In the first three months, we opened 4 net new store locations in The Americas Group. During the quarter, we increased the dividend rate to $.86 from $.85 last year. Our cash generation remains strong, which has enabled us to resume open market treasury stock purchases after suspending these purchases for the last 8 quarters.”

“For the second quarter, we anticipate our Sherwin-Williams’ core net sales will increase a mid-to-high single digit percentage compared to last year’s second quarter. In addition, we expect incremental sales from the Valspar acquisition to be approximately $600 million for April and May in the second quarter. For the full year 2018, we expect Sherwin-Williams’ core net sales to increase by a mid-to-high single digit percentage compared to full year 2017. In addition, we expect incremental sales from Valspar for the first five months to be approximately $1.7 billion in 2018…”

For the more first quarter financial information go to  www.sherwin.com.

Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paints, 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 Water Seal, Cabot and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams branded products are sold exclusively through a chain of more than 4,900 company-operated stores and facilities, 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 110 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.

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Sherwin-Williams

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