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The Sherwin-Williams Company – Record Sales for the 2018 Second Quarter

CLEVELAND, OHIO – The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the second quarter ended June 30, 2018. Compared to the same period in 2017, consolidated net sales increased by $1.04 billion, or 27.8%, to $4.77 billion in the quarter and increased $2.24 billion, or 34.5%, to $8.74 billion in six months due primarily to the addition of Valspar sales, higher paint sales volume in The Americas Group and selling price increases.

  • Consolidated net sales increased 27.8% in the quarter to a record $4.77 billion; Valspar increased consolidated net sales $783.9 million, or 21.0%, in the quarter, as Valspar annualized June 1st
  • Net sales from stores in U.S. and Canada open more than twelve calendar months increased 6.8%   in the quarter
  • Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from continuing operations increased 29.3% in the six months to $1.33 billion
  • Raising FY18 adjusted EPS guidance to $19.05 to $19.35 per share, excluding acquisition related costs and environmental provisions, compared to $15.07 per share on a comparable basis in FY17
  • Net sales in The Americas Group increased 7.7% to $2.63 billion in the quarter and increased 7.2% to $4.71 billion in six months due primar

In the first six months, segment profit as a percent to net sales increased to 19.3% of net sales from 19.1% last year due to higher paint sales volume and selling price increases partially offset by increased raw material costs.

Net sales of the Consumer Brands Group increased 45.0% to $777.7 million in the quarter and increased 66.8% to $1.43 billion in six months due primarily to the inclusion of Valspar sales and selling price increases, partially offset by lower volume sales to some of the Group’s retail customers.

Segment profit increased to $165.1 million in the first six months from $132.0 million last year. Segment profit for the first six months was increased by incremental Valspar operations profit for the first five months of $75.8 million.

The Performance Coatings Group’s net sales stated in U.S. dollars increased 79.9% to $1.37 billion in the quarter and increased 108.5% to $2.60 billion in six months due primarily to the inclusion of Valspar sales and selling price increases.

Stated in U.S. dollars, segment profit increased in the quarter to $144.2 million from $62.3 million last year due primarily to the inclusion of Valspar operations and selling price increases, partially offset by increased raw material costs. Stated in U.S. dollars, segment profit increased in the first six months to $235.0 million from $119.5 million last year due primarily to the inclusion of Valspar operations.

In the first six months, the Company opened 22 net new store locations in The Americas Group. The Valspar acquisition valuation was finalized in the second quarter 2018 resulting in depreciation of $44 million and amortization of $300 million on an annual basis.

Commenting on the second quarter, John G. Morikis, Chairman, President and Chief Executive Officer, said, “The Company posted record results in net sales, gross profit, and profit before taxes in the second quarter, aided by the Valspar acquisition which continues to build momentum. Consolidated earnings per share expanded by 26.8% percent in the quarter, excluding acquisition-related costs and environmental expense provisions impacts in both years.

“Underlying demand remained solid across most of our end market segments during the quarter. At the same time, raw material costs continued to inflate during the quarter at a rate slightly higher than anticipated. We continue to focus on offsetting these escalating costs by controlling spending and implementing price increases.

“All three operating segments delivered year-over-year improvement in net sales and profit.

The Americas Group posted another strong quarter of volume growth and profit improvement.

The Consumer Brands Group is executing well on its expanded partnership with one of its largest customers.

The Performance Coatings Group had sales and volume growth across most of its businesses and improved their operating margin on good cost control and effective pricing actions.

The Valspar acquisition passed the one year anniversary on June 1, 2018, and both the Consumer Brands and Performance Coatings Groups are ahead of schedule in integrating their respective businesses…”

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. Sherwin-Williams 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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