CLEVELAND, July 17, 2014
/PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the second quarter and six
months ended June 30, 2014. Compared to the same periods in
2013, consolidated net sales increased $329.1 million, or 12.1%, to $3.04 billion in the quarter and increased
$528.5 million, or 10.8%, to
$5.41 billion in six months due
primarily to higher paint sales volume in our Paint Stores Group
and acquisitions. Acquisitions increased consolidated net sales
4.6% in the quarter and 4.5% in six months. Unfavorable currency
translation rate changes decreased consolidated net sales 0.9% in
the quarter and 1.3% in six months.
Diluted net income per common share in the quarter increased to
$2.94 per share from $2.46 per share in 2013, and increased in six
months to $4.06 per share from
$3.57 per share last year. The
quarter and six months 2013 diluted net income per common share
included charges of $.08 per share
related to Brazil tax assessments.
The increases in second quarter and six month diluted net income
per common share were due primarily to improved operating results
of the Paint Stores and Consumer Groups. Acquisitions decreased
diluted net income per common share by $.06 per share and $.18 per share in the quarter and six months,
respectively. Currency translation rate changes decreased diluted
net income per common share by $.02
per share in the quarter and $.05 per
share in six months.
Net sales in the Paint Stores Group increased 17.2% to
$1.88 billion in the quarter and
increased 16.9% to $3.24 billion in
six months due primarily to higher architectural paint sales volume
across all end market segments and acquisitions. Acquisitions
increased net sales 6.5% in the quarter and 6.8% in six months. Net
sales from stores open for more than twelve calendar months
increased 9.8% in the quarter and increased 9.0% in six months over
last year's comparable periods. Paint Stores Group segment profit
increased $42.9 million to
$375.9 million in the quarter from
$333.0 million last year and
increased $59.4 million to
$522.1 million in six months from
$462.7 million last year due
primarily to higher paint sales volume partially offset by the loss
from acquisitions and increases in selling, general and
administrative expenses. Acquisitions had an unfavorable impact on
segment profit of $10.4 million in
the quarter and $27.1 million in six
months. Segment profit as a percent to net sales decreased in the
quarter to 20.0% from 20.7% last year and decreased in six months
to 16.1% from 16.7% in 2013 due to the impact of acquisitions.
Net sales of the Consumer Group increased 10.1% to $433.4 million in the quarter and increased 8.0%
to $758.7 million in six months due
primarily to higher volume sales to most of the Group's retail
customers and the impact of acquisitions. Acquisitions increased
net sales 5.0% and 4.5% in the quarter and six months,
respectively. Segment profit increased to $92.5 million in the quarter from $79.0 million last year and increased to
$143.6 million in six months from
$133.0 million last year due
primarily to higher volume sales, improved operating efficiencies
and profit from acquisitions. Acquisitions increased segment profit
$2.7 million in the quarter and
$2.1 million in six months. As a
percent to net external sales, segment profit increased in the
quarter to 21.3% from 20.1% last year and was flat in six months at
18.9%.
The Global Finishes Group's net sales stated in U.S. dollars
increased 6.1% to $544.6 million in
the quarter due primarily to higher paint sales volume and selling
price increases. Six month sales stated in U.S. dollars increased
4.2% to $1.04 billion due primarily
to selling price increases partially offset by unfavorable currency
translation rate changes. Unfavorable currency translation rate
changes decreased net sales by 0.3% in the quarter and 0.9% in six
months. Stated in U.S. dollars, segment profit increased in the
quarter to $54.9 million from
$54.5 million last year due primarily
to higher paint sales volume and selling price increases partially
offset by charges of $4.5 million in
the quarter related to the exit of our business in Venezuela. Six month segment profit increased
to $101.3 million from $88.4 million last year due primarily to improved
operating efficiencies and selling price increases partially offset
by the Venezuela charges in the
quarter. Unfavorable currency translation rate changes decreased
segment profit $0.6 million in the
quarter and $2.3 million in six
months. As a percent to net external sales, segment profit was
10.1% in the quarter versus 10.6% last year and 9.7% in six months
compared to 8.8% in 2013.
The Latin America Coatings Group's net sales stated in U.S.
dollars decreased 8.9% to $181.2
million in the quarter and decreased 9.5% to $363.6 million in six months due primarily to
unfavorable currency translation rate changes and lower paint sales
volume partially offset by selling price increases. Unfavorable
currency translation rate changes decreased net sales by 11.3% in
the quarter and 13.9% in six months. Stated in U.S. dollars,
segment profit increased in the quarter to $5.7 million from $0.9
million last year due primarily to an $11.8 million charge recorded in the second
quarter 2013 related to a Brazil
tax assessment and selling price increases partially offset by
lower volume sales, increasing raw material costs and unfavorable
currency translation rate changes. Stated in U.S. dollars, segment
profit in six months decreased to $15.6
million from $21.7 million
last year due primarily to lower volume sales, increasing raw
material costs and unfavorable currency translation rate changes
partially offset by selling price increases and the Brazil tax assessment in 2013. Unfavorable
currency translation rate changes decreased segment profit
$2.9 million in the quarter and
$6.8 million in six months. As a
percent to net external sales, segment profit improved in the
quarter to 3.1% from 0.4% last year and decreased in six months to
4.3% from 5.4% in 2013.
The Company acquired 2.03 million shares of its common stock
through open market purchases in the quarter and 3.33 million
shares in six months. The Company had remaining authorization at
June 30, 2014 to purchase 8.83 million shares.
Commenting on the financial results, Christopher M. Connor, Chairman and Chief
Executive Officer, said, "We are pleased with the continued strong
positive sales and earnings per share momentum. Our Paint Stores
Group continues to lead with sales volume and operating results.
Our Consumer Group and Global Finishes Group, excluding the
Venezuela charges, continue to
show operating margin improvements. The Paint Stores Group
architectural volume growth was strong across all end market
segments. The Comex acquisition is performing better than expected
in the year. Our Consumer Group improved its operating results
through higher volume sales and operating efficiencies. Our Global
Finishes Group continues to improve its operating margins through
improved operating efficiencies. The Latin America Coatings Group
is minimizing the impact on its core operating margins through
selling price increases and good cost control, although we are not
satisfied with the results.
"We are continuing to invest in our business. In the first six
months, Paint Stores Group opened 33 net new stores. For the year,
we expect our Paint Stores Group to open 80 to 90 new stores. Our
working capital ratio (accounts receivable plus inventories less
accounts payable to sales) at June 30,
2014 was 11.7% compared to 12.0% last year. During the
quarter, we continued to buy shares of our stock, and we increased
the dividend rate to $.55 from
$.50 last year. Our balance sheet
remains flexible and is positioned well for future acquisitions and
other investments in our business.
"For the third quarter, we anticipate our consolidated net sales
will increase nine to fourteen percent compared to last year's
third quarter. At that anticipated sales level, we estimate diluted
net income per common share in the third quarter of 2014 to be in
the range of $3.15 to $3.25 per share
compared to $2.55 per share earned in
the third quarter of 2013. This guidance includes our expectation
that the Comex acquisition will increase net sales $120 million to $130 million and reduce diluted
net income per common share by approximately $.05 per share in the third quarter. For the full
year 2014, we expect consolidated net sales to increase eight to
thirteen percent compared to full year 2013. With annual sales at
that level, we have raised our expectation for diluted net income
per common share for 2014 to a range of $8.50 to $8.70 per share compared to $7.26 per share earned in 2013. This annual
guidance includes our expectation that the Comex acquisition will
increase net sales by a low single digit percentage in the year and
negatively impact diluted net income per common share $.35 per share in 2014."
The Company will conduct a conference call to discuss its
financial results for the second quarter and first six months, and
its outlook for the third quarter and full year 2014, at
11:00 a.m. EDT on Thursday,
July 17, 2014. The conference call will be webcast
simultaneously in the listen only mode by Vcall. To listen to the
webcast on the Sherwin-Williams website, www.sherwin.com, click on
About Us, choose Investor Relations, then select Press Releases and
click on the webcast icon following the reference to the
July 17th release. The webcast will also be available at
Vcall's Investor Calendar website, www.investorcalendar.com. An
archived replay of the live webcast will be available at
www.sherwin.com beginning approximately two hours after the
call ends and will be available until August
7, 2014 at 5:00 p.m. EDT.
Founded in 1866, The Sherwin-Williams Company is a global leader
in the manufacture, development, distribution, and sale of coatings
and related products to professional, industrial, commercial, and
retail customers. The company manufactures products under
well-known brands such as Sherwin-Williams®, Dutch
Boy®, Krylon®, Minwax®,
Thompson's® Water
Seal®, and many more. With global headquarters in
Cleveland, Ohio,
Sherwin-Williams® branded products are sold exclusively
through a chain of more than 4,100 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 Global Finishes Group
distributes a wide range of products in more than 115 countries
around the world. For more information, visit www.sherwin.com.
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 forward-looking
statements are based upon management's current expectations,
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 results and experience. These risks,
uncertainties and other factors include such things as: general
business conditions, strengths of retail and manufacturing
economies and the growth in the coatings industry; changes in the
Company's relationships with customers and suppliers; changes in
raw material availability and pricing; unusual weather conditions;
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 Contact:
Bob Wells
Senior Vice President, Corporate Communications and Public
Affairs
Sherwin-Williams
Direct: 216.566.2244
rjwells@sherwin.com
Media Contact:
Mike
Conway
Director, Corporate Communications
Sherwin-Williams
Direct: 216.515.4393
Pager: 216.422.3751
mike.conway@sherwin.com
The
Sherwin-Williams Company and Subsidiaries
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Statements of
Consolidated Income (Unaudited)
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Three Months Ended
June 30,
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Six Months Ended June
30,
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Thousands of dollars,
except per share data
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2014
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2013
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2014
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2013
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Net sales
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$
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3,042,995
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$
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2,713,889
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$
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5,409,551
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$
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4,881,057
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Cost of goods
sold
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1,633,342
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1,480,310
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2,933,997
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2,684,627
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Gross
profit
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1,409,653
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1,233,579
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2,475,554
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2,196,430
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Percent to
net sales
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46.3%
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45.5%
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45.8%
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45.0%
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Selling, general and
administrative expenses
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969,183
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837,124
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1,853,271
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1,615,803
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Percent to
net sales
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31.8%
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30.8%
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34.3%
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33.1%
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Other general expense
- net
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|
770
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|
485
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|
|
198
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4,432
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Interest
expense
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16,374
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15,069
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32,768
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30,380
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Interest and net
investment income
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(757)
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(698)
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(1,346)
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(1,447)
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Other (income)
expense - net
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(5,147)
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715
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(4,644)
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(2,006)
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Income before income
taxes
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429,230
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380,884
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595,307
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549,268
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Income
taxes
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137,783
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123,597
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188,403
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175,796
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Net income
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$
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291,447
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$
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257,287
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$
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406,904
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$
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373,472
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Net income per common
share:
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Basic
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$
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3.00
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$
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2.51
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$
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4.14
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$
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3.65
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Diluted
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$
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2.94
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$
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2.46
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$
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4.06
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$
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3.57
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Average shares
outstanding - basic
|
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96,599,869
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|
|
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101,665,737
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97,716,539
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101,813,398
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Average shares and
equivalents outstanding - diluted
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98,541,909
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103,896,780
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99,688,557
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104,031,718
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Additional information regarding the Company's financial
condition, operating segment results and other information can be
found on the Sherwin-Williams website, www.sherwin.com, by clicking
on About Us, choosing Investor Relations, then selecting Press
Releases and clicking on the reference to the July 17th release.
SOURCE The Sherwin-Williams Company