CLEVELAND, Oct. 28, 2014
/PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) announced
its financial results for the third quarter and nine months ended
September 30, 2014. Compared to the same periods in 2013,
consolidated net sales increased $303.2
million, or 10.6%, to $3.15
billion in the quarter and increased $831.6 million, or 10.8%, to $8.56 billion in nine months due primarily to
higher paint sales volume in our Paint Stores Group and
acquisitions. Acquisitions increased consolidated net sales 3.3% in
the quarter and 4.1% in nine months. Unfavorable currency
translation rate changes decreased consolidated net sales 0.7% in
the quarter and 1.1% in nine months.
Diluted net income per common share in the quarter increased to
$3.35 per share from $2.55 per share in 2013, and increased in nine
months to $7.39 per share from
$6.11 per share last year. The
quarter and nine months 2013 diluted net income per common share
included charges of $.13 and
$.21 per share, respectively, related
to Brazil tax assessments. The
increases in third quarter and nine month diluted net income per
common share were due primarily to improved operating results of
the Paint Stores, Global Finishes and Consumer Groups. Acquisitions
decreased diluted net income per common share by $.01 per share and $.18 per share in the quarter and nine months,
respectively. Currency translation rate changes decreased diluted
net income per common share by $.03
per share in the quarter and $.08 per
share in nine months.
Net sales in the Paint Stores Group increased 15.0% to
$2.03 billion in the quarter and
increased 16.1% to $5.27 billion in
nine months due primarily to higher architectural paint sales
volume across all end market segments. Acquisitions increased net
sales 4.6% in the quarter and 5.9% in nine months. Net sales from
stores open for more than twelve calendar months increased 9.6% in
the quarter and increased 9.2% in nine months over last year's
comparable periods. Paint Stores Group segment profit increased
$72.4 million to $431.8 million in the quarter from $359.4 million last year and increased
$132.0 million to $954.0 million in nine months from $822.0 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
$5.4 million in the quarter and
$32.3 million in nine months. Segment
profit as a percent to net sales increased in the quarter to 21.3%
from 20.4% last year due primarily to higher paint sales volume
partially offset by the impact of acquisitions. Segment profit as a
percent to sales was flat at 18.1% in nine months compared to 2013
due to the impact of acquisitions.
Net sales of the Consumer Group increased 5.0% to $385.2 million in the quarter and increased 7.0%
to $1.14 billion in nine months due
primarily to the impact of acquisitions and higher volume sales to
most of the Group's retail customers. Acquisitions increased net
sales 3.9% and 4.3% in the quarter and nine months, respectively.
Segment profit increased to $79.0
million in the quarter from $73.1
million last year and increased to $222.5 million in nine months from $206.1 million last year due primarily to higher
volume sales, and improved operating efficiencies. Acquisitions
decreased segment profit $1.9 million
in the quarter and had no significant impact on segment profit in
nine months. As a percent to net external sales, segment profit
increased in the quarter to 20.5% from 19.9% last year and
increased in nine months to 19.5% from 19.3% last year.
The Global Finishes Group's net sales stated in U.S. dollars
increased 5.7% to $536.3 million in
the quarter due primarily to higher paint sales volume and selling
price increases. Nine month sales stated in U.S. dollars increased
4.7% to $1.58 billion due primarily
to selling price increases partially offset by unfavorable currency
translation rate changes. Unfavorable currency translation rate
changes decreased net sales by 0.4% in the quarter and 0.7% in nine
months. Stated in U.S. dollars, segment profit increased in the
quarter to $60.8 million from
$44.5 million last year due primarily
to higher paint sales volume, the $6.3
million gain on the early termination of a customer
agreement and selling price increases. Nine month segment profit
increased to $162.1 million from
$132.9 million last year due
primarily to improved operating efficiencies, selling price
increases, and the early termination of a customer agreement.
Unfavorable currency translation rate changes decreased segment
profit $0.9 million in the quarter
and $3.3 million in nine months. As a
percent to net external sales, segment profit was 11.3% in the
quarter versus 8.8% last year and 10.3% in nine months compared to
8.8% in 2013.
The Latin America Coatings Group's net sales stated in U.S.
dollars decreased 4.0% to $200.4
million in the quarter and decreased 7.6% to $564.0 million in nine 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 7.8% in
the quarter and 11.8% in nine months. Stated in U.S. dollars,
segment profit increased in the quarter to $11.8 million from a loss of $1.0 million last year and increased in nine
months to $27.4 million from
$20.7 million last year due primarily
to charges recorded in the third quarter and nine months 2013
related to Brazil tax assessments
and selling price increases partially offset by lower volume sales,
increasing raw material costs and unfavorable currency translation
rate changes. Charges of $19.8
million and $31.6 million in
the quarter and nine months 2013, respectively, were related to
Brazil tax assessments.
Unfavorable currency translation rate changes decreased segment
profit $4.0 million in the quarter
and $10.7 million in nine months. As
a percent to net external sales, segment profit improved in the
quarter to 5.9% from negative 0.5% last year and increased in nine
months to 4.9% from 3.4% in 2013.
The Company acquired 2.00 million shares of its common stock
through open market purchases in the quarter and 5.33 million
shares in nine months. The Company had remaining authorization at
September 30, 2014 to purchase 6.83 million shares.
Commenting on the financial results, Christopher M. Connor, Chairman and Chief
Executive Officer, said, "We are pleased to report record sales and
earnings per share in the third quarter and first nine months of
2014 on the continued positive sales volume and strong operating
results of our Paint Stores Group. The Paint Stores Group
architectural volume growth was positive across all end market
segments. The Comex acquisition continues to perform 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 nine
months, Paint Stores Group opened 51 net new stores. Our working
capital ratio (accounts receivable plus inventories less accounts
payable to sales) at September 30,
2014 was 10.8% compared to 12.5% 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 fourth quarter, we anticipate our consolidated net
sales will increase six to eight percent compared to last year's
fourth quarter. At that anticipated sales level, we estimate
diluted net income per common share in the fourth quarter of 2014
to be in the range of $1.30 to $1.40
per share compared to $1.14 per share
earned in the fourth quarter of 2013. This guidance includes our
expectation that the Comex acquisition will reduce diluted net
income per common share by approximately $.10 per share in the fourth quarter. For the
full year 2014, we expect consolidated net sales to increase nine
to eleven 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 $8.70 to $8.80 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 $.28 per share in 2014."
The Company will conduct a conference call to discuss its
financial results for the third quarter and first nine months, and
its outlook for the fourth quarter and full year 2014, at
11:00 a.m. EDT on Tuesday,
October 28, 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
October 28th 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 November 17, 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
September 30,
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Nine Months Ended
September 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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3,150,570
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$
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2,847,417
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$
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8,560,121
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$
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7,728,474
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Cost of goods
sold
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1,679,615
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1,551,459
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4,613,612
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4,236,086
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Gross
profit
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1,470,955
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1,295,958
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3,946,509
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3,492,388
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Percent to
net sales
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46.7%
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45.5%
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|
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46.1%
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45.2%
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Selling, general and
administrative expenses
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984,366
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889,690
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2,837,637
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2,505,493
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Percent to
net sales
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31.2%
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31.2%
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33.1%
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32.4%
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Other general expense
- net
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11,873
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834
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|
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12,071
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5,266
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Interest
expense
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16,025
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|
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15,394
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|
|
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48,793
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|
|
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45,774
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Interest and net
investment income
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(764)
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(916)
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(2,110)
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(2,363)
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Other (income)
expense - net
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(14,593)
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3,494
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(19,237)
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|
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1,488
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Income before income
taxes
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474,048
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387,462
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1,069,355
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936,730
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Income
taxes
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147,808
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124,496
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336,211
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300,292
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Net income
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$
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326,240
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$
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262,966
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$
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733,144
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$
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636,438
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Net income per common
share:
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Basic
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$
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3.42
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$
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2.60
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$
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7.53
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$
|
6.24
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Diluted
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$
|
3.35
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$
|
2.55
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$
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7.39
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$
|
6.11
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Average shares
outstanding - basic
|
|
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94,800,191
|
|
|
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100,460,185
|
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96,744,423
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|
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101,362,328
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Average shares and
equivalents outstanding - diluted
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96,714,043
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|
|
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102,622,514
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|
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98,670,999
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|
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103,551,542
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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 October 28th release.
SOURCE The Sherwin-Williams Company