CLEVELAND, April 21, 2016
/PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW)
announced its financial results for the first quarter ended
March 31, 2016. Compared to the same period in 2015,
consolidated net sales increased $123.7
million, or 5.1%, to $2.57
billion in the quarter due primarily to higher paint sales
volume in our Paint Stores and Consumer Groups. Unfavorable
currency translation rate changes decreased consolidated net sales
2.8% in the quarter.
Diluted net income per common share in the quarter increased to
$1.57 per share, including a
$.24 per share charge from costs
associated with the anticipated acquisition of Valspar, from
$1.38 per share in 2015. The increase
in first quarter diluted net income per common share was due
primarily to improved operating results of the Paint Stores Group.
Currency translation rate changes decreased diluted net income per
common share by $.06 per share in the
quarter.
Net sales in the Paint Stores Group increased 10.5% to
$1.62 billion in the quarter due
primarily to higher architectural paint sales volume across all end
market segments. Net sales from stores open for more than twelve
calendar months increased 9.4% in the quarter over last year's
comparable period. Paint Stores Group segment profit increased
$77.0 million to $253.5 million in the quarter from $176.6 million last year due primarily to higher
paint sales volume. Segment profit as a percent to net sales
increased in the quarter to 15.7% from 12.1% last year.
Net sales of the Consumer Group increased 7.5% to $378.1 million in the quarter due primarily to
sales of HGTV HOME® by Sherwin-Williams paint to Lowe's
stores. Segment profit increased to $64.0
million in the quarter from $55.4
million last year due primarily to improved operating
efficiencies and higher volume sales. As a percent to net external
sales, segment profit increased in the quarter to 16.9% from 15.8%
last year.
The Global Finishes Group's net sales stated in U.S. dollars
decreased 3.3% to $454.2 million in
the quarter. Unfavorable currency translation rate changes
decreased net sales by 4.7% in the quarter. Stated in U.S. dollars,
segment profit increased in the quarter to $48.6 million from $38.9
million last year due primarily to decreasing raw material
costs and good cost control partially offset by unfavorable
currency translation rate changes. Unfavorable currency translation
rate changes reduced segment profit $3.0
million in the quarter. As a percent to net external sales,
segment profit increased in the quarter to 10.7% from 8.3% last
year.
The Latin America Coatings Group's net sales stated in U.S.
dollars decreased 24.7% to $125.2
million in the quarter due primarily to unfavorable currency
translation rate changes and volume declines partially offset by
selling price increases. Unfavorable currency translation rate
changes decreased net sales by 22.2% in the quarter. Stated in U.S.
dollars, segment profit decreased in the quarter to a loss of
$0.9 million from a profit of
$9.5 million last year due primarily
to increasing raw material costs and unfavorable currency
translation rate changes partially offset by selling price
increases. Unfavorable currency translation rate changes decreased
segment profit $6.2 million in the
quarter. As a percent to net external sales, segment profit
decreased in the quarter to a loss of 0.7% from 5.7% profit last
year.
The Company made no open market purchases of its common stock in
the three months ended March 31, 2016. At March 31, 2016,
the Company had remaining authorization to purchase 11.65 million
shares of its common stock through open market purchases.
Commenting on the financial results, John G. Morikis, President and Chief Executive
Officer, said, "We are pleased to report record sales and earnings
per share from the continued positive sales volume and strong
operating results of our Paint Stores Group and operating margin
improvements in our Consumer and Global Finishes Groups. Our Paint
Stores Group posted another quarter of positive operating results
and architectural volume growth. Consumer Group improved its
operating results through improved operating efficiencies. The HGTV
HOME® by Sherwin-Williams paint program continues to
drive sales improvements in Consumer Group. Our Global Finishes
Group improved its operating results through improved operating
efficiencies and good cost control. The Latin America Coatings
Group continues to manage through the negative effects of currency
devaluation and weak end market demand in some geographies.
"We continued to invest in our business by opening thirteen net
new locations in the Paint Stores Group in the first three months.
On March 20, 2016, the Company was
pleased to report that it had entered into an agreement to purchase
the Valspar Corporation. During the quarter, we increased the
dividend rate to $.84 from
$.67 last year. Our balance sheet
remains flexible and is positioned well for future acquisitions and
other investments in our business.
"For the second quarter, we anticipate our consolidated net
sales will increase a low to mid single digit percentage compared
to last year's second quarter. At that anticipated sales level, we
estimate diluted net income per common share in the second quarter
of 2016, excluding acquisition costs, to be in the range of
$3.95 to $4.15 per share compared to
$3.70 per share earned in the second
quarter of 2015. We anticipate costs related to the anticipated
acquisition of Valspar to decrease diluted net income per common
share by approximately $.15 per share
in the second quarter 2016. For the full year 2016, we expect
consolidated net sales to increase by a low single digit percentage
compared to full year 2015. With annual sales at that level, we are
raising our guidance that diluted net income per common share for
2016, excluding acquisition costs, will be in the range of
$12.50 to $12.70 per share compared
to $11.16 per share earned in 2015.
We expect costs related to the anticipated acquisition of Valspar
to be $185 million to $205 million in
2016."
The Company will conduct a conference call to discuss its
financial results for the first quarter, and its outlook for the
second quarter and full year 2016, at 11:00
a.m. EDT on Thursday, April 21, 2016. 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, 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 April 21st release. The webcast
will also be available at Issuer Direct'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 May 5, 2016 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®, HGTV
HOME® by 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.
Regulation G Reconciliation
Management of the Company believes that investors' understanding of
the Company's operating performance is enhanced by the disclosure
of diluted net income per common share excluding the Valspar
acquisition costs. This adjusted earnings per share measurement is
not in accordance with U.S. generally accepted accounting
principles (GAAP). It should not be considered a substitute for
earnings per share computed in accordance with U.S. GAAP and may
not be comparable to similarly titled measures reported by other
companies. The following table reconciles diluted net income per
common share computed in accordance with U.S. GAAP to diluted net
income per common share excluding the Valspar acquisition costs for
the quarter ended March 31, 2016, and
anticipated diluted net income per common share computed in
accordance with U.S. GAAP to anticipated diluted net income per
common share excluding the Valspar acquisition costs for the
quarter and year ended June 30, 2016
and December 31, 2016,
respectively.
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Three
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Months
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Three Months
Ended
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Year Ended
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Ended
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June 30,
2016
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December 31,
2016
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March 31,
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(guidance)
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(guidance)
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2016
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Low
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High
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Low
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High
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Consolidated diluted
net income per common share
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$
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1.57
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$
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3.80
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$
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4.00
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$
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11.17
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$
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11.50
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Valspar acquisition
costs diluted net charge per common share
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$
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.24
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$
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.15
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$
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.15
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$
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1.33
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$
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1.20
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Diluted net income
per common share excluding Valspar
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$
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1.81
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$
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3.95
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$
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4.15
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$
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12.50
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$
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12.70
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acquisition
costs
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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 statements can be identified by the use of
forward-looking terminology such as "believe," "expect," "may,"
"will," "should," "project," "could," "plan," "goal," "potential,"
"seek," "intend" or "anticipate" or the negative thereof or
comparable terminology. 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;
the Company's ability to complete the planned acquisition of The
Valspar Corporation, or Valspar, if at all, including the potential
for regulatory authorities to require divestitures in connection
with the proposed transaction; the Company's ability to
successfully integrate past and future acquisitions into its
existing operations, including Valspar, as well as the performance
of the businesses acquired; risks inherent in the achievement of
cost synergies and the timing thereof for the planned acquisition
of Valspar; 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.
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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
March 31,
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Thousands of dollars,
except per share data
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2016
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2015
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Net sales
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$
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2,574,024
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$
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2,450,284
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Cost of goods
sold
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1,312,279
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1,317,835
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Gross
profit
|
|
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1,261,745
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1,132,449
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Percent to
net sales
|
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49.0%
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|
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46.2%
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Selling, general and
administrative expenses
|
|
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1,002,355
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929,197
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Percent to
net sales
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38.9%
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37.9%
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Other general expense
(income) - net
|
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17,554
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(1,673)
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Interest
expense
|
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25,732
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12,351
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Interest and net
investment income
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(487)
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(422)
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Other expense
(income) - net
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226
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(245)
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Income before income
taxes
|
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216,365
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193,241
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Income
taxes
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69,237
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61,837
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Net income
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$
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147,128
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$
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131,404
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Net income per common
share:
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Basic
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$
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1.61
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$
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1.42
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Diluted
|
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$
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1.57
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$
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1.38
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Average shares
outstanding - basic
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91,475,860
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92,740,059
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Average shares and
equivalents outstanding - diluted
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93,548,234
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95,278,725
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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 April 21st release.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/the-sherwin-williams-company-reports-2016-first-quarter-financial-results-300255277.html
SOURCE The Sherwin-Williams Company