The Sherwin-Williams Company Reports 2024 Second Quarter Financial Results
SUMMARY
- Consolidated net sales increased 0.5% in the quarter to $6.27 billion
- Net sales from stores in the
Paint Stores Group open more than twelve calendar months increased 2.4% in the quarter
- Net sales from stores in the
- Diluted net income per share increased 14.0% to
$3.50 per share in the quarter compared to$3.07 per share in the second quarter 2023- Adjusted diluted net income per share increased 12.5% to
$3.70 per share in the quarter compared to$3.29 per share in the second quarter 2023
- Adjusted diluted net income per share increased 12.5% to
- Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in the quarter increased 12.1% to
$1.44 billion , or 22.9% of net sales - Increasing full year 2024 diluted net income per share guidance to a range of
$10.30 to$10.60 per share, including acquisition-related amortization expense of$0.80 per share- Increasing full year 2024 adjusted diluted net income per share guidance in the range of
$11.10 to$11.40 per share
- Increasing full year 2024 adjusted diluted net income per share guidance in the range of
CEO REMARKS
"Led by strong performance in the
"
SECOND QUARTER CONSOLIDATED RESULTS
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
Net sales |
$ 6,271.5 |
|
$ 6,240.6 |
|
$ 30.9 |
|
0.5 % |
Income before income taxes |
$ 1,173.4 |
|
$ 1,012.1 |
|
$ 161.3 |
|
15.9 % |
As a % of net sales |
18.7 % |
|
16.2 % |
|
|
|
|
Net income per share - diluted |
$ 3.50 |
|
$ 3.07 |
|
$ 0.43 |
|
14.0 % |
Adjusted net income per share - diluted |
$ 3.70 |
|
$ 3.29 |
|
$ 0.41 |
|
12.5 % |
Consolidated Net sales increased primarily due to higher sales volumes in the Paint Stores and Performance Coatings Groups, partially offset by lower sales volumes in the
Income before income taxes increased primarily due to benefits from moderating raw material costs and higher Net sales, partially offset by continued investments in long-term growth strategies and digital technologies.
Diluted net income per share included a charge of
SECOND QUARTER SEGMENT RESULTS
|
|||||||
|
|||||||
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
Net sales |
$ 3,619.9 |
|
$ 3,498.7 |
|
$ 121.2 |
|
3.5 % |
Same-store sales change (1) |
2.4 % |
|
9.5 % |
|
|
|
|
Segment profit |
$ 907.1 |
|
$ 849.3 |
|
$ 57.8 |
|
6.8 % |
Reported segment margin |
25.1 % |
|
24.3 % |
|
|
|
|
|
|||||||
(1) Same-store sales represents net sales from stores open more than twelve calendar months. |
Net sales in PSG increased primarily due to low-single digit sales volume growth and continued realization of higher selling prices implemented earlier in the year. Net sales grew in all end markets, led by residential repaint, new residential, commercial and protective and marine, with the exception of property maintenance which declined modestly year-over-year. PSG Segment profit increased primarily due to higher Net sales and moderating raw material costs, partially offset by continued investments in long-term growth strategies, including higher employee-related costs.
|
|||||||
|
|||||||
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
Net sales |
$ 844.3 |
|
$ 945.8 |
|
$ (101.5) |
|
(10.7) % |
Segment profit |
$ 204.4 |
|
$ 110.3 |
|
$ 94.1 |
|
85.3 % |
Reported segment margin |
24.2 % |
|
11.7 % |
|
|
|
|
Adjusted segment profit (1) |
$ 220.4 |
|
$ 148.3 |
|
$ 72.1 |
|
48.6 % |
Adjusted segment margin |
26.1 % |
|
15.7 % |
|
|
|
|
|
|
(1) |
Adjusted segment profit equals Segment profit excluding the impact of |
Net sales in CBG decreased primarily due to a mid-single digit percentage sales volume decline as a result of soft DIY demand in
|
|||||||
|
|||||||
|
Three Months Ended |
||||||
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
Net sales |
$ 1,806.4 |
|
$ 1,794.9 |
|
$ 11.5 |
|
0.6 % |
Segment profit |
$ 301.5 |
|
$ 272.7 |
|
$ 28.8 |
|
10.6 % |
Reported segment margin |
16.7 % |
|
15.2 % |
|
|
|
|
Adjusted segment profit (1) |
$ 350.5 |
|
$ 322.3 |
|
$ 28.2 |
|
8.7 % |
Adjusted segment margin |
19.4 % |
|
18.0 % |
|
|
|
|
|
|
(1) |
Adjusted segment profit equals Segment profit excluding the impact of |
Net sales in PCG increased primarily due to incremental sales of 1.7% from an acquisition, partially offset by 1.0% unfavorable currency translation. Sales volume varied by region and business. Performance was led by Industrial Wood, Coil and Automotive Refinish in
LIQUIDITY AND CASH FLOW
The Company generated
2024 GUIDANCE
|
Third Quarter |
|
Full Year |
||
|
2024 |
|
2024 |
||
Net sales |
Up low-single digit % |
|
Up low-single digit % |
||
Effective tax rate |
|
|
Low twenty percent |
||
Diluted net income per share |
|
|
|
- |
|
Adjusted diluted net income per share (1) |
|
|
|
- |
|
|
(1) Excludes |
"The macroeconomic environment has been softer for longer than many economists anticipated at the start of the year, and it is unclear how this trajectory may unfold in our back half," said
"We expect third quarter 2024 consolidated net sales to be up a low-single digit percentage compared to the third quarter of 2023. We are updating our guidance for the full year 2024 to reflect our better than expected second quarter diluted net income per share results, tempered by continued demand uncertainty in several end markets. We now expect consolidated net sales to be up a low-single digit percentage compared to full year 2023 and diluted net income per share to be in the range of
CONFERENCE CALL INFORMATION
The Company will host a conference call to discuss its financial results for the second quarter, and its outlook for the third quarter and full year 2024, at
The conference call will be webcast simultaneously in listen only mode. To listen to the webcast on
ABOUT
Founded in 1866,
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains "forward-looking statements," as defined under
INVESTOR RELATIONS CONTACTS:
Jim Jaye
Senior Vice President, Investor Relations & Corporate Communications
Direct: 216.515.8682
investor.relations@sherwin.com
Vice President, Investor Relations
Direct: 216.566.2766
investor.relations@sherwin.com
MEDIA CONTACT:
Vice President,
Direct: 216.515.8849
corporatemedia@sherwin.com
|
|||||||
Statements of Consolidated Income (Unaudited) |
|||||||
(in millions, except per share data) |
|||||||
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net sales |
$ 6,271.5 |
|
$ 6,240.6 |
|
$ 11,638.8 |
|
$ 11,683.0 |
Cost of goods sold |
3,208.1 |
|
3,368.3 |
|
6,044.4 |
|
6,389.8 |
Gross profit |
3,063.4 |
|
2,872.3 |
|
5,594.4 |
|
5,293.2 |
Percent to net sales |
48.8 % |
|
46.0 % |
|
48.1 % |
|
45.3 % |
Selling, general and administrative expenses |
1,845.7 |
|
1,760.0 |
|
3,645.5 |
|
3,453.0 |
Percent to net sales |
29.4 % |
|
28.2 % |
|
31.3 % |
|
29.6 % |
Other general income - net |
(33.6) |
|
(32.5) |
|
(31.6) |
|
(22.0) |
Impairment |
— |
|
34.0 |
|
— |
|
34.0 |
Interest expense |
110.8 |
|
111.7 |
|
213.8 |
|
221.0 |
Interest income |
(0.9) |
|
(7.2) |
|
(7.0) |
|
(10.7) |
Other income - net |
(32.0) |
|
(5.8) |
|
(39.7) |
|
(9.0) |
Income before income taxes |
1,173.4 |
|
1,012.1 |
|
1,813.4 |
|
1,626.9 |
Income taxes |
283.5 |
|
218.4 |
|
418.3 |
|
355.8 |
Net income |
$ 889.9 |
|
$ 793.7 |
|
$ 1,395.1 |
|
$ 1,271.1 |
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
Basic |
$ 3.55 |
|
$ 3.10 |
|
$ 5.54 |
|
$ 4.96 |
Diluted |
$ 3.50 |
|
$ 3.07 |
|
$ 5.47 |
|
$ 4.90 |
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
251.0 |
|
256.0 |
|
251.8 |
|
256.3 |
Diluted |
254.2 |
|
258.9 |
|
255.1 |
|
259.3 |
|
|||||||
Business Segments (Unaudited) |
|||||||
(millions of dollars) |
|||||||
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
||||
|
Net |
|
Segment |
|
Net |
|
Segment |
|
Sales |
|
Profit (Loss) |
|
Sales |
|
Profit (Loss) |
Three Months Ended |
|
|
|
|
|
|
|
|
$ 3,619.9 |
|
$ 907.1 |
|
$ 3,498.7 |
|
$ 849.3 |
|
844.3 |
|
204.4 |
|
945.8 |
|
110.3 |
|
1,806.4 |
|
301.5 |
|
1,794.9 |
|
272.7 |
Administrative |
0.9 |
|
(239.6) |
|
1.2 |
|
(220.2) |
Consolidated totals |
$ 6,271.5 |
|
$ 1,173.4 |
|
$ 6,240.6 |
|
$ 1,012.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
$ 6,492.9 |
|
$ 1,400.3 |
|
$ 6,357.8 |
|
$ 1,376.0 |
|
1,655.3 |
|
357.8 |
|
1,818.5 |
|
204.1 |
|
3,488.3 |
|
539.2 |
|
3,504.7 |
|
491.6 |
Administrative |
2.3 |
|
(483.9) |
|
2.0 |
|
(444.8) |
Consolidated totals |
$ 11,638.8 |
|
$ 1,813.4 |
|
$ 11,683.0 |
|
$ 1,626.9 |
|
|||
Condensed Consolidated Balance Sheets (Unaudited) |
|||
(millions of dollars) |
|||
|
|
|
|
|
|
||
|
2024 |
|
2023 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 200.0 |
|
$ 209.4 |
Accounts receivable, net |
3,048.1 |
|
3,117.8 |
Inventories |
2,289.1 |
|
2,439.0 |
Other current assets |
513.4 |
|
584.4 |
Total current assets |
6,050.6 |
|
6,350.6 |
Property, plant and equipment, net |
3,136.6 |
|
2,442.5 |
|
7,606.9 |
|
7,446.5 |
Intangible assets |
3,692.8 |
|
3,934.4 |
Operating lease right-of-use assets |
1,890.8 |
|
1,869.2 |
Other assets |
1,356.3 |
|
1,122.9 |
Total assets |
$ 23,734.0 |
|
$ 23,166.1 |
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Short-term borrowings |
$ 1,358.3 |
|
$ 806.2 |
Accounts payable |
2,493.9 |
|
2,489.7 |
Compensation and taxes withheld |
708.6 |
|
700.5 |
Accrued taxes |
347.1 |
|
308.0 |
Current portion of long-term debt |
849.7 |
|
499.5 |
Current portion of operating lease liabilities |
457.8 |
|
436.1 |
Other accruals |
1,251.2 |
|
1,099.1 |
Total current liabilities |
7,466.6 |
|
6,339.1 |
Long-term debt |
8,130.8 |
|
9,095.7 |
Postretirement benefits other than pensions |
133.2 |
|
139.3 |
Deferred income taxes |
642.0 |
|
710.9 |
Long-term operating lease liabilities |
1,502.9 |
|
1,503.2 |
Other long-term liabilities |
2,106.7 |
|
1,746.8 |
Shareholders' equity |
3,751.8 |
|
3,631.1 |
Total liabilities and shareholders' equity |
$ 23,734.0 |
|
$ 23,166.1 |
Regulation G Reconciliations
Management of the Company utilizes certain financial measures that are not in accordance with
Management believes that investors' understanding of the Company's operating performance is enhanced by the disclosure of diluted net income per share excluding
|
|
|
|
|
|
|
|
|
Year Ending |
||
|
Three Months Ended |
|
Six Months Ended |
|
|
||||||
|
|
|
|
|
(after-tax guidance) |
||||||
|
Pre-Tax |
Tax Effect (1) |
After-Tax |
|
Pre-Tax |
Tax Effect (1) |
After-Tax |
|
Low |
|
High |
Diluted net income per share |
|
|
$ 3.50 |
|
|
|
$ 5.47 |
|
$ 10.30 |
|
$ 10.60 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related amortization expense (1) |
$ .26 |
$ .06 |
$ .20 |
|
$ .51 |
$ .12 |
$ .39 |
|
$ .80 |
|
$ .80 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net income per share |
|
|
$ 3.70 |
|
|
|
$ 5.86 |
|
$ 11.10 |
|
$ 11.40 |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
Year Ended |
||||||
|
|
|
|
|
|
||||||
|
Pre-Tax |
Tax Effect (1) |
After-Tax |
|
Pre-Tax |
Tax Effect (1) |
After-Tax |
|
Pre-Tax |
Tax Effect (1) |
After-Tax |
Diluted net income per share |
|
|
$ 3.07 |
|
|
|
$ 4.90 |
|
|
|
$ 9.25 |
|
|
|
|
|
|
|
|
|
|
|
|
Items related to Restructuring Plan: |
|
|
|
|
|
|
|
|
|
|
|
Severance and other |
$ .06 |
$ .03 |
.03 |
|
$ .06 |
$ .03 |
.03 |
|
$ .06 |
$ .02 |
.04 |
Impairment of assets related to |
.13 |
.08 |
.05 |
|
.13 |
.08 |
.05 |
|
.13 |
.08 |
.05 |
Gain on divestiture of domestic aerosol business |
(.08) |
(.02) |
(.06) |
|
(.08) |
(.02) |
(.06) |
|
(.08) |
(.02) |
(.06) |
Discrete income tax expense related to |
— |
— |
— |
|
— |
— |
— |
|
— |
(.06) |
.06 |
Total |
.11 |
.09 |
.02 |
|
.11 |
.09 |
.02 |
|
.11 |
.02 |
.09 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment related to trademarks |
— |
— |
— |
|
— |
— |
— |
|
.09 |
.02 |
.07 |
Devaluation of the Argentine Peso |
— |
— |
— |
|
— |
— |
— |
|
.16 |
— |
.16 |
Acquisition-related amortization expense (1) |
.26 |
.06 |
.20 |
|
.53 |
.11 |
.42 |
|
1.03 |
.25 |
.78 |
Adjusted diluted net income per share |
|
|
$ 3.29 |
|
|
|
$ 5.34 |
|
|
|
$ 10.35 |
|
|
(1) |
Acquisition-related amortization expense consists of the amortization of intangible assets related to the |
(2) |
The tax effect is calculated based on the statutory rate and the nature of the item, unless otherwise noted. |
Management believes that investors' understanding of the Company's operating performance is enhanced by the disclosure of EBITDA, which is a non-GAAP financial measure defined as Net income before income taxes and Interest expense, depreciation and amortization, as well as Adjusted EBITDA, which is a non-GAAP financial measure that excludes certain adjustments that management believes enhances investors' understanding of the Company's operating performance. Management considers EBITDA and Adjusted EBITDA useful in understanding the operating performance of the Company. The reader is cautioned that the Company's EBITDA and Adjusted EBITDA should not be compared to other entities unknowingly. Further, EBITDA and Adjusted EBITDA should not be considered alternatives to Net income or Net operating cash as an indicator of operating performance or as a measure of liquidity. The following table reconciles Net income computed in accordance with US GAAP to EBITDA and Adjusted EBITDA, as applicable.
(millions of dollars) |
|
|
|
|
|
|
Three Months |
|
Three Months |
|
Six Months |
|
Ended |
|
Ended |
|
Ended |
|
|
|
|
|
|
Net income |
$ 505.2 |
|
$ 889.9 |
|
$ 1,395.1 |
Interest expense |
103.0 |
|
110.8 |
|
213.8 |
Income taxes |
134.8 |
|
283.5 |
|
418.3 |
Depreciation |
71.1 |
|
71.8 |
|
142.9 |
Amortization |
82.1 |
|
81.5 |
|
163.6 |
EBITDA |
$ 896.2 |
|
$ 1,437.5 |
|
$ 2,333.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
Three Months |
|
Six Months |
|
Ended |
|
Ended |
|
Ended |
|
|
|
|
|
|
Net income |
$ 477.4 |
|
$ 793.7 |
|
$ 1,271.1 |
Interest expense |
109.3 |
|
111.7 |
|
221.0 |
Income taxes |
137.4 |
|
218.4 |
|
355.8 |
Depreciation |
70.4 |
|
75.7 |
|
146.1 |
Amortization |
83.7 |
|
83.0 |
|
166.7 |
EBITDA |
$ 878.2 |
|
$ 1,282.5 |
|
$ 2,160.7 |
Restructuring expense |
0.9 |
|
8.7 |
|
9.6 |
Impairment of assets related to |
— |
|
34.0 |
|
34.0 |
Gain on divestiture of domestic aerosol business |
— |
|
(20.1) |
|
(20.1) |
Adjusted EBITDA |
$ 879.1 |
|
$ 1,305.1 |
|
$ 2,184.2 |
|
|||||||
Selected Information (Unaudited) |
|||||||
(millions of dollars, except store count data) |
|||||||
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||
|
|
|
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Depreciation |
$ 71.8 |
|
$ 75.7 |
|
$ 142.9 |
|
$ 146.1 |
Capital expenditures |
250.9 |
|
206.1 |
|
534.7 |
|
416.0 |
Cash dividends |
178.6 |
|
156.3 |
|
361.1 |
|
312.8 |
Amortization of intangibles |
81.5 |
|
83.0 |
|
163.6 |
|
166.7 |
|
|
|
|
|
|
|
|
Significant components of Other general income - net: |
|
|
|
|
|||
Provisions for environmental matters - net |
$ (14.1) |
|
$ 0.6 |
|
$ (10.5) |
|
$ 13.3 |
Gain on divestiture of domestic aerosol business |
— |
|
(20.1) |
|
— |
|
(20.1) |
Gain on sale or disposition of assets |
(19.8) |
|
(16.2) |
|
(23.2) |
|
(20.8) |
Other |
0.3 |
|
3.2 |
|
2.1 |
|
5.6 |
|
|
|
|
|
|
|
|
Significant components of Other income - net: |
|
|
|
|
|||
Net investment gains |
$ (3.8) |
|
$ (15.5) |
|
$ (8.9) |
|
$ (18.7) |
Net expense from banking activities |
4.4 |
|
3.9 |
|
7.7 |
|
7.8 |
Foreign currency transaction related (gains) losses - net |
(4.6) |
|
16.8 |
|
3.0 |
|
23.6 |
Other (1) |
(28.0) |
|
(11.0) |
|
(41.5) |
|
(21.7) |
|
|
|
|
|
|
|
|
Store Count Data: |
|
|
|
|
|
|
|
|
19 |
|
16 |
|
26 |
|
20 |
|
4,720 |
|
4,644 |
|
4,720 |
|
4,644 |
|
5 |
|
6 |
|
7 |
|
6 |
|
325 |
|
313 |
|
325 |
|
313 |
|
1 |
|
4 |
|
2 |
|
2 |
|
324 |
|
319 |
|
324 |
|
319 |
|
|
|
|
|
|
|
|
(1) Consists of items of revenue, gains, expenses and losses unrelated to the primary business purpose of the Company. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/the-sherwin-williams-company-reports-2024-second-quarter-financial-results-302203860.html
SOURCE