CLEVELAND, April 23, 2024 /PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the first quarter ended March 31, 2024. All comparisons are to the first quarter of the prior year, unless otherwise noted.

SUMMARY

• Consolidated net sales decreased 1.4% in the quarter to $5.37 billion
  • Net sales from stores in the Paint Stores Group open more than twelve calendar months were approximately flat in the quarter
• Diluted net income per share increased 7.1% to $1.97 per share in the quarter compared to $1.84 per share in the first quarter 2023
  • Adjusted diluted net income per share increased 6.4% to $2.17 per share in the quarter compared to $2.04 per share in the first quarter 2023
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in the quarter increased 2.0% to $896.2 million, or 16.7% of net sales
• Reaffirming full year 2024 diluted net income per share guidance in the range of $10.05 to $10.55 per share, including acquisition-related amortization expense of $0.80 per share
  • Reaffirming full year 2024 adjusted diluted net income per share guidance in the range of $10.85 to $11.35 per share

CEO REMARKS

"In what is a seasonally smaller first quarter and with continued demand choppiness in several end markets, Sherwin-Williams delivered consolidated sales within our guided range, gross margin expansion and diluted earnings per share and EBITDA growth," said President and Chief Executive Officer, Heidi G. Petz. "We also continued to execute our capital allocation strategy by investing $546 million in share repurchases and increasing our dividend 18.2% in the quarter.

"Paint Stores Group sales were up slightly against a strong double-digit comparison, driven by a modest contribution from our February 1 price increase which will reach greater realization in the second quarter. Our recent growth investments helped drive above-market growth in Residential Repaint. Commercial and Protective & Marine sales also grew. New Residential sales were down as anticipated, though we are seeing momentum with our homebuilder customers. Delayed capex projects impacted Property Maintenance sales. In Consumer Brands Group, North America DIY paint demand remained soft, which was partially offset by international growth. Segment margin improved, primarily driven by higher manufacturing and distribution fixed cost absorption, lower raw material costs and improved results in Latin America and Europe. Performance Coatings Group sales were in line with expectations as demand remained variable by business and region. Sales grew in Industrial Wood and Coil. Sales were flat in Auto Refinish against a mid-teens comparison, and Packaging sales were down, as expected. General Industrial demand was soft in all regions. Segment margin improved year-over-year for the fifth consecutive quarter. In all segments, we continued to execute on our priorities which we expect will drive increasing momentum as the year progresses."

FIRST QUARTER CONSOLIDATED RESULTS

Consolidated Net sales decreased primarily due to lower sales volumes in the Consumer Brands Group, inclusive of the impact from the divestiture of the China architectural business in the prior year, and the Performance Coatings Group in North America. Net sales in the Paint Stores Group was essentially flat in the quarter.

Income before income taxes increased primarily due to benefits from moderating raw material costs, partially offset by continued investments in long-term growth strategies and digital technologies.

Diluted net income per share included a charge of $0.20 per share for acquisition-related amortization expense in the first quarter of both 2024 and 2023.

FIRST QUARTER SEGMENT RESULTS

Net sales in PSG increased primarily due to a modest impact from the recently announced price increase with sales volume approximately flat year-over-year. Net sales growth in the Residential Repaint, Commercial and Protective & Marine end markets was partially offset by lower Net sales in the New Residential and Property Maintenance end markets. PSG segment profit decreased primarily due to continued investments in long-term growth strategies and higher employee-related costs, partially offset by moderating raw material costs.

Net sales in CBG decreased primarily due to a mid-single digit percentage sales volume decline and a 2.6% impact of divestitures in 2023. The sales volume decrease in North America was partially offset by sales volume growth in Europe as well as selling price increases in Latin America and Europe, which impacted net sales by a low-single digit percentage. CBG segment profit increased primarily due to higher fixed cost absorption in the manufacturing and distribution operations within the segment, moderating raw material costs and improved results in Latin America and Europe, partially offset by lower North America sales volume. Acquisition-related amortization expense reduced segment profit as a percent of Net sales by 200 basis points in the first quarter of 2024, compared to 220 basis points in the first quarter of 2023.

Net sales in PCG decreased primarily due to lower sales volume in North America and Latin America, partially offset by higher sales volumes in Europe, inclusive of acquisition impact, and Asia. Performance was led by the Industrial Wood and Coil businesses, offset by decreases in the General Industrial and Packaging businesses. Incremental sales from acquisitions increased Net sales by 1.3% in the quarter. PCG segment profit increased primarily as a result of moderating raw material costs, partially offset by lower sales volume in North America. Acquisition-related amortization expense reduced segment profit as a percent of Net sales by 300 basis points in the first quarter of 2024, compared to 290 basis points in the first quarter of 2023.

LIQUIDITY AND CASH FLOW

The Company used $58.9 million in Net operating cash during the first quarter of 2024 primarily as a result of seasonal increases in working capital requirements, partially offset by Net income. This Net operating cash usage was funded through an increase in Short-term borrowings. The Company returned cash of $728.0 million to our shareholders in the form of dividends and repurchases of 1.7 million shares of its common stock during the first quarter of 2024. At March 31, 2024, the Company had remaining authorization to purchase 37.9 million shares of its common stock through open market purchases.

2024 GUIDANCE

"We remain highly confident in our customer focused strategy and are extremely well-positioned as the painting season begins," said Ms. Petz. "While uncertainties persist in the macroeconomic environment, we see growing opportunity, and we are encouraged by pro architectural demand and sentiment in April. Our team is aggressive, determined and focused on the right priorities. The growth investments we've made, the solutions we bring, the internal metrics we drive, and changing competitive dynamics are all pointing in our favor, and I am confident that these factors will translate into strong performance going forward. We expect share gains and returns to become more and more evident as the year progresses. We continue to have high expectations and are committed to meeting or exceeding our targets. We remain unwavering in driving success for our customers and shareholders.

"We expect second quarter 2024 consolidated net sales to be flat to up a low-single digit percentage compared to the second quarter of 2023. Our guidance for the full year 2024 remains unchanged, with consolidated net sales expected to be up a low to mid-single digit percentage compared to full year 2023 and diluted net income per share in the range of $10.05 to $10.55 per share, including acquisition-related amortization expense of $0.80 per share, compared to $9.25 per share in 2023. Full year 2024 adjusted diluted net income per share is expected to be in the range of $10.85 to $11.35 per share compared to $10.35 per share in 2023, an increase of 7% at the mid-point. We expect to provide an update on our full year guidance when we report our second quarter results in July."