The Sherwin-Williams Company Reports 2021 Third Quarter Financial Results

CLEVELAND, Oct. 26, 2021

SUMMARY

• Consolidated net sales increased 0.5% in the quarter to $5.15 billion
• Net sales from stores in U.S. and Canada open more than twelve calendar months decreased 2.8% in the quarter
• Raw material availability issues negatively impacted quarter sales by an estimated high single digit percentage
• Diluted net income per share decreased to $1.88 per share in the quarter compared to $2.55 per share in the third quarter 2020
• Adjusted diluted net income per share decreased to $2.09 per share in the quarter compared to $2.76 per share in the third quarter 2020
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) decreased in the quarter to $834.2 million, or 16.2% of sales
• Generated net operating cash of $2.1 billion, or 13.5% of sales, in the first nine months of the year
• FY21 diluted net income per share guidance in the range of $7.16 to $7.36 per share, including a loss of $0.34 per share from the Wattyl divestiture and acquisition-related amortization expense of $0.85 per share
• Reaffirming adjusted diluted net income per share guidance in the range of $8.35 to $8.55 per share

CEO REMARKS

"Demand remains strong across our pro architectural and industrial end markets; however, results in the quarter were significantly impacted by ongoing and industry-wide raw material supply chain challenges," said Chairman, President and Chief Executive Officer, John G. Morikis. "Consolidated net sales increased less than 1%, as raw material availability negatively impacted total sales by a high single digit percentage, of which approximately 75% of the impact was in The Americas Group. The raw material availability challenges combined with higher raw material costs significantly pressured gross margins in the quarter. We continue to implement price increases to offset higher raw material costs across the business and are confident margins will recover as inflation headwinds eventually subside. Despite the near-term margin pressure, cash flow generation remained strong during the quarter, enabling us to invest in long-term strategic growth initiatives, open 19 new stores, announce two acquisitions and purchase 1.675 million shares.

"In The Americas Group, underlying demand in our professional architectural businesses remains robust. We expect delayed projects to be completed as raw material availability improves, and our team is aggressively pursuing additional business. In the Consumer Brands Group, our sales remained down double-digits, driven by difficult comparisons to the prior year, consumers returning to the workplace, raw material availability issues and the divestiture of the Wattyl business. Growth in the Pros Who Paint category in this segment was not enough to offset the lower North America DIY demand and raw material availability challenges. In the Performance Coatings Group, all businesses and regions delivered growth, most by double digit percentages."

THIRD QUARTER CONSOLIDATED RESULTS