Sherwin-Williams Releases Results for Third Quarter
CLEVELAND - The Sherwin-Williams Co. announced its financial results for the third quarter and nine months ended September 30, 2010. Compared to the same periods in 2009, consolidated net sales increased $175.4 million, or 8.8 percent, to $2.172 billion in the quarter and increased $385.4 million, or 7.0 percent, to $5.881 billion in nine months. Acquisitions increased consolidated net sales 3.4 percent in the quarter and 1.9 percent in nine months. Favorable currency translation rate changes increased consolidated net sales 0.6 percent in the quarter and 1.4 percent in nine months.
Net sales in the Paint Stores Group increased 5.4 percent to $1.286 billion in the quarter and increased 2.8 percent to $3.382 billion in nine months due primarily to selling price increases and improving domestic architectural paint sales to residential repaint contractors and DIY customers. Net sales from stores open for more than 12 calendar months increased 5.1 percent in the quarter and 2.5 percent in nine months over last year’s comparable periods. Paint Stores Group segment profit decreased to $225.1 million in the quarter from $230.2 million last year due primarily to continuing raw material cost increases and increases in selling, general and administrative expenses that were partially offset by selling price increases. For the nine months, Group segment profit increased to $484.8 million from $480.3 million last year due primarily to higher sales and selling price increases partially offset by continuing raw material cost increases and increases in selling, general and administrative expenses. Segment profit as a percent to net sales decreased in the quarter to 17.5 percent from 18.9 percent last year and decreased in nine months to 14.3 percent from 14.6 percent in 2009.
Net sales of the Consumer Group increased 3.0 percent to $340.4 million in the quarter and 5.9 percent to $1.043 billion in nine months due primarily to improving demand at some of the Segment’s retail, industrial and institutional customers. Segment profit increased to $59.7 million in the quarter from $56.5 million last year and increased to $177.9 million in nine months from $152.8 million last year. Segment profit in the quarter increased as a percent to net external sales to 17.5 percent from 17.1 percent last year and increased in nine months to 17.1 percent from 15.5 percent due primarily to increased sales and cost savings realized from previous year site rationalizations partially offset by increasing raw material costs.
The Global Finishes Group’s net sales stated in U.S. dollars increased 22.6 percent to $544.5 million in the quarter and increased 19.4 percent to $1.452 billion in nine months due primarily to acquisitions, higher paint sales volume and favorable currency translation rate changes. In the quarter and nine months, acquisitions increased net sales in U.S. dollars by 15.1 percent and 8.6 percent, respectively, and favorable currency translation rate changes increased net sales by 2.5 percent and 5.5 percent, respectively. Stated in U.S. dollars, Global Finishes Group segment profit in the quarter increased to $31.9 million from $29.7 million and increased in nine months to $94.9 million from $66.1 million last year due primarily to increased paint sales volume, good expense control and favorable currency rate changes, partially offset by dilution from acquisitions. Favorable foreign currency translation rate changes increased segment profit $1.4 million and $7.2 million for the quarter and nine months, respectively. Acquisitions had an unfavorable impact on segment profit of $2.8 million in the quarter and $7.1 million in nine months. As a percent to net external sales, segment profit was 5.9 percent in the quarter versus 6.7 percent last year and 6.5 percent in nine months compared to 5.4 percent in 2009.
The company acquired 1.13 million shares of its common stock through open-market purchases in the quarter bringing the total to 3.48 million shares in nine months. The company had remaining authorization at September 30, 2010, to purchase 7.28 million shares.
Commenting on the third quarter and nine months financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “Our sales and earnings-per-share in the third quarter, adjusted for the acquisition of Becker Acroma, finished in the middle of our guidance range. Earnings leverage fell short of what we would normally expect to generate on a sales increase of this magnitude due to persistently high raw material costs, the timing of our price increases and higher SG&A expenses required to ensure product availability and good customer service.
“We are continuing to invest in our business. In the first nine months, Paint Stores Group opened 25 new locations, while closing 11 redundant locations. The Becker Acroma acquisition, completed in September 2010, and the Sayerlack acquisition are performing to expectations. Even though the acquisitions had a negative impact on the quarter and nine months financial results, they strengthen our growing global platform to better serve our customers around the world with outstanding R&D, products and people. During the quarter, we utilized our cash to buy shares of our stock and pay a cash dividend of $.36 per common share.
“We remain cautiously optimistic about the stability of end-market demand and are working hard to mitigate the effect of rising raw material costs. During the fourth quarter of 2010, we anticipate consolidated net sales will increase in the mid teens compared to last year’s fourth quarter, primarily due to acquisitions. We expect diluted net income per common share for the fourth quarter to be in the range of $.59 to $.69 per share compared to $.58 per share in 2009. For the full year 2010, we expect consolidated net sales to increase above 2009 levels by a high-single-digit percentage. With annual sales at that level, we are updating our July 22 full-year guidance for diluted net income per common share for 2010 to be in the range of $4.12 to $4.22 per share, compared to $3.78 per share earned in 2009.”
Net sales in the Paint Stores Group increased 5.4 percent to $1.286 billion in the quarter and increased 2.8 percent to $3.382 billion in nine months due primarily to selling price increases and improving domestic architectural paint sales to residential repaint contractors and DIY customers. Net sales from stores open for more than 12 calendar months increased 5.1 percent in the quarter and 2.5 percent in nine months over last year’s comparable periods. Paint Stores Group segment profit decreased to $225.1 million in the quarter from $230.2 million last year due primarily to continuing raw material cost increases and increases in selling, general and administrative expenses that were partially offset by selling price increases. For the nine months, Group segment profit increased to $484.8 million from $480.3 million last year due primarily to higher sales and selling price increases partially offset by continuing raw material cost increases and increases in selling, general and administrative expenses. Segment profit as a percent to net sales decreased in the quarter to 17.5 percent from 18.9 percent last year and decreased in nine months to 14.3 percent from 14.6 percent in 2009.
Net sales of the Consumer Group increased 3.0 percent to $340.4 million in the quarter and 5.9 percent to $1.043 billion in nine months due primarily to improving demand at some of the Segment’s retail, industrial and institutional customers. Segment profit increased to $59.7 million in the quarter from $56.5 million last year and increased to $177.9 million in nine months from $152.8 million last year. Segment profit in the quarter increased as a percent to net external sales to 17.5 percent from 17.1 percent last year and increased in nine months to 17.1 percent from 15.5 percent due primarily to increased sales and cost savings realized from previous year site rationalizations partially offset by increasing raw material costs.
The Global Finishes Group’s net sales stated in U.S. dollars increased 22.6 percent to $544.5 million in the quarter and increased 19.4 percent to $1.452 billion in nine months due primarily to acquisitions, higher paint sales volume and favorable currency translation rate changes. In the quarter and nine months, acquisitions increased net sales in U.S. dollars by 15.1 percent and 8.6 percent, respectively, and favorable currency translation rate changes increased net sales by 2.5 percent and 5.5 percent, respectively. Stated in U.S. dollars, Global Finishes Group segment profit in the quarter increased to $31.9 million from $29.7 million and increased in nine months to $94.9 million from $66.1 million last year due primarily to increased paint sales volume, good expense control and favorable currency rate changes, partially offset by dilution from acquisitions. Favorable foreign currency translation rate changes increased segment profit $1.4 million and $7.2 million for the quarter and nine months, respectively. Acquisitions had an unfavorable impact on segment profit of $2.8 million in the quarter and $7.1 million in nine months. As a percent to net external sales, segment profit was 5.9 percent in the quarter versus 6.7 percent last year and 6.5 percent in nine months compared to 5.4 percent in 2009.
The company acquired 1.13 million shares of its common stock through open-market purchases in the quarter bringing the total to 3.48 million shares in nine months. The company had remaining authorization at September 30, 2010, to purchase 7.28 million shares.
Commenting on the third quarter and nine months financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “Our sales and earnings-per-share in the third quarter, adjusted for the acquisition of Becker Acroma, finished in the middle of our guidance range. Earnings leverage fell short of what we would normally expect to generate on a sales increase of this magnitude due to persistently high raw material costs, the timing of our price increases and higher SG&A expenses required to ensure product availability and good customer service.
“We are continuing to invest in our business. In the first nine months, Paint Stores Group opened 25 new locations, while closing 11 redundant locations. The Becker Acroma acquisition, completed in September 2010, and the Sayerlack acquisition are performing to expectations. Even though the acquisitions had a negative impact on the quarter and nine months financial results, they strengthen our growing global platform to better serve our customers around the world with outstanding R&D, products and people. During the quarter, we utilized our cash to buy shares of our stock and pay a cash dividend of $.36 per common share.
“We remain cautiously optimistic about the stability of end-market demand and are working hard to mitigate the effect of rising raw material costs. During the fourth quarter of 2010, we anticipate consolidated net sales will increase in the mid teens compared to last year’s fourth quarter, primarily due to acquisitions. We expect diluted net income per common share for the fourth quarter to be in the range of $.59 to $.69 per share compared to $.58 per share in 2009. For the full year 2010, we expect consolidated net sales to increase above 2009 levels by a high-single-digit percentage. With annual sales at that level, we are updating our July 22 full-year guidance for diluted net income per common share for 2010 to be in the range of $4.12 to $4.22 per share, compared to $3.78 per share earned in 2009.”
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