Sherwin-Williams' Profit up in First Quarter
May 1, 2011
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CLEVELAND - The Sherwin-Williams Co. announced its financial results for the first quarter ended March 31, 2011. Compared to the same period in 2010, consolidated net sales increased $290.1 million, or 18.5 percent, to $1.86 billion in the quarter due primarily to acquisitions and selling price increases. Acquisitions and favorable currency translation rate changes increased consolidated net sales nine percent and 1.2 percent, respectively.
Diluted net income per common share in the quarter increased 110 percent to $.63 per share from $.30 per share in 2010 due primarily to higher sales, expense control and a lower effective tax rate.
Net sales in the Paint Stores Group increased 9.2 percent to $929.3 million in the quarter due primarily to selling price increases, improving domestic architectural paint sales to DIY and residential repaint customers, and improving protective and marine product sales. During the quarter, net sales from stores open for more than 12 calendar months increased 8.9 percent over last year’s first quarter. Paint Stores Group segment profit increased to $68.9 million in the quarter from $47.8 million last year due primarily to selling price increases partially offset by raw material cost increases. Segment profit as a percent to net sales increased to 7.4 percent from 5.6 percent last year.
Net sales of the Consumer Group increased 1.0 percent to $294.9 million in the quarter. Segment profit increased to $41.1 million in the quarter from $37.5 million last year. Segment profit as a percent of net external sales increased to 13.9 percent from 12.8 percent last year.
The Global Finishes Group’s net sales stated in U.S. dollars increased 49.6 percent to $630.2 million in the quarter due primarily to acquisitions, higher paint sales volume, selling price increases and favorable currency translation rate changes. In the quarter, acquisitions and favorable currency translation rate changes increased net sales of the Global Finishes Group in U.S. dollars by 33.3 percent and 3.6 percent, respectively.
Commenting on the first quarter, Christopher M. Connor, Chairman and Chief Executive Officer, said, “Although domestic demand remains soft, we are encouraged by the improvement in domestic DIY and protective and marine sales in the Paint Stores Group and continued growth in architectural, protective and marine, OEM and automotive finishes sales in the Global Group. Our Consumer Group improved their operating results through disciplined cost management and selling price increases. Our operating segment management teams continue to control costs and implement price increases in an effort to keep pace with rising raw material costs.
“We continued to invest in our Paint Stores Group business by opening seven net new locations and staffing our stores to ensure quality customer service. For the year, we expect to open 50 to 60 net new stores. Our Global Finishes Group acquired three companies over the past twelve months, including Acroma and Sayerlack in Europe and Pinturas Condor in Ecuador. Although these acquisitions had a small impact on our first quarter consolidated net income, they expand our global reach and provide important assets to support our worldwide business. During the quarter, we used our cash to continue to buy shares of stock, and we increased the dividend rate to $.365 from $.36 last year. Our balance sheet remains flexible and is positioned for future acquisitions and investments in our business.
“For the second quarter, we anticipate that our consolidated net sales will increase eight to 13 percent compared to last year’s second quarter. We expect diluted net income per common share for the second quarter to be in the range of $1.65 to $1.75 per share compared to $1.64 per share in 2010. For the full year 2011, we expect consolidated net sales to increase above 2010 levels by a high-single-digit percentage. With annual sales at that level, we are reaffirming our guidance that diluted net income per common share for 2011 is expected to be in the range of $4.65 to $5.05 per share compared to $4.21 per share earned in 2010.”
Diluted net income per common share in the quarter increased 110 percent to $.63 per share from $.30 per share in 2010 due primarily to higher sales, expense control and a lower effective tax rate.
Net sales in the Paint Stores Group increased 9.2 percent to $929.3 million in the quarter due primarily to selling price increases, improving domestic architectural paint sales to DIY and residential repaint customers, and improving protective and marine product sales. During the quarter, net sales from stores open for more than 12 calendar months increased 8.9 percent over last year’s first quarter. Paint Stores Group segment profit increased to $68.9 million in the quarter from $47.8 million last year due primarily to selling price increases partially offset by raw material cost increases. Segment profit as a percent to net sales increased to 7.4 percent from 5.6 percent last year.
Net sales of the Consumer Group increased 1.0 percent to $294.9 million in the quarter. Segment profit increased to $41.1 million in the quarter from $37.5 million last year. Segment profit as a percent of net external sales increased to 13.9 percent from 12.8 percent last year.
The Global Finishes Group’s net sales stated in U.S. dollars increased 49.6 percent to $630.2 million in the quarter due primarily to acquisitions, higher paint sales volume, selling price increases and favorable currency translation rate changes. In the quarter, acquisitions and favorable currency translation rate changes increased net sales of the Global Finishes Group in U.S. dollars by 33.3 percent and 3.6 percent, respectively.
Commenting on the first quarter, Christopher M. Connor, Chairman and Chief Executive Officer, said, “Although domestic demand remains soft, we are encouraged by the improvement in domestic DIY and protective and marine sales in the Paint Stores Group and continued growth in architectural, protective and marine, OEM and automotive finishes sales in the Global Group. Our Consumer Group improved their operating results through disciplined cost management and selling price increases. Our operating segment management teams continue to control costs and implement price increases in an effort to keep pace with rising raw material costs.
“We continued to invest in our Paint Stores Group business by opening seven net new locations and staffing our stores to ensure quality customer service. For the year, we expect to open 50 to 60 net new stores. Our Global Finishes Group acquired three companies over the past twelve months, including Acroma and Sayerlack in Europe and Pinturas Condor in Ecuador. Although these acquisitions had a small impact on our first quarter consolidated net income, they expand our global reach and provide important assets to support our worldwide business. During the quarter, we used our cash to continue to buy shares of stock, and we increased the dividend rate to $.365 from $.36 last year. Our balance sheet remains flexible and is positioned for future acquisitions and investments in our business.
“For the second quarter, we anticipate that our consolidated net sales will increase eight to 13 percent compared to last year’s second quarter. We expect diluted net income per common share for the second quarter to be in the range of $1.65 to $1.75 per share compared to $1.64 per share in 2010. For the full year 2011, we expect consolidated net sales to increase above 2010 levels by a high-single-digit percentage. With annual sales at that level, we are reaffirming our guidance that diluted net income per common share for 2011 is expected to be in the range of $4.65 to $5.05 per share compared to $4.21 per share earned in 2010.”
