The Sherwin-Williams Company Reports 2022 First Quarter Financial Results

Ein Geschäft von Sherwin-Williams. © RiverNorthPhotography / iStock Unreleased / Getty Images

PR Newswire

CLEVELAND, April 26, 2022

CLEVELAND, April 26, 2022 /PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the first quarter ended March 31, 2022. All comparisons are to the first quarter of the prior year, unless otherwise noted.

SUMMARY

Consolidated net sales increased 7.4% in the quarter to $5.00 billion

Net sales from stores in U.S. and Canada open more than twelve calendar months increased 3.8% in the quarter

Diluted net income per share decreased to $1.41 per share in the quarter compared to $1.51 per share in the first quarter 2021

Adjusted diluted net income per share decreased to $1.61 per share in the quarter compared to $2.06 per share in the first quarter 2021

Reaffirming FY22 diluted net income per share guidance in the range of $8.40 to $8.80 per share, including acquisition-related amortization expense of $0.85 per share

Reaffirming adjusted diluted net income per share guidance in the range of $9.25 to $9.65 per share

CEO REMARKS

"Our team delivered results in line with our expectations in an environment characterized by strong demand, ongoing cost inflation, and choppy raw material availability that improved meaningfully in the final weeks of the quarter," said Chairman and Chief Executive Officer, John G. Morikis. "Sales grew 7.4% against a double-digit comparison a year ago, and we delivered sequential improvement in consolidated gross margin and segment margins in all of our businesses. Our margins remained under pressure on a year over year basis, as significant pricing actions previously announced in all businesses have not yet fully caught up to offset highly elevated raw material costs.

"Throughout the quarter, we remained focused on providing differentiated solutions for our customers, and we continue to see opportunity and momentum in every business. In The Americas Group, sales increased in all professional customer segments, led by protective and marine, property maintenance, new residential and residential repaint, and backlogs remain strong. While our Consumer Brands Group faced a challenging prior year comparison, the Group's sales in North America were nearly flat as we continued to focus on supporting key retail partners and growing our Pros Who Paint initiative. The Performance Coatings Group delivered double-digit sales growth driven by both strong volume and pricing. All businesses and regions in the Group generated growth, led by our packaging and coil divisions. At quarter end, our architectural inventory gallons significantly improved in our distribution centers and our North American paint stores."

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FIRST QUARTER CONSOLIDATED RESULTS

	Three Months Ended March 31,
	2022	2021	$ Change	% Change
Net sales	$ 4,998.7	$ 4,656.0	$ 342.7	7.4 %
Income before income taxes	$ 461.1	$ 509.0	$ (47.9)	(9.4) %
As a % of sales	9.2 %	10.9 %
Net income per share - diluted	$ 1.41	$ 1.51	$ (0.10)	(6.6) %
Adjusted net income per share - diluted	$ 1.61	$ 2.06	$ (0.45)	(21.8) %

Consolidated net sales increased primarily due to selling price increases in all segments and higher product sales volume in the Performance Coatings Group. These increases were partially offset by lower sales volume in the Consumer Brands and The Americas Groups, primarily due to challenging prior year comparisons, along with anticipated raw material availability challenges which are largely behind us. Income before income taxes decreased primarily due to lower sales volumes in the Consumer Brands Group and The Americas Group and higher raw material costs across all three segments, partially offset by selling price increases and SG&A spending controls.

Diluted net income per share included a charge of $0.20 per share for acquisition-related amortization expense.

FIRST QUARTER SEGMENT RESULTS

The Americas Group ("TAG")

	Three Months Ended March 31,
	2022	2021	$ Change	% Change
Net sales	$ 2,644.1	$ 2,503.1	$ 141.0	5.6 %
Same-store sales ⁽¹⁾	3.8 %	8.2 %
Segment profit	$ 445.4	$ 480.0	$ (34.6)	(7.2) %
Reported segment margin	16.8 %	19.2 %


⁽¹⁾	Same-store sales represents net sales from stores in U.S. and Canada open more than twelve calendar months.

Net sales in TAG increased due primarily to sales increases in all professional contractor end markets, partially offset by challenging prior year sales volume comparisons in residential repaint and new residential. The anticipated raw material availability challenges mostly impacted DIY volume, as we prioritized serving our professional painting contractors. TAG segment profit decreased due primarily to lower paint sales volume in all professional architectural contractor and DIY end markets and increased raw material costs, partially offset by selling price increases.

Consumer Brands Group ("CBG")

	Three Months Ended March 31,
	2022	2021	$ Change	% Change
Net sales	$ 699.4	$ 778.1	$ (78.7)	(10.1) %
Segment profit	$ 64.9	$ 143.7	$ (78.8)	(54.8) %
Reported segment margin	9.3 %	18.5 %
Adjusted segment profit ⁽¹⁾	$ 84.3	$ 166.5	$ (82.2)	(49.4) %
Adjusted segment margin	12.1 %	21.4 %


⁽¹⁾	Adjusted segment profit excludes the impact of acquisition-related amortization expense. Acquisition-related amortization expense in CBG was $19.4 million and $22.8 million in the first quarter of 2022 and 2021, respectively.

Net sales in CBG decreased due primarily to the Wattyl divestiture, lower sales outside of North America, and challenging prior year comparisons, partially offset by selling price increases. CBG segment profit decreased primarily due to lower sales volume, increased raw material costs and supply chain inefficiencies, partially offset by selling price increases. Acquisition-related amortization expense reduced segment profit as a percent of net external sales by 280 basis points compared to 290 basis points in the first quarter of 2021.

Performance Coatings Group ("PCG")

Three Months Ended March 31,

2022

2021

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