Sherwin-Williams Earns $5.68 per Share

Sherwin-Williams (SHW) made $5.68 per share for Q3. That’s seven cents below Wall Street’s estimate.

Consolidated net sales increased 5.0% in the quarter to $4.73 billion.

Net sales from stores in U.S. and Canada open more than twelve calendar months increased 5.2% in the quarter.

Diluted net income per share increased 11.7% to $3.72 per share in the quarter compared to $3.33 per share in the third quarter of 2017. Third quarter 2018 included a charge for the California public nuisance litigation and acquisition-related costs of $1.09 and $0.87 per share, respectively, and third quarter 2017 diluted net income per share included acquisition-related costs of $1.42 per share.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from continuing operations increased 16.9% in the nine months to $1.99 billion.

Narrowing FY18 adjusted EPS guidance to $19.05 to $19.20 per share, excluding acquisition-related costs, the charge for the California litigation and environmental provisions, compared to $15.07 per share on a comparable basis in FY17.

Commenting on the third quarter, John G. Morikis, Chairman, President and Chief Executive Officer, said, “We continue to make great progress on the integration of Sherwin-Williams and Valspar into a faster growing, more profitable enterprise, but our results in the third quarter don’t fully reflect that progress. Revenue growth slowed from the pace set in the second quarter, due primarily to slower growth in some North American architectural businesses, a sequential slow-down in some of our industrial businesses in China and Europe and unfavorable currency translation rate changes. The price increases implemented over the past 12 months have largely kept pace with accelerating raw material inflation on a consolidated basis, but some of our Performance Coatings businesses continue to lag in that effort. During the quarter, our Global Supply Chain team incurred incremental costs in an effort to keep pace with load-in demand during what is traditionally our peak sales volume quarter. These unfavorable impacts were mostly offset by a lower than anticipated effective tax rate on both a reported and adjusted basis. Our effective tax rates on reported net income and adjusted net income were 14.9 percent and 18.5 percent, respectively. While our results in the quarter fell short of our initial expectations, we remain confident in, and excited about, the long term value created by the combination of these two great companies.

“For the fourth quarter, we anticipate our consolidated net sales will increase a mid-single digit percentage compared to last year’s fourth quarter. For the full year 2018, we expect our consolidated net sales will increase by a high teen percentage, including incremental Valspar sales of $1.85 billion for the first five months of 2018, compared to the full year 2017. With annual sales at this level, we are updating our full year 2018 diluted net income per share to be in the range of $13.85 to $14.00 per share, including charges of $3.86 per share for acquisition-related costs, $1.09 per share for the California litigation, and $.25 per share for environmental expense provisions. Diluted net income per share in 2017 was $18.67 per share, including a one-time benefit of $7.04 per share from deferred income tax reductions, a one-time charge of $.44 per share for discontinued operations and a charge of $3.00 per share for acquisition-related costs. The incremental supply chain costs incurred in the third quarter make it unlikely we will reach the higher end of the full year adjusted diluted net income per share range provided last quarter. We are therefore narrowing our full year 2018 adjusted diluted net income per share to be in the range of $19.05 to $19.20 per share, excluding acquisition costs, the charge for the California litigation, and environmental expense provisions, compared to $15.07 per share on a comparable basis in 2017. We now expect our 2018 effective tax rate to be approximately nineteen to twenty percent.”

Posted by on October 25th, 2018 at 7:36 am


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