Sherwin-Williams Lowers Guidance

The big banks kicked off Q4 earnings season this morning, and so far, they’ve soundly beaten expectations. Wells Fargo (WFC) earned $1.38 per share which was 26 cents more than Wall Street had been expecting.

Citigroup’s (C) beat was even bigger. For Q4, the bank made $1.98 per share. That beat by 61 cents per share.

BlackRock (BLK) made $10.42 per share compared with estimates of $10.15 per share.

The only dud was JP Morgan (JPM). They made $2.86 per share versus estimates of $3.01 per share. Still, the bank had net income of $10.4 billion. The shares are down about 5% this morning.

Sherwin-Williams (SHW) won’t report earnings until January 27, but the paint people warned that results will be below expectations. Sherwin blamed “slower than expected improvement in raw material availability and COVID-related labor headwinds in December.”

The company released preliminary results. They said Q4 sales rose by 6.1% and earnings were $1.15 per share which includes 20 cents of acquisition-related amortization expenses. Wall Street had been expecting $1.69 per share. For the year, that brings earnings to $8.15 per share.

“While we met our consolidated fourth quarter net sales guidance and demand remains robust, we are disappointed in our weaker than expected earnings results in the quarter,” said Chairman, President and Chief Executive Officer, John G. Morikis. “Our lower than expected earnings relative to our prior guidance is related to a shortfall in The Americas Group, where sales were below our guidance due to slower than expected improvement in raw material availability and COVID-related labor headwinds in December. While availability of some raw materials has improved slightly, others including select resins and additives specific to our professional contractor products remain in tight supply. Logistics and transportation issues have further impacted the supply chain. Additionally, we faced meaningful labor challenges in The Americas Group in December related to the COVID Omicron variant, as our workforce, including store managers, field sales reps and drivers, experienced reduced staff availability and store hours in some locations. Many of our suppliers and customers have also reported labor-related impacts due to the ongoing COVID resurgence. Sales in our Consumer Brands Group exceeded expectations, driven primarily by non-paint products. Performance Coatings Group’s top line results also exceeded expectations and were strong in all businesses and regions.

“As we enter 2022, demand remains strong across the majority of our end markets, though we expect raw material availability and COVID-related issues to persist through the first quarter. Raw material and other costs remain elevated, and we continue to respond with pricing actions in every Group to offset higher costs, including a 12% price increase in The Americas Group effective February 1st. We have continued to invest in our business, including adding 50 million gallons of incremental architectural capacity that is now online. Additionally, we opened 79 paint stores in the U.S. and Canada during 2021, including 32 in the fourth quarter. We remain highly confident in our strategy, our people, and our ability to emerge as an even stronger Company following the current near-term disruptions.”

SHW is currently down about 3%.

Posted by on January 14th, 2022 at 10:28 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.