Sherwin-Williams Earns $2.09 per Share

This morning, Sherwin-Williams (SHW) reported Q3 earnings of $2.09 per share. That missed Wall Street’s consensus by one penny per share.

Quarterly sales increased 0.5% to $5.15 billion. The company estimated that “raw material availability” hurt sales by a high-single-digit percentage.

“Demand remains strong across our pro architectural and industrial end markets; however, results in the quarter were significantly impacted by ongoing and industry-wide raw material supply chain challenges,” said Chairman, President and Chief Executive Officer, John G. Morikis. “Consolidated net sales increased less than 1%, as raw material availability negatively impacted total sales by a high single digit percentage, of which approximately 75% of the impact was in The Americas Group. The raw material availability challenges combined with higher raw material costs significantly pressured gross margins in the quarter. We continue to implement price increases to offset higher raw material costs across the business and are confident margins will recover as inflation headwinds eventually subside. Despite the near-term margin pressure, cash flow generation remained strong during the quarter, enabling us to invest in long-term strategic growth initiatives, open 19 new stores, announce two acquisitions and purchase 1.675 million shares.

“In The Americas Group, underlying demand in our professional architectural businesses remains robust. We expect delayed projects to be completed as raw material availability improves, and our team is aggressively pursuing additional business. In the Consumer Brands Group, our sales remained down double-digits, driven by difficult comparisons to the prior year, consumers returning to the workplace, raw material availability issues and the divestiture of the Wattyl business. Growth in the Pros Who Paint category in this segment was not enough to offset the lower North America DIY demand and raw material availability challenges. In the Performance Coatings Group, all businesses and regions delivered growth, most by double digit percentages.”

Here’s how the quarter breaks down. Diluted net income was $1.88 per share. There’s another 21 cents per share from an acquisition-related amortization expense. That adds up to $2.09 per share which is down from $2.76 per share for last year’s Q3.

The good news is that Sherwin is standing by its full-year guidance of $8.35 to $8.55 per share.

Posted by on October 26th, 2021 at 10:53 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.