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Sherwin-Williams


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Sales Nail a Q3 Record for Sherwin

Wednesday, October 29, 2014

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Protective, marine, automotive and OEM coatings all did their part, but it was the architectural business that ruled Sherwin-Williams' third quarter, ringing up a record in the process, the manufacturer reported Tuesday (Oct. 28).

Net sales in the Paint Stores Group increased by 15.0 percent to $2.03 billion for the quarter and by 16.1 percent to $5.27 billion in the first nine months of the year, the Cleveland paint and coatings maker said.

Overall, consolidated net sales increased by 10.6 percent in the quarter, to a record $3.15 billion.

Record Sales and Share Prices

Much of that showing came from the Paint Stores Group, where net sales from stores open more than one year increased by 9.6 percent for the quarter.

S-W Paint Stores
Sherwin-Williams via SEC.gov

Sherwin-Williams had reason to smile after its third-quarter showing by the Paint Stores Group.

“We are pleased to report record sales and earnings per share in the third quarter and first nine months of 2014 on the continued positive sales volume and strong operating results of our Paint Stores Group," said Sherwin-Williams chairman and CEO Christopher M. Connor.

"The Paint Stores Group architectural volume growth was positive across all end market segments."

The company added 51 net stores in the first nine months of 2014, Connor added.

Counting in Comex

Connor said that the company's acquisition of the Comex Group "continues to perform better than expected." The Cleveland company bought the North American business of Mexico's largest paint maker in September 2013; Mexican regulators quashed an effort by Sherwin-Williams to buy Comex's business in Latin America as well.

Sherwin-Williams reported a loss of 18 cents per share from the Comex book for the first nine months of the year and said it expected a fourth-quarter loss of about 10 cents per share.

ConsumerPaintStores
GlobalLatinGroup
Sherwin-Williams

Sherwin-Williams offered this sales breakdown in 2013. Clockwise from top: the Paint Stores Group, Consumer Group, Latin America Coatings Group, and Global Finishes Group.

Despite the loss, Sherwin-Williams' share price increased to a record $7.39 for the nine-month period and rose by 31.4 percent to a record $3.35 for the third quarter.

Other segments reported as follows.

Consumer Group

The Consumer Group sells private-label and branded products through retailers across North America and parts of Europe. It also operates the global supply chain for paints, coatings and other products.

Net sales of the Consumer Group increased by 5.0 percent to $385.2 million in the quarter and by 7.0 percent to $1.14 billion in nine months, due primarily to acquisitions and higher-volume sales to most retail customers.

Segment profit increased for both the quarter and first nine months, driven by higher volumer sales and "improved operating efficiencies," the company said. Acquisitions decreased segment profit $1.9 million in the quarter.

Global Finishes Group

The Global Finishes Group produces OEM, protective, marine and automotive coatings and finishes for customers in more than 100 countries.

SW Global Finishes
Sherwin-Williams via SEC.gov

Net sales for Global Finishes, which includes protective and marine coatings, rose 5.7 percent for the third quarter of 2014, compared to the prior-year period. Nine-month sales rose 4.7 percent.

Net sales for the group increased 5.7 percent for the quarter on higher volume sales and selling price increases; nine-month sales increased 4.7 percent to $1.58 billion, due primarily to selling price increases.

Segment profit increased in the quarter to $60.8 million from $44.5 million last year. Over nine months, segment profit increased to $162.1 million from $132.9 million. Connor attributed the segment's improved operating margins to greater operating efficiencies.

Unfavorable currency translation rates shaved both the sales and profit figures slightly.

Latin America Coatings Group

The Latin America Coatings Group sells architectural paints, industrial coatings and related products throughout Latin America.

Net sales for the group declined 4.0 percent year-over-year for the quarter and 7.6 percent for nine months, due to unfavorable currency translation rates and lower sales volume.

S-W_Q3_9Mo_2014
Sherwin-Williams

Nevertheless, segment profit increased in the quarter to $11.8 million from a loss of $1.0 million last year; the nine-month profit was $27.4, up from $20.7 million last year.

Connor said the Latin America Coatings Group "is minimizing the impact on its core operating margins through selling price increases and good cost control, although we are not satisfied with the results."

Looking Ahead

For the fourth quarter, Sherwin-Williams expects consolidated net sales to increase six to eight percent from the prior-year period. That would put the share price at $1.30 to $1.40, compared with Q4 of 2013, he said.

The outlook includes the expected 10-cent loss from Comex.

For the full year 2014, Connor said, the company expects net sales to increase nine to 11 percent compared to full-year 2013. At that level, the company expects a share price of $8.70 to $8.80 for 2014, compared with $7.26 in 2013.

Full details, including the third-quarter conference call webcast, are available on Sherwin-Williams' Investor Relations page.

   

Tagged categories: Architectural coatings; Earnings reports; Marine Coatings; OEM (Original Equipment Manufacturers); Paint and Coating Sales; Sherwin-Williams

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