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Sherwin-Williams Sees Q1 Net Sales Grow

Friday, April 22, 2016

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While The Sherwin-Williams Company saw a slight dip in net sales for in its Global Finishes Group in the start of 2016, strong performance by the PaintStores Group helped push the company into a record Q1.

The company’s consolidated net sales rose to a record $2.57 billion in the quarter, up 5.1 percent from the same period a year ago, Sherwin-Williams reported Thursday (April 21).

Morikis
Images: Sherwin-Williams

Sherwin-Williams' President and CEO John G. Morikis says the report shows record sales and earnings per share.

Unfavorable currency translation rate changes nipped net sales by 2.8 percent in the quarter.

“We are pleased to report record sales and earnings per share from the continued positive sales volume and strong operating results of our Paint Stores Group and operating margin improvements in our Consumer and Global Finishes Groups,” said President and CEO John G. Morikis.

The company also recently announced plans to purchase the Valspar Corporation for approximately $11.3 billion, a deal which it expects to close by the end of the first quarter next year.

Paint Stores Group Ring Up

Sherwin-Williams Paint Stores Group saw a 10.5 percent increase in net sales, to $1.62 billion, in the quarter, due to increased sales volume across all end market segments.

Net sales from stores open for more than 12 calendar months increased by 9.4 percent in the quarter over last year’s comparable period. Group segment profit increased by $77 million, to $253.5 million, in the quarter.

The company says it continues to invest in this segment, opening 13 net new locations in the quarter.

commercial

Stronger architectural paint sales volume helped the Cleveland-based manufacturer report a record quarter, according to the company.

Sherwin-Williams branded products are sold exclusively through a fleet of more than 4,100 company-owned stores and facilities, while its other brands are sold through leading retailers, paint dealers, hardware stores and distributors.

Consumer Group Gain

The Consumer Group also posted a bright quarter, increasing net sales by 7.5 percent to $378.1 million in the quarter.

Sherwin-Williams attributes growth in this segment to the sales of its HGTV Home by Sherwin-Williams paint to Lowe’s stores.

Segment profit increased $64 million in the quarter from $55.4 million last year due primarily to improved operating efficiencies and higher volume sales.

Global Finishes Dip

The Global Finishes Group—comprised of protective and marine, OEM product finishes and automotive finishes—saw a slight decrease in sales for the first quarter.

Net sales decreased 3.3 percent to $454.2 million in the quarter, affected by currency translation rate changes, the company reported.

Segment profit, however, increased to $48.6 million from $38.9 million in the first quarter of last year. Unfavorable currency translation rate changes decreased profit by $3 million in the quarter.

Morikis said the segment “improved its operating results through improved operating efficiencies and good cost control.”

marine coatings

Despite a dip in net sales, the Global Finishes Group saw a $9.7 million increase in profit for the segment in Q1.

Net sales in the company’s Latin America Coatings Group dropped nearly 25 percent to $125.2 million. Unfavorable currency translation rate changes and volume declines took a toll on sales. Segment profit decreased in the quarter to a loss of $0.9 million from a profit of $9.5 million last year due primarily to rising raw material costs and unfavorable currency translation rate changes partially offset by selling price increases, the company said.

“The Latin America Coatings Group continues to manage through the negative effects of currency devaluation and weak end market demand in some geographies,” noted Morikis.

The Quarter, Year Ahead

For the second quarter, the company anticipates a low to mid-single digit percentage increase in net sales, compared to last year’s second quarter. That estimation would put diluted net income per common share in the range of $3.95 to $4.15 per share, compared to $3.70 earned in the second quarter of 2015.

“We anticipate costs related to the anticipated acquisition of Valspar to decrease diluted net income per common share by approximately $.15 per share in the second quarter 2016,” said Morikis.

For the full year, the company expects net sales to increase by a low single digit percentage compared to 2015.

“With annual sales at that level, we are raising our guidance that diluted net income per common share for 2016, excluding acquisition costs, will be in the range of $12.50 to $12.70 per share compared to $11.16 per share earned in 2015,” said Morikis, adding that expected costs related to the anticipated acquisition of Valspar would be in the $185 million to $205 million range for 2016.

   

Tagged categories: Architectural coatings; Business matters; Coatings manufacturers; Earnings reports; Economy; Marine Coatings; Market; Sherwin-Williams

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