The Sherwin-Williams Company (SHW) 8-K The Sherwin-Williams Company Reports 2019 Third Quarter Financial Results

EXHIBIT 99

NEWS:

The Sherwin-Williams Company        •        101 West Prospect Avenue        •         Cleveland, Ohio 44115        •        (216)566-2000

The Sherwin-Williams Company Reports 2019 Third Quarter Financial Results

• Consolidated net sales increased 2.9% in the quarter to $4.87 billion

• Net sales from stores in U.S. and Canada open more than twelve calendar months increased 8.1% in the quarter

• Diluted net income per share increased to $6.16 per share in the quarter compared to $3.72 per share in the third quarter 2018

• Third quarter 2019 includes a benefit from the resolution of the California public nuisance litigation, which increased earnings per share $.28, and charges for acquisition-related costs of $.77 per share; third quarter 2018 included charges for the California litigation and acquisition-related costs of $1.09 and $.87 per share, respectively

• Excluding acquisition-related costs and othernon-operating expenses, diluted net income per share increased to $6.65 per share in the quarter versus $5.68 per share in the third quarter 2018 on a comparable basis

• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 11.8% in the quarter to $919.3 million, or 18.9% of sales

• Increasing FY19 adjusted EPS guidance to $20.90 to $21.30 per share, excluding acquisition-related costs and othernon-operating expenses, versus $18.53 per share on a comparable basis in FY18

CLEVELAND, OHIO, October 22, 2019 - The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the third quarter ended September 30, 2019. Compared to the same period in 2018, consolidated net sales increased $136.2 million, or 2.9%, to $4.87 billion in the quarter and increased $316.1 million, or 2.3%, to $13.79 billion in nine months. The increase in the quarter was due primarily to higher paint sales volume in North American stores and selling price increases, partially offset by demand softness in some end markets outside the U.S. and unfavorable currency translation rate changes. Currency translation rate changes decreased consolidated net sales by 0.9% in the third quarter and 1.5% in the first nine months, respectively. Diluted net income per share increased to $6.16 per share in the third quarter compared to $3.72 per share in the third quarter 2018. Third quarter 2019 includes a benefit from the resolution of the California litigation, which increased earnings per share $.28, and a charge for acquisition-related costs of $.77 per share. Currency translation rate changes decreased diluted net income per common share in the quarter by $.11 per share. Third quarter 2018 diluted net income per share included charges for acquisition-related costs and the California litigation of $.87 and $1.09 per share, respectively. Diluted net income per share increased to $13.82 per share in the first nine months compared to $10.59 per share in the same period in 2018. The first nine months of 2019 includes charges for acquisition-related costs of $2.23 per share, a tax credit investment loss of $.79 per share, and a pension settlement expense of $.27 per share, partially offset by a benefit from the resolution of the California litigation of $.28 per share. Currency translation rate changes decreased diluted net income per common share in the first nine months of 2019 by $.21 per share. The first nine

months of 2018 included charges of $3.05, $1.09 and $.25 per share for acquisition-related costs, the California litigation and environmental expense provisions, respectively. During the third quarter of 2019, the Company reduced its accrual for the California litigation by $59.6 million to $76.7 million as a result of the final court approved agreement to resolve the litigation and the initial payment of $25.0 million to the plaintiffs in accordance with the agreement.

Net sales in The Americas Group increased 8.7% to $2.90 billion in the quarter and increased 5.9% to $7.81 billion in nine months due primarily to higher paint sales across all end markets in North American stores and selling price increases. Net sales from stores in the U.S. and Canada open for more than twelve calendar months increased 8.1% in the quarter and increased 5.5% in nine months over last year’s comparable periods. Segment profit increased $85.9 million to $663.7 million in the quarter and increased $122.1 million to $1.61 billion in nine months due primarily to higher paint sales volume and selling price increases. Segment profit as a percent of net sales increased in the quarter to 22.9% from 21.7% in the third quarter last year. In the first nine months, segment profit as a percent of net sales increased to 20.6% compared to 20.1% in the same period last year.

Net sales of the Consumer Brands Group decreased 11.9% to $678.5 million in the quarter and decreased 3.0% to $2.14 billion in nine months. The decrease in the quarter was due primarily to comparisons toload-in sales for a new customer program in 2018, the divestiture of the Guardsman furniture protection business in the third quarter of 2018 and softer sales outside of North America in some end markets, partially offset by selling price increases and higher volume sales to most of the Group’s retail customers. The decrease in the nine months was due primarily to the divestiture of the Guardsman furniture protection business in the third quarter of 2018, softer sales outside of North America in some end markets and unfavorable currency translation rate changes, partially offset by selling price increases and higher volume sales related to a new customer program. Currency translation rate changes decreased Group net sales by 1.3% in the nine months. Segment profit increased to $114.9 million in the quarter from $83.9 million in the third quarter last year due primarily to improved supply chain efficiencies and good cost control, partially offset by incremental investments in the new customer program. Segment profit as a percent of net external sales increased in the quarter to 16.9% from 10.9% in the third quarter last year. Acquisition-related amortization expense in the quarter was $22.6 million compared to $26.0 million in the third quarter last year. In the first nine months, segment profit increased to $343.5 million from $249.1 million in the comparable period last year primarily due to improved supply chain efficiencies, moderating raw material costs, good cost control and reduced impacts of acquisition-related amortization expense, partially offset by unfavorable currency translation rate changes. Segment profit as a percent of net external sales increased in the nine months to 16.1% from 11.3% in the same period last year. Acquisition-related amortization expense through nine months was $68.0 million compared to $86.4 million in the same period last year. Currency translation rate changes decreased segment profit $3.3 million in nine months.

The Performance Coatings Group’s net sales decreased 0.3% to $1.29 billion in the quarter and decreased 1.4% to $3.84 billion in nine months. The decrease in both the quarter and nine months was due primarily to softer sales outside of North America in some end markets and unfavorable currency translation rate changes, partially offset by selling price increases. Currency translation rate changes decreased Group net sales by 1.6% and 2.7% in the quarter and nine months, respectively. Segment profit increased in the quarter to $137.4 million from $104.9 million in the third quarter last year due primarily to moderating raw material costs and good cost control. Segment profit as a percent of net external sales increased in the quarter to 10.7% from 8.1% in the third quarter last year. Acquisition-related amortization expense in the quarter was $54.3 million compared to $55.4 million in the third quarter last year. Segment profit increased in the first nine months to $386.5 million from $339.8 million in the same period last year due primarily to moderating raw material costs and good cost control, partially offset by unfavorable currency translation rate changes. Currency translation rate changes decreased segment profit $10.5 million in the nine months. Segment profit as a percent of net external sales increased in the first nine months to 10.1% from 8.7% in the same period last year. Acquisition-related amortization expense for the first nine months was $162.4 million compared to $160.6 million in the same period last year.

Net operating cash improved $230.2 million to $1.66 billion in the nine months. This strong cash generation allowed us to return cash of approximately $892.6 million to our shareholders in the form of dividends and share repurchases. The Company purchased 1,325,000 shares of its common stock in the first nine months, and at September 30, 2019, the Company had remaining authorization to purchase 8.80 million shares of its common stock through open market purchases.

Commenting on the third quarter, John G. Morikis, Chairman and Chief Executive Officer, said, “Sherwin-Williams delivered strong results in the quarter as adjusted earnings per share increased 17.1% year-over-year to $6.65. Our performance in the quarter was driven by continued strength in North American architectural paint markets, which offset choppiness in some industrial end markets. U.S. and Canada same store sales growth was 8.1% as our pro painting customers continued to report strong demand. As a result of this strong volume and operating efficiencies, consolidated gross margin expanded over 300 basis points to 45.7%. Adjusted EBITDA margin in the quarter improved 150 basis points to 18.9% compared to the prior year.

“For the second consecutive quarter, all three operating segments increased segment profit and margin compared to the same period last year. In The Americas Group, our North American paint stores generated strong growth in all regions and all customer end markets, led by double digit growth in residential repaint. With the strong volume, the team delivered incremental operating margin of approximately 37%, and we have opened 31 net new stores year to date. In the Consumer Brands Group, sales decreased more than expected due primarily to softness in some international markets. In North America, we continued to strengthen our relationships with our largest retail partners. The team has done a nice job of controlling selling expenses, while continuing to realize synergies and improving year over year supply chain costs. The Performance Coatings Group was impacted by slowing industrial demand in some end markets, leading to slightly lower sales in the quarter. Despite the softer than expected top line, the team remained focused on controlling selling expenses, and with moderating raw material costs, adjusted segment profit and margin increased year over year.

“For the fourth quarter, we anticipate our consolidated net sales will increase by a low single digit percentage compared to last year’s fourth quarter. For the full year 2019, we expect our consolidated net sales will increase by a low single digit percentage compared to the full year 2018. We are updating our full year 2019 diluted net income per share guidance to be in the range of $17.07 to $17.47 per share. Diluted net income per share in 2018 was $11.67 per share, including a charge of $4.15 per share for acquisition-related costs and a charge of $2.71 per share fornon-operating expenses. We are increasing our full year 2019 adjusted diluted net income per share guidance to be in the range of $20.90 to $21.30 per share, excluding charges for acquisition-related costs andnon-operating expenses, compared to $18.53 per share for the full year 2018 on a comparable basis.”

The Company will conduct a conference call to discuss its financial results for the third quarter, and its outlook for the fourth quarter and full year 2019, at 11:00 a.m. EDT on Tuesday, October 22, 2019. The conference call will be webcast simultaneously in the listen only mode by Issuer Direct. To listen to the webcast on the Sherwin-Williams website,www.sherwin.com, click on About Us, choose Investor Relations, then select Press Releases and click on the webcast icon following the reference to the October 22nd release. The webcast will also be available at Issuer Direct’s Investor Calendar website,www.investorcalendar.com. An archived replay of the live webcast will be available atwww.sherwin.com beginning approximately two hours after the call ends and will be available until November 8, 2019 at 5:00 p.m. EST.

Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paints, coatings and related products to professional, industrial, commercial, and retail customers. Sherwin-Williams manufactures products under well-known brands such as Sherwin-Williams^®, Valspar^®, HGTV HOME^® by Sherwin-Williams,Dutch Boy^®, Krylon^®, Minwax^®, Thompson’s^® Water Seal^®, Cabot^® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams^® branded products are sold exclusively through a chain of more than 4,900 company-operated stores and facilities, while the company’s other brands are sold through leading mass merchandisers, home centers,

independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visitwww.sherwin.com.

Regulation G Reconciliation

Management of the Company believes that investors’ understanding of the Company’s operating performance is enhanced by the disclosure of diluted net income per share excluding Valspar acquisition-related costs and othernon-operating expenses. This adjusted earnings per share measurement is not in accordance with U.S. generally accepted accounting principles (GAAP). It should not be considered a substitute for earnings per share computed in accordance with U.S. GAAP and may not be comparable to similarly titled measures reported by other companies. The following tables reconcile diluted net income per share computed in accordance with U.S. GAAP to adjusted diluted net income per share.

	Three Months			Nine Months			Year Ended
	Ended			Ended			December 31, 2019
	September 30,			September 30,			(guidance)
	2019			2019			Low			High
Diluted net income per share	$	6.16		$	13.82		$	17.07		$	17.47
California litigation expense provision reduction		(.28	)		(.28	)		(.28	)		(.28	)
Tax credit investment loss					.79			.79			.79
Pension plan settlement expense					.27			.27			.27
Othernon-operating expenses		(.28	)		.78			.78			.78
Integration costs(1)		.14			.33			.51			.51
Acquisition-related amortization expense(2)		.63			1.90			2.54			2.54
Total acquisition-related costs		.77			2.23			3.05			3.05
Adjusted diluted net income per share	$	6.65		$	16.83		$	20.90		$	21.30

	Three Months		Nine Months		Year
	Ended		Ended		Ended
	September 30,		September 30,		December 31,
	2018		2018		2018
Diluted net income per share	$	3.72	$	10.59	$	11.67
California litigation expense		1.09		1.09		1.09
Environmental expense provision				.25		1.32
Pension plan settlement expense						.30
Othernon-operating expenses		1.09		1.34		2.71
Integration costs(1)		.22		1.08		1.55
Acquisition-related amortization expense(2)		.65		1.97		2.60
Total acquisition-related costs		.87		3.05		4.15
Adjusted diluted net income per share	$	5.68	$	14.98	$	18.53

(1) Integration costs consist primarily of professional service expenses, salaries and other employee-related expenses dedicated directly to the integration effort, and severance expense. These costs are included in Selling, general and administrative and other expenses and Cost of goods sold.

(2) Acquisition-related amortization expense consists primarily of the amortization of intangible assets related to the Valspar acquisition and is included in Amortization.

Management of the Company believes that investors’ understanding of the Company’s operating performance is enhanced by the disclosure of earnings before interest, taxes, depreciation and amortization (EBITDA). This measurement is not in accordance with U.S. GAAP. It should not be considered a substitute for net income or net operating cash. The following table reconciles net income computed in accordance with U.S. GAAP to EBITDA.

Thousands of dollars

	Three Months		Three Months		Three Months			Nine Months
	Ended		Ended		Ended			Ended
	March 31, 2019		June 30, 2019		September 30, 2019			September 30, 2019
Net income	$	245,237	$	471,003	$	576,438		$	1,292,678
Interest expense		90,994		89,198		85,282			265,474
Income taxes		53,617		204,698		133,395			391,710
Depreciation		64,716		65,032		65,209			194,957
Amortization		78,771		78,081		77,548			234,400
EBITDA		533,335		908,012		937,872			2,379,219
California litigation expense provision reduction						(34,667	)		(34,667	)
Pension plan settlement expense		32,410							32,410
Integration costs		9,345		13,519		16,071			38,935
Adjusted EBITDA	$	575,090	$	921,531	$	919,276		$	2,415,897
	Three Months		Three Months		Three Months			Nine Months
	Ended		Ended		Ended			Ended
	March 31, 2018		June 30, 2018		September 30, 2018			September 30, 2018
Net income from continuing operations	$	250,127	$	403,604	$	354,027		$	1,007,758
Interest expense		91,547		93,507		92,281			277,335
Income taxes		53,459		134,482		61,926			249,867
Depreciation		71,591		72,542		67,381			211,514
Amortization		85,049		73,893		80,077			239,019
EBITDA from continuing operations		551,773		778,028		655,692			1,985,493
California litigation expense provision						136,333			136,333
Environmental expense provision				32,018					32,018
Integration costs		30,423		39,273		30,177			99,873
Adjusted EBITDA	$	582,196	$	849,319	$	822,202		$	2,253,717

This press release contains certain “forward-looking statements,” as defined under U.S. federal securities laws, with respect to sales, earnings and other matters. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “could,” “plan,” “goal,” “potential,” “seek,” “intend” or “anticipate” or the negative thereof or comparable terminology. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions. Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements and from the Company’s historical results and experience. These risks, uncertainties and other factors include such things as: general business conditions; the Company’s ability to successfully integrate past and future acquisitions into its existing operations, including Valspar, as well as the performance of the businesses acquired; risks inherent in the achievement of additional anticipated cost synergies resulting from the acquisition of Valspar and the timing thereof; strengths of retail and manufacturing economies and the growth in the coatings industry; changes in the Company’s relationships with customers and suppliers; changes in raw material availability and pricing; unusual weather conditions; and other risks, uncertainties and factors described from time to time in the Company’s reports filed with the Securities and Exchange Commission. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Investor Relations Contacts:	Media Contacts:
Jim Jaye	Julie Young
Senior Vice President – Investor Relations & Corporate Communications	Vice President – Global Corporate Communications
Sherwin-Williams	Sherwin-Williams
Direct: 216.515.8682	Direct: 216.515.8682
james.r.jaye@sherwin.com	julie.s.young@sherwin.com
Eric Swanson	Mike Conway
Vice President – Investor Relations	Director – Corporate Communications
Sherwin-Williams	Sherwin-Williams
Direct: 216.566.2766	Direct: 216.515.4393
eric.r.swanson@sherwin.com	mike.conway@sherwin.com

The Sherwin-Williams Company and Subsidiaries

Statements of Consolidated Income (Unaudited)

Thousands of dollars, except per share data    

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net sales	$	4,867,650		$	4,731,470		$	13,786,371		$	13,470,272
Cost of goods sold		2,642,096			2,721,066			7,644,305			7,734,393
Gross profit		2,225,554			2,010,404			6,142,066			5,735,879
Percent to net sales		45.7	%		42.5	%		44.6	%		42.6	%
Selling, general and administrative expenses		1,345,171			1,273,066			3,920,476			3,795,492
Percent to net sales		27.6	%		26.9	%		28.4	%		28.2	%
Other general expense - net		12,032			11,526			18,696			41,495
Amortization		77,548			80,077			234,400			239,019
Interest expense		85,282			92,281			265,474			277,335
Interest and net investment income		(637	)		(555	)		(1,588	)		(2,732	)
California litigation expense		(34,667	)		136,333			(34,667	)		136,333
Other expense (income) - net		30,992			1,723			54,887			(8,688	)
Income before income taxes		709,833			415,953			1,684,388			1,257,625
Income taxes		133,395			61,926			391,710			249,867
Net income	$	576,438		$	354,027		$	1,292,678		$	1,007,758
Net income per share - basic	$	6.28		$	3.80		$	14.07		$	10.82
Net income per share - diluted	$	6.16		$	3.72		$	13.82		$	10.59
Average shares outstanding - basic		91,823,573			93,099,714			91,850,565			93,121,900
Average shares and equivalents outstanding - diluted		93,604,260			95,135,257			93,510,104			95,170,768

The Sherwin-Williams Company and Subsidiaries

Business Segments (Unaudited)

Thousands of dollars

	2019					2018
	Net		Segment			Net		Segment
	External		Profit			External		Profit
	Sales		(Loss)			Sales		(Loss)
Three Months Ended September 30:
The Americas Group	$	2,898,158	$	663,671		$	2,665,663	$	577,738
Consumer Brands Group		678,473		114,891			770,543		83,941
Performance Coatings Group		1,290,247		137,432			1,294,579		104,868
Administrative		772		(206,161	)		685		(350,594	)
Consolidated totals	$	4,867,650	$	709,833		$	4,731,470	$	415,953
Nine Months Ended September 30:
The Americas Group	$	7,809,059	$	1,607,143		$	7,371,135	$	1,485,027
Consumer Brands Group		2,137,447		343,482			2,204,668		249,072
Performance Coatings Group		3,838,002		386,452			3,891,678		339,828
Administrative		1,863		(652,689	)		2,791		(816,302	)
Consolidated totals	$	13,786,371	$	1,684,388		$	13,470,272	$	1,257,625

The Sherwin-Williams Company and Subsidiaries

Consolidated Financial Position (Unaudited)

Thousands of dollars    

	September 30,
	2019			2018
Cash	$	189,645		$	181,511
Accounts receivable		2,479,043			2,584,280
Inventories		1,824,969			1,802,418
Other current assets		414,082			410,913
Short-term borrowings		(435,699	)		(650,134	)
Current portion of long-term debt		(429,569	)		(310,561	)
Current portion of operating lease liabilities		(364,379	)
Accounts payable		(2,028,402	)		(2,165,724	)
Other current liabilities		(1,607,741	)		(1,715,646	)
Working capital		41,949			137,057
Net property, plant and equipment		1,798,301			1,766,354
Deferred pension assets		33,468			305,979
Goodwill and intangibles		11,847,956			12,253,184
Operating leaseright-of-use assets		1,659,010
Othernon-current assets		617,865			617,147
Long-term debt		(8,043,030	)		(8,710,831	)
Postretirement benefits other than pensions		(260,968	)		(277,857	)
Deferred income taxes		(1,096,854	)		(1,356,566	)
Long-term operating lease liabilities		(1,352,246	)
Other long-term liabilities		(1,222,591	)		(803,942	)
Shareholders’ equity	$	4,022,860		$	3,930,525

Selected Information (Unaudited)

Thousands of dollars

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
The Americas Group - net new stores		11			21			31			43
The Americas Group - total stores		4,727			4,663			4,727			4,663
Performance Coatings Group - net new branches					(3	)		(1	)		(6	)
Performance Coatings Group - total branches		281			284			281			284
Depreciation	$	65,209		$	67,381		$	194,957		$	211,514
Capital expenditures		96,946			64,358			224,825			166,184
Cash dividends		105,102			80,898			314,859			242,539
Amortization of intangibles		77,548			80,077			234,400			239,019
Significant components of Other general expense - net:
Provision for environmental related matters - net		10,602			2,299			17,874			34,317
Loss on sale or disposition of assets		1,430			9,227			822			7,178
Significant components of Other expense (income) - net:
Pension plan settlement expense								32,410
Extinguishment of Senior Notes expense		14,754						14,754
Dividend and royalty income		(2,253	)		(2,995	)		(7,830	)		(5,967	)
Expense from banking activities		2,622			2,694			7,973			7,380
Foreign currency transaction related losses		16,394			6,157			12,458			9,321
Other(1)		(525	)		(4,133	)		(4,878	)		(19,422	)
Intersegment transfers:
Consumer Brands Group		995,115			936,281			2,768,947			2,657,614
Performance Coatings Group		29,495			4,474			88,331			16,888
The Americas Group		(5	)		233			1			506
Administrative		3,317			3,390			9,655			9,851

(1) Consists of items of revenue, gains, expenses and losses unrelated to the primary business purpose of the Company. No items are individually significant.