SHW - Earnings call transcript Q4 2017 | The Sherwin-Williams Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Thank you for joining The Sherwin-Williams Company's review of Fourth Quarter and Full Year 2017 Results and Expectations for 2018. With us on today's call are John Morikis, Chairman, President and CEO; Al Mistysyn, Senior Vice President, Finance and CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Bob Wells, Senior Vice President, Corporate Communications. This conference call is being webcast simultaneously in listen-only mode by Issuer Direct via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes and will be available until Wednesday, February 14, 2018 at 5:00 PM Eastern time. include statements, will U.S. defined call conference certain as forward-looking under This Securities sales, to with and Federal respect earnings Laws, other matters. speaks is company of new Any which forward-looking statement, update statement only future a the any of forward-looking result as date or such revise statement no events made, undertakes the information, whether and obligation to as on or otherwise. this forward-looking statements company's transmitted earlier the is earnings in regarding morning. provided declaration full A release After session the company’s to will remarks, the open prepared we questions. call the turn now to Bob will I over Wells.

Bob Wells

Thanks, other Relations, the reportable press release. XX%, provided billion, new our our Jesse. January XX deck interest of fourth some balance of morning, everyone. increased $X.XX Investor $X.X our Good In information, segments, slide time, on sheet selected a breakdown with sales by we’ve to or items Beginning billion. Consolidated including our a and website, with results quarter. under financial sherwin.com,

X.X% consolidated Valspar increased revenues, core in Excluding the quarter. sales

to billion, full year, the For XX.X%, consolidated increased $X.XX or $XX.XX sales billion.

core XX.X%, Excluding $XXX.X $X.XX same or gross XX.X% fourth period million, $XXX.X consolidated X.X%. or Gross increased gross for to Consolidated the quarter the in million, was margin quarter XX.X% increased the in compared Consolidated XX.X%, year profit profit year dollars increased $X.X billion. the Valspar, fourth in billion. to for the sales to year. last

quarter to million, decreased sales XX.X%, in from year. but same last Selling, last percent or of XX% billion general fourth consolidated XX.X% expense from year, to to the administrative increased decreased year. XX.X% a For $XXX.X margin gross in the as and XX.X% quarter $X.XX the

a XX.X% of billion $XXX.X increased Interest million, for in sales million the million. and expense to SG&A decreased XX.X%, or year, from $XX.X increased to to the $XX.X expense quarter XXXX. XX.X% $X.XX percent as For

interest X.X%, $XXX.X decreased expense the increased million. million, $XXX.X or before Consolidated due was increase entirely interest million. to to $XX.X For in fourth to million quarter The expense. $XXX.X acquisition-related profit year, the tax

For the to tax billion. before million, full or decreased year, $XX consolidated profit X.X%, $X.XX

for the effective XX.X%, would a Our have tax deferred respectively. income liability and XX.X% tax excluding year, and on quarter operations core adjustment, rate been

tax of from $X.XX common per in net increased incremental and operations. $XX.XX The $X.XX per interest We from for the $X.XX last to reductions; per EPS to low onetime per for the from net expense $X.XX per from $XX.XX share, net and XXXX expect Diluted of a increased income expenses, XXXX. step-up fourth share the per year income of Valspar deferred per share common Diluted share share XX.X% full income per to $X.XX quarter The acquisition-related $X.XX rate full and accounting our including year $X interest year. share share, of mid-XXs. $XX.XX in be of the acquisition-related incremental and $X tax accounting in net includes amortization; inventory per includes for income benefit, share step-up share amortization; purchase operations. onetime purchase from share the effective inventory expense income in Valspar to including expenses, tax per benefit

in comparison fourth fourth the full press of reconciliation and summarized year share Regulation per at a our end the have release. We quarter XXXX G earnings table quarter

million, me segment. billion. by Americas fourth performance The break Group Let minutes a $X.XX for increased quarter in down few take Sales to $XXX.X the X.X%, our or to

division. Latin that the or sales year. calendar and U.S., increased the in divisions, division and For volumes Eastern the Caribbean, quarter and segment fourth to slightly million, Southeastern division. every Sales the by Canada Midwestern America in profit division, $XXX Fourth to quarter, our the dollars, net division increased led million. stated all in the X.X%, $X.XX X.X% than million, in division, year. store or increased sales in $XXX.X increased U.S. months, quarter quarter stores billion. the opened followed is more the Sales and in by in Canada sales in X.X% XX region, year, Southwestern were Comparable and in XX.X%, the X.X% $XX.X positive Regionally,

year, billion. from fourth quarter margin increased to XX.X% Segment $XXX.X full Americas XX.X%, points for Group year. XX.X% year. million, basis the margin $X.XX For last to or XX points operating basis to XXXX year last The profit increased the full for from operating XXX XX.X% increased XX.X%

increased to Turning net external million, sales $XXX.X Group. million. now Consumer XX.X%, $XXX.X Fourth quarter the to or Brands

Brands Group to XX.X%, Consumer billion. For or the million, $X.XX $XXX.X sales year, increased

Excluding the or Consumer XX.X%, the X.X% the year. group decreased decreased million. the to decreased Segment Group the in sales from profit for quarter sales in $XX.X fourth core Brands X.X% for Valspar, in quarter million, and $XX.X

million. For year, $XXX the full to $XX XX%, million, decreased or segment profit

core Excluding for for decreased in a decreased XX.X% to the XX% percent profit year. and sales group X.X% profit the in quarter XX.X% net Valspar, the year. decreased from segment Segment as the quarter last of

year. For operating year, decreased the XX.X% from to segment XX.X% last margin

the for in in and margin respectively. decreased basis year XX.X%, group XXX the and decreased operating quarter XX.X% basis core to Valspar, Excluding the points points XXX

$XXX.X increased For dollars XX.X%, to our billion, in million, sales $X.XX fourth increased net Performance $X.XX or billion. $X.XX billion. to XXX.X%, Coatings or Full quarter U.S. Group, year sales

profit quarter to Excluding segment Coatings XX.X%, sales Stated $XX.X million, million from group core from increased Valspar, million last the year. the increased $XXX.X U.S. quarter $XX.X and Group or year. X% the Performance in fourth increased sales in in in X.X% for the dollars,

For the or profit year, XX.X%, million. million, segment to increased $XXX.X $XX.X

increased the in Currency quarter million $X.X decreased Excluding million year. quarter X.X% segment $X.X X% and the the increased in the Valspar, rate and profit changes translation core segment profit in year. in

fourth year. to margin to X.X% last year the XXXX. decreased segment X.X% XX.X% for sales, Operating in compared net to XX.X% quarter decreased of percent in the a As to compared profit

Morikis, expectations John? operating John in who to comments quarter Excluding let me the general results call year XXXX. for to for review Valspar, points the our for quarter our of group flat year will concludes full margin fourth was decreased basis the That for XXXX. the XX and XXXX, core and compared some make highlight the turn operating and over so

John Morikis

Bob. for Thanks Good us. you, our a was joining solid morning, to quarter finish Fourth everyone. year. Thank

Consolidated Excluding points. basis grew income consolidated operating of consolidated and margin Valspar the XX XX.X%, quarter core SG&A points, core XXX in gross percent expanded quarter. all as X% decreased sales improved a fourth compared XXXX. results, basis our sales to nearly

results pricing little progress restore business the more $X to the business. through, offset to billion have acquisition-related Valspar noise it's expected, added core difficult raw work value back making the are in good just Bob With in that year moment. performance profitability, come on while the As of to I'll capture still the full a than a inflation. material that we to we walked And net quarter. consolidated to see sales underlying to do integration, all and the in Valspar's

XXX Contractor for to our the of increased increased in segment Sales you sales out margin XX and single-digit quickly impacts Canadian operating at fourth and the stores volumes positive margin quarter, quarter billion. coming years. our leverage points and coatings all-time in the high last time X.X% past basis Irma, Canada grew a business tax PBT rose the the marking quarter of margin earnings U.S. on in repaint quarter. in improved double-digit exceeded earnings year in growth positive to quarter by every by marine pricing. per for of X% double Paint's hurricanes group Harvey in Valspar, quarters. incremental gross first consolidated more the from protective $X.XX If basis Consolidated the following also $XX.X on Profit digits the many in core points profit to XX.X% for contractors to a generating business accelerated share. very margin to the total compared both high the X.X% XX grew from quarter and year with XXth SG&A. EBITDA gross XX%, than U.S. below Operating XX The stores and early sales double-digit Americas new XXX next to add growth was and count billion. is X,XXX billion. our X,XXX total Americas. store alone billion. year. to that And The back grew fourth to total with the of at in bringing customer in confident in to full to realistic, this quarter, We and our XXX year. per rebounded XXX our XX% in store to another stores comparable net intend the a Group residential of n opened stores North The $X.XX locations rate XXXX. year-end milestone the America backlog X.X% Sales net $XX.XX projects from aided year pace, and i share locations before to $X.XX in increased the new in XX.X%, remain opening Sales to we Americas

domestic segment by made short customers. complex brand aligning progress Consumer to initiating likely strong DIY all on two rightsizing sales quarter Our inventory portfolios and the marketing and managing the due in maintaining demand of this year projects, Group's well several Brands integrating expectations, during part operating a results and financial fell chain customer and market retail But impressive expenses. while our multiple optimization team adjustments for supply relationships year and teams, and

throughout margins projects. legacy the of in Valspar positioned showed improvement. the also Performance sequential volumes product good for Sherwin-Williams year this Coatings quarter group on the the high. Sales efforts these range value-capture across and the integration operating accelerated both All and and wide and Group fourth remain group lines, team progress ahead, this of have well made our for for expectations year a modest

as Our generation. $XXX greater year more million on see an year operations. implement of a $X.XX less XXXX. which company to strong Free progress that operating persistent we had price efforts cash cash, of noticeable December net last hand compared raw XXXX increase reduce Net front fund dividends, to cash was to will first cash million to in to XX, be increases, billion inflation, this cash $XXX.X XX% we define offset compared the $X.XX debt for $XXX.X sales. And material XXXX half to million and the sufficient of flow, operating utilized expect than terms was was of billion, in continue. year. and CapEx and on On of than the

$X paid approximately debt used cash sheet acquisition. we fund retired $XXX year, The preliminary reflects in and over accounting and the the debt. During of purchase incremental to in balance million billion billion balances dividends $X.XX

will stores. should stock be to million We $XXX and expenditures $XXX.X invest the million, intangibles XXXX, and be $XXX we million, productivity expect for amortization in million. systems and common which $XXX Our as purchases continue Depreciation capital amortization million. no our quarter Treasury Depreciation totaled we for was anticipated of to capital sales, year to is open-market million, during $XXX the improvements, was In and expenditures inventory new of X.X% about year. $XXX and approximately step-up be about million. of $XXX made

options from exercises. opportunistic we at had December XXXX to purchases million intend a XX.XX XX, in However, level we On acquire do dilution to stock shares. company to sufficient authorization resume of remaining offset

Directors year. our from month, Next share, a at Board $X.XX $X.XX quarterly of will recommend last up dividend meeting, per of we

Before get XXXX, by announced year to we outlook XXXX, end XXXX, Valspar annual I'd on like we close comment million. the of one March raised our synergies run our rate target to to we be progress in deal the At estimated $XXX back When for about on the integration. of quarter to I of million. the the the $XXX third

XXX was $XXX actual synergy and prior our target the end date, XXXX we've being faster XXXX to rate To short, rate from more another we originally full year-end approximately verified. projects, of completed are our and that integration In on run we've up are are Our raising projects at $XXX moving we year currently target million. projects million, $XXX approved run million, identified of anticipated. or XXX than

of identified we've added and made reformulation. with the in purchase programs, promotional being and list a material including opportunities raw compensation are for On cost organizational benefits optimization, great to aligning SG&A, we've to In each IT few. cost passing systems opportunities and name design New progress programs, and and leveling, marketing week. optimization goods,

opportunity, our manufacturing from architectural volume distribution Performance facilities. Valspar Projects use ones. projects, and Revenue in region our long-term an wallet extrusion metal many production leveling American active acrylic and development blending is the products, the our ability by Midwest initiatives In new are synergies been share existing benefiting West line. example reduced coating to and run manufacturing attract matching underway are an to for legacy and provide accounts including a opportunity. on focus and costs and production perhaps, of Mid-Atlantic, is and jobs optimization every expand some Our are, some start on synchronizing our reformulation also polymer high-value the North world, North facilities off between key from us optimizing routes we're smallbatch Group and Valspar product American example to of to of in-house leverage regions. at distribution, good Coast industrial for and we're has on Logistics to One Sherwin in greatest smallbatch customers. freight being footprint. the with Coatings one of color ability high The is helping

sales We mid volume to XXXX. in of quarter $XXX range first remaining first and out the compared increasingly expect of run achieve quarter, single-digit anticipate annual the of to $XXX a million. With net most long-term good percentage confident to million sales coming fourth the momentum consolidated of in high synergies will we increase costs to rate quarter book we're and to XXXX, these our

and the in forecasting earnings per to synergies we first Due addition, be expenses, from the we've the quarterly sales $X uncertainty exact share for in quarter. to billion the to future. of expect In incremental integration guidance foreseeable elected timing suspend increased Valspar approximately

expect a to year full year net XXXX, the For to we single-digit compared mid core to XXXX. high percentage also sales increase full

to XXXX, we revenues. addition, for five industry-wide by first is likely But possibly of raw range outlook Valspar our cost in sales $X.X add higher up half. be tempered billion expect in to consolidated industry the even the inflation, persistent In material incremental in XXXX somewhat X% first months to the in the to X% approximately earnings from

share anticipate of XXXX. to in earned share income $XX.XX XXXX factors common per diluted share will per these in to With mind, net compared in we the $XX.XX per be range $XX.XX for

the of Valspar a totaling in includes, share XX% expect share. earnings XXXX Full to As $X.XX be rate reform, we recently announced to the approximately range. XXXX low effective our to acquisition result tax mid tax per year costs of per related

company, Jay successful last in announced as very closed, the career the market serving after as very Group a years want Finally, best. The the from Jay our past change retire a contribution Monday to President after the including seven leadership Americas for we decision Jay the of I his Davisson, The Americas and service Group, and his thank has publicly Sherwin-Williams. wish made and family to with

to and pipeline leadership of successfully come a having Ippolito he process, business Group. As who talent. and We're robust to President be succession the our happy I'd range expect seamless this results. thoughtful a we'll architectural to this that your planning and we the we're take role is industrial from an Americas to as knowledge Since global expect Pete morning, of well Americas roles division President The and our like strong vast of business, end, very brings business developing and Sherwin-Williams, announcing with financial leadership and of role as Pete our Midwestern in talent excited for position transition. Pete, and Again, you've company, Pete Group. in To veteran take and our thank outstanding intimate have Group track of we're joining our new blessed The us Americas General of Manager this to you that a comes well has outstanding The now business. a prepared, of experience delivering XX-year served questions. record in as XXXX, held the our of

Operator

[Operator first the is Ghansham proceed with line Instructions] Panjabi with Our from question. Baird. question your Please of coming

Ghansham Panjabi

morning. Good guys. Hi,

John Morikis

morning, Good Ghansham.

Ghansham Panjabi

Morning.

break by but you broadly single-digit your and off, can Paint that high Performance it's as XXXX, expectations for Coatings what consumer core the about growth to for First on operating sales mid segments? well? volume Clearly, led Group, across down more Stores

Allen Mistysyn

about start we've in sales of as that is be the Al And group growth. stores Mistysyn. to high of talked talking end the in our guidance. Canada and being past, by guidance, This U.S. we've our always about primary the would Ghansham. about Sure, talked driver continue I

So of you expect mid in that end them to to be high high the single-digits.

seen the going what consumer. company, volumes and, the X% As even low you a I that we're October we're say the December. in to to know, volume price through X. to similar the From we've single-digit announced the four see effective across of increase first price of seeing X% would in I that's increase And across each effectiveness standpoint, months we think, in groups that,

about optimistic a soft year. consumer we're coming think off pretty I

We have better comparables.

our And like momentum then, there. different guidance of approximately on the We to and about pieces also. we're really last thing Ghansham, in we think, be have to And I around then some price impact FX our be, about should I'd do turn EPS business, good guidance, no talk expect X%. sales planned. would talking has while

the core of incremental versus inflation. guidance XXXX, So midpoint seeing In raw results. costs our acquisition-related pro versus excluding year is an we're - full XX% of XXXX forma material EPS increase

million expense the our $XXX savings in same set operations, our sources. help to we've achieving rate on through We'll on our growth. on and about but at the we us P&L, reduction the that I future and take debt a million this - back acquisition do to as community. taking financial Sherwin synergies them robust path our the interest the $XXX that those of to portion to our in do into but prudent investor believe expected incremental debt going And believe approach talked Valspar the opportunity we to tax and accelerate here it's to We're normal target prepared with of for business reinvest puts into increased take Our future. XXXX come core growth more that offsetting investments an than with we're increasing a a these is opportunity the an on liquidity headwinds our comments, effective we we

Ghansham Panjabi

single-digit Which pricing? inflation you the And pointed inflation. Okay, mid incremental materials quarter, raw give most granularity second low seeing within? that's last material towards just material you I question, raw think, on can just more raw you a to helpful. us are

X. of X Now to kind

on much. that? more what's granularity Just Thanks driving some so

Allen Mistysyn

Yes, behind in story XX% to year, due material Crude supply Ghansham. constraints the spike simpler little was categories. been $X.XX was oil most to Last A pressure expect multiple across the TiOX. inflation pricing This $X.XX because year-over-year. propylene has a raw in the per XX% we year, up of is January to pound.

We first - to Higher like packaging. the its that already trajectory. propylene while little costs. product continued already is This all also year's Comparisons expect propylene half, packaging affecting constraint, and acrylic the XXXX then we was price the high-density expect work by pricing our do resulted raw but or higher price way in chain, it's a in pricing the inflation our nomination in risk second. global - affecting We categories were the That's commented February. material first solvents through and it's the in quarter to poly higher takes supply TiOX could additional half. producers. year-over-year in to And first last simply due half, in first be lower announcement inflation

as go to year, categories. easier a year to through average lot of this X% in as the and we get different So range, we across it's expect comparisons for we be but X% said, the

Ghansham Panjabi

it. Thank Got you.

Operator

coming Please of Markets. Viswanathan next Arun with proceed RBC Thank Capital question The from you. of the line is your question.

Tom Narayan

Hi. for guys. Thanks Tom morning. It's actually Good Arun.

our will net biggest that factor, is numbers. net maybe kind some following you're segments perhaps, with should It putting raws. the Which trying a of question specific raws on headwind the pricing And on XXXX, put like raws guidance. through? be going a most Just the that new us see in impacted to basis to weren't EPS of by Ghansham's raws? seems your on Just understand for up we

John Morikis

Yes, Tom.

Americas. raw that is but saw to behind pass the the which after year TiOX On part, mostly I'll This industrial paint petrochemical it with well. of increases categories affected part, question, on mostly to and year, first side the the architectural the off coatings the are we last first material pressure the it going as more the basket, The affect businesses, in Al

material And entire for business so this pressure year. I raw the would look across

Al Mistysyn

expect that gross long this of say, XX% the remind I price improves. a is in I over behind. – contract XX% The about margin still will that. you, raw our material as one I of pursue we've guidance And the about, and couple and our price inflation, range, we term, Tom, short talked gross talked term the the on to may about But the pretty Valspar margins long to And the past increase recover. I thing in increase cycles calls, little would the the on the still as long-term margin last really is feel one good effectiveness

about we're through the continues, that believe, the chasing Valspar or going Although side. right price be inflation as we're price now, we – on we going feel confident that's to material raw should

John Morikis

points up consolidated the and to look basis quarter. Valspar you the add I'd the that, core, look business, XX – we're weren't if about have down only you able do at the Al's We that business, our that to SW to at to Yes. for if been the in core pricing. margins, basis points if we're point XX fourth we achieve the able wouldn't year, then gross

that that the we we the months. in – Al's actually in. the talking we've started we Valspar nine basically we pricing now, and take expected. going closed, starting changed fourth was more initiatives to So exactly move first and that We're we is roll about to tracking as said of It's to more point, have pricing of six year, going that been expect calendar the in, to the we've to since as see quarter,

it's So projected. going we exactly actually as

Tom Narayan

on And Store Really follow-up Great. my then Group. Paint strong performance.

on sales. And any if Just of tough we issue would kind of is a labor expect QX, that XXXX this like U.S. be happen same-store housing in QX. curious the kind typically there if with Or some happening cadence in XXXX? normal in comps in issues new additionally, should

Bob Wells

ability to out, you momentum as first the quarter, single of Tom, out quarter. outlook, we're volumes tough the And were same-store there talking a Yes. high-end mid-to the going and talking go comp quarter. of pointed we we’re why fourth have in top we and range. But have our the we’re our we to with high sales that and in a customers – that feel over we're coming digits, I confident expect to that that's up would that fairly stores and We're fully the the first that X.X%. be in is start seeing with, good our up of

John Morikis

the our as been of wallet we've share initiatives well customers not with opening that we've overcome far existing about as new had talking Yes, growing sometime as about only to as accounts, the little you comps, but made in the point making a your about new sure offset with are also that bit filling enough pipeline business labor, to later that that we question that.

part, we For diminished bit, I same last would I labor this of part, we in throughout the some the market. markets, most metro say, in But issues the think quarter, the commented labor. to the continue a see on on the continue the for it's most restraint

fact, see we're side, a a side bit I of say tighter. in to on the a projects starting as of residential labor might that for has the that bit also backup In become business

Tom Narayan

over. Understood. turn it Thanks. I'll

Operator

question. the is line of Steve you. Byrne Lynch. question Please with with Bank your next America/Merrill from coming of proceed Thank The

Steve Byrne

was Thank Yes. affect architectural trends, been or used I either levels, if you've you. wall-covering positive for could versus inside that changes outside the or negative home coating in trends? wondering either home, of historical seeing any

John Morikis

wallpaper anything I all. not speak has at experiencing of. one much industry that don't change Steve, is think that to now, right always The we're No. cycled.

people repainting. are of shelter many out of we blessing the in through say, which actually I'd magazines are there, TV programs that and the like fact, the frequency In

right wall-covering, that. the to that. on we we if it paint we'd that it in more be moves But benefit seems sell enjoy now, from side, So direction, and

Steve Byrne

that And seeing that Valspar China? on with the of architectural from any from your own are in leverage paint through respect experience legacy you selling China, brands kind potential paint to you in sold stores of upside could experience benefiting

Allen Mistysyn

and observation, great best around practices call about a we are excited of all the world. the of what our bringing that's Yes, kind businesses to

Our week, We're business. Lorber, our company from leader, working last transfer the that to of just terrific was a on that knowledge in China Ed leader.

actually We the many have to of visit has U.S. they to might I've stores those trying an understanding surprisingly them, and of get dealers of we them lot what our gotten to to know as do traveled transfer. a how

very they're to So that. receptive

them money to here themselves. As many trying of get I see their said, own it spend to

of what bringing that in everywhere, work might works work what about other some in necessarily doesn't we works U.S. practice. excited we're the also best places. know So know that but We the U.S. that

not We're to do works market. we're So has it be going here, if for what's every it to limited right by there.

Steve Byrne

you. Thank

John Morikis

Steve. Thanks

Operator

The with line Christopher Credit next Please coming proceed Parkinson is you. question with from Thank the of Suisse. question. your

Christopher Parkinson

to hit Great. down you. key saw general Coatings, for think you and within your Can volume Thank Performance also, And Allen then any coil? trends break or industrial broad-based on this I the just a you applies then but assets as little potential not quick, expectation whether strength multi-year your and Val within on bit, on pricing legacy margin just targets? strategy any broad it longer-term comments PC Thank you. specifically

John Morikis

you about maybe take the Chris. I'll the talk first Allen pricing. piece. can Thank then you,

Chris, as really the in that now I mentioned are have seeing, opportunity to and leverage a we're business. question, my your earlier we about Regarding about trends we the excited. what combined resources remarks

to customers technology. with think, the finding business throughout as primarily in small with the really, to Valspar's spot I gives an good, So very quick turnaround the the they've as we're That provide with them to that technologies able leverage we demands around take their them as customers, know well excited future, that. just Very being in well to us and utilizing in spread our quickly very relationships over our out to world, our the respond working terrific U.S., the sweet strong, but are continuing received years. we're in gotten care the time and wonderful it immediate opportunity have facilities by We're the world. coil batch was of that ability about

Allen Mistysyn

part paint customer's is a is that of of product, at on Imagine a reason believe of will The a very to product it. small important. in is price an chase the but why Chris, we the be good. seeing that the very yes, And effectiveness And that of pricing the performance believe tractor. is going cost it's although portion Caterpillar but we part looking XXXX, actions, we of important

the So we're to chasing be we're price, to XXXX. get throughout believe going but it we going

Christopher Parkinson

color your key you your initiatives Great. long incremental exposure intermediate be Thank industry is? terms of And Thank just out in Just any onwards? broadening on appreciated. strategic enhancing you. comment can M&A, also undertaking simply XXXX And you the yourself any in involvement any to in end or either potential broad market broadly your term you. expectation for see would

Allen Mistysyn

take you industry I ability do the debt-to-EBITDA to on at the we of So our end leverage One, look will participate. or first believe, around the that I'll we're part XXXX, continue And believe X.X. when consolidate. our do at to

Our that the end at X. of XXXX around expectation will be leverage for

So that half second I a flexibility, the very well. gives fits particularly XXXX, us of one strategic to and our pursue in that portfolio acquisition believe

John Morikis

And waiting as point to expect, not looking. Chris, for would time, begin that you in we're

Our teams technology at look be. revisiting constantly opportunities might what opportunities. are look geographic We we those at opportunities,

future And your through about, question in is opportunities we so are or acquisition, to our enhancing broadening interested yes. answer the definitely

Christopher Parkinson

Thank color. you for the

John Morikis

Thanks, Chris.

Operator

Thank you.

the question. proceed with Don with is question your Please coming next Susquehanna. from line of Our Carson

Don Carson

on U.S. to does going in if what raws second anticipating X% twice do architectural? up? sales you. Paint market at doing Or you on at is Thank was increase? price do you on think October XXXX at another growing market? that the Group. overall X.X% you will same-store X% to price, you growth, your put Or you in X% then mind to and grow back deal put that still Stores sufficient with And through going Question X Are is that the

John Morikis

we Don, a on we it's price monthly we costs on material as the continue on that sufficient X, rest to first movement, throughout cover the have and part quarter we of currently that is raw the in basis, So price we that required, do the put place increase question, see that evaluate and currently believe to the we'll increase of that year. whether and monitor another We that first the see. as October of

Al Mistysyn

X.X the the don't data believe we of fourth in times to of exactly pricing in is range enough was quarter, of the market that consolidated. times for we effective movement what the still we And market, yet think growth the to in Yes. grew the market. the stores. of but pace to the terms X% like That to target. us probably Don, the leaves said relative I in say the volume we quarter that little rate a with volume tag what we range have first, fourth the X growth our north That's

John Morikis

expectations our And same rate growth, to will be that the X.X market. times X continue over to of times

Don Carson

on follow-up a Consumer Just Group.

contributed Your Were was by to for year the any basis Or that, the year-over-year any that? and segment for DIY big-box product at X.X% customers on was quarter. simply losses in those comparison line your of down de-stocking slowdown that shows there it a that customers?

John Morikis

year, quarter, No, points. any the And for fourth we've went about challenging last to. a so. and it many, the a know was consumer's I Don. customers adjusting year. that There of Clearly, wasn't inventory not comparisons to talking loss. knew year, one There's might appropriately business know that many happy remind going going load some you been you, and a you're had weakness be in with add, year. past or and we're to more as also we we We coming right. that the that And really little this we area from had were of last that - in we I'll difficult, the in lot a would But performance. not clearly consumer

have. team the assets they and We here really now are conversations think eager look and mentioned that our to right forward, about who customers we very let wonderful the we're having As grow. opportunity are discipline with have combined have we're the we we and strong, and gallons, though, that excited about brands that in Al the

can having, reach them we discussions we meaningful think, goals. about how help we their so And

of as the with into enter into and determination. year think some momentum a XXXX, we We will lot that So it's hopefully as got XXXX. show here up here we've proceeds

Don Carson

Thank you.

John Morikis

you. Thank

Operator

Thank you.

of question your next Please is coming Morgan of from Our line Andrews Stanley. Vincent proceed question. with the

Grace Chen

is This Hi. Grace Vincent. on Chen for

you're say consumer. head specific increased there You we the initiatives spring maybe spend? up as then? market targeting season into painting on Are Following any strategic

John Morikis

of in don't lay fact we is But over we a little going want which to we just confidence thing initiatives, Yes, that determined. doing talk same we and we number And momentum, out. fields over have are about we've of think change are that to there a the none when really got the things.

but would we So here don't right have you the publicly we lot on those to yes, as of expect, considerations table, out want a flush that now.

Grace Chen

And tax through you the do reform, it EPS? that's savings Okay, for the generally with U.S. plans to then to do expect that? you flow mind fair. have you'll that, from see any in Or specific

John Morikis

robust we for our do the opportunities growth. are on as to segments. to we with at I we're - to those a like other – with all back opened view businesses investments, reinvest of process that going portion savings a the opportunity it's through accelerate our but comments go absolutely of about, we across just take into future this opportunity I growth. as my And real And the processing we'll our looking question, future talked our first No,

Grace Chen

Thank you. very helpful. That’s

John Morikis

you. Thank

Operator

the McCarthy Please Thank The with Kevin line with you. question next your from is proceed Partners. coming of Vertical question. Research

Kevin McCarthy

on Kevin It's for Matt. Hi.

want I quickly. clarify in at portion Before the of looking included are segment kind I'm to the I just of decks, the slide ask, something breakdowns? Valspar numbers synergy the If

John Morikis

results The Valspar, they synergies and in way flowing in our our any – but in it's be core and our are we core embedded our Sherwin would actual that really report. our both

Kevin McCarthy

wondering the kind basis. was just sounds it's But... I it Okay. being But whether they're attributing, both. of on how or Sherwin Valspar legacy like

John Morikis

and just Valspar operations, consolidate we it's as and the harder Sherwin. two the separate imagine, can consolidate you core to we harder Kevin, Yes, the as departments, between

Kevin McCarthy

Okay.

there or down So look that if out any are looks at Valspar year-over-year about amortization. legacy I of inclusive XX%, about it's synergies EBIT $XX and million, slide deal-related for decks, backing

of that’s look like last they’re Coatings, Just XX% – XX% most given about about coming and from looks from down Performance to margins the like breakout, year.

So restore to used high I margins margins year? enjoy? business teens long kind guess, year-end to that the And – next mid-high you would question take expect be you do it think those how those EBITDA of where is, by do will

John Morikis

Yes.

about, we're costs didn't talked that window. have saw We not going price in get a XXXX to recover for material one-year raw in and the we

going run rate the we're at it being way and number, run bit – of rate chasing in a the they That take margin synergy an little going XXX to here. target we've synergies, end the those for bit XXXX, time recover time said, recoup we're that our some about us be some the were. we of increased end But of increased to So both back a is of to margins the synergy to XXXX. to talked We're that for margin little going increased for if of see the P&L. going through those absent that recoup the of – synergies to

Kevin McCarthy

– if little you sales was Okay. And the context and because wondering for if then, breakdown between had provide been initiatives almost price two same-store a could I volume pricing you on PSG I Protective like specifically think, But you up the on X%. as double digits, quarter. said volumes resi about was thinking & well. repaint, and up double Marine I digits was something maybe was would've

just I'm of offsets you. that. Thank kind the So wondering on where were

John Morikis

rest that and the will than half I to think be be going then volume is of X, more little price. bit your a

Kevin McCarthy

Thanks a Great. lot.

Operator

next Sood coming line proceed Please The is of with the question. Deutsche your Bank. question Thank you. Nishu of from

Nishu Sood

beginning what you more to how And storm-related two wanted the happening, now the the little you that's what you likely more specifically what sales XQ. we rebound about just of that a components of And are, couldn't in I that. What bit specific, the during the expecting – could have did you. from – disruptions as quarter? give bit the fourth that on that are proportion season see kind a Thank rebuild shape to see we the well. painting disruption of then is visibility Obviously, here? if to that One little happen ask as out,

John Morikis

division, was single-digits. quarter, you were double up up digits Southwestern in and Southeastern division they high the look at So if

also I'd both those divisions those what numbers in Now prior sales storm. out were to is strong of that the to point growth

So it's was of how much storm. attributed that very difficult for to us to say the

were running that interrupted running storm. the a we we now at rate at are similar So by

attribute So to one very of difficult. to storm any the would that be area

the had, The Southwest closed. it storms More in believe, of other this as as southeast in. I came that stores piece in those point through, nearly at one was is we XXX rolled the it

not While not I selling exterior those stores - are we are business that closed. paint. our closed, is it's mean, we're

is And quarter XXth and it the a So the levels repaint to the were consecutive as it's operating storm. on back though strong we performance. are significant rebounded drop. very you that mentioned, of this seems we It sales. as was to back, prior resi And

good all the feeling in our And momentum about stores. so we're

Bob Wells

year. the And of seen U.S. John's the in to southern just point, we particular reiterate the strength throughout region have

Nishu Sood

it. Got

the Okay. of repaint assumption for of kind you. you are we've growth, 'XX through side what would momentum single-digit Are to high and using of housing half Thank sales things? flow your 'XX, to acceleration, outlook also in 'XX? the that And that seen terms continuation growth the of assuming you for of in in some second mid- how

Bob Wells

up more new and or - basically builders, think for Yes, less Nishu, us. existing pick forecast new them would inventory the residential mid- That sales orders from interpreting the are like the to building seems range. for and by that most of in be the all high the in the we're 'XX we're little starts builders pace. average. home might we as builders, be feels to to homes tracking at backlogs in single-digit high seeing It faster the the about starting and We public right single-digits new on market a slack

robust So is years out activity. we commenting driving also we've I remodeling market. expecting are appreciation couple home point would of that for how about a been a value

in to year XXXX remodeling as North a America strong expect well. really be We

new not construction. So on our outlook is based just

moderate asked non-residential, declines, acceleration two and of footage starts. to that, too. - I or modest XXXX about non-residential a was a picture, Let following you positive in on residential, XXXX years we're know starts add XXXX expecting a square seeing in improving an but me we're year in -

Nishu Sood

you. thank Great, Okay.

John Morikis

You you. Thank bet.

Operator

you. Thank

Juvekar coming question. is question Please next your the with Our P.J. of line with from proceed Citigroup.

Daniel Jester

for on guys it's Hi, P.J. Jester Dan

years Just on on haven't America, been but it we a talked Latin call tougher the much now. really it's couple about today, of

turn go around? signs that, you that there might business optimism Just is of if XXXX, wondering, any into

John Morikis

there. down work to continue we Dan, Yes,

there. us Indiana and performers region Cone strongest were the Southern Our for down

our It's Some business. businesses to saw And slightly. big increase are up in our still digits. were double of down Brazil, a while volumes in of area pressure we're that Brazil. experience those in The continuing part an sales is we

continuing I've market time for We're down time not there. We're again. we're hard get So said - better. not and working to waiting the we're waiting. this

we're the pushing progress gaining I ball and hard, down really leaders to working think there here. are that, going some keep again, we're that terrific

Daniel Jester

store If out on I Okay. that it XX in think And just new to turned the and opening openings. remember that clarify this then to new Americas planning I The something XXX. on I said stores be closer you year, you're wanted to correctly,

you open the first, is a So forward few stores? that – pull guess, any And specifically XXX, Or look talked if I ago, And that number because did so just right you there if then just that about, go doing I did the openings? many the you're now correct? quite number XXX something Thanks. of you XXX, XXXX that Valspar as store mix? I to years like is not of back in focuses something of terms to

Bob Wells

rate of the the Americas. pertained tag. XX that But run Caribbean. guidance is clarification, ended U.S., on We in our on XXX The Canada The all the to store It's openings, throughout Caribbean comment on up base. openings as John let versus the U.S., now. XX store Canada I'll and peak gave and opening Dan, we Hi, actually our

Latin So the America. openings in all included it

John Morikis

districts, that more want more that And is With management with opening to as at kind and run would recruit X,XXX He want requires it's spoken aggressive rate, an rate. Pete Ippolito. from that. I've in to we say this – we regarding from and store the I we've that sales of he'll settled add we to support about And continue an promoter, trainees college grow, area XXX areas.

some are a available be to going And bet funds earlier these was that program so our of taking Al going that piece the here you tax that could big for when forward, about of talking that should this grow our our will XXX we're investor going think and him. stores organization. Pete's and a base. support I But continuing wants around you to go smart business, see into us to But

Daniel Jester

Thanks Okay. guys.

John Morikis

Dan. Thanks,

Operator

Thank you.

your question coming Robert question. line Please from is of next Koort Goldman the with proceed Our with Sachs.

Robert Koort

sneaking you specifically? Al, a you I there. run quicker me extract mentioned XXXX to rate little achieve synergies? you got to the those for capture and wondering, to costs those. how me And faster what cost Thanks Can the synergies of Great. a then was tell in is

Allen Mistysyn

the Yes, that project benefits Rob. to vetting is P&L. get validating out Bob. those The speed the by the fact really we and that going to we're see

And and we've Group system expect what one and P&L going of improvements corporate. those savings through the for us run also able vetted is as rate them in through into as our and into XXXX. January It's acquisition. is group, of to been systems And the Brands Coatings implementations. the some on largest Consumer it So confidence impacted are put through X, being Performance we each Group that turn we've the gave the ways the to by we see

Robert Koort

then And how those. when obviously, you it comes contractor ultimate and to curious, U.S. the guys markets serve in have mousetrap helpful. you the That's

achieve in same in you group over those started confidence performance conclusions of looking of As Australia, U.S.? you China, have time in come the that in through or that paint the sort you can at superior in brands any Europe, to sort stores Valspar exhibit your the you

Allen Mistysyn

evaluate business what of every continuing market. aspects We to are sense our in would make

you. somewhere it works understand here to so We technologies. that that, diligent can't just ultimate to steal that. that research the assume that what really Bob. it in to can important, trying works want it's to way, By work nor work it'll that, to said, elements, market. We're think bring differentiate brand to mousetrap not like I I too. we else. as ourselves our team really to I the what going because here everything assume what in be to everywhere, with our that market approach, going We're products, Thank very I'm it

Robert Koort

You’re welcome.

Operator

you. Thank

question. Research. Please coming next your Scott with question line is of from Wolfe with Our proceed Mushkin the

Scott Mushkin

for my Thanks guys. question. taking Hi,

guess, little call Just couple this a answers bit. a I got from, tag

portfolio, do around in wondering I'm kind in? what kind just you as areas acquisitions. our kind you being see you think about of And strategically? weakness the some over guys back You talked the of – And what minds if get market look for maybe of

Bob Wells

Yes.

so And managers general geographic to We want to rather with of and mentioned, not want very really going our this that's of way in you'd into market, the technology that believe, I differentiate the business-my-business, a And service a look and having an with put areas. important we part, than future, from at think opportunities of understand. availability we what product, than our that, talk in in the we the look, that we part standpoint, And to it shareholders. is is look ourselves we also right at element an our other to opportunities and deeper to go-forward this near the be. off, and I'd work lot we to say we're that get cash to there spending is strategy. important really think might

Scott Mushkin

further up. pretty Okay, talked expectations I a you the lot to and fair about I it. remarks, guys Can thinking it, then good about? I it's for I share I that. something price you guess, continue putting should think maybe get through go maybe to be comments And actually that Is on a just appreciate anything? missed about commodities we increases. want that you guys didn't

Bob Wells

kind basis. we're monitoring have we but inflationary sufficient a an the situation. a we that of you say into on raw we influx current that as pricing the environment, Scott, material imagine, is going it a daily did And can that believe for

we we our talk talk customers, to our The and doing. as So then as we'll been, a raw to price, what has what we've more we're in past materials than about think increasing gotten see Street practice

John Morikis

we're And Scott, period the that don't this And during with time period a anywhere near you environment, at XXXX we out we XXXX, here that you think demonstrates did just the price think have. look the between and if I and increases. I discipline clock is X as take do rewind but – go a what that if reminder,

making commitment price while we should Al go in make sure increases. through sure out opportunity those we that compression provides bit represent anything, our looking us the idea have As mentioned the that And here, reach that stay even Then the value - we're and firm short period, is goals. to And their our the of during bring period as customers, it. we believe get we there's value that we them the capture of earlier, helping if that that adding to little a always to that price. we proposition

Scott Mushkin

or on worried And then issues about that Perfect. supply you're really? something TiOX, not that is

John Morikis

market of conditions their number favorable. tight. to reasons TiOX a of There's the kind global for And capacity supply of being we've got major utilization producers chloride managing keep

have China. We production in some shutdowns in

necessarily if its - the be chronically certainly, the industry under the structural, market just expect better year. we better So through it's not part structurally – probably to the we tight half, do don't the is believe But capacity. of meaning first the part

Scott Mushkin

All right. Perfect. questions. my Thanks for taking

John Morikis

Scott. Thank you,

Operator

Scott Zelman next with you. Thank Please is line Rednor your question The proceed Associates. the question. coming with from & of

Scott Rednor

good morning, Hi, everyone.

John Morikis

Good morning, Scott.

Scott Rednor

little bit core the prior a it's in in was biggest I something else the variable guidance, what's is or up $X.XX than consider? The commodity? Is there? purely there Question should we range years, for larger issuance. Al. just that down it prior curious, Or

Al Mistysyn

science out of have P&L, the commodities. on to in And going an be timing. in incremental more synergies. our synergies on It's to We the some a timing variability and we what you're exact put range our that's not expect

main be So two those factors. will the

Scott Rednor

that, are look think of guidance, out tracking of measure? Okay, to company history. it ahead suggest it cash And one was XX%, And cash flow, Is year operations flow there? right around Al. anything of that ahead the then that, I XXXX if in at the to great. we is sales, which from Or you highest unusual that's would seem your

Al Mistysyn

would year. working capital say, had we strong a I very

capital year. working than at last a XX% came would Sherwin expect core Our versus in That's XX.X% change year-over-year going I bigger forward.

that. tailwind little got on we a So wind, bit of

going So yet, XXXX generation. outlook the pleased but with certainly we're change not just cash to our

look after it XX%. You CapEx, over at we're and

and as performance, XXXX. to we that into strong going get we're pushing keep So

Scott Rednor

by any there the there and one, then sales was side? the And FX, on one Great. if segment last was in quarter just

Al Mistysyn

well, overall and because was speak in really quarter, impact, to X% and a to Nothing the got was to of little it's tough FX Performance TAG. tailwind. it it then numbers of you've and The low a consolidated, was but a speak nothing in on the as Valspar look about Consumer. in at Coatings these in Yes. single-digit

Scott Rednor

much. very you Thank great. Okay,

John Morikis

Thanks, Scott.

Operator

with from Thank the you. line of coming Chuck Please question. your next proceed with The question is Cerankosky Northcoast Research.

Chuck Cerankosky

debt could maybe the versus afternoon, everyone. year? of the little economics after maybe bit think midpoint you Good stock reform about and the paying down with of we a Al, buying what tax changed this talk back about should

Al Mistysyn

Yes. still I options flexibility we're – think, we paying after the us. of debt said, our I in strategic our That acquisitions think that back earlier, the down to with that's being talked debt-to-EBITDA buying certainly, our offset that getting important the have sense Chuck, priority so very about the the down from first going the we is stock. in go to that shares XXXX, leverage dilution

a progression flow and quite get you our lower the pay may little to and is get on position as acquisitions. what a are to debt down us the look half, put in ability down going, operations our our see towards we we cash think how debt I on honestly, to and, second bit

driving we keep debt-to-EBITDA that feel comfortable flexibility. ratio we'll down so that have that So leverage we

Chuck Cerankosky

place repo? third stock is The

Al Mistysyn

right. That's

Chuck Cerankosky

much. very you Thank

John Morikis

Thank you.

Operator

with proceed Fargo. question. Truman Wells Thank from of you. coming Patterson Please question The the is with your next line

Truman Patterson

morning good Hi, guys.

John Morikis

morning Good Truman.

Truman Patterson

pertains Valspar. at all Stores kind legacy excluding This of really and consumer. question. looking Group to Paint Quick I'm your Sherwin business,

through a the consumer hand relationship. supply cetera. much dichotomy about than So margin Paint your you chain in global is fell Typically, capturing than to about segments bit two XX walk historical is more out Stores fell occurring hand of and which between kind these much while worse percentage better due initiatives, et points points maybe the percentage which consumer Group us what's two historical, only Can the move there? quarter-over-quarter, quarter-over-quarter, your

John Morikis

Sure.

I volume. say thing first The would is

SG&A. Stores get our in you fourth they Group leverage in Paint As that, great and that volume, leverage incremental on saw quarter drives

slower the headcount SG&A we As into our bit. get little quarters, contracts a

see We in a you're our so leverage we SG&A. same that softer, get not volumes not did Group. that great growth, as leverage. see little and And our we The seeing Consumer effect volume were the on

Al Mistysyn

consumer that's side. side in opposite almost the the Yes, we saw that

John Morikis

line. Declining

Al Mistysyn

Yes.

Truman Patterson

Okay. short. it And then pretty should multi-part question, be but

run among you the broken For out, the kind and well break charges and into fourth question gross segments as SG&A? could in as quarter, EPS charges, your as synergies in we of the And similar look rate, then the where are $X.XX the guys various $XXX margin out versus at least is on million is synergies where XXXX, does where fall and XXXX? that then

Jane Cronin

number There puts Truman. was purchase around of quarter the and Sure, in accounting. a takes our

the reported goods, million and in SG&A that purchase $XX just and in Performance $XXX Coatings year million, $XX in Group, our we if Performance out, was sold, was the amortization. amortization. total, was release, So to of million And of full of was cost accounting the break million $XX $XXX for down million included million $XXX million $XX for charges I by million the million. Coatings of goods there million about and for $XX Consumer And we Brands, SG&A speak $XX goods, amortization of Brands in of million Cost was SG&A Consumer if about $XXX.X and $X cost that I

Al Mistysyn

being and So accounting look purchase amount, million Consumer small if Performance be gross by going we in Group the Coatings talk segment, majority about about do, breaking the talk And can And to just by all it's $XXX annualization the as to million be, and in about really gets you group, purchase imagine, again impacts just it will $XXX not $XXX that We're of you Group segment. down tough be segment. want it synergies a vast intermingled, at the it XXXX, profit, by will to most hit, Consumer don't The of Group million on hit. will really accounting, amortization. is about amortization.

Truman Patterson

your in you prior the Okay. on about previously, mind legacy guys more, to said we enrollment own where take months and XXX don't that maybe Performance margin integration, year-over-year, the nine me that pricing whenever where first Could compared closed falling if through. could you months you to would Valspar we're expectations are had flow us in sneaking about us pricing guys one know, bps Performance maybe deal your the seven question, environment maybe – through the Coatings? And I now you give you into today following looking the to walk at up Valspar's on Coatings

John Morikis

Sure.

right agreements As it that last had in do in whom past. performance, had almost say, they've to the to I'd we break many Valspar. the agreement Valspar customers, the with agreements relates implied we where are of be. we wanted And are go to – day the or and was the one thing large firstly, previous These expected

Our goal retain customer. is to get and the price the

the of so right we expected. And rolling exactly to working quarter, and going be talked to the from think, and, it's fourth had as six customers about nine I We some in that preceding start we our that with we're months.

expect the So as that of as more I to into said we in. here, roll even first go quarter we earlier, now

we're on it little but it. chasing we're be As here to a bit, Al going mentioned,

hard working for the that ability to Our good the I'd about teams value get we we're continuing while we're it's and in, it. But coming we're And part how And are terrific discussions. having the hard make add to having to about say, pricing feeling sure are we're largest if. is our working not discussions.

Truman Patterson

Okay. Thank guys. you,

John Morikis

Thank you, Truman.

Operator

your Longbow line with proceed next Please with The coming from of question Dmitry is question. Research. Thank you. the Silversteyn

Dmitry Silversteyn

calls my Thanks take I for my sticking – questions, around say. should to

Just a quick real question.

your look your You mentioned when Consumer the release, getting segment pricing detail more at and you price how increase went in the press DIY Can a in actually, business. pricing that your bit you in little up market provide and ability XXXX? in you're of there the

John Morikis

to get in stated, our been of I rolling the and that. would respect that there. of out on been want on specifics the we rolling it's say, out to our of business, in. continue question, in as but I'd into don't it's customers – Dmitry. tell I for continues every understand I in, any just you I roll to really this roll Yes, side will one is say, would businesses

Dmitry Silversteyn

Okay. Fair enough.

volume I maintaining slow businesses kind will Paint Group, your but counterintuitive if which Coatings quick would most margins Brands, almost from question when North of the with and previous saw came margins raw Group, Stores a what benefits and a you're actually in it's little raw better as whole biggest understand year-over-year the caller there and a sequential you pretty at margins, materials on I in drop well. drop and just your your Consumer huge has how Performance than margins as bit been by American done margins But interactions, mean, the margins to increases. year-over-year, which the all to it look price of Just material your be a think impacted your mentioned, volume of have piece, in historically margins,

they can segment allowing inflation material what's your Coatings in your kind of face pretty raw collapsed Groups maintain stiff as Performance and in the you So DIY to in margins as you talk did? and in have Paint of margins about the why Stores much your

John Morikis

that Yes. I'd say, our we're a Dmitry. our happening buying can with the to typically projects through we the paint many start let our into customers we're of with with in painters, we you season. working when in and it's them know that with program having mostly painting limited so just scope. that customers, a timing put issues them The paint their issue, And program, kind but discussions side, work And even adjust. of we what's of are contractor on

And so the then we going as our if project, increase next new as are to reflect through project with that them we're completes. to the prices materials. going raw to move And work a project, prices

timing really it's So a issue.

at bit, work little quicker. so with We same On We ball of were Sherwin side. we side, here thing. - coating ahead the agreements a many the little the on a in performance got bit

side, been they've executing Valspar and little now. They're those able a right historically, behind, do to the we're it. On

comes answer timing. really down just to I'd it So that it

Dmitry Silversteyn

the for luck lot. quarter. Best Thanks Fair a of enough. Okay.

Operator

next Please line of proceed KeyBanc. Thank Sison question from you. the with question. The with Mike is your coming

Michael Sison

Hi, guys.

growth? to Just right of kind mean, are Has know what quick able you're pace? markets I Valspar. team little keep raw on a on the bit humming one up behind about materials, I been now. organic industrial but a

John Morikis

are. Yes, we

Michael Sison

their are to there? products ability match seeing We new and growth

John Morikis

Yes, Sorry Mike. if you there, we are. we're interrupting

side. it's growth nice and Valspar all industrial businesses. the what's We are our And really across the or getting both - Sherwin legacy of some core on that's nice is

there's We're we're what through that we about retain customer I nice retaining base, you to we're about customers, When we as feeling our mean, XXXX. our momentum going into sides, integration, really about. on the good feeling the here. growing the a good employees with go have think both the So momentum ability

Michael Sison

both on there. And sort to up be But Okay. to And months. what's do next you what the six that or quick the of shelf on ends that months want to show kept the line seems follow-up. I it coming longer-term? nine you've six a those maintain you'll love strategy space in months share

John Morikis

we're lows? what you're asking sorry going to I'm us show

Michael Sison

keeping Yes, what sort strategy that that shelf space? of and

Al Mistysyn

helping understand. strategy having reach We very well to goals. comes to Well, we're Yes, don't and that it understand goals. and I'll down a our to that sure know here. want and here for answer to that But responding good customers' you'll what needs their providing help very is understanding they any make them it feet work It's reach our to all it our our want them with I back to XX,XXX lay customer customer.

Michael Sison

it. Got Thank you.

John Morikis

Thanks, Mike.

Operator

JP is Thank Silke proceed Morgan. of your with question. you. The the with question coming next line from Kueck Please

Silke Kueck

Hi. you? How morning. Good are

John Morikis

morning, Good Silke.

Silke Kueck

Just some small stuff.

was but write-down next think I was year, like - something there in $XXX that million. Your or running think. this like depreciation of year quarter a I something your million the in for that fourth And quarter, $XX is like an Was number? depreciation asset

John Morikis

had for capitalization. We that in policy step-up depreciation quarter. fourth We on in change purchase took parts And hit a that Silke. the the will that took there on a We the a quarter. was change, moving accounting a quarter we not of our in also did Yes, make repeat. threshold inventory some our number

valuation into believe of I adjustments believe gotten XXXX. adjustments still us. got and most bigger we behind one-time onetime believe So we go open. do we've behind to May till the well, we that still into is gotten that But next end it, year, we still we've reviewing as But get – We're finalized. we're – the have the we us of

Silke Kueck

consumer you guidance at consumer high grow for the ranges? and first end think Do your when business, sales year, the outlook at do below to the a or for quarter And low in your business or have of the is the those you like look at Okay. going above the growth or end you view?

John Morikis

expectations would to are I that tell the out quarter, come smaller always it's at high going of you a Again, our end. Well, be fourth quarter. it's the you

First virtually dynamics. the same quarter,

So...

Silke Kueck

pretty pretty low, bar the But is – the bar is right?

John Morikis

is. It is, it

next meeting. You’re it bring exactly to – my I'm management to going

about at we if do the performs expectations business in quarter. that? high this How leave have it how first I of So

Silke Kueck

that million million. the And a know, going quarter, be at $XX incremental synergies looks absolute secondly, you end on ended expect I means like by year already I your that to quarter that year-over-year you said a also an quarter. the like you're $XXX you the And rate of get a because somewhere million it's to $XXX And don't are million, $XX you million. think basis of if run to if getting, like $XXX million $XXX fourth conservative

million? Or I so don't incremental $XXX the is Why lot very year be the should think more $XXX or...? conservative? do a So XXXX back low do in savings expect then number $XXX $XXX or the million you should or It that like, beginning bigger and savings than very half in be million you know, of the million. like the at

John Morikis

Silke. No,

were manufacturing tracking – I rationalization. that use are seeing synergy, example, is and you're there projects think run the in rate I'll what a the

in U.S. rationalization would late We and very until run announced September facilities the synergy the four number. likely the benefit But of we more in that of in manufacturing P&L in see the rationalizations in XXXX, won't my be of XXXX those rate So XXXX.

P&L. rate want to in careful I synergy the be to including our – got So about we run

the we we year. what won't think the continue that as the break into at end in XXXX – versus will our what of run to why, Many million tried realized P&L throughout that $XXX we following until just projects that's in we the enter – XXXX. XXXX, So to hit out be call, go think going of rate to those is projects

is. why that's – where it's the So number

Silke Kueck

very Thanks much. Okay.

John Morikis

Silke. you, Thank

Operator

Raymond you. Lambert James. Patrick Thank from The your of line Please with question next with proceed is question. the coming

Patrick Lambert

my taking Two for afternoon. [Indiscernible] questions. of Good Hi. sets question. Thanks

only that's think So it the I first XXX. in if The And if 'XX, sure million to useful you for So Did receive correct quantify run you had you out. actually put that one, I'm of to terms and if year some back the should think XXXX? not very coming the put But I for be synergies. of rate $XXX million. synergy. I I one. savings, next was I the look progression? run that's and rate. would at about very 'XX actually rate I XXX of also, But you basically, And savings but terms full beginning QX synergy for that exiting synergies, think could in spent overall. savings achieved, of cost it's at you difficult, in way $XX the mentioned the it know the that run seeing Is the we number actual year? Not

first the tax want the to rate. tax, part. set the is second on The answer you cash Maybe

Allen Mistysyn

run at synergy have number rate XXXX. the was talked about the of synergies, synergy increased the now end of million a call. closing quarter third million the the the a run $XXX $XXX quarter, beginning that our we of to the we're seeing of actually third $XXX rate On We million we out coming of And that that that on acquisition.

and That's the year in million and that to - As think to in goes goes be That'll as of hard timing million It's the got is say forward. $XX change on. you month. are million. want get the there getting in probably you, I run our is P&L, of those The month the or get the we timing out the the why talked give run I variability as hi, come as $XX we've as expect, year $XX about P&L $X a the knowing rate systems year in to But new far increase months would coming would to caution about projects as be - predict. the on, we've seven rate going you implemented online, about is run actual rate realized million. to number $XX about million. what hard the We've

The XXXX. achieve. about $XXX get trying end of the achieve what other really in was The we're accomplished million to cost cost through to you talked comment of

were integration and for XXXX, much guidance And we're So $XXX impact of X have from we end of the through million. or much forecast our to $XXX June about trying cost actual of cost as to XXXX million. the achieve of us. the another XXXX, in behind achieve get our us the In

So that's million. where you get $XXX

Patrick Lambert

Okay.

cash to It's - switch So revenue And of of how four reform. rates that? about extra Is calculate to you U.S. impact cash tax let and that million tax about and comment me it's taxes, reduction? the fair if on say is - that more $XX free that it see from the five you too? your basically I could reform. percentage assumptions, points between the four

Allen Mistysyn

lower go we effective we the as in to our tax that. through benefit is about impacts have rate. the cash a our related the on to get walking guidance, effective to on a there taxes, said, just the - still, expect I benefit tax we analyzing 'XX low And still that, we talked that We're we're cash rates. would mid-XXs That's see through our along we're But why and the with we'll rate. interpretations like

Patrick Lambert

start Is that XX to a - is them? good

Allen Mistysyn

XX be a good start. would

Patrick Lambert

much. very Okay. you Thank

John Morikis

Thanks, Patrick.

Operator

Thank you.

proceed Please with question next from with your Our line of is the coming question. Roberts UBS. John

John Roberts

we the pull slide real in again, had and expecting few the we've we'll at couple sell-in customers the sluggish the the consumer risk the on market back to then of year Back you. for of the because the that of the sell-in not back well? again, for will optimistic whether you reductions inventory start at low again, years simply have and end good, or go of end? this of past end year the And back years. was inventories the Thank the by kind at on it's again the a Are

John Morikis

that going we are here good tell results would that as high separate your that Well, expectations in have point as into I our refine determination. that continue a I help differences to it mentioned, and, the do entered would wanted you one, we is But we better is XXXX. can to customers say We what I themselves. John. we with

not just As I the things, that's And mentioned earlier, hoping results. made it's same for different I doing why point. that

We with to grow different ways and that business. with customers a different we our are approach them help their working can

end I'd in the year. the if ourselves we the of disappointed find situation same So at be

John Roberts

back And raw then on materials.

China. Epoxies in out. environmentally cited have production singled One particular And Chinese specifically of your don't you seeing driven competitors epoxy. in a the you're of because I curtailment if our were packaging architectural know pressure again, business. coating business

the if the know don't are I rest world. raw affected of their differently materials being than Now

John Morikis

I So has TIOX supply curtailments. as a sharply know much epoxies. that was in result John, been Chinese so and don't up XXXX, pretty of about

Bob Wells

say it back the right and spike There now, line. I'd seems to pricing. that then drop in in a was be I a believe, But

John Roberts

you. Thank Okay.

John Morikis

Thanks, John.

Operator

It questions time. have further this appears at no we

back for additional Mr. Wells So I'd comments. to the pass like floor concluding any over to

Bob Wells

Thanks again, Jessie.

me Community by each you That's a Again, our XX. our a of of up at the detailed Presentation the progress. so May brief Tuesday, our a by be wrap by our XX, that in March, The our customary and Tuesday, information is of followed the reception invitations integration session asking to business related by host consist and lunch. We'll on on We'll registration late and May host date teams, sending in site Hotel your e-mail. please review watch Langham we'll Let update leadership Valspar your out calendars. date a Q&A Boston. today save Financial to day Annual program will segment followed link

As I'll any next questions over days you call. to this arise the that handle available morning's digest additional as be few always,

or thanks If to queue for your like you Sherwin-Williams. I'd call and follow-up schedule. again us at add callback in interest joining today, Kristy thank in to you placed the for for you the and continued XXX-XXX-XXXX be like Johnson will can call, a to you she

Operator

participation. you for teleconference. may this time. lines disconnect Again, we today's at And you your Ladies thank conclude your and gentlemen, this does

The Sherwin-Williams Company (SHW) 25 Jan 182017 Q4 Earnings call transcript