SHW - Earnings call transcript Q1 2022 | The Sherwin-Williams Company

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Operator

Good morning. And thank you for joining The Sherwin-Williams Company’s review of the First Quarter 2021 Results and our outlook for the Second Quarter and Full Year of 2022. With us on today’s call are John Morikis, Chairman and CEO; Al Mistysyn, CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Jim Jaye, Senior Vice President, Investor Relations and 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. 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 Jim will I over Jaye.

Jim Jaye

a Thank an Sherwin-Williams meaningfully in improving material ago, percentage you, a cost businesses. margin delivered of weeks double-digit first comparison line with raw we a and and high good all single-digit morning, began and everyone. and of by in Sales segment ongoing quarter the our environment grew the quarter. demand, consolidated year against our sequential in choppy which results delivered expectations strong improvement the final in gross margins and by in inflation availability, characterized quarter

margins a area previously pressure This caught material an a near-term. to have businesses volatility. highly basis, on yet up not costs year-over-year under in all actions elevated announced remains pricing raw significant of Our remained fully

enter season. and confidence as team operating is Our with we the begin momentum, to painting

focused Our our remain is strategy clear that and on help solutions delivering we customers succeed.

in cost outlook. are first double-digit increased challenging who material along Group Let billion. Starting year me our briefly primarily my to in range. some due to largely due raw the to behind Americas the consolidated availability Consolidated with quarter year to increases margin in provide and will Morikis, by now. commentary low which unless material was outpacing XXXX decreased Consumer sales sales turning quarterly additional the period XX.X%, near-term. with numbers our comparisons, John Volume inflation price summarize otherwise. the and prior Pricing Comparisons $X The the comments to gross lower availability stated on primarily the quarter and issues topline, X.X% before challenges, driven volume, raw prior was us lower Brands Group, anticipated to are

margin improved basis, basis the primarily actions and XXX year. quarter points, month margin to to sequential first sales. gross On decreased last taken improved gross a by additional quarter. Our due compared the each XX.X% in SG&A expense during of pricing to

$XX before X.X% below on was $XX.X ago. year expense $X.XX per Sequentially, $XXX.X included amortization depreciation The $X.XX a basis quarter XXX million. to ago. million or X.X% improved SG&A in compared and $XXX.X before was the profit share was Our profit sequential share of by million quarter XXXX expense, tax fourth year points quarter to per XX.X%. share better. basis Diluted versus and decreased income acquisition-related million net Consolidated a per tax a

or XX.X% expense and EBITDA sequential per XX.X%. per was depreciation Wattyl per $XXX the per share of a first adjusted $X.XX income diluted On quarter and share acquisition-related million quarter share was share $X.XX the year Excluding ago. divestiture adjusted a net in increased amortization net diluted basis, sales. income versus

the of partially Moving price our segments, was margin few the challenging part prioritize largest the enter and up of the than increased increases selling volume, leverage to offset points were last volume operating margin high raw Brands decreased volume higher an XX.X% year driven increases primarily Group extremely to margin resulting X.X% divestiture. of by into percentage decreased Americas X to quarter professional an to This sales lower Consumer which was segment improved of the segment decreased has from in Sales to good volume inefficiencies, cost points where operating XX.X%, margin up price we in decreased to sales XX.X%, Segment Wattyl quarter. serving ago, of to comparison, material highest as Segment the and points improved we significantly Adjusted on sales and by single-digit comparisons in resulting increased continued The raw second contractors, make and over outside low lower the costs, volume points against related higher improved sales, Group impacted business. primarily three impact sales, related material margin to cost among XXX chain lower pricing our material as segments. from sales and comparison price the segment availability, to Sales XX.X%, due Adjusted the Group a operating America the costs, comparison the inflation control. primarily basis offset sequentially. XX%. higher which selling basis double-digit by volume offset control Segment price the company’s from basis improve sales weeks margin material as good offset XX.X% costs, of raw by double-digit were supply more in a Performance most, lower quarter XXX sequentially. where and increases. North against DIY higher as and XXX raw a improved Coatings partially and were increases. selling Adjusted was and sequentially. strong

year the John first outlook the for call some Let quarter over commentary and John? me for the additional quarter the along second now full XXXX. with turn our on to

John Morikis

Thank you, listening. good Jim, everyone and morning to

into to themes call Before business. we the I’d like some across our frame with segments, getting three some on today’s seeing are color

strong most business. the First, of demand remains very across

well elsewhere specific year a customers of due product to Our teams and growing meet as of to over project have accounts challenges. on highly volume share availability shopped are the engaged reactivating focused may that needs through new the past as and wallet,

not availability we raw improved on materials the to going clear, lack has largely now sales and bottleneck supply are a own fleet moved this chain has be forward. this material of our capabilities. quarter supplement as and to material second tank Second, in and expect late have meaningfully speeding do into the quarter. We the To delivery suppliers’ continued from raw employing impact has recovery by near-term, the suppliers’ In not their wagons to transportation the production completely recovered, logistics.

in Our is area competitors. this unique our among ability

also focusing of make us. prioritization raw that and the available are the materials on formulations to most We are SKU to

contributing resin is Specialty Additionally, needs. acquisition the to meaningfully our Polymers

Third, is XX our capacity on stores fourth in brought distribution incremental inventory place the better architectural than and gallons in centers and of at is The was of the running. we it in quarter up a December. markedly end million

we materials to of those supply the raw materials quickly As are improves, converting paint.

any March In fact, we in gallons previous in history. our paint more in made company’s than month architectural

million demand rate then and up in looking we at painting with capacity will begin in expanding $XXX North our distribution quarter CBG, building season be investment to Carolina to XXXX. as the we We typically keep future, and Statesville, through production expect architectural the to facility that completed at TAG run announced high which to and this additional begin inventory And serves fourth a a would. both our

toward previously of Finally, guidance significant provided. the we high end and inflation remains trending the is

to raw basket other including of in materials, addition increases and have seen we freight, labor. In elements energy the cost

we costs. offsetting are our improvement efforts said increased continuous As in past, these focused on have the

as costs in we offset our Additionally, and so necessary. actions to of to been pricing do all aggressive we these have will continue with businesses

quarter The quarter, Protective and comments our in double-digit both will as Americans the up order sales Marine first led were keep of our Property and growth was percentage. get I As first Group, in which my by brief far by outlook. a Management, to to

and double-digit commercial New residential, comparison we digits, double repaint mid a a strong DIY and residential faced by percentage. professional single-digit to were prioritize as up contractors. down was sales

segment expanded the of is We increase volume a announced We sales, The quarter, in with in the have under double-digit sales remaining product first for in XX see to still year. stores in XXX realized planned. perspective, sequentially. than new performed XX% pressure. the low margin increase part going plan price first the larger From interior net Xst mix. the and We in better a we for February opened as begun quarter the also with margin exterior to price business being paint recovery interior as

sales and trainees, new also management reps, services. products, innovative We ecommerce growth productivity and our continued enhancing investments

our Moving Group. on to Brands Consumer

Note in Sales were as we growth this we was trends which paint nearly in basis pricing. Europe North which on me have quarter single-digit lockdowns. a While Pricing softer the in SG&A Performance divestiture, let increased comparison. was strategic regions XX.X% anniversary our from percentage including growth. encouraged on expanded positive Wattyl and about sales on single-digit that and in incremental divisions supporting now growing key comparison, Coatings margin high first benefiting faced China, range. against and by Group. significantly the double-digit all America, on business COVID-related our of comment on low points quarter generated as comparisons Segment Group the the focus and initiative. Group Last are were pros who very to challenging and partners the Price double-digit sequential was volume, the we sales a quarter. we leverage in continue X realization in increased flat in a retail sales drag all teens and by high quarter, range, and volume faced in a

and demand, sequential Asia pricing. new As saw by customer division North the all quarter was strongest, and Packaging America, nearly coil, Group the we respectively. and groups, driven industrial, in followed with by gains Every wins, share the Latin improvement fastest general grew, by auto double wallet meaningful Europe. wood, other Regionally, grew America, industrial underlying margin by sales refinish of in followed during in digits, the robust in quarter.

the purchase share outlets, in shares dividends. in of of our our We dividends to $XXX.XX. distributed to moving form approximately We an $XXX.X X.XX $XXX in quarter. invested million buybacks. the $XXX Before me returned speak to in and capital million to million the at We allocation let million price quarter average shareholders

including We project. in million our core and expenditures, in invested building futures $XX our $XX through capital for also million our million $XXX.X CapEx business

of April increased Additionally, share borrowing the with Industrial our ratio on Coatings as ended a European quarter times, Sika of business closed to net debt-to-EBIT we X. the and Sika fund acquisition We short-term repurchases X.X the acquisition.

high closer the X the X.X to of the end by to be year. our of to times expect range end times We

double-digit by Comparisons as continue markets, though America, to we very facing driven end comparison point. dent the segments, the demand strong Rising very our slow, residential back management, mortgage an have quarter rates made architectural well-positioned demand have year. in North Pro this a demand remain in to that be defensive multiple property outlook, post-pandemic our we was I in Turning will residential the architectural including of referenced nature. new in extremely customers repaint to and not half recovery. strong robust appreciable ease proven earlier, a to growth are in which residential more to Should the for we see

the year in outlook America, our will the based for us. as be strong closely We in Comparisons Demand year. region. remain industrial progresses on although continue over from war remains expect shared European with the largest demand the will challenging Ukraine. remains customers potential impacts monitor North strong, demand have also the of remainder to our we strongest

in below dampened company Belarus and suspending For operations are wave. these been we the in and sales latest particular, Russia our In well the are and the sales Asia of has total near-term regions. by COVID-XX record, X% China demand in

expect architectural we we aspects. we innovation, and to perspective, as the outpaces and that in we believe value-added leverage grow our chain industrial challenging market. rate at are to most From supply a the through a the differentiated On strengths continue will sides, distribution, services

we going As forward. I on improving my to expect earlier to comments, and minimal this described sales impact a in have continue

the the of trending On primarily are we the driven by our are we is moderate Performance is range, toward to Group. considerable elevated, of short-term level of visibility in material back remain the volatility mid-teens year-over-year or double-digit the low guidance. inflation do in quarter market cost There high inflation beyond side expect raw half the of maintaining end the limited. Though, We the our equation, year. to and the Coatings two to but

necessary. and prepared if additional we pricing are for remain Our increases on actions track

to to double-digit second increase we anticipate the a XXXX, price percentage will compared consolidated For the inclusive low sales XXXX, by of a second of our quarter of mid-teens increase. low quarter double-digit net

expect We a up Americas single-digit by The to be low high Group double-digit to percentage.

by up we the low We to up a percentage. low percentage. XX be Performance by double-digit to Coatings And mid-teens Brands be expect a to to high-teens expect Consumer

issues disasters, I derail year. will to Our impact guidance weaker of half the pricing sales EPS we COVID due of and momentum, began actions including half stronger weighted heavily adjusted second second growth first growth volume, natural comparisons. you chain full half of with great second XX.X%, the year and supply XX.X% the of the XXXX and before is remind XXXX half

guidance the For full XXXX, year unchanged. our remains

net to high sales by increase consolidated single-digit to double-digit low a expect percentage. We

single-digit North of be American Americas or a We at paint percentage, mid-to-high to group stores the end the up expect range. The high above with

Brands Consumer a Group a and expect low-to-mid percentage. single We high up to Group be Coatings Performance up percentage double-digit to to single-digit by be low

unchanged. interest $X.XX quarter in and full per net of earn earnings year compared over income additional XXXX. acquisition-related tax in the depreciation range guidance per The $X.XX share, full on expect of XXXX XX% per we and diluted per share provided midpoint expect points we in share. for the are share increase share share to $X.XX, at We year basis, Full currency includes XXXX year per rate, an On of to per to amortization earnings an $X.XX approximately CapEx, delivered $X.XX XXXX per XXXX. we exchange, expense, share, amortization expense last $X.XX adjusted data $X.XX be the

the capabilities, Sherwin-Williams and As strategy, there team industry. product we service the painting focused we differentiated at no on we bring are tasks XX,XXX the our season, solutions the is The and enter of confident the in heart remain employees better to of hand and customers. our

and extremely a years. will challenges even we are two towards what excited gaining well-positioned as an Our faced last expect half the be the are stronger the of momentum year. we progress am second following strong the business by emerging we remains we very as I Sherwin-Williams we

you, business call, to forward our the commentary are scheduled New we our provide person. are many available upcoming in we prepared for you Wednesday, Community I addition at concludes additional And on remarks. Financial our In looking website to York seeing and event remind market Xth June our of that Presentation City. today’s will in Details will very and much on

at We take questions this your will be happy time. to

Operator

Morgan Certainly. coming Stanley. from question from Your [Operator is first Instructions] Vincent Andrews

live. is line Your

Vincent Andrews

your of the you, stores the much in flow am some volume. morning, if if possibilities second out all just versus limit you If you you volume could going to able good maybe imply quarter TAG to I are and for of and the sort to how I concerned of get about Thank in think we might be you everyone. you sort volume But do am price in could second quarter. back wondering I the just talk second just you the know that are had better in I March. at is production wondering quarter? big any that the amount volume there through in

John Morikis

take the what different maybe to go is, quick will I little the the Yeah. I Vincent, give way asking out on think this here. speaks of you because color and demand, through just a that to bit segments run a you are

that also experiencing with raspberry backlogs. believe start shift that me let we really well a plays positive really strong There’s customers paint advantage. tell are quality and mix in that’s So you our place our to and taking

faster the are this ability applicator market drive through productivity grow painter that about helps that is providing with the for so than greater product and provide So our ability that to finished quality also volume, talk to more do be helping are apply product. volume might them our we a experienced able we contractors to when to you them through our includes

in is look driving in you clearly their appreciation for would see LIRA forecasting this double XXXX the growth If home demand. at you area, digits.

it’s well very -- above for at sales overall strong comp slowed If us. Index inventory, lack you against the XX. very look in home of year-over-year NAHB have is market a NHAB Remodeling strong existing strong And but a

are shortages area. I been to with through are we backlog in material now here the here constraints and well. the the Maintenance solution is our impactful growth. those reporting positive. continue yet to you that’s good but residential end going addressed say, are an at So demand well demand. as mentioned fresh, we areas delayed along There’s see in and of a with projects area on grow return this we even Commercial, -- our expect governors that’s starts improved is in this there’s of current I that grow aggressive travel, varying and But a pretty increased is telling office, this contractors awareness market as turns underlying and rate. these projects looking to underlying year say, many of would keep area need clean, expect are Projects demand as Property solid maintenance the also share customers. and are see absolutely pretty Customers are inexpensive, apartment the driving to I’d really is we solid. being of us. assets know, these them of strong solid continue repaint to labor market And acting as to to resuming are is albeit school an with and paces, paint the demand

terrific as the So availability as products, drywall stronger any Completions for and here, current been and months nine from year-over-year that we could us. straight obviously, here growing remain construction a the architects, starts Index, the project are aspect are XX anything be as of the is generally out. really material here Dodge months, but focused by residential, by tracks that’s area, Index is some due for to new on way, well. And in great both than cases, permits softer really labor other strong we that which months this got anything is building Architectural which position single, with significant. spending be have here markets to multifamily leads to Momentum an project know, that strong, impact the could to Building positive has could roofing you and -- commercial

alone, mortgage kind I’d housing this to periods. low in area, mentioned of the the we throughout about thought between average USA this accelerate as new that this a close pace above despite and have it in article gotten an to construction captures meaningful most in shortfall trend need quarter which spike rates, units lot a the have more in gap. the seen a million million still X.X annual just we million a other are sentiment housing completed We residential. new level, X.X new this earlier I In current X I have per still XXXX to that’s to to million million, rising housing not well would by one decade, than units a more today and to think rapid from slowdown, X.X close area, unit of and building questions that than current were X.X highlight X.X more about talked million I Even of They ranging if comparison at the XX to take year the pace continue unit than gap. years a

So mentioned, as got we strong I position have a here.

that, are it these of here. in regardless years with I stronger determined professional it get strategy and whichever this will happens We to to that development is position areas, on you we deployment have tilts. to been now strategy what way tell way capitalize And driving for be in our company

market and if should talk position on So little a capitalize going some ourselves really DIY. the hard DIY expected. able would further to to on one any it. we We more behaved be I that one worked as am talk touch then whichever of that the about down, way fact these to am the going believe to area might be Al bit on ask volume I did slow shift we to areas capitalize on able to to have we reason for to we as

professional was and comp. As demand as Brands impacted difficult business. Consumer key prioritized contractors our DIY earlier, normal strategic also to in I return But more customers we and business our level mentioned continued to that this our this against,

Al Mistysyn

is this Mistysyn. Al Vincent, Yeah.

about of That’s includes difficult level be talked As primarily digits I comps our to -- the TAG John price as that TAG projected to digits because first a which digits set quarter. sales down January to the a with up flat low-single and low-double down slightly. volume flat our our for first and single just high In sequential expectation second improvement be with on the call, high low, talked our architectural we to quarter volume, half for Consumer about. low-double up

analyze the So half. sales an you When you year first mid-single, easier end about North being the in you for be the about our price second slightly that talked of paint half with down low-double We our stores America look in took we growth America above range. price TAG which North the high we quarter to in the second quarter. I will to comp to price you talked digits TAG paint leads in and expect on half low-to-mid first of to increases mid-to-high single-digit gets at full be as second the digit or second flat the in mid-to-high of last year the That in at momentum at down trend case. stores that half, and single year, fully the the the volume in a

Vincent Andrews

much. so Thanks

John Morikis

Thank you, Vincent.

Operator

Thank you.

Your question from from JPMorgan. Jeff coming is Zekauskas next

live. is line Your

Jeff Zekauskas

you comment contraction residential volumes in new residential, Can can DIY? the the like effects on about quarter business the quarter? Thanks of volume material And talk in first was excluding your you the first the commercial, in in volumes raw shortages and what repaint very much. on

Al Mistysyn

availability, improved I talked we rolled in some on be choppiness with mid material our about thought we what out on in low single-digit a raw February. that to January, quarter it the The we would way say is, end Jeff, saw Yeah. headwind. might call year availability,

it to As a We million it the levels, largest April. historic of John a in I have not March end but of is that, to the plus It’s into XX And March. John talked March better was and as significantly history it through gallons in talked architectural significantly architectural points improvement show -- increase. from company. production year volume continues end on the data significant December improved gallon about, -- into was single and in about, the improve that our

XX we it’s is, availability have really at tough, have look the much us, The would in how much lot fact exactly pinpoint to have in of think, versus how how a because availability behind quarter, sales had much I been that put the could I gallons on inventory. our quarter would So, be we expectation other fill quarters capacity, highlight third of And and sales SPI. point of flattish to from through our with architectural million the data second inventory the to confidence additional seasonally is, quarter along help our of the highest quarter. first I for

with you the our As would the through keep because keep back buying be last summer quarter up similar were capacity in up to we Jeff, the of -- you sales put and and in, inventory fourth than volume. historically, decline significantly similar two getting the we Because know, able XXXX inventory with to back quarters, our increased volumes can’t we where years. are higher in going the to

John Morikis

responses. to Yeah. thing The great would those only I add

way of They is I think important those trend clarifying that as all quarter similar. run And to volume back will because I were manufacturing very your Jeff, hard down, maybe of they to up. time segments, inventory to year, your that quarter that don’t is this on. all through the till build them point next each think the our improved, all I all improved continue question the went about probably point on we break to will assets need

Jeff Zekauskas

for the quarter higher they Were lower? or

John Morikis

were lower? they Year-over-year

Al Mistysyn

digits comps and new that of paint, were Yeah. raspberry DIY the primarily had. as Jeff, and because more repaint well. they -- was commercial strong roll res lower, up difficult be double new up up Whereas we would res,

our So first in quarter. tougher comp

Jeff Zekauskas

Group, you I with that -- actions in your America. Coatings. Performance question, for But you price see in done more in Consumer go that are slides And my second and commented you to in Brands have pricing didn’t The Okay. have the increases Americas

this year? So are Americas we in for done

Al Mistysyn

are would around, say, input visibility and I one costs. That volatility Yeah. we the raw but visibility the quarter in best. look when at we other Jeff, I the is wouldn’t done. not just at materials, out say have we market

you I we think do the see will is in what past. like have us

or to see those very price. September meaningful change did and what with see out a prepared August and them, additional meaningful go we a X% We out went we costs year, discipline if surcharge. will we we monitor in in closely Xst to we are and last went we if a with Similar out input

have these and we to anticipate. closely really we monitor So to react what situations

Jeff Zekauskas

Great. much. Thank you so

John Morikis

Thanks, Jeff.

Operator

you. Thank

question is Josh coming Your next from from Spector UBS.

live. Your line is

Josh Spector

for Yeah. question. Hi. taking my Thanks

on So consumer of just on some Americas to Group. points your goes mean, The kind the prior of side, I

Just XX% up say would as from much level? moving you versus wondering pricing growth high volume of refill the the how single-digit

John Morikis

The -- if I say our in -- Josh, look XX% about at quarter. growth first talking you you the second… are our the

Josh Spector

Sorry. guide? quarter In your second

John Morikis

Thank similar look be to expect price you. you XX%, at high-teens, low Sorry. When a amount. up

have which strong we TAG, As significantly comps, easier was down double-digit.

I think built had inventory partners. in inventory an strategic at quarter when our you our build. look first We the through

chain, both we our TAG, a in situation inventories across As drove quarter down the you were we on, went about expect, and Consumer we the would that similar talked as retail third the quarter partner. our and fourth

we North second quarter. softer build strong level XX% did our outside our -- do U.S. to we But store So about Asia inventory the and partners. with we and some we of to comp, at and America did these in to have a expect have Europe pretty strong, be weak with the sales expect Europe That’s really comps Asia. and be

don’t I an our have in build So, rest number retail sell-through, first exact had how say, quarter in our to much we building partners. inventory versus assured, to but was

Josh Spector

your your guess Thanks. stable? generally Brands And a channel, group? in either you the or any I stores I pretty -- or Consumer seeing change channel or is any pricing the as are guess in there DIY down things up, goes up, Consumer as and own follow just trade any

John Morikis

the stores our it mix Consumer Brands a say to quality positive as more we I’d No. say pretty shift are moving I I’d I’d relates into seeing higher down. and in customers. are they earlier, Consumer side, Professional than of in of as stable. -- our rather say mentioned our side shift in

Josh Spector

Thank you.

John Morikis

Josh. Again, that’s they can and has Thank that so they driven the the as are as contractor you, attack the mainly off backlog be to painting they of productive can, labor design of facing.

Operator

Thank you.

question next from is Chris Your Parkinson Mizuho. coming from

is live. line Your

Chris Parkinson

Great. Thank so you much.

little a you. Just the into well also you efforts? Can industry’s as effects from investment some see do had the Thank shortages? further own, those where we that efforts resins you your community and probably on certain additives? when raw should as material So backward the integrate the hit on stand with and to

John Morikis

-- of get and bit terrific opportunity Well, to get idea have Chris, will, for risk us, we this, believe out on and to top really and and are that, was these don’t think, an that going better assets. that some away leverage get announced as mentioned, a of effects it SPI the little SPI upstream. coast I purchased of we resin this on I while our little most resin. assets. dependence importantly, the as and that It and doing customers think or assets see hurricane we are strategy when are the on a had Gulf We the asset, set the helped to from also, there in you for you further it’s always expect to us always only you should deleverage, the of to terrific Each the with a as mentioned, that Coast get if we terrific to manufacturing facilities it’s to trying we starting people, Coast, they of inland bit producer continue a have us manufactured us.

of assets. these to see productivity are We more already out starting

expect to belong. to TiOX in There reasonable great some business, get that be us into expect additives, very don’t with We return. where the we continue. that’s not We but there, investments will

Chris Parkinson

market shifts, at product just share quarter just in also it. some share in a community, in shifts, finish past chatter Got There’s lot to due regarding investment market the part shortages. been least potential of to the

have you confidence opportunity of to to what build us, speak to likely chain? public your all convey normalizes once to those that response you ability maintain Now debates to in regarding or so market supply everything Thank your can the the what’s and share, you us level much.

John Morikis

well. a always that I’d that to is strategy. you blessed are question, confidence Yeah. our Chris, will strategy. us tell appreciate you I And strategy can this high. important. very and includes is with the level We consistent we branding leverage tell and think I speak that, We our and of serves consistency that that and we model equally And model, a distribution strong it that brand very control

innovation designed We specific develop product. have an to program segments

our we what these a able are a We in we build the for because are and to of so that the them needs specific claim. our that understanding needs have our just over is that our trainees, way, one the by more segments. the we was were business, segments these we each Training four our have CEO We customers. XX as talk most and people talent. XX the what Vice college this enter what Presidents we of very We important. not painting the of services, company, old. training recruit XX these And making Program a outstanding these are throughout about These same this develop reason challenges our the probably train retain services industry to to talent. and customers, example, our thousands Presidents have good people. Management to are Management X,XXX make model, And in I management year think with throughout training. we nearly years, five finally, that from of do we and was the probably a and Group And are develop trainee and this TAG years were the best trainees. of the that have division program serve have this and products for to company. a people believe I contractors And So President understand investing now we we is around to been In the the graduates we is control talent help have are management hire the money. I Program This graduates that Trainee apologetic program. of have our We confidence X,XXX an am we

XX of leadership have service. greater where we -- paint they win. experience. say our are provide they of have people important our than digits. and of because direction they these to rep -- most people. assets single tenure, nearly employees more and how what out over still know our leaders the XX% And years single years That’s know tell to Training than digits, we constantly are and they an hanging the gallon Turnover our XX want X,XXX force this to And our of that’s paint, organization, tenured still environment half has XX One our of of are years our environment more they companies graduates do. customer created don’t I people of service. our buying that, over or and in facing reps customers, of are Our of a in XX% that and Program our compete, stay. workforce managers field win we is leaders people Management of In do, to has

Our focus making up paint day, they things, wake on contractor and every two people successful. painting

store specialty painting it this format, So contractors. works for

always company. avoiding our talked complacency about We in have

In fact, that often kills. say we complacency

get our come better every this make I will We to But day. down better to our day. were I versus working to do working are people We painting will this, believe others. every contractors say

We have drive, of lot determination. a a XX-year lot of head a start,

going not a looking forward win are model. I little bit. competing We by am against any to to

Chris Parkinson

color. much. so you Great Thank

John Morikis

Chris. Thanks,

Operator

you. Thank

Your coming Baird. from question Panjabi is next Ghansham from

is line live. Your

Ghansham Panjabi

as to guess especially your Thank bit in for going China, morning, XXXX. iteration earnings guidance and with disruptions less a supply seems these in I you. potential just certain, Europe along macroeconomic everybody. back well. any Good backdrop regions The through

you Is earnings would better what are view of wide to it on for about? think the global it sort initial Now of positives just range call or to what else relative raw a as as simple year, still have macro? understanding that you risks incremental to would have material visibility the you that access as the offsets some

John Morikis

a I’d we our the and customers first, deployed, really also I And about say about have just a Chief talked that his people. we our I that’s say third Colin the learned say I’d Officer, But working well team have at have. are with responsiveness I’d this, that advantage. if Well, will of who to talked we of to Procurement be your assurance us and we our assets, look you The Davie demonstration continues have to lot that to responding say have stepped serve and point an suppliers rewarding needs. the creative supply up have in to been suppliers the month element think, in I producing month in this a that important demonstrated of and the history have market of product. March, you company’s supply, the appreciate record in we once had we

and one what doing. and everything with customer. thing. the I’d it’s all It’s we bring thing, is And starts ecosystem. say it’s not entire are Everything It’s that, we so, the that focused one

we working through learning XXX-year-old large respond. looking So and are and are that is this we to and lens nimble back be company quick

well are I from am say it if in, at that the at And lot I that, a positioned be high to of a respond to able am looking looking so outside really I’d assets demand to market.

Al Mistysyn

would just add to Ghansham, I that.

the gross brunt the done. out at raw the price look improvement will the Coatings segments the particular, sequential our hard those one and You -- of material in that teams all and operating margin really have on took second Ad sequential increases been operating Performance in that occasions. with each improvement of across the work segment highlight half I multiple have Group

first year-over-year. the our for the primarily raw you margin operating took operating materials increase if second for at significant -- were flat look about And adjusted You -- in half. we recall, that increases segment quarter

has and continued gross we to and second are margin that the So going quarter. showing absolutely just terrific done job improvement getting that an its team price in in price, our holding see

across of in drive are but expect and improvement our a operating topline. margin Consumer actions, than the bottomline helping the in each and pricing our the of historic low all operating fourth improvement the the We operating volume sequential to segments, to and margin gross albeit faster that our across the margin from quarter, efforts adjusted each continuous see segments

what gives confidence going improvements are goes on. to me we continue year to as see So that the that’s

Ghansham Panjabi

Okay. if their for mean habits had evidence Coatings, mobility switched very occurred coil, And in packaging, that that. reversion of volumetrically. we lots have normalizes. of There’s Thanks sort of post-COVID a to Performance run consumer have have kind as good very, of businesses of then et just several cetera,

volume do trend kind think of So individual the to these PCG, few next unfold you expect as how over line various you the businesses about within quarters?

John Morikis

your point. Well, are really we excited to

a a momentum with to of give of teams businesses could that is less got this I through we if little would lot maybe like And because sit regularly so about we that’s question. there’s the lot talk these there’s have strength, and bit you opportunity. just this of We in boy, walk and if expectation boardroom a quickly, much but have. of you no the We our room, in competence for each there color, these segments,

growth we If double-digit you in packaging, a had strong quarter. look at our the

around of last had per we the quarter each fact, for business, this sales, quarters in In sales three quarters have the record with last of packaging XX% three.

look at and are anticipation in you if expansions robust year beyond. in non-BPA we and Both is strong of here coatings our gain XXXX our traction. demand investing to and food very demand business, So capacity this the and customers in continues a beverage,

in with So came and is we we is Valspar are a acquisition This people we a this had phenomenal. technology double-digit quarter nugget thrilled here here metal of have, had obviously The straight just have by the quarter region, and it the about led that we and in that that growth the double-digit business. differentiation have fourth as the growth buildings. coil. in extrusion coil. double-digit every We That’s sales

So forward. we this are excited going business about

That’s double-digit finishing Our general straight in led the double-digit was growth general industrial, America were by quarter. first and business, with Every GI. strongest growth fifth in again LatAm our region here. quarter North and positive transportation the

industrial a here to share technology pretty Miles below, as a terrifically double-digit and brought wood, are had from works refinish continue we we in in but with single-digit growing nearing Our technology are tech that wonderful some high our We levels Valspar growth. here And our pre-pandemic technology driven leveraging auto key had quarter. aggressively. Sherwin here. and

correlate cabinetry, here, We flooring, have which momentum res furniture, cabinetry construction. obviously good positive trends new kitchen very to got similar in and

and LatAm, and increases fastest our largest in markets, all Europe but America, the region were and saw Asia most coil, packaging really right region, and of with So we clearly double end behind. them pleased strong grew and by by North digits all

to So lot this here our stands beneath of from a that team in remain Karl experienced a are We strong. really in Got the us the division organization TAG. lot PCG. expectations true of got well. terrific a came as of and We leader Valspar. and Karl Jorgenrud of TAG about same people But retention really as well. the importance talk that presidents

together Sherwin average talked came the we between greatest of talent, openly retention and Valspar. division average of people. when we you Sherwin-Williams years Valspar back, those about presidents And and when terrific and Our been look this in XX again, have infusion

the X%. still turnover Our below integration is this years after is and

talent side, side, I in better. could legacy on get we at and Valspar. we the strong, came some on side architectural of pretty always They think the think are look like from architectural if the you architectural are talent brought, the we so, had the obviously, Sherwin -- And pretty to we

the we at fact, on side that’s come it, the side have us it confidence the the Valspar architectural of terrific gives PCG In going forward. when Operating our new Chief yeah, came our Officer through benefits retain ability look in But I Valspar. and talent had to and from

great have got we fundamentals, assets. So

got technology. have great We

we got people. and And leverage to are everything going that great we for great get. customers we We have have

Ghansham Panjabi

you. Thank

John Morikis

Thanks, Ghansham.

Operator

Thank you.

is question next Melich from Greg coming Evercore Your from ISI.

is line Your live.

Greg Melich

margin gross Hi. the progression on follow-up a Thanks. detail I want the to quarter. little in more

to mentioned I gross you quarter? give price. were volume do than you that second that the that down mix number you gross think us due on continues the in year-over-year, margin Could of gross and more pressure margins the think that

Al Mistysyn

single you higher operating margin impact. but just talked Yeah. about of volume, margin the is what driver and is Greg, it clearly -- we gross the know, have and a that not as always biggest

still in cost you are year-over-year you we little look quarter, in our If at price -- first a our if bit. chasing at look

on of we end that we towards get I quarter. get top the second of think the as

the also as drive help is seasonal going less of be it’s Greg, our And in to mid-single a second help at down quarter against look will to and TAGs, is but gross first digits, that’s normally see in our margin, quarter, And going the shift still be down our second in slightly a our our quarter margin. drive our grow in mix second margin, as you volume positive quarter. drag. operating drag volume down our it it’s it help to to So That’s you well architectural tough going to you to be comps increase flat in significant a going would. a

Greg Melich

another of if what end seen Got round half, by quarter, it. top costs, the the of price back of back top higher And given at range? we of do second we look of need is raws the have at the we stay on year-to-date with, half, when end for the the pricing I on the raws to guess,

Al Mistysyn

more Yeah. Greg, we I are what -- on what think, is looking the side you at industrial now. right

I on think the when we It’s high talk of range. the end about the to more industrial. moving basket

increases price industrial uniform. as aren’t know, you As

quarter, -- in first some roll the on end some into year about be the that call, quarter. our So may there I second talked

accordingly. will continue to are year go and going say, volatility monitor a to monitor react and that, not have to and half, of the need am on we to pretty based just a earlier, out just that lot last don’t we about get one out I It’s is the amount have the of adjusted. -- quarter or our But those the same. percent had talked best, increase think to I the are that may like at visibility much we more, I we going it and the think, timing

John Morikis

Yeah. It’s to, What we is we we a need say not hesitation. will. if that will

Greg Melich

be want waited a and will little as a get think, two sure? just follow-up that, half just volume past, rebuild more or again you pricing, think, last about an month I the year, I to four that in Do volume are a trying shortfalls, in John, prices there you within but quarter. you you to to share. now resident to given hike am obviously, especially the extra on thinking is a just the months, to maybe, the you tendency are have back wait And

John Morikis

bit this our I know different and we further communicating have volatility. right, Good that about portion you, that. are customers greater now done are I of the we Greg. well, is we volatility have, think have for little think a our you the clarity cycle with you to company we know what’s because And I been into

So will then is to be we because a price. I that, building we the there the the keep don’t past, as to we have quicker minimum. additional increase buffer need know be with to try to if that out to that not our been and the price had in customers, communicating is more we to we to with a need absorb But volatility are have intent wait to able volatility,

would we or prefer quicker, your I to nothing point, be So, and do think, to moving would enjoy we it’s doing.

do you quickly. it. yet if of customers will to do we it, from But the for We have thank a our it any need to we be, are get going note

Greg Melich

Great. Thanks and good luck.

John Morikis

Yeah.

bet. You

Operator

you. Thank

Your John is question coming McNulty from from next BMO.

Your line live. is

John McNulty

taking Yeah. Thanks my for questions.

think just kind your the of early And all? I and from should mentioned should get are the is how call fleet put logistics were customers top in the is that of that decline the it kind the of actually the that it that your it’s mirror issues that incrementally that, us service more we appreciative about had the understand, on rearview You you -- all if of? cost a you big of and something think might guess, how you service, once -- us you help about our for of of a, perspective. Can one, own your is part part hey, we that in of how then logistic that help just flexibility using have to customers charge with to or

John Morikis

Yeah. made we do suppliers specifically we not product we mainly John, their customers. work are do it. discussion question we trying but our are to when fact along bridge goes have to to first that. with suppliers, we that where we to there’s in going go with need happens, we to was we to speaking it your intent and them, to gaps the our there that this back the when what ensure earlier. expect, What together me that jobs, it, let the not comment would them, were with work you about and that that It’s And do need with a cost as

of So a the care and it less our focus is when on that. customer those right there got leverage we are that We do point now differentiation. doing our are fleet is and and and our company, times taking you of efficient the fact we know have

example, that the recovery side about For a to largest little Brand approach very Consumer of on adamant North was was to our one our a have customers. less have South important to we than customers efficient liked seen, but would

and undertaking our not to expensive -- DNA. which our customers served not most to we what least to their us us respond way so that And was needs, allowed that’s and or a that took in

it if materials in some producing the so, we of shipping raw we it a and across be trucks in, to raw fleet country the it’s efficiency we way for choose it, and back to get the happen. to help cases, in when We than And get waiting cases we want efficient if to to right supply in to its or are time, we some and that just use our where we are footprint. pinch able can to it where plant, need will materials less we to have supply were are like now, are chain ensure to the comes this we terrific And would our what over that have going fullest. to But down not to we that our optimize its serving customers. work we

leadership that, expect should team, as focused on a it. You we are very

we but understand that that, highest we servicing understand priority our teams Our is have. the also customers

Al Mistysyn

Yeah. John…

John McNulty

very Thanks it. Yeah. Got Go ahead. much.

Al Mistysyn

add a drag is let make down, out and to supply driving to lower margins make point, supply Group in that year-over-year, But are that’s what operating That John talked that bit you we in is volume call of still The margin -- quarter. an and were comment to little only that consumer anything being the chain customers if our drag, about -- John’s -- I operating third we Consumer our a willing that our is Brand a to in probably investment and in clear. the servicing clearly number is, look chain one did would that that’s they then, just better. efficiencies, at first

John McNulty

for Thanks Thanks. it. color. it. Appreciate Got the

John Morikis

Thanks, John.

Operator

you. Thank

Your Byrne of is Steve next from question from coming Bank America.

Your line is live.

Steve Byrne

commented the or previously end the noteworthy. quarter than but have inventory big have is production The low driven that you. volume do for material going Thank March at Is into that costs volume build raw of quarter, you more a by was you Yeah. the month really you might largely you. the much been

driven, volume this is is confidence that half? of you are seeing that’s backlog strong what So is such and giving reflection your you as that Pro a is a -- contractors in what if second have that

John Morikis

clear. Well, let Steve, be me very

We in have second hard incredible confidence stop. the half,

to have sequentially given capacity out, that between going all be are are capacity. we We speed, do more are to to would we capital that quarter, raw the our have, working have to have XX likely we are inventory first It’s and materials of continue inventory more we time to and And next of serve we added capacity going available. utilize to coming had we serve are have supporting We the million little we customers, now to don’t and in the online. to the if additional of put to that. but customers this year to able We a each our full able became serve inventory. because inventory we our normally first the growing everything in month building able that be demand, It’s out building quarter, run customers. gallons additional

Steve Byrne

and first second historical to how do think be? And second splits year stronger this between you half perhaps, half half could sales, relative much

John Morikis

the be March, this make says It’s production part raw have a we materials. comparisons that, of ability we month have second, for of we I a to product, much of going partially just have that as year record we to a record year, sure. -- success the talked, -- in our have, stronger And because

the strong. demand so, And is

materials. raw have We

capacity. have We

a have the in are We to time going good back half.

Steve Byrne

Maybe just from do your what are Is your how fraction of get you data? one, that quick that Pros partner? and consumer that sales one pain

John Morikis

Yeah.

and you to going of not is mix I relatively will comment our are it’s important very but growing about overall small, tell We that business. area. customers’ a a

of making here. are that here, been have for a investments commitments we making that talking the the We quarters number are about we

even business came the raw with fact that fact, In were just that and we a through challenging materials. pretty prioritizing time we

our space. and channel. this stores, have, there it, strategic model been get want love this strategic model. this our determined that in are a Pro products we centre distribution through They own array we available terrific that a but own a very are excited able at only to of success, you marginal to prefer full are for had, partners help are home home too limited we win centre. because speak be space volumes. at think it customers to I able of they long that to and opportunity amount marketplace, if our a We In through in be who controlled buy there’s competition a should look the in about partners our there’s paints we want And and stores this along believe, with to

Steve Byrne

Thank you.

John Morikis

bet. You

Operator

you. Thank

Your Citi. from next from P.J. coming question is Juvekar

live. is line Your

P.J. Juvekar

Yes. Hi, John.

stores? that? load of in so also, stores? the raw material these you stores supply and complexity stores capacity or you quarter, about add cadence talked new said, only new chain You And excess a this the is Do to and shortages cadence I XX of adding think you for have four that you issues can while. new going opened, think new you you first the inventory do that what’s in to think what’s new

John Morikis

Well, let your start finishing portion. me with -- finish

at as we world XXX stores manufacturing, stores a believe raw And a add that. Including, in like aspect and And them. convert that was why between have model. an in when to in every and raw in end this people year. because is, that materials. materials labor going are be We get you to that became to and our in the in look facilities, business. think so continue available, invested it invest would knew our if we to could we to our Mark XX long the we market perhaps we We we the did predict of didn’t couldn’t and demonstrated game we to this the answer here play I coming we We

the in a stores things all the tight. our pipeline XX-plus that are So in you other little saying, with the got courage employee. to Maybe invest of oh, when bit now wish it going we scar you XX years and not little say, years I sitting producing follow comes that have further, we would to tissue a be had bit and okay, now products. here have am I I have the

to bunker in going stores, run territories, their this knew you We during we after. We are movie they say at would we you we adversity have do, And these it how the close confidence, right got that and at have tough confidence. times, this. works. know close in when what And have going And others and we eye get are you do look seen exactly before.

to bunker that. we hunting and to now going do are are We right continue

P.J. Juvekar

And about Great. of new stores? the also cadence the

John Morikis

like first up the Yeah. between the -- of ramp that. we going more end Four bit it’s now to the in would think to here a the than four, was But it little year. see quarter, in I net and

XXX to end year. the We will in the the be before XX of

P.J. Juvekar

the to has at Great. any that Depot Home big impact Have at you seen a competitors on boxes. partnership one And target your of new business? of Pros your

John Morikis

focused them and experience that of counter and areas and a as behind us. format in built painting market. making model Well, XX the earlier, years, the productive their for that people as have contractors as XX were is a specialty model have I products specific in -- that on with we the is years for mentioned possible. as with services in as years certainly thrive believe XX are It the that profitable them with right store we believe We possible

competition. welcome So, big no say, be I on Competition would to really I going the just we am you arrogance better. with Sherwin. makes

P.J. Juvekar

to you. good Thank your see confidence. you and Thank Great.

John Morikis

Yeah.

Operator

Thank you.

is Leithead Mike Barclays. from Your from next coming question

Your line live. is

Mike Leithead

guys. morning, Good Thanks. Great.

John Morikis

Good morning, Mike.

Mike Leithead

to the mostly supply operations seeing are with at the well? improve international architectural Valspar the comment look release, you as was you challenges John, you chain maybe guess legacy U.S. worst conditions us, in there about the meaningfully or or that behind start when talked a being your businesses Maybe I

John Morikis

working quickly to and and them goods very quickly to convert and quick things is these The the Sladek, partnership and our and suppliers I products to this President our amazing to in materials area. also continue again, we of and we behind I for the raw of is advantage and Operating March well had to at we Yeah. the I up role ensuring and part give happening, I business, mean get entire we stores credit we our the the one out and it. has the of Chief attention small business Global of be on Chain procurement outside what’s able started of the team And to why take way, where of she and is U.S. Petz, a When our to want with quarter really as the have have that by I forward. and her finished on in have our terrific that a expect Davie, want confidence architectural we to CPO another the not those obviously, way. work need, that happening all our impacted nimble customers don’t these importantly, balance are the of this. in give Officer. fellow Heidi mentioned to -- I think, in the our air very her confidence. that by our we opportunities impact this going takes I is, in and our that came talent we a here. turning Supply getting earlier, been don’t significantly It’s -- look scenes by that Joe Colin think she throughout X have

Mike Leithead

just And color seeing Thank to drill basket. bit curious you inorganic side the helpful. was in payments? of I what hoping the Super just on TiOX with more oil-based raw materials Obviously, are into lot there’s you. on second, a Great. but then, inputs, a focus both

Jim Jaye

the Jim. that going seen. to the higher say part is this talked What be this prices, we Mike, and oil prices is year the oil guidance that end Yeah, probably about on I’d of have we our at of because of

how think an and our resins and really for those remind remains going be us than input more to oil. it sustained prices you I’d is as stay to solvent for seen are oil this that long propylene I meaningful

over but past. the and connected in long-term, the in seen we the are oil short-term, propylene So have disconnects

need So more go things with out there price, will. think if as Al all to these earlier, of in we monitor terms we of said to continue we will

side, inflationary seen there’s and which certainly, TiOX rising the TiOX. tight demand, ore are into on inventories, we convert have question used the Your there strong pressures costs, energy the given to

We haven’t any availability had issues really there.

our suppliers, We good I think. place are in a with

the So to we really it. monitor will on supply continue chain,

and to will We availability necessary really expect us. from get that’s perspective, -- pricing it behind as an we

Mike Leithead

much. so you Thank Great.

Jim Jaye

Mike. You welcome, are

Operator

you. Thank

Begleiter from from Your David Deutsche is coming Bank. next question

Your line is live.

David Begleiter

John, have reports Thank some prices Sherwin there those reports is discounting U.S. inaccurate? just you. in paint that been Are the

John Morikis

Yes.

David Begleiter

XX% for getting historical and how is levels? you are compared Very trend it good. February announced the how And Xst, the pricing you to much of same

John Morikis

been little the than price year. the a we increase increases David, Yeah. with out went price better has bit last actually

been on, right where market improved the -- has effectiveness filtered as and So the it been the gone very has we and feel has maintained is it months that been now. at through good have about

David Begleiter

very much. you Thank

John Morikis

David. Thanks,

Operator

you. Thank

from McCarthy Kevin Your coming from next is Vertical Research. question

Your live. line is

Kevin McCarthy

Coatings, Two on I Good afternoon. if may. questions Yes. Performance

looks I had First, points. though, think, is goal are the one and looks there is nicely still you What for on high it do XXs, low some At it you the pretty running improvement or XXX if you like over teens think the time, margin side, made margins, sequential PCG get nowadays. to a John, path nice that volumes case the of basis like so, there medium-term? of

John Morikis

is absolutely great confidence it have in Kevin, that. we and Yeah. ability to our do

you going volume. that to are continue see think to with I

on We have has in had obviously seen impact it. the material an cost raw pickup

going impact. have So to the has announced an price that through. rolls That’s been

have about continuing that also of us attack. other are emphasize and some that are to we talked publicly the We available to

very ground our gave of materials, to complexity of lines, our raw clear be -- of product spike. I with up ability that a our we on ground isn’t little confidence in to gaining and those Bravado, it want the but reach were this, some going And going have that raw do through are we to metrics our talking includes material simplification less have our plants. some about. the just it. got We bit we We unfortunately, in been this

are We got we on -- the those. going we have executing have to and got confidence, plans take we are

to this. on So deliver we are going

Kevin McCarthy

what realize acquired the But speak you April Sika’s I believe. then, that? And can a chose deal. Xst, there business secondly, just to it’s is you I opportunity and you on not to why Coatings huge do Industrial recently

John Morikis

which Yeah. are It’s a trying and not think our everywhere need of said, practice. we don’t I always that a strategy, example be -- everyone, we great M&A have we to everything to

creating shareholder value. are We

with the identify and have assets, of our also in joined leadership leader Sika Sherwin strength the Sika strong really and in people just of ability to about we Sika in leverage opportunity Hasler with the fire when to of so, legacy as production. a very our is the strong team assets the think new great going example and And the and and a each connect us. believe team, owners of you I markets Sherwin-Williams U.K. in combination production, is in fire protection primary a the a to sales is also dot business corrosion Thomas drive and acquire and terrific growth. work capture protection position of the ability And production to and that’s has platform it’s of local joined really with strong look a then The [ph] great protection we capabilities provide that together each for both. for the Germany us. the to with protection best is new talked leadership at the Valspar, local opportunity And and

Kevin McCarthy

thoughts. Great. I the appreciate

John Morikis

Yeah.

You bet.

Operator

Thank you.

Viswanathan Your Capital from RBC coming Arun from is next Markets. question

Your line is live.

Arun Viswanathan

Really for my growth single-digit I questions. that guess, the sales taking just quickly, for curious Thanks year. think you so mid-to-high about Great. when

You said end or upper even TAG at would that. be the above

weighted I think should more But that covered a be you that imagine. this. could I price, you already so -- towards is there possibility

year? look and sales, we at that million through in as $X.X go that the same-store So to you remain we above when should level expect

Al Mistysyn

Yes. improve there? on. are the It goes as Arun? you year will Arun, still

Operator

Your Loop from Garik is Shmois coming question Capital. next from

Your line is live.

Garik Shmois

Oh! for big picture questions Hi. couple Thanks. A me. of

for from contracted pretty in how a could evolving indicators about about are volumes leading positive if any interest obviously and But existing backlog. the you are impact you outlook. see the talked and You increase you anticipating of bullish TAG number just TAG sounding curious rates beyond

John Morikis

would got Benshere, Well, sure a say, we I I very you am that tired But are getting Group all going about well. in leader positioned start talking team our really Justin have terrific leadership. President, I that to here has am with, this

share So team to is slightly be fact start and our to differently positioned market going in I your with have situation. able am you answer what any to the that asked than take capture

starts going a comments in going the the just are and going driving does maintenance through That tilts. to that and there’s new So the that new we going I that property continue. demand, as it’s housing down, have demand my are shortage slows tilt other And said, it there’s we strong be bump capture going they residential any but there. repaint be or they homebuilders way, to But given to earlier residential be we to expect in another way residential and The on and more that okay. demand it we to here, if road about suspect are are described a this and with, are it continues, more working as it. we

are to on be top We of going whatever way right itself.

Al Mistysyn

just some Just on our business. to Garik, a perspective put sort type remind TAG you. of that, mean, I mid-teens to new residential is of percentage

strongly out, to we meaningful us, are in it’s all as John while So as segments well. points positioned other these

Garik Shmois

to the production, Yeah. the project. And be is, capacity sense. March to capacity going be of is just the guess particularly surge XX ramped increase. Makes it. just just able more respect is to out I that this get million in fully point that gallons there to in Got at clear, question follow-up or with

John Morikis

But coming constantly add running. his in every we capacity have. I and capacity mentioned, that working also $XXX we will as online. additional is say there is up to XX to spoke team debottlenecking investing He are is, Supply will are to asset Sladek, we mentioned and I President. Well, the more the million XXXX. Joe gallons it’s believe to facility It on in be That finding Statesville answer Chain up coming I that Global that yes. and captured. the be more and But in be capacity. million running, in up The

looking are we So ahead.

to volume We we the in continue drive going would determination our we curve. are speaking back to look and strategy. have, the have are with and and we determination of expect confidence and not execution we the we ahead to wish of great Again, have confidence and

capacity to the it. care going We be are to able to take of have

Garik Shmois

Thank you. Great.

Al Mistysyn

You bet.

Operator

Thank you.

Your Adam from Baumgarten next coming from is Zelman. question

live. line Your is

Adam Baumgarten

Thanks for taking my question.

the that said least second you decline expect think moderate to half. the costs or case? in input you I at Is

John Morikis

then the now. the for the based see bit down I think be highest expect about back probably inflation year, further have it a we quarter we said we little to what of we yes, on second quarter, would input and costs, the talked what half come first moderate in

or is so. got about visibility have we that’s mentioned, Al best yes, As maybe But, the correct. quarter a

back the half. Our shows current outlook in moderation

Adam Baumgarten

business. Got DIY up maybe Okay. quality positive mix demand higher quality. and it. How to shift much then weaker the given is SKU then of that the some in product simply And in more rationalization the a versus just mix on related availability, true

John Morikis

I paint it’s cost. of a I XX% and And have attribute this of availability. a for that time than question, their These except been issue that would it’s represents recognize XX% witnessing say, Well, only contractors, it good XX%, labor to labor you we some would now sometimes when continued. to very largely more

that man and up make you more hour can more have opportunity are people more projects moving so more you that complete, you quality. issues productive, in per and cost resolve If the callbacks, can less

breadth it’s even going well get are have is you, there the would Typically, off that would the -- they to quality go for with closet tell some products. We And price. have I of product people they a and Rarely on, product And would to and the project a are was programs project it. division themselves. get you bit find see quality and of again, -- Again, full all sure. Justin you walk lower touch breadth a a market, can and in applications man would more bit I But speaks quickly get get this expense, productivity, people people or do no that in price just what -- ceilings stay We what full back to spend when higher that. and big and did it’s don’t our better are The be what We happen. people they for people. for in so, execute there little I very When to for are doors more store. move a would conscious that callbacks next little that I a we our you investment trained on if is that. to and and And These up, the it. -- team, you find the is wait hope a okay, people get it’s that We a that. in. learning presidents, pay they it just learn more at worth in a per the our high open tenure of don’t cost this chain very understand hour program. higher They quality look on working his food well. cost, to how a we don’t by the it’s not hope up that

Adam Baumgarten

Got lot. it. Thanks a

John Morikis

bet. You

Operator

you. Thank

Your is next from Eric Cleveland Bosshard coming Company. Research question from

Your line live. is

Eric Bosshard

seems Thank broadly worse materials, things, of raw on like days first ago. you. inflation all, versus Two it’s XX

the seems talked doing energy manage and that and that to TiOX. Is today more ago? is from incremental and you within are XX with are a guidance comfortable raws original environment, original difficult You to it read oil for than bit and days something about there stay the still paper you range

John Morikis

now. the But I mentioned and we towards Yeah. oil range, feel answer we said with multiple as react If it on Eric, times think, that previous I to now, of right as higher range. are the we have that some be pricing as to we mid-teens that, of to related trending low are moves on other today, you and propylene heard things, that right more comfortable in my end we needed. ready range will beyond double-digit

Al Mistysyn

that. Eric, I would add just to

of to our marketing, ongoing You an working marketing, labs, so with architectural with any doing not it’s current really basket, or that procurement, material we response tweaks drive response more in raw consolidation, through driving procurement talk with whether about in working simplification, see in effort short-term can volume That’s raw smaller industrial, and working we not with a response the materials. what working are base our environment. to platform to it’s we that

Eric Bosshard

about talked you in that John, secondly, heard this before. talk then, in architectural I environment, reactivating And the have that’s Okay. about customers know business. I you if And don’t

what could like, be that if of So just that color you helpful? a give would looks us bit little of

John Morikis

of of reasons. Yeah. are I might give what description obvious we a you for it doing like more what and looks

we want question can have to, complete scoreboard a protect way have the their and able what case. I they on desire about solutions products stay bring just the and you very we discounting But not they very to our there a was for. on, clear through customers [Technical you is and that leveraging as we We how not and to rumors be are though will are was is that we achieved done reputation. about, that is and price. be as it. it I bring after and clear it do we I We that it’s and But be to spoke And to we have there -- Difficulty] people projects to the strong want are a willing we direct booked. that, quality the of it people, Eric, services many to very to doing what do Earlier in about profitability we that show tell have

though determined X,XXX the would the reengage have sales might of were pride if a they you so could to and be, partner reengage. to while great consistency customers. -- we it weather building in going think up do have rep need don’t aligned their times. and if these We project and challenging over in products controlled they or are customers be through lost And those is one day where go for a what feel our times you all the were whatever could of reps it needs, Sherwin-Williams and gotten here. better have relationships, be get anticipate had store trust, activities and Every having somewhere to responsive it when And there reps of you and they to what connectivity sales their might manager you Well, do, building as them assure there lost they important. rest there. But wake we a we might Sherwin-Williams helping imagine take thing we challenges And some us delays, all have to ability their need customers couldn’t they our to have shifts go sales in or products it needed model may with to late anticipating else. we

are back a are make we are so friend, our going and that stores, We they not to active with be they cup with back of customers paint. going assume in use are our very just very coming coffee, and these start to to deliberate, a ensure engaged

it to going pretty are be We regularly. after

Eric Bosshard

you. Thank Okay.

Al Mistysyn

bet. You

Operator

Thank you.

Sison Mike Your Fargo. Wells next question from is coming from

is live. line Your

Unidentified Analyst

Richard Hi. This [ph]. is Thanks taking for my question.

one architectural building the focus your more do that are DIY to that and on you or raw availability, to bring have increase material inventories you you The point you on, can going due you now majority you side? easing production expect the on of side Just production were on volumes, Americas have on to capacity which largely that look when down at Group,

John Morikis

we segments into this our and at to goods point, raw think be going all business we Well, materials want I are precious and the that of these talk to so finished pursuing converting about. extent that’s

about have. we that we quarter, talk next we the will to see what We capacity but terrific opportunity utilize did a

Unidentified Analyst

SKUs potentially your on to that, know in just increased then terms and there the get of [Technical demand focus related in getting of that production any SKUs you order Okay. in limiting happening stores, number are or Is that talked about that to you on the still out. past, And in more I want SKUs -- is Difficulty]

John Morikis

And challenging I had are product expansion near to never bit down those we back to of come that future not what line be will to opportunity in that rationalize through some opportunities This with. give SKUs simplification us It a and time. was as will our an a did at out look return. you we the There what we in year. would will going beyond But last of jump were. little where we a just is suspect very see coming what

better capital. more our working We are company, going efficient a to be with

need, it but we We the past, as wide what out will it inventory our the will need. spread in but has be have have may not we customers as

Unidentified Analyst

Great. Thank you.

Al Mistysyn

You bet.

Operator

you. Thank

from Pandya Your next question is coming On from Jaideep Field Research.

is live. line Your

Jaideep Pandya

whenever two-part Thanks I and prices the inflation, sort question gross previous you sort a progression peers of This topic. dynamically same X%. in a of a of yourself increasing pricing, sort increases on very it’s your in dynamically years region job the a lot. of guess phenomenal quite to have And in done lot of the two cycle, quarters. the the five subsequent had sort have of margin four, you in cycle, X%, last the

think with you expect see magnitude that as of or and same some because up pricing you demand lot. cycle, give we weakens this down XXXX, so if to materials the Europe? do in will stabilize and catch with should go in dynamically in the you sort went materials when other your have inflation raw with do Thanks expansion in year margin pricing and raw you your of back cycle, pricing, increases So, XXXX, a Asia up potentially this gross price

John Morikis

this. say I’d So

You are right.

also there’s an invest back in the business. there’s look been opportunity you the there, opportunity historically, but been If to

transportation, we this make There gross I is would your our money. but and more labor, our And that way, that it in might go all line, this, investments help to customers margin answer their Difficulty] help [Technical things other our costs our make invest so into question not of necessarily are in them these that we are profitability. hit to doing, the determination

achieve So I’d our these thoughtful that in we that. profitable, And these, for can piggish see tried pricing of we to be and how very that and in when if take each goals win. a goes don’t what they and we deserve that say their pricing, to whatever we win in-depth continue and customers put it as all more got all result that not ensure you one reason, very help to that do of everything that we us then business are didn’t and our happens a win, is view view to investments, into customers the going

be our be drivers. the investments, to the our so will And successful ability customers help and commitments

Al Mistysyn

environment are you and as the that. gross and see first our to we a in with pricing and costs seeing you in add We material margin just up a short-term do catch contraction, improvement our raw saw material in up we margin recovery start sequential then I’d quarter. starts Jaideep, in and pricing raw Yeah. put we believe costs go similar to where

adjusted see margin And then we the back our sequential seeing in Our talked -- expectation gross to talked margin you are we would see on target about EPS at quarter. second of start off. not expect with call, will second the in that recovery our improvement We XX%. midpoint, the as XX% is we for year gross I of And out, end a XX%, which to start getting expansion need that coming to to expect about we to long-term then year. half going

Jaideep Pandya

a and more could this years five-ish are I deal? positively on ahead original appreciate been actually, on it’s that hindsight, the to you where did changed. you are But so of really, lot. just you surprised back plan, go the one done and been better, Thanks be the have your running Valspar what And has sort in since there to much deal. areas has us follow-up still you are What which room for areas there’s well if

John Morikis

I is of -- Heidi new are with that’s terrific customers one. our top the technology that talent. leverage of the mentioned the COO, assets larger Performance I’d say the auto there’s with was the is combination Valspar think, of at and we say one refinish I has through the of a well the number company, starting say of Group and to bought it President for I’d bought as infusion mentioned the Well, ahead, talent way was automotive, I and been technology I’d Petz, throughout I who all good. there exciting. some -- customers automotive automotive finish, and asked, the our if earlier, why leveraging or we Coatings the

importance. So that opportunity healthy we hear our we and what allow to our that have the to is and brand happen. pricing It think or I could can some were see years I’d determination we that of think coming we continue invest say there us growing say, brand not the and to I you previous add. the is there hear to put I -- business. can took in. And a relevance differently in from Valspar part leadership in itself customers think are that that’s I And why of that. when XXXX back that always that learned recover do The big to I’d a and I I hope part so terrific serve opportunities remain we I and there. determination out think And so done look you I it’s have of faster terrific think strong better. one very and or if say of was on that hesitation

the I working is capital think area. another

I it. we to think gotten have

utilization more of as there’s think I the the plants. opportunities still asset are

we there. the proud are tell kills, with started. of think, I we work company So not still of we opportunities, of quality find of have that are we complacency to, acquired are I There’s But There’s be just as there. of earlier, getting lot that plenty to a still that the prioritizing along still the quality just done But we ourselves came people and speaks we it. would we you, done. and what accomplished and mentioned the

Jaideep Pandya

lot. a Thanks

Al Mistysyn

bet. You

John Morikis

you. Thank

Operator

conference I to Q&A concludes Thank back ahead. our the you. Please will That go Jaye now hand remarks. session. closing Jim for

Jim Jaye

look of Matthew, and and are you, for lot are we everybody confidence off, results. a many we focused will about sign heard New in just forward of momentum, today that a thanks you we And community you the call. our here really that I before York on Thank of Xth there. to presentation, June lot hope seeing financial joining remind I we be you will operating driving City upcoming with and

with great always, Have follow-up day. of your Swanson you rest thank will a for as available and I along So calls. again, once be Eric your

Operator

and gentlemen. concludes Thank you, ladies This event. today’s

you You time may disconnect at this have and your wonderful a day. Thank participation. for

The Sherwin-Williams Company (SHW) 26 Apr 222022 Q1 Earnings call transcript