The Sherwin-Williams Company (SHW) 25 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

James Jaye	Senior Vice President, Investor Relations & Corporate Communications
Heidi Petz	President and Chief Operating Officer
John Morikis	Chairman and Chief Executive Officer
Allen Mistysyn	Senior Vice President, Finance & Chief Financial Officer
Jane Cronin	Senior Vice President, Enterprise Finance
Vincent Andrews	Morgan Stanley
Jeffrey Zekauskas	JPMorgan
Christopher Parkinson	Mizuho Securities
Michael Harrison	Seaport Research Partners
John McNulty	BMO Capital Markets
Ghansham Panjabi	Robert W. Baird
Michael Sison	Wells Fargo
Steve Byrne	Bank of America
Gregory Melich	Evercore ISI
Michael Leithead	Barclays
Truman Patterson	Wolfe Research
David Begleiter	Deutsche Bank
Joshua Spector	UBS
Aleksey Yefremov	KeyBanc Capital Markets
Arun Viswanathan	RBC Capital Markets
John Roberts	Credit Suisse
Kevin McCarthy	Vertical Research Partners
Duffy Fischer	Goldman Sachs
Adam Baumgarten	Zelman & Associates
Charles Cerankosky	Northcoast Research
Garik Shmois	Loop Capital Markets
Eric Bosshard	Cleveland Research
Jaideep Pandya	On Field Investment Research

Call transcript

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Operator

Good morning. Thank you for joining the Sherwin-Williams Company's Review of First Quarter 2023 Results and our Outlook for the Second Quarter and Full Year of 2023.

With us on today's call are John Morikis, Chairman and CEO; Al Mistysyn, CFO; Heidi Petz, President and COO; Jane Cronin, Senior Vice President, Enterprise Finance; 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 a the any of forward-looking result as date or such revise statement no made, undertakes the information, whether and obligation to as on prepared open events otherwise. A this is the company's the in transmitted questions. or full earlier statements will future earnings After morning. remarks, session to company's the provided up declaration regarding we release forward-looking

call now turn to will I the over Jim Jaye.

James Jaye

and to markets. sales expectations percentage led by a good year Thank end percentage, by delivered increase you, period compared and were in net Consolidated single-digit morning our grew excellent results first of mid-teens quarter architectural ago. same a a Sherwin-Williams professional the our to high everyone. ahead

business, side Asia Industrial of the On increased the except regions in Pacific. all sales

and Stores partially in raw significantly other volume a margin higher costs. inflation categories, strong wages improved effective sequentially decrease in goods slight includes by material year-over-year, of were which and Cost Group employee-related driven by sold Gross Paint offset and the year-over-year in pricing.

our hold given reach to services success. have pricing of majority into the customers their the talent have their put secure and goals drive solutions market, to the help drive differentiated expect the We to we the investments enhance and ongoing we made innovation, provides that

expanded three sequentially segments year-over-year. all in reportable margin Segment and

income share We also double-digit diluted EBITDA. and delivered strong in per growth net

closed our business. our agreement a last architectural noncore divest on on realignment which late we divestiture portfolio actions China of the including Additionally, to business, and to year, recently X, April execute we continue announced announced aerosol the

our period a stated Comparisons otherwise. to few quarter year are comments consolidated like numbers. I'd unless to the prior just first highlight my in of

with line. top Starting the

of percentage and basis of billion. SG&A gross benefits. improvement points, sales First by investments XXXX increases a consolidated an basis the expense driven of to growth points. Paint XXX initiatives in $X.XX in employee-related XX.X%, margin investments sales people to and year-over-year XXX across an the long-term X.X% increased other as net compensation Consolidated quarter through increase our increased XX.X%, in Stores Group's was company

in our differentiator people Our the remain marketplace. key

before profit ago. net in per the per tax increased a XX.X%. or Consolidated share share income year Diluted was $XXX.X $X.XX million quarter per share versus $X.XX

Valspar related costs per ago. expense to versus income announced year Excluding quarter a acquisition-related and to per actions, $X.XX XX.X% adjusted diluted increased restructuring previously share first $X.XX share net amortization share per

sales. XX.X% a quarter was the or $XXX as in increased percent XX.X% and million EBITDA of

Let me follow now by first with John move turn it on results will some our Heidi commentary over to provide questions. our outlook segment. before Heidi, we on who to your comments quarter will on

Heidi Petz

The previously have as Americas release. is Thank Stores this prior you, We with last to on Paint in this this no the Jim. Group, prior known change. year change been to begin Group. Current and to consolidated morning's change. results our press There year restated related impact and segment described results reflect call I'll this

were growth ahead and driven single-digit increased effective high by sales and of Group Stores our volume Paint quarter First pricing. expectations continued XX.X%,

Segment points basis XXX segment million profit $XX.X XX.X%. margin increased by to and improved

protective and segments new followed by sales in in quarter. and DIY residential management mid-teens respectively. and architectural led residential, by the All double double-digit by & Sales market Pro grew a digits, also Our property increased marine percentage Pro by by commercial, percentages. increased repaint

faster interior product sales were both interior a growing strong, of and mix. paint with From a exterior the larger representing and part sales perspective,

by the the where America, sales ahead X.X% less digits in North in our digits. up Latin of than America were were where X%; and regions, addition in Performance and single were on architectural strong expected guidance sales than Asia. well and again In Europe, Moving our down America of other better Group, and Brands in Latin to were low in business double digits double quarter. sales down Sales prior Consumer which results quarter increased reflects current in year. in a the now was down

to basis quarter. Effective we pricing aerosols, expect offset the improved FX Adjusted volume the Latin XX%, end mid-single-digit second led partially segment ability The single-digit by during in behind XXX us by America significantly margin resins quarter, be headwinds. of a points and year-over-year. stains and low impacting this our the and was in decrease tightness produce alkyd by was issue up to

month, architectural Jim business. divest this and business beginning at we mentioned, a into the we aerosol agreement entered noncore also of an to As divested China our

expect actions teens, high drive immaterial. quarter we costs target. segment margin our a return in over margin benefit low to will the these were restructuring We time adjusted Onetime XXs as

teens Sales from a low segment decrease impact the FX XXX comparison. teens driven single-digit Coatings low sales. in in included quarter improvement, and by increase to execution in which the increased Group our pricing. of by fourth is has Performance low pricing of including basis the margin segment a and against volume, discontinued a by Russia this sales increased effective margin impact. X.X% strategy, driven XX.X% was This straight unfavorable team from XX.X% Adjusted points delivered acquisitions, offset The operations partially mid-single-digit year-over-year

increased down were a North nearly varied America Europe comp. America, in single against digits, digits sales sales in were in Asia digits, comp. double XX% digits. Sales up strong a In mid-single significantly increased also while Sales by PCG by double sales Latin region. high against

From strongest All double-digit expected due against digits. General by perspective, was mid-single were these mid-single down which up division as growth in digits Auto flooring related slowing cabinetry new up both of sales residential percentage, were divisions furniture, followed Wood Industrial and grew three Refinish, in mid-teens comparisons. which to softness. to Industrial, and was a by Coil a

FX. Russia mid-single sales down X exit a unfavorable remainder digits with our Packaging down comp and about the point XX-plus against to volume also were in due of

prospects our to very good continue in growth feel end We position market. and about this

his it the for for John turn year. let comments to over outlook our quarter on that, second the full and With me

John Morikis

especially a start strong to hard you, our two relentless inflation the last thank years. recovery Thank for deliver want are Heidi. year, the the I we the teams to following experienced seeing we've cost margin to working

said and first our in that's exactly expected January, we strong As a delivered. quarter, what have we team to

We the also know we're the that face indicated headwinds we're we would quarter. have about do, to We updating we progresses. and illusions be not after to macro first likely as year the work under no guidance

better next few over the we as might get We'll the of into have a much season the months. year idea how painting unfold deeper

we markets, expect dynamics. growing new we'll includes and leveraging sales continue strategy, recession-resilient second the appropriate and outperform enter on and can share our we to confident to our This the As in quarter, remain control. remain we wallet, in capabilities managing investments continuing cost product We solutions, accounts differentiated and of and and representatives price stores market. what focused service growth

For the low consolidated we of compared single-digit second a quarter down percentage be XXXX, by second anticipate inclusive of increase. to will net of quarter a our sales the high XXXX, price up or single-digit

For carryover down a digits, consolidated the mid-single we XXXX. sales price from to be to flat net full mid-single-digit inclusive of expect year XXXX,

included for Group. in Our Consumer of architectural year from American Stores and second full the Paint business sales by quarter the move segment Brands are the and our Latin reflect Group expectations slide deck the to

China the transaction from year our business impact no time the guidance on the at or the as not yet in quarter is architectural of closed. sales has divestiture There this the

percentage to cost our down mid-single-digit to costs side, by is to in where the low be outlook there change continue a On no XXXX. compared in we material raw to expect XXXX

third and see the expect We the to largest occurring second quarters. benefit in

expect to across We commodity many decreases likely categories, widely. will though the see ranges vary

to and expect costs, be to up high range. We single-digit other including energy, the in wages mid-

typically to quarter see our to performance understand half need we smallest, outlook. is second and second impacts trends potential quarter first and on our better The

and an quarter. We full on expect provide sales to guidance our EPS our second update following year

As acquisition-related change an share per basis, Full share expect expense is $X.XX year of at to announced range range be the $X.XX this full we to no share. expect time of for our $X.XX approximately includes to XXXX to guidance previously income per in actions share, share in earnings year to XXXX of year guidance $X.XX related $X.XX and full per adjusted $X.XX. a amortization per XXXX targeted restructuring earnings the net there which to we per $X.XX diluted On share. expense of includes our result, per

refer you rate, press effective and provided provided deck the data on which are interest We provides also CapEx, to the for we guidance in expectations There January I'll our issued Reg capital on morning, release press GAAP tax a reconciliation amortization exchange, expense. currency our our this with and the depreciation slide G within release. call. to table also priorities points allocation and updates our additional no

of from January All these unchanged as remain call our well.

and to believe beyond in many limited current continue half, variables play, at the uncertainty the the of high visibility Given first realistic we global level a economy, the one. is outlook our

As the stronger for in the would We've and and we're we business laid better, we since to see we more significant get assumptions out last change and information, more the now a our results. downturn, our could second assumption we company. stronger in If through change. January many those expect resilient deliver quarter transformed a ways

challenging. leadership business through our which We anticipate that and cycles. in previous is and experienced confident We highly accordingly. team, be many would been has I'm deep XXXX planned

actions. appropriate will and have We taking continue

to similar That strong of more help out our customers downturns. expect We be coming to this momentum prior and stem our period innovative more of profitable. of from uncertainty, strategy momentum solutions that providing will productive

environments, to while even earning concludes market The also like we expect years customers, can we to new in come. and bottom XXXX competitors challenging we're valuable for our the the an outperform become to That In prepared is partner our line and current our remarks. one, more ones.

With for questions. to joining this to be you thank we'll like morning, and us take happy that, I'd your

Operator

[Operator Stanley. coming for Vincent Your from at Andrews question is today Instructions] first Morgan

Vincent Andrews

strong in carryover at incremental Could quarter, had X% there the just very was there. sales And you performance. margins, TAG in I obviously, ask about a was know pricing looking the I in

seems quite was strong. So like volume it the

balance of as that a the whether was is or and bridge just the was the through good you if just to of investment the could with as initiatives quarter quarter in store some number that So move sort what SG&A the a in of there run openings and year? total lot expense your we to of company of spend underlying ahead

Allen Mistysyn

year. additional higher the in beginning XX% Al year-over-year second in X/X of SG&A X/X the just year-over-year. Yes, Mistysyn. of then acquisitions, in into stores increase of is approximately and which consolidated due Stores reps, Group year the costs Vincent, And was to and employee-related And increase, of was excluding merit due half let sales me addition, increase first that start is represented Paint And and quarter up XX%. this the increases increase. multiple was this of over this the new probably were about to last with

John Morikis

Yes.

build Let element to them. want it's me carry developed have employees, value controlled they're before our a and talent customers. our make investments of want think here of that understand see our employees to on just trained, right on relationships critical they're absolutely jump there We as in you the key retention with model, the in our retain distribution that we of the particularly, the we of a strategy. sure We that to we I

are investments that. the we've clearly about actually we midyear year, so that of seeing benefits made the last And beginning

boasted But customers benefit rate that the we're we're back improved dramatically. X% down our employers. our to to that's our had impact turnover. And on has taken proud some in in there's X% point Now in And employee clearly, employees its often retention. about would employees as relationship has with our that the some And course. to -- an We've economy market our range. I of and say range turnover the

investment back because an make our think our those are important employees sure are we want low. important and walking that that So to an retention a customers when make is We historic into our there to element we that's stores.

turn So let that back you. to over me

Allen Mistysyn

tightly we we in a add and we thing restructuring adjust as from on second year. better would . I to I demand smaller the more to get as from marketing we're other the Vincent, the year-over-year only expect last is, as discussed cost a discretionary G&A merit January, other start spending manage increase going half. increase expenses to and realizing our in second We outlook I'd The continue in quarter that activities. say annualize reductions would our Yes.

low our our uptick slight is Paint in less up service will first Group a in those Stores in we we'd much it single-digit architectural which half. expect impact. Typically, quarter, demand not in see annualize what increase our ramps to and see than second staffing uptick. saw SG&A seasonal be and a as we then Acquisitions slightly to And

sales, I'd lower on, the percent second of the then of goes the year seasonally some year because year-over-year the we gets of annualize expect quarter, as goes sales as So tighter on my as these but architectural higher a things. change

Operator

Zekauskas Your next JPMorgan. Jeff from at coming is question

Jeffrey Zekauskas

The to should level. it XX% a SG&A base be increase moderate of than going I from that you're as year, case XX%, with But understand this we considering, more year-over-year? are everything up that

Allen Mistysyn

expect stores, -- it our second in added I'd at Stores particular, year the ramps we our Jeff, get SG&A in half. increases year, more No, you out went because as we as how up Group, second if happen rolled into look Paint merit half on the but last

nice the as have PCG would SG&A. really very lower the say through SG&A comp of impact higher, managing other Paints, with so I we the have similar go groups they've merit So gets year. the increases, a percent been but would tightly. job their their a managing done Consumer, change gets the

then admin, but system And it in in to we're tightly. manage that, like to we'll going and upgrades continue things invest

high percentage for a increase of the would not expect I So year. that

Jeffrey Zekauskas

to residential like case, then first reasonably Paint up to get what year-over-year of think a in held business And have the year, you the your given in conditions. next When do well, Group? the secondly, as base residential Okay. are or those market quarter fourth new new volumes Stores quarter seems we

John Morikis

starts XX% that XX%. in down that better to And be are in our expectation the Jeff, to be year-over-year our of So we've than range be housing the we'd business, would the said single-family market. expected

talked of fact would that that about to it of down expectations our expect also the our openly that segments during XX% we heavier period recession-resilient be in So pull would be to And XX% some the more time. range. we've

that sequential you as unfold, trend the we the we -- quarter we saw described. So saw that just exactly

year-over-year, then February, double-digit March. low in we So percentage and January, increase; saw in high digits increase; teens mid-single

we a expect that the trend balance year. to type of So of through continue the

days If and see you quarters, new impact you look comparison on can days, previous the to the as res and XXX it number XX downturn back see sales then our unfolds. in starts the of you

Operator

Parkinson Your next question for Mizuho. today Christopher is coming from at

Christopher Parkinson

little in repaint backlog, property sit little on protective? in be can your just you and the specifically on you're customers seeing what hit you're and perhaps more terms maintenance hearing John, greatly It what on a from bit in resi of would contractors market, then bit a appreciated.

John Morikis

Group the I'd XX% of sales made Yes, It's our And know. grew one professional mentioned, every as professional percentage is as Heidi Group Chris, PRO of billion a segments start mid-teens portion company. growing of $XX with our our by fact Stores that our largest digits. with sales. the a Stores up total Paint is Paint you in business, double of

large are segments these So growing digits. double

dollars. in we're So real market absolute share growing

initiatives To we or maybe that XX your question Justin of more it would it's more to wallet in best difficult get come bidding account returned on and repaint, a new give described so give a was so share the normalized activity. as and the likely to where I'll a bid clearly to probably for months, to And bidding market, more bidding because level and describe are would XX, a residential that I having activity of they as backlogged. a painter specifically even team busy credit best were the Binns past and say his you lot working. out XX normalized

both the If are in projecting. NAHB they're positive, deceleration some LIRA remodel clearly or you look at but index, what the

a on year. this mid-single-digit top double-digit quarter Our was performance last of year

doing. have So we I'd confidence in what say we're that

ability to expense. in our our and competitors' confidence grow to continue at have grow We

people We that's is do. We in think have it just important store. a talked stores. briefly element very about product back our the our that what in We we in

So the of believe, the a our people, has direct we retention to of our correlation customers. retention

but growing of can that in like. products into if as to help those we're residential not get new products. And we new segments introduce they're introducing in We successful some perhaps well. later, doing, customer continue also repaint details, what But new only to keep we

residential, us after and diversity with an help ability there Talk hide the we're to their market new new moment new their business a retain products those important will say that adverse bit ago helping to and relationships. res but in imperfections that's question, of our drive that relationships have, the we that durability, introducing been our and work continue we of products about Jeff's our to high in little introducing fact, an builders we to expect to business, efficiency, residential and that element and new our I in believe, will and We're a help that our to ability has will the improved face customers help grow build grow here grow. in

expect of here with greater and absolute the time market this new We to come out in some market share. of challenges

came the was On the asked one markets of results that you in clearly stronger-than-expected quarter. about this the for with side, Commercial

position Our investing an reps local and and segment. that element strong been in very local segment in reps, long good, products, growing. important specifications growing this and We've this in the is we is stores have fact

XX% we've for a about contractors labor, contractor about which applying to represents, either are markets, of the a XX% innovative as we likely here the commercial talk in commercial cost are you or products a XX% metro cost. well. When that number Again, perhaps the average, than higher on painting often to XX% for higher think of introduced of as labor many cost The union the is the in average, of contractor. about goods paint

a even customers. value greater is therefore, model, Our these to

business. with of lot work is market absolutely dividend. ground, paying a that's the commercial to side, work grow with we're there's to this contractors coming collaborate at designers, expense of architects, the the we ability with work still our this excited And out of and about these The Our continue and with expect to the competitors.

Property maintenance, driven and another segment is are improvement but capital more as projects grew our increase growth as you gains as share in about and only an here normal is returning to expected. stronger by Occupancy rents asked well, that than well not rates, continued turns.

the have side continue while faster. really going and only grow Pro tank this is segment we're even and to expectation is good the growing we to by in really that going feel team to fuel share, put well, it So for our we're

Christopher Parkinson

the as this on raw got it the broadly, things just on saying the two basket frustrating we're you're the you've of substrates quick follow-up two terms right but seems you just And basket, here a in direction. and few like material the Can Understood. in we pleasant just a to are perhaps are today? most keep simple, hit that if sticky, surprises most moving as

James Jaye

resins. not I first moderation to would expect down were They as point, was pigments a and say may there. near really are that TiOX as Chris, sure on. To led little moderation surprises raw goes Yes, And in monomers, we slightly be quarter. materials we I'd but see that say The there solvents expected. a some there's stickier your term, and lot trending of by year the the

higher remind also other inflation cost as costs. I of a our wages would in includes employee-related and everyone, reminder, goods

digits. in full For towards is for unchanged. see said expecting we year, our as the down mid-single quarter, as some low second our opening, to we're the moderation guide Raws we further to which, move

Operator

Harrison from Research Mike Partners. is Seaport question next at Your coming

Michael Harrison

you capacity that over hoping little a additional ago? bit you you As brought little cost as architectural to in expand to going something I about Was these that be could a have year weighing forward? is we're on of wait capacity? is challenges capacity bit that back probably look that should guess we And seem housing additional pulled about should talk a at utilization the fixed as or hindsight, maybe or ahead, on a you that little absorption think some that longer

John Morikis

not. Absolutely

did. you in Mike. believe you it. in and if back you the going, my I exactly when invested would are of have as we one and happening do pulled sitting penny market that filling would capacity, not And chair, we're and expect what's like have We were where we

Allen Mistysyn

just Yes. Mike, that. I'd add to

on architectural the January headwind a As just the with you back industry architectural because remember I in volume potential lower up. inventory had build call, to everybody talked about

term. short that's So

we fill Pro that across growth segments of that term, and a John the in have capacity we'll talked Long very each lot the Architectural confidence about, up of quickly. segments,

average bounce go it these I'll strong a back though even capacity. we'll single rate, might to lived bigger some cycles we architectural were digit and of we're business through XXXX So short-term be and fill for X-, grew then, XX-year the the we've and as X- the headwind, than and growth 'XX, a back we and compounded before, that much growth, high back today

to or we're the argue So going outlook because and the -- growth future Statesville confidence add forward the have of in I would that, and in we on architectural.

Michael Harrison

in year Performance in for out on, And Great. business? surprising to you particular rest region then was on it And with you Coatings expect to China Asia right. All bit recovery to you regions? are play I on demand the going that different weakest be business, across me of in how little comment and some seeing you. the the the Asia that was emphasis the a guess Can

John Morikis

seen to do the well. well to normalcy or market to of positioned Mike, the back to resume we're just some very be positioned Asia. that. We're the tries kind yet It's in as Well, market

what that is than technology, happens our any as and in people, market. our lot expectations situation assets, to Our faster the a with to the of our has I do market think in grow

perspective. but think good relationship from a a also in technology, very I we're a position

customers back product, our more market as yes, say opens our capitalize up, than that are producing is uncertainty share expect there. to general So we with some I'd there it the in and

Operator

Capital McNulty Markets. today question John for next of Your is from coming BMO

John McNulty

the seems a better the -- like Are better Can side, the to expectation it in Brand are in bit stocking below kind but was again, of than normal on going It business coming stock? it a there? speak little you to expected. bit was normal, than you going patterns seeing little you Consumer thought. maybe of like sounded be you're you we kind Can a was that

little there maybe So would helpful. bit a be of color

Allen Mistysyn

Yes, I you're right. that say absolutely John, would

We And Europe. quarter January the seen remember have in performance we obviously call, on said in in if destocking maybe saw North fourth America some that had a not our our seen. you better I and had

So we anticipate a We channel back, build I it our a back the the DSCs, historic saw retail look inventory. levels increase to actually think the through call, channel. slower retail from we're channel -- if may at inventory. at be retail I slight And in I thinking inventory in across chain more would the back of

Latin So was double-digit we're And a strong that's that had service summer you well tailwind positioned very to quarter. in coming season just also, quarter spring Group. when and and brought the mid-single-digit up. I'd Consumer them helped into the highlight Latin a the selling America America Brands

John McNulty

Got it.

Okay.

contractors the or weather in to And you around is can't that? maybe But characterize a it also of guess, front. credit how better much maybe and where have much was out know the of pent-up like the slowly. more much expected? a have a some would paint you from little regions start -- the or things Okay. I the like tend lot at bit been wetter you seeing on you that then you -- the started West we've and season, what to particularly in that Is looks than blame first maybe some why data guys when Midwest it Do the don't little I looks the do take least weather demand? quarter for you a

John Morikis

I'd talk characterize you're to it about right. as we don't weather, like

there under think with in to to some significant other that. and I our sure. going those in to better of have impact are areas, pressure stay it that we short going that are on weather John, try areas and are impact areas little away businesses, be of But from be there whether, some a does are

includes Our and opportunity expectations to go grow from business. our team out the

what going going We're way. means we're the driving and our question, weather results proud to to to let follow what's in the accomplish now. our determined but not weather appreciate so accomplished. a not more, of And right as we're We're stand for we've

Operator

Panjabi coming is from question next Ghansham Your Baird. at

Ghansham Panjabi

John, credit a previous the you've about as system issues banking given the to three to changed starting through that March? for in also the reiteration ago. view us of residential think and context for your before? still your it pretty consistent U.S. with view which was Europe Has how XXXX, new year Or on went parameters months of in Commercial is

John Morikis

solid say the I'd Ghansham, this XX to These They are now. buildings see reaching we started stage months painting a XX year, pretty year. ago.

if on, we sight expect we see in the and to But have a is, XX now. we'll coming impact So are we there space, which an from this fact, to have paint. long months growing of projects XX share, on to Construction Commercial in line that there's and of lot

Ghansham Panjabi

first know I the of rest year for but packaging, specific thinking of that very terms tough in are the the then business? quarter, comps you how And you. about Got for

John Morikis

business our what with unique accept we businesses interesting This continuing unique we an on at is XX% the look to is never you team But one That's of this comps. a commercialization Packaging top the very our of I from Packaging, of consider when because situation think a any very softness. technology. expand

So on. share. we We're continue to see is lines that growing. They're They the grow. product our growing

that's taking within high not through impacting that as I'm right of now to a place day, line the we're we them on that given often brought destocking work levels. team It's our the happened level of is many in brands inventory a accepting and What's that's they customers there's But going softness. have were giving we're a gaining case, the break. this share that and incremental sight in production every that lines

have demonstrate issue here. the be to what team. that the confidence team this doing. quarter the team little was share progresses, a of for So and We've technology, short-term grow able I we're here second a in choppiness for think our continue will to as expectations to the resume the quarter. a And be lot little they're the year in to a growing. It's We'll probably or fine We'll first tough. this got

Operator

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

Michael Sison

need start have that how I John, to the you for know to trends folds year. half. for mentioned you the Nice better the idea a second to see on XQ

So second sort a are of that as PSG What unfold I that XQ you pretty in your comes and -- outlook? think think And just curious outlook does out going if does flatten worse, that if it versus mean what mean? your expect for strong better first I today, quarter. or volumes suggests to half means

Allen Mistysyn

is quarter. say, smallest first as would John about, Yes, Mike, I quarter the talked mean, I our

a quarter. strong look mid-second We We've higher our We're the to just our year-end seasonally market better and it uncertainty we better mentioned, get quarter. view demand demand I and We our after in residential new of on monitoring that. start last would three expect, said call demand slowing that it's delivered the experienced of before. a years, closely you at think lot expected second on I as a quarter. trends

managed investments gives particularly discretionary And This items us continued SG&A, the G&A opportunity and we'll other the continue manage for demand tightly, best with more will in second our to be certainty half. our outlook.

company But of any in we growth us to this these share I forward. and going is environment slower long-term to environment. think that the come how grow allow we investments we're macro manage market especially out as believe going

is I those what we you our believe best variables our second the market for quarter give and better realistic. perform expectations, outlook together half the mean, all market. And the demand And we'll outlook than is we year. we'll have outperform we currently if than believe here. we'll after the also better our second But

Michael Sison

downturn, to you a where structure they be margins were quick where do or get follow-up, new you do this if this capacity, and at prior earnings back going think given cost And as forward? better your volumes your such, should to

John Morikis

-- expect about in And margin is our be talked quarter, with solutions. bottom the poke we're right that. we've margins the customers right is, reason sequential range, that on of the gross demonstrated we to do We've this we focused expect to level to we the the believe through and close that I that Well, margin, think the speaking XX% expect to incremental in XX%. the range -- getting we'll of the we

focus really is simple. Our

we successful. in right expect margins combination as be as them help mean position are will the And to a right to to shareholders. result, a I make to with to combined be to And that them a able able money, the want the build we to provide more and success. we our both we customers customers us solutions, result, of for that. lead believe And be help our

Allen Mistysyn

I'd Mike, operating in teens, to Coatings have that, our to confidence is about of XXs. add high drive The it by Performance a Group margins we thing when low thinking lot to segment, that only

acquisitions, excluding you back Again, It's all-time we that quarter. mark And in XX.X. quarter, to confident Group owned hit that at Brands The the XXs. we're Consumer we an low if since in were driving high up and remember, first Valspar. third we've teens high

structure that cost get tailwind. So we a our will right, be

up back we We those operating share hold on on different experience occasions Performance the going we price. growth, watermarks that's businesses. different margins business, market in this, come But as out gallon our to we the of drive growth the strong drive to architectural what's Coatings in high and

Operator

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

Steve Byrne

stores the on category that is Consumer you Or you got job with is the in comment how that growth? has Paint free that the driving business Can you involved the is For it example, know when What is? extensive I site? it product at meaningful? Lowe's are Is delivery was offering? least some And in exclusivity of offering that? to your you Pros what Lowe's? versus first would say back fraction What that

Heidi Petz

John. go -- Yes ahead, well,

John Morikis

No, Heidi. just as a and you, combined then commitment inside I of to outstanding I first organization leaders think start And elements it I inside Lowe's all, companies want this, organization, partner. say by at business. the both I'd terrific there's to working they're to grow leaders was right going terrific the kick an say, with our we're and looking that of to the

to disclose so percentage we're And the not that, Steve. on going

as a to about I we have grow. talk the of this and Heidi, broader for maybe But Consumer also Paint, well view, on Pros would the could importance that as the the relationship but like you little in Brands initiatives portfolio a Who to bit

Heidi Petz

a Steve, this. this Petz. is Heidi good bit of John covered

want best partner. demonstrating the I that the think, we we're make are that of end day, very we the sure to at

be their partner. #X we want In fact, to

make only to activating, we're place taking there's shoppers certainly. sure So we some promotional of here think now. aisle that in of the as certainly, a launches areas, not we're some of working engagements how those a calendars, through got investing of in their sure but right making support and the lot that the right traffic, they're drive lot converting we're We've to that And we've great brands. are got

it sure the would conversions. got the mentioned now here, the won't our better with Pros Who leadership has certainly the to alignment much and making both of we been into through want sure a we're Paint partnership the in detail We organization, but the lockstep DIY I their in all them terms terms those driving than across we've organization, that is John too never team, with this, make get way say but right segments. of

got there. when that So that are we've the of you and sure those think metrics to the make aligned structures, are mirrored

the moving way and I for feel year. in really that confident plans big So we're got the forward

moving. So to keep we're going

John Morikis

they On the Steve, a can other that are specifically, They a element for might focus get at to of and dry project. your goes that about And who those stronger. to there's don't calls to Pros or has use point, I think details and reasons, disclose been question competitive that. everything wall or never anything, every your hit supplies we purchase Who delivery The best. the center sales Paint, so with along platform. effort team customers And on prefer home from -- to there a while that collaboration strategic

Steve Byrne

old that the few to of for back Is brand brand? you're stores one thus, into you, merger and have an in stores the driven in the of really that was paint And not type maybe the more drill China years if a I model didn't that is Heidi, Huarun was a like potential? the when going be company China that that Huarun brand. effort? over could Valspar that's that it those is recall conclusion see the And U.S. and in best owner for into

Heidi Petz

a it better think there's model perfectly. was Steve, here. there I you answered -- Yes,

said done the business and certainly as revenue of And acquisition, just was certainly I And strategy the We work that we've and of it -- million optimize in does about get sure making our had can an we acquired it think frankly, a -- employees of the just -- think are driving XXX brands, of we're you with lot assets to sometimes more remember, valuable a example our in that it align in a is this where the divestiture $XXX that. I the on you focus to that group they're with portfolio shareholders. return was part Valspar as for others XXXX.

the down on second move we this to as half expect here, So close XXXX. we'd quarter next of

Operator

is Evercore Your at next question from for Melich coming Gregory ISI. today

Gregory Melich

Thanks dramatic quarter deceleration through less that? for to the the architectural. you in that year-over-year helpful April it Is say, than trends deceleration it given the the been is now? volume volume that negative running in Or line top has fair expect -- is

Allen Mistysyn

we not better or just would would say is it trend, any that to I have Greg, trending Yes, worse. April as expected

Gregory Melich

think to flat you it from much quarter. into growth, of was second about from the How But of the of and is where quarter, is All FX what right. much is? price could the help staying just the and In us that sales frame volume volume to down the sort sort this? of Well, in first was price in to X.X% I how deceleration? down try. -- break have it sales I How going it slightly

Allen Mistysyn

you're is was the with a higher, I would bit up offset FX volume acquisitions a say digits. right, little percentage, by And flattish. mostly was added Greg. low price being high that Sure, single single-digit which And headwinds.

to quarter, our is increases. compared in annualize February the at we the If that price increase Stores second look and price lower XX% going year-over-year be X as other first the quarter of second you Group slightly Paint quarter the price effective in to some

groups As other significant with you the price and divisions know, were increases as well. out

uniform we Coatings our Group. second -- lower Paint quarter. The but just to will due Group, then through our will primarily we've volumes, lower get as softening And they're not some So both as is new that first talked headwinds our residential they quarter annualize Stores in difference quarters. North through as about, America we offset first acquisitions FX into as main and gotten Performance mostly in

Gregory Melich

able Was on help volume that the fact in you were being getting margin primarily get of price down volume expansion And is some maybe breaking down that margin from of to say by fair it to raws? Or the that in could gross quarter. held or -- first not much? top expansion you sort there, the so

Allen Mistysyn

of increases. the nice say most -- benefit I'd But a were price impact increased Yes. we volumes Stores see did the in benefit of the Paint Group.

materials highest are our margin the the getting segment plus of costs. is that and that And reminder, John a As about. we slightly raw talked top gross raw moderating material on

significant we we as see into material that you contraction. inflation, know, As raw short-term get

raw materials to we moderate because catching the starts moderate pricing then price. the continue it's out, And margins our And... of As growth we investments gross make. on most flatten as see we of and and up, we to hang

John Morikis

Yes.

an important element. I think it's

not well invest the as the in other services to continue as but the products, We and technologies assets.

about, in as of important retention that talked obvious the and we new the as investment talent well say I'd talent. and just Additionally, talent

it's customers all can. to we're what's in profitability our our investing in our every So every the more trucks tech with to every the customers. the fleet, store, than rep, the adding We're rep, improve success of designed of even

making. So cost of our customers the trying the to it there's more and success to we're that with drive of the can, than investments in what's we're the

Gregory Melich

maybe And jump with I'll John, on that, that.

this and pressure if are a increase, actually is besides those could costs making raws, you price year Given you're slightly have down? a investments wage raws even where other in

John Morikis

on Heidi, XX efficiencies to We with leverage that have. with the purchasing. we we point, to discussion. it Greg, myself efficiency increases. isn't a we discussion our on that the Every we We with we've into more go entire to team, every so we drive change. And doesn't have talked operations don't for drive it's sit and approach, And price have not can try more days, in to try -- many and just that cost about Al, do plant, have. everything leadership it's years to everything out try use and the materials, the to your raw together our we down, we

lever our there find may be first are that times not when situations it choice. drives But be whatever we Energy, So where it it, might the might described, raw the others. that's materials it transportation, you've on be. of as in ourselves, some

that, to make that evaluate customers, take on our we investors. and we our talk monthly So basis, decision, it a then we to we

At this of point, say pricing those that out been working inside not in, stores. scale we're businesses, parts because we've position in. our on not a I increases some our customers will with different in to still a in with where we're broad any about talk putting pricing put we're to

in area. no finish this there's line So

Operator

question is next Barclays. Leithead coming Your Mike from at

Michael Leithead

dig one XQ. wanted to revenue my Performance on end. on call Coatings guess outlook. in in was Just I X.X% I it, the up,

year or flattish down You're the is for first XQ single to pretty so guide steep XX% the so, about full half digits, some it guiding which half call decline. down second is imply and low seems

a you little that maybe just bit? unpack can So

Allen Mistysyn

Mike. Sure,

quarter. strength Heidi We first we positive expect second continued Auto let General in in be a in. Refinish and the do jump quarter, our sales than little Industrial in slower saw Let and start bit may me then in I'll what

be digit, the quarter. expect and comps strong the second We softness in we primarily double-digit low Coil Wood. And down to to then expect in due continued Packaging Industrial the single

is Asia I low largest we're Pacific a strong by if region, be little ton North Latin digits high not to a both will up region, or think against moderate it a even down expecting quarter, comps, our America in or bit. single-digit Europe improvement you first look and double-digit at and expected compared America, of single

Heidi Petz

a just would few on here highlights segments. And hit I the Yes.

some obviously, of a of this hit based regions. the our lot of on think, strategy differentiation. on I is I'll

highlights. couple a of just So

we're recession example we've realization quarters, us about for we've challenges. look could expect demand A is where here. you continue to to been see the also to seeing We've regions, most see our to We really a value We customers. up that we're we the few would calls strong If at mid-teen based I on would working number more a great you comment good and Automotive in price talking momentum demonstrate of last for on our the taking said expect up here. building meaningful the think really able and in been being here installations, percent. do where still Refinish and and resilient, momentum some were now We're few share build through. create

but consistent as raw to a hear convert theme You'll largely some finished segments where across probably material soon Coatings it is now as these Performance goods possible. Group challenges, recovered our a we've and of race to

working So shop for that some you are also shortages these working our these backlogs challenge can a that Refinish. and continue technicians, through imagine be closely are customers. to absolutely the the customers is Refinish parts rather space where a does of impacting Automotive Automotive priority with The customers labor

the and as Latin America we're North some marine. in quarter these, which to say, very strong highlight where aggressively Europe, servicing through this leading in strong protective and is most through Demand the & segments would America we've there, North through I'd strong know, some of I pressure project XXXX. Asia, about in seeing outlook, segment strong double-digit Mike, is and certainly Marine our America the Paint too, and still you is Stores in sales -- Protective here, a quickly talked delays.

And it we're the as path ounce to sure to as of resin conversion the on continues improve taking I that mentioned, here. every raise here making we're the

as So to Industrial. on briefly gains incremental just growth see there General I'll comment well. share expect we'd and

think would of You across and categorize mixed bag I the the regions. segments more mentioned as a this, that

However, levels. globally, just adjusting some be showing got example areas of then slowing. are of And inventory early heavy equipment you've that good a remains that, our Appliances strongest. will signs to

very Industrial remaining North we're certainly Briefly with hit to any Wood So ramp comments. going consistent to is America production to there. come and back additional Coil, strong on and demand. up Coil continue I'll

than performing is like softness areas the and business. buildings in aluminum seeing trim better metal business some expected Our

laser talked And still very most as focused And there, in and from strong seeing be We've Industrial this the and to been we on pressure where built Asia EMEA pressure. continues furniture. I'll is business across is on about new the new America hit pressure we're Coil. feel accounts. segment, that teams Latin with good The but segment briefly actual say coming Wood. most it would the within I performance

challenge. to The kitchen we cabinets continue that other in prepared residential flooring, new tied be our like mentioned are segments to and remarks a

continued pressure seeing we're the there. So

there the importantly, competition, aggressively some share leadership our But through to softness on market working reacting market differently. the cases, in while it's is what expanding gains, is team

on technology quicker I'll a in technology. brings and gains focus So going batches, to obsolescence. less furniture our give capital, turnaround new is benefit example smaller less customer on which getting here. service, with you we're category, a with our these the working working quick And this introducing ultimately, waste less customers greater example allow to The and

this partner goals. as business meaningful I'm just So with bringing bring in what's how can, are that another their our to them solutions you example to of beyond we customers to the

overall a those but just around quick segments, little color. So bit of

Operator

Patterson at Wolfe Your Truman next coming is question Research. from

Truman Patterson

it fourth already trends capture or Just just from questions the in incremental to really the in three Or quarter of carryover realize clarity. you following pricing of able during of were a quarter? place the was Pricing in up little on the what for kind each just actually each was Greg's of in segments, segments? one

Allen Mistysyn

able carryover pricing maybe past Well, regions there sure, talked better situation. service that or where was in we there's about be customer cost we John go for our that alkyd There's incremental to Coatings the across for resin that group, Truman, some as even to for to been as the improving where Paint But have Stores up. effective pockets specific now causing mostly with specific businesses it's in haven't Performance and product consumer. Group, are inputs needed maybe we're other we didn't

one be higher in of example we've out where to energy costs. some Europe to use I those had as offset

So some it, the from though, the carryover maybe incremental, mass of is majority XXXX. pricing

Truman Patterson

years, to to XQ. volumes about? a And were in and items margins XQ will even in XQ? first X follow down up quarter highest there ramp sequential first was those That's see think seasonality or though XQ in op year-over-year the then like XX.X%. kind like in Normally, like margin normal teens. cadence is of in Perfect. Or quarter low good that XXX Coatings, you in Performance shouldn't onetime think Were that any we a margins bps

Allen Mistysyn

Yes, anything quarter. puts over wasn't Truman, say takes I you probably there's onetime jumps out, global business, our cadence. our across a and can that There it's margin. as drove -- every gross that increase would imagine, operating But good in a in nothing the

John Morikis

expect that our to the in customers, help the really right for customers improve teens, segments, ability we've to and XXs. right to be the the And long technologies said right profitability. their demonstrating high low a time credit lot this every his There's of are the the and day. of sequential a work. improvement. out a our The Truman, to I'd of your driving To that lot we there, lieutenants hard Karl point, leader identification Jorgenrud see give we

in now. in the I was tell and I'm get them right look quickly. very to And Karl room him expecting them there eye the

So that respond -- probably and he going to. would he's

are a got going lot expectations, we lot we've of So that in expectations, a to deliver. high of and team, confidence

Allen Mistysyn

add synergies and expectation in -- the goes help that will on, integrate my this as slightly that, in drive those acquisitions as to as Truman, the segment. progresses the year improve acquisitions to quarter the thing other operating that year continue I only would dilutive is were margin other better we the realized

Operator

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

David Begleiter

say, been increase bit about on similar a this demand historically, perhaps QX. from given just $X.XX increase QX, John, weakness the here? year little or sequentially about, less, you see Would you've talking expect that you a

Allen Mistysyn

a the and by higher carrying a sequential year-over-year wages talked a impact, our going distribution. and sequential can I you understand costs raw second question. improvement to margin, have not over sequential think in quarter we're expect see we David, expect What our I give quarter improvement about on and the manufacturing EPS. within positive in partially We price Yes, to material will gross second increases offset guidance and is,

a our more last cost second the annualize I merit SG&A, expect and year-over-year activity. in increase I quarter start reductions as year restructuring would say that with smaller of we realizing increase from from do we

SG&A our higher So expect service SG&A, percent ramping talked of percent increase we as increased be our of a But typically that about, seasonally Stores because in would sales, sales. up to Paint I second see with a sales. an the in to lower as as quarter I architectural

in of not because do in you second a sales, lift going Stores expect we're So our architectural quarter-to-quarter quarter improvement Paint but Group the to

John Morikis

to we're quarter. going we second we But expect We update you right at see to a the the expect have a now, what quarter, of good and good end quarter.

David Begleiter

John, the just And on any price Stores are Understood. seeing that Paint you giving or -- you erosion in business? are givebacks Group,

John Morikis

us keep David, pain normally, see marquee lot attention, all and drivers large, But that industry be some to disciplined proud health. get egos. competitive those to for that requires our we Actually, small percentage, invest what is pretty that will jobs help a successful and your met a of is We company you No. call, and and we that that we're your specific projects. it part, the that understand the see ability all on might we want is customers of we continue perhaps see most to what what because have healthy to a in

And that sure. that believe to so demonstrate you most it's competitive value can the wins. for in part, bring. Sherwin-Williams And race that race we for it's the But

Operator

is Your next from Spector coming question UBS. Josh for today at

Joshua Spector

up of on side contractor wanted follow I things. the Pro to

going comments call, almost educate weren't that that are to some declining you they to anything last market your customers, them in the really think made fact about you backlogs some that be there seeing need and I to or John, extent. to declines, of

changed changed? versus Has And visibility the months that a what Is backlogs guys has you much from that have ago? that now, few changed? on conversation

John Morikis

those least. like many to past either in grow. Yes. return bids. customers say looking calls be on phone that characterize would challenging those not general There's opportunity understanding I been But now statements requests. because able an or I say entire of like requests Bid returning the industry continue there's in an have an to are yes, should that can bid even careful calls some be that to that to for to making the that

of pursuing and residents painting contractors inexpensive, a choose the at those highly yet many If to many home, are homes are choosing And while move of those those stay aging. those. in U.S., The you are look those into homes remains the relatively project, impactful aging. and people are they to homes may paint new in

as market. a success, doing would helping a of it what again, more them their describe So marketing little and mentioned to aware looking that. are more with I of important normalized Contractors probably work, and an earlier, part doing having they're a I is we're that are a also lot future and they aspect

great the only for don't that. been for how have but over I help that just looking say in it's what's not to when And an align that prepare the with XXX might can, painters. to It's recognize. obviously, our they around years, at not element we've most people should and be been our They this corner, customers, ability to them understand

put We're on out even every in Now grow how neighborhood started and interview person and the they business, specify they understand project when own And to a helping reach to they sign to them how to, to in some company. came their paint a them. potential business, the a products, cases, in some cases, how painters.

with most people in So their to grow that ways understand helping wouldn't we're these business firms, lockstep them

Joshua Spector

or we've and I down six, demand if softened. last months nine of starts guess some downturn of now I least the And been for housing things, in turnover side this when repaint ask about come at the just the

square more all Is defensive? how today? and that COVID are repaying that staying demand which staying I you're more rates on seeing less that you Given how now? during what where and to the is that about more based interest way is defensive put, do defensive, defensive, Any DIY thinking XX%, higher say, guess you're is those to people characterize

John Morikis

forward. to and coming out I'm the last have not Al, quite an the your of see residential many this but softness the the in to a of had we've larger, going leaders slowdown And would that I element sat we and sure myself currently what repaint we company during business, and are that doing in offset it market business seen reviewed running residential have of was like the like I that. important a successful then, experienced we downturn. as question, understand more repaint and it say been meaningful might some

were growing And given in had. we've our that our love position position now residential, We successful over-indexed we've success the new We there. there.

offset Automotive other been Industrial the And the so on to of businesses and even property residential areas. within the some the like our management sub-segments our side, has Refinish repaint, and some that

a with then we're view, this And at business this happens, always the long-term manage war now an of we right and important So is repaint if residential what? looking element. game

we business business, was at our double If And were reason made decision DIY We in digits, that We to we product. DIY important that DIY the the there maintain our retail that We are help grow. hit a because but did allocating you DIY so DIY our small. year, took in year's customers our want comparisons it's relationship. look we that to to the sales and long-term up Last important. our making were deemphasize last customers to that large is weren't

to we take base. the our on of a small repaint but on element DIY, it's through look the continue focus grow. residential is to business professional comps important stores. is a but The result, our As now, that that expect good our business, an we'll XX% DIY

Heidi Petz

one to would more I Josh, side. thing add residential the that on repaint

products. look the offsetting the think I at think backlogs other business introducing you about on we demand, back this -- your of we're new if how and softening question to some

that coating. a think the contractors performs X-component focused on new like So much essentially these It's we've introduced in, a going component one epoxy. professional walls, if cabinet largely about you a

allowing complete essentially cabinet. to contractors So and walls excellent to the chemical kitchen and in and the these moisture resistance from an go help to entire

the advantage can in where So to the really ability trying they home, take to while arm them of generate revenue. they're else with

Operator

at Yefremov Alex from coming is question next Your Capital KeyBanc Markets.

Aleksey Yefremov

out seeing I cost second the signs estate. is questions have are inflation two the labor leveling you of is side. on the of Any real And cost. on the One terms there? in What trends? part on

As cost you seeing existing are sign leases leases, renew there? new you moderation or any

Allen Mistysyn

Yes.

-- Let to mid-, get especially centers. half the our specific retain has I will, through you our out outside labor expect would I'll one me costs. make do high say in factories We would and our side, talked any to do I take on we're don't been our nonfactory that individuals get going out, given those in sure the Alex, the increase we to facilities. or level labor We as and say our first about if distribution single-digit on of costs we higher rate into second of bed, to sites. market to of area. attract market and continue that studies distribution

I a would to happen. think what admit we're not Previously, little behind. going let we that got as I to maybe

leveled Each we've happening level to manufacturing in we them -- But specific I diligent one the think a on we'll But do it's believe market, what's going inflation I less be is to out. different. to that and put there. more to distribution each out pressure diligent I expect will So rates in is little market more forward. be more to as tick got see unemployment be wage up, going it areas

John Morikis

what And that part, would We We well a and the tenants very are side, or bills, good fact and make looking and relatively are that think, a predominant fact that strength as on we pay the that about be their it brand rents in here, try tenant The that say, to that. talk seem plays bill. we you flat. long-term bring. to we're for that I'd to the to industry, those financial investing that we leverage we stores, others about is closing while I rent use tell can that for fit We the our tenant. like most talk premium our

Operator

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

Arun Viswanathan

businesses. many many, guys question, first obviously you have I was guess, So

Commercial or that we are performing not characterize have of bad that? think better If as should Or expected initially those X resi as maybe -- what home about thought? maybe you better were to the top than performing maybe capabilities you than Would how the be and X new potentially new would expected, that being or be?

John Morikis

that Well, certainly I Commercial better. say has would performed

performed has maintenance property Our better.

& protective performed Our has marine better.

high our expectations is, in. think repaint had we I going residential that of that

our -- never we So say I think they're -- expectations. would I meeting

we meet raised expectations. they expectations, our When our

Automotive On to each because in that opportunities. are are this And -- very say side, question, our answer -- the there doing well. there our really think hard I of Arun, business is that businesses, some I'd others Industrial it's

looking at we not if When about in the focus new look and being a business, the where residential zero. opportunities. you it, our about is talk pressure, you're our the in then Paint Group, Stores it's can way but talk at a come So on -- and X are our come teams or in under

know And there so new within are even growth. residential, we for opportunities there

And so -- I line. there's often no say finish there's

in play businesses, all return And exist take of we and been they it. past there's of that spring market for where these to are Even within In that role to the single their position opportunities the we every the improving teams to those while expect each grow our in there those we segments lot find pressure, those market. opportunities now are these the leadership -- the Wood, of are opportunities. faster we that is have there through expected grow Industrial does find the than in and that a in business. segments so many and the growth, that of when them of coiled sub-segments we opportunities, But team advantage

Arun Viswanathan

wanted here Okay. the And I as ask a to a little follow-up, about bit. EPS outlook

rightly wrongly $XX or report, for $X.XX in us several So to 'XX. I prior range to your the of were think last earnings

at Yourselves rebased and $X.XX have or our to us so expectations midpoint. the

$X.XX on that had so probably But outlook, would maybe mention, to -- drivers top get know Is are I does EPS? for environment from -- what $XX that in couple to of it take affordability we So remove John. you a that it turnover? that come driving back 'XX? mainly or into that similar our we higher there several things the better can lower near that range you housing a back

Allen Mistysyn

There's Existing are first the is been Arun, lot lot rates biggest higher. Yes, turnover lower. is home I growth. uncertainty of volume and a of a headwinds. and of macro some there's mean mortgage the always the

New family are lower. -- single-family starts

than reps time, market in market. As faster across opportunities, improves reps over because stores, added expect we of grow growth the in in much other we've of investing as of the that new each and to the keep new the businesses some long-term investments put we

then of the So tailwind, with it's grow. I we I going to believe 'XX headwind dynamics. similar a back the and keep 'XX instead a and environment similar a macro becomes and because environment

we we're to Xx expect we that's back grow how the the to market, margin drive Xx but to to be. Xx to market. operating to going it that X.Xx So expect not And where to Xx

John Morikis

summer. is the growing the it's Yes, since to our us response, And single-family there. multifamily ability frequently what fact shift the But every these that get about have differentiates more terrific discussion. resources that capitalizing. segments, to volume mean a we we residential, I opportunity. and to of I a important. we been opportunities And point and that in believe new when last last lot starts in talk share is attention robust agree, why is those having that mentioned and one key and we'll It's even we're

better day waiting to on every and volume that come working once the position to capitalize expansion see be to not in we're back. market And the the a just that for We're opportunity improve. to really markets take it

Arun Viswanathan

it's to And Or usually, just one. FCP the moved some had August. visibility into one June. I the in know Was last a year? mainly bit quick that I guess, May guys little have more you just you or

was understand So that, just just to move. that anything there wanted to I if

John Morikis

in bring here. wanted It's August. to you We to Cleveland time beautiful a It's... to be

Arun Viswanathan

Great.

John Morikis

bit is we to about put Yes. lot and talk teams quite to to a you, much have you about. front of our I frankly, bring going talk be to and going able more August we're a be things our And line mean in think in little we're to to good better. proud sight really in of of

you. to forward hosting looking we're So

Operator

John Your next from question Roberts Credit for at Suisse. coming is today

John Roberts

now. business Auto been has a Your Refinish time strong consistently long for right

was I new Dupli-Color, that above-market the it's pandemic performance? and now controlled strong. products? it the pandemic, thought we're of but Is During driving out it Is What's still distribution? it

John Morikis

technology We technology. technology. between combination It's distribution. combining of the talked controlled Valspar Sherwin It's and the system about some Yes. technology

leadership. We wonderful have

point, here was said John, we fact, great that's it expected products, to grow. And to great have think to And We in happening. about proving our controlled. time are we've we for position exactly been is, your talking, the numbers some going distribution what happen and

John Roberts

you've then Latin got And over XXX in America. Okay. stores

those run you they're that going segment, differently? Now you the do to Are repositioning in them stores? Consumer be

John Morikis

in to expertise leverage best done No. practices more and will more and might be experiences in likely amongst our got most the Group. sharing as and has All business we been brands a Consumer talent Consumer job, where that of terrific. that business Group. along, and well can be Paint market bringing Brands is Consumer We've represents we their we've talent as the Group. our realization Stores think our team Brands Rea really There found a that or mirrors that Todd wonderful their

And quite work both frankly, it ways. will

they to is that America some North to there and in it We Latin as that have back America. we expect do of leaders what well, from and learn bring down terrific

a customers on win-win for it's both and for businesses So both sides. certainly

Operator

coming Vertical for Your at is from next Kevin McCarthy question today Partners. Research

Kevin McCarthy

it the that to is certain your April? destocking is segment? Group, in regard sense we Performance sit done still is Or out customer among within your as With playing businesses Coatings it here

John Morikis

you there differences region say some at would I be by a although concern example, look out, there's in of lot as happening played Kevin. an in what's might likely But it's say in would I region, the if market. Europe

So be particularly deal position. part, that the here customers we But play in think most in the might in America, a inventory have there's I don't great in. still for might of that some North unique segments we

Kevin McCarthy

linked indexed your Good Performance mechanism as to relates feature of Group to percentage what are contracts of hear. pricing Coatings it And then raw secondly, if to I sales that sort may, would materials? some

John Morikis

percentage. small very A

Kevin McCarthy

Okay.

be say when it the majority pricing on a hang So to price prepared that you majority if vast John, would small. remarks, your index in like quite sounds is that of your indeed, increases, you

John Morikis

correct. That's

Operator

Sachs. Your Fischer next coming from Duffy question Goldman is at

Duffy Fischer

your first materials. to to customers say, We're you you If steps you year, increase have we level? raw if structural system. guys what prices slacked have of a again? ago, we materials to Just back and were seeing now next guys shorted wanted. raw Obviously, things supply and you get roll on structurally get short steps couldn't the the taken question are taken demand normal availability normal A over. let's materials what year raw Or in a back demand are level,

James Jaye

structurally very us. say availability short. we've past response would over taken what for of recovered will has I nicely a the couple be seen. Duffy, in years not to of We've number they The steps

We One our has of of of those was our which purchase suppliers. specialty many polymers, certainly with portfolio production. work the well. as simplified internal resin closely our increased We've

don't So are as have have past. would to we materials the would there raw maybe as in not I know... procure we many that

John Morikis

an supply, we're of say not chain supply very the to important Duffy, I'd from return to trying to of past. assurance it's a understand,

and steps. customers, ability position goal improve Our our has supply and to our our been taken appropriate we've to

here this Heidi For competitive lay Heidi wanting her going into team leaning but details is what question. to are, out right We're edge to -- we're now. the not not get receipt, those those going and of answer on steps right reasons, to

this issues, a process. forward-thinking work coming we have we're in to very going and we're better a would you out we I future as and learned tell I'd lot been smarter that how during through result. say And

Duffy Fischer

million does Valspar, that's but it are think for then a you printed no but if $XXX does This Dutch right, back brand And your of guys Walmart you Boy, kind see it And in longer move a it's decade once of time, then. out numbers? non-event the what my move needle the or it needle? It's like in Glidden the was I notes bumped before. opportunity ago, Fair. guys a we'll

Heidi Petz

think going don't to the customer to value is enjoyed we in to impact look to and have, service because that I this Krylon. we're be us. as still move be we to We we comes sell such past, you. at looking this of your business for can general, have, really companies in both brands will forward important we will a And exciting with is you I continue private Yes. Thompson's, us an think forward key candid to if an in a there them we really the will existing where point, future. be very or have label And while Minwax, look at opportunity our both as both on sides the the opportunity We brands that. lot absolutely think create something the to If any in interested Walmart

Operator

from Zelman coming Your question Adam next Associates. is for at Baumgarten & today

Adam Baumgarten

are this Just one process? through for point me. review? Or Are that of the there are you any businesses portfolio other at that in under kind strategic

John Morikis

brand, Adam, everything we look program, every constantly. at every every business,

have discipline. We that

Operator

is Cerankosky question Research. Northcoast Chuck at coming next Your from

Charles Cerankosky

Was DIY in to the just quarter. on at think But Group the short supplies you America, that. talk more was Group, digits And of look the was year North some there at DIY you When double about in Stores a Paint Paint soft. Stores? ago touched Consumer than there I in up

John Morikis

we I'd really, Not last deemphasized year DIY really serve have customers. our say to Chuck.

have it's professional now we that to sales so to mention important be again, largely a to the so our through on -- of sell. determined And our going because representing focus it's our of by that year. have, And And XX% smaller stores. what and base a think product goes last I success is we about

but business. So there. PRO We're we'll our business. focus take the It is the us, on helps DIY

Operator

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

Garik Shmois

follow on field quarter? I just to you expect across any and Brands. wanted in And second Pro? the inventory of Consumer that DIY do both up the into to you that that saw bleed Was

Allen Mistysyn

summer we and in season. selling of declines are, you'd as seeing our the mid what spring we out the Typically, come inventory months in start see No.

see So I wouldn't quarter. in saw first expect builds like our we inventory to

supply more think we're through place. in said, materials place. typical a a good are Inventories are seasonal pattern I good you'll see inventory in this the a chain Raw So year. I total Like

and be at expect servicing they at, just service to to our at. the level in serviced perspective, we're to put So customers expect we to that it back them

will flow of to expect that would cycles. I management past inventory the of happen So similar

Garik Shmois

It any or doesn't just all, wanted I trade if in you're sound mix I just or it. up. Got seeing at to wanted down in Stores it, to any confirm it follow like Brands? change be paint but in Consumer

John Morikis

shift. per No, that a have Customers a sales more labor on bit to continue the that learn cost opposite. percent more product that of It's actually mix a a little a might them as gallon, make positive higher-quality but they project.

in So stores. our our mix is positive

Operator

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

Eric Bosshard

in XQ an assuming in the the A about margin? we volume. there What the I the coming or I'm volume having trying the it, margin, through linkage gross quarter performance gross follow-up I'm however gross quarters we talked. strength was for figure upside is Do on first strong On Is guess. benefit the think to characterize as margin performance, that from you, out from you move gross build some impact of differently behaves as the the year? you've and in How balance between should the you volume Al, margin?

Allen Mistysyn

going because our and Group a Stores quarter certainly better margin had segment had volume, in sure. for first It certainly the Paint highest and Yes. gross margin gross improves -- it's increased our

expect in to segment the raw I second price and think to material performing our we is Stores do on our still as quarter. see still Paint some but sequential also hang we're And be volumes, best that to going moderating moderation.

for So think the I volumes help sure.

then stronger But gross And update, see we'll other help half expect when you dynamic, Eric, an year-over-year the and it to give rest second Paint mix after in our quarter. on in the I a that our the sequential improvement And gross than segments, because second margin. second is margin quarter. Stores of do Group of will

Operator

for from coming today question Jaideep Research. is final On Your Panaya at Field

Jaideep Pandya

really the question is multifamily coming The of question you is destocking demand second really really is the start? tell on towards? on Industrial us there weaker destocking then any And Could Wood. when homes. or did the signs actually And

a as be pocket backlog next your finish. year, of decent competitors One that of the there alluding year was there air projects sort some this but could of is sort

not the worry do you matter in you Or or about? something weakness it's that for management expect So homes multifamily in XXXX? in commercial/property

John Morikis

we'll and and certainly of the good going with both Wood I'd right me our say let work full. high amount see and of We're multifamily sight this But say pipeline on forward. next balance multifamily move is the year, backwards. into our as is bidding now, of multifamily, happens I'd year what right a contractors line is in confidence with on Well, we and for commercial space. activity -- this start the the now strong the Industrial

pretty I'd on say So our positively that. looks future

Wood, under with industrial likely the been it's pressure along timing, In housing.

to opportunities So there if business. as again, all how look for want It's Industrial this you the is you precursor not in our talked some are And business that good give in to we'll to Wood. multifamily as at -- housing well expectation insight but a has market business exact, behaved. in starts you as is segments this about, outpaced both that the

have every that growth focused are day. on We out there teams

Operator

to and the end of the call turn closing the reached will over session, have for We remarks. I Jaye Jim question-and-answer now

James Jaye

there's everybody, that for to will of deliver you on but joining year Yes. XX. as close you, progresses, heard soon, today. we we're us the our to year can be John Thank that here details webcast. we be know we're that what the remain off strongly And on out forward date we're did at results. we'll control. for We financial want will presentation on prepared here, and that annual to call today's start many also to time, today be will please to save to community work seeing that as I that. in remind have our with headwinds going you and And Cleveland, in we to August conditions. same do team focused do, look event to be you The to still available macro the good the those a knows Registration very going said,

as And Swanson for today. Sherwin. your attending be Eric available Have always, with follow-up along great interest a calls. I for phone your for you day. thank in will Thanks So

Operator

you this lines conference, you time. at Thank today's concludes your This may participation. disconnect your and for

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