SHW - Earnings call transcript Q2 2024 | The Sherwin-Williams Company

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Operator

Good morning. Thank you for joining the Sherwin-Williams Company's Review of Second Quarter 2024 Results and our Outlook for the Third Quarter and Full Year of 2024. With us on today's call are Heidi Petz, President and CEO; Al Mistysyn, Chief Financial Officer; 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 2 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 the questions. the company's session will remarks, up open prepared we to

to over call Jaye. the turn now will Jim I

James Jaye

you, share sequentially our of percentages. sales Group, with within a to continued and range. and from Thank macroeconomic morning. were quarter strong delivered grew continues global per and Stores Sherwin-Williams our guided Margin good all by environment. year-over-year driven by double-digit segments. margin X Paint Led reportable be expanded in improved Gross what consolidated little execution an EBITDA uneven and and earnings by diluted strategy, help

enterprise returns to priorities, back last continue We have are year in and the now half investments from clearly the of which make made we and heightened annualized. on progress our seeing

XX% We share to $XXX an dividends our through approach our and capital year-over-year. of the million quarter, shareholders increase disciplined also during maintained returning repurchases, allocation

full in increase strategy, half executing new win share earnings quarter the on our our advantage value note. current we outlook. and second back year, focused on visibility We our and highly market. our half ends Our year of of our taking And proposition performance increasing accounts disruptions first are into strong remain a coupled with demonstrating the of wallet to the

and stronger more actions investments positioned end demand performance to will deliver result becomes environment highly that confident our even well and eventually We when market in robust. in the are current

your on quarter our and our Let Heidi, turn by will moving before to over to results outlook second on questions. segment it comment who me now

Heidi Petz

Thank you, Jim.

and and continue you continue quarter where by the the believe ongoing their passion we Two, inspired for adapt; for we from time, strong the a to put operate X demand and to to world returns customers. second want to our right I to will understands our in do. things: employees means. all with delivering our investments continues the team humbled company business. see success. around and and three, any in initiatives And team in by position for content greater demonstrate not environment we the even our and of be I execute that must efforts for We're First, our XX,XXX with our our urgency. our customers that and are that At choppy quarter for results our One, we're their in we strategy. executing company continue thank have on all results I same determination while sustained ongoing

quarter, far as low with by begin sales comparison. Stores Volume double-digit price up As specifics on Paint mid-single the single digits the I'll a where second both digits. and against were increased Group,

higher of made return share we last dedicated that here down take by improved driven price We're evidence by costs. increased Strong to led sales in seeing the clearly the in raw in Pro expected, which sales back were as the repaint, we reps Segment a progressed. up to continuing sales realization market. margin we percentage. quarter As mid-single-digit a was moderating are by year. XX.X%, material in residential a investments from half

to grew digits improving the New Residential completions. as starts returned to double-digit single turn low growth single-family against quarter a by are Commercial comparison. we in seeing

teens Protective low high have increased Marine feel mid-single low that & about sales to And good comp. X%, From interior digits grew there very faster perspective, Property we DIY sales. exterior in management been pipeline. the than digits product delays was paint a up down delays, a against project a single acknowledge while paint less continued with comparison. compared projects. XXs than we was CapEx

for have open We XXX the year. full opened year-to-date and to XX net stores expect to XX new

household upturn on that home was market manufacturing cycle this a high well single-digit America Sales in volume, to in an by pressure we that primarily who the continue selling improvements distribution to Outside cost expanded America, in growing weakness remains anticipated. material primarily demand. expect currency within in raw DIY partnerships elsewhere. Latin are percentage to offset we North Sales single-digit We sales expectations Consumer partially segment the eventually margin long depleted moderating Brands by XX.X%. to in existing in increases, offset net driven Lower underperformed double-digit partially by below that Group. higher expectations in was sales and absorption confident and Adjusted architectural in understand impact savings Europe. with discretionary term. high modest costs. our see This decreased a positioned headwind. spending and over divestiture and to America the decreased our be of and Moving costs sales China appear our we percentage, Latin were consumers were softer dollars translation where where a fixed segment We're are and currently by percentage employee-related price and than in unfavorable the of America. North debt Inflation, a their available a also by

customer In differentiation. drive the by was an margin unfavorable end business. this continued segment hard ongoing growth driven reflects It ability strong modest of Adjusted success margin Group, acquisition, team to partially to also XX.X%. optimize value the reflects by in Performance work that Coatings improved offset This performance our was which translation. to currency our markets sales our

by demand and including an division growth, choppy wood Industrial impact see to continue the acquisition. We led region. of the

business Heavy driven was North overall. down core insurance than where low our to Coil up less and demand in North offsetting a refinish energy lower in Regionally, digits claims. share we sight spot. reluctance are deductibles softness by bright was was to in expected, Packaging back all consumer the Auto of transportation Share resulting positive but gains. half infrastructure while a less General line sales low year. down and solid than down also down lower single digits growth of in group have in other equipment in significantly regions. industrial pay in delivered single were America good was X% and most the gains America, were is improvement the regions. in

to third year. market start half. softer Moving for of quarter our the at back material in help from has anticipated our the the that guidance many expect than year. We on macroeconomic to It's the full the economists clear been environment and for longer get don't

new share competitive positioned second We tailwind, confident to conditions. in is us our markets. each being business Sherwin-Williams more And as and accept on are well wallet will of apparent targeted gains. half, are we're our dynamics ease simply time of over and to in continue in improve. a share become unwilling conditions these count end our you gains Comparisons aggressive incredibly pursuit very of can market

XXXX. includes As for and this for the sales with our expectations quarter release specific third outlook, the segment slide our of issued morning's consolidated for deck press

compared expected For unchanged. to the Performance mid-single year up to and the be sales percentage consolidated XXXX, for full single-digit digits. to low are Paint Coatings low sales Group of Full Stores guidance our remain the up year previous guide Group a

Brands half softer-than-expected continued DIY Consumer guidance We have the demand North the weak and Group market. in our meaningfully first reduced American following

our in increasing guidance. low now full are the We quarter. results of becomes guidance our revised earnings our guidance given of the end our year better-than-expected the midpoint second previous

a adjusted share, an guiding at On EPS basis, range are the increase to an of X.X% the we the midpoint year. in over $XX.XX now $XX.XX prior diluted of

As are be anticipating, would better. our we EPS to have expect sales better prove to than often said, we we should currently be

deck slide for purposes. also for provides raw items and costs our material other expectations Our guidance modeling on helpful

immune their As we Customers productivity we we us looking choppy conditions. reliability, focus second that strategy. disarray. Sherwin-Williams of on leads competitive periods intensely dependability This solutions not will uncertainty and more to our for differentiated half, that and to know their profitability. are drive even consistency, market from enter and our In are

by have our prepared a experienced win. knows This just to and believe deep expect We We to and do in that remarks. concludes design, how do success team that. we

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

Operator

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

Vincent Andrews

about challenging volume out. could us bit a it Heidi, Paint XQ, not the little that in pushed there least quarter like were probably talk had XQ a month at you some weather conditions seems Stores to unlike where some

got you . are bit terms this? are what pushout a saying bit little back So as some in XQ about hit terms make are to could in make and may to where challenging. maybe baking progressed, customers being talk a up in this then a little of started what little backlogs whether you quarter able of you of a And up your of half and And in, result the year? of the their of the

Heidi Petz

to Yes. characterized Vincent, you over I'm give I it and hand then But Al little bit here as of start commentary I'll a to -- it to think going well. well.

and be our conditions the shareholders our really immune long And where run. you paint challenge our ultimately also and segments for not in look if to certainly, the the across application having make are customers think about right me laser-focused and hide we've let got some we behind obviously don't to that which I we're controllables sure here. benefits we weather. here, contractors, But was clear there

expect in by we're If down to to the us to quarters, where I confident in would you up that. last doing continue that but residential I'm to digits seen share, starting QX, to we're this segment, you've the over repaint, going a as with mentioned mid-single see continue very remarks, your take point in market you market. look prepared posting few especially

that year. laid investments also we think remember a we're in return it's signal last that on a I clear you'll getting the

confidence a a our worth So talk we're even My our share of lot doing a new the ultimately out positive our how we're that's upside by team field that is to in with stores. feedback playing customers, more and repeating great market lot it design design, gives of we what in out it's getting them is segment, example customers as money. and relates from success make incredible And opportunity. there's time working, by me helping this of often

you give growth cycle take after bit of to time are with the completion. a and the QX spending the here. Single-family little time are by but then lot is encouraged personally let over come And we're they're ultimately of in If I'm we we're starts to why our I've this. seeing in I optimizing team QX, been that here. color turning and again, residential of Al profitability. new builders commentary, kind to going That a to reason and

in here segment I'm are, at back momentum the So see industry, specifically some very solid that in half, confident we as the best tailwind look positioned as our say, market this only recovers. would within that opportunity, not do we that our we I

is Property to have on But renovation. move in agreements ahead this Management, with I we're plenty new Vincent, much new the I And our put pause area waiting all think certainly work, and at If residential, securing hard on demonstrating this like segment not of rates where, here. this have opportunity I us. we construction think exclusive value both are interest seen for and an teams additional

focus to this through So helping on manage pause. to continuing customers we're going be our

helping older a them properties these upgrade how companies as a got the in understanding You've look they're to and at of with really management new and like. taking competing their prioritize try properties to lot investments discipline

Allen Mistysyn

single we I exited so mid-single up run Price second broken at were would with. coming up strong take below probably digits really was to -- low would double-digit leads the as that low X.X% to the where expectations we only the between third up were half targeted digits. add our price up would volume say digits, year. is was just half comparison digits. guidance it And at was which slightly to compared quick a last Volume second quarter thing our but quarter quarter, digits be similar, and into up to the up single low look a single low just And second out second single low be second low and rate, and quarter, the to I

second that reminder, being the half. at a in same second that res of we talked our expect quarter in the end about and As happened, our repaint we high range up

Operator

question with next Chris is Research. Your Parkinson Wolfe from .

Christopher Parkinson

'XX raws think versus we in But and lot when your back gross price When we volume, longer-term of a a opportunity, take out parts margin step still labor about down break moving the market, perhaps and control. which some your housing and are already there's of things thinking based for investment how that, outlook not things initiatives, second but 'XX, just on that kind of of all about the doing? be 'XX, affect the been the half the even other including you've that community all should investments onwards

Allen Mistysyn

Yes, talk Chris, this today. question, the to but we're that specifically again. not that Al going appreciate is I target long-term to

gives the within FCT next we talk days, targets I longer today, the to the us focus a think us And metrics and beat second financial delivered on full really good our market each in . with adjusted think environment -- the about and want the we and EPS EPS to opportunity I gives XX that our strong of half, raise a also quarter for tough year term. second

Operator

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

Arun Viswanathan

PSG. you and mentality, traditionally through on how profile there's as like? thoughts frame look of 'XX the a couple look And for that kind on Maybe Congrats share you Obviously, been get us. I there's of 'XX. strong opportunity just get and if Maybe into thoughts going Is Great. them I just know new kind you and some your gain those get to for the customers, could when you about further that of talked prevail? get onboard results. maybe the line, customers a up those still several mix what's that changes them earlier, benefit do guys? margin their of gains up there's who that perception the them the potential are . competitors can you frame does and correct? of dollars going think that's hundred own on million some could I of

Heidi Petz

Yes, Arun.

terms Let me in certainly question is customers start your for Yes, this positive mix with new coming us. of last in. a

more product premium existing So the new value to we segment. customers, customers that premium provide. in experience of this tend

luxury would we the have won't certainly would I few run-up that, go 'XX, So indicators to Obviously, we're by and comes here you it a the of get in in we idea into a signal. relative reading tenured I'll the outlook. the to fair confidence very 'XX that of very already when success back characterization And I again, segments. experiencing to is any team But any say that the is tell that's segment. make this management a not across astute what market design, momentum

the best another discipline cycle So I'd portfolio. the is really for where laying about a the which stores, so automotive point investments at in run-up. the these in to see that we in are good repaint example. that timing point we're the holds is you example positioned same right -- Residential across specifically refinish great can you asked but

positive unique to where seeing automotive I'm of know, refinish similar you organization puts very market customers So a really as stores standpoint, to and we're relationships that our team direct and that well users that model very some proud end signals ability have a position. share our with from and in us these model,

would is But getting say another to So seeing. penetration candidly, I want that's putting But up and while of let the we're high pick I'll record we've outside Al, not you here, that the the and else in we're jump installs, that anywhere you investments here? acceleration still example got stores. in everyone

Allen Mistysyn

Yes, Arun, some the you're things I the seeing market. of think in

And than think I we've basically talked res repaint, customers were in out the our immediate and they taking of share, of West that this. is our supporting business. directly about a out I opportunity and we districts they're Kellymore in of because about we've California. Coast talked the that in more type in more see more think fair

efficient point opportunities. up strategy. very longer market. we'll in confident this making more that talked but X goes that the PPG, back down our are And repaint on -- it res drives quarters And that services customer them and maybe we grow about question all It investment and off We're offer last that understanding to investments the to get money. alluded them their products to we've and think customers line. that see jobs products this mix longer-term their that and on getting really we're digits more and it the paying services about about. I'd thesis what line -- top consistent Chris off, the previous I happens, We to more be is make bottom to of know to get shifts. And being mid-single each We the then a in in allow really faster, loyalty. midterm,

Operator

Your next question Zekauskas Jeff is with JPMorgan. . from

Jeffrey Zekauskas

R&D be under done in you're capital your and about be stores. you paint regional -- Could between plant performance expenditures some with capital $XXX your once talk expansions your normal million? should expenditures And

Allen Mistysyn

to know, on projects, in After Jeff, consistent CapEx. and cash attract you philosophy. and talent above-market continue we'll which get to building and improvement one retain flow. -- CapEx as RONA allocation are And you Yes, X%. take target growth, second will flow, take ROS past our the then reminder, we'll us as allow to a us very the capital world-class help and we our strong cash I'll future below that drive drive And

have growth where the I'll opportunities years add new there. where on capacity. to point specifically the into we with may in confidence France we our to depending share online that market come with have lot we've we So our have a the of idea, And packaging rates are, capacity

our Southeast on out We our would I in And plant stores. in paint build state architectural continue our architectural both with to confidence confidence And argue growth and but opportunities Brands at in we'll of acquisitions, we'll some facing buy stock And EPS. lot XX% that's the then of our prior back. short-term certainly absent dividend outlook. the bill Group then capacity, approximately at Consumer in again, the headwinds, a the keep

James Jaye

perspective Southwest area quarter, give I division close would but we in leader an too And tell commentary, a club point Jeff, our competitors I'd too, And we've in one was this you stores, out, on their don't regional where doors. was our seen that the typically that, current the much this house. is Jim. of that From

you some been so bit of about. for And a can little . the that thanks And as read we've talking the share that gains question.

Operator

from with next BMO question John McNulty is Your Capital Markets.

John McNulty

that the on simplicity the high about improvement? you've bulk guess obviously, be Because terms So drive thinking some really this versus of making? entirely. of And didn't I of how front, was in should price one the the raws we measures the despite margin this gross some been efficiency if this ] XXX volumes. up and [ not, soft some volumes you of put really the number,

be So guess, we there? the drivers how should I thinking about big

Allen Mistysyn

that have higher Yes, drive of better had second couple driving a the better segments. John, moderating expansion we in than versus raw the global driven improvement our our first other is with supply in things second effectiveness expect at of gross I end do our half. quarter Group part in that see driver see that. continue the entire to realization Moderating first that gross cost quarter, quarter, the the being the higher the you about costs. see materials, margin of momentum that half, margin as we some talked saw really we much talked than price going Paint gross quarter. we range. the outside The Stores half repaint better have we consumer that half. second Paint We absorption also in And our the in But really of to better and margin. also about have it quarter. saw Stores material in sales faster drive price that second of carry as res should as efficiencies half, first into But chain And maybe margin mix. a our raw the the along to the saw that gross not what we Group first by growing again, performance fixed We're in high certainly our was We've mix being the second will did in higher happens, brand

won't we've what in raw the half, as high. of continuation of So not just material . first tailwind be seen because as the heavy

Heidi Petz

you that, help only And then, us. choppy John, and additional when volume environment, continue not we're such in would lay I in add to to to a going that's stretch

Operator

Fargo. Sison for Your is from Mike question next Wells with . today

Michael Sison

I actually worse? I well. market think the I these really your demand see think And Or mean share environment? that getting gains the in curious, are you I just in a your stores accelerate second do possibility? hope you demand not for selling importantly, half. would better then how that for as colors -- happens was do the Guardian What . outlook if would more the gets days?

Heidi Petz

Well, with the question. I'll start first

I first lie. which environment. segment of environment, be prepared You is realistic approach But by those taking know any a you within look think is we're think, foremost, and have answers very a what, we to why I for where as some choppy

is So think this to in opportunity again, we've to of down by talk continued res we've gain because in continued incredible of we've take And terms market, share. demonstrated about area an this that for repaint, us. design, market I share a

a that's the in the we that, think litmus operate -- cover we Having good how test said we market. without as down did in what repeating I will prepared So of really very growth investments segment looks to like. that indicators remarks, we're thoughtful our pacing sure what driving be are growth we're going by that and where we make that see to the

So...

Allen Mistysyn

outperforming, I'd the missed half. then year but property going win into our the half what the question Yes. little thought maybe the expectations it. expected they're maintenance, hitting for line and improving delayed projects guide than far with softer, look commercial res the too bit we I not Paint we certainly that not not in outside thing guide they're the our And coming if about with with Guardian to add Mike, baseball you res it's at is certainly repaint other into or where second was year. PNM Stores, only our the second to a new coming in

James Jaye

Mike. though, place, first in Still

Operator

Your Zelman. Adam is next from with question Baumgarten

Adam Baumgarten

performs color relative paint the . the segment business you quarter? to in on curious give Just some overall how the Pro if can

Heidi Petz

in certainly, for America. to just -- important be pressure us. Yes, North really to continues bit be we're under the Paint segment here, a a [indiscernible] Adam. continuing

talk that retailer know, you As relative all customers partner to about this investing to point that talked we things little Al, know about in bit right going reps sure had I we're and to segment. you this to really commentary is a on that we making also with we've to pro in at important relative our jump think continued the the paints the some a other and segment to on color outlook. are continue were

I think there's making that a working our partners. balance of here in we're strategic terms with [indiscernible] sure in

Allen Mistysyn

and And what in if projects. remodeling up family. higher we've ticket you think that's of your that quarter the not some just indicators I projects think past I fourth we is the a -- ticket made the even look to and we're third here the that quarter. and when improve in have out in seen the kitchen, you're at you of Lira, to And the leading lower bottom the feed expect following still

those revert some what gaps, through in you maybe second that's the half. smaller and So we going to to projects ticket fill see to expect

that return the DIY through channel and we're paint and 'XX the channel of term. and of ability first investments piece second get most longer is half this I seeing half. being gain the investment why looking segment as And for best not pressure pro made And -- we confident year. half the that think where on a is Clearly, the positioned run comes and the to into strategy, back. the we're of that. this second to our 'XX we're share looking and We're in looking to just out We're

Heidi Petz

critical I X and our piece strategy the paint really But I strategy. a part here, Adam, Provu I want this, add of said well. to in is think,

confident important not is up a financial to are for a high very our serve that going growing to in that strategic high-margin but we access shareholders. our opportunity, organization. and strategic is that nice have to a in also we important set segment It very segment. just this stores create is a just partnerships This growth has strategically and it's are We not this win that segment our

Operator

Leithead Your next question with Mike is from Barclays.

Michael Leithead

Just bit the your segment the that on allocated recorded or large a versus net of one income year million a administrative other income prior is statement, is that? which in one you -- What last is to quarter. And the $XX businesses? quarter,

Allen Mistysyn

you at line that and FX in look there. goes it's move specifically, When [ ] through the Yes. really

I just environmental income. address what general FX Mike, then what quarter, is on in the other did the all We other credits see know and gain You sales.

look versus it about tax net We about you a $X.XX headwind If which at tailwind. it's a year-over-year a $X.XX. rate, net effective higher of have was did

expect low costs we're those to environmental expected. our the as I year in second been So as credits out, though net Not has still a I'd in income lines expect get and nonoperating it still even size second the percentage. that you that if a beat because our we second expected into had on up typically double-digit half, other year-over-year half last in some through other that charges in higher past. expecting year, of environmental line was and going back coming some our half

Operator

with for is question today Cunningham from next Patrick Your Citi.

Patrick Cunningham

performance verticals. Where coatings see your see you you key the And half? where from the most markets underlying upside back trending in share gain outlook opportunities? curious I'm the for do do on

Heidi Petz

start Patrick, Yes, I'll with that.

me Let the portfolio first level. start at

I think gains. is value for And share are is margin make delivering. across some in do, we those rewarding of certainly money total, that that these if the value what performance our PCG them you helping us more look or we're demonstrating which

progress by packaging, per to We're expect start the U.S. share here. relative look United So division do of we continue here, to States. kind if And our of outside gaining I'll at guide, I the second half

new that preparing we're technology that market to at going it's Coil into as owners. -- know run of this our a and to a the that continue brand investment, for capacity, really If our strategy to for confident see good we're we our and putting you of packaging, issues is work. you solving here. look know some know, a growth, example up is lot unique. We're within the there's We customers we bring

share, got auto consistent solutions, I team taking mention I to customizable their response quality so hit we at service would the did and refinish, I execution excellent time there and production. We're we've winning. wood. tech on fastest delivering support attribute We're to very the team that and industrial that. And repeat won't our

a new As back to for foundation building that improvements, you been quarter we tailwind look with in as us we're the all potential still choppy, we've would a be half, expect up in certainly good last on but regions. residential

Operator

Kevin is McCarthy from next Your Partners. with Vertical Research question

Kevin McCarthy

you for on question X-part A demand. DIY

would First, stores, sales how in be, if to through then could flowing you part the the versus And company-owned expect been year-to-date. at of reasons behind second trend X has don't challenged about know, segment, contractor important just your professional that? And And talk that positive what speak DIY I I look it's moving in would comfortably well DIY general DIY you terms most Can sales the, you your are . into stores the about disparity? quite forward? the consumer red. or course, in X

Heidi Petz

We I slightly segment, talk characterized observation, about well. it's a It's Yes. Kevin. X And different often think this you've having good that segments.

value as little the the service prepared DIY home depleted conscious store the and more center sensitive savings specialty that remarks that be relative tends talked to to and inflation, debt. prefers in is about certainly consumer pressure stores, our the early expect bit experience you about The macro. with household that If environment and a in candidly goes feeling we along paint that. DIY a think current for they're less looking

relative tell our right very I So Having segment. performance consumer. that relative to not kind those is area at real have and do in said want this our absolutely do sand in the for that that, expectations, certainly this are our you, an because in question to DIY we would to the heads I of run pressures

a here, space. us in the very is sure This up. free for the term. consumer housing we architectural of earlier cycles, of we important that Fundamental long are our All look that belief in understand there well that certainly to segment at over that positioned going we're referenced is log a DIY in part And when overall that importance you are jam strategy. the making as

with others. the partnership Lowe's, positioned partners best are best we among including with ensuring strategic exclusive on focus our our so and And growing

that that very our as be above-market market heads our making up going growth. are right in recover, with and again, partners. begins locked sure we will sand laser not focused the deliver are now, we're we to the our So confident continue on in to to we're But ability

Allen Mistysyn

DIY that Kevin, the price but -- took DIY customer Stores comment impacting Group, our Pro. Yes, on as stores that the through as the of is increase certainly in well the the that we our increases is Paint price part

Operator

Evercore is from question next Melich Your Greg with ISI.

Gregory Melich

things. X I'd follow to up love on

FX, price volume, what's the understanding back second in half both quarter from guide? implied your and mix First, and

Allen Mistysyn

And kind look really you half, guide look acquisitions segment the at of up X%. and also consumer. sales at where segment and if than of second expected, low divestitures single-digit and Group year. we that comparison FX. single to I But up X.X%, X.X% we Greg, our bit last the our had Yes, digits in were at low the PCG was miss about less price quarter second we little driver slightly, up headwind our If Paint compared the up with volume both segment of quarter the talked the a Stores on was

a but out remainder see is Consumer second expect look small in digits. single when we ] a high down in is the and . I'd digits this are, a and volume is of single is tailwind expect half, primarily up price down say, said little digits. I just up again, acquisitions to will number divestitures, because -- then will before, the single to digits, high and of Paint volume down I and a increases price A X.X be I'd America. then small actually expect PCG Group, low single impacts continued really be clear, Acquisitions we to a be the softness FX be And up all not think second be would you double low little less digits that the and call [ expected we bit and single do immaterial, be tailwind you of price to bit on other headwind up at and be material. single-digit that's low FX, low X%. be tell Latin within about unfavorable. have of to expected digits. the headwind low Stores low then in FX that about headwind. on And index than then the the percentage. flat, of I or price in volume for half, single the we will accounts of headwind to

Operator

with Baird. Your next question . from is Panjabi Ghansham

Ghansham Panjabi

alluded cited affordability as portions to Consumer in your of and and slide Are you've issues it relates to deduct Coatings, Brands you prepared of also Paint over Performance such affordability as the months relative baseline consumer ought citing consumer the already to to parts your refinish business of Stores to you same segment. the I impacting On or think so? comments, what dynamic deck as to seen XX the Switching last customers it your relates also the incremental

Heidi Petz

value piece. true would it maybe a maybe differently are affordability say, Ghansham, price I to bit always would than little I focused that conscious, there be the characterize on going so more

And us what so it's doing more we consistent, we candidly every upon and that reliable us. do say will service just that from delivering a contractors habitual incumbent we are disease, very discerning is expect that day

make business every we're are money. day, on their them not that And conversations I display more clearly making understanding, them. helping price changes think, about grow it them that talking sure we having delivering with us value and helping We're so and their for is

Operator

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

Steve Byrne

structure. an in quantify cost what What understand volumes down there was operating Can improved the absorption in to year-over-year. Can Al, that us? rate of spite that for led improvement me cost that you you your efficiencies. mentioned you consumer to higher lower that help led And fixed lower volumes were

Allen Mistysyn

side. Steve, we thought Yes. a is impact really our consistent costs really wouldn't higher our the so Group, SEP between do did offset in on both standards detail we into about our that out about to have year first like this that last this I that, to could Group we to coming this X first an going years Stores our out. reset costs, Performance first to at match we or efficiencies on talked is with offset not call, Brands overall gross that's our those the Paint standard choppiness experienced our talked quarter Consumer the of year. those I because our And X and last we It's I about updating quarter conversion Coatings and talked as which our We costs over on production volumes Group. said on to it margin cost call, been a not we're quarter. on drag get

] high. Coatings our Stores to We And that up half in don't is an the Group XX.X%, first high all-time improvement you see think then all-the-time see Group. Performance XX.X which certainly, we it's performance material. can is our an certainly with And Paint [

that experienced the partially sales those sales going Brands you're in North -- did volume, to cost in that improvement see second volume to Group volume is continued So half, by the due Consumer you look DIY when decline in a profits offset America related really it through phenomenon higher at quarter. I shortfall we entire profit out second that call the operating the absorption fixed to

continue consistent. down we'll on the we're So as said, a base to My consumer to like this it into expectation path. of more is get margin. operating future Think build I off going

James Jaye

next question for is with Josh today Your Spector from UBS.

Joshua Spector

in lower your improvement view turnover of ticks event this to obviously or that risk on X be basically to So in if a strength year. projects win any down. scenario, in you I'd year low relative It's in to don't you'd of I repaint. been housing meaning characterize your we a it want either resi you over-earning backlog the have that if or you maybe curious next been or think is source wanted slew about . to from ask really a still I with your the for mean turnover opportunity that or market? perhaps coming get completion

Heidi Petz

think I think, good I question. it's a mean, it's X. Josh, I

of has I is something. This I market. take source us ensure the of we're segment. time talk of right share opportunity about at been it truly we certainly, model I area of to strength take can how have. believe an we're think one the with certainly to health you this making that to strength backlog those we that back to controlled the kind here, there's real. across the do do When well the right positioned. the investments no because And for distribution that understand And

were investing and the these contractors reps the ensuring their more geographies, pace contractors grow we're in understanding at reps arming the what database we but of the not focused laying travel tools, So right painting largest day from help in be to in world's right with successful. X, are our laser need to go to on the have to they they and only business,

upside, I -- when think a line got opinion the success my upside. a got about lot So in we're here, don't there's of finish early this in innings that we've and space and think We've I here.

Operator

Your Mike from next Harrison Seaport is Research question Partners. with

Michael Harrison

the Coatings Another question Group. on Performance

portion least how lapping for comment in weakness your of are of there kind some through improvement regions industrial second you general general across on that You walk of Can any in at said expectations and industrial? guess, things business, us or half? year are the regions in prior regions. the that trending, demand all was lower some those signs I

Allen Mistysyn

with a positive let back. share and would Yes, starting starts Mike, And -- North type share you the all side, I me this do say less slowdown wallet gains I'd of of take in that, environment, in the on see say It on gains, share a differentiation. step with America.

less America of headwind. I be think will a North

-- out Latin expect Asia Latin America to do second positive, lot holding Europe, up. is so I in comp a America but coming Asia sorry, I'm the and Pacific soft in We to more of expect don't Asia a Europe be we really Asia think half. again, against

is the you know, of So region it as moderate across I our think North as largest to across do half. America, all the second expect through . get regions, we and PCG

Heidi Petz

would would say market. up holding And Mike, the And that's on better here, team's focused our core you I the the account credit, focus than the to been has think growth. fundamentals I of laser tell that I given new

pressure. here activities offset right the some on to of focused is team the So the

Operator

from Fisher Sachs. Goldman Your with next question is Duffy

Patrick Fischer

well earlier could, X% the through from of we're this we had I X% do of If didn't trend walk as you the a I that hoped. quarter Can just Al, announced where a year. now kind to getting just year? XX% you realized to that, say, said as usually kind us pricing being of X%? that in at you you You thought clarification. let's talked second your How about do within of

Allen Mistysyn

on, we we price the our increase mentioned and quarter the targeted improved went exited rate. as effectiveness at Duffy, Yes, effectiveness that the quarter

to kind see expect that of would realization. I So

single into single have realization, low forecast low the We of then volume our second half. and . in digit digit kind built that

Operator

Begleiter with next is David Deutsche from question Bank. Your

David Begleiter

that of Heidi, earnings in talk back would year? QX the were versus QX? can CPG And the cadence to you you on up implying the half they of be margins, specifically Al in

Allen Mistysyn

CVG, we're half. it mean didn't will from No, range and taken. on David, way an the really the does second margin that's -- imply where the was to in be It at the it if standpoint within through quarter we're I what where that really and through sales operating at dependent volume

architectural But it's in whether fourth seasonal volume quarter. improvement DIY going in our really margin, sales, still to . America our we we know, see will to operating depend North slowdown you expect on sequential see As sales a

Operator

KeyBanc with from Capital Your Markets. Yefremov next Aleksey question is

Aleksey Yefremov

this Al, to build that I you up that comment is level your on on. the you made earlier CPG wanted follow can margin

this or perhaps we low the XXXX, we some of of in if think XXs about pace plus levers, can So XXXX margin think operating recovery. volume

could a part Or story offsets volume sustainable margins are not and this is high-XX term? longer some be leverage? So this mid- with perhaps there any of to margin

Allen Mistysyn

showed in we continue as well Brands. Volume No. [indiscernible], to pandemic teens, had And the volumes high divisions all start you -- for itself a that challenge would that segments, low seeing as driver we XXs. I get we'll Operating our know, on market, and higher. past, And #X margin that we certainly, leverage bar. during in see our is out-the-door expectation margin we our to operating that sales, and and have of as performance Consumer we when raise in the is that group clearly talked we XXXX margins strong operating turn in the consumer really the volume in volume. grow, expect continue the drove to

Operator

question John Mizuho. . is next Roberts with from Your

John Ezekiel Roberts

DIY interior, is mostly I think.

Or outgrow and is was effect to unusual quarter? was weather interior unfavorable? exterior So interior weather the painters that the it for this to switched when

Allen Mistysyn

think the that's have I in work case. and I'll use backlogs have jobs Res they ] John, [ They'll weeks and weather to opportunity Yes. they the and lined advance X can on take just pivot they week, of up. where interior move exterior good rainy they again, do repaint can so a it's And really advantage projects. if products then -- wet projects. X,

Operator

Your next Coast Research. with from question is Chuck Cerankosky North

Charles Cerankosky

Nice quarter.

to purchasing explained seem of Group. in why You you maybe architectural but know buck bigger are Stores the sensitivity projects end, Paint clearly Group? the in price the the customers trend higher and of Stores CVG that some I residential projects not group, in Paint those to does extend

Allen Mistysyn

Yes.

talked of DIY think of kind customer, amount have. they the the that's within we've to more they I inflation, a where volume bulk Consumer, the different debt about of are is and Chuck, sensitive

res mentioned so It's less Pro, our I our DIY like And on look repaint, remarks. in price in that Heidi side about some we this. impact talked our about, those And You at in of at her think stores. opening on if a stores. the in DIY look headwinds talked specifically is we've there you

think mid-single-digit new to that really our over about last the stores. drive in quarters have growth down the business I market. driving done a through X good job teams a

immune to are immune investments it's the are res just So it's consistent we've about that. being continue . cost, we consumers to that hire very of and because share made or take end those the not repainters continually

Heidi Petz

innovating go to great of of example homeowner of out that consumer expectation it willingness specialty DIY is paint the a service on the that and is premium with it of and think a solution. but value color the the of along type pay the store that high things I certainly points expectation service which is model, selection, for of an can being also in to of us and product, the a values all equally an side, that premium that

Operator

Shmois is question from with next Loop Your Garik Capital.

Garik Shmois

much ask flat the How I raws good XQ in in raw wanted were is about and a down to still of materials. assumption. half year, the back

that the I was think previously. outlook

Allen Mistysyn

Eric. Yes,

digits down the mid-single Rod, basket quarter. full the or picking So for year will we're full second year-over-year And saying the still low in be singles. the year, down was that

thanks you back that for is So year-over-year. the flattish And half question. tells the

Operator

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

Eric Bosshard

miss, you if of ability the digit. is the to in store those the could. res ago, versus share shortfall curious days The I'm on of I'm down the what then momentum And the there. into mid-single back question the that just the areas, on gains of the driving different just XX magnitude the is consumer bit, into market and up terms to different side, would, of up both you in down A a of half sustain so curious the X of curious in dive if market and little magnitude repaint, I the X then on market? revenue

Heidi Petz

been this the Yes. Eric, miss longer. put first again, or the as softer -- just simply on in said what's days. so prepared let would me in we XX I changed remarks, revenue, your of start this question but the kind And it simply with characterizing as it's CBG

the at being DIY market under America If just North pressure. you look

that we'd the to not recovered pace are So not like the fundamentals at -- see. have

market. mid-single would to and in res As a of our I sustainability being it to point the there a again, on stores things, digits fundamentals. repaint, relates few performance down up

it's where greatest we foremost, upside. and have the First the segment

indicators and to the in the we to, need is as that We'll the I market as to investments we the realistic get closely be our gain know share again, based material. runway team very need as as market what And back made. on to going as watching to we be would and the So see is also watch. we have aggressive point market. we

So our ability to ramp that up.

respond for quickly to proven that that we I can upside. think pretty be we've best positioned

Operator

is question Ceccarelli with next Berenberg. Your . from Aron

Aron Ceccarelli

bear the I repaints. that I understood at accounts new so a you premium, correctly continue usually as new came you accounts the talk bit was of before, mentioned have about to higher market If margin. you I a profitability a question can little share. little surprised. Maybe on resi bit

So market little as you dig can bit And how gains should like ask maybe out I your more pan if to continue? share a into that? would this

Heidi Petz

Yes.

with comment. start just that, earlier me on Let based my

kind res getting of comment share first of new products. them you wallet. coming earned of more contractor, more bell contractor repaint If getting a in making up a kind curve of where a picture time, in versus that kind we've My sure and and right to new over the them on repaint is we're mature res foremost, relative set of

the sure required. So of more helping making customers faster, talk making a right them that when off get our touch oftentimes site and their in conversation on that's is and are premium up about job the them money, getting we there, crews product less

project, more So at look you they're of when cost the making total a money.

looking put of then leaning very playing us database of and in the success And leverage be our to our the bell and up or maturity these grow are sure making size, them helping tools, reps are that digital work able meeting our may in we're contractors data what teams from contractor, particular they store to to they're to proactively customers of that be our services, they help beginning. to could in at if we're store more our how for on optimize it teams where set then exactly there's help and products, this So they're their repo along is our position them again curve, our for they cetera. role them bigger helping up to kind all again, travel set et and help traveling where

Operator

Alexander is next Laurence with Your Jefferies. question from

Laurence Alexander

up will will material case, your base very raw Just in your quickly, in your cost be raw year-over-year materials QX?

Allen Mistysyn

Flash.

Operator

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

James Jaye

and everybody, Thank us for joining you, thank today. you, Holly,

to continue Today, and very I is outperforming global line in we're our the just well. customers. year be be team sales increased profitable as as while presentation, than we've you outlined by Boston is think we for our at . I'll Heidi heard of XX The that positioned, solutions you to full starting our We're and everyone, prove do our we the scheduled we're if is have often macro remind And our guidance. providing we've markets. mentioned, what on would certainly very close strategy strategy. focused growth want I acting better performance which heard for community expect with, choppy, said, bottom driving our that today, to better in to X:XX. and our financial well August we're confident we've aligned, today very

You'll hear management from of Al along Heidi, and members our Q&A our other typical team, session. with

that register for you So our on date our They'll again IR can and that Investor free August e-mail feel or is team. also website be Relations to webcast, XX.

rest in and I again day. have you So for of Sherwin, thank your that, your great will with interest a

Operator

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

The Sherwin-Williams Company (SHW) 23 Jul 242024 Q2 Earnings call transcript