SHW - Earnings call transcript Q3 2024 | The Sherwin-Williams Company

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Operator

Good morning. Thank you for joining the Sherwin-Williams Company review of the third quarter 2024 results and our outlook for the fourth 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. This conference call will include certain forward-looking statements as defined under the U.S. federal securities laws with respect to sales, earnings and other matters. Any forward-looking statements speak only as of the date on which such statement is made and the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. forward-looking earlier provided this regarding earnings the declaration transmitted release morning. full statements in is company's A After the over company's session to prepared remarks, we will turn will now the call to Jaye. questions. I Jim open the

James Jaye

our and Sales choppy Sherwin-Williams and in segments ongoing grew all you, characterized gross per earnings within sales, demand, good third X grew the Thank quarter, guidance In share by diluted expanded consolidated range. margin morning. and were EBITDA.

dividends to through share our and shareholders We highly in in repurchases. We also returned million confident quarter remain $XXX importantly, to the our execute and our strategy team's ability consistently.

to long-term to capitalize share continued on unprecedented in opportunity. as see We the gain invest what quarter we

to in sales above-market near-term expect profitable reps, drive growth. continued We capabilities and sustained stores, these and incremental investments technical digital services and

of also have to growth SG&A mid-single-digit the the We the in resulting fourth second level moderate pace described. to investment low half expect quarter we more normalized in previously in

from hard maintaining recognize the as our Helene entering precisely quarter. far to next recovery As the for months, and EPS timing This than range current several the is the guidance. typical fourth accounts our wider year full that range variables our we are of outlook, are holiday to related Milton over including and shutdowns extended potential demand customers. for X among forecast hurricanes industrial We

success. near-term other on Our to and our to challenges while executing team long-term these navigate continues multiple initiatives drive

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

Heidi Petz

morning. all us and Jim, you thank this you, joining Thank for

go been to our and the Southeast our hurricanes impacted thoughts in all the those begin I and please outlook, quarter have Before know comments by U.S. the recent that on that out sympathies my

returns appropriate and help together nearly the our for priority XXX been families. each amazed and of We've hard our been have our safety period customers the the exactly decades us drive Hurricane now. we doing long is are community begin. At of by right as providing people they I sustained the at the of right will worked back for closed following our the stores presentation, and share choices are come those nearly financial their stores are above-market and and and resiliency the are over growth We to the the quarter to time Hurricane by and were ground were how customers in of teams of an fourth working term. inspiring. professional all quarter. has unprecedented, on Helene also is online following to has deliberately right people the described investments support were to our for employees, provide prouder now our recent our I'm for I with and take advantage third of that our of efforts right full it. current the Our make period quarter, of at at be other. Approximately rebuild and The the Milton some some continue and could stores to back support approach. online. The most opportunity approach success not and start Similarly, market approximately closed It's personal recovery we XXX our what end design perseverance gain

offer stability While consistency, or in and execution, competitors distracted reliability. we are their inconsistent

works. down doubling are We it a because on we know We're predictable strategy our partner.

Our and focused, aggressive. is determined team

customers our make productive with provide to them profitable. continue We more to and solutions

continue our We outperformance results time. doing, and confidence to will we in believe we have what are demonstrate over great

unfavorable anticipated increased were investments digits. in but realization far Group, architectural higher range low by the as Volume margin the pricing to mix. by single the decreased was specifics primarily Stores As price with and to Pro offset XX.X% single sales Segment due third quarter, Paint up growth we on we'll long-term both Marine pay begin a digits. was next low digits where partially high was a year. up prior consecutive double-digit continued growth & Repaint, against quarter. Protective of comparison as extending of down flat our investments In the single in to mix solid Residential market. off, we and to in into mid-single-digit pipeline delivered the in projects a quarter opportunities and has fifth low

was faster at caused digits improving but New a than by against product a some our comparison. single a a Property regions. Residential choppy continued also in delays where in in high sales paint largest remains soft. From delays CapEx exterior low perspective, Commercial conditions outdoor paint sales projects. grew Management grew grew mid-single-digit flat market. with single-digit DIY rate interior of

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

cost was Group. sales XX%, driven Adjusted market. manufacturing DIY FX. Moving lower that of demonstrates volume net to Coatings high flat operations This decreased Performance were Consumer unfavorable America, and by optimization performance by the absorption America fixed and due customer percentage, level inclusive a differentiated margin continued by from offset net Brands Sales our the effectively increased a positive, business control, the margin lower Latin solutions in and sales sales single Group, as expanded America high distribution cost by decreased Europe, on partially to to segment X% mid-single-digit high our reflects by offset This and within approximate higher the strong XX.X%. were In impact sales. In In percentage. and existing inflation and than primarily price in in were in efforts. but unfavorable effective segment teens primarily unfavorable more by FX. Adjusted volume home by to FX. North weakness continue an single-digit Sales pressure decreased digits, FX. where margin segment sales the was offset to North unfavorable

region. region. driven by acquisition. We by sales with every solid also wood choppy Packaging continue in Industrial by grew low digits, single and delivered share delivered single-digit to growth an high division see up demand Coil growth driven gains.

and core Refinish have in by heavy account a by in the in is transportation New face pay America, regions sales where in equipment were reluctance consumer percentage. resulting to to our General markets. Regionally, low single-digit industrial except decreased deductibles claims. lower softness insurance which all wins positive headwinds Auto in North masked business been group in continued

on Moving includes this and our morning's guidance. press with The consolidated includes issued the deck sales consolidated expectations to year fourth for XXXX. segment XXXX. of release slide for the quarter for our deck segment our for also and updated full guidance sales The

full Our diluted share unchanged. is per guidance income net year

midpoint net at X.X% share our guidance. remains over at prior Our per adjusted diluted year income the of growth the

year range we provided and in plan July. I your the on We of EPS results for are also our fourth executing absolutely full beginning focused quarter that are XXXX. in many in formulate recognize views to the delivering you

guidance the of I can that be FCP inflection not until the it's timing high-level specific useful While pacing a we're when, by into of not in may but share next only as a and environment. preliminary year providing heading question commentary commentary, variable January, some a largest is our framework. The any if. demand single stand true We

However, can trying not let to something quarter, or peg week, precision. this with month to a we a specific alone do specific it's a

interest a existing rates, home others. informs from Our wide that also Lira, our variety affordability, housing including is indicators, housing Direct many starts, sales, critical forecasting our among industrial outlook. of data customers input production a consumer incorporate spending and point models

the red view yellow more green, strategy. profitable. The beginning productive solutions and yellow current to While that to remain more and our of and attracting some initial to one, our are current macro even a our the in that good likely the environment demand becomes also We to customers from from to like choppy certain make several first move year. more our customers What differentiated is in competitive is half signals is while ones. approach is new deliver that is news many valuable a

of We targeted incredibly aggressive pursuit share of of will well in continue wallet is end very being positioned each new and business markets. in our gains. Sherwin-Williams

We we when robust. in will market the becomes more demand significantly are environments all so confident and outperform

committed remarks. With this you our This our to us take for to design and by employees I'd our your like thank driving customers, our happy success morning, to We be prepared joining that, questions. for and we'll shareholders. concludes are

Operator

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

Vincent Andrews

like on ask based sudden, spend of pulled made that on and there. exactly sense It in SG&A what's you just third into seems the of back all a in just you like for anticipated talk Just a cadence you could quarter of a was us than the Could tactical precipitated on going more what seems the to did? the give decision I spend, half. XQ. it what If XQ there the that about you

Heidi Petz

Yes.

to candidly, some capitalize this, long-term really competitors important these areas invest our I see timing. continue heard Let to that bit Al strategy. widen out me even the few where as about We're would and to making things, this this are tell think, prepared we going to as in I'm to ideal appreciate you remarks, the of Vincent, to that positioned And in to our a talk here in I that an my sure competitive are on the going moat. and best we aren't opportunity question. But a start. seeing time cadence you opportunities. playing hand

sure recover continue efforts. time So it's the we're our these head to to invest. we're to not for fully rewarded waiting keep We're to or make going and market for us to tell getting down

to they're and of with do will technology, would ahead mirror of the in that one and to amount XX over Sherwin-Williams. But cycle, what's in in well some well hand absolute sharing this to out-promising into lay comment try the very this I investments XX industry competitors out before coming of got much year. And we're we've confident assets often commitments of us Al, making investments of we next times. these doing customers ahead at to these because best at continue best tell that We to you the people would are I more and best the are all I you types going of tell now front we're what

to we're are our going to deliver we're to our strategy, no but there's I going continue it, and doubt customers. confident we're think absolutely in for invest, to we about going win

Allen Mistysyn

Vincent, Al this Yes, is Mistysyn.

half growth we As we the forecasted into operating we're managing than margin, quarter. done, year margin a the and in and the coming typically of have expect higher second gross we

some call, long-term reaffirm of So in improvement I confident Paint to second as Day, quarter what take that on opportunities, invested we Investor the at in reaffirm Heidi we strategy. our growth particularly mentioned. And do that are Stores I Group and said we in just normally our this our

get have we is comment our your last for the over consistent in we X half, are investments coming with in a return it's SG&A those making. forecast, in a line, confident Res into returns we're that we'll that we mid-single showing the half the think I to for in getting quarters, quarter. can And investment look digits and We like is thought point I'm investments the up thesis, that Repaint right. If at made I second I line where second the

a that. in there's bit So of little timing

half. piece on right other initiatives for system So with then that we're our our investments is in expecting only we've in and undertaking. the And digital line been modernizations what continued the that second the

Operator

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

Christopher Parkinson

little not a potentially even from terms hit see Could whether sluggish just the share about a of pricing of further in whether environment, better a how those realization or basis market as or more in preliminary holding you a and positive a constructive 'XX not and pendulum could perhaps in for realizations XXXX you're of a the dynamics current improves we're bit or then XXXX thinking selling XXXX? terms the on lot is though of we bit on realizations, back

Allen Mistysyn

Chris. Yes,

we feeling increase reason talked effective about, price Jim is X% pressure in January and feedstocks. And that the As we're X. increased announced the stores, behind

in weaker, more also inflation, that it I being overall about increase price. on where price and selling significantly which we a P&M we're that expecting DIY be to right. stronger, expect is about being The be. It's health expecting mix think We have increase to average care wage of weighs we typical you're talk offset which higher but year-over-year. And we're is 'XX, by

by XXXX, expect you we new a and how dynamics committed you market, it need we plays have price have get architectural when we're we're America a get -- driven look national contracts. I'd of think into of We in we that historical this But there's our say. it. increases. But we and timing also this see to XX%, I competitive need to account I really fully of into And our range XX% in to number think to getting out. North when expectation as the going that's as in know discipline

Operator

next is from Roberts question coming John Your from Mizuho.

John Ezekiel Roberts

the there. earnings In was transfers in change the between the an in significantly the that in the change Consumer, than was intersegment change Did different externally change sales? there divergence sales reported interesting

Allen Mistysyn

the -- allocation increase did chain volume and we perform did entire is talked that with I John, better profit the due the first same. quarter No, Global to better a was segment little the about quarter second supply in dynamic. our and that bit in

the look business Commercial of into that's actually to and went side, consistent year. back North last backwards the over PBT in And at quarters on If America you last volume. been going even our a theme X last -- because

demand lot dynamic tightly real It's just and change team and to no So managing a more I inventory in the credit. they allocation. better. operating efficiently give production. a with costs the their stable performed of more They're

Heidi Petz

and that of the core take to of to on can the give years continued that on portfolio. some aerosol organic to we a quarters back where last you strong away as There's I and business. of for that few decisions focus was over would that growth, key China were And of walked relative categories a add John, businesses absolutely credit team from a some well. we of the and divestiture team focused I'll some the handful nonstrategic get lot made the refining I those. kind

baseline a for at Day So improved really built forward. This our and design we new and by talked been profit. about has speed Analyst going business

you will. meaner fighting So a leaner, if machine,

[indiscernible]. so So excited we that realize to volume come back for can the

Operator

John question from BMO. is McNulty next coming from Your

John McNulty

So when some taken about that place. you of changes have competitive the and landscape the think

unloading But think, and you've of mean are BSF like pretty well does terms I I it potentially understood, same. throughout there I Kelly are Moore the Axo at and industry. are. look of point, assets got changes other the this PPG in kind think, opportunities where doing some the

destocking terms I or there? the be And you competitive the business, in of you then is terms consumer see that can I business as if the to guess, you of to opportunities in So store's group to right this the PPG speak parts how the in speak point guess of that and now -- looking of also may well? me, consumer other can terms be and where customer may your environment tied at on excuse landscape side, and inventories

Heidi Petz

I'll the with John, about to PPG. I'll talk first moves question to hand Al relative competitive over your this start on your to question of some and then

clear I a think been all, nailed you first always there think, certainly it. And of are There's I of shift. let me lot be really opportunities.

that is we out way this to the differentiation believing as amazing is. doing are we will being focused ahead I focus curve, what differentiator take feedback our moment are the on fact, industry, our the we In in we a do unique simply at dependable, this strategy, hear It's where do. see that amazing. I'm laser say it's and reliable, on what you customers, with of consistent, look guys investing our of some our in you long-term a back we

making industry, holding and sure market a Sherwin-Williams. where in we're down a in firm going It's to very moment a So we're environment of invest. in hallmark that is there an our there

open us accelerate I out we're to always are in time. for seeing And or we're our to and think if strengthen reviews. opportunities to you're assess. playing continue there But always strategy, that to real look going those

Allen Mistysyn

inventory due think, quarter We levels not consumer certainly John, have consumer, our in don't been believe that in for Yes, on particular, sales impact to or I do stable. I destocking. the the was think pretty the

been we opportunities different look take there's segments, certainly we'll of look have, the I just the other our maybe accelerate yes, to a approach opportunities continued right we to that right -- strategy. you M&A, And a in if soft if it's think in for And disciplined how as and think always I we at they're take assets them. at some the then a market. DIY regions, alluded

Operator

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

David Begleiter

Or PPG do targeting potentially going you sales billion are much is for America. now of $X in you business roughly Heidi in How North on the think up grabs? forward? it's that business,

Heidi Petz

premium grab start all I'll what portfolio. the framing the gallon bring we're is characterize to get of and there sure way question, company talked of that long on at we interested not We earn day lifelong segments opportunity. simply more We're David, them work very we're and Well, that on would we it's about PPG, every of and -- we've and quality do these out for and we commodities. don't of them first it that a our share in front the or to there hard foremost, tell be understand and and value got of as same what term was Sherwin-Williams customer. a better to would I they that want customers lot build consistent, short-term that as make a focused, service every where with a day. I way way characterize will would more in sales respect a deliver Kelly-Moore, -- maybe to focus better as if we've a we every when I want to that you into know relative I

want making exact the you in and tell it's about to quality number, earn time. I terms quantifying of more sure that over So can keep the it's we sales

Operator

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

Michael Harrison

guess, year? rates next could home have more down equity that do the as that on trend? be about side of that's the you I'm to tapping something I interest go up, an home and indicators suggesting you as coming maybe What to we've market? that into are see driver prices they internal remodeling seen your, demand important going remodeling view that could that hoping your curious just was I and with speak how potentially homeowners

James Jaye

this your Mike, Yes, about you being resurgence. is is Jim. very America in primed I Street timely. there Journal, an was I this if home just the mean morning article Yes. question renovation a look think Wall for

I the indicators them, going. to that about year. I we existing some know, second, on down Those there investments bit, where So people wanes in is time. pent-up of feeling that think for talked inflation the I Al a of that, look sales. where as period our quarter about is in Lira home as ahead period you numbers, do it is view We've longer-term seeing Heidi in that's that third the think often already up there good to Res we've laid homes, being for that sometime market at improves, and great being been the little digits fits And Repaint our economy have and us. mentioned long think going year-over-year some of tick next best. numbers of equity mentioned market the demand mid-single right? at, with the their a in up start But probably a you're is in opportunity a one flat

help once be to as feel So about good where our very will DIY piece there, get and and our to we're business repaint very that we headed solid, expect we res well. some start help also

Heidi Petz

Justin focused down here. create organization, our you've on by been this our credit a differentiation, at great the it's lot -- we his I -- of is team I incredible of idea point, got give in can and landscape Binns success a example has and focus It's on really that Mike, the right head of design. good this changing here. a the value mean I the think a question.

contractors to res of contractors and as loyalty back. more is to some for team building moderate a best run that To for this Jim's the sure waiting of do we positioned lot we're of follow come the making see these needs here advantage solving recovery, and for space, with waiting not we're market repaint coming when out the these not primed be take a So absolutely nice we're into new up does we'll point, market. that. But

Operator

from question coming Cunningham is Patrick from next Your Citi.

Patrick Cunningham

And impact range it at? mentioned size you couple guess, in industrial, concentrated Or the I something then shutdowns more sensitivity equipment the of and in XQ XQ? is for is hurricane XQ. the in implied You on the for this broader? first, wider guide is on a it help customers holiday transportation? for and variables hinting are can And

Allen Mistysyn

Patrick. Yes,

small that's quarter having It's damage impact the seeing damage, to hard quarter the back at quarter, third the primarily versus about quarter, And for you in impact timing fourth Helene bad enough and major less that X online. The just more the dictate a the in a speed just quarter, to paint recovery, that and structural. And the environment X open. look outlook back the of weeks time X dynamics with before fourth to insurance hurricanes, fourth the claims, what one up pick you customers was in with speed in to point. that flooding the third taken type quarter actually our assess your the homeowners of It's third little hurricanes able then up, it's for being pick start major because necessarily in having stores and start our coming I we -- takes why say, uncertain primers our one of think I'd really If of be to -- our in start about follows, sundries really will it having than adds it's it it talking that I'll predict start if it's makes range. have we're this quarter the work, and historically, X higher to it's the reviewing with X hurricane, not in to get the major to and stores. recovery, one and we've

right out. guidance. pretty about cost then probably line quarter. the in us $X.XX be it'd didn't it And We stores, that of in impact the exclude you If with call

those back as quarter. get to just up ramp fourth expect in it's -- we going think sales It's our I the quarter to progresses.

Heidi Petz

that. that of his extend few piece. not The temporary the organization making demand over in obviously holidays more side. shutdown have at other potentially, the And of lockstep a to the way shutdown that I'll a we noise outside customers. but there Jorgenrud with relative be briefly Karl the and are the lot best examples seeing really and can of looking stay to we're touch environment of close been on our partners this, so on that Could and sure customer true a we're

Operator

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

Gregory Melich

want the I a circle One price like to should getting not I back to sounds on what is probably, it? X in the Paint expect, Is increase, It little what, think is would that X%. the things. less imagine X% you then fair we you're think a mix? which Stores way Group. And about it's

Allen Mistysyn

Yes. have we look dilute think others, you could lot than getting just different segments price, it are and effectiveness. Greg, look the that mix -- one price I It's some because of we're performing mix bucket. we at as price when at because it a you better in

our and versus example, quarter, quarter. about, And up mix volume dilute both year, res is price we in be as digits a an as to third single impact. so roll saw But as next quarter. starts that going the are that new like we quite we some improve third price of talked change X% to going DIY and Res it's to as low the in Repaint And in not out

Operator

KeyBanc from coming from Your Capital Markets. Yefremov next Park Aleksey is question

Aleksey Yefremov

you contractors, please? backlog on Could trends the for comment pro

James Jaye

Aleksey. Sure, Yes.

I'd Repaint, overall, little coming But choppy because the mean we've hurricanes a out fairly seeing with in. Res I if I they're of bit maybe fabs I'd you say beginning here with think the there. seen look at what backlogs normalized. say,

bigger that for I is think aggressively pursuing. we're thing the share gain opportunities the us

commercial, still that to of cautiously where we've that pickup hung commercial our is through, period to despite year. Commercial business, our worked into completions, You in our slower say some look we're we're of but new at that backlog and be we're some the would but would we one start up there start expectation year this in as next seeing extended well verticals in being the diminish there. being will res, other optimistic, pretty get I backlog starts, that is there

Operator

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

Michael Sison

So for the me? can you -- hear quarter fourth yes,

Allen Mistysyn

Yes.

Michael Sison

Yes.

about Sorry Yes. that.

you're grow? quarter, done then the So don't want corner the there for segment profit to Will the I stores, nice going growth And in a for the need turn start -- specifics, store what job XXXX, see thoughts give with profit you've fourth but this and to think on know sort generate to done you increases? of terms if growth? do type positive you're do to to I SG&A back year? in segment of, And guess, get you you growth Or of year. you next any

Allen Mistysyn

sales Mike, say see we quarter Yes, but segments architectural seasonal guidance, give detailed quarter slowdown Obviously, the we our improvement don't and we still typically all fourth concerning margin would this, year-over-year. show I to expect the in operating in to seen. we a expect fourth that have historically

see our architectural X to in operating I expect expansion don't businesses. So margin

be made into realized of year I think similar will get in our outsized first because the plan we you an other I I investments very the to think the of half growth XXXX, this had because years. year. as last second half

as be in moderate give better year. guidance the are going year, the first in our the the guidance half without I and We to situations more think giving gross and/or same. just expectations and than about Jim have in we'll of share we the turns. those investments put take these in the when up, a of market Heidi headwinds market ease of more and a to we'll stronger we January. half But full that second the talked volume believe advantage a of today, margin like in of we'll the we'll did our be second market to share of some in is accelerate growth percent SG&A take going quarter, higher If

Heidi Petz

also piece I well And a Al clear is I as one this to one's just to year. that moderated profile be about very SG&A the that. next we to head think want want and more of no articulate said add really here. in sand

we're While expect and level to we going that growth. owe our return. we had to until We absolutely heightened And that a get we we outsized to design, that. want relentless deliver shareholders, by be have volume

Operator

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

Patrick Fischer

Just a raw materials. on question

that Al, you feedstocks. think, cost mentioned see I for increased you

was different of into I So kind break wondering if buckets. you it

of and So one, the costs actually half it driving third that's some kind you other front? Oil into feedstock first you're the relief seeing increased just pigments that aren't derivatives? the the and on seeing Why down oil XX% And going what quarter. forward? is being that inorganics from is the

James Jaye

take that I'll Duffy, Yes, one.

to in flattish will flattish year-over-year me saw talked where with maybe were the and quarter what that we fourth let them quarter our third the down singles we So low come right in about year-over-year. raws start our be forecast. just We're in that for in around looking also

you available say I pricing whole not in of seeing producers forward, right now if kind at I'd are et think supply stable, from lot the going is of going a have Ultimately, cetera. readily drive market. impact plays And to now. that TiOX look see is what's we'll how tariffs But right you their out. demand, TiOX also who and evaluating production levels, is

seen key which oil here come you if derivatives, that's Duffy, know, I look feedstock for that oil know propylene On us. kind down we But of the yes, the recently. have at you

I and and were that up driven, was tariffs and that a propylene might resins third the quarter, additional Epoxy in impact quarter, come third unplanned that the planned in year-over-year, think, really almost up that. might quarter, by look you in outages. XX% some If in the also there's was

necessarily seen -- But we'll as that the it and impact basket we our it goes at looking into propylene very meaningfully next year. closely, epoxy we're So we're where see or get we yet. watching haven't

You we visibility. X a of quarter or have know maybe

our give going basket, And move the So driver. in not big look official January. We'll to be is we're view it. as you it's meaningful. which entire We watch just our to at We'll propylene those watching things. you we raws. continue other at That our though, the demand Ultimately, is know, costs. look

Our health to for care us, major a et headwind continues cetera. be

of in now more kind that's So right January. our to come with view

Operator

is Barclays. Your next Leithead from question from coming Michael

Michael Leithead

fairly now. sort right are, the raws to follow or choppy did up price you seems It demand like Actually, is Paint said uncertain want Al, increase. I again, readily but on back circle of available, Stores

increase given your the ongoing contractor any seeing seen the you Stores thus to relatively, accounts. far? price an to larger customers? weakness, this say, impact over is box or just national not I customer But that Paint tailored some activity So activity, a swing And towards, big curious retail how you're you've know the promo of really DIY lot positioning the of are

Allen Mistysyn

working by Not an line bottom we in It's because impact we've customers their talked seen their effective, -- they be And gain grow -- be choice to moving thus of invest include services we can about, talk up that, in price, we products supply our customers their on help far. so line resilience I our second service, when continue provide and that the I top of we're with provide supplier supplier typically down. and chain as and continue of in that consistently better more to mix quality. grow efficiencies choice, to we've

the need out price discipline So need the other we we're on that increase are when with have we why just and we input go costs there account, Jim it. price into mentioned, to taking as

Operator

next is Panjabi coming Baird. from Your from question Ghansham

Ghansham Panjabi

to I'm how customers post for rates terms it in of volatility just interest PSG, more the at recent so sentiment to your asking because on activity? you characterize increase rates, noise major mortgage aggregate with their level? would just in relates just the optimism cut. Fed as there's including been much specific most Heidi, It's XXXX with engagement

So just to stands for curious XXXX? where as sentiment

Heidi Petz

segment. would I it And pertinent of Ghansham, a that moments ago. Yes. say covered Jim just some few definitely by

is what in cuts look material rate faster, there you broadly as Everyone's it a into reading macros. broadly think everyone's have what year, everyone aggregate, potential, a the next of if more same broad is to -- reality half for pragmatic are think these modest that impact. back I But going is I I sentiment. speaking, trying across plan more hoping is is to the and say here would the

on in I the some segment is some would segment the do And that's CapEx, like. area Jim the think You reflective where and say, that navigating based lot sales bullish and Res getting we're obviously this the throughout we biggest bit on, we've the live where a would cut know kind reasons I said Commercial customer these I year labor a alluded their the a to to signals by more relative We're as Repaint. say we been challenge on existing these that all have our of of earlier, and is home other that even projects we constraints, sentiment. before, of reality got as all probably

Operator

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

Kevin McCarthy

you Group, X if within businesses Coatings the on Performance namely wondering Packaging. and Refinish outlook was I for could the comment

you've reluctance that's understood pay sounds gained side, claims correctly, commentary Refinish like insurance looks it masked share, if to like it some I diminished deductibles. the and your by lower but being On

would you you like And in a looks acceleration that expect coming or in point be, view do the nice reverse more you continue Do had structural some side, on question there. XXXX? And as at expect that my So you packaging it it quarters? transitory? to to would

Heidi Petz

with is reasons think wanted Refinish community at that exactly financial I of Yes. piece. Kevin, big start said. this I highlight the And one our presentation to I'll the you recent what

mass. of I this is here we're business. positioned in think how love some that I

approach look our low If so our exposure to Latin this by point, you and we of mix you some take America, We business out. But play at were more the just more peers, given to negative over your and have look to impacted relative FX transitional. would of mid-single-digit QX, it that we there, at just structural if time. expect sales our is weight kind big

sales single our high are comp. see year-to-date, a quarter-to-quarter, low they You're swings going digit against to single-digit down

which line calls. exclude you that, their flat, in with if FX where are our our recent are in is So at from competitors sales

is continue and and to really number, out We're our We're next November get I with what North The be it's year doing absolutely confidence important doing, go clear which what increase adoption core but improving and you paid that, but to gains, sustainable tailwind year. collision customers, think are that laser-focused necessary, is Packaging, as a it that which satisfied the this region. environment we're with in digits out team on And as strengthening we others accounts want I this I again, said your largest and are double look for mentioned our claims with is America, year-to-date single-digit be we're systemic. If share where is really we you on for but having to we'll down not So and an has early working, momentum at both direct look on I to that we question our what high share in some done price team work here. fantastic gaining the at second be program. here. And do think is gains to new expect continue claims, word a of acceleration.

that positioned. is think love business how I a this I we're a Again, perfect word. is

sales Our was up quarter which third in high were all volume. of single digits, our

and index So up team We've was volume job. a offset digits, which fantastic pricing we're positive actually The regions, a got bit double was done by of all great in our momentum. agreements. has some low some our

single very appreciation these these we're characterize our We've to down. the So but while out spending saw our strong, see not loss share you quarter would that as XX back next not eager months And is the done. have earning expect strong Garland, the strong event, team's we're to are say fourth recaptured in providing many of business They're time customers only technology, sight day, next Texas very of with Sherwin-Williams. they're and I some again balance of heads to but work additional the every that this world over year. is class. of if look strong line performance would -- when leading flat customers the from year-to-date, -- that the temporary I a return I at year, we to plant into recovery The out to of just service better I'm

to invest. model our in believe We We here. continue

here. Latin and was looking customers of there's as more pacing going across on ban beginning new be America, already serving is EFSA be BPA ceremony with ago just are plant to of other backbone 'XX over to at Tournus and wins just the our APAC and in North customers a for weeks our rolls few regions, America over recent pleased expansion in and including Some as into our ribbon-cutting XXXX. that the couldn't some QX This there France that

positioned -- business last where where So we've excited X. certainly think not added that just really to market we're closed and the October going on packaging our I We is category least, just capacity. but our here. Henkel very And well the metal

expectations across the So both about big family, we're Mexico of very at excited of this and Germany goes. employees welcome course, and to business where XXX sites production Sherwin but our

Operator

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

Arun Viswanathan

going since the QX, it was that for like not sounds large $X.XX it about impact be So was hurricane to QX.

factor about that looks year. Is kind be assuming when good sized could achieved is a think you you I past about million the the potentially from next sight line to from that half Stores next that of there benefiting Stores gains interest to well, think When think you're So about Kelly-Moore? the if maybe glad as just I think my that. lower opportunity main you rates, framing you Group, question Maybe price 'XX. guess you how Maybe the pretty high of should I that thinking Group were up it to exited achieve, single-digit get able in hear can portion from how it? in 'XX? then it maybe to they about sales amount in maybe you the X% as does a some like of for Paint that similar about around growth in is sound when we a PPG. And year increase, $XXX PSG well. already share of encouraging that further second has gains Is

Allen Mistysyn

out you're period I'm for is long over quarters things But talking temper then X.X get XXXX, guiding sight our been And the of about how like moving, X interest I expectation. not reductions that. Arun, choppiness things time far. all asking certain know not about I'd the pretty that we I expect longer to we're that would taking see. In not just and we've and filter We've -- of of through in gone years first to it's temper I again, things mean, a things I'd for that. line half temper a of and environment, nature. talked and with this we'll last we taken rate

to get us let January. So

we'll a line we're to we'll share that, with get up coming here Let's of then better you. -- the that And teams. our going operating through plans sight with and certainly

Operator

Zekauskas coming question next is Jeff from from JPMorgan. Your

Jeffrey Zekauskas

to is Two-part will spending elevated question. X% your of year-over-year In leading your SG&A is direction long-term the come down, your to quarter, quarter, costs the maybe said that perhaps, in share what fourth in lower spending. gains you and discussion the market SG&A to

to being So points improvement of up in what stores? of the in then elevated quarter? And in and XXX fourth spending your flattish. margins order what where are you $XX the going talk this quarter of the about it's year it XXX basis your the was opened exactly really in lower? million are that Consumer sort maybe or Consumer what's Can stores And constrained Brands in magnitude, business is in with the like secondly, Brands, margins sort by down quarter third point sales up margins then go happened in XXX this basis the and keeping

Allen Mistysyn

Jeff. Yes,

going controlling in as G&A as investments we're the quarter. timing doesn't a exactly look second well you tightly, when half, at align in think our sometimes and I there's

they the side the of convenience investments all stores, in face our low half they our delivery, making. would our on invest as to just to So disciplined that's it selling of second and the we're approach innovation the SG&A. counter, in have to for say line same We half stores I our second expertise into why quarter. into so productivity was want pointed reps, And take and are say, we the a in I that our the third goes driving expectations customers, our coming for by SG&A turnover

that our and them the they more consistent to allow on effective be On in the side be digital to effective when systems employees that, of get to modernization, allow we want other data, field. more better to more

to other tightly down. trying And very so that there's G&A we're that control manage and

overall growth help while help with X% we're the market for mid-single-digit to those said, dynamics demand waiting Repaint environment. Res being go I that back can we the So we're to pay That for and getting.

margin. global being So the a and we're for headwind through getting passing back get -- a can We Consumer, it's back cost it. we I offset the on to of been it's overall in goes year-over-year. higher has also efficiencies up you're our returns. On chose chain thought standards at readjust and our to when But GSE allocation, to really confidence that seeing the is it supply Brands, there chain again, global look years, absorption improved our and what in we impact no Consumer that's is because sits fixed supply number

getting from chain. is to on our within getting also the So allocation increase big a top operations stores a of they're that, to from Brands Consumer tailwind and PCG. global supply better But

Heidi Petz

around a I if is first there. Jeff, the I I used absolutely free margins the to And different I take approach you want go keeping would the long-term And language intent. back in think visit, share to constrained your leading which just towards stores. question gains, on SG&A elevated

when back that comment, take think see we of margins, expanded advantage earlier to we as to an these absolutely Al's want opportunity. I

laid that accelerate our Financial designed I QX opportunity to you I'll did out this So it an us at to of take all priorities QX, give investments. And growth. to Community back these presentation, the X deliver some above-market

need to and that of to more our simplification Al have they some X So those our add to teams digital helping absolutely will the pay customers. priorities, that mentioned, faster priorities off sure value that what make go

was on absolutely think opportunistic our important -- I design. was it by So part. an it And

Operator

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

Charles Cerankosky

I'd out contractor best about on value as it's what's are you and you whether well Heidi talk you commercial? like looking talk about the versus opportunities it do that or DIY going sales, can market share true maybe to as mentioned given at opportunities at In and available res share there, better what quality market sales sales,

Heidi Petz

this to it I in industry. we think you a a is back the bit customer our Yes, start I'll best. point with I again, as do earlier, won't on comment But our Certainly, value go moment the of strategies. bet. true

for last years. few pressure lot there's of across been think a I the category the broadly

shifts the there's being banners. Move make the prongs in back to We're brands and So all DNA. to our kind with that. interested customers to go they to to and quality work that, Within we'll question. earlier continue on -- One, to your things relative lockstep as of in there. my all our decisions we and X I'll core where it's want people in to not sales comment,

to sure quality subsegments delivering we make we're is sales, not Al's serve to are how play returning where not interest we the help not our that do successful. in point, by focused certainly shareholders. What we're to that of So back premium them paid, making commodity return those we we're going more and the spaces getting -- in

labor to opportunities so are premium time So of they're with some saving products, They're job that sites products off of these to on easier up. and less and them on premium touch apply, getting money upgrade faster.

look trying when quality the we're it's at So we mix to those products. who and with sales, how we're service targeting the right of

Operator

Spector Your next from question is UBS. coming from Josh

Joshua Spector

Two ones, quick I may. if

you're where going Just full Can you at target within your CapEx, customer seeing with watch that's versus submarkets a your explain which the of point already performance you about just just what's that can you slowdowns being a as talked on you. for bigger specific year And risk? just be on kind year-to-date guide?

Allen Mistysyn

financing about CapEx. arrangement for our what BOF the headquarters. million get we new On in year-to-date, And happens $XXX $XXX because Josh, is of million including CapEx, CapEx ], reimbursed [ was of our

really $XXX about million. is we've So net

So core million. $XXX CapEx is

you into $XXX So new just That's where noise buildings. -- the million, that our million, around is big kind we $XXX of we guided want X% to $XXX less at. which the be sales, to million of the gets in

Heidi Petz

down. Josh, ag for the sure heavy question shutdowns, then, the some and in temporary very with that, slowing those broad-based And point. extended time, yet no this PCG in to some much transitory signal it's the that, equipment point any and of Again, of relative point widespread industrial on this or your end more that to -- general as signal be that at of would season, we be see there's would

Operator

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

Steve Byrne

you decline volumes that that mentioned line, raws drove does a X% the in they And COGS? the third the comment secondly, were were flattish. share Was any general you Jim, pricing lower maybe actually for and contribute picked any what of indicated top comment to on COGS? Can you're what gaining in up PPG are outlook business, seeing just you your in aggressive your from stores competitors as your in quarter. share? the

you aggressive So share? could do where on see risk you that price? gaining are get they And

Allen Mistysyn

job Steve, on sold up of our goods primarily team cost So chain our Consumer due supply on doing Group nice the to with a of decrease controlling with production efficiencies digit decreased, low was Brands the global costs. volumes single

other cost the are the The drivers. FX sold Those of X was main in quarter. goods lowered impact

On flattish the Performance single PCG lower consumer. Coatings more than then was our stores volume volume in was low digit. side, and was up with offset

Heidi Petz

disciplined in that a pass would where success, to why between so pricing, relative on Steve, by competitive labor. in we was that actual the which XX%, say look the needed, set through large, a is, I industry best itself side how along would the to we store be cost a XX%, that our aggressive at position as generally them at we of kind and that customer any price. leadership cost a typically bidding the partner to and out, typically, the out understand if of that pass it's have lot be helps to very be to transparent to key season, take want them way to our with a up do relates the we our then balance this product coach want best We -- deliver of of through, come We to confidence it to when is they somewhere for helping first. how needed, customers. industry, to want We XX%

staying unprecedented on I to in have seen plan our in but We're moment paying attention. able a is seen which sure make not if to environments, is mix we're very to certainly focus would in and we're a hold what of of our that customers on, we especially close not close We're on positive ultimately of at we we've recent to be announced, off competitive And upselling of of tell lot because this to industry. we're going some to confident XX job to that continue activity, back extremely this so that. we continually these and an do is kind we'll this that just historic to our focused on crews of be to in come you, sites don't run and off -- price -- XX these that a environments. I customers, we've rate,

Operator

question Zelman. Adam Your coming next is Baumgarten from from

Adam Baumgarten

year your kind you're on at on thoughts the a of initial the Is next remaining continuation from it's this way level. interpret trends first to the half of of of that, choppy here kind the high Just half in 'XX point? of seeing a back that

Allen Mistysyn

Yes. That's exactly what seeing. we're

Heidi Petz

and idea And had go if not to just could, in this I here if, because nailed back it's it's Adam, jump I it, I AI when. of but to

and real so out playing in are situation. this slower longer kind And we that manage is prepared of time, to absolutely

Operator

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

Garik Shmois

increase next ramp. and the it the the half SG&A of potential in Just sales back on year,

over kind it how you'd situational -- just picture, a leverage? of bigger sales now? Is investment Or is maybe managing maybe you're right about be of Just thinking time? SG&A to there

Allen Mistysyn

it's operating Garik, I talked we've on focus margin. think, about, situational driving with our as is --

benefit because mean global produce schedule quarter, investments. that, third factories, a And returns really being normal able quarter. demand these and up selling opportunistic leading our has summer our how building like -- into because taking saw realizing Heidi to chain the it fourth time that's on it's and inventory SG&A of standard into us leverage. and our set as in curve years, other inventory 'XX, ourselves right season. We our architectural years those to of the That and we gross with production we this when more some to cycle the the and our putting build efficiencies We're and out through stronger supply and margin drop we're we're gross we at been inventory expect for mentioned, how year -- some long-term inventory get in we're products right I the 'XX and being more margin helps with bell inventory and expansion

Operator

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

Eric Bosshard

for? driving follow market that figure growth. curve the the focus not I of investment to does that out aiming Al your expands? and operating you're is If I just moderate could guess is achieving trying I'm is where talked operating target growth the you share Or sustains margin How do comment, you talk what the about think earlier. up. margin I about above-market

Allen Mistysyn

we'll No. We to absolutely G&A are -- moderate aiming the on side.

help for we I think investments in confident because been our return and we're we've can because investments. on selling pay those because consistent know our to the get in investments we strategy a

SG&A see if, to not just future. as I enough think going -- improves, you it's when. environment -- as to us your growing in and leverage it's you will It's start going demand on not SG&A. back mix the I'm sorry, not SG&A get Because out macro on improves, invest leverage the as -- volumes get heavy can

appropriate to pace. grow our expansion gross the margin SG&A and on focused faster are get time absolutely margin at a to operating we So leverage managing at

Operator

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

James Jaye

thanks, for joining Thank you, and us morning. this Matthew, everybody,

long we've investing the the and in We strategy. a that what for We're now. As trends We're approach Heidi business to unprecedented, a confident of do industry times, The believe to and exactly the now. place is very our to we're advantage right that. is run after doing very nearly said, in and going motivated people, very our perfect we gain share quarter. in of don't our opportunity we favor us mentioned often we're full get current we're and unique business at And to take returns. the in But above-market right run team drive do is our it. our the couple it. growth long-term term that's what market

you again. thank So

week be myself, available always, your will remaining days. Thank coming Swanson, you for Eric the so over and As calls much.

Operator

Thank event. This concludes you, today's everyone.

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

The Sherwin-Williams Company (SHW) 22 Oct 242024 Q3 Earnings call transcript