November 10, 2015 Baird Industrial Conference - Sherwin

Chris Connor
Chairman & CEO
Sean Hennessy
Senior Vice President, Finance & CFO
Bob Wells
Bob Wells
Senior Vice President
Corporate Communications & Public Affairs
Forward‐Looking Statements
The presentations today will contain certain “forward‐looking statements” with
respect to sales, earnings and other matters. These forward‐looking statements are
p management’s
g
current expectations,
p
, estimates,, assumptions
p
and beliefs
based upon
concerning future events and conditions. Forward‐looking statements are necessarily
subject to risks, uncertainties and other factors, many of which are outside the
control of the Company, that could cause actual results to differ materially from such
statements and from the Company
Company’ss historical results and experience.
experience These risks,
risks
uncertainties and other factors include such things as: general business conditions,
strengths of retail and manufacturing economies and the growth in the coatings
industry; changes in the Company’s relationships with customers and suppliers;
changes in raw material availability and pricing; unusual weather conditions; and
other risks, uncertainties and other factors described from time to time in the
Company’s reports filed with the Securities and Exchange Commission. Any forward‐
p
onlyy as of the date on which such statement is made,, and
lookingg statement speaks
the Company undertakes no obligation to update or revise any forward‐looking
statement, whether as a result of new information, future events or otherwise.
The Sherwin-Williams Company - 3rd Quarter 2015
U.S. Coatings Industry
Sales Mix by Category
U.S. Accounts for ~ 80% of Consolidated SHW Revenues
Architectural
56%
OEM Product Finishes
30%
Special Purpose
14%
The Sherwin-Williams Company - 3rd Quarter 2015
Total Coatings
2014
~1.20 Billion Gallons (+4%)
~22.8 Billion Dollars (+4.5%)
Source: ACA; Company Estimates
Segment Breakdown Based on Gallons
U.S. Coatings Industry
Architectural Coatings Gallons (Millions)
850
Miillions of Galllons
800
750
~ 720 Million
700
650
600
550
500
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Estimate of Normalized, Sustainable Industry Volume The Sherwin-Williams Company - 3rd Quarter 2015
Source: Company Estimates ACA 2014
Favorable Customer Mix
DIY Contractor Shift will Continue 41%
59%
59%
41%
Paint Contractor
The Sherwin-Williams Company - 3rd Quarter 2015
DIY/ Remodeler
Source: U.S. Dept of Commerce/ACA/
Company Estimates
Company Overview
Financial Highlights: 9 Months ‘15 vs ‘14
9/30/14
9/30/15
% Chg.
$8 56B
$8.56B
$8 73B
$8.73B
+2 0%
+2.0%
EBITDA
$1,267M
$1,441M
+13.7%
Net Income Net
Income
% Sales
$733.1M
$733
1M
8.6%
$855.8M
$855
8M
9.8%
+16 7%
+16.7%
$7.39
$9.04
+22.3%
Net Sales
Net Sales
Earnings Per Share
The Sherwin-Williams Company - 3rd Quarter 2015
Company Overview
Revenue & Profit by Segment ‐ 2014
Segment Revenues: $11.13B
Segment Profit:
$1.70B
20%
Profit as a % of Sale
es
15%
Average: 15.2%
Latin America
Global Finishes
10%
Paint Stores
Consumer
5%
0%
20%
60%
40%
Share of Revenue
The Sherwin-Williams Company - 3rd Quarter 2015
80%
100%
Note: Excludes Administrative Segment
2014 Store Count
Sherwin‐Williams
4000
Home Depot
Home Depot
3500
Lowe's
3000
PPG
Kelly‐Moore
2500
Cloverdale/Rodda
2000
Dunn Edwards
Dunn Edwards
1500
Benjamin‐Moore
Diamond Vogel
1000
Vista
500
0
1 Year Change:
+95
The Sherwin-Williams Company - 3rd Quarter 2015
+27
Paint Stores Group + Comex
Paint Stores Group + Comex Stores
Store Penetration
Households per Store
30,000 or less
30,001 to 40,000
to 40,000
40,001 to 50,000
50,001 or more
The Sherwin-Williams Company - 3rd Quarter 2015
Latin America Coatings Group
Market Segmentation
Residential Repaint/DIFM
Commercial
Property Management
Channel Optimization
Channel Optimization
Company Operated Stores
Dedicated S‐W Dealers
The Sherwin-Williams Company - 3rd Quarter 2015
Home Centers
Hardware Stores
Protective & Marine Latin America Coatings Group
Controlled Distribution
Company‐Operated & Dedicated Dealers
250‐500
100‐250
50‐100
25‐50
10‐25
Less than 10
The Sherwin-Williams Company - 3rd Quarter 2015
Diversified Brands Division
Market Specific Brand Portfolios
Retail
Commercial
The Sherwin-Williams Company - 3rd Quarter 2015
Diversified Brands Europe
Brands Europe
Diversified
Brands Canada
Diversified Brands Division
HGTV HOME™ by Sherwin‐Williams



Strong Brand Recognition
Approximately
25% of Department Facings
Approximately 25% of Department Facings
Targeting the Discerning Paint Shopper
The Sherwin-Williams Company - 3rd Quarter 2015
Global Finishes Group
Automotive
Automotive
Aerospace
Marine
The Sherwin-Williams Company - 3rd Quarter 2015
Protective
Protective
OEM Finishes
Global Supply Chain End to End Supply Chain
•
•
•
•
62 Manufacturing Sites
14 Distribution Service Centers
400 Tractors / 1,200 Trailers
More than 10
000 Emplo
ees
10,000
Employees
The Sherwin-Williams Company - 3rd Quarter 2015
Pricing Discipline
$ Gross Profit
% of Sales
Raw Material Index
4,617
5,000
$4,617
4,222
$4,222
4,500
$M
Millions
4 000
4,000
3,598
,
$3 598
$3,598
3 499
3,499
$3,499
3,500
3,000
5
164
5,164
$
$5,164
44.9
2 500
2,500
3,263
$3,263
46.0
3 481
3,481
$3,481
3,745
$3,745
45.3
44.8
43.8
42 7
42.7
46.4
44.3
1.4
2,000
1,500
1.2
1 000
1,000
500
0
1.0
2007
2007
2008
2008
2009
2009
2010
2010
The Sherwin-Williams Company - 3rd Quarter 2015
2011
2011
2012
2012
2013
2013
2014
2014
Uses of Cash
2010‐2014 ($ Millions)
5‐Year
Net Operating Cash: $4 507
5‐Year Net Operating Cash: $4,507
Cash Dividends
$895.6
Treasury Stock
Purchases
$3,740.8
$803.3
Capital Expenditures
$521.8
Acquisitions
The Sherwin-Williams Company - 3rd Quarter 2015
Stock Repurchase
14.00
13.20
Millions of S
M
Shares
12.00
9.00
10.00
7.25
6.93
8 00
8.00
5.00
6.00
4.70
4.60
4.30
4.00
2.00
0.00
2007
2008
2009
2010
2011
Avg. Common
Shares Outstanding 130.9
119.3
115.4
108.2
103.4
103.9
A
Avg.
P
Price/Share
i /Sh
$54
$54.28
28
$58
$58.93
93
$75
$75.14
14
$78
$78.16
16
$121
$121.25
25
$65 39
$65.39
The Sherwin-Williams Company - 3rd Quarter 2015
2012
2013
103.0
2014
98.1
$178
$178.90
90 $220.66
$220 66
Dividends Per Share
1980 – 2015
2.68
$2.75
$2.50
2.20
$2.25
2.00
$2.00
$
$1.75
$1.50
1.40
1.56
1
56
1.46
1.42 1.44
1.26
$1.25
.82
$1.00
.68
$0.75
$0.50
$0.25
.28 .32
.25
.22
.16 .18 .19 .21
.14
.13
.08 .10 .12
.01 .04 .05 .06
.35
.40 .45
.58 .60
.48 .54
.62
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$
$0.00
The Sherwin-Williams Company - 3rd Quarter 2015