01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
Sherwin-Williams Company reported record net sales of $19.94 billiona in 2021, an increase of 8.6% driven by selling price increases across all segments and higher volumes in the Performance Coatings Group.
However, diluted net income per share saw a slight decrease to $6.98b from $7.36 in 2020, impacted by higher raw material costs and availability issues that negatively affected full-year sales by a mid-single digit percentage. The company completed a three-for-one stock split in Q1 2021 to enhance accessibility for investors. The company navigated significant headwinds, including raw material inflation and supply chain disruptions, which are expected to improve in 2022.
Sherwin-Williams is focused on meeting customer demand through capacity expansion, store growth, and strategic acquisitions, while implementing price increases to offset cost inflation and recover margins. The company maintains a strong balance sheet and plans to continue disciplined capital allocation, prioritizing organic growth, strategic acquisitions, and returning capital to shareholders via share repurchases and dividends.
02—Key points
Key Highlights
- Record net sales of $19.94 billion in 2021, up 8.6% year-over-year.
- The Americas Group and Performance Coatings Group showed sales growth, while Consumer Brands Group sales declined.
- Diluted EPS decreased to $6.98 from $7.36 in 2020, affected by raw material cost increases and availability issues.
- Company completed a 3-for-1 stock split in March 2021.
- Divested the Wattyl business in Australia and New Zealand.
- Continued investment in acquisitions to expand product offerings and manufacturing capacity.
- Expects raw material availability to improve and plans additional price increases to offset inflation and recover margins in 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Sherwin Williams Co kept $0.09.
- Revenue$19.94B100.0%
- Cost of revenue−$11.40B57.2%
- Gross profit$8.54B42.8%
- Operating costs−$5.46B27.4%
- Operating income$3.08B15.5%
- Interest, other & tax−$1.22B6.1%
- Net income$1.86B9.3%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 17, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $19.94B$18.36B | +8.6% |
| Cost of Revenue | $11.40B$9.68B | +17.8% |
| Gross Profit | $8.54B$8.68B | −1.6% |
| SG&A Expenses | $5.88B$5.48B | +7.4% |
| Operating Income | $3.08B$3.37B | −8.6% |
| Interest Expense | $334.70M$340.40M | −1.7% |
| Net Income | $1.86B$2.03B | −8.2% |
| EPS (Basic) | $7.10$7.48 | −5.1% |
| EPS (Diluted) | $6.98$7.36 | −5.2% |
| Shares Outstanding (Basic) | 262.50M271.30M | −3.2% |
| Shares Outstanding (Diluted) | 267.10M275.80M | −3.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Sherwin-Williams' financial performance in 2021?
The primary drivers were strong demand, particularly in the Americas Group and Performance Coatings Group, which led to record net sales. Selling price increases across all segments also contributed significantly. However, higher raw material costs and supply chain disruptions, particularly concerning availability, impacted gross margins and overall profitability compared to the previous year.
How did supply chain issues and raw material inflation affect the company?
Sherwin-Williams experienced significant raw material inflation and availability issues, which negatively impacted sales by a mid-single digit percentage and reduced gross profit margins. The company is implementing price increases and expects raw material availability to improve in 2022.
What is the company's outlook for 2022?
The company anticipates continued robust demand in its end markets and expects raw material availability to improve. Sherwin-Williams plans to increase production capacity, open more stores, continue strategic acquisitions, and manage costs through price adjustments to recover margins.
How is Sherwin-Williams managing its capital allocation?
The company remains disciplined in its capital allocation, focusing on driving value for customers and returns for shareholders. Priorities include investing in organic growth (e.g., new stores), pursuing strategic acquisitions, and returning excess cash to shareholders through open market share repurchases and cash dividends.
06—Continue