Summary
Sherwin-Williams Co. (SHW) reported a significant decrease in net sales and net income for the first quarter of 2009 compared to the same period in 2008, reflecting the challenging global economic conditions and a prolonged downturn in the U.S. housing market. Net sales fell 13.0% to $1.55 billion, driven by reduced paint sales volume across most segments, particularly the Global Finishes Group. Net income dropped by 52.2% to $37.3 million, resulting in diluted earnings per share of $0.32, down from $0.64 a year ago. Despite the revenue decline, the company maintained a strong financial position with improved working capital and a reduced debt-to-capitalization ratio. Management focused on expense control, which partially offset the impact of lower sales on profitability. However, the company also incurred increased 'Other general expense' due to higher accruals for environmental matters and exit costs from store closures. Investors should note the company's ongoing exposure to environmental liabilities and lead-based paint litigation, although management does not currently believe these will materially impact financial condition or liquidity.
Financial Highlights
45 data points| Revenue | $1.55B |
| Cost of Revenue | $870.07M |
| Gross Profit | $680.61M |
| SG&A Expenses | $608.85M |
| Net Income | $37.28M |
| EPS (Basic) | $0.11 |
| EPS (Diluted) | $0.11 |
| Shares Outstanding (Basic) | 347.84M |
| Shares Outstanding (Diluted) | 354.09M |
Key Highlights
- 1Consolidated net sales decreased by 13.0% to $1.55 billion in Q1 2009 compared to Q1 2008, attributed to declining paint sales volume and unfavorable foreign currency translation.
- 2Net income decreased significantly by 52.2% to $37.3 million ($0.32 diluted EPS) compared to $77.9 million ($0.64 diluted EPS) in Q1 2008, reflecting the challenging economic environment.
- 3Gross profit margin slightly improved to 43.9% from 43.8%, driven by stabilizing raw material costs and higher selling prices, partially offset by increased conversion and fixed costs due to lower volume.
- 4Selling, general, and administrative expenses (SG&A) as a percentage of net sales increased to 39.3% from 36.6%, although total SG&A spending decreased year-over-year due to expense control measures.
- 5The company maintained a strong liquidity position, with cash and cash equivalents increasing by $16.0 million and a current ratio of 0.97 at March 31, 2009.
- 6Total debt decreased by $270.3 million year-over-year to $1.078 billion, and the debt-to-capitalization ratio improved to 40.5% from 45.4%.
- 7The company incurred increased 'Other general expense' of $10.3 million, primarily due to higher accruals for environmental-related matters and exit costs from facility closures.