Summary
Sherwin-Williams reported mixed results for the first quarter of 2010, with net sales increasing slightly by 1.0% to $1.565 billion, primarily driven by favorable foreign currency translation rates offset by a decline in domestic paint sales volume. Net income, however, decreased by 12.5% to $32.6 million, or $0.30 per diluted share, compared to $37.3 million, or $0.32 per diluted share, in the prior year. This decline in profitability was impacted by a one-time $11.4 million tax charge related to the new healthcare legislation, which reduced earnings per share by $0.10. The company's financial position remained stable, with a current ratio of 1.25 at the end of the quarter. While short-term borrowings increased due to seasonal working capital needs, overall debt levels saw a slight decrease year-over-year. Despite challenging economic conditions, Sherwin-Williams generated positive operating cash flow over the trailing twelve months and maintained sufficient borrowing capacity. Investors should note the ongoing challenges in the domestic architectural paint market and the continued uncertainty surrounding significant legal proceedings, particularly those related to lead pigment and lead-based paint.
Financial Highlights
48 data points| Revenue | $1.57B |
| Cost of Revenue | $873.51M |
| Gross Profit | $691.97M |
| SG&A Expenses | $612.88M |
| Net Income | $32.60M |
| EPS (Basic) | $0.10 |
| EPS (Diluted) | $0.10 |
| Shares Outstanding (Basic) | 323.88M |
| Shares Outstanding (Diluted) | 328.48M |
Key Highlights
- 1Net sales increased 1.0% to $1.565 billion, driven by favorable foreign currency, but impacted by declining domestic paint volumes.
- 2Net income decreased 12.5% to $32.6 million ($0.30/share) from $37.3 million ($0.32/share) due to a $11.4 million tax charge from new healthcare legislation.
- 3Gross profit margin improved slightly to 44.2% from 43.9% due to increased sales and expense control, partially offset by rising raw material costs.
- 4Selling, general, and administrative (SG&A) expenses as a percentage of sales decreased to 39.1% from 39.3%, reflecting good expense management.
- 5The Paint Stores Group experienced a 5.3% decline in net sales, indicating ongoing weakness in the domestic architectural paint market.
- 6The Global Finishes Group showed strong growth, with net sales increasing 16.2% due to currency translation benefits and higher paint volumes.
- 7The company has substantial reserves for environmental liabilities ($161.5 million) and faces significant, unquantifiable litigation risks, particularly concerning lead-based paint, for which no amounts have been accrued.