Summary
Sherwin-Williams Co. (SHW) reported solid third-quarter and year-to-date results for the period ending September 30, 2010. The company demonstrated revenue growth across its segments, driven by acquisitions and improved demand in both domestic and global markets. Despite rising raw material costs impacting gross margins, Sherwin-Williams effectively managed selling, general, and administrative expenses, leading to an increase in diluted net income per share for both the quarter and the nine-month period. The company's financial condition remained strong, with robust operating cash flow, though slightly lower than the prior year due to increased working capital needs. Sherwin-Williams also strategically utilized its borrowing capacity and cash flow to fund acquisitions, capital expenditures, and shareholder returns through dividends and share repurchases. The company is actively managing its financial risks and maintains a strong liquidity position with significant available borrowing capacity.
Financial Highlights
55 data points| Revenue | $2.17B |
| Cost of Revenue | $1.20B |
| Gross Profit | $971.59M |
| SG&A Expenses | $703.67M |
| Operating Income | $316.70M |
| Interest Expense | $11.31M |
| Net Income | $175.26M |
| EPS (Basic) | $0.54 |
| EPS (Diluted) | $0.53 |
| Shares Outstanding (Basic) | 319.36M |
| Shares Outstanding (Diluted) | 325.19M |
Key Highlights
- 1Consolidated net sales increased by 8.8% in Q3 2010 to $2.17 billion and by 7.0% year-to-date to $5.88 billion, driven by acquisitions and improved market demand.
- 2Diluted net income per share rose to $1.60 in Q3 2010 and $3.53 year-to-date, an improvement from $1.51 and $3.17 in the prior year periods, respectively.
- 3Gross profit margin decreased to 44.7% in Q3 2010 (from 46.5% in Q3 2009) due to rising raw material costs, partially offset by price increases and cost savings.
- 4Selling, general, and administrative expenses as a percentage of net sales decreased to 32.4% in Q3 2010 (from 32.8% in Q3 2009), indicating effective cost management.
- 5The company completed significant acquisitions, including Becker Industrial Products AB and Sayerlack Industrial Coatings, strengthening its Global Finishes Group.
- 6Net operating cash flow for the nine months was $477.6 million, down from $615.6 million in the prior year, primarily due to increased working capital requirements.
- 7Sherwin-Williams maintained a strong liquidity position, with $1.268 billion in remaining borrowing ability at September 30, 2010.