Summary
Sherwin-Williams Company (SHW) reported a strong second quarter and first half of 2012, driven by improved domestic architectural paint demand and sales volume increases. Net sales rose by 9.3% for the quarter and 11.9% year-to-date, with significant growth across most segments, particularly the Paint Stores Group. Gross profit margin improved due to higher selling prices and volume, while SG&A expenses as a percentage of sales decreased due to increased revenue. Net income saw a substantial increase, with diluted earnings per share rising to $2.17 for the quarter and $3.13 year-to-date. The company generated robust operating cash flow, utilized for acquisitions, capital expenditures, share repurchases, and dividends. Financial condition remains strong with sufficient borrowing capacity. Management highlighted continued focus on cost control and operational efficiency as key drivers for sustained performance.
Financial Highlights
52 data points| Revenue | $2.57B |
| Cost of Revenue | $1.42B |
| Gross Profit | $1.15B |
| SG&A Expenses | $810.21M |
| Operating Income | $405.05M |
| Interest Expense | $10.23M |
| Net Income | $227.81M |
| EPS (Basic) | $0.74 |
| EPS (Diluted) | $0.72 |
| Shares Outstanding (Basic) | 304.34M |
| Shares Outstanding (Diluted) | 312.01M |
Key Highlights
- 1Consolidated net sales increased by 9.3% in Q2 2012 to $2.57 billion and by 11.9% in the first six months of 2012 to $4.71 billion, driven by higher sales volume and pricing.
- 2Gross profit margin improved to 44.7% in Q2 2012 from 43.4% in Q2 2011, and to 43.8% for the first six months from 43.2% in the prior year, attributed to selling price increases and higher paint volume.
- 3Diluted net income per common share rose significantly to $2.17 in Q2 2012 from $1.66 in Q2 2011, and to $3.13 for the first six months from $2.29 in the prior year.
- 4Net operating cash flow increased substantially to $202.1 million for the first six months of 2012, up from $108.2 million in the same period of 2011, despite a significant ESOP settlement payment.
- 5The company completed the acquisition of Geocel Corporation, strengthening its Consumer Group's position in the sealant and adhesive market.
- 6Sherwin-Williams generated $829.8 million in net operating cash from July 1, 2011, to June 30, 2012, supporting capital investments, acquisitions, share repurchases, and dividend payments.
- 7SG&A expenses decreased as a percentage of sales, indicating improved operational leverage with higher revenue.