Summary
The Sherwin-Williams Company (SHW) reported solid performance for the nine months ended September 30, 2015, with consolidated net sales increasing by 2.0% to $8.735 billion. Net income rose by a notable 17.1% to $855.8 million, translating to a diluted EPS of $9.04, up from $7.39 in the prior year period. This growth was primarily driven by improved operating results in the Paint Stores and Consumer Groups, supported by higher paint sales volume and enhanced operating efficiencies. The company also demonstrated strong operating cash flow generation of $902.5 million for the nine-month period, indicating robust operational health.
Financial Highlights
51 data pointsBeta
Financial Statements
Beta
| Revenue | $3.15B |
| Cost of Revenue | $1.58B |
| Gross Profit | $1.57B |
| SG&A Expenses | $993.63M |
| Operating Income | $652.96M |
| Interest Expense | $17.00M |
| Net Income | $374.49M |
| EPS (Basic) | $1.35 |
| EPS (Diluted) | $1.32 |
| Shares Outstanding (Basic) | 276.59M |
| Shares Outstanding (Diluted) | 283.30M |
Key Highlights
- 1Consolidated net sales increased by 2.0% to $8.735 billion for the nine months ended September 30, 2015.
- 2Net income grew by 17.1% to $855.8 million, with diluted EPS rising to $9.04 from $7.39 in the prior year.
- 3Operating cash flow remained strong at $902.5 million for the nine-month period.
- 4Gross profit margin improved to 48.5% from 46.1% for the nine months ended September 30, 2015, driven by increased volume and efficiency.
- 5The company issued $800 million in new senior notes to fund general corporate purposes and repay short-term borrowings.
- 6Despite a slight increase in SG&A as a percentage of sales, driven by new store openings and program launches, overall profitability saw significant improvement.
- 7The company's financial condition remained strong, with a current ratio of 1.27 at September 30, 2015, an improvement from the previous year.
Frequently Asked Questions
Revenue growth was primarily driven by higher paint sales volume in the Paint Stores Group and Consumer Group. Despite a slight overall increase of 0.1% in consolidated net sales for the third quarter and 2.0% for the nine months, the performance was bolstered by strong sales volume, partially offset by unfavorable foreign currency translation rates.
Profitability significantly improved, with net income increasing by 17.1% for the nine-month period. This was largely due to an expansion in gross profit margins, which rose to 48.5% from 46.1% year-over-year. This margin improvement stemmed from increased paint sales volume and enhanced operating efficiency, allowing the company to better absorb selling, general, and administrative (SG&A) expenses, which also saw some increase due to strategic investments like new store openings.
Sherwin-Williams maintained a strong financial position and liquidity. Cash and cash equivalents increased, and the company generated substantial operating cash flow ($902.5 million for the nine months). Significant financing activities included issuing $800 million in senior notes and using proceeds to repay short-term borrowings. The current ratio improved to 1.27, indicating a healthy ability to meet short-term obligations.
The company is involved in ongoing litigation, most notably concerning lead pigment and lead-based paint. While the company believes these claims are without merit and is vigorously defending them, there remains inherent uncertainty. A significant adverse ruling in the California public nuisance case could materially impact results. Additionally, the company has accrued liabilities for environmental-related activities, with a notable portion related to two manufacturing sites, but management believes these will not have a material adverse effect on the company's overall financial condition, liquidity, or cash flow due to the extended resolution timeline.