Skip to content
AnalystLens

SHERWIN WILLIAMS CO 8-K Report, Financial Results (Jan 25, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed January 25, 2024
Period End
January 25, 2024
Security
SHW
In the record · 2016–202610-K1110-Q328-K145

SHW filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 145 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jan ’18Jan ’18
  2. Leadership change8-K · Nov ’20Nov ’20
  3. Material agreement8-K · Oct ’22Oct ’22
  4. Material agreement8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed January 25, 2024. Cited figures are marked; the original filing is the authoritative source.

The Sherwin-Williams Company (NYSE: SHW) reported record full-year 2023 net sales of $23.05 billiona, up 4.1%, with diluted EPS rising 19.8% to $9.25 and adjusted diluted EPS rising to $10.35 (up 18.6%).

Gross margin expanded to 46.7% from 42.1%, and net operating cash flow reached $3.52 billionb, or 15.3% of net sales. Adjusted EBITDA grew 17.5% to $4.24 billion. Paint Stores Group (PSG) was the main driver, with high-single-digit full-year sales growth and expanding segment margins, while Consumer Brands Group (CBG) faced weak DIY demand and Performance Coatings Group (PCG) grew through acquisitions and currency translation.

Fourth-quarter results were softer. Diluted EPS fell 6.1% to $1.39c and adjusted diluted EPS fell 4.2% to $1.81. Pre-tax income declined 4.2%, weighed down by higher employee and environmental costs, a $41.8 million loss from the Argentine peso devaluation, and a $23.9 million trademark impairment.

CBG's adjusted segment margin fell to 10.8% from 12.7%, while PCG's adjusted segment margin improved to 17.3% from 14.2%. Looking ahead, management guided full-year 2024 diluted EPS to $10.05d–$10.55 and adjusted diluted EPS to $10.85–$11.35, implying about 7% growth at the midpoint. The guidance assumes low-to-mid single-digit consolidated sales growth, a low-20% effective tax rate, and modest raw material deflation.

A 5% price increase in PSG takes effect February 1, 2024, to offset wage and other cost inflation. Management expects gross margin expansion, and first-quarter 2024 sales are guided to be flat to down low-single digits. Shareholder returns totaled $2.06 billion in 2023 through dividends and buybacks.

02—Key points

Key Highlights

  1. Record full-year 2023 net sales of $23.05 billion, up 4.1%, with Paint Stores Group same-store sales up 6.8%.
  2. Full-year diluted EPS rose 19.8% to $9.25; adjusted diluted EPS rose to a record $10.35, up 18.6%.
  3. Gross margin expanded to 46.7% for the year, up from 42.1% in 2022, and remained within the company's targeted range.
  4. Fourth-quarter diluted EPS fell 6.1% to $1.39 and adjusted EPS fell 4.2% to $1.81, pressured by higher expenses, the Argentine devaluation ($0.16/share) and a trademark impairment ($0.07/share).
  5. 2024 guidance: adjusted diluted EPS of $10.85–$11.35 (about 7% growth at the midpoint) on low-to-mid single-digit sales growth; GAAP diluted EPS guidance is $10.05–$10.55.
  6. Operating cash flow of $3.52 billion (15.3% of sales) funded $2.06 billion in shareholder returns and the acquisition of SIC Holding GmbH, while reducing debt.
  7. A 5% price increase in Paint Stores Group effective February 1, 2024, aims to offset wage and other cost inflation despite modest raw material deflation.

03—Questions

Frequently Asked Questions

  1. How strong was Sherwin-Williams' full-year 2023 performance?

    The company set records for net sales ($23.05 billion) and adjusted diluted EPS ($10.35). Gross margin expanded roughly 460 basis points to 46.7%, and operating cash flow was $3.52 billion. Growth came mainly from Paint Stores Group, which overcame a weak housing backdrop.

  2. Why did fourth-quarter 2023 earnings decline?

    Q4 pre-tax income fell 4.2% because of continued growth investments, higher employee-related and incentive compensation costs, and higher environmental expense. Non-operating charges also weighed on results, including a $41.8 million loss from the Argentine peso devaluation and a $23.9 million trademark impairment. Moderating raw material costs partly offset these pressures.

  3. What is the 2024 outlook and how does it differ from the adjusted figures?

    Management expects full-year 2024 consolidated net sales to rise low-to-mid single digits, with a low-20% effective tax rate. GAAP diluted EPS is guided to $10.05–$10.55. Adjusted EPS of $10.85–$11.35 excludes $0.80 per share of acquisition-related amortization expense. First-quarter sales are expected to be flat to down low single digits year over year.

  4. Which business segments are performing well and which are struggling?

    Paint Stores Group is the strongest segment, with full-year sales up high-single digits and expanding margins. Performance Coatings Group grew through acquisitions and currency gains, and its Q4 adjusted segment margin improved to 17.3%. Consumer Brands Group struggled with weak DIY demand, and its Q4 adjusted segment margin fell to 10.8% from 12.7%.

  5. How is the company returning capital and managing its balance sheet?

    Sherwin-Williams returned $2.06 billion to shareholders through dividends and share repurchases in 2023 and bought back 5.6 million shares. It had 39.6 million shares remaining under its repurchase authorization at year-end. The company also reduced short-term borrowings and long-term debt and acquired German coatings firm SIC Holding GmbH. Year-end short-term borrowings fell to $374.2 million from $978.1 million, and total debt was roughly $9.5 billion ($374.2 million short-term plus $1,098.8 million current and $8,377.9 million long-term).

04—Continue

← View all 8-K filings