Why did earnings grow much faster than sales in 2024?

Net sales were nearly flat at $23.10 billion, but gross margin rose 180 basis points to 48.5% on price-cost discipline and efficiency gains. Lower non-recurring charges also helped. In 2023, the company recorded Argentine devaluation losses, trademark impairments, China divestiture impairments, and higher environmental provisions, which did not repeat at the same scale in 2024. Reported diluted EPS growth of 14.1% therefore overstates the underlying improvement, and adjusted EPS growth of 9.5% is the better gauge of operating performance.

How did each business segment perform?

The Paint Stores Group was the standout, with fourth-quarter net sales up 3.4% and same-store sales up 2.0%, driven by selling price increases and volume growth in residential repaint and new residential. Consumer Brands sales fell 4.3% in the quarter, mainly due to currency translation in Latin America, though adjusted segment profit rose 9.8%. Performance Coatings sales fell 1.6% in the quarter, with Packaging growing double digits and General Industrial declining, while adjusted segment profit was roughly flat.

What is the 2025 outlook and what could change it?

Management expects low-single-digit consolidated net sales growth in 2025, with PSG at or above the high end of that range, and adjusted diluted EPS of $11.65 to $12.05. Q1 2025 sales are expected to be up or down low-single digits. Upside exists if demand proves stronger than expected, since management said higher volume could push guidance higher. Downside risks include prolonged end-market softness, currency, raw material costs, and litigation. Guidance also assumes about $100 million of new-building transition costs and about $40 million of higher interest expense.

How is the company returning cash and what is its capital position?

Sherwin-Williams generated $3.15 billion of net operating cash in 2024 and returned $2.46 billion to shareholders through dividends and buybacks. Cash dividends were $723.4 million, and the company repurchased 5.2 million shares. At year-end, it had authorization to repurchase 34.4 million more shares. Total debt was roughly $9.9 billion (short-term borrowings, current and long-term debt), with 2024 and 2025 maturities being refinanced, which will raise interest expense. Capital expenditures rose to $1.07 billion from $888 million, reflecting investment in new facilities.

What are the main risks highlighted in the release?

The release flags continued demand choppiness in most end markets, softness in industrial businesses outside Packaging, and currency pressure in Latin America, which reduced Consumer Brands sales by about 5.5% in Q4. It also cites the cost of raw materials and energy, tariffs and trade policy, and the outcome of pending and future lead pigment and lead-based paint litigation and environmental matters. Management notes that the company's Annual Report on Form 10-K contains a fuller list of risk factors.

SHW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 30, 2025. Cited figures are marked; the original filing is the authoritative source.

Sherwin-Williams closed 2024 with record full-year net sales of $23.10 billion^a, up slightly (about 0.2%) from $23.05 billion in 2023.

Growth was driven by the Paint Stores Group (PSG), where same-store sales rose 1.7% for the year and 2.0% in the fourth quarter, offsetting softness in Consumer Brands (CBG) and Performance Coatings (PCG). Profitability improved meaningfully. Full-year gross margin expanded 180 basis points to 48.5%, diluted EPS rose 14.1% to $10.55^b, and adjusted diluted EPS rose 9.5% to a record $11.33.

Fourth-quarter diluted EPS grew 36.7% to $1.90^c, helped by the absence of prior-year Argentine devaluation and trademark impairment charges, and adjusted EPS grew 15.5% to $2.09. Management reported net operating cash of $3.15 billion (13.7% of sales) and returned $2.46 billion to shareholders through dividends and buybacks. The outlook is cautious on demand but positive on earnings.

For 2025, management guides to low-single-digit consolidated net sales growth, with PSG at or above the high end of that range. Adjusted diluted EPS is guided to $11.65 to $12.05^d, about 4.6% growth at the midpoint, and GAAP diluted EPS to $10.70 to $11.10. Management expects demand softness to persist in several end markets well into the second half of 2025, if not into 2026.

The guidance includes about $0.80 per share of acquisition-related amortization, $0.15 per share of restructuring costs, roughly $100 million of costs tied to the move into new buildings, and about $40 million of higher interest expense from refinancing 2024 and 2025 debt maturities. For investors, the key takeaways are margin-driven earnings growth despite flat top-line sales, strong cash generation supporting dividends and buybacks, and a 2025 plan that relies on pricing discipline, efficiency gains, and above-market growth in PSG rather than a broad demand recovery. Risks flagged include continued softness in industrial and other non-PSG end markets, currency pressure in Latin America, and ongoing lead pigment and environmental litigation.

02—Key points

Key Highlights

Record full-year 2024 net sales of $23.10 billion, up about 0.2%, with PSG same-store sales up 1.7% for the year.
Full-year gross margin expanded 180 basis points to 48.5%, supported by pricing and cost discipline.
Diluted EPS rose 14.1% to $10.55; adjusted diluted EPS rose 9.5% to a record $11.33.
Fourth-quarter diluted EPS jumped 36.7% to $1.90 and adjusted EPS rose 15.5% to $2.09, aided by lapping 2023 Argentine devaluation and trademark impairment charges.
Net operating cash of $3.15 billion (13.7% of sales); $2.46 billion returned to shareholders via dividends and repurchases of 5.2 million shares.
2025 guidance: adjusted diluted EPS of $11.65 to $12.05 (about 4.6% growth at midpoint) and low-single-digit net sales growth, with management expecting demand softness into 2H 2025 or beyond.
Adjusted EBITDA rose 6.0% to $4.49 billion (19.4% of net sales), and the company expects about $40 million of higher interest expense from debt refinancing and about $100 million of costs tied to new buildings in 2025.

03—Questions

Frequently Asked Questions

Why did earnings grow much faster than sales in 2024?
Net sales were nearly flat at $23.10 billion, but gross margin rose 180 basis points to 48.5% on price-cost discipline and efficiency gains. Lower non-recurring charges also helped. In 2023, the company recorded Argentine devaluation losses, trademark impairments, China divestiture impairments, and higher environmental provisions, which did not repeat at the same scale in 2024. Reported diluted EPS growth of 14.1% therefore overstates the underlying improvement, and adjusted EPS growth of 9.5% is the better gauge of operating performance.
How did each business segment perform?
The Paint Stores Group was the standout, with fourth-quarter net sales up 3.4% and same-store sales up 2.0%, driven by selling price increases and volume growth in residential repaint and new residential. Consumer Brands sales fell 4.3% in the quarter, mainly due to currency translation in Latin America, though adjusted segment profit rose 9.8%. Performance Coatings sales fell 1.6% in the quarter, with Packaging growing double digits and General Industrial declining, while adjusted segment profit was roughly flat.
What is the 2025 outlook and what could change it?
Management expects low-single-digit consolidated net sales growth in 2025, with PSG at or above the high end of that range, and adjusted diluted EPS of $11.65 to $12.05. Q1 2025 sales are expected to be up or down low-single digits. Upside exists if demand proves stronger than expected, since management said higher volume could push guidance higher. Downside risks include prolonged end-market softness, currency, raw material costs, and litigation. Guidance also assumes about $100 million of new-building transition costs and about $40 million of higher interest expense.
How is the company returning cash and what is its capital position?
Sherwin-Williams generated $3.15 billion of net operating cash in 2024 and returned $2.46 billion to shareholders through dividends and buybacks. Cash dividends were $723.4 million, and the company repurchased 5.2 million shares. At year-end, it had authorization to repurchase 34.4 million more shares. Total debt was roughly $9.9 billion (short-term borrowings, current and long-term debt), with 2024 and 2025 maturities being refinanced, which will raise interest expense. Capital expenditures rose to $1.07 billion from $888 million, reflecting investment in new facilities.
What are the main risks highlighted in the release?
The release flags continued demand choppiness in most end markets, softness in industrial businesses outside Packaging, and currency pressure in Latin America, which reduced Consumer Brands sales by about 5.5% in Q4. It also cites the cost of raw materials and energy, tariffs and trade policy, and the outcome of pending and future lead pigment and lead-based paint litigation and environmental matters. Management notes that the company's Annual Report on Form 10-K contains a fuller list of risk factors.

04—Continue

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