• Adjusted Earnings Per Share (EPS): Increased by near-double-digit percentage to $11.33 for the full year; fourth-quarter adjusted EPS increased by 15.5%.
• Consolidated Sales: Increased slightly for the full year; fourth-quarter sales increased by low single-digit percentage.
• Gross Margin: Expanded slightly over a very strong level from the previous year.
• Cash Generation: $3.2 billion or 13.7% of sales for the full year.
• Shareholder Returns: $2.5 billion returned through share repurchases and dividends.
• Capital Expenditures (CapEx): $1.1 billion, including $532 million for new headquarters and R&D center.
• Net Debt to Adjusted EBITDA Ratio: Ended 2024 at 2.2 times.
• Paint Stores Group Sales: Grew by a low single-digit percentage for the full year; high single-digit growth in residential repaint and protective and marine in Q4.
• Consumer Brands Group Sales: Decreased due to unfavorable FX; adjusted segment margin expanded.
• Performance Coatings Group Sales: Slightly below expectations; adjusted segment margin expanded to 18%.
• New Store Openings: Expect to open 80 to 100 new stores in the US and Canada in 2025.
• Dividend Increase: Proposed annual dividend increase of 10.5% to $3.16 per share.

• Warning! GuruFocus has detected 6 Warning Sign with BOOT.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sherwin-Williams Co (NYSE:SHW) delivered strong fourth-quarter results, concluding a record year with near-double-digit growth in adjusted earnings per share.
• The company achieved significant margin expansion across all three operating segments, with adjusted segment margins reaching the highest level since the Valspar acquisition in 2017.
• Sherwin-Williams Co (NYSE:SHW) generated $3.2 billion in cash, representing 13.7% of sales, and returned $2.5 billion to shareholders through share repurchases and dividends.
• The company plans to open 80 to 100 new stores in the US and Canada in 2025, indicating confidence in future growth opportunities.
• Sherwin-Williams Co (NYSE:SHW) is implementing targeted price increases and expects to achieve gross margin expansion in 2025 despite raw material cost pressures.

Negative Points

• The demand environment remains choppy, with several end markets not expected to improve until 2026, impacting growth prospects.
• Consumer brands group sales decreased due to soft DIY demand and unfavorable foreign exchange impacts.
• Sherwin-Williams Co (NYSE:SHW) anticipates higher interest expenses in 2025 due to refinancing debt at higher rates and financing activities for new buildings.
• The company faces potential additional tariffs on raw materials, which could necessitate further price increases.
• Non-residential construction is expected to remain soft throughout 2025, with commercial completions anticipated to be weak.

Q & A Highlights

Q: What commodities or areas are driving the expected rise in raw material expenses, and are tariffs a factor? A: Yes, tariffs are a factor, particularly those related to Asian imports of epoxy. We're seeing low single-digit inflation in the raw basket, driven by industrial resins, TiO2, solvents, and packaging. Additionally, natural gas prices are trending upwards, adding pressure. If significant new tariffs arise, we are prepared to implement additional price increases in specific markets and segments. - James Jaye, Senior Vice President - Investor Relations and Corporate Communications; Allen Mistysyn, Chief Financial Officer

Q: Can you explain the $80 million associated with the new headquarters and the step-up in environmental spending? A: About a quarter of the $80 million for the new headquarters are transition costs, such as moving and decommissioning old buildings. The new facility is more efficient, but we are transitioning from a fully depreciated building. Environmental costs are expected to return to normal levels after credits last year. - Allen Mistysyn, Chief Financial Officer

Q: How do you view the share gain opportunity relative to PPG and the Kelly-Moore business? A: We are well-positioned following the Kelly-Moore acquisition, particularly in residential repaint. The PPG sale presents a ripe opportunity, especially in property management, commercial, and new residential segments. We focus on quality sales and targeting customers who value our offerings. - Heidi Petz, President and CEO

Q: What are the largest growth opportunities for Sherwin-Williams in 2025 and 2026? A: We expect to outperform in residential repaint due to product innovation that enhances contractor productivity. In performance coatings, coil and packaging are key growth areas, driven by new account wins and market share gains. - Heidi Petz, President and CEO

Q: How do you expect the Paint Stores Group sales to perform in 2025? A: We anticipate price will be stronger than volume, with residential repaint expected to grow at or above the high end of the range. New residential should maintain positive momentum, while commercial and property maintenance may improve as the year progresses. - Allen Mistysyn, Chief Financial Officer

For the complete transcript of the earnings call, please refer to the full earnings call transcript.