The Sherwin-Williams Company Q2 FY2025 earnings call

• Restructuring initiatives doubled to $105M, expecting $80M annual savings. - Construction of new global headquarters led to unexpected costs in the quarter. - Competitive actions by rivals indicate strategy is working; investing aggressively in Paint Stores Group. - Opened 20 net new stores, 38 year-to-date in Paint Stores Group. - Continued disciplined control of SG&A, with full-year guidance on track for low single-digit increase. - Focus on differentiated solutions, growth investments, and controlling G&A.

Paint Stores Group: Sales increased low single-digit, price mix up mid-single digits, volume down low single digits. Opened 20 net new stores, 38 year-to-date. Segment profit increased, margin decreased slightly. Consumer Brands Group: Sales below expectations, volume, price mix, FX down low single digits. Segment SG&A decreased low single digits. Adjusted segment margin decreased due to lower sales and supply chain volumes. Performance Coatings Group: Sales in line with expectations, volume, acquisitions, FX up low single digits, offset by unfavorable price mix. Regionally, growth in Europe, Asia, Latin America offset by North America decrease. Segment profit and margin decreased due to increased costs, FX losses, and prior year gain non-repeat.

• Reduced adjusted earnings guidance for full year due to softer architectural sales and supply chain inefficiencies. - SG&A expected to be in low single-digit target range. - CapEx reduced by $170M to $730M, including $300M for building project. - Expect Souvenil acquisition to close by end of year.

• Softer for longer demand environment across segments. - Supply chain inefficiencies due to reduced production volumes. - Uncertainty in new building costs and competitive actions impacting market share.

Q: David Begleiter asked about potential deterioration in demand in the back half of the year and where to see it.

A: Heidi Petz said new residential, coil, and DIY markets are areas to watch.

Q: Vincent Andrews asked about incremental competitive dynamics and which PSG subsegments would gain share.

A: Heidi Petz said commercial, new residential, and property maintenance are key areas.

Q: John McNulty asked about SG&A spend and store count.

A: Al Mistysyn said SG&A in second half expected to be up low single digits, with targeted store openings.

Q: Jeff Zekauskas asked about inflection point for stores business and consumer brands group.

A: Heidi Petz and Jim Jaye discussed transitions in consumer brands and competitive advantages in stores.

Q: Christopher Parkinson asked about growth spend allocation.

A: Al Mistysyn and Heidi Petz talked about aggressive customer acquisition and strategic focus.

Q: Arun Viswanathan asked about future growth algorithm.

A: Al Mistysyn discussed expected higher growth in paint stores group post-demand recovery.

Q: Greg Melich asked about volume and gross margins.

A: Al Mistysyn explained impact of volume weakness on gross margin.

Q: John asked about CapEx reductions and tax benefits.

A: Al Mistysyn discussed CapEx cuts and tax implications.

Q: Chuck Cerankosky asked about product pricing in market share gain.

A: Al Mistysyn said pricing not alone, focus on value proposition.

Q: Kevin McCarthy asked about restructuring program details.

A: Al Mistysyn and Heidi Petz discussed restructuring savings and flow-through.

Q: Duffy Fischer asked about transfer accounting and segment burden.

A: Al Mistysyn explained distribution of operating rate pain.

Q: Mike Harrison asked about raw materials deflation and pricing.

A: Jim Jaye and Al Mistysyn discussed raw material deflation and competitive pricing.

Q: Garik Shmois asked about mix in Performance Coatings and Consumer Brands.

A: Al Mistysyn explained mix impacts in both segments.

Q: Aron Ceccarelli asked about sales guidance and segment margin.

A: Heidi Petz and Al Mistysyn discussed confidence in holding full-year guide and margin drivers.

Q: Matt Dale asked about supply chain inefficiencies.

A: Al Mistysyn discussed impact of supply chain on fixed costs.

Q: Laurence Alexander asked about refinish and productivity.

A: Heidi Petz and Al Mistysyn talked about refinish opportunities and productivity savings.