The Sherwin-Williams Company Q4 FY2025 earnings call

• Sherwin-Williams ended 2025 with strong fourth quarter results, driven by solid core performance and Suvenil acquisition. Consolidated sales in Q4 increased mid-single-digit, gross margin flattish year over year but expanded excluding Suvenil, SG&A as % of sales decreased, adjusted diluted net income per share up 6.7%, adjusted EBITDA up 13.4%. - Full-year 2025: Record consolidated sales and adjusted diluted earnings per share; gross profit and margin expanded; adjusted EBITDA up; returned $2.5B to shareholders; completed Suvenil acquisition; new global headquarters opened; added net new stores and sales territories; reinstated 401(k) matching program.

Paint Stores Group: Fourth quarter sales increased in expected range, led by high single-digit growth in protective and marine; residential repaint solid but slightly below mid-single-digit. Full-year sales low single-digit growth, with protective and marine high single-digit, residential repaint mid-single-digit, commercial low single-digit, property maintenance and new residential flattish. Segment margin increased. Consumer Brands Group: Fourth quarter sales exceeded expectations with Suvenil and FX, underlying business flat. Full-year sales low single-digit due to Suvenil and soft DIY demand; adjusted segment margin decreased. Performance Coatings Group: Fourth quarter sales high end of expectations, led by packaging and auto refinish; adjusted segment margin improved. Full-year sales flat overall, packaging high single-digit, auto refinish flat with share gains, coil low single-digit, industrial wood and general industrial low single-digit; adjusted segment margin impacted by geographic mix.

• 2026 consolidated sales expected low to mid-single-digit growth. Diluted net income per share $10.70-$11.10, adjusted $11.50-$11.90. - Paint Stores Group: 7% price increase effective Jan 1, raw materials up low single-digit. - SG&A expected low single-digit growth. - Expect to open 80-100 net new stores in US and Canada. - Recommend 1.3% dividend increase to $3.20 per share. - Opportunistic share repurchases; evaluate acquisitions.

• Macro and market uncertainties, including soft DIY demand, unfavorable FX, steel tariff impacts, volatility in industrial demand, mortgage rate lock-in effect, cautious consumer sentiment.

Q: On performance coatings segment margin outperformance, could you give more color?

A: Discipline on display, focus on new business wins, simplification, and SG&A control. SG&A has been a focus, with moderated pace considering volumes. First half under pressure, second half showed improvement.

Q: On SG&A outlook for 2026, what are you factoring in?

A: SG&A up low single digit, including history of restructuring costs, incremental Suvenil, and cost control efforts. 401(k) match reinstatement makes year-over-year comparison apples to apples.

Q: On raw material assumptions and healthcare labor, what underpins the guidance?

A: Raw material basket up low single-digit, including tariffs and commodity inflation. Healthcare costs are a headwind but efforts to mitigate are in place.

Q: On price mix with 7% price hike in Jan and 4Q 3%-3.5% mix, why expect low single-digit realization?

A: Balance between chasing volume and price, prioritizing volume to not risk it, but confident in hitting gross margin targets.

Q: On severe winter weather impact on Q1 EPS, any concerns?

A: Weather impacts every year, Southeast and Southwestern divisions deal with it annually, no current concerns.

Q: On Consumer Brands Group top-line and 2026 outlook, implications for existing business?

A: Underlying business in North America DIY still challenged, targeted price increases, FX headwinds in Latin America in second half.

Q: On Paint Stores Group guidance vs market, how do you outperform?

A: Residential repaint continues to take share, investments in stores, reps, innovation, and new products will drive outperformance.

Q: On industrial-facing businesses and potential disruption, how do you capitalize?

A: Stable strategy, close to customers, find new ways to solve challenges, and continue aggressive approach.