The Sherwin-Williams Company Q1 FY2026 earnings call

• Strong sales in quarter with heightened global uncertainty and demand softness; sales exceeded guidance in all reportable segments. • Consolidated sales grew by high single-digit percentage inclusive of Suvenil acquisition; gross margin expanded by 90 basis points. • SG&A increased by mid single-digit percentage, full-year guidance unchanged. • Adjusted diluted net income per share and adjusted EBITDA increased. • Returned 773 million dollars to shareholders through share buybacks and dividends; strong balance sheet with net debt to adjusted EBITDA ratio of 2.5 times. • Continued to execute strategy with focus on growth investments, new account and share-of-wallet initiatives. • Assessed and optimized store portfolio in Paint Stores Group, opened 21 new stores, closed 27. • Consumer Brands sales exceeded expectations due to Suvenil acquisition and growth in some regions. • Performance Coatings Group saw growth in various divisions and regions despite some end market declines.

Paint Stores Group: grew by mid single-digit percentage, price mix and volume both up low single digits (price mix more than volume), effectiveness of January 1 price increase better than expected; opened 21 new stores, closed 27. Protective and marine team: sales up double digits vs high single-digit comparison, seventh straight quarter of high single-digit growth. Commercial business: sales up mid single digits in choppy market. Residential repaint: returned to mid single-digit growth. Property maintenance: low single-digit growth. Segment profit grew by low single digits, margin flat. Consumer Brands: sales exceeded expectations driven by high-teens growth from Suvenil acquisition; group sales excluding Suvenil up low single digits (high-teens in Europe, high single-digit in Latin America; North America down low single digits); adjusted segment margin increased. Performance Coatings Group: sales slightly above mid single-digit range, growth in every division and region; volume up low single digits, acquisitions slightly positive, price mix flat, FX tailwind; automotive refinish up low-teens, packaging up high single digits, general industrial, coil, wood solid growth; adjusted segment profit up mid single digits, margin flat, higher incentive compensation and FX headwinds drove SG&A higher

• Assumptions from January call largely intact; customer feedback and indicators signal little support for meaningful recovery in most end markets. • Middle East conflict added complexity and uncertainty; team confident in managing through it. • Expect negative impacts on demand from recent events, magnitude hard to predict. • Raw material costs for oil, natural gas, petrochemical feedstocks inflated and volatile; increased full-year raw material inflation outlook to low to mid single digits. • Consolidated price/mix expectation increases to high end of low single-digit range. • Consolidated sales and earnings guidance for full year unchanged, with adjustments in mix of volume, price, and FX.

• Global uncertainty and persistent demand softness in most end markets. • Middle East conflict adding complexity and uncertainty. • Volatility in raw material prices/costs, particularly for oil, natural gas, and key petrochemical feedstocks. • Impact of raw material supply disruptions tied to Strait of Hormuz volatility in some regions. • Customer behavior mix with prudence and hesitation in some cases affecting production schedules and ordering.

Q: Question on price and cost dynamic, why more surgical pricing?

A: Heidi and Ben discussed it's an opportunity, with more than twice the pricing now in new guide, phasing by regions, raw material buying methods, and balancing price with right volume.

Q: Question on cost breakdown, raw material peak and rollover?

A: Jim said most pressure on industrial basket, propylene up 50% due to Middle East, solvents elevated, TiO2 not as elevated, over 80% sales in North America with good supply.

Q: Question on removing 'select commodity inflation' term?

A: Jim said it was to make it clear commodities are moving upwards.

Q: Question on share gain environment, gross spend, store openings/closures?

A: Heidi discussed aggressive share gain efforts in various segments, disciplined store portfolio assessment.

Q: Question on 2026 guidance, volume delta and earnings offsets?

A: Ben said volume expected to be muted due to demand impact, price offsetting to maintain full-year guide.

Q: Question on housing affordability and proposed actions?

A: Ben said would like supply opportunities to help affordability, watching policy changes.

Q: Question on margin improvement in Consumer Brands?

A: Ben said due to global supply chain efficiencies, price mix, no cost reallocation.

Q: Question on pricing realization and future increases?

A: Heidi said January increase realization better than expected, would do more pricing methodically if needed.

Q: Question on gross margin expansion and future quarters?

A: Ben said would have been over 100-basis-point improvement without Suvenil, expect continued gross margin expansion with normal phasing.

Q: Question on performance in PSG and PCG continuing?

A: Heidi said yes, with examples of continued share gain efforts.

Q: Question on price clarification and raw material quarterly cadence?

A: Ben said consolidated pricing includes January and since then, raw materials flow through heavier in second half.

Q: Question on raw material guide and North America exposure?

A: Ben said strategic relationships, procurement, mix of business and contract buying help.

Q: Question on packaging growth and regulatory shifts?

A: Heidi said regulatory shifts like BPA ban provide tailwind, expect continued growth.

Q: Question on mortgage environment and household formations?

A: Jim and Heidi discussed mortgage rate, affordability, household formations, pent-up demand.

Q: Question on Performance Coatings sales volume guide and order books?

A: Heidi said no material shift, Ben said feedstock gap and inflation impact guide.

Q: Question on Performance Coatings customer behavior?

A: Heidi said mix of prudence and confidence, strategy working.

Q: Question on customer prebuy due to inflation?

A: Jim and Heidi said not seeing material prebuy.

Q: Question on U.S. architectural paint demand and Paint Stores Group guidance?

A: Heidi said demand under pressure but strategy in place, Ben said Paint Stores Group guidance remains in low single-digit range.

Q: Question on refinish market share and EMEA deco?

A: Heidi said refinish benefited from Valspar acquisition and value proposition; Ben said Europe sales mix impact, core sales growth mid single-digit.

Q: Question on pricing phasing and raw material impact?

A: Ben and Jim discussed pricing phasing, raw material propylene impact and future price actions.