Core Viewpoint - Sherwin-Williams Company will announce its financial results for Q2 2024 on July 23, 2024, before market open, providing insights into its financial condition and segment results [1] Financial Results Announcement - The press release detailing the financial results will be available on the Sherwin-Williams website [1] - A conference call to discuss the financial results and outlook for Q3 and full year 2024 will take place at 11:00 a.m. EDT on July 23, 2024 [3] - The call will feature Sherwin-Williams President and CEO Heidi Petz along with other senior executives [3] Webcast Information - The conference call will be webcast in listen-only mode, with an archived replay available approximately two hours after the call ends [2]

A month has gone by since the last earnings report for Sherwin-Williams (SHW) . Shares have added about 1.2% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Sherwin-Williams due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Sherwin-Williams' Q1 Earnings and Sales L ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2024 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 1-04851 THE SHERWIN-WILLIAMS COMPANY (Exact name of registrant as specified in its charter) | Ohio | 34-0526850 | | --- | --- | | (S ...

Financial Data and Key Metrics Changes - Consolidated sales in Q1 2024 were at the low end of the guided range, driven by lower than anticipated volume, particularly in the Paint Stores Group [7][10] - Gross margin expanded by 270 basis points year-over-year to 47.2%, while EBITDA margin improved by 60 basis points to 16.7% [15] - Adjusted diluted net income per share increased by 6.4%, and the company returned $728 million to shareholders through dividends and share repurchases, a 59% increase year-over-year [15] Business Line Data and Key Metrics Changes - **Paint Stores Group**: Sales increased by 0.5% against a mid-teens comparison, with volume flat and segment margin decreasing to 17.2% due to higher planned growth investments [10][11] - **Consumer Brands Group**: Sales decreased by 7.1%, with lower volume and divestitures partially offset by price increases, particularly in Latin America [22] - **Performance Coatings Group**: Sales were in line with expectations, with adjusted segment margin improving to 17.1%, reflecting disciplined strategy and growth from acquisitions [24] Market Data and Key Metrics Changes - Sales in North America decreased by a high single-digit percentage in the Consumer Brands Group, while sales outside North America increased by a double-digit percentage in Europe [22] - The residential repaint market showed mid-single-digit growth, indicating above-market performance due to increased investments [20] Company Strategy and Development Direction - The company is focused on aggressive growth strategies, including increasing exclusive national contracts and enhancing customer engagement through digital initiatives [17][29] - The company plans to open 80 to 100 new stores in 2024, viewing this as a significant growth opportunity [21][75] - Management emphasized the importance of controlling internal factors to capitalize on market disruptions and improve market share [28][63] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainties in the macroeconomic environment but expressed confidence in improving demand indicators, particularly in the housing market [27][30] - The company expects to see benefits from focused investments throughout the year, with a belief that demand will eventually increase [30][63] Other Important Information - The company maintained a disciplined capital allocation approach, with expectations for raw material costs to remain stable [31][59] - Management highlighted the importance of their differentiated business model and the potential for share gains as market conditions improve [14][63] Q&A Session Summary Question: Impact of Weather on Sales - Management acknowledged weather as a factor but emphasized that execution and delayed activity were also significant contributors to lower sales [34][35] Question: Gross Margin Drivers - Gross margin improvement was primarily due to moderating raw material costs and modest price increases, with higher volumes in the Paint Stores Group contributing positively [43][44] Question: Consumer Brands EBIT Expectations - Sequential margin improvement is expected in the Consumer Brands Group for Q2 and Q3 due to seasonality and improved sales volume [48][49] Question: New Exclusive National Accounts - The 56 new exclusive national account wins are considered material and indicative of the company's ability to service contractors effectively [51] Question: Raw Material Environment - The raw material basket was down mid-single-digit percentage year-over-year, with expectations for continued moderation in costs [54][58] Question: Market Share Gains - The company remains confident in its ability to gain market share, supported by strategic investments and a robust sales approach [61][63] Question: Pricing Strategy - The company implemented a 5% price increase effective February 1, with full realization expected by the end of Q2 [70] Question: Protective & Marine Coatings Outlook - Management expects Protective & Marine coatings to grow faster than architectural sales, despite some project delays [108]

Exhibit 99.1 NEWS | | 101 W. Prospect | Cleveland, Ohio | | (216) 566- | | --- | --- | --- | --- | --- | | The Sherwin-Williams Company | • Avenue | • 44115 | • | 2000 | The Sherwin-Williams Company Reports 2024 First Quarter Financial Results CLEVELAND, April 23, 2024 - The Sherwin-Williams Company (NYSE: SHW) announced its financial results for the first quarter ended March 31, 2024. All comparisons are to the first quarter of the prior year, unless otherwise noted. SUMMARY CEO REMARKS "In what is a seaso ...

Part I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) A global leader in the paint and coatings industry, the company operates through three distinct segments with a worldwide presence - The company is organized into three reportable operating segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group[14](index=14&type=chunk) - As of December 31, 2023, Sherwin-Williams employed **64,088 people**, with approximately **75% in the United States**[32](index=32&type=chunk) [Business Segments Overview](index=3&type=section&id=Item%201.%20Business%23Segments) The company's three segments utilize distinct distribution models, including specialty stores, retail partners, and direct sales channels **Segment Store and Branch Count (as of Dec 31, 2023)** | Segment | Number of Locations | Geographic Focus | | :--- | :--- | :--- | | Paint Stores Group | 4,694 specialty stores | U.S., Canada, Caribbean | | Consumer Brands Group | 318 specialty stores | Latin America | | Performance Coatings Group | 322 branches | Worldwide | - In 2023, approximately **61% of the Consumer Brands Group's total sales were intersegment transfers**, primarily to the Paint Stores Group[16](index=16&type=chunk) - During 2023, the Consumer Brands Group **divested a non-core domestic aerosol business** and its China architectural business[16](index=16&type=chunk) [Human Capital Resources](index=6&type=section&id=Item%201.%20Business%23Human%20Capital%20Resources) The human capital strategy focuses on culture, talent acquisition, employee engagement, safety, and competitive total rewards - The company's human capital management is built on seven guiding values: integrity, people, service, quality, performance, innovation, and growth[31](index=31&type=chunk) - In 2023, the company hired approximately **1,400 college graduates** through its management trainee program to build its talent pipeline[36](index=36&type=chunk) - The company conducts a global employee engagement survey every other year, with the most recent one conducted in 2023, to measure progress and drive improvements[37](index=37&type=chunk) [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant economic, financial, operational, and legal risks, including inflation, supply chain issues, and lead paint litigation [Economic and Strategic Risks](index=10&type=section&id=Item%201A.%20Risk%20Factors%23Economic%20and%20Strategic) Performance is sensitive to economic conditions like inflation and interest rates, which impact housing and industrial markets - High inflation and elevated mortgage rates impacted consumer behavior in 2023 and are expected to continue to do so in 2024, affecting the U.S. housing market and global industrial markets[46](index=46&type=chunk) - Contractor labor shortages are causing project backlogs, which could adversely affect the growth rate of demand for the company's products[50](index=50&type=chunk) [Financial Risks](index=11&type=section&id=Item%201A.%20Risk%20Factors%23Financial) Key financial risks include substantial debt, potential credit market weakness, and foreign currency fluctuations - As of December 31, 2023, the company had total debt of approximately **$9.851 billion**[57](index=57&type=chunk) - The company experienced a loss of **$41.8 million** in 2023 due to the significant devaluation of the Argentine Peso in December 2023[61](index=61&type=chunk) [Operational Risks](index=12&type=section&id=Item%201A.%20Risk%20Factors%23Operational) Operational risks include raw material costs, supply chain disruptions from geopolitical events, and cybersecurity threats - The company faces supply chain risks from geopolitical events, noting that the Israel-Hamas war has caused shipping disruptions in the Red Sea and surrounding waterways[64](index=64&type=chunk) - The company relies heavily on information technology and acknowledges that it and its third-party partners have experienced cybersecurity attacks and incidents in the past[77](index=77&type=chunk)[79](index=79&type=chunk) - The company's success depends on its ability to attract and retain a qualified global workforce, facing challenges from a tightened labor market and intense competition for talent[81](index=81&type=chunk) [Legal and Regulatory Risks](index=17&type=section&id=Item%201A.%20Risk%20Factors%23Legal%20and%20Regulatory) The company is subject to complex regulations and significant litigation related to historical lead-based paint sales - The company is a defendant in numerous legal proceedings arising from the past manufacture and sale of lead pigments and lead-based paints, which could result in material liability[97](index=97&type=chunk) - The company is involved with environmental investigation and remediation activities at current and former sites, and the ultimate liability may exceed the amounts currently accrued[95](index=95&type=chunk) - Increased global focus on climate change may lead to new regulations, fees, or restrictions that could increase production costs and require additional investments[93](index=93&type=chunk) [Item 1B. Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[100](index=100&type=chunk) [Item 1C. Cybersecurity](index=20&type=section&id=Item%201C.%20Cybersecurity) A cybersecurity program aligned with NIST frameworks is overseen by the Audit Committee to manage and mitigate cyber threats - The company's cybersecurity program is aligned with frameworks established by the National Institute of Standards and Technology (NIST)[102](index=102&type=chunk) - The Audit Committee assists the Board with oversight of the ERM program and cybersecurity risk, receiving regular reports from the CFO and CISO[103](index=103&type=chunk)[104](index=104&type=chunk) - To date, the company has not experienced a cybersecurity threat or incident that has had a **material adverse effect** on its business, results of operations, or financial condition[107](index=107&type=chunk) [Item 2. Properties](index=22&type=section&id=Item%202.%20Properties) The company operates numerous global facilities and is completing a new headquarters and R&D center in 2024 **Manufacturing and Distribution Facilities by Segment (as of Dec 31, 2023)** | Segment | Manufacturing Facilities (Owned/Leased) | Distribution Facilities (Owned/Leased) | | :--- | :--- | :--- | | Consumer Brands Group | 93 (82/11) | 66 (42/24) | | Performance Coatings Group | 11 (8/3) | 13 (4/9) | - The Paint Stores Group opened a net of **70 new stores** in 2023, bringing its total to 4,694[111](index=111&type=chunk)[112](index=112&type=chunk) - Construction of the company's new global headquarters and research and development center is expected to be completed in 2024[109](index=109&type=chunk) [Item 3. Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) This section incorporates by reference detailed information on legal and environmental matters from other report sections - The company uses a disclosure threshold of **$1 million** for environmental proceedings where a governmental authority is a party[117](index=117&type=chunk) - Detailed information regarding legal proceedings is incorporated by reference from Note 12 to the Consolidated Financial Statements[118](index=118&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[119](index=119&type=chunk) [Information About Our Executive Officers](index=24&type=section&id=Information%20About%20Our%20Executive%20Officers) This section details the company's executive officers, noting recent leadership changes effective January 2024 - Effective January 2024, **Heidi G. Petz assumed the role of President and Chief Executive Officer**[122](index=122&type=chunk)[123](index=123&type=chunk) - **John G. Morikis transitioned from CEO to Executive Chairman** in January 2024[122](index=122&type=chunk) - Allen J. Mistysyn has served as Senior Vice President – Finance and Chief Financial Officer since January 2017[124](index=124&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (SHW) trades on the NYSE, and the company actively repurchased shares during Q4 2023 **Issuer Purchases of Equity Securities (Q4 2023)** | Period | Total Shares Purchased (Program) | Average Price Paid per Share (Program) | Maximum Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Oct 2023 | 350,000 | $240.35 | 41,075,000 | | Nov 2023 | 950,000 | $268.86 | 40,125,000 | | Dec 2023 | 500,000 | $292.87 | 39,625,000 | | **Q4 Total** | **1,800,000** | **$269.99** | **39,625,000** | - The company's common stock is listed on the New York Stock Exchange under the symbol SHW[135](index=135&type=chunk) [Item 6. [Reserved]](index=27&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, record sales of $23.05 billion were driven by price increases, leading to strong cash flow and debt reduction **2023 Full Year Financial Highlights** | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $23.052 billion | $22.149 billion | +4.1% | | Diluted Net Income per Share | $9.25 | $7.72 | +19.8% | | Adjusted Diluted Net Income per Share | $10.35 | $8.73 | +18.6% | | Net Operating Cash | $3.522 billion | $1.920 billion | +83.4% | | Adjusted EBITDA | $4.239 billion | $3.608 billion | +17.5% | - The company plans to open **80 to 100 new stores** in the United States and Canada in 2024[147](index=147&type=chunk) [Results of Operations](index=29&type=section&id=Item%207.%20MD%26A%23Results%20of%20Operations) Consolidated net sales grew 4.1% to $23.05 billion in 2023, with gross margin improving significantly to 46.7% **Net Sales by Segment (Year Ended Dec 31)** | Segment | 2023 (in millions) | 2022 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Paint Stores Group | $12,839.5 | $11,963.3 | 7.3% | | Consumer Brands Group | $3,365.6 | $3,388.4 | (0.7)% | | Performance Coatings Group | $6,843.1 | $6,793.5 | 0.7% | | **Total** | **$23,051.9** | **$22,148.9** | **4.1%** | - Consolidated gross profit as a percentage of net sales **increased to 46.7%** in 2023 from 42.1% in 2022, driven by selling price increases and moderating raw material costs[156](index=156&type=chunk) - SG&A expenses increased to 30.6% of net sales in 2023, up from 28.6% in 2022, due to higher employee-related expenses and costs to support higher sales[155](index=155&type=chunk)[158](index=158&type=chunk) [Financial Condition, Liquidity and Cash Flow](index=32&type=section&id=Item%207.%20MD%26A%23Financial%20Condition%2C%20Liquidity%20and%20Cash%20Flow) The company generated $3.52 billion in operating cash, reduced debt, and increased its dividend for the 45th consecutive year - Net operating cash increased to **$3.522 billion** in 2023 from $1.920 billion in 2022, primarily due to higher net income and improved working capital management[206](index=206&type=chunk) - Total debt outstanding **decreased by $718.8 million** to $9.851 billion at the end of 2023[185](index=185&type=chunk) - The company purchased **5.6 million shares** of its common stock for $1.432 billion in 2023 and had authorization to purchase an additional 39.6 million shares at year-end[204](index=204&type=chunk) - 2023 marked the **45th consecutive year of increased dividend payments**[205](index=205&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Item%207.%20MD%26A%23Non-GAAP%20Financial%20Measures) Management uses non-GAAP measures like Adjusted EBITDA and Adjusted EPS to provide a clearer view of ongoing operations **Reconciliation of Net Income to Adjusted EBITDA (in millions)** | | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $2,388.8 | $2,020.1 | | Interest, Taxes, Depreciation, Amortization | $1,761.1 | $1,525.7 | | **EBITDA** | **$4,149.9** | **$3,545.0** | | Adjustments (Restructuring, Impairment, etc.) | $89.2 | $62.8 | | **Adjusted EBITDA** | **$4,239.1** | **$3,607.8** | **Reconciliation of Diluted EPS to Adjusted Diluted EPS** | | 2023 | 2022 | | :--- | :--- | :--- | | Diluted net income per share (GAAP) | $9.25 | $7.72 | | Restructuring Plan Items | $0.09 | $0.20 | | Impairment related to trademarks | $0.07 | - | | Devaluation of the Argentine Peso | $0.16 | - | | Acquisition-related amortization expense | $0.78 | $0.81 | | **Adjusted diluted net income per share** | **$10.35** | **$8.73** | [Critical Accounting Policies and Estimates](index=41&type=section&id=Item%207.%20MD%26A%23Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies require significant management judgment, particularly for inventory, goodwill, and litigation accruals - Inventories are valued at the lower of cost or net realizable value, with cost determined principally by the **LIFO method**[227](index=227&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually on October 1, or more frequently if indicators of impairment exist; the 2023 test resulted in a **$23.9 million trademark impairment** in the Consumer Brands Group[228](index=228&type=chunk)[232](index=232&type=chunk) - The company accrues for environmental remediation costs when they are probable and can be reasonably estimated, but these estimates are subject to uncertainty[237](index=237&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate, foreign currency, and commodity price risks, which it manages with derivatives - The company utilizes U.S. Dollar to Euro cross-currency swap contracts to hedge its net investment in European operations[242](index=242&type=chunk) - The company does not use derivative instruments for speculative or trading purposes[242](index=242&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the consolidated financial statements, management's report, and the independent auditor's report [Management and Auditor Reports](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Reports) Management and the independent auditor, Ernst & Young LLP, both affirmed the effectiveness of internal controls over financial reporting - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2023[250](index=250&type=chunk) - Ernst & Young LLP issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[253](index=253&type=chunk)[269](index=269&type=chunk) - The audit firm identified the environmental-related accrual for the Gibbsboro, New Jersey site as a **critical audit matter**, requiring complex judgment[275](index=275&type=chunk)[276](index=276&type=chunk) [Consolidated Financial Statements](index=52&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Financial%20Statements) The statements show 2023 net sales of $23.05 billion, net income of $2.39 billion, and total assets of $22.95 billion **Key Financial Statement Data (Year Ended Dec 31, 2023, in millions)** | Statement | Line Item | Amount | | :--- | :--- | :--- | | **Income Statement** | Net Sales | $23,051.9 | | | Net Income | $2,388.8 | | **Balance Sheet** | Total Assets | $22,954.4 | | | Total Liabilities | $19,238.6 | | | Total Shareholders' Equity | $3,715.8 | | **Cash Flow** | Net Operating Cash | $3,521.9 | | | Net Investing Cash | $(1,039.3) | | | Net Financing Cash | $(2,424.6) | [Notes to Consolidated Financial Statements](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Notes%20to%20Financial%20Statements) The notes detail key financial data including acquisitions, debt structure, environmental liabilities, and litigation - In October 2023, the company acquired SIC Holding GmbH for approximately **$265 million in cash**; in April 2023, it divested its China architectural business (Note 3)[331](index=331&type=chunk)[337](index=337&type=chunk) - Total long-term debt maturities for the next five years are: **$1.1B in 2024**, $1.05B in 2025, $350.1M in 2026, $1.5B in 2027, and none in 2028 (Note 8)[356](index=356&type=chunk) - The company had total environmental-related accruals of **$318.9 million** at year-end 2023, with the majority related to four major sites, primarily the Gibbsboro, NJ site (Note 11)[392](index=392&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk) - The company is vigorously defending numerous legal proceedings related to the historical manufacture of lead-based paint and believes the claims are without merit, but an adverse outcome could be material (Note 12)[405](index=405&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=96&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[498](index=498&type=chunk) [Item 9A. Controls and Procedures](index=96&type=section&id=Item%209A.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of year-end 2023 - The CEO and CFO concluded that **disclosure controls and procedures were effective** as of the end of the period[499](index=499&type=chunk) - There were **no changes in internal control** over financial reporting during the period that have materially affected, or are reasonably likely to materially affect, these controls[501](index=501&type=chunk) [Item 9B. Other Information](index=96&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fourth quarter - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q4 2023[502](index=502&type=chunk) [Item 9C. Disclosure Regarding Jurisdictions that Prevent Inspections](index=96&type=section&id=Item%209C.%20Disclosure%20Regarding%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[503](index=503&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=97&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and governance is incorporated by reference from the 2024 Proxy Statement - Information regarding directors, the Audit Committee, and Section 16(a) compliance is **incorporated by reference** from the 2024 Proxy Statement[506](index=506&type=chunk)[509](index=509&type=chunk)[510](index=510&type=chunk) - The company has adopted a Code of Conduct for all employees and a Code of Ethics for Senior Financial Management, which are available on its website[511](index=511&type=chunk)[512](index=512&type=chunk)[513](index=513&type=chunk) [Item 11. Executive Compensation](index=97&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the company's 2024 Proxy Statement - Information on executive compensation is **incorporated by reference** from the Proxy Statement[515](index=515&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=98&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the 2024 Proxy Statement - Information on security ownership and equity compensation plans is **incorporated by reference** from the Proxy Statement[516](index=516&type=chunk)[517](index=517&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details on related party transactions and director independence are incorporated by reference from the 2024 Proxy Statement - Information on related transactions and director independence is **incorporated by reference** from the Proxy Statement[518](index=518&type=chunk) [Item 14. Principal Accountant Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement - Information on principal accountant fees and services is **incorporated by reference** from the Proxy Statement[519](index=519&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K **Changes in Deferred Tax Asset Valuation Allowances (in millions)** | Year | Beginning Balance | Additions (Deductions) | Ending Balance | | :--- | :--- | :--- | :--- | | 2023 | $97.5 | $9.1 | $106.6 | | 2022 | $97.2 | $0.3 | $97.5 | | 2021 | $104.6 | $(7.4) | $97.2 | [Item 16. Form 10-K Summary](index=105&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary under this item - None[536](index=536&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 4.1% increase in sales for the full year, reaching $23.1 billion, with adjusted earnings per share decreasing by a mid-single-digit percentage due to higher non-operating costs [27][28][34] - The gross margin improved significantly year-over-year, with a specific mention of a 210 basis point increase in the Paint Stores Group segment margin to 19.3% [37][43] - The company returned $2.1 billion to shareholders through dividends and share buybacks in 2023 [38] Business Line Data and Key Metrics Changes - Sales in the Paint Stores Group increased by 2.3%, driven by volume growth as previous price increases annualized [37] - The Consumer Brands Group experienced a 7.1% decrease in sales, primarily due to lower demand in North America, although sales increased in Europe and Latin America [51] - The Performance Coatings Group saw slight sales growth, with significant variability across regions, particularly strong in Europe and Latin America but weaker in North America and Asia [52][36] Market Data and Key Metrics Changes - The company noted that new residential construction sentiment improved, with single-family starts up year-over-year for six consecutive months [122] - Existing home sales have declined year-over-year for 28 straight months, impacting the residential repaint market [122] - The company expects to open 80 to 100 new stores in the U.S. and Canada in 2024, indicating a focus on expanding market presence despite current market challenges [123] Company Strategy and Development Direction - The company plans to continue its investments in growth, particularly in the residential repaint segment, which is expected to outperform the market [56][64] - A 5% price increase was announced for the Paint Stores Group effective February 1, 2024, to offset rising costs [61][88] - The company aims to control costs tightly in non-customer-facing functions while continuing to evaluate acquisitions that fit its strategy [45][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow market share despite a challenging macroeconomic environment, citing strong partnerships with contractors [41][64] - The outlook for 2024 includes expectations for low to mid-single-digit top-line growth and gross margin expansion, with adjusted diluted net income per share projected to increase by over 7% compared to 2023 [107][43] - Management acknowledged ongoing uncertainties in the global economy but remains optimistic about the company's strategic positioning and execution [46][47] Other Important Information - The company invested $590 million in capital expenditures in 2023, with plans for further investments in R&D and operational improvements [39] - The net debt to adjusted EBITDA ratio at the end of the year was 2.3x, indicating a manageable debt level [39] Q&A Session Summary Question: What are the expectations for customer order patterns into the spring paint season? - Management characterized expectations as normal, with improved alignment and partnerships with customers [6][7] Question: What is the impact of running plans below volumes in 2023? - Management indicated that under-absorption impacted earnings but expects a reversal in 2024 [15][16] Question: Can you elaborate on the 2024 EPS outlook? - Management guided for low-to-mid single-digit top-line growth and anticipated gross margin expansion, with potential for greater than 7% EPS growth year-over-year [23][107] Question: What are the drivers for the residential repaint market? - Management noted that existing home turnover and home price appreciation are key indicators that could positively impact the market [97][122] Question: How does the company plan to manage pricing and cost pressures? - Management plans to implement price increases while managing costs tightly, particularly in non-customer-facing areas [61][88]

Sherwin-Williams Co (NYSE:SHW) Q3 2023 Earnings Conference Call October 24, 2023 11:00 AM ET Company Participants James Jaye - SVP, IR & Corporate Communications Heidi Petz - President, COO & Director John Morikis - Chairman & CEO Allen Mistysyn - SVP, Finance & CFO Conference Call Participants John McNulty - BMO Capital Markets Vincent Andrews - Morgan Stanley Jeffrey Zekauskas - JPMorgan Chase & Co. Gregory Melich - Evercore ISI Stephen Byrne – Bank of America Merrill Lynch Garik Shmois - Loop Capital Mar ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) THE SHERWIN-WILLIAMS COMPANY (Exact name of registrant as specified in its charter) | Ohio | 34-0526850 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | 101 West Prospect Avenue Cleveland, Ohio 44115-1075 (Address of principal executive offices) (Zip Code) (216) 566-2000 (Registrant's telephone number including area code) ☒ Quarterly Report Pur ...

Financial Data and Key Metrics Changes - Consolidated net sales in the second quarter exceeded expectations, growing by a mid-single-digit percentage, with gross margin significantly improving sequentially and year-over-year due to strong volume in the Paint Stores Group and moderating raw material costs [135][137] - Adjusted diluted net income per share and EBITDA showed strong double-digit growth, with an adjusted EBITDA margin of 20.9%, near the high end of the long-term target range of 19% to 21% [137] Business Line Data and Key Metrics Changes - Sales in the Paint Stores Group increased by 10%, driven by mid-single-digit volume growth and effective pricing, with segment margin improving by 280 basis points to 24.3% [121] - The Performance Coatings Group saw sales increase less than 1% against a strong 15.2% comparison, with volume decreasing low single digits but offset by mid-single-digit price increases [140] - The Auto Refinish segment experienced solid demand, with installations in North America up strong double digits year-to-date, indicating positive future sales prospects [127] Market Data and Key Metrics Changes - Sales in North America increased by a low single-digit percentage, while Latin America and Europe saw strong double-digit sales growth. However, sales in China were down double digits [140] - Demand in Asia remained weak, with sales down double digits against a soft period a year ago [123] Company Strategy and Development Direction - The company is focused on investing in growth and customer-facing initiatives, aiming to drive long-term success despite current market challenges [103][137] - The leadership team is confident in their strategy and is committed to gaining market share while making disciplined investments [103][151] Management's Comments on Operating Environment and Future Outlook - Management noted that the general industrial end markets are choppy, with mixed demand reported by North American customers, and indicated that new residential volume will be challenging in the second half of the year [143][126] - The company expects consolidated net sales for the full year 2023 to be up a low single-digit percentage, with volume down a low single-digit percentage [144] Other Important Information - The company revised its raw material outlook, expecting costs to decrease by mid- to high single-digit percentages in 2023 compared to 2022 [102] - SG&A expenses are expected to increase in the high single-digit to low double-digit range for the full year, primarily driven by investments in long-term growth initiatives [128] Q&A Session Summary Question: What are the expectations for volume in the second half of the year? - Management expects volume to be down low to mid-single digits, citing a challenging demand environment [147] Question: Can you provide clarity on the gross margin targets? - The company is targeting a gross margin range of 46%, with potential to exceed that in favorable pricing environments [148] Question: What is driving the expected increase in SG&A? - The increase in SG&A is driven by investments in growth initiatives, compensation, and benefits [149] Question: How is the integration of recent acquisitions progressing? - The integration of acquisitions is focused on ensuring seamless customer experiences and capturing synergies [71] Question: What is the outlook for the DIY segment? - The DIY segment is expected to face tougher comparisons in the second half, with growth not expected to continue at the same pace as the first half [110]