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 June 30, 2023 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 | | --- | --- | | (St ...

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, 2023 or 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 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identificat ...

The Sherwin-Williams Company (NYSE:SHW) Q1 2023 Earnings Conference Call April 25, 2023 11:00 AM ET Company Participants James Jaye - Senior Vice President, Investor Relations & Corporate Communications Heidi Petz - President and Chief Operating Officer John Morikis - Chairman and Chief Executive Officer Allen Mistysyn - Senior Vice President, Finance & Chief Financial Officer Jane Cronin - Senior Vice President, Enterprise Finance Conference Call Participants Vincent Andrews - Morgan Stanley Jeffrey Zekaus ...

Financial Performance - Net sales for the year ended December 31, 2022, were $22,148.9 million, an increase of 10.1% from $19,944.6 million in 2021[273]. - Gross profit for 2022 was $9,325.1 million, representing 42.1% of net sales, compared to 42.8% in 2021[273]. - Net income for 2022 was $2,020.1 million, up from $1,864.4 million in 2021, reflecting a growth of 8.4%[273]. - The company’s comprehensive income for 2022 was $2,017.9 million, compared to $1,884.3 million in 2021[275]. - Net operating cash decreased to $1,919.9 million in 2022 from $2,244.6 million in 2021, reflecting a decline in cash flow[281]. - Selling, general and administrative expenses were $6,014.5 million, accounting for 27.2% of net sales in 2022, down from 27.9% in 2021[273]. - The company reported a loss on divestiture of business amounting to $111.9 million in 2021, with no such loss reported in 2022[281]. Assets and Liabilities - The company reported a total asset value of $22,594.0 million as of December 31, 2022, an increase from $20,666.7 million in 2021[278]. - Current liabilities increased to $5,960.7 million in 2022 from $5,719.5 million in 2021[278]. - The company had short-term borrowings of $978.1 million in 2022, up from $763.5 million in 2021[278]. - The Company reported a total long-term debt of $9.591 billion as of December 31, 2022, an increase from $8.851 billion in 2021[340]. - The Company has unused capacity under its various credit agreements of $2.742 billion as of December 31, 2022[349]. Acquisitions and Investments - The company acquired businesses for $1,003.1 million in 2022, up from $210.9 million in 2021, indicating a strong focus on expansion[281]. - The Company completed acquisitions in 2022 with an aggregate purchase price of approximately $1.024 billion, including $282.8 million of intangible assets and $565.8 million of goodwill recognized from these transactions[322]. - The aggregate purchase price for acquisitions completed in 2021 was approximately $227.0 million, with $155.6 million of goodwill and $11.3 million of intangible assets recognized[325]. Internal Controls and Compliance - The Company maintained effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria[248]. - The Audit Committee meets at least quarterly to review the adequacy of financial controls and the effectiveness of the Company's internal control over financial reporting[260]. - The Company recognizes that internal control over financial reporting cannot provide absolute assurance due to inherent limitations[242]. - The Company conducted an assessment of the effectiveness of internal control over financial reporting under the 2013 Internal Control – Integrated Framework[243]. - The Company believes it has designed safeguards to reduce the risk of material misstatements in financial reporting[242]. Environmental and Legal Matters - The environmental-related accrual for the Gibbsboro site was $290.4 million, with $50.2 million as short-term and $240.2 million as long-term accruals[270]. - The majority of the environmental-related accrual, $246.6 million or 84.9%, is associated with four Major Sites as of December 31, 2022[380]. - The Gibbsboro site, a former manufacturing plant, accounts for a substantial portion of the environmental-related accrual, with ongoing investigations and remediation efforts expected to take an extended period[381]. - The New Jersey Department of Environmental Protection has filed a lawsuit against the Company seeking recovery for natural resource damages and other costs related to hazardous substance discharge at its Gibbsboro site, with a trial scheduled for September 26, 2023[414]. - The Company has been involved in multiple legal proceedings related to public nuisance claims, with most cases concluded in favor of the Company, except for ongoing proceedings in Pennsylvania[393]. Pension and Employee Benefits - The Company provided health care benefits to 30,009 active employees in 2022, with costs amounting to $347.4 million, a 3.9% increase from $336.0 million in 2021[352]. - The annual contribution for the domestic defined contribution pension plan was $88.9 million in 2022, up from $85.3 million in 2021, reflecting a 4.2% increase[353]. - The Company’s foreign defined contribution pension plans saw contributions of $19.4 million in 2022, a 8.4% increase from $17.9 million in 2021[354]. - As of December 31, 2022, the domestic defined benefit pension plan was overfunded with a projected benefit obligation of $91.7 million and fair value of plan assets at $119.4 million, resulting in excess plan assets of $27.7 million[355]. - The net pension cost for the domestic defined benefit pension plan was $1.2 million in 2022, a decrease from $1.6 million in 2021[360]. Stock and Shareholder Information - As of December 31, 2022, the Company had 900,000,000 shares of common stock and 30,000,000 shares of serial preferred stock authorized for issuance[416]. - The company reported stock-based compensation expenses of $99.7 million in 2022, with an income tax benefit recognized of $24.6 million[426]. - The total intrinsic value of options exercised in 2022 was $125.4 million, compared to $485.8 million in 2021[429]. - The weighted average grant date fair value per share for RSUs granted in 2022 was $271.75[433]. - The company purchased 3,350,000 treasury stocks in 2022, contributing to a total treasury stock balance of 14,717,347 shares[419].

Financial Data and Key Metrics Changes - Consolidated profit before tax increased by $186 million or 60.2% year-over-year [7] - Diluted net income per share rose to $1.48 from $1.15 a year ago, with adjusted diluted net income per share increasing 41% to $1.89 [7] - Adjusted EBITDA increased by $281 million or 52.7% [7] - Full year consolidated sales grew by 11.1% to a record $22.1 billion, marking the 12th consecutive year of growth [13] Business Line Data and Key Metrics Changes - Sales in Protective & Marine, DIY, and Latin America increased by double digits, although below the TAG segment's guided range [8] - Adjusted segment margin for the DIY segment improved by 500 basis points year-over-year to 11.3% [9] - Performance Coatings sales increased by 13.2% for the year, with all divisions growing except for industrial wood, which was down slightly [14] Market Data and Key Metrics Changes - Sales in North America and Latin America increased by double digits, while sales in Europe decreased by high-single digits due to economic slowing [10] - The industrial wood business was down low teens, impacted by the housing slowdown affecting furniture and cabinetry markets [11] Company Strategy and Development Direction - The company is focused on customer solutions and continuous improvement in business optimization activities, preparing for a challenging operating environment in 2023 [6] - The company plans to continue investing in digital and sustainability initiatives and execute its acquisition strategy to widen the competitive gap [17] - The company aims to control costs tightly in non-customer-facing functions and execute restructuring initiatives [24] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging 2023, with existing home sales declining year-over-year for 16 consecutive months [19] - The company expects year-over-year sales and earnings performance to be significantly better in the first half of 2023 than in the second half [20] - Management believes that the current economic environment presents opportunities to grow market share and improve customer relationships [28] Other Important Information - The company plans to recommend a dividend increase of 0.8% to $2.42 per share, marking the 45th consecutive year of dividend increases [26] - The company invested $883 million to repurchase shares and distributed $618.5 million in dividends [15] Q&A Session Summary Question: What is the outlook for existing home sales? - Management noted that existing home sales drive a portion of the repaint business, and while there has been a decline, they are investing in more stores and reps to capture market share [96] Question: How is the company addressing inventory destocking? - Management acknowledged inventory destocking in the North American retail channel and is monitoring the situation closely [69] Question: What are the expectations for raw material costs? - Management expects raw material costs to decrease by a low to mid-single-digit percentage in 2023 compared to 2022, with the largest benefits anticipated in the second and third quarters [22] Question: How does the company plan to manage SG&A costs? - Management plans to maintain tight control over SG&A costs and will adjust discretionary spending based on demand outlook [143]

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 September 30, 2022 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 | | --- | --- | ...

The Sherwin-Williams Company (NYSE:SHW) Q3 2022 Earnings Conference Call October 25, 2022 11:00 AM ET Company Participants Jim Jaye - Senior Vice President, Investor Relations & Corporate Communications John Morikis - Chairman and Chief Executive Officer Al Mistysyn - Senior Vice President, Finance & Chief Financial Officer Conference Call Participants Vincent Andrews - Morgan Stanley Truman Patterson - Wolfe Research Josh Spector - UBS Jeff Zekauskas - JPMorgan Chase & Co. Ghansham Panjabi - Robert W. Bair ...

Sherwin-Williams Co (NYSE:SHW) Q2 2022 Earnings Conference Call July 27, 2022 11:00 AM ET Company Participants James Jaye - SVP, IR & Corporate Communications John Morikis - Chairman & CEO Allen Mistysyn - SVP, Finance & CFO Conference Call Participants Ghansham Panjabi - Robert W. Baird & Co. Christopher Parkinson - Mizuho Securities Gregory Melich - Evercore ISI Vincent Andrews - Morgan Stanley Adam Baumgarten - Zelman & Associates Stephen Byrne - Bank of America Merrill Lynch Garik Shmois - Loop Capital ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial information, including statements, notes, and management's discussion and analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of The Sherwin-Williams Company, including statements of income, comprehensive income, balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items for the periods ended June 30, 2022 and 2021 [STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)](index=3&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20INCOME%20(UNAUDITED)) This section provides the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021 Consolidated Income Highlights (Three Months Ended June 30) | Metric (in millions, except per share data) | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------------- | :-------- | :-------- | :--------- | :--------- | | Net sales | $5,872.3 | $5,379.8 | $492.5 | 9.2% | | Gross profit | $2,449.0 | $2,411.4 | $37.6 | 1.6% | | Gross profit % to net sales | 41.7% | 44.8% | -3.1% | | | Selling, general and administrative expenses | $1,519.1 | $1,437.8 | $81.3 | 5.7% | | Income before income taxes | $739.9 | $819.2 | $(79.3) | -9.7% | | Net income | $577.9 | $648.6 | $(70.7) | -10.9% | | Diluted Net income per common share | $2.21 | $2.42 | $(0.21) | -8.7% | Consolidated Income Highlights (Six Months Ended June 30) | Metric (in millions, except per share data) | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------------- | :--------- | :--------- | :--------- | :--------- | | Net sales | $10,871.0 | $10,035.8 | $835.2 | 8.3% | | Gross profit | $4,501.9 | $4,523.4 | $(21.5) | -0.5% | | Gross profit % to net sales | 41.4% | 45.1% | -3.7% | | | Selling, general and administrative expenses | $2,926.6 | $2,763.7 | $162.9 | 5.9% | | Income before income taxes | $1,201.0 | $1,328.2 | $(127.2) | -9.6% | | Net income | $948.7 | $1,058.2 | $(109.5) | -10.3% | | Diluted Net income per common share | $3.61 | $3.93 | $(0.32) | -8.1% | [STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)](index=4&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) This section presents the unaudited condensed consolidated statements of comprehensive income, detailing net income and other comprehensive income components Consolidated Comprehensive Income (Three Months Ended June 30) | Metric (in millions) | 2022 | 2021 | Change ($) | | :------------------- | :------- | :------- | :--------- | | Net income | $577.9 | $648.6 | $(70.7) | | Other comprehensive (loss) income, net of tax: | | | | | Foreign currency translation adjustments | $(173.1) | $62.6 | $(235.7) | | Pension and other postretirement benefit adjustments | $1.5 | $1.4 | $0.1 | | Unrealized net gains on cash flow hedges | $(1.0) | $(1.4) | $0.4 | | Other comprehensive (loss) income | $(172.6) | $62.6 | $(235.2) | | Comprehensive income | $405.3 | $711.2 | $(305.9) | Consolidated Comprehensive Income (Six Months Ended June 30) | Metric (in millions) | 2022 | 2021 | Change ($) | | :------------------- | :-------- | :-------- | :--------- | | Net income | $948.7 | $1,058.2 | $(109.5) | | Other comprehensive (loss) income, net of tax: | | | | | Foreign currency translation adjustments | $(216.7) | $16.3 | $(233.0) | | Pension and other postretirement benefit adjustments | $2.5 | $3.2 | $(0.7) | | Unrealized net gains on cash flow hedges | $(2.0) | $(2.4) | $0.4 | | Other comprehensive (loss) income | $(216.2) | $17.1 | $(233.3) | | Comprehensive income | $732.5 | $1,075.3 | $(342.8) | [CONSOLIDATED BALANCE SHEETS (UNAUDITED)](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) This section provides the unaudited condensed consolidated balance sheets, outlining assets, liabilities, and shareholders' equity Consolidated Balance Sheet Highlights (June 30, 2022 vs. December 31, 2021) | Metric (in millions) | June 30, 2022 | Dec 31, 2021 | Change ($) | Change (%) | | :------------------- | :------------ | :----------- | :--------- | :--------- | | Total current assets | $6,259.5 | $5,053.7 | $1,205.8 | 23.9% | | Total assets | $22,052.8 | $20,666.7 | $1,386.1 | 6.7% | | Total current liabilities | $7,198.2 | $5,719.5 | $1,478.7 | 25.8% | | Total liabilities and shareholders' equity | $22,052.8 | $20,666.7 | $1,386.1 | 6.7% | | Total shareholders' equity | $2,224.6 | $2,437.2 | $(212.6) | -8.7% | Key Balance Sheet Changes (June 30, 2022 vs. June 30, 2021) | Metric (in millions) | June 30, 2022 | June 30, 2021 | Change ($) | Change (%) | | :------------------- | :------------ | :------------ | :--------- | :--------- | | Cash and cash equivalents | $312.6 | $219.6 | $93.0 | 42.4% | | Accounts receivable, net | $2,982.5 | $2,590.6 | $391.9 | 15.1% | | Inventories | $2,411.6 | $1,804.1 | $607.5 | 33.7% | | Short-term borrowings | $2,012.0 | $762.1 | $1,249.9 | 164.0% | | Current portion of long-term debt | $0.6 | $687.1 | $(686.5) | -99.9% | [CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)](index=6&type=section&id=CONDENSED%20STATEMENTS%20OF%20CONSOLIDATED%20CASH%20FLOWS%20(UNAUDITED)) This section details the unaudited condensed consolidated cash flows from operating, investing, and financing activities Consolidated Cash Flow Highlights (Six Months Ended June 30) | Metric (in millions) | 2022 | 2021 | Change ($) | | :------------------- | :-------- | :-------- | :--------- | | Net operating cash | $639.7 | $1,201.3 | $(561.6) | | Net investing cash | $(473.9) | $(72.5) | $(401.4) | | Net financing cash | $(8.0) | $(1,125.3)| $1,117.3 | | Net increase (decrease) in cash and cash equivalents | $146.9 | $(7.0) | $153.9 | | Cash and cash equivalents at end of period | $312.6 | $219.6 | $93.0 | [STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (UNAUDITED)](index=7&type=section&id=STATEMENTS%20OF%20CONSOLIDATED%20SHAREHOLDERS'%20EQUITY%20(UNAUDITED)) This section presents the unaudited condensed consolidated statements of shareholders' equity, showing changes over the period Shareholders' Equity Changes (Six Months Ended June 30, 2022) | Metric (in millions) | Balance Dec 31, 2021 | Net Income | Other Comprehensive Loss | Treasury Stock Purchased | Treasury Stock Issued | Stock-based Comp. | Other Adjustments | Cash Dividends | Balance June 30, 2022 | | :------------------- | :------------------- | :--------- | :----------------------- | :----------------------- | :-------------------- | :---------------- | :---------------- | :------------- | :-------------------- | | Common Stock | $90.8 | | | | | $0.2 | | | $91.0 | | Other Capital | $3,793.0 | | | | $11.0 | $38.3 | $0.4 | | $3,842.7 | | Retained Earnings | $2,121.7 | $948.7 | | | | | $(0.1) | $(307.1) | $2,763.3 | | Treasury Stock | $(2,869.9) | | | $(703.5) | $11.0 | $(32.9) | $(0.1) | | $(3,595.4) | | Accumulated Other Comprehensive Loss | $(698.4) | | $(216.2) | | | | | | $(914.6) | | **Total** | **$2,437.2** | **$948.7** | **$(216.2)** | **$(703.5)** | **$22.0** | **$5.6** | **$0.3** | **$(307.1)** | **$2,224.6** | [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [NOTE 1 - BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%20-%20BASIS%20OF%20PRESENTATION) This note outlines the basis for preparing the unaudited condensed consolidated financial statements in accordance with US GAAP - The unaudited condensed consolidated financial statements are prepared in accordance with US GAAP for interim financial information and Form 10-Q instructions, including normal recurring accruals. Management expects continued variability in quarterly results due to the seasonal nature of the business, with most net sales traditionally occurring in the second and third quarters[19](index=19&type=chunk)[21](index=21&type=chunk) [NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=8&type=section&id=NOTE%202%20-%20RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses the adoption and evaluation of recent accounting pronouncements, including ASU 2021-10 and ASU 2021-08 - The Company adopted ASU 2021-10 (Government Assistance) effective **January 1, 2022**, which requires disclosures for material government assistance transactions but did not impact financial position, results, or cash flows. The Company is evaluating ASU 2021-08 (Business Combinations: Accounting for Contract Assets and Liabilities) effective after **December 15, 2022**[22](index=22&type=chunk)[23](index=23&type=chunk) [NOTE 3 - ACQUISITIONS AND DIVESTITURES](index=8&type=section&id=NOTE%203%20-%20ACQUISITIONS%20AND%20DIVESTITURES) This note details the Company's acquisition and divestiture activities, including adjustments to prior acquisitions and new purchases - In Q1 2022, adjustments to the 2021 Specialty Polymers acquisition increased finite-lived intangible assets by **$61.4 million** and property, plant, and equipment by **$11.0 million**, with a corresponding decrease in goodwill, having no material impact on previously reported results[24](index=24&type=chunk) - In Q2 2022, the Company acquired Sika AG's European industrial coatings business for **$211.4 million**, to be reported within the Performance Coatings Group. The impact on consolidated financial results is not material[25](index=25&type=chunk)[26](index=26&type=chunk) - In July 2022, the Company completed the acquisition of a domestic floor coatings company and a European coatings company for approximately **$425 million**, also to be reported within the Performance Coatings Group[26](index=26&type=chunk) - On **March 31, 2021**, the Company divested Wattyl, an Australian and New Zealand paint manufacturer, for a pre-tax loss of **$111.9 million**, to focus resources on global opportunities aligned with long-term strategies[27](index=27&type=chunk) [NOTE 4 - INVENTORIES](index=9&type=section&id=NOTE%204%20-%20INVENTORIES) This note provides a breakdown of inventory categories and the valuation methods used by the Company Inventories Breakdown (in millions) | Category | June 30, 2022 | Dec 31, 2021 | June 30, 2021 | | :---------------------- | :------------ | :----------- | :------------ | | Finished goods | $1,812.1 | $1,378.8 | $1,282.8 | | Work in process and raw materials | $599.5 | $548.4 | $521.3 | | **Total Inventories** | **$2,411.6** | **$1,927.2** | **$1,804.1** | - The Company primarily uses the last-in, first-out (LIFO) method for inventory valuation, with interim calculations based on management's estimates of year-end levels and costs, subject to final year-end valuation[28](index=28&type=chunk) [NOTE 5 - LONG-LIVED ASSETS](index=9&type=section&id=NOTE%205%20-%20LONG-LIVED%20ASSETS) This note details the Company's property, plant, and equipment, and discusses impairment testing for goodwill and intangible assets Property, Plant and Equipment, Net (in millions) | Category | June 30, 2022 | Dec 31, 2021 | June 30, 2021 | | :--------------------------- | :------------ | :----------- | :------------ | | Land | $255.3 | $257.7 | $258.9 | | Buildings | $1,137.2 | $1,157.8 | $1,078.5 | | Machinery and equipment | $3,124.8 | $3,043.6 | $3,006.4 | | Construction in progress | $330.5 | $205.4 | $189.3 | | Property, plant and equipment, gross | $4,847.8 | $4,664.5 | $4,533.1 | | Less allowances for depreciation | $2,885.9 | $2,797.2 | $2,726.8 | | **Property, plant and equipment, net** | **$1,961.9** | **$1,867.3** | **$1,806.3** | - Goodwill and indefinite-lived intangible assets are tested for impairment annually in the **fourth quarter**, with interim tests performed if events or circumstances indicate impairment[29](index=29&type=chunk) [NOTE 6 - DEBT](index=10&type=section&id=NOTE%206%20-%20DEBT) This note outlines the Company's outstanding debt, including short-term borrowings and long-term debt, and available credit capacity Outstanding Debt (in millions) | Category | June 30, 2022 | Dec 31, 2021 | June 30, 2021 | | :--------------------------- | :------------ | :----------- | :------------ | | Long-term debt (including current portion) | $8,594.2 | $8,851.5 | $8,290.9 | | Short-term borrowings | $2,012.0 | $763.5 | $762.1 | | **Total debt outstanding** | **$10,606.2** | **$9,615.0** | **$9,053.0** | Short-term Borrowings and Weighted Average Interest Rates (June 30, 2022) | Category | Amount (in millions) | Weighted Average Interest Rate | | :--------------------------- | :------------------- | :----------------------------- | | Domestic commercial paper | $1,708.8 | 1.7% | | Revolving credit facility | $250.0 | 2.6% | | Foreign facilities | $53.2 | 6.5% | | **Total** | **$2,012.0** | | - As of **June 30, 2022**, the Company had **$1.506 billion** in unused capacity under its various credit agreements. The Company amended its credit agreement on **May 23, 2022**, extending the maturity of **$150.0 million** of commitments to **June 20, 2027**[31](index=31&type=chunk) [NOTE 7 - PENSION AND OTHER POSTRETIREMENT BENEFITS](index=11&type=section&id=NOTE%207%20-%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) This note details the net periodic benefit cost for the Company's pension and other postretirement benefit plans Net Periodic Benefit Cost (Six Months Ended June 30, in millions) | Component | 2022 | 2021 | | :--------------------------- | :----- | :----- | | Domestic Defined Benefit Pension Plan | $0.8 | $0.8 | | Foreign Defined Benefit Pension Plans | $2.0 | $3.1 | | Other Postretirement Benefits | $5.5 | $5.7 | | **Total Net Periodic Benefit Cost** | **$8.3** | **$9.6** | - Service cost for pension and postretirement benefits is recorded in Cost of goods sold and SG&A, while other components are recorded in Other expense (income) - net[33](index=33&type=chunk) [NOTE 8 - OTHER LONG-TERM LIABILITIES](index=11&type=section&id=NOTE%208%20-%20OTHER%20LONG-TERM%20LIABILITIES) This note describes the Company's accruals for estimated environmental-related activity costs and potential loss contingencies - The Company accrues for estimated environmental-related activity costs when commitments or clean-up plans are developed and costs can be reasonably estimated, primarily for past operations and third-party sites[36](index=36&type=chunk) Environmental-Related Accruals (in millions) | Category | June 30, 2022 | June 30, 2021 | | :--------------------------- | :------------ | :------------ | | Accruals in Other long-term liabilities | $269.2 | $283.8 | | Estimated costs in Other accruals | $45.9 | $68.6 | | **Total Accruals** | **$315.1** | **$352.4** | - Four major sites, including Gibbsboro, New Jersey, account for the majority (**85.6%**) of the total environmental accrual. If the ultimate loss contingency reaches the unaccrued maximum, the accrual would be **$94.5 million higher** at **June 30, 2022**[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 9 - LITIGATION](index=13&type=section&id=NOTE%209%20-%20LITIGATION) This note provides an overview of the Company's involvement in various claims and lawsuits, including lead pigment litigation - The Company is involved in various claims and lawsuits, including product liability, personal injury, environmental, and lead pigment/lead-based paint litigation. Accruals are made when a loss is probable and estimable[48](index=48&type=chunk) - For lead pigment and lead-based paint litigation, the Company has not accrued amounts (except for California) due to the belief that a loss is not probable or estimable, but acknowledges potential material adverse effects on financial condition if significant liability is determined[52](index=52&type=chunk)[73](index=73&type=chunk) - The Santa Clara County, California proceeding was resolved with an agreement for the Company and two other defendants to collectively pay **$305.0 million**. As of **June 30, 2022**, the Company's accrual for this agreement was **$52.7 million**[54](index=54&type=chunk) - In Wisconsin, the Seventh Circuit reversed judgments against the Company in the Owens, Sifuentes, and Burton cases, granting summary judgment in favor of the Company and other defendants on all pending claims in **March 2022**[62](index=62&type=chunk)[64](index=64&type=chunk) - The Illinois Department of Healthcare and Family Services' petition to intervene in the Mary Lewis v. Lead Industries Association, et al. case was denied, and final judgment was entered in favor of the defendants in **October 2021**[70](index=70&type=chunk) - Insurance coverage litigation regarding lead pigment abatement costs is ongoing in Ohio, with the Company appealing a **December 2020** trial court decision that granted summary judgment to insurers[72](index=72&type=chunk) [NOTE 10 - SHAREHOLDERS' EQUITY](index=18&type=section&id=NOTE%2010%20-%20SHAREHOLDERS'%20EQUITY) This note details changes in shareholders' equity, including dividends declared and treasury stock repurchase activities Dividends Declared and Paid on Common Stock (in millions, except per share data) | Period | Cash Dividend Per Share (2022) | Total Dividends (2022) | Cash Dividend Per Share (2021) | Total Dividends (2021) | | :------------- | :----------------------------- | :--------------------- | :----------------------------- | :--------------------- | | First Quarter | $0.60 | $150.9 | $0.55 | $151.8 | | Second Quarter | $0.60 | $156.2 | $0.55 | $145.9 | | **Total** | **$1.20** | **$307.1** | **$1.10** | **$297.7** | Treasury Stock Purchases (Three and Six Months Ended June 30) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Treasury stock purchases (millions of dollars) | $296.4 | $870.1 | $703.5 | $1,645.5 | | Treasury stock purchases (shares) | 1,100,000 | 3,100,000 | 2,550,000 | 6,400,000 | | Average price per share | $269.46 | $280.70 | $275.89 | $257.12 | - As of **June 30, 2022**, the Company had remaining authorization to purchase **46.0 million shares** of its common stock. In **February 2022**, the Board increased the quarterly cash dividend to **$0.60 per share**, targeting an annual dividend of **$2.40 per share for 2022**[77](index=77&type=chunk)[184](index=184&type=chunk) [NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=19&type=section&id=NOTE%2011%20-%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note presents the components of accumulated other comprehensive (loss) income and their changes over the period Accumulated Other Comprehensive (Loss) Income (AOCI) (in millions) | Component | Balance Dec 31, 2021 | Amounts Recognized in AOCI | Amounts Reclassified from AOCI | Balance June 30, 2022 | | :--------------------------- | :------------------- | :------------------------- | :----------------------------- | :-------------------- | | Foreign Currency Translation Adjustments | $(702.1) | $(216.7) | | $(918.8) | | Pension and Other Postretirement Benefits Adjustments | $(32.2) | | $2.5 | $(29.7) | | Unrealized Net Gains on Cash Flow Hedges | $35.9 | | $(2.0) | $33.9 | | **Total** | **$(698.4)** | **$(216.7)** | **$0.5** | **$(914.6)** | [NOTE 12 - DERIVATIVES AND HEDGING](index=19&type=section&id=NOTE%2012%20-%20DERIVATIVES%20AND%20HEDGING) This note describes the Company's use of derivative instruments, such as cross currency swaps, for hedging purposes - The Company uses U.S. Dollar to Euro cross currency swap contracts to hedge its net investment in European operations, effectively converting U.S. Dollar fixed-rate debt to Euro denominated fixed-rate debt[82](index=82&type=chunk) - In **April 2022**, a portion of a **$244.0 million** contract was settled, reducing its notional value to **$162.7 million**, with an immaterial loss recognized in AOCI[82](index=82&type=chunk) Unrealized Gains (Losses) on Cross Currency Swaps, Net of Taxes (in millions) | Period | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Unrealized gains (losses), net of taxes | $30.8 | $(6.0) | $38.9 | $17.1 | [NOTE 13 - FAIR VALUE MEASUREMENTS](index=20&type=section&id=NOTE%2013%20-%20FAIR%20VALUE%20MEASUREMENTS) This note provides information on financial assets and liabilities measured at fair value and the fair value of debt Financial Assets and Liabilities Measured at Fair Value (June 30, 2022, in millions) | Category | Total | Level 1 | Level 2 | Level 3 | | :--------------------------- | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | Deferred compensation plan assets | $72.0 | $41.8 | $30.2 | | | Qualified Replacement Plan assets | $29.6 | $29.6 | | | | Net investment hedge asset | $15.4 | | $15.4 | | | **Total Assets** | **$117.0**| **$71.4** | **$45.6** | **$—** | | **Liabilities:** | | | | | | Net investment hedge liability | $— | | | | Carrying Amounts and Fair Values of Debt (June 30, 2022, in millions) | Category | Carrying Amount | Fair Value | | :--------------------------- | :-------------- | :--------- | | Publicly traded debt | $8,592.5 | $7,639.8 | | Non-publicly traded debt | $1.7 | $1.6 | [NOTE 14 - REVENUE](index=21&type=section&id=NOTE%2014%20-%20REVENUE) This note details the Company's revenue recognition policies, geographic sales distribution, and contract assets and liabilities - A large portion of the Company's revenue is recognized at a point in time for sales with payment terms typically between **30 and 60 days**, with variable consideration estimated based on historical information and current trends for discounts[91](index=91&type=chunk) - Approximately **80% of net external sales are in North America**, with **less than 10% in the EMEAI region**, and the remainder globally. No individual country outside the U.S. is significant[93](index=93&type=chunk) Contract Assets and Liabilities (in millions) | Category | Dec 31, 2021 | June 30, 2022 | | :--------------------------- | :----------- | :------------ | | Accounts Receivable, Less Allowance | $2,352.4 | $2,982.5 | | Contract Assets (Current) | $60.9 | $65.1 | | Contract Assets (Long-Term) | $131.2 | $110.4 | | Contract Liabilities (Current) | $259.8 | $252.7 | | Contract Liabilities (Long-Term) | $9.2 | $7.2 | Movement in Allowance for Doubtful Accounts (in millions) | Period | 2022 | 2021 | | :------------------------- | :----- | :----- | | Balance at January 1 | $48.9 | $53.5 | | Bad debt expense | $36.5 | $18.0 | | Uncollectible accounts written off, net of recoveries | $(13.6)| $(4.9) | | **Balance at June 30** | **$71.8**| **$66.6**| [NOTE 15 - OTHER](index=22&type=section&id=NOTE%2015%20-%20OTHER) This note provides a breakdown of other general expense (income) and other expense (income) components Other General Expense (Income) - Net (Six Months Ended June 30, in millions) | Category | 2022 | 2021 | | :--------------------------- | :---- | :---- | | Provisions for environmental matters - net | $4.7 | $5.0 | | Loss on divestiture of business | $— | $111.9| | Loss (gain) on sale or disposition of assets | $2.2 | $(4.6)| | **Other general expense (income) - net** | **$6.9**| **$112.3**| Other Expense (Income) - Net (Six Months Ended June 30, in millions) | Category | 2022 | 2021 | | :--------------------------- | :---- | :---- | | Investment losses (gains) | $14.9 | $(18.3)| | Net expense from banking activities | $5.9 | $5.1 | | Foreign currency transaction related losses | $10.3 | $11.6 | | Miscellaneous pension expense | $1.9 | $2.0 | | Other income | $(17.9)| $(12.5)| | Other expense | $16.7 | $8.8 | | **Other expense (income) - net** | **$31.8**| **$(3.3)**| [NOTE 16 - INCOME TAXES](index=24&type=section&id=NOTE%2016%20-%20INCOME%20TAXES) This note presents the effective tax rate and discusses unrecognized tax benefits for the periods presented Effective Tax Rate | Period | 2022 | 2021 | | :------------------------- | :---- | :---- | | Second Quarter | 21.9% | 20.8% | | First Six Months | 21.0% | 20.3% | - The effective tax rate was less favorably impacted by tax benefits related to employee share-based payments in Q2 and the first six months of **2022** compared to the same periods last year[109](index=109&type=chunk) - At **December 31, 2021**, the Company had **$228.5 million** in unrecognized tax benefits, with **$13.7 million** reasonably possible to significantly change in the next **twelve months**. No significant changes occurred in the first **six months of 2022**[110](index=110&type=chunk)[111](index=111&type=chunk) [NOTE 17 - NET INCOME PER SHARE](index=24&type=section&id=NOTE%2017%20-%20NET%20INCOME%20PER%20SHARE) This note provides basic and diluted net income per share calculations and related adjustments for acquisition amortization Net Income Per Share (Three Months Ended June 30) | Metric | 2022 | 2021 | | :------------------------- | :---- | :---- | | Basic net income per share | $2.24 | $2.47 | | Diluted net income per share | $2.21 | $2.42 | Net Income Per Share (Six Months Ended June 30) | Metric | 2022 | 2021 | | :------------------------- | :---- | :---- | | Basic net income per share | $3.67 | $4.00 | | Diluted net income per share | $3.61 | $3.93 | - Diluted net income per share for Q2 **2022** included a **$0.20 per share charge** for acquisition-related amortization expense, compared to **$0.23 in Q2 2021**. For the first **six months of 2022**, it included a **$0.41 per share charge** for acquisition-related amortization[158](index=158&type=chunk)[159](index=159&type=chunk) [NOTE 18 - REPORTABLE SEGMENT INFORMATION](index=25&type=section&id=NOTE%2018%20-%20REPORTABLE%20SEGMENT%20INFORMATION) This note presents net external sales and segment profit by reportable segment, including The Americas, Consumer Brands, and Performance Coatings Groups Net External Sales by Segment (Three Months Ended June 30, in millions) | Segment | 2022 | 2021 | Change ($) | Change (%) | | :------------------------- | :-------- | :-------- | :--------- | :--------- | | The Americas Group | $3,343.1 | $3,093.4 | $249.7 | 8.1% | | Consumer Brands Group | $737.9 | $731.5 | $6.4 | 0.9% | | Performance Coatings Group | $1,790.3 | $1,554.5 | $235.8 | 15.2% | | Administrative | $1.0 | $0.4 | $0.6 | 150.0% | | **Total** | **$5,872.3**| **$5,379.8**| **$492.5** | **9.2%** | Segment Profit (Three Months Ended June 30, in millions) | Segment | 2022 | 2021 | Change ($) | Change (%) | | :------------------------- | :------ | :------ | :--------- | :--------- | | The Americas Group | $700.4 | $727.3 | $(26.9) | -3.7% | | Consumer Brands Group | $63.5 | $122.8 | $(59.3) | -48.3% | | Performance Coatings Group | $196.8 | $144.8 | $52.0 | 35.9% | | **Total Segment Profit** | **$960.7**| **$994.9**| **$(34.2)**| **-3.4%** | - The Administrative segment includes corporate administrative expenses, real estate management, interest expense/income, and certain environmental-related matters. It also included the **$111.9 million pre-tax loss** on the Wattyl divestiture in **2021**[119](index=119&type=chunk) - Net external sales of consolidated foreign subsidiaries increased **1.7% to $1.121 billion in Q2 2022** (vs. **$1.102 billion in Q2 2021**) and **2.8% to $2.198 billion for the six months ended June 30, 2022** (vs. **$2.139 billion in 2021**)[120](index=120&type=chunk) [NOTE 19 - NON-TRADED INVESTMENTS](index=27&type=section&id=NOTE%2019%20-%20NON-TRADED%20INVESTMENTS) This note describes the Company's investments in U.S. affordable housing and historic renovation real estate markets - The Company has investments in U.S. affordable housing and historic renovation real estate markets, and other variable interest entities. These are not consolidated as the Company is not the primary beneficiary[122](index=122&type=chunk) Non-Traded Investments Balances (in millions) | Category | June 30, 2022 | Dec 31, 2021 | June 30, 2021 | | :--------------------------- | :------------ | :----------- | :------------ | | Other assets | $528.1 | $355.8 | $186.2 | | Other accruals | $48.4 | $61.8 | $42.9 | | Other long-term liabilities | $470.4 | $289.7 | $141.5 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, liquidity, and cash flows for the three and six months ended June 30, 2022, compared to the prior year. It highlights key trends, operational challenges, and strategic initiatives, including segment-specific performance, changes in income, and financial health metrics [BACKGROUND](index=28&type=section&id=BACKGROUND) This section provides an overview of The Sherwin-Williams Company's business, history, and organizational structure - The Sherwin-Williams Company, founded in **1866**, manufactures, distributes, and sells paint, coatings, and related products primarily in North and South America, with operations also in the Caribbean, Europe, Asia, and Australia[123](index=123&type=chunk) - The Company is structured into **three reportable segments**: The Americas Group, Consumer Brands Group, and Performance Coatings Group, plus an Administrative segment, for performance assessment and resource allocation[124](index=124&type=chunk) [SUMMARY](index=28&type=section&id=SUMMARY) This section summarizes the Company's financial performance, demand trends, and key operational challenges for the quarter - Demand remained strong in Q2 for The Americas Group and Performance Coatings Group, with The Americas Group showing continued strength in professional architectural markets. Performance Coatings Group's North American strength was offset by China lockdowns and European macroeconomic uncertainty[125](index=125&type=chunk) - The Consumer Brands Group's sales did not improve as expected due to softer DIY demand in North America (impacted by inflation), a challenging European economic environment, and COVID-related lockdowns in China[125](index=125&type=chunk) - Consolidated gross margin improved sequentially but slower than anticipated, with weaker than expected earnings primarily due to lower Consumer Brands Group sales, supply chain inefficiencies, persistent raw material costs, and higher labor, transportation, interest, and other expenses[126](index=126&type=chunk) - The Company maintains a strong liquidity position with **$312.6 million in cash** and **$1.506 billion in unused credit capacity** at **June 30, 2022**, and plans to use excess cash for share repurchases[127](index=127&type=chunk) [RESULTS OF OPERATIONS](index=28&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the Company's consolidated net sales, gross profit, SG&A expenses, and income before taxes for the periods presented - Consolidated net sales increased **9.2% to $5.872 billion in Q2 2022**, with diluted net income per share at **$2.21**, down from **$2.42 in Q2 2021**[129](index=129&type=chunk) Net Sales by Segment (Three Months Ended June 30) | Segment | 2022 | 2021 | Change ($) | Change (%) | | :------------------------- | :-------- | :-------- | :--------- | :--------- | | The Americas Group | $3,343.1 | $3,093.4 | $249.7 | 8.1% | | Consumer Brands Group | $737.9 | $731.5 | $6.4 | 0.9% | | Performance Coatings Group | $1,790.3 | $1,554.5 | $235.8 | 15.2% | | Administrative | $1.0 | $0.4 | $0.6 | 150.0% | | **Total** | **$5,872.3**| **$5,379.8**| **$492.5** | **9.2%** | - Consolidated net sales increased in Q2 **2022** due to selling price increases across all segments, higher professional architectural sales volume in North America, and growth in Packaging and Coil businesses, partially offset by lower sales outside North America and a **1.4% negative impact from currency translation**[131](index=131&type=chunk) - The Americas Group's net sales increased due to selling price increases and higher professional contractor architectural sales, while Consumer Brands Group saw increases from selling prices offset by lower sales volume outside North America. Performance Coatings Group's net sales increased due to higher sales in most end markets, driven by price increases and volume growth[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Consolidated gross profit increased **$37.6 million in Q2 2022**, but the gross margin rate decreased to **41.7% from 44.8% in Q2 2021**, primarily due to higher raw material costs and supply chain inefficiencies[141](index=141&type=chunk) - Consolidated SG&A expenses increased **$81.3 million in Q2 2022** due to new store openings and investments in digital technologies, but decreased as a percentage of net sales by **80 basis points** due to good cost control[143](index=143&type=chunk) - Income before income taxes decreased by **9.7% in Q2 2022** and **9.6% for the first six months of 2022**, primarily due to higher raw material costs, supply chain inefficiencies, and lower sales volume in the Consumer Brands Group[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[156](index=156&type=chunk) [FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW](index=33&type=section&id=FINANCIAL%20CONDITION,%20LIQUIDITY%20AND%20CASH%20FLOW) This section discusses the Company's financial position, liquidity, and cash flow activities, including working capital and debt - The Company's financial condition and liquidity remained strong at **June 30, 2022**, with **$639.7 million in net operating cash** generated in the first six months despite increased working capital requirements[160](index=160&type=chunk) - Cash and cash equivalents increased by **$146.9 million** in the first six months of **2022**, reaching **$312.6 million** at period-end. Total debt outstanding was **$10.606 billion**, with net debt (total debt less cash) at **$10.294 billion**[161](index=161&type=chunk)[162](index=162&type=chunk) - Net working capital increased by **$66.0 million** to a deficit of **$938.7 million** at **June 30, 2022**, driven by increases in current assets (accounts receivable, inventories) partially offset by increases in current liabilities (short-term borrowings)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Net property, plant and equipment increased by **$94.6 million** in the first six months of **2022**, primarily due to **$235.8 million in capital expenditures**, largely for new paint stores and operational efficiencies[166](index=166&type=chunk)[167](index=167&type=chunk) - Goodwill and intangible assets decreased by **$74.9 million** from **December 31, 2021**, primarily due to amortization and foreign currency translation, partially offset by new acquisitions[168](index=168&type=chunk)[169](index=169&type=chunk) - Net operating cash decreased by **$561.6 million to $639.7 million** for the first six months of **2022**, mainly due to lower net income and increased working capital needs. Net investing cash usage increased by **$401.4 million to $473.9 million**, driven by acquisitions and capital expenditures[185](index=185&type=chunk)[186](index=186&type=chunk) - Net financing cash usage decreased by **$1.117 billion to $8.0 million** for the first six months of **2022**, primarily due to lower treasury stock purchases and increased short-term borrowings, partially offset by higher long-term debt repayments[187](index=187&type=chunk) [Market Risk](index=36&type=section&id=Market%20Risk) This section describes the Company's exposure to market risks from interest rate, foreign currency, and commodity fluctuations - The Company is exposed to market risk from interest rate, foreign currency, and commodity fluctuations, occasionally using derivative instruments for hedging, but not for speculation[189](index=189&type=chunk) - Management does not expect foreign currency exchange rate and commodity price fluctuations or hedging contract losses to have a material adverse effect on the Company's financial condition, results of operations, or cash flows[189](index=189&type=chunk) [Financial Covenant](index=36&type=section&id=Financial%20Covenant) This section outlines the Company's compliance with its consolidated leverage covenant related to total indebtedness and EBITDA - Certain borrowings include a consolidated leverage covenant, requiring the leverage ratio (total indebtedness to EBITDA) not to exceed **3.75 to 1.00**. The Company was in compliance with this covenant at **June 30, 2022**, and expects to remain so[191](index=191&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures like EBITDA and Adjusted EBITDA for performance analysis - Management uses non-GAAP financial measures like EBITDA (net income before income taxes, interest, depreciation, and amortization) and Adjusted EBITDA (excluding the Wattyl divestiture loss) to analyze business performance[192](index=192&type=chunk)[193](index=193&type=chunk) EBITDA and Adjusted EBITDA (Six Months Ended June 30, in millions) | Metric | 2022 | 2021 | | :------------------------- | :-------- | :-------- | | Net income | $948.7 | $1,058.2 | | Interest expense | $181.3 | $166.7 | | Income taxes | $252.3 | $270.0 | | Depreciation | $130.3 | $136.4 | | Amortization | $156.5 | $157.0 | | **EBITDA** | **$1,669.1**| **$1,788.3**| | Loss on divestiture | $— | $111.9 | | **Adjusted EBITDA** | **$1,669.1**| **$1,900.2**| [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=37&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights the critical accounting policies and estimates that require significant management judgment - The preparation of financial statements requires management to make estimates and assumptions, which are based on best estimates, judgments, and assumptions believed to be reasonable under the circumstances[196](index=196&type=chunk) - There have been no significant changes in critical accounting policies, management estimates, or accounting policies since **December 31, 2021**[197](index=197&type=chunk) [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION](index=38&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section provides a cautionary statement regarding forward-looking information, outlining inherent risks and uncertainties - This section contains forward-looking statements based on management's current expectations, predictions, estimates, assumptions, and beliefs concerning future events and conditions, including anticipated performance, growth, business plans, and potential liabilities[199](index=199&type=chunk) - Readers are cautioned that forward-looking statements are subject to risks, uncertainties, and other factors (e.g., economic conditions, raw material pricing, supply chain disruptions, litigation) that could cause actual results to differ materially[200](index=200&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reiterates the Company's exposure to market risks from interest rate, foreign currency, and commodity fluctuations, and its use of derivative instruments for hedging. It confirms no material changes to market risk exposure since the prior annual report - The Company is exposed to market risk from interest rate, foreign currency, and commodity fluctuations and uses derivative instruments for hedging, not speculation[201](index=201&type=chunk) - No material changes in the Company's exposure to market risk have occurred since the disclosure in the Annual Report on Form 10-K for the year ended **December 31, 2021**[201](index=201&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2022, based on an evaluation by the CEO and CFO. It also states that no material changes to internal control over financial reporting were identified during the period - The Company's disclosure controls and procedures were evaluated and deemed effective as of **June 30, 2022**, ensuring timely and accurate reporting of required information[202](index=202&type=chunk) - No material changes in internal control over financial reporting were identified during the period covered by the report[203](index=203&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, equity security sales, and other required information [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed disclosures on environmental-related matters and other legal proceedings provided in Notes 8 and 9 of the financial statements, which are incorporated by reference. It specifies a $1 million threshold for disclosing environmental proceedings involving potential monetary sanctions - The Company uses a **$1 million threshold** for disclosing environmental matters where a governmental authority is a party and potential monetary sanctions exceed this amount[206](index=206&type=chunk) - Information regarding environmental-related matters and other legal proceedings is incorporated by reference from Notes **8 and 9** of the Condensed Consolidated Financial Statements[207](index=207&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the Company's Annual Report on Form 10-K for a comprehensive discussion of risk factors that could materially affect the business. It confirms that no material changes to previously disclosed risk factors occurred during the six months ended June 30, 2022 - A discussion of the Company's risk factors is available in Part I, Item 1A. Risk Factors in its Annual Report on Form 10-K for the year ended **December 31, 2021**[208](index=208&type=chunk) - No material changes to the previously disclosed risk factors occurred during the **six months ended June 30, 2022**[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the Company's share repurchase activity for the second quarter of 2022, detailing the number of shares purchased, average price paid, and remaining authorization under the publicly announced program Share Repurchase Program Activity (Second Quarter 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan | Maximum Number of Shares That May Yet Be Purchased Under the Plan | | :--------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------ | :---------------------------------------------------------------- | | April 1 - April 30 | 75,000 | $281.75 | 75,000 | 47,050,000 | | May 1 - May 31 | 925,000 | $268.47 | 925,000 | 46,125,000 | | June 1 - June 30 | 100,000 | $269.43 | 100,000 | 46,025,000 | | **Quarter Total**| **1,100,000** | **$269.46** | **1,100,000** | **46,025,000** | - Shares were purchased through the Company's publicly announced share repurchase program, which has no specified expiration date[209](index=209&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report under this item [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, certifications of the CEO and CFO, and Inline XBRL documents - Exhibits include Amendment No. **16** to the Credit Agreement (**May 23, 2022**), Rule **13a-14(a)/15d-14(a)** Certifications of the CEO and CFO, Section **1350** Certifications, and various Inline XBRL documents[214](index=214&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) This section contains the required signatures for the report, confirming its due authorization and submission - The report was duly signed on **July 27, 2022**, by Jane M. Cronin, Senior Vice President - Enterprise Finance, and Allen J. Mistysyn, Senior Vice President - Finance and Chief Financial Officer[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)

The Sherwin-Williams Company (NYSE:SHW) Q1 2022 Earnings Conference Call April 26, 2022 11:00 AM ET Company Participants John Morikis - Chairman and CEO Al Mistysyn - Chief Financial Officer Jane Cronin - Senior Vice President, Corporate Controller Jim Jaye - Senior Vice President, Investor Relations and Communications Conference Call Participants Vincent Andrews - Morgan Stanley Jeff Zekauskas - JPMorgan Josh Spector - UBS Chris Parkinson - Mizuho Ghansham Panjabi - Baird Greg Melich - Evercore ISI John Mc ...