Sherwin-Williams(SHW) - 2024 Q4 - Annual Report

Financial Reporting and Internal Controls - The Sherwin-Williams Company reported effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria[263]. - The consolidated financial statements present a fair view of the Company's financial position as of December 31, 2024, 2023, and 2022, in accordance with U.S. GAAP[279]. - The Audit Committee meets quarterly to review the adequacy of financial controls and the effectiveness of internal control over financial reporting[275]. - The independent registered public accounting firm expressed an unqualified opinion on the effectiveness of internal control over financial reporting as of December 31, 2024[263]. - The Company conducted an assessment of internal control effectiveness based on the 2013 Internal Control – Integrated Framework[259]. - The Company has designed safeguards to reduce the risk of material misstatements in financial reporting[258]. Financial Performance - Net sales for the year ended December 31, 2024, were $23,098.5 million, a slight increase from$23,051.9 million in 2023, representing a growth of 0.2%[288]. - Gross profit increased to $11,195.1 million in 2024, up from$10,758.1 million in 2023, reflecting a gross margin of 48.5%, compared to 46.7% in the previous year[288]. - Net income for 2024 was $2,681.4 million, an increase of 12.2$2,388.8 million in 2023, with diluted earnings per share rising to $10.55 from$9.25[288]. - Comprehensive income for 2024 was $2,430.5 million, a decrease from$2,465.1 million in 2023, primarily due to foreign currency translation adjustments[291]. - The company reported total assets of $23,632.6 million as of December 31, 2024, an increase from$22,954.4 million in 2023[294]. - Current liabilities increased to $6,808.7 million in 2024, compared to$6,626.9 million in 2023, primarily due to higher short-term borrowings[294]. - The company’s retained earnings grew significantly to $7,246.3 million in 2024, up from$5,288.3 million in 2023, indicating strong profitability retention[294]. Expenses and Cash Flow - Selling, general and administrative expenses were $7,422.1 million in 2024, representing 32.1$415.7 million in 2024, slightly down from $417.5 million in 2023, reflecting effective debt management[288]. - Net operating cash for 2024 was$3,153.2 million, down from $3,521.9 million in 2023, reflecting a decrease of 10.4$2.86 in 2024 from $2.42 in 2023, marking an 18.2$210.4 million from $276.8 million at the end of 2023, a decline of 24.0$779.8 million in income taxes paid in 2024, a slight decrease from $816.7 million in 2023[297]. Investments and Acquisitions - The Company signed an agreement to acquire BASF's Brazilian decorative paints business for$1.15 billion, with annual sales of approximately $525 million[347][348]. - The Company completed the acquisition of a metal packaging coatings business for approximately$80 million, recognizing $21.1 million of goodwill and$27.9 million of finite-lived intangibles[350][364]. - The Company finalized the acquisition of SIC Holding for approximately $290 million, resulting in$181.3 million of goodwill and $110.8 million of finite-lived intangibles[352][365]. - The Company expects to finalize the purchase price allocation for the recent acquisitions within the allowable measurement period, with no material impact on consolidated financial results[351]. Liabilities and Debt Management - Long-term debt totaled$9,226.0 million as of December 31, 2024, down from $9,476.7 million in 2023[375]. - The Company repaid$600.0 million of 4.05% senior notes due August 2024 and issued $400.0 million of 4.55$3.274 billion as of December 31, 2024[385]. - Domestic commercial paper borrowings increased to $655.6 million in 2024 from$347.7 million in 2023[385]. - The weighted average interest rate for domestic short-term borrowings was 4.7% in 2024, down from 5.5% in 2023[385]. Environmental and Legal Matters - The company is involved in various litigation cases, including lead pigment and lead-based paint litigation, which may have a material impact on its financial condition[428]. - The company is vigorously defending against lead pigment and lead-based paint litigation, expecting additional claims in the future[431]. - The Ohio Supreme Court ruled in favor of the insurers regarding insurance coverage for lead pigment abatement, which may affect the company's financial condition[440]. - The company is currently facing a lawsuit from the New Jersey Department of Environmental Protection seeking recovery for alleged hazardous substance discharges[442]. Employee Benefits and Pension Plans - The Company had 32,283 active employees covered by domestic health care plans in 2024, with benefit costs amounting to $382.6 million, an increase from$363.2 million in 2023[389]. - The annual contribution for the domestic defined contribution pension plan was $103.5 million in 2024, up from$97.8 million in 2023, reflecting a growth of 1.8%[390]. - The domestic defined benefit pension plan was overfunded as of December 31, 2024, with a projected benefit obligation of $95.3 million and fair value of plan assets at$148.7 million, resulting in excess plan assets of $53.4 million[392]. - The Company expects to make benefit payments of$19.2 million in 2025 and a total of $139.2 million from 2030 through 2034 for all defined benefit pension plans[394]. Stock and Shareholder Matters - As of December 31, 2024, the company had 900,000,000 shares of common stock and 30,000,000 shares of serial preferred stock authorized for issuance[444]. - The total dividends declared and paid on common stock in 2024 amounted to$723.4 million, with a cash dividend per share of $2.86[449]. - The company purchased 5,200,000 treasury shares during the year ended December 31, 2024, increasing the total treasury stock to 25,688,335 shares[448]. - The number of shares outstanding decreased to 251,291,100 as of December 31, 2024, down from 254,543,290 in 2023[448].