Sherwin-Williams(US:SHW)2023-01-26 21:13Financial 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]