Despite Strong Demand, Sherwin-Williams Lowers Third Quarter and Full Year 2021 Sales and Earnings Expectations Amid Escalating Raw Material Availability Challenges and Inflation Headwinds;

Announces Agreement to Expand Internal Resin Manufacturing Capabilities

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Sep 28, 2021, 16:05 ET

CLEVELAND, Sept. 28, 2021 /PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) today updated its net sales and diluted net income per share guidance for the third quarter and full year 2021.

SUMMARY

Narrows third quarter 2021 consolidated net sales guidance to be flat to down slightly compared to third quarter 2020
Establishes third quarter 2021 diluted net income per share guidance in the range of $1.80 to $1.90 per share, including $0.20 per share for acquisition-related amortization expense
Lowers full year 2021 consolidated net sales guidance to be up by a high single digit percentage over full year 2020
Lowers full year 2021 diluted net income per share guidance to be in the range of $7.21 to $7.41 per share, including $0.80 per share for acquisition-related amortization expense and a loss of $0.34 per share on the Wattyl divestiture
Management conference call scheduled for 9:00 a.m. EDT, Wednesday, September 29, 2021

CEO REMARKS

"As demand remains robust across our pro architectural and industrial end markets, we continue to make investments in our strategic growth initiatives, including bringing 50 million gallons of additional architectural production capacity online over the next two quarters," said Chairman, President and Chief Executive Officer, John G. Morikis. "At the same time, the persistent and industry-wide raw material availability constraints and pricing inflation we have previously reported have worsened, and we do not expect to see improved supply or lower raw material pricing in our fourth quarter as anticipated. As a result of these headwinds, we are narrowing our third quarter sales expectations and establishing third quarter earnings guidance. For the full year, we now expect sales to be up by a high single digit percentage and adjusted diluted net income per share guidance to be $8.45 at the midpoint of the range.

"Our suppliers are now reporting that the impacts of Hurricane Ida are more severe and will be longer lasting than initially thought. Production of several key resins, additives and solvents, expected to resume by late September, has been pushed out. We now expect raw material availability issues to negatively impact our consolidated sales by a high-single digit percentage in the fourth quarter. This follows the high-single digit impact in the third quarter we previously communicated. We will continue to partner closely with our suppliers to improve supply while employing all of our assets to reduce the impact on our customers. We are confident the majority of sales delayed by these conditions will be recovered over future quarters as raw material availability improves.

"In addition to the significant supply challenges, raw material pricing remains highly elevated, and we are increasing our full-year raw material inflation outlook to be up a high-teens percentage compared to last year. We continue to combat these elevated costs with pricing actions across all of our businesses. We are maintaining staffing in our manufacturing facilities to ensure we meet the demand as quickly as raw material availability issues subside. While maintaining these costs puts additional pressure on our third and fourth quarter earnings, we are committed to providing the resources necessary to drive our customers' success.

"While visibility of recovery in the supply chain is limited, we are committed to transparency and keeping our customers and shareholders informed. We remain confident in our team's ability to manage through these conditions and emerge with deeper, stronger customer and supplier relationships. We will continue to invest in our strategic growth initiatives, and we do not expect these near-term challenges to dampen our longer-term momentum."

AGREEMENT TO ACQUIRE SPECIALTY POLYMERS, INC.

Sherwin-Williams also today announced another key step in positioning the Company to better serve customers by signing an agreement to acquire Specialty Polymers, Inc., a leading manufacturer and developer primarily of water-based polymers used in architectural and industrial coatings and other applications. The transaction is expected to close by the end of 2021. Revenue of the business was approximately $112 million for the year ended December 31, 2020, inclusive of sales to Sherwin-Williams as a manufacturer of proprietary polymers. The business operates production facilities in Woodburn, OR and Chester, SC and employs approximately 150 people. Sales will be reported in the Performance Coatings Group operating segment.

"Specialty Polymers will add to our existing internal resin manufacturing capability," said Mr. Morikis. "In addition to Specialty Polymers' significant current capacity, we see the opportunity to add millions of pounds of additional capacity to its footprint in the near term with relatively minimal investment. This additional capacity will allow us to better serve the strong demand of Sherwin-Williams customers while also expanding the ability of Specialty Polymers to serve its external customers. We're excited to welcome the talented employees of Specialty Polymers to the Sherwin-Williams family upon the close of the transaction."

CONFERENCE CALL INFORMATION

The Company will conduct a conference call to discuss its updated guidance and agreement to acquire Specialty Polymers, Inc. at 9:00 a.m. EDT on Wednesday, September 29, 2021. Participating on the call will be Chairman, President and Chief Executive Officer, John Morikis, along with other senior executives.

The conference call will be webcast simultaneously in listen only mode by Issuer Direct. To listen to the webcast on the Sherwin-Williams website, click on the following link, https://investors.sherwin-williams.com/events-and-presentations/default.aspx. An archived replay of the webcast will be available at https://investors.sherwin-williams.com/events-and-presentations/default.aspx beginning approximately two hours after the call ends.

UPDATED THIRD QUARTER 2021 GUIDANCE

*Third Quarter 2021*	Current Guidance (September 28, 2021)	Previous Guidance (September 8, 2021)

Sales*
The Americas Group	Down low-single digit %	Up or down low-single digit %
Consumer Brands Group	Down low twenties %	Down low-to-mid-twenties %
Performance Coatings Group	Unchanged	Up high-teens %
Consolidated	Flat to down slightly	Up or down low-single digit %


*Earnings Per Share⁽¹⁾*
Diluted net income per share	$1.80 to $1.90	No previous guidance
Loss on divestiture	-	No previous guidance
Acquisition-related amortization expense⁽²⁾	$0.20	No previous guidance
Adjusted diluted net income per share	$2.00 to $2.10	No previous guidance

*Sales guidance is compared to third quarter 2020.

UPDATED FULL YEAR 2021 GUIDANCE

*Full Year 2021*	Current Guidance (September 28, 2021)	Previous Guidance (September 8, 2021)

Sales*
The Americas Group	Up high single digit %	Up low-double digit to mid-teens %
Consumer Brands Group	Down mid-teens %	Down mid-to-high single digit %
Performance Coatings Group	Unchanged	Up low-twenties %
Consolidated	Up high single digit %	Up high-single to low-double digit %

*Earnings Per Share⁽¹⁾*
Diluted net income per share	$7.21 to $7.41	$8.01 to $8.31
Loss on divestiture	$0.34	$0.34
Acquisition-related amortization expense⁽²⁾	$0.80	$0.80
Adjusted diluted net income per share	$8.35 to $8.55	$9.15 to $9.45

Raw materials	Up high-teens %	Up mid-teens %

*Sales guidance is compared to full year 2020.

(1)	After-tax
(2)	Acquisition-related amortization expense consists primarily of the amortization of intangible assets related to the Valspar acquisition and is included in Amortization.

The Company is scheduled to release third quarter 2021 financial results on October 26, 2021.

ABOUT THE SHERWIN-WILLIAMS COMPANY

Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paint, coatings and related products to professional, industrial, commercial, and retail customers. The Company manufactures products under well-known brands such as Sherwin-Williams®, Valspar®, HGTV HOME® by Sherwin-Williams, Dutch Boy®, Krylon®, Minwax®, Thompson's® Water Seal®, Cabot® and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 5,000 Company-operated stores and facilities, while the Company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Performance Coatings Group supplies a broad range of highly-engineered solutions for the construction, industrial, packaging and transportation markets in more than 120 countries around the world. Sherwin-Williams shares are traded on the New York Stock Exchange (symbol: SHW). For more information, visit www.sherwin.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This press release contains certain "forward-looking statements," as defined under U.S. federal securities laws, with respect to sales, earnings and other matters. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "could," "plan," "goal," "potential," "seek," "intend" or "anticipate" or the negative thereof or comparable terminology. These forward-looking statements are based upon management's current expectations, estimates, assumptions and beliefs concerning future events and conditions. Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements and from the Company's historical results and experience. These risks, uncertainties and other factors include such things as: general business and economic conditions; the Company's ability to successfully integrate past and future acquisitions into its existing operations, as well as the performance of the businesses acquired; strengths of retail and manufacturing economies and the growth in the coatings industry; changes in the Company's relationships with customers and suppliers; changes in raw material availability and pricing; adverse weather conditions or impacts of climate change, natural disasters and public health crises, including the COVID-19 pandemic; the duration, severity and scope of the COVID-19 pandemic and the actions implemented by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19, which may exacerbate one or more of the aforementioned and/or other risks, uncertainties and factors more fully described in the Company's reports filed with the Securities and Exchange Commission (SEC); and other risks, uncertainties and factors described from time to time in the Company's reports filed with the SEC. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

INVESTOR RELATIONS CONTACTS:

Jim Jaye
Senior Vice President, Investor Relations & Corporate Communications
Direct: 216.515.8682 - [email protected]

Eric Swanson
Vice President, Investor Relations
Direct: 216.566.2766 - [email protected]

MEDIA CONTACT:

Julie Young
Vice President, Global Corporate Communications
Direct: 216.515.8849 - [email protected]

SOURCE The Sherwin-Williams Company