The Sherwin-Williams Company Updates Third Quarter 2017 Sales and Earnings Expectations

CLEVELAND, Sept. 28, 2017 /PRNewswire/ -- The Sherwin-Williams Company (NYSE: SHW) is updating its guidance for sales and earnings per share for the third quarter ending September 30, 2017, which was previously provided on July 20, 2017. This update reflects the impact of Hurricanes Harvey, Irma and Maria on Sherwin-Williams' operations in Texas, Florida, the Caribbean and neighboring areas and two earthquakes in Mexico. The Americas Group operates 706 paint stores in Texas, Florida and the Caribbean, and has 145 company-operated stores and 387 dedicated dealers in Mexico.

In the days surrounding Hurricanes Harvey, Irma and Maria, company-operated paint stores, manufacturing facilities and distribution centers in the affected regions suspended daily operations to ensure the safety of employees and comply with instructions of the local authorities.  Based on a preliminary assessment, the short-term impact of these unprecedented events is expected to reduce revenues in The Americas Group by a range of $50-70 million in the third quarter.  The Company expects third quarter sales and profit to be negatively impacted by the lost sales days, costs related to clean up and recovery efforts and tightened supply of propylene and ethylene based raw materials.

"Our thoughts and prayers are with the thousands of Sherwin-Williams employees and all those affected by these catastrophic natural disasters who have experienced loss," commented John G. Morikis, Chairman, President and Chief Executive Officer.  "Efforts are well underway to provide relief and support to the affected communities. The majority of company-operated stores and facilities in these regions have reopened, and we have made tremendous efforts to quickly resume operations while supporting those in need during this difficult time.

"Due to the impact of the storms and earthquakes, we now anticipate Sherwin-Williams' core net sales in the third quarter will increase a low single digit percentage compared to the third quarter last year. The previous expectation for Sherwin-Williams' core net sales in the quarter had been a low to mid single digit percentage increase.  Our expected incremental sales from the Valspar acquisition remain unchanged at approximately $1.0 billion in the third quarter. At that anticipated sales level, we are revising our expectation for diluted net income per common share in the third quarter to be in the range of $3.40 to $3.70 per share compared to our previous expectation of $3.70 to $4.10 per share and $4.08 per share earned in the third quarter 2016.  This includes a $1.10 per share charge from costs associated with the Valspar acquisition, and includes an EPS increase of $.40 to $.60 per share from Valspar operations. The increase from Valspar operations includes an acquisition financing expense charge of $.40 per share in the third quarter.  Third quarter 2016 earnings included a $.24 per share charge for acquisition-related costs.

"While we are still assessing the longer term impact of these tragic events on our business, the sales momentum we are seeing across most geographies—particularly in our company-operated stores in the unaffected regions of the U.S. and Canada—should enable us to recover some of the third quarter earnings shortfall over the balance of the year. We will provide a full year 2017 outlook when we report 3Q17 earnings on October 24^th."

Financial Community Presentation

Sherwin-Williams will host its annual Financial Community Presentation from the Marriott Marquis in New York City on October 3, 2017.   This year's meeting will focus on the Valspar transaction, including progress on integration, multi-year financial outlook and projections, debt structure and leverage targets, and more.  The audio portion of the presentation will be webcast simultaneously with accompanying slides at https://investors.sherwin-williams.com/press/.  To access the webcast, click on Sherwin-Williams Press Releases and then click on the webcast icon referencing the September 20th release. An archived replay will be available at Sherwin-Williams Press Releases until November 20, 2017 at 5:00 p.m. EST. Copies of the Financial Community Presentation slides will also be available at Sherwin-Williams 2017 Financial Community Presentations. 

Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of paints, 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 4,100 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.

Regulation G Reconciliation

Management of the Company believes that investors' understanding of the Company's operating performance is enhanced by the disclosure of diluted net income per common share excluding the Valspar acquisition-related costs. This adjusted earnings per share measurement is not in accordance with U.S. generally accepted accounting principles (GAAP). It should not be considered a substitute for earnings per share computed in accordance with U.S. GAAP and may not be comparable to similarly titled measures reported by other companies. The following tables reconcile diluted net income per common share computed in accordance with U.S. GAAP to diluted net income per common share excluding the impact from the Valspar acquisition.

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 conditions; the Company's ability to successfully integrate past and future acquisitions into its existing operations, including Valspar, as well as the performance of the businesses acquired; risks inherent in the achievement of anticipated cost synergies resulting from the acquisition of Valspar and the timing thereof; 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; unusual weather conditions; and other risks, uncertainties and factors described from time to time in the Company's reports filed with the Securities and Exchange Commission. 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 Contact:
Bob Wells
Senior Vice President, Corporate Communications and Public Affairs
Sherwin-Williams
Direct:  216.566.2244
[email protected]

Media Contact:
Mike Conway
Director, Corporate Communications
Sherwin-Williams
Direct:  216.515.4393
Pager:  216.422.3751
[email protected]

SOURCE The Sherwin-Williams Company

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