3Q 2023 Results

October 24, 2023

Forward-Looking Statements

This presentation 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," "target," "potential," "seek," "intend," "aspire," "strive" or "anticipate" or the negative thereof or comparable terminology. These forward-looking statements are based upon management's current expectations, predictions, 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 performance, results and experience. These risks, uncertainties and other factors include such things as: general business conditions, strengths of retail and manufacturing economies and growth in the coatings industry; changes in general economic conditions; changes in raw material and energy supplies and pricing; disruptions in the supply chain; adverse weather conditions or natural disasters, including those that may be related to climate change or otherwise; losses of or changes in the Company's relationships with customers and suppliers; competitive factors; the Company's ability to successfully integrate past and future acquisitions into its existing operations, as well as the performance of the businesses acquired; the Company's ability to achieve expected benefits of restructuring and productivity initiatives; public health crises; damages to our business, reputation, image or brands due to negative publicity; 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.

1

3Q 2023 Financial Performance Highlights

($ in millions,

3Q 2023

3Q 2022

% Change

except per share data)

Sales

$6,116.7

$6,047.4

1.1%

Gross Profit

$2,916.2

$2,589.4

12.6%

Gross Margin

47.7%

42.8%

+490 bps

Reported EPS

$2.95

$2.62

12.6%

Adjusted EPS (1)

$3.20

$2.83

13.1%

EBITDA (1)

$1,266.3

$1,124.2

12.6%

% of Sales

20.7%

18.6%

+210 bps

Net Operating Cash

$1,308.7

$639.2

104.7%

3Q 2023 Results (October 24, 2023)

Note: All comparisons are to the third quarter of the prior year, unless otherwise noted

Note: LSD/MSD/HSD = low, mid or high single digit %. DD = double digit %

(1) Reconciliation from reported EPS to adjusted EPS and Net Income to EBITDA provided in Appendix

  • Sales increased 1.1% driven by effective pricing and a LSD contribution from acquisitions, partially offset by a LSD decline in volumes
    • Sales in all three segments were within our guidance range
  • Gross margin expanded 490 basis points to 47.7%, driven by pricing discipline and moderating raw material costs
  • Adjusted EPS increased 13.1% to $3.20/share
  • EBITDA grew 12.6% to $1.3 billion, or 20.7% of sales
  • Net operating cash more than doubled to $1.3 billion
    • Continued SG&A investments in customer solutions and growth initiatives
    • Returned $565.8 million to shareholders through dividends and share repurchases

2

Paint Stores Group (PSG)

  • Sales increased 3.6% against a 21.5% comparison, driven by effective pricing
    • Sales growth led by Protective & Marine - strength in flooring, infrastructure and oil & gas applications
    • Pro architectural sales led by Commercial, followed by Residential Repaint and Property Maintenance
    • New Residential down as expected but continuing to outperform the market
    • Pro architectural volume up LSD excluding New Residential
    • DIY down against a challenging comparison - consumer remains under pressure
  • Segment margin grew to 25.9% driven by effective pricing and lower raw material costs

($ in millions)

3Q 2023

3Q 2022

% Change

Sales

$3,537.1

$3,414.0

3.6%

Segment Profit

$917.5

$741.3

23.8%

Segment Margin

25.9%

21.7%

+420 bps

+MSD

-MSD

+HSD

+LSD

-LSD

+DD

Res Repaint

New

Commercial

Property

DIY

Protective &

Residential

Maintenance

Marine

3Q-23 sales vs. 3Q-22 sales

3Q 2023 Results (October 24, 2023)

Note: The Americas Group became Paint Stores Group effective January 1, 2023 to reflect realignment of management and reporting of Latin America architectural business to Consumer Brands Group.

3Q Paint Stores Group results reflect this change in both years.

Note: All comparisons are to the third quarter of the prior year, unless otherwise noted3

Note: LSD/MSD/HSD = low, mid or high single digit %. DD = double digit %

Consumer Brands Group (CBG)

  • Sales decreased 4.0% - MSD volume declines and the negative impact from the China architectural divestiture partially offset by effective pricing
    • North America down MSD - DIY softness partially offset by growth in Pros Who Paint category
    • LDD growth in Europe; HSD growth in Latin America
  • Divestiture of China architectural business completed on August 1, 2023
  • Adjusted segment margin impacted by lower sales volume and lower fixed cost absorption due to lower production volumes

($ in millions)

3Q 2023

3Q 2022

% Change

Sales

$854.8

$890.6

-4.0%

Reported Segment Profit

$101.6

$117.7

-13.7%

Reported Segment Margin

11.9%

13.2%

-130 bps

Adjusted Segment Profit (1)

$117.6

$136.6

-13.9%

Adjusted Segment Margin

13.8%

15.3%

-150 bps

-MSD

+HSD

+LDD

NORTH AMERICA

LATIN AMERICA

EMEAI

3Q-23 sales vs. 3Q-22 sales

3Q 2023 Results (October 24, 2023)

Note: Consumer Brands Group 3Q results in both years reflect the inclusion of the Latin America architectural business, which was previously reported in The Americas Group (now known as Paint Stores Group)

Note: All comparisons are to the third quarter of the prior year, unless otherwise noted

Note: LSD/MSD/HSD = low, mid or high single digit %. DD = double digit %

4

(1) Adjusted segment profit equals Segment profit excluding the impact of acquisition-related amortization expense; reconciliation from segment profit to adjusted segment profit provided in Appendix

Performance Coatings Group (PCG)

  • Sales down slightly (-1.0%) - HSD volume declines partially offset by LSD pricing and a LSD contribution from acquisitions
  • Mid-teensgrowth in Europe, LSD growth in Latin America, MSD decline in North America and DD decline in Asia Pacific
  • Sales growth led by Industrial Wood, followed by Auto Refinish
  • Sales decreased in Coil and General Industrial - variable by region
  • Packaging impacted by continued end-customer destocking
  • Adjusted segment margin expanded to 19.1%

($ in millions)

3Q 2023

3Q 2022

% Change

Sales

$1,724.2

$1,741.7

-1.0%

Reported Segment Profit

$279.7

$236.3

18.4%

Reported Segment Margin

16.2%

13.6%

+260 bps

Adjusted Segment Profit (1)

$329.4

$286.0

15.2%

Adjusted Segment Margin

19.1%

16.4%

+270 bps

+MSD

-LSD

-LSD

+LDD

-DD

AUTO REFINISH

COIL

GENERAL

INDUSTRIAL

PACKAGING

INDUSTRIAL

WOOD

3Q-23 sales vs. 3Q-22 sales

3Q 2023 Results (October 24, 2023)

Note: All comparisons are to the third quarter of the prior year, unless otherwise noted

Note: LSD/MSD/HSD = low, mid or high single digit %. DD = double digit %5

(1) Adjusted segment profit equals Segment profit excluding the impact of acquisition-related amortization expense; reconciliation from segment profit to adjusted segment profit provided in Appendix

Guidance

Fourth Quarter 2023

Sales

  • Up or down low-single-digit percentage
  • Segments
    • PSG: up low-single-digit percentage
    • CBG: down mid-teens percentage
      • Excluding impact of portfolio adjustments, expect sales to be down low-double-digit percentage
    • PCG: flat to up low-single-digit percentage

Full Year 2023

Sales

  • Up low-single-digit percentage
  • Foreign Exchange: < -1.0%
  • Segments
    • PSG: up mid to high-single-digit percentage
    • CBG: down low-single-digit percentage
      • Excluding impact of portfolio adjustments, expect sales to be flat to down low-single-digit percentage
    • PCG: flat to up low-single-digit percentage

GAAP Earnings Per Share: $9.21-$9.41

  • Includes acquisition-related amortization expense of $0.80 per share and net expense related to the restructuring plan of $0.09 per share
  • Adjusted earnings per share: $10.10-$10.30

Raw materials: down high-single-digit percentage

Capital expenditures: approximately $750 million total, includes $250 million for new R&D facility

Interest expense: approximately $420 million

Depreciation (~$300 million) and amortization (~$340 million)

Tax rate: low 20s percent

3Q 2023 Results (October 24, 2023)

Note: all segment guidance includes Latin America architectural sales in Consumer Brands Group

6

Strong Financial Position

Operating Cash Flow ($ in millions)

$1,308.7

$639.2

3Q 2023

3Q 2022

Cash & Liquidity Position ($ in millions)

9/30/2023

Cash

$503.4

Liquidity

Total Credit Facilities

$3,750.0

(Less Amount Utilized)

(408.5)

Net Credit Available

$3,341.5

Near Term Debt Maturities (1) ($ in millions)

$1,619

$1,100

$1,050

$350

2023

2024

2025

2026

2027

Selected Financial Ratios

9/30/2023

Total Debt / TTM EBITDA

2.4x

Net Debt / TTM EBITDA

2.3x

3Q 2023 Results (October 24, 2023)

(1) Full debt maturity schedule provided in Appendix

7

Appendix

8

Debt Summary (as of September 30, 2023)

Q3 2023

$ in millions

Balance

Int. Rate

Short-Term:

Domestic

$

338.5

5.48%

Non-Domestic:

0.1

6.15%

Total Short-Term Borrowings

$

338.6

5.48%

Long-Term:

7-year, 3.125% notes due (1)

2024

500.0

1.39%

2-year, 4.05% notes due (2)

2024

600.0

3.70%

10-year, 3.30% notes due

2025

250.0

3.30%

10-year, 3.45% notes due

2025

400.0

3.45%

3-year, 4.25% notes due (3)

2025

400.0

3.62%

10-year, 3.95% notes due

2026

350.0

3.95%

30-year, 7.375% notes due (4)

2027

119.4

6.25%

10-year, 3.45% notes due (5)

2027

1,500.0

3.32%

10-year, 2.95% notes due

2029

800.0

2.95%

10-year, 2.30% notes due

2030

500.0

2.30%

10-year, 2.20% notes due

2032

500.0

2.20%

30-year, 4.00% notes due

2042

300.0

4.00%

30-year, 4.40% notes due

2045

250.0

4.40%

30-year, 4.55% notes due

2045

400.0

4.55%

30-year, 4.50% notes due

2047

1,250.0

4.50%

30-year, 3.80% notes due

2049

550.0

3.80%

30-year, 3.30% notes due

2050

500.0

3.30%

30-year, 2.90% notes due

2052

500.0

2.90%

100-year, 7.45% notes due

2097

3.5

7.45%

Promissory Notes

Various

0.9

3.45%

Other (6)

(76.4)

0.00%

Total LT Debt

$

9,597.4

3.44%

Total Debt

$

9,936.0

3.51%

Maturities of Long-Term Debt

$1,619

USD EUR

$1,250

$1,100 $1,050

$800

$650

$500

$500

$550

$500

$500

$350

$300

$4

2023 2024

2025 2026

2027

2028

2029

2030

2031

2032

…

2042

…

2045

2046

2047

2048

2049

2050

2051

2052

…

2097

Fixed vs. Floating Rate Debt

Fixed

3%

Floating

97%

3Q 2023 Results (October 24, 2023)

(1)

Debt swapped to EUR fixed rate interest

(4)

$100 million of 2027 30-year notes swapped to EUR

(2)

$150 million of 2024 2-year notes swapped to EUR

(5)

$163 million of 2027 10-year notes swapped to EUR

9

(3)

$200 million of 2025 3-year notes swapped to EUR

(6)

"Other" long-term debt is comprised of unamortized premiums, discounts and issuance costs

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Disclaimer

Sherwin Williams Co. published this content on 24 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 October 2023 11:09:35 UTC.