SHW Financial Analysis

Analysis Date: 1/31/2025

Business Model

Sherwin-Williams generates revenue primarily through its three segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group

Revenue Sources

• Paint Stores Group (57.1% of revenue) - Sales through company-operated stores
• Consumer Brands Group (13.5% of revenue) - Sales through retail partners
• Performance Coatings Group (29.4% of revenue) - Industrial and specialty coatings

Revenue Distribution by Channel

• Paint Stores Group: Company-operated stores (>5,000 locations)
• Consumer Brands: Mass retailers, home centers, hardware stores

Income Statement Analysis

• Net sales increased 0.9% driven by Paint Stores Group growth
• Gross margin expanded 10bps to 48.6% year-over-year
• Operating income grew 29.9% with strong margin expansion

Balance Sheet Analysis

• Working capital management improved with lower inventory and receivables
• Total assets increased 3.0% year-over-year

Cash Flow Analysis

• Operating cash flow declined 10.5% to $3.15B, still strong at 13.7% of sales
• Higher capital expenditures of $1.07B including new HQ and R&D center

Capital Allocation

Returned $2.46B to shareholders through $723.4M in dividends and share repurchases of 5.2M shares. Planning 10.5% dividend increase in 2025. Capital expenditures of $1.07B including investments in new headquarters and R&D center.

Management Commentary

Strong Q4 results despite continued demand choppiness in majority of end markets

Residential repaint significantly outgrew market with high-single digit growth

Expect demand softness to persist into second half 2025 or 2026

Overall Sentiment: Cautiously optimistic with focus on execution and share gains despite challenging market conditions

Recommendation

Rating: Buy

Reason for Rating: Strong execution and market share gains despite headwinds, with significant growth opportunities when demand improves

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 4:38:56 AM