Sherwin-Williams (SHW) Misses Q4 EPS by 1c; Issues Mixed Outlook

Sherwin-Williams (NYSE: SHW) reported Q4 EPS of $1.37, $0.01 worse than the analyst estimate of $1.38. Revenue for the quarter came in at $2.57 billion versus the consensus estimate of $2.6 billion.

Sherwin-Williams sees Q1 2015 EPS of $1.30-$1.45, versus the consensus of $1.55.

Sherwin-Williams sees FY2015 EPS of $10.90-$11.10, versus the consensus of $11.03.

Commenting on the financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, "We are pleased to report another year of record performances in sales, earnings per share, and earnings before interest, taxes, depreciation and amortization which surpassed $1.5 billion for the first time.

"Over the past year, our Paint Stores Group grew architectural sales volume across every end market segment and delivered strong operating results. We made great progress during 2014 on the integration of the U.S. and Canadian Comex stores, which performed better than expected in 2014. In December, our Consumer Group announced a new agreement to sell architectural paint under the HGTV HOME® by Sherwin-Williams brand through Lowe's stores nationwide. The Global Finishes Group improved segment profit as a percent to sales through greater operating efficiencies and good cost control. The Latin America Coatings Group minimized the impact of declining currency on its core operating margins through selling price increases and good cost control. Sales in local currency were positive in both the quarter and full year.

"We continue to generate significant cash from operations allowing us to invest in the business and return a substantial portion to our shareholders. In 2014, we generated net operating cash flow of $1.08 billion. Our working capital ratio (accounts receivable plus inventories less accounts payable to sales) at December 31, 2014 was 10.1% compared to 10.5% last year. In 2014, we added 95 net new stores passing the 4,000 store milestone, finishing the year with 4,003 stores in operation. During the year, we continued to buy our stock on the open market and increased our annual cash dividend 10% to $2.20 per common share. Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business.

"In the first quarter of 2015, we anticipate our consolidated net sales will increase in the mid single digit percentage range compared to the first quarter of 2014. At that anticipated sales level, we estimate diluted net income per common share in the first quarter of 2015 will be in the range of $1.30 to $1.45 per share compared to $1.14 per share earned in the first quarter of 2014. For the full year 2015, we expect consolidated net sales to increase a high single digit percentage compared to full year 2014. With annual sales at that level, we have raised our expectation for diluted net income per common share for 2015 to a range of $10.90 to $11.10 per share compared to $8.78 per share earned in 2014."

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