Sherwin-Williams (SHW) Tops Q1 EPS by 42c, Revenues Beat; Offers FY21 EPS Mid-Point Guidance Above Consensus

Sherwin-Williams (NYSE: SHW) reported Q1 EPS of $2.06, $0.42 better than the analyst estimate of $1.64. Revenue for the quarter came in at $4.66 billion versus the consensus estimate of $4.51 billion.

SUMMARY

• Consolidated net sales increased 12.3% to $4.66 billion
  • Net sales from stores in U.S. and Canada open more than twelve calendar months increased 8.2%
• Diluted net income per share increased to $1.51 per share
  • Adjusted diluted net income per share increased 51.5% to $2.06 per share
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased to $848.7 million, or 18.2% of sales
• Net operating cash increased 256% to $195.7 million
• Completed a three-for-one stock split to improve accessibility to a broader base of investors
• The Company anticipates FY21 diluted net income per share in the range of $7.66 to $7.93 per share, including a loss of $0.34 per share from a divestiture and acquisition-related amortization expense of $0.80 per share

CEO REMARKS

"I am proud of our team's strong start to the year, as all three of our segments delivered strong top-line growth and profit expansion," said Chairman, President and Chief Executive Officer, John G. Morikis. "Our sales growth was driven by strong architectural paint demand, improving demand in the industrial end markets served, and pricing actions to offset raw material cost increases. We leveraged this strong sales growth to solid margin expansion across all of our businesses. In the quarter, we delivered 12.3% sales growth, 51.5% adjusted EPS growth, and 320 basis points of adjusted EBITDA margin expansion. We continued to generate strong cash, which allowed us to invest in long-term strategic growth initiatives, repurchase 3.3 million shares in the first quarter, and open 12 new stores in the U.S. and Canada. We also completed the previously announced divestiture of our Wattyl business in Australia and New Zealand.

"In The Americas Group, our residential repaint, new residential and DIY businesses grew sales by double-digits, while our new commercial business continued its rebound growing sales low-single-digits. Strength in DIY end markets continued in our Consumer Brands Group, as sales were up double-digits across all regions. In Performance Coatings Group, our industrial wood and general industrial businesses grew by double-digits, while our packaging and coil businesses grew high-single-digits. Our automotive refinish business grew mid-single-digits."

GUIDANCE:

Sherwin-Williams sees FY2021 EPS of $8.80-$9.07, versus the consensus of $8.83.

Commenting on the Company's outlook, Mr. Morikis noted, "While we are very encouraged with our strong start to the year in a seasonally smaller quarter and continuing strength in the demand environment, our full year adjusted earnings guidance remains unchanged given the near-term uncertainty of raw material availability and cost inflation. Despite the uncertainties, our businesses are extremely well positioned, and we remain confident in our long-term ability to grow faster than the market. We look forward to our June 8th Financial Community Presentation, where we will provide an update on full year sales and EPS guidance, business demand trends, raw material dynamics, technology investments, and our robust ESG initiatives."

For earnings history and earnings-related data on Sherwin-Williams (SHW) click here.

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