Sherwin-Williams (NYSE: SHW) reported Q1 EPS of $3.60, $0.09 worse than the analyst estimate of $3.69. Revenue for the quarter came in at $4.04 billion versus the consensus estimate of $4.09 billion.

• Consolidated net sales increased 1.9% in the quarter to $4.04 billion
• Net sales from stores in U.S. and Canada open more than twelve calendar months increased 3.6% in the quarter
• Diluted net income per share was flat at $2.62 per share in both first quarter 2019 and 2018
  • First quarter 2019 includes charges for acquisition-related costs and pension settlement expense of $.71 and $.27 per share, respectively; first quarter 2018 included acquisition-related costs of $.95 per share
  • Excluding acquisition-related costs and pension settlement expense, diluted net income per share increased to $3.60 per share in the quarter compared to $3.57 per share in the first quarter 2018 on a comparable basis
• Reaffirming FY19 adjusted EPS guidance of $20.40 to $21.40 per share, excluding acquisition-related costs and pension settlement expense, versus $18.53 per share on a comparable basis in FY18

Commenting on the first quarter, John G. Morikis, Chairman and Chief Executive Officer, said, \"We made good progress on our pricing initiatives across all segments during the quarter and effectively managed SG&A spending, but volumes fell short of expectations due to a slower start to the architectural painting season in North America and continued challenging conditions in many end markets outside North America. Despite the volume shortfall and higher year-over-year raw material costs, consolidated Company adjusted gross margin, which excludes acquisition-related costs, improved sequentially and was flat year-over-year. We expect the positive trend in gross margin and operating expense control to continue as the year progresses, and volume growth should also improve over the balance of the year, particularly in the back half.

"Looking at our performance by segment, in The Americas Group, despite a strong backlog and project pipeline reported by many of our professional customers, volume growth in the quarter was slower than expected. We continued to invest by opening 15 net new store locations in The Americas Group during the quarter. In our Consumer Brands Group, most of the softness in demand in the quarter was in markets outside North America. Consumer Brands Group adjusted segment operating margin in the first quarter expanded sequentially and year-over-year, and we are very well positioned across all North American retail channels heading into the important spring selling season. Performance Coatings Group achieved modest sales growth and increased adjusted segment operating margin in the quarter against year-over-year raw material pressure.

GUIDANCE:

Sherwin-Williams sees FY2019 EPS of $20.40-$21.40, versus the consensus of $21.14.

"For the second quarter, we anticipate our consolidated net sales will increase two to five percent compared to last year's second quarter. As a reminder, second quarter revenue comparisons to 2018 in The Americas Group and the Performance Coatings Group are the most challenging of the year, and Consumer Brands Group faces comparisons to early load in volume from the Lowes program and the divested Guardsman business. For the full year 2019, we expect our consolidated net sales will increase four to seven percent compared to the full year 2018. We are updating our full year 2019 diluted net income per share guidance to be in the range of $16.93 to $17.93 per share as a result of lower than expected pension settlement expense of $.27 per share, versus the previous estimate of $.43 per share, and charges of $3.20 per share for acquisition-related costs. Diluted net income per share in 2018 was $11.67 per share, including a charge of $4.15 per share for acquisition-related costs and charges for non-operating expenses of $2.71 per share. We are reaffirming our full year 2019 adjusted diluted net income per share guidance to be in the range of $20.40 to $21.40 per share, excluding acquisition-related costs and pension settlement expense compared to $18.53 per share for the full year 2018 on a comparable basis."

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