A closer look at Sherwin-Williams
“Today, we are operating as a single integrated company.”
So, said Sherwin-Williams CEO John Morikis, referring to his company’s blockbuster acquisition of Valspar, during the company’s second quarter earnings call with analysts.
And the second quarter results were record-breaking. The company posted a net sales gain of 27.8% to a record $4.77 billion. Net income jumped 19%. (Note: the third quarter will be the first in which results will be fully comparable to the previous year.)
[More on the company’s second quarter performance is here.]
During the call, the company also raised its full year 2018 guidance to a range between $19.05 and $19.35. That’s a sizeable jump from the $15.07 the company reported last year. Wall Street’s short-term reaction was swift. Shares of SHW jumped more than 8% the day of the report. And share price increased another 11.7% on Thursday, before giving some of those gains back on Friday.
The company’s relationship with Lowe’s – it is the retailer’s sole supplier of paint – figured prominently during the call. Morikis expressed optimism that the partnership will lead to increased market share through a simplified approach.
“By simplifying the offering, we can make it easier for both sales associates and the consumer to understand,” he said. “So, we feel we have a terrific lineup that's going to be rolling out.”
He added that the relationship is one of growing sales together, and “not arguing about price.”
At the Sherwin-Williams’ own company paint stores, the story is growth. The group opened 18 net new stores in the quarter, bringing the total store count to 4,642 at the end of the quarter. The full-year plan calls for an additional 90 to 100 net new stores in The Americas by year-end.
Meanwhile, sales to residential repaint contractors in the U.S. and Canada grew at a double-digit pace for the 17th time in the last 19 quarters.
Among the paint store customers, the CEO estimates that maybe half, or slightly less, are loyal, primary customers. “So, we have a terrific opportunity, we think, to grow share of wallet here,” he said.
“Much of the heavy lifting involved in creating a fully integrated North American supply chain is behind us, and a wide range of opportunities to improve our productivity and operating efficiency outside of the Americas has been identified and are in process.”
The paint landscape is not without its challenges, and one of them is the broad building-industry-wide challenge of scarcity of buildable land. Bob Wells, senior VP, said it’s less common to see housing communities push out into undeveloped regions of the suburbs.
On the flip side: “Downtown high-rise development is really strong,” he said.
So, said Sherwin-Williams CEO John Morikis, referring to his company’s blockbuster acquisition of Valspar, during the company’s second quarter earnings call with analysts.
And the second quarter results were record-breaking. The company posted a net sales gain of 27.8% to a record $4.77 billion. Net income jumped 19%. (Note: the third quarter will be the first in which results will be fully comparable to the previous year.)
[More on the company’s second quarter performance is here.]
During the call, the company also raised its full year 2018 guidance to a range between $19.05 and $19.35. That’s a sizeable jump from the $15.07 the company reported last year. Wall Street’s short-term reaction was swift. Shares of SHW jumped more than 8% the day of the report. And share price increased another 11.7% on Thursday, before giving some of those gains back on Friday.
The company’s relationship with Lowe’s – it is the retailer’s sole supplier of paint – figured prominently during the call. Morikis expressed optimism that the partnership will lead to increased market share through a simplified approach.
“By simplifying the offering, we can make it easier for both sales associates and the consumer to understand,” he said. “So, we feel we have a terrific lineup that's going to be rolling out.”
He added that the relationship is one of growing sales together, and “not arguing about price.”
At the Sherwin-Williams’ own company paint stores, the story is growth. The group opened 18 net new stores in the quarter, bringing the total store count to 4,642 at the end of the quarter. The full-year plan calls for an additional 90 to 100 net new stores in The Americas by year-end.
Meanwhile, sales to residential repaint contractors in the U.S. and Canada grew at a double-digit pace for the 17th time in the last 19 quarters.
Among the paint store customers, the CEO estimates that maybe half, or slightly less, are loyal, primary customers. “So, we have a terrific opportunity, we think, to grow share of wallet here,” he said.
“Much of the heavy lifting involved in creating a fully integrated North American supply chain is behind us, and a wide range of opportunities to improve our productivity and operating efficiency outside of the Americas has been identified and are in process.”
The paint landscape is not without its challenges, and one of them is the broad building-industry-wide challenge of scarcity of buildable land. Bob Wells, senior VP, said it’s less common to see housing communities push out into undeveloped regions of the suburbs.
On the flip side: “Downtown high-rise development is really strong,” he said.