Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Investor Day (September 2020)
26 slides from Sherwin-williams Company (the)'s investor day presentation, Sep 28, 2020
Slide 1: Industry Overview
2020 F I NANCI AL CO M M UNI TY P RE S E NTATI O N INDUSTRY OVERVIEW JOHN MORIKIS C H A I R MA N & C H I E F E XE C U TI V E OF F I C E R
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain certain "forward-looking statements," as defined under U.S. federal securities laws. These forward-looking statements are based upon management's current expectations, estimates, assumptions and beliefs concerning future events and conditions.
Slide 3: U.S. Architectural Coatings
2020 F I NANCI AL CO M M UNI TY P RE S E NTATI O N U.S. ARCHITECTURAL COATINGS
Slide 4: U.S. Architectural Paint Industry
U.S. Architectural Paint Industry Architectural Paint Gallons Non-Residential & Residential Square Footage 260,000 Non-Residential & Residential Sq. Ft in Thousands 900 2019 ~831 Million (~2.0% YoY) 850 PRIOR PEAK 250,000 Millions of Gallons 800 240,000 750 700 230,000 PRIOR PEAK 650 220,000 600 210
Slide 5: U.S. Architectural Paint Industry
U.S. Architectural Paint Industry ~831 Million Gallons in 2019 New Residential Non-Residential Repaint (Pro) 6% 30% (50M Gal) (247M Gal) Non-Residential Repaint (Pro) 15% New Residential (126M Gal) 12% (100M Gal) DIY 37% (308M Gal) SHW is Well-Positioned in All Architectural Coating Segments FINANCI
Slide 6: U.S. Architectural Paint Industry Trends
U.S. Architectural Paint Industry Trends NEW RESIDENTIAL PROPERTY COMMERCIAL DIY RESIDENTIAL REPAINT (PRO) MANAGEMENT • Robust recovery in starts • Rapid return of exterior • Projects resuming – • Slower recovery • Unprecedented demand projects; interior gaining pace of completions driven by consume
Slide 7: U.S. Demographics
U.S. Demographics SILENT BABY BOOMERS GEN X MILLENNIALS iGEN (GEN Z) 1928-1945 1946-1964 1965-1980 (GEN Y) 1997-2012 1981-1996 - Transitioning to Senior Living - Aging in place; driving - Move up creates churn and - Forming households - Will further extend Facilities remodeling spend drives remodeli
Slide 8: New Residential Housing Starts
New Residential Housing Starts Painting Begins ~3-4 Months After Start Housing Starts in '000s (Seasonally Adjusted Annual Rate) & YoY% Change Strong Starts Strong Starts 1,700 Wave 1 Wave 2 50% 42.1% 27.1% 1,600 37.8% Rapid 40% Recovery 1,500 23.1% 30% 13.9% 2.8% 1,400 7.6% 11.0% COVID-19 5.5% 20%
Slide 9: Housing Supply Not Keeping Pace
Housing Supply Not Keeping Pace Housing Surplus/ Deficit Housing Surplus/Deficit (thousands) & Vacancy Rate (RHS) Homeowner Vacancy Rate We have Underbuilt Since the Great Recession and Inhabitable Vacancies have Largely Been Absorbed FINANCIAL COMMUNITY PRESENTATION – SEPTEMBER 29, 2020 9 Sources:
Slide 10: Repaint & Remodel
Repaint & Remodel Leading Indicator of U.S. Remodeling Activity Homeowner Improvements & Repairs Four-Quarter Moving Four-Quarter Moving Totals Historical Estimates Rate of Change LIRA Projections: Standard Methodology Billions LIRA Projections: Downside $450 10% 6.7% 6.8% 6.5% 6.1% 6.0% 6.3% 6.2% 5
Slide 11: Remodeling Drivers
Remodeling Drivers Existing Home Sales Existing Home Sales '000s - SAAR (YoY % Change) Rapid Recovery Existing Home 15% Sales Momentum 10.5% 8.7% 10.4% 10% 7.1% 5,800 3.2% 4.2% 8.8% COVID-19 3.1% 0.8% Pause 5% 0% 5,300 -5% -11.7% -10% 4,800 -17.2% -15% 4,300 -20% -26.6% -25% 3,800 -30% Jan Feb Mar A
Slide 12: National Association of Home Builders (NAHB) Remodeling Index
National Association of Home Builders (NAHB) Remodeling Index NAHB Remodel Index - Quarterly (50+ = expansion) 80 70 60 50 40 30 20 10 2005 2010 2001 2002 2003 2004 2006 2007 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Current and Future Indicators Quickly Returned to Positive FINANC
Slide 13: Repaint Drivers
Repaint Drivers Aging Housing Stock Median Age of Housing Stock 45 41 40 40 39 38 37 35 35 34 32 32 31 30 30 30 28 28 27 25 25 25 23 20 15 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 The Median Age of the Nation’s 137 Million Homes is 40 Years Old FINANC
Slide 14: Repaint Drivers
Repaint Drivers Change in U.S. Home Values S&P/Case-Shiller Home Price Appreciation Index - YoY % Change 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Price Appreciation Gives Homeowners Confidence to Remodel FINANCIAL COMMUNITY PRESE
Slide 15: Repaint & Remodel: Baby Boomers Aging in Place
Repaint & Remodel Baby Boomers Aging in Place “What I’d really like to do is stay in my current residence for as long as possible” 76% OF BABY BOOMERS OWN THEIR HOME 86% 76% 17% 88% 66% 64% 21% 53% 23% 24% 69% 55% ARE LOOKING TO BELIEVE HOME 41% 29% RENOVATE VALUES ARE (and borrowing an GOING UP ave
Slide 16: DIY to Contractor Shift Expected to Continue in U.S. & Canada
DIY to Contractor Shift Expected to Continue in U.S. & Canada 37% 59% DIY/ Remodeler Paint Contractor 63% 41% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 17: Commercial Construction
2020 F I NANCI AL CO M M UNI TY P RE S E NTATI O N COMMERCIAL CONSTRUCTION
Slide 18: Commercial Construction Starts
Commercial Construction Starts Painting Begins ~12-18 Months After Start T3M Avg - Sq Ft in '000s and YoY% Change Strong Starts Strong Starts 85,000 Wave 1 Wave 2 30% 11.4% 22.6% 80,000 12.8% 15.0% 11.5% 13.3% 10.8% 20% 13.2% 11.0% 7.3% 75,000 9.6% 10.5% 6.7% 7.1% 10% 70,000 COVID-19 Pause 0% 65,000
Slide 19: U.S. Commercial Construction Put in Place
U.S. Commercial Construction Put in Place Projects Will Resume as Maintenance Cannot be Delayed Indefinitely Annual Commercial Construction Put in Place (Millions of Dollars) $349,597 $352,846 $342,707 $328,362 $309,635 $286,383 $273,611 $247,875 $222,622 $227,033 $227,961 $217,384 2008 2009 2010 20
Slide 20: Industrial Coatings
2020 F I NANCI AL CO M M UNI TY P RE S E NTATI O N INDUSTRIAL COATINGS
Slide 21: Industrial Demand by Region
Industrial Demand by Region Purchasing Managers Index (PMI) - Manufacturing US PMI - IHS MARKIT (50+ = expansion) EUROZONE PMI - IHS MARKIT (50+ = expansion) 70 70 60 60 50 50 40 40 30 30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec BRAZIL PMI - IHS
Slide 22: Global Paints & Coatings Industry
Global Paints & Coatings Industry Paint & Coatings Industry Top Global Manufacturers Global Mix by Category (Based on $) Coatings Industry 2019 Total Coatings 2019 Global Market ~ 9.8 Billion Gallons Top 10 Suppliers ~51% ~132 Billion Dollars Special Architectural Purpose Paints Coatings 40% 20% All
Slide 23: Industrial Coatings
Industrial Coatings Technology Driven, Specialty Solutions That Drive Customer Throughput and Productivity Slower Pace of Global Recovery Faster FINANCIAL COMMUNITY PRESENTATION – SEPTEMBER 29, 2020 23
Slide 24: Industrial Coatings: Faster Recovery
Industrial Coatings Faster Recovery • Shift from plastic to cans – environmental concerns • Growing new categories – spiked seltzer and energy drinks • Shift to non-BPA technology • Customer investments in capacity expansion “Up-cycle for beverage cans to be robust and supply/demand to likely PACKAG
Slide 25: Industrial Coatings: Moderate Recovery
Industrial Coatings Moderate Recovery • Strong recovery of new residential construction a driver for key end markets: furniture, flooring, cabinetry, doors, molding • Heightened consumer interest in customized finishes and colors • Manufacturers relocating from China to SE Asia beginning to ramp up
Slide 26: Industrial Coatings: Slower Recovery
Industrial Coatings Slower Recovery • Asia-Pacific showing strongest recovery • Long-supply chains slowing some larger OEM recovery • COVID-19 limiting access to some facilities • Focus on deeper segmentation, new account activity GENERAL “Industrial production improving sequentially in most major r
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