Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Investor Presentation (June 2021)
23 slides from Sherwin-williams Company (the)'s investor presentation, Jun 8, 2021
Slide 1: Industry Overview
2021 F I NANCI AL CO M M UNI TY P RE S E NTATI O N INDUSTRY OVERVIEW J AM E S R . J AY E SENIOR VICE PRESIDENT, INVESTOR RELATIONS A N D C O R P O R A T E C O MMU N I C A T I O N S
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain "forward-looking statements," as defined under U.S. federal securities laws. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," “may,” “will,” “should," "project," "could," "plan," "g
Slide 3: U.S. Architectural Coatings
2021 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 900 2020 270,000 ~858 Million (~3.2% YoY) 850 PRIOR 260,000 PEAK Millions of Gallons 800 250,000 Sq. Ft in Thousands 750 240,000 700 230,000 650 PRIOR PEAK 220,000 600 210,000 550 200,000 500 2
Slide 5: U.S. Architectural Paint Industry
U.S. Architectural Paint Industry New Residential Non-Residential Repaint (Pro) 5% 30% (44M Gal) (254M Gal) Non-Residential Repaint (Pro) 12% New Residential (103M Gal) 12% (102M Gal) DIY 41% (355M Gal) ~858 Million Gallons in 2020 FINANCIAL COMMUNITY PRESENTATION – JUNE 8, 2021 5 Sources: ACA, Depa
Slide 6: U.S. Architectural Paint Industry Trends
U.S. Architectural Paint Industry Trends NEW RESIDENTIAL PROPERTY COMMERCIAL DIY RESIDENTIAL REPAINT (PRO) MANAGEMENT • Starts strong, • Interior and • Prior projects resuming, • Apartment turns, • Return to normal customers bullish exterior strong gaining momentum hospitality gaining cools “nesting
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 - Aging in place; driving - Move up creates churn and - Forming households - Will further extend Living 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 YoY% Change 1,800 70% 1,700 50% 1,600 1,500 30% COVID-19 YoY% Change 1,400 Pause 1,300 10% Starts 1,200 -10% 1,100 1,000 -30% 900 800 -50% Jan Feb Mar Apr Ma
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 800 6.0% 600 5.0% 400 200 4.0% 0 3.0% (200) (400) 2.0% (600) 1.0% (800) (1,000) 0.0% 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995
Slide 10: Repaint & Remodel
Repaint & Remodel Leading Indicator of U.S. Remodeling Activity Homeowner Improvements & Repairs Four-Quarter Moving Four-Quarter Moving Totals Billions Historical Estimates Rate of Change LIRA Projections $400 10% 6.3% 5.5% 5.4% 4.7% 4.8% 4.0% 5% 3.4% 3.0% 3.0% 1.9% 1.7% $370 1.1% $353 $351 $350 $3
Slide 11: Remodeling Drivers: Existing Home Sales
Remodeling Drivers Existing Home Sales Existing Home Sales '000s - SAAR (YoY% Change) YoY% Change 7,300 COVID-19 30% Pause 6,800 20% 6,300 10% Existing Home Sales YoY% Change 5,800 0% 5,300 -10% 4,800 -20% 4,300 -30% 3,800 -40% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Slide 12: Repaint Drivers
Repaint Drivers S&P/Case-Shiller Home Price Median Age of Housing Stock Appreciation Index - YoY% Change 15.0% 45 41 40 10.0% 40 39 38 37 35 5.0% 35 34 32 32 31 30 30 30 0.0% 28 28 27 25 25 25 -5.0% 23 20 -10.0% 15 -15.0% 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 201
Slide 13: DIY Contractor Shift Expected to Continue in U.S. & Canada
DIY Contractor Shift Expected to Continue in U.S. & Canada 41% 59% DIY/ Remodeler Paint Contractor 59% 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 201
Slide 14: Commercial Construction
2021 F I NANCI AL CO M M UNI TY P RE S E NTATI O N COMMERCIAL CONSTRUCTION
Slide 15: Commercial Construction Starts
Commercial Construction Starts Painting Begins ~12-18 Months After Start T3M Avg - Sq Ft in '000s and YoY% Change YoY% Change Strong Starts Lead to Painting Phase 12-18 Choppy and Gradual Sequential Improvement 85,000 Months Later – Plus 3 Month COVID Pause in New Starts 30% 80,000 20% 75,000 COVID-
Slide 16: Commercial Recovery Gaining Momentum
Commercial Recovery Gaining Momentum Architectural Billings Index (>50 = expansion) 65 60 55 50 45 40 35 30 25 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 ABI has Strengthened to a Score Not Seen Since Pre-Great Recession FINANCIAL COMM
Slide 17: 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 $348,754 $342,707 $328,362 $309,635 $286,383 $273,611 $247,875 $222,622 $227,033 $227,961 $217,384 2008 200
Slide 18: Industrial Coatings
2021 F I NANCI AL CO M M UNI TY P RE S E NTATI O N INDUSTRIAL COATINGS
Slide 19: 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 20: Industrial Coatings – Strong Recovery
Industrial Coatings – Strong Recovery 1 Kitchen Cabinet Manufacturing Association INDUSTRIAL INDUSTRIAL GENERAL WOOD WOOD INDUSTRIAL • New residential strength driving flooring, cabinetry • Heavy equipment OEMs reporting solid trends and furniture • Demand improving in all regions, led by Asia YTD •
Slide 21: Industrial Coatings – Continued Strength
Industrial Coatings – Continued Strength PACKAGING COIL • Shift from plastic to cans – environmental concerns • Recovery of commercial construction – similar drivers as architectural • Growing new categories: spiked seltzer & energy drinks • Appliance, HVAC, trailer truck strong momentum in 2021 • S
Slide 22: Industrial Coatings – Gaining Momentum
Industrial Coatings – Gaining Momentum AUTO PROTECTIVE REFINISH & MARINE • Miles driven and collision rates improving but below • Sequential improvement pre-COVID levels • Oil and gas maintenance cannot be delayed indefinitely • Continued industry consolidation creates opportunity • Growth in other
Slide 23: Typical Coatings Product
Typical Coatings Product 2021 est. vs. 2020 Industry Inflation* Resins/Latex (41%) 11 to 19% Acrylic (Latex Paints) Alkyd (Oil Paints) Epoxy (Epoxy Paints) Pigments (29%) 1 to 2% Titanium Dioxide Pigments Paint Fillers Extenders Containers (15%) 7 to 13% Metal or Plastic Additives (9%) -1 to -2% Sol
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