Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Investor Day (June 2019)
30 slides from Sherwin-williams Company (the)'s investor day presentation, Jun 5, 2019
Slide 1: Industry Overview
INDUSTRY OVERVIEW JOHN MORIKIS C H A I R MA N & C H I E F E XE C U TI V E O F F I C E R FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements The presentations today will contain certain “forward-looking statements," within the meaning of the federal securities laws, with respect to anticipated future performance (including sales and earnings), expected growth, future business plans and other matters. These stat
Slide 3: Global Paint & Coatings Industry
Global Paint & Coatings Industry Global Mix by Category (Based on $) Mix by Category (Based on $) 2% Special Architectural 6% 39% Purpose Paints Coatings 39% 20% 12% 2% 4% OEM Coatings 7% 41% 17% 11% Total Coatings 2018 ~9.7 Billion Gallons ~130 Billion Dollars Source: KNG Global Research The use of
Slide 4: Paint & Coatings Demand by Region
Paint & Coatings Demand by Region Geographic Split of Global Revenue Europe North America 23% 23% 23% 24% 23% 21% 25% Asia-Pacific 25% 46% 41% South America 4% 52% 43% 6% 3% ROW ~ 4% 3% All Coatings OEM Coatings Architectural Paints Special Purpose Coatings Sources: KNG Global Research The use of KN
Slide 5: Top Global Manufacturers
Top Global Manufacturers Coatings Industry 2018 Global Market All Others Top 10 Suppliers ~55% (>5,000 firms) Masco Source: KNG Global Research The use of KNG information in this presentation is for illustrative FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 5 and consistency purposes only; SHW hav
Slide 6: North America Paint & Coatings Industry
North America Paint & Coatings Industry Sales ($) Mix by Category North America Architectural Paint & Coatings Special Paints Purpose 41% 2018 22% ~1.5 Billion Gallons ~29.9 Billion Dollars OEM Coatings 37% Source: KNG Global Research The use of KNG information in this presentation is for illustrati
Slide 7: U.S. Architectural Coatings
U.S. ARCHITECTURAL COATINGS FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 7
Slide 8: U.S. Paint & Coatings Industry
U.S. Paint & Coatings Industry Architectural Paint Gallons & Square Footage Architectural Paint Gallons Nonresidential & Residential 900 260,000 Square Footage Nonresidential & Residential Sq. Ft in Thousands 850 PRIOR PEAK 250,000 800 Millions of Gallons 240,000 750 700 230,000 650 220,000 600 210,
Slide 9: U.S. Architectural Paints
U.S. Architectural Paints Estimated Breakdown by Segment New Non-Residential Residential 6% Repaint (Pro) (49M Gal) 29% (238M Gal) Non-Residential Repaint 15% New Residential (123M Gal) 12% (98M Gal) DIY 38% (311M Gal) 819 Million Gallons in 2018 FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 9 Sou
Slide 10: 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 household Facilities remodeling spend drive
Slide 11: Housing Supply Not Keeping Pace
Housing Supply Not Keeping Pace Housing Surplus/ Deficit (LHS) Housing Surplus/Deficit (thousands) & Vacancy Rate (RHS) Housing Surplus/Deficit (thousands) Homeowner Vacancy Rate Cumulative Housing Surplus/Deficit (RHS) 800 0.03 800 4,000 600 600 Cumulative Surplus/Deficit (Thousands) 3,000 0.025 An
Slide 12: Household Growth vs. Completions & Placements
Household Growth vs. Completions & Placements Thousand of Housing Units 2,500 2,000 1,500 1,000 500 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 HVS Household Growth (3-Year Rolling Average) Completions & Placements New construction not keepin
Slide 13: Repaint & Remodel
Repaint & Remodel Leading Indicator of U.S. Remodeling Activity 10% $370 6.9% 6.9% 7.3% 7.3% 7.3% 7.0% 6.9% 6.9% 6.4% 6.3% 6.5% 5.2% $350 $352 5% $345 $339 $353 $330 $336 $330 $323 $310 $316 0% $315 $309 $305 $299 $290 -5% $270 $250 -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2p Q3p Q4p 2017 2018 2019 4-Quarte
Slide 14: Remodeling Drivers
Remodeling Drivers Existing Home Sales & Monthly Housing Turnover Existing Home Sales Monthly Housing Turnover 30% 8.5% 8.0% 7.5% 20% Tax Credit 7.0% Expiration 10% 6.5% Y/Y % Change 6.0% 0% 5.5% 5.0% -10% 4.5% 4.0% -20% 3.5% 3.0% -30% 2.5% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 15: Remodeling Drivers
Remodeling Drivers Aging Housing Stock Share of Owner-Occupied Housing by Year Structure Built Median Age of Housing Stock 40 39 40 38 37 3% 34 35 16% 35 32 32 31 30 30 30 38% 28 28 27 15% 25 25 25 23 20 13% 15% 15 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Slide 16: Remodeling Drivers
Remodeling Drivers Change in U.S. Home Values Index 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 Price appreciation gives homeowners confidence to remodel FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 16 Source: Harvard Joint Center for Housing Studies, 2019, www.jchs.harvard.edu. All rights reserved.
Slide 17: Repaint & Remodel
Repaint & Remodel Baby Boomers Aging in Place Share of Home Improvement Spending (Percent) Age of Homeowners 55 & Over 35-54 Under 35 Older homeowners now account for fully half of improvement spending nationally Source: Harvard Joint Center for Housing Studies, Improving America’s Housing 2019, FIN
Slide 18: Repaint & Remodel
Repaint & Remodel Employment & Consumer Sentiment U.S. Monthly Unemployment Rate Consumer Sentiment Index 12.0% 120 10.0% 110 100 8.0% 90 6.0% 80 4.0% 70 2.0% 60 0.0% 50 1989 1990 1992 1994 1995 1997 1999 2000 2002 2004 2005 2007 2009 2010 2012 2014 2015 2017 2019 1989 1991 1993 1995 1997 1999 2001
Slide 19: Repaint & Remodel
Repaint & Remodel DIY Contractor Shift Will Continue in U.S. & Canada 38% 59% DIY/ Remodeler Paint Contractor 62% 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 20
Slide 20: Commercial Construction
COMMERCIAL CONSTRUCTION FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 20
Slide 21: Commercial Construction Put in Place
Commercial Construction Put in Place $500 Annual U.S. Commercial Construction Completions ($bn) $450 $400 $350 $300 $250 $200 $150 $100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Accumulated construction put in place drives maintenance opportunities FIN
Slide 22: Commercial Construction Starts
Commercial Construction Starts Painting is one of the last trades into projects Completions Strong Starts 12-18 Months $450 Commercial Construction Starts ($bn, SA) $400 $350 $300 $250 $200 $150 $100 $50 $- Sep 2016 Dec 2016 Sep 2017 Dec 2017 Sep 2018 Dec 2018 Jun 2016 Mar 2017 Jun 2017 Mar 2018 Jun
Slide 23: Industrial & Special Purpose Coatings
INDUSTRIAL & SPECIAL PURPOSE COATINGS FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 23
Slide 24: Industrial Demand by Region
Industrial Demand by Region Purchasing Managers Index (PMI) - Manufacturing US Manufacturing PMI Brazil Manufacturing PMI Eurozone Manufacturing PMI China Manufacturing PMI ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ‘19 ’06 ’08 ’10 ’12 ’14 ’16 ’18 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09
Slide 25: Industrial Coatings
Industrial Coatings Technology driven, specialty solutions that drive customer throughput and productivity FINANCIAL COMMUNITY PRESENTATION – JUNE 5, 2019 25
Slide 26: Urbanization
Urbanization Urban vs. Rural Global Population, 1950 - 2050 % of Population Living in Urban Areas 100% 2018 2030 2050 88% 89% 7 000 000 84% 81% 82% 80% 6 000 000 74% 72% 68% 68% 5 000 000 66% 59% 60% 55% 4 000 000 50% 3 000 000 43% 2 000 000 40% 1 000 000 0 20% 1955 1960 1965 1970 1975 1980 1985 199
Slide 27: Global Infrastructure Spending
Global Infrastructure Spending Infrastructure Investment Gap by Region, 2016-2040 Extent to which estimated investment need is greater than investment expected under current trends 60% 50% 47% 39% 40% 30% 19% 20% 16% 10% 10% 10% 0% AMERICAS AFRICA EUROPE OCEANIA ASIA WORLD Significant global backlog
Slide 28: Oil & Gas Infrastructure
Oil & Gas Infrastructure Capital Expenditures (In billions of dollars) Shell Exxon Occidental -18% -20% -40% 31.7 -15% +11% -39% -6% 33.0 +27% 8.9 26.1 22.1 23.0 26.5 -49% +39% 20.8 -5% +33% 19.6 5.3 5.0 16.2 15.4 3.6 2.7 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 -17
Slide 29: Global Beverage Cans
Global Beverage Cans EMEAI Beverage Cans Market Size 72.8 Billion Units* NAR Beverage Cans Market Growth 3% CAGR** Market Size 93.5 Billion Units* Market Growth -1% CAGR** APR Beverage Cans Market Size 120.0 Billion Units* Market Growth 4% CAGR** LAR Beverage Cans Market Size 39.3 Billion Units* Mar
Slide 30: Auto Refinish Demand
Auto Refinish Demand 3,300 3,250 3,200 U.S. Monthly Miles Driven (thousands) 3,150 3,100 3,050 3,000 2,950 2,900 2,850 2,800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Miles driven continues to increase steadily, driving demand for automotive refinish FINANCIAL COMMUNITY PRESENTATION – JUNE 5
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