Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Investor Day (September 2020)
21 slides from Sherwin-williams Company (the)'s investor day presentation, Sep 29, 2020
Slide 1: Financial Overview
2020 F I NANCI AL CO M M UNI TY P RE S E NTATI O N FINANCIAL OVERVIEW AL M I S T Y S Y N SENIOR VICE PRESIDENT FINANCE & C H I E F F I N A N C I A L 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: Consolidated Sales
Consolidated Sales In Millions of Dollars Consolidated Sales $ In Millions $17,901 $17,534 $14,984 $11,856 -1.9% $11,339 $8,919 $8,751 1.9% 4.6% 26.4% 17.0% 2.1% 2015 2016 2017 2018 2019 6MOS2019 6MOS2020 FINANCIAL COMMUNITY PRESENTATION – SEPTEMBER 29, 2020 3 Refer to Financial Appendix 1: Income S
Slide 4: Consolidated Gross Profit
Consolidated Gross Profit Excluding Acquisition Related Costs & Other Adjustments Adjusted Gross Profit $8,072 Adjusted Gross Margin $7,513 Proforma Gross Margin $6,886 $ In Millions $5,925 $5,559 +4.6% $4,104 $3,925 49.0% 50.0% 46.0% 45.1% 46.9% 42.8% 44.0% 45.9% 44.6% 44.4% 2015 2016 2017 2018 201
Slide 5: SG&A Expense
SG&A Expense Excluding Acquisition Related Costs & Other Adjustments Adjusted SG&A Adjusted SG&A % to Sales Proforma SG&A % to Sales $5,244 $ In Millions $4,969 $4,694 $4,102 $3,914 +1.9% $2,561 $2,609 34.5% 34.6% 31.3% 28.7% 29.8% 30.1% 31.1% 29.9% 29.3% 28.3% 2015 2016 2017 2018 2019 6MOS2019 6MOS
Slide 6: Operating Income
Operating Income Excluding Acquisition Related Costs & Other Adjustments Adjusted Operating Income Adjusted Operating Income % to Sales Proforma Operating Income % to Sales $2,828 $ In Millions $2,544 $2,191 +9.6% $1,824 $1,495 $1,647 $1,364 15.4% 15.8% 14.5% 14.6% 14.5% 17.1% 15.3% 14.6% 14.3% 14.8
Slide 7: Profit Before & After Tax
Profit Before & After Tax Excluding Acquisition Related Costs & Other Adjustments Adjusted Profit Before Tax Adjusted Profit After Tax Continuing Operations $2,440 $ In Millions $2,186 $1,290 $1,957 $1,974 $1,184 $1,729 $1,761 $1,032 $1,549 $952 $1,430 $1,214 $1,054 2015 2016 2017 2018 2019 6MOS2019
Slide 8: Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)
Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) Excluding Acquisition Related Costs & Other Adjustments % to Sales $3,057 Adjusted EBITDA $ In Millions $2,822 $2,423 +7.0% $2,007 $1,602 $1,809 $1,497 16.9% 17.1% 16.8% 18.3% 16.0% 16.2% 16.1% 2015 2016 2017 2018 2019 6MOS2019 6M
Slide 9: Working Capital Performance
Working Capital Performance Accounts Receivable + Inventory – Payables % to Sales Working Capital $ In Millions $2,055 $2,102 $2,035 $1,971 $2,486 $2,413 14.0% 13.6% $975 12.5% 12.4% 11.6% 11.7% 8.6% 2015 2016* 2017** 2018 2019 2Q19 2Q20 Target FY Working Capital as a % to Sales of 11% to 11.5% *PRO
Slide 10: Cash Flow Performance, as Reported
Cash Flow Performance, as Reported In Millions of Dollars Net Operating Cash Uses of Cash Net Operating Cash Less Cap. Ex. • Capital Expenditures • Pay Dividends $2,321 • Manage Debt $1,884 $1,944 $1,992 • Acquisitions $1,661 $1,693 • Share Repurchases $1,447 $1,309 $1,213 $1,075 $1,070 $932 $758 $6
Slide 11: Consistent Capital Allocation Philosophy
Consistent Capital Allocation Philosophy WE WILL NOT HOLD CASH • Return Dividend to 30% of PY Earnings BALANCED CAPITAL KEY OBJECTIVES – FY20 Increase 18.6% ALLOCATION GOALS • BBB+ Target CAPEX Invest • Reduce Debt to EBITDA Leverage To Rating Approx. 2.5x – FY20 • Debt to Dividend 30% of PY EBITDA
Slide 12: Consolidated Net Operating Cash & Uses of Cash
Consolidated Net Operating Cash & Uses of Cash 5-Year Net Operating Cash: ~$8.9B 2015-2019 CASH DIVIDENDS USES OF CASH $2.4 DEBT REPAYMENT $3.1 • Capital Expenditures • Pay Dividends CAPITAL EXPENDITURES • Manage Debt • Acquisitions - $77M in 2019 SHARE REPURCHASES • Share Repurchases $1.6 $1.3 FINA
Slide 13: Debt to Adjusted EBITDA Ratio
Debt to Adjusted EBITDA Ratio Excluding Acquisition Related Costs & Other Adjustments Debt Adjusted EBITDA Debt to Adjusted EBITDA $ In Millions $11,755 $10,521 $9,344 $8,685 $8,850 4.5 4.3 3.3 2.8 2.8 2.5 $3,057 $3,162 $2,617 $2,822 $2,423 @ Close - 6/1/2017 2017 2018 2019 Q2 2020 2020F Targeting L
Slide 14: Maturities of Long-Term Debt
Maturities of Long-Term Debt $2,250 2017 As of June 30, 2020 $ In Millions $1,619 $1,619 $ 1,500 $1,250 $1,250 $800 $660 $650 $650 $650 $650 $545 $550 $500 $500 $500 $500 $350 $350 $300 $300 $300 $25 $4 $4 2018 2025 … 2042 … 2050 … 2017 2019 2020 2021 2022 2023 2024 2026 2027 2028 2029 2030 2045 204
Slide 15: Dividends Per Share
Dividends Per Share 2005 - 2020 +18.6% 2019 was 41st Consecutive Year of Dividend Increases $5.36* $4.52 $3.36 $3.40 $3.44 $2.68 $2.20 $2.00 $1.44 $1.46 $1.56 $1.40 $1.42 $1.26 $1.00 $0.82 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Dividend Returned to 30% of Pri
Slide 16: Capital Allocation: Strategic M&A
Capital Allocation Strategic M&A TARGET CRITERIA VALUE DRIVERS • Improve Technology Portfolio • Fit Core Competencies • Leverage Acquisitions Across Our Global Businesses • Strengthen Global Reach • Leadership in Key Technologies, Markets, • Supply Products Across • Fills Product or Capability Gap o
Slide 17: Share Repurchase History
Share Repurchase History 2011 – 6MOS 2020 (000s) Shares 6,925 Average Price Per Share $523.69 $464.98 4,700 4,600 4,300 $402.17 3,575 $278.57 $220.66 $178.90 1,675 1,700 $121.25 1,525 $78.16 2011 2012 2013 2014 2015 2016* 2017* 2018 2019 6MOS 2020 105,672 103,930 103,049 98,741 94,544 94,488 94,927
Slide 18: Summary Capitalization
Summary Capitalization Strong Financial Profile Provides Flexibility 6/30/2020 . • $3.0B Remaining Available at 6/30/20 Cash $188M • Expect to Maintain Balance Sheet Flexibility to Pursue Growth Opportunities Debt $8.8B • Annual Cash Generation Comfortably Supports Anticipated Funding Needs Revolvin
Slide 19: A Strong Foundation on Which We Will Continue to Build
A STRONG FOUNDATION • Track Record of Financial Performance & Focused Execution In All Economic Environments • Large, Stable Revenue Base with Improving EBITDA Margins • Strong Balance Sheet • Experienced & Determined Management Team …ON WHICH WE WILL CONTINUE TO BUILD • Grow Revenue Organically & t
Slide 20: Third Quarter 2020 Sales Guidance
Third Quarter 2020 Sales Guidance Original July 28, 2020/Revised September 29, 2020 ORIGINAL July 28, 2020 REVISED SEPTEMBER 29, 2020 THIRD QUARTER 2020 SALES GUIDANCE THIRD QUARTER 2020 SALES GUIDANCE Sales Guidance Up or Down Low Single Sales Guidance Up 3% to 5% Digits By Segment: By Segment: The
Slide 21: Full Year 2020 Guidance
Full Year 2020 Guidance Sales & EPS ORIGINAL July 28, 2020 REVISED SEPTEMBER 29, 2020 FULL YEAR 2020 SALES GUIDANCE FULL YEAR 2020 SALES GUIDANCE Sales Guidance Flat to LY Sales Guidance Flat to Up Slightly By Segment: By Segment: The Americas Group Flat to Up Low SD The Americas Group Flat to Up Lo
The Sherwin-Williams Company — Investor Day (September 2020) on 6ix