Sherwin-Williams Company (the) · NYSE:SHW
Sherwin-Williams Company (the) — The Sherwin-Williams Company — Investor Day (May 2016)
28 slides from Sherwin-Williams Company (the)'s investor day presentation, May 26, 2016
Slide 1: Financial Overview
Financial Overview SEAN HENNESSY Senior Vice President Finance & Chief Financial Officer
Slide 2: Consolidated Sales
Consolidated Sales $ Millions 11,130 11,339 12,000 10,186 9,534 10,000 8,766 7,810 8,005 7,980 7,776 7,191 7,094 8,000 6,000 4,000 2,000 0 % Change vs. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Prior Year: 17.6 8.6 2.5 (0.3) (11.1) 9.6 12.7 8.8 6.8 9.3 1.9 Financial Community Presentati
Slide 3: Consolidated Gross Profit
Consolidated Gross Profit $ Millions $ Gross Profit % to Sales 5,559 6,000 5,164 4,617 5,000 4,222 3,598 3,745 3,413 3,499 3,481 4,000 3,080 3,263 46.4 49.0 3,000 43.7 44.9 43.8 46.0 44.8 44.3 45.3 42.8 42.7 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012* 2013 2014 2015 Financial Community Pr
Slide 4: Consolidated Gross Profit
Consolidated Gross Profit $ Millions $ Gross Profit % to Sales 5,559 6,000 Gross Margin** 5,164 4,617 5,000 4,222 3,598 3,745 3,413 3,499 3,481 4,000 3,080 3,263 46.4 49.0 3,000 43.7 44.9 43.8 46.0 44.8 44.3 45.3 42.8 42.7 44.4 2,000 41.7 40.7 1,000 0 2005 2006 2007 2008 2009 2010 2011 2012* 2013**
Slide 5: SG&A Expense
SG&A Expense $ SG&A % to Sales $ Millions 3,823 3,914 4,000 3,468 3,200 3,500 2,961 2,597 2,644 2,728 3,000 2,513 2,535 2,326 2,500 2,000 1,500 35.7 35.1 34.5 33.1 33.8 33.6 34.0 34.3 32.4 32.2 32.4 1,000 500 0 2005 2006 2007 2008 2009 2010 2011 2012* 2013 2014 2015 Financial Community Presentation
Slide 6: SG&A Expense
SG&A Expense $ SG&A % to Sales $ Millions SG&A % to Sales** 3,823 3,914 4,000 3,468 3,200 3,500 2,961 2,597 2,644 2,728 3,000 2,513 2,535 2,326 2,500 2,000 1,500 35.7 35.1 34.5 33.1 33.8 33.6 34.0 34.3 32.4 32.2 32.4 1,000 29.6 30.1 29.2 500 0 2005 2006 2007 2008 2009 2010 2011 2012* 2013** 2014** 2
Slide 7: Operating Income
Operating Income* $ Operating Income % to Sales $ Millions 1,800 1,647 1,600 1,342 1,400 1,149 1,200 1,002 947 903 855 1,000 754 753 784 728 14.5 11.6 12.5 12.1 800 10.7 9.9 11.3 10.5 10.3 9.7 8.9 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012** 2013 2014 2015 * Consolidated Gross Profit Minu
Slide 8: Operating Income
Operating Income* $ Operating Income % to Sales $ Millions 1,800 Operating % to Sales*** 1,647 1,600 1,342 1,400 1,149 1,200 1,002 947 903 855 1,000 754 753 784 12.5 728 14.5 11.6 12.1 800 10.5 10.7 10.3 9.7 9.9 11.3 8.9 600 14.3 11.4 12.1 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012** 2013***
Slide 9: 2015 Reportable Segments
2015 Reportable Segments $ Millions Net External Segment Sales Profit ROS* Paint Stores Group $7,209.0 $1,433.5 19.9% Latin America Coatings Group $631.0 $18.5 2.9% Consumer Group $1,578.0 $308.8 19.6% Global Finishes Group $1,916.3 $201.9 10.5% Administrative $5.1 $(413.7) - Financial Community Pre
Slide 10: Profit Before & After Tax
Profit Before & After Tax $ Millions Profit Before Tax 1,549.0 1,600.0 Profit After Tax 1,400.0 1,258.2 1,200.0 1,086.0 1,053.8 1,000.0 912.9 907.3 865.9 834.3 714.5 741.5 753.0 800.0 656.2 677.8 615.6 622.8 631.0 576.1 600.0 463.3 476.9 435.8 462.5 441.9 400.0 200.0 0.0 2005 2006 2007 2008 2009 201
Slide 11: Working Capital Ratio
Working Capital Ratio (Accounts Receivable + Inventory – Payables)/Sales 15.0% 12.5% 12.7% 13.0% 11.7% 11.9% 11.2% 10.9% 10.8% 10.7% 10.5% 10.1% 11.0% 8.6% 9.0% 7.0% 5.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Financial Community Presentation - May 26, 2016
Slide 12: Working Capital & Days
Working Capital & Days $ Millions 2009 2010 2011 2012 2013 2014 2015 Accounts Receivable $696.1 $916.7 $989.9 $1,032.5 $1,097.8 $1,130.6 $1,114.3 Days 53 56 56 55 54 55 54 Inventories $738.5 $917.7 $926.8 $920.3 $970.8 $1,033.5 $1,018.5 Days 96 94 96 91 86 86 83 Accounts Payable $674.7 $909.6 $965.1
Slide 13: Working Capital & Days
Working Capital & Days $ Millions 1Q 2015 1Q 2016 Accounts Receivable $1,234.6 $1,290.7 Days 53 52 Inventories $1,161.3 $1,147.4 Days 100 96 Accounts Payable $1,174.8 $1,152.9 Days 69 69 Net Working Capital $1,221.0 $1,285.2 % to Sales 10.9% 11.2% Financial Community Presentation - May 26, 2016
Slide 14: Net Operating Cash
Net Operating Cash $ Millions 1600 1,447.5 1400 Uses of Cash 1,083.8 1,081.5 963.5 • Manage Debt 1200 1000 876.2 859.2 887.9 • Capital Expenditures 706.6 735.8 712.1 • Pay Dividends 800 665.7 605.3 569.8 546.4 • Acquisitions 600 425.0 428.5 • Buy Back Stock 400 200 0 2008 2009 2010 2011 2012 2013 20
Slide 15: 2016 First Quarter Cash Flow
2016 First Quarter Cash Flow $ Millions 2015 2016 Net Operating Cash (55.1) (79.8) Capital Expenditures (42.9) (52.0) Dividends (62.6) (77.7) Free Cash Flow (160.6) (209.5) Financial Community Presentation - May 26, 2016
Slide 16: Free Cash Flow by Quarter
Free Cash Flow* by Quarter 650 550 450 350 250 150 50 -50 -150 -250 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total Year 2011 -219 180 272 196 429 2012 -228 280 294 224 570 2013 -174 301 388 197 712 2014 -167 323 427 83 666 2015 -160 297 421 406 963 2016 -209 Financial Community Presentation - May 26, 2016 *
Slide 17: Total Debt : EBITDA Ratio
Total Debt : EBITDA Ratio 98% 113% 103% 151% 129% 119% 109% 1,963 2000 1,805 1,809 1,705 1,722 1,521 1,336 1500 1,129 1,045 965 993 924 1000 834 818 500 0 2009 2010 2011 2012 2013 2014 2015 EBITDA Total Debt Financial Community Presentation - May 26, 2016
Slide 18: Debt Maturity Schedule
Debt Maturity Schedule December 31, 2015 Due Date $ Millions 1.350% Senior Notes 2017 $699.6 3.450% Senior Notes 2025 $399.8 4.450% Senior Notes 2045 $397.7 4.000% Senior Notes 2042 $298.6 7.375% Debentures 2027 $119.4 Other $5.1* Total Long Term Debt $1,923.4 Financial Community Presentation - May
Slide 19: Interest Expense, Earnings Coverage and Debt to Capitalization
Interest Expense, Earnings Coverage and Debt to Capitalization Interest Exp. (Millions) Earnings Cov. (Times) 80.0 71.6 70.6 67.2 65.7 64.2 70.0 62.7 61.8 60.0 49.6 40.0 50.0 42.5 42.8 40.0 26.1 30.0 18.4 18.3 20.6 15.5 14.2 13.4 13.7 16.6 20.0 11.9 10.6 10.0 0.0 2005 2006 2007 2008 2009 2010 2011 2
Slide 20: Rating Agencies
Rating Agencies Standard & Poor’s Rating Services March 2016 • Long-Term Rating at ‘A’ • Short-Term Rating at ‘A-1’ • Credit Watch Negative Moody’s Investors Services March 2016 • Long-Term Rating Downgraded to ‘A-3’ • Short-Term Debt Rating Downgraded to ‘P-2’ • Under Review for Further Downgrade F
Slide 21: Treasury Stock Acquired
Treasury Stock Acquired 2005-2015 Average Price Avg. Shares Shares Per Share Total Dollars Outstanding (000) 2005 8,076,000 44.14 356,493,265 141,079 2006 5,600,000 54.49 305,158,657 137,342 2007 13,200,000 65.39 863,138,211 130,925 2008 7,250,000 54.28 393,539,607 118,178 2009 9,000,000 58.93 530,3
Slide 22: Treasury Stock Acquired
Treasury Stock Acquired 2010-2017 Average Price Avg. Shares Shares Per Share Total Dollars Outstanding (000) 2010 5,000,000 75.14 375,700,000 108,786 2011 4,700,000 78.16 367,371,981 105,672 2012 4,600,000 121.25 557,765,791 103,930 2013 4,300,000 178.90 769,271,010 103,049 2014 6,925,000 220.66 1,5
Slide 23: Dividends Per Share
Dividends Per Share 1979 – 2016 $3.50 $3.36 $3.00 2.68 $2.50 2.20 2.00 $2.00 1.56 1.40 1.42 1.44 1.46 $1.50 1.26 1.00 $1.00 .82 .68 .54 .58 .60 .62 .40 .45 .48 $0.50 .28 .32 .35 .16 .18 .19 .21 .22 .25 .08 .10 .12 .13 .14 .01 .04 .05 .06 $0.00 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1
Slide 24: Dividends Per Share
Dividends Per Share 1979 – 2018 $3.44* $3.40* $3.50 $3.36 $3.00 2.68 $2.50 2.20 2.00 $2.00 1.56 1.401.421.441.46 $1.50 1.26 1.00 $1.00 .82 .68 .54 .58 .60 .62 .40 .45 .48 $0.50 .28 .32 .35 .16 .18 .19 .21 .22 .25 .08 .10 .12 .13 .14 .01 .04 .05 .06 $0.00 1979 1980 1981 1982 1983 1984 1985 1986 1987
Slide 25: Uses of Cash
Uses of Cash 2010-2015 ($ Millions) 5-Year Net Operating Cash: $5,237 Cash Dividends $984.3 Treasury Stock $4,218.4 Capital Purchases $912.5 Expenditures $223.6 Acquisitions Financial Community Presentation - May 26, 2016
Slide 26: Summary of Valspar Costs
Summary of Valspar Costs (Millions) • Financing • Legal • Advisor 1Q16 2Q16 3Q16 Total Total $36.9 $21.4 $25.2 $185-$205 Net Income $22.5 $13.1 $15.4 EPS ($.24) ($.15) ($.16) ($1.20)-($1.33) Financial Community Presentation - May 26, 2016
Slide 27: Forecast Debt to EBITDA
The Sherwin-Williams Co. Forecast Debt to EBITDA (Millions) Debt to EBITDA 1 LT Debt 2 2016 1.00 $1,925 2017 4.25 $9,275 2018 3.00 $9,275 2020 1.90 $6,850 1 Ratio calculated using gross debt to EBITDA 2 Effective January 1, 2016, the Company adopted FASB issued ASU No. 2015-03, requiring debt issuan
Slide 28: Credit Rating
Credit Rating • Reduce Debt Is Priority • Stock Buy Back Minimal Until Debt To EBITDA Approaches 2:1 • Dividend Increases But Not At 30% To Prior Year EPS • Investment Grade Is Important • Small Selective Bolt On Acquisitions Financial Community Presentation - May 26, 2016
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