Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Credit Suisse Basic Materials Conference 2014
31 slides from Sherwin-williams Company (the)'s conference presentation, Sep 17, 2014
Slide 1: Credit Suisse Basic Materials Conference
Credit Suisse Basic Materials Conference September p 17,, 2014
Slide 2: Forward-Looking Statements
Forward‐Looking Statements The presentations today will contain certain “forward‐looking statements” with respect to sales, earnings and other matters. These forward‐looking statements are p management’s based upon g current expectations, p , estimates,, assumptions p and beliefs concerning future e
Slide 3: 2013 Coatings Industry
2013 Coatings Industry Global Mix by Category OEM Product Special Purpose Finishes 21% 42% Total Coatings Architectural 2013 37% ~8.3 Billion Gallons (+6.4%) ~108.7 Billion Dollars (+4.5%) Source: Kusumgar, Nerlfi & Growney, The Sherwin-Williams Company - 2nd Quarter 2014 Company Estimates
Slide 4: Coatings Demand by Region
Coatings Demand by Region Share of Global Revenue by Category EMEA North America 28% 24% 31% 26% 33% 19% 24% Asia‐Pacific Asia‐ 22% 37% 30% South America 7% 42% % 49% 9% 4% 4% ROW ~ 4% All Coatings OEM Product Finishes Architectural Coatings Special Purpose Coatings The Sherwin-Williams Company - 2n
Slide 5: Coatings Industry Top Global Manufacturers - 2013
Coatings Industry Top Global Manufacturers ‐ 2013 Akzo Nobel • Top T 10 suppliers li account for ~57% global share All Others (>10,000 ((> 10,000 , firms)) • More than 10,000 companies make up the balance Source: Kusumgar, Nerlfi & Growney, Company Data The Sherwin-Williams Company - 2nd Quarter 201
Slide 6: U.S. Coatings Industry
U.S. Coatings Industry Sales ($) Mix by Category OEM Product Finishes Architectural 29% Total Coatings 57% Special Purpose 2013 14% ~1.2 Billion Gallons (+5.2%) ~21.8 Billion Dollars (+5.6%) Source: ACA; Company Estimates The Sherwin-Williams Company - 2nd Quarter 2014 Segment Breakdown Based on Gal
Slide 7: U.S. Coatings Industry
U.S. Coatings Industry Architectural Coatings Gallons (Millions) 850 800 750 Millions of Gallons 700 ~ 701 Million 650 600 550 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Estimate of Normalized, Sustainable Industry Volume The Sherwin-Williams Compan
Slide 8: Favorable Customer Mix
Favorable Customer Mix DIY Contractor Shift will Continue 42% 59% 58% 41% Contractor DIY Source: U.S. Dept of Commerce/ACA/Company Estimates The Sherwin-Williams Company - 2nd Quarter 2014
Slide 9: U.S. Architectural Paint Market
U.S. Architectural Paint Market Breakdown by Segment (Current) Residential Repaint (Pro) 25% id i l Non‐Residential (175M Gal) Repaint New Non‐ 16% Residential ((112M Gal)) 6% (42M Gal) DIY New Residential 42% 11% (294M Gal) (77M Gal) 701 Million Gallons The Sherwin-Williams Company - 2nd Quarter 20
Slide 10: U.S. Architectural Paint Market
U.S. Architectural Paint Market Breakdown by Segment (Normal) Residential Non‐Residential Repaint (Pro) Repaint New Build 24% 16% +48M (182M Gal) (122M Gal) Repaint (Pro) New Non Non‐ +17M Residential 7% (53M Gal) DIY 38% (294M Gal) Repaint (DIY) New Residential ~Flat 15% (114M Gal) 760 Million Gall
Slide 11: Company Overview
Company Overview Financial Highlights (Non‐GAAP) 20121 20132 % Chg. Net Sales $9 53B $9.53B $10 07B $10.07B +5 6% +5.6% EBITDA $1,209M $1,413M +16.8% Net Income $680M $787M +15 8% +15.8% % Sales 7.1% 7.8% Earnings Per Share $6.49 $7.60 +17.1% Net Operating Cash $937M $1,119M +19.4% Dividends Per Sha
Slide 12: Company Overview
Company Overview Financial Highlights 1H‐14 vs 1H‐13 GAAP Non‐GAAP 1H‐13 1H‐14 % Chg. 1H‐131 1H‐142 % Chg. Net Sales $4 88B $4.88B $5 41B $5.41B +10 8% +10.8% $4 88B $4.88B $5 19B $5.19B +6 4% +6.4% EBITDA $672.1M $726.7M +8.1% $683.9M $752.1M +10.0% Net Income $373.5M $373 5M $406.9M $406 9M +9 0%
Slide 13: Revenue & Profit by Segment - 2013
Company Overview Revenue & Profit by Segment ‐ 2013 20% Segment Revenues: $10.17B Segment Profit: $1.44B 15% Average: 14.2% es Profit as a % of Sale Latin America 10% Global Finishes Paint Stores Consumer 5% 0% 20% 40% 60% 80% 100% Share of Revenue Note: Excludes Administrative Segment The Sherwin-W
Slide 14: Paint Stores Group
Paint Stores Group 2013 Store Count 4000 Sherwin‐Williams 3500 Home Depot Lowe's 3000 PPG 2500 Kelly‐Moore Cloverdale/Rodda 2000 Dunn Edwards 1500 Benjamin‐Moore Diamond Vogel 1000 Vista 500 0 Industry (U.S., Canada, Caribbean): ‐ Dedicated Paint Stores: ~11,000 ‐ Total Paint Outlets: ~50,000 The Sh
Slide 15: Paint Stores Group + Comex Stores
Paint Stores Group + Comex Stores Store Penetration Households per Store 30,000 or less 30,001 to 40,000 40,001 to 50,000 50,001 or more The Sherwin-Williams Company - 2nd Quarter 2014
Slide 16: Paint Stores Group
Paint Stores Group Store Penetration Post Integration Households per Store 30,000 or less 30,001 to 40,000 40,001 to 50,000 50,001 or more The Sherwin-Williams Company - 2nd Quarter 2014
Slide 17: Contractor Preference Increasing
Contractor Preference Increasing Primary Outlet by Product Category Share of Painting Contractors Citing Sherwin‐Williams as Their Primary Outlet for… for 2010 50% 2011 0 SHW 2012 2013 Closest Competitor 10% Paint Sundries Spray Equipment Source: 2013 Market Vision Research The Sherwin-Williams Comp
Slide 18: Consumer Preference Increasing
Consumer Preference Increasing JD Power Satisfaction Rating Paint Retailer Segment O Overall ll Customer C Satisfaction S i f i IndexI d Scores S JD J.D. (Based on a 1,000‐point scale) Power Overall Score Circle Rating Sherwin‐Williams 848 5 Ace Hardware 835 5 Paint Retailer Average 818 3 Highest in
Slide 19: Consumer Group End to End Supply Chain
Consumer Group End to End Supply Chain • 32 Manufacturing Sites • 7 Distribution Service Centers • 400 Tractors / 1,200 Trailers • More than 6 000 Emplo 6,000 ees Employees The Sherwin-Williams Company - 2nd Quarter 2014
Slide 20: Brand Power
Brand Power Leading U.S. Brand Awareness #1 Architectural Paint Brand #1 Stain & Protective Finish Brand #1 Aerosol Paint Brand Awareness #1 Auto Specialty Paint Brand #1 Painting Tool Brand #1 Wood Sealer Brand The Sherwin-Williams Company - 2nd Quarter 2014
Slide 21: Latin America Coatings Group
Latin America Coatings Group Architectural Protective & Marine Product Finishes S‐W Stores Dealers Home Centers The Sherwin-Williams Company - 2nd Quarter 2014
Slide 22: Latin America Coatings Group
Latin America Coatings Group Mexico El Salvador Venezuela SS‐W Facilities ili i (12) Licensees (2) Perú Brazil Chile Uruguay Argentina The Sherwin-Williams Company - 2nd Quarter 2014
Slide 23: Global Finishes Group
Global Finishes Group Automotive Aerospace Protective Marine OEM Finishes The Sherwin-Williams Company - 2nd Quarter 2014
Slide 24: Global Finishes Group
Global Finishes Group The Sherwin-Williams Company - 2nd Quarter 2014
Slide 25: Consolidated Sales
Consolidated Sales $ Millions 12,000 10,186 9,534 10,000 8,766 7,810 8,005 7,980 , 7,776 7 191 7,191 7,094 8,000 6,114 6,000 4,000 2,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % Change vs. Prior Year: 3. 13.1 7.6 17.6 8.6 .5 2.5 (0.3) ((11.1) . ) 9.6 .7 12.7 8.8% 6.8% The Sherwin-Willia
Slide 26: Pricing Discipline
Pricing Discipline $ Gross Profit % of Sales Raw Material Index 5,000 4,617 $4,617 4,222 $4,222 4,500 $3,598 $3 598 3,745 $3,745 $ , 4 000 4,000 3,413 $3,413 3 598 3,598 3 499 3,499 $3 $3,499 499 $3,481 3,481 3,263 $3,263 3,500 $ Millions 3,000 46.0 44.3 45.3 1.6 44.9 44.8 2 500 2,500 43 7 43.7 43 8
Slide 27: SG&A Expense
SG&A Expense $ Millions $ SG&A % to Sales 3,468 3,500 3,200 2,961 3,000 2,644 2,728 2 513 2,513 2,597 , 2 535 2,535 2,326 2,500 2,069 2,000 35.7 35.1 1,500 33.8 32.4 33.1 33.8 33.6 34.0 32.4 32.2 1,000 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013 The Sherwin-Williams Company - 2nd Quarte
Slide 28: Uses of Cash
Uses of Cash 2009‐2013 ($ Millions) 5‐Year Net Operating Cash: $4 285 $4,285 Cash Dividends $840 9 $840.9 $720.0 Capital Expenditures St k $2,462.7 TTreasury Stock $2 462 7 $590.4 Purchases Acquisitions The Sherwin-Williams Company - 2nd Quarter 2014
Slide 29: Stock Repurchase
Stock Repurchase 13.20 14.00 12.00 9.00 Shares 10.00 7.25 8 00 8.00 Millions of S 5.60 5.00 4.70 4.60 6.00 4.30 4.00 M 2.00 0.00 2006 2007 2008 2009 2010 2011 2012 2013 Avg. Common Shares Outstanding 137.3 130.9 119.3 115.4 108.2 103.4 103.9 103.0 A Avg. P Price/Share i /Sh $54 49 $54.49 $65 $65.39
Slide 30: Total Debt : EBITDA Ratio
Total Debt : EBITDA Ratio 88% 98% 113% 103% 151% 129% 1,705 , 1,722 , 1800 1600 1336 1400 1129 1200 1,045 993 946 965 924 965 1000 834 818 EBITDA 800 Total Debt 600 400 200 0 2008 2009 2010 2011 2012 2013 Year End Cash ((Mil): ) $26.2 $69.3 $58.6 $32.7 $862.6 $744.9 The Sherwin-Williams Company - 2n
Slide 31: Dividends Per Share
Dividends Per Share 1979 – 2014 $2.25 2.20 2.00 $2.00 $1.75 1.56 1.46 1.42 1.44 $1.50 1 40 1.40 1.26 $1.25 1.00 $1.00 .82 $0.75 .68 .62 .58 .60 .54 $0 50 $0.50 .45 .48 .40 .32 .35 .25 .28 .21 .22 $0.25 .14 .16 .18 .19 .08 .10 .12 .13 .01 .04 .05 .06 $ $0.00 1979 1980 1981 1982 1983 1984 1985 1986 19
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