Sherwin-williams Company (the) · NYSE:SHW
Sherwin-williams Company (the) — The Sherwin-Williams Company — Investor Day (August 2024)
94 slides from Sherwin-williams Company (the)'s investor day presentation, Aug 29, 2024
Slide 1: 2024 Financial Community Presentation
2024 Financial Community Presentation Welcome
Slide 2: Market Update
Market Update JAMES R. JAYE SVP, Investor Relations & Corporate Communications
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains "forward-looking statements," as defined under U.S. federal securities laws, with respect to sales, earnings and other matters. Forward-looking statements can be identified by the use of forward-looking words such as "believe," "expect," "estimat
Slide 4: Architectural Markets
San, == Architectural Markets SHERWIN-WILLIAMS. Wj
Slide 5: U.S. Architectural Paint Industry
U.S. Architectural Paint Industry U.S. Architectural Paint Gallon Estimate U.S. Non-Residential & Residential Square Footage SHW PSG GREW GALLONS 900 IN A DOWN MARKET 800 260,000 U.S. Sq. Ft. in Thousands Millions of Gallons 700 600 220,000 500 400 180,000 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 6: U.S. Architectural Market Trends: Choppy Demand
U.S. Architectural Market Trends: Choppy Demand ~10-15% of market ~30-35% of market ~5-10% of market ~10-15% of market ~35-40% of market NEW RESIDENTIAL PROPERTY COMMERCIAL DIY RESIDENTIAL REPAINT MANAGEMENT Market outlook: Market outlook: Market outlook: Market outlook: Market outlook: Near-term Lo
Slide 7: U.S. Demographics
U.S. Demographics Silent Baby Boomers Gen X Millennials Gen Z 1928-1945 1946-1964 1965-1980 1981-1996 1997-2012 78-95 Years Old 59-77 Years Old 43-58 Years Old 27-42 Years Old 11-26 Years Old (As Of 2023) (As Of 2023) (As Of 2023) (As Of 2023) (As Of 2023) Transitioning to Aging in place; Move
Slide 8: Strong Household Formation Supports Long Term Demand
Strong Household Formation Supports Long Term Demand 16.5 million household formations vs. 13.0 million housing starts 2,500 2,250 2,000 in 000s 1,750 1,500 1,250 1,000 750 500 250 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Household Formation Total Housing Starts Household formations have ou
Slide 9: New Residential - Single Family Housing Starts
New Residential - Single Family Housing Starts Painting Begins ~4-6 Months After Start Single Family Starts YoY % Change 1,300 60.0% 50.0% RECOVERY IN SINGLE FAMILY STARTS 1,200 40.0% (Seasonally Adjusted Annual Rate) 30.0% Single Family Starts In ‘000s 1,100 20.0% YoY% Change 1,000 10.0% 0.0% 900 -
Slide 10: Repaint & Remodel
Repaint & Remodel Leading Indicator of U.S. Remodeling Activity $550 20.0% LIRA Estimates $500 15.0% Four-Quarter Moving Totals in Billions Homeowner Improvements & Repairs $450 10.0% Four-Quarter Moving Rate of Change $400 5.0% $350 0.0% $300 -5.0% $250 -10.0% 1Q21 2Q21 2021 3Q21 4Q21 1Q22 2Q22 202
Slide 11: Residential Repaint
Residential Repaint SHW Outperforms Despite Soft Existing Home Sales 6,800 50.0% Existing Home Sales YoY % Change 6,400 40.0% 30.0% 6,000 20.0% Existing Home Sales In ‘000s 5,600 10.0% YoY% Change 5,200 0.0% 4,800 -10.0% 4,400 -20.0% 4,000 -30.0% 3,600 -40.0% Jul 21 Aug 21 Sep 21 Nov 21 Dec 21 Jul 2
Slide 12: Many Factors Beyond EHS Drive Residential Repaint Market Growth
Many Factors Beyond EHS Drive Residential Repaint Market Growth Median Existing Home Age Home Price Aging Home Sales is 40 Years Appreciation in Place Installed Square Remote Work Climate & Footage Grows Home Office Natural Disaster Changing Annually Upgrades Recovery Color Trends Residential Repain
Slide 13: Commercial Bldg. Starts
Commercial – Multi-Family & Other Building Starts Painting Begins ~12-24 Months After Start 230,000 30.0% 220,000 20.0% 210,000 SOFTENING COMMERCIAL BUILDING STARTS 200,000 10.0% T3M Avg. Sq. Ft. in ‘000s Commercial Bldg. Starts YoY% Change 190,000 0.0% 180,000 170,000 -10.0% 160,000 -20.0% 150,000
Slide 14: Property Maintenance
Property Maintenance Surge of Multi-Family Completions Will Require Future Maintenance 700 STRONG MULTI-FAMILY COMPLETIONS MAINTENANCE 80.0% 650 600 60.0% (Seasonally Adjusted Annual Rate) Multi-Family Completions In ‘000s 550 40.0% 500 YoY% Change 450 20.0% 400 0.0% 350 -20.0% 300 250 -40.0% Jul 22
Slide 15: Pro Gaining Share from DIY Over the Long Term
Pro Gaining Share from DIY Over the Long Term 36% 43% 56% 64% 2024E 2025E 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 PRO Paint Contractor Gallons DIY Gallons Sherwin-Williams is Well Positioned to Serve Pro and DIY Sources: U.S. Commerce Department, ACA, Company Estimates 15
Slide 16: Industrial Markets
ie Industrial Markets SHERWIN-WILLIAMS. Ws
Slide 17: Industrial Demand by Region
Industrial Demand by Region S&P Global Purchasing Managers Index (PMI) – Manufacturing USA Eurozone Brazil China 60 Expansion 55 50 Contraction 45 40 2022 2023 2024 YTD Choppy Industrial Macro Environment by End Market and Region Source: S&P Global. The PMI is a weighted average of the following fiv
Slide 18: Targeted End Markets – Growth Drivers & Outlook
Targeted End Markets – Growth Drivers & Outlook Automotive Refinish Protective & Marine Market Outlook: Near Term Long-Term Market Outlook: Near Term Long-Term SHW system installations robust Manufacturing facility starts in US/Mex driven by onshoring U.S. miles driven have recovered post COVI
Slide 19: Targeted End Markets – Growth Drivers & Outlook
Targeted End Markets – Growth Drivers & Outlook Packaging Coil Market Outlook: Near Term Long-Term Market Outlook: Near Term Long-Term Shift from plastic to cans: sustainability trend U.S. housing has never been this underbuilt – extrusions, New growth categories: spiked seltzer & energy drink
Slide 20: Targeted End Markets – Growth Drivers & Outlook
Targeted End Markets – Growth Drivers & Outlook Industrial Wood General Industrial Market Outlook: Near Term Long-Term Market Outlook: Near Term Long-Term Cabinets, flooring & furniture to rebound with SF starts Heavy equipment and transportation softness US lumber prices moderating Resident
Slide 21: Controlling the Controllables
Controlling the Controllables Alignment Strategy on enterprise Targeting the Driving customer is working priorities right markets success Expect to continue Investing and Pricing Focused on outperforming playing offense discipline execution the market Deep and experienced team and differentiated bus
Slide 22: Success by Design
Success by Design HEIDI G. PETZ President & CEO
Slide 23: $23.1 billion 2023 Net Sales
$23.1 billion 65,000+ 5,000+ 2023 Net Sales Employees Stores and Branches 120+ 140+ 30% Countries Manufacturing & PERFORMANCE COATINGS GROUP Distribution Facilities 56% 14% PAINT STORES GROUP CONSUMER BRANDS GROUP INDUSTRY-LEADING PORTFOLIO OF BRANDS 23
Slide 24: Delivering Results: 64,000+ Employees Aligned on Our Strategy
Delivering Results: 64,000+ Employees Aligned on Our Strategy To Create… Measured by… Guided by… Value and Opportunities for Key Stakeholders Above Market Growth Our Key Enterprise Priorities Customers ROS & Shareholders RONAE Success by Design Employees Cash Generation Culture Communities Provide D
Slide 25: Proven Track Record: It Starts and Ends With Delivering Results
Proven Track Record: It Starts and Ends With Delivering Results Stock Performance Total Return Comparison: January 1, 2003 – July 31, 2024 SHW DELIVERING CONTINUED $5,500 $5,075.65 Shareholder Value $4,500 45 $3,500 Consecutive Years of Dividend Increases $2,500 $1,500 S&P 500 71.8 Million $954.10 S
Slide 26: Uniquely Positioned for Delivering Above Market Growth
Uniquely Positioned for Delivering Above Market Growth Unique Assets Differentiated Solutions Delivered to our Controlled Depth of Talent Distribution Model & Ownership Culture Innovative Customers Products & Services Industry Responsive Customer Data & Strong Organic Leading Brands Supply Chain Con
Slide 27: Enterprise Strategic Priorities
Enterprise Strategic Priorities ABOVE MARKET GROWTH TALENT & CULTURE SUSTAINABILITY SIMPLIFICATION DIGITIZATION SUPPLY CHAIN RESPONSIVENESS Success by Design 27
Slide 28: Talent & Culture
Talent & Culture Attract & Onboard Retain & Develop Career Mobility ~ 1,400 ~ 10,000 ~ 7,000 73% 7-9% 85% College graduates Management Of our Of PSG Best in class Of employees recruited annually Trainee Program employees have Management annual turnover responded graduates 20+ years Trainee Graduates
Slide 29: Simplification
Simplification Raw Material Consolidation Manufacturing Productivity Finished Goods Consolidation Service Working Accelerated & Warehouse Faster M&A Reduced Disciplined capital reductions lower cost footprint synergy capture customer review of assets innovation optimization order cycle time Improved
Slide 30: Supply Chain Responsiveness
Supply Chain Responsiveness Safety is Unconditional Dual Sourcing Strategic Toller Flexibility Supply Chain Planning Multi-Site Readiness Risk Modeling Capacity expansions In-house resin – Strategic vs. “Hidden factory” New Global Statesville, Waco, Specialty Polymers transactional automation R&D Ce
Slide 31: Digitization
Digitization Customer & Employee Connectivity Data Strategy Platform(s) Optimization Revenue enablement Enhanced Increased sales AI task force – Regulatory & ERP upgrades & pricing analytics predictive & rep productivity productivity compliance & harmonization planning models use cases automation Im
Slide 32: Sustainability
Sustainability Product Blueprint Environmental Footprint Social Imprint Governance & Ethics Forbes® – World’s Best Employers | Fortune® – World’s Most Admired Companies | Newsweek® - World’s Most Trustworthy Companies ~ 320k MWh ~ 70 million ~ 650 ~ 100s of ~ 6,000 MWh ~ 1,400 Renewable energy Gallo
Slide 33: Our Global Architectural & Industrial Businesses
Above Market Growth Our Global Architectural & Industrial Businesses Paint Stores Consumer Performance Group Brands Group Coatings Group Deep & Targeted Disciplined Innovative Customer Shareholder Experienced Segments Approach to Profitability Value Solutions Team Investment Delivering Customer Valu
Slide 34: Global Architectural
Global Architectural JUSTIN BINNS President, Global Architectural
Slide 35: Disciplined Focus and Unique Solutions
Disciplined Focus and Unique Solutions For Each of our Targeted Architectural Market Segments Paint Stores Group Controlled distribution 4,700+ stores 56% of SHW sales Residential New Property Commercial Repaint Residential Maintenance Consumer Brands Group Strategic channel partners 13,000+ retail
Slide 36: Paint Stores Group
Paint Stores Group $12.8 billion PRIMARY END MARKETS • Residential Repaint 2023 Net Sales • New Residential 4,700+ 3,800+ • Commercial Stores across Sales Reps • Property Maintenance the US, Canada and Caribbean • DIY • Protective & Marine 30,000+ ~1,400 • Opportunity in all Markets – long Employees
Slide 37: Unique Controlled Distribution Model
Unique Controlled Distribution Model We Own the Complete Customer Experience… Talent development & retention Segment-focused sales reps Product innovation & offering Color experience Customer data & digital platform Dedicated logistics & delivery fleet Delivering Differentiated Solutions
Slide 38: We Own… Talent Development
We Own… Talent Development ~ 1,400 Management Trainees Hired Annually 7-9% * Average Voluntary Turnover Investments in Our People Make Us an Industry Leader in Employee Retention and Premium Customer Experience *Includes Store Managers, Asst. Store Managers, and Sales Reps 38
Slide 39: We Own… Segment-Focused Sales Reps
We Own… Segment-Focused Sales Reps EXPERTISE Marketing Training & Support Segment Application Product 3,800+ Sales Reps Reaching More Customers Than Ever 39
Slide 40: We Own… Product Innovation & Offering
We Own… Product Innovation & Offering #1 In Customer Factory-Like Finish Strong Mar Satisfaction For Cabinetry Resistance with Interior Paints* Painter Productivity *For J.D. Power 2024 award information, visit jdpower.com/awards 40
Slide 41: We Own… Color Experience
We Own… Color Experience Cutting Edge Solutions to Boost Homeowner and Contractor Color Confidence 41
Slide 42: We Own… Digital Innovation
We Own… Digital Innovation App Engagement PRO+ signups Year over year Year over year Digital Engagement Helps Pros Grow Faster 42
Slide 43: We Own… Digital Innovation
We Own… Digital Innovation • Place & manage orders • Color selection • Quoting • Invoicing • Inventory Digital Tools Empower and Help Our Customers Run Their Businesses 43
Slide 44: We Own… A Dedicated Logistics & Delivery Fleet
We Own… A Dedicated Logistics & Delivery Fleet 3,300+ Vehicles | 3,100+ Drivers | Millions of Deliveries Each Year Responsive Delivery System Focused on Customer Productivity 44
Slide 45: Unique Controlled Distribution Model
Unique Controlled Distribution Model 1 2 3 4 5 6 7 8 9 10 Marketing Consultation Bid Training/ Color & Place Prep Apply Quality Follow /Word of Acceptance Staffing Product Order Work Site Paint Control Up Mouth Selection Physical and Digital Touchpoints Along Every Step of the Contractor Journey 45
Slide 46: Brand Preferred By Professional Painters
#1 #1 #1 Brand Preferred Brand Specified In Paint Brand By Professional By Designers** Awareness* Painters* *2023 Material Research **2023 MarketVision 46
Slide 47: Consumer Brands Group
Consumer Brands Group TODD REA President, Consumer Brands Group
Slide 48: Consumer Brands Group
Consumer Brands Group $3.4 billion STRATEGIC CHANNEL PARTNERS AND BRANDS 2023 Net Sales 3,200+ Employees GLOBAL REACH: • North America • Europe • Latin America KEY DIFFERENTIATORS Customer relationships, trademark service, exceptional products, store locations, color leadership and digital experienc
Slide 49: Reshaping Our Portfolio
Reshaping Our Portfolio Rightsized Footprint Simplification Maximizing Returns 49
Slide 50: Consumer Focused & Customer Driven
Consumer Focused & Customer Driven The Right The Right The Right The Right Brands Segments Partners Solutions 50
Slide 51: The Right Brands
The Right Brands Hero Brands That Drive Traffic to Our Retail Partners America’s #1 Selling #1 Brand Preferred Over 6,700 Points Design Expertise Meets Trusted by Consumers Brand of Interior by Pros for Brushes of Distribution Legendary Quality for Decades Stains and Clears* and Rollers!** Ranked #1
Slide 52: The Right Segments
The Right Segments Pro Who Do-It-Yourself Paints Targeted LATAM Niche Europe 52
Slide 53: The Right Partners
The Right Partners Strong Distribution Well positioned in industry or channel Serves the needs of priority segments Invested and committed to growth The Right Partners Across Home Centers, Dealers, Distributors, Mass, Direct & eComm 53
Slide 54: The Right Solutions
The Right Solutions Talent & People Digital Product Innovation Training & Field Support Category Expertise Digital Store & regional World class talent Robust, new Enhance service Social Media assortment optimization & culture product pipeline models Influencer marketing Inventory optim
Slide 55: Key Takeaways
Key Takeaways Disciplined Focus on Well Positioned Value Added Brand Portfolio Priority Segments Partners Solutions 55
Slide 56: Global Industrial
Global Industrial KARL JORGENRUD President, Global Industrial
Slide 57: Performance Coatings Group
Performance Coatings Group $6.8 billion BUSINESSES • Automotive Refinish 2023 Net Sales • Coil • General Industrial 120+ • Industrial Wood • Packaging Countries • Protective & Marine KEY DIFFERENTIATORS Local service model, highly specified coatings, global expertise, product innovation, color solut
Slide 58: The Foundation of our Profitable Success
The Foundation of our Profitable Success Customer-Driven Innovation Connected Global Expertise Color & Design Expertise Blending Facilities & Customization Sustainability-Focused Solutions Acquisitions Accelerate Strategy 58
Slide 59: Providing Solutions in Attractive and Growing Markets
Providing Solutions in Attractive and Growing Markets AUTOMOTIVE COIL GENERAL INDUSTRIAL PACKAGING PROTECTIVE REFINISH INDUSTRIAL WOOD & MARINE Seasoned and Highly Skilled Teams with Deep Expertise Across Industries 59
Slide 60: Automotive Refinish
Automotive Refinish BRIAN GALLAGHER President & General Manager, Automotive Refinish
Slide 61: Automotive Refinish Division Profile
Automotive Refinish Division Profile Who We Are Where We Focus Differentiators 2,300+ Employees Controlled Distribution Dealership Groups 170+ Company-owned Multi Shop Owners Direct Sales & Technical Teams Branches in North America Commercial Vehicles Innovative Products Selected Complementary Distr
Slide 62: Differentiator: Controlled Distribution
Differentiator: Controlled Distribution Direct Model: Close to Customer: 170+ North American Inventory, tinting and branches blending expertise, sales 429 Delivery Vehicles and technical support Support: Complementary: Global design, application Strategic distributors and training centers/
Slide 63: Differentiator: Our People
Differentiator: Our People Technical Representatives: Branch Managers: 100+ reps 500+ branch employees 1,500+ years combined 175+ sales representatives experience Repeatable customer Tailored support for customers, experiences distributors and employees Training: Customer Connectivity:
Slide 64: Differentiator: Customer Productivity Solutions
Differentiator: Customer Productivity Solutions Collision Core® Auto Color matching Shop Software System and retrieval Improve cycle time and profitability Express Scratch Increase capacity Repair Program Improve first-time on-time quality A-PlusTM business Optimize labor, elevate solutions
Slide 65: Differentiator: Innovative Products
Differentiator: Innovative Products Ultra 9K® Waterborne Ultra System® HPC15 HP Basecoat System Process Clearcoat Wet-on-wet application Air Dry Technology cures in as Improved cycle time little as 15 minutes at 75°F Less paint and Eliminates need for bake cycle reduced emissions Complet
Slide 66: Our Differentiators
OUR DIFFERENTIATORS Controlled Our Customer Innovative Distribution People Productivity Products Solutions 66
Slide 67: Coil & Extrusion Coatings
Coil & Extrusion Coatings JOSH BAGSHAW President, Coil Coatings Division
Slide 68: Where You Will Find Us
Where You Will Find Us CONSTRUCTION MANUFACTURED PRODUCTS Roofing Siding Panels Appliance Garage Doors Gutters/Trim Curtain Wall Windows HVAC Lighting Fixtures 68
Slide 69: Coil Coating Division Profile
Coil Coating Division Profile Who We Are Where We Focus Differentiators Steel & Aluminum Producers 400+ Employees Speed of Responsiveness Coaters & Applicators 207 Technical specialists Consistency & Quality Roll Formers & OEMs with ~2,200 combined Color Customization years of service in Architects
Slide 70: Differentiator: Speed of Responsiveness
Differentiator: Speed of Responsiveness Our People: Local Production: 50 technical 20 SHW facilities representatives worldwide ~790 combined years of Small batches service Representative Examples: Turn small batch orders within 48 hours utilizing facilities near customers Embedding autom
Slide 71: Differentiator: Consistency and Quality
Differentiator: Consistency and Quality Extensive Capabilities Saltwater and Air Corrosion UV Corrosion Resistance Testing Solar Reflectance Chemical Resistance Color/Gloss Retention Abrasion Resistance Adhesion Film Thickness and Hardness Finish Consistency Coating Flexibility
Slide 72: Testing Capabilities
Testing Capabilities Ft. Myers, Florida weathering test site – 100,000+ test panels with up to 50 years of exposure. One of the most accredited natural exposure facility in the coil and extrusion industry!
Slide 73: Differentiator: Customer Driven Innovative Products
Differentiator: Customer Driven Innovative Products RadGuard Fluropon Illumipon WeatherXL NovaCoil Protection and durability Dirt resistance Long-lasting performance Substrate compatibility Reduced solvent content Tested in chalk, fade, and less waste Color and gloss levels weathering,
Slide 74: Differentiator: Best-in-Class Color Customization
Differentiator: Best-in-Class Color Customization SW DesignHouse: Range of Finishes: Library of 50,000+ colors Sheen/gloss level Create new custom colors (matte, standard, high gloss) Advanced matching technology Special Effects: Metallic, sparkle, color shift, wood/slate mimicry Industry-
Slide 75: Our World is Color
Our World is Color Using Color to Inspire, Connect and Bring Architectural Visions to Life 75
Slide 76: Our World is Color
Our World is Color Smithsonian National Museum of African American History and Culture: Architect Freelon Adjaye Bond / SmithGroup 76
Slide 77: Our World is Color
Our World is Color Innovative, Color-shifting Technology 77
Slide 78: Providing Unique and Differentiated Solutions for our Customers
Providing Unique and Differentiated Solutions for our Customers CONSISTENCY CUSTOMER 78
Slide 79: Financial Update
Financial Update ALLEN J. MISTYSYN SVP, Finance and Chief Financial Officer
Slide 80: Consistent Sales Growth
Consistent Sales Growth Consistent Growth Following Valspar Acquisition $ In Billions Continue to Invest in Key Drivers $25 of Customer Success $23.1 5-Year Compounded Average Growth Rate $22.1 (CAGR) by Segment First full year PSG +7.3% of Valspar acquisition $19.9 $20 CBG +0.2% $18.4 PCG
Slide 81: Gross Margin Expansion
Gross Margin Expansion Gross Margin Improvement Through Tough Cycle 50% We Win When Our Customers Win Outsize DIY mix re: COVID More Stable Demand Environment 48% 47.3% Offset Raw Material and Other Cost Inflation 46.7% Through Disciplined Pricing 46% Continued Focus on Innovation & Improvin
Slide 82: Gross Margin Drivers
Gross Margin Drivers 51% Volume 47% to 50% 50% Supply Chain Efficiencies Innovation / 49% Product Mix Simplification 45% to 48% 48% Acquisition Synergies Price/RM Cost Wages & 47% Other Cost Inflation 46% 45% Prior GM Target Range New GM Target Range 82
Slide 83: Operating Margin Levers
Adjusted Operating Margin* Operating Margin Levers Improvement Over the Cycle Following Valspar Acquisition 18% Focused on Long-Term Operating 17.4% 17.2% Margin Expansion VOLUME! VOLUME! VOLUME! 16% 15.8% 15.0% Gross Margin Outperformance Provides 14.8% 14.5% Opportunity for Heightened Growth
Slide 84: Return on Net Assets Employed (PBT) %
Return on Net Assets Employed (PBT) % 20.4% 18.5% 18.0% 17.6% 15.1% 13.1% 2018 2019 2020 2021 2022 2023 RONAE (PBT) Target Mid-20% Note: Return on net assets employed (RONAE) is calculated as Profit before tax (PBT) excluding Valspar acquisition-related amortization (and integration costs in 2018 an
Slide 85: Net Operating Cash
Net Operating Cash Drive Strong Cash Generation $ In Billions $4.0 Strong Net Operating Cash Generation $3.5 $3.4 Working Capital Management Core Competency Uses of Cash $3.0 Capital Expenditures Dividends $2.3 $2.2 Strategic M&A $2.0 $1.9 $1.9 Opportunistic Share Repurchases Manage
Slide 86: Consolidated Net Operating Cash & Uses of Cash
Consolidated Net Operating Cash & Uses of Cash $1.7 Capital Expenditures, Excluding Building Our Future Projects $2.7 $8.3 Dividends Acquisitions $1.3 Share Repurchases 5-Year Net Operating Cash: ~ $13.4B 2019 - 2023 $ In Billions 86
Slide 87: Consistent Disciplined Capital Allocation Philosophy
Consistent Disciplined Capital Allocation Philosophy We Will Not Hold Cash • Consistent Capital Allocation Philosophy: We Will Not Hold Cash CAPEX Dividend Strategic M&A Share Investment Target 30% of Clearly Defined Repurchase Modest PY GAAP Criteria Absent Strategic Requirements* Earnings M&A <2.0
Slide 88: Midterm Financial Targets
Midterm Financial Targets Sales Gross Margin EBITDA Margin +MSD Over Cycle 47% to 50% 20% to 24% PSG: +MSD to +HSD CBG: +LSD New Goal New Goal PCG: +MSD Working Capital Net Operating Cash Leverage Ratio 11.0% to 11.5% 14% to 15% 2.0x to 2.5x as a % to Sales Net debt to EBITDA as a % to Sales New Goa
Slide 89: Comparison of Cumulative Five-Year Total Return
Comparison of Cumulative Five-Year Total Return Peer group of companies comprised of the following: Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF SE, Genuine Parts Company, H.B. Fuller Company, The Home Depot, Inc., Lowe’s Companies, Inc., Masco Corporation, Newell Brands Inc., PPG Industries,
Slide 90: Managing & Investing through Volatility to Deliver Long-Term Outperformance
Managing & Investing through Volatility to Deliver Long-Term Outperformance $ In Billions, except for EPS and Stock Price Data Great Financial Crisis Valspar Integration, COVID & Supply Chain Disruptions Macroeconomic Volatility Outperformance Macroeconomic Volatility Expected Outperformance 2008 20
Slide 91: Creating Shareholder Value
Creating Shareholder Value DRIVE DRIVE DRIVE DRIVE GROWTH ROS RONAE CASH GENERATION 91
Slide 92: Appendix
Appendix
Slide 93: Regulation G Reconciliation: Adjusted Operating Profit
Regulation G Reconciliation: Adjusted Operating Profit ($ in millions) 2018 2019 2020 2021 2022 2023 Operating profit (1) $ 2,066.7 $ 2,448.4 $ 2,891.3 $ 2,660.7 $ 2,993.5 $ 3,692.7 Valspar acquisition-related amortization 326.7 307.5 304.5 294.0 276.3 266.1 Valspar acquisition-related integration c
Slide 94: 2024 Financial Community Presentation
2024 Financial Community Presentation
The Sherwin-Williams Company — Investor Day (August 2024) on 6ix