Sherwin-Williams will become a $10 billion company this year
Cleveland's Sherwin-Williams Co. is on pace to post another record year of paint sales, with record net sales of $3.15 billion and record profits per share of $3.35 per share for the third quarter of 2014. The company's business is boosted by the success of its architectural paints for homes and buildings, seen here in the Brecksville Sherwin-Williams store.
(Lisa DeJong, The Plain Dealer)
CLEVELAND, Ohio -- The Sherwin-Williams Co. is chugging its way toward another monster year for paint sales, posting record net sales of $3.15 billion and record profits per share of $3.35 per share for the third quarter of 2014.
The news sent Sherwin-Williams' shares jumping to $229.50 when the markets opened Tuesday, nearly $4 per share higher than Monday's close of $225.68. The stock price closed at $224.00, down 1 percent from Monday.
Highlights of its third quarter results released Tuesday include:
Sherwin-Williams' Chairman and CEO Chris Connor
1.) The Cleveland paint company sold $303.2 million, or 10.6 percent more paint in the quarter that ended Sept. 30 than it did last year. That brings its nine month total net sales to $8.56 billion, up $831.6 million, or 10.8 percent more than the same period last year.
Acquisitions, including U.S. and Canadian divisions of Mexican paint company Consorcio Comex, S.A. de C.V., which the company acquired on Sept. 16, 2013, contributed 3.3 percent to the quarter and 4.1 percent to the first nine months of the year.
Unfavorable currency rates hurt net sales by 0.7 percent in the quarter and 1.1 percent in the first nine months.
2.) Diluted net income per common share rose 31.4 percent to $3.35 per share (up from $2.55 last year) for the quarter and rose 20.9 percent to $7.39 (up from $6.11) for the first nine months. Charges from Brazil tax assessments hurt the third quarter by 13 cents per share and the first nine months by 21 cents per share.
Net profits for the quarter rose 24 percent to $326.2 million for the quarter (from $263.0 million); and 15 percent to $733.1 million for the first nine months (from $636.4 last year).
3.) Paint stores net sales were up 15 percent to $2.03 billion for the quarter, and up 16.1 percent to $5.27 billion for the first nine months, because of higher volumes of architectural paints for homes and buildings.
Related Plain Dealer stores:
April 18: Sherwin-Williams "moving on" from pursuing Comex as it posts record 1st quarter for 2014
Oct. 25, 2013: Sherwin-Williams' brisk paint sales rack up a third straight quarter of record sales and profits
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Net sales from stores open at least a year, called same-store sales, rose 9.6 percent in the third quarter and 9.2 percent in the first nine months compared to 2013.
4.) Consumer Group net sales increased 5 percent to $385.2 million for the quarter, and 7 percent to $1.14 billion for the first nine months, because of acquisitions and higher paint sales among its retail customers.
5.) Global Finishes Group net sales were up 5.7 percent to $536.3 million for the quarter, and up 4.7 percent to $1.58 billion for the first nine months, because of higher paint volumes sold at higher prices.
6.) Latin America Coatings Group net sales declined 4 percent to $200.4 million for the quarter, and were down 7.6 percent to $564.0 million in the first nine months. Unfavorable currency rates hurt net sales by 7.8 percent for the quarter and 11.8 percent for the first nine months. Results were also hurt by Brazil tax assessments, lower paint sales volumes, partially offset by price increases.
"We are pleased to report record sales and earnings per share in the third quarter and first nine months of 2014 on the continued positive sales volume and strong operating results of our Paint Stores Group," Chairman and Chief Executive Chris Connor said in a statement.
"The Paint Stores Group architectural volume growth was positive across all end market segments. The Comex acquisition continues to perform better than expected in the year. Our Consumer Group improved its operating results through higher volume sales and operating efficiencies. Our Global Finishes Group continues to improve its operating margins through improved operating efficiencies. The Latin America Coatings Group is minimizing the impact on its core operating margins through selling price increases and good cost control, although we are not satisfied with the results."
Sherwin-Williams opened 51 net new stores in the first nine months of 2014.
The company also bought 5.33 million shares of its common stock in the first nine months of the year, raised its dividend rate to 55 cents from 50 cents, and hinted that more announcements were pending. "Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business," Connor said.
7.) For the fourth quarter, Sherwin-Williams anticipates that net sales were rise 6 percent to 8 percent, and diluted net income per common share will be $1.30 to $1.40 per share (compared to $1.14 per share in the final quarter of 2013).
For 2014 as a whole, the company expects net sales of 9 percent to 11 percent, and raised its full-year outlook to $8.70 to $8.80 per share (compared to $7.26 per share last year).