Industry Overview - Sherwin-Williams
Industry Overview - Sherwin-Williams
Industry Overview - Sherwin-Williams
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
<strong>Industry</strong> <strong>Overview</strong><br />
Chris Connor<br />
Chairman & CEO<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
2012 Coatings <strong>Industry</strong><br />
Global Mix by Category<br />
Architectural<br />
43%<br />
Special<br />
Purpose<br />
20%<br />
OEM Product<br />
Finishes<br />
37%<br />
Total Coatings<br />
2012<br />
7.8 Billion Gallons (+5%)<br />
~104 Billion Dollars (+5%)<br />
Source: Orr & Boss Inc. / ChemQuest estimates; Segment Percents Based on Dollars<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Coatings Demand by Region<br />
Share of Global Volume by Category<br />
N. America<br />
24%<br />
26%<br />
19%<br />
22%<br />
South America<br />
7%<br />
9%<br />
4%<br />
4%<br />
EMEA<br />
28%<br />
31%<br />
33%<br />
24%<br />
ROW ~ 4%<br />
All Coatings<br />
Architectural Coatings<br />
Asia-Pacific<br />
37%<br />
30%<br />
42%<br />
49%<br />
OEM Product Finishes<br />
Special Purpose Coatings<br />
Source: Orr & Boss, Company Estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Coatings <strong>Industry</strong><br />
Top Global Manufacturers - 2012<br />
• Top 10 suppliers<br />
account for ~57%<br />
global share<br />
• More than 15,000<br />
companies make<br />
up the balance<br />
All Others<br />
(>15,000 firms)<br />
Source: Kusumgar, Nerlfi & Growney, Company Data<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Coatings <strong>Industry</strong><br />
Top Global Manufacturers – 2012 (ProForma)<br />
• <strong>Sherwin</strong>-<strong>Williams</strong><br />
acquisition of Comex<br />
• PPG acquisition of<br />
Akzo Nobel N.A.<br />
• Carlyle Group<br />
acquisition of Dupont<br />
Performance Coatings<br />
All Others<br />
(>15,000 firms)<br />
• Valspar strategic<br />
supply relationship<br />
with Ace Hardware<br />
Source: Company Estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Coatings <strong>Industry</strong><br />
Sales ($) Mix by Category<br />
Architectural<br />
57%<br />
Special<br />
Purpose<br />
14%<br />
OEM Product<br />
Finishes<br />
29%<br />
Total Coatings<br />
2012<br />
1.18 Billion Gallons (+13%)<br />
20.68 Billion Dollars (+11%)<br />
Source: American Coatings Association; Segment Percents Based on Gallons<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
850<br />
U.S. Coatings <strong>Industry</strong><br />
Architectural Coatings Gallons (Millions)<br />
800<br />
Millions of Gallons<br />
750<br />
700<br />
650<br />
600<br />
~ 740 – 760 million<br />
~ 671 Million<br />
550<br />
~ ACA Estimate<br />
500<br />
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015<br />
Source: U.S. Department of Commerce, ACA 2012, Company estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Coatings <strong>Industry</strong><br />
Architectural Coatings Gallons (Millions)<br />
850<br />
800<br />
Millions of Gallons<br />
750<br />
700<br />
650<br />
600<br />
~ 740 – 760 million<br />
~ 671 Million<br />
~ 636 Million<br />
550<br />
500<br />
~ ACA Estimate<br />
~ S-W Estimate<br />
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015<br />
Source: U.S. Department of Commerce, ACA 2012, Company estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
850<br />
800<br />
U.S. Coatings <strong>Industry</strong><br />
Architectural Coatings Gallons (Millions)<br />
~ 804 Million<br />
Millions of Gallons<br />
750<br />
700<br />
650<br />
600<br />
~ 740 – 760 million<br />
550<br />
~ ACA Forecast<br />
500<br />
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015<br />
Source: U.S. Department of Commerce, ACA 2012, Company estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Favorable Customer Mix<br />
DIY Contractor Shift will Continue<br />
59%<br />
43%<br />
41%<br />
57%<br />
Contractor<br />
DIY<br />
Source: U.S. Dept of Commerce/ACA/Company Estimates<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
DIY Channel Share, U.S.<br />
Most Recent Purchase by Store Type<br />
Mass Merchants<br />
13%<br />
Paint Stores<br />
17%<br />
Home Centers<br />
59%<br />
Hardware<br />
9%<br />
Lumber/Building<br />
Supply 2%<br />
Source: PCRP 2012<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Contractor Channel Share, U.S.<br />
Primary Outlet by Store Type<br />
Paint Stores<br />
90.3%<br />
Home Center<br />
6.0%<br />
Hardware<br />
1.8%<br />
Discount/Other<br />
1.9%<br />
Source: S-W Marketing: 2012<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Coatings <strong>Industry</strong><br />
Demand Drivers<br />
• Architectural Paint<br />
– Residential – New / Turnover<br />
– Home Remodeling<br />
– Non-Residential – New / Maintenance<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Architectural Paint<br />
Existing Home Sales (SAAR)<br />
8,000<br />
Existing Home Sales in 000s Units<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
2012<br />
+11.9%<br />
0<br />
.<br />
Mar-01<br />
Jun-01<br />
Sep-01<br />
Dec-01<br />
Mar-02<br />
Jun-02<br />
Sep-02<br />
Dec-02<br />
Mar-03<br />
Jun-03<br />
Sep-03<br />
Dec-03<br />
Mar-04<br />
Jun-04<br />
Sep-04<br />
Dec-04<br />
Mar-05<br />
Jun-05<br />
Sep-05<br />
Dec-05<br />
Mar-06<br />
Jun-06<br />
Sep-06<br />
Dec-06<br />
Mar-07<br />
Jun-07<br />
Sep-07<br />
Dec-07<br />
Mar-08<br />
Jun-08<br />
Sep-08<br />
Dec-08<br />
Mar-09<br />
Jun-09<br />
Sep-09<br />
Dec-09<br />
Mar-10<br />
Jun-10<br />
Sep-10<br />
Dec-10<br />
Mar-11<br />
Jun-11<br />
Sep-11<br />
Dec-11<br />
Mar-12<br />
Jun-12<br />
Sep-12<br />
Dec-12<br />
Mar-13<br />
Source: National Association of Realtors<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Architectural Paint<br />
New Home Sales vs. Existing Home Sales (SAAR)<br />
8,000<br />
1600<br />
Existing Home Sales in 000s Units<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
2012<br />
+11.9%<br />
+15%<br />
1400<br />
1200<br />
1000<br />
800<br />
600<br />
400<br />
200<br />
New Home Sales in 000s Units<br />
0<br />
.<br />
Mar-01<br />
Jun-01<br />
Sep-01<br />
Dec-01<br />
Mar-02<br />
Jun-02<br />
Sep-02<br />
Dec-02<br />
Mar-03<br />
Jun-03<br />
Sep-03<br />
Dec-03<br />
Mar-04<br />
Jun-04<br />
Sep-04<br />
Dec-04<br />
Mar-05<br />
Jun-05<br />
Sep-05<br />
Dec-05<br />
Mar-06<br />
Jun-06<br />
Sep-06<br />
Dec-06<br />
Mar-07<br />
Jun-07<br />
Sep-07<br />
Dec-07<br />
Mar-08<br />
Jun-08<br />
Sep-08<br />
Dec-08<br />
Mar-09<br />
Jun-09<br />
Sep-09<br />
Dec-09<br />
Mar-10<br />
Jun-10<br />
Sep-10<br />
Dec-10<br />
Mar-11<br />
Jun-11<br />
Sep-11<br />
Dec-11<br />
Mar-12<br />
Jun-12<br />
Sep-12<br />
Dec-12<br />
Mar-13<br />
0<br />
Source: National Association of Realtors / U.S. Census Bureau<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
2,000<br />
1,800<br />
1,600<br />
Housing Starts (SAAR)<br />
Single Family<br />
100%<br />
80%<br />
60%<br />
000 Units<br />
1,400<br />
1,200<br />
1,000<br />
800<br />
600<br />
400<br />
200<br />
0<br />
2012<br />
+18.8%<br />
40%<br />
20%<br />
0%<br />
-20%<br />
-40%<br />
-60%<br />
-80%<br />
-100%<br />
.<br />
Mar-01<br />
Jun-01<br />
Sep-01<br />
Dec-01<br />
Mar-02<br />
Jun-02<br />
Sep-02<br />
Dec-02<br />
Mar-03<br />
Jun-03<br />
Sep-03<br />
Dec-03<br />
Mar-04<br />
Jun-04<br />
Sep-04<br />
Dec-04<br />
Mar-05<br />
Jun-05<br />
Sep-05<br />
Dec-05<br />
Mar-06<br />
Jun-06<br />
Sep-06<br />
Dec-06<br />
Mar-07<br />
Jun-07<br />
Sep-07<br />
Dec-07<br />
Mar-08<br />
Jun-08<br />
Sep-08<br />
Dec-08<br />
Mar-09<br />
Jun-09<br />
Sep-09<br />
Dec-09<br />
Mar-10<br />
Jun-10<br />
Sep-10<br />
Dec-10<br />
Mar-11<br />
Jun-11<br />
Sep-11<br />
Dec-11<br />
Mar-12<br />
Jun-12<br />
Sep-12<br />
Dec-12<br />
Mar-13<br />
% Change vs. previous year<br />
Source: U.S. Census Bureau<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Housing Starts (SAAR)<br />
Structures w/ 5+ Units<br />
450<br />
200%<br />
400<br />
180%<br />
160%<br />
000 Units<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
2012<br />
+131.5%<br />
140%<br />
120%<br />
100%<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
-20%<br />
-40%<br />
-60%<br />
-80%<br />
% Change vs. previous year<br />
0<br />
-100%<br />
.<br />
Mar-01<br />
Jun-01<br />
Sep-01<br />
Dec-01<br />
Mar-02<br />
Jun-02<br />
Sep-02<br />
Dec-02<br />
Mar-03<br />
Jun-03<br />
Sep-03<br />
Dec-03<br />
Mar-04<br />
Jun-04<br />
Sep-04<br />
Dec-04<br />
Mar-05<br />
Jun-05<br />
Sep-05<br />
Dec-05<br />
Mar-06<br />
Jun-06<br />
Sep-06<br />
Dec-06<br />
Mar-07<br />
Jun-07<br />
Sep-07<br />
Dec-07<br />
Mar-08<br />
Jun-08<br />
Sep-08<br />
Dec-08<br />
Mar-09<br />
Jun-09<br />
Sep-09<br />
Dec-09<br />
Mar-10<br />
Jun-10<br />
Sep-10<br />
Dec-10<br />
Mar-11<br />
Jun-11<br />
Sep-11<br />
Dec-11<br />
Mar-12<br />
Jun-12<br />
Sep-12<br />
Dec-12<br />
Mar-13<br />
Source: U.S. Census Bureau<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Remodeling Activity<br />
LIRA Index<br />
Billions of $<br />
160<br />
150<br />
140<br />
130<br />
120<br />
110<br />
-4.4%<br />
-6.7%<br />
-1.3% 0.5% -0.4%<br />
-2.1% -1.4% 0.0% 2.2% 3.7% 2.1%<br />
112 113.1 114.3 112.3 111.6 110.7<br />
112.6 112.3 114 114.8 115.1<br />
8.2% 8.8% 10.6% 16.8%<br />
121.6 124.1 127<br />
134.4<br />
19.7%<br />
145.5<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%<br />
-5%<br />
-10%<br />
-15%<br />
100<br />
Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13<br />
-20%<br />
Homeowner Improvements 4-quarter Moving Totals<br />
4-Quarter Moving Rate of Change<br />
Source: Joint Center for Housing Studies of Harvard University<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
160,000<br />
U.S. Architectural Paint<br />
Non-Residential<br />
140,000<br />
2006 vs. 2005:<br />
1%<br />
2007 vs. 2006:<br />
-5%<br />
2008 vs. 2007:<br />
-19%<br />
2009 vs. 2008:<br />
-46%<br />
2010 vs. 2009:<br />
-18%<br />
2011 vs. 2010<br />
-2%<br />
2012 vs. 2011:<br />
+4%<br />
2013<br />
Non-Residential Sq.Ft. in 000s<br />
120,000<br />
100,000<br />
80,000<br />
60,000<br />
40,000<br />
20,000<br />
0<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
April<br />
May<br />
June<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
April<br />
May<br />
June<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
April<br />
May<br />
June<br />
Jul<br />
Aug<br />
Sep<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
2006 2007 2008 2009 2010 2011 2012 2013<br />
Source: Dodge Construction Potentials Bulletin<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Coatings <strong>Industry</strong><br />
Demand Drivers<br />
• Architectural Paint<br />
– Residential – New / Turnover<br />
– Home Remodeling<br />
– Non-Residential – New / Maintenance<br />
• OEM Product Finishes<br />
– Industrial Production<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Manufacturing Activity<br />
65<br />
60<br />
55<br />
50<br />
45<br />
40<br />
35<br />
30<br />
25<br />
20<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sept<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sept<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sept<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
May<br />
Jun<br />
Jul<br />
Aug<br />
Sept<br />
Oct<br />
Nov<br />
Dec<br />
Jan<br />
Feb<br />
Mar<br />
Apr<br />
2009 2010 2011 2012 2013<br />
Source: Institute for Supply Management<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Manufacturing Activity<br />
April March<br />
Index 2013 2013 Change Direction Rate of Change<br />
PMI 50.7 51.3 -0.6 Growing Slower<br />
New Orders 52.3 51.4 +0.9 Growing Faster<br />
Production 53.5 52.2 +1.3 Growing Faster<br />
Employment 50.2 54.2 -4.0 Growing Slower<br />
Inventories 46.5 49.5 -3.0 Contracting Faster<br />
Order Backlog 53.0 51.0 +2.0 Growing Faster<br />
Exports 54.0 56.0 -2.0 Growing Slower<br />
Source: Institute for Supply Management<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Coatings <strong>Industry</strong><br />
Demand Drivers<br />
• Architectural Paint<br />
– Residential – New / Turnover<br />
– Home Remodeling<br />
– Non-Residential – New / Maintenance<br />
• OEM Product Finishes<br />
– Industrial Production<br />
• Special Purpose<br />
– Infrastructure Investment<br />
– Light Vehicle Sales<br />
– Miles Driven<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Protective & Marine Coatings<br />
25<br />
U.S. Infrastructure Investment<br />
20<br />
Percent Change<br />
15<br />
10<br />
5<br />
0<br />
-5<br />
-10<br />
-15<br />
2011 2012 2013p<br />
Commercial Manufacturing Power/Comm. Mining Non-Building<br />
Source: IHS Global Insight<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
2,000,000<br />
1,500,000<br />
1,000,000<br />
500,000<br />
United States<br />
Light Vehicle Sales<br />
2011 2012 2013<br />
150,000<br />
100,000<br />
50,000<br />
Mexico<br />
--<br />
--<br />
Jan.<br />
Feb.<br />
Mar.<br />
Apr.<br />
May<br />
June<br />
July<br />
Aug.<br />
Sept.<br />
Oct.<br />
Nov.<br />
Dec.<br />
Jan.<br />
Feb.<br />
Mar.<br />
Apr.<br />
May<br />
June<br />
July<br />
Aug.<br />
Sept.<br />
Oct.<br />
Nov.<br />
Dec.<br />
400,000<br />
300,000<br />
200,000<br />
100,000<br />
Brazil<br />
2,500,000<br />
2,000,000<br />
1,500,000<br />
1,000,000<br />
500,000<br />
China<br />
--<br />
--<br />
Jan.<br />
Feb.<br />
Mar.<br />
Apr.<br />
May<br />
June<br />
July<br />
Aug.<br />
Sept.<br />
Oct.<br />
Nov.<br />
Dec.<br />
Jan.<br />
Feb.<br />
Mar.<br />
Apr.<br />
May<br />
June<br />
July<br />
Aug.<br />
Sept.<br />
Oct.<br />
Nov.<br />
Dec.<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
U.S. Vehicle Miles Driven<br />
Rolling 12 Month Miles<br />
Recession<br />
3.0<br />
Trillions of Miles<br />
2.8<br />
2.6<br />
2.4<br />
2.2<br />
2.0<br />
1.8<br />
1.6<br />
1.4<br />
1.2<br />
1.0<br />
Source: www.fhwa.dot.gov<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
<strong>Sherwin</strong>-<strong>Williams</strong> Perspective<br />
Market Summary<br />
1. Remain Bullish on Americas Expect Pace of Growth in<br />
Most Segments to Exceed Rest of World<br />
2. U.S. Architectural Market Remains Poised for a<br />
Multi-Year Rebound<br />
3. Painting Contractor Share is Back on a Sustainable Growth<br />
Path with Favorable Demographics<br />
4. Product Finishes, Protective & Marine and Automotive<br />
Demand Expected to Grow in Americas and Asia<br />
Financial Community Presentation<br />
Financial Community<br />
– Thursday,<br />
Presentation<br />
May<br />
– May<br />
12,<br />
23,<br />
2011<br />
2013
Change language