Investor Presentation - Sherwin-Williams
Investor Presentation - Sherwin-Williams
Investor Presentation - Sherwin-Williams
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<strong>Investor</strong> <strong>Presentation</strong>
Forward-Looking StatementsThis presentation today will contain certain “forward-looking statements”, as definedunder U.S. federal securities laws, with respect to sales, earnings and other matters.These forward-looking statements are based upon management’s current expectations,estimates, assumptions and beliefs concerning future events and conditions. Forwardlookingstatements are necessarily subject to risks, uncertainties and other factors,many of which are outside the control of the Company, that could cause actual resultsto differ materially from such statements and from the Company’s historical results andexperience. These risks, uncertainties and other factors include such things as:general business conditions, strengths of retail and manufacturing economies and thegrowth in the coatings industry; changes in the Company’s relationships with customersand suppliers; changes in raw material availability and pricing; unusual weatherconditions; and other risks, uncertainties and other factors described from time to timein the Company’s reports filed with the Securities and Exchange Commission. Since itis not possible to predict or identify all of the risks, uncertainties and other factors thatmay affect future results, the above list should not be considered a complete list. Anyforward-looking statement speaks only as of the date on which such statement ismade, and the Company undertakes no obligation to update or revise any forwardlookingstatement, whether as a result of new information, future events or otherwise.The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Discussion Outline• Coatings Market Overview• <strong>Sherwin</strong>-<strong>Williams</strong> Overview• Paint Stores• Consumer• Global Finishes• <strong>Sherwin</strong>-<strong>Williams</strong> Financial OverviewThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
U.S. Coatings IndustrySales ($) Mix by CategoryArchitectural59%SpecialPurpose15%OEM ProductFinishes26%Total Coatings20101.13 Billion Gallons (+6.5%)17.72 Billion Dollars (+9.3%)Source: U.S. Department of Commerce; Segment Percents Based on DollarsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
U.S. Architectural PaintResidentialHousing Startsin Thousands60050040030020010002009 2010 2011p% Chg. (38%) 6.5% 1.7%Source: Consensus of Builders, H.J.C.H.S.The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
U.S. Architectural PaintResidentialExisting Home Sales6.05.04.03.02.0TraditionalDistressed &Foreclosure1.00.02009 2010 2011p% Chg. 5.5% (5.6%) (.6%)Source: IHS Global InsightThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
8,000U.S. Architectural PaintResidential16007,0001400Existing Home Sales in 000s Units6,0005,0004,0003,0002,0001,00012001000800600400200New Home Sales in 000s Units0Jan-01Apr-01Jul-01Oct-01Jan-02Apr-02Jul-02Oct-02Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Oct-04Jan-05Apr-05Jul-05Oct-05Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08Jul-08Oct-08Jan-09Apr-09Jul-09Oct-09Jan-10Apr-10Jul-10Oct-10Jan-110Source: HIS Global InsightThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Percent Change121086420-2-4U.S. Architectural PaintResidential Repaint / RemodelLIRA Index2010 2011pQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Source: Harvard Joint Center for Housing StudiesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
U.S. Architectural PaintNon-ResidentialSq. Ft. of Non-Residential Projects StartedMillions80070060050040030020010002009 2010 2011p% Chg. (42%) (17.8%) 7.9%Source: McGraw-Hill ConstructionThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
160,000140,0002005 vs. 2004:0%U.S. Architectural PaintNon-Residential2006 vs. 2005:1%2007 vs. 2006:-5%2008 vs. 2007:-19%2009 vs. 2008:-45.9%2010 vs. 2009:-18%Non-Residential Sq. Ft. in 000s120,000100,00080,00060,00040,00020,0000JanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSepOctNovDecJanFebMarAprilMayJuneJulAugSepOctNovDec2005 2006 2007 2008 2009 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Favorable Customer MixDIY Contractor Shift will Continue59%45%41%55%ContractorDIYSource: U.S. Dept of Commerce MA28F Report/Company EstimatesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
OEM Product FinishesU.S. Industrial ProductionPercent Change6420-2-4-6-8-102009 2010 2011pSource: IHS Global InsightThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Protective & Marine CoatingsU.S. Infrastructure InvestmentPercent Change2009 2010 2011pCommercial Manufacturing Power/Comm. Mining Non-BuildingSource: IHS Global InsightThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Industrial Coatings DemandU.S. Light Vehicle Sales16,000.0014,000.00SAAR throughApril 201112,000.00Millions of Units10,000.008,000.006,000.004,000.002,000.000.0019921993199419951996199719981999200020012002200320042005200620072008200920102011Source: Bureau of Transportation StatisticsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Industrial Coatings DemandU.S. Vehicle Miles DrivenRolling 12 Month MilesRecession3.0Trillions of Miles2.82.62.42.22.01.81.61.41.21.0Source: Calculated Risk EconomicsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Company OverviewFinancial Highlights2009 2010Net Sales $7.09M $7.78MEBITDA $834M $924MIncome $436M $462M% Sales 6.1% 5.9%Earnings Per Share $3.78 $4.21Net Operating Cash $859M $707MDividend Per Share $1.42 $1.44Return on Assets 10.1% 8.9%Return on Shareholder Equity 27.1% 31.0%The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Company OverviewRevenue & Profit by Segment - 2010Paint StoresSales: $4.38 BillionProfit: $619.6 MillionProfit %: 14.1Sales: $2.09 BillionProfit: $123.7 MillionProfit %: 5.9GlobalSales: $1.30 BillionProfit: $204.0 MillionProfit %: 15.7ConsumerControlled Distribution Accounts for 75% of SalesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Paint Stores Group3,390 StoresThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Paint Stores GroupTop 10 Paint Store Chains – North AmericaCountYE 2010 Est.1 Yr Change3,390 +36Akzo Nobel/ICI/Glidden 495 -12PPG 392 +2Comex/Pro Paint, Inc. 334 +1Kelly-Moore 162 -1Cloverdale/Rodda 111 1,784 +10 +3Dunn Edwards 108 +5Diamond Vogel 68 -1Benjamin Moore 65 -2Vista 49 +1Gap: +1,606 +33Source: Independent Research, Company Websites, Rauch Guide, Chain Store GuideThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Paint Stores GroupStore PenetrationHouseholds per StoreOver 50,00040,000 - 50,00030,000 - 40,000Under 30,000The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Paint Stores GroupControlled Distribution Advantages• Direct Relationship with Customer / End-User• Control Over Brands, Pricing, Inventory, Staffing• Control Pace and Place of GrowthThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Paint Stores GroupVoluntary TurnoverManager 2.9%Assistant Mgr. 8.0%Sales Rep 4.8%The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Consumer GroupEnd to End Supply Chain• 26 Manufacturing Sites• 10 Distribution Service Centers• 400 Tractors / 1,200 Trailers• More than 6,000 EmployeesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Consumer GroupRaw Material BreakdownContainers (16%)Metal or PlasticSolvents (10%)Resins/Latex (37%)Acrylic (Latex Paints)Alkyd (Oil Paints)Epoxy (Epoxy Paints)Pigments (27%)Titanium DioxidePigmentsPaint FillersExtendersAdditives (10%)The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Consumer GroupTotal Technical Expenditures$ Millions120110100908070605040302010073.4 78.2 83.6 86.2 88.7 88.3 91.3 95.4 101.3 102.4 102.0 101.8 102.71998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Consumer GroupStrong Brands in Every CategoryDIYPaintsProfessionalPaintsAerosolPaintsAutomotiveFinishesIndustrialCoatingsProfessionalApplicatorsWoodFinishesCommercialCoatingsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Consumer GroupU.S. Outlet Penetration56,000Total U.S. Paint &Coatings Outlets38,000Consumer SegmentCustomers3,400<strong>Sherwin</strong>-<strong>Williams</strong> StoresThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Global Finishes GroupAutomotiveAerospaceArchitecturalProtectiveMarineOEM FinishesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Global Finishes GroupExpanding Global Platform• Protective & Marine• OEM Product Finish• Automotive• Aerospace• Architectural• Protective & Marine• OEM Product Finish• Automotive• Automotive• OEM Product Finish• Architectural• Industrial Wood Coatings• Protective & Marine• OEM Product Finish• Automotive• Architectural• Protective & Marine• OEM Product Finish• AutomotiveThe The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st - 1st Quarter Quarter 2011 2011
Consolidated Gross Profit3,500$ Gross Profit% of Sales3,0803,4133,5983,4993,2633,481$ Millions3,0002,5002,0001,5002,249 2,30844.944.32,22043.82,339 2,455 2,70145.1 45.444.242.843.744.943.846.044.81,00050001999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Selling, General & Admin Expense3,0002,500$ SG&A% to Sales2,3262,0692,5132,597 2,6442,5352,728$ Millions2,0001,5001,00033.832.4 32.2 32.433.135.735.150002004 2005 2006 2007 2008 2009 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Working Capital Ratio(Accounts Receivable + Inventory – Payables)/Sales20%15%11.5% 11.0%13.8%12.5%11.7%12.7%12.7%10.7% 11.9%10%5%0%2002 2003 2004 2005 2006 2007 2008 2009 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Net Operating Cash9008007006005004003002001000874.5 876.2 859.2815.8706.6593.9 605.3546.4470.5425.02006 2007 2008 2009 2010Uses of Cash• Acquisitions• Capital Expenditures• Buy Back Stock• Manage Debt• Pay DividendsNet Operating Cash less Cap. Ex. & DividendsNet Operating CashThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Stock Repurchase14.0013.2012.00Millions of Shares10.008.006.007.986.608.105.607.259.005.004.002.000.002003 2004 2005 2006 2007 2008 2009 2010Avg. CommonShares Outstanding 147.0 144.7 141.1 137.3 130.9 119.3 115.4 108.2(fully diluted / in millions)The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Total Debt : EBITDA Ratio($ in Millions)12001000800600400200087583% 84% 88% 98% 113%10471148946965 834 81883410452006 2007 2008 2009 2010924Total DebtEBITDAThe <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
Dividends Per Share1979 – 2010$1.50$1.40$1.30$1.20$1.10$1.00$0.90$0.80$0.70$0.60$0.50$0.40$0.30$0.20$0.10$0.00.01 .04 .05 .06.08 .10 .12 .13 .14 .16 .18 .19 .21 .22 .25 .28 .32 .35 .40.45 .48 .54 .58 .60 .62 .68 .821.001.261.401.42 1.441979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company - 1st Quarter 2011
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