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Sherwin-Williams Company Reports First Quarter 2011

Published on 2011-04-26. Author : SpecialChem

CLEVELAND, OHIO -- The Sherwin-Williams Company announced its financial results for the first quarter ended March 31, 2011. Compared to the same period in 2010, consolidated net sales increased $290.1 million, or 18.5%, to $1.86 billion in the quarter due primarily to acquisitions and selling price increases. Acquisitions and favorable currency translation rate changes increased consolidated net sales 9.0% and 1.2%, respectively.

Diluted net income per common share in the quarter increased 110.0% to $.63 per share from $.30 per share in 2010 due primarily to higher sales, expense control, and a lower effective tax rate. The first quarter 2010 income tax expense included an $11.4 million one-time increase relating to the Health Care and Education Reconciliation Act of 2010 passed in the first quarter 2010. Foreign currency translation rate changes and acquisitions had no significant impact on diluted net income per common share in the quarter.

Net sales in the Paint Stores Group increased 9.2% to $929.3 million in the quarter due primarily to selling price increases, improving domestic architectural paint sales to DIY and residential repaint customers and improving protective and marine product sales. During the quarter, net sales from stores open for more than twelve calendar months increased 8.9% over last year's first quarter. Paint Stores Group segment profit increased to $68.9 million in the quarter from $47.8 million last year due primarily to selling price increases partially offset by raw material cost increases. Segment profit as a percent to net sales increased to 7.4% from 5.6% last year.

Net sales of the Consumer Group increased 1.0% to $294.9 million in the quarter due primarily to selling price increases and the timing of seasonal shipments to some customers partially offset by the elimination of a portion of a paint program with a large retail customer. Segment profit increased to $41.1 million in the quarter from $37.5 million last year. Segment profit as a percent of net external sales increased to 13.9% from 12.8% last year due primarily to good cost control and selling price increases partially offset by increasing raw material costs.

The Global Finishes Group's net sales stated in U.S. dollars increased 49.6% to $630.2 million in the quarter due primarily to acquisitions, higher paint sales volume, selling price increases, and favorable currency translation rate changes. In the quarter, acquisitions and favorable currency translation rate changes increased net sales of the Global Finishes Group in U.S. dollars by 33.3% and 3.6%, respectively. Stated in U.S. dollars, Global Finishes Group segment profit in the quarter increased to $36.8 million from $23.0 million in last year's first quarter due primarily to increased paint sales volume and good expense control. Foreign currency translation rate changes and acquisitions increased segment profit in the quarter by $1.6 million. As a percent to net external sales, segment profit was 5.8% in the quarter versus 5.5% last year.

The Company acquired 1.1 million shares of its common stock through open market purchases in the quarter and had remaining authorization at March 31, 2011 to purchase 4.65 million shares. Commenting on the first quarter, Christopher M. Connor, Chairman and Chief Executive Officer, said, "Although domestic demand remains soft, we are encouraged by the improvement in domestic DIY and protective and marine sales in the Paint Stores Group and continued growth in architectural, protective and marine, OEM and automotive finishes sales in the Global Group. Our Consumer Group improved their operating results through disciplined cost management and selling price increases. Our operating segment management teams continue to control costs and implement price increases in an effort to keep pace with rising raw material costs.

"We continued to invest in our Paint Stores Group business by opening seven net new locations and staffing our stores to ensure quality customer service. For the year, we expect to open 50 to 60 net new stores. Our Global Finishes Group acquired three companies over the past twelve months, including Acroma and Sayerlack in Europe and Pinturas Condor in Ecuador. Although these acquisitions had a small impact on our first quarter consolidated net income they expand our global reach and provide important assets to support our world-wide business. During the quarter, we used our cash to continue to buy shares of stock and we increased the dividend rate to $.365 from $.36 last year. Our balance sheet remains flexible and is positioned for future acquisitions and investments in our business.

"For the second quarter, we anticipate that our consolidated net sales will increase eight to thirteen percent compared to last year's second quarter. We expect diluted net income per common share for the second quarter to be in the range of $1.65 to $1.75 per share compared to $1.64 per share in 2010. For the full year 2011, we expect consolidated net sales to increase above 2010 levels by a high single digit percentage. With annual sales at that level, we are reaffirming our guidance that diluted net income per common share for 2011 is expected to be in the range of $4.65 to $5.05 per share compared to $4.21 per share earned in 2010."

About Sherwin-Williams Company

Founded in 1866, The Sherwin-Williams Company is one of the global leader in the manufacture, development, distribution, and sale of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams®, Dutch Boy®, Krylon®, Minwax®, Thompson's® Water Seal®, and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 3,900 company-operated stores and facilities, while the company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 109 countries around the world.

Source: Sherwin-Williams Company


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