Where are the raw material cost increases concentrated, and has the peak for commodities like VAMs and propylenes been reached?

The most pressure is seen in the industrial basket, specifically solvents and resins (petrochemical-based commodities). Propylene, which drives about 75% of their basket, is forecasted to be up 50% more through the rest of 2026 due to Middle East disruptions. TiO2 has not elevated as much. The company's North American sourcing and contractual buying help navigate headwinds. “Propylene drives about 75% of our basket, and that pricing is up because of the Middle East forecasted maybe up 50% more through the rest of 26 related to those disruptions.”

Is the shift from low single-digit volume increase to decline a reflection of market expectations, and what offsets maintain intact earnings guidance?

The volume piece reflects the likely demand impact from inflation and muted consumer sentiment, which is at historically low levels. The stronger price embedded in the guidance is the primary offset, allowing the company to maintain its full-year earnings range despite softer volume expectations. “And so I think what you see in our guide, keeping it full year in that same range. It's how we get there is very, very different. And so we expect maybe volumes to be a little more muted and you think through the consumer sentiment numbers.”

Is the realization of the January 1 price increase better than expected, and would the company implement a mid-season price increase if needed?

The realization of the January increase is better than expected, and all customer conversations have occurred. The company would consider mid-season price increases if necessary due to market volatility, but would do so methodically, working with customers to ensure they are prepared and can incorporate increases into their bids. “But let me be very clear, if we need to go again, we will go again.”

SHW

Sherwin Williams (SHW) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Materials· Apr 28, 2026

Source: earnings call transcript

Executive summary

The Sherwin-Williams Company Q1 FY26 — Strong Sales and Gross Margin Expansion Despite Headwinds

Sherwin-Williams delivered strong Q1 FY26 results, with consolidated sales and adjusted EBITDA growing by high single-digits, driven by strategic investments and share gains. Despite persistent demand softness and heightened global uncertainty, the company demonstrated pricing discipline and operational efficiency, leading to gross margin expansion. Management remains confident in its strategy to navigate market challenges and continue outperforming through targeted actions and customer focus.

Highlights

Consolidated sales grew by a high single-digit percentage, exceeding guidance in all segments.
Reported gross margin expanded by 90 basis points year-over-year.
Adjusted diluted net income per share increased by a mid-single-digit percentage.
Adjusted EBITDA increased by a high single-digit percentage.
Net operating cash improved by $200 million, driven by increased net income and lower working capital use.

Concerns

Volume decreased in the mid-single-digit range in Consumer Brands, primarily in North America.
SG&A increased by a mid-single-digit percentage due to Suvinil acquisition, new buildings, and FX translation.
Raw material inflation outlook increased to low to mid-single digits for the full year.
Middle East conflict adds further complexity and uncertainty, with expected negative impacts on demand.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 SG&A increase	low single-digit medium materiality	FY26 · 2026	High
Full-year 2026 Adjusted diluted net income per share	unchanged high materiality	FY26 · 2026	High
New store openings for the year	80 to 100 new stores low materiality	FY26 · 2026	High
Full-year 2026 raw material inflation outlook	up low to mid-single digits high materiality	FY26 · 2026	Medium
Full-year 2026 consolidated price mix	high end of our low single-digit range high materiality	FY26 · 2026	High
Full-year 2026 consolidated sales and earnings	unchanged high materiality	FY26 · 2026	High
Full-year 2026 volume	low single digits decline high materiality	FY26 · 2026	Medium
Full-year 2026 Paint Stores Group sales	low single digit medium materiality	FY26 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consolidated Sales exceeded guidance, inclusive of a low single-digit contribution from the Suvinil acquisition.	—	high single-digit percentage	—	—
Paint Stores Group Price mix increased more than volume. Effectiveness of January 1 price increase trending better than expected. Protective & Marine sales increased double digits. Commercial business sales increased mid-single digits. Residential repaint returned to mid-single-digit growth. Property maintenance showed low single-digit growth. New residential demand remained challenging. Price mix increase: low single-digit percentageVolume increase: low single-digit percentage	—	mid-single-digit percentage	—	basically flat
Consumer Brands Sales exceeded expectations, driven by Suvinil acquisition. Softness persisted in North America. Adjusted segment margin increased due to strong top line and flow-through. Suvinil acquisition growth: high-teensPrice mix increase: low single-digit rangeFX increase: low single-digit rangeVolume decrease: mid-single-digit rangeSales excluding Suvinil growth: low single digitsEurope growth: high-teensLegacy Latin America growth: high single-digitNorth America sales decrease: low single digitsAdjusted segment margin flow-through: 34.3%	—	—	—	increased
Performance Coatings Group Growth in every division and region, reflecting new account growth focus. Demand in underlying core business still declining in some end markets. Adjusted segment profit increased mid-single digits. Higher incentive compensation and FX headwinds drove SG&A higher, resulting in muted flow-through. Volume growth: low single digitsAcquisitions impact: slightly positivePrice mix: flatFX impact: tailwindAutomotive refinish sales growth: low-teens percentageAutomotive refinish volume growth: high single-digitPackaging sales growth: high single digitsAsia Pacific growth: double-digitEurope growth: double-digit	—	slightly above mid-single-digit range	—	flat

SHW operating KPIs by quarter

SHW operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Employees	64K I want to begin by thanking our 64,000 global employees for their sheer determination and willingness to solve challenges as we navigate a wide variety of near-term pressures. Source: earnings call transcript	64K That'd be one of the 6 -- we talk about our 6 enterprise priorities very consistently with our 64,000 global employees. Source: earnings call transcript	65K I want to start by thanking our 65,000 global employees for their dedication and determination to deliver a solid year during one of the more challenging operating environments our company has seen. Source: earnings call transcript	64K+ I want to begin by thanking our more than 64,000 employees for executing our strategy in what remains a very challenging operating environment. Source: earnings call transcript	64K+ I want to begin by thanking our more than 64,000 employees for their relentless focus on executing on behalf of our customers. Source: earnings call transcript	—
Stores opened Paint Stores Group	18 We expanded segment margin by 120 basis points, 18.4% while continuing to invest in growth by opening 18 new stores in the quarter. Source: earnings call transcript	—	—	21 We opened 21 new stores during the quarter and as planned, closed 27 or about 0.5% of total PSG stores. Source: earnings call transcript	—	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Suvinil acquisition

The Suvinil acquisition contributed to consolidated sales and Consumer Brands growth, but had a dilutive impact on reported gross margin and contributed to SG&A increase.

Risks & headwinds

Global uncertainty and demand softness

persistent demand softness in most end markets

Mitigation:Aggressive share gain efforts, targeted investments, focus on reliability and consistency for customers.

Middle East conflict as the year progresses

expected negative impacts on demand

Mitigation:Managing risk closely in Asia Pacific and EMEA, leveraging strong supplier relationships, focus on securing supply.

Raw material inflation Q2 and H2 2026

up low to mid-single digits (full year outlook); propylene forecasted up 50% more through rest of 2026

Mitigation:Securing incremental volume, appropriate and decisive pricing actions, cost-out actions, prepared to implement additional increases if necessary.

SG&A increase Q1 FY26

mid-single-digit percentage increase in Q1

Mitigation:Full year guidance for SG&A increase remains low single-digit, implying efficiency improvements or offsets later in the year.

Consumer Brands North America softness Q1 FY26

sales decreased by low single digits

Mitigation:Focus on global supply chain efficiencies and continuous improvement to drive margin, and leveraging premium gallons.

Housing affordability and consumer confidence

lowest level on record for consumer sentiment

Mitigation:Monitoring policy changes, focusing on supply-side solutions for affordability, leveraging partnerships with national homebuilders, strong position in multifamily.

Q&A highlights

Why is the pricing approach more surgical than a broad, across-the-board increase, given global cost pressures?

Management explained that the pricing strategy is highly disciplined and targeted, leveraging strong customer relationships. The new guide includes more than double the pricing compared to original January guidance, reflecting phased impacts across regions and industrial vs. architectural segments. They aim to balance price with volume and will implement additional increases if necessary.

“I think one place to anchor is that we have more than twice the pricing now in this new guide than what we had in the original guidance that we gave you in January.”

asked by John McNulty · answered by Benjamin Meisenzahl

2 min read 5 chapters

Detailed narrative

Market Dynamics and Share Gains

Sherwin-Williams continues to operate in a challenging environment characterized by heightened global uncertainty and persistent demand softness in most end markets. Despite this, the company is aggressively pursuing share gains, particularly in residential repaint, where sales were up mid-single digits in a flat to down market. Commercial segment sales also outperformed, growing mid-single digits while completions were down double digits, reflecting targeted share gain efforts.

Raw Material and Pricing Strategy

The company faces increasing raw material inflation, with the full-year outlook raised to low to mid-single digits, driven by oil, natural gas, and petrochemical feedstocks like propylene. In response, Sherwin-Williams is implementing incremental, targeted pricing actions by customer, geography, and end market, aiming for consolidated price mix at the high end of the low single-digit range.

The company emphasizes a surgical approach to pricing, balancing it with volume and cost-out actions.

Geographic and End-Market Performance

North America accounts for over 80% of consolidated revenue, with most raw materials sourced regionally, providing insulation from Strait of Hormuz volatility. Industrial businesses are seeing inflationary pressures first, particularly in APAC and EMEA, followed by North and South American architectural businesses.

The company's strong performance in Automotive Refinish (low-teens growth) and Packaging (high single-digit growth) highlights successful value propositions and new business acquisition across regions.

Operational Efficiency and Capital Allocation

Gross margin expanded by 90 basis points, with Consumer Brands showing margin improvement due to global supply chain efficiencies and a better price/mix. The company continues its disciplined capital allocation strategy, returning $773 million to shareholders through share buybacks and dividends in Q1. Store portfolio optimization is ongoing, with 21 new stores opened and 27 closed, aiming for 80-100 new openings for the year.

Housing Affordability and Policy Impact

Management acknowledges housing affordability as a key challenge and is monitoring government actions. They prefer policies that increase supply and lower costs for homebuilders, which would trickle down to consumers, rather than solely stimulating demand. While household formations have slowed, a structural deficit in housing supply and pent-up demand are expected to provide long-term support, with the company well-positioned in both single-family and multifamily segments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.