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    SHW
    Earnings call· Mar 2026(Q1 FY26)

    SHERWIN WILLIAMS Q1 FY26 earnings call SHW

    Apr 28, 2026 Source

    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

    5

    • 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

    4

    • 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

    8
    CategoryTargetConfidence
    Full-year 2026 SG&A increase
    low single-digit
    medium materiality
    High
    Full-year 2026 Adjusted diluted net income per share
    unchanged
    high materiality
    High
    New store openings for the year
    80 to 100 new stores
    low materiality
    High
    Full-year 2026 raw material inflation outlook
    up low to mid-single digits
    high materiality
    Medium
    Full-year 2026 consolidated price mix
    high end of our low single-digit range
    high materiality
    High
    Full-year 2026 consolidated sales and earnings
    unchanged
    high materiality
    High
    Full-year 2026 volume
    low single digits decline
    high materiality
    Medium
    Full-year 2026 Paint Stores Group sales
    low single digit
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    9
    Gross margin expansion
    90YoY
    Q1 FY26

    Fourth quarter out of the last 15 quarters with year-over-year gross margin expansion. Would have been over 100 bps improvement without Suvinil.

    Net operating cash improvement
    $200M
    Q1 FY26

    Driven by an increase in net income and working capital being a lower use of funds.

    Shareholder returns
    $773M
    Q1 FY26

    Part of disciplined capital allocation strategy.

    Net debt to adjusted EBITDA ratio
    2.5x
    Q1 FY26

    Ended the first quarter with a strong balance sheet.

    New stores opened
    21
    Q1 FY26

    Part of ongoing portfolio optimization for Paint Stores Group.

    Stores closed
    27
    Q1 FY26

    Part of ongoing portfolio optimization for Paint Stores Group.

    Propylene price increase forecast
    50
    rest of 2026

    Forecasted increase due to Middle East disruptions, impacting derivatives that flow into the company's raw material basket. Propylene drives about 75% of the company's raw material basket.

    North America revenue share
    80
    Q1 FY26

    Over 80% of consolidated revenue is in North America, with majority of raw materials sourced regionally.

    Contractor labor cost
    85
    Q1 FY26

    85% of contractors' costs are labor, making them willing to pay a premium for products that improve job site productivity.

    Industry KPIs

    1
    MetricValueDetails
    Volume vs price split—

    Deals & partnerships

    1
    Suvinilacquisition

    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

    6
    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 conflictas 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 inflationQ2 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 increaseQ1 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 softnessQ1 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

    6

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.