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    SHW
    Earnings call· Jun 2026(Q2 FY26)

    SHERWIN WILLIAMS Q2 FY26 earnings call SHW

    Jul 28, 2026 Source

    Executive summary

    Sherwin-Williams Q2 FY26 — Strong Execution Drives Raised Full-Year Guidance

    Sherwin-Williams delivered robust top and bottom-line growth in Q2 FY26, significantly outperforming expectations across all segments despite a challenging demand environment and ongoing global uncertainty. The company's strategic execution, new account wins, and disciplined cost management drove substantial share gains and profitability, enabling a raise in full-year sales and adjusted EPS guidance. Management remains focused on internal catalysts for growth, including store optimization and strategic pricing actions, while maintaining a disciplined capital allocation approach.

    Highlights

    5

    • Consolidated sales grew by a high single-digit percentage, exceeding guidance in all three segments.

    • Adjusted diluted net income per share increased approximately 10%.

    • Adjusted EBITDA grew by 10.5% to $1.5 billion, with adjusted EBITDA margin expanding 60 basis points to 21.5% of sales.

    • Net operating cash improved by 21% or $235 million, with free cash flow conversion at 86%.

    • Returned $1.5 billion to shareholders through accelerated share repurchases and dividends.

    Concerns

    4

    • Raw material inflation is expected to be up in the high single-digit range in the second half, leading to a mid-single-digit full-year outlook.

    • DIY demand remained muted, with no meaningful improvement in the segment.

    • New residential market remained very challenging, with single-family starts and completions negative for 5 of the last 6 months.

    • Consumer Brands Group sales in Europe decreased by a double-digit percentage due to customer inventory management and destocking.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year 2026 Consolidated Sales Growth
    mid- to high single-digit percentage increase
    high materiality
    High
    Full-year 2026 Adjusted Diluted Net Income Per Share
    $11.80 to $12.20
    high materiality
    High
    Full-year 2026 Reported SG&A Expense Growth
    mid-single-digit percentage
    medium materiality
    Medium
    Full-year 2026 Raw Material Basket Inflation
    mid-single-digit range
    high materiality
    Medium
    Full-year 2026 Consolidated Price Mix Increase
    mid-single-digit range
    medium materiality
    Medium
    Full-year 2026 Gross Margin
    maintain at last year's level
    medium materiality
    Medium
    Paint Stores Group (PSG) New Stores
    80 to 100 new stores
    low materiality
    High
    Price Increase
    8%
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Paint Stores Group
    Delivered growth across all PRO segments, with Protective and Marine achieving its eighth straight quarter of at least high single-digit growth. Commercial business gains are now evident, and residential repaint/property maintenance showed mid-single-digit increases. Outperformed the market in new residential despite challenging conditions. Segment profit grew by mid-single digits.
    Price mix growth: low end of mid-single digitsVolume growth: low single-digit percentageProtective and Marine sales growth: mid-teens percentageCommercial business sales growth: high single digitsResidential repaint and property maintenance sales growth: mid-single digitsNew residential sales decrease: low single digitsNew stores opened YTD: 45Stores closed YTD: 57
    		mid-single-digit percentage growth——24.6%
    Consumer Brands Group
    Sales exceeded expectations, driven by the Suvinil acquisition and strong performance in North America, which saw low single-digit volume growth. Europe sales declined due to customer inventory management. Adjusted segment margin increased 210 basis points, with half from core operating performance and half from favorable non-operating items.
    Suvinil acquisition contribution: mid-teens percentageSales excluding Suvinil growth: mid-single digitsLegacy Latin America (ex-Suvinil) growth: low double-digit percentageNorth America sales growth: high single digitsNorth America volume growth: low single-digitEurope sales decrease: double-digit percentagePrice mix growth: mid-single-digitFX tailwind: low single-digit
    		exceeded expectations——24.5%
    Performance Coatings Group
    Sales beat expectations with growth across all divisions and regions, reflecting strong new account focus despite largely unchanged underlying demand. General Industrial, Automotive refinish, Packaging, Coil, and Wood all showed solid growth. Adjusted segment margin increased 50 basis points with strong incremental margin of 26.4%.
    Price mix growth: low single digitsVolume growth: low single digitsFX tailwind: low single-digitGeneral Industrial sales growth: high single digitsGeneral Industrial volume growth: mid-single-digitAutomotive refinish growth: high single-digit rangePackaging sales growth: mid-single digitsCoil and wood growth: mid-single digitsAsia Pacific sales growth: strong double-digitNorth America sales growth: mid-single-digit
    		beat expectations——up 50 bps
    Administrative segment
    SG&A declined 9.8%, largely reflecting a favorable year-over-year comparison due to approximately $49 million of severance and other restructuring expenses in the prior year period versus approximately $3 million in the current quarter.
    SG&A decline: 9.8%
    		————

    Operational metrics

    37
    Consolidated sales growth
    high single-digit percentage
    Q2 FY26

    Inclusive of a low single-digit contribution from the Suvinil acquisition.

    Suvinil acquisition contribution to consolidated sales
    low single-digit
    Q2 FY26

    Contribution to consolidated sales growth.

    Reported gross margin
    decreased slightly
    Q2 FY26

    Increased excluding the dilutive impact of Suvinil.

    Reported SG&A expense growth
    mid-single-digit percentage
    Q2 FY26

    Driven primarily by nonannualized Suvinil acquisition costs and higher employee service costs.

    SG&A as percent of sales
    decreased 90 basis points
    Q2 FY26

    Reflects leverage from sales growth.

    Adjusted diluted net income per share growth
    approximately 10%
    Q2 FY26

    Non-GAAP measure.

    Adjusted EBITDA
    $1.5 billionup 10.5%
    Q2 FY26

    Non-GAAP measure.

    Adjusted EBITDA margin
    21.5%expanded 60 basis points
    Q2 FY26

    Non-GAAP measure.

    Net operating cash improvement
    $235 millionup 21%
    Q2 FY26

    Driven by increase in net income and working capital.

    Free cash flow conversion
    86%
    Q2 FY26

    Reflects strong cash generation.

    Shareholder returns
    $1.5 billion
    Q2 FY26

    Combined with dividends and accelerated share repurchases.

    Net debt to adjusted EBITDA ratio
    2.4x
    Q2 FY26

    Reflects a strong balance sheet.

    Annual savings from restructuring actions
    $17 million
    Annual

    Expected from restructuring actions taken during the quarter.

    Paint Stores Group (PSG) sales growth vs market
    meaningfully outpacing the market
    YTD Q2 FY26

    Despite store footprint optimization.

    Paint Stores Group (PSG) new stores opened
    45
    YTD Q2 FY26

    Part of store footprint optimization.

    Paint Stores Group (PSG) stores closed
    57
    YTD Q2 FY26

    Part of store footprint optimization, these stores did not meet profitability thresholds.

    Paint Stores Group (PSG) Protective and Marine sales growth
    mid-teens percentageversus a high single-digit comparison
    Q2 FY26

    Driven by data centers, semiconductor infrastructure, and manufacturing onshoring.

    Paint Stores Group (PSG) Commercial business sales growth
    high single digits
    Q2 FY26

    In an underlying market that remains soft, reflecting targeted gains over the past 24 months.

    Paint Stores Group (PSG) Residential repaint and property maintenance sales growth
    mid-single-digit
    Q2 FY26

    Result of efforts in the commercial business.

    Paint Stores Group (PSG) New residential sales decrease
    low single digits
    Q2 FY26

    Outperformed the market despite single-family starts and completions being negative for 5 of the last 6 months.

    Paint Stores Group (PSG) segment profit growth
    mid-single digits
    Q2 FY26

    Reflects strong segment performance.

    Consumer Brands Group (CBG) sales growth excluding Suvinil
    mid-single digits
    Q2 FY26

    Reflects core business performance.

    Consumer Brands Group (CBG) legacy Latin America sales growth excluding Suvinil
    low double-digit percentage
    Q2 FY26

    Strong performance in the region.

    Consumer Brands Group (CBG) North America sales growth
    high single digitsagainst a soft comparison
    Q2 FY26

    Driven by new product offerings, favorable mix, and Pros Who Paint.

    Consumer Brands Group (CBG) North America volume growth
    low single-digit
    Q2 FY26

    DIY demand remained muted.

    Consumer Brands Group (CBG) Europe sales decrease
    double-digit percentageagainst the high teens comparison
    Q2 FY26

    Driven by customer inventory management and destocking.

    Consumer Brands Group (CBG) adjusted segment margin increase
    210 basis points
    Q2 FY26

    Half from sales growth leverage and flat SG&A (ex-Suvinil), other half from favorable nonoperating items.

    Performance Coatings Group (PCG) General Industrial sales growth
    high single digits
    Q2 FY26

    Led by strength in heavy equipment.

    Performance Coatings Group (PCG) General Industrial volume growth
    mid-single-digit
    Q2 FY26

    Component of General Industrial sales growth.

    Performance Coatings Group (PCG) Automotive refinish growth
    high single-digit range
    Q2 FY26

    Driven by price/mix and favorable FX.

    Performance Coatings Group (PCG) Packaging sales growth
    mid-single digitsagainst a low teens comparison
    Q2 FY26

    Continued strong performance, outgrowing the market in beverage cans.

    Performance Coatings Group (PCG) Coil and wood growth
    mid-single-digit
    Q2 FY26

    Reflects solid performance.

    Performance Coatings Group (PCG) Asia Pacific sales growth
    strong double-digit
    Q2 FY26

    Strong regional performance.

    Performance Coatings Group (PCG) North America sales growth
    mid-single-digit
    Q2 FY26

    Solid regional performance.

    Administrative segment SG&A decline
    9.8%
    Q2 FY26

    Reflects favorable year-over-year comparison with prior year period, including approximately $49 million of severance and other restructuring expenses versus approximately $3 million in the current quarter.

    Administrative segment severance and restructuring expenses (prior year)
    $49 million
    Q2 FY25

    Compared to $3 million in current quarter.

    Administrative segment severance and restructuring expenses (current quarter)
    $3 million
    Q2 FY26

    Compared to $49 million in prior year.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price splitmid-single-digit range%
    Productivity cost savings program$17 millionUSD

    Product announcements

    1
    ProductTypeDetails
    Emerald Symmetrylaunch

    Deals & partnerships

    2
    SuvinilAcquisition of a Latin American asset

    Long-admired asset in Latin America, successfully integrated into existing Sherwin-Williams business. Integration focused on customer and employee first, ensuring business continuity and cultural compatibility. Identified additional synergies beyond initial expectations.

    AkzoNobelJoint bid with DuPont for AkzoNobel's assets

    Sherwin-Williams, in partnership with DuPont, made a bid for AkzoNobel's assets but subsequently pulled it. The decision was based on a disciplined approach to capital allocation, a lack of desired engagement from AkzoNobel after two bids, and the belief that there were more attractive uses for shareholder cash. The company emphasized it is not desperate for acquisitions and will only pursue opportunities at the right value and time.

    Capital programs

    2
    Store footprint optimization initiativecompleted (for pruning phase)
    Start: Q2 FY26

    Benefit: healthier, more productive platform that better serves customers and generates stronger returns for shareholders

    Opened 45 new stores year-to-date and closed 57 stores (about 1% of total PSG stores) during the quarter. The net number of new stores for the year will be approximately 30. The company expects to be at the high end of 80 to 100 net new stores beginning next year.

    Restructuring actionsunderway$17 million annual savings
    Start: Q2 FY26

    Benefit: approximately $17 million of annual savings

    Actions taken during the quarter are expected to result in approximately $17 million of annual savings, with about half realized over the remainder of this year.

    Risks & headwinds

    7
    Ongoing global uncertainty

    No meaningful improvement in demand

    Mitigation: Continued execution of strategy, new account wins, focus on levers within control.

    Raw material inflationH2 FY26 and full year FY26

    Up high single-digit range in H2; mid-single-digit range for full year

    Mitigation: Targeted pricing actions (8% increase effective September 1), strong supplier relationships, disciplined supply chain execution.

    Higher oil and related cost pressuresBalance of the year

    Impact seen

    Mitigation: Actively managing, expecting continued volatility.

    Muted DIY demand

    Remained muted

    Mitigation: Focus on 'Pros Who Paint' segment, strategic partnerships, finding new ways to capture volume.

    Challenging new residential market

    Single-family starts and completions negative for 5 of last 6 months

    Mitigation: Outperforming the market through account wins and aggressive strategies; innovation (e.g., Emerald Symmetry).

    Customer inventory management and destocking in Europe

    Double-digit percentage decrease in Europe sales (Consumer Brands Group)

    Headwinds in transportation and energy end markets

    Some headwinds

    Mitigation: Performance Coatings Group focusing heavily on new business to offset core erosion.

    What to watch in Q3 FY26

    5

    Raw Material Basket Inflation

    next quarter
    Currentmid-single-digit range (full year outlook)
    TargetConfirmation of high single-digit increase in H2 FY26

    Why it matters

    Raw material costs are a significant headwind, and their actual trajectory will impact profitability and pricing strategy.

    We expect inflation in our raw material basket to be up in the high single-digit range in the second half moving our full year outlook to the mid-single-digit range.

    Q&A highlights

    10

    Can you explain the rationale for the bid for AkzoNobel's assets and then pulling it, and how this impacts future M&A strategy?

    The bid was for premium assets long admired, but without the desired level of engagement and at a certain price point, it was a simple decision that there were more attractive uses of shareholder cash. The company is disciplined and not desperate for acquisitions, focusing on organic growth.

    “when we get to a point where we're 2 bids in and which I think was a very fair, reasonable and premium all-cash offer without the level of engagement that we wanted it was a simple decision that there was absolutely more attractive uses of our shareholders' cash.”

    asked by John McNulty · answered by Heidi Petz

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Execution & Market Outperformance

    Sherwin-Williams demonstrated strong execution in Q2 FY26, achieving high single-digit consolidated sales growth and a 10% increase in adjusted diluted EPS, significantly exceeding guidance across all three reportable segments. This outperformance occurred despite persistent global uncertainty🌐 and a lack of broad-based demand recovery, driven by continued strategy execution, new account wins, and effective leverage of prior growth investments. The company's ability to widen the gap with competitors through meaningful customer engagement and share gains underscores the strength of its business model.

    02

    Capital Allocation & Shareholder Returns

    The company maintained a disciplined approach to capital allocation, returning $1.5 billion to shareholders in Q2 FY26 through a combination of dividends and accelerated share repurchases. This was facilitated by strong cash generation, with net operating cash improving by 21% or $235 million, and a free cash flow conversion rate of 86%. Sherwin-Williams ended the quarter with a strong balance sheet, reflected in a net debt to adjusted EBITDA ratio of 2.4x, indicating financial flexibility for future strategic moves.

    03

    Store Optimization Initiative

    Sherwin-Williams undertook a strategic store footprint optimization initiative during the quarter, opening 45 new stores while closing 57, resulting in a net of approximately 30 new stores for the year. This targeted approach, which management stated is now 'behind us' for the pruning phase, aims to enhance profitability and operational flexibility by ensuring the highest level of service and return on net assets. The company expects to accelerate net new store openings to the high end of 80 to 100 annually starting next year, leveraging a more productive platform.

    04

    Raw Material Inflation & Pricing Actions

    Management anticipates continued raw material inflation, projecting a high single-digit increase in the raw material basket for the second half of FY26, leading to a mid-single-digit full-year outlook. To counteract these cost pressures, the company announced an 8% price increase effective September 1, strategically timed to avoid disrupting customers during the peak paint selling season. This action, combined with disciplined price/cost management, is expected to help maintain full-year gross margin at last year's level and ensure the company keeps pace with inflationary trends.

    05

    M&A Discipline and Suvinil Integration

    The company demonstrated strict M&A discipline by withdrawing its bid for AkzoNobel's assets, citing a lack of desired engagement and a commitment to not overpay, emphasizing that other attractive uses of shareholder cash exist. In contrast, the integration of the Suvinil acquisition in Latin America continues to be highly successful, with additional synergies identified and strong growth opportunities realized. This highlights Sherwin-Williams' strategic patience and focus on value-accretive acquisitions that align with its long-term strategy.

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