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    SHW
    Earnings call· Sep 2025(Q3 FY25)

    SHERWIN WILLIAMS CO SHW

    Oct 28, 2025 Source

    Executive summary

    The Sherwin-Williams Company Q3 FY25 — Solid Results Amidst Soft Demand, Strategic Investments Drive Outperformance

    Sherwin-Williams delivered solid Q3 FY25 results, outperforming a persistently soft demand environment through strategic growth investments and disciplined cost control. The company saw strong performance in its Paint Stores Group, driven by market share gains, and closed the Suvinil acquisition to bolster its Consumer Brands Group. Despite navigating ongoing macroeconomic uncertainty and implementing cost-saving measures, including a temporary 401(k) match pause, management remains focused on long-term value creation and aggressive volume growth.

    Highlights

    5

    • Consolidated sales increased at the high end of the guided range for Q3 FY25.

    • Adjusted EBITDA margin expanded 60 basis points to 21.4% in Q3 FY25.

    • Adjusted diluted earnings per share grew by 6.5% in Q3 FY25.

    • Paint Stores Group sales increased by a mid-single-digit percentage with low single-digit volume growth in Q3 FY25.

    • Returned $864 million to shareholders through share repurchases and dividends in Q3 FY25.

    Concerns

    5

    • Demand environment remains "softer for longer" and "choppy" through the first half of 2026 and likely beyond, with minimal positive catalysts.

    • Consumer Brands Group volume was down mid-single digits in Q3 FY25.

    • Performance Coatings Group segment profit and margin decreased due to lower gross margin from unfavorable product and region sales mix and higher costs in Q3 FY25.

    • Temporarily paused 401(k) company matching contributions effective October 1, 2025, due to prolonged demand uncertainty and cost-saving initiatives.

    • Raw material costs are expected to be up low single digits in 2026, with healthcare costs increasing by a low double-digit percentage.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2025 Consolidated Sales Growth
    low single-digit percentage increase
    high materiality
    High
    Full-year 2025 Adjusted Diluted Net Income Per Share
    $11.25 to $11.45
    high materiality
    High
    Q4 2025 Consolidated Sales Growth
    low single-digit percentage increase
    medium materiality
    High
    North America Paint Stores Openings
    80 to 100 stores
    low materiality
    High
    2026 Raw Material Costs
    up low single digits
    high materiality
    Medium
    2026 Healthcare Costs
    increase by a low double-digit percentage
    medium materiality
    Medium
    2026 Wage Costs
    increase by a low single-digit percentage
    medium materiality
    Medium
    2026 Capital Expenditure as % of Sales
    around 2% of sales
    medium materiality
    High
    Restructuring Savings
    $40 million
    medium materiality
    High
    Restructuring Savings (Full-Year Basis)
    $80 million
    medium materiality
    High
    Paint Stores Group Price Increase
    7%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Paint Stores Group
    Outperformed the market in all segments served, driven by growth investments. Segment gross margin was flattish, but SG&A leverage drove profit and margin expansion.
    Price/mix: up high end of low single digitsVolume: up low single digitsIncremental margin on low single-digit volume growth: over 30%Net new stores opened in Q3: 23Net new stores opened YTD: 61Residential repaint sales growth: mid-single digitsCommercial sales growth: mid-single digitsNew residential sales growth: low single digitsProperty maintenance sales growth: low single-digit percentagesDIY sales growth: low single-digit percentagesExterior sales: slightly better than interior, both up mid-single digits
    		Increased mid-single-digit percentage——Segment profit grew mid-single-digit percentage; Segment margin increased 40 bps
    Consumer Brands Group
    Sales reflect continued softness in North America DIY and unfavorable FX in Latin America, partially offset by growth in Europe. Margin increase primarily due to favorable product mix shift and good cost control, despite supply chain inefficiencies from lower production volumes.
    Price/mix: up low single digitsVolume: down mid-single digitsFX impact: slight headwindSegment margin reduction from severance and restructuring: 85 bpsNet Sherwin-Williams stores closed in Latin America: 8
    		Beat expectations——Adjusted segment margin increased
    Performance Coatings Group
    Regional growth in Europe and North America was partially offset by decreases in Latin America and Asia. Margin decrease primarily due to lower gross margin from unfavorable product and region sales mix and higher costs to support sales.
    Volume: increased low single-digit percentagesAcquisitions: increased low single-digit percentagesFX: increased low single-digit percentagesPrice/mix: unfavorablePackaging growth: double-digit (inclusive of acquisition)Auto Refinish growth: mid-single-digit (inclusive of high single-digit in North America)Coil sales growth: decreased low single-digit percentagesIndustrial wood sales growth: decreased low single-digit percentagesGeneral industrial sales growth: decreased low single-digit percentagesSegment margin reduction from severance and restructuring: 30 bps
    		In line with expectations——Segment profit and margin decreased

    Operational metrics

    10
    Adjusted EBITDA margin
    21.4%expanded 60 bps
    Q3 FY25

    Consolidated adjusted EBITDA margin.

    Adjusted diluted EPS growth
    6.5%
    Q3 FY25

    Year-over-year growth in adjusted diluted earnings per share.

    Shareholder returns
    $864 million
    Q3 FY25

    Total amount returned to shareholders.

    SG&A growth
    low single-digit percentagemoderated
    Q3 FY25

    Consolidated SG&A growth, driven by cost control and inclusive of restructuring and new building costs.

    Administrative SG&A growth
    low double-digit percentagedown
    Q3 FY25

    Excluding corporate portion of restructuring costs and new building costs.

    Paint Stores Group incremental margin on volume
    over 30%
    Q3 FY25

    Incremental margin achieved on low single-digit volume growth.

    Consumer Brands Group segment margin reduction from restructuring
    85 bps
    Q3 FY25

    Impact of severance and other restructuring expenses on segment margin.

    Performance Coatings Group segment margin reduction from restructuring
    30 bps
    Q3 FY25

    Impact of severance and other restructuring expenses on segment margin.

    401(k) company match status
    temporarily paused
    Q4 FY25

    Decision made to preserve jobs and protect the company amidst prolonged demand uncertainty. Goal is to reinstate as soon as possible.

    Industry gallons (US)
    down
    FY25

    Expected to be down again this year, challenged across most end markets.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price splitPaint Stores Group: Price/mix up high end of low single digits; Volume up low single digits. Consumer Brands Group: Price/mix up low single digits; Volume down mid-single digits.%
    Productivity cost savings program$40 millionUSD

    Deals & partnerships

    1
    SuvinilAcquisition of a paint business in Latin America

    Closed earlier this month, adding to the Consumer Brands Group Latin America portfolio. Expected to provide many profitable growth opportunities.

    Capital programs

    1
    New Headquarters and R&D Centerunderway

    Benefit: world-class facilities

    Move into the new facilities has begun, with completion expected in Spring 2026. Expected to result in a modest cost headwind next year.

    Risks & headwinds

    7
    Soft and choppy demand environmentH1 2026 and beyond

    Minimal positive catalysts; expected to persist through H1 2026 and likely beyond.

    Mitigation: Focus on differentiated solutions, new account and share of wallet initiatives, and continued returns on growth investments.

    Raw material cost inflationFY26

    Up low single digits in 2026 (inclusive of tariffs).

    Mitigation: Disciplined pricing actions, including a 7% price increase in Paint Stores Group effective January 1, 2026, and targeted increases in other segments.

    Healthcare cost inflationFY26

    Increase by a low double-digit percentage in 2026.

    Mitigation: Efficiency and simplification initiatives, disciplined pricing actions.

    Wage inflationFY26

    Increase by a low single-digit percentage in 2026.

    Mitigation: Efficiency and simplification initiatives, disciplined pricing actions.

    Unfavorable product and region sales mixQ3 FY25

    Impacted PCG gross and segment margins in Q3 FY25.

    Mitigation: Expectation of moderation in unfavorable mix in Q4 FY25, focus on growing volume and cost control.

    Supply chain inefficiencies from lower production volumesQ3 FY25

    Partially offset CBG adjusted segment margin increase; impacted gross margin by low 10-30 bps.

    Mitigation: Global supply chain team controlling costs and being creative to offset decreases, maintaining workforce for future volume return.

    Temporary pause of 401(k) company matchQ4 FY25 onwards

    Effective October 1, 2025.

    Mitigation: Decision made after implementing other cost-saving initiatives to preserve jobs and protect the company; goal is to reinstate as soon as possible.

    What to watch in Q4 FY25

    5

    Paint Stores Group 7% price increase effectiveness

    next quarter
    Current7% increase announced, effective Jan 1, 2026
    TargetEffectiveness in typical historical range, balanced with gallon growth

    Why it matters

    This will indicate the company's ability to pass through costs and maintain margins in a soft demand environment.

    Specifically, we have announced a 7% price increase in Paint Stores Group effective January 1, along with targeted increases in our other segments. Effectiveness in Paint Stores should be in our typical historical range, but likely will be tempered by market dynamics and segment mix.

    Q&A highlights

    10

    Given flat raw material costs this year and low single-digit increases next year, why is the 7% price increase for Paint Stores Group so high, especially in a tepid demand environment?

    The 7% price increase is driven by higher year-over-year cost increases, including raw materials (up low single digits) and other cost basket items like healthcare and wages. Management emphasizes balancing gallon growth with price effectiveness, noting that segment mix can temper price/mix realization. The company aims to be aggressive in growing the business while covering costs.

    “How we got to the 7% is it's really driving it because of higher year-over-year increases. You talk about our initial view of raw material costs being up low single digits as compared to being flattish in the current year. And the other basket -- cost basket increases.”

    asked by Ghansham Panjabi · answered by Allen Mistysyn

    2 min read5 chapters

    Detailed Narrative

    01

    Market Outperformance & Strategic Investments

    Despite a "softer for longer" demand environment, Sherwin-Williams' Paint Stores Group (PSG) sales increased by a mid-single-digit percentage in Q3 FY25, with volume up low single digits. Management attributes this outperformance to strategic growth investments, including opening 23 net new stores in the quarter and 61 year-to-date, along with adding commensurate sales representatives. The company believes it outperformed the market in all segments served, including residential repaint (up mid-single digits), commercial (up mid-single digits), and new residential (up low single digits), demonstrating returns on these investments.

    02

    Cost Management & Profitability Focus

    The company demonstrated strong cost control, with SG&A growth moderating to a low single-digit percentage in Q3 FY25 and administrative SG&A (excluding restructuring and new building costs) down by a low double-digit percentage. Adjusted EBITDA margin expanded 60 basis points to 21.4%. PSG achieved over 30% incremental margin on low single-digit volume growth, reflecting SG&A leverage despite flattish gross margins. To preserve jobs and protect the company amidst macroeconomic uncertainty🌐, Sherwin-Williams temporarily paused its 401(k) company matching contributions effective October 1, 2025, with a goal to reinstate it as soon as possible.

    03

    Suvinil Acquisition & Consumer Brands Group Optimization

    Sherwin-Williams successfully closed the Suvinil acquisition in early October, integrating it into the Consumer Brands Group (CBG) Latin America portfolio. This acquisition is expected to increase consolidated sales by a low single-digit percentage in Q4 FY25, with an immaterial negative impact on diluted EPS due to transaction costs. Suvinil, a $525 million business with mid-teens EBITDA, is projected to grow to high teens/low 20s EBITDA over the midterm. CBG also continued channel optimization efforts in Latin America, closing 8 net Sherwin-Williams stores and shifting volume to qualified dealers.

    04

    Performance Coatings Group Dynamics

    Performance Coatings Group (PCG) sales were in line with expectations in Q3 FY25, with volume, acquisitions, and FX all contributing low single-digit percentage increases, partially offset by unfavorable price/mix. While packaging showed double-digit growth and Auto Refinish grew mid-single digits (high single digits in North America due to share gains), sales in coil, industrial wood, and general industrial decreased. PCG's segment profit and margin declined due to lower gross margin, primarily from an unfavorable product and region sales mix and higher costs, with restructuring expenses reducing segment margin by 30 basis points.

    05

    2026 Outlook & Persistent Headwinds

    Management anticipates the challenging demand environment to persist through the first half of 2026 and likely beyond, with minimal positive catalysts. Initial expectations for 2026 include raw material costs rising low single digits (inclusive of tariffs), healthcare costs increasing low double digits, and wages up low single digits. To counter these headwinds, the company announced a 7% price increase for the Paint Stores Group effective January 1, 2026, alongside targeted increases in other segments, while continuing aggressive volume growth initiatives.

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