The Sherwin-Williams Co. said sales rose 5.1 percent to a record $2.57 billion for the first quarter of 2015, primarily because of improved operations in its paint stores.
CLEVELAND, Ohio -- The Sherwin-Williams Co. reported record sales of $2.57 billion for the first quarter of 2015, a 5.1-percent increase over the same period last year, primarily because of improved operations in its paint stores.
Results might have been higher if unfavorable currency translation rates hadn't pulled down net sales by 2.8 percent, the company said.
The Cleveland-based paint company on March 20 announced plans to acquire Valspar Corp., a Minneapolis-based global paints and coatings company, in an all-cash deal for $113 per share, or about $11.3 billion.
If approved by Valspar shareholders and regulators, the combined global paint company would have total revenues of about $15.6 billion, adjusted earnings of $2.8 billion, and about 58,000 employees.
Among other results reported Thursday morning:
1.) Diluted net income per common share rose to $1.57 per share for the quarter that ended March 31, up from $1.38 per share in the first quarter of 2015. That includes 24-cents-per-share in costs from the anticipated Valspar acquisition. Without those costs, diluted net income would have risen 31.2 percent to a record $1.81 per share.
2.) In Sherwin-Williams' Paint Stores Group, net sales grew 10.5 percent to $1.62 billion, primarily because of higher sales volume of architectural paint across all markets. Paint store profits grew by $77 million to $253.5 million for the quarter, compared to $176.6 million for the same quarter last year. Net sales from stores open at least a year, called same-store sales, rose 9.4 percent in the first quarter.
3.) Net income rose $15.7 million, or 12 percent, to $147.1 million, from $131.4 million for the first quarter of 2015.
4.) In the Consumer Group, net sales rose 7.5 percent to $378.1 million, from $351.7 million, mainly because of sales of HGTV Home by Sherwin-Williams in Lowe's home improvement stores. Profits grew to $64 million, from $55.4 million last year.
5.) In the Global Finishes Group, net sales declined 3.3 percent to $454.2 million in U.S. dollars, from $469.6 million in 2015. Unfavorable currency rates hurt net sales by 4.7 percent, but profits still grew to $48.6 million, from last year's $38.9 million, because of cheaper raw materials and "good cost control," the company said.
6.) In the Latin American Coatings Group, net sales fell 24.7 percent to $125.2 million in U.S. dollars during the quarter, down from $166.2 million in the first quarter of 2015, because of unfavorable currency rates and lower sales volumes. The segment lost $928,000 during the quarter, from a profit of $9.5 million last year, because of higher raw material costs and unfavorable currency rates.
7.) The company, whose Sherwin-Williams branded products are sold exclusively at its 4,099 company-operated stores and facilities, opened 13 net new stores in the first quarter. The company expects to end up with 90 to 100 more stores by the end of 2016.
"First quarter 2016 was a good quarter for Sherwin-Williams from both a revenue and profit perspective," President and Chief Executive John G. Morikis told analysts on Thursday. "Architectural paint volume growth in North America was the strongest we've seen in the past 10 years or longer
"Industrial coating demand also picked up some momentum in North America and Europe. Even with a 2.8-percent drag from unfavorable currency translation in the quarter and continued soft market conditions in Latin America, our consolidated net sales growth exceeded 5 percent for the first time since third quarter 2014."
"For the second quarter, we anticipate our consolidated net sales will increase a low- to mid-single-digit percentage compared to last year's second quarter," and diluted net income per common share, excluding acquisition costs, of about $3.95 to $4.15 per share, he said. The anticipated acquisition of Valspar is expected to decrease diluted net income per common share by about 15 cents per share.
For 2016 as a whole, the company expects net sales to increase by a low single-digit percentage. "With annual sales at that level, we are raising our guidance that diluted net income per common share for 2016, excluding acquisition costs, will be in the range of $12.50 to $12.70 per share, compared to $11.16 per share earned in 2015," Morikis said.
"We expect costs related to the anticipated acquisition of Valspar to be $185 million to $205 million in 2016."
Sherwin-Williams' shares opened at $303, hit a 52-week high of $309, and eventually declined $2.65, to close at $297.37 on Thursday. That's 1 percent less than Wednesday's close of $300.02.