The Sherwin-Williams Company increased consolidated net sales by 8.9 per cent in Q1 2023 to US$5.44 billion, helped by strong growth in Automotive Refinish. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased 26.7 per cent to US$878.2 million.
The company generated US$88.2 million in net operating cash during the quarter, mainly due to higher profit, despite a normal seasonal increase in working capital requirements. This cash generation, along with an increase in short-term borrowings, allowed the company to return cash of US$458.2 million to shareholders as dividends and share repurchases.
“We delivered strong results in the first quarter, with higher than expected consolidated net sales, sequential and year-over-year expansion in gross margin, and double-digit percentage growth in diluted net income per share and EBITDA,” said John Morikis, Chairman and Chief Executive Officer of Sherwin-Williams.
“Segment margin expanded sequentially and year-over-year in all three of our reportable segments. We also continued to invest in growth initiatives across the business during the quarter while returning cash to our shareholders through an increase in our quarterly dividend and an investment of US$301.7 million to repurchase 1.3 million shares.”
In the Performance Coatings Group (PCG), sales were up in all regions except Asia Pacific. Growth was strongest in Automotive Refinish, which was up by a mid-teens percentage. PCG net sales benefitted primarily due to selling price increases in all end markets and incremental sales from acquisitions, partially offset by lower sales volumes in Asia and Europe.
Morikis said that while Sherwin-Williams’ first quarter was strong, it was also a seasonally smaller period, and the company’s outlook for the full year is unchanged.
“Visibility remains limited, and we continue to expect a very challenging demand environment in the back half of 2023 against difficult comparisons,” he added.
“We will continue to prioritise what we can control by maintaining a focus on recession resilient markets, growing new accounts and share of wallet, continuing appropriate growth investments in stores and sales representatives, and managing price-cost dynamics. We remain confident in our differentiated strategy, capabilities, and product and service solutions, and we continue to expect to outperform the market.
“Against this backdrop, we expect 2023 second quarter consolidated net sales growth to be up or down a low-single digit percentage compared to the second quarter of 2022. For the full year 2023, we continue to expect consolidated net sales to be down a mid-single digit percentage to flat compared to full year 2022.”