The Sherwin-Williams Company (SHW) 27 Jan 222021 Q4 Earnings call transcript

Good morning. Thank you for joining The Sherwin-Williams Company's review of the Fourth Quarter 2021 Results and their outlook for the First Quarter and Full Year of 2022. With us on the call -- on today's call are John Morikis, Chairman, President and CEO; Al Mistysyn, CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Jim Jaye, Senior Vice President, Investor Relations and Communications. This conference call is being webcast simultaneously in listen-only mode by Issuer Direct via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes. include statements will U.S. defined call conference certain as forward-looking under This securities sales, to with and federal respect earnings laws other matters. speaks is Company of new Any which forward-looking statement, update statement only future a the any of forward-looking result as date or such revise statement no events made undertakes the information whether and obligation to as on or otherwise. this forward-looking statements Company's transmitted earlier the is earnings in regarding morning. provided declaration full A release After session the Company's to will remarks, the open prepared we questions. call the turn now to Jim will I over Jaye.

Thank you good morning, and everyone.

fourth quarter fell note. our on ending sales While guidance, were disappointing earnings short our within results a expectations, our of our year

additional As we particularly in on Americas did anticipated and availability meaningfully as our Group described material the as supply suppliers global our and well our our put on in as the call, customers. the chain pressure raw improve on and organization, as XX company, not quarter our January variant Omicron

fourth also strong faced we news end highest the with inflation that are The of We in markets. the our pricing remains These demand headwinds. are quarter, is combating good near-term which across continued actions. the year

are sequentially. raw material We supply improve seeing issues

to relationships actions the for above all, and that our also during very us strengthen And the strongly our take position we term. strategy and, We quarter long remain continue in customer confident our people.

quarter XXXX. Group. Raw the our Brands Group. for immaterial to to the XX% single-digit high was inflation John by $X.XX material sales Group, will in percentage with percentage, the decreased volume, provide XXXX largely impact to Coatings to who before the in driven outlook margin cost profit Morikis, range. chain outpacing Consolidated increases inefficiencies. impacted commentary about included acquisition-related and Consumer material net quarter of tax negatively availability sales with The quarter estimated near to briefly impact me an single-digit the Performance to line, share. million. increased expense in gross per term of depreciation in The Americas full numbers the the in remaining by our expense XX.X%, per amortization quarter income sales. lower of decreased $X.XX and quarter an share. X.X% to supply $XX.X summarize was Pricing impact expense. $XXX.X acquisition-related XX.X% The sales decreased amortization high decreased year million the turning price Let consolidated raw the per Diluted billion. fourth $X.XX included share Consolidated and before SG&A quarterly on top Starting of with

items, these $X.XX adjusted per earnings quarter were diluted Excluding fourth share per share.

Moving divestiture. on three among a Segment control. offset increases volume, was Adjusted the selling cost of operating price increases. costs, as as and sales margin from decreased decreased more selling costs increases. driven volume sales, single-digit raw the raw Sales X.X% volume continued Group by price as double-digit and we decreased chain segment partially volume higher segments. by were segments. operating a investing of price of offset comparison our sales, higher in Coatings pricing selling inflation resulting by X%, raw Performance volume to leverage increased primarily Americas in against partially Group X.X% lower from was Brands company's the and Sales lower the the were and from primarily X.X% to offset and increased material Sales of which material Wattyl raw segment XX.X%, increases margin than availability. high to Sales to initiatives. sales control up material inefficiencies, higher costs, and were offset SG&A slightly to highest margin material impact growth resulting related by Adjusted the sales, good lower cost Consumer as the in Segment year excluding higher operating percent in decreased where supply XX.X%, the flat price strategic ago. a good Group

to along first call quarter additional with the commentary now turn for John year the XXXX outlook on over our for and XXXX. me Let full

Thank and additional quarter moment, provide full good fourth to color first in on you the Jim, I'll year. a morning everyone. but our like I'd some summarize

of especially fourth Sherwin-Williams not We continuation of an these of an material new customers. crippled in years growing raw disasters of on we solutions-based the For supply faced in as but determination. the transportation and year. come. on to customers' raw the year. by And of during as chain of lack material we well a dedicated The and asset employees have get also closer significantly our led our it account distribution. resulted cost trends for the natural with value-added winter various and raw of The even activity innovation, This year to the through differentiated loyalty throughout bode through customer that opportunity strong Ida XXX,XX These no demand second and storm services Labor battle pandemic, our brought escalated any a all, supporting year. to We challenges did predicted. with focused in the continue for the rapid row, industry's costs material unprecedented approach a could businesses one complications Uri challenges inflation. to quarter. most The excuse, our responded use to greatest series hurricane metrics coupled and availability the

remain the significant, meeting business recover will as see and past margins customers' with grow we rising moderate but While on they we time. cycles, aggressive over costs costs we attacked on pricing commodity also as have businesses. they in all just we actions confident, in our focused pressure highly needs, was Near-term

the was long-term the the It few single-digit billion. full single-digit for We the basis, year also related performance a availability segment sales in single-digit was headwind the delivered challenging Pricing material full a Americas environment. was record Pricing to given including consecutive the business. growth On X.X%, year X% the XXth I'll range. increased we the a PBT continue to multiple operating margin just invest Group XX% growth grown mention and range. have a metrics. mid year. year, the during sales mid to raw $XX.X in Consolidated year in initiatives solid mid for

grew year. of customer in by double-digit segment in customer residential the largest segments, in single-digits Sales the grew Our for other percentage repaint all exception mid-to-high row. a sixth with year the a DIY

year. raw year. Omicron in was of from the we X.X% mid cost of a single-digit unit little Brands not $XX.X dollars, the in opened point saw sales, the XX that comparison was sales fully million, which sales against and inflation the the Even inflation, raw impact before overcome to segment This the what and a stores business. year. XX% consumers the variant the Performance percentage. we We consolidated a pandemic. down availability divested increased other increase the four with for in the also mid-teens preserved Pricing cost including were was realization year. percentage new a Wattyl Consumer Amidst less by double-digit company, year, for XX.X% vast majority or the in decreased impacts net in range. and during was highest during the than the material driven the prior were by DIY every projects this Price related material TAG. adjusted Coatings region to profit up nesting Every business were able tax from

year $X.X little a per operating of full dividends billion levels. $XXX.XX. and below average $X.X As our Adjusted sales. an in $X.X dividends, were for shares or of income We in We a share last billion, EBITDA was and buybacks. cash form the over at diluted to cash the to result, shareholders $X.XX was billion XX.X% net distributed Net We sales. net $XXX price returning XX.X%. increase billion, income the work, for million to XX.X of share or invested an year's purchase our of million year put of XX.X%

We $XXX with We million ended X.X our year in invested business expenditures, our Building debt-to-adjusted-EBITDA ratio Future for approximately the net also times. our a project. including $XX through capital million of

the Total XXXX the XX.X%, outpaced add peer European Company, of AG and to coatings three business Polymers in our of the return business announced we will was our coatings acquisitions Sika Additionally, which Specialty group. and the XXX that S&P Inc. capabilities: shareholders Tennant to industrial

also various aspects for ESG progress efforts. good our our Business made announced were by mention this our We to on I'd and program recognized We year. of year Daily. like next-generation and Finally, targets Investor's Forbes this Newsweek,

two perhaps a per GAAP the per Given billion, end per XX.X% share. our increased sales consolidated Since of of profit macroeconomic results the of $XXX the our diluted or net increased per better volatility share diluted XX.X% income over to adjusted increased of $X.XX are business. combined period $X.XX illustration or X.X%. net $X grew underlying share the environment over strength $XXX share. the net XX.X%. million, the past X.X%. XXXX, million, Adjusted Gross And increased to income EBITDA or years,

Over we've and in approximately the of shareholders buybacks. to two-year dividends $X.X the share period form billion returned

As which double-digit was availability to quarter new some quarter. the the end quick to was implement impact have the other liked. far as as improvement, Raw call The costs of variant, material get the we all would our Commodity but Group discussed by themes in XXXX which remained comments growth as this was in percentage. of key and Americas by as was to not we meaningful as the challenge. sales In and was quarter, a same outlook. led our we in third and Protective month. There keep continue strong Omicron fourth order Marine our our nearly remained on earlier our up elevated my markets. brief price wrinkle increases. was fourth a I'll remain The recovery Demand in was

realized interior X in our increases double-digit August interior DIY of the price We up against than From paint were price being exterior larger in sales, from a New part an residential resulting mix. XXXX quarter sales a fourth extremely performed X, with down the in management the comparison. single-digit the single-digit high was Res property strong mid-September range. commercial our increase low XXXX up February perspective, range. the and in product in and better and surcharge. mid-single-digit double were repaint digits

we sales new opened mentioned new in this year. the is in quarter. X with productivity-enhancing stores, reps, services. to innovative management As a and these new make increase we new stores investments XX% products, XX effective price trainees, We net e-commerce February Along continue fourth of

to and Moving of year, digits in by fourth America. basically the Wattyl single the on Group. impact That softer our Fourth in quarter excluding more pronounced. positive single-digit sales Europe Coatings Asia, where the high in me restrictions trends Pricing was the quarter Performance comment let and range. in Group. COVID in were Last, up low our were Sales sales offset on Consumer divestiture. quarter a last to were was the Brands flat North

this for We in continue Europe, division was all the strongest wallet as this by quarter Group was straight of percentage in gains, in demand, with in sales business. quarter. double Latin and realization low Refinish all North generated and followed by wins, and sales underlying the increased customer regions to see range America, America of Every momentum, Wood Regionally, Coil, Industrial high-teens group robust respectively. growth grew fastest General Packaging share Asia. driven the is double-digit the followed and and by in digits nearly new Price all Auto the Industrial, by grew pricing. a sixth quarter divisions growth. by

to Customer demand labor an markets. XXXX in on Turning industrial growth some a We will our be strong and areas. environment operating with to across outlook. continue end see likely architectural governor

material improving so sequentially expect the trajectory We remains availability uneven. continue to raw

not supply predict should on believe materials of the We variant impacts paint. the impact convert XXXX with raw quarter. of the from Omicron ready over chain COVID Any ample to moderate remainder predict. to hard to is determination. What's those quickly improves, stand through our we first the to As are supply capacity the additional hard

Our results to simply to is role report influence not them.

in through and and additional bend retain ahead, capacity, existing supplier, new to product resin been to arrangements actions our prioritizing the curve produce customer's, very agreements our a acquisition Looking These the expect products. offering and of suppliers, we to to deliberate in taking. include the investments and our distribute employees with we've favor steps

improvement, raw our material of year the about goes supply sequential gross less and each margin on, in expect and margin As to more sequential chain issues volume segments. talking growth, improvement and we be more operating availability about and less and

will basket also a that, of assumes outlook the be material in for mid-teens rate to market XXXX to inflation Our compared percentage raw XXXX. low by up our double-digit

year and year-over-year gradual We four progresses. expect in quarters, as the impact in to first see reductions quarter, quarter inflation likely the the each occurring largest with all

expect all elevated. categories We commodity to be meaningfully

expect single-digit transportation mid-to-high other and costs, wages range. up We be the including to in

in so all price We as implementing do will continue to additional currently necessary. businesses, and are increases

XXXX, of first by a price XXXX, consolidated our quarter of first offset mid-single-digit compared increase double-digit ongoing percentage will to the low the availability low For issues. net anticipate material we sales a by increase, of partially to inclusive quarter raw

the digits mid-single Americas stores high Group expect with to We up North that at or the range. paint of end to America be low above

Brands percentage Performance low Coatings single-digit double-digit Consumer expect We to we mid- a to to a down percentage. expect up high by to and be by high-teens be

volume, second year half and full the heavily half-weighted stronger Our impact of action guidance weaker to pricing is second XXXX due a comparison.

the COVID derailed of EPS first growth growth we great XX.X%, momentum, As half year. disasters and chain issues adjusted natural and began of XXXX with the second including the XX.X% recall, you'll half before sales of supply

year sales percentage. low a increase full XXXX, net to high single-digit expect to by the For we double-digit

Americas We the percentage, paint single-digit range. up a of North Group to end above again, at be or American expect high mid-to the with high the stores

Brands We low be Consumer percentage, Performance and high double-digit expect to to be a low Coatings up up to percentage. to single-digit Group mid-single-digit a

XXXX. share. in $X.XX XXXX midpoint we adjusted basis, to share expect for XX% the per amortization per includes the full of share at per an of acquisition-related of expense guidance, net increase in in XXXX approximately to compared $X.XX year over per an to earnings share Full diluted income per share On expect earnings the $X.XX, share $X.XX delivered of be $X.XX range XXXX We year $X.XX XXXX. to $X.XX earned we per

on me additional update with capital data allocation our priorities. some Let and an points close

ongoing full Given and our actions volume would year growth, we initiatives, pricing continuous improvement margin expect gross expansion.

SG&A XXXX noncustomer-facing leverage costs to tightly expect controlling in in see by We functions.

our We enhance will solutions make across provide to enterprise. customers. our It ability to continue investments to will differentiated the

as XXX We'll and We and improvements, open new in productivity Canada between on innovation. and well XX in US stores expect product focused the systems to capacity in be as XXXX. reps, sales

also our center digital additional in are incremental investments home channel. embedded We plan and our in year full the investments platform These guidance.

expect We consolidated sales. exchange about of a be headwind on will currency X.X%

rate XXXX XX% our expect effective low be the to range. We tax in

$XXX year approximately million. guidance CapEx the core Our for is

make about be should In million. and Interest and investments addition $XXX new to this CapEx, million core our R&D Both each. in depreciation to amortization approximately we should headquarters project. of to related our expect be $XXX 'XX $XXX million expense facility about

We we've GAAP targeted long-term debt Historically, about XX% million prior at XXXX. have due of $XXX of dividends in earnings. year

to at will month of an Next our Board we of X.X% up annual year. recommend Directors meeting, increase last from per share, $X.XX $X.XX dividend

We expect that evaluate continue repurchases. our fit to also continue acquisitions making to opportunistic We'll strategy. share

has confidence begin solutions As service people we we and higher. the to strategy, our bring in our differentiated confident Above capabilities remain in we product and all, my our never customers. been XXXX,

our challenges you that, and emerging steadfast questions. value. With to Our That in your prepared I'd on focus business us that this positioned concludes for following remain last the as two Sherwin-Williams remains be shareholder years. our extremely like we we're remarks. well even to and thank faced joining an take morning we'll in happy the have We stronger creating

Thank you. question And with [Operator Chris our line from Instructions] Mizuho. perhaps the mute. proceed your Parkinson is with first of your line is question. Please Mr. Parkinson

question. You for are live

Sorry about that.

towards back in margin towards be multiple So there can steps to and your -- your strive structure performance. consumer especially goals, it rebuild seems long-term

improvement investors then we getting sequential How shortages, what's in importantly, actually material think basis, material given embedded Any towards pricing. to goals? based should cetera for logistics costs how in long-term margins Just expectations offset and etcetera, your cadence those a by inflation, near-term raw be about you. hopefully 'XX hopefully be your factors? on Thank back all raw better et the on more color guidance recalibrate appreciated. And perhaps on would of 'XX should

say, is half, Sure the our Mistysyn. Yes. I the a Al This strong second very a exactly would half And unfolded budget -- opposite. first softer is and with strong XXXX Chris. XXXX as

as X in And divisions February about a incremental headwinds mentioned going talked across the to pricing. continued increase. TAG raw with XX% pricing. and heavily expect John going first with out groups half. we're materials We all out We But weighted

the let gross history, of on. you to our volume-driven look volume. growing I contraction our quarter So margins gross first margins as from -- the if moderate continued those recovery back when I the see And And -- previous on see at half XXXX in half back second almost see price in can we XXXX including half contraction side the -- as expect margin, on improvement see recovery some a titanium and margins segments. the and points. the operating to our has raw to then saw second side you contract. even in get effectiveness And operating improve, to raw top as me years. in over, then margins XXXX And expect And But recovery. slight our you'd past that We as year-over-year segments dioxide. pricing growth roll our goes our look I our -- saw the and architectural margin XXX demand material would run-up look in catch-up and it's raw what among in I our Performance you strong is the gross each on on half of start sequential operating is point -- get we with with on Coatings really basis that expect big material when have materials we we including across XXXX starting then half. to saw all see the segments. implement that expansion And first an with XXXX, along And would we environment is to offset in you continues we the inflationary our potential the price increases, continued seeing TAG as start start you see to margin increases. at to expectation and as of know second And even even in

We environment see expect to similar a today.

just That's skepticism rates, there's a of terms bit the follow-up just essentially very environment. given more helpful. demand affordability there's -- recently in say a as little housing of quick just let's been XXXX just inflationary broader And

your underscores your hearing to as well truly will Just and from win boxes, what really very macro helpful? volume stores, share Sherwin-specific and any be ability from for the confidence Pro insights angle TAG as additional on what the specifically big you're further and on both you. your Thank just

market Chris, the that I would in be think points on important position two very market, One second is and you point. hit our there. it the

bids reps moment. So XXXX would ask this the customers. year. now quarter our that indicator they customers feedback of we our a Jim terrific we customers in that say architectural run pretty over in feeding us look with our the give most have CRM into getting customers here looking market. right system their close look market. forward, third is gives one in confidence a our we're I'd a have the second, across to segments, every much store pretty confidence the with that is going of full data back our nearly that is they're to sales out the And segments relationship taking strong say confidence XXXX we would This now. first that talk macro But those have you that believe out to right exactly that But and to I'll if We've incredible me in to challenging the we grow. day Many as there pipeline telling and indicators what the and plays demand continues every are be the is be a that. believe us managers had

ask So from reinforce customers. the you it's what that a hearing let little Jim numbers our bit very me we're give But macro solid. on to

Thank Yeah. Chris. John. morning, you, And good

them, levels double-digit in always big -- rev the of And repaint still that side look you is indicator a LIRA starts As the very supportive, through we've on remodeling little when now, about years single-digits ticking index to and saying direction high our on throughout to positive they both that the side, various at the the XXXX. luxury rates the there homes also go level level activity we trending largely or pointing addition need Chris. at bit up leading I a quarter indicators but you look won't all about The was what look near John's that see and permits at remodeling across residential are the up going have since forward. There's growth they're in been record customers built, think. in maybe strong entry of the very talked trends of are well. Think all be and Mortgage new for fourth well, comments a and summer. still at backlog while as permits I market

Index, On Index, In Architectural maintenance all really in pointing directions. strong you've the Billing the those commercial activity seeing the we're good other property construction there. side, of Dodge indicators got Momentum

you no matter our it feels So very look TAG strong. business on where

We our also make Brands one well in their from on dynamics. pricing gross seeing point push market ability addition for talk about Yeah, market as because ability there But what the well. our confidence pricing is pricing that Consumer believe TAG of is and in availability to that our of the margins customers through. and Consumer we're I'd supply/demand pricing have the our This to there's to where in put our lot Brands contractors. in a business we as the opportunity

you the market. going price same But it at I mindset notes so I don't the time So you we're tell receive will typically up to teams what almost to increases price projects they're round. to push thank I this to they're And are very increase often the don't customers could through. confidence not. have expect on I've okay be their are And receive putting to for deciding, putting in we the confident in price price and any that said of into which put ones I know who going ability our in they're to which customers is take, need through. our

So the powerful. very dynamics are

Thank you helpful. very It’s much.

Thanks Chris.

of the with is proceed Our from question Please Panjabi next Ghansham your line with question. Baird.

Thank in early it's you. year follow-up. know in you and week. very I a seemingly of Good us the there's morning you're lot somewhat guess catch-up levels what can your I going And a it material raw specific out on But assuming as terms the break for everybody. every guidance? guess XXXX then your I of relates earnings year to for as inventory availability volume I'm referring and unfolds? to own

Yeah.

raw that in a So to our to material we've expect Ghansham, us bit in have quarter. about our commitment in gives the mid-single the the gotten -- say the availability, across it great our be choppiness meet may we and some bit in availability to existing that digits. But stronger single supplier expectation new available quarter. We first first being quarter confidence production first that should our stronger our choppiness little we -- base a us base seeing and talked of we'll of could first demand is our quarter I really supplier see our low little

more quarter of build the the last product John line prioritized historic more to are end year-end versus a not compared XXXX to mentioned, and would what to but year levels. in with to say So our first I significantly going we inventory that

we a with growth will we supply real XX us in year shortfall and inventory is you're of The the that the that excess position. capacity ourselves the raw early have help better material of really additional of put days sales TAG inventory. the because the of filled getting end put talking and at for that up XX in because inventory being on in to So but

I by Ghansham, if could terrific Al. think add a that's I response

we've But points long-term looking the to we long-term is I'd We to at just to really look and There I that that Al going choppiness more talk add if just and some certainly We've we feel capacity like outperform spring. additional a about just and on. couple are mentioned on our understand look could. think his coming that. got here often short-term. why the this brought is company coiled about that I when we that's there's point opportunities I important.

think other we're is that The not understand that complacent. to thing I important

underway You and look to more to process well but shareholders in a I products responsiveness might this out ensure work of have. productivity at how and we get of done our more efficiency that our be There's would question a simplification here, we're think our some plants. be

to of response issues these a current experience that we of how And result looking ensure through bet on? anything to As not just to situation. out ensure we've do we that at happen we we the here the to again come this were we're this, that are the build in horse as how sitting we're this if like do avoid waiting types trying of get going And forward.

So be to resin to the the But the products our able from capacity to to raw to that to different we allow raw bought. company It to just around include equally lines an situation of important that product bought. be more responsive, resins does our able supply simplification us many of be is we it the does include more it adaptive or suppliers material or move material if customers. be one

there's customers' more work responsive help forward. that future, help more reactive our to opportunities going and a needs place only to us. but going we're It's going in to it's this situations of lifting that's be going today, but to So, taking heavy not see to lot us the in really like not good to

customers various on constraints earnings realizing what the wave et because and you your supply just volumes that issues still customers so produce that get a able cite paint, very magic That's quarterly fair of think forth. terms so raw to then nodes labor, material all trying And other so you chain, you're in on is to more gauge, there's and were you be to if you standpoint, Okay. your of need this calls but to from helpful. a cetera? a is a able of and in difficult appliances, answer, many different in choppiness just and the citing, including their basis, I'm amount wand, the are there going to question

about have our think, got it Al made our And improve. -- to raw mentioned, raw this We our to we're associate going I incredible about get do the going is improving feelings the business I to comments That's raws going why would able start post, going have to Well, hated going behind we're that. suppliers, I weather. current to our confidence talking this We've want talking growing with that regarding new earlier. like we're It's what talking is always to we've be material materials I'd to and about now. say results us, material weather. to talking improve. position feel and way. we're this about the and between raw and as to

we're be other in be be as we're to to build the that that responsive going like able first transportation as the a going and not we race typically but build we're there in we quarter, like. are to issues the build quarter first fact face to that inventory going Now through to the product to

more going we in first a to coming get to position to respond. if and raw the won't going to season. it but inventory some through racing we're better, out and have level quarter, to we're the going be more we It's fourth be traditional as possible pipeline more And be have able to going first to have is would built paint We'll if build quarter, but the be going will, some you materials into like the in inventory be to capacity the a to that but of liked we get So year. to hand-to-hand there combat fill here. would

Ghansham, there. add other thing Yes. the I'd

at look got them. years believe I you doing we've when we results. think and two challenges our been to challenging, is management we've to solid been I and that. really influence able And are paid meet the experienced not report and past results team those produced management team, and long believe have We because tenured a simply

doing while three-year and portion that If adjusted midpoint the our compounded the the we of buybacks. continue you our a to form a of shareholders rate. dividends invest growth share average growth to significant look returning the at in future that And company, yields of XX% in and EPS XXXX

is think XXXX our global is volume such transportation our teams I doing first supply, to logistics it my past first past architectural down what architectural expectation see half. look to the is And second flat that to volume team be So more material And volume. we half, I'll strong because going up. low consistent in will procurement our really half a our of had all maybe you're is at get supply -- and get It's the single-digits. get set our chain and things raw expectation that

volume. that's we're mid-to-high second in businesses TAG improvement what's really to operating going and up consumer. half architectural our across single margin digits Our And drive expecting be to the

Okay. Thanks so much.

Thanks, Ghansham.

Our next with with question of the comes Bob question. Koort Sachs. your from line Goldman proceed Please

Thank I you that following Maybe make last sure want properly. very response, understood just it on much. I to

be down price you're weak? to be in implying coming, TAG your would February expect maybe And hike given architectural you said what pricing then on the cadence XXXX revenues. of I revenues And in would I'm you and you so will think almost match the business think, half, all then even why I the through seems more pricing. it think gave for again first guidance wondering the XXXX, I broadly

for on maybe range like be. volume. of whole Thinking a you seems there's year. not it would a production net lot that So us why few of this give little more can Maybe color giving

to And clarify, first start a down. to to was had I Yes, we Bob flat such in half half it's first our architectural strong last to year. our volume be because highlighting

first Consumer stores were at the single-digits was high paint If up high up America North TAG was and in single-digits look quarter, our quarter. up XX, first you our

stores So high I high single-digits, North with was referring full America at to mid- up the And or year that, range. our to end our comment be that the TAG would being volume. being paint above of

mid-to-high a annualize you're price to to get single-digits. you the If increases, going

sense? I to be would mid. paint that our be low stores up expect Does to So and North volume America make to

was That's some the you you throughout you'd as that you weaker how do do curious, guys XXXX if out, if I'm there I there maybe And then your is trying have helpful. false comfort? insight demand just maybe customers do to how that. Okay. scrambling bookings on, have were double appreciate figure ordering, were underlying if that – in a that and risk, scarcity or wasn't any some mode confidence there expect? is than slightly you of And there get any

bidding at can place, and activity at are real. Bob, confidence that that is that's that. not that's the taking job And comfort And place, demand we requests look taking for as verify got all. the a me tremendous the we we've concern

that. great So confidence We've demand got in the real. is

That’s clear. Thank you, John.

question line question. with Wolfe Please Our of the with Research. from Patterson Truman is next proceed your

Hey, my everyone. good Thanks morning, question. for taking

a if raw embedded break for as material a fourth year-over-year year kind guidance you to your moving out sit could in But up of down? whether I is raw then inflation your look took double-digit quarter today inflation understand full low segments? you hoping snapshot can in still First, we I'm XXXX, or discuss January, mid-teens is just by XXXX, we material And by inflation expectations target.

year sequentially improve our But as likely comparisons think in to I What Truman. mid-singles the as get little quarter, would fourth say expecting quarter. low to highest the should low fourth It expect easier. I and said first and up in it a the and on we're inflation. full in we you're quarter bit I the double-digit be that Yes, mid-teens us for is even would to the year, goes the see

pretty to the to highest Coatings support Group. helping inflation see still segment expect Performance that's think by there. the out that's strong probably I would inflation our in demand is out there I again

about other increase that only talked Performance weighted The we I materials year last make to Truman. I comment reiterate, When on say to Coatings. just raw was would in Yes, about the our heavily still XX%. that

We probably expect also our two said, inflation a sight material little just line that raw quarters bit year. out. this you to of best at But see is it on than less

basket in with half last And increase if the or So to of continue will year, quickly monitor like react XXXX. inflation second looking we'll did this we see or pricing year. at third as any we change have we throughout

Okay.

parse quarter a operating volumes component how out model. declining, – bps I'm volume leverage the versus fell it this Okay. Thanks that is going of And XXX due single hoping you know leverage much we'll your year-over-year. help margins in digits And fourth this TAG, for to is to was call a then high that. key on? us can price/cost that's dynamic I

on I that had didn't less biggest volume mentioned, margin impacts Consumer what at and Brands is it's but that case being the improvement our organization. If would better is operating in TAG because sales But Yes. single production the really we Truman, each quarter just the guidance if our volume the planned. had we that And I that I'd the the segments level decline. that set than talk operating our due global as in increasing. of to year XXX% of availability the all look this past, we in about volume sales said just And recap again, I I've consumer, at driven than volume-driven you XXXX. as TAG, almost you But our that And meet chain expected, because driver especially margin. Group is across we was to move kind look look of at plans it if we say the may, like embedded gallons supply of to is margin. by also primarily paint to fourth if non-paint and

supply segment. material the chain raw probably equally inefficiency So, higher impacted Consumer costs and the

the quarter-to-quarter and is get material was the are raw Group, that that weighted. volume our the equally gain. sequential of sales XX%-plus but one then number again full two increase year impact Performance of about probably for increase. Coatings driver the you saw into nice And then really So, other But the we

will took that we in on to front really one work in the raw incremental on the increase materials chase the improvement segment second drove They're on raw with do that that the this as said and margin -- segment operating first mentioned quarter we've as top to materials. pricing what segment more the So, out of margins. impact And is and year additional in materials earlier expectation pricing increase in of see and our our this has our get I we half. raw is

was dollar Hey clarity. lost clarity. Al TAG little segment decline The to a all not almost was to leverage? due it you lost entirely of commentary I decline majority the bit on due for overwhelming margin for that the volume

Truman. right That's right. That's

you. Thank Okay.

Truman. Thanks

of question. comes line from with Jeff with Please Zekauskas the your next JPMorgan. Our question proceed

the want XXXX for Still percentage. pursue much. high to TAG very of mid to Thanks up single-digit guidance

be single-digit I earlier slight realize mean volume range said should up single-digits how high are be or to you might mid-single-digits. number, think prices your bit TAG your high I growth? be low unless your a if negative volume you flat I don't expect that there's currency. I to some of see mid up going to negative

to the or thinking range. Yes. end up if And What XX%. above at North so being to is look we talked the of XX% America at high stores X% high you're you -- X% about that -- end our or XX%

increases our first paint quarter double-digit first price to be look our get high through the think single-digit about price of at stores stores increases go high the in moderate low single-digits. will you as annualize increase up to going mid in If the the if a how to cadence paint in that you And we we second the to half. we're half

kind So, mid to how to I the that's get low of volume.

moderate see that X% I your why quarter I really the maybe that don't Yes, it mean I costs But up in year. SG&A third to aside -- were for to the level. would think put

up you to a SG&A lagging much little you that expectations it was effect talk to bit whatever your about expect SG&A a can inflationary it more, be inflation more you're and was there or in experiencing detail? in So,

we by stores our through slower we still servicing will but very programs continue as year, at other be expect unfolds invest full if segment say paints Performance to in Group, do on And in year We TAG to initiatives to our controlling to as XXX Pro Sure. platform. and invest really there. John but would in -- Coatings direction first our our for the how focused like opportunities key second leverage look We'll get progresses. to line, our the to continue non-customer-facing guidance We'll then XX look don't to be going provide the at within you our half SG&A. some And new digital on our give the plus mentioned. than in mentioned the you although SG&A throughout we're half I I consumer volume look

our half on So first we we our half. second see expect in more see SG&A leverage to in than

Okay. so much. Thank you

Jeff. Thanks,

of from the Sison is Our line next Please question. Mike question proceed with your Fargo. with Wells

Hi, morning. Good guys.

Just point? sort as particularly you How are are more volume areas have maximize as to amongst customers? are in your want. And allocating at gallons volume you about don't there in the this think of or country you you those put given you TAG, where and curious much Can mix limited profitability as profitable?

we've a think observation had of you -- really that's I make there's because lot work part, good to Mike, good place, taking your and a of it's some on decisions. pretty

that product we ensure become those or and materials raw think, treat resources have the we job just products that. down utilizing paring include that were the decisions have that in those raw the of as available We've to precious the terrific some And I done a really, needed. line materials

will product fit that products fit that get. could their manufacturing we're of may giving are there customers the times that it needs customers. have needs, And been in best they we're came to product the not our So but a when

at are as And we've with product built good. with come customers a into so do unique turn inventory customers. The we're about in get we're may And availability that's you wanting for leveraging we reasons we're and I a say we're doing stores way. a the what we've one for in because They something of big you stronger, our mantra relationships understand of keeping project? something customers that TAG our do. and Sherwin, product a work our Let a them established doing? so mentality differentiation. store the got is of organization, responsiveness, a frankly, in We working is of what's I'm particularly of very One are and our about exit working teams customers What is in best And with is and quite level paint. the couldn't number out our about way our line in a that that a would are And me them. lot the bad keeping been really how excited point this, this, And that We've proud. companies the this that and within teams with talking the stores you there the that, and talk company. relationships sight the most rep to those

to And as so, responsive there's to a possible possible. as sharing the of inventory as be as customer close

before. believe them they we're as this and customers, with making it's as point get They So a to we're -- them where ever solid moving, get trying keep more the sharing paint with we are point have keep through is, we what get trust that we're to as us us. more that them They us. is not our not decision have that's information them their to the of to think we as families. we we why we're of that, were projects about you answering providing to earlier keep we're of about than our we've view trying the worked and partners. make We're the the customer do confidence question demand, with has which improved. What serve. result customer this And asked And their product in for why asked can sharing to are -- we when working

get on to doing off the it. their the money they're project giving to projects ones, next making so, and And them them next products we're

XXXX, control you Got upside can the place, do given And but out you the where cash to have your you it. guys do surprise think follow-up, And one that that? our what's see surprised to were game upside, think do that? as a where if of in you could upside to particularly to quick in first or you

to I going we're tell this. would surprise. Well, you

the also over form investing share returned billion this you while and of cash in billion and buybacks, last $X.X shareholders back If in our Mike. generated years, the we've we've two over operating been we've $X.X dividends to look in business, net

paint been helping because XXX So on. really side, more reps. new on we're strong this we've and willing paints innovation. have adding in who stores, sure we stores it's the and what pay management new our about new in but them net solutions our that's make We've talked make in are money yet, America that stores, not opened with our to XXX probably partners to customers focused Brands North future trainees investing pipeline. added believe Coating Performance we're really pros over a we've invested our X,XXX services we We've that We've for, Consumer

here with say, the in answer innovation. which would we're is having you tough question, And be raw how invest sitting some materials, to you can your products might yes. make, decisions well, about And first make when going To investing in to we're innovation?

We are investing in innovation.

confidence. it tell remember confidence. customers learning over our people we've In And it of strategy. And confidence, new made products fact, really if a I that's importantly, you, helped think manager, XX And I year you an sell And look much over and part I new gives would and those last it when the lot. our salesperson. salesperson most to a just was pretty and XX me know store it a better because I years, per averaged can think important me product. It's a that our I products gives I important. probably average firsthand, a gave

And we And customers' we're that they responsive may that they our be know. needs And to use and their not unarticulated in to these customers the in sometimes to can positioned articulate think those that business. so the are things have we're these both products help – the they investing products. solutions uniquely needs

the no keeping it's have clean. that the areas surge now pipe, emphasis be right should coming And technologies the resistance. that, we in of resistance, in surprise in mar breakthrough variants, clear it surprises of a scuff COVID the surfaces durability, down so one And include market key with is

technology platforms what the But forward. doing. as allocation of servicing we're of that and right you raw precious some And so our these an assured on about surprises now, move customers. of self-cleaning say part But rest we're as material naturally we that's you'll our important focused be hearing

you're capital other making. to to I think should going of that use ounce last incremental going surprise get about work just the longer surprised bit output those our that years. we're we've million facility is We that invested talked is about I them that every We've you We're we've innovation. people new the I added. the areas of those. might R&D capacity out assets asking put and but term, to think – and going in will expenditures two the utilization to as added as $XXX expect over money We're we're hard. of and surprises capacity the be think and I mentioned a also this the

to that collaboration people asset to be my While I drive our the that's going then guess the be part last the that of we're short an be Polymers helps that that's forward, in because technology the would exciting. acquired. going think from be thinking really just utilization would the our not going what going off I important it's top we term, of get to wonderful to head, this Specialty And I add of company thing

comes be the inherent and of a our we some believe and differentiator Gulf the is from our to think really respond ability ability Coast well. what going to market I to really as outperform de-risk

But about. other and We pretty what's here the where that we we're quarter about this excited like that, want more really have fourth to about some getting Mike working best There's about talk would and excited quarter better really talk We're of do and a And a those lot about up I've confidence our excited what of So to like the on. over we're We're is I'm started. lot things we've just believe headed. that, while ahead. accomplished got have down a I digital coming but we could I are we're sleeves. areas. the what pipe themes

you. All Thank right.

comes Bank from Our with America. your question. Steve the proceed of with of Please next question line Byrne

Paint. paint capture Depot you help And this contractor something you recent Pros see John, more Who that from just exactly you initiative similar? How mentioned Home to initiative? at is a Lowe's risk do any do What business? can

Well, all our competitors we respect Steve.

risk. nothing So our say the is we just a head stick don't in sand and

an everything healthy the part really fact, for In paranoid which Paint as paint often about we that drives as contractors, nothing we life, take is towards these a who serious talk of a But granted. and effort what project. a Who means initiative Pros

So goal painting the paint. fact, that of host those project. of stores every or a contractor in would could out on – There's every focused on could nearly a wake that whole project contractors paint every applying I our with the out nearly are up be day with there project, there, say, ends remodelers

is a it cabinets. store. might And a to want And pick pick different prefer up shopping might want want they pick paint that so plumbing, whatever up might up customers they might environment They to reason there drywall, are than be. the to

well I'd learned in that have just our penetration limited number have opportunity had services as to both much we terrific many home stores, in some Pros penetrate bring center apply that technology a for And on and terrific home may in say through success us what looking partners market customers effort while to our everyone. had a be they that the customers opportunity Paints. money those is to relationship better platform. think prefer business at greater through these there's have really the format. those will very we've actions they center the by their a We ultimately our cases customers Consumer the services, make we as that TAG through and in more customers on product help painters. And putting different benefit believe with a helping success and that focus product in all We've nuances choose Brands preference unique finding got to some opportunities Who as and with to And to our of this so terrific our

this on respect with one year-over-year just then issue And more to TAG.

You a noted is drag component and were that DIY reflected on that If did drag is also a being that's a year-ago very year-over-year strong that of volume volumes price mix volumes in TAG, the headwind. a result benefit year-ago than year-over-year something that more year-over-year that has there the price? shift you impact that guide? also in were have the Is is

No, we very shift. experiencing a I bring wouldn't say that jump what that's is positive to shift mix is the are I case But to where wanting clarify Steve. you when mix up

are products that about as trying and to issues. get out the and touch done all believe part in the do if and lowest well quality up getting aware getting the is our callbacks when allows will, out back contractors of a able in painting we demand. as that you being our highest Our getting more we've home yet be They possible. a with very we price paint lot cases to in much go productive. And greatest in bringing will the And gallon to project, could less what ones either answer, you are most store talk labor, One about talked of the of not not talk you is are fact to just quite of specialty partners frankly or center experience this be now and many contractors about opposite.

again we're in labor their lower as our and they want they not products be you as their finished make a more more productive pay. some whom So contractors than like laborers those looking or in much would experienced helping to to professional at their helping make of quality output would may we're

first as and volume a… I comp Consumer just is about I TAG had XX%. talking See both a When that probably included Yeah. versus to add half related in -- reminder the to paint and relative is Consumer stores our thing would only about architectural was a difficult DIY

XX%.

their in quarter year. last growth XX% first

you. Okay. Thank

Thank you Steve.

question next from the Our Arun is line with question. Capital with proceed Viswanathan of RBC Please your Markets.

morning. for my have A taking been of question. Thanks lot I Good questions guess asked. Great. the

of So a maybe couple I'll particular of just ask verticals. couple a on questions

you're Has there are improvement you maybe not during just kind MRO? the pandemic. been address imagine markets what given there? seeing update that any on I commercial lingering So I you know but lagged construction had, in and could those of, us can effects just first? the that

product I the as is I'd some the feels in pretty reason say is we've good. in back cases. Underlying commercial I'd of Sales Arun that these say projects stage are challenged And come demand been paint been we've online but solid. and many areas in of availability, it pumping say through these but that beginning to reaching

of Our have that talked some labor impacting business. this constraints reported in about not they're the paint space only the customers we've

up be get fighting and guys sooner the the more for So done these food moving waiting who are labor keep you drywallers may drywall chain. to for

of an it's look a flow it -- MRO Momentum it MRO it's entire help I well. I I'd because -- mentioned, as continue. Dodge that you with strong. have fits maybe of very well, the this, we we I'm Marine if Index But the could impact underneath will the sorry answer because sense, asked lot So you was & you it at also having fits on project. Jim confidence that other And segment from a maybe about Protective say on could but a think the broader

We're lot good really up strong. here here. And and there's a double-digits. business of work was Our up very

And We're through. beginning way spoken The to spending work continues on strength been doing we've adjacent about petrochem our off. excited that pay is have the work infrastructure opportunities markets there. in We and to about as in the government that. its

not it if well immediate, capture look we're be longer that positioned well. While really term, may you and to that working hard for as

really, really, good. So

indicator of pricing the to of as look know to we've of confidence. experience, customers, I as and you when an side standpoint as we them us pay through demand years at from done know my from It's customer the it. our every TAG of have, you from that It's it want tremendous market. and well that simply projects from And flowing the I mentioned, segment strength market very -- us customers If to for a is professional willing our from because is. to that strong get a customers their their they're got the

as there. cash and just maybe follow-up, uses free flow Thanks. just can ask I And a about

could you kind as a it actually right, is So working that that drag maybe raws, inventory maybe higher-priced appears or capital benefit sell it building as be inventory that of move is through XXXX. capital you and working would

just thereof, flow for cash cash could so, use thus cash And used you elevated uses in I flow Thanks. free and expectations, that then we us multiples Is remain help buybacks? how growth here? should mean understand most seen have will and you excess valuation free and XXXX think about its be

Arun. Yeah,

operating in I partially generate in working point cash think increase the slightly your we'll we're offset net by income in with to that a net improvement XXXX what higher expecting capital. the

to significantly inventory architectural year gallons than in expect We some inflation end the correct, Plus, we there's with ended there. more XXXX. of you're

CapEx, talked John plus million about, That projects. Building as far another be $XXX not the Future we as include about X.X% $XXX million to does or expect As that incentives. for Our

that to number, out Dividends the $XXX increase than XXX. we $XXX X% some million see less a cash up we'll X%. million. expect net So That's about

your up forecast the So our the to it end the approach of But our you far is of is M&A go is backwards. leverage free as this year, our high-end at X.X% ratio was debt-to-EBITDA look range. at as flow cash going debt-to-EBITDA concerned really for when

expect two flat that ratio EBITDA. to leverage what's increase to debt in times, So is at be and we the driving X.X down really

So to in continue quarter. very But our and stock going -- you're our and in be we're going hold our and buy absent announced allocation M&A, sheet continue back. we're philosophy going have to from do close to cash. that capacity going we're to be a to consistent not strategy balance acquisition standpoint, Sica acquire capital going to we're fit We're previously and additional then to to acquisitions right, expect first the pursue to we our

Thanks.

Arun. Thanks,

Our question question. Research. Mike with Harrison the from line Please Seaport proceed comes next your with of

see further you are stable raw bit specific and How or can baskets at these for up significantly, are a some behaving morning. others you Good the resins, situation go material additives those material you of was if still maybe of seeing wondering packaging, As moderating? pigments some break little I this raw year? down Hi. us. you look do solvents, while

to we're couple about, increase really is say still I packaging. of resins, think comments you'll of is so a material ticking 'XX, Been and that Mike, We've about buying recently. our seen and raw seen often down, bit a talked feedstock. XX% the necessarily at solvents we've haven't in disconnect monomers, look expecting from Yes little that a propylene that of in biggest things we here the would there. come will that basket. we're but I be or it -- critical We propylene as

environment strong the is we're I of demand that that in. because part think of

well. that TiOX tight, that relationships feel given as that on our TiOX, we side, but up have strong also strong we're seeing about we remain the very with think Inventories the of good I demand tick suppliers. really supply given the our

the update question give out seeing like an two COVID other how was seems just you're All two Maybe then you to where impact dominating It us playing And ago? on, is on right. of relative that were the Omicron kind my weeks conversation. the situation. ago weeks

the We're different Well, it's improving. itself. than in I'd say what marketplace would no see you

saw the rest of country the that the of spike same and we decline saw. kind So,

behind So us. get to to excited we this are try

of sales I about stuff. talk I we and about want want Mike, talk to don't about want I tired talk profits. As growing earlier growing to this about to don't mentioned we're talking COVID. materials. raw

we answer rather but even a do. fight this try got a can of tissue. scar what lot skill of forecast this. really just to That's up give tell not lot do. determination and going We've we're we're side backed on do we what's this we to you and you a So just to and what going happening, And in with through I'd

Thanks All very much. right. Fair enough.

Thank you, Mike.

Please question line David Our next with Bank. your Deutsche of from Begleiter the proceed with coming question. is

about afternoon. in Good Al growth or QX? we the John, versus improvement at how you. earnings Thank the TAG looking QX, should think just

Yes.

and volumes that quarter, a look highest you quarter the we're raw and costs do our is TAG which to is in be going to single We cost quarter -- you it our look at fourth put which to TAG, there. see backwards our digit impact really if expect going When tells to low-to-mid margins. sales our to elevated it It's see of when But volumes price a specifically quarter, so expect our the and -- sales should hit Southwest, the we ahead in hit, them fourth we first EBIT talked need assuming when be quarter, we about quarter our and forecast about driving and margin. at we volume, Southeast on fourth in hit you margin do we and look dollars of dollars. sequentially, talk look TAG small our exterior those our our improvement performance by are be the up with David, in the into again for expectation. year our the expect higher coming first highest pressure going the material So talked and to in profit any driver quarter to about still I you the the at

just seem be sustainable briefly forward? price better. versus And And that? cycles going doing this to little is prior is Why bit it cycle at announced looking price realization increases a John, on Great.

in responding. reporting. that influence demand that that as all wants That's confidence more. on supply not What do mean, as actually, not it's trying the Well, simply to about. our business also our say, to be with customers the where and sure Todd products to customers I his think develop this, the possible. more and Coatings Petz at do just right if We're not paint, our side. Customer Performance Justin that our hard in business the we be would customers But or I little the we make TAG But who David successful maybe is really hard working our we place just a to talked able such I we're are. consumer them I time and demand. a to it's right or have for I'd market with Binns talked and reasons greatly teams, Ray customers, certainly say in working our that that, team our team our her have to is help earlier it. about just speaks keep services we're that don't to at have aligning Heidi

So, that's are don't or on have more their numbers family, executing fair our who's that for we success, the ask what share, customers. paint we're running in company, aligning do our to because to we're closely center our talk really their increases. how to public We with helping as goals we do price help do challenges. if for goals, we're shareholders, the that, we money. you feed customers, we result And our focusing our where best get the is successful be respond in hard their to just of often running a moving. and We're trying we aligned need, a their while can. focus think We're them. I they with to that And and of reach I the our private there's fat goals. the jobs, trying What to we trying fire. understand when we're about you to it's working helping think, with it to success do we're to our as their we company And do that keep adding And to a and crazy them Yes, keep while have. to customers

very much. you Thank

Thanks, David.

next P.J. Juvekar proceed your with of from with Our comes question question. Please the Citi. line

year. steel lumber half up second prices John year, lumber got prices. last rising move again In afternoon. have in Hi. Good Yes. last this on and after the projects declining with and delayed the many gone year are of

for up project remodeling that's concern construction have costs think you as significantly? a do So gone

No, I don't.

was other the staff my at very it's a who price at as that an P.J., If item including my named that heard I've to demand, going an was example, you look actually a a on of people, getting variable. CFO, LIRA strong it, them backlog. there's indicators the we be bought look one and And strong delay slight in and

requires just tell that But idea or whatever ability frankly get at market best is prices not everyone looking at many may right I this now, the you're and to lot okay, people that Now that asking a going have the question are may I'll get I there patience fixed. as there they it place pushing say, out that it's been want with I demand. pay it are I the needs again the up, I continue. want itself to Demand very going it, time. that of to you remodeling, once can of the them remodel an be the or of that looks think But strong. is done aging their because have quite And addition price off that are in back area this would to need, or because home like either the or home, that

of In pass time, you. Thank light it along. Great. I’ll

Thank P.J. you,

Thank you, P.J.

line Please comes question. with Our of McCarthy the Partners. from with Vertical your Kevin next question Research proceed

Performance sequential Do tempted Yes. at flat Thank earnings I in about have examples directional think for feeling you in question. and sequential Coatings are you I'm to Al, I segment up of already, XQ that taking versus performance a history, XXXX? there down If trending TAG XQ strong XQ ask XQ. but into you of trend in for addressed my XQ. think, so in regard, look we that

sequential Kevin, do believe to going Yes, see I improvement. we're

I think of couple for -- team a that reasons.

I to double-digit to There's around are. mid need think well. we that high aggressively seeing, that's that terrific first as the increases volumes get to should quarter our team, low again no with tells volume the has And they in quarter knowing XXXX our job throughout you done off price talked First, price it, putting help getting that in Along need we're a or drive the backing be price go that increase going mid. high on the in and and low up to about XXXX. of the to they team in a discipline being teens, with improvement first

those your impact I in follow-up contribution you're closing? of wanted Excellent. Can thinking you And talk to guidance through to what recognizing on various the they're For about embedded in the quarter? that referenced. then that's the acquisitions the sales three financial that deals example, first is of for stages that you

Yes.

would the what, quarter, know I at look it For first net. you

Sika at have to first the in ANZ our immaterial don't net it’d headwind. quarter. first an be of we acquisitions, expect our If in you divestiture we have quarter, look

of SPI immaterial. talking really Tenant you're So net about and ANZ, it's and

Al's more was to going pretty a it the us Polymers more and to It's acquired Tenant a try grow an opportunity. it internal to of that that to technology is small buy. technology give Specialty does manufacturing. the -- throughout take point, company. we acquisition, And but We're

you Thank Okay. much. very

Thanks, Kevin.

Our next from line with question ISI. of Evercore with comes Greg Melich the proceed Please question. your

half? Thanks. say the look at would the bps that of of on the in the and year raws XXX to holistically, on was volume impact you raws gross follow-up I volume half we were If last wanted margin. pressure other

Yes.

August here's to TAG may not into really petrochem built and September really having would year second more basket materials Coatings. X. and until our cover got the raw Greg, Performance it on it heavier little why We in then say into on and got ramp think, side. we And I a half impacted that the in viewed up of pricing was XX really a on be raw the material I that, saw we

really a We're because -- more, the a fourth for TAG that digits, down have TAG decline. to dollar. and being booked, In margin been quarter, though high it. offset as I dollar And raws couldn’t in us dollar specific bit So single our you the would the see offset couldn't close impacted like we really impacts little driver fourth the really quarter. volume miss the heavier think

it. Got

you I But raws. think the across a it's if heavier it at little look year

sort Raws looking And I get to back the had would be and back of driver. of we at we the history is in how still XXXX. the follow-up sort guess, margins

when think the you back or -- the slower, faster business cycle company to years happen that of in took to world enough last to expect Do changed and the were. would impact you cadence recovery? that, the you for I has you the XXXX XXXX two where get or it

the like half I'd And still of over the we're XX% place TAG pricing our we in of the expect that I have look still our were not you is surpass I have Performance second than is, XXXX, other we company volume the for different the differentiate Group then, acquisition. will two-year our within I half the where that opportunity, of around the sales. taken But is or think we feel a paid -- really We cadence in, the with but strategy a do year at makeup XXXX second real surpass. don't operating approach And Valspar only the this look thing of that that. can we highlight that activities applicable. get and and Coatings what to certainly margin. you going and strong and XXXX and businesses have think, we back because at think that

we at think be I there. could TAG, So

think I two the segments work do. other more have to

of I lot. to And longer, it would bit an took when becomes that this a incredible conviction those get and goes Greg, add came it learned that But, out. awful is, were delays as tougher it would I say, with little some we time there learning

also I lot are and guidelines. those there's Al say hard we that's with good agree going conviction. a I'd But and determination We're can. as I -- push So think that that, as of to

luck Good guys. great. That's

Greg. Thanks,

with question UBS. comes line the your Please from Next John question. of Roberts with proceed

one here guys. quick a Just

have the to been just through construction over buildings of back paint far roll when painted. re-price go Have has completed commercial and or time? New to you pretty able does are advance that, and that in been

John. that, in some in opportunities not. adjust to not of But cases some are a there In for answer There's them. cases, many single there's

case-by-case so And it's a basis.

Okay. Thank you.

bet. You

Thanks, John.

of the line The question. with Baumgarten Zelman. with next question is Adam Please your proceed from

Hey, do you to negative rationalized expect raw back have improves And Do impact the back if expect guys. some good that's the case, bring a SKUs material you supply to half? as on in the you the margins? that afternoon, of

back if need inventory we Well, would manage we want back? So long is just very do without it as it's that, be what the going survive it business And a capital to our is going to this not very usual. bring be, we going working say I why go They'll our approach. through closely. to disciplined to to question and

disciplined in fact a my see there's if there's that So capital comes because be it's the along that a answer approach. proper you would return And investment that. working with

beyond XXXX? CapEx anticipate CapEx XXXX, do then And additional about headquarter-related you just it. thinking any maybe in Got

Yeah.

drop look spending see in and then so what it similar I think are at you have another amount XXXX. XXXX into off we far to going we're

you. Thank Great.

Please Our next question your is from with proceed with the Capital. Loop line Garik question. of Shmois

Thanks. Hi.

for Just me. one question

be to first the quarter? Are full pricing. additional you've for Just what beyond clear year is pricing assuming announced and you guidance on any the needed

to that in I'd the guidance that, is the say may they no certainly in little different XXXX. into They not half expect there's is our have Performance Coatings have in additional. some will I of because today but rolled pricing in price go have has just the think rolling we're But planning increases way some quarter don't TAG, in. additional, there's not may quarter. they the consumer second assumption roll I been in, second first a

to to the it And that customers what be approach front absolutely increase. a see be for want future keep our We increase little more more we the think might out volatility. you is of this don't we there what way, can a asking a with in of minimum. really can price covering than I our try that to when approach be hopes

And numbers to move pricing the the our have to with try so minimum more in. we've customers that if got open approach to best them respond a that. volatile to introduces But to think it's fact or little volatility, prices environment the a and to we're keep that about an the we the in discussion move

so Thanks Got it. much.

Garik. Thanks,

Please with line your with On final the Jaideep Field Pandya of Our is from question proceed Research. question.

happened think considering on some this is and generally you increasing large the size, M&A of really suppliers up if to and in on rather about actually. of list interregional capacity you're ticket a bulking It's resin your you. in-housing do this, what consolidation this asking has ticket view you. is raw you point you sort the but about to of crisis way material basis industry, it around I to mean, different of or do at Because have want industry? how of go really more way consolidations. consolidation Thank see raw going brought materials an your large Thank or and verifying a the sort putting coating just of in look answer an is from

point your is say our if bulk to may first the for is what up. fact strategy. that strategy I'd our really driver with our just is Well, I start desires M&A about our in –

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not litmus us so it by true customers for We're just able and need everything that And precise to customers. strategy. to that it's the what about everyone, shareholder for be chasing value in be to driving our value it's our to serve business, our commodities. a shareholders. to don't staying size. is test not To have do We desire looking not very at if we We're is everywhere. about And we to by position be you business a will

going not the all see us over to jumping world. You're

Something and strategy. it sale it against we're – chasing up If bounces so is strategy a for we've we're It's got And not not. it. interested. defined all do to we're very our if handsets

All much. right. Thank you so

bet. You

call the to this Jim Thank Jaye time turn I'll for At remarks. you. back closing

we how just as capabilities. Thank lot strong of is and businesses tell heard of a of heard it. confidence our our XXXX, after demand of and us ahead I all a in across enter that we're people opportunity fiscal today and are excited I as we you hope you you, you our lot Rob.

today. you joining thank us So for

for of rest always, be e-mails. we'll calls your your a and follow-up available follow-up Have day. you. great Thank As

This will today's Thank participation. conclude your conference. you for

at now time. lines disconnect this may your You