The Sherwin-Williams Company (SHW) 23 Apr 242024 Q1 Earnings call transcript

Good morning. Thank you for joining The Sherwin-Williams Company's review of first quarter 2024 results and our outlook for the second quarter and full year of 2024. With us on today's call are Heidi Petz, President and CEO; Al Mistysyn, Chief Financial Officer; Jane Cronin, Senior Vice President, Enterprise Finance; 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 [indiscernible] will be available at www.sherwin.com, beginning approximately 2 hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under the U.S. federal securities laws with respect to sales, earnings and other matters. forward-looking only made, the no future and update revise speaks such on obligation events statement a or is as statement the any or forward-looking otherwise. as new date of which to result Any of whether and statement company undertakes A. Full forward-looking provided statements in release company's earnings declaration earlier this regarding transmitted morning. is the After to questions. the company's prepared remarks, we will open the session call turn will the over to Jaye. now I Jim

to demand margin quarter choppiness morning. good what EBITDA a per advantage the and in value and execute In Sherwin-Williams its with of on first quarter, consolidated guided continued strategy. diluted several Thank within market. growth. share you, and ourselves delivered we proposition in continued customers seasonally to is take Throughout markets, expansion end the prospective current our disruptions our demonstrate smaller earnings and sales our range, position and and gross

of confident and While no in low were expectations, guidance we end the January. outlook, year sales full provided remain our at there from our the our we change results is in

we highly We and business model the well begins. positioned our as differentiated remain confident painting in season also are

While uncertainties opportunity. see environment, persist macroeconomic in we the

penetrating optimistic and targeted environment coupled We pro-architectural by sentiment markets in our end recent growth improving levels. as our with markets multiple us an in are continue several enabling end April are to the year encouraged decisions, at about demand customers progresses. Competitor are investments

Group have modest North followed we and our volumes, comparison at are as more low by now primarily lower-than-anticipated America. Contributions and the the from become per in sales in Consumer fully margin the returns annualized. EBITDA year-over-year quarter expanded Paint Group XX.X%. and gains range, against XX.X%, the progresses. Higher share were ramp will half improved second share XXX to made stores in income our announced driven XX in second by end in the to which SG&A face evident yet not in and to to expect and Stores investments year growth were this deliberate more margin more recently Consolidated we points diluted the in seeing we accelerated We increased increases year expected, points price X.X%. and basis of year, quarter paint adjusted net our of in last by basis Brands as strongest reflects beginning the quarter. Gross

through also disciplined We maintained allocation increase dividends share million approach our during quarter. of repurchases returned shareholders to and year-over-year. capital $XXX an the our and XX%

to segment commentary who Let quarter on on results questions. some outlook to first and turn Heidi, me will over your provide it our by now before moving our

you, Jim. Thank

at strategy, approach. We successfully which, forward-looking a very Sherwin-Williams, implementing are and do with our aggressive we

choppy me we are moment not our clear, and give industry pausing. may pause, be conditions market a others While let of in are

to I'm competition. our what our between doing morning, much our as ensure the accelerates our to to gap I but talk company this results we're us of only So continues, about as not the and going am widen ability about momentum

So results quarter. start let the the with first of me

a full is our not how seasonally unfold. dictate smaller necessarily year quarter results As first our one, Jim mentioned, our and will do

While our range. our our guidance, in at the end lower it sales came was within of

ability above-market growth. in deeply leadership deliver to strategy, our with believe experienced and and team's I forward, differentiated lockstep Going customers our our execute our to

our me Here confidence great to are we leading several the give position. strengthen that of continue indicators that

and national increased in exclusive customers example, number the management quarter. homebuilders have of contracts For with we the we property

These Foot up up in stores stores the from our new an as are up are at of and Net customer strong just are in share of purchasing meaningful significantly year multiple some into and the will we translate and Group industrial and performance wallet calls businesses. expect unique year our seeing accounts Paint is we're factors accounts unfolds. the in ago. traffic a call our all-time high, is activity active Stores Score quarter. rep New wins accounts Promoter and our across also

first Group, against I'll a quarter, where begin the on far by As X.X% Stores increased Paint with sales specifics mid-teens as the comparison.

not satisfied sales basically We pressured in with level of outdoor are challenging volume by this quarter. the as some Exterior geographies. performance in flat conditions paint was were painting

June see past, we throughout the demonstrated balance we've As to strong of the related focused weeks benefit than of A in first up investments modestly offset quarter the our X challenges. Price announced the in expect unfold increase. few can to more year. was our February

our the quarter higher ramp to decreased flat effectiveness growth year-over-year margin Segment to a forward. typical XX.X%, second reflecting investments. planned seeing now moved are and as We volume

deliver As a every customer up quarter segment percentage where see year's digits. year by were first as investment above-market reminder, Pro already led in to in repaint, gallons sales our We paint this growth ago. modestly in a Marine grew first the In Protective by were were and the are a return. Commercial double-digit quarter, up mid-single & in beginning evidence this this residential segment quarter. that store increased a sales

apartment down increased is single-digit was a the as turn while in decreased remained low momentum delays single-family New by down, in as paint CapEx completions starts steady. a modestly. percentage but perspective, year Property exterior progresses. From sales driven there to by residential sales increasingly projects product even interior management was terms expected, that will as also

Encouragingly, opened sales full to the in were XX and digits to for expect in X quarter We mid-single the quarter. net spray year. XXX open stores equipment up new the

open. are doors Our

win take We on the new solutions. on based continue and created momentum differentiated our and existing we are laser-focused serving have share to We'll both customers. business

in has in architectural This was quarter. growth North the Consumer strategic quarter results margin volume margin was of to solid amortization primarily America our of Performance by increases, to selling the in expense, continued against Group. a were and by growth. we margin, in and expanded the expected by Adjusted improved Lower low manage XX.X%. sales margin, by in and North Coatings Europe the driven with offset acquisitions. each raw segment cost excludes again, businesses build. in segment range choppiness percentage our a America. partially Brands impact percentage improved Latin and Latin manufacturing including And divestitures year-over-year high price wood America by Outside Auto reflects Sales acquisition-related to the the decreased which the volume moderating single-digit growth, absorption and Sales as their fifth single-digit mirror Group primarily decreases was Sales flat Latin regions. mid-teens delivered offset were seasonal double-digit This partially was Asia comparison. amortization Latin America a recent business percentage a volume. Sales of partially delivered Coil America excludes of the in decreased lower by offset in disciplined our Lower Europe, by X.X% straight America. Adjusted this and partners distribution material XX.X%. Industrial offset in improvement. across by and that fixed America. growth timing the to North on segment impact improved inventory strategy in of Europe North from led our Moving acquisition-related America, expense, in increased business. Industrial the is to refinish also of team sales costs growing operating acquisitions. and which

as We technology the the as and year. up with down show are will regions. more year by lower begin our meaningfully Packaging to in confident was improvement half demand General of recent share service was expected wins progresses. the industrial back driven expected, differentiated by all in impacted

year. the our guidance quarter for on full second Moving and to

to talk want about First, I team. our our to always It comes down people. global

I bet acting all and focused with visible every They're Our results. day, this on team and engaged, become this determination our team day. and is more will and right aggressive on priorities, the highly urgency. more in would

acknowledged much year. Second, uncertainties improve We we on from the improved, completions don't easing material with emerging. macro unlikely expect building to sales the [indiscernible] a the Single-family but starts increasingly Last in spots environment bright are in from momentum Existing declines there that get our remodeling indicates home outlook few economy. and week's January are to turn year housing this and the this call, softer. to continues have year. as get progresses. help the will Harvard to later report are

has On in improved manufacturing PMI side, stabilized the several or regions. the industrial

tilting in Paint agreements our control. favor can in we we controlling national residential Third, in Group, exclusive table Year-to-date, we what primarily account by new Stores new the have maintenance. are signed property XX and

rep We call sales and also have increased significantly. called accounts activity unique

have plan field have to recently closed and of We a otherwise or who competitors doors distracted. their are robust engage customers activity aggressive

I are earlier, doors open. As our said

We are not distracted.

to expect here. us very be You aggressive can

users Plus near In the store March, In of reps platform managers, number team along highest new with addition and our to ever, a digital platform, through we're engaging experienced our of had we initiatives. of and number with registrations. our driving Pros customer stickiness record stores

Tour We support have the European converting to opened Commission's new mandate. our coatings customers will packaging which France non-BPA to plant, XXXX meet

are momentum, new and the on architectural and industrial in our multiple projects we're mega customers' success. that to specked gaining both businesses are and We infrastructure multiple new products introducing drive

going everything At The key markets going of certain for log jam taking doing break. is long multiple share we this: demand we're reasons, point, actions competitive items. in to to are Obviously, list in these takeaway that be addition a there's not we're that but the that some can you is end to

if. not We're capitalize. very will confident it's We a to of when, be matter there

specific the segment for deck for our press for the includes sales release quarter and outlook, slide of morning's second As expectations this with issued consolidated our XXXX.

January. is our earnings contains unchanged again, and outlook, also which, sales year deck in we per full from what The provided share

update outlook our July. quarter our We in on an expect we XXXX year second to results report provide full when

on other deck for items our and slide Our provides helpful costs raw guidance for modeling expectations material purposes. also

our well. from unchanged call as remain these of All January

As you ourselves. can of have high expectations see, we

win. have our is is one, want right team right aggressive and that decades for know priorities. it determined clear, the the I on to demonstrated and playing we to We we works. focused Our are be strategy

success outperform to us prepared the thank rewarding solutions our I'd market, This for your to shareholders. with will to you We also our our questions. we drive to differentiated concludes happy are while morning. take joining our that, like And We'll this all customers' expect and continue be remarks. confident

question [Operator Morgan from Instructions] Your Stanley. Vincent first coming from Andrews is

since could historically, and an it was weather a deck little know it to excuse. and like company bit talk doesn't about up. the I it you your you on use Heidi, But it brought in maybe comment as

an And how how of to come low were did and the may might at related you you mention in with your be perspective? end Just curious that, XQ? And in up results day's you did think think make PSG you disappointed lost you much that from much exterior the quarter you range.

you're looking you was to that weather could the or I related into execution course whether in all and as to So have the want clarify better just like whether XQ? correct quarter been move you felt

to I point sit ]. certainly, weather weather. it, a is excuse. thing we're of would our weather at back you The do to tell [ We're going and trying part create last Sherwin-Williams but there's is to own here no

I lot of So a a I relative with in this would just here. It is say so regards, may minute execution. think take not much activity. some But delayed

look market in the imagine, you and our with paint of getting a of customers store, is stores, over and If hearing spending, and of I'm team you paint we're a over our the acquired unique that I'm would as distribution, newly with out certainly with existing potential our validation specialty broadly right customers that lot theme and model. and that also now with strategy at store differentiated lot time

the year. our little is with areas of a certainly I'd choppiness and forward the dependable we critical the certainly people, the to part goes going important to as it. now really of in Our here to and gives execution availability to additional ask into few point accessible that see contractors of you're in be in head back critical are you going environment. market, store a on. to relative weather segment. That areas products, bit is I'll point with launch lot by right of then The is give come pad. a consistent us to to ranging few an to quarter, confidence that that of really Al I'll list And color, me the The a and experiencing to I'm our going points. jump balance some be of quality the ability the this store

than we pressured saw Al which Protective start by laggard, is a off about in in exterior to not the case. were outdoor looked talk This painting was maintenance. a saw slower expecting. We Southeastern exterior it, slide were sales, our softer-than-anticipated Vincent. largest did if then Marine at sales property a about opening challenging slower you division Yes, our we And first division, which And the is quarter the Commercial, we which Mistysyn. typically that got & is deck, sales, conditions.

Paint that balance three quarter, these been into flat some but of projects segments and quarter. the the One second the the will of them the remarks, mentioned All a that month Group In of same-day certainly we're moved. and the we that of I fourth mentioning, about quarter, see basis. March we a And Coop. have just look have if not for mid-single it these digits. the in we with the talked made and but mid-single will in how investments in in first worth quarter, first I have at And get being April. the level her Stores we year, on market were pushed quarter in think there. continued high Heidi Repaint Stores the year, be for think, confidence was think digits I all Paint opening up highlight, you we've jobs done confidence unfolded up strongest momentum Res is

it's our But pretty And we're this, year, residential One do but we piece looking be we're making growth this I we do very say just this I certainly investments comparisons for mid- just to on year. continue not products so the that comp obviously, at us, that but high contractor specific only the add possible. the here. to remind we not to all aggressive as and try last repaint as help of that to We're we everything think in of said flat, not but had would had about side, this range. be you as would segment only delivering to doing in the I also the previous here, the above-market here value this now, expect proposition successful taking right a designed continue have evidence to that services, seriously segment, can we're the think

you're think I growth [indiscernible]. that's relative this seeing what to above-market now in

Your from next question Melich from ISI. Greg Evercore coming is

I margin, wanted up follow margin. specifically the gross to on

volume leverage was operating in mentioned you Brands flat was disappointed. there think I or Consumer that some but the Group,

it margin price So understand that like to together? And Or manufacturing? just there maybe raws you us versus benefit from could help gross XQ? was was put any all in

and And higher primarily the volumes also the It's Greg. Yes, costs other segments, tailwind is increases another margin price in moderating that Group. a has Paint raw Search Stores as material in the modest paint group company. gross than were which higher

and I expected talked those underperformed primary the that but was if Consumer talk higher impacted other on our supply in call presentation August recall, that So operating cost I performance negatively that pressure year-over-year fixed you our choppy margin the margin segments. I inefficiencies. if chain the And due The and affected recall, last experienced were energy the drivers the year chain on about offset consumer supply also, We under out the our improvement. this financial including margin, was XXXX. Brands community swings our costs costs. wages, improve manufacturing our you by operating production global gross and about that other plus it call year-end throughout I of higher to to the did on

product really [Audio chain, we about the PCG. our per There in our on costs improvements I not with Gap] And simplification expect year-end it's update of we continue an do to gallon detail call. getting and impact in Store improvement supply is Paint to Group into on efforts. talked see annually, that do typically we global cost as continuous so And as our -- incremental

curve first more in digits. with sales it distribution the and I our continue architectural cost quarter of quarter. quarters dropping typical XQ typically [indiscernible] to XQ remaining and of We with into and consumer second bell then for that. to absorption our fixed But our back be our quarter do higher our in quarter being year. down guidance fourth and does low the second should compared the our going that single as operations second seasonality agree I manufacturing will expect and

next Begleiter Deutsche Your from from Bank. coming David is question

new number? years? Is was big that last I amount of mentioned XX it a small number? or Is average with last XX win you And exclusive is year number? X won that that the maybe account What wins. the a there dollar a national associated

tell I on is it's won't you it's share also And the your appreciate numbers, also our I but ability you to it's that put question. evidence would I would What of tell I both can residential servicing that certainly, store only new display a a do. specialty contractors, a Sherwin-Williams paint what standpoint can that it only and maintenance do from way relative is these to property in material.

footprint to a local have, on our base of and a but so the and team, the these we nationally support leveraging be broad of function contractors. And that of just that of platform, local not expertise our needs ability nimble our

I what a pickup value uniquely but the evidence to we're what So material in proposition you're and able our of seeing, think it's do market.

Your McNulty Markets. John next is question from from Capital BMO coming

material speak can we to Maybe environment. raw the

a behind are inflationary you're to little if your everything bit [indiscernible] some guess, stable are from Or basket. this maybe lower, color question left having the higher? [indiscernible] you a mixed material kind like really lot of starting how the give the color you there unchanged. up, mark. you're a an so perspective, if does oil kind bit give I for go raw not of moving. can can still the I is of seeing bag at a got us is -- us outlook basket derivative You've It falling of little if year But but there kind we've run out with on -- just point of is more things seem a see guess,

This is start Yes. also down benefit flattish slightly in say, I'll half in the still just Yes. quarter slightly that's Jim. down bit as half year-over-year. quarter, raw solvents sequentially. digits a flattish the and the we of benefit our for was think the saw biggest And you single of rest year, first out back basket and mid-single-digit XQ. would year-over-year, resin, what monomer, the low the saw biggest a was was then XQ, less Sure. first in percentage, year, back just the the down little with I benefit we probably look year-over-year, TiOX, the Maybe it's the likely in Where of I year-over-year. year, down than

year full down the upside So the progresses. for single year. as if the But digit. there's right low we're still low in looking at year now, right now, we're still down single some that We'll digits see

question 'XXs. specifically, since year-over-year were John, the December, picked a up some now barrel. $XX still fall That's sequentially here. the but $XX, Propylene Your it's commodities from of about [indiscernible] where up and down has right we crude in

of of utilization true input other the still moderation some then it's lower on and demand still going I'd see say on little thing expect end but do in flattish rates to to is say always choppy. I of softer, bit. lot demand for think some the we environment for some with that, and exporting they're little restocking, these to is And year-over-year. bit Their in a us, put of a China. producers Now being out China TiOX. still And demand we're TiOX, pressure that's are seeing there little I'd on continue of up that's in markets a domestic of sort their the the bit TiOX seeing a some They're picking costs.

low in for still a . flattening bit it then single year, XQ and summarize digits So down the out.

is Wolfe question coming from Parkinson Chris next Research. from Your

a a community, biotech community seems just across on. little So have highlights more gain three market share going as projected on can the the things well as sales your give you thesis obviously, the but are

to historically of potentially. with Obviously, inventories rates inflection will the have that. You low single-family do have

but in ways. you advantage have And many competitors. narrative the underlying geographic of now also a then one, your versus not have share You X gain

and XX to thinking of to about in or something or it the further So 'XX over positioning last Or plans further you're X kind spending your is as for and things months? an 'XX relates actually this inflection evolved onwards. changed interventional where your as outlook

think don't I has Chris, thesis spending our Yes, yet. changed

think year-end and about I share the what expect we investments gains talked half and with with we on res accelerated our call, influence our that and leaning second additional see, gains to repaint. the that share investments saw accelerate we or that in to

as we've look we market as get we'll and we Gap] see at typically the think quarter, I indicators through indicators, what the done, [Audio second

would as about sales talked and be CapEx our and call, a to share those in starts on property market. we that first existing improved new to greater We'd acceleration single-family see we home moderate, see expect maintenance, improve. in interest quarter this expect to rates will better we turn an of get positioned and

few well, earlier, I our indicators when. to add confidence. give of a some a strengthening said lot Chris, the would as lot not we it's to examples. it's a a matter just to of shared time reiterate me that position that And in what pointed market spending of I we're the we of if,

So you a more I'll just color here. bit give

short you here. about think actions some If term executing the

activity. we're we our unleashing on own our model, contractors. world's of call think you know, But database the well is right that painting increased largest this because now mentioned of as data, selling controlled other way about distribution the to team You

We're the is prescriptive focused. So being team want surgical a to We're in time fashion. or spend the a very where where energy. very very out of in team in targeted guessing hunting terms not we

my So confidence hunting. how I of think to relative in the teams terms

store and the on the painters these paint. Our also hands getting mentioned of also out hard accounts. bucket, the our our and in our unique a activation and products with getting reps paint in but earlier accounts, pro the We're new managers active and increase working of the significant account into

into clear such the are the some actions in we're making very want market specifications, this. give of going that painting in and a you out term, the to position of coming investing a So that as our a season. then impact strengthening us control, about share when to is activities in and the lot sure deliberate is lot about which these short go think how confidence applications And we term long of

be a [indiscernible]. position in will to We take

Josh coming is question next from UBS. Your Spector from

realized question I in the First, of wanted to that. on specifically sounds ask how pricing. to quarters? first the guess, expect Group, little price in roll the quarter? Store a So bit Paint a it phased your coming description than I more And was do what that into you if And

So do we see in XQ or XQ kind of the full impact of that pricing rollout?

Josh. Yes,

talked X% -- As we about quarters, X, first with done, the typically reminder, so more I say, call, prior increase price year-end of we quarters we our as a have as would just on went typical. the next pre-COVID, the we went said realize the we over and it's would next out few couple February increase out full we

ramp As split price quarter. we second a between realized expect fully as to price that in get increase the X.X% we talked and we about, volume, had we'd and pretty our up and first exit quarter evenly

question from Mike is Your Global. Harrison next coming from Seaport

competitors of a of One announced view their business. strategic architectural your

you you builds wins. I challenges, some acquired you acquiring? expansion your rather to as Where to think parts guys I'm just business there their that new ever of always storage part will drive stores have of are of are you than helping customer paint or this alluded curious, But efforts? store consider

We excitement value a the this at is of of market. the acquisition this an tell cash we're is answer in And proposition in terms outlay. the lot to the without The opportunity no. I is distract that got you our looking way would

the result reinforce frankly, Sherwin-Williams. lot again, a of this there's think of decisions. I confusion and out opportunity this there the -- is some as -- our these of of but to a consistency reliability And

partner to they want doubt the a and without it's help be way, project they whether leads, know choose make helping customers with going us and we're partner or are to with that or that there with planning they of we're that bidding, every us, product them sure successful. them step going with when or So to to trust

the So opportunity out I there's to our go and continue stability demonstrate display the strategy, on and think, continuity of our that. is it's here, to and

before. which we X want of back was that was PPI, a have The store I Mike, Yes, in part say last purchased was chains COMEX, to XXXX. and

I strategy XXX mentioned, as it as to the we're small chain store in in XX Heidi confident a in is is. opening our stores like think acquiring U.S.

executing that that. against we're happy So continue we'll with strategy, and

Investment next Patrick is from Citi question coming Research. Cunningham Your from

gains? bit general There to industrial much do across be be for there for increases in seems the some are And expect your quite how outperform Performance choppiness as packaging. volumes pricing broadly, the expectations your what What year? for still And share indices a are of just well. then given targeted and to for from maybe Co expectations price might year, off, some rolling but you maybe

some and Yes. piece I'll to take the hand pricing. outlook, the of to first on the of Al over that of relative then I'll the segments and some

industrial look if think all there's say and of you the to would auto that, PNM. wood, packaging, across there's absolutely I I choppiness. board, refinish, coil upside

that's were Texas the in a there down remarks, packaging, bit our the that under said geography. pressure continues the more out look by But just as I you were of I back shortly that plant this at in we required proud most last if some start we sales There in with prepared to to were as is quarter be, true. a up running. customers, If our that we GI while our say and expected. quarter, certainly said some segment. this would customers make

be only advanced a the is also but these regain faster customers more plant now technology which in to the through in we Europe As our this that our allows of profitable, be customers and to non-BPA result earlier, mentioned more to use market. coating, have is efficient of [indiscernible] a not technology sustainable more as superior

take support to technology terms North this customers up our So in we've sustainability in digits continued do to excitement their lot and double America. basis global and to be this what there's our a Automotive agendas. a we of of about more refinish, installed can talked

and a offering We are technology unique There's taking service share. together. that we're

leverage to ability our our with our Group reliable much Stores to along package Paint automotive and that consistent service. like the it's So provide branches,

that differentiation that they're point the don't say the can And we're customers certainly gaining. volume I from. taking know another of. of So that winning. really we We And everyone share here. something business taking proud we're is know the we're know competitors we're think We

numbers as small more We're ahead, with the customers finally we're will year we're with work got clearly unfolds. winning lot and evident but a large winning with these here. medium-sized customers, We've winning So customers.

is mentioned other holding on this America up bit than but North earlier, regions. coil, Just briefly a better

significant tailwind in quarter. some wood, another wins believe market all does as to the out here. We to America. There's your some into some point, in it going that regions, is here new Industrial North relates be to create choppy positive story continue the had Mexico helping to business bottomed us. demand demand have second for nearshoring. We has positive

the percent and Some of be ahead recent ECA continue EBITDA dollars acquisitions, of and to plan. [indiscernible],

industrial the program, there. we I So we're seen continuing and as hard year and lot much regions, we're make detail to And general down wood all the best accounts this in to that as, as very choppy unfolds. new to sure is into fight aggressively, accretive on a expect we more won't ourselves chasing and pretty again, that industrial we recover go position that's and we're

the digits. down volumes year Full be single on second to would you our low upper our the low was up tell quarter Patrick, digits. down Yes, in second be single up has volume up that, volumes flat be you our will That first half guidance change which to There half flat digits. single to low with to single to digits. that guidance low -- no is tells

question is Yefremov Aleksey Your from Markets. Capital from KeyBanc next coming

homebuilding in residential. change latest was customers maintained the rates. you this and what Or set momentum optimism volatility level? basically mentioned extent has as customers have homebuilding You the of perhaps? sensed Has among To moderated in the same it new

that, Yes, take Aleksey. I'll

accounts quarter very the national Matter sentiment I Al to people earlier was I may need live in type customers of continues of there think I the the that what's of out. to bit place things think our be a be are fact, But going the And well. down hit there. environment, to our with what intact. to able afford as people that expectations there. among or It where are also to to we're you're and remain team little I to think traveling are spoke around that and their about of driving of Texas several home heading. might homebuilder of change what be buy seems to working we'll started The some And customers positive. to is our of a part they adjusting month-to-month a happen how are optimistic they demographics affordability see plays in and some drive homebuilders seeing rate

Your Ghansham next question is coming from Panjabi from Baird.

just question. follow on the last up

amount Sherwin various You in based of of is a color various context the outlook are buybacks then gave just second next year of fair changed view a coming of terms flow due has positioned of on year this of fair year? allocation paydown? debt between cash for versus Al you any debt and amount balancing into your kind how any versus initiatives, PSG coming your way verticals free how And on for and us the meaningful question, a maybe internal your but in initial in

changed. is you No, an Again, we I'd don't by & anything as demand think as think segment markets. certainly continues upside. be I materially point example And Marine segment, them look Protective has there because in all I'll use to was to strength a I that segment see

what think up, I started, Having there's said mega But and our than we fire be we'll been technology of quarter. protective then Some pretty is not in rates pick there's when some think back want that, which to of flooring we're indicator, came so we're an here. some some that's there's projects and nothing is you market this into the from coatings, good at again, back been the where but I issues the out gaining materially upside today. significant incremental different of more July have to back that where look relative just upside. in any go But these projects, these to last in launching new as year delayed, some at as if fluctuate of we're timing jobs some visibility which I investment,

for feel year. say about very the good cash I generation that Yes, Ghansham, strong flow net would our operating I

You increase our dividends quarter. us big shareholder buybacks in in saw return and a first cash and

our just We've to remain the refinance then do a nice our going out debt, point, and We first XX% at debt We I to billion look dividend, take we'll will you it invest at in stick total disciplined the of when I was increase been out in think expect very as and $X.X to which over your quarter. be to allocation that. they'll CapEx. our on XXXX, I flat albeit we're mature reiterate, debt see philosophy. we mean, short-term to our debt rates, of capital maturing, paid But fit. higher likely

that to to range to the back. to end And then X.X absent going I expect debt-to-EBITDA we're of And target be that buy by do acquisitions, X our continue. stock expect year. We in

is question Leithead from Barclays. coming next from Michael Your

year-on-year. was of how up Or that with inflation investment the relative that increase? inflation in growth you're On drivers incurring? year-over-year other wage should Is we line SG&A, about I think X% quarter first to rate roughly think wage in about

think Yes, is this typical wage years. for more prior Mike, is I XXXX about way. inflation to it The

about single-digit think a impact. So low

quarter, investments first of what I in second you're made annualization growth seeing the think accelerated the the last start the of we of our in year. half long-term

the year this we we're mid-single-digit that of half the recall, because I second full will level out would second I you made that and As thought for be the range on half in the in year-end with a the that annualizing above SG&A year. our then said being percentage call, first investments up half

from is Baumgarten question Adam next Zelman. coming Your from

you give if I mentioned [indiscernible]. how did maybe quarter? could you don't some I but mentioned on the on just paint update us in I Pros an say soft, but know know business the you this, was color DIY

Yes.

alignment there's continue characterize of to of the gives expectations. I of lot Paints quarter, in would strong also we I have a the and challenged in quarter, investments, first would say confidence best I which the Pro a lot But was our maybe of say, a to way is think below our our bit But certainly, confidence in some share us work balance the lot grow going know retail do for got that place. been this year. that alignment confidence we've never are space partners. no here. a of doubt, to in with don't better the a I to in we has our

is Fischer Your coming from Duffy from Sachs. next Goldman question

Can a in benefit. we our was I margins material drill a would raw assume you down meaningful little price, got

margin have the increases wholly your those growth I from decline a hard to investments. the to treating So negative time

benefit were consumer? in So growth maybe growth things investments negative the the segment, the else on anything to pulling down segment besides investments? Or other segment there the was the than margin the were that's basically that that in you which from transfer other paint,

Yes, Duffy, it's primarily volume.

talked As in, of biggest we Stores sure, is the of say, I'd segments, but Paint in our margin volume past, all about in driver the for have leverage operating Group. our

progresses. for to investments So the an continue And of as have also expect we the do going a from we it. year that's return then be the to to made, we those majority yes, but impact investments get

Wells next Fargo. is Michael question Your Sison coming from from

you year, as sort profit do profit guess And to expect follow-up into segment will for you full I positive. the is XQ, XQ, segment growth? on XQ of for PSG, turn get a that

that. of Yes, on all

question is from McCarthy coming Kevin Vertical Your next Partners. Research from

two-part Maybe if I Paint on may, Group. Stores question, a

few where part with than then the and coatings. stores XXXX think Crafting forth? architectural came slower likely U.S. for do sales industry commentary for your given it start for par? And track Marine be do on paint segment First, Marine you gallonage & and Protective the this & think the characterize year? months that second rearview so more is guidance mirror, slower and to would would with or in you Protective PSG, you timing a would to on or where grow might you faster your you comment think How in around

start the look hand year-over-year. I'll then some We at I'll over it Yes. P&M piece, gallons with Al. of and to the

it's your visibility some timing. believe regard is mentioned I of these I increased you that in said of delays project away, as is we in work. question, our have think confidence I some any what it into don't And simply And gone timing. this they project us earlier, it gives with think

to sure launches, So best the these with make team industry. are that again, positioned is in the of working hard some we

that Al when we're to over front timing So the does at I'll hand [indiscernible] line. it talk about then And question recover, the to of your

talked just strong half and the first about the We think do it in faster P&M, Yes. than Kevin, bit the I delays first better new and softening, a changed we we think to commented res line that expect softer then in with I second to had sight that grow to Architectural the as expect little being has half we because likely stronger commercial. project of experiencing. quarter maybe half. the We a be we're first that

that will of some third into way quarter this our find So probably its year.

So of -- that. lot confidence the P&M but in we strength and a in have

new year, industry 'XX, in talked think when because the likely volume, down flattish. bettering about think being much. we I res we XXXX I it with think is low talk single. talked probably coming about And that think I But the you into maybe 'XX, I was about down so

Your John Roberts next question from coming is from Mizuho.

in property commercial buildings maintenance guidance Is that's on Or mortgage the activity that because into the going properties? delays are June quarter. your so delayed and quarter, issues delayed more the of there significant apartment the June with for some

Yes.

project and the up what I first delay see saw third pick to think quarter. weather we the in quarter, we'll quarter into from the relative from those second in

far talked our CapEx as As about quarter we first projects, on this call.

impact lending don't material ease up improve growing in do for at moderate, we rates easier and a in our our to lending gets seeing have amount CapEx expect rates a standards property projects forecast second bit. CapEx growth both little As we maintenance half. start significant John,

will to with CapEx that turns So And to tailwind. are benefit as returns improve. then going a slight as continue

Shmois Garik from Capital. from Loop coming is question next Your

or there to in due across build. Is that to You inventory you was broadly Consumer speak was for quarter XQ restocking and to expect any to your mentioned restocking there network? any in limited impact the any maybe opportunities size would some way if material the quarter in Brands

going a not because say we to ask think I we're in. to comment certainly would jump our with that all I'll signal But add comment as few ahead. Alan, would to without come you'd very to strong I obviously we've customers something on that's into to that? out years, ask a opportunity and goes position our season want it the anything materiality that through that on. start is to the come wanting saying in last there's And

North Yes, I is the up architectural think about first consumer season for America, quarter [indiscernible]. ramps and a quarter up. in it our ramps mean, small as

and past, not the in this material. it's overly seen have we So

You think huge. about a million, not $XXX couple of on percent it's

is coming America. from from question Steve next of Bank Byrne Your

clearly, out your or new accounts. question can You headcount investments. related? are And you how Or also accounts? sales doing you to shift is, forces that you the more that to My made Is the driving about existing comment And is it Or really drive higher-performing share drive mix model. this products. for this for been that's incentivizing there hunting your with gains? servicing to are something drive to

few a that's Steve, a Well, I say great question. would things.

contractors. use our -- word it trying I look bring think at talk you a ecosystem to if what about we're to the we is that to lot

we suite at reps plans, -- certainly intercept here where goal are our digital these are is, exactly of them in cycle where contractors look regardless are So in said. the tools, and their everything of When they you that the cycle. selling growth at it's going maturity, business basically to you their their

if segment. And of commercial. new res residential differs those segment, different it's is by so contractor needs, versus The obviously, it by repaint versus

our successful. word of make them obviously the team on our a set reasons. the got We've right team obvious more We've and the the make to out more help help But prepared. We've that. we're won't these got support that the readiness of go digital is surgical, tools got and into contractors the to for So of data. when just it we're where to our efficient intercept is customers I hunting, mentioned tools details lot team investing. to We

thing only add the about them money. to would is who the Steve, often most painting driver loyalty of the make and talk #X contractors is we surveys their I helps that

the more to haven't ability and reps we with So markets field demos our efficiencies higher-quality line and top with labor painting improved the show their painters gain the line the that so because have of and dramatically. they more can contractors the doing we same that time their spend can bottom grow can products in number they them with those

So that's we think a value that can provide. I add

question is next Viswanathan from RBC Your Arun SPX coming from Capital Markets.

questions Stores maybe Group. on two Paint Just

something think second And that I at Historically, you've question increase openings been now has West you underpenetrated Coast. towards? all, stores. Is your one then of the that shut there first and store my on pivot So And competitors your given could margins. was and basically of growth maybe on

easiest you it face like you were in Group. second those the comps your Stores looks So Paint in Last to up half or year, quarters. in X% X% so

Stores full half end kind towards guide expect second your of upper in this So Group sales? the digits of mid-single to be in the year year would up Paint of for you

I'll I'll getting to Al to into your nice and one. questions with question. by hand X way, it over second the cover the job the then Yes, first And start one, X

did You really gracefully. that

I your And I as long aggressively one, would competed lot first the Yes, Kelly-Moore on West. we a on of Kelly-Moore the competitor. closure. you that recognized happening the We've So tell and against respect was a think them for in what point with have

are well positioned customers. beginning and some of their already We are former to serve

of on not expect there. at We're lens you stores here. said gains. We expect necessarily opening very can the this aggressive. to be But wouldn't comment the to I new potential share And as continued size through us I of the earlier, gain going to look

ready to something like of taken for us, to where very in and industry, our about actions real make estate thoughtful to want the talent that steps sure this that the take when happens think makes we're best we've I the the and sense we're we go.

Yes, ]. [ Arun

that in expect think our digit We range. would right. I second be half you're that mid-single would

the certainly at selling course, indicators appropriate. our give the we see update and call look Of at look season We'll as an to Street July those on trends, unfold. summer as

Jefferies. Your from coming next from Alexander is Laurence question

landscape and our down? a drift bolt-on characterize the Just starting you it in quick appealing M&A currently one to is Can on just discussions Industrial how Coatings. for multiples

do think as uncertain environment, said, multiples decline. to Yes. in you see you this Laurence, start of I type

smaller You we're market. you pipeline would our also being a growing see said, know strategy think we're confident -- in I maybe industrial. -- we our than see typically in That out in a

are We want line that with be and the well bolt-ons acquisitions fit growth make we markets pursuing balance our any to strategy strategy. that that fit sheet that to certainly will our And to better strategy. make there's that of actively positioned and turn and as sight and as accelerate that

from Your Cleveland Research Bosshard question from next Company. coming is Eric

I is, get the a SG&A Do Al, the remodel remodel investment? scenario, bit grows doesn't that is of bit wanted think rates to half. I improve. some brakes you In Is the perhaps is about were this Heidi rates sustain SG&A you're there little where where making there what and on when. that do in the a you once go scenario to cycle we obviously, back And made share. being a investment, about incremental slower then and you we to said conversation don't sales? where it, gain a the second you're that improving the as second you earlier the moderated point tap down investment ask question environment. in a talked and And

our again we earlier we no, The or these made situation where pull an are focused investments. We're in a is see don't Eric, we environment very strategy. confident back. comment So

things And points we've water differentiation we all the in that the market. to meaningful all trying people, so are to not we're know of all But got where trees. be

be can there. very that bullish You expect we'll continue to

don't Al, [indiscernible] you us in And So the to I there. pulling see let I'll back no, any regard speak

I we're Yes. focused expansion. mean, gross and on through that's you as operating margin know, margin Eric, growing sometimes

SG&A to gross that But accelerate in to we our see SG&A improve, into down would 'XX the into the sales And strategy. seeing confidence those our start leverage see forward. in start we the -- on expansion, in I about new improvement we margin have come 'XX that's opportunity in you outsized that yes, property CapEx leverage investments, to again, rates with we the take whenever Sometimes single-family have it's because starts talked expect maintenance. go volumes I as improving.

Your question Berenberg. from next is Aaron coming Chiral from

If I has mean, your you all-time as your is in opportunity, to? not retail traffic PSG any in high I part would of traffic? understand. of like terms largest retail running correctly, mentioned your in I view, in network yet or that you stores, upside the was of sales March. What understood would is that to the density Where there is like part stores your

foremost. question. great a say would first It's opportunity the to I continues be and

us, for And While biggest [indiscernible] of say repaint the would more it's already in top said is as segment, very there's there. I we've we've that share opportunity where growth. healthy on every historically, got opportunity

don't environment think to in any going is today. this way I traffic to kind So flat continue incremental that Res outperform think is correct the sits help in going to traffic this of Repaint incremental

earlier, or as accounts, I mentioned you be and will that something it's we're unique an is this So evidence is we're increased mentioned that call confident it accretive, and accounts opportunity, as rather an that share. active so this and increased taking activity

remarks. our now Please the to closing conference back That concludes will Q&A Jaye go ahead. Jim hand for session. I

everybody, for Yes. Thank call our today. joining you,

And our returns those our the and that confident those We've the going become strategy team right more confident and we're investments, you're heard very I see and unfolds, we're we're gains to the customers. think more share you that year is those evident. pretty aligned, driving very and for doing. solutions made what as in

just hear group you, And from That's year presentation on Heidi XX. Boston. community thing addition this will have The is and to our remind other I we would in do our in well. you'll commentary annual as presidents Al, financial August

So be coming will some time information on that soon. out additional

be great And always, your that, next a several please. interest, and calls days. thanks the for we'll for over as for look available So your follow-up Have day.

today's event. This everyone. concludes you, Thank

disconnect have You a time, you for Thank day. may your wonderful this and participation. at