The Sherwin-Williams Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net sales increased 7.9% year-over-year to $6.86 billion.
• Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 3.9%.
• Net income decreased 1.5% to $821.0 million, representing 12.0% of net sales.
• Diluted net income per share increased 0.9% to $3.38, compared to $3.35 in the third quarter of 2025.
• Adjusted diluted net income per share increased 1.1% to $3.63, compared to $3.59 in the third quarter of 2025.
• Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 3.4% to $1.39 billion, or 20.3% of net sales.
• Adjusted EBITDA increased 3.3% to $1.40 billion, or 20.5% of net sales.
• Income before income taxes increased 0.3% to $1.0635 billion.
• Gross margin was impacted by higher raw material and supply chain costs and mix dilution from Suvinil; excluding Suvinil, year-to-date gross margin is flat compared to the prior year.
• SG&A as a percent of sales decreased in the quarter.
• Net operating cash generated was $2.59 billion for the first nine months of 2026.
• Short-term borrowings increased to $2.35 billion as of September 30, 2026, from $1.85 billion in 2025.
• Long-term debt decreased to $7.94 billion as of September 30, 2026, from $9.32 billion in 2025.

Guidance and Future Outlook:

• Full year 2026 diluted net income per share guidance revised to a range of $10.92 to $11.22 per share.
• Full year 2026 adjusted diluted net income per share guidance narrowed to a range of $11.85 to $12.15 per share.
• Guidance includes Valspar acquisition-related amortization expense of $0.82 per share and severance/restructuring expenses of $0.11 per share.
• Fourth quarter 2026 consolidated net sales are expected to increase by a mid-single digit percentage compared to the fourth quarter of 2025.
• Full year 2026 consolidated net sales are expected to be up a mid to high-single digit percentage compared to full year 2025.
• Full year 2026 effective tax rate is expected to be in the low twenty percent range.
• Management anticipates muted demand over the remainder of 2026 and into 2027 based on customer sentiment and leading indicators.

Business Segments and Product Lines:

• Paint Stores Group (PSG): Net sales increased 4.7% to $4.016 billion; segment profit increased 2.1% to $974.3 million; reported segment margin was 24.3%. Same-store sales increased 3.9%. Sales growth was driven by selling price increases (mid-single digit impact) and low-single digit volume growth. Protective and marine end markets saw double-digit growth; commercial grew high-single digits; residential repaint grew mid-single digits.
• Consumer Brands Group (CBG): Net sales increased 21.7% to $937.4 million, driven by the Suvinil acquisition, favorable foreign currency, and mix shifts, partially offset by soft North American demand. Segment profit decreased 7.1% to $146.2 million; reported segment margin was 15.6%. Adjusted segment profit decreased 4.4% to $171.4 million.
• Performance Coatings Group (PCG): Net sales increased 8.8% to $1.903 billion; segment profit increased 6.2% to $255.2 million; reported segment margin was 13.4%. Sales growth was driven by selling price increases (mid-single digit impact) and low-single digit volume growth. General Industrial, Packaging, and Coil businesses saw double-digit growth; Industrial Wood and Automotive Refinish grew low-single digits.

Market and Competitive Landscape:

• The company reported winning new customers and increasing share-of-wallet across all three reportable segments despite muted underlying market volumes.
• Selling price increases impacted consolidated net sales by a mid-single digit percentage.
• The company maintains a chain of more than 5,400 company-operated stores and branches.
• Paint Stores Group added 12 net new stores in the quarter, bringing the total to 4,853.
• Consumer Brands Group added 2 net new stores in the quarter, bringing the total to 310.
• Performance Coatings Group maintained 317 total branches.

Risks and Challenges:

• Higher raw material and supply chain related costs impacted gross margins and segment profits.
• Incremental SG&A expenses associated with the Suvinil acquisition and increased costs to support higher sales (including additional sales reps and stores) offset segment profit growth.
• Unfavorable foreign currency transaction gains and losses impacted Consumer Brands Group segment profit.
• Increased interest expense attributable to higher debt levels impacted administrative costs.
• Management notes risks related to general business conditions, inflation, supply chain disruptions, labor costs, geopolitical conditions, and integration of acquisitions.

Management Commentary and Tone:

• CEO Heidi G. Petz described the third quarter performance as demonstrating resilience and strategy strength in a challenging demand environment.
• Management emphasized disciplined pricing and cost actions timed with customers to address inflationary pressures.
• The tone remains confident in the ability to deliver profitable growth and shareholder value while navigating muted demand conditions.
• Management highlighted a focus on serving customers, controlling controllable factors, and continuing top and bottom-line growth.

Other Key Points:

• The company returned $749.0 million to shareholders in the quarter through dividends and share repurchases.
• For the first nine months of 2026, the company returned $2.98 billion to shareholders via dividends and repurchases of 7.1 million shares.
• At September 30, 2026, the company had remaining authorization to purchase 22.5 million shares of common stock.
• The Suvinil acquisition, completed in October 2025, contributed to net sales growth and margin dilution.
• Diluted net income per share included charges of $0.21 per share for Valspar acquisition-related amortization and $0.04 per share for severance and restructuring expenses in the third quarter of 2026.
• Capital expenditures were $128.7 million for the quarter and $375.4 million for the first nine months of 2026.
• Cash dividends paid were $194.3 million for the quarter and $588.9 million for the first nine months of 2026.