We use cookies to improve your experience, analyze site usage, and show relevant ads. Go to our Privacy Policy for details.
The call reported multiple clear operational and financial positives — high single-digit consolidated sales growth, 90 bps gross margin expansion, mid/high single-digit gains in adjusted EPS and EBITDA, improved cash flow (+$200M), and substantial shareholder returns — alongside ongoing execution on share gains across segments. However, the tone was cautious given persistent demand softness across many end markets, elevated raw material inflation (revised to up low–mid single digits), geopolitical supply risk tied to the Middle East, moderation in volume expectations, and some acquisition-related dilution and SG&A headwinds. Management emphasized disciplined pricing (more surgical), cost-outs, and confidence in execution and the balance sheet. Overall the call presented a balanced picture of strong execution and results tempered by material external inflationary and demand headwinds.
Management left unchanged its consolidated sales and earnings guidance for FY2026 while updating key assumptions: full‑year raw‑material inflation was raised to up low‑to‑mid single digits and consolidated price/mix to the high end of the low‑single‑digit range, volumes were tempered (moving from prior low‑single‑digit growth assumptions toward low‑single‑digit declines in some areas), and full‑year SG&A guidance remains a low‑single‑digit increase (despite Q1 SG&A rising mid‑single‑digits and an expected ~100‑bp unfavorable SG&A‑to‑sales impact from non‑annualized acquisition/new‑building costs and FX). Q1 highlights that underlie the guide included consolidated sales up a high‑single‑digit percentage (including a low‑single‑digit contribution from Suvenil), gross margin expansion of ~90 bps, adjusted EBITDA up high‑single‑digits, adjusted diluted EPS up mid‑single‑digits, a $200M improvement in net operating cash, $773M returned to shareholders in the quarter, and a net debt to adjusted EBITDA ratio of 2.5x; the company also expects to open 80–100 new Paint Stores Group locations in 2026.
Consolidated sales grew a high single-digit percentage in Q1 2026, inclusive of a low single-digit contribution from the Suvenil acquisition; sales exceeded guidance on a consolidated basis and across all three reportable segments.
Reported gross margin expanded by 90 basis points year-over-year in Q1 (despite a dilutive impact from Suvenil); this marks 14 of the last 15 quarters with year-over-year gross margin expansion.
Adjusted diluted net income per share increased by a mid single-digit percentage and adjusted EBITDA increased by a high single-digit percentage in the quarter; net operating cash improved by $200 million driven by higher net income and lower working capital use.
Returned $773 million to shareholders in the quarter through share repurchases and dividends; ended Q1 with a net debt to adjusted EBITDA ratio of 2.5x, described as a strong balance sheet.
Paint Stores Group grew by a mid single-digit percentage with both price/mix and volume increasing low single digits; residential repaint returned to mid single-digit growth; opened 21 new stores, closed 27 stores (~0.5% of PSG stores) and continue to expect 80–100 new store openings for the year.
Consumer Brands sales exceeded expectations driven by high-teens growth from the Suvenil acquisition; excluding Suvenil, Consumer Brands grew low single digits with Europe up high teens and Latin America up high single digits; adjusted segment flow-through was strong at 34.3% and adjusted segment margin improved.
Performance Coatings Group delivered better-than-expected sales slightly above the mid single-digit range with growth across all divisions and regions: volume grew low single digits, automotive refinish up low-teens, packaging up high single digits, and double-digit regional growth in Asia Pacific and Europe; adjusted segment profit rose by mid single digits.
Company increased its consolidated price/mix expectation to the high end of its low single-digit range and described a more surgical, customer- and region-specific pricing approach; also emphasized accelerated cost-out actions and strategic supplier relationships to manage inflation and supply risk.
Good morning. Thank you for joining The Sherwin-Williams Company's review of first quarter 2026 and our outlook for the second quarter and full year of 2026. With us on today's call are Heidi Petz, Chair, President and Chief Executive Officer; Ben Meisenzoll, Chief Financial Officer; Paul Lang, Chief Accounting Officer; and Jim Jaye, Senior Vice President, Investor Relations and Communications. This conference call is being webcast simultaneously in listen-only mode by accessing Newswire via the Internet at sherwin.com. An archived replay of this webcast will be available at sherwin.com beginning approximately two hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under U.S. federal securities laws with respect to sales, earnings, and other matters. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
A full declaration regarding forward-looking statements is provided in the company's earnings release transmitted earlier this morning. After the company's prepared remarks, we will open up this session to questions. I will now turn the call over to Jim Jaye.
Thank you, and good morning to everyone. The Sherwin-Williams Company delivered strong sales in a quarter characterized by heightened global uncertainty and persistent demand softness in most end markets. Our growth investments and ongoing new account and ...