Investor Presentation - Sherwin Williams
Investor Presentation - Sherwin Williams
Investor Presentation - Sherwin Williams
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<strong>Investor</strong> <strong>Presentation</strong>
Discussion Outline• Coatings Market Overview• <strong>Sherwin</strong>-<strong>Williams</strong> Overview• <strong>Sherwin</strong>-<strong>Williams</strong> Investment Rationale– Diversified Customer Base– Controlled Distribution– Channel/Brand Strategy– Leading Technology– People Development & Retention– Growth from Acquisitions– Financial StrengthThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Coatings IndustryGlobal Demand (US$)Total Coatings20096.5 Billion Gallons (-6.3%)88 Billion Dollars (-8.1%)Architectural Coatings20093.2 Billion Gallons (-5.3%)32 Billion Dollars (-2.1%)Asia Pacific39%Europe29%Americas28%ROW4%Asia Pacific23%Europe37%Americas34%ROW6%Source: Kusumgar, Nerlfi & Growney, October 2009, Company DataThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Coatings IndustryTop Manufacturers - 2009Worldwide1 Akzo Nobel/ICI2 PPG/SigmaKalon3 <strong>Sherwin</strong>-<strong>Williams</strong>4 Dupont5 BASF6 RPM7 Valspar8 Sika9 Kansai10 NipponUnited States1 <strong>Sherwin</strong>-<strong>Williams</strong>2 PPG3 Valspar4 Masco5 Akzo Nobel/ICI6 DuPont7 RPM8 Comex9 Benjamin MooreSource: Coatings World – 2009 Top CompaniesSource: Paint & Coatings IndustryThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
U.S. Coatings IndustrySales ($) Mix by CategoryArchitecturalCoatings48%SpecialPurpose23%OEMFinishes29%20091.00 Billion Gallons (- 18.7%)15.05 Billion Dollars (- 18.3%)Source: U.S. Department of Commerce; Segment Percents Based on DollarsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
U.S. Construction MarketAnnual Growth Rates by Market (sq. ft.)30%20%% Increase/Decrease10%0%-10%-20%-30%-40%-50%-60%-70%20032004 2005 2006 2007 2008 2009Residential Commercial/Ind. InstitutionalSource: DODGE Construction Potentials Bulletin – February 2010The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Millions of Units(Single Family & Multi-Family)160.00150.00140.00130.00120.00110.00100.0090.0080.0070.002000Positive Demand PotentialHousing Units: Actual vs Potential+25.7 Million New Units1.2 Million/Year+400k - 600kReplacement Units/Year200220042006200820102012201420162018202020222024202620282030Actual UnitsForecasted DemandSource: U.S. Department of Commerce; The Brookings Institution, December 2004The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
U.S. Existing Home SalesSeasonally Adjusted8,00050%Source: National Association of RealtorsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010Sales in Thousands of UnitsPercentage Change Over Previous Year7,0006,0005,0004,0003,0002,0001,000040%30%20%10%0%-10%-20%-30%-40%-50%.Mar-01Jun-01Sep-01Dec-01Mar-02Jun-02Sep-02Dec-02Mar-03Jun-03Sep-03Dec-03Mar-04Jun-04Sep-04Dec-04Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07Mar-08Jun-08Sep-08Dec-08Mar-09Jun-09Sep-09Dec-09EH Sales % Change in sales vs. previous year
Favorable Customer MixDIY Contractor Shift will Continue199919981997199619951994199319921991199019891988198719861985198419831982198119802009200820072006200520042003200220012000Contractor DIYSource: U.S. Dept of Commerce MA28F Report/Internal EstimatesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Favorable Customer MixDIY Contractor Shift will Continue• DIY Contractor Shift Driven by Demographics-Primarily Aging U.S. Population2007 2030Under 65(88%)65+(12%)Under 65(79%)65+(21%)Source: U.S. Census BureauThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
DIY Channel Share, U.S.Most Recent Purchase by Store Type2009Home Centers63%MassMerchants15%Source: Proprietary Paint IndustryData, S-W MarketingHardware7%Paint Stores15%The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Contractor Channel Share, U.S.Primary Outlet by Store Type2009PaintStores90.1%Hardware1.7%HomeCenters4.6%Discount /Other3.6%Source: SW Marketing: 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Global Coatings MarketOther Emerging Trends• Low-VOC “Green” Product and Practices• Growing Impact of Global IndustrialProduct Specifications• Increasing Automobile Ownershipand Use in Developing Countries• Continuing Global and DomesticConsolidationThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Company OverviewFinancial Highlights2008 2009Net Sales $7.980M $7.094MEBITDA $946M $834MIncome $477M $436M% Sales 6.0% 6.1%Earnings Per Share $4.00 $3.78Net Operating Cash $876M $859MDividend Per Share $1.40 $1.42Return on Assets 10.8% 10.1%Return on Shareholder Equity 26.7% 27.1%The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Company OverviewRevenue & Profit by Segment - 2009ConsumerPaint StoresSales: $4.21 BillionProfit: $600.2 MillionProfit %: 14.3Sales: $1.23 BillionProfit: $157.4 MillionProfit %: 12.8Sales: $1.65 BillionProfit: $65.0 MillionProfit %: 3.9GlobalControlled Distribution Accounts for 75% of SalesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores Group3,354 StoresThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores GroupTop 10 Paint Store Chains – North AmericaCount2009 Est.1 Yr Change3,354 +8Akzo Nobel/ICI/Glidden 491 -87PPG 389 -20Comex/Pro Paint, Inc. 258 -61Kelly-Moore 163 -2Dunn Edwards 103 1,690 0Cloverdale/Rodda 102 0Diamond Vogel 69 -10Benjamin Moore 67 -2Vista 48 +2Gap: +1,664 -172Source: Independent Research, Company Websites, Rauch Guide, Chain Store GuideThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores GroupStore PenetrationHouseholds per StoreOver 50,00040,000 - 50,00030,000 - 40,000Under 30,000The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores GroupControlled Distribution Advantages• Direct Relationship with Customer / End-User• Control Over Brands, Pricing, Inventory, Staffing• Control Pace and Place of GrowthThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores GroupRecognized Employer of ChoiceBusinessWeek“100 Best Places toLaunch A Career”2007 & 2008The PrincetonReview“Best Entry LevelJobs”2005, 2006, 2007& 2008FORTUNE“100 Best Companiesto Work For”2005, 2006 & 2008The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Paint Stores GroupVoluntary TurnoverManager 4.4%Assistant Mgr. 9.3%Sales Rep 6.9%The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupEnd to End Supply Chain• 26 Manufacturing Sites• 10 Distribution Service Centers• 400 Tractors / 1,200 Trailers• More than 6,000 EmployeesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupRaw Material BreakdownContainers (16%)Metal or PlasticSolvents (10%)Resins/Latex (37%)Acrylic (Latex Paints)Alkyd (Oil Paints)Epoxy (Epoxy Paints)Pigments (27%)Titanium DioxidePigmentsPaint FillersExtendersAdditives (10%)The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupTotal Technical Expenditures$ Millions120110100908070605040302010062.673.4 78.2 83.6 86.2 88.7 88.3 91.3 95.4 101.3 102.0 105.9 101.81997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupStrong Brands in Every CategoryDIYPaintsProfessionalPaintsAerosolPaintsAutomotiveFinishesIndustrialCoatingsProfessionalApplicatorsWoodFinishesCommercialCoatingsThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupDiverse Channels of DistributionMassMerchandisersWarehouseHome CenterCraftSupplyAutoAftermarketIndustrialSupplyPaint & DecoratingRetailersCabinetSupplyConstructionSupplyThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Consumer GroupU.S. Outlet Penetration56,000Total U.S. Paint &Coatings Outlets38,000Consumer SegmentCustomers3,400<strong>Sherwin</strong>-<strong>Williams</strong> StoresThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Global Finishes GroupAutomotiveAerospaceArchitecturalProtectiveMarineOEM FinishesThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Global Finishes GroupExpanding Global Platform• Protective & Marine• OEM Product Finish• Automotive• Aerospace• Automotive• OEM Product Finish• Architectural• Protective & Marine• OEM Product Finish• Automotive• Protective & Marine• OEM Product Finish• Automotive• Architectural• Protective & Marine• OEM Product Finish• Automotive• ArchitecturalThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1 st Quarter 2010
Consolidated Gross Profit$ Millions3,7003,2002,7002,2001,7001,200$ Gross Profit% to Sales2,7012,130 2,249 2,308 2,220 2,339 2,45544.945.145.444.344.243.243.83,08042.83,41343.73,598 3,49944.943.83,26346.0700200-3001998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Selling, General & Admin Expense$ Millions3,0002,5002,0001,5001,0001,88234.8$ SG&A% to Sales2,06933.82,32632.42,51332.22,597 2,64432.433.12,53535.750002003 2004 2005 2006 2007 2008 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Working Capital Ratio(Accounts Receivable + Inventory – Payables)/Sales20%15%13.8%11.5% 11.0%13.8%12.5% 11.7%12.7%11.2% 10.7%10%5%0%2001 2002 2003 2004 2005 2006 2007 2008 2009The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Net Operating Cash($ in Millions)9008007006005004003002001000874.5 876.2 859.2815.8716.7593.9 605.3546.4460.0 470.52005 2006 2007 2008 2009Uses of Cash• Acquisitions• Capital Expenditures• Buy Back Stock• Manage Debt• Pay DividendsNet Operating Cash less Cap. Ex. & DividendsNet Operating CashThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Stock Repurchase14.0013.2012.00Millions of Shares10.008.006.004.006.707.986.608.105.607.259.002.000.002002 2003 2004 2005 2006 2007 2008 2009Avg. CommonShares Outstanding 152.4 147.0 144.7 141.1 137.3 130.9 119.3 115.4(fully diluted / in millions)The <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Total Debt : EBITDA Ratio($ in Millions)1200100080060040062173%84887583%104784%11481148 94696583488%81898%83420002005 2006 2007 2008 2009Total DebtEBITDAThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
Dividends Per Share1979 – 2010EThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010.01 .04 .05 .06.08 .10 .12 .13 .14 .16 .18 .19 .21 .22 .25 .28 .32 .35 .40.45 .48 .54 .58 .60 .62 .68 .82$1.50$1.40$1.30$1.20$1.10$1.00$0.90$0.80$0.70$0.60$0.50$0.40$0.30$0.20$0.10$0.001.261.401.42 1.441.001979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009E 2010
Summary• <strong>Sherwin</strong>-<strong>Williams</strong> Investment Rationale– Diversified Customer Base– Controlled Distribution– Channel/Brand Strategy– Leading Technology– People Development & Retention– Growth from Acquisitions– Financial StrengthThe <strong>Sherwin</strong>-<strong>Williams</strong> Company – 1st Quarter 2010
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