CLEVELAND, Ohio – Paint and wood coatings specialist Sherwin-Williams reported an increase in sales and net income during its third quarter ended Sept. 30.
The company said consolidated sales rose 5.2%, or $254.5 million to $5.12 billion. This was due primarily to higher sales to most of the Consumer Brands Group’s retail customers in all regions as well as continued strong sales in residential repaint and DIY in North American stores in the Americas Group. It also saw a return to growth in the Performance Coatings Group.
The company added that the estimated impact on consolidated net sales during the quarter from COVID-19 was not material, but that it experienced a 3% decrease in the first nine months. Currency translation rates also decreased consolidated net sales by 1.3% during the first nine months.
Consolidated profit for the three months ended Sept. 30 was $875.6 million, up 23.3% from $709.8 million in the third quarter of 2019.
Diluted net income per share rose to $7.66 per share in the third quarter compared with $6.16 per share in the third quarter of 2019.
Net sales in the Americas Group rose 2.8%, from $2.9 billion to $2.98 billion during the quarter, which was due primarily to higher residential repaint, DIY and new residential paint sales in the U.S. and Canada. Sales were partially offset by the impacts of COVID-19 on demand in some end market segments.
Net sales from stores in the U.S. and Canada open for more than 12 calendar months rose 3.1% during the quarter and segment profit rose $83.8 million to $747.4 million in the quarter, from $663.6 million during the same period last year, a 12.6% increase.
Net sales in the Consumer Brands group rose 23.5% to $838.1 million from $678.4 million in the same period last year. This increase was due primarily to higher volume sales to most of the group’s retail customers in all regions. Segment profit rose to $198.3 million in the quarter, up 73% from $114.9 million in the third quarter of last year, which was due to higher volume sales, favorable product mix, moderating raw materials costs and steps the company has taken in the past year to improve its international operating margins.
Net sales in the Performance Coatings Group rose 1.2%, from $1.3 billion to $1.31 billion in the quarter. This was due to higher sales volume and improving demand in most businesses and regions, led by its Packaging and Industrial Wood division.
Segment profit in the third quarter rose to $155.3 million, up 13% from the $137.5 million reported in the third quarter of last year. This was due primarily to moderating raw materials costs and higher sales volumes. Currency translation rates decreased the group’s net sales by 1.4% and decreased segment profit by 4.1% during the quarter.
“Continued and unprecedented strength in our DIY business, solid demand across our residential repaint and new residential segments, and improving demand in our industrial coatings businesses and regions drove our strong third quarter results,” said Chairman and CEO, John G. Morikis. “Improving sales, coupled with favorable customer and product mix, lower input costs and ongoing continuous improvement efforts, drove strong double-digit growth in EBITDA and diluted net income per share.
“Strong cash flow generation in the quarter enabled us to continue making strategic investments across the business while returning more than $500 million to our shareholders in the form of treasury share purchases and dividends, a more than 100% increase compared with the third quarter of 2019.”
Morikis added, “For the fourth quarter, we anticipate our consolidated net sales will increase by 3% to 7% compared to last year’s fourth quarter. For the full year 2020, we expect our consolidated net sales will increase by a low single digit percentage compared with the full year 2019.
“Based on sales at these levels, we are increasing our full year 2020 diluted net income per share guidance to be in the range of $21.49 to $21.79 per share compared with $16.49 per share earned in 2019.”