The Sherwin-Williams Company (SHW) Q4 2023 earnings summary

Executive summary

• FY 2023 sales reached a record $23,051.9 million, up 4.1%; gross margin expanded to 46.7% and adjusted diluted EPS rose 18.6% to $10.35.

• Q4 sales increased 0.4% to $5,252.2 million; adjusted diluted EPS was $1.81, down 4.2% YoY.

Financial highlights

• FY sales were $23,051.9 million versus $22,148.9 million in 2022; growth reflected pricing and a low-single-digit acquisition contribution, net of divestitures.

• FY net income was $2,388.8 million versus $2.02 billion; diluted EPS rose 19.8% to $9.25 from $7.72, while adjusted EPS increased to $10.35 from $8.73.

• FY gross profit rose 15.4% to $10,758.1 million; gross margin expanded 460 bps to 46.7%. Q4 gross margin expanded 580 bps to 48.5%.

• Q4 gross profit increased 14.1% to $2,548.7 million; reported diluted EPS was $1.39 versus $1.48.

• Adjusted EBITDA increased 17.5% to $4,239.1 million, or 18.4% of FY sales; net operating cash was $3,521.9 million.

Outlook and guidance

• Q1 2024 sales outlook: up or down low-single-digit%; PSG up low- to mid-single-digit%, CBG up or down low-single-digit%, PCG down low-single-digit%.

• FY 2024 sales outlook: up low- to mid-single-digit%; FX impact below -1.0%; PSG up low- to mid-single-digit%, CBG up or down low-single-digit%, PCG flat to up low-single-digit%.

• FY 2024 GAAP EPS guidance is $10.05–$10.55, including $0.80/share of acquisition-related amortization; adjusted EPS guidance is $10.85–$11.35.

• FY 2024 assumptions include raw materials down low-single-digit%, capex ~$605 million, interest expense ~$425 million and an effective tax rate in the low 20s%; $135 million of capex is for a new R&D facility.

• Modest raw material deflation expected; a 5% PSG price increase took effect Feb. 1, 2024, citing wage and other non-raw-material cost escalation.