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- 1. Sean P. Hennessy Robert J. Wells Senior Vice President, Vice President, Finance & CFO Corporate Communications & Public Affairs
- 2. Forward-Looking Statements This presentation today will contain certain “forward-looking statements”, as defined under U.S. federal securities laws, with respect to sales, earnings and other matters. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions. Forward- looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, that could cause actual results to differ materially from such statements and from the Company’s historical results and experience. These risks, uncertainties and other factors include such things as: general business conditions, strengths of retail and manufacturing economies and the growth in the coatings industry; changes in the Company’s relationships with customers and suppliers; changes in raw material availability and pricing; unusual weather conditions; and other risks, uncertainties and other factors described from time to time in the Company’s reports filed with the Securities and Exchange Commission. Since it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results, the above list should not be considered a complete list. 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. The Sherwin-Williams Company – Full Year 2007
- 3. Coatings Industry Global Demand Africa/ 2006 Est. Mideast North America 7.3 Billion Gallons 4% 28% Western 88 Billion Dollars Europe 26% Latin America 4% Eastern Europe Other Asia/ China 7% Japan Pacific 9% 8% 15% Source: Euromonitor 2006 The Sherwin-Williams Company – Full Year 2007
- 4. Top 10 Manufacturers By Rank, 2007 Est. United States Worldwide 1 Akzo Nobel/ICI 1 Sherwin-Williams 2 PPG/SigmaKalon 2 PPG 3 Sherwin-Williams 3 Valspar 4 Dupont 4 Masco 5 BASF 5 ICI 6 Valspar 6 DuPont 7 RPM 7 RPM 8 Nippon 8 Comex 9 Akzo Nobel 10 Benjamin Moore Source: Coatings World Source: Paint & Coatings Industry The Sherwin-Williams Company – Full Year 2007
- 5. U.S. Coatings Industry Sales Mix by Category 2007 Special 1.28 Billion Gallons Purpose 20.07 Billion Dollars 29% Architectural 48% Product Finishes 23% Source: U.S. Department of Commerce; Segment Percents Based on Dollars The Sherwin-Williams Company – Full Year 2007
- 6. U.S. Coatings Industry Architectural Coatings - 2007 2007 = $9.6 Billion New Construction - Residential 20% - Commercial/ Institutional 80% Maintenance/Repaint - Residential - Commercial/ Institutional Source: Proprietary Paint Industry Data, S-W Marketing The Sherwin-Williams Company – Full Year 2007
- 7. U.S. New Construction Mix of Construction Put In Place – 2007 Commercial & Institutional 54% Residential 46% Total Value of Construction: $1,161.3 Billion Source: U.S. Census Bureau - February, 2008 The Sherwin-Williams Company – Full Year 2007
- 8. New Construction Sherwin-Williams Sales vs Housing Starts 40% 30% % Increase/Decrease 20% 10% 0% -10% -20% -30% -40% 1Q-05 2Q-05 3Q-05 4Q-05 1Q-06 2Q-06 3Q-06 4Q-06 1Q-07 2Q-07 3Q-07 4Q-07p S-W Revenues Residential Starts Source: U.S. Census Bureau - April, 2006 The Sherwin-Williams Company – Full Year 2007
- 9. Architectural Coatings Gallons in Millions DIY DIY PC 39% PC 51% DIY 49% 42% 61% PC 58% 1987 2007 527 Million Gallons 696 Million Gallons 1997 647 Million Gallons Source: U.S. Dept of Commerce MA28F Report/Internal Estimates The Sherwin-Williams Company – Full Year 2007
- 10. DIY Channel Share, U.S. Most Recent Purchase by Store Type 2007 Home Center / Mass Lumber / Merchants Building 16% Materials 60% Paint Stores Hardware Stores 19% 5% Source: Proprietary Paint Industry Data, S-W Marketing The Sherwin-Williams Company – Full Year 2007
- 11. Contractor Channel Share, U.S. Primary Outlet by Store Type 2007 Paint Hardware Stores Stores 92.3% 0.6% Home Centers 2.4% Discount / Other 4.7% Source: National Marketing Measures: 2007 The Sherwin-Williams Company – Full Year 2007
- 12. Financial Highlights The Sherwin-Williams Company 2007 2006 Net Sales $8.01M $7,810M EBITDA $1,148M $1,050M Income $616M $576M % Sales 7.7% 7.4% Earnings Per Share $4.70 $4.19 Return on Assets 12.7% 11.5% Return on Beginning Equity 30.9% 33.3% The Sherwin-Williams Company – Full Year 2007
- 13. Revenue by Segment The Sherwin-Williams Company - 2007 Consumer 16% Paint Stores 62% $1.31 Billion $4.96 Billion $1.73 Billion Global 22% The Sherwin-Williams Company – Full Year 2007
- 14. Distribution Mix The Sherwin-Williams Company - 2007 Sales Through Controlled Distribution 75% Sales Through External Channels 25% The Sherwin-Williams Company – Full Year 2007
- 15. Operating Segment Profit Dollars & Percent of Sales - 2007 Consumer 17.1% Paint Stores $224.2 Million 15.5% Global $766.5 Million $160.7 Million 9.3% The Sherwin-Williams Company – Full Year 2007
- 16. Paint Stores Group 2007 Sales $4.96 Billion The Sherwin-Williams Company – Full Year 2007
- 17. Paint Stores Company Operated Distribution North America 2007 Est. 2002 Est. Sherwin-Williams 3,325 2,643 ICI/Glidden 662 718 PPG 450 250 Pro Paint, Inc. 372 308 Benjamin Moore* 154 68 Kelly-Moore 164 160 Cloverdale/Rodda 109 101 Dunn Edwards 83 71 Diamond Vogel 77 85 Vista 46 46 * “Majority Owned” Source: Company Websites, Rauch Guide & Chain Store Guide The Sherwin-Williams Company – Full Year 2007
- 18. Diversified Customer Base Residential New DIY Commercial Repaint Residential Property Industrial & OEM Architects & Management Marine Finishes Designers The Sherwin-Williams Company – Full Year 2007
- 19. Consumer 2007 Sales $1.31 Billion • Manufacturing & Distribution Arm of Company • Centralized Research & Development • Focus on Productivity • Operational Excellence – Six Sigma The Sherwin-Williams Company – Full Year 2007
- 20. Distribution Total Coatings Outlets, U.S. 56,000 Total U.S. Paint & Coatings Outlets Consumer Segment 38,000 Customers Sherwin-Williams Stores 3,200 The Sherwin-Williams Company – Full Year 2007
- 21. Consumer Leading Brands for Each Category Paint Aerosols Wood Care Applicators The Sherwin-Williams Company – Full Year 2007
- 22. Global 2007 Sales $1.73 Billion OEM Product Finishes International Coatings Automotive Finishes The Sherwin-Williams Company – Full Year 2007
- 23. Consolidated Gross Profit 2007 Year-End Results 3,598 $ Gross Profit 3,700 3413 % to Sales 3,080 3,200 2,701 2,455 2,700 2,339 2,308 2,220 2,130 2,249 2,097 $ Millions 2,200 1,728 1,700 45.1 45.4 44.9 44.9 44.2 44.3 43.8 43.7 43.0 42.8 43.2 1,200 41.8 700 200 -300 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 The Sherwin-Williams Company – Full Year 2007
- 24. Selling, General & Admin Expense 2007 Year-End Results $ SG&A 3,000 2,597 % to Sales 2,513 2,326 2,500 2,069 1,882 1,785 2,000 1,730 $ Millions 1,500 34.4 34.8 34.1 33.8 32.4 32.2 32.4 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 The Sherwin-Williams Company – Full Year 2007
- 25. Working Capital Ratio (Accounts Receivable + Inventory – Payables)/Sales 18% 16.3% 16% 13.8% 13.8% 14% 12.7% 12.5% 11.7% 11.5% 11.0% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 The Sherwin-Williams Company – Full Year 2007
- 26. Net Operating Cash 900 874.8 800 815.8 Uses of Cash 700 716.7 • Acquisitions ($ in Millions) 600 558.9 544.7 • Capital Expenditures 500 546.6 400 • Buy Back Stock 460.0 460.0 300 351.7 340.9 • Pay Dividends 200 100 0 2003 2004 2005 2006 2007 Net Operating Cash less Cap.Ex. & Dividends Net Operating Cash The Sherwin-Williams Company – Full Year 2007
- 27. Stock Repurchase 13.2 14.00 12.00 Millions of Shares 10.00 8.10 7.98 8.00 6.70 6.70 6.60 5.60 6.00 4.00 2.00 0.00 2001 2002 2003 2004 2005 2006 2007 Avg. Common Shares Outstanding 156.9 152.4 147.0 144.7 141.1 137.3 130.9 (fully diluted / in millions) The Sherwin-Williams Company – Full Year 2007
- 28. Debt : EBITDA Ratio 1500 84% 83% 1148 73% 99% ($ in Millions) 1047 1000 76% 965 848 875 745 678 738 500 621 514 0 2003 2004 2005 2006 2007 EBITDA Debt The Sherwin-Williams Company – Full Year 2007
- 29. Dividends Per Share 1979 – 2008E $1.50 1.40 $1.40 1.26 $1.30 $1.20 $1.10 1.00 $1.00 .82 $0.90 $0.80 .68 .60 .62 $0.70 .54 .58 .48 $0.60 .40.45 $0.50 .32.35 $0.40 .25 .28 .18 .19 .21 .22 $0.30 .13 .14 .16 .10 .12 $0.20 .05 .06 .08 $0.10 .01 .04 $0.00 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E * After adjustment for all common stock splits The Sherwin-Williams Company – Full Year 2007
- 30. Summary • Positioned for Growth – Controlled Distribution – Technological & Marketing Innovation – Strong Brands – Sales & Marketing Organization – Balance Sheet Liquidity – Strong Cash Flow – Growth Initiatives • Improved Earnings • Consistent Dividend Increases The Sherwin-Williams Company – Full Year 2007
- 31. Questions & Answers Save the Date: 6.24.08 Financial Community Presentation Cleveland Robert Wells Vice President Corporate Communications and Public Affairs Direct: 216.566.2244 rjwells@sherwin.com Mike Conway Director Corporate Communications and Investor Relations Direct: 216.515.4393 Pager: 216.422.3751 mike.conway@sherwin.com The Sherwin-Williams Company – Full Year 2007