Sherwin-Williams NYSE: SHW executives said first-quarter 2026 results came in ahead of internal expectations despite “heightened global uncertainty and persistent demand softness in most end markets,” while the company kept its full-year sales and earnings guidance intact and updated its outlook for raw material inflation and price mix following the onset of renewed volatility tied to the Middle East conflict.
First-quarter results: sales above guidance, margins expanded
Jim Jaye, senior vice president of investor relations and communications, said consolidated sales grew by a “high single-digit%,” including a “low single-digit contribution” from the Suvinil acquisition. Gross margin expanded 90 basis points year over year, even with what Jaye described as a dilutive impact from Suvinil, marking “the fourteenth quarter out of the last 15 quarters” with year-over-year gross margin expansion.
Jaye said SG&A rose by a mid-single-digit percentage against a difficult comparison, and he reiterated that full-year guidance continues to call for a low-single-digit increase in SG&A. Adjusted diluted EPS increased by a mid-single-digit percentage, and adjusted EBITDA rose by a high-single-digit percentage, according to Jaye. Net operating cash improved by $200 million, driven by higher net income and working capital being “a lower use of funds.”
On capital allocation, Jaye said Sherwin-Williams returned $773 million to shareholders through dividends and share repurchases during the quarter and ended the period with net debt to adjusted EBITDA of 2.5x.
Segment performance: share gains offset soft end markets
Chair, President and CEO Heidi Petz highlighted new-account growth and what she called widening differentiation versus competitors, crediting Sherwin-Williams’ field teams for customer intimacy that supports targeted pricing and share gains.
Paint Stores Group (PSG): Petz said PSG sales increased by a mid-single-digit percentage, with both price mix and volume up low single digits and “price mix increasing more than volume.” She added that realization on the company’s Jan. 1 price increase was “trending slightly better than expected,” and later confirmed that “all of those conversations have happened and are out there.” Segment profit grew by low single digits and segment margin was “basically flat.”
Within PSG, Petz cited double-digit sales growth in Protective & Marine, marking a seventh straight quarter of at least high single-digit growth. She said commercial sales rose mid-single digits in a “choppy market,” residential repaint returned to mid-single-digit growth, and property maintenance grew low single digits. New residential demand remained “very challenging” as anticipated.
Petz said the company opened 21 new stores and closed 27 in the quarter, and reaffirmed an expectation to open 80–100 new stores for the year while continuing to “assess and optimize” the portfolio to drive profitability and return on net assets.
Consumer Brands Group: Petz said Consumer Brands sales exceeded expectations, driven by “high-teens growth” from Suvinil. Excluding Suvinil, sales increased by low single digits, driven by high-teens growth in Europe and high single-digit growth in legacy Latin America, while North America declined low single digits. She said volume decreased mid-single digits, while price mix and FX increased low single digits. Adjusted segment margin increased, with Petz citing 34.3% flow-through.
CFO Ben Meisenzahl later attributed margin improvement in Consumer Brands primarily to “global supply chain efficiencies,” simplification efforts, and a better price/mix profile. He also said there was “no reallocation” of costs among segments and that investors should still “expect to still see low 20s margin in this segment as we’ve talked about.”
Performance Coatings Group (PCG): Petz said PCG sales grew slightly above the company’s mid-single-digit expectation, with growth in “every division and region.” Volume grew low single digits, acquisitions were “slightly positive,” price mix was flat, and FX was a tailwind. Automotive Refinish rose in the low teens, driven by high single-digit volume and double-digit gains in all regions. Packaging grew high single digits, while General Industrial, Coil, and Wood also posted growth. PCG adjusted segment profit rose mid-single digits, with segment margin flat as higher incentive compensation and FX headwinds weighed on SG&A.
Pricing and raw materials: more targeted actions amid conflict-driven volatility
Management focused heavily on the evolving price/cost backdrop. Petz described “incremental targeted actions by customer, geography, and end market,” and Meisenzahl emphasized balancing pricing with the “right volume,” noting the company is not “looking for all volume.”
Meisenzahl told analysts consolidated pricing embedded in the updated outlook is “more than 2x” what was assumed in the original January guidance, reflecting the phasing of raw material pressure by region and end market, and Sherwin-Williams’ mix of contractual versus spot raw material purchasing. He said the company is “like 50/50 between contractual and spot buying,” with more architectural volume on contract and more industrial exposure to spot buying.
The company raised its full-year raw material inflation outlook to “up low to mid-single digits,” with Petz citing inflation and volatility in oil, natural gas, and petrochemical feedstocks such as propylene. Petz said sustained commodity inflation typically takes “about a quarter or two” to flow into the P&L, and the company expects impacts to become more material through the second quarter and into the second half.
Jaye said pressure has been most visible in the industrial raw material basket, including solvents and resins. He added that “propylene drives about 75% of our basket,” and said propylene pricing was up due to the Middle East situation, citing a forecast that it could be “up 50% more through the rest of ’26” tied to disruptions. He added that TiO2 had “not elevated as much yet” and said Sherwin-Williams is “more on the chlorinated side” rather than sulfate TiO2, while noting the broader market is global.
Executives also addressed supply risk. Petz said the first objective is “certainty of supply,” and noted that over 80% of consolidated revenue is in North America, with the majority of raw materials for those sales sourced in-region and “largely insulated” from disruptions tied to Strait of Hormuz volatility. She said the company is monitoring higher-risk regions, including Asia Pacific and EMEA, more closely.
Guidance: full-year outlook unchanged, but mix shifts toward price over volume
Petz said the assumptions from the January outlook “largely remain intact” and reiterated that customer feedback and indicators still point to “little support for meaningful recovery in most end markets.” She added that the Middle East conflict introduced “further complexity and uncertainty,” and the company expects some negative impacts on demand as the year progresses, though the magnitude is difficult to predict.
While consolidated full-year sales and earnings guidance was unchanged, Meisenzahl acknowledged the path to those results now assumes a different mix, with “volumes to be a little more muted” in part due to inflation and weak consumer sentiment. He pointed to consumer sentiment readings that he said were the lowest on record, “even going back to GFC and COVID.”
For PSG specifically, Meisenzahl said full-year guidance “remains in line” with prior expectations and reflects confidence in share gain opportunities, even as mix may vary across PSG end markets.
End-market commentary: housing affordability, packaging regulation, and customer behavior
On U.S. housing, Meisenzahl said the company is watching policy efforts aimed at affordability, but suggested structural supply-side changes—such as opening land for development—would be more meaningful than what he called “shorter term unlocks.” Jaye said the company is not expecting mortgage rates to move “a whole lot” this year, and described a “triangle” of rates, affordability, and incomes that needs to improve in sync. He added that household formations have slowed somewhat but remain “a pretty healthy rate,” and emphasized a structural underbuilding deficit that supports long-term demand across single-family and multifamily.
In Packaging, Petz said Sherwin-Williams is positioned to benefit from regulatory changes, pointing to the European Food Safety Authority’s ban on BPA scheduled to take effect in the second quarter. She said the company is “at the very front edge of that” and expects customer conversions to continue into the second half of 2026 and into 2027. Jaye added that beyond Europe, “Asia and LATAM” also offer room for further conversions.
On customer behavior in Performance Coatings, Petz said behavior is “a mix,” with some customers showing prudence while others remain confident given backlogs and pipelines. Petz also said the company is not seeing material “pre-buy” activity tied to anticipated inflation-driven price increases.
In closing remarks, Jaye said the company’s strategy “is clear, it’s working, it’s not changing,” and announced Sherwin-Williams’ 2026 financial community presentation will be held in Cleveland on Sept. 24, where investors will see the company’s new global headquarters and global technology center.
About Sherwin-Williams NYSE: SHW
Sherwin-Williams NYSE: SHW is a global manufacturer and distributor of paints, coatings and related products. Founded in 1866 and headquartered in Cleveland, Ohio, the company supplies a broad range of coatings for residential, commercial and industrial applications. Its product offering includes architectural paints and stains, industrial and protective coatings, automotive finishes, and a variety of sundry products such as primers, sealants and specialty treatments used by professionals and consumers.
The company sells through multiple channels, including a large network of company-operated retail paint stores that serve professional contractors and do-it-yourself consumers, as well as through distributors and mass retailers.
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