管理層發言
Good morning. Thanks for joining The Sherwin-Williams Companies review of second quarter 2026 and our outlook for the third quarter and full year of 2026. With us on today's call are Heidi G. Petz, Chair, President, and Chief Executive Officer; Ben E. Meisenzahl, Chief Financial Officer; Paul Lang, Chief Accounting Officer; and Jim Jaye, Senior Vice President, Investor Relations and Communications. This conference call is being webcast simultaneously and on Accesswire via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under U.S. federal securities laws with respect to sales, earnings, and other matters. 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 statements whether as a result of new information, future events, or otherwise. A full disclosure regarding forward-looking statements is provided in the company's earnings release transmitted earlier this morning. After the company's prepared remarks, we will open the session to questions. I will now turn the call over to Jim Jaye.
Good morning to everyone, and thank you for joining our call. Sherwin-Williams delivered strong top- and bottom-line growth in the quarter. Amid ongoing global uncertainty and without any meaningful improvement in demand, our sales outperformance reflects continued execution of our strategy, new account wins, and a clear return on prior growth investments. As sales exceeded guidance on a consolidated basis and in all three reportable segments, consolidated sales grew by a high single-digit percentage inclusive of a low single-digit contribution from the Suvinil acquisition. Reported gross margin decreased slightly but increased excluding the dilutive impact of Suvinil. Targeted pricing actions during the quarter enabled us to offset raw material inflation. Reported SG&A expense increased by a mid-single-digit percentage but decreased 90 basis points as a percent of sales. The increase was driven primarily by non-annualized Suvinil acquisition costs and higher employee service costs related to the greater-than-expected year-over-year sales and profit improvement in the quarter. We expect full-year reported SG&A to increase by a mid-single-digit percentage. Adjusted diluted net income per share increased year over year. The Adjusted EBITDA grew by 10.5% to $1.5 billion and adjusted EBITDA margin expanded 60 basis points to 21.5% of sales. Net operating cash improved by 21% or $235 million in the quarter, driven by an increase in net income and working capital being a higher source of cash year over year. Free cash flow conversion was 86%. Consistent with our disciplined approach to capital allocation, we took advantage of volatility in the market to accelerate share repurchases in the quarter, and combined with dividends returned $1.5 billion to shareholders. We ended the second quarter with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.4x. Based on our strong first-half performance, as well as our assumptions for the remainder of the year, we are increasing our full-year consolidated sales and EPS guidance. Let me now turn it over to Heidi, who will provide some color on second-quarter segment performance before moving on to our outlook and your questions.
Thank you, Jim. I want to begin by thanking our 64,000 employees for their relentless focus on executing on behalf of our customers. In an environment that remains challenging, our employees continue to work hard and find new ways to deliver the reliability, consistency, and customer-focused solutions that set Sherwin-Williams apart. The strength of our strategy is evident in our performance. We are continuing to widen the gap between Sherwin-Williams and the competition through meaningful customer engagement, robust new account growth, and meaningful share gains across the business. At the same time, we continue to focus on optimizing the enterprise and controlling our costs as evidenced by the restructuring actions taken during the quarter. We expect these actions will result in approximately $17 million of annual savings with about half realized over the remainder of this year. Looking at our segment results in the second quarter, I will begin with Paint Stores Group, which grew by a mid-single-digit percentage. Price mix grew at the low end of mid-single digits and volume increased by a low-single-digit percentage. Our team delivered growth in all pro segments. Protective and Marine continued its momentum as sales increased by a mid-teens percentage versus a high-single-digit comparison. It was the eighth straight quarter of at least high-single-digit growth in this business. Data centers, semiconductor infrastructure, and manufacturing onshoring are among several drivers of this growth, where customers continue turning to Sherwin-Williams for a suite of solutions that can be delivered quickly and consistently. In the commercial business, the gains we have been targeting over the past 24 months are now evident, as sales increased by high single digits in an underlying market that remained soft. These efforts have also resulted in the mid-single-digit increases in residential repaint and property maintenance. New residential remains very challenging as single-family starts and completions have been negative for five of the last six months, but meaningful account wins propelled us to low-single-digit growth in the quarter. Segment profit grew by mid-single digits and segment margin was 24.6%. As planned, we have opened 45 new stores year to date, and also, as planned, closed 57 or about 1% of total PSG stores. As we have done for decades, we continually assess and optimize our store portfolio to drive profitability, strengthen operational flexibility, drive improvement in return on net assets, and ensure that we maintain the highest level of service for our customers. Our customers are not being negatively impacted by this targeted 80 to 100 new stores for the year; the net number will be approximately 30. The cost of closing stores year to date is immaterial, and the store optimization initiative is behind us. We fully expect to be at the high end of 80 to 100 net new stores beginning next year given the trimming we have completed this year. We also announced an 8% price increase effective September 1st to offset raw material and other cost inflation. Because of our strong supplier relationships and disciplined supply chain execution, we were able to delay this increase for customers and avoid disrupting their business during the height of the paint selling season. We expect effectiveness of this increase to be in our typical range, so we will continue to be opportunistic in pursuing additional volume. Consumer Brands Group sales exceeded our expectations, driven by a mid-teens contribution from the Suvinil acquisition. Mid-single-digit price mix and low-single-digit foreign exchange were partially offset by a low-single-digit decrease in volume. Group sales, excluding Suvinil, increased by mid single digits and our legacy Latin America business, excluding Suvinil, increased by a low-double-digit percentage. North America sales increased by high single digits against a soft comparison and included low-single-digit volume growth. The North America growth was driven by new product offerings, favorable mix, and the Pro-Hoop paints as DIY demand remained muted. Sales decreased in Europe by a double-digit percentage again against the high-teens comparison, driven by customer inventory management and destocking. Adjusted segment margin increased 210 basis points to 24.5%. Leverage from mid-single-digit sales growth and flat SG&A excluding Suvinil drove half of the improvement, with the other half coming from favorable nonoperating items. In Performance Coatings Group, sales beat expectations with growth in every division and region. These results reflect the strong new-account focus that we continue to drive as demand largely remains unchanged in our underlying core business. Price mix and volume both grew by low single digits in the quarter, with price mix greater than volume. FX was a low-single-digit tailwind. Growth was strongest in the general industrial division, led by strength in heavy equipment as sales were up high single digits inclusive of mid-single-digit volume growth. Automotive Refinish also grew in the high-single-digit range, driven by price mix and favorable FX. Packaging continued its strong performance as sales increased by mid single digits against a low-teens comparison. Coil and wood also delivered mid-single-digit growth. Group sales expanded in all regions, including a strong double-digit increase in Asia Pacific and mid-single-digit growth in North America. Adjusted segment margin increased 50 basis points with strong incremental margin of 26.4%. Within the administrative segment, SG&A declined 9.8%. As a reminder, this improvement largely reflects a favorable year-over-year comparison with the prior-year period, including approximately $49 million of severance and other restructuring expenses versus approximately $3 million in the current quarter. The slide deck accompanying our press release this morning provides more detail on second-quarter segment results. Now moving on to our guidance. Our better-than-expected first-half performance gives us increased confidence in our ability to deliver growth through the balance of the year. Importantly, our updated outlook assumes there is not a broad-based demand recovery. Customer feedback and the leading indicators we track continue to show limited signs of meaningful improvement in most end markets. In this environment, we continue to focus on the levers within our control: securing incremental volume while maintaining the products, services, and supply solutions which drive productivity and profitability for our customers. Inflation remains a variable we are actively managing. Our supplier relationships are strong and continue to be a competitive advantage. We do not expect raw material availability to be an issue for us. At the same time, we are not immune from inflation. We are seeing the impact of higher oil and related cost pressures, and we expect continued volatility throughout the balance of the year. We expect inflation in our raw material basket to be up in the high-single-digit range in the second half, putting our full-year outlook in the mid-single-digit range. We have taken a thoughtful approach to balance the timing and amount of price increases for our customers, and we are taking actions to keep pace with inflation while continuing to deliver the products, services, and solutions that our customers value. We expect consolidated price mix for the year to increase to the mid-single-digit range, and we expect to maintain full-year gross margin at last year's level at the midpoint of our guidance. The slide deck issued with this morning's press release includes our expectation for consolidated and segment sales for the third quarter and full-year 2026. Based on our strong first-half performance and the momentum that we are carrying into the second half, we are raising our full-year sales and adjusted EPS guidance. Consolidated sales are now expected to increase by a mid- to high-single-digit percentage, and adjusted diluted net income per share is now expected to be in the range of $11.80 to $12.20 per share. Our guidance reflects stronger execution versus our initial January expectations, continued share gains, disciplined price-cost management, and ongoing productivity actions. Our slide deck contains other details you may find useful for modeling purposes. We are encouraged by our second-quarter performance and proud of what our teams accomplished during the first half of the year. Their execution demonstrates the strength of our business, the durability of our strategy, and the advantages that continue to differentiate us in the marketplace. Our mindset has not changed. In this environment, we know growth will need to come from what we do, not from what the market gives us. We remain focused on being our own catalyst for growth, which means taking share, serving customers better than anyone else, and creating opportunities regardless of the demand backdrop. That is exactly where Sherwin-Williams excels, and we intend to continue leaning into these strengths. At the same time, we are not satisfied as we know there is more business to earn, more productivity to unlock, and more value to create. Our employees are the key to our success, and I want to take a moment to speak directly to them and express my deep respect and appreciation. As we have just demonstrated, we will continue approaching the many opportunities ahead of us with urgency, discipline, and confidence in our ability to deliver. This concludes our prepared remarks. As a reminder, we will be hosting our financial community presentation at our new global headquarters and global technology center on September 24th. I look forward to seeing many of you there. Please reach out to our investor relations team if you have not registered as space is limited. With that, I would like to thank you for joining us this morning, and we will be happy to take your questions.
分析師問答
Certainly. Everyone, at this time we will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speaker to provide optimum sound quality. In the interest of time, we do ask that participants please ask one question. And once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from John McNulty from BMO Capital Markets. Your line is live.
Yeah. Thanks for taking my question and congrats on some really solid results, especially in a tough environment. So I wanted to ask, maybe you can unpack a little bit: mid-quarter, Nippon made a bid for Akzo and then relatively quickly thereafter pulled that bid. I guess, walk us through the rationale for both moves and how we should be thinking about M&A going forward in terms of the opportunities that you may see out there?
Yes. Good morning, John. I will take that. We take a very disciplined approach, not only to our capital allocation philosophy that remains unchanged, but as it relates specifically to M&A, as you can imagine, we are constantly looking and assessing assets that would be a fit or an accelerator to our strategy. And so we probably pass well over—I'd say we pass over 90% of opportunities across our desk. But when we look at those specific assets, those were very premium targeted assets that we had long admired, and there was an opportunity at the right price at the right time. If they are the right value, that would have been something that would absolutely have been complementary to our strategy. Having said that, I think timing is everything. Value is everything. And when we got to a point where we were two bids in, which I think was a very fair, reasonable, and premium all-cash offer with the level of engagement that we wanted, it was a simple decision that there were absolutely more attractive uses of our shareholders' cash. And so the decision to walk away and put that cash to use was in our and our shareholders' best interest. Thank you, John.
Thank you.
Your next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.
Thank you. Good morning, everyone. Can I ask for a little more color on the Consumer Brands margins? Obviously, strong improvement. How should we expect those margins to move on a go-forward basis? Also, I noticed that versus the other two segments, there was not really a callout here on market share gains or anything. Obviously some other nice callouts, but nothing on the share gain. So what drove these margins to be so much better than the other two segments?
Hey, Vincent. It is Ben E. Meisenzahl. On the margin piece, it really comes from two parts. First, about half of it is coming from core operating performance. If you look at Consumer Brands and strip out Suvinil and just look at the core business, which was up about mid single digits, the resulting SG&A was flat. So you think about the leverage that you get in a situation like that. The other half of the margin expansion was from more favorable nonoperating items. That also impacted the sequential first-quarter to second-quarter comparison. So if you back out those nonoperating items, we are more flattish first quarter to second quarter. That is what is driving the adjusted segment margin there.
Vincent, I will add in from a market-share standpoint. DIY, obviously, has not shown any meaningful improvement in that particular segment. Pro-Hoop paints, however, we are seeing continued share gains there, and that is a testament to the team successfully executing on our strategy. We have very strategic partnerships—Lowe's, Menards, and others—but this is a growing segment, still a small base, and the fundamentals are intact there. So a lot of credit to the team for continued focus. Thank you, Vincent.
Thank you.
Your next question is coming from Duffy Fischer from Goldman Sachs. Your line is live.
Yeah. Good morning. Just a question around the implied guidance at the midpoint. So in the first half year-over-year you guys were up about $0.40 of EPS. And at the midpoint in the second half you are up a little more than a dime, even though you have a pretty big price increase rolling through in September. So one, just want to see what is it that might slow down, when you are looking at it year over year, that would have a smaller increase. And then second, between Q3 and Q4, should Q4 be seasonally bigger than normal because of that price increase when you look at it versus history?
Hey, Duffy. If you look at the year-over-year, there are two things that impact the first half versus the second half. First, the comps: last year, the first half were more difficult than the second half. So that phasing and what we are going against this year has an impact. But if you look at the second half of this year and the slower growth of EPS, as we have talked about, we still expect that ramp-up of raw material costs. We have taken our guide up a little bit for the back half or for the full year, and that is coming on the back half. Even though we have pricing that we are laying in and our commitment to staying in front of that, you know, it is still an economic headwind that we are facing here. So that is probably the biggest reason why you would see maybe a little less of the growth in the second half than you saw in the first half.
Duffy?
Thank you.
Your next question is coming from Ghansham Panjabi from Baird. Your line is live.
Thank you, operator. Good morning, everybody. Heidi, going back to your comments on the outlook and given the steady increase in interest rates recently, specific to the PSG segment: are you embedding any sort of volume deterioration sequentially for the back half of this year, which will be offset by share gain initiatives on your end, you know, to sort of sum to that low-single-digit volume growth? Is that the right way to think about it? Thank you.
No. Ghansham, I look at this and we do not expect that to happen. We do not expect any material change. I will see if Ben is going to give some color to give you a little bit more perspective, but I will ask him to touch base in a minute. I just want to take a moment, though, and give you a little bit of segment perspective to reinforce my point. Broad strokes: obviously we talk a lot about what is going on from a residential standpoint. New residential, I would say the exact opposite: backlogs are stable, and the team is really standing tall. We continue to take share here. Our new-account activity continues to be very strong as our active accounts where we are growing our current-customer share of wallet. Even though it is a challenging market, we are still continuing to be very aggressive out there. We talk a lot about innovation with this segment, and we talk about innovating in and out of the can. Something I want to highlight here: this is really exciting. We just launched a product called Emerald Symmetry, and it is the best-performing interior product that we have ever produced. Not only the right performance characteristics, but it is going to be a great plant-based, zero-VOC product, helping to really advance our sustainability agenda. So we are doing a lot of work here in this current macro to certainly favor growth and square footage for these residential repaint contractors. So volume is certainly positive there. New residential continues to be under pressure. Single-family completions are down on average high single digits in 2026 while our sales were down a low single digit, so demonstrating that we are taking share there. I would underscore property maintenance: year-over-year rent remains weak with some sequential improvement. Our outperformance, with low-single-digit growth, is also evidence of share gain. So the market is not going to help us in any regard, but I do want to take a moment on Protective & Marine because it is been a fantastic highlight. As I said earlier, it is our eighth straight quarter of at least high-single-digit growth. We are exceptionally and uniquely well-positioned for some of these tailwinds. We talk a lot about data-center build-out infrastructure and the semiconductor infrastructure; the team is really going to market very effectively with a very unique suite of solutions. Again, back to the comments earlier: we know the market's not going to help us. We are not waiting. We have a lot of time ahead of us this year. We know we can control what we can control, and we are going to expect that we outpace the market.
I will add to what Heidi said: if you look at the phasing of volume year over year, half over half in the guidance is relatively consistent. Going back to our original guidance in January, our assumptions were the same; what is different is the level of volume is higher than what we would have expected, and you see that in our original January guidance where we were down low single digit to up low single digit. Stores group volume now we are guiding to up low single-digit volume, which supports all the things that Heidi talked about. Quarter-over-quarter volume will be consistent; what changes is pricing as we try to balance that against inflation. Thank you.
Gotcha. Thank you.
Your next question is coming from Greg Melich from Evercore ISI. Your line is live.
Greg. Thanks. I guess I would follow up on that last point. I think you mentioned in the prepared comments the price increase in September and you expect realization to be in the historic range. Is that the range that we have seen this year, I think more like 40%? Or is it the historic more 60 to 70%? And then the second part of that question is, would that be enough for gross margins to grow year over year in the back half given raw material is still accelerating?
I mean, expectation is that we are balanced with pricing and committed to staying in front of that. Going back to your September price-increase question, we normally see a glide path, and to Heidi's point, the pricing will be at that same historical trend. We have customers that have contracts; there are probably some things that go into 2027 as well. But we would expect that over time we are really able to capture that the same way. I will remind you, our goal has been to implement pricing when the market can support it and we can do it in a way that preserves our customer relationships and manages our ability to get share gains. We felt that September provided the best balance between those objectives, and that is why you see us taking this approach now.
Thanks, Greg.
Thank you.
Your next question is coming from Patrick Cunningham from Citi. Your line is live.
Hi. Good morning. Thanks for taking my question. I was hoping you could just give a little bit of detail behind the drivers for both the commercial and Protective & Marine segments, and what sort of multi-quarter or multiyear visibility do you have there from some of your share gains, new product wins, anything that we should think about across those two strong segments?
Yeah. Good morning, Patrick. It is Jim. On the commercial side, you are seeing a couple quarters in a row where we are outperforming. We have talked about some of the market-share opportunities that we have been targeting over the last 24 months or so. I think you are starting to see those come through in a more prominent way now. A lot of credit to the team that is driving the commercial side there. On the Protective & Marine side, Heidi touched on it: the data-center build-out, the semiconductor fabs, and others like water treatment and pharmaceutical—the onshoring—are all treatment opportunities for us. We have a great suite of solutions: flooring, structural steel, and there is also an architectural element of office space in all of those applications as well.
Patrick, one other piece to add: when we talk about AI data centers and the build-out, you think of the race of these hyperscalers and speed matters. We can provide speed. We can provide a comprehensive one-shop solution for many of their coatings needs across the board that Jim just mentioned. We love the tailwind, and we are ready for it. Thanks, Patrick.
Thank you.
Your next question is coming from John Roberts from Mizuho. Your line is live.
Thank you. Back to the original M&A question. Sherwin did not appear to be interested in the number-one European deco business. Why was that?
Well, we have looked at that, John, for a long time. One of the things we love about our controlled distribution model certainly is the backdrop and the market dynamics in which we sit here in North America. We are proud of the playbook that we have created. Obviously, there is a lot of agility within that playbook, but the market fundamentals outside of North America simply do not support that level of capital deployment. So we do think there are other very attractive alternatives for shareholders' cash, and we are going to put that to good work. Thank you, John.
Thank you.
Your next question is coming from Arun Viswanathan from RBC. Your line is live.
Thanks for taking my question. I was hoping to ask just on two segments: residential repaint and packaging. I think both of those are in the mid-single-digit range. Could you just elaborate? It sounds like residential repaint has been higher before, but is that plateauing? Is there anything else you could do to drive higher growth there? And similarly in packaging, are you still working on some share gains there? And where are we in kind of the European DPA transition? Thanks.
You bet. On residential repaint: is it plateauing? Absolutely not. In fact, I would say we are just getting started there. This is the segment where we have the largest share gains ahead, and we are continuing to be agile and deploy resources and make sure that team is well prepared. There is a lot of share available for grabs, and so we are going to continue with our dedicated stores, our residential repaint reps, product launches, the innovation we are providing in the can, and the digital suite of tools that we continue to innovate for residential repaint contractors regardless of their size. These tools help them with their economics, be better planners, and leverage our multiple stores and delivery. We have an organization that has shifted to more of a consultative selling approach, and our teams in the stores are doing a great job helping customers succeed. It is evident in our numbers and we continue to expect outsized growth. On packaging: the mid-single-digit growth was led by strength in beverage cans; we are outgrowing the market. Regarding the EFSA piece and the ban on BPA taking effect in Q2 of this year, that will continue to drive customer conversion in the back half of this year and into next year. So we expect that to be a positive tailwind. Thanks, Arun.
Thank you.
Your next question is coming from Matt Dale from Bank of America. Your line is live.
Morning. Just wanted to ask a clarifying question on the consumer business. You mentioned some nonoperating tailwinds, that things would have been flat quarter over quarter. Was that a flat margin comment or flat EBITDA? Can you tie that up, Benjamin?
Yeah, Matthew, that would have been the adjusted segment margin that would have been flat. Roughly half of the improvement you saw quarter over quarter, if you had adjusted for what we saw in the first quarter, you would have seen more flattish adjusted segment margins in Consumer Brands Group.
Okay. Appreciate that. That is helpful. And then Heidi, to jump back a little bit on John's earlier question and maybe both John's: ultimately, what changed between your first two attempts on Akzo and then the release of the slide deck and then your decision to walk away? I appreciate the price-discipline comment, but conceptually you kind of already had to come up in a more material way. Then the slide deck comes out and a few days later you walk. Am I reading too much into a couple days' lapse? Or is there something else there? Because that deal is not necessarily done. Just wondering how it relates to your appetite. And conceptually, I would assume any spin-offs are fair game for consideration, right?
Matthew, let me address that. I think there are three parts. First, you are assigning too much weight to the days. We have been looking at those assets for years; we are not desperate for those assets. I want to be very clear: we do not need acquisition to grow. We have a lot of organic scale opportunity and the team is doing a fantastic job, demonstrating that. On what changed between bid one and bid two: we put a fair and reasonable, premium all-cash offer forward and we did not get the level of engagement that we wanted. We are not going to negotiate against ourselves if we are not desperate for these assets. We are laser-focused on growing these businesses with or without them. If assets fall out of the sky at completion of an MOE at the right value, we would absolutely take a look, but it would have to be at the right value and the right time. I will also point to the success of Suvinil as an example of capital being put to great use; that demonstrates the discipline of how we think about M&A. We admired that asset for over 10 years and were thoughtful in our approach and integration. Business continuity is our north star. Cultural compatibility is worth noting; two great teams coming together can create enhanced value. I am pleased with the success the team is having there. Ben?
Again, we have talked about how our cash generation remains a strategic advantage. In the first half, that is really on display: we returned almost $1 billion more in cash to shareholders, we did the ASR, and between walking away from the joint bid and being blacked out for the quarter you can see us taking decisive action in an environment where our share price was on sale. You will continue to see us be strategic with how we manage our capital allocation.
Thank you.
Your next question is coming from David Begleiter from Deutsche Bank. Your line is live.
Thank you. Good morning. Heidi, just on DIY: I saw it did tick down versus the prior three quarters of it being up. What changed in the DIY market for you guys this quarter?
I do not think there was any material shift, David. It would be more nominal than material. We are still waiting for the catalyst to kick in on the DIY segment. If you bifurcate that segment, you have the premium DIY homeowner in our stores who prefer a specialty kind of experience and we are faring better there. The recovery there is less inflation-sensitive. The more value-conscious DIY homeowner that prefers a home center is still under pressure. Our strategic partnerships remain extremely important as we continue to find ways to look at that volume. The fundamental theme is we do not believe there will be a catalyst in the market anytime soon, and the charge to the team is we have to be our own catalyst for growth. You will continue to hear us talk about that. There are a lot of levers we can pull; they are not infinite, but it is a control-what-we-can-control mindset, and that gives us confidence.
Thank you.
Your next question is coming from Josh Spector from UBS. Your line is live.
Hi. Good morning. I wanted to follow up on the pricing side. I heard your comments around realization of the 8% increase, but just trying to think about the timing of that relative to your updated pricing guidance. My interpretation is maybe you are realizing 1% to 2% in fourth quarter and then maybe more of that falls into 2027. So one, is that kind of the right interpretation? And two, what does that mean for your approach to pricing around January 1st, 2027? Is that coming up in conversations now, or will that be a separate conversation three months from now?
Hey, Josh. The phasing is realistic: we have done a lot of pricing throughout the year and we are being realistic with the approach. We waited until September to avoid impacting our customers during the peak selling season. The season rolling later in the year might have an impact on realization. We are balancing this year with the inflation we continue to see, and obviously part of that will go into the first part of next year. We are not ready to call anything beyond 2026 right now; we are watching quarter by quarter and our teams are constantly assessing impacts and what actions we need to take.
Thanks, Josh.
Thank you.
Your next question is coming from Jeff Zekauskas from JPMorgan. Your line is live.
Thanks very much. Two-part question. You talked about 57 store closures. Is there a pattern to the closures? Are these unprofitable or in a particular region or too small? And why are they happening this year? Secondly, in terms of pricing, you are lifting your Paint Stores pricing by 8%. If you compare that pricing action to what is going on in Performance Coatings, should Performance Coatings price initiatives be at least that number because raw material inflation would be a little bit higher, or is there some other dynamic at work? What are you doing in pricing in Performance?
Jeff, I will start on the stores and hand it to Ben on pricing. There is a pattern: they did not meet the profitability threshold. We have built one of the industry's premier distribution platforms over many decades, and with that comes responsibility to actively manage that platform. We will continue to open stores; as we pruned in this downturn, we wanted to make sure we favored the best use of shareholder cash in the right places. We expect to be at the higher end of 80 to 100 net new stores beginning next year and we will be aggressive there. This pruning was by design to make the platform more productive and aligned with where our customers are growing. It is behind us and will enable us to move faster going forward. Ben?
On pricing, the way we go to market is very different between our architectural business and the industrial business. With Performance Coatings Group, the pricing approach is a bit more surgical by business unit or region. Given raw material inflation continuing to climb in the second half, PCG has been out with pricing more surgically. We waited on the architectural side to preserve volume and share, and to avoid putting pressures on our customers. So it is a different approach between the two businesses. You will continue to see pricing actions across segments as we balance price-cost dynamics.
Thank you.
Your next question is coming from Chuck Cerankosky from Northcoast Research. Your line is live.
Good morning, everyone. I would like to talk a little bit about Suvinil: how the integration is going, where you are at in the process, and to what degree it contributed or dented EPS dollars.
Hey, Chuck. Suvinil continues to be a great addition to Sherwin-Williams. Encouraged by what we are seeing as we bring Suvinil into the existing Sherwin-Williams business that has been here for many decades. Our teams have identified additional synergies, even things we did not appreciate initially through the industrial lens. On the customer front there have been a lot of great growth opportunities as the two brands come together; we are really encouraged. We said in April we would continue integration activities the rest of this year into the early part of next year. We still think it is an immaterial tailwind to our EPS for the year as we continue to merge the companies.
Thank you.
Your next question is coming from Abigail Ebert from Wells Fargo. Your line is live.
Hi there. Thanks for taking my question and congrats on the quarter. You have talked in the past about your strategy for driving new business wins in Paint Stores with your rep network, app launches, and things like that. Can you speak to how you are driving new business wins in Performance Coatings given the different customers?
Abigail, good morning. These are very different models, customers, end markets, and regions. Our ability to standardize within Paint Stores Group is different from Performance Coatings. Performance Coatings has teams with incredible tenure and expertise in these end markets, and it is about serving customers better. One unappreciated asset is our blending facilities: our ability to have assets close to industrial wood, coil, and large customers allows us to serve them faster—days and weeks versus competitors—and customers are willing to pay a premium for speed, consistency of color, and demonstrated value. That lets us create new business opportunities and wins. Thank you, Abigail.
Thank you.
Your next question is coming from Kevin McCarthy from VRP. Your line is live.
Yes. Thank you, and good morning. Heidi, a broad question on market-share gains: you are doing a nice job with broad-based gains for a while now. Are there certain businesses where you have been pleasantly surprised by the magnitude of share gains where you won more than expected? And in contrast, are there any businesses where share gains have proven more challenging than you thought, maybe due to competitive behavior, where you see room for improvement?
Kevin, there is never enough share gains. I am not surprised by the magnitude anywhere; the team has been hard at work. Commercial is a good example: we have put additional focus on what only Sherwin-Williams can provide to some larger contractors, and the team has executed in a data-driven, disciplined approach—looking for customers where we can earn more share of wallet by demonstrating our value with delivery, ProPlus, our app, and our store network. Some projects are multi-year and their timing is showing up now in our share gains. Where it has been more challenging: new residential and industrial wood, which are tied to new residential cabinets and furniture. Those areas remain under pressure. Even with new residential down low single digits in the first half of 2026, our sales were down a low single digit and we are outperforming given the soft single-family completions. We expect to be at a minimum of 1.5x to 2x the market in share gains; as the market moves we expect continued outsized growth. Thank you, Kevin.
Thank you.
Your next question is coming from Mike Harrison from Seaport Research. Your line is live.
Hi. Good morning. Within the PCG segment, you said your general industrial sales were up high single digits. Could you break down how much of that was pricing versus volume and what end markets are showing strength in industrial? Do you think that strength is sustainable into the second half?
Mike, volume was up mid single digits and price mix up low single digits. We had some FX tailwind in the low single digits. Growth is coming from general finishing and heavy equipment construction. We are continuing to see transportation and energy have some headwinds, but the team is focusing heavily on new business to offset some of that core erosion.
Thank you.
Your next question is coming from Laurence Alexander from Jefferies. Your line is live.
Hi. This is Dan Rizzo for Laurence. Thanks for fitting me in. Just getting back to the store closures: historically, how many stores do you close annually prior to this period? And is franchising something you have considered for Paint Stores Group?
In a normal year you are talking a small handful—two, three, four—often because of prior acquisitions and duplications. Strategically finding stores that are not getting the return profile you want and getting them out now allows us to go faster later. Franchising is not something we have considered; it does not fit the long-term strategic value model.
Laurence, one of the things we talk about with our stores is ownership: our store managers own the P&L, the culture, hiring, and bringing business into the store. The store closures were about simplification and pruning to go faster later. This is by design and we do not expect to annualize that level year over year. It is behind us so we can continue to put new stores in when and where they make sense.
Thank you.
Your next question is coming from Christopher Parkinson from Wolfe Research. Your line is live.
When you take a step back as CEO, is there anything else in terms of major initiatives that you feel the Sherwin team should be even more aggressive on? You've gone through store count, increased average price point, grown the Salesforce. Is there one or two initiatives where you could double down to further improve trajectory and go after that 1.5x market growth?
Great question, Christopher. There is a whole lot. When you look at the moat and what we are trying to do, especially in a downturn to put more space between us and competitors, there are levers and growth vectors—top-line and bottom-line growth. We have to be our own catalyst. I am excited about our stores, employees, and the data we own: we have assembled one of the world's largest databases of painting contractors. There is so much we can do with that to be better partners. We have a distribution platform that can provide scale and agility, which our contractors value. This is an opportunity, especially in a downturn with volatility and inflationary pressure, for Sherwin-Williams to stand tall and demonstrate differentiation to customers and elevate our partnerships. That's where the team's focused and why we are taking share.
Christopher, I'll add that digital is another big opportunity. The industry is under-digitized and whoever gets demand signals the quickest will get disproportionate share. We are actively working on ERP modernizations, CRM work, and data to get insights faster. That remains a big opportunity and you will see us continue to invest there.
Thank you.
That concludes our Q&A session. I will now hand the conference back to Jim Jaye for closing remarks. Please go ahead.
Thank you, and thank you everybody for joining our call. I want to reiterate Heidi's comments thanking our employees for their hard work and delivering a really strong quarter in this difficult environment. Strategy is clear, it is working, it is unchanged, and you can expect us to continue executing at this high level. I want to close out, as Heidi mentioned, with a reminder of our financial community presentation in Cleveland on September 24th where you will have a chance to see our new HQ and global technology center. We hope many of you can join us. Thanks again for your interest in Sherwin-Williams, and we are available as always for your follow-ups. Have a great day.
Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.