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SHW_3Q_2008
1. Christopher M. Connor Sean P. Hennessy
Chairman & CEO Senior Vice President,
Finance & CFO
Robert J. Wells
Vice President,
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 – 3rd Quarter 2008
3. Discussion Outline
• Coatings Market Overview
• Sherwin-Williams Overview
• Sherwin-Williams Investment Rationale
– Diversified Customer Base
– Controlled Distribution
– Channel/Brand Strategy
– Leading Technology
– People Development & Retention
– Growth from Acquisitions
– Financial Strength
The Sherwin-Williams Company – 3rd Quarter 2008
4. Coatings Industry
Global Demand
Asia Pacific Europe
7.3 Billion Gallons
23% 32%
81 Billion Dollars
Latin
America
11%
Other
4%
Canada
4% United States
26%
Source: U.S. Census Bureau, July 2007/CHEMARK
The Sherwin-Williams Company – 3rd Quarter 2008
5. Coatings Industry
Top Manufacturers
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 Valspar 5 ICI
6 RPM 6 DuPont
7 BASF 7 RPM
8 Kansai 8 Comex
9 Nippon 9 Akzo Nobel
10 Sika 10 Benjamin Moore
Source: Paint & Coatings Industry
Source: Coatings World
The Sherwin-Williams Company – 3rd Quarter 2008
6. U.S. Coatings Industry
Sales ($) Mix by Category
2007
1.28 Billion Gallons
Special 20.07 Billion Dollars
Purpose
29%
Architectural
Coatings
48%
OEM
Finishes
23%
Source: U.S. Department of Commerce; Segment Percents Based on Dollars
The Sherwin-Williams Company – 3rd Quarter 2008
7. U.S. Construction Market
Annual Growth Rates by Market (sq. ft.)
30%
20%
% Increase/Decrease
10%
0%
-10%
-20%
-30%
-40%
-50%
2004
2003 2005 2006 2007 2008 YTD
August ‘08
Residential Commercial/Ind. Institutional
Source: DODGE Construction Potentials Bulletin – August 2008
The Sherwin-Williams Company – 3rd Quarter 2008
8. U.S. Existing Home Sales
Seasonally Adjusted
8,000 30%
% Change over Previous Year
7,000
20%
Sales in Thousands of Units
6,000
10%
5,000
4,000 0%
3,000
-10%
2,000
-20%
1,000
0 -30%
. Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun
-01 -01 -02 -02 -03 -03 -04 -04 -05 -05 -06 -06 -07 -07 -08
Source: National Association of Realtors
The Sherwin-Williams Company – 3rd Quarter 2008
9. U.S. Architectural Coatings
Gallons in Millions
DIY
DIY
PC 39%
PC
51% DIY
49% 61%
42%
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 – 3rd Quarter 2008
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 – 3rd Quarter 2008
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 – 3rd Quarter 2008
12. Company Overview
Financial Highlights
2007 2006
Net Sales $8,005M $7,810M
EBITDA $1,148M $1,050M
Income $616M $576M
% Sales 7.7% 7.4%
Earnings Per Share $4.70 $4.19
Net Operating Cash $875M $816M
Dividend Per Share $1.26 $1.00
Return on Assets 12.7% 11.5%
The Sherwin-Williams Company – 3rd Quarter 2008
13. Company Overview
Revenue & Profit by Segment - 2007
Consumer
Sales: $1.31 Billion
Profit: $224.2 Million
Paint Stores Profit %: 17.1
Global
Sales: $4.96 Billion
Sales: $1.73 Billion
Profit: $767 Million
Profit: $160.7 Million
Profit %: 15.5
Profit %: 9.3
Controlled Distribution Accounts for 75% of Sales
The Sherwin-Williams Company – 3rd Quarter 2008
14. Diversified Customer Base
Residential-Commercial-Industrial
Special Purpose Coatings
Architectural Coatings OEM Finishes
• Residential DIY • Kitchen Cabinets
• Industrial Maintenance
• Residential Repaint (Pro) • Residential Furniture
• Traffic Marking
• New Residential • Office Furniture
• Automotive Refinish
• New Commercial &
• Wood Building Products
• Marine
Institutional
• Metal Building Products
• Aerosol Paints
• Property Maintenance
• Miscellaneous
• Architects & Designers • Heavy Equipment
• Electronics
• Military
The Sherwin-Williams Company – 3rd Quarter 2008
15. Controlled Distribution
Competitive Advantages
• Direct Relationship with
Customer / End-User
• Control Over Brands, Pricing,
Inventory, Staffing
• Control Pace and Place of
Growth
The Sherwin-Williams Company – 3rd Quarter 2008
16. Controlled Distribution
Top 10 Paint Store Chains – North America
2008 Est. 2002 Est.
3,308 2,643
ICI/Glidden 638 718
PPG 450 250
Comex/Pro Paint, Inc. 397 308
Kelly-Moore 165 160
2,050 1,807
Benjamin Moore 70 68
Cloverdale/Rodda 102 101
Dunn Edwards 103 71
Diamond Vogel 79 85
Vista 46 46
Gap: +1,258 +836
Source: Company Websites, Rauch Guide, Chain Store Guide, Independent Research
The Sherwin-Williams Company – 3rd Quarter 2008
17. Controlled Distribution
Global Group
• Company-Operated Branches
for Architectural, Automotive
and OEM Finishes
• Added 22 Net New Locations
YTD 2008 for a Total of 541
Branches
The Sherwin-Williams Company – 3rd Quarter 2008
18. Channel-Brand Strategy
Leading Brands by Category and Channel
PAINT STORES GROUP CONSUMER GROUP
Paint Dealer/ Mass Merchant/
Sherwin-Williams
Specialty
Hardware Department
Paint Store
Paint
Aerosols
Wood Care
Applicators
The Sherwin-Williams Company – 3rd Quarter 2008
20. Leading Technology
New Product Development
• Productivity Enhancing
• Sustainability
• Color Technology
• Safety and Security
The Sherwin-Williams Company – 3rd Quarter 2008
21. People Development & Retention
Recognized Employer of Choice
The Princeton
Review
“Best Entry Level
Jobs”
2005, 2006, 2007
& 2008
FORTUNE
BusinessWeek
“100 Best Companies
“100 Best Places to
to Work For”
Launch A Career”
2007 & 2008 2005, 2006 & 2008
The Sherwin-Williams Company – 3rd Quarter 2008
22. People Development & Retention
Successful Recruiting Effort
New MTP Hires in 2007:
• Paint Stores Group 707
• Automotive Finishes 55
• Chemical Coatings Division 18
• Paint & Coatings Division 2
Total 782
The Sherwin-Williams Company – 3rd Quarter 2008
23. People Development & Retention
Voluntary Turnover
Manager 4.4%
Assistant Mgr. 9.3%
Sales Rep 6.9%
The Sherwin-Williams Company – 3rd Quarter 2008
24. Growth by Acquisition
• Completed 7 Transactions in 2007 for a Total Investment of $282 Million
Generating Over $258 Million in Sales
• Completed 13 Transactions Over Last Five Years for a Total Investment of
$940 Million Generating Over $870 Million in Sales
The Sherwin-Williams Company – 3rd Quarter 2008
32. Summary
• Sherwin-Williams Investment Rationale
– Diversified Customer Base
– Controlled Distribution
– Channel/Brand Strategy
– Leading Technology
– People Development & Retention
– Growth from Acquisitions
– Financial Strength
The Sherwin-Williams Company – 3rd Quarter 2008
