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SHW_IR_Slides_5_08 SHW_IR_Slides_5_08 Presentation Transcript

  • Christopher M. Connor Sean P. Hennessy Chairman & CEO Senior Vice President, Finance & CFO Robert J. Wells Vice President, Corporate Communications & Public Affairs
  • 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 .
  • 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
  • Coatings Industry Global Demand United States 26% Latin America 11% Europe 32% Asia Pacific 23% Canada 4% Other 4% Source: U.S. Census Bureau, July 2007/CHEMARK 7.3 Billion Gallons 81 Billion Dollars
  • Coatings Industry Top Manufacturers Source: Coatings World 1 Sherwin-Williams 2 PPG 3 Valspar 4 Masco 5 ICI 6 DuPont 7 RPM 8 Comex 9 Akzo Nobel 10 Benjamin Moore 1 Akzo Nobel/ICI 2 PPG/SigmaKalon 3 Sherwin-Williams 4 Dupont 5 Valspar 6 RPM 7 BASF 8 Kansai 9 Nippon 10 Sika Worldwide United States Source: Paint & Coatings Industry
  • U.S. Coatings Industry Sales ($) Mix by Category Source: U.S. Department of Commerce; Segment Percents Based on Dollars Architectural Coatings 48% Special Purpose 29% OEM Finishes 23% 2007 1.28 Billion Gallons 20.07 Billion Dollars
  • U.S. Construction Market Annual Growth Rates by Market (sq. ft.) Source: McGraw-Hill Construction – spring 2008 % Increase/Decrease 2003 2004 2005 2006 2007e 2008f
  • U.S. Existing Home Sales Seasonally Adjusted Source: National Association of Realtors Sales in Thousands of Units % Change over Previous Year
  • U.S. Architectural Coatings Gallons in Millions Source: U.S. Dept of Commerce MA28F Report/Internal Estimates
  • DIY Channel Share, U.S. Most Recent Purchase by Store Type Source: Proprietary Paint Industry Data, S-W Marketing 2007
  • Contractor Channel Share, U.S. Primary Outlet by Store Type Source: National Marketing Measures: 2007 2007
  • Company Overview Financial Highlights 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 Net Operating Cash $875M $816M Dividend Per Share $1.26 $1.00 Return on Assets 12.7% 11.5% 2007 2006
  • Company Overview Revenue & Profit by Segment - 2007 Sales: $4.96 Billion Profit: $767 Million Profit %: 15.5% Sales: $1.31 Billion Profit: $224.2 Million Profit %: 17.1% Sales: $1.73 Billion Profit: $160.7 Million Profit %: 9.3% Paint Stores Global Consumer Controlled Distribution Accounts for 75% of Sales
  • Diversified Customer Base Residential-Commercial-Industrial
    • Architectural Coatings
    • Residential DIY
    • Residential Repaint (Pro)
    • New Residential
    • New Commercial &
    • Institutional
    • Property Maintenance
    • Architects & Designers
    • Special Purpose Coatings
    • Industrial Maintenance
    • Traffic Marking
    • Automotive Refinish
    • Marine
    • Aerosol Paints
    • Miscellaneous Special
    • Purpose
    • OEM Finishes
    • Kitchen Cabinets
    • Residential Furniture
    • Office Furniture
    • Wood Building Products
    • Metal Building Products
    • Heavy Equipment
    • Electronics
    • Military
  • Controlled Distribution Competitive Advantages
    • Direct Relationship with
    • Customer / End-User
    • Control Over Brands, Pricing,
    • Inventory, Staffing
    • Control Pace and Place of
    • Growth
    • 3,325 2,643
    • ICI/Glidden 662 718
    • PPG 450 250
    • Comex/Pro Paint, Inc. 372 308
    • Kelly-Moore 164 160
    • Benjamin Moore 154 68
    • Cloverdale/Rodda 109 101
    • Dunn Edwards 83 71
    • Diamond Vogel 77 85
    • Vista 46 46
    • Gap: +1,208 +836
    Source: Company Websites, Rauch Guide & Chain Store Guide Controlled Distribution Top 10 Paint Store Chains – North America 2007 Est. 2002 Est. 2,117 1,807
  • Controlled Distribution Global Group
    • Company-Operated Branches
    • for Architectural, Automotive
    • and OEM Finishes
    • Added 50 Net New Locations
    • in 2007 for a Total of 519
    • Branches
  • Channel-Brand Strategy Leading Brands by Category and Channel Paint Aerosols Wood Care Applicators Sherwin-Williams Paint Store Paint Dealer/ Hardware Mass Merchant/ Department Specialty PAINT STORES GROUP CONSUMER GROUP
  • Leading Technology Total Technical Expenditures $ Millions % of Sales 1.3 1.3 1.5 1.6 1.6 1.7 1.7 1.6 1.5 1.3 1.3 1.3
  • Leading Technology New Product Development
    • Productivity Enhancing
    • Sustainability
    • Color Technology
    • Safety and Security
  • People Development & Retention Recognized Employer of Choice FORTUNE “ 100 Best Companies to Work For” 2005, 2006 & 2008 The Princeton Review “ Best Entry Level Jobs” 2005, 2006, 2007 & 2008 BusinessWeek “ 100 Best Places to Launch A Career” 2007 & 2008
  • 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
  • Manager 4.4% Assistant Mgr. 9.3% Sales Rep 6.9% People Development & Retention Voluntary Turnover
  • 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 $870 Million in Sales
  • Consolidated Gross Profit
  • Selling, General & Admin Expense
  • Working Capital Ratio (Accounts Receivable + Inventory – Payables)/Sales 16.3% 13.8% 11.5% 11.0% 13.8% 12.5% 11.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2000 2001 2002 2003 2004 2005 2006 2007 12.7%
  • Net Operating Cash
    • Uses of Cash
    • Acquisitions
    • Capital Expenditures
    • Buy Back Stock
    • Manage Debt
    • Pay Dividends
    ($ in Millions) 558.9 544.7 716.7 351.7 340.9 460.0 460.0 815.8 874.8 546.6
  • Stock Repurchase Avg. Common Shares Outstanding 156.9 152.4 147.0 144.7 141.1 137.3 130.9 122.1 (fully diluted / in millions) (1Q)
  • Debt : EBITDA Ratio 678 745 848 1047 1148 514 738 621 875 965 0 500 1000 1500 2003 2004 2005 2006 2007 Debt EBITDA ($ in Millions) 76% 99% 73% 83% 84%
  • Dividends Per Share 1979 – 2008E
  • Summary
    • Sherwin-Williams Investment Rationale
      • Diversified Customer Base
      • Controlled Distribution
      • Channel/Brand Strategy
      • Leading Technology
      • People Development & Retention
      • Growth from Acquisitions
      • Financial Strength