Sherwin Williams Q4 2025 The Sherwin-Williams Co Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 The Sherwin-Williams Co Earnings Call
Speaker #2: Good morning. Thank you for joining the Sherwin-Williams Company's review of fourth quarter and full year 2025 results and our outlook for the first quarter and full year of 2026.
Operator: Good morning. Thank you for joining the Sherwin-Williams Company's review of Q4 and full year 2025 results, and our outlook for the Q1 and full year of 2026. With us on today's call are Heidi Petz, Chair, President, and Chief Executive Officer; Ben 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 in listen-only mode by Access Newswire via the Internet at www.sherwin.com. An archive replay of this webcast will be available at www.sherwin.com, beginning approximately 2 hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under the US Federal Securities laws with respect to sales, earnings, and other matters.
Operator: Good morning. Thank you for joining the Sherwin-Williams Company's review of Q4 and full year 2025 results, and our outlook for the Q1 and full year of 2026. With us on today's call are Heidi Petz, Chair, President, and Chief Executive Officer; Ben 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 in listen-only mode by Access Newswire via the Internet at www.sherwin.com. An archive replay of this webcast will be available at www.sherwin.com, beginning approximately 2 hours after this conference call concludes. This conference call will include certain forward-looking statements as defined under the US Federal Securities laws with respect to sales, earnings, and other matters.
Speaker #2: today's call are Heidi With us on Petz, Chair, President, and Chief Executive Officer; Ben Meisenthal, Chief Financial Officer; Paul Lang, Chief Accounting Officer; and Jim Jay, Senior Vice President, Investor Relations and Communications.
Speaker #2: This conference call is being webcast simultaneously and listen-only mode by access newswire via the internet at www.sherwin.com. An archive replay of this website will be available at www.sherwin.com beginning approximately two hours after this conference call concludes.
Speaker #2: will include certain forward-looking statements This conference call as defined under the 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 statement, whether it is a result of new information, future events, or otherwise.
Operator: 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 it is a result of new information, future events, or otherwise. A full declaration 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 James Jaye.
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 it is a result of new information, future events, or otherwise. A full declaration 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 James Jaye.
Speaker #2: declaration regarding forward-looking statements is A full provided in a company's earnings release, transmitted earlier this morning. After the company's prepared remarks, we will open the session to questions.
Speaker #2: I will now turn the call over to Jim Jay.
Speaker #3: Thank you, and good morning to everyone. Sherwin-Williams ended the year with strong fourth quarter results. Driven by solid core performance, an inclusive of the first full quarter of the souvenil acquisition.
Jim Jaye: Thank you, and good morning to everyone. Sherwin-Williams ended the year with strong fourth quarter results, driven by solid core performance and inclusive of the first full quarter of the Suvinil acquisition. Consolidated sales in the fourth quarter increased by a mid-single-digit percentage, inclusive of a low single-digit contribution from Suvinil. Reported gross margin was flattish year-over-year, but expanded, excluding the dilutive impact of the Suvinil acquisition. SG&A, as a percent of sales, decreased year-over-year, including severance, other restructuring expenses, and Suvinil, reflecting our disciplined, ongoing cost control measures. Adjusted diluted net income per share in the quarter increased by 6.7%. Adjusted EBITDA in the quarter grew 13.4% and expanded 120 basis points to 17.7% as a percent of sales. Free cash flow conversion in the quarter was 90.1%.
Jim Jaye: Thank you, and good morning to everyone. Sherwin-Williams ended the year with strong fourth quarter results, driven by solid core performance and inclusive of the first full quarter of the Suvinil acquisition. Consolidated sales in the fourth quarter increased by a mid-single-digit percentage, inclusive of a low single-digit contribution from Suvinil. Reported gross margin was flattish year-over-year, but expanded, excluding the dilutive impact of the Suvinil acquisition. SG&A, as a percent of sales, decreased year-over-year, including severance, other restructuring expenses, and Suvinil, reflecting our disciplined, ongoing cost control measures. Adjusted diluted net income per share in the quarter increased by 6.7%. Adjusted EBITDA in the quarter grew 13.4% and expanded 120 basis points to 17.7% as a percent of sales. Free cash flow conversion in the quarter was 90.1%.
Speaker #3: Consolidated sales in the fourth quarter increased by a mid-single-digit percentage, inclusive of a low single-digit contribution from Souvenil. Reported gross margin was flattish year over year.
Speaker #3: excluding the dilutive impact of the But expanded, souvenil acquisition. SG&A, as a percent of sales, decreased year over year, including severance and other restructuring expenses, and souvenil, reflecting our disciplined ongoing cost control measures.
Speaker #3: net income per share in the quarter increased Adjusted diluted by 6.7%. Adjusted EBITDA in the quarter grew 13.4% and expanded 120 basis points to 17.7% as a percent of sales.
Speaker #3: Free cash flow conversion in the quarter was 90.1%. In terms of our segments in the fourth quarter, paint stores group sales increased in the range we expected.
Jim Jaye: In terms of our segments in the Q4, Paint Stores Group sales increased in the range we expected, led by high single-digit growth in Protective and Marine against a high single-digit comp. Residential repaint remained solid, and growth was just slightly below the mid-single-digit range and also against a high single-digit comp. Group sales included positive low single-digit price mix, partially offset by a low single-digit decrease in volume. Segment margin expanded 90 basis points to 20.8%. Consumer Brands Group sales exceeded our expectations. Sales from the Suvinil acquisition and positive low single-digit FX were partially offset by price mix and volume, both of which were down less than a percentage point. Sales in the underlying business, excluding Suvinil, were essentially flat, which was better than we expected and drove the top line beat.
In terms of our segments in the Q4, Paint Stores Group sales increased in the range we expected, led by high single-digit growth in Protective and Marine against a high single-digit comp. Residential repaint remained solid, and growth was just slightly below the mid-single-digit range and also against a high single-digit comp. Group sales included positive low single-digit price mix, partially offset by a low single-digit decrease in volume. Segment margin expanded 90 basis points to 20.8%. Consumer Brands Group sales exceeded our expectations. Sales from the Suvinil acquisition and positive low single-digit FX were partially offset by price mix and volume, both of which were down less than a percentage point. Sales in the underlying business, excluding Suvinil, were essentially flat, which was better than we expected and drove the top line beat.
Speaker #3: Led by high single-digit growth in protective and marine, against a high single-digit comp. Residential repaint remained solid and growth was just slightly below the mid-single-digit range, and also against a high single-digit comp.
Speaker #3: positive low single-digit price mix partially offset by a Group sales included low single-digit decrease in volume. Segment margin expanded 90 basis points to 20.8%.
Speaker #3: Consumer brands group sales exceeded our expectations. Sales from the souvenil acquisition and positive low single-digit FX were partially offset by price mix and volume.
Speaker #3: Both of which were down less than a percentage point. Sales in the underlying business, excluding souvenil, were essentially flat, which was better than we expected, and drove the top line beat.
Jim Jaye: Adjusted segment margin decreased, including a negative impact from Suvinil and related transaction closing costs and purchase accounting items. Adjusted segment margin increased excluding these impacts. Within Performance Coatings Group, sales were at the high end of expectations, led by strength in packaging and auto refinish. Adjusted segment margin improved 150 basis points to 19%, driven by new business wins, as well as good control of SG&A, which was down mid-single digits. We also continued our strong cost control efforts within the administrative segment, where SG&A was down a low single-digit percentage in the quarter, including one-time restructuring costs of approximately $2 million. Excluding these restructuring costs and the non-annualized new building operating costs, administrative SG&A was down by a low teens percentage, improving on Q3 results that were down low double digits, demonstrating our continued tight management of G&A costs.
Adjusted segment margin decreased, including a negative impact from Suvinil and related transaction closing costs and purchase accounting items. Adjusted segment margin increased excluding these impacts. Within Performance Coatings Group, sales were at the high end of expectations, led by strength in packaging and auto refinish. Adjusted segment margin improved 150 basis points to 19%, driven by new business wins, as well as good control of SG&A, which was down mid-single digits. We also continued our strong cost control efforts within the administrative segment, where SG&A was down a low single-digit percentage in the quarter, including one-time restructuring costs of approximately $2 million. Excluding these restructuring costs and the non-annualized new building operating costs, administrative SG&A was down by a low teens percentage, improving on Q3 results that were down low double digits, demonstrating our continued tight management of G&A costs.
Speaker #3: margin decreased including a negative Adjusted segment impact from souvenil, and related transaction closing costs and purchase accounting items. Adjusted segment margin increased excluding these impacts.
Speaker #3: Within performance coatings group, sales were at the high end of expectations. Led by strength in packaging and auto refinish. Adjusted segment margin improved 150 basis points to 19%.
Speaker #3: Driven by new business wins as well as good control of SG&A, which was down mid-single digits. We also continued our strong cost control efforts within the administrative segment, where SG&A was down a low single-digit percentage in the quarter.
Speaker #3: Including one-time restructuring costs of approximately $2 million. Excluding these restructuring costs and the non-annualized new building operating costs, administrative SG&A was down by a low teens percentage.
Speaker #3: on third quarter results that were down low Improving double digits. Demonstrating our continued tight management of G&A costs. The slide deck accompanying our press release this morning provides more detail on fourth quarter segment results.
Jim Jaye: The slide deck accompanying our press release this morning provides more detail on Q4 segment results. Let me now turn it over to Heidi, who will provide a few full year highlights before moving on to our 2026 outlook and your questions.
The slide deck accompanying our press release this morning provides more detail on Q4 segment results. Let me now turn it over to Heidi, who will provide a few full year highlights before moving on to our 2026 outlook and your questions.
Speaker #3: Let me now turn it over to Heidi, who will provide a few full-year highlights before moving on to our 2026 outlook and your
Speaker #3: questions. Thank you, Jim, and good
Heidi Petz: Thank you, Jim, and good morning. I want to start by thanking our 65,000 global employees for their dedication and determination to deliver a solid year during one of the more challenging operating environments our company has seen. Sherwin-Williams celebrates 160 years in 2026, and it's because of our employees and our culture that we're able to deliver sustainable results through all types of cycles. Our team continues to execute our playbook while finding new ways to help our customers become more productive and more profitable. I'm proud of what our team accomplished in 2025. At this time last year, we talked about the potential for a softer for longer demand environment, and that is exactly what we saw play out, as there was no meaningful improvement in demand across our end markets.
Heidi Petz: Thank you, Jim, and good morning. I want to start by thanking our 65,000 global employees for their dedication and determination to deliver a solid year during one of the more challenging operating environments our company has seen. Sherwin-Williams celebrates 160 years in 2026, and it's because of our employees and our culture that we're able to deliver sustainable results through all types of cycles. Our team continues to execute our playbook while finding new ways to help our customers become more productive and more profitable. I'm proud of what our team accomplished in 2025. At this time last year, we talked about the potential for a softer for longer demand environment, and that is exactly what we saw play out, as there was no meaningful improvement in demand across our end markets.
Speaker #4: morning. I want to start by thanking our 65,000 global employees for their dedication and determination to deliver a solid year during one of the more challenging operating environments our company has seen.
Speaker #4: Sherwin-Williams celebrates 160 years in 2026. And it's because of our employees and our culture that we're able to deliver sustainable results through all types of cycles.
Speaker #4: Our team continues to execute our playbook, while finding new ways to help our customers become more productive and more profitable. I'm proud of what our team accomplished in 2025.
Speaker #4: At this time last year, we talked about the potential for a softer, for longer demand environment. And that is exactly what we saw play out.
Speaker #4: As there was no meaningful improvement in demand across our end markets. Our team refused to wait for the market. And instead focused on creating opportunities and controlling what we could control.
Heidi Petz: Our team refused to wait for the market and instead focused on creating opportunities and controlling what we could control. We stayed true to our strategy, made targeted investments, focused on share gains, and executed on our enterprise priorities. We continued to deliver innovative solutions for our customers, and in a disruptive competitive environment, Sherwin-Williams stood out by being a consistent, reliable, and dependable partner. Our success by design approach resulted in our team delivering record full-year consolidated sales and record adjusted diluted earnings per share. Gross profit dollars and gross margin expanded. Adjusted EBITDA dollars and Adjusted EBITDA margin also expanded. It was also another very strong year for cash generation, with net operating cash growing 9.4% to $3.5 billion, or 14.6% of sales.
Our team refused to wait for the market and instead focused on creating opportunities and controlling what we could control. We stayed true to our strategy, made targeted investments, focused on share gains, and executed on our enterprise priorities. We continued to deliver innovative solutions for our customers, and in a disruptive competitive environment, Sherwin-Williams stood out by being a consistent, reliable, and dependable partner. Our success by design approach resulted in our team delivering record full-year consolidated sales and record adjusted diluted earnings per share. Gross profit dollars and gross margin expanded. Adjusted EBITDA dollars and Adjusted EBITDA margin also expanded. It was also another very strong year for cash generation, with net operating cash growing 9.4% to $3.5 billion, or 14.6% of sales.
Speaker #4: We stayed true to our strategy, made targeted investments, focused on share gains, and executed on our enterprise priorities. We continued to deliver innovative solutions for our customers, and in a disruptive competitive environment, Sherwin-Williams stood out by being a consistent, reliable, and dependable partner.
Speaker #4: Our success by design approach resulted in our team delivering record full-year consolidated sales and record adjusted diluted earnings per share. Gross profit dollars and gross margin expanded.
Speaker #4: Adjusted EBITDA dollars and adjusted EBITDA margin also expanded. It was also another very strong year for cash generation, with net operating cash growing 9.4% to $3.5 billion.
Speaker #4: Or 14.6% of sales. This percent of sales is right in the middle of the most recent target range that we've previously announced. Free cash flow was $2.7 billion.
Heidi Petz: This percent of sales is right in the middle of the most recent target range that we've previously announced. Free cash flow was $2.7 billion, and free cash flow conversion for the year was 59%. In terms of capital allocation, our policy remains consistent. We returned $2.5 billion to shareholders through share repurchases in our dividend, which we raised for the 47th consecutive year. We completed the acquisition of Suvinil, and we continued to make strategic CapEx investments, including our new global headquarters and Global Technology Center, which opened at the end of the year. We've been talking about these buildings for years, and we are thrilled that we are here. The move-in is going extremely well, and I'm confident that this will continue to strengthen our culture of collaboration, innovation, and winning together.
This percent of sales is right in the middle of the most recent target range that we've previously announced. Free cash flow was $2.7 billion, and free cash flow conversion for the year was 59%. In terms of capital allocation, our policy remains consistent. We returned $2.5 billion to shareholders through share repurchases in our dividend, which we raised for the 47th consecutive year. We completed the acquisition of Suvinil, and we continued to make strategic CapEx investments, including our new global headquarters and Global Technology Center, which opened at the end of the year. We've been talking about these buildings for years, and we are thrilled that we are here. The move-in is going extremely well, and I'm confident that this will continue to strengthen our culture of collaboration, innovation, and winning together.
Speaker #4: And free cash flow conversion for the year was 59%. In terms of capital allocation, our policy remains consistent. We returned 2.5 billion to shareholders through share repurchases in our dividend, which we raised for the 47th consecutive year.
Speaker #4: We completed the acquisition of Souvenil, and we continued to make strategic CapEx investments, including our new global headquarters and global technology center. Which opened at the end of the year.
Speaker #4: We've been talking about these buildings for years, and we are thrilled that we are here. The move-in is going extremely well, and I'm confident that this will continue to strengthen our culture of collaboration, innovation, and winning together.
Speaker #4: All in, we ended 2025 with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.3 times. Looking at our reportable segments on a full-year basis, paint stores grew sales by a low single-digit percentage.
Heidi Petz: All in, we ended 2025 with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.3 times. Looking at our reportable segments on a full year basis, paint stores grew sales by a low single-digit percentage. Protective and Marine increased by high single digits. Residential repaint increased by mid-single digits, and for the third year in a row, meaningfully outperformed the market, where existing home sales remained soft. Low single-digit growth in commercial reflects share gains and above-market performance, as multifamily completions were down significantly during the year. Share gains are also evident in property maintenance and new residential, both of which were flattish in a down market characterized by muted CapEx spending, high rates, and affordability challenges. Segment margin increased, reflecting operating leverage and solid returns on our investments. We also added 80 net new stores and 87 net new sales territories.
All in, we ended 2025 with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.3 times. Looking at our reportable segments on a full year basis, paint stores grew sales by a low single-digit percentage. Protective and Marine increased by high single digits. Residential repaint increased by mid-single digits, and for the third year in a row, meaningfully outperformed the market, where existing home sales remained soft. Low single-digit growth in commercial reflects share gains and above-market performance, as multifamily completions were down significantly during the year. Share gains are also evident in property maintenance and new residential, both of which were flattish in a down market characterized by muted CapEx spending, high rates, and affordability challenges. Segment margin increased, reflecting operating leverage and solid returns on our investments. We also added 80 net new stores and 87 net new sales territories.
Speaker #4: Protective and Marine increased by high single digits. Residential Repaint increased by mid-single digits. And for the third year in a row, meaningfully outperformed the market, where existing home sales remained soft.
Speaker #4: Low single-digit growth in commercial reflects share gains and above-market performance. As multifamily completions were down significantly during the year. Share gains are also evident in property maintenance and new residential, both of which were flattish in a down market characterized by muted CapEx spending, high rates, and affordability challenges.
Speaker #4: Segment margin increased, reflecting operating leverage and solid returns on our investments. We also added 80 net new stores and 87 net new sales territories.
Speaker #4: Consumer brands' full-year sales grew by a low single-digit percentage, driven by the Souvenil acquisition, as underlying sales decreased by low single digits, resulting from soft DIY demand in North America and unfavorable FX.
Heidi Petz: Consumer Brands full-year sales grew by a low single-digit percentage, driven by the Suvinil acquisition, as underlying sales decreased by low single digits, resulting from soft DIY demand in North America and unfavorable FX. Adjusted segment margin decreased, including a negative impact from Suvinil, as we previously described, as well as lower production in the segment's manufacturing operations to match softer demand, resulting in lower fixed cost absorption. Performance Coatings full year sales varied by division and geography and were flat overall, which outpaced a very challenging industrial demand backdrop. Acquisitions added a low single-digit percentage in the year, and FX was a slight tailwind, but these were offset by unfavorable price mix. Packaging grew at the high end of high single digits as we continued to win new business globally, including those complying with new non-BPA coating requirements.
Consumer Brands full-year sales grew by a low single-digit percentage, driven by the Suvinil acquisition, as underlying sales decreased by low single digits, resulting from soft DIY demand in North America and unfavorable FX. Adjusted segment margin decreased, including a negative impact from Suvinil, as we previously described, as well as lower production in the segment's manufacturing operations to match softer demand, resulting in lower fixed cost absorption. Performance Coatings full year sales varied by division and geography and were flat overall, which outpaced a very challenging industrial demand backdrop. Acquisitions added a low single-digit percentage in the year, and FX was a slight tailwind, but these were offset by unfavorable price mix. Packaging grew at the high end of high single digits as we continued to win new business globally, including those complying with new non-BPA coating requirements.
Speaker #4: Adjusted segment margin decreased, including a negative impact from Souvenil, as we previously described, as well as lower production in the segment's manufacturing operations to match softer demand, resulting in lower fixed cost absorption.
Speaker #4: Performance coatings' full-year sales varied by division angiography and were flat overall, which outpaced a very challenging industrial demand backdrop. Acquisitions added a low single-digit percentage in the year, and FX was a slight tailwind.
Speaker #4: But these were offset by unfavorable price mix. Packaging grew at the high end of high single digits, as we continued to win new business globally, including those complying with new non-BPA coating requirements.
Speaker #4: Auto refinish was flat for the year, with share gains becoming more evident in the second half, where sales were up mid-single digits. Coil sales decreased by low single digits, as meaningful new account wins were not enough to offset steel tariff impacts.
Heidi Petz: Auto Refinish was flat for the year, with share gains becoming more evident in the second half, where sales were up mid-single digits. Coil sales decreased by low single digits as meaningful new account wins were not enough to offset steel tariff impacts. Industrial Wood and General Industrial each decreased by low single digits, driven by soft housing and industrial markets, respectively. Adjusted segment margin remained in our high teens target range, but was impacted by unfavorable geographic mix as Europe grew by mid-single digits, while other regions were down low single digits. As we close out 2025, I'm also pleased to share that we are reinstating our 401(k) matching program for eligible US employees, effective February 1. We'll also be restoring the matching contributions that have been paused since October 1 by the end of our Q1.
Auto Refinish was flat for the year, with share gains becoming more evident in the second half, where sales were up mid-single digits. Coil sales decreased by low single digits as meaningful new account wins were not enough to offset steel tariff impacts. Industrial Wood and General Industrial each decreased by low single digits, driven by soft housing and industrial markets, respectively. Adjusted segment margin remained in our high teens target range, but was impacted by unfavorable geographic mix as Europe grew by mid-single digits, while other regions were down low single digits. As we close out 2025, I'm also pleased to share that we are reinstating our 401(k) matching program for eligible US employees, effective February 1. We'll also be restoring the matching contributions that have been paused since October 1 by the end of our Q1.
Speaker #4: Industrial wood and general industrial each decreased by low single digits, driven by soft housing and industrial markets, respectively. Adjusted segment margin remained in our high teens target range, but was impacted by unfavorable geographic mix as Europe grew by mid-single digits, while other regions were down low single digits.
Speaker #4: As we close out 2025, I'm also pleased to share that we are reinstating our 401(k) matching program for eligible U.S. employees effective February 1st.
Speaker #4: We'll also be restoring the matching contributions that have been paused since October 1st by the end of our first quarter. As I described last quarter, the decision to pause the company match was made after we had implemented multiple cost-savings initiatives, and significant restructuring actions, driven by multi-year demand and macroeconomic uncertainty.
Heidi Petz: As I described last quarter, the decision to pause the company match was made after we had implemented multiple cost savings initiatives and significant restructuring actions, driven by multiyear demand and macroeconomic uncertainty. Given what we anticipated back in July, and with the prospect of additional risks materializing, we faced a difficult decision, either pursue further workforce reductions or temporarily pause the 401(k) company match. While many companies chose widespread layoffs, we chose a different path. We chose to protect jobs, retain talent, and invest in the long-term health of the organization by keeping our teams intact. We also committed to restoring the match as soon as performance allowed, just as we have done in the past. Our teams responded exactly as strong teams do.
As I described last quarter, the decision to pause the company match was made after we had implemented multiple cost savings initiatives and significant restructuring actions, driven by multiyear demand and macroeconomic uncertainty. Given what we anticipated back in July, and with the prospect of additional risks materializing, we faced a difficult decision, either pursue further workforce reductions or temporarily pause the 401(k) company match. While many companies chose widespread layoffs, we chose a different path. We chose to protect jobs, retain talent, and invest in the long-term health of the organization by keeping our teams intact. We also committed to restoring the match as soon as performance allowed, just as we have done in the past. Our teams responded exactly as strong teams do.
Speaker #4: Given what we anticipated back in July, and with the prospect of additional risks materializing, we faced a difficult decision, either pursue further workforce reductions or temporarily pause the 401(k) company match.
Speaker #4: While many companies chose widespread layoffs, we chose a different path. We chose to protect jobs, retain talent, and invest in the long-term health of the organization by keeping our teams intact.
Speaker #4: We also committed to restoring the match as soon as performance allowed, just as we have done in the past. Our teams responded exactly as strong teams do.
Speaker #4: We elevated our performance and focused on controlling what we could control, including winning new business, growing share of wallet, pricing discipline, and accelerating further cost reductions.
Heidi Petz: We elevated our performance and focused on controlling what we could control, including winning new business, growing share of wallet, pricing discipline, and accelerating further cost reductions. We demonstrated what truly differentiates Sherwin-Williams. At the same time, some of the risks that we saw in July did not materialize or were less severe than expected, including the delayed realization of some tariff impacts. The combination of all these factors is enabling us to both resume and retroactively restore the match sooner than originally anticipated. Now, moving on to our 2026 guidance. The demand environment feels much like it did a year ago. The softer for longer dynamic we described again back in October remains intact. While some conditions are gradually becoming more stable, many of the indicators we track, along with cautious consumer sentiment, provide little support for any broad-based or accelerated recovery at this time.
We elevated our performance and focused on controlling what we could control, including winning new business, growing share of wallet, pricing discipline, and accelerating further cost reductions. We demonstrated what truly differentiates Sherwin-Williams. At the same time, some of the risks that we saw in July did not materialize or were less severe than expected, including the delayed realization of some tariff impacts. The combination of all these factors is enabling us to both resume and retroactively restore the match sooner than originally anticipated. Now, moving on to our 2026 guidance. The demand environment feels much like it did a year ago. The softer for longer dynamic we described again back in October remains intact. While some conditions are gradually becoming more stable, many of the indicators we track, along with cautious consumer sentiment, provide little support for any broad-based or accelerated recovery at this time.
Speaker #4: We demonstrated what truly differentiates Sherwin-Williams. At the same time, some of the risks that we saw in July did not materialize or were less severe than expected, including the delayed realization of some tariff impacts.
Speaker #4: The combination of all these factors is enabling us to both resume and retroactively restore the match sooner than originally anticipated. Now, moving on to our 2026 guidance, the demand environment feels much like it did a year ago.
Speaker #4: The softer-for-longer dynamic we described again back in October remains intact. While some conditions are gradually becoming more stable, many of the indicators we track, along with cautious consumer sentiment, provide little support for any broad-based or accelerated recovery at this time.
Speaker #4: This environment is likely to persist well into 2026. The slide deck issued with our press release lays out our key economic assumptions for 2026.
Heidi Petz: This environment is likely to persist well into 2026. The slide deck issued with our press release lays out our key economic assumptions for 2026. I'd also like to provide you with some additional color that informs our outlook. On the architectural side of the business, residential repaint remains our single biggest growth opportunity, and we have and will continue to make investments to win here. Demand remains difficult to predict, with industry forecasts for existing home sales growth varying widely from slightly down to up double digits. The mortgage rate lock-in effect remains real. Harvard's LIRA Index is projecting very modest growth, and select retailers have forecasted flattish home improvement growth as a base case. Additionally, consumer sentiment remains muted. These same dynamics also signal another potentially challenging year for DIY.
This environment is likely to persist well into 2026. The slide deck issued with our press release lays out our key economic assumptions for 2026. I'd also like to provide you with some additional color that informs our outlook. On the architectural side of the business, residential repaint remains our single biggest growth opportunity, and we have and will continue to make investments to win here. Demand remains difficult to predict, with industry forecasts for existing home sales growth varying widely from slightly down to up double digits. The mortgage rate lock-in effect remains real. Harvard's LIRA Index is projecting very modest growth, and select retailers have forecasted flattish home improvement growth as a base case. Additionally, consumer sentiment remains muted. These same dynamics also signal another potentially challenging year for DIY.
Speaker #4: I'd also like to provide you with some additional color that informs our outlook. On the architectural side of the business, residential repaint remains our single biggest growth opportunity, and we have and will continue to make investments to win here.
Speaker #4: Demand remains difficult to predict with industry forecasts for existing home sales growth varying up double digits. The widely, from slightly down to mortgage rate lock-in effect remains real.
Speaker #4: Harvard's LIRA index is projecting very modest growth, and select retailers have forecasted flattish home improvement growth as a base case. Additionally, consumer sentiment remains muted.
Speaker #4: These same dynamics also signal another potentially challenging year for DIY. We expect the new residential market to be down at least in the mid-single-digit range this year, given negative single-family starts over the back half of 2025, and many forecasters' expectations for further softening in 2026.
Heidi Petz: We expect the new residential market to be down at least in the mid-single-digit range this year, given negative single-family starts over the back half of 2025 and many forecasters' expectations for further softening in 2026. National Association of Home Builders sentiment levels were notably negative exiting 2025, and mortgage rates remain in the 6+ range. We welcome meaningful economic and policy proposals to address affordability and increase supply, though these will take time to finalize, implement, and take effect. We expect to outperform the market as we continue strengthening our home builder customer relationships. In the commercial segment, the Architectural Billings Index has continued its long run of negative readings. We do see a bright spot in multifamily starts, which were positive for most of the second half of 2025.
We expect the new residential market to be down at least in the mid-single-digit range this year, given negative single-family starts over the back half of 2025 and many forecasters' expectations for further softening in 2026. National Association of Home Builders sentiment levels were notably negative exiting 2025, and mortgage rates remain in the 6+ range. We welcome meaningful economic and policy proposals to address affordability and increase supply, though these will take time to finalize, implement, and take effect. We expect to outperform the market as we continue strengthening our home builder customer relationships. In the commercial segment, the Architectural Billings Index has continued its long run of negative readings. We do see a bright spot in multifamily starts, which were positive for most of the second half of 2025.
Speaker #4: National Association of Home Builders sentiment levels were notably negative exiting 2025, and mortgage rates remain in the 6-plus range. We welcome meaningful economic and policy proposals to address affordability and increased supply, though these will take time to finalize, implement, and take effect.
Speaker #4: We expect to outperform the market as we continue strengthening our home builder customer relationships. In the commercial segment, the Architectural Billings Index has continued its long run of negative readings.
Speaker #4: We do see a bright spot in multifamily starts, which were positive for most of the second half of 2025. However, these starts won't turn to completions in painting until late this year and into 2027.
Heidi Petz: However, these starts won't turn to completions and painting until late this year and into 2027. We are pleased with the share gains we are making here, as demonstrated by our above-market growth over the second half of 2025, and which we expect will continue throughout 2026. Property maintenance CapEx spending still appears to be idling in neutral, though we are well positioned to capture pent-up demand when rates moderate. We expect flattish sales as we continue to grow our account base to help offset core softness. In Protective and Marine, the project pipeline remains solid, though the timing of starts and completions remain variable. We expect this business, along with residential repaint, to be the best sales performers in Paint Stores Group this year.
However, these starts won't turn to completions and painting until late this year and into 2027. We are pleased with the share gains we are making here, as demonstrated by our above-market growth over the second half of 2025, and which we expect will continue throughout 2026. Property maintenance CapEx spending still appears to be idling in neutral, though we are well positioned to capture pent-up demand when rates moderate. We expect flattish sales as we continue to grow our account base to help offset core softness. In Protective and Marine, the project pipeline remains solid, though the timing of starts and completions remain variable. We expect this business, along with residential repaint, to be the best sales performers in Paint Stores Group this year.
Speaker #4: We are pleased with the share gains we are making here as demonstrated by our above-market growth over the second half of 2025, and which we expect will continue throughout 2026.
Speaker #4: Property maintenance capex spending still appears to be idling in neutral, though we are well-positioned to capture pent-up demand when rates moderate. We expect flattish sales as we continue to grow our account base to help offset core softness.
Speaker #4: In Protective and Marine, the project pipeline remains solid, though the timing of starts and completions remains variable. We expect this business, along with Residential Repaint, to be the best sales performers in the Paint Stores Group this year.
Speaker #4: On the industrial side, the U.S. manufacturing PMI ended at its lowest point in the year in December after 10 months of contraction. Brazil and the Eurozone PMIs are also contracting.
Heidi Petz: On the industrial side, the US manufacturing PMI ended at its lowest point in the year in December, after ten months of contraction. Brazil and the Eurozone PMIs are also contracting. Optimism is easing in China, and the PMI there remains below its historical average. We see a 2026 backdrop where our core business remains flat at best, but strong new account wins from last year and this year, along with positive price mix, should drive low single-digit sales growth in Performance Coatings Group. We expect modest growth in auto refinish, driven by share gains and price mix, with the industry remaining flattish to down, given pressure on consumers and related softness of insurance claims. In coil, we expect flattish sales as the market remains under pressure related to steel tariffs. In packaging, share gains and our industry-leading non-BPA coatings should drive flattish sales against a tough double-digit comparison.
On the industrial side, the US manufacturing PMI ended at its lowest point in the year in December, after ten months of contraction. Brazil and the Eurozone PMIs are also contracting. Optimism is easing in China, and the PMI there remains below its historical average. We see a 2026 backdrop where our core business remains flat at best, but strong new account wins from last year and this year, along with positive price mix, should drive low single-digit sales growth in Performance Coatings Group. We expect modest growth in auto refinish, driven by share gains and price mix, with the industry remaining flattish to down, given pressure on consumers and related softness of insurance claims. In coil, we expect flattish sales as the market remains under pressure related to steel tariffs. In packaging, share gains and our industry-leading non-BPA coatings should drive flattish sales against a tough double-digit comparison.
Speaker #4: Optimism is easing in China, and the PMI there remains below its historical average. We see a 2026 backdrop where our core business remains flat at best, but strong new account wins from last year and this year, along with positive price mix, should drive low single-digit sales growth in the Performance Coatings Group.
Speaker #4: We expect modest growth in auto refinish, driven by share gains and price mix, with the industry remaining flattish to down given pressure on consumers and related softness of insurance claims.
Speaker #4: In coil, we expect flattish sales as the market remains under pressure related to steel tariffs. In packaging, share gains and our industry-leading non-DPA coatings should drive flattish sales against a tough double-digit comparison.
Speaker #4: Our industrial wood and general industrial divisions have the strongest new account growth in the group last year. We expect these wins to drive low single-digit growth in both of these divisions even as core demand remains very weak.
Heidi Petz: Our Industrial Wood and General Industrial divisions had the strongest new account growth in the group last year. We expect these wins to drive low single-digit growth in both of these divisions, even as core demand remains very weak. In summary, for the third year in a row, the market is not going to give us much help, and for the third year in a row, we expect to outperform the market and grow sales and earnings per share. We'll continue to remain extremely aggressive, with a focus on helping existing customers grow, as well as winning new business and converting share gains. I want to be very transparent here. We're providing guidance that we believe is very realistic, given this backdrop.
Our Industrial Wood and General Industrial divisions had the strongest new account growth in the group last year. We expect these wins to drive low single-digit growth in both of these divisions, even as core demand remains very weak. In summary, for the third year in a row, the market is not going to give us much help, and for the third year in a row, we expect to outperform the market and grow sales and earnings per share. We'll continue to remain extremely aggressive, with a focus on helping existing customers grow, as well as winning new business and converting share gains. I want to be very transparent here. We're providing guidance that we believe is very realistic, given this backdrop.
Speaker #4: In summary, for the third year in a row, the market is not going to give us much help. And for the third year in a row, we expect to outperform the market and grow sales and earnings per share.
Speaker #4: We'll continue to remain extremely aggressive with a focus on helping existing customers grow, as well as winning new business and converting share gains. I want to be very transparent here.
Speaker #4: We're providing guidance that we believe is very realistic given this backdrop. We are also confident that if the market is better than we're currently seeing, we would expect to outperform the guidance that we are providing to start the year.
Heidi Petz: We are also confident that if the market is better than we're currently seeing, we would expect to outperform the guidance that we are providing to start the year. The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for Q1 2026. The deck also includes our initial expectations for the full year, where consolidated sales are expected to be up a low- to mid-single-digit percentage, and diluted net income per share is expected to be in the range of $10.70 to $11.10 per share.
We are also confident that if the market is better than we're currently seeing, we would expect to outperform the guidance that we are providing to start the year. The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for Q1 2026. The deck also includes our initial expectations for the full year, where consolidated sales are expected to be up a low- to mid-single-digit percentage, and diluted net income per share is expected to be in the range of $10.70 to $11.10 per share.
Speaker #4: The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the first quarter of 2026. The deck also includes our initial expectations for the full year, where consolidated sales are expected to be up a low to mid-single-digit percentage and diluted net income per share is expected to be in the range of $10.70 to $11.10 per share.
Speaker #4: Excluding acquisition-related amortization expense of approximately $0.80 per share, adjusted diluted net income per share is expected in the range of $11.50 to $11.90, an increase of 2.4% at the midpoint compared to 2025's adjusted diluted net income per share of $11.43.
Heidi Petz: Excluding acquisition-related amortization expense of approximately $0.80 per share, Adjusted Diluted Net Income Per Share is expected in the range of $11.50 to $11.90, an increase of 2.4% at the midpoint compared to 2025's Adjusted Diluted Net Income Per Share of $11.43. I'll note that at the $11.70 midpoint, earnings growth will outpace the midpoint of our core sales growth, excluding the impact of Suvinil sales. Our slide deck contains several additional data points that provide important context that I'd also like to briefly address. Any comparisons described are year-over-year. From a sales perspective, I'll remind you that the Paint Stores Group implemented a 7% price increase effective January 1. Realization should be in the low single-digit range, given market dynamics and segment mix.
Excluding acquisition-related amortization expense of approximately $0.80 per share, Adjusted Diluted Net Income Per Share is expected in the range of $11.50 to $11.90, an increase of 2.4% at the midpoint compared to 2025's Adjusted Diluted Net Income Per Share of $11.43. I'll note that at the $11.70 midpoint, earnings growth will outpace the midpoint of our core sales growth, excluding the impact of Suvinil sales. Our slide deck contains several additional data points that provide important context that I'd also like to briefly address. Any comparisons described are year-over-year. From a sales perspective, I'll remind you that the Paint Stores Group implemented a 7% price increase effective January 1. Realization should be in the low single-digit range, given market dynamics and segment mix.
Speaker #4: I'll note that at the $11.70 midpoint, earnings growth will outpace the midpoint of our core sales growth, excluding the impact of souvenil sales. Our slide deck contains several additional data points that provide important context that I'd also like to briefly address.
Speaker #4: Any comparisons described are year over year. From a sales perspective, I'll remind you that the paint stores group implemented a 7% price increase effective January 1st.
Speaker #4: Realizations should be in the low single-digit range given market dynamics and segment mix. We are also implementing targeted price increases in specific areas with our other two reportable segments.
Heidi Petz: We are also implementing targeted price increases in specific areas with our other two reportable segments. We expect the market basket of raw materials to be up a low single-digit percentage in 2026, driven by tariffs, along with select commodities also inflating. We expect to overcome these raw material headwinds and deliver full-year gross margin expansion, given both incremental 2026 pricing and accelerated simplification efforts across our supply chain. We expect GAAP SG&A dollars to grow by a low single-digit percentage in 2026, inclusive of a low single-digit contribution from Suvinil. As we pointed out last quarter, interest expense will be up this year. This increase includes approximately $40 million related to the lease payments for our new global headquarters, and approximately $35 million of interest related to the $1.1 billion, one-year delayed draw term loan that we executed in September.
We are also implementing targeted price increases in specific areas with our other two reportable segments. We expect the market basket of raw materials to be up a low single-digit percentage in 2026, driven by tariffs, along with select commodities also inflating. We expect to overcome these raw material headwinds and deliver full-year gross margin expansion, given both incremental 2026 pricing and accelerated simplification efforts across our supply chain. We expect GAAP SG&A dollars to grow by a low single-digit percentage in 2026, inclusive of a low single-digit contribution from Suvinil. As we pointed out last quarter, interest expense will be up this year. This increase includes approximately $40 million related to the lease payments for our new global headquarters, and approximately $35 million of interest related to the $1.1 billion, one-year delayed draw term loan that we executed in September.
Speaker #4: We expect the market basket of raw materials to be up a low single-digit percentage in 2026, driven by tariffs along with select commodities also inflating.
Speaker #4: We expect to overcome these raw material headwinds and deliver full-year gross margin expansion given both incremental 2026 pricing and accelerated simplification efforts across our supply chain.
Speaker #4: We expect gap SG&A dollars to grow by a low single-digit percentage in 2026, inclusive of a low single-digit contribution from souvenil. As we pointed out last quarter, interest expense will be up this year.
Speaker #4: This increase includes approximately $40 million related to the lease payments for our new global headquarters and approximately $35 million of interest related to the $1.1 billion.
Speaker #1: $1 billion, a one-year delayed loan that draw term we executed in September. It also includes approximately $15 million in increased interest expense related to refinancing at higher rates.
Heidi Petz: It also includes approximately $15 million in increased interest expense related to refinancing at higher rates. We expect to end the year within our current long-term target debt to EBITDA leverage ratio of 2 to 2.5 times. We expect to open 80 to 100 net new stores in the US and Canada in 2026. We'll also continue adding sales reps and territories, accelerating innovation, and expanding our digital capabilities. Next month, at our Board of Directors meeting, we will recommend an annual dividend increase of 1.3% to $3.20 per share, up from $3.16 last year. If approved, this will mark the 48th consecutive year we've increased our dividend. We expect to continue making opportunistic share repurchases. We'll also continue to evaluate acquisitions that fit and accelerate our strategy.
It also includes approximately $15 million in increased interest expense related to refinancing at higher rates. We expect to end the year within our current long-term target debt to EBITDA leverage ratio of 2 to 2.5 times. We expect to open 80 to 100 net new stores in the US and Canada in 2026. We'll also continue adding sales reps and territories, accelerating innovation, and expanding our digital capabilities. Next month, at our Board of Directors meeting, we will recommend an annual dividend increase of 1.3% to $3.20 per share, up from $3.16 last year. If approved, this will mark the 48th consecutive year we've increased our dividend. We expect to continue making opportunistic share repurchases. We'll also continue to evaluate acquisitions that fit and accelerate our strategy.
Speaker #1: We expect to also include approximately $15 million in increased interest expense related to refinancing at higher rates. We expect to end the year within our current long-term target.
Speaker #1: Debt to EBITDA leverage ratio of 2 to 2 and a half times . We expect to open 80 to 100 net new stores in the US and Canada in 2026 .
Speaker #1: We'll also continue adding sales reps and territories , accelerating innovation and expanding our digital capabilities . Next month at our Board of Directors meeting , we will recommend an annual increase dividend of 1.3% to $3.20 per share , up from $3.16 last If this will 48th mark the consecutive year approved , year .
Speaker #1: We've increased our dividend and continue making opportunistic share repurchases. We'll also continue to evaluate acquisitions that fit our strategy and, in addition, accelerate our slide deck.
Heidi Petz: In addition, our slide deck provides guidance on our expectations for currency exchange, effective tax rate, CapEx, depreciation, and amortization. Finally, I'll remind you that as our Q1 is a seasonally smaller one, we do not plan to make any updates to full year guidance, up or down, until our Q2 is completed, at which point we will have a better view of how the paint and coatings season is unfolding. Sherwin-Williams is extremely well positioned as we enter 2026. Again, while we expect little if any help in terms of end market demand, our teams refuse to be discouraged by these near-term trends. We know stronger demand will return at some point, driven by powerful demographics and enduring market fundamentals. But we're not waiting for that moment. We're focused on winning today and securing our long-term future.
In addition, our slide deck provides guidance on our expectations for currency exchange, effective tax rate, CapEx, depreciation, and amortization. Finally, I'll remind you that as our Q1 is a seasonally smaller one, we do not plan to make any updates to full year guidance, up or down, until our Q2 is completed, at which point we will have a better view of how the paint and coatings season is unfolding. Sherwin-Williams is extremely well positioned as we enter 2026. Again, while we expect little if any help in terms of end market demand, our teams refuse to be discouraged by these near-term trends. We know stronger demand will return at some point, driven by powerful demographics and enduring market fundamentals. But we're not waiting for that moment. We're focused on winning today and securing our long-term future.
Speaker #1: our In provides guidance on our expectations for currency exchange , effective tax rate , CapEx , depreciation , and amortization . Finally , I'll remind you that as our first quarter is a seasonally smaller one , we do not plan any to make to full year guidance up or down updates until our second quarter is completed , at which point we will have a better view of how the paint and coatings season is unfolding .
Speaker #1: Sherwin-Williams is extremely well positioned as we enter 2026 . Again , while we expect little if any help in terms of end market demand , our teams refused to be discouraged by these near-term trends .
Speaker #1: We know stronger demand will return at some point , driven by powerful demographics and enduring market fundamentals . not waiting But we're for that moment .
Heidi Petz: We know the playbook, stay true to our proven customer-first strategy, control what we can control, and turn volatility into opportunity. That means relentlessly pursuing new accounts and share of wallet, innovating in and out of the can, investing where returns are clear, maintaining price cost discipline, advancing our enterprise priorities, and driving accountability to ensure flawless execution. This is how we grow and create value regardless of market cycles. We're proud of what we've accomplished, but we're even more energized by the opportunities ahead. Across every business, we see room to grow, innovate, and lead. Our focus remains sharp, grow sales, drive returns on sales and assets, and generate cash. We'll continue to deliver unique solutions for customers and outperform the market. This is a great time to continue demonstrating what makes Sherwin-Williams so unique.
We know the playbook, stay true to our proven customer-first strategy, control what we can control, and turn volatility into opportunity. That means relentlessly pursuing new accounts and share of wallet, innovating in and out of the can, investing where returns are clear, maintaining price cost discipline, advancing our enterprise priorities, and driving accountability to ensure flawless execution. This is how we grow and create value regardless of market cycles. We're proud of what we've accomplished, but we're even more energized by the opportunities ahead. Across every business, we see room to grow, innovate, and lead. Our focus remains sharp, grow sales, drive returns on sales and assets, and generate cash. We'll continue to deliver unique solutions for customers and outperform the market. This is a great time to continue demonstrating what makes Sherwin-Williams so unique.
Speaker #1: focused on winning today and We're securing our long term future . We know the playbook . Stay true to our proven customer first strategy .
Speaker #1: Control what we can control and turn volatility into opportunity . That means relentlessly pursuing new accounts and share of wallet , innovating in and out of the can , investing where returns are clear , maintaining price , cost , discipline , advancing our enterprise priorities , and driving accountability to ensure flawless execution is how we of create grow and .
Speaker #1: regardless cycles . We're This proud of what we've even more accomplished , but energized by the we're opportunities ahead . every Across business , we see room to grow , innovate , and lead .
Speaker #1: Our focus remains sharp. Sales drive returns on sales and assets and generate cash. We'll continue to deliver unique solutions for customers and outperform the market.
Heidi Petz: We win when our customers win, and that is exactly what we plan to do. I'd like to end where I started by thanking our team for being truly the best in the industry. This concludes our prepared remarks, and with that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.
We win when our customers win, and that is exactly what we plan to do. I'd like to end where I started by thanking our team for being truly the best in the industry. This concludes our prepared remarks, and with that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.
Speaker #1: This is a great time to continue demonstrating what makes Sherwin-Williams so unique . We win when our customers win . And that is exactly what we plan to do .
Speaker #1: I'd like to end where I started by thanking our team for being truly the best in the industry . This concludes our prepared remarks .
Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone, to provide optimum sound quality. We do ask that participants please ask one question. Once again, if you have any questions or comments, please press star one on your phone. Our first question is coming from Ghansham Panjabi from Baird. Your line is live.
Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone, to provide optimum sound quality. We do ask that participants please ask one question. Once again, if you have any questions or comments, please press star one on your phone. Our first question is coming from Ghansham Panjabi from Baird. Your line is live.
Speaker #1: And with that , I'd like to thank you for joining us this morning . And we'll be happy to take your questions .
Speaker #2: Certainly , everyone at this time will be conducting a question and answer session . If you have any questions or comments , please press star one on your phone at this time .
Speaker #2: We do ask that while posing your question . Please pick up your handset . If you're listening on speakerphone to sound provide quality .
Speaker #2: We do optimum ask that participants please ask one question once again if you have any questions or comments , please press star one on your phone .
Ghansham Panjabi: Yeah, thanks, operator. Good morning, everybody. I guess first off, on the, you know, Performance Coatings segment, the margin outperformance there relative to at least our expectations, the incremental seem very, very high in Q4, and I know you called out some of the more profitable businesses like packaging and Auto Refinish being up nicely, et cetera. But can you just give us a bit more color in terms of what drove that?
Ghansham Panjabi: Yeah, thanks, operator. Good morning, everybody. I guess first off, on the, you know, Performance Coatings segment, the margin outperformance there relative to at least our expectations, the incremental seem very, very high in Q4, and I know you called out some of the more profitable businesses like packaging and Auto Refinish being up nicely, et cetera. But can you just give us a bit more color in terms of what drove that?
Speaker #2: Our first question is coming from Ghansham Panjabi from Baird . Your line is live .
Speaker #3: Operator . Good morning Yeah , thanks . everybody . I guess first off , on the , you know , performance coding segment , the margin outperformance there relative to at least our expectations , the incremental seem very , very high in four .
Speaker #3: Q and I know you called out some of the more profitable businesses like packaging and auto refinish being up nicely , etc. , but can you just give us a bit more color in terms of what drove that ?
Heidi Petz: Yeah, Ghansham, good morning. I think what you're seeing there clearly is discipline on display. This is an organization led under Karl Jorgenrud. Been in the industry for over 30 years, and I think this is an environment where we're in the 5th straight year of a challenging demand environment. The team stood tall and delivered, and you're gonna see this play out. A very clear, aggressive focus on new business wins, taking market share, but also a lot of heavy lifting in, we talk about simplification in our enterprise priorities, taking complexity out of the business. I'm very pleased with some of the heavy lifting there. Having said that, we're early innings, and I'll hand it over to Ben here to jump in.
Heidi Petz: Yeah, Ghansham, good morning. I think what you're seeing there clearly is discipline on display. This is an organization led under Karl Jorgenrud. Been in the industry for over 30 years, and I think this is an environment where we're in the 5th straight year of a challenging demand environment. The team stood tall and delivered, and you're gonna see this play out. A very clear, aggressive focus on new business wins, taking market share, but also a lot of heavy lifting in, we talk about simplification in our enterprise priorities, taking complexity out of the business. I'm very pleased with some of the heavy lifting there. Having said that, we're early innings, and I'll hand it over to Ben here to jump in.
Speaker #1: Yeah , good morning . I think what you're seeing there clearly is discipline on display . This is an organization led under Carl Jorgen Ruud .
Speaker #1: Been in industry for over 30 years , and I think this is an environment where in the fifth straight year of a challenging demand environment , the team delivered .
Speaker #1: and And you're going to see this play out a very focus clear , on new aggressive business wins , taking market but share , also a lot of heavy lifting .
Speaker #1: We talk a lot about simplification in our enterprise priorities—taking complexity out of the business. I'm very pleased with some of the heavy lifting there.
Ben Meisenzahl: Hey, Ghansham, Ben Meisenzahl. Yeah, adding to what Heidi said there, you know, I point to the two halves of PCG. Heidi called out simplification. SG&A has been a focus of this team here. They've consistently been able to keep their SG&A at a moderated pace considering where volumes are at. But if I look at the two halves, I think that's a good way to look at it here. We were under pressure, the first part of the year, right after the election, and we started seeing some of the new policies take shape. There might have been some hesitation. The operating margin was backwards about 160 basis points in the first half. The second half, adjusted operating margin showed 20 basis points worth of improvement.
Ben Meisenzahl: Hey, Ghansham, Ben Meisenzahl. Yeah, adding to what Heidi said there, you know, I point to the two halves of PCG. Heidi called out simplification. SG&A has been a focus of this team here. They've consistently been able to keep their SG&A at a moderated pace considering where volumes are at. But if I look at the two halves, I think that's a good way to look at it here. We were under pressure, the first part of the year, right after the election, and we started seeing some of the new policies take shape. There might have been some hesitation. The operating margin was backwards about 160 basis points in the first half. The second half, adjusted operating margin showed 20 basis points worth of improvement.
Speaker #1: Having said that , we're early innings and I'll hand it over to Ben here to to jump in . .
Speaker #4: Hey , Josh and Ben Meisenzahl . Yeah . Adding to what Heidi said there . You know , I point to the two halves of PCG .
Speaker #4: Heidi called out simplification . SG&A has been a focus of this team here . They've consistently been able to keep their SG&A at a at a moderate pace , considering where volumes are at .
Speaker #4: But if I look at the two halves, I think that's a good way to look at it here. We were under pressure.
Speaker #4: The first part of the year, right after the election, and we started seeing some of the new policies take shape.
Speaker #4: There might have been some hesitation . The operating margin was backwards . About 160 basis points in the first half . The second half adjusted operating margin points worth of 20 basis second half The was improvement .
Ben Meisenzahl: The second half was at 17.9%, pretty close to where, you know, we ended 2024. Obviously, the 19%, you know, the good pop in the Q4. And so I agree with what Heidi said there. It just comes down to discipline, focus on SG&A. I think this is also a good example. We always talk about the operating margin and not looking just at gross margin or SG&A. Here's a really good example of why we do that, because we're able to demonstrate and grow operating margin because of really good SG&A controls.
The second half was at 17.9%, pretty close to where, you know, we ended 2024. Obviously, the 19%, you know, the good pop in the Q4. And so I agree with what Heidi said there. It just comes down to discipline, focus on SG&A. I think this is also a good example. We always talk about the operating margin and not looking just at gross margin or SG&A. Here's a really good example of why we do that, because we're able to demonstrate and grow operating margin because of really good SG&A controls.
Speaker #4: 17.9% , pretty close to where , you know , the we ended 2024 . Obviously , the 19% is a good pop in the fourth quarter .
Speaker #4: And so I agree with what Heidi said there . It just comes down to discipline , focus on S , G&A . I think this is also a good example .
Speaker #4: We always talk about the operating margin and that looking just at gross margin or SGA . Here's a really good example of why we do that , because we're able to demonstrate and grow operating margin , because a really good SGA controls .
Ghansham Panjabi: Thank you, Ghansham.
Jim Jaye: Thank you, Ghansham.
Operator: Thank you. Our next question is coming from John McNulty from BMO Capital Markets. Your line is live.
Operator: Thank you. Our next question is coming from John McNulty from BMO Capital Markets. Your line is live.
Speaker #5: Thank you . Gotcha .
John McNulty: Yeah, good morning. Thanks for taking my question and maybe kind of a decent segue from that last question. On the SG&A outlook for 2026, I guess, can you help us to think about what you're factoring in and what kind of level of growth we should be expecting? Because I know you continue to invest even when the markets struggle. You've also got this 401(k) match coming back in. So I guess, can you help us to think about how that should play out as the year progresses?
John McNulty: Yeah, good morning. Thanks for taking my question and maybe kind of a decent segue from that last question. On the SG&A outlook for 2026, I guess, can you help us to think about what you're factoring in and what kind of level of growth we should be expecting? Because I know you continue to invest even when the markets struggle. You've also got this 401(k) match coming back in. So I guess, can you help us to think about how that should play out as the year progresses?
Speaker #2: Thank you. Our next question is coming from John McNulty from BMO Capital Markets. Your line is live.
Speaker #6: Yeah . Good morning . Thanks for taking my question . And maybe kind of a decent segue from that last question on the on the Cigna outlook for 2026 , I guess .
Speaker #6: Can you help us to think about what factoring you're in , of level of should be what kind growth we expecting ? Because I know you continue to even invest when the market struggle .
Speaker #6: You've also got this, this for match coming back in. So I guess, can you help us to think about how that should play out as the year progresses?
Ben Meisenzahl: Hey, John. Yeah, the way to think about that, and we called out, you know, Heidi talked about in her opening comments, with reinstating the 401(k) and doing our retroactive match, we're apples to apples, 2025 versus 2024. And so that, the catch-up contribution as it relates to, to 2025 earnings, we're apples to apples there. And so because we did that, as you look 2024, 2025, and then into 2026, there is no, quarter-to-quarter, year-over-year, 401(k), impact. As you look at broader SG&A, you know, as we called out in the opening remarks, SG&A up a low single digit, that obviously includes, the history of, of the-...
Ben Meisenzahl: Hey, John. Yeah, the way to think about that, and we called out, you know, Heidi talked about in her opening comments, with reinstating the 401(k) and doing our retroactive match, we're apples to apples, 2025 versus 2024. And so that, the catch-up contribution as it relates to, to 2025 earnings, we're apples to apples there. And so because we did that, as you look 2024, 2025, and then into 2026, there is no, quarter-to-quarter, year-over-year, 401(k), impact. As you look at broader SG&A, you know, as we called out in the opening remarks, SG&A up a low single digit, that obviously includes, the history of, of the-...
Speaker #4: John . Hey , Yeah . The way to think about that . And we called out Heidi , talked about in her opening comments with reinstating the 401 K and doing our retroactive match .
Speaker #4: to We're apples apples 2025 versus 2024 . And so that catch up contribution as it relates to 2025 earnings , we're apples to apples there .
Speaker #4: And so because we did that as you look 2024 2025 and then into 2026 , there is no quarter to quarter year over year 401 K impact .
Speaker #4: As you look at broader SG&A, called out in the opening remarks, SG&A is up a low single digit. That obviously includes the history of the restructuring costs that we [see in] 2025.
Ben Meisenzahl: Restructuring costs that we took in 2025, and then you layer on the incremental Suvinil, which is also a low single-digit. So you can do the, the math there to figure out the core versus, Suvinil. But really what we have, you know, embedded there, is, is, you know, that low single-digit growth. Again, that points right back to the cost controls, everything that we talked about throughout the year here. We had about $40 million in savings in 2025. You saw that our one-time, restructuring costs were a little bit higher than what we guided to in October. That's gonna give us the ability to, to upsize, the other $40 million, that we initially called out. That's probably closer to a $46 million in savings, in 2026.
Restructuring costs that we took in 2025, and then you layer on the incremental Suvinil, which is also a low single-digit. So you can do the, the math there to figure out the core versus, Suvinil. But really what we have, you know, embedded there, is, is, you know, that low single-digit growth. Again, that points right back to the cost controls, everything that we talked about throughout the year here. We had about $40 million in savings in 2025. You saw that our one-time, restructuring costs were a little bit higher than what we guided to in October. That's gonna give us the ability to, to upsize, the other $40 million, that we initially called out. That's probably closer to a $46 million in savings, in 2026.
Speaker #4: took layer And then you on the incremental souvenir , also a low single which is digit . So you can do the the math there to figure out the core versus souvenir .
Speaker #4: But really what we have embedded there is , is that low single digit growth . Again , that points right back to the cost controls .
Speaker #4: Everything that we talked about throughout the year here . We had about 40 million in savings in 2025 . You saw that our one time restructuring costs were a little bit higher than what we to in guided October .
Speaker #4: That's going to give us the ability to upsize the other $40 million that we initially called out. That's probably closer to $46 million in savings in 2026.
Ben Meisenzahl: And so again, really proud of what the teams are doing to really control cost, while volumes are challenged.
And so again, really proud of what the teams are doing to really control cost, while volumes are challenged.
Heidi Petz: John, I give Ben a lot of credit. He uses this phrase of, to the team, and for those employees listening, I'm talking to you here, too, "We wanna earn our SG&A," right? And so we're gonna always pace that to volume, and you're gonna see that discipline play out throughout the year.
Heidi Petz: John, I give Ben a lot of credit. He uses this phrase of, to the team, and for those employees listening, I'm talking to you here, too, "We wanna earn our SG&A," right? And so we're gonna always pace that to volume, and you're gonna see that discipline play out throughout the year.
Speaker #4: And so , again , really proud with the teams are doing to really control cost . While volumes are challenged .
Speaker #1: John , we give Ben a lot of credit . He uses this phrase of to the team . And for those employees listening , I'm talking to you here too .
Ben Meisenzahl: Thank you, John.
Jim Jaye: Thank you, John.
Speaker #1: We want to earn our SG&A . Right . And so we're going to always pace that to volume . And you're going to see that discipline play out throughout the year .
Operator: Thank you. Our next question is coming from Chris Parkinson from Wolfe Research. Your line is live.
Operator: Thank you. Our next question is coming from Chris Parkinson from Wolfe Research. Your line is live.
Speaker #5: John you Thank .
Speaker #5: John you Thank .
Christopher Parkinson: Great. Thank you so much. You know, can we talk about some of the things that are more or less in your control in terms of your guidance and, and, you know, just how you, Ben, and now are thinking about it in terms of the implied gross margin guide? You know, just perhaps just a quick comments on healthcare, labor assumptions, the raw basket. It seems like there's some divergences between solvents, acrylics, and TiO2, asset utilization. Just kind of just what underpins that and what gives you the confidence that that is the correct framework, at least to begin the year? Thank you so much.
Christopher Parkinson: Great. Thank you so much. You know, can we talk about some of the things that are more or less in your control in terms of your guidance and, and, you know, just how you, Ben, and now are thinking about it in terms of the implied gross margin guide? You know, just perhaps just a quick comments on healthcare, labor assumptions, the raw basket. It seems like there's some divergences between solvents, acrylics, and TiO2, asset utilization. Just kind of just what underpins that and what gives you the confidence that that is the correct framework, at least to begin the year? Thank you so much.
Speaker #2: you . Parkinson next Our from Chris Thank coming question is from Wolfe Research . Your line is live .
Speaker #7: Great . Thank you so much . You know , can we talk about some of the things that are more or less in your control in terms of your guidance and you know , just how you , Ben , and our about in terms thinking of the implied gross margin guide , you know , just perhaps just a quick comments on healthcare , labor assumptions , basket the raw seems like there's some divergences between solvents , acrylics and TiO2 utilization .
Speaker #7: Great . Thank you so much . You know , can we talk about some of the things that are more or less in your control in terms of your guidance and you know , just how you , Ben , and our about in terms thinking of the implied gross margin guide , you know , just perhaps just a quick comments on healthcare , labor assumptions , basket the raw seems like there's some divergences between solvents , acrylics and TiO2 asset Just kind of just what underpins that and what gives you the confidence that that the correct framework , at least to begin the year ?
Jim Jaye: Yeah, good morning, Chris. This is Jim. I'll start with the raws piece of your question. So as you saw in our slide deck, we're guiding to our raw material basket to be up a low single-digit percentage this year. That includes tariffs and some of the commodities inflating. In particular, I'd say the areas where we're seeing the most pressure would be on the packaging side of our basket, also non-TiO2 pigments, extenders, things of that nature. Also some pressure on resins, and I'd say that's a little bit heavier weighted on the industrial side of the basket. But those are the things that are driving the raw material guidance that we're laying out.
Jim Jaye: Yeah, good morning, Chris. This is Jim. I'll start with the raws piece of your question. So as you saw in our slide deck, we're guiding to our raw material basket to be up a low single-digit percentage this year. That includes tariffs and some of the commodities inflating. In particular, I'd say the areas where we're seeing the most pressure would be on the packaging side of our basket, also non-TiO2 pigments, extenders, things of that nature. Also some pressure on resins, and I'd say that's a little bit heavier weighted on the industrial side of the basket. But those are the things that are driving the raw material guidance that we're laying out.
Speaker #7: Thank you so much .
Speaker #5: Yeah . Good morning Chris , this is Jim . I'll start with the raws piece of your question . So as you saw in our slide deck , we're guiding to our raw material basket to be up a low single digit percentage this year .
Speaker #5: That includes tariffs and some of the commodities inflating. In particular, I'd say the areas where we're seeing the most pressure would be on the packaging side of our basket.
Speaker #5: Also non TiO2 pigments , extenders , things of that nature . Also some pressure on resins . And that's a little I'd say heavier weighted on the industrial side of the basket .
Ben Meisenzahl: Yeah, Chris, I'll add on to the SG&A side and just the overall cost side. You think about, we've called out in the admin segment, interest expense, you know, being a headwind for next year. So when you look at the growth that we have in our admin spending next year, about half of that is gonna be interest expense, and then half of it is normalization of other non-operating costs and just your general SG&A. And you called out healthcare. We've all seen the headlines, healthcare up, you know, double digits. We're in that camp. We have things that we can do to mitigate that, so what we're passing on to our employees isn't as meaningful as that. So we're trying to be, you know, really diligent there.
Ben Meisenzahl: Yeah, Chris, I'll add on to the SG&A side and just the overall cost side. You think about, we've called out in the admin segment, interest expense, you know, being a headwind for next year. So when you look at the growth that we have in our admin spending next year, about half of that is gonna be interest expense, and then half of it is normalization of other non-operating costs and just your general SG&A. And you called out healthcare. We've all seen the headlines, healthcare up, you know, double digits. We're in that camp. We have things that we can do to mitigate that, so what we're passing on to our employees isn't as meaningful as that. So we're trying to be, you know, really diligent there.
Speaker #5: But those are the things that are driving the raw material guidance that we're laying out .
Speaker #4: Yeah Chris , I'll add on to the side and just the overall cost side you think about . We've called out in the admin segment , interest expense being a headwind for next year .
Speaker #4: And so when you look at the growth that we have in our admin spending next year , about half half of of that is going to be interest expense .
Speaker #4: And then half of it is normalization of other non-operating costs, and just your general G&A. And you called out healthcare—we've all seen the headlines on healthcare, you're seeing double digits.
Speaker #4: that camp . We're in We have things that we can do to mitigate that . So what we're passing on to our employees isn't as as meaningful as that .
Ben Meisenzahl: But, you know, we, we've continued to try to, you know, keep, keep that cost low. If I go back and point to some of the opening comments on the admin SG&A, you know, the core SG&A, we're, we've been able to keep that down low double digits, you know, down low teens, and that just demonstrates, again, the levers we're able to pull to make sure we can keep that the costs in check, knowing that, again, we're in that lower volume environment right now.
But, you know, we, we've continued to try to, you know, keep, keep that cost low. If I go back and point to some of the opening comments on the admin SG&A, you know, the core SG&A, we're, we've been able to keep that down low double digits, you know, down low teens, and that just demonstrates, again, the levers we're able to pull to make sure we can keep that the costs in check, knowing that, again, we're in that lower volume environment right now.
Speaker #4: So we're trying to be really diligent . There . But we we've continued to try to , you know , keep keep that cost If I go back and point low .
Speaker #4: some of the opening comments on the admin SG&A , you know , the core SG&A , we've been able to keep that down double digits .
Speaker #4: You know , down low , teens and that just demonstrates , again , the levers we're able to pull to make sure we can keep that .
Jim Jaye: Thank you, Chris.
Jim Jaye: Thank you, Chris.
Speaker #4: The costs in check, knowing that again, we're in that lower volume environment right now. Thank you, Chris.
Operator: Thank you. Our next question is coming from Greg Melich from Evercore ISI. Your line is live.
Operator: Thank you. Our next question is coming from Greg Melich from Evercore ISI. Your line is live.
Greg Melich: Hi, thanks. I wanted to follow up on price mix in the fourth quarter, and then also the 7% price hike on 1 January. I guess it looks like it was 3 to 3.5% price mix in Q4. With the price increase coming in in January, why wouldn't we expect that to be more going into Q1 2026?
Greg Melich: Hi, thanks. I wanted to follow up on price mix in the fourth quarter, and then also the 7% price hike on 1 January. I guess it looks like it was 3 to 3.5% price mix in Q4. With the price increase coming in in January, why wouldn't we expect that to be more going into Q1 2026?
Speaker #2: Thank you. Our next question is coming from Greg Melich from Evercore ISI. Your line is live.
Speaker #8: Hi . Thanks . I wanted to follow up on on price mix in the fourth quarter . And then also the 7% price hike on Jan one .
Speaker #8: I guess it looks like it was 3 to 3.5% price mix . And for Q and with the price increase coming in in January , why wouldn't we expect that to be more going into the first quarter in
Heidi Petz: Yeah, Greg, I'll start, and I'll hand this over to Ben to give a little bit more color. But I'll take you back to some of the comments I said in my prepared remarks relative to market dynamics. And, you know, we are looking at the competitive environment. I would frame it more as a jump ball environment, to be honest with you. And so we're going to continue to be, as you would expect, extremely aggressive as it relates to chasing volume right now. And so there's a balance. The team is very prepared. There's a lot of tenure in the organization. They know how to strike that right balance.
Heidi Petz: Yeah, Greg, I'll start, and I'll hand this over to Ben to give a little bit more color. But I'll take you back to some of the comments I said in my prepared remarks relative to market dynamics. And, you know, we are looking at the competitive environment. I would frame it more as a jump ball environment, to be honest with you. And so we're going to continue to be, as you would expect, extremely aggressive as it relates to chasing volume right now. And so there's a balance. The team is very prepared. There's a lot of tenure in the organization. They know how to strike that right balance.
Speaker #1: Greg , I'll start and Yeah , I'll hand this over to give a little bit more color . But you back to some of I'll take the comments .
Speaker #1: As I said in my prepared remarks, relative to market dynamics—and, you know, we, you are looking at the competitive environment.
Speaker #1: I would frame it more as a jump ball environment, to be honest with you. And so we're going to continue to be, as you would expect, extremely aggressive as it relates to chasing volume right now.
Heidi Petz: But I'm very confident that when we get our customers in, I'm very confident in the team's ability to work with them to add value and continue to, you know, trade them into more premium products. That ultimately is gonna make them more productive. Let me hand it to Ben to comment on the quarter.
But I'm very confident that when we get our customers in, I'm very confident in the team's ability to work with them to add value and continue to, you know, trade them into more premium products. That ultimately is gonna make them more productive. Let me hand it to Ben to comment on the quarter.
Speaker #1: And so there's a balance . The team is very prepared . There's a lot of tenure in the organization . They know how to to strike that right balance .
Speaker #1: But I'm very confident that when we get some of our customers in , I'm very confident in the team's ability to work with them .
Speaker #1: To add value and continue to to , to , you know , trade them into to more premium products that ultimately is going to make them more productive .
Ben Meisenzahl: Yeah, I agree with everything Heidi said there, and again, we've talked about that price mix, you know, looking at incremental pricing and, you know, mix of some of the business as well. And so you may have, you know, a little bit of noise in there. But Heidi hit the nail on the head with volume, and we've talked about, in this environment, prioritizing volume. And so as our teams know, that high effectiveness is critical, you know, for us to get to the high end of our guide. We're gonna continue to, you know, put the pressure on there to capture as much price as we can, but we're not gonna put volume at risk to do that.
Ben Meisenzahl: Yeah, I agree with everything Heidi said there, and again, we've talked about that price mix, you know, looking at incremental pricing and, you know, mix of some of the business as well. And so you may have, you know, a little bit of noise in there. But Heidi hit the nail on the head with volume, and we've talked about, in this environment, prioritizing volume. And so as our teams know, that high effectiveness is critical, you know, for us to get to the high end of our guide. We're gonna continue to, you know, put the pressure on there to capture as much price as we can, but we're not gonna put volume at risk to do that.
Speaker #1: Let me hand it to Ben to comment on the quarter .
Speaker #4: Yeah , I agree with everything Heidi said there . And again , we've talked about that price mix . You know , looking at incremental pricing and , the business as you know , mix of some of well .
Speaker #4: And you may so have , you know , a little of noise in bit there . But Heidi hit the hit the head on it with volume .
Speaker #4: I mean , we've talked about in this environment prioritizing volume . And so as know , that high our teams effectiveness is critical for us to get to the high end of our guide , we're going to continue to , you know , put the pressure on there to to capture as much price as we can , but we're not going to put volume at risk to do that .
Ben Meisenzahl: Yeah, that may be what's a little bit different than what you've seen in the past.
Yeah, that may be what's a little bit different than what you've seen in the past.
Heidi Petz: But still very confident in our gross margin targets that we put out, and we're gonna hold to that.
Heidi Petz: But still very confident in our gross margin targets that we put out, and we're gonna hold to that.
Speaker #4: And so that may be what's a little bit different than what you've seen in the
Jim Jaye: Thank you, Greg.
Jim Jaye: Thank you, Greg.
Speaker #1: But still
Speaker #1: very past . confident in our gross margin targets that we put out . And we're going to hold to that .
Operator: Thank you. Our next question is coming from David Begleiter from Deutsche Bank. Your line is live.
Operator: Thank you. Our next question is coming from David Begleiter from Deutsche Bank. Your line is live.
Speaker #5: Thank you . Greg .
David Begleiter: Thank you. Good morning. Heidi, can you discuss the impact of the severe winter weather on your current demand trends? And does that mean that Q1 EPS could be down year-over-year just because of the weather impacts? Thank you.
David Begleiter: Thank you. Good morning. Heidi, can you discuss the impact of the severe winter weather on your current demand trends? And does that mean that Q1 EPS could be down year-over-year just because of the weather impacts? Thank you.
Speaker #2: Thank you. Our next question is coming from David Begleiter from Deutsche Bank. Your line is live.
Speaker #9: Thank you . Good morning . I'm Heidi . Can you discuss the impact of the severe winter weather on your current demand trends ?
Ben Meisenzahl: Hey, David, it's Ben. Let me make a couple comments here. I mean, I realize right now, in the midst of you know, watching the storm go through this week. We have weather every quarter. I mean, it impacts us every year. If you remember last year, you know, we had the Gulf winter storm. It had all the classic ice, you know, wind, snow, everything that you would expect with a winter storm like that. But our Southeast division and our Southwestern division, they deal with weather at this time of year, every single year, and so no concerns there right now.
Ben Meisenzahl: Hey, David, it's Ben. Let me make a couple comments here. I mean, I realize right now, in the midst of you know, watching the storm go through this week. We have weather every quarter. I mean, it impacts us every year. If you remember last year, you know, we had the Gulf winter storm. It had all the classic ice, you know, wind, snow, everything that you would expect with a winter storm like that. But our Southeast division and our Southwestern division, they deal with weather at this time of year, every single year, and so no concerns there right now.
Speaker #9: And does that mean that Q1 Q1 EPs could be down year over year just because of the weather impacts ? Thank you .
Speaker #4: Hey David , it's Ben . Make a couple comments here . realize I mean , of in the right now I , you know , midst watching the storm go through this , we weather week have every quarter .
Speaker #4: I mean , it impacts us If you remember , last every year . year , you know , we had the the Gulf winter storm .
Speaker #4: It had classic all the ice , you know , wind , snow , everything that you would expect with a winter storm like that .
Speaker #4: But our southeast division , our southwestern division , they they deal with wetter weather at this time of year , every single year .
Jim Jaye: Thank you, David.
Jim Jaye: Thank you, David.
Operator: Thank you. Our next question is coming from John Roberts from Mizuho. Your line is live.
Operator: Thank you. Our next question is coming from John Roberts from Mizuho. Your line is live.
Speaker #4: And so no concerns there . Right now .
Speaker #5: Thank you .
Speaker #4: David .
John Roberts: Thank you. Your packaging coatings performance is impressive here. Have we recovered to new highs since the correction you had? How much more is left in terms of the conversion of the industry?
John Roberts: Thank you. Your packaging coatings performance is impressive here. Have we recovered to new highs since the correction you had? How much more is left in terms of the conversion of the industry?
Speaker #2: Thank you. Our next question is coming from John Roberts from Mizuho. Your line is live.
Speaker #10: Thank you. And your packaging coatings performance is impressive. Here, have we recovered to new highs since the correction you had?
Heidi Petz: Yeah. Good morning, John. I, I would tell you, you know, we've essentially recovered a lot of what we said was kind of temporary share loss, and but that doesn't mean that we're happy with where we are. There's still a lot more to go get. I, I really like our position here with our leading technology. We continue to win and demonstrate value. We've got some, obviously, dynamics playing out. EFSA, the European Food Safety Association's ban on BPA, that's gonna be taking effect in Q2. We know that that will continue to drive more customer conversions for us, so really like our position here. So we're, we're in good shape. Jim, maybe if you could comment on a few of those areas.
Heidi Petz: Yeah. Good morning, John. I, I would tell you, you know, we've essentially recovered a lot of what we said was kind of temporary share loss, and but that doesn't mean that we're happy with where we are. There's still a lot more to go get. I, I really like our position here with our leading technology. We continue to win and demonstrate value. We've got some, obviously, dynamics playing out. EFSA, the European Food Safety Association's ban on BPA, that's gonna be taking effect in Q2. We know that that will continue to drive more customer conversions for us, so really like our position here. So we're, we're in good shape. Jim, maybe if you could comment on a few of those areas.
Speaker #10: And how much more is left in terms of the conversion of the industry?
Speaker #1: Yeah . John . I would Good morning tell you , you know we've essentially recovered a lot of what we said was kind of temporary share loss .
Speaker #1: mean that we are . we're happy that doesn't And but There's still a lot more to go get . really like our position I , I here with our leading technology .
Speaker #1: continue We to win and demonstrate value . We've got some obviously dynamics playing out Efsa , the European Food Safety Association's ban on BPA that's going to be taking effect in Q2 .
Speaker #1: We know that that will continue to drive more customer conversions for us . So really like our position here . So we're in good shape .
Jim Jaye: Yeah, I would add to that, John, that, you know, in terms of how much is left to go, I would say that in Asia and LATAM, there's still quite, quite a bit to go. You know, North America, and as Heidi just pointed out, Europe, are farther ahead on that. But in terms of that conversion, those other regions still have quite a ways to go. Thanks for the question.
Jim Jaye: Yeah, I would add to that, John, that, you know, in terms of how much is left to go, I would say that in Asia and LATAM, there's still quite, quite a bit to go. You know, North America, and as Heidi just pointed out, Europe, are farther ahead on that. But in terms of that conversion, those other regions still have quite a ways to go. Thanks for the question.
Speaker #1: Jim , maybe if you could comment on a few of those areas .
Speaker #5: I would Yeah , add to that , John , that , you know , in terms of how much is left to go , I would say that in Asia and Latam , there's still quite , quite a bit to go .
Speaker #5: You know , North America . And as Heidi just pointed out , Europe are farther ahead on that . But in terms of that conversion , those other regions still have quite a ways to go .
Operator: Thank you. Your next question is coming from Alexei Yefremov from KeyBanc Capital Markets. Your line is live.
Operator: Thank you. Your next question is coming from Alexei Yefremov from KeyBanc Capital Markets. Your line is live.
Speaker #5: Thanks for the question .
Aleksey Yefremov: Thanks. Good morning. Heidi, I wanted to come back to your comments on focusing more on volumes than prices here. I guess typically, this could lead to a bit of a zero-sum game, where your competitors would also focus on volumes. Is there something that's different right now about competitive environment? Maybe your competitors cannot afford lower prices, so they have to raise their prices and see some volume. Or is there another dynamic that kind of makes your strategy of being more volume focused, the right one this year?
Aleksey Yefremov: Thanks. Good morning. Heidi, I wanted to come back to your comments on focusing more on volumes than prices here. I guess typically, this could lead to a bit of a zero-sum game, where your competitors would also focus on volumes. Is there something that's different right now about competitive environment? Maybe your competitors cannot afford lower prices, so they have to raise their prices and see some volume. Or is there another dynamic that kind of makes your strategy of being more volume focused, the right one this year?
Speaker #2: Thank you . Your next question is coming from Aleksey Yefremov from KeyBanc Capital Markets . Your line is live .
Speaker #11: Thanks . Good morning Heidi , I wanted to come back to your more volumes comments on than focusing price year . I guess typically this could lead to to a bit of a zero sum game where your competitors would also focus on volumes .
Speaker #11: Is there something that's different right now about the competitive environment? Maybe your competitors cannot afford lower prices, so they have to raise their prices and cede some volume.
Speaker #11: Or is there another dynamic that kind of makes you a strategy of more being volume focused ? The right one this year ?
Heidi Petz: So, Alexei, let me reframe what I heard you say. I think you said, not putting volume above price, and I would say it's not putting volume above price. It's being very balanced in our view here. And so in this, it's a jump ball, competitive environment. There's a lot of market share up for grabs right now, and we're not going to lose our minds, lose our way. We're very disciplined when it comes to pricing, but we wanna make sure that the teams are empowered out in the front lines to convert some of these larger, bigger customers, that weren't in Sherwin-Williams family before. We're gonna be, we're gonna be dog on a bone in chasing that business.
Heidi Petz: So, Alexei, let me reframe what I heard you say. I think you said, not putting volume above price, and I would say it's not putting volume above price. It's being very balanced in our view here. And so in this, it's a jump ball, competitive environment. There's a lot of market share up for grabs right now, and we're not going to lose our minds, lose our way. We're very disciplined when it comes to pricing, but we wanna make sure that the teams are empowered out in the front lines to convert some of these larger, bigger customers, that weren't in Sherwin-Williams family before. We're gonna be, we're gonna be dog on a bone in chasing that business.
Speaker #1: So , Aleksey , let me reframe what I heard you say . I think you you said not putting volume above price . And I would say it's not putting volume above price .
Speaker #1: It's being very balanced in our view here . And so in this is a jump ball competitive environment . There's a lot of market share up for grabs right now .
Speaker #1: And we're not going to lose our minds lose our way . We're very disciplined when it comes to But pricing . we want to make sure that the teams are the front lines empowered out in to convert these some of bigger larger , customers that weren't in in Sherwin-Williams family before .
Ben Meisenzahl: Alexei, I'll add to that. You know, we've always talked about volume as the number one driver of our operating margin, and so when you look over the long term, getting that wider base of business, getting that share of wallet and new accounts in, and even when we bring them in, we have ways in our stores, wherever the customer is in their, you know, their journey, to help get them up into those premium products and other ways that flows into that price mix as well. But we recognize over the long term, you know, that securing the volume, the right volume that we want, is how we get to our midterm and long-term goals.
Ben Meisenzahl: Alexei, I'll add to that. You know, we've always talked about volume as the number one driver of our operating margin, and so when you look over the long term, getting that wider base of business, getting that share of wallet and new accounts in, and even when we bring them in, we have ways in our stores, wherever the customer is in their, you know, their journey, to help get them up into those premium products and other ways that flows into that price mix as well. But we recognize over the long term, you know, that securing the volume, the right volume that we want, is how we get to our midterm and long-term goals.
Speaker #1: We're going to be we're going to be dog on a bone and chasing that business .
Speaker #4: Aleksei I'll add to that . You know , we've always talked about volume is the number one driver of our operating margin . And so when you look over the long term , getting that , that wider base of of business , getting that share of wallet and new accounts in and even when we bring them in , we have ways in our stores wherever the customer is in their , you know , their journey to help get them up into those premium products and other ways that flows into that price mix as well .
Speaker #4: But we recognize over the long term , you know , securing the that that volume , the right volume that we want is how we get to our mid-term and long term goals .
Heidi Petz: One piece Ben just said, and I think it's really important to emphasize, when we bring our contractors in, the confidence we have in treating them up to premium, is they are making more money as a result of working with these higher end, better products. And I'll remind you, the total cost, labor comprises 85 to 87% of their total cost. So their willingness to pay a premium to get on and off of job sites faster, have less touch-up, less quality issues, especially in an inflationary environment, it plays to our strengths.
Heidi Petz: One piece Ben just said, and I think it's really important to emphasize, when we bring our contractors in, the confidence we have in treating them up to premium, is they are making more money as a result of working with these higher end, better products. And I'll remind you, the total cost, labor comprises 85 to 87% of their total cost. So their willingness to pay a premium to get on and off of job sites faster, have less touch-up, less quality issues, especially in an inflationary environment, it plays to our strengths.
Speaker #1: One piece , Ben just said , and I think it's really important to emphasize when we when we bring our contractors in , the confidence we have in trading them up to premium is they are making more money as a result of working with these higher end better products and I'll remind you , the total labor cost , comprises total cost .
Speaker #1: One piece , Ben just said , and I think it's really important to emphasize when we when we bring our contractors in , the confidence we have in trading them up to premium is they are making more money as a result of working with these higher end better products and I'll remind you , the total labor cost , comprises total cost . So 8,587% of their their willingness to pay a premium to get on and off of Jobsites faster have less touch up , less quality issues , especially in an inflationary environment .
Ben Meisenzahl: Thanks, Alexei.
Ben Meisenzahl: Thanks, Alexei.
Operator: Thank you. Our next question is coming from Jeff Zekauskas from JP Morgan. Your line is live.
Operator: Thank you. Our next question is coming from Jeff Zekauskas from JP Morgan. Your line is live.
Speaker #1: It plays to our strengths .
Speaker #5: Thanks , Aleksey .
Jeff Zekauskas: Thanks very much. Your residential repaint sales were up low single digits, but your prices were probably up higher than that. So were residential repaint volumes flat or down? And have they decelerated through the course of the year, and if so, why?
Jeff Zekauskas: Thanks very much. Your residential repaint sales were up low single digits, but your prices were probably up higher than that. So were residential repaint volumes flat or down? And have they decelerated through the course of the year, and if so, why?
Speaker #2: Thank you . Our next question is coming from Jeff Sikorsky's from J.P. Morgan . Your line is live .
Speaker #12: Thanks very much for your residential repaint . Sales were up low single digits , but your prices were probably up higher than that .
Speaker #12: So we're residential , repaint volumes flat or down . And have they decelerated through the course of the year ? And if so , why ?
Ben Meisenzahl: Hey, Jeff. If you look at the fourth quarter, last year we were up against a really strong comp in residential repaint. We were up a high single digit, and so that had a little bit of impact of what you're seeing here for the third quarter. We remain very confident in res repaint. This is where, you know, we made a lot of investments. We're as the biggest opportunity for share gains, we're very confident with that segment, with our pricing realization. And so I think, we continue to be very happy with where res repaint is. And obviously, as you look forward into 2026, that's a segment that we're gonna continue to count on and invest in.
Ben Meisenzahl: Hey, Jeff. If you look at the fourth quarter, last year we were up against a really strong comp in residential repaint. We were up a high single digit, and so that had a little bit of impact of what you're seeing here for the third quarter. We remain very confident in res repaint. This is where, you know, we made a lot of investments. We're as the biggest opportunity for share gains, we're very confident with that segment, with our pricing realization. And so I think, we continue to be very happy with where res repaint is. And obviously, as you look forward into 2026, that's a segment that we're gonna continue to count on and invest in.
Speaker #4: Hey , Jeff , if at you look the fourth quarter , we were last year , we had we were up against a really strong comp in residential repaint .
Speaker #4: We were up a high single digit . And so that had a little bit of what you're seeing here impact . of For the third quarter , remain we in very repaint .
Speaker #4: is This where , you know , we confident get we've made a lot of investments . We're has the biggest opportunity for share gains .
Speaker #4: We're very confident with that segment with our pricing realization . And so I think we continue to be very happy with where repaint is .
Heidi Petz: This is also a segment we have a lot of confidence in because we continue year over year to outperform the market, and so I wouldn't characterize it, Jeff, as slowing. I think, if you go back into some of our history, last two years, there was a surge as we continued to focus on taking that Kelly-Moore share. That's now in our history and behind us. So you're probably seeing a little bit of that. But in terms of what is out there, the amount of market share to be gained is extraordinary, and we're gonna chase it.
Heidi Petz: This is also a segment we have a lot of confidence in because we continue year over year to outperform the market, and so I wouldn't characterize it, Jeff, as slowing. I think, if you go back into some of our history, last two years, there was a surge as we continued to focus on taking that Kelly-Moore share. That's now in our history and behind us. So you're probably seeing a little bit of that. But in terms of what is out there, the amount of market share to be gained is extraordinary, and we're gonna chase it.
Speaker #4: And obviously, as you look forward into 2026, that's a segment that we're going to continue to count on and invest in.
Speaker #1: This is also a segment we have a lot of confidence in because we continue year over year to outperform the market . And so I wouldn't characterize it , Jeff , as slowing .
Speaker #1: I think if you our go back into some of history last two years , there was a there was a as we surge focus on taking that .
Speaker #1: Kelly more share . That's now in our history . And behind us . So you're probably seeing a little bit of that . But in terms of what is out there , the amount of market share to be gained is is extraordinary .
Ben Meisenzahl: Thank you, Jeff.
Jim Jaye: Thank you, Jeff.
Operator: Thank you. Our next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.
Operator: Thank you. Our next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.
Speaker #1: And we're going to chase it.
Speaker #5: Thank you Jeff .
Vincent Andrews: ... Thank you, and good morning, everyone. Wondering if you can help us bridge consumer brands from the Q4 performance on the top line up about 25% with Suvinil in the mid-20s to your expectations for Q1 and for the full year with Q1 up low to mid-teens now, and the full year up high single to low double digits, recognizing that you have to comp Suvinil late in the year. But what does that imply that you know the existing business is gonna do from a volume price mix perspective? And then what is your FX assumption within there as well? Thank you.
Vincent Andrews: ... Thank you, and good morning, everyone. Wondering if you can help us bridge consumer brands from the Q4 performance on the top line up about 25% with Suvinil in the mid-20s to your expectations for Q1 and for the full year with Q1 up low to mid-teens now, and the full year up high single to low double digits, recognizing that you have to comp Suvinil late in the year. But what does that imply that you know the existing business is gonna do from a volume price mix perspective? And then what is your FX assumption within there as well? Thank you.
Speaker #2: you . next question Vincent is Our Thank from Andrews coming from Morgan Stanley . Your live line is .
Speaker #13: good morning , Thank you and everyone . Wondering if you can help us bridge consumer brands from the the fourth quarter performance on the top line up about 25% with Sunil in the mid 20s .
Speaker #13: To your expectations for one quarter and for the full year, with one quarter up low to mid-teens. Now, and the full year up high single to low double digits.
Speaker #13: Recognizing that you have to comp souvenir late in the year, but what does that imply? That you know what the existing business is going to do from a volume, price, mix perspective? And then what is your FX assumption within there as well?
Ben Meisenzahl: Hey, Vincent. Yeah. So going from Q4 into next year, I mean, you nailed it. We got the annualization that's obviously gonna have a sizable impact through the Q3 of next year when we annualize. The underlying business, I mean, as Heidi talked about in her opening comments, I mean, there's still a lot of challenges with the North American DIY market. We don't expect that to be an overperformer for us until we see some of the housing catalysts really catch. You asked about, you know, pricing. All of our businesses have some level of pricing embedded in their guide for next year.
Ben Meisenzahl: Hey, Vincent. Yeah. So going from Q4 into next year, I mean, you nailed it. We got the annualization that's obviously gonna have a sizable impact through the Q3 of next year when we annualize. The underlying business, I mean, as Heidi talked about in her opening comments, I mean, there's still a lot of challenges with the North American DIY market. We don't expect that to be an overperformer for us until we see some of the housing catalysts really catch. You asked about, you know, pricing. All of our businesses have some level of pricing embedded in their guide for next year.
Speaker #13: Thank you .
Speaker #4: Vincent . Yeah . Hey , So going from fourth quarter into next year , I mean , you nailed it . We got the annual ization .
Speaker #4: That's obviously going to have a sizable impact through the third quarter of next year when we annualize the underlying business . I mean , as talked about in Heidi her opening comments , I mean , there's still a lot of challenges with the North American DIY market .
Speaker #4: We don't expect that to be an over performer for us until we see some of the housing catalysts really , really catch . You asked about pricing , you know , all of our businesses have some level of pricing embedded in their guide for next year .
Ben Meisenzahl: And so, even though we don't go out all at the same time like we do for Stores Group, you should expect that there are some targeted price increases, not only for Consumer Brands Group, but also for Performance Coatings Group, that could differ by the different business units or by region. And then FX, you know, when you look at a full year basis, I mean, we do have Consumer Brands Group down a low single digit because of FX. That's mainly gonna come in the second half of the year, and that's mainly coming from headwinds that we anticipate in Latin America.
And so, even though we don't go out all at the same time like we do for Stores Group, you should expect that there are some targeted price increases, not only for Consumer Brands Group, but also for Performance Coatings Group, that could differ by the different business units or by region. And then FX, you know, when you look at a full year basis, I mean, we do have Consumer Brands Group down a low single digit because of FX. That's mainly gonna come in the second half of the year, and that's mainly coming from headwinds that we anticipate in Latin America.
Speaker #4: And so even though we don't go out all at the same time like we do for stores group , you should expect that there are some targeted price increases , not only for consumer Brands group , but also for performance coatings group that could differ by the different business units or by by region .
Speaker #4: And then FX , you know , when you look at full year basis , I mean , we do have consumer brands group down a low single digit because of FX .
Heidi Petz: I'll mention on the Suvinil piece, because I can't help it. We're really excited about this acquisition and the progress that we're making. It's obviously early, but the teams are laser focused. We've got a dedicated integration team so that our commercial teams can remain laser focused on our customer and business continuity. I think that we're certainly pulling out the Valspar playbook, the rigor behind customers and employees, and making sure that we're keeping the... What's happening in the market is going to be really important here. We've got an opportunity to demonstrate why these brands are better together, why these teams are better together, so that we can drive innovation with a market-leading brand, and I'm very confident in what we're gonna be able to do in Brazil.
Heidi Petz: I'll mention on the Suvinil piece, because I can't help it. We're really excited about this acquisition and the progress that we're making. It's obviously early, but the teams are laser focused. We've got a dedicated integration team so that our commercial teams can remain laser focused on our customer and business continuity. I think that we're certainly pulling out the Valspar playbook, the rigor behind customers and employees, and making sure that we're keeping the... What's happening in the market is going to be really important here. We've got an opportunity to demonstrate why these brands are better together, why these teams are better together, so that we can drive innovation with a market-leading brand, and I'm very confident in what we're gonna be able to do in Brazil.
Speaker #4: That's mainly going to come in the second half of the year , and that's mainly coming from headwinds that we anticipate in Latin America .
Speaker #1: And I'll mention on the souvenir piece , because I can't help it . We're really excited about this and the making . progress that It's we're obviously early the , but teams are laser focused .
Speaker #1: We've got our dedicated integration teams that are commercial teams can remain laser focused on our customer and business continuity . I think that we're certainly pulling out the Valspar playbook .
Speaker #1: The rigor behind customers and employees and making sure that we're keeping the what's happening in the market is going to be really important here .
Speaker #1: We've got an opportunity to demonstrate why these brands are better together, why these teams are better together, so that we can drive innovation with a market-leading brand.
Ben Meisenzahl: Thank you, Vincent.
Ben Meisenzahl: Thank you, Vincent.
Operator: Thank you. Our next question is coming from Josh Spector, from UBS. Your line is live.
Operator: Thank you. Our next question is coming from Josh Spector, from UBS. Your line is live.
Speaker #1: And I'm very confident in what we're going to be able to do in Brazil.
Speaker #5: Thank you . Vincent .
Josh Spector: Yeah. Hey, good morning. So I was trying to go through all the macro assumptions you have in that slide, which is very helpful. When I put that all together, it seems to say that maybe you're thinking the market in your Paint Stores Group is down something like 1%, maybe 2% next year. If I look at your Paint Stores Group guidance, you know, you're flat, your store additions typically add a point. So, to me, that implies that you're basically saying you do closer to in line with the market, versus outperform by a point or two. I'm just curious if you, you know, disagree with any of that framing. Is the market lower? Are you assuming more?
Josh Spector: Yeah. Hey, good morning. So I was trying to go through all the macro assumptions you have in that slide, which is very helpful. When I put that all together, it seems to say that maybe you're thinking the market in your Paint Stores Group is down something like 1%, maybe 2% next year. If I look at your Paint Stores Group guidance, you know, you're flat, your store additions typically add a point. So, to me, that implies that you're basically saying you do closer to in line with the market, versus outperform by a point or two. I'm just curious if you, you know, disagree with any of that framing. Is the market lower? Are you assuming more?
Speaker #2: Thank you. Our next question is coming from Josh Spector from your line, UBS. You are live.
Speaker #14: Yeah . Hey . Good morning . So I was trying to go through all the macro assumptions you have in that slide , which is very helpful .
Speaker #14: When I put that all together , it seems to say that maybe you're thinking the market and your paint stores group is Something down .
Speaker #14: like 1% , maybe 2% next year . If I look at your paint store group guidance , you're flat , your store typically at additions a point .
Speaker #14: So to me that implies that you're basically saying you do closer to in line with the market versus outperform by a point or two .
Josh Spector: Just square that with the comments you've been talking about earlier, about, you know, focus on gaining volumes of share gains. Thanks.
Just square that with the comments you've been talking about earlier, about, you know, focus on gaining volumes of share gains. Thanks.
Speaker #14: I'm just curious if you disagree with any of that framing . Is the market Are you lower ? assuming more and just square that with the comments you've been talking about earlier , about focus on gaining volumes of share gains ?
Heidi Petz: Josh, respectfully, I disagree. We, the market is down, I think, probably hard to characterize it, but I would say it's down more than that. And where we look at our performance base case, we've guided to down single to up single, and the controllables in that space, and I'll point to residential repaint, where we continue to take share in a down market. We're gonna continue to make the investments, putting a new store in every four days, continue to invest in dedicated reps. We're investing in innovation. In fact, in the end of the quarter, we're gonna be launching a zero VOC, plant-based interior coating that will be the best paint we've ever made. And it's because we're that confident in our ability to convert share with residential repaint.
Heidi Petz: Josh, respectfully, I disagree. We, the market is down, I think, probably hard to characterize it, but I would say it's down more than that. And where we look at our performance base case, we've guided to down single to up single, and the controllables in that space, and I'll point to residential repaint, where we continue to take share in a down market. We're gonna continue to make the investments, putting a new store in every four days, continue to invest in dedicated reps. We're investing in innovation. In fact, in the end of the quarter, we're gonna be launching a zero VOC, plant-based interior coating that will be the best paint we've ever made. And it's because we're that confident in our ability to convert share with residential repaint.
Speaker #14: Thanks , Josh .
Speaker #1: Respectfully , I disagree . We the market is down . I think probably hard to characterize it , but I would say it's down more than that .
Speaker #1: And where we look at our performance base case , we've guided to down single to up single and the controllables in that space .
Speaker #1: I'll and I'll point to And repaint where we continue to take share in a down market . We're going to to make investments , the continue putting a new store in every four days , continue to invest in dedicated reps .
Speaker #1: We're investing in innovation . In fact , in the end of the quarter , we're going to be launching a zero VOC plant based interior coating .
Heidi Petz: I hand over to Ben to speak to any of the other segments here.
I hand over to Ben to speak to any of the other segments here.
Speaker #1: That will be the best paint we've ever made . And it's because we're that confident in our ability to convert , residential share with repaint .
Ben Meisenzahl: Yeah, I mean, it, if I take it to, you know, talking about, you know, volume here, I think one thing to point at in Paint Stores Group is the ability, even in, you know, a challenged volume market, to still, you know, grow incremental margins. And you look at what happened in Q4, with volumes down low single digit, with stores through good cost control, you know, we're able to generate, you know, almost a 50% incremental margin. And if you look at, you know, the full year, I mean, it's almost 40%, again, in a volume challenged environment. And so we're gonna continue to find ways, in, you know, despite what's happening in the market, to continue to drive margins. Thanks, Josh.
Ben Meisenzahl: Yeah, I mean, it, if I take it to, you know, talking about, you know, volume here, I think one thing to point at in Paint Stores Group is the ability, even in, you know, a challenged volume market, to still, you know, grow incremental margins. And you look at what happened in Q4, with volumes down low single digit, with stores through good cost control, you know, we're able to generate, you know, almost a 50% incremental margin. And if you look at, you know, the full year, I mean, it's almost 40%, again, in a volume challenged environment. And so we're gonna continue to find ways, in, you know, despite what's happening in the market, to continue to drive margins. Thanks, Josh.
Speaker #1: hand over I'll to Ben to speak to any of the other segments here .
Speaker #4: Yeah , I mean , if I take it to you're talking about volume here , I think one thing to point point at in paint stores group is the ability , even in a challenged volume market to still grow incremental margins .
Speaker #4: And you look at what happened in the fourth quarter, with volumes down low single digit with stores, group, good cost control.
Speaker #4: You know , we're able to to generate , you know , almost a 50% incremental margin . And if you look at the full it's year , I mean , almost 40% .
Speaker #4: Again , in a volume challenged environment . And so we're going to continue to find ways in , you know , despite happening in the market what's , to continue to drive margin .
Operator: Thank you. Our next question is coming from Mike Sisson, from Wells Fargo. Your line is live.
Operator: Thank you. Our next question is coming from Mike Sisson, from Wells Fargo. Your line is live.
Speaker #5: Thanks , Josh .
Vincent Andrews: Hey, good morning. Heidi, you mentioned that, you'd welcome some, you know, policies or proposals to help affordability increase supply. You know, what do you think would be helpful in terms of, you know, maybe sparking a recovery in paint demand this year? And then quick follow-up in Protective and Marine, had a really good year. Is, is that mostly the protective side, and does it go into data centers? And if it does, you know, how big and what's the potential there? Thank you.
Mike Sisson: Hey, good morning. Heidi, you mentioned that, you'd welcome some, you know, policies or proposals to help affordability increase supply. You know, what do you think would be helpful in terms of, you know, maybe sparking a recovery in paint demand this year? And then quick follow-up in Protective and Marine, had a really good year. Is, is that mostly the protective side, and does it go into data centers? And if it does, you know, how big and what's the potential there? Thank you.
Speaker #2: Thank you . Our next question is coming from Mike Sison from Wells Fargo . Your line is live
Speaker #15: . How do
Speaker #15: you that you'd mention morning . Hey good policies or proposals some welcome to to to help affordability increase supply . What do you think would be helpful in terms of maybe sparking a recovery in paint demand this year and then a quick follow up in protected Marines had another good year .
Speaker #15: Is that mostly the protective side and does it do it ? Does it go into data centers ? And if it does , how big and what's the potential there ?
Heidi Petz: Great. Well, Mike, I thought you were gonna offer up a policy recommendation. So, yeah, we look at this kind of a three-legged stool, if you will. I don't know that it's gonna be one without the other. I think it's a combination of household income, rates, and affordability. And so as we come into, you know, a year of a midterm election, we'll see what moves there. But at the end of the day, our builders, our partners, are still, you know, still hesitating and waiting to see for some of those things to be solved. I think we're in an environment here where, as we partner with these, our builders, and I remind you, we've got a pretty healthy position with some of the largest builders from an exclusive standpoint.
Heidi Petz: Great. Well, Mike, I thought you were gonna offer up a policy recommendation. So, yeah, we look at this kind of a three-legged stool, if you will. I don't know that it's gonna be one without the other. I think it's a combination of household income, rates, and affordability. And so as we come into, you know, a year of a midterm election, we'll see what moves there. But at the end of the day, our builders, our partners, are still, you know, still hesitating and waiting to see for some of those things to be solved. I think we're in an environment here where, as we partner with these, our builders, and I remind you, we've got a pretty healthy position with some of the largest builders from an exclusive standpoint.
Speaker #15: Thank you .
Speaker #1: Great . Well , Mike , I thought you were going to offer up a policy recommendation . So yeah , we look at this kind of a three legged stool , if you will .
Speaker #1: I don't know that it's going to be one without the other . I think it's combination of household income affordability . And rates and so as we come into , you know , a midterm election , we'll see what moves there .
Speaker #1: But at the end of the day , our builders are partners , are still , you know , still hesitating and waiting to see for some of those things to be solved .
Speaker #1: I think we're in an environment here where as we partner with these , our builders and I remind you , we've got a pretty healthy position with some of the largest builders from an exclusive standpoint .
Heidi Petz: So our ability to lock in with them, help them see around the corner and plan, is gonna be important now more than ever. I'll move on to the P&M side. And, yeah, it is higher on the protective side than the marine side. And you said it right, Mike, it - this is where Sherwin-Williams is so exceptionally well positioned because of the boom we see with AI infrastructure. As you look across that P&M division and the healthy pipeline that the team is working on and what we can bring to market, these data centers, for example, if you look at every coating, that every surface that needs to be coated, we've got a solution.
So our ability to lock in with them, help them see around the corner and plan, is gonna be important now more than ever. I'll move on to the P&M side. And, yeah, it is higher on the protective side than the marine side. And you said it right, Mike, it - this is where Sherwin-Williams is so exceptionally well positioned because of the boom we see with AI infrastructure. As you look across that P&M division and the healthy pipeline that the team is working on and what we can bring to market, these data centers, for example, if you look at every coating, that every surface that needs to be coated, we've got a solution.
Speaker #1: So our ability to lock in with them, help them see around the corner, and plan is going to be important now more than ever.
Speaker #1: I'll move on to the PNM side . And yeah , it is higher on the protective side than the marine side . And you said it right , Mike , this is this is where Sherwin-Williams is .
Speaker #1: So exceptionally well positioned because of the boom . We see with AI infrastructure . As you look across that PNM division and the healthy pipeline that the team is working on and the what we can bring to market these data centers , for example , if you look at every coating that every surface that needs to be got a coated , we've high solution .
Heidi Petz: Our high-performance flooring that we've just made some acquisitions in recently puts us in market leadership position, and you're gonna see us be extremely bullish as we move forward.
Our high-performance flooring that we've just made some acquisitions in recently puts us in market leadership position, and you're gonna see us be extremely bullish as we move forward.
Speaker #1: The flooring performance that we've just made—our recent acquisitions—puts us in a market leadership position. And you're going to see us be extremely bullish as we move forward.
Ben Meisenzahl: Yeah. Mike, I'll add just one more thing. I mean, going back to, you know, the first question in, in the policies, and Heidi laid that out well. You know, what that all means to us as it relates to our, our outlook, you know, if there are things that happen, if there are policies that are implemented that become tailwinds for us, the plan that we have built, you know, is gonna enable us to capture those and win from those. And so I know we outlined on slide 9 of the presentation, you know, some of our economic assumptions. And so we're gonna be watching to see if there are policy adjustments that could turn some of those metrics better for us.
Ben Meisenzahl: Yeah. Mike, I'll add just one more thing. I mean, going back to, you know, the first question in, in the policies, and Heidi laid that out well. You know, what that all means to us as it relates to our, our outlook, you know, if there are things that happen, if there are policies that are implemented that become tailwinds for us, the plan that we have built, you know, is gonna enable us to capture those and win from those. And so I know we outlined on slide 9 of the presentation, you know, some of our economic assumptions. And so we're gonna be watching to see if there are policy adjustments that could turn some of those metrics better for us.
Speaker #4: Mike , I'll
Speaker #4: add just one more thing . I mean , . going back Yeah , to the first question in the policies and how you laid that out .
Speaker #4: Well , you know what that all means to us as it relates to our our outlook . You know , if there are things that that happen , if there are policies that are implemented that become tailwinds for us , the plan that we have built is going to enable us to to capture those and win from those .
Speaker #4: And so I know we outlined on slide nine of the prepared of the presentation , you know , some of our economic assumptions .
Ben Meisenzahl: And in turn, you should expect our performance to mirror that.
And in turn, you should expect our performance to mirror that.
Speaker #4: And so we're going to be watching to see if there are policy adjustments that could turn some of those metrics better for us .
Mike Harrison: Thanks, Mike.
Jim Jaye: Thanks, Mike.
Operator: Thank you. Our next question is coming from Patrick Cunningham from Citi. Your line is live.
Operator: Thank you. Our next question is coming from Patrick Cunningham from Citi. Your line is live.
Speaker #4: And and in turn , you should expect our performance to , to mirror that .
Speaker #5: Mike Thanks , .
Patrick Cunningham: Hi, good morning. So Heidi, throughout the past year and a half, you've talked about, you know, capitalizing on opportunities, you know, disruption in the industry. Given the recent, you know, mega-merger announcement, there's potentially some fresh disruption. So how would you characterize the opportunity set, maybe within more of your industrial-facing businesses?
Patrick Cunningham: Hi, good morning. So Heidi, throughout the past year and a half, you've talked about, you know, capitalizing on opportunities, you know, disruption in the industry. Given the recent, you know, mega-merger announcement, there's potentially some fresh disruption. So how would you characterize the opportunity set, maybe within more of your industrial-facing businesses?
Speaker #2: Our Thank you . next from question is Patrick Cunningham from Citi . Your line is live .
Speaker #7: Hi . Good morning .
Speaker #6: So .
Speaker #13: Heidi , throughout the past .
Speaker #7: Year .
Speaker #16: And a half , you've talked about capitalizing on opportunities , disruption in the industry . Given the recent mega merger announcement . potentially There's some fresh disruption .
Heidi Petz: Yeah, it's a great question. I think the word disruption is the right word. When you think about what's in play there, obviously, it impacts several of our divisions, and the teams are gonna continue to be very aggressive out there. You know, but when I step back and look at the big picture over the last few years, I think it's safe to say that by and large, there's been a lot of shift across the competitive set on both architectural and industrial. And what I'm most excited about is the stability of our strategy. We've got a rock-solid strategy. We've got the playbook, we've got the management team, the team out in the field every day, clarity about how to execute that playbook.
Heidi Petz: Yeah, it's a great question. I think the word disruption is the right word. When you think about what's in play there, obviously, it impacts several of our divisions, and the teams are gonna continue to be very aggressive out there. You know, but when I step back and look at the big picture over the last few years, I think it's safe to say that by and large, there's been a lot of shift across the competitive set on both architectural and industrial. And what I'm most excited about is the stability of our strategy. We've got a rock-solid strategy. We've got the playbook, we've got the management team, the team out in the field every day, clarity about how to execute that playbook.
Speaker #16: So, how would you characterize the opportunity set, maybe within more of your industrial-facing businesses?
Speaker #1: Yeah , it's a great question . I think the word disruption is the right word . And when you think about what's in play , there , obviously there's it impacts several several of our divisions and the teams are going to continue to be very aggressive out there .
Speaker #1: know . But when You I step back and look at the big picture , over the last few years , I think it's safe to that say by and large , there's been a lot of shift across the competitive set on both architectural and industrial and what I'm most excited about is the stability of our .
Speaker #1: we've strategy We got a rock solid strategy . the playbook , We've got we've got the management team , the the team out in the field every day .
Heidi Petz: And so we mentioned earlier that there's, you know, we take volatility as an opportunity to create opportunity, whether that's in the macro or in the competitive landscape. And we're gonna do, we're gonna be just that. We're gonna continue to stay close and get closer to our customers, find new ways to solve their challenges, and we're, we're gonna come out winning.
And so we mentioned earlier that there's, you know, we take volatility as an opportunity to create opportunity, whether that's in the macro or in the competitive landscape. And we're gonna do, we're gonna be just that. We're gonna continue to stay close and get closer to our customers, find new ways to solve their challenges, and we're, we're gonna come out winning.
Speaker #1: Clarity about how to execute that playbook . And so we mentioned earlier that there's , you know , we take volatility as an opportunity to create opportunity .
Speaker #1: Whether that's in the macro or in the competitive landscape . And we're going to do we're going to be just that . We're going to continue to stay close and get closer to our customers , ways to solve their find new challenges .
Mike Harrison: Thank you, Patrick.
Jim Jaye: Thank you, Patrick.
Operator: Thank you. Our next question is coming from Arun Viswanathan from RBC Capital Markets. Your line is live.
Operator: Thank you. Our next question is coming from Arun Viswanathan from RBC Capital Markets. Your line is live.
Speaker #1: And we're going to come out winning .
Speaker #5: Thank you . Patrick .
Speaker #2: Thank you. Our next question is coming from Arun Viswanathan from RBC Capital Markets. Your line is live.
Arun Viswanathan: Great, thanks for taking my question. Hope you guys are well. I guess I just wanted to understand, the element of, potential conservatism in the guide here and maybe what, what could get you to the upper end. It, it sounds like, you know, you will be, implementing that price increase, maybe get 2 to 3 points out of that. And, and then, you know, would it be mainly volume in Paint Stores Group? I mean, we have seen some improvement in existing home sales over the last few months. And are you kind of assuming kind of, you know, continued softness in commercial and new?
Arun Viswanathan: Great, thanks for taking my question. Hope you guys are well. I guess I just wanted to understand, the element of, potential conservatism in the guide here and maybe what, what could get you to the upper end. It, it sounds like, you know, you will be, implementing that price increase, maybe get 2 to 3 points out of that. And, and then, you know, would it be mainly volume in Paint Stores Group? I mean, we have seen some improvement in existing home sales over the last few months. And are you kind of assuming kind of, you know, continued softness in commercial and new?
Speaker #13: Great .
Speaker #17: Thanks for taking my question . I hope you guys are well . I guess I just wanted to understand the element of potential conservatism in the guide here , and what could maybe get you to the upper end .
Speaker #17: It sounds like , you know , you will be implementing that price increase . Maybe you get . that of 2 to 3 points out and then , you know , mainly would it be volume in pain storage group ?
Speaker #17: I mean , we have seen some improvement in existing home sales over the last few months . And are you kind of assuming kind of , you know , continued softness in commercial and new ?
Arun Viswanathan: Maybe you can just kind of go through some of the verticals within Paint Stores Group and see how, you know, maybe some of the different scenarios could play out and maybe get push you towards the upper end of that guide. Thanks.
Maybe you can just kind of go through some of the verticals within Paint Stores Group and see how, you know, maybe some of the different scenarios could play out and maybe get push you towards the upper end of that guide. Thanks.
Speaker #17: Maybe you can just kind of go through some of the verticals within Paint Storage Groups and see how, you know, maybe some of the different scenarios could play out.
Ben Meisenzahl: Hey, Arun. You know, I'll start with saying that, you know, when you look at our outlook, I would call it realistic. And again, if I point back to the presentation deck and the economic assumptions that are the foundation of our guidance, you can see how, you know, we're framing that out. And I'll point to a couple of the indicators. You know, if you look at existing home turnover, there's a wide varying range of, you know, assumptions next year. You have some people that think it's gonna be back 1 to 2%. You've got some that are reporting it could be as high as 14%.
Ben Meisenzahl: Hey, Arun. You know, I'll start with saying that, you know, when you look at our outlook, I would call it realistic. And again, if I point back to the presentation deck and the economic assumptions that are the foundation of our guidance, you can see how, you know, we're framing that out. And I'll point to a couple of the indicators. You know, if you look at existing home turnover, there's a wide varying range of, you know, assumptions next year. You have some people that think it's gonna be back 1 to 2%. You've got some that are reporting it could be as high as 14%.
Speaker #17: And maybe push you towards the upper end of that guide . Thanks .
Speaker #4: Hey , Arun , I'll start with saying that , you know , as you look at our outlook , I would I would call it realistic .
Speaker #4: And again , if I back to point the presentation deck and the economic assumptions that have are the foundation of our guidance , you can see how we're framing that out .
Speaker #4: And I'll point to a couple of the indicators . You know , if you look at existing home turnover , there's a wide varying range of , you assumptions .
Speaker #4: Next year you have some people that think it's going to be back 1 to 2% . You've got some that are reporting it could be as high as 14% .
Ben Meisenzahl: And so I think what's important for us to, to share, and the reason that we put that slide together, so you could anchor on, you could see where we were anchoring our basis for, for our midpoint guidance. And so we feel in, in that example, with existing home sales, it's more realistic to be, you know, in that low single-digit range, absent any, you know, major policy shifts or anything else that we, we talked about. And so, the basis of that foundation, I think we feel very, you know, comfortable and confident with. And as I mentioned earlier, if those indicators get better, if we see, you know, rates, you know, trend lower, if existing home sales turnover is higher, if consumer confidence and affordability gets better, you should expect that our results are, are higher than, the midpoint that we're providing.
And so I think what's important for us to, to share, and the reason that we put that slide together, so you could anchor on, you could see where we were anchoring our basis for, for our midpoint guidance. And so we feel in, in that example, with existing home sales, it's more realistic to be, you know, in that low single-digit range, absent any, you know, major policy shifts or anything else that we, we talked about. And so, the basis of that foundation, I think we feel very, you know, comfortable and confident with. And as I mentioned earlier, if those indicators get better, if we see, you know, rates, you know, trend lower, if existing home sales turnover is higher, if consumer confidence and affordability gets better, you should expect that our results are, are higher than, the midpoint that we're providing.
Speaker #4: And so I think what's important for us to to share , and the reason that we put that slide together so you could anchor on , you can see where we were anchoring our basis for , for our midpoint guidance .
Speaker #4: And so we feel in that example with existing home sales , it's more realistic to be , you know , in that low single digit range , absent any , you know , major policy shifts or anything else that we talked about .
Speaker #4: And so the basis of that foundation , I think we feel very comfortable and confident with and as I mentioned earlier , if those indicators get better , if we see , you know , rates trend lower , if existing home sales turnover is higher , if consumer confidence and affordability gets better , you should expect that our results are higher than the midpoint that we're providing .
Mike Harrison: Thank you, Arun.
Jim Jaye: Thank you, Arun.
Operator: Thank you. Our next question is coming from Duffy Fischer from Goldman Sachs. Your line is live.
Operator: Thank you. Our next question is coming from Duffy Fischer from Goldman Sachs. Your line is live.
Speaker #5: Thank you Arun .
Duffy Fischer: Yeah, good morning. Could we go back to Consumer Brands Group? I just want to understand the margin implication of Suvinil coming in and the cost-cutting programs. So do we need to kind of model a 2% decline year-over-year until we anniversary Suvinil, and then, you know, it kind of bounces back up towards normal? Or how to think about that playing out throughout this year, and then once we've anniversaried it, what does it look like?
Duffy Fischer: Yeah, good morning. Could we go back to Consumer Brands Group? I just want to understand the margin implication of Suvinil coming in and the cost-cutting programs. So do we need to kind of model a 2% decline year-over-year until we anniversary Suvinil, and then, you know, it kind of bounces back up towards normal? Or how to think about that playing out throughout this year, and then once we've anniversaried it, what does it look like?
Speaker #2: Thank you. Our next question is coming from Duffy Fisher from Goldman Sachs. Your line is live.
Speaker #6: Yeah . Good morning . Could we go consumer Brands Group ? want to understand the margin implication of souvenirs coming in and the cost cutting programs .
Speaker #6: So do we need to kind of model a 2% decline year over until we year anniversary souvenir and then it kind of bounces back up towards normal or how to think about that playing out throughout this And then year .
Ben Meisenzahl: ... Hey, Duffy. Yeah, if you think about, the fourth quarter is generally a lower margin quarter, for us, anyway. And as we talked about, you know, coming out of our Q2 call, you know, we, Consumer Brands Group, we have some supply chain inefficiencies built in there, and that was, you know, due to targeted production volume reductions as we're trying to manage our inventory to the end of the year. So with Suvinil, I know there's a lot of noise there. With Suvinil coming in, that doesn't help as well. But what I will tell you is that, you know, from an operating margin point of view, we should expect to see, you know, similar core business to our existing Sherwin business.
Ben Meisenzahl: ... Hey, Duffy. Yeah, if you think about, the fourth quarter is generally a lower margin quarter, for us, anyway. And as we talked about, you know, coming out of our Q2 call, you know, we, Consumer Brands Group, we have some supply chain inefficiencies built in there, and that was, you know, due to targeted production volume reductions as we're trying to manage our inventory to the end of the year. So with Suvinil, I know there's a lot of noise there. With Suvinil coming in, that doesn't help as well. But what I will tell you is that, you know, from an operating margin point of view, we should expect to see, you know, similar core business to our existing Sherwin business.
Speaker #6: once we've anniversary at what does it look like ?
Speaker #4: Hey , Duffy . Yeah . If you think about the fourth quarter , is generally a lower margin quarter , you know , for us anyway .
Speaker #4: And as we talked about , you know , coming out of our second quarter call , you know , we consumer brands group , we have some supply chain inefficiencies built in there .
Speaker #4: And that was, you know, due to targeted production volume reductions, as we're trying to manage our inventory to the end of the year.
Speaker #4: So with souvenir , I know there's a lot of noise there with souvenir coming in that doesn't that doesn't help as well . But what I will tell you is that from an operating margin point of view , we should expect to to see , you know , similar core business to our existing Sherwin business .
Ben Meisenzahl: We will have some integrating costs, as you can imagine, a deal of that size, the integrating activities that are gonna be required, the system integrations, et cetera. We're gonna have some costs, as we go through 2026. But, you know, from a margin point of view, yeah, until we anniversary that in Q3 of next year, you can expect it to be maybe a little muted, the same degree that you saw in Q4.
We will have some integrating costs, as you can imagine, a deal of that size, the integrating activities that are gonna be required, the system integrations, et cetera. We're gonna have some costs, as we go through 2026. But, you know, from a margin point of view, yeah, until we anniversary that in Q3 of next year, you can expect it to be maybe a little muted, the same degree that you saw in Q4.
Speaker #4: We will have some integrating costs . As you can imagine , a deal of that size , the integrating activities that are going to be required .
Speaker #4: The system integrations , etc. we're going to have some cost as we go through 2026 , but you know , from a margin point of view , yeah , until we anniversary that in the third quarter of next year , you can expect it to be maybe , maybe a little muted the same degree that you saw in the fourth quarter .
Kevin McCarthy: Thanks, Duffy.
Jim Jaye: Thanks, Duffy.
Operator: Thank you. Our next question is coming from Mike Harrison, from Seaport Research Partners. Your line is live.
Operator: Thank you. Our next question is coming from Mike Harrison, from Seaport Research Partners. Your line is live.
Speaker #5: Thanks , Duffy .
Speaker #2: Thank you . Our next question is coming from Mike Harrison from Seaport Research Partners . Your line is live .
Mike Harrison: Hi, good morning. You've talked in the past about periodic repaints of houses occurring every 5 to 7 years. A lot of demand was pulled forward into the 2021 timeframe, so, you know, we should be getting into a period where we should start to see more repaint activity. In your view, Heidi, what is preventing that thesis from playing out? Is it the cost of labor and maybe availability of paint contractors? Is it the cost of the paint itself? You know, when you think about consumer sentiment and you know, just propensity to repaint periodically, you know, what could conflict with that prevailing view of repainting every 5 to 7 years?
Mike Harrison: Hi, good morning. You've talked in the past about periodic repaints of houses occurring every 5 to 7 years. A lot of demand was pulled forward into the 2021 timeframe, so, you know, we should be getting into a period where we should start to see more repaint activity. In your view, Heidi, what is preventing that thesis from playing out? Is it the cost of labor and maybe availability of paint contractors? Is it the cost of the paint itself? You know, when you think about consumer sentiment and you know, just propensity to repaint periodically, you know, what could conflict with that prevailing view of repainting every 5 to 7 years?
Speaker #13: Hi . Good morning . You've talked in the past about periodic repayment houses occurring every 5 to 7 years . A lot of demand was pulled forward 2021 timeframe .
Speaker #13: into So we getting into a should be period where we should start to see more repaint activity . In your view , Heidi , what is preventing that thesis from playing out ?
Speaker #13: Is it the cost of labor and maybe availability of paint contractors ? Is it the cost of the paint itself ? You know , when you think about consumer sentiment and , you know , just propensity to repaint periodically , you know , what what could the conflict with that prevailing view of of repainting every 5 to 7 years ?
Heidi Petz: Yeah, and you're right, it is, we say, a kind of a 5- to 6- to 7-year cycle, and we, we are coming off of that post-COVID. I do think there are some natural governors in play right now, just because we are in an inflationary environment. Consumer confidence is absolutely impacted. When you think about home improvement in general, though, what I love about our position is that we're one of the most affordable and most quick to update your home versus larger kitchen and bath projects. And so I do believe as we continue to monitor a lot of these indicators, we're gonna stay very close to it. But we'd like to see more tick up happen faster. I do think it's gonna still be a bit choppy throughout the year.
Heidi Petz: Yeah, and you're right, it is, we say, a kind of a 5- to 6- to 7-year cycle, and we, we are coming off of that post-COVID. I do think there are some natural governors in play right now, just because we are in an inflationary environment. Consumer confidence is absolutely impacted. When you think about home improvement in general, though, what I love about our position is that we're one of the most affordable and most quick to update your home versus larger kitchen and bath projects. And so I do believe as we continue to monitor a lot of these indicators, we're gonna stay very close to it. But we'd like to see more tick up happen faster. I do think it's gonna still be a bit choppy throughout the year.
Speaker #1: Yeah . And you're right . It is . We say kind of a five to 6 to 7 year cycle . And we we are coming off of post that Covid .
Speaker #1: I do think some there are natural governors in play right now just because we are in an inflationary environment . Consumer confidence is absolutely impacted .
Speaker #1: When you think about home improvement in general, though, what I love about paint is that it's one of the things we're most able and most quick to use to update your home versus larger kitchen and bath projects.
Speaker #1: And so I do believe as we continue to monitor a lot of these indicators , what we're going to stay very close to it .
Heidi Petz: And I'll remind you too, the DIY segment represents about 40% of the available gallons out there. So when it starts to move, you're gonna wanna come along for the ride, but we just need it to start moving.
And I'll remind you too, the DIY segment represents about 40% of the available gallons out there. So when it starts to move, you're gonna wanna come along for the ride, but we just need it to start moving.
Speaker #1: But we'd like to see more more tick up happen faster . I do think it's going to still be a bit throughout the choppy year , and I'll remind you to the DIY segment represents about 40% of the available gallons out there .
Ben Meisenzahl: I think Ben's point that he mentioned a minute ago is important too, Mike, around the existing home sale outlook. I mean, that range of some saying existing home sales could be down low single digits to up 14%. That gives you a really good view, I think, into the uncertainty that's out there in terms of demand. So, whatever way it goes, though, we expect to outperform, and we're very well positioned to do that based on the investments we've consistently made over the last two years. And thanks for the question.
Ben Meisenzahl: I think Ben's point that he mentioned a minute ago is important too, Mike, around the existing home sale outlook. I mean, that range of some saying existing home sales could be down low single digits to up 14%. That gives you a really good view, I think, into the uncertainty that's out there in terms of demand. So, whatever way it goes, though, we expect to outperform, and we're very well positioned to do that based on the investments we've consistently made over the last two years. And thanks for the question.
Speaker #1: And so when it starts to move , you're going to want to come along for the ride . But we just need it to start moving .
Speaker #1: .
Speaker #5: And I think Ben’s point that he mentioned a minute ago is important to Mike around the existing home sale outlook. I mean, that range of some saying existing home sales could be down low single digits to up 14%.
Speaker #5: That gives you a really good view . I think , into the uncertainty that's out there in terms of of demand . So goes , though , whatever way it we expect to outperform and we're very well positioned to do that based on the investments we've consistently made two years .
Operator: Thank you. Our next question is coming from Kevin McCarthy, from Vertical Research Partners. Your line is live.
Operator: Thank you. Our next question is coming from Kevin McCarthy, from Vertical Research Partners. Your line is live.
Speaker #5: Over. And thanks for the question.
Kevin McCarthy: Yes, thank you, and good morning. Heidi, in the prepared remarks, I think you commented with regard to the 7% price increase that you'd expect realization to be in the low single-digit percentage range. I'm not sure if that was a near-term comment or if that's where you would expect to be in the fullness of time, but maybe you can elaborate on what that trajectory does look like over the next few quarters. And what I'm really trying to get at is the nexus between this realization versus your historical realizations against the backdrop of, you know, your aggressive pursuit of volume. Will it be lower this time, or do you think ultimately it will be the same?
Kevin McCarthy: Yes, thank you, and good morning. Heidi, in the prepared remarks, I think you commented with regard to the 7% price increase that you'd expect realization to be in the low single-digit percentage range. I'm not sure if that was a near-term comment or if that's where you would expect to be in the fullness of time, but maybe you can elaborate on what that trajectory does look like over the next few quarters. And what I'm really trying to get at is the nexus between this realization versus your historical realizations against the backdrop of, you know, your aggressive pursuit of volume. Will it be lower this time, or do you think ultimately it will be the same?
Speaker #2: Thank you . Our next question is coming from Kevin McCarthy from Vertical Research Partners . Your line is live .
Speaker #18: Yes . Thank you . And good morning . Heidi . In the prepared remarks , I think you commented with regard to the 7% price increase you'd that expect realization to be in the low single digit percentage range .
Speaker #18: I'm not sure if that was a near term comment or or if that's where you would expect to be in the fullness of time , but maybe you can elaborate on on what that trajectory does look like over the next few quarters , and what I'm really trying to get at is the Nexus between this realization versus your historical realizations against the backdrop of , you your aggressive pursuit of know , Will it be lower this volume .
Heidi Petz: We've said it's gonna be in the historic range, maybe at the low end of the historic range, but I would look at this again because of this unique competitive environment that we find ourselves in. When I look at the low single digit guidance, I would think of that, Kevin, as a full year guide, and I'll invite Ben to jump in on any other details.
Heidi Petz: We've said it's gonna be in the historic range, maybe at the low end of the historic range, but I would look at this again because of this unique competitive environment that we find ourselves in. When I look at the low single digit guidance, I would think of that, Kevin, as a full year guide, and I'll invite Ben to jump in on any other details.
Speaker #18: time , or do you think ultimately it will be the same ?
Speaker #1: The range is going to be in, we—historic. Maybe at the low end of the historic range, but I would look at this again because of this unique competitive environment that we find ourselves in.
Speaker #1: When I look at the low single digit guidance , I would think of that . Kevin , as a full year guide , and I'll invite Ben to jump in on any other details .
Ben Meisenzahl: Yeah, Kevin, I think what's important to know here, you know, that the teams are engaged. We're getting after the effectiveness, you know, where we can get it. There might be some delayed realization if you have, you know, different accounts that go a little later than January. And so we're gonna continue to monitor this. We know how to do this well. There's a high degree of confidence in our Paint Stores Group teams to get the price where they can, and we're gonna manage it that way.
Ben Meisenzahl: Yeah, Kevin, I think what's important to know here, you know, that the teams are engaged. We're getting after the effectiveness, you know, where we can get it. There might be some delayed realization if you have, you know, different accounts that go a little later than January. And so we're gonna continue to monitor this. We know how to do this well. There's a high degree of confidence in our Paint Stores Group teams to get the price where they can, and we're gonna manage it that way.
Speaker #4: Yeah , Kevin , I think what's important to note here , you know , that the teams are are engaged . We're getting after the effectiveness .
Speaker #4: You know , where we can get it . There might be some delayed realization as you have , you know , accounts that different go a little later than January .
Speaker #4: And so we're going to continue to monitor this . We're we know how to do this this . Well , there's a high degree of confidence in our paint stores group teams to , price where they to get the can .
Heidi Petz: Thank you, Kevin.
Jim Jaye: Thank you, Kevin.
Operator: Thank you. Our next question is coming from Matthew DeYoe, from Bank of America. Your line is live.
Operator: Thank you. Our next question is coming from Matthew DeYoe, from Bank of America. Your line is live.
Speaker #4: And we're going to manage it that way .
Speaker #5: Thank you . Kevin .
Speaker #2: Thank you. Our next question is coming from Matthew Dio from Bank of America. Your line is live.
Mike Harrison: Yeah, good morning, everyone. To build a little bit on Pat's question, would you look at or participate in any asset sales on the backs of the, kind of the peer merger going on? I mean, I know it's a bit of a broad question, considering there's a pretty diversified portfolio, but say, for example, powder coatings, right? Would new market entry be interesting to you or expansion in some of these other more core industrial segments?
Matthew DeYoe: Yeah, good morning, everyone. To build a little bit on Pat's question, would you look at or participate in any asset sales on the backs of the, kind of the peer merger going on? I mean, I know it's a bit of a broad question, considering there's a pretty diversified portfolio, but say, for example, powder coatings, right? Would new market entry be interesting to you or expansion in some of these other more core industrial segments?
Speaker #2: .
Speaker #19: Hey, good. To build a little bit on Pat's question, would you look at or participate in any asset sales on the back of the kind of, the peer merger going on?
Speaker #19: everyone morning
Speaker #19: I mean , I know it's a bit of a broad question considering there's pretty diversified portfolio , but say , for example , powder coatings , right .
Speaker #19: Would new market entry be interesting to you or expansion in some of these other more core industrial segments ?
Heidi Petz: ... Well, Matt, we love to grow, and we love expansion. Having said that, we, you know, the way we look at our, our growth strategy, obviously, where we start with an organic focus. When we consider inorganic activity, it's a very disciplined review of our portfolio, which, which you just said. And so when I think about the, you know, what's in play there, and as stewards of your capital, you know, we're always going to look, but there are a few of those businesses that they fell out of the air and into our laps; all day long, yes, we would love them. But right now, we're just focusing on growing organically and competing in the market.
Heidi Petz: ... Well, Matt, we love to grow, and we love expansion. Having said that, we, you know, the way we look at our, our growth strategy, obviously, where we start with an organic focus. When we consider inorganic activity, it's a very disciplined review of our portfolio, which, which you just said. And so when I think about the, you know, what's in play there, and as stewards of your capital, you know, we're always going to look, but there are a few of those businesses that they fell out of the air and into our laps; all day long, yes, we would love them. But right now, we're just focusing on growing organically and competing in the market.
Speaker #1: Well , Matt , we love to grow and we love expansion . Having said that , you know , the way we look at our our growth strategy , obviously what with an organic we start focus when we consider inorganic activity .
Speaker #1: It's a very review of our disciplined portfolio , which you just said . And so when I think about the , you know , what's in play there and as stewards of your capital , you know , we're always going to look .
Speaker #1: But there are a few of those businesses that they fell out of air into our the laps all day long . Yes , we would love them , but right now we're just focusing on growing organically and competing in the market .
Ben Meisenzahl: Thank you, Matt.
Ben Meisenzahl: Thank you, Matt.
Operator: Thank you. Our next question is coming from Garik Shmois from Loop Capital. Your line is live.
Operator: Thank you. Our next question is coming from Garik Shmois from Loop Capital. Your line is live.
Speaker #5: Thank you . Matt .
Garik Shmois: Oh, hi. Thank you. As you made the decision to bring back the 401(k) match, you cited delays in tariffs as one of the drivers that helped you decide to reinstitute it. I was wondering if there's anything else specifically that you're looking at that gave you confidence? And just on the flip side, you're talking to a number of choppy macro indicators and, you know, trends that don't seem to be, you know, flipping anytime soon. I was wondering if there's any incremental costs that you're looking to implement this year.
Garik Shmois: Oh, hi. Thank you. As you made the decision to bring back the 401(k) match, you cited delays in tariffs as one of the drivers that helped you decide to reinstitute it. I was wondering if there's anything else specifically that you're looking at that gave you confidence? And just on the flip side, you're talking to a number of choppy macro indicators and, you know, trends that don't seem to be, you know, flipping anytime soon. I was wondering if there's any incremental costs that you're looking to implement this year.
Speaker #2: Thank you . Our next question is coming from Garik Shmois from Loop Capital . Your line is live .
Speaker #20: Hi. Thank you. As you made the decision to bring back the 401(k) match, you cited delays in tariffs as one of the drivers that helped you decide to reinstitute it.
Speaker #20: I was wondering if there was anything else specifically that you're looking at that gave you confidence . And just on the flip side , you're talking to a number of choppy macro indicators and trends seem to that don't be flipping Is anytime soon .
Heidi Petz: Right. So, Garik, I'm gonna start, and then I'll hand this over to Ben. I think your point and your recognition and our recognition that the tariffs are going to have a delayed realization, so I'll have Ben comment on that here in a moment. But I do want to take a minute just to address this. I think we said this in the prepared remarks, but this decision was not made on a single quarter or any short-term optics. And we all know this period of elevated and prolonged uncertainty. We had one objective in mind, which was protecting the operating strength, the stability, and the long-term health of our company by protecting jobs. And I'm really proud that we've been in a position to restore that.
Heidi Petz: Right. So, Garik, I'm gonna start, and then I'll hand this over to Ben. I think your point and your recognition and our recognition that the tariffs are going to have a delayed realization, so I'll have Ben comment on that here in a moment. But I do want to take a minute just to address this. I think we said this in the prepared remarks, but this decision was not made on a single quarter or any short-term optics. And we all know this period of elevated and prolonged uncertainty. We had one objective in mind, which was protecting the operating strength, the stability, and the long-term health of our company by protecting jobs. And I'm really proud that we've been in a position to restore that.
Speaker #20: Are there any incremental costs that you're looking to implement this year?
Speaker #1: I'm great. So, I'm going to start, and then I'll hand this over to Ben. I think your point and your recognition—and our recognition—that the tariffs are going to have a delayed realization.
Speaker #1: Ben I'll have So comment on that here in a moment . But I do want to take a minute just to address this .
Speaker #1: I think we said this in the prepared remarks , but this decision was not made on a single quarter or any short term optics .
Speaker #1: we And all know this period of elevated and prolonged uncertainty . We had one objective in mind , which was protecting the operating strength , the stability in the long term health of our company by protecting jobs and I'm I'm really proud that we've been in a position to restore that .
Heidi Petz: But here's the reality, and I share this with you just to bring you into how I'm thinking about this. When you have a differentiated strategy that you believe in, and it's clearly working, and you've got a world-class team that knows how to execute through all types of cycles, your number one focus is on execution. And so I think now more than ever, you've got customers that are dealing with so much uncertainty. They are looking for partners that can be stable, reliable, and predictable. And when you've got a winning strategy, you've got customers that need you, you're gonna invest in that execution capacity. So which means we're gonna continue to not only attract and hire, but it's in our best interest to retain this talent. So we've seen a lot of widespread layoffs out there, in and out of our industry.
But here's the reality, and I share this with you just to bring you into how I'm thinking about this. When you have a differentiated strategy that you believe in, and it's clearly working, and you've got a world-class team that knows how to execute through all types of cycles, your number one focus is on execution. And so I think now more than ever, you've got customers that are dealing with so much uncertainty. They are looking for partners that can be stable, reliable, and predictable. And when you've got a winning strategy, you've got customers that need you, you're gonna invest in that execution capacity. So which means we're gonna continue to not only attract and hire, but it's in our best interest to retain this talent. So we've seen a lot of widespread layoffs out there, in and out of our industry.
Speaker #1: But here's the reality , and I share this with you . Just to bring you into how I'm thinking about this . When you have a differentiated strategy that you believe in and it's clearly working and you've got a world class team that knows how to execute through all types of cycles , your number one focus is on execution .
Speaker #1: And so I think now more than ever , you've got customers that are dealing with so much uncertainty . They are looking for partners that can be stable , reliable and And predictable .
Speaker #1: when you've got a winning strategy , You're going you've got that invest in to customers capacity . execution means we're So which going to continue to not only attract and hire , but it's in our best interest to retain this talent .
Heidi Petz: And I said earlier, we chose a different path, and it was to maintain and preserve these jobs. And I think that making sure that we have that execution capacity, that is what has rewarded our shareholders very well over the last few decades. But let me hand it back to Ben to talk more about the 26 implication.
And I said earlier, we chose a different path, and it was to maintain and preserve these jobs. And I think that making sure that we have that execution capacity, that is what has rewarded our shareholders very well over the last few decades. But let me hand it back to Ben to talk more about the 26 implication.
Speaker #1: So we've seen a lot of widespread out layoffs there in and out of our industry . said earlier , we chose a different path .
Speaker #1: And it was to maintain and preserve these jobs. And I think that making sure that we have that execution capacity, that is what is rewarded.
Ben Meisenzahl: Yeah, I mean, just one comment there, and I'll remind you, back in July, when we gave our guidance, we were operating in an environment of high uncertainty. And, Heidi talked about, you know, us wanting to have, make sure we preserve that financial flexibility. And so that didn't materialize the way that, you know, we had planned out. And part of having that flexibility and pulling that 401(k) lever is, you know, since it didn't play out the way that we had thought throughout the year, it gave us that ability to reinstate that. And even though it was quicker than we had expected, it's great that we were able to do that.
Ben Meisenzahl: Yeah, I mean, just one comment there, and I'll remind you, back in July, when we gave our guidance, we were operating in an environment of high uncertainty. And, Heidi talked about, you know, us wanting to have, make sure we preserve that financial flexibility. And so that didn't materialize the way that, you know, we had planned out. And part of having that flexibility and pulling that 401(k) lever is, you know, since it didn't play out the way that we had thought throughout the year, it gave us that ability to reinstate that. And even though it was quicker than we had expected, it's great that we were able to do that.
Speaker #1: Our very well over the last few shareholders decades . But let me hand it back to Ben to talk more about the 26 implication .
Speaker #4: Yeah , I mean , I've just one comment there and I'll remind you back in July when we gave our guidance , we were operating in an environment of high uncertainty and Heidi talked about , you know , us wanting to have make sure we preserve that , that financial flexibility .
Speaker #4: so And that didn't materialize the way that we had planned out . And part of having that flexibility and pulling that is , you 401 lever know , since it didn't play out the way that we had thought throughout it gave us ability that to to the year , reinstate that .
Ben Meisenzahl: As we go into 2026, it doesn't mean that, you know, the pressures that we see have alleviated. There are still tariff pressures as part of our low single-digit raw material guide that we're gonna have to contend with this year, and that delayed realization is something that we're gonna have to contend with this year. You've seen us on the cost out and pulling, you know, levers for, you know, some of the big needle movers. We have confidence that our teams are gonna continue to do that. And we see our cross-business unit teams working really well together to unlock costs in areas that have been harder to get at in prior years.
As we go into 2026, it doesn't mean that, you know, the pressures that we see have alleviated. There are still tariff pressures as part of our low single-digit raw material guide that we're gonna have to contend with this year, and that delayed realization is something that we're gonna have to contend with this year. You've seen us on the cost out and pulling, you know, levers for, you know, some of the big needle movers. We have confidence that our teams are gonna continue to do that. And we see our cross-business unit teams working really well together to unlock costs in areas that have been harder to get at in prior years.
Speaker #4: though it And even was it was quicker than we had expected , it's great that we were able to do that as we go into 2026 .
Speaker #4: It doesn't mean that , you know , the that pressures we see have have alleviated . There are there are still tariff pressures as part of our low single digit raw material guide that we're going to have to contend year and with this that that delayed realization is something that we're going to have to contend with this year .
Speaker #4: You've seen us on the cost out and pulling levers for, you know, some of the big needle movers. We have confidence that our teams are going to continue to do that.
Speaker #4: And we see our cost unit teams working really well together to unlock cost in areas that have been harder to get at in prior years.
Ben Meisenzahl: And so our confidence in them being able to do that also helps our decision to make this and get it reinstated, get this behind us, and we're gonna find ways to continue to overcome the volume challenges.
And so our confidence in them being able to do that also helps our decision to make this and get it reinstated, get this behind us, and we're gonna find ways to continue to overcome the volume challenges.
Speaker #4: And so our confidence in them being able to do that also helps our decision to to make this and get it reinstated , get this behind us , and we're going to find ways to to overcome continue to the volume challenges .
Garik Shmois: Thank you, Garik.
Thank you, Garik.
Operator: Thank you. Our next question is coming from Chuck Cerankosky from North Coast Research. Your line is live.
Operator: Thank you. Our next question is coming from Chuck Cerankosky from North Coast Research. Your line is live.
Speaker #5: Thank you .
Speaker #4: Garik .
Chuck Cerankosky: Good morning, everyone. I wanna take a look at the Paint Stores Group and see if there's any insights to be gleaned by how the non-coatings sales are going, especially with the professionals basket when they're in your stores.
Chuck Cerankosky: Good morning, everyone. I wanna take a look at the Paint Stores Group and see if there's any insights to be gleaned by how the non-coatings sales are going, especially with the professionals basket when they're in your stores.
Speaker #2: Thank you . Our next question is coming from Chuck Saarikoski from Northcoast Your line is live .
Speaker #21: Good morning everyone . I want to take a look at the paint Stores group and and see if there's any insights to be gleaned by how the non coatings sales are going , especially with the professionals basket .
Heidi Petz: Chuck, we're gonna need a little bit more on the question, if you don't mind. When you say non-coatings, what specifically are you referring to?
Heidi Petz: Chuck, we're gonna need a little bit more on the question, if you don't mind. When you say non-coatings, what specifically are you referring to?
Speaker #21: When they're, when they're, when they're in your stores.
Chuck Cerankosky: I'm thinking about the supplies, brushes, sprayers, things like that, that might indicate now where the pros' head is at and what you folks might be looking at to change in their baskets.
Chuck Cerankosky: I'm thinking about the supplies, brushes, sprayers, things like that, that might indicate now where the pros' head is at and what you folks might be looking at to change in their baskets.
Speaker #1: Chuck , we're going to need a little bit more on the question if you don't mind , when you say non coding , what specifically are you referring to ?
Speaker #21: I'm thinking about the supplies brushes , sprayers , things like that . That that might indicate . Now where the pros head is at .
Heidi Petz: That was helpful. Jim's gonna start off here, and then I'll jump in.
Heidi Petz: That was helpful. Jim's gonna start off here, and then I'll jump in.
Speaker #21: And what you folks might be looking at to change in their baskets.
Ben Meisenzahl: Yeah, Chuck, I was just gonna say, you know, one of the things you may be thinking about is spray equipment sales, and I'd say those have been, you know, flattish, reflecting the environment that we're in. Especially, those are, you know, areas we've talked about, new res being under pressure. That'd be an area where you might see some more of that activity. But, Heidi, did you have anything else you wanted to add?
Jim Jaye: Yeah, Chuck, I was just gonna say, you know, one of the things you may be thinking about is spray equipment sales, and I'd say those have been, you know, flattish, reflecting the environment that we're in. Especially, those are, you know, areas we've talked about, new res being under pressure. That'd be an area where you might see some more of that activity. But, Heidi, did you have anything else you wanted to add?
Speaker #1: That was helpful . Jim's going to Jim's going to start off here . And then I'll jump in .
Speaker #5: Yeah, Chuck, I was just going to say, you know, one of the things you talk about is thinking maybe spray equipment sales.
Speaker #5: say And I'd those have been , know , you flattish , reflecting the environment that we're in those , especially are areas we've talked about new RVs being under pressure .
Heidi Petz: Just flat. I mean, it's flattish.
Heidi Petz: Just flat. I mean, it's flattish.
Ben Meisenzahl: Yeah.
Ben Meisenzahl: Yeah.
Heidi Petz: Chuck, the way we think about that, and we call it AP, applied products, is just obviously can be more of a leading indicator. Spray equipment's a really good example, but I would just characterize it as flat, is what we're looking at.
Heidi Petz: Chuck, the way we think about that, and we call it AP, applied products, is just obviously can be more of a leading indicator. Spray equipment's a really good example, but I would just characterize it as flat, is what we're looking at.
Speaker #5: That'd be an area where you might see some more of that activity . But Heidi , did you have anything else you wanted to add ?
Speaker #1: Just flat . I mean , it's flattish . And Chuck , the way we think about that , we called A.P. Applied Products is just obviously can be more of a leading indicator .
Ben Meisenzahl: Thanks, Chuck.
Ben Meisenzahl: Thanks, Chuck.
Speaker #1: Spray is equipment's a really good example , but I would just characterize it as flat is what we're looking at
Operator: Thank you. Our next question is coming from Eric Bosshard from Cleveland Research. Your line is live.
Operator: Thank you. Our next question is coming from Eric Bosshard from Cleveland Research. Your line is live.
Speaker #1: .
Speaker #5: Thanks , .
Speaker #5: Chuck
Eric Bosshard: Good morning. On the DIY market, could you just frame a bit of what you're seeing in terms of perhaps your performance in terms of volume and what's going on with price mix in Q4 and the expectation in 2026?
Eric Bosshard: Good morning. On the DIY market, could you just frame a bit of what you're seeing in terms of perhaps your performance in terms of volume and what's going on with price mix in Q4 and the expectation in 2026?
Speaker #2: Thank you . Our next question is coming from Eric Bosshard from Research . Your line is live .
Speaker #22: Good morning . I'm the DIY market . Can you just frame a bit of what you're seeing in terms of perhaps your performance in terms of volume and what's going on with price mix in for Q and the expectation in 26 ?
Heidi Petz: Yeah, Eric, volume continues to be very choppy. Obviously, this is similar to the comments I made earlier. It's. I wish it was a different environment. Having said that, you know, we've got a unique distribution because we service this DIY customer in two areas. One, through our paint stores, and we love the margin accretion on that side of the business. That's more of a discerning DIY customer that's looking for a higher level of service. But our partnerships through, you know, a lot of our strategic retail partners are extremely important here. And in this environment, you know, we say, "Don't let a downturn go to waste." Making sure that we are aligned, thinking differently about, you know, what's on the shelf, how we can compete across the street.
Heidi Petz: Yeah, Eric, volume continues to be very choppy. Obviously, this is similar to the comments I made earlier. It's. I wish it was a different environment. Having said that, you know, we've got a unique distribution because we service this DIY customer in two areas. One, through our paint stores, and we love the margin accretion on that side of the business. That's more of a discerning DIY customer that's looking for a higher level of service. But our partnerships through, you know, a lot of our strategic retail partners are extremely important here. And in this environment, you know, we say, "Don't let a downturn go to waste." Making sure that we are aligned, thinking differently about, you know, what's on the shelf, how we can compete across the street.
Speaker #1: Yeah . Eric , volume very continues to be choppy . Obviously this is similar to the comments I made earlier . It's I wish it was a different environment .
Speaker #1: Having that , said you know , we've got a unique distribution because we service this DIY customer in two areas . One through our paint stores , and we we love the the margin accretion on that side of the business .
Speaker #1: That's more of a more discerning DIY customer that's looking for a higher level of service . But our partnerships through , you know , a lot of our strategic retail partners are extremely important here and in this environment .
Speaker #1: You know , we say don't let a downturn go to waste , making sure that we are aligned , thinking differently about , you know , what's on the shelf , how we can compete across the street .
Heidi Petz: And so there's a lot of good momentum in terms of planning. We just need the catalyst to come to realization. On price mix, I'll hand it over to Ben.
And so there's a lot of good momentum in terms of planning. We just need the catalyst to come to realization. On price mix, I'll hand it over to Ben.
Speaker #1: And so there's a lot of good momentum in terms of planning . We just need the catalyst to to come to realization price mix .
Ben Meisenzahl: Yeah, Eric, I mean, you've seen in our stores, I mean, our DIY performance has been a little bit better in the quarter here. If I look at DIY in total, though, a lot of what you see there is maybe the premium gallon push. We talked about that on our third quarter call, that with some of our channel partners, we're seeing better premium gallons. And so that's obviously a component of the price mix bucket that you see there. And that's a win for our customers 'cause that's, you know, putting them in a position where they can be more efficient for, you know, for the projects that they're doing in their homes. And so that's about what, you know, we're seeing there.
Ben Meisenzahl: Yeah, Eric, I mean, you've seen in our stores, I mean, our DIY performance has been a little bit better in the quarter here. If I look at DIY in total, though, a lot of what you see there is maybe the premium gallon push. We talked about that on our third quarter call, that with some of our channel partners, we're seeing better premium gallons. And so that's obviously a component of the price mix bucket that you see there. And that's a win for our customers 'cause that's, you know, putting them in a position where they can be more efficient for, you know, for the projects that they're doing in their homes. And so that's about what, you know, we're seeing there.
Speaker #1: on hand that over to Ben .
Speaker #4: Yeah . Eric , I mean , you've seen in our stores , I mean , our DIY performance has been a little bit better in here the quarter .
Speaker #4: DIY in total , If I though , a lot of what you see there maybe is the the premium gallon push . We talked about that on our third quarter call that with some of our channel partners , we're seeing better premium gallons .
Speaker #4: And so that's obviously a component of the the price mix bucket that you see there . And that's a win for our customers because that's , you know , putting them in a position where they can be more efficient for , you know , for the projects that they're doing in their homes .
Ben Meisenzahl: Obviously, in our stores, again, if we're changing pricing, that's a segment where maybe we can be a little more effective. But that'd be my only comment there.
Obviously, in our stores, again, if we're changing pricing, that's a segment where maybe we can be a little more effective. But that'd be my only comment there.
Speaker #4: And so that that's about what we're seeing there . Obviously in our stores again , if we're changing pricing , that's a segment where maybe we can be a little more effective .
Eric Bosshard: Thanks, Eric.
Thanks, Eric.
Operator: Thank you. Our next question is coming from Lawrence Alexander from Jefferies. Your line is live.
Operator: Thank you. Our next question is coming from Lawrence Alexander from Jefferies. Your line is live.
Speaker #4: But that'd be my only comment there.
Speaker #5: Thanks , Eric .
Lawrence Alexander: Good morning. Could you give an update on what your net price tailwind is expected to be going into 2026, and how that compares to how you think about trend pricing, absent a sharp cyclical improvement?
Laurence Alexander: Good morning. Could you give an update on what your net price tailwind is expected to be going into 2026, and how that compares to how you think about trend pricing, absent a sharp cyclical improvement?
Speaker #2: Thank you . Our next question is coming from Lawrence Alexander from Jefferies . Your line is live .
Speaker #23: morning . Good Could you give an update on what your net price tailwind to be going going is into expected 2026 and how that compares to how you think about trend pricing absent a sharp cyclical improvement .
Ben Meisenzahl: Hey, Lawrence. Yeah, I mean, we're gonna annualize our pricing. We went out January 6 last year, and so by the time, you know, we did our pricing January 1 in stores this year, we've annualized that. There might have been a little bit of pricing that we captured later in the year, but our expectation is, hey, we've lapped last year's price increase. The timing coincides pretty well with the new price increase. And so, as we've talked about a couple of times here this morning, you know, we'll be managing high effectiveness in that pricing as best we can as we work through 2026.
Ben Meisenzahl: Hey, Lawrence. Yeah, I mean, we're gonna annualize our pricing. We went out January 6 last year, and so by the time, you know, we did our pricing January 1 in stores this year, we've annualized that. There might have been a little bit of pricing that we captured later in the year, but our expectation is, hey, we've lapped last year's price increase. The timing coincides pretty well with the new price increase. And so, as we've talked about a couple of times here this morning, you know, we'll be managing high effectiveness in that pricing as best we can as we work through 2026.
Speaker #4: Laurence . Yeah , I mean , we're going to annualize our pricing . We went out January sixth last year . And so by the time we did our pricing January 1st and stores this year , we've we've annualized that there might have been a little bit of pricing that we captured later in the year .
Speaker #4: But our expectation is, hey, we've lapped last year's price increase. The timing coincides pretty well with the new price increase.
Speaker #4: And so, as we've talked about a couple of times here this morning, we'll be managing high effectiveness in that pricing as best we can as we work through 2026.
Heidi Petz: Maybe just a final comment as it relates to pricing, I think, and the discipline, just to put a bow on this. I think we are in a very unique position. There's a lot of inflection happening across the industry, and I'm very confident in our strategy, our leadership team, and confident in where we're taking this company. And, I'm excited for what's ahead, and we just, we need the market to help us a little bit, and we're having a very different conversation.
Heidi Petz: Maybe just a final comment as it relates to pricing, I think, and the discipline, just to put a bow on this. I think we are in a very unique position. There's a lot of inflection happening across the industry, and I'm very confident in our strategy, our leadership team, and confident in where we're taking this company. And, I'm excited for what's ahead, and we just, we need the market to help us a little bit, and we're having a very different conversation.
Speaker #1: And maybe just a final comment as it relates to pricing , I think , in the discipline , just to put a bow on this , I think we are in a very unique position .
Speaker #1: There's a lot of inflection happening across the industry, and I'm very confident in our strategy and in our taking this team leadership company.
Jim Jaye: I would just add to tie that all up, Lawrence. Again, if you look in the slide deck that we put out with some of the guidance, you know, we're talking for the full year in 2026, we've got low single digit positive price mix in all three segments, and that gives you a positive, low single digit price mix on a consolidated basis for the full year. Thanks for the question.
Jim Jaye: I would just add to tie that all up, Lawrence. Again, if you look in the slide deck that we put out with some of the guidance, you know, we're talking for the full year in 2026, we've got low single digit positive price mix in all three segments, and that gives you a positive, low single digit price mix on a consolidated basis for the full year. Thanks for the question.
Speaker #1: And I'm excited for what's ahead. And we just—we need the help, market to us a little bit. And we're having a very different conversation.
Speaker #5: Now . Just add to tie that all up . Laurence , again , if you look in the slide deck that we put out with some of the guidance , you know , we're talking for the full year in 26 .
Speaker #5: We've got low single digit positive price mix in all three segments . And that gives you a positive low single digit price mix on a consolidated basis for the full year .
Operator: Thank you. That concludes our Q&A session. I will now hand the conference back to James Jaye for closing remarks. Please go ahead.
Operator: Thank you. That concludes our Q&A session. I will now hand the conference back to James Jaye for closing remarks. Please go ahead.
Speaker #5: And thanks for the question.
Speaker #2: Thank you. That concludes our Q&A session. I'll now hand the conference back to Jim Jaye for closing remarks. Please go ahead.
Jim Jaye: Yeah, thank you, Matthew, and thank you, everybody, for joining our call. Thanks to all the employees of Sherwin-Williams for all their continued hard work. Clearly, you heard today we're continuing to operate in a very challenging demand environment, and we expect that to continue well into the year. But as Heidi mentioned, Ben mentioned, we believe the guidance we're giving today, this initial guidance, is realistic, given all the economic assumptions that we laid out in our slide deck. And, you know, quite frankly, should the market be better than we're seeing today, we'd expect to outperform that guidance. So regardless of the environment, you can count on us. Our strategy is clear, which is providing those differentiated solutions for our customers. I will close with a save-the-date request for everybody for our 2026 financial community presentation.
Jim Jaye: Yeah, thank you, Matthew, and thank you, everybody, for joining our call. Thanks to all the employees of Sherwin-Williams for all their continued hard work. Clearly, you heard today we're continuing to operate in a very challenging demand environment, and we expect that to continue well into the year. But as Heidi mentioned, Ben mentioned, we believe the guidance we're giving today, this initial guidance, is realistic, given all the economic assumptions that we laid out in our slide deck. And, you know, quite frankly, should the market be better than we're seeing today, we'd expect to outperform that guidance. So regardless of the environment, you can count on us. Our strategy is clear, which is providing those differentiated solutions for our customers. I will close with a save-the-date request for everybody for our 2026 financial community presentation.
Speaker #5: Yeah . Thank you , Matthew , and thank you , everybody , for joining our call . And thanks to all the employees of Sherwin-Williams for all their continued hard work .
Speaker #5: Clearly, you heard today we're continuing to operate in a very challenging demand environment, and we expect that to continue well into the year.
Speaker #5: But as Heidi mentioned , Ben we're giving mentioned , we believe the today , this initial guidance is realistic . Giving , given all the economic assumptions that we laid out in our slide deck .
Speaker #5: quite And frankly , should the market be better than we're seeing today , we'd expect to outperform that guidance . So regardless of the environment , you can count on us .
Speaker #5: Our strategy is clear , which is providing those differentiated our solutions for customers . I will close with a save the date request for everybody for our 2026 financial community presentation .
Jim Jaye: It's gonna be in Cleveland this year on Thursday, 24 September, and it will include the opportunity for you to see our new global headquarters and our new global technology center. So we're excited for all of you to experience this amazing investment that we've made for our customers and our people. That date, again, is 24 September, and we'll have more details on that later in the year. As always, we'll be available for your follow-ups here, and thanks again for your interest in Sherwin. Have a great day.
It's gonna be in Cleveland this year on Thursday, 24 September, and it will include the opportunity for you to see our new global headquarters and our new global technology center. So we're excited for all of you to experience this amazing investment that we've made for our customers and our people. That date, again, is 24 September, and we'll have more details on that later in the year. As always, we'll be available for your follow-ups here, and thanks again for your interest in Sherwin. Have a great day.
Speaker #5: It's going to be in Cleveland this year on Thursday , September 24th , and it will include the opportunity for you to see our new headquarters and global our new global technology center .
Speaker #5: So we're excited for all of you to to experience this , this amazing investment that we've made for our customers and our people that date again is September 24th , and we'll have more details on that later in the year .
Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Speaker #5: As always, we'll be available for your follow-ups here. Again, thank you for your interest, and thanks, Sherwin. Have a great day.
Speaker #2: Thank you everyone . This concludes today's event . You may disconnect at this time and have a wonderful day . Thank you for your participation .
