Q2 2026 The Sherwin-Williams Co Earnings Call

July 28, 2026

Speaker #1: Porter 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 and Restor Relations and Communications.

Speaker #1: This conference call is being webcast simultaneously and listen-only mode by Access Newswire via the internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com/beginning approximately 2 hours after this conference call concludes.

Speaker #1: Good morning. Thank you for joining the Sherwin-William Company's review of second quarter 2026 and our outlook for the third quarter and full year of 2026.

Speaker #1: With us on today's call are Heidi Petz, Chair, President, and Chief Executive Officer; Ben Meisendahl, Chief Financial Officer; Paul Lang, Chief Accounting Officer; and Jim Jay, Senior Vice President and Rester Relations and Communications.

Speaker #1: This conference call will include certain forward-looking statements 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 of which such statement is made, and the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker #1: This conference call is being webcast simultaneously and listen-only mode by Axis NewsWire via the internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com/beginning approximately two hours after this conference call concludes.

Speaker #1: 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.

Speaker #1: I will now turn the call over to Jim, Jay.

Speaker #2: Good morning to everyone, and thank you for joining our call. Sherwin-Williams delivered strong, top, and bottom-line growth in the quarter, amid ongoing global uncertainty and without any meaningful improvement in demand.

Speaker #2: Our sales outperformance reflects continued execution of our strategy, new account wins, and a clear return on prior growth investments. As sales exceeded guidance on a consolidated basis and in all three reportable segments.

Speaker #1: I will now turn the call over to Jim, Jay.

Speaker #2: Good morning to everyone.

Speaker #2: Consolidated sales grew by a high single-digit percentage. Inclusive of a low single-digit contribution from the souvenir acquisition. Reported gross margin decreased slightly but increased excluding the dilutive impact of souvenir.

Speaker #2: Targeted pricing actions during the quarter enabled us to offset raw material inflation. Reported SG&A expense increased by a mid-single-digit percentage but decreased 90 basis points as a percent of sales.

Speaker #2: The increase was driven primarily by non-annualized souvenir acquisition costs and higher employee service costs related to the greater-than-expected year-over-year sales and profit improvement in the quarter.

Speaker #2: We expect full-year reported SG&A to increase by a mid-single-digit percentage. Adjusted diluted net income per share increased approximately 10%. Adjusted EBITDA grew by 10.5% to 1.5 billion dollars.

Speaker #2: And adjusted EBITDA margin expanded 60 basis points to 21.5% of sales. Net operating cash improved by 21%, or 235 million dollars in the quarter.

Speaker #2: Driven by an increase in net income, and working capital being a higher source of cash year over year. Free cash flow conversion was 86%.

Speaker #2: Consistent with our disciplined approach to capital allocation, we took advantage of volatility in the market to accelerate share repurchases in the quarter. And combined with dividends, returned 1.5 billion dollars to shareholders.

Speaker #2: We ended the second quarter with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.4 times. Based on our strong first half performance, as well as our assumptions for the remainder of the year, we are increasing our full-year consolidated sales and EPS guidance.

Speaker #2: Let me now turn it over to Heidi, who will provide some color on second quarter segment performance, before moving on to our outlook and your questions.

Consistent with our disciplined approach to capital allocation, we took advantage of volatility in the market to accelerate share repurchases in the quarter.

And combined with dividends, returned $1.5 billion to shareholders.

Speaker #3: Thank you, Jim. I want to begin by thanking our more than 64,000 employees for their relentless focus on executing on behalf of our customers.

We ended the second quarter with a strong balance sheet and a net debt-to-adjusted EBITDA ratio of 2.4 times.

Speaker #3: In an environment that remains challenging, our employees continue to work hard and find new ways to deliver the reliability, consistency, and customer-focused solutions that set Sherwin-Williams apart.

Based on our strong first half performance, as well as our assumptions for the remainder of the year, we are increasing our full-year consolidated sales and EPS guidance.

Speaker #3: The strength of our strategy is evident in our performance. We are continuing to widen the gap between Sherwin-Williams and the competition through meaningful customer engagement, robust new account growth, and meaningful share gains across the business.

Let me now turn it over to Heidi, who will provide some color on second quarter segment performance before moving on to our outlook and your questions.

Thank you. Jim. I want to begin by thanking our more than 64,000 employees for their Relentless focus on executing on half of our customers.

Speaker #3: At the same time, we continue to focus on optimizing the enterprise and controlling our costs as evidenced by the restructuring actions taken during the quarter.

Speaker #3: We expect these actions will result in approximately 17 million dollars of annual savings with about half realized over the remainder of this year. Looking at our segment results in the second quarter, I'll begin with Paint Stores Group, which grew by a mid-single-digit percentage.

in an environment that remains challenging, our employees continue to work hard to find new ways to deliver the reliability consistency, and customer focused solutions that that Sherwin Williams have

The strength of our strategy is evident in our performance. We are continuing to widen the gap between Sherwin Williams and competition through meaningful customer engagement, robust, new account, growth, and meaningful, share gains across the business.

Speaker #3: Price Mix grew at the low end of mid-single digits and volume increased by a low single-digit percentage. Our team delivered growth in all pro segments.

At the same time, we continue to focus on optimizing the enterprise and controlling our costs, as evidenced by the restructuring actions taken during the quarter.

Speaker #3: Protective and Marine continued its momentum as sales increased by a mid-teens percentage versus a high single-digit comparison. It was the eighth straight quarter of at least high single-digit growth in this business.

We expect these actions will result in approximately $17 million of annual savings, with about half realized over the remainder of this year.

Speaker #3: Data Centers, Semiconductor Infrastructure, and Manufacturing Onshoring are among several drivers of this growth, where customers continue turning to Sherwin-Williams for a suite of solutions that can be delivered quickly and consistently.

Looking at our segment results in the second quarter, I'll begin with Paint Stores Group, which grew by a mid-single-digit percentage.

This mix grew at the low end of mid-single digits, and volume increased by a low single-digit percentage.

Speaker #3: In the commercial business, the gains we have been targeting over the past 24 months are now evident, as sales increased by high single digits in an underlying market that remains soft.

Our team delivered growth in all pro segments. Protective Marine continued its momentum, as sales grew by a mid-teens percentage versus a high single-digit comparison.

It would be eight straight quarters of at least high single-digit growth in this business.

Speaker #3: These efforts have also resulted in the mid-single-digit increases in residential repaint and property maintenance, new residential remained very challenging as single-family starts and completions have been negative for five of the last six months.

Data centers, semiconductor infrastructure, and manufacturing onshoring are among several drivers of this growth, where customers continue turning to Sherwin-Williams for a suite of solutions that can be delivered quickly and consistently.

Speaker #3: But meaningful account wins propelled us to low single-digit growth in the quarter. Segment profit grew by mid-single digits and segment margin was 24.6%. As planned, we have opened 45 new stores year to date, and also as planned, closed 57, or about 1% of total PSG stores.

In the commercial business, the gains we have been targeting over the past 24 months are now evident as sales increased by high single digits, and an underlying market that remains soft.

These efforts have also resulted in the mid single digit increases in residential, reaping and property maintenance.

Speaker #3: As we have done for decades, we continually assess and optimize our store portfolio to drive profitability, strengthen operational flexibility, drive improvement in return on net assets employed, and ensure that we maintain the highest level of service for our customers.

Though residential remains very challenging, as single family starts and completions have been negative for five of the last six months, a meaningful account win propelled us to low single-digit growth in the quarter.

Segment profit grew by mid-single digits, and segment margin was 24.6%.

Speaker #3: Sales are not being negatively impacted by this targeted surgical approach, as our mid-single-digit growth year to date is meaningfully outpacing the market. We are still on pace to open 80 to 100 new stores for the year, though the net number will be approximately 30.

As.

35 new stores year to date and also was planned closed 57 or about 1% of total PSG stores.

Speaker #3: The cost of closing stores year to date is immaterial and the store footprint optimization initiative is behind us. We fully expect to be at the high end of 80 to 100 net new stores beginning next year, given the trimming we have completed this year.

As we have done decades, we continually assess and optimize our store, portfolio to drive profitability. Strengthen operational flexibility of improvement in return. On net asset employed and ensure that we maintain the highest level of service for our customers.

Speaker #3: We also announced an 8% price increase effective September 1st to offset raw material and other cost inflation. Because of our strong supplier relationships, and disciplined supply chain execution, we were able to delay this increase for customers and avoid disrupting their business during the height of the paint selling season.

Fully outpacing the market.

We are still on pace to open 8,100 new stores for the year, though. The net number will be approximately 30.

Cost of closing stores year to date is interior, and the store footprint optimization initiative is behind us.

Speaker #3: We expect effectiveness of this increase to be in our typical range, though we will continue to be opportunistic in pursuing additional volume. Consumer Brands Group sales exceeded our expectations, driven by a mid-teens contribution from the souvenir acquisition.

We fully expect to be at the high end of 8,200 net new stores beginning next year, given the trend we've completed this year.

We also announced an 8% price increase, effective September 1st, to offset raw material and other cost inflation.

Speaker #3: Mid-single-digit price mix and low single-digit FX were partially offset by a low single-digit decrease in volume. Group sales excluding souvenir increased by mid-single digits and our legacy Latin America business excluding souvenir increased by a low double-digit percentage.

Because of our strong supplier relationships and disciplined supply chain execution, we were able to delay the increase for customers and avoid disrupting their business during the height of the paint selling season.

We expect effectiveness of increase to be in our typical range so we will continue to be opportunistic and pursuing additional volumes.

Speaker #3: North America sales increased by high single digits against a soft comparison and included low single-digit volume growth. The North America growth was driven by new product offerings, favorable mix, and the pro who paints, as DIY demand remained muted.

Consumer Brands Group's sales exceeded our expectations, driven by an accretive contribution from the Souvenir acquisition.

Mid single digit price, mix and low, single digit FX or partially offset. By a low single digit, decrease in volume,

Speaker #3: Sales decreased in Europe by a double-digit percentage against a high teens comparison, driven by customer inventory management and destocking. Adjusted segment margin increased 210 basis points to 24.5%.

For sales, excluding souvenir increased by mid single digits and our Legacy Latin America business, excluding souvenir increased by a low double digit percentage.

Speaker #3: Leverage from mid-single-digit sales growth and flat SG&A excluding souvenir drove half of the improvement, with the other half coming from favorable non-operating items. In performance coatings group, sales beat expectations with growth in every division and region.

North America sales increased by high single digits against a soft comparison and included low single-digit volume growth.

The North America growth was driven by new product offering favorable mix and the pro whooping as DIY demand remained muted.

Speaker #3: These results reflect the strong new account focus that we continue to drive as demand largely remains unchanged in our underlying core business. Price mix and volume both grew by low single digits in the quarter.

Bill decreased in Europe by a double-digit percentage against the high teens comparison, driven by customer inventory management and destocking.

Adjusted segment margin increased from 210 basis points to 24.5%.

Speaker #3: With price mix greater than volume. FX was a low single-digit tailwind. Growth was strongest in the general industrial division, led by strength in heavy equipment as sales were up high single digits, inclusive of mid-single-digit volume growth.

Leverage from mid-single-digit sales growth and flat SG&A. Excluding some of the improvement, with the other half coming from favorable non-operating items.

Speaker #3: Automotive refinish also grew in the high single-digit range, driven by price mix and favorable FX. Packaging continued its strong performance as sales increased by mid-single digits against a low teens comparison.

In Performance Coatings Group sales, we beat expectations with growth in every division and region. These results reflect the strong new account focus that we continue to drive, as demand largely remains unchanged in our underlying core business.

Price, mix, and volume both grew by low single digits in the quarter, with price/mix greater than volume. FX was a low single-digit tailwind.

Speaker #3: Coil and wood also delivered mid-single-digit growth. Group sales expanded in all regions including a strong double-digit increase in Asia Pacific, and mid-single-digit growth in North America.

Growth was strongest in the General Industrial division and by strength in heavy equipment, as sales were up high single digits, inclusive of mid-single-digit volume growth.

Speaker #3: Adjusted segment margin increased 50 basis points with strong incremental margin of 26.4%. Within the administrative segment, SG&A declined 9.8%. As a reminder, this improvement largely reflects a favorable year-over-year comparison with the prior year period, including approximately 49 million dollars of severance and other restructuring expenses versus approximately 3 million dollars in the current quarter.

Automotive Refinish also grew in the high single-digit range here, driven by price/mix and favorable FX.

Packaging continued its strong performance as sales increased by mid-single digits against a low-teens comparison.

Coil and Wood also delivered mid-single-digit growth.

Group sales expanded in all regions, including a strong, double digit increase in asia-pacific and mid single digit growth in North America.

Speaker #3: The slide deck accompanying our press release this morning provides more detail on second quarter segment results. Now, moving on to our guidance. Our better-than-expected first half performance gives us increased confidence in our ability to deliver growth through the balance of the year.

Adjusted segment margin increased 50 basis points with strong incremental margin of 26.4%.

Speaker #3: Importantly, our updated outlook assumes there is not a broad-based demand recovery. Customer feedback in the leading indicators we track continue to show limited signs of meaningful improvement in most end markets.

Within the administrative segment, SG&A declined 9.8%. As a reminder, this improvement largely reflects a favorable year-over-year comparison with the prior-year period, including approximately $49 million of severance and other restructuring expenses versus approximately $3 million in the quarter.

Speaker #3: In this environment, we continue to focus on the levers within our control, securing incremental volume while maintaining the products, services, and supply solutions which drive productivity and profitability for our customers.

The slide deck accompanying our press release this morning provides more detail and second quarter segment results.

Now, moving on to our guidance.

Our better-than-expected first half performance gives us increased confidence in our ability to deliver growth through the balance of the year.

Speaker #3: Inflation remains a variable we are actively managing. Our supplier relationships are strong, and continue to be a competitive advantage. And we do not expect raw material availability to be an issue for us.

Importantly, our updated outlook assumes there is not a broad-based demand recovery.

Customer feedback in the leading indicators we track. Continue to show limit signs of meaningful Improvement in most end markets.

Speaker #3: At the same time, we are not immune from inflation. We are seeing the impact of higher oil and related cost pressures, and we expect continued volatility throughout the balance of the year.

Speaker #3: We expect inflation in our raw material basket to be up in the high single-digit range in the second half, moving our full-year outlook to the mid-single-digit range.

In this environment, we continue to focus on the levers within our control securing incremental volume, while maintaining the products services and supply Solutions, which Drive productivity and profitability for customers.

Speaker #3: We have taken a thoughtful approach to balance the timing and amount of price increases for our customers, and we are taking actions to keep pace with inflation while continuing to deliver the products, services, and solutions that our customers value.

Inflation remains manageable. We are actively managing supplier relationships, which are strong and continue to be a competitive advantage, and we do not expect raw material availability to be an issue for us.

Speaker #3: We expect consolidated price mix for the year to increase to the mid-single-digit range, and we expect to maintain full-year gross margin at last year's level at the midpoint of our guidance.

At the same time, we are not immune from inflation. We are seeing the impact of higher oil and related cost pressures, and we expect continued volatility throughout the balance of the year.

In the second half, we're moving our full-year outlook to the mid-single-digit range.

Speaker #3: The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the third quarter and full year 2026.

Speaker #3: Based on our strong first half performance and the momentum that we are carrying into the second half, we are raising our full-year sales and adjusted EPS guidance.

We have taken a thoughtful approach to balance the timing and amount of price increases for our customers, and we are taking actions to keep pace with inflation while continuing to deliver the products, services, and solutions that our customers value.

Speaker #3: Consolidated sales are now expected to increase by a mid to high single-digit percentage, and adjusted diluted net income per share is now expected to be in the range of $11.80 to $12.20 a share.

We expect consolidated price mix for the year to increase to the mid-single-digit range, and we expect to maintain full-year gross margin at last year's level at the midpoint of our guidance.

Speaker #3: Our guidance reflects stronger execution versus our initial January expectations, continued share gains, disciplined price-cost management, and ongoing productivity actions. Our slide deck contains other details you may find useful for modeling purposes.

The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the third quarter and the full year 2026.

Based on our strong first half performance, and the momentum that we are carrying into the second half.

We are raising our full year sales and adjusted EPS guidance.

Speaker #3: We are encouraged by our second quarter performance and proud of what our team's accomplished during the first half of the year. Their execution demonstrates the strength of our business, the durability of our strategy, and the advantages that continue to differentiate us in the marketplace.

Consolidated sales are now expected to increase by a mid- to high-single-digit percentage, and adjusted diluted earnings per share are now expected to be in the range of $11.80 to $12.20 per share.

Our guidance reflects stronger execution versus our initial January. Expectations continued share gains.

Speaker #3: Our mindset has not changed. In this environment, we know growth will need to come from what we do, not from what the market gives us.

Disciplined price-loss management and ongoing productivity actions—our slide deck contains other details you may find useful for modeling purposes.

Speaker #3: We remain focused on being our own catalyst for growth, which means taking share serving customers better than anyone else, and creating opportunities regardless of the demand backdrop.

We are encouraged by our second quarter performance and proud of what our teams accomplished during the first half of the year.

Speaker #3: That's exactly where Sherwin-Williams excels, and we intend to continue leaning into these strengths. At the same time, we are not satisfied, as we know there is more business to earn, more productivity to unlock, and more value to create.

Their execution demonstrates the strength of our business, the durability of our strategy, and the advantages that continue to differentiate us in the marketplace.

Our mindset has not changed in this environment. We know growth will need to come from what we do, not from what the market gives us.

Speaker #3: Our employees are the key to our success, and I want to take a moment to speak directly to them and express my deep respect and appreciation.

Speaker #3: As we have just demonstrated, we will continue approaching the many opportunities ahead of us with urgency, discipline, and confidence in our ability to deliver.

we remain focused on being our own Catalyst for growth, which means taking share serving customers better than anyone else and creating opportunities regardless of the demand backdrop,

That's exactly where Sherwin-Williams excels, and we intend to continue leaning into these strengths.

Speaker #3: This concludes our prepared remarks. As a reminder, we will be hosting our financial community presentation at our new global headquarters and global technology center on September 24th.

At the same time we're not satisfied because we know there is more business to earn more productivity to unlock and more value to create.

Speaker #3: I look forward to seeing many of you there. Please reach out to our investor relations team if you have not registered as space is limited.

Our employees are the key to our success, and I want to take a moment to speak directly to them and express my deep respect and appreciation.

Speaker #3: With that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.

Speaker #1: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star 1 on your phone at this time.

As we just demonstrated, we will continue approaching the many opportunities ahead of us with urgency, discipline, and confidence in our ability to deliver.

Speaker #1: We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. In the interest of time, we do ask that participants please ask one question.

Speaker #1: And once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from John McNulty from BMO Capital Markets.

This concludes our prepared remarks. As a reminder, we will be hosting our Financial Community presentation at our new global headquarters in the Global Technology Center on September 24th. I look forward to seeing many of you there. Please reach out to our Investor Relations team if you have not registered—space is limited. With that, I'd like to thank you for joining us this morning, and we will be happy to take your questions.

Speaker #1: Your line is live.

Speaker #2: Yeah, thanks for taking my question, and congrats on some really solid results, especially in a tough environment. So I wanted to ask, maybe you can unpack a little bit, mid-quarter you and Nippon made a bid for AXO, and then relatively quickly thereafter, pulled that bid.

Certainly, Evan at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star 1 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.

In the interest of time, we ask that participants please ask one question.

And once again, if you have any questions or comments, please press star 1 on your phone.

Speaker #2: I guess, can you walk us through the rationale for both moves, and how we should be thinking about M&A going forward in terms of the opportunities that you may see out there?

Your first question is coming from John McNulty from BMO Capital markets, your line is live.

Speaker #3: Yeah, good morning, John. I'll take that. We take a very disciplined approach not only to our capital allocation philosophy that remains unchanged, but as it relates specifically to M&A, as you can imagine, we are constantly looking and assessing assets that would be a fit or an accelerator to our strategy.

Speaker #3: And so we probably passed well over we passed on well over 90%, I would say, that cross our desk, but when we look at those specific assets, those were very premium-targeted assets that we had long admired, and there was an opportunity at the right price, at the right time, at the right value that would have been something that would absolutely have been complementary to our strategy.

Yeah. Thanks for taking my question and congrats on uh on really solid results, especially in its environment. Um so I wanted to ask maybe you can unpack a little bit, you know, mid-quarter. Um you and on made a bid for for axo and then you know, relatively quickly thereafter um, pulled that bit, I guess. Can you walk us through the rationale for both moves and and how we should be thinking about, m&a, going forward, in terms of the opportunities that you may see out there.

Yeah, good morning John. I'll I'll take that. You know, we take a very disciplined approach, um not only to our Capital, allocation philosophy that remains unchanged, but is it relates specifically to m&a?

Speaker #3: Having said that, I think timing is everything, value is everything, and when we get to a point where we're two bids in, which I think was a very fair reasonable and premium all-cash offer without the level engagement that we wanted, it was a simple decision that there was absolutely more attractive uses of our shareholders' cash.

Speaker #3: And so the decision to walk away and put that cash to use was in our and our shareholders' best interest.

Speaker #2: Thank you, John.

Speaker #1: Thank you. Your next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.

Speaker #2: Thank you. Good morning, everyone. Can I ask for a little more color on the consumer brands margins? Obviously, very strong. Improvement. How should we expect those margins to move on a go-forward basis?

Speaker #2: I also sort of noticed versus the other two segments, there wasn't really a call-out here on market share gains or anything. Obviously, some other nice call-outs, but nothing on the share gain.

And premium all cash offer without the level engagement that we wanted. Um, it was a simple decision that there was absolutely more attractive uses for our shareholders cash. And so, the decision to, to walk away and put that cash to use was was in our and our shareholders best interests.

Thank you, John.

Thank you. Your next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.

Speaker #2: So what drove these margins to be so much better than the other two segments, and what is the sustainability of it?

Speaker #4: Hey, Vincent, Ben Meisenzahl. On the margin piece, it really comes from probably two parts. First, you look about half of it is coming from just the core operating performance.

Speaker #4: You look at the stronger sales that consumer brands had in the quarter, and if I strip out souvenir and just look at the core business, which was up about mid-single digits, the resulting SG&A was flat.

Uh, thank you. Good morning, everyone. Um, can I ask for a little more, uh, color on the Consumer Brands? Um, margins obviously very strong, uh, improvement. Um, you know, how should we expect those margins, uh, to move on a go-forward basis? I also sort of noticed for the other two segments, there wasn't really a call-out here on, on market share gains or anything. Um, you know, obviously some other nice call-outs, but, uh, nothing on the share again. So what drove, um, these margins to be so much better, uh, than the other two segments, and what is the sustainability of it?

Speaker #4: And so you think about the leverage that you get in a situation like that. And then the other half of the margin expansion was from more favorable non-operating items.

Speaker #4: That also impacted the sequential first quarter to second quarter. So if you back out those non-operating items, you're more flattish first quarter to second quarter.

Speaker #4: So that's what's driving the adjusted segment margin there.

Speaker #3: Vincent, I'll add in from a market share standpoint. DIY, obviously, there's not been any meaningful improvement in that particular segment. Probably what paints, however, we are seeing continued share gains there, and that's a testament to the team's successfully executing on our strategy.

Hey, Vincent and mizen and all on the margin piece, it really comes from like 2 parts. Uh first, uh, you look about half of it is coming from just the core operating uh performance. You know, you look at the stronger sales that a consumer Brands had in the quarter. Uh, and if I if I strip out suvinil and just like the Core Business, uh, which was up about, maybe single digits, the the resulting sgna was flat. And so you think about leverage that you get in a situation like that and then uh the other half of the margin expansion was from more favorable non-operating items.

Speaker #3: We've got obviously our very strategic partnerships, Lowe's and Menards and others, but this is a growing segment, still a small base, but the fundamentals are intact there.

Speaker #3: So a lot of credit to the team for continued focus.

Uh, that also impacts the sequential, you know, first quarter to second quarter. Uh, so if you back out those non-operating items, we're more flattish, you know, first quarter to second quarter. Uh, so that's what's driving just a second margin there.

Speaker #2: Thank you, Vincent.

Speaker #1: Thank you. Your next question is coming from Duffy Fischer from Goldman Sachs. Your line is live.

Speaker #2: Yeah, good morning. Just a question around kind of the implied guidance that the midpoint. So in the first half, year over year, you guys were up about 40 cents of EPS.

Speaker #2: And at the midpoint in the second half, you're up a little more than a dime. Even though you have a pretty big price increase rolling through in September.

Since it all add in from market share standpoint. Um, DIY obviously there's not many meaningful Improvement in in that particular segment. Pro Group paints, however, we are seeing continued to share gains there and that's a testament to the team successfully executing on our strategy. We got obviously are very strategic Partnerships lows and Menards and and others but this is a growing segment, still a small base but the fundamentals are intact there. So a lot of credit to the team continued Focus.

Thank you, Ben.

Speaker #2: So one, just wanted to see, what is it that might slow down when you're looking at it year over year that would have a smaller increase?

Thank you. Your next question is from Duffy Fisher from Goldman Sachs. Your line is live.

Speaker #2: And then second part of that, between Q3 and Q4, should Q4 be seasonally bigger than normal because of that price increase when you look at it versus history?

Speaker #4: Hey, Duffy. Yeah, if you look at the year over year, I mean, there's two things really that impact the first half versus the second half.

Speaker #4: If you look first at the comps, last year's first half, we're more difficult than the second half. And so if you look at that phasing and what we're going against this year here, that does have an impact.

Speaker #4: But if you do look at the second half of this year and that slower growth of EPS, as we've talked about, we still expect that ramp-up of raw material costs.

Yeah, good morning. Just a question around kind of the implied guidance that the midpoint. So, in the first half, uh, year-over-year, you guys were, um, about 40 cents of eps, um, and at the midpoint in the second half, you're up a little more than a dime. Uh, even though you have a pretty big price increase rolling through, uh, in September. So, 1 just wanted to see what is it that might slow down, uh, when you're looking at it year-over-year, that would, you know, have a smaller increase and then, uh, second part of that between Q3 and Q4, should do 4 be seasonally bigger than normal, uh, because of that price increase, when you look at it versus history,

Speaker #4: We've taken our guide up a little bit. For the back half or for the full year, and that's coming on the back half. And so even though we have pricing that we're still laying in, and our commitment to staying in front of that with balanced management of the price costs environment, it is still an economic headwind that we're facing here.

Speaker #4: And so that's probably the biggest reason why you would see maybe a little less of the growth in the second half that you saw in the first half.

Speaker #2: Duffy.

Speaker #1: Thank you. Your next question is coming from Ghansham Panjabi from Baird. Your line is live.

Speaker #5: Thank you, everybody. Good morning, everybody. Heidi, going back to your comments on the outlook and just given the steady increase in interest rates recently, specific to the PSG segment, are you embedding any sort of volume deterioration sequentially for the back half of this year, which will be offset by share gain initiatives on your end, to sort of sum to that low single-digit volume growth?

Duffy. Yeah, if you look at the the year-over-year and there's 2 things, really, that impact. The first half versus the second half. If if you look first at the comps last year's first half, you know, were more difficult uh, than the second half. And so if you look at that phasing and what we're going against, you know, this year here that does have an impact, but if you do look a second half of this year in, in, in that, um, slower growth of of UPS, we've talked about, you know, we still expect that ramp up of raw material costs. We've taken our guys up a little bit, uh, for the, the back, half for the full year, and that's coming on the back half. And so, even though we have pricing that we're still laying in, um, and, and our commitment to staying in front of that, you know, balanced management of of the price cost environment. It is still, uh, an economic headwind that that we're facing here. And so, that's probably the biggest reason why you would see, you know, maybe a little less, um, you know, of, of the, the growth in the second half that you saw in the first half.

Stuffy.

Speaker #5: Is that the right way to think about it? Thank you.

Speaker #3: No. I look at this, Ghansham, we don't expect that to happen. We don't expect any material change. And I'll see if Ben's going to give some color commentary to give you a little bit more perspective.

Thank you. Your next question is coming from Gotcha Punjabi from Baird. Your line is live.

Speaker #3: But I'll ask him to touch base in a minute. I just want to take a moment, though, and give you a little bit of segment perspective to reinforce my point.

Speaker #3: If you look broad strokes and obviously, we talk a lot about what's going on from a residential standpoint, new residential, I would say the exact opposite.

Thank you have a good morning everybody. Um I just going back to your, you know, comments on the Outlook. And you know just giving the steady increase in interest rates recently uh specific to the PSG segments. Are you embedding any sort of volunteer sequentially for the back half of this year which will be offset by sharing initiatives on your end you know just to sum to that low single digit volume growth. Is that is that the right way to think about it. Thank you.

Speaker #3: Obviously, very confident in the backlogs are stable, but the team is really standing tall. We continue to take share here. Our new account activity continues to be very strong as our active accounts where we're growing our current customers' share of wallet.

Speaker #3: And so even though it's a challenging market, we're still continuing to be very aggressive out there. We talk a lot about innovation with this segment, and we talk about innovating in and out of the can.

Speaker #3: Something I want to highlight here, this is really exciting. We just launched a product called Emerald Symmetry. And it's the best-performing interior product that we've ever produced.

Speaker #3: So not only with the right performance characteristics, but it's going to be a great plant-based zero-VOC product helping to really advance our sustainability agenda.

Speaker #3: So we're doing a lot of work here in this current macro to certainly favor growth and square footage for these res repaint contractors. So volume certainly positive there.

Speaker #3: New residential continues to be under pressure. We are outperforming as monthly. Single-family completions are down, an average high single digits in 2026, while our sales were down a low single digit.

Give you a little bit more perspective, but and I'll ask him to touch base in a minute. I just want to take a moment and give you a little bit of segments perspective to reinforce my point. You look broad strokes and and obviously we talked a lot about what's going on from a residential standpoint, new residential. Um, I would say the exact opposite obviously very confident in the backlogs are stable, but the team is really Standing Tall. We continue to take share here, our new account activity, um, continues to be very strong, um, as our our active accounts where we're growing our current customers there of wallet. And so even though it's a challenging Market, we're we're still continuing to be very aggressive out there. Um, we talked a lot about Innovation with this with the segment and we talk about innovating in and out of the Ken. Something I want to highlight here, this is really exciting. We just launched a product called Emerald Symmetry and it's the best performing interior product that we've ever produced. Um, so not only with the right performance characteristics, but it's going to be a great plant-based zero VOC products with helping to really Advance our sustainability.

Speaker #3: So demonstrating that we're taking share there. It certainly can touch on property maintenance. Our year-over-year rent growth remains weak. With some sequential improvement, I would underscore some, but our outperformance with low single-digit growth is also evidence of share gains.

Speaker #3: So the market's not going to help us in any regard. But I do want to take a moment here on protective and marine because it's been a fantastic highlight.

Speaker #3: I said this in the call earlier, but it's our eighth straight quarter of at least high single-digit growth. So we are exceptionally and uniquely well-positioned, I would say, for some of these tailwinds.

Agenda. So, we're doing a lot of work here in this current macro, um, to certainly favor, uh, growth and square footage for these raspberry paint contractors. So, um, volume certainly positive there. Um, new residential continues to be, uh, you know, Under Pressure. We are outperforming, um, as monthly, um, single family, completion are down. Um, an average high single digits in 2026, while our sales were down a low single digit. So demonstrating that we're taking share their, um,

Speaker #3: We talk a lot about data center build-out infrastructure, the semiconductor infrastructure. The team is really going to market very effectively here. With a very unique suite of solutions.

Speaker #3: And so again, back to the comments earlier, we know the market's not going to help us. We're not waiting. We have a lot of time ahead of us this year.

Speaker #3: We know we can control what we can control, but we're going to expect that we outpace the market.

Speaker #4: Yeah, gotcha. I mean, I'll add to what Heidi said there and going back to the original part of your question. I mean, if you look at the phasing of volume, year-over-year, half over half in the guidance, it's relatively consistent.

Speaker #4: And if you go back to our original guidance in January, our assumptions were the same. What's different is the level of volume is higher than what we would have expected.

Speaker #4: And you see that in our original January guidance, down most single-digit to up most single-digit stores group volume. And now we're guiding to that up low single-digit volume.

Touch on property maintenance, you know, our year-over-year rent growth remains weak um, with some sequential Improvement, I would underscore some, um, but our outperformance with low single digit, growth is also evidence of sharing. So the Market's not going to help us, um, in any regard, but I do want to take a moment here on protect and Marine because it's been a fantastic. Um, highlight, I said this in the, the call earlier but it's our eighth straight quarter of at least High single digit growth. So we are exceptionally and uniquely. Well, positioned, I would say for some of the Tailwind, we talked a lot about data center, build out infrastructure. The semi, the semiconductor infrastructure, the team is really going to Market very effectively here um with a very unique Suite of solutions. And so again, back to the kind of earlier, we know the Market's not going to help us. We're not waiting. We have a lot of time ahead of us this year. Um, we know we can control, we can control but we're going to expect that we outpace the market.

Speaker #4: And so that supports all the things that Heidi talked about there. But again, the quarter-over-quarter volume you're going to see consistent. And what changes is the pricing as we try to balance that against the inflation.

Speaker #2: Thank you, Ghansham.

Speaker #1: Thank you. Your next question is coming from Gregory Melich from Evercore ISI. Your line is live.

Speaker #4: All right. Thanks. I guess I'd follow up on that last point. I think you mentioned in the prepared comments the price increase in September.

Yeah, gotcha. And I I'll I'll add to what Heidi said there and going back to the original part of your question. I mean, if you look at the freezing of volume, you know, year-over-year, uh the half over half, you know, in the guidance, it's, it's relatively, you know, consistent and if you go back to our original guidance, in January, um, our our assumptions were the same. What's different is, you know, the level of volume is higher than what we would have expected. And you see that in, um, our original January guidance, You Know, download single digit to upload single digits stores through volume. And now we're guiding to, uh, that upload single digit volume. So that supports all the things that Heidi talked about, their

Speaker #4: You expect realization to be in the historic range. Can you just is that the range that we've seen this year? I think the more like 40%, or is it the historic more 60 to 70%?

But again, the quarter-over-quarter volume, you're going to see consistent, and what changes is the pricing as we try to balance that against the inflation.

Thank you, gotcha.

Speaker #4: And then the second part of that question is, would that be enough for gross margins to grow year over year in the back half, given the raw materials still accelerating?

Thank you. Your next question is coming from Gregory Mik from Evercore ISI. Your line is live.

Speaker #2: Yeah, Greg, I mean, starting with the back part of your question there, I mean, our expectation is that we're balanced with pricing and our commitment has been to stay in front of that.

Speaker #2: And so you'll continue to see that there. Again, going back to your September price increase question, we normally see a glide path. And to Heidi's point, the this pricing will be at that same historical trend.

All right, thanks. Um, I guess I'd follow up on that last point. I think you mentioned in the prepared comments, the price increase in September, you expect realization to be in the historic range. Excuse is that the the range that we've seen this year? I think the more like 40% or is it the historic more 60 to 70%?

And then the second part of that question is, would that be enough for gross margins to grow year over year in the back half, given that raw materials are still accelerating?

Speaker #2: And as you know, we have customers that have contracts there are probably some things that go into 2027 as well. But we would expect that over time that we're really, really able to capture that the same way.

Speaker #2: And I'll remind you as well, I mean, the goal here has been to implement pricing when the market can support it. And when we can do it in a way that preserves our customer relationships and manages our ability to get share gains.

Speaker #2: And so we felt that September provided the best balance between those objectives. And that's why you see us going right now. Thanks, Greg.

Speaker #1: Thank you. Your next question is coming from Patrick Cunningham from Citi. Your line is live.

Yeah, Greg, give me that starting with the back of your question there. I mean our expectation is that, you know, we're balanced with with pricing and our commitment is to stay in front of that. And so, you know, you'll you'll you'll continue to see that there. Uh, again going back to your September, uh, price increase question. You know, we normally see, you know, a Glide path in in Heidi's point the the this pricing will be at that same historical uh, Trend. And as you know, we have customers that have contracts. Uh, there are probably some things that go into into 2027 as well, uh, but we, you know, we would expect that over time that, you know, we're really, really, uh, able to capture that the same way and I'll find you as well. I mean, our the goal here, you know, has been

Speaker #5: Hi, good morning. Thanks for taking my question. I was hoping you could just give a little bit of detail beyond the drivers for both the commercial and protective segments.

Speaker #5: And what sort of multi-quarter, multi-year visibility do you have there from some of your share gains, new product wins, anything that we should think about across those two strong segments?

It preserves our customer relationships and manages our ability to get share gains. And so, we felt that September provided the best balance between those objectives, and that's why you see us going right now.

Thanks Greg.

Thank you. Your next question is coming from Patrick Cunningham from City. Your line is live.

Speaker #2: Yeah, good morning, Patrick. It's Jim. I'd say on the commercial side, you're seeing this is a couple of quarters in a row where we're outperforming.

Speaker #2: We've talked about some of the market share opportunities that we've been targeting over the last 24 months or so. I think you're starting to see those come through in a more prominent way now.

Speaker #2: A lot of credit to the team that's driving the commercial side there. The other part of your question, Patrick, just again, was which other segment?

Hi, good morning, thanks for taking my question. I was hoping you could just get a little bit, um, of detail beyond the behind, the drivers, for both a commercial and protective segments. Um, and you know what, sort of multi quarter multi-year visibility, do you have there from some of your sharing new product lines or anything? We should think about across those 2 drug segments?

Speaker #2: The P&M piece? Yeah, so the P&M piece is Heidi, I think, touched on it. The data center build-out, the infrastructure build-out, semiconductor fabs, there's others that maybe aren't getting as much of a headline, but water treatment, pharmaceutical, the onshoring, all of that is opportunity for us.

Speaker #2: A great suite of solutions, flooring, structural steel, and there's also an architectural element of the office space in all of those applications as well.

Yeah, good morning, Patrick, it's Jim. I think on the commercial side you're seeing this is, you know, quarters in a row where we're outperforming. We've talked about some of the market share opportunities that we we've been targeting over the last 24 months or so. I think you're starting to see those come through, uh, in a more, uh, prominent way. Now, a lot of credit to the team, that's that's driving the commercial side there. Um, the other part of your question, Patrick just again, was, which other Summit

The pmf piece.

Speaker #3: Patrick, one other piece to add. And Jim mentioned this, but when we talk about AI, data centers, and the build-out, you think of the race of these hyperscalers and speed matters.

Speaker #3: And we can provide speed. We can provide a comprehensive one-shot solution for many of their coding needs across the board that Jim just mentioned.

Speaker #3: So we love the tailwind, and we're ready for it.

Speaker #2: Thanks, Patrick.

Speaker #1: Thank you. Your next question is coming from John Roberts from Mizuho. Your line is

Yeah. So the P&M piece is um you know Heidi I think touchdown at the the data center built out the infrastructure build out semiconductor Fabs. You know there's others that maybe aren't getting as much of a headline but water treatment pharmaceutical, the onshoring, all of that is opportunity for us. A great Suite of solutions, flooring structural steel. And there's also an architectural element of the office space and all of those applications as well.

Speaker #6: Thank you. Back to the original M&A question. Sherwin didn't appear to be interested in the number one European Deco business. Why was that?

Speaker #3: Well, we've looked at that, John. For a long time. And one of the things that we love about our controlled distribution model certainly is the backdrop that the market dynamics in which we sit here in North America we've absolutely are proud of how the playbook that we've created, obviously, there's a lot of agility within that playbook.

1 other piece to add and Jim mentioned this. So we talk about AI data centers, and the buildout, you have the, the race of hyperscalers and speed matters, and we we can provide bead. We can provide a comprehensive 1 shop solution for many of their codings that needs across the board that Jim just mentioned. So we're, we love the tailwind and we're ready for it.

Thanks Patrick.

Thank you. Your next question is coming from John Roberts from a zoo. Your line is live.

Speaker #3: But the market fundamentals outside of North America simply don't support that level of capital deployment. So we do think there are, again, other very attractive alternatives of shareholders: cash, and we're going to put that to good work.

Um, thank you. Back to the original M&A question. Sherwin didn't appear to be interested in the number one European Deco business. Why was that?

Speaker #2: Thank you, John.

Speaker #1: Thank you. Your next question is coming from Arun Viswanathan from RBC. Your line is live.

Speaker #5: Great. Thanks for taking my question. I was hoping to ask just on two segments. Resi repaint and packaging. I think both of those were in the mid-single-digit range.

Well, we've looked at that John um, for a long time and 1 of the things that we love about, you know, our our control distribution model, um, certainly is the backdrop the market dynamics in which we sit here in North America. Um, we we absolutely uh are proud of how the Playbook we've created. Obviously there's a lot of agility in that Playbook. Um but the market fundamentals outside of North America. Um, simply don't

Speaker #5: If I'm not mistaken, could you just elaborate? It sounds like Resi repaint, obviously, you've been in higher ranges before, but is that kind of plateauing?

Support that level of capital deployment. So we do think there are again, other very attractive, um, Alternatives of shareholders cash and we're going to put that good work.

Thank you, John.

Speaker #5: Is there anything else that you could do to drive higher growth there? And then similarly in packaging, are you still working on some share gains there?

Thank you. Your next questions come from Arun Vaughan from RBC. The line is live.

Speaker #5: And where are we in kind of the European BPA transition? Thanks.

Speaker #3: Yeah, you bet. Well, let me start with Resi repaint. Is it plateauing? Absolutely not. In fact, I would say we're just getting started there.

Hey, thanks for taking my question. Um, I was hoping to ask, uh, just on—on...

Speaker #3: I'll remind you that this is the segment where we have the largest share gains ahead, and we are continuing to be agile and deploy resources and make sure that that team is well-prepared.

Speaker #3: There's a lot of share available for grabs right there. And so we're going to continue not only with our dedicated stores our residential repaint reps the product launches the innovation that we're providing in the can all of the digital suite of tools that we're innovating and continue to innovate for these residential repaint contractors, regardless of their size, to help them with their economics, be better planners, make sure that we're helping them leveraging our store multiple stores and helping them grow and travel so we're in a really good place also a testament to the team.

Single digit range, uh, if I'm not mistaken, um, could you just elaborate it sounds like a resi repaint. Um, you know, obviously you've been in high range before but is that, you know, kind of plateauing, um, is there anything else you could do to drive, you know, higher growth there and then similarly in packaging? Um uh are you still working on some share gains there and where are we in kind of the European PPA transitions. Thanks

Speaker #3: We've got an organization that we've long been focused on, not just selling, but shifting to more of a consultative selling approach. And so our team I'm very proud of what our folks in the stores are doing day in and day out to help our customers succeed here.

Yeah, you bet. Well, let me start with res repaint. Is it up? Towing absolutely not. In fact, I would say we're just getting started there. I'll remind you that this is the segment where we have the largest share gains ahead, and we are continuing to be agile and deploy resources and make sure that that team is well prepared. There's a lot of share available for grab right there, and so we're going to continue not only with our dedicated doors, our residential repaint reps, and the product launch of the innovation that we're providing in the can, but also all of the digital suite of tools that we're innovating and continue to innovate for these residential repainting contractors, regardless of their size.

Speaker #3: And it's evidence in our numbers, and we continue to expect that outsized growth. I'll touch on packaging. You mentioned mid-single-digit volume. That certainly was led by strengthened beverage cans.

Speaker #3: We're clearly outgrowing the market. Here, I think the EFSA piece you mentioned, the ban on BPA, taking effect in Q2, obviously, of this year, that will continue to drive customer conversion back half of this year and into next year.

Speaker #3: So we expect that to be goodness petting our way.

Speaker #2: Thanks, Arun.

Speaker #1: Thank you. Your next question is of America. Your line is live.

The consultative selling approach. And so our team, I'm very proud of what our folks in the stores are doing day in and day out to help our customers succeed here. And it's it's evidence. Um, it's evident our numbers and we continue to expect that outside growth. I'll touch on packaging, you mentioned mid digit, um, volume, um, that certainly was led by strength and beverage cans

Speaker #4: Good morning. I just wanted to ask kind of a clarifying question a little bit on the consumer business. You'd mentioned some non-operating tailwinds, absent, that things would have been flat, quarter over quarter.

Speaker #4: Was that a market would have been flat, or was that an EBITDA would have been flat? Can you just tie that up then?

Um, we're clearly outgrowing the market, um, here. I think the piece you mentioned—the ban on BPA—um, is taking effect in Q2 this year. That will continue to drive customer conversion back half of this year and into next year, so we expect that to be goodness heading our way.

Thanks.

Speaker #2: Yeah. Matt, that would have been the adjusted segment margin, would have been flat. And so again, roughly half of the improvement that you saw quarter over quarter if you had adjusted that for what we saw in the first quarter, you would have seen more flattish adjusted segment margins in CBG.

Thank you, your next question. Coming from Matthew Deo from Bank America, your line is live morning. Uh, I just want

To ask.

Speaker #4: Okay. I appreciate that. That's helpful. And then Heidi, to jump back a little bit on John's earlier question and I guess maybe both John's, but and I don't know if I want to drag this conversation too much, but ultimately, what changed between your first two attempts on Axon Abell and then the release of the slide deck and then your decision to walk away?

On the Consumer business, you'd mentioned some non-operating tail ends absent, that things would have been flat quarter over quarter. Was that a— is that a month would have been flat, or was that a— it would have been flat? Um, can you just…

Tie that up then.

Speaker #4: I appreciate the price discipline comment, but conceptually, you kind of already had it come up in a more material way. And then the slide deck comes out, and then a few days later, you walk.

Yeah. Matt, that would have been the adjusted segment margin. You would have been flat. So again, I roughly half of the Improvement that you saw a quarter over quarter. Uh, if you had adjusted that for what we saw in the first quarter, you would have, you would have seen a more flattish adjusted segment, margins and CBG.

Speaker #4: Am I reading too much into what was a couple of days lapse, or is there something else there? Because I mean, that deal isn't necessarily done, though I think the market expects, but just wondering how it relates to your appetite.

Okay, I appreciate that. That's tough and then uh to to jump back a little bit on John's earlier question, I guess maybe both John's but um, and I don't know if I want to drag this conversation too much but like ultimately

Speaker #4: And then conceptually, I would assume any spin-offs or fair game for sure went to consider. Or asset separations, right?

Speaker #3: Right. So Matt, let me attack your question here. I think there's basically three parts of it. First, I do think you're assigning too much weight to the days.

Speaker #3: And if you look at the discipline in which we think about capital allocation deployment, we've been looking at those assets for years. And so we're not desperate for those assets.

Speaker #3: I want to be very clear. And we've said we don't need acquisition to grow. We have a lot of organic scale opportunity. The team is doing a fantastic job demonstrating that.

What change between your first 2 attempts on on a Nobel and then the release of the slide deck and then your decision to walk away? Like I I appreciate the price discipline comment but conceptually, you kind of already you had come up in a more material way and then you know the slide deck comes out and then a few days later you walk that am I reading too much into what was a couple days lapse or, uh, is there something else there? Because I mean that deal isn't necessarily done though. I think the market expects but just wondering how it relates to your appetite and then conceptually, I would assume any spin-offs are are fair game for sure when to to consider or asset?

Speaker #3: We're not going fast enough. We'll happily take more. But you asked about what's changed kind of between bid one and bid two. And it was what I stated earlier as we talked about putting a very what we thought was not only a fair and reasonable, but superior all-cash offer forward.

Speaker #3: At some point, without getting the level of engagement that you want, what we're not going to do is negotiate against ourselves if we're not desperate for these assets.

Speaker #3: We're going to be laser-focused on growing these businesses with or without. But I think your third point, and it's a very fair point, should these assets fall out of the sky at the completion of the MOE, at the right value, then we would absolutely take a look at those.

Right? So the attack your question here. I think there's basically 3 parts of it. First, I do think you're saying too much weight to the days and then if you look at the discipline in which we think about Capital allocation deployment, uh, we've been looking at those assets for for years and so um, we're not desperate for those assets. That would be very clear and we we've said we don't need acquisition to grow. We have a lot of organic sales opportunity. The team is doing a fantastic job. Demonstrate demonstrating that. Um, not we, we're not going fast enough, we'll happily take more. But you asked about what's changed, kind of between did 1 and did 2. Um, it was what I stated earlier as we talked about

Speaker #3: But we would have to be at the right value at the right time. I will take a moment, Matt, just to point to the success of souvenir is a great example of capital being put to great use.

Speaker #3: And just a moment on this while you didn't ask about it. I think it demonstrates the discipline of how we think about M&A. We've long admired that asset down in Latin America.

Speaker #3: I had been looking at that for over 10 years. We were very thoughtful in our approach. Not just in terms of the deal, but in terms of the integration.

Speaker #3: Coming from the Valspar side and playing a big role on integration, it's extremely important that when we're thinking about success here, it is customer and employee first.

Speaker #3: And I'm very pleased with the success that the team is having. The business continuity continues to be our North Star, making sure that we're providing stability, not only in our relationships with our customers, but in our service levels.

Speaker #3: I think the cultural compatibility is also worth noting. You've got two great teams coming together. We say one plus one equals three here. And the compatibility of strong teams and what we're able to do to leverage a strong asset of the market leadership and certainly the strong ability to provide innovation from Sherwin-Williams we are really just getting started there.

I'll put a very what we thought was not only a fair and reasonable, but Superior all cash offer forward um at some point without getting the levels of Engagement that you want what? We're not going to do is negotiate against ourselves if we're not desperate or these assets, we're going to be laser focused on growing these businesses with or without but I think your third point and it's a very fair point, you know should these assets um fill out of the sky at the completion of the Moe at the right value. Then we would absolutely take a look at those but it would have to be at the, at the right value at the right time. I will take a moment. Matt, just to point to the success of um, suvinil. It's a great example of capital, um, being put to Great use and just a moment on this, while you didn't ask that. I think it, it demonstrates. The discipline of how we think about m&a. We've long admired. Um, that asset down in Latin America and looking had been looking at that for over 10 years. Uh, we were very thoughtful in our approach. Um, not just in terms of the deal but in terms of integration um coming from the Valar side and playing a big role in integration. It's extremely important that we're thinking about

Speaker #2: And Matt, I just want to build on one thing that Heidi said here. Again, we've talked about how our cash generation remains a strategic advantage for us.

Speaker #2: And you look at the first half, and that's really on display. I mean, we returned almost a billion more in cash to shareholders. We did the ASR.

Success. Here it is customer and employee first. And I'm very pleased with the success of the team is having, you know, the business continuity continues to be our North Star. Making sure that we're providing stability. Not only in our relationships with our customers, but in our service levels, I think the cultural compatibility. Um, it's also worth noting. Um, You've Got 2, great teams coming together. We say, 1 plus 1 equals 3 here and the compatibility of strong teams and what we're able to do to leverage a strong at strong asset of the market leadership.

Speaker #2: In between, when we walked away from the joint bid to when we were blacked out for the quarter. And so you can see us there taking decisive actions in an environment where our share price is on sale.

And certainly um the strong ability to provide Innovation from Sherman Williams. Um we are we are really just getting started there.

Speaker #2: And so you're going to continue to see us be really strategic with how we're managing our capital allocation. And just wanted to put an exclamation on that.

Speaker #1: Thanks, Matt. Thank you. Your next question is coming from David Begleiter from Deutsche Bank. Your line is live.

Speaker #5: Thank you. Good morning. I'm Heidi, just on DIY. I saw it did tick down versus the prior three quarters of it being up. What changed in DIY market for you guys this quarter?

Speaker #6: I don't think there's really any

Speaker #3: material shift there, David. It would be more nominal than material. We're still waiting for the catalyst to kick in on the DIY segment. I think if you look at bifurcating that segment, you've got more of the premium DIY homeowner in our stores that prefer a specialty kind of experience.

Said hi, said here. Again, it's, you know, we've talked about how our cash generation remains a strategic advantage for us. And you look at the first half, and that's really on display. I mean, we returned, um, you know, almost a billion more in cash to shareholders. We did the ASR, uh, you know, in between, you know, the— and, um, we walked away from the joint bid to, you know, when we were blacked out for the quarter. And you can see us there taking decisive actions in an environment where, you know, our share price is on sale. And so you're going to continue to see us be, you know, really strategic with how we're managing our capital allocation, and I just wanted to put an explanation on that.

Thanks Matt.

Thank you. Your next question is coming from David Begleiter from Deutsche Bank. Your line is live.

So I—I saw it did take down.

Speaker #3: And we're faring better there. The recovery there certainly less inflationary sensitive. On the more value-conscious DIY homeowner that prefers a home center, still under pressure, but again, this is where our strategic partnerships are extremely important, that we continue to find new and different ways to look at that volume.

Prior to 3 quarter, of it, being up, what changed the DIY marketing guys, that this order.

I don't think there's really any material um shift there that I, you know, it it would be more nominal than material. Um we're still waiting for the catalyst

Speaker #3: But I want to take a moment on this point. And we talk a lot about this in our prepared comments. But the fundamental theme here is we do not believe there will be a catalyst in the market anytime soon.

Speaker #3: And the charge to the team is that we have to be our own catalyst for growth. And so you're going to continue to hear us talk about that.

To kick in on and the DIY segment. And I think if you look at bifurcating that segment, you've got more of the premium DIY homeowner in our in our stores that prefer a specialty, uh, kind of experience. And we're, we're fairing better there, the recovery. There is certainly, um, less, um, uh, inflationary sensitive.

Speaker #3: There are a lot of levers that we can pull. They're not infinite. But it is a control what we can control mindset. And that is what gives us confidence.

Speaker #3: We continue to focus on execution discipline and I think we've built strong credibility on that front because we've been able to demonstrate even in the challenging environment.

Speaker #2: Thank you, David.

Speaker #1: Thank you. Your next question is coming from Josh Spector from UBS. Your line is live.

Speaker #7: Yeah. Hi. Good morning. I wanted to follow up on the pricing side, just I mean, I heard your comments around the realization of the 8% increase.

Speaker #7: But just trying to think about the timing of that, relative to kind of your updated pricing guidance, it seems like my interpretation is maybe you're realizing one to two percent in fourth quarter and then maybe more of that falls into 2027.

And the more value conscious DIY homeowner that prefers Home Center. Um still under pressure. But again, this is where our strategic partnership um, are extremely important um, that we continue to to find new and different ways to to get that volume. But I want to take a moment on this point and we, we talked a lot about this in our prepared comments. But the fundamental theme Here is we do not believe there will be a catalyst in the market anytime soon. And the charge to the team is that we have to be our own Catalyst for growth. And so, you're going to continue to hear us talk about that. Um, there are a lot of levers that we can pull, they're not infinite, um, but it is a control. What we can control mindset and that that is what gives us confidence. We continue to focus on execution discipline. I think we build strong credibility, um, on that front because we've been able to demonstrate even in the challenging environment.

Thank you, David.

Speaker #7: So one, is that kind of the right interpretation? And then two, what does that mean for your approach to pricing for what you typically do around Jan 1, 2027?

Thank you. Your next question is. Coming from Josh Spectre from UBS. Your line is live.

Speaker #7: Is that coming up in conversations now, or is that going to be a separate conversation three months from now? Thanks.

Speaker #2: Hey, Josh. Yeah. The phasing of this and again, we've done a lot of pricing throughout the year here. And we're being realistic with what the approach is.

Speaker #2: And I know we keep hammering back on volume being the premium. There is going to be a balance there to make sure that all the work that we've done to keep our customers and to make sure that we're able to supply them and keep a minimum price increase because we did.

Yeah. Hey, good morning. Um I wanted to follow up on the pricing side just I heard your comments around the realization of the 8% increase but just trying to think about the time that you know relative to kind of your updated pricing guidance. I mean it seems like my interpretation is maybe realizing 1 to 2% in fourth quarter and maybe more of that falls in the 2027. So 1 is that kind of right interpretation and then 2 what does that mean for your approach to pricing for what you typically do on around Jan 1 2027? Is that coming up in conversations now? Or is that going to be a separate conversation? 3 months from now?

Thanks.

Speaker #2: We've waited long. I mean, as I mentioned, waiting till September, that was a strategic decision to make sure that we didn't impact our customers the way that some of our competitors may have by going earlier in the painting season.

Speaker #2: And so obviously, the season is rolling over later in the year. I mean, that might have an impact on realization. But I can assure you that the way that we're approaching this here, it is balanced with the inflation that we continue to see.

Speaker #2: And obviously, that'll go into the first part of next year. And so that is part of the calculation. But we're not ready to call anything beyond 2026 right now.

Speaker #2: We're watching this quarter by quarter, half by half, and we'll continue to watch the market. There are uncertainties out there with what inflation will do.

Speaker #2: And our teams are constantly assessing what those impacts are. And what actions we would need to take.

Speaker #4: Thanks, Josh.

Speaker #1: Thank you. Your next question is coming from Jeff Zekoskis from JP Morgan. Your line is live.

Speaker #7: Thanks very much. A two-part question. You talked about '57 store closures. Is there a pattern to the closures? Are these unprofitable or in a particular region or too small?

Hey, Josh. Yeah, the the phasing of this and and again, we've done, you know, a lot of pricing about the year and we're being, we're being realistic with, you know what the approach is. And I know we keep hammering back on volume, you know, being premium, there is going to be a balance there to make sure that, you know, all the work that we've done, uh, to to, to keep our customers. And to make sure that we're, we're able to supply them and keep a minimum price increase we have. Yeah, we've waited long, and we, as I mentioned waiting till September, that was a strategic decision, uh, to make sure that we didn't impact our customers. Uh, the way that, um, you know, you know, some of our editors may have by going earlier in the painting season. And so, uh, obviously the season is rolling over later in the year. I mean, that might have an impact on realization, but I can assure you that, you know, the way that we're approaching this year, um, it it is balanced with the inflation that we continue to see. Obviously, that'll go into the first part of next year. And so that is, you know, part of the calculation. Uh, but we're, you know, we're not ready to call anything beyond, you know, 2026 right now. We're, we're watching this.

You know, quarter by quarter, half by half. Um, and we'll continue to watch the market. There are uncertainties out there with what inflation will do, and our teams are constantly assessing what those impacts are and what actions we would need to take.

Speaker #7: And why are they happening this year? And secondly, in terms of pricing, you're lifting your paint stores pricing by 8%. If you compare that pricing action to what's going on in performance coatings, should performance coatings price initiatives be at least that number because the raw material inflation would be a little bit higher?

Thanks Josh.

Thank you. Your next question is coming from deficits from JP Morgan. Your line is live?

Uh, thanks very much. Uh, two-part question. You talked about 57 store closures.

Speaker #7: Or is there some other dynamic at work? What are you doing in pricing and performance?

Or too small, and why are they happening this year?

and secondly, um,

Speaker #3: Yeah. Jeff, good morning. I'll start the first question on the stores, and then I'll hand it over to Ben. He can comment on the pricing question that you had.

Speaker #3: You asked if there was a pattern. And there is a pattern. They didn't meet the profitability threshold. And so if you think about we've built what I would consider one of the industry's premier distribution platforms over many, many decades.

Speaker #3: And with that comes the responsibility for us to actively manage that platform. So we're going to continue to open stores. And you heard in my prepared remarks, as we were pruning, we wanted to take advantage of what I would just this downturn being really candid to do that and make sure that we're favoring the best use of shareholder cash in the right places.

In terms of pricing, or lifting your paint store pricing by 8%—if you compare that pricing action to what's going on in Performance Coatings, should Performance Coatings price initiatives be at least that number because the raw material inflation would be a little bit higher, or is there some other dynamic at work? What do you do with pricing in Performance?

Yeah, Jeff. Good morning.

Speaker #3: The expectation going forward is that we get to the higher end of that 80 to 100 net new stores beginning next year. And you should expect to see us be aggressive there on that front.

Speaker #3: So in this environment, while we've got this great platform, we think that it's in our shareholder's best interest if we are looking at making these increasingly productive our platform increasingly efficient leveraging AI where it makes sense and where it's helpful.

Speaker #3: But also making sure that we're increasingly aligned with where our customers are growing. So that's what we're solving for. And I think the results are going to be a healthier more productive platform that better serves customers.

Speaker #3: And better generates stronger returns for our shareholders. So we're excited that this is behind us and we can move forward with a more productive platform.

On the pricing. Uh, question that you had you asked if there was a pattern and there is a pattern, they didn't meet the profitability threshold. Um and so if you think about with the you know, we we've built what I would consider 1 of the industry's Premier distribution platforms over many, many decades and with that comes the responsibility for us to actively manage that that that platform. So we're going to continue to open stores and you you heard in my prepared remarks um you know as we were pruning we wanted to take advantage of the web just this downturn being really candid to to to do that and make sure that we're considering the best use of shareholder cash in the right place. The expectation going forward that we get to the higher end of that, 80 to 100 net stores. Beginning this year, you should expect to see us, um, be be aggressive there on that front. So in this environment, while we got this great platform, we think that it's in our shareholders best interests that we are looking at making these increasingly productive.

Speaker #3: And I'll hand it to Ben on the pricing question here.

Speaker #2: Yeah. Jeff, on pricing, as you know, the way we go to market with pricing is very different between our architectural business and the industrial business.

Speaker #2: And so with PCG, and we've talked about this going back to April and even into January, where we had announced some pricing it is a little more surgical within PCG.

Speaker #2: And so as you can expect, with raw material inflation continuing to climb here in the second half, that PCG has been out with pricing a little more surgically by business unit or by region.

Speaker #2: And again, our decision to wait on the architectural side to make sure we preserve volume in our share and made sure that we didn't put those pressures on our customers, it's a different approach that we have between the two different businesses.

Speaker #2: But your thought is right. There's pricing out in all of our segments right now as we're trying to balance the price cost dynamics that are there.

Speaker #1: Thank you, Jeff. Thank you. Your next question is coming from Chuck Cerankosky from North Coast Research. Your line is live.

Um, our platform increasingly efficient leveraging, AI, where it makes sense, and where it's helpful. Um, but also making sure that we're increasingly aligned with where our customers are growing. Um, that's what we're solving for and I think the results can be a healthier more productive platform. That better serves customers, um, and better generates stronger returns, remember our shareholders. So we're excited that this behind us and we can move forward with a more productive platform and I'll hand it to been on the price question here. Yeah, John pricing as you know, the way we go marketing is very different between architectural business, and the industrial business. And so, with, with PCG and we've talked about this, you know, going back to April, even in January, where we had announced some pricing, uh, it is a little more, um, surgical within PCG and so as you can expect with raw material inflation, continuing to uh, time here in the second half that, you know, that the PCG has been out with um you know pricing a little more surgically by business unit by region. Um and again that

Speaker #6: Good morning, everyone. I'd like to talk a little bit about Suvinol how the integration is going, where you're at in the process, and to what degree it contributed or didn't to EPS dollars.

Our decision to wait on the architectural side to to, to make sure we preserve volume, um, in in our share, and made sure that we didn't put those pressure on our customers. It's just, it's a different, a different approach that we have between the 2 different businesses, but your your thought is right. There are, there's pricing out in all of our segments, right now, as we're trying to balance, uh, the price cost, uh, dynamics that are there.

Thank you, Jeff.

Speaker #2: Hey, Chuck. Yeah. Suvinol continues to really be a great addition to Sherwin-Williams for us. And as we've talked about on the last couple of calls, really encouraged by what we're seeing down there is we're bringing Suvinol into the existing Sherwin-Williams business that's been there for 80 years.

Thank you. Your next question is coming from North Coast Research. Your line is live.

Speaker #2: I think some of the highlights that I'd call out here because our teams have gotten their hands more on what that Suvinol business brings.

Good morning. I'd like to talk a little bit about suvinil. Uh, how the integration is going where that in the process and to, to what degree it contributed or did to, uh, EPS dollars?

Speaker #2: We've identified additional synergies even things that maybe we didn't appreciate through the industrial lens. When we were initially looking at opportunities, on the customer front, there's been a lot of really great growth opportunities as the two brands come together.

Speaker #2: And so we're really encouraged about that. In April, I talked a lot about we were going to continue to be doing integrating activities the rest of this year, into early part of next year.

Speaker #2: And so we still think it's a new material tailwind to our EPS for the year as we continue to merge the companies.

Speaker #1: Thank you, Chuck. Thank you. Your next question is coming from Abigail Eberts from Wells Fargo. Your line is live.

Speaker #5: Hi there. Thanks for taking my question and congrats on the quarter. You've talked in the past about your strategy for driving new business wins in paint stores with your rep network, your app launches, and things like that.

Speaker #5: Can you speak to how you're driving new business wins in PCG given the different customers?

Hey, Chuck. Yeah, it's super new continues to, you know, really be a great addition to Sharon Williams for us. And we've talked about on the last couple calls, you know, really encouraged by what we're seeing down there. We're bringing you know, souvenir into the existing, you know, Sheron Williams business. Uh, that's been there for for 80 years. Uh, I think some of the highlights, you know, that I call out here because our team's gotten their, uh, you know, their hands more on, you know what, what souvenir business brings. We we've identified additional synergies, even things that maybe we didn't appreciate through the industrial lens when we were initially looking at opportunities, uh, on the customer front, there's been a lot of really great, uh, growth opportunities as the, the 2 Brands come together. And so we're we're really encouraged about that in April. I talked a lot about, um, we were going to continue to be doing integrating activities, you know, uh, the rest of this year into early part of next year. So uh, we still think it's uh, an immaterial Tailwind or EPS, you know, for the year as we continue to to merge the company.

Companies.

Thank you, Chuck.

Speaker #3: Yeah, Abigail. Good morning. I think it's a Ben kind of alluded to this a little bit on the last question. These are very different models, different customers and markets, regions.

Thank you. Your next question is coming from Abigail Ebert from Wells Fargo. Your line is live.

Speaker #3: And so you're right. When you think about our ability to kind of standardize within paint stores group, it's a little bit different on the performance coating side.

Speaker #3: This is really a team with incredible tenure and expertise in these end markets. And regions and it really is about making sure that we are best serving these customers.

Thanks for taking my question, congrats on the quarter. Um, we've talked in the past about your strategy for driving new business wins in paint doors with your rep Network, your app launches and things like that. Can you speak to how you're driving new business wins in PCG? Getting a different customers?

Speaker #3: And so if you think about some of the assets that we have on our performance coating side that are fairly underappreciated would be our blending facilities.

Speaker #3: And so our ability to have these assets that are close to industrial wood, coil, large customers we're able to better serve oftentimes in at days and weeks versus even longer versus our competitors.

Speaker #3: And these customers are willing to pay a premium for that. So the speed, the consistency of color, our ability to demonstrate value every day affords us a position to create these new business opportunities and new business wins.

Speaker #1: Thank you, Abigail. Thank you. Your next question is coming from Kevin McCarthy from VRP. Your line is live.

Speaker #6: Yes. Thank you and good morning. Heidi, I have a broad question for you on the subject of market share gains. I've been doing a nice job with broad-based gains for a while now.

Speaker #6: But I wanted to ask are there certain businesses where you've been pleasantly surprised by the magnitude of share gains where you wound up winning more than you had expected?

Yeah, good morning. I think it's a, it's a been alluded to this a little bit in the last question, these are very different models, different customers and markets regions. Um, so you're right when you think about our ability to kind of standardize within the storage group. Um, it's a little different on the performance coding side. This is really a team um, with Incredible tenure and expertise in these end markets um, in regions. And it really is about making sure that we are best serving the customers. And so if you think about um, some of the assets that we have on our performance coding side that are that are fairly unap or underappreciated, um, would be our our bleeding facilities. So, our ability to have these assets that are close to Industrial would coil large customers. Um, were able to better serve um, often times and and you know, eighty days and weeks versus, you know, even longer versus our competitors. Um, and these customers are willing to pay a premium for that. So speed, the consistency of color, our ability to demonstrate value every day um before this the position to to create these new business opportunities and new business with

Thank you, Abigail.

Speaker #6: And then in contrast, are there any businesses that come to mind where share gains have proven to be more challenging than you would have thought maybe due to competitive behavior or otherwise where you see room for improvement moving forward?

Thank you. Your next question is coming from Ken McCarthy from vrp. Your line is lost.

Speaker #3: Well, Mike, I have to start or Kevin, rather, I have to start with there's never enough share gains, right? So let's agree with that.

Speaker #3: I'm not surprised by the magnitude anywhere. In fact, the team has been really hard at work and I'll point to commercial as a really I think good example.

Speaker #3: We've talked a lot about res repaint. And I do continue to see heightened growth there. The commercial segment, we talked a lot about this for the last few years, putting additional focus on what it is that only Sherwin-Williams can provide to some of these contractors, even some of these larger contractors.

Thank you and good morning. Um, how do you have a broad question for you, on the subject of market share, gains been doing a nice job with broad-based gains for a while now. But I wanted to ask, are there certain businesses where you've been pleasantly surprised by the magnitude of of share gains where you wound up? Winning more uh than you had expected and then contrasts, are there any businesses that come to mind where share of pro would be more challenging than you would have thought maybe due to competitive Behavior or otherwise where um you see room for improvement, moving forward.

Speaker #3: And so the team has been really focused and hard at work in a very data-driven very disciplined approach by looking for customers that maybe we had some share of wallet in the past.

Speaker #3: Is there opportunity to earn and demonstrate the value that Sherwin-Williams can bring with our delivery, with our ability to as we talked about the pro plus our app, our ability to help these contractors to plan, to bid, to grow, to travel, to better leverage our stores and delivery.

Speaker #3: So we're hard at work out demonstrating our value every day. Some of these projects are multi-year in nature. And so the timing in which we're seeing these conversions that you're seeing in our share gains now are a realization of some of those projects coming to completion and new projects beginning.

Well, Mike, I have to start or Kevin rather have to start with. There's never enough share again, right? So, let's agree with that. Um, that I'm not surprised by the magnitude anywhere. In fact, um, the team has been really, really hard at work, and I like to commercials are really a good example. We're talking about res paint and I and I do continue to see, um, heightened growth there. This commercial segment, um, we talked a lot about this for the last few years, putting additional focus on. You know, what, it is that only show and Williams can provide to some of these contractors even some of these larger contractors. Um, and so the team has been really focused and hard at work. And a very data driven, very disciplined approach, um, by looking for customers that maybe we had some share of wall in the past, their opportunity to earn and demonstrate the value that everyone Williams can bring, um, with

Speaker #3: But I'm very pleased about that. I think your question on where it's more challenging new residential, I'd have to point to new residential industrial wood as it's really tied mostly to new residential just based on cabinets, and furniture, those are the areas that are still under pressure the most.

Speaker #3: I am pleased, though, that even despite new residential is down low single digits in the first half of '26 with flat, I think, full year in '25 and we are outperforming given the soft single family completions.

Speaker #3: They've been very choppy to start the year with a lot of economic uncertainty. But we're continuing to take share in a really challenged environment.

Speaker #3: So the expectation across the board is we're not waiting for the market. And we need to be at a minimum of one and a half to two times the market.

Speaker #3: So as the market starts to move, we expect to continue to have outsized growth there.

Speaker #1: Thank you, Kevin.

Delivery with our ability to, you know, as we talked about the Pro Plus our app, you know, our ability to help these contractors to plan to bid, um, to grow to Trout, to better leverage our stores and distribution and delivery. Um, so we're hard at work out, demonstrating our value every day. Um, some of these projects are multi-year in nature. So the timing in which we're seeing these conversions, um, that you're seeing in our, in our share gains. Now are a realization of some of those projects can be completion and and new projects beginning. Um, but I'm very pleased about that. I think your your question on where it's more challenging um new residential it has points of new residential. Um, industrial wood is it? It's really tied mostly to new residential just based on cabinets and Furniture. Um, those those are the areas that are still, um, uh, Under Pressure. The most, I am pleased though that even despite new residential is down with single digits. Um, in the first half of 26, um, it's flat, I think full year in 25. Um, in we are outperforming given this

Speaker #2: Thank you. Your next question is coming from Mike Harrison from Seaport Research Partners. Your line is live.

Speaker #1: Hi, good morning. Within the PCG segment, you said that your general industrial sales were up high single digits. Just was looking to see if you could break down how much of that was pricing versus volume?

Speaker #1: What end markets are showing strengths in industrial? And do you think that that strength is going to be sustainable into the second half?

Softening goal, family completions, um, they've been very choppy to start the year with a lot of economic uncertainty, um, but we're continuing to take share in a really challenged environment. So the expectation across the board is, we're not weighting some market, and we need to be at a minimum one and a half to two times the market. Um, so as the market starts to move, we expect to continue to have outsized share.

Thank you. Kevin.

Thank you. Your next question is coming from Harrison from Seaport Research Partners. Your line is live.

Speaker #3: Yeah, Mike, the volume was up mid-single digits and price mix up low single digits. We had some effects tailwind low single digits there. But like I mentioned in my prepared comments, the growth has really coming from general finishing and heavy equipment construction.

Speaker #3: So we're continuing to see transportation and energy have some headwinds. But a lot of compliments to the team. But despite that backdrop, they're out focusing very heavily on new business to offset some of that core erosion.

Uh, I just was looking to see if you could break down how much of that was pricing versus volume. Uh, what end markets are showing strength in industrial, and do you think that strength is going to be sustainable into the second half?

Speaker #1: Thank you, Mike.

Speaker #2: Thank you. Your next question is coming from Lawrence Alexander from Jefferies. Your line is live.

Speaker #1: Hi, this is Dan Rizzon from Lawrence. Thanks for fitting me in here. Just getting back to the store closures. I understand this is kind of an unusual situation, but just historically speaking, how I mean, how many stores do you close kind of on an annual basis prior to this kind of period we've been in?

Speaker #1: And also, is franchising something that's ever been considered for the paint stores group?

Yeah. Mike the um, volume was up mid single digits and, um, price mix upload single digits. We have some, um, FX, um, Gail windlass single digits there. Um, but like I mentioned in my prepared comments, the group is really coming from General finishing and heavy equipment construction. Um, so we're, we're continuing to see transportation and energy, um, have some headwinds, um, but I a lot of, you know, compliment to the team that despite that backdrop or out focusing very heavily on, on new business, um, to offset some of that core erosion.

Thank you, Mike.

Speaker #5: Yeah. I mean, in a normal year, you're talking a small handful, two, three, four. A lot of times, again, you may see those because of prior acquisitions and you got duplication.

Thank you. Your next question is coming from Lawrence Alexander from Jefferies. Your line is live.

Speaker #5: And so generally, the focus is getting those new stores in. And so as Heidi talked about earlier, strategically finding the stores where maybe they're not hitting the return profile that you want.

Hi, uh, this is Dan from Lawrence. Thanks for fitting me in here. Um, just getting back to the store closures—uh, I understand this is kind of an unusual situation, but just historically speaking, how—I mean, how many stores do you close on an annual basis prior to this kind of...?

Speaker #5: And getting those out now, it allows us to go faster later. And we have that. We're looking for the opportunity to be at the higher end of that 80 to 100 stores.

Period we've been in, and also, is franchising something that's ever been considered for the main storage group?

Speaker #5: And then franchising is not something that we've considered doesn't fit the long-term strategy value model. And so wouldn't be something that you see us talk about.

Speaker #3: Lawrence, one of the things that we talk a lot about with our stores is this idea of ownership. And our store managers own the P&L.

Speaker #3: They own the culture of the store. They own the hiring of that store. Obviously, they own bringing business into the store. But I think then Ben said it well.

Speaker #3: And it really is making sure that at the core we're really grooming that ownership mindset. The store closures piece, we have our six enterprise priorities.

Speaker #3: Simplification is a very, very important priority that I want to take a moment and talk about. The reason that we're taking this approach to really pruning stores is so we can go faster but it is by design.

Speaker #3: We don't expect to annualize that level year over year. That's why I intentionally said it's behind us so that we could continue to put the new stores in when and where they make sense to support our customers.

Yeah. I mean in a normal year, you know you're talking a small handful you know 2 3 4. Uh a lot of times again you may see those because of the prior Acquisitions and you got duplication. And so the generally focus is getting those new stores in. And so as Heidi talked about earlier, you know, strategically finding the stores where maybe they're not hitting the return profile that you want and getting those out. Now, it allows us to go faster later and we have that, uh, we're looking for the, the opportunity to be at a higher end of that, 80 to 100 stores. Uh, and then franchising is not something that, you know, we, we considered doesn't doesn't fit the long term, strategy value model. And so, would be something that you see us talk about Lauren 1 of the things that we talk a lot about with our stores, is this idea of ownership. Um, and you know, we, we store managers own the p&l they own the, the the culture of the store, they own, the hiring of that store, obviously they own bringing business into the store, but I think then been said it. Well, and it really is making sure that at the core. Um, we're really, we're, we're grooming.

Speaker #1: Thank you, Dan.

Speaker #2: Thank you. Your next question is coming from Chris Parkinson from Wolf Research. Your line is live.

Speaker #4: Just on the back of that, when you take a step back as CEO, is there anything else in terms of major initiatives that you feel the Sherwin team should be even more aggressive on?

Speaker #4: I mean, you've gone through the store count. You've been increasing the average price point by attacking some of the lower volume, higher price point paints and going after kind of the top end of the market over time.

Ownership mindset. Um, the store closures piece. We we have our 6 Enterprise priorities. Um, simplification is a very, very important priority that I want to take a moment and talk about, um, the reason that we're taking this approach to to Really bringing stores is that we can go faster, but it is by Design. Um, we don't expect to annualize that level um, year-over-year. That's why I intentionally said it's behind us. Um, so that we can continue to put uh, put the the new stores in when and where they make sense to support.

Customers.

Thank you, Dan.

Speaker #4: You've increased your sales source. Is there any one or two initiatives where you said, "You know what? We can double down on X, Y, and Z to even further improve our trajectory and really go after that one and a half times market growth"?

Thank you. Your next question is coming from Chris Parkinson, from Wolfe research. Your line is live.

Speaker #4: Is there anything that comes to mind?

Speaker #3: Well, a whole lot how long do we have? So Chris, it's a great question. There's a couple of things here. And I think when you look at the moat and you look at what we're trying to do, especially in a downturn to put more space between us and our competitors, there are absolutely not only levers, but we talk about growth vectors, top line growth, bottom line growth.

Speaker #3: And I said this earlier. We need to be our own catalyst in this market that's not going to simply provide one. And so yeah, there's a lot of there's a lot here.

Just on the back of that, we need to step back as CEO. Is there anything else in terms of major initiatives that you feel that you're on team? Should be more aggressive on? I mean, you've gone through the store, count you've been increasing, you know, the average price point by attacking some of the lower volume, higher price point pains and going after, you know, kind of the top end of the market, over time, you've increased your sales force, is there any 1 or 2 initiatives, where you said, you know what we can dumb double down on X Y and Z to even further improve our trajectory and really go after that 1 and a half times market growth. Is there anything that comes to mind?

Speaker #3: What gets me really excited, not just our stores, our employees, the data that we own, we've assembled the world's largest database of painting contractors.

Speaker #3: There's so much we can be doing with that to be better partners. To our customers, we've got a distribution platform that I'm very proud that we can do two things very well at the same time, which is provide scale and agility.

Well, a whole lot. How long do we have? So, um, because it's a great question, there are a couple of things here. And I think, when you look at the moat and you look at what we're trying to do, especially in a downturn, to put more space between us and our competitors, there are absolutely not only levers, but—when we talk about growth, vectors, topline growth, bottom-line growth. And I said this earlier, we need to be our own catalyst in this.

Speaker #3: Again, which our contractors, our customers value. This is an opportunity especially in a downturn with so much volatility and inflationary pressure. This is an opportunity for Sherwin-Williams to really stand tall and demonstrate our differentiation to our customers and to elevate our partnerships with our customers.

Speaker #3: That's where the team's focus. That's why we're taking share and that's why I'm confident we're going to have a strong back half.

In this market, that's not going to still provide 1 and so, yeah, there's a lot of, there's a lot here. What gets me really excited. Not just our stores are employees. Um, our the data that we own, we we've assembled the largest database of pain contractors. There are. There's so much we can be doing with that. That be better Partners to our customers. Um, we've got a distribution platform that I'm very proud that we can do 2 things very well at the same time, which is

Speaker #5: Yeah. Chris, I'll add to what Heidi said there. I think digital is another opportunity. I think the industry is under digitized. And this supports all the things all the investments that we've been making in digital.

Speaker #5: And really, I mean, whoever gets demand signals, the quickest, they're going to be the ones that get the disproportionate amount of share. And so our teams are actively working through that through ERP modernizations, CRM work.

Speaker #5: We've talked a lot about data and how we get insights. To our businesses faster. And so I think that remains a really big opportunity for us that our teams are actively working on.

Speaker #5: You'll see us continue to talk about.

Speaker #1: Thank you, Chris.

Speaker #2: Thank you. That concludes our Q&A session. I'll now hand the conference back to Jim Jay for a closing remarks. Please go ahead.

Speaker #1: Thank you, Matthew. And thank you, everybody, for joining our call. And I want to reiterate Heidi's comments, thanking our employees for their hard work in delivering a really strong quarter.

Speaker #1: In this really difficult environment. Strategy is clear. It's working. It's unchanged. And you can expect us to continue executing at this high level. I want to close out, as Heidi mentioned, also again, another commercial for our financial community presentation.

That's where the teams focused, that's why we're taking care. And that's why I'm confident, we're going to have a strong back house. Yeah. First, I'll add to what Heidi said there, I think digital, you know, is another opportunity. Uh, I think the industry is under digitized and this supports all the things, all the Investments that we've been making in digital, uh, and really, I mean, whoever, whoever gets demand signals the, the quickest, they're going to be the ones that, uh, get the disproportionate amount of share. And so, our teams are actively, you know, working through that, through Erp modernization, you know, uh, you know, CRM work, we've talked a lot about, you know, data and how we get insights to our businesses faster. And so, I think that's that remains a really big opportunity for us that our teams are active working on, you'll see us continue to, to talk about

Thank you, Chris.

Thank you, that concludes our Q&A session. I'll now hand the conference back to Jim Jaye for closing remarks. Please go ahead.

Speaker #1: Cleveland, September 24th. You'll have the chance to see our new HQ and our global technology center. So hope that you'll many of you will be able to join us for that.

Speaker #1: Thanks again for your interest in Sherwin and we're available as always for your follow-ups. Have a great day.

Speaker #2: Thank you. Everyone has concluded today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker #1: At 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 and Rester Relations and Communications.

Speaker #1: This conference call is being webcast simultaneously and listen-only mode by AXIS NewsWire via the internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately 2 hours after this conference call concludes.

Speaker #1: I will now turn the call over to Jim, Jay.

Speaker #2: Consolidated sales grew by a high single-digit percentage. Inclusive of a low single-digit contribution from the souvenir acquisition. Reported gross margin decreased slightly, but increased excluding the dilutive impact of souvenir.

Speaker #2: Targeted pricing actions during the quarter enabled us to offset raw material inflation. Reported SG&A expense increased, by a mid-single-digit percentage, but decreased 90 basis points as a percent of sales.

Speaker #2: The increase was driven primarily by non-annualized souvenir acquisition costs, and higher employee service costs related to the greater-than-expected year-over-year sales and profit improvement in the quarter.

Speaker #2: And adjusted EBITDA margin expanded 60 basis points to 21.5% of sales. Net operating cash improved by 21%, or 235 million dollars in the quarter.

Speaker #2: Driven by an increase in net income, and working capital being a higher source of cash year over year. Pre-cash flow conversion was 86%. Consistent with our disciplined approach to capital allocation, we took advantage of volatility in the market to accelerate share repurchases in the quarter.

Speaker #2: And combined with dividends, returned 1.5 billion dollars to shareholders. We ended the second quarter with a strong balance sheet and a net debt to adjusted EBITDA ratio of 2.4 times.

Speaker #2: Based on our strong first half performance, as well as our assumptions for the remainder of the year, we are increasing our full-year consolidated sales and EPS guidance.

Speaker #2: Let me now turn it over to Heidi, who will provide some color on second-quarter segment performance, before moving on to our outlook and your questions.

Speaker #3: Thank you, Jim. I want to begin by thanking our more than 64,000 employees for their relentless focus on executing on behalf of our customers.

Speaker #3: At the same time, we continue to focus on optimizing the enterprise and controlling our costs as evidenced by the restructuring actions taken during the quarter.

Speaker #3: Price Mix grew at the low end of mid-single digits and volume increased by a low single-digit percentage. Our team delivered growth in all pro segments.

Speaker #3: Data centers, semiconductor infrastructure, and manufacturing onshoring are among several drivers of this growth, where customers continue turning to Sherwin-Williams for a suite of solutions that can be delivered quickly and consistently.

Speaker #3: Segment profit grew by mid-single digits and segment margin was 24.6%. As planned, we have opened 45 new stores year to date, and also as planned, closed 57, or about 1% of total PSG stores.

Speaker #3: Mid-single-digit Price Mix and low single-digit FX were partially offset by a low single-digit decrease in volume. Group sales excluding souvenir increased by mid-single digits and our legacy Latin America business excluding souvenir increased by a low double-digit percentage.

Speaker #3: Sales decreased in Europe by a double-digit percentage against a high teens comparison driven by customer inventory management and destocking. Adjusted segment margin increased 210 basis points to 24.5%.

Speaker #3: Leverage from mid-single-digit sales growth and flat SG&A excluding souvenir drove half of the improvement, but the other half coming from favorable non-operating items. In performance coatings group, sales beat expectations with growth in every division and region.

Speaker #3: These results reflect the strong new account focus that we continue to drive as demand largely remains unchanged in our underlying core business. Price Mix and volume both grew by low single digits in the quarter.

Speaker #3: With Price Mix greater than volume. FX was a low single-digit tail end. Growth was strongest in the general industrial division, led by strength in heavy equipment as sales were up high single digits, inclusive of mid-single-digit volume growth.

Speaker #3: Automotive refinish also grew in the high single-digit range, driven by Price Mix and favorable FX. Packaging continued its strong performance as sales increased by mid-single digits against a low teens comparison.

Speaker #3: Coil and wood also delivered mid-single-digit growth. Group sales expanded in all regions including a strong double-digit increase in Asia Pacific and mid-single-digit growth in North America.

Speaker #3: We expect inflation in our raw material basket to be up in the high single-digit range in the second half, moving our full-year outlook to the mid-single-digit range.

Speaker #3: The slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the third quarter and full year 2026.

Speaker #3: Based on our strong first half performance and the momentum that we are carrying into the second half, we are raising our full-year sales and adjusted EPS guidance.

Speaker #3: We are encouraged by our second quarter performance and proud of what our teams accomplished during the first half of the year. Their execution demonstrates the strength of our business, the durability of our strategy, and the advantages that continue to differentiate us in the marketplace.

Speaker #3: Our mindset has not changed. In this environment, we know growth will need to come from what we do, not from what the market gives us.

Speaker #3: Our employees are the key to our success, and I want to take a moment to speak directly to them and express my deep respect and appreciation.

Speaker #3: As we have just demonstrated, we will continue approaching the many opportunities ahead of us with urgency, discipline, and confidence in our ability to deliver.

Speaker #3: I look forward to seeing many of you there. Please reach out to our investor relations team if you have not registered as space is limited.

Speaker #3: With that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.

Speaker #1: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star 1 on your phone at this time.

Speaker #1: And once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from John McNulty from BMO Capital Markets.

Speaker #1: Your line is live.

Speaker #2: Yeah. Thanks for taking my question, and congrats on some really solid results, especially in a tough environment. So I wanted to ask maybe you can unpack a little bit mid-quarter you and Nippon made a bid for AXO, and then relatively quickly thereafter, pulled that bid.

Speaker #2: I guess, can you walk us through the rationale for both moves and how we should be thinking about M&A going forward in terms of the opportunities that you may see out there?

Speaker #3: Yeah. Good morning, John. I'll take that. We take a very disciplined approach not only to our capital allocation philosophy that remains unchanged, but as it relates specifically to M&A, as you can imagine, we are constantly looking and assessing assets that would be a fit or an accelerator to our strategy.

Speaker #3: And so we probably passed well over we passed on well over 90%, I would say, that cross our desk. But when we look at those specific assets, those were very premium-targeted assets that we had long admired and there was an opportunity at the right price, at the right time, at the right value that would have been something that would absolutely have been complementary to our strategy.

Speaker #3: And so the decision to walk away and put that cash to use was in our and our shareholders' best interest.

Speaker #2: Thank you, John.

Speaker #1: Thank you. Your next question is coming from Vincent Andrews from Morgan Stanley. Your line is live.

Speaker #2: Thank you. Good morning, everyone. Can I ask for a little more color on the consumer brands margins? Obviously, very strong improvement. How should we expect those margins to move on a go-forward basis?

Speaker #2: So what drove these margins to be so much better than the other two segments? And what is the sustainability of it?

Speaker #4: Hey, Vincent. Ben Meisenzahl. On the margin piece, it really comes from probably two parts. First, you look about half of it is coming from just the core operating performance.

Speaker #4: And so you think about the leverage that you get in a situation like that. And then the other half of the margin expansion was from more favorable non-operating items.

Speaker #4: That also impacted the sequential first quarter to second quarter so if you back out those non-operating items, you're more flattish first quarter to second quarter.

Speaker #4: So that's what's driving the adjusted segment margin there.

Speaker #3: Vincent, I'll add in from a market share standpoint. DIY, obviously, there's not been any meaningful improvement in that particular segment. Pro Who Paints, however, we are seeing continued share gains there.

Speaker #3: And that's a testament to the team's successfully executing on our strategy. We've got obviously our very strategic partnerships, Lowe's and Menards and others, but this is a growing segment, still a small base, but the fundamentals are intact there.

Speaker #3: So a lot of credit to the team for continued focus.

Speaker #2: Thank you, Vincent.

Speaker #1: Thank you. Your next question is coming from Duffy Fischer from Goldman Sachs. Your line is live.

Speaker #2: Yeah. Good morning. Just a question around kind of the implied guidance at the midpoint. So in the first half, year over year, you guys were up about 40 cents of EPS.

Speaker #2: And at the midpoint in the second half, you're up a little more than a dime. Even though you have a pretty big price increase rolling through in September.

Speaker #2: So one, just wanted to see what is it that might slow down when you're looking at it year over year that would have a smaller increase?

Speaker #2: And then second part of that, between Q3 and Q4, should Q4 be seasonally bigger than normal because of that price increase when you look at it versus history?

Speaker #4: Hey, Duffy. Yeah. If you look at the year over year, I mean, there's two things really that impact the first half versus the second half.

Speaker #4: But if you do look at the second half of this year and that slower growth of EPS, as we've talked about, we still expect that ramp-up of raw material costs.

Speaker #4: We've taken our guide up a little bit. For the back half or for the full year, and that's coming on the back half. And so even though we have pricing that we're still laying in and our commitment to staying in front of that with balanced management of the price cost environment, it is still an economic headwind that we're facing here.

Speaker #4: And so that's probably the biggest reason why you would see maybe a little less of the growth in the second half that you saw in the first half.

Speaker #2: Duffy.

Speaker #1: Thank you. Your next question is coming from Ghansham Panjabi from Baird. Your line is live.

Speaker #5: Thank you. Good morning, everybody. Heidi, going back to your comments on the outlook and just given the steady increase in interest rates recently, specific to the PSG segment, are you embedding any sort of volume deterioration sequentially for the back half of this year, which will be offset by share gain initiatives on your end to sort of sum to that low single-digit volume growth?

Speaker #5: Is that the right way to think about it? Thank you.

Speaker #3: But I'll ask him to touch base in a minute. I just want to take a moment, though, and give you a little bit of segment perspective to reinforce my point.

Speaker #3: If you look broad strokes and obviously we talk a lot about what's going on from a residential standpoint, new residential, I would say the exact opposite.

Speaker #3: Something I want to highlight here, this is really exciting. We just launched a product called Emerald Symmetry. And it's the best performing interior product that we've ever produced.

Speaker #3: So not only with the right performance characteristics, but it's going to be a great plant-based zero VOC product so helping to really advance our sustainability agenda.

Speaker #3: So we're doing a lot of work here in this current macro to certainly favor growth and square footage for these res repaint contractors. So volume certainly positive there.

Speaker #3: New residential continues to be under pressure. We are outperforming as monthly. Single family completions are down. An average high single digits in 2026, while our sales were down a low single digit.

Speaker #3: So demonstrating that we're taking share there. It certainly can touch on property maintenance. Our year over year rent growth remains weak. With some sequential improvement, I would underscore some, but our outperformance with low single digit growth is also evidence of share gains.

Speaker #3: So the market's not going to help us in any regard. But I do want to take a moment here on protective and marine because it's been a fantastic highlight.

Speaker #3: I said this in the call earlier, but it's our eighth straight quarter of at least high single digit growth. So we are exceptionally and uniquely well positioned, I would say, for some of these tailwinds.

Speaker #3: And so again, back to the comments earlier, we know the market's not going to help us. We're not waiting. We have a lot of time ahead of us this year.

Speaker #3: We know we can control what we can control, but we're going to expect that we outpace the market.

Speaker #4: Yeah. Gotcha. And I'll add to what Heidi said there and going back to the original part of your question. I mean, if you look at the phasing of volume, year over half over half in the guidance, it's relatively consistent.

Speaker #4: And if you go back to our original guidance in January, our assumptions were the same. What's different is the level of volume is higher than what we would have expected.

Speaker #4: And you see that in our original January guidance, down most single digit to up most single digit stores group volume. And now we're guiding to that up low single digit volume.

Speaker #4: And so that supports all the things that Heidi talked about there. But again, the quarter over quarter volume you're going to see consistent and what changes is the pricing as we try to balance that against the inflation.

Speaker #2: Thank you, Ghansham.

Speaker #1: Thank you. Your next question is coming from Gregory Melich from Evercore ISI. Your line is live.

Speaker #4: Great. Thanks. I guess I'd follow up on that last point. I think you mentioned in the prepared comments the price increase in September. You expect realization to be in the historic range.

Speaker #4: Can you just is that the range that we've seen this year? I think the more like 40%, or is it the historic more 60 to 70%?

Speaker #4: And then the second part of that question is, would that be enough for gross margins to grow year over year in the back half, given the raw material still accelerating?

Speaker #2: Yeah. Greg, I mean, starting with the back part of your question there, I mean, our expectation is that we're balanced with pricing and our commitment has been to stay in front of that.

Speaker #2: And so you'll continue to see that there. Again, going back to your September price increase question, we normally see a glide path and to Heidi's point, the this pricing will be at that same historical trend.

Speaker #2: And so we felt that September provided the best balance between those objectives. And that's why you see us going right now. Thanks, Greg.

Speaker #1: Thank you. Your next question is coming from Patrick Cunningham from Citi. Your line is live.

Speaker #5: Hi. Good morning. Thanks for taking my question. I was hoping you could just give a little bit of detail beyond the drivers for both the commercial and protective segments.

Speaker #5: And what sort of multi-quarter or multi-year visibility do you have there from some of your share gains, new product lens, anything that we should think about across those two strug segments?

Speaker #2: Yeah. Good morning, Patrick. It's Jim. I'd say on the commercial side, you're seeing this is a couple of quarters in a row where we're outperforming.

Speaker #2: A lot of credit to the team that's driving the commercial side there. The other part of your question, Patrick, just again, was which other segment?

Speaker #2: The P&M piece. Yeah. So the P&M piece is Heidi, I think, touched on it. The data center build-out, the infrastructure build-out, semiconductor fabs, there's others that maybe aren't getting as much of a headline, but water treatment, pharmaceutical, the onshoring, all of that is opportunity for us.

Speaker #2: A great suite of solutions, flooring, structural steel, and there's also an architectural element of the office space in all of those applications as well.

Speaker #3: Patrick, one other piece to add. And Jim mentioned this, but when we talk about AI, data centers, and the build-out, you think of the race of these hyperscalers and speed matters.

Speaker #3: And we can provide speed. We can provide a comprehensive one-shot solution for many of their coding needs across the board that Jim just mentioned.

Speaker #3: So we love the tailwind and we're ready for it.

Speaker #2: Thanks, Patrick.

Speaker #1: Thank you. Your next question is coming from John Roberts from Mizuho. Your line is live.

Speaker #2: Thank you. Back to the original M&A question. Sherwin didn't appear to be interested in the number one European Deco business. Why was that?

Speaker #3: Obviously, there's a lot of agility within that playbook. But the market fundamentals outside of North America simply don't support that level of capital deployment.

Speaker #3: So we do think there are, again, other very attractive alternatives of shareholders: cash, and we're going to put that to good work.

Speaker #2: Thank you, John.

Speaker #1: Thank you. Your next question is coming from Arun Viswanathan from RBC. Your line is live.

Speaker #5: Great. Thanks for taking my question. I was hoping to ask just on two segments. Resi repaint and packaging. I think both of those were in the mid-single-digit range.

Speaker #5: If I'm not mistaken, could you just elaborate? It sounds like Resi repaint, obviously, you've been in higher ranges before, but is that kind of plateauing?

Speaker #5: Is there anything else that you could do to drive higher growth there? And then similarly in packaging, are you still working on some share gains there?

Speaker #5: And where are we in kind of the European PPA transition? Thanks.

Speaker #3: Yeah. You bet. Well, let me start with Resi repaint. Is it plateauing? Absolutely not. In fact, I would say we're just getting started there.

Speaker #3: There's a lot of share available for grabs right there. And so we're going to continue not only with our dedicated stores our residential repaint reps the product launches, the innovation that we're providing in the can, all of the digital suite of tools that we're innovating and continue to innovate for these residential repaint contractors, regardless of their size, to help them with their economics, be better planners, make sure that we're helping them leveraging our store multiple stores and helping them grow and travel so we're in a really good place also a testament to the team.

Speaker #3: We've got an organization that we've long been focused on, not just selling, but shifting to more of a consultative selling approach. And so our team, I'm very proud of what our folks in the stores are doing day in and day out to help our customers succeed here.

Speaker #3: We're clearly outgrowing the market. Here, I think the EFSA piece you mentioned, the ban on DPA, taking effect in Q2, obviously, of this year, that will continue to drive customer conversion back half of this year and in the next year.

Speaker #3: So we expect that to be goodness heading our way.

Speaker #2: Thanks, Arun.

Speaker #1: Thank you. Your next question is coming from Matthew DeYoe from Bank of America. Your line is live.

Speaker #6: Good morning. I just wanted to ask kind of a clarifying question a little bit on the consumer business. You'd mentioned some non-operating tailwinds, absent, that things would have been flat, quarter over quarter.

Speaker #6: Was that a market would have been flat, or was that a EBITDA would have been flat? Can you just tie that up then?

Speaker #2: Yeah. Matt, that would have been the adjusted segment margin would have been flat. And so again, roughly half of the improvement that you saw quarter over quarter if you had adjusted that for what we saw in the first quarter, you would have seen more flattish adjusted segment margins in CBG.

Speaker #6: Okay. I appreciate that. That's helpful. And then Heidi, to jump back a little bit on John's earlier question and I guess maybe both John's, but and I don't know if I want to drag this conversation too much, but ultimately, what changed between your first two attempts on Axon Abell and then the release of the slide deck and then your decision to walk away?

Speaker #6: I appreciate the price discipline comment, but conceptually, you kind of already had to come up in a more material way. And then the slide deck comes walk.

Speaker #6: Am I reading too much into what was a couple of days lapse or is there something else there? Because I mean, that deal isn't necessarily done, though I think the market expects, but just wondering how it relates to your appetite.

Speaker #6: And then conceptually, I would assume any spin-offs or fair game for sure went to consider. Or asset separations, right?

Speaker #3: Right. So Matt, let me attack your question here. I think there's basically three parts of it. First, I do think you're assigning too much weight to the days and if you look at the discipline in which we think about capital allocation deployment, we've been looking at those assets for years.

Speaker #3: And so we're not desperate for those assets. I want to be very clear. And we've said we don't need acquisition to grow. We have a lot of organic scale opportunity.

Speaker #3: The team is doing a fantastic job demonstrating that. We're not going fast enough. We'll changed kind of between bid one and bid two. And it was what I stated earlier as we talked about putting a very what we thought was not only a fair and reasonable but superior all-cash offer forward.

Speaker #3: At some point, without getting the level of engagement that you want, what we're not going to do is negotiate against ourselves if we're not desperate for these assets.

Speaker #3: And just a moment on this. While you didn't ask about it, I think it demonstrates the discipline of how we think about M&A. We've long admired that asset down in Latin America and had been looking at that for over 10 years.

Speaker #3: We were very thoughtful in our approach not just in terms of the deal, but in terms of the integration. Coming from the Valspar side and playing a big role on integration, it's extremely important that when we're thinking about success here, it is customer and employee first.

Speaker #3: And I'm very pleased with the success that the team is having. The business continuity continues to be our North Star, making sure that we're providing stability not only in our relationships with our customers, but in our service levels.

Speaker #2: And Matt, I just want to build on one thing that Heidi said here. Again, it's we've talked about how our cash generation remains a strategic advantage for us.

Speaker #2: And you look at the first half, and that's really on display. I mean, we returned almost a billion more in cash to shareholders. We did the ASR.

Speaker #2: And so you're going to continue to see us be really strategic with how we're managing our capital allocation. And just wanted to put an exclamation on that.

Speaker #1: Thanks, Matt. Thank you. Your next question is coming from David Begleiter from Deutsche Bank. Your line is live.

Speaker #7: Thank you. Good morning. I'm Heidi. Just on DIY, I saw it did tick down versus the prior three-quarter but being up. What changed in the DIY market for you guys this quarter?

Speaker #5: I don't think there's really any material shift there, David. It would be more nominal than material. We're still waiting for the catalyst to kick in on the DIY segment.

Speaker #5: I think if you look at bifurcating that segment, you've got more of the premium DIY homeowner in our stores that prefer a specialty kind of experience.

Speaker #5: And we're faring better there. The recovery there certainly less inflationary sensitive. On the more value-conscious DIY homeowner that prefers a home center, still under pressure, but again, this is where our strategic partnerships are extremely important, that we continue to find new and different ways to look at that volume.

Speaker #5: But I want to take a moment on this point. And we talk a lot about this in our prepared comments, but the fundamental theme here is we do not believe there will be a catalyst in the market anytime soon.

Speaker #5: And the charge to the team is that we have to be our own catalyst for growth. And so you're going to continue to hear us talk about that.

Speaker #5: There are a lot of levers that we can pull. They're not infinite. But it is a control what we can control mindset. And that is what gives us confidence.

Speaker #5: We continue to focus on execution discipline and I think we've built strong credibility on that front because we've been able to demonstrate even in the challenging environment.

Speaker #2: Thank you, David.

Speaker #1: Thank you. Your next question is coming from Josh Spector from UBS. Your line is live.

Speaker #6: Yeah. Hi. Good morning. I wanted to follow up on the pricing side, just I mean, I heard your comments around the realization of the 8% increase, but just trying to think about the timing of that relative to kind of your updated pricing guidance.

Speaker #6: I mean, it seems like my interpretation is maybe you're realizing one to two percent in fourth quarter and then maybe more of that falls into 2027.

Speaker #6: So one, is that kind of the right interpretation? And then two, what does that mean for your approach to pricing for what you typically do around Jan 1, 2027?

Speaker #6: Is that coming up in conversations now, or is that going to be a separate conversation three months from now? Thanks.

Speaker #2: Hey, Josh. Yeah. The phasing of this and again, we've done a lot of pricing throughout the year here, and we're being realistic with what the approach is.

Speaker #2: And so obviously, the season is rolling over later in the year. I mean, that might have an impact on realization, but I can assure you that the way that we're approaching this here, it is balanced with the inflation that we continue to see.

Speaker #2: And obviously, that'll go into the first part of next year. And so that is part of the calculation. But we're not ready to call anything beyond 2026 right now.

Speaker #2: We're watching this quarter by quarter, half by half, and we'll continue to watch the market. There are uncertainties out there with what inflation will do.

Speaker #2: And our teams are constantly assessing what those impacts are, and what actions we would need to take.

Speaker #4: Thanks, Josh.

Speaker #1: Thank you. Your next question is coming from Jeff Zekoskis from JP Morgan. Your line is live.

Speaker #6: Thanks very much. A two-part question. You talked about '57 store closures. Is there a pattern to the closures, or are these unprofitable or in a particular region or too small?

Speaker #6: And why are they happening this year? And secondly, in terms of pricing, you're lifting your paint stores pricing by 8%. If you compare that pricing action to what's going on in performance coatings, should performance coatings price initiatives be at least that number?

Speaker #6: Because the raw material inflation would be a little bit higher, or is there some other dynamic at work? What are you doing in pricing and performance?

Speaker #5: Yeah. Jeff, good morning. I'll start the first question on the stores, and then I'll hand it over to Ben. He can comment on the pricing question that you had.

Speaker #5: You asked if there was a pattern. And there is a pattern. They didn't meet the profitability threshold. And so if you think about the we've built what I would consider one of the industry's premier distribution platforms over many, many decades.

Speaker #5: And with that comes the responsibility for us to actively manage that platform. So we're going to continue to open stores. And you heard in my prepared remarks, as we were pruning, we wanted to take advantage of what I would just this downturn being really candid to do that and make sure that we're favoring the best use of shareholder cash in the right places.

Speaker #5: The expectation going forward is that we get to the higher end of that 80 to 100 net new stores beginning next year. And you should expect to see us be aggressive there on that front.

Speaker #5: So in this environment, while we've got this great platform, we think that it's in our shareholder's best interest if we are looking at making these increasingly productive our platform increasingly efficient leveraging AI where it makes sense and where it's helpful, but also making sure that we're increasingly aligned with where our customers are growing.

Speaker #5: So that's what we're solving for. And I think the results are going to be a healthier more productive platform that better serves customers. And better generates stronger returns for our shareholders.

Speaker #5: So we're excited that this is behind us and we can move forward with a more productive platform. And I'll hand it to Ben on the pricing question here.

Speaker #2: Yeah. Jeff, I'm pricing as you know, the way we go to market with pricing is very different between our architectural business and the industrial business.

Speaker #2: And so with PCG, and we've talked about this going back to April and even into January, where we had announced some pricing it is a little more surgical within PCG.

Speaker #2: But your thought is right. There's pricing out in all of our segments right now as we're trying to balance the price cost dynamics that are there.

Speaker #1: Thank you, Jeff. Thank you. Your next question is coming from Chuck Cerankosky from North Coast Research. Your line is live.

Speaker #7: Good morning, everyone. I'd like to talk a little bit about Suvinol how the integration is going, where you're at in the process, and to what degree it contributed or didn't to EPS dollars.

Speaker #2: That's been there for 80 years. I think some of the highlights that I'd call out here because our teams have gotten their hands more on what that Suvinol business brings.

Speaker #2: And so we still think it's a new material tailwind to our EPS for the year as we continue to merge the companies.

Speaker #1: Thank you, Chuck. Thank you. Your next question is coming from Abigail Eberts from Wells Fargo. Your line is live.

Speaker #8: Hi there. Thanks for taking my question and congrats on the quarter. You've talked in the past about your strategy for driving new business wins in paint stores with your rep network, your app launches, and things like that.

Speaker #8: Can you speak to how you're driving new business wins in PCG given the different customers?

Speaker #5: Yeah, Abigail. Good morning. I think it's a Ben kind of alluded to this a little bit on the last question. These are very different models, different customers and markets, regions.

Speaker #5: And so you're right when you think about our ability to kind of standardize within paint stores group. It's a little bit different on the performance coating side.

Speaker #5: This is really a team with incredible tenure and expertise in these end markets. And regions and it really is about making sure that we are best serving these customers.

Speaker #5: And so if you think about some of the assets that we have on our performance coating side that are fairly underappreciated would be our blending facilities.

Speaker #5: And so our ability to have these assets that are close to industrial wood, coil, large customers we're able to better serve oftentimes in at days and weeks versus even longer versus our competitors.

Speaker #5: And these customers are willing to pay a premium for that. So the speed, the consistency of color, our ability to demonstrate value every day affords us a position to create these new business opportunities and new business wins.

Speaker #1: Thank you, Abigail. Thank you. Your next question is coming from Kevin McCarthy from VRP. Your line is live.

Speaker #7: Yes. Thank you and good morning. How do you have a broad question for you on the subject of market share gains and doing a nice job with broad-based gains for a while now.

Speaker #7: But I wanted to ask are there certain businesses where you've been pleasantly surprised by the magnitude of share gains where you wound up winning more than you had expected?

Speaker #7: And then in contrast, are there any businesses that come to mind where share gains have proven to be more challenging than you would have thought maybe due to competitive behavior or otherwise where you see room for improvement moving forward?

Speaker #5: Well, Mike, I have to start or Kevin, rather, I have to start with there's never enough share gains, right? So let's agree with that.

Speaker #5: I'm not surprised by the magnitude anywhere. In fact, the team has been really hard at work and I'll point to commercial as a really I think good example.

Speaker #5: We've talked a lot about res repaint. And I do continue to see heightened growth there. The commercial segment, we talked a lot about this for the last few years, putting additional focus on what it is that only Sherwin-Williams can provide to some of these contractors, even some of these larger contractors.

Speaker #5: And so the team has been really focused and hard at work in a very data-driven very disciplined approach by looking for customers that maybe we had some share of wallet in the past.

Speaker #5: Is there opportunity to earn and demonstrate the value that Sherwin-Williams can bring with our delivery, with our ability to as we talked about the pro plus our app, our ability to help these contractors to plan to bid to grow, to travel, to better leverage our stores and delivery.

Speaker #5: So we're hard at work out demonstrating our value every day. Some of these projects are multi-year in nature. And so the timing in which we're seeing these conversions that you're seeing in our share gains now are a realization of some of those projects coming to completion and new projects beginning.

Speaker #5: But I'm very pleased about that. I think your question on where it's more challenging new residential, I'd have to point to new residential industrial wood as it's really tied mostly to new residential just based on cabinets, and furniture.

Speaker #5: Those are the areas that are still under pressure the most. I am pleased, though, that even despite new residential is down low single digits in the first half of '26 with flat, I think, full year in '25 and we are outperforming given the soft single family completions they've been very choppy to start the year with a lot of economic uncertainty.

Speaker #5: But we're continuing to take share in a really challenged environment. So the expectation across the board is we're not waiting for the market. And we need to be at a minimum of one and a half to two times the market.

Speaker #5: So as the market starts to move, we expect to continue to have outsized growth there.

Speaker #1: Thank you, Kevin.

Speaker #2: Thank you. Your next question is coming from Mike Harrison from Seaport Research Partners. Your line is live.

Speaker #6: Hi, good morning. Within the PCG segment, you said that your general industrial sales were up high single digits. Just was looking to see if you could break down how much of that was pricing versus volume?

Speaker #6: What end markets are showing strengths in industrial? And do you think that that strength is going to be sustainable into the second half?

Speaker #5: Yeah, Mike, the volume was up mid single digits and price mix up low single digits. We had some effects tailwind low single digits there.

Speaker #5: But like I mentioned in my prepared comments, the growth has really coming from general finishing and heavy equipment construction. So we're continuing to see transportation and energy have some headwinds.

Speaker #5: But a lot of compliments to the team that despite that backdrop, they're out focusing very heavily on new business to offset some of that core erosion.

Speaker #1: Thank you, Mike.

Speaker #2: Thank you. Your next question is coming from Lawrence Alexander from Jefferies. Your line is live.

Speaker #6: Hi. This is Dan Rizzon from Lawrence. Thanks for putting me in here. Just getting back to the store closures. I understand this is kind of an unusual situation, but just historically speaking, how I mean, how many stores do you close kind of on an annual basis prior to this kind of period we've been in?

Speaker #6: And also, is franchising something that's ever been considered for the paint stores group?

Speaker #7: Yeah. I mean, in a normal year, you're talking a small handful, two, three, four. A lot of times, again, you may see those because of prior acquisitions and you got duplication.

Speaker #7: And so generally, the focus is getting those new stores in. And so as Heidi talked about earlier, strategically finding the stores where maybe they're not hitting the return profile that you want and getting those out now.

Speaker #7: It allows us to go faster later. And we have that. We're looking for the opportunity to be at the higher end of that 80 to 100 stores.

Speaker #7: And then franchising is not something that we've considered doesn't fit the long-term strategy value model. And so wouldn't be something that you see us talk about.

Speaker #5: Lawrence, one of the things that we talk a lot about with our stores is this idea of ownership. And our store managers own the P&L.

Speaker #5: They own the culture of the store. They own the hiring of that store. Obviously, they own bringing business into the store. But I think then Ben said it well.

Speaker #5: And it really is making sure that at the core we're really grooming that ownership mindset. The store closures piece, we have our six enterprise priorities.

Speaker #5: Simplification is a very, very important priority that I want to take a moment and talk about. The reason that we're taking this approach to really pruning stores is so we can go faster but it is by design.

Speaker #5: We don't expect to annualize that level year over year. That's why I intentionally said it's behind us so that we could continue to put the new stores in when and where they make sense to support our customers.

Speaker #1: Thank you, Dan.

Speaker #2: Thank you. Your next question is coming from Chris Parkinson from Wolf Research. Your line is live.

Speaker #3: Just on the back of that, when you take a step back as CEO, is there anything else in terms of major initiatives that you feel the Sherwin team should be even more aggressive on?

Speaker #3: I mean, you've gone through the store count. You've been increasing the average price point by attacking some of the lower volume, higher price point paints and going after kind of the top end of the market over time.

Speaker #3: You've increased your sales force. Is there any one or two initiatives where you said, "You know what? We can double down on X, Y, and Z to even further improve our trajectory and really go after that one and a half times market growth"?

Speaker #3: Is there anything that comes to mind?

Speaker #5: Well, a whole lot how long do we have? So Chris, that's a great question. There's a couple of things here. And I think when you look at the moat and you look at what we're trying to do, especially in a downturn to put more space between us and our competitors, there are absolutely not only levers, but we talk about growth vectors, top line growth, bottom line growth.

Speaker #5: And I said this earlier. We need to be our own catalyst in this market that's not going to simply provide one. And so yeah, there's a lot here.

Speaker #5: What gets me really excited, not just our stores, our employees, the data that we own, we've assembled the world's largest database of painting contractors.

Speaker #5: There's so much we can be doing with that to be better partners. To our customers, we've got a distribution platform that I'm very proud that we can do two things very well at the same time, which is provide scale and agility.

Speaker #5: Again, which our contractors, our customers value. This is an opportunity especially in a downturn with so much volatility and inflationary pressure. This is an opportunity for Sherwin-Williams to really stand tall and demonstrate our differentiation to our customers and to elevate our team's focus.

Speaker #5: That's why we're taking share and that's why I'm confident we're going to have a strong back half.

Speaker #7: Yeah. Chris, I'll add to what Heidi said there. I think digital is another opportunity. I think the industry is under digitized. And this supports all the things, all the investments that we've been making in digital.

Speaker #7: And really, I mean, whoever gets demand signals, the quickest, they're going to be the ones that get the disproportionate amount of share. And so our teams are actively working through that through ERP modernizations, CRM work.

Speaker #7: We've talked a lot about data and how we get insights. To our businesses faster. And so I think that remains a really big opportunity for us that our teams are actively working on.

Speaker #7: You'll see us continue to talk about.

Speaker #1: Thank you, Chris.

Speaker #2: Thank you. That concludes our Q&A session. I'll now hand the conference back to Jim Jay for a closing remarks. Please go ahead.

Speaker #1: Strategy is clear. It's working. It's unchanged. And you can expect us to continue executing at this high level. I want to close out, as Heidi mentioned, also again, another commercial for our financial community presentation.

Speaker #1: Cleveland, September 24th. You'll have the chance to see our new HQ and our global technology center. So hope that you'll many of you will be able to join us for that.

Speaker #1: Thanks again for your interest in Sherwin and we're available as always for your follow-ups. Have a great day.

Q2 2026 The Sherwin-Williams Co Earnings Call

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