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F500-2021-162-Sherwin-Williams

The paint and coating company began selling ready-mixed paint in 1875. First quarter 2021 net sales were up 8.6% year over year in the Americas Group, largely thanks to a do-it-yourself home renovation craze brought on by the COVID pandemic.

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F500-2020-180-Sherwin-Williams

The paint company develops and manufactures paints and related products and distributes them to consumers and companies.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Sherwin-Williams manufactures and distributes paints, coatings, and related products for residential, commercial, and industrial use. The company operates through a network of company-operated stores and facilities, serving both professional contractors and do-it-yourself consumers. Its product offerings include interior and exterior paints, stains, and protective coatings. Sherwin-Williams also supplies coatings to original equipment manufacturers and industrial markets.

Q2 2026

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Sherwin-Williams (SHW): Company Profile, Stock Price, News, Rankings

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Sherwin-Williams

sherwin-williams

Good morning, and thank you for joining the Sherwin Williams Company's review of second quarter twenty twenty five results and our outlook for the third quarter and full year of 2025. With us on today's call are Heidi Petz, Chair, President and Chief Executive Officer Al Mestizhin, Chief Financial Officer Paul Lang, Chief Accounting Officer and Jim Jay, Senior Vice President, Investor Relations and Communications. This conference call is being webcast simultaneously in listen only mode by accessing 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. This conference call will include certain forward looking statements as defined under U.

S. Federal securities laws with respect to sales, earnings and other matters. Any forward looking statement speaks only as of the date of which this statement is made, and the company undertakes no obligation to update or revise any forward looking statement, whether as a result of new information, future events or otherwise. 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 this session to questions.

I will now turn the call over to Jim Jay. Sir, the floor is yours.

Thank you, and good morning to everyone. Sherwin Williams continued to execute our strategy in a demand environment that remained choppy as we expected. We also continued to take aggressive and deliberate operational and commercial actions in response to: number one, a softer for longer demand environment and number two, a rapidly changing and opportune competitive environment, which we are taking advantage of by accelerating our strategic intensity in the short term to favor Sherwin Williams over the long term. On a year over year basis, consolidated sales were within our guided range, with growth in Paint Stores Group offset by softness in our other two segments. Gross margin and gross profit dollars expanded.

It was the twelfth quarter in a row of year over year gross margin expansion. SG and A in the quarter increased for the reasons described in our press release. Despite the higher level in the quarter, we remain on track for our original guidance of a low single digit percentage increase in SG and A for the full year. The decrease in adjusted earnings per share in the quarter reflects the anticipated higher non operating costs year over year, sooner than expected new building expenses and targeted growth investments we continue to make. From a capital allocation perspective, we continue to execute our disciplined strategy, returning $716,000,000 to shareholders through share repurchases and dividends.

Looking ahead, the macroeconomic indicators we track, along with real time customer sentiment, point to continued turbulence and a slowdown in demand across various segments, businesses and regions over the remainder of 2025. As a result, we are reducing our adjusted earnings guidance for the full year. This is based on softer architectural sales volumes than anticipated coming into 2025 and supply chain inefficiencies due primarily to a reduction in production gallons within our global supply chain, partially offset by a reduction in SG and A spending. Despite these softening market conditions, we remain committed to delivering above market growth. Let me now turn it over to Heidi, who will provide some additional color on the second quarter before moving on to our outlook and your questions.

Thank you, Jim, and good morning to everyone. I want to begin by acknowledging that this was not a perfect quarter. I also want to remind you that we don't run the company to achieve perfect quarters. We run the company with a disciplined strategy to deliver significant long term outperformance of the market. And that is exactly what we're doing, especially competitive environment.

More specifically, I want to address head on some of the larger dynamics and actions that played out in the quarter and give you reassurance and importantly confidence in what we are doing and why. First, we began the year by telling you that we were operating in a very choppy demand environment. As a result, we also told you we would be responding proactively and aggressively on the cost side, including guiding to approximately $15,000,000 or $0.15 per share in restructuring initiatives for the year. As the quarter progressed, demand momentum remained stalled and in some areas deteriorated further, notably in new residential, DIY and coil coatings end markets. We told you we had additional levers available to us.

And as you would expect, we did not wait to pull those levers, and we are pulling other levers now. Specifically, we are going broader and deeper in our restructuring initiatives and more than doubling our full year target to approximately $105,000,000 or $0.32 per share. We expect these actions to result in savings of approximately $80,000,000 on an annual basis. Second, building a new global headquarters and our R and D center is not an exact science. It is not always possible to predict timing with precision on a multi year project of this scale.

Frankly, our construction partners and teams made more progress on the project in the quarter than we expected. That's a good thing. We want to begin operating in our new facilities sooner rather than later. As a result, we incurred costs in the quarter that we didn't expect to see until the second half of the year. Third, one of the many advantages of our direct distribution model is that we have several thousand team members in our stores and in the field that are partnering with our contractors every single day, providing us with real time market intelligence.

Specifically, we've learned of recent and significant reductions in customer facing positions and assets among our largest architectural competitors. We've also learned of a competitor implementing a high single digit minimum price increase in the heart of the paint selling season, which can be highly disruptive to customers. We believe these competitive actions are signals that our strategy is working. We continue to believe we are at a major inflection point in the North American architectural coatings industry, and we refuse to miss this once in a career opportunity that's unfolding before us. This is why we will continue investing aggressively in Paint Stores Group with customer facing growth initiatives in the quarter and throughout the second half of twenty twenty five, while maintaining discipline around G and A costs.

We are highly confident that these actions will drive significant above market growth when the demand environment improves. Professional painting contractors are looking for predictability and reliability. They need partners that are committed to providing solutions that drive their success. That is what Sherwin Williams provides, especially in the heart of the painting season. Let me now provide some color on our second quarter segment performance.

In the interest of time, I will keep my comments brief in order to focus on our full year outlook and provide time for your questions. Sales in Paint Stores Group increased by a low single digit percentage with price mix up by mid single digits and volume down low single digits. As expected, the price mix component was slightly below the level of our first quarter, which included the residual impact of our February 2024 increase. Protective and Marine increased by high single digits for the fourth straight quarter. Residential repaint sales again grew by mid single digits, significantly outpacing the market.

We also outperformed in new residential, where sales increased by low single digits in a quarter when single family completions were down by double digits. Similarly, commercial sales grew low single digits in the quarter with multifamily completions down mid teens. Property maintenance and DIY sales decreased. Even with the heightened growth investments I mentioned, segment profit increased and segment margin decreased only slightly. We opened 20 net new stores in the quarter and 38 year to date, which is ahead of last year's pace.

Consumer Brands Group sales were below expectations with volume, price mix and FX all down by similar low single digit percentages. Sales reflect continued softness in North America DIY and unfavorable FX in Latin America, partially offset by growth in Europe. Segment SG and A decreased by low single digits with continued discipline in controlling general and administrative expenses, while maintaining investments to support customers' sales. Adjusted segment margin decreased primarily due to the lower sales and impact of lower production volumes in our supply chain. Performance Coatings Group sales were in line with expectations.

Volume, acquisitions and FX were all up by low single digit percentages, but slightly offset by unfavorable pricemix. Regionally, segment growth in Europe, Asia and Latin America was offset by a decrease in North America. From a division perspective, Packaging continued to be a bright spot with double digit growth inclusive of an acquisition. Oil sales were up low single digits also inclusive of an acquisition, but the outlook for this business has become murkier with uncertainty related to steel tariffs. Industrial wood and general industrial sales were down as expected.

Auto refinish also remained under pressure and was down slightly, although the industry is beginning to annualize lower insurance claims. We are encouraged by meaningful new account wins in this business, which are currently being more than offset by softness in core accounts driven by lower insurance claims. TCG segment profit and margin decreased primarily due to increased costs, support sales, higher foreign currency transaction losses and a prior year gain on a sale of assets, which did not repeat in the quarter. Severance and other restructuring expenses also reduced the segment margin by 50 basis points. And before moving on to our outlook, I would also like to note the continued good work in our administrative function to control costs.

Excluding the corporate portion of restructuring costs and the new building costs, administrative SG and A was down by a high single digit percentage in the quarter. As we enter the second half of the year, it is clear we continue to be in a softer for longer demand environment with further deterioration possible. Our slide deck describes several of the demand indicators we track. None of these are particularly encouraging at this time. Customer sentiment reflects continued uncertainty and hesitancy to invest, and consumer confidence remains mixed.

To be clear, we expect no help from the market over the remainder of the year. However, we continue to focus our efforts on market share gains across each of our businesses and segments. As a result, we are revising our full year sales expectations downward in our Consumer Brands segment, while maintaining our Performance Coatings segment sales guidance. We are only minimally adjusting downward paint stores segment sales guidance as the January price increase realization is not enough to offset the adjustment downward in full year volume. The lower architectural sales volumes are requiring a reduction in our full year production gallons in our supply chain, which is also pressuring bottom line results.

Specific third quarter and full year ranges are provided in our slide deck. Accordingly, we are also revising our diluted earnings per share guidance downward. On a slightly more positive note, the softer demand is resulting in a more favorable commodity backdrop. We now expect slight deflation of our raw material basket in the back half of the year, resulting in flattish full year costs. While welcome, these benefits are not enough to fully offset the impact of the softer demand environment.

Tariffs also remain a variable in this outlook. While we cannot control the demand environment, what we can control is our commitment to a winning strategy, a team that knows how to pivot in uncertain times, and our ability to execute to help our customers be successful. You have seen evidence of that by the actions we've taken year to date. We will continue to act with discipline and urgency during the remainder of the year. Here is what you can expect to see.

We will continue to focus on differentiated solutions that help our customers become more productive and more profitable. We will continue to invest in growth initiatives in a time of unprecedented competitive opportunity in our industry. We will fund these growth investments by continuing to focus relentlessly on controlling general and administrative spending, and we expect SG and A to be in our low single digit target range for the year. We are going deeper and broader in our restructuring initiatives. As I mentioned earlier, we are doubling our initial targets.

We are reducing our CapEx spending for the year by 170,000,000 or approximately 20%. Total CapEx moved downward from $900,000,000 to $730,000,000 inclusive of $300,000,000 for our building projects. We are accelerating completion and transition to our new buildings as quickly as possible. As we seek to begin getting a return on this project, more activity in the current year will result in a pull forward of certain transition and operating expenses. We now estimate total investment in the year to be $115,000,000 inclusive of $95,000,000 of SG and A and $20,000,000 of interest expense, with approximately 50% of SG and A expenses nonrepeatable.

We will continue to opportunistically repurchase our shares and pursue targeted acquisitions that accelerate our strategy. We expect the Souvenir acquisition to close before the end of the year. And we will continue to focus on our enterprise priorities. Talent continues to drive us. Simplification and digitization will make us more productive and our supply chain more responsive.

Profitable above market growth over the long term remains our North Star. Let me conclude by reminding you that because of our success by design mindset and deeply experienced teams, we are highly confident that our current course is the right one. While others in this space strategies and are unclear of their direction, we see this as a time for certainty and stability and an opportunity to demonstrate what makes Sherwin Williams so unique. We will continue to navigate near term pressures appropriately and with the discipline that you've come to expect from us, and we will be aggressive and targeted as we expand our competitive moat in the short and long term. You should fully expect that we will extend our strong track record of delivering for our customers and ultimately for our shareholders.

This concludes our prepared remarks. With that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.

Thank you. At this time, we will be conducting our question and answer session. Our first question is coming from David Begleiter with Deutsche Bank. Line is live.

You. Good morning. Heidi, you mentioned potential deterioration in the back half of the year in demand, what gives you that caution? And if it does occur, where you expect to see that deterioration?

Yes. Good morning, David. There's really three key areas. I don't know that anyone's immune in total here as there's so much volatility. But I would point to new residential becomes continues to be choppier, if not a bit more challenging.

We're seeing a bit of evidence in coil as well. And as you see some good wins there continues to be a challenging environment, especially as it relates to the tariffs and the uncertainty around that. And I would also point to the DIY market, we would love to get back to some of the historical highs. This continues to be choppier for longer. So, we're staying very close to this relative to not only our stores, but our strategic partners.

I'll point to Lowe's, Menards and others. I would tell you that we've never been in a better position of strength with some of these partnerships. So, David, those are the three areas that we're continuing to stay focused on.

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

Thank you and good morning everyone. Heidi, thank you in particular for the proactive comments on the incremental competitive dynamics. I'm wondering if you can just help us if we think about, let's just say, over the next twelve months in TSG, which of the six sub segments do you think these incremental competitive dynamics will lead to the most share in? I noticed in the quarter, it looked like there was some improvement in commercial versus the first quarter, but just curious what this opportunity presents for the sub segments going forward?

Well, Vincent, I would be remiss if I didn't say there's opportunity in all segments. But let me start with the segments that are going to obviously just take a bit longer. Let me start there, because we're still being aggressive in terms of conversion market share gains on the segments you mentioned. But relative to the competitors, the competitive environment, we would point largely to commercial, new residential and property maintenance, given where they have largely been focused. Now, those projects tend to be longer, bigger, multiyear and so some of that is just going to happen as a function of project timing.

It's not stopping us from being aggressive and getting in front of these customers now. And so some of those wins that you are seeing are a result of short term market share gains. So we're not waiting for project timing. And then, if I take you to the other segments, I think what you're seeing already in our results point to residential repaint. We continue to be up mid single digit in a flat to down market, which is 100% driven by market share gains.

And as you kind of go around the horn, we've got the challenges in commercial, new residential. Those are really the biggest opportunities in the short and long term.

Hey, Vincent. This is Alan Stishan. I'd also like to highlight, it's not the we talked about the accelerated investments that allow us to grow market share at a faster rate. And I can point to going back to 2019, we have over 400 more stores. We have over 500 more reps.

And our six year compounded average growth rate, that includes our forecast for 2025, is up low single digits in volume. That compares to an industry volume, not our reporting numbers, but ACA and others, that's been down consistently year over year since 2020. So we have a lot of confidence that the investments we're making, we're going to get a return on them and it's across each of the pro architectural segments because we have more people on the street, relationship building with our customers and we're very disciplined. When things get tough, we do not stray away from our strategy. We stick to our strategy to grow market share.

And Vincent, if you hear excitement in our voice, that would be a reflection of how we're feeling right now. The confidence in what we're doing to take advantage of some of this we framed this as a once in a career opportunity because it is just that. And so there's confidence and excitement, and we're committed to moving forward.

Thank you. Our next question is coming from John McNulty with BMO Capital Markets. Your line is live.

Yes. Thanks for taking my question. Maybe just a little more detail on the SG and A spend. So it sounds like you've got some big opportunities here. I guess, can we should we be thinking about that as primarily headcount adds?

Should we be thinking about maybe the store count creeping higher than what you've targeted? And it also seems like SG and A in the back half of the year, if we kind of adjust for corporate headquarter move, like it actually seems like it may not be as robust in the back half of the year. So is this I guess, how should we be thinking about that?

Yes, John, let me start with the building here. Just to get that off the table. You're right. We had originally estimated $100,000,000 $80,000,000 of that was SG And A, all in the second half. We did have some costs pull forward and were quicker and we took those.

Now I expect our new building costs on SG And A to be about little less than $60,000,000 in our second half compared to the 80,000,000 I think when you look at the investments we're making in stores, we're still going to open 80 to 100 stores this year, likely that will continue into next year. So it's really targeted rep ads in very specific markets where we believe we can get a bigger return and a quicker return, quite honestly, for those investments. When you look at our second quarter, and I'll use adjusted, was up a little over 108,000,000 New BOF costs of about 40,000,000 were in that. So our SG and A in the quarter was up 3.8%. All of it was incremental an increase in Paint Stores Group.

There's some timing and advertising and marketing in there to support some in quarter promotions, but it's primarily new stores, which is over 91 stores and over 108 reps additional reps in the field that's driving those increases. If you look at our other segments, consumer was down, PCG was up slightly mainly because of acquisitions and then admin was down, as Heidi mentioned, a high single digit percentage excluding the new BOS. So in the short term, we're pulling levers to manage through this tough environment. You saw the restructuring charges are higher than we had originally forecasted. That will carry into our second half with continued adds in Paint Stores Group.

But I would tell you, we're going to have a lot of discipline around G and A and we're going to realize the benefits of the restructuring charges we've already put in place. So I expect our second half SG and A to be up only low single digits in 1% to 2% range, which is better than what we had planned coming into the year.

Thank you. Our next question is coming from Jeff Zekauskas Your line is live.

Thanks very much. Heidi, you've talked about there being an inflection point for the stores business, so once in a career opportunity. Is that because of the opportunities following the divestiture of the PPG architectural business? Or is it because we're in a higher interest rate environment and so demand should increase in the future? What is it about the current moment that makes it so important?

And then secondly, in the Consumer Brands Group, your stores decreased from $3.25 to 3.12 What's that about? And why are prices down in Consumer Brands?

Great. Well, good morning, Jeff. Let me start with your first question. And I think it's a great question. It starts and ends with a differentiated strategy that we've been working on for decades.

And so, while this is a unique moment in the industry, it's also a result of a strong and very steadfast commitment to what we believe is important to showing up for our customers every single day. You then layer into that certainly what's happening from a macro standpoint, the uncertainty, some of the turbulence and there's been a lot of, I would call it competitive turbulence that I believe is playing to our favor because of our stability, because of our predictability. When I'm out with customers, I mentioned this on our last call, I just was out with another contractor last week and heard the very same sentiment, which is who would have thought that simply doing what you say you will do in an environment where there's so much volatility and uncertainty, you guys show up and you're focused on our success. So, think in this environment, the backdrop of we've been stable for decades, you combine that with the macro and some of the competitive choppiness. And then, yes, there is an opportunity there to continue to focus on the fundamentals relative to market share, new business wins, making sure that we are securing the best possible market position.

So it is a unique point in time and we're not going to we never let a crisis go to waste. We're not going to let this environment go to waste. Let me now pivot to your question on the CBG side. Maybe Jim, I'll start with you.

Yes. Good morning, Jeff. This is Jim. Yes, on CBG, we did have the store closures, as you pointed out. Those were really transitions from company owned stores to dedicated dealers.

So the channel continues to evolve down in Brazil and that was a pivot that we made down there. Your question around the price and consumer brand, remind you it's price mix. So there's also a mix element in there. You saw that the Europe piece was higher this year than the North America piece and the Latin America piece. There's a little bit of mix impact there and maybe a little bit of price mix in Latin America. And thank you for the questions, Jeff.

Thank you. Our next question is coming from Christopher Parkinson with Wolfe Research. Your line is live.

Hi. Thank you so much for taking my questions. Heidi, when we take a look at growth spend, one of your main competitors has allegedly been kind of laying off customers and obviously some others have been facing a lot of challenges. Has that changed your calculus at all and how you're thinking about allocating growth spends between PSG and consumer brands? Is there anything there? Or has that kind of just been the status quo?

Well, Chris, let me start with you said laying off customers. I think you meant laying off employees, but we wouldn't be Yes, excuse me, yes. So in that environment, I think I'm going to ask Al to jump in on a few of these items. I think there are a few things. Are unique dynamics here.

Let me just take you to the view of a contractor in the middle of the paint selling season. You know, the way that we approach things like pricing, the way that we approach conversations relative to tools to help our contractors be more productive. You know, we're starting those conversations well ahead of the season, but we want to make sure that we're honoring that in the middle of that cycle. So, I think you are seeing some short term pressures where customers and contractors are confused. We are seeing some layoffs relative to some of our competitors.

And yes, you should expect that we're going to be extremely aggressive relative to customer acquisition in that environment.

Yes, Chris, the only thing I would add to that is with consumer brands and the second half outlook on sales to be down to mid to high single digits, we have to manage our expenses with the outlook. But again, we have a strategy. We're not going to cut our way to health and we're not going to cut our way to hurt long term growth, but we are looking at opportunities there. Within our Performance Coatings Group, I think one of the key things that they've been doing all along and they've done a really nice job is with demand environment being softer for longer, we're talking around the fifth year. They've done a really nice job controlling their costs and their field expenses without taking away from the customer differentiating things that we do, tech service reps and how we approach new account activity.

They've been laser focused on accelerating new account activity so that as demand does improve and it will improve, GI, industrial wood, auto refinish, they all will improve. We'll get our more than our fair share of that market growth.

Thank you. Our next question is coming from Arun Viswanathan with RBC Capital Markets. Your line is live.

Great. Yes, thanks for taking my question. Congrats on the progress here. I guess, I just wanted to maybe if you could frame us on how to think about your future growth algorithm. So it sounds like you are leaning into a lot of investments that will help you drive continued above market growth.

Should we also kind of take away that you've made some comments about softer for longer. The housing market maybe will should it settle into maybe a 1% to 3% growth rate and you could be maybe two times that? Or how should we think about your long term volume opportunity? And do these investments kind of increase it from what it was in the past? Maybe it was 1.5 to two times in the past, now we're squarely in the two to 2.5 times range.

Is that kind of the strategy and objective behind really leaning into these investments during this opportune time? Thanks.

Yes, Arun. I would say we've been here before and go back to 02/1929, and we continue to invest when the industry lost 30% of its paint volume. And although we're in a different environment, what I would say is because demand has been pent up for longer with existing home sales down, now we're seeing a little bit of softness in new residential. So the market opportunity is very similar. And coming out of that environment and look at 2010 to 2020, we grew Paint Stores Group sales low double digit percentage.

And as we talk about what our expectations are for growth in that algorithm coming out of we get interest rates to start moderating, we get affordability of homes to start moderating. And the position we have relative to our competitors, yes, our expectation is higher that instead of 1.5 to two we'd grow 2.5% to 3% in some cases with minimal high single digit growth. So that we've set the bar very high for our paint storage group. And when we see demand start turning, the expectations are even going to be stronger then.

Thank you. Our next question is coming from Greg Melich with Evercore. Your line is live.

Hi, thanks. I'd love to follow-up on the dynamics of volume and gross margins. So clearly, weakness continuing in architectural. I guess what would gross margins had been if we managed to have volume be flat or up in the quarter? Can we think of that being forty, fifty, 60 bps of relative pain?

Yes. I think you're probably because of the way it flows out. So think about Paint Storage Group was down low single digit, consumer volumes were down more than that. So you have a little bit of mix. I'd be hesitant to go all the way to 60 basis points.

But what you did see in the quarter to drive the incremental gross margin, which is we talked about in our opening remarks, up 60 basis points in a tough volume environment, twelfth consecutive quarter due to the price increase effectiveness within paint stores. Paint stores is growing faster than the other segments, which also at a higher margin. So that helps our gross margin. But with supply chain efficiencies due to the lower production volumes, because we need to manage our inventories tightly. We need to manage our inventories with our production volumes with our sales volume and you'll see us do that through the second half.

But that's also a drag on gross margin in the quarter. Thanks, Greg.

Thank you. Our next line is coming from Robert with Mizuho. Your line is open.

Thank you. Where are the CapEx reductions coming from? And I think the new accelerated depreciation is retroactive back to the start of the year. Is there any meaningful benefit coming here from cash taxes?

Yes, John. So we just to level set, we took our CapEx down from 900,000,000 to $730,000,000 with the idea that we're going to continue completing our Statesville architectural capacity project. We're going to continue to work through our warehouse automation and even coil. We have a coil capacity expansion in process because of the confidence we have in our long term growth. I think what we've had to do is slow down spending in some of our other areas that, yes, they need to be done, we're going to do them, they just got pushed back.

So we're canceling things. We're just moving things back as we reset cash with the demand environment.

Our next question is coming from Patrick Cunningham with Citi. Line is live.

Reggie repaint continues to have strong above market growth. I think there's a lot of debate on the direction of this market. Can you comment on how underlying backlogs and activity evolved throughout the balance of the quarter and into July? Thank you.

Yes. Good morning, Patrick. The sentiment among these contractors and obviously there's some variability relative to size of these res repaint contractors. But by and large, they would characterize the backlogs are stable and that there's work to be You know, we are seeing some marginal increase in bid activity. But the caveat here is that, you know, as you think about some of these projects, project size could be smaller, but we're working hard with these contractors to help them, you know, work, look, leads, help them travel and find new opportunities, launching products to help them have more surface area once they're in a home and have more activity to bid on.

But by and large, we've gotten to a point of a bit of stability, we need more volume here. I think we'd be remiss to say that we're happy with where the market is. We are happy that we continue to take share in this environment. But when the market recovers, we're going to absolutely be best positioned given the market share gains that we're seeing in the down cycle.

Thank you. Our next question is coming from Ghansham Panjabi with Baird. Your line is live.

Guys, good morning. Heidi, just given the current backdrop that you summarized in Slide eight, is your base case at this point that the volume weakness you're seeing at an industry level is likely to spill over into at least the first part of twenty twenty six? And then on the flip side of that, as you think about your PSG verticals, which do you think would be the quickest to show any signs of improvement if in fact, long duration interest rates crack lower?

Well, think it starts with, as you look by segment, obviously, there's devils in the details here. As we've briefly talked a bit about, I do want to hit on as you think about our other segments here, commercial is a really good example where the backlog of projects continues to be a challenge. And that was some of our existing and some new large commercial contractors. And the conversation is changing a bit as they're looking for true partners here that I would say now more than ever that we can help them look at their growth plans, bid activity becoming even more productive on job sites that would be another big opportunity. As we talk about multifamily completions have been down double digits year over year, we continue to be up low single digits to taking share within that segment.

If I point to property maintenance, property management, interest rates still continue to be a challenge here, putting a lot of them on pause. And we're continuing to stay really focused with these customers and these contractors. The overage of supply, occupancy preservation efforts are still causing a bit of a reduction, but we're continuing to focus on share gains. So Al, if you want to

Yes, think I'd say when you look at first half twenty twenty six, clearly, we're not going to guide to that. But you know we run our forecasting models. I would just say our line of sight today in this dynamic rapidly changing environment is less transparent than maybe in a stable environment. And that seems obvious, but early indications would say And that's why we're paid to influence results, and that's why we're taking action now with additional investments within Paint Stores Group to influence results in the first half.

We don't have to be we're not we don't have to be satisfied and aren't satisfied in the demand environment. So we're trying to do things about that to do better. So you can expect us to continue doing that.

Thank you. Our next question is coming from Michael Sison with Wells Fargo. Your line is live.

Hey, good morning. I wanted to visualize the market share gains a little bit better in Paint Stores Group. Your volumes were down low single digits in 2Q. What do you think industry volumes were down in 2Q? And what do you think the outlook is for the full year?

And then, Heidi, maybe longer term, what mortgage rate do you think we need to get to for industry volumes to turn the corner? I mean, with 6% help, 5%, maybe there's some historical correlation you can walk us through.

Yes, Mike, it's Jim. I think I'll start, maybe turn it to Al or Heidi for other comments. But as Heidi mentioned in her opening, I think if you look in the second quarter, you see that our new res business was up slightly. We've seen completions down in the quarter very meaningfully. For us to be up, I think, tells you we've got to be outperforming our competitors.

Same thing on commercial, where you saw commercial up slightly in the quarter, but you saw multifamily completions were down in the teens during the quarter. So I think that bodes very well for the share gains and we expect that trajectory to continue.

Mike, on your other question here relative to what would be the trigger, I think it's a mix of a few variables. Rates is obviously a huge piece of that. And as I'm spending time with a lot of these builders, while they're anticipating a rate reduction, anything south of six is going to be seen as a positive. I would tell you that the general sentiment is, while that's important, of equal importance is consumer confidence and affordability. So, I think it's somewhere in the mix of those three things coming together that we are absolutely staying laser focused on.

Sherwin-Williams (SHW) Q2 2025 Earnings Call Transcript

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