Sherwin-Williams Expects $75 Million in 2027 Savings Amid Tepid Demand
Key Facts
That means the company adjusted the range of its forecast without lowering its midpoint. In its second-quarter report, it had forecast a range of $11.80 to $12.20. The update came alongside a report of quarterly sales of $6.86 billion, up 7.9% year over year.
Adjusted diluted earnings per share rose 1.1% to $3.63 in the third quarter, compared with $3.59 in the same period a year earlier. Net income, meanwhile, fell 1.5% to $821 million. The results show a divergence between growth in sales and adjusted earnings per share on one hand, and a decline in net income on the other. CEO Heidi Petz said that despite weak underlying market volumes, the company continued to win new customers, increase its share of customer spending and deliver sales growth across its three segments. She added that the company took pricing and cost-control measures to address inflation.
The Paint Stores Group was the largest sales-growth detail in the disclosure, with sales of about $4.02 billion, up 4.7% year over year. The company attributed sales growth to price increases and a low-single-digit percentage rise in sales volume. But management described underlying market volumes as weak, putting revenue growth in a context shaped by pricing effects and limited improvement in volumes. It also said sales mix, raw-material costs and supply chains pressured margins, along with the impact of the acquisition of Savanil.
On the earnings call, management said it expected weaker demand to persist for longer, with volatility across most end markets. It added that the leading indicators it monitors currently point to few positive catalysts. The company did not limit these conditions to the industrial sector; it described weak demand and volatility across most end markets. It said expectations that this environment will continue are prompting it to keep managing costs, alongside the pricing measures it announced. This assessment provides a more cautious backdrop for the company's outlook for next year.
Sherwin-Williams expects about $75 million in cost savings in 2027, including $25 million from restructuring actions taken in the second and third quarters of 2026. Management said additional measures are still under review for the fourth quarter. The savings are part of the company's efforts to address inflation and improve efficiency, and were not tied solely to weak demand. At the same time, the company expects raw-material price inflation to be in the low- to mid-single-digit range in 2027. It expects the largest year-over-year impact in the first half of the year, before it eases in the second half.
For the near term, the company expects consolidated sales in the fourth quarter of 2026 to rise by a mid-single-digit percentage compared with the same period a year earlier, while keeping full-year sales growth within the mid- to high-single-digit range. In premarket trading on October 27, the stock fell 3.9% after the results and cautious outlook, according to Investing.com. The site reported that adjusted earnings per share fell short of analysts' estimates. Management said it would provide a more specific outlook for 2027 on its usual January call. Markets are watching for that outlook amid the company's estimates for raw-material inflation and continued tepid demand.