) fourth-quarter 2012 adjusted earnings of $1.17 per share
surpassed the Zacks Consensus Estimate of $1.15. The adjusted
earnings exclude asset impairment charges of 2 cents a share and
a negative acquisitions and currency translation impact of 3
cents a share. Including that impact, earnings were $1.12 per
share in the reported quarter compared with 14 cents a year
For full-year 2012, adjusted earnings (excluding one time
items) came in at $6.64 per share exceeding the Zacks Consensus
Estimate of $6.52.
Reported earnings were $6.49 per share, up 56.8% from $4.14 a
Net sales for the quarter increased 7.3% year over year to $2.22
billion, and exceeded the Zacks Consensus Estimate of $2.20
billion. The growth was driven by an increase in paint sales
volume and selling price, partly offset by the negative impacts
of currency translation.
For the full year, net sales increased 8.8% year over year to
$9.53 billion, surpassing the Zacks Consensus Estimate of $9.51
Performance by Segment
The Paint Stores Group posted net sales of $1.25 billion in
the reported quarter, up 9.8% from the year-ago period. The
improvement largely stemmed from the increase in paint sales
volume across all market segments as well as higher selling
Segment profit increased 36.1% to $181.5 million due to higher
paint sales volume and selling price, partly offset by soaring
raw material prices as well as selling, general and
Net sales of the Consumer Group unit went up 1.4% to $255.8
million due to acquisitions, partly offset by lower volume sales
to most of the Group's retail customers.
Segment profit plunged 22.8% to $23.3 million in the quarter
due to normal seasonal decline in the internal finished goods
inventory, increased raw material costs, partly offset by selling
Net sales from the Global Finishes Group segment jumped 5.1%
to $487.1 million in the quarter as a result of selling price
increases and higher paint sales volume, partly offset by
unfavorable currency translation.
The segment's profit in the quarter more than doubled to $34.1
million from $13 million in the year ago quarter. The growth was
fueled by increased selling price, increased paint sales volume,
good expense control, and efficiencies gained from the continued
integration of prior year acquisitions.
The Latin America Coatings Group sales increased 5.2% to $231.5
million in the quarter due to selling price increases and higher
paint sales volume.
Segment profit jumped 14% to $30.1 million in the quarter from
$26.4 million in the previous year quarter, primarily due to
selling price increases and higher paint sales volume, partly
offset by increases in raw materials costs and unfavorable
foreign currency translation rate changes.
Sherwin-Williams acquired 0.8 million shares through open
market purchases in the reported quarter. The company had
remaining authorization to purchase 16.45 million shares as of
Dec 31, 2012.
In 2012, Sherwin-Williams generated net operating cash flow of
$887.9 million. The company's balance sheet is well positioned to
accommodate the closing of Comex acquisition and other
investments in its business. The company borrowed approximately
$1 billion in the fourth quarter at an average rate of 2.1%.
For the first quarter of 2013, the company expects
consolidated sales to increase in the low single-digits year over
year. It expects earnings per share in the band of $1.03 to $1.13
for the quarter.
For 2013, the company anticipates that consolidated net sales
would increase by a mid single-digit clip over 2012. It forecasts
net income per common share to be in the range of $7.45 to $7.55
Sherwin-Williams' philosophy is to diversify its customer base
and expand its operations into various geographies. The company
follows a strategy of growing through acquisitions and also
through internal initiatives such as efficient working capital
management and innovation. This policy enables the company to
somewhat reduce its dependency upon prevailing market
However, Sherwin-Williams is facing higher raw material costs,
primarily acrylic latex and titanium dioxide (a key paint
pigment) in the Consumer group segment. The segment purchases raw
materials for the company.
Another coatings company,
PPG Industries Inc.
), recently released its fourth quarter results. The company
posted fourth quarter earnings per share of $1.53, excluding
one-time charges, which matched the Zacks Consensus Estimate. The
company holds a Zacks Rank #2 (Buy).
Other coatings companies with favorable Zacks Rank are
Akzo Nobel NV
The Valspar Corporation
) with both carrying a Zacks Rank #2 (Buy).
AKZO NOBEL NV (AKZOY): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
SHERWIN WILLIAM (SHW): Free Stock Analysis
VALSPAR CORP (VAL): Free Stock Analysis
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