SHW Sherwin-Williams 10-Q 2026-09-30 section summaries

Sherwin-Williams — Q3 and nine months ended September 30, 2026

Results and operating trends

Sales grew, but higher costs compressed margins. Q3 net sales increased 7.9% to $6.860B from $6.3582B; nine-month (9M) sales rose 7.4% to $19.3162B from $17.9784B. Cost of goods sold rose faster in Q3, up 10.8% to $3.5828B from $3.2327B, and increased 8.1% for 9M to $9.9205B from $9.1755B. Gross profit was $3.2772B from $3.1255B in Q3 and $9.3957B from $8.8029B for 9M. Gross margin declined to 47.8% from 49.2% in Q3 and 48.6% from 49.0% for 9M.

SG&A increased to $2.0691B from $1.9528B in Q3 and $6.1424B from $5.7582B for 9M, though it declined as a share of sales in both periods. Interest expense rose to $139.3M from $117.2M in Q3 and $406.8M from $333.4M for 9M. Q3 pretax income was $1.0635B from $1.0605B, while net income declined to $821.0M from $833.1M. For 9M, pretax income increased to $2.8558B from $2.6992B and net income to $2.1993B from $2.0917B. Diluted EPS was $3.38 from $3.35 in Q3 and $8.95 from $8.34 for 9M; lower diluted weighted-average shares—242.8M from 249.0M in Q3 and 245.7M from 250.9M for 9M—supported per-share growth. Effective tax rates increased to 22.8% from 21.4% in Q3 and 23.0% from 22.5% for 9M, primarily reflecting less favorable employee share-based payment tax benefits.

Segments and markets

Q3 Paint Stores Group sales were $4.0158B from $3.8368B, with pretax income of $974.3M from $954.3M and margin of 24.3% from 24.9%. Consumer Brands Group sales were $937.4M from $770.1M, but pretax income fell to $146.2M from $157.3M and margin to 15.6% from 20.4%. Performance Coatings Group sales were $1.9033B from $1.7500B, with pretax income of $255.2M from $240.3M and margin of 13.4% from 13.7%. Administrative pretax loss was $312.2M from $291.4M, including the higher interest expense, reconciling segment pretax income to consolidated pretax income.

Approximately 80% of sales came from North America, slightly less than 10% from EMEAI, with the remainder from other regions. No individual non-U.S. country, customer, or export sales represented 10% or more of consolidated sales. Most sales are point-in-time transactions without long-term supply contracts; typical account terms are 30–60 days.

Cash, capital allocation and balance sheet

9M operating cash flow was $2.5911B from $2.3591B; capital expenditures were $375.4M from $567.2M, producing calculated operating cash flow less capex of $2.2157B from $1.7919B. Working capital used $334.4M, versus $432.3M in 9M 2025. Cash interest paid increased to $433.0M from $343.3M. The company repurchased $2.3571B of shares and paid $588.9M in dividends during 9M. Shares outstanding declined from 247.7M at December 31, 2025 to 241.6M at September 30, 2026. Q3 repurchases were $520.1M for 1.50M shares versus $668.2M for 2.00M shares; 9M repurchases were $2.3571B for 7.10M shares versus $1.5384B for 4.45M shares. The quarterly dividend was $0.80 per share.

At September 30, total assets were $26.9614B and shareholders’ equity $3.9767B. Goodwill was $7.9755B and intangible assets other than goodwill $3.7443B; calculated tangible common equity was negative $7.7431B. Total debt outstanding was $11.7951B, versus $10.8713B at year-end 2025 and $11.516B a year earlier; cash was $264.2M. Short-term borrowings were $2.3536B, including $1.604B of commercial paper and a $749.7M term loan. SHW entered a new 364-day $750M unsecured term loan in September, had $2.322B of unused committed credit capacity, and repaid a $350M senior-note principal using commercial paper. Real-estate sale-leaseback financing liabilities totaled $817.9M. Publicly traded debt had a $9.3282B carrying amount and $8.0128B fair value.

Credit, exposures and other developments

Receivables, net, were $3.5981B, up from $3.1223B a year earlier. 9M bad-debt expense increased to $61.5M from $45.3M, and net write-offs to $38.0M from $24.2M; the expected-credit-loss allowance was $86.0M, versus $81.5M a year earlier. Environmental accruals totaled $253.6M, with up to $70.1M of reasonably possible additional exposure; three major sites represented 81.0% of accruals. Management does not expect these liabilities to materially affect financial condition, liquidity, or cash flow, but additional accruals could materially affect income. Lead-paint litigation remains unaccrued because management considers losses not probable or cannot estimate a range. Other legal exposures include Gibbsboro environmental claims and Firetex product, testing, software-estimate, and advertising claims; potential costs are unquantified.

SHW completed a roughly $75M paint-manufacturing acquisition in June and finalized the purchase-price allocation for its approximately $1.15B Suvinil acquisition. Currency hedges included $2.3627B of cross-currency-swap notional; 9M net-investment hedge gains, net of tax, were $43.8M, compared with a $133.4M loss in 2025. Supply-chain-financing liabilities included in accounts payable were $251.1M, versus $206.1M at year-end 2025.

Sherwin-Williams (SHW) — Part I, Item 2

Operating performance

Sherwin-Williams delivered sales growth in Q3 and the first nine months of 2026, but higher input and supply-chain costs, acquisition mix, and financing costs weighed on margins. Management characterized demand as “softer-for-longer,” while pointing to customer wins and share-of-wallet gains. Price increases contributed mid-single-digit sales growth in both periods; volume gains, foreign exchange, and the October 2025 Suvinil acquisition also supported results.

• Consolidated results: Q3 net sales were $6.8600B, up from $6.3582B; 9M sales were $19.316B, up from $17.978B. Q3 gross profit increased to $3.2772B from $3.1255B, while gross margin declined to 47.8% from 49.2%. For 9M, gross profit was $9.3957B from $8.8029B, with margin down to 48.6% from 49.0%; excluding Suvinil’s dilution, 9M gross margin was flat year over year.
• Costs and earnings: Q3 cost of goods sold rose 10.8% to $3.5828B from $3.2327B, outpacing sales; 9M cost of goods sold rose 8.1% to $9.9205B from $9.1755B. Q3 SG&A was $2.0691B from $1.9528B, but declined as a share of sales to 30.2% from 30.7%; 9M SG&A was $6.1424B from $5.7582B. Q3 pretax income was nearly flat at $1.0635B versus $1.0605B, with pretax margin declining to 15.5% from 16.7%. 9M pretax income rose 5.8% to $2.8558B from $2.6992B, while margin slipped to 14.8% from 15.0%.
• Net income and EPS: Q3 net income was $821.0M versus $833.1M; 9M net income increased to $2.199B from $2.092B. Diluted GAAP EPS rose to $3.38 from $3.35 in Q3 and $8.95 from $8.34 for 9M. Adjusted diluted EPS, a non-GAAP measure, was $3.63 from $3.59 in Q3 and $9.67 from $9.20 for 9M. Adjustments exclude acquisition-related amortization and severance/restructuring costs; Q3 2026 GAAP EPS included $0.21 per share of amortization and $0.04 of restructuring charges. The company cautions that adjusted EPS is not a substitute for GAAP EPS and may not be comparable with similarly titled measures at other companies.
• Interest and taxes: Interest expense increased to $139.3M from $117.2M in Q3 and $406.8M from $333.4M for 9M, reflecting higher debt and financing costs for the new global headquarters. Effective tax rates were 22.8% versus 21.4% in Q3 and 23.0% versus 22.5% for 9M, partly because employee share-based-payment tax benefits were less favorable. Q3 EBITDA was $1.390B from $1.345B; adjusted EBITDA was $1.403B from $1.359B. 9M EBITDA was $3.823B from $3.523B; adjusted EBITDA was $3.860B from $3.616B.

Segment results and drivers (Q3)

• Paint Stores: Revenue was $4.0158B from $3.8368B; pretax income was $974.3M from $954.3M. Mid-single-digit pricing and low-single-digit volume growth contributed to a 3.9% increase in comparable sales at stores open more than 12 months. Professional end markets grew, led by double-digit protective and marine growth; residential repaint grew mid-single digits.
• Consumer Brands: Revenue was $937.4M from $770.1M; pretax income was $146.2M from $157.3M. Sales growth of 21.7% was primarily acquisition-driven, with favorable currency and mix partly offset by soft North American demand.
• Performance Coatings: Revenue was $1.9033B from $1.7500B; pretax income was $255.2M from $240.3M. Mid-single-digit pricing and low-single-digit volume growth supported sales; General Industrial, Packaging, and Coil each grew double digits.
• Administrative reconciliation: Revenue was $3.5M from $1.3M; pretax loss was $312.2M versus $291.4M.

Cash flow, balance sheet, and capital allocation

9M operating cash flow was $2.591B versus $2.359B, supported by lower working-capital cash requirements, higher earnings, and depreciation and amortization, partly offset by lower deferred-tax benefits. 9M capital expenditures were $337.6M; acquired PP&E additions were another $61.8M, primarily Suvinil. Depreciation was $296.0M. Management expects 2026 capex below 2025, targets core capex near 2% of net sales, and expects to fund investment primarily from operating cash. Trailing-12-month operating cash flow was $3.684B; investing and financing activities used $701.7M and $2.937B, respectively.

At September 30, 2026, cash was $264.2M and debt was $11.795B ($11.531B net of cash), compared with debt of $10.871B at December 31, 2025 and $11.516B a year earlier. September debt comprised $9.442B of long-term debt, including current maturities, and $2.354B of short-term borrowings. The current-liability increase contributed to a $2.822B net working-capital deficit, versus $1.327B a year earlier; the current ratio fell to 0.71 from 0.82. SHW reported $3.977B of shareholders’ equity, down $621.6M from December 2025, primarily due to treasury-stock activity and dividends, partly offset by net income.

The company returned $2.981B to shareholders through dividends and repurchases in 9M, buying 7.1M shares; authorization remained for 22.5M shares. The quarterly dividend rose to $0.80 per share from $0.79, or $3.20 annualized. Cash plus unused credit-facility capacity of $2.322B supported liquidity; SHW said it was compliant with financing covenants.

Other developments and risks

Suvinil purchase-price allocations contributed to year-over-year growth in goodwill and intangible assets. Goodwill was $181.4M higher year over year, though down $61.1M from December 2025. Intangible assets were $278.1M higher year over year, mainly reflecting $618.9M of purchase-price allocations, primarily Suvinil, partly offset by amortization; they declined $221.8M from December, mainly due to $264.7M of amortization.

The headquarters real-estate financing transaction generated total proceeds of $800M; it is accounted for as financing, not a sale, and SHW retains the assets under a lease extending 30 years after construction. The company cited risks from raw-material and energy costs, inflation, supply-chain disruption, soft demand, tariffs and currency movements, acquisition integration, indebtedness and financing markets, cybersecurity, environmental compliance and remediation, litigation including lead-pigment and lead-paint matters, and evolving sustainability requirements. Management reported no significant changes in critical accounting policies or estimates since FY 2025.

Market Risk

Sherwin-Williams is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The company expects continuing losses related to currency translation, interest-rate movements, and commodity prices. It may use foreign-currency options and forwards, cross-currency swaps, interest-rate locks, and commodity swaps to hedge these exposures; derivatives are not used for speculative or trading purposes.

Management does not expect the exposures or potential losses on hedge contracts to materially adversely affect the company’s financial condition, results of operations, or cash flows. The company reported no material change in market-risk exposures since its FY2025 Form 10-K disclosure.

Controls and Procedures

Management, including the CEO and CFO, evaluated the company’s disclosure controls and procedures as of period-end and concluded they were effective. No changes in internal control over financial reporting during the period were identified as having materially affected, or being reasonably likely to materially affect, those controls. The section reported no specific control deficiencies, financial metrics, or business developments.

Risk Factors

For the nine months ended September 30, 2026, Sherwin-Williams reported no material changes to the risk factors previously disclosed in its 2025 Form 10-K. The company cautions that a disclosed risk may already have materialized. This section does not describe the underlying risks or report new financial metrics or business developments.

For the quarter ended September 30, 2026, no Company directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. This section reports no financial results or other business developments.