The Sherwin-Williams Company (NYSE:SHW) Q1 2015 Earnings Conference Call - Final Transcript

Apr 16, 2015 • 11:00 am ET


The Sherwin-Williams Company (NYSE:SHW) Q1 2015 Earnings Conference Call - Final Transcript


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Good morning. Thank you for joining The Sherwin-Williams Company to review of the First Quarter 2015 Results and Expectations for the Second Quarter and Full Year.

This conference call is being webcast simultaneously in listen-only mode by Vcall via the Internet at An archived replay of this webcast will be available at the, beginning approximately two hours after this conference call concludes, and will be available until Wednesday, May 06, at 5:00 PM Eastern Time. After the review of the first quarter results, we will open the session for questions.

I will now turn the call over to Bob Wells.

Bob Wells

Thank you, Melissa. Good morning, everyone. Thanks for joining us. We're going to begin the call this morning as usual with a brief recap of first quarter 2015 results by John Morikis, our President and Chief Operating Officer. Then Chris Connor, our Chairman and CEO, will provide some perspective on the quarter and our expectations for second quarter and full year. Following their remarks, we will open the call to questions, and Sean Hennessy, our Chief Financial Officer and Al Mistysyn, Vice President, Corporate Controller, are with us this morning to participate in the Q&A session.

(Forward-Looking Cautionary Statements)

In the interest of time, we've also provided some balance sheet items and other selected financial information on our website,, under the Investor Relations tab, first quarter press release.

With that, let me turn the call over to John to review our performance for the first quarter.

John Morikis

Thanks Bob. If you've listened to our earning calls over the past few quarters, you may detect the familiar pattern in today's release. Once again, in the first quarter, we saw good momentum in most of our domestic businesses and less favorable results from our non-domestic operations.

I'll begin by highlighting overall company performance for first quarter 2015 compared to first quarter 2014, then comment on each reportable segment. Consolidated net sales increased 3.5% to a record of $2.45 billion, driven primarily by higher paint sales volumes in our Paint Stores and Consumer Groups. Unfavorable currency translation decreased consolidated net sales 3.1% in the quarter.

Consolidated gross profit dollars increased $66.5 million in the quarter to $1.13 billion. Our consolidated gross margin increased 120 basis points in the quarter to 46.2% of sales from 45% in the first quarter last year. Most of the gross margin improvement in the quarter resulted from higher sales by Paint Stores Group, our highest gross margin segment, and increased operating leverage from higher production and distribution volume.

Selling, general and administrative expenses increased $45.1 million over first quarter last year to $929.2 million. As a percent of sales, SG&A increased to 37.9% in the first quarter this year from 37.4% last year, due primarily to the incremental investments in the Lowe's roll-out.

Interest expense decreased $4 million compared to the first quarter last year to $12.4 million. This decrease was due to the rate difference between the $500 million and five-year notes we retired in fourth