The Sherwin-Williams Company (NYSE:SHW) Q1 2015 Earnings Conference Call - Final Transcript
Apr 16, 2015 • 11:00 am ET
quarter of 2014, and the comparable increases in our short-term borrowings.
Consolidated profit before taxes in the quarter increased $27.2 million to $193.2 million due primarily to improved operating results from our Paint Stores Group. Unfavorable currency translation reduced profit before tax in the quarter by $6.4 million or 3.8%. Our effective tax rate in the first quarter this year was 32% compared to 30.5% in the first quarter 2014. For the full year 2015, we expect our effective tax rate to be in the low 30s compared to last year's rate of 31.2%.
Consolidated net income increased $15.9 million to $131.4 million. Net income, as a percent of sales, was 5.4% compared to 4.9% in the first quarter last year. Diluted net income per common share for the quarter increased 21% to $1.38 per share from $1.14 per share in 2014.
Now, looking at our results by operating segment. Sales for our Paint Stores Group in the first quarter of 2015 increased 7.5% to $1.46 billion from $1.36 billion last year. Comparable store sales, sales by stores opened more than 12 calendar months, increased 6.4%. All the Paint Stores Group sales increase was due to higher organic paint and equipment sales volumes across all end-markets. Price mix had a negligible impact on sales in the quarter.
Regionally in the quarter, our Midwestern Division led all divisions, followed by Southeastern Division, Eastern Division and our Southwestern Division. Sales and volumes were positive in every division. Segment profit for the Group increased $30.3 million or 20.7% to $176.6 million in the quarter, as higher paint and equipment sales volumes were partially offset by higher SG&A spending. Segment operating margin increased to 12.1% of sales from 10.8% in the first quarter of last year.
For our Latin America Coatings Group, first quarter net sales decreased 8.9% to $156.2 million due to unfavorable currency translation that was partially offset by selling price increases. Volumes in the quarter were slightly positive, but currency translation rate changes decreased sales in U.S. dollars by 13.9% in the quarter.
Segment profit in U.S. dollars decreased to $9.5 million in the quarter from $10 million last year. Segment profit was negatively impacted by higher raw material costs and unfavorable currency translation, partially offset by selling price increases. Currency translation decreased Latin America segment profit by $3.4 million in the quarter. As a percent of net sales, segment operating profit was 5.7% in the quarter compared to 5.5% in the first quarter 2014.
Now, turning to Consumer Group. First quarter sales increased 8.1% to $351.7 million due primarily to the initial shipment for the HGTV HOME by Sherwin-Williams paint program to Lowe's stores. Segment profits for the Consumer Group increased $4.3 million to $55.4 million in the quarter from $51.1 million in the first quarter last year.
The profit improvement in the quarter was due primarily to increased operating efficiencies that were partially offset by higher SG&A spending related to the HGTV HOME roll-out. Segment profit, as a percent