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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Q & A
Sean Hennessy

-- you're going to see margin expansion in the gross profit line and I think you're going to see some efficiencies in the SG&A line.

The only way you can get there so -- but I think, we're coming over, coming against the Comex integration. We feel really good about the Comex integration and this is where the business is at. I mean, we feel very good, if we can get gallons. It also has to do with the sales curve in the second quarter and in the third quarter. The Stores Group in Consumer will be a larger percentage of our total sales.

So a couple of things happened there. Number one, we've always had an incremental gallon and those two groups are the best incremental gallon flow through we have in the company. And number two, even though foreign currency is going to be a headwind in the second and third quarter with the sales curve again outside the country be in a smaller percentage of the total, that headwind will actually be smaller in the second and third quarter. It comes back in the fourth quarter.

So, all those things are working in that direction. And I think operationally, the Store Group is in great shape and the Consumer Group is in great shape. And they are going to lead the profit improvement in the second and third quarter.

John McNulty

And then maybe just one follow-up question. With regard to the HDTV roll-out, when we think about the actual costs and how they sequence in throughout the year, I guess how should we be thinking about the lumpiness of that as you are kind of ramping this up? Do we see a lot in the first quarter and then it winds down or do we do see a lot and then it starts to get offset more by revenues coming in? How should we think about that?

Sean Hennessy

I think couple of things. The last quarter I mentioned that we have 12 months of SG&A because you can't just turn on an organization in mid-March. And we had 9.5 months worth of sales. So, the first quarter because it is the smallest quarter, the SG&A impact was the greatest and that's why you saw in the first quarter our SG&A was five times higher than last year.

In the second quarter, there is a lot of advertising, and a lot of SG&A promotions going on in that second quarter. And then you're going to start seeing the SG&A flatten out. And so, I think from the expense, second quarter maybe the largest actually. But the first quarter is probably the most -- the toughest comparison for us. And then you will see the SG&A get to a more normal running rate in the third quarter and fourth quarter.


Vincent Andrews, Morgan Stanley.

Vincent Andrews

Just had a question if you could sort of try to bridge the full year from your -- your guidance has stayed the same. It sounds like