The Sherwin-Williams Company (NYSE:SHW) Q4 2015 Earnings Conference Call - Final Transcript
Jan 28, 2016 • 11:00 am ET
Good morning. Thank you for joining the Sherwin-Williams Company's Review of Fourth Quarter and Full-Year 2015 Results and Expectations for 2016.
With us on today's call are John Morikis, President and CEO; Sean Hennessy, CFO; Allen Mistysyn, VP, Corporate Controller; and Bob Wells, SVP, Corporate Communications. This conference call is being webcast simultaneously in listen-only mode by Issuer Direct via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes and will be available until Wednesday, February 17, at 5 PM Eastern time.
(Forward-Looking Cautionary Statements)
After the company's prepared remarks, we will open the session to questions. I will now turn the call over to Bob Wells.
Thanks, Jessie. Good morning everyone. In the interest of time, we provided some balance sheet items and other selected financial information on our website at www.sherwin.com under Investor Relations January 28th press release.
Our consolidated sales in the fourth quarter increased 1.4%, $2.6 billion, due entirely to higher paint sales volumes to our paint stores and consumer groups. For the full-year, sales increased 1.9% to $11.34 billion. Unfavorable currency translation decreased consolidated net sales 3.6% in the quarter and 3.3% for the full year.
Consolidated gross profit in the fourth quarter increased $104.3 million to $1.3 billion, and gross margin expanded to 50.8% of sales from 47.4% of sales in the fourth quarter 2014. For the year, gross margin increased to 49% of sales from 46.4% of sales last year. The increase in gross margin in the quarter and full year was due primarily to volume driven supply chain productivity and lower year-over-year raw material costs.
Selling, general, and administrative expense increased $6.1 million to $991.5 million in the fourth quarter, but decreased as a percent of sales to 38.1% from 38.3% in the same quarter last year. For the full-year 2015, SG&A expense increased $90.6 million to $3.91 billion and increased as a percent of sales to 34.5% from 34.3% in 2014.
Incremental SG&A to support the new HGTV HOME program at Lowe's and new store openings and sales territory additions accounted for the majority of the SG&A increase in the year. Other general expense decreased $12.6 million in the fourth quarter and $7.2 million for the year, due primarily to lower environmental expenses in both periods. Interest expense for the quarter increased $4.1 million to $19.5 million. For the year, interest expense was $61.8 million compared to $64.2 million in 2014.
Profit before tax in the fourth quarter increased 57.4% to $297.2 million and for the full year increased 23.1% to $1.55 billion. Our effective income tax rate for the fourth quarter 2015 increased to 33.4% from 29.7% in the fourth quarter last year. For the year, our effective tax rate was 32% compared to 31.2% in 2014. Consolidated net income for the quarter increased $65.3 million to $198 million. For the year, net income increased $188 million to $1.05 billion. Net income as a percent of