Sherwin-Williams Growth Accelerates, Lifts Full-Year EPS Guidance
Sherwin-Williams posted 7.5% sales growth and 14.3% diluted EPS growth in the second quarter, prompting the paint maker to raise its full-year earnings outlook for the first time this year.
Sherwin-Williams (SHW) reported second-quarter net sales of $6.79 billion, up 7.5% from a year earlier, as growth across its three operating segments broke a multi-quarter deceleration trend. Diluted earnings per share rose 14.3% to $3.43 from $3.00, and adjusted diluted EPS grew 9.5%.
The acceleration marks a reversal for the paint and coatings maker, which had seen consolidated sales growth slow from 3.2% in the third quarter of 2024 to 6.8% in the first quarter of 2025 before climbing back above 7% in the latest period. Adjusted EBITDA margin expanded 60 basis points to 21.5%, building on a first quarter in which margin gains were essentially flat year over year at 17.6%.
Consumer Brands Group led the turnaround, with net sales surging 21.5% to $983.5 million and adjusted segment margin expanding 210 basis points to 24.5%, a sharp reacceleration from the "challenging" conditions the segment cited in the third quarter of 2024. Performance Coatings Group grew net sales 6.3% to $1.91 billion with margin up 50 basis points to 17.3%, extending a steadier climb after a flat 2024. Paint Stores Group same-store sales rose 4.2%, up from 2.4% in the first quarter, though segment margin slipped to 24.6% from 24.8% a year earlier and remained below the 24.9% posted in the third quarter of 2024.
To address that margin pressure, Sherwin-Williams implemented an 8% price increase across Paint Stores Group effective September 1, aimed at offsetting raw material, energy, logistics and packaging cost inflation, a move not flagged in prior quarterly releases. The company also detailed restructuring actions taken during the quarter expected to generate about $17 million in annual savings, the first specific figure attached to those efforts. Severance and restructuring charges fell to $0.07 a share from $0.18 a year earlier, even as Valspar-related acquisition amortization held at a steady $0.20-a-share drag for a fourth consecutive quarter.
Income before income taxes climbed to 16.4% of net sales from 15.6% a year earlier, an improvement over the first quarter, when that margin compressed to 12.0% from 12.3% amid raw material and SG&A pressure. Net operating cash rose 21% year over year to $1.49 billion, with free cash flow conversion of 86%, down from the 90.1% conversion reported in the fourth quarter of 2024.
Sherwin-Williams raised its full-year 2025 diluted EPS guidance to a range of $10.92 to $11.32, up from $10.70 to $11.10, and lifted adjusted diluted EPS guidance to $11.80 to $12.20 from $11.50 to $11.90. The increase follows a first quarter in which the company had simply reaffirmed its prior range.
The company returned $1.46 billion to shareholders through dividends and buybacks in the quarter, bringing first-half returns to $2.23 billion, compared with $864 million returned in the third quarter of 2024 alone, a step-up in the pace of capital return.