The Sherwin Williams Company (SHW), the manufacturer and seller of paints, coatings, and related products has announced a 0.63 percent drop in profit for the quarter ended Mar. 31, 2014.
The company earned $115.46 million or $1.14 a share in the first-quarter, compared with $116.18 million or $1.11 a share a year ago. Analysts on average had predicted net income of $1.11 a share.
Revenue during the first-quarter grew 9.20 percent to $2,366.56 million from $2,167.17 million in the last year period.
Gross margin expanded by 61 basis points over the last year period to 45.04 percent. Total expenses as a percentage of revenues increased to 92.29 percent from 91.68 percent in the same period last year. That resulted in contraction of 61 basis points in operating margin to 7.71 percent.
The company posted operating income of $182.38 million, compared with an operating income of $180.22 million in the previous year period.
Christopher M Connor, chairman and chief executive officer, said, "We are pleased to report record sales and earnings per share from the continued positive sales volume and strong operating results of our Paint Stores Group and the operating margin improvement of our Global Finishes Group. The Paint Stores Group architectural volume growth was strong across all end market segments. The Comex acquisition performed better than expected in the quarter. Although the impact of harsh weather on domestic sales in the quarter was modest, it did disrupt supply chain operations and service driving up costs in the Consumer Group. Our Global Finishes Group continues to improve its operating margins through improved operating efficiencies. The Latin America Coatings Group despite the continued difficult environment is minimizing the impact on its core operating margins through selling price increases and good cost control."
"We continued to invest in our business by opening seventeen net new locations in the Paint Stores Group. For the year, we expect our Paint Stores Group to open 80 to 90 new stores. Our working capital ratio (accounts receivable plus inventories less accounts payable to sales) at March 31, 2014 was 11.0% compared to 11.7% last year. During the quarter, we continued to buy shares of our stock and we increased the dividend rate to $.55 from $.50 last year. Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business."
For the second quarter, Sherwin Williams expects consolidated net sales to increase 8 to 14 percent compared to last year's second quarter. At that anticipated sales level, it estimates diluted net income per common share in the second quarter of 2014 to be in the range of $2.80 to $3.00 a share compared to $2.46 a share earned in the second quarter of 2013.
While for the full year 2014, the company expects consolidated net sales to increase 8 to 13 percent compared to full year 2013. With annual sales at that level, it has reaffirmed guidance that diluted net income per common share for 2014 is expected to be in the range of $8.12 to $8.32 a share compared to $7.26 a share earned in 2013.
Shares of Sherwin Williams Company rose $5.34 or 2.78 percent to close at $197.59 on Thursday.