Sherwin-Williams Company
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ITEM 1. BUSINESS
Introduction
The Sherwin-Williams Company, founded in 1866 and incorporated in Ohio in 1884, is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region, Europe, Asia and Australia. Our principal executive offices are located at 1 Sherwin Way, Cleveland, Ohio 44113-2206, telephone (216) 566-2000. As used in this report, the terms “Sherwin-Williams,” “Company,” “we”, “us” and “our” mean The Sherwin-Williams Company and its consolidated subsidiaries.
Available Information
We make available free of charge on or through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (SEC). You may access these documents on our Investor Relations website, investors.sherwin.com.
We also make available free of charge on our website our Corporate Governance Guidelines, our Director Independence Standards, our Code of Conduct and the charters of our Audit Committee, our Compensation and Management Development Committee and our Nominating and Corporate Governance Committee. You may access these documents on our Investor Relations website, investors.sherwin.com.
Basis of Reportable Segments
The Company reports its segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources. The Company has three reportable operating segments: Paint Stores Group, Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments). The Company reports all other business activities and immaterial operating segments that are not reportable in the Administrative function. For further information about the Reportable Segments, see Note 22 to the consolidated financial statements in Item 8.
Paint Stores Group
Paint Stores Group consisted of 4,853 company-operated specialty paint stores in the United States, Canada and the Caribbean region at December 31, 2025. Each store is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products. The majority of these products are produced by manufacturing facilities in the Consumer Brands Group. In addition, each store sells select purchased associated products. The loss of any single customer would not have a material adverse effect on the business of this segment.
Consumer Brands Group
The Consumer Brands Group manufactures and distributes a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers, including home centers and hardware stores, dedicated dealers and distributors throughout North America, Latin America and Europe. Sales and marketing of certain controlled brand and private-label products are performed by a direct sales staff. The products distributed through third-party customers are intended for resale to the ultimate end-user of the product. The Consumer Brands Group also consisted of 307 company-operated specialty paint stores in Latin America at December 31, 2025. Each store is engaged in servicing the needs of home, commercial and industrial projects to contractors and do-it-yourself customers in Latin America. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products which are branded for the Latin America market. In addition, each store sells select purchased associated products. The Consumer Brands Group also supports the Company’s other businesses around the world with new product research and development, manufacturing, distribution and logistics. Approximately 63% of the total sales of the Consumer Brands Group in 2025 were intersegment transfers of products primarily sold through the Paint Stores Group. The Consumer Brands Group had sales to certain customers that, individually, may be a significant portion of the sales and related profitability of the segment. This segment incurred most of the Company’s capital expenditures related to ongoing environmental compliance measures, manufacturing capacity expansion, operational efficiencies and maintenance projects at sites currently in operation.
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Performance Coatings Group
The Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and performance-based resins and colorants worldwide. This segment licenses certain technology and trade names worldwide. Sherwin-Williams® and other controlled brand products are distributed through the Paint Stores Group, this segment’s 317 company-operated branches, a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors. The Performance Coatings Group had sales to certain customers that, individually, may be a significant portion of the sales of the segment. However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment.
Administrative Function
The Administrative function includes the administrative expenses and assets of the Company’s new global headquarters and research and development center. In addition, it includes the operations of a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s new and former global headquarters and former research and development center and disposal of idle facilities. The Administrative function’s remaining assets consist primarily of cash and cash equivalents, investments and noncurrent pension assets. Also included in the Administrative function is interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters and other expenses that were not directly associated with the Reportable Segments. Sales of this function represented external leasing revenue. The Administrative function did not include any significant foreign operations. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative function.
Raw Materials and Products Purchased for Resale
Raw materials and products purchased for resale make up the majority of our consolidated Cost of goods sold. Raw materials may vary considerably by the specific paint or coating being manufactured but can generally be divided into the following categories: resins and latex, pigments, additives, solvents and metal or plastic containers. A significant portion of these raw materials are derived from various upstream petrochemical and related commodity feedstocks, notably propylene. Raw materials are sourced from multiple suppliers globally, typically within the geographic region where our products are being manufactured. A portion of specialized resins and other products are manufactured in house. We also purchase a variety of products for resale that are highly complementary to our paint and coating offerings, notably spray equipment and parts, floorcovering and assorted sundries. We attempt, if feasible, to mitigate our potential risk associated with the sourcing of our raw materials and other products through inventory management, strategic relationships with key suppliers, alternative sourcing strategies and long-term investments to expand our manufacturing capabilities.
Seasonality
The majority of the sales for the Reportable Segments traditionally occur during the second and third quarters. Periods of economic downturn, however, can alter these seasonal patterns. There is no significant seasonality in sales for the Administrative function.
Working Capital
In order to meet increased demand during the second and third quarters, the Company usually builds its inventories during the first quarter. Working capital items (inventories and accounts receivable) are generally financed through short-term borrowings, which include the use of lines of credit and the issuance of commercial paper. For a description of the Company’s liquidity and capital resources, see Item 7 Financial Condition, Liquidity and Cash Flow.
Trademarks and Trade Names
Customer recognition of trademarks and trade names owned or licensed by the Company collectively contribute significantly to our sales. The major trademarks and trade names used by each of the Reportable Segments are set forth below.
•Paint Stores Group: Sherwin-Williams®, A-100®, Builders Solution®, Captivate®, Cashmere®, Duration®, Emerald®, Gallery Series™, Kem Tone®, Latitude®, Loxon®, Metalatex®, Novacor®, Painters Edge Plus®, ProClassic®, ProCraft®, Pro Industrial™, ProMar®, Scuff Tuff®, SuperDeck®, SuperPaint®, Woodscapes®
•Consumer Brands Group: Cabot®, Colorgin®, Condor®, Dupli-Color®, Dutch Boy®, Geocel®, HGTV HOME® by Sherwin-Williams, Krylon®, Minwax®, Purdy®, Ronseal®, Suvinil®, Thompson’s® WaterSeal®, Valspar®, White Lightning®
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•Performance Coatings Group: Sherwin-Williams®, Acrolon®, AcromaPro®, ATX®, DeBeer Refinish®, Duraspar®, EcoDex®, Envirolastic®, Excelo®, EzDex®, Fastline®, Firetex®, Fluropon®, Gross & Perthun™, Heat-Flex®, House of Kolor®, Huarun®, ICA®, Inver®, Kem Aqua®, Klumpp Coatings™, Lazzuril®, Macropoxy®, Martin Senour®, Matrix Edge®, M.L. Campbell®, Octoral®, Oskar Nolte™, PermaClad®, Polane®, Powdura®, Sayerlack®, Sher-Wood®, Sumaré®, Ultra 9K®, Ultra 7000®, ValPure®, Valspar®
Patent and Licensing Income
Although patents and licenses are not of material importance to our business as a whole or any segment, each segment derives a portion of its income from the licensing of technology, trademarks and trade names to foreign companies.
Backlog and Productive Capacity
Backlog orders are not typically significant in the business of any Reportable Segment since there is normally a short period of time between the placing of an order and shipment. We believe that sufficient productive capacity currently exists to fulfill our needs for paint, coatings and related products during 2026.
Competition
We experience competition from many local, regional, national and international competitors of various sizes in the manufacture, distribution and sale of our paint, coatings and related products. We are a leading manufacturer and retailer of paint, coatings and related products to professional, industrial, commercial and retail customers, however, our competitive position varies for our different products and markets.
In the Paint Stores Group, competitors include other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets. Product quality, product innovation, breadth of product line, technical expertise, service and price determine the competitive advantage for this segment.
In the Consumer Brands Group, domestic and foreign competitors include manufacturers and distributors of branded and private-label paint and coatings products as well as other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets. Technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price are key competitive factors for this segment.
The Performance Coatings Group has numerous competitors in its domestic and foreign markets with broad product offerings and several others with niche products. Key competitive factors for this segment include technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price.
The Administrative function has many competitors consisting of other real estate owners, developers and managers in areas in which this segment owns property. The main competitive factors are the availability of property and price.
Human Capital Resources
Our commitment to our people is embedded in the Company’s corporate purpose and guiding values. Through the development, manufacture, distribution and sale of innovative paint and coatings products, our employees are instrumental in fulfilling our corporate purpose to inspire and improve the world by coloring and protecting what matters. The Company’s seven guiding values — integrity, people, service, quality, performance, innovation and growth — drive how we fulfill our purpose, emphasize the importance of our global workforce and serve as the foundation of our culture of excellence.
At December 31, 2025, we employed 64,249 people worldwide, of which approximately 73% were in the United States. The success of our business and our ability to execute on our strategy depend in large part on our ability to attract, retain, develop and progress qualified employees with a broad range of skills, experiences and perspectives at all levels of our organization. To deliver on these objectives, we have developed key programs, policies and initiatives focused on belonging and culture, talent acquisition and employee engagement, occupational health and safety and total rewards.
Belonging and Culture. We strive to foster a strong workplace culture that drives belonging, employee experience, performance and above market growth while attracting, retaining, developing and progressing a pipeline of talent ready to serve the communities in which we operate. As reflected in our Code of Conduct and reinforced through our values, fostering a strong culture and a positive employee experience is imperative for long-term sustainable growth. The building blocks of our culture of belonging include:
•Communicating impact: Sharing the Company story, goals and priorities at all levels and supporting our employees in life, career and connections.
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•Leading with intention: Creating a culture where we inspire employees to Create Your Possible and leverage the unique contributions of each employee to foster a positive employee experience for all and drive above-market growth.
•Empowering everyone: Investing in our people by providing collaboration, development and learning opportunities to drive retention, progression and engagement.
•Committing to action: Empowering and engaging leaders at all levels to use tools and resources to take meaningful action to foster a culture of belonging for all employees.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(dollars in millions, except as noted and per share data)
BACKGROUND
The Sherwin-Williams Company, founded in 1866, and its consolidated subsidiaries (collectively, the Company) are engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region and throughout Europe, Asia and Australia.
The Company is structured into three reportable segments - Paint Stores Group, Consumer Brands Group and Performance Coatings Group (collectively, the Reportable Segments) - and an Administrative function, which is representative of the way it is internally organized for assessing performance and making decisions regarding the allocation of resources. See Note 18 in Item 1 for further information on the Company’s Reportable Segments.
SUMMARY
•Consolidated Net sales increased 7.9% to $6.860 billion in the quarter and increased 7.4% to $19.316 billion in the year to date period
◦Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 3.9% and 3.6% in the quarter and year to date period, respectively
•Diluted net income per share increased 0.9% to $3.38 per share in the quarter compared to $3.35 per share in the third quarter of 2025 and increased 7.3% to $8.95 per share in the year to date period compared to $8.34 per share in the year to date period of 2025
◦Adjusted diluted net income per share increased 1.1% to $3.63 per share in the quarter compared to $3.59 per share in the third quarter of 2025 and increased 5.1% to $9.67 per share in the year to date period compared to $9.20 per share in the year to date period of 2025
•Generated Net operating cash of $2.591 billion in the year to date period compared to $2.359 billion in the year to date period of 2025
OUTLOOK
During 2026, we continued to focus on the execution of our differentiated strategy, Success by Design, which supports our customers by providing value and productivity-oriented solutions for their businesses. In a softer-for-longer demand environment, this focus resulted in strong sales growth driven by new customer wins and share-of-wallet gains. We are addressing macroeconomic inflationary pressures by reducing costs, improving efficiency and taking measured and deliberate pricing actions with our customers in mind. Significant opportunities exist for each of our businesses, and we will continue to support our growth strategy by executing initiatives within our enterprise priorities, including talent, simplification, digitization, supply chain responsiveness and sustainability.
We employ a disciplined capital deployment strategy, while maintaining a balanced approach toward driving value for our customers and returns for our shareholders. We continue to pursue business acquisitions, transactions and investments that fit our long-term growth strategy and will return value to our shareholders through the payment of dividends and the reinvestment of excess cash through repurchases of shares of our stock. We have a strong liquidity position, with $264.2 million in cash and cash equivalents and $2.322 billion of unused capacity under our credit facilities at September 30, 2026. We are, and expect to remain, in compliance with all financing covenants.
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RESULTS OF OPERATIONS
The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The results of operations for the three and nine months ended September 30, 2026 are not indicative of the results to be expected for the full year as our business is seasonal in nature, with the majority of Net sales traditionally occurring during the second and third quarters. However, periods of economic uncertainty can alter the Company’s seasonal patterns.
The following discussion and analysis addresses comparisons of material changes in the condensed consolidated financial statements for the three and nine months ended September 30, 2026 and 2025.
Net Sales
Three Months Ended September 30, 2026
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | Currency Impact | Acquisition and Divestiture Impact | |||||||||||||||||||||||||||||||||||
| Paint Stores Group | $ | 4,015.8 | $ | 3,836.8 | $ | 179.0 | 4.7 | % | — | % | — | % | ||||||||||||||||||||||||||||
| Consumer Brands Group | 937.4 | 770.1 | 167.3 | 21.7 | % | 1.0 | % | 21.5 | % | |||||||||||||||||||||||||||||||
| Performance Coatings Group | 1,903.3 | 1,750.0 | 153.3 | 8.8 | % | 0.7 | % | — | % | |||||||||||||||||||||||||||||||
| Administrative | 3.5 | 1.3 | 2.2 | 169.2 | % | — | % | — | % | |||||||||||||||||||||||||||||||
| Total | $ | 6,860.0 | $ | 6,358.2 | $ | 501.8 | 7.9 | % | 0.3 | % | 2.6 | % | ||||||||||||||||||||||||||||
Consolidated Net sales increased by 7.9% in the third quarter of 2026 primarily due to higher Net sales in all reportable segments, inclusive of the October 2025 acquisition of Suvinil, and selling price increases, which impacted Net sales by a mid-single digit percentage. Net sales of all consolidated foreign subsidiaries increased to $1.366 billion in the third quarter of 2026 compared to $1.135 billion in the same period last year. The increase in Net sales for all consolidated foreign subsidiaries was due to higher Net sales in all regions, led by Latin America, which is inclusive of the Suvinil acquisition. Net sales of all operations other than consolidated foreign subsidiaries increased to $5.494 billion in the third quarter of 2026 compared to $5.223 billion in the same period last year.
Net sales in the Paint Stores Group increased by 4.7% in the third quarter of 2026 primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, as well as low-single digit percentage sales volume growth. Net sales increased in all professional customer end markets, led by a double-digit percentage increase in protective and marine, a high-single digit percentage increase in commercial and a mid-single digit percentage increase in residential repaint. Net sales from stores open for more than twelve calendar months increased by 3.9% in the third quarter of 2026 compared to last year’s comparable period. Net sales of non-paint products increased 3.8% in the third quarter of 2026 compared to last year’s comparable period. A discussion of changes in volume versus pricing for sales of non-paint products is not pertinent due to the wide assortment of general merchandise sold.
Net sales in the Consumer Brands Group increased by 21.7% in the third quarter of 2026 primarily as a result of the acquisition of Suvinil, favorable foreign currency translation and a positive shift in mix, partially offset by soft demand in North America.
Net sales in the Performance Coatings Group increased by 8.8% in the third quarter of 2026 primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, and low-single digit percentage sales volume growth. Net sales increased in all businesses, led by General Industrial, Packaging and Coil, which each increased by a double-digit percentage, and Industrial Wood and Automotive Refinish, which each increased by a low-single digit percentage.
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Nine Months Ended September 30, 2026
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | Currency Impact | Acquisition and Divestiture Impact | |||||||||||||||||||||||||||||||||||
| Paint Stores Group | $ | 10,955.7 | $ | 10,478.8 | $ | 476.9 | 4.6 | % | — | % | 0.1 | % | ||||||||||||||||||||||||||||
| Consumer Brands Group | 2,829.2 | 2,341.7 | 487.5 | 20.8 | % | 1.7 | % | 18.2 | % | |||||||||||||||||||||||||||||||
| Performance Coatings Group | 5,522.9 | 5,153.1 | 369.8 | 7.2 | % | 2.2 | % | 0.1 | % | |||||||||||||||||||||||||||||||
| Administrative | 8.4 | 4.8 | 3.6 | 75.0 | % | — | % | — | % | |||||||||||||||||||||||||||||||
| Total | $ | 19,316.2 | $ | 17,978.4 | $ | 1,337.8 | 7.4 | % | 0.9 | % | 2.5 | % | ||||||||||||||||||||||||||||
Consolidated Net sales increased by 7.4% in the first nine months of 2026 due to higher Net sales in all reportable segments, inclusive of the October 2025 acquisition of Suvinil, and selling price increases, which impacted Net sales by a mid-single digit percentage. Net sales of all consolidated foreign subsidiaries increased to $4.003 billion in the first nine months of 2026 compared to $3.335 billion in the same period last year. The increase in Net sales for all consolidated foreign subsidiaries was due to higher Net sales in all regions, led by Latin America, which is inclusive of the Suvinil acquisition. Net sales of all operations other than consolidated foreign subsidiaries increased 4.6% to $15.313 billion in the first nine months of 2026 compared to $14.643 billion in the same period last year.
Net sales in the Paint Stores Group increased by 4.6% in the first nine months of 2026 primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, as well as low-single digit percentage sales volume growth. Net sales increased in all but one professional customer end market, led by a double-digit percentage increase in protective and marine and mid-single digit percentage increases in commercial and residential repaint. New residential decreased by a low-single digit percentage, as expected. Net sales from stores open for more than twelve calendar months increased 3.6% in the first nine months of 2026 compared to last year’s comparable period. Net sales of non-paint products increased 3.6% in the first nine months of 2026 compared to last year’s comparable period. A discussion of changes in volume versus pricing for sales of products other than paint is not pertinent due to the wide assortment of general merchandise sold.
Net sales in the Consumer Brands Group increased by 20.8% in the first nine months of 2026 primarily as a result of the acquisition of Suvinil and a 1.7% favorable impact from foreign currency translation. A positive shift in mix was partially offset by soft demand in North America.
Net sales in the Performance Coatings Group increased by 7.2% in the first nine months of 2026 primarily attributable to low-single digit percentage sales volume growth, selling price increases, which impacted Net sales by a low-single digit percentage, and a 2.2% favorable impact from foreign currency translation. Net sales increased in all businesses, led by a double-digit percentage increase in General Industrial, and a high-single digit percentage increase in Packaging, Coil and Automotive Refinish.
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Income Before Income Taxes
The following table presents the components of Income before income taxes as a percentage of Net sales:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Percent to Net Sales | Percent to Net Sales | Percent to Net Sales | Percent to Net Sales | |||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 6,860.0 | 100.0 | % | $ | 6,358.2 | 100.0 | % | $ | 19,316.2 | 100.0 | % | $ | 17,978.4 | 100.0 | % | ||||||||||||||||||||||||||||||
| Cost of goods sold | 3,582.8 | 52.2 | % | 3,232.7 | 50.8 | % | 9,920.5 | 51.4 | % | 9,175.5 | 51.0 | % | ||||||||||||||||||||||||||||||||||
| Gross profit | 3,277.2 | 47.8 | % | 3,125.5 | 49.2 | % | 9,395.7 | 48.6 | % | 8,802.9 | 49.0 | % | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses (SG&A) | 2,069.1 | 30.2 | % | 1,952.8 | 30.7 | % | 6,142.4 | 31.8 | % | 5,758.2 | 32.0 | % | ||||||||||||||||||||||||||||||||||
| Other general expense (income) - net | 5.2 | 0.1 | % | (4.7) | (0.1) | % | 14.9 | 0.1 | % | 10.5 | 0.1 | % | ||||||||||||||||||||||||||||||||||
| Interest expense | 139.3 | 2.0 | % | 117.2 | 1.9 | % | 406.8 | 2.1 | % | 333.4 | 1.8 | % | ||||||||||||||||||||||||||||||||||
| Interest income | (5.9) | (0.1) | % | (2.6) | — | % | (14.1) | (0.1) | % | (8.3) | — | % | ||||||||||||||||||||||||||||||||||
| Other expense (income) - net | 6.0 | 0.1 | % | 2.3 | — | % | (10.1) | (0.1) | % | 9.9 | 0.1 | % | ||||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 1,063.5 | 15.5 | % | $ | 1,060.5 | 16.7 | % | $ | 2,855.8 | 14.8 | % | $ | 2,699.2 | 15.0 | % | ||||||||||||||||||||||||||||||
Three Months Ended September 30, 2026
Consolidated Cost of goods sold increased $350.1 million, or 10.8%, in the third quarter of 2026 compared to the same period in 2025 primarily due to higher sales volume, inclusive of the Suvinil acquisition, and higher raw material and supply chain related costs.
Consolidated Gross profit increased $151.7 million in the third quarter of 2026 compared to the same period in 2025 primarily due to higher Net sales in all reportable segments, inclusive of the Suvinil acquisition, partially offset by higher raw material and supply chain related costs. Consolidated Gross profit as a percent of consolidated Net sales in the third quarter of 2026 decreased to 47.8% compared to 49.2% during the same period in 2025 primarily due to mix, including dilution from the Suvinil acquisition and higher growth in lower margin reportable segments, as well as higher raw material and supply chain related costs.
The Paint Stores Group’s Gross profit in the third quarter of 2026 was higher than the same period last year by $77.3 million due primarily to higher Net sales, partially offset by higher raw material and supply chain related costs. The Paint Stores Group’s Gross profit as a percent of Net sales decreased in the third quarter of 2026 compared to the same period last year primarily due to the impact of inflation on raw material and supply chain related costs. The Consumer Brands Group’s Gross profit increased by $37.8 million in the third quarter of 2026 compared to the same period last year primarily due to higher Net sales, inclusive of the Suvinil acquisition, partially offset by higher raw material and supply chain costs. The Consumer Brands Group’s Gross profit as a percent of Net sales decreased in the third quarter of 2026 compared to the same period last year primarily due to the dilutive impact of the Suvinil acquisition and the impact of inflation on raw material and supply chain costs. The Performance Coatings Group’s Gross profit increased $47.0 million in the third quarter of 2026 compared to the same period last year primarily due to higher Net sales, partially offset by higher raw material and supply chain related costs. The Performance Coatings Group’s Gross profit as a percent of Net sales decreased in the third quarter of 2026 compared to the same period last year primarily due to the impact of inflation on raw material and supply chain related costs.
Consolidated SG&A increased $116.3 million in the third quarter of 2026 versus the same period last year primarily due to an increase in employee-related costs to support higher Net sales, incremental SG&A expenses associated with the Suvinil acquisition and higher costs in the Administrative function related to the new global headquarters and technology center. As a percent of Net sales, consolidated SG&A decreased by 50 basis points in the third quarter of 2026 compared to the same period last year.
The Paint Stores Group’s SG&A increased $51.9 million in the third quarter of 2026 compared to the same period last year primarily due to investments in additional sales reps and stores. The Consumer Brands Group’s SG&A increased $43.6 million in the third quarter of 2026 compared to the same period last year primarily due to incremental SG&A expenses associated with the Suvinil acquisition. The Performance Coatings Group’s SG&A increased $26.1 million in the third quarter of 2026 compared to the same period last year primarily due to an increase in employee-related and other costs to support higher sales. The Administrative function’s SG&A decreased $5.3 million in the third quarter of 2026 compared to the same period last year due primarily due to effective cost control, partially offset by increased costs related to the new global headquarters and technology center.
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Other general expense (income) - net was expense of $5.2 million in the third quarter of 2026 compared to income of $4.7 million in the same period last year primarily due to a loss on the sale or disposition of assets in the current year versus a gain recognized in the prior year, partially offset by higher provisions for environmental matters in the prior year which did not recur in the current year. See Note 15 in Item 1 for further information.
Interest expense increased $22.1 million in the third quarter of 2026 compared to the same period last year due to an increase in total debt outstanding as well as interest expense related to real estate financing associated with the new global headquarters. See Note 6 in Item 1 for further information on the Company’s outstanding debt.
Other expense - net increased $3.7 million in the third quarter of 2026 compared the same period last year primarily due to higher foreign currency transaction related net losses and higher pension related expenses, partially offset by net investment losses in the prior year which did not recur in the current year. See Note 15 in Item 1 for further information.
Nine Months Ended September 30, 2026
Consolidated Cost of goods sold increased $745.0 million, or 8.1%, in the first nine months of 2026 compared to the same period in 2025 primarily due to higher sales volume, inclusive of the Suvinil acquisition, higher raw material and supply chain related costs and an unfavorable foreign currency related impact.
Consolidated gross profit increased $592.8 million in the first nine months of 2026 compared to the same period in 2025 primarily due to higher Net sales in all reportable segments, inclusive of the Suvinil acquisition, partially offset by higher raw material and supply chain related costs. Consolidated gross profit as a percent of consolidated Net sales decreased in the first nine months of 2026 to 48.6% compared to 49.0% during the same period in 2025 due to the dilutive impact of the Suvinil acquisition. Excluding the dilutive impact of the Suvinil acquisition, consolidated gross profit as a percent of consolidated Net sales was flat year over year.
The Paint Stores Group’s gross profit in the first nine months of 2026 was higher than the same period last year by $269.9 million due primarily to higher Net sales, partially offset by higher raw material and supply chain related costs. The Paint Stores Group’s gross profit as a percent of Net sales was flat in the first nine months of 2026 compared to the same period in 2025 for these same reasons. The Consumer Brands Group’s gross profit increased by $210.6 million in the first nine months of 2026 compared to the same period last year due primarily to higher Net sales, inclusive of the Suvinil acquisition, partially offset by higher raw material and supply chain costs. The Consumer Brands Group’s gross profit as a percent of Net sales decreased in the first nine months of 2026 compared to the same period last year primarily due to the dilutive impact of the Suvinil acquisition and the impact of inflation on raw material and supply chain costs. The Performance Coatings Group’s gross profit increased $130.5 million in the first nine months of 2026 compared to the same period last year primarily due to higher Net sales, partially offset by higher raw material and supply chain related costs. The Performance Coatings Group’s gross profit as a percent of Net sales was flat in the first nine months of 2026 compared to the same period last year for these same reasons.
Consolidated SG&A increased $384.2 million in the first nine months of 2026 versus the same period last year primarily due to an increase in employee-related costs to support higher Net sales, incremental SG&A expenses associated with the Suvinil acquisition and higher costs in the Administrative function related to the new global headquarters and technology center. As a percent of Net sales, consolidated SG&A was decreased modestly in the first nine months of 2026 compared to the same period last year for these same reasons.
The Paint Stores Group’s SG&A increased $179.2 million in the first nine months of 2026 compared to the same period last year primarily due to investments in additional sales reps and stores. The Consumer Brands Group’s SG&A increased $118.1 million in the first nine months of 2026 compared to the same period last year primarily due to incremental SG&A expenses associated with the Suvinil acquisition as well as higher employee-related costs to support higher sales. The Performance Coatings Group’s SG&A increased $78.0 million in the first nine months of 2026 compared to the same period last year due primarily to higher employee-related costs to support higher sales. The Administrative function’s SG&A increased $8.9 million in the first nine months of 2026 compared to the same period last year due primarily to costs related to the new global headquarters and technology center, partially offset by a decrease in employee-related costs related to non-recurring severance from the prior year period.
Other general expense - net increased $4.4 million in the first nine months of 2026 compared to the same period last year primarily due to a loss on the sale or disposition of assets in the current year versus a gain recognized in the prior year, partially offset by lower individually insignificant miscellaneous expenses and higher provisions for environmental matters in the prior year which did not recur in the current year. See Note 15 in Item 1 for further information.
Interest expense increased $73.4 million in the first nine months of 2026 compared to the same period last year due to an increase in total debt outstanding as well as interest expense related to real estate financing associated with the new global headquarters. See Note 6 in Item 1 for further information on the Company’s outstanding debt.
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Other expense (income) - net was income of $10.1 million in the first nine months of 2026 compared to expense of $9.9 million in the same period last year primarily due to lower foreign currency transaction related net losses and lower individually insignificant miscellaneous expenses, partially offset by pension related expense recognized in the current period as compared to pension related income in the prior year period. See Note 15 in Item 1 for further information.
The following table presents Income before income taxes by segment and as a percent of Net sales by segment:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Income Before Income Taxes: | ||||||||||||||||||||||||||||||||||||||||||||||
| Paint Stores Group | $ | 974.3 | $ | 954.3 | $ | 20.0 | 2.1 | % | $ | 2,490.7 | $ | 2,412.0 | $ | 78.7 | 3.3 | % | ||||||||||||||||||||||||||||||
| Consumer Brands Group | 146.2 | 157.3 | (11.1) | (7.1) | % | 556.3 | 453.4 | 102.9 | 22.7 | % | ||||||||||||||||||||||||||||||||||||
| Performance Coatings Group | 255.2 | 240.3 | 14.9 | 6.2 | % | 760.9 | 698.1 | 62.8 | 9.0 | % | ||||||||||||||||||||||||||||||||||||
| Administrative | (312.2) | (291.4) | (20.8) | (7.1) | % | (952.1) | (864.3) | (87.8) | (10.2) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 1,063.5 | $ | 1,060.5 | $ | 3.0 | 0.3 | % | $ | 2,855.8 | $ | 2,699.2 | $ | 156.6 | 5.8 | % | ||||||||||||||||||||||||||||||
| Income Before Income Taxes as a percent of Net sales: | ||||||||||||||||||||||||||||||||||||||||||||||
| Paint Stores Group | 24.3 | % | 24.9 | % | 22.7 | % | 23.0 | % | ||||||||||||||||||||||||||||||||||||||
| Consumer Brands Group | 15.6 | % | 20.4 | % | 19.7 | % | 19.4 | % | ||||||||||||||||||||||||||||||||||||||
| Performance Coatings Group | 13.4 | % | 13.7 | % | 13.8 | % | 13.5 | % | ||||||||||||||||||||||||||||||||||||||
| Administrative | nm | nm | nm | nm | ||||||||||||||||||||||||||||||||||||||||||
| Total | 15.5 | % | 16.7 | % | 14.8 | % | 15.0 | % | ||||||||||||||||||||||||||||||||||||||
nm - not meaningful | ||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense
The effective tax rate was 22.8% for the third quarter of 2026 compared to 21.4% for the third quarter of 2025, and 23.0% for the first nine months of 2026 compared to 22.5% for the first nine months of 2025. The increase in the effective tax rate for the third quarter of 2026 was primarily due to a less favorable impact from tax benefits related to employee share-based payments. The effective tax rate increased for the first nine months of 2026 compared to the same period last year for these same reasons. See Note 16 in Item 1 for further information.
Net Income Per Share
Diluted net income per share increased 0.9% to $3.38 per share in the third quarter of 2026 compared to $3.35 per share in the third quarter of 2025. Diluted net income per share in the third quarter of 2026 included Valspar acquisition-related amortization expense of $0.21 per share and severance and other restructuring expenses of $0.04 per share. Diluted net income per share in the third quarter of 2025 included charges for Valspar acquisition-related amortization expense of $0.20 per share and severance and other restructuring expenses of $0.04 per share. Foreign currency translation rate changes increased diluted net income per share by $0.01 in the third quarter of 2026.
Diluted net income per share for the first nine months of 2026 increased 7.3% to $8.95 per share compared to $8.34 per share in the first nine months of 2025. Diluted net income per share for the first nine months of 2026 included charges for Valspar acquisition-related amortization expense of $0.61 per share and severance and other restructuring expenses of $0.11 per share. Diluted net income per share in the first nine months of 2025 included a charge for Valspar acquisition-related amortization expense of $0.59 per share and severance and other restructuring expenses of $0.27 per share. Foreign currency translation rate changes increased diluted net income per share by $0.07 in the first nine months of 2026.
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FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW
Overview
The Company’s financial condition and liquidity remained strong at September 30, 2026. The Company generated $2.591 billion in Net operating cash and returned cash of $2.981 billion to its shareholders in the form of dividends and share repurchases during the first nine months of 2026. Net income increased 5.1% to $2.199 billion and EBITDA increased 8.5% to $3.823 billion for the first nine months of 2026. Refer to the Non-GAAP Financial Measures section below for the definition and calculation of EBITDA.
At September 30, 2026, the Company had Cash and cash equivalents of $264.2 million and total debt outstanding of $11.795 billion. Total debt, net of Cash and cash equivalents, was $11.531 billion. The Company continues to maintain sufficient short-term borrowing capacity at reasonable rates, and has sufficient cash on hand and total available borrowing capacity to fund its current operating requirements.
Net Working Capital
Net working capital, defined as Total current assets less Total current liabilities, decreased $1,494.1 million to a deficit of $2.822 billion at September 30, 2026 compared to a deficit of $1.327 billion at September 30, 2025. The net working capital decrease is due to an increase of $2.375 billion in Total current liabilities partially offset by an increase in Total current assets of $881.3 million.
Current asset balances increased $881.3 million at September 30, 2026 compared to September 30, 2025 due to an increase in Accounts receivable, net of $475.8 million, an increase in Inventories of $270.7 million, an increase in Other current assets of $112.1 million, primarily related to miscellaneous prepaid expenses and other receivables, and an increase in Cash and cash equivalents of $22.7 million.
Current liability balances increased $2.375 billion at September 30, 2026 compared to September 30, 2025 due to an increase in the Current portion of long-term debt of $1.148 billion, an increase in Short-term borrowings of $506.7 million, an increase in Accounts payable of $453.7 million, an increase in Compensation and taxes withheld of $108.0 million, an increase in Other accruals of $105.1 million, primarily related to increases in customer considerations, non-traded investments and derivative liabilities, an increase in Accrued taxes of $45.8 million, and an increase in the Current portion of operating lease liabilities of $7.8 million. The Company’s current ratio was 0.71, 0.87 and 0.82 at September 30, 2026, December 31, 2025 and September 30, 2025, respectively.
Property, Plant and Equipment
Net property, plant and equipment increased $88.2 million in the first nine months of 2026 and $312.4 million in the twelve months since September 30, 2025. The increase in the first nine months was due to capital expenditures of $337.6 million and assets acquired through business combinations of $61.8 million, primarily related to the Suvinil acquisition, partially offset by depreciation expense of $296.0 million, foreign currency translation and other adjustments of $9.3 million, and sales or dispositions of fixed assets of $5.9 million. Since September 30, 2025, the increase was due to capital expenditures of $532.8 million and assets acquired through business combinations of $203.2 million, partially offset by depreciation expense of $394.3 million and foreign currency translation and other adjustments of $29.3 million.
Included in 2026 capital expenditures were expenditures related to manufacturing capacity expansion, operational efficiencies and maintenance projects in the Consumer Brands and Performance Coatings Groups and the opening of new stores and renovation and improvements in existing stores in the Paint Stores Group.
In 2026, the Company expects to spend less than 2025 for capital expenditures, which it will fund primarily through the generation of operating cash. Core capital expenditures are targeted to be approximately 2% of Net sales in 2026 and are expected to be for investments in various productivity improvements and maintenance projects at existing manufacturing, distribution and technology facilities and new store openings.
Real Estate Financing
In December 2022, the Company closed a transaction to sell and subsequently lease back its new global headquarters. This transaction did not meet the criteria for recognition as an asset sale under U.S. generally accepted accounting principles (US GAAP) and as such, was accounted for as a real estate financing transaction. The Company received the final proceeds for the new global headquarters in 2025 for a total of $800 million. The initial lease term includes the construction period and extends for 30 years thereafter, and the Company has the right and option to extend the lease term.
The net proceeds from this transaction and other real estate financing transactions are recognized as Proceeds from real estate financing transactions within the Financing Activities section of the Statements of Condensed Consolidated Cash Flows. The
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Company will continue to recognize the related assets, including any capitalized interest, within Property, plant and equipment, net on the Consolidated Balance Sheets. These assets are subject to depreciation over their useful lives in accordance with the Company’s accounting policies. The Company also allocates payments between interest and repayment of the financing liability over the life of the agreement. See Note 8 in Item 1 and Note 10 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning real estate financing.
Goodwill and Intangible Assets
Goodwill decreased $61.1 million from December 31, 2025 and increased $181.4 million from September 30, 2025. The decrease during the first nine months of 2026 was due to purchase price allocation adjustments of $39.3 million and foreign currency translation and other adjustments of $21.8 million. The increase over the twelve month period from September 30, 2025 was due to purchase price allocation adjustments of $208.2 million, primarily related to the Suvinil acquisition, partially offset by foreign currency translation and other adjustments of $26.8 million.
Intangible assets decreased $221.8 million from December 31, 2025 and increased $278.1 million from September 30, 2025. The decrease during the first nine months of 2026 was due to amortization of $264.7 million, partially offset by foreign currency translation and other adjustments of $20.5 million, capitalized software of $12.4 million and purchase price allocation adjustments of $10.0 million. The increase over the twelve month period from September 30, 2025 was due to purchase price allocations of $618.9 million, primarily related to the Suvinil acquisition, capitalized software of $25.2 million and foreign currency translation and other adjustments of $4.6 million, partially offset by amortization of $352.8 million and a 2025 trademark impairment of $17.8 million.
See Note 5 in Item 1 and Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning the Company’s Goodwill and Intangible assets.
Other Assets
Other assets increased $128.1 million from December 31, 2025 and decreased $1.010 billion from September 30, 2025. The increase in the first nine months of 2026 was primarily due to an increase in non-traded investments, finance lease right-of-use assets and assets related to cloud computing arrangements, partially offset by a decrease in customer considerations. The decrease from September 30, 2025 was primarily related to the deposit held for the Suvinil acquisition, partially offset by an increase in non-traded investments. See Notes 1, 14 and 16 in Item 1 and Notes 1, 18 and 20 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information.
Debt (including Short-term borrowings)
| September 30, | December 31, | September 30, | |||||||||||||
| 2026 | 2025 | 2025 | |||||||||||||
| Long-term debt (including current portion) | $ | 9,441.5 | $ | 9,670.8 | $ | 9,668.6 | |||||||||
| Short-term borrowings | 2,353.6 | 1,200.5 | 1,846.9 | ||||||||||||
| Total debt outstanding | $ | 11,795.1 | $ | 10,871.3 | $ | 11,515.5 | |||||||||
The Company’s long-term debt primarily consists of senior notes as disclosed in Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and periodically, amounts borrowed under its credit agreements. See Note 6 in Item 1 for further information concerning Long-term debt, Short-term borrowings and credit agreements.
Defined Benefit Pension and Other Postretirement Benefit Plans
Long-term liabilities for defined benefit pension and other postretirement benefit plans did not change significantly from December 31, 2025. The changes from September 30, 2025 are primarily due to changes in actuarial assumptions and the acquisition of Suvinil. See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning the Company’s liabilities for defined benefit pension and other postretirement benefit plans.
Deferred Income Taxes
Deferred income taxes decreased $22.9 million from December 31, 2025 and increased $85.2 million from September 30, 2025. The decrease from December 31, 2025 is primarily due to the amortization of intangible assets. The increase from September 30, 2025 is primarily due to accelerated domestic research and development deductions recognized as a result of U.S. tax reform legislation known as the One Big Beautiful Bill Act. This increase was partially offset by amortization of intangible assets.
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Environmental-Related Liabilities
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-17 | Binns Justin T | President, Glob. Architectural | Sell | -13,500 | $352.70 | -$4,761,450 |
| 2026-08-07 | Jorgenrud Karl J | President, Glob. Industrial | Sell | -7,886 | $368.30 | -$2,904,414 |
Source: SEC Form 4 filings.
Next expected filings
- ~2027-02-18 10-K expected by 2027-02-27 (in 113 days)
- ~2027-04-27 10-Q expected by 2027-05-11 (in 181 days)
- ~2027-07-27 10-Q expected by 2027-08-10 (in 272 days)
- ~2027-10-26 10-Q expected by 2027-11-09 (in 363 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-10-27 8-K Earnings Release; Financial Statements and Exhibits
- 2026-10-27 10-Q Quarterly Report
- 2026-09-29 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-07-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-28 10-Q Quarterly Report
- 2026-06-09 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-04-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-28 10-Q Quarterly Report
- 2026-02-19 10-K Annual Report
- 2026-02-09 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-01-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-17 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-11-05 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-11-03 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-10-28 10-Q Quarterly Report