Oct. 26, 2021, 7:22 a.m. EDT

Sherwin-Williams earnings miss as supply chain challenges take a toll on sales and margins

Sherwin-Williams Co. (NYS:SHW) reported third-quarter net income of $502.2 million, or $1.88 per share, down from $705.8 million, or $2.55 per share, last year. Adjusted EPS of $2.09 missed the FactSet consensus for $2.11. Sales of $5.147 billion were up from $5.122 billion and ahead of the FactSet consensus for $5.090 billion. Chief Executive John Morikis says demand is strong, but supply chain challenges hurt results. "Consolidated net sales increased less than 1%, as raw material availability negatively impacted total sales by a high single digit percentage, of which approximately 75% of the impact was in The Americas Group," he said in a statement. "The raw material availability challenges combined with higher raw material costs significantly pressured gross margins in the quarter." The company will continue to raise prices to offset the cost of raw materials. For the fourth quarter, Sherwin Williams is guiding for a net sales increase in the mid-to-high single digit percent. The FactSet consensus is for sales of $4.682 billion, implying 4.3% growth. For the year, the company expects a sales increase in the high-single digit percent and adjusted EPS of $8.35 to $8.55. The FactSet consensus is for sales of $19.869 billion, implying a rise of 8.2%, and EPS of $8.61. Sherwin Williams stock rose 1.1% in Tuesday premarket trading, and is up 26.4% for the year to date. The S&P 500 index (S&P:SPX) has gained 21.6% for 2021 so far.

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