🎨 What the Company Does
Sherwin-Williams is one of the world’s largest manufacturers, distributors, and retailers of paints, coatings, and related products. Unlike many competitors, the company operates thousands of company-owned paint stores while also serving retail consumers and industrial customers through multiple business segments.
Its operations are organized into three reporting segments:
- Paint Stores Group – Supplies professional painting contractors through company-operated stores across North America.
- Consumer Brands Group – Sells branded paint products through retailers, hardware stores, and e-commerce channels.
- Performance Coatings Group – Provides specialized coatings for industrial, automotive, aerospace, marine, packaging, and infrastructure markets.
The company continues to invest in manufacturing, research and development, store expansion, acquisitions, and international growth while serving customers across residential, commercial, and industrial markets.
📊 Financial Highlights
- Revenue reached a record $23.6 billion in FY2025.
- Gross profit increased as pricing, product mix, and manufacturing efficiencies improved profitability.
- Operating income remained relatively stable despite higher operating expenses.
- Net income declined modestly due to higher interest expense and less favorable non-operating items.
- Operating cash flow remained strong, supporting acquisitions, capital expenditures, dividends, and share repurchases.
- The company continued investing in manufacturing facilities, technology, and strategic acquisitions while maintaining access to multiple sources of liquidity.
⚠️ Key Risks
- Dependence on the availability and cost of raw materials used in paint and coatings production.
- Demand from professional contractors, residential construction, remodeling, and industrial customers.
- Strong competition across architectural and industrial coatings markets.
- Execution risks associated with acquisitions and business integration.
- Cybersecurity threats and potential disruptions to information technology systems.
- Environmental regulations, product liability obligations, and compliance with industry-specific regulations.
- Risks related to protecting brands, intellectual property, and global operations.
📈 MD&A Highlights
Management reported record net sales despite challenging market conditions, including softer residential housing activity, cautious consumer spending, and weaker industrial demand.
The company focused on pricing discipline, operational efficiency, productivity improvements, customer service, and continued investment in long-term growth initiatives.
- Paint Stores Group delivered record sales, record profit, and continued market share gains.
- Consumer Brands Group faced weaker home improvement demand but benefited from retail partnerships and acquisition activity.
- Performance Coatings Group managed softer industrial demand through pricing discipline, productivity improvements, and new business wins.
Management continued allocating capital toward acquisitions, manufacturing capacity, technology investments, dividends, and share repurchases while maintaining financial flexibility.
📝 Takeaway
Sherwin-Williams entered FY2026 as a leading global coatings company with record revenue, strong operating cash flow, and a diversified business model serving professional, consumer, and industrial customers. Although earnings were modestly affected by higher expenses and interest costs, the company continued investing in long-term growth while maintaining profitability and shareholder returns.
💵 Income Statement Summary
| (unit: $m, EPS in $) | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenue | 23,051.9 | 23,098.5 | 23,574.3 |
| Cost of Goods Sold | 12,293.8 | 11,903.4 | 12,058.8 |
| Gross Profit | 10,758.1 | 11,195.1 | 11,515.5 |
| SG&A | 7,065.4 | 7,422.1 | 7,695.0 |
| Operating Income | 3,567.7 | 3,811.8 | 3,812.9 |
| Non-Operating Income/Expense | (65.5) | 44.7 | (20.9) |
| Interest Income/Expense | (392.3) | (404.7) | (453.8) |
| Income Before Tax | 3,109.9 | 3,451.8 | 3,338.2 |
| Income Tax | 721.1 | 770.4 | 769.7 |
| Net Income | 2,388.8 | 2,681.4 | 2,568.5 |
| EPS | 9.3 | 10.6 | 10.3 |
💡 Plain English
Sherwin-Williams generated $23,574.3 million in FY2025 revenue, up from $23,098.5 million in FY2024. The increase was modest, but gross profit rose to $11,515.5 million, showing that the company retained more of each sales dollar after paying for products and raw materials.
Operating income remained nearly unchanged at $3,812.9 million, compared with $3,811.8 million in FY2024. This happened because the improvement in gross profit was largely offset by higher selling, general and administrative expenses, commonly called SG&A. SG&A includes costs such as employee compensation, store operations, marketing, administration, and corporate support.
The income statement also shows a structural shift below operating income. Net interest expense increased from $404.7 million in FY2024 to $453.8 million in FY2025. In addition, the company recorded $20.9 million of net non-operating expense in FY2025, compared with $44.7 million of net non-operating income in FY2024. These changes contributed to income before tax declining to $3,338.2 million.
Net income decreased to $2,568.5 million from $2,681.4 million, while diluted EPS declined to $10.3 from $10.6. The EPS decline was slightly smaller than the decline in net income because Sherwin-Williams had fewer weighted-average diluted shares outstanding, partly reflecting its ongoing share repurchase activity.
In simple terms: Sales and gross profit reached new highs in FY2025, but higher operating costs, interest expense, and other non-operating expenses prevented that improvement from reaching the bottom line. The core business remained profitable, but earnings weakened slightly compared with FY2024.
📈 Key Financial Ratios
| Ratio | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| ROE (%) | 64.3% | 69.4% | 55.9% |
| ROA (%) | 10.4% | 11.3% | 9.9% |
| ROTC (%) | 29.5% | 30.7% | 28.5% |
| ROIC (%) | 33.0% | 33.9% | 31.4% |
| Gross Margin (%) | 46.7% | 48.5% | 48.8% |
| Operating Margin (%) | 15.5% | 16.5% | 16.2% |
| Pretax Margin (%) | 13.5% | 14.9% | 14.2% |
| Net Margin (%) | 10.4% | 11.6% | 10.9% |
| Debt-to-Equity Ratio (D/E) (%) | 278.4% | 218.2% | 230.9% |
| Net Debt / EBITDA (x) | 2.39x | 2.00x | 2.27x |
| Interest Coverage Ratio (x) | 8.5x | 9.2x | 8.4x |
| Current Ratio (x) | 0.83x | 0.79x | 0.87x |
| Quick Ratio (x) | 0.48x | 0.46x | 0.53x |
| Fixed Asset to Long-term Capital Ratio (%) | 23.5% | 29.0% | 30.6% |
💡 Plain English
Sherwin-Williams continued to generate strong profitability in FY2025 despite slightly lower earnings. Gross margin improved to 48.8%, the highest level in the three-year period, indicating that the company kept more profit from each dollar of sales after covering production costs.
Although operating and net margins declined slightly from FY2024, they remained comfortably above FY2023 levels. This suggests that the company’s core operations continued to perform well, even as higher operating expenses and interest costs weighed on earnings.
Returns on capital also remained impressive. ROE, ROA, ROTC, and ROIC all stayed well above levels typically considered healthy for large industrial companies, reflecting Sherwin-Williams’ ability to generate substantial profits from both shareholder capital and invested capital.
Leverage increased modestly during FY2025. The Debt-to-Equity ratio rose to 230.9%, while Net Debt / EBITDA increased to 2.27x. Even so, the company’s Interest Coverage Ratio of 8.4x indicates that operating earnings remained more than sufficient to cover annual interest expense.
Liquidity also improved slightly. Both the Current Ratio and Quick Ratio increased compared with FY2024, suggesting that Sherwin-Williams strengthened its short-term financial flexibility while continuing to invest in the business and return capital to shareholders.
In simple terms: Sherwin-Williams remained a highly profitable company in FY2025. Margins stayed strong, returns on capital remained excellent, debt levels were manageable, and the business continued to generate enough operating profit to comfortably support its borrowing costs.
⚠️ This article is for educational purposes only.
👉 The Sherwin-Williams Company (SHW) FY2025 10-K Analysis (Filed 2026) | Explained for Beginners
Originally published on Finvincio