Analyst Note| Brian Bernard, CFA, CPA |
Narrow-moat Sherwin-Williams reported third-quarter results that were mostly in line with our expectations. Revenue increased 0.5% on a year-over-year basis to approximately $5.2 billion (down roughly 4% sequentially), led by volume growth in the performance coatings group. Sherwin, like most of its competitors, is facing increased inflationary and supply chain challenges that have constrained sales and weighed on margins. On the supply chain front, some of Sherwin’s customers are facing component shortages that have reduced their output. Sherwin is experiencing similar issues as it’s unable to secure enough raw materials to meet demand. Raw material availability continues to contribute to a growing backlog that most likely will not be fulfilled until 2022.