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What changed in Sherwin-Williams's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sherwin-Williams's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+342 added−321 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-20)

Top changes in Sherwin-Williams's 2024 10-K

342 paragraphs added · 321 removed · 277 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

41 edited+4 added−9 removed17 unchanged
Biggest changeThese risks, uncertainties and other factors include such things as: • general business conditions, including the strength of retail and manufacturing economies and growth in the coatings industry; • changes in general domestic and international economic conditions, including due to changes in inflation rates, interest rates, tax rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, government policies, laws and regulations; • weakening of global credit markets and our ability to generate cash to service our indebtedness; • fluctuations in foreign currency exchange rates, including as a result of inflation, central bank monetary policies, currency controls and other exchange restrictions; • any disruption in the availability of, or increases in the price of, raw material and energy supplies; • disruptions in the supply chain, including those related to industry capacity constraints, raw material availability, transportation and logistics delays and constraints, political instability or civil unrest; • catastrophic events, adverse weather conditions and natural disasters, including those that may be related to climate change or otherwise; • losses of or changes in our relationships with customers and suppliers; • competitive factors, including pricing pressures and product innovation and quality; • our ability to successfully integrate past and future acquisitions into our existing operations, as well as the performance of the businesses acquired; • risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets, including general economic conditions, policy changes affecting international trade, political instability, inflation rates, recessions, sanctions, foreign currency exchange rates and controls, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed conflicts and wars (including the ongoing conflict between Russia and Ukraine and the Israel-Hamas war) and other economic and political factors; • cybersecurity incidents and other disruptions to our information technology systems, and our reliance on information technology systems; • our ability to attract, retain, develop and progress a qualified global workforce; • our ability to execute on our business strategies related to sustainability matters, and achieve related expectations, including as a result of evolving regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs and the availability of requisite financing, and changes in carbon markets; • damage to our business, reputation, image or brands due to negative publicity; • our ability to protect or enforce our material trademarks and other intellectual property rights; • our ability to comply with numerous and evolving U.S. and non-U.S. laws, rules, and regulations and the effectiveness of our compliance efforts; • adverse changes to our tax positions in U.S. and non-U.S. jurisdictions, including as a result of new or revised tax laws or interpretations; • increasingly stringent domestic and foreign governmental regulations, including those affecting health, safety and the environment; • inherent uncertainties involved in assessing our potential liability for environmental-related activities; 5 Table of Contents • other changes in governmental policies, laws and regulations, including changes in tariff policies, accounting policies and standards; and • the nature, cost, quantity and outcome of pending and future litigation and other claims, including the lead pigment and lead-based paint litigation, and the effect of any legislation and administrative regulations relating thereto.
Biggest changeThese risks, uncertainties and other factors include such things as: • general business and economic conditions in the United States and worldwide; • inflation rates, interest rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, terrorist activity, armed conflicts and wars, public health crises, pandemics, outbreaks of disease and supply chain disruptions; • shifts in consumer behavior driven by economic downturns in cyclical segments of the economy; • shortages and increases in the cost of raw materials and energy; • catastrophic events, adverse weather conditions and natural disasters (including those that may be related to climate change); • the loss of any of our largest customers; • increased competition or failure to keep pace with developments in key competitive areas of our business; • disruptions to our information technology systems, including due to digitization efforts or cybersecurity incidents; • our ability to attract, retain, develop and progress a qualified global workforce; • our ability to successfully integrate past and future acquisitions into our existing operations; • risks and uncertainties associated with our expansion into and our operations in South America, Asia, Europe and other foreign markets; • policy changes affecting international trade, including import/export restrictions and tariffs; • our ability to achieve our strategies or expectations relating to sustainability considerations, including as a result of evolving legal, regulatory and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite suppliers, energy sources, or financing and changes in carbon markets; • damage to our business, reputation, image or brands due to negative publicity; • the infringement or loss of our intellectual property rights or the theft or unauthorized use of our trade secrets or other confidential business information; • a weakening of global credit markets or changes to our credit ratings; • our ability to generate cash to service our indebtedness; • fluctuations in foreign currency exchange rates and changing monetary policies; • our ability to comply with a variety of complex U.S. and non-U.S. laws, rules and regulations; • increases in tax rates, or changes in tax laws or regulations; • our ability to comply with numerous, complex and increasingly stringent domestic and foreign health, safety and environmental laws, regulations and requirements; • our liability related to environmental investigation and remediation activities at some of our currently- and formerly-owned sites; • the nature, cost, quantity and outcome of pending and future litigation, including lead pigment and lead-based paint litigation; and • the other risk factors discussed in Item 1A of this Annual Report on Form 10-K and our other reports filed with the SEC. 5 Table of Contents Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered a complete list.
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 and 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).
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).
Technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price are the 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.
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.
These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and the lead pigment and lead-based paint litigation.
These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and lead pigment and lead-based paint litigation.
Key competitive factors for this segment include technology, product quality, product innovation, breadth of product line, technical expertise, distribution, service and price. The Administrative segment 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.
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.
The Company’s policies and programs are designed to respond to the needs of our employees in a manner that provides a safe, professional, efficient and rewarding workplace. Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other programs to support employees’ growth, both personally and professionally, and the diverse needs and well-being of our employees worldwide.
The Company’s policies and programs are designed to respond to the needs of our employees in a manner that provides a safe, professional, efficient and rewarding workplace. Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other programs to support employees’ growth, both personally and professionally, and the needs and well-being of our employees worldwide.
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 segment.
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.
Over the past few years, we have enhanced certain of the Company’s benefits and practices to support the health and well-being of our employees. Our enhanced benefits have included tele-health, paid sick leave, family leave and voluntary leave of absence policies and programs.
Over the past few years, we have enhanced certain of the Company’s benefits and practices to support the health and well-being of our employees. Our enhanced benefits have included paid sick leave, family leave and voluntary leave of absence policies and programs.
We measure our progress toward creating a culture of belonging that empowers employees to learn, grow and achieve their aspirations by conducting periodic pulse surveys and a global engagement survey, which we conducted in 2023 and expect to conduct every other year. We are focused on using these survey results to drive continued progress with our efforts.
We measure our progress toward creating a culture of excellence that empowers employees to learn, grow and achieve their aspirations by conducting periodic pulse surveys and a global engagement survey, which we conducted in 2023 and expect to conduct every other year. We are focused on using these survey results to drive continued progress with our efforts.
Each store in this segment 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.
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.
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 2024.
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 2025.
Each store in this segment 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.
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.
Campbell®, Octoral®, Oskar Nolte™, PermaClad®, Polane®, Powdura®, Sayerlack®, Sher-Wood®, Sumaré®, Ultra 9K®, Ultra 7000®, ValPure®, Valspar® Patents Although patents and licenses are not of material importance to our business as a whole or any segment, the Performance Coatings Group derives a portion of its income from the licensing of technology, trademarks and trade names to foreign companies.
Campbell®, Octoral®, Oskar Nolte™, PermaClad®, Polane®, Powdura®, Sayerlack®, Sher-Wood®, Sumaré®, Ultra 9K®, Ultra 7000®, ValPure®, Valspar® Patents 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.
Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “believe,” “expect,” “estimate,” “project,” “plan,” “goal,” “target,” “potential,” “intend,” “aspire,” “strive,” “may,” “will,” “should,” “could,” “would,” “seek,” or “anticipate” or the negative thereof or comparable terminology.
Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “anticipate,” “aspire,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “strive,” “target,” “will,” or “would” or the negative thereof or comparable terminology.
While our commitment starts at the top, with a Board of Directors with diverse skills, backgrounds and experiences, creating a supportive, welcoming environment across our global footprint is the shared responsibility of all of our employees, including our senior leaders.
While our commitment starts at the top, with a Board of Directors with a broad range of skills, backgrounds and experiences, creating a supportive, welcoming environment across our global footprint is the shared responsibility of all of our employees, including our senior leaders.
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 61% of the total sales of the Consumer Brands Group in 2023 were intersegment transfers of products primarily sold through the Paint Stores Group.
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 2024 were intersegment transfers of products primarily sold through the Paint Stores Group.
Our principal executive offices are located at 101 West Prospect Avenue, Cleveland, Ohio 44115-1075, 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 unless the context indicates otherwise.
Our principal executive offices are located at 101 West Prospect Avenue, Cleveland, Ohio 44115-1075, 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.
We invest in our people by providing learning and employee networking opportunities, including through our ERGs, to drive retention, development and engagement and help employees excel in their current and future roles. During 2023, our employees completed thousands of hours of online and instructor-led courses across a broad range of categories, including leadership, professional skills, technical skills and compliance.
We invest in our people by providing learning and employee networking opportunities to drive retention, development and engagement and help employees excel in their current and future roles. During 2024, our employees collectively completed thousands of hours of online and instructor-led courses across a broad range of categories, including leadership, professional skills, technical skills and compliance.
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 diverse skills, experiences and perspectives at all levels of our organization.
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.
For more information about the Reportable Segments, see Note 23 to the Consolidated Financial Statements in Item 8. Paint Stores Group Paint Stores Group consisted of 4,694 company-operated specialty paint stores in the United States, Canada and the Caribbean region at December 31, 2023.
For more information about the Reportable Segments, see Note 22 to the consolidated financial statements in Item 8. Paint Stores Group Paint Stores Group consisted of 4,773 company-operated specialty paint stores in the United States, Canada and the Caribbean region at December 31, 2024.
We strive for incident-free workplaces and are continuously assessing and improving the programs that are in place to help keep our employees, customers and communities safe, including by improving our global management systems, standards and performance measures. Total Rewards. We prioritize the fair, consistent and equitable treatment of our employees in relation to working conditions, wages, benefits, policies and procedures.
We strive for incident-free workplaces and are continuously seeking to improve the programs that are in place to help keep our employees, customers and communities safe, including by regularly re-evaluating our global management systems, standards and performance measures. Total Rewards. We prioritize the fair and consistent treatment of our employees in relation to working conditions, wages, benefits, policies and procedures.
Regulatory Compliance For additional information regarding environmental-related matters, see Notes 1, 11 and 20 to the Consolidated Financial Statements in Item 8. 4 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Letter to Shareholders” and elsewhere in this report constitute “forward-looking statements” within the meaning of federal securities laws.
Regulatory Compliance For additional information regarding environmental-related matters, see Notes 1, 10 and 19 to the consolidated financial statements in Item 8. 4 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of federal securities laws.
Additionally, in 2023, we continued to permit remote, alternate and flexible work arrangements where possible to promote increased flexibility and support employee health and well-being, while maintaining our focus on collaboration and engagement.
We continue to permit remote, alternate and flexible work arrangements where possible to promote increased flexibility and support employee health and well-being, while maintaining our focus on collaboration and engagement.
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, which includes compensation and benefits programs and practices. Belonging and Culture .
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.
The Company’s early talent programs, including our management trainee program and similar programs across our global business, play a critical role in attracting, developing and advancing a pipeline of talent with diverse skills, backgrounds and experiences. During 2023, we hired approximately 1,400 college graduates through our management trainee program as part of our long-term growth initiatives.
The Company’s early talent programs, including our management trainee program and similar programs across our global business, play a critical role in attracting, developing and advancing a pipeline of talent with a broad mix of skills, backgrounds and experiences. During 2024, we hired approximately 1,500 professionals through our management trainee program as part of our long-term growth initiatives.
We have over 300 chapters globally that bring together employees from various groups, divisions and functional teams to foster more inclusive workplaces, create greater synergy around business objectives and serve as a hub for professional development and mentorship opportunities that enable our employees to thrive and find long-term success at Sherwin-Williams. Talent Acquisition and Employee Engagement.
We have over 400 employee-led communities that bring together employees from various groups, divisions and functional teams to create greater synergy around business objectives and serve as a hub for innovation, professional development and mentorship opportunities that enable our employees to thrive and find long-term success at Sherwin-Williams. Talent Acquisition and Employee Engagement.
Material gains and losses from the sale of property are infrequent and not a significant operating factor in determining the performance of the Administrative segment. 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.
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.
The building blocks of our culture include: • Communicating impact: Sharing the Company story, goals and priorities at all levels, and educating our workforce on allyship and belonging. • Leading with inclusion: Creating a culture where we are open and leverage the unique contributions of each employee to positively impact our people and business results. 3 Table of Contents • 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 to use tools and resources to take meaningful action to foster a culture of belonging for all employees.
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. • 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. 3 Table of Contents • 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.
Sherwin-Williams ® and other controlled brand products are distributed through the Paint Stores Group, this segment’s 322 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.
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 324 company-operated branches, a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.
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 318 company-operated specialty paint stores in Latin America at December 31, 2023.
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 334 company-operated specialty paint stores in Latin America at December 31, 2024.
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.
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, 2024, we employed 63,890 people worldwide, of which approximately 75% were in the United States.
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. See Item 1A Risk Factors for more information regarding cost and sourcing of raw materials.
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.
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.
Trademarks and Trade Names Customer recognition of trademarks and trade names owned or licensed by the Company collectively contribute significantly to our sales.
Also included in the Administrative segment is 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 and disposal of idle facilities. Sales of this segment represent external leasing revenue.
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 current global headquarters and research and development center and disposal of idle facilities.
We strive to ensure our senior leaders have the resources they need to foster inclusion and belonging and ultimately leverage the diversity of our workforce to deliver customer-focused differentiated products, services and solutions.
We strive to ensure our senior leaders have the resources they need to foster a positive employee experience for all and ultimately leverage our workforce to deliver customer-focused differentiated products, services and solutions. In 2024, we continued supporting employees in life, career and connection.
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 segment.
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.
We strive to attract, retain, develop and progress a workforce that embraces our culture of inclusion through an integrated talent management strategy.
We strive to attract, retain, develop and progress a workforce that embraces our culture through an integrated talent management strategy. This strategy connects major milestones in the employee journey, including talent acquisition, onboarding, performance management, leadership and management development, succession and career progression.
We strive to foster a culture of belonging to drive employee engagement and performance while attracting, retaining, developing and progressing a diverse pipeline of talent that reflects the communities in which we operate. As reflected in our Code of Conduct and reinforced through our actions, training and attitudes, fostering an inclusive culture is a moral and business imperative.
We strive to foster a strong workplace culture that drives belonging, employee engagement, performance and above market growth while attracting, retaining, developing and progressing a pipeline of talent ready to serve the communities in which we operate.
However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment. Administrative Segment The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site.
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.
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.
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.
Also included in the Administrative segment is interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters and other expenses which are not directly associated with the Reportable Segments. The Administrative segment does not include any significant foreign operations.
The Administrative function’s remaining assets consist primarily of cash and cash equivalents, investments and deferred pension assets. Also included in the Administrative function was 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.
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During 2023, the Company divested a non-core domestic aerosol business and the China architectural business, both part of the Consumer Brands Group. See Note 3 to the Consolidated Financial Statements in Item 8 for more information. Sales and marketing of certain controlled brand and private-label products is performed by a direct sales staff.
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Administrative Function The Administrative function includes the administrative expenses and assets of the Company’s new global headquarters and research and development center, both currently under construction.
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This segment licenses certain technology and trade names worldwide. During 2023, the Company acquired German-based SIC Holding GmbH which is part of the Performance Coatings Group. See Note 3 to the Consolidated Financial Statements in Item 8 for more information.
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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.
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At December 31, 2023, we employed 64,088 people worldwide, of which approximately 75% were in the United States and 25% were in other global regions.
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Our employee-led communities have served as champions of the employee value proposition, Create Your Possible, a framework for initiatives with a shared purpose of driving professional development, employee engagement and business results.
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Our senior leaders attend an education and training session every year, and we hold CEO Forums on Inclusion, led by our CEO and other senior leaders, designed to encourage open discussions with employees about opportunities to advance our culture of belonging.
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In 2024, we introduced a new education benefit that offers bachelors’ degrees, associates’ degrees and certificates for in-demand fields, with tuition fully paid by our Company. More recently, in 2025 we added a new backup child and elder care benefit.
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In 2023, we also continued our focus on driving allyship and empathy through conscious inclusion training and elevating the visibility and prominence of our Employee Resource Groups (ERGs). These are voluntary, employee-led communities with a shared purpose of developing connections between and among employees and allies with diverse backgrounds.
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This strategy connects major milestones in the employee journey, including talent acquisition, onboarding, performance management, leadership and management development, succession and career progression, and is supported by our focus on employee engagement, culture, workforce analytics and information technology governance.
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We also collaborate with various colleges and universities to continue to broaden our talent pipeline with qualified women, underrepresented racial or ethnic groups, individuals with disabilities, veterans and other candidates.
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We also have rewarded our employees’ resiliency and hard work and made changes in our business to encourage retention, including through wage increases, reduced store hours and employee benefits enhancements.
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Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered a complete list.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+22 added−5 removed114 unchanged
Biggest changeAny such event involving the misappropriation, loss or other unauthorized disclosure of information, whether impacting us or third parties we rely on or do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.
Biggest changeAny such event involving the misappropriation, loss or other unauthorized disclosure of information or disruption of our systems, whether impacting us or third parties we rely on or do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, including individual claims or consumer class actions, commercial litigation, administrative and civil or criminal investigations or actions, regulatory intervention and sanctions or fines, investigation and remediation costs, loss of intellectual property, release of confidential information, alteration or corruption of data or systems, costs related to remediation or the payment of ransom, and litigation and possible prolonged negative publicity, and disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.
Compliance with continuously evolving U.S. and non-U.S. federal, state and local laws, rules, regulations and related interpretations applicable to our business, may increase our compliance costs or require significant capital investment, and our results of operations could be adversely impacted if these costs are greater than we have projected.
Compliance with continuously evolving U.S. and non-U.S. federal, state and local laws, rules, regulations and related interpretations applicable to our business, may increase our costs or require significant capital investment, and our results of operations could be adversely impacted if these costs are greater than we have projected.
Wars, armed conflicts, political instability, civil disturbances and unrest, terrorist attacks, and actions by governments in these areas (such as the ongoing conflict between Russia and Ukraine and the Israel-Hamas war and any expansion or increase in the severity and intensity of such) may decrease the supply and increase the price of raw materials that we use for our business, which could have a material adverse effect on our sales, earnings, cash flow or results of operations.
Wars, armed conflicts, political instability, civil disturbances and unrest, terrorist attacks and actions by governments in these areas (such as the ongoing conflict between Russia and Ukraine and Israel and Hamas and any expansion or increase in the severity and intensity of such) may decrease the supply and increase the price of raw materials that we use for our business, which could have a material adverse effect on our sales, earnings, cash flow or results of operations.
Compliance with these requirements, including the European Union’s General Data Protection Regulation, China’s Personal Information Protection, Data Security, and Cyber Security Laws, the California Consumer Privacy Act as amended by the California Privacy Rights Act, a growing number of other U.S. comprehensive state privacy laws, and other international and domestic regulations, are costly and will result in additional costs in our efforts to continue to comply.
Compliance with these requirements, including the European Union’s General Data Protection Regulation, China’s Personal Information Protection, Data Security and Cyber Security Laws, the California Consumer Privacy Act as amended by the California Privacy Rights Act, other U.S. state privacy laws and a growing number of other international and domestic regulations, are costly and will result in additional costs in our efforts to continue to comply.
Our business may face increased scrutiny from such stakeholders and if our strategies relating to sustainability considerations do not meet stakeholder expectations and standards (including with respect to establishing science-based targets), which continue to evolve and may differ across jurisdictions in which we operate, our business, financial condition, results of operations and reputation could be adversely impacted.
Our business may face scrutiny from such stakeholders and if our strategies relating to sustainability considerations do not meet stakeholder expectations and standards (including with respect to establishing science-based targets), which continue to evolve and may differ across jurisdictions in which we operate, our business, financial condition, results of operations and reputation could be adversely impacted.
These laws and regulations can provide for significant penalties for non-compliance, which could result in additional costs of compliance, enforcement actions, regulatory investigations and fines, individual or class action litigation, or reputational harm. Ongoing efforts to comply with these laws also may divert management and employee attention from other business and growth initiatives.
These laws and regulations can provide for significant penalties for non-compliance, which could result in additional costs of compliance, enforcement actions, regulatory investigations and fines, individual or class action litigation, commercial litigation or reputational harm. Ongoing efforts to comply with these laws also may divert management and employee attention from other business and growth initiatives.
Historically, our reported net sales, earnings, cash flow and financial condition have been subjected to fluctuations in foreign exchange rates. Our primary exchange rate exposure is with the Euro, the Brazilian Real, the Mexican Peso, the Canadian Dollar, the Chinese Yuan, the British Pound, and the Argentine Peso, each against the U.S. Dollar.
Historically, our reported net sales, earnings, cash flow and financial condition have been subjected to fluctuations in foreign exchange rates. Our primary exchange rate exposure is with the euro, the Mexican peso, the Brazilian real, the Canadian dollar, the British pound, the Chinese yuan, the Chilean peso and the Argentine peso, each against the U.S. dollar.
We have the ability under our existing credit facilities to incur substantial additional indebtedness in the future. Our ability to make payments on our debt, fund other liquidity needs and make planned capital expenditures will depend on our ability to generate cash in the future.
We have the ability under our existing credit facilities and otherwise to incur substantial additional indebtedness in the future. Our ability to make payments on our debt, fund other liquidity needs and make planned capital expenditures will depend on our ability to generate cash in the future.
In the event of catastrophic events, adverse weather conditions or a natural disaster cause significant damage to any one or more of our principal manufacturing or distribution facilities, we may not be able to manufacture the products needed to meet customer demand, which could have an adverse effect on our sales of certain paint, coatings and related products.
In the event of catastrophic events, adverse weather conditions or a natural disaster causing significant damage to any one or more of our principal manufacturing or distribution facilities, we may not be able to manufacture the products needed to meet customer demand, which could have an adverse effect on our sales of certain paint, coatings and related products.
Similarly, our failure or perceived failure to pursue or fulfill our strategies and expectations; comply with federal, state, or international ethical, environmental, or other standards, regulations, or expectations; adhere to public statements; satisfy reporting standards; or meet evolving and varied stakeholder expectations within the timelines we announce, or at all, could have adverse operational, reputational, financial, and legal impacts.
Similarly, our failure or perceived failure to pursue or fulfill our strategies and expectations; comply with federal, state, or international ethical, environmental, or other standards, regulations, or expectations; adhere to public statements; satisfy new and emerging reporting standards; or meet evolving and varied stakeholder expectations within the timelines we announce, or at all, could have adverse operational, reputational, financial and legal impacts.
Our operations are subject to various domestic and foreign health, safety and environmental laws, regulations and requirements, including those related to climate change and chemicals registration and management. These laws, regulations and requirements not only govern our current operations and products, but also may impose potential liability on us for our past operations.
Our operations are subject to various domestic and foreign health, safety and environmental laws, regulations and requirements, including those related to climate change, producer responsibility and chemicals registration and management. These laws, regulations and requirements not only govern our current operations and products, but also may impose potential liability on us for our past operations.
Our information, facilities and systems and those hosted or supported by third parties on our behalf could also be impacted by the intentional or unintentional improper conduct of our employees, vendors or others who have access to and may mishandle or misappropriate sensitive and confidential information.
Our information, facilities and systems and those hosted or supported by third parties on our behalf could also be impacted by the intentional or unintentional improper conduct of our employees, vendors or others who have access to and may mishandle or misappropriate information or access systems or facilities.
Our results of operations, cash flow, liquidity or financial condition could be adversely affected by a variety of domestic and international factors, including general economic conditions, political instability, inflation rates, recessions, sanctions, tariffs, foreign currency exchange rates, foreign currency exchange controls, interest rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed conflicts and wars (including the ongoing conflict between Russia and Ukraine and the Israel-Hamas war), difficulties in staffing and managing foreign operations and other economic and political factors.
Our results of operations, cash flow, liquidity or financial condition have in the past and could in the future be adversely affected by a variety of domestic and international factors, including general economic conditions, political instability, inflation rates, recessions, sanctions, tariffs, foreign currency exchange rates, foreign currency exchange controls, interest rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed conflicts and wars (including the ongoing conflict between Russia and Ukraine and Israel and Hamas), difficulties in staffing and managing foreign operations and other economic and political factors.
We also face attempts, including through cyber attacks and social engineering tactics, to gain unauthorized access to our systems for the purpose of improperly acquiring our trade secrets or confidential business information.
We also face attempts, including through cybersecurity attacks and social engineering tactics, to gain unauthorized access to our systems for the purpose of improperly acquiring our trade secrets or confidential business information.
If any of the banks in these credit and financing facilities are unable to perform on their commitments, such inability could adversely impact our cash flow, liquidity or financial condition, including our ability to obtain funding for working capital needs and other general corporate purposes.
If any of the banks in these 11 Table of Contents credit and financing facilities are unable to perform on their commitments, such inability could adversely impact our cash flow, liquidity or financial condition, including our ability to obtain funding for working capital needs and other general corporate purposes.
During 2023, no individual customer accounted for sales totaling more than ten percent of our sales. However, we have some customers that, individually, purchase a large amount of products from us.
During 2024, no individual customer accounted for sales totaling more than ten percent of our sales. However, we have some customers that, individually, purchase a large amount of products from us.
Cyber attacks and cybersecurity threats are increasingly sophisticated, constantly evolving and originate from many sources globally, and often cannot be recognized or understood until the target has already been attacked.
Cybersecurity incidents, attacks and cybersecurity threats are increasingly sophisticated, constantly evolving and originate from many sources globally and often cannot be recognized or understood until the target has already been attacked.
Some of our competitors operate more 9 Table of Contents extensively in certain regions around the world and have greater financial or operational resources to compete internationally. They may secure better terms from certain vendors, adopt more aggressive pricing, and devote more resources to certain product lines or parts of their business.
Some of our competitors operate more extensively in certain regions around the world and have greater financial or operational resources to compete internationally. They may secure better terms from certain vendors, adopt more aggressive pricing and devote more resources to certain product lines or parts of their business.
From time to time, catastrophic events, adverse weather conditions and natural disasters (including those that may be related to climate change or otherwise) have caused business disruptions and have had an adverse effect on our sales, manufacture and distribution of paint, coatings and related products.
From time to time, catastrophic events, adverse weather conditions and natural disasters (including 7 Table of Contents those that may be related to climate change or otherwise) have caused business disruptions and have had an adverse effect on our sales, manufacture and distribution of paint, coatings and related products.
The Company will continue to vigorously defend against any additional lead pigment and lead-based paint litigation that may be filed, including utilizing all avenues of appeal, if necessary. Litigation is inherently subject to many uncertainties, and we ultimately may not prevail.
The Company will 15 Table of Contents continue to vigorously defend against any additional lead pigment and lead-based paint litigation that may be filed, including utilizing all avenues of appeal, if necessary. Litigation is inherently subject to many uncertainties, and we ultimately may not prevail.
Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes and assumptions; the pace of scientific and technological developments; increased costs; the availability of requisite suppliers, energy sources, or financing; and changes in carbon markets.
Examples of such factors include, but are not limited to, evolving legal, regulatory and other standards, processes and assumptions; the pace of scientific and 10 Table of Contents technological developments; increased costs; the availability of requisite suppliers, energy sources, or financing; and changes in carbon markets.
Our ability to generate cash, to a certain extent, is subject to general business, economic, 7 Table of Contents financial, competitive, legislative, regulatory and other factors beyond our control, including supply chain disruptions, adverse weather conditions or natural disasters, armed conflicts and wars, changes in raw material and energy supplies, public health crises and pricing and related impacts.
Our ability to generate cash, to a certain extent, is subject to general business, economic, financial, competitive, legislative, regulatory and other factors beyond our control, including supply chain disruptions, adverse weather conditions or natural disasters, armed conflicts and wars, changes in raw material and energy supplies, public health crises and pricing and related impacts.
Payments to us by our subsidiaries will also be contingent upon our subsidiaries’ earnings and business considerations. Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors.
Payments to us by our 12 Table of Contents subsidiaries will also be contingent upon our subsidiaries’ earnings and business considerations. Our right to receive any assets of any of our subsidiaries upon their liquidation or reorganization will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors.
In addition, environmental and social 8 Table of Contents regulations, including regulations related to climate change or otherwise, have in the past and may in the future negatively impact us or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy.
In addition, environmental and social regulations, including regulations related to climate change or otherwise, have in the past and may in the future negatively impact us or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy.
Despite our efforts to timely comply with climate change initiatives, implement measures to improve our operations and execute on our related strategies and initiatives, any actual or perceived failure to comply with new or additional requirements or meet stakeholder expectations with respect to the impacts of our operations on the environment and related strategies and initiatives may result in adverse publicity, increased litigation risk, and adversely affect our business and reputation, which could adversely impact our results of operations, cash flow and financial condition.
Despite our efforts to timely comply with such initiatives, implement measures to improve our operations and execute on our related strategies and initiatives, any actual or perceived failure to comply with new or additional requirements or meet stakeholder expectations with respect to the impacts of our operations on the environment or on our customers or employees and related strategies and initiatives may result in adverse publicity, increased litigation risk and adversely affect our business and reputation, which could adversely impact our results of operations, cash flow and financial condition.
Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. ECONOMIC AND STRATEGIC RISKS Adverse changes in general business and economic conditions in the United States and worldwide may adversely affect our results of operations, cash flow, liquidity or financial condition.
Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. ECONOMIC AND STRATEGIC RISKS Adverse changes in general business and economic conditions in the United States and worldwide have in the past adversely affected and may in the future adversely affect our results of operations, cash flow, liquidity or financial condition.
For example, although we do not have significant operations in the region, the Israel-Hamas war has caused disruption, instability and volatility in supply chains and logistics, including shipping disruptions in the Red Sea and surrounding waterways.
For example, although we do not have significant operations in the region, the conflict between Israel and Hamas has caused disruption, instability and volatility in supply chains and logistics, including shipping disruptions in the Red Sea and surrounding waterways.
We discuss these risks and uncertainties in more detail in the “Environmental-Related Liabilities” and “Environmental Matters” sections in Item 7 and in Note 11 to the Consolidated Financial Statements in Item 8. 14 Table of Contents The nature, cost, quantity and outcome of pending and future litigation could have a material adverse effect on our results of operations, cash flow, liquidity and financial condition.
We discuss these risks and uncertainties in more detail in the “Environmental-Related Liabilities” and “Environmental Matters” sections in Item 7 and in Note 10 to the consolidated financial statements in Item 8. The nature, cost, quantity and outcome of pending and future litigation could have a material adverse effect on our results of operations, cash flow, liquidity and financial condition.
Expanding export controls or limits on foreign investment, for example, can impact the global supply of raw materials. Government actions taken in connection with the United States-China trade conflict could impact business, including sales, imports and exports.
Expanding export controls or limits on foreign investment, for example, has in the past and could in the future impact the global supply of raw materials. Government actions taken in connection with the United States-China trade conflict has in the past and could in the future impact business, including sales, imports and exports.
Following two years of historic inflation, some raw material and energy prices decreased in 2023, particularly resins and solvents derived from petrochemical feedstock sources such as propylene and ethylene.
Following two years of historic inflation, certain raw material and energy prices decreased in 2023 and 2024, particularly resins and solvents derived from petrochemical feedstock sources such as propylene and ethylene.
Changes in inflation rates, interest rates, tax rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, governmental policies, laws and regulations, business disruptions due to cybersecurity incidents, terrorist activity, armed conflicts and wars (including the ongoing conflict between Russia and Ukraine and the Israel-Hamas war), public health crises, pandemics, outbreaks of disease, catastrophic events, adverse weather conditions or natural disasters (including those that may be related to climate change or otherwise), supply chain disruptions (including those caused by industry capacity constraints, labor shortages, raw material availability, and transportation and logistics delays and constraints), and other economic factors have in the past and could in the future adversely affect demand for some of our products, our ability to predict and meet any future changes in the demand for our products, the availability, delivery or cost of raw materials, our ability to adequately staff and maintain operations at affected facilities and our results of operations, cash flow, liquidity or financial condition and that of our customers, vendors and suppliers.
Changes in inflation rates, interest rates, tax rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, governmental policies, laws and regulations (including import and export requirements such as new or increased tariffs, sanctions, quotas or trade barriers), business disruptions due to cybersecurity incidents, terrorist activity, armed conflicts and wars (including the ongoing conflict between Russia and Ukraine and Israel and Hamas), public health crises, pandemics, outbreaks of disease, catastrophic events, adverse weather conditions or natural disasters (including those that may be related to climate change or otherwise), supply chain disruptions (including those caused by industry capacity constraints, labor shortages, raw material availability and transportation and logistics delays and constraints) and other economic factors have in the past and could in the future adversely affect demand for some of our products, our ability to predict and meet any future changes in the demand for our products, the availability, delivery or cost of raw materials, our ability to adequately staff and maintain operations at affected facilities and our results of operations, cash flow, liquidity or financial condition and that of our customers, vendors and suppliers.
The outcome of new legislation or regulation in the U.S. and other jurisdictions in which we operate may result in fees or restrictions on certain activities or materials and new or additional requirements, including to fund energy efficiency activities or renewable energy use and to disclose information regarding our greenhouse gas emissions performance, renewable energy usage and efficiency, waste generation and recycling rates, climate-related risks, opportunities and oversight and related strategies and initiatives across our global operations.
The outcome of new and emerging legislation or regulation in the U.S., European Union and other jurisdictions in which we operate may result in fees or restrictions on certain activities or materials (including changes to our products or product packaging) and new or additional requirements, including to fund energy efficiency activities or renewable energy use and to disclose information regarding our greenhouse gas emissions performance, renewable energy usage and efficiency, waste generation and recycling rates, climate-related risks, opportunities and oversight and related strategies and initiatives across our global operations.
If we are unable to comply with all of the laws, rules, regulations, and interpretations applicable to us, we could become the subject of inquiries, reviews, or investigations by regulators, an adverse outcome of which could lead to enforcement actions, the imposition of fines or costs, require us to suspend operations at certain facilities, the assertion of private litigation claims and damages, or damage to our reputation.
If we are unable to comply with all of the laws, rules, regulations and interpretations applicable to us, we could become the subject of inquiries, reviews or investigations by regulators and related adverse outcomes of which could lead to enforcement actions, the imposition of fines or costs, requirements to suspend operations at certain facilities, the assertion of private litigation claims and damages or damage to our reputation.
Factors such as political instability, higher tariffs, supply chain disruptions, adverse weather conditions and natural disasters (including those that may be related to climate change or otherwise), armed conflicts and wars, or public health crises have impacted and may in the future disrupt the availability of raw material and fuel supplies, adversely impact our ability to meet customer demands for some of our products or adequately staff and maintain operations at affected facilities, and increase our costs.
Factors such as political instability, higher tariffs, import/export restrictions, supply chain disruptions, adverse weather conditions and natural disasters (including those that may be related to climate change or otherwise), armed conflicts and wars, or public health crises have impacted and may in the future adversely impact the availability and cost of raw materials and fuel supplies, our ability to meet customer demands for some of our products, adequately staff and maintain operations at affected facilities and our costs generally.
To the extent we are unable to remain competitive with our total rewards programs (which include compensation and benefits programs and practices), talent management strategy, 11 Table of Contents inclusive workplace culture and related inclusion, diversity and equity and employee engagement strategies, initiatives, programs and practices, or if qualified candidates or employees become more difficult to attract or retain under reasonable terms, we may experience higher labor-related costs and may be unable to attract, retain, develop and progress a qualified global workforce, which could adversely affect our business and future success and impair our ability to meet our strategic objectives and the needs of our customers.
To the extent we are unable to remain competitive with our total rewards programs (which include compensation and benefits programs and practices), talent management strategy, workplace culture and strategies, initiatives, programs and practices that drive belonging and a positive employee experience, or if qualified candidates or employees become more difficult to attract or retain under reasonable terms, we may experience higher labor-related costs and may be unable to attract, retain, develop and progress a qualified global workforce, which could adversely affect our business and future success and impair our ability to meet our strategic objectives and the needs of our customers .
These risks are expected to continue to be magnified due to the increased reliance on information technology systems to conduct our business, including those used in furtherance of supporting remote and hybrid in-office work environments and managing our global operations.
These risks are expected to continue to be magnified due to the increased reliance on information technology systems to conduct our business, including those used in furtherance of supporting remote and 8 Table of Contents hybrid in-office work environments and managing our global operating and financial processes.
In the U.S. construction and housing segments, we continue to see project backlogs due to contractors experiencing a shortage of skilled workers, resulting in an adverse effect on the growth rate of demand for our products.
We continue to see project backlogs in these segments due to contractors experiencing a shortage of skilled workers, resulting in an adverse effect on the growth rate of demand for our products.
We discuss the risks and uncertainties related to litigation, including the lead pigment and lead-based paint litigation, in more detail in Note 12 to the Consolidated Financial Statements in Item 8. 15 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
We discuss the risks and uncertainties related to litigation, including the lead pigment and lead-based paint litigation, in more detail in Note 11 to the consolidated financial statements in Item 8. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Furthermore, many governments, regulators, investors, employees, customers, media outlets, and other stakeholders are increasingly focused on sustainability considerations relating to businesses, including climate change and greenhouse gas emissions, human capital, and inclusion and belonging.
Furthermore, many governments, regulators, investors, employees, customers, media outlets and other stakeholders are focused on sustainability considerations relating to businesses, including climate change and greenhouse gas emissions, natural capital circularity, human capital and belonging, culture and employee experience.
With respect to inflation in particular, high levels of inflation impacted consumer behavior in 2023. We expect inflationary pressure to continue to impact consumer and manufacturing customer behavior during 2024, including in the United States housing market as a result of elevated mortgage rates and in global industrial markets as a result of softer demand.
In particular, high levels of ongoing global inflation have impacted consumer and manufacturing behavior in recent years. We expect inflationary pressure to continue to impact consumer and manufacturing customer behavior during 2025, including in the United States housing market as a result of elevated mortgage rates and in global industrial markets as a result of softer demand.
Despite the security measures we have in place, our facilities and systems, and those of third parties we rely on or do business with, may be vulnerable to cyber attacks, security breaches, malware (including but not limited to ransomware and other programs that operate with malicious intent), power outages, system failures, acts of vandalism, human or technical errors or other similar events or disruptions.
Despite the security measures we have in place, our facilities and systems and those of third parties we rely on or do business with, may be vulnerable to cybersecurity incidents, attacks, security breaches, malware (including ransomware and other programs that operate with malicious intent), power outages, system failures, acts of vandalism, human or technical errors, fraud (including through phishing or other social engineering attempts) or other similar events or disruptions.
Our business benefits from free trade agreements, which may include the United States-Mexico-Canada Agreement and EU-UK Trade and Cooperation Agreement, and efforts to withdraw from, or substantially modify such agreements, in addition to trends such as protectionism or nationalism, and the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flow and that of our customers, vendors and suppliers. 10 Table of Contents Cybersecurity incidents and other disruptions to our information technology systems may interfere with our operations, result in the compromise or loss of critical and confidential information and severely harm our business.
Our business benefits from free trade agreements, which may include the United States-Mexico-Canada Agreement and EU-UK Trade and Cooperation Agreement, and efforts to withdraw from, or substantially modify such agreements, in addition to trends such as protectionism or nationalism and the implementation of more restrictive trade policies, such as more detailed inspections, higher tariffs, import or export licensing requirements, exchange controls or new barriers to entry, could have a material adverse effect on our results of operations, financial condition or cash flow and that of our customers, vendors and suppliers.
We are affected by changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance. Economic and political conditions in the countries where we are subject to taxes, including in the U.S., have in the past and may in the future result in significant changes to tax laws or regulations.
Economic and political conditions in the countries where we are subject to taxes, including in the U.S., have in the past and may in the future result in significant changes to tax laws or regulations.
Despite our efforts to prevent these threats and disruptions to our information technology systems, these systems may be affected by damage or interruption resulting from, among other causes, cyber attacks, security breaches, power outages, system failures or malware (including but not limited to ransomware and other programs that operate with malicious intent).
Despite our efforts to prevent these threats and disruptions to our information technology systems, these systems and those of our third-party providers may be affected by damage or interruption resulting from, among other causes, cybersecurity incidents, attacks, security breaches, power outages, system or operational failures or malware (including ransomware and other programs that operate with malicious intent).
We expect health, safety and additional environmental laws, regulations and requirements to be increasingly stringent upon our industry in the future. Our costs to comply with these laws, regulations and requirements may increase as they become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flow or financial condition.
Our costs to comply with these laws, regulations and requirements may increase as they become more stringent in the future, and these increased costs may adversely affect our results of operations, cash flow or financial condition.
Compliance with these climate change initiatives may also result in additional costs to us, including, among other things, increased production costs, additional taxes, additional investments in renewable energy use and other initiatives, reduced emission allowances or additional restrictions on production or operations.
Compliance with these climate change, chemical management and other initiatives has in the past and may in the future result in additional costs to us, including, among other things, increased production costs, additional taxes, additional investments in renewable energy use and other initiatives, reduced emission allowances, additional restrictions on production or operations and increased costs associated with reporting and data assurance.
A decrease in consumer and business discretionary spending has in the past and could in the future reduce the demand for some of our products and has in the past and could in the future adversely affect our sales, earnings, cash flow or financial condition. Interest rates increased substantially in 2022 and 2023 and may continue to increase.
A decrease in consumer and business discretionary spending has in the past and could in the future reduce the demand for some of our products and has in the past and could in the future adversely affect our sales, earnings, cash flow or financial condition.
If we cannot generate the required cash, we may not be able to make the necessary payments required under our indebtedness. At December 31, 2023, we had total debt of approximately $9.851 billion, which is a decrease of $718.8 million since December 31, 2022.
If we cannot generate the required cash, we may not be able to make the necessary payments required under our indebtedness. At December 31, 2024, we had total debt of approximately $9.888 billion, which is an increase of $37.5 million since December 31, 2023.
Any such shift in consumer and manufacturing customer behavior could adversely affect the demand for some of our products and our results of operations, cash flow, liquidity or financial condition.
Such impacts could adversely affect the demand for some of our products and our results of operations, cash flow, liquidity or financial condition.
These investigations, examinations and other proceedings could subject us to significant liability and require us to take significant accruals or pay significant settlements, fines and penalties, which could have a material adverse effect on our results of operations, cash flow or financial condition.
These investigations, examinations and other proceedings could subject us to significant liability and require us to take significant accruals or pay significant settlements, fines and penalties, which could have a material adverse effect on our results of operations, cash flow or financial condition. 13 Table of Contents Increases in tax rates, or changes in tax laws or regulations, could increase our costs and could adversely affect our results of operations, cash flow or financial condition.
Our business, reputation, image and brands could be damaged by negative publicity. Our reputation, image and recognized brands significantly contribute to our business and success, as they are critical to retaining and growing our customer base and our relationships with other stakeholders.
Our business, reputation, image and brands could be damaged by negative publicity. Our reputation, image and recognized brands significantly contribute to our business and success, as they are critical to retaining and growing our customer base and our relationships with other stakeholders. Specifically, our ability to maintain a positive perception of us and our business, including through our guiding values.
We have numerous patents, trade secrets, trademarks, trade names and know-how that are valuable to our business. Despite our efforts to protect such intellectual property and other proprietary information from unauthorized use or disclosure, third parties may attempt to disclose, obtain or use our trademarks or such other intellectual property and information without our authorization.
Despite our efforts to protect such intellectual property and other proprietary information from unauthorized use or disclosure, third parties may attempt to disclose, obtain or use our trademarks or such other intellectual property and information without our authorization.
We discuss risks and uncertainties with regard to taxes in more detail in Note 21 to the Consolidated Financial Statements in Item 8. 13 Table of Contents We are required to comply with, and may become subject to additional, numerous complex and increasingly stringent domestic and foreign health, safety and environmental (including related to climate change) laws, regulations and requirements, the cost of which is likely to increase and may adversely affect our results of operations, cash flow or financial condition.
We are required to comply with, and may become subject to additional, numerous complex and increasingly stringent domestic and foreign health, safety and environmental laws, regulations and requirements, the cost of which is likely to increase and may adversely affect our results of operations, cash flow or financial condition.
Unauthorized use of our intellectual property by third parties, the failure of foreign countries to have laws to protect our intellectual property rights, or an inability to effectively enforce such rights in foreign countries could have an adverse effect on our business. 12 Table of Contents LEGAL AND REGULATORY RISKS We are subject to a wide variety of complex U.S. and non-U.S. laws, rules and regulations, as well as compliance risks related to new and existing laws and regulations, compliance with which could increase our costs and could adversely affect our results of operations, cash flow or financial condition.
LEGAL AND REGULATORY RISKS We are subject to a wide variety of complex U.S. and non-U.S. laws, rules and regulations, as well as compliance risks related to new and existing laws and regulations, compliance with which could increase our costs and could adversely affect our results of operations, cash flow or financial condition.
Risks and uncertainties associated with our expansion into and our operations in Asia, Europe, South America and other foreign markets could adversely affect our results of operations, cash flow, liquidity or financial condition. Net sales of our consolidated foreign subsidiaries totaled approximately 19.2%, 19.4% and 21.2% of our total consolidated Net sales in 2023, 2022 and 2021, respectively.
Risks and uncertainties associated with our expansion into and our operations in South America, Asia, Europe and other foreign markets have in the past and could in the future adversely affect our results of operations, cash flow, liquidity or financial condition.
Inability to protect or enforce our material trademarks and other intellectual property rights could have an adverse effect on our business. Our competitive position and the value of our products and brands could be reduced and our business adversely affected if we are unable to maintain or adequately protect our intellectual property.
Our competitive position and the value of our products and brands could be reduced and our business adversely affected if we are unable to maintain or adequately protect our intellectual property. We have numerous patents, trade secrets, trademarks, trade names copyrights and know-how that are valuable to our business.
Sales outside of the United States make up a significant part of our current business and future strategic plans.
Net sales of our consolidated foreign subsidiaries totaled approximately 19.2%, 19.2% and 19.4% of our total consolidated Net sales in 2024, 2023 and 2022, respectively. Sales outside of the United States make up a significant part of our current business and future strategic plans.
Increased global focus on climate change may result in the imposition of new or additional regulations or requirements applicable to, and increased financial and transition risks for, our business and industry. A number of government authorities and agencies have introduced, or are contemplating, regulatory changes to address climate change, including the regulation and disclosure of greenhouse gas emissions.
Global focus on climate change and chemical use and management may result in the imposition of new or additional regulations or requirements applicable to, and new or additional financial and transition risks for, our business and industry.
The recent and continued combination of high interest rates and high inflation impacted consumer and manufacturing customer behavior during 2023, which we expect to continue into 2024.
Although changes in inflation, the interest rate environment and the mortgage market are difficult to predict, we expect the recent and continued combination of high interest rates and high inflation to continue to impact consumer and manufacturing customer behavior in 2025.
Our results of operations, cash flow or financial condition may be negatively impacted if we do not successfully integrate past and future acquisitions into our existing operations and if the performance of the businesses we acquire do not meet our expectations.
A sustained labor shortage or increased turnover rates within our employee base (or within the employee base of key suppliers or third-party manufacturers), could negatively affect our supply chain or our ability to efficiently operate our manufacturing and distribution facilities and overall business. 9 Table of Contents Our results of operations, cash flow or financial condition may be negatively impacted if we do not successfully integrate past and future acquisitions into our existing operations and if the performance of the businesses we acquire do not meet our expectations.
Rising interest rates and shifts in consumer behavior have adversely affected and may continue to adversely 6 Table of Contents affect the demand for new residential homes, existing home turnover and new non-residential construction. Any worsening in these segments will reduce the demand for some of our products and may adversely impact sales, earnings and cash flow.
Interest rates, in particular, drive shifts in consumer behavior with respect to the housing market, and have in the past adversely affected and may in the future adversely affect demand for new residential homes, existing home turnover and new non-residential construction.
Disruptions to these systems may impair our ability to conduct business and have a material adverse effect on our business, results of operations and financial condition. While we maintain cybersecurity insurance, costs related to a cyberattack may exceed the amount of our insurance coverage or may be excluded under the terms of the policy.
Disruptions to these systems may impair our ability to conduct business and threaten the availability, confidentiality and integrity of our systems and information and have a material adverse effect on our business, results of operations and financial condition. As part of our business, we collect and handle information about our business, customers, employees and suppliers.
Increases in tax rates, or changes in tax laws or regulations, could increase our costs and could adversely affect our results of operations, cash flow or financial condition. We are subject to tax laws and regulations in the U.S. and multiple jurisdictions outside of the U.S.
We are subject to tax laws and regulations in the U.S. and multiple jurisdictions outside of the U.S. We are affected by changes in tax laws and regulations, as well as changes in related interpretations and other tax guidance.
These information technology systems are important to many business-critical processes including, but not limited to, production planning, manufacturing, distribution, finance, company operations, research and development, sales and customer service. Some of these systems are maintained or operated by third-party providers, including cloud-based systems.
Information technology systems are important to many of our business-critical operating and financial processes, including production planning, manufacturing, distribution, communication with our employees, customers and suppliers, sales and customer service, research and development, recording and processing transactions and the production of accurate and timely reports on our financial and operating results.
Removed
We rely on information technology systems to conduct our business, including recording and processing transactions, manufacturing and selling our products, researching and developing new products, maintaining and growing our competitive position, and supporting and communicating with our employees, customers, suppliers and other vendors.
Added
In addition, market uncertainty and volatility in various geographies have been magnified as a result of potential shifts in U.S. and foreign trade, economic and other policies following the 2024 U.S. presidential and congressional elections, and any such actual shifts, including price increases on certain raw materials, or changes in the availability of, or tariffs on certain imported raw materials, could adversely impact our results of operations, cash flow, liquidity or financial condition.
Removed
As part of our business, we collect and handle sensitive and confidential information about our business, customers, employees and suppliers.
Added
These shifts in consumer behavior have in the past adversely impacted and may in the future adversely 6 Table of Contents impact demand for some of our products, and our results of operations, cash flow, liquidity or financial condition.
Removed
We continue to mitigate these risks in a number of ways, including through additional investment, engagement of third-party experts and consultants, improving the security of our facilities and systems (including through upgrades to our security and information technology systems), providing annual training for all employees (with more enhanced or frequent training based on role or responsibility), assessing the continued appropriateness of relevant insurance coverage and strengthening our controls and procedures to identify, detect, protect against, respond to and mitigate these threats.
Added
Although the Federal Reserve cut interest rates in 2024, mortgage rates have remained high and we have not experienced meaningful positive impacts on demand for our products that serve these segments of the economy to date.
Removed
We continue to face elevated wage rates and intense competition for talent due to the ongoing impacts of a tightened labor market and other macroeconomic conditions.
Added
Any worsening in these segments will reduce the demand for some of our products and may adversely impact sales, earnings and cash flow. In the U.S. construction and housing segments, labor markets are impacted by a number of factors, including high employment levels, unemployment programs and subsidies, immigration laws and volatility in general macroeconomic factors.
Removed
Specifically, our ability to maintain a positive perception of us and our business, including through our seven guiding values of integrity, people, service, quality, performance, innovation, and growth, influences our success.
Added
Disruptions to our information technology systems, including due to digitization efforts or cybersecurity incidents, may interfere with our operating and financial processes, result in the compromise or loss of critical and confidential information and severely harm our business. We rely on information technology systems to conduct our business.
Added
In connection with our digitization initiative, we have begun a multi-year phased process to upgrade and harmonize certain components of our information technology systems, including our financial processing systems. We are making significant investments in this complex, enterprise-wide initiative. Planned implementations will lead to changes in our operating and financial processes as well as our internal control over financial reporting.
Added
Disruptions to our information technology systems could occur if we do not effectively design or implement these systems solutions, or otherwise fail to manage resulting changes in processes and controls.
Added
This could adversely affect our operations, negatively impact our financial reporting and the effectiveness of our internal control over financial reporting and have a material adverse effect on our business, results of operations and financial condition. Some of the information technology systems we rely on are maintained or operated by third-party providers, including cloud-based systems.
Added
Although we implement various controls to try to mitigate risks to our systems, information and other property, there can be no guarantee that the actions and controls we have implemented, or which we have caused third-party service providers to implement, will be sufficient to protect and mitigate risks to our systems, information or other property.
Added
A number of factors may adversely affect the labor force available to us or increase labor costs generally, including high employment levels, population migration, unemployment programs and subsidies, immigration laws and volatility in general macroeconomic factors impacting the labor market.
Added
Although we have not experienced any material labor shortage to date, over the past few years, we have experienced an increasingly competitive labor market.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−0 removed14 unchanged
Biggest changeAny such event involving the misappropriation, loss or other unauthorized disclosure of information, whether impacting us or third parties we rely on or do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition. 16 Table of Contents To date, we have not experienced a cybersecurity threat or incident that has had a material adverse affect on our business, results of operations and financial condition.
Biggest changeAny such event involving the misappropriation, loss or other unauthorized disclosure of information, whether impacting us or third parties we rely on or do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.
The Audit Committee regularly reviews our risk exposures relating to cybersecurity with our CISO and CFO, including the review of the state of the Company’s cybersecurity and emerging cybersecurity developments and threats, and the steps management has taken to monitor and mitigate such exposures. Our CISO manages a team of cybersecurity professionals with expertise and experience in information security.
The Audit Committee regularly reviews our risk exposures relating to cybersecurity with our CISO and CFO, including review of the state of the Company’s cybersecurity and emerging cybersecurity developments and threats and the steps management has taken to monitor and mitigate such exposures. Our CISO manages a team of cybersecurity professionals with expertise and experience in information security.
Our Chief Information Security Officer (CISO) leads our global cybersecurity program and is responsible for management of our cybersecurity risks. Our CISO reports to our CFO. Our CISO has served in that position since 2022 and has relevant experience in cybersecurity leadership positions, including prior experience as CISO of a public company.
Our Chief Information Security Officer (CISO) leads our global cybersecurity program and is responsible for management of our cybersecurity risks. Our CISO reports to our CFO. Our CISO has served in that position since 2022 and has relevant 16 Table of Contents experience in cybersecurity leadership positions, including prior experience as CISO of a public company.
We use various controls, technologies, and other processes designed to identify, protect against, detect, respond to and mitigate cybersecurity risks, in alignment with frameworks established by the National Institute of Standards and Technology (NIST) . These include, but are not limited to, internal reporting, monitoring and detection tools, threat intelligence, and general and role-based training.
We use various controls, technologies and other processes designed to identify, protect against, detect, respond to and mitigate cybersecurity risks, in alignment with the National Institute of Standards and Technology (NIST) Cybersecurity Framework 2.0 . These include, but are not limited to, internal reporting, monitoring and detection tools, threat intelligence and general and role-based training.
Added
To date, we have not experienced a cybersecurity threat or incident that has had a material adverse affect on our business, results of operations and financial condition.

Item 2. Properties

Properties — owned and leased real estate

12 edited+0 added−0 removed2 unchanged
Biggest changeManufacturing (1) Distribution (1) Leased Owned Total Leased Owned Total Consumer Brands Group Africa 1 1 1 1 Asia 3 6 9 3 3 6 Canada 3 3 1 1 Europe 2 17 19 3 15 18 Jamaica 1 1 1 1 Latin America 12 12 6 10 16 United States 6 42 48 11 12 23 Total 11 82 93 24 42 66 Performance Coatings Group Asia 2 2 2 2 Europe 1 7 8 4 4 8 United States 1 1 3 3 Total 3 8 11 9 4 13 (1) Certain geographic locations may contain both manufacturing and distribution facilities.
Biggest changeManufacturing (1) Distribution (1) Leased Owned Total Leased Owned Total Consumer Brands Group Africa 1 1 1 1 Asia 3 6 9 3 4 7 Canada 3 3 1 1 Europe 2 16 18 3 13 16 Jamaica 1 1 1 1 Latin America 12 12 5 10 15 United States 6 42 48 14 12 26 Total 11 81 92 26 41 67 Performance Coatings Group Europe 1 8 9 4 4 8 Latin America 1 1 United States 1 1 2 2 Total 2 9 11 6 4 10 (1) Certain locations may contain both manufacturing and distribution facilities.
ITEM 2. PROPERTIES The Company’s global headquarters, which includes the global headquarters for the Paint Stores, Consumer Brands and Performance Coatings Groups and the Administrative segment, is located in Cleveland, Ohio. During 2023, the Company closed on a transaction to sell and subsequently lease back its current headquarters and research and development center.
ITEM 2. PROPERTIES The Company’s global headquarters, which includes the global headquarters for the Paint Stores, Consumer Brands and Performance Coatings Groups and the Administrative function, is located in Cleveland, Ohio. During 2023, the Company closed on a transaction to sell and subsequently lease back its current global headquarters and research and development center.
Construction of the Company’s new global headquarters and research and development center is expected to be completed in 2024. Refer to Item 7 for further information on the construction of our new global headquarters and research and development center. Our principal manufacturing and distribution facilities are located as set forth below.
Construction of the Company’s new global headquarters and research and development center is expected to be completed in 2025. Refer to Item 7 for further information on the construction of our new global headquarters and research and development center. Our principal manufacturing and distribution facilities are located as set forth below.
The Consumer Brands Group operated 318 specialty paint stores in Latin America at December 31, 2023. 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.
The Consumer Brands Group operated 334 specialty paint stores in Latin America at December 31, 2024. 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.
For additional information regarding real property leases, see Note 10 to the Consolidated Financial Statements in Item 8.
For additional information regarding real property leases, see Note 9 to the consolidated financial statements in Item 8.
All real property within the Administrative segment is owned with the exception of the current global headquarters, current research and development center and new global headquarters currently under construction. For additional information regarding real property within the Administrative segment, see information set forth in Item 1 and Item 7 of this report, which are incorporated herein by reference.
All real property within the Administrative function is owned with the exception of the current global headquarters, current research and development center and new global headquarters currently under construction. For additional information regarding real property within the Administrative function, refer to Item 1 and Item 7 of this report, which are incorporated herein by reference.
The operations of the Paint Stores Group included 4,694 company-operated specialty paint stores, of which 205 were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. Lucia and Barbados at December 31, 2023.
The operations of the Paint Stores Group included 4,773 company-operated specialty paint stores, of which 206 were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curaçao, Aruba, St. Lucia and Barbados at December 31, 2024.
At the end of 2023: • the Mid Western Division operated 1,189 paint stores primarily located in the midwestern and upper west coast states; • the Eastern Division operated 911 paint stores along the upper east coast and New England states; • the Canada Division operated 256 paint stores throughout Canada; • the Southeastern Division operated 1,188 paint stores principally covering the lower east and gulf coast states, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St.
At the end of 2024: • the Mid Western Division operated 1,204 paint stores primarily located in the mid west and upper west coast states; • the Eastern Division operated 921 paint stores along the upper east coast and New England states; • the Canada Division operated 259 paint stores throughout Canada; • the Southeastern Division operated 1,210 paint stores principally covering the lower east and gulf coast states, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St.
International locations consisted of branches in Europe (47), Canada (22), Chile (11), Mexico (5), Peru (3), Ecuador (2), Brazil (2), Thailand (2), Indonesia (2), Vietnam (1) and China (1). During 2023, this segment added 5 net new branches, consisting of 8 opened or acquired branches and 3 branches closed.
International locations consisted of branches in Europe (47), Canada (22), Chile (11), Mexico (5), Peru (3), Ecuador (2), Brazil (2), Thailand (2), Indonesia (2), Vietnam (1), Singapore (1) and China (1). During 2024, this segment added 2 new branches.
During 2023, the Consumer Brands Group opened 11 net new stores, consisting of 17 new stores opened and 6 stores closed. 18 Table of Contents The Performance Coatings Group operated 224 branches in the United States and 98 branches internationally at December 31, 2023.
During 2024, the Consumer Brands Group opened 16 net new stores, consisting of 18 new stores opened and 2 stores closed. 18 Table of Contents The Performance Coatings Group operated 225 branches in the United States and 99 branches internationally at December 31, 2024.
These paint stores are located in Mexico (162), Chile (58), Brazil (50), Ecuador (37) and Uruguay (11).
These paint stores are located in Mexico (180), Chile (57), Brazil (49), Ecuador (37) and Uruguay (11).
Maarten, Jamaica, Curacao, Aruba, St. Lucia and Barbados; and • the Southwestern Division operated 1,150 paint stores in the central plains and lower west coast states. During 2023, the Paint Stores Group opened 70 net new stores, consisting of 76 new stores opened and 6 stores closed.
Maarten, Jamaica, Curaçao, Aruba, St. Lucia and Barbados; and • the Southwestern Division operated 1,179 paint stores in the central plains and lower west coast states. During 2024, the Paint Stores Group opened 79 net new stores, consisting of 84 new stores opened and 5 stores closed.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed2 unchanged
Biggest changeFor information regarding certain environmental-related matters and other legal proceedings, see the information included under the captions titled “Other Long-Term Liabilities” and “Litigation” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1, 11, 12 and 20 to the “Notes to Consolidated Financial Statements” in Item 8.
Biggest changeFor information regarding certain environmental matters and other legal proceedings, see the information included under the captions titled “Other Long-Term Liabilities” and “Litigation and Other Contingent Liabilities” of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 1, 10, 11 and 19 to the consolidated financial statements in Item 8.
The information contained in Note 12 to the Consolidated Financial Statements is incorporated herein by reference.
The information contained in Note 11 to the consolidated financial statements is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

13 edited+1 added−1 removed7 unchanged
Biggest changeSofish served as Vice President, Total Rewards from August 2019 to January 2023 and Vice President, Executive Compensation from March 2015 to August 2019. Mr. Sofish has been employed with the Company since September 1996. Mr. Young has served as Senior Vice President – Corporate Strategy and Development since March 2021. Mr.
Biggest changeMr. Lang served as Vice President – Enterprise Finance, Reporting & Controls from May 2022 to January 2025. Mr. Lang served as Vice President – Assistant Corporate Controller from August 2019 to May 2022 and Director – External Financial Reporting from February 2018 until August 2019. Mr. Lang has been employed with the Company since February 2018. Mr.
Petz served as President & General Manager, Retail North America from March 2019 to September 2020 and Senior Vice President, Marketing from June 2017 to March 2019. Ms. Petz has served as a Director since October 2023 and joined the Company in June 2017 in connection with the Valspar acquisition. Mr.
Also within the Consumer Brands Group, Ms. Petz served as President & General Manager, Retail North America from March 2019 to September 2020 and Senior Vice President, Marketing from June 2017 to March 2019. Ms. Petz has served as a Director since October 2023 and joined the Company in June 2017 in connection with the Valspar acquisition. Mr.
Binns served as President, Paint Stores Group from January 2023 to January 2024, President, The Americas Group from March 2022 to January 2023, President, Performance Coatings Group from November 2020 to March 2022 and President & General Manager, Automotive Finishes Division, Performance Coatings Group from July 2018 to November 2020. Mr.
Binns served as President, Paint Stores Group from January 2023 to January 2024, President, The Americas Group from March 2022 to January 2023, President, Performance Coatings Group from November 2020 to March 2022 and President & General Manager, Automotive Finishes Division, 20 Table of Contents Performance Coatings Group from July 2018 to November 2020. Mr.
Young served as Vice President – Corporate Strategy and Development from June 2017 to March 2021. Mr. Young joined the Company in June 2017 in connection with the Valspar acquisition. 20 Table of Contents Mr. Binns has served as President, Global Architectural since January 2024. Mr.
Young has served as Senior Vice President – Corporate Strategy and Development since March 2021. Mr. Young served as Vice President – Corporate Strategy and Development from June 2017 to March 2021. Mr. Young joined the Company in June 2017 in connection with the Valspar acquisition. Mr. Binns has served as President, Global Architectural since January 2024. Mr.
Young 48 Senior Vice President – Corporate Strategy and Development Justin T. Binns 48 President, Global Architectural Karl J. Jorgenrud 47 President, Global Industrial Todd D. Rea 49 President, Consumer Brands Group Colin M. Davie 54 President & General Manager, Global Supply Chain Division, Consumer Brands Group Mr.
Young 49 Senior Vice President – Corporate Strategy and Development Justin T. Binns 49 President, Global Architectural Karl J. Jorgenrud 48 President, Global Industrial Todd D. Rea 50 President, Consumer Brands Group Colin M. Davie 56 President & General Manager, Global Supply Chain Division, Consumer Brands Group Ms.
Cronin has been employed with the Company since September 1989. Ms. Garceau has served as Senior Vice President – Chief Legal Officer and Secretary since February 2024. Ms. Garceau served as Senior Vice President, General Counsel and Secretary from August 2017 to February 2024. Ms. Garceau has been employed with the Company since February 2014. Mr.
Boyce has been employed with the Company since October 2008. Ms. Garceau has served as Senior Vice President – Chief Legal Officer and Secretary since February 2024. Ms. Garceau served as Senior Vice President, General Counsel and Secretary from August 2017 to February 2024. Ms. Garceau has been employed with the Company since February 2014. Mr.
Petz served as Chief Operating Officer from March 2022 to January 2024, President, The Americas Group from March 2021 to March 2022, Senior Vice President, Marketing, The Americas Group from November 2020 to March 2021 and President, Consumer Brands Group from September 2020 to November 2020. Also within the Consumer Brands Group, Ms.
Petz served as President and Chief Operating Officer from March 2022 to January 2024, and President, The Americas Group (now known as the Paint Stores Group) from March 2021 to March 2022, Senior Vice President, Marketing, The Americas Group from November 2020 to March 2021 and President, Consumer Brands Group from September 2020 to November 2020.
Jaye has served as Senior Vice President – Investor Relations and Corporate Communications since June 2019. Mr. Jaye served as Vice President – Investor Relations from October 2017 to June 2019. Mr. Jaye has been employed with the Company since October 2017. Mr. Sofish has served as Senior Vice President – Human Resources since January 2023. Mr.
Jaye has served as Senior Vice President – Investor Relations and Corporate Communications since June 2019. Mr. Jaye served as Vice President – Investor Relations from October 2017 to June 2019. Mr. Jaye has been employed with the Company since October 2017. Mr. Lang has served as Senior Vice President – Enterprise Finance and Chief Accounting Officer since January 2025.
Executive officers are generally elected annually by the Board of Directors and hold office until their successors are elected and qualified or until their earlier death, resignation or removal. Name Age Position John G. Morikis 60 Executive Chairman, Director Heidi G. Petz 49 President and Chief Executive Officer, Director Allen J.
Executive officers are generally elected annually by the Board of Directors and hold office until their successors are elected and qualified or until their earlier death, resignation or removal. Name Age Position Heidi G. Petz 50 Chair, President and Chief Executive Officer Allen J. Mistysyn 56 Senior Vice President – Finance and Chief Financial Officer Marlena K.
Mistysyn has served as Senior Vice President – Finance and Chief Financial Officer since January 2017. Mr. Mistysyn has been employed with the Company since June 1990. Ms. Cronin has served as Senior Vice President – Enterprise Finance since July 2022. Ms. Cronin served as Senior Vice President – Corporate Controller from October 2016 to July 2022. Ms.
Mistysyn has served as Senior Vice President – Finance and Chief Financial Officer since January 2017. Mr. Mistysyn has been employed with the Company since June 1990. Ms. Boyce has served as Senior Vice President – Human Resources since January 2025. Ms.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 19 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following is the name, age and position of each of our executive officers and all prior positions held by each person during the last five years.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 19 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following is the name, age and position of each of our executive officers and a brief description of their business experience.
Mistysyn 55 Senior Vice President – Finance and Chief Financial Officer Jane M. Cronin 56 Senior Vice President – Enterprise Finance Mary L. Garceau 51 Senior Vice President – Chief Legal Officer and Secretary James R. Jaye 57 Senior Vice President – Investor Relations and Corporate Communications Gregory P. Sofish 58 Senior Vice President – Human Resources Bryan J.
Boyce 46 Senior Vice President – Human Resources Mary L. Garceau 52 Senior Vice President – Chief Legal Officer and Secretary James R. Jaye 58 Senior Vice President – Investor Relations and Corporate Communications J. Paul Lang 48 Senior Vice President – Enterprise Finance and Chief Accounting Officer Bryan J.
Morikis has served as a Director since October 2015 and has been employed with the Company since December 1984. Ms. Petz has served as President since March 2022 and Chief Executive Officer since January 2024. Ms.
Petz has served as Chair of the Board of Directors since January 2025, and as President and Chief Executive Officer since January 2024. Prior to her current role, Ms.
Removed
Morikis has served as Chairman since January 2017, serving as Executive Chairman since January 2024. Mr. Morikis served as Chief Executive Officer from January 2016 to January 2024, President from March 2021 to March 2022 and October 2006 to March 2019 and Chief Operating Officer from October 2006 to January 2016. Mr.
Added
Boyce served within the Performance Coatings Group as Senior Vice President, Human Resources from May 2022 to December 2024, within the Consumer Brands Group as Senior Vice President, Human Resources from January 2021 to May 2022 and as Vice President, Human Resources, Industrial Wood Division, Performance Coatings Group from March 2019 to January 2021. Ms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed2 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Number of Shares that May Yet Be Purchased Under the Plan October 1 – October 31 Share repurchase program (1) 350,000 $ 240.35 350,000 41,075,000 Employee transactions (2) 593 $ 249.50 N/A November 1 – November 30 Share repurchase program (1) 950,000 $ 268.86 950,000 40,125,000 Employee transactions (2) 1,829 $ 261.55 N/A December 1 – December 31 Share repurchase program (1) 500,000 $ 292.87 500,000 39,625,000 Employee transactions (2) 1,461 $ 290.10 N/A Total Share repurchase program (1) 1,800,000 $ 269.99 1,800,000 39,625,000 Employee transactions (2) 3,883 $ 270.45 N/A (1) Shares were purchased through the Company’s publicly announced share repurchase program.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Number of Shares that May Yet Be Purchased Under the Plan October 1 – October 31 Share repurchase program (1) 850,000 $ 364.96 850,000 34,425,000 Employee transactions (2) 532 $ 389.91 N/A November 1 – November 30 Share repurchase program (1) 34,425,000 Employee transactions (2) 1,156 $ 384.70 N/A December 1 – December 31 Share repurchase program (1) 34,425,000 Employee transactions (2) 870 $ 358.75 N/A Total Share repurchase program (1) 850,000 $ 364.96 850,000 34,425,000 Employee transactions (2) 2,558 $ 376.96 — N/A (1) Shares were purchased through the Company’s publicly announced share repurchase program.
Peer group of companies comprised of the following: Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF SE, Genuine Parts Company, H.B. Fuller Company, The Home Depot, Inc., Lowe’s Companies, Inc., Masco Corporation, Newell Brands Inc., PPG Industries, Inc., RPM International Inc., and Stanley Black & Decker, Inc.
Peer group of companies is comprised of the following: Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF SE, Genuine Parts Company, H.B. Fuller Company, The Home Depot, Inc., Lowe’s Companies, Inc., Masco Corporation, Newell Brands Inc., PPG Industries, Inc., RPM International Inc. and Stanley Black & Decker, Inc.
Issuer Purchases of Equity Securities The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of 2023.
Issuer Purchases of Equity Securities The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of 2024.
The cumulative five-year total return assumes $100 was invested on December 31, 2018 in Sherwin-Williams common stock, the S&P 500 and the peer group. The cumulative five-year total return, including reinvestment of dividends, represents the cumulative value through December 31, 2023.
The cumulative five-year total return assumes $100 was invested on December 31, 2019 in Sherwin-Williams common stock, the S&P 500 and the peer group. The cumulative five-year total return, including reinvestment of dividends, represents the cumulative value through December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange and traded under the symbol SHW. The number of shareholders of record at January 31, 2024 was 5,064.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange and traded under the symbol SHW. The number of shareholders of record at January 31, 2025 was 4,864.
The Company had remaining authorization at December 31, 2023 to purchase 39,625,000 shares. There is no expiration date specified for the program.
The Company had remaining authorization at December 31, 2024 to purchase 34,425,000 shares. There is no expiration date specified for the program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

132 edited+37 added−29 removed42 unchanged
Biggest changeYear Ended December 31, 2023 Paint Stores Group Consumer Brands Group Performance Coatings Group Administrative Total Net sales $ 12,839.5 $ 3,365.6 $ 6,843.1 $ 3.7 $ 23,051.9 Income before income taxes $ 2,860.8 $ 309.3 $ 991.6 $ (1,051.8) $ 3,109.9 as a % of Net sales 22.3 % 9.2 % 14.5 % 13.5 % Items related to Restructuring Plan: Severance and other 14.2 (0.2) 1.3 15.3 Impairment of assets related to China divestiture 6.9 27.1 34.0 Gain on divestiture of domestic aerosol business (20.1) (20.1) Total — 21.1 (0.2) 8.3 29.2 Impairment related to trademarks 23.9 23.9 Devaluation of the Argentine Peso 30.8 11.0 41.8 Acquisition-related amortization expense (1) 69.3 196.8 266.1 Adjusted segment profit $ 2,860.8 $ 454.4 $ 1,199.2 $ (1,043.5) $ 3,470.9 as a % of Net sales 22.3 % 13.5 % 17.5 % 15.1 % Year Ended December 31, 2022 Paint Stores Group Consumer Brands Group Performance Coatings Group Administrative Total Net sales $ 11,963.3 $ 3,388.4 $ 6,793.5 $ 3.7 $ 22,148.9 Income before income taxes $ 2,348.1 $ 314.2 $ 734.9 $ (824.1) $ 2,573.1 as a % of Net sales 19.6 % 9.3 % 10.8 % 11.6 % Items related to Restructuring Plan: Severance and other 25.6 22.2 47.8 Impairment 15.5 15.5 Total — 41.1 22.2 — 63.3 Acquisition-related amortization expense (1) 76.2 200.1 276.3 Adjusted segment profit $ 2,348.1 $ 431.5 $ 957.2 $ (824.1) $ 2,912.7 as a % of Net sales 19.6 % 12.7 % 14.1 % 13.2 % (1) Acquisition-related amortization expense consists of the amortization of intangible assets related to the Valspar acquisition and is included in Selling, general and administrative expenses. 36 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect amounts reported in the accompanying consolidated financial statements.
Biggest changeYear Ended December 31, 2024 Paint Stores Group Consumer Brands Group Performance Coatings Group Administrative Total Net sales $ 13,188.0 $ 3,108.0 $ 6,797.3 $ 5.2 $ 23,098.5 Income before income taxes $ 2,902.6 $ 589.9 $ 1,027.9 $ (1,068.6) $ 3,451.8 as a percent of Net sales 22.0 % 19.0 % 15.1 % nm 14.9 % Acquisition-related amortization expense (1) 63.8 196.3 260.1 Adjusted segment profit $ 2,902.6 $ 653.7 $ 1,224.2 $ (1,068.6) $ 3,711.9 as a percent of Net sales 22.0 % 21.0 % 18.0 % nm 16.1 % Year Ended December 31, 2023 Paint Stores Group Consumer Brands Group Performance Coatings Group Administrative Total Net sales $ 12,839.5 $ 3,365.6 $ 6,843.1 $ 3.7 $ 23,051.9 Income before income taxes $ 2,860.8 $ 309.3 $ 991.6 $ (1,051.8) $ 3,109.9 as a percent of Net sales 22.3 % 9.2 % 14.5 % nm 13.5 % Items related to Restructuring Plan: Severance and other 14.2 (0.2) 1.3 15.3 Impairment of assets related to China divestiture 6.9 27.1 34.0 Gain on divestiture of domestic aerosol business (20.1) (20.1) Total — 21.1 (0.2) 8.3 29.2 Impairment related to trademarks 23.9 23.9 Devaluation of the Argentine peso 30.8 11.0 41.8 Acquisition-related amortization expense (1) 69.3 196.8 266.1 Adjusted segment profit $ 2,860.8 $ 454.4 $ 1,199.2 $ (1,043.5) $ 3,470.9 as a percent of Net sales 22.3 % 13.5 % 17.5 % nm 15.1 % nm -not meaningful (1) Acquisition-related amortization expense, which is included within Selling, general and administrative expenses, consists of the amortization of intangible assets related to the Valspar acquisition.
Defined Benefit Pension and Other Postretirement Benefit Plans To determine the Company’s ultimate obligation under its defined benefit pension plans and other postretirement benefit plans, management estimates the future cost of benefits and attributes that cost to the time period during which each covered employee works.
Defined Benefit Pension and Other Postretirement Benefit Plans To determine the Company’s ultimate obligation under its defined benefit pension and other postretirement benefit plans, management estimates the future cost of benefits and attributes that cost to the time period during which each covered employee works.
Valuation of Long-Lived Assets In accordance with the Property, Plant and Equipment Topic of the ASC, if events or changes in circumstances indicate that the carrying value of long-lived assets, including Operating lease right-of-use assets, may not be recoverable or the useful life has changed, impairment tests are performed or the useful life is adjusted.
Valuation of Long-Lived Assets In accordance with the Property, Plant and Equipment Topic of the ASC, if events or changes in circumstances indicate that the carrying value of long-lived assets, including operating and finance lease right-of-use assets, may not be recoverable or the useful life has changed, impairment tests are performed or the useful life is adjusted.
Operational management, considering industry and Company-specific historical and projected data, develops growth rates and sales projections for each significant trademark. Terminal value rate determination follows common methodology of capturing the present value of perpetual sales estimates beyond the last projected period assuming a constant WACC and a low long-term growth rate.
Management, considering industry and Company-specific historical and projected data, develops growth rates and sales projections for each significant trademark. Terminal value rate determination follows common methodology of capturing the present value of perpetual sales estimates beyond the last projected period assuming a constant WACC and a low long-term growth rate.
In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result. See Note 8 to the Consolidated Financial Statements in Item 8 for additional information.
In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result. See Note 7 to the consolidated financial statements in Item 8 for additional information.
See Note 8 to the Consolidated Financial Statements in Item 8 for a detailed description and summary of the Company’s outstanding debt, short-term borrowings and other available financing programs.
See Note 7 to the consolidated financial statements in Item 8 for a detailed description and summary of the Company’s outstanding debt, short-term borrowings and other available financing programs.
However, the Company does not expect that foreign currency exchange rate and commodity price fluctuations or hedging contract losses will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. See Notes 1 and 20 to the Consolidated Financial Statements in Item 8 for additional information related to foreign currency translation.
However, the Company does not expect that foreign currency exchange rate and commodity price fluctuations or hedging contract losses will have a material adverse effect on the Company’s financial condition, results of operations or cash flows. See Notes 1 and 19 to the consolidated financial statements in Item 8 for additional information related to foreign currency translation.
The reader should refer to the determination of Net income and Net operating cash in accordance with US GAAP disclosed in the Statements of Consolidated Income and Statements of Condensed Consolidated Cash Flows in Item 8.
The reader should refer to the determination of Net income and Net operating cash in accordance with US GAAP disclosed in the Statements of Consolidated Income and Statements of Consolidated Cash Flows in Item 8.
See Note 14 to the Consolidated Financial Statements in Item 8 for additional information concerning the Company’s defined contribution savings plan. 33 Table of Contents NON-GAAP FINANCIAL MEASURES Management utilizes certain financial measures that are not in accordance with US GAAP to analyze and manage the performance of the business. The required disclosures for these non-GAAP measures are shown below.
See Note 13 to the consolidated financial statements in Item 8 for additional information concerning the Company’s defined contribution savings plan. 33 Table of Contents NON-GAAP FINANCIAL MEASURES Management utilizes certain financial measures that are not in accordance with US GAAP to analyze and manage the performance of the business. The required disclosures for these non-GAAP measures are shown below.
In December 2023, the Company exercised its call provision to make-whole the entire outstanding $119.4 million aggregate principal amount of its 7.375% Debentures due 2027 and the entire outstanding $3.5 million aggregate principal amount of its 7.45% Debentures due 2097. The retirement of the Debentures resulted in a loss of $12.8 million recorded in Other general expense (income) - net.
In December 2023, the Company exercised its call provision to make-whole the entire outstanding $119.4 million aggregate principal amount of its 7.38% Debentures due 2027 and the entire outstanding $3.5 million aggregate principal amount of its 7.45% Debentures due 2097. The retirement of the Debentures resulted in a loss of $12.8 million recorded in Other general (income) expense - net.
Refer to “Real Estate Financing” section herein for further information. (2) Relates to open purchase orders for raw materials at December 31, 2023. (3) Relates primarily to estimated future capital contributions for investments in the U.S. affordable housing and historic renovation real estate partnerships and various other contractual obligations.
Refer to “Real Estate Financing” section herein for further information. (2) Relates to open purchase orders for raw materials at December 31, 2024. (3) Relates primarily to estimated future capital contributions for investments in the U.S. affordable housing and historic renovation real estate partnerships and various other contractual obligations.
Operational management, considering industry and Company-specific historical and projected data, develops growth rates, sales projections and cash flow projections for each reporting unit. Terminal value rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and a low long-term growth rate.
Management, considering industry and Company-specific historical and projected data, develops growth rates, sales projections and cash flow projections for each reporting unit. Terminal value rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and a long-term growth rate.
Additionally, due to the uncertainties involved, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. See Note 12 to the Consolidated Financial Statements in Item 8 for information concerning litigation.
Additionally, due to the uncertainties involved, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. See Note 11 to the consolidated financial statements in Item 8 for information concerning litigation.
Refer to the “Non-GAAP Financial Measures” section for a reconciliation of EBITDA to Net income. At December 31, 2023, the Company was in compliance with the covenant and expects to remain in compliance. The Company’s notes, debentures and revolving credit agreements contain various default and cross-default provisions.
Refer to the “Non-GAAP Financial Measures” section for a reconciliation of EBITDA to Net income. At December 31, 2024, the Company was in compliance with the covenant and expects to remain in compliance. The Company’s notes, debentures and revolving credit agreements contain various default and cross-default provisions.
The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during 2023. Management does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations in 2024.
The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during 2024. Management does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations in 2025.
As of October 1, 2023, the Company performed an analysis and determined that there were no events or changes in circumstances to suggest the carrying value of each long-lived asset group is not recoverable and therefore, no further impairment tests were performed.
As of October 1, 2024, the Company performed an analysis and determined that there were no events or changes in circumstances to suggest the carrying value of each long-lived asset group is not recoverable and therefore, no further impairment tests were performed.
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 segment in the same way it is internally organized for assessing performance and making decisions regarding the allocation of resources.
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 in the same way it is internally organized for assessing performance and making decisions regarding the allocation of resources.
Diluted net income per share in 2023 included acquisition-related amortization expense of $0.78 per share, severance and other expense of $0.04 per share, expenses related to the divestiture of the China architectural business of $0.11 per share, impairment related to trademarks of $0.07 per share and expense related to the devaluation of the Argentine Peso of $0.16 per share.
Diluted net income per share for 2023 included acquisition-related amortization expense of $0.78 per share, severance and other expense of $0.04 per share, expenses related to the divestiture of the China architectural business of $0.11 per share, impairment related to trademarks of $0.07 per share and expense related to the devaluation of the Argentine peso of $0.16 per share.
The reader is cautioned that the free cash flow measure should not be compared to other entities unknowingly as it may not be comparable and it does not consider certain non-discretionary cash flows, such as mandatory debt and interest payments.
The reader is cautioned that the Free cash flow after dividends measure should not be compared to other entities unknowingly as it may not be comparable and it does not consider certain non-discretionary cash flows, such as mandatory debt and interest payments.
In 2023 and 2022, the Company entered into foreign currency forward contracts with maturity dates of less than twelve months primarily to hedge against value changes in foreign currency and cross currency swap contracts to hedge its net investment in European operations.
In 2024 and 2023, the Company entered into foreign currency forward contracts with maturity dates of less than twelve months primarily to hedge against value changes in foreign currency and cross currency swap contracts to hedge its net investment in European operations.
See Note 6 to the Consolidated Financial Statements in Item 8 for a discussion of the reductions in carrying value or useful life of long-lived assets in accordance with the Property, Plant and Equipment Topic of the ASC.
See Note 5 to the consolidated financial statements in Item 8 for a discussion of the reductions in carrying value or useful life of long-lived assets in accordance with the Property, Plant and Equipment Topic of the ASC.
The rate of compensation increases used to determine the projected benefit obligation at December 31, 2023 was 3.0% for the domestic pension plan and 3.3% for foreign pension plans, which was comparable to the rates used in the prior year.
The rate of compensation increases used to determine the projected benefit obligation at December 31, 2024 was 3.0% for the domestic pension plan and 3.3% for foreign pension plans, which was comparable to the rates used in the prior year.
See Note 11 to the Consolidated Financial Statements in Item 8 for further information on environmental-related liabilities. Contractual and Other Obligations and Commercial Commitments The Company has certain obligations and commitments to make future payments under contractual and other obligations and commercial commitments.
See Note 10 to the consolidated financial statements in Item 8 for further information on environmental-related liabilities. Contractual and Other Obligations and Commercial Commitments The Company has certain obligations and commitments to make future payments under contractual and other obligations and commercial commitments.
Short-term borrowings are primarily comprised of amounts outstanding under the Company’s domestic commercial paper program and various foreign credit facilities. The Company’s Long-term debt primarily consists of senior notes. The Company targets Net 29 Table of Contents debt, which is total debt outstanding, net of Cash and cash equivalents, to be 2.0 to 2.5 times EBITDA.
Short-term borrowings are primarily comprised of amounts outstanding under the Company’s domestic commercial paper program and various foreign credit facilities. The Company’s Long-term debt primarily consists of senior notes. The Company targets Net debt, which is total debt outstanding, net of Cash and cash equivalents, to be 2.0 to 2.5 times EBITDA.
See Note 7 to the Consolidated Financial Statements in Item 8 for a discussion of goodwill and intangible assets and the impairment tests performed in accordance with the Goodwill and Other Intangibles Topic of the ASC.
See Note 6 to the consolidated financial statements in Item 8 for a discussion of goodwill and intangible assets and the impairment tests performed in accordance with the Goodwill and Other Intangibles Topic of the ASC.
See Note 11 to the Consolidated Financial Statements in Item 8 for information concerning the accrual for extended environmental-related activities and a discussion concerning unaccrued future loss contingencies.
See Note 10 to the consolidated financial statements in Item 8 for information concerning the accrual for extended environmental-related activities and a discussion concerning unaccrued future loss contingencies.
RESULTS OF OPERATIONS The following discussion and analysis addresses comparisons of material changes in the consolidated financial statements for the years ended December 31, 2023 and 2022.
RESULTS OF OPERATIONS The following discussion and analysis addresses comparisons of material changes in the consolidated financial statements for the years ended December 31, 2024 and 2023.
If management estimates that the reasonable market value is below cost or determines that future demand was lower than current inventory levels, based on historical experience, current and projected market demand, current and projected volume trends and other relevant current and projected factors associated with the current economic conditions, a reduction in inventory cost to estimated net realizable value is provided for in the reserve for obsolescence.
If management estimates that the reasonable market value is below cost or determines that future demand was lower than current inventory levels, based on historical experience, current and projected market demand, current and projected volume trends and other relevant current and projected factors associated with the current economic conditions, a reduction in inventory cost to current market price is provided for in the reserve for obsolescence.
See Note 5 to the Consolidated Financial Statements in Item 8 for more information regarding the impact of the LIFO inventory valuation and the reserve for obsolescence.
See Note 4 to the consolidated financial statements in Item 8 for more information regarding the impact of the LIFO inventory valuation and the reserve for obsolescence.
Management considers free cash flow to be a useful tool in its determination of appropriate uses of the Company’s Net operating cash.
Management considers Free cash flow after dividends to be a useful tool in its determination of appropriate uses of the Company’s Net operating cash.
See Note 21 to the Consolidated Financial Statements in Item 8 for information concerning income taxes. 39 Table of Contents
See Note 20 to the consolidated financial statements in Item 8 for information concerning income taxes. 39 Table of Contents
In establishing the expected long-term rate of return on plan assets, management considered the historical rates of return, the nature of investments and an expectation for future investment strategies. The expected long-term rate of return on assets for the domestic defined benefit pension plan was 6.3% at December 31, 2023 and 2022.
In establishing the expected long-term rate of return on plan assets, management considered the historical rates of return, the nature of investments and an expectation for future investment strategies. The expected long-term rate of return on assets for the domestic defined benefit pension plan was 6.5% and 6.3% at December 31, 2024 and 2023, respectively.
See Note 23 to the Consolidated Financial Statements in Item 8 for additional information on the Company’s Reportable Segments.
See Note 22 to the consolidated financial statements in Item 8 for additional information on the Company’s Reportable Segments.
The covenant states the Company’s consolidated leverage ratio is not to exceed 3.75 to 1.00; however, the Company may elect to temporarily increase the leverage ratio to 4.25 to 1.00 for a period of four consecutive fiscal quarters immediately following the consummation of a qualifying acquisition, as defined in the credit agreement dated August 30, 2022.
The covenant states the Company’s consolidated leverage ratio is not to exceed 3.75 to 1.00; however, the Company may elect to temporarily increase the leverage ratio to 4.25 to 1.00 for a period of four consecutive fiscal quarters immediately following the consummation of a qualifying acquisition, as defined in the credit agreement dated July 31, 2024.
See Note 20 to the Consolidated Financial Statements in Item 8 for additional information. The Company’s available capacity under its committed credit agreements is reduced for amounts outstanding under its domestic commercial paper program and letters of credit. At December 31, 2023, the Company had unused capacity under its various credit agreements of $3.332 billion.
See Note 19 to the consolidated financial statements in Item 8 for additional information. The Company’s available capacity under its committed credit agreements is reduced for amounts outstanding under its domestic commercial paper program and letters of credit. At December 31, 2024, the Company had unused capacity under its various credit agreements of $3.274 billion.
During 2023, the Company closed on a transaction to sell and subsequently lease back its current headquarters and research and development center. In connection with the sale, proceeds of $47.2 million were received and an immaterial gain was recognized.
During 2023, the Company closed on a transaction to sell and subsequently lease back its current global headquarters and R&D center. In connection with the sale, proceeds of $47.2 million were received and an immaterial gain was recognized.
The Company will also allocate payments between interest and repayment of the financing liability over the life of the agreement. Refer to Note 11 to the Consolidated Financial Statements within Item 8 for further information.
The Company will also allocate payments between interest and repayment of the financing liability over the life of the agreement. See Note 10 to the consolidated financial statements within Item 8 for further information.
The total number of stores in operation at December 31, 2023 was 4,694 in the United States, Canada and the Caribbean region. The Paint Stores Group’s objective is to expand its store base by an approximate average of 2% each year, primarily through organic growth. Sales of products other than paint increased approximately 5.0% over last year.
The total number of stores in operation at December 31, 2024 was 4,773 in the United States, Canada and the Caribbean region. The Paint Stores Group’s objective is to expand its store base by an approximate average of 2% each year, primarily through organic growth. Sales of products other than paint increased 0.6% over last year.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions, except as noted and per share data) Company Background The Sherwin-Williams Company, founded in 1866, and its consolidated wholly owned 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions, except as noted and per share data) Company Background The Sherwin-Williams Company, founded in 1866, 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 and throughout Europe, Asia and Australia.
The expected long-term rate of return on assets for the foreign defined benefit pension plans decreased to 4.8% at December 31, 2023 from 5.5% at December 31, 2022. In developing the assumed health care cost trend rates, management considered industry data, historical Company experience and expectations for future health care costs.
The expected long-term rate of return on assets for the foreign defined benefit pension plans was 4.8% at December 31, 2024 and 2023. In developing the assumed health care cost trend rates, management considered industry data, historical Company experience and expectations for future health care costs.
Year Ended December 31, 2023 Pre-Tax Tax Effect (1) After-Tax Diluted net income per share $ 9.25 Items related to Restructuring Plan: Severance and other $ .06 $ .02 .04 Impairment of assets related to China divestiture .13 .08 .05 Gain on divestiture of domestic aerosol business (.08) (.02) (.06) Discrete income tax expense related to China divestiture (1) — (.06) .06 Total .11 .02 .09 Impairment related to trademarks .09 .02 .07 Devaluation of the Argentine Peso .16 — .16 Acquisition-related amortization expense (2) 1.03 .25 .78 Adjusted diluted net income per share $ 10.35 Year Ended December 31, 2022 Pre-Tax Tax Effect (1) After-Tax Diluted net income per share $ 7.72 Items related to Restructuring Plan: Severance and other $ .18 $ .03 .15 Impairment .06 .01 .05 Total .24 .04 .20 Acquisition-related amortization expense (2) 1.06 .25 .81 Adjusted diluted net income per share $ 8.73 (1) The tax effect is calculated based on the statutory rate and the nature of the item, unless otherwise noted.
Year Ended December 31, 2024 Pre-Tax Tax Effect (1) After-Tax Diluted net income per share $ 10.55 Acquisition-related amortization expense (2) $ 1.02 $ .24 .78 Adjusted diluted net income per share $ 11.33 Year Ended December 31, 2023 Pre-Tax Tax Effect (1) After-Tax Diluted net income per share $ 9.25 Items related to Restructuring Plan: Severance and other $ .06 $ .02 .04 Impairment of assets related to China divestiture .13 .08 .05 Gain on divestiture of domestic aerosol business (.08) (.02) (.06) Discrete income tax expense related to China divestiture (1) — (.06) .06 Total .11 .02 .09 Impairment related to trademarks .09 .02 .07 Devaluation of the Argentine peso .16 — .16 Acquisition-related amortization expense (2) 1.03 .25 .78 Adjusted diluted net income per share $ 10.35 (1) The tax effect is calculated based on the statutory rate and the nature of the item, unless otherwise noted.
For comparisons of the years ended December 31, 2022 and 2021, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 22, 2023.
For comparisons of the years ended December 31, 2023 and 2022, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 20, 2024.
See Notes 1, 17 and 20 to the Consolidated Financial Statements in Item 8 for additional information related to the Company’s use of derivative instruments. 32 Table of Contents The Company believes it may be exposed to continuing market risk from foreign currency exchange rate and commodity price fluctuations.
See Notes 1, 16 and 19 to the consolidated financial statements in Item 8 for additional information related to the Company’s use of derivative instruments. The Company believes it may be exposed to continuing market risk from foreign currency exchange rate and commodity price fluctuations.
At December 31, 2023, Net debt was $9.574 billion and was 2.3 times the Company’s EBITDA in 2023. See the Non-GAAP Financial Measures section for the definition and calculation of EBITDA.
At December 31, 2024, Net debt was $9.678 billion and was 2.2 times the Company’s EBITDA in 2024. See the Non-GAAP Financial Measures section for the definition and calculation of EBITDA.
The assumed health care cost trend rates for medical and prescription costs used to determine the projected benefit obligation for other postretirement benefit obligations at December 31, 2022 were 5.5% and 8.3%, respectively. The respective year-end assumptions described above for the Company’s defined benefit plans are also used to determine expense for the next year.
The assumed health care cost trend rates for medical and prescription costs used to determine the projected benefit obligation for other postretirement benefit obligations at December 31, 2023 were 6.0% and 9.0%, respectively. The respective year-end assumptions described above for the Company’s defined benefit plans are also used to determine expense for the next year.
As a percent of Net sales, SG&A increased 200 basis points compared to the same period in 2022 for these same reasons.
As a percent of Net sales, SG&A increased 150 basis points compared to the same period in 2023 for these same reasons.
An optional qualitative assessment allows companies to forego the annual quantitative test if it is not more likely than not that impairment has occurred based on monitoring key Company financial performance metrics and macroeconomic conditions. The qualitative assessment is performed when deemed appropriate.
An optional qualitative assessment allows companies to forego the annual quantitative test if it is not more likely than not that impairment has occurred based on monitoring key Company financial performance metrics and macroeconomic conditions. The qualitative assessment is performed when deemed appropriate. Management tests goodwill for impairment at the reporting unit level.
The following table summarizes EBITDA and Adjusted EBITDA as calculated by management for the years indicated below: Year Ended December 31, 2023 2022 Net income $ 2,388.8 $ 2,020.1 Interest expense 417.5 390.8 Income taxes 721.1 553.0 Depreciation 292.3 264.0 Amortization 330.2 317.1 EBITDA 4,149.9 3,545.0 Restructuring expense 9.6 47.3 Impairment related to Restructuring Plan 34.0 15.5 Gain on divestiture of domestic aerosol business (20.1) — Impairment related to trademarks 23.9 — Devaluation of the Argentine Peso 41.8 — Adjusted EBITDA $ 4,239.1 $ 3,607.8 Free Cash Flow Free cash flow is a non-GAAP financial measure defined as Net operating cash, as shown in the Statements of Consolidated Cash Flows, less the amount reinvested in the business for capital expenditures and the return on investment to its shareholders by the payments of cash dividends.
The following table summarizes EBITDA and Adjusted EBITDA as calculated by management for the years indicated below: Year Ended December 31, 2024 2023 Net income $ 2,681.4 $ 2,388.8 Interest expense 415.7 417.5 Income taxes 770.4 721.1 Depreciation 297.4 292.3 Amortization 326.6 330.2 EBITDA $ 4,491.5 $ 4,149.9 Restructuring expense — 9.6 Impairment related to Restructuring Plan — 34.0 Gain on divestiture of domestic aerosol business — (20.1) Impairment related to trademarks — 23.9 Devaluation of the Argentine peso — 41.8 Adjusted EBITDA $ 4,491.5 $ 4,239.1 Free Cash Flow After Dividends Free cash flow after dividends is a non-GAAP financial measure defined as Net operating cash, as shown in the Statements of Consolidated Cash Flows, less the amount reinvested in the business for capital expenditures and the return on investment to its shareholders by the payments of cash dividends.
See Note 3 to the Consolidated Financial Statements in Item 8 for additional information related to acquisitions and divestitures. See Note 7 to the Consolidated Financial Statements in Item 8 for a description of goodwill, identifiable intangible assets and asset impairments and summaries of the remaining carrying values of goodwill and intangible assets.
See Note 3 to the consolidated financial statements in Item 8 for additional information related to acquisitions. See Note 6 to the consolidated financial statements in Item 8 for a description of goodwill, intangible assets, historical impairments and summaries of the remaining carrying values of goodwill and intangible assets.
The credit for 2024 is primarily due to amortization of the impact of a plan amendment executed in 2022. See Note 9 to the Consolidated Financial Statements in Item 8 for additional information on the Company’s obligations and funded status of its defined benefit pension plans and other postretirement benefits.
This credit is primarily due to the remaining amortization of the impact of a plan amendment executed in 2022. This impact will be fully amortized in 2025. See Note 8 to the consolidated financial statements in Item 8 for additional information on the Company’s obligations and funded status of its defined benefit pension plans and other postretirement benefits.
Actual results could differ from these assumptions. Management believes the assumptions used are reflective of what a market participant would have used in calculating fair value or useful life considering the current economic conditions.
Management believes the assumptions used are reflective of what a market participant would have used in calculating fair value or useful life considering the current economic conditions.
The following table summarizes free cash flow as calculated by management for the years indicated below: Year Ended December 31, 2023 2022 Net operating cash $ 3,521.9 $ 1,919.9 Capital expenditures (888.4) (644.5) Cash dividends (623.7) (618.5) Free cash flow $ 2,009.8 $ 656.9 34 Table of Contents Adjusted Diluted Net Income Per Share Management of the Company believes that investors’ understanding of the Company’s operating performance is enhanced by the disclosure of diluted net income per share excluding Valspar acquisition-related amortization expense and certain other adjustments.
The following table summarizes Free cash flow after dividends as calculated by management for the years indicated below: Year Ended December 31, 2024 2023 Net operating cash $ 3,153.2 $ 3,521.9 Capital expenditures (1,070.0) (888.4) Cash dividends (723.4) (623.7) Free cash flow after dividends $ 1,359.8 $ 2,009.8 34 Table of Contents Adjusted Diluted Net Income Per Share Management believes investors’ understanding of the Company’s operating performance is enhanced by the disclosure of diluted net income per share excluding Valspar acquisition-related amortization expense and certain other adjustments.
The Company believes that cash generated from operating activities and borrowings available under long-term and short-term debt, including its committed credit agreements and commercial paper program, will be sufficient for it to meet its contractual and other obligations and commercial commitments. The following tables summarize such obligations and commitments as of December 31, 2023.
The Company believes that cash generated from operating activities and borrowings available under long-term and short-term debt, including its committed credit agreements and commercial paper program, will be sufficient for it to meet its contractual and other obligations and commercial commitments.
The assumed discount rate used to determine the projected benefit obligation for foreign defined benefit pension plans decreased to 4.8% at December 31, 2023 from 5.1% at December 31, 2022. The assumed discount rate used to determine the projected benefit obligation for other postretirement benefit obligations decreased to 5.0% at December 31, 2023 from 5.2% at December 31, 2022.
The assumed discount rate used to determine the projected benefit obligation for foreign defined benefit pension plans increased to 5.5% at December 31, 2024 from 4.8% at December 31, 2023. The assumed discount rate used to determine the projected benefit obligation for other postretirement benefit obligations increased to 5.6% at December 31, 2024 from 5.0% at December 31, 2023.
The Consumer Brands Group’s gross profit as a percent of net sales increased for these same reasons.
The Paint Stores Group’s Gross profit as a percent of Net sales increased for these same reasons.
Changes in the Company’s accrual for product warranty claims during 2023 and 2022, including customer satisfaction settlements during the year, were as follows: 2023 2022 Balance at January 1 $ 36.2 $ 35.2 Charges to expense 37.0 30.1 Settlements (32.8) (29.1) Balance at December 31 $ 40.4 $ 36.2 Shareholders’ Equity Shareholders’ equity increased $613.7 million to $3.716 billion at December 31, 2023 from $3.102 billion last year.
Changes in the Company’s accrual for product warranty claims during 2024 and 2023, including customer satisfaction settlements during the year, were as follows: 2024 2023 Balance at January 1 $ 40.4 $ 36.2 Charges to expense 34.2 37.0 Settlements (28.2) (32.8) Balance at December 31 $ 46.4 $ 40.4 Shareholders’ Equity Shareholders’ equity increased $335.4 million to $4.051 billion at December 31, 2024 from $3.716 billion last year.
Litigation See Note 12 to the Consolidated Financial Statements in Item 8 for information concerning litigation. Market Risk The Company is exposed to market risk associated with interest rate, foreign currency and commodity fluctuations. The Company occasionally utilizes derivative instruments as part of its overall financial risk management policy, but does not use derivative instruments for speculative or trading purposes.
Market Risk The Company is exposed to market risk associated with interest rate, foreign currency and commodity fluctuations. The Company occasionally utilizes derivative instruments as part of its overall financial risk management policy, but does not use derivative instruments for speculative or trading purposes.
Defined Benefit Pension and Other Postretirement Benefit Plans In accordance with the accounting prescribed by the Retirement Benefits Topic of the ASC, the Company’s total liability for unfunded or underfunded defined benefit pension plans increased $10.5 million to $69.0 million primarily due to changes in actuarial assumptions.
Defined Benefit Pension and Other Postretirement Benefit Plans In accordance with the accounting prescribed by the Retirement Benefits Topic of the ASC, the Company’s total liability for unfunded or underfunded defined benefit pension plans decreased $1.2 million to $67.8 million primarily due to changes in actuarial assumptions.
Net sales of all operations other than consolidated foreign subsidiaries increased 4.3% to $18.624 billion for 2023 versus $17.855 billion for 2022. Net sales in the Paint Stores Group increased 7.3% primarily due to mid-single digit sales volume growth and selling price increases, which impacted net sales by a low-single digit percentage.
Net sales of all operations other than consolidated foreign subsidiaries increased to $18.673 billion for 2024 compared to $18.624 billion for 2023. Net sales in the Paint Stores Group increased 2.7% primarily due to sales volume growth and selling price increases, which both impacted Net sales by a low-single digit percentage.
The decrease in the discount rates was primarily due to lower interest rates. In deciding on the rates of compensation increases, management considered historical Company increases as well as expectations for future increases.
The increase in the discount rates was primarily due to higher interest rates. In determining the rates of compensation increases, management considered historical Company increases as well as expectations for future increases.
See Note 3 to the Consolidated Financial Statements in Item 8 for additional information on acquisitions and divestitures. Net financing cash usage increased $2.142 billion to a usage of $2.425 billion in 2023 from a usage of $282.4 million in 2022.
See Note 3 to the consolidated financial statements in Item 8 for additional information on acquisitions and divestitures. Net financing cash usage decreased $407.5 million to a usage of $2.017 billion in 2024 from a usage of $2.425 billion in 2023.
The Company’s liability for other postretirement benefits decreased $6.6 million to $147.2 million at December 31, 2023 due primarily to changes in the actuarial assumptions. The assumed discount rate used to determine the projected benefit obligation for the domestic defined benefit pension plan decreased to 5.1% at December 31, 2023 from 5.3% at December 31, 2022.
The Company’s liability for other postretirement benefits decreased $12.1 million to $135.1 million at December 31, 2024 primarily due to benefits paid and changes in actuarial assumptions. The assumed discount rate used to determine the projected benefit obligation for the domestic defined benefit pension plan increased to 5.8% at December 31, 2024 from 5.1% at December 31, 2023.
The assumed health care cost trend rates used to determine the projected benefit obligation for other postretirement benefit obligations at December 31, 2023 were 6.0% and 9.0% for medical and prescription drug cost increases, respectively, both decreasing gradually to 4.5% in 2032.
The assumed health care cost trend rates used to determine the projected benefit 30 Table of Contents obligation for other postretirement benefit obligations at December 31, 2024 were 6.5% and 11.8% for medical and prescription drug cost increases, respectively, both decreasing gradually to 4.5% in 2034.
Net investing cash usage decreased $568.3 million to a usage of $1.039 billion in 2023 from a usage of $1.608 billion in 2022 due primarily to lower cash used for acquisitions, proceeds from the divestiture of businesses and an increase in proceeds from the sale of assets, partially offset by increased cash used for capital expenditures.
Net investing cash usage increased $157.0 million to a usage of $1.196 billion in 2024 from a usage of $1.039 billion in 2023 primarily due to an increase in cash used for capital expenditures, proceeds from the divestiture of a business in 2023 and reduced proceeds from the sale of assets, partially offset by lower cash used for acquisitions.
Amount of Commitment Expiration Per Period Commercial Commitments Total Less Than 1 Year 1–3 Years 3–5 Years More Than 5 Years Standby letters of credit $ 146.2 $ 146.2 Surety bonds 230.4 230.4 Total commercial commitments $ 376.6 $ 376.6 $ — $ — $ — 31 Table of Contents Warranties The Company offers product warranties for certain products.
Amount of Commitment Expiration Per Period Commercial Commitments Total Less Than 1 Year 1–3 Years 3–5 Years More Than 5 Years Standby letters of credit $ 125.5 $ 125.5 Surety bonds 216.1 216.1 Total commercial commitments $ 341.6 $ 341.6 $ — $ — $ — Warranties The Company offers product warranties for certain products.
Net sales from stores in the Paint Stores Group open for more than twelve calendar months increased 6.8% in the year over the prior year comparable period. During 2023, the Paint Stores Group opened 76 new stores and closed 6 locations for a net increase of 70 stores.
Net sales from stores in the Paint Stores Group open for more than twelve calendar months increased 1.7% in the year over the prior year comparable period. During 2024, the Paint Stores Group opened 84 new stores and closed 5 locations for a net increase of 79 stores.
In this method, management estimates the royalty savings arising from the ownership of the intangible asset. The key assumptions used in estimating the royalty savings for impairment testing include a discount rate, a royalty rate, growth rates, sales projections, a terminal value rate and, to a lesser extent, a tax rate.
The key assumptions used in estimating the royalty savings for impairment testing include a discount rate, a royalty rate, growth rates, sales projections, a terminal value rate and to a lesser extent, a tax rate.
The Company’s matching contributions to the defined contribution savings plan charged to operations were $153.9 million in 2023 compared to $140.0 million in 2022. At December 31, 2023, there were 18,680,108 shares of the Company’s common stock being held by the defined contribution savings plan, representing 7.3% of the total number of voting shares outstanding.
The Company’s matching contributions to the defined contribution savings plan charged to operations were $165.1 million in 2024 compared to $153.9 million in 2023. At December 31, 2024, there were 16,771,640 shares of the Company’s common stock being held by the defined contribution savings plan, representing 6.7% of the total number of voting shares outstanding.
Net sales in the Administrative segment, which primarily consists of external leasing revenue, remained flat in 2023. 25 Table of Contents Income Before Income Taxes The following table presents the components of income before income taxes as a percentage of net sales: Year Ended December 31, 2023 2022 % of Net Sales % of Net Sales Net sales $ 23,051.9 100.0 % $ 22,148.9 100.0 % Cost of goods sold 12,293.8 53.3 % 12,823.8 57.9 % Gross profit 10,758.1 46.7 % 9,325.1 42.1 % Selling, general, and administrative expenses (SG&A) 7,065.4 30.6 % 6,331.6 28.6 % Other general expense (income) - net 67.1 0.3 % (24.9) (0.1) % Impairment 57.9 0.3 % 15.5 0.1% Interest expense 417.5 1.8 % 390.8 1.8 % Interest income (25.2) (0.1) % (8.0) — % Other expense (income) - net 65.5 0.3 % 47.0 0.1 % Income before income taxes $ 3,109.9 13.5 % $ 2,573.1 11.6 % Consolidated Cost of goods sold decreased $530.0 million, or 4.1%, in 2023 compared to the same period in 2022 primarily due to lower sales volumes in the Consumer Brands and Performance Coatings Groups and moderating raw material costs, partially offset by higher sales volume in the Paint Stores Group and the impacts of increases in wages and other employee-related expenses.
Net sales in the Administrative function, which primarily consists of external leasing revenue, increased by an insignificant amount in 2024. 25 Table of Contents Income Before Income Taxes The following table presents the components of Income before income taxes as a percent of Net sales: Year Ended December 31, 2024 2023 % of Net Sales % of Net Sales Net sales $ 23,098.5 100.0 % $ 23,051.9 100.0 % Cost of goods sold 11,903.4 51.5 % 12,293.8 53.3 % Gross profit 11,195.1 48.5 % 10,758.1 46.7 % Selling, general and administrative expenses (SG&A) 7,422.1 32.1 % 7,065.4 30.6 % Other general (income) expense - net (38.8) (0.1) % 67.1 0.3 % Impairment — — % 57.9 0.3 % Interest expense 415.7 1.8 % 417.5 1.8 % Interest income (11.0) — % (25.2) (0.1) % Other (income) expense - net (44.7) (0.2) % 65.5 0.3 % Income before income taxes $ 3,451.8 14.9 % $ 3,109.9 13.5 % Consolidated Cost of goods sold decreased $390.4 million, or 3.2%, in 2024 compared to the same period in 2023 primarily due to lower sales volume in the Consumer Brands Group and moderating raw material costs, partially offset by higher sales volumes in the Paint Stores and Performance Coatings Groups.
During 2023, $23.8 million of interest was capitalized with the long-term portion of the liability in Other long-term liabilities. The Company will continue to recognize the related assets within Property, plant and equipment, net on the Consolidated Balance Sheets under US GAAP. These assets will be subject to depreciation over their useful lives in accordance with the Company’s accounting policies.
The Company will continue to recognize the related assets within Property, plant and equipment, net on the Consolidated Balance Sheets under US GAAP. These assets will be subject to depreciation over their useful lives in accordance with the Company’s accounting policies.
Additionally, the Company will continue to 28 Table of Contents construct its new headquarters and research and development center. Refer to the Real Estate Financing section herein for further information on the financing transaction for the new headquarters. Real Estate Financing In December 2022, the Company closed a transaction to sell and subsequently lease back its partially-constructed new headquarters.
Additionally, the Company expects to complete construction of its new global headquarters and R&D center. Refer to the Real Estate Financing section herein for further information on the financing transaction for the new global headquarters. Real Estate Financing In December 2022, the Company closed a transaction to sell and subsequently lease back its partially-constructed new global headquarters.
Net pension cost in 2024 for the domestic pension plan and foreign pension plans is expected to be approximately $1.8 million and $4.4 million, respectively. Net periodic benefit credit for other postretirement benefits in 2024 is expected to be approximately $17.0 million.
Net pension (credit) cost in 2025 for the domestic pension plan and foreign pension plans is expected to be approximately $(1.6) million and $5.3 million, respectively. Net periodic benefit credit for other postretirement benefits in 2025 is expected to be approximately $9.7 million.
The Paint Stores Group’s gross profit for 2023 increased $908.6 million compared to the same period in 2022 primarily due to sales volume growth, selling price increases and moderating raw material costs. The Paint Stores Group’s gross profit as a percent of net sales increased for these same reasons.
Consolidated Gross profit as a percent to consolidated Net sales increased to 48.5% in 2024 from 46.7% in 2023 for these same reasons. The Paint Stores Group’s Gross profit for 2024 increased $242.1 million compared to the same period in 2023 primarily due to higher Net sales driven by sales volume growth, selling price increases and moderating raw material costs.
These expenses were partially offset by a gain on the divestiture of a non-core domestic aerosol business of $0.06 per share. Currency translation rate changes increased diluted net income per share in the year by $0.05 per share.
These expenses were partially offset by a gain on the divestiture of a non-core domestic aerosol business of $0.06 per share.
The following table presents income before income taxes by segment and as a percentage of net sales by segment: Year Ended December 31, 2023 2022 $ Change % Change Income Before Income Taxes: Paint Stores Group $ 2,860.8 $ 2,348.1 $ 512.7 21.8 % Consumer Brands Group 309.3 314.2 (4.9) (1.6) % Performance Coatings Group 991.6 734.9 256.7 34.9 % Administrative (1,051.8) (824.1) (227.7) (27.6) % Total $ 3,109.9 $ 2,573.1 $ 536.8 20.9 % Income Before Income Taxes as a % of Net Sales: Paint Stores Group 22.3 % 19.6 % Consumer Brands Group 9.2 % 9.3 % Performance Coatings Group 14.5 % 10.8 % Administrative nm nm Total 13.5 % 11.6 % nm - not meaningful Income Tax Expense The effective income tax rate for 2023 was 23.2% compared to 21.5% in 2022.
The following table presents Income before income taxes by segment and as a percent of Net sales by segment: Year Ended December 31, 2024 2023 $ Change % Change Income Before Income Taxes: Paint Stores Group $ 2,902.6 $ 2,860.8 $ 41.8 1.5 % Consumer Brands Group 589.9 309.3 280.6 90.7 % Performance Coatings Group 1,027.9 991.6 36.3 3.7 % Administrative (1,068.6) (1,051.8) (16.8) (1.6) % Total $ 3,451.8 $ 3,109.9 $ 341.9 11.0 % Income Before Income Taxes as a percent of Net sales: Paint Stores Group 22.0 % 22.3 % Consumer Brands Group 19.0 % 9.2 % Performance Coatings Group 15.1 % 14.5 % Administrative nm nm Total 14.9 % 13.5 % nm - not meaningful Income Tax Expense The effective income tax rate for 2024 was 22.3% compared to 23.2% in 2023.
Consolidated gross profit dollars increased primarily due to selling price increases in all Reportable Segments, higher sales volume in the Paint Stores Group and moderating raw material costs, partially offset by lower sales volumes in the Consumer Brands and Performance Coatings Groups.
Consolidated Gross profit increased $437.0 million, or 4.1%, in 2024 compared to the same period in 2023 primarily due to higher sales volumes in the Paint Stores and Performance Coatings Groups and moderating raw material costs, partially offset by lower sales volume in the Consumer Brands Group.
This increase was due primarily to proceeds from long-term debt in 2022 which did not occur in 2023, a net decrease in short-term borrowings and an increase in treasury stock purchases, partially offset by lower payments of long-term debt and higher proceeds from real estate financing transactions.
This decrease was primarily due to a net increase in short-term borrowings, proceeds from long-term debt in 2024 and higher proceeds from stock options exercised, partially offset by an increase in payments of long-term debt, treasury stock purchases and payment of cash dividends.
The Performance Coatings Group’s gross profit as a percent of net sales increased for these same reasons. Consolidated SG&A increased by $733.8 million compared to the same period in 2022 primarily due to increased employee-related expenses, including incentive-based compensation expense, expenses to support higher sales levels and net new store openings.
The Performance Coatings Group’s Gross profit as a percent of Net sales increased for these same reasons. Consolidated SG&A increased by $356.7 million, or 5.0%, in 2024 compared to the same period in 2023 primarily due to investments in long-term growth strategies, including expenses to support net new store openings and digital technologies and higher employee-related costs.
Net sales of all consolidated foreign subsidiaries increased 3.1% to $4.428 billion for 2023 versus $4.294 billion for 2022 due primarily to growth in the Europe and Latin America regions, partially offset by lower net sales in the Asia region as a result of the divestiture of the China architectural business.
Net sales of all consolidated foreign subsidiaries decreased to $4.426 billion in 2024 compared to $4.428 billion in 2023 primarily due to unfavorable currency translation impact in Latin America and lower Net sales in Asia as a result of the divestiture of the China architectural business, partially offset by higher Net sales in Europe as a result of acquisitions.
Core capital expenditures are targeted to be less than 2% of Net sales in 2024 and are expected to be for investments in various productivity improvement and maintenance projects at existing manufacturing, distribution and research and development facilities and new store openings.
In 2025, the Company expects to spend slightly less than 2024 for capital expenditures, which it will fund primarily through the generation of operating cash. Core capital expenditures are expected to be for investments in various productivity improvement and maintenance projects at existing manufacturing, distribution and research and development facilities and new store openings.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollar to Euro cross currency swap contracts to hedge the Company’s net investment in its European operations. The contracts have been designated as net investment hedges and have various maturity dates. See Note 17 to the Consolidated Financial Statements in Item 8.
Biggest changeIn 2024, 2023 and 2022, the Company utilized U.S. dollar to euro cross currency swap contracts to hedge the Company’s net investment in its European operations. The contracts have been designated as net investment hedges and have various maturity dates. See Note 16 to the consolidated financial statements in Item 8.
The Company entered into forward foreign currency exchange contracts during 2023, 2022 and 2021 to hedge against value changes in foreign currency. There were no material contracts outstanding at December 31, 2023. Forward foreign currency exchange contracts are described in Note 20 to the Consolidated Financial Statements in Item 8.
The Company entered into forward foreign currency exchange contracts during 2024, 2023 and 2022 primarily to hedge against value changes in foreign currency. There were no material contracts outstanding at December 31, 2024. Forward foreign currency exchange contracts are described in Note 19 to the consolidated financial statements in Item 8.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk associated with interest rates, foreign currency and commodity fluctuations. We occasionally utilize derivative instruments as part of our overall financial risk management policy, but do not use derivative instruments for speculative or trading purposes. In 2023, 2022 and 2021, the Company utilized U.S.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk associated with interest rates, foreign currency and commodity fluctuations. We occasionally utilize derivative instruments as part of our overall financial risk management policy, but do not use derivative instruments for speculative or trading purposes.

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