Sherwin-Williams (SHW) 10-K risk factor changes: FY2022 vs FY2021

The risks described below and in other documents we file from time to time with the [removed: Securities and Exchange Commission] [added: SEC] could materially and adversely affect our business, results of operations, cash flow, liquidity or financial condition.

[removed: The COVID-19 pandemic has adversely impacted our business, results of operations, cash flow and financial condition,] [added: Public health crises, including pandemics] and the [removed: continuing effects of the COVID-19 pandemic remain highly unpredictable] [added: measures taken by public health] and [added: governmental authorities to address them,] could adversely impact our business, results of operations, cash flow, liquidity and financial condition in the future.

Our business, results of operations, cash flow and financial condition [removed: have been, and may be in the future,] [added: were] adversely affected by the COVID-19 pandemic, including the impacts resulting from efforts by public health and governmental authorities to contain and combat the outbreak and spread of COVID-19.

[removed: Since the onset of the pandemic, we have made] [added: The pandemic caused us to make significant] changes [removed: in] [added: throughout] our business designed to [removed: support these efforts and] protect the health and well-being of our employees and customers.

We continue to evaluate the changes we have made in our [removed: business, consider new and further changes,] [added: business] and work with public health, government and other authorities and [removed: organizations] [added: organizations, as necessary and appropriate,] to maintain our operations and support the health and well-being of our employees, customers and their families.

[removed: The necessary and appropriate measures we have taken have] [added: These changes] resulted in additional [removed: costs, including for COVID-related leave and healthcare costs,] [added: costs] and [removed: have] adversely impacted our business and financial performance.

The [removed: COVID-19] pandemic [removed: has] [added: also] severely impacted the global [removed: economy,] [added: economy (and continues to impact certain regional economies more than others),] disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets, all of which [removed: may continue, and all of which] have adversely [removed: affected,] [added: affected our business, including as a result of occasional, temporary disruptions] and [removed: may continue to adversely affect,] [added: closures of some of] our [removed: business.][added: facilities, shifts in consumer behaviors and preferences and impacts in the demand for some of our products.]

[removed: While we continue to closely monitor the impact of the pandemic on all aspects of our business, the] [added: The] extent of the impact [removed: on our results] of [removed: operations, cash flow, liquidity, and financial performance, as well as our ability] [added: any public health crisis] to [removed: execute near-term and long-term] [added: our] business [removed: strategies and initiatives,] will depend on numerous [removed: evolving] factors [removed: and future developments, which are highly uncertain and which] [added: that] we [removed: cannot] [added: may not be able to] predict or control, [removed: and some of which we are not currently aware,] including, but not limited to: (a) the duration, severity and scope of the [removed: pandemic,] [added: crisis,] including [removed: additional variants and waves] [added: the spread] of [removed: COVID-19 cases;] [added: new virus strains and variants;] (b) rapidly-changing governmental and public health directives to [removed: contain and combat the outbreak, including with respect to COVID-19 vaccination and testing requirements, and the duration, degree, effectiveness and easing, removal or reinstitution of directives;] [added: address it;] (c) the [removed: further] development, availability, effectiveness and distribution of [removed: COVID-19] treatments and vaccines; (d) the extent and duration of [removed: the pandemic’s] [added: its] adverse and/or volatile effects on economic and social activity, supply chain logistics, inflationary pressures, consumer confidence, discretionary spending and preferences, labor and healthcare costs, labor markets and unemployment [removed: rates, any of which may reduce demand for some of our products, impact our ability to predict and meet any future changes in the demand for our products, or impair the ability of those with whom we do business to satisfy their obligations to us;] [added: rates;] (e) our ability to sell, provide and meet the demand for our services and [removed: products, including as a result of new, or the reinstitution of prior, directives;] [added: products;] (f) any temporary reduction in our workforce or closures of our offices and facilities and our ability to adequately staff and maintain our [removed: operations, including as a result of employees or their family members testing positive for COVID-19;] [added: operations;] (g) the ability of our customers and suppliers to continue their [removed: operations, which could affect our ability to sell, provide and meet the demand for our services and products] [added: operations;] and [removed: result] [added: (h) any impairment] in [removed: terminations] [added: value] of [removed: contracts, losses] [added: our tangible or intangible assets which could be recorded as a result] of [added: weaker economic conditions.]

Adverse changes in such conditions in the United States and [removed: worldwide, including due to the COVID-19 pandemic,] [added: worldwide] may reduce the demand for some of our products, adversely impact our ability to predict and meet any future changes in the demand for our products, and impair the ability of those with whom we do business to satisfy their obligations to us, each of which could adversely affect our results of operations, cash flow, liquidity or financial condition.

Higher inflation rates, interest rates, tax rates and unemployment rates, higher labor and healthcare costs, recessions, changing governmental policies, laws and regulations, business disruptions due to cybersecurity incidents, terrorist activity, armed [removed: conflict,] [added: conflict (including the ongoing conflict between Russia and Ukraine),] war, public health crises (including the COVID-19 pandemic), [removed: impacts of climate change, fires] [added: adverse weather conditions] or [removed: other] natural [removed: disasters,] [added: disasters (including those that may be related to climate change or otherwise),] supply chain [removed: disruptions,] [added: disruptions (including those caused by industry capacity constraints, labor shortages, raw material availability,] and [added: transportation and logistics delays and constraints), and] other economic factors [added: have in the past and] could [removed: also] [added: 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.

[removed: Although] [added: Rising] interest rates [removed: remain low by historical standards,] [added: and] any [removed: increase] [added: such shift in consumer behavior] may adversely affect the demand for new residential homes, existing home turnover and new non-residential construction.

In the U.S. construction and housing segments, [removed: the recent demand for new construction has caused contractors] [added: we continue] to [removed: experience] [added: see project backlogs due to contractors experiencing] a shortage of skilled workers, resulting in [removed: related project backlogs and] an adverse effect on the growth rate of demand for our products.

While we [added: would typically] expect to see higher demand for our products as project backlogs are reduced in the future, [removed: this labor shortage may adversely impact our sales, earnings, cash flow or financial condition.][added: rising inflation and other economic]

Downgrades in these [removed: ratings, including due to uncertainties regarding COVID-19,] [added: ratings] likely would increase our cost of borrowing and could have an adverse effect on our access to the capital markets, including our access to the commercial paper market.

[removed: Future events] and [removed: changing market conditions may impact our assumptions and] change our estimates of future sales and cash flow, resulting in us incurring substantial impairment charges, which would adversely affect our results of operations or financial condition.

At December 31, [removed: 2021,] [added: 2022,] we had total debt of approximately [removed: $9.615] [added: $10.570] billion, which is an increase of [removed: $1.323 billion] [added: $954.7 million] since December 31, [removed: 2020.][added: 2021.]

Our ability to generate cash, to a certain extent, is subject to general [added: business,] economic, financial, competitive, legislative, regulatory and other factors beyond our control, including public health crises, such as the COVID-19 pandemic, adverse weather conditions or natural [removed: disasters, such as due] [added: disasters (including those that may be related] to [removed: the impacts of] climate [removed: change,] [added: change or otherwise),] supply chain [removed: disruptions] [added: disruptions, changes in raw material] and [added: energy supplies and pricing and] related impacts.

- increase our vulnerability to adverse [added: business,] economic or industry conditions;

- limit our ability to obtain additional financing in the future to enable us to react to changes in our business or [added: general business,] economic or industry conditions; or

Adverse weather conditions and natural disasters, including [removed: due] [added: those that may be related] to [removed: the impacts of] climate [removed: change,] [added: change or otherwise,] may temporarily reduce the demand for some of our products, impact our ability to meet the demand for our products or cause supply chain disruptions and increased costs, and could have a negative effect on our sales, earnings or cash flow.

From time to time, adverse weather conditions and natural disasters, including [removed: due] [added: those that may be related] to [removed: the impacts of] climate [removed: change,] [added: change or otherwise,] have had or may have an adverse effect on our sales, manufacture and distribution of paint, coatings and related products.

[removed: The] [added: Also from time to time, the] impact of these risks to our suppliers [removed: also] have had or may have an adverse effect on our sales, manufacture and distribution of certain of our products.

[removed: These] [added: Adverse weather conditions or] natural disasters and their impacts [removed: to certain of our suppliers resulted] [added: have resulted, and may] in [removed: unprecedented] [added: the future result, in] industry-wide supply chain disruptions, increased raw material and other costs, and [removed: significantly hindered] our [added: hindered] ability to manufacture the products needed to fully meet customer demand.

We purchase raw materials (including [added: petrochemical-derived resins, latex and solvents,] titanium dioxide and [removed: petrochemical feedstock sources, such as propylene and ethylene)] [added: various additives)] and energy for use in the manufacturing, distribution and sale of our products.

Factors such as political instability, higher tariffs, supply chain disruptions, adverse weather conditions and natural disasters (including [removed: hurricanes and severe winter or other storms due] [added: those that may be related] to [removed: the impacts of] climate [removed: change)] [added: change] or [added: otherwise), or] public health crises [removed: (including] [added: have disrupted, and may in] the [removed: COVID-19 pandemic) could disrupt] [added: 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.

In addition, environmental and social regulations, including regulations related to climate [removed: change,] [added: change or otherwise,] may negatively impact us or our suppliers in terms of availability and cost of raw materials, as well as sources and supply of energy.

In the event we experience supply chain disruptions from our suppliers, we may not be able to timely [added: shift to internal production or] secure alternate sources in order to prevent significant impacts to our business, or we may experience quality issues with raw materials and energy sourced from alternate sources.

[removed: The] [added: While we have started to see a decline in some raw material prices in recent months, the] cost of raw materials and energy could continue to experience periods of volatility in the future and may adversely affect our earnings and cash flow.

During [removed: 2021,] [added: 2022,] no individual customer accounted for sales totaling more than ten percent of our sales.

Although our broad distribution channels help to minimize the impact of the loss of any one [added: customer or the loss of a significant amount of sales to any one] customer, the loss of any of these large [removed: customers] [added: customers, or the loss of significant amount of sales to any of these large customers,] could have an adverse effect on our sales, earnings or cash flow.

Technology, product quality, product [removed: innovation,] [added: innovation and development (including relating to increased customer interest in the sustainability attributes of products and our related key strategies and initiatives for expanding our product offerings),] breadth of product line, technical expertise, distribution, service and price are key competitive factors for our business.

Our results of operations, cash flow or financial condition may be negatively impacted if we do not successfully integrate [added: past and] future acquisitions into our existing operations and if the performance of the businesses we acquire do not meet our expectations.

We have historically made strategic acquisitions of businesses in the paint and coatings industry and likely will acquire additional businesses in the future as part of our long-term growth [removed: strategy.][added: strategy and initiatives.]

The success of [added: past and] future acquisitions depends in large part on our ability to integrate the operations and personnel of the acquired companies and manage challenges that may arise as a result of the acquisitions, particularly when the acquired businesses operate in new or foreign markets.

In the event we do not successfully integrate such [added: past and] future acquisitions into our existing operations so as to realize the expected return on our investment, our results of operations, cash flow or financial condition could be adversely affected.

Net external sales of our consolidated foreign subsidiaries totaled approximately [removed: 21.2%, 19.5%] [added: 19.4%, 21.2%] and [removed: 20.6%] [added: 19.5%] of our total consolidated net sales in [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] respectively.

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, [added: sanctions,] tariffs, foreign currency exchange rates, foreign currency exchange controls, interest rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, [added: armed conflict (including the ongoing conflict between Russia and Ukraine), war,] difficulties in staffing and managing foreign operations and other [removed: external] economic and political factors.

In many foreign countries, it is not uncommon [added: for others] to engage in certain business practices we are prohibited from engaging in because of regulations applicable to us, such as the Foreign Corrupt Practices Act and the UK Bribery Act.

Although we have internal control policies and procedures designed to [removed: ensure] [added: promote] compliance with these regulations, there can be no assurance our policies and procedures will prevent a violation of these regulations.

Our business benefits from free trade agreements, which may include the United States-Mexico-Canada [added: Agreement and EU-UK Trade and Cooperation] Agreement, and efforts to withdraw from, or substantially modify such agreements, in addition to the implementation of more restrictive trade policies, such as more detailed inspections, higher [removed: 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.]

While we believe we have identified and discussed below the key risks affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, results of operations, cash flow, liquidity or financial condition in the future.

With respect to inflation in particular, we expect inflationary pressure to impact consumer behavior during 2023, including in the United States and Europe housing markets and as a result of elevated mortgage rates.

Any such shift in consumer behavior could adversely affect the demand for some of our products and our results of operations, cash flow, liquidity or financial condition.

In response to increasing inflation, the U.S. Federal Reserve began to raise interest rates in March 2022 and since then, has signaled it expects to make additional rate increases.

We expect inflationary pressure to impact consumer behavior during 2023, particularly in the United States and Europe housing markets and as a result of elevated mortgage rates.

conditions may delay a recovery in demand, which may result in the labor shortage and such other conditions adversely impacting our sales, earnings, cash flow or financial condition.

Public health crises (including the COVID-19 pandemic if current conditions were to worsen for an extended period) and the measures taken by public health and governmental authorities to address them, could adversely impact our business, results of operations, cash flow, liquidity and financial condition in the future.

Future events and changing market conditions may impact our assumptions

During 2022, industry-wide shortages of alkyd resins impacted our ability to manufacture and meet the demand of some of our products, including certain stains, aerosols and industrial products.

If these shortages continue or worsen, and we are unable to offset the shortages through internal production or alternate sources, we may experience adverse impacts to our business, including adverse effects to our earnings and cash flow.

During 2022, we invested $1.003 billion to complete five acquisitions.

We may not successfully execute or achieve the expected benefits of our current business restructuring plan or other productivity initiatives we may take in the future.

In the fourth quarter of 2022, we approved a business restructuring plan to simplify our operating model and portfolio of brands within the Consumer Brands Group and to reduce costs in all regions in the Consumer Brands Group, Performance Coatings Group and the Administrative segment.

Key focus areas within the Consumer Brands Group include the China architectural business, aerosol portfolio and optimization of the overall retail portfolio.

The majority of these restructuring actions are expected to be completed by the end of 2023.

In the event we do not successfully execute on our restructuring plan or other productivity initiatives and are unable to realize expected benefits, our results of operations, cash flow or financial condition could be adversely affected.

We discuss the restructuring plan in more detail in Note 4 to the Consolidated Financial Statements in Item 8.

During 2022, COVID-related lockdowns in China caused significant weakness in the demand for some of our products and adversely affected our sales in the region.

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.

Cyber attacks and cybersecurity threats are increasingly sophisticated, constantly evolving and originate from many sources globally, and often cannot be recognized until launched against a target.

Our information, facilities and systems could also be impacted by the intentional or unintentional improper conduct of our employees, vendors or others who have access to and may misappropriate sensitive and confidential information.

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.

Our reputation and image is critical to retaining and growing our customer base and our relationships with other stakeholders.

Our business and brands depend on 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.

Significant negative claims or publicity involving us, our business or our products, services, culture, values, strategies and practices, undermine confidence, and could materially damage our reputation and image, even if such claims are inaccurate.

Damage to our reputation and image could adversely impact our ability to attract new and retain existing customers, employees and other business and stakeholder relationships.

Additionally, negative or inaccurate postings, articles, or comments on social media and the internet about us could generate negative publicity that could damage our business, reputation, image and brands.

Damage to our business, reputation or image, or negative publicity, could adversely affect the demand for some of our products and adversely affect our sales, earnings, cash flow or financial condition.

This law provides for, among other things, a corporate alternative minimum tax on adjusted financial statement income and an excise tax on corporate stock repurchases.

We are continuing to evaluate the impact this new law may have on our results of operations, cash flow or financial condition.

results of operations, cash flow or financial condition for the annual or interim period during which such liability is accrued or paid.

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.

The changes in our business have included: temporarily reducing store hours and closing our sales floors in our company-operated paint stores to the general public; requiring our customers to order product online or via phone and to access their products via curbside pickup or delivery; implementing remote, alternate and flexible work arrangements where possible; enhancing cleaning and sanitation procedures; implementing domestic and international travel restrictions and return to work and visitor screening protocols; postponing or canceling the hosting or attending of large events; and enhancing certain employee benefits, such as telehealth, paid sick leave, family leave and voluntary leave of absence policies and programs.

As the pandemic continues and evolves, we may incur additional costs and experience further adverse impacts to our business, each of which may be significant.

We also have faced, and may continue to face, operational risks in connection with remote and hybrid in-office work arrangements, including but not limited to cybersecurity risks and increased vulnerability to damage or interruption resulting from, among other causes, cyber attacks, security breaches, phishing, malware, viruses, ransomware, power outages or system failures.

We have experienced occasional, temporary disruptions and closures of some of our facilities, including more recently in connection with the Omicron variant and due to our employees or their family members testing positive for COVID-19.

We also have seen shifts in consumer behaviors and preferences, as well as impacts in the demand for some of our products.

While demand levels for our products have been returning to more normalized levels, our ability to predict and meet any future changes in the demand for our products due to the impacts of the pandemic remains uncertain.

revenue and adverse effects to our supply chain; and (h) any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions.

If the pandemic continues to create disruptions or turmoil in the credit or financial markets or impacts our credit ratings in the future, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity needs.

Given the inherent uncertainty surrounding COVID-19, the pandemic may continue to create challenging operating environments and may have an adverse impact on our business in the near term.

If these conditions persist or worsen for a prolonged period, the COVID-19 pandemic, including any of the above factors and others that are currently unknown, may also have a material adverse effect on our results of operations, cash flow, liquidity, or financial condition.

During 2021, Winter Storm Uri and Hurricane Ida caused significant damage to certain of our suppliers’ facilities in Texas and Louisiana, respectively.

We discuss these natural disasters and their adverse impact to our business in more detail in the “Outlook” section in Item 7.

Additionally, the results of the United Kingdom’s referendum on European Union membership, which resulted in the United Kingdom’s exit from the European Union on January 31, 2020 (“Brexit”), caused significant volatility in global stock markets, currency exchange rate fluctuations and global economic uncertainty.

The transition period post-Brexit expired on December 31, 2020, and the United Kingdom and European Union entered into a free trade agreement that now governs the United Kingdom’s relationship with the European Union.

While the United Kingdom and European Union generally have continued to trade with each other without the imposition of tariffs for imports and exports, trades have been subject to new customs

requirements that require additional documentation and data and new controls on the movement and reporting of goods (including chemicals).

Although we have not experienced any material disruption in our business as a result of Brexit to date, we do not know the extent to which Brexit and the free trade agreement will ultimately impact the business and regulatory environment in the United Kingdom, the rest of the European Union or other countries, although it is possible there will be tighter controls and administrative requirements for imports and exports between the United Kingdom and the European Union or other countries, as well as increased regulatory complexities, as the transition continues.

Any of these factors could adversely impact customer demand, our relationships with customers and suppliers and our results of operations.

the laws of the United States.

on certain activities or materials.

See [removed: Note 21] [added: Notes 23 and 24] to the Consolidated Financial Statements in Item 8 for additional information on the Company’s Reportable Segments.

- Consolidated net sales increased [removed: 8.6%] [added: 11.1%] in the year to a record [removed: $19.94] [added: $22.149] billion

◦Net sales from stores in U.S. and Canada open more than twelve calendar months increased [removed: 6.0%] [added: 11.7%] in the year

- Diluted net income per share [removed: decreased] [added: increased] to [removed: $6.98] [added: $7.72] per share in the year compared to [removed: $7.36] [added: $6.98] per share in the full year [removed: 2020][added: 2021]

◦Adjusted diluted net income per share [removed: decreased] [added: increased] to [removed: $8.15] [added: $8.73] per share in the year compared to [removed: $8.19] [added: $8.15] per share in the full year [removed: 2020][added: 2021]

Please see Item 1A “Risk Factors” in Part I of this Annual Report on Form 10-K for further information regarding the current and potential impact of [removed: the COVID-19 pandemic and] [added: macroeconomic conditions on] the [removed: potential impact of] [added: Company, including those relating to] supply chain [removed: disruptions and] [added: disruptions,] raw material [removed: inflation on] [added: availability, and inflation, and] the [removed: Company.][added: Company’s restructuring actions.]

The following discussion and analysis addresses comparisons of material changes in the consolidated financial statements for the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

For comparisons of the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] 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, [removed: 2020] [added: 2021] filed on February [removed: 19, 2021.][added: 17, 2022.]

| | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | $ Change | | | | | | % Change | | |

| The Americas Group | | | $ | [removed: 11,217.0] [added: 12,661.0] | | | | | $ | [removed: 10,383.2] [added: 11,217.0] | | | | | $ | [removed: 833.8] [added: 1,444.0] | | | | | [removed: 8.0] [added: 12.9] | | % |

| Consumer Brands Group | | | [removed: 2,721.6] [added: 2,690.7] | | | | | | [removed: 3,053.4] [added: 2,721.6] | | | | | | [removed: (331.8)] [added: (30.9)] | | | | | | [removed: (10.9)] [added: (1.1)] | | % |

| Performance Coatings Group | | | [removed: 6,003.8] [added: 6,793.5] | | | | | | [removed: 4,922.4] [added: 6,003.8] | | | | | | [removed: 1,081.4] [added: 789.7] | | | | | | [removed: 22.0] [added: 13.2] | | % |

Consolidated [removed: net] [added: Net] sales for [removed: 2021] [added: 2022] increased [removed: due] [added: 11.1%] primarily [added: due] to selling price increases in all Reportable Segments and higher product sales volume in [removed: the Performance Coatings] [added: The Americas] Group, partially offset by lower sales volume in the Consumer Brands [removed: Group.][added: and Performance Coatings Groups.]

Currency translation rate changes [removed: increased 2021 consolidated net] [added: reduced Net] sales by [removed: 0.8%.][added: 0.4% compared to 2021.]

Net sales of all operations other than consolidated foreign subsidiaries increased [removed: 6.4%] [added: 13.6%] to [removed: $15.722] [added: $17.855] billion for [removed: 2021] [added: 2022] versus [removed: $14.781] [added: $15.722] billion for [removed: 2020.][added: 2021.]

Net sales in The Americas Group increased [removed: due] primarily [added: due] to selling price increases [added: as well as volume growth] in all end markets, [removed: while sales volume remained flat as a result of raw material availability challenges.][added: particularly residential repaint.]

Net sales from stores in U.S. and Canada open for more than twelve calendar months increased [removed: 6.0%] [added: 11.7%] in the year over last year’s comparable period.

Currency translation rate changes [removed: reduced net] [added: decreased Net] sales by [removed: 0.1%] [added: 1.1%] compared to [removed: 2020.][added: 2021.]

During [removed: 2021,] [added: 2022,] The Americas Group opened [removed: 92] [added: 89] new stores and closed [removed: 7] [added: 17] redundant locations for a net increase of [removed: 85] [added: 72] stores, with a net increase of [removed: 73] [added: 75] new stores in the U.S. and Canada.

The total number of stores in operation at December 31, [removed: 2021] [added: 2022] was [removed: 4,859] [added: 4,931] in the United States, Canada, Latin America and the Caribbean.

The Americas Group’s objective is to expand its store base [added: by] an average of 2% each year, primarily through organic growth.

Sales of products other than paint increased approximately [removed: 12.5%] [added: 0.2%] over last year.

Net sales of the Consumer Brands Group decreased in [removed: 2021] [added: 2022] primarily due to lower [removed: volume] sales [removed: to most of the group’s retail customers as DIY demand returned to more normal levels, raw material availability issues,] [added: volumes in all regions] and the Wattyl divestiture, [removed: partially] offset by selling price [removed: increases.][added: increases in all regions.]

The Performance Coatings Group’s [removed: net] [added: Net] sales in [removed: 2021] [added: 2022] increased [removed: due] primarily [added: due] to higher [added: organic] sales [removed: volumes in most end markets and] [added: driven by] selling price [removed: increases.][added: increases in all end markets, partially offset by lower sales volumes.]

[removed: At December 31, 2021,] [added: In 2022,] the Performance Coatings Group [removed: had 282] [added: added 35 new branches, increasing the total to 317] branches open in the United States, Canada, Mexico, South America, Europe and Asia.

Net sales in the Administrative segment, which primarily consists of external leasing revenue of excess headquarters space and leasing of facilities no longer used by the Company in its primary business, [removed: decreased] [added: increased] by an insignificant amount in [removed: 2021.][added: 2022.]

| Net sales | | | $ | [removed: 19,944.6] [added: 22,148.9] | | | | | 100.0 | | % | | | | $ | [removed: 18,361.7] [added: 19,944.6] | | | | | 100.0 | | % |

| Cost of goods sold | | | [removed: 11,401.9] [added: 12,823.8] | | | | | | [removed: 57.2] [added: 57.9] | | % | | | | [removed: 9,679.1] [added: 11,401.9] | | | | | | [removed: 52.7] [added: 57.2] | | % |

| Gross profit | | | [removed: 8,542.7] [added: 9,325.1] | | | | | | [removed: 42.8] [added: 42.1] | | % | | | | [removed: 8,682.6] [added: 8,542.7] | | | | | | [removed: 47.3] [added: 42.8] | | % |

| Selling, general, and administrative expenses (SG&A) | | | [removed: 5,572.5] [added: 6,014.5] | | | | | | [removed: 27.9] [added: 27.2] | | % | | | | [removed: 5,477.9] [added: 5,572.5] | | | | | | [removed: 29.8] [added: 27.9] | | % |

| Other general [added: (income)] expense - net | | | [removed: 101.8] [added: (24.9)] | | | | | | [removed: 0.5] [added: (0.1)] | | % | | | | [removed: 27.7] [added: 101.8] | | | | | | [removed: 0.2] [added: 0.5] | | % |

| Amortization | | | [removed: 309.5] [added: 317.1] | | | | | | [removed: 1.5] [added: 1.4] | | % | | | | [removed: 313.4] [added: 309.5] | | | | | | [removed: 1.7] [added: 1.5] | | % |

| Impairment of trademarks | | | [removed: —] [added: 15.5] | | | | | | [removed: —] [added: 0.1] | | [removed: %] [added: %] | | | | [removed: 2.3] [added: —] | | | | | | — | | [removed: %] |

| Interest expense | | | [removed: 334.7] [added: 390.8] | | | | | | [removed: 1.7] [added: 1.8] | | % | | | | [removed: 340.4] [added: 334.7] | | | | | | [removed: 1.9] [added: 1.7] | | % |

| Other [removed: (income)] expense [added: (income)] - net | | | [removed: (19.5)] [added: 47.0] | | | | | | [removed: (0.1)] [added: 0.1] | | % | | | | [removed: 5.3] [added: (19.5)] | | | | | | [removed: —] [added: (0.1)] | | % |

| Income before income taxes | | | $ | [removed: 2,248.6] [added: 2,573.1] | | | | | [removed: 11.3] [added: 11.6] | | % | | | | $ | [removed: 2,519.2] [added: 2,248.6] | | | | | [removed: 13.7] [added: 11.3] | | % |

Consolidated [removed: cost] [added: Cost] of goods sold increased [removed: $1.723] [added: $1.422] billion, or [removed: 17.8%] [added: 12.5%,] in [removed: 2021] [added: 2022] compared to the same period in [removed: 2020] [added: 2021] primarily due to higher raw material costs (including [removed: titanium dioxide] [added: petrochemical-derived resins, latex] and [removed: petrochemical feedstock sources)] [added: solvents,] and [removed: unfavorable currency translation rate changes,] [added: titanium dioxide),] partially offset by lower [removed: sales volumes primarily as a result of raw material availability issues during the second half of 2021.][added: product volume and favorable currency translation rate changes.]

Currency translation rate changes [removed: increased] [added: decreased] Cost of goods sold by [removed: 1.1%] [added: 2.0%] in the current year.

Consolidated [removed: gross] [added: Gross] profit [removed: decreased $139.9] [added: increased $782.4] million in [removed: 2021] [added: 2022] compared to the same period in [removed: 2020.][added: 2021.]

Consolidated [removed: gross] [added: Gross] profit as a percent to consolidated [removed: net] [added: Net] sales decreased to [removed: 42.8%] [added: 42.1%] in [removed: 2021] [added: 2022] from [removed: 47.3%] [added: 42.8%] in [removed: 2020.][added: 2021.]

- Generated strong net operating cash of $1.920 billion

◦Deployed $1.003 billion toward five acquisitions that will add to our product offerings and capabilities

◦Invested $883.2 million in share repurchases and paid $618.5 million in dividends to return value to our shareholders

During 2022, we continued to experience the effects of macroeconomic challenges such as raw material inflation, less than optimal raw material availability, armed conflict in Europe, and COVID-related lockdowns in Asia.

Our focus on cost control measures remains steady as we execute on targeted restructuring actions to simplify our business.

The growth investments we made during the year, including five completed acquisitions, are well-positioned to contribute to our resilient portfolio.

While we anticipate a challenging demand environment in 2023, our long-term strategy and customer-focused solutions drive confidence in our outlook.

We anticipate inflationary pressure in 2023 to impact consumer behavior in both the United States and Europe, particularly in housing markets.

Elevated mortgage rates may have a negative impact on new residential volume.

Certain other costs, such as wages, energy and transportation are expected to increase.

We are focused on gaining market share despite this challenging environment, while leveraging our exposure in more historically resilient end markets such as residential repaint, property maintenance, auto refinish, and packaging.

During 2023, we expect to benefit from price increases we implemented during 2021 and 2022.

Additionally, we expect to realize approximately $50 million to $70 million in estimated annual savings from previously announced restructuring actions, of which we expect 75% will be realized by the end of 2023.

Our deliberate cost control and ongoing continuous improvement initiatives, coupled with anticipated raw material cost deflation, are expected to drive full year gross margin expansion in 2023.

Our capital deployment strategy remains balanced and consistent.

We do not have any long-term debt maturities due in 2023 and expect to reduce short-term borrowings while generating net operating cash.

We have plans to invest in the construction of new facilities, including our new global headquarters (new headquarters) in downtown Cleveland, Ohio and new research and development (R&D) center in the Cleveland suburb of Brecksville, and in the expansion of certain existing manufacturing and distribution facilities.

We plan to expand our footprint by opening 80 to 100 new stores in the United States and Canada in 2023, and pursue acquisitions that align with our long-term growth strategy.

We will also return value to our shareholders through the payment of dividends and the reinvestment of excess cash for share repurchases of Company stock.

| Administrative | | | 3.7 | | | | | | 2.2 | | | | | | 1.5 | | | | | | 68.2 | | % |

| Total | | | $ | 22,148.9 | | | | | $ | 19,944.6 | | | | | $ | 2,204.3 | | | | | 11.1 | | % |

Currency translation rate changes decreased 2022 consolidated Net sales by 1.5%, while acquisitions which were completed during the past twelve months added approximately 1.1% to consolidated Net sales.

Net sales of all consolidated foreign subsidiaries increased 1.7% to $4.294 billion for 2022 versus $4.223 billion for 2021 primarily due to benefits from acquisitions offset by weakening demand in the Europe and Asia Pacific regions.

Currency translation rate changes decreased Net sales 3.8% compared to 2021, largely offset by the impact of acquisitions completed during the past twelve months which added approximately 3.7% to Net sales.

| | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | |

| Interest income | | | (8.0) | | | | | | — | | % | | | | (4.9) | | | | | | — | | % |

This increase in Gross profit dollars was driven by higher sales in The Americas Group and Performance Coatings Group.

The Consumer Brands Group’s SG&A increased by $52.6 million for the year primarily due to restructuring actions and higher employee costs, offset by favorable currency translation rate changes.

The Administrative segment’s SG&A increased $2.9 million primarily due to higher employee costs.

Refer to Note 4 to the Consolidated Financial Statements in Item 8 for additional information on the restructuring actions.

Other expense (income) - net increased $66.5 million in 2022 compared to 2021 primarily due to increased investment losses of $40.1 million and foreign currency transaction related losses which increased by $21.6 million.

| | | | 2022 | | | | | | 2021 | | | | | | $ Change | | | | | | % Change | | |

| Administrative | | | (824.1) | | | | | | (835.1) | | | | | | 11.0 | | | | | | 1.3 | | % |

| Total | | | $ | 2,573.1 | | | | | $ | 2,248.6 | | | | | $ | 324.5 | | | | | 14.4 | | % |

Refer to Notes 4 and 7 to the Consolidated Financial Statements in Item 8 for additional information regarding the restructuring actions and trademark impairments, respectively.

This strong cash generation enabled the Company to invest

$1.003 billion in acquisitions and $644.5 million in capital expenditures, and return $1.502 billion to shareholders in the form of cash dividends and share repurchases during the year.

Current liability balances increased $241.2 million at December 31, 2022 compared to December 31, 2021 primarily due to the timing of payments related to Other accruals and Accrued taxes.

See Note 1 to the Consolidated Financial Statements in Item 8 for additional information on government incentives.

The Company has entered into an agreement to sell its current headquarters and R&D center.

◦Raw material availability issues negatively impacted full year sales by a mid-single digit percentage

- Completed a three-for-one stock split to improve accessibility to a broader base of investors

- Finalized the divestiture of our Wattyl business in Australia and New Zealand

- Continued to invest in acquisitions expanding our product offerings and manufacturing capacity

The Company navigated many uncertainties during 2021, including unprecedented raw material inflation, industry-wide supply chain disruptions, as well as temporary changes in the demand for our products due to the impacts of the COVID-19 pandemic earlier in the year and the Omicron variant later in the year.

Despite the uncertainties, our businesses continue to be well-positioned, and we have confidence in our long-term outlook.

The COVID-19 pandemic continues to evolve and disrupt normal activities in many segments of the global economy.

We continue to work with government and health authorities to operate our business, including our company-operated stores, manufacturing plants and other facilities.

We also continue to follow recommended actions of government authorities and health officials in order to protect the health and well-being of our employees, customers and their families worldwide.

As we look to 2022, we are encouraged by the demand environment, which remains robust across our end markets.

Our customers remain positive, and we expect that jobs delayed by raw material availability issues in 2021 will be completed in the quarters ahead rather than cancelled.

We brought on 50 million gallons of incremental architectural paint production capacity in 2021 to meet this demand and will continue to add paint stores in 2022.

We expect raw material availability to continue improving.

We are implementing additional price increases to offset to the sustained cost inflation and expect raw material costs will ultimately moderate, enabling the recovery of our margins over time.

We intend to remain disciplined in our capital allocation approach, focused on driving value for our customers and returns for our shareholders.

Capital expenditures, excluding our new global headquarters, will remain modest at approximately 2 percent of sales and we will continue to pursue acquisitions that fit our strategy.

We expect to use any excess cash to make open market purchases of Company stock.

Our balance sheet remains strong, and we expect debt to EBITDA to approach the high end of our target of 2.0 to 2.5 times range.

Common Stock Split

During the first quarter of 2021, the Company’s Board of Directors approved and declared a three-for-one stock split to shareholders of record at the close of business on March 23, 2021 (the Stock Split).

The Stock Split was effected on March 31, 2021.

All share and per share information herein has been retroactively adjusted to reflect the Stock Split.

| Administrative | | | 2.2 | | | | | | 2.7 | | | | | | (0.5) | | | | | | (18.5) | | % |

| Total | | | $ | 19,944.6 | | | | | $ | 18,361.7 | | | | | $ | 1,582.9 | | | | | 8.6 | | % |

Net sales of all consolidated foreign subsidiaries increased 17.9% to $4.223 billion for 2021 versus $3.581 billion for 2020 due primarily to returning demand in most industrial end markets globally.

In 2022, the Consumer Brands Group is focused on meeting customer needs through product development, building inventory, and optimizing the product assortment at existing customers.

Currency translation rate changes increased net sales 2.2% compared to 2020.

In 2022, the Performance Coatings Group plans to continue expanding its worldwide presence, including improving its customer base and product offering.

| | | | 2021 | | | | | | | | | | | | 2020 | | | | | | | | |

| Interest and net investment income | | | (4.9) | | | | | | — | | % | | | | (3.6) | | | | | | — | | % |

The Performance Coatings Group’s gross margin rate decreased primarily due to higher raw material costs, partially offset by higher sales volumes and selling price increases.

The Consumer Brands Group’s SG&A decreased by $104.9 million for the year primarily due to good sales and marketing cost control in line with a return to more normal DIY sales levels.

The Administrative segment’s SG&A decreased $72.2 million primarily due to lower compensation, including incentive compensation.

Other (income) expense - net improved $24.8 million in 2021 compared to 2020 primarily due to the $21.3 million loss recognized upon extinguishment of debt in 2020 in the Administrative segment.

| Administrative | | | (835.1) | | | | | | (854.6) | | | | | | 19.5 | | | | | | 2.3 | | % |

| Total | | | $ | 2,248.6 | | | | | $ | 2,519.2 | | | | | $ | (270.6) | | | | | (10.7) | | % |

The strong cash generation, along with an increase in our short-term borrowings and long-term debt, allowed the Company to invest $372.0 million in capital expenditures and return $3.339 billion to shareholders in the form of cash dividends and share buybacks during the year.

Current liability balances increased $1.125 billion at December 31, 2021 compared to December 31, 2020 primarily due to a $763.4 million increase in Short-term borrowings and $235.5 million increase in the Current portion of long-term debt.

Excluding Short-term borrowings and the Current portion of long-term debt, current liabilities increased $126.2 million primarily due to the timing of payments related to accounts payable, partially offset by lower accruals, including compensation.

The Company has committed to spend a minimum of $600 million of capital expenditures to build both the new headquarters and R&D center.

In [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the Company utilized U.S. Dollar to Euro cross currency swap contracts to hedge the Company’s net investment in its European operations.

See Note [removed: 15] [added: 17] to the Consolidated Financial Statements in Item 8.

The Company entered into forward foreign currency exchange contracts during [removed: 2021] [added: 2022] to hedge against value changes in foreign currency.

There were no material contracts outstanding at December 31, [removed: 2021.][added: 2022.]

Forward foreign currency exchange contracts are described in Note [removed: 18] [added: 20] to the Consolidated Financial Statements in Item 8.

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 [removed: Commission.][added: Commission (SEC).]

You may access these documents on our Investor Relations website, [removed: investors.sherwin-williams.com.][added: investors.sherwin.com.]

For more information about the Reportable Segments, see Note [removed: 21] [added: 23] to the Consolidated Financial Statements in Item 8.

The Americas Group consisted of [removed: 4,859] [added: 4,931] company-operated specialty paint stores in the United States, Canada, Latin America and the Caribbean region at December 31, [removed: 2021.][added: 2022.]

The Consumer Brands Group [added: manufactures and] supplies a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers and distributors throughout North America, as well as in China and Europe.

Approximately [removed: 62%] [added: 67%] of the total sales of the Consumer Brands Group in [removed: 2021] [added: 2022] were intersegment transfers of products primarily sold through The Americas Group.

The Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and [removed: performance-][added: performance-based resins and colorants worldwide.]

[removed: Sherwin-Williams® and other controlled brand products are distributed through The Americas Group and this segment’s 282 company-operated] [added: operated] branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.

Also included in the Administrative segment is interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related [removed: matters,] [added: matters] and other expenses which are not directly associated with the Reportable Segments.

A [removed: small] portion of specialized resins and other products are manufactured in house.

*•The Americas Group:* Sherwin-Williams®, [added: A-100®, Builders Solution®, Captivate®,] Cashmere®, Colorgin®, Condor®, Duration®, Emerald®, [removed: Harmony®,] Kem Tone®, [added: Latitude®,] Loxon®, Metalatex®, Novacor®, [removed: PaintShield®,] [added: Painters Edge Plus™,] ProClassic®, ProCraft®, [removed: ProIndustrial™,] [added: Pro Industrial™,] ProMar®, SuperDeck®, SuperPaint®, Woodscapes®

*•Performance Coatings Group:* Sherwin-Williams®, Acrolon®, AcromaPro®, ATX®, DeBeer Refinish®, Duraspar®, EcoDex®, Envirolastic®, Excelo®, EzDex®, Fastline®, Firetex®, Fluropon®, Heat-Flex®, House of Kolor®, Huarun®, Inver®, Kem Aqua®, Lazzuril®, Macropoxy®, Martin Senour®, Matrix [removed: Edge™,] [added: Edge®,] M.L. Campbell®, Octoral®, PermaClad®, Polane®, Powdura®, Sayerlack®, Sher-Wood®, Sumaré®, Ultra 9K®, Ultra 7000®, ValPure®, Valspar®

During [removed: 2021,] [added: 2022,] we experienced raw material [removed: shortages, labor constraints,] [added: shortages] and [removed: weather-related shutdowns] [added: labor constraints] that impacted our production and ability to meet customer orders.

We believe that sufficient productive capacity currently exists to fulfill our needs for paint, coatings and related products during [removed: 2022.][added: 2023.]

At December 31, [removed: 2021,] [added: 2022,] we employed [removed: 61,626] [added: 64,366] people worldwide, of which [removed: 78%] [added: 75%] were in the United States and [removed: 22%] [added: 25%] were in other global regions.

Our commitment to our people is embedded in [removed: our] [added: the Company’s] corporate purpose and guiding values.

[removed: Our purpose is] [added: Through our purpose, we strive] to inspire and improve the world by coloring and protecting what matters.

[removed: We fulfill] [added: Our employees are instrumental in fulfilling] this purpose through the development, manufacture, distribution and sale of innovative paint and coatings [removed: products, striving to deliver benefits for all major stakeholders, including our employees.][added: products.]

The Company’s seven guiding values — integrity, people, service, quality, performance, innovation and growth — [removed: influence] [added: drive] how we fulfill our purpose, emphasize [removed: our commitment to] [added: the importance of] our [removed: people] [added: global workforce] and serve as the foundation of our culture of excellence.

We [removed: are committed] [added: strive] to [removed: fostering] [added: foster] a culture of inclusion [added: and belonging] where differences are welcomed, appreciated and celebrated to positively impact our people and business.

The building blocks of our [removed: inclusion, diversity and equity] [added: ID&E] strategy include:

[removed: Our continuous efforts to create] [added: Creating] a supportive, welcoming environment across our global footprint is the shared responsibility of all employees, including our senior leaders.

[removed: Our] [added: Each year, our] senior leaders attend an [removed: inclusion, diversity] [added: ID&E education] and [removed: equity learning] [added: training] session to assist us in maintaining our commitment to leading with inclusion and [removed: embracing and] leveraging the diversity of our workforce.

[added: *Talent Acquisition and Employee Engagement.*] Through our integrated talent management strategy, we strive to attract, retain, develop and progress a workforce that embraces our culture of inclusion and reflects our diversity efforts.

The Company’s early talent programs, including our management trainee [removed: program,] [added: program and similar programs across our global business,] play a critical role in [removed: attracting] [added: attracting, developing] and [removed: progressing] [added: advancing] a diverse pipeline of talent.

During [removed: 2021,] [added: 2022,] we hired approximately 1,400 [removed: talented people] [added: college graduates] through our management trainee program as part of our long-term growth initiatives.

We [removed: are also committed to investing] [added: invest] in our people by providing learning and employee networking [removed: opportunities] [added: opportunities, including through our ERGs,] to drive retention, [removed: progression] [added: development] and engagement and help [removed: them] [added: employees] excel in their current and future roles.

During [removed: 2021,] [added: 2022,] our employees completed thousands of hours of online and instructor-led courses across a broad range of categories, including leadership, [removed: inclusion, diversity and equity,] [added: ID&E,] professional skills, technical and compliance.

*Occupational Health and Safety.* [removed: We are committed to providing] [added: Providing] safe and healthy working environments for our [removed: employees.][added: employees is a core value.]

We have a [removed: continued] [added: consistent] focus on Environmental, Health and Safety [removed: (EHS)] excellence that [removed: involves enhancing] [added: promotes] employee health and safety, process safety, [added: and] occupational [removed: health] [added: health, including evaluation] and [removed: taking] [added: implementation of] reasonable preventative measures to reduce workplace injuries [removed: to protect the health] and [removed: safety of our employees.][added: illness.]

We strive for incident-free workplaces — continuously assessing and [removed: developing] [added: improving] the programs that are in place to help keep our employees, customers and communities safe.

Since the onset of the [added: COVID-19] pandemic, we have implemented [removed: significant] modifications [removed: to] [added: throughout] our [added: business and] health and safety [removed: programs, which were] [added: programs] designed to protect the health and well-being of our employees and [removed: customers from COVID-19.][added: customers.]

[removed: *Employment Practices and Total] [added: *Total] Rewards.* We [removed: are committed to] [added: prioritize] the fair, consistent and equitable treatment of our employees in relation to working conditions, wages, benefits, policies and procedures.

[removed: To this end, the] [added: 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.

Over the past [removed: two] [added: few] years, we [added: have] enhanced certain of the Company’s benefits and practices to support the health and well-being of our employees through the [removed: challenges of the] [added: COVID-19] pandemic and [removed: significant supply chain disruptions caused by Winter Storm Uri and Hurricane Ida — two natural disasters that occurred during 2021.][added: other challenges.]

We also have rewarded our employees’ resiliency and hard work and made changes in our business to encourage retention, including [added: through] wage increases, reduced store hours and employee benefits enhancements.

For additional information regarding environmental-related matters, see Notes 1, [removed: 9] [added: 11] and [removed: 18] [added: 20] to the Consolidated Financial Statements in Item 8.

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 [removed: the] federal securities laws.

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,” “may,” “will,” “should,” “project,” “could,” “plan,” “goal,” “target,” “potential,” “seek,” “intend,” [removed: “aspire”] [added: “aspire,” “strive”] or “anticipate” or the negative thereof or comparable terminology.

- changes in general domestic and international economic [removed: conditions such as] [added: conditions, including due to higher] inflation rates, interest rates, tax [removed: rates,] [added: rates and] unemployment rates, higher labor and healthcare costs, [removed: recessions,] [added: recessions] and changing government policies, laws and regulations;

You may access these documents on our Investor Relations website, investors.sherwin.com.

Sherwin-Williams® and other controlled brand products are distributed through The Americas Group and this segment’s 317 company-

The success of our business and ability to execute on our strategy depend in large part on our ability to attract, retain, develop and progress a diverse population of qualified employees at all levels of our organization.

We have developed key strategies, objectives and measures as part of the overall management of our business that support our global workforce and enable us to attract, retain, develop and progress top talent in a competitive labor market.

These strategies, objectives and measures are advanced through programs, policies and initiatives focused on inclusion, diversity and equity (ID&E), talent acquisition and employee engagement, occupational health and safety and total rewards, which includes compensation and benefits programs and practices.

During 2022, we held our annual CEO Forums on Inclusion, which are designed to encourage open discussions with employees that are led by our Chief Executive Officer and other senior leaders about opportunities to advance our culture of inclusion and belonging.

We also continued our focus on driving allyship and empathy through conscious inclusion training across our global workforce and elevating the visibility and prominence of our Employee Resource Groups (ERGs).

These voluntary, employee-led networks are organized around a shared underrepresented demographic, and membership spans across 250 chapters globally.

ERGs 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.

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, ID&E, workforce analytics and human resources information technology governance.

We also partner with various colleges and universities, including Historically Black Colleges and Universities and Hispanic-Serving Institutions, to attract women, underrepresented racial or ethnic groups, individuals with disabilities, veterans and other candidates into the talent pipeline.

We measure our progress toward creating an inclusive culture that empowers employees to learn, grow and achieve their aspirations by conducting periodic pulse surveys and our global engagement survey, which we first conducted during 2021 and expect to conduct every other year.

We are focused on using these survey results to drive continued progress with our efforts.

These efforts have included, and may continue to include where necessary and appropriate, enhanced cleaning and sanitation procedures and return to work protocols.

These efforts also continue to include permitting remote, alternate and flexible work arrangements where possible to promote increased flexibility and support employee health and safety, while maintaining our focus on innovation, collaboration, and engagement.

During 2022, we continued enhancing the benefits we provide to our employees, including by extending our employee assistance program to our global workforce.

The program provides mental

health and well-being, family, career, lifestyle, legal and financial resources, tools and services designed to support our employees across all aspects of their lives.

- our ability to achieve expected benefits of restructuring and productivity initiatives;

- weakening of global credit markets and our ability to generate cash to service our indebtedness;

- cybersecurity incidents and other disruptions to our information technology systems and operations;

- our ability to protect or enforce our material trademarks and other intellectual property rights;

- our ability to attract, retain, develop and progress a qualified global workforce;

- damage to our business, reputation, image or brands due to negative publicity;

At December 31, 2021, The Americas Group consisted of operations from subsidiaries in 10 foreign countries.

At December 31, 2021, the Consumer Brands Group consisted of operations in the United States and subsidiaries in 5 foreign countries.

based resins and colorants worldwide.

At December 31, 2021, the Performance Coatings Group consisted of operations in the United States and subsidiaries in 44 foreign countries.

We believe our people are central to the foundation and future of the Company’s success.

Our culture and commitment to our people are important factors in attracting, retaining, developing and progressing qualified talent.

*Purpose and Culture*.

We value and support our people through, among other initiatives, our inclusion, diversity and equity, talent acquisition, employee engagement, and occupational health and safety initiatives, and our employment practices and total rewards programs.

*Talent Acquisition and Employee Engagement.* We are committed to providing our people with opportunities to learn, grow and be recognized for their achievements.

These efforts have included, but are not limited to: requiring social distancing; permitting remote, alternate and flexible work arrangements where possible; enhancing cleaning and sanitation procedures; restricting domestic and international travel; developing return to work and visitor screening protocols; and postponing or cancelling the hosting or attending of large events.

For additional information regarding our response to the COVID-19 pandemic and supply chain disruptions, see the information included within Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

- our ability to attain cost savings from productivity initiatives;

- the duration, severity and scope of the COVID-19 pandemic and the actions implemented by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19, which may exacerbate one or more of the aforementioned and/or other risks, uncertainties and factors more fully described in the Company’s reports filed with the Securities and Exchange Commission.

[removed: Securities and Exchange Commission] [added: SEC] regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold.

For 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, [removed: 9, 10] [added: 11, 12] and [removed: 18] [added: 20] to the “Notes to Consolidated Financial Statements” in Item 8.

The information contained in Note [removed: 10] [added: 12] to the Consolidated Financial Statements is incorporated herein by reference.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

The aggregate market value of common stock held by non-affiliates of the Registrant at June 30, [removed: 2021] [added: 2022] was [removed: $71,612,872,106] [added: $57,920,449,955] (computed by reference to the price at which the common stock was last sold on such date).

At January 31, [removed: 2022, 260,373,774] [added: 2023, 258,442,281] shares of common stock were outstanding, net of treasury shares.

Portions of our Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Shareholders (“Proxy Statement”) to be filed with the Securities and Exchange Commission within 120 days of our fiscal year ended December 31, [removed: 2021] [added: 2022] are incorporated by reference into Part III of this report.

| Item 1. | | | [removed: [Business](#i36b8a0d7661241fb8fcef70177a5caef_13)] [added: [Business](#ic6d89eb8d5ed47839a7aadf63eb72fac_13)] | | | [removed: [1](#i36b8a0d7661241fb8fcef70177a5caef_13)] [added: [1](#ic6d89eb8d5ed47839a7aadf63eb72fac_13)] | | |

| | | | [Cautionary Statement Regarding Forward-Looking [removed: Information](#i36b8a0d7661241fb8fcef70177a5caef_16)] [added: Information](#ic6d89eb8d5ed47839a7aadf63eb72fac_16)] | | | [removed: [5](#i36b8a0d7661241fb8fcef70177a5caef_16)] [added: [5](#ic6d89eb8d5ed47839a7aadf63eb72fac_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i36b8a0d7661241fb8fcef70177a5caef_19)] [added: Factors](#ic6d89eb8d5ed47839a7aadf63eb72fac_19)] | | | [removed: [6](#i36b8a0d7661241fb8fcef70177a5caef_19)] [added: [6](#ic6d89eb8d5ed47839a7aadf63eb72fac_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i36b8a0d7661241fb8fcef70177a5caef_22)] [added: Comments](#ic6d89eb8d5ed47839a7aadf63eb72fac_22)] | | | [removed: [14](#i36b8a0d7661241fb8fcef70177a5caef_22)] [added: [15](#ic6d89eb8d5ed47839a7aadf63eb72fac_22)] | | |

| Item 2. | | | [removed: [Properties](#i36b8a0d7661241fb8fcef70177a5caef_25)] [added: [Properties](#ic6d89eb8d5ed47839a7aadf63eb72fac_25)] | | | [removed: [16](#i36b8a0d7661241fb8fcef70177a5caef_25)] [added: [16](#ic6d89eb8d5ed47839a7aadf63eb72fac_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i36b8a0d7661241fb8fcef70177a5caef_28)] [added: Proceedings](#ic6d89eb8d5ed47839a7aadf63eb72fac_28)] | | | [removed: [17](#i36b8a0d7661241fb8fcef70177a5caef_28)] [added: [17](#ic6d89eb8d5ed47839a7aadf63eb72fac_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i36b8a0d7661241fb8fcef70177a5caef_31)] [added: Disclosures](#ic6d89eb8d5ed47839a7aadf63eb72fac_31)] | | | [removed: [17](#i36b8a0d7661241fb8fcef70177a5caef_31)] [added: [17](#ic6d89eb8d5ed47839a7aadf63eb72fac_31)] | | |

| | | | [Information About Our Executive [removed: Officers](#i36b8a0d7661241fb8fcef70177a5caef_34)] [added: Officers](#ic6d89eb8d5ed47839a7aadf63eb72fac_34)] | | | [removed: [18](#i36b8a0d7661241fb8fcef70177a5caef_34)] [added: [18](#ic6d89eb8d5ed47839a7aadf63eb72fac_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and [removed: Issuer](#i36b8a0d7661241fb8fcef70177a5caef_40)[ ](#i36b8a0d7661241fb8fcef70177a5caef_40)[Purchases] [added: Issuer](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)[Purchases] of Equity [removed: Securities](#i36b8a0d7661241fb8fcef70177a5caef_40)] [added: Securities](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)] | | | [removed: [20](#i36b8a0d7661241fb8fcef70177a5caef_40)] [added: [20](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#i36b8a0d7661241fb8fcef70177a5caef_43)] [added: [\[Reserved\]](#ic6d89eb8d5ed47839a7aadf63eb72fac_43)] | | | [removed: [21](#i36b8a0d7661241fb8fcef70177a5caef_43)] [added: [21](#ic6d89eb8d5ed47839a7aadf63eb72fac_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results [removed: of](#i36b8a0d7661241fb8fcef70177a5caef_46)[ ](#i36b8a0d7661241fb8fcef70177a5caef_46)[Operations](#i36b8a0d7661241fb8fcef70177a5caef_46)] [added: of](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)[Operations](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)] | | | [removed: [22](#i36b8a0d7661241fb8fcef70177a5caef_46)] [added: [22](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i36b8a0d7661241fb8fcef70177a5caef_64)] [added: Risk](#ic6d89eb8d5ed47839a7aadf63eb72fac_64)] | | | [removed: [38](#i36b8a0d7661241fb8fcef70177a5caef_64)] [added: [38](#ic6d89eb8d5ed47839a7aadf63eb72fac_64)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i36b8a0d7661241fb8fcef70177a5caef_67)] [added: Data](#ic6d89eb8d5ed47839a7aadf63eb72fac_67)] | | | [removed: [39](#i36b8a0d7661241fb8fcef70177a5caef_67)] [added: [39](#ic6d89eb8d5ed47839a7aadf63eb72fac_67)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and [removed: Financial](#i36b8a0d7661241fb8fcef70177a5caef_181)[ ](#i36b8a0d7661241fb8fcef70177a5caef_181)[Disclosure](#i36b8a0d7661241fb8fcef70177a5caef_181)] [added: Financial](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)[Disclosure](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)] | | | [removed: [89](#i36b8a0d7661241fb8fcef70177a5caef_181)] [added: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i36b8a0d7661241fb8fcef70177a5caef_184)] [added: Procedures](#ic6d89eb8d5ed47839a7aadf63eb72fac_184)] | | | [removed: [89](#i36b8a0d7661241fb8fcef70177a5caef_184)] [added: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_184)] | | |

| Item 9B. | | | [Other [removed: Information](#i36b8a0d7661241fb8fcef70177a5caef_187)] [added: Information](#ic6d89eb8d5ed47839a7aadf63eb72fac_187)] | | | [removed: [89](#i36b8a0d7661241fb8fcef70177a5caef_187)] [added: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_187)] | | |

| Item 9C. | | | [Disclosure Regarding Jurisdictions that Prevent [removed: Inspection](#i36b8a0d7661241fb8fcef70177a5caef_1840)[s](#i36b8a0d7661241fb8fcef70177a5caef_1840)] [added: Inspections](#ic6d89eb8d5ed47839a7aadf63eb72fac_190)] | | | [removed: [89](#i36b8a0d7661241fb8fcef70177a5caef_1840)] [added: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_190)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i36b8a0d7661241fb8fcef70177a5caef_193)] [added: Governance](#ic6d89eb8d5ed47839a7aadf63eb72fac_196)] | | | [removed: [90](#i36b8a0d7661241fb8fcef70177a5caef_193)] [added: [91](#ic6d89eb8d5ed47839a7aadf63eb72fac_196)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i36b8a0d7661241fb8fcef70177a5caef_196)] [added: Compensation](#ic6d89eb8d5ed47839a7aadf63eb72fac_199)] | | | [removed: [90](#i36b8a0d7661241fb8fcef70177a5caef_196)] [added: [91](#ic6d89eb8d5ed47839a7aadf63eb72fac_199)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and [removed: Related](#i36b8a0d7661241fb8fcef70177a5caef_199)[ ](#i36b8a0d7661241fb8fcef70177a5caef_199)[Stockholder Matters](#i36b8a0d7661241fb8fcef70177a5caef_199)] [added: Related](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)[Stockholder Matters](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)] | | | [removed: [91](#i36b8a0d7661241fb8fcef70177a5caef_199)] [added: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i36b8a0d7661241fb8fcef70177a5caef_202)] [added: Independence](#ic6d89eb8d5ed47839a7aadf63eb72fac_205)] | | | [removed: [91](#i36b8a0d7661241fb8fcef70177a5caef_202)] [added: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_205)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i36b8a0d7661241fb8fcef70177a5caef_205)] [added: Services](#ic6d89eb8d5ed47839a7aadf63eb72fac_208)] | | | [removed: [91](#i36b8a0d7661241fb8fcef70177a5caef_205)] [added: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_208)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i36b8a0d7661241fb8fcef70177a5caef_211)] [added: Schedules](#ic6d89eb8d5ed47839a7aadf63eb72fac_214)] | | | [removed: [92](#i36b8a0d7661241fb8fcef70177a5caef_211)] [added: [93](#ic6d89eb8d5ed47839a7aadf63eb72fac_214)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i36b8a0d7661241fb8fcef70177a5caef_214)] [added: Summary](#ic6d89eb8d5ed47839a7aadf63eb72fac_217)] | | | [removed: [98](#i36b8a0d7661241fb8fcef70177a5caef_214)] [added: [99](#ic6d89eb8d5ed47839a7aadf63eb72fac_217)] | | |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| [PART I](#ic6d89eb8d5ed47839a7aadf63eb72fac_10) | | | | | | | | |

| [PART II](#ic6d89eb8d5ed47839a7aadf63eb72fac_37) | | | | | | | | |

| [PART III](#ic6d89eb8d5ed47839a7aadf63eb72fac_193) | | | | | | | | |

| [PART IV](#ic6d89eb8d5ed47839a7aadf63eb72fac_211) | | | | | | | | |

| | | | [Signatures](#ic6d89eb8d5ed47839a7aadf63eb72fac_220) | | | [100](#ic6d89eb8d5ed47839a7aadf63eb72fac_220) | | |

| | | | | | | | | | | | | | | |

| [PART I](#i36b8a0d7661241fb8fcef70177a5caef_10) | | | | | | | | |

| [PART II](#i36b8a0d7661241fb8fcef70177a5caef_37) | | | | | | | | |

| [PART III](#i36b8a0d7661241fb8fcef70177a5caef_190) | | | | | | | | |

| [PART IV](#i36b8a0d7661241fb8fcef70177a5caef_208) | | | | | | | | |

| | | | [Signatures](#i36b8a0d7661241fb8fcef70177a5caef_217) | | | [99](#i36b8a0d7661241fb8fcef70177a5caef_217) | | |

\[THIS PAGE INTENTIONALLY LEFT BLANK\]

We own our world headquarters located in Cleveland, Ohio, which includes the world headquarters for The [removed: Americas Group,] [added: Americas,] Consumer Brands [removed: Group] and Performance Coatings [removed: Group.][added: Groups and the Administrative segment.]

| Asia | | | | | | [removed: 1] [added: 3] | | | [removed: 5] [added: 4] | | | [removed: 6] [added: 7] | | | | | | [removed: 1] [added: 3] | | | [removed: 3] [added: 2] | | | [removed: 4] [added: 5] | | |

| Europe | | | | | | [added: 1] | | | [removed: 3] [added: 17] | | | [removed: 3] [added: 18] | | | | | | [removed: 1] [added: 3] | | | [removed: 3] [added: 15] | | | [removed: 4] [added: 18] | | |

| Latin America | | | | | | [removed: 2] [added: 3] | | | [removed: 6] [added: 10] | | | [removed: 8] [added: 13] | | | | | | [removed: 4] [added: 5] | | | [removed: 5] [added: 10] | | | [removed: 9] [added: 15] | | |

| United States | | | | | | 6 | | | [removed: 31] [added: 40] | | | [removed: 37] [added: 46] | | | | | | 11 | | | [removed: 1] [added: 10] | | | [removed: 12] [added: 21] | | |

| Total | | | | | | [removed: 9] [added: 13] | | | [removed: 49] [added: 76] | | | [removed: 58] [added: 89] | | | | | | [removed: 18] [added: 23] | | | [removed: 13] [added: 39] | | | [removed: 31] [added: 62] | | |

| Europe | | | | | | 1 | | | [removed: 17] [added: 5] | | | [removed: 18] [added: 6] | | | | | | 4 | | | [removed: 12] [added: 2] | | | [removed: 16] [added: 6] | | |

| United States | | | | | | | | | [removed: 10] [added: 2] | | | [removed: 10] [added: 2] | | | | | | [added: 3] | | | [removed: 9] | | | [removed: 9] [added: 3] | | |

| Total | | | | | | [removed: 4] [added: 1] | | | [removed: 35] [added: 7] | | | [removed: 39] [added: 8] | | | | | | 7 | | | [removed: 30] [added: 2] | | | [removed: 37] [added: 9] | | |

The operations of The Americas Group included a leased distribution facility in Uruguay and [removed: 4,859] [added: 4,931] company-operated specialty paint stores, of which [removed: 217] [added: 216] were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. Lucia, Uruguay, Brazil, Chile, Peru, Mexico, Ecuador and Barbados at December 31, [removed: 2021.][added: 2022.]

At the end of [removed: 2021:][added: 2022:]

- the Mid Western Division operated [removed: 1,156] [added: 1,172] paint stores primarily located in the midwestern and upper west coast states;

- the Eastern Division operated [removed: 891] [added: 901] paint stores along the upper east coast and New England states;

- the Canada Division operated [removed: 246] [added: 252] paint stores throughout Canada;

- the Southeastern Division operated [removed: 1,151] [added: 1,171] paint stores principally covering the lower east and gulf coast states, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. Lucia and Barbados;

- the [removed: South Western] [added: Southwestern] Division operated [removed: 1,105] [added: 1,128] paint stores in the central plains and the lower west coast states; and

- the Latin America Division operated [removed: 310] [added: 307] paint stores in Uruguay, Brazil, Chile, Peru, Mexico and Ecuador.

During [removed: 2021,] [added: 2022,] The Americas Group opened [removed: 85] [added: 72] net new stores, consisting of [removed: 92] [added: 89] new stores opened [removed: (76] [added: (71] in the United States, [removed: 3] [added: 11] in [removed: Canada, 3] [added: Mexico, 6] in [removed: South America] [added: Canada] and [removed: 10] [added: 1] in [removed: Mexico)] [added: South America)] and [removed: 7] [added: 17] stores closed [removed: (6] [added: (2] in the United [removed: States] [added: States, 14 in South America] and 1 in [removed: South America).][added: Mexico).]

The Performance Coatings Group operated [removed: 221] [added: 223] branches in the United States, of which 8 were owned, at December 31, [removed: 2021.][added: 2022.]

The Performance Coatings Group also operated [removed: 61] [added: 94] branches internationally, of which [removed: 6] [added: 7] were owned, at December 31, [removed: 2021,] [added: 2022,] consisting of branches in [removed: Canada (21),] Europe [removed: (15),] [added: (47), Canada (22),] Chile (11), Mexico (5), Peru [removed: (4),] [added: (3),] Vietnam (3), Ecuador [removed: (1),] [added: (2),] and Brazil (1).

For additional information regarding real property leases, see Note [removed: 8] [added: 10] to the Consolidated Financial Statements in Item 8.

The Company has entered into an agreement to sell its current headquarters and its research and development center.

The sale is expected to be completed during 2023.

Refer to Item 7 for further information on the construction of our new headquarters and research and development center.

During 2022, this segment added 35 net new branches, consisting of 39 opened or acquired branches and 4 branches closed.

| Asia | | | | | | 2 | | | 3 | | | 5 | | | | | | 2 | | | 2 | | | 4 | | |

| Latin America | | | | | | 1 | | | 4 | | | 5 | | | | | | 1 | | | 6 | | | 7 | | |

During 2021, this segment opened one new branch and closed one branch for no net change in the number of branches operated.

The following is the name, age and position of each of our executive officers and all [removed: persons chosen to become executive officers, as well as all] prior positions held by each person during the last five years.

| John G. Morikis | | | [removed: 58] [added: 59] | | | Chairman and Chief Executive Officer, Director | | |

| Heidi G. Petz | | | [removed: 47] [added: 48] | | | President and Chief Operating Officer | | |

| Allen J. Mistysyn | | | [removed: 53] [added: 54] | | | Senior Vice President - Finance and Chief Financial Officer | | |

| Jane M. Cronin | | | [removed: 54] [added: 55] | | | Senior Vice President - [removed: Corporate Controller] [added: Enterprise Finance] | | |

| Mary L. Garceau | | | [removed: 49] [added: 50] | | | Senior Vice President, General Counsel and Secretary | | |

| [removed: Thomas] [added: Gregory] P. [removed: Gilligan] [added: Sofish] | | | [removed: 61] [added: 57] | | | Senior Vice President - Human Resources | | |

| James R. Jaye | | | [removed: 55] [added: 56] | | | Senior Vice President - Investor Relations and Corporate Communications | | |

| Bryan J. Young | | | [removed: 46] [added: 47] | | | Senior Vice President - Corporate Strategy and Development | | |

| Justin T. Binns | | | [removed: 46] [added: 47] | | | President, The Americas Group | | |

| Karl J. Jorgenrud | | | [removed: 45] [added: 46] | | | President, Performance Coatings Group | | |

| Todd D. Rea | | | [removed: 47] [added: 48] | | | President, Consumer Brands Group | | |

| Joseph F. Sladek | | | [removed: 51] [added: 52] | | | President & General Manager, Global Supply Chain Division, Consumer Brands Group | | |

Mr. Morikis has served as Chairman since January [removed: 2017, President since March 2021,] [added: 2017] and Chief Executive Officer since January 2016.

Mr. Morikis [added: also] served as President from [added: March 2021 to March 2022 and] October 2006 to March 2019 and Chief Operating Officer from October 2006 to January 2016.

[removed: Ms. Petz] [added: Mr. Binns] has served as President, The Americas Group since March [removed: 2021.][added: 2022.]

Ms. Petz served as [added: 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.

[removed: Ms. Petz] [added: Mr. Sofish] has been employed with the Company since [removed: June 2017.][added: September 1996.]

[removed: Effective March 1, 2022,] Ms. Petz [removed: will serve] [added: has served] as President and Chief Operating [removed: Officer.][added: Officer since March 2022.]

Ms. Cronin [removed: has] served as Senior Vice President - Corporate Controller [removed: since] [added: from] October [removed: 2016.][added: 2016 to July 2022.]

Mr. [removed: Gilligan] [added: Sofish] has served as Senior Vice President - Human Resources since January [removed: 2016.][added: 2023.]

Mr. Young served as Vice President - Corporate Strategy and Development from June 2017 to [removed: February] [added: March] 2021.

Mr. [removed: Binns] [added: Jorgenrud] has served as President, Performance Coatings Group since [removed: November 2020.][added: March 2022.]

[removed: Mr. Binns served as President & General Manager, Automotive Finishes Division,] Performance Coatings Group from July 2018 to November 2020 and President & General Manager, Eastern Division, The Americas Group from October 2016 to July 2018.

Mr. Jorgenrud [removed: has] served as President & General Manager, General Industrial Division, Performance Coatings Group [removed: since] [added: from] January [removed: 2020.][added: 2020 to March 2022 and President & General Manager, Protective & Marine Division, Performance Coatings Group from June 2017 to December 2019.]

Mr. [removed: Jorgenrud] [added: Binns] served as [removed: President & General Manager, Protective & Marine Division,] [added: President,] Performance Coatings Group from [removed: June 2017] [added: November 2020] to [removed: December 2019.][added: March 2022, President & General Manager, Automotive Finishes Division,]

Mr. Rea served within the Consumer Brands Group as President of North America Sales from November 2020 to November 2021, Senior Vice President of Sales, Retail and National Accounts from November 2019 to November 2020, Senior Vice President of Sales, Lowe’s Business Unit from March 2018 to November [removed: 2019,] [added: 2019 and] Senior Vice President of Sales, National Accounts from August 2017 to February [removed: 2018, and Vice President of Sales, National Accounts from April 2016 to August 2017.][added: 2018.]

Mr. Sladek served within the Global Supply Chain Division, Consumer Brands Group as Senior Vice President, Global Operations & Engineering from August 2020 to January 2021, Senior Vice President, International & Industrial Operations from April 2019 to August [removed: 2020,] [added: 2020 and] Vice President, Excellence Initiatives from March 2017 to March [removed: 2019 and Vice President, Engineering & Manufacturing Quality from June 2014 to March 2017.][added: 2019.]

Ms. Petz joined the Company in June 2017 in connection with the Valspar acquisition.

Ms. Cronin has served as Senior Vice President - Enterprise Finance since July 2022.

Mr. Sofish served as Vice President, Total Rewards from August 2019 to January 2023 and Vice President, Executive Compensation from March 2015 to August 2019.

Mr. Young joined the Company in June 2017 in connection with the Valspar acquisition.

Mr. Jorgenrud joined the Company in June 2017 in connection with the Valspar acquisition.

Effective March 1, 2022, Mr. Morikis will serve as Chairman and Chief Executive Officer.

Prior to joining the Company in connection with the Valspar acquisition, Ms. Petz served as Vice President of Marketing, Consumer Business of Valspar from June 2013 to June 2017.

Ms. Garceau served as Vice President, Deputy General Counsel and Assistant Secretary from June 2017 to August 2017, Associate General Counsel and Assistant Secretary from April 2017 to June 2017 and Associate General Counsel from February 2014 to April 2017.

Mr. Gilligan has been employed with the Company since October 1983.

Prior to joining the Company, Mr. Jaye served as Senior Director, Communications and Investor Relations at Nordson Corporation, manufacturer of dispensing products and systems, from October 2007 to October 2017.

Prior to joining the Company in

connection with the acquisition of The Valspar Corporation, Mr. Young served as Vice President, Corporate Development of Valspar from October 2015 to June 2017.

Mr. Young has been employed with the Company since June 2017.

Effective March 1, 2022, Mr. Binns will serve as President, The Americas Group.

Prior to joining the Company in connection with the Valspar acquisition, Mr. Jorgenrud served as Vice President and General Manager, Global Functional Coatings of Valspar from September 2013 to June 2017.

Mr. Jorgenrud has been employed with the Company since June 2017.

Effective March 1, 2022, Mr. Jorgenrud will serve as President, Performance Coatings Group and will become an executive officer at that time.

The number of shareholders of record at January 31, [removed: 2022] [added: 2023] was [removed: 5,365.][added: 5,232.]

The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of [removed: 2021.][added: 2022.]

| Share repurchase program (1) | | | | | | [removed: 1,475,000] [added: —] | | | | | | $ | [removed: 290.20] [added: —] | | | | | [removed: 1,475,000] [added: —] | | | | | | [removed: 49,100,000] [added: 45,225,000] | | |

| Employee transactions (2) | | | | | | [removed: 2,423] [added: —] | | | | | | $ | [removed: 294.85] [added: —] | | | | | | | | | | | N/A | | |

| Share repurchase program (1) | | | | | | [removed: 200,000] [added: 150,000] | | | | | | $ | [removed: 333.69] [added: 223.07] | | | | | [removed: 200,000] [added: 150,000] | | | | | | [removed: 48,900,000] [added: 45,675,000] | | |

| Employee transactions (2) | | | | | | [removed: 715] [added: 37] | | | | | | $ | [removed: 330.67] [added: 252.23] | | | | | | | | | | | N/A | | |

| Share repurchase program (1) | | | | | | [removed: 325,000] [added: 450,000] | | | | | | $ | [removed: 340.09] [added: 219.24] | | | | | [removed: 325,000] [added: 450,000] | | | | | | [removed: 48,575,000] [added: 45,225,000] | | |

| Share repurchase program (1) | | | | | | [removed: 2,000,000] [added: 600,000] | | | | | | $ | [removed: 302.66] [added: 220.20] | | | | | [removed: 2,000,000] [added: 600,000] | | | | | | [removed: 48,575,000] [added: 45,225,000] | | |

The Company had remaining authorization at December 31, [removed: 2021] [added: 2022] to purchase [removed: 48,575,000] [added: 45,225,000] shares.

(2)All shares were delivered to satisfy the exercise price and/or tax withholding obligations by employees who exercised stock options or had [removed: shares of] restricted stock [added: units] vest.

The cumulative five-year total return assumes $100 was invested on December 31, [removed: 2016] [added: 2017] 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, [removed: 2021.][added: 2022.]

[removed: ][added: ]

| Employee transactions (2) | | | | | | 2,281 | | | | | | $ | 211.09 | | | | | | | | | | | N/A | | |

| Employee transactions (2) | | | | | | 2,318 | | | | | | $ | 211.75 | | | | | | | | | | | N/A | | |

Common Stock Split

During the first quarter of 2021, the Company’s Board of Directors approved and declared a three-for-one stock split to shareholders of record at the close of business on March 23, 2021 (the Stock Split).

The Stock Split was effected on March 31, 2021.

All share and per share information herein has been retroactively adjusted to reflect the Stock Split.

| Employee transactions (2) | | | | | | 603 | | | | | | $ | 342.05 | | | | | | | | | | | N/A | | |

| Employee transactions (2) | | | | | | 3,741 | | | | | | $ | 309.30 | | | | | | | | | | | N/A | | |

On February 17, 2021, the Board of Directors authorized the Company to purchase an additional 45,000,000 shares of the Company’s stock for treasury purposes.

| Report of Management on Internal Control Over Financial Reporting | | | [removed: [40](#i36b8a0d7661241fb8fcef70177a5caef_70)] [added: [40](#ic6d89eb8d5ed47839a7aadf63eb72fac_70)] | | |

| Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | | | [removed: [41](#i36b8a0d7661241fb8fcef70177a5caef_73)] [added: [41](#ic6d89eb8d5ed47839a7aadf63eb72fac_73)] | | |

| Report of Management on the Consolidated Financial Statements | | | [removed: [42](#i36b8a0d7661241fb8fcef70177a5caef_79)] [added: [43](#ic6d89eb8d5ed47839a7aadf63eb72fac_79)] | | |

| Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements (PCAOB ID: 42) | | | [removed: [43](#i36b8a0d7661241fb8fcef70177a5caef_82)] [added: [44](#ic6d89eb8d5ed47839a7aadf63eb72fac_82)] | | |

| Statements of Consolidated Income | | | [removed: [46](#i36b8a0d7661241fb8fcef70177a5caef_85)] [added: [46](#ic6d89eb8d5ed47839a7aadf63eb72fac_85)] | | |

| Statements of Consolidated Comprehensive Income | | | [removed: [47](#i36b8a0d7661241fb8fcef70177a5caef_88)] [added: [47](#ic6d89eb8d5ed47839a7aadf63eb72fac_88)] | | |

| Consolidated Balance Sheets | | | [removed: [48](#i36b8a0d7661241fb8fcef70177a5caef_91)] [added: [48](#ic6d89eb8d5ed47839a7aadf63eb72fac_91)] | | |

| Statements of Consolidated Cash Flows | | | [removed: [49](#i36b8a0d7661241fb8fcef70177a5caef_94)] [added: [49](#ic6d89eb8d5ed47839a7aadf63eb72fac_94)] | | |

| Statements of Consolidated Shareholders’ Equity | | | [removed: [50](#i36b8a0d7661241fb8fcef70177a5caef_97)] [added: [50](#ic6d89eb8d5ed47839a7aadf63eb72fac_97)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [51](#i36b8a0d7661241fb8fcef70177a5caef_100)] [added: [51](#ic6d89eb8d5ed47839a7aadf63eb72fac_100)] | | |

In order to ensure that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2021,] [added: 2022,] we conducted an assessment of its effectiveness under the supervision and with the participation of our management group, including our principal executive officer and principal financial officer.

Based on our assessment of internal control over financial reporting under the criteria established in Internal Control – Integrated Framework, we have concluded that, as of December 31, [removed: 2021,] [added: 2022,] the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] has been audited by Ernst & Young LLP, an independent registered public accounting firm, and their report on the effectiveness of our internal control over financial reporting is included on page 41 of this report.

[removed: ][added: ]

[removed: Chairman, President] [added: Chairman] and Chief Executive Officer

[removed: ][added: ]

[removed: ][added: ]

Senior Vice President - [removed: Corporate Controller][added: Enterprise Finance]

To the Shareholders and [added: the] Board of Directors of The Sherwin-Williams Company

We have audited The Sherwin-Williams Company’s internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, The Sherwin-Williams Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of The Sherwin-Williams Company as of December 31, [added: 2022,] 2021, [removed: 2020,] and [removed: 2019,] [added: 2020,] the related statements of consolidated income, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes and the financial statement schedule listed in Item 15(a) and our report dated February [removed: 17, 2022] [added: 22, 2023] expressed an unqualified opinion thereon.

[removed: ][added: ]

We are responsible for the preparation and fair presentation of the consolidated financial statements, accompanying notes and related financial information included in this report of The Sherwin-Williams Company and its consolidated subsidiaries (collectively, the “Company”) as of December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] and for the years then ended in accordance with U.S. generally accepted accounting principles.

As discussed in the Report of Management on Internal Control Over Financial Reporting on page 40 of this report, we concluded that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2021.][added: 2022.]

We have audited the accompanying consolidated balance sheets of The Sherwin-Williams Company (the “Company”) as of December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] the related statements of consolidated income, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes and the financial statement schedule listed in Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 17, 2022] [added: 22, 2023] expressed an unqualified opinion thereon.

Such procedures [removed: include] [added: included] examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

| *Description of the Matter* | | | As described in Note [removed: 9] [added: 11] to the consolidated financial statements, the Company had short-term and long-term accruals for environmental-related activities of [removed: $45.9] [added: $50.2] million and [removed: $277.4] [added: $240.2] million, respectively, at December 31, [removed: 2021.] [added: 2022.] The Company’s largest and most complex site is the Gibbsboro, New Jersey site (“Gibbsboro”) and the substantial majority of the environmental-related accrual relates to this site. Gibbsboro consists of six operable units which contain a combination of soil, [added: sediment,] waterbodies and groundwater contamination, and are in various phases of investigation and remediation with the Environmental Protection Agency (“EPA”). The Company’s estimated environmental-related accrual for Gibbsboro is based on industry standards and professional judgement, and the most significant assumptions underlying the estimated cost of remediation efforts reserved for Gibbsboro are the types and extent of [removed: contamination.] [added: future remediation.] Auditing the Company’s environmental-related accrual at the Gibbsboro site required complex judgement due to the inherent challenges in identifying the type and extent of future remedies [removed: and the costs of implementing those remedies] in determining the probable and reasonably estimable loss for which the Company will be responsible. | | |

| *How We Addressed the Matter in Our Audit* | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes to estimate the Gibbsboro environmental-related accrual. For example, we tested controls over management’s review of the environmental loss calculations and the key assumptions affecting those calculations as described above. To test the Gibbsboro environmental-related accrual, our audit procedures included, among others, a review of correspondence with the EPA supporting the Company’s assessment of the [removed: type and] [added: type,] extent [added: and cost] of [removed: contamination] [added: remediation] at the Gibbsboro site for which the Company is responsible. We [added: assessed the appropriateness of the Company’s policies and procedures and tested management’s environmental reserve estimate. We] involved our environmental specialists to confirm our understanding of the remediation plans for the most significant operable units within the Gibbsboro site and to evaluate the [added: impact of current year investigation and remediation activities on the] Company's methodology and assumptions [added: used] to estimate the [removed: unit] cost and extent of [removed: contamination] [added: remediation] in accordance with industry practice, applicable laws and regulations. We [removed: recalculated the remediation cost estimate based on unit cost and estimated extent of remediation required. We] reconciled types and extent of [removed: contamination] [added: remediation] identified in communications between the Company and the EPA to the Company’s remediation cost estimates recorded for [removed: Gibbsboro and confirmed a sample of underlying cost estimates with third-parties.] [added: Gibbsboro.] We also conducted a search for publicly available information that might indicate facts contrary to the types and extent of [removed: contamination] [added: remediation] currently identified in the Company’s remediation cost estimates recorded for Gibbsboro. | | |

| | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Net sales | | | $ | [removed: 19,944.6] [added: 22,148.9] | | | | | $ | [removed: 18,361.7] [added: 19,944.6] | | | | | $ | [removed: 17,900.8] [added: 18,361.7] | |

| Cost of goods sold | | | [removed: 11,401.9] [added: 12,823.8] | | | | | | [removed: 9,679.1] [added: 11,401.9] | | | | | | [removed: 9,864.7] [added: 9,679.1] | | |

| Gross profit | | | [removed: 8,542.7] [added: 9,325.1] | | | | | | [removed: 8,682.6] [added: 8,542.7] | | | | | | [removed: 8,036.1] [added: 8,682.6] | | |

| *Percent to [removed: net] [added: Net] sales* | | | [removed: 42.8] [added: 42.1] | | % | | | | [removed: *47.3*] [added: *42.8*] | | *%* | | | | [removed: *44.9*] [added: *47.3*] | | *%* |

| Selling, general and administrative expenses | | | [removed: 5,572.5] [added: 6,014.5] | | | | | | [removed: 5,477.9] [added: 5,572.5] | | | | | | [removed: 5,274.9] [added: 5,477.9] | | |

| *Percent to [removed: net] [added: Net] sales* | | | [removed: 27.9] [added: 27.2] | | % | | | | [removed: *29.8*] [added: *27.9*] | | *%* | | | | [removed: *29.5*] [added: *29.8*] | | *%* |

| Other general [added: (income)] expense - net | | | [removed: 101.8] [added: (24.9)] | | | | | | [removed: 27.7] [added: 101.8] | | | | | | [removed: 39.1] [added: 27.7] | | |

| Amortization | | | [removed: 309.5] [added: 317.1] | | | | | | [removed: 313.4] [added: 309.5] | | | | | | [removed: 312.8] [added: 313.4] | | |

As permitted by SEC rules, we have excluded the operations and related assets of the 2022 acquisitions from the scope of our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022.

The Total assets and Net sales of the 2022 acquisitions represented approximately 5.0% and 0.6% of the Company's respective consolidated Total assets and Net sales as of and for the year ended December 31, 2022.

As indicated in the accompanying Report of Management On Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Sika AG, Gross & Perthun GmbH, Dur-A-Flex, Inc., Powdertech Oy Ltd., and Industria Chimica Adriatica S.p.A.

(collectively the 2022 acquisitions), which are included in the 2022 consolidated financial statements of the Company and constituted 5.0% of Total assets as of December 31, 2022 and 0.6% of Net sales for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the 2022 acquisitions excluded from the scope of management’s assessment.

/s/ Ernst & Young, LLP

February 22, 2023

Chairman and Chief Executive Officer



Senior Vice President - Enterprise Finance

/s/ Ernst & Young, LLP

February 22, 2023

| Amounts recognized in AOCI (2) | | | 106.8 | | | | | | 48.7 | | | | | | (19.4) | | |

| Net income | | | $ | 2,020.1 | | | | | $ | 1,864.4 | | | | | $ | 2,030.4 | |

| Impairment of trademarks | | | 15.5 | | | | | | — | | | | | | 2.3 | | |

| Provisions for restructuring | | | 47.3 | | | | | | — | | | | | | — | | |

| Proceeds from real estate financing transactions | | | 207.3 | | | | | | — | | | | | | — | | |

| Treasury stock issued | | | | | | | | | 11.0 | | | | | | | | | | | | 11.0 | | | | | | | | | | | | 22.0 | | |

| Stock-based compensation activity | | | 0.4 | | | | | | 167.1 | | | | | | | | | | | | (33.5) | | | | | | | | | | | | 134.0 | | |

| Other adjustments | | | | | | | | | (7.2) | | | | | | (0.1) | | | | | | | | | | | | | | | | | | (7.3) | | |

| Balance at December 31, 2022 | | | $ | 91.2 | | | | | $ | 3,963.9 | | | | | $ | 3,523.2 | | | | | $ | (3,775.6) | | | | | $ | (700.6) | | | | | $ | 3,102.1 | |

Defined Contribution Savings Plan

See Note 14 for further details on the defined contribution savings plan.

All consolidated non-highly inflationary foreign operations use the local currency of the country of operation as the functional currency.

The resulting translation adjustments are included in AOCI.

Government Incentives

The Company receives incentives from various government entities in the form of tax rebates or credits, grants, and loans.

These incentives typically require that the Company maintain specified spending levels and other operational metrics and may be subject to reimbursement if conditions are not met or maintained.

Government incentives are recorded in the Company’s consolidated financial statements in accordance with their purpose as a reduction of expense, a reduction of the cost of the capital investment or other income.

The benefit of these incentives is recorded when received and all conditions as specified in the agreement are fulfilled.

There were $86.6 million and $49.4 million of government incentives received as cash payments related to the construction of the Company’s new headquarters and R&D center in 2022 and 2021, respectively.

These government incentives were recorded as a reduction in the carrying amount of the respective assets under construction within Property, plant and equipment, net on the Consolidated Balance Sheets and within Other as an investing activity on the Statements of Consolidated Cash Flows.

Real Estate Financing

The Company has entered into certain sale-leaseback agreements that do not qualify as asset sales and were accounted for as real estate financing transactions.

These arrangements primarily consist of our new headquarters currently under construction, for which we expect to receive total proceeds approximating $800 million to $850 million on an incremental basis until the completion of construction.

In December 2022, the Company received $210 million at closing pursuant to the transaction.

The net proceeds are recognized within the Financing Activities section of the Statements of Consolidated Cash Flows, and corresponding financing obligations are recognized within Other long-term liabilities and Other accruals on the Consolidated Balance Sheets.

Future payments are estimated to be $77 million during the remaining construction period, of which $22 million is estimated to be paid in the following twelve months.

Adopted in 2022

February 17, 2022

\[THIS PAGE INTENTIONALLY LEFT BLANK\]

| Amounts recognized in Other comprehensive income (loss) (2) | | | 48.7 | | | | | | (19.4) | | | | | | (5.1) | | |

| Balance at January 1, 2019 | | | $ | 118.4 | | | | | $ | 2,896.4 | | | | | $ | 6,246.5 | | | | | $ | (4,900.7) | | | | | $ | (629.9) | | | | | $ | 3,730.7 | |

| Adjustment to initially adopt ASU 2016-02 | | | | | | | | | | | | | | | (8.4) | | | | | | | | | | | | | | | | | | (8.4) | | |

| Adjustment to initially adopt ASU 2018-02 | | | | | | | | | | | | | | | 8.3 | | | | | | | | | | | | (8.3) | | | | | | — | | |

| Treasury stock transferred from defined benefit pension plan | | | | | | | | | | | | | | | | | | | | | (131.8) | | | | | | | | | | | | (131.8) | | |

| Stock-based compensation activity | | | 1.0 | | | | | | 254.5 | | | | | | | | | | | | (25.2) | | | | | | | | | | | | 230.3 | | |

| Other adjustments | | | | | | | | | 2.1 | | | | | | | | | | | | | | | | | | | | | | | | 2.1 | | |

This ASU replaced the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

As a result of the transition method elected, the required comparative period disclosures are prepared in accordance with the incurred loss impairment methodology.

ESOP

The cost of the Company’s stock-based compensation is recorded in accordance with the Stock Compensation Topic of the ASC.

The resulting translation adjustments were included in accumulated other comprehensive income (loss) (AOCI), a component of Shareholders’ equity.

Reclassifications

Certain amounts in the consolidated financial statements and notes to the consolidated financial statements for 2019 and 2020 have been reclassified to conform to the 2021 presentation.

Adopted in 2021

Effective January 1, 2021, the Company adopted Accounting Standards Update (ASU) 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740.

It also improves consistent application of and simplifies U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance.

The amendments are being applied prospectively.

During the third quarter of 2021, the Company signed an agreement to acquire the European industrial coatings business of Sika AG (Sika).

These acquisitions support the growth of the Performance Coatings Group by providing new technologies and an expanded global platform.

The acquisitions have been accounted for as business combinations.

During the fourth quarter of 2019, the Company performed a strategic review of its business lines as part of the annual planning cycle.

Decisions were made during this review related to certain brands which resulted in a reduction to the long-term forecasted net sales for certain indefinite-lived trademarks acquired in the Valspar acquisition within the Performance Coatings and Consumer Brands Groups.

As a result of the strategic decisions made at that time and in conjunction with the annual impairment review performed as of October 1, 2019, the Company recognized non-cash pre-tax impairment charges totaling $122.1 million related to certain recently acquired indefinite-lived trademarks.

These charges included impairments totaling $117.0 million in the Performance Coatings Group and $5.1 million in the Consumer Brands Group.

In the Performance Coatings Group, $75.6 million related to trademarks in North America directly associated with strategic decisions made to rebrand industrial products to the Sherwin-Williams® brand name, $25.7 million related to trademarks in the Asia Pacific region as a direct result of recent performance that reduced the long-term forecasted net sales and $15.7 million related to other recently acquired trademarks in various regions.The annual impairment review did not result in any goodwill impairment.

| Balance at January 1, 2019 (1) | | | | | | $ | 2,256.6 | | | | | $ | 1,753.8 | | | | | $ | 2,946.3 | | | | | $ | 6,956.7 | |

| December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Gross | | | | | | $ | 166.4 | | | | | $ | 3,062.8 | | | | | $ | 1,730.3 | | | | | $ | 312.9 | | | | | $ | 5,272.4 | | | | | | | | | | | | | |

| Accumulated amortization | | | | | | (134.8) | | | | | | (527.5) | | | | | | (223.5) | | | | | | (260.5) | | | | | | (1,146.3) | | | | | | | | | | | | | | |

| Net value | | | | | | $ | 31.6 | | | | | $ | 2,535.3 | | | | | $ | 1,506.8 | | | | | $ | 52.4 | | | | | $ | 4,126.1 | | | | | $ | 608.4 | | | | | $ | 4,734.5 | |

| Floating Rate Loan | | | 2021 | | | | | | — | | | | | | — | | | | | | 251.9 | | |

| 2.25% Senior Notes | | | 2020 | | | | | | — | | | | | | — | | | | | | 428.6 | | |

In March 2020, the Company issued $500.0 million of 2.30% Senior Notes due May 2030 and $500.0 million of 3.30% Senior Notes due May 2050 in a public offering.

The net proceeds from the issuance of these notes were used to repurchase a portion of the 2.75% Senior Notes due 2022 and redeem the 2.25% Senior Notes due May 2020.

The repurchase of the 2.75% Senior Notes due 2022 during the first quarter of 2020 resulted in a loss of $21.3 million recorded in Other (income) expense - net.

The net proceeds from the issuance of these notes were used for general corporate purposes.

In August 2019, the Company repurchased $1.010 billion of its 2.25% Senior Notes due 2020 and $490.0 million of its 2.75% Senior Notes due 2022.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Based upon that evaluation, our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer concluded that as of the end of the period covered by this [removed: report] [added: report,] our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in [removed: Securities and Exchange Commission] [added: SEC] rules and forms, and accumulated and communicated to our management, including our [removed: Chairman, President] [added: Chairman] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

The information regarding our directors and director nominees is set forth in our Proxy Statement under the caption “Proposal 1 – Election of [removed: 11] [added: 9] Directors” and is incorporated herein by reference.

There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors during [removed: 2021.][added: 2022.]

Our Code of Conduct and Code of Ethics for Senior Financial Management are available on our Investor Relations website, [removed: investors.sherwin-williams.com.][added: investors.sherwin.com.]

We intend to disclose on our Investor Relations website, [removed: investors.sherwin-williams.com,] [added: investors.sherwin.com,] any amendment to, or waiver from, a provision of our Code of Conduct or Code of Ethics for Senior Financial Management that applies to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, and that is required to be publicly disclosed pursuant to the rules of the SEC.

The information required by this item is set forth in our Proxy Statement under the captions [removed: “2021] [added: “2022] Director Compensation Table,” “Director Compensation Program,” “Executive Compensation” and “Executive Compensation Tables” and is incorporated herein by reference.

| Statements of Consolidated Income | | | [removed: [46](#i36b8a0d7661241fb8fcef70177a5caef_85)] [added: [46](#ic6d89eb8d5ed47839a7aadf63eb72fac_85)] | | |

| Statements of Consolidated Comprehensive Income | | | [removed: [47](#i36b8a0d7661241fb8fcef70177a5caef_88)] [added: [47](#ic6d89eb8d5ed47839a7aadf63eb72fac_88)] | | |

| Consolidated Balance Sheets | | | [removed: [48](#i36b8a0d7661241fb8fcef70177a5caef_91)] [added: [48](#ic6d89eb8d5ed47839a7aadf63eb72fac_91)] | | |

| Statements of Consolidated Cash Flows | | | [removed: [49](#i36b8a0d7661241fb8fcef70177a5caef_94)] [added: [49](#ic6d89eb8d5ed47839a7aadf63eb72fac_94)] | | |

| Statements of Consolidated Shareholders’ Equity | | | [removed: [50](#i36b8a0d7661241fb8fcef70177a5caef_97)] [added: [50](#ic6d89eb8d5ed47839a7aadf63eb72fac_97)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [51](#i36b8a0d7661241fb8fcef70177a5caef_100)] [added: [51](#ic6d89eb8d5ed47839a7aadf63eb72fac_100)] | | |

Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] is set forth below.

All other schedules for which provision is made in the applicable [added: SEC] accounting regulations [removed: of the Securities and Exchange Commission] are not required under the related instructions or are inapplicable and therefore have been omitted.

| *(millions of dollars)* | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Beginning balance | | | $ | [removed: 104.6] [added: 97.2] | | | | | $ | [removed: 84.6] [added: 104.6] | | | | | $ | [removed: 73.5] [added: 84.6] | |