Sherwin-Williams (SHW) 10-K risk factor changes: FY2023 vs FY2022

Our [added: business, operations, and] business [removed: is] [added: plans and strategies are] sensitive to global and regional business and economic conditions.

Adverse changes in such conditions in the United States and worldwide [added: have in the past impacted and] may [added: in the future] 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.

[removed: Higher] [added: Changes in] inflation rates, interest rates, tax [removed: rates and] [added: rates,] unemployment rates, [removed: higher] labor [removed: and] [added: costs,] healthcare costs, [removed: recessions, changing] [added: recessionary conditions, geopolitical conditions,] governmental policies, laws and regulations, business disruptions due to cybersecurity incidents, terrorist activity, armed [removed: conflict] [added: conflicts and wars] (including the ongoing conflict between Russia and [removed: Ukraine), war,] [added: Ukraine and the Israel-Hamas war),] public health [removed: crises (including the COVID-19 pandemic),] [added: crises, pandemics, outbreaks of disease, catastrophic events,] adverse weather conditions or natural disasters (including those that may be related to climate change or otherwise), supply chain disruptions (including those caused by industry capacity constraints, labor shortages, raw material availability, and transportation and logistics delays and constraints), and other economic factors have in the past and could in the future adversely affect demand for some of our products, our ability to predict and meet any future changes in the demand for our products, the availability, delivery or cost of raw materials, our ability to adequately staff and maintain operations at affected facilities and our results of operations, cash flow, liquidity or financial condition and that of our customers, vendors and suppliers.

[removed: With respect to inflation in particular, we] [added: We] expect inflationary pressure to [added: continue to] impact consumer [added: and manufacturing customer] behavior during [removed: 2023,] [added: 2024,] including in the United States [removed: and Europe] housing [removed: markets and] [added: market] as a result of elevated mortgage [removed: rates.][added: rates and in global industrial markets as a result of softer demand.]

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

During economic downturns in these segments, the levels of consumer and business discretionary spending [removed: may decrease, and the recovery of these segments may lag behind the recovery of] [added: have in] the [removed: overall economy.][added: past decreased.]

[removed: This] [added: A] decrease in [added: consumer and business discretionary] spending [removed: likely will] [added: has in the past and could in the future] reduce the demand for some of our products and [removed: may] [added: has in the past and could in the future] adversely affect our sales, earnings, cash flow or financial condition.

[removed: Rising interest rates and any such shift in consumer behavior may adversely] affect the demand for new residential homes, existing home turnover and new non-residential construction.

[removed: A] [added: Any] worsening in these segments will reduce the demand for some of our products and may adversely impact sales, earnings and cash flow.

While we would typically expect to see higher demand for our products as project backlogs are reduced in the future, [removed: rising] inflation and other economic [added: 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.]

A weakening of global credit markets [removed: could] [added: or changes to our credit ratings may] adversely affect our results of operations, cash flow, liquidity or financial condition.

A weakening of global credit markets [added: has in the past and] could [added: in the future] adversely impact our net sales, the collection of accounts receivable, funding for working capital needs, expected cash flow generation from current and acquired businesses, access to capital and our investments, which [added: has in the past and] could [added: in the future] adversely impact our results of operations, cash flow, liquidity or financial condition.

An inability to access the capital markets [added: with the same flexibility we have now and on terms commercially acceptable to us, or at all,] could have a material adverse effect on our results of operations, cash flow, liquidity or financial condition.

We have goodwill and intangible assets recorded on our [removed: balance sheet.][added: Consolidated Balance Sheets.]

[added: Future events, such as the integration or rebranding of trademarks acquired in acquisitions] and [added: changing market conditions may impact our assumptions and] change our estimates of future sales and cash flow, [added: including our ability to track trademark specific sales and cash flow,] resulting in us incurring substantial impairment charges, which [removed: would] [added: could] adversely affect our results of operations or financial condition.

At December 31, [removed: 2022,] [added: 2023,] we had total debt of approximately [removed: $10.570] [added: $9.851] billion, which is [removed: an increase] [added: a decrease] of [removed: $954.7] [added: $718.8] million since December 31, [removed: 2021.][added: 2022.]

Our ability to make payments on our debt, fund [removed: our] other liquidity [removed: needs,] [added: needs] and make planned capital expenditures will depend on our ability to generate cash in the future.

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

Finally, changes in the laws of foreign jurisdictions in which we operate [added: have in the past and] may [added: in the future] adversely affect the ability of some of our foreign subsidiaries to repatriate funds to us.

Fluctuations in foreign currency exchange rates [added: and changing monetary policies] could adversely affect our results of operations, cash flow, liquidity or financial condition.

Because of our international operations, we are exposed to risk associated with interest rates and value changes in foreign currencies, [added: including as a result of inflation, central bank monetary policies, currency controls and other exchange restrictions,] which may adversely affect our business.

Our primary exchange rate exposure is with the Euro, the [removed: Chinese yuan,] [added: Brazilian Real,] the [added: Mexican Peso, the] Canadian [removed: dollar,] [added: Dollar,] the [removed: Brazilian real,] [added: Chinese Yuan,] the British [removed: pound,] [added: Pound,] and the [removed: Mexican peso,] [added: Argentine Peso,] each against the U.S. [removed: dollar.][added: Dollar.]

While we actively manage the exposure of our foreign currency risk as part of our overall financial risk management policy, we [removed: believe we] [added: have in the past and] may [added: in the future] experience losses from foreign currency exchange rate fluctuations, and [added: currency controls and restrictions, and] such losses could adversely affect our sales, earnings, cash flow, liquidity or financial condition.

Factors such as political instability, higher tariffs, supply chain disruptions, adverse weather conditions and natural disasters (including those that may be related to climate change or otherwise), [added: armed conflicts and wars,] or public health crises have [removed: disrupted,] [added: impacted] and may in the future [removed: disrupt,] [added: 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 [removed: facilities] [added: facilities,] and increase our costs.

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

Although raw materials and energy supplies (including oil and natural gas) are generally available from various sources in sufficient quantities, unexpected shortages and increases in the cost of raw materials and energy, [added: supplier capacity constraints,] or any deterioration in our relationships with or the financial viability of our suppliers, may have an adverse effect on our earnings or cash flow.

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

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

[removed: Adverse] [added: Catastrophic events, adverse] weather conditions and natural [removed: disasters, including] [added: disasters (including] those that may be related to climate change or [removed: otherwise,] [added: 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, [added: catastrophic events,] adverse weather conditions and natural [removed: disasters, including] [added: disasters (including] those that may be related to climate change or [removed: otherwise,] [added: otherwise)] have [removed: had or may] [added: caused business disruptions and] have [added: had] an adverse effect on our sales, manufacture and distribution of paint, coatings and related products.

In the event [added: of catastrophic events,] adverse weather conditions or a natural disaster cause significant damage to any one or more of our principal manufacturing or distribution facilities, we may not be able to manufacture the products needed to meet customer demand, which could have an adverse effect on our sales of certain paint, coatings and related products.

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

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

During [removed: 2022,] [added: 2023,] no individual customer accounted for sales totaling more than ten percent of our sales.

[removed: Some of our competitors operate more] extensively in certain regions around the world and have greater financial or operational resources to compete internationally.

Technology, product quality, product [added: composition, raw material sourcing, product] 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.

Net [removed: external] sales of our consolidated foreign subsidiaries totaled approximately [removed: 19.4%, 21.2%] [added: 19.2%, 19.4%] and [removed: 19.5%] [added: 21.2%] of our total consolidated [removed: net] [added: Net] sales in [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] 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, sanctions, tariffs, foreign currency exchange rates, foreign currency exchange controls, interest rates, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed [removed: conflict] [added: conflicts and wars] (including the ongoing conflict between Russia and [removed: Ukraine), war,] [added: Ukraine and the Israel-Hamas war),] difficulties in staffing and managing foreign operations and other economic and political factors.

In addition, public health crises [removed: (including the COVID-19 pandemic)] in foreign jurisdictions may temporarily reduce the demand for some of our products and adversely affect the availability and cost of raw materials.

Due to the [removed: international] [added: global] scope of our operations, changes in government policies on foreign trade and investment may affect the demand for our products and services, impact the competitive position of our products or prevent us from being able to sell products in certain countries.

We operate all over the world serving customers in more than 120 countries.

With respect to inflation in particular, high levels of inflation impacted consumer behavior in 2023.

Interest rates increased substantially in 2022 and 2023 and may continue to increase.

The recent and continued combination of high interest rates and high inflation impacted consumer and manufacturing customer behavior during 2023, which we expect to continue into 2024.

Rising interest rates and shifts in consumer behavior have adversely affected and may continue to adversely

Rating agencies regularly evaluate our business and could downgrade our credit rating based on a number of factors, including factors beyond our control, such as general business or economic conditions.

Our ability to generate cash, to a certain extent, is subject to general business, economic,

Currency controls or restrictions may limit our ability to convert foreign currencies into U.S. Dollars, or to remit dividends and other payments from our subsidiaries or businesses located in or conducted within a country imposing such controls or restrictions.

For example, we experienced a loss of $41.8 million in 2023 as a result of the significant devaluation of the Argentine Peso in December 2023 as part of economic reforms implemented by the government of Argentina, and we may experience similar losses in the future.

In addition, environmental and social

Although we generally have a number of suppliers, in some cases we have limited or single-sources of supply.

We purchase raw materials globally from sources around the world, including in the Middle East, Central and South America and other areas that may be less politically stable than other areas.

Wars, armed conflicts, political instability, civil disturbances and unrest, terrorist attacks, and actions by governments in these areas (such as the ongoing conflict between Russia and Ukraine and the Israel-Hamas war and any expansion or increase in the severity and intensity of such) may decrease the supply and increase the price of raw materials that we use for our business, which could have a material adverse effect on our sales, earnings, cash flow or results of operations.

For example, although we do not have significant operations in the region, the Israel-Hamas war has caused disruption, instability and volatility in supply chains and logistics, including shipping disruptions in the Red Sea and surrounding waterways.

Following two years of historic inflation, some raw material and energy prices decreased in 2023, particularly resins and solvents derived from petrochemical feedstock sources such as propylene and ethylene.

Our facilities and systems are not fully redundant and our disaster recovery planning may not be sufficient to meet business needs in the event of disruptions.

Some of our competitors operate more

They may secure better terms from certain vendors, adopt more aggressive pricing, and devote more resources to certain product lines or parts of their business.

International, national, and regional laws, regulations, and policies that have the effect of restricting global trade and markets and restricting the import and export of products, services and technology, or those of our customers, or for the benefit of favored industries or sectors, could interfere with our operations, supply chain, manufacturing costs and customer relationships and harm our business.

Expanding export controls or limits on foreign investment, for example, can impact the global supply of raw materials.

Government actions taken in connection with the United States-China trade conflict could impact business, including sales, imports and exports.

While we maintain cybersecurity insurance, costs related to a cyberattack may exceed the amount of our insurance coverage or may be excluded under the terms of the policy.

We and third parties we rely on or do business with have experienced cybersecurity attacks and incidents in the past, some of which have resulted in unauthorized access to our information and systems and other disruptions to our business operations, and we could in the future experience similar incidents.

These laws and regulations can provide for significant penalties for non-compliance, which could result in additional costs of compliance, enforcement actions, regulatory investigations and fines, individual or class action litigation, or reputational harm.

Ongoing efforts to comply with these laws also may divert management and employee attention from other business and growth initiatives.

To the extent we are unable to remain competitive with our total rewards programs (which include compensation and benefits programs and practices), talent management strategy,

We may not achieve our strategies or expectations relating to sustainability considerations, which could expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.

We have established strategies and expectations for our business relating to certain sustainability considerations, including regarding reducing greenhouse gas emissions, increasing energy efficiency, increasing use of electricity from renewable energy sources, reducing waste and improving safety performance.

These strategies and expectations reflect our current business plans and aspirations, and there is no guarantee that they will be achieved.

Our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control.

Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes and assumptions; the pace of scientific and technological developments; increased costs; the availability of requisite suppliers, energy sources, or financing; and changes in carbon markets.

Failures or delays (whether actual or perceived) in achieving our strategies or expectations related to these matters could expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.

Furthermore, many governments, regulators, investors, employees, customers, media outlets, and other stakeholders are increasingly focused on sustainability considerations relating to businesses, including climate change and greenhouse gas emissions, human capital, and inclusion and belonging.

Our business may face increased scrutiny from such stakeholders and if our strategies relating to sustainability considerations do not meet stakeholder expectations and standards (including with respect to establishing science-based targets), which continue to evolve and may differ across jurisdictions in which we operate, our business, financial condition, results of operations and reputation could be adversely impacted.

Similarly, our failure or perceived failure to pursue or fulfill our strategies and expectations; comply with federal, state, or international ethical, environmental, or other standards, regulations, or expectations; adhere to public statements; satisfy reporting standards; or meet evolving and varied stakeholder expectations within the timelines we announce, or at all, could have adverse operational, reputational, financial, and legal impacts.

Our competitive position and the value of our products and brands could be reduced and our business adversely affected if we are unable to maintain or adequately protect our intellectual property.

We also face attempts, including through cyber attacks and social engineering tactics, to gain unauthorized access to our systems for the purpose of improperly acquiring our trade secrets or confidential business information.

The theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such incidents could adversely affect the value of our investment in research and development and our business.

We are also subject to compliance risks related to contract requirements, and risks that any third-party we engage to do work on our behalf might conduct business in a manner that is inconsistent with our Code of Conduct or with legal requirements.

Compliance with continuously evolving U.S. and non-U.S. federal, state and local laws, rules, regulations and related interpretations applicable to our business, may increase our compliance costs or require significant capital investment, and our results of operations could be adversely impacted if these costs are greater than we have projected.

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 pandemics 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.

Our business, results of operations, cash flow and financial condition 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.

The pandemic caused us to make significant changes throughout our business designed to protect the health and well-being of our employees and customers.

These changes resulted in additional costs and adversely impacted our business and financial performance.

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

The pandemic also severely impacted the global 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 have adversely affected our business, including as a result of occasional, temporary disruptions and closures of some of our facilities, shifts in consumer behaviors and preferences and impacts in the demand for some of our products.

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.

The extent of the impact of any public health crisis to our business will depend on numerous factors that we may not be able to predict or control, including, but not limited to: (a) the duration, severity and scope of the crisis, including the spread of new virus strains and variants; (b) rapidly-changing governmental and public health directives to address it; (c) the development, availability, effectiveness and distribution of treatments and vaccines; (d) the extent and duration of 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 rates; (e) our ability to sell, provide and meet the demand for our services and products; (f) any temporary reduction in our workforce or closures of our offices and facilities and our ability to adequately staff and maintain our operations; (g) the ability of our customers and suppliers to continue their operations; and (h) any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions.

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.

In recent years, some raw material and energy prices have increased, particularly titanium dioxide and petrochemical feedstock sources, such as propylene and ethylene, as well as metal and plastic packaging.

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.

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

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.

From time to time, our Company, our operations and the industries in which we operate may be reviewed or investigated by regulators, which could lead to enforcement actions or the assertion of private litigation claims and damages.

We are subject to tax laws and regulations in the United States and multiple foreign jurisdictions.

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.

We believe the litigation brought to date is without merit or subject to meritorious defenses and are vigorously defending such litigation.

The Company is structured into three reportable segments – [removed: The Americas] [added: Paint Stores] Group, Consumer Brands Group and Performance Coatings Group (collectively, the Reportable Segments) – and an Administrative segment in the same way it is internally organized for assessing performance and making decisions regarding [added: the] allocation of resources.

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

- Consolidated [removed: net] [added: Net] sales increased [removed: 11.1%] [added: 4.1%] in the year to a record [removed: $22.149] [added: $23.052] billion

◦Net sales from stores in [removed: U.S. and Canada] [added: the Paint Stores Group] open more than twelve calendar months increased [removed: 11.7%] [added: 6.8%] in the year

- Diluted net income per share increased [added: 19.8%] to [removed: $7.72] [added: $9.25] per share in the year compared to [removed: $6.98] [added: $7.72] per share in the full year [removed: 2021][added: 2022]

◦Adjusted diluted net income per share increased to [removed: $8.73] [added: $10.35] per share in the year compared to [removed: $8.15] [added: $8.73] per share in the full year [removed: 2021][added: 2022]

- Generated [removed: strong net] [added: Net] operating cash of [removed: $1.920 billion][added: $3.522 billion, or 15.3% of net sales, in the year]

[removed: We] [added: Within Paint Stores Group and Consumer Brands Group, we] anticipate [added: continued] inflationary pressure in [removed: 2023] [added: 2024] to impact consumer behavior in both the United States and Europe, particularly in housing markets.

[removed: Certain] [added: As it relates to consolidated expenses, while we expect raw material costs to be down by a low-single digit percentage, certain] other costs, such as wages, [added: healthcare,] energy and transportation are expected to increase.

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

[removed: We plan to] expand our footprint by opening 80 to 100 new stores in the United States and Canada in [removed: 2023,] [added: 2024,] and pursue acquisitions that align with our long-term growth strategy.

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

The following discussion and analysis addresses comparisons of material changes in the consolidated financial statements for the years ended December 31, [removed: 2022] [added: 2023] and [removed: 2021.][added: 2022.]

For comparisons of the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2021] [added: 2022] filed on February [removed: 17, 2022.][added: 22, 2023.]

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | $ Change | | | | | | % Change | | |

| [removed: Net Sales:] [added: Net sales] | | | [added: $] | [added: 23,051.9] | | | | | [added: 100.0] | | [added: %] | | | | [added: $] | [added: 22,148.9] | | | | | [added: 100.0] | | [added: %] |

| Administrative | | | 3.7 | | | | | | [removed: 2.2] [added: 3.7] | | | | | | [removed: 1.5] [added: —] | | | | | | [removed: 68.2] [added: —] | | % | [added: | | | — | | % | | | | — | | % |]

Consolidated [removed: Net sales for 2022] [added: gross profit dollars] increased [removed: 11.1%] primarily due to selling price increases in all Reportable [removed: Segments and] [added: Segments,] higher [removed: product] sales volume in [removed: The Americas Group,] [added: the Paint Stores Group and moderating raw material costs,] partially offset by lower sales [removed: volume] [added: volumes] in the Consumer Brands and Performance Coatings Groups.

Net sales of all consolidated foreign subsidiaries increased [removed: 1.7%] [added: 3.1%] to [removed: $4.294] [added: $4.428] billion for [removed: 2022] [added: 2023] versus [removed: $4.223] [added: $4.294] billion for [removed: 2021 primarily] [added: 2022] due [added: primarily] to [removed: benefits from acquisitions offset by weakening demand] [added: growth] in the Europe and [added: Latin America regions, partially offset by lower net sales in the] Asia [removed: Pacific regions.][added: region as a result of the divestiture of the China architectural business.]

Net sales of all operations other than consolidated foreign subsidiaries increased [removed: 13.6%] [added: 4.3%] to [removed: $17.855] [added: $18.624] billion for [removed: 2022] [added: 2023] versus [removed: $15.722] [added: $17.855] billion for [removed: 2021.][added: 2022.]

Net sales from stores in [removed: U.S. and Canada] [added: the Paint Stores Group] open for more than twelve calendar months increased [removed: 11.7%] [added: 6.8%] in the year over [removed: last year’s] [added: the prior year] comparable period.

During [removed: 2022, The Americas] [added: 2023, the Paint Stores] Group opened [removed: 89] [added: 76] new stores and closed [removed: 17 redundant] [added: 6] locations for a net increase of [removed: 72 stores, with a net increase of 75 new stores in the U.S. and Canada.][added: 70 stores.]

The total number of stores in operation at December 31, [removed: 2022] [added: 2023] was [removed: 4,931] [added: 4,694] in the United States, [removed: Canada, Latin America] [added: Canada] and the [removed: Caribbean.][added: Caribbean region.]

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

Sales of products other than paint increased approximately [removed: 0.2%] [added: 5.0%] over last year.

In [removed: 2022,] [added: 2023,] the Performance Coatings Group added [removed: 35] [added: 5 net] new branches, increasing the total to [removed: 317] [added: 322] branches open in the United States, Canada, Mexico, South America, Europe and Asia.

| Cost of goods sold | | | [removed: 12,823.8] [added: 12,293.8] | | | | | | [removed: 57.9] [added: 53.3] | | % | | | | [removed: 11,401.9] [added: 12,823.8] | | | | | | [removed: 57.2] [added: 57.9] | | % |

| Gross profit | | | [removed: 9,325.1] [added: 10,758.1] | | | | | | [removed: 42.1] [added: 46.7] | | % | | | | [removed: 8,542.7] [added: 9,325.1] | | | | | | [removed: 42.8] [added: 42.1] | | % |

| Other general [removed: (income)] expense [added: (income)] - net | | | [removed: (24.9)] [added: 67.1] | | | | | | [removed: (0.1)] [added: 0.3] | | % | | | | [removed: 101.8] [added: (24.9)] | | | | | | [removed: 0.5] [added: (0.1)] | | % |

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

| Interest expense | | | [removed: 390.8] [added: 417.5] | | | | | | 1.8 | | % | | | | [removed: 334.7] [added: 390.8] | | | | | | [removed: 1.7] [added: 1.8] | | % |

| Interest income | | | [removed: (8.0)] [added: (25.2)] | | | | | | [removed: —] [added: (0.1)] | | % | | | | [removed: (4.9)] [added: (8.0)] | | | | | | — | | % |

| Other expense (income) - net | | | [removed: 47.0] [added: 65.5] | | | | | | [removed: 0.1] [added: 0.3] | | % | | | | [removed: (19.5)] [added: 47.0] | | | | | | [removed: (0.1)] [added: 0.1] | | % |

| Income before income taxes | | | $ | [removed: 2,573.1] [added: 3,109.9] | | | | | [removed: 11.6] [added: 13.5] | | % | | | | $ | [removed: 2,248.6] [added: 2,573.1] | | | | | [removed: 11.3] [added: 11.6] | | % |

Consolidated Gross profit increased [removed: $782.4 million] [added: $1.433 billion, or 15.4%,] in [removed: 2022] [added: 2023] compared to the same period in [removed: 2021.][added: 2022.]

Consolidated Gross profit as a percent to consolidated Net sales [removed: decreased] [added: increased] to [removed: 42.1%] [added: 46.7%] in [removed: 2022] [added: 2023] from [removed: 42.8%] [added: 42.1%] in [removed: 2021.][added: 2022.]

The Performance Coatings Group’s [removed: Gross] [added: gross] profit [removed: for 2022] [added: as a percent of net sales] increased [removed: $363.7 million compared to the] [added: for these] same [removed: period in 2021.][added: reasons.]

Consolidated SG&A increased by [removed: $442.0] [added: $733.8] million compared to the same period in [removed: 2021] [added: 2022] primarily due to increased [added: employee-related expenses, including incentive-based compensation expense,] expenses to support higher sales levels and net new store openings.

As a percent of Net sales, SG&A [removed: decreased 70] [added: increased 200] basis points compared to the same period in [removed: 2021 as a result of effective cost control measures.][added: 2022 for these same reasons.]

Effective January 1, 2023, the Company changed its organizational structure to manage and report the Latin America architectural paint business within the Consumer Brands Group to more closely align demand and service model trends with its current business strategy.

The Latin America business was formerly part of The Americas Group, which has become the Paint Stores Group concurrent with this change.

The Company will report segment results for the newly realigned Paint Stores Group and Consumer Brands Group for both current and prior periods presented herein.

- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) increased 17.5% in the year to $4.239 billion or 18.4% of net sales

During 2023, we executed on our strategy to provide differentiated solutions to enable our customers to increase their productivity and profitability.

Net sales grew to a record level, gross margin expanded due to moderating raw material costs and carryover price increases, and Net operating cash increased due to record Net income and improved working capital management.

This performance enabled us to continue to invest in our business through customer-focused innovation, complete the acquisition of SIC Holding GmbH, reduce short-term borrowings and long-term debt, and return capital to shareholders through dividends and share repurchases.

We enter 2024 with confidence, energy and a commitment to seize profitable growth opportunities in our targeted end-markets, although uncertainties do remain in the marketplace.

While mortgage rates are expected to remain high compared to recent historical levels, we expect them to moderate and positively impact new and existing residential sales volume.

We also remain focused on gaining market share and leveraging our strategic investments to counteract forecasted declines in remodeling spend in 2024.

The outlook for the Performance Coatings Group is varied by end market and region with expected resilience in Automotive Refinish and tailwinds in Industrial Wood.

Demand softness is forecasted in General Industrial due to negative manufacturing trends in North America, Europe and Brazil and in Packaging due to expected flat-to-down volumes in the food and beverage industry.

Selling, general and administrative expenses are expected to increase moderately in 2024 to support targeted investments, but remain tightly controlled in non-customer facing functions.

Long-term debt maturities due in 2024 are $1.100 billion and are expected to be refinanced at higher interest rates.

We plan to

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

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| | | | 2023 | | | | | | 2022 | | | | | | $ Change | | | | | | % Change | | | | | | Currency Impact | | | | | | Acquisitions and Divestitures Impact | | |

| Paint Stores Group | | | $ | 12,839.5 | | | | | $ | 11,963.3 | | | | | $ | 876.2 | | | | | 7.3 | | % | | | | (0.1) | | % | | | | — | | % |

| Consumer Brands Group | | | 3,365.6 | | | | | | 3,388.4 | | | | | | (22.8) | | | | | | (0.7) | | % | | | | (0.4) | | % | | | | (1.9) | | % |

| Performance Coatings Group | | | 6,843.1 | | | | | | 6,793.5 | | | | | | 49.6 | | | | | | 0.7 | | % | | | | 0.3 | | % | | | | 4.1 | | % |

| Total | | | $ | 23,051.9 | | | | | $ | 22,148.9 | | | | | $ | 903.0 | | | | | 4.1 | | % | | | | — | | % | | | | 1.0 | | % |

Consolidated Net sales for 2023 increased 4.1% primarily due to selling price increases, volume growth due to higher architectural sales volume in the Paint Stores Group and a 1.0% net increase from the impact of acquisitions and divestitures completed during the past twelve months, partially offset by sales volume decreases in the Consumer Brands and Performance Coatings Groups.

Net sales in the Paint Stores Group increased 7.3% primarily due to mid-single digit sales volume growth and selling price increases, which impacted net sales by a low-single digit percentage.

Net sales in the Consumer Brands Group decreased 0.7% in 2023 primarily due to a low-single digit sales volume decrease and a 1.9% decrease from the impact of divestitures, partially offset by selling prices increases, which impacted net sales by a mid-single digit percentage.

Net sales in the Performance Coatings Group increased 0.7% in 2023 primarily due to selling price increases, which impacted net sales by a mid-single digit percentage, and a 4.1% increase from the impact of acquisitions completed during the past twelve months, partially offset by a high-single digit sales volume decrease.

Net sales in the Administrative segment, which primarily consists of external leasing revenue, remained flat in 2023.

| | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | |

| Selling, general, and administrative expenses (SG&A) | | | 7,065.4 | | | | | | 30.6 | | % | | | | 6,331.6 | | | | | | 28.6 | | % |

| Impairment | | | 57.9 | | | | | | 0.3 | | % | | | | 15.5 | | | | | | 0.1% | | |

Consolidated Cost of goods sold decreased $530.0 million, or 4.1%, in 2023 compared to the same period in 2022 primarily due to lower sales volumes in the Consumer Brands and Performance Coatings Groups and moderating raw material costs, partially offset by higher sales volume in the Paint Stores Group and the impacts of increases in wages and other employee-related expenses.

In 2023, certain manufacturing and distribution costs (excluding raw materials) incurred within the Consumer Brands Group were in excess of the Company’s standard conversion cost estimates established at the beginning of the year.

Consistent with prior years, these expenses were related to supply chain inefficiencies and remained within the manufacturing and distribution operations of the Consumer Brands Group.

The Paint Stores Group’s gross profit for 2023 increased $908.6 million compared to the same period in 2022 primarily due to sales volume growth, selling price increases and moderating raw material costs.

The Paint Stores Group’s gross profit as a percent of net sales increased for these same reasons.

The Consumer Brands Group’s gross profit increased $139.3 million in 2023 compared to the same period in 2022 due primarily to selling price increases and moderating raw material costs, partially offset by a sales volume decrease and increases in wages and other employee-related expenses in manufacturing and distribution operations.

The Consumer Brands Group’s gross profit as a percent of net sales increased for these same reasons.

The Performance Coatings Group’s gross profit increased $402.2 million compared to the same period in 2022 due primarily to higher selling prices, moderating raw material costs and the impact of acquisitions, partially offset by lower sales volume and increases in wages and other employee-related expenses.

The Performance Coatings Group’s SG&A increased by $139.9 million for the year primarily due to higher employee-related expenses, costs from acquisitions and investments in technology.

The Administrative segment’s SG&A increased $128.0 million primarily due to higher employee-related expenses, including stock-based and other incentive compensation, as well as increased expenses related to technology and systems.

◦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.

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

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.

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

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| The Americas Group | | | $ | 12,661.0 | | | | | $ | 11,217.0 | | | | | $ | 1,444.0 | | | | | 12.9 | | % |

| Consumer Brands Group | | | 2,690.7 | | | | | | 2,721.6 | | | | | | (30.9) | | | | | | (1.1) | | % |

| Performance Coatings Group | | | 6,793.5 | | | | | | 6,003.8 | | | | | | 789.7 | | | | | | 13.2 | | % |

| 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 in The Americas Group increased primarily due to selling price increases as well as volume growth in all end markets, particularly residential repaint.

Currency translation rate changes reduced Net sales by 0.4% compared to 2021.

Net sales of the Consumer Brands Group decreased in 2022 primarily due to lower sales volumes in all regions and the Wattyl divestiture, offset by selling price increases in all regions.

Currency translation rate changes decreased Net sales by 1.1% compared to 2021.

The Performance Coatings Group’s Net sales in 2022 increased primarily due to higher organic sales driven by selling price increases in all end markets, partially offset by lower sales volumes.

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.

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, increased by an insignificant amount in 2022.

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

| Net sales | | | $ | 22,148.9 | | | | | 100.0 | | % | | | | $ | 19,944.6 | | | | | 100.0 | | % |

| Selling, general, and administrative expenses (SG&A) | | | 6,014.5 | | | | | | 27.2 | | % | | | | 5,572.5 | | | | | | 27.9 | | % |

| Amortization | | | 317.1 | | | | | | 1.4 | | % | | | | 309.5 | | | | | | 1.5 | | % |

Consolidated Cost of goods sold increased $1.422 billion, or 12.5%, in 2022 compared to the same period in 2021 primarily due to higher raw material costs (including petrochemical-derived resins, latex and solvents, and titanium dioxide), partially offset by lower product volume and favorable currency translation rate changes.

Currency translation rate changes decreased Cost of goods sold by 2.0% in the current year.

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

This was partially offset by higher raw material costs in each Reportable Segment and lower sales in the Consumer Brands Group.

The gross margin rate decreased primarily as a result of higher raw material costs.

The Americas Group’s Gross profit for 2022 increased $477.7 million compared to the same period in 2021.

The Americas Group’s Gross profit dollars increased primarily as a result of selling price increases, partially offset by higher raw material costs.

The Americas Group’s gross margin rate decreased primarily due to higher raw material costs.

The Consumer Brands Group’s Gross profit decreased $68.6 million in 2022 compared to the same period in 2021.

The Consumer Brands Group’s Gross profit dollars and margin rate decreased primarily as a result of lower sales volume and higher raw material costs.

In [added: 2023,] 2022 and 2021, the Company utilized U.S. Dollar to Euro cross currency swap contracts to hedge the Company’s net investment in its European operations.

The Company entered into forward foreign currency exchange contracts during [added: 2023,] 2022 [added: and 2021] to hedge against value changes in foreign currency.

There were no material contracts outstanding at December 31, [removed: 2022.][added: 2023.]

As used in this report, the terms “Sherwin-Williams,” “Company,” [removed: “we”] [added: “we”, “us”] and “our” mean The Sherwin-Williams Company and its consolidated subsidiaries unless the context indicates otherwise.

The Company has three reportable operating segments: [removed: The Americas] [added: Paint Stores] Group, Consumer Brands Group and Performance Coatings Group (individually, a [removed: “Reportable Segment”] [added: Reportable Segment] and collectively, the [removed: “Reportable Segments”).][added: Reportable Segments).]

[removed: The Americas] [added: Paint Stores] Group consisted of [removed: 4,931] [added: 4,694] company-operated specialty paint stores in the United States, [removed: Canada, Latin America] [added: Canada] and the Caribbean region at December 31, [removed: 2022.][added: 2023.]

The Consumer Brands Group manufactures and [removed: supplies] [added: distributes] 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 [removed: retailers] [added: retailers, including home centers] and [added: hardware stores, dedicated dealers and] distributors throughout North America, [removed: as well as in China] [added: Latin America] and Europe.

Approximately [removed: 67%] [added: 61%] of the total sales of the Consumer Brands Group in [removed: 2022] [added: 2023] were intersegment transfers of products primarily sold through [removed: The Americas] [added: the Paint Stores] Group.

This segment incurred most of the Company’s capital expenditures related to ongoing environmental compliance [removed: measures] [added: measures, manufacturing capacity expansion, operational efficiencies and maintenance projects] at sites currently in operation.

Sherwin-Williams® and other controlled brand products are distributed through [removed: The Americas Group and] [added: the Paint Stores Group,] this segment’s [removed: 317 company-][added: 322 company-operated branches, 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 the operations of a real estate management unit that is responsible for the ownership, [removed: management,] [added: management] and leasing of non-retail properties held primarily for use by the [removed: Company, including the Company’s headquarters site,] [added: Company] and disposal of idle facilities.

We also purchase a variety of products for resale that are highly complementary to our paint and coating offerings, notably spray equipment and parts, [removed: floorcovering,] [added: floorcovering] and assorted sundries.

[removed: However, periods] [added: Periods] of economic [removed: downturn] [added: downturn, however,] can alter these seasonal patterns.

For a description of the Company’s liquidity and capital resources, see [removed: the “Financial] [added: Item 7 Financial] Condition, Liquidity and Cash [removed: Flow” section in Item 7.][added: Flow.]

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

*•Consumer Brands Group:* Cabot®, [added: Colorgin®, Condor®,] Dupli-Color®, Dutch Boy®, Geocel®, HGTV HOME® by Sherwin-Williams, [removed: Huarun®,] Krylon®, Minwax®, Purdy®, Ronseal®, Thompson’s® WaterSeal®, Valspar®, White Lightning®

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

Although patents and licenses are not of material importance to our business as a whole or any segment, [removed: The Americas Group and] the Performance Coatings Group [removed: derive] [added: derives] a portion of [removed: their] [added: its] income from the licensing of technology, trademarks and trade names to foreign companies.

We believe that sufficient productive capacity currently exists to fulfill our needs for paint, coatings and related products during [removed: 2023.][added: 2024.]

In [removed: The Americas] [added: the Paint Stores] Group, competitors include other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets.

In the Consumer Brands Group, domestic and foreign competitors include manufacturers and distributors of branded and private-label paint and coatings [removed: products.][added: products as well as other paint and wallpaper stores, mass merchandisers, home centers, independent hardware stores, hardware chains and manufacturer-operated direct outlets.]

The success of our business and [added: our] ability to execute on our strategy depend in large part on our ability to attract, retain, develop and progress [removed: a diverse population of] qualified employees [added: with diverse skills, experiences and perspectives] at all levels of our organization.

At December 31, [removed: 2022,] [added: 2023,] we employed [removed: 64,366] [added: 64,088] people worldwide, of which [added: approximately] 75% were in the United States and 25% were in other global regions.

Through [added: the development, manufacture, distribution and sale of innovative paint and coatings products,] our [removed: purpose, we strive] [added: employees are instrumental in fulfilling our corporate purpose] to inspire and improve the world by coloring and protecting what matters.

[removed: These strategies, objectives and measures are advanced through] [added: To deliver on these objectives, we have developed key] programs, policies and initiatives focused on [removed: inclusion, diversity] [added: belonging] and [removed: equity (ID&E),] [added: culture,] talent acquisition and employee engagement, occupational health and safety and total rewards, which includes compensation and benefits programs and practices.

[removed: Reflected] [added: As reflected] in [removed: the Company’s] [added: our] Code of Conduct and reinforced through our actions, training and attitudes, fostering an inclusive culture is a moral and business imperative.

The building blocks of our [removed: ID&E strategy] [added: culture] include:

[removed: - *Educate] [added: *•Leading with inclusion:* Creating a culture where we are open] and [removed: communicate to drive success:* Building awareness of inclusive leadership behaviors to] leverage the unique contributions of each employee to positively impact our people and business results.

- [removed: *Develop and engage talent by investing in our people:*] [added: *Empowering everyone:*] Investing in our people by providing [removed: networking] [added: collaboration, development] and learning opportunities to drive retention, progression and engagement.

[removed: Creating] [added: While our commitment starts at the top, with] a [added: Board of Directors with diverse skills, backgrounds and experiences, creating a] supportive, welcoming environment across our global footprint is the shared responsibility of all [added: of our] employees, including our senior leaders.

[removed: During 2022,] [added: Our senior leaders attend an education and training session every year, and] we [removed: held our annual] [added: hold] CEO Forums on Inclusion, [removed: which are] [added: led by our CEO and other senior leaders,] designed to encourage open discussions with employees [removed: that are led by our Chief Executive Officer and other senior leaders] about opportunities to advance our culture of [removed: inclusion and] belonging.

[removed: We] [added: In 2023, we] also continued our focus on driving allyship and empathy through conscious inclusion training [removed: across our global workforce] and elevating the visibility and prominence of our Employee Resource Groups (ERGs).

[removed: ERGs] [added: We have over 300 chapters globally that] bring together employees from various groups, divisions and functional teams to foster more inclusive workplaces, create greater synergy around business objectives and serve as a hub for professional development and mentorship opportunities that enable our employees to thrive and find long-term success at Sherwin-Williams.

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

This strategy connects major milestones in the employee journey, including talent acquisition, onboarding, performance management, leadership and management development, succession and career progression, and is supported by our focus on employee engagement, [removed: ID&E,] [added: culture,] workforce analytics and [removed: human resources] information technology governance.

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

During [removed: 2022,] [added: 2023,] we hired approximately 1,400 college graduates through our management trainee program as part of our long-term growth initiatives.

We also [removed: partner] [added: collaborate] with various colleges and [removed: universities, including Historically Black Colleges and Universities and Hispanic-Serving Institutions,] [added: universities] to [removed: attract] [added: continue to broaden our talent pipeline with qualified] women, underrepresented racial or ethnic groups, individuals with disabilities, veterans and other [removed: candidates into the talent pipeline.][added: candidates.]

During [removed: 2022,] [added: 2023,] our employees completed thousands of hours of online and instructor-led courses across a broad range of categories, including leadership, [removed: ID&E,] professional skills, technical [added: skills] and compliance.

We measure our progress toward creating [removed: an inclusive] [added: a] culture [added: of belonging] that empowers employees to learn, grow and achieve their aspirations by conducting periodic pulse surveys and [removed: our] [added: a] global engagement survey, which we [removed: first] conducted [removed: during 2021] [added: in 2023] and expect to conduct every other year.

We have a consistent focus on Environmental, Health and Safety excellence that promotes employee health and safety, process [removed: safety,] [added: safety] and occupational health, including evaluation and implementation of [removed: reasonable] preventative measures to reduce workplace injuries and illness.

We strive for incident-free workplaces [removed: —] [added: and are] continuously assessing and improving the programs that are in place to help keep our employees, customers and communities [removed: safe.][added: safe, including by improving our global management systems, standards and performance measures.]

[removed: These efforts also continue] [added: Additionally, in 2023, we continued] to [removed: include permitting] [added: permit] remote, alternate and flexible work arrangements where possible to promote increased flexibility and support employee health and [removed: safety,] [added: well-being,] while maintaining our focus on [removed: innovation, collaboration,] [added: collaboration] and engagement.

Paint Stores Group

During 2023, the Company divested a non-core domestic aerosol business and the China architectural business, both part of the Consumer Brands Group.

See Note 3 to the Consolidated Financial Statements in Item 8 for more information.

The Consumer Brands Group also consisted of 318 company-operated specialty paint stores in Latin America at December 31, 2023.

Each store in this segment is engaged in servicing the needs of home, commercial and industrial projects to contractors and do-it-yourself customers in Latin America.

These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products which are branded for the Latin America market.

In addition, each store sells select purchased associated products.

During 2023, the Company acquired German-based SIC Holding GmbH which is part of the Performance Coatings Group.

See Note 3 to the Consolidated Financial Statements in Item 8 for more information.

Sales of this segment represent external leasing revenue.

Senour®, Matrix Edge®, M.L. Campbell®, Octoral®, Oskar Nolte™, PermaClad®, Polane®, Powdura®, Sayerlack®, Sher-Wood®, Sumaré®, Ultra 9K®, Ultra 7000®, ValPure®, Valspar®

*Belonging and Culture*.

We strive to foster a culture of belonging to drive employee engagement and performance while attracting, retaining, developing and progressing a diverse pipeline of talent that reflects the communities in which we operate.

- *Communicating impact:* Sharing the Company story, goals and priorities at all levels, and educating our workforce on allyship and belonging.

- *Committing to action:* Empowering and engaging leaders to use tools and resources to take meaningful action to foster a culture of belonging for all employees.

We strive to ensure our senior leaders have the resources they need to foster inclusion and belonging and ultimately leverage the diversity of our workforce to deliver customer-focused differentiated products, services and solutions.

These are voluntary, employee-led communities with a shared purpose of developing connections between and among employees and allies with diverse backgrounds.

- fluctuations in foreign currency exchange rates, including as a result of inflation, central bank monetary policies, currency controls and other exchange restrictions;

- any disruption in the availability of, or increases in the price of, raw material and energy supplies;

- our ability to execute on our business strategies related to sustainability matters, and achieve related expectations, including as a result of evolving regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs and the availability of requisite financing, and changes in carbon markets;

- our ability to comply with numerous and evolving U.S. and non-U.S. laws, rules, and regulations and the effectiveness of our compliance efforts;

- adverse changes to our tax positions in U.S. and non-U.S. jurisdictions, including as a result of new or revised tax laws or interpretations;

The Americas Group

In addition to our stores in the Latin America region, The Americas Group meets regional customer demands through developing, licensing, manufacturing, distributing and selling a variety of architectural paints, coatings and related products in North and South America.

operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.

Sales of this segment represent external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses.

During 2022, we experienced raw material shortages and labor constraints that impacted our production and ability to meet customer orders.

Our employees are instrumental in fulfilling this purpose through the development, manufacture, distribution and sale of innovative paint and coatings products.

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.

*Inclusion, Diversity and Equity*.

We strive to foster a culture of inclusion and belonging where differences are welcomed, appreciated and celebrated to positively impact our people and business.

- *Fill the pipeline with the best talent:* Attracting the best talent pool that reflects the diversity of the communities in which we serve and do business.

- *Progress talent by embedding equity into talent planning:* Embedding equity into talent practices, processes, tools and resources at all levels.

Each year, our senior leaders attend an ID&E education and training session to assist us in maintaining our commitment to leading with inclusion and leveraging the diversity of our workforce.

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

Since the onset of the COVID-19 pandemic, we have implemented modifications throughout our business and health and safety programs designed to protect the health and well-being of our employees and customers.

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

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.

- changes in raw material and energy supplies and pricing;

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

- the achievement of growth in foreign markets, such as Asia, Europe and South America;

For the fiscal year ended December 31, [removed: 2022][added: 2023]

The aggregate market value of common stock held by non-affiliates of the Registrant at June 30, [removed: 2022] [added: 2023] was [removed: $57,920,449,955] [added: $68,095,363,926] (computed by reference to the price at which the common stock was last sold on such date).

At January 31, [removed: 2023, 258,442,281] [added: 2024, 254,464,522] shares of common stock were outstanding, net of treasury shares.

Portions of our Proxy Statement for the [removed: 2023] [added: 2024] 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: 2022] [added: 2023] are incorporated by reference into Part III of this report.

| Item 1. | | | [removed: [Business](#ic6d89eb8d5ed47839a7aadf63eb72fac_13)] [added: [Business](#i9d0bd69fd9d1400b960fb710ce5d8915_13)] | | | [removed: [1](#ic6d89eb8d5ed47839a7aadf63eb72fac_13)] [added: [1](#i9d0bd69fd9d1400b960fb710ce5d8915_13)] | | |

| | | | [Cautionary Statement Regarding Forward-Looking [removed: Information](#ic6d89eb8d5ed47839a7aadf63eb72fac_16)] [added: Information](#i9d0bd69fd9d1400b960fb710ce5d8915_16)] | | | [removed: [5](#ic6d89eb8d5ed47839a7aadf63eb72fac_16)] [added: [5](#i9d0bd69fd9d1400b960fb710ce5d8915_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#ic6d89eb8d5ed47839a7aadf63eb72fac_19)] [added: Factors](#i9d0bd69fd9d1400b960fb710ce5d8915_19)] | | | [removed: [6](#ic6d89eb8d5ed47839a7aadf63eb72fac_19)] [added: [6](#i9d0bd69fd9d1400b960fb710ce5d8915_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#ic6d89eb8d5ed47839a7aadf63eb72fac_22)] [added: Comments](#i9d0bd69fd9d1400b960fb710ce5d8915_22)] | | | [removed: [15](#ic6d89eb8d5ed47839a7aadf63eb72fac_22)] [added: [16](#i9d0bd69fd9d1400b960fb710ce5d8915_22)] | | |

| Item 2. | | | [removed: [Properties](#ic6d89eb8d5ed47839a7aadf63eb72fac_25)] [added: [Properties](#i9d0bd69fd9d1400b960fb710ce5d8915_25)] | | | [removed: [16](#ic6d89eb8d5ed47839a7aadf63eb72fac_25)] [added: [18](#i9d0bd69fd9d1400b960fb710ce5d8915_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#ic6d89eb8d5ed47839a7aadf63eb72fac_28)] [added: Proceedings](#i9d0bd69fd9d1400b960fb710ce5d8915_28)] | | | [removed: [17](#ic6d89eb8d5ed47839a7aadf63eb72fac_28)] [added: [19](#i9d0bd69fd9d1400b960fb710ce5d8915_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#ic6d89eb8d5ed47839a7aadf63eb72fac_31)] [added: Disclosures](#i9d0bd69fd9d1400b960fb710ce5d8915_31)] | | | [removed: [17](#ic6d89eb8d5ed47839a7aadf63eb72fac_31)] [added: [19](#i9d0bd69fd9d1400b960fb710ce5d8915_31)] | | |

| | | | [Information About Our Executive [removed: Officers](#ic6d89eb8d5ed47839a7aadf63eb72fac_34)] [added: Officers](#i9d0bd69fd9d1400b960fb710ce5d8915_34)] | | | [removed: [18](#ic6d89eb8d5ed47839a7aadf63eb72fac_34)] [added: [20](#i9d0bd69fd9d1400b960fb710ce5d8915_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and [removed: Issuer](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)[Purchases] [added: Issuer](#i9d0bd69fd9d1400b960fb710ce5d8915_40)[ ](#i9d0bd69fd9d1400b960fb710ce5d8915_40)[Purchases] of Equity [removed: Securities](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)] [added: Securities](#i9d0bd69fd9d1400b960fb710ce5d8915_40)] | | | [removed: [20](#ic6d89eb8d5ed47839a7aadf63eb72fac_40)] [added: [22](#i9d0bd69fd9d1400b960fb710ce5d8915_40)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#ic6d89eb8d5ed47839a7aadf63eb72fac_43)] [added: [\[Reserved\]](#i9d0bd69fd9d1400b960fb710ce5d8915_43)] | | | [removed: [21](#ic6d89eb8d5ed47839a7aadf63eb72fac_43)] [added: [23](#i9d0bd69fd9d1400b960fb710ce5d8915_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results [removed: of](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)[Operations](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)] [added: of](#i9d0bd69fd9d1400b960fb710ce5d8915_46)[ ](#i9d0bd69fd9d1400b960fb710ce5d8915_46)[Operations](#i9d0bd69fd9d1400b960fb710ce5d8915_46)] | | | [removed: [22](#ic6d89eb8d5ed47839a7aadf63eb72fac_46)] [added: [24](#i9d0bd69fd9d1400b960fb710ce5d8915_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ic6d89eb8d5ed47839a7aadf63eb72fac_64)] [added: Risk](#i9d0bd69fd9d1400b960fb710ce5d8915_64)] | | | [removed: [38](#ic6d89eb8d5ed47839a7aadf63eb72fac_64)] [added: [40](#i9d0bd69fd9d1400b960fb710ce5d8915_64)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#ic6d89eb8d5ed47839a7aadf63eb72fac_67)] [added: Data](#i9d0bd69fd9d1400b960fb710ce5d8915_67)] | | | [removed: [39](#ic6d89eb8d5ed47839a7aadf63eb72fac_67)] [added: [41](#i9d0bd69fd9d1400b960fb710ce5d8915_67)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and [removed: Financial](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)[Disclosure](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)] [added: Financial](#i9d0bd69fd9d1400b960fb710ce5d8915_187)[ ](#i9d0bd69fd9d1400b960fb710ce5d8915_187)[Disclosure](#i9d0bd69fd9d1400b960fb710ce5d8915_187)] | | | [removed: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_181)] [added: [92](#i9d0bd69fd9d1400b960fb710ce5d8915_187)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#ic6d89eb8d5ed47839a7aadf63eb72fac_184)] [added: Procedures](#i9d0bd69fd9d1400b960fb710ce5d8915_190)] | | | [removed: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_184)] [added: [92](#i9d0bd69fd9d1400b960fb710ce5d8915_190)] | | |

| Item 9B. | | | [Other [removed: Information](#ic6d89eb8d5ed47839a7aadf63eb72fac_187)] [added: Information](#i9d0bd69fd9d1400b960fb710ce5d8915_193)] | | | [removed: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_187)] [added: [92](#i9d0bd69fd9d1400b960fb710ce5d8915_193)] | | |

| Item 9C. | | | [Disclosure Regarding Jurisdictions that Prevent [removed: Inspections](#ic6d89eb8d5ed47839a7aadf63eb72fac_190)] [added: Inspections](#i9d0bd69fd9d1400b960fb710ce5d8915_196)] | | | [removed: [90](#ic6d89eb8d5ed47839a7aadf63eb72fac_190)] [added: [92](#i9d0bd69fd9d1400b960fb710ce5d8915_196)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#ic6d89eb8d5ed47839a7aadf63eb72fac_196)] [added: Governance](#i9d0bd69fd9d1400b960fb710ce5d8915_202)] | | | [removed: [91](#ic6d89eb8d5ed47839a7aadf63eb72fac_196)] [added: [93](#i9d0bd69fd9d1400b960fb710ce5d8915_202)] | | |

| Item 11. | | | [Executive [removed: Compensation](#ic6d89eb8d5ed47839a7aadf63eb72fac_199)] [added: Compensation](#i9d0bd69fd9d1400b960fb710ce5d8915_205)] | | | [removed: [91](#ic6d89eb8d5ed47839a7aadf63eb72fac_199)] [added: [93](#i9d0bd69fd9d1400b960fb710ce5d8915_205)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and [removed: Related](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)[ ](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)[Stockholder Matters](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)] [added: Related](#i9d0bd69fd9d1400b960fb710ce5d8915_208)[ ](#i9d0bd69fd9d1400b960fb710ce5d8915_208)[Stockholder Matters](#i9d0bd69fd9d1400b960fb710ce5d8915_208)] | | | [removed: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_202)] [added: [94](#i9d0bd69fd9d1400b960fb710ce5d8915_208)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ic6d89eb8d5ed47839a7aadf63eb72fac_205)] [added: Independence](#i9d0bd69fd9d1400b960fb710ce5d8915_211)] | | | [removed: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_205)] [added: [94](#i9d0bd69fd9d1400b960fb710ce5d8915_211)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#ic6d89eb8d5ed47839a7aadf63eb72fac_208)] [added: Services](#i9d0bd69fd9d1400b960fb710ce5d8915_214)] | | | [removed: [92](#ic6d89eb8d5ed47839a7aadf63eb72fac_208)] [added: [94](#i9d0bd69fd9d1400b960fb710ce5d8915_214)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#ic6d89eb8d5ed47839a7aadf63eb72fac_214)] [added: Schedules](#i9d0bd69fd9d1400b960fb710ce5d8915_220)] | | | [removed: [93](#ic6d89eb8d5ed47839a7aadf63eb72fac_214)] [added: [95](#i9d0bd69fd9d1400b960fb710ce5d8915_220)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#ic6d89eb8d5ed47839a7aadf63eb72fac_217)] [added: Summary](#i9d0bd69fd9d1400b960fb710ce5d8915_223)] | | | [removed: [99](#ic6d89eb8d5ed47839a7aadf63eb72fac_217)] [added: [101](#i9d0bd69fd9d1400b960fb710ce5d8915_223)] | | |

| [PART I](#i9d0bd69fd9d1400b960fb710ce5d8915_10) | | | | | | | | |

| Item 1C. | | | [Cybersecurity](#i9d0bd69fd9d1400b960fb710ce5d8915_1808) | | | [16](#i9d0bd69fd9d1400b960fb710ce5d8915_1808) | | |

| [PART II](#i9d0bd69fd9d1400b960fb710ce5d8915_37) | | | | | | | | |

| [PART III](#i9d0bd69fd9d1400b960fb710ce5d8915_199) | | | | | | | | |

| [PART IV](#i9d0bd69fd9d1400b960fb710ce5d8915_217) | | | | | | | | |

| | | | [Signatures](#i9d0bd69fd9d1400b960fb710ce5d8915_226) | | | [102](#i9d0bd69fd9d1400b960fb710ce5d8915_226) | | |

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

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

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

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

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

We maintain a cybersecurity program that is aligned with our business and focused on managing risks to our Company.

As described below, we have established policies, standards, processes and practices for assessing, identifying and managing material risks from cybersecurity threats, which are integrated into our overall risk management program and governance structure.

We use various controls, technologies, and other processes designed to identify, protect against, detect, respond to and mitigate cybersecurity risks, in alignment with frameworks established by the National Institute of Standards and Technology (NIST).

These include, but are not limited to, internal reporting, monitoring and detection tools, threat intelligence, and general and role-based training.

We also maintain third party management processes to identify and manage the cybersecurity risks associated with third party service providers.

We periodically evaluate and improve the effectiveness of our cybersecurity program internally and by engaging with consultants and other third party advisors to conduct reviews and assessments of our program.

These periodic assessments and reviews may include penetration and vulnerability testing, simulations, table-tops, and other exercises.

Overseeing the assessment and management of our exposure to various risks, including cybersecurity, is a key oversight responsibility for the Board of Directors.

We have an enterprise risk management (ERM) program that includes the processes used to identify, assess, and manage our most significant enterprise risks and uncertainties that could materially impact the long-term health of the Company or prevent the achievement of strategic objectives.

These risks are identified, measured, monitored and managed across key risk categories, which include the consideration of cybersecurity risks.

Our chief financial officer (CFO) facilitates the Company’s ERM program, which includes a formal assessment of the Company’s risk environment at least once per year.

The ERM program also facilitates the incorporation of risk assessment and evaluation into the strategic planning process and the provision of regular reports to senior management, including our CEO.

The Audit Committee assists the Board with its oversight of both the ERM program and cybersecurity risk, providing regular reports to the Board.

Our CFO reviews the ERM program with the Audit Committee at least once per year, including reviewing existing risks and significant emerging risks across the Company’s key risk categories.

In reviewing specific threats and risks with the Board, senior management may incorporate reports from consultants and other third party advisors.

Our Chief Information Security Officer (CISO) leads our global cybersecurity program and is responsible for management of our cybersecurity risks.

Our CISO reports to our CFO.

Our CISO has served in that position since 2022 and has relevant experience in cybersecurity leadership positions, including prior experience as CISO of a public company.

The Audit Committee regularly reviews our risk exposures relating to cybersecurity with our CISO and CFO, including the review of the state of the Company’s cybersecurity and emerging cybersecurity developments and threats, and the steps management has taken to monitor and mitigate such exposures.

Our CISO manages a team of cybersecurity professionals with expertise and experience in information security.

Our CISO is informed of cybersecurity incidents by the cybersecurity team’s security operations center, which is generally responsible for monitoring the prevention, detection, mitigation, and remediation of cybersecurity incidents.

We have an established process governing our assessment, response and notifications internally and externally upon the occurrence of a cybersecurity incident, including for our evaluation of materiality.

Depending on the nature and severity of an incident, this process provides for escalating notification to our CEO and Board of Directors.

Despite our efforts to prevent cybersecurity threats and incidents, our systems may be affected by damage or interruption resulting from, among other causes, cyber attacks, security breaches, power outages, system failures or malware (including ransomware and other programs that operate with malicious intent).

Disruptions to these systems may impair our ability to conduct business and have a material adverse effect on our business, results of operations and financial condition.

Despite the security measures we have in place, our facilities and systems, and those of third parties we rely on or do business with, may be vulnerable to cyber attacks, security breaches, malware (including ransomware and other programs that operate with malicious intent), power outages, system failures, acts of vandalism, human or technical errors or other similar events or disruptions.

Any such event involving the misappropriation, loss or other unauthorized disclosure of information, whether impacting us or third parties we rely on or do business with, could result in losses, damage our reputation or relationships with customers and suppliers, expose us to the risks of litigation, regulatory action and liability, disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.

To date, we have not experienced a cybersecurity threat or incident that has had a material adverse affect on our business, results of operations and financial condition.

We, and third parties we do business with, have experienced cybersecurity attacks and incidents in the past, some of which have resulted in unauthorized access to our information and systems and other disruptions to our business operations, and we could in the future experience similar incidents.

See Risk Factors in Item 1A for additional information on cybersecurity risks.

[removed: We own our world headquarters located in Cleveland, Ohio,] [added: The Company’s global headquarters,] which includes the [removed: world] [added: global] headquarters for [removed: The Americas,] [added: the Paint Stores,] Consumer Brands and Performance Coatings Groups and the Administrative [removed: segment.][added: segment, is located in Cleveland, Ohio.]

[removed: The] [added: During 2023, the] Company [removed: has entered into an agreement] [added: closed on a transaction] to sell [added: and subsequently lease back] its current headquarters and [removed: its] research and development center.

Refer to Item 7 for further information on the construction of our new [added: global] headquarters and research and development center.

We believe our manufacturing and distribution facilities are [removed: well-maintained and are] [added: well-maintained,] suitable and adequate, with sufficient productive capacity, to meet our current needs.

| Asia | | | | | | 3 | | | [removed: 4] [added: 6] | | | [removed: 7] [added: 9] | | | | | | 3 | | | [removed: 2] [added: 3] | | | [removed: 5] [added: 6] | | |

| Europe | | | | | | [removed: 1] [added: 2] | | | 17 | | | [removed: 18] [added: 19] | | | | | | 3 | | | 15 | | | 18 | | |

| Latin America | | | | | | [removed: 3] | | | [removed: 10] [added: 12] | | | [removed: 13] [added: 12] | | | | | | [removed: 5] [added: 6] | | | 10 | | | [removed: 15] [added: 16] | | |

| United States | | | | | | 6 | | | [removed: 40] [added: 42] | | | [removed: 46] [added: 48] | | | | | | 11 | | | [removed: 10] [added: 12] | | | [removed: 21] [added: 23] | | |

| Total | | | | | | [removed: 13] [added: 11] | | | [removed: 76] [added: 82] | | | [removed: 89] [added: 93] | | | | | | [removed: 23] [added: 24] | | | [removed: 39] [added: 42] | | | [removed: 62] [added: 66] | | |

| Europe | | | | | | 1 | | | [removed: 5] [added: 7] | | | [removed: 6] [added: 8] | | | | | | 4 | | | [removed: 2] [added: 4] | | | [removed: 6] [added: 8] | | |

| United States | | | | | | | | | [removed: 2] [added: 1] | | | [removed: 2] [added: 1] | | | | | | 3 | | | | | | 3 | | |

| Total | | | | | | [removed: 1] [added: 3] | | | [removed: 7] [added: 8] | | | [removed: 8] [added: 11] | | | | | | [removed: 7] [added: 9] | | | [removed: 2] [added: 4] | | | [removed: 9] [added: 13] | | |

The operations of [removed: The Americas] [added: the Paint Stores] Group included [removed: a leased distribution facility in Uruguay and 4,931] [added: 4,694] company-operated specialty paint stores, of which [removed: 216] [added: 205] were owned, in the United States, Canada, Puerto Rico, Virgin Islands, Grenada, Trinidad and Tobago, St. Maarten, Jamaica, Curacao, Aruba, St. [removed: Lucia, Uruguay, Brazil, Chile, Peru, Mexico, Ecuador] [added: Lucia] and Barbados at December 31, [removed: 2022.][added: 2023.]

These paint stores are divided into [removed: six] [added: five] separate operating divisions [removed: that] [added: based on their geographical region and] are responsible for the sale of predominantly [removed: architectural,] [added: Sherwin-Williams® and other controlled brand architectural paint and coatings,] protective and marine [added: products, OEM product finishes] and related [removed: products through the paint stores located within their geographical region.][added: products.]

At the end of [removed: 2022:][added: 2023:]

- the Mid Western Division operated [removed: 1,172] [added: 1,189] paint stores primarily located in the midwestern and upper west coast states;

- the Eastern Division operated [removed: 901] [added: 911] paint stores along the upper east coast and New England states;

- the Canada Division operated [removed: 252] [added: 256] paint stores throughout Canada;

- the Southeastern Division operated [removed: 1,171] [added: 1,188] 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; [added: and]

- the Southwestern Division operated [removed: 1,128] [added: 1,150] paint stores in the central plains and [removed: the] lower west coast [removed: states; and][added: states.]

During [removed: 2022, The Americas] [added: 2023, the Paint Stores] Group opened [removed: 72] [added: 70] net new stores, consisting of [removed: 89] [added: 76] new stores opened [removed: (71 in the United States, 11 in Mexico, 6 in Canada] and [removed: 1 in South America) and 17] [added: 6] stores [removed: closed (2 in the United States, 14 in South America and 1 in Mexico).][added: closed.]

The Performance Coatings Group operated [removed: 223] [added: 224] branches in the United [removed: States, of which 8 were owned,] [added: States and 98 branches internationally] at December 31, [removed: 2022.][added: 2023.]

During [removed: 2022,] [added: 2023,] this segment added [removed: 35] [added: 5] net new branches, consisting of [removed: 39] [added: 8] opened or acquired branches and [removed: 4] [added: 3] branches closed.

For additional information regarding real property within the Administrative segment, see [removed: the] information set forth in Item 1 [added: and Item 7] of this report, which [removed: is] [added: are] incorporated herein by reference.

Construction of the Company’s new global headquarters and research and development center is expected to be completed in 2024.

| Asia | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |

The Consumer Brands Group operated 318 specialty paint stores in Latin America at December 31, 2023.

These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products which are branded for the Latin America market.

These paint stores are located in Mexico (162), Chile (58), Brazil (50), Ecuador (37) and Uruguay (11).

During 2023, the Consumer Brands Group opened 11 net new stores, consisting of 17 new stores opened and 6 stores closed.

International locations consisted of branches in Europe (47), Canada (22), Chile (11), Mexico (5), Peru (3), Ecuador (2), Brazil (2), Thailand (2), Indonesia (2), Vietnam (1) and China (1).

All real property within the Administrative segment is owned with the exception of the current global headquarters, current research and development center and new global headquarters currently under construction.

The sale is expected to be completed during 2023.

- the Latin America Division operated 307 paint stores in Uruguay, Brazil, Chile, Peru, Mexico and Ecuador.

The Performance Coatings Group also operated 94 branches internationally, of which 7 were owned, at December 31, 2022, consisting of branches in Europe (47), Canada (22), Chile (11), Mexico (5), Peru (3), Vietnam (3), Ecuador (2), and Brazil (1).

All real property within the Administrative segment is owned by us.

| John G. Morikis | | | [removed: 59] [added: 60] | | | [removed: Chairman and Chief] Executive [removed: Officer,] [added: Chairman,] Director | | |

| Heidi G. Petz | | | [removed: 48] [added: 49] | | | President and Chief [removed: Operating Officer] [added: Executive Officer, Director] | | |

| Allen J. Mistysyn | | | [removed: 54] [added: 55] | | | Senior Vice President [removed: -] [added: –] Finance and Chief Financial Officer | | |

| Jane M. Cronin | | | [removed: 55] [added: 56] | | | Senior Vice President [removed: -] [added: –] Enterprise Finance | | |

| Mary L. Garceau | | | [removed: 50] [added: 51] | | | Senior Vice [removed: President, General Counsel] [added: President – Chief Legal Officer] and Secretary | | |

| James R. Jaye | | | [removed: 56] [added: 57] | | | Senior Vice President [removed: -] [added: –] Investor Relations and Corporate Communications | | |

| Gregory P. Sofish | | | [removed: 57] [added: 58] | | | Senior Vice President [removed: -] [added: –] Human Resources | | |

| Bryan J. Young | | | [removed: 47] [added: 48] | | | Senior Vice President [removed: -] [added: –] Corporate Strategy and Development | | |

| Todd D. Rea | | | [removed: 48] [added: 49] | | | President, Consumer Brands Group | | |

| [removed: Joseph F. Sladek] [added: Colin M. Davie] | | | [removed: 52] [added: 54] | | | President & General Manager, Global Supply Chain Division, Consumer Brands Group | | |

Mr. Morikis has served as Chairman since January [removed: 2017 and Chief] [added: 2017, serving as] Executive [removed: Officer] [added: Chairman] since January [removed: 2016.][added: 2024.]

Mr. Morikis [removed: also] served as [added: Chief Executive Officer from January 2016 to January 2024,] President from March 2021 to March 2022 and October 2006 to March 2019 and Chief Operating Officer from October 2006 to January 2016.

Ms. Petz has served as President [added: since March 2022] and Chief [removed: Operating] [added: Executive] Officer since [removed: March 2022.][added: January 2024.]

Ms. Petz served as [added: Chief Operating Officer from March 2022 to January 2024,] President, The Americas Group from March 2021 to March 2022, Senior Vice President, Marketing, The Americas Group from November 2020 to March 2021 and President, Consumer Brands Group from September 2020 to November 2020.

[removed: Ms. Petz] [added: Mr. Davie] joined the Company in June 2017 in connection with the Valspar acquisition.

Mr. Mistysyn has served as Senior Vice President [removed: -] [added: –] Finance and Chief Financial Officer since January 2017.

Ms. Cronin has served as Senior Vice President [removed: -] [added: –] Enterprise Finance since July 2022.

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

Ms. Garceau [removed: has] served as Senior Vice President, General Counsel and Secretary [removed: since] [added: from] August [removed: 2017.][added: 2017 to February 2024.]

Mr. Jaye has served as Senior Vice President [removed: -] [added: –] Investor Relations and Corporate Communications since June 2019.

Mr. Jaye served as Vice President [removed: -] [added: –] Investor Relations from October 2017 to June 2019.

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

Mr. Young has served as Senior Vice President [removed: -] [added: –] Corporate Strategy and Development since March 2021.

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

Mr. Binns has served as President, [removed: The Americas Group] [added: Global Architectural] since [removed: March 2022.][added: January 2024.]

Mr. Binns served as President, [added: Paint Stores Group from January 2023 to January 2024, President, The Americas Group from March 2022 to January 2023, President,] Performance Coatings Group from November 2020 to March [removed: 2022,] [added: 2022 and] President & General Manager, Automotive Finishes Division, [added: Performance Coatings Group from July 2018 to November 2020.]

Mr. Jorgenrud has served as President, [removed: Performance Coatings Group] [added: Global Industrial] since [removed: March 2022.][added: January 2024.]

Mr. Jorgenrud served as [added: President, Performance Coatings Group from March 2022 to January 2024,] President & General Manager, General Industrial Division, Performance Coatings Group from January 2020 to March 2022 and President & General Manager, Protective & Marine Division, Performance Coatings Group from June 2017 to [removed: December 2019.][added: January 2020.]

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 [removed: 2020,] [added: 2020 and] Senior Vice President of Sales, Lowe’s Business Unit from March 2018 to November [removed: 2019 and Senior Vice President of Sales, National Accounts from August 2017 to February 2018.][added: 2019.]

Mr. [removed: Sladek] [added: Davie] has served as President & General Manager, Global Supply Chain Division, Consumer Brands Group since January [removed: 2021.][added: 2024.]

| Justin T. Binns | | | 48 | | | President, Global Architectural | | |

| Karl J. Jorgenrud | | | 47 | | | President, Global Industrial | | |

Ms. Petz has served as a Director since October 2023 and joined the Company in June 2017 in connection with the Valspar acquisition.

Ms. Garceau has served as Senior Vice President – Chief Legal Officer and Secretary since February 2024.

Mr. Davie served as Senior Vice President and Chief Procurement Officer from March 2022 to January 2024, Senior Vice President – Purchasing from October 2021 to March 2022, President & General Manager, Industrial Wood Division, Performance Coatings Group from March 2019 to October 2021 and President & General Manager, Engineered Polymer Solutions, Performance Coatings Group from June 2017 to March 2019.

| Justin T. Binns | | | 47 | | | President, The Americas Group | | |

| Karl J. Jorgenrud | | | 46 | | | President, Performance Coatings Group | | |

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. 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 2020 and Vice President, Excellence Initiatives from March 2017 to March 2019.

Mr. Sladek has been employed with the Company since May 2007.

The number of shareholders of record at January 31, [removed: 2023] [added: 2024] was [removed: 5,232.][added: 5,064.]

The following table sets forth a summary of the Company’s purchases of common stock during the fourth quarter of [removed: 2022.][added: 2023.]

| Share repurchase program (1) | | | | | | [removed: 150,000] [added: 350,000] | | | | | | $ | [removed: 223.07] [added: 240.35] | | | | | [removed: 150,000] [added: 350,000] | | | | | | [removed: 45,675,000] [added: 41,075,000] | | |

| Share repurchase program (1) | | | | | | [removed: 450,000] [added: 950,000] | | | | | | $ | [removed: 219.24] [added: 268.86] | | | | | [removed: 450,000] [added: 950,000] | | | | | | [removed: 45,225,000] [added: 40,125,000] | | |

| Employee transactions (2) | | | | | | [removed: —] [added: 593] | | | | | | $ | [removed: —] [added: 249.50] | | | | | | | | | | | N/A | | |

| Share repurchase program (1) | | | | | | [removed: —] [added: 500,000] | | | | | | $ | [removed: —] [added: 292.87] | | | | | [removed: —] [added: 500,000] | | | | | | [removed: 45,225,000] [added: 39,625,000] | | |

| Employee transactions (2) | | | | | | [removed: 37] [added: 1,829] | | | | | | $ | [removed: 252.23] [added: 261.55] | | | | | | | | | | | N/A | | |

| Share repurchase program (1) | | | | | | [removed: 600,000] [added: 1,800,000] | | | | | | $ | [removed: 220.20] [added: 269.99] | | | | | [removed: 600,000] [added: 1,800,000] | | | | | | [removed: 45,225,000] [added: 39,625,000] | | |

The Company had remaining authorization at December 31, [removed: 2022] [added: 2023] to purchase [removed: 45,225,000] [added: 39,625,000] shares.

The following graph compares the cumulative total shareholder return on [removed: Sherwin-Williams] [added: the Company’s] common stock [added: (NYSE: SHW)] with the cumulative five-year total return of the companies listed on the Standard & Poor’s 500 Stock Index and the peer groups of companies selected on a line-of-business basis.

The cumulative five-year total return assumes $100 was invested on December 31, [removed: 2017] [added: 2018] in Sherwin-Williams common stock, the S&P 500 and the peer group.

The cumulative five-year total return, including reinvestment of dividends, represents the cumulative value through December 31, [removed: 2022.][added: 2023.]

[removed: ][added: ]

| Employee transactions (2) | | | | | | 1,461 | | | | | | $ | 290.10 | | | | | | | | | | | N/A | | |

| Employee transactions (2) | | | | | | 3,883 | | | | | | $ | 270.45 | | | | | | | | | | | N/A | | |

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

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

| Report of Management on Internal Control Over Financial Reporting | | | [removed: [40](#ic6d89eb8d5ed47839a7aadf63eb72fac_70)] [added: [42](#i9d0bd69fd9d1400b960fb710ce5d8915_70)] | | |

| Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | | | [removed: [41](#ic6d89eb8d5ed47839a7aadf63eb72fac_73)] [added: [43](#i9d0bd69fd9d1400b960fb710ce5d8915_73)] | | |

| Report of Management on the Consolidated Financial Statements | | | [removed: [43](#ic6d89eb8d5ed47839a7aadf63eb72fac_79)] [added: [45](#i9d0bd69fd9d1400b960fb710ce5d8915_79)] | | |

| Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements (PCAOB ID: 42) | | | [removed: [44](#ic6d89eb8d5ed47839a7aadf63eb72fac_82)] [added: [46](#i9d0bd69fd9d1400b960fb710ce5d8915_82)] | | |

| Statements of Consolidated Income | | | [removed: [46](#ic6d89eb8d5ed47839a7aadf63eb72fac_85)] [added: [48](#i9d0bd69fd9d1400b960fb710ce5d8915_85)] | | |

| Statements of Consolidated Comprehensive Income | | | [removed: [47](#ic6d89eb8d5ed47839a7aadf63eb72fac_88)] [added: [49](#i9d0bd69fd9d1400b960fb710ce5d8915_88)] | | |

| Consolidated Balance Sheets | | | [removed: [48](#ic6d89eb8d5ed47839a7aadf63eb72fac_91)] [added: [50](#i9d0bd69fd9d1400b960fb710ce5d8915_91)] | | |

| Statements of Consolidated Cash Flows | | | [removed: [49](#ic6d89eb8d5ed47839a7aadf63eb72fac_94)] [added: [51](#i9d0bd69fd9d1400b960fb710ce5d8915_94)] | | |

| Statements of Consolidated Shareholders’ Equity | | | [removed: [50](#ic6d89eb8d5ed47839a7aadf63eb72fac_97)] [added: [52](#i9d0bd69fd9d1400b960fb710ce5d8915_97)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [51](#ic6d89eb8d5ed47839a7aadf63eb72fac_100)] [added: [53](#i9d0bd69fd9d1400b960fb710ce5d8915_100)] | | |

In order to ensure that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2022,] [added: 2023,] 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.

As permitted by SEC rules, we have excluded the operations and related assets of the [removed: 2022 acquisitions] [added: 2023 acquisition of SIC Holding GmbH] from the scope of our assessment of the effectiveness of internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

The Total assets and Net sales of the [removed: 2022 acquisitions] [added: 2023 acquisition of SIC Holding GmbH] represented approximately [removed: 5.0%] [added: 1.3%] and [removed: 0.6%] [added: 0.1%] of the Company's respective consolidated Total assets and Net sales as of and for the year ended December 31, [removed: 2022.][added: 2023.]

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: 2022,] [added: 2023,] 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: 2022] [added: 2023] 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 [removed: 41] [added: 43] of this report.

[removed: ][added: ]

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

[removed: ][added: ]

[removed: ][added: ]

We have audited The Sherwin-Williams Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] based on the COSO criteria.

[removed: (collectively] [added: As indicated in] the [removed: 2022 acquisitions),] [added: 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 SIC Holding GmbH,] which [removed: are] [added: is] included in the [removed: 2022] [added: 2023] consolidated financial statements of the Company and constituted [removed: 5.0%] [added: 1.3%] of Total assets as of December 31, [removed: 2022] [added: 2023] and [removed: 0.6%] [added: 0.1%] 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 [removed: 2022 acquisitions] [added: 2023 acquisition] excluded from the scope of management’s assessment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: (PCAOB),] the consolidated balance sheets of The Sherwin-Williams Company as of December 31, [removed: 2022, 2021,] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] 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: 2022,] [added: 2023,] and the related notes and the financial statement schedule listed in Item 15(a) and our report dated February [removed: 22, 2023] [added: 20, 2024] expressed an unqualified opinion thereon.

The Company’s management is responsible for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control Over Financial Reporting.

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 [removed: “Company”)] [added: Company)] as of December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] 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 [removed: 40] [added: 42] of this report, we concluded that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

[removed: ][added: ]

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

We have audited the accompanying consolidated balance sheets of The Sherwin-Williams Company (the [removed: “Company”)] [added: Company)] as of December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] 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: 2022,] [added: 2023,] 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: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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) [removed: (“PCAOB”),] [added: (PCAOB),] the Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] 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: 22, 2023] [added: 20, 2024] expressed an unqualified opinion thereon.

| *Description of the Matter* | | | As described in Note 11 to the consolidated financial statements, the Company had short-term and long-term accruals for environmental-related activities of [removed: $50.2] [added: $88.1] million and [removed: $240.2] [added: $230.8] million, respectively, at December 31, [removed: 2022.] [added: 2023.] The Company’s largest and most complex site is the Gibbsboro, New Jersey site [removed: (“Gibbsboro”)] [added: (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, sediment, [removed: waterbodies] [added: surface water] and groundwater contamination, and are in various phases of investigation and remediation with the Environmental Protection Agency [removed: (“EPA”).] [added: (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 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 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 type, extent and cost of remediation at the Gibbsboro site for which the Company is responsible. We 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 impact of current year investigation and remediation activities on the Company's methodology and assumptions used to estimate the cost and extent of remediation in accordance with industry practice, applicable laws and regulations. We reconciled types and extent of remediation identified in communications between the Company and the [removed: EPA] [added: EPA, including agreed upon remediation plans with the EPA,] to the Company’s remediation cost estimates recorded for Gibbsboro. We also conducted a search for publicly available information that might indicate facts contrary to the types and extent of remediation currently identified in the Company’s remediation cost estimates recorded for Gibbsboro. | | |

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Net sales | | | $ | [removed: 22,148.9] [added: 23,051.9] | | | | | $ | [removed: 19,944.6] [added: 22,148.9] | | | | | $ | [removed: 18,361.7] [added: 19,944.6] | |

| Cost of goods sold | | | [removed: 12,823.8] [added: 12,293.8] | | | | | | [removed: 11,401.9] [added: 12,823.8] | | | | | | [removed: 9,679.1] [added: 11,401.9] | | |

| Gross profit | | | [removed: 9,325.1] [added: 10,758.1] | | | | | | [removed: 8,542.7] [added: 9,325.1] | | | | | | [removed: 8,682.6] [added: 8,542.7] | | |

| *Percent to Net sales* | | | [removed: 42.1] [added: 46.7] | | % | | | | [removed: *42.8*] [added: *42.1*] | | *%* | | | | [removed: *47.3*] [added: *42.8*] | | *%* |

| Selling, general and administrative expenses | | | [removed: 6,014.5] [added: 7,065.4] | | | | | | [removed: 5,572.5] [added: 6,331.6] | | | | | | [removed: 5,477.9] [added: 5,882.0] | | |


H. G. Petz

February 20, 2024


H. G. Petz

February 20, 2024

| *Percent to Net sales* | | | 30.6 | | % | | | | *28.6* | | *%* | | | | *29.5* | | *%* |

| Other postretirement benefit plan net cost | | | (15.8) | | | | | | (1.6) | | | | | | (3.9) | | |

| Other | | | 7.0 | | | | | | 43.9 | | | | | | 10.7 | | |

| Supplemental cash flow information | | | | | | | | | | | | | | | | | |

| Net income | | | | | | | | | | | | | | | 2,388.8 | | | | | | | | | | | | | | | | | | 2,388.8 | | |

| Other comprehensive income | | | | | | | | | | | | | | | | | | | | | | | | | | | 76.3 | | | | | | 76.3 | | |

| Stock-based compensation activity | | | 0.6 | | | | | | 229.3 | | | | | | | | | | | | (26.0) | | | | | | | | | | | | 203.9 | | |

| Balance at December 31, 2023 | | | $ | 91.8 | | | | | $ | 4,193.6 | | | | | $ | 5,288.3 | | | | | $ | (5,233.6) | | | | | $ | (624.3) | | | | | $ | 3,715.8 | |

As a result of the change, The Americas Group has been renamed the Paint Stores Group which now focuses on the core U.S., Canada and Caribbean region stores business.

All reported segment information herein, including comparable prior periods, include the Latin America architectural paint business within the Consumer Brands Group.

See Note 23 for further details on this change and other information on the Company’s reportable segments.

Inventories

Inventories are stated at the lower of cost or net realizable value with cost determined principally on the last-in, first-out (LIFO) method.

If inventories accounted for on the LIFO method are reduced on a year-over-year basis, then liquidation of certain quantities carried at costs prevailing in prior years occurs.

Management records an estimate of net realizable value for obsolete and discontinued inventories based on historical experience and current trends through reductions to inventory cost by recording a provision included in Cost of goods sold.

If management estimates that the reasonable market value is below cost or determines that future demand was lower than current inventory levels, based on historical experience, current and projected market demand, current and projected volume trends and other relevant current and projected factors associated with the current economic conditions, a reduction in inventory cost to estimated net realizable value is provided for in the reserve for obsolescence.

See Note 14 for further details.

Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.

For subsidiaries operating in highly inflationary economies, the parent’s reporting currency is the functional currency.

Monetary assets and liabilities are translated into U.S. dollars using rates of exchange at the balance sheet date and non-monetary assets and liabilities are translated into U.S. dollars at their historical rates of exchange, with remeasurement adjustments and other transaction gains and losses recognized in Net income.

See Note 20 for further details.

There were no material government incentives received in 2023 or 2021.

Supply Chain Financing

As part of our strategy to manage working capital, we have entered into agreements with various financial institutions that act as intermediaries between the Company and certain suppliers.

The Company is not a party to agreements between the suppliers and the financial institutions.

These arrangements provide participating suppliers the option to settle outstanding accounts payable incurred by the Company in the normal course of business early at a discount and do not impact our rights and obligations with suppliers, including amounts due and scheduled payment terms.

Under the terms of our agreements, the Company confirms the validity of each supplier invoice to the respective financial institution upon receipt.

On the invoice due date, the Company settles the outstanding amount with the respective financial institution.

Liabilities associated with these

arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $213.1 million, $258.1 million and $221.7 million at December 31, 2023, 2022 and 2021, respectively.

Reclassifications

Certain amounts in the consolidated financial statements and notes to the consolidated financial statements for 2022 and 2021 have been reclassified to conform to the 2023 presentation.

In addition, a required rollforward of activity within the programs will be disclosed prospectively beginning with the annual period ending December 31, 2024.

In March 2023, the FASB issued ASU 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for investments in tax credit structures using the proportional amortization method.” This ASU allows entities to apply the proportional amortization method to all tax equity investments if certain conditions are met.

J. G. Morikis

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.

February 22, 2023

J. G. Morikis



February 22, 2023

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

| *Percent to Net sales* | | | 27.2 | | % | | | | *27.9* | | *%* | | | | *29.8* | | *%* |

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

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

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

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

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

| Amortization of intangible assets | | | 317.1 | | | | | | 309.5 | | | | | | 313.4 | | |

| Defined benefit pension plans net cost | | | 5.1 | | | | | | 6.8 | | | | | | 7.6 | | |

| Other | | | 29.6 | | | | | | (6.4) | | | | | | (6.9) | | |

| Payments for credit facility and debt issuance costs | | | (7.3) | | | | | | (11.5) | | | | | | (10.0) | | |

| Balance at January 1, 2020 | | | $ | 119.4 | | | | | $ | 3,153.0 | | | | | $ | 7,366.9 | | | | | $ | (5,836.5) | | | | | $ | (679.5) | | | | | $ | 4,123.3 | |

| Adjustment to initially adopt ASU 2016-13 | | | | | | | | | | | | | | | (3.0) | | | | | | | | | | | | | | | | | | (3.0) | | |

| Treasury stock issued | | | | | | | | | 61.6 | | | | | | | | | | | | 120.8 | | | | | | | | | | | | 182.4 | | |

| Treasury stock retired | | | (30.6) | | | | | | | | | | | | (8,061.6) | | | | | | 8,092.2 | | | | | | | | | | | | — | | |

| Stock-based compensation activity | | | 1.1 | | | | | | 276.4 | | | | | | | | | | | | (26.7) | | | | | | | | | | | | 250.8 | | |

| Other comprehensive loss | | | | | | | | | | | | | | | | | | | | | | | | | | | (2.2) | | | | | | (2.2) | | |

Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments” (ASC 326).

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

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

Effective January 1, 2022, the Company adopted Accounting Standards Update (ASU) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” This ASU requires disclosures for material government assistance transactions during annual reporting periods.

The disclosures include information about the nature of the transaction, the related accounting policies used to account for the government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions.

*Pending*

The transaction is subject to customary closing conditions and is expected to close in 2023.

The acquired business will be reported within the Company’s Performance Coatings Group.

This business engineers, manufactures and sells corrosion protection coating systems and fire protection coating systems.

In July 2022, the Company completed the acquisitions of Gross & Perthun GmbH, a German-based developer, manufacturer, and distributor of coatings primarily for the heavy equipment and transportation industries, Dur-A-Flex, Inc., a domestic floor coatings company, and Powdertech Oy Ltd., a Finland-based distributor of powder coatings and related products.

The acquired businesses will be reported within the Company’s Performance Coatings Group.

(ICA), an Italian designer, manufacturer and distributor of industrial wood coatings with global operations.

statements since the respective acquisition dates.

Specialty Polymers is reported within the Company’s Performance Coatings Group.

Divestiture

The divestiture will enable the Company to focus its resources on global opportunities which better align with our long-term strategies.

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] [added: President] 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 [removed: (“Exchange Act”).][added: (Exchange Act).]

Based upon that evaluation, our [removed: Chairman] [added: President] 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 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 SEC rules and forms, and accumulated and communicated to our management, including our [removed: Chairman] [added: President] and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

*Trading Arrangements*

During the quarter ended December 31, 2023, none of the Company’s directors or “officers,” as defined in Rule 16a-1(f) of the Exchange Act, adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

None.

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

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

We have adopted a Code of Conduct, which applies to all [removed: directors] [added: directors, officers] and employees, including our [added: principal] executive [removed: officers,] [added: officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions,] of Sherwin-Williams and our subsidiaries wherever located.

[removed: Under our] [added: We have also adopted a] Code of Ethics for Senior Financial Management, [added: pursuant to which] our chief executive officer, chief financial officer and senior financial management are responsible for creating and maintaining a culture of high ethical standards and of commitment to compliance throughout our Company to ensure the fair and timely reporting of Sherwin-Williams’ financial results and condition.

Please refer to the information set forth in our Proxy Statement under the caption “Code of Conduct,” which is incorporated herein by reference.

The information required by this item is set forth in our Proxy Statement under the captions [removed: “2022] [added: “2023] Director Compensation Table,” “Director Compensation Program,” “Executive [removed: Compensation” and] [added: Compensation,”] “Executive Compensation Tables” and [added: “2023 CEO Pay Ratio” and] is incorporated herein by [removed: reference.][added: reference (other than the Compensation Committee Report, which will be deemed furnished).]

| Statements of Consolidated Income | | | [removed: [46](#ic6d89eb8d5ed47839a7aadf63eb72fac_85)] [added: [48](#i9d0bd69fd9d1400b960fb710ce5d8915_85)] | | |

| Statements of Consolidated Comprehensive Income | | | [removed: [47](#ic6d89eb8d5ed47839a7aadf63eb72fac_88)] [added: [49](#i9d0bd69fd9d1400b960fb710ce5d8915_88)] | | |

| Consolidated Balance Sheets | | | [removed: [48](#ic6d89eb8d5ed47839a7aadf63eb72fac_91)] [added: [50](#i9d0bd69fd9d1400b960fb710ce5d8915_91)] | | |

| Statements of Consolidated Cash Flows | | | [removed: [49](#ic6d89eb8d5ed47839a7aadf63eb72fac_94)] [added: [51](#i9d0bd69fd9d1400b960fb710ce5d8915_94)] | | |

| Statements of Consolidated Shareholders’ Equity | | | [removed: [50](#ic6d89eb8d5ed47839a7aadf63eb72fac_97)] [added: [52](#i9d0bd69fd9d1400b960fb710ce5d8915_97)] | | |