Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

(dollars in millions, except as noted and per share data)

BACKGROUND

The Sherwin-Williams Company, founded in 1866, and its consolidated subsidiaries (collectively, the Company) are engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region and throughout Europe, Asia and Australia.

The Company is structured into three reportable segments - Paint Stores Group, Consumer Brands Group and Performance Coatings Group (collectively, the Reportable Segments) - and an Administrative function, which is representative of the way it is internally organized for assessing performance and making decisions regarding the allocation of resources. See Note 18 in Item 1 for further details on the Company’s Reportable Segments.

SUMMARY

• Consolidated Net sales decreased 1.1% to $5.306 billion in the quarter

◦Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 1.2% in the quarter

• Diluted net income per share increased 1.5% to $2.00 per share in the quarter compared to $1.97 per share in the first quarter of 2024

• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) in the quarter increased 4.6% to $937.0 million, or 17.7% of Net sales

OUTLOOK

In a macro-economic environment that remains turbulent, we are focused on being a source of stability and reliability for our customers. Our differentiated strategy, Success by Design, has not changed as we seek to provide our customers with solutions that increase their productivity and profitability. We remain well-positioned in each of our targeted markets and continue to prioritize initiatives such as new stores and digital technologies that we believe will allow us to generate sustained and profitable above-market growth in an increasingly uncertain and competitive landscape.

We employ a disciplined capital deployment strategy, while maintaining a balanced approach toward driving value for our customers and returns to our shareholders. We continue to pursue business acquisitions, transactions and investments that fit our long-term growth strategy. We will return value to our shareholders through the payment of dividends and the reinvestment of excess cash for share repurchases of Company stock. We have a strong liquidity position, with $199.8 million in cash and $2.148 billion of unused capacity under our credit facilities at March 31, 2025. We are, and expect to remain, in compliance with bank covenants.

RESULTS OF OPERATIONS

The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The results of operations for the three months ended March 31, 2025 are not indicative of the results to be expected for the full year as our business is seasonal in nature, with the majority of Net sales for the Reportable Segments traditionally occurring during the second and third quarters. However, periods of economic uncertainty can alter the Company’s seasonal patterns.

The following discussion and analysis addresses comparisons of material changes in the condensed consolidated financial statements for the three months ended March 31, 2025 and 2024.

Net Sales

Three Months Ended March 31, 2025

			Three Months Ended March 31,
			2025						2024						$ Change						% Change												Currency Impact						Acquisition and Divestiture Impact
Paint Stores Group			$	2,939.8					$	2,873.0					$	66.8					2.3		%										(0.1)		%
Consumer Brands Group			762.2						811.0						(48.8)						(6.0)		%										(3.3)		%
Performance Coatings Group			1,602.0						1,681.9						(79.9)						(4.8)		%										(2.6)		%				0.7		%
Administrative			1.7						1.4						0.3						21.4		%										—		%
Total			$	5,305.7					$	5,367.3					$	(61.6)					(1.1)		%										(1.4)		%				0.2		%

Consolidated Net sales decreased by 1.1% in the first quarter of 2025 primarily due to unfavorable foreign currency translation. Lower sales in the Performance Coatings and Consumer Brands Groups were partially offset by higher sales in the Paint Stores Group. Net sales of all consolidated foreign subsidiaries decreased to $1.045 billion in the first quarter of 2025 compared to $1.103 billion in the same period last year. The decrease in Net sales for all consolidated foreign subsidiaries was primarily due to lower Net sales in the Europe and Latin America regions. Net sales of all operations other than consolidated foreign subsidiaries decreased to $4.261 billion in the first quarter of 2025 compared to $4.264 billion in the same period last year.

Net sales in the Paint Stores Group increased by 2.3% in the first quarter of 2025 primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, partially offset by a low-single digit percentage decrease in sales volume. Net sales increased in certain professional customer end markets, led by a high-single digit percentage increase in protective and marine and a mid-single digit percentage increase in residential repaint. Net sales from stores open for more than twelve calendar months increased by 1.2% in the first quarter of 2025 compared to last year’s comparable period. Net sales of non-paint products decreased 0.4% in the first quarter of 2025 compared to last year’s comparable period. A discussion of changes in volume versus pricing for sales of non-paint products is not pertinent due to the wide assortment of general merchandise sold.

Net sales in the Consumer Brands Group decreased by 6.0% in the first quarter of 2025 primarily due to soft DIY demand in North America and a 3.3% impact from unfavorable currency translation driven by Latin America.

Net sales in the Performance Coatings Group decreased 4.8% primarily due to a 2.6% impact from unfavorable currency translation driven by Latin America. A high-single digit increase in Packaging Net sales, inclusive of an acquisition, was offset by decreases in all other business units.

Income Before Income Taxes

The following table presents the components of Income before income taxes as a percentage of Net sales:

			Three Months Ended March 31,
			2025												2024
									% of Net Sales												% of Net Sales
Net sales			$	5,305.7					100.0		%				$	5,367.3					100.0		%
Cost of goods sold			2,746.6						51.8		%				2,836.3						52.8		%
Gross profit			2,559.1						48.2		%				2,531.0						47.2		%
SG&A			1,793.8						33.8		%				1,799.8						33.5		%
Other general expense - net			8.9						0.2		%				2.0						—		%
Interest expense			103.8						1.9		%				103.0						1.9		%
Interest income			(3.3)						(0.1)		%				(6.1)						—		%
Other expense (income) - net			2.9						0.1		%				(7.7)						(0.1)		%
Income before income taxes			$	653.0					12.3		%				$	640.0					11.9		%

Three Months Ended March 31, 2025

Consolidated Cost of goods sold decreased $89.7 million, or 3.2%, in the first quarter of 2025 compared to the same period in 2024 primarily due to a low-single digit decrease in volume and currency translation rate changes, which decreased Cost of goods sold by 1.7%.

Consolidated gross profit increased $28.1 million in the first quarter of 2025 compared to the same period in 2024 primarily due to higher selling prices in the Paint Stores Group, partially offset by lower sales volumes in all segments and currency translation rate changes. Consolidated gross profit as a percent of consolidated Net sales increased in the first quarter of 2025 to 48.2% compared to 47.2% during the same period in 2024 for these same reasons.

The Paint Stores Group’s gross profit in the first quarter of 2025 was higher than the same period last year by $79.8 million due primarily to higher Net sales driven by higher selling prices. The Paint Stores Group’s gross profit as a percent of Net sales increased in the first quarter of 2025 compared to the same period in 2024 for these same reasons. The Consumer Brands Group’s gross profit decreased by $32.7 million in the first quarter of 2025 compared to the same period last year due primarily to lower Net sales and unfavorable currency related impacts. The Consumer Brands Group’s gross profit as a percent of Net sales decreased in the first quarter of 2025 compared to the same period in 2024 for these same reasons. The Performance Coatings Group’s gross profit decreased $26.2 million in the first quarter of 2025 compared to the same period last year due primarily to lower Net sales and unfavorable currency related impacts. The Performance Coatings Group’s gross profit as a percent of Net sales increased slightly in the first quarter of 2025 compared to the same period last year.

Consolidated Selling, general and administrative expenses (SG&A) decreased $6.0 million in the first quarter of 2025 versus the same period last year primarily due to effective cost control in managing the operations of the business and currency translation rate changes, partially offset by modestly higher employee-related costs. As a percent of Net sales, consolidated SG&A increased 30 basis points in the first quarter of 2025 compared to the same period last year.

The Paint Stores Group’s SG&A increased $27.2 million in the first quarter of 2025 compared to the same period last year due primarily due to higher employee-related costs. The Consumer Brands Group’s SG&A decreased $5.4 million in the first quarter of 2025 compared to the same period last year primarily due to lower employee-related costs and currency translation rate changes. The Performance Coatings Group’s SG&A decreased $6.8 million in the first quarter of 2025 compared to the same period last year primarily due to effective cost control in managing the operations of the business and currency translation rate changes. The Administrative function’s SG&A decreased $21.0 million in the first quarter of 2025 compared to the same period last year due primarily to effective cost control in managing the operations of the business, including spending on digital project investments and lower employee-related costs.

Other general expense - net increased $6.9 million in the first quarter of 2025 compared to the same period last year primarily due to increased miscellaneous operating expenses in the Administrative function. See Note 15 in Item 1 for further details.

Interest expense increased $0.8 million in the first quarter of 2025 compared to the same period last year. See Note 6 in Item 1 for additional information on the Company’s outstanding debt.

Other expense (income) - net was expense of $2.9 million in the first quarter of 2025 compared to income of $7.7 million in the same period last year primarily due to higher currency transaction losses in the current year, a decrease in net investment gains and an increase in miscellaneous expenses. See Note 15 in Item 1 for further details.

The following table presents Income before income taxes by segment and as a percentage of Net sales by segment:

			Three Months Ended March 31,
			2025						2024						% Change
Income Before Income Taxes:
Paint Stores Group			$	541.2					$	493.2					9.7		%
Consumer Brands Group			131.9						153.4						(14.0)		%
Performance Coatings Group			212.7						237.7						(10.5)		%
Administrative			(232.8)						(244.3)						4.7		%
Total			$	653.0					$	640.0					2.0		%
Income Before Income Taxes as a Percent of Net Sales:
Paint Stores Group			18.4		%				17.2		%
Consumer Brands Group			17.3		%				18.9		%
Performance Coatings Group			13.3		%				14.1		%
Administrative			nm						nm
Total			12.3		%				11.9		%
nm - not meaningful

Income Tax Expense

The effective tax rate was 22.8% for the first quarter of 2025 compared to 21.1% for the first quarter of 2024. The increase in the effective tax rate was primarily due to a less favorable impact of tax benefits related to employee share-based payments. The other significant components of the Company’s effective tax rate were consistent year-over-year. See Note 16 in Item 1 for further details.

Net Income Per Share

Diluted net income per share increased 1.5% to $2.00 per share in the first quarter of 2025 compared to $1.97 per share in the first quarter of 2024. Diluted net income per share in the first quarter of 2025 included charges for for acquisition-related amortization expense of $0.19 per share and severance and other restructuring expenses of $0.06 per share. Diluted net income per share in the first quarter of 2024 included a charge for acquisition-related amortization expense of $0.20 per share. Foreign currency translation rate changes decreased diluted net income per share by $0.03 in the first quarter of 2025.

FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW

Overview

The Company’s financial condition and liquidity remained strong at March 31, 2025. The Company used $61.1 million in Net operating cash during the first quarter of 2025 primarily as a result of seasonal increases in working capital requirements, partially offset by Net income. This Net operating cash usage was funded through an increase in Short-term borrowings. The Company returned cash of $552.1 million to its shareholders in the form of dividends and share repurchases during the first quarter of 2025. The Company’s EBITDA increased 2.4% to $917.7 million for the first three months of 2025. Refer to the Non-GAAP Financial Measures section below for the definition and calculation of EBITDA.

At March 31, 2025, the Company had Cash and cash equivalents of $199.8 million and total debt outstanding of $10.776 billion. Total debt, net of Cash and cash equivalents, was $10.577 billion. The Company continues to maintain sufficient short-term borrowing capacity at reasonable rates, and the Company has sufficient cash on hand and total available borrowing capacity to fund its current operating requirements.

Net Working Capital

Net working capital, defined as Total current assets less Total current liabilities, decreased $195.9 million to a deficit of $1.837 billion at March 31, 2025 compared to a deficit of $1.641 billion at March 31, 2024. The net working capital decrease is due to an increase of $393.2 million in current liabilities partially offset by an increase in current assets of $197.3 million.

Current asset balances increased $197.3 million at March 31, 2025 compared to March 31, 2024 primarily due to an increase in Inventories of $137.2 million, an increase in Other current assets of $36.2 million and an increase in Cash and cash equivalents of $19.9 million.

Current liability balances increased $393.2 million at March 31, 2025 compared to March 31, 2024 primarily due to an increase in Short-term borrowings of $542.2 million, an increase in Accounts payable of $59.0 million and an increase in the Current portion of operating lease liabilities of $16.1 million, partially offset by a decrease in the Current portion of long-term debt of $198.3 million and a decrease in Other accruals of $18.2 million, primarily related to decreases in environmental liabilities and miscellaneous other current liabilities, partially offset by an increase in commitments related to Non-Traded Investments. The Company’s current ratio was 0.77, 0.79 and 0.78 at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

Property, Plant and Equipment

Net property, plant and equipment increased $130.2 million in the first three months of 2025 and $654.6 million in the twelve months since March 31, 2024. The increase in the first three months was primarily due to capital expenditures of $180.9 million and currency translation and other adjustments of $29.2 million, partially offset by depreciation expense of $79.9 million. Since March 31, 2024, the increase was primarily due to capital expenditures of $935.9 million and assets acquired through business combinations of $41.0 million, partially offset by depreciation expense of $306.2 million, the sale or disposition of fixed assets of $10.7 million and currency translation and other adjustments of $5.4 million.

Capital expenditures primarily represented expenditures related to construction activities associated with the new global headquarters and research and development (R&D) center in the Administrative function. Construction of the new global headquarters and R&D center is expected to be complete in 2025. Also included in 2025 capital expenditures were expenditures related to manufacturing capacity expansion, operational efficiencies and maintenance projects in the Consumer Brands and Performance Coatings Groups and the opening of new paint stores and renovation and improvements in existing stores in the Paint Stores Group.

In 2025, the Company expects to spend slightly less than 2024 for capital expenditures, which it will fund primarily through the generation of operating cash. Core capital expenditures, which exclude expenditures associated with the new global headquarters and R&D center, are expected to be for investments in various productivity improvement and maintenance projects at existing manufacturing, distribution and R&D facilities and new store openings. Refer to “Real Estate Financing” below for further information on the financing transaction for the new global headquarters.

Real Estate Financing

In December 2022, the Company closed a transaction to sell and subsequently lease back its partially-constructed new global headquarters. As part of the terms of the transaction, the Company is contractually obligated for completing the construction of the building and related improvements at the new global headquarters. This transaction did not meet the criteria for recognition as an asset sale under U.S. generally accepted accounting principles (US GAAP) and as such, was accounted for as a real estate financing transaction. The Company received the final proceeds for the new global headquarters in the first quarter of 2025 for

a total of $800 million. The initial lease term includes the construction period and extends for 30 years thereafter, and the Company has the right and option to extend the lease term. The lease payment amounts during the construction period are dependent upon the timing and amount of total reimbursement of construction and other costs received by the Company. Lease payments over the next twelve months are expected to be approximately $50 million. The amount of the lease payments during the initial 30 year lease term will be calculated upon completion of the construction period. Once determinable, this is expected to result in a significant increase in the Company’s long-term contractual obligations.

The net proceeds from this transaction and other real estate financing transactions are recognized as proceeds from real estate financing transactions within the Financing Activities section of the Statements of Condensed Consolidated Cash Flows. The Company will continue to recognize the related assets within Property, plant and equipment, net on the Consolidated Balance Sheets under US GAAP. These assets will be subject to depreciation over their useful lives in accordance with the Company’s accounting policies. The Company will also allocate payments between interest and repayment of the financing liability over the life of the agreement. See Note 8 in Item 1 and Note 10 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information concerning real estate financing.

Goodwill and Intangible Assets

Goodwill increased $128.3 million from December 31, 2024 and increased $87.0 million from March 31, 2024. The increase during the first three months of 2025 was primarily due to purchase accounting allocations of $74.8 million and foreign currency translation fluctuations of $53.5 million. The increase over the twelve month period from March 31, 2024 was primarily due to purchase accounting allocations of $95.8 million, partially offset by foreign currency translation fluctuations and other adjustments of $8.8 million.

Intangible assets decreased $39.8 million from December 31, 2024 and $284.1 million from March 31, 2024. The decrease during the first three months of 2025 was primarily due to amortization of $81.0 million, partially offset by currency translation fluctuations and other adjustments of $41.2 million. The decrease over the twelve month period from March 31, 2024 was primarily due to amortization of $325.6 million and currency translation fluctuations and other adjustments of $17.5 million, partially offset by capitalized software of $30.7 million and purchase accounting allocations of $28.3 million.

See Note 5 in Item 1 and Note 6 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information concerning the Company’s Goodwill and Intangible assets.

Other Assets

Other assets increased $126.8 million from December 31, 2024 and $459.2 million from March 31, 2024. The increase in the first quarter of 2025 was primarily due to an increase in Non-Traded Investments, partially offset by a decrease in assets related to cross currency swap contracts. The increase from March 31, 2024 was primarily due to an increase in Non-Traded Investments, finance lease right-of-use (ROU) assets and assets related to cloud computing arrangements. See Notes 1 and 12 in Item 1 and Notes 1 and 9 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 in for further information.

Debt (including Short-term borrowings)

			March 31,						December 31,						March 31,
			2025						2024						2024
Long-term debt (including current portion)			$	8,977.9					$	9,226.0					$	9,478.6
Short-term borrowings			1,798.5						662.4						1,256.3
Total debt outstanding			$	10,776.4					$	9,888.4					$	10,734.9

The Company’s long-term debt primarily consists of senior notes as disclosed in Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. See Note 6 in Item 1 for additional information concerning debt.

Defined Benefit Pension and Other Postretirement Benefit Plans

Long-term liabilities for defined benefit pension and other postretirement benefit plans did not change significantly from December 31, 2024. The changes from March 31, 2024 are primarily due to changes in actuarial assumptions. See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information concerning the Company’s liabilities for defined benefit pension and other postretirement benefit plans.

Deferred Income Taxes

Deferred income taxes decreased $21.5 million from December 31, 2024 and $80.3 million from March 31, 2024 primarily due to amortization of acquisition-related intangible assets.

Environmental-Related Liabilities

The operations of the Company, like those of other companies in the same industry, are subject to various domestic and foreign environmental laws and regulations. These laws and regulations not only govern current operations and products, but also impose potential liability on the Company for past operations. Management expects environmental laws and regulations to impose increasingly stringent requirements upon the Company and the industry in the future. Management believes that the Company conducts its operations in compliance with applicable environmental laws, regulations and requirements and has implemented various programs designed to help protect the environment and promote continued compliance.

Depreciation of capital expenditures and other expenses related to ongoing environmental compliance measures were included in the normal operating expenses of conducting business. The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during the first three months of 2025. Management does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations in 2025. See Notes 8 and 15 in Item 1 for further information on environmental-related long-term liabilities.

Contractual Obligations, Commercial Commitments and Warranties

There have been no significant changes to the Company’s contractual obligations and commercial commitments in the first three months of 2025 as summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Litigation

See Note 9 in Item 1 for information concerning litigation.

Shareholders’ Equity

			March 31,						December 31,						March 31,
			2025						2024						2024
Total shareholders’ equity			$	4,130.1					$	4,051.2					$	3,503.7

Shareholders’ equity increased $78.9 million during the first three months of 2025 primarily as a result of Net income of $503.9 million, an increase in AOCI of $102.3 million mainly due to currency translation adjustments and an increase in Other capital of $46.2 million mainly associated with stock-based compensation expense and stock option exercises. These increases were partially offset by $373.2 million of treasury stock activity mainly attributable to treasury stock repurchases and cash dividends paid on common stock of $200.4 million.

Shareholders’ equity increased $626.4 million since March 31, 2024 primarily as a result of Net income of $2.680 billion and an increase in Other capital of $323.6 million mainly associated with stock-based compensation expense and stock option exercises. These increases were partially offset by $1.569 billion of treasury stock activity mainly attributable to treasury stock repurchases, cash dividends paid on common stock of $741.3 million and a decrease in AOCI of $67.9 million mainly due to currency translation adjustments.

During the first three months of 2025, the Company purchased 1.0 million shares of its common stock for treasury purposes through open market purchases. The Company acquires its common stock for general corporate purposes, and depending on its cash position and market conditions, it may acquire additional shares in the future. The Company had remaining authorization at March 31, 2025 to purchase 33.4 million shares of its common stock.

In February 2025, the Company’s Board of Directors increased the quarterly cash dividend from $0.715 per share to $0.79 per share. This quarterly dividend, if approved in each of the remaining quarters of 2025, would result in an annual dividend for 2025 of $3.16 per share, or a 30% payout of 2024 diluted net income per share.

Effective April 16, 2025, the Company’s shareholders approved The Sherwin-Williams Company 2025 Equity and Incentive Compensation Plan. See Note 10 in Item 1 for additional information.

Cash Flow

Net operating cash for the three months ended March 31, 2025 was a usage of $61.1 million compared to a usage of $58.9 million for the same period in 2024. The decrease in Net operating cash was primarily due to higher cash requirements for working capital.

Net investing cash usage decreased $5.1 million in the first three months of 2025 to a usage of $316.2 million compared to a usage of $321.3 million for the same period in 2024 primarily due to a decrease in cash used for capital expenditures, partially offset by cash used for acquisitions.

Net financing cash source increased $77.6 million in the first three months of 2025 to a source of $367.2 million compared to a source of $289.6 million for the same period in 2024 primarily due to an increase in short-term borrowings and a decrease in treasury stock purchases, partially offset by an increase in payments of long-term debt, a decrease in proceeds from stock option exercises and real estate financing transactions and an increase in cash dividends.

In the twelve month period from April 1, 2024 through March 31, 2025, the Company generated Net operating cash of $3.151 billion, used $1.191 billion in investing activities and used $1.940 billion in financing activities.

Market Risk

The Company is exposed to market risk associated with interest rate, foreign currency and commodity fluctuations. The Company occasionally utilizes derivative instruments as part of its overall financial risk management policy, but does not use derivative instruments for speculative or trading purposes. In 2025 and 2024, the Company entered into foreign currency forward contracts with maturity dates of less than twelve months primarily to hedge against value changes in foreign currency. The Company also has cross currency swap contracts to hedge its net investment in European operations. See Notes 12 and 15 in Item 1 for additional information related to the Company’s use of derivative instruments.

The Company believes it may be exposed to continuing market risk from interest rate, foreign currency exchange rate and commodity price fluctuations. However, the Company does not expect that interest rate, foreign currency exchange rate and commodity price fluctuations or hedging contract losses will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Financial Covenant

Certain borrowings contain a consolidated leverage covenant. The covenant states that the Company’s consolidated leverage ratio is not to exceed 3.75 to 1.00, however, the Company may elect to temporarily increase the leverage ratio to 4.25 to 1.00 for a period of four consecutive fiscal quarters immediately following the consummation of a qualifying acquisition, as defined in the New Credit Agreement dated July 31, 2024. The leverage ratio is defined as the ratio of total indebtedness (the sum of Short-term borrowings, Current portion of long-term debt and Long-term debt) at the reporting date to consolidated “Earnings Before Interest, Taxes, Depreciation, and Amortization” (EBITDA), as defined in the credit agreement, for the 12-month period ended on the same date. Refer to the “Non-GAAP Financial Measures” section below for a reconciliation of EBITDA to Net income. At March 31, 2025, the Company was in compliance with the covenant and expects to remain in compliance. The Company’s notes, debentures and revolving credit agreements contain various default and cross-default provisions. In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result. See Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Note 6 in Item 1 for additional information concerning the Company’s debt and related covenants.

Non-GAAP Financial Measures

Management of the Company utilizes certain financial measures that are not in accordance with US GAAP to analyze and manage the performance of the business. The required disclosures for these non-GAAP measures are shown below. The Company provides such non-GAAP information in reporting its financial results to give investors additional data to evaluate the Company’s operations. Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with US GAAP.

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure defined as Net income before income taxes, Interest expense, depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure defined as EBITDA that excludes certain adjustments that management believes enhances investors’ understanding of the Company’s operating performance. Management considers EBITDA and Adjusted EBITDA useful in understanding the operating performance of the Company. The reader is cautioned that the Company’s EBITDA and Adjusted EBITDA should not be compared to other entities unknowingly. Further, EBITDA and Adjusted EBITDA should not be considered alternatives to Net income or Net operating cash as an indicator of operating performance or as a measure of liquidity. The reader should refer to the determination of Net income and Net operating cash in accordance with US GAAP disclosed in the Statements of Consolidated Income and Statements of Condensed Consolidated Cash Flows in Item 1.

The following table summarizes EBITDA and Adjusted EBITDA as calculated by management for the periods indicated below:

			Three Months Ended March 31,
			2025						2024
Net income			$	503.9					$	505.2
Interest expense			103.8						103.0
Income taxes			149.1						134.8
Depreciation			79.9						71.1
Amortization			81.0						82.1
EBITDA			$	917.7					$	896.2
Severance and other restructuring expenses			19.3						—
Adjusted EBITDA			$	937.0					$	896.2

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect amounts reported in the accompanying condensed consolidated financial statements. These determinations were made based upon management’s best estimates, judgments and assumptions that were believed to be reasonable under the circumstances, giving due consideration to materiality. We do not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

A comprehensive discussion of the Company’s critical accounting policies, management estimates and significant accounting policies followed in the preparation of the condensed consolidated financial statements is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes in critical accounting policies, management estimates or accounting policies since the year ended December 31, 2024.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, anticipated future performance (including sales and earnings), expected growth, future business plans and the costs and potential liability for environmental-related matters and lead pigment and lead-based paint litigation. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “anticipate,” “aspire,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “project,” “seek,” “should,” “strive,” “target,” “will,” or “would” or the negative thereof or comparable terminology.

Readers are cautioned not to place undue reliance on any forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside our control, that could cause actual results to differ materially from such statements and from our historical results, performance and experience. These risks, uncertainties and other factors include such things as:

• general business and economic conditions in the United States and worldwide;

• inflation rates, interest rates, unemployment rates, labor costs, healthcare costs, recessionary conditions, geopolitical conditions, terrorist activity, armed conflicts and wars, public health crises, pandemics, outbreaks of disease and supply chain disruptions;

• shifts in consumer behavior driven by economic downturns in cyclical segments of the economy;

• shortages and increases in the cost of raw materials and energy;

• catastrophic events, adverse weather conditions and natural disasters (including those that may be related to climate change);

• the loss of any of our largest customers;

• increased competition or failure to keep pace with developments in key competitive areas of our business;

• disruptions to our information technology systems, including due to digitization efforts or cybersecurity incidents;

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

• our ability to successfully integrate past and future acquisitions into our existing operations;

• risks and uncertainties associated with our expansion into and our operations in South America, Asia, Europe and other foreign markets;

• policy changes affecting international trade, including import/export restrictions and tariffs;

• our ability to achieve our strategies or expectations relating to sustainability considerations, including as a result of evolving legal, regulatory and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite suppliers, energy sources, or financing and changes in carbon markets;

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

• the infringement or loss of our intellectual property rights or the theft or unauthorized use of our trade secrets or other confidential business information;

• a weakening of global credit markets or changes to our credit ratings;

• our ability to generate cash to service our indebtedness;

• fluctuations in foreign currency exchange rates and changing monetary policies;

• our ability to comply with a variety of complex U.S. and non-U.S. laws, rules and regulations;

• increases in tax rates, or changes in tax laws or regulations;

• our ability to comply with numerous, complex and increasingly stringent domestic and foreign health, safety and environmental laws, regulations and requirements;

• our liability related to environmental investigation and remediation activities at some of our currently- and formerly-owned sites;

• the nature, cost, quantity and outcome of pending and future litigation, including lead pigment and lead-based paint litigation; and

• the other risk factors discussed in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and our other reports filed with the SEC.

Readers are cautioned that it is not possible to predict or identify all of the risks, uncertainties and other factors that may affect future results and that the above list should not be considered a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.