Sherwin-Williams 10-Q 2025-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended June 30, 2025

or

For the transition period from to

Commission file number 1-04851

THE SHERWIN-WILLIAMS COMPANY

(Exact name of registrant as specified in its charter)

(216) 566-2000

(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.33-1/3 Par Value – 249,333,316 shares as of June 30, 2025.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

See notes to condensed consolidated financial statements.

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

(1) The three months ended June 30, 2025 and 2024 include unrealized (losses) gains, net of taxes of $(109.0) million and $5.8 million, respectively, related to net investment hedges. The six months ended June 30, 2025 and 2024 include unrealized (losses) gains, net of taxes of $(145.3) million and $24.1 million, respectively, related to net investment hedges. See Note 12 for additional information.

(2) Net of taxes of $1.1 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively. Net of taxes of $2.2 million and $2.9 million for the six months ended June 30, 2025 and 2024, respectively.

(3) Net of taxes of $(1.0) million for the three and six months ended June 30, 2025. See Note 12 for additional information.

(4) Net of taxes of $0.3 million for the three months ended June 30, 2025 and 2024. Net of taxes of $0.6 million for the six months ended June 30, 2025 and 2024.

See notes to condensed consolidated financial statements.

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

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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 increased 0.7% to $6.315 billion in the quarter and decreased 0.2% to $11.620 billion in the year to date period

◦Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 0.8% and 1.0% in the quarter and year to date period, respectively

• Increased Selling, general and administrative expenses in the quarter for broader restructuring initiative related to softer demand, sooner than anticipated building related costs and heightened growth investment related to incremental competitive opportunities

• Diluted net income per share decreased 14.3% to $3.00 per share in the quarter compared to $3.50 per share in the second quarter of 2024 and decreased 8.6% to $5.00 per share in the year to date period compared to $5.47 in the year to date period of 2024

OUTLOOK

We will continue to execute on our consistent and disciplined strategy, Success by Design. In a softer demand market which is expected to continue, if not deteriorate in the second half of 2025, we are responding by accelerating our restructuring actions. These actions are not at the cost of abandoning our strategy or limiting future growth prospects when markets recover. We will continue to make investments to deepen customer relationships, capture incremental share and reward our shareholders over the long term. We remain well-positioned in each of our targeted markets and continue to execute on deliberate, disciplined and targeted 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 and 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 $269.8 million in cash and $2.235 billion of unused capacity under our credit facilities at June 30, 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 and six months ended June 30, 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 and six months ended June 30, 2025 and 2024.

Net Sales

Three Months Ended June 30, 2025

Consolidated Net sales increased by 0.7% in the second quarter of 2025 primarily due to higher sales in the Paint Stores Group, partially offset by lower sales in the Consumer Brands and Performance Coatings Groups. Net sales of all consolidated foreign subsidiaries increased to $1.155 billion in the second quarter of 2025 compared to $1.143 billion in the same period last year. The increase in Net sales for all consolidated foreign subsidiaries was primarily due to higher Net sales in the Europe region. Net sales of all operations other than consolidated foreign subsidiaries increased to $5.159 billion in the second quarter of 2025 compared to $5.129 billion in the same period last year.

Net sales in the Paint Stores Group increased by 2.3% in the second 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 0.8% in the second quarter of 2025 compared to last year’s comparable period. Net sales of non-paint products decreased 0.7% in the second 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 4.1% in the second quarter of 2025 primarily due to soft DIY demand in North America and a 1.6% unfavorable impact from foreign currency translation driven by Latin America, partially offset by higher Net sales in Europe.

Net sales in the Performance Coatings Group were effectively flat as a result of incremental sales from acquisitions being offset by selling price decreases, primarily attributable to product mix. Performance was led by Packaging, which increased by a double digit percentage inclusive of an acquisition and Coil, offset by decreases in all other business units.

Six Months Ended June 30, 2025

Consolidated Net sales were effectively flat in the first six months of 2025. Higher sales in the Paint Stores Group were offset by lower sales in the Consumer Brands and Performance Coatings Groups. Net sales of all consolidated foreign subsidiaries decreased to $2.200 billion in the first six months of 2025 compared to $2.246 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 Latin America region. Net sales of all operations other than consolidated foreign subsidiaries increased 0.3% to $9.420 billion in the first six months of 2025 compared to $9.393 billion in the same period last year.

Net sales in the Paint Stores Group increased by 2.3% in the first six months 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 1.0% in the first six months of 2025 compared to last year’s comparable period. Net sales of non-paint products decreased 0.5% in the first six months of 2025 compared to last year’s comparable period. A discussion of changes in volume versus pricing for sales of products other than paint is not pertinent due to the wide assortment of general merchandise sold.

Net sales in the Consumer Brands Group decreased by 5.1% in the first six months of 2025 primarily due to soft DIY demand in North America and a 2.4% unfavorable impact from foreign currency translation driven by Latin America, partially offset by higher Net sales in Europe.

Net sales in the Performance Coatings Group decreased by 2.4% in the first six months of 2025 largely due to selling price decreases, primarily attributable to product mix, which impacted Net sales by a low-single digit percentage and a 1.1% unfavorable impact from foreign currency translation. These decreases were partially offset by incremental sales from acquisitions. Performance was led by Packaging, which increased by a double digit percentage inclusive of an acquisition, 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 June 30, 2025

Consolidated Cost of goods sold decreased $11.9 million, or 0.4%, in the second quarter of 2025 compared to the same period in 2024 primarily due to a low-single digit decrease in sales volume.

Consolidated gross profit increased $54.9 million in the second 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 the Paint Stores and Consumer Brands Groups. Consolidated gross profit as a percent of consolidated Net sales increased in the second quarter of 2025 to 49.4% compared to 48.8% during the same period in 2024 for these same reasons.

The Paint Stores Group’s gross profit in the second quarter of 2025 was higher than the same period last year by $93.5 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 second quarter of 2025 compared to the same period in 2024 for this same reason. The Consumer Brands Group’s gross profit decreased by $37.1 million in the second quarter of 2025 compared to the same period last year due primarily to lower Net sales, lower fixed cost absorption from decreased production volumes and an unfavorable foreign currency related impact. The Consumer Brands Group’s gross profit as a percent of Net sales decreased in the second quarter of 2025 compared to the same period in 2024 for these same reasons. The Performance Coatings Group’s gross profit decreased $17.2 million in the second quarter of 2025 compared to the same period last year due primarily to lower Net sales and product mix. The Performance Coatings Group’s gross profit as a percent of Net sales decreased in the second quarter of 2025 compared to the same period last year for these same reasons.

Consolidated Selling, general and administrative expenses (SG&A) increased $165.9 million in the second quarter of 2025 versus the same period last year primarily due to higher employee-related costs and costs related to the new global headquarters and R&D buildings. As a percent of Net sales, consolidated SG&A increased 250 basis points in the second quarter of 2025 compared to the same period last year.

The Paint Stores Group’s SG&A increased $82.8 million in the second quarter of 2025 compared to the same period last year primarily due to increased costs to support higher sales, including higher employee-related costs and expenses for new store openings, and marketing and advertising. The Consumer Brands Group’s SG&A decreased $3.0 million in the second quarter of 2025 compared to the same period last year primarily due to effective cost control. The Performance Coatings Group’s SG&A increased $13.1 million in the second quarter of 2025 compared to the same period last year primarily due to increased costs to support sales, including higher employee-related costs. The Administrative function’s SG&A increased $73.0 million in the second quarter of 2025 compared to the same period last year due primarily to higher employee-related costs, including severance, and costs related to the new global headquarters and R&D buildings.

Other general expense (income) - net was expense of $6.3 million in the second quarter of 2025 compared to income of $33.6 million in the same period last year primarily due to higher gains on the sale or disposition of assets and insurance recoveries for environmental matters in the second quarter of 2024 which did not recur in the current period. See Note 15 in Item 1 for further details.

Interest expense increased $1.6 million in the second 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 $4.7 million in the second quarter of 2025 compared to income of $32.0 million in the same period last year. The decrease is primarily due to higher foreign currency transaction related losses and lower miscellaneous income in the current period. See Note 15 in Item 1 for further details.

Six Months Ended June 30, 2025

Consolidated Cost of goods sold decreased $101.6 million, or 1.7%, in the first six months of 2025 compared to the same period in 2024 primarily due to a low-single digit decrease in sales volume and favorable foreign currency translation, which decreased Cost of goods sold by 0.9%.

Consolidated gross profit increased $83.0 million in the first six months 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. Consolidated gross profit as a percent of consolidated Net sales increased in the first six months of 2025 to 48.9% compared to 48.1% during the same period in 2024 for these same reasons.

The Paint Stores Group’s gross profit in the first six months of 2025 was higher than the same period last year by $173.3 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 six months of 2025 compared to the same period in 2024 for this same reason. The Consumer Brands Group’s gross profit decreased by $69.8 million in the first six months of 2025 compared to the same period last year due primarily to lower Net sales and an unfavorable foreign currency related impact. The Consumer Brands Group’s gross profit as a percent of Net sales decreased in the first six months of 2025 compared to the same period last year for these same reasons. The Performance Coatings Group’s gross profit decreased $43.4 million in the first six months of 2025 compared to the same period last year primarily due to lower Net sales and an unfavorable foreign currency related impact. The Performance Coatings Group’s gross profit as a percent of Net sales decreased in the first six months of 2025 compared to the same period last year for these same reasons.

Consolidated SG&A increased $159.9 million in the first six months of 2025 versus the same period last year primarily due to higher employee-related costs and costs related to the new global headquarters and R&D buildings. As a percent of Net sales, consolidated SG&A increased 140 basis points in the first six months of 2025 compared to the same period last year for these same reasons.

The Paint Stores Group’s SG&A increased $110.0 million in the first six months of 2025 compared to the same period last year primarily due to increased costs to support higher sales, including higher employee-related costs and expenses for new store openings, and marketing and advertising. The Consumer Brands Group’s SG&A decreased $8.4 million in the first six months of 2025 compared to the same period last year primarily due to lower employee-related costs and foreign currency translation rate changes. The Performance Coatings Group’s SG&A increased $6.3 million in the first six months of 2025 compared to the same period last year due primarily to increased costs to support sales, including higher employee-related costs. The Administrative function’s SG&A increased $52.0 million in the first six months of 2025 compared to the same period last year due primarily to higher employee-related costs, including severance, and costs related to the new global headquarters and R&D buildings.

Other general expense (income) - net was expense of $15.2 million in the first six months of 2025 compared to income of $31.6 million in the same period last year primarily due to higher gains on the sale or disposition of assets, insurance recoveries for environmental matters in the first six months of 2024 which did not recur in the current period and increased miscellaneous operating expenses in the Administrative function. See Note 15 in Item 1 for further details.

Interest expense increased $2.4 million in the first six months 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 $7.6 million in the first six months of 2025 compared to income of $39.7 million in the same period last year. The decrease is primarily due to higher foreign currency transaction related losses and lower miscellaneous income, net of miscellaneous expenses, in the current period. 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 Reportable Segment:

Income Tax Expense

The effective tax rate was 23.4% for the second quarter of 2025 compared to 24.2% for the second quarter of 2024, and 23.2% for the first six months of 2025 compared to 23.1% for the first six months of 2024. The decrease in the effective tax rate for the second quarter of 2025 was primarily due to a more favorable impact of tax benefits related to employee share-based payments. The effective tax rate was essentially flat for the first six months of 2025 when compared to the same period last year. The other significant components of the Company’s effective tax rate were consistent in both comparable periods. See Note 16 in Item 1 for further details.

On July 4, 2025, U.S. tax reform legislation known as the One Big Beautiful Bill Act (the Tax Act) was signed into law. The Tax Act includes a broad range of tax provisions affecting businesses including extending permanently, with modification, certain business and international tax provisions enacted as part of the Tax Cuts and Jobs Act of 2017 and expanding certain Inflation Reduction Act tax incentives while accelerating the phase-out of others. Most provisions of the Tax Act take effect for tax years starting in 2026; however, certain provisions have immediate effect impacting the 2025 tax year. Key provisions of the Tax Act relevant to our operations include immediate expensing of certain capital expenditures and domestic research and development expense beginning in 2025 and changes to various U.S. international tax provisions going forward. We do not anticipate the Tax Act will materially change our effective tax rate for 2025, however we are currently evaluating the full impact of the Tax Act on our condensed consolidated financial statements. We expect to reflect the effects of the Tax Act in our financial statements for the quarter ending September 30, 2025, in accordance with the Income Taxes Topic of the ASC.

Net Income Per Share

Diluted net income per share decreased 14.3% to $3.00 per share in the second quarter of 2025 compared to $3.50 per share in the second quarter of 2024. Diluted net income per share in the second quarter of 2025 included charges for acquisition-related amortization expense of $0.20 per share and severance and other restructuring expenses of $0.18 per share. Diluted net income per share in the second 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 $0.02 in the second quarter of 2025.

Diluted net income per share for the first six months of 2025 decreased 8.6% to $5.00 per share compared to $5.47 per share in the first six months of 2024. Diluted net income per share for the first six months of 2025 included charges for acquisition-related amortization expense of $0.38 per share and severance and other restructuring expenses of $0.24 per share. Diluted net income per share in the first six months of 2024 included a charge for acquisition-related amortization expense of $0.39 per share. Foreign currency translation rate changes decreased diluted net income per share by $0.05 in the first six months of 2025.

FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW

Overview

The Company’s financial condition and liquidity remained strong at June 30, 2025. The Company generated $1.052 billion in Net operating cash during the first six months of 2025 and returned cash of $1.269 billion to its shareholders in the form of dividends and share repurchases during the first six months of 2025. Net income decreased 9.8% to $1.259 billion and EBITDA decreased 6.7% to $2.179 billion for the first six months of 2025. Refer to the Non-GAAP Financial Measures section below for the definition and calculation of EBITDA.

At June 30, 2025, the Company had Cash and cash equivalents of $269.8 million and total debt outstanding of $10.686 billion. Total debt, net of Cash and cash equivalents, was $10.417 billion. The Company continues to maintain sufficient short-term borrowing capacity at reasonable rates, and 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 $355.1 million to a deficit of $1.771 billion at June 30, 2025 compared to a deficit of $1.416 billion at June 30, 2024. The net working capital decrease is due to an increase of $729.8 million in current liabilities partially offset by an increase in current assets of $374.7 million.

Current asset balances increased $374.7 million at June 30, 2025 compared to June 30, 2024 primarily due to an increase in Inventories of $195.5 million, an increase in Cash and cash equivalents of $69.8 million, an increase in Accounts receivable, net of $63.8 million and an increase in Other current assets of $45.6 million.

Current liability balances increased $729.8 million at June 30, 2025 compared to June 30, 2024 primarily due to an increase in Short-term borrowings of $348.4 million, an increase in the Current portion of long-term debt of $301.0 million, an increase in Other accruals of $92.4 million, primarily related to increases in accrued severance, insurance and other benefits payable, cross currency swap contracts and miscellaneous other accruals, partially offset by a decrease in short-term environmental-related liabilities, an increase in Accounts payable of $76.1 million and an increase in the Current portion of operating lease liabilities of $22.9 million. These increases were offset by a decrease in Accrued taxes of $91.3 million. The Company’s current ratio was 0.78, 0.79 and 0.81 at June 30, 2025, December 31, 2024 and June 30, 2024, respectively.

Property, Plant and Equipment

Net property, plant and equipment increased $272.7 million in the first six months of 2025 and $669.3 million in the twelve months since June 30, 2024. The increase in the first six months was primarily due to capital expenditures of $363.0 million, currency translation and other adjustments of $65.1 million and assets acquired through business combinations of $12.2 million, partially offset by depreciation expense of $159.2 million, and the sale or disposition of fixed assets of $8.4 million. Since June 30, 2024, the increase was primarily due to capital expenditures of $892.8 million, currency translation and other adjustments of $53.4 million and assets acquired through business combinations of $45.1 million, partially offset by depreciation expense of $313.7 million, and the sale or disposition of fixed assets of $8.3 million.

Buildings within Property, plant and equipment, net increased by $536.8 million and $628.1 million in the first six months of 2025 and in the twelve months since June 30, 2024, respectively, primarily due to the new research and development center (R&D Center) meeting the criteria to be placed into service during the second quarter of 2025. An immaterial amount of capital expenditures related to finalizing the construction of the R&D Center will be placed into service during the remainder of 2025 in the Administrative function. The R&D Center asset will be depreciated over its useful life of 60 years.

Other than the R&D Center, capital expenditures primarily represented expenditures related to construction activities associated with the new global headquarters in the Administrative function. The global headquarters 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 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 capacity, productivity improvements 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 $227.5 million from December 31, 2024 and increased $200.7 million from June 30, 2024. The increase during the first six months of 2025 was primarily due to foreign currency translation fluctuations and other adjustments of $156.7 million and purchase accounting allocations of $70.8 million. The increase over the twelve month period from June 30, 2024 was primarily due to foreign currency translation fluctuations and other adjustments of $108.9 million and purchase accounting allocations of $91.8 million.

Intangible assets increased $10.2 million from December 31, 2024 and decreased $149.4 million from June 30, 2024. The increase during the first six months of 2025 was primarily due to currency translation fluctuations and other adjustments of $122.0 million, purchase accounting allocations of $35.0 million and capitalized software of $17.6 million, partially offset by amortization of $164.4 million. The decrease over the twelve month period from June 30, 2024 was primarily due to amortization of $327.5 million, partially offset by currency translation fluctuations and other adjustments of $85.1 million, purchase accounting allocations of $63.0 million, and capitalized software of $30.0 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 $138.6 million from December 31, 2024 and $413.8 million from June 30, 2024. The increase in the first six months 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 June 30, 2024 was primarily due to an increase in finance lease right-of-use (ROU) assets, Non-Traded Investments 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)

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.

In April 2025, in anticipation of a probable issuance of new long-term fixed rate debt within the next twelve months, the Company entered into interest rate lock contracts with an aggregate notional amount of $300 million. See Notes 12 and 13 in Item 1 for additional information.

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 June 30, 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 $46.6 million from December 31, 2024 and $81.1 million from June 30, 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 six 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 six 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

Shareholders’ equity increased $349.7 million during the first six months of 2025 primarily as a result of Net income of $1.259 billion, an increase in AOCI of $277.3 million mainly due to currency translation adjustments and an increase in Other capital of $104.0 million mainly associated with stock-based compensation expense and stock option exercises. These increases were partially offset by $892.1 million of treasury stock activity mainly attributable to treasury stock repurchases and cash dividends paid on common stock.

Shareholders’ equity increased $649.1 million since June 30, 2024 primarily as a result of Net income of $2.545 billion, an increase in Other capital of $338.2 million mainly associated with stock-based compensation expense and stock option exercises and an increase in AOCI of $179.0 million mainly due to currency translation adjustments. These increases were

partially offset by $1.653 billion of treasury stock activity mainly attributable to treasury stock repurchases and cash dividends paid on common stock.

During the first six months of 2025, the Company purchased 2.5 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 June 30, 2025 to purchase 32.0 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 six months ended June 30, 2025 was a source of $1.052 billion compared to a source of $1.144 billion for the same period in 2024. The decrease in Net operating cash was primarily due to lower net income recognized and higher cash requirements for working capital, partially offset by a decrease in cash used for long-term contract assets with customers.

Net investing cash usage decreased $24.8 million in the first six months of 2025 to a usage of $557.3 million compared to a usage of $582.1 million for the same period in 2024 primarily due to a decrease in cash used for capital expenditures, partially offset by cash used for the acquisition of businesses.

Net financing cash usage decreased $185.0 million in the first six months of 2025 to a usage of $442.8 million compared to a usage of $627.8 million for the same period in 2024 primarily due to an increase in short-term borrowings, a decrease in payments of long-term debt and a decrease in treasury stock purchases, partially offset by a decrease in proceeds from real estate financing transactions, a decrease in proceeds from stock option exercises and an increase in cash dividends.

In the twelve month period from July 1, 2024 through June 30, 2025, the Company generated Net operating cash of $3.061 billion, used $1.172 billion in investing activities and used $1.832 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 and interest rate lock contracts in anticipation of a probable issuance of new long-term fixed rate debt within the next twelve months. 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 June 30, 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 6 in Item 1 and Note 7 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 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 as an indicator of operating performance. The reader should refer to the determination of Net income in accordance with US GAAP disclosed in the Statements of Consolidated Income in Item 1.

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

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.

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. The Company may enter into option and forward currency exchange contracts, interest rate locks and commodity swaps to hedge against value changes in foreign currency, interest rates and commodities. The Company believes it may experience continuing losses from foreign currency translation, interest rate movement and commodity price fluctuations. However, the Company does not expect foreign currency translation or transactions, interest rate movement, commodity price fluctuations or hedging contract losses to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. There were no material changes in the Company’s exposure to market risk since the disclosure included 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.

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 Chair, 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 (the Exchange Act). Based upon that evaluation, our Chair, 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 Securities and Exchange Commission rules and forms, and accumulated and communicated to our management including our Chair, President and Chief Executive Officer and our Senior Vice President - Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the periods covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Securities and Exchange Commission regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to these regulations, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required.

For information regarding certain environmental-related matters and other legal proceedings, see the information included under the captions titled “Environmental-Related Liabilities” and “Litigation” of “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and Notes 8 and 9 of the “Notes to Condensed Consolidated Financial Statements.” The information contained in Note 9 to the Condensed Consolidated Financial Statements is incorporated herein by reference.

We face a number of risks that could materially and adversely affect our business, results of operations, cash flows, liquidity or financial condition. A discussion of our risk factors can be found in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024. Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. During the six months ended June 30, 2025, there were no material changes to our previously disclosed risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

A summary of the Company’s second quarter activity is as follows:

(1)Shares were purchased through the Company’s publicly announced share repurchase program. There is no expiration date specified for the program.

(2)Shares were delivered to satisfy the exercise price and/or tax withholding obligations by employees who exercised stock options or had restricted stock units vest.

Trading Arrangements

During the quarter ended June 30, 2025, 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.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.