The operator introduces the participants on the conference call and mentions that it will be webcasted and available for replay. They also mention that the call will include forward-looking statements and that the company had a successful first quarter despite some challenges. The company remains focused on their strategy and is prepared to take advantage of market disruptions.

The company's sales were lower than expected, but they remain confident in their full year outlook and see opportunities for growth. Consolidated sales were at the low end of the range due to lower volume, but gross margin improved. The company also made investments in growth and returned a significant amount of money to shareholders. Heidi Petz will provide further commentary on the first quarter results by segment.

The speaker discusses the success of Sherwin-Williams' strategy and their aggressive approach in the face of market conditions. They mention that the first quarter results were within their guidance but at the lower end of their range, and express confidence in their differentiated strategy and experienced leadership. They highlight several indicators, such as increased exclusive contracts and higher net promoter score, that give them confidence in their position. They also mention specific details about the first quarter performance, including a slight increase in sales and flat volume in the Paint Stores Group.

Exterior paint sales were negatively affected by challenging outdoor painting conditions in some areas, but the company expects to see the benefits of their investments later in the year. Price increased slightly due to a previously announced increase. Segment margin decreased due to flat volume and planned investments. Pro sales were strong, particularly in residential repaint, and there is potential for growth in single family starts. Interior paint sales increased slightly while exterior sales decreased. Spray equipment sales showed positive growth. The company opened seven new stores in the quarter and plans to open 80 to 100 for the full year. Consumer brands sales decreased by 7.1%.

The paragraph discusses the sales performance and adjusted segment margin for the Performance Coatings Group, which includes both North America and international regions. Sales decreased in North America but increased in Europe and Latin America due to selling price increases and divestitures. The adjusted segment margin improved due to various factors, such as improved manufacturing and distribution costs and growth from acquisitions. The Industrial Wood and Coil businesses showed strong growth, while Auto Refinish was flat and Packaging and General Industrial were down. The company is confident in their recent share wins and expects improvement in the back half of the year. The paragraph ends with a mention of the company's global team and the importance of their people.

The team at the company is highly motivated and focused on achieving their goals. Although there are uncertainties in the economy, there are some positive signs emerging such as an increase in single family housing starts and improvements in the remodeling and industrial sectors. The company is also taking proactive measures to control what they can, including signing new agreements and increasing sales activity. They are also investing in digital initiatives and have opened a new packaging plant to meet new regulations. Overall, the company is confident in their ability to succeed and is taking aggressive action to drive growth.

In this paragraph, the speaker discusses upcoming products in the architectural and industrial businesses, but does not reveal specifics for competitive reasons. They express confidence that the demand for these products will increase in the future and provide an unchanged outlook for sales and earnings. They also mention their team's determination and focus on success, and conclude by thanking the audience and opening the floor for questions.

In this paragraph, Vincent Andrews asks Heidi Petz about the impact of weather on the company's performance in the first quarter. Petz acknowledges that weather was a factor, but emphasizes that the company does not want to use it as an excuse. She also mentions that the company's differentiated strategy of distribution and quality of people are critical in the current environment. Petz believes that the company's ability to be accessible, dependable, and consistent will serve as a launch pad for future success. She also mentions that weather was a contributing factor to the company's performance in the first quarter.

The market is experiencing some fluctuations, with some segments performing better than others. Al Mistysyn explains that exterior sales were softer than expected due to challenging outdoor painting conditions, especially in the Southeastern division. However, the company is confident that these projects will be completed later in the year. The residential repaint market has been flat, but the company has seen mid-single-digit growth in the fourth quarter and first quarter. March was the strongest month for Paint Stores Group and this momentum is expected to continue in April. The company is making investments in this market and expects to see above-market growth.

The company is focused on providing value to contractors in a specific segment and has seen above-market growth in residential paint. The gross margin for the first quarter was driven by moderating raw material costs, modest price increases, and higher volumes in the Paint Stores Group. However, there was some pressure on the operating margin in the Consumer Brands Group due to supply chain inefficiencies. The company is working to improve supply chain performance and regularly updates product costs.

The company expects to see improvements in cost per gallon due to their global supply chain and continuous improvement efforts. This has a small impact on the Paint Stores Group and PCG, but is not material. The Consumer Brands segment had a strong first quarter and is expected to see sequential margin improvement in the second and third quarter due to seasonally higher architectural sales. The company also expects North America sales volume to be less of a headwind in the second quarter compared to the first. However, higher fixed costs in manufacturing and distribution operations are expected to continue throughout the year.

In response to a question about the number of new exclusive national account wins, Sherwin-Williams' Heidi Petz states that she cannot share specific numbers, but the 56 wins are significant and demonstrate the company's unique value proposition in servicing contractors. In regards to raw material environment, the company's outlook for the year remains unchanged, with a mixed bag of factors such as oil prices and TiO2 fluctuations. Petz does not provide specific details, but mentions that some materials have remained stable while others may be experiencing inflation.

In the first quarter, the company's raw material basket was down mid-single-digit percentage year-over-year, with the biggest benefit coming from monomer, resins, solvents, and TiO2. For the rest of the year, raw materials are expected to be down low-single-digits in the second quarter and slightly flattish in the back half of the year. Crude oil is currently at $80-$81 per barrel, up from December but down from the fall peak. Propylene is flat year-over-year, while TiO2 is seeing some restocking but overall demand is still choppy. The company expects raw materials to remain down low-single-digits for the full year, with potential for some upside. China's export of TiO2 due to softer domestic demand may continue to put pressure on the market.

Chris Parkinson asks about Sherwin-Williams' projected market share gain and if their spending plans have evolved or changed in the past 6 to 12 months. AIlen Mistysyn responds that their spending thesis has not changed and they will continue to make investments to accelerate their share gains. They will assess market indicators and if they see upside in volumes and gross margin, they will add more investments. They are confident in their strategy and believe in the long-term need for housing in the country. As interest rates moderate, they expect to see improvements in existing home sales.

The company expects an increase in new single family starts and property maintenance CapEx, which will allow them to gain a greater share of the market. They are confident in their position and are executing targeted actions to strengthen their position in the market. This includes utilizing their controlled distribution model to target specific painting contractors and actively promoting their products in stores. They are also investing in long-term strategies such as specifications and applications to secure market share.

The speaker discusses the factors they are controlling to strengthen their position and take Alpha's gross share. They also mention the pricing rollout and how it will be phased in the coming quarters. They do not acquire paint stores as part of their store expansion efforts but are excited about the opportunity to demonstrate their value proposition in the market.

The speaker discusses the recent decisions and acquisitions made by Sherwin-Williams and emphasizes the company's commitment to consistency and reliability for its customers. They also mention their strategy of opening new stores and share their expectations for volume and pricing in various segments.

The General Industrial (GI) segment continues to face pressure, but there are positive developments in other areas. In the packaging sector, the Texas plant is back up and running and the European plant is now able to regain customers with a non-BPA coating, which is faster, more efficient, and more sustainable. In automotive refinish, the company is gaining market share in North America due to a unique technology and service offering. The Coil segment is also performing well in North America with new business wins.

The company is experiencing positive momentum in the homebuilding sector, with demand for industrial wood increasing and recent acquisitions performing well. However, the overall market remains choppy and demand is expected to be down in the second quarter. The company's volume guidance for the first half of the year is down low-single-digits, but they expect it to be flat to up low-single-digits in the second half. The sentiment among homebuilder customers remains positive, although the impact of changing interest rates is uncertain.

The speaker responds to a question about Sherwin's outlook for different verticals and states that nothing has significantly changed since last quarter. They mention Protective & Marine as a segment with potential upside due to demand strength and new technology being launched. The speaker also notes that they will provide updates in July if there are any changes.

Allen Mistysyn, the speaker, expresses confidence in the company's strong net operating cash flow generation for the year. He mentions the increase in shareholder cash and dividends, as well as the plan to buy back stock and refinance debt. He reiterates the company's capital allocation philosophy, which includes investing in CapEx, paying dividends, and buying back stock. He expects to maintain a debt-to-EBITDA target range and mentions that wage inflation will have a low-single-digit impact on SG&A in 2024. The increase in SG&A in the first quarter is due to the annualization of accelerated long-term growth investments made in the second half of last year.

In the first quarter, the Pros Who Paint business did not meet expectations, but the company is confident in their investments and strong alignment with retail partners. There was a decline in margins in the PSG segment due to volume and growth investments, but the company expects a return on those investments throughout the year.

Michael Sison asked if segment profit for PSG will turn positive in the second, third, and fourth quarters and if there will be overall segment profit growth for the full year. Kevin McCarthy asked about the U.S. architectural industry gallonage for 2023 and how it might track for this year, as well as how Protective & Marine coatings will perform compared to paint stores sales. Heidi Petz mentioned that project delays are a factor in the timing of growth, but the team is working to be well-positioned when the market recovers. Al Mistysyn added that P&M is expected to grow faster than architectural due to new residential projects being weaker in the first half and stronger in the second half.

The speaker discusses how the first quarter project delays may impact the third quarter, and mentions that industry volume may be down in 2023 but likely flat in 2024. They also talk about the impact of weather and lending standards on CapEx projects and property maintenance. In addition, they mention that there was some impact on Consumer Brands due to limited inventory build, but do not expect significant restocking in the second quarter.

Heidi Petz and Allen Mistysyn discuss the company's strong position going into the season and the opportunity ahead. They mention that the first quarter is a small quarter for consumer sales in North America, but it will ramp up as the architectural season ramps up. They also mention that the company's sales force is actively seeking new accounts and using digital tools to support and intercept contractors at different stages of their business. This investment is aimed at driving share gains, mix shift to higher-performing products, and overall growth.

The speaker discusses the company's efficient and strategic approach to hunting and mentions their focus on helping customers make more money. The next question addresses the potential for increased store openings on the West Coast and the expected growth and margins in the Paint Stores Group in the second half of the year.

The speaker acknowledges the recent closure of Kelly-Moore and expresses confidence in gaining market share. They also mention being aggressive in their strategies and not necessarily opening new stores. The speaker also mentions expectations for mid-single-digit growth in the second half of the year and the potential for bolt-on M&A in the industrial coatings market. They note that multiples may be declining in the current uncertain environment but they are actively pursuing acquisitions that fit their strategy. They also express confidence in their balance sheet for making future acquisitions.

Eric Bosshard from Cleveland Research Company asks about SG&A investments to gain market share. He asks if the company will continue these investments if rates don't go down and remodels don't improve. Heidi Petz responds that they are confident in their strategy and will not pull back on investments. Al Mistysyn adds that they are focused on growing operating margin and will see leverage on SG&A in the future as rates and volumes improve.

The speaker, Jim Jaye, thanks everyone for joining the call and highlights the team's alignment and confidence in their strategy. He mentions investments and driving solutions for customers, and expresses confidence in seeing share gains and returns throughout the year. He also reminds listeners of the upcoming annual financial community presentation in Boston on August 29.

The speaker mentions that in addition to Heidi and Al, the audience will also hear from group presidents. They will provide more information on the topic in the near future. The speaker thanks the audience for their interest and invites them to follow up with any questions in the coming days. The operator then concludes the event.

This summary was generated with AI and may contain some inaccuracies.