The Sherwin-Williams Company Investor update

Good afternoon, everybody. Glad that you are here. Welcome. Make sure my, sorry about that. Good afternoon, everybody, and welcome to the 2026 Sherwin-Williams Financial Community Presentation. I am Jim Jaye, Senior Vice President of Investor Relations and Corporate Communications for the company, and on behalf of our leadership team who is here today, thank you for joining us in Cleveland as well as those who are online. We really appreciate you being with us today. We are especially pleased to host you in our new global headquarters and later today at our new global technology center. These are more than new buildings. They are strategic investments in continued industry leadership and a culture focused on talent, collaboration, innovation, and ultimately delivering a world-class customer experience. They are already beginning to create value for us. This year also marks Sherwin-Williams' 160th anniversary.

Few companies endure that long, and even fewer continue evolving, continue leading, and continue compounding value generation after generation. Today you will hear how we expect to extend that track record for decades to come. As a reminder, today's presentation and remarks are being made within the context of our forward-looking statements disclosure. At Sherwin-Williams, safety is unconditional. We always begin with what we call a safety grabber. Should you hear the fire alarm activated, please leave through the marked exits and our security teams will be out in the hallway to assist you. Let's get started. You know us as the leader in paint and coatings, but today we are going to show you that we are much more than that. We are a well-positioned, share-gaining compounder that delivers through all cycles.

Our company is led by a deep and experienced team with a proven track record of delivering growth, execution, and long-term value creation. Today, in a few minutes, I am excited for you to hear from several members of our team, including our Chair, President, and CEO, Heidi Petz, and our Chief Financial Officer, Ben Meisenzahl. Sherwin-Williams is the premier global paint and coatings company in the world. Last year, our sales were about $23.6 billion, and at the midpoint of our most recent guidance, we will surpass $25 billion in 2026. We have over 64,000 dedicated employees operating in more than 120 countries. We operate in a global market estimated at just shy of $200 billion. The competition there is significant. The top suppliers make up approximately 50% of that pie, with the remainder being highly fragmented and made up of hundreds of additional suppliers.

Over time, that pie is expected to continue to grow, and given the softer for longer environment that we have been speaking of for the last four years, we are confident that there is significant pent-up demand to be released ahead of us. From 2019 through 2025, the global coatings volume grew less than 1% annually, with North America and Europe actually down low single digits. That includes both architectural and industrial coatings. Some third-party outlooks are suggesting that volume growth should improve across regions in the years ahead, and we expect that recovery to be gradual and uneven rather than a linear progression. Even so, the direction appears more constructive than what the industry has experienced over the last several years. U.S. demographics should continue to provide opportunity over the long run.

While there are several variables to consider and the pacing may vary, the fact is that Gen X, millennials, and Gen Z are still driving growth in household formations. This should support new single and multi-family housing, remodel, and maintenance over time. In addition, aging homeowners have accumulated substantial wealth, including $90 trillion of baby boomer wealth, which drives home spending and second home spending as well. The U.S. has underbuilt homes for more than a decade, with estimates of the housing gap commonly in the 2 million-4 million range, with some estimates as high as 6 million. We all know mortgage rates remain high, but activity should gradually normalize as households adjust and the lock-in effect fades. Home builders also continue to offer very attractive incentives.

Ultimately, the recovery we know is going to be driven by a combination of things: rates, affordability, income growth, and consumer confidence. While single-family new residential is a very important end market for us, I want to remind you that it's less than 10% of our consolidated Sherwin-Williams sales. Existing home sales have been near historic lows for much of the past three years, which suggests that the market's more likely to recover than to deteriorate further. Existing home sales are actually up slightly year to date through August. At the same time, we have record homeowner equity, more than double 2019 levels at roughly $36 trillion. That provides a powerful funding source for repair, remodeling, and upgrades. This slide reinforces the pent-up demand story. U.S. architectural gallons are down about 11% from the 2020 peak, even as square footage put in place has continued to grow.

That square footage eventually needs to be maintained, which will drive res repaint and property maintenance gallons. In sum, housing activity may remain muted in the near term, but home price appreciation, homeowner wealth, aging housing stock, and stay-in-place behavior continue to support paint and coatings demand. On the industrial side of our business, we compete in a broad range of premium end markets. As you know, there's no single indicator that tells the full story for us there. That said, the manufacturing PMI trends have improved in recent months, particularly in the U.S., which represents about half of our industrial business. As I mentioned, with architectural coatings, we expect the recovery here to be gradual and choppy. We're not waiting for a recovery in any of these markets. We're controlling what we can control, and that's catalyzing growth on the top line and the bottom line.

We're determined to put even more distance between Sherwin-Williams and our competitors. It's with this mindset that I'm pleased to welcome to the stage our Chair, President, and CEO, Heidi Petz.

Good afternoon, everyone. Thank you for investing your time to be here with us today. Today, we are going to answer two fundamental questions, which is why Sherwin-Williams and why now? The answer is that regardless of the cycle, we continue to invest in a winning strategy. We continue to strengthen our advantage, especially in this softer for longer environment. We have tremendous momentum on our side. We are confident in our strategy, and even more importantly, we have got a proven ability to execute regardless. Today, you are going to see a company with a 160-year track record of delivering through all types of cycles, and you are going to see an enterprise that is becoming smarter, faster, and more efficient as we enter what we believe is a new era of productivity and value creation. Our value creation story is crystal clear.

We deliver differentiated solutions that help our customers be more productive and therefore more profitable. We often talk about success is that our customers are making more money by partnering with Sherwin-Williams. If you believe in your strategy, you do not abandon it when things get tough. You commit to creating long-term value, even through a relentless focus on consistent execution and partnership. That is exactly what Sherwin-Williams has been doing while others have been pulling back. The result is a wider set of competitive advantages. Through consistent and disciplined execution, we continue to find new ways to strengthen our competitive advantage across the enterprise. Our controlled distribution. This gives us unmatched proximity to our customers through our stores, our branches, and our blending facilities. Pricing effectiveness. This is earned through decades of building trust and providing solutions to our customers. Data. This includes the world's largest database of painting contractors.

A portfolio of premium assets. This is unrivaled in our industry. Importantly, world-class talent, including thousands of sales reps and technical reps that are working every day side by side with our customers. Because of our consistent strategy and a very disciplined execution, we have never been better positioned to win. Our advantage is not one asset. It is our unique combination of capabilities that become stronger year over year. It is hard for competitors to replicate because it is credibility and trust that has been built over decades, and this has been built through people, systems, and continued investment. With that, I am going to invite our operational leaders to join me on stage to share a little bit about what makes their businesses so unique. To begin, we are going to start with our architectural business. If you would join me in welcoming Justin Binns, our President of Global Architectural.

Thank you. Thank you, Heidi. Paint Stores Group is built around the professional painter empowered by our unique controlled distribution, local service, innovative products, pricing discipline, trusted relationships, and unmatched customer intimacy. Our model helps pros save time, win work, manage jobs, and most importantly, improve their profitability. That is why this business continues to compound share over time. We have decades of growth ahead of us in Paint Stores Group. There are approximately 12,000 specialty paint distribution points in the U.S.A. and Canada, and well over 7,000 of those distribution points today do not sell Sherwin-Williams products. We expect to open 80-100 net new stores annually on the way to our next milestone of 6,000 locations. It is not just about the number of stores.

We continue to purify the mission of every store, resulting in a premium experience for customers in each of the priority segments that we serve. Our aggressive footprint strategy also drives densification in key metro markets. This drives economy of scale, enhanced service capabilities, and speed to profitability. Above all, the number of job sites are extensive. Nobody, I mean nobody, is better equipped to meet the customer where they are and service these sites through both our stores and our delivery service. Our relentless focus on serving our customers has also resulted in increased store productivity. Sales per store, PBT per store, and segment margin have all increased from pre-pandemic levels.

As you can see, the investments we are making in our newest stores are generating a return at a faster pace than prior stores investments as we improve on our use of data, better alignment across our real estate resources, and a continued focus on the highest returning markets. I'd like to welcome to the stage Todd Rea, President of our Consumer Brands Group.