Sherwin-Williams Q2 2025: Rising Costs Erode Profits Despite Stable Sales

Sherwin-Williams, a global leader in the manufacturing and sale of paints and coatings, recently released its financial results for the second quarter of 2025. Today, we're diving into the numbers from their latest 10-Q filing to understand the company's performance and what it signals about the current market.

A Mixed Picture on Sales

At first glance, Sherwin-Williams held its ground in a challenging economic environment. The company reported consolidated net sales of $6.315 billion for the quarter, a modest 0.7% increase from the $6.272 billion reported in the same period last year.

However, performance varied significantly across its business segments, painting a picture of divergent demand:

• Paint Stores Group: This segment, which serves professional contractors and DIY customers through its vast network of retail stores, was the bright spot. It posted a 2.3% increase in sales to $3.702 billion, suggesting continued resilience in the professional painting market.
• Consumer Brands Group: This division, which sells products through other retailers, faced headwinds. Sales declined by 4.1% to $809.4 million, indicating potential softness in the broader consumer and DIY markets.
• Performance Coatings Group: Serving a wide range of industrial clients, this segment saw a slight sales dip of 0.3% to $1.801 billion.

Profitability Under Pressure

While sales remained relatively stable, the story changes as we move down the income statement. To visualize how revenue flowed through the company's costs and expenses to its bottom line, check out the chart below.

The key takeaway is a significant squeeze on profits. While the company's Gross Profit improved slightly to $3.118 billion with a healthier margin of 49.4%, this gain was more than offset by rising operating costs.

The main culprit was Selling, General, and Administrative (SG&A) expenses. These costs, which include everything from marketing and salaries to logistics, surged to $2.012 billion, or 31.9% of net sales. This is a substantial jump from $1.846 billion, or 29.4% of sales, in the second quarter of 2024.

This increase in operating expenses had a direct impact on the bottom line. Income before income taxes fell by 16.0% to $985.7 million, and Net Income dropped 15.2% to $754.7 million. This translated to a lower diluted earnings per share (EPS) of $3.00, down from $3.50 in the prior-year quarter.

Returning Capital to Shareholders

Despite the profitability challenges, Sherwin-Williams continued its long-standing practice of returning capital to its investors. The company:

• Paid $197.9 million in dividends to its shareholders during the quarter.
• Repurchased 1.45 million of its own shares for $518.5 million, a move that helps support the stock price and can boost EPS over the long term.

Final Brushstrokes

Sherwin-Williams' second quarter reveals a company navigating a complex market. The strength of its direct-to-customer Paint Stores Group provided a solid foundation for revenue. However, the sharp increase in SG&A expenses significantly eroded profitability, highlighting an urgent need for cost management.

Looking ahead, the company's ability to control these operating costs while contending with mixed demand across its segments will be critical. While the drop in net income is a point of concern, the firm's consistent shareholder return policy and the resilience of its core professional business remain key strengths.