Bob Wells – Senior Vice President-Corporate Communications John Morikis – President and Chief Executive Officer Al Mistysyn – Senior Vice President-Finance and Chief Financial Officer.

Arun Viswanathan – RBC Capital Markets Jeff Zekauskas – JPMorgan Christopher Parkinson – Credit Suisse Steve Byrne – Bank of America Merrill Lynch Don Carson – Susquehanna Financial Ghansham Panjabi – Baird Vincent Andrews – Morgan Stanley Scott Mushkin – Wolfe Research Duffy Fischer – Barclays David Begleiter – Deutsche Bank P.J.

Juvekar – Citigroup Bob Koort – Goldman Sachs Mike Harrison – Seaport Global Securities Mike Sison – KeyBanc Capital Markets Kevin McCarthy – Vertical Research Partners Nishu Sood – Deutsche Bank Scott Rednor – Zelman & Associates Dmitry Silversteyn – Longbow Research Chuck Cerankosky – Northcoast Research John Roberts – UBS Greg Melich – MoffettNathanson Patrick Lambert – Raymond James Laurence Alexander – Jefferies Rosemarie Morbelli – Gabelli & Company.

Good morning. Thank you for joining The Sherwin-Williams Company's review of First Quarter 2018 Results and Expectations for the full fiscal year of 2018.

With us on today's call are John Morikis, President and CEO; Al Mistysyn, CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Bob Wells, Senior Vice President, Corporate Communications. This conference call is being webcast simultaneously in listen-only mode by Issuer Direct via the Internet at www.sherwin.com.

An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes and will be available until Monday, May 14, 2018 at 5:00 PM Eastern Time. This conference call will include certain forward-looking statements, as defined under U.S.

Federal Securities Laws, with respect to sales, earnings and other matters. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

A full declaration regarding forward-looking statements is provided in the Company's earnings release transmitted earlier this morning. After the Company’s prepared remarks, we will open the session to questions. I will now turn the call over to Bob Wells..

first, calculation of liability based on the pre-1951 housing standard; and second, selection of a receiver. The new judge will determine the process for deciding these two issues. An initial hearing took place March 28, and initial briefs on the proposed size of the abatement fund were filed last week. The next hearing is scheduled for May 24.

The defendants plan to seek certification in the U. S. Supreme Court. Petitions are likely to be filed in June or July. That concludes our review of our operating results for the first quarter. So let me turn the call over to John Morikis, who will make some general comments and highlight our expectations for the remainder of 2018.

John?.

Thank you, Bob. Good morning, everyone. Thanks for joining us. Despite a slow start to the painting season in certain regions of North America, we delivered strong results in our first quarter. Sales, gross profit, net income and diluted earnings per share were all first quarter records for the company.

We are seeing continued strong demand across most businesses, and we're making good progress on the Valspar integration, value capture and pricing initiatives to offset raw material inflation.

If you back out the contribution from Valspar, our core consolidated sales grew by nearly 5% compared to first quarter 2017, with a little more than half coming from volume, consolidated gross profit dollars increased by nearly $40 million in the quarter. The core gross margin declined 93 basis points year-over-year to 47.8%.

SG&A as a percent of sales decreased 121 basis points, and core consolidated profit before tax increased 7.2% and expanded 25 basis points as a percent of sales. Core diluted earnings per share, again, excluding Valspar results and acquisition costs, increased 10.7% to $2.89 compared to the same quarter last year.

The Valspar business had a little more than $1 billion in net sales and $0.68 to earnings per share in the quarter. Consolidated first quarter 2018 EPS, excluding acquisition expenses, increased 36.8% year-over-year to $3.57 per share.

The Americas Group grew volumes and improved their operating performance compared to the first quarter last year, although growth was at the lower end of our expectations due to slow exterior paint sales in some regions for most of the quarter. Sales to residential repaint contractors in the U.S.

and Canada grew at a double-digit pace for the 16th time in the last 18 quarters. Protective and marine coatings sales in the U.S. and Canada grew in the high single digits. And property management, new residential, commercial and DIY segments all contributed to TAG's growth in the quarter. Latin America sales in total increased 9.5%.

It appears that the fundamental demand and trends remain strong across the business.

TAG segment operating margins improved 60 basis points compared to the first quarter last year, reflecting our progress in implementing price increases to offset a challenging raw material cost environment and good expense control as SG&A decreased slightly as a percent of sales.

The group opened seven net new stores in the quarter, bringing our total store count at the end of the quarter to 4,624 stores in the Americas. Our plan calls for this team to add approximately 100 net new stores in The Americas by the end of the year.

The e-commerce platform launched by TAG last year is receiving positive reviews from both our customers and our field organization. And we expect adoption to increase over time, enhancing both our in-store and field service experience.

Consumer Brands Group also showed good progress in the first quarter, but the improvement is not quite as obvious in the numbers. On a year-over-year basis compared to pro forma combined results from first quarter 2017, sales increased 3.8% and adjusted operating margin, excluding the purchase accounting impacts, improved by 260 basis points.

If you look at it sequentially, first quarter sales increased nearly 15% compared to fourth quarter 2017, much of which is probably attributable to seasonality. And first quarter reported operating margins expanded 720 basis points to 11.3% compared to 4.1% in fourth quarter.

Backing out purchase accounting amortization expenses from both quarters, segment operating margin in the first quarter was 16.2% compared to approximately 9.9% in the fourth quarter.

The improvement in segment operating margin, both sequentially and year-over-year, is a result of successful expense control and cost synergies as well as our early progress in implementing price increases.

On February 28, Lowe's announced a significantly expanded partnership with Sherwin-Williams, in which Lowe's will become the only nationwide home center to offer our top-selling wood care brands, including Minwax, Cabot, Thompson's WaterSeal, the top paintbrush brand in Purdy and industry-leading spray-paint in Krylon.

Lowe's continues to be the only nationwide home center to offer our Valspar and HGTV HOME by Sherwin-Williams brands of interior and exterior paints. Both companies are supporting this effort with incremental investment in service, training and brand communications.

And we're confident this combination of high quality products, category-leading brands and outstanding customer service will accelerate comp growth in Lowe's paint aisle. Lowe's will determine the timing and cadence of the department resets.

While there is no impact from this announcement in first quarter 2018, we do expect this expanded partnership to result in increased volumes and revenues in full year 2018. Given our anticipated investment in marketing, displays, training and other support areas, we expect earnings dilution of approximately $0.40 this year.

In the Performance Coatings Group, top line growth was just under 10% compared to pro forma combined revenues in the first quarter 2017. Sales were up in every product category, led by packaging coatings, general industrial and Industrial Wood Coatings. Reported segment operating margin was 7.4% compared to 11.8% reported last year.

If you back out the impact of purchase accounting amortization in the quarter, which was a little over $57 million, adjusted operating margin in the quarter was 12.1%, which compares to 13.5% pro forma combined operating margin last year.

The pressure on operating margins year-over-year as a result of continued escalation in raw material costs, most notably, petrochemicals and epoxy, which are a large portion of the Performance Coatings raw material basket. We continue to work with our customers to recover these cost increases through pricing actions.

EBITDA or earnings before interest, taxes, depreciation and amortization increased 44% to $557.8 million in the first quarter, which includes $137.9 million from Valspar. EBITDA margin was flat year-over-year at 13.9% of sales. Core EBITDA without Valspar increased 6% to $413.9 million.

Net operating cash in the quarter was $40.7 million compared to $231.8 million a year ago. Net operating cash in the first quarter last year included a benefit of approximately $137 million from settlements of the Treasury lock hedge. Changes in working capital come from most of the remainder of the difference.

On March 31, the company had $158.6 million of cash on hand that will be utilized to reduce debt and fund operations. During the quarter, we raised our dividend to $0.86 per share, paying $81 million in cash dividends. The balance sheet reflects preliminary purchase accounting balances and total debt of approximately $10.8 billion.

We intend to reduce our net debt-to-EBITDA ratio to approximately 3:1 by the end of 2018. Our capital expenditures in the quarter totaled $42.3 million. Depreciation was $71.6 million, and amortization of intangibles and inventory step-up was $85 million.

For the full year, we continue to expect capital expenditures to be approximately $330 million, which is about 1.9% of anticipated sales, as we continue to invest in productivity improvements, systems and new stores. Depreciation should be between $280 million to $290 million, and amortization will be about $340 million.

On our year-end 2017 call, we said we would resume opportunistic open-market purchases of company stock in 2018 at a level sufficient to offset dilution from options exercises. In the first quarter, we purchased 600,000 shares at an average price of $401.91 per share.

On March 31, we {***10-20***} {***Spart-020***} On March 31, we had remaining authorization to acquire approximately 11 million shares. It's hard to believe that June 1 will mark one year since the close of the Valspar acquisition. I'm extremely proud of the progress we have made in the 10 months we've been together.

Perhaps, most proud of the fact that we are increasingly functioning as a single unified global team. You should take comfort in the fact that as a team, we remain focused on execution and value capture in the areas of SG&A, raw materials, manufacturing, distribution, R&D and revenues.

We have confidence in our 2018 year-end annual run rate synergy target of $320 million, which should benefit this year's P&L by about $140 million to $160 million. We expect to book most of the remaining costs to achieve these synergies in 2018, and we are increasingly confident in our long-term annual run rate range of $385 million to $415 million.

Turning to our outlook for the balance of the year. With strong sales and volume momentum coming out of the first quarter, we anticipate second quarter consolidated core net sales will increase a mid-to-high single-digit percentage compared to the second quarter of 2017.

In addition, we expect incremental sales from Valspar to be approximately $600 million, for the months of April and May, where June 1, making the one year anniversary of the close of the transaction. For the full year 2018, we continue to expect, core net sales will increase a mid-to-high single-digit percentage compared to full year 2017.

In addition, we expect incremental sales from Valspar in the first five months of 2018 to add approximately $1.7 billion to consolidated revenues. With these factors in mind, we anticipate diluted net income per common share for 2018 will be in the range of $14.95 to $15.45 per share.

This guidance has been revised to include approximately $0.40 per share dilution from our initial investment in the Lowe's partnership, which reduces the anticipated income contribution from Valspar to $2.30 to $2.50 per share. Acquisition-related costs and purchase accounting impacts are expected to be $3.40 to $3.50 per share.

Given the many moving parts in last year's results and this year's guidance, it can be challenging to understand our underlying earnings per share performance.

We believe the most meaningful way to view guidance is to exclude Valspar acquisition costs and one-time items, which results in a full year EPS guidance midpoint of $18.65 compared to $15.07 adjusted EPS last year. On this basis, earnings per share would grow by nearly 24% year-over-year at the mid-point of our 2018 guidance.

We have included Regulation G reconciliation table with this morning's press release to better illustrate all the moving parts. With that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions..

[Operator Instructions] Our first question is coming from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your question..

Good morning, thanks guys. I guess just a couple of questions. So first off, just wanted to understand the 5.2% same-store sales performance. I know that you guys increased the prices by 3% to 5% in October, so maybe you can just update us on the traction there.

And then similarly, if you are in kind of a low single-digit increase on prices, that would imply kind of a similar rate for volume. How do you see the volume kind of progressing through the year? I mean, I know that Q1 is – sorry the paint season is off to a slow start here.

But are you optimistic that things could improve with weather getting better and labor availability maybe loosening up? Or how do you see that playing out? Thanks..

Sure. Let me start with the volume piece, and I'll have Al talk to the pricing. You're exactly right. We're feeling terrific about the volume and the momentum that we have in our stores organization.

Had a number of opportunities to talk with not only our customers but our employees, and there's an overall feeling of confidence in the year, many, many customers talking about this being a record year for them. And I'd say the confidence is very strong. So you're right, we got off to a little slower start in a smaller quarter.

Not too concerned with that. Feeling good about the key drivers that we've been talking about for quite some time, the continued focus on new accounts and share of wallet of existing customers. So the team is executing extremely well. We have great confidence this is going to be a terrific year for our stores..

Hi, Arun this Al. When we talk about pricing in our Paint Stores Group, we realized a little more than 2% effective pricing. That was roughly sufficient to offset the raw material increases that we're seeing, and it's in line with the effectiveness that we were expecting in the quarter..

One other thing I'd add to that, Arun, we also look at some of the purchases of our customers to give us even more confidence. If you look at spray equipment purchases, for example, those were up double digits.

The whole basket, if you look at those things that we look at internally to try to get a sense of how confident our customers are, they're all pointing terrifically in the right direction. .

And just a quick follow-up as I can on the other two segments, margins appear to be improving. And I was pleased to see the consumer performance. So I don't know if you can just characterize the price cost situation you're seeing in those two segments. Are they also improving? Thanks..

Yes. Why don't I take the same approach here? I'll talk about just the market here for just a moment, and then I'll have Al talk about the pricing. But you're exactly right. If you look at consumer, for example, and the way that we're running this business and the way that we look at the results, it's a combined business.

The combined business for consumer was up 3.8%. And when I say it's combined, it's really one integrated organization now. We don't run separate businesses between the consumer, architectural and legacy SHW. There's one leadership team. There's one marketing team, one sales organization. And quite frankly, they're the furthest along in the integration.

So they're working hard trying to be as responsive as they can to our customers' needs without regard to what brand they're selling. And when you look at the performance that they're posting, we feel pretty good about their position and the momentum that they have..

I think on the on the price side, the we are seeing the positive effect of pricing initiative on Consumer Brands. Certainly, a work in process, and we have room to grow there. On the performance coatings side, as Bob or John talked about in the call, they did see the biggest impact on the increased raw material in the quarter.

We had talked about our first half of the year having a tougher comparison from a raw material standpoint. And I would say that group is probably the furthest behind with the highest inflation and, again, making progress. And we'll continue to do so as we roll the quarters out..

Yes. Let me just give you a couple of comments on performance coatings from a market side of it. If you look at the momentum that they have, Arun, if you look at just going back to Q3, their sales were up 5.8%; Q4, up 6.9%; and then this most recent quarter, up 9.8%. And they're showing improvement year-over-year in their operating profit.

So the profit, if you look at a pro forma basis for that same Q3 period, was down 15.9%; Q4, down 8.7%; in this most recent quarter, down 1.5%. None of us were happy with down 1.5% but it does illustrate the momentum that we're gaining here while growing our sales.

And this is a team that's very determined in what they're doing, and we've got great confidence that they're going to continue to gain traction here. .

Great thank..

Thanks Arun..

The next question is coming from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question..

Thanks very much. If I can just follow-up on performance coatings numbers. It looks like sequentially, your revenues were up a little bit, and your operating profit was down, I don't know, $15 million.

So it looks like what's happening is that your raw material squeeze is getting a little bit larger or your raw materials are rising faster than your pricing efforts.

Is that true? And how do you expect that progression to go in the second quarter?.

Yes, Jeff you are absolutely correct. We did see an acceleration of raw material cost increases in our first quarter, and it predominantly impacted our Performance Coatings Group. And as you can imagine, when they go up that quick, it's very hard for us to react and put another price increase into the market.

That being said, we do have pricing implemented, and we'll monitor that situation as we always do on a month by-month basis. And if we see another increase that warrants a price adjustment, we'll do that. So pricing actions are in progress. .

I'll describe it as they are rowing in, there are continued pricing activities that continue but there are a number of agreements that have already been established that we are waiting for the timing to click in as well. So its a combination of those price agreements that we’ve already hit on as well as those that are continuing to be implemented..

Okay, for my follow-up, in Consumer Brands, you've picked up some business at Lowe's, and I guess, you've lost some business at Depot. Like, on an annualized basis, is the sales benefit something on the order of $200 million on a four quarter basis? And I guess, I'll leave it at that..

Yes, Jeff. So if you look at 2019, you would expect it to be around that amount, maybe slightly below, but around that amount is a good start. .

Okay great, thank you so much..

Thanks Jeff..

The next question is coming from the line of Christopher Parkinson with Credit Suisse. Please proceed with our question..

Thank you. Just very quickly within The Americas Group. Can you comment on the actual end market trends across luxury paint, commercial and property management. Just getting away from some of the 1Q noise, just what are your intermediates to long-term thoughts? And then also a quick comment on Latin America would be very helpful. Thank you..

Yes Chris. John walked through the current quarter's performance by segment. We had another double-digit performance from – in the residential repaint segment, high single-digit in Protective & Marine and mid-single-digit in most of the balance. I will tell you, the outlook for new residential looks pretty positive.

Most – among most public builders, orders, new orders and backlogs are up in the low teens. We've seen a continued significant home value appreciation that should drive strong remodeling activity. Harvard's LIRA forecasts 7-plus percent growth in remodeling activity through the year.

The nonresidential square footage started the year pretty soft, but we expect commercial starts to grow this year probably in the range of about 4%, 5%. That translates to probably an equivalent level of growth in square footage. So new commercial looks strong.

Residential repaint will continue to drive outsized growth in that segment because we're seeing probably a shift from DIY to do-it-for and a lot of investment amongst stay-in-place homeowners in upgrading their homes..

And Chris on Latin America, I'll take that. As a reminder, Latin America represents about 3.9% of our sales. From a sales and volume perspective, all countries were positive both in volume and sales. Pricing continues to improve with more pricing rolling in. So same activities there that we just talked about.

We've achieved some pricing, but we're working hard to drive additional pricing as well as other margin initiatives internally that we can pursue. Additionally, we're focused on pursuing more profitable segments and price points and customers, as you would expect, while continuing to look for additional synergy opportunities.

So we didn't expect to go from a standing start here to a full sprint. This is kind of the path that we expected to see as we saw improvements in Latin America. So I'd say, it's progressing not fast enough for us. We want to move faster, and we're continuing to work with our teams to gain traction at a faster rate..

That is helpful. And just you did hit a little on this, but just to dig, I guess, one step deeper.

Can you just talk about the end market performance in Performance Coatings, specifically those assets acquired from Val? And also I recently saw some price increases in packaging, but kind of what else can you do throughout 2018 to look at the setup for 2019 a little more favorably? So just any insights there would be very helpful..

Sure there are, to begin with there are some incredible sale synergies that our teams are working on. We're very excited about not only the pipeline or funnel, if you will, of existing identified sale synergies, but we're adding to those projects and programs every day.

And so the more we work at identifying sales synergies, I'd tell you that the more we're finding the teams are energized and accelerating that. So I think, first and foremost, the combined businesses are going to be much stronger and more meaningful, we believe, in the marketplace. And our continued efforts there will be to identify more.

Now that said, there's a lot of work that we can do to continue to improve our performance back. And by segment, each of those business units have identified those levers where we can pull and drive results.

But I'd say, when you look at the Valspar business and the transaction, we've always said we had high expectations in our ability to achieve the value capture. We knew we could get the costs out, and we're working aggressively to that. And more confidence now than ever that we're going to be able to achieve that.

But I'd also say that we have more confidence than ever in the sales synergies that are out there. And so our teams are working to identify those segments, those customers and how to better leverage the combined assets to drive the complementary nature of this business..

And on the pricing side, we have talked consistently about specifically on Valspar Performance Coatings side that we're one price increase behind. So we're going to chase that throughout 2018. That being said, as John mentioned, prices rolling in, and we expect that to continue throughout the year..

That is very helpful thank you..

Thank you. The next question is coming from the line of Steve Byrne with Bank of America Merrill Lynch. Please proceed with your question..

John you mentioned a few of these commercial expense line items that you're accelerating as part of that agreement with Lowe's, the sales expense, the marketing and displays and so forth.

Are these onetime upfront line items that will dissipate over time? Or is it a matter of the expenses are recurring and the sales is going to lag before that shelf space in Lowe's is filled up with your product?.

Let me take a piece of that, Steve, and then I'm going to have to turn it over to Al. I will say this that our expectations here are to help drive Lowe's business. And so to answer it, it's a little bit of both. There are certainly some expenses that we're investing in.

So we're adding additional people, for example, to be a little closer to the sales associates, to ensure better execution on the sales floor, right? So doing more of what we've done and wanting to drive better results requires a little different behavior.

We think helping to have the sales associates become more familiar and comfortable with a simplified product lineup and technology, helping them to sell better in the aisle, all those things, we think, are better off with the additional investments that we're making.

When you look at the earnings release that we've posted, where this $0.40 hits in here and hits our EPS, part of that comes from the fact that, to your point, some of it hits in the third and fourth quarter, with very little sales recognition hitting this year. Let me just ask Al to touch on that a little bit..

Yes. It is really just a timing issue. As you roll the program out, we're basically missing the summer selling season on the paint side. But you're having the costs of those roll in and, as John mentioned, primarily in our third and fourth quarter. That being said, we're excited about the program.

And 2019 certainly will be accretive to sales, as we've talked before, but ain't profit..

Okay, thank you that is helpful. I wondering if you have made any changes yet in the China paint model of that wall room brand, the legacy Valspar brand.

Have you made any changes in that overall model to accelerate sales?.

Not so much in the model, Steve, but we are in other areas. We feel as though we've got quite a bit to bring to that business in technology and the approach to growing our business that we're transferring there..

Okay, thank you..

Thanks Steve..

The next question is coming from the line of Don Carson with Susquehanna Financial. Please proceed with you question..

Yes, thank you. Going back to Paint Stores Group. You have 5.2% same-store sales growth. You're talking about Q2 and full year 2018 core sales up in the mid-to-high single high digits. So I assume Paint Store Group would be at the high end of that.

What will be the price volume breakout there? Is price going to continue to add about twp points? Or given some of the increase we continue to see in TiO2 and with rising oil prices, you need another price increase in Paint Stores Group to maintain gross margins?.

Yes Don, I think you are right. Price would be around that 2%. And as you recall, we went out on October 1, as we continue to roll that in, we might see a little bit more going in our second quarter. So the difference is volume, and you're absolutely correct, we do expect our stores, U. S.

and Canada stores, to be in the high end of the mid-high single digits for our second quarter and for our full year. As far as price goes, we have a long-standing tradition that we'll continue to monitor the raw material basket. We'll push back on our vendors. We'll try to internalize from cost reductions as much as we can.

And then absent those levers, we'll talk to our customers first and then talk to The Street about it any other increases..

As a follow-up on the raw material can you differentiate between what you are seeing on the architectural side versus the industrial side, particularly with epoxies on the latter? What's sort of the difference in your outlook for raw material increase between those two different end markets?.

Yes Don, on the architectural side, the primary driver is still TiO2. And we're seeing a somewhat similar trajectory in TiO2 to what we saw in 2017. All the global producers, as we expected, have announced second quarter price increases that are currently under negotiation.

But that's really primarily what is driving inflation in the architectural side. On the industrial side of the raw material basket, you've got crude oil, propylene, which also affects architectural coatings, but it affects the industrial piece. Epoxies, zinc, all heading in the wrong direction.

So we're seeing inflation from more of the raw material components on the industrial side. There's certainly inflation in the basket on both sides, probably more on industrial. .

Thanks Al..

You bet..

The next question is coming from the line of Ghansham Panjabi with Baird. Please proceed with your questions..

Hi, guys good morning. Just to sort of back up. Given that you stopped giving quarterly EPS guidance, did first quarter, from an earnings standpoint, play out the way you thought it would relative to your initial expectations? I know there are several moving parts such as weather, et cetera, that weighed on the quarter.

But did the timeline of synergies come in ahead of your initial view? And how much do you think the unfavorable weather in the U.S.

impacted the quarter the best you can tell?.

So I would say the quarter did come in a little bit better than what we're planning. We did have a lower tax rate in the quarter due to some discretes – the timing of some of the discrete items. But you look at the strength in our Consumer Brands and our Performance Coatings businesses, both outperformed even what our expectations were.

So that's really why the quarter came in better. As far as weather is concerned, it's hard to pinpoint an exact amount on what the impact is in the quarter..

And just sort of a follow-up.

Just given, perhaps, the weather disruption this quarter as well, at least the beginning of the quarter, how do you feel about your customers catching up to their backlogs as the year progresses in context of trades generally being tight from a labor standpoint previously?.

Yes, we have had a lot of discussion about that, Ghansham. And overall, I'd say, at this point, we still feel pretty good about the contractors' ability to maintain what they are calling or what they're projected to be a record year. We're working hard to help them with that.

We’ve talked a lot about the products have been developed to help their productivity and the services that we provide in our stores to be able to help them be responsive. So it's going to be a push as we have a lot of people working hard on weekends and long hours.

But right now, I'd say we're still confident in our ability to turn this into an outstanding year.

Okay, terrific, thank you..

Thanks Ghansham..

Thank you. The next question is coming from the line of Vincent Andrews of Morgan Stanley. Please proceed with your questions..

Thank you and good morning everyone. As I think about the manufacturing synergies associated with Valspar, I was pretty focused on your ability to consolidate their facilities.

But now with this incremental volume going into Lowe's, how does that change the calculus there? Is having more volume better than shutting down more facilities? Or What if anything has changed?.

Absolutely having more volume better than shutting down facilities. But I think the teams is still on pace to rationalize the four facilities that they had talked about late last year, and that'll roll in, in our third and fourth quarters.

And I think that team does a great job of finding capacity within the four walls that allows us to take on incremental business without adding significant assets or requiring us to keep the fixed assets..

And just a follow-up.

The 600,000 shares repurchased in the first quarter, is there a reason why it was so large in the first quarter? And how should we be thinking about repurchases for the balance of the year?.

No, I think if you look at, we have talked about offsetting option dilution, and typically, our first quarter is our largest quarter on options exercised and with restricted stock that's issued in the first quarter. So I think we are a little bit ahead of it. I would say the options didn't come in as heavy as we thought.

So we'll monitor that as a year goes on and make sure that we meet our commitments that – and make sure we're paying down our debt to get our debt-to-EBITDA leverage down to approximately 3:1 that John talked about. .

Thanks very much..

Thanks Vincent..

The next question is coming from the line of Scott Mushkin of Wolfe Research. Please proceed with your question..

Hey guys, a lot of my questions have actually been answered. But, I have one, I think in the press release you guys talked about the choppiness of kind of the international markets. I was wondering if you could maybe elaborate on that a little bit, kind of what you're seeing from the macro perspective in the industrial side of your business. .

Yeah, so when you look at our businesses, naturally, they don't move consistently across each business in one direction. So we have seen, in any region, some businesses performing better than others. But overall, collectively, those businesses are performing quite well. We've got a lot of confidence in the team.

And I referenced just the terrific talent that's come from Valspar and the relationships that they have with their customers are just outstanding. So a little bit of choppiness, I think, is pretty normal. We've got a lot of confidence in the team. And as we combine these businesses, as I mentioned earlier, then we have a lot of synergies for growth. .

Alright, perfect..

Thanks Scott..

The next question is coming from the line of Duffy Fischer with Barclays. Please proceed with your question..

Yes, good morning. First question is just as we start to anniversary Valspar, the growth rate within Valspar businesses starts to matter more as we do our year-over-year.

So within Consumer and Performance, how fast on a pro forma basis has the Valspar part of the business been growing?.

So if you look at the – certainly, in the quarter, both the Consumer business was up over 13%, and the Performance Coatings Valspar business was up a similar amount. I'd temper the consumer business a little bit. I don't think we're expecting double-digit gains.

We'll take double-digit gains, but I don't think we're expecting that out of that team on a longer cycle. But you would expect low mid-single-digit growth across the group. I think that's where we're starting to look, Duffy, is we've integrated so much and made such great progress, specifically, as John mentioned, on Consumer.

It's hard to look at Valspar versus Sherwin. So we look at the group, and we're expecting low to mid-single-digit growth in that group. On the Performance Coatings side, the momentum they have, we're expecting a little bit better than that.

And again, they're well down the path of integration, and we're looking at a combined business, and our outlook is to say that mid-single-digit growth rate is – mid- to high single digit growth rate is probably what we're looking at. .

And then relative to consensus, you guys beat the first quarter pretty handily. You just talked about you beat your own internal expectations, but yet you brought the year down the same $0.40 that the Lowe's stuff is going to hit you.

With a bad first quarter weather-wise and some momentum there, theoretically, pickup feels like that means Q1 through Q4 is a little bit light relative to what your original expectations are.

Can you just kind of help triangulate some of those numbers?.

Yes, sure. I mean first to be clear, we reaffirmed our original full year EPS guidance at the midpoint, and that's a 26% increase year-over-year. So you need to deliver, and we needed to deliver strong first quarter and get off to a strong start. As I mentioned, the tax rate was a little bit lower that gave us a little bit of a tailwind.

We fully expect the full year to be in the next – rest of the quarters to be in the low to mid-20% range. And you know it, Duffy, our first quarter is our smallest and generally most volatile quarter of the year. It's been a long-standing practice of ours to wait and see how the painting season unfolds before considering revisions to the outlook.

And I think that's served us well on the path, and we fully want to continue with that practice..

Terrific, thank you guys..

Thanks Duffy..

Our next question is coming from the line of David Begleiter from Deutsche Bank. Please proceed with your question. .

Thank you. Good morning. John Lowe’s has a professional paint focus going forward.

How do you make sure the incremental professional paints at Lowe's, to the expense of Home Depot or something else like that rather than your own Paint Stores?.

Yeah, so there is a terrific opportunity there. When you thing about the painting contractor that's painting every day, they typically have gravitated towards a specialty paint store, and we work hard to make that easy for them. But there is an entire customer base when you think about the home centers.

People that use paint in part of their projects or part of a remodel project that is a little more difficult for our teams to reach through a specialty store. So we think it's a terrific opportunity for us, along with our customer, Lowe's, to better penetrate that. And we don't think at all that it's cannibalizing our core business.

It's typically customers that are in home centers that are purchasing other products, be it drywall or plumbing or whatever it might be and using paint as part of that project. And we're really excited about working with our customer to reach those customers in a new and increased rate. .

Very good.

John lastly, in Performance Coatings, how would you characterize level of competitors for price increases in these businesses?.

I’d say, when you think about this, when you think about the cost of goods, the raw materials represent 85% of the cost of goods. When the basket moves, you really need to get it. And our view is clearly on adjusting to the basket as it moves.

I'd say that because nearly everyone probably has similar dynamics, many would feel the same pressure and probably have to take the same type of activities they hold. But we're more focused internally then we are from a competitive standpoint, and we let them make their decisions. We know we have to make ours..

Thank you..

Thank you..

Our next question {***Epart-054***} {***54-End***}.

Thank you. Our next question is coming from the line of P.J. Juvekar with Citigroup. Please proceed with your question..

Yes, hi, good morning. You guys clearly delivered on sales synergies by winning this Lowe's business. So question on this incremental business that you just won.

Do you expect that to be a lower-margin business because of increased branding and marketing costs? And secondly, did you have to offer a lower price to win that business?.

Well, we don't talk about specific pricing or customers. But I would tell you that the value here is in the branding and the opportunity to help our customer reach their goals. We clearly have a raw material basket that's moving.

We think it's just good practice for us to have open discussions with our customers about our need to remain whole to be able to serve their business and help them grow. And so that's the nature of our business. We're not going to give any specifics, but I would say that it's going to help our profitability..

And is that help our profitability for next 12 months or is the profitability going to improve after the 12 months?.

No. If I understand your question correctly, we're going to have a little bit of drag that Al talked about that. That's the $0.40 that we talked this year as the cost moves in. But moving forward, next year, we expect that's going to help us, and our goal is going to be to grow that in both sales and profitability going forward, not just the one year..

Okay. And then your LatAm business was quite strong. Revenues up 9.5%, profits were up.

What are you seeing? Are you seeing a turnaround in Lat Am?.

The market is definitely starting to show positive signs. I think our teams are executing well. But again, I want to be very clear. While we're pleased with the progress, there's a lot of work for us to continue to work on. And our teams are really honkered down trying to do the right things here..

Okay. Thank you..

Thanks, P.J..

Thank you. The next question is coming from the line of Bob Koort with Goldman Sachs. Please proceed with your question..

Thanks very much. Al, you guys gave an earnings number that excluded some of the one-offs that I think 3.57 was what you posted.

Can you tell me what the EBITDA would be on a same basis?.

EBITDA was up 6% in the quarter for the core Sherwin. That would have been – give me one second. So we would have made the $414 million versus last year $391 million, so up 6%. As we talked about 5.51, 5.52 is the total..

5.52 has the one-offs. I guess, I'm trying to extract it to make it a like-for-like to the EPS number..

So you think about – it's about $30 million adjustment for the one-off. So I guess it would be at 30..

And then on TiO2, do you guys have any desire to enter into these long-term contracts that the producers are seeking? Or do you think this is just typical hard-core commodity so why lock in anything now if it might loosen up down the line?.

Bob, we have a terrific procurement team, as you know, and our goal is to do what's right. If they feel though – as though there's some benefit to lock up a piece or part of that, they have the ability to do that. We're not convinced that it has to be a one or zero here.

We're looking at what's best for our shareholders long-term, and we'll take the appropriate action as they see fit..

Got it. Thank you very much..

Thanks Bob..

Thank you. Our next question is coming from the line of Mike Harrison with Seaport Global Securities. Please proceed with your question..

Hi, good morning. I was wondering if you could comment just on the consumer business overall. The sales growth there was pretty good.

Wondering, did you already see some additional load-in at Lowe's in the first quarter? Can you maybe walk through what you saw in sort of the different segments in consumer, including in Europe and in Asia?.

Yes. So Mike, we did not begin to see the benefit of the new agreement at this point. The growth primarily came through North America through a cross-section of customers, but primarily in the national retail category. And I'll remind you the Consumer Group pursues four segments.

There's national retail, MRO in commercial; other retail; and as you mentioned, Europe and a small business in Asia there. The other thing – other point before talking about those other areas, I'd say, we did face a softer comp in the first quarter. So we did have a benefit of that as well.

But when you look at the numbers, if we're going to move the needle, it's going to be in North America. The European business and Asia offer opportunities, but there's much smaller businesses. So there's a lot of effort going on there as the synergy opportunities are explored for technology and transfer just institutional knowledge, going both ways.

But the reality is if we're going to be successful here, we've go to move the North American needle, and that's what we're working on the most..

All right. And then you guided to $600 million of incremental sales for the two months of Valspar in the second quarter. It looks like that's maybe a little slower pace than I have. And you did about 10/60, $1.06 billion in the first quarter.

Is that reflecting some of the changes with the big-box retailers? Or kind of how should we think about that contribution maybe being in the lower run rate than you were in the first quarter?.

Yes, Mike, I wouldn't read anything into that. It’s approximately 600 for April and May, and then it rolls into our comp going forward. But nothing of concern in that run rate..

All right. Thanks very much..

Thanks Mike..

Thank you. The next question is coming from the line of Mike Sison with KeyBanc Capital Markets. Please proceed with your question..

Hey, good morning guys.

In terms of gross margin, when you think about the 42.5, where does that go for the rest of the year? And what's kind of the embedded gross margin for the full year embedded in your guidance?.

Yes, we don't break out gross margin specifically in the guidance. But what I would just say is, as we talked about, our first half would be our toughest comparison on a raw material basis year-over-year. If raw materials trend like we believe they will, we should see sequential improvement.

And I'll go back also, the original EPS guidance at $19.05, it's a 26% improvement. And embedded – implied in that is gross margin expansion and SG&A leverage. That's the only way you can – we can get to those numbers..

And your raw material outlook is still low single digits?.

Mike, its still 4% to 6% range, based on the first quarter running a little higher in terms of year-over-year inflation than we anticipated, we're likely going to push toward the higher end of that range for full year. Now as a reminder, that is our outlook for the industry on a basket similar to what we buy.

That does not include raw material synergies..

Got it.

And then just a quick follow-up on the $0.40, as you head into 2019, will you overcome that $0.40, meaning that once you get the sales in from Lowe's and you you've got the costs embedded, is it a plus 40 plus next year?.

Yes. It will be a plus 40. We're not going to probably talk about how much of it more than that..

Got it. Thank you..

Thanks Mike..

Thank you. Our next question is coming from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question..

Good morning, thank you. In response to an earlier question, I think you indicated potential for sales to Lowe's in the amount of nearly $200 million in 2019.

My question is how would you characterize the amount of forgone sales at Home Depot relative to that number? And is there a timing difference between the load-in Lowe's versus the phase-out at Home Depot?.

Yes, Kevin, that was – the number I was quoting is the net number for 2019. As far as timing goes, Lowe's will dictate the cadence of the roll-ins, and Home Depot and that will happen this year as well. But much past that, we're not going to get into them a lot of the detail related to….

I think out of respect to our customers, both Home Depot and Lowe's, we're going to allow them to announce when the different brands will be or will not be available..

Fair enough. I appreciate that clarification. That was a net number. And then second for Al, given the change in tax regime and the lower rate in the first quarter of 2018, do you see any downward tension in your rate? I know you're affirming low to mid-20% range.

But was the 1Q level strictly discrete items? Or is there any residual effect that you foresee?.

Yes. The 1Q was the timing of the discrete items. And I would highlight, if you look at our core business, Valspar, Lowe's together, our effective tax rate was 19.4% versus last year of 22.7%. The impact of the acquisition-related costs drives the consolidated rate down.

But really, nothing more than just timing of discrete items in that first quarter, a small quarter so has a bigger effect..

Thank you..

Thank you. The next question is coming from the line of Nishu Sood with Deutsche Bank. Please proceed with your question..

Thank you. Wanted to ask about the synergies, in your commentary, John, you mentioned synergies contributing to margins in the Consumer Group, but didn't mention it in the margin commentary for Performance Coatings. And that may just been the different trends, I just wanted to dig into that a little bit.

And should we expect here on 2018 kind of sequential basis different cadence of synergy realizations? So I just wanted to check into that, see if there was something behind that..

Yes, so if I didn't speak to the synergies, then the work that the team is doing on the Performance Coatings side, then that was an error on my part. A lot of good work and really terrific effort on the part of the Performance Coatings team as well. So yes, there are going to be synergies there. I will say that there are energies going to hit in 2018.

And then as you look ahead, from a manufacturing standpoint, there'll be additional opportunities from an asset rationalization standpoint in the future that'll take a little bit longer as we get systems and processes in place to look at those outside of the U.S. that will benefit the Performance Coatings business the most..

Yes. Nishu, let me add that just if you look at the cadence of midpoint that we talked about, $150 million by quarter, it's really more front-end loaded than back-end loaded.

That related to the projects that have been validated as we went through last year that we see going through the P&L and feel confident about and then the back half is really getting impacted by new projects, system implementations that John talked about and then factory closures that I talked about earlier..

Got you. That’s helpful. Thank you.

And in terms of the Consumer Group, I know this will go away next quarter, but maybe the quarter after that, but in terms of the breakdown between the old legacy Valspar and the legacy Sherwin-Williams, quite a strong performance from the Valspar side of things, kind of continuation of trends on the Sherwin-Williams side of things.

Wonder if you could just speak to that, and particularly, the acceleration on the legacy Valspar side..

Yes. So I mentioned this briefly earlier that the way this business is managed and run now, it's very difficult to account for a sale or synergy on one side or the other. So as we brought the businesses together, for example, the sales organization is a combined sales organization.

There were some sales reps that – there are some sales reps that were previously from Valspar, some from Sherwin-Williams, same with products. And so this is an area, as I mentioned, that we made the most progress in integration. So it's very, very difficult to account one side or the other.

Our focus here is purely on doing what's right for the customer. And so if selling a gallon of Sherwin or a gallon of Valspar is what's right for the customer, we're pursuing that. We're adding that up and giving you that information as a legacy Valspar, legacy Sherwin.

But it's not the way we are running the business, and it really doesn't account for the overall synergies and efforts that are taking place. It's probably the most area that's – the area that's most gray amongst all of them..

Got you, makes sense. Thank you..

Thank you. The next question is coming from the line of Scott Rednor with Zelman & Associates. Please proceed with your question..

Hey, Al, could you just clarify relative to the 1.40 to 1.60 of synergies this year, how much exactly was realized in 1Q?.

If you split it, the 1.50 by four quarters, we saw a little bit more than that in our first quarter. That's the way I would characterize it..

Okay, thank you.

And then could you just talk to, on the paint store side within North America, the delta between interior, exterior, kind of what was the gap? And are you seeing that at all reverse here in April?.

Naturally, the interior was much stronger in the first quarter so there were high single-digit gains in interior and we were positive in the low or mid-single exterior. This time of year, we would expect to see more exterior gallons going out in the Southeast and Southwest than what we did and Eastern’s impact was probably significant as well.

Not so much that they saw the impact on exterior, but just on completion of projects certainly has an impact on business there..

And then just – John, I mean, a few years ago, you guys put up a significant amount of SG&A spend into the Lowe's program. And safe to say that trailed some of the more robust expectations you have for that program back in 2014, 2015.

How do you get confident that a higher level of spend right now you could get a return on that spend when you look to the next couple of years?.

Well, it's every element of the business, Scott.

If you start with the fact that we've got a partner here, who is committed to us and us to them in this area of their business, so the opportunity to work collectively on a brand assortment, the training of their people, the simplified branding if you just look at it from that standpoint, instead of having two or three different brands in there, with sales reps all calling on the sales associate giving their feelings on which is the right product to sell and what's situation, the ability to better train and have them more knowledgeable about the product technology, I mean, every aspect of the business, we think, is terrific and meaningful.

And when you look at the alignment that we have there, we think it's going to be a big win. Now that said, we talk a lot about their performance in North America. Their partners outside of that specific customer had a terrific first quarter as well.

We've got great relationships with other customers that we're continuing to work, if it's Ace or Menard's or a whole host of other customers doing extremely well. So we're very pleased, and we're very focused on doing what's right for each one of these customers, and we think we've got some good momentum..

Great. Thanks. Thanks so much, John..

Thanks, Scott..

Thank you. The next question is coming from the line of Dmitry Silversteyn with Longbow Research. Please proceed with your question..

Yes, thanks for taking my questions. A lot of my questions have been answered, but I just want to confirm something. In your Wood Coatings business, your competitor was talking about seeing some weakness there because of the way Chinese are coating at the plant rather than coating in the field.

Are you seeing that in your wood business? Or is your wood business primarily sort of plant-applied coatings?.

Well, there are two different areas there, Dmitry, right? There is the architectural type customers that apply wood in homes as well as the manufacturing. And there is a trend to having more of that product manufactured in a factory as opposed to staying and finished on projects..

And then how does it affect your business? And is it positive for you either on top line or margin or neutral or negative?.

I'd say it's probably neutral. I mean, maybe – yes, it's an opportunity for us. When you look at our market share there, Dmitry, there's tremendous upside, and that's what we are focused on..

Okay, got it. And then just a bookkeeping question. Was there a foreign exchange benefit to your Performance Coatings revenue number? You provided for consumer and the Latin American piece, but I don't – maybe I missed it but not for performance..

On Performance Coatings, the FX impact on our PBT was about $4.6 million..

$4.6 million, that's on profit, right?.

That's on profit..

So what was impact on revenue?.

So the 3.9% is the tailwind..

Okay, thank you very much..

Thanks, Dmitry..

Thank you. Our next question is coming from the line of Chuck Cerankosky with Northcoast Research. Please proceed with your question..

Good morning or good afternoon, everyone. I want to direct the question to Al, a technical question, Al. Looking at the purchase accounting impacts for the first quarter, there were $0.71, and the guidance was $2.65 for the full year, so not quite four times as much.

Does that simply reflect the lower tax rate in the quarter? Are there some – or were there some one-time non-amortization items in the first quarter?.

There's about $30 million of non-amortization type items in the first quarter. And Chuck, we called out $100 million for the year on one-time integration costs. And the way that would roll out would be, second quarter would probably be similar to our first quarter, and then it'll drop down from there..

All right, thank you on that. And then, John, when we're looking at pricing actions, Sherwin-Williams take, it seems that it's relatively easy, and I say that with much respect to get them through to the contractors.

How do you look at same situation when you're talking to retailers and talking to OEMs?.

Well, I wouldn't say that any pricing is easy, Chuck. What we're trying to do is, I think we have done historically and Valspar has done historically as well, and that is continue to provide products and services that allow our customers to be successful.

We're in the solutions business, right? So we're bringing products and services that help them reach their goal. And when our raw material basket moves, we have open discussions with them to help them understand what's happening from our cost standpoint. But I'd say this.

It's not so much the discussion or that meeting that determines our success, Chuck. It's what we do all year.

When we're working for our customers on a regular basis, helping them reach their goals, then as our cost goal, we are much more likely to be successful and having those cost discussions than having to come down to one discussion if you failed all years.

So we're working hard every year to provide the great products and services that allow us to be successful when our raw material basket moves..

Understood. Thank you very much..

Thank you, Chuck..

Thank you. Our next question is coming from the line of John Roberts with UBS. Please proceed with your question..

Hi, good afternoon. You operate your own truck fleet in the U.S.

Is the tightness in the trucking market allowing your control distribution to laid again any share or provide any extra advantage right now? And are your costs inflating like they are in the third-party trucking market?.

The answer to your first question, I'd say that it is an important part of our service model. So the idea of being able to serve our customers with our fleet is one component, John, of what I just mentioned, having good service all year. We have about 700 drivers that operate 550 tractors, and they're an important part of our team.

And so the ability to serve customers as a result of having our own drivers allows our drivers to make nighttime deliveries, for example, in our stores so that our store people could be more focused on our customers. To your point about the flexibility, we can be responsive as opportunities arise to be there when our customers need us.

As far as the costs, we have terrific retention of our employees, including our drivers because we pay a very competitive wage, and we'll continue to do that. There's not been significant price or cost increases here, but we're also very sensitive to what's happening in the market to make sure that we're paying our drivers appropriately..

Great. Thank you..

Thanks, John..

Thank you. The next question is coming from the line of Greg Melich with MoffettNathanson. Please proceed with your question..

Thanks. I had a quick one for Al and then a follow-up on price and volume.

Al, the 3x debt-to-EBITDA leverage where does that go once we make the lease accounting adjustment? Does that change it by a turn? Or how do we think about that?.

Yes, it won't change it. I think it'll change it by roughly a third to a half when we get the full impact of the leases on our balance sheet..

Got it.

That's how much it will go up so when you go to that target to stay under three that will – it will bump up that sort of the headwind that you have until next year?.

That’s right, that’s right..

Okay. And then on the business, I want to make sure I got the comp right and the price and volume mix. So the comp was 5.3. And let's say, price was 2, and volume was 3.

Given that the rest of the year looks like the comp will need to be a couple of hundred bps higher, is that improvement in comp that you're expecting more from price increases rolling through or more from volume pickup?.

It's going to be from volume..

So we should assume the price still stays around that 2 level?.

Yes, I mean, certainly, you get a little bit improvement as we continue to work with our customers, but it won't be significantly more than that..

Okay, thanks a lot. Good luck, guys..

Thanks, Greg..

Thank you. Our next question is coming from the line of Patrick Lambert with Raymond James. Please proceed with your question..

Hi, good afternoon. Thanks for picking. A few questions, this is mostly about the timing, timing of the $0.40 cost for developing Lowe's solution. If you could tell us that $0.20 in Q2 and Q3 and then almost breakeven in Q4, that's question number one.

But the same question for synergies I think you've breaking the chance it would be above the same for each quarter, but just if you could confirm the impact of the synergies per quarter. And finally, raw materials, I try to get the absolute dollars headwinds in Q1.

Is that still or is that a bit above $110 million of headwinds from raw materials? Thank you..

So on the timing of the Lowe's program, I would say it's going to be more heavily weighted to our third and fourth quarters. As far as the synergy, Patrick, like I said, it's pretty, pretty even throughout the quarters but a little more heavily weighted to our first and second quarters.

And on the raw – just the pure raw material dollars, the $110 million, I think, you said, sounds a little bit heavier than what I would say but not really materially off..

Its about $100 million..

Sure..

Okay. That’s it for me..

Thanks, Patrick..

Thank you. Our next question is coming from the line of Laurence Alexander with Jefferies. Please proceed with your question..

Good afternoon. Just two quick clarifications, you have some comments, sorry, about how your customers have improved their productivity.

Does that – in the architectural segment, does that imply that the summer volumes could be higher than your historical growth rates? Or do you see the soft start to the year as more just pushing out into creating pent-up demand that will be satisfied in Q4? And secondly, I don't think there's any ambiguous in this, but apparently, there might be.

Which of the earnings ranges is the benchmarks that you will be using to build your bridge to 2019?.

So on what we're building, as our benchmark would be the consolidated, excluding the Valspar acquisition, 18.35 to 18.95. That's what I would have you focus on as our base going into 2019..

And in terms of the comments on customer productivity, I think the comment was we are going to do everything power to help our customers improve their productivity, both through product performance and service model, in an effort to, frankly, help them catch up. They fell a little behind in the first quarter. They've got a lot of work to do.

They're going to be, we're sure, working longer hours, more weekends, but we're going to participate in that..

Perfect. Thank you..

Thanks, Larry..

Thank you. Our next question is coming from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed with your question..

Good afternoon, everyone. And thank you for taking my question so late. I was wondering if you could give us some details on the packaging side. One of your competitor is making progress and said that they are gaining share on the non-BPA coatings.

Could you help us understand what is happening there, first of all, in terms of what your growth is in that category and then whether the industry, at least in Europe, has already caught up and everyone is more or less non-BPA?.

Yes. So the packaging business is our fastest-growing business in our Performance Coatings business. So we're thrilled with the momentum that we have there. The team is executing, and quite frankly, the technology that we have, we think we have a very unique technology that has really been very well accepted by our customers.

And it's growing in acceptance here. And we're thrilled with it. It's performing very well. And from a market share standpoint, we think we're doing quite well..

All right.

And if we look at the general industrial side, could you give us a feel for the trends and the categories which are showing more improvement year-over-year and continuing in that particular vein?.

In general industrial, what you're talking about?.

Yes..

Well, again, another strong performing area for our Performance Coatings business. They are having very good progress or they're making very good progress in various segments and different geographies around the world.

So earlier there was a question about choppiness, and I made the comment about that it's not every business in every segment moving straight line. So here in the GI business, there are segments in, for example, North America that are doing very well, that may not be as performing strongly in other parts of the world.

But collectively, that business is performing very well. Again, as I mentioned in my prepared comments, it's in the top two or three of the Performance Coatings segment..

Could you share with us which areas are not doing as well in North America, for example?.

We don't – Rosemarie, we don't break into that business in great detail. But I'd say, overall, we're very pleased with the performance there. And this is another area, from a price standpoint, that they've got some very large customers. They've been working through pricing. And we're expecting to see price recovery in this space..

Okay, thank you..

Thanks, Rosemarie..

Thank you. It appears we have no further questions at this time. So I'd like to pass the floor back over to Mr. Wells for any additional concluding comments..

Thank you, Jessie. As a reminder, our annual Financial Community Presentation is scheduled for Tuesday, May 22. It will be held in Boston. The program will consist of a brief business review by our segment leadership teams, including an update on our Valspar integration plan and progress.

And presentations will be followed by a Q&A session and lunch with management. If you have not signed up and would like to attend, registration is still open. Send me an e-mail at rjwells@sherwin.com, and I will reply with a link to our registration site.

Jim Jaye, our VP of Investor Relations and I will be available over the coming days to help you with any follow-up questions that arise as you digest this morning's call. I'd like to thank you again for joining us today, and thank you for your continued interest in Sherwin-Williams..

Thank you. Ladies and gentlemen, this does conclude today's teleconference. Again, we thank you for your participation and you may disconnect your lines at this time..