A Unique Growth Opportunity f Sh
for Sherwin‐Williams
i Willi
Chris Connor
Chris Connor
Chairman & CEO
Sean Hennessy
Sean Hennessy
Bob Wells Bob Wells
Senior Vice President,
Senior Vice President,
Finance & CFO
Corporate Communications
Financial Community Presentation – Thursday, May 12, 2011
Forward-Looking
Forward Looking Statements
The presentation today will contain “forward‐looking statements” Th
i
d
ill
i “f
d l ki
”
concerning the proposed acquisition of Comex. These forward‐looking statements are based upon management’s current expectations, estimates, assumptions and beliefs. Forward‐looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from such statements and from our historical results and experience. Any forward‐
looking statement speaks only as of today, and we have no obligation to
looking statement speaks only as of today, and we have no obligation to update or revise any forward‐looking statement, whether as a result of new information, future events or otherwise. If you would like more information about the risks involved with forward‐looking statements, please see our SEC filings
SEC filings. Financial Community Presentation – Thursday, May 12, 2011
Call Agenda
Call Agenda
• Transaction Summary
• Who is Comex?
• Why
y does this acquisition
q
make sense?
• What will the combined entity look like?
• How will the deal be financed?
• Other questions?
1
Financial Community Presentation – Thursday, May 12, 2011
Transaction Summary
Transaction Summary
• Sherwin-Williams to acquire Consorcio Comex, S.A.
de
d C.V.
C V for
f approximately
i t l $2.34
$2 34 billion
billi in
i cash
h
– Expected to be EPS accretive in first 12 months
– EPS dilutive in initial quarter
q
• Complements Sherwin-Williams’ growth strategy
– Expands architectural paint business in Americas
– Increases retail distribution in many markets where our
store count is low
• Completion of acquisition subject to customary
regulatory approvals
2
Financial Community Presentation – Thursday, May 12, 2011
Who is Comex?
• Founded in Mexico in 1952
• Total company sales of $1.4
$1 4 Billion
• 66% in Latin America, 34% in U.S.
and Canada
• Respected family of brands
• Second largest
g
specialty
p
y paint
p
store organization
g
in
the Western Hemisphere
- Over 3,300 points of sale in Mexico operated by 750
independent concessionaires
- 240 company-operated stores in the United States
3
- 78 company-operated stores and 1500 independent
d l
dealers
iin C
Canada
d
Financial Community Presentation – Thursday, May 12, 2011
Who is Comex?
Mexico
U.S. and Canada
Sales: $
$935M
Sales: $
$488M
Architectural Paint
64%
Architectural Paint
91%
Industrial
25%
Building
g
Materials
3%
4
Resin ((other))
5%
Industrial
9%
• ~75% of sales from Architectural Paint
• ~20% of sales from Industrial Coatings
Financial Community Presentation – Thursday, May 12, 2011
Why Comex Makes Sense
Why Comex Makes Sense
• Augments current business mix
– Sales heavily skewed toward Architectural Paint; balance
from Industrial and Building Materials
– Improves scale throughout Latin America
– Provides technology development / transfer opportunities
• Expands retail distribution
– Increases store coverage in markets where our store count
is low: Mexico, western U.S. and Canada
• Strengthens family of brands
– Iconic
I
i brand
b d iin M
Mexico
i
– Contractor brand loyalty in U.S. and Canada
5
Financial Community Presentation – Thursday, May 12, 2011
y
Why Comex Makes Sense
Top 10 Paint Store Chains – North America
YE 2011 Est.
YE 2011 Est
Count
6
1 Yr Change
3,450 +60 Akzo Nobel/ICI/Glidden PPG
558
393
Comex/Pro Paint Inc
Comex/Pro Paint, Inc. 318
Kelly‐Moore
154
1,831
Dunn Edwards 109
Cloverdale/Rodda C
o e da e/ odda
104 0
Diamond Vogel 67
Benjamin Moore
84
Vista
45
+4
+2
‐21
21
‐9
+1
+2
‐1
0
‐4
Gap:
+86
+1,619
Source: Independent Research, Company Websites, Rauch Guide, Chain Store Guide
‐26
Financial Community Presentation – Thursday, May 12, 2011
Paint Stores Group
p
Store Penetration
7
Financial Community Presentation – Thursday, May 12, 2011
p
Paint Stores Group + Comex
Store Penetration
Comex Operations
General
Color Wheel
Frazee
8
Kwall
Parker
Financial Community Presentation – Thursday, May 12, 2011
Sherwin
Williams + Comex
Sherwin‐Williams
+ Comex
Paint Stores Group
Latin America Coatings Group
9
Financial Community Presentation – Thursday, May 12, 2011
Sherwin‐Williams
2011 Sales: $8.77 B
Global Finishes
Paint Stores Group
Consumer
Latin America
10
Financial Community Presentation – Thursday, May 12, 2011
Sherwin‐Williams + Comex
Pro Forma 2011 Sales: $10.19B
Global Finishes
Paint Stores Group
Consumer
Latin America
11
• Strengthens our U.S. & Canadian Paint Stores business
• Doubles our Latin American coatings business
• Company-operated
Compan operated stores,
stores concessionaires and direct sales
account for more than 75% of combined sales
Financial Community Presentation – Thursday, May 12, 2011
a c a g g ts
Financial Highlights
•
•
•
•
•
Acquisition for approximately $2.34 billion in cash
Attractively priced at ~1.7x Sales
Initial quarter dilutive / first 12 months accretive
Fi
Finance
$2.0
$2 0 billion
billi iin 5
5, 10
10, and
d 30 year ttranches
h
Debt to EBITDA ratio
– Currently 1.0x
– At closing 3.0x
– 2018 1.25x
• Dividend
Di id d payoutt ratio
ti remains
i consistent
i t t
• Stock buybacks reduced for two years
12
Financial Community Presentation – Thursday, May 12, 2011
Questions?
Financial Community Presentation – Thursday, May 12, 2011