The Sherwin-Williams Company achieved its sixth consecutive quarter of organic sales growth, a rate that exceeded the industry average by 300 basis points.
The company successfully covered 90% of cost of goods sold inflation through proactive pricing actions, reaching a breakeven run rate one quarter earlier than previous commitments. Sherwin-Williams expects to reach 100% coverage of cost of goods sold inflation by Q4 2026 via continued global pricing adjustments. Cost of goods sold inflation is estimated to remain in the mid-single-digit to high-single-digit percentage range through the end of 2026.
Industrial and Aerospace performance
The Industrial Coatings segment has reached a growth inflection point, driven by multi-year share gains in packaging technologies and automotive OEM. This segment is projected to continue outperforming, with new business wins estimated at $25 million per quarter.
Aerospace performance is supported by a $300 million order backlog and diversified exposure across military and commercial end-uses. To support long-term demand, the company is investing over $0.5 billion in aerospace capacity, including the Shelby facility. While some business units perform below the aerospace average, the company is focusing on margin improvement rather than exits.
Automotive and Architectural segments
Performance in Automotive Refinish was impacted by U.S. customer destocking and challenging year-over-year comparisons, though management believes destocking has now concluded. The company expects Automotive Refinish to return to revenue and volume growth in the second half of 2026 as inventory normalizes and new MSO wins convert. In the U.S., automotive insurance premiums experienced their first quarterly year-over-year decline in five years.
In the Architectural Coatings EMEA segment, margins returned to expansion following several quarters of contraction. The company is executing a restructuring program in Architectural EMEA that includes scheduled plant closures in late 2026 and early 2027.
Management Outlook and Operations
Management attributed a 5% volume growth to share gains won over the last 1.5 to 2 years that are now impacting the P&L. They stated that customers are not trading down to value brands because they prioritize throughput and productivity. Furthermore, management stated they have seen virtually no lost business due to pricing efforts, describing the process as collaborative.
Regarding supply, the company maintained operational resilience and supply continuity despite rising logistics and raw material costs resulting from the Iran conflict. The speed of price realization improved by removing lag periods and applying learnings from previous cycles.
Capital allocation remains focused on share repurchases and organic investment, with $175 million in shares repurchased year-to-date. The company expects to continue outpacing the market, though potentially not at the 500 basis point level recorded this quarter.
The significant period of U.S. destocking is over, with volumes expected to be up in low single digits for the second half of 2026. Q3 guidance assumes organic sales growth in the low to mid-single-digit range, which is balanced by mixed consumer sentiment in Europe.
