Reportable Segment Information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

REPORTABLE SEGMENT INFORMATION

REPORTABLE SEGMENT INFORMATION

The Company reports its segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Reporting Topic of the ASC. The Company has three reportable operating segments: The Americas Group, Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments). Factors considered in determining the three Reportable Segments of the Company include the nature of business activities, the management structure directly accountable to the Company’s chief operating decision maker (CODM) for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors. The Company reports all other business activities and immaterial operating segments that are not reportable in the Administrative segment.

The Company’s CODM has been identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Because of the diverse operations of the Company, the CODM regularly receives discrete financial information about each Reportable Segment as well as a significant amount of additional financial information about certain divisions, business units or subsidiaries of the Company. The CODM uses all such financial information for performance assessment and resource allocation decisions. The CODM evaluates the performance of and allocates resources to the Reportable Segments based on segment profit or loss and cash generated from operations. The accounting policies of the Reportable Segments are the same as those described in Note 1 of this report.

The Americas Group consisted of 4,931 company-operated specialty paint stores in the United States, Canada, Latin America and the Caribbean region at December 31, 2022. Each store in this segment is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products. The majority of these products are produced by manufacturing facilities in the Consumer Brands Group. In addition, each store sells select purchased associated products. The Americas Group sells a variety of architectural paints, coatings and related products through dedicated dealers, home centers, distributors, hardware stores and other retailers throughout Latin America. The Americas Group meets regional customer demands through developing, licensing, manufacturing, distributing and selling a variety of architectural paints, coatings and related products in North and South America. The loss of any single customer would not have a material adverse effect on the business of this segment. During 2022, this segment opened 72 net new stores, consisting of 89 new stores opened (71 in the United States, 11 in Mexico, 6 in Canada and 1 in South America) and 17 stores closed (2 in the United States, 14 in South America and 1 in Mexico). In 2021 and 2020, this segment opened 85 and 16 net new stores, respectively. The CODM uses discrete financial information about The Americas Group, supplemented with information by geographic region, product type and customer type, to assess performance of and allocate resources to The Americas Group as a whole. In accordance with ASC 280-10-50-9, The Americas Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Consumer Brands Group manufactures and supplies a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers and distributors throughout North America, as well as in China and Europe. The Consumer Brands Group also supports the Company’s other businesses around the world with new product research and development, manufacturing, distribution and logistics. Approximately 67% of the total sales of the Consumer Brands Group in 2022 were intersegment transfers of products primarily sold through The Americas Group. Sales and marketing of certain controlled brand and private-label products is performed by a direct sales staff. The products distributed through third-party customers are intended for resale to the ultimate end-user of the product. The Consumer Brands Group had sales to certain customers that, individually, may be a significant portion of the sales and related profitability of the segment. This segment incurred most of the Company’s capital expenditures related to operational efficiencies, capacity and health and safety initiatives at sites currently in operation. The CODM uses discrete financial information about the Consumer Brands Group, supplemented with information by product type and customer type, to assess performance of and allocate resources to the Consumer Brands Group as a whole. In accordance with ASC 280-10-50-9, the Consumer Brands Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and performance-based resins and colorants worldwide. This segment licenses certain technology and trade names worldwide. Sherwin-Williams® and other controlled brand products are distributed through The Americas Group and this segment’s 317 company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors. The Performance Coatings Group had sales to certain customers that, individually, may be a significant portion of the sales of the segment. However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment. During 2022, this segment added 35 net new branches, consisting of 39 opened or acquired branches and 4 branches closed. The CODM uses discrete financial information about the Performance Coatings Group, supplemented with information about geographic divisions, business units and subsidiaries, to assess performance of and allocate resources to the Performance Coatings Group as a whole. In accordance with ASC 280-10-50-9, the Performance Coatings Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site and the operations of a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses that were not directly associated with the Reportable Segments. In addition, the Administrative segment included a $111.9 million pre-tax loss on the Wattyl divestiture recognized during the year ended December 31, 2021. See Notes 3 and 20 for additional information on the Wattyl divestiture. Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses. The Administrative segment did not include any significant foreign operations. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.

Net external sales of all consolidated foreign subsidiaries were $4.294 billion, $4.223 billion and $3.581 billion for 2022, 2021 and 2020, respectively.

Long-lived assets consisted of Property, plant and equipment, Goodwill, Intangible assets, Operating lease right-of-use assets, Deferred pension assets and Other assets. The aggregate total of long-lived assets for the Company was $16.686 billion, $15.613 billion and, $15.810 billion at December 31, 2022, 2021 and 2020, respectively. Long-lived assets of consolidated foreign subsidiaries totaled $3.369 billion, $2.785 billion and $3.167 billion at December 31, 2022, 2021 and 2020, respectively.

Total Assets of the Company were $22.594 billion, $20.667 billion and $20.402 billion at December 31, 2022, 2021 and 2020, respectively. Total assets of consolidated foreign subsidiaries were $5.337 billion, $4.653 billion and $4.834 billion, which represented 23.6%, 22.5% and 23.7% of the Company’s total assets at December 31, 2022, 2021 and 2020, respectively.

No single geographic area outside the United States was significant relative to consolidated net external sales or consolidated long-lived assets. Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all years presented.

In the reportable segment financial information that follows, Segment profit was total net sales and intersegment transfers less operating costs and expenses. Identifiable assets were those directly identified with each reportable segment. The Administrative segment assets consisted primarily of cash and cash equivalents, investments, deferred pension assets and headquarters property, plant and equipment. Domestic intersegment transfers were primarily accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs for paint products. Non-paint domestic and all international intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales. All intersegment transfers are eliminated within the Administrative segment.

	2022
	The Americas Group			Consumer Brands Group			Performance Coatings Group			Administrative		Consolidated Totals
Net external sales	$	12,661.0		$	2,690.7		$	6,793.5		$	3.7	$	22,148.9
Intersegment transfers	—			5,508.7			203.7			(5,712.4)		—
Total net sales and intersegment transfers	$	12,661.0		$	8,199.4		$	6,997.2		$	(5,708.7)	$	22,148.9
Segment profit	$	2,436.6		$	225.7		$	734.9				$	3,397.2
Interest expense										$	(390.8)	(390.8)
Administrative expenses and other										(433.3)		(433.3)
Income before income taxes	$	2,436.6		$	225.7		$	734.9		$	(824.1)	$	2,573.1
% to net external sales	19.2		%	8.4		%	10.8		%			11.6		%
Identifiable assets	$	6,018.2		$	6,605.0		$	8,296.8		$	1,674.0	$	22,594.0
Capital expenditures	92.9			289.4			38.7			223.5		644.5
Depreciation	76.1			124.0			29.1			34.8		264.0
Amortization	3.5			79.6			232.0			2.0		317.1

	2021
	The Americas Group			Consumer Brands Group			Performance Coatings Group			Administrative		Consolidated Totals
Net external sales	$	11,217.0		$	2,721.6		$	6,003.8		$	2.2	$	19,944.6
Intersegment transfers	—			4,411.8			149.7			(4,561.5)		—
Total net sales and intersegment transfers	$	11,217.0		$	7,133.4		$	6,153.5		$	(4,559.3)	$	19,944.6
Segment profit	$	2,239.1		$	358.4		$	486.2				$	3,083.7
Interest expense										$	(334.7)	(334.7)
Administrative expenses and other										(500.4)		(500.4)
Income before income taxes	$	2,239.1		$	358.4		$	486.2		$	(835.1)	$	2,248.6
% to net external sales	20.0		%	13.2		%	8.1		%			11.3		%
Identifiable assets	$	5,627.9		$	5,161.1		$	8,388.6		$	1,489.1	$	20,666.7
Capital expenditures	79.2			123.9			90.8			78.1		372.0
Depreciation	73.4			86.7			66.2			36.8		263.1
Amortization	3.7			83.7			218.9			3.2		309.5

	2020
	The Americas Group			Consumer Brands Group			Performance Coatings Group			Administrative		Consolidated Totals
Net external sales	$	10,383.2		$	3,053.4		$	4,922.4		$	2.7	$	18,361.7
Intersegment transfers	—			3,688.4			137.1			(3,825.5)		—
Total net sales and intersegment transfers	$	10,383.2		$	6,741.8		$	5,059.5		$	(3,822.8)	$	18,361.7
Segment profit	$	2,294.1		$	579.6		$	500.1				$	3,373.8
Interest expense										$	(340.4)	(340.4)
Administrative expenses and other										(514.2)		(514.2)
Income before income taxes	$	2,294.1		$	579.6		$	500.1		$	(854.6)	$	2,519.2
% to net external sales	22.1		%	19.0		%	10.2		%			13.7		%
Identifiable assets	$	5,386.6		$	5,387.4		$	8,071.1		$	1,556.5	$	20,401.6
Capital expenditures	63.9			89.8			43.0			107.1		303.8
Depreciation	73.0			87.6			69.1			38.3		268.0
Amortization	4.5			90.0			213.9			5.0		313.4