The Sherwin-Williams Company (SHW) Q2 2026 earnings summary

Executive summary

• Net sales rose 7.5% year-over-year to $6.79 billion in Q2 2026, with all segments exceeding guidance and the Suvinil acquisition contributing to growth.

• Diluted EPS increased 14.3% to $3.43, and adjusted diluted EPS rose 9.5% to $3.70, driven by strong sales and operational execution.

• Free cash flow conversion reached 86%, with $1.5 billion returned to shareholders via buybacks and dividends in Q2 and $2.23 billion in the first half.

• Strategic execution, new account wins, and disciplined capital allocation supported outperformance despite muted demand and global uncertainty.

• Continued focus on cost optimization and restructuring, targeting $17 million in annual savings.

Financial highlights

• Adjusted EBITDA increased 10.5% to $1.5 billion, with margin expanding 60 bps to 21.5%.

• Gross margin was 49.2% of net sales, slightly down from 49.4% year-over-year.

• Net operating cash improved by $235 million to $1.35 billion in Q2; first half net operating cash flow reached $1.487 billion.

• Capital expenditures for Q2 were $108.4 million; first half totaled $246.7 million.

• Net debt to adjusted EBITDA ratio at 2.4x at quarter-end.

Outlook and guidance

• Full-year 2026 adjusted diluted EPS guidance raised to $11.80–$12.20; net sales expected to grow mid to high single digits.

• Q3 2026 sales expected to increase mid to high single digits, with Consumer Brands Group up low-twenties percent.

• Full-year gross margin expected to match prior year at midpoint of guidance.

• Inflation in raw materials expected to be up high single digits in H2, mid-single digits for full year.

• No broad-based demand recovery assumed; growth expected from execution, not market tailwinds.