What changed in this filing

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Item 1. Financial Statements

2025-04-29 compared with 2024-10-22 · 274 added, 369 removed, 511 unchanged (56% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net sales $ 5,305.7 $ 5,367.3

4 unchanged sentences

Percent to Net sales 33.8 % 33.5 %

Other general expense (income) - net 0.7 61.9 ( 30.9 ) 39.9

Impairment — — — 34.0

Other general expense - net 8.9 2.0

Interest expense 103.8 103.0

13 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

(in millions) Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

(in millions) Three Months Ended

Net income $ 503.9 $ 505.2

8 unchanged sentences

( 0.9 ) ( 0.9 )

Other comprehensive income (loss) 100.7 ( 105.1 ) ( 51.9 ) ( 55.8 )

Other comprehensive income (loss), net of tax 102.3 ( 80.7 )

Comprehensive income $ 606.2 $ 424.5

(1) The three months ended September 30, 2024 and 2023 include unrealized (losses) gains, net of taxes, of $( 31.4 ) million and $ 24.2 million, respectively, related to net investment hedges.

The nine months ended September 30, 2024 and 2023 include unrealized (losses) gains, net of taxes, of $( 7.3 ) million and $ 11.4 million, respectively, related to net investment hedges.

(1) The three months ended March 31, 2025 and 2024 include unrealized (losses) gains, net of taxes, of $( 36.3 ) million and $ 18.3 million, respectively, related to net investment hedges.

See Note 12 for additional information.

(2) Net of taxes of $ 1.6 million for the three months ended September 30, 2024 and 2023.

Net of taxes of $ 4.5 million and $ 4.6 million for the nine months ended September 30, 2024 and 2023, respectively.

(3) Net of taxes of $ 0.3 million for the three months ended September 30, 2024 and 2023.

Net of taxes of $ 0.9 million for the nine months ended September 30, 2024 and 2023.

(2) Net of taxes of $ 1.1 million and $ 1.5 million for the three months ended March 31, 2025 and 2024, respectively.

(3) Net of taxes of $ 0.3 million for the three months ended March 31, 2025 and 2024.

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) September 30,

(in millions) March 31,

2025 December 31,

2023 September 30,

2024 March 31,

Current assets:

28 unchanged sentences

250.6 million, 251.3 million and 253.5 million shares outstanding

at September 30, 2024, December 31, 2023 and September 30, 2023, respectively

at March 31, 2025, December 31, 2024 and March 31, 2024, respectively

92.6 92.5 92.0

8 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

(in millions) Nine Months Ended

September 30,

2024 September 30,

(in millions) Three Months Ended

2025 March 31,

Operating Activities

4 unchanged sentences

Amortization of intangible assets 81.0 82.1

Gain on divestiture of business — ( 20.1 )

Impairment — 34.0

Stock-based compensation expense 26.6 24.6

12 unchanged sentences

Capital expenditures ( 189.3 ) ( 283.8 )

Acquisition of business, net of cash acquired — ( 23.2 )

Proceeds from divestiture of businesses — 103.7

Proceeds from sale of assets 9.3 49.0

Acquisition of businesses, net of cash acquired ( 82.4 ) —

Other ( 44.5 ) ( 37.5 )

1 unchanged sentence

Financing Activities

Net increase (decrease) in short-term borrowings 541.4 ( 639.2 )

Proceeds from long-term debt 848.7 —

Net increase in short-term borrowings 1,135.8 882.5

Payments of long-term debt ( 250.0 ) —

Payments for credit facility and debt issuance costs ( 8.6 ) —

Payments of cash dividends ( 200.4 ) ( 182.5 )

5 unchanged sentences

Effect of exchange rate changes on cash ( 0.5 ) ( 6.3 )

Net (decrease) increase in cash and cash equivalents ( 38.6 ) 304.6

Net decrease in cash and cash equivalents ( 10.6 ) ( 96.9 )

Cash and cash equivalents at beginning of year 210.4 276.8

13 unchanged sentences

Net income 503.9 503.9

Other comprehensive loss ( 80.7 ) ( 80.7 )

Treasury stock purchased ( 545.5 ) ( 545.5 )

Stock-based compensation activity 0.2 104.3 ( 14.0 ) 90.5

Other adjustments 0.9 0.9

Cash dividends -- $ 0.715 per share

( 182.5 ) ( 182.5 )

Balance at March 31, 2024 $ 92.0 $ 4,298.8 $ 5,611.0 $ ( 5,793.1 ) $ ( 705.0 ) $ 3,503.7

Net income 889.9 889.9

Other comprehensive loss ( 71.9 ) ( 71.9 )

Treasury stock purchased ( 434.4 ) ( 434.4 )

Stock-based compensation activity 0.1 44.4 ( 0.2 ) 44.3

Other adjustments ( 1.2 ) ( 1.2 )

Cash dividends -- $ 0.715 per share

( 178.6 ) ( 178.6 )

Balance at June 30, 2024 $ 92.1 $ 4,342.0 $ 6,322.3 $ ( 6,227.7 ) $ ( 776.9 ) $ 3,751.8

Net income 806.2 806.2

Other comprehensive income 102.3 102.3

4 unchanged sentences

( 200.4 ) ( 200.4 )

Balance at September 30, 2024 $ 92.4 $ 4,471.4 $ 6,946.0 $ ( 6,677.5 ) $ ( 676.2 ) $ 4,156.1

Balance at March 31, 2025 $ 92.6 $ 4,622.4 $ 7,549.8 $ ( 7,361.8 ) $ ( 772.9 ) $ 4,130.1

(in millions, except per share data) Common

12 unchanged sentences

Balance at March 31, 2024 $ 92.0 $ 4,298.8 $ 5,611.0 $ ( 5,793.1 ) $ ( 705.0 ) $ 3,503.7

Net income 793.7 793.7

Other comprehensive income 14.5 14.5

Treasury stock purchased ( 234.2 ) ( 234.2 )

Stock-based compensation activity 0.1 47.5 ( 0.1 ) 47.5

Other adjustments ( 0.9 ) ( 0.9 )

Cash dividends -- $ 0.605 per share

( 156.3 ) ( 156.3 )

Balance at June 30, 2023 $ 91.4 $ 4,044.6 $ 4,481.5 $ ( 4,335.1 ) $ ( 651.3 ) $ 3,631.1

Net income 761.5 761.5

Other comprehensive loss ( 105.1 ) ( 105.1 )

Treasury stock purchased ( 410.1 ) ( 410.1 )

Stock-based compensation activity 0.3 58.7 ( 1.4 ) 57.6

Other adjustments 0.6 0.6

Cash dividends -- $ 0.605 per share

( 155.6 ) ( 155.6 )

Balance at September 30, 2023 $ 91.7 $ 4,103.9 $ 5,087.4 $ ( 4,746.6 ) $ ( 756.4 ) $ 3,780.0

See notes to condensed consolidated financial statements.

2 unchanged sentences

(millions of dollars, unless otherwise noted)

Periods ended September 30, 2024 and 2023

Periods ended March 31, 2025 and 2024

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of The Sherwin-Williams Company and its wholly owned subsidiaries (collectively, the Company) have been prepared in accordance with U.S.

The accompanying unaudited condensed consolidated financial statements included in this report have been prepared by management of The Sherwin-Williams Company (herein referred to as the Company) in accordance with U.S.

generally accepted accounting principles (US GAAP) for interim financial information and the instructions to Form 10-Q.

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In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The condensed consolidated financial statements include the accounts of the Company and all consolidated subsidiaries.

Intercompany accounts and transactions have been eliminated.

The Company’s share of earnings or losses from nonconsolidated affiliates is included in the condensed consolidated financial statements using the equity method of accounting when the Company is able to exercise significant influence over the operating and financial decisions of the affiliate.

The Company has historically experienced, and expects to continue to experience, variability in quarterly results.

The results of operations for the three and nine months ended September 30, 2024 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the reportable segments traditionally occurring during the second and third quarters.

The results of operations for the three months ended March 31, 2025 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the reportable segments traditionally occurring during the second and third quarters.

However, periods of economic uncertainty can alter the Company’s seasonal patterns.

Since December 31, 2023, a ccounting estimates were revised as necessary during the first nine months of 2024 based on new information and changes in facts and circumstances.

Since December 31, 2024, a ccounting estimates were revised as necessary during the first three months of 2025 based on new information and changes in facts and circumstances.

The following represents updates to certain significant accounting policy disclosures.

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As part of our strategy to manage working capital, we have entered into agreements with various financial institutions that act as intermediaries between the Company and certain suppliers.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 255.2 million, $ 213.1 million and $ 247.7 million at September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 211.5 million, $ 215.7 million and $ 238.7 million at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

Non-Traded Investments

5 unchanged sentences

The Company reasonably expects amortization based on the receipt of tax credits would produce a measurement substantially similar to amortization based on the receipt of tax credits and other tax benefits.

Both the amortization and related tax credits and other tax benefits are recognized in Income tax expense on the Statements of Consolidated Net Income.

Three Months Ended Nine Months Ended

September 30, September 30, September 30, September 30,

2024 2023 2024 2023

Both the amortization and related tax credits and other tax benefits are recognized in Income tax expense on the Statements of Consolidated Income.

Three Months Ended

March 31, March 31,

Amortization of Non-Traded Investments $ 28.7 $ 20.1

3 unchanged sentences

In addition, the associated impact of related tax credits and other tax benefits are recorded as a reduction of Accrued taxes and a net deferred income tax asset within Deferred income taxes.

On the Statements of Condensed Consolidated Cash Flows, the tax credits and other tax benefits are presented as a change in Accrued taxes and in Deferred income taxes within Operating activities.

Tax credits and other tax benefits reduced Accrued taxes by $ 75.2 million, $ 94.8 million and $ 66.8 million at September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

On the Statements of Condensed Consolidated Cash Flows, the tax credits and other tax benefits are presented as a Change in working capital accounts - net and in Deferred income taxes within Operating activities.

Tax credits and other tax benefits reduced Accrued taxes by $ 31.5 million, $ 104.9 million and $ 21.8 million at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

The following table summarizes the balances related to Non-Traded Investments and related tax credits and other tax benefits on the Consolidated Balance Sheets:

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

4 unchanged sentences

NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2024, the Company adopted Accounting Standards Update (ASU) 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for investments in tax credit structures using the proportional amortization method.” This ASU allows entities to apply the proportional amortization method to all tax equity investments if certain conditions are met.

In addition, the ASU requires certain disclosures about the nature and financial implications of tax equity investments on an entity’s financial position, results of operations and cash flows, including the impact of transition on the periods presented, if any.

The adoption of the ASU did not materially affect the Company’s financial position, results of operations or cash flows since the Company has historically applied the proportional amortization method to its Non-Traded Investments, however, certain disclosures have been added based on the requirements of the ASU.

See Note 1 for further details.

Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss.

In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item.

The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others.

Lastly, all current required annual segment reporting disclosures under Topic 280 will be effective for interim periods.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of adopting this ASU and expects the standard will only impact its segment disclosures with no impact to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

1 unchanged sentence

Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions.

This ASU is effective for fiscal years beginning after December 15, 2024.

The Company is evaluating the impact of adopting this ASU.

NOTE 3 - ACQUISITIONS AND DIVESTITURES

Closed in Prior Year

In October 2023, the Company completed the acquisition of German-based SIC Holding GmbH, a Peter Möhrle Holding venture comprised of Oskar Nolte GmbH and Klumpp Coatings GmbH (SIC Holding).

This business specializes in foil coatings as well as radiation-cured and waterbased industrial wood coatings for the board, furniture and flooring industry.

The Company has finalized the purchase price allocation for the acquisition within the allowable measurement period.

SIC Holding is reported within the Company’s Performance Coatings Group and the results of operations for the acquisition have been included in the consolidated financial statements since the acquisition date.

This ASU is effective for fiscal years beginning after December 15, 2024 and will expand the Company’s annual income tax disclosures, but will not affect the Company’s financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” This ASU enhances expense disclosures on both an annual and interim basis by requiring public business entities to disclose additional information about specific expense categories in the notes to the consolidated financial statements.

This ASU requires public entities to disclose, in a tabular format, purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion, as applicable, for each income statement line item that contains those expenses.

Specific expenses, gains and losses that are already disclosed under existing US GAAP are also required to be included in the disaggregated income statement expense line item disclosures, and any remaining amounts will need to be described qualitatively.

Additionally, the ASU requires disclosure of the total amount of selling expenses and the entity’s definition of selling expenses.

In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date” which clarified that ASU 2024-03 is effective for annual fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is evaluating the impact of adopting ASU 2024-03.

NOTE 3 - ACQUISITIONS

In February 2025, the Company signed an agreement to acquire the Brazilian decorative paints business of BASF SE (BASF), which is a leading provider of architectural paints in Brazil with annual sales of approximately $ 525 million.

The business develops, manufactures and sells a comprehensive portfolio of innovative products under the Suvinil and Glasu!

brand names to professional painters, designers, architects, general contractors and consumers across the country.

The business also operates two production facilities located in the Northeast and Southeast regions of Brazil.

The closing of the transaction is subject to receipt of Brazilian antitrust approval, satisfaction or waiver of certain other customary closing conditions, as well as BASF’s completion in all material respects of its carve-out of all relevant assets, properties, contracts, permits, rights and employees of the decorative paints business into a separate entity.

The Company will acquire all issued and outstanding equity interests in this separate entity for an agreed-upon cash purchase price of $ 1.15 billion, subject to customary post-closing adjustments.

The Company intends to finance the transaction through a combination of cash on hand, liquidity available under existing facilities and new debt.

The acquired business is expected to be reported within the Company’s Consumer Brands Group.

Closed in Current Year

In March 2025, the Company completed the acquisition of a European coil and industrial coatings company for approximately $ 80 million.

The acquired business is reported within the Company’s Performance Coatings Group.

The Company expects to finalize the purchase price allocation for the acquisition within the allowable measurement period.

Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.

The total purchase price for the acquisition was approximately $ 290 million, including an immaterial amount paid in the third quarter of 2024 to finalize certain representations, warranties and closing conditions.

Subsequent Event

The Company completed the acquisition of a metal packaging coatings business in October 2024.

The acquisition was funded via an escrow account in September 2024 for approximately $ 80 million in cash.

The deposit is recorded in Other assets on the Consolidated Balance Sheets as of September 30, 2024 and presented in Other investing activities on the Statements of Condensed Consolidated Cash Flows for the nine months then ended.

The acquired business develops, manufactures and sells coatings for the food and household product markets and will be reported within the Company’s Performance Coatings Group.

Closed in Prior Year

The Company completed the divestiture of a non-core domestic aerosol business within the Consumer Brands Group in the second quarter of 2023.

This transaction resulted in the recognition of a $ 20.1 million gain within the Administrative function and was recorded within Other general expense (income) - net in the Statements of Consolidated Income.

During the third quarter of 2023, the Company completed the divestiture of the China architectural business within the Consumer Brands Group.

An immaterial working capital adjustment was finalized during the first quarter of 2024.

The associated net assets were classified as held for sale at June 30, 2023 in accordance with the Property, Plant, and Equipment Topic of the ASC.

Following the prescribed order of impairment testing, the Company first reviewed individual tangible and intangible assets under their applicable Topic of the ASC to determine if their carrying value was higher than their respective fair value.

As a result, the Company recorded an impairment charge of $ 6.9 million within the Consumer Brands Group in the second quarter of 2023 related to China architectural trademarks.

The Company then compared the updated carrying value of the assets and liabilities comprising the disposal group as a whole to its respective fair value which was determined to be equal to the selling price, less costs to sell.

As a result of this comparison, the Company recorded an additional impairment charge of $ 27.1 million within the Administrative function in the second quarter of 2023 and classified the remaining assets as Other current assets and remaining liabilities as Other accruals at June 30, 2023.

The fair value of the disposal group was classified as level 2 in the fair value hierarchy as fair value was based on a specific price and other observable inputs for similar items with no active market.

These divestitures did not meet the criteria to be reported as discontinued operations in the consolidated financial statements as the Company’s decision to divest these businesses did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

In October 2024, the Company completed the acquisition of a metal packaging coatings business for approximately $ 80 million.

The acquired business develops, manufactures and sells coatings for the food and household product markets and is reported within the Company’s Performance Coatings Group.

The Company expects to finalize the purchase price allocation for the acquisition within the allowable measurement period.

Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.

NOTE 4 - INVENTORIES

Included in Inventories were the following:

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

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An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time.

interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation.

Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation.

In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors.

2 unchanged sentences

Included in Property, plant and equipment, net were the following:

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

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In accordance with the Goodwill and Other Intangibles Topic of the ASC, goodwill and indefinite-lived intangible assets are tested for impairment annually during the fourth quarter, and interim impairment tests are performed whenever an event occurs or circumstances change that indicate an impairment has more likely than not occurred.

See Note 3 for information on the impairment test performed as a result of the China architectural business classification change to held for sale as of June 30, 2023.

NOTE 6 - DEBT

The following table summarizes the Company’s outstanding debt:

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

4 unchanged sentences

The Company’s long-term debt primarily consists of senior notes.

In August 2024, the Company repaid the principal of $ 600.0 million related to the Company’s 4.05 % senior notes due August 8, 2024 using commercial paper and subsequently issued $ 400.0 million of 4.55 % senior notes due 2028 and $ 450.0 million of 4.80 % senior notes due 2031 in a public offering.

The net proceeds from the issuance of these notes were used to repay outstanding borrowings under the Company’s domestic commercial paper program and for general corporate purposes.

The newly issued senior notes contain customary qualitative covenants as defined in their respective agreements.

The Company is in compliance with these and all other covenants related to the senior notes as of September 30, 2024.

During the second quarter of 2024, the Company paid the principal of $ 500.0 million related to its 3.125 % senior notes due June 1, 2024.

For further details on the Company’s debt, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

During the first quarter of 2025, the Company repaid the principal of $ 250.0 million related to the Company’s 3.3 % senior notes due February 1, 2025 using commercial paper.

For further details on the Company’s long-term debt, see Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Short-Term Borrowings

In July 2024, the Company entered into a new $ 2.500 billion revolving credit agreement maturing on July 31, 2029 (the New Credit Agreement) which replaced the $ 2.250 billion credit agreement dated August 30, 2022, as amended.

The New Credit Agreement may be used for general corporate purposes, including the financing of working capital requirements.

Under the terms of the New Credit Agreement, the Company may request to extend the maturity date for two additional one-year periods, request an uncommitted increase up to $ 750.0 million and issue letters of credit under a $ 250.0 million subfacility.

quantitative leverage ratio and other customary qualitative covenants for the revolving credit agreement have not changed under the terms of the New Credit Agreement.

The Company is in compliance with these covenants as of September 30, 2024.

In March 2025, the Company amended its credit agreement dated August 2, 2021, as amended, to extend the maturity of $ 75.0 million of the commitments available for borrowing and issuing letters of credit under the credit agreement from June 20, 2025 to June 20, 2030.

The Company’s available capacity under its committed credit agreements is reduced for amounts outstanding under its domestic commercial paper program, various credit agreements and letters of credit.

At September 30, 2024, the Company had unused capacity under its various credit agreements of $ 3.026 billion.

At March 31, 2025, the Company had unused capacity under its various credit agreements of $ 2.148 billion.

The following table summarizes the Company’s short-term borrowings:

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

Short-term borrowings:

Domestic commercial paper $ 1,782.2 $ 655.6 $ 1,235.3

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Weighted average interest rate:

Domestic commercial paper 5.2 % 5.5 % 5.5 %

Foreign facilities 3.4 % 3.6 % 6.2 %

For further details on the Company’s debt, including available credit facilities and related agreements, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Domestic 4.6 % 4.7 % 5.5 %

Foreign 3.1 % 3.1 % 3.5 %

For further details on the Company’s short-term borrowings, see Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

NOTE 7 - PENSION AND OTHER POSTRETIREMENT BENEFITS

The following table summarizes the components of the Company’s net periodic benefit cost (credit) for domestic and foreign defined benefit pension plans and other postretirement benefits:

The following table summarizes the components of the Company’s net periodic pension and benefit (credit) cost for domestic and foreign defined benefit pension plans and other postretirement benefits:

Defined Benefit

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2025 2024 2025 2024 2025 2024

Three Months Ended September 30:

Three Months Ended March 31:

Service cost $ 0.7 $ 0.9 $ 1.1 $ 1.2 $ 0.1 $ 0.1

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Amortization of actuarial gains ( 0.5 ) ( 0.1 ) ( 0.3 ) ( 0.3 ) ( 0.6 ) ( 0.1 )

Net periodic benefit cost (credit) $ 0.5 $ 0.5 $ 1.1 $ 0.4 $ ( 4.3 ) $ ( 4.0 )

Nine Months Ended September 30:

Service cost $ 2.7 $ 2.5 $ 3.6 $ 3.2 $ 0.3 $ 0.4

Interest cost 3.7 3.4 9.0 8.6 5.1 5.6

Expected return on assets ( 6.2 ) ( 5.5 ) ( 8.4 ) ( 9.3 ) — —

Amortization of prior service cost (credit) 1.4 1.0 ( 0.1 ) ( 0.2 ) ( 17.9 ) ( 18.0 )

Amortization of actuarial (gains) losses ( 0.2 ) — ( 0.8 ) ( 1.1 ) ( 0.3 ) 0.1

Net periodic benefit cost (credit) $ 1.4 $ 1.4 $ 3.3 $ 1.2 $ ( 12.8 ) $ ( 11.9 )

Net periodic pension and benefit (credit) cost $ ( 0.4 ) $ 0.5 $ 1.3 $ 1.1 $ ( 2.4 ) $ ( 4.3 )

Service cost is recorded in Cost of goods sold and Selling, general and administrative expenses.

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Management expects environmental laws and regulations to impose increasingly stringent requirements upon the Company and the industry in the future.

Management believes that the Company conducts its operations in compliance with applicable environmental laws, regulations and requirements and has implemented various programs designed to help protect the environment and promote continued compliance.

The Company is involved with environmental investigation and remediation activities at some of its currently and formerly owned sites (including sites that were previously owned and/or operated by businesses acquired by the Company).

Management believes that the Company conducts its operations in compliance with applicable environmental laws, regulations and requirements and has implemented various programs designed to protect the environment and promote continued compliance.

The Company is involved with environmental investigation and remediation activities at some of its currently and formerly owned sites (including sites which were previously owned and/or operated by businesses acquired by the Company).

In addition, the Company, together with other parties, has been designated a potentially responsible party under federal and state environmental protection laws for the investigation and remediation of environmental contamination and hazardous waste at a number of third-party sites, primarily Superfund sites.

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The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third-party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment.

Costs for environmental-related activities may not be reasonably estimable, particularly at early stages of investigation, and therefore would not be included in the accrued amount.

The costs which are estimable are mostly undiscounted and determined based on currently available facts regarding each site.

These estimated costs, which are mostly undiscounted, are determined based on currently available facts regarding each site.

If the reasonably estimable costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided.

The Company routinely assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available, including as a result of sites progressing through investigation and remediation-related activities, upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

At September 30, 2024 and 2023, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 209.8 million and $ 260.1 million , respectively.

Estimated costs of current investigation and remediation activities of $ 93.6 million and $ 50.2 million are included in Other accruals at September 30, 2024 and 2023 , respectively.

Actual costs incurred may vary from the accrued estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.

If the Company’s future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company’s accrual for environmental-related activities would be $ 88.7 million higher than the minimum accruals at September 30, 2024.

Four of the Company’s currently and formerly owned manufacturing sites (Major Sites) account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at September 30, 2024 .

At September 30, 2024 , $ 255.6 million, or 84.2 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 88.7 million at September 30, 2024 , $ 65.2 million, or 73.5 %, related to the Major Sites.

At March 31, 2025 and 2024, the Company had accruals reported on the Consolidated Balance Sheets as Other long-term liabilities of $ 223.8 million and $ 224.8 million , respectively.

Estimated costs of current investigation and remediation activities of $ 65.9 million and $ 92.4 million are included in Other accruals at March 31, 2025 and 2024 , respectively.

various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.

If the Company’s future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company’s accrual for environmental-related activities would be $ 92.9 million higher than the minimum accruals at March 31, 2025.

Additionally, costs for environmental-related activities may not be reasonably estimable at early stages of investigation and therefore would not be included in the unaccrued maximum amount.

At March 31, 2025 , $ 242.3 million, or 83.6 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 92.9 million at March 31, 2025 , $ 70.0 million, or 75.3 %, related to the Major Sites.

The significant cost components of this liability continue to be related to remedy implementation, regulatory agency interaction and project management and other costs.

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While there are administrative tasks to be completed before final agency approval, the remediation phase of the work for these three OUs is effectively complete and future work for these OUs is anticipated to be limited.

OUs are in various phases of investigation and remediation with the EPA that provide enough

information to reasonably estimate cost ranges and record environmental-related accruals.

OUs are in various phases of investigation and remediation with the EPA that provide enough information to reasonably estimate cost ranges and record environmental-related accruals.

The most significant assumptions underlying the reliability and precision of remediation cost estimates for the Gibbsboro site are the type and extent of future remedies to be selected by the EPA and the costs of implementing those remedies.

The remaining three Major Sites comprising the majority of the accrual include (1) a multi-party Superfund site that (a) has received a record of decision from the federal EPA and is currently in the remedial design phase for one OU, (b) has received a record of decision from the federal EPA for an interim remedy for another OU, and (c) has a remedial investigation ongoing for another OU, (2) a closed paint manufacturing facility that is in the operation and maintenance phase of remediation under both federal and state EPA programs, and (3) a formerly-owned site containing warehouse and office space that is in the remedial/design investigation phase under a state EPA program.

The remaining three Major Sites comprising the majority of the accrual include:

(1) a multi-party Superfund site that (a) has received a record of decision from the federal EPA and is currently in the remedial design phase for one OU, (b) has received a record of decision from the federal EPA for an interim remedy for another OU and (c) has a remedial investigation ongoing for another OU, (2) a closed paint manufacturing facility that is in the operation and maintenance phase of remediation under both federal and state EPA programs and (3) a formerly-owned site containing warehouse and office space that is in the remedial/design investigation phase under a state EPA program.

Each of these three Major Sites are in phases of investigation and remediation that provide sufficient information to reasonably estimate cost ranges and record environmental-related accruals.

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Unasserted claims could have a material effect on the Company’s loss contingency as more information becomes available over time.

At September 30, 2024 , the Company did not have material loss contingency accruals related to unasserted claims.

At March 31, 2025 , the Company did not have material loss contingency accruals related to unasserted claims.

Management does not expect that a material portion of unrecognized loss contingencies will be recoverable through insurance, indemnification agreements or other sources.

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Management expects these contingent environmental-related liabilities to be resolved over an extended period of time.

Management is unable to provide a more specific time frame due to the indeterminate amount of time to conduct investigation activities at any site, the indeterminate amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indeterminate amount of time necessary to conduct remediation activities.

Asset Retirement Obligation

Management is unable to provide a more specific time frame due to the indeterminate amount of time to conduct investigation

activities at any site, the indeterminate amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indeterminate amount of time necessary to conduct remediation activities.

Asset Retirement Obligations

The Asset Retirement and Environmental Obligations Topic of the ASC requires a liability to be recognized for the fair value of a conditional asset retirement obligation if a settlement date and fair value can be reasonably estimated.

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Real Estate Financing

The Company has entered into certain sale-leaseback agreements that do not qualify as asset sales and were accounted for as real estate financing transactions.

Net proceeds are recognized within the Financing Activities section in the Statements of Consolidated Cash Flows.

These arrangements primarily consist of the new headquarters currently under construction, for which the Company expects to receive total proceeds approximating $ 800 million to $ 850 million on an incremental basis until completion of construction.

The following table summarizes the activity related to this transaction during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended Nine Months Ended

September 30, September 30, September 30, September 30,

2024 2023 2024 2023

The Company has entered into certain sale-leaseback agreements that do not qualify as asset sales and were accounted for as real estate financing transactions, one of which was to sell and subsequently lease back its partially-constructed new global headquarters.

Net proceeds are recognized within the Financing Activities section in the Statements of Condensed Consolidated Cash Flows.

The Company received the final proceeds for the new global headquarters in the first quarter of 2025 for a total of $ 800 million.

The following tables summarize the activity related to this transaction and the corresponding balances recognized in the Consolidated Balance Sheets.

Three Months Ended

March 31, March 31,

Proceeds received $ 40.9 $ 77.0

Capitalized interest (1)

(1) Interest is capitalized within construction in progress in Property, plant and equipment, net.

March 31, December 31, March 31,

2025 2024 2024

(1) Interest is capitalized within Other long-term liabilities.

The financing obligation for the new headquarters was $ 731.9 million and $ 435.7 million at September 30, 2024 and 2023, respectively.

The short-term portion of the liability recorded in Other accruals was $ 48.5 million and $ 34.9 million at September 30, 2024 and 2023, respectively.

Short-term liability (1)

$ 50.3 $ 49.7 $ 43.3

Long-term liability (2)

757.8 715.9 550.7

Total liability $ 808.1 $ 765.6 $ 594.0

(1) The short-term portion of the liability is recorded in Other accruals.

(2) The long-term portion of the liability is recorded in Other long-term liabilities.

See Note 10 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information concerning real estate financing.

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In the course of its business, the Company is subject to a variety of claims and lawsuits, including, but not limited to, litigation relating to product liability and warranty, personal injury, environmental, intellectual property, commercial, contractual and antitrust claims, that are inherently subject to many uncertainties regarding the possibility of a loss to the Company.

Uncertainties to which litigation is inherently subject include, among other things, costs, unpredictable court or jury decisions that could affect other litigation against the Company and encourage an increase in the number and nature of future claims and proceedings and differing laws and regulations in jurisdictions where the Company operates.

These uncertainties will ultimately be resolved when one or more future events occur or fail to occur confirming the incurrence of a liability or the reduction of a liability.

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In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred.

Due to the uncertainties involved in litigation, management is unable to predict the outcome of the litigation identified below, the number or nature of possible future claims and proceedings or the effect that any legislation and/or administrative regulations may have on the litigation or against the Company.

In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations.

With respect to the litigation identified below, the Company has only accrued for the court-approved agreement related to the California Proceedings, identified in the Public Nuisance Claim Litigation section.

For the remaining litigation identified below, the Company does not believe it is probable that a loss has occurred, or the Company believes it is not possible to estimate the range of potential losses.

In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated.

Due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition.

An estimate of the potential impact on the Company’s results of operations, cash flow, liquidity or financial condition cannot be made due to the aforementioned uncertainties.

Lead pigment and lead-based paint litigation.

The Company’s past operations included the manufacture and sale of lead pigments and lead-based paints.

The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints.

The Company, along with other companies, is and has been a defendant in a number of legal proceedings arising from the manufacture and sale of lead pigments and lead-based paints.

The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories.

The plaintiffs have sought various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others.

The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint.

The Company is vigorously defending such litigation.

The Company expects that additional lead pigment and lead-based paint litigation may be filed against the Company in the future asserting similar or different legal theories and seeking similar or different types of damages and relief.

The Company will continue to vigorously defend against any additional lead pigment and lead-based paint litigation that may be filed, including utilizing all avenues of appeal, if necessary.

Litigation is inherently subject to many uncertainties, including costs, unpredictable court or jury decisions, and differing laws in jurisdictions where the Company operates, and the Company ultimately may not prevail.

Adverse court rulings or determinations of liability in a particular case, among other factors, could affect other lead pigment and lead-based paint litigation against the Company and encourage an increase in the number and nature of future claims and proceedings.

Other than the California Proceedings and currently pending cases, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

In addition, from time to time, various legislation and administrative regulations have been enacted, promulgated or proposed to impose obligations on present and former manufacturers of lead pigments and lead-based paints respecting asserted health concerns associated with such products or to overturn the effect of court decisions in which the Company and other manufacturers have been successful.

Due to the uncertainties involved, management is unable to predict the outcome of the lead pigment and lead-based paint litigation, the number or nature of possible future claims and proceedings or the effect that any legislation and/or administrative regulations may have on the litigation or against the Company.

In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation, or resulting from any such legislation and regulations.

Except with respect to the litigation in the California Proceedings, discussed below, the Company has not accrued any amounts for such litigation because the Company does not believe it is probable that a loss has occurred, or the Company believes it is not possible to estimate the range of potential losses.

In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated.

Due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition.

An estimate of the potential impact on the Company’s results of operations, cash flow, liquidity or financial condition cannot be made due to the aforementioned uncertainties.

The Company is vigorously defending all lead pigment and lead-based paint litigation.

The Company will continue to vigorously defend against any additional litigation that may be filed, including utilizing all avenues of appeal, if necessary.

Public Nuisance Claim Litigation .

The Company and other companies were defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by the State of Rhode Island;

The Company and other companies have been defendants in legal proceedings seeking recovery based on public nuisance liability theories, among other theories, brought by various states, cities and counties, including by the State of Rhode Island;

the City of St.

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Except for the California Proceedings in which the Company reached a court-approved agreement in 2019 after nearly twenty years of litigation, all of those legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

Most recently, on May 7, 2024, as further described below in Wisconsin Proceedings, the plaintiffs in the Gibson and Valoe cases filed amended complaints alleging, in part, public nuisance claims.

Litigation Seeking Damages from Alleged Personal Injury .

Most recently, on May 7, 2024, as further described below in Wisconsin Litigation, three plaintiffs filed amended complaints alleging, in part, public nuisance claims.

Wisconsin Litigation .

The Company and other companies are or have been defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries.

The current proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint.

The current proceedings consist of two federal court cases pending in the United States District Court for the Eastern District of Wisconsin (Ernest Gibson v.

American Cyanamid, et al.

and Deziree and Detareion Valoe v.

American Cyanamid, et.

al.) and one case pending in Milwaukee County Circuit Court in Wisconsin (Arrieona Beal v.

Armstrong Containers, Inc., et al.).

Those matters include claims by four individuals allegedly injured from ingestion of lead pigment or lead-containing paint while they were minors.

The plaintiffs generally seek compensatory damages and have invoked Wisconsin’s risk contribution theory (which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff.

Wisconsin Proceedings.

In April 2016, the United States District Court for the Eastern District of Wisconsin consolidated three cases (Ravon Owens v.

On May 20, 2021, as a result of a decision in favor of the Company by United States Court of Appeals for the Seventh Circuit in the Ravon Owens v.

American Cyanamid, et al., Cesar Sifuentes v.

American Cyanamid, et al., and Glenn Burton, Jr.

American Cyanamid, et al.) for purposes of trial.

A trial was held in May 2019 and resulted in a jury verdict for the three plaintiffs in the amount of $ 2.0 million each for a total of $ 6.0 million against the Company and two other defendants (Armstrong Containers Inc.

du Pont de Nemours).

Post-trial motions resulted in a reduced damages award to one plaintiff.

Subsequently, the Company filed a notice of appeal with the Seventh Circuit with respect to each of the Owens, Sifuentes and Burton cases.

On April 15, 2021, the Seventh Circuit reversed the judgments and held that the Company was entitled to judgment as a matter of law on all claims filed by the three plaintiffs .

The plaintiffs filed a petition with the Seventh Circuit on April 27, 2021, seeking a rehearing en banc and, in the alternative, a request for certification of questions to the Wisconsin Supreme Court.

The plaintiffs’ petition was denied.

On May 20, 2021, as a result of the Seventh Circuit’s decision in favor of the Company in the Owens, Sifuentes and Burton cases, the Company and the three other defendants filed motions for summary judgment to dismiss all claims of the approximately 150 plaintiffs then pending in the Eastern District of Wisconsin (Maniya Allen, et al.

American Cyanamid, et al.

Ernest Gibson v.

American Cyanamid, et al.;

Dijonae Trammel, et al.

American Cyanamid, et al., and Deziree Valoe, et al.

and Glenn Burton, Jr.

American Cyanamid, et al.

On March 3, 2022, the district court granted summary judgment in favor of the Company and the other defendants on all claims then pending in the district court.

cases, the Company and the three other defendants filed motions for summary judgment to dismiss all claims of the approximately 150 plaintiffs then pending in the Eastern District of Wisconsin, including the claims of Gibson and the Valoes.

On March 3, 2022, the district court granted summary judgment in favor of the Company and the other defendants.

On September 15, 2022, the plaintiffs filed notices of appeal with the Seventh Circuit, seeking to appeal the district court’s summary judgment in favor of the Company and the other defendants.

As part of the plaintiffs’ appellate reply brief to the Seventh Circuit, the plaintiffs included a motion to certify issues to the Wisconsin Supreme Court.

On February 9, 2024, the Seventh Circuit declined to certify any issues to the Wisconsin Supreme Court and affirmed the district court’s summary judgment in favor of the Company and the other defendants in all claims except involving those filed by three plaintiffs in the Gibson and Valoe cases, which cases were remanded to the district court for further proceedings.

On February 9, 2024, the Seventh Circuit affirmed the district court’s summary judgment in favor of the Company and the other defendants in all cases except those filed by Gibson and the Valoes, which cases were remanded to the district court for further proceedings.

Following remand of the Gibson and Valoe cases, the three remaining plaintiffs filed amended complaints on May 7, 2024, alleging strict liability, negligence and public nuisance claims.

The defendants filed motions to dismiss the plaintiffs’ amended complaints on June 20, 2024.

In a separate proceeding, on August 24, 2021, the plaintiff in Arrieona Beal v.

Hattie and Jerry Mitchell filed an amended complaint in Milwaukee County Circuit Court, naming the Company and other alleged former lead pigment manufacturers as defendants pursuant to the risk contribution liability theory.

On November 8, 2024, the district court granted in part and denied in part defendants’ motions to dismiss the amended complaints, dismissing the second cause of action for general negligence and plaintiffs’ abatement allegations, but otherwise permitting the case to proceed.

On December 6, 2024, the Company and some of the other defendants filed a third-party complaint against NL Industries, Inc.

(NL) and the owners and landlords of the properties where plaintiffs resided.

On January 30, 2025, the district court entered a stipulated order dismissing NL pursuant to the execution of a Pierringer release settlement agreement between plaintiffs and NL where the plaintiffs have agreed to indemnify NL against claims for contribution from the Company and some of the other defendants.

Some of the owners and landlords have filed motions to dismiss the third-party complaints, to which the Company has filed oppositions;

these motions are pending.

In the separate state court proceeding, on August 24, 2021, Arrieona Beal filed an amended complaint in Milwaukee County Circuit Court, naming the Company and other alleged former lead pigment manufacturers as defendants pursuant to the risk contribution liability theory.

The plaintiff previously had sued her landlords.

On January 3, 2024, the Company and some of the other manufacturing defendants filed a third-party complaint against NL Industries, Inc.,

and cross-claims against the landlord defendants.

On January 3, 2024, the Company and some of the other manufacturing defendants filed a third-party complaint against NL and cross-claims against the landlord defendants.

On January 10, 2024, one of the landlord defendants filed a counterclaim and cross-claim against all parties.

On May 15, 2024, the plaintiff filed a motion for partial judgment on the pleadings to strike the Company and other manufacturing defendants’ affirmative defenses, and on August 6, 2024, the circuit court granted defendants’ motion to strike the plaintiff’s motion.

The parties have been conducting discovery.

Insurance coverage litigation.

The Company and its liability insurers, including certain underwriters at Lloyd’s of London, initiated legal proceedings against each other to determine, among other things, whether the costs and liabilities associated with the abatement of lead pigment are covered under certain insurance policies issued to the Company.

The insurers’ action, which was filed on February 23, 2006 in the Supreme Court of the State of New York, County of New York, was dismissed.

The Company’s action, filed on March 3, 2006 in the Common Pleas Court, Cuyahoga County, Ohio, previously was stayed and inactive.

On January 9, 2019, the Company filed an unopposed motion to lift the stay with the trial court, which was granted, allowing the case to proceed.

On June 28, 2019, the Company and its liability insurers each filed separate motions for summary judgment seeking various forms of relief.

The trial court entered an order on December 4, 2020, granting the insurers’ motion for summary judgment, denying the Company’s motion, and entering final judgment in favor of the insurers.

The trial court sided with the Company on all of the issues presented, except one.

On December 21, 2020, the Company filed a notice of appeal to the Court of Appeals of Cuyahoga County, Ohio, Eighth Appellate District, and the insurers filed cross-appeals.

On September 1, 2022, the appellate court reversed the trial court’s grant of summary judgment, finding in favor of the Company on its appeal and against the insurers on their cross-appeal, and remanded the case to the trial court.

On September 12, 2022, the insurers applied to the appellate court for reconsideration of its decision, en banc review, or certification of an appeal to the Ohio Supreme Court, which the appellate court denied.

The insurers subsequently filed a notice of appeal to the Ohio Supreme Court, to which the Company filed its response.

On May 9, 2023, the Ohio Supreme Court accepted the insurers’ appeal.

Oral argument was held on October 24, 2023.

An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities.

The Company has not recorded any assets related to these insurance policies or otherwise assumed that proceeds from these insurance policies would be received in estimating any contingent liability accrual.

Therefore, an ultimate loss in the insurance coverage litigation without a determination of liability against the Company in the lead pigment or lead-based paint litigation will have no impact on the Company’s results of operation, liquidity or financial condition.

As previously stated, however, except with respect to the litigation in the California Proceedings discussed above, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

On February 27, 2025, landlord defendants Hattie and Jerry Mitchell were voluntarily dismissed pursuant to the execution of a Pierringer release settlement agreement between plaintiff and the landlord defendants where the plaintiff has agreed to indemnify the landlord defendants against claims for contribution from the Company and the other defendants.

Other matters.

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The NJ DEP seeks to recover natural resource damages, punitive damages and litigation fees and costs, as well as other costs, damages, declaratory relief and penalties pursuant to New Jersey state statutes and common law theories in connection with the alleged discharge of hazardous substances and pollutants at the Company’s Gibbsboro, New Jersey site, a former manufacturing plant and related facilities.

The parties have been conducting expert discovery.

Trial is scheduled to start on March 10, 2025.

Following expert discovery, on November 20, 2024, the Company filed a motion in the United States District Court for the District of New Jersey seeking to enforce the terms of an April 2019 Remedial Design/Remedial Action Consent Decree between the Company and the United States Environmental Protection Agency (the Consent Decree) that is being attacked by the NJ DEP’s state court lawsuit.

On December 21, 2024, the United States filed a brief in opposition to the Company’s motion, to which the Company filed a reply brief.

The Company’s motion regarding the Consent Decree remains pending in federal court.

Meanwhile, on November 20, 2024, the Company filed a motion to stay the

state court proceedings pending resolution of the Company’s motion regarding the Consent Decree.

On December 19, 2024, the state court denied the Company’s stay motion, but suspended all then-pending dates in the court’s schedule, including the previous trial date of March 10, 2025, until an ongoing discovery dispute between the Company and the NJ DEP is resolved.

On December 20, 2024, the NJ DEP filed a motion for partial summary judgment seeking to find the Company liable under the Spill Act and Solid Waste Management Act, which the state court denied on January 31, 2025.

The state court has set a trial date of February 23, 2026.

In July 2024, a third-party assurance, testing, inspection and certification provider changed its listing for one of the Company’s protective coatings products, an intumescent coating used for fire protection of steel beam assemblies.

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The Company’s review of this matter is ongoing.

Except for an immaterial product warranty liability recorded on the Consolidated Balance Sheets as of September 30, 2024, any additional amount or range of potential loss cannot be reasonably estimated at this time.

Except for an immaterial product warranty liability which remains recorded on the Consolidated Balance Sheets as of March 31, 2025, any additional amount or range of potential loss cannot be reasonably estimated at this time.

NOTE 10 - SHAREHOLDERS’ EQUITY

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First Quarter $ 0.79 $ 200.4 $ 0.715 $ 182.5

Second Quarter 0.715 178.6 0.605 156.3

Third Quarter 0.715 182.5 0.605 155.6

Total $ 2.145 $ 543.6 $ 1.815 $ 468.4

Treasury Stock

The Company acquires its common stock for general corporate purposes through its publicly announced share repurchase program.

As of September 30, 2024, the Company had remaining authorization from its Board of Directors to purchase 35.3 million shares of its common stock.

The table below summarizes share repurchases during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

As of March 31, 2025, the Company had remaining authorization from its Board of Directors to purchase 33.4 million shares of its common stock.

The table below summarizes share repurchases:

Three Months Ended

Treasury stock purchases (in millions) $ 351.7 $ 545.5

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Other Activity

During the nine months ended September 30, 2024, 1,584,890 stock options were exercised at a weighted average price per share of $ 124.82 .

During the three months ended March 31, 2025, 198,718 stock options were exercised at a weighted average price per share of $ 134.53 .

In addition, 175,344 restricted stock units vested during the same period.

Subsequent Event

Effective April 16, 2025, the Company’s shareholders approved The Sherwin-Williams Company 2025 Equity and Incentive Compensation Plan (2025 Plan).

The 2025 Plan replaces The Sherwin-Williams Company 2006 Equity and Performance Incentive Plan (Amended and Restated as of October 13, 2023), The Sherwin-Williams Company 2006 Stock Plan for Nonemployee Directors and The Sherwin-Williams Company 2007 Executive Annual Performance Bonus Plan (Amended and Restated as of October 13, 2023).

The 2025 Plan has an aggregate of 21,969,555 shares of common stock available for awards.

NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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Amounts recognized in AOCI (1)

( 35.8 ) — — ( 35.8 )

Amounts reclassified from AOCI (2), (3)

( 3.4 ) ( 0.9 ) ( 4.3 )

Balance at September 30, 2024 $ ( 752.7 ) $ 50.9 $ 25.6 $ ( 676.2 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $( 7.3 ) million, net of taxes during the nine months ended September 30, 2024.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 4.5 million for the nine months ended September 30, 2024.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.9 million for the nine months ended September 30, 2024.

Balance at March 31, 2025 $ ( 866.3 ) $ 69.7 $ 23.7 $ ( 772.9 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $( 36.3 ) million, net of taxes during the three months ended March 31, 2025.

(2) Pension and other postretirement benefits adjustments are net of taxes of $ 1.1 million for the three months ended March 31, 2025.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.3 million for the three months ended March 31, 2025.

See Statements of Consolidated Comprehensive Income.

7 unchanged sentences

( 4.5 ) ( 0.9 ) ( 5.4 )

Balance at September 30, 2023 $ ( 850.3 ) $ 64.7 $ 29.2 $ ( 756.4 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $ 11.4 million, net of taxes during the nine months ended September 30, 2023.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 4.6 million for the nine months ended September 30, 2023.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.9 million for the nine months ended September 30, 2023.

Balance at March 31, 2024 $ ( 792.2 ) $ 59.8 $ 27.4 $ ( 705.0 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $ 18.3 million, net of taxes during the three months ended March 31, 2024.

(2) Pension and other postretirement benefits adjustments are net of taxes of $ 1.5 million for the three months ended March 31, 2024.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.3 million for the three months ended March 31, 2024.

See Statements of Consolidated Comprehensive Income.

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Net Investment Hedges

The Company has U.S.

The Company has entered into U.S.

Dollar to euro cross currency swap contracts with various counterparties to hedge the Company’s net investment in its European operations.

2 unchanged sentences

Dollar denominated fixed-rate debt to euro denominated fixed-rate debt.

The outstanding contracts as of September 30, 2024 are summarized in the table below.

Contract Date Notional

Value Maturity Date

June 28, 2023 $ 200.0 August 8, 2025

November 8, 2021 162.7 June 1, 2027

May 10, 2024 100.0 June 1, 2027

May 21, 2024 175.0 June 1, 2027

August 7, 2024 150.0 June 1, 2027

September 26, 2024 100.0 June 1, 2027

September 12, 2024 100.0 March 1, 2028

December 7, 2023 150.0 August 15, 2029

May 21, 2024 225.0 August 15, 2029

September 24, 2024 100.0 September 1, 2031

In August 2024, the Company settled its $ 150.0 million U.S.

Dollar to Euro cross currency swap contract entered into on March 28, 2023.

In May 2024, the Company settled its $ 500.0 million U.S.

Dollar to Euro cross currency swap contract entered into on February 13, 2020.

At the time of both of these settlements, an immaterial loss was recognized in AOCI.

The following table summarizes amounts recognized in the Consolidated Balance Sheets for cross currency swap contracts.

The outstanding contracts as of March 31, 2025 are summarized by maturity date in the table below.

Notional Value Maturity Date

$ 200.0 August 8, 2025

687.7 June 1, 2027

100.0 March 1, 2028

525.0 August 15, 2029

100.0 September 1, 2031

The following table summarizes the balance sheet location of the cross currency swap contracts.

See Note 13 for additional information on the fair value of these contracts.

September 30, December 31, September 30,

March 31, December 31, March 31,

2025 2024 2024

1 unchanged sentence

Other assets 3.3 39.5 0.7

Other accruals 4.5 12.0 —

Other long-term liabilities 3.6 — 3.4

The changes in fair value of the cross currency swap contracts are recognized in the foreign currency translation adjustments component of AOCI.

The following table summarizes the unrealized (losses) gains for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended Nine Months Ended

September 30, September 30, September 30, September 30,

2024 2023 2024 2023

The following table summarizes the unrealized (losses) gains:

Three Months Ended

March 31, March 31,

(Losses) gains $ ( 48.2 ) $ 24.3

6 unchanged sentences

See Note 15 for further details.

There were no material foreign currency option and forward contracts outstanding at September 30, 2024 and 2023.

There were no material foreign currency option and forward contracts outstanding at March 31, 2025, December 31, 2024 and March 31, 2024.

NOTE 13 - FAIR VALUE MEASUREMENTS

5 unchanged sentences

Significant unobservable inputs

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at September 30, 2024 and December 31, 2023.

Except for the acquisition and divestiture related fair value measurements described in Note 3, there were no assets and liabilities measured at fair value on a nonrecurring basis.

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at March 31, 2025, December 31, 2024 and March 31, 2024.

Except for the acquisition related fair value measurements described in Note 3, there were no assets and liabilities measured at fair value on a nonrecurring basis.

The following table presents the Company’s financial assets that are measured at fair value on a recurring basis, categorized using the fair value hierarchy.

September 30, 2024 December 31, 2023

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

March 31, 2025 December 31, 2024 March 31, 2024

Total Level 1 Level 2 Total Level 1 Level 2 Total Level 1 Level 2

Deferred compensation plan $ 99.2 $ 99.2 $ — $ 98.6 $ 98.6 $ — $ 90.7 $ 90.7 $ —

Net investment hedges 4.3 — 4.3 48.9 — 48.9 3.3 — 3.3

Available-for-sale debt securities — — — — — — 4.7 — 4.7

$ 103.5 $ 99.2 $ 4.3 $ 147.5 $ 98.6 $ 48.9 $ 98.7 $ 90.7 $ 8.0

Net investment hedges $ 3.6 $ — $ 3.6 $ — $ — $ — $ 3.4 $ — $ 3.4

The deferred compensation plan assets consist of investment funds maintained for future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts.

The investments are marketable securities accounted for under the Debt and Equity Securities Topics of the ASC.

The Level 1 investments are valued using quoted market prices multiplied by the number of shares.

The deferred compensation plan assets also include partnership funds measured using net asset value (or its equivalent) as a practical expedient, which are not classified in the fair value hierarchy.

As of September 30, 2024 and December 31, 2023, the fair value of the partnership funds was $ 6.8 million and $ 6.4 million, respectively.

The cost basis of all investments within the deferred compensation plan was $ 78.6 million and $ 76.3 million at September 30, 2024 and December 31, 2023, respectively.

The net investment hedges represent the fair value of outstanding cross currency swap contracts.

The level 1 investments are valued using quoted market

prices multiplied by the number of shares.

There was $ 6.9 million, $ 7.0 million and $ 6.6 million of deferred compensation plan assets held in partnership funds measured using net asset value (or its equivalent) as a practical expedient as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

These investments are not classified in the fair value hierarchy.

The cost basis of all investments within the deferred compensation plan was $ 84.8 million, $ 82.7 million and $ 78.1 million at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

The net investment hedges represent the fair value of the cross currency swaps.

See Note 12 for further details.

The fair value is based on a valuation model that uses observable inputs, including interest rate curves and the euro foreign currency rate.

The available-for-sale debt securities consisted of bonds issued by a foreign government that settled in 2024.

The fair value was based on pricing models that use observable data from a market with limited activity.

The cost basis at March 31, 2024 was $ 6.7 million.

The carrying amounts reported for Cash and cash equivalents and Short-term borrowings approximate fair value.

The fair value of the Company’s publicly traded debt is based on quoted market prices.

2 unchanged sentences

The following table summarizes the carrying amounts and fair values of the Company’s publicly traded debt and non-publicly traded debt.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024 March 31, 2024

Value Carrying

Publicly traded debt $ 8,977.7 $ 8,000.1 $ 9,225.8 $ 8,172.8 $ 9,477.9 $ 8,464.2

17 unchanged sentences

Under these circumstances, the Company recognizes a contract asset and amortizes these prepayments over the expected benefit life of the long-term contract, typically on a straight-line basis.

The majority of variable consideration in the Company’s contracts include a form of volume rebate, discounts and other incentives, where the customer receives a retrospective percentage rebate based on the amount of their purchases.

In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of sales until paid to the customer per the terms of the contract.

The majority of variable consideration in the Company’s contracts include volume rebates, discounts and other incentives, where the customer receives a retrospective percentage rebate based on the amount of their purchases.

In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of Net sales until paid to the customer per the terms of the contract.

Forms of variable consideration such as tiered rebates, whereby a customer receives a retrospective price decrease dependent on the volume of their purchases, are calculated using a forecasted percentage to determine the most likely amount to accrue.

Management creates a baseline calculation using historical sales and then utilizing forecast information, estimates the anticipated sales volume each quarter to calculate the expected reduction to sales.

The remainder of the transaction price is fixed as agreed upon with the customer, limiting estimation of revenues, including constraints.

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(Current) Contract

Consolidated Balance Sheets caption:

Balance sheet caption:

Accounts receivable, net Other

2 unchanged sentences

Balance at December 31, 2024 $ 2,388.8 $ 55.0 $ 231.0 $ 386.2 $ 1.6

Balance at September 30, 2024 2,973.4 57.8 225.1 363.2 4.0

The difference between the closing and opening balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the contractual performance obligation and the associated payment.

Balance at March 31, 2025 2,813.1 82.7 234.1 245.8 15.0

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the contractual performance obligation and the associated payment.

Provisions for estimated returns are established and the expected costs continue to be recognized as contra-revenue per ASC 606 when the products are sold.

12 unchanged sentences

The following table summarizes the movement in the Company’s allowance for current expected credit losses:

Nine Months Ended

September 30,

Three Months Ended

Beginning balance $ 60.4 $ 59.6

2 unchanged sentences

Ending balance $ 68.4 $ 65.7

NOTE 15 - OTHER

Other general expense (income) - net

Included in Other general expense (income) - net were the following:

NOTE 15 - OTHER (INCOME) EXPENSE

Other general expense - net

Included in Other general expense - net were the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Provisions for environmental matters - net $ 3.1 $ 3.6

Gain on divestiture of business (see Note 3) — — — ( 20.1 )

(Gains) losses on sale or disposition of assets ( 2.0 ) 12.7 ( 25.2 ) ( 8.1 )

Gain on sale or disposition of assets ( 2.1 ) ( 3.4 )

Other 7.9 1.8

Other general expense (income) - net $ 0.7 $ 61.9 $ ( 30.9 ) $ 39.9

Other general expense - net $ 8.9 $ 2.0

Provisions for environmental matters - net represent initial provisions for site-specific estimated costs of environmental investigation or remediation and increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

Provisions for environmental matters - net for the nine months ended September 30, 2024 included an immaterial amount of insurance proceeds related to environmental cleanup at a current manufacturing site.

For the three months ended September 30, 2023, additional provisions were recorded based on new information which impacted the estimate of required remediation at certain Major Sites and other Company locations.

See Note 8 for further details on the Company’s environmental-related activities.

(Gains) losses on sale or disposition of assets represents (gains) losses with the sale or disposal of property, plant and equipment and intangible assets previously used in the conduct of the primary business of the Company.

Gain on sale or disposition of assets represents the net gains associated with the sale or disposal of property, plant and equipment and intangible assets previously used in the conduct of the primary business of the Company.

There were no items within the Other caption that were individually significant.

2 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net investment gains $ ( 3.2 ) $ ( 5.1 )

1 unchanged sentence

Foreign currency transaction related losses - net 10.0 7.6

Miscellaneous periodic benefit income ( 4.9 ) ( 5.2 ) ( 14.7 ) ( 15.4 )

Miscellaneous pension and benefit income ( 3.4 ) ( 4.9 )

Other income ( 10.4 ) ( 9.0 )

1 unchanged sentence

Other expense (income) - net $ 2.9 $ ( 7.7 )

Net investment gains primarily relate to the change in market value of the investments held in the deferred compensation plan and realized change in market value of bonds issued by a foreign government.

Net investment gains primarily relate to the change in market value of the investments held in the deferred compensation plan.

The three months ended March 31, 2024 also included the change in market value related to bonds issued by a foreign government.

See Note 13 for further details on the fair value of these investments.

1 unchanged sentence

See Note 12 for further details regarding these foreign currency contracts.

Miscellaneous periodic benefit income consists of the non-service components of pension and other postretirement benefit net periodic benefit cost (credit).

Miscellaneous pension and benefit income consists of the non-service components of net periodic pension and benefit (credit) cost.

See Note 7 for further details.

2 unchanged sentences

NOTE 16 - INCOME TAXES

The effective tax rate was 21.2 % and 22.4 % for the third quarter and first nine months of 2024, respectively, compared to 24.5 % and 22.9 % for the third quarter and first nine months of 2023, respectively.

The decrease in the effective tax rate for both periods was primarily due to a more favorable impact from tax benefits related to employee share-based payments.

The effective tax rate was 22.8 % for the first quarter of 2025, compared to 21.1 % for the first quarter of 2024.

The increase in the effective tax rate was primarily due to a less favorable impact from tax benefits related to employee share-based payments.

The other significant components of the Company’s effective tax rate were consistent year-over-year.

3 unchanged sentences

At December 31, 2024, the Company had accrued $ 18.8 million for the potential payment of income tax interest and penalties.

In the second quarter of 2024, the Company agreed to a Notice of Proposed Adjustment by the IRS for $ 28.7 million related to certain adjustments for 2017 through 2019, and is adequately reserved.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2023 during the first nine months of 2023.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2024 during the first three months of 2025.

The Company and its subsidiaries file income tax returns in the U.S.

federal jurisdiction and various state and foreign jurisdictions.

The Company finalized the IRS audit for the 2013 through 2016 income tax returns in 2023 and paid the related assessments in the fourth quarter of 2023 and first quarter of 2024.

The Company finalized the IRS audit for the 2011 income tax return in 2023 and paid the tax assessment in the second quarter of 2024 and the interest assessment in the third quarter of 2024.

The IRS is currently auditing the Company’s 2017 through 2019 income tax returns.

As of September 30, 2024, the federal statute of limitations has not expired for the 2017 through 2023 tax years.

At September 30, 2024, the Company is subject to non-U.S.

The Company finalized the IRS audit for the 2017 through 2019 income tax returns in the fourth quarter of 2024 and paid the tax assessment in the first quarter of 2025.

The Company expects to pay the related interest assessment in the second quarter of 2025.

As of March 31, 2025, the federal statute of limitations has not expired for the 2020 through 2024 tax years.

At March 31, 2025, the Company is subject to non-U.S.

income tax examinations for the tax years of 2014 through 2024.

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 503.9 $ 505.2

Average shares outstanding 250.6 255.1 251.4 255.9

Weighted average shares outstanding 249.4 252.5

Basic net income per share $ 2.02 $ 2.00

Net income $ 503.9 $ 505.2

Average shares outstanding assuming dilution:

Average shares outstanding 250.6 255.1 251.4 255.9

Weighted average shares outstanding assuming dilution:

Weighted average shares outstanding 249.4 252.5

Stock options and other contingently issuable shares (1)

3.3 3.3 3.2 2.9

Average shares outstanding assuming dilution 253.9 258.4 254.6 258.8

Weighted average shares outstanding assuming dilution 252.5 255.8

Diluted net income per share $ 2.00 $ 1.97

(1) There were 0.1 million of stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three an d nine months ended September 30, 2024.

There were 1.1 million and 2.0 million of stock options and other contingently issuable shares exclud ed due to their anti-dilutive effect for the three and nine months ended September 30, 2023, respectively.

(1) There were 1.0 million and 0.1 million of stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three months ended March 31, 2025 and 2024, respectively.

NOTE 18 - REPORTABLE SEGMENT INFORMATION

3 unchanged sentences

Refer to Note 22 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for further details on the Company’s Reportable Segments.

Three Months Ended September 30, 2024

Group Consumer

Group Performance

Group Administrative Consolidated

Net sales $ 3,650.2 $ 790.5 $ 1,720.0 $ 1.8 $ 6,162.5

Intersegment transfers — 1,412.2 6.4 ( 1,418.6 ) —

Total net sales and intersegment transfers $ 3,650.2 $ 2,202.7 $ 1,726.4 $ ( 1,416.8 ) $ 6,162.5

Segment profit $ 895.9 $ 165.5 $ 259.7 $ 1,321.1

Interest expense $ ( 103.4 ) ( 103.4 )

Administrative expenses and other ( 194.9 ) ( 194.9 )

Income before income taxes $ 895.9 $ 165.5 $ 259.7 $ ( 298.3 ) $ 1,022.8

Three Months Ended September 30, 2023

Group Consumer

Group Performance

Group Administrative Consolidated

Net sales $ 3,537.1 $ 854.8 $ 1,724.2 $ 0.6 $ 6,116.7

Intersegment transfers — 1,359.1 49.3 ( 1,408.4 ) —

Total net sales and intersegment transfers $ 3,537.1 $ 2,213.9 $ 1,773.5 $ ( 1,407.8 ) $ 6,116.7

Segment profit $ 917.5 $ 101.6 $ 279.7 $ 1,298.8

Interest expense $ ( 101.9 ) ( 101.9 )

Administrative expenses and other ( 187.9 ) ( 187.9 )

Income before income taxes $ 917.5 $ 101.6 $ 279.7 $ ( 289.8 ) $ 1,009.0

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Group Consumer

4 unchanged sentences

Total net sales and intersegment transfers 2,939.8 1,983.2 1,607.3 ( 1,224.6 ) 5,305.7

Segment profit $ 2,296.2 $ 523.3 $ 798.9 $ 3,618.4

Cost of goods sold 1,307.9 1,632.7 1,036.0 ( 1,230.0 ) 2,746.6

Selling, general and administrative expenses 1,093.0 217.7 351.5 131.6 1,793.8

Interest expense — — — 103.8 103.8

Administrative expenses and other ( 465.0 ) ( 465.0 )

Other segment items (1)

( 2.3 ) 0.9 7.1 2.8 8.5

Income before income taxes $ 541.2 $ 131.9 $ 212.7 $ ( 232.8 ) $ 653.0

Nine Months Ended September 30, 2023

% to Net sales 18.4 % 17.3 % 13.3 % nm 12.3 %

Supplemental Information:

Capital expenditures $ 26.7 $ 56.9 $ 12.4 $ 93.3 $ 189.3

Depreciation (2)

22.1 45.9 4.8 7.1 79.9

Amortization (3)

0.4 16.8 63.5 0.3 81.0

nm - not meaningful

(1) Other segment items includes Other general expense - net, Interest income and Other expense (income) - net.

(2) Depreciation is recorded within Cost of goods sold and Selling, general and administrative expenses.

(3) Amortization is recorded with Selling, general and administrative expenses.

Three Months Ended March 31, 2024

Group Consumer

4 unchanged sentences

Total net sales and intersegment transfers 2,873.0 2,022.8 1,719.0 ( 1,247.5 ) 5,367.3

Segment profit $ 2,293.5 $ 305.7 $ 771.3 $ 3,370.5

Cost of good sold 1,320.9 1,639.6 1,121.5 ( 1,245.7 ) 2,836.3

Selling, general and administrative expenses 1,065.8 223.1 358.3 152.6 1,799.8

Interest expense — — — 103.0 103.0

Administrative expenses and other ( 411.7 ) ( 411.7 )

Other segment items (1)

( 6.9 ) 6.7 1.5 ( 13.1 ) ( 11.8 )

Income before income taxes $ 493.2 $ 153.4 $ 237.7 $ ( 244.3 ) $ 640.0

% to Net Sales 17.2 % 18.9 % 14.1 % nm 11.9 %

Supplemental Information:

Capital expenditures $ 35.7 $ 80.7 $ — $ 167.4 $ 283.8

Depreciation (2)

21.4 37.2 5.7 6.8 71.1

Amortization (3)

0.8 17.0 63.8 0.5 82.1

nm - not meaningful

(1) Other segment items includes Other general expense - net, Interest income and Other expense (income) - net.

(2) Depreciation is recorded within Cost of goods sold and Selling, general and administrative expenses.

(3) Amortization is recorded with Selling, general and administrative expenses.

In the reportable segment financial information, Segment profit represents each reportable segment’s Income before income taxes.

Due to the nature of the Company’s integrated manufacturing operations and centralized administrative and information technology support, a substantial amount of allocations are made to determine segment financial information.

Domestic intersegment transfers are primarily accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs for paint products.

1 unchanged sentence

All intersegment transfers are eliminated within the Administrative function.

In 2023, absorbed manufactured cost standards for domestic intersegment transfers were established inclusive of forecasted cost reductions from planned initiatives for which unfavorable deviations were recognized within the Consumer Brands Group.

The manufactured cost standards established at the beginning of 2024 did not include forecasted cost reductions.

Net sales of all consolidated foreign subsidiaries were $ 1.124 billion and $ 1.105 billion for the three months ended September 30, 2024 and 2023, respectively.

Net external sales of all consolidated foreign subsidiaries were $ 3.370 billion and $ 3.342 billion for the nine months ended September 30, 2024 and 2023, respectively.

Long-lived assets of these subsidiaries totaled $ 3.631 billion and $ 3.217 billion at September 30, 2024 and 2023, respectively.

Expenses that are specifically identifiable to a certain Reportable Segment are allocated accordingly.

For expenses that are not specifically identifiable to a certain Reportable Segment, an appropriate allocation base is identified, and expenses are allocated based on each segment’s respective share of the allocation base.

The significant expense categories and amounts align with the segment-level information that is regularly provided to the Chief Operating Decision Maker (CODM) and includes intersegment expenses within the amounts shown.

Net sales of all consolidated foreign subsidiaries were $ 1.045 billion and $ 1.103 billion for the three months ended March 31, 2025 and 2024, respectively.

Long-lived assets of these subsidiaries totaled $ 3.583 billion and $ 3.524 billion at March 31, 2025 and 2024, respectively.

Domestic operations accounted for the remaining Net sales and long-lived assets.

1 unchanged sentence

Export sales and sales to any individual customer were each less than 10% of consolidated Net sales in 2025 and 2024.

The following table presents identifiable assets for each of the Company’s Reportable Segments:

Group Consumer

Group Performance

Group Administrative Consolidated

March 31, 2025 $ 6,143.8 $ 7,156.8 $ 8,071.1 $ 3,264.4 $ 24,636.1

December 31, 2024 5,878.0 6,854.7 7,847.4 3,052.5 23,632.6

March 31, 2024 5,936.5 6,850.6 8,217.3 2,423.7 23,428.1

For further details on the Company’s Reportable Segments, see Note 22 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements