What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 180 added, 104 removed, 183 unchanged (61% of the section changed)

5 unchanged sentences

See Note 18 in Item 1 for further information on the Company’s Reportable Segments.

• Consolidated Net sales increased 6.8% to $5.667 billion in the quarter

◦ Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 2.4% in the quarter

• Diluted net income per share increased 7.5% to $2.15 per share in the quarter compared to $2.00 per share in the first quarter of 2025

◦ Adjusted diluted net income per share increased 4.4% to $2.35 per share in the quarter compared to $2.25 per share in the first quarter of 2025

• Generated Net operating cash of $139.1 million in the quarter compared to a usage of $61.1 million in the first quarter of 2025

• Consolidated Net sales increased 7.5% to $6.789 billion in the quarter and increased 7.2% to $12.456 billion in the year to date period

◦ Net sales from stores in the Paint Stores Group open more than twelve calendar months increased 4.2% and 3.4% in the quarter and year to date period, respectively

• Diluted net income per share increased 14.3% to $3.43 per share in the quarter compared to $3.00 per share in the second quarter of 2025 and increased 11.6% to $5.58 per share in the year to date period compared to $5.00 per share in the year to date period of 2025

◦ Adjusted diluted net income per share increased 9.5% to $3.70 per share in the quarter compared to $3.38 per share in the second quarter of 2025 and increased 7.7% to $6.05 per share in the year to date period compared to $5.62 per share in the year to date period of 2025

• Generated Net operating cash of $1.487 billion in the year to date period compared to $1.052 billion in the year to date period of 2025

In an uncertain demand environment given current customer sentiment, our growth investments and execution on our differentiated strategy, Success by Design, continued to yield positive results.

As the softer-for-longer demand environment continues to persist in 2026, coupled with potential inflation related to raw materials, energy, logistics and packaging as a result of recent geopolitical events, we are focusing on securing incremental volume, balanced with appropriate and decisive pricing and cost-out actions to maintain the products, services and supply solutions which drive productivity and profitability for our customers.

As the softer-for-longer demand environment is expected to continue in the second half of 2026, coupled with inflation in raw materials, energy, logistics and packaging, we continue to focus on securing incremental volume, balanced with appropriate and decisive pricing and cost-out actions in all our businesses while maintaining the products, services and supply solutions which drive productivity and profitability for our customers.

Significant opportunities exist for each business, and we will continue to support our growth strategy by executing initiatives within our enterprise priorities, including talent, simplification, digitization, supply chain responsiveness and sustainability.

We employ a disciplined capital deployment strategy, while maintaining a balanced approach toward driving value for our customers and returns for our shareholders.

We continue to pursue business acquisitions, transactions and investments that fit our long-term growth strategy and will return value to our shareholders through the payment of dividends and the reinvestment of excess cash for share repurchases of Company stock.

We have a strong liquidity position, with $216.9 million in cash and $2.443 billion of unused capacity under our credit facilities at March 31, 2026.

We have a strong liquidity position, with $293.5 million in cash and cash equivalents and $1.969 billion of unused capacity under our credit facilities at June 30, 2026.

We are, and expect to remain, in compliance with all financing covenants.

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

The results of operations for the three months ended March 31, 2026 are not indicative of the results to be expected for the full year as our 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 and six months ended June 30, 2026 are not indicative of the results to be expected for the full year as our 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.

The following discussion and analysis addresses comparisons of material changes in the condensed consolidated financial statements for the three months ended March 31, 2026 and 2025.

Three Months Ended March 31,

The following discussion and analysis addresses comparisons of material changes in the condensed consolidated financial statements for the three and six months ended June 30, 2026 and 2025.

Three Months Ended June 30, 2026

Three Months Ended June 30,

2026 2025 $ Change % Change Currency Impact Acquisition and Divestiture Impact

4 unchanged sentences

Total $ 6,789.3 $ 6,314.5 $ 474.8 7.5 % 0.8 % 2.2 %

Consolidated Net sales increased by 6.8% in the first quarter of 2026 primarily due to higher Net sales in all reportable segments, inclusive of the October 2025 acquisition of Suvinil and a 1.7% impact from favorable foreign currency translation.

Net sales of all consolidated foreign subsidiaries increased to $1.279 billion in the first quarter of 2026 compared to $1.045 billion in the same period last year.

Consolidated Net sales increased by 7.5% in the second quarter of 2026 primarily due to higher Net sales in all reportable segments, inclusive of the October 2025 acquisition of Suvinil.

Net sales of all consolidated foreign subsidiaries increased to $1.358 billion in the second quarter of 2026 compared to $1.155 billion in the same period last year.

The increase in Net sales for all consolidated foreign subsidiaries was due to higher Net sales in all regions, led by Latin America, which is inclusive of the Suvinil acquisition.

Net sales of all operations other than consolidated foreign subsidiaries increased to $4.388 billion in the first quarter of 2026 compared to $4.261 billion in the same period last year.

Net sales in the Paint Stores Group increased by 3.7% in the first quarter of 2026 primarily due to selling price increases, which impacted Net sales by a low-single digit percentage, as well as low-single digit percentage sales volume growth.

Net sales increased in all but one professional customer end market, led by a double-digit percentage increase in protective and marine and a mid-single digit percentage increase in residential repaint and commercial.

New residential decreased by a low-single digit percentage.

Net sales from stores open for more than twelve calendar months increased by 2.4% in the first quarter of 2026 compared to last year’s comparable period.

Net sales of non-paint products increased 2.5% in the first quarter of 2026 compared to last year’s comparable period.

Net sales of all operations other than consolidated foreign subsidiaries increased to $5.431 billion in the second quarter of 2026 compared to $5.159 billion in the same period last year.

Net sales in the Paint Stores Group increased by 5.1% in the second quarter of 2026 primarily due to selling price increases, which impacted Net sales by a mid-single digit percentage, as well as low-single digit percentage sales volume growth.

Net sales increased in all professional customer end markets, led by a double-digit percentage increase in protective and marine, a high-single digit percentage increase in commercial and a mid-single digit percentage increase in residential repaint.

Net sales from stores open for more than twelve calendar months increased by 4.2% in the second quarter of 2026 compared to last year’s comparable period.

Net sales of non-paint products increased 4.2% in the second quarter of 2026 compared to last year’s comparable period.

A discussion of changes in volume versus pricing for sales of non-paint products is not pertinent due to the wide assortment of general merchandise sold.

Net sales in the Consumer Brands Group increased by 19.2% in the first quarter of 2026 primarily as a result of the acquisition of Suvinil, a 2.4% impact from favorable foreign currency translation and increased Net sales in Europe.

These increases were partially offset by soft DIY demand in North America which decreased Net sales by a low-single digit percentage.

Net sales in the Performance Coating Group increased by 6.5% in the first quarter of 2026 primarily as a result of a 4.1% impact from favorable foreign currency translation and low-single digit percentage sales volume growth.

Net sales increased in certain business units led by Automotive Refinish, which increased by a double-digit percentage, General Industrial and Packaging, which increased by high-single digit percentages, and Coil, which increased by a mid-single digit percentage.

Net sales in the Consumer Brands Group increased by 21.5% in the second quarter of 2026 primarily as a result of the acquisition of Suvinil, increased Net sales in North America and a 1.6% impact from favorable foreign currency translation.

Net sales in the Performance Coatings Group increased by 6.3% in the second quarter of 2026 primarily due to selling price increases, mainly attributable to product mix, which impacted Net sales by a low-single digit percentage, low-single digit percentage sales volume growth and a 2.0% impact from favorable foreign currency translation.

Net sales increased in all businesses, led by General Industrial and Automotive Refinish, which each increased by a high-single digit percentage, as well as Packaging, Industrial Wood and Coil, which each increased by a mid-single digit percentage.

Six Months Ended June 30, 2026

Six Months Ended June 30,

2026 2025 $ Change % Change Currency Impact Acquisition

Divestiture Impact

Paint Stores Group $ 6,939.9 $ 6,642.0 $ 297.9 4.5 % — % 0.2 %

Consumer Brands Group 1,891.8 1,571.6 320.2 20.4 % 2.0 % 16.6 %

Performance Coatings Group 3,619.6 3,403.1 216.5 6.4 % 3.0 % 0.1 %

Administrative 4.9 3.5 1.4 40.0 % — % — %

Total $ 12,456.2 $ 11,620.2 $ 836.0 7.2 % 1.2 % 2.4 %

Consolidated Net sales increased by 7.2% in the first six months of 2026 due to higher sales in all reportable segments, inclusive of the October 2025 acquisition of Suvinil and a 1.2% impact from favorable currency translation.

Net sales of all consolidated foreign subsidiaries increased to $2.637 billion in the first six months of 2026 compared to $2.200 billion in the same period last year.

The increase in Net sales for all consolidated foreign subsidiaries was due to higher Net sales in all regions, led by Latin America, which is inclusive of the Suvinil acquisition.

Net sales of all operations other than consolidated foreign subsidiaries increased 4.2% to $9.819 billion in the first six months of 2026 compared to $9.420 billion in the same period last year.

Net sales in the Paint Stores Group increased by 4.5% in the first six months of 2026 primarily due to selling price increases, which impacted Net sales by a low-single digit percentage, as well as a low-single digit percentage sales volume growth.

Net sales increased in all but one professional customer end market, led by a double-digit percentage increase in protective and marine and mid-single digit percentage increases in commercial and residential repaint.

New residential decreased by a low-single digit percentage, as expected.

Net sales from stores open for more than twelve calendar months increased 3.4% in the first six months of 2026 compared to last year’s comparable period.

Net sales of non-paint products increased 3.4% in the first six months of 2026 compared to last year’s comparable period.

A discussion of changes in volume versus pricing for sales of products other than paint is not pertinent due to the wide assortment of general merchandise sold.

Net sales in the Consumer Brands Group increased by 20.4% in the first six months of 2026 primarily as a result of the acquisition of Suvinil, increased Net sales in North America and a 2.0% favorable impact from foreign currency translation.

Net sales in the Performance Coatings Group increased by 6.4% in the first six months of 2026 primarily attributable to low-single digit percentage sales volume growth, selling price increases, primarily attributable to product mix, which impacted Net sales by a low-single digit percentage, and a 3.0% favorable impact from foreign currency translation.

Net sales increased in all businesses, led by a double-digit percentage increase in General Industrial, a high-single digit percentage increase in Automotive Refinish and mid-single digit percentage increases in Packaging and Coil.

Income Before Income Taxes

The following table presents the components of Income before income taxes as a percentage of Net sales:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net Sales Percent to

Net sales $ 6,789.3 100.0 % $ 6,314.5 100.0 % $ 12,456.2 100.0 % $ 11,620.2 100.0 %

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Income before income taxes $ 1,112.5 16.4 % $ 985.7 15.6 % $ 1,792.3 14.4 % $ 1,638.7 14.1 %

Three Months Ended March 31, 2026

Consolidated Cost of goods sold increased $139.8 million, or 5.1%, in the first quarter of 2026 compared to the same period in 2025 primarily due to the impact of the Suvinil acquisition and foreign currency translation changes, which increased Cost of goods sold by 2.2%.

These increases were partially offset by moderating raw material costs.

Consolidated Gross profit increased $221.4 million in the first quarter of 2026 compared to the same period in 2025 primarily due to higher Net sales in all reportable segments, the acquisition of Suvinil within the Consumer Brands Group, moderating raw material costs and favorable foreign currency translation.

Consolidated Gross profit as a percent of consolidated Net sales increased in the first quarter of 2026 to 49.1% compared to 48.2% during the same period in 2025 for these same reasons.

The Paint Stores Group’s Gross profit in the first quarter of 2026 was higher than the same period last year by $85.8 million due primarily to higher Net sales as a result of increased selling prices and sales volume growth.

The Paint Stores Group’s Gross profit as a percent of Net sales increased in the first quarter of 2026 compared to the same period last year for these same reasons.

The Consumer Brands Group’s Gross profit increased by $99.8 million in the first quarter of 2026 compared to the same period last year due primarily to the acquisition of Suvinil and global supply chain efficiencies.

The Consumer Brands Group’s Gross profit as a percent of Net sales increased in the first quarter of 2026 compared to the same period last year for these same reasons.

The Performance Coatings Group’s Gross profit increased $40.2 million in the first quarter of 2026 compared to the same period last year primarily due to favorable foreign currency translation and higher Net sales as a result of sales volume growth.

The Performance Coatings Group’s Gross profit as a percent of Net sales increased modestly in the first quarter of 2026 compared to the same period last year for these same reasons.

Consolidated SG&A increased $175.8 million in the first quarter of 2026 versus the same period last year primarily due to an increase in employee-related costs and marketing and advertising to support higher Net sales, incremental SG&A expenses associated with the Suvinil acquisition, higher costs in the Administrative function related to the new global headquarters and technology center and unfavorable foreign currency translation.

As a percent of Net sales, consolidated SG&A increased in the first quarter of 2026 compared to the same period last year due to these same factors.

The Paint Stores Group’s SG&A increased $64.0 million in the first quarter of 2026 compared to the same period last year primarily due to increased costs to support higher sales, including higher employee-related costs and marketing and advertising.

The Consumer Brands Group’s SG&A increased $41.6 million in the first quarter of 2026 compared to the same period last year primarily due to incremental SG&A expenses associated with the Suvinil acquisition as well as higher employee-related and marketing costs to support higher sales.

The Performance Coatings Group’s SG&A increased $32.5 million in the first quarter of 2026 compared to the same period last year primarily due to higher employee-related costs.

The Administrative function’s SG&A increased $37.7 million in the first quarter of 2026 compared to the same period last year due primarily to costs related to the new global headquarters and technology center.

Other general expense - net decreased $2.6 million in the first quarter of 2026 compared to the same period last year primarily due to a decrease in site specific environmental-related accruals.

Three Months Ended June 30, 2026

Consolidated Cost of goods sold increased $255.1 million, or 8.0%, in the second quarter of 2026 compared to the same period in 2025 primarily due to higher Net sales, inclusive of the Suvinil acquisition, a moderate rise in raw material costs and an unfavorable foreign currency related impact .

Consolidated Gross profit increased $219.7 million in the second quarter of 2026 compared to the same period in 2025 primarily due to higher Net sales in all reportable segments, inclusive of the Suvinil acquisition, partially offset by a moderate rise in raw material costs.

Consolidated Gross profit as a percent of consolidated Net sales in the second quarter of 2026 decreased slightly to 49.2% compared to 49.4% during the same period in 2025 primarily due to the dilutive impact of the Suvinil acquisition.

The Paint Stores Group’s Gross profit in the second quarter of 2026 was higher than the same period last year by $106.8 million due primarily to higher Net sales as a result of selling price increases and sales volume growth, partially offset by a moderate rise in raw material costs.

The Paint Stores Group’s Gross profit as a percent of Net sales was flat in the second quarter of 2026 compared to the same period last year for these same reasons.

The Consumer Brands Group’s Gross profit increased by $73.0 million in the second quarter of 2026 compared to the same period last year primarily due to higher Net sales, inclusive of the Suvinil acquisition, favorable mix, supply chain efficiencies and favorable impacts from foreign currency, partially offset by a moderate rise in raw material costs.

The Consumer Brands Group’s Gross profit as a percent of Net sales decreased in the second quarter of 2026 compared to the same period last year related to the dilutive impact of the Suvinil acquisition.

The Performance Coatings Group’s Gross profit increased $43.3 million in the second quarter of 2026 compared to the same period last year primarily due to higher Net sales as a result of selling price increases, primarily attributable to product mix, sales volume growth and favorable foreign currency translation, partially offset by a moderate rise in raw material costs.

The Performance Coatings Group’s Gross profit as a percent of Net sales increased modestly in the second quarter of 2026 compared to the same period last year for these same reasons.

Consolidated SG&A increased $92.1 million in the second quarter of 2026 versus the same period last year primarily due to an increase in employee-related costs to support higher Net sales, incremental SG&A expenses associated with the Suvinil acquisition and higher costs in the Administrative function related to the new global headquarters and technology center.

As a percent of Net sales, consolidated SG&A decreased by 90 basis points in the second quarter of 2026 compared to the same period last year.

The Paint Stores Group’s SG&A increased $63.3 million in the second quarter of 2026 compared to the same period last year primarily due to increased costs to support higher sales, including investments in additional sales reps and stores.

The Consumer Brands Group’s SG&A increased $32.9 million in the second quarter of 2026 compared to the same period last year primarily due to incremental SG&A expenses associated with the Suvinil acquisition.

The Performance Coatings Group’s SG&A increased $19.4 million in the second quarter of 2026 compared to the same period last year primarily due to an increase in employee-related costs to support higher sales.

The Administrative function’s SG&A decreased $23.5 million in the second quarter of 2026 compared to the same period last year due primarily due to lower employee costs related to non-recurring severance from the prior period, partially offset by increased costs related to the new global headquarters and technology center.

Other general expense - net decreased $2.9 million in the second quarter of 2026 compared to the same period last year primarily due to lower individually insignificant miscellaneous expenses , partially offset by a modest increase in site specific environmental-related accruals.

See Note 15 in Item 1 for further information.

Interest expense increased $27.8 million in the first quarter of 2026 compared to the same period last year due to an increase in long-term debt and short-term borrowings as well as interest expense related to the new global headquarters and technology center.

Interest expense increased $23.5 million in the second quarter of 2026 compared to the same period last year due to an increase in short-term borrowings and long-term debt as well as interest expense related to real estate financing associated with the new global headquarters.

See Note 6 in Item 1 for further information on the Company’s outstanding debt.

Other (income) expense - net was income of $4.0 million in the first quarter of 2026 compared to expense of $2.9 million in the same period last year primarily due to foreign currency transaction related net gains in the current period as compared to net losses in the comparable prior year period, partially offset by unfavorable changes in the market value of investments held in deferred compensation plans.

Other (income) expense - net was income of $12.1 million in the second quarter of 2026 compared to expense of $4.7 million in the same period last year primarily due to lower foreign currency transaction related net losses, higher investment gains and lower individually insignificant miscellaneous expenses, partially offset by pension related expense in the second quarter of 2026 compared to pension related income in the second quarter of 2025.

See Note 15 in Item 1 for further information.

Six Months Ended June 30, 2026

Consolidated Cost of goods sold increased $394.9 million, or 6.6%, in the first six months of 2026 compared to the same period in 2025 primarily due to higher sales volume, inclusive of the Suvinil acquisition, a moderate rise in raw material costs and an unfavorable foreign currency related impact .

Consolidated gross profit increased $441.1 million in the first six months of 2026 compared to the same period in 2025 primarily due to higher Net sales in all reportable segments, inclusive of the Suvinil acquisition, partially offset by a moderate

rise in raw material costs.

Consolidated gross profit as a percent of consolidated Net sales increased in the first six months of 2026 to 49.1% compared to 48.9% during the same period in 2025 for these same reasons, including the dilutive impact of the Suvinil acquisition.

The Paint Stores Group’s gross profit in the first six months of 2026 was higher than the same period last year by $192.6 million due primarily to higher Net sales as a result of selling price increases and sales volume growth, partially offset by a moderate rise in raw material costs.

The Paint Stores Group’s gross profit as a percent of Net sales increased in the first six months of 2026 compared to the same period in 2025 for these same reasons.

The Consumer Brands Group’s gross profit increased by $172.8 million in the first six months of 2026 compared to the same period last year due primarily to higher Net sales, inclusive of the Suvinil acquisition, and favorable impacts from foreign currency, partially offset by a moderate rise in raw material costs.

The Consumer Brands Group’s gross profit as a percent of Net sales increased in the first six months of 2026 compared to the same period last year for these same reasons, inclusive of the dilutive impact of the Suvinil acquisition.

The Performance Coatings Group’s gross profit increased $83.5 million in the first six months of 2026 compared to the same period last year primarily due to higher Net sales as a result of sales volume growth, selling price increases, primarily attributable to product mix, and favorable foreign currency translation.

The Performance Coatings Group’s gross profit as a percent of Net sales increased modestly in the first six months of 2026 compared to the same period last year for these same reasons.

Consolidated SG&A increased $267.9 million in the first six months of 2026 versus the same period last year primarily due to an increase in employee-related costs to support higher Net sales, incremental SG&A expenses associated with the Suvinil acquisition and higher costs in the Administrative function related to the new global headquarters and technology center.

As a percent of Net sales, consolidated SG&A was flat in the first six months of 2026 compared to the same period last year for these same reasons.

The Paint Stores Group’s SG&A increased $127.3 million in the first six months of 2026 compared to the same period last year primarily due to higher employee-related costs related to investments in additional sales reps and stores.

The Consumer Brands Group’s SG&A increased $74.5 million in the first six months of 2026 compared to the same period last year primarily due to incremental SG&A expenses associated with the Suvinil acquisition as well as higher employee-related costs to support higher sales.

The Performance Coatings Group’s SG&A increased $51.9 million in the first six months of 2026 compared to the same period last year due primarily to higher employee-related costs to support higher sales.

The Administrative function’s SG&A increased $14.2 million in the first six months of 2026 compared to the same period last year due primarily to costs related to the new global headquarters and technology center, partially offset by a decrease in employee-related costs related to non-recurring severance from the prior period .

Other general expense - net decreased $5.5 million in the first six months of 2026 compared to the same period last year primarily due to lower individually insignificant miscellaneous expenses , partially offset by an decrease in the gain on sale or disposition of assets.

See Note 15 in Item 1 for further information.

Interest expense increased $51.3 million in the first six months of 2026 compared to the same period last year due to an increase in short-term borrowings and long-term debt as well as interest expense related to real estate financing associated with the new global headquarters.

See Note 6 in Item 1 for further information on the Company’s outstanding debt.

Other (income) expense - net was income of $16.1 million in the first six months of 2026 compared to expense of $7.6 million in the same period last year primarily due to foreign currency transaction related net gains in the second quarter of 2026, which were in a net loss position in the second quarter of 2025, and lower individually insignificant miscellaneous expenses, partially offset by pension related expense in the current period as compared to pension related income in the prior year period and lower investment gains.

See Note 15 in Item 1 for further information.

The following table presents Income before income taxes by segment and as a percent of Net sales by segment:

Three Months Ended March 31,

2026 2025 $ Change % Change

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 $ Change % Change 2026 2025 $ Change % Change

Income Before Income Taxes:

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Performance Coatings Group 14.3 % 13.6 % 14.0 % 13.5 %

Administrative nm nm

Administrative nm nm nm nm

Total 16.4 % 15.6 % 14.4 % 14.1 %

1 unchanged sentence

Income Tax Expense

The effective tax rate was 21.3% for the first quarter of 2026 compared to 22.8% for the first quarter of 2025.

The decrease in the effective tax rate was primarily due to a more 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.

The effective tax rate was 24.2% for the second quarter of 2026 compared to 23.4% for the second quarter of 2025, and 23.1% for the first six months of 2026 compared to 23.2% for the first six months of 2025.

The increase in the effective tax rate for the second quarter of 2026 was primarily due to a less favorable impact from tax benefits related to employee share-based payments.

The effective tax rate was essentially flat for the first six months of 2026 compared to the same period last year.

The other significant components of the Company’s effective tax rate were consistent in both comparable periods.

See Note 16 in Item 1 for further information.

Net Income Per Share

Diluted net income per share increased 7.5% to $2.15 per share in the first quarter of 2026 compared to $2.00 per share in the first quarter of 2025.

Diluted net income per share in the first quarter of 2026 included Valspar acquisition-related amortization expense of $0.20 per share.

Diluted net income per share in the first quarter of 2025 included charges for Valspar acquisition-related amortization expense of $0.19 per share and severance and other restructuring expenses of $0.06 per share.

Foreign currency translation rate changes increased diluted net income per share by $0.03 in the first quarter of 2026.

Diluted net income per share increased 14.3% to $3.43 per share in the second quarter of 2026 compared to $3.00 per share in the second quarter of 2025.

Diluted net income per share in the second quarter of 2026 included Valspar acquisition-related amortization expense of $0.20 per share and severance and other restructuring expenses of $0.07 per share.

Diluted net income per share in the second quarter of 2025 included charges for Valspar acquisition-related amortization expense of $0.20 per share and severance and other restructuring expenses of $0.18 per share.

Foreign currency translation rate changes increased diluted net income per share by $0.02 in the second quarter of 2026.

Diluted net income per share for the first six months of 2026 increased 11.6% to $5.58 per share compared to $5.00 per share in the first six months of 2025.

Diluted net income per share for the first six months of 2026 included charges for Valspar acquisition-related amortization expense of $0.40 per share and severance and other restructuring expenses of $0.07 per share.

Diluted net income per share in the first six months of 2025 included a charge for Valspar acquisition-related amortization expense of $0.38 per share and severance and other restructuring expenses of $0.24 per share.

Foreign currency translation rate changes increased diluted net income per share by $0.06 in the first six months of 2026.

FINANCIAL CONDITION, LIQUIDITY AND CASH FLOW

The Company’s financial condition and liquidity remained strong at March 31, 2026.

The Company generated $139.1 million in Net operating cash during the first quarter of 2026 and returned cash of $772.7 million to its shareholders in the form of dividends and share repurchases during the first quarter of 2026.

Net income increased 6.1% to $534.7 million and EBITDA increased 8.8% to $998.2 million for the first three months of 2026.

The Company’s financial condition and liquidity remained strong at June 30, 2026.

The Company generated $1.487 billion in Net operating cash and returned cash of $2.232 billion to its shareholders in the form of dividends and share repurchases during the first six months of 2026.

Net income increased 9.5% to $1.378 billion and EBITDA increased 11.7% to $2.433 billion for the first six months of 2026.

Refer to the Non-GAAP Financial Measures section below for the definition and calculation of EBITDA.

At March 31, 2026, the Company had Cash and cash equivalents of $216.9 million and total debt outstanding of $11.700 billion.

At June 30, 2026, the Company had Cash and cash equivalents of $293.5 million and total debt outstanding of $12.072 billion.

Total debt, net of Cash and cash equivalents, was $11.779 billion.

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Net Working Capital

Net working capital, defined as Total current assets less Total current liabilities, increased $802.1 million to a deficit of $1.035 billion at March 31, 2026 compared to a deficit of $1.837 billion at March 31, 2025.

The net working capital increase is due to an increase in current assets of $460.0 million and a decrease of $342.1 million in current liabilities.

Current asset balances increased $460.0 million at March 31, 2026 compared to March 31, 2025 due to an increase in Accounts receivable, net of $379.0 million, an increase in Other current assets of $105.9 million, primarily related to prepaid expenses and recoverable income taxes, and an increase in Cash and cash equivalents of $17.1 million.

These increases were offset by a decrease in Inventories of $42.0 million.

Current liability balances decreased $342.1 million at March 31, 2026 compared to March 31, 2025 due to a decrease in the Current portion of long-term debt of $1.151 billion.

This decrease was offset by an increase in Short-term borrowings of $578.1 million, an increase in Accounts payable of $90.5 million, an increase in Other accruals of $54.3 million primarily related to customer considerations, an increase in Accrued taxes of $45.8 million, an increase in Compensation and taxes withheld of $25.3 million and an increase in the Current portion of operating lease liabilities of $14.6 million.

The Company’s current ratio was 0.86, 0.87 and 0.77 at March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Net working capital, defined as Total current assets less Total current liabilities, decreased $856.7 million to a deficit of $2.628 billion at June 30, 2026 compared to a deficit of $1.771 billion at June 30, 2025.

The net working capital decrease is due to an increase of $1.431 billion in Total current liabilities partially offset by an increase in Total current assets of $573.9 million.

Current asset balances increased $573.9 million at June 30, 2026 compared to June 30, 2025 due to an increase in Accounts receivable, net of $459.3 million, an increase in Other current assets of $45.8 million, primarily related to recoverable income taxes and prepaid expenses, an increase in Inventories of $45.1 million and an increase in Cash and cash equivalents of $23.7 million.

Current liability balances increased $1.431 billion at June 30, 2026 compared to June 30, 2025 due to an increase in Short-term borrowings of $539.7 million, an increase in the Current portion of long-term debt of $347.7 million, an increase in Accounts payable of $256.4 million, an increase in Accrued taxes of $149.6 million, an increase in Compensation and taxes withheld of $79.5 million, an increase in Other accruals of $51.9 million primarily related to increases in customer considerations and non-traded investments, partially offset by a decrease in accrued severance, and an increase in the Current portion of operating lease liabilities of $5.8 million.

The Company’s current ratio was 0.73, 0.87 and 0.78 at June 30, 2026, December 31, 2025 and June 30, 2025, respectively.

Property, Plant and Equipment

Net property, plant and equipment increased $68.5 million in the first three months of 2026 and $542.5 million in the twelve months since March 31, 2025.

The increase in the first three months was due to capital expenditures of $118.7 million, Suvinil purchase price allocation adjustments of $48.1 million and foreign currency translation and other adjustments of $1.5 million, offset by depreciation expense of $98.3 million and the sale or disposition of fixed assets of $1.5 million.

Since March 31, 2025, the increase was due to capital expenditures of $683.7 million, assets acquired through business combinations of $193.7 million, foreign currency translation and other adjustments of $21.3 million and the sale or disposition of fixed assets of $2.5 million, offset by depreciation expense of $358.7 million.

Buildings within Property, plant and equipment, net increased $52.5 million in the first three months of 2026 and $1.523 billion in the twelve months since March 31, 2025.

The increase in the first three months was primarily due to capital expenditures related to finalizing the construction of the new global headquarters and technology center.

Since March 31, 2025, the increase was primarily due to the new global headquarters and technology center meeting the criteria to be placed into service during 2025.

Net property, plant and equipment increased $82.0 million in the first six months of 2026 and $413.5 million in the twelve months since June 30, 2025.

The increase in the first six months was due to capital expenditures of $230.1 million and assets acquired through business combinations of $55.5 million, primarily related to the Suvinil acquisition, partially offset by depreciation expense of $196.8 million, sales or dispositions of fixed assets of $3.4 million, and foreign currency translation and other adjustments of $3.4 million.

Since June 30, 2025, the increase was due to capital expenditures of $613.0 million and assets acquired through business combinations of $197.0 million, partially offset by depreciation expense of $377.9 million and foreign currency translation and other adjustments of 18.6 million.

Buildings within Property, plant and equipment, net increased $76.9 million in the first six months of 2026 and $1.032 billion in the twelve months since June 30, 2025.

The increase in the first six months of 2026 was primarily due to capital expenditures related to finalizing the construction of the new global headquarters and technology center.

Since June 30, 2025, the increase was primarily due to the new global headquarters and technology center meeting the criteria to be placed into service during 2025.

Also included in 2026 capital expenditures were expenditures related to manufacturing capacity expansion, operational efficiencies and maintenance projects in the Consumer Brands and Performance Coatings Groups and the opening of new stores and renovation and improvements in existing stores in the Paint Stores Group.

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Goodwill and Intangible Assets

Goodwill decreased $33.2 million from December 31, 2025 and increased $295.0 million from March 31, 2025.

The decrease during the first three months of 2026 was due to Suvinil purchase price allocation adjustments of $29.7 million and foreign currency translation fluctuations and other adjustments of $3.5 million.

The increase over the twelve month period from March 31, 2025 was due to purchase price allocation adjustments of $202.3 million, primarily related to the Suvinil acquisition, and foreign currency translation fluctuations and other adjustments of $92.7 million.

Intangible assets decreased $80.5 million from December 31, 2025 and increased $392.2 million from March 31, 2025.

The decrease during the first three months of 2026 was due to amortization of $88.5 million and Suvinil purchase price allocation adjustments of $17.1 million, offset by foreign currency translation fluctuations and other adjustments of $23.6 million and capitalized software of $1.5 million.

The increase over the twelve month period from March 31, 2025 was due to purchase price allocations of $626.0 million, primarily related to the Suvinil acquisition, foreign currency translation fluctuations and other adjustments of $90.1 million and capitalized software of $38.0 million, offset by amortization of $344.1 million and trademark impairment of $17.8 million.

Goodwill decreased $13.4 million from December 31, 2025 and increased $215.6 million from June 30, 2025.

The decrease during the first six months of 2026 was due to foreign currency translation fluctuations and other adjustments of $11.5 million and purchase price allocation adjustments of $1.9 million.

The increase over the twelve month period from June 30, 2025 was due to purchase price allocation adjustments of $234.1 million, primarily related to the Suvinil acquisition, partially offset by foreign currency translation fluctuations and other adjustments of $18.5 million.

Intangible assets decreased $162.4 million from December 31, 2025 and increased $260.3 million from June 30, 2025.

The decrease during the first six months of 2026 was due to amortization of $176.4 million and purchase price allocation adjustments of $16.8 million, partially offset by foreign currency translation fluctuations and other adjustments of $24.8 million and capitalized software of $6.0 million.

The increase over the twelve month period from June 30, 2025 was due to purchase price allocations of $591.6 million, primarily related to the Suvinil acquisition, capitalized software of $28.3 million and foreign currency translation fluctuations and other adjustments of $6.8 million, partially offset by amortization of $348.6 million and 2025 trademark impairment of $17.8 million.

See Note 5 in Item 1 and Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning the Company’s Goodwill and Intangible assets.

Other assets increased $17.7 million from December 31, 2025 and $18.4 million from March 31, 2025.

The increase in the first three months of 2026 was primarily due to an increase in non-traded investments partially offset by a decrease in customer considerations.

The increase from March 31, 2025 was primarily due to an increase in assets related to cloud computing arrangements, deferred income tax assets and pension plan assets, partially offset by a decrease in customer considerations and non-traded investments.

See Notes 1 and 14 in Item 1 and Notes 1, 8, 18 and 20 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 in for further information.

Other assets increased $87.0 million from December 31, 2025 and $75.9 million from June 30, 2025.

The increase in the first six months of 2026 was primarily due to an increase in non-traded investments and assets related to cloud computing arrangements, partially offset by a decrease in customer considerations.

The increase from June 30, 2025 was primarily due to an increase in non-traded investments, assets related to cloud computing arrangements and deferred income tax assets, partially offset by a decrease in customer considerations.

See Notes 1, 14 and 16 in Item 1 and Notes 1, 18 and 20 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information.

Debt (including Short-term borrowings)

March 31, December 31, March 31,

June 30, December 31, June 30,

2026 2025 2025

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Total debt outstanding $ 12,072.1 $ 10,871.3 $ 10,686.3

The Company’s long-term debt primarily consists of senior notes as disclosed in Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

See Note 6 in Item 1 for further information concerning debt.

See Note 6 in Item 1 for further information concerning Long-term debt, Short-term borrowings and credit agreements.

Defined Benefit Pension and Other Postretirement Benefit Plans

Long-term liabilities for defined benefit pension and other postretirement benefit plans did not change significantly from December 31, 2025.

The changes from March 31, 2025 are primarily due to changes in actuarial assumptions and the acquisition of Suvinil.

The changes from June 30, 2025 are primarily due to changes in actuarial assumptions and the acquisition of Suvinil.

See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning the Company’s liabilities for defined benefit pension and other postretirement benefit plans.

Deferred Income Taxes

Deferred income taxes were effectively flat from December 31, 2025 and increased $179.4 million from March 31, 2025.

The changes from March 31, 2025 are primarily due to accelerated domestic research and development deductions recognized as a result of U.S.

Deferred income taxes decreased $8.1 million from December 31, 2025 and increased $196.3 million from June 30, 2025.

The decrease from December 31, 2025 is primarily due to the amortization of intangible assets.

The increase from June 30, 2025 is primarily due to accelerated domestic research and development deductions recognized as a result of U.S.

tax reform legislation known as the One Big Beautiful Bill Act.

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Depreciation of capital expenditures and other expenses related to ongoing environmental compliance measures were included in the normal operating expenses of conducting business.

The Company’s capital expenditures, depreciation and other expenses related to ongoing environmental compliance measures were not material to the Company’s financial condition, liquidity, cash flow or results of operations during the first three months of 2026.

Management also does not expect that such capital expenditures, depreciation and other expenses will be material to the Company’s financial condition, liquidity, cash flow or results of operations for the remainder of 2026.

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Contractual Obligations, Commercial Commitments and Warranties

There have been no significant changes to the Company’s contractual obligations and commercial commitments in the first three months of 2026 as summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no significant changes to the Company’s contractual obligations and commercial commitments in the first six months of 2026 as summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

See Note 9 in Item 1 for further information concerning litigation.

Shareholders’ Equity

March 31, December 31, March 31,

June 30, December 31, June 30,

2026 2025 2025

Total shareholders’ equity $ 3,854.7 $ 4,598.3 $ 4,400.9

Shareholders’ equity decreased $167.2 million during the first three months of 2026 primarily as a result of $623.5 million of treasury stock activity mainly attributable to treasury stock repurchases and the payment of $197.1 million in cash dividends, partially offset by Net income of $534.7 million, an increase in Other capital of $71.0 million mainly associated with stock-based compensation expense and stock option exercises and an increase in Other comprehensive income, net of tax of $47.6 million mainly due to foreign currency translation adjustments.

Shareholders’ equity increased $301.0 million since March 31, 2025 primarily as a result of Net income of $2.599 billion, an increase in Other comprehensive income, net of tax of $186.1 million mainly due to foreign currency translation adjustments and an increase in Other capital of $182.4 million mainly associated with stock-based compensation expense and stock option exercises.

The increase in Shareholders’ equity was partially offset by treasury stock activity mainly attributable to treasury stock repurchases of $1.880 billion and the payment of $786.5 million in cash dividends.

Shareholders’ equity decreased $743.6 million during the first six months of 2026 primarily as a result of $1.885 billion of treasury stock activity mainly attributable to treasury stock repurchases and the payment of $394.6 million in cash dividends, partially offset by Net income of $1.378 billion, an increase in Other capital of $117.6 million mainly associated with stock-based compensation expense and stock option exercises and an increase in Other comprehensive income, net of tax of $40.3 million mainly due to foreign currency translation adjustments.

Shareholders’ equity decreased $546.2 million since June 30, 2025 primarily as a result of treasury stock activity mainly attributable to treasury stock repurchases of $2.623 billion and the payment of $786.1 million in cash dividends, partially offset by Net income of $2.688 billion, an increase in Other capital of $171.1 million mainly associated with stock-based compensation expense and stock option exercises and an increase in Other comprehensive income, net of tax of $3.8 million mainly due to foreign currency translation adjustments.

Additionally, during the fourth quarter of 2025, the Company retired 29.5 million common stock shares held in treasury stock, which resulted in decreases of Common stock, Other capital, Retained earnings and Treasury stock.

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See the Statements of Consolidated Shareholders’ Equity in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further information concerning the treasury stock retirement.

During the first three months of 2026, the Company purchased 1.6 million shares of its common stock for treasury purposes through open market purchases.

During the first six months of 2026, the Company purchased 5.6 million shares of its common stock for treasury purposes through open market purchases.

The Company acquires its common stock for general corporate purposes, and depending on its cash position and market conditions, it may acquire shares in the future.

The Company had remaining authorization from its Board of Directors at March 31, 2026 to purchase 28.0 million shares of its common stock.

In February 2026, the Company’s Board of Directors increased the quarterly cash dividend from $0.79 per share to $0.80 per share.

This quarterly dividend, if approved in each of the remaining quarters of 2026, would result in an annual dividend for 2026 of $3.20 per share, or a 31% payout of 2025 diluted net income per share.

Net operating cash for the three months ended March 31, 2026 was a source of $139.1 million compared to a usage of $61.1 million for the same period in 2025.

The improvement in Net operating cash was primarily due to lower cash requirements for working capital and deferred taxes, higher Net income and an increase in depreciation and amortization.

Net investing cash usage decreased $145.7 million in the first three months of 2026 compared to the same period in 2025 primarily due to cash used for an acquisition in the first three months of 2025 and a decrease in cash used for capital expenditures related to the new global headquarters and technology center.

Net financing cash source decreased $319.6 million in the first three months of 2026 compared to the same period in 2025 primarily due to an increase in treasury stock purchases, an increase in payments of long-term debt and a decrease in proceeds from real estate financing transactions, partially offset by an increase in short-term borrowings and proceeds from stock options exercised.

In the twelve month period from April 1, 2025 through March 31, 2026, the Company generated Net operating cash of $3.652 billion, used $1.921 billion in investing activities and used $1.698 billion in financing activities.

The Company had remaining authorization from its Board of Directors at June 30, 2026 to purchase 24.0 million shares of its common stock.

In February 2026, the Company’s Board of Directors increased and approved the quarterly cash dividend from $0.79 per share to $0.80 per share.

In April and July 2026, the Board of Directors approved the quarterly cash dividend of $0.80 per share for the respective quarters.

If approved in the fourth quarter of 2026, it would result in an annual dividend of $3.20 per share, or a 31% payout of 2025 diluted net income per share.

Net operating cash for the six months ended June 30, 2026 was a source of $1.487 billion compared to a source of $1.052 billion for the same period in 2025.

The improvement in Net operating cash was primarily due to lower cash requirements for working capital, higher Net income, an increase in depreciation and a decrease in deferred income taxes.

Net investing cash usage decreased $179.1 million in the first six months of 2026 compared to the same period in 2025 primarily due to cash used for an acquisition in the first six months of 2025 and a decrease in cash used for capital expenditures related to the new global headquarters and technology center.

Net financing cash usage increased $573.6 million in the first six months of 2026 compared to the same period in 2025 primarily due to an increase in treasury stock purchases, an increase in payments of long-term debt and a decrease in proceeds from real estate financing transactions, partially offset by an increase in proceeds from long-term debt.

In the twelve month period from July 1, 2025 through June 30, 2026, the Company generated Net operating cash of $3.887 billion, used $1.887 billion in investing activities and used $1.952 billion in financing activities.

The Company is exposed to market risk associated with interest rates, foreign currency and commodity fluctuations.

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Refer to the “Non-GAAP Financial Measures” section for a reconciliation of EBITDA to Net income.

At March 31, 2026, the Company was in compliance with the covenant and expects to remain in compliance.

At June 30, 2026, the Company was in compliance with the covenant and expects to remain in compliance.

The Company’s notes, debentures and revolving credit agreements contain various default and cross-default provisions.

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EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure defined as Net income before income taxes, Interest expense, depreciation and amortization.

EBITDA is a non-GAAP financial measure defined as Net income before Interest expense, Income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure defined as EBITDA that excludes certain adjustments that management believes enhances investors’ understanding of the Company’s operating performance.

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Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Net income $ 843.6 $ 754.7 $ 1,378.3 $ 1,258.6

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Adjusted EBITDA $ 1,458.6 $ 1,319.8 $ 2,456.8 $ 2,256.8

Adjusted Diluted Net Income Per Share

Management believes investors’ understanding of the Company’s operating performance is enhanced by the disclosure of diluted net income per share excluding Valspar acquisition-related amortization expense and certain other adjustments.

Valspar acquisition-related amortization expense is excluded from diluted net income per share due to its significance as a result of the purchase price assigned to finite-lived intangible assets at the date of acquisition and the related impact on underlying business performance and trends.

While these intangible assets contribute to the Company’s revenue generation, the related revenue is not excluded.

This adjusted earnings per share measurement is not in accordance with US GAAP.

It should not be considered a substitute for earnings per share in accordance with US GAAP and may not be comparable to similarly titled measures reported by other companies.

The following tables reconcile diluted net income per share computed in accordance with US GAAP to adjusted diluted net income per share.

Three Months Ended June 30,

After-Tax Pre-Tax Tax

Diluted net income per share $ 3.43 $ 3.00

Acquisition-related amortization expense (2)

$ .27 $ .07 .20 $ .26 $ .06 .20

Severance and other restructuring expenses .10 .03 .07 .23 .05 .18

Adjusted diluted net income per share $ 3.70 $ 3.38

Six Months Ended June 30,

After-Tax Pre-Tax Tax

Diluted net income per share $ 5.58 $ 5.00

Acquisition-related amortization expense (2)

$ .53 $ .13 .40 $ .51 $ .13 .38

Severance and other restructuring expenses .10 .03 .07 .31 .07 .24

Adjusted diluted net income per share $ 6.05 $ 5.62

(1) The tax effect is calculated based on the statutory rate and the nature of the item, unless otherwise noted.

(2) Acquisition-related amortization expense, which is included within Selling, general and administrative expenses, consists of the amortization of intangible assets related to the Valspar acquisition.

These intangible assets are primarily customer relationships and intellectual property and are being amortized over their remaining useful lives.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

40 unchanged sentences

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 2. Management’s Discussion and Analysis