Good morning. Thank you for joining the Sherwin-Williams Company’s review of Fourth Quarter and Full Year 2015 Results and Expectations for 2016. With us on today’s call are John Morikis, President and CEO; Sean Hennessy, CFO; Allen Mistysyn, Vice President Corporate Controller; and Bob Wells, Senior Vice President Corporate Communications. This conference call is being webcast simultaneously in listen-only mode by issuer direct via the Internet at www.sherwin.com. An archived replay of this webcast will be available at www.sherwin.com beginning approximately two hours after this conference call concludes and will be available until Wednesday, February17 at 5 p.m. Eastern time. This conference call will include certain forward-looking statements as defined under U.S. federal securities laws with respect to sales, earnings, and other matters. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. A full declaration regarding forward-looking statements is provided in the Company’s earnings release transmitted earlier this morning. After the Company’s prepared remarks, we will open the session to questions. I’ll now turn the call over to Bob Wells.

Thanks Jessy. Good morning, everyone. In the interest of time, we provided some balance sheet items and other select financial information on our website www.sherwin.com under Investor Relations January 28 press release. Our consolidated sales in the fourth quarter increased 1.4%, $2.6 billion, due entirely to higher paint sales volume through our Paint Stores and Consumer Groups. For the full year, sales increased 1.9% to $11.34 billion. Unfavorable currency translation decrease consolidated net sales 3.6% in the quarter and 3.3% for the full year. Consolidated gross profit in the fourth quarter increased $104.3 million to $1.3 billion and gross margin expanded to 50.8% of sales from 47.4% of sales in the fourth quarter of 2014. For the year, gross margin increased to 49% of sales from 46.4% of sales last year. The increase in gross margin in the quarter and full year was due primarily to volume driven supply chain productivity and lower year-over-year raw material costs. Selling, general and administrative expense increased $6.1 million to $991.5 million in the fourth quarter, but decreased as a percent of sales to 38.1% from 38.3% in the same quarter last year. For the full year 2015, SG&A expense increased $90.6 million to $3.91 billion, an increase as a percent of sales to 34.5% from 34.3% in 2014. Incremental SG&A to support the new HGTV Home program at Lowe’s, and new store openings and sales territory additions accounted for the majority of the SG&A increase in the year. Other general expense decreased $12.6 million in the fourth quarter and $7.2 million for the year due primarily to lower environmental expenses in both periods. Interest expense for the quarter increased $4.1 million to $19.5 million. For the year, interest expense was $61.8 million compared to $64.2 million in 2014. Profit before tax in the…

Thanks, Bob. Good morning, everyone. Thanks for joining us. As we announced last October, on January 1 of this year, I assumed the duties of Chief Executive Officer. Back in 1971, British Rock Band THE WHO recorded the now famous lyric, Meet the new boss, Same as the old boss. In our case, the same may not hold true literally in every respect. But it is certainly true when it comes to our mutual confidence in the Company’s strategy, our focus on growing market share through superior products and execution. Our adherence to key performance metrics like return on net assets employed. And net operating cash to sales and our shareholder friendly capital allocation. These are the things that will define the value of Sherwin-Williams in the years ahead. And I believe they are all moving in the right direction. 2015 was a year of ups and downs. Our full year revenue of $11.3 billion set a new record for the Company, but are well short of our original expectations. One reason for this was stronger currency headwinds than originally anticipated. Another was the weaker than expected demand for industrial coatings in certain categories. Particularly those used to maintain oil and gas production and storage assets. And in the middle two quarters of 2015, we broke our long standing practice of not giving weather reports on earnings calls as heavy rainfall across much of the country clearly affected paint demand. This lower than expected revenue performance however, did not translate to lower than expected profit or cash flow. Our full year profit before tax, net income, earnings per share and net operating cash, all met or exceeded the expectations we set back in January 2015. Net income eclipsed $1 billion in 2015 for the first time in our Company’s history.…

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from the line of John Roberts with UBS. Please proceed with your question.

Good morning, guys.

Good morning, John.

John, I think, one of the big tip on that. “The Who” album was won’t get pulled again. On that note, what is your thinking about raw materials, given the volatility in oil as your guidance assuming relatively, conservatively not much benefits here it’s going to take some time for oil to work its way down the supply chain?

John, this is Bob. We think that there could be some benefit in the petrochemical side of the basket maybe as much as we saw in 2015. We think that, we saw a pretty big move in TiO2 in 2015 and we’re unlikely to see that figure move in 2016. So mid-single-digit I think is a reasonable outlook for the industry. And well as we usually develop a catch as we go through the year.

And then, it is 83 store openings per year for the Paint Stores segment, is that right rated to be a kind of steady state there?

Yes. I think there’s about average for us. Will adjust that as we go but I think that’s about where we want to run.

Okay. Thank you.

Thanks John.

Thank you. Our next question is coming from the line of Ghansham Panjabi with Robert W. Baird. Please proceed with your question.

Hi. Good morning and this is actually Mehul Dalia sitting in for Ghansham. How are you guys doing?

Hi, Mehul.

First up, 4Q same store sales is an acceleration over 2Q and 3Q, so just wanted to know what changed and how did the non-architectural piece perform on a relative basis compared to the previous two quarters.

If you look at the – this is Sean Hennessy. And so I’ll take first – the second part first. I think that non-paint sales performed fairly well. I think that consistently throughout the year, we had a nice year in the non-paint sales but they accelerated also. I think that the Paint Store Group had a very nice quarter and there is chance have we don’t usually talk about weather, but the maybe weather helped us a little bit. But I think that what’s when you look at the second and third quarter versus fourth quarter. We did use weather in the second and third quarter. Thank you. You see parts of that.

Got it. Also what’s your estimate how the industry grew in the U.S. how it changed on perspective in 2015 and what are your expectations for 2016.

Yes. Mig, this is Bob. We have very few data sources to go to help us with estimates of industry volume. The American Coating Association models industry volume over the course of year. They currently stand at an estimate of 5.5% growth for 2015, we think they are a little high. We were thinking more in the 3% to 3.5% range but as we collect more data, year-end data, we'll kind of fine-tune that outlook but I think it's likely the industry will end up in the 3% to 3.5% range.

And your expectation for 2016 similar 3% to 3.5%?

It could be a little stronger than that. It depends on the weather patterns relative to last year, but that's not a bad range.

Great, and just one last one before I turn it over. With the three selling season, quickly approaching, can you talk about some of the lessons learned at Lowe's in 2015 and if any strategy shift or anything that you guys are going to do in 2015. Thank you.

Yes. I don't think there is a strategy shift at all. I think lessons learned include the importance of being very responsive obviously to our customers. Really working well with associates in the aisles and helping them to be successful and knowledgeable in our products. So I think we've got a very good strategy there. I think we've got a very good relationship there and I think we're working very hard to be the best customer there as we do with all of our customers.

Great, thank you so much.

Thanks, Mehul.

Thank you. Our next question is coming from the line of Don Carson with Susquehanna Financial. Please proceed with your question.

Yes, question for Sean just on gross margin. Just when we think it can't get any better it does, so particularly in the fourth quarter. So I'm wondering how much of that was volume driven was there any sort of true up against your standard cost [indiscernible] turned out to be lower than you originally thought when you made the estimate on standard costing. And what's been your outlook for next year if you in the year on a 50.8% gross margin that signal a pretty strong performance as we get into the paint season this year?

Yes. Don, if you take a look at that 340 basis points approximately half of that was due to the paint volume increases for our North American supply chain. That's really the number one thing that drove it. That also includes integration of that Comex business that has been a nice piece of that. Also you have to remember the mix because of the foreign currency exchange. As U.S. becomes bigger and bigger piece of that, of our total sales, our paint store group does have the highest gross margin. So that helps on the other piece. Now having said that LIFO is always trying to catch what you think is going to happen with the laws and the way the raws came in a was a slight help from the LIFO. LIFO did help us especially in the Consumer Group and also a little bit in the Storage Group. If you take a look about the long-term, in the long-term I think we try to give you guidance what we think is long-term we think probably our long-term when you look at the makeup of the company and where we are going is in the mid-47 to the mid-49s. I think that again when that foreign currency changes around instead of being at 80% U.S. in North American sales you’re going to start seeing that come down back into the 70s, that will have the reverse impact on the gross margin so when we feel like we’re running at a normal area we think we are going to be in the 47.5% to 49.5% gross margin.

Sean, what was the LIFO adjustment either in dollars or percentage terms?

We are not going to break that out. I would tell you that it was a help because you asked that question I wanted to point that out but it’s not enough that we’re going to put it in the K.

Alright, thank you.

Thanks, Don.

Thank you. Our next question is coming from the line PJ Juvekar with Citi. Please proceed with your question.

Hi, good morning.

Good morning PJ.

Just on follow up on HGTV rollout that you had last year I understand that you were delayed in some stores and then you had a wet spring so given on that last year what are your expectations for this year in terms of volume growth and what are your margins for HGTV paint?

I’m going to jump in real quick. I just want to remind everyone we’ve over the years have been very careful not to break out customer P&Ls and because of the differentiating factor of HGTV in 2015 we try to give you some guidance but we really don’t have any kind of plans to break the sales or the absolute gross margins or the operating margins. We think it’s in our core now and you’re going to see it going on in the future but so from that standpoint I think we are going to shy away from giving that customer specific P&L but John you might want to comment? On the sales side I think we expect.

As I mentioned, we are working closely with all levels of Lowe’s, and we’re feeling good about the momentum as I mentioned. I think it’s a matter of execution now and as I said we’re going to focus on being the best partner we can for them and every customer that we have.

And John, you have just under 4,100 stores today and you said 5,000 is the target is that a saturation point for you in terms of numbers of stores and when do you think you might get there? Thank you.

Let me be clear 5000 is not our target, it’s a milestone. And I often say that – I refer to it because it’s between 4000 and our next number 6000 and so we’re going to stop at 5000 on the way. We don’t see a saturation point. We continue to add stores each of our district managers maintain a real estate strategy and a plan to continue to invest in their stores and there’s not a one of them that is raised their hand to say that the and really see no additional markets that they can add to. It’s our expectations that we’re going to continue to invest in those markets and continue to penetrate the opportunities in those markets and we are excited about that.

Is there a particular area where you want to add stores?

We are obviously looking at the West Coast. We shared with the community here that we look at households per paint store and we see a terrific opportunity in the West area of the country and again we remain very confident in this model. This model in our ability to grow market share and to grow our operating leverage as we grow that incremental volume that gives us that confidence.

Thank you.

Thank you. Our next question is coming from the line of Duffy Fischer with Barclays. Please proceed with your question.

Good morning, fellows.

Good morning, Duffy.

In question there’s a number of ways just to triangulate it, but if you look at it Q4 you delivered and in the Q1 that you’ve guided to just take the mid-point in extrapolate that through 2016 there’s a disconnect between how good those quarters were and kind of where the mid-point is for 2016. Is there something in the back three quarters where there’s a little bit a step down that we should take into account or is that just a good case of conservatism?

No, I think when you look at it way you just guided us to I think the first quarter, I just want to remind you in Consumer Group because of the HGTV expenses if you remember the SG&A expenses – we had a jump in the first quarter and we pointed out last year that that was going to be 100% SG&A, zero sales. So I think this year we’re going to have relatively close to the same amount of SG&A but some sales going against it so. I think that helped us. I think if you look over two years I think the first quarter would look more normal to you and would probably look more like the other three quarters we have in the guidance.

Okay great. And then one of the issues in 2015 was it seems like your customers were running up against their bandwidth as far as just the number of painters they could employ. Is your sense that they have been able to expand their paint force and therefore the opportunity for more sales is bigger this year in the U.S?

That’s improved to some degree. It’s hard to put your fingers exactly on that but I’d say in the market I think it’s gotten a little better.

Okay great. Thanks fellows.

Thank you, Duffy.

Thank you. Our next question is coming from the line of Bob Koort with Goldman Sachs. Please proceed with your question.

Hi, John. Good morning.

Good morning, Bob.

I was curious what your appetite was for spending money down in South America opportunistically and what’s going on down there or maybe there’s a little bit of greater fear about forging ahead more aggressively what are your thoughts on?

I think there’s a little difference everywhere. I think that two years ago we were really nervous about putting money down in Argentina. And when you think about the exchange rate now with 13 times you look at Chile now they’ve changed their government out, so we feel okay investing in Chile. Recovery long-term we still feel good about Brazil but we’re watching both of those governments and seeing what happens with some of the policies down there. If the right opportunity would appear we would actually buy it. I think that we still are looking at the long-term, but I think on the marginal investments we’ve been very careful on what we’re going to spend down there. When I say marginal I’m not talking about distribution, or manufacturing, or marketing. I think more on the admin side, system sides those kinds of sides how much working capital will allow it to grow and so forth. We’re watching it. We feel good about that. We’re still cash positive each and every country and that really helps us stay the course. But, we think eventually it might be a while it was interesting we were going through what we went through in the late 80s and early 90s when we actually had to do inflationary accounting in South America which I had to look at some of the rules like it had been so long. We take a look at this spot and we’re watching these things but we’re being careful on the margins.

In a follow-up, what are you seeing in results in Canada given the commodity influence growth rates there and what you see the path forward for 2016?

Okay, we don’t break it by region but I could say directionally as you would expect the oil and gas market there has experience the pressure that one would expect. We are growing in the market our acquisitions of the brand that came along with Comex general paint are in the process of integrating that in and we’re really excited about the momentum we’re gaining up there. On the architectural side we are continuing to grow the Protective and Marine side we continue to see some pressure.

Got it, thanks so much.

Thanks Bob.

Thank you. Our next question is coming from the line of Vincent Andrews with Morgan Stanley. Please proceed with our question.

Thanks I’ve got a few quick ones. Starting with the fourth quarter you beat the consensus estimate by about $0.18 and I couldn’t help noticing that your guidance range for the entirety of 2016 is about $0.20, so I’m just wondering why the range seems so narrow for 2016. Maybe we could start there?

If you took a look at the guidance we gave at the beginning of 2015 about a year ago we gave you $0.20 and $10.90 to $11.10. I think we’ve changed this spend many, many times. Back in 2009 we gave you a guidance range of $1. I think there’s been a lot of moving parts but I think that we feel confident that we’re able to – whether it happens, adjust to different things I would think we’re going to be able to get that kind of improvement.

Okay and then on your tax rate in the fourth quarter stepped up a bit. How should we think about that tax rate in 2016?

Yes. I think that when we take a look at it the full year was about 32.1%. I think it’s going to be approximately right around that number to maybe - if it comes in at 31.5% or 32.5% I wouldn’t be surprised.

Okay. And then lastly what’s on the guidance you have an FX headwind baked in there?

Yes. We do. just think about how the Brazilian real, even the Canadian dollar we are talking about before we definitely have a foreign currency. Foreign currency when you take a look at 2015 was much higher than we originally expected because I think everybody knows how the currencies are going and we thought it was prudent we definitely have foreign currency headwind in there.

And how much is it?

We don’t break that out. Because there are so many different currencies and so forth but it’s significant.

Okay. Thanks very much.

Thanks, Vincent.

Thank you. Our next question is coming from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your question.

Thanks, good morning guys.

Good morning Arun.

Good morning. I just had a couple of questions. Following questions on the guidance topic can you help us understand maybe what you were thinking as far as architectural and paint stores and then the other segments on the top line basis looks like you’re guiding to low single digits for the full Company. Do you expect more of the same i.e. weakness in Protective and Marine and our performance in architectural?

I will tell you that, when we look at our guidance I think the fourth quarter is pretty interesting. Total we were at 1.4% sales gain, Store Group was 5.9% so four times what we thought that we are going to be at. I think that currency other things, I think that, we don’t break out our guidance by segment but I think that to give you some indication that tells you where we think the growth is going to be

But we do see to your point the issue of Protective and Marine we expect that pressure is going to continue for the foreseeable future.

Okay. And then, this is just as a follow-up on the raw side obviously some decline incremental in 3Q and 4Q. If I go through the math I guess you expect that to continue to be a benefit in 2016. Is there any reason why we shouldn’t expect a nice benefit on the raw side and maybe you could just elaborate on the oil versus TiO2?

Yes. Arun, and this is Bob. We do expect to continue to see benefit from raw materials and we’ve commented that on the oil side it does take longer for a drop in propylene and ethylene to work its way through the acrylic chain and actually get to market. So there’s probably more tailwind on that side of the basket in the year to come than there is on the TiO2 side. TiO2 took a pretty sharp drop in the back half of last year. We’ll see that obviously the benefit of that in the first half of this year but TiO2 is approaching kind of its historic starting place of $100 pound on the spot market. So we don’t necessarily see a lot of further runway for TiO2 to decline.

Thanks. Just one more thing up I can get in on the share buyback side what you are guys expecting to do in 2016? Thanks

I think we’ve been pretty consistent with our cash utilization and I think that we feel pretty good about the cash generation of the Company. I think we’ve been consistently generating cash and strong cash over the last 15 or so years and I’m going back to when we took, we’re put into these jobs. I think you’re going to see us continue to invest in the business in CapEx in new stores and so forth. I think that we’re going to pay out dividends. You heard the dividend going over $3.30. And then, when we look at acquisitions and we’re going to look at buying back stock and I would tell you I’d be surprised if we were holding cash at the end of next year.

Thank you.

Thanks Arun.

Thank you. Our next question is coming from the line of Aram Rubinson with Wolfe Research. Please proceed with your question.

Hi this is actually Chris on for Aram.

Hey, Chris.

I had a couple questions. One is housekeeping. Can you give us the gross profit segment by segment by any chance?

Sure. Just give me one second here. Paint Store Group was up $97.8 million in the quarter. Consumer Group $27.5 million. Global Finishes Group was down $4.8 million and Latin America was down $15.1 million.

Okay. Great. Thank you. And then just want to dig in a few brief questions in terms of Global Finishes, so what you attribute like a sudden step up and profitability obviously GM is going help a little bit but what made major improvements did you put on the cost side and how sustainable is that in the next several quarters?

Right. When we look at that Global Finishes Group in the fourth quarter was up 29% it was the operating profit was really driven by SG&A expense control. And favorable raw material costs which more than offset the negative currency because they had to go against currency also and I would tell you we feel pretty good about this SG&A savings that we have. I will tell you years ago when this Global Finishes Group was operating at 3% to 3.5% after we bought the Becker, Sayerlack and Inchem acquisitions, we said eventually we felt that could run at 12% and so we think that we’re at a pretty good spot. We think in the future a lot of that improvement has come from those efficiencies we are going to get and I think in the future it’s going to be driven by market share gains and sales gains.

Team there has done a really nice job of streamlining the noncustomer facing functions and give their team a lot of credit for continuing to focus on that.

Okay. Great. And this one quick one. You called out in the – one potential reason for strength in the consumer segment was there something going on there in terms of a new program launch or you can name it from that what kind of drove that strength?

We have a very good relationship with a very good customer there. And so we are continuing to focus our efforts there as I mentioned earlier we want to be the best supplier to each of our customers and so we’ve really just tried to listen to a very good customer being responsive and help them grow and that’s our game plan.

Alright, great. All thanks. Thanks again.

Welcome Chris

Thank you. Our next question is coming from the line of Scott Rednor with Zelman & Associates. Please proceed with your question.

Hi. Good morning.

Good morning, Scott.

I just want a better understand the planning assumption for 2016 you guys posted 27% earnings growth last year and over the past four years it’s been about 20% to 25% on average in this year that you are guiding to 10%. despite the fact you continue to feel good about the architectural paint market and raw material tailwind so I guess there is an offset from Comex not being as accretive but what else is in the budget that we should consider that should contribute to lower earnings throughout the share?

I think that the FX headwinds, where I would say be a little more our estimate is a little stronger than it was going into last year. I think that Comex was a really strong one and I think you heard Bob’s comments about raw materials. Even though they are going to be a nice tailwind I don’t see the tailwind being as strong in 2016 as it was in 2015.

And now you guys done on Comex. I thought the previously Comex you had a multi-year runway so what inning are you in with that integration?

I would say we are in inning eight. That the bottom of the eighth and the home team is winning big. I think we’re going to see it, we were able to accelerate it.

Who we do sort out the – we are continuing to invest in the store transitions over team Sherwin so Sean’s point largely on the supply chain side I think that team did a terrific job and we’ve clearly moved some of that up from what we have expected to see in 2016 into 2015. And we were successful also on the store side but there’s still some work to do on the store side and that’s what we are working on here as we roll into 2016.

Great. Very helpful. And just one last one for you Sean. The cash flow conversation for sales, that you guys kind of talked to investment community about it, right around 13% this year is that is it something unusual or is that kind of the new run rate of the company going forward?

I think we were helped with if you look at the working capital again we define working capital as receivables plus, inventory minus payable was driven all the way down to 8.6% and I would tell you that our long-term goal is to reduce that working capital as a percent of sales. So that we can go from 10% to 11% and the long-term cash as a conversation from sales and I will tell that our working capital at 8.6%. our inventory is in great shape. Our receivables are in great shape but I think our payables were favorably impacted by timing of some payments year-over-year. So I think that our payables, the accounts payable will be lower next year which will raise the working capital backup into that, our more near-term target of about 10% of sales. So I think the 13% is nice and I think it was just because of the timing of payments. I think you’re going to see us going back in that 10% to 11% of sales in the future.

Great. Nice quarter, guys. Thanks for all the detail.

Thanks Scott.

Thanks Scott.

Thank you. Our next question is coming from the line of Greg Melich with Evercore ISI. Please proceed with your question.

Hi. Thanks. I had a couple hopefully housekeeping follow-ups it sounds like - do you give a number for what raws were down in 2015 and love that and also buyback is or isn’t in the guidance for EPS?

On the raw material question, Greg. We said that for the full year over 2014 raw materials would be down in the mid-single digits. In the back half we mentioned the fact it was trending a little higher than that or at the high-end of mid-single digits just due to the trajectory of materials over the course of the year.

And it sounds like given what Sean said that probably finish that the high-end so maybe down 6% or 7% the higher end of mid-single digits?

For the second half.

It’s over 2015. We could that raws were down at high-end of mid-single digit.

Now for the full year, you’d be in the mid singles.

You’d still be in the singles but more in the back half. Got it.

Yes.

And then on the buyback and EPS?

We definitely have in our guidance some buybacks. We did not have any cash were not holding any cash in our guidance for the end of the year.

Okay. Great. And then really, I want to ask business it looks like that fourth quarter demand trend nice improvement with the comp. What was the volume comp when you packed out mix and what accounted for the acceleration if you think about it versus second and third quarter was it architectural was it maybe some of the other weaker businesses not being as weak?

It was largely the architectural, Greg and if you look at what we’ve seen there clearly it’s an improvement in third quarter over fourth quarter and we continue to be excited and encouraged by the comments we’re hearing from many of our customers. Our home builders that saw a more mild weather which enabled them to catch up on some of the lost work days that were previously an issue. There’s just a momentum there that we are working hard to make sure we capture more than our share.

And if you look ahead on the commercial side do you think the backlog there looks like acceleration as well?

The nonresidential side didn’t slowdown in 2015 to 2014. What we feel as an absolute number it was still a good performance. Our relationship in this business as we look at the large commercial contractors and how we are positioned there we feel really good that with the market we’ll grow well beyond behind what the market trends will grow. We’ve got a very good position here. We work hard on every aspect from product specifications color and we expect to get again quite a bit of that share as we grow into 2016.

The other issue to keep in mind on the non-res new side is that there is a long lag between starts and paints in that market so starts were strong in 2014 and just down slightly in 2015 so that bodes pretty well for painting on new construction new nonresidential construction in 2016.

So if you look at residential repaint we been experiencing double-digit gains here for quite some time we’ve got good momentum there good position in the commercial side and we expect as Bob mentioned that that pipeline is going to work in our direction.

That’s great. Thanks a lot and good luck.

Thanks Greg.

Thank you. Our next question is coming from the line of Nils Wallin with CLSA. Please proceed with your question.

Hi. Good morning and thanks for taking my question. I believe you said that paint volume in the stores group was greater than revenues and revenue growth that is and so given your estimation of 3% or 4% overall growth for the paint gallons it suggests that you are probably taking share. How would you characterize those share gains? Are you actually seeing competitors close down or you just somehow that their growth is – there are not opening stores as fast as you are? And then finally, are you actually seeing any distributors kind of leave the business. Independent distributors?

Well. There are stores that close. It really varies by market. It’s a very fragmented market and we compete with local competitors so each market is bit different and we often say inside our four walls that we don’t discriminate by where we will grow our share. Some of them will be larger competitors and some of them might be smaller but our teams locally are focused on their customers that offer opportunity and it may be in any channel that they see those opportunities but they are really focused on growing and we’re winning. We feel pretty good about the pace in which we are winning.

The other thing I would point out, we didn’t commented on over the last couple of years we’ve done very well with international accounts since the recession as a consolidated supplier base we are the only paint supplier that has a truly national footprint of contractor friendly outlets so that helped us a lot in that arena.

Got it. And then where are you in terms of your capacity to supply the market? Do you anticipate you’ll need to expand capacity in the next two to three years or it’s maybe five years out?

I think that the when we take a look at the capacity I think our manufacturing footprint has been expanded each and every year from efficiencies. We’ve taken a look at our capacity utilization. we’re in nice shape. We went through a nice growth here we did an integration of Comex. We might see down the road five years where we might have to do some type of major expansion on our plant but in the short term here we don’t have a game plan to open a new plant.

The teams are doing a really nice job as Sean mentioned in some of those investments might be on our billing line or something like that but we’ve got a team that’s got a mindset of continuous improvement and they are working hard to capture additional capacity.

And then just one final one, I know that stated all year some of the raw material headwinds in your Latin American coatings group is there any opportunity to change sourcing’s that you don’t have going forward.

I tell you why. What happens with most of the major raw materials. So 87% of raw materials where purchasing down there. Our purchase spend U.S. dollar, so when the raws go down mid-single-digit I will say five and then currencies fluctuates losses 25% to 30% such as in Brazil. your raws on a local basis are going to go up. That’s really the big driver not sitting here saying can we go from one supplier to another.

Got it. Thanks very much.

Thanks, Nils.

Thank you. Our next question is coming from the line of Chuck Cerankosky with Northcoast Research. Please proceed with your question.

Good afternoon, everyone.

Hi. Chuck.

Tomorrow afternoon. First John can you talk about where pricing might go in the Paint Stores Segment in 2016?

Well, we’ve not announced the price increase and Chuck as you know many years of falling us our first communication is to our customers and then we would quickly update you as quickly as we can but right now we’ve not announced anything.

Should we assume that the shelf prices will at least be stable?

Yes I’d say that’s a safe bet. Yes.

Okay. What about the interest rate in environment? Any comments on that about what it might be doing to end market demand specially on the architectural side, residential architectural side?

I think Chuck. You’ve seen a lot of projects. It’s seems like people are still investing, the markets are open. The interest rates are low but we’re watching the starts and so forth. I think it really comes down to if they can utilize these assets they are investing in them.

Now what are you referring to Sean when you say utilizing assets?

Whether it’s commercial or people building multi-family dwellings and so forth that’s what I’m talking about.

And then a question based on something you mentioned earlier the call you were integrating general paint in Canada, could you provide a little detail about that? Will that banner go away?

Much like we did with every past acquisition that we’ve done with every past acquisition we look at the customer base and the customer dictates to us the pace in which we move the Sherwin-Williams brand is the ultimate brand that we end up with. Some of these products then end up a sub brand inside our Sherwin-Williams stores. We are able to leverage the advertising and the communications that we have that promote the Sherwin-Williams brand once they become a Sherwin-Williams banner store. And so we move in that direction but we move at the pace that we are able to get through the tunnel and in short when we get to the other side that we have our customers with us.

And then in the guidance it sounds like Latin America Sean, you guys are being very cautious on everything from currency to the regional economies. Is there anything else that we should think about in terms of the Latin America segment?

No. I think you hit on them. I think that the basic business is again we're watching it. We have not forecast the Brazil is going to be robust economy next year Argentina will be. I think we'll see what happens in Chile. Mexico seems to be doing fine but I think when you look at some of these areas. There is a reason why the currency continues to devalue and I don't see Brazil being a positive this year.

All right. Thank you very much.

Thanks [indiscernible]

Thank you. Our next question is coming from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed with your question.

Thank you for taking my question after the timeframe just for me, John when you talk about being – Comex being at the bottom of the eighth inning whatever that means. Does that mean you are done about three quarters done in terms of the integration of what you want to do?

Rosemarie, this is John. Because I was trying to make the point that John came back and said that on the operational side, on the admin side, on the systems side, the integration of raw materials and so forth. I would tell you we've completed that. Where the pieces that haven't been completed is what John said about the general paints and different pieces there. But inside United States, I would say all the operational and the reason I said bottom of the eighth is to referred that some of the incremental gains we expected were brought forward into 2015 and that's what I was referring to is the EPS gains.

Right. And so those improvements are now part of our everyday operations. We've taken those facilities out of the supply chain and now we're running those volumes through our existing plants and the additional point that I was making Rosemarie was that now our focus become how do we get the most throughput on each of those stores? Some that had transitioned earlier and some that were in the process now but now that they've been – many of them been converted to Sherwin stores, our opportunity to grow our sales in many segments that they weren't selling in the past become the opportunity moving forward.

Thank you. That is helpful. And still in the Consumer Group last year, you were building the channel at Lowe's, so as the margin benefited from strong volume. Are we to expect a slightly lower volume because now it is really repurchasing a selling at the channel?

I would say yes because 100% of the architectural paint we've sold to Lowe's last year was incremental. So and the other reason at our core we – that's definitely was 100% incremental this year. Last year in 2015 and 2016 will not be.

So how much do you think it will cost you about 100 basis points or could be impact of the lower volume being higher than that?

You know what, we will see but it's definitely going to – it will definitely be a reduction.

Okay, thanks. And on the Ti02 the producers have been announcing several price increases, they all seem to be getting their act together. Are you taking it or in part of your comments about the fact that now it's the bottom meaning a low floor or a beginning of price increases on the Ti02.

Yes, Rosemarie. We often comment that these pricing cycles in Ti02 typically begin with pricing below $1 a pound. Oftentimes peak above $2 a pound and then settle back on the back end of the cycle below $1 a point again. We're hovering just above $1 a pound. And we realize that there's been price increase announcements in the market. Ultimately, the balance of supply and demand in the market will determine whether those increases our successful and we'll see, but it feels like we are approaching the bottom on the downside of this cycle.

Okay. And you find that the supply demand is getting I mean could it be balance by the end of this year or that is too early and we need another couple of years.

I think it's too early. It really depends on demand growth. Demand growth outside of North America has been very weak.

Okay. And lastly if I may, could you bring us up-to-date on some of the press releases that you have published saying that you are working with Lowe's towards introducing other product lines. Can you give us a feel of what that is and then tell us how the antibacterial is doing? I know it's early, but.

Let me start with your question on the – on our product paint seal it's exciting new technology for us. It's the first EPA registered paint that kills 99% of these five specific infection causing bacteria that have been exposed for two hours and there's nothing like it in the market, nothing. And so we're excited about it. It actually lands and it begins to sell in our stores beginning February 1. So you are right. It is little bit early. We just finished up our sales meetings with our team where we've done some extensive training with our team on the product and we're really looking forward to it. We did launch it last year and the feedback from the medical community has just been outstanding. It's just terrific. We’re very excited about it. So we're looking forward to a good year with the product.

That is in the new category [indiscernible]

We’re not in a position to talk to anything like new categories or new products. I think that’s important that we respect our customer’s position and anything that they might be launching we think should be coming from them.

Okay, that’s fair. Thank you very much.

Thanks, Rosemarie.

Thank you. Our next question is coming from the line of Ivan Marcuse with KeyBanc Capital Markets. Please proceed with your questions.

Hi thanks. Just a real quick question in terms of 2015 the way I understand mix was a bit of a drag in terms of higher commercial volumes and lower protective and marine. 2016 within your sales guidance is mix, do we lapped that mix become sort of de-minimis or is that still a bit of an issue as commercial continues to grow and in the fact that continues to be a bit of a drag?

I think that it's going to be smaller than it was this year, but it still will be somewhat of a drag.

Great, thanks.

Thanks, Ivan.

Thank you. Our next question is coming from the line of Jay McCanless, Sterne, Agee. Please proceed with your question.

Good morning, everyone.

Good morning, Jay.

I've heard you all make some comments about SG&A, but did you provide formal guidance on what we should expect for SG&A as a percentage of sales for 2016?

No. We're basically giving you sales and EPS guidance. We didn't go down the factors of that.

Okay, all right. Thank you.

Thanks Jay.

Thank you. Our next question is coming from the line of Eric Bosshard with Cleveland Research. Please proceed with your question.

Good morning.

Good morning, Eric.

The store comp in 2015 moved around more than we're used to seeing from an 8 or 9 to a 2 and now back to a 5. The question in terms of 2016, the factors that moved it around during 2015, can you just remind us of what those were and then how you think about that as it relates to 2016?

Yes, I think that one of the first thing and as John said that you won’t repeat it. We usually did not talk about weather, but weather did impact that second and third and I believe the fourth quarter. We had some nice weather and I think that homebuilders have said that they caught up more than they thought they were going to in the fourth quarter and I think that's probably a very accurate statement. And I think that we're not expecting, we probably expecting a little more normal in that area. I would say that's probably the big driver. The second one is probably the labor and how the labor was working and I think John's comment earlier that our customers seem to feel that they are in a better situation with labor going into 2016 than 2015.

So I know you don't guide on a segment basis, but when you go through that it sounds like if more normal weather and more normal labor that I guess and your guidance wouldn't seem to imply that we're going back to 8s or 9s in the stores group. And so in terms of again the difference between what you are guiding in 2016 and the days of the 8s again what's the difference?

I would just say market.

And if you go back five years price too. Price in a lot of those years.

Yes.

And as long as raw materials are benign, you are unlikely to see a lot of price.

Yes.

Very good. Thank you.

Thanks, Eric.

Thank you. Our next question is coming from the line of Dmitry Silversteyn with Longbow Research. Please proceed with your question.

Well, now for sure, good afternoon, gentlemen. Very much for being so accommodating just a couple clarifications on the fourth quarter just make sure I understand the direction that the business is going. It sound like a Latin America, you saw a little bit faster volume declines. And I mean you complain about volumes being down offset by a higher pricing for a few quarters. But it looks like it was sort of way down in the fourth quarter. Is that sort of the pace of that we should expect to see there in 2016 in other words kind of a mid-single digit decline in organic growth of volume plus price?

I will just tell you right now, Demetri, you are right. We don’t break this out. We didn't see that dramatic of the difference between the fourth quarter and the other quarters in the year. By country, you saw different things go back and forth. I would say it was the dramatic change in the Brazilian real and some of these things that hit us harder than what we thought they were going to be in the fourth quarter. And when you sit there and take a look at that we have to get some price back, back to the comments about where we are. So I think things are from when you sit down and look at that gallon number and the sales number, I think it had more to do with FX than it did for business.

Yes, I would say that the one area that we clearly felt an impact, Dmitry was in that oil and gas and mining operations. We have a very good presence there and there's a lot of pressure there.

Got you, got you, okay. Just question book keeping question for Sean, the tax rate expectations for 2016 about 32% same as 2015.

Yes. I think that – we've been in that range for probably 8 years to 10 years. And I could see us staying in that range.

Okay, very good. And then just on sort of the incremental margin and I know it's not the right way calculating. But I mean you've delivered like a 73% incremental margin in paint stores if you look at the change in revenue versus the change in profit dollars and as in the EBIT line and about 55% in the Consumer Group. Would lead me believe that a lot of your raw material benefit happened in the fourth quarter because I don't think your incremental margin really is that high, is that the right way to think about that?

Yes, because if you think only about fourth quarter, gross margin it really came down to two things. Gross margin in SG&A and gross margin definitely had the larger impact in that SG&A. But don't discount that what we've been talking about with this Comex integration. I think that when you think about the expenses that were admin expenses, those kind of expenses we basically now at a nice run rate for all the different systems and admin expenses for Comex.

Got it. One final question just on new store growth, you keep guiding to sort of the 100 stores a year or so. You get close in 2014 at about 95, you only get 3 this year. So what's holding you back from getting to that 100? Is it finding the right locations or some constraints on personal or sort of how should we think about your not exceeding 100 stores if you have 100 stores as a yearly average.

It really does come down to a level of comfort that we have with the expansion and making sure that we have the human talent to be able to deliver on our promise. And so as we add the stores incrementally important if you will to have the right people at the right level to be able to deliver on every brand promise that we make. And we just feel that 85 to 100 range is the right range and you're going to see that fluctuate, sometimes it just in the timing of when they are going to hit. You might have a heavier first quarter or heavier fourth quarter, but that's a range that we just feel comfortable with.

Okay, fair enough. Thank you very much.

Thanks, Dmitry.

Thank you. Our next question is coming from the line of Christopher Perrella with Bloomberg Intelligence. Please proceed with your question.

Good afternoon. Thank you for taking my call. A real quick one, are you still taking 1% to 2% of Ti02 out of the formulations per annum or have you sort of had a technical limit with reductions.

Yes. I think there's a lot of discussion about the formulation a couple years ago and the reaction for the rapid rise in titanium dioxide. But we said then that a lot of our formulation for depending contractor. And we know that 1% to 2% was put up there by some of the competitors we have and we said that we're pretty careful not to change the formulas of these were of courses in the products.

Yes, I like to make sure. We’re very clear on that. The consistent for our product to our customers, we describe at this way, the closer than close enough for our customers. So we have had the opportunity to formulate for robustness that might modify the amount of Ti02 but the quality of our product is something that we will never ever put at risk. I mean the customers that come to buy our products are expecting a consistent product. Ti02 is a important part of that and the formulations that we've been able to help maximize the productivity by formulations is not at the cost of just simply removing Ti02 and having product that's going to perform differently.

All right. Thank you, guys. Appreciate it.

Thanks, Chris.

Thank you. Our next question is coming from the line of David Wong with Morningstar. Please proceed with your question.

Hi guys, thanks for taking my question. With the decline of raw materials in mid-single digit last year, presumably your competitors also benefited from that, have you started to feel any competitive pressures from your customers savings.

We typically see the pressure on large bid projects and that's typically been the same for as long as I've been in the industry of 31 years. And while the average pricing might tick down slightly the margins are not. And so we worked very hard to ensure that we remain competitive on those large projects. It's a relatively small percentage of our total sales. They are good projects. They are often times, they are important projects to us and so we work to keep those projects Sherwin-Williams.

Great. And you guys said res repaint double-digits with DIY little bit slower, how did new res fair for you guys.

New res was a good performer for us. It was slightly behind res repaint, but it performed well for us. We’ve got have a very good relationship with many of the home builders in the marketplace and we have products that perform specifically for their needs. As well as what Bob mentioned we've got a distribution platform that allows us to make commitments across the country and be responsive to their needs.

Great, thank you.

Thanks, David.

Thank you. Our next question is coming from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question.

Hi, thanks very much.

Hi, Jeff.

Do you think that the weakness in oil and gas and in the southern and southwestern domestic economies is lowering your paint store volume growth rate by a pointer to and in general are Global Finishes volumes growing? Do you expect them to grow in the first half of 2016 and do you feel any slowing in domestic economy or in the global economy?

I will take the Global Finishes first. We had a positive accounts in the Global Finishes North America was our strongest continent by far in total those were fine. When we look at – We don't break this out but I would tell you that I think your first question about when you have so many stores you got to be careful but it does appear that some of the weakness is starting is starting to affect some of the store sales in pockets. You go out to West Texas or some of these other places Oklahoma. I think we're starting to see it Jeff.

Yes. And then – go ahead, I’m sorry.

Well, I was going to say were starting to feel it in areas and yet construction in Texas in many parts of the states are still hanging on so it's a bit of a mixed bag. It offers opportunities. We are seeking them out.

So domestic retail sales have slowed in the U.S. does you feel that or when you look at your order pattern or what your organization says does it feel like the U.S. is slowing down a little bit but that's not something you detect?

When you take a look for us and I'll go to the store side the store side it's 85% painting contractors. The retail side is pretty – when you segment the retail you’ll look at the people that we're selling in our retail stores I think we have probably not felt that it as strong as probably others. On the Lowe's side as I mentioned to a prior question is result incremental for us. We probably have a better picture down the road for you but I don't think we should be – I don’t think we are the indicator for you.

And Jeff a lot of the survey work I've read has indicated that home-improvement have actually held up better as a retail category than retail in general. So I think there has been an impact on home-improvement but it's been less than on other retail categories.

Okay, great. Thanks so much.

Thanks, Jeff.

Thank you. Our next question is coming from the line of Richard O'Reilly with Revere Associates. Please proceed with your question.

Okay. Thank you. Good afternoon. Thank you, gentlemen.

Hi, Richard.

I’ve got two questions. One I wanted to follow up on the finishes group. You just said you had positive volumes. Now oil and gas Protective and Marine were down, what areas were up for you?

We also have finish in their. We have some other businesses but I don't know if we want to cut it down to that kind of segment inside that Global Finishes Group.

Okay you did have positive volume growth in 2015.

Yes.

Okay. Second I want to follow-up on the raw materials your first question you said your projection of down mid-single digit seems conservative. And I know you talked about the Ti02 but propylene is down 50% in a year or so, so can you talk about the basket of your inputs and maybe give us an idea of why it's only down in mid-single digits. You understand that.

Richard actually a mid-single-digit decline is a pretty significant decline across the entire basket. We spent a lot of time talking about Ti02 in the latex and Resin side of the basket which granted is the lion's share of our raw material basket by value but there are also categories of packaging and specialty chemicals that maybe moving the opposite direction. And offset the deflation in Ti02 and resins and latex to some degree. The other thing I would caution you want is assuming that Resin and latex pricing is tracking in line with propylene or with crude oil a lot of times because these are specialty formulas they are often times owned and controlled by our supplier. That gives them some measure of pricing power in the short-term. The Resin that you use in a particular paint formula has a very significant impact on the performance of the end product and they're not interchangeable parts. If the supplier wants to hold on to some of the benefit of lower cost propylene for a period of time in the long run we believe we'll get the benefit but the benefit tends to come to market slower than in the commodity category like Ti02.

Okay, good. Thank you for that answer. I appreciate it. That’s it.

Thanks, Richard.

Thank you. It appears we have no further questions at this time. So I'd like to turn the fall back over to Mr. Wells for any additional concluding comments.

Thanks again, Jessy. I'll conclude the call this morning by asking you to save the date of Thursday, May 26 on your calendars. That's the day we'll host our annual financial community presentation at our headquarters in Cleveland. The program will consist of our customary mourning presentations by management with a Q&A session followed by reception and lunch and then will also be some special program options offered in the afternoon to help commemorate our 150th year history. Again that date is Thursday, May 26 and we will be sending out invitations and related information and a link to our registration website in late March. So please watch your e-mail. As usual I'll be available over the balance of the day in the coming days to answer any remaining questions. Thanks for joining us today and thank you for your continued interest in Sherwin-Williams.