[Please refer to Appendix. Sherwin-Williams Co. (SHW) Catalysts on the Horizon Substantial Upside; Top Coatings Pick ESTIMATE CHANGE

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1 Baird Equity Research Packaging & Coatings Sherwin-Williams Co. (SHW) Catalysts on the Horizon Substantial Upside; Top Coatings Pick Reiterate Outperform rating. A combination of strong end-market demand, improving pricing characteristics, and a self-improvement angle post the pending merger with Valspar combines for an attractive investment profile in our view noting that $20/share of earnings by 2019 is realistic (post Valspar synergies/deleveraging). As such we reiterate our Outperform rating on the stock, with our $330 price target based on 14.0x '17E EV:EBITDA. Solid momentum into Post conference call, we believe that with earnings risk off the table, investors will start to focus on several staggered catalysts on the horizon for Sherwin-Williams underlying continued upside for the shares even after the 8% relief rally on the heels of a strong 4Q16 earnings report. VAL deal on track little risk to synergies. Specifically, with management commenting that the divested asset to facilitate the Valspar transaction is well below the $650 million divestiture (at which point the economic value of VAL shares would inflect lower), our view is that the latter (potentially the wood stains business) substantially reduces risk to the $280 million in two-year synergies outlined at the time of the transaction announcement. Pricing power evident. Further, with price increases in paint rolling through on a sequential basis throughout 2017, our view is that raw material driven margin compression risk is relatively low, especially with Sherwin leading the industry on pricing (especially given healthy end-market volumes). End-markets solid and could accelerate. In addition, U.S. construction fundamentals remain solid, with a strong backlog in 2017 only offset by extreme weather risk, noting that both residential and commercial construction demand drivers are solid. Finally, with comparisons easing for the protective and marine end-markets and increased commodity prices/infrastructure spending likely biasing volumes higher, our view is that SSS for the Paint Stores Group segment (~70% of sales) could remain at a mid-single-digit clip through the end of the decade at a minimum. Meaningful Upside potential. In following, noting that we have previously calculated pro-forma EPS of $20/share by 2019 as Valspar is fully integrated, the stock is undervalued, in our opinion highlighting that even a healthy discount to the 24x P/E multiple (LTM basis) over the past five years sums to substantial upside from current levels. Sherwin remains the top pick status within our Coatings coverage universe. ESTIMATE CHANGE 1-Year Price Chart F-16 M-16 A-16 Stock Data M-16 J-16 J A-16 S-16 O Rating: Outperform Suitability: Average Risk Price Target: $330 Price (1/26/17): $ Market Cap (mil): $28,823 Shares Out (mil): 94.5 Average Daily Vol (mil): 0.97 Dividend Yield: 0.5% '17E EV:EBITDA: 13.1x '17E FCF Yield: 4.4% Estimates FY Dec 2016A 2017E 2018E Q A 2.05 E Q A 4.50 E Q A 4.45 E Q A 2.75 E Fiscal EPS A E E Previous Est E E Fiscal P/E 24.5x 22.2x 20.3x Chart/Table Sources: FactSet and Baird Data. Price chart reflects most recent closing price. EPS (Net): Quarterly EPS may not sum to FY EPS due to rounding. N-16 D-16 J-17 Sherwin-Williams is a global leader in the manufacture, development, distribution, and sale of coatings and related products to professional, commercial, and retail customers. [Please refer to Appendix - Important Disclosures and Analyst Certification] Ghansham Panjabi, Ph.D. Sr. Research Analyst gpanjabi@rwbaird.com Mehul M. Dalia Sr. Research Associate mdalia@rwbaird.com Matthew T. Krueger Research Associate mtkrueger@rwbaird.com

2 Sherwin-Williams Co. Details Key Takeaways from 4Q16 On an operating segment basis, Sherwin-Williams Paint Stores Group segment (67% of 17E sales) reported YOY sales growth (+9.8%) based on positive SSS growth (+5.5%), contributions from net new stores (~1.2%), and a reclassification of revenue that positively impacted PSG revenues (+3.1%). SSS during the quarter were up YOY due to solid volumes across architectural paints which offset some minor lingering difficulties across the non-architectural business, which includes some marine, protective, and petrochemical based end markets. Management commentary highlighted that the outlook on the North American architectural paint market remains attractive, with double-digit growth across new residential and residential repaint supplementing comparably more modest benefits across commercial and DIY markets during 4Q16. Meanwhile, the company continues to open new stores (39 net of closures during the quarter), while previously closing the last of its redundant Comex stores. For 2017 SHW expects to open net new stores, building upon its 94 new locations during Management believes that positive growth in residential architectural paints will continue to be the primary driver for the company throughout Given YOY increases in TiO2 prices and a recovery in crude oil prices, management stated that it expects the raw material basket to be up low-single-digits driven primarily by pending TiO2 price hikes and also by petrochemical inflation. Also, although SHW s raw material basket is tied to oil prices, management has previously guided that a 10% move in commodity oil prices will result in a less than 1% move in raw material costs, summing to a slightly inflationary raw material outlook for the company. The company added 39 stores during the quarter organically (on a net basis), bringing the total count to 4,180 stores in the U.S., Canada, and Caribbean. As for profitability, operating margins (ex-special items) declined 30 bp YOY, to 18.6%, as a result of modestly higher store volumes being offset by the reclassification of third party operations into PSG sales / expenses. Next, Consumer Group segment (13% of 17E sales) revenues increased 0.4%, primarily as a result of higher sales to the segment s retail customer base. Additionally, Sherwin stated that U.S. volumes continued to outpace European results, given that results in the region were impacted by lower demand across the U.K. specifically. More specifically, positive volumes (+1.7%) more than offset lingering FX headwinds (-1.3%) for the group, with price:mix and M&A impacts negligible. As a result of improved operating efficiencies, modest volume growth, and reductions in SG&A spending across the segment, margins improved further during 4Q16 (up 120 bp to 17.4% during the quarter). Management expects the business to continue its improvement into The Global Finishes Group segment (15% of 17E sales) reported ~flat sales 4Q16 with an unfavorable headwind from FX (-1.7%) being offset by slight positive volume growth (+0.5%), noting that a reclassification of revenues provided a tailwind for the segment (+1.3%). Operating margins were higher YOY at 13.6% as the company continues to improve efficiency across the segment, noting that lower raw material costs and stronger cost control efforts were only partially offset by FX headwinds. Lastly, the Latin America Coatings Group (5% of 17E sales) reported a sales improvement of 8.3% YOY during 4Q16. Highly unfavorable FX (-6.7%) was more than offset by higher pricing (+11.0%) and volumes (+4.0%). Unfavorable FX translations and increasing raw material costs (raws priced in U.S.$) continued to detract from segment profit during 4Q16, with a goodwill and trademark impairment also impacting operating income. In terms of profitability, EBIT margins were down 630 bp, to -4.5%. The business was unprofitable throughout 2016 and we have conservatively modeled negative EBIT into

3 Sherwin-Williams Co. As for non-operating items during 4Q16, Sherwin-Williams continued build cash on the balance sheet to partially fund the announced acquisition of Valspar Corporation, as the company made no open market purchases of common stock during the quarter. Commenting specifically on the pending acquisition, SHW stated that it now expects minimal divestitures for the transaction (from no divestitures previously), although the company confirmed that it expects less than $650 million in divested sales and thus a purchase price of $113 for the VAL shares. The aforementioned acquisition of VAL was announced on March 20, 2016, with Sherwin-Williams agreeing purchase Valspar for $11.2 billion (~11.0x EBITDA including synergies / $113 per VAL share). Meanwhile, interest expense increased ~$2.1 million YOY (to ~$21.7 million) due to higher YOY debt levels associated with the Valspar acquisition and rising interest rates, while the company s tax rate was 32.0% during the quarter (vs. 33.4% in 4Q15). Taxes came in roughly in line with our expectations, remembering that previously adopted favorable tax legislation will positively impact Sherwin s income tax rate moving forward. Regarding guidance, management issued a 1Q17 range of $ $2.13 (excluding VAL acquisition related costs and a change in income tax provisions) and FY17 EPS guidance was issued at $ $ Meanwhile, CapEx should be ~$230 million, with depreciation and amortization at ~$175-$185 million and ~$30 million, respectively. SHW also highlighted that the company expects FY17 costs associated with the VAL acquisition to impact earnings by ~$0.69 in EPS, partially offset by the impact from the aforementioned change in accounting standards that Sherwin has proactively implemented ($0.11 impact on FY17 according to SHW management). Finally, Sherwin-Williams reported diluted 4Q16 EPS of $2.34 versus consensus at $2.21 and $2.12 reported during 4Q15.. 3

4 Sherwin-Williams Co. Quarterly Results Comparison - SHW (actual) vs. RWB Estimates Actual vs. Estimate Year/Year Change Reported 4Q16 4Q16E $ Diff %/bps Diff EPS Impact 4Q15 % Change Net Revenue: Paint Stores Group 1, , % - 1, % Consumer Group % % Global Finishes Group % % Latin America Coatings Group % % Administrative (0.1) -4.7% % Net Revenue 2, , % - 2, % Operating Income: Paint Stores Group % $ % Consumer Group % $ % Global Finishes Group % $ % Latin America Coatings Group (7.8) 1.6 (9.4) % ($0.07) % Administrative (103.6) (92.5) (11.1) 12.0% ($0.08) (103.7) 0.1% Operating Income % $ % Operating Margins: Paint Stores Group 18.6% 18.0% % (30) Consumer Group 17.4% 16.5% % 120 Global Finishes Group 13.6% 11.5% % 250 Latin America Coatings Group -4.5% 1.0% - (550) - 1.8% (630) Operating Margins 12.5% 12.2% % 30 Interest Expense (net) % ($0.01) % Pretax Income % $ % Taxes % % Tax Rate 32.0% 31.9% - 0.1% ($0.00) 33.4% -4.2% Net Income to Restricted Shares % $0.00 (0.5) - Net Income to Common Shares % $ % Diluted Shares Outstanding (0.5) -0.5% $ % Diluted EPS $2.34 $2.20 $ % $0.15 $ % Sources: Company filings and estimates * EPS impact may be off by +/- $0.01 due to rounding. Investment Thesis Top-three global coatings player and dominant N.A. franchise. In our opinion, Sherwin-Williams remains a strong No. 3 in the attractive global coatings niche, with outsized exposure toward the N.A. architectural coatings market (~45% share). Products include coatings used in construction (paints and sealants) and product manufacturing (autos/wood furniture), with N.A. architectural coatings encompassing ~70% of the sales portfolio differentiating SHW from its more global peers (75% sales from N.A.). 70% sales base housing biased. In following, Sherwin-Williams has clearly benefited from the improvement in U.S. housing fundamentals over the last five years, with non-residential trends starting to improve steadily noting that Sherwin should continue to outpace market growth by 1.5-2x based on their outsized exposure to professional painting contractors. Near-term outlook attractive. As such, we believe that SHW fundamentals are attractive near term, with improving end-market dynamics boosted by a stable to declining raw material cost environment--noting that Sherwin is due for a price increase announcement after a 2-3 year lull (could likely to occur in 2017 if TiO2 prices start to increase). SHW-VAL deal a positive catalyst. Moreover, we believe that the pending deal between SHW and VAL is a strong strategic fit, noting that Valspar s packaging coatings business is a crown jewel within the space (global leader/high-margin), while the acquisition also expands Sherwin s exposure 4

5 Sherwin-Williams Co. in U.S. DIY (Lowe s/ace), international (Europe/Australia/China) and industrial (coil/wood/general industrial) businesses. Valuation. Our $330 price target is based on 14.0x '17E EV:EBITDA, above the company's historical average of 8.5x LTM EV:EBITDA, which we believe is justified given the Sherwin s strong brand equity, significant free cash flow generation, pricing power, and cash flow allocation track record. Risks & Caveats Outsized exposure to U.S. architectural coatings. Any potential slowdown across the U.S. housing market and U.S. architectural coatings market (~70% of Sherwin's sales) is a major risk. Volatile raw material costs. Though the raw material environment has been relatively benign in recent years, spikes in propylene and TiO2 costs (both major cost inputs) could hurt Sherwin's profitability. Significant operating leases. At current, Sherwin-Williams has ~$700 million in operating leases (NPV), as 93% of its stores are leased, which we believe could become a risk if leasing terms become unfavorable in the future. Lead-based paint litigation. Sherwin-Williams is an easy target for lead-based paint related litigation given its dominance in the U.S. architectural coatings market, its significant FCF generation, and the relatively low number of existing prior lead-based paint producers left in business at current (most have gone bankrupt). Environmental liabilities. Sherwin-Williams mentions environmental litigation as an ongoing concern in their filings, and accrues potential liabilities from adverse rulings when it is increasingly probable that a liability will materialize and an amount can be determined. Company Description Founded in 1866, The Sherwin-Williams Company is a global leader in the manufacture, development, distribution, and sale of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams, Dutch Boy, Krylon, Minwax, Thompson s WaterSeal, and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams branded products are sold exclusively through a chain of more than 4,000 company-operated stores and facilities, while the company s other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 109 countries around the world. 5

6 Figure 1. Sherwin-Williams Quarterly Income Statement ($ in millions except per share data) Q1 Q2 Q3 Q E E E E 2017E Paint Stores Group $1,615.3 $1,781.6 $2,108.3 $2,324.8 $2,227.9 $2,396.7 $1,838.7 $1,971.0 $8,474.1 EBIT $253.5 $285.0 $509.0 $563.6 $518.3 $574.4 $341.9 $374.3 $1,797.3 % margin 15.7% 16.0% 24.1% 24.2% 23.3% 24.0% 18.6% 19.0% 21.2% Consumer Group $378.1 $378.1 $477.5 $482.3 $412.9 $417.0 $315.9 $322.2 $1,599.6 EBIT $64.0 $66.2 $108.3 $110.8 $92.0 $93.8 $54.9 $58.0 $328.8 % margin 16.9% 17.5% 22.7% 23.0% 22.3% 22.5% 17.4% 18.0% 20.6% Global Finishes Group $454.2 $454.2 $499.2 $499.2 $480.7 $480.7 $455.0 $457.3 $1,891.4 EBIT $48.6 $49.9 $65.2 $66.2 $63.2 $65.1 $62.0 $64.1 $245.4 % margin 10.7% 11.0% 13.1% 13.3% 13.1% 13.5% 13.6% 14.0% 13.0% Latin America Coatings Group $125.2 $135.2 $133.3 $141.3 $156.6 $161.3 $171.8 $176.9 $614.8 EBIT -$0.9 -$0.1 -$9.6 $1.4 $1.0 $1.6 -$7.8 $1.7 $4.7 % margin -0.7% 0.0% -7.2% 1.0% 0.6% 1.0% -4.5% 1.0% 0.8% Administrative $1.3 $1.3 $1.3 $1.3 $1.3 $1.2 $1.1 $1.2 $5.0 EBIT -$ $95.0 -$88.3 -$95.0 -$84.5 -$95.0 -$ $95.0 -$380.0 % margin Total External Sales $2,574.0 $2,750.3 $3,219.5 $3,448.9 $3,279.5 $3,457.0 $2,782.6 $2,928.7 $12,584.9 EBIT $258.6 $306.1 $584.6 $647.0 $590.0 $639.9 $347.4 $403.2 $1,996.2 % margin 10.0% 11.1% 18.2% 18.8% 18.0% 18.5% 12.5% 13.8% 15.9% Interest Expense $19.8 $21.5 $20.2 $21.5 $21.0 $21.5 $21.7 $21.5 $86.0 Pretax Income $238.8 $284.6 $564.4 $625.5 $569.0 $618.4 $325.7 $381.7 $1,910.2 % Margin 9.3% 10.3% 12.8% 18.1% 17.4% 17.9% 11.7% 13.0% 15.2% Income taxes $69.2 $91.1 $180.5 $200.2 $168.3 $197.9 $105.0 $122.1 $611.3 Tax Rate (%) 29.0% 32.0% 32.0% 32.0% 29.6% 32.0% 32.2% 32.0% 32.0% Net Income $169.6 $193.5 $383.9 $425.4 $400.7 $420.5 $220.7 $259.5 $1,298.9 % Margin 6.6% 7.0% 11.9% 12.3% 12.2% 12.2% 7.9% 8.9% 10.3% Net Income to Restricted Shares $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Net Income to Common Shares $169.6 $193.5 $383.9 $425.4 $400.7 $420.5 $220.7 $259.5 $1,298.9 % Margin 6.6% 7.0% 11.9% 12.3% 12.2% 12.2% 7.9% 8.9% 10.3% Dil EPS $1.81 $2.05 $4.06 $4.50 $4.23 $4.45 $2.34 $2.75 $13.75 Dil Shares Notes: 1Q 2016: N/A 2Q 2016: 3Q 2016: 4Q 2016: 1Q 2017: N/A 2Q 2017: 3Q 2017: 4Q 2017: Analysis: Yr/Yr Paint Stores Group 10.5% 10.3% 6.2% 10.3% 6.7% 7.6% 9.8% 7.2% 8.8% Yr/Yr Consumer Group 7.5% 0.0% (2.6%) 1.0% (2.1%) 1.0% 0.4% 2.0% 1.0% Yr/Yr Global Finishes Group (3.3%) 0.0% (1.3%) 0.0% (1.1%) 0.0% 0.0% 0.5% 0.1% Yr/Yr Latin America Coatings Group (24.7%) 8.0% (11.2%) 6.0% 0.4% 3.0% 8.3% 3.0% 4.7% Yr/Yr Administrative (1.8%) 0.0% 0.9% 0.0% 4.3% (7.0%) (9.7%) 4.9% -0.7% Total Yr/Yr Sales 5.1% 6.8% 2.8% 7.1% 4.0% 5.4% 6.8% 5.3% 6.2% EBIT Margin (Paint Stores Group) 15.7% 16.0% 24.1% 24.2% 23.3% 24.0% 18.6% 19.0% 21.2% EBIT Margin (Consumer Group) 16.9% 17.5% 22.7% 23.0% 22.3% 22.5% 17.4% 18.0% 20.6% EBIT Margin (Global Finishes Group) 10.7% 11.0% 13.1% 13.3% 13.1% 13.5% 13.6% 14.0% 13.0% EBIT Margin (Latin America Coatings (0.7%) (0.0%) (7.2%) 1.0% 0.6% 1.0% (4.5%) 1.0% 0.8% Total EBIT Margin 10.0% 11.1% 18.2% 18.8% 18.0% 18.5% 12.5% 13.8% 15.9% Pretax margin 9.3% 10.3% 12.8% 18.1% 17.4% 17.9% 11.7% 13.0% 15.2% Net Margin (Common) 6.6% 7.0% 11.9% 12.3% 12.2% 12.2% 7.9% 8.9% 10.3% Yr/Yr EPS Growth 30.9% 13.0% 9.7% 11.0% 6.6% 5.2% 10.7% 17.6% 10.4% EBITDA $307.3 $358.6 $634.6 $699.5 $639.8 $692.4 $396.6 $455.7 $2,206.2 EBITDA Margin 11.9% 13.0% 19.7% 20.3% 19.5% 20.0% 14.3% 15.6% 17.5% D&A $48.7 $52.5 $50.1 $52.5 $49.8 $52.5 $49.2 $52.5 $210.0 Research disclosures can be accessed at Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

7 Figure 2. Sherwin-Williams Segment Results Reconciliation YOY Q1 Q2 Q3 Q E E E E 2017E Model Assumptions Paint Stores Group SSS Volume (est) 9.4% 4.0% 5.2% 2.5% 2.1% 2.8% 5.0% 3.0% 3.1% Price:Mix 0.0% 2.0% 0.0% 3.4% 0.0% 3.4% 0.5% 3.0% 3.0% SSS Estimate 9.4% 6.0% 5.2% 5.9% 2.1% 6.2% 5.5% 6.0% 6.0% Store Count 4,099 4,205 4,117 4,230 4,141 4,255 4,180 4,280 4,243 Net New Stores Store Growth (YOY) 2.2% 2.6% 2.3% 2.7% 2.3% 2.8% 2.3% 2.4% 2.6% New Store Sales 1.1% 1.3% 1.0% 1.4% 1.5% 1.4% 1.2% 1.2% 1.3% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX / Other 0.0% 3.0% 0.0% 3.0% 3.1% 0.0% 3.1% 0.0% 1.5% Total 10.5% 10.3% 6.2% 10.3% 6.7% 7.6% 9.8% 7.2% 8.8% EBIT Margins D 3.6% 0.3% 2.3% 0.1% (1.0%) 0.7% (0.3%) 0.4% 0.4% Consumer Group Vol (est) 7.5% 0.0% (2.6%) 1.0% (2.1%) 1.0% 1.7% 2.0% 1.0% Price:mix (est) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% (1.3%) 0.0% 0.0% Total 7.5% 0.0% (2.6%) 1.0% (2.1%) 1.0% 0.4% 2.0% 1.0% EBIT Margins D 1.2% 0.6% (0.6%) 0.3% 1.4% 0.2% 1.2% 0.6% 0.4% Global Finishes Group Vol (est) 1.4% (0.5%) 1.3% (0.5%) 0.4% 0.0% 0.5% 0.5% (0.1%) Price:mix (est) 0.0% 0.0% 0.0% 0.0% (1.5%) 0.0% 0.0% 0.0% 0.0% Acq / Div 0.0% 1.5% 0.0% 1.5% 1.5% 0.0% 1.3% 0.0% 0.8% FX (4.7%) (1.0%) (2.6%) (1.0%) (1.5%) 0.0% (1.7%) 0.0% (0.5%) Total (3.3%) 0.0% (1.3%) 0.0% (1.1%) 0.0% 0.0% 0.5% 0.1% EBIT Margins D 2.4% 0.3% 1.7% 0.2% 1.8% 0.4% 2.5% 0.4% 0.3% Latin America Coatings Group Vol (est) (3.5%) 4.0% 0.0% 3.0% (2.0%) 2.0% 4.0% 2.0% 2.8% Price:mix (est) 1.0% 8.0% 5.2% 5.0% 10.6% 2.0% 11.0% 1.0% 4.0% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX (22.2%) (4.0%) (16.4%) (2.0%) (8.2%) (1.0%) (6.7%) 0.0% (1.8%) Total (24.7%) 8.0% (11.2%) 6.0% 0.4% 3.0% 8.3% 3.0% 5.0% EBIT Margins D (6.5%) 0.7% (9.9%) 8.2% (0.8%) 0.4% (6.3%) 5.5% 3.7% Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

8 Figure 3. Sherwin-Williams Quarterly Income Statement ($ in millions except per share data) Q1 Q2 Q3 Q Paint Stores Group $1,461.5 $1,615.3 $1,985.0 $2,108.3 $2,087.3 $2,227.9 $1,675.2 $1,838.7 $7,790.2 EBIT $176.6 $253.5 $433.4 $509.0 $507.4 $518.3 $316.1 $341.9 $1,622.7 % margin 12.1% 15.7% 21.8% 24.1% 24.3% 23.3% 18.9% 18.6% 20.8% Consumer Group $351.7 $378.1 $490.0 $477.5 $421.6 $412.9 $314.6 $315.9 $1,584.4 EBIT $55.4 $64.0 $114.2 $108.3 $88.3 $92.0 $50.9 $54.9 $319.2 % margin 15.8% 16.9% 23.3% 22.7% 20.9% 22.3% 16.2% 17.4% 20.1% Global Finishes Group $469.6 $454.2 $505.8 $499.2 $486.1 $480.7 $454.8 $455.0 $1,889.1 EBIT $38.9 $48.6 $57.3 $65.2 $55.1 $63.2 $50.6 $62.0 $239.0 % margin 8.3% 10.7% 11.3% 13.1% 11.3% 13.1% 11.1% 13.6% 12.7% Latin America Coatings Group $166.2 $125.2 $150.1 $133.3 $156.0 $156.6 $158.7 $171.8 $586.9 EBIT $9.5 -$0.9 $4.0 -$9.6 $2.1 $1.0 $2.8 -$7.8 -$17.4 % margin 5.7% -0.7% 2.7% -7.2% 1.4% 0.6% 1.8% -4.5% -3.0% Administrative $1.3 $1.3 $1.3 $1.3 $1.2 $1.3 $1.3 $1.1 $5.0 EBIT -$74.8 -$ $88.3 -$88.3 -$85.2 -$84.5 -$ $ $382.9 % margin Total External Sales $2,450.3 $2,574.0 $3,132.1 $3,219.5 $3,152.3 $3,279.5 $2,604.6 $2,782.6 $11,855.6 EBIT $205.6 $258.6 $520.7 $584.6 $567.7 $590.0 $316.8 $347.4 $1,780.7 % margin 8.4% 10.0% 16.6% 18.2% 18.0% 18.0% 12.2% 12.5% 15.0% Interest Expense $12.4 $19.8 $12.9 $20.2 $17.0 $21.0 $19.6 $21.7 $82.7 Pretax Income $193.2 $238.8 $507.8 $564.4 $550.7 $569.0 $297.2 $325.7 $1,698.0 % Margin 7.9% 9.3% 12.8% 17.5% 17.5% 17.4% 11.4% 11.7% 14.3% Income taxes $61.8 $69.2 $157.8 $180.5 $176.2 $168.3 $99.2 $105.0 $523.0 Tax Rate (%) 32.0% 29.0% 31.1% 32.0% 32.0% 29.6% 33.4% 32.2% 30.8% Net Income $131.4 $169.6 $349.9 $383.9 $374.5 $400.7 $198.0 $220.7 $1,174.9 % Margin 5.4% 6.6% 11.2% 11.9% 11.9% 12.2% 7.6% 7.9% 9.9% Net Income to Restricted Shares -$0.2 $0.0 -$2.0 $0.0 -$2.0 $0.0 -$0.5 $0.0 $0.0 Net Income to Common Shares $131.2 $169.6 $347.9 $383.9 $372.5 $400.7 $197.5 $220.7 $1,174.9 % Margin 5.4% 6.6% 11.1% 11.9% 11.8% 12.2% 7.6% 7.9% 9.9% Dil EPS $1.38 $1.81 $3.70 $4.06 $3.97 $4.23 $2.11 $2.34 $12.45 Dil Shares Notes: 1Q 2015: N/A 2Q 2015: 3Q 2015: 4Q 2015: 1Q 2016: N/A 2Q 2016: 3Q 2016: 4Q 2016: Analysis: Yr/Yr Paint Stores Group 7.5% 10.5% 5.4% 6.2% 2.9% 6.7% 5.9% 9.8% 8.1% Yr/Yr Consumer Group 8.1% 7.5% 13.1% (2.6%) 9.4% (2.1%) 13.6% 0.4% 0.4% Yr/Yr Global Finishes Group (5.6%) (3.3%) (7.1%) (1.3%) (9.3%) (1.1%) (9.5%) 0.0% -1.4% Yr/Yr Latin America Coatings Group (8.9%) (24.7%) (17.2%) (11.2%) (22.1%) 0.4% (23.5%) 8.3% -7.0% Yr/Yr Administrative 6.1% (1.8%) 3.9% 0.9% 1.5% 4.3% (1.6%) (9.7%) -1.6% Total Yr/Yr Sales 3.5% 5.1% 2.9% 2.8% 0.1% 4.0% 1.4% 6.8% 4.6% EBIT Margin (Paint Stores Group) 12.1% 15.7% 21.8% 24.1% 24.3% 23.3% 18.9% 18.6% 20.8% EBIT Margin (Consumer Group) 15.8% 16.9% 23.3% 22.7% 20.9% 22.3% 16.2% 17.4% 20.1% EBIT Margin (Global Finishes Group) 8.3% 10.7% 11.3% 13.1% 11.3% 13.1% 11.1% 13.6% 12.7% EBIT Margin (Latin America Coatings 5.7% (0.7%) 2.7% (7.2%) 1.4% 0.6% 1.8% (4.5%) -3.0% Total EBIT Margin 8.4% 10.0% 16.6% 18.2% 18.0% 18.0% 12.2% 12.5% 15.0% Pretax margin 7.9% 9.3% 12.8% 17.5% 17.5% 17.4% 11.4% 11.7% 14.3% Net Margin (Common) 5.4% 6.6% 11.1% 11.9% 11.8% 12.2% 7.6% 7.9% 9.9% Yr/Yr EPS Growth 21.0% 30.9% 25.8% 9.7% 18.3% 6.6% 54.2% 10.7% 11.5% EBITDA $255.0 $307.3 $569.6 $634.6 $616.4 $639.8 $368.4 $396.6 $1,978.4 EBITDA Margin 10.4% 11.9% 18.2% 19.7% 19.6% 19.5% 14.1% 14.3% 16.7% D&A $49.4 $48.7 $48.9 $50.1 $48.6 $49.8 $51.6 $49.2 $197.7 Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

9 Figure 4. Sherwin-Williams Segment Results Reconciliation YOY Q1 Q2 Q3 Q Model Assumptions Paint Stores Group SSS Volume (est) 6.4% 9.4% 5.4% 5.2% 3.1% 2.1% 6.2% 5.0% 5.4% Price:Mix 0.0% 0.0% (1.5%) 0.0% (1.0%) 0.0% (1.0%) 0.5% 0.1% SSS Estimate 6.4% 9.4% 3.9% 5.2% 2.1% 2.1% 5.2% 5.5% 5.6% Store Count 4,010 4,099 4,025 4,117 4,048 4,141 4,086 4,180 4,134 Net New Stores Store Growth (YOY) 2.2% 2.2% 2.1% 2.3% 2.2% 2.3% 2.1% 2.3% 2.3% New Store Sales 1.1% 1.1% 1.5% 1.0% 0.8% 1.5% 0.7% 1.2% 1.2% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX / Other 0.0% 0.0% 0.0% 0.0% 0.0% 3.1% 0.0% 3.1% 1.6% Total 7.5% 10.5% 5.4% 6.2% 2.9% 6.7% 5.9% 9.8% 8.3% EBIT Margins D 1.3% 3.6% 1.9% 2.3% 3.0% (1.0%) 3.2% (0.3%) 1.1% Consumer Group Vol (est) 8.1% 7.5% 13.1% (2.6%) 9.4% (2.1%) 13.6% 1.7% 1.1% Price:mix (est) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% (1.3%) (0.3%) Total 8.1% 7.5% 13.1% (2.6%) 9.4% (2.1%) 13.6% 0.4% 0.8% EBIT Margins D 0.0% 1.2% 2.0% (0.6%) 0.4% 1.4% 5.2% 1.2% 0.8% Global Finishes Group Vol (est) 1.0% 1.4% 0.6% 1.3% (1.0%) 0.4% 0.0% 0.5% 0.9% Price:mix (est) 0.3% 0.0% 0.0% 0.0% 0.0% (1.5%) (2.4%) 0.0% (0.4%) Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 1.5% 0.0% 1.3% 0.7% FX (6.9%) (4.7%) (7.7%) (2.6%) (8.3%) (1.5%) (7.1%) (1.7%) (2.6%) Total (5.6%) (3.3%) (7.1%) (1.3%) (9.3%) (1.1%) (9.5%) 0.0% (1.4%) EBIT Margins D (1.1%) 2.4% 1.2% 1.7% 0.0% 1.8% 3.3% 2.5% 2.1% Latin America Coatings Group Vol (est) 0.0% (3.5%) (1.0%) 0.0% 0.0% (2.0%) (3.6%) 4.0% (0.4%) Price:mix (est) 5.0% 1.0% 1.2% 5.2% 1.5% 10.6% 1.5% 11.0% 7.0% Acq / Div 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FX (13.9%) (22.2%) (17.4%) (16.4%) (23.6%) (8.2%) (21.4%) (6.7%) (13.4%) Total (8.9%) (24.7%) (17.2%) (11.2%) (22.1%) 0.4% (23.5%) 8.3% (6.8%) EBIT Margins D 0.2% (6.5%) (0.4%) (9.9%) (4.5%) (0.8%) (4.5%) (6.3%) (5.9%) Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

10 Figure 5. Sherwin-Williams Annual Income Statement ($ in millions except per share data) E 2018E Paint Stores Group $4,844.6 $4,955.3 $4,834.9 $4,209.4 $4,381.2 Paint Stores Group $4,209.4 $4,381.2 $4,779.8 $5,409.9 $6,002.1 $6,851.6 $7,209.0 $7,790.2 $8,474.1 $8,955.5 EBIT $719.9 $766.5 $690.8 $611.2 $619.7 EBIT $611.2 $619.7 $650.4 $865.2 $990.5 $1,201.4 $1,433.5 $1,622.7 $1,797.3 $1,939.7 % margin 14.9% 15.5% 14.3% 14.5% 14.1% % margin 14.5% 14.1% 13.6% 16.0% 16.5% 17.5% 19.9% 20.8% 21.2% 21.7% Consumer Group $1,364.2 $1,311.6 $1,272.1 $1,225.2 $1,297.7 Consumer Group $1,225.2 $1,297.7 $1,274.3 $1,321.9 $1,341.7 $1,420.8 $1,578.0 $1,584.4 $1,599.6 $1,623.6 EBIT $214.2 $228.3 $151.1 $157.4 $204.0 EBIT $157.4 $204.0 $173.7 $216.4 $242.1 $252.9 $308.8 $319.2 $328.8 $340.2 % margin 15.7% 17.4% 11.9% 12.8% 15.7% % margin 12.8% 15.7% 13.6% 16.4% 18.0% 17.8% 19.6% 20.1% 20.6% 21.0% Global Finishes Group $1,593.2 $1,731.2 $1,866.0 $1,653.5 $2,092.3 Global Finishes Group $1,116.8 $1,417.1 $1,878.3 $1,960.7 $2,004.5 $2,080.9 $1,916.3 $1,889.1 $1,891.4 $1,929.2 EBIT $130.4 $171.7 $153.0 $90.0 $130.2 EBIT $39.1 $71.2 $91.1 $147.9 $170.6 $201.1 $201.9 $239.0 $245.4 $260.0 % margin 8.2% 9.9% 8.2% 5.4% 6.2% % margin 3.5% 5.0% 4.8% 7.5% 8.5% 9.7% 10.5% 12.7% 13.0% 13.5% Latin America Coatings Group $536.6 $675.2 $828.5 $836.1 $832.5 $771.4 $631.0 $586.9 $614.8 $620.9 EBIT $50.9 $59.0 $75.5 $81.2 $70.2 $40.5 $18.5 -$17.4 $4.7 $9.1 % margin 9.5% 8.7% 9.1% 9.7% 8.4% 5.2% 2.9% -3.0% 0.8% 1.5% Administrative $7.7 $7.1 $6.8 $6.3 $5.1 Administrative $6.3 $5.1 $4.8 $5.9 $4.7 $5.0 $5.1 $5.0 $5.0 $5.0 EBIT -$ $ $ $ $204.1 EBIT -$ $ $ $ $ $ $ $ $ $380.0 % margin % margin Total External Sales $7,809.8 $8,005.3 $7,979.7 $7,094.2 $7,776.4 Total External Sales $7,094.2 $7,776.4 $8,765.7 $9,534.5 $10,185.5 $11,129.5 $11,339.3 $11,855.6 $12,584.9 $13,134.3 EBIT $901.5 $999.7 $834.8 $698.9 $749.7 EBIT $698.9 $749.7 $789.5 $1,034.2 $1,180.3 $1,322.4 $1,610.8 $1,780.7 $1,996.2 $2,169.0 % margin 11.5% 12.5% 10.5% 9.9% 9.6% % margin 9.9% 9.6% 9.0% 10.8% 11.6% 11.9% 14.2% 15.0% 15.9% 16.5% Interest Expense $67.2 $71.6 $65.7 $40.0 $46.4 Interest Expense $40.0 $46.4 $42.5 $42.8 $62.7 $64.2 $61.8 $82.7 $86.0 $85.0 Pretax Income $834.3 $928.1 $769.1 $658.9 $703.3 Pretax Income $658.9 $703.3 $747.0 $991.4 $1,117.6 $1,258.2 $1,549.0 $1,698.0 $1,910.2 $2,084.0 % Margin 10.7% 11.6% 9.6% 9.3% 9.0% % Margin 9.3% 9.0% 8.5% 10.4% 11.0% 11.3% 13.7% 14.3% 15.2% 15.9% Income taxes $258.3 $302.4 $256.6 $208.6 $216.3 Income taxes $208.6 $216.3 $227.1 $308.2 $343.3 $392.3 $495.1 $523.0 $611.3 $666.9 Tax Rate (%) 31.0% 32.6% 33.4% 31.7% 30.8% Tax Rate (%) 31.7% 30.8% 30.4% 31.1% 30.7% 31.2% 32.0% 30.8% 32.0% 32.0% Net Income $576.1 $625.7 $512.5 $450.3 $487.0 Net Income $450.3 $487.0 $520.0 $683.2 $774.3 $865.9 $1,053.8 $1,174.9 $1,298.9 $1,417.1 % Margin 7.4% 7.8% 6.4% 6.3% 6.3% % Margin 6.3% 6.3% 5.9% 7.2% 7.6% 7.8% 9.3% 9.9% 10.3% 10.8% Net Income to Restricted Shares $3.3 -$5.0 Net Income to Restricted Shares -$3.3 -$5.0 -$4.8 -$5.8 -$3.0 -$4.2 -$4.7 $0.0 $0.0 $0.0 Net Income to Common Shares $576.1 $625.7 $512.5 $447.0 $482.1 Net Income to Common Shares $447.0 $482.1 $515.2 $677.4 $771.3 $861.7 $1,049.1 $1,174.9 $1,298.9 $1,417.1 % Margin 7.4% 7.8% 6.4% 6.3% 6.2% % Margin 6.3% 6.2% 5.9% 7.1% 7.6% 7.7% 9.3% 9.9% 10.3% 10.8% Dil EPS $4.19 $4.78 $4.29 $3.89 $4.42 Dil EPS $3.89 $4.42 $4.88 $6.50 $7.48 $8.78 $11.16 $12.45 $13.75 $15.00 Dil Shares Dil Shares Notes: Notes: FY 2001: Stripped out $24.1M in AT amortization expense FY 2009: Stripped out $36.1M (0.13/share) in asset impairment charges and loss on dissolution of a foreign subsidiary FY 2002: Stripped out AT transitional impairment charge and excludes cumulative effect of a change i FY 2010: Stripped out $11.4M taxes due to healthcare reg., $24.2M ($0.12) for LT bond purchase, $6.5M impair. charge ($0.04) and $5.3M gain on disp. of closed as FY 2007: Stripped out $15.2M (pre-tax) in impairment charges ($0.08/share) FY 2011: Stripped out $5.5M in impairment of trademarks ($0.03/share) and $75M in taxes due to IRS settlement FY 2008: Stripped out $54.6M (pre-tax) in impairment charges ($0.30/share) FY 2012: Stripped out $80M ESOP settlement payment ($49.2 million AT or $.47 in EPS) FY 2009: Stripped out $36.1M (0.13/share) in asset impairment charges and loss on dissolution of a foreign subsidiary FY 2010: Stripped out $11.4M taxes due to healthcare reg., $24.2M ($0.12) for LT bond purchase, $6.5M impair. charge ($0.04) and $5.3M gain on disp. of closed assets ($0.04) Analysis: Analysis: E 2018E Yr/Yr Paint Stores Group 11.3% 2.3% (2.4%) (12.9%) 4.1% Yr/Yr Paint Stores Group (12.9%) 4.1% 9.1% 13.2% 10.9% 14.2% 5.2% 8.1% 8.8% 5.7% Yr/Yr Consumer Group (1.9%) (3.9%) (3.0%) (3.7%) 5.9% Yr/Yr Consumer Group (3.7%) 5.9% (1.8%) 3.7% 1.5% 5.9% 11.1% 0.4% 1.0% 1.5% Yr/Yr Global Finishes Group 10.6% 8.7% 7.8% (11.4%) 26.5% Yr/Yr Global Finishes Group % 32.5% 4.4% 2.2% 3.8% (7.9%) (1.4%) 0.1% 2.0% Yr/Yr Latin America Coatings Group % 22.7% 0.9% (0.4%) (7.3%) (18.2%) (7.0%) 4.7% 1.0% Yr/Yr Administrative (3.2%) (7.7%) (4.8%) (8.0%) (17.8%) Yr/Yr Administrative (8.0%) (17.8%) (6.3%) 21.9% (19.7%) 5.3% 2.4% (1.6%) (0.7%) 0.7% Total Yr/Yr Sales 8.6% 2.5% (0.3%) (11.1%) 9.6% Total Yr/Yr Sales (11.1%) 9.6% 12.7% 8.8% 6.8% 9.3% 1.9% 4.6% 6.2% 4.4% EBIT Margin (Paint Stores Group) 14.9% 15.5% 14.3% 14.5% 14.1% EBIT Margin (Paint Stores Group) 14.5% 14.1% 13.6% 16.0% 16.5% 17.5% 19.9% 20.8% 21.2% 21.7% EBIT Margin (Consumer Group) 15.7% 17.4% 11.9% 12.8% 15.7% EBIT Margin (Consumer Group) 12.8% 15.7% 13.6% 16.4% 18.0% 17.8% 19.6% 20.1% 20.6% 21.0% EBIT Margin (Global Finishes Group 8.2% 9.9% 8.2% 5.4% 6.2% EBIT Margin (Global Finishes Group) 3.5% 5.0% 4.8% 7.5% 8.5% 9.7% 10.5% 12.7% 13.0% 13.5% EBIT Margin (Latin America Coatings 9.5% 8.7% 9.1% 9.7% 8.4% 5.2% 2.9% (3.0%) 0.8% 1.5% Total EBIT Margin 11.5% 12.5% 10.5% 9.9% 9.6% Total EBIT Margin 9.9% 9.6% 9.0% 10.8% 11.6% 11.9% 14.2% 15.0% 15.9% 16.5% Pretax margin 10.7% 11.6% 9.6% 9.3% 9.0% Pretax margin 9.3% 9.0% 8.5% 10.4% 11.0% 11.3% 13.7% 14.3% 15.2% 15.9% Net Margin (Common) 7.4% 7.8% 6.4% 6.3% 6.2% Net Margin (Common) 6.3% 6.2% 5.9% 7.1% 7.6% 7.7% 9.3% 9.9% 10.3% 10.8% Yr/Yr EPS Growth 27.5% 14.1% (10.2%) (9.5%) 13.6% Yr/Yr EPS Growth (9.5%) 13.6% 10.4% 33.4% 15.0% 17.4% 27.1% 11.5% 10.4% 9.1% EBITDA 1, , , EBITDA , , , , , , ,369.0 EBITDA Margin 13.4% 14.5% 12.5% 12.3% 11.9% EBITDA Margin 12.3% 11.9% 11.1% 12.7% 13.4% 13.7% 16.0% 16.7% 17.5% 18.0% D&A D&A Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

11 Figure 6. Sherwin-Williams Cash Flow Statement E 2018E Net Income $576.1 $625.7 $512.5 $447.0 $482.1 Net Income $447.0 $482.1 $515.2 $677.4 $771.3 $861.7 $1,049.1 $1,175.7 $1,298.9 $1,417.1 D&A $145.9 $163.5 $165.5 $170.9 $175.3 D&A $170.9 $175.3 $180.9 $179.2 $187.8 $198.9 $198.6 $197.7 $210.0 $200.0 Deferred Taxes ($11.4) $27.7 $32.2 ($8.6) $20.1 Deferred Taxes ($8.6) $20.1 $16.9 $20.0 $27.8 $20.0 $20.0 $0.0 $20.0 $20.0 Other $86.8 ($9.4) $168.7 $339.4 ($51.8) Other $339.4 ($51.8) ($25.3) $89.6 ($14.1) ($15.0) $29.2 ($20.0) $30.0 $30.0 Operating Cash flow $797.4 $807.4 $878.8 $948.6 $625.7 Operating Cash flow $948.6 $625.7 $687.8 $966.2 $972.7 $1,065.6 $1,296.9 $1,353.5 $1,558.9 $1,667.1 Op Cash / Share $5.80 $6.17 $7.36 $8.25 $5.73 Op Cash / Share $8.25 $5.73 $6.51 $9.28 $9.43 $10.86 $13.80 $14.34 $16.50 $17.64 Capital expenditures $209.9 $165.9 $117.2 $91.3 $125.2 Capital expenditures $91.3 $125.2 $153.8 $157.1 $166.7 $200.5 $234.3 $239.0 $230.0 $230.0 Dividends $135.4 $162.3 $165.1 $162.6 $156.4 Dividends $162.6 $156.4 $153.5 $160.9 $205.0 $215.3 $249.1 $300.0 $325.0 $345.0 Working capital needs ($18.5) ($67.1) $2.6 $92.8 ($76.0) Working capital needs $92.8 ($76.0) ($43.3) $78.3 ($111.0) $55.0 ($150.0) $56.5 $50.0 $50.0 Free cash flow $470.5 $546.4 $593.9 $602.0 $420.1 Free cash flow $602.0 $420.1 $423.7 $569.9 $712.1 $594.8 $963.5 $758.0 $953.9 $1,042.1 Free cash flow (excluding dividend) $605.9 $708.7 $759.0 $764.6 $576.5 Free cash flow (excluding dividend) $764.6 $576.5 $577.3 $730.8 $917.1 $810.1 $1,212.6 $1,058.0 $1,278.9 $1,387.1 FCF / Share $3.42 $4.17 $4.98 $5.23 $3.85 FCF / Share $5.23 $3.85 $4.01 $5.47 $6.91 $6.06 $10.25 $8.03 $10.09 $11.03 FCF / Share (ex-dividend) $4.41 $5.42 $6.36 $6.65 $5.28 FCF / Share (ex-dividend) $6.65 $5.28 $5.46 $7.02 $8.89 $8.25 $12.90 $11.21 $13.53 $14.68 EBITDA $1,047.4 $1,163.2 $1,000.3 $869.8 $925.0 EBITDA $869.8 $925.0 $970.4 $1,213.4 $1,368.1 $1,521.4 $1,809.3 $1,978.4 $2,206.2 $2,369.0 Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

12 Figure 7. Sherwin-Williams Balance Sheet FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q Q Q Q Q Q Q Q Assets Cash & Cash Equivalents $27.3 $26.2 $69.3 $58.6 $32.7 $862.6 $744.9 $40.7 $205.7 $889.8 $64.0 $75.1 $91.0 $205.7 $70.5 $402.7 $702.6 $889.8 Short-Term Investments Accounts receivable (net) , , , , , ,234.6 $1, , , ,290.7 $1, , ,231.0 Inventories (net) , , , , , , , , , , ,068.3 Deferred Income Taxes Other Current Assets Total Current Assets $2,069.6 $1,909.2 $1,770.0 $2,213.7 $2,261.6 $3,149.2 $3,158.7 $2,566.8 $2,658.9 $3,627.3 $2,765.8 $3,005.1 $2,924.2 $2,658.9 $2,888.6 $3,483.9 $3,708.2 $3,627.3 Goodwill , , , , , , , , , , , , , , , , ,381.9 Intangible Assets Deferred Pension Asset Other Assets Property, Plant & Equipment (net) , , , , , , , , , , ,095.9 Total Assets $4,855.3 $4,415.8 $4,323.9 $5,169.2 $5,229.3 $6,234.7 $6,382.5 $5,706.1 $5,791.9 $6,752.5 $5,859.3 $6,134.7 $6,102.0 $5,791.9 $6,038.3 $6,665.7 $6,917.8 $6,752.5 Liabilities & Shareholder's Equity Short Term Borrowings , , Accounts Payable , , , , , , , , , , ,034.6 Compensation and Taxes Withheld Accrued Taxes Current Portion of LT Debt Other Accruals , ,053.4 Total Current $2,141.4 $1,936.7 $1,393.7 $2,063.9 $2,162.7 $1,876.4 $2,528.6 $2,680.7 $2,141.9 $2,829.2 $3,379.0 $3,357.2 $2,294.2 $2,141.9 $2,262.6 $2,625.2 $2,515.8 $2,829.2 LT Debt , , , , , , , , , , , , ,211.3 Postretirement Benefits Other Than Pension Other LT Liabilities Shareholders Equity 1, , , , , , , , , , , ,878.4 Total Liabilities & Equity $4,855.3 $4,415.8 $4,323.9 $5,169.2 $5,229.3 $6,234.7 $6,382.5 $5,706.1 $5,791.9 $6,752.5 $5,859.3 $6,134.7 $6,102.0 $5,791.9 $6,038.3 $6,665.7 $6,917.8 $6,752.5 Cash Total Debt , , , , , , , , , , , , , ,952.5 Net Debt , , , , , , , , , , ,062.7 Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

13 Figure 8. Sherwin-Williams Balance Sheet Analysis Balance Sheet Analysis: FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Current ratio (X) 1.0x 1.0x 1.3x 1.1x 1.0x 1.7x 1.2x 1.0x 1.2x Cash per share ($) $0.21 $0.22 $0.60 $0.54 $0.31 $8.28 $7.22 $0.42 $2.19 Cash less total debt ($) ($938.1) ($807.5) ($748.3) ($986.2) ($960.7) ($842.3) ($977.0) ($1,764.7) ($1,757.1) Receivables O/S (days) Receivables/sales (%) 10.9% 9.6% 9.8% 11.8% 11.3% 10.8% 10.8% 10.2% 9.8% Inventory turnover (X) 5.0x 5.2x 5.2x 4.7x 5.4x 4.5x 5.7x 5.8x 5.7x Inventory/sales (%) 11.1% 10.8% 10.4% 11.8% 10.6% 9.7% 9.5% 9.3% 9.0% Sales - % change 2.5% (0.3%) (11.1%) 9.6% 12.7% 8.8% 6.8% 9.3% 1.9% Receivables - % change 0.7% (11.6%) (9.6%) 31.7% 8.0% 4.3% 6.3% 3.0% (1.4%) Inventory - % change 7.5% (2.6%) (14.5%) 24.3% 1.0% (0.7%) 5.5% 6.5% (1.5%) Debt / total cap. (%) 35.1% 34.2% 35.4% 39.4% 39.6% 48.8% 49.2% 64.4% 69.3% Debt / equity (%) 19.9% 18.9% 18.9% 20.2% 19.0% 27.3% 27.0% 31.6% 33.9% Net Debt / EBITDA 0.8x 0.8x 0.9x 1.1x 1.0x 0.7x 0.7x 1.2x 1.0x Assets/equity (X) 2.7x 2.8x 2.9x 3.2x 3.4x 3.5x 3.6x 5.7x 6.7x Interest coverage (X) 14.0x 12.7x 17.5x 16.1x 18.6x 24.2x 18.8x 20.6x 26.1x Book value per share ($) $13.65 $13.45 $12.96 $14.74 $14.36 $17.20 $17.21 $10.15 $9.23 Fixed asset turnover (X) 0.1x 0.1x 0.1x 0.1x 0.1x 0.1x 0.1x 0.1x 0.1x Total asset turnover (X) 1.6x 1.8x 1.6x 1.5x 1.7x 1.5x 1.6x 2.0x 2.0x Average asset turnover (X) Return average assets (%) 12.7% 11.1% 10.2% 10.2% 9.9% 11.8% 12.2% 14.3% 18.2% Return average equity (%) 33.1% 30.2% 28.9% 31.1% 33.0% 40.9% 43.3% 62.2% 112.5% Return total capital (%) 24.5% 22.8% 20.5% 19.4% 21.7% 20.2% 23.3% 32.3% 38.5% Shares outstanding Sales $8,005 $7,980 $7,094 $7,776 $8,766 $9,534 $10,186 $11,130 $11,339 COGS $4,407 $4,481 $3,831 $4,295 $5,021 $4,102 $5,569 $5,965 $5,780 Pretax Margin 11.6% 9.6% 9.3% 9.0% 8.5% 10.4% 11.0% 11.3% 13.7% Int Expense $71.6 $65.7 $40.0 $46.4 $42.5 $42.8 $62.7 $64.2 $61.8 Pretax $928.1 $769.1 $658.9 $703.3 $747.0 $991.4 $1,117.6 $1,258.2 $1,549.0 Tax Rate 32.6% 33.4% 31.7% 30.8% 30.4% 31.1% 30.7% 31.2% 32.0% Net Income (Common) $625.7 $512.5 $447.0 $482.1 $515.2 $677.4 $771.3 $861.7 $1,049.1 A-Tax Int $48.3 $43.8 $27.4 $32.2 $29.6 $29.5 $43.4 $44.2 $42.0 Dividend $162.3 $165.1 $162.6 $156.4 $153.5 $160.9 $205.0 $215.3 $249.1 Retention Rate 74.1% 67.8% 63.6% 67.6% 70.2% 76.2% 73.4% 75.0% 76.3% Source: Company reports and estimates Ghansham Panjabi, Ph.D. Mehul M. Dalia Matthew T. Krueger Senior Research Analyst Senior Research Associate Research Associate gpanjabi@rwbaird.com mdalia@rwbaird.com mtkrueger@rwbaird.com (214) (415) (414)

14 Sherwin-Williams Co. Appendix - Important Disclosures and Analyst Certification Approved on 26 January :10EST/ Published on 27 January :00EST. Covered Companies Mentioned All stock prices below are the 01/26/2017 closing price. Valspar Corp. (VAL - $ Neutral) (See recent research reports for more information) Rating and Price Target History for: Sherwin-Williams Co. (SHW) as of /19/14 O:$225 10/02/14 O:$240 12/11/14 O:$260 01/14/15 O:$300 04/22/16 O:$ Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q Created by BlueMatrix Rating and Price Target History for: Valspar Corp. (VAL) as of /13/14 O:$85 11/26/14 O:$90 01/14/15 N:$90 08/26/15 N:$85 03/22/16 N:$ Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q Created by BlueMatrix 1 Incorporated makes a market in the securities of SHW and VAL. Appendix Important Disclosures and Analyst Certification Incorporated and/or its affiliates expect to receive or intend to seek investment-banking related compensation from the company or companies mentioned in this report within the next three months. Incorporated may not be licensed to execute transactions in all foreign listed securities directly. Transactions in foreign listed securities may be prohibited for residents of the United States. Please contact a Baird representative for more information. Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader U.S. equity market over the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity market over the next 12 months. Underperform (U) - Expected to underperform on a total return, risk-adjusted basis the broader U.S. equity market over the next 12 14

15 Sherwin-Williams Co. months. Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with an emphasis on safety. Company characteristics may include: stable earnings, conservative balance sheets, and an established history of revenue and earnings. A - Average Risk - Growth situations for investors seeking capital appreciation with an emphasis on safety. Company characteristics may include: moderate volatility, modest balance-sheet leverage, and stable patterns of revenue and earnings. H - Higher Risk - Higher-growth situations appropriate for investors seeking capital appreciation with the acceptance of risk. Company characteristics may include: higher balance-sheet leverage, dynamic business environments, and higher levels of earnings and price volatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to accept a high degree of volatility and risk. 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