Analysis of Debt
Total Debt (Carrying Amount)
Sherwin-Williams Co., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The data reflects the debt structure and changes over a five-year period. Several key trends emerge when analyzing the borrowings, current liabilities, long-term debt, and total debt positions.
- Short-term borrowings
- Starting from a minimal amount in 2020, short-term borrowings experienced a significant surge by the end of 2021, reaching a peak near 763.5 million. This upward trend continued in 2022, peaking further at approximately 978.1 million. However, in 2023, there was a marked reduction to 374.2 million, followed by a moderate increase again to 662.4 million in 2024. This volatility suggests adjustments in short-term financing needs or refinancing strategies within the period.
- Current portion of long-term debt
- This liability saw a relatively stable figure in 2020 and 2021, with values around 25 million and 260.6 million respectively. A dramatic decrease was observed in 2022, dropping to a mere 0.6 million, indicating either conversions, repayments, or reclassifications. However, 2023 and 2024 experienced substantial increases with over 1 billion reported each year, suggesting renewed short-term obligations or maturing portions of long-term debt being classified as current.
- Current portion of finance lease liabilities
- Data is unavailable for the initial four years, but in 2024 this liability appears as 3.7 million, indicating either new lease agreements or changes in reporting practices related to finance leases.
- Long-term debt, excluding current portion
- The long-term debt showed a gradual increase from approximately 8.27 billion in 2020 to around 9.59 billion in 2022, indicating growing reliance on long-term financing. However, a decline followed in 2023 and 2024, reducing to approximately 8.38 billion and then 8.18 billion respectively. This decrease could be indicative of repayments, refinancing, or strategic debt management reducing exposure to long-term liabilities.
- Long-term finance lease liabilities, excluding current portion
- No data was reported until 2024 when 185.6 million was recorded, likely reflecting a new lease reporting standard adoption or acquisitions of finance leases classified under long-term liabilities.
- Total debt and finance lease liabilities (carrying amount)
- Total debt increased systematically from about 8.29 billion in 2020 up to a peak of 10.57 billion in 2022. Subsequently, total debt decreased to approximately 9.85 billion in 2023, before rising slightly again to nearly 10.08 billion in 2024. This overall trend shows a pattern of rising indebtedness up to mid-period, followed by partial deleveraging, offset somewhat by new liabilities.
In summary, the data indicates dynamic shifts in the company’s debt profile, with peaks in short-term borrowings and current portions of long-term debt around 2022 followed by reductions. Long-term debt growth until 2022 reversed in subsequent years. The emergence of finance lease liabilities in 2024 adds a new component to the debt structure, suggesting evolving financing or reporting frameworks. The company’s total debt surged over the first three years, peaking in 2022, and then declined moderately, reflecting active management of financing sources and obligations over the analyzed period.
Total Debt (Fair Value)
| Dec 31, 2024 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Short-term borrowings | 662,400) |
| Publicly traded debt | 8,172,800) |
| Non-traded debt | 200) |
| Total long-term debt, including current portion (fair value) | 8,173,000) |
| Finance lease liabilities | 189,300) |
| Total debt and finance lease liabilities (fair value) | 9,024,700) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.90 |
Based on: 10-K (reporting date: 2024-12-31).
Weighted-average Interest Rate on Debt
Weighted average interest rate on debt and finance lease liabilities: 3.76%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 3.45% | 1,495,700) | 51,602) | |
| 4.50% | 1,233,700) | 55,517) | |
| 2.95% | 795,500) | 23,467) | |
| 3.80% | 543,700) | 20,661) | |
| 2.30% | 497,600) | 11,445) | |
| 2.20% | 495,500) | 10,901) | |
| 3.30% | 494,600) | 16,322) | |
| 2.90% | 492,100) | 14,271) | |
| 4.80% | 445,000) | 21,360) | |
| 3.45% | 399,800) | 13,793) | |
| 4.25% | 399,500) | 16,979) | |
| 4.55% | 395,400) | 17,991) | |
| 4.55% | 397,600) | 18,091) | |
| 3.95% | 351,600) | 13,888) | |
| 4.00% | 297,200) | 11,888) | |
| 3.30% | 250,000) | 8,250) | |
| 4.40% | 241,300) | 10,617) | |
| 8.00% | 200) | 16) | |
| 4.70% | 655,600) | 30,813) | |
| 3.10% | 6,800) | 211) | |
| 5.50% | 189,300) | 10,412) | |
| Total | 10,077,700) | 378,493) | |
| 3.76% | |||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 378,493 ÷ 10,077,700 = 3.76%
Interest Costs Incurred
Sherwin-Williams Co., interest costs incurred
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Interest Expense
- Interest expense exhibited a generally upward trend over the observed five-year period. Starting at 340,400 thousand US dollars in 2020, it slightly decreased to 334,700 thousand in 2021. However, from 2021 onwards, interest expense increased consistently, reaching 390,800 thousand in 2022, then 417,500 thousand in 2023, followed by a marginal decrease to 415,700 thousand in 2024. Overall, the expense rose by approximately 22% from 2020 to 2024, indicating increasing borrowing costs.
- Capitalized Interest
- Capitalized interest data were not recorded until 2023, where it appeared at 30,700 thousand US dollars, before nearly doubling to 59,600 thousand in 2024. The emergence and growth of capitalized interest suggest increased investment in capital projects where borrowing costs are being added to the asset cost rather than expensed immediately.
- Interest Costs Incurred
- Interest costs incurred, representing the sum of interest expense and capitalized interest, mirrored the trend of interest expense from 2020 through 2022, initially fluctuating slightly but then increasing notably from 390,800 thousand in 2022. With the introduction of capitalized interest in 2023, total interest costs increased more substantially, rising to 448,200 thousand and further growing to 475,300 thousand in 2024. This indicates higher overall borrowing costs, partly offset by capitalization practices.
- Summary Insights
- The data shows that while direct interest expense has increased moderately over the period, the addition of capitalized interest from 2023 onward has accelerated the growth of total interest costs incurred. This pattern suggests a shift in financing strategy possibly linked to increased capital expenditures. The trend of rising interest costs may impact profitability unless offset by corresponding growth in asset base or earnings.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 3,867,500 ÷ 415,700 = 9.30
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 3,867,500 ÷ 475,300 = 8.14
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio exhibited a moderate decline from 8.4 in 2020 to 7.58 by the end of 2022, indicating a slightly decreased ability to cover interest expenses during this period. However, this trend reversed subsequently, with the ratio rising to 8.45 in 2023 and further improving to 9.3 by 2024, suggesting a strengthening financial position and enhanced capacity to meet interest obligations in later years.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio followed a similar initial pattern, decreasing from 8.4 in 2020 to 7.58 in 2022. Unlike the unadjusted ratio, the adjusted ratio did not recover as strongly, showing a smaller increase to 7.87 in 2023 and then a marginal rise to 8.14 by 2024. This indicates that when considering capitalized interest, the company's ability to cover interest expenses improved but remained at a somewhat lower level compared to the unadjusted measure.
- Overall Insights
- The trends suggest that the company faced some challenges in its interest coverage capacity through 2022, but managed to strengthen this position in the following two years. The stronger improvement in the unadjusted ratio relative to the adjusted ratio highlights the impact of capitalized interest on the overall interest coverage assessment. The upward trend in both ratios in the latest years indicates improved earnings or reduced interest expense relative to previous years.