Good morning. Thank you for joining The Sherwin-Williams Company's review of third quarter 2022 results and our outlook for the fourth quarter and full year of 2022. With us on today's call are John Morikis, Chairman and CEO; Al Mistysyn, CFO; Jane Cronin, Senior Vice President, Corporate Controller; and Jim Jaye, Senior Vice President, Investor Relations and 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. This conference call will include certain forward-looking statements as defined under US 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 statement 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 up this session to questions. I will now turn the call over to Jim Jaye.

Thank you, and good morning to everyone. Sherwin-Williams had an excellent performance in the third quarter, including high-teens sales growth resulting in the first $6 billion sales quarter in company history; significant, sequential and year-over-year gross margin improvement, record adjusted diluted earnings per share and strong cash flow. Demand remains strong in pro-architectural and North American industrial end markets in contrast to continuing softness in Europe and China. While year-over-year cost inflation remained very significant in the quarter, we were encouraged by a modest sequential decrease in raw material costs. The industry supply chain also continued to stabilize, though conditions remain tight with some previously noted specialty resins in particular remaining in limited supply. Throughout the quarter, our team continued to focus on growth initiatives, product innovation, customer solutions, pricing actions, cost control, supply chain improvements and business optimization activities while also taking actions and planning for a wide range of scenarios that could unfold next year. I'd like to go through just a few of the numbers at a high level and then turn it over to John, who will provide some additional color on the third quarter and our outlook. Comparisons in my comments are to the prior year period unless stated otherwise. Starting with the top line. Third quarter 2022 consolidated sales increased 17.5% to a record $6 billion. Pricing was in the low double-digit range. Consolidated gross margin increased to 42.8%. This was an improvement of 120 basis points year-over-year and 110 basis points sequentially, reflective of our pricing actions. Gross margin improved sequentially month-to-month in the quarter, with September increasing 650 basis points year-over-year. SG&A expense decreased to 25.3% of sales. Consolidated profit before tax increased $265.7 million or 43.5%. Diluted net income per share in the quarter was $2.62 per share versus $1.88 per share a year ago. Excluding Valspar acquisition-related amortization expense, third quarter adjusted diluted net income per share increased 35.4% to $2.83 per share versus $2.09 a year ago. EBITDA in the quarter was $1.12 billion or 18.6% of sales. Moving on to our operating segments. Sales in The Americas Group increased 21.4%, driven by double-digit volume growth across all architectural end markets and high single-digit price increases. Segment profit increased by $132.6 million and segment margin was 21.2%, which was about flat with last year and up 30 basis points sequentially. Sales in the Consumer Brands group increased 8.5%, driven by a low double-digit price increase, which offset lower sales volumes, primarily outside of North America. Continued tightness in alkyd resin impacted North America stain and aerosol sales. Adjusted segment margin was 16.2%, up 150 basis points year-over-year and 500 basis points sequentially. Sales in the Performance Coatings Group increased 13.7% and were driven by mid-teen price increases, partially offset by a less than 1% decrease in volume. Mid-single-digit sales from acquisitions were offset by a mid-single-digit unfavorable FX impact. Adjusted segment margin increased 590 basis points to 16.4% of sales, due primarily to higher selling price increases. Let me now turn it over to John to provide some additional commentary, before we move on to your questions.

Thank you, Jim, and good morning, everyone. As we've indicated since the start of the year, we expected 2022 would be a year of two contracts to have, and that's exactly what we're seeing play out. We delivered strong results in the third quarter, and I want to thank our entire leadership team and all 61,000 employees for their focus, their determination and drive in what remains a challenging operating environment. We continue to have great confidence in our strategy. Before moving on to our outlook, let me provide some additional color on our third quarter. In The Americas Group segment, we delivered record sales and PBT. Mid-teens volume growth and high single-digit pricing drove sales, which were up by a strong double-digit percentage in every end market we serve. The sales growth was led by DIY, which was compared to an extremely soft quarter a year ago, where we prioritized our Pro customers given limited product availability. Sales growth was next strongest in our property management, followed by new residential, residential repaint and commercial, respectively. Sales were also up by a double-digit percentage in Protective & Marine, but were dampened by the ongoing limited availability of alkyd resin. We are seeing strong effectiveness from the 10% price increase we announced September 6. TAG segment profit increased due primarily to double-digit paint volume growth and selling price increases, partially offset by increased raw material costs and higher SG&A costs related to continued investments in our long-term growth initiatives and our strategy. From a product perspective, exterior and interior paint sales were both strong, with exterior sales growing slightly faster and interior being the larger part of the mix. We've opened 32 net new stores year-to-date and expect to open 40 to 50 in the fourth quarter. We continue to invest in our management training program, expecting to hire more than 1,400 college graduates that will enter this program this year and who will be the future leaders of the company. We also added sales reps and territories in the quarter, along with ongoing growth investments in innovative new products, e-commerce and productivity-enhancing services. Our Consumer Brands Group had a much improved quarter, led by sales that exceeded our guidance. Sales in North America increased by a double-digit percentage, driven largely by price. DIY paint demand remained sluggish, as inflation continued to pressure consumers, while continued tightness in alkyd resin impacted our ability to produce stains and aerosols. On a positive note, the Pros Who Paint segment again grew by a strong double-digit percentage. Sales in China were down by a double-digit percentage, due mainly to the COVID-related lockdowns. Europe was also down double digits due to the slowing macroeconomic environment. Segment margin improved significantly, primarily due to selling price increases and good cost control, partially offset by lower sales volume, increased raw material costs and higher supply chain costs. The Performance Coatings Group followed a very good second quarter with another strong performance in the third. Sales were up mid-teens, including mid-teens pricing and a mid-single-digit benefit from acquisitions, partially offset by a very slight decrease in volume in a mid-single-digit impact from unfavorable FX. For the second straight quarter, this team delivered year-over-year segment margin improvement, driven by execution of our strategy, including effective pricing actions. The 16.4% adjusted margin in the quarter was the highest for the segment since the acquisition of Valspar. And excluding the impact of acquisitions closed over the last 12 months, adjusted segment margin was 17% in the quarter. Although, we're pleased to have reached the low end of our expressed margin target of high teens low 20s. We know there's a significant amount of opportunity ahead. I'm proud of our team's efforts to reach this goal and know they understand the high expectations we have for continued improvement. Sales varied significantly by region. In North America, sales increased double digits against a challenging comp and included low single-digit volume growth. Latin America sales also increased by double digits against a strong comp. Sales were up high single digits in Asia, driven by price as COVID lockdowns continue to impact demand. Sales in Europe were down mid-single digits against a double-digit comparison and continued economic slowing. Every division in the group grew led by coil and followed by packaging, auto refinish, general industrial and industrial wood. We're also pleased by what we're seeing so far from the recent acquisitions we've announced in this segment. Again, these businesses added mid-single-digit growth in PCG sales in the quarter though this was nearly all offset by unfavorable FX. Earlier this month, we announced an agreement to acquire ICA, a high-quality European business focused on innovative wood coatings. Before moving to our outlook, let me speak to capital allocation in the quarter. We returned approximately $203 million to our shareholders in the quarter in the form of dividends and share buybacks. We invested $48 million to purchase 200,000 shares at an average price of $237.81 per share. We distributed $155.8 million in dividends. We also invested $175 million in our business through capital expenditures, including $125 million in core CapEx and $50 million for our building our future project. We closed three acquisitions in the third quarter for approximately $440 million. We ended the quarter with a net debt-to-EBITDA ratio of 3.1 times as we increased short-term borrowings to fund our recent acquisitions. We'll drive the ratio to our long-term target of 2 to 2.5 times range in 2023. We will use cash in the fourth quarter of 2022 to manage debt and share buybacks will be done to offset option dilution. Turning to our outlook. We expect to deliver a very solid fourth quarter, resulting in our second half sales increasing by a low double digits to mid-teens percentage. And second half diluted earnings per share increasing by 35% at the midpoint of our guidance. Within The Americas Group, demand is strong across all of our pro-architectural markets, including new residential, despite higher interest rates, with customers reporting strong backlogs that will take them through the end of the year and likely longer. We also see a unique opportunity to continue winning new business as our competitors transition their pro contractor business models and our differentiated model has never been more on display in value than it is today. Within the Consumer Brands Group, we expect the North American DIY consumer to continue to face inflationary pressures and Europe and China remain challenging. Within the Performance Coatings Group, demand remains strongest in North America, our largest region. European demand slowed in the third quarter, and we expect continued softness in the fourth quarter. In Asia, the pace of recovery from prior COVID lockdowns in China and prospects for additional lockdowns make it difficult to assess demand trajectory. From an industry supply chain perspective, we're largely getting the raw materials we need, though the availability of alkyd and some specialty resins remain choppy and is impacting certain product lines within Consumer Brands and Performance Coatings. While we continue to push hard, we don't expect meaningful improvement in the availability of these resins until the first quarter of next year. Some near-term inefficiencies remain in our own supply chain as we continue to take steps to overcome industry issues and serve our customers. On the cost side of the equation, our full year raw material inflation guidance remains in the high teens. We expect to see further sequential decline of raw material costs in the fourth quarter, though they will remain elevated year-over-year. We expect the trajectory of raw material costs to continue trending favorably as we exit the year, although the pace and level of potential relief next year is difficult to project. Additionally, along with the highest inflation rate we've seen in 40 years, we're also experiencing significant higher costs and other elements of our cost basket, including labor, transportation and fuel and other costs. We will continue to monitor these costs, fight hard to offset them and respond with additional pricing, if necessary. So specifically for the fourth quarter of 2022, we expect our consolidated net sales will increase by a high single to low double-digit percentage, inclusive of a low double-digit price increase. We expect The Americas Group to be up high teens to low 20%. We expect Consumer Brands to be down a mid to high single-digit percentage, and we expect Performance Coatings to be flat to up a low single-digit percentage. We expect North America, which is the largest region within PCG, to be up a low teens percentage. For the full year 2022, we expect consolidated sales to increase by a low double-digit percentage, inclusive of a low double-digit percentage price increase. We expect The Americas Group to be up by low double digits to mid-teens percentage. We expect Consumer Brands Group to be down a low single-digit percentage and Performance Coatings Group to be up by a low double to mid-teens digit percentage. Given the many variables we've noted, we left our diluted net income per share guidance for 2022 unchanged and in the range of $7.65 to $7.95 per share. Full year 2022 earnings per share guidance includes Valspar acquisition related amortization expense of approximately $0.85 per share. On an adjusted basis, we expect full year 2022 earnings per share of $8.50 to $8.80, which represents mid single-digit percentage growth from 2021 at the midpoint in what continues to be a challenging macro environment. This guidance implies a second half adjusted diluted net income per share of $4.63 per share at the midpoint, an increase of 35% over the same time period last year. In addition, we provided updated guidance on several of our full year data points in our slide deck, including our expectations for FX, CapEx, interest expense, depreciation and amortization. We expect our full year tax rate will remain in the low 20% range. While we're not prepared to provide any specific guidance on 2023 at this time, I would like to comment on demand trends and actions we're taking that will impact our 2023 outlook that we will provide in January. We expect slowing new residential demand with elevated interest rates and other costs that are impacting new single-family home permits and starts. However, multifamily production has maintained strong momentum. It's also clear that macro headwinds are likely to continue and potentially worsen in Europe and China. Our base case in this environment remains to prepare for the worst and hope for the best. I'm highly confident in our leadership team, which is deep in experience and has been through many previous business cycles. We've transformed our business in many ways since the last significant downturn, and we are now a stronger, more resilient company. We know what to do. To this end, we've been evaluating multiple options available to us based on a wide range of scenarios, and we are prepared to take appropriate actions beginning this quarter. These include the following we continue to review our portfolio of businesses, brands and customer programs to ensure that they are adding above-market growth and long-term shareholder value. As a result of this work, we are announcing action plans to simplify our operating model and portfolio of brands in Consumer Brands Group and to reduce costs in all regions in Performance Coatings Group, Consumer Brands and administrative segments. These actions, once finalized, could include one-time costs or charges in the range of $160 million to $180 million over the next four quarters, and could result in annual run rate savings of approximately $50 million to $70 million once fully implemented. Additional details on these planned actions are outlined in the slide deck issued with our press release this morning. We will call out significant one-time charges and update our progress on run rate synergies on future quarterly earnings calls. We remain committed to our strategy of providing innovative solutions that help our customers to be more productive and profitable. In challenging environments, we have the opportunity to become an even more valuable partner to our customers. We will continue to focus on new account growth and share of wallet initiatives. We will leverage our strength in recession resilient end markets, including residential repaint, property management, packaging and auto refinish, all of which are larger than they were in previous cycles. We will continue to invest in growth initiatives, including adding stores, sales reps and innovative products and services. We will continue to invest in our people, including our management trainee program I previously mentioned, along with ongoing training that positions our people as one of the most significant amongst our many points of differentiation. We will continue implementing appropriate pricing actions across the company to offset persistently higher input costs, with a focus on regaining our gross margins back to our long-term target range of 45% to 48%. We will continue investing in acquisitions that can accelerate our long-term strategy and top-line growth, and expand our operating margins, including our most recent announcement of European Wood Coatings leader, ICA Group. We will maintain our disciplined capital allocation philosophy. We will not hold cash, while investing appropriately in CapEx, paying a dividend, targeting acquisitions that accelerate our strategy and absent M&A buying back our stock. In sum, we expect to deliver a solid fourth quarter to complete a very strong second half of 2022, and we're also taking actions to get ahead of what could be a challenging 2023. We don't expect to be immune from any number of potentially difficult scenarios, but what we do expect is to outperform our competitors and the market. We will do this by leveraging the best team in the industry. We remain committed to creating shareholder value over the long term. And that concludes our prepared remarks. At this time, we'll be happy to take your questions.

Ladies and gentlemen, the floor is now open for questions. Your first question for today is coming from Vincent Andrews.

Thank you. Just a question on TAG and the margin, both sequentially and year-over-year. You saw a lot more improvement in margins in the other two segments. I mean you didn't TAG. So I was wondering why that was. I did notice you called out some long-term investment spending in TAG that might have affected that. So perhaps, you could talk about that a little bit as well in terms of what that is? And whether it carries over, not just in the 4Q but into next year as well?

Yes, Vincent, this is Al Mistysyn. We experienced just over a 20% increase year-over-year in our segment profit, with flow-through in the low 20% range, which is typically normal for us. Our higher sales volumes usually lead to improved operating margins. I've previously mentioned that we typically see low to mid-single-digit volume growth in a normal environment, but we are now expecting mid- to high 20% growth. We had one significant month where we raised selling prices, although these increases were partially offset by higher raw material costs, which, as I noted earlier, are better sequentially but still up by a mid-single-digit percentage in our fourth quarter. Additionally, the increased SG&A costs we identified are part of our ongoing investments in long-term growth initiatives. We've opened 67 new stores and added over 80 representatives, increasing headcount in our stores to support our growth outlook. As John mentioned, we plan to accelerate growth in the fourth quarter by adding 40 to 50 new stores. For the fourth quarter, I anticipate the typical seasonal slowdown in architectural demand, alongside a sequential decline in operating margins. However, we expect solid flow-through in the fourth quarter, possibly exceeding 30%. Moreover, we will have a full quarter benefit from the 10% price increase implemented on September 6, which is performing better than we expected. We also anticipate a sequential decrease in raw material costs, easing comparable figures, leading to a significant year-over-year improvement in our operating margins this quarter. The growth in SG&A will carry into the first half of next year, with more details to be provided in January.

And just as a follow-up, we talked a lot about raw material shortages for a year now, and part of what you were doing this year was trying to get your TAG inventory back to a comfortable level to service your customers. Are you there now? And given that maybe a lot of that was done over the last quarter or two when raws were peaking, should we be thinking about you carrying sort of peak COGS inventory into next year's spring season, or how should we think about the cadence of sort of lower raw material costs flowing through in TAG specifically?

Vincent, I'll address the inventory aspect first and then Al can cover the accounting part. Currently, we are in a strong position regarding most of our products. As I mentioned earlier, we are still facing challenges with the alkyd resin and some specialty resins, but we are making progress. We anticipate that by the end of the first quarter, we will have overcome most, if not all, of these issues. For the time being, the majority of our product line is accessible to our customers. We do not wait for customers to find their way back to our stores. Our sales representatives and store managers actively pursue both existing and new customers to inform them about the availability of these products.

Yes. We actually increased our inventory from the second quarter to the third quarter, which is unusual for us. This was necessary to meet the strong demand we're experiencing, particularly with TAG showing mid-teen volume growth in the third quarter and a projected high low double-digit growth in the fourth quarter. We plan to manage our architectural inventory carefully, potentially increasing it by another 4 million gallons by year-end. However, we will closely monitor the situation as the quarter progresses and take into account demand trends, especially as we look ahead to the first half of next year, which may lead to adjustments. Our store-level inventories are in excellent condition, allowing us to meet the strong demand with high service levels, and we anticipate continuing this trend. As our inventories stabilize, we will focus on managing our working capital. At the end of the third quarter, our working capital ratio was over 12%, and we aim to reduce this to between 11% and 11.5% by year-end, maintaining a solid inventory position as we move into next year.

And Vincent, this ties also back to your first question on the SG&A to Al's earlier point. We are continuing to invest in people to provide the service in the stores. So, as the product becomes more available, you may recall in the last couple of quarters, we talked about the new account activity at record levels and active accounts. So, now we've got a lot more people coming into our stores, new accounts coming in. We've got product available. We want to make sure that we have the service to deliver on our promise. And so they're all interrelated, and they're all working very well.

Great to hear. Thanks guys.

Your next question is coming from Truman Patterson.

Good morning everyone. I appreciate you taking my questions. It's clear there are many variables affecting raw material inflation related to suppliers and petrochemicals. John, you mentioned that raw material costs are showing a favorable trend as we approach the end of the year. Could you clarify what the gross margin outlook for raw materials might be as we exit the year compared to the third quarter?

Yes, Truman, this is Jim. I'll take that one. So, if you look at our third quarter, the raw material basket was up by mid-teens percentage year-over-year. I think as we get into the fourth quarter, we're looking at that being more like a mid-single-digit year-over-year number. I think, as John said in his prepared remarks, the trajectory is good and heading in the right direction. I think it's hard to project exactly what it's going to do next year. We're trying to still formulate that, and we'll come back to you in January with our full year guide to give you some more color on that.

Yes. Truman, I'd just add to that. As we typically do and our planning for the upcoming year, we work with our suppliers closely on looking at demand trends, looking at volume trends by region, and it gives us a better line of sight as we get through the end of the year. And that's why January, we are able to give you a much better outlook on the raw material basket and other input costs, quite honestly, as we've talked about. Labor rates have been up high single digits, and in some cases, across our supply chain, low to mid teens in an effort to reduce turnover, which is very expensive, but the expertise that goes with that turnover and then freight and other transportation costs. So, we'd like to talk about the full basket as we get into January, and we'll have a better line of sight to that.

Okay. Okay. Perfect. And then, you all mentioned some of the cost control initiatives in PCG and CBG in preparation of a slowdown, right? Savings of $50 million to $70 million annually. I'm hoping you can walk through those in a bit more detail. And then also, assuming volumes turn negative or remain negative through '23, how does that impact your thoughts on kind of decremental operating margins for both of those segments?

Yes, Truman, I want to be cautious about going into too much detail on this call. We're making decisions in our fourth quarter and moving forward. As we discussed during our second quarter earnings call in July, it’s part of our usual earnings process. We are evaluating our portfolio of business brands and customer programs to determine their potential for generating above-average market share growth as well as meeting our operating margin and cash flow targets. If we don’t observe progress in these areas, we will take actions similar to exiting the East private label business and the sale of our architectural business in Australia and New Zealand. Regarding the run rate savings, a larger portion is attributed to the portfolio review rather than straightforward cost reductions, and this is in relation to the macroeconomic challenges we’re facing. It's likely a 60-40 split. This is significant because it indicates that we are not overreacting to the macro environment. We are actually improving operating margins across our consumer brands and in the PCG. As John mentioned, we reached the lower end of our high teens margin at 17%, but we still have work ahead. The actions we are taking in the upcoming quarters are not tied to our long-term target of high teens to low 20s operating margin; they are a response to the slowdown we are witnessing in Europe and Asia. We also have opportunities for growth through platform consolidations, and as we integrate these acquisitions into next year, they will start to positively contribute by the second half. Therefore, if we experience further demand slowdowns, we have additional strategies to mitigate any negative impact on our operating margins.