0000089800-26-000038
SEC filingSolid start to 2026 with revenue and profit growth driven by Paint Stores Group pricing and volume, though cash flow improvement was partly offset by working capital needs.
Gross profit increased 8.7% to $2.78 billion, outpacing revenue growth, resulting in gross margin expansion to 49.1% from 48.2% in the prior-year quarter. The improvement was driven by favorable pricing and product mix in the Paint Stores Group, as well as cost management. Net income rose 6.1% to $534.7 million, and diluted earnings per share increased 7.5% to $2.15, benefiting from the higher gross profit and a lower effective tax rate.
Net cash provided by operating activities improved to $139 million from a use of $61 million in the prior-year quarter, driven by higher net income and favorable working capital changes. Capital expenditures were $138 million, primarily related to finalizing the construction of the new global headquarters and technology center, as well as manufacturing capacity expansion, operational efficiencies, and store openings. The company expects full-year 2026 capital expenditures to be lower than 2025, funded through operating cash flow.
Management did not provide quantitative guidance but noted that business is seasonal, with the majority of net sales traditionally occurring in the second and third quarters. The company expects to spend less on capex in 2026 than in 2025. Key risks include ongoing lead pigment litigation, environmental remediation costs at major sites (notably Gibbsboro, New Jersey), and the potential impact of foreign currency translation and commodity price fluctuations. The company also faces a false advertising lawsuit from Carboline regarding its Firetex intumescent coating product. Despite these uncertainties, management believes environmental and litigation liabilities will not materially affect financial condition, liquidity, or cash flows.