Robert J. Wells - Senior Vice President of Corporate Communications and Public Affairs Christopher M. Connor - Chairman and Chief Executive Officer Sean P. Hennessy - Chief Financial Officer and Senior Vice President of Finance

Robert A. Koort - Goldman Sachs Group Inc., Research Division Duffy Fischer - Barclays Capital, Research Division Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division Aram Rubinson - Wolfe Research, LLC P. J. Juvekar - Citigroup Inc, Research Division Charles A. Dan - Morgan Stanley, Research Division Dennis McGill - Zelman & Associates, LLC Kevin W. McCarthy - BofA Merrill Lynch, Research Division Nils-Bertil Wallin - CLSA Limited, Research Division John Roberts - UBS Investment Bank, Research Division John P. McNulty - Crédit Suisse AG, Research Division Ivan M. Marcuse - KeyBanc Capital Markets Inc., Research Division Dmitry Silversteyn - Longbow Research LLC Donald Carson - Susquehanna Financial Group, LLLP, Research Division Gregory S. Melich - ISI Group Inc., Research Division Charles Edward Cerankosky - Northcoast Research Eric Bosshard - Cleveland Research Company Richard O'Reilly

Good morning. Thank you for joining The Sherwin-Williams Company's review of the fourth quarter and full year 2013 results and expectations for 2014. With us on today's call are Chris Connor, Chairman and CEO; Sean Hennessy, CFO; Al Mistysyn, Vice President, Corporate Controller; and Bob Wells, Senior Vice President, Corporate Communications. This conference call is being webcast simultaneously in listen-only mode via Vcall via the Internet at www.sherwin.com. An archived replay of this webcast will be available at sherwin.com, beginning approximately 2 hours after this conference call ends, and will be available until Wednesday, February 19, 2014, 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 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 this session to questions. I will now turn the call over to Bob Wells.

Thanks, Jesse. In order to allow more time for questions, we've provided balance sheet items and other statistical data on our website at sherwin.com, under Investor Relations 2013 Year End Press Release. Summarizing overall company performance for the fourth quarter and full year 2013, consolidated sales for the fourth quarter increased 10.6% to $2.46 billion, due primarily to higher paint sales volume to our Paint Stores Group and acquisitions. For the full year, sales increased 6.8% to $10.19 billion. Sales from acquisitions increased consolidated net sales approximately 4.6% in the quarter and 1.8% in the full year. Currency translation decreased consolidated net sales 1.1% in the quarter and 0.8% for the full year. Consolidated gross margin in the fourth quarter increased to 45.8% of sales from 44.8% of sales in the fourth quarter of 2012. The increase in gross margin in the quarter was primarily due to improved fixed cost absorption from increased sales volumes, partially offset by lower gross margin sales by the U.S. and Canadian stores acquired from Comex. For the year, gross margin increased to 45.3% of sales from 44.1% last year. The increase in gross margin for the year was primarily due to increased production volumes, partially offset by import duty assessments related to our Brazilian operation and dilution from acquisitions. Selling, general and administrative expense in dollars increased $70.2 million in the fourth quarter compared to fourth quarter last year, but decreased, as a percent of sales, to 39.2% from 40.1% in the same quarter last year. For the full year 2013, SG&A expense increased $208 million to $3.47 billion but decreased, as a percent of sales, to 34% from 34.2% in 2012. The incremental SG&A from acquisitions, new stores and customer service investments accounted for the majority of SG&A increase in the year. Interest…

Thanks, Bob, and good morning, everybody. Thanks for joining us today. The financial results in the press release we issued this morning, as well as the numbers that Bob just walked you through, adhere to generally accepted accounting principles for financial reporting. That's the standard we prefer to follow because it's the most consistent and appropriate way to present our results. Although we don't use non-GAAP or pro forma or adjusted financial metrics in our earnings releases, in some cases, you can get a clear picture of how the core business perform by backing out the extraordinary items. The past 2 years are good examples. If you strip away the impact from acquisitions, tax assessments, Department of Label settlement and various other one-time items we incurred over the past 2 years, so we're comparing apples-to-apples, our core consolidated sales increased 5% in 2013 and our core earnings per share increased more than 17% or $6.49 per share to $7.60. This approach also helps to highlight the earnings leverage in our operating segments. For example, backing up the acquisitions from our Paint Stores Group, organic revenue growth for the year was just under 9% and flow-through on operating profit was more than 36%. On a GAAP basis, both Paint Stores Group and Consumer Group established new high watermarks for full year operating margins. Paint Stores' operating margin expanded 60 basis points to 16.5% and consumer segment operating margin increased to 18% from 16.4% last year. Global Finishes Group operating margin also improved 100 basis points year-over-year while the economic challenges and currency headwinds Bob discussed were too much for our Latin American coating segment to overcome. Although we anticipate further dilution from acquisition and integration this year, we also expect continued strong earnings leverage on organic revenue growth. We achieved 2…

[Operator Instructions] Our first question is -- comes from the line of Bob Koort with Goldman Sachs.

Chris, you mentioned the sort of upper single-digit, low double-digit revenue base and also some raw material inflation. Can you give us a sense of what pricing might do in 2014?

Yes, we can. In fact, we have announced some pricing to our stores, that's what we typically comment on. But we want to give you a little different feel for that this year. And Sean, maybe you can take the guide through that.

Yes, this is Sean Hennessy. And as you mentioned in the past, we've been able to tell you when and how much selling price increases we have taken to the market. Due to the integration of the 5 brands acquired through the Comex, there are inconsistencies in when those things will occur, that do not really -- do not allow us to answer the question on pricing the same way as we have in the past. Our margin will be affected by the selling price increase that Chris just talked about and stores did go out in early January with some pricing. But the annualization of Comex, the foreign currency fluctuations, raw material changes that are going on, what we've thought of in the past, we've only given guidance on the annual basis looking at the sales and to the EPS. And just to give you some clarity on what's going to happen with pricing and how all this affects us is really to give you a gross margin range. Our gross margins will increase this year but we still believe we're in that 43% to 46% range. And this should tell you that we believe our total gross margin will be in the 45.5% to 46% range versus the 45.3% that we realized in the full year 2013.

The next question is coming from the line of Duffy Fischer with Barclays.

Just wanted to clarify on the comment that Chris made first. The 36% incremental margins in Paint Stores excluding the acquisitions, did I hear that right?

That's correct.

Okay, very good. And then if you look at the $40.4 million of loss from the acquisition in that segment, can you break that down a little bit? How much was underlying business? How much was kind of inventory onetime step up or costs on the integration? I guess I'm just trying to get a sense, what was kind of the run rate of the business? I think we've talked about close to breakeven as it was coming into the portfolio, but just trying to understand the health of the businesses underlying that number?

Yes, and a couple of things there -- again, this is Sean Hennessy, when you take a look at the sales curve that they have, they have a sales curve much like the Paint Stores Group for the second and third quarter, the highest sales quarters. So when you talk about annual might be flat but really when the fourth quarter is our toughest quarter because of the sales curve. When you look at that $40 million, approximately half of that was operating income, normal operating income. The other half was really onetime causes, inventory step up, other causes of expense that you mentioned. So that was about half and half, almost half and half is exactly. And just to remind you, when you look at that, as well as we're talking about that, that $40 million hit, we also mentioned that Comex was $0.13 dilutive for the year. And if you think where that $40 million segment was in the operating profit, the net effect from Comex was positively affected by tax savings and those tax savings were due to the integration of contingent liabilities. That integration was a positive $0.15 per share. And so when you -- and really, it really dealt a lot with the defined benefit plan. Our tax rate was 30.7% for the year that we reported. It would have been 32.1% really without that Comex and without that balance sheet integration. And our fourth quarter tax rate was 22.2%. It would have been 32.3% without the Comex. So in a way, that 40, that converts down to the $0.13. When you look at Chris' comments, that 45 to 50, mid point there is 50. There it is, $0.63. And I know last quarter, we've talked about the $0.60 to $0.65 dilution. We did give you 20 -- that $0.40 in the fourth quarter and we just experienced $0.11, but that $0.15 tax savings, actually it was -- we were not expecting to get that in the fourth quarter. So we actually were expecting to get that in the calendar year 2014. But we were able to accelerate that with the combination of defined benefit plan so it works out pretty well.

The next question is coming in the line of Ghansham Panjabi with Robert W. Baird. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Sean, maybe you could just expand on the continued liability tax savings. Is there any flow-through whatsoever into 2014 or was that all netted out in 4Q?

Yes, we ended up -- we were able to get 100% of it in the fourth quarter, so that was nice. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then just on Latin America, can you just give us a more granular picture as it relates to the major countries there? Is the weakness broad-based, any impact on inflation from the currency devaluations in certain countries there?

Sure, Ghansham. As we've commented in the past, Brazil is the second largest country of revenue for the corporation, Mexico would be third. And those happen to be the 2 economies that were probably hit the most. When we look at local currency performance for the business, our sales were up modestly. We held serve, I guess, is a good way to take a look at that as we went through the year. We are not expecting to see a lot of turnaround in Brazil going forward and I think we still have these currency devaluations. So Latin America has been the cycle for us. We've had a solid 10-year run down there where we had relatively flat currency and we're able to make some good inroads and we're kind of going through the other side of that right now. Our expectations, as we gave guidance, was that it wouldn't be a real help to the company next year. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: Okay. And Chris, just to clarify that, on Brazil, specifically, does this sort of paradigm right now just affect your organic growth initiatives down there?

Not so much. I mean, those are long-term plans that we have in place. So as you know, we are continuing to open our own dedicated company facilities, primarily in the northeastern part of the country. We continue to support our dealer network and convert to a more dedicated dealer format. So we haven't pulled back. We rarely do in a downturn. We keep pushing forward.

Our next question is coming from the line of Jeff Zekauskas with JPMorgan. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: You talked about or you can deduce from the press release that the revenues in Comex in the quarter were about $100 million. Order of magnitude, what are they in a seasonally strong quarter?

I think when we've talked about this acquisition, we had told you that, at one point in time, when the entirety of the acquisition was being discussed, it's about a $1.5 billion transaction for the company. We said 1/3 of that was approximately in the United States, so $500 million for ease of math. So $100 million fourth quarter. And back to Sean's comment about the second and third quarters drive it. We just gave guidance that the first quarter for Comex revenue would be, again, about $100 million in the midpoint of that, so that all seems to kind of fit and tick and tie together, Jeff.

So you're looking at about 20% in the fourth and third -- I'm sorry, the first -- 20% in the fourth and the first, 30% in the second and third. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Okay, good. And then for my follow-up. Pretty much every year propylene goes up in the first quarter of the year and then comes back down because refineries turn around and so do ethylene crackers. So do you normally have some rise in your raw materials, in your propylene-based raw materials, in the first quarter and then they come off in the course of the year? Or now that the acrylics industry structure is a little bit tighter, do they tend to stay a little bit higher? Sort of can you discuss the progression of the normal propylene-based raw materials?

Yes, Jeff, this is Bob. We've said in the past that, typically, it takes between 90 and 120 days for an increase in propylene to flow-through the acrylic chain and that's still the case. So I guess that would be saying, if propylene does follow its normal course and comes down after first quarter, it's likely we aren't going to see a lot of upward pressure in the acrylics and the solvents. But if it were to stay in the low to mid $0.70 per pound range, we'd likely see some modest upward pressure, primarily in acrylics in the middle part of the year.

The next question is coming from the line of Aram Rubinson with Wolfe Research.

Couple of things, one, I'm hoping you can clarify on the U.S. in terms of the bid process to get a proxy for your backlog, how things are looking there? And then I have a quick follow-up.

Yes, I think that when you -- when we look at the activity, that bidding activity, we feel pretty good about it. I think it -- occasionally, you'll see some weather affecting daily sales. But when you look at the demand, we feel pretty good about what's happening in America, in the United States.

In terms of size of job as well, any sense of whether that's coming from non-res or res or can you tell?

Yes, I think it's been pretty consistent, Aram, about the segments that we've commented on. Residential repaint has been terrific. And new residential construction, we've commented on that as well. Property management's doing well, given the rebound in the multifamily housing. So all those segments are doing well. We're not the kind of company that has a backlog or we see forward orders, I mean, painting contractors walk in that morning, we put paint in their truck and they walk out and get the job done. So to Sean's point, just kind of the flow and the rhythm and the feel of the business is very consistent with the guidance we've given. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: And 2 quick housekeeping things, can you give us a sense as to what share count you've got assumed in that EPS guidance for '14? And also, Bob or Sean, if you know, often times, at the end of the year, you do a physical inventory adjustment and call that out in the K. I didn't know if that figure was available for us.

As in the past, when you take a look at guidance and you look at it, we do have share buyback in our guidance, not really going to share that number, but we don't -- as we said earlier, we don't usually go down the P&L. But we do have some stock buybacks, we have uses of cash. On the other number for that adjustment, we don't have it right now in the physical inventory. I know it's going to be in the K, I just don't have it here in the room with me, sorry. And one more note on share count. We ended the year with actual shares outstanding of 100,129,380, so that's the starting point.

The next question is coming from the line of P.J. Juvekar with Citigroup.

A quick question on the commercial market. Can you talk about what kind of contract or project backlog are you seeing for this spring and how does that compare with last year?

Yes, I wouldn't describe the -- this is Bob again, I would not describe the commercial market right now, at this point, as being significantly backlogged. We are seeing a modest pickup in starts in the back half of 2013, which should translate to more paint projects by the back half of 2014. That would be in the mid to high single-digit range. So that the rebound in commercial construction has been slow to start, we are seeing a little bit of momentum building. I think the forecast for starts in 2014 are healthier than 2013, high single-digits. Some people are even going out on a limb with low teens numbers. But I think the good news in this is we're seeing more activity in the repaint market, which implies higher occupancy rates in office, retail and lodging and that should ultimately translate to higher square footage. As a reminder, commercial construction volume is still in the trough, so we've got a long ways to come back.

And secondly on TiO2. I think, Chris, you mentioned that producer inventories have come down. So as you get ready for the spring season, how do your inventories of TiO2 look like? And also you've been cautious on buying Chinese TiO2 in the past. Where do you stand on that?

In terms of our TiO2 inventory, they remain extremely steady and in line with our kind of production processes throughout the course of the year. We take the vast majority of this product in the United States in a slurry form. It's not the kind of thing that we can load up on excess inventory and sit on it. So we are at a pretty much a steady-state consistent inventory level based on the demand of production that we put on our factories. We have been increasing our purchases of some offshore titanium, mostly in the sulfite grade. We see more of that emerging in our Latin American operations. I think we've commented in the past that, at some point in time, perhaps 5% of our needs could be moved to that type and we're seeing some progress towards that.

Our next question is coming from the line of Charles Dan with Morgan Stanley.

I'm trying to understand, if you guys are including higher gross margins in your guidance, it seems like to get to your -- to the guidance, you'd have to assume some pretty sharp increases in SG&A or other costs in excess of what you've outlined for Comex. So, is that -- is there some reason why that's happening? Or any color that could help us understand the SG&A ramp I think would be helpful.

I think we're continually -- we've continued to invest in the business, invest in new stores. I think we're going to open more stores in 2014 than in 2013. So the people and the reps and the infrastructure there, I think, that we're adding to that, that's going to increase the SG&A. And I think that we've continued to, on the admin side, continue to invest in IT projects that have allowed us to get our working capital down to an all-time low of net 10% and allowed the cash to go back over 10% of sales. And think that those things are good investments that we're spending in SG&A that are creating cash. And so, yes, we're investing in this business but I think the number one reason we're going to have SG&A growth next year is going to be the Comex acquisition. And then secondly is the continuing building out of the store chain in our stores group.

Is there a significant amount of expenses related to Comex Mexico and your efforts there and maybe you could highlight that as well?

No. I think we've been pretty prudent there. We do have ongoing expenses but I wouldn't call them material on our SG&A base.

And then finally, as a follow-up or housekeeping, if you guys could give the change in gross profit by segment?

Sure. Okay. And -- for the quarter? Gross profit...

Yes, that would be great.

Consolidated was $128.7 million, as you know, Paint Stores Group was $80.9 million; Consumer Group, $27.4 million; Global Finishes, $8.6 million; and Latin America, $6.4 million. So I'll just give you the year-to-date so you don't have to do the addition there. The full year 2013 consolidated, $410.3 million; Stores Group, $330.9 million; Consumer Group, $47.4 million; Global Finishes, $43.6 million; and Latin America was actually negative $28.8 million.

Our next question is coming from the line of Dennis McGill with Zelman & Associates. Dennis McGill - Zelman & Associates, LLC: Just, Sean, on the SG&A question again, in the past, you've always invested in the business and even have been proactive about investing ahead of revenue and I think that was the case in '13 as well. But you've also been able to leverage SG&A versus revenue. So from a relative standpoint, is your expectation of SG&A is going up even -- maybe even talking about it with or without Comex?

Yes. I think that when we look at the 2013, back to your point, and I'm just looking at this -- 2012, our SG&A was 34.2%. Without Comex this year, we would have shown improvement on that. And next year, we're still going to show -- we'll show improvement on the core SG&A. And I'm trying to look at the metric that I can give you, but no, I think the core SG&A will improve. Dennis McGill - Zelman & Associates, LLC: And with Comex, it would be up, in terms of revenue?

When you take a look at it, yes, it's going to be close to up. It's going to be in that ballpark, it's not -- for the full year. Dennis McGill - Zelman & Associates, LLC: Okay. And then, Chris, I guess there's probably nothing specific you can share on Comex Mexico, but any update on timing at least, of news flow?

Yes, we'd be happy to comment on Comex Mexico, we've continued to work on that. And Sean, maybe you can take the team through that.

We continue to believe -- at the very beginning, I'd like to say, we still believe this is going to be a very good acquisition for the company. We'll continue to work on a process that would allow us to close this acquisition. This process required us signing nondisclosure agreements with outside parties, which limits what we can say, but what we will say is we have an exclusive contract with the Achar family through March 31, 2014. We have crafted our final remedy and are prepared to present to the proper authorities. We have not received a firm date of that presentation but fully expect it to occur in February, with a response from the commission sometime after that but close to the March 31 date. Dennis McGill - Zelman & Associates, LLC: And is it your expectation of that decision would then be final one way or another?

That's why we used the word final remedy. I think that this is our final bite of the apple.

Our next question is coming from the line of Kevin McCarthy with Bank of America Merrill Lynch.

Sean, just a clarification on the tax rate given the Comex U.S. and Canadian distortions, what is the tax rate that you've embedded in your earnings guidance for 2014 or range of tax rates?

Yes. We don't go down -- again, we try not to go down the whole frame, because there some -- we don't have 1 range, we have multiple scenarios to get into a range. But if you take a look at year-to-date without the Comex, it would have been in that 32.3% range. We've all constantly talking about that low 33%s. And I think that you go back the last 5 years, I think it's been in that low 33% type of range.

Okay. And then second question for Chris, if I may, I heard your comments regarding the California litigation or, I guess, Bob's comments here and the appeals associated with that. How should we be thinking about funding of the $1.15 billion in terms of how it could possibly be split among the defendants and timing? And separate question, do you have any other avenues of recourse beyond the appeals process factoring property owners, for example?

Kevin, it's Bob. On the first part of the question, the decision by the judge, the remedy is joint and several -- is a joint and several liability. So it means that all 3 defendants are essentially equally responsible for the entire remedy. He has given no indication how he intends to apportion the remedy across 3 defendants. It's also our position that it's kind of a moot issue at this stage in the game because we don't believe we'll have to pay any money prior to the appeal process. This is a mandatory injunction, which we do not believe should require any appeal bond or anything of that nature. As far as future actions with respect to factoring homeowners or anything like that, we're not prepared to go into that at this point.

Our next question is coming from the line of Nils Wallin with CLSA.

It looks like incremental margins in your Paint Stores Group declined pretty sharply on a sequential basis and year-over-year when you remove Comex. Is there any seasonality in this or is there something unique, just trying to get more color on what drove the decline in incremental margins.

Yes. I don't know what number you're using for Comex margins but even with that, the fourth quarter is always interesting because of LIFO, the physical inventory adjustments that we spoke about before, so a couple of years ago, we were talking about this. 2009, our gross margin actually was 48.5% in the quarter because of some of these things that have occurred. So there's different things that go on between 1 fourth quarter to another. Fourth quarter is the toughest to look at. I think to try to read, to try to project anything in the future.

Got it. And just as a follow-up, I think at one time, estimates, the Sherwin's estimate, at least, for total gallons in the U.S. was somewhere in the line of 630 million to 640 million in 2012. Do you have an estimate or do you have an update for what you think it may have been in 2013?

Nils, this is Bob. We think the market in 2013 probably grew in the 4% to 5%, maybe 5.5% range. And we base that just by looking at various public statements and public releases across the population of publicly traded companies that do significant architectural business in the U.S.. That feels about right to us.

The next question is coming from the line of John Roberts with UBS.

Could you give us a timeframe for getting the U.S. and Canada Comex stores to the average Sherwin-Williams margins? And given the potential here that you might have to divest the wholly-owned Mexican Sherwin-Williams operations, I don't know, whether the nondisclosure will allow you to at least range that -- or size it for us? And is it above or below the average paint store margins?

Just so you know, first, Mexico stores that you're referred to, our operations are in the LACG segment, they're not in the store segment. Just want to make sure that's clear. On the first question of what we've said is, again, that $0.60 to $0.65, and what we've said is in 2015, in the annual 2015, we think that the Comex stores will run at the 70% to 80% of where Paint Stores Group is at. And then after that, it will start to continue to improve from there. And the Comex -- and the Mexican assets, we're really, again, we're little -- we're under secrecy with the nondisclosure, we really don't want to express what the remedy may or may not be and then also not going to give metrics to any possible remedy. I think what's better course for us is that if we get approval, we'll disclose all of those type of things to you. And if we don't get approval, we probably won't, that's for sure. The remedy will never be public.

Our next question is coming from the line of John McNulty of Crédit Suisse. John P. McNulty - Crédit Suisse AG, Research Division: Two quick points or questions. On the $0.45 to $0.55 hit that you expect in 2014 from Comex, in that, can you give us some color as to how much of that is going to be onetime or kind of structurally working to fit the asset in versus kind of just the normal run rate for that business?

Yes, I think that 60% will be onetime hits and it will be in that range. John P. McNulty - Crédit Suisse AG, Research Division: Okay. So that business is then running at a loss kind of -- or in your mind, for 2014, is going to run at a loss the whole year?

Right. Because what happens is, when you -- let's say, you're going to -- you're living in the short term with the additional cost of, possibly, some plants and distribution centers, those were considering part, until we close them and taking the hit, we consider that part of the ongoing op. And that's where you start saying, which bucket do you put it in. But if you close the plant in September, at the end of September, then the first 9 months go into your first bucket of the operating margin and then the hit of closing plant goes into the extraordinary. That answer would tell you that if we run that plant for 9 months, that's in the normal, not in the extraordinary. John P. McNulty - Crédit Suisse AG, Research Division: Okay, okay. Fair enough. And just then just one follow-up question. If we back out Comex in terms of kind of what it did in the fourth quarter and then also kind of how it's going to impact 2014, it looks like you're guiding to 5% to 10% top line growth, which normally, based on kind of what Chris had talked about earlier in terms of leverage, tax, what have you, should get you $1.25 to almost $2.25 of incremental EPS and that -- but your guidance really doesn't imply that when you kind of look at your core non-Comex-related business, it looks like it's at the very low-end or even sub that. So, I guess, what's driving that, what's driving that level of conservatism in your kind of core platform?

I will tell you this. I would just say, if you take a look at the core, I don't think that a 5% gain has ever given us $2.25 EPS growth in a year. And so when you look at the number that Chris gave you, the $7.60 versus the $6.49, it's $1.11. And so when you sit there and look at that $7.60, and I'm just going to add back the midpoint, that's is -- use the midpoint, $8.22 and $0.50 of Comex, that takes you up to $8.72 from $7.60, that's $1.12 when you take a look at that, so I think that's pretty comparable. And I do think that, in general, I think that things are going pretty well. I think $1.11 on top of $1.12 last year, $1.12 versus $1.11 are pretty comparable. And when you look at that sales gain, just like this year, we think that currency is still going to be a headwind and some of these countries are still going to have some problems.

Our next question is coming from the line of Ivan Marcuse with Keybanc Capital Markets.

Most of my questions are answered. I just have a quick one. In the Global Group, continuing to be fairly -- consolidation continues to move on. Is there any opportunity for you to consolidate that market further? And then if you look at your European businesses, I know that they're small, relative, but have you seen any stabilization to improvement going forward?

Yes, Ivan, we have talked for a while with The Street about our strategy here. We like these businesses. We would look for opportunities to invest appropriately were there opportunities to present themselves, we won't comment on any of that, perspectively. Europe had a good year for our Global Finishes business. We're seeing some nice progress over there from the teams that we've put on the ground. We expect Europe to continue to have profitable sales going forward.

And on your first question, our operating profit in 2012 was 7.5%. This year, it was 8.5%. So nice 1% gain on the ROF. And as we've talked in the past, we still think we can drive that to 12%, so we think there's still big improvement in the future.

Our next question is coming from the line of Dmitry Silversteyn with Longbow Research.

A couple of questions. First of all, to follow-up on the last question. Can you talk a little bit about what you're seeing in your Global Group businesses in terms of auto collision and industrial markets. You mentioned that Europe was strong for your wood coatings business, but can you talk about the other portions of Global?

Yes, so I think all 3 of these businesses ran pretty much at the same level. You can see that the sales results here were below the company's consolidated numbers. So a relatively soft sales year. We've commented about soft economic environment, some of the end markets that we sell products into are a little soft as well. I think that when we take the market performance itself into consideration, not concerned that we're losing share here, but not exactly lighting it up either. Going forward, we're pretty excited about the winter we're having across the United States. Automotive runs on collision repair business and so that should be a little bit of a tailwind for that team going into this year and I think we've had some nice wins on various accounts around the world in our product finishes businesses. We'd expect them to have a little better year going forward next year as well. So beyond that, Dmitry, not a lot more to comment on.

Okay, that's helpful. If you look at the Consumer Group, it really had a nice turnaround as the year progressed. It sort of started the year weakly and you have some losses of a business, and then it seemed to well turned around by the end of the year. Can you talk a little bit about sort of what you guys done to get that ship moving in the right direction and also what's your outlook for the consumer is for 2014 both in terms of, not maybe the top line, directionally and perhaps margin expectations.

So I'll take the business and the sales, and we'll Sean comment on margin expectations for Consumer Group. You're right, the fourth quarter was terrific. One of the best quarters we've seen in sometime. And it was pretty broad-based across the entire customer segment. The product lines, as you know, in our consumer business, we have architectural paint, but we also have aerosols and brushes and rollers, caulks and sealants, stains, water protecting products and pretty much, across the board, all those business were going in a good direction. I don't think that the fourth quarter is the precursor of things to come. We've been consistent with our guidance that this is a low single-digit kind of growing business for the company, I don't think we're expecting that we've reached a new kind of a plateau, we're going to run at this level going forward. But it was encouraging to see and I think one of our executives made a comment that when we get good quarters in consumer, we'll take them, we're glad for them. Our expectations are that most of the headwinds that we've had here that have been kind of event driven, lost the big accounts, et cetera, have all anniversary-ed, they're all behind us. So 2014, knock on wood, might be one of those years that's a pretty normalized year and give us a sense of how the business can actually run. Sean, you want to comment a little bit on our margin expectations here?

Sure. Over the years, we've continued to talk about that consumer can have -- their operating margins can be higher than stores, but it's going to be more volatile. And so when we get volume through and what's nice is there was volumes, for the last couple of years, we've had volume only going through from the stores group, as Chris talked about, the struggles on the external sales. But when you get external sales like we have, as well as the internal sales going through there, consumer can really produce nicely for us. And that's why we've always thought that the margins can be higher there, but because of the choppiness of demand, especially on the external side, you're going to see it much more volatile. So last year, we hit 18%, I think that it's a well-managed division that we've given some assets from the Comex grouping to them. I think that they'll do a great job with those assets and I think that in the end, you'll see margins higher than this. I can't remember when stores groups' highest margin was 14.4%. And someone said, "Well, are you ever going to beat that?" We've beat it a few times now, the last 2 years actually. And I think our Consumer Group, we expect to go higher with some of these assets and add a little more volume.

Got it. And just a couple of bookkeeping questions. What's your CapEx and G&A expectations for 2014?

I think our CapEx is going to be somewhere in the $180 million to $200 million range. And as we bring in some -- do some of these work and move some production around. And our G&A should be in the $35 million range, up from around $29 million to $30 million they had this year. And use those numbers, they're not going to be materially off.

The next question is coming from the line of Don Carson with Susquehanna Financial.

Bob, I wanted to follow-up on your growth outlook for U.S. architecture. You talked about 5%, 5.5% growth in calendar '13, with the pickup in commercial or nonresidential construction this year. Would you expect that to accelerate? And then the follow-on to that is Paint Stores grew at almost 8% versus 5% market growth and, obviously, nonres is even higher proportion of contractor business, so would you expect your Paint Stores Group sales to -- on a same-store sales basis, to outpace the market growth even further in 2014?

Don, on the first part of the question, if the rate of housing starts holds up and that would be a 10% to 15% increase year-over-year in the rate of housing starts, and we see this high single digit acceleration in nonresidential starts, with a commensurate amount of nonresidential maintenance and -- property maintenance activity, it would be very easily -- easy to duplicate mid single-digit industry growth rate in 2014. We have long said that our expectation for our Paint Stores Group is for growth in the range of 1.5x to 2x market rate. And we think, in that environment, that's probably doable as well.

Our next question is coming from the line of Gregg Melich with ISI Group.

The half of the $40 million of loss that you had in the quarter from the acquisitions, the half that was impairment, did that show up in the gross margin or SG&A?

I would tell you probably 65%, 70% went in to gross margin and the remainder went to SG&A.

Got it. And then the second question was on the pricing. I recognized it's difficult given Comex having a different mix. But if you could just look at the old Paint Stores Group, what do you think the pricing is?

Yes, I think, that again, because as time goes on, there's customers that are going to go from the old to the new, the Comex stores. And I think that any metric we give you might give you a wrong indication, Greg. And that's what we're trying to walk away from this, this quarter. We might -- a year from now, we might come back to the old way but right now, we're -- with people going from 1 store to another, it's -- any metric might give you the wrong indication.

I understand. But so to maybe to get to the -- another angle about gross margin, it looks like gross margins, if you back out the DOJ settlement, where, really, you only have 20 or 30 bps. I guess, why did the GM gains decelerate so much in the fourth quarter? Is there something else that going on that we need to be...

No. I think that -- I think it was the Comex. If you take a look at that piece that went through, that onetime hit that went through gross margins that we just -- I just gave you, I think should give you a pretty good idea that, really, gross margins didn't decelerate.

Got it. That's the 65%.

Yes.

The next question is coming from the line of Chuck Cerankosky with Northcoast Research.

Start it off with Sean, I think around the time you announced the Comex acquisition, I had asked about using the financing that you had instituted for repo if the deal didn't get done, is that still your feeling?

Yes. But you can probably tell that we're close to having a final answer in this, so we still have that cash on our balance sheet. But if not, we'll end up buying back stock.

Okay. And then that 36% incremental margin, I don't understand quite how you got to that. But I do see if I back out the Comex impact on the paint stores in the quarter, the segment got about a 16.6% margin, can you sort of connect the dots there, Sean, between those 2 figures?

Chuck, do you have one other question, I'll pull out that piece of paper.

All right. And then the other question would be if you look at the approximately $20 million hit from Comex in the fourth quarter due to onetime items and once your forecasting for Comex's hit in the first quarter, it looks like you're going to be spending more on onetime items, perhaps. And that the operations should already be showing improvement in the fourth -- in the first quarter of 2014, is that a correct conclusion to draw?

Again, that's why we put a little bit wider range on here, it really depends on when we take some of these closing costs, Chuck. But the first quarter should be fairly consistent with the -- the first quarter should be fairly consistent. But yes, you're right, when you back that out, it's going to be slightly better than the fourth quarter with the 50-50.

Okay. Have you announced any -- I think you've closed a couple of plants and a distribution center on Comex. Have you announced any other facility shutdowns or integrations with existing Sherwin operations?

We've announced 4 closings, Chuck, to date, of the 8 that we had talked about that we acquired. And not all of those are down or cost into the numbers yet but 4 have been announced.

So, Chuck, back to your other question, if you take a look at the operating profit in the store group segment, $990 million. You add back the $43 million that we talked about, the acquisition impact, without that, it would have been 1-0-3 -- call it 1-0-3-3. You compare that, that means that the PBT change is $171,000,855. The sales without the Comex was up $476 million, $171 million divided by $476 million, 36.1%.

Our next question is coming from the line of Eric Bosshard with Cleveland research.

Two things, first of all, Sean, you referenced, just curious, was there a LIFO charge that was material that impacted the 4Q Paint Stores profit?

No, but I think what happens is that when you start -- just look at the fourth quarter, it might not be material. But if you look at the change year-over-year, because 1 year might be a hit, 1 year might be a credit. And those -- we true that up in the fourth quarter. So even though LIFO might be a credit for the year, you might have a debit there because of the way you accrued it in the first 3 quarters.

So was there a material year-over-year change in how that influenced the 4Q number?

I don't have that exact number but I would say -- I was trying to answer the question about why specifically the fourth quarter isn't as pure as the other 3 quarters, so I don't think LIFO is that material between one or the other.

And then secondly, Comex have owned these stores for a while now, it seemed like they were losing market share and money before you acquired them. Obviously, closing facilities helps on the money side. But in terms of the market share in those stores, how was sales growth performing in those versus the core and how do you feel about the trajectory of market share in that business?

Yes, Eric, we've done a lot to stabilize this business since acquiring it. As an example, a number of these stores did not have a full complement of management inside. Sales rep territories were open. Stores were struggling to get inventory when we had acquired them. All of those fixes have been made and made quickly. And we're seeing a stabilization of the existing customer base through these stores. We're every bit optimistic that these things are going to run in line with the other stores inside the districts that they're joining. And so the business is doing fine from that regard and we expect it to get better as time goes on.

The next question is coming from the line of Richard O'Reilly with Revere Associates.

On the Paint Stores Group margins, if we exclude the loss, the acquisition loss, it looks like the margin, if I did my math right, was about 14.3% or slightly down from a year ago, which is a surprise because of the higher volumes. Can you expand that or was the benefit of the volumes all showing up in the Consumer Group?

You're talking about the quarter, correct?

For the quarter, yes.

I think when you look at it, without the acquisitions, just from the quarter, like we did with Chuck, you add the $40 million back, you're at $208 million, that would tell you that we were at 12.3% and last year we're at 14.6%. And I would just say it had to do with how some SG&A rolled in. I think when you look at the Stores Group, especially the way new stores rolled in, a little more heavy in the fourth quarter than it was in 2012.

Okay, fine. Timing of course. Okay. And the volume gain, the Consumer Group has benefited from the volume gains in the paint business, that's part of it, right?

Yes, yes.

Okay, fine. Okay. Second question on your inflation outlook. A year ago, you said it was also going to be up low-single digit, what did it work out to be for calendar '13, do you have an idea?

Richard, we think it's pretty stable, year-over-year. And TiO2 was down a little and the rest of the basket was up slightly.

Okay, fine. So a year ago, you are too pessimistic and now you're looking at the things about the same way. Okay, fine.

Our next question is coming from the line of Charles Dan with Morgan Stanley.

I just wanted to follow up on the gross profit, guys. On the Lat Am segment, did you say that the profit was $6.4 million increase or decrease?

And I will tell you that in 10 seconds here. I've got to double check, because they way you asked the question.

I didn't mean it to sound like an accusation.

No, it was a decrease.

There are no further questions in queue at this time. I would now like to hand the floor back over to management for any concluding comments.

Thanks, again, Jesse. Let me conclude this morning by asking you all to save the date of Thursday, May 22nd, on your calendars. This is the date we'll host our annual financial community presentation at the Intercontinental Barclays Hotel in New York City. The program, as usual, will consist of our customary morning presentations with questions and answers followed by a reception and lunch. Again, the date is Thursday, May 22nd, and we'll be sending out invitations and related information in the weeks ahead. I'd like to thank you all for joining us again today and thanks for your continued interest in Sherwin-Williams.

Thank you, ladies and gentlemen. This does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.