Good morning. Thank you for joining the Sherwin-Williams Company's review of the Third Quarter 2015 Financial Results and expectations for the fourth quarter and full year. 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 and will be available until Monday, November 18, 2015, at 5 pm Eastern time. Following the Company's review of the third quarter financial results and outlook for the fourth quarter and full year, we will conduct a question-and-answer session. I will now turn the call over to Bob Wells, Senior Vice President Corporate Communications. Please go ahead, Sir.

Thanks, Terry. Good morning, everyone, and thanks for joining us. We are going to begin the call as usual this morning with some prepared remarks by John Morikis, President and Chief Operating Officer, and Chris Connor, Chairman and CEO. Following their remarks, we will open the call to questions and Sean Hennessy, our Chief Financial Officer, and Al Mistysyn, Vice President Corporate Controller, are here with us this morning to participate in the Q&A session. Before I pass the microphone to John, let me remind you that 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 statements whether as a result of new information, future events, or otherwise. A full declaration regarding forward-looking statements is provided in our earnings release transmitted earlier this morning. In the interest of time, we've also provided some balance sheet items and other selected financial information on our website at www.sherwin.com under investor relations third quarter press release. With that, let me turn the call over to John to review our performance for the third quarter.

Thanks, Bob. Good morning, everyone. Our results in the third quarter 2015 clearly demonstrate the earnings power of this business model. Although we faced some difficult headwinds to revenue growth mostly related to currency devaluation, further softening in demand for industrial coatings, and a slow recovery in domestic construction activity, diluted net income per common share increased 18.5% to $3.97, an all-time high for any quarter in our history. Sales volumes lagged in many of our operating segments, but our domestic architectural paint volumes remain strong and drove operating rates higher in our US manufacturing and distribution facilities. This resulted in significant operating leverage in the quarter. This operating leverage, combined with stable pricing, favorable raw material costs in most of our domestic businesses, and good SG&A expense control across the Company drove consolidated gross margin, TVT margin, and net income as a percent of sales falls to record levels. I will spend a few minutes highlighting overall Company performance for third quarter 2015 compared to third quarter 2014, then comment on each reportable segment. Consolidated net sales increased of 0.1% to $3.15 billion. Solid domestic demand for architectural paint was mostly offset by weak volume demand in our non-domestic business and currency devaluation. Consolidated gross profit dollars increased $103 million year over year to $1.57 billion and gross margin increased 320 basis points to 49.9% of sales from 46.7% in the third quarter of last year. Selling, General, and Administrative expenses for the quarter increased $9.3 million to $993.6 million. As a percent of sales, third-quarter SG&A was 31.5%, up 30 basis points from last year. Interest expense for the quarter was $17 million, an increase of $970,000 over third quarter last year. Consolidated profit before taxes in the quarter increased $76.7 million or 16.2% to $551 million. Our…

Thanks, John, and good morning, everybody. Thanks for joining us today. I think John's opening comments pretty much said it all. Revenue growth was weaker than expected in the quarter, but the earnings power of our Company has never been stronger. Volume demand lagged our initial expectations for the quarter in virtually every market we serve, but we remain focused on delivering positive results regardless of the demand environment. I feel confident in saying that is precisely what we did in the third quarter and have done throughout the year. In the first nine months earnings per share increased 22.3% over last year on revenue growth of just 2%. Our year-to-date consolidated operating margin and gross margin are both at all-time highs, and we maintain our pricing discipline despite soft demand in a very competitive market environment. Our paint source group provides the clearest picture of domestic market conditions and there were some noteworthy bright spots in the quarter. Sales of residential retained contractors through our paint stores continue to grow at a double-digit pace. Sales volumes for the new construction markets, both residential and nonresidential, also increased compared to last year, but at a slower pace than the residential retained market. Our DIY business was down slightly in the quarter and protective and marine coating sales were down significantly. In total, Paint Source Group grew third-quarter revenues by just under 3% with volume growth slightly stronger than that, and architectural paint volumes well outpacing revenues. Our consumer group is working closely with Lowe's to build momentum behind the HGTV HOME by Sherwin-Williams paint program. As we indicated on our second quarter call, HGTV sales through Lowe's are trending towards the low end of our target of 2% to 3% of consulted revenues for 2015. Consumer group's core business performed…

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ghansham Panjabi of Robert W. Baird. Please go ahead.

Hey guys. Good morning.

Hey Ghansham.

Maybe John with the new high watermark for margins.

He's up to the task, don't worry Ghansham.

John, good luck with that. First off on the Paint Stores Group and your 2.1% reported same-store sales, can you sort of parse out for us the performance between architectural and some of the other protective coatings in that market that you saw in that channel?

The architectural side was by far the strongest. We had a very good and strong performance in architectural and our industrial protective and marine side we clearly faced some headwinds there. We do very well, particularly in the petrochem area, we out index probably the market by quite a bit and with the softness there that has a netiquette impact on our volume.

So architectural two to three times?

Yes.

And I guess on that note should we expect same-store sales to continue to be pressured by these categories in 2016 or do you think there will be a tailwind from the [indiscernible].

This is Sean Hennessy. When you look at 2016, I think we're putting that together right now and I think in January when we discuss the fourth quarter we'll also be giving you some guidance on 2016 and give you a clearer picture.

Okay. Thanks so much, guys.

Our next question comes from Arun Viswanathan of RBC. Please go ahead.

Good morning. Thanks for taking my question. Just curious on the raw materials side. We did have some declines here as well in the third quarter. Are you still kind of sticking to the mid single-digit decline in 2015 and what's your outlook for 2016?

Yes. This is Bob. We are still sticking to our mid single-digit decline for year-over-year average raw material basket for the industry. We think in the back half it is likely trending to the high end of a mid single-digit range just based on the trajectory of raw materials over the course of the year, but we're standing by ever mid-single digit outlook. For 2016?

Right.

I'm sorry, Arun. Maybe I misunderstood the question. We are really not in a position to give a raw material outlook for 2016 yet. We will do that on our year-end call.

Okay. Appreciate that. As a follow up, on the volume side, 2% comp in the quarter. I was just curious how that played out versus your own expectations. I think last time we were expecting a slight increase in Q3 versus Q2 which did a 3.9 and then I guess similarly maybe you could just talk about if there's been any structural changes to the market which would prevent you from going back to the kind of mid single-digit level for next year? Thanks.

I would tell you when you look at our sales guidance for the third quarter to where we came in, I think that we were a little disappointed in the comps store and stores group. We were not disappointed at all in the architectural performance. We felt that we continually said over the long run we think we can beat the market by one and a half to two times. We think we are right there. On the protective marine side there was a little bit of a challenge, maybe a little more of a challenge than we thought and that hurts us two ways. That hurts us in the volume and secondly the average selling price. So, that has a little more effect on the cause of that Q1 to be lower. Structurally, those type of things on the architectural side we still are as confident as ever.

Okay. Great. Thanks.

Our next question comes from Aram Rubinson of Wolfe Research. Please go ahead.

Thank you. Two questions. First of all on the paint stores. You did indicate that the volumes were higher than the comp. Can you just give us a sense on the price mix element? I think last quarter it was a negative 1.5%. What are we looking at in the third quarter for price mix and maybe break it down? And then also I know you were going after the R&R contractors a little bit more. That might have hurt your mix in Q2. What did we do with that in the third quarter?

I think the biggest impact of the price mix, Aram, has been the comments that you are hearing this morning about the struggles continuing into protective and marine. As a reminder, these are gallons that can sell upwards of $100 a gallon for us. As we commented, the pricing disciplines of the Company are in great shape. You see that in the margins. Our residential repaint numbers are up double digits as we commented, so the price mix issues are really holding up fine on the price side, it's just the types of end market gallons are having a little impact here.

Then could you help us. I think you guys are doing some things on the store front that you may not have talked about which is kind of leaning down the stores, doing more centralized deliveries, working capital being a bit more centralized. Are there things you are doing on the store side that are worth airing in that regard?

No. Nothing worth talking about truthfully. Our focus is on making sure that our people and our products are where our customers need them. So anything that we're doing in the field is to better align our resources with our customer's needs.

And there is really no programs that we're undertaking, Aram, in that space at all. That is just not beyond our normal efficiency practices.

And then just if you can give us the gross profit dollar increase by segment and then I'll leave you guys for the next questioner.

Okay. Give me one second. Gross margin dollar changed in the third quarter by segment same-stores group increased $89.2 million. Consumer was increased by $34.2 million. Global Finishes Group was down $5.6 million, and the Latin America Coatings Group was down $[17.8] million.

Got it. Thank you. It looks like your Paint Store Group gross margin was about the same as the house from our map. Thanks very much.

Our next question comes from Duffy Fischer of Barclays.

Question on how you achieve your awesome margins in Paint Stores. Obviously if volumes were not as strong as you had anticipated -- incremental margins are very strong, so every gallon you don't sell should hurt. The mix seems to hurt in protective and marine as a higher ASP so I'm assuming more profitable, but yet you just crushed the margins. Can you talk through how you were able to do that?

A couple things. Again, just back to the point that Chris just reiterated, I think architectural gallons we're really good, I think that any time we get those architectural gallons going in the right way. I think that number two we had really good SG&A control in Storage Group. So when you see our total SG&A up $9 million, I know it's 3/10 of a percent of sales so, that's going pretty well. And the Comex. We had the Comex integration in the third quarter. We are now fully through it. We think the third quarter was you see the full effect of the Comex. You see it in two places. When you talk about this Comex you see it in Stores Group as well as you see it in Consumer Group. And you look at the operative margins that consumer was able to generate, so that Comex acquisition is doing very well now, integrated very well by our teams in the field, and you're seeing those types of things in both of the segments.

Okay. And then maybe just a to shift a quick to the HGTV. We've gone through one paint season trending towards the bottom end of the range you thought about. What's the after action review on that? What went well? What didn't? Is it just going to take a little bit longer, brand recognition and stuff like that, and what should we expect different next year?

Duffy, as we look at this going forward we're quite excited. We have got a good partner with a good relationship there. We've learned, there is no question about it, and we're comfortable with the direction we're going here. We continue to work hard with the store associates as well as Lowe's corporate. We've expanded our SKUs just recently launching into a satin finish which is a very important finish in the home center channel, so we're expanding our SKU count, we are getting more in tune with our customer, and quite frankly we're looking forward to a strong future with this program.

Great. Thanks, guys.

Thanks, Duffy.

Our next question comes from Dennis McGill of Zelman & Associates.

Thank you. I guess this question is on the overall gross margin. Setting a record high and I think you've obviously said that a lot of times over the years, but is there a point where you worry at all about competitive actions or worry more than normal about competitive actions or threshold where you feel like you have achieved everything on the margin side?

Dennis, we worry about that every day, so thanks for calling that out to our attention. Obviously the market dictates the prices we can get for our products. We compete in a very respected industry. The quality of our products and the services can command a price in the market I think you're seeing the leverage of the business model come to fruition here.

Okay. And on the protective and marine, can you maybe just split out a portion of revenue within that segment that would be tied to that piece of the business?

Tied specifically to the petrochemical part of it?

Not just petro but the protective and marine as a total within Paint Store?

Inside the store's business?

Yes.

That would be low to mid teens, Dennis, 13% to 15% of the Paint Stores Group revenue.

Okay. Great. Thank you and, Chris, thank you for the honesty and humor over the years. We'll miss you. Appreciate it.

Our next question comes from Jeff Zekauskas of JPMorgan.

Good morning. It's [indiscernible] in for Jeff. How are you? You said that your core consumer gross was flat in the quarter, so that means that HGTV contributed maybe $40 million to sales? Is that about right?

That's in the range.

That's an range. Okay. And another gross margin question. So, prices went low again this third quarter and as best as we can tell nobody has realized those benefits yet. Very few raw material inventories probably in the fourth quarter. Do you expect to have more raw materials benefits in the first half next year?

We obviously give a detailed raw material outlook on our year-end call in January. We have commented that based on the current trajectory of the petrochemical side of the raw material basket, raw materials should be a tailwind next year. We will give you a little more color around that at year end.

Okay. And lastly, do you have in outlook for your corporate expense in the fourth quarter? There was a pretty large environmental component in the fourth quarter last year and probably reappear?

Exactly. When you look at it, we do not have the environmental repeating. I think when you see the EPS guidance we have given you versus last year, you can see that -- and that environmental went into the admin segment so, yes, just because of that you're going to see an improvement in that admin segment.

Okay. Thanks very much.

Our next question comes from PJ Juvekar of Citi.

Good morning. It's Dan Jester on for PJ. I think I heard you correctly that you said that the DIY business at the stores was down in the quarter. I was just wondering are you seeing any evidence that maybe the program at Lowe's is taking DIY customer away from your store?

No. We don't think that is the impact in the quarter at all. That HGTV program was a de minimus part of our store's business. We've always felt that the customer that chooses to shop in a specialty paint store is a fundamentally different customer than a big box customer. And in the quarter, softness was really driven over some timing and promotional activity earlier in the quarter and it's actually been rebounding nicely. We had a good September in DIY stores to our stores business.

Okay, and then kind of sticking with that theme. I believe you talked previously about kind of re-energizing your investment plans and some of your other brands and consumers like Dutch Boy and Pratt & Lambert. Should we be thinking about any major programs using any of those brands in the future?

We are obviously looking at every brand and evaluating the investments that we go in there. We're going through our planning process right now with our teams. You would expect that our diversified brands team is in fact looking at some of those brands to get behind and we will be talking about those as we roll into next year.

Okay. Great. Thank you.

Our next question comes from Bob Koort of Goldman Sachs.

Good morning. This is Chris Evans on for Bob. The challenging environment outside of North America, if you could talk about how you plan to sort of manage those declines you're seeing in Latin America in your global finishes brand?

I think that as a company we've always taken a look first and foremost when you're looking in Latin America if you look at the history of us, making sure that we remain cash positive and just like Argentina in 2002 and some of things that happened in the 90s with hyperinflation, we continue to make sure and we stay cash positive which makes it easy to continue to invest in those kinds of countries. Secondly, whether it's even in United States stores group, in Houston in the 80s or other places, if there's something -- we try to take advantage of these types of markets and we're looking at assets and we're looking at investments down there that eventually will come back. We think Latin America is having a tough time currency-wise, but the things will be able to do in Mexico this year and we're still investing in the rest of the Latin America group for us. We feel very good about the long term of this business.

Thanks. And then you talked about raws and margin expansion a bit and maybe I missed it, but did you break out or could you break out what portion of that margin expansion was from raws?

Yes. What we prefer to say is when you look at the Comex integration, the ability for us to take those gallons through our own footprint and I think that's completed and gallon gains. You have the gallon gains over in Stores Group as well as Consumer Group, so those factors are well over half. We don't break it out in those -- we say those, that's the majority of the margin improvement and raws is just the smaller piece of that.

Chris, the other thing is if there's a positive mix shift with Stores Group growing faster than any other segment, that has a positive effect on gross margin as well.

Thanks, guys.

Our next question comes from Chuck Cerankosky of Northcoast Research.

Good morning, everyone. Nice quarter. You guys addressed a lot of the mix and margin questions with Paint Stores, but I want to make sure understand something. If you're looking at some of these protective and marine coatings, obviously they can sell for quite a bit more than the architectural. Is it right to assume automatically that they have a high margin and then what happens when we're dealing with the strong operating leverage in the architectural gallons? John, can you talk about how all that mixes together in the final margin number we see?

Yes. When you look at the protective marine that's going through the stores group, it's not very different. The operating margins, the SG&A and so forth, it's very close to the architectural business, but as you say, the costs are higher and the selling prices are higher.

So that means the strength in architectural volume was really driving the train?

Yes. Alright. Thank you.

Our next question comes from Vincent Andrews of Morgan Stanley.

Hey, guys. This is [Matt] [ph] in for Vincent. I was wondering if you could speak to the underlying demand environment in Canada and the impact Paint Store Group and Consumer there.

Demand in Canada has been spotty. With our new acquisition, Comex, rolling in now, we're excited about the future here. This brand that we bought in and the conversion we're going through offers us opportunity as we consolidate the general paint brand into our Sherwin brand. So, going forward it may in fact come from market share gains, but we're expecting to move forward in Canada.

Okay. Great. And then in terms of the impact of inventory cycles in the big box retailers, did you feel any effects from that throughout the quarter?

No. Nothing to speak of. No.

Okay. Thanks, guys.

Our next question comes from Dmitry Silversteyn of Longbow Research.

Good morning. I think a lot of my questions have been answered but I would like to follow-up on obviously the shortfall in revenues and your performance for the earnings line above the top end of the guidance you provided from the first quarter. What were the one or two sort of biggest differences between your expectations regarding cost for the margin side heading into the quarter versus what turned out to be the case?

I think what it really came down to, Dmitry, was protected marine sales and secondly was the currency. The currency was -- we did not have the Brazilian Real getting close to 4 to 1 and those two things, but when we looked at what we thought we could do with the Comex integration and the selling price and the architectural side, it was pretty close to what original guidance was.

So that's my question, Sean. You had revenues that were lower than you expected for a variety of reasons but your earnings were above the top end of your expectations or top end of your guidance, so something must have happened between the revenue line and the net income line.

Okay. I think it was the SG&A control. No doubt about it. I think the gross margin might have been a couple cents different than we thought, but I think the SG&A increasing only $9 million in the quarter. I know the divisions has been working really hard to get that SG&A down and I think that is the operating margin difference.

Are those levels of SG&A spending sustainable when you see the business going forward or was this sort of a reaction to what you saw going on in the market with the currencies and demand and we can expect those SG&A levels to recover somewhat as you head into 2016?

No, they are sustainable. Going forward, we believe we can continue to run.

At these levels. Okay. Secondly, can you talk a little bit about it sounded like your pricing was relatively flat both in the core group and the consumer group. Can you talk about the impact on the mix, if you will, on the revenue lines from lower protective and marine coatings and whatever else may be driving that as well as the consumer line?

I'm sorry, Dmitry. Bob mentioned that protective and marine accounts for low teens percentage of our stores business and by design these are products that sell for two and three times what a typical architectural product sells for. So a lot of that mix shift is coming as a result of the softness in that business. I think we've commented that pricing is holding up well. You're clearly seeing that in the margins performance, so with the exception of kind of that customer shift inside that business, there hasn't been a lot of mix. We did comment that the residential repaint customer continues to grow at a double digit piece for us. Those are good, solid architectural gallons for us at reasonable pricing and you can see the impact of that go into the chain.

Okay. If I'm looking at the price mix components and assuming that your prices flat year-over-year, if I'm hearing sort of low single digits, negative mix is that sort of the right way of looking at it?

I think that -- with one exception, Dmitry, and that is we've talked about competitive pricing in the large commercial project that has a little bit of a negative effect on a very small piece of the market but by far and away the largest impact on the difference between sales and volume was that negative mix from primarily protective and marine.

Got you. And then if I could follow up. I want to make sure I heard you correctly. Did you say that sales were approximately $40 million for the quarter for HGTV at Lowe's?

Yes. Because of the comment we made about relatively flat without and that's where the computation will get you to.

Okay. That's down almost 60% from the second quarter which I understand benefited from that but if I'm sort of the $40 million number coming up with 150, maybe 200 from a prior quarter in the maybe warmer months, that's sort of low end, below the low end of the guidance that you issued for this business. So, are we sort of going to grow into this with a full paint season and maybe a couple more in 2016, 2017 or was there some level of disappointment with the performance of this product at Lowe's this season versus…

It's on the low end of our range so, yes, we're disappointed. We strive to exceed that range, but going forward we have great confidence in our team and we have a great partner with a great relationship. As I mentioned we've added a SKU here that's an important SKU in the satin finish and we continue having great discussions about other opportunities, so I think you're right, we're going to grow into this and were excited about the future here.

Okay. Very good. Let me follow-up. Typically when offers discounts and prices my understanding is [indiscernible] on the paint supply on a 50/50 basis more or less. I understand it's your agreement with Lowe's may be a little different. Are you participating in this by one get one free gallon offer that is going on at Lowe's right now?

We will not comment on that Dmitry. We don't comment about the specifics of any customer.

Okay. Thank you.

Our next question comes from Greg Melich of Evercore ISI.

Thanks, good morning, guys. Two questions. If you look at gross margin which was up 320 BPS for the Company, how would you break that down year-over-year between raws and mix shift, whether it be geographic or product? How should we think of that overall?

Greg, as an ongoing basis we have never broken price mix gallons out. What we try to do from an earlier question is we're saying that when you look at the 320 you have the Comex integration which was very positive for us. We've taken their gallons and their footprint through our footprint. I think also the increasing gallons of the Stores Group as well as the increasing gallons in the Consumer Group and also as we've always said that the Stores Group has the highest SG&A as a percent of sales, so when you look at the operating margins that means that the gross margins are the highest as we sell directly to the end user. As they become a bigger and bigger piece of the Company, that is going to create that mix. And then there was raw materials in there. Those are all the factors and what we said is if you look without -- raw materials really didn't drive this. It was the other three factors that drove it.

So the order you gave them we should assume is a rough order of importance?

Yes.

Great. The second question I had was a bit on the outlook and also what impact of the quarter. You mentioned wet weather delaying some construction. I know that was something that happened in the second quarter in June. Could you give us some ideas of where that is and how that might be looking as you look forward?

Yes, Greg. It looks very positive. We commented on the call that the residential repaint activity has remained strong. It's actually been strong for going on three years now and if you look at housing activity in general, there's a lot of reason to believe that the recovery is still in full swing. Household formations have been very strong and have remained strong. Existing home sales are up almost 8% year over year. Pending home sales up almost 10%. Average home values are pricing and continues to rise which is healthy for the industry, and on the new construction side it's even stronger with new home sales up almost 20% and single-family starts up more than 10%. Non-residential starts slowed a little this year, but the interesting thing this year there is that in 2015 despite it being down slightly from 2014, it's the second strong this year since 2008. We have back to back to back strong years of starts in nonresidential activity which is going to drive commercial painting in the years ahead.

I guess I have one last one since we have Chris and John and the whole team there. There's enough turmoil going on in the world. Sometimes this is when opportunities really arise. Are there parts of the word that you think Sherwin should be more greatly involved where for the next year or two if it gets worse could be a good opportunity to enter? Thanks.

We are always looking for those opportunities. That could be by customer or by segment and we keep a close eye on to those. As you should expect, our teams on the ground are empowered and pursuing those opportunities as they present themselves.

Great. Thanks a lot.

Our next question comes from Ivan Marcuse of KeyBanc.

Thanks for taking my questions. Real quick on the consumer business. Why did margins continue to remain flat if you have higher volume and raw materials coming through? Why wouldn't you see some leverage there?

Our operating margins in the consumer group were up 40 basis points in the quarter for the year. We said that the Lowe's business is fairly neutral. It's not accretive or dilutive this year. How with all the sales could you get the operating margin up? So I think you can imagine what kind of increase that has. That's really where -- I think it's a great positive story that again integration from Comex is creating that kind of value that the Lowe's business at close to zero operating margin is not affecting the total operating margins for the consumer. In fact, remember, at the beginning of the year many people thought that the Consumer Group would go backwards in operating margins because of that Lowe's business.

Great. And just a quick question probably for Sean, this is for you. Interest expense, if I did the math right, it looks like that was down a little bit. Why did interest expense jump and what would you sort of expect the run rate and is there any plans to add that, et cetera?

Yes. In the month of July we issued bonds, took out the short-term debt. We issued $800 million at effectively 4%. That's $32 million. When you look at next year we expect that our interest expense will be higher as we term that out. You can imagine we were paying 20, 22 basis points for that $800 million in the short-term market and now we're at 4% with that, but we expect -- what we said is we think our interest expense will be up. In fact, Marybeth asked this question a couple quarters ago and that's about 20% next year.

The interest expense will be up 20%?

Yes.

Thank you.

Our next question comes from Rosemarie Morbelli of Gabelli & Co.

Good morning everyone and congratulations. Since most of the questions or all of the questions have been asked about the operations in the third quarter, I was wondering if you could talk a little bit about your new announcement, you're paint shield and give us a feel for the market size, how unique which may not be that unique, to have something. Can you touch on that particular basis?

Well, actually no one has a product like this. This is a very unique and exclusive and patented technology and it is a product that we are very proud of. The market size that you asked, it's a little hard to define as we're finding more and more opportunities for this. We look for the opportunities in schools, athletic facilities, in senior care facilities and hospitality settings, even in residential areas, wherever these infectious bacteria may exist we feel as though this product offers an application. And in a nutshell what we have here is our Company has successfully suspended compound in a paint product that will kill bacteria. It's very unique. If you look at the issues, the hospital space, it's quite an issue. The product that we have will kill 99.9% of staph, MRSA, E. coli, and a couple of other bacteria that really pose a serious challenge to our hospital and these other areas that we mentioned. To develop a product that does not just inhibit these microbes but actually kills bacteria is very unique and it's the first EPA registered product of its kind. So, there might be other products, but nothing like this.

So you say EPA registered is that -- how do you go through that process? Is that similar to FDA or do you take already an approved bug killer, I can't pronounce any of those, that has been already approved and then you only need the EPA to approve the fact that you can actually put it in your paint?

No. And the way you go through this is very painfully would be my answer. It took us a number of years and quite an effort on our team's part. We are very proud of our team and the process that they went through. So, it is a product that is, as I mentioned, EPA registered. It's the first microbicidal paint that kills these bacteria. It lasts up to four years. We really believe this is a game changer in the industry. We're very excited about it. We had a wonderful launch yesterday and we're really looking forward to the opportunity that this product will present.

And you can't share more or less what your anticipation, revenues that can be generated from this product over the next I don't know, three or five years?

We just do not disclose that type of information. We're very excited though, I will say that. We're very excited.

Otherwise you wouldn't do it.

That's fair.

Thank you very much for your help.

Our next question comes from Jay McCanless of Sterne, Agee.

Good morning, guys. First question I had is, and this is going back to the oil and gas and the protective, when the oil prices starting rolling over last fall did you see the gallons start to roll off at the same time or was there a lag effect and has that carried through to the last two to three quarters while oil prices have been coming down?

I would say there was a little bit of a lag. We didn't see it immediately, but it has accelerated recently.

Okay. And then could you disclose for global what percentage of that is going to be under the protective and marine and petrochemical, what percentage of revenues?

Yes. We don't break that out, but I will tell you the majority of that is actually in the Service Group.

Okay. Great. Thanks, guys.

Our next question comes from John Roberts of UBS.

Chris, my thanks as well. Was all of the HGTV sales in the quarter sell-through or was there still some sell into the channel going on?

There was no sell in, it was all selling out. It was through. There was no loading in.

And then some of your competitors talked about significant destocking in the retail channel at the end of the season. Were your gains in spite of seeing that or did you really not see much of that?

We didn't see that.

You didn't see it. Great. Thank you.

Our next question comes from David Wong of Morningstar.

Good morning and thanks for taking my question. I just had one since a lot of them have been asked already. Can you give us a sense of your operating leverage that you discussed. Can you remind us what portion of your costs are fixed versus variable, especially on the SG&A line?

On the SG&A line we've always said that a high percentage of our SG&A is fixed and we've always said that because we wouldn't open a store without a manager, assistant manager, the right to staffing model. When we open a store we consider a lot of that fixed and that's how we manage a company. We say if we're going to open a store, probably when I sit there and look at it, the way we look at it, almost 90% of it is fixed, 10% is variable.

Great. Thank you very much.

Our next question comes from Nils Wallin of CLSA.

Thanks and good morning, just about. I had a question on your top-line expectations for the fourth quarter. Obviously this year-on-year for the third quarter was kind of flattish and you're assuming some sort of growth maybe mid single-digits in the fourth quarter. What's the cause of that inflection point?

I think if you look at the way, and we're guesstimating here on the foreign currency, but if you remember, fourth quarter is when it really started to fall off. If you think about the value of the dollar just jumped in the fourth quarter, so we comparisons get better, we don't think the currencies may get stronger, but just the comparisons get better. So we're seeing that. And just looking at the business and where we're at in the other areas. Someone said it earlier, even though there was a lag we did start seeing some of the protective and marine in the fourth quarter being negatively affected. We think those are the reasons you see the 1/10 going up to the mid low single digits.

Understood. On the HGTV and Lowe's I know another participant asked about the buy one get one free, and I believe that was in the third quarter. It's continuing into the fourth quarter, so I'm just curious how you think about that in terms of brand recognition, brand quality. Will this type of discounting cause you to rethink how the brand will be positioned next year?

Again, this would be a better discussion for Lowe's. Their pricing of that product is something that they determine.

Okay. And then just finally I guess in Global Finishes there was some degree of organic of weakness. Is there any market share shifts happening because others who are in the refinish business seem to still see some growth there?

In the automotive refinish business I'd say we do see some pressure there. There's a great deal of consolidation that's taken on in that space. We have found ourselves on the wrong side of some of the transactions that have taken place, so we felt a some pressure in our market share.

And how do expect to address that?

Well, every day we're trying to address that. Our products and our services we think are good. We are trying to align ourselves with the right customers and ensure that the introductions that we have of both new products and our people are in the right place doing the right things at the right time.

Great. Thanks for taking my question.

This concludes our question-and-answer session. I would now like to turn the conference back over to Bob Wells for any closing remarks.

Thank you again, Carrie. As always, I will be available for the balance of today, tomorrow, and throughout the coming week to answer your follow-up questions. I would like to thank you again for joining us this morning and thanks for your continued interest in Sherwin-Williams.