Some interesting thoughts on the earnings call last week
An interesting back and forth regarding Dow (DOW) and Rohm & Hass (ROH)
Jeff Zekauskas – J.P. Morgan
“I don’t know if you noticed, but there’s some possible consolidation among your acrylic suppliers.”
Christopher M. Connor
“Wow, we hadn’t heard.”
Jeff Zekauskas – J.P. Morgan
“What do you make of that? And do you think that that — you know, is that neutral for Sherwin or negative or positive?”
Christopher M. Connor
“Well, time will tell. I guess I would comment on Dow and Roman Haus that both of these companies have had longstanding relationships with Sherwin-Williams. They are important suppliers to us. They’ve been very good companies to deal with and we expect that that relationship will continue and time will tell whether this is a positive, neutral, or negative — too early to make that call.”
Jeff Zekauskas – J.P. Morgan
“Would you have any interest in integrating into acrylics?”
Christopher M. Connor
“Again, too early to make that call.”
The follow up question ought to have been “any thoughts on becoming part of Dow Chemical?”
On Domestic and International Acquisitions:
Donald Carson – Merrill Lynch
“Okay, and then a capital structure question — you said you haven’t really changed your view yet post the successful resolution of the pigment litigation to lever up a bit more. Is that partly because you are trying to keep your powder dry for acquisitions? And what is the acquisition environment? Are some of the smaller companies still a little shell-shocked about the environment and not yet willing to consider selling?”
Christopher M. Connor
“On your first point, you are absolutely correct. We want to keep the powder dry. We do think — we think we — and it goes to your second point; we think that eventually there might be some real nice assets here. We’re continuing to look at it but I don’t think the owners of these businesses has really changed. I think that we’ll see how they feel over the next six months and year, but we continue to push.”
Donald Carson – Merrill Lynch
“Okay, and what’s the backlog like on international acquisitions? Is there anymore progress there?”
Christopher M. Connor
“There’s some interesting properties out there right now. To Sean’s point, a little bit more activity there than domestically, given a more robust market and willingness to sell more of the — on an up trend. And we don’t comment much more beyond that in terms of what we are seeing or what we are doing.”
Look for Sherwin to now resume an active acquisition strategy that the lead paint specter has all but vanquished. They have weathered the housing storm to this point because of them and will come through this a far stronger compnay than when they went it.
Disclosure (“none” means no position):Long SHW, Dow, none
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