宣偉 (SHW) 2011 Q4 法說會逐字稿

Good morning. Thank you for joining the Sherwin-Williams Company's review of fourth-quarter and full-year 2011 results and expectations for 2012. With us on today's call are Chris Connor, Chairman and CEO; Sean Hennessy, Senior Vice President, Finance and 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 by VCall 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 ends and will be available into Thursday, February 16, 2012 at 5PM Eastern Standard time.

This conference call will include certain forward-looking statements, as defined under US Federal Securities Law, with respect to sales, earnings and other matters. Any forward-looking statements speak 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 the Company's earnings release, transmitted earlier this morning. After the Company's prepared remarks, we will open the session to questions. I would now turn the call over to Chris Connor.

Thank you, Jackie and good morning, everyone. Thank you for joining us. The Company finished 2011 on a very solid footing and 2012 is off to a strong start. We're looking forward to sharing these results with you and taking your questions. But, before we get to that, let me take a moment to comment on an important change in our recording structure. This morning the company filed an 8-K, announcing a change in our reportable operating segments.

Beginning with the fourth quarter of 2011, we increased our reportable operating segments from three to four, due to the continued revenue growth, geographic expansion, and end-market diversity of our Global Finishes Group. The Latin American Coatings Group, previously aggregated within the Global Finishes Group, will now be reported as a standalone segment. The remaining Global Finish Group businesses, namely automotive finishes, our OEM product finishes and protective and marine coatings, will make up the Global Finishes Group reportable operating segment. This change will provide better visibility into the operations and financial performance of these businesses. The segregation makes sense, in that our Latin American Coatings Group sells primarily architectural products in a specific geography, where as the businesses in our Global Finishes segment service industrial end markets worldwide.

Information about the composition of each of our reportable operating segments is included in the 8-K filed this morning. For comparison purposes, the 8-K filing also includes updated results for each calendar quarter of 2011, as well as full-year results for these new segments for 2010 and 2009. All of this information can be accessed through our Company website, under the Investor Relations/SEC Filings tab. I will now turn the call over to Bob Wells to review our fourth-quarter, full-year results. Then I'll be back to comment on our performance in 2011, as well as, give our outlook for 2012. Bob?

Thanks, Chris. In order to allow more time for questions, we've provided balance sheet items and other statistical data on our website, at www.sherwin.com, under Investor Relations 2010 year-end Press Release. Summarizing overall Company performance for the fourth quarter and full year 2011, consolidated sales for the fourth quarter increased 9.2% to $2.07 billion, due primarily to selling price increases, acquisitions, and higher paint sales volume. For the full year, sales increased 12.7% to $8.77 billion. Sales from acquisitions increased consolidated net sales 0.7% in the quarter and 4.5% for the year. Currency translation rate changes decreased consolidated net sales 1.2% in the quarter and increased sales 0.7% for the year.

Consolidated gross margins in the fourth quarter, decreased to 42.8% of sales from 44.6% in the fourth quarter of 2010. For the year, gross margin decreased 42.7% of sales, from 44.8% last year. The decrease in gross margins for the quarter and year was primarily due to higher year-over-year raw material costs. Selling, general, and administrative expense in dollars, increased $33.6 million in the fourth quarter, compared to fourth quarter last year. But, decreased as a percent of sales to 36.4%, from 38% in the same quarter last year.

For the full year 2011, SG&A expense increased $232.7 million, but also decreased as a percent of sales to 33.8% from 35.1% in 2010. Incremental SG&A from acquisitions and new stores accounted for the majority of the SG&A increases in the year. Our fourth-quarter 2011 asset impairment charge of $5.5 million, compares to a fourth-quarter asset impairment charge last year of $4.5 million. Interest expense for the quarter decreased $11.8 million to $9.6 million. For the year, interest expense was $42.5 million, compared with $70.6 million in 2010.

As a reminder, fourth-quarter and full-year 2010 interest expense, included costs associated with the repurchase of long-term debt. The incremental interest expense related to the repurchase of this debt reduced 2010 diluted net income per common share, by approximately $0.04 in the fourth quarter and $0.12 for the full year. Our effective income tax rate for the fourth quarter 2011, increased to 88.8%, from 29.7% in the fourth quarter of 2010. Our fourth-quarter '11 income tax expense, includes a one-time after-tax charge of approximately $75 million to satisfy our settlement with the IRS. For the year, our effective tax rate was 40.4%, compared to 31.8% in 2010.

Consolidated net income for the quarter decreased by $58.4 million to $14.5 million. For the year, net income decreased $20.6 million to $441.9 million. Net income as a percent of sales, decreased to 70 basis points from 3.8% in the fourth quarter last year. This decrease was due entirely to the IRS settlement. For the year, net income as a percent of sales decreased to 5% from 5.9% in 2010, for largely the same reasons.

Diluted net income per common share for the fourth quarter 2011, decreased to $0.14 per share from $0.67 per share, in the fourth quarter 2010. For the year, diluted net income per common share, decreased to $4.14 from $4.21 per share in 2010. The IRS settlement reduced diluted net income per common share in the quarter, by $0.71 per share and in the full year, by $0.70 per share.

Now I would like to review our performance by segment. Sales for our Paint Stores Group in the fourth quarter 2010, increased 13.5% to $1.13 billion. For the year, net sales increased 9.1% to $4.78 billion. Sales increased in the quarter and year resulted, primarily from selling price increases and gradually improving architectural paint sales volume, across most customer segments. Comparable store sales increased 12.7% in the quarter and 8.3% in the year. Regionally in the fourth quarter, our Eastern division led all divisions. Followed by Southeastern division, Midwestern division, and Southwestern divisions. Sales by all four Paint Stores divisions increased by double-digit percentages in the fourth quarter.

Segment operating profits in the Paint Stores Group, decreased 1% to $133.7 million, from $134.8 million in the fourth quarter last year, due primarily to higher raw material costs, increased SG&A expense, and the impairment charge. For the full year, Paint Stores Group operating profit, increased 4.2% to $645.7 million. Due primarily to higher selling prices and volume growth, that more than offset higher raw material costs and SG&A expenses. Segment operating profit margin for the fourth quarter, decreased to 11.8%, from 13.5% last year. Profit margin for the full year 2011, decreased to 13.5%, from 14.1% in 2010.

Turning now to the Consumer Group, fourth quarter external net sales decreased 1.1% to $252.1 million, from $255 million, in the fourth quarter last year. For the year, Consumer Group sales decreased 1.8% to $1.27 billion, from $1.3 billion in 2010. Consumer Group sales in the quarter and the year were adversely impacted by the loss of a portion of a paint program with a large retail customer, that was partially offset by selling price increases. Segment operating profits for the fourth quarter increased to $30.2 million, from $26.1 million last year. Primarily due to the selling price increases and good expense control that were partially offset by higher raw material costs. For the year, segment operating profit decreased to $173.7 million, from $204 million in 2010. The segment profit decline in the year resulted primarily from higher raw material costs that were only partially offset by higher selling prices and good expense control. As a percent of net sales, Consumer Group's operating profit, in the fourth quarter increased to 12%, from 10.2% last year. For the year, operating margin, decreased to 13.6%, from 15.7% in 2010.

For our Global Finishes Group, net sales of the fourth quarter increased 8.1% to $463.3 million, due primarily to selling price increases, acquisitions, and higher sales volume. For the year, Global Finishes Group sales increased 32.5% to $1.88 billion, due again to acquisitions, selling price increases, higher sales volume, and favorable currency translations. Acquisitions increased the Group's sales in US dollars, by 3.2% in the quarter and 20.7% in the year. Currency translation rate changes decreased sales in US dollars by 1.7% in the quarter and increased sales by 1.4% in the year.

Global Finishes Group segment operating profit in the fourth quarter increased to $13 million, from $9.3 million last year. For the year, segment operating profit increased to $90.3 million, from $64.7 million last year. In the quarter and year, higher selling prices, volume growth, and good expense control more than offset raw material cost inflation and dilution from acquisitions. Currency translation had no significant effect on segment confidence, in the quarter and increased profits $4.5 million in the year. Acquisitions, reduced profits for the segment $2.8 million in the quarter and $6.4 million in the year. As a percent of net sales, Global Finishes Group operating profit was 2.8% in the fourth quarter, compared to 2.1% last year, and 4.8% for the year, compared to 4.6% in 2010.

For our Latin American Coatings Group, net sales, in the fourth quarter increased 4% to $20.1 million, due primarily to higher sales volume and selling price increases, partially offset by unfavorable currency translations. For the year, sales increased 22.7% to $828.5 million, due primarily to acquisitions, selling price increases, higher sales volume, and favorable currency translations. Acquisitions had no material impact on segment sales for the quarter, but increased sales, in US dollars, by 8.7% in the year. Currency translation rate changes decreased sales in US dollars by 6.4%, in the quarter and increased sales by 3% in the year.

Stated in US dollars, Latin American Coatings Group segment profit in the quarter increased 34.6% to $26.4 million. For the year, segment profit increased 27.9%, to $75.4 million. In both the quarter and year, segment profit improvement resulted primarily from higher sales volume and price increases, partially offset by raw materials cost inflation. Currency translation decreased segment profit $1.9 million in the quarter and increased profit $1.9 million in the year. Acquisitions had no impact on profit in the quarter, but increased segment profits $1.1 million over the 12 months. As a percent of net sales, segment operating profit was 12% in the fourth quarter, compared to 9.3% last year, and 9.1% for the year, compared to 8.7% in 2010.

Let me conclude by commenting briefly on our balance sheet items, you'll find more balance sheet information on our website, under www.sherwin.com Investor Relations Press Releases. Our total debt, on December 31, 2011, was $993.4 million, including short-term borrowings of $346.3 million. Our cash balance, at the end of the quarter, was $32.7 million, compared to $58.6 million at the end of 2010.

Total borrowings to capitalization were 39.6% at year-end, compared to 39.4% at the end of 2010. Long-term debt to capitalization was 25.8%, compared to 24.7% on December 31, 2010. For full year 2011, we spent $154 million on capital expenditures, depreciation expense was $151 million, and amortization expense was $30 million. For the full year 2012, we anticipate capital expenditures, for the year, to be in the range of $140 million to $150 million, depreciation will be about $150 million, and amortization will be about $30 million.

I will conclude with a review, two brief comments on the status of our litigation. In California, the Santa Clara case involving eight cities and counties in California and five former lead pigment manufacturers, continues to move through the discovery phase. Discovery will continue for the next four to six months, at which time the parties will have the opportunity to file depositive pretrial motions. The court has set a tentative trial date of September 10, 2012.

In Wisconsin, the Gibson case, involving a single plaintiff, was recently argued before the 7th Circuit Federal Court of Appeals. The trial judge found that risk contribution rule, established by the Wisconsin Supreme Court and earlier in the Thomas case, to be unconstitutional. The plaintiff appealed and we expect a decision within the next thirty to sixty days. That concludes my review of our results for the fourth quarter and full year 2011. So, I'll turn the call back over to Chris, who will make some general comments and highlight our expectations for 2012. Chris?

Thanks, Bob. Now we began 2011 with a cautious sense of optimism and in our year-end call last year, we projected that we'd look back, probably on 2010 as a transition year for our Company and the domestic paint coatings industry. We described the outlook at that time, for many of our end markets as stable to improving. And as you recall, we covered this outlook by saying that raw material cost inflation was likely to remain a challenge. I think it is fair to say, looking back, the conditions we faced over the past year on both of these fronts were more challenging than we anticipated. US market demand for paint and coatings continued to trend downward, following the expiration of 2010 Home Buyer Tax Credit stimulus.

The Department of Commerce buying estimates for the architectural market in the first half of 2011 were down 8% from 2010. Most of Latin American markets fared better than the US. The European markets likely fared worse. I don't think I need to belabor the point too much on raw materials. Our outlook, at the beginning of 2011, was for industry wide market basket inflation in the high-single to low double-digit range for the year. And the actual inflation rate as we all know was probably double that.

Yet, against the challenging backdrop of depressed market demand and unprecedented raw material cost inflation, Sherwin finished 2011 with record sales and record earnings per share. We continue to invest in new stores and branches. We make great progress toward integrating the four acquisitions completed over the past two years. We generated strong net operating cash, that was reinvested in the Business, used to buy back our stock and pay our record dividends. By most measures, 2011 was a successful year.

But I'd like to comment briefly on the progress we made in a few specific areas because I think they best underscore the strength and focus of our Organization. First, our ongoing commitment to expanding our store base and maintaining appropriate service levels in our stores, despite the difficult market conditions, is clearly paying off. Paint Stores Group achieved positive gallon buying growth for the full year 2011 and the rate of growth accelerated significantly in the second half and even more so in the fourth quarter. This growth was broad-based, with nearly every customer segment showing positive volume. More importantly in a flat to down market we're confidant that our volume growth during the year translates to market share growth.

In 2011, our Paint Stores Group added 60 net new stores, bringing our store count in the US, Canada and the Caribbean to 3,450 locations compared to 3,390 a year ago. Our plan for 2012, again, calls for net new store openings in the range of 50 to 60 locations. Looking beyond the Paint Stores Group, our Company achieved a noteworthy milestone, in the fourth quarter, as we surpassed 4,000 total Company-operated stores and branches, across all operating segments worldwide. The same competitive advantages control distribution brings our Paint Stores Group, mainly direct customer interaction, responsiveness, and control over brands, pricing, inventory, and growth, are equally applicable to our Global Finishes and Latin American Coatings Group. For these reasons, control distribution will continue to play an important and expanding role in these segments going forward.

Second, I'd like to take a moment to comment on our continued progress in working capital management and cash performance. At year-end, our working capital ratio had dropped to 10.9% of sales, compared to 11.9% at the end of 2010. Convincing evidence, that the integration of the acquisitions completed, in the past two years, is on track, as tight working capital management contributed to higher cash generation. For the year, we generated $736 million, net operating cash or about 8.4% of sales.

If we add back the cash settlement paid to the IRS, during the year, cash from operations for the year, rose above 9% of net sales. Free cash flow, operating cash minus CapEx and dividends, finished the year at $428 million. In the fourth quarter, we acquired just under 0.5 million shares of the Company's stock for treasury, bringing our full-year total to 4.7 million shares, purchased at an average cost of $78.16 per share, for a total investment of $367 million. At year-end, we have remaining authorization to acquire another 21 million shares of the Company's stock. Over the past year, we returned more than $153 million in cash, to shareholders through quarterly dividends. 2011 marks our 33rd consecutive year of increased dividends per share. A trend we intend to continue in 2012.

The third and final area I'd like to touch on, is our earnings-per-share performance for the year. $4.84, before the IRS settlement, is a record for our Company. And a solid performance considering the stiff headwinds we face in the market. If you believe the old expression, that what doesn't kill you makes you stronger, emerging from 2011 a much stronger Company than we were a year ago. And while we still have work to do in offsetting the raw material inflation we incurred this past year, through a combination of productivity and price implementation, I believe the 15% earnings-per-share growth, in this environment, proves the resilience of the business model.

Looking ahead to this year, there appears to be a growing sentiment in the market predicting better times ahead. Many see early signs of the housing recession is finally nearing an end. While others forecast moderating rates of raw materials inflation. On the demand side, we too see early, but encouraging signs of improvement in the residential markets. Time will tell whether this momentum is durable and whether it will ultimately lead the US housing market back to more sustainable levels in the coming years.

On the raw material front, however, we still expect significant cost headwinds in 2012, primarily from titanium dioxide, couple this with the annualization of inflation of 2011, and we would expect the average year-over-year raw material cost increases for the paint and coatings industry to be the high-single to low double-digit percentage range in 2012. With these factors in mind, our outlook, for the first quarter 2012, is for consolidated net sales to increase 9% to 14%, compared to last year's first quarter. With sales at that level, we have to make diluted net income per common share, in the first quarter to be in the range of $0.56 to $0.74 per share, compared to $0.63 per share earned in the first quarter of 2011. For the full year, we expect net sales will increase by a high-single digit to low-teens percentage versus 2011. And with annual sales at that level, we estimate diluted net income per common share for 2012 will be in the range of $5.37 to $5.67 per share. Again, thanks to all of you for joining us this morning, and now we would be happy to take your questions.

Thank you. (Operator Instructions) Thank you, our first question comes from Don Carson, Susquehanna Financial Group

Just wanted to know what your assumption was for the US architectural market, behind your guidance range for next year? And, of course, the DSC has done away with their reporting, but you talk about an 8% decline in the first half of '11. What is your assessment for full-year and again, what is your base case for calendar 2012?

I think, in terms of our expectations for the year going forward for the industry, we have built up in the pieces and parts. We would expect that the housing market is going to continue to show moderate gains. We think all in on both single-family, multi-family, this year. We're going to end somewhere the mid-to upper 600,000 units.

That is going to potentially grow to the low to mid- 700,000 units. That will be a little bit of a lift. And we think that the repaint markets also have been improving moderately. So, all in I think, our expectation for the industry will be that we will see flat to low single-digit volume gains for the architectural market.

Okay. And then a question on your new segment reporting. The old Global Finishes Group, with some of the acquisitions, you were thinking of margin improvement, of the 6% range to maybe 11% or 12% by 2014. How does that change as you strip Latin America out? And what do you see as the margin potential for Latin America, which is running around 9% now?

Yes, why don't I ask Sean Hennessy, our CFO, to jump in with that, Don.

Yes, again we usually talk about 12%, when we talk about the Global group. We still believe that both pieces will still be shooting at that 12%. I think that you can see the Latin America group is over 9%, which means that they're a little closer. We expect them to reach that 12% prior to the Global group. But, we continue to do more things in Latin America, with the control distribution and so forth. After we hit 12%, we will probably reevaluate that.

Okay. Thank you.

Chris Nocella, Barclays Capital

Your same-stores growth of 12.7% in the quarter. What is the split there between price and volume?

Yes, pricing for the Stores group Chris was in the upper single digit range. That is the majority of it. However, we would note that the volume performance, in the quarter, really was strengthening for that business.

Okay. And based on the already announced price increases, do you think you saw the greatest benefit in the fourth quarter or could the first quarter be actually a little bit higher?

In terms of pricing?

For the pricing, do you think the flow-through will be higher in the first quarter than it was in the fourth?

For the Stores group?

Correct.

Yes. And the fourth quarter, which is the second smallest EPS, when you look at the absolute dollars, there are adjustments that go through there. We had the impairment of some trade names and so forth. But, if you took a look at some of the inventory adjustments to go through the fourth quarter, the flow-through is acceptable. But, when you take a look at the first quarter, we should not have those headwinds.

Okay. And, just lastly, on the Latin America business. Organic sales growth was about 11%, 2011. What is your expectation for that business in 2012?

The business will continue to chug along pretty well. We are going to have some FX issues in Latin America next year with the real. I don't know that we have given guidance yet per se, on the pieces parts. But it will be a positive year for Latin American Coatings next year.

Thanks a lot.

Jeff Zekauskas of JPMorgan.

Good morning. In your Paint Stores Group, you had double-digit sales and flat operating profits? Whereas in the Consumer Group, you had flat sales and if you adjust for some nonrecurring items last year, you had 50% improvement in operating profits? So, why is it that in the business where you had all of the sales growth, you didn't really have any operating profit growth? Whereas the opposite took place in Consumer?

Yes, Jeff, this is Sean Hennessy. When you take a look, if I can remind you of the third quarter. When you look at the third quarter, the Consumer Group was 11.7% versus 17.5% in 2010 third quarter. And at that time, what we said is, if you looked at the way our inventory was coming down, usually we started to reduce our inventory in the third quarter. And when someone asks why was our margin in Consumers down that dramatic, we said that the reverse happened in the fourth quarter. That is, we take some of the inventory off of your balance sheet and instead of it going through the P&L because we are producing less. That occurred in the third quarter this year versus the fourth quarter in 2010.

So, as you can see, 11/7 we are at 12% in the fourth quarter and the 17.5 was 10.2% in 2010. A lot of different things are happening in the quarter-by-quarter. That sometimes the quarters are changing, as you manage your inventory and the balance sheet and so forth. That is why the two quarters, in the third and the fourth quarter of the Consumer, were that way. Again as I mentioned, in the Paint Stores Group, with $133 million last year, the second smallest quarter. And with the fourth quarter with inventory adjustments, LIFO and others and the trade names. That is really what caused the reduction in the flow-through. But, without it they showed acceptable flow-through.

Okay. Just while we are on the subject, what was your gallonage growth in 2011?

We said that gallons were positive for the Company in 2011. And we said that that had been trending throughout the year and a more favorable with the fourth quarter being our best gallon quarter.

Okay. And then lastly, there are some, or possibly there are some properties that are on the market with exposure to the auto retains and auto OEM markets. Is that something that if they were available at attractive prices, would that be of interest to Sherwin-Williams? Even though they may be of relatively large size?

Jeff, we have never commented on specific M&A opportunities that are out there. I'm familiar with the property that you are talking about. I think strategically, you have heard us speak to the investment community about our interest in the automotive after-market segment. But, not the automotive OE segment. And we will leave it at that.

Okay, thank you very much.

PJ Juvekar of Citigroup.

Good morning. You had mentioned that you gained share in your paint stores business? So, are you taking share from other independent store chains? And is that more than offsetting any share loss that you may have had due to the DIY segment?

Yes, PJ, I think that our comments here are broad-based for the industry, as opposed to any specific channel segment. Although, I think you are right to talk about the smaller independent paint store operator that struggled in this downturn. I think it is easy to see share gains from there, as well as some of the other regional paint store chain operators, that we think we have made some progress against. There has not been an offset for our DIY business. We have commented throughout the year last year that our DIY performance was strong.

In fact, on all the consolidated numbers that we've given you, both on sales revenue and gallon performance, our DIY numbers were there or slightly higher. So, a strong DIY year for the Company. Through our stores organization, offset a little bit by the loss of DIY business through our Walmart account. But overall, pretty strong performance and as we have commented, looking at all the industry data we can get our hands on relative to gallon performance, we're pretty confident across all segments that there were share gains here.

Okay, and then secondly, can you update us on your efforts to reduce your TiO2 usage in paint and do you have any volumetric expectations?

We have a number of initiatives underway to address the titanium issue. We've talked about them in the past with the investment community, relative to replacing titanium with either a lower grade sulfite-type titanium's, internal formulations that will reduce the use of it and forcing perhaps emerging technologies from other parts around the world. All of those activities are under way. I think we have given guidance that were those to all come to fruition, we would be somewhere in the 5% to 10% range of our total titanium tonnage-usage that could be replaced. And I would say we are the early days of making progress toward that.

All right, thank you. And then just quickly for Sean. Sean, you mentioned you think of FX headwinds from Latin America. Given that in the production, IT has been slowing down in Brazil. Are you seeing any impact of volumes there?

Slightly. But, not dramatic enough to not give us confidence that we're going to have improvement in Brazil, as well as, Latin America.

Okay, thank you.

Thanks, PJ

Ivan Marcuse, Keybanc Capital Markets

Thanks for taking my questions. First question I have is you have always been sort of conservative on your housing outlook. Is there a sign in the market now or something in the market, that is more directly related to the repaint business or your store business? That maybe is more positive now than it was for it had been in the past? Or is it just the general market that you're looking at, that gives you some optimism going into 2012?

Well, I think the housing is more positive than it has been over the last two to three to four years. We hit bottom somewhere in the 400,000 to 500,000 units and we're seeing 600 and change starts this year. And most of the economic forecasters that we look at and we think that this makes sense, show a number slightly larger than that next year. We see that from permits that have been pulled and projects that are being bid on by our painting contracting customers. So, that outlook looks a little bit brighter to us.

We've also just have been watching the trends, Ivan. The residential and the commercial repaint markets, as a reminder, still account for approximately 80% of all the gallonage that our industry sells. And that tends to start to move and stay on a trend line. It has been a good trend line in the last couple of quarters. And as we said, briefly in our comments, the year is off to a good start. Really driven by this maintenance painting project. So, heading into the year with a fairly optimistic outlook about what we are going to see through architectural volume through our stores this year.

Great. And then, Sean, in the Consumer Group, your operations and inventory build, is that going to move back to historical operating patterns or will it be similar to the first half of this year, where it could build up inventory and then, as you talked about in the second half, with sort of a -- you worked out the inventory.

Right. I think we are going to go more to the historical. I think, that is why when you look at the improvement that the consumer had in the first quarter, as they built inventory last year, we will still build inventory. But, I like your description. More historical. And I think the bell shape curve will be closer to historical. So we probably will not see the changes by quarter that we did this year.

Great. And then lastly, what is the FX gain related to? And would you expect to 2012 tax rate to be?

I think our tax rate is going to be in the lower 30%'s, like we have been for the past. If you take the change out, in the tax rate with the leveraging settlement. We are in the low 30%'s also. But the FX gain and really the gain in the quarter was really driven in Brazil and Mexico. But the FX loss here to date was really Mexico and Venezuela and what happened at the beginning of the year at Venezuela.

Got you. Thank you for taking my questions.

Greg Melich, ISI Group

I wanted to dig a little bit more into SG&A. I know that we cycle a lot of the acquisitions. Is that 4% year-over-year growth or $25 million or $30 million year-over-year. Should we think of that is a normalized run rate now that we cycled the acquisitions and--?

Yes, I think that when you take a look at it 4%, 4.5% increase in the fourth quarter is more normalized. If you take that we have annualized the major acquisitions in Europe, through the first three quarters that is where the full year is probably a little bit different. But, I think you are right on with that analysis.

Okay, great. And then Chris maybe a bigger picture question. In the past you have seen over many years the range of the gross margins that the business could do used to be sort of 42% to 45% and has shifted up to 43% to 46%. But you have also been making acquisitions and you've been growing overseas. Do you think that 43% to 46% is still the right range? Or just given the acquisitions and given the business mix, that maybe it goes back to 42 to 45 for a few years?

No, we still feel good about that range, Greg. And I think of note, we have announced yet another price increase for calendar year 2012. As you know, we give full transparency to the Street, regarding the pricing activities of our Stores Group and we announced a 8% price increase effective February 1 of 2012? We're going to continue to move pricing into the marketplace. A great deal of it depends on what happens with titanium for the rest of the year. But if it holds in the range that we have given for the year, for the industry, -- we fully expect to be back in the 43% to 46% range.

Great, thanks a lot.

Chuck Cerankosky, Northcoast Research

Good morning, everyone. First question, is regarding impairment charges, Sean. I am looking at the P&L and you have got trade market impairment charges, which you talk about in the text of the press release. But you're also mentioning asset impairment charges. Are we talking about two separate line items? Or two separate types of impairment charges?

I think, we are talking about the same things. It is really related to trade names. As you know, when we acquire something in the Stores Group, you're looking at NAB, Duron, Conlux, some of these trade names we keep for quite a while. But, when you continue to stop using those brand names, you are doing a mark-to-market on your balance sheet. Last year, those impairments actually brang the Global -- and dealt with the long time acquisitions from prior years.

The reason I'm asking -- or focusing on this, Sean, is in the P&L, the amounts for 2011 is bigger than $4.5 million in 2010. Yet in the taxes is talking about a $0.03 hit this year versus $0.04 last year. Was wondering if you could reconcile that?

I will get back to on that, Chuck. Because that is the question on the $0.03 versus the $0.04.

Yes, that's what has me confused there. All right, got you. Now when we're looking at the new segment reporting, Sean. It is astounding at least to me, the spread between the operating margin of the Latin America Group versus Global Finishes. And I'm wondering what accounts for that. Is this an allocation thing, or just the nature of the products? But regarding the latter, you would think some of these reflective coatings would have higher margins than architectural.

Chuck, I think it really has to do with the scale of the businesses. We've been in Brazil for many, many years, a lot longer than we have been in China. And some of these acquisitions that we did complete in 2010, as you know, we take a look at the purchase price versus sales, it was lower than the dollars that we refer to every once in a while. So, we have continually said those were at lower operating margins. So, I think that it is a good change. You are going to see that. But I think that is really the reason why.

Okay. Can you give us any precision on what the volume growth in the fourth quarter was in Paint Stores?

Yes, I think as we -- the earlier question, when we talked about the revenue in the 12% range. And that the pricing portion of that was in the upper single digits, not the high single digits. The rest of that is going to be volume? By mathematics, Chuck, that's going to get you to the mid-single digit range.

Okay. So similar to the third quarter?

Stronger than the third quarter.

A little stronger?

Stronger than the third quarter.

All right. Now when you're looking what your Paint Store customers are doing in both the contractors and the DIY, when they are in the store. Are you seeing anything that indicates less sensitivity to price increases or a willingness to build a market basket? For example, a contractor finally getting past the hump on buying an incremental piece of equipment or whatever it may be?

Yes, I think as the volume comes and we were commenting that in the last couple of quarters it has been coming. And don't forget that volume is building and the tax of, potentially fixed price increases in the last 20 months. So, the concern that pricing is having a chilling effect on demand, once again proving not to be the case. It is more the broader market issues that are causing painters to get going again. We will see the rest in the associated product sales and really the equipment sales are more of a end of first quarter, start of second quarter, and will be available to comment a little bit more on that side of it going forward. But, in terms of product mix and continuing to move up to better quality products, all of those levers which are historically at play here, Chuck, are still competing as they have historically.

All right thank you very much. Congratulations.

If I can jump in and give you an answer to your question on the $0.03 versus $0.04. The dollars that you quoted, which was right from us, is what hits the up G&A. And last year in the (inaudible) there was also a $2.1 million impairment that went to cost of goods sold. So that is why it was $0.04 last year and $0.03 this year.

So run that by me again. There's--?

Included in last year's $0.04, besides the amount that you quoted, was also $2.1 million that went to cost of goods sold. So that is what was in the $0.04. We did not include it in the absolute numbers that you quoted earlier.

So the $2.1 million is not in that EPS amount, but it is in the $5.49 million?

No, we are talking about last years. When the number is higher. There's also -- the $0.04 included a $2.1 million impairment into cost of goods sold. The other number you quoted was the SG&A piece.

Got you. All right thank you, Sean.

Bob Koort of Goldman Sachs.

Good morning, this is actually Brian Maguire, in for Bob today. Just a question on the raw materials guidance. If I heard you right I think you said high single to low double-digit raw material costs for 2012. I think on the third quarter call, you might have mentioned that if these prices stayed where they were then you would be looking at more like low to mid-teens. I think we have since gotten a price increase in TiO2? I'm just wondering if something has changed since then or maybe you're seeing something in the organic side of the bucket, or the metal side of the bucket that you are expecting to decline there next year just because of the components of that raw increase?

Great question, Brian, and it is very intuitive to pick that up. Because you're right that has been a little bit of a change. Why don't I ask Bob to comment on what we are seeing there.

Sure, Brian. The question that we answered on last quarter's call was that if you straightlined raw material costs we finished the quarter, in third quarter, what would it bode for 2012 as its annualized? It is a little different question asking the same question at the end of fourth quarter, because a good portion of the raw material basket eased somewhat during the fourth quarter. We are starting from a slightly lower base than the fourth quarter. Annualized, 2011 costs going through '12 to-date, would amount to mid to high single digits for the industry. And then on top of that, we anticipate continued inflation in TiO2 as we indicated.

Is it most of the resins that gave you some of the relief for the fourth quarter?

Yes.

Okay, great. And then on the SG&A, I think it's like you are expecting to continue 4% to 4.5% growth year-over-year. And contrasting that against your high single to low teens sales patterns, that implies a lot of leverage in 2012. Do think that will be enough to offset any gross margin compression that you may have some raw materials price increases?

I think that when you take a look at it. Really we try to give you a sales and EPS guidance. We don't go down each component whether it is gross margin and give guidance especially at this time. But, I think when you look at the high point, the midpoint and the low point, I think that it bodes that we're going to have operating margin improvement next year.

Got it. And then -- I think you you mentioned that the Eastern regions led the way of the same-store sales growth in the Paint Stores. Was that a change from you have been seeing recently or was there anything kind of the composition and where the same-store sales growth is coming geographically, that gives you some increased confidence that this housing recovery is meaningful and we are actually going to have a recovery in 2012?

This is Bob, Brian. I think the Eastern division has been lagging on the new construction side because there's not as much new development and space to develop in Eastern geographic regions. I think the strong performance by Eastern division in the fourth quarter really suggests that the repaint market in the Eastern division were out-performing those in other divisions. Although, as Chris pointed out, or as I pointed out, all four divisions had double-digit sales growth in recent quarters. So we're kind of splitting hairs trying to determine differences between the fourth.

So it is pretty broad-based then?

Yes.

Okay thanks a lot.

Kevin McCarthy, BofA Merrill Lynch

Yes, good morning. Chris, you mentioned in a response to a previous question that you thought you might be able to reduce your titanium dioxide requirement by 5% to 10%. I just wonder if your major global codings peers have made similar remarks within the last six or eight weeks. I just wanted to drill down a little bit on that. You mentioned that it was early days. Can you give us a feel for where you are today relative to that target range? Also the timing that you had envisioned to achieve the range? And how much you can get from new technologies versus what they just diminishing the content on lower end products if that is an option?

We are not in the range today. We would be below that. The expectation would be that over the next few years, we would work to get in there. And I think that is about the growth of what we would be comfortable commenting on. We recognize that given the choice of a poor performing product or a consistent product at a higher price, the vast majority of our customers would opt for the latter. So any decisions we make to replace titanium, reduce titanium, formulate titanium out, those two are very rigorous field testing processes. So we are going to lag a little bit perhaps our peers ability to move in this range. Nevertheless, it has work worth doing and there are opportunities there. And I feel that we are on target for where we should be.

Okay. And then shifting gears. Sean, Brazilian currency and a lot of other currencies, for that matter, have been quite volatile since Labor Day of last year. Can you remind us how you are approaching hedging, especially now that we have a separate (inaudible) segment there. How should we think about your activities or lack thereof?

I think that we continually look at, again cash flow. We are borrowing in-country, we borrowed in-country when we have been to Europe. As well as, some of the other acquisitions that we made. And there's operating income that's being created -- or cash is being created. We continue to pay down. While these companies are bringing cash back to us here in the United States. We are doing some forward contracts and so forth. But we are also doing things between one country and the other. So that we have intercompanies that are protecting us.

Okay. Thank you very much.

Dennis McGill, Zelman and Associates

Good morning and thanks. Just a couple quick ones. Chris, I think you mentioned in the fourth quarter, you said the volume growth that you saw was across every customer segment. I was just curious if there was a meaningful spread between top and bottom? Any color you could give on which segments are at the extreme? And then if there is any meaningful discrepancy, maybe give us an order of magnitude?

Yes, I think the trends lines there, Dennis, have been that the DIY business and the residential repeat business through our contractor segments were at the high end. That has been consistent with, kind of, the years performance. The news of the quarter, is that the new residential and some of the commercial markets, which had been lagging, turned positive for us for as well. And that is a really good sign

Okay. And then just big picture, I guess, in hindsight, when you look at the Paint Stores performance for the year being up in dollars and margin pressure being pretty minimal despite the volume counts that you talked about and the raw materials. Are you any more confident about what the recovery could look like or where margins could return to if you do get the volume growth and the return to normal?

Yes, I think when you take a look at the high point for the paint program was 15 --15.7% operating margins. I don't see anything structurally different that we see that is a possibility in the future.

Okay. I'll stop there. Thanks, guys.

Dmitry Silversteyn of Longbow Research.

Good morning, guys, and thanks for taking my call. A lot of my questions have been answered. But just to follow-up. You did discuss the -- or at least directionally, the volume performance of the Stores Group. Assuming similar levels of pricing for the Consumer Group, it looks like your volumes were down significantly and significantly more than would be suggested by the loss of the Walmart business. So did anything happen in the Consumer Group in the fourth quarter to give you that result?

Well, first of all, our selling price -- effective selling price is a little longer. The cycle is a little longer in Consumer Group than it is in stores. So it wasn't as high as it was in the stores. Don't have that number exactly. But having said that, I think we're pretty happy with the way the fourth quarter came out with Consumer Group.

Okay. So 4% to 5% volume loss, I guess, was at the high end of your expectations? Is that you are saying?

Yes, I think without the Walmart, I think that this was the last dramatic quarter that we had to go through. And I think without that, I think it is right with our expectations.

All right, very good. Secondly, talking about margins and the way to think about that for 2012 and beyond. Clearly, if raw material inflation stays as benign -- and I don't know if that's the right word to use, but stays as benign as you think it will, which is high single digits, low double digits, type of inflation, given high single digit pricing that you pass through and the traction that you've already got with your existing pricing. It sounds like you should stay on power and maybe even get ahead of raw materials a little bit so on the gross margin side of the business it looks like you are okay. What concerns me about your comment about margin improvement and year-over-year after two years of decline, is that your fastest growth is happening in your Global Group and your Latin American Group, both of which are lower margin businesses. So is the improvement you are seeking in your North American business is going to be sufficient to offset the negative mix, if you will, from the lower margin businesses growing faster and the external market than traditional markets?

Well, first of all, Dmitry, isn't it wonderful to be talking about benign raw material cost increases in the high single low doubles. Where have we gotten to in this industry? I think you make a very good point about the faster growing segments. Over the past couple of years. But, I think what you should be reading into this guidance that we are giving today, is that our Stores business is clearly back on track. And it is moving in a really solid direction here. With the pricing leverage that we need and we're giving guidance that we expect the gross margins to bottom and turn and going the right direction. As Sean commented, we expect that the SG&A numbers will continue to grow in the right direction as well. And that the operating leverage for the entire Company this year will be positive.

Okay. Very good. And finally, you talked about the Global Group getting the ability to reach 12% operating margin sometime in the future. It is almost a 10 point improvement that you are looking to gain there. What is going to take you there? And how long is that going to take?

We have a couple of acquisitions that were significant in this business, that we're 1.5 to 2 years into the integration of it. We talked last year, I think, on a number of the calls about the need for pricing in those businesses and that we had not been as aggressive as we should have been. Given the careful stance we were taking as new owners of this business. I think all the time that traditional work that we do here on pricing, on the operating side of the business, on the cost side of the business, on the asset side of the business, helps build these businesses in the right direction. And all those things are at foot here. To Sean's point, we have been consistent about giving guidance that this business can structurally get there. That is nothing that has changed our opinion about that. And as scale comes up in these countries, we fully expect to get that accomplished.

Let me see if I can ask this a different way. How much of the profit improvement you are looking to get out of the Global Group is going to be improving the profitability on the two Wood Coating businesses that you bought in Europe. Versus just the maturation of already nice unit margin that you have in automotive after-market, Marine, protective and some other mid-shift businesses that are part of the Global Group?

I think we would expect be getting slightly higher percentage operating lift from those businesses than they would play for their volume. I mean they are early in the cycle and they should be ramping up quicker. We gave you some guidance in terms of the size of those businesses when we acquired them. Relative to the entire new size of the Global Group, I know you have that data point. But I think what is important to note is that all of the businesses, both the domestic part of those businesses, as well as the other quarters of the world, we all expect those things to improve this year.

I think that in the short term, Chris is absolutely right. But, to answer your question a little differently, just because of the size differential between the acquisitions versus the core, the absolute dollars will grow faster from the core, just because that is 70% of the sales approximately. And so the acquisitions that are 30%, 35% or higher than 30%, more the percentage will grow faster. But, the absolute dollars will grow faster at the core.

Got it. Okay, that's helpful. Thank you.

Eric Bosshard, Cleveland Research Company

Good morning. The volume numbers on the stores, in fourth quarter, was also something we've not seen in quite some time. I'm curious, Chris, on the confidence you have, and I know that visibility is never great in this business, but things that you're looking at that give you some confidence on the sustainability or where that goes and what you are assuming, your guidance applies to that in 2012?

To open the comment there, we've made the point that 2012 is off to a solid start. So we are seeing the kind of gallon numbers that we experienced ramping up in the fourth quarter continue on that same trend line into the first quarter of this year. Of note, we just returned from Nashville, Tennessee where we had 7,000 of our employees gathered in one room. All of our store managers and field sales folks. And it's always a terrific time to be with our team. And the sense from their face-to-face contact with their customers, would indicate that we are expecting that this industry is going to have a better gallon growth this year.

And you commented when you went through the details that it is commercial and new resi. Is that sort of where the inflection is taking place?

I think it is across the whole volume. I think that was the question about, kind of, the range from Dennis to Dellman about what is the high, what is the low. And we commented that both the res repaint and the DIY gallons continues to move up. And the new commercial and new residential have gone positive. So really across all these break out segments was movement up by hundreds of basis points. And the demand for gallons. Not one was more aggressive than the other, but we got the negatives positive which was a really good sign.

Thank you.

Nils Wallin, CLSA

This year seems to be or at least this winter is probably running about 7% warmer than last year. Have you noticed any seasonality in the order patterns that you saw in the fourth quarter then you are seeing so far this year, in the first quarter?

The first quarter is always a weather quarter. Firstly, it is our smallest quarter of the year. So there may be a little bit of that happening. As we have had warmer weather in the upper Midwest and upper Northeast, we have been getting wiped out in Texas and other places. For the earlier comment, I was just with our five Alaska store managers. They've got 18 feet of snow in Alaska. So I think there is marginal impact on weather, but for the most part it is not that big of a deal for us.

Okay. Now I think in your guidance, regarding the raw material basket, you spoke mostly about the TiO2 going up. But some of the organic or resins getting some relief there. Certainly there is an expectation in some parts of the market about propylene prices moving back up because of supply constraints and what have you. And obviously you are not buying propylene, but it translates to the downstream resins that you are buying. What are you seeing or what are your expectations in that regard? And do you expect that there could be some resins increases later on in the year?

The short answer is yes. I think the rate of increase is likely to moderate compared to last year. But, our expectations to the raw material basket in the industry being up, high single digits to low teens, does incorporate some inflation on the non-pigment side of the raw material basket.

Okay. Thanks, that's helpful. And then just more, I guess of, a broader look. Your controlled distribution model in North America is certainly an envy of the industry. But, then it is probably a little bit different how you would approach it in South America. Are you looking for the same type of expanse and density of your distribution model in South America? And what type of investment do you think you would need to make to get there?

Yes, good question. Not every country and every market within country fits the model, as well as perhaps it does in North America. So just to give you a little more clarity to that. For example, in Brazil, within the southern part of the country, around Sao Paulo and Rio, traditional and very very strong independent paint dealer network that we sell our products through, and want to continue to support those folks, and in the northeastern part of the country, not so much. And that is really where we focus our store growth from an architectural neighborhood paint store. Yes, we would need the same kind of density in that geography within the country of Brazil. In the economic are very similar to US economics in terms of what it costs to open a store. We rent the facilities, we put about the same amount of inventory, and fixturing, et cetera into them. So, I don't think that we need to get to the 3,500 store count density model in the United States for Latin America to start showing the same kind of operating margins. But suffice it to say that there will be pockets where we can run at that same density. I hope that is hopeful, Nils.

Yes, thanks very much.

John Roberts of Buckingham Research Group.

Thank you. Did you leave all of the automotive refinish in the new Global Group?

Yes.

So you're going to keep that -- US everything all in one place?

Yes, those businesses are, on the industrial coatings side, global by nature. So, there still will be US businesses included in that global business.

Right. And Latin American refinish, as well?

Latin America -- yes. The automotive refinish is in that global group.

Okay. And then secondly as a leading indicator, sometimes in the past you've talked about spray equipment and ladders, et cetera. Have you seen anything in your distribution sales of some of that stuff to give you encouragement as well?

Yes, the volume there is solid. Sales are up double digits in those segments. And just as a reminder though, this is kind of the off-season for that. And when we get back to our first quarter call, we really will be in the second, and we'll have a little better feel for that. But even off-season to be up solid double-digit sales gain, would be an indication of better confidence for painting contractors, John.

Okay, thank you.

[Jet Di Pondeal] of (inaudible).

Hello guys from London. A couple of questions really quick. You alluded to taking market share in a shrinking market. Now thankfully and hope you are right the market is sort of starting to turn. Now when it does turn, what sort of market share do you envisage?

Do expect to grow faster than guys with stores and similar distribution network? I'm referring to basically PPG, and (inaudible). That is the first question. The second question is with regards to TiO2 per se. One of your very big suppliers is putting capacity in a more mid-term situation. And they were saying that paint companies are trying to talk to them with regards to longer-term contracts. Have you developed or have you had any longer-term contracts with regards to securing supply for the TiO2 per se. Simply because they are also relating to the fact that TiO2 market in the US could become a bit tighter as the year progresses? Thank you.

Sure. Thank you. I'll take the first question on market share and ask Sean to cover a little bit about our titanium contract structure and how we think about that market. Our expectation on market share is exactly to your point against the other operators of the regional paint store chain. As a reminder, we have shared with the Street frequently, the kind of customer mix shift between titanium contractors and do-it-yourself. And as we start to see a little healthier economy, i.e. housing starts increasing, some of the commercial projects increasing, we expect to see a rebound in the role the painting contractors will play the total purchases of these products.

And that bodes well for us. We have a commanding lead on store count. We are widening that gap on an annual basis. All of those things make sense that they should in fact deliver a higher market share for the Company and typically that comes against those that are also providing products and services to painting contractors. So that is where we expect to get it. Having said that, the DIY still is a sizable portion of the business. And the market.

And again from earlier comments, we have been talking about really solid double-digit sales gains in our DIY business for a while. So at least holding our own, if not gaining a little bit of share from a small base of that stores spot from DIY. So all in, we think another solid market share opportunity year for us coming out. Sean, you want to comment on the titanium production?

Sure. I would say that in the last few years, this decade has really been one of the most volatile decades in raw materials, in all of raw materials. I would say that the word contracts is sometimes overused. I would say now we don't have contracts per se. But probably have more agreements. We will probably and we are always looking to make sure that we can take -- take care of our customers. We'd like to have only one price increase per year.

We have gone above that many many times. So right now, we are watching -- years ago we want -- we wanted to have a contract. But we would never buy 100%. You would always want to be somewhat in the stock market. I think the way that raw materials have been rising the last few years, they have been less optimistic or less wanting to, to do a contract with us on a firm price. I think that what we are doing is we're watching the market and if we see an opportunity to buy a longer-term contract, we might do it. But, I would say it is more in a state of flux right now.

Okay. Maybe just a quick follow-up. Ex-TiO2, your raw materials bill is it fair to assume that it goes up maybe between zero to 4 -- 3%, 4%?

I don't if I would put it in a range. I think that it -- suffice it to say we do expect inflation on that side of the basket and it is one of the reasons why we give a range for raw materials in general is because rather than pinning it down to a specific inflation percent, we know that that is -- will go up.

Thank you so much guys.

[Jeremy Brunelli], Consumer Edge Research

Hello, thanks for taking my call. A couple of quick questions. One is to validate some of your comments versus what was in the press release. I think you said in the Paint Store Groups that you saw improving volumes across most segments. But it sounds like what you're saying is you saw it across all segments. Should I interpret that that there was some segments that were kind of a flat growth pace from third quarter to fourth quarter? Is there anything to read into that?

I think for the fourth quarter, it is all segments, for the year some segments. And we talked about the new residential piece of that really being the segments that improved. That was the good news in the fourth quarter.

Got you. And I think you said that you saw ramping volumes. Does that mean the pace of growth through the quarter was accelerating?

Yes.

in 2012. Okay. And then do you have any sense in the repaint market if there is an inflection point between strength in maintenance versus an inflection more towards bigger ticket capital improvements?

We don't have a good feel for that one. We don't get that perspective on the repaint job, it is because of a major remodeling job or commercial capital expenditure to your point. We get great visibility between new construction and maintenance. But, that is a fine line that we don't really get that good visibility, Jeremy

Great, thanks. And one last question. Can you just remind us what the lead time is from when -- either from a permit or from a housing start to where the pro painters buy paint from you guys?

On average of the residential market that would be aboub a six to eight month lag.

Great, thank you.

Our last question comes from Jeff Zekauskas of JPMorgan.

Thanks for taking my question. Do you worry that there is adequate TiO2 supply over a multi-year period if the coatings industry globally grows 3.5%?

Well, Jeff, that is a certainly topic question for discussion. And you have to go beyond the titanium producers to the ore producers to get your arms wrapped around that. And I think there's been a lot more focus from the paint manufacturing side to do just that. I would certainly pay a lot more attention to the various mines and capacity around the world than we would have in past decades, as we have been dealing with the titanium run-up for some time. And I think that it, kind of, depends on who you are talking to and who's trying to push pricing, who is going to indicate what the availability is.

We are convinced that the core earth ore required to make titanium is an extremely plentiful ore in the world. We're not worried about a shortage of that at any time in the future. However, the ability to mine it and get it out and have it ready to be converted is of some concern. Just as we commented and the industry has commented on some of the capacity expansions that the producers are generating, we see the same thing coming from the mining side as well. Time will tell over how all of that kind of comes together and if we end up with more shortages than not. We have also talked regarding our ability to maybe offset some of this demand. As well as some of our competitors are perhaps as aggressive if not more so than we are in the States. I think it is really early to comment on that. We are quite confident that as we look out to 2012 and short-term beyond that, that the availability supply will be sufficient to fund the Company's growth.

Okay, thank you very much.

Thank you. I'd like to hand the floor back over to management for any closing remarks.

Thank you, Jackie. Let me conclude this morning's call by asking you to save the date of Wednesday, May 23, 2012, on your calendars. That is the date we will host our annual financial community presentation this year at the Park Plaza Hotel in Boston. The program will consist of our customary morning presentations with Q&A, followed by our reception and lunch. Again that date is Wednesday, May 23. We will be sending out invitations with related in information in the coming weeks. And again, I will be available over the balance of the day and this week, to take your follow-up calls. Thanks for joining us today and thank you for your continued interest in Sherwin-Williams.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.