Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Adjusted EBITDA | $1.4 billion | grew 3.3% |
| Net operating cash | Grown 10% or $232 million | year-to-date |
| Consolidated sales | High single-digit percentage | growth |
| Adjusted diluted net income per share | Increased by approximately 1% | Not stated |
| Net debt-to-adjusted EBITDA ratio | 2.4x | Not stated |
Guidance and outlook
- Full year adjusted diluted net income per share range of $11.85 to $12.15.
- Expect 2027 cost savings of approximately $75 million.
- Expect 2027 raw material inflation in the low to mid-single-digit range.
How management sounded
Positive (+5 on our -10 to +10 scale). Management expressed confidence in their strategy and market share gains despite persistent end-market softness, while maintaining their full-year earnings guidance. Management sounded more upbeat than on 6% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Pricing Strategy
Asked: Will you need more price increases in 2027 to offset raw material inflation?
Answer: Management stated they will continue to manage pricing dynamically based on cost basket visibility and will take action as needed, similar to their approach throughout 2026.
Gross Margin and Suvinil
Asked: How did the Suvinil acquisition impact gross margins, and will these costs persist in 2027?
Answer: Management explained that business mix, including the Suvinil acquisition, impacted gross margins, but emphasized that adjusted operating margin is a better barometer for value creation.
Housing Market
Asked: What is the outlook for U.S. housing demand given recent interest rate spikes?
Answer: Management noted that while indicators remain soft, they are gaining market share in residential repaint and new residential segments and are not relying on a macro recovery for their guidance.
Performance Coatings Volume
Asked: Can the volume resilience in Performance Coatings continue into 2027?
Answer: Management expressed confidence in the continuation of volume growth, citing record high new business wins and a healthy pipeline in areas like general industrial and packaging.
What to watch before the next call
- The timing of volume inflection in end markets, particularly as management expects soft demand for longer.
- The realization of the $75 million in cost savings planned for 2027.
- The impact of currency volatility in Brazil on the Suvinil business.
