But managment at Sherwin Williams, one of the US’s leading paint producers, is convinced things would be even hotter if it weren’t for all the rain.
Earlier this month, the company announced disappointing revenues, which grew just 2.9% instead of an expected 7.1%. The announcement was followed by a 10% drop in the stock.
In outlining the reasons for the weak results during an earnings call, CEO Chris Connor spent a decent amount of time on rain.
“As most of you know, it is our long-standing practice to not give weather reports on earnings calls, but the unprecedented rainfall across most of the United States during the past three months is hard to ignore,” he said.
“16 states recorded above-average rainfall in the month of April. That number increased to 22 states in May, with 12 of those recording much above average and Texas, Oklahoma and Colorado setting all-time rainfall records,” Connor added.
According to Connor, 24 states had above average rainfall in June with three — Illinois, Indiana and Ohio — hitting all-time highs. The flooding this severe weather brought to Texas even prompted President Obama to declare a state of emergency for the state.
Data from the National Oceanic and Atmospheric Association backs Connor up. 108 of the 180 weather stations NOAA tracks nationwide had higher than average rainfall for the first 6 months of the year. Also, May had the highest percentage of stations reporting “very wet” conditions in the history of the department, which spans back to 1895.
Essentially, since it was raining at a historic rate there was no time for contractors to use the paint they had or purchase new paint. Connor said on the call that the effects weren’t just limited to his company.
“The impact of these extraordinary weather patterns can be seen in national home building data as well. Residential building permits were up 25% year-over-year in May, while actual starts were up only 5%. Year-to-date, residential permits have increased at twice the rate of starts,” he said.
Where it may show a delay for the housing market is completions, which is typically when paint is applied to the structure. Single family home completions missed expectations in both May and June, after having an excellent April according to data from the Census Bureau. And on Friday, sales for new homes slumped to their lowest level in 7 years.
Connor mentioned that for Sherwin Williams at least, it’s not a permanent setback though it may be delayed to next year. “You know, a good week in June can make up for an entire horrible month of February. The problem was we didn’t have the good week in June in 2015,” said Connor. “We don’t expect we’ll get caught up and so that should bode well for a little bit of a better start in calendar year 2016.”
While there were other factors that impacted Sherwin Williams cited for the downturn in its sales, including the price of oil, it does seem that the weather argument holds some water.
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