- Record reported earnings per diluted share (EPS) of $2.00 and
adjusted EPS of $2.13
- Net sales of $4.6 billion; organic sales flat versus prior
year
- Segment margins improved 60 basis points year over year,
marking eight consecutive quarters of margin expansion
- Share repurchases of approximately $200 million in the quarter;
$500 million year to date
PPG (NYSE:PPG) today reported financial results for the third
quarter 2024.
Third Quarter Consolidated Results
$ in millions, except EPS
3Q 2024
3Q 2023
YOY change
Net sales
$4,575
$4,644
(1)%
Net income
$468
$426
+10%
Adjusted net income(a)
$500
$493
+1%
EPS
$2.00
$1.79
+12%
Adjusted EPS(a)
$2.13
$2.07
+3%
(a) Reconciliations of reported to
adjusted figures are included below
Chairman and CEO Comments
Tim Knavish, PPG chairman and chief executive officer, commented
on the quarter:
We delivered record third quarter EPS driven by positive volume
growth in seven of our ten businesses, including strong growth in
several of our key technology businesses and despite deterioration
in automotive original equipment manufacturer (OEM) build rates
during the quarter. Our reported EPS was $2.00, and adjusted EPS of
$2.13 grew 3% year over year even with an unfavorable impact from a
higher effective income tax rate, which reduced the year-over-year
EPS comparison by $0.08. The third quarter was our seventh
consecutive quarter of adjusted EPS growth. Our aggregate segment
margin improved 60 basis points year over year aided by business
mix and lower costs, marking our eighth consecutive quarter of
increases.
We delivered year-over-year sales volume growth of 2% in the
Performance Coatings segment, offset by increasingly challenged
global industrial production, which constrained demand in the
Industrial Coatings segment. Performance Coatings growth was
catalyzed by sustained strength in aerospace demand, refinish
coatings share gains, and strong performance in the architectural
coatings Americas and Asia Pacific business. This growth was offset
by Industrial Coatings segment declines in Europe and the U.S.
where automotive OEM build rates weakened, especially late in the
quarter and general industrial production remained soft. In the
Asia-Pacific region, both reporting segments delivered solid sales
growth in China and India, driven by our share gains.
During the quarter, we extended our heritage of rewarding our
shareholders. We repurchased approximately $200 million of stock
during the third quarter and have repurchased about $500 million
year to date. In July, we increased our quarterly dividend by 5%,
and we paid about $160 million in dividends in the quarter with
approximately $465 million paid year to date. Our balance sheet
remains strong, which continues to provide us with the financial
flexibility to drive shareholder value creation going forward.
Looking ahead, we maintain our full-year 2024 sales and EPS
guidance, expecting organic sales to be flat and adjusted earnings
per share to be at the low end of the $8.15 to $8.30 range. The
pending closure of the silicas products business divestiture and
the architectural coatings U.S. and Canada strategic review
reflects the execution of our enterprise growth strategy to focus
our resources on businesses where we have the greatest growth and
margin opportunities. Finally, we remain committed to our heritage
of strong cost management and improved productivity that reinforces
our ability to maintain momentum in driving higher margins and
earnings growth.
This strong performance would not be possible without the
dedication of our employees to deliver growth for PPG. Thank you to
our PPG team around the world who make it happen and deliver on our
purpose every day: We protect and beautify the world®.
Third Quarter 2024 Reportable Segment Financial
Results
Performance Coatings
segment
$ in millions
3Q 2024
3Q 2023
YOY change
Net sales
$2,921
$2,880
+1%
Segment income
$513
$452
+13%
Segment income %
17.6%
15.7%
Sales volumes
+2%
Selling prices
+1%
Foreign currency translation
(1)%
Divestitures
(1)%
Performance Coatings net sales increased, as higher sales
volumes and selling prices were partially offset by the
divestitures of the non-North American portion of the traffic
solutions business and unfavorable foreign currency
translation.
Sales volumes increased 2% year over year with growth in five of
the six businesses in this segment led by aerospace coatings,
protective and marine coatings, and architectural coatings Americas
and Asia Pacific. PPG’s aerospace coatings business delivered
record quarterly sales stemming from double-digit percentage
organic sales growth and ended the quarter with an order backlog of
approximately $290 million, even though we improved our production
capacity this year through debottlenecking and other productivity
gains. Protective and marine coatings organic sales increased by a
low single-digit percentage compared to the prior year, driven by
share gains in Europe and Asia Pacific. Organic sales for
architectural coatings Americas and Asia Pacific were higher by a
low single-digit percentage, with solid volume growth in the
professional contractor segment in the U.S. and Canada. PPG
continues to benefit from our well-established concessionaire
network in Mexico. Organic sales in automotive refinish coatings
grew by a mid-single-digit percentage, including high single-digit
percentage increases in U.S. collision-related products and despite
lower overall industry collision claims. Year-over-year organic
sales for architectural coatings Europe, Middle East and Africa
were flat which is a positive trend after several quarters of
declines. This was supported by growth in central and eastern
Europe, offset by lower sales volumes across western Europe.
Segment income increased by 13% versus the prior year, and
segment operating margin improved 190 basis points year over year
to 17.6%, driven by higher sales volumes and targeted price
increases partially offset by general cost inflation.
Industrial Coatings
segment
$ in millions
3Q 2024
3Q 2023
YOY change
Net sales
$1,654
$1,764
(6)%
Segment income
$199
$246
(19)%
Segment income %
12.0%
13.9%
Sales volumes
(3)%
Selling prices
(3)%
Industrial Coatings segment net sales were lower compared to the
third quarter 2023 due to lower sales volumes and lower selling
prices from certain index-based customer contracts.
Automotive OEM coatings organic sales decreased more than
initially forecasted, declining by a double-digit percentage due to
lower U.S. and European industry build rates, which deteriorated
notably late in the quarter, partly offset by PPG growth in China
and Mexico. Similar to prior quarters, industrial activity in the
U.S. and Europe was lackluster. As a result, industrial coatings
organic sales declined by a mid-single-digit percentage, more than
offsetting solid growth in emerging markets. Packaging coatings
organic sales were up a low single-digit percentage year over year
with improved sales volumes stemming from share gains partially
offset by lower selling prices.
Segment income decreased 19%, and segment margin declined by 190
basis points compared to the third quarter 2023 driven by lower
sales volumes and lower selling prices on certain index-based
pricing contracts.
Additional Financial Information
- At quarter end, the company had cash and short-term investments
totaling $1.3 billion. Net debt was $5.2 billion, up $0.3 billion
from the third quarter 2023.
- Corporate expenses were $72 million in the third quarter, which
was $16 million lower than the prior year due to lower
incentive-based compensation and cost savings initiatives.
- Net interest expense was $19 million in the third quarter.
- The reported and adjusted effective tax rates were
approximately 22.5% in the third quarter. The adjusted effective
tax rate was 19.5% in the third quarter 2023 due to certain
nonrecurring discrete tax items.
Additional information related to the third quarter financial
information is posted within the Investors section of PPG.com.
The term organic sales as used in this press release is defined
as net sales excluding the impact of currency, acquisitions and
divestitures.
PPG: WE PROTECT AND BEAUTIFY THE WORLD®
At PPG (NYSE:PPG), we work every day to develop and deliver the
paints, coatings and specialty materials that our customers have
trusted for more than 140 years. Through dedication and creativity,
we solve our customers’ biggest challenges, collaborating closely
to find the right path forward. With headquarters in Pittsburgh, we
operate and innovate in more than 70 countries and reported net
sales of $18.2 billion in 2023. We serve customers in construction,
consumer products, industrial and transportation markets and
aftermarkets. To learn more, visit www.ppg.com.
The PPG Logo and We protect and beautify the world are
registered trademarks of PPG Industries Ohio, Inc.
Additional Information
PPG will provide detailed commentary regarding its financial
performance, including presentation-slide content, on the PPG
Investor Center at www.ppg.com at about 4:30 p.m. ET today, October
16. The company will hold a conference call to review its third
quarter 2024 financial performance on October 17, at 8:00 a.m. ET.
Participants can pre-register for the conference by navigating to
https://www.netroadshow.com/events/login?show=d102d1c7&confId=71286.
The conference call also will be available in listen-only mode via
Internet broadcast from the PPG Investor Center at www.ppg.com. A
telephone replay will be available October 17, beginning at
approximately 11:00 a.m. ET, through October 31, at 11:59 p.m. ET.
The dial-in numbers for the replay are: in the United States,
1-866-813-9403; Canada, 1-226-828-7578; UK (Local), 0204-525-0658;
international, +44-204-525-0658; passcode 759218. A web replay also
will be available shortly after the call on the PPG Investor Center
at www.ppg.com, and will remain through Wednesday, October 15,
2025.
Forward-Looking Statements
Statements contained herein relating to matters that are not
historical facts are forward-looking statements reflecting PPG’s
current view with respect to future events and financial
performance. These matters within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, involve risks and
uncertainties that may affect PPG’s operations, as discussed in the
company’s filings with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and
the rules and regulations promulgated thereunder. Accordingly, many
factors could cause actual results to differ materially from the
forward-looking statements contained herein. Such factors include
statements related to global economic conditions, geopolitical
issues, the effects o our business of COVID-19, the amount of
future share repurchases, increasing price and product competition
by our competitors, fluctuations in cost and availability of raw
materials, energy, labor and logistics, the ability to achieve
selling price increases, the ability to recover margins, customer
inventory levels, PPG inventory levels, the ability to maintain
favorable supplier relationships and arrangements, the timing of
realization of anticipated cost savings from restructuring and
other initiatives, the ability to identify additional cost savings
opportunities, the timing and expected benefits of potential future
and completed acquisitions, difficulties in integrating acquired
businesses and achieving expected synergies therefrom, economic and
political conditions in international markets, the ability to
penetrate existing, developing and emerging foreign and domestic
markets, foreign exchange rates and fluctuations in such rates,
fluctuations in tax rates, the impact of future legislation, the
impact of environmental regulations, unexpected business
disruptions, the unpredictability of existing and possible future
litigation, including asbestos litigation, and governmental
investigations. However, it is not possible to predict or identify
all such factors. Consequently, while the list of factors presented
here and in our 2023 Annual Report on Form 10-K considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Consequences of material
differences in results compared with those anticipated in the
forward-looking statements could include, among other things, lower
sales or earnings, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on PPG’s
consolidated financial condition, results of operations or
liquidity.
All information in this release speaks only as of October 16,
2024, and any distribution of this release after that date is not
intended and will not be construed as updating or confirming such
information. PPG undertakes no obligation to update any
forward-looking statement, except as otherwise required by
applicable law.
Regulation G Reconciliation
PPG believes investors’ understanding of the company’s
performance is enhanced by the disclosure of net income, earnings
per diluted share from continuing operations and PPG’s effective
tax rate adjusted for certain items. PPG’s management considers
this information useful in providing insight into the company’s
ongoing performance because it excludes the impact of items that
cannot reasonably be expected to recur on a quarterly basis or that
are not attributable to our primary operations. Net income,
earnings per diluted share from continuing operations and the
effective tax rate adjusted for these items are not recognized
financial measures determined in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”) and should not be
considered a substitute for net income, earnings per diluted share,
the effective tax rate or other financial measures as computed in
accordance with U.S. GAAP. In addition, adjusted net income,
adjusted earnings per diluted share and the adjusted effective tax
rate may not be comparable to similarly titled measures as reported
by other companies. PPG is not able to provide a reconciliation of
full-year 2024 expected adjusted earnings per diluted share to the
most directly comparable GAAP financial measure without
unreasonable effort because certain items that impact such measure
are uncertain or cannot be reasonably predicted at this time.
Regulation G Reconciliation - Net
Income and Earnings per Diluted Share
($ in millions, except per-share
amounts)
Third Quarter
2024
Third Quarter
2023
$
EPS(a)
$
EPS(a)
Reported net income from continuing
operations
$468
$2.00
$426
$1.79
Acquisition-related amortization
expense
24
0.10
30
0.13
Business restructuring-related costs,
net(b)
—
—
10
0.04
Portfolio optimization(c)
8
0.03
27
0.11
Adjusted net income from continuing
operations, excluding certain items
$500
$2.13
$493
$2.07
Third Quarter
2024
Third Quarter
2023
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Effective tax rate, continuing
operations
$611
$137
22.4%
$557
$121
21.7%
Acquisition-related amortization
expense
32
8
24.4 %
40
10
23.9 %
Business restructuring-related costs,
net(b)
—
—
— %
13
3
22.9 %
Portfolio optimization(c)
10
2
24.3%
15
(12)
(77.2%)
Adjusted effective tax rate, continuing
operations, excluding certain items
$653
$147
22.5%
$625
$122
19.5%
(a)
Earnings per diluted share is calculated
based on unrounded numbers. Figures in the table may not
recalculate due to rounding.
(b)
Business restructuring-related costs, net
include business restructuring charges, offset by releases related
to previously approved programs, which are included in Other
(income)/charges, net on the condensed consolidated statement of
income, accelerated depreciation of certain assets, which is
included in Depreciation on the condensed consolidated statement of
income, and other restructuring-related costs, which are included
in Cost of sales, exclusive of depreciation and amortization and
Selling, general and administrative on the condensed consolidated
statement of income.
(c)
Portfolio optimization includes advisory,
legal, accounting, valuation, other professional or consulting fees
and certain internal costs directly incurred to effect
acquisitions, as well as similar fees and other costs to effect
divestitures and other portfolio optimization exit actions. These
costs are included in Selling, general and administrative expense
on the condensed consolidated statement of income. Portfolio
optimization also includes losses on the sale of certain assets,
which are included in Other (income)/charges, net in the condensed
consolidated statement of income, including the loss recognized in
the third quarter 2023 on the sale of the company’s legacy
industrial Russian operations.
PPG INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
INCOME (unaudited)
(All amounts in millions except per-share
data)
Three Months Ended September
30
Nine Months Ended September
30
2024
2023
2024
2023
Net sales
$4,575
$4,644
$13,680
$13,896
Cost of sales, exclusive of depreciation
and amortization
2,663
2,752
7,842
8,214
Selling, general and administrative
1,062
1,047
3,203
3,108
Depreciation
97
102
298
287
Amortization
32
40
106
121
Research and development, net
105
108
325
322
Interest expense
67
64
184
190
Interest income
(48
)
(39
)
(135
)
(96
)
Pension settlement charge
—
—
—
190
Other (income)/charges, net
(14
)
13
15
4
Income before income taxes
$611
$557
$1,842
$1,556
Income tax expense
137
121
422
350
Net income attributable to controlling and
noncontrolling interests
$474
$436
$1420
$1206
Net income attributable to noncontrolling
interests
(6
)
(10
)
(24
)
(26
)
Net income (attributable to PPG)
$468
$426
$1,396
$1,180
Earnings per common share (attributable to
PPG)
$2.01
$1.80
$5.96
$5.00
Earnings per common share (attributable to
PPG) - assuming dilution
$2.00
$1.79
$5.93
$4.97
Average shares outstanding
233.3
236.2
234.5
236.0
Average shares outstanding - assuming
dilution
234.3
237.5
235.6
237.2
PPG INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS HIGHLIGHTS (unaudited)
($ in millions)
Nine Months Ended September
30
2024
2023
Cash from operating activities
$1,074
$1,513
Cash used for investing activities:
Capital expenditures
$523
$381
Business acquisitions, net of cash
balances acquired
$29
$108
Cash used for financing activities:
Dividends paid on PPG common stock
$464
$445
Purchase of treasury stock
$511
—
PPG INDUSTRIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
HIGHLIGHTS (unaudited)
($ in millions)
September 30
December 31
September 30
2024
2023
2023
Current assets:
Cash and cash equivalents
$1,251
$1,514
$1,218
Short-term investments
71
75
64
Receivables, net
3,653
3,279
3,612
Inventories
2,263
2,127
2,217
Assets held for sale
237
—
—
Other current assets
438
436
441
Total current assets
$7,913
$7,431
$7,552
Current liabilities:
Short-term debt and current portion of
long-term debt
$339
$306
$606
Accounts payable and accrued
liabilities
4,342
4,467
4,210
Current portion of operating lease
liabilities
196
194
189
Restructuring reserves
46
87
95
Liabilities held for sale
73
—
—
Total current liabilities
$4,996
$5,054
$5,100
Long-term debt
$6,138
$5,748
$5,596
PPG OPERATING METRICS
(unaudited)
($ in millions)
September 30
December 31
September 30
2024
2023
2023
Operating Working Capital (a)
$3,185
$2,645
$3,201
As a percent of quarter sales,
annualized
17.4%
15.2%
17.2%
(a)
Operating working capital includes: (1)
receivables from customers, net of allowance for doubtful accounts,
(2) FIFO inventories and (3) trade liabilities.
PPG INDUSTRIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BUSINESS SEGMENT
INFORMATION (unaudited)
($ in millions)
Three Months Ended September
30
Nine Months Ended September
30
2024
2023
2024
2023
Net sales
Performance Coatings
$2,921
$2,880
$8,583
$8,549
Industrial Coatings
1,654
1,764
5,097
5,347
Total
$4,575
$4,644
$13,680
$13,896
Segment income
Performance Coatings
$513
$452
$1,485
$1,384
Industrial Coatings
199
246
707
736
Total
$712
$698
$2,192
$2,120
Items not allocated to segments
Corporate
(72
)
(88
)
(224
)
(240
)
Interest expense, net of interest
income
(19
)
(25
)
(49
)
(94
)
Business restructuring-related costs, net
(a)
—
(13
)
(15
)
(27
)
Portfolio optimization (b)
(10
)
(15
)
(42
)
(22
)
Legacy environmental remediation charges
(c)
—
—
(20
)
—
Pension settlement charge (d)
—
—
—
(190
)
Insurance recovery (e)
—
—
—
9
Income before income taxes
$611
$557
$1,842
$1,556
(a)
Business restructuring-related costs, net
include business restructuring charges, offset by releases related
to previously approved programs, which are included in Other
(income)/charges, net on the condensed consolidated statement of
income, accelerated depreciation of certain assets, which is
included in Depreciation on the condensed consolidated statement of
income and other restructuring-related costs, which are included in
Cost of sales, exclusive of depreciation and amortization and
Selling, general and administrative on the condensed consolidated
statement of income.
(b)
Portfolio optimization includes losses on
the sale of non-core assets, including the loss recognized in the
second quarter 2024 on the sale of the Company's traffic solutions
business in Argentina and the loss recognized in the third quarter
2023 on the sale of the company’s legacy industrial Russian
operations, which is included in Other (income)/charges, net in the
condensed consolidated statement of income. Portfolio optimization
also includes advisory, legal, accounting, valuation, other
professional or consulting fees and certain internal costs directly
incurred to effect acquisitions, as well as similar fees and other
costs to effect divestitures and other portfolio optimization exit
actions. These costs are included in Selling, general and
administrative expense on the condensed consolidated statement of
income.
(c)
Legacy environmental remediation charges
represent environmental remediation costs at certain non-operating
PPG manufacturing sites. These charges are included in Other
(income)/charges, net in the condensed consolidated statement of
income.
(d)
In the first quarter 2023, PPG purchased
group annuity contracts that transferred pension benefit
obligations for certain of the company’s retirees in the U.S. to
third-party insurance companies, resulting in a non-cash pension
settlement charge.
(e)
In the first quarter 2023, the company
received reimbursement under its insurance policies for damages
incurred at a southern U.S. factory from a winter storm in
2020.
CATEGORY Corporate
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241016890041/en/
PPG Media Contact: Mark Silvey Corporate Communications
+1-412-434-3046 silvey@ppg.com
PPG Investor Contact: Alex Lopez Investor Relations
+1-412-434-3466 alejandrolopez@ppg.com investor.ppg.com
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