PPG reports third quarter 2024 financial results
-
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
Third Quarter Consolidated Results
$ in millions, except EPS |
3Q 2024 |
3Q 2023 |
YOY change |
Net sales |
|
|
(1)% |
Net income |
|
|
+10% |
Adjusted net income(a) |
|
|
+1% |
EPS |
|
|
+12% |
Adjusted EPS(a) |
|
|
+3% |
(a) Reconciliations of reported to adjusted figures are included below |
Chairman and CEO Comments
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
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
During the quarter, we extended our heritage of rewarding our shareholders. We repurchased approximately
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
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 |
|
|
+1% |
Segment income |
|
|
+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
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 |
|
|
(6)% |
Segment income |
|
|
(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
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
The PPG Logo and We protect and beautify the world are registered trademarks of
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
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
All information in this release speaks only as of
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
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 |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
22.4% |
|
|
|
|
|
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 |
|
|
|
|
22.5% |
|
|
|
|
|
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. |
|
|
|
|
|
|
|
|
||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME (unaudited) |
|||||||||||
(All amounts in millions except per-share data) |
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
137 |
|
|
121 |
|
|
422 |
|
|
350 |
|
Net income attributable to controlling and noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests |
(6 |
) |
|
(10 |
) |
|
(24 |
) |
|
(26 |
) |
Net income (attributable to PPG) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share (attributable to PPG) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share (attributable to PPG) - assuming dilution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average shares outstanding |
233.3 |
|
|
236.2 |
|
|
234.5 |
|
|
236.0 |
|
|
|
|
|
|
|
|
|
||||
Average shares outstanding - assuming dilution |
234.3 |
|
|
237.5 |
|
|
235.6 |
|
|
237.2 |
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS HIGHLIGHTS (unaudited) |
|
|
|
($ in millions) |
|
|
|
|
Nine Months Ended
|
||
|
2024 |
|
2023 |
Cash from operating activities |
|
|
|
Cash used for investing activities: |
|
|
|
Capital expenditures |
|
|
|
Business acquisitions, net of cash balances acquired |
|
|
|
Cash used for financing activities: |
|
|
|
Dividends paid on PPG common stock |
|
|
|
Purchase of treasury stock |
|
|
— |
|
|
|
||||
CONDENSED CONSOLIDATED BALANCE SHEET HIGHLIGHTS (unaudited) |
|
|
||||
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Short-term debt and current portion of long-term debt |
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PPG OPERATING METRICS (unaudited) |
|
|
|
|
|
|
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
|
Operating Working Capital (a) |
|
|
|
|
|
|
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. |
|
||||||||||||
CONSOLIDATED BUSINESS SEGMENT INFORMATION (unaudited) |
|
|
|
|
||||||||
($ in millions) |
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Net sales |
|
|
|
|
|
|
|
|||||
Performance Coatings |
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Coatings |
1,654 |
|
|
1,764 |
|
|
5,097 |
|
|
5,347 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Segment income |
|
|
|
|
|
|
|
|||||
Performance Coatings |
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Coatings |
199 |
|
|
246 |
|
|
707 |
|
|
736 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(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. |
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|
|
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||||
(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 |
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(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. |
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||||
(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 |
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(e) |
In the first quarter 2023, the company received reimbursement under its insurance policies for damages incurred at a southern |
CATEGORY Corporate
View source version on businesswire.com: https://www.businesswire.com/news/home/20241016890041/en/
PPG Media Contact:
Corporate Communications
+1-412-434-3046
silvey@ppg.com
PPG Investor Contact:
Investor Relations
+1-412-434-3466
alejandrolopez@ppg.com
investor.ppg.com
Source: PPG