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PPG reports record third quarter results

Post Time:Oct 23,2013Classify:Industry NewsView:69

PPG Industries (NYSE:PPG) today reported third quarter 2013 net sales of $4 billion, up 17 percent versus the prior year.   

Third quarter 2013 reported net income from continuing operations was $220 million, or $1.52 per diluted share, and adjusted net income from continuing operations was $353 million, or $2.44 per diluted share. Third quarter 2012 reported net income and earnings per diluted share from continuing operations were $288 million and $1.86, respectively. There were no nonrecurring charges in the prior-year quarter.

Third quarter 2013 adjusted net income excludes after-tax charges of $73 million, or 50 cents per diluted share, for previously announced business restructuring; $56 million, or 39 cents per diluted share, due to an increase in a legacy environmental reserve; and $4 million, or 3 cents per diluted share, for acquisition-related expenses. A Regulation G Reconciliation of third quarter 2013 adjusted net income and earnings per diluted share to reported net income and earnings per diluted share is included below.

Third quarter 2013 reported and adjusted net income include lower pension expenses resulting from a reorganization of certain company pension plans, which occurred as a part of recently completed separation activities of the former commodity chemicals business. These changes resulted in a catch-up benefit recorded in the third quarter of about $9 million pretax, $6 million after tax, or a total of 4 cents per diluted share, which relates to the first half 2013 reporting periods. This benefit will recur, adding about $4 million to pretax income each quarter going forward.

“We continued to deliver record financial performance in the third quarter as positive impacts from our cash deployment and our strong operating focus were coupled with a broader improvement in market conditions,” said Charles E. Bunch, PPG chairman and chief executive officer. “Aerospace and automotive OEM coatings remained PPG’s most consistent growth drivers, with many other businesses contributing to the overall sales and earnings growth.

“In comparison with recent quarters, year-over-year sales volume trends improved in each major region during the quarter, including some initial signs of stability in Europe,” Bunch said. “We continued our cost-reduction actions and benefited from these improving demand trends, which helped us deliver record third quarter earnings in each major region.

“Performance within the North American architectural coatings business acquired from AkzoNobel continued to improve, and we remained aggressive in capturing our targeted synergies,” Bunch said. “Within the six months following the transaction closing, we already realized, on a run-rate basis, more than 50 percent of the targeted $200 million of acquisition synergies. While there remains considerable work ahead, I am pleased with the team’s excellent progress to date.”

Looking ahead, Bunch said, “We expect to continue to benefit from the gradual growth in global demand trends. The fourth quarter is seasonally slower than the third quarter in many of our end-use markets, especially architectural coatings. We are expecting a larger magnitude of sequential seasonality this year as architectural coatings now represents a larger proportion of our revenues following our April acquisition.

“Regarding regional trends, we expect the U.S. economy will continue to grow in a measured manner supported by increasing demand in many markets we supply,” Bunch said. “Emerging-region growth is expected to continue but remain inconsistent by end-use market and country. In Europe, where our volumes are still down about 20 percent versus pre-recession levels, demand appears to be stabilizing and we remain poised to benefit from any volume improvement given the actions we have taken there to substantially reduce our ongoing cost structure.

“Lastly, we ended the quarter with a strong balance sheet and cash position, with additional free cash flow expected in the fourth quarter, which is typically our strongest cash-generation quarter seasonally. We remain focused, yet disciplined, on timely cash deployment for earnings accretion. We have repurchased about $325 million of PPG stock in the first nine months of this year, and we are increasing our targeted full-year share repurchase level toward the higher end of the previously communicated range of $500 million to $750 million, as we continue our heritage of returning cash to shareholders,” Bunch concluded.

The company today reported year-to-date cash from continuing operations of about $1.3 billion, approximately 25 percent ahead of the prior-year total. In addition, cash and short-term investments totaled about $2.2 billion as of Sept. 30, 2013, up from $2.0 billion at the end of the third quarter 2012.


Source: http://www.glassonweb.com/news/index/20539/Author:

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