PPG reports first quarter 2024 financial results
-
Record reported earnings per diluted share (EPS) of
$1.69 and adjusted EPS of$1.86 -
Net sales of
$4.3 billion ; organic sales declined 2% versus prior year, down 1% excluding prior year large customer load-in - Segment margins improved 60 basis points year over year, the sixth consecutive quarter of margin expansion versus prior year
-
Share repurchases of approximately
$150 million
First Quarter Consolidated Results
$ in millions, except EPS |
1Q 2024 |
1Q 2023 |
YOY change |
Net sales |
|
|
(2)% |
Net income |
|
|
+52% |
Adjusted net income(a) |
|
|
+2% |
EPS |
|
|
+52% |
Adjusted EPS(a) |
|
|
+2% |
(a) Reconciliations of reported to adjusted figures are included below |
Chairman and CEO Comments
We achieved year-over-year adjusted EPS growth for the fifth consecutive quarter despite continued challenges in the macro environment. The company benefited from our well-established businesses in
We continue to make progress on returning to our historic segment margin profile with an aggregate segment margin improvement of 60 basis points, marking the sixth consecutive quarter of year-over-year improvement. 2024 is expected to be another year of excellent cash flow, and our balance sheet remains strong, including lower inventories year over year, providing us with ongoing shareholder value creation opportunities. We completed approximately
Looking ahead, while global industrial production remains at low absolute levels, we believe that demand in
We are executing on the strategic reviews of the architectural coatings
PPG remains focused on various enterprise growth initiatives to drive higher sales volumes and fully capitalize on our technical and service capabilities. In the second quarter, we expect low single-digit percentage aggregate sales volume growth, led by our aerospace, protective and marine, and packaging coatings businesses and by
Thank you to our more than 50,000 employees around the world who partner with our customers every day to drive mutual success by providing best-in-class paints, coatings and specialty materials, including productivity-enhancing and sustainable solutions.
First Quarter 2024 Reportable Segment Financial Results
Performance Coatings segment
$ in millions |
1Q 2024 |
1Q 2023 |
YOY change |
Net sales |
|
|
(1)% |
Segment income |
|
|
+2% |
Segment income % |
15.4% |
15.0% |
|
Sales volumes |
|
|
(3)% |
Selling prices |
|
|
+1% |
Foreign currency translation |
|
|
+1% |
Performance Coatings net sales were down 1%, as higher selling prices and favorable foreign currency translation were offset by lower sales volumes. Year-over-year first quarter sales volume comparisons were unfavorably impacted by a prior-year,
Sales of PPG’s technology-advantaged aerospace products remained strong, as the business delivered mid-single-digit percentage organic sales growth year over year, while the order backlog increased to
Segment income increased by 2% versus the prior year primarily due to higher selling prices and input costs, which moderated from record levels, and were partially offset by lower sales volumes and increased wages. Segment operating margins increased by 40 basis points year over year.
Industrial Coatings segment
$ in millions |
1Q 2024 |
1Q 2023 |
YOY change |
Net sales |
|
|
(3)% |
Segment income |
|
|
+4% |
Segment income % |
14.7% |
13.7% |
|
Sales volumes |
|
|
(1)% |
Selling prices |
|
|
(2)% |
Foreign currency translation |
|
|
—% |
Industrial Coatings segment net sales were lower compared to the first quarter 2023 due to lower selling prices and slightly lower sales volumes. The lower price includes the impact from the absence of European energy surcharges that occurred in the first quarter 2023 reflecting exceedingly high energy prices in the region, impacting year-over-year comparisons by approximately 100 basis points.
Automotive original equipment manufacturer coatings organic sales decreased by a low single-digit percentage due to lower index-based selling prices and lower industry volumes in the
Segment income was 4% higher than the prior year, as input costs moderated from historically high levels and manufacturing performance improved, which more than offset the impact from lower organic sales and higher wages. Segment margins improved by 100 basis points compared to the first quarter 2023. Lower pricing from the absence of European energy surcharges was offset by lower energy-related input costs.
Additional Financial Information
-
At quarter end, the company had cash and short-term investments totaling
$1.2 billion . Net debt was$5.0 billion , down$0.8 billion from the first quarter 2023. -
Corporate expenses were
$83 million in the first quarter, which was$16 million higher than the prior year, primarily due to inflation, increased benefits costs, and growth-related investments. -
Net interest expense was
$13 million in the first quarter. - The effective tax rate was approximately 24% in the first quarter.
Outlook
The company today reported the following projections for the second quarter and full-year 2024 based on current global economic activity, continued uneven global industrial production, uneven but stabilizing demand in
Outlook |
2Q 2024 |
FY 2024 |
Organic sales growth |
Up low single digits |
Up low single digits |
Adjusted EPS |
|
|
The effective tax rate for the second quarter 2024 is expected to be between 23.5% to 24.5%, slightly higher than prior year, including the impact of several regional tax rate increases and the expected mix of country-specific earnings.
Additional information related to 2024 financial projections are available in the detailed commentary and associated presentation slides related to the first quarter financial information which are 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) |
|||||||||
|
First Quarter 2024 |
|
First Quarter 2023 |
||||||
|
$ |
|
EPS(a) |
|
$ |
|
EPS(a) |
||
Reported net income from continuing operations |
|
|
|
|
|
|
|
|
|
Acquisition-related amortization expense |
29 |
|
0.12 |
|
31 |
|
|
0.13 |
|
Business restructuring-related costs, net(b) |
8 |
|
0.03 |
|
— |
|
|
— |
|
Portfolio optimization(c) |
4 |
|
0.02 |
|
— |
|
|
— |
|
Pension settlement charge(d) |
— |
|
— |
|
144 |
|
|
0.61 |
|
Insurance recovery(e) |
— |
|
— |
|
(7 |
) |
|
(0.03 |
) |
Adjusted net income from continuing operations, excluding certain items |
|
|
|
|
|
|
|
|
|
|
First Quarter 2024 |
|
First 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 |
|
|
|
|
24.0 |
% |
|
|
|
|
|
|
|
22.7 |
% |
Acquisition-related amortization expense |
38 |
|
9 |
|
24.6 |
% |
|
41 |
|
|
10 |
|
|
24.5 |
% |
Business restructuring-related costs, net(b) |
11 |
|
3 |
|
27.4 |
% |
|
— |
|
|
— |
|
|
— |
% |
Portfolio optimization(c) |
6 |
|
2 |
|
24.2 |
% |
|
— |
|
|
— |
|
|
— |
% |
Pension settlement charge(d) |
— |
|
— |
|
— |
% |
|
190 |
|
|
46 |
|
|
24.3 |
% |
Insurance recovery(e) |
— |
|
— |
|
— |
% |
|
(9 |
) |
|
(2 |
) |
|
24.3 |
% |
Adjusted effective tax rate, continuing operations, excluding certain items |
|
|
|
|
24.1 |
% |
|
|
|
|
|
|
|
23.3 |
% |
(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 charges/(income), 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. |
|
(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 |
|
(e) |
In the first quarter 2023, the company received reimbursement under its insurance policies for damages incurred at a southern |
|
|||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME (unaudited) |
|||||
(All amounts in millions except per-share data) |
|||||
|
Three Months Ended |
||||
|
2024 |
|
2023 |
||
Net sales |
|
|
|
|
|
Cost of sales, exclusive of depreciation and amortization |
2,445 |
|
|
2,596 |
|
Selling, general and administrative |
1,064 |
|
|
992 |
|
Depreciation |
103 |
|
|
92 |
|
Amortization |
38 |
|
|
41 |
|
Research and development, net |
109 |
|
|
104 |
|
Interest expense |
55 |
|
|
59 |
|
Interest income |
(42 |
) |
|
(25 |
) |
Pension settlement charge |
— |
|
|
190 |
|
Other charges/(income), net |
1 |
|
|
(22 |
) |
Income before income taxes |
|
|
|
|
|
Income tax expense |
129 |
|
|
80 |
|
Net income attributable to controlling and noncontrolling interests |
|
|
|
|
|
Net income attributable to noncontrolling interests |
(9 |
) |
|
(9 |
) |
Net income (attributable to PPG) |
|
|
|
|
|
|
|
|
|
||
Earnings per common share (attributable to PPG) |
|
|
|
|
|
|
|
|
|
||
Earnings per common share (attributable to PPG) - assuming dilution |
|
|
|
|
|
|
|
|
|
||
Average shares outstanding |
235.6 |
|
|
235.8 |
|
|
|
|
|
||
Average shares outstanding - assuming dilution |
236.9 |
|
|
236.9 |
|
|
||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS HIGHLIGHTS (unaudited) |
||||
($ in millions) |
||||
|
Three Months Ended |
|||
|
2024 |
|
2023 |
|
Cash (used for)/from operating activities |
$(60 |
) |
|
|
Cash used for investing activities: |
|
|
|
|
Capital expenditures |
|
|
|
|
Cash used for financing activities: |
|
|
|
|
Dividends paid on PPG common stock |
|
|
|
|
|
|
|
||||||
CONDENSED CONSOLIDATED BALANCE SHEET HIGHLIGHTS (unaudited) |
|
|
||||||
($ in millions) |
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
2024 |
|
2023 |
|
2023 |
|||
Current assets: |
|
|
|
|
|
|||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
Short-term investments |
54 |
|
|
75 |
|
|
56 |
|
Receivables, net |
3,581 |
|
|
3,279 |
|
|
3,595 |
|
Inventories |
2,331 |
|
|
2,127 |
|
|
2,599 |
|
Other current assets |
524 |
|
|
436 |
|
|
517 |
|
Total current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|||
Short-term debt and current portion of long-term debt |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
4,467 |
|
|
|
|
Current portion of operating lease liabilities |
|
|
|
194 |
|
|
|
|
Restructuring reserves |
|
|
|
87 |
|
|
|
|
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 |
17.8 |
% |
|
15.2 |
% |
|
18.4 |
% |
|
|
|
|
|
|
|||
(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 |
||||
|
2024 |
|
2023 |
||
Net sales |
|
|
|
||
Performance Coatings |
|
|
|
|
|
Industrial Coatings |
1,697 |
|
|
1,752 |
|
Total |
|
|
|
|
|
|
|
|
|
||
Segment income |
|
|
|
||
Performance Coatings |
|
|
|
|
|
Industrial Coatings |
249 |
|
|
240 |
|
Total |
|
|
|
|
|
|
|
|
|
||
Items not allocated to segments |
|
|
|
||
Corporate |
(83 |
) |
|
(67 |
) |
Interest expense, net of interest income |
(13 |
) |
|
(34 |
) |
Business restructuring-related costs, net (Note A) |
(11 |
) |
|
— |
|
Portfolio optimization (Note B) |
(6 |
) |
|
— |
|
Pension settlement charge (Note C) |
— |
|
|
(190 |
) |
Insurance recovery (Note D) |
— |
|
|
9 |
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
||
Note A: |
|
|
|
||
Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other charges/(income), 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. |
|||||
Note B: |
|
|
|
||
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 consolidated statement of income. |
|||||
Note C: |
|
|
|
||
In the first quarter 2023, PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the company’s retirees in the |
|||||
Note D: |
|
|
|
||
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/20240418007336/en/
PPG Media Contact:
Corporate Communications
+1-412-434-3046
silvey@ppg.com
PPG Investor Contact:
Investor Relations
+1-412-434-3466
jonathanedwards@ppg.com
investor.ppg.com
Source: PPG