PPG Reports Record Third Quarter 2020 Financial Results

PITTSBURGH–(BUSINESS WIRE)–PPG (NYSE:PPG) immediately reported third quarter 2020 web gross sales of about $three.7 billion, down roughly four% versus the prior 12 months. Promoting costs elevated by 1.three%. Gross sales volumes had been down about 5% versus the prior 12 months, which replicate ongoing unfavorable financial impacts of the COVID-19 pandemic. Acquisition-related gross sales added lower than 1% to gross sales development, and the year-over-year influence from international foreign money translation was minimal.

Third quarter 2020 reported web earnings from persevering with operations was $442 million, or $1.86 per diluted share. Adjusted web earnings from persevering with operations was $458 million, or $1.93 per diluted share. Adjusted figures exclude after-tax gadgets of $16 million for hurricane-related bills and restructuring-related prices. Third quarter 2019 web earnings from persevering with operations was $366 million, or $1.54 per diluted share, and adjusted web earnings from persevering with operations was $396 million, or $1.67 per diluted share. The third quarter 2020 reported and adjusted efficient tax charges had been roughly 22%, in comparison with the third quarter 2019 reported and adjusted efficient tax charges of 23%. Detailed reconciliations of the reported to adjusted figures are included beneath.

“As reported earlier this month, we delivered report working leads to the third quarter, with each of our reportable enterprise segments delivering increased phase earnings than the prior 12 months, regardless of continued, unfavorable pandemic-related financial results,” mentioned Michael H. McGarry, PPG chairman and chief government officer. “Sturdy year-over-year natural gross sales development in international architectural coatings and continued price administration drove earnings development in our Efficiency Coatings reporting phase. As well as, our main expertise and repair capabilities benefited us as demand for automotive OEM coatings and basic industrial coatings started recovering within the quarter, producing sturdy PPG working leverage and boosting earnings in our Industrial Coatings reporting phase.

“In combination, we delivered working margins that had been about 300 foundation factors increased than the prior 12 months. Our continued execution of each interim and structural cost-savings initiatives is driving increased incremental earnings on enhancing gross sales volumes. Within the quarter, we delivered about $90 million of price financial savings from numerous interim initiatives and about $35 million of incremental structural financial savings from enterprise restructuring packages, together with the execution of some manufacturing footprint optimization initiatives. Along with our earnings efficiency, we generated greater than $800 million of money from operations within the quarter, together with the advantage of a 150-basis-point discount in working capital as a p.c of gross sales versus the third quarter 2019.

“Trying forward, we’re more likely to expertise regular seasonal tendencies within the fourth quarter, particularly in our European and North American architectural coatings companies,” McGarry added. “Even with the continued uncertainty from the pandemic we anticipate general financial exercise to proceed to get better, however in an uneven method. The pandemic remains to be considerably impacting the demand for sure coatings merchandise – most notably, international business aerospace, marine, and protecting coatings that help the oil and gasoline business. As well as, we anticipate that automotive refinish coatings demand within the U.S. and Europe will stay beneath 2019 ranges till there’s a return to extra regular commuting patterns. We stay nicely positioned to seize further incremental earnings development as soon as these sectors, that symbolize about 30% of our enterprise portfolio, start to get better. Just like the previous a number of quarters, we’ll proceed to concentrate on execution towards all components inside our management. Additionally, the corporate’s steadiness sheet stays sturdy, and we’re evaluating earnings-accretive money deployment options.

“We’ll proceed to prioritize the well being and security of our staff, whereas offering wonderful help to our prospects with our technology-advantaged merchandise. I’m very pleased with the whole international PPG workforce, and I need to thank everybody for his or her continued focus and diligence throughout these difficult instances. As I mentioned final quarter, I stay assured that we’re on the trail to emerge from this disaster as a fair stronger firm, and these report quarterly outcomes lay the muse for delivering on this dedication,” McGarry concluded.

Third Quarter 2020 Reportable Section Monetary Outcomes

• Efficiency Coatings phase third quarter web gross sales had been about $2.three billion, down roughly $60 million, or about three%, versus the prior 12 months. Promoting costs elevated by 2%, and acquisition-related gross sales added practically 1%, or about $20 million, primarily from the Texstars and ICR acquisitions. These beneficial properties had been greater than offset by decrease gross sales volumes of about 5%, or about $125 million, primarily associated to the COVID-19 pandemic. There was no materials influence from international foreign money translation through the quarter because the strengthening Euro was offset by weaker Latin American currencies.

  Architectural coatings – Europe, Center East and Africa (EMEA) year-over-year web gross sales, excluding the influence of foreign money and acquisitions (natural gross sales), elevated by about 10%, pushed by elevated shopper demand after many nations permitted retail retailer re-openings following mandated closures through the second quarter. Yr-over-year natural gross sales, in architectural coatings – Americas and Asia Pacific had been up a low-single-digit share, with variations by channel and area. Regardless of difficult financial circumstances in Mexico, the PPG-Comex architectural coatings enterprise grew natural gross sales by a mid-single-digit share. Gross sales volumes in protecting and marine coatings had been down a mid-single-digit share, pushed by decrease demand in all main areas besides Asia-Pacific. Aerospace coatings gross sales volumes had been down about 35% impacted by decrease business OEM and aftermarket demand, whereas gross sales for aerospace navy purposes had been just like the prior 12 months pushed by rising demand for PPG’s technology-advantaged merchandise. Gross sales volumes for automotive refinish coatings improved considerably in contrast with the prior sequential quarter, however nonetheless declined about 10% on a year-over-year foundation. Automotive refinish coatings gross sales volumes in China had been increased than the prior 12 months as automotive miles pushed and visitors congestion have returned to pre-pandemic ranges.

  Section earnings for the third quarter was $426 million, up about $45 million, or about 12%, year-over-year. Section earnings was aided by increased promoting costs, cost-mitigation efforts and restructuring initiatives, partially offset by the unfavorable earnings influence from decrease gross sales volumes stemming from the pandemic.

• Industrial Coatings phase third quarter web gross sales had been about $1.four billion, down about $80 million, or about 5%, versus the prior-year interval. Because of the continued decline in international financial demand stemming from the COVID-19 pandemic, gross sales volumes decreased by 5% versus the prior-year interval; nonetheless, this was a dramatic enchancment versus the close to 40% year-over-year quantity decline skilled within the second quarter. There was no materials influence from international foreign money translation through the quarter.

  PPG automotive unique gear producer (OEM) coatings gross sales volumes differed by area however in combination had been comparatively flat in comparison with the prior 12 months and above international business auto manufacturing charges, supported by our main expertise and customer support capabilities. This consists of strong year-over-year development in China aided by increased regional business retail gross sales, together with important sequential quarterly enchancment in business construct charges within the U.S. and Europe. PPG gross sales volumes for automotive OEM coatings in China had been increased than the prior-year quarter by a low-teen share. Gross sales volumes for the economic coatings enterprise additionally improved considerably from the second quarter 2020; though demand assorted by sub-segment and was down a mid-single-digit share in combination versus the prior 12 months. Packaging coatings gross sales volumes decreased a low-single-digit share year-over-year, as rising demand within the U.S. and Latin America was offset by softer combination demand in Asia and Europe.

  Section earnings for the third quarter was $253 million, up about $45 million, or roughly 23% year-over-year. Section earnings was aided by aggressive cost-mitigation actions, restructuring price financial savings, and modestly increased promoting costs, partially offset by the unfavorable earnings influence from the decrease gross sales volumes.

The corporate ended the third quarter with web debt of $three.5 billion, roughly $600 million decrease than the second quarter. The corporate pay as you go $1 billion of a $1.5 billion time period mortgage maturing in April 2021. The corporate’s $2.2 billion revolving credit score facility is at the moment undrawn.

As well as, the corporate immediately reported the next projections for the fourth quarter 2020 based mostly on present international financial exercise:

• Mixture gross sales volumes are anticipated to be down a low-to-mid-single digit share, differing by enterprise and area
• Complete incremental structural price advantages from restructuring financial savings are anticipated to be between $30 million and $35 million
• Company bills are anticipated to be between $55 million and $60 million in comparison with $55 million within the third quarter 2020
• Internet curiosity expense is anticipated to be between $28 million and $30 million.
• The corporate’s international ongoing efficient tax fee is anticipated to be within the vary of 18% to 21%. The speed is decrease sequentially versus the third quarter pushed by potential discrete gadgets to be realized within the fourth quarter
• Adjusted earnings per diluted share are anticipated to be between $1.50 and $1.57.

PPG: WE PROTECT AND BEAUTIFY THE WORLD™

At PPG (NYSE:PPG), we work each day to develop and ship the paints, coatings and supplies that our prospects have trusted for greater than 135 years. By dedication and creativity, we resolve our prospects’ greatest challenges, collaborating intently to seek out the suitable path ahead. With headquarters in Pittsburgh, we function and innovate in additional than 70 nations and reported web gross sales of $15.1 billion in 2019. We serve prospects in development, shopper merchandise, industrial and transportation markets and aftermarkets. To study extra, go to www.ppg.com.

Extra Data

PPG will present detailed commentary relating to its monetary efficiency, together with presentation-slide content material, on the PPG Investor Middle at www.ppg.com at 5 p.m. ET immediately, October 19. The corporate will maintain a convention name to evaluate its third quarter 2020 monetary efficiency tomorrow, October 20, at eight a.m. ET. Members can pre-register for the convention by navigating to http://www.directeventreg.com/registration/occasion/8873424. The convention name additionally will likely be out there in listen-only mode by way of Web broadcast from the PPG Investor Middle at www.ppg.com. A phone replay will likely be out there tomorrow, October 20, starting at roughly 11:00 a.m. ET, by November three at 11:59 p.m. ET. The dial-in numbers for the replay are: in america, 1-800-585-8367; worldwide, +1-416-621-4642; passcode 8873424. A Internet replay additionally will likely be out there shortly after the decision on the PPG Investor Middle at www.ppg.com, and can stay by Tuesday, Oct. 19, 2021.

Ahead-Trying Statements

Statements contained herein referring to issues that aren’t historic details are forward-looking statements reflecting PPG’s present view with respect to future occasions and monetary efficiency. These issues inside the that means of Part 27A of the Securities Act of 1933, as amended, and Part 21E of the Securities Alternate Act of 1934, as amended, contain dangers and uncertainties that will have an effect on PPG’s operations, as mentioned within the firm’s filings with the Securities and Alternate Fee pursuant to Sections 13(a), 13(c) or 15(d) of the Alternate Act, and the principles and rules promulgated thereunder. Accordingly, many elements may trigger precise outcomes to vary materially from the forward-looking statements contained herein. Such elements embody statements associated to the anticipated results on our enterprise of the COVID-19 pandemic, international financial circumstances, rising worth and product competitors by international and home rivals, fluctuations in price and availability of uncooked supplies, the flexibility to attain promoting worth will increase, the flexibility to get better margins, buyer stock ranges, the flexibility to take care of favorable provider relationships and preparations, the timing of realization of anticipated price financial savings from restructuring initiatives, the flexibility to determine further price financial savings alternatives, difficulties in integrating acquired companies and attaining anticipated synergies therefrom, financial and political circumstances in worldwide markets, the flexibility to penetrate present, growing and rising international and home markets, international change charges and fluctuations in such charges, fluctuations in tax charges, the influence of future laws, the influence of environmental rules, sudden enterprise disruptions, the unpredictability of present and potential future litigation, together with asbestos litigation, and governmental investigations. Nonetheless, it isn’t potential to foretell or determine all such elements. Consequently, whereas the listing of things introduced right here and in our 2019 Annual Report on Type 10-Okay and the second quarter 2020 quarterly report on Type 10-Q are thought-about consultant, no such listing needs to be thought-about to be an entire assertion of all potential dangers and uncertainties. Unlisted elements might current important further obstacles to the conclusion of forward-looking statements. Penalties of fabric variations in outcomes in contrast with these anticipated within the forward-looking statements may embody, amongst different issues, decrease gross sales or earnings, enterprise disruption, operational issues, monetary loss, authorized legal responsibility to 3rd events and related dangers, any of which may have a fabric opposed impact on PPG’s consolidated monetary situation, outcomes of operations or liquidity.

All data on this launch speaks solely as of October 19, 2020, and any distribution of this launch after that date just isn’t supposed and won’t be construed as updating or confirming such data. PPG undertakes no obligation to replace any forward-looking assertion, besides as in any other case required by relevant legislation.

Regulation G Reconciliation

PPG believes investor’s understanding of the corporate’s efficiency is enhanced by the disclosure of web earnings, earnings per diluted share from persevering with operations and PPG’s efficient tax fee adjusted for sure gadgets. PPG’s administration considers this data helpful in offering perception into the corporate’s ongoing efficiency as a result of it excludes the influence of things that can’t moderately be anticipated to recur on a quarterly foundation or that aren’t attributable to our main operations. Internet earnings, earnings per diluted share from persevering with operations and the efficient tax fee adjusted for this stuff should not acknowledged monetary measures decided in accordance with U.S. typically accepted accounting ideas (“U.S. GAAP”) and shouldn’t be thought-about an alternative choice to web earnings, earnings per diluted share, the efficient tax fee or different monetary measures as computed in accordance with U.S. GAAP. As well as, adjusted web earnings, adjusted earnings per diluted share and the adjusted efficient tax fee might not be similar to equally titled measures as reported by different firms.

Regulation G Reconciliation – Internet Earnings and Earnings per Diluted Share

($ in thousands and thousands, besides per-share quantities)

CATEGORY Company

CATEGORY Monetary