This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

PPG Reports Record Fourth Quarter And Full-Year 2013 Results

Looking ahead, Bunch said, “We expect to realize benefits from modest global growth. Regionally, we expect growth to remain broadest in the U.S. economy, spanning several coatings end-use markets. Emerging-regions growth, while still uneven, is expected to continue at a solid pace for PPG, comparable to recent trends. In Europe, which represents about one-third of our sales, economies appear to be improving but remain fragile. In 2014, we anticipate measured growth in that region, and we expect to realize solid earnings leverage due to the actions we have taken the past two years to significantly reduce our regional cost structure.”

Bunch also said the company remained slightly ahead of schedule on achieving targeted acquisition-related cost synergies relating to the North American architectural coatings acquisition. He added that the restructuring program approved in the third quarter 2013 is focused primarily on achieving the remaining synergies, and those actions are now underway. As a result, the company expects incremental cost savings of between $75 million and $90 million in 2014.

“Lastly, we ended the year with a strong balance sheet and cash position, which we expect to be supplemented by continued strong free cash flow, along with the receipt of about $1.5 billion in after-tax proceeds from the pending sale of our ownership interest in the Transitions Optical joint venture. Over the next 18 to 24 months, we anticipate deploying between $3.0 billion and $4.0 billion of cash in a disciplined manner on incremental earnings-growth initiatives, and returning cash to shareholders,” Bunch concluded.

The company today reported year-to-date cash from continuing operations of about $1.8 billion, a 15 percent increase versus the prior year. Full-year capital spending was slightly more than $500 million. Cash used for business acquisitions totaled about $1.0 billion. The company also noted that 2013 marked the 42 nd consecutive year of increasing annual per-share dividend payouts, with cash dividends paid of about $350 million. The company also repurchased $1.0 billion, or 5.7 million shares, of PPG stock. PPG ended the year with cash and short-term investments totaling $1.75 billion.

Fourth Quarter 2013 Reporting Segment Financial Results

  • Performance Coatings segment net sales for the quarter were $1.4 billion, up 25 percent. The increase was due primarily to acquired-business sales, partly offset by a 3 percent decline in segment volumes. Aerospace net sales growth continued, aided by ongoing industry growth and sales from acquired businesses. Automotive refinish net sales grew in all major regions, including continued emerging-region volume gains and a return to growth in Europe. Excluding the favorable acquisition impacts, architectural coatings sales results by distribution channel were similar to results in recent quarters, including company-owned stores growth of more than 10 percent and lower national retail channel sales due to a previously disclosed change in products sold to a large retail customer. Lower but stabilizing marine new-build activity remained a large negative impact to segment volumes. Overall, the segment experienced normal seasonal trends, although the size and seasonality of the acquired architectural business amplified the impact in comparison to prior years. Segment earnings of $179 million were up 1 percent as a result of the increased net-sales impacts, partly offset by higher growth-related expenses in aerospace and automotive refinish.
  • Industrial Coatings segment net sales for the quarter were $1.2 billion, increasing 10 percent, or $108 million, versus the prior year primarily due to strong volume improvement, with acquisition-related gains also contributing. Volumes in automotive original equipment manufacturer (OEM) coatings grew by more than 10 percent globally, outpacing a global industry growth rate of about 3 percent, with each major PPG region delivering similar growth rates. The industrial coatings business also grew volumes globally, led by North American gains, growth in Asia that remained varied by end-use market, and initial volume recovery in European demand that led to a flat year-over-year comparison for that region. Strong Asian packaging coatings growth was offset by lower European demand. Segment earnings for the quarter were $174 million, up 21 percent as a result of the higher volumes and continued cost management.
  • Architectural Coatings – EMEA (Europe, Middle East and Africa) segment net sales for the quarter were $466 million, up $1 million versus the prior-year quarter primarily due to favorable foreign currency translation. Fourth quarter volumes declined by 4 percent year over year, consistent with the previous quarter and a significant improvement versus the first half 2013, when year-over-year volume declines averaged 10 percent. Despite the lower volumes, segment earnings of $22 million were $13 million higher than the previous year due to lower costs, including benefits from completed restructuring actions and ongoing discretionary cost management.
  • Optical and Specialty Materials segment net sales for the quarter were $309 million, up $37 million versus the prior year. Optical products net sales improved as continued global demand growth was supplemented by customer inventory stocking ahead of the TRANSITIONS(R) Generation VII product introduction in North America, which commenced this month. Silica products volume also grew on improved demand. Segment earnings of $85 million were up 25 percent versus the prior year stemming from the sales improvement, partly offset by higher selling-related costs supporting the higher demand and product launch.
  • Glass segment net sales were $264 million for the quarter, up $23 million year over year. Segment volumes grew 8 percent on improved global fiber glass demand. Flat glass pricing increased, as did commercial construction-related demand. Segment earnings were $22 million, an increase of $14 million versus the prior-year quarter. Segment earnings improved due to higher net sales and manufacturing cost improvements, partly offset by the negative impact of cost inflation, including higher transportation and natural gas costs.

Full-Year 2013 Financial Results

PPG’s 2013 annual net sales from continuing operations were $15.1 billion, an increase of 12 percent versus $13.5 billion the prior year. The company’s full-year 2013 reported net income from continuing operations was $1.0 billion, or $7.13 per diluted share, versus $726 million, or $4.69 per diluted share, in 2012. Full-year 2013 adjusted net income from continuing operations was $1.2 billion, or $8.28 per diluted share, versus $995 million, or $6.44 per diluted share, in 2012. A detailed reconciliation of the reported to the adjusted figures is included below.

2 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7870 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs