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.
Jefferies analysts note that recent construction spending data indicates a cycle rotation away from construction-exposed names and toward industrial- and durable goods-levered firms could be playing out.