PPG Industries (NYSE:PPG) today reported record fourth quarter 2013 net sales from continuing operations of $3.7 billion, up $459 million, or 14 percent, versus the prior year. Fourth quarter 2013 reported net income from continuing operations was $254 million, or $1.78 per diluted share. Fourth quarter 2013 adjusted net income from continuing operations was $258 million, or $1.81 per diluted share, which excludes $4 million, or 3 cents per diluted share, for acquisition-related costs. Fourth quarter 2012 reported net income and earnings per diluted share from continuing operations were $191 million and $1.23, respectively, and adjusted net income from continuing operations was $194 million, or $1.25 per diluted share, respectively, excluding $3 million, or 2 cents per diluted share, for acquisition-related costs. “Our record fourth quarter financial performance caps off one of the most successful years in the company’s history, both financially and strategically,” said Charles E. Bunch, PPG chairman and chief executive officer. “With the 45 percent increase in earnings per share versus last year, we have now delivered 14 consecutive quarters of record adjusted earnings, illustrating the benefits of our strong coatings portfolio, broad global footprint, prudent cash deployment and measurable results from our strategic actions. “We achieved record fourth quarter financial results, as higher earnings stemming from our continuing operating and cost discipline are now being coupled with a higher level of organic sales growth,” Bunch said. “We continued to outpace industry growth in aerospace and automotive OEM coatings. More broadly, we also benefited from stabilizing regional demand in Europe, as our year-over-year coatings volumes in that region were flat in the fourth quarter following nine consecutive quarters of decline. “On a full-year basis, we remained focused on creating shareholder value, including completion of several considerable strategic actions to shift to a more consistent and higher-growth business portfolio,” Bunch added. “We delivered all-time record full-year earnings, more than replacing the earnings from the separated commodity chemicals business, as we continue to benefit from aggressive management of our existing businesses combined with earnings accretion from cash deployed. During 2013 we maintained a balanced use of cash, spending $1.5 billion on acquisitions and capital spending focused on growing our company, and continuing our heritage of rewarding shareholders by returning about 75 percent of our cash from operations, or $1.35 billion, in dividends and stock repurchases.”
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.