PPG Industries (PPG) Tops Q1 EPS by 1c

PPG Industries (NYSE: PPG) reported Q1 EPS of $1.19, $0.01 better than the analyst estimate of $1.18. Revenue for the quarter came in at $3.4 billion versus the consensus estimate of $3.4 billion.

• First quarter net sales of about $3.4 billion, approximately 7% lower than the prior year and down nearly 5% in constant currencies
• First quarter reported earnings per diluted share (EPS) of $1.02 and adjusted EPS of $1.19
• Net sales and EPS includes an estimated unfavorable impact from the effects of the COVID-19 pandemic of approximately $225 million and $0.35, respectively
• Rapid implementation of cash and cost management actions
• Cash and short-term investments of approximately $1.9 billion at quarter-end; supplemented by an additional $700 million from recent April short-term borrowing
• Completed bolt-on acquisitions of ICR and Alpha Coating Technologies

“Our first quarter results reflect a sudden and wide-ranging deterioration in global demand during the month of March and the impacts of the economic shutdown in China during February. As the COVID-19 pandemic spread, we prioritized and remained focused on protecting our people, customers and all of our stakeholders,” said Michael H. McGarry, PPG chairman and chief executive officer. “I could not be more proud of our employees around the world who have worked tirelessly to help keep each other safe and healthy throughout this unprecedented time in the history of our company. I commend their dedication to safely operating our facilities, labs, stores and distribution centers in order to provide our customers with the essential products and services they count on. Given the breadth of the COVID crisis, we are increasing and accelerating our charitable contributions around the world.”

“From a financial perspective, our businesses through early March, with the exception of those in China, were mostly performing at or above the financial targets we had set at the outset of the year, and we were pacing toward low-double-digit percentage EPS growth. We had solid performance in our global architectural and packaging coatings businesses and continued growth in the aerospace coatings business. In the last two weeks of March, however, many of our larger original equipment manufacturer (OEM) customers were forced to shut down; a number of architectural paint stores in certain countries were mandated to close; and miles driven and flown throughout the world fell sharply as many countries imposed stay-at-home mandates.

“We have taken immediate and broad steps to adapt to the current business climate, including decisive cost actions and an increased focus on cash generation and liquidity. These include announced salary reductions for senior leaders, shutdowns of some manufacturing and distribution operations, temporary employee furloughs at the most severely demand-impacted businesses, reduced spending across all businesses and functions, and deferred capital expenditures. In addition, we continued to execute our previously announced restructuring programs, achieving about $20 million of savings in the first quarter. We are accelerating other initiatives and now expect to achieve higher restructuring savings of $80 to $90 million for the full year. We are continuing to assess and manage through the crisis, and will determine if further cost or restructuring actions are warranted.

“Looking ahead,” McGarry added, “we expect customer demand levels to remain severely impacted, with significant declines continuing in the automotive OEM, automotive refinish and aerospace coatings businesses. In certain other businesses, including packaging coatings, do-it-yourself (DIY) architectural coatings, long-cycle protective coatings and military products, demand has only been modestly impacted by crisis. Also, our operations in China are now fully operational, and regional economic activity is returning toward pre-crisis levels. We remain focused on prudently managing our cash and balance sheet. We ended the quarter with about $1.9 billion of cash on hand and have continued to optimize our overall liquidity. Finally, I am very confident in the skills and experience of our global team as we navigate effectively through this challenging time and look to emerge from the crisis stronger.”

For earnings history and earnings-related data on PPG Industries (PPG) click here.

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