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PPG Industries (PPG) Q3 Earnings Miss Estimates, Sales Beat
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PPG Industries Inc. (PPG - Free Report) logged net income of $329 million or $1.39 per share in third-quarter 2022, down from the year-ago quarter’s profit of $344 million or $1.43 per share.
Barring one-time items, adjusted earnings were $1.66 per share in the reported quarter, down from $1.69 logged in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.67.
Net sales rose roughly 2% year over year to $4,468 million. The figure beat the Zacks Consensus Estimate of $4,459.6 million. The top line was driven by higher selling prices. However, volumes were hurt by weaker demand in Europe, lower demand recovery in China on a sequential comparison basis and unfavorable currency swings. Organic sales rose more than 9%, aided by higher selling prices.
PPG Industries, Inc. Price, Consensus and EPS Surprise
Performance Coatings: Net sales in the segment were $2,705 million in the reported quarter, down 2% year over year, as lower sales volumes, divestitures, the wind down of business in Russia and unfavorable currency impacts more than offset higher selling prices in all businesses. Sales volumes in the segment were down 6%. Selling prices rose 11% year over year.
Segment income declined 11% year over year to $362 million. The downside was caused by raw material, logistics and labor cost inflation, unfavorable currency, higher manufacturing costs and lower sales volumes, partly offset by increased selling prices and restructuring cost savings.
Industrial Coatings: Sales in the segment were $1,763 million, up 9% year over year. Sales rose due to higher selling prices across all businesses and increased sales volumes, partly offset by the wind down of business in Russia and unfavorable currency impacts. Sales volumes rose 2% year over year and selling prices were up 14% year over year.
Segment income totaled $192 million, up 37% year over year. The upside was driven by increased selling prices and higher volumes, partly masked by higher raw material and energy costs and unfavorable currency translation.
Financials
PPG Industries ended the quarter with cash and cash equivalents of $1,029 million, down roughly 15% year over year. Long-term debt rose around 6% year over year to $6,478 million.
Outlook
Moving ahead, the company sees normal seasonal demand trends in the fourth quarter. Economic activity is predicted to remain weak in Europe and China. The company also envisions demand for architectural do-it-for-yourself paint products to continue to soften globally. The company also said that an additional cost-restructuring program is underway targeting $70 million in annualized savings upon full implementation.
PPG Industries projects adjusted earnings per share (EPS) in the band of $1.05-$1.20 for fourth-quarter 2022, barring amortization expenses of 13 cents and costs related to earlier approved and communicated business restructuring of 2 cents. It also sees reported EPS of 90 cents to $1.05 for the quarter.
The company also expects aggregate sales volumes to be down a mid-single-digit percentage on a year-over-year basis in the fourth quarter.
Price Performance
Shares of PPG Industries have lost 28.6% in the past year compared with a 15% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
PPG Industries currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Ryerson Holding Corporation (RYI - Free Report) .
Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 426.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 10% in a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 69% in a year. The company currently carries a Zacks Rank #1.
Ryerson Holding, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.
Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 23% over a year.
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PPG Industries (PPG) Q3 Earnings Miss Estimates, Sales Beat
PPG Industries Inc. (PPG - Free Report) logged net income of $329 million or $1.39 per share in third-quarter 2022, down from the year-ago quarter’s profit of $344 million or $1.43 per share.
Barring one-time items, adjusted earnings were $1.66 per share in the reported quarter, down from $1.69 logged in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.67.
Net sales rose roughly 2% year over year to $4,468 million. The figure beat the Zacks Consensus Estimate of $4,459.6 million. The top line was driven by higher selling prices. However, volumes were hurt by weaker demand in Europe, lower demand recovery in China on a sequential comparison basis and unfavorable currency swings. Organic sales rose more than 9%, aided by higher selling prices.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Highlights
Performance Coatings: Net sales in the segment were $2,705 million in the reported quarter, down 2% year over year, as lower sales volumes, divestitures, the wind down of business in Russia and unfavorable currency impacts more than offset higher selling prices in all businesses. Sales volumes in the segment were down 6%. Selling prices rose 11% year over year.
Segment income declined 11% year over year to $362 million. The downside was caused by raw material, logistics and labor cost inflation, unfavorable currency, higher manufacturing costs and lower sales volumes, partly offset by increased selling prices and restructuring cost savings.
Industrial Coatings: Sales in the segment were $1,763 million, up 9% year over year. Sales rose due to higher selling prices across all businesses and increased sales volumes, partly offset by the wind down of business in Russia and unfavorable currency impacts. Sales volumes rose 2% year over year and selling prices were up 14% year over year.
Segment income totaled $192 million, up 37% year over year. The upside was driven by increased selling prices and higher volumes, partly masked by higher raw material and energy costs and unfavorable currency translation.
Financials
PPG Industries ended the quarter with cash and cash equivalents of $1,029 million, down roughly 15% year over year. Long-term debt rose around 6% year over year to $6,478
million.
Outlook
Moving ahead, the company sees normal seasonal demand trends in the fourth quarter. Economic activity is predicted to remain weak in Europe and China. The company also envisions demand for architectural do-it-for-yourself paint products to continue to soften globally. The company also said that an additional cost-restructuring program is underway targeting $70 million in annualized savings upon full implementation.
PPG Industries projects adjusted earnings per share (EPS) in the band of $1.05-$1.20 for fourth-quarter 2022, barring amortization expenses of 13 cents and costs related to earlier approved and communicated business restructuring of 2 cents. It also sees reported EPS of 90 cents to $1.05 for the quarter.
The company also expects aggregate sales volumes to be down a mid-single-digit percentage on a year-over-year basis in the fourth quarter.
Price Performance
Shares of PPG Industries have lost 28.6% in the past year compared with a 15% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
PPG Industries currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) and Ryerson Holding Corporation (RYI - Free Report) .
Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 426.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 10% in a year.
Sociedad has a projected earnings growth rate of 530.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 2.1% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 69% in a year. The company currently carries a Zacks Rank #1.
Ryerson Holding, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 74.2% for the current year. The consensus estimate for RYI's earnings for the current year has been revised 3.2% upward in the past 60 days.
Ryerson Holding’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 28.9%. RYI has gained around 23% over a year.