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PPG Industries (PPG) Q2 Earnings Beat Estimates, Sales Lag
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PPG Industries, Inc. (PPG - Free Report) reported second-quarter 2023 profit of $490 million or $2.06 per share, up from $443 million or $1.86 per share in the year-ago quarter.
In the second quarter, excluding one-time items, adjusted earnings per share increased to $2.25 from $1.81 in the year-ago quarter, surpassing the Zacks Consensus Estimate of $2.14.
The company’s revenues were $4,872 million in the quarter, up 4% year over year. The upside in sales can be attributed to higher selling prices. The top line missed the Zacks Consensus Estimate of $4,894.3 million.
Aggregate segment margins saw a significant improvement of 330 basis points from the prior-year second quarter, attributed to strong selling price realization and lower raw material costs.
PPG Industries, Inc. Price, Consensus and EPS Surprise
The Performance Coatings segment’s second-quarter revenues increased 4% year over year to $3,041 million. The figure fell short of our estimate of $3,046.2 million. This increase in net sales was primarily attributed to higher selling prices across all businesses and favorable foreign currency translation, which effectively mitigated the impact of lower sales volumes.
The Industrial Coatings segment achieved revenues of $1,831 million, a 4% year-over-year increase, primarily propelled by higher selling prices, partly offset by lower sales volumes. The figure was ahead of our estimate of $1,749.7 million. Organic sales of Automotive OEM coatings rose due to higher volumes and prices.
Financials
At the end of the quarter, the company held approximately $1.3 billion in cash and short-term investments. The net debt decreased to $5.6 billion, marking a reduction of about $500 million compared to the same period in the previous year.
Corporate expenses amounted to $85 million during the second quarter, showing an increase of $30 million from the prior year. This rise was primarily attributed to stock-based compensation related to total shareholder return and other performance-based incentive compensation, as well as non-cash pension expense.
The successful implementation of acquisition-related synergies and business restructuring programs resulted in approximately $15 million of additional cost savings during the quarter.
Outlook
The company's projected adjusted EPS for the third quarter is in the range of $1.85-$1.95. For the full year, the company raised its adjusted EPS projection to the range of $7.28-$7.48. These projections consider various factors such as current global economic activity, soft global industrial production, continued economic uncertainty associated with geopolitical issues in Europe, and higher interest rates in most developed countries.
The company expects performance coatings demand in Europe to stabilize at lower levels than the pre-conflict period in Ukrainewhile raw material and transportation normalize closer to pre-pandemic levels.
For Industrial coatings, PPG anticipate a low single-digit percentage decline in organic sales due to lower global industrial production, except for modest growth in China. Other industrial end-use markets are expected to be soft. However, selling price increases are expected to continue.
Price Performance
PPG Industries shares have risen 21.8% in the past year compared with the industry’s rise of 12.3% over the same period.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
PPG Industries currently carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the Basic Materials space include Livent Corporation ,and Carpenter Technology Corporation (CRS - Free Report) , both sporting a Zacks Rank #1, and United States Steel Corporation (X - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%. The company’s shares have gained 19.5% in the past year.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 98.3% in the past year.
The Zacks Consensus Estimate for X’s current-year earnings has been revised 5.4% upward in the past 60 days. U. S. Steel beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 18.1% on average. The company’s shares have risen roughly 21.2% in the past year.
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PPG Industries (PPG) Q2 Earnings Beat Estimates, Sales Lag
PPG Industries, Inc. (PPG - Free Report) reported second-quarter 2023 profit of $490 million or $2.06 per share, up from $443 million or $1.86 per share in the year-ago quarter.
In the second quarter, excluding one-time items, adjusted earnings per share increased to $2.25 from $1.81 in the year-ago quarter, surpassing the Zacks Consensus Estimate of $2.14.
The company’s revenues were $4,872 million in the quarter, up 4% year over year. The upside in sales can be attributed to higher selling prices. The top line missed the Zacks Consensus Estimate of $4,894.3 million.
Aggregate segment margins saw a significant improvement of 330 basis points from the prior-year second quarter, attributed to strong selling price realization and lower raw material costs.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Review
The Performance Coatings segment’s second-quarter revenues increased 4% year over year to $3,041 million. The figure fell short of our estimate of $3,046.2 million. This increase in net sales was primarily attributed to higher selling prices across all businesses and favorable foreign currency translation, which effectively mitigated the impact of lower sales volumes.
The Industrial Coatings segment achieved revenues of $1,831 million, a 4% year-over-year increase, primarily propelled by higher selling prices, partly offset by lower sales volumes. The figure was ahead of our estimate of $1,749.7 million. Organic sales of Automotive OEM coatings rose due to higher volumes and prices.
Financials
At the end of the quarter, the company held approximately $1.3 billion in cash and short-term investments. The net debt decreased to $5.6 billion, marking a reduction of about $500 million compared to the same period in the previous year.
Corporate expenses amounted to $85 million during the second quarter, showing an increase of $30 million from the prior year. This rise was primarily attributed to stock-based compensation related to total shareholder return and other performance-based incentive compensation, as well as non-cash pension expense.
The successful implementation of acquisition-related synergies and business restructuring programs resulted in approximately $15 million of additional cost savings during the quarter.
Outlook
The company's projected adjusted EPS for the third quarter is in the range of $1.85-$1.95. For the full year, the company raised its adjusted EPS projection to the range of $7.28-$7.48. These projections consider various factors such as current global economic activity, soft global industrial production, continued economic uncertainty associated with geopolitical issues in Europe, and higher interest rates in most developed countries.
The company expects performance coatings demand in Europe to stabilize at lower levels than the pre-conflict period in Ukrainewhile raw material and transportation normalize closer to pre-pandemic levels.
For Industrial coatings, PPG anticipate a low single-digit percentage decline in organic sales due to lower global industrial production, except for modest growth in China. Other industrial end-use markets are expected to be soft. However, selling price increases are expected to continue.
Price Performance
PPG Industries shares have risen 21.8% in the past year compared with the industry’s rise of 12.3% over the same period.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
PPG Industries currently carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the Basic Materials space include Livent Corporation ,and Carpenter Technology Corporation (CRS - Free Report) , both sporting a Zacks Rank #1, and United States Steel Corporation (X - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%. The company’s shares have gained 19.5% in the past year.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 98.3% in the past year.
The Zacks Consensus Estimate for X’s current-year earnings has been revised 5.4% upward in the past 60 days. U. S. Steel beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 18.1% on average. The company’s shares have risen roughly 21.2% in the past year.