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PPG Industries Inc. (PPG - Free Report) reported net income from continuing operations of $371 million or $1.51 per share for second-quarter 2018, down roughly 25% from the year ago figure of $497 million or $1.92 per share.
Barring one-time items including restructuring costs, adjusted earnings were $1.90 per share in the reported quarter, up around 6% year over year. It beat the Zacks Consensus Estimate of $1.89.
Net sales went up roughly 9% year over year to $4,131 million. It beat the Zacks Consensus Estimate of $4,118 million. Favorable currency swings improved net sales by more than 2%. The company recorded net sales growth in local currencies of roughly 6% driven by strong volume growth and higher selling prices. Volumes grew more than 3% while selling prices rose more than 2%.
PPG Industries, Inc. Price, Consensus and EPS Surprise
Performance Coatings: The segment recorded around $2.5 billion in sales and income of $428 million in the reported quarter. Sales grew 9% year over year while income rose 6%. Favorable currency translation increased segment sales by more than 2%. Segment income rose on the back of higher sales volumes and increased selling prices that more than offset raw material and logistics cost inflation.
Industrial Coatings: Sales at the segment were $1.6 billion, up roughly 9% from the prior-year period. Total sales volume rose nearly 3% year over year. Acquisition-related sales provided benefits of $30 million. Net income at the segment was $223 million, down 16% year over year as raw material and logistics cost inflation more than offset higher selling prices.
Financial Position
PPG Industries ended the quarter with cash and cash equivalents of $1,020 million, down around 35% year over year. Long-term debt rose around 26% year over year to $5,048 million.
PPG Industries bought back shares totalling nearly $1.1 billion during the first half including around $460 million in the second quarter.
Outlook
Moving ahead, PPG Industries does not expect any respite from inflationary cost pressures in the third quarter. The company expects to continue its earnings-accretive cash deployment in the second half of the year. It remains committed to deploy $2.4 billion of cash in 2018 on acquisitions and share repurchases. The company expects its effective tax rate to be in the range of 23-24% for 2018.
The company also initiated a new restructuring program and expects this to deliver annualized savings of roughly $85 million once it is fully implemented. This is in addition to the benefits it is realizing from the restructuring program announced in 2016.
Price Performance
PPG Industries has underperformed the industry over the past year. The company’s shares have moved down around 6% compared with roughly 5.1% growth recorded by the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #3 (Hold).
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have gained roughly 47% over a year.
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 52% in a year.
BHP Billiton has an expected long-term earnings growth rate of 15%. Its shares have shot up roughly 25% over a year.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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PPG Industries (PPG) Tops Q2 Earnings, Revenue Estimates
PPG Industries Inc. (PPG - Free Report) reported net income from continuing operations of $371 million or $1.51 per share for second-quarter 2018, down roughly 25% from the year ago figure of $497 million or $1.92 per share.
Barring one-time items including restructuring costs, adjusted earnings were $1.90 per share in the reported quarter, up around 6% year over year. It beat the Zacks Consensus Estimate of $1.89.
Net sales went up roughly 9% year over year to $4,131 million. It beat the Zacks Consensus Estimate of $4,118 million. Favorable currency swings improved net sales by more than 2%. The company recorded net sales growth in local currencies of roughly 6% driven by strong volume growth and higher selling prices. Volumes grew more than 3% while selling prices rose more than 2%.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. Price, Consensus and EPS Surprise | PPG Industries, Inc. Quote
Segment Highlights
Performance Coatings: The segment recorded around $2.5 billion in sales and income of $428 million in the reported quarter. Sales grew 9% year over year while income rose 6%. Favorable currency translation increased segment sales by more than 2%. Segment income rose on the back of higher sales volumes and increased selling prices that more than offset raw material and logistics cost inflation.
Industrial Coatings: Sales at the segment were $1.6 billion, up roughly 9% from the prior-year period. Total sales volume rose nearly 3% year over year. Acquisition-related sales provided benefits of $30 million. Net income at the segment was $223 million, down 16% year over year as raw material and logistics cost inflation more than offset higher selling prices.
Financial Position
PPG Industries ended the quarter with cash and cash equivalents of $1,020 million, down around 35% year over year. Long-term debt rose around 26% year over year to $5,048 million.
PPG Industries bought back shares totalling nearly $1.1 billion during the first half including around $460 million in the second quarter.
Outlook
Moving ahead, PPG Industries does not expect any respite from inflationary cost pressures in the third quarter. The company expects to continue its earnings-accretive cash deployment in the second half of the year. It remains committed to deploy $2.4 billion of cash in 2018 on acquisitions and share repurchases. The company expects its effective tax rate to be in the range of 23-24% for 2018.
The company also initiated a new restructuring program and expects this to deliver annualized savings of roughly $85 million once it is fully implemented. This is in addition to the benefits it is realizing from the restructuring program announced in 2016.
Price Performance
PPG Industries has underperformed the industry over the past year. The company’s shares have moved down around 6% compared with roughly 5.1% growth recorded by the industry.
Zacks Rank & Stocks to Consider
PPG Industries currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include KMG Chemicals, Inc. , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have gained roughly 47% over a year.
Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 52% in a year.
BHP Billiton has an expected long-term earnings growth rate of 15%. Its shares have shot up roughly 25% over a year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>