PPG Industries' (PPG) Q3 Earnings and Sales Beat Estimates
PPG Industries, Inc. PPG reported third-quarter 2023 profit of $426 million or $1.79 per share, up from $329 million or $1.39 per share in the year-ago quarter.
In the reported quarter, excluding one-time items, adjusted earnings per share increased to $2.07 from $1.66 in the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.95.
The company’s revenues were $4,644 million in the quarter, up roughly 4% year over year. The upside can be attributed to higher selling prices. The top line surpassed the Zacks Consensus Estimate of $4,620.8 million.
The aggregate segment margin increased 260 basis points (bps) from the year-ago quarter, representing the fourth consecutive quarter of year-over-year margin growth.
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 third-quarter revenues increased 6% year over year to $2,880 million. The figure outperformed our estimate of $2,765.9 million. Performance Coatings' net sales rose as a result of favorable foreign exchange swings and higher selling prices. Segment income climbed 25% year over year, owing mostly to higher selling prices and moderating input costs that are going lower from historically high levels. Year over year, segment operating margins increased 230 bps.
Revenues in the Industrial Coatings segment were flat year over year at $1,764 million, as reduced sales volumes were offset by higher selling prices, a net benefit from acquisitions and divestitures, and positive foreign currency translation. The figure was ahead of our estimate of $1,749.8 million. Segment income increased 28% over the previous year, owing mostly to higher selling prices and lower raw material costs, offset by decreased sales volumes. Compared to the third quarter of 2022, segment margins grew 300 bps.
Financials
At the end of third quarter, the company had almost $1.3 billion in cash and short-term investments. Net debt was $4.9 billion, down nearly $800 million from the prior-year quarter.
In the third quarter, acquisition-related synergies and company restructuring activities generated around $15 million in incremental cost savings.
Outlook
PPG expects total organic sales to be up or down a low single-digit percent in the fourth quarter. The company's projected adjusted EPS for the fourth quarter is in the range of $1.44-$1.50. For the full year, the company raised its adjusted EPS projection to the band of $7.58-$7.64.
Price Performance
PPG Industries shares have risen 17.9% in the past year compared with the industry’s growth of 17.5% over the same period.
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Zacks Rank & Key Picks
PPG currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Koppers Holdings Inc. KOP and The Andersons Inc. ANDE.
Equinox has a projected earnings growth rate of 90% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). Equinox delivered a trailing four-quarter earnings surprise of roughly 18.1%, on average. The stock is up around 40.8% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Koppers has a projected earnings growth rate of 7.5% for the current year. It currently carries a Zacks Rank #2 (Buy). Koppers delivered a trailing four-quarter earnings surprise of roughly 21.7%, on average. The stock is up around 65.4% in a year.
Andersons currently carries a Zacks Rank #2. The stock has gained roughly 55.1% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
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