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PPG Industries (PPG) Q3 Earnings Beat, Sales Trail Estimates

Zacks Equity Research

PPG Industries Inc. PPG logged net income from continuing operations of $366 million or $1.54 per share in third-quarter 2019 compared with $368 million or $1.51 per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) were $1.67, up from $1.45 in the prior-year quarter. The figure beat the Zacks Consensus Estimate of $1.61.  

Net sales edged up around 0.2% year over year to $3,826 million in the reported quarter. However, the figure missed the Zacks Consensus Estimate of $3,896.7 million. Unfavorable currency swings affected net sales by around 2% while acquisition-related sales, net of divestitures, contributed more than 2% to sales growth and higher selling prices contributed 2.6%.

PPG Industries, Inc. Price, Consensus and EPS Surprise

 

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 amounted to roughly $2.3 billion in the third quarter, up around 1% year over year. Sales volume in the segment was relatively flat year over year. Unfavorable foreign currency translation reduced net sales by roughly 2%.

Segment income rose roughly 15% year over year to $380 million. The figure benefitted from higher selling prices, cost management and restructuring initiatives of the company.

Industrial Coatings: Sales in the segment totaled $1.5 billion, down nearly 1% from the prior-year quarter’s figure. Increased selling prices of 2% and acquisition-related sales of around $80 million were offset by lower sales volumes of 6%. Also, unfavorable foreign currency translation lowered sales by nearly 2% on a year-over-year basis.

Net income in the segment totaled $205 million, up around 22% year over year. Improving selling prices, acquisition-related income and strong cost management actions were partly offset by reduced sales volumes. Unfavorable currency impact was around $3 million.

Financial Position

PPG Industries ended the quarter with cash and cash equivalents of $1.4 billion, up around 29.8% year over year. Long-term debt fell around 2.7% year over year to $4,885 million.

Outlook

Going forward, PPG Industries expects global economic growth to remain soft in the fourth quarter and impact several end-use markets.

For 2019, the company expects adjusted EPS in the range of $6.17-$6.27. The projection includes fourth quarter year-over-year growth in constant currencies of around 15% at the mid-point. Moreover, the guidance represents adjusted EPS growth at the low-to-mid end of earlier announced 7-10% range, excluding currency translation impacts.

The company expects full-year sales growth of a low-single-digit percentage, which excludes currency-translation impacts.

Price Performance

Shares of PPG Industries have gained 21.3% in the past year against 31.6% decline of the industry.



Zacks Rank & Key Picks

PPG Industries currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Franco-Nevada Corporation FNV and Agnico Eagle Mines Limited AEM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 170% for 2019. The company’s shares have surged 61.9% in the past year.

Franco-Nevada has a projected earnings growth rate of 34.9% for 2019. The company’s shares have rallied 40.3% in a year’s time.

Agnico Eagle has an estimated earnings growth rate of 158.6% for the current year. Its shares have moved up 42.2% in the past year.

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