PPG Industries Inc. (PPG), Large Cap AI Study of the Week
September 3, 2024
Weekly AI Pick from the S&P 500
Company Overview
PPG Industries, Inc., established in 1883, is a global leader in the manufacture and distribution of paints, coatings, and specialty materials. The company serves a wide range of markets, including industrial equipment, automotive, aerospace, marine, and residential sectors, offering products such as coatings, sealants, adhesives, and optical materials. PPG operates through two primary business segments: Performance Coatings and Industrial Coatings. The Performance Coatings segment caters to markets like aerospace and architectural coatings, while the Industrial Coatings segment focuses on automotive OEM, industrial applications, and specialty coatings.
PPG places a strong emphasis on research and development, dedicating around 2.5% of its annual net sales to R&D efforts aimed at driving profitable growth and sustainability. The company operates multiple R&D facilities and centers of excellence to manage product development, raw material costs, and sustainability initiatives. PPG ensures a stable supply of high-quality raw materials through contracts and alternative sourcing strategies, effectively managing fluctuating raw material and energy costs. With a global footprint, PPG mitigates regional economic risks and has seen logistics and raw material availability improve to pre-pandemic conditions.
Employee engagement and development are key priorities for PPG, which maintains good labor relations and upholds stringent environmental, health, and safety standards. The company fosters a diverse and inclusive workplace through Employee Resource Networks (ERNs) and has a dedicated sustainability committee focused on reducing greenhouse gas emissions, conserving water, and enhancing energy efficiency. In 2023, 44% of PPG's sales came from sustainably-advantaged products, including energy-saving automotive paints, low-temperature cure coatings, and eco-friendly solutions. PPG is also involved in environmental remediation at several sites but expects these costs to have a minimal impact on its financial position or liquidity.
By the Numbers
Annual 10-K Report Summary (2023):
- Net sales: $18.2 billion (3% increase from 2022)
- Income before income taxes: $1,748 million ($367 million increase from 2022)
- Cost of sales: Decreased by $351 million
- Selling, general, and administrative expenses: Increased by $380 million
- Earnings per diluted share from continuing operations: $5.35 (up from $4.33 in 2022)
- Net income: $1,270 million
- Adjusted net income: $1,822 million
- Adjusted earnings per share (EPS): $7.67
- Performance Coatings segment net sales: $11,164 million (4.4% increase)
- Industrial Coatings segment net sales: $7,082 million (1.8% increase)
- Segment income (Industrial Coatings): $966 million (50.2% increase)
- Cash from operating activities: $2,411 million (150.4% increase)
- Cash used for investing activities: $556 million (20.6% increase)
- Cash used for financing activities: $1,550 million (279% increase)
- Share repurchases: $86 million
- Dividends paid: $598 million
- Long-term debt: $6.05 billion
- Interest payments: $966 million
- Total Indebtedness to Total Capitalization ratio: 42%
- Capital expenditures: $549 million (6% increase)
Quarterly 10-Q Report Summary (Q2 2024):
- Net sales: $4.8 billion (1.6% decline from the previous year)
- Income before income taxes: $693 million ($47 million increase)
- Cost of sales: Decreased by 4.6%
- Selling, general, and administrative expenses: Increased by 0.7%
- Earnings per diluted share from continuing operations: $2.24 (8.7% increase)
- Adjusted earnings per share (EPS): $2.50 (11.1% increase)
- Performance Coatings segment net sales: Relatively flat
- Industrial Coatings segment net sales: Declined (specific percentage not provided)
- Cash and short-term investments: $1.2 billion (decrease from $1.6 billion at the end of 2023)
- Cash from operating activities (first half of 2024): $305 million (significant drop from $621 million in 2023)
- Restructuring savings in Q2 2024: About $10 million
- Expected total savings for 2024: At least $35 million
- Expected cash outlays for restructuring in 2024: Roughly $60 million
- Consolidated net assets decrease due to currency translation: $444 million
These key figures provide a numerical assessment of PPG Industries Inc.'s financial performance and position based on the most recent annual and quarterly reports.
