PPG recently reported third quarter 2019 net sales of approximately $3.8 billion, comparable with the prior year. Net sales in constant currencies were about 2% higher versus the previous year, driven by higher selling prices of 2.6%, and acquisition-related sales, net of divestitures, of more than 2%. Aggregate sales volumes were down nearly 3% versus the prior year. Unfavorable foreign currency translation impacted net sales by approximately 2%, or about $80 million.
Third quarter 2019 reported net income from continuing operations was $366 million, or $1.54 per diluted share. Adjusted net income from continuing operations was $396 million, or $1.67 per diluted share. Adjusted figures exclude after-tax items of $30 million for environmental charges and restructuring-related costs. Third quarter 2018 net income from continuing operations was $368 million, or $1.51 per diluted share. Third quarter 2018 adjusted net income from continuing operations was $353 million, or $1.45 per diluted share. For the third quarter 2019, the reported and adjusted effective tax rates were approximately 23% – higher than the third quarter 2018 reported and adjusted effective tax rates of approximately 18% and 21%, respectively. Detailed reconciliations of the reported to adjusted figures are included below.
“We delivered strong adjusted earnings per share growth of 15% compared to the prior year quarter, as we continue to build momentum and remain focused on operating margin recovery. Strong execution against our cost-savings initiatives and our sixth consecutive quarter with selling price increases of at least 2% aided in our gross profit improvement, as we continue our efforts to offset the significant raw material cost inflation absorbed in the past few years,” said Michael H. McGarry, PPG chairman and chief executive officer. “Our earnings growth came despite notable weakening in industrial production, which was broad – both geographically and by end-use market – and which more significantly impacted our general industrial and automotive OEM coatings businesses. Consistent with our recent quarterly trends, the aerospace coatings and protective and marine coatings businesses posted strong sales growth.
“We made excellent progress executing on our key initiatives, including $20 million of cost savings in the third quarter related to previously announced cost savings programs,” said McGarry. “In addition, we completed the acquisition of Dexmet, a manufacturer of specialty materials for aerospace, automotive and industrial applications. We have completed four acquisitions with combined annual revenues of about $400 million that are benefiting our results this year. We continue to generate strong operating cash flow, with year-to-date cash generation improving by about $600 million in comparison to last year.
“As we look ahead to the fourth quarter, we anticipate global economic growth will remain soft impacting several end-use markets. Many of our customers remain cautious about their ordering patterns and inventory levels. We expect additional margin recovery progress, including the benefit of $20 million of restructuring-related savings year-over-year. We also continue to commercialize innovative products and technologies that provide value to our customers and support incremental sales growth, including our recently announced PPG Envirocron Extreme Protection Edge powder coating and the PPG MOONWALK automated paint mixing system for automotive refinish. Lastly, we ended the quarter with approximately $1.5 billion in cash and cash equivalents, providing us strong flexibility for shareholder value-creating cash deployment.
“We currently expect 2019 full-year adjusted earnings per diluted share to be in the range of $6.17 to $6.27, which is comparable to our July guidance and includes fourth quarter year-over-year growth in constant currencies of about 15% at the mid-point,” McGarry added. “This guidance places our full-year 2019 adjusted earnings-per-share growth at the low-to-mid end of our previously communicated 7% to 10% range, excluding currency translation impacts. We continue to expect full-year sales growth of a low-single-digit percentage, excluding currency translation impacts.”
The company reported the impact from unfavorable currency translation on adjusted earnings per diluted share for the full year is expected to be between 18 and 20 cents.
