PPG has reported first quarter 2016 net sales of $3.7 billion, consistent with the prior year. Net sales in local currencies grew 4 percent year-over-year, with acquisition sales contributing 3 percent and sales volume growth adding one percent. Unfavorable foreign currency translation impacted net sales by nearly 4 percent, or about $140 million.
First quarter 2016 reported net income was $347 million, or $1.29 per diluted share. First quarter 2016 adjusted net income was $351 million, or $1.31 per diluted share. Adjusted net income excludes after-tax charges totaling $4 million, or 2 cents per diluted share, for transaction-related costs and a non-recurring charge. The adjusted effective tax rate for the quarter was 25 percent.
First quarter 2015 reported net income and earnings per diluted share from continuing operations were $321 million and $1.16, respectively. Adjusted net income from continuing operations was $327 million, or $1.18 per diluted share, including an after-tax charge for transaction-related costs of $6 million, or 2 cents per diluted share. The first quarter 2015 adjusted effective tax rate was 24.4 percent.
“We delivered record first quarter adjusted earnings per diluted share, which represented an 11 percent year-over-year increase, marking our 13th consecutive quarter with a double-digit percentage increase,” said Michael McGarry, PPG president and CEO. “Our record first quarter results benefited from the strong earnings leverage we achieved on sales volume gains along with acquisition-related income and continued cost discipline. We realized this improvement despite ongoing, but moderating, unfavorable foreign currency translation.
“Sales volumes grew one percent year-over-year, reflecting a continuation of modest global demand trends. Our growth accelerated and broadened in Europe, where volumes have improved for five consecutive quarters. U.S. and Canada sales volumes were flat, as we continued to experience variations by end-use market and country. Year-over-year growth in emerging regions remained positive, despite strong prior-year growth in China and Mexico, and reflected uneven end-use market demand,” McGarry added.
“Sales volume increases were comparable in both of our coatings segments, led by the packaging, automotive refinish and architectural coatings – EMEA businesses. Sales volumes declined in our Glass segment primarily due to reduced production capacity related to a scheduled facility outage. Also, the six acquisitions we completed during 2015 contributed to the improved financial results for our two coatings segments,” McGarry said.
“Looking ahead, we expect economic growth to remain measured globally. We anticipate further expansion of the European economic recovery, resulting in higher demand that will enable us to continue to capitalize on our ongoing actions to reduce our cost base in that region. Regional demand in the U.S. and Canada is expected to improve incrementally year-over-year across several end-use markets. Growth rates in emerging regions are expected to remain mixed, with higher consumer spending supporting increased Asian demand and PPG-specific above-market performance in Mexico, tempered by sustained economic weakness in South America,” McGarry said.
“We are accelerating our efforts to develop and commercialize new customer-driven technologies, and we have enhanced our consumer branding strategies. Both of these important initiatives are focused on driving higher organic growth. We are maintaining our strong cost focus, including finalizing the remaining actions of our previously announced restructuring program. Further, the impact of unfavorable foreign currency translation on our sales and income has moderated based on recent exchange rates. Finally, we have a strong cash position and balance sheet, which we intend to continue deploying on earnings-accretive and shareholder-focused actions,” McGarry concluded.
PPG reported today that cash and short-term investments totaled approximately $1 billion at the end of the first quarter 2016. During the quarter, the company repurchased $150 million, or about 1.5 million shares, of PPG stock, and average diluted shares outstanding were reduced by about 2 percent versus the prior year. The company has approximately $770 million remaining under its current share repurchase authorization. PPG reiterated its commitment to deploy $2 billion to $2.5 billion of cash, in years 2015 and 2016 combined, on acquisitions and share repurchases.
