First quarter reported net income was $30 million, or 18 cents per share, which included a significant charge related to a change in U.S. tax law. Adjusted net income was $117 million, or 70 cents per share. First quarter 2009 sales were $2.8 billion and the reported loss was $111 million, or 68 cents per share, which included a significant charge for business restructuring. Adjusted net income was $32 million, or 19 cents per share.
First quarter 2010 net income includes aftertax charges of $85 million, or 51 cents per share, as a result of a change in U.S. tax law that is part of the recently-enacted U.S. Patient Protection and Affordable Care Act, and $2 million, or 1 cent per share, to reflect the net increase in the current value of the company’s obligation under its proposed asbestos settlement, which is pending court proceedings. First quarter 2009 net loss includes aftertax charges of $141 million, or 86 cents per share, for business restructuring, and $2 million, or 1 cent per share, related to the proposed asbestos settlement.
“Throughout the first quarter, we continued to experience a moderate recovery in several of the global end-use markets we serve,” said Charles E. Bunch, PPG chairman and chief executive officer. “This recovery, combined with lower costs resulting from our restructuring initiatives and other cost-reduction actions, positively impacted our financial results in comparison with what were very low earnings levels last year.
“Higher year-over-year sales volumes were most evident in our Industrial Coatings segment,” Bunch said, “which benefited from improving global automotive builds and gains in several general industrial applications. Also, our investments over the past several years to expand our presence in emerging regions, such as Asia/Pacific, continue to pay off. This region, in addition to our Optical and Specialty Materials segment, posted record-setting results and continues to drive growth for the corporation.” Bunch added that several of PPG’s businesses experienced weather-related sales softness early in the quarter, but rebounded strongly. “We easily exceeded our internal projections for March,” he said.
“Overall for the quarter,” Bunch said, “I am very pleased that all of the hard work and difficult steps we took over the past 18 months, throughout the recession, to position the company for economic recovery are now beginning to yield measurable benefits.”
Looking ahead to the rest of the year, Bunch said he was “encouraged that we are now entering what has historically been PPG’s best quarter with a very low cost position and growing momentum.” He said several businesses that have been slower to recover, such as Commodity Chemicals, are beginning to exhibit signs of improvement that, combined with PPG’s continued cost-reduction and execution focus, provide the company with a clear path for continued earnings recovery.
Performance Coatings segment sales in the first quarter 2010 increased $37 million, or 4 percent, versus last year’s first quarter. Sales increased as a result of higher selling prices and favorable foreign currency. Volumes declined slightly with lower volumes in North America and Europe offsetting growth in Asia/Pacific and Latin America. Segment earnings grew $38 million, or 43 percent, due to lower costs, including the impacts of aggressive cost-management, and from the factors impacting sales.
Industrial Coatings segment sales for the quarter rose $249 million, or 39 percent, due to volume growth exceeding 30 percent, with higher year-over-year volumes in all businesses and regions. Foreign currency also aided sales. Segment earnings for the quarter were $101 million, an increase of $117 million from the prior year’s first quarter, due to the improved sales volumes along with reduced costs primarily from aggressive cost-reduction initiatives and restructuring actions.
Architectural Coatings – Europe, Middle East and Africa (EMEA) segment sales for the quarter increased $27 million, or 7 percent, due principally to stronger foreign currencies. Segment earnings grew $8 million due to lower costs.
Optical and Specialty Materials segment sales for the quarter increased $39 million, or 16 percent, as a result of double-digit percentage volume growth and foreign currency. Segment earnings rose $22 million due to the improved sales volumes.
Commodity Chemicals segment sales for the quarter decreased $33 million, or 9 percent, due to declines in year-over-year selling prices, partially offset by improving volumes. Segment earnings decreased $80 million due to the lower selling prices and higher input costs, which were partially countered by the higher sales volumes and lower manufacturing costs.
Glass segment sales increased $24 million, or 12 percent, compared with the prior year as a result of improved volumes and foreign currency, which were partially offset by lower pricing including reduced energy surcharges. The segment loss was $3 million, an improvement of $24 million, due to lower costs and higher equity earnings and royalty income, which offset the effects of the lower selling prices.
PPG Industries’ vision is to continue to be the world’s leading coatings and specialty products company. Founded in 1883, the company serves customers in industrial, transportation, consumer products, and construction markets and aftermarkets. With headquarters in Pittsburgh, PPG (ppg.com) operates in more than 60 countries around the globe. Sales in 2009 were $12.2 billion. PPG shares are traded on the New York Stock Exchange (symbol: PPG).
PPG will hold a conference call to review its first quarter financial performance today, Thursday, April 15, at 2 pm ET. The company will provide commentary and host questions and answers. The dial-in numbers are: in the United States, 866-277-1181; international, 617-597-5358; passcode 24441016. The conference call also will be available in listen-only mode via Internet broadcast from PPG’s Investor Center at ppg.com (Windows Media Player). A telephone replay will be available today, Thursday, April 15, beginning at approximately 5 pm ET, through Thursday, April 29, at 5 pm ET. The dial-in numbers for the replay are: in the United States, 888-286-8010; international, 617-801-6888; passcode 54091672. A Web replay also will be available on PPG’s Investor Center at ppg.com, beginning at approximately 4:30 pm ET today, Thursday, April 15, 2010, through Friday, April 15, 2011.
Statements in this news release relating to matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 reflecting the company’s current view with respect to future events or objectives and financial or operational performance or results. These matters involve risks and uncertainties as discussed in PPG Industries’ periodic reports on Form 10-K and Form 10-Q, and its current reports on Form 8-K, filed with the Securities and Exchange Commission (SEC). Accordingly, many factors could cause actual results to differ materially from the company’s forward-looking statements.
Among these factors are global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, the realization of anticipated cost savings from restructuring initiatives, difficulties in integrating acquired businesses and achieving expected synergies therefrom, the ability to penetrate existing, developing or emerging foreign and domestic markets, and economic and political conditions in international markets, foreign exchange rates and fluctuations in such rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions and the unpredictability of possible future litigation, including litigation that could result if the asbestos settlement discussed in PPG’s filings with the SEC does not become effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on PPG’s consolidated financial condition, results of operations or liquidity.
Forward-looking statements speak only as of the date of their initial issuance, and PPG does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
Vince Morales, PPG Investor Relations