PPG Industries Inc. (PPG) is set to release first-quarter 2025 results after the closing bell on April 29. PPG Industries missed the Zacks Consensus Estimate for earnings in two of the trailing four quarters, beat once while delivering in-line results on the other occasion. It delivered a trailing four-quarter negative earnings surprise of around 0.6%, on average. While the company is expected to have benefited from acquisitions and restructuring cost savings in the first quarter, its performance is likely ...

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings and revenues for PPG Industries in the upcoming earnings report, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - PPG Industries is expected to report quarterly earnings of $1.62 per share, reflecting a year-over-year decrease of 12.9% [3]. - Revenues are projected to be $3.65 billion, down 15.3% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 1.39% lower in the last 30 days, indicating a reassessment by analysts [4]. - A positive Earnings ESP of +4.16% suggests analysts have recently become more optimistic about PPG's earnings prospects [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - PPG Industries currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, PPG Industries was expected to post earnings of $1.65 per share but delivered $1.61, resulting in a surprise of -2.42% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - While PPG Industries is seen as a potential earnings-beat candidate, other factors should also be considered when evaluating the stock ahead of its earnings release [16].

Core Viewpoint - PPG Industries is experiencing challenges due to weak demand, particularly in Europe, but is benefiting from pricing actions, improved manufacturing efficiencies, cost discipline, and acquisitions [1][9]. Group 1: Financial Performance and Strategies - The company has implemented a cost-cutting and restructuring strategy, optimizing working capital, which is expected to generate significant cost savings [4]. - PPG realized an additional $15 million in structural cost savings in Q4 2024 and anticipates around $45 million in restructuring savings for the full year 2025 [4]. - A comprehensive cost reduction program is expected to deliver pre-tax savings of $60 million in 2025, focusing on structural costs mainly in Europe [4]. - PPG has achieved nine consecutive quarters of segment EBITDA margin expansion, indicating a commitment to enhancing profitability [5]. Group 2: Acquisitions and Growth - The company is pursuing inorganic growth through acquisitions, with contributions expected from recent acquisitions such as Tikkurila, Worwag, Cetelon, and Arsonsisi's powder coatings business [6]. - PPG returned $1.4 billion to shareholders in 2024 through dividends and share repurchases, with $620 million in dividends and $750 million in share buybacks [8]. Group 3: Market Challenges - PPG faces soft demand conditions, particularly in the automotive sector, with lower OEM build rates and industrial production impacting sales in the Industrial Coatings unit [9]. - The company anticipates a low single-digit to mid-single-digit percentage decline in industrial coatings segment sales in Q1 2025 due to subdued global industrial production [10]. - Overall organic growth is expected to be limited by lower automotive OEM and industrial production in the first quarter, with continued pressure on industrial coatings demand [10].

Group 1: Corporate Initiatives - PPG Industries Inc. has joined the Make it Zero initiative, focusing on reducing scope 3 greenhouse gas emissions in the DIY home improvement sector [1] - As a member of the initiative's task force, PPG is working on standardized methods for tracking and measuring carbon emissions, promoting best practices in reporting, and reducing scope 3 emissions [2] - The company is committed to collaborating with customers and suppliers to achieve sustainability goals and transition to lower-carbon products [3] Group 2: Financial Performance - PPG's shares have declined by 25.1% over the past year, while the industry has seen a smaller decline of 7.1% [4] - The company expects adjusted earnings per share (EPS) for 2025 to be between $7.75 and $8.05, indicating a 7% increase at the midpoint, excluding foreign currency impacts and higher tax rates [5] - Annual EPS growth is anticipated to be concentrated in the second half of 2025, with expectations of over $100 million in annualized share gains in the Industrial Coatings segment starting in the second half of this year [6]

Company Overview - PPG Industries (PPG) shares increased by 12.5% to close at $103.11, following a significant volume of trading, contrasting with a 19.2% loss over the past four weeks [1] - The rally in PPG's stock is attributed to a surge in material stocks after President Trump announced a 90-day pause on reciprocal tariffs for most countries [1] Earnings Expectations - PPG is expected to report quarterly earnings of $1.62 per share, reflecting a year-over-year decline of 12.9%, with revenues anticipated at $3.64 billion, down 15.5% from the previous year [2] - The consensus EPS estimate for PPG has been revised marginally higher over the last 30 days, indicating a potential for price appreciation if the positive trend continues [3] Industry Context - PPG Industries is part of the Zacks Chemical - Specialty industry, which includes other companies like Celanese (CE), whose stock closed 17.1% higher at $43.90, despite a 31.4% decline over the past month [3] - Celanese's consensus EPS estimate has decreased by 4.4% to $0.40, representing an 80.8% drop from the previous year's report, and it currently holds a Zacks Rank of 5 (Strong Sell) [4]

Company Developments - PPG Industries has launched a waterborne automotive coatings manufacturing plant in Samut Prakan, Thailand, with an annual production capacity of 2,000 tons to meet the rising demand for sustainable coatings in Southeast Asia [1] - The new facility includes an automated spray application center aimed at enhancing services and improving competitiveness in the global market [2] - PPG is focusing on the Southeast Asian market, particularly in the automotive sector, and plans to partner with Chinese brands like BYD and Chery for localized production and technical support [3] Financial Outlook - PPG missed fourth-quarter 2024 earnings and sales estimates but projects adjusted EPS for 2025 to be between $7.75 and $8.05, indicating a 7% increase at the midpoint, with growth expected in the second half of 2025 [4] - PPG aims to achieve over $100 million in annualized share gains in its Industrial Coatings segment starting in the second half of 2025 [4] Industry Comparisons - Dow Inc. anticipates benefits from near-term projects and increased operational focus in 2025, with a cost-cutting initiative of $1 billion, including workforce reductions of 1,500 roles globally [5] - DuPont projects consolidated net sales for 2025 to be between $12.8 billion and $12.9 billion, with adjusted EPS forecasted between $4.30 and $4.40 [6] - Eastman Chemical expects modest volume growth in its specialty businesses in 2025, with an EBITDA growth commitment of $75-$100 million [7]

Financial Performance - Net sales for 2024 were approximately $15.8 billion, a decrease of 2% compared to 2023, primarily due to declining sales volumes and unfavorable foreign currency translation [111]. - Income before income taxes increased by $162 million to $1,852 million in 2024, driven by lower raw material costs and restructuring savings [112]. - Cost of sales, exclusive of depreciation and amortization, decreased by $426 million to $9,252 million in 2024, representing 58.4% of net sales [117]. - Earnings per diluted share from continuing operations increased to $5.72 in 2024, up 10.9% from $5.16 in 2023 [136]. - Adjusted earnings per diluted share rose by 6% to $7.87 in 2024 compared to $7.42 in 2023 [141]. - The effective tax rate for continuing operations was 25.6% in 2024, an increase of 0.3% from the previous year [138]. - The effective tax rate for 2025 is expected to be in the range of 23% to 25%, an increase compared to the 2024 adjusted effective tax rate [151]. Cash Flow and Capital Management - The company generated $1.4 billion in operating cash flow during 2024, demonstrating resilience in a challenging macroeconomic environment [141]. - PPG ended 2024 with approximately $1.4 billion in cash and short-term investments, expecting strong cash generation in 2025 [153]. - Cash from operating activities for continuing operations decreased by $903 million to $1,391 million in 2024, primarily due to unfavorable changes in working capital [198]. - Cash used for investing activities decreased by $126 million to $399 million in 2024, a 24.0% decline compared to 2023, primarily due to proceeds from the sale of the silicas products business [206]. - Cash used for financing activities decreased by $125 million to $1,425 million in 2024, an 8.1% decline compared to 2023, mainly due to lower repayments of long-term debt [212]. - PPG repurchased approximately nine million shares of stock over four years, including $752 million in 2024, with $2.8 billion remaining under its current share repurchase authorization [152]. - Dividends paid to shareholders increased to $622 million in 2024, marking the 53rd consecutive year of increased annual per-share dividend payments, with a 5% increase in the quarterly dividend to $0.68 per share [215]. - The company expects capital expenditures for 2025 to be approximately $725 million to $775 million, aimed at supporting future organic growth opportunities [210]. Segment Performance - Global Architectural Coatings net sales decreased by 2.5% in 2024 to $3,921 million, primarily due to lower sales volumes [158]. - Segment income for Global Architectural Coatings increased by $5 million year over year, driven by higher selling prices and moderating raw material costs [163]. - Architectural coatings EMEA organic sales were flat year over year, with higher selling prices offset by lower sales volumes [166]. - Segment income for Performance Coatings increased by $123 million year over year, primarily due to higher selling prices and moderating raw material costs [174]. - Performance Coatings net sales increased by 2% in 2024, driven by higher selling prices (+6%) and partially offset by lower sales volumes (-5%) and divestitures (-2%) [170]. - Aerospace coatings organic sales increased by a double-digit percentage, supported by strong demand and customer order backlogs [172]. - Industrial Coatings segment net sales decreased by $402 million year over year, primarily due to lower selling prices and lower sales volumes driven by lower industry demand [180]. - Automotive OEM coatings organic sales decreased by a high single-digit percentage year over year due to lower sales volumes and indexed-based selling prices [181]. Cost Management and Restructuring - A comprehensive cost reduction program was approved in October 2024, focusing on reducing structural costs primarily in Europe [128]. - Total restructuring savings were approximately $40 million in 2024, with an anticipated annualized pre-tax savings of approximately $175 million once fully implemented, including $60 million in 2025 [146]. - PPG incurred wage inflation in 2024, impacting operating costs, but raw material costs were favorable compared to 2023 [148]. - Selling price improvements were achieved across several businesses in 2024, with careful monitoring of costs planned for 2025 [149]. Foreign Currency and Market Risks - Foreign currency exchange rates had a net unfavorable impact on net income from continuing operations of approximately $20 million in 2024, expected to continue in 2025 [150]. - The unfavorable impact of foreign currency translation on full year 2024 Income before income taxes was approximately $20 million, attributed to the strengthening of the U.S. dollar against the Mexican peso and Chinese yuan [236]. - A 10% adverse change in exchange rates for European and Canadian currencies could reduce Income before income taxes by $429 million in 2024, compared to $402 million in 2023 [243]. - PPG had non-U.S. dollar denominated debt of $3.3 billion as of December 31, 2024, with a potential unrealized translation loss of $369 million if the U.S. dollar weakens by 10% against European currencies [245]. - The company is exposed to market risks related to changes in foreign currency exchange rates and interest rates, and may use derivative financial instruments to manage these risks [241]. Debt and Capitalization - Total indebtedness to total capitalization ratio was 45% as of December 31, 2024, well below the 60% limit set by credit agreements [221]. - Long-term debt obligations total $5,808 million, with $933 million due in 2025 [224]. - The total amount of unrecognized tax benefits for uncertain tax positions was $152 million as of December 31, 2024 [226]. - As of December 31, 2024, consolidated net assets decreased by $905 million compared to December 31, 2023, primarily due to the strengthening of the U.S. dollar against the Mexican peso [235]. - The fair value of foreign currency forward contracts was a net liability of $53 million as of December 31, 2024, compared to a net asset of $23 million as of December 31, 2023 [243]. - Interest rate swaps converted $375 million of fixed rate debt to variable rate debt, with fair values of liabilities at $16 million as of December 31, 2024 [246]. - A 10% increase in variable interest rates would increase annual interest expense by $3 million for U.S., Canada, Mexico, and Europe, and by $2 million for Asia and South America [246]. - The fair value of U.S. dollar to euro cross currency swap contracts was a net asset of $50 million as of December 31, 2024 [244].

Company Overview - PPG Industries Inc. has expanded its non-bisphenol A (BPA) HOBA internal coatings line with the introduction of PPG Hoba Pro 2848 coating, aimed at the growing demand for aluminum bottle packaging for beverages [1][2] - The new coating was showcased at Paris Packaging Week and received an Aerosol and Dispensing Forum (ADF) Innovation Award [1] Product Details - PPG Hoba coatings have been utilized for five decades in aluminum aerosol cans and tubes for personal care products, and the new product targets the sustainable packaging market for beverages [2] - PPG Hoba Pro 2848 is a non-bisphenol, PFAS-NI, and non-phenolic internal liner that offers improved interior protection for various applications including personal care, beverages, pharmaceuticals, and food [3] Market Performance - PPG Industries shares have decreased by 19.3% over the past year, while the industry has seen a decline of 16.6% during the same period [4] - The company expects adjusted earnings per share (EPS) for 2025 to be between $7.75 and $8.05, indicating a 7% increase at the midpoint, excluding foreign currency translation and higher tax rates [5] Future Outlook - Annual EPS growth is anticipated to be concentrated in the second half of 2025, with expectations of more than $100 million in annualized share gains in the Industrial Coatings segment starting in the second half of this year [6]

Core Viewpoint - PPG Industries reported disappointing fourth-quarter adjusted EPS results and provided FY25 adjusted EPS guidance below market expectations [1][2]. Financial Performance - PPG's quarterly earnings were $1.61 per share, missing the analyst consensus estimate of $1.65 per share [1]. - The company achieved a 6% growth in adjusted EPS for the year 2024, generating $1.4 billion in operating cash flow [2]. - PPG returned $1.4 billion to shareholders through stock repurchases and dividends during the year, with approximately $250 million repurchased in the fourth quarter [2]. Future Guidance - PPG expects adjusted EPS for FY25 to be in the range of $7.75-$8.05, significantly below market estimates of $8.68 [2]. Market Reaction - Following the earnings announcement, PPG shares fell 2.9% to trade at $112.07 [3]. - Analysts adjusted their price targets for PPG, with Wells Fargo lowering it from $150 to $135, Mizuho from $150 to $140, and Barclays from $144 to $125 [4].

Core Viewpoint - PPG Industries reported mixed financial results for the fourth quarter of 2024, with adjusted earnings per share (EPS) slightly increasing year-over-year but missing consensus estimates, while revenues declined significantly compared to the previous year [1][2][7]. Financial Performance - Adjusted EPS for Q4 2024 was $1.61, up from $1.56 in Q4 2023, but below the Zacks Consensus Estimate of $1.65 [1] - Revenues for the quarter were $3,729 million, a decrease of approximately 5% year-over-year, missing the consensus estimate of $4,005.5 million [2] - For the full year 2024, adjusted EPS was $7.87 compared to $7.42 in 2023, while net sales decreased by 2% to $15,845 million [7] Segment Analysis - Performance Coatings segment revenues increased by 2% to $1,262 million, driven by growth in aerospace, protective and marine coatings, and traffic solutions [4] - Industrial Coatings segment revenues fell by 9% year-over-year to $1,586 million, primarily due to lower sales volumes and prices, with a significant drop in automotive OEM coatings [5] - Global Architectural Coatings segment reported revenues of $881 million, down 7% year-over-year, mainly due to unfavorable foreign currency impacts [6] Sales and Market Trends - Organic sales declined by a low single-digit percentage year-over-year, with growth in Mexico, China, and India, offsetting declines in automotive OEM and industrial coatings [3] - The aerospace order backlog grew to approximately $300 million, indicating strong demand in that sector [4] Financial Position - At the end of Q4 2024, PPG had around $1.4 billion in cash and short-term investments, with net debt at $4.5 billion, a decrease of roughly $30 million from the previous year [8] Future Outlook - PPG expects adjusted EPS for 2025 to range between $7.75 and $8.05, indicating a potential 7% increase at the midpoint, based on current economic conditions and mixed demand across regions [9] - The company anticipates that annual EPS growth will be concentrated in the second half of 2025, with plans to achieve over $100 million in annualized share gains in the Industrial Coatings segment starting in the second half of 2024 [10] Stock Performance - PPG Industries' shares have decreased by 13.2% over the past year, compared to a 15.4% decline in the industry during the same period [11]