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PPG Industries, Inc. PPG reported a first-quarter 2023 profit of $264 million or $1.11 per share, up significantly from $18 million or 8 cents per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.82, up from $1.37 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $1.55.
The upside in earnings can be attributed to the company’s pricing growth across segments, improved manufacturing efficiencies and overall cost discipline.
The company’s revenues were $4,380 million in the quarter, up 1.7% year over year. The upside in sales can be attributed to higher selling prices. The top line missed the Zacks Consensus Estimate of $4,489.5 million.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Review
The Performance Coatings segment’s first-quarter revenues increased 2% year over year to $2,628 million. This modest increase is driven by higher selling prices in all businesses that more than offset reduced sales volumes, the impact of divestitures, the exit of business in Russia and unfavorable foreign currency translations.
Revenues from the Industrial Coatings segment totaled $1,752 million, an increase of 1% year over year, driven by higher prices that offset lower sales volumes, unfavorable currency and the exit of business in Russia. Sales of Automotive OEM coatings increased on higher volumes and prices.
Financials
PPG ended the quarter with cash and cash equivalents of $1,426 million, up around 48.5% year over year. Long-term debt was $7,082 million, up 3.6%.
Corporate expenses rose by $15 million in the reported quarter to $70 million. The increase is attributed to higher non-cash pension expenses. The company also realized around $15 million of cost savings from acquisition-related synergies and business restructuring programs in the quarter.
Outlook
PPG projects adjusted earnings of $6.95-$7.25 per share for 2023. The prediction excludes amortization expense, non-cash pension settlement charge, benefit from insurance recovery and costs related to earlier approved and communicated business restructuring.
Factoring in current global economic activities, geopolitical issues in Europe and higher interest rates in most developed countries, the company expects sales volumes in second-quarter 2023 to be flat with the potential for slight improvement or decrease of a low single-digit percentage year over year. Adjusted earnings for the second quarter are projected in the band of $2.05-$2.15.
Price Performance
PPG shares are up 6.4% in the past year against the industry’s decline of 3% over the same period.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
PPG currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Basic Materials space are Steel Dynamics, Inc. STLD, Linde plc LIN and Olympic Steel, Inc. ZEUS.
Steel Dynamics currently carries a Zacks Rank #1 (Strong Buy). Shares of STLD have gained 19.5% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 11.3% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Linde, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.97% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 13.3% over the past year.
Olympic Steel currently carries a Zacks Rank #1. Shares of ZEUS have gained 31.3% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.2% on average.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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