PPG Reports Record First Quarter Sales, Earnings Per Share
PITTSBURGH--April 20, 2006--PPG Industries reported today first quarter net income of $184 million, or $1.11 a share, including aftertax charges of $23 million, or 14 cents a share, for business restructuring; and $6 million, or 3 cents a share, to reflect the net increase in the current value of the company's obligation under its asbestos settlement agreement reported in May 20, 200602. Sales were $2.6 billion.In the first quarter 2005, PPG reported net income of $95 million, or 55 cents a share, including aftertax charges of $91 million, or 52 cents a share, for a legal settlement; and $5 million, or 3 cents a share, to reflect the net increase in the value of the company's obligation under its asbestos settlement agreement. Sales were $2.5 billion.
"For the 12th consecutive quarter we posted an all-time, quarterly sales record," said Charles E. Bunch, chairman and chief executive officer. "Supporting this revenue growth were our coatings businesses, which posted an all-time first quarter record, and our optical business, which increased sales by 20 percent and set the all-time record for any quarter. These results continue to demonstrate the success of our growth strategies.
"More important, our earnings per share were easily an all-time first-quarter record, reflecting our company's primary mission of generating profitable growth. Though energy and raw material costs are still high, we remain optimistic about overall economic prospects and our ability to continue delivering strong financial performance."
Coatings sales increased $108 million, or 8 percent, as a result of higher volumes, especially in Asia, and improved selling prices across most businesses. These increases coupled with an increase in sales due to acquisitions were partially offset by the impact of weaker foreign currencies. Operating earnings were up $158 million due to the impact of an adverse legal settlement in 2005, and the benefits of the higher selling prices and volumes. These increases were partially offset by the negative impact of inflation, primarily raw material costs, and the impact of business restructuring.
Glass sales increased $11 million, or 2 percent, because of higher volumes across all businesses and acquisition-related sales increases, which were partially offset by the impact of weaker foreign currencies. Operating earnings were down $9 million due to the impact of inflation, primarily higher energy costs. These decreases were partially offset by manufacturing efficiencies.
Chemical sales increased $26 million, or 4 percent, due to higher optical products volumes, higher selling prices for chlor-alkali products and increased sales relating to an acquisition in the optical business. These increases were partially offset by lower volumes for chlor-alkali products and the impact of weaker foreign currencies. Operating earnings were down $27 million due to the impact of higher inflation, principally higher energy and ethylene costs of $44 million; higher environmental charges; lower volume; and higher advertising expenses. These decreases were partially offset by the benefit of the higher selling prices discussed above.
PPG INDUSTRIES AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENT OF OPERATIONS (unaudited)
(All amounts in millions except per-share data)
3 Months Ended
Mar. 31
2006 2005
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Net sales $2,638 $2,493
Cost of sales 1,691 1,558
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GROSS PROFIT 947 935
Other expenses (earnings):
Selling and other 535 527
Depreciation 82 87
Interest 20 21
Amortization 9 8
Asbestos settlement - net 9 9
Business restructuring 35 -
Other - net (Note A) (12) 138
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INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST 269 145
Income tax expense 66 34
Minority interest 19 16
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NET INCOME (Note B) $184 $95
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Earnings per common share $1.11 $0.55
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Earnings per common share - assuming dilution $1.11 $0.55
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Average shares outstanding 165.4 172.5
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Average shares outstanding - assuming dilution 166.5 174.2
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Note A:
The three months ended March 31, 2005, includes a pretax charge of
$150 million for a legal settlement.
Note B:
The three months ended March 31, 2005, includes an aftertax charge
of $91 million for a legal settlement.
CONDENSED BALANCE SHEET (unaudited)
Mar. 31 Dec. 31
2006 2005
------- -------
(millions)
Current assets:
Cash and cash equivalents $416 $466
Receivables - net 2,038 1,871
Inventories 1,195 1,119
Other 525 563
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Total current assets 4,174 4,019
Property less accumulated depreciation 2,283 2,304
Investments 351 311
Goodwill and identifiable intangible assets 1,665 1,654
Other assets 445 393
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TOTAL $8,918 $8,681
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Current liabilities:
Short-term debt and current portion of long-term debt $86 $101
Asbestos settlement 480 472
Accounts payable and accrued liabilities 1,778 1,776
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Total current liabilities 2,344 2,349
Long-term debt 1,174 1,169
Asbestos settlement 391 385
Deferred income taxes 92 90
Accumulated provisions 1,576 1,527
Minority interest 127 108
Shareholders' equity 3,214 3,053
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TOTAL $8,918 $8,681
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BUSINESS SEGMENT INFORMATION (unaudited)
3 Months Ended
Mar. 31
2006 2005
------ -------
(millions)
Net sales
Coatings $1,440 $1,332
Glass 565 554
Chemicals 633 607
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TOTAL $2,638 $2,493
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Operating income
Coatings (Note A) $167 $9
Glass (Note B) 32 41
Chemicals 128 155
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TOTAL 327 205
Interest expense - net (17) (17)
Asbestos settlement - net (9) (9)
Compensation cost associated with stock options (7) (7)
Other unallocated corporate income (expense) - net (25) (27)
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INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST $269 $145
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Note A:
Operating income for the three months ended March 31, 2006,
includes pretax charges of $33 million for business restructuring,
including severance costs of $31 million and asset write-offs of
$2 million. Operating income for the three months ended March 31,
2005, includes a pretax charge of $150 million for a legal
settlement.
Note B:
Operating income for the three months ended March 31, 2006,
includes pretax charges of $2 million for business restructuring,
consisting of severance costs.