PPG Industries (PPG) Q4 2014 earnings summary

Executive summary

• FY14 net sales rose 8% to $15.36B; diluted EPS was $15.03, including $6.93 from discontinued operations, while continuing-operations diluted EPS increased to $8.10 from $6.55.

• Adjusted continuing-operations diluted EPS was $9.75; growth reflected higher volumes, acquisitions, productivity and share repurchases, partly offset by a $317M debt-refinancing charge and environmental costs.

Financial highlights

• Net income attributable to PPG was $2.102B versus $3.231B in 2013; continuing-operations income was $1.133B versus $950M.

• FY14 sales growth comprised 4% from acquisitions, 3% from higher volumes and 1% from pricing; volumes excluding acquisitions advanced 3.5%.

• Cost of sales, excluding depreciation and amortization, was 57% of sales versus 58% in 2013; SG&A was 24.5% versus 24.4%.

• Q4 net sales were $3.707B; diluted EPS was $0.60, including continuing-operations EPS of $0.62 and discontinued-operations EPS of $(0.02).

Outlook and guidance

• 2015 growth expected strongest in the U.S.; North American and Asian economies projected to grow generally in line with 2014, with mixed emerging-market demand and subdued, uneven European growth.

• Mid-January exchange rates implied 2015 FX translation headwinds of $650M–$750M to sales and $65M–$75M to earnings; further currency weakening could increase the impact.

• 2015 ongoing effective tax rate forecast at 24.0%–25.0%; net interest expense expected to fall $55M after refinancing, and pension/OPEB costs to rise $60M–$65M.

• Comex expected to contribute $180M–$200M of sales in Q1 2015; selective pricing actions planned, and 2015 capital spending expected at 3.5%–4.0% of sales.