PPG Industries Inc. PPG reported net income from continuing operations of $99 million or 42 per share in second-quarter 2020, down from the year-ago quarter’s profit of $270 million or $1.13 per share.
Barring one-time items, adjusted earnings were 99 cents per share in the reported quarter, down 46.5% from $1.85 logged in the year-ago quarter. Nevertheless, the figure topped the Zacks Consensus Estimate of 65 cents.
Net sales declined 25.1% year over year to $3,015 million. However, the figure surpassed the Zacks Consensus Estimate of $2,833 million. Unfavorable currency swings affected net sales by more than 3%. Sales volume fell 24% year over year.
PPG Industries, Inc. Price, Consensus and EPS Surprise
PPG Industries, Inc. price-consensus-eps-surprise-chart | PPG Industries, Inc. Quote
Segment Highlights
Performance Coatings: Net sales in the segment amounted to around $2.1 billion in the second quarter, down 15% year over year. Sales volume in the segment declined around 15%. Unfavorable foreign currency translation impacted net sales by 4%.
Segment income declined 15% year over year to $362 million. Reduced sales volume associated with the coronavirus pandemic and unfavorable foreign currency translation were partly offset by higher selling prices, cost mitigation measures and restructuring initiatives.
Industrial Coatings: Sales in the segment totaled around $950 million, down roughly 40% from the prior-year quarter’s figure. The benefits of slightly higher selling prices were offset by 38% decline in sales volume. Also, unfavorable foreign currency translation lowered sales by around 3% on a year-over-year basis.
Net income in the segment totaled $34 million, down around 85% year over year. Reduced sales volume due to customer shutdowns associated with the coronavirus pandemic were partly offset by modestly higher selling prices, cost mitigation measures and restructuring cost savings.
Financial Position
As of Jun 30, 2020, PPG Industries had cash and cash equivalents of $2,252 million, up 133.9% year over year. Long-term debt fell 4.8% year over year to $4,613 million.
Outlook
Going forward, the company expects to achieve restructuring savings of $60-$70 million in the second half of 2020.
PPG Industries also expects total sales volume for the third quarter to decline 8-15%. The company stated that the wide range is due to the uncertainty associated with the impact of the coronavirus pandemic.
Moreover, it anticipates corporate expenses of $50-$55 million and net interest expenses of $32-$36 million for the third quarter.
Price Performance
Shares of the company have declined 1.5% in the past year compared with the 6.6% decline of the industry.
Zacks Rank & Key Picks
PPG Industries currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Harmony Gold Mining Company Limited HMY and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 49.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 126% in the past year.
Northern Dynasty has an expected earnings growth rate of 28.6% for 2020. The company’s shares have skyrocketed 191.5% in the past year.
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