PPG Industries third-quarter net income went down by 22% YOY, to $344 million. Net sales during the quarter was higher by 19% YOY, to $4.37 billion. The company reported earnings per diluted share (EPS) of $1.43 and adjusted EPS of $1.69.

 

Michael H. McGarry, PPG chairman and chief executive officer, commented on the quarter, "As we communicated in early September, supply-chain disruptions worsened during the quarter as various commodity and component shortages restricted both our manufacturing output and that of certain customers. While overall demand remained robust during the quarter, these increased disruptions prevented us from completely fulfilling our strong order books. Throughout the quarter, we continued to prioritize selling price increases and we delivered 6 percent price realization for the quarter, led by the Industrial Coatings reporting segment.

 

Several of our businesses, including automotive refinish, protective and marine, and packaging coatings delivered above-market volume performance despite the procurement challenges. In addition, demand recovery continued in our aerospace coatings business, primarily in the aftermarket. Strategically, the integration of our five recent acquisitions is well underway, with initial synergy capture meeting expectations. I am pleased to report that our two larger acquisitions - Ennis-Flint and Tikkurila - delivered solid top-line performance in the quarter, and would have performed even better, aside from the sourcing interruptions.

 

Looking ahead, while economic demand remains strong on an aggregate basis, we anticipate ongoing supply chain disruptions to persist throughout the fourth quarter, with potential further impacts from the recent industrial production curtailments in China. We expect these disruptions to ease slightly in overall quantity and magnitude as the quarter progresses. We will continue to prioritize selling price increases and expect realization to be sequentially higher in the fourth quarter. The pace of our price realization continues to be well ahead of the most recent raw material inflation cycle in 2017-2018, which should allow us to fully offset aggregate raw material cost inflation in early 2022. In addition, the anticipated recovery of the automotive original equipment manufacturer (OEM), aerospace, and automotive refinish coatings businesses, which collectively accounted for about 40% of our pre-pandemic sales, will be a significant catalyst for growth in 2022. As always, we will continue to aggressively manage all aspects of our cost structure."

 

The company reported the following projections for the fourth quarter and full year 2021 based on current global economic activity, continuing customer production limitations due to global semiconductor shortages, coatings raw material supply constraints, and near-term economic uncertainty associated with COVID-19: 

- Aggregate net sales volumes down 8% to 10% on a year-over-year basis

- Corporate expenses of about $50 million to $55 million

- Net interest expense of $25 million to $27 million

- The effective tax rate of about 20%

- Full-year adjusted earnings per diluted share of $6.67 to $6.73