- Fourth quarter highlights include:
- Record fourth quarter net sales of $4.4 billion
- Net sales up 4% year over year (YOY), including organic sales
growth of 1%
- Quarterly earnings per diluted share (EPS) of $0.38 and
adjusted EPS of $1.53
- Further progress on margin recovery; segment margin up 260
basis points YOY
- Share repurchases of $100 million
- Full-year 2023 highlights include:
- Record sales of $18.2 billion; aided by 3% organic sales
growth
- EPS of $5.35 and record adjusted EPS of $7.67
- Record operating cash flow of over $2.4 billion; up more than
$1.4 billion YOY
PPG (NYSE: PPG) today reported financial results for the fourth
quarter 2023.
Fourth Quarter Consolidated Results
$ in millions, except EPS
4Q 2023
4Q 2022
YOY change
Net sales
$4,350
$4,185
+4%
Net income
$90
$238
-62%
Adjusted net income(a)
$363
$286
+27%
EPS
$0.38
$1.01
-62%
Adjusted EPS(a)
$1.53
$1.22
+25%
(a) Reconciliations of reported to
adjusted figures are included below
Chairman and CEO Comments
Tim Knavish, PPG chairman and chief executive officer, commented
on the quarter and 2023:
Capping off a record year, the PPG team delivered solid
year-over-year sales growth, strong adjusted earnings growth and
record operating cash flow. The breadth and diversity of our
business portfolio was a key driver to our record fourth quarter
performance, as we benefited from solid volume growth in China,
demand stabilization in Europe and continued growth in several key
end-use markets such as aerospace, automotive original equipment
manufacturer (OEM) and protective coatings.
We made strong progress on returning to our historic segment
margin profile while delivering segment earnings growth of 30% and
an aggregate segment margin improvement of 260 basis points,
marking the fifth consecutive quarter of year-over-year margin
improvement. Additionally, our earnings growth and working capital
management resulted in strong cash generation in the quarter and
record operating cash flow of over $2.4 billion for the year. We
ended the year with a strong balance sheet that, coupled with our
legacy of solid cash flow, provides us with shareholder value
creation opportunities going forward.
Looking at the full year, in addition to our record financial
performance, we successfully implemented various strategic
initiatives to strengthen the company, including key actions to
position PPG for higher organic growth. We also executed on our
ongoing portfolio review leading to the divestitures of both our
European and Australian Traffic Solutions businesses and the
recently announced strategic alternatives review of the silicas
products business. Finally, we have continued our heritage of
rewarding our shareholders with our 124th consecutive year of
dividend payments, including 52 consecutive years of dividend
increases.
Looking ahead, while global industrial production remains at low
absolute levels, we expect that demand for our businesses in China
will continue to improve. In Europe, we believe that economic
activity will stabilize in 2024 at current levels. In the U.S., we
anticipate that economic conditions will remain subdued during the
first half of 2024, and in Mexico, which is now our second largest
country in terms of total net sales, we expect strong momentum to
continue. From a PPG perspective, we plan to deliver volume growth
in 2024 by executing on our key strategic growth initiatives and
fully capitalizing on continued demand in several areas, including
aerospace and Mexico, which will also benefit from cross-selling
initiatives through our concessionaire network.
We are laser focused on maintaining the unwavering support of
our customers as we leverage our strong brands and provide
technology-advantaged products and solutions that enhance their
productivity and sustainability. We aim to build on our strong 2023
financial performance by continuing our growth and value creation
in 2024 for the benefit of all stakeholders. Finally, I want to
thank our more than 50,000 employees around the world for “making
it happen” in 2023 and positioning us for growth in 2024.
Fourth Quarter 2023 Reportable Segment Financial
Results
Performance Coatings
segment
$ in millions
4Q 2023
4Q 2022
YOY change
Net sales
$2,615
$2,490
+5%
Segment income
$325
$272
+19%
Segment income %
12.4%
10.9%
Sales volumes
-1%
Selling prices
+3%
Foreign currency translation
+3%
Performance Coatings net sales increased 5%, led by higher
selling prices and favorable foreign currency translation.
Sales of PPG’s technology-advantaged aerospace products remained
strong, as the business delivered mid-teen percentage organic sales
growth year over year. Protective and marine coatings delivered
mid-single-digit percentage organic sales growth driven by strong
volume growth in the U.S. and Europe. Automotive refinish coatings
organic sales grew by a low single-digit percentage, aided by
growth in Europe and Asia. In the architectural coatings Americas
and Asia-Pacific business, organic sales decreased a low
single-digit percentage. Architectural coatings in Mexico delivered
another strong quarter, as we continue to benefit from a growing
Mexican economy and our excellent Comex brand. U.S. and Canada
architectural coatings sales were lower, as growth in the
professional contractor channel was more than offset by continuing
softness in do-it-yourself demand. Organic sales for architectural
coatings in the EMEA region were down by a low single-digit
percentage, as the benefit of higher prices was more than offset by
lower but moderating volumes.
Segment income increased by 19% versus the prior year primarily
due to higher selling prices and moderating input costs. Segment
operating margins improved by 150 basis points year over year.
Industrial Coatings
segment
$ in millions
4Q 2023
4Q 2022
YOY change
Net sales
$1,735
$1,695
+2%
Segment income
$230
$155
+48%
Segment income %
13.3%
9.1%
Sales volumes
0%
Selling prices
0%
Foreign currency translation
+2%
Industrial Coatings segment net sales were higher compared to
the fourth quarter 2022 aided by favorable foreign currency
translation.
Automotive OEM coatings organic sales increased by a
mid-single-digit percentage with higher selling prices in all
regions and higher aggregate sales volumes led by our market share
gains in the Asia-Pacific region and Mexico. Offsetting this sales
volume growth was lower global industrial activity which resulted
in softer demand in all other businesses in the segment. Industrial
coatings organic sales declined by a mid-single-digit percentage
with lower volumes in most sub-segments. As expected, packaging
coatings organic sales were down a low single-digit percentage
driven by softer customer demand in Europe and Latin America
partially offset by strong growth in the U.S. and the Asia-Pacific
region.
Segment income was higher than the prior year by $75 million, or
48%, primarily due to input costs moderating from historically high
levels and improving manufacturing performance. Segment margins
improved by 420 basis points compared to the fourth quarter
2022.
Full-Year 2023 Financial Results
$ in millions, except EPS
2023
2022
YOY change
Net sales
$18,246
$17,652
+3%
Net income(a)
$1,270
$1,028
+24%
Adjusted net income(a)(b)
$1,822
$1,436
+27%
EPS(a)
$5.35
$4.33
+24%
Adjusted EPS(a)(b)
$7.67
$6.05
+27%
(a) From continuing operations
(b) Reconciliations of reported to
adjusted figures are included below
Record full-year 2023 net sales were approximately $18.2
billion, up about 3% versus the prior year. Organic sales were
higher by 3% driven by higher selling prices. Adjusted EPS was also
a record, increasing 27% due to higher selling prices, moderating
input costs, structural cost savings and favorable foreign-currency
translation, partially offset by lower sales volumes. Ending the
year, input costs and inventory levels remain above historical
levels.
In 2023, the company paid approximately $600 million in
dividends. Capital expenditures totaled about $550 million. The
company repurchased $100 million of stock in the fourth quarter and
had about $1 billion remaining on its current share repurchase
authorization at the end of 2023.
Additional Financial Information
- Fourth quarter reported EPS included a non-cash charge of $0.67
reflecting goodwill impairment for the Traffic Solutions business.
The fair value of the Traffic Solutions business decreased
primarily due to an increase in the weighted cost of capital
(discount rate) assumption reflecting the current interest rate
environment.
- Corporate expenses were $100 million in the fourth quarter,
higher than the prior year primarily due to increased performance
and shareholder return-based incentive compensation along with
non-cash pension expense.
- The reported and adjusted effective tax rates were 46.4% and
22.0%, respectively, in the fourth quarter. The reported rate was
impacted by the fourth quarter non-cash charge for impairment and
certain other charges, for which there was not a tax benefit.
- Net interest expense of $13 million was below the company’s
expectation at the outset of the quarter due to the early repayment
of a term loan and stronger than expected cash generation.
- At quarter end, the company had cash and short-term investments
totaling nearly $1.6 billion. Net debt was $4.5 billion, which is
about $1.2 billion lower compared to the prior-year fourth
quarter.
Outlook
The company today reported the following projections for the
first quarter and full year 2024 based on current global economic
activity, soft industrial production, demand stabilization in
Europe, continued growth in Mexico and demand improvement in
China.
Outlook
1Q 2024
FY 2024
Adjusted EPS
$1.80 - $1.87 per share
$8.34 - $8.59 per share
The effective tax rate for the first quarter 2024 is expected to
be between 24.0% to 25.0%, higher than prior year including the
impact of several regional tax rate increases and the expected mix
of country-specific earnings.
Additional information related to 2024 financial projections are
available in the detailed commentary and associated presentation
slides related to the fourth quarter financial information which
are posted within the investors section of PPG.com.
The term organic sales as used in this press release is defined
as net sales excluding the impact of currency, acquisitions,
divestitures and the wind down of Russia operations.
PPG: WE PROTECT AND BEAUTIFY THE WORLD®
At PPG (NYSE:PPG), we work every day to develop and deliver the
paints, coatings and specialty materials that our customers have
trusted for more than 140 years. Through dedication and creativity,
we solve our customers’ biggest challenges, collaborating closely
to find the right path forward. With headquarters in Pittsburgh, we
operate and innovate in more than 70 countries and reported net
sales of $18.2 billion in 2023. We serve customers in construction,
consumer products, industrial and transportation markets and
aftermarkets. To learn more, visit www.ppg.com.
The PPG Logo and We protect and beautify the world are
registered trademarks of PPG Industries Ohio, Inc.
Additional Information
PPG will provide detailed commentary regarding its financial
performance, including presentation-slide content, on the PPG
Investor Center at www.ppg.com at about 4:30 p.m. ET today, January
18. The company will hold a conference call to review its fourth
quarter 2023 financial performance on January 19, at 8:00 a.m. ET.
Participants can pre-register for the conference by navigating to
https://www.netroadshow.com/events/login?show=38e62f00&confId=58856.
The conference call also will be available in listen-only mode via
Internet broadcast from the PPG Investor Center at www.ppg.com. A
telephone replay will be available January 19, beginning at
approximately 11:00 a.m. ET, through February 2, at 11:59 p.m. ET.
The dial-in numbers for the replay are: in the United States,
1-866-813-9403; Canada, 1-226-828-7578; UK, (Local) 0204-525-0658;
international, +44-204-525-0658; passcode 676198. A Web replay also
will be available shortly after the call on the PPG Investor Center
at www.ppg.com, and will remain through Thursday, January 16,
2025.
Forward-Looking Statements
Statements contained herein relating to matters that are not
historical facts are forward-looking statements reflecting PPG’s
current view with respect to future events and financial
performance. These matters within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, involve risks and
uncertainties that may affect PPG’s operations, as discussed in the
company’s filings with the Securities and Exchange Commission
pursuant to Sections 13(a), 13(c) or 15(d) of the Exchange Act, and
the rules and regulations promulgated thereunder. Accordingly, many
factors could cause actual results to differ materially from the
forward-looking statements contained herein. Such factors include
statements related to the effects on our business of COVID-19,
global economic conditions, geopolitical issues, the amount of
future share repurchases, increasing price and product competition
by our competitors, fluctuations in cost and availability of raw
materials, energy, labor and logistics, the ability to achieve
selling price increases, the ability to recover margins, customer
inventory levels, PPG inventory levels, the ability to maintain
favorable supplier relationships and arrangements, the timing of
realization of anticipated cost savings from restructuring and
other initiatives, the ability to identify additional cost savings
opportunities, the timing and expected benefits of potential future
and completed acquisitions, difficulties in integrating acquired
businesses and achieving expected synergies therefrom, economic and
political conditions in international markets, the ability to
penetrate existing, developing and emerging foreign and domestic
markets, foreign exchange rates and fluctuations in such rates,
fluctuations in tax rates, the impact of future legislation, the
impact of environmental regulations, unexpected business
disruptions, the unpredictability of existing and possible future
litigation, including asbestos litigation, and governmental
investigations. However, it is not possible to predict or identify
all such factors. Consequently, while the list of factors presented
here and in our 2022 Annual Report on Form 10-K considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Consequences of material
differences in results compared with those anticipated in the
forward-looking statements could include, among other things, lower
sales or earnings, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on PPG’s
consolidated financial condition, results of operations or
liquidity.
All information in this release speaks only as of January 18,
2024, and any distribution of this release after that date is not
intended and will not be construed as updating or confirming such
information. PPG undertakes no obligation to update any
forward-looking statement, except as otherwise required by
applicable law.
Regulation G Reconciliation
PPG believes investors’ understanding of the company’s
performance is enhanced by the disclosure of net income, earnings
per diluted share from continuing operations and PPG’s effective
tax rate adjusted for certain items. PPG’s management considers
this information useful in providing insight into the company’s
ongoing performance because it excludes the impact of items that
cannot reasonably be expected to recur on a quarterly basis or that
are not attributable to our primary operations. Net income,
earnings per diluted share from continuing operations and the
effective tax rate adjusted for these items are not recognized
financial measures determined in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”) and should not be
considered a substitute for net income, earnings per diluted share,
the effective tax rate or other financial measures as computed in
accordance with U.S. GAAP. In addition, adjusted net income,
adjusted earnings per diluted share and the adjusted effective tax
rate may not be comparable to similarly titled measures as reported
by other companies. PPG is not able to provide a reconciliation of
first quarter and full-year 2024 expected adjusted earnings per
diluted share to the most directly comparable GAAP financial
measure without unreasonable effort because certain items that
impact such measure are uncertain or cannot be reasonably predicted
at this time.
Regulation G Reconciliation - Net
Income and Earnings per Diluted Share
($ in millions, except per-share
amounts)
Fourth Quarter 2023
Fourth Quarter 2022
$
EPS(a)
$
EPS(a)
Reported net income from continuing
operations
$90
$0.38
$238
$1.01
Acquisition-related amortization
expense
30
0.13
31
0.13
Business restructuring-related costs,
net(b)
13
0.05
6
0.03
Impairment and other related charges,
net(c)
160
0.67
11
0.05
Portfolio optimization(d)
28
0.12
—
—
Environmental remediation charges(e)
23
0.10
—
—
Argentina currency devaluation
losses(f)
24
0.10
—
—
Insurance recoveries(g)
(5
)
(0.02
)
—
—
Adjusted net income from continuing
operations, excluding certain items
$363
$1.53
$286
$1.22
Full Year 2023
Full Year
2022
$
EPS(a)
$
EPS(a)
Reported net income from continuing
operations
$1,270
$5.35
$1,028
$4.33
Acquisition-related amortization
expense
121
0.51
126
0.53
Business restructuring-related costs,
net(b)
34
0.14
56
0.24
Impairment and other related charges,
net(c)
160
0.67
214
0.90
Portfolio optimization(d)
58
0.24
12
0.05
Environmental remediation charges(e)
23
0.10
—
—
Argentina currency devaluation
losses(f)
24
0.10
—
—
Insurance recoveries(g)
(12
)
(0.05
)
—
—
Pension settlement charge(h)
144
0.61
—
—
Adjusted net income from continuing
operations, excluding certain items
$1,822
$7.67
$1,436
$6.05
Fourth Quarter 2023
Fourth Quarter 2022
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Effective tax rate, continuing
operations
$192
$89
46.4
%
$319
$73
22.9
%
Acquisition-related amortization
expense
40
10
25.0
%
41
10
24.4
%
Business restructuring-related costs,
net(b)
16
3
18.8
%
8
2
29.7
%
Impairment and other related charges,
net(c)
160
—
—
%
15
4
24.7
%
Portfolio optimization(d)
31
3
9.7
%
—
—
—
%
Environmental remediation charges(e)
30
7
23.3
%
—
—
—
%
Argentina currency devaluation
losses(f)
20
(4
)
(20.0
)%
—
—
—
%
Insurance recoveries(g)
(7
)
(2
)
28.6
%
—
—
—
%
Adjusted effective tax rate, continuing
operations, excluding certain items
$482
$106
22.0
%
$383
$89
23.2
%
Full Year 2023
Full Year 2022
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Income Before Income
Taxes
Tax Expense
Effective Tax Rate
Effective tax rate, continuing
operations
$1,748
$439
25.1
%
$1,381
$325
23.5
%
Acquisition-related amortization
expense
161
40
24.8
%
166
40
24.1
%
Business restructuring-related costs,
net(b)
43
9
20.9
%
75
19
25.3
%
Impairment and other related charges,
net(c)
160
—
—
%
245
31
12.7
%
Portfolio optimization(d)
53
(7
)
(13.2
)%
10
(2
)
(20.0
)%
Environmental remediation charges(e)
30
7
23.3
%
—
—
—
%
Argentina currency devaluation
losses(f)
20
(4
)
(20.0
)%
—
—
—
%
Insurance recoveries(g)
(16
)
(4
)
25.0
%
—
—
—
%
Pension settlement charge(h)
190
46
24.2
%
—
—
—
%
Adjusted effective tax rate, continuing
operations, excluding certain items
$2,389
$526
22.0
%
$1,877
$413
22.0
%
(a)
Earnings per diluted share is calculated
based on unrounded numbers. Figures in the table may not
recalculate due to rounding.
(b)
Business restructuring-related costs, net
include business restructuring charges, offset by releases related
to previously approved programs, which are included in Other
charges/(income), net on the consolidated statement of income,
accelerated depreciation of certain assets, which is included in
Depreciation on the consolidated statement of income, and other
restructuring-related costs, which are included in Cost of sales,
exclusive of depreciation and amortization and Selling, general and
administrative on the consolidated statement of income.
(c)
In the fourth quarter 2023, the company
recorded impairment and other related charges due to a non-cash
goodwill impairment recognized for the Traffic Solutions reporting
unit as a result of its annual goodwill impairment test. The fair
value of the Traffic Solutions reporting unit decreased primarily
due to increases in the cost of capital (discount rate assumption)
and declines in the reporting unit’s long-term forecast driven by
challenges at its operations in Argentina due to the highly
inflationary environment and changes to the reporting unit’s global
footprint, including the fourth quarter 2023 divestiture of its
European and Australian businesses. In 2022, the company recorded
impairment and other related charges due to the wind down of the
company's operation in Russia.
(d)
Portfolio optimization includes losses on
the sale of non-core assets, including the losses recognized on the
sales of the company's European and Australian Traffic Solutions
businesses in the fourth quarter 2023, which are included in Other
charges/(income), net in the consolidated statement of income,
accelerated amortization expense recognized related to the exit of
a non-core business, which is included in Amortization in the
consolidated statement of income, and the impact for the step up to
fair value of inventory acquired in certain acquisitions, which is
included in Cost of sales, exclusive of depreciation and
amortization in the consolidated statement of income. Portfolio
optimization also includes advisory, legal, accounting, valuation,
other professional or consulting fees, and certain internal costs
directly incurred to effect acquisitions, as well as similar fees
and other costs to effect divestitures and other portfolio
optimization exit actions. These costs are included in Selling,
general and administrative expense in the consolidated statement of
income.
(e)
Environmental remediation charges
represent environmental remediation costs at certain legacy PPG
manufacturing sites. These charges are included in Other
charges/(income), net in the consolidated statement of income.
(f)
In December 2023, the central bank of
Argentina adjusted the official foreign currency exchange rate for
the Argentine peso, significantly devaluing the currency relative
to the United States dollar. Argentina currency devaluation losses
represent foreign currency translation losses recognized during
December 2023 related to the devaluation of the Argentine peso,
which is included in Other charges/(income), net in the
consolidated statement of income.
(g)
In the first quarter 2023, the company
received reimbursement under its insurance policies for damages
incurred at a southern U.S. factory from a winter storm in 2020. In
the fourth quarter 2023, the company received reimbursement for a
previously approved insurance claim under a policy covering legacy
asbestos-related matters. These insurance recoveries are included
in Other charges/(income), net in the consolidated statement of
income.
(h)
In the first quarter 2023, PPG purchased
group annuity contracts that transferred pension benefit
obligations for certain of the company’s retirees in the U.S. to
third-party insurance companies, resulting in a non-cash pension
settlement charge.
PPG INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF INCOME (unaudited) (All amounts in
millions except per-share data) Three Months Ended Twelve Months
Ended December 31 December 31
2023
2022
2023
2022
Net sales
$4,350
$4,185
$18,246
$17,652
Cost of sales, exclusive of depreciation and amortization
2,531
2,623
10,745
11,096
Selling, general and administrative
1,114
955
4,222
3,842
Depreciation
104
92
391
388
Amortization
46
41
167
166
Research and development, net
111
108
433
448
Interest expense
57
53
247
167
Interest income
(44
)
(20
)
(140
)
(54
)
Impairment and other related charges, net
160
15
160
245
Pension settlement charge
-
-
190
-
Other charges/(income), net
79
(1
)
83
(27
)
Income before income taxes
$192
$319
$1,748
$1,381
Income tax expense
89
73
439
325
Income from continuing operations
$103
$246
$1,309
$1,056
Income/(loss) from discontinued operations, net of tax
-
-
-
(2
)
Net income attributable to controlling and noncontrolling interests
$103
$246
$1,309
$1,054
Net income attributable to noncontrolling interests
(13
)
(8
)
(39
)
(28
)
Net income (attributable to PPG)
$90
$238
$1,270
$1,026
Amounts attributable to PPG: Income from continuing
operations, net of tax
$90
$238
$1,270
$1,028
Income/(loss) from discontinued operations, net of tax
-
-
-
(2
)
Net income (attributable to PPG)
$90
$238
$1,270
$1,026
Earnings per common share (attributable to PPG) Income from
continuing operations, net of tax
$0.38
$1.01
$5.38
$4.35
Income/(loss) from discontinued operations, net of tax
-
-
-
(0.01
)
Net income (attributable to PPG)
$0.38
$1.01
$5.38
$4.34
Earnings per common share (attributable to PPG) - assuming
dilution Income from continuing operations, net of tax
$0.38
$1.01
$5.35
$4.33
Income/(loss) from discontinued operations, net of tax
-
-
-
(0.01
)
Net income (attributable to PPG)
$0.38
$1.01
$5.35
$4.32
Average shares outstanding
236.2
235.5
236.0
236.1
Average shares outstanding - assuming dilution
237.3
236.6
237.2
237.3
PPG INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS HIGHLIGHTS (unaudited) ($
in millions) Twelve Months Ended December 31
2023
2022
Cash from operating activities - continuing operations
$2,411
$963
Cash used for investing activities: Capital expenditures
$549
$518
Business acquisitions, net of cash balances acquired
$109
$114
Financing activities: Dividends paid on PPG common stock
$598
$570
PPG INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEET HIGHLIGHTS (unaudited) ($ in
millions) December 31 December 31
2023
2022
Current assets: Cash and cash equivalents
$1,514
$1,099
Short-term investments
75
55
Receivables, net
3,279
3,303
Inventories
2,127
2,272
Other current assets
436
444
Total current assets
$7,431
$7,173
Current liabilities: Short-term debt and current portion of
long-term debt
$306
$313
Accounts payable and accrued liabilities
4,467
4,087
Current portion of operating lease liabilities
194
183
Restructuring reserves
87
138
Total current liabilities
$5,054
$4,721
Long-term debt
$5,748
$6,503
PPG OPERATING METRICS (unaudited) ($ in millions)
December 31 December 31
2023
2022
Operating Working Capital (a)
$2,645
$2,830
As a percent of quarter sales, annualized
15.2
%
16.9
%
(a) Operating working capital includes: (1) receivables from
customers, net of allowance for doubtful accounts, (2) FIFO
inventories and (3) trade liabilities.
PPG INDUSTRIES, INC. AND
SUBSIDIARIES CONSOLIDATED BUSINESS SEGMENT INFORMATION
(unaudited) ($ in millions) Three Months Ended Twelve
Months Ended December 31 December 31
2023
2022
2023
2022
Net sales Performance Coatings
$2,615
$2,490
$11,164
$10,694
Industrial Coatings
1,735
1,695
7,082
6,958
Total
$4,350
$4,185
$18,246
$17,652
Segment income Performance Coatings
$325
$272
$1,709
$1,399
Industrial Coatings
230
155
966
643
Total
$555
$427
$2,675
$2,042
Items not allocated to segments Corporate
(100
)
(52
)
(340
)
(218
)
Interest expense, net of interest income
(13
)
(33
)
(107
)
(113
)
Impairment and other related charges, net (Note A)
(160
)
(15
)
(160
)
(245
)
Business restructuring-related costs, net (Note B)
(16
)
(8
)
(43
)
(75
)
Portfolio optimization (Note C)
(31
)
-
(53
)
(10
)
Environmental remediation charges (Note D)
(30
)
-
(30
)
-
Argentina currency devaluation losses (Note E)
(20
)
-
(20
)
-
Insurance recoveries (Note F)
7
-
16
-
Pension settlement charge (Note G)
-
-
(190
)
-
Income before income taxes
$192
$319
$1,748
$1,381
Note A: In the fourth quarter 2023, the company recorded impairment
and other related charges due to goodwill impairment recognized for
the Traffic Solutions reporting unit as a result of its annual
goodwill impairment test. The fair value of the Traffic Solutions
reporting unit decreased primarily due to increases in the cost of
capital (discount rate assumption) and declines in the reporting
unit’s long-term forecast driven by challenges at its operations in
Argentina due to the highly inflationary environment and changes to
the reporting unit’s global footprint, including the fourth quarter
2023 divestiture of its European and Australian businesses. In
2022, the company recorded impairment and other related charges due
to the wind down of the company's operation in Russia. Note B:
Business restructuring-related costs, net include business
restructuring charges, offset by releases related to previously
approved programs, which are included in Other charges/(income),
net on the consolidated statement of income, accelerated
depreciation of certain assets, which is included in Depreciation
on the consolidated statement of income, and other
restructuring-related costs, which are included in Cost of sales,
exclusive of depreciation and amortization and Selling, general and
administrative on the consolidated statement of income. Note C:
Portfolio optimization includes losses on the sale of non-core
assets, including the losses recognized on the sales of the
company's European and Australian Traffic Solutions businesses in
the fourth quarter 2023, which are included in Other
charges/(income), net in the consolidated statement of income,
accelerated amortization expense recognized related to the exit of
a non-core business, which is included in Amortization in the
consolidated statement of income, and the impact for the step up to
fair value of inventory acquired in certain acquisitions, which is
included in Cost of sales, exclusive of depreciation and
amortization in the consolidated statement of income. Portfolio
optimization also includes advisory, legal, accounting, valuation,
other professional or consulting fees, and certain internal costs
directly incurred to effect acquisitions, as well as similar fees
and other costs to effect divestitures and other portfolio
optimization exit actions. These costs are included in Selling,
general and administrative expense in the consolidated statement of
income. Note D: Environmental remediation charges represent
environmental remediation costs at certain legacy PPG manufacturing
sites. These charges are included in Other charges/(income), net in
the consolidated statement of income. Note E: In December 2023, the
central bank of Argentina adjusted the official foreign currency
exchange rate for the Argentine peso, significantly devaluing the
currency relative to the United States dollar. Argentina currency
devaluation losses represent foreign currency translation losses
recognized during December 2023 related to the devaluation of the
Argentine peso, which is included in Other charges/(income), net in
the consolidated statement of income. Note F: In the first quarter
2023, the company received reimbursement under its insurance
policies for damages incurred at a southern U.S. factory from a
winter storm in 2020. In the fourth quarter 2023, the company
received reimbursement for a previously approved insurance claim
under a policy covering legacy asbestos-related matters. These
insurance recoveries are included in Other charges/(income), net in
the consolidated statement of income. Note G: In the first quarter
2023, PPG purchased group annuity contracts that transferred
pension benefit obligations for certain of the company’s retirees
in the U.S. to third-party insurance companies, resulting in a
non-cash pension settlement charge.
CATEGORY Corporate
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240118374446/en/
PPG Media Contact: Mark Silvey Corporate Communications
+1-412-434-3046 silvey@ppg.com
PPG Investor Contact: Jonathan Edwards Investor Relations
+1-412-434-3466 jonathanedwards@ppg.com investor.ppg.com
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