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PPG Industries(PPG) - 2025 Q1 - Quarterly Report
PPGPPG Industries(PPG)2025-04-30 18:13
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Financial Performance - Net sales for the three months ended March 31, 2025, were approximately 3.7billion,adecreaseof4.33.7 billion, a decrease of 4.3% compared to the prior year, primarily due to unfavorable foreign currency translation and divestitures [116]. - Income before income taxes was 502 million, a decrease of 40millionyear−over−year,mainlyduetoforeigncurrencytranslationimpactsandcostinflation[117].−TheeffectivetaxrateforthethreemonthsendedMarch31,2025,was24.340 million year-over-year, mainly due to foreign currency translation impacts and cost inflation [117]. - The effective tax rate for the three months ended March 31, 2025, was 24.3%, compared to 23.6% in the prior year [126]. - Earnings per diluted share from continuing operations decreased to 1.64, down 4.1% from 1.71intheprioryear[126].SegmentPerformance−GlobalArchitecturalCoatingsnetsalesdecreasedby11.31.71 in the prior year [126]. Segment Performance - Global Architectural Coatings net sales decreased by 11.3% to 857 million, with segment income down 28.9% to 118million[131].−PerformanceCoatingsnetsalesincreasedby6.8118 million [131]. - Performance Coatings net sales increased by 6.8% to 1.265 billion, with segment income rising 9.2% to 274million[138].−IndustrialCoatingssegmentnetsalesdecreasedby8.1274 million [138]. - Industrial Coatings segment net sales decreased by 8.1% to 1,562 million in Q1 2025 compared to 1,699millioninQ12024[146].−AutomotiveOEMcoatingsorganicsalesdecreasedbyamid−single−digitpercentageinQ12025duetolowersalesvolumesandindexed−basedsellingprices[147].−Packagingcoatingsorganicsalesincreasedbyalowsingle−digitpercentagecomparedtotheprioryear,drivenbyhighersalesvolumesinEurope,LatinAmerica,andAsiaPacific[149].−Specialtycoatingsandmaterialsorganicsalesincreasedbyamid−single−digitpercentagecomparedtoQ12024,withsegmentincomeat1,699 million in Q1 2024 [146]. - Automotive OEM coatings organic sales decreased by a mid-single-digit percentage in Q1 2025 due to lower sales volumes and indexed-based selling prices [147]. - Packaging coatings organic sales increased by a low single-digit percentage compared to the prior year, driven by higher sales volumes in Europe, Latin America, and Asia Pacific [149]. - Specialty coatings and materials organic sales increased by a mid-single-digit percentage compared to Q1 2024, with segment income at 215 million, a decrease of 14% year-over-year [150]. Sales Expectations - Organic sales in the Performance Coatings segment are expected to continue growing in the second quarter of 2025, driven by industry growth and share gains [141]. - The company anticipates aggregate organic sales for the Global Architectural Coatings segment to be flat to a low single-digit percentage increase compared to the second quarter of 2024 [137]. - In the second quarter, aggregate organic sales for the aerospace coatings and protective and marine coatings segments are expected to increase by a low to mid-single-digit percentage compared to Q2 2024 [144]. Cash and Investments - Cash and short-term investments totaled 1.9billionasofMarch31,2025,upfrom1.9 billion as of March 31, 2025, up from 1.4 billion at December 31, 2024 [154]. - Cash used for operating activities in Q1 2025 was 16million,comparedtocashfromoperatingactivitiesof16 million, compared to cash from operating activities of 7 million in Q1 2024, reflecting unfavorable changes in working capital [155]. Capital Expenditures and Restructuring - Total capital spending is expected to be approximately 725millionto725 million to 775 million in 2025 to support future organic growth opportunities [159]. - The Company expects total restructuring savings of 75millionin2025,withcashoutlaysrelatedtotheseactionsprojectedatapproximately75 million in 2025, with cash outlays related to these actions projected at approximately 100 million [166]. Debt and Financial Risk - As of March 31, 2025, the Total Indebtedness to Total Capitalization ratio was 50%, within the required limit of 60% [163]. - As of March 31, 2025, PPG had non-U.S. dollar denominated borrowings of 4.8billion,upfrom4.8 billion, up from 3.3 billion as of December 31, 2024 [181]. - The fair value of foreign currency forward contracts was a net liability of 31millionasofMarch31,2025,comparedto31 million as of March 31, 2025, compared to 53 million as of December 31, 2024 [179]. - A 10% increase in the value of the euro to the U.S. dollar would reduce the fair value of PPG's cross currency swap contracts by 36millionasofMarch31,2025[180].−AweakeningoftheU.S.dollarby1036 million as of March 31, 2025 [180]. - A weakening of the U.S. dollar by 10% against European currencies would result in unrealized translation losses of 530 million at March 31, 2025 [181]. - PPG's interest rate swaps converted 375millionoffixedratedebttovariableratedebt,withfairvaluesofliabilitiesat375 million of fixed rate debt to variable rate debt, with fair values of liabilities at 11 million as of March 31, 2025 [182]. - An increase in variable interest rates of 10% would increase annual interest expense by 4millionfortheperiodendedMarch31,2025[182].−ThepotentialreductioninPPG′sincomebeforeincometaxesfromadversechangesinexchangerateswas4 million for the period ended March 31, 2025 [182]. - The potential reduction in PPG's income before income taxes from adverse changes in exchange rates was 479 million for the three months ended March 31, 2025 [179]. - The fair value of cross currency swap contracts was a net asset of 39millionasofMarch31,2025,downfrom39 million as of March 31, 2025, down from 50 million as of December 31, 2024 [180]. - A 10% increase in interest rates in the U.S., Canada, Mexico, and Europe would increase annual interest expense by $4 million [182]. - There were no material changes in the Company's exposure to market risk from December 31, 2024, to March 31, 2025 [183].