PPG Industries(US:PPG)2025-04-30 18:13Financial Performance - Net sales for the three months ended March 31, 2025, were approximately $3.7 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 $40 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 $1.71 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 $118 million [131]. - Performance Coatings net sales increased by 6.8% to $1.265 billion, with segment income rising 9.2% to $274 million [138]. - Industrial Coatings segment net sales decreased by 8.1% to $1,562 million in Q1 2025 compared to $1,699 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 $1.9 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 $16 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 $725 million to $775 million in 2025 to support future organic growth opportunities [159]. - The Company expects total restructuring savings of $75 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 $4.8 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 $31 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 $36 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 $375 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 $4 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 $39 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].