PPG Industries(PPG) - 2021 Q1 - Quarterly Report

FORM 10-Q Filing Information Registrant Information This section provides key identification details for PPG Industries Inc., including its legal name, jurisdiction of incorporation, principal executive offices, and stock exchange listings. It confirms the company's compliance with SEC filing requirements and its status as a large accelerated filer - Registrant: PPG INDUSTRIES INC.[2] - Incorporation Jurisdiction: Pennsylvania[2] | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :----------------------------------------| | Common Stock, par value $1.66 2/3 | PPG | New York Stock Exchange | | 0.875% Notes due 2022 | PPG 22 | New York Stock Exchange | | 0.875% Notes due 2025 | PPG 25 | New York Stock Exchange | | 1.400% Notes due 2027 | PPG 27 | New York Stock Exchange | - Filing Status: Large Accelerated Filer (☑ Yes)[4][5] - Outstanding Common Stock (as of March 31, 2021): 237,091,179 shares[5] Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for PPG Industries, Inc. and its subsidiaries, including the Statement of Income, Comprehensive Income/(Loss), Balance Sheet, Shareholders' Equity, and Cash Flows, along with detailed notes. The financial statements reflect the company's performance and financial position for the three months ended March 31, 2021, highlighting significant changes in revenue, net income, assets, liabilities, and cash flows compared to the prior year and prior period Condensed Consolidated Statement of Income For the three months ended March 31, 2021, PPG reported a significant increase in net sales and net income compared to the prior year, with diluted EPS rising to $1.58. This growth was primarily driven by higher sales volumes | Metric | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | YoY Change ($ in millions) | YoY Change (%) | | :------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------------- | :------------- | | Net sales | $3,881 | $3,377 | $504 | 14.9% | | Income before income taxes | $499 | $319 | $180 | 56.4% | | Net income (attributable to PPG) | $378 | $243 | $135 | 55.6% | | Earnings per common share (attributable to PPG) - assuming dilution | $1.58 | $1.02 | $0.56 | 54.9% | Condensed Consolidated Statement of Comprehensive Income/(Loss) Total comprehensive income for PPG significantly improved to $247 million in Q1 2021 from a loss of $449 million in Q1 2020, primarily due to a substantial reduction in unrealized foreign currency translation adjustments | Metric | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | Net income attributable to controlling and noncontrolling interests | $385 | $248 | | Unrealized foreign currency translation adjustments | ($128) | ($706) | | Other comprehensive loss, net of tax | ($133) | ($702) | | Comprehensive income/(loss) attributable to PPG | $247 | ($449) | Condensed Consolidated Balance Sheet As of March 31, 2021, PPG's total assets increased to $20.1 billion from $19.6 billion at December 31, 2020, driven by increases in receivables, inventories, and investments. Total liabilities also rose, mainly due to higher short-term debt and long-term debt, while total shareholders' equity saw a modest increase | Metric | March 31, 2021 ($ in millions) | December 31, 2020 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :------------------------------- | :-------------------------------- | :--------- | :--------- | | Total current assets | $7,339 | $6,798 | $541 | 7.96% | | Total assets | $20,139 | $19,556 | $583 | 2.98% | | Total current liabilities | $5,120 | $4,831 | $289 | 5.98% | | Total liabilities | $14,170 | $13,741 | $429 | 3.12% | | Total shareholders' equity | $5,969 | $5,815 | $154 | 2.65% | - Goodwill increased to $5,153 million at March 31, 2021, from $5,102 million at December 31, 2020, primarily due to acquisitions and purchase accounting adjustments[15][33] Condensed Consolidated Statement of Shareholders' Equity PPG's total shareholders' equity increased to $5,969 million by March 31, 2021, from $5,815 million at the beginning of the year. This was primarily driven by net income attributable to PPG, partially offset by cash dividends and other comprehensive loss | Metric | January 1, 2021 ($ in millions) | March 31, 2021 ($ in millions) | Change ($ in millions) | | :------------------------------------------------ | :------------------------------ | :----------------------------- | :--------- | | Total PPG shareholders' equity | $5,689 | $5,839 | $150 | | Net income attributable to PPG | — | $378 | $378 | | Other comprehensive loss, net of tax | — | ($131) | ($131) | | Cash dividends | — | ($128) | ($128) | Condensed Consolidated Statement of Cash Flows Cash used for operating activities decreased significantly to $23 million in Q1 2021 from $159 million in Q1 2020, primarily due to higher net income. However, cash used for investing activities increased substantially to $424 million, driven by business acquisitions and capital expenditures. Financing activities provided $469 million, mainly from debt issuance, partially offset by debt repayment and dividends | Cash Flow Activity | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | YoY Change ($ in millions) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :------------- | | Cash used for operating activities | ($23) | ($159) | $136 | | Cash used for investing activities | ($424) | ($59) | ($365) | | Cash from financing activities | $469 | $1,012 | ($543) | | Net (decrease)/increase in cash and cash equivalents | ($18) | $670 | ($688) | | Cash and cash equivalents, end of period | $1,808 | $1,886 | ($78) | - Business acquisitions, net of cash balances acquired, accounted for $356 million of cash used in investing activities in Q1 2021, a significant increase from $44 million in Q1 2020[18] - Proceeds from the issuance of debt, net of discounts and fees, totaled $692 million in Q1 2021, contributing significantly to financing activities[18] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, new standards, acquisitions, divestitures, inventory valuation, goodwill, restructuring programs, debt, earnings per share, income taxes, pensions, comprehensive loss, financial instruments, stock-based compensation, commitments, contingent liabilities, revenue recognition, and segment information. They offer crucial context for understanding the financial figures and the company's operational decisions 1. Basis of Presentation The unaudited condensed consolidated financial statements are prepared in accordance with SEC requirements and U.S. GAAP for interim reporting, including all necessary recurring adjustments. They should be read in conjunction with the 2020 Annual Report on Form 10-K, and interim results may not be indicative of full-year performance due to seasonal variations - Statements are unaudited and prepared following SEC and U.S. GAAP for interim reporting[20] - Interim results may not be indicative of full-year results due to seasonal variations[21] 2. New Accounting Standards PPG adopted ASU No. 2019-12 (Income Taxes) in 2021 with no material impact. The company is currently assessing the potential impacts of ASU No. 2020-06 (Convertible Debt) and ASU No. 2020-04 (Reference Rate Reform) which are effective in future fiscal years - Adopted ASU No. 2019-12 (Income Taxes) effective January 1, 2021; no material impact[22] -