PPG Industries(US:PPG)2022-04-22 16:08Financial Data and Key Metrics Changes - The company reported record net sales of $4.3 billion for Q1 2022, with adjusted earnings per diluted share from continuing operations at $1.37, significantly above the upper end of January guidance [18][21][29] - Selling prices increased by 10% year-over-year, marking the 20th consecutive quarter of higher selling prices, with a 12% increase on a 2-year stack basis compared to Q1 2020 [22][25] - The company experienced a sequential margin improvement of over 200 basis points compared to Q4 2021, with expectations for continued improvement in Q2 [25][26] Business Line Data and Key Metrics Changes - The automotive refinish business saw strong sales volumes in the U.S. and Europe, contributing positively to overall performance [20] - The aerospace business benefited from year-over-year improvements, with expectations for further industry demand growth as it remains below pre-pandemic levels [20] - The Traffic Solutions business achieved over 10% sales growth, with record sales in Q1 and a large order backlog entering Q2 [23][80] Market Data and Key Metrics Changes - Sales in Latin America reached a record high during the quarter, driven by strong demand [19] - The company noted that DIY sales in Europe were a concern, while the Pro Painter backlog remained strong [45][46] - The company is optimistic about recovery in the automotive market, particularly in Europe, as consumers shift towards electric vehicles [43] Company Strategy and Development Direction - The company is focusing on real-time pricing strategies to combat inflation, with plans to implement further price increases in Q2 [26][33] - The acquisition of Arsonsisi's Powder Coatings business aligns with the company's strategy to grow its powder coatings manufacturing capabilities [29] - The company is committed to advancing its ESG program, having issued its inaugural DE&I report [30] Management's Comments on Operating Environment and Future Outlook - The management highlighted ongoing uncertainties due to the Ukraine-Russia crisis and COVID-19 restrictions in China, which have impacted regional demand [14][31] - Despite these challenges, the company expects to see improvements in supply chain disruptions and inventory rebuilding as the year progresses [34] - The management remains confident in achieving earnings catalysts and returning to prior peak operating margins [34][35] Other Important Information - The company recorded a pre-tax charge of $290 million for impairment of assets related to its Russian operations, which represented approximately 1% of total net sales for 2021 [12] - The company is experiencing raw material shortages, with an overall sales backlog growing to about $180 million [27] Q&A Session Summary Question: Can you provide an update on inflation outlooks and input shortages? - Management noted that input shortages remain consistent, with improvements in reliability in Europe and Asia, and a decrease in force majeures from over 100 to about 50 [38] Question: What is the demand and supply chain situation in Europe and China? - Management indicated that the automotive situation in China is being impacted but is expected to recover, while DIY sales in Europe are a concern [43][46] Question: Are there any competitive pricing pressures in the U.S. architectural market? - Management stated that they have not seen discounting in the market and are successfully implementing price increases [52] Question: How is the relationship with Home Depot progressing? - The company has stocked 60% of Home Depot stores and expects to ramp up availability as supply improves [60][62] Question: What are the expectations for EPS in 2023? - Management remains confident in achieving EPS greater than $9, supported by improving market conditions and pricing strategies [72] Question: How is the automotive OEM business performing? - Management reported improvements in operational efficiencies and noted strong demand for electric vehicle applications [100]