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PPG Industries, Inc. (PPG)
Q3 2010 Earnings Call Transcript
October 21, 2010 2:00 pm ET
Vince Morales – VP, IR
Chuck Bunch – Chairman and CEO
Bob Dellinger – SVP, Finance and CFO
Dave Navikas – VP and Controller
David Begleiter – Deutsche Bank
Kevin McCarthy – Bank of America
Frank Mitsch – BB&T Capital Markets
P.J. Juvekar – Citi
Douglas Chudy – KeyBanc
Don Carson – Susquehanna
Bob Koort – Goldman Sachs
John Roberts – Buckingham Research
Dmitry Silversteyn – Longbow Research
Saul Ludwig – Northcoast Research
Previous Statements by PPG
» PPG Industries Inc. Q2 2010 Earnings Call Transcript
» PPG Industries Q1 2010 Earnings Call Transcript
» PPG Industries Q4 2009 Earnings Call Transcript
I will now like to turn the conference over to your host for today’s call, Mr. Vince Morales, Vice President of Investor Relations. Please proceed, sir.
Hello. This is Vince Morales, Vice President of Investor Relations for PPG Industries. Welcome to PPG’s Third Quarter 2010 Financial Teleconference.
Joining me on the call today from PPG is Chuck Bunch, Chairman of the Board and Chief Executive Officer; Bob Dellinger, Senior Vice President, Finance and Chief Financial Officer; and Dave Navikas, Vice President and Controller.
Our comments relate to financial information released on Thursday, October 21, 2010. The presentation supporting this briefing may be accessed through the Investor Center on the PPG Web site at ppg.com.
As noted on slide #2, our prepared remarks and comments made in the subsequent question-and-answer session may contain forward-looking statements reflecting the company’s current view about future events and their potential effect on PPG’s operating and financial performance.
These statements involve risks and uncertainties and as discussed in PPG Industries’ filings with the SEC, may cause actual results to differ from such forward-looking statements. The company is under no obligation to provide subsequent updates on these forward-looking statements.
This presentation also contains certain non-GAAP financial measures. Pursuant to the requirements of Regulation G, the company has provided in the appendix of the presentation materials reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Before we begin our discussion on the third quarter, let me comment on the process change that we will be implementing beginning with our fourth quarter earnings call to be held in mid-January.
Beginning with that earnings call, PPG will post on its Web site at ppg.com detailed prepared remarks along with related presentations slides. It will be posted approximately 30 minutes prior to beginning of that call.
PPG will not read the prepared remarks on the call, but we will have a few summary opening comments from our Chairman and CEO which will be followed by an extended period to questions.
This revised process will provide the same amount of data will enable each of you additional time to review the information and prepare for the call and will allow for us significantly more time for Q&A.
The agenda for today’s discussion on the third quarter results is noted on slide number three. Let me introduce PPG’s Chairman and CEO, Chuck Bunch, who will provide the opening remarks.
Thank you, Vince, and welcome, everyone. This afternoon I will provide a brief overview of our third quarter performance. Bob Dellinger will review details of our financial results. I will make a few closing remarks and then we will take questions.
PPG once again posted very strong results. In fact, we delivered record third quarter adjusted earnings per share, which easily eclipsed our prior record. Our earnings per share results were more than 60% higher than last year’s recession impacted numbers and about 15% higher than the pre-recession levels of 2007 and 2008, even though volumes are still around 10% below those years.
This achievement reflects the benefits of the strategic initiatives we’ve undertaken to broaden our geographic footprint, especially in high-growth emerging regions and the diversity of the end-use markets we serve. In addition, our lower overall cost structure has allowed us to leverage the ongoing gradual global industrial recovery into a higher rate of earnings growth. We achieved this despite persistent raw material cost inflation and anemic construction markets in the developed economies of the world.
Overall, PPG sales volumes in the quarter grew 6% in comparison with 2009. For our businesses with links to global industrial activity, the growth trend remained fairly constant throughout the third quarter taking into account seasonal impacts. We anticipate that it will continue to do so for the remainder of the year.
However, given the lethargic construction markets in the mature regions, our year-over-year volumes remained negative in our Architectural Coatings businesses at a rate of decline consistent with prior quarters. We also delivered selling price increases totaling over 3% for the entire company. In many cases, this pricing is working to counteract elevated raw material inflation.
Year-over-year segment earnings grew by more than 35%. Higher industrial activity resulted in sizeable gains in PPG’s Industrial Coatings and commodity chemical segments and in our fiber glass business, all of which are experiencing strong demand recovery from the recession.
Our Performance Coatings and Optical and Specialty Materials segments once again grew earnings at double-digit percentages and delivered third quarter earnings records. Architectural Coatings Europe, Middle East and Africa, or EMEA, segment earnings fell slightly with negative currency conversion being a major factor.
Overall, I was very satisfied with our performance for the quarter. I believe we demonstrated that our actions have properly positioned the company to grow in today’s environment. We are now beginning to deploy our strong balance sheet to provide additional future earnings growth opportunities.