PPG Industries reported record second quarter net sales in 2013 of $4.1 billion, up 16 percent versus the prior year. Second quarter 2013 reported net income from continuing operations was $341 million, or $2.35 per diluted share. Adjusted net income for the quarter was $356 million, or a record $2.45 per diluted share, excluding nonrecurring acquisition-related charges of 10 cents per diluted share as detailed in a reconciliation below. Second quarter 2012 reported net income and earnings per diluted share from continuing operations were $297 million and $1.92 respectively. There were no nonrecurring charges in the prior-year quarter.
“We achieved new sales and adjusted earnings records due to the continued strong performance of our coatings businesses, which in aggregate delivered 25 percent earnings growth in comparison to last year’s record level,” said Charles E. Bunch, PPG chairman and CEO. “The record adjusted earnings results were driven by our strong operating focus, including ongoing aggressive cost management, and the earnings benefit from cash deployed on recent coatings acquisitions.
“Overall economic conditions remained divergent by region,” Bunch said. “North America continued to expand, aided by higher industrial and auto production combined with continued positive momentum in the construction markets. Asia also grew, led by higher local consumption in China, while the European region remained sluggish with economic activity generally declining. Our sales volume results were also mixed, similar to the respective regional trends, but we delivered higher earnings in each major region.
“An important factor to our excellent overall coatings results was higher sales in businesses such as automotive OEM (original equipment manufacturer) coatings, automotive refinish and aerospace,” Bunch added. “For our non-coatings segments, sales and earnings were up modestly in Optical and Specialty Materials versus record prior-year results, and Glass earnings declined as market conditions for both glass businesses remained challenging.
“Importantly, we finalized our acquisition of the AkzoNobel North American architectural coatings business on April 1, and we are very pleased with the results in the quarter,” Bunch said. “The acquired business had sales of about $475 million in the quarter and delivered a mid-single-digit percentage earnings return on sales, which was slightly ahead of our target. We are in the early stages of integration and still have a considerable amount of work to do, including executing our recently approved restructuring program. We remain confident that we will deliver the targeted $200 million of annual synergies over a three-year period, as previously outlined.”
PPG also announced that its board of directors approved a $102 million business restructuring program. The approved actions are focused on achieving cost synergies related to the recent North American architectural coatings acquisition, including actions in the acquired business as well as in PPG's legacy architectural business. Additionally, smaller targeted actions were approved for businesses where market conditions remain very challenging, most notably protective and marine coatings and certain European businesses such as architectural coatings and fiber glass. The restructuring charge will be included in PPG's third quarter 2013 financial results, and it is comprised of cash charges totaling approximately $97 million and non-cash charges of about $5 million. Related cash outlays of about $60 million are expected in 2013, with the remainder likely to occur in 2014.