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PPG Reports Third Quarter 2021 Financial Results

General News
PPG Industries Logo - Supply Service Provider for the Lumber Industry

PPG (or the “Company”) reported financial results for the third quarter 2021.

– Record third quarter net sales of nearly $4.4 billion, about 19% higher than prior year
– Organic sales growth led by higher selling prices of nearly 6%
– Reported earnings per diluted share (“EPS”) of $1.43 and adjusted EPS of $1.69
– Increased supply disruptions negatively impacted sales and manufacturing costs
– Raw material cost inflation of about 25% year-over-year
– Plan to execute share repurchases in the fourth quarter; continue to evaluate potential bolt-on acquisitions

Chairman and CEO Comments

Michael H. McGarry, PPG chairman and chief executive officer, commented on the quarter:

As we communicated in early September, supply-chain disruptions worsened during the quarter as various commodity and component shortages restricted both our manufacturing output and that of certain customers. While overall demand remained robust during the quarter, these increased disruptions prevented us from completely fulfilling our strong order books. Throughout the quarter, we continued to prioritize selling price increases and we delivered 6 percent price realization for the quarter, led by the Industrial Coatings reporting segment.

Several of our businesses, including automotive refinish, protective and marine, and packaging coatings delivered above-market volume performance despite the procurement challenges. In addition, demand recovery continued in our aerospace coatings business, primarily in the aftermarket. Strategically, the integration of our five recent acquisitions is well underway, with initial synergy capture meeting expectations. I am pleased to report that our two larger acquisitions – Ennis-Flint and Tikkurila – delivered solid top-line performance in the quarter, and would have performed even better, aside from the sourcing interruptions.

Looking ahead, while economic demand remains strong on an aggregate basis, we anticipate ongoing supply chain disruptions to persist throughout the fourth quarter, with potential further impacts from the recent industrial production curtailments in China. We expect these disruptions to ease slightly in overall quantity and magnitude as the quarter progresses. We will continue to prioritize selling price increases and expect realization to be sequentially higher in the fourth quarter. The pace of our price realization continues to be well ahead of the most recent raw material inflation cycle in 2017-2018, which should allow us to fully offset aggregate raw material cost inflation in early 2022. In addition, the anticipated recovery of the automotive original equipment manufacturer (“OEM”), aerospace, and automotive refinish coatings businesses, which collectively accounted for about 40% of our pre-pandemic sales, will be a significant catalyst for growth in 2022. As always, we will continue to aggressively manage all aspects of our cost structure.

Finally, I am proud of our employees, who are demonstrating The PPG Way every day in strong collaboration with our customers and suppliers, and I am more confident than ever that we will come through these current macro challenges as a stronger company.

Third Quarter 2021 Reportable Segment Financial Results

Performance Coatings Segment

Performance Coatings net sales increased primarily due to acquisition-related sales and selling price increases across all businesses. While demand remained strong in most end-use markets, raw material availability constrained sales, most notably in the architectural coatings Americas and Asia Pacific, architectural coatings Europe, Middle East and Africa (“EMEA”), and traffic solutions businesses. Demand for architectural coatings do-it-yourself products contracted in all major regions compared to the elevated 2020 third quarter level, but was comparable to the third quarter of 2019. Automotive refinish coatings demand improved in the U.S., but remained subdued in the EMEA region. Aerospace sales volumes continued to recover and were about 20% higher than the prior year, but remained significantly below third quarter 2019 levels. Ennis-Flint and Tikkurila represented the majority of the acquisition-related sales.

Segment income was lower than the prior year mainly due to raw material cost inflation and lower sales volumes, partially offset by higher selling prices, acquisition-related earnings and restructuring cost savings.

Industrial Coatings Segment

Industrial Coatings net sales increased primarily due to acquisition-related sales and selling price increases across all businesses, partially offset by lower sales volumes. Automotive OEM coatings sales volumes were down a high-teen percentage, but remained above automotive industry production rates. All other businesses in this reporting segment had higher year-over-year sales, including strong, above-market performance in packaging coatings. Wörwag, Tikkurila and Cetelon represented the acquisition-related sales.

Segment income was lower than the prior year mainly due to raw material cost inflation and lower automotive OEM coatings sales volumes, partially offset by higher selling prices and restructuring cost savings.

Additional Financial Information

The company had cash and short-term investments totaling approximately $1.3 billion and net debt of $5.5 billion at the end of the third quarter, which is $400 million lower than the second quarter 2021 and consistent with the company’s commitment to reduce debt following recent acquisitions.

Corporate expenses were $45 million in the third quarter, lower than anticipated due to a reduction in incentive compensation expense.

Business restructuring programs delivered about $35 million of cost savings, and the company remains on track for full-year 2021 savings of about $135 million.

The company’s effective tax rate for the third quarter was about 22%.


The company today reported the following projections for the fourth quarter and full year 2021 based on current global economic activity, continuing customer production limitations due to global semiconductor shortages, coatings raw material supply constraints, and near-term economic uncertainty associated with COVID-19:

– Aggregate net sales volumes down 8% to 10% on a year-over-year basis
– Corporate expenses of about $50 million to $55 million
– Net interest expense of $25 million to $27 million
– The effective tax rate of about 20%
– Full-year adjusted earnings per diluted share of $6.67 to $6.73

A detailed commentary and associated presentation slides related to the third quarter earnings information is posted on the company’s investor relations website.

For the full third quarter results, click here.

About PPG Industries

At PPG (NYSE:PPG), we work every day to develop and deliver the paints, coatings and materials that our customers have trusted for more than 135 years. Through dedication and creativity, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. With headquarters in Pittsburgh, we operate and innovate in more than 75 countries and reported net sales of $13.8 billion in 2020. We serve customers in construction, consumer products, industrial and transportation markets and aftermarkets. To learn more, visit


Mark Silvey – Corporate Communications – – (412) 434-3046

Source: PPG Industries, Inc.