Charles E. Bunch, PPG's president and chief executive officer who will assume the top job when current Chairman Raymond W. LeBoeuf retires on July 1, said yesterday that PPG was in a strong position to scout for acquisitions, with $700 million in cash and short-term investments on hand.
"We've been kicking a lot of tires," Bunch said at the Downtown-based coatings, chemicals and glass producer's annual shareholders meeting at the Sheraton Hotel Station Square -- his first as CEO.
But he cautioned not to expect PPG to invest as much in buying up businesses as it did under LeBoeuf, who oversaw a $2 billion spending spree. He envisions buying small-to-medium size companies with annual sales of up to $250 million.
Bunch, 55, was named chief executive, effective March 31, the day LeBoeuf announced his retirement, and will become chairman when the 58-year-old LeBoeuf leaves.
Bunch joined PPG in 1979 as assistant to the corporate controller and, among other jobs, spent six years in Europe managing PPG glass operations. He was named senior vice president for strategic planning and corporate services in 1997, executive vice president in 2000 and president and chief operating officer in 2002.
"I've been at PPG for 26 years and have a good understanding of what we're doing," Bunch said in an interview after the annual meeting. "The timing is good because we have the strongest balance sheet in years ... and the overall direction of the economy is still strong."
Bunch's biggest concern is the escalating price of energy and raw materials. PPG is looking at alternative sources to cut costs and is hoping the Bush administration can put in place more effective energy policies, Bunch said.
"When you're under pressure of increasing raw material costs, it's an opportunity to look at other suppliers.," Bunch said. "We're doing what we can to deflect cost increases."
The company yesterday reported first-quarter net income of $95 million, or 55 cents a share, down from $119 million or 69 cents per share in the year-ago quarter.
The results included after-tax charges of $91 million, or 52 cents per share, for settlement of a case involving a defective wood treatment product made by PPG, and $5 million, or 3 cents per share, to cover an increase in the company's obligation to settle asbestos litigation.
Without the nonrecurring legal charges, net income totaled $186 million, up 56 percent from a year ago, on record first-quarter sales of $2.5 billion that were aided by a 34 percent jump in chemicals sales.
The adjusted per-share earnings were $1.10, beating analysts' estimates of $1.06.
PPG shares rose $1.70, or nearly 3 percent, to $67.45 -- the biggest daily percent gain since Aug. 16.
The $91 million charge will be applied to a judgment PPG was ordered to pay Marvin Lumber and Cedar Co. and Marvin Windows of Tennessee Inc. The companies claimed PPG's PILT wood treatment did not prevent premature rot in Marvin's products.
The original judgment in 2002 ordered PPG to pay $156.1 million in damages to Marvin, but last month a federal appeals court reduced that amount by $30 million.
The $5 million charge relates to the $500 million settlement PPG reached in 2002 in a high-profile case involving its ownership stake in bankrupt Pittsburgh Corning Corp.
Also yesterday, the company's board of directors raised the quarterly dividend on the common stock to 47 cents from 45 cents, payable June 10 to shareholders of record May 10.
"As a person about to be on a fixed income, the 2-cent dividend increase is greatly appreciated," LeBoeuf quipped.
Prior to the meeting's close, LeBoeuf said he was "truly blessed with a strong team" during his years at the helm of PPG.
"Thank you for a good ride," he told shareholders and employees in the audience. Among them was former chairman L. Stanton Williams, who retired in 1990 and who hired LeBoeuf from Ford Motor Co. in 1980.