Reported net income and earnings per diluted share for the current and prior year include several nonrecurring items, which are detailed in a reconciliation below.First quarter 2013 adjusted net income and earnings per diluted share from continuing operations, excluding nonrecurring charges, were $235 million and $1.58 respectively. First quarter 2012 adjusted net income and earnings per diluted share from continuing operations, excluding nonrecurring charges, were $216 million and $1.41 respectively.
-First quarter 2013 sales from continuing operations of $3.3 billion
-First quarter adjusted earnings per diluted share from continuing operations of $1.58
-Reported earnings per diluted share of $16.31, including large nonrecurring gain from commodity chemicals business separation
-Aggregate coatings segment earnings increased 13 percent with growth in each region
-Incremental restructuring savings of nearly $30 million realized in quarter
-Cash deployed for share repurchases during quarter totaled $140 million
-Increased synergy target following completion of AkzoNobel North American architectural coatings acquisition
“During the quarter, we delivered strong performance in our coatings portfolio, as we grew aggregate coatings segment earnings by 13 percent versus last year’s record level,” said Charles E. Bunch, PPG chairman and CEO. “We continued to experience notable demand divergence among the major regional economies, with activity generally strong in North America, broad growth improvement in Asia and persistent weakness in Europe.
“Despite these regional differences, our coatings earnings grew in each major region aided principally by our proactive cost-management actions coupled with the continued strength of several end-use markets, including automotive OEM, aerospace and U.S. construction,” Bunch said.
Bunch commented that sales and earnings fell in the Optical and Specialty Materials segment based on weaker consumer demand in the United States, which was partly offset by volume growth from a strong new product introduction in Europe in February. Glass segment earnings declined versus the prior year on weaker fiber glass results, Bunch said.
“Strategically, we completed the acquisition of the AkzoNobel North American architectural coatings business April 1. The acquired business, with 2012 sales of $1.5 billion, more than doubles our business serving the construction and maintenance markets in the region,” Bunch said.
“Since the acquisition announcement in December 2012, teams have been working diligently to ensure the integration is seamless for customers and successful in creating value for our shareholders. These teams have identified additional cost-improvement opportunities, and we have increased our synergy target by 25 percent. We now expect to achieve $200 million in annual synergies within the first three full years, including $60 million in annual cost reductions that we realized when the transaction closed.
“Looking to the second quarter, we anticipate positive momentum in the United States and Asia to continue, while conditions in Europe remain challenging with limited prospects for near-term improvement,” Bunch said. “We expect our earnings growth trend will continue based on our geographic and end-use market diversity, additional cost improvements from our restructuring program, and continued aggressive management of our businesses which is a hallmark of PPG. Finally, we are working to capitalize on our strong balance sheet as we continue to analyze opportunities to increase earnings though prudent cash deployment.”
The company today reported that cash and short-term investments totaled approximately $2.4 billion as of March 31, 2013. The company spent approximately $140 million on share repurchases, primarily in the months of February and March following the separation of PPG’s commodity chemicals business. The company also repaid $600 million of term debt that matured near the end of the first quarter. The payment on April 1, 2013, of about $950 million, including estimated closing adjustments, for the acquisition of the AkzoNobel architectural coatings business will be reflected in the company’s second quarter financial statements.
As announced January 28, 2013, the company completed the separation of its commodity chemicals business and subsequent merger with a subsidiary of Georgia Gulf Corporation into a combined company now named Axiall Corporation. The merger closed following the expiration of the exchange offer under which PPG reduced its shares outstanding by approximately 10.8 million shares, or about 7 percent. Current year and prior year results for the former Commodity Chemicals segment and a net gain on the separation transaction have been reported as discontinued operations.
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