PPG Reports Fourth Quarter and Full-Year 2021 Financial Results

  • Record fourth quarter net sales of about $4.2 billion, about 12% higher than prior year
  • Organic sales growth of nearly 4%, led by higher selling prices
  • Reported earnings per diluted share (EPS) of $1.12 and adjusted EPS of $1.26
  • Continuing supply disruptions and increased manufacturing interruptions negatively impacted sales and operating costs
  • Raw material cost inflation up 30% year over year in the fourth quarter
  • Fourth quarter share repurchases of more than $200 million; balance sheet flexibility remains
  • Record full-year sales of about $16.8 billion, aided by 10% organic growth
  • Increased acquisition synergy targets by 15% to $150 million of earnings

PPG reported financial results for the fourth quarter 2021.

Fourth Quarter Consolidated Results

$ in millions, except EPS4Q 20214Q 2020Y-O-Y change
Net sales*$4,190$3,757+12%
Net income$267$272-2%
Adjusted net income**$298$403-26%
Adjusted EPS**$1.26$1.69-25%
*Components of year-over-year net sales change: higher selling prices (+8%), lower sales volumes (-4%), acquisition-related sales (+9%), unfavorable foreign currency translation (-1%)
**Detailed reconciliations of reported to adjusted figures are included below
From continuing operations

Chairman and CEO Comments

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

We achieved higher sales than we originally forecasted as demand for our products remained strong and we continued to rapidly implement additional selling price increases. Our quarterly sales, which were a record for any fourth quarter, were aided by acquisition-related sales and above-market sales volume performance in several of our end-use markets, including automotive refinish, marine, and PPG-Comex architectural coatings. The prior year fourth quarter results included elevated architectural coatings do-it-yourself demand and higher global industrial activity related to initial recovery from the pandemic.

From an earnings perspective, selling prices improved sequentially versus the third quarter and increased 8% year-over-year, partially offsetting raw material and logistics cost inflation. However, we experienced significantly higher operating costs due to unpredictable manufacturing interruptions at both our facilities and our customers’ operations stemming from a rapid and substantial impact from labor availability due to COVID-19. Also impacting sales and earnings were ongoing raw material and transportation availability challenges resulting in continued difficulty fulfilling strong order books in several end-use markets, as we ended the quarter with order backlog of over $150 million.

We remained pleased with the integration pace of our five recent acquisitions and have identified further opportunities driving our total synergy target to $150 million in earnings, a 15% increase from the original goal. PPG’s 2022 annual investor deep dive is scheduled on June 9 in Europe to review these acquisitions in further detail.

Looking ahead, while demand for PPG products remains strong, the heightened supply and COVID-related disruptions experienced in the fourth quarter are expected to continue in the first quarter of the year impacting our ability to manufacture and deliver product. We expect raw material costs to remain at an elevated level and we are experiencing additional inflation in other cost areas, including logistics and labor. Further selling price increases are being implemented in all of our businesses to mitigate the incremental inflation, and we continue to aggressively manage all aspects of our cost structure, including actions to minimize the cost impacts of the current supply challenges.

Lastly, as I reflect on 2021, I am very proud and appreciative of our employees who helped navigate many challenges during the past year and provided excellent service to our customers. Operationally, this was a very difficult year, and it was through their perseverance and dedication to living our values through The PPG Way that we were able to deliver record full-year net sales and adjusted earnings per share. Strategically, we made progress in strengthening the company with the successful integration of five acquisitions and further optimizing our cost structure including $135 million of cost savings from our restructuring programs. We continued to reward our shareholders by extending our consecutive annual dividend payments to over 120 years, including raising our annual dividend payout for the 50th successive year.

I remain very confident that as the business environment returns to a more normal state we are well positioned to deliver strong organic sales and earnings growth. We not only see a path to returning to our prior peak operating margins, but to exceeding them over time.

Fourth Quarter 2021 Reportable Segment Financial Results

  • Performance Coatings segment
$ in millions4Q 20214Q 2020% change
Net sales$2,507$2,167+16%
Segment income$243$299-19%
Segment income %9.7%13.8% 
Sales volumes  -2%
Selling prices  +8%
Acquisition-related sales  +11%
Foreign currency translation  -1%

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 in all businesses, with the largest impacts in the architectural Americas and Asia Pacific, automotive refinish and aerospace coatings businesses. As expected, demand for architectural coatings do-it-yourself products continued to contract in all major regions compared to elevated 2020 fourth quarter levels. Automotive refinish coatings organic sales grew by a mid-single-digit percentage as demand continues to gradually improve and the company outperformed market growth, with further recovery expected as aggregate body shop demand remains about 10% below pre-pandemic levels. Aerospace coatings sales volumes were well above prior-year levels despite increasing manufacturing disruptions, but still remain about 20% below fourth quarter 2019 levels. Protective and marine coatings sales volumes were up about 10% year-over-year driven by strong above-market growth. 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 and logistics cost inflation, increased manufacturing costs and lower sales volumes, partially offset by higher selling prices coupled with restructuring cost savings.

  • Industrial Coatings segment
$ in millions4Q 20214Q 2020% change
Net sales$1,683$1,590+6%
Segment income$105$282-63%
Segment income %6.2%17.7% 
Sales volumes  -8%
Selling prices  +9%
Acquisition-related sales  +6%
Foreign currency translation  -1%

Industrial Coatings net sales increased primarily due to acquisition-related sales and selling price increases across all businesses, partially offset by lower sales volumes. In comparison to strong prior year demand, automotive original equipment manufacturer (OEM) coatings sales volumes were down and slightly below automotive industry production rates due to customer mix, and continued to be impacted by lower year-over-year industry production due to semiconductor chip shortages. Industrial coatings sales volumes were lower driven by softer demand in Asia Pacific and in comparison with a strong, prior-year pandemic recovery-related demand. Packaging coatings once again delivered strong organic sales growth, led by higher selling prices and strong sales volumes in the U.S. and Canada and EMEA regions. Wörwag, Tikkurila and Cetelon represented the acquisition-related sales.

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

Additional Financial Information

  • The company had cash and short-term investments totaling about $1.1 billion. Net debt was $5.5 billion at the end of the fourth quarter, which is down about $350 million since funding the Tikkurila acquisition in June 2021.
  • Corporate expenses were about $45 million in the fourth quarter, lower than expected due to a reduction in management incentive compensation expense.
  • Business restructuring programs delivered about $20 million of cost savings in the quarter and totaled nearly $135 million for the full-year 2021.
  • The company’s reported and adjusted effective tax rates for the fourth quarter were about 1% and 5%, respectively. The fourth quarter tax rate was lower than expected due to the geographic mix of earnings in the fourth quarter and certain favorable discrete tax items. The full-year reported and adjusted tax rates for 2021 were 20.6% and 20.0% which were comparable to the 2020 rates of 21.4% and 22.6%, respectively.

Full-Year 2021 Financial Results

$ in millions, except EPS20212020Y-O-Y change
Net sales*$16,802$13,834+21%
Net income$1,420$1,056+34%
Adjusted net income**$1,619$1,452+12%
Adjusted EPS**$6.77$6.12+11%
*Components of year-over-year net sales change: higher selling prices (+5%), higher sales volumes (+5%), acquisition-related sales (+9%), favorable foreign currency translation (+2%)
**Detailed reconciliations of the reported to the adjusted figures are included below
From continuing operations

Full-year 2021 reported net sales from continuing operations were approximately $16.8 billion, up about 21% versus the prior year. Organic sales were higher by 10% including sales volume growth and higher selling prices. About 40% of the business portfolio remains more than 15% below pre-pandemic sales volume levels, and is expected to be a revenue and earnings growth catalyst in 2022 and 2023. This 40% represents the automotive OEM, aerospace, and automotive refinish coatings businesses.

For 2021, the company paid $536 million in dividends and $2.1 billion for acquisitions. Capital expenditures totaled $371 million, which was higher than the prior year but still below more normalized historical levels due to pandemic-related constraints. The company had about $1.3 billion remaining on its current share repurchase authorization at the end of 2021.


In addition, the company today reported the following projections for the first quarter 2022 based on current global economic activity and in consideration of the near-term economic uncertainty associated with the impact of the pandemic:

  • Aggregate net sales volumes down a mid-single-digit percentage on a year-over-year basis
  • Corporate expenses are expected to be about $70 million. The first quarter is typically higher than other quarters.
  • Net interest expense is expected to be about $25 million
  • Effective tax rate of 22% to 23%
  • Reported EPS of $0.84 to $1.02
  • Adjusted EPS $1.02 to $1.20, excluding amortization expense of $0.14 and costs related to previously approved and communicated business restructuring of $0.04.



Source: PPG

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