PPG Reports Fourth Quarter and Full-Year 2024 Financial Results
PPG has released its financial results for the fourth quarter and full year of 2024. The company showed resilience amid a challenging macroeconomic environment, with solid growth in adjusted earnings per share (EPS), despite declines in net sales.
Fourth Quarter Consolidated Results
Key figures for Q4 2024:
- Net Sales: $3,729 million (down 5% from Q4 2023)
- Net Income: $2 million (down 98% from Q4 2023)
- Adjusted Net Income: $375 million (up 1% from Q4 2023)
- EPS: $0.01 (down 98% from Q4 2023)
- Adjusted EPS: $1.61 (up 3% from Q4 2023)
PPG’s financial results were impacted by the divestitures of its U.S. and Canada architectural coatings business, which was classified as discontinued operations, with a significant loss on sale of $285 million during the quarter.
Chairman and CEO Tim Knavish’s Comments
Tim Knavish, PPG’s Chairman and CEO, provided insights into the company’s performance and outlook. He highlighted the resilience demonstrated throughout 2024, despite external challenges. The company’s adjusted EPS grew by 6%, and it achieved a 10% increase in net income. PPG’s operating cash flow reached $1.4 billion, which was largely returned to shareholders through stock repurchases and dividends. The company repurchased approximately $250 million of stock in Q4 and $750 million for the full year, representing about 3% of outstanding shares.
Knavish also emphasized PPG’s strategic actions, including the divestitures of silica products and its U.S. and Canada architectural coatings businesses. These moves have helped strengthen the company’s financial profile, improve its adjusted EBITDA margin to 18.1%, and position PPG for sustainable growth. The company saw organic sales decline in the quarter, with growth in Mexico, China, and India balancing out declines in other regions.
Looking ahead to 2025, PPG expects a slow start to the year, driven by continued challenges in European demand and global industrial markets. However, PPG anticipates low single-digit organic sales growth for the full year. The company has already taken steps to reduce costs, including restructuring in Europe and consolidating manufacturing operations. Knavish reaffirmed PPG’s commitment to driving shareholder value, with about $400 million in share repurchases planned for Q1 2025.
Fourth Quarter Segment Results
Global Architectural Coatings Segment
- Net Sales: $881 million (down 7% year-over-year)
- Segment Income: $118 million (down 10% year-over-year)
- Segment EBITDA: $144 million (down 8% year-over-year)
The Global Architectural Coatings segment experienced a decline in net sales primarily due to unfavorable foreign currency translation. Organic sales in Europe, the Middle East, and Africa (EMEA) saw a slight decline, driven by lower demand across the region, while organic sales in Latin America and Asia Pacific remained relatively stable.
Performance Coatings Segment
- Net Sales: $1,262 million (up 2% year-over-year)
- Segment Income: $259 million (up 19% year-over-year)
- Segment EBITDA: $292 million (up 15% year-over-year)
The Performance Coatings segment saw strong growth, led by aerospace coatings and protective and marine coatings. Aerospace order backlogs increased to approximately $300 million, reflecting solid demand for PPG’s technology in this sector. The segment also benefited from higher sales in automotive refinish coatings and traffic solutions. The increased segment EBITDA was driven by pricing actions and cost-control measures.
Industrial Coatings Segment
- Net Sales: $1,586 million (down 9% year-over-year)
- Segment Income: $185 million (down 20% year-over-year)
- Segment EBITDA: $234 million (down 18% year-over-year)
The Industrial Coatings segment saw a significant decline in net sales, mainly due to lower sales volumes and decreased selling prices. Organic sales in automotive OEM coatings dropped as expected, largely due to lower industry production rates in the U.S. and Europe. The segment also faced challenges in industrial coatings and packaging coatings, with overall sales volumes in these categories declining.
Full-Year 2024 Financial Results
Key figures for the full year 2024:
- Net Sales: $15,845 million (down 2% from 2023)
- Net Income: $1,344 million (up 10% from 2023)
- Adjusted Net Income: $1,848 million (up 5% from 2023)
- EPS: $5.72 (up 11% from 2023)
- Adjusted EPS: $7.87 (up 6% from 2023)
- Adjusted EBITDA Margin: 18.1% (up from 17.1% in 2023)
Despite a 2% decline in net sales due to lower volumes and unfavorable foreign currency translation, PPG delivered strong full-year results, with growth in adjusted EPS and net income. The company achieved record sales in aerospace coatings and strong performance in automotive refinish coatings and architectural coatings in Latin America. PPG’s technology-driven product portfolio, including digital and technology-advantaged products, supported its solid performance.
PPG returned significant value to shareholders in 2024, paying out approximately $620 million in dividends and repurchasing $750 million in stock. The company ended the year with $2.8 billion remaining on its current share repurchase authorization.
Additional Financial Information
- Cash and Short-Term Investments: $1.4 billion at quarter-end
- Net Debt: $4.5 billion (down about $30 million from the prior year)
- Corporate Expenses: $87 million (down $27 million from the prior year)
- Net Interest Expense: $15 million in Q4
- Effective Tax Rate: 86% for Q4 (due to restructuring costs and portfolio optimization items with no tax benefit), with an adjusted tax rate of 22%
2025 Outlook
Looking ahead to 2025, PPG expects adjusted EPS to range from $7.75 to $8.05. This projection reflects organic growth driven by a combination of improved global industrial demand and strategic actions. EPS growth is expected to be weighted toward the second half of the year, with share gains expected in the Industrial Coatings segment.
PPG anticipates continued growth in key markets, particularly in aerospace and automotive refinish coatings, as well as strong performance in Latin American architectural coatings. However, the company also expects global industrial production to remain soft, with mixed demand across different regions.
PPG’s strong financial performance in 2024, despite challenges in some regions, underscores the company’s ability to adapt and drive growth through its diversified product portfolio and strategic cost actions. As PPG moves into 2025, the company remains committed to delivering sustainable growth, optimizing its portfolio, and providing value to shareholders.
