PPG reported third quarter 2021 financial results
·         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.