- Record net sales of about $4.4 billion
- Organic sales growth of more than 5% versus prior year, led by higher selling prices
- Reported earnings per diluted share (EPS) of $1.11 and adjusted EPS of $1.82
- Accelerating margin recovery; operating margins up 380 basis points year over year
- Supply disruptions moderating and manufacturing operations improving
- Operating cash flow improvement of about $400 million year over year
According to the company’s website press release on April 20, 2023, PPG (NYSE:PPG) reported financial results for the first quarter 2023.
First Quarter Consolidated Results
*Components of year-over-year net sales change: higher selling prices (+8%), lower sales volumes (-3%), divestiture-related sales and the wind down of Russia operations (-1%), unfavorable foreign currency translation (-2%)
**Detailed reconciliations of reported to adjusted figures are included below
President and CEO Comments
Tim Knavish, PPG president and chief executive officer, commented on the quarter:
As we communicated earlier this month, the pace of our operating margin recovery accelerated during the quarter, which drove a 33% year-over-year increase in adjusted EPS. Our improving results are despite macroeconomic conditions that remain challenging and reflect the strengths of our diverse business portfolio and progress we are making on restoring margins in line with our historical profile.
While the global demand environment generally remained consistent with our prior expectations, several businesses outperformed our original forecast and their respective markets. These include the aerospace coatings business and our Latin America region, each delivering record sales in the first quarter. In addition, our automotive original equipment manufacturer (OEM) coatings business benefited from solid global production growth and remains well positioned. Finally, our latest customer win in the U.S. architectural business provided a higher load-in benefit than originally projected.
Our strong earnings growth was across most business units and was aided by higher incremental margins that were driven by higher selling prices, improving manufacturing efficiencies and overall cost discipline. These factors also resulted in record first quarter operating earnings in our Europe, Middle East and Africa (EMEA) region.
Looking ahead, we anticipate the macro environment will generally remain consistent with the first quarter, with continued stabilization of economic activity (at lower absolute levels) in Europe and modestly improving demand in China. In the U.S., we expect sequential slowing in economic activity in certain end-use markets, particularly those that are construction-related. Supply chain disruptions are abating, and we are already experiencing and expect further increases in commodity raw material availability. We remain highly focused on partnering with our customers and delivering superior service and products with a focus on enhancing their productivity and sustainability. Finally, along with additional organic growth, we are executing and delivering on our previously announced restructuring actions and acquisition-related synergies, which collectively will drive additional margin recovery momentum and related operating cash flow.
Lastly, I want to thank our global employees for their unwavering dedication and focus on living our purpose – We protect and beautify the world – by making it happen and helping to deliver these strong first-quarter financial results.
