PPG Earnings Conference Call
posted on
Jan 14, 2013 02:48PM
NEAR TERM PRODUCER - TiO2
Titanium dioxide prices are expected to double by 2015
Both the prepared commentary and discussion during the Q&A may contain forward-looking statements reflecting the company's current view about future events and their potential effect on PPG's operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. Today's presentation also contains certain non-GAAP financial measures the company has provided in the appendix of the presentation materials, which again are available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information, please refer to PPG's filings with the SEC. Now let me introduce PPG's Chairman and CEO, Chuck Bunch. Thank you, Vince, and welcome, everyone. Our record fourth quarter results capped off what has been an exceptional year for the company, driven by excellent operating performance and the announcement of several significant strategic transactions that accelerate the pace of our portfolio transformation. Record fourth quarter adjusted earnings per share of $1.53 are 10% higher than last year and marked 10 consecutive quarters of adjusted earnings per share records. We achieved these results despite continued variation in regional economic performance and mixed end-use market demand levels. A few business highlights from the quarter where the aggregate coatings segment earnings growth of 30% and Optical and Specialty Materials segment results, which were similar. Commodity Chemicals also grew earnings versus last year despite 2 unplanned outages during the quarter. Full year commodity chemical results eclipsed last year's record level. Geographically, the United States remained our strongest region, with most businesses delivering top line growth. Emerging markets growth remains modest, with trends improved in several businesses versus the prior 2 quarters. European demand continued to be negative, but the trend there also improves slightly versus the last few quarters. A key element of our success in the quarter and overall for the year was the company's strong operating execution. We continued to aggressively manage our businesses, and fourth quarter results also benefited from the restructuring actions, which we proactively initiated early in 2012. For the full year, we achieved a record adjusted EPS figure of $7.94, which is up 16% from last year's record. Worth mentioning is earnings results improved in each region, including Europe. Also, our full year return on sales percentage was higher in each segment except Glass. For the year, we delivered a record level of cash from operations, up 25% versus last year and continued our long legacy of returning cash to shareholders by increasing our dividend for the 41st consecutive year. In addition, the announced strategic actions reflect the continued execution on our vision to remain a global leader in coatings and Specialty Materials. Progress is well underway to finalize these actions. We begin 2013 well positioned. Our expectations are for continued variations in economic conditions. We expect a growth bias to remain for the United States, improvement in growth prospects in Asia and European activity to remain subdued. As a result of these mixed conditions, we will remain diligent in managing our businesses. Operationally, we expect an incremental $70 million to $80 million of savings from the finalization of our restructuring programs, and we will implement targeted price increases in our coatings businesses to fully offset the inflation from the past 2 years. Finally, even before considering any impact from 2013 free cash flow, we have excellent financial flexibility with cash and short-term investments of $2.4 billion. A primary focus for the corporation in 2013 will be to analyze prudent cash deployment opportunities focused on profitable earnings growth. Overall, I am pleased with the financial performance we achieved in 2012, and we remain focused as we begin 2013 on profitably growing the company and creating additional shareholder value. Thank you for your attention. This concludes our prepared remarks. Now operator, would you please give instructions and open the phone lines for questions.
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