- Record second quarter net sales of nearly $4.4 billion, about 45% higher than prior year
- Reported earnings per diluted share (EPS) of $1.80 and adjusted EPS of $1.94
- Sales volumes grew about 24% year over year, supported by strong demand recovery across many end-use markets
- Pervasive raw material supply disruptions drove year-over-year cost inflation of a mid-to-high-teen percentage
- Selling prices increased 3.5%; additional pricing actions being implemented
- Completed Tikkurila, Wörwag, and Cetelon acquisitions in the quarter. Five acquisitions completed since December 2020; total annualized revenue of about $1.7 billion
PPG reported a second quarter 2021 net sales of approximately $4.4 billion, approximately 45% higher than the prior year. Selling prices increased by 3.5% and sales volumes were higher by approximately 24% in comparison to the previous year. Favorable foreign currency translation impacted net sales by about 6%, or about $185 million, and acquisition-related sales added more than 11% year over year.
Second quarter 2021 reported net income was $431 million, or $1.80 per diluted share, and adjusted net income was $465 million, or $1.94 per diluted share.
“Our strong organic sales growth reflects a partial demand recovery from the pandemic, including above-market contributions across many of our businesses. However, our volume growth was significantly tempered due to various supply and component disruptions, including those that reduced the overall manufacturing capability of our customers. In addition, despite strong underlying end-use market demand, various coatings raw material shortages and logistics issues reduced our ability to fully supply our existing order book within the quarter. Our recent acquisitions also contributed to our strong year-over-year sales growth, and they are meeting our expectations,” said Michael H. McGarry, PPG chairman and chief executive officer.
“While we delivered solid adjusted EPS in the second quarter, our results were below our April forecast. In addition to the top-line impact from the supply disruptions, we experienced continual increases in raw material and transportation costs throughout the quarter. We actively implemented additional selling price increases during the quarter and our pace of price realization is well ahead of the most recent raw material inflation cycle in 2017-2018. In addition to further selling price increases, we delivered about $40 million of structural cost savings from business restructuring programs and have increased our targeted, full-year 2021 savings by about 10%, to $135 million. We also continued our outstanding cash flow generation which year to date is about $600 million, or about $250 million higher than 2020.
“We continue to proactively manage various supply chain disruptions, which we now expect will likely persist through the third quarter. As a result, we expect that aggregate input and logistics costs will be sequentially higher in the third quarter, compared to the second quarter. We continue to prioritize further selling price increases, which we expect will fully offset raw material cost inflation before the end of 2021, on a run-rate basis. Overall economic demand growth remains very broad and robust and, as supply conditions normalize, we expect strong sales growth later this year and into next year aided by our technology advantaged products, our diverse geographic and end-use market participation, and continuing recovery from our aerospace business. As is PPG’s hallmark, we will continue to aggressively manage all aspects of our cost structure,” added McGarry.