PPG Industries recently reported fourth quarter 2014 net sales from continuing operations of $3.71 billion, up $207 million, or 6%, vs. the prior-year figure of $3.5 billion. Net sales in local currencies grew 10% year-over-year, with acquisition-related sales contributing about 6% and volume growth adding 4%. Unfavorable currency translation impacted net sales by 4%, or about $130 million.
Fourth quarter 2014 reported net income from continuing operations was $86 million, or $.62 per diluted share. Fourth quarter 2014 adjusted net income from continuing operations was $293 million, or $2.11 per diluted share. The adjusted figures exclude debt refinancing charges of $200 million after-tax, or $1.44 per diluted share, $36 million after-tax, or $.26 per diluted share, for transaction-related costs primarily from the Comex acquisition, and the benefit of lower taxes of $29 million, or $.21 per diluted share, relating to a favorable ruling on a prior-year foreign tax matter. The ongoing tax rate on the adjusted earnings excluding these adjustments was 23.5% for the fourth quarter and 23.9% for the full year, consistent with the company’s prior guidance.
Fourth quarter 2013 reported net income and earnings per diluted share were $237 million and $1.66, respectively. Adjusted fourth quarter 2013 net income from continuing operations was $240 million with earnings from continuing operations of $1.68 per diluted share, excluding transaction-related costs of $3 million, or $.02 per diluted share.
Glass segment net sales were $272 million for the quarter, up $8 million, or 3%, year-over-year on higher sales volumes and selling prices, partly offset by negative currency translation. Solid flat glass sales volume growth continued, aided by higher demand for value-added products serving residential and non-residential end-use markets. These gains were offset by lower fiber glass volumes, as higher European volumes were offset by weaker volumes in the U.S. due to customer inventory management. Segment earnings were $33 million, up $11 million vs. the prior year, due to the higher sales and improved manufacturing utilization and costs.
“We established new fourth quarter and full-year milestones in sales and adjusted earnings per share from continuing operations,” said Charles E. Bunch, chairman and CEO. “Our strong financial performance, including several consecutive years of at least 20% adjusted earnings growth, clearly illustrates the benefits of our active portfolio management, earnings-accretive cash deployment and persistent operational focus.
“For the fourth quarter, our adjusted earnings per share increased by 26% supported by growth of at least 10% from each reporting segment. While overall global economic activity remained modest, our sales volumes improved about 4%, with each major region delivering volume growth at or above our third quarter results. This was aided by solid growth in each business in our Industrial Coatings segment, along with continuing sales improvement in aerospace and automotive refinish.
“Strategically, 2014 was another successful and eventful year as we continued to enhance our business portfolio, including completion of the Comex acquisition in the fourth quarter. We are very pleased to now have this high-quality business as part of PPG. We also continued our heritage of returning cash to shareholders, with more than $1.1 billion returned for the year through dividends and share repurchases.” In April, the company raised the per-share dividend by 10%. PPG has paid annual dividends for 115 consecutive years, including 43 consecutive years of increased per-share payouts.
“As evidenced by our results, we remain poised to benefit from continuing global growth due to our broad geographic reach and excellent product portfolio, coupled with our previously completed restructuring actions and ongoing cost discipline,” said Bunch. “As we enter 2015, we anticipate growth rates will remain mixed by region, with North American and Asian economies continuing to grow at rates generally consistent with 2014. Our base case assumption is that European growth will remain mixed by country but subdued overall. However, we believe that European economies stand to benefit considerably if oil prices remain at current levels, which may stimulate higher growth in that region.
“From a PPG perspective, we remain focused on new product development, operational excellence and continued opportunities to deploy cash for earnings accretion. Our acquisition pipeline remains active, and share repurchases remain an integral element of our capital allocation strategies. We anticipate deploying $1.5 billion to $2.5 billion of cash in years 2015 and 2016 combined, on acquisitions and share repurchases, with a focus on creating additional shareholder value.”
PPG recently reported cash and short-term investments totaling $1.2 billion at year-end. The company repurchased $300 million, or about 1.4 million shares, of PPG stock during the quarter. PPG also reported approximate full-year 2014 cash uses as follows: $585 million for capital spending, $360 million for dividends paid, $2.5 billion on acquisitions (including repayment of debt acquired), and $750 million on share repurchases totaling approximately 3.8 million shares.