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$PPG said it has signed a deal to transfer pension benefits for $1.6Bil in pension liabilities to Massachusetts Mutual and $MET. Under the agreement, $PPG's pension plans will buy annuity contracts from MassMutual and $MET for US salaried and non-union hourly retirees or their survivors who began receiving retirement payments on or before April 1.
$PPG said it expects to achieve $45-50MM of the remainder of its $125MM restructuring program in fiscal 2018. The tax rate on earnings from continuing operations is estimated to be in the 23- 24% range, a tad lower than the 2017 level. This year, PPG targets to deploy around $2.4Bil of cash on either acquisitions or share repurchases.
$PPG expects its initiatives to address raw material inflation will yield results in the first half of this year, by bringing in significant raw material efficiency. While focusing on the overall cost structure, PPG plans to continue to execute on its restructuring program. The company expects acquisition-related sales gains of $125MM in FY18.
$PPG said the volume growth in 4Q17 was supplemented by acquisition-related gains from Crown Group, which was added to its fold in October 2017. The company is working with retail firm $HD to have its Timeless product added to more retail locations. In the current fiscal year, PPG plans to spend about $20MM on additional growth-related activities.
$PPG, a manufacturer of coatings, reported an 8% growth in sales to $3.7Bil in 4Q17, helped mainly by higher selling prices and favorable currency rates. Net earnings were $0.73 per share, compared to $1.31 per share in 4Q16, which included one-time gains. Adjusted for special items, 4Q17 earnings were $1.19 per share, up 3% from last year.
$PPG BoD authorized the repurchase of $2.5Bil of outstanding common stock effective immediately. This program is in addition to the company’s existing share repurchase authorization, which was approved in Oct. 2016 and had approx. $1.4Bil remaining as of Sept. 30, 2017.
Higher costs, mainly in transportation, following the adverse effects of recent hurricanes and business trends would affect the $PPG 3Q17 diluted EPS by $0.05 to $0.10. The EPS from continuing operations is expected to be in the range of $1.48 to $1.55. The volume growth rate would be above 1.5% for the quarter concerned.
$PPG has named Tim Knavish as SVP of its Industrial Coatings division, effective October 1, replacing Shelley Bausch who has elected to leave the company. Knavish will also oversee the company’s Packaging Coatings and Coatings Services businesses. He will continue to report to Chairman and CEO Michael McGarry.
From the restructuring actions announced last year, $PPG targets $40-50MM of savings in 2017. The company has captured 20% of the targeted savings in 1Q17 and expects that to gradually grow throughout the year to middle-to-upper end of targeted $40-50MM range.
With regards to the business activity, $PPG commented that all the surveys mentioned that economic optimism continued to go up since the U.S. election. The company added that the order book didn't reflect the economic optimism even though the demand was solid.
$PPG's cash and short-term investments totaled approximately $1.4Bil on March 31, 2017, up about $350MM y-o-y. At 1Q17 end, PPG has about $1.7Bil remaining under its current share-repurchase authorization. PPG reiterated its commitment to deploy at least $2.5-3.5Bil of cash on acquisitions, share repurchases in 2017 and 2018 combined.
"Looking ahead, we expect economic growth to remain modest, particularly in developed regions.,” CEO Michael McGarry said, while $PPG posted 1Q17 results. "Growth rates in emerging regions are expected to remain moderate, driven by increased consumer demand in Asia and broad-based expansion across Latin America, including in Brazil,” he added.
For 1Q17, selling prices for $PPG were flat. Unfavorable foreign currency translation impacted net sales by nearly 2%, or about $65MM. "Sales volumes continued to expand solidly in emerging regions, led by growth in Latin America and Asia,” CEO Michael McGarry said.