On July 25, PPG reported second quarter 2017 net sales of $3.8 billion, up about 1 percent versus the prior year. Net sales in local currencies grew nearly 2 percent year-over-year, aided by acquisitions. Selling prices improved slightly versus the prior year and in comparison to recent sequential quarters, reflecting initial efforts to offset raw material cost inflation. Aggregate sales volumes were flat year-over-year with variation by region and business unit. Unfavorable foreign currency translation impacted net sales by nearly 2 percent, or about $65 million.

   Second quarter 2017 net income from continuing operations was $504 million, or $1.95 per diluted share. Second quarter 2017 adjusted net income from continuing operations was $472 million, or $1.83 per diluted share. Adjusted net income excludes an after-tax gain from the sale of the Mexican Plaka wallboard business of $24 million, or 9 cents per diluted share; a benefit from a legal settlement of $11 million, or 4 cents per diluted share; and after-tax transaction-related costs of $3 million, or 1 cent per diluted share. The effective tax rate for the quarter was 24.1 percent, and the adjusted effective tax rate for the quarter was 24.6 percent.
 
   Second quarter 2016 reported net income from continuing operations was $339 million, or $1.25 per diluted share. Second quarter 2016 adjusted net income from continuing operations was $466 million, or $1.73 per diluted share. Adjusted net income excluded net after-tax charges totaling $127 million, or 48 cents per diluted share, including: net tax effect of asbestos settlement funding of $128 million, or 48 cents per diluted share; an asset write-down of $8 million, or 3 cents per diluted share; transaction-related costs of $4 million, or 2 cents per diluted share; and a gain from the sale of the company’s minority ownership interest in an equity affiliate of $13 million, or 5 cents per diluted share. The effective tax rate for the quarter was 45.2 percent, and the adjusted effective tax rate for the quarter was 24.8 percent.
 
   All figures presented for the current and prior year have been recast to reflect PPG’s former Glass segment as discontinued operations.  In the second half of 2016, PPG sold its flat glass and European fiber glass businesses and divested its interests in two Asian fiber glass joint ventures. PPG anticipates the pending sale of its North American fiber glass business will be finalized in the second half of 2017. Accordingly, the company expects its effective tax rate on ongoing earnings from continuing operations will be lower than its prior forecast and will be between 24.5 and 25.0 percent.
 
   “We achieved higher adjusted earnings per diluted share, increasing 6 percent year-over-year,” said Michael McGarry, PPG chairman and chief executive officer. “This improvement was despite significant raw material cost inflation and continued unfavorable foreign currency translation. We worked to offset these headwinds through aggressive cost management, including accelerated execution of our restructuring program announced in 2016, and benefits from our ongoing cash deployment.”
 
   “We are continuing to work on a variety of actions to improve our organic volume growth rate and are delivering results on various initiatives.  Some highlights include the Industrial Coatings segment where volumes grew well above industry rates, and in PPG’s company-owned architectural coatings stores in the U.S., which have posted six consecutive quarters of improved same store sales. However, aggregate Performance Coatings segment volumes declined year-over-year.  Also, overall company volumes were flat in the second quarter, which included the effect of our efforts to raise selling prices resulting in us turning away certain business. Year-to-date volume growth is about one percent which is well below our target. This remains a key focus area which we will continue to address,” McGarry said.
 
   “Looking ahead, overall global economic growth is expected to remain consistent but modest. Our highest growth rates continue to be in emerging regions, although these economies have moderated in recent quarters. We have seen evidence of broadening early economic-cycle activity in Europe; however, in the U.S. and Canada, growth has become more industry-specific. Notable and specific to PPG is that we will reach the anniversary of the significant declines in the marine new-build industry, which have had an unfavorable impact on our organic growth rate the past two years. Also, given the significant inflation in coatings raw material costs, we continue to work with our customers on selling prices,” McGarry said.
 
   “We expect a higher level of earnings-accretive cash deployment in the second half of 2017 versus the first half,” McGarry continued. “This deployment will likely include both acquisitions and share repurchases and we are resuming share repurchases in the third quarter. We previously communicated an intent to deploy $2.5 billion to $3.5 billion of cash on acquisitions and share repurchases in years 2017 and 2018, and are now targeting the upper-end of that range at a minimum,” McGarry concluded.
 
   PPG reported that on June 30, 2017, cash and short-term investments totaled approximately $1.6 billion and that the company had approximately $1.7 billion remaining under its current share-repurchase authorization.

 
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