PPG Industries, Inc. (NYSE: PPG) stock fell over 1.4% in the pre-market session of October 20th, 2020 (Source: Google finance) after the company posted lower than expected results for the third quarter of FY 20. PPG in the third quarter of FY 20 has reported the adjusted earnings per share of $1.93, while reported 4 percent fall in the adjusted revenue to $3.69 billion in the third quarter of FY 20, beating the analysts’ estimates for revenue by 2.12%. Overall, company sales volumes had declined by about 5% versus the prior year third quarter. The selling prices rose by 1.3% year-over-year, on the back of stronger contributions from the Performance Coatings reportable segment. Similar rise are anticipated for the fourth quarter. The recent acquisitions of Texstars, ICR, and Alpha increased net sales by less than 1%, or about $20 million, in the third quarter. Going forward, the company anticipates demand recovery to continue; although, the pace of recovery will vary across end-use markets and geographic regions. In the fourth quarter, the company projects the sales volumes will be unfavorable by low- to-mid-single digit percentage compared to the prior year.
Third quarter marks strong global architectural coatings demand comingled with a recovery of global demand in several industrial-related coatings end-use markets from low levels seen in the second quarter of 2020 due to the COVID-19 pandemic. Economic activity in the quarter remained the strongest in China. The pandemic is still affecting the demand for coatings products in certain sectors, most notably the global commercial aerospace, marine, and protective coatings products that support the energy markets. During the third quarter, the company started implementing the restructuring program that was announced in June 2020. When completed, the company anticipates that the steps taken to deliver about $170 million in annual pre-tax cost savings. During the third quarter, the company had realized approximately $15 million of savings from this new program and an additional $20 million from all other active restructuring programs. The company projects an additional $30 to $35 million of savings from restructuring programs during the fourth quarter.
Additionally, during the third quarter, PPG repaid $1 billion of short-term debt due in April 2021, leaving $500 million outstanding on the term loan. The company ended the third quarter with $2 billion of cash and cash equivalents.