PPG Industries, Inc. (NYSE:PPG) Q4 2022 Earnings Call Transcript

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Tim Knavish: Yes. Yes, the PPG specifics, you know well about the THD Home Depot Pro program, and we expect double digits from that program again this year after strong double digits last year. The other one, we’ve got a nice additional retail win. Our customer is going to announce it first, but you should hear in weeks, possibly months here of what that is, that will help offset some of the other things that Vince mentioned. And then the spray paint win for us with that innovation award at the Home Depot is — we’re excited about opportunity to not only leverage that specific product, but expand that offering either further. But when you put it all together, Kevin, we are expecting net-net for volumes in that space to be down, but of course sales to be up with the price offsetting the difference.

Operator: Our next question comes from Frank Mitsch with Fermium Research. Please go ahead, Frank.

Frank Mitsch: First, I want to extend my sympathies to the PPG’s family on the passing of Bill Hernandez. He really was a great, great guy. Tim, I appreciate your answer on the full year EPS question, for sure, given all the uncertainties. But you already indicated that you expect European earnings will be up year-over-year in the second quarter. And you also mentioned that your folks on the ground in China are expecting China to really pick up come April. And so I’m wondering, is part of your calculus that we will likely see higher year-over-year EPS in the second quarter?

Vince Morales: Well, again, Frank, first of all, thanks for the call out to Bill Hernando, a loved PPG partnered here for many years. and just a world-class CFO and great human being and been a tragic and sudden loss this past weekend. So thank you for calling that out. Frank, at the end of the day, the uncertainty at this point with what’s happening with China and when and what’s happening with Europe and to what degree, and what’s happening to raw material pricing and the specificity of that raw material pricing, as you know, can change our earnings profile fairly significantly. We’re just not in a position right now to put out a statement on Q2 EPS. That said, as I said earlier, I believe we’ve got a hangover in Q1, but a number of those, let’s call them, earnings levers start to come due in Q2.

Vince Morales: Yes, Frank, this is Vince. We do give this up. If you look at our profile of countries, China is one of our largest countries for sure. So there’s still uncertainty there as we pointed out, and Tim pointed out in the opening remarks about the timing of the opening. Right now, we certainly hope March aerospace a strong month. Definitely April too hard to predict April, which is Q2 is typically a very good quarter in China. So, we’re not in position at this point to provide any real line on that at this point.

Operator: Our next question comes from Josh Spector of UBS. Please go ahead, Josh.

Josh Spector: I just have a couple of follow-ups here. First, do you think you can achieve the low end of your margin targets this year in 2023 on average? And second, if you could comment on your ability to hold prices across the businesses as we move through this year? And any comments there versus why this might be different versus prior cycles?

Vince Morales: Yes. Josh, one lever to help us improve earnings, again, we’re not trying to give full year guidance on margins, and that’s even harder pass than top line. So, we’ll defer that till a little bit later into the year. Your question on pricing, I’m going to let Tim answer it.

Tim Knavish: Yes, Josh, I’m confident in our team’s ability to hold price similar to prior cycles. And with this cycle, possibly even more because of other inflation that is more persistent than we’ve had in other cycles. So that’s — we’re confident in that.

Operator: Our next question comes from Vincent Andrews of Morgan Stanley. Please go ahead, Vincent.

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