PPG Industries Earnings Call Nuggets: M&A and Supply Costs
PPG Industries, Inc. (NYSE:PPG) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
David Begleiter – Deutsche Bank: Chuck, just on today’s announcement on the optical JV and then potential sale or purchase. Give us a little more detail on your thinking on this business, is it core or is it not core, if you sold it, what’s the tax basis you bought it? How much will it cost you, a little more detail would be great?
Charles E. Bunch – Chairman and CEO: David, we’re not really going to give a lot more color on our – on the press release. We did that for our disclosure obligations and we’re not going to get into providing a lot of additional details on the press release regarding transitions.
David Begleiter – Deutsche Bank: Then just one more thing; Chuck, if you look at your Coatings margins, they were roughly 13.1% for the entire Coatings businesses. Should they be up or down next year? If up, by how much do you think?
Charles E. Bunch – Chairman and CEO: Well, we feel we have an opportunity to improve on our Coatings margins. So, we think in general economic conditions and volumes should improve globally. Depends again on the regions and markets, but we feel that that is going to be an overall benefit, plus we have as you know we’ll be calendarizing the full restructuring benefits as we go through 2013. So, those two events I think or those two conditions give us an opportunity to improve on our Coatings margins.
Duffy Fischer – Barclays: You mentioned that you still want to get price coming year to catch up with raw materials, how much more price do you need to kind of breakeven on raw materials overall?
Charles E. Bunch – Chairman and CEO: Duffy, we had some inflation as we look even at the fourth quarter, even as the raw material basket was coming in balance, we still had the slight inflation overall in our costs. So, as we look to 2013, we’re seeing some difference in trends overall for raw materials. We have some of our raw materials, especially on the inorganic side that we have some modest declines. Although now, what we’re seeing here as we start the year is some increases, especially in commodities here in North America, like propylene or ethylene. So, I would say that we’re looking for a more balanced raw material outlook as we go through – as we open here in 2013 and we will have other inflationary costs and we will have more than likely some targeted price increases for to address those or in businesses, regions where we haven’t fully recaptured the inflationary pressure that we saw over the last two years.
Duffy Fischer – Barclays: Then on your goals I think you’ve talked several times about more than 10% that you’d like de-content TiO2 from your can of paint, how much of that did you get accomplished in ’12 and then how much more can we get done in ’13?
Charles E. Bunch – Chairman and CEO: Well, when we made the announcements regarding our targets for improvements in using TiO2 more efficiently, we said 4% to 6% during 2012, we accomplished that at the lower end of the range and we think we still have in 2013 an opportunity to improve our utilization again in the lower single-digit target levels for 2013.