PPG Unites with Physical Security - Analyst Blog

Zacks Investment Research
Posted: Apr 02, 2012 1:00 PM
PPG Unites with Physical Security  - Analyst Blog

PPG Industries Inc. (PPG) announced that its marine and protective coatings business has collaborated with Physical Security for the application of PPG’s Mil-Tough BR polyurea coating. The coating is expected to assist customers in satisfying the requirements of the U.S. Department of Defense Unified Facilities Criteria and the Interagency Security Committee Physical Security Criteria for Anti-Terrorism Force Protection (ATFP).

PPG along with a number of its groups are working with Physical Security to bring the polyurea technology to the ATFP market. Different segments, including the original equipment manufacturers, science and technology group and government solutions team, are all working with the two companies to provide cost effective solutions to the U.S. Government. PPG’s team has an established reputation, especially due to its experience in hardening the exterior walls of the Pentagon while offering glazing systems for the American embassies in Berlin, Kabul and Moscow.

The MIL-Tough BR coatings is an application that provides blast resistant coatings and has shown surprising results of blast resistance while handling challenging situations related to the environment and industry.

PPG released its fourth-quarter 2011 result in January 2012. The company’s revenues and earnings for the quarter beat the Zacks Consensus Estimates. It delivered record earnings in the quarter driven by higher revenues and cost-cutting initiatives. Revenues went up 4% to $3.52 billion in the quarter, slightly exceeding the Zacks Consensus Estimate of $3.50 billion. For full-year 2011, revenues increased 11% year over year to $14.89 billion.

PPG has a strong cash position, and continues to utilize cash on earnings growth initiatives. The company has also returned cash to its shareholders in the form of uninterrupted dividend pay outs. It also expects to deploy its strong cash position for continuous growth and aims to end 2012 with a cash balance of less than $1 billion.

However, raw material costs have been a matter of concern for PPG’s earnings. Although the raw material costs have shown a moderating trend, the price of the company’s primary raw material titanium dioxide (TiO2) has been escalating. PPG competes with the DuPont Performance Coatings segment of EI DuPont de Nemours & Co. (DD) and BASF Coatings AG.

We currently have a long-term Neutral recommendation on PPG. The stock maintains a Zacks #2 Rank, which translates into a short-term (1 to 3 months) Buy rating.

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