PPG Industries Q2 Earnings Call Highlights

PPG Industries NYSE: PPG reported second-quarter net sales of $4.5 billion, up 7% from a year earlier, as the coatings maker recorded its sixth consecutive quarter of organic sales growth. Organic sales rose 4%, with sales volumes and selling prices contributing equally, Chairman and CEO Tim Knavish said on the company’s earnings call.

Adjusted earnings per share were $2.23, slightly above the prior-year period. Knavish said strong results in Aerospace and Architectural Coatings Latin America helped offset expected lower volumes in Automotive Refinish. Company adjusted EBITDA margin exceeded 17% during the quarter.

PPG said it covered approximately 90% of cost-of-goods-sold inflation through pricing in the second quarter and now expects to achieve full coverage by the fourth quarter, one quarter earlier than its prior target. The company cited rising raw material, energy, logistics and packaging costs across the coatings supply chain following the Iran War.

Segment results reflect aerospace and industrial momentum

Global Architectural Coatings sales increased 8% to $1.1 billion. Organic sales rose 2%, driven by higher selling prices that were partly offset by modestly lower volume. Latin America and Asia-Pacific posted mid-single-digit organic sales growth, while EMEA returned to positive organic sales growth at a low-single-digit rate.

Segment EBITDA increased 14%, and margin expanded 100 basis points to 19.4%. Knavish said European pricing and cost actions produced a return to margin expansion following several quarters of contraction. For the third quarter, PPG expects the segment’s organic sales to range from flat to up a low-single-digit percentage, while EBITDA margin is expected to be relatively flat year over year.

Performance Coatings sales rose 7% to $1.6 billion, while organic sales increased 3%. Aerospace posted double-digit sales growth and maintained an order backlog of about $300 million. Protective and Marine Coatings also grew at a double-digit rate, marking its 13th consecutive quarter of sales-volume growth, and Traffic Solutions grew at a mid-single-digit rate.

Automotive Refinish organic sales, however, declined by a double-digit percentage, reflecting difficult comparisons with customer order patterns in the second quarter of 2025 and a still-modest industry recovery. Performance Coatings EBITDA margin fell 300 basis points to 22.7%, a decline Knavish said was driven almost entirely by the Automotive Refinish comparison.

Management said it expects Automotive Refinish to return to growth in both the third and fourth quarters, with U.S. destocking now behind the business. Knavish also pointed to improving insurance-market indicators, including a low-single-digit year-over-year decline in auto insurance premiums during the second quarter, the first such quarterly decline in five years.

Industrial Coatings sales grew 7% to $1.8 billion, with organic sales up 5% on volume gains in all three businesses. Automotive OEM Coatings grew at a low-single-digit rate, including mid-single-digit volume growth and share gains that outpaced global auto production by approximately 500 basis points. Packaging Coatings posted double-digit organic sales growth, with volumes up more than 20% on a two-year stacked basis.

Industrial Coatings EBITDA increased 2%, though margin declined 70 basis points to 15.9% because of cost inflation. PPG expects modest organic growth and margin compression for the segment in the second half, citing the timing of index-based pricing.

Aerospace investment and share-gain focus

Knavish highlighted aerospace as a major growth engine, describing PPG’s roughly $2 billion aerospace portfolio as spanning sealants, adhesives, transparencies and coatings across original-equipment and aftermarket channels. The company is investing more than $500 million in added aerospace capacity, including a previously discussed $380 million facility in Shelby, North Carolina, along with about $120 million of debottlenecking and expansion work at existing sites.

During the analyst discussion, Knavish said PPG expects approximately $25 million per quarter of previously won new business in its Industrial Coatings segment to begin contributing to revenue. He identified Aerospace, Packaging Coatings, Protective and Marine, Industrial Coatings and Automotive OEM as areas where PPG is gaining share.

In Protective and Marine, Knavish cited strength in marine aftermarket, Asian marine new-build activity, fire protection, data centers, warehouses, energy and infrastructure. He said the company does not see a near-term peak in the business, though growth rates could moderate as comparisons become more difficult.

Cash flow, capital returns and outlook

Chief Financial Officer Jamie Beggs, who joined her first PPG earnings call in the role, said the company ended the quarter with $1.6 billion in cash and short-term investments. Net debt declined by more than $400 million from the second quarter of 2025, leaving net debt at 1.9 times adjusted EBITDA.

Year-to-date cash from operations totaled about $600 million, more than $220 million higher than a year earlier, primarily due to working-capital improvements. PPG returned approximately $235 million to shareholders during the quarter through dividends and share repurchases, including $75 million in buybacks. Year-to-date share repurchases reached $175 million.

The company reaffirmed its full-year adjusted EPS guidance of $7.70 to $8.10. For the third quarter, PPG expects organic sales growth of low-single-digit to mid-single-digit percentages and adjusted EBITDA margin ranging from flat to down 100 basis points year over year.

About PPG Industries (NYSE:PPG)

PPG Industries is a global supplier of paints, coatings and specialty materials that serves industrial, transportation, consumer and construction markets. Founded in 1883 as the Pittsburgh Plate Glass Company, PPG has evolved from its origins in glass manufacturing into a diversified coatings and materials company headquartered in Pittsburgh, Pennsylvania. The company develops and manufactures a broad array of products used to protect and enhance surfaces, from consumer paints to highly engineered coatings for demanding industrial applications.

PPG's product portfolio includes architectural and decorative paints, automotive original equipment and refinish coatings, industrial coatings for machinery and equipment, protective and marine coatings, aerospace and defense coatings, and packaging coatings and materials.

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