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    PPG
    Earnings call· Mar 2026(Q1 FY26)

    PPG INDUSTRIES Q1 FY26 earnings call PPG

    Apr 29, 2026 Source

    Executive summary

    PPG Q1 FY26 — Solid Organic Growth and Reaffirmed Full-Year EPS Guidance

    PPG delivered solid Q1 FY26 results, driven by consistent organic sales growth and proactive pricing actions, despite a challenging macro environment and rising input costs. The company reaffirmed its full-year EPS guidance, banking on strong performance in aerospace and architectural coatings in Latin America, alongside ongoing cost management and share gains. Management is focused on leveraging its global supply chain and technology to offset inflationary pressures and maintain momentum.

    Highlights

    5

    • Achieved 1% organic sales growth, marking the fifth consecutive quarter of year-over-year organic sales growth.

    • Adjusted EPS increased 6% year-over-year to $1.83.

    • Segment EBITDA margin was over 19%, reflecting strong execution and share gains.

    • Aerospace business delivered double-digit organic growth and has a backlog of approximately $350 million.

    • Repaid $700 million of debt and returned approximately $260 million to shareholders through dividends and share repurchases.

    Concerns

    4

    • Raw material, energy, logistics, and packaging costs are expected to increase by a mid-single-digit percentage for the remainder of the year due to geopolitical events.

    • Automotive refinish organic sales decreased by a double-digit percentage due to lower sales volumes.

    • Architectural coatings sales in Europe declined by a low single-digit percentage.

    • Industrial Coatings segment EBITDA margin was negatively impacted by regional mix, specifically a decline in China automotive production.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year Adjusted EPS
    $7.70 to $8.10
    high materiality
    High
    Q2 Organic Sales Growth
    flat to positive low single digits
    medium materiality
    Medium
    Q2 Adjusted EPS Growth
    flat to a positive low single-digit percentage
    medium materiality
    Medium
    Raw Material Cost of Goods Sold Impact
    mid-single-digit percentage increase
    high materiality
    High
    Refinish Volume Growth
    volume growth
    medium materiality
    Medium
    Industrial Segment Share Gains
    additional share gains
    medium materiality
    High
    Automotive OEM Market Outperformance
    continue outgrowing the market
    medium materiality
    High
    Aerospace Output Increase (Debottlenecking)
    some improvement
    medium materiality
    High
    Aerospace New Plant Volume Output
    step change in volume output
    high materiality
    High
    European Architectural Fixed Cost Reduction
    $25 million reduction
    medium materiality
    High
    Structural Restructuring Benefits
    $50 million
    medium materiality
    High
    Structural Restructuring Benefits
    $50 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Global Architectural Coatings
    Organic sales for Latin America and Asia Pacific increased by a mid-single-digit percentage with equal contributions from selling price and sales volumes. Mexico retail sales were especially strong. Architectural coatings sales in Europe declined by a low single-digit percentage, partially offset by favorable pricing. Expects organic sales and margin momentum to continue into Q2 2026. Four manufacturing plants in Europe will be closed in H2 2026 for structural cost reduction.
    Organic growth: +2%EBITDA margins: up 230 bps
    		$965M+13%—Segment income increased >30%
    Performance Coatings
    Led by strong performance in aerospace, traffic solutions, and protective and marine coatings. PMC has delivered 12 consecutive quarters of positive volume growth. Automotive refinish organic sales decreased due to customer order patterns, but U.S. industry accident claims are improving. Anticipates refinish volume growth in H2 2026. Investments in aerospace are improving productivity and output.
    Aerospace organic growth: double-digitTraffic Solutions organic growth: high single-digitProtective and Marine Coatings (PMC) organic growth: high single-digitAutomotive Refinish organic sales: double-digit percentage decrease
    		$1.3B+5%—Segment EBITDA: 24%
    Industrial Coatings
    Outpaced industry demand due to share gains in automotive OEM coatings and packaging coatings. China automotive production decline impacted Q1, but comparisons are expected to improve. Expects sequential margin improvement driven by incremental industry and PPG sales volume growth, selling price realization, and aggressive cost management.
    Organic sales: flatSales volume growth: +1%Automotive OEM sales volume: flat (outpaced industry decline by ~300 bps)Industrial Coatings organic sales: low single-digit percentage decreasePackaging Coatings organic sales: double-digit percentage increasePackaging Coatings sales volumes: up >20% on 2-year stack basis
    		$1.6B+4%—Negatively impacted by regional mix

    Operational metrics

    10
    Adjusted EPS
    $1.83+6% versus prior year
    Q1 FY26

    Reported adjusted earnings per share.

    Segment EBITDA margin
    >19%
    Q1 FY26

    Reflecting solid execution and share gains.

    Cash and short-term investments
    $1.6B
    End of Q1 FY26

    Balance sheet strength provides financial flexibility.

    Debt repaid
    $700M
    Q1 FY26

    Matured debt repaid in the first quarter.

    Shareholder returns
    $260M
    Q1 FY26

    Through dividends and share repurchases.

    Cash flow as percentage of sales
    ~10%
    Proxy

    A good proxy walking around number for the company's cash flow.

    Automotive OEM outperformance vs. industry
    ~300 bps
    Q1 FY26

    Outpaced the decline in global automotive industry production.

    Refinish U.S. industry accident claims
    down 1%YoY
    Feb & Mar

    Indicates a normalization trend after high single-digit to double-digit declines.

    Refinish U.S. industry accident claims (trend)
    low single-digit declinesYoY
    3 of last 4 months

    Reinforcing a normalization trend.

    Ozark acquisition revenue
    $100M
    Annual

    Approximate revenue for the small bolt-on acquisition in Traffic Solutions.

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price splitVolume: +1%, Price: positive%
    Productivity cost savings program$50MUSD

    Orderbook & backlog

    1
    Aerospace backlog$350MQ1 FY26

    Despite year-over-year output increase.

    Deals & partnerships

    1
    OzarkSmall bolt-on acquisition for Traffic Solutions business.

    An opportunistic asset that is highly synergistic, acquired at a good price. It helps raise the margin profile and cash generation for the Traffic Solutions business.

    Capital programs

    3
    Aerospace debottlenecking investmentsunderway
    Spent to date: ~$150M
    Start: last year

    Benefit: improved productivity and output

    Approximately $150 million invested over the last year, expected to show improvement in late 2026 into 2027.

    New Aerospace plantannounced~$380M

    Benefit: step change in volume output

    A new plant investment of approximately $380 million, expected to provide a step change in volume output by the 2028 timeframe.

    European Architectural plant closuresunderway

    Benefit: $25M fixed cost reduction annually

    Four manufacturing plants will be closed in the second half of 2026, resulting in approximately $25 million in lower fixed costs annually from 2027.

    Risks & headwinds

    4
    Rising raw material, energy, logistics, and packaging costs due to geopolitical events (Iran war)Remainder of 2026

    Mid-single-digit percentage increase in cost of goods sold for the remainder of the year.

    Mitigation: Proactive price increases, leveraging global supply chain, product formulation technology, AI for cost reduction, expecting faster price-cost realization.

    Automotive refinish volume declineQ1 2026, expected to continue in Q2

    Double-digit percentage decrease in organic sales in Q1.

    Mitigation: Expecting volume growth in H2 2026 as industry inventory normalizes and accident claims improve.

    Inconsistent demand and regional mix impact in Industrial CoatingsQ1 2026

    Organic sales flat, Industrial Coatings organic sales down low single-digit percentage, segment EBITDA margin negatively impacted by China auto production decline.

    Mitigation: Expects sequential margin improvement, continued share gains, and outperforming the market in Automotive OEM.

    Architectural Coatings Europe volume declineQ1 2026

    Low single-digit percentage decline in total.

    Mitigation: Partially offset by favorable pricing, structural cost reductions (4 plant closures), building a business that can perform well at flat volumes.

    What to watch in Q2 FY26

    5

    Refinish volume growth

    Second half of 2026
    CurrentDouble-digit percentage decrease (Q1)
    TargetPositive volume growth

    Why it matters

    Indicates recovery in a key segment and leverage on improved industry accident claims.

    In refinish, as we previously communicated, we expect year-over-year organic sales volume declines in the second quarter as we lap strong prior year first half order patterns. We anticipate volume growth during the second half of 2026.

    Q&A highlights

    6

    Asked about specific changes made to accelerate price-cost recovery compared to prior cycles and whether volumes would hold given recent price increases.

    Tim Knavish stated that the company's pricing muscle has been refined with each cycle, and current organic growth momentum helps balance pricing and volume. He noted prior cycles took 1-1.5 years for neutrality, while this cycle is expected to be months.

    “Now from a volume standpoint, we're combining it with positive momentum on the organic growth muscle that we're that we've been building and demonstrating results for these last 5 quarters or so. So we're confident that we're going to be able to strike the right balance between pricing and volume.”

    asked by Ghansham Panjabi · answered by Timothy Knavish

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    PPG reported solid first-quarter 2026 results with 1% organic sales growth, marking the fifth consecutive quarter of year-over-year growth. Net sales reached $3.9 billion, and adjusted EPS increased 6% to $1.83, supported by a segment EBITDA margin over 19%. This performance was attributed to higher selling prices, technology-advantaged products, and strong commercial execution, demonstrating resilience in a challenging macro environment.

    02

    Strategic Pricing and Cost Management

    The company is proactively raising prices to offset an expected mid-single-digit percentage increase in raw material, energy, logistics, and packaging costs for the remainder of the year. Management expects price realization to be much faster than in prior inflation cycles, leveraging refined pricing strategies and strong organic growth momentum. Structural cost reductions, including the closure of four European manufacturing plants, are also underway, targeting $25 million in fixed cost savings annually from 2027, contributing to $50 million in structural restructuring benefits in both 2026 and 2027.

    03

    Aerospace Business as a Growth Engine

    The aerospace business continues to be a significant growth driver, delivering double-digit organic growth and maintaining a backlog of approximately $350 million. Investments totaling around $150 million have been made in debottlenecking, with a new $380 million plant planned to further increase capacity by 2028. The business benefits from a balanced mix of OEM and aftermarket sales across commercial, general aviation, and military segments, providing resilience against market fluctuations and ensuring consistent growth for several years.

    04

    Refinish Market Recovery

    The automotive refinish market is showing signs of recovery, with U.S. industry accident claims seeing low single-digit declines in three of the last four months, indicating normalization after significant declines last year. U.S. distributor fulfillment orders are also sequentially improving as inventory levels normalize. While Q2 is expected to see volume declines due to strong prior-year comparisons, volume growth is anticipated in the second half of 2026, contributing positively to overall performance.

    05

    Industrial Segment Share Gains

    PPG's Industrial Coatings segment achieved flat organic sales but 1% sales volume growth, outpacing industry demand due to share gains, particularly in automotive OEM and packaging coatings. The company expects to launch additional share gains throughout 2026 and into 2027, contributing to future growth. Despite a negative impact from regional mix in China automotive production in Q1, sequential margin improvement is expected driven by incremental industry and PPG sales volume growth, selling price realization, and aggressive cost management.

    06

    Capital Allocation and Balance Sheet Strength

    PPG ended the quarter with $1.6 billion in cash and short-term investments, demonstrating strong financial flexibility. The company repaid $700 million of debt that matured in Q1 and returned $260 million to shareholders through dividends and share repurchases. Capital deployment priorities include maintaining the dividend, investing in organic growth projects like aerospace, and selective, disciplined bolt-on M&A, with share repurchases expected to continue as a consistent practice.

    AI-generated summary of the company’s earnings call. Not investment advice.