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PPG (PPG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Jul 29, 2026

Source: earnings call transcript

Executive summary

PPG Q2 FY26 — Strong Organic Growth and Accelerated Price Realization

PPG delivered its sixth consecutive quarter of organic sales growth, driven by commercial and operational excellence, and accelerated its price realization to cover 90% of COGS inflation ahead of schedule. While strong performance in aerospace, protective and marine, and industrial coatings segments drove overall growth, the automotive refinish business faced challenging year-over-year comparisons and slower demand recovery, impacting Performance Coatings' margin. The company remains confident in its full-year EPS guidance, citing positive momentum and proactive pricing actions.

Highlights

5

  • Achieved 4% organic sales growth, with equal contributions from sales volumes and selling prices, outperforming the industry by 300 basis points.

  • Covered 90% of cost of goods sold inflation with pricing in Q2, one quarter ahead of commitment, aiming for 100% by Q4.

  • Aerospace achieved exceptional double-digit percentage sales growth and maintained an order backlog of around $300 million.

  • Protective and Marine Coatings organic sales increased by a double-digit percentage, marking its 13th consecutive quarter of volume growth.

  • Industrial Coatings segment organic sales increased 5% due to volume growth across all three businesses, including Automotive OEM coatings outpacing global industry production by 500 basis points.

Concerns

3

  • Automotive Refinish Coatings organic sales decreased by a double-digit percentage due to challenging prior-year comparisons and a modest recovery of underlying industry demand.

  • Performance Coatings segment EBITDA margin declined 300 basis points year-over-year, primarily driven by the refinish year-over-year comparison.

  • Industrial Coatings segment EBITDA margin declined 70 basis points to 15.9%, driven by cost of goods sold inflation.

Guidance & targets

CategoryTargetConfidence
Global Architectural Coatings Organic Sales Growth
flat to positive low single-digit percentage
medium materiality
High
Global Architectural Coatings EBITDA Margin
relatively flat
medium materiality
High
Performance Coatings Organic Sales Growth
mid- to high single-digit percentage
medium materiality
High
Performance Coatings EBITDA Margin
expansion to return
medium materiality
High
Industrial Coatings Organic Sales Growth
flat to positive low single digits
medium materiality
High
Industrial Coatings EBITDA Margin
compression
medium materiality
Medium
Cost of Goods Sold Inflation
mid-single digit to high single-digit percentage
high materiality
High
Company-wide Organic Sales Growth
low single digit to a mid-single-digit percentage
high materiality
High
Company Adjusted EBITDA Margin
flat to a decline of 100 basis points year-over-year
high materiality
High
Full Year Adjusted EPS
$7.70 to $8.10
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Global Architectural Coatings
Net sales rose 8% to $1.1 billion, with 2% organic growth driven by higher selling prices partially offset by slightly lower sales volumes. Organic sales for Latin America and Asia Pacific increased by a mid-single-digit percentage. EMEA organic sales turned positive, increasing a low single-digit percentage. Segment EBITDA margin improved 100 basis points to 19.4%, driven by higher selling prices and cost control actions.
Organic sales growth: 2%EBITDA margin: 19.4%EBITDA margin improvement: 100 bps
$1.1 billion8%—19.4%
Performance Coatings
Net sales grew 7% to $1.6 billion, with organic sales up 3%, led by aerospace (double-digit), protective and marine coatings (double-digit), and Traffic Solutions (mid-single-digit), partially offset by a double-digit decrease in automotive refinish sales volumes. Segment EBITDA margin was 22.7%, declining 300 basis points year-over-year, driven almost entirely by the refinish year-over-year comparison.
Organic sales growth: 3%EBITDA margin: 22.7%EBITDA margin decline: 300 bps
$1.6 billion7%—22.7%
Industrial Coatings
Net sales grew 7% to $1.8 billion, with organic sales increasing 5% due to volume growth in all three businesses. Automotive OEM coatings organic sales increased low single-digit percentage, outpacing global automotive industry production by 500 basis points. Industrial Coatings organic sales improved mid-single-digit percentage. Packaging coatings organic sales increased by a double-digit percentage. Segment EBITDA margin declined 70 basis points to 15.9%, driven by cost of goods sold inflation.
Organic sales growth: 5%EBITDA margin: 15.9%EBITDA margin decline: 70 bps
$1.8 billion7%—15.9%

Orderbook & backlog

Aerospace Order Backlog $300 million Q2 FY26

remained around

starting to see benefits of capacity and productivity investments

Deals & partnerships

Not stated small bolt-on $65 million

Closed on a small bolt-on acquisition during the quarter.

Capital programs

Aerospace Capacity Expansion underway $0.5 billion

Benefit:additional capacity to drive scale and support strong growth

Investing more than $0.5 billion in additional capacity to drive scale and support strong growth with technology developed through collaboration and synergies across other PPG businesses.

Shelby Aerospace Plant Construction under construction $380 million

Benefit:new plant

The $380 million portion of the total aerospace capacity expansion is for the new plant in Shelby, North Carolina, which is currently under construction.

Existing Aerospace Facilities Debottlenecking & Capacity Expansion underway $120 million

Benefit:debottleneck, but also just add incremental capacity

The remaining $120 million of the aerospace capacity expansion is being spent at existing facilities, such as Huntsville, Alabama, and Mojave, California, to debottleneck and add incremental capacity, with output improvements just starting to be seen.

European Manufacturing Plant Closures (Architectural EMEA) planned

Benefit:margin enhancement

The plant closures are expected to provide a step change in margin enhancement in 2027, with closures anticipated in Q4 2026 and Q1 2027, and benefits from leverage not yet realized.

Risks & headwinds

Iran War Impact on Input Costs Q2 FY26 - Q4 FY26

mid-single digit to high single-digit percentage COGS inflation expected

Mitigation:Proactive price adjustments globally, aiming for 100% COGS inflation coverage by Q4.

Automotive Refinish Market Demand and Comparisons Q2 FY26

double-digit percentage organic sales decrease

Mitigation:Expected U.S. destocking to be behind them, pricing actions, and stabilization in 2H FY26.

Consumer Sentiment in Europe Q3 FY26

modestly lower volumes

Mitigation:Higher prices and self-help actions expected to increase earnings.

Industrial Coatings EBITDA Margin Compression second half of 2026

70 basis points decline in Q2

Mitigation:Share gains expected to outperform markets, but margin compression due to timing of index-based price.

What to watch in Q3 FY26

Automotive Refinish Sales Growth

Q3 FY26
Current down double-digit percentage
Target up low single digits

Why it matters

Refinish is a high-margin business, and its return to growth is key for Performance Coatings segment margin expansion and overall EPS trajectory.

refinish will grow in Q3 and refinish will grow in Q4.

Find out whether PPG delivers this. Inve re-checks your case every morning.

Q&A highlights

Why did Performance Coatings decline sequentially, and what gives confidence in 2H acceleration given raw material trends?

The sequential decline in Performance Coatings was entirely due to challenging year-over-year comparisons in the refinish business; other segment businesses grew strongly. Confidence for 2H acceleration stems from strong top-line momentum, proactive pricing actions, and the belief that refinish destocking in the U.S. is now complete, with refinish expected to return to growth in Q3 and Q4.

“Performance Coatings, the drop in sales was entirely refinish year-over-year comps. That's really the quick answer. All of our other businesses in that space, we were double-digit in Aerospace. We grew double-digit in protective and marine. We grew mid-single digits in Traffic. So the rest of that segment is growing. So the delta in performance was purely refinish comps.”

asked by Matthew DeYoe · answered by Timothy Knavish

2 min read 6 chapters

Detailed narrative

Organic Growth Momentum

PPG achieved its sixth consecutive quarter of organic sales growth, up 4%, with equal contributions from sales volumes and selling prices. This growth outpaced the industry by 300 basis points, with 8 out of 9 businesses contributing, driven by commercial excellence, innovation, and operational initiatives. The company's strategy to deliver product innovation and productivity solutions is yielding positive momentum.

Pricing and Cost Coverage

The company successfully covered approximately 90% of its cost of goods sold inflation with pricing in Q2, accelerating its timeline by one quarter to reach 100% coverage by Q4. This faster rate of price realization, compared to previous cycles, was attributed to customer value propositions, procurement capabilities, and portfolio strength, despite mid-to-high single-digit COGS inflation expected through Q4.

Aerospace Business as a Growth Engine

PPG's aerospace business, with nearly 100 years in the industry, offers a unique $2 billion portfolio across sealants, adhesives, transparencies, and coatings. Demand is robust, supported by highly specialized products for OEM and aftermarket channels, global distribution, and diversification across commercial, general aviation, and military end-uses. The company is investing over $0.5 billion in additional capacity to drive scale and support consistent above-industry growth for years to come.

Industrial Coatings Turnaround

The Industrial Coatings segment saw a significant turnaround, with organic sales increasing 5% due to volume growth across all three businesses, reflecting previously communicated share gains. Automotive OEM coatings outperformed global industry production by 500 basis points, and Industrial Coatings organic sales improved mid-single digits, marking a change in trajectory. Packaging coatings organic sales increased double-digits, with volumes up over 20% on a two-year stack basis.

Automotive Refinish Headwinds

The Automotive Refinish Coatings business experienced a double-digit organic sales decrease, primarily due to challenging year-over-year comparisons and a slower-than-desired recovery in underlying industry demand. While U.S. automotive insurance claims improved, the pace was not as fast as hoped, though a low single-digit decline in premiums in Q2 marked the first year-over-year decrease in five years, reinforcing a normalization trend. Management expressed confidence that U.S. destocking is now behind them.

Capital Deployment and Balance Sheet

PPG ended the quarter with $1.6 billion in cash and short-term investments, reducing net debt by over $400 million year-over-year to 1.9x adjusted EBITDA. Year-to-date cash from operating activities was approximately $600 million, up over $220 million year-over-year, driven by working capital improvements. The company returned $235 million to shareholders through dividends and share repurchases in Q2, maintaining its focus on maximizing shareholder value.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.