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    PPG
    Earnings call· Jun 2026(Q2 FY26)

    PPG INDUSTRIES Q2 FY26 earnings call PPG

    Jul 29, 2026 Source

    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

    10
    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

    3
    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%

    Operational metrics

    16
    Adjusted EPS
    $2.23slightly higher year-over-year
    Q2 FY26

    Adjusted earnings per share for the quarter.

    Total Company Adjusted EBITDA Margin
    over 17%
    Q2 FY26

    Reflecting solid commercial execution of both pricing and share gains.

    COGS Inflation Coverage
    90%
    Q2 FY26

    Covered about 90% of cost of goods sold inflation with pricing, one quarter ahead of commitment.

    Share Repurchases
    $75 million$175 million year-to-date
    Q2 FY26

    Amount of shares repurchased during the quarter.

    Net Debt to Adjusted EBITDA
    1.9x
    Q2 FY26

    Leverage ratio at the end of the quarter.

    Cash from Operating Activities
    $600 millionover $220 million higher year-over-year
    YTD FY26

    Primarily driven by working capital improvements.

    Total Return to Shareholders
    $235 million
    Q2 FY26

    Amount returned through dividends and share repurchases.

    Aerospace Order Backlog
    $300 millionremained around
    Q2 FY26

    Backlog as the company starts to see benefits of capacity and productivity investments.

    Protective and Marine Coatings Volume Growth Streak
    13
    Q2 FY26

    Consecutive quarters of sales volume growth.

    Automotive OEM Coatings Outperformance vs. Industry
    500
    Q2 FY26

    Outpacing global automotive industry production.

    Packaging Coatings Volume Growth (2-year stack)
    over 20%
    Q2 FY26

    Customers continue to adopt leading technologies.

    U.S. Auto Insurance Claims Decline
    mid-single-digit percentageversus double-digit percentage in prior year
    past 2 quarters

    Pace of improvement was not as fast as desired, but reinforces a normalization trend.

    U.S. Auto Insurance Premiums Decline
    low single-digit percentagefirst quarterly year-over-year decline in the past 5 years
    Q2 FY26

    Reinforces a normalization trend for the industry.

    Industrial Segment New Business Wins
    $25 million
    per quarter

    Expected new business wins hitting the P&L going forward.

    Raw Material Basket Petrochem Derivative Share
    about half
    current

    Approximately half of the raw material basket is a derivative of petrochem.

    Raw Material Lock-in Period
    45 to 60 days
    average

    Average period for locking in raw material purchases, with exceptions.

    Industry KPIs

    1
    MetricValueDetails
    Volume vs price split4%%

    Orderbook & backlog

    1
    Aerospace Order Backlog$300 millionQ2 FY26

    remained around

    starting to see benefits of capacity and productivity investments

    Deals & partnerships

    1
    Not statedsmall bolt-on$65 million

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

    Capital programs

    4
    Aerospace Capacity Expansionunderway$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 Constructionunder 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 Expansionunderway$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

    4
    Iran War Impact on Input CostsQ2 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 ComparisonsQ2 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 EuropeQ3 FY26

    modestly lower volumes

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

    Industrial Coatings EBITDA Margin Compressionsecond 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

    5

    Automotive Refinish Sales Growth

    Q3 FY26
    Currentdown double-digit percentage
    Targetup 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

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