PPG — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales reached $4.4 billion in Q3 2026, a 7% year-over-year increase driven by 3% higher selling prices, 2% higher sales volumes, 1% positive foreign currency translation, and 1% from acquisitions.
• Reported net income was $473 million (+7% YoY), while adjusted net income was $502 million (+4% YoY).
• Reported EPS was $2.12 (+8% YoY), and adjusted EPS was $2.25 (+6% YoY).
• Adjusted EBITDA margin was 18.2%, supported by strong performance in aerospace and architectural coatings in Latin America.
• Cash from operating activities was approximately $1.2 billion year-to-date, $100 million higher than the prior year.
• Net debt was $5.2 billion at quarter end, a decrease of approximately $200 million from Q3 2025.
• Cash and short-term investments totaled $1.6 billion at quarter end.
• Effective tax rate was 24.2% for the quarter.

Guidance and Future Outlook:

• Full-year 2026 adjusted EPS guidance raised to a tighter range of $7.90 to $8.10.
• Q4 2026 organic sales growth expected in the low single-digit percentage range.
• Q4 2026 adjusted EBITDA margin expected to be flat to an increase of 100 basis points year-over-year.
• Industrial Coatings segment expects Q4 organic sales to range from up to down a low single-digit percentage, with EBITDA margin compression due to the timing of index-based pricing.
• Performance Coatings segment expects Q4 organic sales growth between a low single-digit to mid-single-digit percentage, with EBITDA margin expansion driven by pricing actions and automotive refinish stabilization.
• Global Architectural Coatings segment expects Q4 organic sales to be flat to low single-digit growth, with EBITDA margin expansion.

Business Segments and Product Lines:

• Global Architectural Coatings: Net sales increased 4% YoY to $1,055 million; organic sales grew 2% driven by selling prices and Latin America volume growth. Segment EBITDA margin expanded 300 basis points to 24.0%.
• Performance Coatings: Net sales increased 10% YoY to $1,554 million; organic sales grew 8%. Aerospace achieved double-digit organic sales growth with a backlog near $300 million. Protective and marine coatings achieved 14 consecutive quarters of volume growth. Segment EBITDA margin expanded 220 basis points to 23.9%.
• Industrial Coatings: Net sales increased 5% YoY to $1,744 million; organic sales grew 4%. Packaging coatings saw double-digit organic sales growth with volumes up over 20% on a two-year stacked basis. Automotive OEM coatings volumes outperformed global industry production. Segment EBITDA margin contracted 260 basis points to 14.4% due to cost of goods sold inflation.

Market and Competitive Landscape:

• PPG outpaced the industry by 300 basis points in organic sales growth, marking the seventh consecutive quarter of growth.
• Commercial actions fully offset the impact of cost of goods sold inflation across the portfolio.
• Automotive OEM coatings share gains enabled the business to deliver sales volumes exceeding global automotive industry production.
• Marine sales volume growth in Asia Pacific was above market rates.

Risks and Challenges:

• Cost of goods sold inflation remains high, particularly impacting the Industrial Coatings segment margins.
• Forward-looking statements involve risks including global economic conditions, geopolitical issues, raw material price fluctuations, labor and logistics costs, and the ability to achieve selling price increases.
• Potential risks include tariffs, foreign exchange rate fluctuations, and the timing of realization of cost savings from restructuring.

Management Commentary and Tone:

• Chairman and CEO Tim Knavish expressed being "extremely encouraged" by the record Q3 EPS and strong discipline in execution.
• Management highlighted the quality of businesses and the impact of commercial actions as key drivers.
• The tone reflects confidence in growth momentum, realized pricing benefits, and the execution of productivity programs.

Other Key Points:

• Share repurchases totaled approximately $150 million in the quarter and $320 million year-to-date.
• Dividends paid on PPG common stock were $482 million year-to-date.
• Capital expenditures were $464 million year-to-date.
• Corporate expenses were $92 million in the third quarter ($83 million exclusive of depreciation and amortization).
• Net interest expense was $22 million in the third quarter.
• The company recorded a net charge related to the resolution of an outstanding tax matter and received an insurance reimbursement for legacy asbestos-related matters.
• Portfolio optimization included a $3 million gain from the sale of a non-core business.