[Q2 2024 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Consolidated%20Results) PPG reported record earnings for Q2 2024, achieving **$4.8 billion** in net sales with flat organic growth and continued shareholder returns Q2 2024 Key Financial Metrics | Metric | 2Q 2024 | 2Q 2023 | YOY Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,794 million | $4,872 million | (2)% | | Net Income | $528 million | $490 million | +8% | | Adjusted Net Income | $590 million | $534 million | +10% | | Reported EPS | $2.24 | $2.06 | +9% | | Adjusted EPS | $2.50 | $2.25 | +11% | - Organic sales were **flat year-over-year**, with growth in aerospace, packaging, and architectural coatings in the Americas and Asia Pacific offset by declines in automotive refinish and softness in global automotive and industrial production[1](index=1&type=chunk)[54](index=54&type=chunk) - The company repurchased approximately **$150 million** in shares during the quarter, bringing the year-to-date total to **$300 million**[1](index=1&type=chunk)[17](index=17&type=chunk) - Segment margins improved by **110 basis points** year-over-year, marking the **seventh consecutive quarter** of margin expansion[1](index=1&type=chunk)[17](index=17&type=chunk) [Chairman and CEO Comments](index=1&type=section&id=Chairman%20and%20CEO%20Comments) The Chairman and CEO highlighted strong financial results and record earnings, noting consistent adjusted EPS growth and margin expansion amidst mixed regional performance and strategic reviews - Management reported the **sixth consecutive quarter** of year-over-year adjusted EPS growth and the **seventh** for segment margin improvement[16](index=16&type=chunk)[17](index=17&type=chunk) - Geographic performance was mixed: financial results benefited from established businesses in **Mexico** and **China**, but **European sales volumes** were unfavorable and below initial expectations[2](index=2&type=chunk)[39](index=39&type=chunk) - Strategic reviews for the **architectural coatings U.S. and Canada business** and the **global silicas business** are progressing on schedule[40](index=40&type=chunk) [Segment Performance](index=2&type=section&id=Second%20Quarter%202024%20Reportable%20Segment%20Financial%20Results) Total segment income increased in Q2 2024, with Performance Coatings achieving record margins despite flat sales, while Industrial Coatings saw income growth despite a sales decline [Performance Coatings Segment](index=2&type=section&id=Performance%20Coatings%20segment) The Performance Coatings segment reported flat net sales of **$3.0 billion** but a **6%** income increase to **$570 million**, achieving record **18.7%** margins Performance Coatings Q2 Results ($ million) | Metric | 2Q 2024 | 2Q 2023 | YOY Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,048 | $3,041 | 0% | | Segment Income | $570 | $537 | +6% | | Segment Income % | 18.7% | 17.7% | +100 bps | - Aerospace products sales remained strong, with **double-digit percentage** organic sales growth and an increased order backlog of approximately **$290 million**[41](index=41&type=chunk) - Architectural coatings organic sales grew by a **low single-digit percentage** in the Americas and Asia Pacific, supported by the professional contractor segment, with **Mexico** delivering record sales and earnings[5](index=5&type=chunk) - Automotive refinish coatings organic sales declined by a **mid-single-digit percentage** due to a challenging prior-year comparison and uneven U.S. distributor order patterns[5](index=5&type=chunk) [Industrial Coatings Segment](index=3&type=section&id=Industrial%20Coatings%20segment) Industrial Coatings segment net sales declined **5%** to **$1.7 billion**, yet segment income increased **4%** to **$259 million**, with margins improving by **110 basis points** Industrial Coatings Q2 Results ($ million) | Metric | 2Q 2024 | 2Q 2023 | YOY Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,746 | $1,831 | (5)% | | Segment Income | $259 | $250 | +4% | | Segment Income % | 14.8% | 13.7% | +110 bps | - Automotive OEM coatings organic sales decreased by a **high single-digit percentage** due to lower prices and industry volumes in the U.S. and Europe[21](index=21&type=chunk) - Packaging coatings organic sales grew by a **mid-single-digit percentage**, driven by higher sales volumes from market share gains[21](index=21&type=chunk) - Industrial coatings organic sales declined by a **low single-digit percentage** due to subdued industrial activity in the U.S. and Europe, which offset growth in China and India[21](index=21&type=chunk) [Financial Position and Cash Flow](index=3&type=section&id=Additional%20Financial%20Information) PPG's Q2 2024 financial position shows **$1.2 billion** in cash and **$5.2 billion** in net debt, with cash from operations for the first six months at **$305 million** - At quarter-end, the company had cash and short-term investments of **$1.2 billion** and net debt of **$5.2 billion**, down **$0.4 billion** year-over-year[44](index=44&type=chunk) Balance Sheet Highlights ($ million) | Account | June 30, 2024 | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,131 | $1,514 | $1,228 | | Inventories | $2,299 | $2,127 | $2,506 | | Total current assets | $7,784 | $7,431 | $8,068 | | Total current liabilities | $5,225 | $5,054 | $5,416 | | Long-term debt | $5,765 | $5,748 | $6,099 | Six Months Ended Cash Flow Highlights ($ million) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash from operating activities | $305 | $621 | | Capital expenditures | $374 | $242 | | Dividends paid | $305 | $292 | [Outlook](index=2&type=section&id=Outlook) PPG projects flat to low single-digit organic sales growth for Q3 and FY2024, with adjusted EPS forecasts of **$2.10-$2.20** for Q3 and **$8.15-$8.30** for the full year 2024 Financial Projections | Outlook | 3Q 2024 | FY 2024 | | :--- | :--- | :--- | | Organic sales growth | Flat to up low single digits | Flat to up low single digits | | Adjusted EPS | $2.10 - $2.20 per share | $8.15 - $8.30 per share | - The company expects **modest sequential quarterly improvement** in general industrial demand and projects organic growth in automotive refinish and protective and marine coatings in Q3[3](index=3&type=chunk) - The effective tax rate for Q3 2024 is expected to be **23.5% to 24.5%**, higher than the prior year's adjusted rate of **19.5%** due to regional tax rate increases and a different mix of country-specific earnings[29](index=29&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q2 2024 and 2023, including the Statement of Income, Balance Sheet, Cash Flows, and Segment Information [Condensed Consolidated Statement of Income](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20INCOME) [Condensed Consolidated Balance Sheet](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) [Condensed Consolidated Statement of Cash Flow](index=7&type=section&id=Cash%20from%20operating%20activities) [Segment Information](index=9&type=section&id=Segment%20Information) [Regulation G Reconciliation (Non-GAAP Measures)](index=5&type=section&id=Regulation%20G%20Reconciliation) This section reconciles Q2 2024 U.S. GAAP financial results to adjusted non-GAAP figures, detailing adjustments from reported net income of **$528 million** to **$590 million** Reconciliation of Reported to Adjusted Net Income and EPS (Q2) | ($ million, except per share) | 2024 $ | 2024 EPS | 2023 $ | 2023 EPS | | :--- | :--- | :--- | :--- | :--- | | **Reported Net Income** | **$528** | **$2.24** | **$490** | **$2.06** | | Acquisition-related amortization | $27 | $0.11 | $30 | $0.13 | | Business restructuring-related costs | $2 | $0.01 | $11 | $0.05 | | Portfolio optimization | $18 | $0.08 | $3 | $0.01 | | Legacy environmental remediation | $15 | $0.06 | — | — | | **Adjusted Net Income** | **$590** | **$2.50** | **$534** | **$2.25** | - Management believes these adjusted figures are useful for investors as they exclude items that are not expected to recur quarterly or are not part of primary operations[25](index=25&type=chunk)

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 18. On the other hand, if they miss, the stock may move lower. Zacks Consensus Estimate Revenues are expected to be $4.92 billion, up 1% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 0.07% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed t ...

Smart wearables equipped with PPG technology already measure these vital signs. In May 2019, Masimo received FDA clearance for its Tetherless Radius PPG sensors. These sensors enable the placement of point-ofcare monitors outside a patient's room, ensuring constant monitoring from a safe distance. The increasing prevalence of CVDs is expected to be a major factor propelling the growth of this market over the forecast period. According to the CDC, approximately 695,000 of the U.S. inhabitants die from CVDs. ...

Image Source: Zacks Investment Research The company is implementing a cost-cutting and restructuring strategy and optimizing its working capital requirements. The cost savings generated by these restructuring initiatives will act as a tailwind for the company. PPG Industries has undertaken extensive restructuring efforts to reduce its cost structure, primarily focusing on regions and end markets with weak business conditions. The company achieved $8 million of incremental cost savings in first-quarter 2024. ...

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases. Based in P ...

can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Carpenter Technology currently carries a Zacks Rank #1. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.1%. The company's shares have soared 102% in the past year. The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.56 per share, indicating a year-over-year rise of 25.9%. ECL, a Zacks Rank #2 stock, beat the consensus estimate in each o ...

Image Source: Zacks Investment Research PPG Industries Inc. (PPG) recently announced that the EDR Antwerp shipyard achieved a 40% reduction in overspray through the electrostatic application of PPG Sigmaglide 2390 fouling release coating. The project was carried out on the underwater hull of the RoRo passenger vessel Stena Transporter from Stena Line and is EDR's second successful electrostatic application project. Electrostatic application improves transfer efficiency compared with airless spraying, thereb ...

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus. Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric tha ...

PPG Industries, Inc. (PPG) recently announced a $300-million investment in advanced manufacturing in North America to support the growing demand for paints and coatings in the automotive industry. This investment, beginning in 2024 and spanning four years, includes the construction of a new manufacturing plant in Loudon County, Tennessee. Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS) , sporting a Zacks Rank #1 (Strong Buy), ATI Inc. (ATI) and Ecolab Inc. ( ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides the company's financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2024, showing a slight decrease in net sales but a significant increase in net income attributable to PPG [Condensed Consolidated Statement of Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income) For the three months ended March 31, 2024, PPG reported a 1.6% decrease in net sales to $4,311 million, while net income attributable to PPG significantly rose to $400 million due to the absence of a prior-year pension settlement charge Condensed Consolidated Statement of Income (Unaudited) | ($ in millions, except per share amounts) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Net sales** | **$4,311** | **$4,380** | | Cost of sales, exclusive of depreciation and amortization | 2,445 | 2,596 | | Selling, general and administrative | 1,064 | 992 | | Pension settlement charge | — | 190 | | **Income before income taxes** | **$538** | **$353** | | Income tax expense | 129 | 80 | | **Net income (attributable to PPG)** | **$400** | **$264** | | **Earnings per common share (attributable to PPG) - assuming dilution** | **$1.69** | **$1.11** | [Condensed Consolidated Balance Sheet](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of March 31, 2024, PPG's total assets slightly increased to $21.87 billion, with total liabilities also marginally rising, while cash and cash equivalents decreased Condensed Consolidated Balance Sheet Highlights (Unaudited) | ($ in millions) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,181 | $1,514 | | Receivables, net | 3,581 | 3,279 | | Inventories | 2,331 | 2,127 | | Goodwill | 6,140 | 6,200 | | **Total assets** | **$21,867** | **$21,647** | | **Liabilities and Shareholders' Equity** | | | | Total current liabilities | $4,943 | $5,054 | | Long-term debt | 5,940 | 5,748 | | **Total liabilities** | **$13,741** | **$13,624** | | **Total PPG shareholders' equity** | **$7,941** | **$7,832** | [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Cash used for operating activities was $60 million in Q1 2024, a significant shift from the prior year's positive cash flow, primarily due to unfavorable working capital changes and increased investing activities Condensed Consolidated Statement of Cash Flows (Unaudited) | ($ in millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Cash (used for)/from operating activities** | **($60)** | **$85** | | **Cash used for investing activities** | **($239)** | **($64)** | | **Cash (used for)/from financing activities** | **($35)** | **$277** | | Net (decrease)/increase in cash and cash equivalents | ($333) | $327 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail financial statement support, including no goodwill impairment, an additional €250 million term loan borrowing, the impact of the Q1 2023 pension settlement charge, and environmental reserves totaling $220 million - No indication of **goodwill impairment** was identified for any reporting units during the quarter ended March 31, 2024[30](index=30&type=chunk) - In January 2024, PPG borrowed an additional **€250 million** under its Term Loan credit agreement[36](index=36&type=chunk) - In March 2023, the company recognized a non-cash **Pension settlement charge of $190 million**, which was not repeated in 2024[50](index=50&type=chunk) Environmental Reserves | ($ in millions) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | New Jersey Chrome | $50 | $53 | | Glass and chemical | 53 | 54 | | Other | 117 | 120 | | **Total environmental reserves** | **$220** | **$227** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, noting a 1.6% sales decrease due to lower volumes, an increase in adjusted EPS driven by moderating raw material costs, and strategic reviews for certain businesses - Net sales for Q1 2024 were **$4.3 billion**, a decrease of **1.6% YoY**, driven by a **2% decline in sales volumes**[118](index=118&type=chunk)[121](index=121&type=chunk) - Adjusted earnings per diluted share increased to **$1.86** from **$1.82** in the prior year, primarily due to moderating raw material costs offsetting lower sales volumes[125](index=125&type=chunk) - Cash used for operating activities was **$60 million**, a **$145 million decrease** from the prior year, mainly due to unfavorable working capital changes[145](index=145&type=chunk) - PPG announced strategic reviews for its architectural coatings U.S. and Canada business and its global silicas products business[158](index=158&type=chunk) [Performance of Reportable Business Segments](index=26&type=section&id=Performance%20of%20Reportable%20Business%20Segments) Both Performance Coatings and Industrial Coatings segments reported higher segment income despite sales challenges, benefiting from moderating raw material costs Performance Coatings Segment Results | ($ in millions) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $2,614 | $2,628 | (0.5)% | | Segment income | $402 | $395 | 1.8% | - Performance Coatings sales were impacted by lower volumes (**-3%**), particularly in architectural coatings in EMEA and the Americas, partially offset by higher prices (**+1%**) and favorable currency (**+1%**), with aerospace coatings sales increasing by a mid-single-digit percentage[132](index=132&type=chunk)[135](index=135&type=chunk) Industrial Coatings Segment Results | ($ in millions) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,697 | $1,752 | (3.1)% | | Segment income | $249 | $240 | 3.8% | - Industrial Coatings sales decreased due to lower selling prices (**-2%**) and lower volumes (**-1%**), with automotive OEM coatings sales decreasing by a low single-digit percentage and packaging coatings remaining flat[139](index=139&type=chunk)[140](index=140&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) PPG ended Q1 2024 with **$1.2 billion** in cash, used **$60 million** in cash from operations due to working capital changes, and projects **$600 million** in capital spending for 2024, while maintaining compliance with debt covenants - Cash and short-term investments totaled **$1.2 billion** at March 31, 2024, down from **$1.6 billion** at year-end 2023[143](index=143&type=chunk) - Total capital spending for 2024 is projected to be approximately **$600 million**[149](index=149&type=chunk) - In January 2024, PPG borrowed an additional **€250 million** under its Term Loan[151](index=151&type=chunk) - As of March 31, 2024, the company's ratio of Total Indebtedness to Total Capitalization was **43%**, well below the **60%** covenant limit[154](index=154&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, using derivatives to hedge these exposures, with a hypothetical adverse change in exchange rates potentially reducing pre-tax income by **$409 million** - The company is exposed to foreign currency transaction and translation risk, where a hypothetical adverse change in exchange rates could reduce pretax income by **$409 million** as of March 31, 2024[172](index=172&type=chunk) - PPG manages interest rate risk by balancing fixed and variable rate debt, using interest rate swaps to convert **$375 million** of fixed-rate debt to variable-rate[175](index=175&type=chunk) - A **10% increase** in variable interest rates would increase annual interest expense by **$6 million** for the period ended March 31, 2024[175](index=175&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of the end of the reporting period[177](index=177&type=chunk) - No material changes to the Company's internal control over financial reporting occurred during the first quarter of 2024[178](index=178&type=chunk) [Part II. Other Information](index=32&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, other information, and exhibits filed with the report [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) PPG is involved in various lawsuits and claims, including environmental and asbestos-related matters, with a trial for a Clean Water Act civil penalty scheduled for June 2024 - PPG is involved in numerous lawsuits and claims related to contract, patent, environmental, product liability, and asbestos matters[180](index=180&type=chunk) - A trial regarding a civil penalty under the Clean Water Act for a former disposal site in Pennsylvania is scheduled for June 3, 2024[182](index=182&type=chunk) - The company continues to be a defendant in lawsuits alleging personal injury from asbestos exposure, as detailed in Note 13[183](index=183&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported compared to those disclosed in the 2023 Annual Report on Form 10-K - No material changes in the Company's risk factors were reported compared to the 2023 Form 10-K[184](index=184&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, PPG repurchased **1,061,901 shares** at an average price of **$141.29** per share, and the Board authorized a new **$2.5 billion** share repurchase program on April 18, 2024 Issuer Purchases of Equity Securities (Q1 2024) | Month | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2024 | — | $— | | February 2024 | — | $— | | March 2024 | 1,061,901 | $141.29 | | **Total Q1 2024** | **1,061,901** | **$141.29** | - On April 18, 2024, the Board of Directors authorized an additional **$2.5 billion** share repurchase program[186](index=186&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) During the first quarter of 2024, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[187](index=187&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL data files - The report includes certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906[191](index=191&type=chunk) - The filing includes financial statements and notes formatted in Inline XBRL[193](index=193&type=chunk)