PPG Industries(PPG) - 2025 Q2 - Quarterly Results

Financial Highlights PPG reported Q2 2025 net sales of $4.2 billion, a 1% decrease, with 2% organic growth and adjusted EPS of $2.22, down 6% Q2 2025 Consolidated Results ($ in millions, except EPS) | Indicator | 2Q 2025 | 2Q 2024 | YOY change | | :--- | :--- | :--- | :--- | | Net sales | $4,195 | $4,235 | (1)% | | Net income | $450 | $493 | (9)% | | Adjusted net income | $504 | $555 | (9)% | | EPS | $1.98 | $2.09 | (5)% | | Adjusted EPS | $2.22 | $2.35 | (6)% | - Organic Sales: Increased 2% year-over-year, driven by both higher sales volumes and prices[4] - Segment Margin: Achieved 17.7% with a segment EBITDA margin of 20.3%[4] - Share Repurchases: Totaled approximately $150 million in the quarter and $540 million year-to-date[4] Management Commentary and Outlook Management highlighted 2% organic sales growth and record Performance Coatings, reaffirming full-year adjusted EPS guidance of $7.75 to $8.05 Chairman and CEO Comments CEO highlighted 2% organic sales growth, record Performance Coatings, flat Industrial Coatings volumes, and varied architectural coatings demand - Delivered 2% organic sales growth with equal contributions from sales volumes and selling prices, reflecting strong product portfolio and commercial execution[3] - The Performance Coatings segment achieved record quarterly sales and earnings, with a 6% increase in organic sales[3] - Industrial Coatings segment sales volumes were flat following several quarters of contraction, signaling initial benefits from share gains[3] - Regional architectural coatings performance was varied: Europe was lackluster, Mexico's retail demand was solid, and the U.S., Canada, and Latin America saw mid-single-digit organic growth[4][5] Outlook PPG anticipates accelerated volume growth and strong H2 2025 EPS growth, reaffirming full-year adjusted EPS guidance of $7.75 to $8.05 - Expects volume growth momentum to accelerate in H2 2025, driving high single-digit percentage EPS growth year-over-year[6] - Industrial Coatings segment is projected to have low single-digit percentage sales volume growth in Q3 and Q4 due to share gains[6] - The company reaffirmed its full-year 2025 adjusted earnings per share guidance of $7.75 to $8.05[7][21] Segment Performance Analysis Performance Coatings led with 7% net sales growth, while Industrial Coatings fell 5% due to divestiture, and Global Architectural Coatings declined 5% Global Architectural Coatings Segment Net sales decreased 5% to $1,018 million due to divestitures and lower volumes, with segment income down 24% Global Architectural Coatings Financials ($ in millions) | Indicator | 2Q 2025 | 2Q 2024 | YOY change | | :--- | :--- | :--- | :--- | | Net sales | $1,018 | $1,070 | (5)% | | Sales volumes | | | (2)% | | Selling prices | | | +1% | | Divestitures and other | | | (4)% | | Segment income | $160 | $211 | (24)% | | Segment income % | 15.7% | 19.7% | | - The net sales decrease was driven by the divestiture of the architectural coatings business in Russia and lower sales volumes, partially offset by higher selling prices[12] - Organic sales in EMEA and Latin America/Asia Pacific declined by a low single-digit percentage. In Mexico, solid retail sales were offset by paused business investment, which is expected to improve in H2 2025[13] Performance Coatings Segment Net sales increased 7% to $1,512 million, driven by volume and price growth, boosting segment income by 9% to $356 million Performance Coatings Financials ($ in millions) | Indicator | 2Q 2025 | 2Q 2024 | YOY change | | :--- | :--- | :--- | :--- | | Net sales | $1,512 | $1,418 | +7% | | Sales volumes | | | +3% | | Selling prices | | | +3% | | Segment income | $356 | $326 | +9% | | Segment income % | 23.5% | 23.0% | | - Sales volume growth was led by strong performance in aerospace coatings (which achieved record quarterly sales), protective and marine coatings, and traffic solutions[16] - Automotive refinish coatings organic sales decreased by a low single-digit percentage but still outperformed the industry due to share gains and subscription revenue[16] Industrial Coatings Segment Net sales declined 5% to $1,665 million due to divestiture, with flat volumes indicating share gains, but segment income fell 12% Industrial Coatings Financials ($ in millions) | Indicator | 2Q 2025 | 2Q 2024 | YOY change | | :--- | :--- | :--- | :--- | | Net sales | $1,665 | $1,747 | (5)% | | Sales volumes | | | —% | | Selling prices | | | (1)% | | Divestitures and other | | | (5)% | | Segment income | $227 | $259 | (12)% | | Segment income % | 13.6% | 14.8% | | - The net sales decline was primarily due to the impact of the divestiture of the silicas products business in late 2024. Sales volumes were flat, reflecting benefits from share gains[18] - Packaging coatings organic sales increased by a high single-digit percentage driven by share gains, while automotive OEM coatings organic sales decreased by a low single-digit percentage[19] Financial Position and Capital Allocation PPG maintained a strong balance sheet with $1.6 billion cash, $5.7 billion net debt, repurchasing $150 million in shares and retiring €300 million debt - The company repurchased approximately $150 million of shares in Q2, bringing the year-to-date total to $540 million[9] - At the end of Q2 2025, cash and short-term investments totaled $1.6 billion. Net debt was $5.7 billion, up $479 million from Q2 2024[11] - The company retired €300 million of debt at maturity in Q2 and has a €600 million debt maturity due in Q4 2025[11] Balance Sheet Highlights ($ in millions) | Account | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,561 | $1,115 | | Total current assets | $8,190 | $7,784 | | Total current liabilities | $5,762 | $5,225 | | Long-term debt | $5,919 | $5,765 | Appendix: Financial Statements & Reconciliations This section presents unaudited Q2 and H1 2025 financial statements and Regulation G reconciliations for non-GAAP measures Regulation G Reconciliation This section reconciles GAAP to non-GAAP figures, adjusting Q2 2025 reported net income ($450 million) to adjusted net income ($504 million) Reconciliation of Reported to Adjusted Net Income ($ in millions, except EPS) | Description | Q2 2025 $ | Q2 2025 EPS | | :--- | :--- | :--- | | Reported net income from continuing operations | $450 | $1.98 | | Acquisition-related amortization expense | $25 | $0.11 | | Business restructuring-related costs, net | $15 | $0.07 | | Portfolio optimization | $2 | $0.01 | | Legacy environmental remediation charges | $12 | $0.05 | | Adjusted net income from continuing operations | $504 | $2.22 | Segment EBITDA Reconciliation ($ in millions) | Segment | Net Sales | Segment Income | Segment EBITDA | | :--- | :--- | :--- | :--- | | Global Architectural Coatings | $1,018 | $160 | $187 | | Performance Coatings | $1,512 | $356 | $389 | | Industrial Coatings | $1,665 | $227 | $276 | | Total | $4,195 | $743 | $852 | Condensed Consolidated Financial Statements Unaudited financial statements show Q2 2025 net income of $450 million, $1.6 billion cash, and $371 million H1 2025 operating cash flow Condensed Consolidated Statement of Income (Three Months Ended June 30, $ in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $4,195 | $4,235 | | Income before income taxes | $598 | $651 | | Net income (attributable to PPG) | $450 | $528 | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30, $ in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Cash from operating activities | $369 | $305 | | Capital expenditures | $330 | $367 | | Dividends paid on PPG common stock | $308 | $305 | | Purchase of treasury stock | $540 | $312 | Consolidated Business Segment Information This table details net sales and segment income for PPG's three business segments for Q2 and H1 2025/2024, reconciling to consolidated income before taxes Segment Net Sales and Income (Three Months Ended June 30, $ in millions) | Segment | Net Sales 2025 | Net Sales 2024 | Segment Income 2025 | Segment Income 2024 | | :--- | :--- | :--- | :--- | :--- | | Global Architectural Coatings | $1,018 | $1,070 | $160 | $211 | | Performance Coatings | $1,512 | $1,418 | $356 | $326 | | Industrial Coatings | $1,665 | $1,747 | $227 | $259 | | Total | $4,195 | $4,235 | $743 | $796 |