Part I Business Overview PPG Industries, Inc. is a global manufacturer and distributor of paints, coatings, and specialty materials, operating through two main segments - PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings, and specialty materials, incorporated in Pennsylvania in 1883, with a vision to be the first-choice partner for innovative solutions11 - PPG operates globally with manufacturing facilities and equity affiliates in over 70 countries, serving diverse end-uses including industrial equipment, packaging, aircraft, marine, automotive, and architectural sectors1213 - The business is comprised of two reportable segments: Performance Coatings and Industrial Coatings14 Performance Coatings Segment The Performance Coatings segment supplies protective and decorative coatings, adhesives, and related chemicals, competing on product performance and brand recognition - The Performance Coatings segment supplies protective and decorative coatings, adhesives, sealants, finishes, pavement marking products, paint strippers, stains, related chemicals, transparencies, transparent armor, and paint films16 - Major competitive factors include product performance, technology, quality, technical and customer service, price, customer productivity, distribution, and brand recognition16 - Global competitors include Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Benjamin Moore, Hempel A/S, Kansai Paints, the Jotun Group, Masco Corporation, Nippon Paint, RPM International Inc., The Sherwin-Williams Company, and 3M Company16 Industrial Coatings Segment The Industrial Coatings segment supplies protective and decorative coatings and specialty materials for automotive OEM, appliances, and consumer electronics - The Industrial Coatings segment primarily supplies protective and decorative coatings and finishes, adhesives, sealants, metal pretreatment products, optical monomers and coatings, low-friction coatings, precipitated silicas, and other specialty materials18 - Key customers and end-uses include automotive original equipment (OEM), appliances, construction equipment, consumer electronics, building products, metal cans, and specialty applications like tires and e-passports18 - Major competitive factors are product performance, technology, quality, technical and customer service, price, customer productivity, and distribution18 Research and Development PPG's R&D aligns with macro trends, focusing on sustainability and productivity, leveraging core technology platforms to address market needs Research and Development Costs | ($ in millions, except percentages) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Research and development costs, including depreciation of research facilities | $456 | $470 | $463 | | % of annual net sales | 2.5 % | 2.7 % | 2.8 % | - PPG aligns product development with macro trends, focusing on sustainability and productivity, leveraging core technology platforms to address unmet market needs19 Raw Materials, Energy and Logistics Raw materials are PPG's largest production cost, with moderating costs in 2023 and a strategic focus on renewable energy and alternative materials - Raw materials, primarily resins, reactants, solvents, titanium dioxide, epoxy, and emulsions, represent PPG's single largest production cost component21 - Raw material costs moderated in 2023 compared to 2022, resulting in a decrease to operating costs of over $500 million, with no significant raw material inflation expected in 2024, though wage inflation is anticipated24 - PPG is increasing renewable energy use and evaluating alternative raw materials for sustainability and circular economy benefits22 Global Operations PPG's significant non-U.S. operations, representing 63% of 2023 net sales, provide geographic diversification and favorable currency translation - PPG's significant non-U.S. operations (63% of total net sales in 2023) provide geographic diversification, lessening the impact of economic conditions in any single region2861 - In 2023, favorable foreign currency translation increased Net sales by approximately $102 million and Income before income taxes by approximately $25 million28 Seasonality PPG typically experiences higher Income before income taxes in Q2 and Q3, and greatest cash from operating activities in Q4, due to market seasonality - PPG typically experiences higher Income before income taxes in the second and third quarters and greatest Cash from operating activities in the fourth quarter due to end-use market seasonality, particularly in architectural coatings and traffic solutions30 Human Capital PPG employed approximately 53,000 people globally in 2023, focusing on culture, engagement, development, and pay equity, with a strong safety commitment - PPG employed approximately 53,000 people globally in 2023, with 16,300 in the U.S. and 36,700 internationally31 - The company's human capital management strategies focus on culture, engagement, development, and pay equity, overseen by the Board's Human Capital Management and Compensation Committee33 - PPG reported an injury and illness rate of 0.32 for 2023, reflecting its commitment to environmental, health, and safety34 Environmental Matters PPG is committed to sustainable operations, with 44% of 2023 sales from sustainably-advantaged products and ambitious 2030 GHG emission reduction goals - PPG is committed to sustainable operations, with 44% of 2023 sales from sustainably-advantaged products and processes38 - The company announced near-term 2030 sustainability goals, including reducing absolute Scope 1 and 2 GHG emissions by 50% and Scope 3 GHG emissions by 30% from a 2019 base year39 Capital Expenditures for Environmental Control Projects | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Capital expenditures for environmental control projects | $26 | $22 | $17 | - PPG has reserved $227 million for environmental remediation efforts and may be subject to additional unreserved losses of approximately $100 million to $200 million42 Risk Factors PPG faces significant risks from raw material price volatility, global economic uncertainties, foreign currency fluctuations, intense competition, evolving environmental regulations, and cybersecurity threats - Increases in raw material prices and declines in availability, particularly for petroleum-derived and inorganic materials like titanium dioxide, could negatively impact financial results as they represent the largest production cost component4749 - Global economic and geopolitical uncertainties, including higher interest rates, ongoing wars, commodity market volatility, and trade agreement changes, could negatively impact demand for PPG's products and services50 - Fluctuations in foreign currency exchange rates, especially the strengthening or weakening of the U.S. dollar, can adversely affect Net sales, Net income, and balance sheet values51 - The highly competitive coatings industry could lead to market share loss, reduced sales volumes, or margin compression due to pricing pressures52 - Evolving environmental laws and regulations, including expanded reporting requirements, could necessitate substantial capital expenditures or operational modifications, increasing compliance costs54 - The company relies extensively on global IT systems, making it vulnerable to cybersecurity threats like advanced persistent threats and ransomware, which could lead to financial loss, data breaches, or operational disruptions6364 - Future growth depends on the ability to innovate existing products and introduce new ones, with failure to keep pace with product innovation or predict market demands potentially adversely affecting business results69 Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments71 Cybersecurity PPG's risk-based cybersecurity program, aligned with NIST, includes training, controls, and incident response, with Board oversight, and has not materially affected the company - PPG's cybersecurity program is designed to protect networks, systems, and data confidentiality, integrity, and availability, based on the U.S. National Institute for Standards and Technology (NIST) cybersecurity framework72 - The program includes ongoing employee training, access management, data encryption, monitoring software, vulnerability management, and a cyber incident response plan72 - The Board of Directors, with the Audit Committee, has overall responsibility for cybersecurity risk oversight, receiving bi-annual reports and briefings from the CIO and CISO75 - To date, cybersecurity threats have not materially affected the Company, which has significantly increased investments in cybersecurity safeguards7374 Properties PPG's global operations include owned manufacturing facilities and R&D centers, with leased headquarters and stores, all deemed suitable and adequate for current operations - PPG's corporate headquarters is in Pittsburgh, PA, with global manufacturing facilities, sales offices, research and development centers, and distribution centers79 - Principal research and development centers are located in various global sites including Allison Park, PA; Tianjin, China; Cleveland, OH; Milan, Italy; and Vantaa, Finland80 - Facilities are considered suitable and adequate, with sufficient capacity for upcoming year's business, and are primarily owned, except for leased headquarters, certain distribution centers, and company-owned paint stores81 Legal Proceedings PPG is involved in various lawsuits and claims, including environmental and asbestos matters, but management believes the aggregate outcome will not materially affect financial position or liquidity - PPG is involved in numerous lawsuits and claims, both actual and potential, seeking substantial monetary damages related to contract, patent, environmental, product liability, asbestos exposure, antitrust, employment, and securities matters82 - In Cadogan, PA, PPG settled injunctive relief claims with the Sierra Club and PennEnvironment, agreeing to cleanup plan enhancements and a $250,000 donation, while vigorously defending against remaining claims for attorneys' fees and civil penalties83 - Lead-related lawsuits in Pennsylvania were dismissed by the Supreme Court in November 2023, with the court ruling that the counties failed to plead valid causes of action85 - Management believes the aggregate outcome of all current lawsuits and claims, including asbestos-related claims, will not have a material effect on PPG's consolidated financial position or liquidity82 Mine Safety Disclosures The company states that this item is not applicable - This item is not applicable89 Part II Market for Common Equity, Stockholder Matters, and Issuer Purchases This section details PPG's common equity market, stockholder matters, and share repurchase program, with approximately $1 billion remaining under current authorization - Market information, including PPG's stock exchange listing, quarterly stock market prices, dividends, holders of common stock, and the stock performance graph, is included in Exhibit 13.191 Issuer Purchases of Equity Securities - Fourth Quarter 2023 | Month | Total Number of Shares Purchased | Avg. Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Max. Number of Shares That May Yet Be Purchased Under the Programs | | :--- | :--- | :--- | :--- | :--- | | October 2023 | — | $— | — | 9,043,759 | | November 2023 | — | $— | — | 7,819,581 | | December 2023 | 673,638 | $148.61 | 673,638 | 6,754,871 | | Total quarter ended December 31, 2023 | 673,638 | $148.61 | 673,638 | 6,754,871 | - PPG's board of directors approved a $2.5 billion share repurchase program in December 2017, with approximately $1.0 billion remaining under the current authorization as of year-end 202392123164 Reserved This item is reserved and contains no information Management's Discussion and Analysis PPG achieved record net sales of $18.2 billion and adjusted EPS of $7.67 in 2023, driven by pricing and moderating raw material costs, anticipating uneven global economic activity in 2024 - Net sales were approximately $18.2 billion in 2023, an increase of 3% compared to the prior year, driven by higher selling prices94 - Income before income taxes was $1,748 million in 2023, an increase of $367 million compared to the prior year, primarily due to higher selling prices and lower raw material costs95 - PPG achieved annual records for net sales, adjusted earnings per diluted share ($7.67, up 27% YoY), and operating cash flow in 2023112 - Raw material costs moderated in 2023, resulting in a favorable impact of more than $500 million to operating costs, with further easing expected in early 202424114119 - The company expects softening global economic activity in 2024, with anticipated volume increases in China, India, Mexico, and aerospace, but subdued demand for architectural coatings115 Performance Overview This section details PPG's 2023 financial performance, including net sales, cost of sales, SG&A, interest, and impairment charges, highlighting key drivers of change Net Sales by Region (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | United States and Canada | $7,488 | $7,383 | 1.4% | | Europe, Middle East and Africa (EMEA) | 5,616 | 5,458 | 2.9% | | Asia Pacific | 2,874 | 2,824 | 1.8% | | Latin America | 2,268 | 1,987 | 14.1% | | Total | $18,246 | $17,652 | 3.4% | - Net sales increased by $594 million, driven by higher selling prices (+5%) partially offset by lower sales volumes (-2%)9697 Cost of Sales, Exclusive of Depreciation and Amortization (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Cost of sales, exclusive of depreciation and amortization | $10,745 | $11,096 | (3.2)% | | Cost of sales as a % of net sales | 58.9 % | 62.9 % | (4.0)% | - Cost of sales decreased by $351 million due to moderating raw material costs and lower sales volume, partially offset by wage and other cost inflation9899 Selling, General and Administrative Expenses (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Selling, general and administrative expenses | $4,222 | $3,842 | 9.9% | | Selling, general and administrative expenses as a % of net sales | 23.1 % | 21.8 % | 1.3% | - Selling, general and administrative expenses increased by $380 million primarily due to wage and other cost inflation, unfavorable foreign currency translation, higher performance-based compensation, and expenses from acquired businesses, partially offset by restructuring cost savings99106 Other Charges and Other Income (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Interest expense | $247 | $167 | 47.9% | | Interest income | ($140) | ($54) | 159.3% | | Impairment and other related charges, net | $160 | $245 | (34.7)% | | Pension settlement charge | $190 | $— | N/A | | Other charges/(income), net | $83 | ($27) | (407.4)% | - Interest expense increased by $80 million due to higher interest rates on variable rate debt, while interest income increased by $86 million due to strong cash generation and higher interest rates102103 - Impairment and other related charges, net, decreased to $160 million in 2023 (goodwill impairment for traffic solutions and indefinite-lived trademarks) from $245 million in 2022 (Russia operations wind-down, non-strategic business sales, and trademarks)104105 - A $190 million non-cash pension settlement charge was recognized in March 2023 due to transferring U.S. pension benefit obligations to third-party insurers108 Effective Tax Rate and Earnings Per Diluted Share PPG's effective tax rate increased to 25.1% in 2023, while adjusted EPS from continuing operations grew 23.6% due to pricing and lower raw material costs Effective Tax Rate and Earnings Per Diluted Share (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Income tax expense | $439 | $325 | 35.1% | | Effective tax rate | 25.1 % | 23.5 % | 1.6% | | Adjusted effective tax rate, continuing operations* | 22.0 % | 22.0 % | —% | | Earnings per diluted share, continuing operations | $5.35 | $4.33 | 23.6% | | Adjusted earnings per diluted share, continuing operations* | $7.67 | $6.05 | 26.8% | - The effective tax rate increased to 25.1% in 2023 from 23.5% in 2022, partly due to a goodwill impairment charge with no tax benefit, while the adjusted effective tax rate remained stable at 22.0%110 - Earnings per diluted share from continuing operations increased by 23.6% year-over-year, driven by increased selling prices, moderating raw material costs, and favorable foreign currency translation111 Review and Outlook PPG achieved record net sales, adjusted EPS, and operating cash flow in 2023, with moderating raw material costs and strategic divestitures, forecasting uneven global economic activity for 2024 - PPG achieved annual records for net sales ($18.2 billion, +3% YoY), adjusted earnings per diluted share ($7.67, +27% YoY), and operating cash flow in 2023112 - Organic sales increased 3% in 2023, driven by strong growth in aerospace coatings and automotive OEM coatings, with record segment earnings in EMEA, Asia Pacific, and Latin America112 - Raw material costs moderated in 2023 but remained above 2019 levels, with further easing expected in early 2024, while wage, logistics, and energy costs are expected to increase114119 - For 2024, PPG anticipates softening global economic activity, with demand growth in China, India, and Mexico, and industry growth in aerospace and protective coatings, but subdued architectural coatings demand115 - The company executed strategic initiatives, including divestitures of European and Australian traffic solutions businesses and a review of the silicas products business, and expects $35 million in restructuring savings in 2024116117 - PPG ended 2023 with approximately $1.6 billion in cash and short-term investments, expecting strong cash generation in 2024, and deployed $109 million for acquisitions, $549 million for capital expenditures, and $598 million for dividends123124 Regulation G Reconciliations - Results from Operations PPG provides non-GAAP financial measures like adjusted net income and EPS to offer insight into ongoing performance by excluding non-recurring items - PPG provides non-GAAP financial measures (adjusted net income, adjusted EPS, adjusted effective tax rate) to offer insight into ongoing performance by excluding non-recurring or non-primary operational items125 Adjusted Financial Performance (2023 vs. 2022) | ($ in millions, except percentages and per share amounts) | Income Before Income Taxes | Income Tax Expense | Effective Tax Rate | Net Income (attributable to PPG) | Earnings per Diluted Share | | :--- | :--- | :--- | :--- | :--- | :--- | | Year-ended December 31, 2023 | | | | | | | As reported, continuing operations | $1,748 | $439 | 25.1 % | $1,270 | $5.35 | | Adjusted, continuing operations, excluding certain items | $2,389 | $526 | 22.0 % | $1,822 | $7.67 | | Year-ended December 31, 2022 | | | | | | | As reported, continuing operations | $1,381 | $325 | 23.5 % | $1,028 | $4.33 | | Adjusted, continuing operations, excluding certain items | $1,877 | $413 | 22.0 % | $1,436 | $6.05 | - Adjustments for 2023 included acquisition-related amortization, business restructuring costs, impairment charges, portfolio optimization, environmental remediation, Argentina currency devaluation losses, insurance recoveries, and a pension settlement charge127128 Performance of Reportable Business Segments Performance Coatings net sales increased 4.4%, driven by pricing, while Industrial Coatings net sales grew 1.8%, both impacted by volume changes and market demand Performance Coatings Segment Financials (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | $ Change 2023 vs. 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $11,164 | $10,694 | $470 | 4.4% | | Segment income | $1,709 | $1,399 | $310 | 22.2% | | Amortization expense | $114 | $123 | ($9) | (7.3)% | | Segment income, excluding amortization expense | $1,823 | $1,522 | $301 | 19.8% | - Performance Coatings net sales increased 4.4% due to higher selling prices (+5%) and favorable foreign currency translation (+1%), partially offset by lower sales volumes (-2%) due to soft demand in Europe130131137 - Aerospace coatings organic sales grew 20% due to price and volume increases, while protective and marine coatings organic sales increased mid-single-digit, and traffic solutions organic sales decreased mid-single-digit135136 Industrial Coatings Segment Financials (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | $ Change 2023 vs. 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $7,082 | $6,958 | $124 | 1.8% | | Segment income | $966 | $643 | $323 | 50.2% | | Amortization expense | $46 | $43 | $3 | 7.0% | | Segment income, excluding amortization expense | $1,012 | $686 | $326 | 47.5% | - Industrial Coatings net sales increased 1.8% due to higher selling prices (+4%), offset by lower sales volumes (-2%) driven by lower global industrial production139140 - Automotive OEM coatings organic sales increased high single-digit, led by EMEA and Asia Pacific, while industrial coatings, packaging coatings, and specialty coatings and materials all saw mid-single-digit organic sales decreases due to softening demand141142143 Commitments and Contingent Liabilities, including Environmental Matters PPG is involved in various lawsuits and environmental matters, maintaining significant reserves, but management believes the aggregate outcome will not materially affect financial position - PPG is involved in various lawsuits and claims, including environmental matters, but management believes the aggregate outcome will not materially affect financial position or liquidity, though it may impact periodic results145146147 - The company maintains significant reserves for environmental contingencies, accruing expenses when a liability is probable and estimable147 Accounting Standards Adopted in 2023 PPG adopted ASU No. 2022-04 on Supplier Finance Programs in 2023 to enhance transparency without affecting financial recognition or measurement - Effective January 1, 2023, PPG adopted ASU No. 2022-04, 'Liabilities - Supplier Finance Programs,' to enhance transparency around supplier finance programs without affecting recognition, measurement, or presentation of obligations266 Accounting Standards to be Adopted in Future Years Future accounting standards, including ASU No. 2023-07 and ASU No. 2023-09, will require additional disclosures on segment expenses and income taxes - ASU No. 2023-07 'Improvements to Reportable Segment Disclosures' (effective Dec 31, 2024) will require disclosures of significant segment expenses and CODM information267 - ASU No. 2023-09 'Improvements to Income Tax Disclosures' (effective Dec 31, 2025) will require specific categories of information within the effective tax rate reconciliation and disaggregated income taxes paid by jurisdiction268 Liquidity and Capital Resources PPG maintained sufficient financial resources in 2023, with cash from operating activities increasing by $1.448 billion, funding capital spending, acquisitions, and dividends - PPG had sufficient financial resources in the past two years to meet operating requirements, fund capital spending (including acquisitions, share repurchases, and pension plans), and pay increasing dividends150 Cash and Short-term Investments (2023 vs. 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,514 | $1,099 | | Short-term investments | 75 | 55 | | Total | $1,589 | $1,154 | Cash from Operating Activities (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Cash from operating activities | $2,411 | $963 | 150.4% | - Cash from operating activities increased by $1,448 million, primarily due to higher net income from increased selling prices and moderating raw material costs, and favorable changes in working capital153 Operating Working Capital (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | | :--- | :--- | :--- | | Trade receivables, net | $2,881 | $2,824 | | Inventories, FIFO | 2,376 | 2,544 | | Trade creditors' liabilities | 2,612 | 2,538 | | Operating working capital | $2,645 | $2,830 | | Operating working capital as a % of fourth quarter sales, annualized | 15.2 % | 16.9 % | | Days sales outstanding | 55 | 56 | | Inventory turnover | 4.4 | 4.5 | Cash Used for Investing Activities (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Cash used for investing activities | $556 | $461 | 20.6% | - Cash used for investing activities increased by $95 million due to higher capital expenditures and lower proceeds from asset sales159 Capital Expenditures, Including Business Acquisitions (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Capital expenditures | $549 | $518 | 6.0% | | Business acquisitions, net of cash balances acquired | $109 | $114 | (4.4)% | | Total capital expenditures, including acquisitions | $658 | $632 | 4.1% | | Capital expenditures, excluding acquisitions, as a % of sales | 3.0 % | 2.9 % | 3.4% | Cash Used for Financing Activities (2023 vs. 2022) | ($ in millions, except percentages) | 2023 | 2022 | % Change 2023 vs. 2022 | | :--- | :--- | :--- | :--- | | Cash used for financing activities | ($1,550) | ($409) | 279.0% | - Cash used for financing activities increased by $1,141 million, primarily due to repayments of long-term debt and lower proceeds from debt issuance, partially offset by the absence of net payments on commercial paper163 - PPG repurchased 0.6 million shares for $86 million in 2023, with $1.0 billion remaining under the current authorization, and dividends paid totaled $598 million in 2023, marking the 52nd successive year of increased annual per-share dividend payments164165 Contractual Obligations and Commitments (as of Dec 31, 2023) | ($ in millions) | Total | 2024 | 2025-2026 | 2027-2028 | Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $6,050 | $302 | $2,239 | $1,446 | $2,063 | | Interest payments | $966 | $134 | $239 | $192 | $401 | | Operating leases | $896 | $216 | $313 | $183 | $184 | | Unconditional purchase commitments | $343 | $136 | $157 | $36 | $14 | Critical Accounting Estimates PPG's critical accounting estimates involve significant judgment in areas such as contingencies, pension benefits, business combinations, and goodwill impairment - Critical accounting estimates include contingencies (environmental remediation, litigation, tax matters), defined benefit pension and other postretirement benefits, business combinations, and goodwill and other identifiable intangible assets176 - Estimates for contingencies involve judgment in assessing liability likelihood and potential loss amounts177 - Pension and postretirement benefit accounting relies on assumptions about inflation, investment returns, mortality, and discount rates178 - Business combinations require allocating acquisition costs to assets and liabilities based on fair values, impacting future operating results179 - Goodwill and indefinite-lived intangible assets are tested for impairment annually using qualitative or quantitative methods, with fair values estimated via discounted cash flow models181 Currency Consolidated net assets increased by $508 million in 2023 due to the U.S. dollar weakening against other currencies, favorably impacting income before taxes - Consolidated net assets increased by $508 million at December 31, 2023, compared to December 31, 2022, due to the U.S. dollar weakening against currencies in regions where PPG operates, notably the Mexican peso183 - A favorable impact of approximately $25 million on full-year 2023 Income before income taxes resulted from the translation of foreign income into U.S. dollars, as the U.S. dollar weakened against certain currencies (Mexican peso, euro) and strengthened against others (Chinese yuan, Argentine peso)184 Forward-Looking Statements The report contains forward-looking statements subject to various factors, including global economic conditions and raw material costs, which could cause actual results to differ materially - The report contains forward-looking statements, which are subject to various factors that could cause actual results to differ materially, including global economic conditions, raw material costs, competition, and geopolitical issues186 - Consequences of material differences could include lower sales or income, business disruption, operational problems, financial loss, and legal liability189 Quantitative and Qualitative Disclosures About Market Risk PPG manages market risks from foreign currency and interest rates using derivative instruments, with sensitivity analyses indicating potential impacts from adverse market rate changes - PPG is exposed to market risks from changes in foreign currency exchange rates and interest rates, which are managed through derivative financial instrument transactions190 - A 10% adverse change in exchange rates on foreign currency hedge contracts could have reduced Income before income taxes by $402 million in 2023192 - A 10% increase in the euro's value against the U.S. dollar would have unfavorably affected cross currency swap contracts by reducing their value by $46 million at December 31, 2023193 - A 10% weakening of the U.S. dollar against European, Asian, and South American currencies would have resulted in unrealized translation losses of $363 million on non-U.S. dollar denominated debt as of December 31, 2023194 - PPG uses interest rate swaps to convert fixed-rate debt to variable-rate debt; a 10% increase in variable interest rates would have increased annual interest expense by $2 million in 2023195 Financial Statements and Supplementary Data This section presents PPG's audited consolidated financial statements for 2021-2023, with unqualified opinions from the independent auditor, detailing critical accounting policies and segment information - PricewaterhouseCoopers LLP issued an unqualified opinion on PPG's consolidated financial statements and the effectiveness of its internal control over financial reporting as of December 31, 2023199 - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on COSO criteria213 Consolidated Statement of Income (2023, 2022, 2021) | ($ in millions, except per share amounts) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net sales | $18,246 | $17,652 | $16,802 | | Income before income taxes | $1,748 | $1,381 | $1,815 | | Income tax expense | 439 | 325 | 374 | | Income from continuing operations | $1,309 | $1,056 | $1,441 | | Net income (attributable to PPG) | $1,270 | $1,026 | $1,439 | | Earnings per common share - assuming dilution | $5.35 | $4.32 | $6.01 | Consolidated Balance Sheet (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Assets | | | | Total current assets | $7,431 | $7,173 | | Property, plant and equipment, net | 3,644 | 3,328 | | Goodwill | 6,200 | 6,078 | | Identifiable intangible assets, net | 2,424 | 2,414 | | Total Assets | $21,647 | $20,744 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $5,054 | $4,721 | | Long-term debt | 5,748 | 6,503 | | Total liabilities | $13,624 | $14,035 | | Total shareholders' equity | $8,023 | $6,709 | | Total Liabilities and Shareholders' Equity | $21,647 | $20,744 | Consolidated Statement of Cash Flows (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Cash from operating activities | $2,411 | $963 | $1,562 | | Cash used for investing activities | ($555) | ($461) | ($2,404) | | Cash (used for)/from financing activities | ($1,550) | ($409) | $1,920 | | Net increase/(decrease) in cash and cash equivalents | $415 | $94 | ($821) | | Cash and cash equivalents, end of year | $1,514 | $1,099 | $1,005 | Note 1. Summary of Significant Accounting Policies This note outlines PPG's significant accounting policies, including consolidation, revenue recognition, inventory valuation, derivative instruments, goodwill impairment, and future accounting standard adoptions - PPG's consolidated financial statements include PPG Industries, Inc. and its controlled subsidiaries, with equity method accounting for 20-50% owned investments224 - Revenue is recognized when performance obligations are satisfied, typically when control of products transfers to the customer226 Advertising and R&D Costs | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Advertising costs | $285 | $252 | $243 | | Research and development, net | $433 | $448 | $439 | - Inventories are valued at the lower of cost or net realizable value, with most U.S. inventories using LIFO and others using FIFO241 - Derivative financial instruments are recognized at fair value, with accounting treatment depending on designation as cash flow, fair value, or net investment hedges242243244245 - Goodwill and indefinite-lived intangible assets are tested for impairment at least annually, or more frequently if impairment indicators arise, using qualitative or quantitative tests250252 - PPG adopted ASU No. 2022-04 on Supplier Finance Programs in 2023 and will adopt ASU No. 2023-07 on Segment Disclosures and ASU No. 2023-09 on Income Tax Disclosures in future years, which will result in additional disclosures but no impact on financial position or cash flows266267268 Note 2. Acquisitions PPG completed the acquisition of Tikkurila Oyj in 2021, a leading Nordic paint producer, with its results reported within the Performance and Industrial Coatings segments - On June 10, 2021, PPG completed the acquisition of Tikkurila Oyj, a leading Nordic producer of decorative paint and coatings, ultimately achieving 100% ownership in Q4 2021270 - Tikkurila's results are reported within the architectural coatings – EMEA (Performance Coatings) and industrial coatings (Industrial Coatings) segments271 Note 3. Working Capital Detail This note provides detailed components of working capital, including receivables, inventories, and accounts payable, highlighting LIFO inventory valuation Working Capital Components (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Receivables | | | | Trade - net | $2,881 | $2,824 | | Other - net | 398 | 479 | | Total Receivables | $3,279 | $3,303 | | Inventories | | | | Finished products | $1,197 | $1,209 | | Work in process | 236 | 238 | | Raw materials | 640 | 784 | | Supplies | 54 | 41 | | Total Inventories | $2,127 | $2,272 | | Accounts payable and accrued liabilities | | | | Trade | $2,612 | $2,538 | | Accrued payroll | 674 | 501 | | Customer rebates | 414 | 377 | | Other postretirement and pension benefits | 96 | 77 | | Income taxes | 128 | 37 | | Other | 543 | 557 | | Total Accounts payable and accrued liabilities | $4,467 | $4,087 | - LIFO inventories comprised 20% and 21% of total gross inventory values in 2023 and 2022, respectively, and if FIFO were used, inventories would have been $249 million and $272 million higher272 Note 4. Property, Plant and Equipment This note details PPG's property, plant, and equipment, net, by asset category, including land, buildings, machinery, and construction in progress Property, Plant and Equipment, Net (as of Dec 31, 2023 and 2022) | ($ in millions) | Useful Lives (years) | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Land and land improvements | 1-30 | $572 | $548 | | Buildings | 20-40 | 1,908 | 1,774 | | Machinery and equipment | 5-25 | 4,157 | 3,960 | | Other | 3-20 | 1,287 | 1,203 | | Construction in progress | | 683 | 492 | | Total | | $8,607 | $7,977 | | Less: accumulated depreciation | | 4,963 | 4,649 | | Net | | $3,644 | $3,328 | Note 5. Investments This note details PPG's investments, including equity affiliates and marketable equity securities, and its share of undistributed net earnings from affiliates Investments (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Investments in equity affiliates | $141 | $134 | | Marketable equity securities | 74 | 61 | | Other | 44 | 49 | | Total | $259 | $244 | - PPG's share of undistributed net earnings from equity affiliates was $21 million in 2023, $25 million in 2022, and $15 million in 2021275 Note 6. Goodwill and Other Identifiable Intangible Assets This note details goodwill by segment and identifiable intangible assets, including a $158 million goodwill impairment charge for traffic solutions in Q4 2023 Goodwill by Segment (as of Dec 31, 2023 and 2022) | ($ in millions) | Performance Coatings | Industrial Coatings | Total | | :--- | :--- | :--- | :--- | | December 31, 2022 | $4,881 | $1,197 | $6,078 | | Acquisitions, including purchase accounting adjustments | 126 | 13 | 139 | | Divestitures | (5) | — | (5) | | Foreign currency impact | 150 | (4) | 146 | | Goodwill impairment | (158) | — | (158) | | December 31, 2023 | $4,994 | $1,206 | $6,200 | - In Q4 2023, a goodwill impairment charge of $158 million was recognized for the traffic solutions reporting unit, primarily due to an increased discount rate and a decline in long-term cash generation forecast277 Identifiable Intangible Assets (as of Dec 31, 2023 and 2022) | ($ in millions) | December 31, 2023 Net | December 31, 2022 Net | | :--- | :--- | :--- | | Indefinite-Lived Identifiable Intangible Assets: Trademarks | $1,442 | $1,325 | | Definite-Lived Identifiable Intangible Assets: Acquired technology | $167 | $191 | | Definite-Lived Identifiable Intangible Assets: Customer-related | 674 | 743 | | Definite-Lived Identifiable Intangible Assets: Trade names | 139 | 153 | | Definite-Lived Identifiable Intangible Assets: Other | 2 | 2 | | Total Identifiable Intangible Assets | $2,424 | $2,414 | - Impairment charges of $2 million and $4 million were recognized in 2023 and 2022, respectively, for certain indefinite-lived trademarks in the Performance Coatings segment279 Estimated Future Amortization Expense | ($ in millions) | 2024 | 2025 | 2026 | 2027 | 2028 | | :--- | :--- | :--- | :--- | :--- | :--- | | Estimated future amortization expense | $147 | $128 | $107 | $96 | $83 | Note 7. Impairment and Other Related Charges, Net This note details impairment and other related charges, including a $158 million goodwill impairment in 2023 and $290 million related to Russia operations in 2022 - In 2023, PPG recorded a $158 million goodwill impairment charge for the traffic solutions reporting unit and $2 million for indefinite-lived intangible assets283277279 - In Q1 2022, PPG recognized $290 million in impairment and other related charges due to the wind-down of Russia operations, including $201 million for long-lived assets (indefinite-lived intangible assets, property, plant and equipment, definite-lived intangible assets) and $89 million for receivables and inventories285286 - Subsequently, $63 million of income was recognized in 2022 due to the collection of certain trade receivables and realization of previously written-down inventories related to Russia operations287 - PPG recorded impairment charges of $14 million in 2022 and $21 million in 2021 for certain smaller, non-strategic businesses classified as held for sale289 Note 8. Business Restructuring PPG records restructuring liabilities for operational consolidations and headcount reductions, with new actions approved in 2023 expected to be completed by end of 2024 - PPG records restructuring liabilities for costs incurred from operational consolidations and headcount reductions, primarily severance and other cash costs, and accelerated depreciation290 - In 2023, new restructuring actions were approved to reduce costs and improve profitability, with most expected to be completed by the end of 2024291 Restructuring Reserve Activity (2023 vs. 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | January 1 | $169 | $231 | | Approved restructuring actions | 33 | 84 | | Release of prior reserves and other adjustments | (35) | (51) | | Cash payments | (57) | (85) | | Foreign currency impact | 3 | (10) | | December 31 | $113 | $169 | Note 9. Leases PPG leases various assets including retail stores, warehouses, and equipment, with total lease costs of $269 million in 2023 - PPG leases retail paint stores, warehouses, distribution facilities, office space, fleet vehicles, and equipment294 Total Lease Cost (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total operating lease cost | $266 | $259 | $260 | | Total finance lease cost | $3 | $3 | $3 | | Total lease cost | $269 | $262 | $263 | Lease Liabilities Maturities (as of Dec 31, 2023) | ($ in millions) | Operating Leases | Finance Leases | | :--- | :--- | :--- | | 2024 | $216 | $2 | | 2025 | 176 | 2 | | 2026 | 137 | 2 | | 2027 | 103 | 1 | | 2028 | 80 | 1 | | Thereafter | 184 | 1 | | Total lease payments | $896 | $9 | | Less: Interest | 80 | 1 | | Total lease obligations | $816 | $8 | Note 10. Borrowings and Lines of Credit This note details PPG's long-term debt obligations, including a new €500 million Term Loan Credit Agreement in 2023 and a $2.3 billion revolving credit facility Long-term Debt Obligations (as of Dec 31, 2023 and 2022) | ($ in millions) | Maturity Date | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Term Loan Credit Agreement, due 2024 ($1,400) | 2024 | — | 1,099 | | 0.875% notes (€600) | 2025 | 660 | 639 | | 1.2% notes ($700) | 2026 | 696 | 694 | | Term Loan Credit Agreement, due 2026 (€500) | 2026 | 552 | — | | 3.75% notes ($800) | 2028 | 808 | 809 | | 2.75% notes (€700) | 2029 | 768 | 743 | | Total Long-term Debt | | $6,050 | $6,806 | | Less payments due within one year | | 302 | 303 | | Long-term debt | | $5,748 | $6,503 | - In April 2023, PPG entered into a €500 million Term Loan Credit Agreement due 2026, which was increased by €250 million in December 2023 (borrowed in January 2024)167298 - The $2.0 billion Term Loan Credit Agreement from February 2021 was fully repaid as of December 31, 2023, with $1.1 billion repaid in 2023168309 - PPG amended and restated its five-year credit agreement in July 2023, extending the term to July 27, 2028, providing a $2.3 billion unsecured revolving credit facility169299 - As of December 31, 2023, PPG was in full compliance with restrictive covenants, maintaining a Total Indebtedness to Total Capitalization ratio of 42% (below the 60% limit)170302310 Long-term Debt Maturities | ($ in millions) | Maturity per year | | :--- | :--- | | 2024 | $302 | | 2025 | $989 | | 2026 | $1,250 | | 2027 | $662 | | 2028 | $784 | | Thereafter | $2,063 | Note 11. Financial Instruments, Hedging Activities and Fair Value Measurements PPG uses derivative financial instruments like interest rate swaps and foreign currency forward contracts to hedge market risks, not for speculative purposes - PPG uses derivative financial instruments (interest rate swaps, cross currency swaps, foreign currency forward contracts, euro-denominated debt) to hedge foreign currency exchange rate and interest rate risks, not for speculative purposes317318321324325326 - As of December 31, 2023, PPG had interest rate swaps converting $375 million of fixed-rate debt to variable-rate debt, with a fair value liability of $14 million322 - PPG had U.S. dollar to euro cross currency swap contracts with a notional amount of $475 million and €3.0 billion of euro-denominated borrowings designated as net investment hedges for its European operations as of December 31, 2023324325 - The company had $2.5 billion in underlying notional amounts for foreign currency forward contracts not designated as hedges, with net assets of $23 million as of December 31, 2023326 Gains/Losses Deferred in Accumulated Other Comprehensive Loss (2023) | ($ in millions) | (Loss)/Gain Deferred in OCI | | :--- | :--- | | Fair Value: Interest rate swaps | ($10) | | Net Investment: Cross currency swaps | ($15) | | Net Investment: Foreign denominated debt | (89) | | Total Net Investment | ($104) | - The fair values of debt instruments are measured using Level 2 inputs, including discounted cash flows and current interest rates336 Note 12. Earnings Per Common Share This note details PPG's earnings per common share, with $5.35 from continuing operations in 2023, and includes potentially dilutive common shares Earnings Per Common Share (2023, 2022, 2021) | ($ in millions, except per share amounts) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Income from continuing operations, net of tax | $1,270 | $1,028 | $1,420 | | Net income (attributable to PPG) | $1,270 | $1,026 | $1,439 | | Weighted average common shares outstanding | 236.0 | 236.1 | 237.6 | | Earnings per common share - assuming dilution | $5.35 | $4.33 | $5.93 | - Potentially dilutive common shares from stock options and other stock compensation plans totaled 1.2 million in 2023 and 2022, and 1.8 million in 2021337 Note 13. Income Taxes PPG's effective tax rate increased to 25.1% in 2023, with details on deferred income tax assets and liabilities, and unrecognized tax benefits Total Income Tax Expense (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total current income tax expense | $622 | $482 | $339 | | Total deferred income tax (benefit)/expense | ($183) | ($157) | $35 | | Total income tax expense | $439 | $325 | $374 | Effective Income Tax Rate Reconciliation (2023, 2022, 2021) | | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | U.S. federal income tax rate | 21.0 % | 21.0 % | 21.0 % | | Effective income tax rate | 25.1 % | 23.5 % | 20.6 % | - The effective tax rate increased to 25.1% in 2023 from 23.5% in 2022, primarily due to taxes on non-U.S. earnings, changes in valuation allowance reserves, and impairment charges338 Deferred Income Tax Assets and Liabilities (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Deferred income tax assets related to Employee benefits | $273 | $275 | | Deferred income tax assets related to Operating loss and other carry-forwards | 279 | 218 | | Valuation allowance | (249) | (182) | | Deferred income tax liabilities related to Intangibles | 696 | 720 | | Deferred income tax liabilities – net | ($235) | ($406) | - PPG had $5.8 billion of undistributed earnings of non-U.S. subsidiaries as of December 31, 2023, with an estimated repatriation tax cost of $123 million342 - The total amount of unrecognized tax benefits that would affect the effective tax rate was $117 million as of December 31, 2023345 Note 14. Employee Benefit Plans PPG sponsors global defined benefit pension plans, with a $190 million non-cash pension settlement charge in 2023, and details on funded status and asset allocation - PPG sponsors defined benefit pension plans globally, with U.S., Canada, Germany, Netherlands, and U.K. plans representing 93% of the total projected benefit obligation347 - In March 2023, PPG purchased group annuity contracts, transferring $309 million in U.S. pension benefit obligations to third-party insurers, resulting in a $190 million non-cash pension settlement charge350 Defined Benefit Pension Plans Funded Status (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Projected benefit obligation, December 31 | $2,216 | $2,386 | | Market value of plan assets, December 31 | $1,729 | $1,974 | | Funded Status | ($487) | ($412) | Other Postretirement Benefit Plans Net Liability (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | Projected benefit obligation, December 31 | $495 | $524 | | Net liability recognized | ($495) | ($524) | Net Periodic Benefit Cost/(Income) (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Pensions Net periodic benefit cost/(income) | $221 | ($18) | $14 | | Other Postretirement Benefits Net periodic benefit cost/(income) | $21 | $25 | ($8) | Weighted Average Assumptions for Benefit Obligation (as of Dec 31, 2023 and 2022) | | 2023 | 2022 | | :--- | :--- | :--- | | Discount rate | 4.9 % | 5.2 % | | Rate of compensation increase | 2.8 % | 2.7 % | - The global expected return on plan assets assumption for 2024 net periodic pension expense will be 6.6% (7.7% for U.S. plans)361 Estimated Future Benefit Payments (2024-2033) | ($ in millions) | Pensions | Other Postretirement Benefits | | :--- | :--- | :--- | | 2024 | $152 | $45 | | 2025 | $137 | $44 | | 2026 | $140 | $41 | | 2027 | $145 | $40 | | 2028 | $146 | $40 | | 2029 to 2033 | $775 | $177 | Pension Plan Asset Allocation Targets (as of Dec 31, 2023 and 2022) | Asset Category | 2023 | 2022 | | :--- | :--- | :--- | | Equity securities | 15-45% | 15-45% | | Debt securities | 30-65% | 30-65% | | Real estate | 0-10% | 0-10% | | Other | 20-40% | 20-40% | - Company-matching contributions to Employee Savings Plans were 100% in 2023, totaling $61 million374375 - Defined contribution plan expense was $90 million in 2023376 Note 15. Commitments and Contingent Liabilities PPG is involved in various lawsuits and environmental matters, maintaining $48 million in asbestos-related reserves and $227 million for environmental remediation - PPG is involved in various lawsuits and claims, including asbestos-related claims, but management believes the aggregate outcome will not materially affect financial position or liquidity381383 - Asbestos-related reserves totaled $48 million as of December 31, 2023, deemed sufficient to cover current and estimable future liabilities387388 - In 2021, the asbestos-related claims reserve was reduced by $133 million based on a valuation analysis following the expiration of a U.S. Bankruptcy Court injunction386387 Environmental Reserves (as of Dec 31, 2023 and 2022) | ($ in millions) | 2023 | 2022 | | :--- | :--- | :--- | | New Jersey Chrome | $53 | $58 | | Glass and chemical | 54 | 60 | | Other | 120 | 99 | | Total environmental reserves | $227 | $217 | | Current Portion | $52 | $50 | Total Pretax Environmental Charges and Cash Outlays (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total pretax environmental charges | $46 | $13 | $44 | | Cash outlays for environmental spending | $36 | $78 | $56 | - In Q4 2023, PPG recognized $30 million in pretax environmental charges, primarily due to increased estimated remediation costs at the Riverside Industrial Park Superfund Site and New Jersey Chrome sites394 - Management expects cash outlays for environmental remediation to range from $40 million to $60 million in 2024, and $20 million to $75 million annually from 2025 through 2028397 - In addition to reserved amounts, PPG may be subject to reasonably possible unreserved environmental loss contingencies estimated between $100 million and $200 million405 Note 16. Shareholders' Equity This note details common stock and treasury stock activity, with $2.54 per share cash dividends paid in 2023 Common Stock and Treasury Stock Activity (2021-2023) | | Common Stock | Treasury Stock | Shares Outstanding | | :--- | :--- | :--- | :--- | | January 1, 2021 | 581,146,136 | (344,459,871) | 236,686,265 | | December 31, 2021 | 581,146,136 | (345,239,110) | 235,907,026 | | December 31, 2022 | 581,146,136 | (346,072,210) | 235,073,926 | | December 31, 2023 | 581,146,136 | (345,935,282) | 235,210,854 | - Per share cash dividends paid were $2.54 in 2023, $2.42 in 2022, and $2.26 in 2021408 Note 17. Accumulated Other Comprehensive Loss (AOCL) AOCL decreased from ($2,810) million in 2022 to ($2,239) million in 2023, primarily due to foreign currency translation and pension adjustments Accumulated Other Comprehensive Loss (2021-2023) | ($ in millions) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefit Adjustments, net of tax | Unrealized Gain on Derivatives, net of tax | Accumulated Other Comprehensive Loss | | :--- | :--- | :--- | :--- | :--- | | January 1, 2021 | ($1,663) | ($937) | $1 | ($2,599) | | December 31, 2021 | ($1,988) | ($763) | $1 | ($2,750) | | December 31, 2022 | ($2,254) | ($557) | $1 | ($2,810) | | December 31, 2023 | ($1,746) | ($494) | $1 | ($2,239) | - The AOCL decreased from ($2,810) million in 2022 to ($2,239) million in 2023, primarily due to current year deferrals and reclassifications related to foreign currency translation adjustments and pension/postretirement benefit adjustments409 Note 18. Other Charges/(Income), Net Total other charges/(income), net, shifted to a $83 million charge in 2023, driven by increased environmental charges and pension non-service costs Other Charges/(Income), Net (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Environmental charges | $46 | $13 | $44 | | Pension and other postretirement benefit plans, non-service cost components | 39 | (10) | (15) | | Share of net earnings of equity affiliates | (21) | (25) | (15) | | Loss/(gain) on sale of assets, net | 23 | (4) | (44) | | Argentina currency devaluation loss | 20 | — | — | | Royalty income | (10) | (8) | (8) | | Business restructuring (income)/charges, net | (2) | 33 | 31 | | Income from legal settlements | — | — | (22) | | Other, net | (12) | (26) | (83) | | Total other charges/(income), net | $83 | ($27) | ($112) | - Total other charges/(income), net, shifted from an income of ($27) million in 2022 to a charge of $83 million in 2023, primarily due to increased environmental charges, non-service cost components of pension/postretirement benefits, and Argentina currency devaluation losses411 Note 19. Stock-Based Compensation PPG's stock-based compensation includes stock options, RSUs, and TSR awards, with total compensation expense of $59 million in 2023 - PPG's stock-based compensation includes stock options, restricted stock units (RSUs), and contingent share grants (TSR awards) under the PPG Amended Omnibus Incentive Plan412 Total Stock-Based Compensation and Tax Benefit (2023, 2022, 2021) | ($ in millions) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total stock-based compensation | $59 | $35 | $57 | | Income tax benefit recognized | $12 | $8 | $12 | - Stock options generally vest over 36 months and have a 10-year term, with fair value estimated using the Black-Scholes model414415 - Unrecognized compensation cost for outstanding stock options was $9 million as of December 31, 2023, expected to be recognized over 1.7 years417 - RSUs have time or performance-based vesting over three years, with performance-based RSUs granted in 2021 vesting at 133% and 2022/2023 grants assumed to vest at 100%419420 - TSR awards are granted annually, paid out based on PPG's total shareholder return percentile rank against the S&P 500 over a three-year period, with 2021 grants resulting in a 55.2% payou
PPG Industries(PPG) - 2023 Q4 - Annual Report