Snapshot
Ppg Industries Inc reported $4.20B of revenue in Q2 2025, up -0.9% year over year, with diluted EPS of $1.98 and an operating margin of 14.7%.
- Revenue
- $4.20B
- YoY growth
- +-0.9%
- Diluted EPS
- $1.98
- Operating margin
- 14.7%
What management said
- •We appreciate your continued interest in PPG and welcome you to our Second Quarter 2025 Earnings Conference Call.
- •I'll start by providing a few highlights from our second quarter 2025 financial performance and then I'll move to our outlook.
- •We delivered net sales of $4.2 billion with an increase in organic sales of 2.2%.
- •Our momentum in organic sales growth was led by our aerospace coatings, protective and marine coatings, and packaging coatings businesses.
- •In addition, sales volumes in our industrial coatings segment outpaced the industry, reflecting the initial benefits from share gains in our packaging, industrial, and automotive OEM businesses.
- •Regionally, we delivered organic growth in both the United States and Latin America, with tepid demand in Europe and some softening in Asia.
- •We delivered a quarterly segment EBITDA margin of 20.3% and our adjusted earnings per diluted share was $2.22.
- •Additionally, in July we raised our quarterly dividend per share by 4%, demonstrating our confidence in the resiliency of our business and the strength and future growth of our company.
- •Looking at each of our segments, in the global architectural coating segment, positive selling prices in both regions were offset by lower volumes and the impact of a divestiture in architectural coatings.
- •EMEA organic sales growth in the Nordic region and in the United Kingdom were offset by lower demand in Eastern Europe.
- •We delivered organic sales growth in Mexico aided by solid retail sales.
- •Segment EBITDA margin decreased driven by the business divestiture, lower sales volumes, and unfavorable currency translation, partially offset by strong cost control actions.
What went well
- •Delivered net sales of $4.2 billion with organic sales up 2.2% and a quarterly segment EBITDA margin of 20.3%, with adjusted EPS of $2.22.
- •Performance Coatings posted record net sales and earnings with 6% organic sales growth on both higher prices and volumes; Aerospace delivered high single-digit organic growth with record quarterly sales and earnings (backlog stable at ~$300 million).
- •Protective and Marine Coatings delivered double-digit organic growth, its ninth consecutive quarter of positive year-over-year volume growth, on technologies like SIGMAGLIDE and copper-free SailAdvance plus fire-protection products.
- •Industrial Coatings sales volumes were flat, an improvement versus recent quarters, reflecting initial benefits of share gains expected to accelerate in 2H2025; all four Performance Coatings businesses outgrew their markets.
- •Returned cash to shareholders with ~$150 million of buybacks (bringing year-to-date to $540 million) and raised the quarterly dividend 4% in July; installed the 3,000th MoonWalk and grew LINQ subscriptions.
What went wrong
- •Automotive Refinish organic sales declined a low single-digit percentage, with U.S. sales flat despite lower industry collision claims; management warned Q3 volumes would be soft as distributor order patterns normalize.
- •Global Architectural Coatings segment EBITDA margin decreased on a divestiture, lower volumes, unfavorable currency, and adverse Mexico vs. non-Mexico mix; European volumes stayed lower, with Eastern Europe weaker than expected.
- •A transitory internal supply-chain disruption in Australia hurt year-over-year architectural volume by about half a turn (50 basis points) and was impactful to the bottom line in the quarter.
- •Industrial Coatings selling prices declined 1% due to carryover of certain index-based customer contracts, and raw-material inflation persisted (epoxy and Mexico FX) versus peers calling raws flat to down.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales / volume growth | 2H2025 | — | Low single digits and moving up the low-single-digit ladder, driven by share gains | |
| Refinish volume | Q3 / Q4 2025 | — | Q3 soft on distributor order-pattern normalization, Q4 more normalized; industry recovery not until 2026 | |
| Architectural / Industrial organic sales guide | FY2025 | Higher prior guide | Revised down modestly (Architectural mainly Europe; Industrial modest decrement on China) | |
| Restructuring / self-help benefits | FY2025 | $75 million full year | ~$30 million realized in 1H, growing incrementally in 2H (not an incremental $75M) | |
| Cash from operations | FY2025 | — | Expected to grow year-over-year, with most cash back-half weighted | |
| Long-term growth algorithm | Ongoing | — | 2-4% organic growth, 8-10% EPS growth, ~$1 billion adjusted free cash flow annually |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Net sales | $4.2 billion, +2.2% organic | Led by Aerospace, Protective and Marine, and Packaging; Industrial volumes outpaced industry |
| Adjusted EPS | $2.22 | Organic growth and cost control amid a dynamic macro |
| Segment EBITDA margin | 20.3% | Strong portfolio execution despite architectural margin pressure |
| Performance Coatings organic sales | +6% | Higher prices and volumes; record segment net sales and earnings |
| Protective and Marine organic sales | Double-digit % | Ninth straight quarter of volume growth on advantaged marine and fire-protection technologies |
| Industrial Coatings selling prices | -1% | Carryover of certain index-based customer contracts |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Share-gain ramp | Wins identified since late Q3 2024 (~$100 million, mostly Auto OEM) | Initial benefits showing in 1H; expected to accelerate across all three Industrial businesses in 2H, lifting net margin via fixed-cost leverage | |
| Refinish normalization | Flat for 1H2025 on share gains and order patterns | Q3 expected soft on order-pattern swing, full normalization (claims down low single digits) not until 2026 | |
| Aerospace investment | Ongoing OpEx/CapEx for output | New U.S. factory announced (~$380 million CapEx) plus continued debottlenecking; high-single-digit/double-digit growth foreseeable | |
| Mexico architectural recovery | Q1 organic sales down low single digits on tariff-driven project pause | Q2 up low single digits (retail-led); project work improving sequentially, guided up modestly to mid-single digits in 2H | |
| Europe architectural | Expected late-Q1 momentum to continue | Momentum did not continue (Eastern Europe weak); now assuming current-state-plus-share-gains with no market-recovery assumption |
Q&A summary
Why were architectural volumes and margins soft, and what is the Europe/Mexico outlook?
Knavish said Europe momentum stalled (Eastern Europe), while Nordics, UK and Benelux improved; Mexico retail is recovering with project work improving sequentially. Margin was hit by FX imbalance, lower Mexico B2B mix, an Australia disruption, and an above-margin divestiture.
What is the Refinish volume outlook and how sustainable is PMC double-digit growth?
Knavish expects Q3 Refinish soft on distributor order-pattern swing and Q4 more normalized, with industry recovery in 2026; PMC's nine straight strong quarters are technology-driven (marine aftermarket, dry dock, fire protection) and seen continuing through 2026.
Why is PPG's raw-material inflation higher than peers calling raws flat to down?
Knavish pointed to PPG's large Mexico purchasing (FX impact on dollar-denominated buys) and to epoxy, which had pre-April tariffs built into guidance; architectural-heavy peers buy little epoxy, explaining much of the difference.
How should we think about incremental margins from the share gains?
Knavish said share gains come in at roughly segment-average gross margin, but the volume element improves net margin through fixed-cost leverage and manufacturing efficiencies as launches roll through 2H2025.
Why were Performance Coatings incremental margins low given +3% volume and +3% price?
Knavish said it was a conscious decision to invest growth-focused OpEx in Aerospace debottlenecking, Refinish digital initiatives, and PMC penetration, capturing future value in a strong (25.7% EBITDA) segment rather than dropping more to the bottom line now.