Snapshot
Ppg Industries Inc reported $4.08B of revenue in Q3 2025, up 1.2% year over year, with diluted EPS of $2.00 and an operating margin of 14.2%.
- Revenue
- $4.08B
- YoY growth
- +1.2%
- Diluted EPS
- $2.00
- Operating margin
- 14.2%
What management said
- •We appreciate your continued interest in PPG Industries and welcome you to our third quarter 2025 earnings conference call.
- •I'll start by providing a few highlights on Q3 2025 and then move to our outlook.
- •In a very challenging world, the team delivered organic growth, which included both volume growth and price growth, and delivered a record high Q3 EPS.
- •Our results for the quarter reflect the accelerating momentum in PPG's organic sales growth with an increase of 2%, including our third consecutive quarter of sales volume growth.
- •In addition, sales volumes in our industrial coatings segments once again outpaced industry demand, reflecting benefits from share gains in both packaging coatings and automotive OEM coatings.
- •Several of our businesses in the performance coatings segment delivered outstanding results, including double-digit organic sales growth in both aerospace coatings and protective and marine coatings.
- •Despite this, PPG organic sales grew a low single-digit percentage in the U.S.
- •Organic sales also increased in Latin America and Asia Pacific and were flat in Europe.
- •Solid sales improvement combined with our aggressive cost management and consistent cash deployment drove an adjusted EPS increase of 5% year over year, establishing a third quarter record of $2.13.
- •EMEA organic sales growth in Eastern Europe was more than offset by lower demand in Western Europe, while volumes remained lower in the quarter.
- •We delivered mid single digit organic sales growth in Mexico, aided by solid retail sales.
- •We expect sales growth to strengthen in Mexico in the fourth quarter, including stronger year over year consumer sales and modest improvement in project related work segment.
What went well
- •Delivered a record-high Q3 adjusted EPS of $2.13, up 5% year-over-year, with organic sales growth of 2% including the third consecutive quarter of sales volume growth.
- •Aerospace delivered double-digit percentage organic growth with record quarterly sales and earnings, and customer order backlog increased to $310 million even as growth investments improved manufacturing output.
- •Protective and Marine Coatings delivered its 10th consecutive quarter of year-over-year volume growth with double-digit organic growth, prompting additional growth-related investments.
- •Industrial Coatings volumes again outpaced industry demand on share gains in Packaging and Automotive OEM; U.S./Canada organic sales grew low single digits for the third straight quarter and Mexico delivered mid-single-digit organic growth on solid retail.
- •Launched the Deltron Premium Glamour Speed Clear Coat, the first Refinish product fully designed with AI technology, and grew Refinish LINQ subscriptions plus MoonWalk installations past 3,000 units.
What went wrong
- •Automotive Refinish organic sales decreased a double-digit percentage versus the prior year, driven by lower U.S. volumes as distributor order patterns were weighted to 1H2025 and industry collision claims stayed depressed.
- •Industry claims normalization did not happen as early as expected, pushing distributor destocking deeper and forcing PPG to lower its Q4 guidance below consensus.
- •Performance Coatings operating income declined year-over-year despite sales growth, on adverse Refinish mix plus above-normal OpEx/CapEx investment in Aerospace and PMC.
- •Architectural EMEA remained soft, with Western Europe demand and lower volumes more than offsetting Eastern Europe organic growth, plus a drag from divestitures.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year 2025 EPS / Q4 guide | Q4 2025 | Higher prior full-year guidance | Lowered; implied Q4 below consensus, entirely due to Refinish destocking | |
| Refinish industry normalization | Mid-2026 | Earlier in 2025/early 2026 | Now expected middle of 2026, with carryover volume challenges through 1H2026 | |
| Aerospace sales growth CAGR | Next 3 years | Mid-single-digit 10-year CAGR | Mid- to high-single-digit percentage | |
| Raw material inflation | FY2025 / into 2026 | — | Low single digits; supply-demand expected to stay long and supportive into 2026 | |
| Aerospace + PMC investment | 2025 into 2027 | — | More than $0.5 billion total, including a new facility commissioned in 2027 | |
| CapEx target | 2025-2027 | Elevated/peaking in 2025 | Glide path back toward 3% of sales by 2027 |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Adjusted EPS | +5% to $2.13 (Q3 record) | Sales improvement, aggressive cost management, and consistent cash deployment |
| Organic sales | +2% | Third consecutive quarter of volume growth plus pricing, despite Refinish drag |
| Aerospace organic sales | Double-digit % | Strong demand for highly specialized qualified products; backlog up to $310 million |
| Automotive Refinish organic sales | Double-digit % decline | Lower U.S. volumes from distributor destocking and depressed collision claims |
| Protective and Marine organic sales | Double-digit % | 10th consecutive quarter of volume growth on marine and energy-market demand |
| Performance Coatings operating income | Declined | Refinish mix plus elevated Aerospace and PMC growth investment |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Refinish slump cause | Q2 expected Q3 softness on order-pattern normalization | Deeper, longer destocking; insurance-rate spikes (16% CAGR 2022-2024, now ~3%) suppressed claims; normalization pushed to mid-2026 | |
| Aerospace scale | Growth engine, ~mid-single-digit 10-year CAGR | Now a third of Performance Coatings; >$0.5B investment underway, new 2027 facility, mid-to-high-single-digit 3-year CAGR | |
| AI in innovation | Not yet commercialized | First fully AI-designed Refinish clear coat launched; ~50 commercialized AI-optimized products expected by year-end, scraping 100+ years of proprietary data | |
| Industrial share gains | ~$100 million quantified a year ago | That $100M now flowing through as launches occur, with additional wins beyond it building through 2026 | |
| Portfolio management | Major pivot to coatings | Active recent pruning (Architectural, U.S. Silicas, Russia, Africa exit); EBITDA moved from ~15% to ~20%; only edge-pruning remains |
Q&A summary
Why was the Refinish hit (mid-to-high-teens decline) so hard and when does it recover?
Knavish attributed it to industry claims normalizing later than expected, deepening distributor destocking; insurance affordability suppressed claims, but normalizing insurance rates should drive claims and PPG recovery to sales and earnings growth by mid-2026.
What drove the lower full-year guidance and below-consensus implied Q4?
Knavish said it is all Refinish: PPG and its distributors expected earlier industry normalization, and when it did not arrive distributors focused on running down inventory for year-end, a double whammy that lowered the Q4 guide.
Why did Performance Coatings operating income decline despite sales growth and ~4% price?
Knavish cited Refinish mix (an above-segment-average business swinging to earnings reduction) plus well-above-normal OpEx and CapEx in Aerospace and PMC to capture long-runway double-digit growth, which hurts near-term but benefits the long term.
How big is the Aerospace CapEx spike and where does total CapEx go?
Knavish said Aerospace CapEx peaks across 2025-2027; total CapEx peaks in 2025 then glides back toward the 3%-of-sales target by 2027; the spike is temporary to capture multi-year, possibly decade-long Aerospace growth.
What does Aerospace content-per-plane growth look like and can it accelerate?
Knavish said growth is well above 1-2%, driven by the sealant business (specialty packaging, frozen end-caps, 3D-printed military sealants) and transparencies (canopies/windshields with rising content per new aircraft), making PPG an aerospace solutions provider, not just coatings.