Snapshot
Ppg Industries Inc reported $3.93B of revenue in Q1 2026, up 6.7% year over year, with diluted EPS of $1.70 and an operating margin of 13.8%.
- Revenue
- $3.93B
- YoY growth
- +6.7%
- Diluted EPS
- $1.70
- Operating margin
- 13.8%
What management said
- •We appreciate your continued interest in PPG and welcome you to our first quarter 2026 earnings conference call.
- •Now, I'd like to start by providing highlights of our first quarter 2026 financial performance, and then I will share our outlook.
- •We achieved organic sales growth of +1%, marking our fifth consecutive quarter of higher year-over-year organic sales.
- •First quarter net sales totaled $3.9 billion, up 7% year-over-year, with adjusted earnings per share of $1.83 and an increase of 6% versus the prior year.
- •Our segment EBITDA margin was over 19%, reflecting solid execution of our share gains, the benefits of our technology advantage products, strong brand recognition, along with excellent commercial execution.
- •Turning to our segment performance in Global Architectural Coatings, first quarter net sales rose 13% to $965 million with +2% organic growth.
- •Organic sales for Architectural Coatings Latin America and Asia Pacific increased by a mid-single-digit percentage compared to the first quarter of 2025, with equal contributions from selling price and sales volumes.
- •Segment income increased more than 30%, supported by pricing and execution of self-help actions, which drove EBITDA margins up 230 basis points above prior year levels.
- •We expect organic sales and margin momentum to continue into the second quarter of 2026.
- •Our Performance Coatings segment delivered 5% positive net sales growth to $1.3 billion, led by double-digit organic growth in Aerospace and high single-digit growth in Traffic Solutions and Protective and Marine Coatings.
- •As expected, Automotive Refinish organic sales decreased by double-digit percentage as sales volumes were lower, reflecting customer order patterns stemming from our U.S.
- •distributor fulfillment orders sequentially improve as industry levels or inventory levels normalize.
What went well
- •Organic sales grew +1%, the fifth consecutive quarter of higher year-over-year organic sales; Q1 net sales totaled $3.9 billion, up 7% year-over-year, with adjusted EPS of $1.83, up 6% versus prior year.
- •Performance Coatings posted 5% net sales growth to $1.3 billion, led by double-digit organic growth in Aerospace and high single-digit growth in Traffic Solutions and Protective and Marine; PMC reached 12 consecutive quarters of positive volume growth and segment EBITDA was strong at 24%.
- •Global Architectural Coatings net sales rose 13% to $965 million with +2% organic growth; segment income increased more than 30% and EBITDA margins rose 230 basis points, with especially strong Mexico (PPG Comex) retail sales and recovering project sales.
- •Aerospace beat the company's own Q1 expectations, with backlog holding at about $350 million despite year-over-year output increasing; the business is essentially sold out so every incremental unit of output converts to incremental volume.
- •Automotive OEM delivered flat sales volume, outpacing the decline in global automotive industry production by about 300 basis points, and Packaging Coatings grew double digits.
What went wrong
- •Automotive Refinish organic sales decreased by a double-digit percentage as volumes were lower, reflecting U.S. distributor order patterns weighted to the first half of 2025; management expects further year-over-year volume declines in Q2.
- •Industrial Coatings margins contracted, driven mainly by sharply lower China automotive builds (down well into double digits) and negative index-contract pricing rolling off in Automotive and Packaging.
- •Rising input costs are emerging as a headwind, with mid-single-digit cost-of-goods-sold inflation expected for the remainder of the year, plus higher energy and logistics (diesel) costs tied to the Iran conflict and European energy situation.
- •Free cash flow was negative in the first quarter, as is typically seasonal for PPG, alongside elevated capital spending.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Cost of goods sold inflation | Remainder of 2026 | — | Mid-single-digit increase | |
| Price realization needed to offset inflation | FY2026 (total company) | — | Low single digits, can flex to mid-single digits if needed | |
| Refinish volume | 2H2026 | — | Return to year-over-year volume growth | |
| Currency impact to EBIT | Q1 2026 | — | Less than $0.10 year-over-year positive; remaining three quarters less than half of that | |
| Structural restructuring benefit | FY2026 / FY2027 | — | ~$50M this year and ~$50M next year ($25M of next year's tied to four European plant closures) | |
| Cash flow | FY2026 | Unchanged vs. January guide | About 10% of sales (proxy walking-around number) |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Net sales | +7% to $3.9 billion | Higher selling prices and continued organic growth momentum |
| Adjusted EPS | +6% to $1.83 | Pricing and execution despite Refinish volume headwinds |
| Architectural Coatings net sales | +13% to $965 million (+2% organic) | Strong Mexico retail and project recovery plus favorable pricing |
| Performance Coatings net sales | +5% to $1.3 billion | Double-digit Aerospace and high single-digit Traffic and PMC growth, offsetting Refinish decline |
| Industrial Coatings net sales | +4% to $1.6 billion (organic flat) | Share gains in Automotive OEM and Packaging offset by China auto weakness and index pricing |
| Segment EBITDA margin | Over 19% | Share gains, technology-advantaged products, and commercial execution |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Price-cost recovery speed | Prior cycles took a year (2021) to a year and a half (2017-2018) to reach run-rate neutrality | Now targeting months, combining a refined pricing muscle with built-up organic growth momentum | |
| Aerospace investment | ~$150M of debottlenecking investment over the prior year or so | New $380M plant announced for ~2028 step-change in output, plus continued debottlenecking and ongoing engineering work | |
| M&A posture | Two small bolt-ons over the CEO's 3.5-year tenure; organic-first | Added Ozark (~$100M revenue, highly synergistic Traffic Solutions bolt-on); feels it now has license for selective, disciplined M&A | |
| Refinish structural outlook | Transitory destocking slump | Long-term low-single-digit growth business with strong margin/cash, supported by expanded TAM (digital tools, MoonWalk, allied products) | |
| European architectural footprint | Ongoing structural cost reduction | Four manufacturing plants to close in 2H2026, yielding ~$25M perpetual fixed-cost reduction starting 2027 |
Q&A summary
What changed to enable faster price-cost recovery this cycle, and will volumes hold given ~20% price increases?
Knavish said the difference is three years of building organic-growth momentum; pricing muscle refines with each cycle so recovery is now months versus a year-plus, and PPG is confident it can balance pricing and volume.
How are second-half volumes shaping up and any Iran-conflict effects?
Knavish feels good about 2H volume: Aerospace beat expectations, Refinish recovery arrived earlier than expected, Industrial share wins are launching, and Mexico recovered; no order-book changes seen from the Iran conflict, only feedstock pricing changes.
How should we think about realization of the announced up-to-20% price increases and sustainability if oil prices fall?
Knavish explained the up-to-20% was a worldwide customer notification; actual realization is spread out and only low-single-digit company-wide realization is needed to offset mid-single-digit COGS inflation, with a lag both up and down.
Could the Aerospace business be affected if flying hours fall due to the conflict?
Knavish saw no 2026 impact: the business is ~50% OEM / 50% aftermarket and balanced across commercial, general aviation and military; depleted aftermarket inventories that were never rebuilt would actually support restocking demand and richer mix.
Why was the Industrial Coatings margin contraction so large?
Knavish confirmed the biggest driver was China auto builds down well into double digits (a high-operating-margin business), with the second factor being index-contract pricing rolling off in Automotive and Packaging, expected to wrap up in Q2.