PPG Industries : First Quarter 2025 Presentation

Published: 2025-04-29 19:34:06 ET PPG

First Quarter 2025 Financial Results

April 29, 2025

First Quarter 2025 Highlights

Positive sales volume and momentum for sustainable growth

Share Repurchases

Strong organic sales growth in aerospace, refinish,

protective and marine, and traffic solutions

Industrial coatings volume growth in all regions

Net

Adjusted EPS

Sluggish demand in architectural coatings

Sales Segment

and soft automotive OEM production

Solid sales growth in China, India, Brazil and Vietnam

+1% Organic Sales

EBITDA Margin

Note: Data reflects reclassification for discontinued operations. All changes versus same quarter last year. Organic sales defined as net sales

excluding the impact of currency, acquisitions and divestitures. See Appendix for reconciliation of Adjusted EPS and Segment EBITDA Margin.

Actions Taken to Deliver Customer Success and Shareholder Value

Aggressive 2025 Execution

Driving superior performance through high-margin business growth and strong cash flow

Portfolio

Portfolio pruning - completed 2024

Re-segment portfolio to provide increased accountability / transparency - completed 2024

Disciplined, opportunistic and accretive M&A

Driving growth momentum

Growth & Margin Leadership

Delivery of world-class margins - 2024 / ongoing

Decisive self-help actions - 2024 / ongoing

Building / executing organic growth competencies

Deliver customer innovation including digital and AI

Accelerating self-help

Capitalizing on structural resilience

Capital

Allocation

Reward shareholders - 2024 / ongoing

Growth-focused capital spending

Free cash deployment to drive shareholder value

Leveraging a strong balance sheet

Organic sales up 1% driven by strength in Performance Coatings segment

Net Sales

($ in millions)

1Q'24 Price Volume Currency Divestitures 1Q'25

$3,849

-3%

$3,684

-2%

Note: Data reflects reclassification for discontinued operations.

Results impacted by soft but moderating European demand and paused Mexico investment

1Q'25

Segment EBITDA

Margin

-310 bps

Net Sales

($ in millions)

-3%

-7%

$857

-2%

$966 1%

1Q'24 Price Volume Currency Divestitures 1Q'25

Organic Sales 1Q'25 Results

Architectural EMEA

Highlights

Architectural EMEA organic sales flat with positive price offset by lower sales volume

Architectural coatings sales in Mexico impacted by a pause in project-related spending

1Q margin impacted by lower volume and inflation due to currency, offset by cost control actions

2Q'25 organic sales growth expected; currency translation expected to remain unfavorable

Architectural Latin America & AP

Flat

MSD

Global Architectural Coatings Segment

LSD

Note: EBITDA margin change for quarter versus the same prior year period. MSD/LSD = Mid/Low Single Digit. See appendix for EBITDA margin reconciliation.

First quarter sales and earnings record with strong growth in all four businesses

Net Sales

($ in millions)

$1,184

-1% -1%

$1,265

1Q'25

+20 bps

Segment

EBITDA

Margin

Organic Sales 1Q'25 Results

1Q'24 Price Volume Currency Divestitures

and Other

1Q'25

Aerospace Refinish

Highlights

Record quarterly aerospace net sales with double-digit percentage organic sales growth

Automotive refinish share gains more than offset lower industry collision claims in the U.S.

Strong, above-market protective and marine coatings growth driven by new technologies

Traffic solutions benefitted from share gains in North America

2Q'25 organic sales growth expected in aerospace, traffic solutions and protective & marine

Performance Coatings Segment

HSD

Protective & Marine Traffic Solutions

Note: EBITDA margin change for quarter versus the same prior year period. DD = Double Digit. HSD/LSD = High/Low Single Digit. See appendix for EBITDA margin reconciliation.

Industrial and packaging growth offset by soft automotive markets

Net Sales

($ in millions)

$1,699

-1%

-2%

$1,562

-4%

1Q'24 Price Volume Currency Divestitures 1Q'25

1Q'25

Segment EBITDA

Margin

Organic Sales

Highlights

Lower auto OEM demand in mature regions and growth in Asia Pacific and Latin America

Positive momentum in industrial coatings sales volume with growth in all regions

Packaging coatings sales volume growth driven by share gains

2Q'25 organic sales declining with lower auto production partially offset by higher industrial demand

Industrial Coatings Segment

LSD

Auto OEM Industrial Packaging

-90 bps

1Q'25

Results

Flat LSD

Note:.EBITDA margin change for quarter versus the same prior year period. MSD/LSD = Mid/Low Single Digit. See appendix for EBITDA margin reconciliation.

Increased cash return to shareholders

1Q'25 Activity

Cash Deployed to Shareholders

($ in millions)

$600

$500

$400

Cash Balance

March 31, 2025

Dividends and Share Repurchases

$300

$200

$100

2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 3Q'24 4Q'24 1Q'25

Net Debt

March 31, 2025

Net Debt / Adjusted EBITDA LTM

Issued long-term debt of €900 million due in 2032

Debt maturities of €900 million due in 2025

Note: Cash balance includes cash equivalents and short-term investments. See appendix for EBITDA reconciliation.

PPG well positioned to mitigate impact of tariffs

Impacts

Mexico project delays

PPG impact <1% of company net sales

2% Lower auto industry production

PPG impact <1% of company net sales

Reduced China exports to U.S.

PPG impact <1% of company net sales

LSD% increase in raw material cost

>95% of materials locally sourced / no-tariff

Diverse portfolio

Regionally balanced Leading positions in all verticals

Accelerating self-help

$75MM in 2025

Share gain momentum

>$100MM annualized

Offsets

Excess chemical supply

Lower oil price

European demand improvement

China stimulus

Improved foreign exchange

Infrastructure spending

Localization of production

Localization of supply

No Change to Guidance

Full-Year EPS

$7.85 - $8.05

Raw Material Cost

LSD% Inflation

Note: The company is not able to provide a reconciliation of full-year 2025 expected adjusted earnings per diluted share to the most directly comparable GAAP financial measure because certain items that impact such measure are uncertain or cannot be reasonably predicted at this time.

Second Quarter Financial Projections

Segment organic sales (YOY %): Global Architectural Coatings Performance Coatings Industrial Coatings

Flat to +LSD

+LSD to +MSD

-MSD to -LSD

Segment margin (YOY)

-80 to -100 bps

Raw material and enacted tariff costs (YOY)

LSD inflation

Corporate expense (net of TSA)

$85MM - $95MM

Net interest expense

$17MM - $21MM

Effective tax rate

24% - 25%

Note: All forecasts are approximate. MSD/LSD = Mid/Low Single Digit.

Diversified Global Portfolio

Strong Brands, Technologies and Services

Leading positions in all coatings verticals

Organic and inorganic growth opportunities

Asset-Light, Highly Flexible Cost Structure Accelerating margin expansion

Strong Balance Sheet &

Consistent Cash Generation

Cash deployment focused on shareholder

value creation

Appendix

2023

16.4%

17.4%

18.9%

13.9%

16.7%

$975

$1,066

$1,037

$943

$4,021

160

186

196

131

673

101

185

211

222

156

774

19.0%

19.8%

21.4%

16.5%

19.2%

2024

17.2%

19.7%

18.2%

13.4%

17.3%

$966

$1,070

$1,004

$881

$3,921

166

211

183

118

678

104

192

237

209

144

782

19.9%

22.1%

20.8%

16.3%

19.9%

2025

13.8%

$857

118

144

16.8%

$ in millions, except margin %

Global Architectural Coatings

Segment Margin, As Reported

Net Sales

Segment Income

Depreciation and Amortization

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin

Performance Coatings

Segment Margin, As Reported

Net Sales

Segment Income

Depreciation and Amortization

Adjusted EBITDA

Adjusted EBITDA margin

19.9%

23.1%

18.3%

17.7%

19.9%

$1,153

$1,424

$1,322

$1,233

$5,132

230

329

242

218

1,019

139

265

363

277

253

1,158

23.0%

25.5%

21.0%

20.5%

22.6%

21.2%

23.0%

22.3%

20.5%

21.8%

$1,184

$1,418

$1,373

$1,262

$5,237

251

326

306

259

1,142

132

285

360

337

292

1,274

24.1%

25.4%

24.5%

23.1%

24.3%

21.7%

$1,265

274

307

24.3%

Industrial Coatings

Segment Margin, As Reported

Net Sales

Segment Income

Depreciation and Amortization

Adjusted EBITDA

Adjusted EBITDA margin

13.7%

13.6%

13.9%

13.3%

13.7%

$1,753

$1,833

$1,767

$1,736

$7,089

241

250

246

231

968

213

294

303

299

285

1,181

16.8%

16.5%

16.9%

16.4%

16.7%

14.7%

14.8%

12.1%

11.7%

13.4%

$1,699

$1,747

$1,655

$1,586

$6,687

249

259

200

185

893

206

301

312

252

234

1,099

17.7%

17.9%

15.2%

14.8%

16.4%

13.8%

$1,562

215

263

16.8%

Total Segments

Segment Margin, As Reported

Net Sales

Segment Income

Depreciation and Amortization

Adjusted EBITDA

Adjusted EBITDA margin

16.3%

17.7%

16.6%

14.8%

16.4%

$3,881

$4,323

$4,126

$3,912

$16,242

631

765

684

580

2,660

113

112

114

453

744

877

798

694

3,113

19.2%

20.3%

19.3%

17.7%

19.2%

17.3%

18.8%

17.1%

15.1%

17.1%

$3,849

$4,235

$4,032

$3,729

$15,845

666

796

689

562

2,713

112

113

109

108

442

778

909

798

670

3155

20.2%

21.5%

19.8%

18.0%

19.9%

16.5%

$3,684

607

107

714

19.4%

Note: Figures in the table may not recalculate due to rounding. Individual segment margin defined as segment income as a percentage of segment net sales and segment margin for the total segments defined as total segment income as a percentage of net sales.

2024

$ 405

$ 493

$444

$1,344

128

149

128

475

360

132

$ 685

$ 792

$ 716

$ 215

$ 2,408

362

377

(4)

$ 702

$ 842

$ 726

$ 594

$ 2,864

2025

$ 375

122

$ 636

(6)

$ 633

$ in millions, except margin %

Reported net income from continuing operations

Interest expense, net of interest income

Income tax expense

Depreciation

Amortization

Net income attributable to noncontrolling interests

EBITDA

Business restructuring-related costs, net(a)

Portfolio optimization costs(b)

Insurance recovery(c)

Legacy environmental remediation charges(d)

Adjusted EBITDA

Net Sales

Net income margin

Adjusted EBITDA margin

$ 3,849

$ 4,235

$ 4,032

$ 3,729

$ 15,845

10.5%

11.6%

11.0%

0.1%

8.5%

18.2%

19.9%

18.0%

15.9%

18.1%

$ 3,684

10.2%

17.2%

Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other (income)/charges, net on the condensed consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the condensed consolidated statement of income and other restructuring-related costs, which are included in Cost of sales, exclusive of depreciation and amortization and Selling, general and administrative on the condensed consolidated statement of income.

Portfolio optimization includes the gain recognized on the sale of the Company's remaining Russia business in the first quarter 2025. There was no tax expense associated with that gain. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees, and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income.

In the first quarter 2025, the Company received reimbursement under its insurance policies for damages incurred at a southern U.S. factory from a winter storm in 2021.

Legacy environmental remediation charges represent environmental remediation costs at certain non-operating PPG manufacturing sites. These charges are included in Other (income)/charges, net in the consolidated statement of income.

$ in millions, except EPS

Total PPG

First Quarter 2025

Net Income

EPS(a)

Net Income from Continuing Operations, As Reported

$ 375

$ 1.64

Acquisition-related amortization expense

0.10

Business restructuring-related costs, net(b)

0.03

Portfolio optimization costs(c)

(6)

(0.03)

Insurance recovery(d)

(4)

(0.02)

Adjusted Net Income Attributable to PPG

$ 396

$ 1.72

Total PPG

First Quarter 2024

Net Income

EPS(a)

Net Income from Continuing Operations, As Reported

$ 405

$ 1.71

Acquisition-related amortization expense

0.11

Business restructuring-related costs, net(b)

0.03

Portfolio optimization costs(c)

0.02

Adjusted Net Income Attributable to PPG

$ 443

$ 1.87

Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.

Portfolio optimization includes a $7 million gain recognized on the sale a business in the first quarter 2025. There was no tax expense associated with that gain. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees, and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income.

In the first quarter 2025, the Company received reimbursement under its insurance policies for damages incurred at a southern U.S. factory from a winter storm in 2021.

Thank You For Your Interest In PPG

INVESTORS:

phone: +1.412.434.3466

email: [email protected]

MEDIA:

phone: +1.412.434.3046

email: [email protected]

Disclaimer

PPG Industries Inc. published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 29, 2025 at 23:24 UTC.