What Management Said
Read the full Q2 2026 transcript ↗Before reviewing our results, I want to welcome Jamie to her first earnings call as PPG's CFO. Now, I'd like to start by providing highlights of our second quarter 2026 financial performance, and then we'll share our outlook for the remainder of the year. I am proud to report that PPG delivered its sixth consecutive quarter of organic sales growth, a solid increase of 4%, with equal contributions from sales volumes and selling prices. As many of you know, we have been systematically building our organic growth muscle through commercial excellence, innovation excellence, and operational excellence.
This growth momentum was led by our strategy to deliver product innovation and productivity solutions both inside and outside the can for our customers. Adjusted EPS of $2.23 was slightly higher year-over-year, driven by strong results in our differentiated Aerospace and Architectural Coatings Latin America businesses, offsetting the expected lower sales volumes in Automotive Refinish. Our total company adjusted EBITDA margin was over 17%, reflecting solid commercial execution of both pricing and share gains, which partially offset portfolio mix dynamics. Turning to our segment performance, in Global Architectural Coatings, second quarter net sales rose 8% to $1.1 billion, with 2% organic growth driven by higher selling prices, partially offset by slightly lower sales volumes.
Organic sales for Architectural Coatings in Latin America and Asia-Pacific increased by a mid-single digit percentage, driven by volume growth in Latin America and higher selling prices. Segment EBITDA increased by 14%, and EBITDA margin improved 100 basis points to 19.4%, driven by the realization of higher selling prices and cost control actions, partially offset by cost of goods sold inflation. Importantly, we delivered EBITDA and margin expansion in both of our major regions this quarter. In Europe, in particular, our pricing and cost actions drove a return to margin expansion after several quarters of contraction, marking a change in trajectory for this business.
What went well
- PPG delivered its sixth consecutive quarter of organic sales growth (+4%, split equally between volume and price), outpacing the industry by 300 basis points with organic growth in all three segments and eight of nine businesses.
- Net sales rose 7% year over year to $4.5 billion and adjusted EPS of $2.23 was slightly higher, driven by strong Aerospace and Latin American Architectural results offsetting expected lower Automotive Refinish volumes.
- Aerospace posted exceptional double-digit sales growth with the order backlog holding around $300 million, while Protective and Marine Coatings grew double digits for a 13th consecutive quarter of volume growth.
- The company covered about 90% of cost-of-goods-sold inflation with pricing in the quarter — coming out of the gate faster than in prior cycles — pulling forward its price/cost break-even point by a quarter.
- Global Architectural Coatings EBITDA rose 14% with margin up 100 basis points to 19.4%, and Europe returned to margin expansion after several quarters of contraction as organic sales turned positive.
- The balance sheet strengthened with net debt down over $400 million year over year to 1.9x EBITDA, year-to-date operating cash flow up more than $220 million to ~$600 million on working-capital gains, and ~$235 million returned to shareholders in the quarter.
What went wrong
- Automotive Refinish organic sales fell a double-digit percentage on tough comparisons to strong 2025 order patterns and only a modest recovery in underlying industry demand, driving Performance Coatings segment EBITDA margin down 300 basis points to 22.7%.
- Price/cost was only neutral in Q2 (versus positive in Q1) as raw materials rose more than initially expected following the abrupt increase tied to the Iran conflict, pressuring Performance Coatings incremental margins.
- Global Architectural volumes were slightly lower as European market demand remained mixed by country, and Q3 architectural EBITDA margin is guided roughly flat year over year.
- The Industrial segment sales guide decelerates to flat-to-down low single digits in Q3 as Packaging laps multiple quarters of double-digit growth, even as underlying share gains continue.
- The pace of U.S. auto-insurance-claim improvement (down mid-single digits over two quarters) was slower than management would like, and buybacks decelerated to $75 million as cash was also deployed on a ~$65 million bolt-on acquisition.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS | FY2026 | $7.70-$8.10 reaffirmed |
| Organic sales growth (company) | Q3 2026 | Low-single-digit to mid-single-digit percentage |
| Adjusted EBITDA margin (company) | Q3 2026 | Flat to down 100 bps year over year |
| Global Architectural organic sales / margin | Q3 2026 | Flat to low-single-digit organic growth; EBITDA margin relatively flat YoY |
| Performance Coatings organic sales | Q3 2026 | Mid-to-high single-digit growth; segment EBITDA margin expansion returns in H2 on pricing and Refinish stabilization |
| Automotive Refinish volumes | H2 2026 | Return to growth (up low single digits) in Q3 and Q4 as U.S. destocking is now behind |
| Industrial segment new-business wins | ongoing | ~$25 million of new-business wins per quarter hitting the P&L across Auto, Packaging and Industrial |
| Aerospace capital investment | multi-year | ~$500M total ($380M new Shelby, NC plant + $120M debottlenecking at Huntsville, Mojave and others) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Net sales | +7% to $4.5B | 6th straight quarter of organic growth (+4%) plus pricing and share gains across most businesses. |
| GAAP diluted EPS | $1.95 | Reported EPS below the $2.23 adjusted figure; adjusted EPS slightly higher YoY on Aerospace and Latin American Architectural strength. |
| Adjusted EBITDA margin | >17% | Solid commercial execution of pricing and share gains partially offset by portfolio-mix dynamics and neutral Q2 price/cost. |
| Global Architectural Coatings sales | +8% to $1.1B (2% organic) | Higher selling prices plus Latin America volume growth (strong Mexico retail and project sales), Europe organic growth turning positive. |
| Global Architectural EBITDA margin | 19.4% (+100 bps) | Higher prices and cost control, with Europe returning to margin expansion. |
| Performance Coatings sales | +7% to $1.6B (3% organic) | Aerospace, Protective & Marine and Traffic Solutions growth, partly offset by lower Automotive Refinish volumes. |
| Performance Coatings EBITDA margin | 22.7% (-300 bps) | Almost entirely the Automotive Refinish year-over-year comparison; pricing offset by lower Refinish volumes. |
| Industrial Coatings volume | +5% (best in 5 years) | Auto OEM and Packaging share gains launching into the P&L (~$25M of wins per quarter) plus an Industrial-business inflection. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Automotive Refinish normalization | Significant U.S. destocking through mid-2026 | Management declared the U.S. destocking behind it as promised; U.S. insurance claims are improving (down mid-single digits), auto-insurance premiums fell a low-single-digit percentage — the first year-over-year decline in five years — and Refinish volumes return to low-single-digit growth in Q3/Q4 with segment margin expansion resuming in H2. | — |
| Fast pricing execution | Reactive pricing in prior cycles | Learnings from prior inflationary cycles plus the abrupt Iran-conflict-driven raw-material spike let PPG cover ~90% of COGS inflation with price in a single quarter and pull forward its break-even, with more price actions coming in Q3; management says collaborative pricing has not cost it business. | — |
| Industrial share-gain harvest | Wins announced over 2+ years | Roughly $100M of Industrial-segment wins from last year (plus ~$100M this year) are now launching into the P&L at ~$25M/quarter — ~40% in Auto OEM (Auto outperformed the market by ~500 bps) — with Packaging step-change gains led by Europe and some wins not launching until 2027. | — |
| Aerospace as a growth engine | Deep dive held last month | Exceptional double-digit growth with a ~$300M backlog; ~$500M of capital investment (new Shelby, NC plant plus debottlenecking at Huntsville and Mojave) is starting to unlock capacity in a high-growth, high-margin business, with more building for the future. | — |
| Protective & Marine durability | Sustained upswing | 13 straight quarters of volume growth (again double digits, above the company's own high-single-digit expectation) driven by marine aftermarket/new-build in Asia and Europe, fire protection, and data-center demand (structural steel, insulative and dielectric coatings, flooring) — management sees no peak on the horizon, only tougher comps. | — |
| Portfolio and capital deployment | Post-divestiture cleanup | 'Nothing of size' is for sale; a few fringe businesses may be cleaned up; capital deployment stays disciplined (11 straight quarters of buybacks, raised dividend, one ~$65M bolt-on closed) with no large M&A in the pipeline and a policy of not letting cash build. | — |
| Europe Architectural inflection | Multiple quarters of margin contraction | A change in trajectory — share gains in ~75% of key countries, higher-margin sustainable products, pricing ahead of inflation, and RSG&A cuts — with a further step change in 2027 as European plant closures (Q4/Q1) execute. | — |
Q&A Summary
Matthew DeYoe (Bank of America) asked why Performance Coatings fell so much sequentially and what supports a second-half acceleration amid rising raws.
Knavish said the drop was entirely the Refinish year-over-year comp (Aerospace, Protective & Marine and Traffic all grew), Refinish returns to growth in Q3/Q4, and fast pricing offsets raws; Lopez added price/cost went from positive in Q1 to neutral in Q2 and will be positive in Q3.
Kevin McCarthy (Vertical Research) asked about the strong Industrial Coatings +5% volume and why the Q3 segment guide decelerates.
Knavish credited Auto OEM and Packaging share gains launching into the P&L (~$25M/quarter), with the Industrial business inflecting positive; the lower Q3 range reflects Packaging lapping repeated double-digit quarters mathematically, while the segment still grows nicely with some wins launching in 2027.
James Hooper (Bernstein) asked how the high-margin Refinish business rebuilds over time.
Knavish said collision (the highest-margin part) drove the large year-over-year swing; with U.S. destocking behind and continued pricing to restore gross margin, the margin delta disappears and Performance Coatings returns to sales, earnings and margin growth from Q3.
Ghansham Panjabi (Baird) asked how PPG recovered price/cost a quarter early.
Knavish said raws were up more than expected, but learnings from prior cycles plus the abrupt Iran-driven spike (removing any lag) and incentives to beat last time let all businesses raise price faster and offset 90% of inflation in one quarter, with more to come.
David Begleiter (Deutsche Bank) asked whether Refinish volumes will be up in Q3 and about competitor body-shop wins.
Knavish said volumes will be up (modestly, as it is a low-volume business) in Q3/Q4, with share shifting daily; PPG converted a big MSO last quarter and has another coming, describing a normal period with nothing extraordinary in Refinish share dynamics.
Chris Parkinson (analyst) asked where PPG is winning the most share sustainably above market.
Knavish cited incremental gains in Aerospace and Comex, step-change gains in Packaging (Europe) and Auto OEM (+500 bps vs market), marine-led Protective & Marine, powder-driven Industrial, and net share wins in ~75% of key European Architectural countries — with no business he worries is losing share.
Jeff Zekauskas (JPMorgan) asked whether the ~$220M higher operating cash flow is sustainable and to confirm the Refinish full-year volume math.
Beggs attributed the cash-flow gain to earlier working-capital management and expects north of 10% of sales for the year; Knavish confirmed first-half Refinish volumes down low double digits and second-half up low single digits (with price and digital subscriptions on top).
Vincent Andrews (Morgan Stanley) asked why buybacks decelerated despite better cash flow and about the bolt-on M&A pipeline.
Knavish said total deployment was similar because PPG closed a ~$65M bolt-on alongside $75M of buybacks; the mid-quarter capital-allocation process (dividend, capex, M&A, then buybacks) drove the mix, strategy is unchanged (11 straight quarters of buybacks, raised dividend), and there is nothing large in the pipeline.
Mike Harrison (Seaport) asked about the sustainability of the Protective & Marine upswing and whether it is nearing a peak.
Knavish said PPG is not near a peak — strength in marine aftermarket/new-build, fire protection, data centers and energy has ample runway; comps will simply moderate to high/mid single digits given large denominators, with maintenance a steady floor.
Rachel (Citi, for Patrick) asked how much of the Architectural EMEA margin improvement is sustainable price versus restructuring benefits.
Knavish said most is share gains, higher-margin sustainable products, pricing ahead of inflation and RSG&A cuts — the European plant closures (Q4/Q1) have not yet contributed, so a further step change comes in 2027.
More on Ppg Industries Inc
Reported 2026-07-29 · figures from the Ppg Industries Inc Q2 2026 earnings call.
See how Top Bucket AI works for your firm
Request DemoTop Bucket AI Research
Stay ahead of private markets
Research and market intelligence for private-markets professionals.
✓
You're subscribed.
Thanks for signing up.