10-K: PPG Industries Reports Mixed Results Amid Strategic Shift in 2024, Cites Challenges in Europe

• PPG Industries reported a 2% decrease in net sales to $15.8 billion in 2024, influenced by lower sales volumes, unfavorable foreign currency translation, and divestitures.
• Despite sales declines in automotive OEM coatings, industrial coatings, and European architectural coatings, the company saw record sales in aerospace coatings and growth in technology-driven businesses.
• Income before income taxes increased by $162 million to $1,852 million, driven by lower raw material costs, reduced performance-based compensation, and restructuring savings, offset by overhead inflation and lower sales volumes.
• The company completed the sale of its architectural coatings business in the U.S. and Canada and its silicas products business in December 2024.
• PPG anticipates a slow start to 2025 due to continued challenges in Europe and global industrial end-use markets, but expects low single-digit percentage organic sales growth for the year.
• The company expects raw material costs to increase by a low single-digit percentage in 2025 due to enacted tariffs.
• PPG repurchased approximately nine million shares of its stock for nearly $1.3 billion over the past four years, including $752 million in 2024, and ended the year with $2.8 billion remaining under its share repurchase authorization.
• PPG's 2025 effective tax rate is expected to be in the range of 23% to 25%.

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive aspects such as increased income before income taxes and strategic divestitures, there are also negative aspects such as decreased net sales and challenges in Europe. The overall sentiment is neutral to slightly positive.

• Record sales in aerospace coatings and growth in several technology-driven businesses.
• Successful execution of strategic initiatives, including the divestiture of the silicas products business and the architectural coatings business in the U.S. and Canada.
• Approval of a comprehensive cost reduction program with anticipated annualized pre-tax savings of approximately $175 million.
• Strong cash generation expected in 2025.
• 53rd consecutive year of increased annual per-share dividend payments to shareholders.

• Net sales decreased by 2% in 2024 due to lower sales volumes, unfavorable foreign currency translation, and divestitures.
• Lower industry demand in automotive OEM coatings, industrial coatings, and architectural coatings in Europe.
• Anticipated slow start to 2025 due to demand challenges in Europe and global industrial end-use markets.
• Expected increase in raw material costs by a low single-digit percentage during 2025 due to enacted tariffs.
• Unfavorable foreign currency translation decreased Income before income taxes by approximately $20 million in 2024.

• Increases in prices and declines in the availability of raw materials could negatively impact financial results.
• The pace of economic growth and level of economic and geopolitical uncertainty could have a negative impact on results of operations and cash flows.
• Fluctuations in foreign currency exchange rates could affect financial results.
• The industries in which PPG operates are highly competitive.
• Business disruptions could have a negative impact on results of operations and financial condition.
• The security of information technology systems could be compromised which could adversely affect operations or reputation.
• PPG may not effectively integrate acquired businesses into existing operations.
• Our ability to understand our customers specific preferences and requirements, and to innovate, develop, produce and market products that meet customer demand is critical to our business results.
• Our business success depends on attracting, developing and retaining a qualified workforce.
• PPGs aerospace coatings business depends, in part, on our ability to successfully meet customer demand, production targets and commitments.

PPG anticipates a slow start to 2025 due to demand challenges in Europe and global industrial end-use markets, but expects low single-digit percentage organic sales growth for the year. The company expects raw material costs to increase by a low single-digit percentage in 2025 due to enacted tariffs.

• During 2024, PPG demonstrated resilience in a challenging industrial macroeconomic environment by growing adjusted EPS, improving aggregate segment margins and generating $1.4 billion in operating cash flow.
• We anticipate a slow start to 2025 as demand in Europe and in global industrial end-use markets remains challenged.
• Despite the macroeconomic environment, we expect to deliver organic sales growth of a low single-digit percentage for the year.

The coatings industry is highly competitive and consists of several large firms with global presence and many firms supplying local or regional markets. PPG competes in its primary markets with the worlds largest coatings companies, most of which have global operations, and with many regional coatings companies.

• PPG competes with major global coatings companies such as Akzo Nobel N.V., BASF Corporation, Hempel A/S, Nippon Paint, the Jotun Group, and The Sherwin-Williams Company.
• PPG has established alliances with Asian Paints Ltd. to serve certain automotive refinish customers in India and with Kansai Paints to serve Japanese-based automotive OEM customers in North America and Europe.
• PPG's 2030 sustainability goals include a commitment to reduce absolute emissions from its own operations (scope 1 and 2) by 50% by 2030 from a 2019 base year and to reduce absolute scope 3 GHG emissions from purchased goods and services, processing of sold products, and end-of-life treatment of sold products by 30% within the same timeframe.

• Shareholders: The company has paid uninterrupted annual dividends since 1899, and 2024 marked the 53rd successive year of increased annual per-share dividend payments to shareholders.
• Employees: The company employed approximately 46,000 people as of December 31, 2024.
• Customers: PPG supplies paints, coatings and specialty products to customers serving a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish and aftermarket; pavement marking products; as well as coatings for other industrial and consumer products.
• Suppliers: PPG uses a wide variety of complex raw materials that serve as the building blocks of our manufactured products.

• The Company will continue to monitor and manage its cost structure to ensure alignment with the overall demand environment.
• The Company will carefully monitor all costs during 2025 and assess the need for additional selling price increases.
• PPG intends to vigorously enforce its rights under the Separation Agreement and Contribution Agreement and to hold Westlake accountable for any damages PPG suffers as a result of Westlakes breach of contract.

• PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought.
• PPGs former disposal area is also the subject of a citizens suit filed by the Sierra Club and PennEnvironment seeking remedial measures beyond the measures specified in PPGs approved cleanup plan, a civil penalty in addition to the penalty included in the CO&A and plaintiffs attorneys fees.
• In 2006, a lawsuit was filed in Manaus, Brazil, captioned Di Gregrio Navegao LTDA v. PPG Industries, Inc. (the Di Gregrio litigation).
• On May 17, 2024, Eagle Spinco filed a lawsuit against PPG in Delaware Superior Court alleging breach of the Separation Agreement and requesting declaratory relief (the Eagle Spinco Lawsuit).
• On June 13, 2024, PPG filed a lawsuit against Westlake in the Court of Chancery in Delaware (the PPG Lawsuit), asserting claims for specific performance, declaratory relief, breach of contract, and equitable estoppel.
• For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos.

• 1883: PPG was incorporated in Pennsylvania.
• Late 1880s Early 1970s: PPG owned property in Cadogan and North Buffalo Townships, Pennsylvania, used for solid waste disposal from its former glass manufacturing facility in Ford City, Pennsylvania.
• November 1998: A fire occurred on a cargo ship off the coast of Brazil, leading to the Di Gregrio litigation.
• October 2018: The Pennsylvania Department of Environmental Protection (the DEP) approved PPGs cleanup plan for the Cadogan Property.
• April 2019: PPG and the DEP entered into a consent order and agreement (CO&A) which incorporated PPGs approved cleanup plan and a draft final permit for the collection and discharge of seeps emanating from the former disposal area.
• February 2021: PPG entered into a $2.0 billion term loan credit agreement (the Term Loan Credit Agreement) to finance the Companys acquisition of Tikkurila.
• December 2021: PPG borrowed an additional $700 million under the Term Loan Credit Agreement to be used for working capital and general corporate purposes.
• May 2022: PPG completed a public offering of 300 million 1.875% Notes due 2025 and 700 million 2.750% Notes due 2029.
• October 2023: Timothy M. Knavish became Chairman and Chief Executive Officer.
• April 2023: PPG entered into a 500 million term loan credit agreement (the Term Loan).
• March 2023: PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the Companys retirees in the U.S. to third-party insurance companies.
• July 2023: PPG amended and restated the Credit Agreement, extending the term through July 27, 2028.
• May 17, 2024: Eagle Spinco filed a lawsuit against PPG in Delaware Superior Court alleging breach of the Separation Agreement and requesting declaratory relief (the Eagle Spinco Lawsuit).
• May 30, 2024: Westlake informed PPG that the Brazilian court entered an award against PPG (which remains the nominal defendant) that with prejudgment interest, fees, and costs would total over $700 million.
• June 13, 2024: PPG filed a lawsuit against Westlake in the Court of Chancery in Delaware (the PPG Lawsuit), asserting claims for specific performance, declaratory relief, breach of contract, and equitable estoppel.
• June 2024: A trial on the issue of a civil penalty under the Clean Water Act was held in June 2024.
• July 2024: The Company raised its per-share quarterly dividend by approximately 5% to $0.68 per share.
• October 2024: The Company approved a comprehensive cost reduction program focused on reducing structural costs primarily in Europe and in certain other global businesses, along with other corporate costs following the divestitures of PPGs silicas products business and the architectural coatings business in the U.S. and Canada.
• October 1, 2024: Kevin D. Braun was named Senior Vice President, Operations.
• November 25, 2024: PPG completed the sale of its silicas products business for $325 million in proceeds and recorded a pre-tax gain on the sale of $129 million in the fourth quarter 2024.
• December 2, 2024: PPG completed the sale of 100% of its architectural coatings business in the U.S. and Canada to American Industrial Partners (AIP).
• December 2024: PPG obtained lender commitments sufficient to increase the size of the Term Loan by 300 million.
• January 2025: PPG borrowed the additional 300 million.
• January 31, 2025: 226,953,559 shares of the Registrants common stock, with a par value of $1.66 2 / 3 per share, were outstanding.
• February 20, 2025: Information about our executive officers as of February 20, 2025.
• May 6, 2025: The Delaware Court of Chancery has set a trial date of May 6, 2025 for the PPG Lawsuit.