8-K: PPG Reports Mixed Q1 2025 Results: Sales Down, But Performance Coatings Shine

• PPG Industries reported its Q1 2025 financial results, with net sales of $3.7 billion, a 4% decrease compared to the prior year.
• This decrease was primarily driven by unfavorable foreign currency translation (3%) and business divestitures (2%), including silicas.
• However, organic sales increased by 1% due to higher sales volumes.
• Reported earnings per diluted share (EPS) were $1.64, and adjusted EPS was $1.72.
• The company's segment margin was 16.5%, and segment EBITDA margin was 19.4%.
• Share repurchases in the quarter totaled approximately $400 million.
• Net debt at the end of the quarter was $5.4 billion, an increase of $340 million over the prior year.
• The company reaffirmed its full-year earnings per share guidance range of $7.75 to $8.05.
• The Performance Coatings segment delivered 9% organic sales growth, with strong performance in aerospace, protective and marine, and traffic solutions.
• The Global Architectural Coatings segment experienced an 11% decrease in net sales, while the Industrial Coatings segment saw an 8% decrease.

Score: 6

Explanation: The sentiment is neutral to slightly positive. While sales are down overall, there are positive signs in the Performance Coatings segment and the reaffirmation of full-year guidance. The company is also taking proactive steps to manage costs and drive growth.

• Organic sales increased by 1% due to higher sales volumes and selling prices.
• The Performance Coatings segment showed strong growth, with a 9% increase in organic sales.
• Aerospace coatings achieved double-digit percentage organic sales growth and has a substantial order backlog.
• The company is realizing benefits from its enterprise growth strategy.
• Self-help cost actions are expected to deliver $75 million in annual savings.
• The company maintains a strong balance sheet and consistent cash generation.
• Share repurchases totaled approximately $400 million during the quarter.

• Net sales decreased by 4% compared to the prior year, primarily due to unfavorable foreign currency translation and business divestitures.
• Adjusted EPS decreased from $1.87 to $1.72, impacted by foreign currency translation and divestitures.
• Net debt increased by $340 million year-over-year.
• The Global Architectural Coatings segment experienced an 11% decrease in net sales.
• The Industrial Coatings segment saw an 8% decrease in net sales.

• The current macro-economic environment is highly dynamic and uncertain.
• Fluctuations in foreign exchange rates could negatively impact results.
• Geopolitical-related uncertainty could affect business investment.
• Lower automotive industry production could impact the Industrial Coatings segment.
• The unpredictability of existing and possible future litigation, including asbestos litigation, and governmental investigations.

The company reaffirms its adjusted earnings per share guidance of $7.75 to $8.05 for the full-year 2025, supported by share gains and self-help actions, while considering current global economic activity and mixed demand.

• Tim Knavish, PPG chairman and chief executive officer, commented that they are beginning to realize the benefits from their enterprise growth strategy.
• He noted positive organic sales growth with increases in both sales volumes and selling prices.
• He also mentioned that the European organic sales were down 1%, which was a significant improvement versus prior quarters as demand for their products is stabilizing in the region.

PPG's results reflect a mixed environment for the coatings industry, with strong performance in specific sectors like aerospace offsetting weakness in others like architectural coatings. The company's focus on cost control and strategic growth initiatives appears to be helping it navigate the challenging macroeconomic conditions.

• Compared to Sherwin-Williams, which also operates in architectural and industrial coatings, PPG's performance in these segments appears weaker, while its Performance Coatings segment is showing more robust growth.
• Axalta Coating Systems, another competitor, focuses primarily on performance coatings, and PPG's results in this segment suggest it is holding its own against competitors.
• The aerospace coatings business is performing well, which aligns with the broader recovery in the aerospace industry post-pandemic.

• Shareholders may be concerned about the decrease in net sales and adjusted EPS, but reassured by the reaffirmed full-year guidance and share repurchase program.
• Employees in the Performance Coatings segment may benefit from the growth in that area.
• Customers may see continued innovation and product development, particularly in the Performance Coatings segment.
• Suppliers may experience some pressure due to the company's cost-control actions.

• The company will provide detailed commentary regarding its financial performance on the PPG Investor Center at www.ppg.com at about 4:30 p.m. ET on April 29.
• The company will hold a conference call to review its first quarter 2025 financial performance on April 30, at 8:00 a.m. ET.

• April 29, 2025: Date of report and earliest event reported; earnings press release issued.
• April 30, 2025: Conference call to review Q1 2025 financial performance at 8:00 a.m. ET.
• April 30, 2025: Telephone replay available beginning at approximately 11:00 a.m. ET through May 14, 2025.
• April 28, 2026: Web replay will remain available through this date.