04.30.25
PPG reported financial results for the first quarter 2025.
First Quarter 2025 Consolidated Results
a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
(c) Includes an unfavorable year-over-year foreign currency translation impact of $0.09 and business divestitures impact of $0.03
Chairman and CEO Comments
Tim Knavish, PPG chairman and chief executive officer, commented on the quarter:
We are beginning to realize the benefits from our enterprise growth strategy as we delivered positive organic sales growth with increases in both sales volumes and selling prices. Our Performance Coatings segment delivered 9% organic sales growth, with several businesses growing above market rates including automotive refinish coatings and traffic solutions, along with double-digit percentage growth in our aerospace coatings and protective and marine coatings businesses.
Regionally, we delivered year-over-year organic sales growth in Asia Pacific, and after six quarters of declines or flat performance we achieved 4% organic sales growth in the U.S., driven by share gains and improvement in industrial production. European organic sales were down 1%, which was a significant improvement versus prior quarters as demand for our products is stabilizing in the region. These topline results reinforce our positive organic growth momentum and contributed to improved manufacturing productivity. In addition, we benefited from the acceleration of our self-help cost actions, and we are now expecting to deliver $75 million in annual savings this year, along with additional discretionary cost management actions.
The current macro-economic environment is highly dynamic and our business model has historically proven to be well positioned to navigate through uncertainty given our diverse, global business portfolio, asset-light footprint and highly variable cost structure. In addition, we have a demonstrated track record of consistent cash generation through all stages of the business cycle to complement our strong balance sheet. As we look ahead with this economic backdrop, we are executing our self-help cost actions, working with our suppliers and customers to adjust to global product flows and mitigate cost impacts, and we are further strengthening our structural organic growth capabilities. We are maintaining our full-year earnings per share guidance range of $7.75 to $8.05.
Additional Financial Information
Net sales include sales volumes growth of 1%, slightly positive selling prices, unfavorable foreign currency translation of 3% and lower year-over-year sales from business divestitures of 2%.
At quarter end, the company had cash and short-term investments totaling $1.9 billion. Net debt was $5.4 billion, an increase of $340 million from the first quarter 2024.
Corporate expenses were $95 million in the first quarter.
First quarter net interest expense was $13 million.
In the first quarter, the reported effective tax rate was 24.3% and the adjusted effective tax rate was 24.5%.
During the first quarter, share repurchases totaled approximately $400 million. In March, the company issued €900 million of debt and has maturities of €300 million and €600 million due in the second and fourth quarters, respectively. Our balance sheet remains strong, which continues to provide us with financial flexibility, and we remain committed to driving shareholder value creation.
First Quarter 2025 Reportable Segment Financial Results
Global Architectural Coatings Segment
(a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
The Global Architectural Coatings segment is comprised of architectural coatings Europe, Middle East and Africa (EMEA) and architectural coatings Latin America and Asia Pacific. Net sales were lower compared to the first quarter 2024, driven by unfavorable foreign currency translation and lower sales volumes. These declines were partially offset by higher selling prices.
Organic sales for architectural coatings EMEA were flat year over year with higher selling prices offset by slightly lower sales volumes as increased organic sales in Central Europe and the Nordic region were offset by Western Europe. Organic sales for architectural coatings Latin America and Asia Pacific declined by a mid-single-digit percentage compared to the first quarter 2024. In Mexico, retail sales volumes were solid in the quarter while project-related sales declined as business investment was paused due to recent geopolitical-related uncertainty. The company expects business and governmental investment to resume in the coming quarters.
Segment EBITDA decreased by 25% versus the prior year driven by significant unfavorable foreign currency translation, primarily due to the Mexican peso, and lower sales volumes, which were partially offset by pricing and cost-control actions.
Performance Coatings Segment
a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
The Performance Coatings segment, which is comprised of aerospace coatings, automotive refinish coatings, protective and marine coatings, and traffic solutions, delivered 9% organic sales growth. This was partially offset by the impacts of unfavorable foreign currency translation and divestitures.
Sales volumes increased 6% year over year with growth led by aerospace coatings, protective and marine coatings, and traffic solutions. Demand for PPG’s technology-advantaged aerospace products strengthened resulting in record quarterly sales, double-digit percentage organic sales growth, and an order backlog of $300 million. Organic sales in automotive refinish coatings increased by a low single-digit percentage with share gains more than offsetting lower industry collision claims. Protective and marine coatings organic sales increased by a double-digit percentage compared to the prior year, driven by above-market marine sales volume growth in the U.S., Europe and Asia Pacific. Traffic solutions benefited from increased sales volumes across North America.
Segment EBITDA increased by 8% versus the prior year, and segment EBITDA margin improved by 20 basis points year over year to 24.3%, driven by higher organic sales stemming from our technology-advantaged products and digital subscriptions.
Industrial Coatings Segment
(a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
Industrial Coatings segment net sales declined compared to the first quarter 2024, primarily due to the impact of foreign currency translation and the divestiture of the silicas products business in 2024. Selling prices declined as a result of certain index-based customer contracts, and sales volumes decreased as strength in industrial coatings and packaging coatings were more than offset by lower automotive industry production.
Automotive original equipment manufacturer (OEM) coatings organic sales decreased by a mid-single-digit percentage due to lower U.S. and European industry build rates, partially offset by PPG sales volume growth in China and Latin America, including share gains in Brazil. Industrial coatings organic sales were flat with lower indexed-based pricing offset by positive sales volume after several quarters of weak global industrial production. Demand for PPG's industrial products improved modestly but varied across subsegments. Packaging coatings organic sales increased by a low single-digit percentage year over year driven by share gains.
Segment EBITDA decreased 13% and segment EBITDA margin declined by 90 basis points compared to the first quarter 2024 driven by unfavorable foreign currency translation and lower organic sales, including price decreases due to index-based contracts, which were partially offset by cost-control actions.
Outlook
The company reaffirms the adjusted earnings per share guidance of $7.75 to $8.05 for the full-year 2025. This range is supported by the momentum of share gains and self-help actions and also reflects current global economic activity, foreign exchange rates, and mixed demand across the various regions and businesses in which we operate.
Additional information related to 2025 financial projections is posted within the slides and prepared commentary associated with the first quarter earnings documents on the Investors section of PPG.com.
First Quarter 2025 Consolidated Results
a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
(c) Includes an unfavorable year-over-year foreign currency translation impact of $0.09 and business divestitures impact of $0.03
Chairman and CEO Comments
Tim Knavish, PPG chairman and chief executive officer, commented on the quarter:
We are beginning to realize the benefits from our enterprise growth strategy as we delivered positive organic sales growth with increases in both sales volumes and selling prices. Our Performance Coatings segment delivered 9% organic sales growth, with several businesses growing above market rates including automotive refinish coatings and traffic solutions, along with double-digit percentage growth in our aerospace coatings and protective and marine coatings businesses.
Regionally, we delivered year-over-year organic sales growth in Asia Pacific, and after six quarters of declines or flat performance we achieved 4% organic sales growth in the U.S., driven by share gains and improvement in industrial production. European organic sales were down 1%, which was a significant improvement versus prior quarters as demand for our products is stabilizing in the region. These topline results reinforce our positive organic growth momentum and contributed to improved manufacturing productivity. In addition, we benefited from the acceleration of our self-help cost actions, and we are now expecting to deliver $75 million in annual savings this year, along with additional discretionary cost management actions.
The current macro-economic environment is highly dynamic and our business model has historically proven to be well positioned to navigate through uncertainty given our diverse, global business portfolio, asset-light footprint and highly variable cost structure. In addition, we have a demonstrated track record of consistent cash generation through all stages of the business cycle to complement our strong balance sheet. As we look ahead with this economic backdrop, we are executing our self-help cost actions, working with our suppliers and customers to adjust to global product flows and mitigate cost impacts, and we are further strengthening our structural organic growth capabilities. We are maintaining our full-year earnings per share guidance range of $7.75 to $8.05.
Additional Financial Information
Net sales include sales volumes growth of 1%, slightly positive selling prices, unfavorable foreign currency translation of 3% and lower year-over-year sales from business divestitures of 2%.
At quarter end, the company had cash and short-term investments totaling $1.9 billion. Net debt was $5.4 billion, an increase of $340 million from the first quarter 2024.
Corporate expenses were $95 million in the first quarter.
First quarter net interest expense was $13 million.
In the first quarter, the reported effective tax rate was 24.3% and the adjusted effective tax rate was 24.5%.
During the first quarter, share repurchases totaled approximately $400 million. In March, the company issued €900 million of debt and has maturities of €300 million and €600 million due in the second and fourth quarters, respectively. Our balance sheet remains strong, which continues to provide us with financial flexibility, and we remain committed to driving shareholder value creation.
First Quarter 2025 Reportable Segment Financial Results
Global Architectural Coatings Segment
(a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
The Global Architectural Coatings segment is comprised of architectural coatings Europe, Middle East and Africa (EMEA) and architectural coatings Latin America and Asia Pacific. Net sales were lower compared to the first quarter 2024, driven by unfavorable foreign currency translation and lower sales volumes. These declines were partially offset by higher selling prices.
Organic sales for architectural coatings EMEA were flat year over year with higher selling prices offset by slightly lower sales volumes as increased organic sales in Central Europe and the Nordic region were offset by Western Europe. Organic sales for architectural coatings Latin America and Asia Pacific declined by a mid-single-digit percentage compared to the first quarter 2024. In Mexico, retail sales volumes were solid in the quarter while project-related sales declined as business investment was paused due to recent geopolitical-related uncertainty. The company expects business and governmental investment to resume in the coming quarters.
Segment EBITDA decreased by 25% versus the prior year driven by significant unfavorable foreign currency translation, primarily due to the Mexican peso, and lower sales volumes, which were partially offset by pricing and cost-control actions.
Performance Coatings Segment
a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
The Performance Coatings segment, which is comprised of aerospace coatings, automotive refinish coatings, protective and marine coatings, and traffic solutions, delivered 9% organic sales growth. This was partially offset by the impacts of unfavorable foreign currency translation and divestitures.
Sales volumes increased 6% year over year with growth led by aerospace coatings, protective and marine coatings, and traffic solutions. Demand for PPG’s technology-advantaged aerospace products strengthened resulting in record quarterly sales, double-digit percentage organic sales growth, and an order backlog of $300 million. Organic sales in automotive refinish coatings increased by a low single-digit percentage with share gains more than offsetting lower industry collision claims. Protective and marine coatings organic sales increased by a double-digit percentage compared to the prior year, driven by above-market marine sales volume growth in the U.S., Europe and Asia Pacific. Traffic solutions benefited from increased sales volumes across North America.
Segment EBITDA increased by 8% versus the prior year, and segment EBITDA margin improved by 20 basis points year over year to 24.3%, driven by higher organic sales stemming from our technology-advantaged products and digital subscriptions.
Industrial Coatings Segment
(a) From continuing operations
(b) Reconciliations of reported to adjusted figures are included below
Industrial Coatings segment net sales declined compared to the first quarter 2024, primarily due to the impact of foreign currency translation and the divestiture of the silicas products business in 2024. Selling prices declined as a result of certain index-based customer contracts, and sales volumes decreased as strength in industrial coatings and packaging coatings were more than offset by lower automotive industry production.
Automotive original equipment manufacturer (OEM) coatings organic sales decreased by a mid-single-digit percentage due to lower U.S. and European industry build rates, partially offset by PPG sales volume growth in China and Latin America, including share gains in Brazil. Industrial coatings organic sales were flat with lower indexed-based pricing offset by positive sales volume after several quarters of weak global industrial production. Demand for PPG's industrial products improved modestly but varied across subsegments. Packaging coatings organic sales increased by a low single-digit percentage year over year driven by share gains.
Segment EBITDA decreased 13% and segment EBITDA margin declined by 90 basis points compared to the first quarter 2024 driven by unfavorable foreign currency translation and lower organic sales, including price decreases due to index-based contracts, which were partially offset by cost-control actions.
Outlook
The company reaffirms the adjusted earnings per share guidance of $7.75 to $8.05 for the full-year 2025. This range is supported by the momentum of share gains and self-help actions and also reflects current global economic activity, foreign exchange rates, and mixed demand across the various regions and businesses in which we operate.
Additional information related to 2025 financial projections is posted within the slides and prepared commentary associated with the first quarter earnings documents on the Investors section of PPG.com.
