PPG INDUSTRIES INC (PPG) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered $3.68B net sales (-4% YoY) and adjusted EPS $1.72, with organic sales up 1% on higher volumes; Performance Coatings drove 9% organic growth while Industrial Coatings declined on FX and divestiture impacts .
Bold beats vs consensus: EPS $1.72 vs $1.62* and Revenue $3.684B vs $3.660B*; strength came from aerospace (record sales, $300M backlog) and protective & marine, offsetting FX and Mexico project pause in architectural coatings. Guidance for FY2025 adjusted EPS $7.75–$8.05 reaffirmed (maintained) .
Cost actions accelerated: management now expects $75M 2025 annual savings (raised from $60M previously), aiding margin resilience amid tariff-related raw material dynamics .
Capital return remains a catalyst: ~$400M share repurchases in Q1 and continued dividend of $0.68 per share announced Apr 17; balance sheet flexibility intact (cash & ST investments $1.9B; net debt $5.4B) .
Narrative: Enterprise growth strategy gaining traction; local-for-local footprint and variable cost structure mitigate tariff risk; aerospace capacity expansion announced ($380M new U.S. facility) supports multiyear growth visibility .

What Went Well and What Went Wrong

What Went Well

Performance Coatings organic sales +9% with price and volume up; aerospace delivered record quarterly sales and stable ~$300M backlog, PMC up double digits, Traffic Solutions mid-single-digit growth; segment EBITDA margin improved to 24.3% .
U.S. returned to 4% organic growth after six quarters of declines; Asia Pacific grew YoY; Europe improved to -1% organic sales (stabilizing) supporting manufacturing productivity and self-help actions .
Management tone confident on resilience: “We are beginning to realize the benefits from our enterprise growth strategy… We are maintaining our full-year earnings per share guidance range of $7.75 to $8.05.” – Tim Knavish, CEO .

What Went Wrong

Global Architectural Coatings down 11% YoY on FX (-7%, notably MXN and EUR), volumes (-3%) and divestitures; segment EBITDA -25% with margin down 310 bps YoY .
Industrial Coatings net sales -8% on FX (-2%) and silicas divestiture (-4%); pricing -1% due to index-based contracts; auto OEM organic sales down mid-single digits on lower U.S./Europe builds .
Cash from operations was negative for continuing operations (-$16M) in Q1 as working capital rose (Operating WC 19.3% of annualized sales vs 15.6% in Q4 2024) .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Net Sales ($USD Billions)	$4.575	$3.729	$3.684
EPS (GAAP, cont. ops)	$2.00	$0.01	$1.64
Adjusted EPS ($)	$2.13	$1.61	$1.72
Total Segment EBITDA %	N/A	18.0%	19.4%

Consensus vs Actual (Q1 2025):

Metric	Consensus	Actual
EPS ($)	1.6218*	1.72
Revenue ($USD Billions)	3.660*	3.684

Values with asterisk (*) retrieved from S&P Global.

Segment breakdown (Q1 2025 vs Q1 2024):

Segment	Net Sales Q1 2024 ($MM)	Net Sales Q1 2025 ($MM)	Segment EBITDA Q1 2024 ($MM)	Segment EBITDA Q1 2025 ($MM)	Segment EBITDA % Q1 2024	Segment EBITDA % Q1 2025
Global Architectural Coatings	$966	$857	$192	$144	19.9%	16.8%
Performance Coatings	$1,184	$1,265	$285	$307	24.1%	24.3%
Industrial Coatings	$1,699	$1,562	$301	$263	17.7%	16.8%
Total	$3,849	$3,684	$778	$714	20.2%	19.4%

KPIs and balance sheet/cash metrics:

KPI	Q4 2024	Q1 2025
Cash + Short-term Investments ($B)	$1.4	$1.9
Net Debt ($B)	$4.5	$5.4
Corporate Expenses ($MM)	$87	$95
Net Interest Expense ($MM)	$15	$13
Reported Effective Tax Rate	86%	24.3%
Adjusted Effective Tax Rate	22%	24.5%
Share Repurchases ($MM)	$250	~$394
Operating Working Capital (% of annualized sales)	15.6%	19.3%

Non-GAAP adjustments (Q1 2025):

Acquisition-related amortization $24M ($0.10 EPS); restructuring costs $7M ($0.03); portfolio optimization gain $(6)M (−$0.03); insurance recovery $(4)M (−$0.02) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY 2025	$7.75–$8.05 (Jan 30, 2025)	$7.75–$8.05 (Apr 29, 2025)	Maintained
Aggregate Segment Margins	FY 2025	Up ~50 bps Y/Y (Q4 call)	No change reiterated (Q1 call)	Maintained
Self-help cost savings	FY 2025	~$60M (Q4 call)	~$75M (Q1 press)	Raised
Capex	FY 2025	~$750M midpoint (Q4 call)	No specific update in Q1; management intends normalization over time	Maintained
Pricing vs Raw Materials	FY 2025	Low-single-digit raw inflation (tariffs) with positive pricing actions	Q1 pricing flattish to slightly positive; positive pricing full-year	Clarified (maintained)
Dividend	Ongoing	$0.68 declared Jan 16, 2025	$0.68 declared Apr 17, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Aerospace demand/capacity	Record sales; ~$290M backlog; debottlenecking	Record Q4 sales; backlog increased to ~$300M; planning investments	Record Q1 sales; backlog ~$300M; long-term capex announced ($380M NC facility)	Strengthening, multi-year visibility
Auto OEM builds	Deteriorated U.S./Europe late Q3; China/Mexico offsets	Soft global builds; index pricing pressure easing later in 2025	Mid-single-digit decline; expect to outperform from Q3 on share gains; $100M industrial share gains in 2025	Near-term soft; improving H2 on share
Architectural (EMEA/Mexico)	EMEA flat; stabilization emerging	EMEA weak consumer confidence; Mexico strong concessionaire network	EMEA organic flat; Mexico project pause; retail solid; margins to recover as volumes normalize	EMEA stabilizing; MX project rebound H2
Tariffs/supply chain	Not a Q3 focus	Low-single-digit raw inflation expected; buyer’s market persists	Local-for-local footprint; minimal finished goods impact; pricing/surcharge levers ready	Managed; limited P&L risk
Refinish digital tools	MOONWALK installations >2,500; subscription revenue traction	Pricing power from productivity tools	>2,700 installations; LINQ subscriptions growing; sales low-single-digit despite lower claims	Ongoing share + pricing tailwind
Protective & Marine	Low-single-digit growth; share gains	Seventh straight quarter growth; aftermarket strong (Sigmaglide)	Double-digit organic growth; multi-region strength	Sustained momentum

Management Commentary

“We delivered positive organic sales growth with increases in both sales volumes and selling prices… Performance Coatings segment delivered 9% organic sales growth… double-digit percentage growth in our aerospace coatings and protective and marine coatings businesses.” – Tim Knavish, CEO .
“Regionally… 4% organic sales growth in the U.S.… European organic sales were down 1%, which was a significant improvement versus prior quarters… We are maintaining our full-year EPS guidance range of $7.75 to $8.05.” – Tim Knavish, CEO .
“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.” – Tim Knavish, CEO .
“We have euro debt maturities of EUR 300 million and EUR 600 million due in the second and fourth quarter, respectively.” – Vince Morales, CFO .

Q&A Highlights

Architectural margins expected to recover as volumes seasonally step up in Europe; Mexico project pause seen continuing into Q2 before improving H2 .
Tariff impact parsed: minimal on finished goods (local-for-local), >95% raw materials locally sourced/no tariffs; pricing/surcharges ready; each potential demand impact bucket <1% of sales .
Segment margins guide unchanged; EPS guidance excludes cash deployment; consistent with prior practice .
Performance Coatings margin leverage muted by growth investments (aerospace debottlenecking, PMC, next-gen digital tools) despite price/volume gains .
Industrial Coatings volume momentum building on share wins; Q2 expected similar to Q1, back-half aided by launches .

Estimates Context

Q1 2025 EPS: Actual $1.72 vs S&P Global consensus $1.62* → beat .
Q1 2025 Revenue: Actual $3.684B vs S&P Global consensus $3.660B* → beat .
Values with asterisk (*) retrieved from S&P Global.

Where estimates may adjust:

Upward revisions likely for aerospace/PMC performance given record aerospace sales and backlog stability (~$300M) .
Architectural EMEA volumes stabilizing, but Mexico project-related softness in Q2 may temper near-term expectations; H2 recovery anticipated .
Industrial price headwinds from index contracts moderating; share gains ($100M annualized) should be reflected in H2 models .

Key Takeaways for Investors

Mix quality improving: Performance Coatings (24.3% EBITDA margin) and aerospace/PMC growth offset FX and divestiture headwinds; margin compounding remains intact .
Architectural headwinds are largely FX/Mexico-driven; expect margin recovery with seasonal volume and H2 project resumption; monitor MX geopolitics .
Industrial remains the swing factor: price reset from index contracts largely behind; share ramps and auto build stabilization in H2 should support earnings trajectory .
Guidance credibility strengthened: EPS range reaffirmed; self-help savings raised to $75M; buyer’s market in raws provides pricing flexibility .
Capital deployment supportive: ~$400M Q1 buyback and ongoing dividend ($0.68) provide downside support; aerospace capex ($380M) underpins multi-year growth .
Trade/tariff buffer: local-for-local model and diversified footprint minimize direct impacts; management prepared to deploy surcharges/reformulations .
Near-term trading: Lean into aerospace/PMC momentum and buyback support; watch Q2 Mexico project trends and industrial orders; H2 setup looks favorable with share gains and stabilization .