PPG INDUSTRIES INC (PPG) Q2 2025 Earnings Summary

Executive Summary

Q2 2025 was solid operationally with 2% organic growth (balanced between price and volume), record Performance Coatings results, and reaffirmed FY25 adjusted EPS guidance of $7.75–$8.05 .
Versus consensus, revenue slightly beat, EPS was in-line, and EBITDA was a modest miss; revenue $4.20B vs $4.16B*, adjusted EPS $2.22 vs $2.22*, EBITDA $774M vs $784M* (see the Estimates Context table) .
Segment contrast remained pronounced: Performance Coatings +7% sales and +30 bps margin expansion, while Industrial (-5%) and Global Architectural (-5%) lagged due to divestitures, mix, and softer volumes .
Management expects accelerated H2 volume momentum from share gains in Industrial, while refinish volumes dip in Q3 due to order normalization, and Mexico project demand improves; FY25 EPS guide reiterated, with Q3 mid-single-digit YoY EPS growth and Q4 low double-digit YoY growth .

What Went Well and What Went Wrong

What Went Well

Record Performance Coatings sales and earnings (+7% net sales; segment EBITDA margin +30 bps to 25.7%) driven by aerospace, protective & marine, and traffic solutions; refinish outperformed claims via share gains and subscriptions .
Positive organic growth across U.S./Canada and Latin America; balanced 2% organic growth company-wide (1% price, 1% volume) demonstrating commercial execution and tech-advantaged portfolio .
Quote: “We anticipate driving high single-digit percentage year-over-year earnings growth for the company in the second half... We are reiterating our full year guidance per share range of $7.75-$8.05” (Tim Knavish) .

What Went Wrong

Global Architectural Coatings margins compressed (segment EBITDA -21%; margin -370 bps YoY) due to divestiture impact, lower volumes, unfavorable currency, and an internal supply chain disruption in Australia .
Industrial Coatings sales declined (-5%) and margins compressed (-130 bps) from the silicas divestiture and index-based price carryover, despite flat volumes and FX tailwinds .
Europe architectural demand remained lackluster, especially Eastern Europe; refinish volumes expected down in Q3 due to normalized customer order patterns .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$3.729	$3.684	$4.195
Net Income (Continuing Ops, $USD Millions)	$2	$375	$450
Diluted EPS (GAAP, Continuing Ops)	$0.01	$1.64	$1.98
Adjusted EPS ($USD)	$1.61	$1.72	$2.22
Segment EBITDA Margin (%)	15.9%	19.4%	20.3%
YoY revenue change (%)	(5)%	(4)%	(1)%

Segment	Q2 2024	Q2 2025
Global Architectural Coatings – Net Sales ($USD Millions)	$1,070	$1,018
Global Architectural – Segment EBITDA ($USD Millions)	$237	$187
Global Architectural – EBITDA Margin (%)	22.1%	18.4%
Performance Coatings – Net Sales ($USD Millions)	$1,418	$1,512
Performance Coatings – Segment EBITDA ($USD Millions)	$360	$389
Performance Coatings – EBITDA Margin (%)	25.4%	25.7%
Industrial Coatings – Net Sales ($USD Millions)	$1,747	$1,665
Industrial – Segment EBITDA ($USD Millions)	$312	$276
Industrial – EBITDA Margin (%)	17.9%	16.6%
Total Segment EBITDA – Net Sales ($USD Millions)	$4,235	$4,195
Total Segment EBITDA ($USD Millions)	$909	$852
Total Segment EBITDA Margin (%)	21.5%	20.3%

KPIs	Q2 2025
Share Repurchases	~$150M in Q2; ~$540M YTD
Effective Tax Rate	~23.5%
Net Interest Expense	$18M
Cash & Short-term Investments	$1.6B
Net Debt	$5.7B (↑ $479M YoY)
Operating Working Capital	$3.249B; 19.4% of quarterly sales (annualized)
Aerospace Order Backlog	~$300M

Non-GAAP adjustments (Q2 2025): acquisition-related amortization ($25M; $0.11 EPS), business restructuring ($15M; $0.07 EPS), portfolio optimization ($2M; $0.01 EPS), legacy environmental remediation ($12M; $0.05 EPS) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY 2025	$7.75–$8.05 (Jan 30, 2025)	$7.75–$8.05 (Reaffirmed Jul 29, 2025)	Maintained
EPS growth cadence	Q3 2025	Not previously specified	Mid single-digit YoY EPS increase	New detail
EPS growth cadence	Q4 2025	Not previously specified	Low double-digit YoY EPS increase	New detail
Industrial Coatings volumes	H2 2025	Not previously quantified	Low single-digit % sales volume growth in Q3–Q4	New detail
Automotive Refinish volumes	Q3 2025	Not previously specified	Decrease due to order normalization	New detail
Mexico architectural project demand	H2 2025	Expect resumption “in coming quarters” (Q1 PR)	Improvement in H2 2025	Clarified improvement timing
Dividend per share	Q3 2025	$0.68 (Jan 16, 2025)	$0.71 (approved Jul 17, 2025)	Raised (~4%)

Earnings Call Themes & Trends

Topic	Q-2 (Q4 2024)	Q-1 (Q1 2025)	Current Period (Q2 2025)	Trend
AI/digital productivity	Digital subscriptions supporting pricing/margins in Performance Coatings	LINQ and MOONWALK installations expanding (2,700+)	3,000th MoonWalk milestone and continued LINQ growth; AI cited as internal and customer-facing lever	Expanding adoption
Supply chain & self-help	Structural cost actions and portfolio optimization; margin expansion	Self-help actions targeted $75M savings in 2025; tariff scenario planning	Aggressive self-help/discretionary cost actions to support H2 earnings growth	Ongoing execution
Tariffs/macro	Anticipated slow start to 2025; FX headwinds	Tariff “shock absorber” attributes; Mexico project pause	Monitoring tariffs; pricing/self-help as mitigants; macro dynamic but stable order patterns	Managed uncertainty
Product performance (Aerospace; Protective & Marine; Traffic)	Record aerospace; protective & marine growth; traffic share gains	Aerospace double-digit, protective & marine double-digit, traffic mid-single-digit; strong US infrastructure	Aerospace high single-digit to low double-digit trajectory; protective & marine continued double-digit; traffic robust demand	Strong, durable
Regional trends (Europe, Mexico)	EMEA architectural down; Mexico slightly positive	Europe stabilizing; Mexico project pause (retail solid)	Europe lackluster (East); Mexico retail solid, project improving sequentially and expected H2 improvement	Europe tepid; Mexico improving
Regulatory/legal (BPA)	—	BPA dynamics referenced in packaging	BPA expansion driving conversions to PPG tech in packaging coatings	Beneficial tailwind
R&D execution/new tech	New tech driving protective & marine and aerospace	Debottlenecking aerospace; investment in growth tech	Sigma Glide, copper-free SailAdvance, fire protection products; new US aerospace factory (~$380M CapEx)	Scaling innovation

Management Commentary

Strategic focus: “We anticipate driving high single-digit percentage year-over-year earnings growth for the company in the second half... We are reiterating our full year guidance per share range of $7.75-$8.05” .
Segment momentum: “The performance coating segment delivered record net sales and earnings… Aerospace delivered high single-digit percentage organic sales growth with record quarterly sales and earnings… Protective and marine coatings delivered double-digit percentage organic sales growth” .
Industrial share gains: “Growing benefits from share gains are expected to drive low single digit % sales volume growth in the third and fourth quarter… will drive earnings and margin expansion” .
Capital allocation: “We completed about $150 million in share repurchases and paid approximately $150 million in dividends… we retired EUR 300 million of debt” .
Dividend confidence: “We raised our quarterly dividend per share by 4%, demonstrating our confidence” .

Q&A Highlights

Architectural Europe and Mexico: Europe momentum failed to carry from late Q1; Eastern Europe soft; Mexico retail solid with project recovery expected in H2; architectural margins impacted by FX, mix, and an Australia supply-chain issue (transitory) .
Refinish outlook: Down low-single-digit vs prior year but flat YTD despite high-single-digit claims declines; Q3 expected soft due to order normalization; continued growth in digital subscriptions (LINQ, MoonWalk) .
Raw materials vs peers: Inflation higher due to Mexico FX exposure and epoxy tariffs; pricing through inflation in Latin America .
Buybacks/M&A: Continued buybacks prioritized absent better uses; selective M&A posture (focused pieces only) .
Industrial trajectory: H2 volume growth driven by awarded share gains across automotive OEM, industrial coatings, and packaging; minimal inventory stacking expected despite tariff uncertainty .

Estimates Context

Metric	Q4 2024 Estimate	Q4 2024 Actual	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual
Revenue ($USD Billions)	$3.970*	$3.729	$3.660*	$3.684	$4.158*	$4.195
Primary EPS ($USD)	$1.634*	$1.61	$1.622*	$1.72	$2.220*	$2.22
EBITDA ($USD Millions)	$621*	$582	$616*	$611	$784*	$774

FY 2025 EPS consensus: $7.681* vs company guidance $7.75–$8.05 (guidance above consensus mid-point) .
Values retrieved from S&P Global.*

Key Takeaways for Investors

H2 earnings momentum: Expect EPS growth to accelerate on Industrial share gains, discretionary cost actions, and continued strength in aerospace/protective; Q3 mid-single-digit and Q4 low double-digit EPS growth targets frame near-term beats potential if execution holds .
Segment divergence persists: Performance Coatings is the engine (record results, margin resilience), while Architectural and Industrial require mix and price normalization; watch for refinish Q3 volume softness and Europe architectural stabilization .
Pricing power and subscriptions: Digital ecosystems (LINQ, MoonWalk) and tech-advantaged products underpin pricing/margins; continued milestones (3,000 MoonWalk installations) support recurring revenue and customer stickiness .
Capital returns intact: Ongoing buybacks and dividend increase to $0.71 reinforce balanced capital allocation amid manageable leverage and strong liquidity .
Tariff/FX risk manageable: Local-for-local footprint, formulation flexibility, and surcharge capabilities provide buffers; watch Mexico FX and epoxy inputs, but management indicates pricing and self-help mitigation levers are in place .
Estimate recalibration: Slight revenue beat and EBITDA miss in Q2 suggest modest cost/price dynamics; consensus below guidance midpoint implies potential upward estimate revisions contingent on H2 volume/margin delivery .
Trading implications: Near-term catalysts include Q3 EPS trajectory, visible Industrial share conversion, and segment mix improvement; any signs of Europe demand uptick or refinish normalization could be stock-positive given guidance reaffirmation .