PPG INDUSTRIES (PPG)·Q4 2025 Earnings Summary
PPG Industries Q4 2025: Revenue Beats but EPS Miss Sends Shares Lower
January 27, 2026 · by Fintool AI Agent
PPG Industries delivered a mixed Q4 2025, beating revenue estimates by 3.8% but missing EPS by 4.4%, sending shares down approximately 4% in after-hours trading. The coatings giant reported adjusted EPS of $1.51 versus consensus of $1.58, while revenue of $3.91 billion topped expectations of $3.77 billion.
Full-year 2025 adjusted EPS came in at $7.58 on net sales of $15.9 billion, with the company returning $1.4 billion to shareholders through dividends ($630 million) and share repurchases ($790 million, representing 3% of outstanding shares).
Did PPG Beat Earnings?
Revenue: Beat | EPS: Miss
PPG delivered its fourth consecutive quarter of higher sales volumes and positive selling prices. The revenue beat was driven by organic growth across all segments, led by aerospace (+DD%), protective & marine (+DD%), and packaging (+DD%) coatings.
The EPS miss reflects higher growth-related investments in aerospace capacity, which are weighing on near-term margins but position PPG for multi-year growth.
Ask Fintool AI AgentWhat Changed From Last Quarter?
Improved: Architectural EMEA stabilizing, Industrial share gains accelerating, Mexico retail recovering
Worsened: Performance Coatings margin pressure from investment spend, Auto refinish volumes still weak
The margin compression primarily reflects mix (lower refinish volumes hurt the highest-margin segment) and elevated OpEx/CapEx for aerospace expansion. Management expects these investments to pay off in 2026-2027 as new capacity comes online.
How Did Each Segment Perform?
Global Architectural Coatings
Mexico drove strong growth (+HSD) on retail strength and recovering project-related spending, while European demand remained soft (low-single-digit decline). Notably, PPG has delivered positive pricing for 39 consecutive quarters in architectural Europe — a testament to pricing discipline even in depressed markets.
Performance Coatings
Standouts: Aerospace delivered record Q4 sales and earnings with double-digit growth. Protective & Marine grew consistently, marking 11 consecutive quarters of volume growth.
Weakness: Automotive refinish organic sales decreased high-single-digit on lower volumes from distributor destocking. Management expects H1 2026 destocking to continue, with normalized order patterns in H2.
Industrial Coatings
Volume growth of 5% well outpaced flat industry demand due to share gains. Auto OEM net sales grew 6% on share gains and favorable customer mix. Packaging coatings delivered double-digit growth driven by technology leadership and sustainable product portfolio wins, particularly in Europe.
What Did Management Guide?
PPG provided a cautious outlook for 2026, with Q1 expected to be particularly soft before improvement in H2:
Q1 2026 Guidance
Full-Year 2026 Guidance
Phasing: EPS growth is expected to be weighted toward H2 2026 — first half flat to low-single-digit growth, accelerating to high-single-digit growth in the second half.
Management expects elevated CapEx through 2027 driven by aerospace capacity additions, with spending returning toward 3% of sales thereafter.
Ask Fintool AI AgentHow Did the Stock React?
PPG shares closed at $110.37, down 2.0% during the regular session. After-hours trading saw further weakness, with shares falling to $108 — representing a total decline of approximately 4% from the prior close.
The negative reaction reflects:
- EPS miss despite revenue beat
- Soft Q1 2026 guidance (margin compression of 50-150 bps)
- Continued refinish headwinds extending into mid-2026
At $108, PPG trades at approximately 14x 2026 consensus EPS of ~$8.11, below its 5-year average forward P/E of ~18x.
Key Themes and Takeaways
"In the fourth quarter, we accelerated our growth momentum by delivering 3% growth in organic sales, our highest performance in any quarter this year, with contributions from sales volume and selling prices, and all regions delivering sales volume growth." — Tim Knavish, Chairman & CEO
Aerospace: The Growth Engine
Aerospace delivered record Q4 sales and earnings with double-digit growth, marking the second consecutive year of 20%+ growth. The business is now nearly as large as refinish. PPG is investing heavily in capacity:
- $120M incremental CapEx approved for debottlenecking and expansions
- $380M new factory announced for sealants and coatings, ~2 years to come online
- Consultants engaged for debottlenecking OpEx in existing qualified operations
- Additional expansions in the pipeline for board approval
"This business will be growing likely for the rest of my career, and hopefully, that's longer than Mr. Morales' career here." — Tim Knavish, CEO
Management noted PPG's aerospace business is "much more than just coatings" — the majority of the portfolio is transparencies, sealants/adhesives, and service materials, making it unique among competitors. They don't compete with a single traditional coatings company across all these verticals.
Refinish: Green Shoots Emerging
Auto refinish remains pressured by depressed U.S. collision claims, driven by insurance affordability concerns. However, management highlighted emerging "green shoots" on the Q4 call:
- December claims only -2% vs high-single-digit or low-double-digit declines throughout the year
- Fill-in orders starting — distributors can only destock so far before needing to resupply body shops
- Insurance premiums normalizing — the catalyst for the claims decline is beginning to moderate
- Share wins accelerating — "We're winning a lot of share... a lot of other ones happening that are not publicly announced and are more to come"
"Everything we're seeing and hearing from our customers since we last spoke is playing out as expected. Distributors are destocking as we expected. Body shops are starting to see the beginning signs of normalization as we expected." — Tim Knavish, CEO
Management expects H1 2026 destocking to continue, with normalized order patterns returning in H2 2026. The expected trajectory: low-to-mid single-digit declines in H1, then sales and EBIT growth in H2.
Share Gains Across Industrial
PPG's Industrial Coatings segment continues to outpace market growth through share gains. Auto OEM net sales grew 6% in Q4, well above flat industry demand, driven by share wins and favorable customer mix. Packaging coatings delivered double-digit organic sales growth, significantly outpacing industry rates — driven by technology shifts favoring PPG's sustainable product portfolio, particularly in Europe.
Management quantified the share gain opportunity: $100 million of share gains expected to be realized in 2026, including $50 million of carryover wins announced last year. Additional double-digit million share wins are expected to launch throughout 2026.
AI Formulation: A Competitive Differentiator
PPG highlighted its AI-driven formulation development as a competitive differentiator on the call:
- First fully AI-developed product launched in refinish (a clear coat optimized for performance and body shop productivity)
- 50 additional products already optimized using AI, delivering cost savings and performance improvements
- Internally developed capability based on digitized formulation data from 100+ years of R&D
- New digital tools launched: Mix'n'Shake tool for further body shop productivity savings
"We believe we're definitely out front here. We've launched, commercialized a refinish clear coat that optimizes performance... based on scraping all of our internal formulations that we've developed over 100 years." — Tim Knavish, CEO
CFO Vince Morales noted the foundation for AI was digitizing formulation data "a couple of years ago" — a time-consuming activity that puts PPG "in the pole position, certainly in the front row in the industry."
Capital Allocation
PPG returned $1.4 billion to shareholders in 2025 and maintains a strong balance sheet with $2.2 billion cash and short-term investments. Net debt stands at $5.1 billion. The company has a $700 million debt maturity due in Q1 2026, which it intends to pay from current cash.
In Q4 specifically, PPG repurchased approximately 980,000 shares at an average price of ~$102, spending around $100 million on buybacks. Management emphasized optionality to pursue both buybacks and potential M&A from ongoing industry consolidation without sacrificing capital return.
CFO Transition: Vince Morales, SVP and CFO, announced his retirement effective July 2026. This was his second-to-last earnings call.
Q&A Highlights
On organic growth drivers: "The macro is not better than we expected. And to your questions about, is our growth based on macro, share gain, or technology introductions, the answer is yes, yes, and yes." — Tim Knavish
On operating leverage and EBITDA: The lack of leverage despite volume growth is "first, second, and third, the Refinish destocking." The high-margin refinish business weakness overwhelms positivity from other segments. Expect leverage to improve in H2 2026 as refinish normalizes.
On corporate expense spike: The Q4 increase was driven by (1) higher-than-expected medical claims ("pay-as-you-go" structure) and (2) incentive comp catch-up as Q4 organic growth and cash flow exceeded expectations. Management noted this is not structural — long-term TSR payouts are below target.
On M&A optionality: "Our balance sheet is strong enough that we've got optionality if something gets spit out of either of those two deals [Sherwin-Williams/Axalta consolidation]... I'm not worried about my ability to do both." PPG remains "organic first" but runs all opportunities through a filter of right asset, right time, right price.
On pricing durability: "You'll see positive price in virtually all of the protective businesses... and the architectural businesses. Even our most challenged region for architectural in Europe, we've gotten price 39 straight quarters."
On EPS cadence: Q1 expected "flat-ish," Q2 low-single-digit growth, then accelerating to high-single-digit growth in H2 2026.
On China/Asia Pacific: Despite headlines, PPG is growing in China (low-to-mid single digit growth expected in 2026) due to "local for local" positioning in the right industries. India delivering double-digit growth and expected to continue.
On AI investment returns: Early ROI is positive — "Millions to the bottom line, not yet material to the company, but very favorable early indicators relative to the investments we made." Pipeline is large, with materiality expected as more products launch.
Historical Beat/Miss Record
EPS data from S&P Global estimates.
Ask Fintool AI AgentWhat to Watch Going Forward
- Aerospace ramp: $380M new factory + ongoing debottlenecking should drive margin expansion as capacity comes online in 2027
- Refinish recovery: December claims -2% is an early positive sign — watch for continued normalization through H1 2026
- AI formulation pipeline: 50 products optimized, more launches planned across all business units
- Mexico: Project-related spending recovering; retail remains strong with mid-single-digit Q4 YoY growth
- Raw material costs: Expected flat in 2026; epoxy and specialty pigments up on tariffs, offset by soft TiO2
- CFO succession: Vince Morales retiring July 2026 — watch for announcement of successor
Read more: PPG Q4 2025 Earnings Transcript | PPG Company Profile