We appreciate your continued interest in PPG and welcome you to our Second Quarter 2025 Earnings Conference Call. I'll start by providing a few highlights from our second quarter 2025 financial performance and then I'll move to our outlook. We delivered net sales of $4.2 billion with an increase in organic sales of 2.2%. Our momentum in organic sales growth was led by our aerospace coatings, protective and marine coatings, and packaging coatings businesses.
In addition, sales volumes in our industrial coatings segment outpaced the industry, reflecting the initial benefits from share gains in our packaging, industrial, and automotive OEM businesses. Regionally, we delivered organic growth in both the United States and Latin America, with tepid demand in Europe and some softening in Asia. We delivered a quarterly segment EBITDA margin of 20.3% and our adjusted earnings per diluted share was $2.22. Additionally, in July we raised our quarterly dividend per share by 4%, demonstrating our confidence in the resiliency of our business and the strength and future growth of our company.
Looking at each of our segments, in the global architectural coating segment, positive selling prices in both regions were offset by lower volumes and the impact of a divestiture in architectural coatings. EMEA organic sales growth in the Nordic region and in the United Kingdom were offset by lower demand in Eastern Europe. We delivered organic sales growth in Mexico aided by solid retail sales. Segment EBITDA margin decreased driven by the business divestiture, lower sales volumes, and unfavorable currency translation, partially offset by strong cost control actions.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales / volume growth | 2H2025 | Low single digits and moving up the low-single-digit ladder, driven by share gains |
| Refinish volume | Q3 / Q4 2025 | Q3 soft on distributor order-pattern normalization, Q4 more normalized; industry recovery not until 2026 |
| Architectural / Industrial organic sales guide | FY2025 | Revised down modestly (Architectural mainly Europe; Industrial modest decrement on China) |
| Restructuring / self-help benefits | FY2025 | ~$30 million realized in 1H, growing incrementally in 2H (not an incremental $75M) |
| Cash from operations | FY2025 | Expected to grow year-over-year, with most cash back-half weighted |
| Long-term growth algorithm | Ongoing | 2-4% organic growth, 8-10% EPS growth, ~$1 billion adjusted free cash flow annually |
| Metric | YoY | Note |
|---|---|---|
| Net sales | $4.2 billion, +2.2% organic | Led by Aerospace, Protective and Marine, and Packaging; Industrial volumes outpaced industry |
| Adjusted EPS | $2.22 | Organic growth and cost control amid a dynamic macro |
| Segment EBITDA margin | 20.3% | Strong portfolio execution despite architectural margin pressure |
| Performance Coatings organic sales | +6% | Higher prices and volumes; record segment net sales and earnings |
| Protective and Marine organic sales | Double-digit % | Ninth straight quarter of volume growth on advantaged marine and fire-protection technologies |
| Industrial Coatings selling prices | -1% | Carryover of certain index-based customer contracts |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Share-gain ramp | Wins identified since late Q3 2024 (~$100 million, mostly Auto OEM) | Initial benefits showing in 1H; expected to accelerate across all three Industrial businesses in 2H, lifting net margin via fixed-cost leverage | — |
| Refinish normalization | Flat for 1H2025 on share gains and order patterns | Q3 expected soft on order-pattern swing, full normalization (claims down low single digits) not until 2026 | — |
| Aerospace investment | Ongoing OpEx/CapEx for output | New U.S. factory announced (~$380 million CapEx) plus continued debottlenecking; high-single-digit/double-digit growth foreseeable | — |
| Mexico architectural recovery | Q1 organic sales down low single digits on tariff-driven project pause | Q2 up low single digits (retail-led); project work improving sequentially, guided up modestly to mid-single digits in 2H | — |
| Europe architectural | Expected late-Q1 momentum to continue | Momentum did not continue (Eastern Europe weak); now assuming current-state-plus-share-gains with no market-recovery assumption | — |