We appreciate your continued interest in PPG Industries and welcome you to our third quarter 2025 earnings conference call. I'll start by providing a few highlights on Q3 2025 and then move to our outlook. In a very challenging world, the team delivered organic growth, which included both volume growth and price growth, and delivered a record high Q3 EPS. Our results for the quarter reflect the accelerating momentum in PPG's organic sales growth with an increase of 2%, including our third consecutive quarter of sales volume growth.
In addition, sales volumes in our industrial coatings segments once again outpaced industry demand, reflecting benefits from share gains in both packaging coatings and automotive OEM coatings. Several of our businesses in the performance coatings segment delivered outstanding results, including double-digit organic sales growth in both aerospace coatings and protective and marine coatings. Despite this, PPG organic sales grew a low single-digit percentage in the U.S. Organic sales also increased in Latin America and Asia Pacific and were flat in Europe.
Solid sales improvement combined with our aggressive cost management and consistent cash deployment drove an adjusted EPS increase of 5% year over year, establishing a third quarter record of $2.13. EMEA organic sales growth in Eastern Europe was more than offset by lower demand in Western Europe, while volumes remained lower in the quarter. We delivered mid single digit organic sales growth in Mexico, aided by solid retail sales. We expect sales growth to strengthen in Mexico in the fourth quarter, including stronger year over year consumer sales and modest improvement in project related work segment.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year 2025 EPS / Q4 guide | Q4 2025 | Lowered; implied Q4 below consensus, entirely due to Refinish destocking |
| Refinish industry normalization | Mid-2026 | Now expected middle of 2026, with carryover volume challenges through 1H2026 |
| Aerospace sales growth CAGR | Next 3 years | Mid- to high-single-digit percentage |
| Raw material inflation | FY2025 / into 2026 | Low single digits; supply-demand expected to stay long and supportive into 2026 |
| Aerospace + PMC investment | 2025 into 2027 | More than $0.5 billion total, including a new facility commissioned in 2027 |
| CapEx target | 2025-2027 | Glide path back toward 3% of sales by 2027 |
| Metric | YoY | Note |
|---|---|---|
| Adjusted EPS | +5% to $2.13 (Q3 record) | Sales improvement, aggressive cost management, and consistent cash deployment |
| Organic sales | +2% | Third consecutive quarter of volume growth plus pricing, despite Refinish drag |
| Aerospace organic sales | Double-digit % | Strong demand for highly specialized qualified products; backlog up to $310 million |
| Automotive Refinish organic sales | Double-digit % decline | Lower U.S. volumes from distributor destocking and depressed collision claims |
| Protective and Marine organic sales | Double-digit % | 10th consecutive quarter of volume growth on marine and energy-market demand |
| Performance Coatings operating income | Declined | Refinish mix plus elevated Aerospace and PMC growth investment |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Refinish slump cause | Q2 expected Q3 softness on order-pattern normalization | Deeper, longer destocking; insurance-rate spikes (16% CAGR 2022-2024, now ~3%) suppressed claims; normalization pushed to mid-2026 | — |
| Aerospace scale | Growth engine, ~mid-single-digit 10-year CAGR | Now a third of Performance Coatings; >$0.5B investment underway, new 2027 facility, mid-to-high-single-digit 3-year CAGR | — |
| AI in innovation | Not yet commercialized | First fully AI-designed Refinish clear coat launched; ~50 commercialized AI-optimized products expected by year-end, scraping 100+ years of proprietary data | — |
| Industrial share gains | ~$100 million quantified a year ago | That $100M now flowing through as launches occur, with additional wins beyond it building through 2026 | — |
| Portfolio management | Major pivot to coatings | Active recent pruning (Architectural, U.S. Silicas, Russia, Africa exit); EBITDA moved from ~15% to ~20%; only edge-pruning remains | — |