We appreciate your continued interest in PPG, and welcome you to our fourth quarter 2025 earnings conference call. I'll start off by providing some highlights on Q4 and full year 2025, and then I'll move on to our 2026 guidance. We also continued our legacy of driving structural cost improvements through our self-help actions and maintained our heritage of strong cash flow generation and disciplined cash deployment, including returning cash to our shareholders. For the full year, net sales totaled $15.9 billion, with 2% organic growth, which was driven by a combination of higher selling prices and volume gains across our segments.
Our adjusted earnings per share came in at $7.58, underscoring our ability to maintain solid profitability in a dynamic environment. Our cash from operations totaled $1.9 billion, up about $500 million year-over-year, supporting a robust free cash flow yield of 5%. This strong cash performance enabled us to return $1.4 billion to shareholders through dividends and share repurchases. Our segment EBITDA margin for the year was a healthy 19%, reflecting ongoing operational efficiency and cost discipline.
Now, turning to the fourth quarter, we further accelerated our growth momentum. Net sales were $3.9 billion, up 5% year-over-year, with 3% organic growth driven by positive sales volume growth across all regions. We achieved record Aerospace coatings, sales, and earnings, led by strong demand for our technology-advanced products. Architectural Coatings in Latin America delivered high single-digit organic sales growth, aided by the sequential quarterly recovery of project-related sales and continued strong retail performance.
| Metric | Period | Current guidance |
|---|---|---|
| Adjusted EPS growth | FY2026 | About 4%, ramping from flat-ish Q1 to low-single-digit Q2 and stronger in 2H |
| Raw material costs | Q1 2026 / FY2026 | Flat for Q1 and flat for the year (epoxies, specialty pigments, metal packaging up on tariffs; TiO2 soft) |
| Aerospace sales growth | FY2026 | High single digits guided |
| Performance Coatings revenue | FY2026 | Flat to up low single digits |
| Refinish volume | 1H / 2H 2026 | Low-to-mid decline in 1H, returning to sales and EBIT growth in 2H on normalized buying patterns |
| Aerospace CapEx | FY2026 | Plus $380M new factory (two years to come online) |
| Metric | YoY | Note |
|---|---|---|
| FY net sales | $15.9 billion, +2% organic | Higher selling prices and volume gains outpacing a -0.2% market decline |
| FY adjusted EPS | $7.58 | Solid profitability maintained in a dynamic environment |
| FY cash from operations | $1.9 billion, up ~$500 million | Strong cash performance, especially late-December receivables collections |
| Q4 net sales | +5% to $3.9 billion (+3% organic) | Positive volume growth across all regions |
| Q4 adjusted EPS | $1.51 | Organic and operational gains offset by higher interest costs and corporate expenses |
| Q4 segment earnings | Up about $20 million | Improved organic growth and pricing despite Refinish destocking |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Refinish recovery timing | Q3 call expected industry normalization mid-2026 | Reinforced guide; green shoots emerging (December claims down only 2%, fill-in orders began, insurance premiums normalizing); destocking 1H, normalized buying 2H | — |
| AI formulation | First AI-developed Refinish clear coat launched in Q3 | Now 50+ products optimized via internally developed formulation AI built on digitized 100-year formulation data; differentiated 'pole position' | — |
| M&A vs. buybacks | Organic-first, disciplined | Still organic-first; given undervalued stock, buybacks often win the math; balance sheet retains optionality for assets from European industry deals in 2027 | — |
| Corporate expense | Elevated in Q4 | Not viewed as structural; driven by pay-as-you-go medical claims pulled into 2025 and Q4 incentive-comp catch-up (still below target overall) | — |
| Architectural Europe portfolio | Hoped for some market upside in 2025 | Now assuming flat-ish 2026, taking aggressive cost actions to expand margin and cash without waiting for recovery | — |