PPG INDUSTRIES INC Q4 FY2024 earnings call

• In 2024, the team demonstrated resilience in a challenging macro, with adjusted EPS at $7.87, growing 6% year-over-year. - Strategically, the company completed divestitures of silica products and Architectural Coatings U.S. and Canada businesses, improving financial profile and positioning for sustainable organic growth. - Ended 2024 with cash of about $1.4 billion, repurchased $750 million of stock, and paid $160 million in dividends, with plan to deploy $400 million in share repurchases in Q1 2025. - Segments: Global Architectural Coatings, Performance Coatings, and Industrial Coatings each have unique characteristics and performance highlights, with Global Architectural Coatings showing margin improvement, Performance Coatings organic sales growth, and Industrial Coatings impacted by global industrial macro-environment.

Global Architectural Coatings: Full-year EBITDA margin improved by 70 basis points; fourth quarter net sales impacted by unfavorable foreign currency translation and weak European architectural demand, but strong in Mexico. Performance Coatings: Fourth quarter organic sales grew 4%, with Aerospace Coatings achieving record sales and double-digit organic growth, Auto Refinish having share gains but lower volumes, and Protective and Marine showing strong growth. Industrial Coatings: Demand constrained by soft global industrial production, sales volume declines in some regions but growth in Latin America, EBITDA margin reduced due to lower volumes but offset by cost control. In absolute terms, adjusted EPS for 2024 was $7.87, growing 6% year-over-year.

• Anticipate slow start to 2025 with challenges in Europe and global industrial end-use markets, but expect stabilization in key economic indicators like Light Vehicle Builds and global industrial production. - Expect organic sales growth of low-single-digit percentage for 2025, with first quarter organic growth flat to slightly down and stronger results in the second-half. - Adjusted earnings per share for 2025 expected in the range of $7.75 to $8.05, representing 7% growth excluding foreign currency and higher tax impact.

• Geopolitical and Macro Risks: Uncertainties in global macroeconomic conditions, trade policies, and geopolitical events that could affect business performance. - Tariff Risks: Impact of tariffs on raw material costs and pricing, leading to potential price-cost mismatches. - Volume and Market Risks: Fluctuations in industrial production, consumer confidence, and market demand affecting segment performances, such as soft global industrial production impacting Industrial Coatings.

Q: Could you talk about the $100 million new win for industrial?

A: Hey, good morning, John. Thanks for the question. That -- certainly the South American exit of one of our competitors is a part of that. I'd say slightly less than half of that. We've got a number of other significant wins in auto OEM, as well as our industrial coatings and our packaging coatings businesses.

Q: Just given your comments on the slight increase in raw material prices for 2025, due to tariffs and whatever else, can you just give us more specifics on how are you adjusting pricing across the portfolio to reduce the risk of any sort of price-cost mismatch as 2025 unfolds in context of all this uncertainty on tariffs?

A: Sure, Ghansham. So what's in our guide for raw materials, which is basically up low-single digits inflation throughout the year is almost entirely based on the tariffs that have already been enacted in our basket, which is pretty much TiO2 and epoxies So we've got that, as well as our mitigation efforts of those already baked into our guide. So what you'll see from a pricing standpoint is, I think Q1 will be flattish to slightly positive as some of our businesses are on traditional calendars as to when they raise prices and that's scattered throughout the first few months of the year.