Q2 2024 PPG Industries Inc Earnings Call

Good morning, my name is Elliot and I'll be your conference operator today. At this time I would like to welcome everyone to the second quarter PPG Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session.

Operator: At this time, I would like to welcome everyone to the second quarter PPG Earnings Conference. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the second quarter PPG earnings conference call. All lines have been placed on mute to prevent any background noise. After speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press staff followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. To allow everyone an opportunity to ask a question, the company requests that each analyst ask only one question. Thank you.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound. To allow everyone an opportunity to ask a question, the company requests that each analyst ask only one question. Thank you. I would now like to turn the conference over to Alex Lopez, Director of Investor Relations. Please go ahead.

If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. To allow everyone an opportunity to ask a question, the company requests that each analyst ask only one question. Thank you.

Operator: I would like to turn the conference over to Alex.

Alejandro Lopez: Alex Lopez, Director of Investor Relations. Please go ahead, sir.

I would now like to turn the conference over to Alex Lopez, Director of Investor Relations. Please go ahead, sir.

Operator: Thank you, Elliot.

Alex Lopez: Thank you, Elliot. And good morning, everyone. This is Alex Lopez, Director of Investor Relations. We appreciate your continuing interest in PPE and welcome you to our second quarter 2024 financial results conference call. Joining me on the call from PPG are Tim Knavish, Chairman and Chief Executive Officer, and Vince Morales, Senior Vice President and Chief Financial Officer.

Alejandro Lopez: Good morning, everyone. This is Alex Lopez, Director of Investor Relations. We appreciate your continuing interest in PPG and welcome you to our second quarter 2024 financial results conference call. Joining me on the call from PPG are Tim Knavish, Chairman and Chief Executive Officer, and Vince Morales, Senior Vice President and Chief Financial Officer. Our comments relate to the financial information released after U.S. equity markets close on Thursday, July 18, 2024. We have posted detailed commentary and accompanying presentation slides on the Investor Center of our website, PPG.com. These slides are also available on the webcast site for this call and provide additional support to the opening comments Tim will make shortly.

Thank You Elliot and good morning everyone this is Alex Lopez, Director Investor Relations

Alex Lopez: Our comments relate to the financial information released after U.S. equity markets closed on Thursday, July 18, 2024. We have posted detailed commentary and accompanying presentation slides on the Investor Center of our website, ppg.com. These slides are also available on the webcast site for this call and provide additional support to the opening comments. The team will make sure

Alex Lopez: We appreciate your continued interest in PPE and welcome you to our second quarter 2024 Financial Results Conference Call.

Speaker Change: Joining me on the call from PPG are Tim Knavish, Chairman and Chief Executive Officer, and Vince Morales, Senior Vice President and Chief Financial Officer.

Speaker Change: Our comments relate to the financial information released after U.S. equity markets closed on Thursday, July 18, 2024.

Speaker Change: We have posted detailed commentary and accompanying presentation slides on the Investor Center of our website, ppg.com.

Speaker Change: These slides are also available on the webcast site for this call and provide additional support to the opening comments Tim will make shortly.

Alejandro Lopez: Following management's perspectives on the company's results for the quarter, we will move to the Q&A session. Both the prepared commentary and discussion during this call may contain what we're looking at statements reflecting the company's current view of future events and their potential effects on PPG operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. The presentation also contains certain non-GAAP financial measures. The company has provided in the appendix of the presentation materials, which are available on our website.

Alex Lopez: Following management's perspective on the company's results for the quarter, we will move to a Q&A session. Both the prepared commentary and discussion during this call may contain forward-looking statements reflecting the company's current view of future events and their potential effects on PPG's operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to this forward-looking statement. The presentation also contains certain non-GAAP financial measures.

Speaker Change: Both, the prepared commentary and discussion during this call may contain forward-looking statements reflecting the company's current view of future events and their potential effects on PPG's operating and financial performance.

Speaker Change: These statements involve uncertainties and risks, which may cause actual results to differ.

Speaker Change: The company is under no obligation to provide subsequent updates to these forward-looking statements.

Alex Lopez: The company has provided in the appendix of the presentation materials, which are available on our website, reconsiderations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information, please refer to PPG's filings with the SEC. Now, let me introduce PPG Chairman and CEO, Tim Knavish. Thank you, Alex.

Speaker Change: The presentation also contains certain non-GAAP financial measures. The company has provided in the appendix of the presentation materials, which are available on our website.

Alejandro Lopez: Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Speaker Change: Pre-considerations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Alejandro Lopez: For additional information, please refer to PPG's filings with the SEC.

Speaker Change: For additional information, please refer to PPG filings with the SEC.

Timothy Knavish: Now, let me introduce PPG's chairman and CEO, Tim Kanagic.

Speaker Change: Now, let me introduce PPG Chairman and CEO Tim Knavish.

Timothy Knavish: Thank you, Alex.

Timothy M. Knavish: And good morning, everyone. Welcome to our second quarter 2024 earnings call. I'd like to start by providing a few highlights on our second quarter 2024 financial performance, and then I'll move to our outlook. The PPG team delivered sales of $4.8 billion in our seventh consecutive quarter of year-over-year segment margin improvement. This culminated in second quarter adjusted earnings per diluted share of $2.50, which is an all-time record for the company and represents 11% year-over-year growth.

Timothy Knavish: Good morning, everyone. Welcome to our second quarter 2024 earnings call. I'd like to start by providing a few highlights on our second quarter, 2024 financial performance. And then I'll move to our outlook. The PPG team delivered sales of $4.8 billion and our seventh consecutive quarter of year-over-year segment margin improvement. This culminated in second quarter adjusted earnings per diluted share of $2.50, which is an all-time record for the company and represents 11% year-rear growth. Despite increasingly challenging macroeconomic conditions, we are building top-line momentum as our underlying year-over-year volume progression improved for the sixth consecutive quarter. In the second quarter, six of our 10 business units delivered positive volume growth versus prior year, aided by our enterprise growth strategy initiative.

Timothy M. Knavish: Thank You Alex and good morning everyone. Welcome to our second quarter 2024 earnings call. I'd like to start by providing a few highlights on our second quarter 2024 financial performance and then I'll move to our outlook.

Timothy M. Knavish: The PPG team delivered sales of $4.8 billion in our seventh consecutive quarter of year-over-year segment margin improvement.

Timothy M. Knavish: This culminated in second quarter adjusted earnings per diluted share of $2.50, which is an all-time record for the company and represents 11% year-over-year growth.

Timothy M. Knavish: Despite increasingly challenging macroeconomic conditions, we are building top-line momentum as our underlying year-over-year volume progression improved for the sixth consecutive quarter. In the second quarter, six of our 10 business units delivered positive volume growth versus the prior year, aided by our Enterprise Growth Strategy Initiative. These initiatives include delivering new products and technologies to our customers, such as our innovative packaging interior can and exterior end coatings technology, as well as our new Sigma Glide technology in our marine business.

Timothy M. Knavish: Despite increasingly challenging macroeconomic conditions, we are building top-line momentum as our underlying year-over-year volume progression improved for the sixth consecutive quarter.

Timothy M. Knavish: In the second quarter, six of our ten business units delivered positive volume growth versus prior year, aided by our enterprise growth strategy initiatives.

Timothy Knavish: These initiatives include delivering new products and technologies to our customers, such as our innovative packaging, interior can, and exterior end coatings technologies, as well as our new Sigma Glide technology in our marine business. Each of these technologies has allowed us to game share in their respective businesses. Our actions also include upgrading and modernizing our manufacturing capabilities to drive increased output, such as in aerospace where demand has outpaced industry supply. One additional example of our enterprise growth strategy is where we're driving changes to the ecosystem of the business models. This includes an architectural coatings US and Canada with our Home Depot initiative, in our refinished business with our digital tools such as Moonwalk and Link, and in our traffic solutions business as we further optimize our service and supply capabilities, which are critical value drivers in this business.

Timothy M. Knavish: These initiatives include delivering new products and technologies to our customers, such as our innovative packaging interior can and exterior end coatings technologies.

Timothy M. Knavish: as well as our new Sigma Glide technology in our marine business.

Timothy M. Knavish: Each of these technologies has allowed us to gain a share in their respective businesses. Our actions also include upgrading and modernizing our manufacturing capabilities to drive increased output, such as in aerospace, where demand has outpaced industry supply. One additional example of our enterprise growth strategy is where we're driving changes to the ecosystem of the business models. This includes in architectural coatings in the U.S. and Canada with our Home Depot initiative, in our refinish business with our digital tools such as Moonwalk and Link, and in our traffic solutions business as we further optimize our service and supply capabilities, which are critical value drivers in this business.

Timothy M. Knavish: Each of these technologies has allowed us to gain share in their respective businesses.

Timothy M. Knavish: Our actions also include upgrading and modernizing our manufacturing capabilities to drive increased output, such as in aerospace where demand has outpaced industry supply.

Timothy M. Knavish: One additional example of our enterprise growth strategy is where we're driving changes to the ecosystem of the business models.

Timothy M. Knavish: This includes in architectural coatings U.S. and Canada with our Home Depot initiative, in our refinish business with our digital tools such as Moonwalk and Lync,

Timothy M. Knavish: and in our traffic solutions business as we further optimize our service and supply capabilities which are critical value drivers in this business.

Timothy Knavish: Additionally, our volume performance in the quarter benefited from our well-established business portfolio in Mexico, China, and India. Overall, however, our aggregate volumes in the quarter were flat year over year, falling shy of our initial expectations as overall demand in Europe and global auto OEM production were below what we assumed in our second quarter guidance. It is important to note that our European volumes, while still negative, improve sequentially year over year versus the first quarter. Also, global industrial activity remains subdued in the quarter. Consistent with our financial guidance in April, our second quarter automotive refinished sales were down year over year, reflecting a strong prior year comparison and lower insurance claims. However, we remain confident that this business will have a strong second half of 2024.

Timothy M. Knavish: Additionally, our volume performance in the quarter benefited from our well-established business portfolio in Mexico, China, and India. Overall, however, our aggregate volumes in the quarter were flat year over year, falling shy of our initial expectations as overall demand in Europe and global auto OEM production were below what we assumed in our second quarter guidance. It is important to note that our European volumes, while still negative, improve sequentially year-over-year versus the first quarter. Also, global industrial activity remains subdued in the Porter.

Timothy M. Knavish: Additionally, our volume performance in the quarter benefited from our well-established business portfolio in Mexico, China, and India.

Timothy M. Knavish: Overall, however, our aggregate volumes in the quarter were flat year over year, falling shy of our initial expectations as overall demand in Europe and global auto OEM production were below what we assumed in our second quarter guidance.

Timothy M. Knavish: It is important to note that our European volumes, while still negative, improve sequentially year over year versus the first quarter.

Speaker Change: Also, global industrial activity remains subdued in the Porter.

Timothy M. Knavish: Consistent with our financial guidance in April, our second quarter automotive refinish sales were down year over year, reflecting a strong prior year comparison and lower insurance claims. However, we remain confident that this business will have a strong second half of 2024. In the quarter, we drove further margin enhancement, and we marked our seventh consecutive quarter of year-over-year segment margin improvement. Our aggregate gross margin was 43% for the quarter, a 180 basis point improvement year-over-year.

Speaker Change: Consistent with our financial guidance in April , our second quarter automotive refinish sales were down year over year, reflecting a strong prior year comparison and lower insurance claims. However, we remain confident that this business will have a strong second half of 2024.

Timothy Knavish: In the quarter, we drove further margin enhancement, and we marked our seventh consecutive quarter of year-over-year segment, segment margin improvement. Our aggregate gross margin was 43% for the quarter, a 180 basis point improvement year over year. Our performance coating segment achieved all time record segment margin of 18.7%. And our industrial coating segment also improved this margin profile by 120 basis points versus the prior year. During the second quarter, we benefited from stable upstream and downstream supply chains, and the vast majority of our suppliers have sufficient or excess capacity, which is noteworthy as this occurred during the peak season for raw material consumption.

Speaker Change: In the quarter, we drove further margin enhancement and we marked our seventh consecutive quarter of year-over-year segment margin improvement. Our aggregate gross margin was 43% for the quarter, a 180 basis point improvement year-over-year.

Timothy M. Knavish: Our Performance Codings segment achieved an all-time record segment margin of 18.7%, and our Industrial Codings segment also improved its margin profile by 120 basis points versus the prior year. During the second quarter, we benefited from stable upstream and downstream supply chains, and the vast majority of our suppliers had sufficient or excess capacity, which is noteworthy as this occurred during the peak season for raw material consumption. Consistent with our guidance, we experienced mid-single-digit percentage raw material deflation that we expect will normalize into flat-to-low single-digit deflation for the third quarter as we anniversary the prior year impact. This benefit was partially offset in our results by general inflation, including higher year-over-year wages and employee benefits.

Speaker Change: Our Performance Codings segment achieved all-time record segment margin of 18.7%. And our Industrial Codings segment also improved its margin profile by 120 basis points versus the prior year.

Speaker Change: During the second quarter, we benefited from stable upstream and downstream supply chains, and the vast majority of our suppliers have sufficient or excess capacity, which is noteworthy as this occurred during the peak season for raw material consumption.

Timothy Knavish: Consistent with our guidance, we experienced mid-single-digit percentage raw material deflation that we expect will normalize in the flat to low single-digit deflation for the third quarter as we anniversary prior year impacts. This benefit was partially offset in our results by general inflation, including higher year-over-year wages and employee benefits. We are proud to have published our 2023 ESG report in the quarter, which highlighted progress against our 2030 targets, including increasing sales from sustainably advantaged products and reducing greenhouse gas emissions throughout our own operations and our values. Chain.

Speaker Change: Consistent with our guidance, we experienced mid-single-digit percentage raw material deflation that we expect will normalize into flat-to-low single-digit deflation for the third quarter as we anniversary prior year impacts.

Speaker Change: This benefit was partially offset in our results by general inflation, including higher year-over-year wages and employee benefits.

Timothy M. Knavish: We are proud to have published our 2023 ESG report this quarter, which highlighted progress against our 2030 targets, including increasing sales from sustainably advantaged products and reducing greenhouse gas emissions throughout our own operations and our values. I want to take this opportunity to provide you with an update on our previously announced strategic reviews of the Architectural Coatings U.S. and Canada business and the Global Silicas product. We are making good progress with these processes and are pleased to have a number of engaged and interested parties.

Speaker Change: We are proud to have published our 2023 ESG report in the quarter.

Speaker Change: which highlighted progress against our 2030 targets, including increasing sales from sustainably advantaged products and reducing greenhouse gas emissions throughout our own operations and our value chain.

Timothy Knavish: I want to take this opportunity to provide you with an update on our previously announced strategic reviews of the architectural coatings US and Canada business and the global silica's product business. We make good progress with these processes and are pleased to have a number of engaged and interested parties. We're working through the traditional bidding management presentation and data provision stages and remain on our original schedule to determine a path forward for each of these assessments. We have also made further progress in driving improvement in working capital, including lowering our year-to-year inventories during a quarter. As a result, our operating working capital was down 90 basis points year-to-year.

Speaker Change: I want to take this opportunity to provide you with an update on our previously announced strategic reviews of the architectural coatings U.S. and Canada business and the Global Silicas product business.

Speaker Change: We make good progress with these processes and are pleased to have a number of engaged and interested parties.

Timothy M. Knavish: We're working through the traditional bidding, management presentation, and data provision stages and remain on our original schedule to determine a path forward for each of these assessments. We have also made further progress in driving improvement in working capital, including lowering our year-over-year inventories during the quarter. As a result, our operating working capital was down 90 basis points year-over-year.

Speaker Change: We're working through the traditional bidding, management presentation, and data provision stages and remain on our original schedule to determine a path forward for each of these assessments.

Speaker Change: We have also made further progress in driving improvement in working capital, including lowering our year-over-year inventories during the quarter.

Speaker Change: As a result, our operating working capital was down 90 basis points year-over-year. We have more work to do over the balance of the year as we move towards seasonally slower sales quarters, but we have already returned to near pre-pandemic inventory levels.

Timothy Knavish: We have more work to do over the balance of the years. We move towards seasonally slower sales quarters, but we have already returned to near pre-pandemic inventory levels. We ended the quarter with a strong balance sheet to remain committed to deploy excess cash for shareholder value creation. During the quarter, we repurchased $150 million of PPG shares, bringing our year-to-date total to about $300 million. This is on top of our fourth quarter 2023 repurchases.

Timothy M. Knavish: We have more work to do over the balance of the year as we move towards seasonally slower sales quarters, but we have already returned to near pre-pandemic inventory levels. We ended the quarter with a strong balance sheet and remain committed to deploy excess cash for shareholder value creation. During the quarter, we repurchased $150 million of PPG shares, bringing our year-to-date total to about $300 million.

Speaker Change: We ended the quarter with a strong balance sheet and remain committed to deploy excess cash for shareholder value creation. During the quarter, we repurchased $150 million of PPG shares, bringing our year-to-date total to about $300 million.

Timothy M. Knavish: This is on top of our fourth quarter 2023 repurchase. Also yesterday, consistent with our long heritage, our board authorized a three cent dividend increase from 65 cents to 68 cents per share. Now looking ahead to the third quarter, we expect overall organic sales to be flat to low single-digit percentage growth. In Mexico, we expect to again deliver excellent financial results. We also believe that demand in China will deliver organic growth as a result of our technology advantage products, but albeit at a lower growth rate than achieved in the first half.

Timothy Knavish: Also, yesterday, consistent with our long heritage, our board authorized a three-cent dividend increase from $0.65 to $0.68 per share. Now, looking ahead to the third quarter, we expect overall organic sales of flat to low single-digit percentage growth. In Mexico, we expect to again deliver excellent financial results. We also believe that demand in China will deliver organic growth. As a result of our technology-advantage products, but albeit at a lower growth rate than achieved in the first half of the year. In Europe, demand remains uneven by country and end use, but we expect modest sequential year-to-year improvement.

Speaker Change: This is on top of our fourth quarter 2023 repurchases.

Speaker Change: Also yesterday, consistent with our long heritage, our board authorized a three cent dividend increase from 65 cents to 68 cents per share.

Speaker Change: Now looking ahead to the third quarter we expect overall organic sales a flat to low single-digit percentage growth. In Mexico we expect to again deliver excellent financial results.

Speaker Change: We also believe that demand in China will deliver organic growth.

Speaker Change: as a result of our technology-advantaged products, but albeit at a lower growth rate than achieved in the first half of the year.

Timothy M. Knavish: In Europe, demand remains uneven by country and end-use, but we expect modest, sequential, year-over-year improvement. In addition to those businesses that grew in the second quarter, we expect organic growth in automotive refinished coatings and protective and marine coatings. And also, while slightly unfavorable year over year, we are expecting product projecting modest sequential quarterly improvement in general industrial demand. We expect to deliver adjusted third quarter EPS between $2.10 and $2.20 per share, aided by solid operating performance.

Speaker Change: In Europe , demand remains uneven by country and end-use, but we expect modest sequential year-over-year improvement.

Timothy Knavish: In addition to those businesses that grew in the second quarter, we expect organic growth in automotive refinished coatings and protective and marine coatings. And also, while slightly unfavorable year over year, we are expecting product-projecting modest sequential quarterly improvement in general industrial demand. We expect to deliver adjusted third quarter EPS between $2.10 and $2.20 per share, aided by solid operating performance. Our guidance midpoint is 4% higher than our record third quarter 2023. However, the midpoint of our guidance is 10% higher than the third quarter of 23, excluding the impact of a higher year-over-year tax rate. As the prior year included several non-recurring favorable discrete tax items, the difference in the tax rate is reducing our year-over-EPS comparison by approximately $0.12 at the midpoint.

Speaker Change: In addition to those businesses that grew in the second quarter, we expect organic growth in automotive refinish coatings and protective and marine coatings.

Speaker Change: And also, while slightly unfavorable year over year, we are expecting projecting modest sequential quarterly improvement in general industrial demand.

Speaker Change: We expect to deliver adjusted third quarter EPS between $2.10 and $2.20 per share, aided by solid operating performance.

Timothy M. Knavish: Our guidance midpoint is 4% higher than our record third quarter of 2023. However, the midpoint of our guidance is 10% higher than the third quarter of 2023, excluding the impact of a higher year-over-year tax rate, as the prior year included several non-recurring favorable discrete tax items. The difference in the tax rate is reducing our year-over-year EPS comparison by approximately $0.12 at the mid-period.

Speaker Change: Our guidance midpoint is 4% higher than our record third quarter 2023. However...

Speaker Change: The midpoint of our guidance is 10% higher than the third quarter of 2023, excluding the impact of a higher year-over-year tax rate, as the prior year included several non-recurring favorable discrete tax items.

Speaker Change: The difference in the tax rate is reducing our year-over-year EPS comparison by approximately 12 cents at the midpoint.

Timothy Knavish: We anticipate overall company selling prices to be flat in the third quarter, as the impact of certain index-based customer contracts in our industrial coating segment will be offset by selling price increases. In our performance coating segment, including some additional incremental pricing that will be realized in the third quarter. With regard to commodity raw materials, supply remains ample, and we continue to realize benefits for moderating input costs. In the third quarter, we expect flat to low single digit percentage raw material deflation, lower than the second quarter as we anniversary some decreased realized in 2023. As we have consistently demonstrated, we will drive further improvement of our operating margins, aided by sales volume growth leverage as a result of the execution of our enterprise growth strategy and self-help in manufacturing productivity and cost control initiatives, which includes continued execution of our previously approved restructuring actions.

Timothy M. Knavish: We anticipate overall company selling prices to be flat in the third quarter as the impact of certain index-based customer contracts in our industrial coding segment will be offset by selling price increases in our performance coding segment, including some additional incremental pricing that will be realized in the third quarter. With regard to commodity raw materials, supply remains ample, and we continue to realize benefits from moderating input costs. In the third quarter, we expect flat to low single-digit percentage raw material deflation, lower than the second quarter as we anniversary some decreased realized in 2023.

Speaker Change: We anticipate overall company selling prices to be flat in the third quarter as the impact of certain index-based customer contracts in our industrial coding segment will be offset by selling price increases

Speaker Change: and our performance coding segment, including some additional incremental pricing that will be realized in the third quarter.

Speaker Change: With regard to commodity raw materials, supply remains ample, and we continue to realize benefits from moderating input costs.

Speaker Change: In the third quarter, we expect flat to low single-digit percentage raw material deflation.

Speaker Change: lower than the second quarter as we anniversary some decreased realized in 2023.

Timothy M. Knavish: As we have consistently demonstrated, we will drive further improvement of our operating margins aided by sales volume growth leverage as a result of the execution of our enterprise growth strategy and self-help in manufacturing productivity and cost control initiatives, which includes continued execution of our previously approved restructuring action. Our more than 50,000 employees are committed to delivering best-in-class solutions to our customers that will drive growth for PPG. Our results this quarter were made possible by our highly dedicated team around the world who make it happen and deliver on our purpose to protect and beautify the world every day. Thank you for your continued confidence in PPG.

Speaker Change: As we have consistently demonstrated, we will drive further improvement of our operating margins.

Speaker Change: aided by sales volume growth leverage as a result of the execution of our enterprise growth strategy and self-help in manufacturing productivity and cost control initiatives which includes continued execution of our previously approved restructuring actions.

Timothy Knavish: Our more than 50,000 employees are committed to delivering best-in-class solutions to our customers that will drive growth for PPG. Our results this quarter were made possible by our highly dedicated team around the world who make it happen and deliver on our purpose to protect and beautify the world every day. Thank you for your continued confidence in PPG.

Speaker Change: Our more than 50,000 employees are committed to delivering best-in-class solutions to our customers that will drive growth for PPG.

Speaker Change: Our results this quarter were made possible by our highly dedicated team around the world who make it happen and deliver on our purpose to protect and beautify the world every day.

Operator: This concludes our prepared remarks. And now, would you please open the line for questions? Thank you.

Operator: This concludes our prepared remarks, and now would you please open the line for questions.

Speaker Change: Thank you for your continued confidence in PPG. This concludes our prepared remarks, and now would you please open the line for questions.

Operator: Thank you.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone. Pause for just a moment to compile the Q&A. Your first question comes from the line of John McNulty with BMO. Your line is open, please go ahead. Yeah, good morning.

Operator: At this time, I would like to remind everyone that in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Speaker Change: Thank you. At this time I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

John Mcnulty: Your first question comes from the line of John McNulty with BMO. Your line is open. Please go ahead.

Speaker Change: Your first question comes from the line of John McNulty with BMO. Your line is open, please go ahead.

John Patrick McNulty: Thanks for taking my question. I guess maybe the first one would just be the US. I would say that that's increasing the likelihood of a sale for some of the other avenues, JVs, partnerships. I think, you know, you kind of said at the beginning of all this, Any option is open, but it sounded like a sale was the preference. Would you say there's a high likelihood of this ending up being?

Timothy Knavish: Yeah, good morning. Thanks for taking my question. So I guess maybe the first one would just be on the US-Canada architectural review. It sounds like you're getting a reasonable amount of interest. Would you say that that's increasing the likelihood of a sale or some of the other avenues, JVs, partnerships? I think you kind of said at the beginning of all this, any option is open, but it sounded like the sale was the preference. Would you say there's a high likelihood of this ending up being a sale?

John Patrick McNulty: Yeah, good morning. Thanks for taking my question. So, I guess maybe the first one would just be on the U.S.-Canada architectural review. It sounds like you're getting a reasonable amount of interest. Would you say...

John Patrick McNulty: That that's increasing the likelihood of a sale versus some of the other avenues, JVs, partnerships. I think, you know, you kind of said at the beginning of all this, any option is open, but it sounded like a sale was the preference. Would you say there's a high likelihood of this ending up being a sale?

Timothy Knavish: Hey, John, thanks for the question. We're very pleased with the level of interest in the architectural US Canada business, and I will say that level of interest has great diversity across the scenarios that may end up being the final path forward. So it's just too early at this point to say which one of those is kind of leading the pack, as we've had really, really good interest in a number of different scenarios from full sale to JV and other forms of partnerships. So just too early, John, but we are making good progress. And John, this has been, as we said at 1070 opening remarks, we're in the normal process working with these interested parties, working with our bankers, having traditional management meetings, etc.

Timothy M. Knavish: Hey, John, thanks for the question. We're very pleased with the level of interest in the architectural U.S.-Canada business, and I will say that the level of interest has great diversity across the scenarios that may end up being the final path forward. So, it's just too early at this point to say which one of those is kind of leading the pack, as we've had really good interest in a number of different scenarios, from, you know, Full Sail to JV and other forms of partnerships. So, it's just too early, John, but we are making good progress. And John, this is Vince.

John Patrick McNulty: Hey John , thanks for the question. We're very pleased with the level of interest in the architectural U.S. Canada business, and I will say that level of interest has great diversity across the scenarios that may end up being the final path forward.

John Patrick McNulty: So it is, it's just too early at this point to say which one of those is kind of leading the pack as we've had

John Patrick McNulty: Really, really good interest in a number of different scenarios from, you know, Full Sail to JV and other forms of partnerships. So, just too early, John , but we are making good progress.

Vincent J. Morales: As we said, Tim said in his opening remarks, we're in the normal process. Working with these interested parties, working with our bankers, having traditional management meetings, etc. So we remain on our original schedule to determine a path forward. Your next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open. Please go ahead. Yeah, good morning, guys. Question on Auto OE.

John Patrick McNulty: And John , this is Vince. As we said, as Tim said in the opening remarks, we're in the normal process.

Vincent J. Morales: working with these interested parties, working with our bankers, having traditional management meetings, etc. So we remain on our original schedule to determine a path forward.

Timothy Knavish: So we remain on our original schedule to determine a path forward.

Duffy Fisher: Your next question comes from the line of Duffy Fisher with Goldman Sachs. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open, please go ahead.

Timothy Knavish: Yeah, good morning, guys. Question on auto-OE. So the numbers you put up were worse than, you know, like if we're looking at just the global auto-builds, you know, S&P or IHS. So is that a customer footprint issue? Is it a destocking by the customer first?

Patrick Duffy Fischer: So the numbers you put up were worse than you know, like, if we're looking at just the global auto builds, you know, S&P or IHS. So is that a customer footprint issue? Is it a de-stocking by the customer? First, and then do we need to anniversary that there are two more quarters after this that are going to kind of be down in the high single digits to get to a new level of run rate? Hey Duffy, thanks for the question.

Patrick Duffy Fischer: Yeah, good morning guys. Question on auto OE. So, the numbers you put up were worse than, you know, like if we're looking at just the global auto builds, you know, S&P or IHS.

Speaker Change: So, is that a customer footprint issue? Is it a de-stocking by the customer first? And then, do we need the anniversary of that? Are there two more quarters after this that are going to kind of be down high single digits to get to a new level of run rate?

Timothy Knavish: And then do we need to anniversary that? Are there two more quarters after this that are going to kind of be down high single digits to get to a new level of run rate?

Timothy Knavish: Hey, Duffy, thanks for the question. You know, our numbers, our projections may have been a bit different than what you're seeing from some of the kind of global services, service providers. A couple of things there. You know, we do have a very strong position in Europe, which was down more than average. And also, our projections, while services maybe are looking more at macros, our projections for Q3 in particular are based on what we actually see in specific assembly plan schedules at the plants that we serve. And a number of them have increased just very recently, increased their summer down times.

Timothy M. Knavish: You know, our numbers, our projections may have been a bit different than what you're seeing from some of the global services, service providers, a couple of things there. But you know, we do have a very strong position in Europe, which, which, which is down more, more than average. And also, our projections, while services maybe you're looking more at macros, our projections for, you know, Q3 in particular, are based on what we actually see in specific assembly plant schedules at the plants that we serve. And a number of them have recently increased their summer down times. So that that may have a disproportionate impact versus what you may be seeing publicly.

Patrick Duffy Fischer: Hey Duffy, thanks for the question.

Patrick Duffy Fischer: You know, our numbers, our projections may have been a bit different than what you're seeing from some of the kind of global services.

Patrick Duffy Fischer: Service Providers

Speaker Change: A couple of things there, you know, we do have a very strong position in Europe .

Speaker Change: which was down more than average.

Speaker Change: And also, our projections, while services maybe are looking more at macros...

Timothy M. Knavish: And then finally, I'd say, as you know, we have a very strong position in China. And we did see a step down in Chinese production plans, you know, as soon as the EV tariffs were announced. And I think some of our customers are playing it cautious here until they see how that scenario plays out. Because, as you know, particularly the largest producer there is, is exporting quite a bit there. So we do think that's a transitory item that will play out. Yeah, definitely.

Speaker Change: Our projections for Q3, in particular, are based on what we actually see in specific assembly plan schedules at the plants that we serve, and a number of them have increased, just very recently, increased their summer down times.

Timothy Knavish: So that may have a disproportionate impact versus what you may be seeing publicly. And then finally, I'd say, as you know, we have a very strong position in China. And we did see a step down in China production plans, you know, as soon as the EV tariffs were announced. And I think some of our customers are playing it cautious here until they see how that scenario plays out because, as you know, particularly the largest producer there is exporting quite a bit there. So we do think that's a transitory item that will play out.

Speaker Change: So that may have a disproportionate impact versus what you may be seeing publicly. And then finally, I'd say, as you know, we have a very strong position in China.

Speaker Change: And we did see a step down in China production plans, you know, as soon as the EV tariffs were announced.

Speaker Change: And I think some of our customers are playing it cautious here until they see how that scenario plays out. Because as you know, particularly the largest producer there is exporting quite a bit there. So we do think that's a transitory item that will play out.

Timothy Knavish: Yeah, definitely. This has been just a point of clarification on our materials. You know, we provide organic sales numbers, which for us includes volume and price, as we've alluded to many times this year in this business and in our industrial segment. And we have index-based pricing. So, excluding price, you know, we're much closer to the service provider numbers that you alluded to in your question. So you have to buy for gate price first, first volume.

Vincent J. Morales: This has been just a point of clarification on our materials. We provide organic sales numbers, which for us include volume and price, as we've alluded to many times this year in this business and in our industrial segment, we have index-based pricing. So, excluding price, you know, we're much closer to the service provider numbers that you alluded to in your question, so you have to bifurcate price versus volume. Your next question comes from the line of Ghansham Panjabi, with Ben. Your line is open, please go ahead. Thank you.

Speaker Change: Yeah, Dan Duffy, this is Vince. Just a point of clarification on our materials, you know, we provide organic sales numbers.

Dan Duffy: which for us includes volume and price as we've alluded to many times this year in this business and in our industrial segment we have index based pricing

Speaker Change: So, excluding price, we're much closer to the service provider numbers that you alluded to in your question. So, you have to bifurcate price versus volume.

Ghansham Panjabi: Your next question comes from the line of Gangshan Panjabi with bed. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Ghansham Panjabi with Baird. Your line is open, please go ahead.

Ghansham Panjabi: Good morning. Thank you.

Timothy Knavish: You know, Tim, can you give us a bit more color on the volume trend line in Europe during the second quarter? You know, you mentioned it was a bit below your forecast, which specific businesses, perhaps where a little bit below, I think you call that Auto EM. And then secondly, you know, in terms of the flatish volumes on a consolidated basis year every year for two Q and the margin improvement, which is quite significant. Can you just give us some of the high-level drivers of that?

Ghansham Panjabi: Tim, can you give us a bit more color on the volume trend line in Europe during the second quarter? You know, you mentioned it was a bit below your forecast. Which specific businesses perhaps were a little bit below? I think you called that out.

Ghansham Panjabi: Yes, good morning. Thank you.

Ghansham Panjabi: Tim, can you give us a bit more color on the volume trend line in Europe during the second quarter? You mentioned it was a bit below your forecast.

Timothy M. Knavish: And then secondly, you know, in terms of Flat-Ish Volumes at a Consolidated Volume, Sure, Ghansham, thank you for the questions. Yeah, the volume trend in Q2 did play out a little worse than we expected, particularly at the end of the quarter. June, in particular, was soft. Largely driven by what I just said about Duffy's questions, that certain assembly plants started to add additional down weeks, and that affected the US and Europe. So that was one thing that played out. The other one was the DECO business in Europe, softer than we expected, again, particularly in the last month of the quarter. A little more color here would be nice.

Ghansham Panjabi: which specific businesses perhaps were a little bit below, I think you call that Auto-EM and then and then secondly, you know in terms of the The flattish volumes on a consolidated basis year-over-year for 2Q and the margin improvement, which is quite significant Can you just give us some of the high-level drivers of that?

Timothy Knavish: Sure, Gunsham. Thank you for the question. Yeah, the volume, the volume trend into to did play out a little worse than we expected, particularly at the end of the quarter. You know, June in particular was soft, largely driven by what I just said on Duffy's questions that certain assembly plants started to add additional down down weeks. And that affected the US and Europe. So that was one thing that played out. The other one is the deco business in Europe softer than we expected again, particularly in the last month of the quarter. The little more color there, you know, we're very strong.

Speaker Change: Sure, Ghansham, thank you for the questions. Yeah, the volume, the volume trend in Q2 did play out a little worse than we expected, particularly at the end of the quarter. You know, June in particular was soft.

Speaker Change: Largely driven by what I just said on Duffy's question that certain assembly plants started to add additional down weeks.

Speaker Change: And that affected U.S. and Europe , so that was one thing that played out. The other one is the DECO business in Europe , softer than we expected, again, particularly in the last month of the quarter. A little more color there. You know, we're very strong.

Timothy M. Knavish: You know, we're very strong in France, and that's one of our larger countries for sales. And, as you know, it had some unique situations going on there.

Timothy Knavish: in France, and that's one of our larger countries for sales. And yes, you know that had some unique situations going on there. So that did slow down for us in June. But interestingly, a subset of Europe's story is Eastern Europe, which has been stronger than expected, where we actually also have a very strong position in countries like Poland and others. So it's really those two businesses in Europe. Europe that trended downward as the quarter progressed. And then the overall volume being flat versus what we had previously said was really driven globally by auto and locally in Europe by architectural.

Speaker Change: in France and that's that's one of our larger countries for sales and yes you know that had some unique situations going on there so that did slow down for us in June but interestingly

Timothy M. Knavish: So that did slow down for us in June. But interestingly, a subset of the European story is that Eastern Europe has been stronger than expected, where we actually also have a very strong position in countries like Europe, I'm sorry, Poland and others. So it was really those two businesses in Europe that trended downward as the quarter progressed. The overall volume being flat versus what we had previously said was really driven globally by auto and locally in Europe by architecture.

Speaker Change: A subset of the Europe story is, Eastern Europe has been stronger than expected, where we actually also have a very strong position in countries like Europe , I'm sorry, Poland and others.

Speaker Change: So, it's really those two businesses in Europe that trended downward as the quarter progressed.

Speaker Change: And then the overall volume being flat versus what we had previously said was really driven globally by auto and locally in Europe by architectural. Those were the two big ones, but as I said in my opening remarks, we have been improving sequentially over the last six quarters.

Timothy M. Knavish: Those were the two big ones, but as I said in my opening remarks, we have been improving sequentially over the last six quarters. If you go back to the end of 22, we were down negative 5% in volume, and that has steadily improved to where we're printing flat this quarter. And also, in my remarks, I said there were six out of ten businesses that had positive volume for us. Just to give you some context, last year that was three out of ten.

Timothy Knavish: Those were the two big ones.

Timothy Knavish: But you know, as I said in my opening remarks, we did; we have been improving sequentially over the last six and six quarters. If you go back the end of 22, we were down negative 5% in volume. And that has steadily improved to where we were printing last this quarter. And also in my remarks, I said there were six out of 10 businesses that were positive volume for us. Just to give you some context there, last year that was three out of 10. So we went from three out of 10 to six out of 10, and we're planning on eight out of 10 in Q3, be in positive.

Speaker Change: If you go back to end of 22, we were down negative 5% in volume, and that has steadily improved to where we're printing flat this quarter.

Speaker Change: and also in my remarks I said there were six out of ten businesses that were positive volume for us just to give you some context there last year that was three out of ten

Christopher S. Parkinson: So we went from three out of 10 to six out of 10, and we're planning on eight out of 10 in Q3 being positive. So a little under where we wanted to be for Q2, largely driven by the end of the quarter in those two businesses, but we feel good about the momentum, Ghansham. Your next question comes from the line of Chris Parkinson with Wolf Research. Your line is open, please go ahead. Great, good morning, everybody.

Speaker Change: So, we went from 3 out of 10 to 6 out of 10, and we're planning on 8 out of 10 in Q3 being positive. So, a little under where we wanted to be for Q2, largely driven by end of quarter in those two businesses, but we feel good about the momentum, Ghansham.

Timothy Knavish: So a little, a little under where we wanted to be for Q2, largely driven by end of quarter and those two businesses, but we feel, we feel good about the momentum gaunchum.

Christopher Parkinson: Your next question comes to the line of Chris Parkinson with Wolf research. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Chris Parkinson with Wolf Research. Your line is open, please go ahead.

Christopher Parkinson: Great.

Timothy Knavish: Good morning, everybody. You know, I don't think any of us are really in a doubt that the macro has been a little bit shopier than most were anticipating into the second quarter, but you've been really focused in the portfolio and your ability to outgrow certain markets. You know, I know it's still been early and perhaps tough to tell, but what would be at this juncture that two to three and markets where you are by far and away the most comfortable and PPG ability to consistently outperform market growth rates. Thank you. Hey, Chris. Thanks for the question.

Timothy M. Knavish: You know, I don't think any of us are really gonna doubt it, a little bit choppier than most were anticipating into the second quarter. But, you know, Tim, you didn't really focus on the portfolio and your ability to outgrow, you know, certain end markets. You know, I know it's still a bit early and perhaps tough to tell. But what would the two to three end markets be at this juncture? Where you are by far and away the most comfortable in PPG's ability to consistently outperform the market. Yeah, hey Chris, thanks for the question.

Christopher S. Parkinson: Great. Good morning, everybody.

Christopher S. Parkinson: You know, I don't think any of us are really going to doubt that the macro has been a little bit choppier than most were anticipating into the second quarter, but, you know, Tim, you didn't really focus in the portfolio and your ability to outgrow, you know, certain end markets, you know, I know it's still a bit early and perhaps tough to tell, but what would be at this juncture, the two to three end markets,

Timothy M. Knavish: where you are by far and away the most comfortable in PPG's ability to consistently outperform market growth rates. Thank you.

Timothy M. Knavish: Number one, aerospace. You know, we're really just, as I've said, for the last several quarters. Everything we can make is sold and shipped. We're adding capacity, we're improving productivity, and we've improved output this past quarter. So we're selling more, and we'll continue to outperform. Despite the, I always say that with Refinish, you really have to look over a full year basis at this business because you always have order pattern issues from the distributors around the world. Refinish, we continue to gain, share, and refinish through the execution of our digital systems, which have been widely accepted and embraced. And we keep adding to that toolbox of new digital tools, Chris.

Timothy Knavish: You know, number one aerospace, you know, we're really just as I've said for last several quarters. Everything we can make is sold and shipped. We're adding capacity. We're improving productivity. We've improved output in this past quarter. So we're selling more, and we'll continue to outperform. You know, despite the, I always say that with refinished, you really have to look over a four year basis with this business because you always have order pattern issues. You know, from the distribute distributors around the world refinished, we continue to gain share and refinished by execution of our digital systems, which have been widely accepted and embraced, and we keep adding to that toolbox of new digital tools, Chris.

Timothy M. Knavish: Yeah, hey Chris, thanks for the question. You know, number one, aerospace. You know, we're really just, as I've said for the last several quarters,

Speaker Change: everything we can make is

Speaker Change: is sold and shipped.

Speaker Change: We're adding capacity, we're improving productivity, we've improved output in this past quarter.

Speaker Change: We're selling more and we'll continue to outperform, you know, despite the, I always say that with Refinish, you really have to look over a full year basis with this business, because you always have order pattern issues.

Speaker Change: from the distributors around the world, refinish. We continue to gain, share, and refinish.

Speaker Change: by execution of our digital systems, which have been, you know, widely accepted and embraced. And we keep adding to that toolbox of new digital tools, Chris. So, feel really good about that.

Timothy Knavish: So feel really good about that. This packaging outperforming from a volume standpoint, and we still haven't launched everything that we won in the last few quarters. Traffic, although not our biggest business, you know, that's, I want to point to a business that the first couple of years I would say we cleaned up that business and now we're in a position where it is really starting to perform for us. You know, other businesses vary very much by specific region, but those would be the four that overall I would say we're outperforming. But I do want to point out three other things: aggregate Mexico, just Mexico across the board, whether it's PPG Comics or our industrial segment businesses or protective encodings, protective marine, we're outperforming Mexico.

Timothy M. Knavish: So I feel really good about that business. Packaging is outperforming from a volume standpoint, and we still haven't launched everything that we've won in the last few quarters. Traffic, although not our biggest business, I want to point to a business that, in the first couple of years, I would say we cleaned up that business, and now we're in a position where it is really starting to perform for us. Other businesses vary very much by specific region, but those would be the four that, overall, I would say, were outperforming. But I do want to point out three other things. Aggregate Mexico.

Speaker Change: packaging outperforming from a volume standpoint and we still haven't launched everything that we've won in the last few quarters.

Speaker Change: Traffic, although not our biggest business, I want to point to a business that the first couple of years I would say we cleaned up that business and now we're in a position where it is really starting to perform for us.

Speaker Change: Other businesses vary very much by specific region, but those would be the four that overall, I would say, were outperforming. But I do want to point out three other things. Aggregate Mexico.

Timothy M. Knavish: Just Mexico across the board, whether it's PPG COMEX or our industrial segment businesses or protective encodings, protective marine, we're outperforming Mexico. Aggregate China, of course, with excluding DECO, where we don't play. Aggregate China, we're outperforming. Aggregate India, except for DECO, where we don't play, we're outperforming. So that's how I would describe the businesses that I feel most confident about our overperformance going forward. Your next question comes from David Begleiter with Deutsche. Your line is open, please go ahead. Thank you. Good morning.

Speaker Change: Just Mexico across the board, whether it's PPG COMEX or our industrial segment businesses.

Timothy Knavish: Aggregate China, of course, with excluding Deco where we don't play aggregate China, we're outperforming aggregate India, except for Deco where we don't play we're outperforming. So that's how I would describe the businesses that, you know, I feel most confident about our overperformance going forward, Chris.

Speaker Change: Protective encodings.

Speaker Change: Protective Marine will outperform Mexico. Aggregate China, of course, with excluding DECA, where we don't play.

Speaker Change: Aggregate China were outperforming.

Speaker Change: Aggregate India, except for Deco where we don't play, we're outperforming. So that's how I would describe the businesses that I feel most confident about our overperformance going forward, Chris.

David Baglizer: Your next question comes from the line of David Baglizer with Deutsche Bank; your line is open, please go ahead. Thank you, good morning. Tim, as you go through the review of a US paint business, are you seeing any disruptions in the business and particularly see any market share losses as due to challenges or disruptions in the business?

Speaker Change: Your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open, please go ahead.

David L. Begleiter: Tim, as you go through the review of the U.S. paint business... Any disruptions to business? Hey Dave, we had a very good quarter in that business. So, of course, that was something that, you know, we had some concerns about as we announced it, but, internally, the team has done a really good job working with our employees, our customers, our distribution partners in the private dealer space, our big box customers, and we had a, you know, we had a good quarter in that business, about, you know, mid-single-digit growth.

David L. Begleiter: Thank you, good morning. Tim, as you go through the review of a U.S. paint business, do you see any disruptions to the business and particularly see any market share losses due to challenges or disruptions in the business? Thank you.

Timothy Knavish: Thank you. Hey, Dave, we had a very good quarter in that business. So, of course, that was something that we had some concerns about as we announced it, but internally the team has done a really good job working with our employees, our customers, our distribution partners in the private dealer space, our big box customers, and we had a good quarter in that business. You know, mid-single digit growth. So, while it's something we're watching and monitoring very closely and trying to stay ahead of it, I'd say the team did a really good job in Q2 of doing that, and we're expecting the same in Q3.

Timothy M. Knavish: Hey Dave, we had a very good quarter in that business.

Speaker Change: So, of course, that was something that, you know, we had some, you know, concerns about as we announced it.

Speaker Change: Internally, the team has done a really good job working with our employees.

Speaker Change: Our customers, our distribution partners in the private dealer space, our big box customers, and we had a good quarter in that business, you know, mid-single-digit growth.

David L. Begleiter: So, you know, while it's something we're watching and monitoring very closely and trying to stay ahead of it, I'd say the team did a really good job in Q2 of doing that, and we're expecting the same in Q3. There are lots of discussions.

Speaker Change: So, you know, while it's something we're watching and monitoring very closely and trying to stay ahead of it, I'd say the team did a really good job in Q2 of doing that and we're expecting the same in Q3. There's lots of discussions, of course there's some anxieties.

Timothy Knavish: There's lots of discussions. Of course, there's some anxieties, but so far that has not had any kind of sizable impact on the financial results.

Timothy M. Knavish: Of course, there are some anxieties, but so far, that has not had any kind of sizable impact on the financial results. The next question comes from the line of John Roberts with Masuho. Your line is open, please go ahead. Thank you, Tim.

Speaker Change: But, so far, that has not had any kind of sizable impact on the financial results.

John Roberts: Your next question comes from the line of John Roberts with Massugo. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of John Roberts with Masuho. Your line is open, please go ahead.

John Ezekiel E. Roberts: Are you still on track with the silica sale as well, and how do you feel about the rest of the specialty materials portfolio? Yeah, John, thanks for the question. Silica is, we're very much on track with that.

Timothy Knavish: Thank you, Tim. Are you still on track with the silica sale as well? And how do you feel about the rest of the specialty materials portfolio?

John Ezekiel E. Roberts: Thank you, Tim. Are you still on track with the silica sale as well, and how do you feel about the rest of the specialty materials portfolio?

Timothy Knavish: Yeah, John. Thanks for the question. Silica, we're very much on track with that. Maybe even a little ahead of where we are on architecture, US, Canada. We've had good interest there as well. Let's just say we're on our original schedule.

Timothy M. Knavish: Maybe even a little ahead of where we are in the architectural US and Canada. We've, we've had good interest there as well. And let's just say we're on our original, original schedule.

Speaker Change: Yeah, John , thanks for the question. Silica's, we're very much on track with that. Maybe even a little ahead of where we are on architectural US, Canada. We've had good interest there as well. And let's just say we're on our original schedule.

Timothy Knavish: The rest of that specialty business we really like, and here's why: because we have a leadership position in those spaces, and they're high technology spaces, which is right in our wheelhouse from our ND capability standpoint. Obviously not the biggest part of our portfolio, but that business was one of the good growth engines for us in Q2. We expect that to continue going forward, so they're good businesses for us.

Timothy M. Knavish: The rest of that specialty business is something we really like. And here's why: we have a leadership position in those spaces, and they're high technology spaces, which is right, right in our wheelhouse from a R&D capability standpoint. So, obviously, not the biggest part of our portfolio. But that business was one of the good growth engines for us.

Speaker Change: The rest of that specialty business we really like.

Speaker Change: And here's why, because we have a leadership position in those spaces.

Speaker Change: and their high technology spaces, which is right in our wheelhouse from an R&D capability standpoint. So, obviously not the biggest part of our portfolio.

Speaker Change: But that business was one of the good growth engines for us in Q2. We expect that to continue going forward. So they're good businesses for us.

Stephen Byrne: Your next question comes from the line of Stephen Byrne with Bank of America, Merrill Lynch. Your line is open; please go ahead. Yes, thank you.

Stephen V. Byrne: In Q2, we expect that to continue going forward. So they're good businesses for us. Your next question comes from the line of Stephen Byrne with Bank of America Merrill Lynch. Your line is open, please go ahead. Yes, Tim. And Tim, if you had a clean slate of how to report your findings.

Speaker Change: Your next question comes from the line of Stephen Byrne with Bank of America Merrill Lynch. Your line is open, please go ahead.

Timothy M. Knavish: You have these 10 businesses; you have some looming divestitures. If you were to report that network of businesses, would you choose two segments and allocate them the way they're currently arranged? Or would you consider going down a path?

Timothy Knavish: And Tim, if you had a clean slate of how to report your financials, you have these 10 businesses; you have some looming divestitures. If you were to report that network of businesses, would you choose two segments? And would you allocate them the way they're currently arranged? Or would you consider going down a path of either more segments or reporting revenue by business, something to drive more transparency?

Stephen V. Byrne: Yes, thank you.

Stephen V. Byrne: And Tim, if you had a clean slate of how to report your financials...

Stephen V. Byrne: You have these 10 businesses, you have some...

Stephen V. Byrne: If you were to report that network of businesses, would you choose two segments, and would you allocate them the way they're currently arranged?

Speaker Change: Or would you consider going down a path of either more segments or reporting revenue by business, something to drive more transparency?

Timothy M. Knavish: either more segments or reporting revenue by business something to drive more Thanks, Steve. You know, it is something I've given a lot of thought to, you know, and we'll continue to think about it and see what things look like, you know, post-architectural USCA, but at a high level, you know, we have a group of businesses that, essentially, deliver factory to factory, you know, pure business B2B type of businesses where they go from our factory to an assembly plant or from our And that's a logical fit because they have a lot of synergies, synergies in operations, synergies in raw materials, synergies in supply chain and logistics, and synergies in science and technology.

Timothy Knavish: It is something I've been given a lot of thought to, and we'll continue to think about it and see what things look like post-architectual usica, but high level. We have a group of businesses that essentially deliver factory to factory, pure business, B2B type of businesses where they go from our factory to an assembly plant or our factory directly to a factory. We have a pink shop of some kind, and that's a logical fit because they have a lot of synergies: synergies in operation, synergies in raw materials, synergies in supply chain and logistics, and synergies in SAO science and technology.

Speaker Change: Thanks Steve. You know it is something I've been given a lot of thought to, you know, and we'll continue to think about it and see what things look like.

Speaker Change: you know, post-architectural USCA, but high-level.

Speaker Change: You know, we have a group of businesses that...

Speaker Change: essentially deliver factory to factory you know pure business b2b type of businesses where they go from our factory to an assembly plant or our factory directly to a paint shop of some kind

Speaker Change: And that's a logical fit because they have a lot of synergies, synergies in operations, synergies in raw materials, synergies in supply chain and logistics, and synergies in science and technology.

Timothy Knavish: We have another group of businesses that largely goes through distribution and has a lot of value add services that are key part of the value proposition, like aerospace, like refinish, and like protective.

Speaker Change: We have another group of businesses that largely goes through distribution and has a lot of value-add services.

Speaker Change: that are a key part of the value proposition like Aerospace, like Refinish.

Timothy Knavish: So high level, I'm comfortable with it, but it's something we do look at on a regular basis, and we'll take a fresh look once this transaction is done. But I'm pretty comfortable with how we report today.

Speaker Change: and like protective so high-level I'm comfortable with it but it's something we do look at on a on a regular basis and you know we'll take a fresh look once once this transactions done but it you know I'm pretty comfortable with how we how we report today

Vincent Andrews: Your next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open; please go ahead. Thank you, and good morning.

Vincent Stephen Andrews: We have another group of businesses that largely go through distribution and have a lot of value-add services, you know that are a key part of the value proposition, like aerospace, like refinish, and like protective. So, at a high level, I'm comfortable with it, but it's something we do look at on a regular basis, and you know we'll take a fresh look once once this transaction is done, but you know I'm pretty comfortable with how we report today. Your next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open. Please go ahead. Thank you, and good morning.

Speaker Change: Your next question comes from the line of Vincent Andrews with Morgan Stanley . Your line is open, please go ahead.

Timothy M. Knavish: In our model, if we look out into 2025, we start to see raw materials move up, probably low single digits. [inaudible] Vincent, so what I would say at a very high level is there's sufficient capacity out there across the supply chain because if you look at the total industry for coatings, we're producing fewer liters than we did, you know, pre-COVID. And so there's a high level, there's, there's still quite a bit of capacity out there.

Timothy Knavish: In our model, if we look out into 2025, we start to see raw materials move up, probably low single digits in the first half of next year. So is that something you'll look to get ahead of from a pricing perspective in the back half of the year, or will you take more of a wait-and-see approach? And are there any parts of the business where we forget about refinish an arrow where you have well-defined pricing power? Are there any parts of the business, maybe auto EM, where you're a little more concerned about being able to pass that through?

Vincent Stephen Andrews: Thank you and good morning. In our model, if we look out into 2025, we start to see raw materials move up, probably low single digits.

Speaker Change: in the first half of next year.

Speaker Change: So is that something you'll look to get ahead of from a pricing perspective in the back half of the year, or will you take more of a wait-and-see approach?

Speaker Change: And are there any parts of the business where, you know, we forget about refinish and aero where you have well-defined pricing power. Are there any parts of the business, maybe auto OEM, where you're a little more concerned about being able to pass that through?

Timothy Knavish: Yeah, even so what I would say at a very high level is there's sufficient capacity out there across the supply chain because if you look at the total industry of coatings, we're producing less leaders than we did pre-COVID, and so there's high level, there's still quite a bit of capacity out there. Of course, we do what we can to get ahead of it, and you pointed to some places where we can get ahead of it. The other businesses, largely the industrial segment, it's typically more real time, and in some cases, as you know, businesses are able to get pricing faster than others.

Vincent Stephen Andrews: Hey Vincent, so what I would say at a very high level is there's sufficient capacity out there across the supply chain because if you look at

Vincent Stephen Andrews: The total industry of coatings, we're producing less liters than we did, you know, pre-COVID. And so there's high level, there's still quite a bit of capacity out there.

Timothy M. Knavish: Of course, we do what we can to get ahead of it, and you pointed out some places where we can get ahead of it. The other businesses, largely the industrial segment, it's typically more real-time, and in some cases, as you know, businesses are able to get pricing faster than others.

Speaker Change: Of course, we do what we can to get ahead of it, and you pointed to some places where we can get ahead of it. The other businesses, largely the industrial segment, it's typically more real time.

Speaker Change: And in some cases, as you know, businesses are able to get pricing faster than others.

Timothy M. Knavish: You know, and as we discussed during the last inflationary cycle, auto OEM is typically the slowest, but we eventually get there, just like we did last cycle. So I would expect it to play out the same in any cycle that may be on the horizon, whether it's next year or the following year. Your next question comes from the line of Michael Sison with Wells Fargo. Your line is open, please go ahead. Hey, good morning. Can you maybe talk a little bit about the profitability of U.S. Architectural Paints?

Timothy Knavish: And as we discussed during the last inflationary cycle, auto EM is typically the slowest, but we eventually get there, just like we did last cycle. So I would expect it to play out the same in any cycle that may be on a rise in whether it's next year or the following year.

Speaker Change: You know, and as we discussed during the last inflationary cycle, auto OEM is typically the slowest.

Speaker Change: But we eventually get there, just like we did last cycle. So I would expect it to play out the same in any cycle that may be on the horizon, whether it's next year or the following year.

Michael Sison: Your next question comes from the line of Michael Sison with Wells Fargo. Your line is open; please go ahead. Okay, good morning. Can you maybe talk a little bit about the profitability of US architectural pain? Has there been any improvement over the last year?

Speaker Change: Your next question comes from the line of Michael Sison with Wells Fargo. Your line is open, please go ahead.

Michael Joseph Sison: Hey, good morning.

Michael Joseph Sison: Can you maybe talk a little bit about the profitability at U.S. Architectural Paints? Has there been any improvement, you know, over the last year?

Michael Joseph Sison: Has there been any improvement, you know, over the last year? You know, maybe what type of growth you think that business will generate in the second half. And then finally, Tim, when you think about the Full Sail JVR partnership, how are you thinking? You know, what are your thoughts about which one would be the best transaction for sure?

Timothy Knavish: You know, maybe what type of growth you think that business will generate in a second half, and then finally Tim, when you think about the full sale, JV, or partnership, how are you thinking, you know, how are you thinking which one would be the best transaction for shareholders? Well, you know, it's the best transaction for shareholders will come down to two pieces. One is, you know, what are the proceeds? What do we get paid for, what we're selling? And two, what's the long-term strategic value of anything we might be left with?

Michael Joseph Sison: You know, maybe what type of growth do you think that business will generate in the second half? And then, you know, finally, Tim, when you think about the full-sale JVR partnership, how are you thinking?

Timothy M. Knavish: you know how are you thinking which one would be the best transaction for shareholders?

Timothy M. Knavish: Well, the best transaction for shareholders will come down to two pieces. One is, what are the proceeds? What do we get paid for what we're selling?

Timothy M. Knavish: Well, you know, the best transaction for shareholders will come down to two pieces. One is, you know, what are the proceeds? What do we get paid for what we're selling? And two, what's the long-term strategic value of anything we might be left with?

Timothy M. Knavish: And two, what's the long-term strategic value of anything we might be left with? So that's why it's really hard for me or any of us to say, here's the best shareholder value proposal right now, because the combination of those two, price, proceeds, and future value of anything we might be left with, we're just not there yet in the process. But that's how we're thinking about it, a combination of shareholder value today for what we get, and shareholder value for the future for, you know, how it fits with our growth strategy and what, you know, what we can expect from earnings and cash flow in the long term. Yeah, Mike on current events.

Timothy Knavish: So that's why it's really hard for me or any of us to say, here's the best shareholder value proposal right now because the combination of those two price proceeds and future value of anything we might left with, we're just not there yet in the process. But that's how we're thinking about it: a combination of shareholder value today for what we get and shareholder value for future for, you know, how it fits with our growth strategy and what, you know, what we can expect from an earnings and cash flow on the long term.

Timothy M. Knavish: So, that's why it's really hard for me or any of us to say, here's the best shareholder value proposal right now, because the combination of those two, price, proceeds, and what we

Timothy M. Knavish: and future value of anything we might be left with, we're just not there yet in the process.

Timothy M. Knavish: But that's how we're thinking about it, is a combination of shareholder value today for what we get and shareholder value for future for, you know, how it fits with our growth strategy and what, you know, what we can expect from an earnings and cash flow on the long term.

Vincent Morales: Yeah, Mike, on current events, look, as Tim's just said in an earlier question, your business is performing well. Volume volumes are key drivers to profitability. You know, our volumes are up in Q2, as we've said in prepared remarks. So we're pleased with the progress year to date.

Vincent J. Morales: Look, as Tim just said in an earlier question, your business is performing well. Volume is a key driver of profitability. Our volumes were up in Q2, as we said in prepared remarks. So we're pleased with the progress year to date. Your next question comes from the line of Frank Mitsch with Fermium Research.

Timothy M. Knavish: Yeah, Mike, on current events, look, as Tim just said in an earlier question, your business is performing well.

Mike: Volumes are a key driver to profitability. Our volumes were up in Q2, as we said in prepared remarks, so we're pleased with the progress year-to-date.

Frank Mitch: Your next question comes from the line of Frank Mitch with Fermi and Research. Your line is open. Please go ahead.

Frank Joseph Mitsch: Your line is open, please go ahead. Good morning and congratulations, Alex, on your new role. Tim, I want to ask about the expectations for the second half being lower than you previously thought, which resulted in the full-year EPS guide being down. I'm just curious, you know, roughly what was the, you know, when you think back three months ago or even six months ago when you first put out the full-year projection, what sort of level of volume growth were you expecting in the second half of the year?

Speaker Change: Your next question comes from the line of Frank Mitsch with Fermium Research. Your line is open, please go ahead.

Timothy Knavish: Good morning, and congrats, Alex, on your new role. Tim, I want to, I want to ask about the expectations for the second half to be lower than you previously thought, you know, which resulted in the four-year EPS guide down. Just curious, you know, roughly what was the, well, you know, when you think back three months ago, or even six months ago when you first put out the full year projection. What sort of level of volume growth were you expecting in the second half of the year and where, where are you now, you know, in terms of expectations on volume growth or the second half of the year.

Frank Joseph Mitsch: Good morning and congrats Alex on your new role.

Timothy M. Knavish: Tim, I want to ask about the expectations for the second half to be lower than you previously thought, which resulted in the full year EPS guide down.

Frank Joseph Mitsch: I'm just curious, you know, roughly, when you think back three months ago, or even six months ago, when you first put out the full-year projection.

Speaker Change: What sort of level of volume growth were you expecting in the second half of the year? And where are you now, you know, in terms of expectations on volume growth for the second half of the year?

Frank Joseph Mitsch: And where are you now, you know, in terms of expectations for volume growth for the second half of the year? And I know that part of the reduction is tied to auto OEM, and you said that you were surprised by the extension of the assembly plant downtime. Just curious, looking back on PPG's history, when you've been surprised in the past by the auto OEMs taking extended assembly plant downtime, does that serve as any sort of a foreshadowing of recessionary environments or anything like that? Any color there would be very helpful.

Timothy Knavish: And I know that part of the reduction is tied to auto OEM. And you said that you know you've been surprised by the extension of the assembly plant downtime.

Speaker Change: And I know that part of the reduction is tied to auto OEM and you said that, you know, you've been surprised by the extension of the assembly plant.

Timothy Knavish: Just curious, looking back in PPG's history, when you've been surprised in the past by the auto OEMs taking extended assembly plant downtime, does that serve as any sort of foreshadowing of recessionary environments or anything like that? Any color there will be very helpful.

Speaker Change: downtime. Just curious looking back in PPG's history when you've been surprised in the past by the auto OEMs taking extended assembly plant downtime, does that serve as any sort of a foreshadowing of recessionary environments or anything like that? Any color there would be very helpful. Thank you.

Timothy Knavish: Thank you.

Timothy Knavish: Hey, Frank. So first of all, what changed for, you know, from what we're saying about the full year to what we're saying today. It's largely a couple of big businesses like Auto Global and Architectural Europe. And of course, the other businesses are puts and takes some up some, you know, some down. So that's really the biggest, the biggest driver.

Timothy M. Knavish: Thank you. Hey Frank. So, first of all, what changed from what we were saying about the full year to what we're saying today? It's largely a couple of big businesses like auto, global, and architectural Europe. And, of course, the other businesses are puts and takes, some up, some down. So, that's really the biggest driver.

Speaker Change: Hey Frank, so first of all, what changed from what we were saying about the full year to what we're saying today? It's largely a couple of big businesses like auto, global.

Speaker Change: and Architectural Europe .

Frank Joseph Mitsch: And of course, the other businesses are puts and takes, some up, some down. So that's really the biggest driver. And to your second question, I'm not using the recession word at all. What I see more is...

Timothy M. Knavish: And to your second question, I'm not using the recession word at all. What I see more is temporary adjustments at assembly plants, just given vehicles, some certain vehicles selling less than they expected and inventories going up a little bit. Inventories are still very healthy compared to pre-COVID levels, but if you look at U.S. inventories, they did creep up a little bit. So, I think there's just some adjustment

Timothy Knavish: And to your second question, I'm not using the recession word at all. What I see more is, you know, temporary adjustments at assembly plants, just given vehicles, some certain vehicles selling less than expected and inventories going up a little bit. You know, inventories are still very healthy compared to pre-COVID levels, but you know, if you look at US inventories, they did creep up a little bit. So I think there's just some adjustment. There's caution from our customers on affordability, interest rates, you know, things that really drive some of the vehicle purchase behavior by consumers. You know, you probably have your own prediction on interest rates.

Speaker Change: you know temporary adjustments at assembly plans

Speaker Change: Just given vehicles, some certain vehicles selling less than expected and inventories going up a little bit.

Speaker Change: Inventories are still very healthy compared to pre-COVID levels, but if you look at U.S. inventories, they did creep up a little bit. So I think there's just some adjustment. There's caution from our customers on affordability, interest rates.

Timothy M. Knavish: There's caution from our customers on affordability, interest rates, things that really drive some of the vehicle purchase behavior by consumers. You probably have your own prediction on interest rates. I have mine.

Speaker Change: You know, things that really drive some of the vehicle purchase behavior by consumers.

Speaker Change: You know, you probably have your own prediction on interest rates. I have mine, but at some point, you know, that should be a pressure that comes off of new car purchases. And I think our customers are just watching the same things very closely, inventories versus affordability and interest rates. But I do not see this as foreshadowing of, you know, foreshadowing of a recession of any kind.

Timothy Knavish: I have mine, but at some point, you know, that should be a pressure that comes off of new car purchases. And I think our customers are just watching the same things very closely: inventories versus affordability and interest rates. But I do not see this as foreshadowing of a recession.

Timothy M. Knavish: But at some point, that should be pressure that comes off of new car purchases. And I think our customers are just watching the same things very closely, inventories versus affordability and interest rates. But I do not see this as foreshadowing of a recession of any kind. Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open; please go ahead. Hi, good morning.

Patrick Cunningham: Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open. Please go ahead.

Patrick David Cunningham: I'm just curious about your optimism for the refinish outlook for the second half. Which regions do you expect to see the most meaningful growth? And, you know, how much of a role will the moonwalk and link play for organic growth? And are you seeing anything in terms of data points or anything of that nature that gives you confidence in the underlying market growth and the fact, Yeah, Patrick, so I'd say the biggest confidence point for us is really everywhere outside of Europe, where we're really still in the very early innings of launching our productivity digital ecosystem?

Speaker Change: Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open, please go ahead.

Timothy Knavish: Hi, good morning. I'm just curious on your optimism for the re-finished outlook for the second half. You know, which regions do you expect to see the most meaningful growth, and how much of a role will moonwalk and link play for organic growth? And are you seeing anything in terms of data for anything? Or does it give you confidence in the underlying market revenue back?

Patrick David Cunningham: Hi, good morning. I'm just curious on your optimism for the refinished outlook for the second half. You know, which regions do you expect to see the most meaningful growth and how much of a role will Moonwalk and Link play?

Speaker Change: Play for organic growth. And are you seeing anything in terms of data points or anything in order both that gives you confidence in the underlying market growth in the back half?

Timothy Knavish: Patrick, so I'd say the, you know, the biggest confidence point for us is really everywhere outside of Europe where we're really still in the very early innings of launching our productivity digital ecosystem. You know that we started that in Europe, gained tremendous share and customer attention and, you know, subscription revenue as we launch that across Europe. And we're still very early days in the US, Australia, China, places like that. So good confidence in the share gain as we roll out those tools around the world. You know, the collision rates are, you know, our question mark, depending on where you are around the world.

Speaker Change: Yeah Patrick, so I'd say the you know the biggest confidence point for us is is really

Speaker Change: everywhere outside of Europe

Speaker Change: where we're really still in the very early innings of launching our productivity digital ecosystem. You know, we started that in Europe .

Patrick David Cunningham: You know that we started that in Europe, gained tremendous share and customer retention and, you know, subscription revenue as we launched that across Europe, and we're still in the very early days in the US, Australia, China, places like that.

Speaker Change: Gained tremendous share and customer attention and you know subscription revenue as we launched that across Europe and we're still very early days in the U.S.

Timothy M. Knavish: So, good confidence in the share gain as we roll out those tools around the world. The collision rates are a question mark, depending on where you are around the world, but we believe our penetration rates of these... digital ecosystems are still single digits for all the body shops out there. So, you know, we've still got a lot of runway, and as I said in my earlier answer, we continue to add to that toolbox of digital productivity tools as we go forward.

Speaker Change: Australia, China, places like that. So.

Speaker Change: Good confidence in the share gain as we roll out those tools around the world.

Speaker Change: The collision rates are, you know, a question mark, depending on where you are around the world, but we believe, you know, our penetration rates of these...

Timothy Knavish: But we believe, you know, our penetration rates of these digital ecosystem is still single digits of all the body shops out there. So, you know, we've still got a lot of runway. And, as I said in my an earlier answer, we continue to add to that toolbox of digital productivity tools as we go forward. So, so it is, of course, the chemistry inside the can, which we're best in class at from a color match and speed and all those things. So we feel really good about that. But a lot of our share gain right now is delivered by the productivity tools outside the can.

Speaker Change: Digital ecosystem is still single digits.

Speaker Change: of all the body shops out there.

Speaker Change: So, you know, we've still got a lot of runway, and as I said in an earlier answer, we continue to add to that toolbox of digital productivity tools as we go forward. So, it is, of course, the chemistry inside the can, which we're best in class at, from a color match and speed and all those things.

Timothy M. Knavish: So, it is, of course, the chemistry inside the can, which we're best in class at from a color match and speed and all those things. So we feel really good about that. But a lot of our share gain right now is delivered by the productivity tools outside the can. And just to get to your question about the second half of the year, just a little bit of history again. In 2023, we had a price increase going into effect in early Q3.

Speaker Change: So, we feel really good about that, but a lot of our shared gain right now is delivered by the productivity tools outside the can.

Timothy Knavish: And just to get to your question on the second half of the year, just a little bit of history. Again, in 2023, we had a price increase going into effect in early Q3. We had a lot of our partners by ahead of that price increase. So, as we alluded to in the period remarks, we had very strong Q2, and we finished last year, software Q3 given by ahead. And that pattern reverses this year. So that order pattern from our distributors is helpful for us in the back half of the year.

Timothy M. Knavish: We had a lot of our partners buy ahead of that price increase. So, as we alluded to in the prepared remarks, we had a very strong Q2 and finished last year. A slightly softer Q3 given the buy ahead, and that pattern reverses this year.

Speaker Change: And just to get to your question on the second half of the year, just a little bit of history again, in 2023, we had a price increase going into effect in early Q3, we had a lot of our

Speaker Change: Partners buy ahead of that price increase. So as we alluded to in the prepared remarks, we had a very strong Q2 and we finished last year. Softer Q3 given the buy ahead and that pattern reverses this year. So that order pattern from our distributors is helpful for us in the back half of the year.

Vincent J. Morales: So that order pattern from our distributors is helpful for us in the back half of the year. Your next question comes from the line of Jeff Zekauskas with J.P. Morgan. Your line is open, please go ahead. Thanks very much. I probably bought all your titanium dioxide.

Jessica: Your next question comes from the line of Jessica with JP Morgan. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Jeff Zekauskas with J.P. Morgan. Your line is open, please go ahead.

Jessica: Thanks very much.

Jessica: A two part question. You've probably bought all your titanium dioxide through the end of the year. So I understand that there's no TIO to pressure this year for you. But with Chinese sanctions on Chinese products in Europe, is that a structural issue? That is, you know, over the next four years, are you going to be facing, as a base case, you know, reasonably higher TIO to prices or much? Charles, TIO surprises. How do you think about that?

Jeffrey John Zekauskas: Thanks very much. A two-part question.

Jeffrey John Zekauskas: You've probably bought all your titanium dioxide through the end of the year, so I understand that there's no TIO2 pressure this year for you, but with sanctions on Chinese product in Europe ,

Jeffrey John Zekauskas: I understand that there's no... but sanctions on Chinese products in Europe. Is that a structural issue? For years, are you going to be, you know, reasonably higher TIO2 prices for much of that time? How do you think about that? And then secondly, in the quarter, your volumes and auto OEM in the U.S. contract, And I think the production group. Is that a temporary phenomenon for you or not? Okay. Hey,

Jeffrey John Zekauskas: Is that a structural issue? That is, you know, over the next four years, are you going to be facing as a base case, you know, reasonably higher TIO2 prices or much higher TIO2 prices? How do you think about that?

Jeff: And then secondly, in the quarter of your volumes in OTO OEM in the US contracted, and I think the production grew in the United States in the second quarter. Is that a temporary phenomenon for you, or are you losing share in the US?

Speaker Change: And then secondly, in the quarter your volumes and auto OEM in the U.S. contracted, and I think the production grew in the United States in the second quarter. Is that a temporary phenomenon for you or are you losing share in the U.S.?

Timothy Knavish: Okay. Hey, Jeff, on the TIO 2, you are correct. We first see no impact in 2004. You know, not so much because of we're sitting on a whole bunch of inventory there, but more because of work contractual coverage.

Timothy M. Knavish: On TIO2, you are correct. We foresee no impact in 2024, not so much because we're sitting on a whole bunch of inventory there, but more because of work contractual coverage. As we look to 2025, here's how we are thinking about it. First of all, at a very high level, we continue to reduce TIO2 consumption per batch without sacrificing performance.

Speaker Change: Okay, hey Jeff, on the TIO2, you are correct, we foresee no impact in 2024.

Speaker Change: Not so much because we're sitting on a whole bunch of inventory there, but more because we're contractual coverage.

Timothy Knavish: As we look to 2025, here's how we are thinking about it. First of all, at a very high level, we continue to reduce TiO 2 consumption per batch without sacrifice and performance. That's about 1% per year. And even though that doesn't sound like a big number, we've been doing it for a decade. And we expect that to continue. Second thing, specific to the tariffs and the anti-dumping, we have great flexibility around the world, given the formulation work that our S&T teams have done such that we've really increased our sourcing flexibility versus where we were, say, five years ago.

Speaker Change: As we look to 2025, here's how we are thinking about it. First of all, at a very high level, we continue to reduce

Speaker Change: TIO2 consumption per batch without sacrifice in performance.

Timothy M. Knavish: That's about 1% per year. And even though that doesn't sound like a big number, we've been doing it for a decade. And we expect that to continue. Second, specific to tariffs and anti-dumping, we have great flexibility around the world, given the formulation work that our S&T teams have done, such that we've really increased our sourcing flexibility versus where we were, say, five years ago. And then, at the end of the day, if those two initiatives are not enough to counter whatever net increase in cost there may be for us, the biggest consumer of TIO2 is DECO by far.

Speaker Change: That's about 1% per year, and even though that doesn't sound like a big number, we've been doing it for a decade, and we expect that to continue. Second thing...

Speaker Change: Specific to the tariffs and anti-dumping, we have great flexibility around the world given the formulation work that our S&T teams have done.

Speaker Change: such that we've really increased our sourcing flexibility versus where we were, say, five years ago.

Timothy Knavish: And then finally, at the end of the day, if those two initiatives are not enough to counter whatever net increase in cost there may be to us, you know, the biggest consumer of TiO 2 is the deco business by far. And we have demonstrated that, as necessary, we'll offset that cost with price.

Speaker Change: And then finally at

Speaker Change: at the end of the day, if those two initiatives are not...

Speaker Change: Enough to counter whatever net...

Speaker Change: increase in cost there may be to us.

Speaker Change: The biggest consumer of TIO2 is the DECO business by far, and we have demonstrated that, as necessary, we'll offset that cost with price. Jeff, let me just add on here to the TIO2 question before...

Timothy M. Knavish: And we have demonstrated that, as necessary, we'll offset that cost with price. Yeah, but let me just add on here to the TIO2 question before Tim goes to the next question. Two things. One, we're not either advantaged or disadvantaged versus others in the region as it relates to this issue. So it's going to be an item for all coding users.

Timothy Knavish: Definitely just that on here for the TIO 2 question before Tim goes to the next question. Two things. One, we're not either advantage or disadvantaged versus others in the region as it relates to this issue. So, you know, it's going to be an item for all coding users. Secondarily, not all of our production and not all of our TiO 2 consumption is in the EU. We have plants outside of the EU that are not affected by the tariffs that we still have some capability to produce with unimpacted tariff Chinese TiO 2.

Speaker Change: Tim goes to the next question. Two things. One, we're not either advantaged or disadvantaged.

Jeffrey John Zekauskas: First, others in the region as it relates to this issue, so it's going to be an item for all coding users. Secondarily, not all of our production.

Vincent J. Morales: Secondarily, not all of our production and not all of our TIO2 consumption is in the EU. We have plants outside of the EU that are not affected by the tariffs. So we still have some capability to produce, with unimpacted tariffs on Chinese TIO2. And Jeff, to your second question on the U.S. automotive specifically, first of all, the final numbers that just came in the last couple days, production in the U.S. was actually down, down low single digits in the quarter, and our sales were down mid-single digits.

Speaker Change: And not all of our TiO2 consumption is in the EU. We have plants outside of the EU that are not affected by the tariffs, so we still have some capability to produce with unimpacted tariff Chinese TiO2.

Timothy Knavish: And Jeff, to your second question on automotive US specifically, first of all, the final numbers that just came in the last couple of days, the production in the US was actually down, down low single digits in the quarter. And, you know, our sales were down mid-single digits. And so some of that would be, you know, Vince talked earlier, you know, the production number that S&P puts out is volume. And our sales number is volume plus price. And we did have some contractual index price in that business. And then the rest of it would be specific assembly plans, specific customer mix that might vary from the, you know, kind of the industry industry average.

Speaker Change: And Jeff, to your second question on automotive U.S. specifically, first of all, the final numbers that just came in the last couple days, the production in the U.S. was actually down, down low single digits.

Jeffrey John Zekauskas: in the quarter and our sales were down mid-single digits.

Vincent J. Morales: And so some of that would be, you know, Vince talked earlier, the production number that S&P puts out is volume, and our sales number is volume plus price, and we did have some contractual index price in that business. And then the rest of it would be specific assembly plans, specific customer mix that might vary from the, you know, kind of industry average. Your next question comes from the line of Kevin McCarthy with VRP. Your line is open. Please go ahead. Yes, good morning, everyone.

Speaker Change: And so, some of that would be, you know, Vince talked earlier, you know, the production number that S&P puts out is volume.

Speaker Change: And our sales number is volume plus price, and we did have some contractual index price in that business. And then the rest of it would be specific assembly plans, specific customer mix that might vary from the, you know, kind of the industry, industry average.

Kevin Mccarthy: Your next question comes from the line of Kevin McCarthy with VRP. Your line is open; please go ahead. Yes, good morning, everyone. Tim, if I look at your second quarter organic sales results versus your forecast from last quarter, it seems to me that PPG did a very good job before casting in maybe 8 to 10 verticals where you can compete. The two that I see that came in a little bit lower are architectural media and protective of green coatings. And so I was wondering if you could speak to each of those businesses and maybe educate us a little bit as to why they came in a little bit weaker than you would have thought.

Kevin William McCarthy: Tim, if I look at your second quarter organic sales result versus your forecast from last quarter, it seems to me that PPG did a very good job of forecasting in the verticals where you compete. The two that I a little bit lower our architectural So I was wondering if you could speak to each of those businesses and maybe educate us a little bit as to why they have Transcript by Rev.com Page of different growth glide paths, you know, say looking into 2025 and the additional color, geography, or product line. Yeah, sure. Hey Kevin,

Speaker Change: Your next question comes from the line of Kevin McCarthy with VRP. Your line is open. Please go ahead.

Kevin William McCarthy: Yes, good morning everyone. Tim, if I look at your second quarter organic sales results,

Kevin William McCarthy: versus your forecast from last quarter it seems to me that PPG did a very good job of forecasting and maybe eight of the ten

Speaker Change: verticals where you compete. The two that I see that came in a little bit lower are Architectural, AMIA, and Protective of Marine Coatings.

Speaker Change: And so I was wondering if you could speak to each of those businesses and maybe educate us a little bit as to why they came in a little bit weaker than you would have thought.

Timothy Knavish: And whether that was because of sort of transitory or idiosyncratic reasons, or do you think they're on, you know, a different. Growth glide path, you know, say looking into 2025 and any additional color on geography or product lines are being super helpful. Yeah, sure.

Speaker Change: And whether that was because of, you know, sort of transitory or idiosyncratic reasons, or do you think they're on, you know, a different growth glide path, you know, say looking into 2025, any additional color on

Speaker Change: geographies or product lines there would be super helpful.

Timothy Knavish: Hey, Kevin, let me let me do architectural a may. Yeah, we were clearly the results were lower than what we expected for the region in aggregate. We had we believed that we were. You've heard me use term bouncing off the bottom. We believe that that time we were on the bottom and we would see sequential improvement Q1 to Q2, the macros frankly just got worse in Europe and that drove that drove that drove auto OEM as well, but a little more color there. We are we're number one and ten or so countries in Europe and our biggest is France.

Timothy M. Knavish: Let me, let me do an architectural AMEA. Yeah, we were, clearly, the results were lower than what we expected for the region in aggregate. We had, we believed that we were, you've heard me use the term bouncing off the bottom. We believed at that time we were on the bottom, and we would see sequential improvement, Q1 to Q2. The macros, frankly, just got worse in Europe, and that drove DECO, that drove Auto OEM as well, but a little more color there. We are Number One in ten or so countries in Europe, and our biggest is France.

Kevin William McCarthy: Yeah, sure. Hey, Kevin.

Speaker Change: Let me let me do architectural AMEA. Yeah, we were clearly the the results were were lower than what we expected for the region in aggregate.

Speaker Change: we had

Speaker Change: We believed that we were, you've heard me use the term bouncing off the bottom, we believed at that time we were on the bottom and we would see sequential.

Speaker Change: Improvement

Speaker Change: Q1 to Q2.

Speaker Change: The macros, frankly, just got worse in Europe , and that drove Deco, that drove Auto OEM as well. But a little more color there, we're number one in ten or so countries in Europe .

Timothy M. Knavish: I made earlier reference, you know, the election and some of the turmoil in France that added to uncertainty, and we really did see a downturn in our sales during that period in France, our largest country. So, I would say that was maybe a transitory downturn, that as things stabilize, we'll see, we'll see some recovery there. We're also number one in most of the Nordic countries, which was also slower than the rest of the region. So, there is a little bit of a country mix there.

Timothy Knavish: I did earlier reference. You've seen the election and some of the turmoil in France that added to uncertainty, and we really did see a downturn in our sales during that period in France, our largest country. So I would say that was that one was maybe a transitory that as things stabilized will see some recovery. There were also number one in most of the Nordic countries, which was also slower than the rest of the region. So a little bit of country mix there on the offset. We’re number one in Poland and a number of the Central European countries that have started to recover.

Speaker Change: and our biggest is France.

Speaker Change: earlier reference you've seen you know the election and some of the turmoil in France that added to uncertainty and we really did see a downturn in our sales during that period in France our largest country so I would say that was

Speaker Change: That one was maybe a transitory that as things stabilize, we'll see some recovery there. We're also number one in most of the Nordic countries, which was also slower than the rest of the region, so a little bit of country mix.

Timothy M. Knavish: On the other hand, we're number one in Poland and a number of Central European countries that have started to recover. So, as we think about that going forward, we do believe we will see some sequential improvement in architectural Europe in Q3. We do believe it'll still be down versus prior, Kevin, but we do think that that'll start to sequentially improve. A much better story on protective and marine. As you know, that business has really been a good performer for us over the last several quarters. We just, this is a project business. We just ran into a handful of project delay-type transitory items that hit us in the quarter.

Speaker Change: There on the offset were number one in Poland and a number of the Central European countries that have started

Timothy Knavish: So as we think about that going forward, we do believe we will see some sequential improvement in architectural Europe and Q3.

Speaker Change: to recover.

Speaker Change: So, as we think about that going forward, we do believe we will see some sequential improvement.

Timothy Knavish: We do believe it will still be down versus prior Kevin, but we do think that that will start to sequentially improve a much better story on protective and marine. As you know, that business has really been a good performer for us over the last several quarters. This is a project business. We just ran into a handful of project delay type transitory items that hit us in the quarter. You should expect growth back on track in that business starting in Q3. For example, we had slower China infrastructure spending than we expected, with the local government issues with the Mexican election.

Speaker Change: in Architectural Europe in Q3. We do believe it'll still be down versus prior, Kevin, but we do think that that'll start to sequentially improve.

Speaker Change: A much better story on Protective and Marine, as you know, that business has really been a good performer for us over the last...

Timothy M. Knavish: You should expect growth back on track in that business starting in Q3. For example, we had slower Chinese infrastructure spending than we expected with the local government issues. With the Mexican election, Pemex was delaying some of its projects as, you know, the elections are behind us now, and we're seeing that pick up. We have been doing really well again in sharing the dry dock business. We had some dry dock delays associated with, you know, going around the Cape.

Speaker Change: several

Speaker Change: quarters. We just, this is a project business.

Speaker Change: We just ran into a handful of...

Speaker Change: Project Delay Type Transitory Items

Speaker Change: that hit us in the quarter, you should expect growth.

Speaker Change: back on track in that business starting in Q3.

Speaker Change: You know, for example, we had slower China infrastructure spending than we expected with the local government issues.

Timothy Knavish: Then Pemex was delaying some of its projects, as you know. The elections behind us now, and we're seeing that pick up. We have been doing really well again and share in the dry dock business. We had some dry dock delays associated with going around the Cape. So just the number of things like that that we do believe are transitory, but the underlying trends for that business for us are much stronger than what I would have described for the macro conditions for Deco Europe. We have been doing really well again and share in the dry dock business.

Speaker Change: With the Mexican election, PEMEX was delaying some of its projects. As you know, the election's behind us now, and we're seeing that pick up.

Speaker Change: We have been doing really well at Gain and Share in the dry dock business. We had some dry dock delays associated with, you know, going around the Cape. So just a number of things like that that we do believe are transitory, but the underlying trends for that business for us.

Speaker Change: are, you know, much stronger than what I would have described for the macro conditions for DECO Europe .

Josh Spector: Your next question comes from the line of Josh Spector with UPS. Your line is open; please go ahead. Hi, good morning.

Timothy M. Knavish: So just a number of things like that that we do believe are transitory. But the underlying trends for that business for us are, you know, much stronger than what I would have described for the macro conditions for Deco Europe. Your next question comes from the line of Josh Spector with UBS. Your line is open, please go ahead. Hi, good morning.

Speaker Change: Your next question comes from the line of Josh Spector with UBS. Your line is open, please go ahead.

Joshua David Spector: I had two questions on the cost side. First, European Peer announced some contract renegotiations with its labor force that they talked about as an incremental inflationary impact. Is that an impact at all for PPG in the second half of 2025? And then, on the other end, your corporate costs have come in better than you've got in the last couple of quarters, although with the reduction in guidance. Are you accruing less for bonuses for this year?

Timothy Knavish: I have two questions on the cost side. I guess first, European peer announced some contract renegotiations with the Labor Force that they talked about as an incremental inflationary. Is that an impact at all for PPG in the second half or 2025?

Joshua David Spector: Hi, good morning. I had two questions on the cost side. I guess first...

Speaker Change: European Peer announced some contract renegotiations with its labor force that they talked about as an incremental inflationary.

Timothy Knavish: And then on the other end, your corporate costs have come in better than you've guided the last couple of quarters. With the reduction in guidance, are you accruing less for bonuses for this year? And is that a, sorry, a tailwind that's baked in this year and a headwind next year? You can help quantify any of that and be appreciated. Thank you.

Speaker Change: Is that an impact at all for PPG in the second half for 2025? And then on the other end, your corporate costs have come in better than you've got in the last couple quarters. With the reduction in guidance...

Vincent J. Morales: And is that a, sorry, a tailwind that's baked in this year and a headwind next year? If you can help quantify any of that, it would be appreciated. Thank you. Yeah, Josh. This is Vince.

Speaker Change: Are you accruing less for bonuses for this year, and is that a, sorry, a tailwind that's baked in this year and a headwind next year? If you can help quantify any of that, it'd be appreciated. Thank you.

Timothy Knavish: Yeah, Josh, this has been with respect to the EU that that's, you know, we're not involved in whatever that peer peers involved with. We're under our normal process terms of reviewing our salaries, benefits on an annual basis. We did, as we alluded to at the beginning of the year, have a little bit of higher wage and benefit inflation this year versus porcelain given the macro. But again, we expect that to trend to normal based on what we know today in future years.

Vincent J. Morales: With respect to the EU, that's, you know, we're not involved in whatever that peers are involved with. We're under our normal process in terms of reviewing our salaries and benefits on an annual basis. We did, as we alluded to at the beginning of the year, have a little bit of higher wage and benefit inflation this year versus historical, given the macro. But again, we expect that to trend to normal based on what we know today in future years.

Speaker Change: Yeah, Josh, this is Vince. With respect to the EU, that's, you know, we're not involved in whatever that appears involved with. We're under our normal process.

Speaker Change: in terms of reviewing our salary benefits on an annual basis.

Speaker Change: We did, as we alluded to at the beginning of the year, have a little bit of higher wage and benefit inflation this year.

Speaker Change: versus historical given the macro but again we expect that's a trend to normal based on we know today in future years. As it relates to corporate cost as we said in our press release

Vincent J. Morales: As it relates to corporate cost, as we said in our press release, we did, due to the lower guidance... for the full year we have made... Adjustments lower for some of our incentive compensation, and that will, these are not big, big numbers. We'll give a full year 25 guide, as we typically would do in January.

Timothy Knavish: And it takes the corporate cost as we send our press release. We did due to the lower guidance. For the full year, we have made adjustments lower for some of our incentive compensation. And that will, these, these are not big, big numbers. We'll give a four-year 25 guide as we typically would do in January. We got to get through the rest of this year.

Speaker Change: We did, due to the lower guidance...

Speaker Change: for the full year we have made.

Speaker Change: adjustments lower for some of our incentive compensation.

Speaker Change: and that will, these are not big big numbers. We'll give a full year 25 guide as we typically would do in January . We've got to get through the rest of this year.

Aleksey V. Yefremov: We gotta get through the rest of this year before we look at year-over-year impacts, especially line-by-line or category-by-category. Your next question comes from the line of Aleksey Yefremov with Key Corp. Your line is open; please go ahead. Good morning, everyone. I wanted to ask about architectural EMEA pricing, given these weaker volumes, is pricing holding up in this region, or is it a more aggressive competitive environment, you know, more aggressive than for your codex portfolio overall? Yeah, hey, Aleksey.

Timothy Knavish: Before we look at the year of year impacts, especially aligned by line or category by category.

Speaker Change: before we look at year-over-year impacts, especially line-by-line or category-by-category.

Aleksey Yefremov: Your next question comes from the line of Alexa Yamfer with Key Call. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Aleksey Yermafrol with Keycorp. Your line is open, please go ahead.

Aleksey Yefremov: Good morning, everyone. I wanted to ask about architectural, immediate pricing given these weaker volumes. Is pricing holding up in this region, or is the competitive environment that's, you know, more aggressive than for your code expertise, overall? Yeah. Hey, Alexey, you know, given the volume challenges, you know, we have seen what I would call, you know, kind of around the edges. Some, some price downward competitive actions that, you know, that we've, we've had the match in order to keep, you know, keep our business. That is an outlier versus most of our coding portfolio. But I would also tell you that it's not; it's not a huge impact because there's still higher, even though, you know, folks are trying to grab volume and, you know, the raw material deflation is, you know, just not what it was earlier in the year.

Aleksey V. Yefremov: Good morning everyone. I wanted to ask about architectural EMEA pricing. Given these weaker volumes, is pricing holding up in this region or is competitive environment perhaps, you know, more aggressive than for your Codex portfolio overall?

Timothy M. Knavish: You know, given the volume challenges, we have seen what I would call, you know, kind of around the edges, some price downward competitive actions that, you know, that we've had to match in order to keep, you know, our business. That is an outlier compared to most of our coatings portfolio. But I would also tell you that it's not, it's not a huge impact, because there's still higher, even though, you know, folks are trying to grab volume and, you know, the raw material deflation is, you know, just not what it was earlier in the year. We and everyone are experiencing higher wage inflation, higher employee benefit inflation than, let's say, maybe a normal year. And we're not the only ones having to deal with that.

Speaker Change: Yeah, hey, Aleksey, you know, given the volume challenges, you know, we have seen

Speaker Change: What I would call, you know, kind of around the edges, some price downward, competitive actions.

Speaker Change: that we've had to match in order to keep our business. That is an outlier versus most of our coding portfolio. But I would also tell you that it's not a huge impact because

Speaker Change: There's still higher, even though, you know, folks are trying to grab volume and, you know, the raw material deflation is...

Timothy Knavish: Us and everyone are experiencing higher wage inflation, higher employee benefit inflation than, let's say, maybe a normal year. And we're not the only ones having to deal that. So I deal with that. So I think that is having some impact. Whether you're talking about architectural, where maybe it is slowing down any, any, you know, otherwise volume grab kind of behavior, but across the portfolio. That's enabling, frankly, price to hold up. And that's also enabling things like other parts of our portfolio in performance code needs to get additional price because us and everyone else are seeing that higher wage inflation.

Speaker Change: You know, just not what it was earlier in the year.

Speaker Change: Us and everyone are experiencing higher wage inflation, higher employee benefit inflation than let's say maybe a normal year. And we're not the only ones having to deal with that. So I think that is having some impact.

Timothy M. Knavish: So I think that is having some impact, whether you're talking about architectural AMEA, or where maybe it is slowing down any otherwise volume-grabbing kind of behavior. But across the portfolio, that's enabling, frankly, price to hold up. And that's also enabling things like other parts of our portfolio and performance companies to get additional prices because us and everyone else are seeing that higher wage inflation. Your next question comes from Michael Leithead with Barclays. Your line is open. Please go ahead.

Speaker Change: whether you're talking about architectural AMEA or where maybe it is.

Speaker Change: slowing down any you know otherwise volume grab kind of behavior

Speaker Change: But across the portfolio, that's enabling, frankly, price to hold up, and that's also enabling things like other parts of our portfolio in performance coding to get additional price, because us and everyone else are seeing that higher wage inflation.

Michael Leithead: Your next question comes from the line of Michael Leithead with Barclays. Your line is open; please go ahead. Great, thanks.

Speaker Change: Your next question comes from the line of Michael Leithead with Barclays. Your line is open, please go ahead.

Michael James Leithead: Great, thanks. Good morning, guys. With the strategic reviews on track for this quarter, presumably, you'll get some level of cash in the door later this year. So, is it fair for us to assume share repurchases are currently your preferred use of excess cash at the moment, or how does that, Hey, Mike? Great shareholder value accretive acquisitions would always be our preferred use of cash, whether it's from proceeds from these potential transactions or just ongoing business.

Timothy Knavish: Good morning, guys. With the strategic reviews on tracks for this quarter, presumably you'll get some level of cash in the door later this year. So is it fair to us to assume share repurchases are currently your preferred use of excess cash at the moment, or how does the acquisition pipeline up to date?

Michael James Leithead: Great, thanks. Good morning, guys. With the strategic reviews on track for this quarter, presumably you'll get some level of cash in the door later this year. So is it fair for us to assume share repurchases are currently your preferred use of excess cash at the moment, or how does the acquisition pipeline look today?

Timothy Knavish: Ed Mike, you know, great shareholder value, accretive acquisitions would always be our preferred use of cash, whether it's from proceeds from these potential transactions or just ongoing visits. That said, that pipeline is a bit thin right now. And so, you know, we continue to look at opportunities, but overall, compared to prior years, I would assess it as thin. And perhaps that'll change going forward; perhaps that'll change in 2025 with interest rates, but right now it's a bit thin. And you've seen three quarters in a row. We've bought shares back. We're demonstrating that we're going to do what we said, which is we're not going to let excess cash build on the balance sheet.

Mike: Hey, Mike.

Speaker Change: I don't... I don't...

Speaker Change: Which great shareholder value accretive acquisitions would always be our preferred use of cash, whether it's from proceeds from these potential transactions or just ongoing business?

Timothy M. Knavish: That said, that pipeline is a bit thin right now, and so, you know, we continue to look at opportunities, but overall, compared to prior years, I would assess it as thin. And perhaps that'll change going forward. Perhaps that'll change in 2025 with interest rates, but right now, it's a bit thin. You've seen three quarters in a row.

Speaker Change: That said, that pipeline is a bit thin right now.

Speaker Change: And so, you know, we continue to...

Speaker Change: Look at opportunities, but overall, compared to prior years, I would assess it as thin. And perhaps that'll change going forward. Perhaps that'll change in 2025.

Speaker Change: with interest rates, but right now it's a bit thin. You've seen three quarters in a row. We've bought shares back. We're demonstrating that we're gonna do what we said, which is we're not gonna let excess cash.

Timothy M. Knavish: We've bought shares back. We're demonstrating that we're going to do what we said, which is we're not going to let excess cash build on the balance sheet. So, you know, when those transactions or potential transactions close, we will take, you know, a look at our pipeline, and if it's still thin, then, you know, we'll deploy cash as we have in the last three quarters. Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open, please go ahead. Hi, good morning.

Timothy Knavish: So, you know, when those transactions are potential transactions closed, we will take, you know, look at our pipeline. And if it's still thin, then, you know, we'll deploy cash as we have in the last three quarters.

Speaker Change: build on the balance sheet. So when those transactions or potential transactions close, we will take a look at our pipeline. And if it's still thin, then we'll deploy cash as we have in the last three quarters.

Mike Harrison: Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open. Please go ahead.

Speaker Change: Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open, please go ahead.

Timothy Knavish: Hi, good morning.

Michael Joseph Harrison: I was wondering, Tim, if you could give us a little bit more color on, you mentioned that you're selling everything you can make, but you know how much better volumes could be at www.larryweaver.com and Unlock as we get into the second half and into 2025. Hey, Mike, just to put some scale on it. You know, our backlog. So we produced more, sold more, had a record quarter in that business, and yet our backlog still grew.

Timothy Knavish: I was wondering if you can give us a little bit more color on what's going on in the aerospace business. You mentioned that you're selling everything you can make, but, you know, how much better could volumes have looked in that business if you didn't have the capacity constraints. And I guess, you know, what specific actions or, you know, how much additional capacity do you think you can unlock as we get into the second half and into 2025. Thanks.

Michael Joseph Harrison: Hi, good morning.

Michael Joseph Harrison: I was wondering, Tim, if you can give us a little bit more color on what's going on in the aerospace business. You mentioned that you're selling everything you can make, but how much better could volumes have looked in that business if you didn't have the capacity constraints?

Speaker Change: And I guess, you know, what specific actions or, you know, how much additional capacity do you think you can unlock as we get into the second half and into 2025? Thanks.

Timothy Knavish: Hey, Mike, just to put some scale on it, you know, our backlog. So, we produced more, sold more, had record quarter in that business, and yet our backlog still grew. So our backlog is almost 300 million dollars. So whatever you have us down for as margin in that business, if we were completely unconstrained, it would be that 300 million at our aerospace margins. But going forward from that, there is nothing on the horizon that our customers are telling us that's going to slow that in the near future, midterm at least. In fact, we're getting forecasts from them that are even higher.

Timothy M. Knavish: Hey Mike, just to put some scale on it...

Speaker Change: You know, our backlog, so we produced more, sold more, had record quarter in that business.

Michael Joseph Harrison: So our backlog is almost $300 million. So whatever you have us down for as margin in that business, if we were completely unconstrained, it would be that $300 million at our aerospace margins. But going forward from that, there is nothing on the horizon that our customers are telling us that's gonna slow that in the near future or midterm, at least. In fact, we're getting forecasts from them that are even higher.

Speaker Change: and yet our backlog still grew.

Speaker Change: So, our backlog is almost $300 million, so, whatever you have us down for as margin in that business, if we were completely unconstrained,

Speaker Change: It would be that $300 million at our aerospace margins. But going forward from that...

Speaker Change: There is nothing on the horizon that our customers are telling us that's going to...

Speaker Change: slow that in the near future, midterm at least.

Speaker Change: In fact, we're getting forecasts from them that are even higher.

Timothy M. Knavish: So what we're doing in the short term is I would call them incremental capacity additions, things you can do quickly, whether it's through productivity improvement or CapEx investments, both of which we're doing. But beyond that, we're assessing whether we need to do something of a larger scale. And when we're ready to talk about that, we'll let you know. But it's a pretty significant backlog driven across commercial, general aviation, and military, driven across transparencies, coatings, and sealants, and driven across OEM and aftermarket.

Timothy Knavish: So, you know, what we're doing in the short term is, I would call them incremental capacity additions, things you can do quickly, whether it's through productivity improvement, or cap X investments, both of which we're doing. You know, but beyond that, we're assessing, do we need to do something of a larger scale? And when we're ready to talk about that, we'll, we'll, we'll let you know. But it's, it's pretty significant significant backlog driven across, you know, commercial, general aviation and military driven across, transparency, coatings and sealants and driven across OEM and aftermarket. Every one of those is getting pulled from my advanced technology.

Speaker Change: You know, what we're doing in the short term is...

Speaker Change: I would call them incremental capacity additions, things you can do quickly, whether it's through productivity improvement or CapEx investments, both of which we're doing.

Speaker Change: You know, but beyond that, we're assessing, do we need to do something of a larger scale? And when we're ready to talk about that, we'll let you know. But it's pretty significant backlog driven across

Speaker Change: Commercial, General Aviation, and Military.

Speaker Change: driven across transparencies, coatings, and sealants, and driven across OEM and aftermarket. Every one of those is getting pulled from our advanced technologies.

Lauren Favre: Your next question comes on the line of Lauren Favre with, sorry, BMP Paraba. Your line is open; please go ahead. Yes, good morning, all-end team. Apologies if France made you, even in France, made you miss your forecast.

Timothy M. Knavish: Every one of those is getting pulled from our advanced technology. Your next question comes from the line of Laurent Favre with BNP Power. Your line is open, please go ahead. Good morning, all, and team apologies. I've got a question on industrial coatings.

Speaker Change: Your next question comes from the line of Laurent Favre with BNP Paribas. Your line is open, please go ahead.

Laurent Guy Favre: Yes, good morning all and team apologies if events in France made you miss your forecast. But I've got a question on industrial coatings pricing.

Timothy Knavish: But I've got a question on industrial coding's pricing. On the minus 3% genuine percent pack, how much of that was indexation versus the rest? And are you seeing pressure away from indexation given with volumes? And the second part to that question is: should we assume that the indexation part is going to get worse into H2? Or are we at the trough in terms of the year-on-year impact?

Laurent Guy Favre: On the minus 3% genuine person pack, how much of that was indexation versus the rent? Are you seeing pressure away from indexation given weak volume? The second part to that question is, should we assume that the indexation part is going to get worse in 2H2, or are we.., in terms of the. Hey Laurent, I'm expecting lots of paint sales as the Olympics get going here and then after the Olympics as well. So I'm sure France, French recovery is on the horizon.

Laurent Guy Favre: On the minus 3%, can you impact how much of that was indexation versus the rest, and are you seeing pressure away from indexation given weak volumes?

Speaker Change: And the second part of that question is, should we assume that the indexation part is going to get worse in 2H2, or are we at the trough in terms of the year-on-year impact? Thank you.

Timothy Knavish: Thank you.

Timothy Knavish: Hey, Laurent, I'm expecting lots of paint sales at the Olympics, get going here and then after the Olympics as well. So I'm sure France, France recovery is on the horizon. The pricing and the industrial segment virtually all of it is index pricing. I don't want to say 100% because there's always things happening around the edges, but virtually all of it is index pricing, and I don't expect that to change significantly as we look through the rest of this year.

Speaker Change: Hey Laurent, I'm expecting lots of paint sales at the Olympics get going here and then after the Olympics as well so I'm sure France, France recovery is on the horizon.

Timothy M. Knavish: You know, the pricing in the industrial segment, virtually all of it is index pricing. I don't want to say 100% because there's always things happening around the edges, but virtually all of it is index pricing. And, you know, I don't expect that to change significantly as we look through, through the rest of this year. Your next question comes from the line of Kevin Estock with Jeffreys. Your line is open; please go ahead.

Speaker Change: You know, the pricing in the industrial segment, virtually all of it.

Laurent: is is index pricing. You know that I don't want to say 100% because there's always things happening around the edges but virtually all of it is is index pricing and you know I don't expect that to change significantly as we look through look through the rest of this year.

Kevin: Your next question comes from the line of Kevin at Stock with Jeffries. Your line is open; please go ahead.

Laurent: Your next question comes from the line of Kevin Estock with Jeffreys. Your line is open, please go ahead.

Dan Rizzo: Hi, this is Dan Rizzo from Jeffries. Thanks for taking my question. Thanks for fitting me in. I was just wondering, you mentioned in your prepared remarks about softness or export from Chinese auto EVs can slowing.

Daniel Rizzo: Hi, this is Dan Rizzo from Jeffrey Zekauskas. Thanks for taking my question. Thanks for fitting me in.

Timothy M. Knavish: I was just wondering, you mentioned in your prepared remarks about softness or exports from Chinese auto EVs kind of slowing, I was wondering if they're, as of yet, anticipating a change in the environment if Trump were to take office. Like, what's the lead time between they anticipate higher tariffs and potentially lower sales and shutdown or slowdown production? Yeah, so I'll start and all Trump questions; I delegate the events.

Laurent: Hi, this is Dan Rizzo from Jeffreys.

Daniel Rizzo: Thanks for taking my question. Thanks for fitting me in. I was just wondering, you mentioned in, um...

Speaker Change: in your prepared remarks about softness or exports from Chinese auto EVs kind of slowing.

Timothy Knavish: I was wondering if they are as of yet anticipating a change in the environment if Trump were to take office. What's the lead time between they anticipate higher tariffs and potentially lower sales and shut down or slow down production?

Speaker Change #100: I was wondering if they're, as of yet, anticipating a change in the environment if Trump were to take office?

Speaker Change #100: Like what's the lead time between they anticipate higher tariffs and potentially lower sales and that they end shutdown or slowdown production?

Timothy M. Knavish: So I'm going to let events handle that part. But what I want to say about the EVs is, you know, we were a proud supplier to the number one manufacturer over there. And, of course, they were, they were doing quite a bit of export. And so they're, they're being cautious right now.

Timothy Knavish: Yeah, so I'll start, and all Trump questions, I delegate the events. So I'm going to let events handle that part, but what I want to say about the EVs is we're a proud supplier to the number one manufacturer over there, and of course they were doing quite a bit of export, and so they're being cautious right now. We'll see how that plays out as far as our overall production numbers as we move through the year, but I do want to point out, even though even with all the headlines on EVs happening right now and maybe in a less than positive direction, I think that's only changing the slope of the curve and not the end point destination of the curve.

Speaker Change #101: Yeah, so I'll start and all Trump questions I delegate to Vince, so I'm going to let Vince handle that part, but

Speaker Change #102: What I want to say about the EVs...

Speaker Change #102: We're a proud supplier to the number one manufacturer over there.

Speaker Change #103: and of course they were they were doing quite a bit of export and so they're being they're being cautious right now and we'll see how that plays out as far as their overall production numbers as we move through the year but I do I do want to point out you know even though

Timothy M. Knavish: And we'll see how that plays out as far as their overall production numbers as we move through the year. But I do, I do want to point out, you know, even though all the headlines on EVs happening right now, and maybe in a less than positive direction, I think that's only changing the slope of the curve and not the endpoint destination of the curve. You know, for 2024, even with all the news we've heard, the projection is still that EV production will grow by 14% versus last year. And the projection is still that 30% of every vehicle produced in China will be an EV. And, of course, China produces about a third of all the world's cars.

Speaker Change #103: Even with all the headlines on EVs happening right now, it may be in a less than positive direction.

Speaker Change #103: I think that's only changing the slope of the curve and not the endpoint destination of the curve.

Timothy Knavish: For 2024, even with all the news we've heard, the projection is still that EV production will grow by 14% versus last year, and the production is still that 30% of every vehicle produced in China will be in EV. And of course, China produces about a third of all the world's cars. So I think we all have to take these headlines as moderation, but not drastically story-changing headlines for EV.

Speaker Change #103: For 2024, even with all the news we've heard, the projection is still that EV production will grow by 14% versus last year.

Timothy M. Knavish: So I think we all have to take these headlines in moderation, but not drastically story-changing headlines for EV. Your next question comes from the line of Arun Viswanathan with RBC. Your line is open. Please go ahead.

Arun Viswanathan: Your next question comes from the line of Arun Viswanathan with RBC. Your line is open; please go ahead. Great, thanks for taking my question.

Speaker Change #103: Your next question comes from the line of Arun Viswanathan with RBC. Your line is open, please go ahead.

Arun Shankar Viswanathan: Great. Thanks for taking my question. I guess I just wanted to ask some more questions. North... portfolio as well.

Timothy Knavish: I guess I just wanted to ask a couple more questions on North American architectural and the portfolio as well. So on architectural, I think our understanding is, you know, 4% of many, but DOM margins for the whole group, but maybe the stores business was recently unprofitable. I don't know if that's something you can just shed some light on. And are you seeing any interest in the stores side of that as well? Presumably, you know, we've heard that there's good interest on the non-sores business.

Arun Shankar Viswanathan: Great. Thanks for taking my question. I guess I just wanted to ask a couple more questions on North American Architectural and the portfolio as well. So, on architectural, I think our understanding is

Arun Shankar Viswanathan: Architectural, I think our understanding is, and a 4% EBITDA margin, the whole group, but maybe the stores business, was recently unprofitable. I don't know if that's... And are you seeing any interest in the stores side of that as well? Presumably, you know, we've heard that there's good interest in the non-stores business, but if there isn't interest in the stores, would you consider kind of keeping those or shutting those down?

Speaker Change #105: You know, 4% EBITDA margins for the whole group, but maybe the stores business.

Speaker Change #105: was recently unprofitable. I don't know if that's something you can just shed some light on.

Speaker Change #105: And are you seeing any interest in the stores side of that as well? Presumably, you know, we've heard that there's good interest on the non-stores business.

Timothy Knavish: But if there isn't on the stores, would you consider kind of keeping those or shutting those down, or how do you proceed there?

Speaker Change #106: If there isn't on the stores, would you consider kind of keeping those or shutting those down or how do you proceed?

Vincent J. Morales: And then on the portfolio itself, as you look into 25, presumably you won't have any architecture in North America. So you will be a little bit more industrial levered. Is there any way you can kind of give us your thoughts on how we should think about that industry? such lower valuations. So I don't know if that enters into your thinking as well. Hey, Arun.

Timothy Knavish: And then on the portfolio itself, as you look into 25, presumably, you won't have architectural in North America. So you will be a little bit more industrial-levered. Is there any way you can kind of give us your thoughts on how we should think about that? Industrial businesses encoding sometimes have fetched lower evaluation. So I don't know if that enters into your thinking as well. Thanks a lot.

Speaker Change #107: there, and then on the portfolio itself.

Speaker Change #108: As you look into 25, presumably you won't have architectural in North America.

Speaker Change #109: So you will be a little bit more industrial levered.

Speaker Change #110: Is there any way you can kind of give us your thoughts on how we should think about that? Industrial businesses and coding sometimes have fetched lower valuations, so I don't know if that enters into your thinking as well. Thanks a lot.

Timothy M. Knavish: Let me answer some North American architectural questions. Again, I think when we announced the strategic review in February, we gave some directional information, and certainly the people who are interested and engaged got the data books, etc., and we're providing data almost on a daily basis. We're not going to get into the nuances of the different channels.

Timothy Knavish: Let me answer the North American architectural questions again.

Timothy Knavish: I think when we announced the strategic review in February, we gave some directional information. And certainly the people who are interested in engaged, you know, got the data books, et cetera, and we're providing data almost on a daily basis. You know, we're not going to get into the nuances of the different channels. Again, we're in a process where there's a lot of folks looking at it. They have what they need. And we're not going to certainly get into how this may or may not be split. Again, there's a multitude of different scenarios that we're entertaining.

Speaker Change #111: Hey Arun, let me answer the North American architectural questions again. I think when we announced the strategic review in February , we gave some directional information.

Speaker Change #112: and certainly the people who are interested and engaged.

Speaker Change #113: You know, I got the data books, et cetera, and we're providing data almost on a daily basis. You know, we're not going to get into the nuances of the different channels.

Timothy M. Knavish: Again, we're in a process where there are a lot of folks looking at it, they have what they need, and we're not going to certainly get into how this may or may not be split. Again, there's a multitude of different scenarios that we're entertaining, and we'll let that process play out, you know, over the next 60 or 75 days or whatever. So, again, we'll let that process play out, and when we get to an ultimate conclusion, I think we'll be a little more granular to answer some of your questions.

Speaker Change #113: Again, we're in a process where there's a lot of folks looking at it, they have what they need.

Speaker Change #113: And we're not going to certainly get into how this may or may not be split.

Speaker Change #113: Again, there's a multitude of different scenarios.

Timothy Knavish: And we'll let that process play out, you know, over the next 60 or 75 days or whatever. So again, we'll let that process play out when we get to an ultimate conclusion.

Speaker Change #113: We're entertaining and we'll let that process play out over the next 60 or 75 days or whatever. So again, we'll let that process play out and when we get to an ultimate conclusion, I think we'll be a little more granular to answer some of your questions.

Timothy Knavish: I think we'll be a little more granular to answer some of your questions.

Timothy M. Knavish: And let me take, Arun, let me take the portfolio question. You know, mathematically, of course, you're spot on that x this business, we will be a little heavier in industrial coding and a little lighter in performance coding. But you've seen the.

Timothy Knavish: And let me take a run.

Timothy Knavish: Let me take the portfolio question. You know, mathematically, of course, you're spot on that X this business, you know, we will be a little heavier in industrial coatings and a lighter in performance coatings. But you've seen the, you know, the numbers and the guidance we've given on the profitability and margin of the architectural US business. And X that business, mathematically, and going forward despite that shift from that you describe from, you know, less performance and more industrial in aggregate, we will be a higher margin and a higher growth company. You know, we wouldn't be doing this doing this otherwise.

Arun Shankar Viswanathan: And let me take, Arun, let me take the the portfolio question. You know, mathematically, of course, you're spot-on that X this business, you know, we will be a little heavier in industrial coatings and a little lighter in performance coatings.

Timothy M. Knavish: You know, the numbers and the guidance we've given on the profitability and margin of the architectural U.S. business, and X that business, mathematically, and going forward, despite that shift you described from, you know, less performance and more industrial, in aggregate, we will be a higher margin and higher growth company. And, you know, we wouldn't be doing this otherwise. And, you know, just to be clear that there's also the benefit of us as a management team, as a PPG team, being able to focus all resources, whether it's human resources, R&D resources, capital resources, bandwidth resources, on businesses that have higher growth and higher margin profiles.

Arun Shankar Viswanathan: But you've seen the...

Arun Shankar Viswanathan: You know, the numbers and the guidance we've given on the profitability and margin of the architectural U.S. business.

Arun Shankar Viswanathan: and X That Business.

Arun Shankar Viswanathan: mathematically and going forward despite that shift from that you described from you know less performance and more industrial in aggregate we will be a higher margin and higher growth company and you know we wouldn't be doing this doing this otherwise

Timothy Knavish: And you know, just to be clear that there's also the benefit of us as a management team, as a PPG team, being able to focus all resources, whether it's human resources, R&D resources, capital resources, bandwidth resources, on businesses that have higher growth and higher margin profiles. So we are fully confident that this is the right thing to do for not only customers, employees, but absolutely for shareholders going forward.

Speaker Change #114: And just to be clear, there's also the benefit of...

Speaker Change #114: Us, as a management team, as a PPG team, being able to focus all resources, whether it's human resources, R&D resources, capital resources,

Speaker Change #114: bandwidth resources on businesses that have higher growth and higher margin profile. So we are fully confident that this is the right thing to do for not only customers, employees, but absolutely for shareholders going forward. Fully confident.

Timothy M. Knavish: So we are fully confident that this is the right thing to do for not only customers and employees but absolutely for shareholders going forward. Fully confident. Your next question comes from the line of Jaideep Pandya with Onfield Investment Research. Your line is open, please go ahead. Oh, thank you.

Jaideep Pandya: Your next question comes from the line of Jaideep Pandya with Enfield Investment Research. Your line is open. Please go ahead.

Speaker Change #115: Your next question comes from the line of Jaideep Pandya with Onfield Investment Research. Your line is open, please go ahead.

Jaideep Pandya: Thank you. I just first question is on packaging.

Jaideep Mukesh Pandya: I just, the first question is on. Could you just tell us how confident you are to keep the share that you have gained because one of your competitors had a fire? Because we are hearing sort of opposite messages, and they seem to be confident they'll get the share back. So just wondering how packaging will look in 2025? My second question is, sorry to come back to North America, but looking back 10 years ago when you bought the actual business, it doesn't feel like a lot has changed in terms of either the store footprint or the, you know, plant footprint or even, for that matter, profitability.

Speaker Change #116: Thank you. I guess the first question is on packaging.

Timothy Knavish: Could you just tell us how confident are you to keep the share that you have gained because one of your competitors had a fire? Because we are hearing sort of opposite messages, and you know they seem to be confident they'll get the share back. So just wondering, you know how would packaging look in 2025.

Speaker Change #117: Could you just tell us how confident are you to keep the share that you have gained?

Speaker Change #118: because one of your competitors had a fire because we are hearing sort of opposite messages and you know they seem to be confident they'll get the share back so just wondering you know how will packaging look in 2025?

Timothy Knavish: My second question is sorry to come back to architectural North America, but you know looking back 10 years ago when you bought the actual business, doesn't feel like a lot has changed in terms of either the store footprint or the, you know, plant footprint or even for that matter the profitability. And you alluded to one point. And which was really neat for investment.

Speaker Change #119: My second question is, sorry to come back to architectural North America, but, you know, looking back 10 years ago when you bought the actual business,

Speaker Change #120: It doesn't feel like a lot has changed in terms of either the store footprint or the, you know, plant footprint, or even for that matter, the profitability.

Speaker Change #121: and you alluded to one point which was read or need for investment

Jaideep Mukesh Pandya: And you alluded to one point, which was really a need for investment. So just curious, you know, when you look at JV models, where do you need to invest? And how do you sort of unpack and improve profitability here? Because you yourself have done it with Axto in the last 10 years, and sorry to say this, but it sort of hasn't worked. So, you know, what would you and a JV partner do here? I'm just curious.

Timothy Knavish: So just curious, you know when you look at JV models, where do you need to invest and how do you sort of unpack and improve profitability here because you yourself done it with Acto in the last 10 years and sorry to say this but it sort of hasn't worked. So you know what would you and a JV partner do here, just curious, and sorry to squeeze in one more team.

Speaker Change #122: So, just curious, you know, when you look at JV models...

Speaker Change #123: Where do you need to invest? And how do you sort of unpack and improve profitability here? Because you yourself have done it with Axto in the last 10 years, and sorry to say this, but it sort of hasn't worked.

Timothy M. Knavish: And sorry to squeeze in one more. Tim, you know, volume growth has been an issue for PPG for the last, you know, 11 quarters. How do you incentivize your sales force to go for volume if you at all want to do that? Thanks a lot.

Speaker Change #123: You know, what would you and a JV partner do here? Just curious. And sorry to squeeze in one more. Tim, you know, volume growth has been an issue for PPG for the last, you know, 11 quarters.

Timothy Knavish: You know volume growth has been an issue for PPG for the last, you know, 11 quarters. How do you incentivize your sales force to go for volume if you at all want to do that. Thanks a lot.

Speaker Change #124: How do you incentivize your sales force to go for volume if you at all want to do that? Thanks a lot.

Timothy Knavish: Okay, JV, thanks for the questions there. I'm packaging a high degree of confidence that we will keep our share gains and continue to grow the share. You know you did mention an incident one of our competitors unfortunately had, and of course there was some, you know, some things that the industry did to get through that, but we want a lot of share that had nothing to do with that incident. And so we are confident going forward that our technologies inside the can outside the can are on the easy open end. Our food lines we're gaining share across a number of different spaces that nothing to do with that isolated isolated incident.

Timothy M. Knavish: Okay, Jaideep, thanks for the questions there. On packaging, we have a high degree of confidence that we will keep our share gains and continue to grow this share. You did mention an incident one of our competitors unfortunately had, and of course, there were some things that the industry did to get through that. We've won a lot of business that had nothing to do with that incident.

J.D.: Okay, Jaideep, thanks for the questions there. On packaging...

J.D.: a high degree of confidence that

Speaker Change #126: We will keep our share gains and continue to grow this year. You know, you did mention an incident one of our competitors unfortunately had, and of course there was some...

Speaker Change #126: You know, some things that the industry did to get through that. But we've won a lot of shares that had nothing to do with that incident. And so we are confident going forward that our technologies inside the can, outside the can,

Timothy M. Knavish: And so we are confident going forward that our technologies inside the can, outside the can, on the easy open end, our food lines, we're gaining share across a number of different spaces that had nothing to do with that isolated incident. So, good news ahead for that business. Your JV scenario for architectural U.S. Canada, you know, at the end of the day, I've said from the beginning that we believe this business could be more successful with a partner, and that partner could either buy the whole thing or do a JV.

Speaker Change #126: On the Easy Open end, our food lines, we're gaining share across a number of different spaces that have nothing to do with that isolated incident. So, good news ahead for that business.

Timothy Knavish: So you know good news ahead for that for that business.

Timothy Knavish: JV scenario for architectural US Canada. You know, at the end of the day, you know there are there. I said from the beginning that we believe this business could be more successful with a partner, and that partner could either buy the whole thing or do it JV. What that partner might might be able to run more velocity through the high fixed cost that company own stores bring high they might be able to bring more velocity through whether it's other other paint products or other building products in general. So that is that is the big issue where JV may be able to help us from that velocity through your high fixed cost stores.

Speaker Change #127: The JV scenario for architectural U.S. Canada, you know, at the end of the day,

Speaker Change #128: You know there are there I've said from the beginning that we believe this business

Speaker Change #128: could be more successful with a partner and that partner could either buy the whole thing or or do a JV what that partner might might be able to run more velocity through the high fixed cost

Timothy M. Knavish: That partner might be able to run more velocity through the high fixed costs that company-owned stores bring; they might be able to bring more velocity through, whether it's other paint products or other building products in general.

Speaker Change #128: that company-owned stores bring.

Speaker Change #128: They might be able to bring more velocity through, whether it's other paint products or other building products in general.

Timothy M. Knavish: So that is the big issue where a JV may be able to help us with that velocity through your high-fixed-cost stores. Volume growth, you know, I mentioned as we move through 2023 and the first half of 2024 that we were modifying incentive comp to drive more organic growth. We've done some of that.

Speaker Change #128: So that is a big issue where JV may be able to help us from that.

Timothy Knavish: You know in volume growth you know I mentioned as we move through 2000 and 23 in the first half of 2024 that we were modifying instead of comp to drive more organic growth. We've done some of that; some of that's all in already in place, and some of it's still being still being implemented as we speak. And that is one element of a multifaceted recipe that we're changing to drive a higher organic profile come.

Speaker Change #128: Velocity through your high-fixed cost

Speaker Change #128: stores.

Speaker Change #128: You know, in volume growth, you know, I mentioned as we move through 2023 and the first half of 2024,

Speaker Change #128: that we were modifying, instead of comp...

Timothy M. Knavish: Some of that's already in place, and some of it's still being implemented as we speak. And that is one element of a multifaceted recipe that we're changing to drive a higher organic profile company. Your next question comes from the line of Aron Ceccarelli with Berenberg. Your line is open, please go ahead. Hello, hi, good morning.

Speaker Change #128: to drive more organic growth.

Speaker Change #128: We've done some of that. Some of that's already in place, and some of it's still being implemented as we speak. And that is one element of a multifaceted recipe that we're changing to drive a higher organic profile company.

Operator: Your next question comes from the line of Aaron Chakarelli with Aaron Berg. Your line is open; please go ahead. Thank you very much. We appreciate your continuous interest and confidence in PPG.

Speaker Change #128: Your next question comes from the line of Aron Ceccarelli with Berenberg. Your line is open, please go ahead.

Aron Ceccarelli: Thanks for taking my question. I have a very quick one on industrial coating. I would be interested in any area of the business that actually accelerates. Yes, Arun, thanks for the question. So at the end of the quarter, I would say the industrial segment, and the automotive segment, was decelerating. As I previously mentioned, we got some further shutdown news as we move through the month of June. I would say industrial starts this pretty flat, but we are starting to see some sequential improvement that we projected in the Q3. And I think packaging, you know, on a basis, the last question is accelerating from a volume standpoint. So, that's how I'd quantify the exit rates for the industrial sector.

Aron Ceccarelli: Hello, hi, good morning. Thanks for taking my question. I have a very quick one on industrial coating. I would be interested in understanding if you can provide some color around the monthly run rate of volumes.

Aron Ceccarelli: And I would be particularly interested in the exit rate in June , if there's any area of the business that actually accelerated or decelerated at the end of the quarter. Thank you.

Speaker Change #130: Yep, Arun, thanks for the question. So, at the end of the quarter, I would say industrial segment, automotive was decelerating. As I previously mentioned, we got some further shutdown news as we move through the month of June .

Speaker Change #130: I would say industrial...

Speaker Change #130: Starting this, you know, pretty flat, but we are starting to see some sequential improvement that we projected in the Q3.

Speaker Change #130: And I think packaging, you know, basis of the last question, is accelerating from a volume standpoint. So that's how I'd quantify the exit rates for industrial segment.

Alex Lopez: There are no further questions at this time. I will now turn the call back over to Alex Lowe. Thank you, Elliot. We appreciate your continued interest and confidence in PPG. This concludes our second quarter earnings call and today's conference call.

Speaker Change #130: There are no further questions at this time. I will now turn the call back over to Alex Lopez.

Alex Lopez: Thank you, Elliot. We appreciate your continued interest and confidence in PPE. This concludes our second quarter earnings call.

Operator: This concludes our second quarter earnings call.

Speaker Change #131: This concludes today's conference call. You may now disconnect.