Q1 2025 PPG Industries Inc Earnings Call

Yeah.

Carly: Good morning all and thank you for joining us for the first call to 2025 PPG earners.

Colleen: Good morning, and thank you for joining us for the first close of 20 to 25 P. P. G earnings Conference call. My name is Colleen I'll be coordinating the call today.

Carly: My name is Carly and I'll be coordinating the call today. All lines have been placed on mute to prevent any background noise.

Colleen: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question answer session.

Carly: After the speaker's remarks, there'll be a question...

Alex Lopez: If you'd like to register a question during the call, you can do so by pressing star followed by 1 on your telephone keypad and submitting yourself an email at And now I'd like to hand over to our host, Alex Lopez, who is your co-host. Thank you, Carly, and good morning, everyone. This is Alex Lopez. We appreciate your continued interest in PPG and welcome you to our first quarter 2025 earnings conference. Joining me today 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 US equity markets closed on Tuesday, April 29, 2025.

Speaker Change: So that's where I drew a question during the call you can do so by pressing star flip I wanted I also had a phone keypad and some yourself out of line of questioning we stopped flip back to it.

Colleen: Kind of it's for us to actually pass floor is yours.

Colleen: Thank you Kelly and good morning, everyone.

Alex: This is Alex.

Alex: We appreciate your continued interest in PPE and welcome you to our first quarter 2025 earnings call earnings Conference call.

Speaker Change: Joining me today from PPE, <unk>, 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 market skills on Tuesday April 29 2025.

Alex Lopez: We have posted detailed commentary and the accompanying presentation slides, which are being shown on these webcasts on the Investor Center of our website, ppg.org.

Speaker Change: We have posted detailed commentary and the accompanying presentation slides, which are being shown on this webcast on the Investor Center of our website <unk> Dot com.

Alex Lopez: Following management's perspective on the company's results, we will move to 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 PPE's operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ.

Speaker Change: Following management's perspective on the Companys results, we will move to Q&A session.

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 effect on EPS operating and financial performance.

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

Alex Lopez: The company is under no obligation to provide subsequent updates to this forward-looking The presentation also contains certain non-GAAP financial The company has provided in the appendix of the presentation materials, which are available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial models.

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

Speaker Change: The presentation also contains certain non-GAAP financial measures.

Speaker Change: Company has provided in the appendix of the presentation materials, which are available on our website reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Alex Lopez: For additional information, please refer to PPG filings with the SEC.

Speaker Change: For additional information please refer to <unk> filings with the SEC.

Tim Knavish: Now, let me introduce PPG Chairman and CEO Tim Kanata. Thank you, Alex, and welcome everyone. I'd like to start by providing a few highlights on our first quarter 2025 financial performance, and then I'll move to our outlook. The PPG team delivered sales of $3.7 billion. This is a decrease of 4% compared with the first quarter of 2024, primarily due to unfavorable foreign currency translation, and the impact from business divestitures, including the silica's We are beginning to realize the benefits of our enterprise growth strategy as organic sales grew year over year with increases in both sales volumes and selling prices.

Speaker Change: Now, let me introduce PPE chairman and CEO.

Speaker Change: Oh, Hey.

Speaker Change: Thank you, Alex and welcome everyone I'd like to start by providing a few highlights on our first quarter 2025 financial performance and then I'll move to our outlook.

Speaker Change: <unk> delivered sales of $3 7 billion. This is a decrease of 4% compared with the first quarter of 2024, primarily due to unfavorable foreign currency translation.

Speaker Change: And the impact from business divestitures, including the silicones business.

Speaker Change: We are beginning to realize the benefits of our enterprise growth strategy as it were.

Speaker Change: <unk> sales grew year over year with increases in both sales volumes and selling prices.

Tim Knavish: Regionally, we delivered year-over-year organic sales growth in Asia, driven by strong performance in China, India, and Vietnam. In the US, after six quarters of declines or flat performance, we achieved 4% organic sales growth, led by share gains in several of our businesses and improvement in industrial production. Organic sales in Latin America were up slightly with growth tempered by the recent geopolitical environment. European organic sales were down 1% which was significant improvement versus prior quarters as demand for our products were stabilizing in the region. Our top-line results reinforce a positive organic growth momentum and contributed to improved manufacturing productivity.

Speaker Change: Regionally, we delivered year over year organic sales growth in Asia, driven by strong performance in China, India and Vietnam.

Speaker Change: In the U S. After six quarters of declines or flat performance, we achieved 4% organic sales growth.

Speaker Change: Led by share gains in several of our businesses and improvement in industrial production.

Speaker Change: Organic sales in Latin America were up slightly with growth tempered by the recent geopolitical environment.

Speaker Change: European organic sales were down, 1%, which was significant improvement versus prior quarters as demand for our products are stabilizing in the region.

Speaker Change: Our topline results reinforce our positive organic growth momentum.

Speaker Change: <unk> contributed to improved manufacturing productivity.

Tim Knavish: As we noted in our earnings materials released last night, our first quarter segment EBITDA margin was 19.4%, and adjusted earnings per diluted share was $1.72. Also, we repurchased approximately $400 million of our stock and ended the quarter with a strong balance.

Speaker Change: As we noted in our earnings materials released last night, our first quarter segment EBITDA margin was 19, 4%.

Speaker Change: And adjusted earnings per diluted share was $1 72.

Speaker Change: Also we repurchased approximately $400 million of our stock and ended the quarter with a strong balance sheet.

Tim Knavish: Before we go through the quarterly details, let me first talk about how our results and momentum reflect the consistent, disciplined execution of the enterprise growth strategy that we launched in 2023. We are beginning to benefit from the actions we have taken to optimize and focus our portfolio. of PPG's organic growth muscle and strategic investments in innovation are driving positive The company is aggressively managing the bottom line, including decisive self-help. Combined with our disciplined capital allocation and strong balance sheet, critical in today's environment, PPG is in a great and differentiated position to prevail in the current economic condition.

Speaker Change: Before we go through the quarterly details, let me first talk about how our results and momentum reflect the consistent disciplined execution of the enterprise growth strategy that we launched in 2023, we are beginning to benefit from the actions, we have taken to optimize and focus.

Speaker Change: Our portfolio.

Speaker Change: The development of Ppg's organic growth muscle and strategic investments in innovation are driving positive momentum.

Speaker Change: The company is aggressively manage the bonding of managing the bottom line, including decisive self help.

Speaker Change: Combined with our disciplined capital allocation and strong balance sheet critical in today's environment PPG is in a great and differentiated position to prevail in the current economic conditions.

Tim Knavish: Looking at our segment performance, in the global architectural coding segment, first quarter net sales were significantly impacted by unfavorable foreign currency translation, which decreased sales by 7% as both the Mexican peso and Europe weakened year over year compared to the U.S. dollar. We are making rapid progress reducing structural costs in this region and anticipate strong incremental earnings leverage as demand trends improve. In architectural codings Latin America and Asia Pacific, sales volumes declined reflecting a pause in project related business and governmental spending in Mexico due to recent geopolitical related uncertainty. However, core retail sales were solid.

Speaker Change: Looking at our segment performance and our global architectural coating segment first quarter net sales were significantly impacted by unfavorable foreign currency translation, which decreased sales by 7% as both the Mexican peso and Europe.

Speaker Change: Weakened year over year compared to the U S dollar.

Speaker Change: In architectural coatings EMEA organic sales were flat versus prior year with improved selling prices offset by slightly lower sales volumes sales increased in central Europe and in the Nordic region, while they declined in Western Europe, our volumes in Europe were slightly unfavorable but stable.

Speaker Change: Rising and we expect flat to higher volumes year over year in the second quarter.

Speaker Change: We are making rapid progress reducing structural costs in this region and anticipate strong incremental earnings leverage as demand trends improve.

Speaker Change: In architectural coatings, Latin America, and Asia Pacific sales volumes declined reflecting a pause in project related business and governmental spending in Mexico due to recent geopolitical related uncertainty however, core retail sales were solid.

Tim Knavish: We anticipate economic activity and project spending in Mexico will resume in the upcoming quarters as more certainty regarding regional trade evolves. With its structural advantages, Mexico will remain a strong growth country for PPG. Segment EBITDA margin decreased 310 basis points versus prior year, driven by lower sales volumes and regional inflation stemming from the weaker peso, partially offset by cost control action. In the performance coding segment, first quarter organic sales increased 9% with both price and sales volume improvement. Within the segment, Aerospace delivered double-digit percentage organic sales growth with record first quarter sales in our Customer order backlogs were stable at $300 million, even with growth-related investments that improved our output in the quarter.

Speaker Change: We anticipate economic activity and project spending and Mexico will resume in the upcoming quarters as more certainty regarding regional trade evolves.

Speaker Change: With its structural advantages, Mexico will remain a strong growth country for PPG.

Speaker Change: Segment, EBITDA margin decreased 310 basis points versus prior year, driven by lower sales volumes and regional inflation stemming from the weaker peso.

Speaker Change: Partially offset by cost control actions.

Speaker Change: In the performance coatings segment first quarter organic sales increased 9% with both price and sales volume improvements.

Speaker Change: Within the segment aerospace delivered double digit percentage organic sales growth with record first quarter sales and earnings.

Speaker Change: Customer order backlogs were stable at $300 million.

Speaker Change: Even with growth related investments that improved our output in the quarter.

Tim Knavish: The backlog demonstrates excellent industry dynamics and strong demand for our technology-advantaged products. In automotive refinish, global organic sales increased a low single digit percentage versus the prior year. In the US, sales volumes improved the mid single digit percentage with benefits from customer order patterns and share gains, offsetting lower and industry collision claims. In the first quarter, the company grew the number of link subscriptions as well as moonwalk installations, which now total more than 2,700 in service, further supporting customer productivity and partners. Protective and marine coatings delivered double-digit percentage organic sales growth supported by increasing global demand for our technologies and our recent share gains in marine.

Speaker Change: The backlog demonstrates excellent industry dynamics and strong demand for our technology advantaged products.

Speaker Change: In automotive refinish global organic sales increased a low single digit percentage versus the prior year in the U S sales volumes improved a mid single digit percentage with benefits from customer order patterns and share gains offsetting lower than industry collision claims.

Speaker Change: In the first quarter. The company grew the number of linked subscriptions as well as moonwalk installations, which now total more than 2700 and service further supporting customer productivity and partnerships.

Speaker Change: Protective and marine coatings delivered double digit percentage organic sales growth supported by increasing global demand for our technologies and our recent share gains in marine this was the eighth consecutive quarter with positive year over year sales volume growth in this business and we are increasing our growth.

Tim Knavish: This was the eighth consecutive quarter with positive year-over-year sales volume growth in this business and we are increasing our growth-related investments to support demand. traffic solutions delivered above market mid single digit percentage sales growth in the quarter. Demand is expected to remain strong for this business throughout the year, including in the second quarter, when demand steps up seasonally. Segment EBITDA was up 8% year-over-year, a new first quarter record reflecting the organic sales growth as our various growth investments in the segment are yielding benefits. In the industrial coating segment, net sales declined compared to the first quarter of 2024, primarily due to the impact of foreign currency translation and the divestiture of the silica products business in 2024.

Speaker Change: Related investments to support demand.

Speaker Change: Graphic solutions delivered above market mid single digit percentage sales growth in the quarter demand is expected to remain strong for this business throughout the year, including in the second quarter when demand steps up seasonally.

Speaker Change: Segment, EBITDA was up 8% year over year, a new first quarter record, reflecting the organic sales growth as our various growth investments in the segment are yielding benefits.

Speaker Change: In the industrial coating segment net sales declined compared to the first quarter of 2024, primarily due to the impact of foreign currency translation and the divestiture of the silica products business in 2024.

Tim Knavish: These items combined lowered sales by 6%. Organic sales for the segment were down less than 2%, which is a significant improvement versus the fourth quarter of 2024, which was down 6%. In the first quarter, selling prices declined 1% due to carryover of certain index-based customer contracts. Segment sales volumes also decreased 1% as strength in industrial coatings and packaging coatings was offset by soft automotive industry. From a business unit perspective, automotive OEM industry production was lower year over year in the U.S. and Europe, and our results followed that lower demand trend. We partially mitigated this volume decline with growth in Asia and Latin America, including our share gains in Brazil.

Speaker Change: These items combined lowered sales by 6%.

Speaker Change: Organic sales for the segment were down less than 2%, which is a significant improvement versus the fourth quarter of 2024, which was down 6%.

Speaker Change: In the first quarter selling prices declined 1% due to carryover of certain index based customer contracts.

Speaker Change: Segment sales volumes also decreased 1% as strength in industrial coatings and packaging coatings was offset by soft automotive industry builds.

Speaker Change: From a business unit perspective, automotive OEM industry production was lower year over year in the U S and Europe and our results followed that lower demand trends, we partially mitigated this volume decline with growth in Asia, and Latin America, including our share gains in Brazil.

Tim Knavish: During the first quarter, we narrowed the gap in our volume performance versus auto industry builds. We expect to grow above industry levels starting in the third quarter of this year, driven by already won share gains and our market outperformance in Asia. industrial coatings organic sales vault sales were flat with lower index based pricing offset by improved sales volume after several quarters of weak industrial production Demand for PPG's industrial products grew in all regions, but varied across subsegments. Packaging coatings organic sales increased by a low single digit percentage year over year driven by share gains on top of strong growth in the prior year.

Speaker Change: During the first quarter, we narrowed the gap in our volume performance versus auto industry builds we expect to grow above industry levels, starting in the third quarter of this year driven by already won share gains and our market outperformance in Asia.

Speaker Change: Industrial coatings organic sales volume sales were flat with lower index based pricing offset by improved sales volume after several quarters of weak industrial production.

Speaker Change: Demand for Ppg's industrial products grew in all regions, but varied across sub segments.

Speaker Change: Packaging coatings organic sales increased by a low single digit percentage year over year, driven by share gains on top of strong growth in the prior year.

Tim Knavish: Segment EBITDA margin declined 90 basis points year-over-year as lower sales volumes and price were partially offset by strong cost control and productivity activity. For the industrial segment, we expect organic results in the second quarter to be generally similar with the first quarter, with share gains aiding organic results in the back half of the year.

Speaker Change: Okay.

Speaker Change: Segment, EBITDA margin declined 90 basis points year over year, as lower sales volumes and price.

Speaker Change: Partially offset by strong cost control and productivity actions.

Speaker Change: For the industrial segment, we expect organic results in the second quarter to be generally similar with the first quarter with share gains, adding aiding organic results in the back half of the year.

Tim Knavish: Now let me talk about our balance sheet and cash. We issued 900 million euro of debt during the quarter at 3.25%. We have Euro debt maturities of $300 million and $600 million due in the second and fourth quarter respectively. During the quarter, we completed approximately $400 million in share repurchases and paid approximately $160 million in dividends. We have repurchased $1.2 billion in our stock over the last six quarters and paid $930 million in dividends over that same time. Our balance sheet remains strong, which continues to provide us with financial flexibility, and we remain committed to driving shareholder value.

Speaker Change: Now, let me talk about our balance sheet and cash we issued 900 million euro of debt during the quarter at 325%.

Speaker Change: We have euro debt maturities of $300 million and 600 million due in the second and fourth quarter respectively.

Speaker Change: During the quarter, we completed approximately $400 million in share repurchases and paid approximately $160 million in dividends.

Speaker Change: We have repurchased $1 $2 billion in our stock over the last six quarters and paid $930 million in dividends over that same time period.

Speaker Change: Our balance sheet remains strong which continues to provide us with financial flexibility and we remain committed to driving shareholder value.

Tim Knavish: Looking ahead, obviously the current macroeconomic environment is highly dynamic. Our business model has historically proven to be well positioned to navigate and perform during periods of uncertainty. As it relates specifically to recent tariffs, let me highlight a few relevant business traits that provide structural resilience for PPG. We have a balanced global business portfolio without reliance on any single country, region, or end market. We primarily buy, make and sell local for local. We are flexible batch process manufacturers, which results in an asset-like footprint that is easily adaptable to volume shifts. We have a highly variable cost structure that allows us to adjust our conversion costs according to demand.

Speaker Change: Looking ahead, obviously the current macroeconomic environment is highly dynamic and our business model has historically proven to be well positioned to navigate and perform during periods of uncertainty.

Speaker Change: As it relates specifically to recent tariffs, let me highlight a few relevant business trades that provides structural resilience for PPG.

Speaker Change: We have a balanced global business portfolio without reliance on any single country region or end market.

Speaker Change: We primarily buy make and sell local for local.

Speaker Change: We are flexible batch process manufacturers, which results in an asset light footprint that is easily adaptable to volume shifts.

Speaker Change: We have a highly variable cost structure that allows us to adjust our conversion costs according to demand.

Tim Knavish: Our input cost model is very dependent on commodity materials, including oil, that are reliant on supply and demand. Historically, we have been successful in adjusting our selling prices, including through surcharges, to account for any changes in our delivered cost of raw material. Finally, we have a demonstrated track record of consistent cash generation through all stages of the business cycle to complement our strong balance. While these structural advantageous attributes of PPG provide a buffer for macro impacts, we are not immune to lower economic demand and continue to closely monitor customer order patterns and quickly adjust as necessary.

Speaker Change: Our input cost model is very dependent on commodity materials, including oil that are reliant on supply and demand.

Speaker Change: Historically, we have been successful in adjusting our selling prices, including through surcharges to account for any changes in our delivered cost of raw materials.

Speaker Change: Finally, we have a demonstrated track record of consistent cash generation through all stages of the business cycle to complement our strong balance sheet.

Speaker Change: While these structural advantageous attributes of PPG provide a buffer for macro impacts we are not immune to lower economic demand and continued to closely monitor customer order patterns and quickly adjust as necessary.

Tim Knavish: Like all companies, we have potential downsides if overall demand significantly weakens, and we are diligently monitoring these conditions. With regard to our supply chain, we're executing our contingency plans and already working with suppliers on alternative sourcing, and you should expect us to aggressively manage our costs and productivity.

Speaker Change: Like all companies, we have potential downsides, if overall demand significantly weakens and we are diligently monitoring these conditions.

Speaker Change: Okay.

Speaker Change: With regard to our supply chain, we are executing our contingency plans and already working with suppliers on alternative sourcing and you should expect us to aggressively manage our cost and productivity.

Tim Knavish: Now a few more details of what we are seeing. In the first quarter, we already realized a step down in demand in Mexico as project-related spending was paused, yet the overall PPG enterprise still performed. Beyond Mexico, we did not see any other significant changes to demand and we did not experience any noteworthy customer pull forward into the first quarter. This pattern has continued for the first four weeks of the second quarter as we have not seen evidence of any curtailment of customer orders in our business. Some customers, however, have publicly expressed the need to eventually assess their production, depending on the duration and eventual framework of trade-out.

Speaker Change: Now a few more details of what we're seeing in the first quarter, we already realized a step down in demand in Mexico.

Speaker Change: As project related spending was pause yet the overall PPG enterprise still performed.

Speaker Change: Beyond Mexico, we did not see any other significant changes to demand and we did not experience any noteworthy customer pull forward into the first quarter.

Speaker Change: This pattern has continued for the first four weeks of the second quarter as we have not seen evidence of any curtailment of customer orders and our businesses.

Speaker Change: Some customers. However have publicly expressed the need to eventually assessed their production depending on the duration and eventual framework of trade outlets.

Tim Knavish: Additionally, we have not yet experienced any significant change to our raw material pricing as our suppliers continue to favor volume over price. We're monitoring this situation and we will react accordingly with pricing actions and or self-help cost actions to mitigate any impact.

Speaker Change: Additionally, we have not yet experienced any significant change to our raw material pricing as our suppliers continue to favor volume over pricing.

Speaker Change: We are monitoring this situation and we will react accordingly, with pricing actions and or self help cost actions to mitigate any impacts.

Tim Knavish: When considering our guidance, we see structural strength in our performance coding segment driven by our technology-advantaged products in aerospace and protective and marine. We expect European architectural codings volume trends to improve and also anticipate short-term tepid business conditions in Mexico given the economic uncertainty. Demand for various general industrial markets improved in the first quarter and we see increasing momentum in the coming quarter. While auto OEM industry demand forecasts were slightly reduced, our share gains are beginning to yield benefits and we expect to outperform the market beginning in the third quarter. We sized our annual share gains in the industrial segment at $100 million, and we are tracking to that annualized figure.

Speaker Change: When considering our guidance, we see structural strength in our performance coating segment, driven by our technology advantage products and aerospace and protective and marine.

Speaker Change: We expect European architectural coatings volume trends to improve and also anticipate short term tepid business conditions in Mexico, given the economic uncertainty.

Speaker Change: Demand from various general industrial markets improved in the first quarter, and we see increasing momentum in the coming quarters.

Speaker Change: While auto OEM industry demand forecast were slightly reduced our share gains are beginning to yield benefits and we expect to outperform the market beginning in the third quarter.

Speaker Change: We sized our annual share gains in the industrial segment at $100 million and we are tracking to that annualized figure.

Tim Knavish: Finally, we expect growing benefits from our self-help programs and other discretionary cost management programs, the pace and scope of which we have stepped up over the past few months.

Speaker Change: Finally, we expect growing benefits from our self help programs and other discretionary cost management programs, the pace and scope of which we have stepped up over the past few months.

Tim Knavish: In closing, I am confident in our ability to successfully navigate this uncertainty given our improved business portfolio, the diversity of our regions and businesses, our self-help actions, and our share gain momentum. We are reaffirming our full year earnings per share guidance range of $7.75 to $8.05. Thank you to our PPG team around the world who make it happen and deliver on our purpose every day. We appreciate your continued confidence in PPG.

Speaker Change: In closing I am confident in our ability to successively successfully navigate this uncertainty given our improved business portfolio. The diversity of our regions and businesses are self help actions and our share gain momentum.

Speaker Change: We are reaffirming our full year earnings per share guidance range of $7 75 to.

Speaker Change: The $8 five.

Speaker Change: Thank you to our PPG team around the world, who make it happen and deliver on our purpose every day. We appreciate your continued confidence in PPG.

Tim Knavish: This concludes our prepared remarks.

Speaker Change: This concludes our prepared remarks.

Carly: And now, would you please open the line for questions? Thank you very much. We'd now like to open the lines for Q&A.

Speaker Change: And now would you. Please open the line for questions.

Speaker Change: Thank you very much we'd now open the lines for Q&A.

Carly: If you'd like to ask a question, please press star followed by one on your telephone keypad, and to remove yourself from the line of questioning, press star followed by two.

Speaker Change: Ask a question. Please press star followed by one on your telephone keypad and should meet yourself Glen a question star for the biopsy.

David Begleiter: Our first question comes from David Begleiter of Deutsche Bank. David, your line is now open. Good morning. Tim, just on global architectural, I know margins are under pressure here. How do you expect margins to trend? Yeah, I don't think you know, we'll get some margin benefit from sequential volume improvement, David. But otherwise, you know, our we've, we've had positive price in that segment. And so really, it's a it's a volume story for us, with, you know, Europe still being down a bit, and then the Mexico, the project side of Mexico slowing down, it was really a volume story.

Speaker Change: Our first question comes from David Walesa, That's Deutsche Bank, David Your line is now.

David Walesa: Thank you good morning.

Speaker Change: Tim just on global architectural I know margins are under pressure here, how do you expect margins to trend in Q2 any any relief from the pressure you saw in Q1.

Speaker Change: Yes, I don't think we will get some margin benefit from sequential volume improvement David.

Speaker Change: But otherwise.

Speaker Change: We've we've had positive price in.

Speaker Change: In that segment and so really it's a it's a volume story for us with.

Speaker Change: Europe still being down a bit and then the Mexico.

Speaker Change: The project side of Mexico slowing down it was really a volume story. So we fully expect that that margin to recover.

Tim Knavish: So we fully expect that margin to recover.

Tim Knavish: And David, just a reminder, typically, in Europe, there's a seasonal step up in the business. So we'll get some leverage from that. Got it.

David Walesa: And David just a reminder, typically.

David Walesa: Europe, there is a seasonal step up in the business. So we will get some leverage from that.

David Walesa: Yeah.

David Begleiter: And Tim, just on COMEX, how much was the business down in Q1 and what gives you the confidence the business will come back? Yeah, look, the confidence comes from a couple of things. You know, first of all, leading up to the tariff of April 2, prior to that, there was already a pause in project related spending for business and government investment projects. This pause, it affected our architectural segment and EBIT in Mexico. It's very important to note that our retail sales, our core retail sales in Mexico remained very solid in Q1. Now, why our confidence?

David Walesa: Got it and Tim just on Comex, how much was the business down in Q1, and what gives you the confidence that business will come back over the next few quarters.

David Walesa: Yes.

David Walesa: Look the confidence comes from a.

David Walesa: A couple of things first of all leading up to the tariff.

David Walesa: April 2nd prior to that there was already a pause in project related spending for business and government investment project.

David Walesa: This pause it affected our architectural segment and EBIT in Mexico.

David Walesa: Very important to note that our retail sales are core retail sales in Mexico remained very solid in Q1.

David Walesa: Now why why our confidence we're very well connected in Mexico with our scale and presence, we're very well connected to the project owners were connected to the project managers, we're well connected to key advisers that are close to the close to the government and to the economy.

Tim Knavish: You know, we're very well connected in Mexico with our scale and presence. We're very well connected to the project owners. We're connected to the project managers. We're well connected to key advisors that are close to the government and to, you know, the economists in the country. And they all believe that, you know, things will continue to be a bit soft in Q2. But as we move through the year, the project spending will increase. Many of these projects are already in flight. We have not seen any cancellation of projects. We continue to see new projects coming on in our pipeline.

David Walesa: <unk> in the country.

David Walesa: And they all believe that.

David Walesa: The Saints will continue to be a bit soft in Q2, but as we move through the year. The project spending will increase many of these projects are already in flight, we have not seen any cancellation of projects. We continue to see new projects coming on in our pipeline. So.

Tim Knavish: So, you know, we're, you know, certainly of trade discussions and with any reasonable framework for Mexico, that would allow all this spending to resume fully. But even without that, we do expect the project spending to increase again, and particularly in the second half. You know, and we're still confident that given a multitude of factors, favorable business climate, favorable unemployment, favorable inflation, good workforce, good population demographics, proximity, we still believe Mexico remains a strong growth country for some time for PPG.

David Walesa: Certainly a trade discussions and with any reasonable framework for Mexico that would allow all the spending to resume fully.

David Walesa: But even without that we do expect the project spending.

David Walesa: The increase again in particularly in the second half.

David Walesa: Feel confident that given a multitude of factors favorable business climate favorable unemployment favorable inflation.

David Walesa: Good workforce good population demographics proximity we still believe Mexico remains a strong growth country for some time for PPG.

David Walesa: Okay.

David Begleiter: Thank you very much.

Speaker Change: Thank you very much.

Duffy Fisher: Our next question comes from Duffy Fisher of Goldman Sachs. Duffy, your line is now open. Yeah, good morning, guys. Just a question on refinish.

Speaker Change: Question comes from Duffy Fischer of Goldman Sachs Duffy. Your line is now open.

Duffy Fischer: Yes. Good morning, guys. Just a question on refinish, if you look at the last four years.

Duffy Fisher: If you look at the last four years, you were kind of down mid single digits up mid single digits down low single digits up low single So that business seems to have gotten much more volatile than what it had been historically. So just, you know, and you kind of see it in the insurance claims data as well. What's really happening in that industry? Are there structural changes going on there? And does that in any way impair your ability to get kind of that consistent pricing year and year?

Duffy Fischer: You were kind of down mid single digits up mid single digits downloads single digits up low single digits. So that business seems to have gotten much more volatile than what it had been historically so just.

Duffy Fischer: C media insurance claims data as well, what's really happening in that industry are there structural changes going on there and does that in any way impair your ability to get kind of that consistent pricing year on year in that business.

Yeah.

Tim Knavish: Hey, Duffy, thanks for the question. I'll answer the last part first. The, let's call it the lumpiness that we see with our sell out has nothing to do with our ability to get pricing in that business. And we've demonstrated that year over year over year over year, despite this lumpiness. And the reason for that is the strength of our total value proposition around customer body shock productivity, where the actual you know, cost of the paint is only a fraction of the cost of the total process. And our productivity solutions help that total process. So one, it does not at all impact our ability to get price.

Duffy Fischer: Hey, Duffy thanks for the question I'll answer the last part first.

Duffy Fischer: Let's call it the lumpiness that we see with our sell out.

Duffy Fischer: Has nothing to do with our ability to get pricing in that business and we've demonstrated that year over year over year over year. Despite this lumpiness and the reason for that is the strength of our total value proposition around customer body shop productivity.

Duffy Fischer: Where the actual.

Duffy Fischer: Of the pain is only a fraction of the cost of the total process and our productivity solutions helped that total process. So one it does not at all impact our ability to get price.

Tim Knavish: You know, second to the lump lumpiness. This business has always had a bit of lumpiness because of the two step distribution model. And the distributors are all, you know, independent, private business people that are managing their own cash flows, trying to time things based on when they think pricing and demand may go certain directions. So this business is always a bit lumpy quarter over quarter.

Duffy Fischer: Second to the lumpy lumpiness.

Duffy Fischer: This business has always had a bit of lumpiness because of the two step distribution model and the distributors are all independent private business people that are managing their own cash flows trying to time things based on when they think pricing and demand may go certain directions.

Duffy Fischer: So this business is always a bit lumpy quarter over quarter and you really have to look at this set of yearly.

Tim Knavish: And you really have to look at this at a yearly and multi year basis sometimes.

Duffy Fischer: Multiyear basis, sometimes.

Tim Knavish: Now, to the longer A longer term picture in refinish, and I think you're referring to some of the lower collision claims. Let me comment on that. This is a critical coatings vertical because of the reasons that I mentioned earlier where our contributions, both inside the chemistry and outside the chemistry with our productivity tools are so important to the body shop owners. You've got labor tightness when it comes to skilled painters. So we play a critical role to the body shop, and that's why you don't hear it just from us. Every coatings company in the world wants to be in refinish and grow in refinish.

Duffy Fischer: Now to the longer.

Duffy Fischer: Longer term picture in refinish, and I think you're referring to some of the lower collision claims.

Let me comment on that this is a rid of coal coatings vertical.

Duffy Fischer: Because of the reasons that I mentioned earlier, where our contributions both inside the chemistry and outside the chemistry with our productivity tools are so important to the body shop owners, you've got labor tightness when it comes to skilled painters. So we play a critical role to to the body shop.

Duffy Fischer: And that's why you don't hear just from US every coatings company in the world wants to be in refinish and grow in refinish and collision claims have been trending lower for years and we've continued to grow and perform during that time period, and that's because of our world class best in class total productivity value proposition.

Tim Knavish: Collision claims have been trending lower for years, and we've continued to grow and perform during that time period, and that's because of our world-class, best-in-class total productivity value proposition. We have the best chemistry in the can, but we actually capture more value and additional value with what we do outside the can. You've heard about some of our digital productivity tools. We do a lot with related products, allied products, which are associated with the painting process but not actually inside the can of paint itself. We've grown there organically and inorganically, and the kegger over a multi-year period for those allied products has consistently been double-digit despite these year-over-year decreasing collisions.

Speaker Change: We have the best chemistry, and Mccann, but you also.

Speaker Change: We actually capture more value and additional value with what we do outside Mccann with you've heard about some are our digital productivity tools we.

Speaker Change: We do a lot with.

Speaker Change: Related project or products Allied products, which are associated with the painting process, but not actually inside the can of paint itself. We've done we've grown there organically and inorganically and the CAGR over a multiyear period for those allied products has consistently been double digit despite the.

Speaker Change: Year over year.

Speaker Change: Decrease in collisions and the reality is the players that deliver the best overall products and productivity solution will continue to win will be continue to be able to capture price as long as they continue to increase the productivity solution that they deliver it is probably the weaker players that don't have those solutions that are going.

Tim Knavish: The reality is the players that deliver the best overall productivity solution will continue to win, will continue to be able to capture price as long as they continue to increase the productivity solution that they deliver. It's probably the weaker players that don't have those solutions that are going to lose share and pay the price.

Speaker Change: That are going to lose share and pay the price.

Speaker Change: Okay.

Speaker Change: Thank you very much. Our next question comes from Kevin Mccarthy VIP, Kevin Your line is now.

Kevin Mccarthy: Kevin McCarthy, Kevin, your line has now ended. Thank you and good morning.

Speaker Change: Yes. Thank you and good morning, I was wondering if you could unpack the sales guidance that you've provided on slide 11 for global architectural coatings in particular.

Kevin Mccarthy: if you could unpack the sales. Global Archives Page 1 Page 1 You could kind of talk through your year-over-year volume expectations. Transcription by CastingWords Hey, thanks for the question, Kevin.

Speaker Change: You were down 11% in the first quarter a I appreciate a lot of that was currency, which is swinging, but maybe you could kind of talk through your year over year volume expectations in that business. For example would you expect a negative three that you saw in the first quarter or two.

Speaker Change: Penetrate positive territory at any other.

Speaker Change: Color on that outlook will be much appreciated.

Kevin: Hey, Thanks for the question, Kevin I'm not recurrent.

Tim Knavish: I'm not a current comment on currency. I wish I were that smart as to predict what that's going to do. So but I will talk about price and volume. We will price as we need to price, we got some positive price in Q1. And, you know, we'll continue to monitor all the stuff that's happening outside of our business in the macros. So you should expect that to be, you know, again, incrementally positive, like it was in Q1.

Speaker Change: Comment on currency I wish it were that smart.

Speaker Change: As to predict what thats going to do so, but I will talk about price and volume.

Speaker Change: We will price says we need the price we got some positive price in Q1.

Speaker Change: And we'll continue to monitor all the stuff that's happening outside of our business and the macros. So you should expect that to be again.

Speaker Change: Mentally positive like it was in Q1 on the volume side, we do think this project.

Tim Knavish: On the volume side, we do think this project pause in Mexico will largely continue into Q2 may get sequentially better. But we're not counting on that in our guide. We do expect we've seen some momentum in Europe, finally. And we do expect that to improve it could, you know, it's been down for a long, long time, it could be flat, it could be incrementally positive. And that's really the change. And in Q2 versus Q1, much more Europe focused than anywhere else.

Speaker Change: A pause in Mexico will largely continue into Q2 may get sequentially better, but we're not counting on that in our guide.

Speaker Change: We do expect we've seen some momentum in Europe, finally, and we do expect that to improve it could it's been down for a long long time, it could be flat it could be incrementally positive and thats really the change in in Q2 versus Q1 much more Europe.

Speaker Change: <unk> than anywhere else.

Speaker Change: Okay.

Speaker Change: Great. Thank you very much.

Michael Sison: Our next question comes from Michael Sison of Wells Fargo. Michael, your line is now open. Hey, good morning. Great start to the year. Seems better than the Browns or Steelers draft, but I just want to dig into performance codings real quick volumes, you know, pretty impressive there.

Speaker Change: Our next question comes from Michael assessing oppose Fucker, Michael Your line is not open.

Michael: Hey, good morning, great start to the year started in the Brown, a stainless draft but.

Michael: Just wanted to dig into performance cutting real quick volumes pretty impressive there.

Michael Sison: What do you think your volume should be for this year in total? And then what do you think market demand is? I know it's a little bit different per little business unit, but I suspect the market share gains are really what's driving that growth.

Speaker Change: What do you think your volume should be for this year in total and then what do you think market demand is I know, it's a little bit different for parallel business unit, but I suspect the market share gains are really what's driving that growth.

Tim Knavish: Hey, Mike, thanks for the question. You know, the the challenge for our performance coatings business is to deliver higher growth than the number of quarterbacks that Cleveland Browns now have in their quarterback room. That'll be a challenge, but we're confident in it because, you know, you look at the performance in Q1, across the businesses, aerospace, double digit, as much as we can make will ship, you know, PMC, double digit, great momentum, great pipeline, traffic will sequentially improve, one, because the share we won last year, and two, because of seasonality, you know, so I think we see a good set there of dynamics and demand with each of the businesses in our performance coating segment.

Mike: Hey, Mike Thanks for the question.

Mike: The challenge for our performance coatings business is to deliver higher growth than a number of quarterbacks Cleveland Browns now, having a quarterback room that'll be a challenge, but we're confident in it because.

Mike: You look at the performance in Q1 across the businesses aerospace double digit as much as we can make we'll ship.

Mike: PMC double digit great momentum great pipeline traffic will sequentially improve one because the share we won last year and two because of seasonality.

Mike: So I think we see a good a good.

Mike: Set there of dynamics and demand with each of the businesses in our performance coatings segment.

Mike: Yes, Mike this is Vince.

Mike: Tagalong comment here, we are delivering.

Mike: Consistent growth in these businesses, we are starting to comp against some more difficult comps in the back half of the year on a two year stack basis. Most of these businesses are up aerospace protective marine up double digits.

Mike: We finish and traffic up.

Mike: Low to mid single digits, and organic sales growth and we expect those trades to continue.

Mike: Yeah.

Speaker Change: Great. Thank you very much. Our next question comes from Ghansham Panjabi of that pension your line is totally.

Tim Knavish: Thank you very much.

Ghansham Panjabi: Ghansham Panjabi of Baird www.ghansham.co.uk Again, Jim, let me start and Tim will add some color here. When we look at Europe, we've seen obviously some easier comps. But across the continent, we're seeing stabilization in a couple areas. Industrial production was stabilized relative to recent past. We also saw in Western Europe, better order pattern, especially exiting the quarter. For Western European countries and architectural, we do know there's some sentiment on government increased governmental spending there. And I think there is in the Nordics recovery underway from a couple tough years. Yeah, I would just add to that that it's a lot of it is based on, you know, the momentum we saw growing as we move through Q1 Ghansham.

Mike: Thank you operator, and good morning, everybody.

Jim: Jim I just wanted to go back to your comments on.

Mike: Europe.

Mike: And just for the color as it relates to what do you think is going on there from a.

Mike: From a macro perspective is it just easier comparisons that are kind of flowing through to you specifically or do you sense, an actual inflection in demand that could be a little bit more sustainable than what we've seen over the last few years.

Mike: Again this is Vince let me, let me start and Tim will add some color here when we look at Europe, we've seen obviously, some easier comps, but across the continent, we're seeing stabilization and a couple of areas.

Speaker Change: Industrial production was stabilized relative to recent past, we also saw in western Europe.

Speaker Change: Better order patterns, especially exiting the quarter.

Speaker Change: For our western European countries and architectural.

Speaker Change: Do know there is some sentiment on governor increased governmental spending there.

Speaker Change: And I think there is in the Nordics recovery underway from a couple of tough years.

Speaker Change: Yes, I would just add to that that it's a lot of it is based on.

Speaker Change: The momentum we saw growing as we moved through Q1 Ghansham.

Tim Knavish: And even even automotive, which, you know, has been down for quite some time, you've got the you've got the easier comps, you've got some of our key customers launching new models as we move through the second half of the year. So you know, we are not expecting a hockey stick at all. But we've been saying for years, in Europe, all we need is stabilization and a little bit of volume. Because we've been doing so much structural cost action, that we will get really good earnings leverage when when that happens.

Speaker Change: And even even automotive which.

Speaker Change: It has been down for quite some time, if you've got the you've got the easier comps you've got some of our key customers launching new models as we move through the second half of the year. So we are not expecting a hockey stick at all but we've been saying for years.

Speaker Change: In Europe, all we need is stabilization and a little bit of volume.

Speaker Change: Because we've been doing so much structural cost action that we will get really good earnings leverage when when that happens.

Speaker Change: Yeah.

Speaker Change: Thank you very much. Our next question comes from John Mcnulty with BMO.

Tim Knavish: Thank you very much.

John Mcnulty: Our next question comes from John McNulty. Yeah, good morning. Thanks for taking my question. So I guess the first one is the first quarter came in a good bit better than I was expected. It seems like you've got It also looks like anything from a volume perspective, year over year you're thinking things are maybe better in 2q than they were in 1q and yet you maintain the guide. So I guess can you help us to think about what is maybe holding you back on that? It sounds like tariffs don't seem to be making too many waves yet for you but but maybe that's just conservativism but but can you just help us?

Speaker Change: John Your line is now.

John Mcnulty: Yes. Good morning, Thanks for taking my question. So I guess the first one is the first quarter came in.

Speaker Change: Good bit better than I think was expected it seems like you've got now an FX tailwind. It also looks like if anything from a from a volume perspective year over year Youre thinking things are maybe better in <unk> than they were in <unk>.

Speaker Change: And yet you maintain the guide so I guess can you help us think about what is maybe holding you back on that it sounded like tariffs don't seem to be making too many waves yet for you, but maybe maybe that's just conservativism, but but can you just help us to think about that.

Tim Knavish: Hey, John, I'm going to give a little tear up overview for PPG.

John Mcnulty: Hey, John.

John Mcnulty: I'm going to give you a little tariff overview for PPG and I'll, let and then Vince can take your more specific questions around.

Vince Morales: And then Vince can take your more specific questions around, you know, effects and volume.

John Mcnulty: FX and volume so.

Tim Knavish: So The overall for PPG, based on what we know today, look, the team, as you would expect, we've been running many scenarios and game theories on how this is going to play out. We've got external help on it. We're on top of it on a very granular basis.

John Mcnulty: Overall for PPG based on what we know today look the team as you would expect we've been running many scenarios and gain theories on how this is going to play out we've got external help on it we're on top of it on a very granular basis and I put it into three buckets of potential PPG impact first of all our products.

Tim Knavish: And I put it into three buckets of potential PPG impact. First of all, our product. Our finished goods. Very minimal impact because we're almost completely local for local. So our finished goods don't really cross too many, too many borders.

John Mcnulty: Our finished goods very minimal impact because we're almost completely local for local so our finished goods don't really cross too many too many borders.

Tim Knavish: Second bucket, the direct cost impact to PPG. We are heavily localized from a raw material standpoint, more than 95% of what we buy is locally sourced or no tariffs. And just a few factoids, if you look at our US businesses, Our top 30 suppliers for our U.S. businesses, zero of them are Chinese. We look at our top 100 suppliers in the U.S. and add up that aggregate spend, 1% is from China. So we're largely locally sourced, and the mitigation actions and the way we've taken advantage of our global footprint is positioned as well. Some of the larger categories, TIO2, Epoxy, they were already tariffed coming into this year, and mitigation actions were already put in place.

John Mcnulty: Bucket.

John Mcnulty: Direct cost impact of PPG.

John Mcnulty: We are heavily localized from a raw material standpoint, more than 95% of what we buy is locally sourced or no tariffs and just a few factoids. If you look at our U S businesses.

John Mcnulty: And our top 30 suppliers for our U S businesses zero of them are Chinese.

John Mcnulty: When you look at our top 100 suppliers in the U S and add up that aggregate spend 1% is.

John Mcnulty: From China.

Speaker Change: So we're largely locally sourced and the mitigation actions and the way we've taken advantage of our global footprint has positioned us well and some of the larger categories CIO to <unk>. They were already tariffs coming into this year and mitigation actions were already put in place the upstream chemical supply Mark.

Tim Knavish: The upstream chemical supply market's very long, so not all the announced tariffs will actually directly pass through to us. And if and when there is a direct impact to us, we'll work with our customers on pricing, surcharges, reformulation, substitutions, things like that.

Speaker Change: It's very long so not all of the announced tariffs will actually directly pass through to us and if and when there is a direct impact to us we work with our customers on on pricing surcharges reformulation substitution and things like that so the third bucket of potential impact for us is demand.

Tim Knavish: So the third bucket of potential impact for us is demand. We have built this into our guide. We've filled in everything we know and everything we can estimate is already built into our guide. You'll note that Mexico already impacted in Q1 and the enterprise still performed. The biggest potential impacts, you think auto, China, Mexico, we included that on the slides. Each of these impacts, based on everything that's out there today, we expect each of them to be less than 1% of total PPG sales. China example, everything that we paint in China. Only 10% of it gets shipped to the U.S.

Speaker Change: We have built this into our guide we've built in everything we know and everything we can estimate is already built into our guide you'll note that Mexico already impacted in Q1, the enterprise still performed the biggest potential impact do you think auto China, Mexico. We included that on the slides each.

Speaker Change: Each of these impacts based on everything Thats out there today, we expect each of them to be less than 1% of total PPG sales. China example, everything that we paint in China.

Speaker Change: Only 10% of it.

Speaker Change: Shipped to the U S. So.

Tim Knavish: So the vast majority of what we do is local to local. And as I mentioned, one month into quarter two, our order patterns are consistent with our expectation.

Speaker Change: So the vast majority of what we do is local to local and as I mentioned, one one month in the quarter too.

Speaker Change: Our order patterns are consistent with our expectations than.

Tim Knavish: Then you get to mitigations. I mentioned a few of them, but a number of our levers, we're doing volume deals with suppliers, we're working with customers on formulation tweaks and adjustments, maximizing our footprint flexibility. And we always have in our toolbox pricing surcharges if necessary.

Speaker Change: And then you get the mitigation as I mentioned, a few of them, but a number of our levers we're doing volume deals with suppliers, we're working with customers on formulation tweaks and adjustments.

Speaker Change: Maximizing our footprint flexibility and we always have in our toolbox pricing surcharges, if necessary and look theres a key mitigated that I think is differentiated for PPG.

Tim Knavish: And look, there's a key mitigator that I think is differentiated for PPG. And I call it the PPG shock absorber, a little bit of a buffer impact, it's structural. You know, our diverse portfolio, lack of dependency on any individual country, geography or segment, our highly variable cost structure, you know, we're even more asset light than we've ever been. With the divestitures, we divested two of our heaviest asset fixed asset businesses when we got rid of 11 factories and 750 brick and mortar stores. And we've got a natural natural hedge, where, you know, demand drops, typically, so does the price of our primary input costs.

Speaker Change: I call it the PPG shock absorber, a little bit of a buffer impacted structural.

Speaker Change: Diverse portfolio.

Speaker Change: Lack of dependency on any individual country geography or segment are highly variable cost structure, we are even more asset light than we've ever been with the divestitures, we divested two of our <unk>.

Speaker Change: Heaviest asset fixed asset businesses, when we got rid of a 11 factories and 750 brick and mortar stores and we've got a natural natural hedge.

Speaker Change: Where demand drops typically so does the price of our primary input costs. So we have a shock absorber that does help us.

Tim Knavish: So we have a shock absorber that does help us with with macro events.

Tim Knavish: You know, and then finally, our guide, based on everything that we know, we, we have, we have identified a clear path, a clear path to meet our full year EPS guide. And we've got momentum and share, we've got momentum and self help, we've got momentum and productivity, combined with the structural resilience and mitigation efforts that I just meant we do have line of sight to our guide.

Speaker Change: With with macro events.

Speaker Change: Finally, our guide based on everything we know we have we have identified a clear path clear path to meet our full year EPS guide.

Speaker Change: Got momentum in share we've got momentum in self help we got momentum and productivity.

Speaker Change: Combined with the structural resilience and mitigation efforts that I just meant we do have line of sight to our guide. So look we clearly recognize there is uncertainty and a lot of things are moving fast and we're not immune to that will flex things as they change in charge forward, but we are laser focused on controlling what we can control.

Tim Knavish: So look, we clearly recognize there's uncertainty and a lot of things are moving fast, and we're not immune to that. We'll flex things as they change and charge forward, but we are laser focused on controlling what we can control.

Vince Morales: Yeah, just to try to provide some granular thoughts on what I would call where we were in January versus what we see today on a full year basis. A couple things that are moving against us, Mexico, we were not aware in January, obviously, of the project Spending pause. Again, we feel that will eventually come back. The automotive industry has stepped down a percent or two versus the guide and the forecast in January. Offsetting that, foreign currencies moved in our direction. We had a pretty stiff headwind of foreign currencies. Coming into the year, we still have a headwind in Q2, and for some currencies, the balance of the year based on current rates.

Speaker Change: Yes, just.

Speaker Change: To try to provide some granular thoughts on what I would call where we were in January versus what we see today.

On a full year basis.

Speaker Change: Couple of things that are moving against Us Mexico.

Speaker Change: We were not aware in January obviously of the project.

Speaker Change: Pending pause again, we feel that will eventually come back.

Speaker Change: The automotive industry has stepped down.

Speaker Change: Senator to versus the guide and the forecast in January offsetting that.

Speaker Change: Foreign currencies moved in our direction.

Speaker Change: We have a pretty stiff headwind of foreign currencies.

Speaker Change: Coming into the year, we still have a headwind in Q2.

Speaker Change: And for some currencies the balance of the year based on current rates.

Vince Morales: We've upped our self-help expectations for the year, and we're tracking to those higher expectations. We've got share gains that are coming in quicker than we had anticipated. And finally, and Tim alluded to this in the earlier question, Europe's stabilizing at a faster clip, albeit modest, than we anticipated in our original guide.

Speaker Change: We've upped our self help.

Speaker Change: Expectations for the year and we're tracking to those higher expectations, we got share gains that are coming in quicker.

Speaker Change: Than we had anticipated.

Speaker Change: And finally.

Speaker Change: Similar to this in the earlier question.

Speaker Change: Europe's stabilizing at a faster clip, albeit modest than we anticipated in our original guide. So some puts and takes like there are every quarter, but those are the bigger pieces.

Vince Morales: So some puts and takes, like there are every quarter, but those were the bigger pieces.

Tim Knavish: Thank you very much.

Speaker Change: Thank you very much.

John Roberts: Our next question comes from John Roberts of Mizzou. John, your line is now open. Thanks and congrats on a return to growth here.

Speaker Change: Our next question comes from John Roberts of Mizuna, John Your line is now open.

John Roberts: Thanks, and congrats on a return to growth here.

John Roberts: Tim, there were a lot of not yet in your opening comments, assuming the tariff stay as is, how long before you see customers repositioning production? And do you think you'll have to idle any of your auto OEM paint lines?

Speaker Change: Tim There were a lot of not yet in your opening comments, assuming the tariffs stay as is how long before you see customers repositioning.

Speaker Change: Production and do you think youll have to idle any of your auto OEM paint lines.

Tim Knavish: Hey, John, thanks. Second part first, I don't think we'll have to idle any lines, we may, you know, decrease staffing, decrease output as necessary, we'll flex. But we don't have to idle any, any factories. And I can't really say what, when any customer would decide to significantly change their production plans. We are positioned virtually everywhere in the world. So wherever they decide to go, we can make coatings for them. So we feel we feel that we have a lot of flexibility, if there's something dramatic and severe, well, we'll talk about that. But we have, you know, we have the ability to follow our customers wherever they go.

John: Hey, John Thanks.

Speaker Change: Second part first I don't think we'll have to audit our.

Speaker Change: Idle any lines, we made decreased staffing decrease output as necessary, we'll flex.

Speaker Change: But we don't have to idle any any factories.

Speaker Change: And I can't really say, what when any customer would decide to significantly change their production plans. We are positioned virtually everywhere in the world. So wherever they decide to go we can make coatings for them.

Speaker Change: So we feel we feel that we have a lot of flexibility. If there is something dramatic in severe while we'll talk about that but we have.

We have the ability to follow our customers wherever they go.

Vince Morales: Yeah, John, Vince here. Just two things. I want to reiterate what Tim said. We are a batch process. So small or large changes in custom order patterns, we're able to easily see and adapt our staffing levels to just also what we said in our opening remarks. We have not seen any significant change in our custom order patterns through April. And we have order patterns looking into May, depending on our short cycle or long cycle businesses. And in our short cycle businesses, looking at the first couple weeks of May, again, no discernible change right now. You know, one last part on the idling of assets that you questioned, you know, we don't need to do that in response to what our customers may do.

Speaker Change: Yes, John Vince here, just two things on our reiterate what Tim said, we are best process, so small or large changes in customer order patterns were able to easily see and adapt.

Speaker Change: Staffing levels too.

Speaker Change: Just also what we said in our opening remarks, we have not seen any significant change in our customer order patterns through April.

Speaker Change: And.

Speaker Change: We have order patterns looking into may.

Speaker Change: Depending on our short cycle or long cycle businesses and in our short cycle businesses looking at the first couple of weeks of May again, no discernible change right now.

Speaker Change: Yes, one last part on the Av.

Speaker Change: The idling them.

Speaker Change: Assets that your question, we we don't need to do that in response to what our customers may do.

Tim Knavish: But I want to remind everyone that we have a significant rightsizing as part of our self-help already underway, where we'll be closing a number of facilities over the next three years. And so that's separate from what's happening, but that'll give us even more leverage going forward than what we have today.

Speaker Change: But I want to remind everyone that we have a significant right sizing as part of our self help already underway, where we will be closing a number of facilities over the next three years and so that's that's separate from what's happening, but that will give us even more leverage going forward than what we have today.

Tim Knavish: Thank you very much.

Speaker Change: Thank you very much our next.

Laurent Favre: Our next question comes from Laurent Favre of BNP Paribas. Laurent, your line is now open. Yes, good morning all.

Speaker Change: Next question comes from Darren <unk> of BNP Paribas Alright. Your line is now open.

Speaker Change: Yes, good morning all.

Tim Knavish: Question on capital allocation. So you didn't get the BSS subpoena. With all the uncertainty, I assume that the activity is going to come to a pause anyway. So I was wondering if you could talk about the intensity and the intent, I guess, intention and intensity on share buybacks after the 400 million in Q1. Yeah, hey, Laurent.

Speaker Change: <unk> on cash kind of location timing.

Speaker Change: So you didn't get the BSS civilian assets.

Speaker Change: With all the uncertainty and assume that activity is going to come to a close anyway. So I was wondering if you could talk about the intensity young and intense I guess intention and intensity on share buybacks.

Speaker Change: <unk> $400 million in Q1, thank you.

Speaker Change: Yeah, Hey.

Tim Knavish: Let me answer M&A first, and then I'll get to repo. And so we've been very consistent on this since 2023, that we're changing from the tip of the spear for growth being M&A and secondary organic, to tip of the spear for us being organic and secondary M&A. So it's still part of our long-term growth strategy, but it's not what we're leading with. We will look at any asset that comes available or any asset that we think would fit with our enterprise growth strategy. But I'll continue to say it's got to be the right asset fitting with our enterprise growth strategy.

Speaker Change: Let me answer M&A first and then I'll get to repo.

Speaker Change: So we've been very consistent on this since since 2023.

Speaker Change: We're changing from the tip of the spear for growth be in M&A.

Speaker Change: Secondary organic to tip of the spear for us being organic and secondary M&A. So it is still part of our long term growth strategy, but it's not what we're leading with.

Speaker Change: We will look at any asset.

Speaker Change: It comes available or any asset that we think would fit with our enterprise growth strategy, but.

Speaker Change: I'll continue to say, it's got to be the right asset fitting with our enterprise growth strategy.

Tim Knavish: It's got to be the right price, we're not going to overpay, and it's got to be the right time relative to what else we have going on with focus and balance and organic growth. And you mentioned Brazil, I said many times that that was a good asset that we would look at and we were interested in, but that didn't fit my right price category.

Speaker Change: Got to be the right price, we're not going to overpay.

Speaker Change: And it's got to be the right time relative to what else, we have growing on with focus and balance on organic growth and you mentioned Brazil.

Speaker Change: I've said many times that that was a good asset that we would look at and we're interested in but that didn't fit right price category now the price wasn't wasn't where we would have paid relative to other options for use of that cash, which which then brings us to the repo question.

Tim Knavish: The price wasn't where we would have paid relative to other options for use of that cash, which then brings us to the repo question. I hope, again, I've been consistent with saying exactly the same thing since I took over relative to capital deployment. that the first thing we did, we paid down debt back in 23. Beyond that, I said I wouldn't let it grow on the balance sheet. And after not buying shares for many quarters, we've now gone six straight quarters of buying shares. It's been best use of our cash to deliver shareholder value. And I would just, you should expect to see that continue prioritization for me.

Speaker Change: I hope.

Speaker Change: And again I've been consistent with saying exactly the same thing since since I took over relative to capital deployment.

Speaker Change: That the first thing we did we paid down debt back in 'twenty three beyond that I said I wouldn't let it grow in the balance sheet and after not buying shares for many quarters. We've now gone six straight quarters of buying shares.

Speaker Change: It's been the best use of our cash to deliver shareholder value and I would just you should expect to see that continued prioritization for me and the reason I can't and won't commit to a specific number is more than ever right. Now it is a highly variable environment and so we'll make that decision as we move.

Vincent Andrews: And the reason I can't and won't commit to a specific number is more than ever right now, it is a highly variable environment. And so we'll make that decision as we move through with the months and quarters. But I would just say, you should expect to see this the same decision making process that has been made for the last seven quarters or six quarters. Thank you very much.

Speaker Change: Through the months and quarters, but I would just say you should expect to see this the same decision making process that has been made for the last seven quarters or six quarters.

Speaker Change: Yeah.

Speaker Change: Thank you.

Unidentified Moderator: Thank you very much. Our next question comes from Vincent Andrews from Morgan Stanley Vincent Your line is not open.

Vincent Andrews: Our next question comes from Vincent Andrews from Morgan Stanley.

Vincent Andrews: Vincent, your line is now open. Thank you. Good morning. Just a few cleanup questions for me on the guidance. You didn't put out the full year details the way you did last quarter, so just some of it, Vince, you covered already, but do you still expect segment margins to be up 50 basis? for the full year. And then if I could also ask, my recollection is that usually the EPS guidance does not include the benefit from share repurchases. Is there any change in that for this year or for the reiteration of the guide?

Unidentified Moderator: Thank you and good morning, just a few clean up questions for me on the guidance you didn't put out the full year detail. The way you did last quarter. So just Vince you covered already but do you still expect segment margins to be up 50 basis points.

Unidentified Moderator: For the full year and then if I could also ask my recollection is that usually the EPS guidance does not include the benefit from share repurchases is there any change in that.

Unidentified Moderator: For this year for the reiteration of the guide.

Vince Morales: Vincent, you're spot on on both. No change to our margin profile and guide. Again, moving around within the segments, but in totality, we're still holding to that. And we typically do not include cash deployment in our EPS guide.

Vincent: Vincent here and you're spot on on both.

Vincent: No change to our margin profile and guide.

Speaker Change: Moving around.

Speaker Change: Within the segments, but in totality, we're still holding to that.

Speaker Change: And we typically do not include cash deployment in our EPS guidance.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thank you very much. Our next question comes from Aleksey <unk> from <unk>.

Aleksey Yefremov: Our next question comes from Aleksey Yefremov.

Aleksey Yefremov: Aleksey, your line is busy. Thanks.

Speaker Change: <unk> I think see your line is now live.

Aleksey Yefremov: Good morning, everyone. In performance codings, your price was up 3%, volumes up 6%. So I would have expected margin to be up a bit more than 20 basis points. Could you just describe what's going on with the margin there? Yeah, hey, Aleksey. This clearly remains our highest margin and best growth segment. If you look at this quarter, the last several quarters, and given the increase in growth prospects, we've increased our growth related investments, our growth related spending, and several of these businesses to capitalize on the opportunities to capture more share for the longer term. You know, we've had a backlog in aerospace.

Speaker Change: Thanks, Good morning, everyone in performance coatings.

Speaker Change: Price was up 3% volumes are up six so I would have expected margins to be up a bit more than 20 basis points could you just describe what's going on with the margin there.

Speaker Change: Yes aleksey.

Speaker Change: This clearly remains our highest margin and best growth segment. If you look at this quarter the last several quarters and given the increase in gross prospects, we've increased our growth related investments our growth related spending and several of these businesses to capitalize on the opportunities to capture more.

Speaker Change: Sure for the longer term.

Speaker Change: We've had some backlog in aerospace as you know we've been spending some money there to gain incremental output, which delivers incremental sales not only for current quarter, but but for future with deep bottleneck bottleneck and by the way. We're also looking at.

Tim Knavish: As you know, we've been spending some money there to gain incremental output, which delivers incremental sales, not only for current quarter, but for future with the bottlenecking. And by the way, we're also looking at longer term, more significant capital investments to support that growth. We're applying incremental growth spending to protect them and marine, where we've delivered eight straight quarters of growth and volume growth. And we expect that to continue. And so we've had to make some some investments there to keep that kind of strong growth rate, strong rate going. And finally, we continue to invest in the next gen of those productivity tools that I mentioned in refinish, those allied products, those digital tools, have been tremendous drivers of growth for us in auto refinish in a in a flat to down market.

Speaker Change: Longer term more significant capital investments to support that growth.

Speaker Change: We're applying incremental gross spending the protective and marine where we've delivered eight straight quarters of growth volume growth and we expect that to continue and so we've had to make some some investments there to keep that kind of strong growth rate strong rate going and finally, we continue to invest in.

Speaker Change: In the next Gen of those productivity tools that I mentioned in refinish those allied products those digital tools.

Speaker Change: Been tremendous drivers of growth for us in auto refinish in a flat to down market. So that's really the reason why youre not seeing let's say the typical leverage in this quarter that you would see for performance coatings.

Tim Knavish: So that's really the reason why you're not seeing, let's say, the typical leverage in this quarter that you would see for performance.

Speaker Change: Okay.

Speaker Change: Thank you very much. Our next question is from Patrick Cunningham Citigroup Patrick Your line is now open.

Patrick Cunningham: Our next question is from Patrick Cunningham. Patrick, your line is now up. Hi, good morning. You know, just on the industry top 10. Transcripts provided by Transcription Outsourcing, LLC. I guess, how do we think about volume? Yeah, Pat.

Patrick Cunningham: Hi, Good morning, just on the industrial coatings sub segment within industrial you had positive volumes in the quarter, how meaningful were share gains here and was there any evidence of some pre buying impacted sales.

Patrick Cunningham: Sales into QQ I guess, how should we think about volume sensitivity going forward for the remainder of the year.

Speaker Change: Yes, Pat.

Tim Knavish: Thanks for asking that great question, because we're excited about this. We have momentum in industrial coatings, you should think about it as positive going forward. And it's, it's, it's two things. A lot of it is share gain delivered as we started to execute on our enterprise growth strategy and build that, that organic growth muscle throughout 24. And in the early 25, we've been winning business. And we're starting starting to launch that business. And you do see, of course, the country dependent, you see a little bit improvements in industrial production in some countries. And because of our portfolio, you know, we're well positioned to capture that.

Patrick Cunningham: Thanks for asking that great question, because we're excited about this we have momentum in industrial coatings, you should think about it as positive going forward.

Patrick Cunningham: It's two things a lot of it is share gain delivered as we started to execute on our enterprise growth strategy and build that that organic growth muscle throughout 'twenty four and in the early 25, we've been winning business.

Patrick Cunningham: And we're starting starting to launch that business and you do see of course, the country dependent you see a little bit improvements in industrial production in some countries and because of our portfolio.

Patrick Cunningham: We are well positioned to capture that.

Tim Knavish: You know, we've seen some positives, you know, China, India, both both grew for us in, in the quarter, we've seen it in general finishes, we saw industrial coatings United States grow in the quarter.

Patrick Cunningham: We've seen some positives China India.

Patrick Cunningham: Both grew for us in.

Patrick Cunningham: In the quarter, we've seen it in general finishes, we saw industrial coatings, United States grow in the quarter.

Tim Knavish: So the word I would use here, and we use it every day when I spoke with my, our leader of this business, and it's momentum, we've got momentum in this Thank you very much.

Patrick Cunningham: The word I would use here and we use it every day when I spoke with my our leader of this business and its momentum we've got momentum in this business.

Patrick Cunningham: Okay.

Patrick Cunningham: Thank you very much our next question comes from Frank Mitsch.

Frank Mitsch: Our next question comes from Frank Mitsch of Framion Research, LLC, Frank Killar, is that what it is? Thank you. I want to follow up on the 2025 guide. You answered the questions, obviously, on the margin expectations, and also gave us some puts and takes. I'm just curious on the organic growth expectations. Obviously, performance coding is very strong in the first quarter, exceeding the 1Q guide. Your expectation for the full year was up low single digits to up mid-single digits.

Speaker Change: Freemium research LLC Frank Your line is now open.

Patrick Cunningham: Okay.

Patrick Cunningham: Thank you.

Speaker Change: I wanted to follow up on the 2025 guide you answered the questions obviously on.

Speaker Change: The margin expectations and also gave us some puts and takes I'm just curious on the organic growth expectations, obviously performance coatings very strong in the first quarter exceeding.

Speaker Change: The <unk> guide.

Speaker Change: Or your expectation for the full year was up low single digits to up mid single digits I suspect, we should probably start.

Tim Knavish: I suspect we should probably start thinking about performance codings organically up in 2025, moving that up to high single digits, low double digits. So, curious to comment on that. And while I've got you, might as well ask about the other two segments, which in 2025, global architectural was expected up low single digits to up mid-single digits. So, does that still hold? And the same with industrial codings, where we have momentum, is that still expected to get up low single digits? Thank you.

Speaker Change: Thinking about performance coatings organically up in 2025, moving that up to high single digits low double digit. So curious a comment on that and while I've got you might as well ask about the other two segments, which in 2025 global architectural was expected up low single digits to up mid single digits. So is that still hold and the same with industrial.

Speaker Change: <unk>, where we have momentum is that still expected to get.

Speaker Change: Low single digits. Thank you.

Vince Morales: Yeah, let me you gave us a lot of parts to that question. So it's gonna take a team effort to answer that, Frank. But what you should expect, as a total company, as a total company, low single digit growth for us for the year. Okay. And we again, that's based on based on what we know today, but we've built in not only known, but estimated impacts from our from our team. And it's all about the momentum and share. You we said last quarter, that we want a bunch of share in an industrial coding segment that will launch in the second half of this year, we still see that on time, some of them actually even pulled forward.

Speaker Change: Yes, let me.

Speaker Change: Gave us a lot of parts to that question. So take a team effort to answer that Frank but.

Speaker Change: You should expect.

Speaker Change: As a total company as a total company low single digit growth for us for the year, Okay and.

Speaker Change: Again, that's based on based on what we know today, but we built in not only known but estimated impacts from our from our team.

Speaker Change: And it's all about the momentum and share you, we said last quarter.

Speaker Change: We want a bunch of share in industrial coatings segment that will launch in the second half of this year, we still see that on time some of them actually even pulled forward.

Vince Morales: And we've continued to win share, there's smaller pieces across the other businesses, just the nature of the customer. But we've continued to win share up and across a number of them. Performance codings, you should expect mid single digits for the year. Due to that due to that growth momentum in that space, and Vince, you can say, yeah, just a reminder, what we said earlier, Frank on performance codings, certainly performing well, comps get harder as we go through the year. If we look at our industrial segment, and we talked about this on the January call, comps, we started to see industrial activity in the back half of 2024 weekend.

Speaker Change: And we've continued to win share there are smaller pieces across the other businesses just the nature of the customer, but we continue to win share across a number of them performance coatings, you should expect mid single digits for the year due.

Vince: Due to that due to that growth momentum in that space and Vince you can say, yes.

Vince: Just a reminder, what we said earlier Frank on the performance coatings, certainly performing well comps get harder as we go through the year.

Vince: If we look at our industrial segment and we talked about this on the January call.

Vince: Comps, we started to see industrial activity in the back half of 2024 weaken so comps in that segment get easier and we talked earlier in the call about what's happening in the architectural business. Both in Q1 and on a forward look, especially in Mexico.

Tim Knavish: So comps in that segment get easier. And we talked earlier in the call about what's happening in the architectural business, both in Q1 and on a forward look, especially in next Thank you very much.

Speaker Change: Great. Thank you very much. Our next question comes from Chris Parkinson of Wolfe Research, Chris Your line is now open.

Christopher Parkinson: Our next question comes from Chris Parkinson of Warp Research. Chris, your line is now open. Great, thank you so much.

Speaker Change: Great. Thank you so much.

Christopher Parkinson: Can you talk a little bit more about the aerospace opportunity and just go through aftermarket OE and military? On one hand, you've got there, you know, a few airlines pulling guidance. On the other hand, you have a pretty strong backlog. So just how should we be thinking about that?

Chris Parkinson: Can you talk a little bit more about the aerospace opportunity and just go through aftermarket OE in military.

Chris Parkinson: One hand, you've got there are few airlines have pulling guidance on the other hand, you have a pretty strong backlog. So just how should we be thinking about that and is there any potential to further debottleneck and add capacity to facilitate the.

Tim Knavish: And is there any potential to further de-bottleneck and add capacity to facilitate the intermediate to long term growth algo? Thank you so much. Yeah, hey, Chris. So military, commercial, general aviation, aftermarket, strong, strong, strong, strong. And even with the like noise that you hear today, the backlogs are huge. The backlogs are years in these these segments, not not months, not quarters, years. And part of that is is what happened during COVID. Not a lot of were produced during COVID. Everybody depleted their inventories. So we're trying to keep up not only with production, but we're also the whole industry is trying to gradually rebuild aftermarket and OE pipelines.

Chris Parkinson: The intermediate to long term growth algo. Thank you so much.

Chris Parkinson: Hey, Chris.

Speaker Change: So <unk>.

Chris Parkinson: Military.

Chris Parkinson: Commercial general aviation aftermarket strong strong strong strong.

Chris Parkinson: And even with the noise that you hear today.

Chris Parkinson: Backlogs are huge backlogs are years in these these segments not not months not quarters years and.

Chris Parkinson: And part of that is is what happened during COVID-19 not a lot of planes were produced during COVID-19.

Chris Parkinson: Everybody depleted their inventories so we're trying to keep up not only with production, but we're also the whole industry is trying to gradually rebuilds aftermarket and OE pipelines. So we see no slow down here.

Tim Knavish: So we see no slowdown here for on the horizon. You know, despite the little video, you'll have news pieces here about what this airline's doing with this country's doing. But you know, you saw what Boeing said in their comments, that they, you know, no matter what happens with China, that their backlog remains multiple years. So you know, we're, we're, we're fully confident that this is going to be a strong business for us for the foreseeable future.

Chris Parkinson: Therefore on the horizon.

Chris Parkinson: Despite the little Youll have news pieces here about what this airline is doing with this country's doing but.

Chris Parkinson: You saw with Boeing said in their comments.

Chris Parkinson: No matter, what happens with China that their backlog remains multiple years.

Chris Parkinson: No.

Chris Parkinson: Sure.

Chris Parkinson: We're fully confident that this is going to be a strong business for us for the foreseeable future. There is still we have many active debottlenecking projects going on right now.

Tim Knavish: There is still we have many active de-bottlenecking projects going on right now, across a number of our facilities for aerospace.

Chris Parkinson: Cross a number of our facilities for aerospace and I would just say stay tuned for kind of larger capital investments.

Tim Knavish: And I would just say, stay tuned for your kind of larger capital investments that that are under engineering analysis now that would position this business for for even even better growth and rewards for the fresh air holders long term. And Chris, if you look at our manufacturing, we have the flexibility to move between OEM, aftermarket, and military. So if we do see some pause in any activity, we can work at that backlog, which is primarily aftermarket, which for us is a net positive. And one thing Tim didn't mention as we look at the business today versus pre-pandemic, military has also picked up, unfortunately.

Chris Parkinson: That are under engineering analysis, now that would position this business for four.

Chris Parkinson: Even better growth in rewards for our shareholders long term.

Speaker Change: And Chris as Vince just if you look at our manufacturing.

Speaker Change: We have the flexibility to move between OEM aftermarket and military.

Speaker Change: If we do see.

Speaker Change: Some pause in any to any activity, we can get work at that backlog, which is primarily aftermarket which for US is a net positive on one thing Tim did mention as we look at the business today versus pre pandemic military has also picked up.

Tim Knavish: But that's unfortunately for geopolitical reasons.

Speaker Change: Unfortunately, but thats Unfortunately for geopolitical reasons.

Tim Knavish: But that's another leg of growth that we didn't see pre-pandemic.

Speaker Change: But thats another leg of growth that we didn't see.

Speaker Change: Pre pandemic.

Tim Knavish: Very helpful. Thank you so much.

Speaker Change: Very helpful. Thank you so much.

Michael Leithead: Our next question comes from Michael Leithead of Barclays.

Michael <unk>: Our next question comes from Michael <unk> of Barclays. Michael Your line is now.

Michael Leithead: Michael, your line is now open. Great, thank you. Good morning, guys. I just had two quick follow-ups.

Michael: Great. Thank you good morning, guys.

Michael: Just had two quick follow ups first on the Comex performance, how does the comex business split between residential and commercial you mentioned that retail is quite strong. So it seems commercial at a much more meaningful drop off and then second apologies if I missed this in the answer to an earlier question, but what is your updated full year currency.

Michael Leithead: First, on the Comex How does the COMEX business split between residential and commercial? You mentioned that retail is quite strong, so it seems commercial had a much more meaningful drop-off.

Michael Leithead: And then second, apologies. and earlier questions.

Vince Morales: But what is your updated full year currency EPS head when you're assuming in your guide? Yeah, I'll take the first one, let Vince take the currency, Michael. It's mostly the core business in PPG COMEX is mostly residential. We don't give out the specific percentages because that does fluctuate depending on product project activity. But it's mostly residential. That's the history and legacy of COMEX. In recent years, we've been expanding significantly the outside of store sales which is the project business.

Michael: The EPS headwind you are assuming in your guidance.

Speaker Change: Yes, I'll take the first one let Vince take the currency Michael.

Speaker Change: It's mostly the core business in PPG Comex is mostly residential we don't give out the specific percentages because that does fluctuate depending on product project activity.

Speaker Change: But it's mostly residential that's the history and legacy of Comex in recent years, we've been expanding significantly.

Speaker Change: Outside of store sales, which is the project business.

Vince Morales: So for FX, we have nine cent impact that I think we laid out in the materials. That'll diminish as we go through the year, as we started to see the currencies weaken, especially in the fourth quarter. So 9 cent impact in Q1, that'll step down in the subsequent quarters. Thank you very much.

Speaker Change: So for FX, we have <unk> impact I think we laid out in the materials.

Speaker Change: That will diminish as we go through the year.

Speaker Change: We started to see the currencies weaken, especially in the fourth quarter. So the <unk> impact in Q1 that will step down in the subsequent quarters.

Speaker Change: Yeah.

Speaker Change: Thank you very much. Our next question comes from Laurence Alexander from Jefferies. Laurence Your line is now open.

Laurent Alexander: Our next question comes from Lawrence Alexander from Jefferies. Good morning, just wanted to unpack the comments around industrial I think in the prepared remarks you indicated you thought momentum would be accelerating. in the over the next several quarters, and it sounded as if you were referring to the underlying rather than just share game.

Speaker Change: Okay.

Speaker Change: Hey, good morning, just wanted to unpack the comments around industrial I think in the prepared remarks, you indicated you thought would be accelerating.

Speaker Change: And over the next several quarters and it sounds as if you will referring to the underlying market.

Speaker Change: Rather than jobs.

Sure Gabe.

Tim Knavish: Can you just clarify whether that's sequential or year over year because of the easy comprofile? and in particular kind of what you're seeing in the wood and heavy duty market. Sure, it's actually both Lawrence that's driving the momentum going forward. We do see some slight upticks in industrial production in the segments that we are strongest. And we also have booked a number of share gains around the world that, you know, these things on industrial, you have to work with customer lines, so it's not an immediate benefit. So that'll be spread out throughout the year. So it's really a combination of both of those.

Speaker Change: Can you just clarify whether that sequential or year over year, because the comp effect.

Speaker Change: And in particular kind of what you're seeing within heavy duty market.

Speaker Change: Yes sure.

Speaker Change: Both Lawrence that's driving the momentum going forward, we do see some slight upticks in in industrial production in the segments that we are we are strongest.

Speaker Change: And we also booked a number of share gains around the world.

Speaker Change: It's a bit these things on industrial you have to work with customer lines. So its not an immediate benefit so that will be spread out throughout the year. So it's really a combination of both of those were not a big player in wood, that's not a segment that we attract very close in heavy duty remains down.

Tim Knavish: We're not a big player in wood, it's not a segment that we track very close and, you know, heavy duty remains down for us. But other segments, or general finishes, COIL has continued to do well for us. And I mentioned earlier, you know, broadly across our book of businesses in China, which is China for China, and broadly across India, as well that we've seen good growth across multiple segments. Thank you very much.

Speaker Change: <unk>.

Speaker Change: For us, but other segments.

Speaker Change: General finishes.

Speaker Change: Coil has continued to do well for us.

Speaker Change: I mentioned earlier broadly across our book of businesses in China, which is China for China, and broadly across India as well, we've seen good growth across multiple multiple segments.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Thank you very much.

Speaker Change: Our next question comes from Josh Spector with UBS, Joe Sean.

Joshua Spector: Joshua Spector of UBS Yeah, good morning. This may be a bit redundant, but I'll try this around the EPS guide for the year. So if I look at what you guys are guiding to roughly for 2Q, maybe $2.20, $2.30 cents in EPS, roughly. Normal seasonality in second half, kind of plus what you did in first half, probably gets you around the $7.65 range. If I add back some of the Mexico project coming back, maybe that's $0.05 a quarter, so about $0.10. So you get to kind of the low end of the guide with just those assumptions.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Yes, good morning, just maybe a bit redundant, but I'll try this around the EPS guide for the year. So if I look at what you guys are guiding to roughly for QQ Navy to $22 30 in EPS roughly.

Speaker Change: Normal seasonality in second half kind of plus what you did in first half probably gets you around the 765 range.

Speaker Change: If I add back some of the Mexico project coming back maybe that <unk> a quarter. So about 10, so you've got to kind of the low end of the guide with just those assumptions. So I guess the easiest way to ask this is second half versus first half what needs to sequentially improve to get that extra <unk> 20 to your midpoint is it mark.

Joshua Spector: So I guess the easiest way to ask this is second half versus first half. What needs to sequentially improve to get that extra $0.15, $0.20 to your midpoint? Is it markets? And we talked about Europe improving. Or is it something else within your control, cost savings, new wins? Just wondering if you can bridge that out for us a little bit.

Speaker Change: And we talked about Europe, improving or is it something else within your control cost savings new wins, just wondering if you can bridge that out for us a little bit.

Vince Morales: Yeah, Josh, this is Vince. First of all, a good reminder to everybody. We did recast our financials in January for the prior years based on the sale of our US architectural Canada business. And the seasonality of our recast business changed dramatically because the U.S. architectural business had peak seasonality in Q2, Q3, and weaker, obviously, bracket quarters. Just a reminder, our EPS last year adjusted on the recast basis. We were $1.87 in Q1. We were $2.35 in Q2. $2.03 in Q3 and $1.61 in Q4. So total $7.87. We did see in the back half of last year, as we alluded to earlier, weaker industrial activity.

Vincent: Yes, Josh this is Vincent.

Speaker Change: First of all a good reminder to everybody.

Speaker Change: We did recast our financials in January.

Speaker Change: Prior years based on the sale.

Of our U S architectural Canada business.

Speaker Change: And the seasonality of our recast business changed dramatically because the U S architectural business at peak seasonality in Q2 Q3.

Speaker Change: Weaker obviously bracket quarters.

Speaker Change: Just a reminder, our EPS last year adjusted.

Speaker Change: On a recast basis were $1 87.

Speaker Change: In Q1, we were $2 35 in Q2 two.

Speaker Change: $2 <unk> in Q3 and $1 61 in Q4, so totaled 787.

Speaker Change: We did see in the back half of last year, as we alluded to earlier weaker industrial activity.

Vince Morales: So if industrial activity would remain constant, the seasonality of last year would have been different. But as we look at our seasonality this year, again, we're competing against those weaker numbers, plus we have share gains in industrial So we're not wearing a lot of pieces. You asked us, we're going to go through blow by blow those pieces. But, you know, things helping us going into the back half of the year, second quarter back half of the year, additional self-help, as I said earlier, some improvement in Europe, some share gain and easier comps in industrial. So those affect the year over year seasonality comparisons that you're doing.

Speaker Change: So its industrial activity would remain constant the seasonality of that last year would have been different.

Speaker Change: But as we look at our seasonality. This year again, we're comping against those weaker numbers plus we have share gains in industrial. So we are not a lot of pieces you asked Josh Brian to go through blow by blow those pieces, but things, helping us going into the back half of the year second quarter back half of the year additional self help as I said earlier some improvement in Europe.

Speaker Change: Some share gain and easier comps in industrial so those affect the year over year seasonality comparisons that youre doing.

Vince Morales: So those would be the things I pull forward.

Speaker Change: So those are those would be the things that pull forward.

Speaker Change: Yeah.

Speaker Change: Thank you very much.

Jeff: Our next question comes from Jeff.

Speaker Change: Our next question comes from Jeff Zekauskas of Jpmorgan.

Jeff: Geoff, your line is now open. Alright, thanks.

Jeff Your line is not open.

Speaker Change: Thanks very much.

Speaker Change: In your protective and marine business.

Tim Knavish: roughly how much And do any of the issues having to do with China shipbuilding affect And can you talk about Good, Jeff. So the first question, a strong majority of that business is protected. And that's true around the world. China shipbuilding, obviously we do participate there. That's actually been quite strong for us this year. But in marine, our biggest strength has actually been aftermarket, aftermarket dry docks. And so we feel, you know, we feel good about a healthy mix from a country standpoint, a healthy mix from a segment standpoint. But to your particular question on China shipbuilding, China marine, it's been a, it's been part of our growth story over the last several quarters.

Speaker Change: Roughly how much is protect and how much is marine.

Speaker Change: And do any of the issues, having to do with China shipbuilding affect that business for you is it something that accelerates your growth tracks from your growth and can you talk about your China exposure in that business.

Jeff Zekauskas: Sure Jeff.

Speaker Change: First question.

Speaker Change: Strong majority of that business is protective.

Speaker Change: And Thats.

Speaker Change: True around the world.

Speaker Change: China Shipbuilding, obviously, we do participate there.

Speaker Change: That's actually been quite strong for us.

Speaker Change: This year, but in marine our biggest strength is actually been aftermarket aftermarket dry docks.

Speaker Change: And so we feel we feel good about our healthy mix from a country standpoint, a healthy mix from a segment standpoint, but to your particular question on China Shipbuilding China Marine.

Speaker Change: It's been part of our growth story over the last several quarters, Yes, and Jeff I think you are alluding to the fact that.

Tim Knavish: Yeah, and Jeff, I think you're alluding to the fact that some of the Chinese activity is in question, at least that's what the periodicals say, in terms of shipbuilding. We also participate in Korea, which is where you may see if there's shipbuilding that moves to a different country. We have beachheads and have participated in the Korea market for quite some time. So again, Tim's earlier comments about our business being a shock absorber, local for local, we're in different regions. If our customers move production, we're there to handle the production wherever they're moving to.

Speaker Change: Some of the Chinese activity as <unk> question Lisa with.

Speaker Change: Periodicals say in terms of shipbuilding. We also participate in Korea, which is where you may see if theyre shipbuilding that moves to a different.

Speaker Change: A different country.

Speaker Change: We have beachheads in and participate in the Korea market for quite some time so again.

Speaker Change: Tim's earlier comments about our business being a shock absorber local for local where in different regions.

Speaker Change: Our customers move production were there to handle the production where they're moving to.

Speaker Change: Thank you very much. Our next question comes from Aaron first one one of them.

Tim Knavish: Our next question comes from Aaron.

Arun Yolande: Arun Yolande Thanks for taking my question. I just had a quick question on auto. Auto OEM. Transcripts provided by Transcription Outsourcing, LLC. Comment on customer mix and those two out of Hey, Arun. So let me take auto OEM first. You know, customer mix has been a challenge for us in a couple of regions. I've talked about that in previous quarters, and the team's doing a lot of work to rebalance that mix. And we will see the a lot of that a lot of that hundred million in share gain is auto OEM, both with on the on the body side, but also the part side.

Speaker Change: Your line is now open.

Speaker Change: Thanks for taking my question I just had a quick question on <unk>.

Speaker Change: OEM auto refinish so.

Speaker Change: To OEM.

Speaker Change: I understand that there is some choppy.

Speaker Change: Demand trends right now, but would you say that your customer mix or maybe your mix towards.

Speaker Change: Evs or ice's would be in any way a mitigating factor and then similarly in refinish. It sounded like you were able to turning the corner on a little bit better quarter there but.

Speaker Change: Lower claims activity. So is that also maybe your customer mix more towards Msos or maybe you just comment on customer mix and those two auto businesses. Thanks.

Speaker Change: Hey, Arun.

Arun: So let me take auto OEM first.

Arun: Customer mix has been a challenge for us and a couple of regions I've talked about that in previous quarters and the <unk>.

Arun: <unk> is doing a lot of work to rebalance that mix.

Arun: And we will see.

Arun: A lot of that a lot of that $100 million in share gain is auto OEM.

Arun: With on the on the body side, but also the parts side. So we will see that both the customer mix and the overall performance of that business continue, especially starting in Q3, when we expect to be outperforming the industry.

Tim Knavish: So we'll see that both the customer mix and the overall performance of that business continue, especially starting in Q3, when we expect to be performing the industry. You know, EV wise, you know, the only thing I'd say there is the EV outside of China is not a huge part of our business today. EV inside of China, we are number one with the largest player and that player is doing doing quite well. And they are, you know, doing a great job. And that that business is doing well for us. On the refinish side, it's not so much a customer mix issue.

Arun: <unk> wise.

Arun: The only thing I would say there is the EV outside of China is not a huge part of our business today.

Arun: Inside of China, We are number one with the largest player in that player is doing doing quite well and they are.

Arun: There are obviously not shipping to the U S.

Arun: <unk>.

Arun: It's largely local for local and that business is doing well for us on the refinished side, it's not so much a customer mix issue. The strength in Q1 was really driven by two things a lot of share wins in the last several quarters in that business and in the U S. We did have some.

Tim Knavish: The strength in Q1 was really driven by two things. A lot of share wins in the last several quarters in that business. And in the US, we did have some favorable customer order patterns. Thank you very much. Thank you.

Arun: Some favorable customer order patterns.

Speaker Change: Thank you very much. Our next question comes from Mike Harrison of Seaport Research Partners. Mike. Your line is now open.

Mike Harris: Mike Harris Research Partners. Mike, your line is now Hi, good morning. A couple of questions on the performance coding. of all, that pricing number of 3%, was that a pretty similar number across all the subsegments? or were there pockets for price in the strong. and then within specifically on traffic solutions. I'm curious, does the strength that you see in Q1 suggest a stronger, you know, busy season or high season for that business? You know, what are some of the leading indicators have available in that business? And what are those? Transcript by Transcription Outsourcing, LLC. Hey, Mike, this is Vince.

Speaker Change: Hi, Good morning, a couple of questions on the performance coatings business first of all.

Speaker Change: That pricing number of 3% was that a pretty similar number across all the sub segments.

Speaker Change: Or were there pockets for pricing was stronger and then within specifically on traffic solutions I'm just curious the strength that you see in Q1 suggests.

Speaker Change: A stronger.

Speaker Change: Z season, or a high season.

Speaker Change: For that business.

Speaker Change: What are some of the leading indicators that you have available in that business and what are those indicators seeing right now about traffic.

Speaker Change: Into the high season. Thank you.

Speaker Change: Hey, Mike This is Vince I'll take the pricing question in 10 minutes of the traffic question.

Vince Morales: I'll take the pricing question and let Tim answer the traffic question. Hey, if you look at our four businesses in there, some are long-cycle businesses, some are project-oriented businesses, and some are shorter cycle. Certainly, we're still seeing some benefits in pricing from our long-cycle businesses that typically would take six months, nine months. So we're seeing some carryover benefits from that. We are also interjecting additional pricing in a couple of these businesses in Q2. So you should see a solid pricing number moving forward. In our short-cycle businesses, we're reacting to market trends on price. Yeah, and on traffic, specifically, I'd say there's three factors here that are driving the strong performance in Q1, and we expect to see in Q2 as well and going forward.

Speaker Change: If you look at our core businesses and there are some are long cycle businesses. Some are project oriented businesses in some of our shorter cycle.

Speaker Change: Certainly we are still seeing some benefits and pricing from our long cycle businesses that typically would take six months nine months. So we're seeing some some carryover benefits from that we are also interjecting additional pricing in a couple of these businesses in Q2. So you should see a solid pricing number moving forward and our shorts.

Speaker Change: Cycle businesses, we're reacting to market trends on price.

Speaker Change: Yes.

Speaker Change: On traffic, specifically I'd say, there's three factors here that are driving the strong performance in Q1, and we expect to see in Q2, as well and going forward.

Tim Knavish: Number one, we've got momentum in the businesses or that business from share gains that we won in the latter part of 2024. So number one is share. Number two is, believe it or not, weather. You know, this this is the most weather sensitive business that we have. And last year was a very wet, wet year in many parts of the United States where particularly where we have the strongest positions. And so there's a lot of miles of road that need that need painted that are pent up from from last year. And so as the weather improves here, as we move through the end of Q1 and into Q2, the stripers are out there trying to catch up on pent up demand as well as this year's demand.

Speaker Change: Number one we've got momentum in the businesses or that business from share gains that we won in the latter part of 2024, so number one a share.

Speaker Change: Number two is believe it or not weather.

Speaker Change: This is the most weather sensitive business.

Speaker Change: We have and last year was a very wet wet.

Speaker Change: Wet year in many parts of the United States, where particularly where we have the strongest positions and so theres a lot of miles of road that need that need painted better pent up from from last year and so as the weather improves here as we move through the end of Q1 and into Q2.

Speaker Change: The stripers or out there.

Speaker Change: Trying to catch up on pent up demand as well as this year's demand and a third would be just overall infrastructure spending.

Tim Knavish: And the third would be just overall infrastructure spending has been a growing tailwind for that business, and some of that is is finally starting to come to fruition. So we're we're expecting because of those three factors, another another strong another strong performance in Q2 and beyond.

Speaker Change: <unk> has been a.

Speaker Change: Growing tailwind for that business and some of that is is finally starting to come to fruition.

Speaker Change: We're expecting because of those three factors another another strong.

Speaker Change: Another strong performance in Q2 and beyond.

Speaker Change: Okay. Thank you very much. We currently have no further questions. So I'd like to hand back for.

Speaker Change: For any further remarks.

Carly: Thank you, Carly. We appreciate your interest and confidence in PPG.

Speaker Change: Thank you currently we appreciate your interest and confidence.

Carly: This concludes our first quarter earnings.

Speaker Change: This concludes our first quarter earnings call.

Speaker Change: Yeah.

Speaker Change: Let me conclude today's call we'd like to thank everyone.

Speaker Change: And for joining in that disconnect your lines.

Speaker Change: Yeah.

Speaker Change: Yeah.