PPG Industries Q4 2025 PPG Industries Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 PPG Industries Inc Earnings Call
To the fourth quarter and full gear 2025, PPG earnings conference call.
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After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,
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I would now like to turn the conference over to Alex Lopez director of investor relations. Please go ahead sir.
Thank you, Warren. And good morning, everyone.
This is Alex Lopez. We appreciate your continued interest in PPG and welcome you to our 4 quarter 2025 earnings conference call.
Joining me today from PPE, our team kanavis, 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, January 27th, 2026.
We have posted detailed commentary and the accompanying presentation. Slides on the investor center of our website ppg.com.
Following Management's perspective on the company's results, we will move to a Q&A session.
Both the prepare commentary and discussions during this call, may contain forward-looking statements reflecting the company's current view of future events and their potential effect on PPE operating and financial performance.
This is statements, involve uncertainties and risks, which may cause actual results to differ.
The company is under no obligation to provide subsequent updates to this forward-looking statements.
The presentation also contains certain non-gaap Financial measures. The company has provided in the appendix of the presentation materials which are available on our website, reconsiderations of these non-gaap Financial measures to the most directly comparable, gaap Financial measures.
For additional information, please refer to PPE filings with the SEC. Now, let me introduce PPE, chairman and CEO, Tim Canabis.
Thanks Alex, good morning everyone. Welcome to our fourth quarter and full year. 2025 earnings call. I'll start off by providing some highlights on Q4 and pull your 2025 and then I'll move on to our 2026 guidance.
I'm pleased to report that 2025 was a year of solid commercial operational. Innovation and financial performance. For PPG, the year also demonstrated the strength and resilience of our Diversified portfolio as well as the dedication of our PPG Global team.
Despite a very mixed and dynamic macroeconomic environment. Throughout the year, we delivered consistent, organic growth, both volume and price capping to your off with our strongest or organic growth of over 3% in the quarter.
We also continued our Legacy of driving structural cost improvements for our self-help actions and maintained. Our heritage of strong cash flow generation and disciplined cash deployment, including returning, cash to shareholders.
For the full year. Net sales totaled 15.9 billion with 2% organic growth which was driven by a combination of higher selling prices and volume gains across our segments.
Our adjusted earnings per share came in at $7.58 underscoring, our ability to maintain solid profitability and dynamic environment.
Our cash from operations totaled, 1.9 billion.
Up about half a billion dollars, year-over-year supporting a robust, free, cash flow, yield of 5%.
This strong cash performance enabled us to return 1.4 billion to shareholders through dividends and share repurchases.
Our segment, IBA margin for the year, was a healthy, 19% reflecting ongoing, operational efficiency and cost discipline.
I'm pleased that we have delivered on our organic growth. Commitment with sales volume and selling price growth. Resulting in a full year, increase of 2% in organic sales, which outpaced the estimated market decline of negative 0.2%.
This is the result of our productivity solutions for our customers as well as the share gains in our core Technologies.
A 5% year-over-year with 3%, organic growth driven by positive sales volume growth across all regions.
We achieved record Aerospace, coding sales and earnings led by strong demand for our technology, advanced products out of OEM net sales, increased 6%. Well outpacing the industry driven by share gains and customer mix.
Architectural Coatings in Latin America delivered, High single digits or organic sales growth aided by the sequential quarterly recovery of project related sales and continued strong retail performance.
We delivered positive sales, volume growth in all regions with asia-pacific leading the pack achieving, mid single digit percentage followed by low single digit percentage in the US Latin America and Europe.
our segment ebita margin for the quarter was 18%, reflecting solid execution, despite some macro headwinds that impacted certain land markets,
Adjusted EPS for the quarter was a 1.51 cents as the improved organic growth. And improved operational performance were more than offset by higher interest costs and increased corporate expenses.
Out looking at each of our segments in a globe architectural, coding segment, fourth quarter, net sales Rose 8% to 951 million with 2% organic growth. This was driven by Mexico's, strong retail performance and sequential Improvement in Project related spending as well as for favorable. Foreign currency translation.
Project related spending was weak in the first half of 2025, driven by uncertainties related to tariffs. However, the second half of 2025 we experienced consistent recovery, and expect this to extend into 2026 based on leading indicators and discussions with our customers.
Architectural. Codings demand in Europe was mixed low single digit percentage decline, which was partially offset by favorable pricing.
We have now delivered positive pricing for 39, consecutive quarters in this business.
Segment in segment income increased 16% driven by improved pricing and cost management.
And Evita margins, improved nearly 100 basis points.
We expect positive organic sales and margin momentum to continue in the first quarter of 2026 in this business.
The performance coding segment, delivered 5%, net, sales growth to 1.3 billion led by double digit organic growth in Aerospace and consistent gains in our protective and Marine codings business, which now has delivered 11 consecutive quarters of volume.
As expected Automotive, refinish organic sales decreased by high single digit percentage as sales volumes were lower reflecting customer ordered patterns, order patterns. Stemming from Distributors more heavily weighting their purchases to the first half of 2025
However, 1 closely watched data point in the industry, is US accident claims and the December year-over-year claims were down only 2% compared to high single-digit or low double-digit declines throughout the year.
As we communicated in our third quarter earnings call the industry claims normalization and our 2025 distributor order patterns will result in a difficult sales. Comparison for PBG in the first half of 26.
Tim Knavish: Sales decreased by a high single-digit percentage, as sales volumes were lower, reflecting customer order patterns, order patterns stemming from distributors more heavily weighting their purchases to the first half of 2025. However, one closely watched data point in the industry is US accident claims. In December, year-over-year claims were down only 2% compared to high single-digit or low double-digit declines throughout the year. As we communicated in our Q3 earnings call, the industry claims normalization and our 2025 distributor order patterns will result in a difficult sales comparison for PPG in the first half of 2026, but incremental volume growth during the second half of 2026.
Timothy Knavish: Sales decreased by a high single-digit percentage, as sales volumes were lower, reflecting customer order patterns, order patterns stemming from distributors more heavily weighting their purchases to the first half of 2025. However, one closely watched data point in the industry is US accident claims. In December, year-over-year claims were down only 2% compared to high single-digit or low double-digit declines throughout the year.
But incremental volume growth during the second half of 2026.
Segments ebaa margin decreased driven by the lower automotive finish coding sales and higher growth. Related investment, spending and Aerospace and protective and Marine Coatings partly offset by higher selling prices. And we expect margin contraction for the segment, during the first half of 2026, with margin growth, during the second half of the year,
As we communicated in our Q3 earnings call, the industry claims normalization and our 2025 distributor order patterns will result in a difficult sales comparison for PPG in the first half of 2026, but incremental volume growth during the second half of 2026. Segment EBITDA margin decreased, driven by the lower automotive refinish coating sales and higher growth-related investment spending in aerospace and protective and marine coatings, partly offset by higher selling prices. We expect margin contraction for the segment during the first half of 2026, with margin growth during the second half of the year.
As you know, our Aerospace business is an important growth engine for the company. And I want to take, I want to take a moment to talk about the momentum and Industry growth and the demand for our highly specialized qualified products.
Tim Knavish: Segment EBITDA margin decreased, driven by the lower automotive refinish coating sales and higher growth-related investment spending in aerospace and protective and marine coatings, partly offset by higher selling prices. We expect margin contraction for the segment during the first half of 2026, with margin growth during the second half of the year. As you know, our aerospace business is an important growth engine for the company, and I want to take a moment to talk about the momentum in industry growth and the demand for our highly specialized, qualified products. The business is equally weighted to OEM and aftermarket customers, with margins that are accretive to the overall reporting segment and has a strong presence in commercial, military, and General Aviation.
The business is equally weighted to OEM and aftermarket customers with margins that are a creative to the overall reporting segments, and has a strong presence and Commercial military and general aviation.
During our second quarter earnings call, we presented a significant expected Aerospace, OEM growth, given the increased builds forecast for the next several years.
As you know, our aerospace business is an important growth engine for the company, and I want to take a moment to talk about the momentum in industry growth and the demand for our highly specialized, qualified products. The business is equally weighted to OEM and aftermarket customers, with margins that are accretive to the overall reporting segment and has a strong presence in commercial, military, and General Aviation.
Translates into sales growth, kegger of high single digit percentage growth for the foreseeable future.
Tim Knavish: During our Q2 earnings call, we presented the significant expected aerospace OEM growth, given the increased builds forecast for the next several years. In addition to the OEM growth, the forecast for higher aftermarket demand translates into sales growth CAGR of high single-digit % growth for the foreseeable future. For PPG, this is a business that is more than just coatings, with the majority of the portfolio being represented by transparencies, sealants and adhesives, and service and materials. For each one of these verticals, we compete with peers that do not have a strong presence in overlapping technologies. This makes our business very unique, with a much stronger segment presence than any traditional competitor in our space.
During our Q2 earnings call, we presented the significant expected aerospace OEM growth, given the increased builds forecast for the next several years. In addition to the OEM growth, the forecast for higher aftermarket demand translates into sales growth CAGR of high single-digit % growth for the foreseeable future. For PPG, this is a business that is more than just coatings, with the majority of the portfolio being represented by transparencies, sealants and adhesives, and service and materials. For each one of these verticals, we compete with peers that do not have a strong presence in overlapping technologies.
The business is equally weighted to OEM and aftermarket customers with margins that are a creative to the overall reporting segments, and has a strong presence in commercial military and general aviation.
For PPG this is a business that is more than just codings with the majority of the portfolio portfolio being represented by transparencies sealants and adhesives and service and materials for each 1 of these verticals. We compete with peers that do not have a strong presence in overlapping Technologies. This makes our business very unique with a much stronger segment presence than any traditional competitor in our space.
During our second quarter earnings call, we presented significant expected Aerospace OEM growth, given the increased builds forecast for the next several years.
In addition, to the OEM growth, the forecast for higher, aftermarket demand,
Translates into sales growth, a kicker of high single-digit percentage growth for the foreseeable future.
Moving to the industrial coding segment. Fourth quarter. Net sales, grew 3%, to 1.6 billion with Organic growth fueled by share gains that led to 5% sales. Volume growth well outpacing industry demand, as we realized the full run rate benefit of share, gains with strength and Automotive, OEM Coatings and packaging coatings,
This makes our business very unique, with a much stronger segment presence than any traditional competitor in our space. Moving to the industrial coatings segment, Q4 net sales grew 3% to $1.6 billion, with organic growth fueled by share gains that led to 5% sales volume growth, well outpacing industry demand. As we realized the full run rate benefit of share gains, with strength in automotive OEM coatings and packaging coatings. From a business unit perspective, our auto-- automotive OEM business delivered 6% increase in net sales, with growth above market as a result of our share gains.
From a business unit perspective, our auto automotive OEM business delivered 6% increase in net sales with growth above Market as a result of our share games. We expect to outgrow the market in the first quarter. And for the full year in 2026, in this business,
For PPG, this is a business that is more than just coatings, with the majority of the portfolio being represented by transparencies, sealants and adhesives, and service and materials for each one of these verticals. We compete with peers that do not have a strong presence in overlapping technology. This makes our business very unique, with a much stronger segment presence than any traditional competitor in our space.
Tim Knavish: Moving to the industrial coatings segment, Q4 net sales grew 3% to $1.6 billion, with organic growth fueled by share gains that led to 5% sales volume growth, well outpacing industry demand. As we realized the full run rate benefit of share gains, with strength in automotive OEM coatings and packaging coatings. From a business unit perspective, our auto-- automotive OEM business delivered 6% increase in net sales, with growth above market as a result of our share gains. We expect to outgrow the market in Q1 and for the full year in 2026 in this business. Organic sales for our industrial coatings business were flat, as sales volumes growth in Europe and Asia Pacific region offset lower index-based pricing. Packaging coatings organic sales increased by a double-digit percentage year-over-year, growing significantly above industry rates.
Organic sales for our Industrial. Coatings business were flat a sales volumes growth in Europe, and a specific region offset. Lower index based pricing.
Packaging Coatings organic sales increased by a double digit percentage, year-over-year growing significantly above industry rates, these results, reflect the positive momentum and share gains led by Europe and the us, as a result of the technology shift, favoring our sustainable product portfolio.
Moving to the industrial coatings segment. Fourth quarter net sales grew 3% to $1.6 billion, with organic growth fueled by share gains that led to 5% sales. Volume growth well outpaced industry demand, as we realized the full run-rate benefit of share gains, with strength in automotive OEM coatings and packaging coatings.
We expect to outgrow the market in Q1 and for the full year in 2026 in this business. Organic sales for our industrial coatings business were flat, as sales volumes growth in Europe and Asia Pacific region offset lower index-based pricing. Packaging coatings organic sales increased by a double-digit percentage year-over-year, growing significantly above industry rates. These results reflect the positive momentum in share gains led by Europe and the US as a result of the technology shift favoring our sustainable product portfolio.
Segment, EA was up 6% year-over-year and IBA margin improved by 30 basis points to 15.1% reflecting The Leverage from the organic sales growth, along with our manufacturing productivity and strong cost control actions.
From a business unit perspective, our automotive OEM business delivered a 6% increase in net sales, with growth above market as a result of our share gains. We expect to outgrow the market in the first quarter and for the full year in 2026 in this business.
Now, looking ahead. We expect some softness and Global industrial and Automotive demand to impact organic sales and margins in the first quarter to 2026?
Organic sales for our Industrial Coatings business were flat, as sales volumes growth in Europe and a specific region offset lower index-based pricing.
Now, let me talk about our balance sheet and cash.
Strong cash flow. Generation remains a key pillar of our strategy.
Tim Knavish: These results reflect the positive momentum in share gains led by Europe and the US as a result of the technology shift favoring our sustainable product portfolio. Segment EBITDA was up 6% year-over-year, and EBITDA margin improved by 30 basis points to 15.1%, reflecting the leverage from the organic sales growth, along with our manufacturing productivity and strong cost control actions. Now, looking ahead, we expect some softness in global industrial and automotive demand to impact organic sales and margins in Q1 2026. Now let me talk about our balance sheet and cash. Strong cash flow generation remains a key pillar of our strategy. As I said, our operating cash flow increased by over half a billion dollars year-over-year to $1.9 billion in 2025.
Segment EBITDA was up 6% year-over-year, and EBITDA margin improved by 30 basis points to 15.1%, reflecting the leverage from the organic sales growth, along with our manufacturing productivity and strong cost control actions. Now, looking ahead, we expect some softness in global industrial and automotive demand to impact organic sales and margins in Q1 2026. Now let me talk about our balance sheet and cash. Strong cash flow generation remains a key pillar of our strategy. As I said, our operating cash flow increased by over half a billion dollars year-over-year to $1.9 billion in 2025.
Packaging Coatings organic sales increased by a double-digit percentage year-over-year, growing significantly above industry rates. These results reflect the positive momentum and share gains led by Europe and the US, as a result of the technology shift favoring our sustainable product portfolio.
As I said our operating cash flow increased by over half a billion dollars a year over year to 1.9 billion in 2025. We returned 1.4 billion to shareholders through dividends of 630 million and share repurchases of 790 million, which represents about 3% of our outstanding shares.
Segment EBITDA was up 6% year-over-year, and EBITDA margin improved by 30 basis points to 15.1%, reflecting the leverage from the organic sales growth, along with our manufacturing productivity and strong cost control actions.
We ended the year with a strong cash, balance of 2.2 billion and the net debt position of 5.1 billion with 700 million of debt maturing in the first quarter of 2026, which we intend to pay from our current cash position.
Now, looking ahead, we expect some softness, and global industrial and automotive demand to impact organic sales and margins in the first quarter of 2026.
Now, let me talk about our balance sheet and cash.
Our balance sheet is strong which continues to provide us with financial flexibility. And we remain committed to using this strength and flexibility to drive shareholder value.
Strong cash flow generation remains a key pillar of our strategy.
Tim Knavish: We returned $1.4 billion to shareholders through dividends of $630 million, and share repurchases of $790 million, which represents about 3% of our outstanding shares. We ended the year with a strong cash balance of $2.2 billion and a net debt position of $5.1 billion, with $700 million of debt maturing in Q1 2026, which we intend to pay from our current cash position. Our balance sheet is strong, which continues to provide us with financial flexibility, and we remain committed to using this strength and flexibility to drive shareholder value. Our capital expenditures for the year total approximately $780 million, reflecting our investment in growth initiatives, including expansions in aerospace and Mexico, and our digital and AI capabilities.
We returned $1.4 billion to shareholders through dividends of $630 million, and share repurchases of $790 million, which represents about 3% of our outstanding shares. We ended the year with a strong cash balance of $2.2 billion and a net debt position of $5.1 billion, with $700 million of debt maturing in Q1 2026, which we intend to pay from our current cash position. Our balance sheet is strong, which continues to provide us with financial flexibility, and we remain committed to using this strength and flexibility to drive shareholder value.
A capital expenditures for the year total approximately 780 million reflecting our investment in growth initiatives, including expansions, and Aerospace, and Mexico, and our digital, and AI capabilities.
As I said our operating cash flow increased by over half a billion dollars a year over year to 1.9 billion in 2025. We returned 1.4 billion to shareholders through dividends of 630 million and share repurchases of 790 million, which represents about 3% of our outstanding shares.
2025 will represent the high water mark of these growth Investments and we expect to sequentially Pace back to our historical levels of approximately 3% of sales by 2027
We have a balance of $2.2 billion and a net debt position of $5.1 billion, with $700 million of debt maturing in the first quarter of 2026, which we intend to pay from our current cash position.
Looking ahead, I'm encouraged by our organic growth momentum and what we will achieve in 2026.
Our capital expenditures for the year total approximately $780 million, reflecting our investment in growth initiatives, including expansions in aerospace and Mexico, and our digital and AI capabilities. 2025 will represent the high water mark of these growth investments, and we expect to sequentially pace back to our historical levels of approximately 3% of sales by 2027. Looking ahead, I'm encouraged by our organic growth momentum and what we will achieve in 2026. We anticipate that demand in Europe and global industrial end-use markets will remain challenged.
Our balance sheet is strong, which continues to provide us with financial flexibility. And we remain committed to using this strength and flexibility to drive shareholder value.
We anticipate the demand in Europe and Global industrial and use markets will remain challenged. However, despite the macroeconomic environment, we expect sales volume growth will be driven by Aerospace.
Architectural Coatings in Mexico and about 100 million of share gains. In the industrial coding segments, that will be realized in 20126 including 50 million of carryover shared gains announced last year.
Tim Knavish: 2025 will represent the high water mark of these growth investments, and we expect to sequentially pace back to our historical levels of approximately 3% of sales by 2027. Looking ahead, I'm encouraged by our organic growth momentum and what we will achieve in 2026. We anticipate that demand in Europe and global industrial end-use markets will remain challenged. However, despite the macroeconomic environment, we expect sales volume growth will be driven by aerospace, architectural coatings in Mexico, and about $100 million of share gains in the industrial coatings segment that will be realized in 2026, including $50 million of carryover share gains announced last year.
Capital expenditures for the year total approximately $780 million, reflecting our investment in growth initiatives, including expansion in Aerospace, Mexico, and our digital and AI capabilities.
We expect overall price for the company to be positive with strength from our performance and Architectural coding segments, which were partially offset by Modest contraction in the industrial coding segment.
2025 will represent the high-water mark of these growth investments, and we expect to sequentially pace back to our historical levels, approximately 3% of sales, by 2027.
This will result in organic sales growth in the range of flats to positive low, single digit percentage.
Looking ahead, I'm encouraged by our organic growth momentum and what we will achieve in 2026.
However, despite the macroeconomic environment, we expect sales volume growth will be driven by aerospace, architectural coatings in Mexico, and about $100 million of share gains in the industrial coatings segment that will be realized in 2026, including $50 million of carryover share gains announced last year. We expect overall price for the company to be positive, with strength from our performance and architectural coatings segments, which will partially offset by modest contraction in the industrial coatings segment.
Resulting in expected, overall flat raw material costs for the year.
We anticipate the demand in Europe and global industrial and use markets will remain challenged. However, despite the macroeconomic environment, we expect sales volume growth will be driven by Aerospace.
Tim Knavish: We expect overall price for the company to be positive, with strength from our performance and architectural coatings segments, which will partially offset by modest contraction in the industrial coatings segment. This will result in organic sales growth in the range of flat to positive low single-digit percentage. Raw material basket remains favorable to coatings producers, and we are consolidating our supplier base, which will help us offset the impacts of already enacted tariffs, resulting in expected overall flat raw material costs for the year. Finally, during 2026, we expect growing benefits from operational excellence programs, reducing our costs by another $50 million. This, combined with the leverage from acceleration and volume growth, is expected to drive earnings per share growth. That, at the midpoint of our guidance, represents a mid-single-digit percentage increase.
Architectural Coatings in Mexico and about 100 million of share gains. In the industrial coding segments, that will be realized in 20126 including 50 million of carryover shared gains announced last year.
Finally, during 2026, we expect growing benefits from operational and Excellence programs reducing our cost by another fifty million dollars. This combined with the leverage from acceleration and volume growth is expected to drive earnings per share growth. Bet at the midpoint of our guidance represents a mid single digit percentage increase.
This will result in organic sales growth in the range of flat to positive low single-digit percentage. Raw material basket remains favorable to coatings producers, and we are consolidating our supplier base, which will help us offset the impacts of already enacted tariffs, resulting in expected overall flat raw material costs for the year. Finally, during 2026, we expect growing benefits from operational excellence programs, reducing our costs by another $50 million. This, combined with the leverage from acceleration and volume growth, is expected to drive earnings per share growth.
We expect, overall price for the company to be positive with strength, from our performance and Architectural coding segments, which will partially offset, by Modest contraction in the industrial coding segment.
We expect earnings per share to to be flat to growth of low single digit percentage during the first half of the year and increasing the high single digit percentage in the second half of the year.
This will result in organic sales growth in the range of flat to positive low single-digit percentage.
In closing, I'm excited about the increasing momentum. We have demonstrating during fourth quarter that allows us to start 2026 on strong footing.
Raw material basket remains favorable to coatings producers, and we are consolidating our supplier base, which will help us offset the impacts of already enacted tariffs, resulting in expected overall flat raw material costs for the year.
We are laser focused on executing our Enterprise growth strategy which emphasizes high margin, business growth, strong cash, flow, generation discipline, Capital allocation, and operational excellence.
Our portfolio pruning and completed in 2024.
That, at the midpoint of our guidance, represents a mid-single-digit percentage increase. We expect earnings per share to be flat to growth of low single-digit % during the first half of the year and increasing to high single-digit % in the second half of the year. In closing, I'm excited about the increasing momentum we have demonstrating during the fourth quarter that allows us to start 2026 on strong footing.
Enables us to more effectively win with our customers and drive shareholder value.
Tim Knavish: We expect earnings per share to be flat to growth of low single-digit % during the first half of the year and increasing to high single-digit % in the second half of the year. In closing, I'm excited about the increasing momentum we have demonstrating during the fourth quarter that allows us to start 2026 on strong footing. We are laser-focused on executing our enterprise growth strategy, which emphasizes high-margin business growth, strong cash flow generation, disciplined capital allocation, and operational excellence. Our portfolio pruning, completed in 2024, enables us to more effectively win with our customers and drive shareholder value. Additionally, we are investing in customer innovation, including digital and AI capabilities, to maintain our technology leadership in coatings, sealants, specialty materials, and productivity solutions for our customers. As always, we remain disciplined with our cash deployment to drive shareholder value.
Finally, during 2026, we expect growing benefits from operational and Excellence programs, reducing our cost by another $50 million. This, combined with the leverage from acceleration and volume growth, is expected to drive earnings per share growth that, at the midpoint of our guidance, represents a mid-single-digit percentage increase.
Additionally we are investing in customer Innovation including digital and AI capabilities to maintain our technology leadership and coding sealants specialty, materials and productivity solutions for our customers.
We expect earnings per share to be flat to growth of a low single-digit percentage during the first half of the year, and increasing to a high single-digit percentage in the second half of the year.
As always, we remain disciplined with our cash, deployments to drive shareholder value.
We are laser-focused on executing our enterprise growth strategy, which emphasizes high-margin business growth, strong cash flow generation, disciplined capital allocation, and operational excellence. Our portfolio pruning, completed in 2024, enables us to more effectively win with our customers and drive shareholder value. Additionally, we are investing in customer innovation, including digital and AI capabilities, to maintain our technology leadership in coatings, sealants, specialty materials, and productivity solutions for our customers.
We're confident in our strategy and the business model to deliver sustainable long-term growth.
In closing, I'm excited about the increasing momentum. We have demonstrated during the fourth quarter that allows us to start 2026 on strong footing.
We are laser-focused on executing our enterprise growth strategy, which emphasizes high margin business growth, strong cash flow generation discipline, capital allocation, and operational excellence.
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 I look forward to discussing our results and I'll in Outlook in more detail during today's call.
Warren, please open the line for questions.
Our portfolio pruning was completed in 2024.
Enables us to more effectively win with our customers and drive shareholder value.
At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad,
we'll pause for just a moment to compile the Q&A roster.
As always, we remain disciplined with our cash deployment to drive shareholder value. We're confident in our strategy and the strength of our business model to deliver sustainable long-term growth. 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. I look forward to discussing our results and outlook in more detail during today's call. Warren, please open the line for questions.
Additionally we are investing in customer Innovation including digital and AI capabilities to maintain our technology leadership and coding sealants specialty, materials and productivity solutions for our customers.
Tim Knavish: We're confident in our strategy and the strength of our business model to deliver sustainable long-term growth. 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. I look forward to discussing our results and outlook in more detail during today's call. Warren, please open the line for questions.
As always, we remain disciplined with our cash and deployments to drive shareholder value.
Your first question comes from the line of Chris Parkinson with Wolfe research.
Your line is open.
We're confident in our strategy and the business model to deliver sustainable, long-term growth.
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 and PPG, I look forward to discussing our results and I'll in Outlook in more detail. During today's call Warren, please open the line for questions.
Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Chris Parkinson with Wolfe Research. Your line is open.
Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Chris Parkinson with Wolfe Research. Your line is open.
At this time, I would like to remind everyone that in order to ask a question, press star then the number 1 on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Most of us would still call the macro, you know, muted or even meager and yet your organic growth. You know, with maybe 1 exceptionalists
Your first question comes from the line of Chris Parkinson with Wolfe Research.
Your line is open.
Chris Parkinson: Most of us would still call the macro, you know, muted or even meager, and yet your organic growth, you know, with maybe one exception, has been pretty solid across a lot of the kind of the substrates and the facets you've been focusing on in the last few years. Could you just add a little bit of insight on what you saw in the fourth quarter and how you're thinking about, you know, everything in 2026 in terms of breaking that growth down? Is-- was the macro actually slightly better than you anticipated? Is it all share gain? Is it new product introductions? If you could kind of just break that down and how, you know, that breakdown would actually lead you to think about your 2026 guidance, that would be particularly helpful. Thank you.
Chris Parkinson: Most of us would still call the macro, you know, muted or even meager, and yet your organic growth, you know, with maybe one exception, has been pretty solid across a lot of the kind of the substrates and the facets you've been focusing on in the last few years. Could you just add a little bit of insight on what you saw in the fourth quarter and how you're thinking about, you know, everything in 2026 in terms of breaking that growth down? Is-- was the macro actually slightly better than you anticipated? Is it all share gain? Is it new product introductions?
A high level answer and I'll get into some details for you here. The high level answer is the macro is not better than we expected, um, and to your questions about is our growth based on macro share, gang, or, or technology? Introductions the answer is, yes. Yes, and yes. So, the spaces where we're seeing macro help,
Uh, you know, Aerospace right that continues to to crush it for us the sequential Improvement in Mexico.
That helps us and you know, I'd say it's still a pretty strong robust, PMC Market.
If you could kind of just break that down and how, you know, that breakdown would actually lead you to think about your 2026 guidance, that would be particularly helpful. Thank you.
when you look across,
Tim Knavish: Yeah. Hey, Chris. I guess a high-level answer, and I'll get into some details for you here. The high-level answer is, the macro is not better than we expected. And to your questions about, is our growth based on macro, share gain, or technology introductions? The answer is yes, yes, and yes. So the spaces where we're seeing macro help, you know, aerospace, right? That continues to crush it for us. The sequential improvement in Mexico, that helps us. And, you know, I'd say still a pretty strong, robust PMC market. When you look across the rest of our businesses, well, and those businesses, if you think about auto OEM, you know, S&P has Q1 down, the rest of the year, call it flat-ish, but we're committed to outperforming that, and we will, we will, we will grow.
Timothy Knavish: Yeah. Hey, Chris. I guess a high-level answer, and I'll get into some details for you here. The high-level answer is, the macro is not better than we expected. And to your questions about, is our growth based on macro, share gain, or technology introductions? The answer is yes, yes, and yes. So the spaces where we're seeing macro help, you know, aerospace, right? That continues to crush it for us. The sequential improvement in Mexico, that helps us. And, you know, I'd say still a pretty strong, robust PMC market.
The rest of our businesses, uh, well, and those businesses, if you think about Auto OEM, uh, you know, SNP has q1 down.
Macro options slightly better than you anticipated. Is it all share gain? Is it new product introductions? Um, if you could kind of just break that down and how you know, that breakdown would actually lead you um, to think about your 26 guidance, um, that would be particularly helpful. Thank you.
uh, the rest of the year or call it flat-ish
but we're committed to outperforming that and and we will, we will, we will grow
Yeah, hey Chris, um, I guess a high-level answer—and I'll get into some details for you here. The high-level answer is the macro is not better than we expected. Um, and to your questions about is our growth based on macro, share gain, or technology introductions, the answer is yes, yes, yes, and yes. So, the spaces where we're seeing macro help,
Packaging industry is very mixed bag and we're, we're, we're crushing it there with multiple quarters of of double digit. And that's largely share game. And I will tell you, largely Europe where we're doing, uh, we're doing quite well, quite well there. Um, you know, if you look at the other businesses architectural Europe, still flat-ish, industrial or general industrial, which as you know, is the catch all
When you look across the rest of our businesses, well, and those businesses, if you think about auto OEM, you know, S&P has Q1 down, the rest of the year, call it flat-ish, but we're committed to outperforming that, and we will, we will, we will grow. Packaging industry is very mixed bag, and we're crushing it there with multiple quarters of double digits, and that's largely share gain, and I will tell you, largely Europe, where we're doing, we're doing quite well, quite well there. You know, if you look at the other businesses, architectural Europe, still flat-ish.
Uh, you know, Aerospace, right, that continues to crush it for us—the sequential improvement in Mexico, that helps us. And, you know, I'd say it's still a pretty strong, robust PMC market.
when you look across,
It's, um, you know, some, some segments are up some are down, overall, I'd still call it pretty flat. So really, there's a few markets where um, we're getting macro help.
The rest of our businesses, uh, well—and those businesses, if you think about auto OEM, uh, you know, S&P has Q1 down, uh, the rest of the year, or call it flat-ish.
Tim Knavish: Packaging industry is very mixed bag, and we're crushing it there with multiple quarters of double digits, and that's largely share gain, and I will tell you, largely Europe, where we're doing, we're doing quite well, quite well there. You know, if you look at the other businesses, architectural Europe, still flat-ish. Industrial or general industrial, which, as you know, is the catch-all, it's, you know, some segments are up, some are down. Overall, I'd still call it pretty flat. So really, there's a few markets where we're getting macro help. Most of our businesses, we're getting share gain help. And to the technology question, a lot of the share that we're gaining in packaging is technology-driven.
But we're committed to outperforming that, and we will—we will—we will grow.
Industrial or general industrial, which, as you know, is the catch-all, it's, you know, some segments are up, some are down. Overall, I'd still call it pretty flat. So really, there's a few markets where we're getting macro help. Most of our businesses, we're getting share gain help. And to the technology question, a lot of the share that we're gaining in packaging is technology-driven.
Is technology driven a lot of the share that we're gaining in refinish. Even though the, you know, the uh the the stocking is is covering this right now. A lot of the share gain is driven by the productivity tools that that that we launched. So it's really a combination of all 3. But high level, I don't think anything has changed significantly with our view of the macro.
Packaging industry is a very mixed bag and we're— we're— we're crushing it there with multiple quarters of double-digit. And that's largely share gain. And I will tell you, largely Europe, where we're doing, uh, we're doing quite well, quite well there. Um, you know, if you look at the other businesses, architectural Europe still flat-ish, industrial or general industrial, which, as you know, is the catch-all.
Your next question comes from the line of Alexa efremov with keybanc capital markets your line is open.
It's, um, you know, some segments are up, some are down. Overall, I'd still call it pretty flat. So really, there's a few markets where, um, we're getting macro help.
Most of our businesses were getting share gain help. And to the technology question.
Yeah, good morning. Thank thanks for providing all the color on. And Mark as I was hoping you could just give us some details on uh, on on total volumes and and, and price uh, for for organic growth in in 26.
Tim Knavish: A lot of the share that we're gaining in refinish, even though the, you know, the destocking is covering this right now, a lot of the share gain is driven by the productivity tools that we launched. So it's really a combination of all three, but high level, I don't think anything has changed significantly with our view of the macro.
A lot of the share that we're gaining in refinish, even though the, you know, the destocking is covering this right now, a lot of the share gain is driven by the productivity tools that we launched. So it's really a combination of all three, but high level, I don't think anything has changed significantly with our view of the macro.
Sure. Let me um, you can do the easy 1 first and that's pricing.
Uh, you should expect to see a positive price in virtually all of the protective businesses. I'm I'm sorry, performance, businesses.
A lot of the share that we're gaining in, packaging is technology driven. A lot of the share that we're gaining in refinished. Even though the, you know, the uh, the the stocking is is covering this right now. A lot of the share gain is driven by the productivity tools that that, that we launched. So it's really a combination of all 3. But high level, I don't think anything has changed significantly with our view of the macro.
Operator: Your next question comes from the line of Alexei Efremov, with KeyBank Capital Markets. Your line is open.
Operator: Your next question comes from the line of Alexei Efremov, with KeyBank Capital Markets. Your line is open.
Alexei Efremov: Good morning. Thanks for providing all the color on end markets. I was hoping you could just give us some details on total volumes and price for organic growth in 2026.
Alexei Yefremov: Good morning. Thanks for providing all the color on end markets. I was hoping you could just give us some details on total volumes and price for organic growth in 2026.
Your next question comes from the line of Alexa Ephraim with KeyBanc Capital Markets. Your line is open.
And the architectural businesses. You know, you heard my even our most challenged region for architectural in Europe, we've gotten price 39, straight quarters. I don't see us, breaking breaking, that streak and of course, our position, our strength in Mexico, we we'll capture price there so you'll, you'll see you'll see price there, um, refinish Aerospace.
Tim Knavish: Sure. Let me do the easy one first, and that's pricing. You should expect to see a positive price in virtually all of the protective businesses. I'm sorry, performance businesses and the architectural businesses. You know, you heard my even our most challenged region for architectural in Europe. We've gotten price 39 straight quarters. I don't see us breaking that streak. And of course, our position, our strength in Mexico, we'll capture price there. So you'll see price there. Refinish, Aerospace, to a lesser degree, PMC. So those two segments will definitely have positive price. Now, in Industrial segment, I would call it flat-ish, but we do have two slight negatives. We still do have a little bit of index pricing carryover.
Timothy Knavish: Sure. Let me do the easy one first, and that's pricing. You should expect to see a positive price in virtually all of the protective businesses. I'm sorry, performance businesses and the architectural businesses. You know, you heard my even our most challenged region for architectural in Europe. We've gotten price 39 straight quarters. I don't see us breaking that streak. And of course, our position, our strength in Mexico, we'll capture price there. So you'll see price there. Refinish, Aerospace, to a lesser degree, PMC. So those two segments will definitely have positive price.
Yeah, good morning, thank thanks for providing all the color on. And Mark, as I was hoping you could just give us some details on, uh, on on total volumes and and, and price. Uh, for for organic growth in 26.
Days to a lesser degree PMC. So those 2 segments will definitely have positive price now in in industrial segments.
Sure, let me, um, do the easy one first, and that's pricing.
Uh, you should expect to see a positive price in virtually all of the Protective businesses— I'm, I'm sorry, Performance businesses.
I would call it, um, flat-ish, but we do have 2 slight negatives. We still do have a little bit of index, pricing carryover and Automotive, frankly Automotive in China, we see some low single digit price declines, frankly that are offset by lower raw materials than we expected in China. But all in you'll you'll see, you know, performance and Architectural, offset a little bit of decline in industrial.
Now, in Industrial segment, I would call it flat-ish, but we do have two slight negatives. We still do have a little bit of index pricing carryover. Automotive, frankly, Automotive in China, we see some low single-digit price declines, frankly, that are offset by lower raw materials than we expected in China. But all in, you'll see, you know, performance and architectural offset a little bit of decline in industrial. You know, volume-wise, we're on a pretty good trend. You'll continue to see volume growth in Aerospace, PMC, Packaging, modest volume growth in Architectural.
And the architectural businesses. You know, you heard my even our most challenged region for architectural in Europe, we've gotten price 39, straight quarters. I don't see us, breaking breaking, that streak and of course, our position, our strength in Mexico, we we'll capture price there so you'll, you'll see you'll see price there. Um, refinish Aerospace to a lesser degree PMC. So those 2 segments will definitely have positive price now in in industrial segments.
Tim Knavish: Automotive, frankly, Automotive in China, we see some low single-digit price declines, frankly, that are offset by lower raw materials than we expected in China. But all in, you'll see, you know, performance and architectural offset a little bit of decline in industrial. You know, volume-wise, we're on a pretty good trend. You'll continue to see volume growth in Aerospace, PMC, Packaging, modest volume growth in Architectural. You'll see volume growth in Auto OEM. Frankly, you know, we've had two quarters in a row of beating markets there, and we're optimistic about doing that throughout 2026. And that's driven by share gains.
You know, volume was we're we're on a, we're on a pretty, a pretty good Trend. Uh, you'll continue to see volume growth in Aerospace, PMC packaging. Um, modest volume growth in, in in architectural, you'll see volume growth in Ottawa. OEM frankly, you know, we have, we've had second 2 quarters in a row of beating markets there, and we're optimistic about doing that throughout 2026 and and that's driven. Uh, that's driven by share gains. And then, you know, as as we move through the year, I think you'll start to see some more in general industrial, where some of the share game wins that we've had will actually come come to launch. So thank you, thank you for the question, Alex.
I would call it, um, flat-ish, but we do have two slight negatives. We still do have a little bit of index, pricing, carryover, and Automotive. Frankly, with Automotive in China, we see some low single-digit price declines, frankly, that are offset by lower raw materials than we expected in China. But all in, you'll see performance in Architectural offset a little bit of decline in Industrial.
Your next question comes from the line of Kevin McCarthy, with vertical research Partners your line is open.
Yes, thank you and good morning. Uh, Tim it was nice to see, you finish up uh the year at plus 3%, on organic sales growth.
You'll see volume growth in Auto OEM. Frankly, you know, we've had two quarters in a row of beating markets there, and we're optimistic about doing that throughout 2026. And that's driven by share gains.And then, you know, as we move through the year, I think you'll start to see some more in general industrial, where some of the share gain wins that we've had will actually come to launch. So thank you. Thank you for the question, Alexei.
Tim Knavish: And then, you know, as we move through the year, I think you'll start to see some more in general industrial, where some of the share gain wins that we've had will actually come to launch. So thank you. Thank you for the question, Alexei.
Uh, if I look at the ebita line though, it was relatively flat. And so I was wondering if you could walk us through your thoughts on operating leverage, it seems though as though, raw materials are pretty benign and you've been, you know, taking costs out of the company as per your restructuring. And so, uh, maybe why did ebita not grow more in the quarter and more? More importantly, how do you see that trending as 2026, progresses?
So, thank you. Thank you for the question, Alexa.
Operator: Your next question comes from the line of Kevin McCarthy, with Vertical Research Partners. Your line is open.
Operator: Your next question comes from the line of Kevin McCarthy, with Vertical Research Partners. Your line is open.
Yeah. Hey Kevin. Um
Your next question comes from the line of Kevin McCarthy with Vertical Research Partners.
Your line is open.
Kevin McCarthy: Yeah, thank you, and good morning. Tim, it was nice to see you finish up the year at +3% on organic sales growth. If I look at the EBITDA line, though, it was relatively flat, and so I was wondering if you could walk us through your thoughts on operating leverage. It seems though, as though raw materials are pretty benign, and you've been, you know, taking costs out of the company as per your restructuring. And so, maybe why did EBITDA not grow more in the quarter? And more importantly, how do you see that trending as 2026 progresses?
Kevin McCarthy: Yeah, thank you, and good morning. Tim, it was nice to see you finish up the year at +3% on organic sales growth. If I look at the EBITDA line, though, it was relatively flat, and so I was wondering if you could walk us through your thoughts on operating leverage. It seems though, as though raw materials are pretty benign, and you've been, you know, taking costs out of the company as per your restructuring. And so, maybe why did EBITDA not grow more in the quarter? And more importantly, how do you see that trending as 2026 progresses?
There's there's several contributors but the the 1 that by far drives that math is is the refinished destocking uh as you know that refinishes 1 of our higher margin businesses. So when it's down and you've got de stocking, I think uh, I think we were down double digits in Q3 High single digits in Q4.
Tim Knavish: Yeah. Hey, Kevin. There's several contributors, but the one that by far drives that math is the Refinish destocking. As you know, that Refinish is one of our higher margin businesses, so when it's down, you've got destocking. I think we were down double digits in Q3, high single digits in Q4. That just... It overwhelms the positivity of the other businesses' organic growth, just given its margin profile. So what we, what you should expect to see there, unfortunately, you'll see some of that in Q1 and Q2. I think you'll see it sequentially get better as the other businesses kick it in more, and more pricing kicks in, more of our cost out and productivity kick in.
Timothy Knavish: Yeah. Hey, Kevin. There's several contributors, but the one that by far drives that math is the Refinish destocking. As you know, that Refinish is one of our higher margin businesses, so when it's down, you've got destocking. I think we were down double digits in Q3, high single digits in Q4. That just... It overwhelms the positivity of the other businesses' organic growth, just given its margin profile. So what we, what you should expect to see there, unfortunately, you'll see some of that in Q1 and Q2.
Yes, thank you, and good morning. Uh, Tim, it was nice to see you finish up the year at plus 3% on organic sales growth. Uh, if I look at the EBITDA line, though, it was relatively flat, and so I was wondering if you could walk us through your thoughts on operating leverage. It seems as though raw materials are pretty benign, and you've been, you know, taking costs out of the company as per your restructuring. And so, uh, maybe why did EBITDA not grow more in the quarter? And more importantly, how do you see that trending as 2026 progresses?
Yeah. Hey Kevin. Um
That just it overwhelms, the positivity of of the other, uh, other businesses organic growth just giving its margin profile. So what we, what you should expect to see there. Unfortunately, you'll see some of that in q1 and Q2, I think you'll see it. Sequentially get better as the other businesses, kick it in more, and more pricing kicks, in more more of our cost out and productivity kick in, but really where you'll see that flip is, uh, is once we get back to the normal, buy buying patterns, which will be the second half of the year.
Quarter. So they were up uh, about 20 million year over year.
There's there's several contributors but the the 1 that by far drives that math is is the refinished destocking uh as you know, that refinishes 1 of our higher margin businesses. So when it's down and you've got D stocking, I think, uh, I think we were down double digits in Q3 High single digits in Q4.
Your next question comes from the line of Vincent Andrews with Morgan Stanley.
I think you'll see it sequentially get better as the other businesses kick it in more, and more pricing kicks in, more of our cost out and productivity kick in. But really, where you'll see that flip is once we get back to the normal buyer buying patterns, which will be the second half of the year.
Tim Knavish: But really, where you'll see that flip is once we get back to the normal buyer buying patterns, which will be the second half of the year.
Vince Morales: Yeah, Kevin, let me—this is Vince. Just, let me remind everybody, our, our segment earnings did grow in Q4, so they were up about $20 million year-over-year.
Vincent Morales: Yeah, Kevin, let me—this is Vince. Just, let me remind everybody, our, our segment earnings did grow in Q4, so they were up about $20 million year-over-year.
That just it overwhelms, the positivity of of the other uh, other businesses organic growth just giving us margin profile. So what we, what you should expect to see there. Unfortunately, you'll see some of that in q1 and Q2, I think you'll see it. Sequentially get better as the other businesses, kick it in more, and more pricing kicks, in more more of our cost out and productivity kick in, but really where you'll see that flip is, uh, is once we get back to the normal buyer, buying patterns, which will be the second half of the year.
Your line is open. Uh, thank you and good morning. I wanted to dig in a little bit more on refinish. If I think of some of the the metrics that have been discussed, uh, over the last couple of calls. I think, I think third quarter claims were down mid. A single digits, but 4 q claims are back down high singles. So you noted, Tim that December was only down 2%, um, and I believe in in in the answer to Kevin's question, you're still anticipating, um, you know, the sort of second half recovery, uh, in in in normalization of, uh, of customer shipments. Um, so could you just help us tie all that together with sort of the latest update? And what you're hearing from from customers? As well as, uh, not just and how you're interpreting all that claims data?
Yeah, Kevin let me this is Vince just uh let me remind everybody our our segment earnings did grow in the fourth quarter so they were up uh about 20 million year over year.
Operator: Your next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.
Operator: Your next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.
Your next question comes from the line of Vincent Andrews with Morgan Stanley.
Vincent Andrews: Thank you, and good morning. I wanted to dig in a little bit more on refinish. As I think of some of the metrics that have been discussed over the last couple of calls, I think Q3 claims were down mid-single digits, but Q4 claims are back down high single digits. So you noted, Tim, that December was only down 2%. And I believe in the answer to Kevin's question, you're still anticipating, you know, the sort of second half recovery, and normalization of customer shipments. So could you just help us tie all that together with sort of the latest update and what you're hearing from customers, as well as, and not just... and how you're interpreting all that claims data?
Vincent Andrews: Thank you, and good morning. I wanted to dig in a little bit more on refinish. As I think of some of the metrics that have been discussed over the last couple of calls, I think Q3 claims were down mid-single digits, but Q4 claims are back down high single digits. So you noted, Tim, that December was only down 2%. And I believe in the answer to Kevin's question, you're still anticipating, you know, the sort of second half recovery, and normalization of customer shipments.
your line is open, uh,
Yeah, thanks Vincent. And and and if you don't mind, I'm gonna I'm gonna take a rather holistic answer here. Try to answer all the refinished questions here, uh, because I want to make sure we leave time to get to to everything in the portfolio here. So I'm going to answer, maybe your your question in and more when it comes to refinish. So, the headline I'd say is, there's nothing, nothing that indicates a huge change for US versus what we told you. At the end of Q3 relative to the industry and to our trajectory
So could you just help us tie all that together with sort of the latest update and what you're hearing from customers, as well as, and not just... and how you're interpreting all that claims data?
however, we are seeing what I would call some reinforcing green shoots, as as we move through the quarter,
Thank you and good morning. I wanted to dig in a little bit more on refinish. If I think of some of the the metrics that have been discussed, uh, over the last couple of calls. I think, I think third quarter claims were down made a single digits, but 4, a few claims you're back down, high single. So you noted Tim that December was only down 2%. Um, and I believe in in in the answer to Kevin's question, you're still anticipating, um, you know, the sort of second half recovery, uh, in in in normalization of, uh, of customer shipments. Um, so could you just help us tie all that together with sort?
Tim Knavish: Yeah. Thanks, Vincent. And if you don't mind, I'm gonna take a rather holistic answer here, try to answer all the Refinish questions here, because I wanna make sure we leave time to get to everything in the portfolio here. So I'm gonna answer maybe your question and more when it comes to Refinish. So the headline I'd say is, there's nothing, nothing that indicates a huge change for us versus what we told you at the end of Q3, relative to the industry and to our trajectory. However, we are seeing what I would call some reinforcing green shoots as we move through the quarter. Okay? So, you know, we're still very confident in our best-in-class productivity solutions to grow share, and that's happening.
Timothy Knavish: Yeah. Thanks, Vincent. And if you don't mind, I'm gonna take a rather holistic answer here, try to answer all the Refinish questions here, because I wanna make sure we leave time to get to everything in the portfolio here. So I'm gonna answer maybe your question and more when it comes to Refinish. So the headline I'd say is, there's nothing, nothing that indicates a huge change for us versus what we told you at the end of Q3, relative to the industry and to our trajectory. However, we are seeing what I would call some reinforcing green shoots as we move through the quarter. Okay?
Of the latest update and what you're hearing from customers, as well as, uh, not just—and now, you're interpreting all that claims data.
Okay. So you know, we still we're still very confident in our best-in-class productivity solutions to grow share and that's happening. We have market share momentum. Um that's happening largely in the US but also also across Europe.
You know, this is and will be a very good business. For PPG as we work through this, this transitory kind of kind of period um you know just given the strength of our position versus others. I will also add
Yeah, thanks Vincent. And and and if you don't mind, I'm gonna, I'm gonna take a rather holistic answer here. Try to answer all the refinished questions here, uh, so I want to make sure we leave time to get to, to everything in the portfolio here. So, I'm gonna answer maybe your your question in, and more when it comes to refinish. So, the headline I'd say is, there's nothing, nothing that indicates a huge change for US versus what we told you. At the end of Q3 relative to the industry and to our trajectory
So, you know, we're still very confident in our best-in-class productivity solutions to grow share, and that's happening. We have market share momentum, that's happening largely in the US, but also, also across Europe. You know, this is and will be a very good business for PPG as we work through this transitory kind of, kind of period, you know, just given the strength of our position versus others. I will also add that there is clearly industry anxiety out there, partly driven by the pressure that body shops have been on for the last 18 months, but also driven by consolidations, divestitures in this industry.
However, we are seeing what I would call some reinforcing green shoots as we move through the quarter,
Tim Knavish: We have market share momentum, that's happening largely in the US, but also, also across Europe. You know, this is and will be a very good business for PPG as we work through this transitory kind of, kind of period, you know, just given the strength of our position versus others. I will also add that there is clearly industry anxiety out there, partly driven by the pressure that body shops have been on for the last 18 months, but also driven by consolidations, divestitures in this industry. And what all of those anxieties play to our strength, one, because of the strength of our, our, our productivity offering, but second, because of the, the, the certainty of continuity that, that we provide.
Okay. So you know, we still we're still very confident in our best-in-class productivity solutions to grow share and that's happening. We have market share momentum um and that's happening largely in the US but also also across Europe.
That there is clearly industry anxiety out there, uh, partly driven by the pressure that body shops have been on for the last 18 months, but also driven by consolidations divestitures in this industry. And what all of those anxieties play to our strengths 1 because the strength of our our our productivity offering but second because of the the the certainty of continuity that uh that we provide um, insurance rates spikes were really the key driver to this disproportionate drop in claims over the last year and a half or so.
Okay, and that led to multi or leading to multi-quarter destocking in our Channel. I mentioned last time how it ties to our rebate structure Etc.
You know, this is and will be a very good business. For PPG, as we work through this, this transitory kind of kind of period um you know just given the strength of our position versus others. I will add
And what all of those anxieties play to our strength, one, because of the strength of our, our, our productivity offering, but second, because of the, the, the certainty of continuity that, that we provide. Insurance rate spikes were really the key driver to the disproportionate drop in claims over the last year and a half or so, okay? And that led to, or leading to, multi-quarter destocking in our channel. I mentioned last time how it ties to our rebate structure, et cetera. And we said at the last quarter, we expect normalization of buying patterns from our distributors in the second half of 2026.
And we said that the last quarter, we expect normalization of buying patterns from our distributors in the second half of 2026 and normal, I'll remind everybody would be kind of low single digit claims down.
And that's very good. Normal is very good for PPG because our track record for decades shows that at that kind of level we can put up record after record because of strength of our, of our offering.
Tim Knavish: Insurance rate spikes were really the key driver to the disproportionate drop in claims over the last year and a half or so, okay? And that led to, or leading to, multi-quarter destocking in our channel. I mentioned last time how it ties to our rebate structure, et cetera. And we said at the last quarter, we expect normalization of buying patterns from our distributors in the second half of 2026. And normal, I'll remind everybody, would be kind of low single-digit claims down, and that's very good. Normal is very good for PPG because our track record for decades shows that at that kind of level, we can put up record after record because of the strength of our, of our offering.
now, if you look at our guide,
That there is clearly industry anxiety out there, uh, partly driven by the pressure that body shops have been on for the last 18 months, but also driven by consolidations divestitures in this industry. And what all of those anxieties play to our strengths 1 because of strength of our, our our productivity offering but second because of the the the certainty of continuity that uh that we provide
Um, insurance rates were really the key driver to the disproportionate drop in claims over the last year and a half or so.
Etc.
I remind you to everybody that we had a very strong first half of 2025 combined with a pretty weak second half of 2025. So when you combine that with what what we're saying now, which is. Okay, these stocking for 2, quarters, sales, volume and ebit growth in Q3 and 4 that really explains a lot of the you know the EPS difference between the first half of the year and the second half of the year.
And normal, I'll remind everybody, would be kind of low single-digit claims down, and that's very good. Normal is very good for PPG because our track record for decades shows that at that kind of level, we can put up record after record because of the strength of our, of our offering. Now, if you look at our guide, I'll remind you too, everybody, that we had a very strong first half of 2025, combined with a pretty weak second half of 2025.
So that's kind of the fundamentals Now updates.
And we said at the last quarter, we expect normalization of buying patterns from our distributors in the second half of 2026, and normal, I’ll remind everybody, would be kind of low single-digit claims down.
Tim Knavish: Now, if you look at our guide, I'll remind you too, everybody, that we had a very strong first half of 2025, combined with a pretty weak second half of 2025. So when you combine that with what we're saying now, which is, okay, destocking for two quarters, sales volume and EBIT growth in Q3 and Q4, that really explains a lot of the, you know, the EPS difference between the first half of the year and the second half of the year. So that's kind of the fundamentals. Now, updates. Everything we're seeing and hearing from our customers since we last spoke is playing out as expected. Distributors are destocking as we expected, body shops are starting to see beginning signs of normalization as we expected, and thus we reinforced our guide today.
And that's very good. Normal is very good for PPG because our track record for decades shows that that kind of level, we can put up record after record because of the strength of our offering.
Everything we're seeing and hearing from our customers. Since we last spoke is playing out as expected. Uh, Distributors are destocking as we expected. Uh, body shops are starting to see the beginning signs of normalization as we expected.
Now, if you look at our guide,
And thus, we we reinforced our guide uh, today the few points of reinforcement and green shoots. Um
So when you combine that with what we're saying now, which is, okay, destocking for two quarters, sales volume and EBIT growth in Q3 and Q4, that really explains a lot of the, you know, the EPS difference between the first half of the year and the second half of the year. So that's kind of the fundamentals. Now, updates. Everything we're seeing and hearing from our customers since we last spoke is playing out as expected. Distributors are destocking as we expected, body shops are starting to see beginning signs of normalization as we expected, and thus we reinforced our guide today.
Because of the because of 2 things, strength of our productivity offering and the anxieties in the marketplace that I mentioned. We're winning a lot of share. We, we saw you saw 1 Public Announcement yesterday, but a lot of other ones happening that are not publicly announced and are more to come.
Second insurance premiums are normalizing.
I'll remind you too, everybody, that we had a very strong first half of 2025 combined with a pretty weak second half of 2025. So, when you combine that with what we're saying now, which is, okay, destocking for two quarters, sales volume and EBIT growth in Q3 and Q4, that really explains a lot of the, you know, the EPS difference between the first half of the year and the second half of the year.
So that's kind of the fundamentals. Now, updates.
Okay. So kind of the, the, the, the Catalyst for this whole cycle, uh, is beginning to is beginning to normalize.
Everything we're seeing and hearing from our customers since we last spoke to playing out as expected. Distributors are DTO as we expected. Body shops are starting to see the beginning signs of normalization as we expected.
Tim Knavish: The few points of reinforcement and green shoots, because of two things, strength of our productivity offerings and the anxieties in the marketplace that I mentioned, we're winning a lot of share. We saw you saw one public announcement yesterday, but a lot of other ones happening that are not publicly announced and are more to come. Second, insurance premiums are normalizing, okay? So kind of the catalyst for this whole cycle is beginning to normalize. We continue to reinforce the strength of our productivity offering. Two things we did just this quarter, we launched the next chapter of digital tools for the body shops, you know, beyond MoonWalk, beyond LINQ, beyond Visualize. We launched a new digital tool called Mix'n'Shake, which drives further body shop productivity savings, and that's being well received.
The few points of reinforcement and green shoots, because of two things, strength of our productivity offerings and the anxieties in the marketplace that I mentioned, we're winning a lot of share. We saw you saw one public announcement yesterday, but a lot of other ones happening that are not publicly announced and are more to come. Second, insurance premiums are normalizing, okay? So kind of the catalyst for this whole cycle is beginning to normalize. We continue to reinforce the strength of our productivity offering.
And thus, we reinforced our guide. Today, the few points of reinforcement and green shoots, uh,
Just this quarter, we launched the next chapter of digital tools for the body shops, you have the on moonwalk, the on link, uh, Beyond visualized, we launched a new digital tool called mix and Shake which drives further Body Shop productivity savings and that's being well received. And we also launched our first AI formulated product in refinish to uh again to help body shops be more productive. So the industry is playing out as we expected.
Because of the because of 2 things, strength of our productivity offering and the anxieties in the marketplace that I mentioned. We're winning a lot of share. We, we saw you saw 1 Public Announcement yesterday, but a lot of other ones happening that are not publicly announced and there are more to come.
Second insurance premiums are normalizing.
we're winning share with our solutions that reinforces, uh, our, our guide to see destocking and first half,
Okay, so kind of the catalyst for this whole cycle is beginning to, is beginning to normalize.
Two things we did just this quarter, we launched the next chapter of digital tools for the body shops, you know, beyond MoonWalk, beyond LINQ, beyond Visualize. We launched a new digital tool called Mix'n'Shake, which drives further body shop productivity savings, and that's being well received. And we also launched our first AI-formulated product in refinish to, again, to help body shops be more productive. So the industry is playing out as we expected. We're winning share with our solutions. It reinforces, our, our guide to destocking in first half, normalized order patterns in the second half.
Uh, normalized order patterns in second half 2. Other things that happened notably in December. You did see the minus 2% claims 1 data point. I get I I get that. But you got to start somewhere. So let's watch that closely closely as we move through the first half of 26. And we did start to see what we call Phil in orders from our distributors.
Tim Knavish: And we also launched our first AI-formulated product in refinish to, again, to help body shops be more productive. So the industry is playing out as we expected. We're winning share with our solutions. It reinforces, our, our guide to destocking in first half, normalized order patterns in the second half. Two other things that happened, notably in December, you did see the -2% claims, one data point. I get, I, I get that, but you got to start somewhere. So let's watch that closely as we move through the first half of 2026. And we did start to see what we call fill-in orders from our distributors, okay? So this multi-quarter destocking, you know, you can only destock so far before you've got to supply the body shops, and that's when you start seeing fill-in orders.
Okay, so this multi-quarter, these stocking, um, you know, you can only deduct so far before you've got to supply the body shops and that's when you start seeing fill-in orders and we did start to see those in December. So another reinforcing sign. So all that added up
Uh, we continue to reinforce, uh, the strength of our productivity offering. Two things we did just this quarter: we launched the next chapter of digital tools for the body shops, you know, beyond Moonwalk, beyond Link, uh, beyond Visualize. We launched a new digital tool called Mix and Shake, which drives further body shop productivity savings, and that's being well received. And we also launched our first AI-formulated product in Refinish to, uh, again help body shops be more productive. So the industry is playing out as we expected.
we're winning share with our solutions that reinforces, uh, our, our guide to see destocking and first half,
Two other things that happened, notably in December, you did see the -2% claims, one data point. I get, I, I get that, but you got to start somewhere. So let's watch that closely as we move through the first half of 2026. And we did start to see what we call fill-in orders from our distributors, okay? So this multi-quarter destocking, you know, you can only destock so far before you've got to supply the body shops, and that's when you start seeing fill-in orders. And we did start to see those in December, so another reinforcing sign.
We expect uh, a muted first half for continued destocking, second half return to sales and ebit growth for a finish in a more normalized distributor, uh, buying pattern. So, you know, just 1 other thing more more for the segments and the to speak to the strength of our portfolio.
In 1 of our best margins businesses. You know, the performance coding segment.
Uh, normalized order pattern, second half, too. Other things that happened notably in December. You did see the minus 2% claims, one data point. I get it, I get that, but you got to start somewhere. So let's watch that closely, closely as we move through the first half of '26. And we did start to see what we call fill-in orders from our distributors.
Tim Knavish: And we did start to see those in December, so another reinforcing sign. So all that added up, we expect a muted first half for continued destocking, second half, return to sales and EBIT growth for refinish and a more normalized distributor buying pattern. So, you know, just one other thing, more, more for the segment and the-- to speak to the strength of our portfolio. Despite a challenging back half of the year in one of our best margin businesses, you know, the Performance Coatings segment still put up a record, record sales year and record earnings year for the, for the whole year in 25. So the strength of our portfolio just really comes through there when things like PMC Aerospace and traffic can offset this transitory period of refinish. So hope I answered your question and more on refinish.
Still put up a record, record sales year, and a record earnings year for the, for the full year, 25. So, the strength of our portfolio just, uh, just really comes through there when things like PMC Aerospace and traffic can offset this transitory period.
So all that added up, we expect a muted first half for continued destocking, second half, return to sales and EBIT growth for refinish and a more normalized distributor buying pattern. So, you know, just one other thing, more, more for the segment and the-- to speak to the strength of our portfolio. Despite a challenging back half of the year in one of our best margin businesses, you know, the Performance Coatings segment still put up a record, record sales year and record earnings year for the, for the whole year in 25.
Okay, so this multi-quarter, these stocking, you know, you can only do so far before you've got to supply the body shops. And that's when you start seeing fill-in orders, and we did start to see those in December. So another reinforcing sign. So all that added up.
So hope I answered your question and more on our finish. It's playing out as we expected, and obviously more data points to come, as we move through, q1 and Q2.
Your next question comes from the line of David beg lighter with Deutsche Bank.
Your line is open.
Thank you. Good morning. Um, Tim on Aerospace.
Can you tell us what the growth of the sales growth was in 2025? And are you at all capacity, constrained in 26?
We expect, uh, a muted first half for continued destocking; second half, return to sales and EBIT growth for a finish in a more normalized distributor, uh, buying pattern. So, you know, just one other thing—more for the segments—and to speak to the strength of our portfolio, despite a challenging back half of the year,
I added a new Supply capacity coming on next year.
In 1 of our best margin businesses. You know, the performance coding segment.
So the strength of our portfolio just really comes through there when things like PMC Aerospace and traffic can offset this transitory period of refinish. So hope I answered your question and more on refinish. It's playing out as we expected, and obviously, more data points to come as we move through Q1 and Q2.
Tim Knavish: It's playing out as we expected, and obviously, more data points to come as we move through Q1 and Q2.
Still put up a record, record sales year, and a record earnings year for the, for the full year, 25. So, the strength of our portfolio just, uh, just really comes through there when things like PMC, Aerospace and traffic can offset this transitory period finish. So hope, I answered your question and more on our finish. It's playing out as we expected and obviously more data points to come, as we move through, q1 and Q2.
Operator: Your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.
Operator: Your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.
David Begleiter: Thank you. Good morning. Tim, on aerospace, can you tell us what the growth, the sales growth was in 2025, and are you at all capacity constrained in 2026 ahead of the new supply capacity coming on next year?
David Begleiter: Thank you. Good morning. Tim, on aerospace, can you tell us what the growth, the sales growth was in 2025, and are you at all capacity constrained in 2026 ahead of the new supply capacity coming on next year?
Yeah, we thanks David. Um, the growth rate for for 20, 25 was double digit. Uh, by the way, it was 20, double digit, and 24, as well. So we expect continued growth, you're starting to laugh, double digit on top of double digit. The nominators are getting bigger. Uh, by the way, this business is almost the same size as refinish now, so the denominator is getting bigger and bigger as you start laughing, multiple double digits. So we're guiding High single digits for, um, you know, 2026 I think for Aerospace, um,
Your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.
Thank you. Good morning. Um, Tim on Aerospace.
Can you tell us what the sales growth was in 2025? And are you at all capacity constrained in ’26?
Tim Knavish: ... Yeah, we, thanks, David. The growth rate for 2025 was double digit. By the way, it was 20 double digit in 2024 as well. So we expect continued growth. You're starting to lap double digit on top of double digit. Denominators are getting bigger. By the way, this business is almost the same size as Refinish now, so the denominator is getting bigger and bigger as you start lapping multiple double digits. So we're guiding high single digits for, you know, 2026, I think, for aerospace. We are capacity constrained, no doubt about it. That's why our CapEx has been above our historical norm for the last couple of years. Round numbers, I approved about $120 million of CapEx last year that I would call incremental aerospace, debottlenecking, CapEx, CapEx expansion.
Timothy Knavish: ... Yeah, we, thanks, David. The growth rate for 2025 was double digit. By the way, it was 20 double digit in 2024 as well. So we expect continued growth. You're starting to lap double digit on top of double digit. Denominators are getting bigger. By the way, this business is almost the same size as Refinish now, so the denominator is getting bigger and bigger as you start lapping multiple double digits. So we're guiding high single digits for, you know, 2026, I think, for aerospace. We are capacity constrained, no doubt about it.
Ahead of the new supply capacity coming on next year.
Yeah, we thanks David, um, the growth rate for for 20 25 was double digits. Uh, by the way, it was 20, double digits, and 24 as well. So,
We are capacity constraints, uh, no doubt about it. We that's why our capex has been above our historical Norm for the last couple of years. Um, round numbers, I approved about 120 million of capex. Last year that I would call incremental Aerospace debottlenecking cap capex expansion. We've also brought in a number of Consultants to help us just with with the bottlenecking on the expense side and that's why you see some of the uh, margin challenges that that I think Kevin asked about. Um,
Continued growth, you're starting to laugh. Double digit on top of double digit. Denominators are getting bigger. Uh, by the way, this business is almost the same size as refinished now. So the denominator is getting bigger and bigger as you start lapping, multiple double digits. So we're guiding High single digits for, um, you know, 2026 I think for Aerospace um,
That's why our CapEx has been above our historical norm for the last couple of years. Round numbers, I approved about $120 million of CapEx last year that I would call incremental aerospace, debottlenecking, CapEx, CapEx expansion. We've also brought in a number of consultants to help us just with, with debottlenecking on the expense side, and that's why you see some of the margin challenges that I think Kevin asked about. And in addition to that 120 or so, we announced $380 million new factory. That'll take about 2 years to bring online for the sealants and coating side of the business.
Tim Knavish: We've also brought in a number of consultants to help us just with, with debottlenecking on the expense side, and that's why you see some of the margin challenges that I think Kevin asked about. And in addition to that 120 or so, we announced $380 million new factory. That'll take about 2 years to bring online for the sealants and coating side of the business. And we're working on some other capacity expansions. I can't get ahead of my board here, but you know, we're not done. This business will be growing likely for the rest of my career, and hopefully that's longer than Mr. Morales' career here. But so we see that coming for as far as our forecasts go.
And in addition to that 120 or so we announced 380 million new Factory, that'll take about 2 years to bring online for the sealants and coding side of the business. And we're working on some other capacity. Expansions I I can't get ahead of my board here uh, but you know, we're not done. We're position this, this business will be growing likely for the rest of of my career and, uh, hopefully that's, uh, longer than Mr. Morales's career here. But, um, so we, we see that coming for for as far as as far as our forecast go
Your next question comes from the line of John Roberts with miso. Your line is open.
We are capacity. Constraint, uh, no doubt about it. We that's why our capex has been above our historical Norm for the last couple of years. Um, round numbers, I approved about 120 million of capex. Last year that I would call incremental Aerospace debottlenecking cap capex expansion. We've also brought in a number of Consultants to help us just with with the bottlenecking on the expense side and that's why you see some of the uh, margin challenges that that I think Kevin asked about. Um,
Uh, thanks and congrats on a long career, Vince and best wishes.
And we're working on some other capacity expansions. I can't get ahead of my board here, but you know, we're not done. This business will be growing likely for the rest of my career, and hopefully that's longer than Mr. Morales' career here. But so we see that coming for as far as our forecasts go.
How broad is this across the industry? Um, is PPG have a, a differentiated position or the Consultants sort of bringing AI to all the coding's companies.
Yeah, hey John. Um, we're super excited about this. There are
And in addition to that 120 or so we announced 380 million new Factory, that'll take about 2 years to bring online for the sealants and coding side of the business. And we're working on some other capacity. Expansions I I can't get ahead of my board here uh, but you know, we're not done. We're position this, this business will be growing likely for the rest of of my career. And, uh, hopefully that's, uh, long.
Longer than Mr. Morales's career here. But um, so we, we see that coming for for as far as as far as our forecasts go.
Operator: Your next question comes from the line of John Roberts with Mizuho. Your line is open.
Operator: Your next question comes from the line of John Roberts with Mizuho. Your line is open.
things in AI that Consultants are bringing to everybody, and I would say that's more kind of back Office customer service, you know, the, you know, Finance transaction processing that, that those are things that are kind of table stinks that everybody's doing formulation AI.
John Roberts: Thanks, and congrats on a long career, Vince, and best wishes.
John Roberts: Thanks, and congrats on a long career, Vince, and best wishes.
Your next question comes from the line of John Roberts with Missoula. Your line is open.
Tim Knavish: Thank you, John.
Timothy Knavish: Thank you, John.
John Roberts: Could you talk a little bit more about the depth of the AI reformulation activity going on? You launched the first product in Refinish, and how broad is this across the industry? Does PPG have a differentiated position or are the consultants sort of bringing AI to all the coatings companies?
John Roberts: Could you talk a little bit more about the depth of the AI reformulation activity going on? You launched the first product in Refinish, and how broad is this across the industry? Does PPG have a differentiated position or are the consultants sort of bringing AI to all the coatings companies?
Uh, thanks, and congrats on a long career, Vince, and best wishes.
This is internally uh, developed working with a few Partners but it's organically internally developed and we believe it's a differentiator, now I'm guessing our competitors are out there, trying to work on it and catch up, but we we we believe we're definitely out front here and we've launched commercialized.
Tim Knavish: Yeah. Hey, John. We're super excited about this. There are things in AI that consultants are bringing to everybody, and I would say that's more kind of back office, customer service, you know, the, you know, finance transaction processing. Those are things that are kind of table stakes that everybody's doing. Formulation AI, this is internally developed, working with a few partners, but it's organically, internally developed, and we believe it's a differentiator. Now, I'm guessing our competitors are out there trying to work on it and catch up, but we believe we're definitely out front here. And we've launched, commercialized a Refinish clear coat that optimizes performance of the end coating, as well as productivity in the body shop for our customers. We launched that as the first product fully developed using AI, but it's not based on anything public.
Timothy Knavish: Yeah. Hey, John. We're super excited about this. There are things in AI that consultants are bringing to everybody, and I would say that's more kind of back office, customer service, you know, the, you know, finance transaction processing. Those are things that are kind of table stakes that everybody's doing. Formulation AI, this is internally developed, working with a few partners, but it's organically, internally developed, and we believe it's a differentiator. Now, I'm guessing our competitors are out there trying to work on it and catch up, but we believe we're definitely out front here.
Um, thank you John. We do talk a little bit more about the uh depth of the AI reformulation activity going on. You launched the first product in refinish and how broad is this across the industry? Um, is PPG have a, a differentiated position or the Consultants sort of bringing AI to all the coding companies.
Yeah, hey John. Um, we're super excited about this. There are
A refinished clear coat that optimizes performance of the end. End coding as well as productivity in the body shop for our customers. We launched that it was the first product fully developed using AI but it's not based on anything public it's based on scraping all of our internal formulations that we've developed over a hundred years and optimizing. So that is commercialized beyond that.
Things in AI that consultants are bringing into everybody, and I would say that's more kind of back office customer service, you know, the, you know, finance transaction processing—that, those are things that are kind of table stakes that everybody's doing, formulation AI.
And we've launched, commercialized a Refinish clear coat that optimizes performance of the end coating, as well as productivity in the body shop for our customers. We launched that as the first product fully developed using AI, but it's not based on anything public. It's based on scraping all of our internal formulations that we've developed over 100 years and optimizing. So that is commercialized. Beyond that, we've, we've launched another 50 products already, where they were existing products in the marketplace, that we've used AI to optimize, both from a product performance standpoint and a cost to PPG standpoint.
This is internally, uh, developed, working with a few partners, but it's organically internally developed and we believe it's a differentiator. Now, I'm guessing our competitors are out there, trying to work on it and catch up, but we, we, we believe we're definitely out front here and we've launched, commercialized a refinished clear coat.
Tim Knavish: It's based on scraping all of our internal formulations that we've developed over 100 years and optimizing. So that is commercialized. Beyond that, we've, we've launched another 50 products already, where they were existing products in the marketplace, that we've used AI to optimize, both from a product performance standpoint and a cost to PPG standpoint. 50 products already since we made that first announcement. Going forward, we'll continue to both optimize existing formulations, but we've got development projects like we did in Refinish across virtually all of our businesses, so more to come there. Hope you, hope you hear a little kick in my step on this one, John, because I'm pretty, pretty excited, not only about where we are, but where we're going.
We've we've launched another 50 products already where they were existing products in the marketplace that we've used AI to optimize both from a product performance standpoint, and a cost to PPG standpoint, 50 products already since we made that first announced going forward, we'll continue to both optimize existing formulations but we've got development projects. Like we did in refinish across virtually all of our businesses so more to come there and hope you hope to hear a little kick in my step, on this 1, John because I'm pretty pretty excited, not only about where we are, but where we're going?
That optimizes performance of the end-to-end coating as well as productivity in the body shop for our customers. We launched— that was the first product fully developed using AI, but it's not based on anything public; it's based on scraping all of our internal formulations that we've developed over a hundred years and optimizing. So that is commercialized beyond that.
50 products already since we made that first announcement. Going forward, we'll continue to both optimize existing formulations, but we've got development projects like we did in Refinish across virtually all of our businesses, so more to come there. Hope you, hope you hear a little kick in my step on this one, John, because I'm pretty, pretty excited, not only about where we are, but where we're going.
Hey, John. This is Vince. Let me add a little here. The precursor to this was really the scraping of the data that Tim described. So we we were fortunate a couple years ago. We digitized a lot of our data so that we think that puts us in a maybe the pole position, certainly in the front row in the industry uh because of that activity was was very time. Consuming. Uh and we we did it a couple years ago that allowed us to now take advantage of that uh digitized data.
Your next question comes from the line of John mcnel with beimo, capital markets, your line is open.
Yeah, thanks for taking my question. Um so
Vince Morales: Hey, John, this is Vince. Let me add a little here. The precursor to this was really the scraping of the data that Tim described. So we were fortunate a couple of years ago, we digitized a lot of our data so that we think that puts us in a, maybe the pole position, certainly in the front row in the industry, because that activity was very time-consuming, and we did it a couple of years ago. That allowed us to now take advantage of that digitized data.
Vincent Morales: Hey, John, this is Vince. Let me add a little here. The precursor to this was really the scraping of the data that Tim described. So we were fortunate a couple of years ago, we digitized a lot of our data so that we think that puts us in a, maybe the pole position, certainly in the front row in the industry, because that activity was very time-consuming, and we did it a couple of years ago. That allowed us to now take advantage of that digitized data.
We've we've launched another 50 products already where they were existing products in the marketplace that we've used AI to optimize both from a product performance standpoint, and a cost to PPG standpoint 50 products. Already since we made that first announcement going forward. We'll continue to both optimize existing formulations but we've got development projects. Like we did in refinish across virtually all of our businesses so more to come there and hope you hope to hear a little kick in my step, on this 1, John because I'm pretty pretty excited, not only about where we are, but where we're going?
Hey, John. This is Vince. Let me add a little here. The precursor to this was really the scraping of the data that Tim described. So we we were fortunate a couple years ago. We digitized a lot of our data so that we think that puts us in a maybe the pole position, certainly in the front row in the industry uh because of that activity was was very time consuming.
And we did it a couple years ago that allowed us to now take advantage of that, uh, digitized deal.
Operator: Your next question comes from the line of John McNulty with BMO Capital Markets. Your line is open.
Operator: Your next question comes from the line of John McNulty with BMO Capital Markets. Your line is open.
Your next question comes from the line of John mcnel with beimo capital markets.
John McNulty: Yeah, thanks for taking my question. So Tim, over the last couple of years, you've dialed back investment in inorganic growth. You've really focused internally, and it seems like it's delivered. You've gotten share gains, you know, like you were saying, from technology, from service, the whole nine yards, and it seems like you're able to outpace your markets right now. I guess, as we look forward, just given the strength of the balance sheet, the strength of the cash flows, is that still pretty much the main focus, where, look, inorganic growth really isn't necessary for PPG going forward, and you keep focusing on the internal opportunities? Or have you played a lot of that out, and now that you're in a stronger position, do you start looking maybe a little bit more aggressively at acquisitions?
John McNulty: Yeah, thanks for taking my question. So Tim, over the last couple of years, you've dialed back investment in inorganic growth. You've really focused internally, and it seems like it's delivered. You've gotten share gains, you know, like you were saying, from technology, from service, the whole nine yards, and it seems like you're able to outpace your markets right now. I guess, as we look forward, just given the strength of the balance sheet, the strength of the cash flows, is that still pretty much the main focus, where, look, inorganic growth really isn't necessary for PPG going forward, and you keep focusing on the internal opportunities?
Tim over the last couple of years, you've you've dialed back, um, investment in in inorganic growth. You've really focused internally and, and it seems like it's delivered, you've gotten share gains, you know, like you were saying from technology from service the whole 9 yards and it seems like you're you're able to outpace your markets right now. I guess as we look forward, just given the strength of the balance sheet, the strength of the cash flows um is that still pretty much the main focus where look inorganic growth really isn't necessary for PPG going forward and you keep focusing on the internal opportunities or have you played a lot of that out and now that you're in a stronger position, do you start looking, maybe a little bit more aggressively at at Acquisitions? I guess. How should we be thinking about that?
Your line is open.
So hey John. Uh great question. So um
Yeah, thanks for taking my question. Um so
they're both important to us.
But the tip of the spear, as I always say, continues to be building this organic growth and margin engine. Because I believe in in many, if not, most of the cases,
We can deliver better shareholder returns by making those investments in organic uh uh organic growth. Organic productivity, organic costs out, Etc.
Or have you played a lot of that out, and now that you're in a stronger position, do you start looking maybe a little bit more aggressively at acquisitions? I guess, how should we be thinking about that?
John McNulty: I guess, how should we be thinking about that?
Tim Knavish: So hey, John, great question. So, they're both important to us, but the tip of the spear, as I always say, continues to be building this organic growth and margin engine because I believe in many, if not most of the cases, we can deliver better shareholder returns by making those investments in organic growth, organic productivity, organic cost out, et cetera. Now, we still will do acquisitions, either bolt-ons or someday transformational. We still believe that the industry needs some consolidation, and we're supporters of that. We still believe there are acquisitions that will add value to PPG's customers and shareholders, that can be tuck-ins from a technology standpoint or reinforce our position somewhere. But, I would say that it's organic first. We still look at every opportunity.
Timothy Knavish: So hey, John, great question. So, they're both important to us, but the tip of the spear, as I always say, continues to be building this organic growth and margin engine because I believe in many, if not most of the cases, we can deliver better shareholder returns by making those investments in organic growth, organic productivity, organic cost out, et cetera. Now, we still will do acquisitions, either bolt-ons or someday transformational. We still believe that the industry needs some consolidation, and we're supporters of that.
Growth. You really focused internally and and it seems like it's delivered, you've gotten share gains, you know, like you were saying from technology from service the whole 9 yards and it seems like you're you're able to outpace your markets right now. I guess as we look forward, just given the strength of the balance sheet, the strength of the cash flows um is that still pretty much the main focus where look inorganic growth really isn't necessary for PPG going forward and you keep focusing on the internal opportunities or have you played a lot of that out and now that you're in a stronger position, do you start looking, maybe a little bit more aggressively at at Acquisitions? I guess. How should we be thinking about that?
So, hey John. Uh, great question. So, um, they're both important to us.
Now, um, we we still will do Acquisitions, either bolt-ons or someday transformational. We still believe that the the industry needs some consolidation. And we're supporters of that, we still believe there are Acquisitions, that will add value to ppg's customers and shareholders. That can be tuck-ins from a technology standpoint or reinforce our position somewhere. Um, but but I would say that that it's it's
organic first.
But the tip of the spear, as I always say, continues to be building this organic growth and margin engine. Because I believe in, in many, if not most, of the cases,
We still look at every opportunity, we put it through a filter of. Is it the right asset? That's consistent with our Enterprise growth strategy where it gives us a strong number 1 or number 2 or reinforces the strong number 1 or number 2.
We can deliver better shareholder returns by making those investments in organic uh uh organic growth. Organic productivity, organic costs out, Etc.
We still believe there are acquisitions that will add value to PPG's customers and shareholders, that can be tuck-ins from a technology standpoint or reinforce our position somewhere. But, I would say that it's organic first. We still look at every opportunity. We put it through a filter of, is it the right asset that's consistent with our enterprise growth strategy, where it gives us a strong number one or number two, or reinforces a strong number one or number two? Is it the right asset?
Is it the right time given everything else that we have going on so that we can assure that we can uh not fall back in a trap where we had to. We had built this excellent inorganic muscle but not an excellent organic muscle
So, is it the right time that we can still do do both if you will?
And most importantly, is it the right price?
Now, um, we we still will do Acquisitions, either bolt-ons or someday transformational. We still believe that the the industry needs some consolidation. And we're supporters of that, we still believe there are Acquisitions, that will add value to ppg's customers and shareholders. That can be tuck-ins from a technology standpoint or reinforce our position somewhere. Um, but but I would say that that it's it's
organic first.
Tim Knavish: We put it through a filter of, is it the right asset that's consistent with our enterprise growth strategy, where it gives us a strong number one or number two, or reinforces a strong number one or number two? Is it the right asset? Is it the right time, given everything else that we have going on, so that we can ensure that we can not fall back in the trap where we had built this excellent inorganic muscle, but not an excellent organic muscle? So is it the right time that we can still do both, if you will? And most importantly, is it the right price?
We still look at every opportunity, we put it through a filter of. Is it the right asset? That's consistent with our Enterprise growth strategy where it gives us a strong number 1, or number 2, or reinforces a strong number 1 or number 2.
Um, you know, especially given where our our depressed or undervalued stock price is um when you do the mathematics and say well okay, it's organic first, then on some of these inorganics man. I'm better off buying shares. So I want to make sure everybody recognizes that all of those are on the table, organic Investments inorganic investment.
Is it the right time, given everything else that we have going on, so that we can ensure that we can not fall back in the trap where we had built this excellent inorganic muscle, but not an excellent organic muscle? So is it the right time that we can still do both, if you will? And most importantly, is it the right price? You know, especially given where our depressed or undervalued stock price is, when you do the mathematics and say, "Well, okay, it's organic first, then on some of these inorganics, man, I'm better off buying shares."
Is it the right f?
Share repos. But we run them through this filter to make sure that all of our decisions are maximized and shareholder value.
Your next question comes from the line of Matthew do with Bank of America. Your line is open,
Is it the right time given everything else that we have going on so that we can assure that we can uh not fall back into the Trap where we had to. We had built this excellent inorganic muscle but not an excellent, organic muscle.
So, is it the right time that we can still do both, if you will?
Tim Knavish: You know, especially given where our depressed or undervalued stock price is, when you do the mathematics and say, "Well, okay, it's organic first, then on some of these inorganics, man, I'm better off buying shares." So I wanna make sure everybody recognizes that all of those are on the table: organic investment, inorganic investment, share repos, but we run them through this filter to make sure that all of our decisions are maximizing shareholder value.
And most importantly, is it the right price?
Yeah, good morning everyone. And, you know, and also Echo John's comments then. So congrats on, uh, on the career and the retirement, um,
I, I want to walk through
So I wanna make sure everybody recognizes that all of those are on the table: organic investment, inorganic investment, share repos, but we run them through this filter to make sure that all of our decisions are maximizing shareholder value.
Um, you know, where are our depression or undervalued stock prices, um, when you do the mathematics and say, well, okay, it's organic first and only some of these inorganics, man. I'm better off buying shares, so I want to make sure everybody recognizes that all of those are on the table—organic investments, inorganic investment.
Some of the corporate cost inflation and and bucket some of this stuff out across potential sources. I mean you're not the only coding company to talk about Healthcare inflation and I get that. But where is that coming in and kind of related. Does it make sense to align compensation fully to organic growth if there isn't commensurate, Eva creation because, you know, it's helping the top line but it also
Share repos, but we run them through this filter to make sure that all of our decisions are maximized and shareholder value.
Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.
Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.
Seems exactly the headwinds from some of the other unabsorbed fixed costs.
Your next question comes from the line of Matthew do with Bank of America. Your line is open,
Matthew DeYoe: Yeah. Good morning, everyone, and, you know, and also echo John's comments, Vince, and congrats on the career and the retirement. I wanted to walk through some of the corporate cost inflation and bucket some of this stuff out across potential sources. I mean, you're not the only coatings company to talk about healthcare inflation, and I get that, but where is that coming in? And kind of related, does it make sense to align compensation fully to organic growth if there isn't commensurate EBIT accretion? Because, you know, it's helping the top line, but it also seems to exacerbate the headwinds from some of the other unabsorbed fixed costs.
Matthew DeYoe: Yeah. Good morning, everyone, and, you know, and also echo John's comments, Vince, and congrats on the career and the retirement. I wanted to walk through some of the corporate cost inflation and bucket some of this stuff out across potential sources. I mean, you're not the only coatings company to talk about healthcare inflation, and I get that, but where is that coming in? And kind of related, does it make sense to align compensation fully to organic growth if there isn't commensurate EBIT accretion?
Yeah, Matt I'll take this first and then I'll let my uh short-timer CFO here. Uh, take it from there.
Uh the the leading answer here is medical claims in Q4 uh Vince will explain it or pay as you go company.
Yeah, good morning everyone. And, you know, and also Echo, John's comments since, and congrats on, uh, on the career and the retirement, um,
They exceeded our expectations.
I, I want to walk through
The second piece is incentive comp now.
You remember some of that's a year-over-year comp issue, right? Because we were we were drawn down our incentive comp crus in Q4 of last year because of overall performance.
Some of the corporate cost inflation—and bucket some of this stuff out across potential sources. I mean, you're not the only coating company to talk about healthcare inflation, and I get that. But where is that coming in, and kind of related.
Because, you know, it's helping the top line, but it also seems to exacerbate the headwinds from some of the other unabsorbed fixed costs.
does it make sense to align compensation fully to organic growth if there isn't commensurate, Eva the creation because you know, it's helping the top line but it also
Seems to exacerbate.
Tim Knavish: Yeah. Matt, I'll take this first, and then I'll let my short-timer CFO here take it from there. The leading answer here is medical claims in Q4. Vince will explain it. We're a pay-as-you-go company. They exceeded our expectations. The second piece is incentive comp. Now, you gotta remember, some of that's a year-over-year comp issue, right? Because we were drawn down our incentive comp accruals in Q4 of last year because of overall performance. In this year, we had done the same, but then we came in stronger in Q4, much stronger in Q4, on two of our three metrics that guide our incentive payout, our short-term incentive payout. That's an important point, the short term versus long term. I'll get to that in a second.
Timothy Knavish: Yeah. Matt, I'll take this first, and then I'll let my short-timer CFO here take it from there. The leading answer here is medical claims in Q4. Vince will explain it. We're a pay-as-you-go company. They exceeded our expectations. The second piece is incentive comp. Now, you gotta remember, some of that's a year-over-year comp issue, right? Because we were drawn down our incentive comp accruals in Q4 of last year because of overall performance.
Some of the other unabsorbed fixed costs.
And in this year, we were we, we had done the same, but then we came in stronger in Q4 much stronger. In Q4 on 2 of our 3 metrics that guide, our incentive payout, our short term, instead of payoff. It's a, it's an important point. The short term versus long term. I'll get to that in a second.
so, um,
Yeah, Matt, I'll take this first and then I'll let my, uh, short-timer CFO here take it from there.
Our short-term incentives are based on 3 metrics organic growth.
Uh, EPS growth.
Uh, the leading answer here is medical claims in Q4. Uh, Vince will explain it, or a pay-as-you-go company.
They exceeded our expectations.
The second piece is incentive comp now.
And cash cash flow. So on 2 of those 3, we finished better than expected. So that increases the payout
In this year, we had done the same, but then we came in stronger in Q4, much stronger in Q4, on two of our three metrics that guide our incentive payout, our short-term incentive payout. That's an important point, the short term versus long term. I'll get to that in a second. So, our short-term incentives are based on three metrics: organic growth, EPS growth, and cash flow. So on two of those three, we finished better than expected, so that increases the payout, but a lot of that all came in Q4, so we had to catch up for the full year, right?
I remember some of that's a year-over-year comp issue, right? Because we were we were drawn down our incentive comp crus in Q4 of last year because of overall performance.
But uh a lot of that all came in Q4, so we had to catch up for the full year, right? So when you compare that to the last year's comp it, it looks like looks like a big number. I want to reinforce though, we are not overpaying, our sales or our team because the total payout is still less than Target.
Tim Knavish: So, our short-term incentives are based on three metrics: organic growth, EPS growth, and cash flow. So on two of those three, we finished better than expected, so that increases the payout, but a lot of that all came in Q4, so we had to catch up for the full year, right? So when you compare that to last year's comp, it looks like a big number. I wanna reinforce, though, we are not overpaying ourselves or our team because the total payout is still less than target. Now, another point, to your point about, you know, kind of how do you balance all these different metrics?
Now, another point to your point about, you know, kind of how do you balance all these different metrics? Uh, if you look at the grand total compensation for our Executives including myself,
And in this year, we were we, we had done the same, but then we came in stronger in Q4 much stronger. In Q4, on 2 of our 3 metrics that guide our incentive payout, our our short term incentive payout. It's a, it's an important point, the short term versus long term. I'll get to that in a second. So um,
Uh, EPS growth.
You know, the TSR payout, which is an important, uh, uh, uh, Factor. If you look look through our proxy, um, you know, that is not paying out, we have not performed there.
And cash, cash flow. So, on two of those three, we finished better than expected. So that increases the payout.
The other 1 is on our restricted shares. You know, we did not meet our EPS growth for that, uh, payout. So some of our longer term, uh, payouts,
So when you compare that to last year's comp, it looks like a big number. I wanna reinforce, though, we are not overpaying ourselves or our team because the total payout is still less than target. Now, another point, to your point about, you know, kind of how do you balance all these different metrics? If you look at the grand total compensation for our executives, including myself, you know, the TSR payout, which is an important factor, if you look through our proxy, you know, that is not paying out. We have not performed there. The other one is on our restricted shares.
For the year will be significantly below Target, but that kind of just explains how and why you see that Delta in the Q4.
But, uh, a lot of that all came in Q4, so we had to catch up for the full year, right? So when you compare that to last year's comp, it looks like a big number. I want to reinforce that we are not overpaying our sales or our team, because the total payout is still less than target.
Yeah man, I'll just add get somewhere by Tim the the prior year again. We lowered our Q4 incentive comp.
Tim Knavish: If you look at the grand total compensation for our executives, including myself, you know, the TSR payout, which is an important factor, if you look through our proxy, you know, that is not paying out. We have not performed there. The other one is on our restricted shares. You know, we did not meet our EPS growth for that payout. So some of our longer-term payouts for the year will be significantly below target, but that kind of just explains how and why you see that delta in the Q4.
Uh, as we, we ended the year lower than we expected when we came into the Q4 this year.
Now, another point to your point about, you know, kind of, how do you balance all these different metrics? Uh, if you look at the grand total compensation for our executives, including myself,
You know, the TSR payout, which is an important, uh, uh, uh, Factor. If you look at look through our proxy, um, you know, that is not paying out, we have not performed there.
You know, we did not meet our EPS growth for that payout. So some of our longer-term payouts for the year will be significantly below target, but that kind of just explains how and why you see that delta in the Q4.
Strong, fourth quarter, organic growth, exceeded strong, uh, strong, uh, cash flow, especially the latter part of December in receivables welcomed, uh, and our cash from opiates was 500 million higher than the prior year. As Tim mentioned, we did not hit our EPS Target, so we are not getting Target path for that.
The other 1 is on our restricted shares. You know, we did not meet our EPS growth for that, uh, payout. So some of our longer term, uh, payouts,
Vince Morales: Yeah, Matt, I'll just add, good summary by Tim. The prior year, again, we lowered our Q4 incentive comp, as we ended the year lower than we expected. When we came into the Q4 this year, strong fourth quarter organic growth exceeded strong cash flow, especially the latter part of December in receivables, welcomed, and our cash from ops was $500 million higher than the prior year. As Tim mentioned, we did not hit our EPS target, so we are not getting the target payout for that. Flipping back to the medical, we are a company that's pay as you go, and we-- as I talk to my peers in the industry, we do see folks...
Vincent Morales: Yeah, Matt, I'll just add, good summary by Tim. The prior year, again, we lowered our Q4 incentive comp, as we ended the year lower than we expected. When we came into the Q4 this year, strong fourth quarter organic growth exceeded strong cash flow, especially the latter part of December in receivables, welcomed, and our cash from ops was $500 million higher than the prior year. As Tim mentioned, we did not hit our EPS target, so we are not getting the target payout for that.
A week as I talked to my peers in the industry. We do see folks, uh,
For the year will be significantly below Target, but that kind of just explains how and why you see that Delta in the Q4.
Yeah, man, I'll just add a good summary by Tim to the prior year again. We lowered our Q4 incentive comp.
We think pulling some medical expenses into 20125. I had up some potential inflation in 2026 so our medical costs a year over year were up uh significantly in in Q4 and particularly in December. So hopefully that answers some of the some of the questions you had on corporate expenses.
Your next question comes from the line of Michael Sisson with Wells Fargo.
Your line is open.
Flipping back to the medical, we are a company that's pay as you go, and we-- as I talk to my peers in the industry, we do see folks... We think pulling some medical expenses into 2025 ahead of some potential inflation in 2026. So our medical costs, year-over-year are up, significantly in, in Q4, and particularly in December. So hopefully that answers some of the, some of the questions you had on corporate expenses.
Uh, as we, we ended the year lower than we expected. When we came into Q4 this year, a strong fourth quarter organic growth exceeded—strong, um, strong, uh, cash flow, especially the latter part of December in receivables—welcomed, uh, and our cash from operations was $500 million higher than the prior year. As Tim mentioned, we did not hit our EPS target, so we are not getting target payout for that.
Vince Morales: We think pulling some medical expenses into 2025 ahead of some potential inflation in 2026. So our medical costs, year-over-year are up, significantly in, in Q4, and particularly in December. So hopefully that answers some of the, some of the questions you had on corporate expenses.
Hey guys. Um, a couple quick questions on architectural ee, you know, that's a business that has struggled to grow. I mean, and markets I understand. But, you know, you know why, why is that a good business for y'all to, to keep longer term and maybe what's the girl algorithm there? And maybe similar on the duster coding is again. I understand and markets have been tough, but, you know, how do you see those 2, businesses grow longer term? And then and just curious, if Vince is going to take the Browns coaching job because, uh, I don't think anybody else wants it. Let me answer that question. First mic, I think that's a hopeless job. So I'm trying to retire or not go into hopeless job.
Flipping back to the medical. Uh, we are a company that's pays you go a week as I talked to my peers in the industry. We do see folks, uh we think pulling some medical expenses into 2025. I had up some potential inflation in 2026 so our medical costs a year over year were up uh significantly in in Q4 and particularly in December. So hopefully that answers some of the some of the questions you had on corporate expenses.
Operator: Your next question comes from the line of Michael Sisson with Wells Fargo. Your line is open.
Operator: Your next question comes from the line of Michael Sisson with Wells Fargo. Your line is open.
Your next question comes from the line of Michael Sisson with Wells Fargo.
Michael Sison: Hey, guys. A couple quick questions. Architectural EMEA, you know, that's a business that has struggled to grow. I mean, end markets, I understand. But, you know, why is that a good business for y'all to keep longer term? And maybe what's the growth algorithm there? And maybe similar on industrial coatings. Again, I understand, end markets have been tough, but, you know, how do you see those two businesses grow longer term? And then, just curious if Vince is gonna take the Browns coaching job, 'cause I don't think anybody else wants it.
Michael Sison: Hey, guys. A couple quick questions. Architectural EMEA, you know, that's a business that has struggled to grow. I mean, end markets, I understand. But, you know, why is that a good business for y'all to keep longer term? And maybe what's the growth algorithm there? And maybe similar on industrial coatings. Again, I understand, end markets have been tough, but, you know, how do you see those two businesses grow longer term? And then, just curious if Vince is gonna take the Browns coaching job, 'cause I don't think anybody else wants it.
I think he's already declined it officially too. So, um, so Mike, the, the, the, the 2 to the 2 businesses, you asked about are very different.
Your line is open.
1 1 is an ongoing ongoing macro issue and that's architectural Europe. The other 1 is really kind of a tariff and
Uh, you know, timestamp issue, and that's General industrial. But let me talk about architectural Europe. Um, it's been a depressed volume market for years as has much of the European economy.
Um,
Hey guys. Um, a couple quick questions on architectural, ey, you know, that's a business that has struggled to grow. I mean, and markets I understand. But, you know, you know why, why is that a good business for y'all to, to keep longer term and maybe what's the girl algorithm there and maybe similar on Industrial Coatings again. I understand and markets have been tough, but, you know, how do you see those 2, businesses grow longer term? And then and just curious, if Vince is going to take the Browns coaching job because, uh, I don't think anybody else wants it.
Vince Morales: Let me answer that question first, Mike. I think that's a hopeless job, so I'm trying to retire, not go into a hopeless job.
Vincent Morales: Let me answer that question first, Mike. I think that's a hopeless job, so I'm trying to retire, not go into a hopeless job.
2 years ago, I guess. 3 years ago now 2023 which was depressed
Let me answer that question. First mic. I think that's a hopeless job. So,
Tim Knavish: I think he's already declined it officially, too. So, Mike, the two answers to the two businesses you asked about are very different. One is an ongoing macro issue, and that's architectural Europe. The other one is really kind of a tariff and, you know, timestamp issue, and that's general industrial. But let me talk about architectural Europe. It's been a depressed volume market for years, as has much of the European economy. Two years ago, I guess three years ago now, 2023, which was depressed, we generated record earnings and record cash that goes all the way back to 2008. So even in depressed markets, we can generate good earnings and good cash, and we don't spend that cash within the business.
Timothy Knavish: I think he's already declined it officially, too. So, Mike, the two answers to the two businesses you asked about are very different. One is an ongoing macro issue, and that's architectural Europe. The other one is really kind of a tariff and, you know, timestamp issue, and that's general industrial. But let me talk about architectural Europe. It's been a depressed volume market for years, as has much of the European economy. Two years ago, I guess three years ago now, 2023, which was depressed, we generated record earnings and record cash that goes all the way back to 2008.
We generated uh, record earnings and record cash that goes all the way back to 2008.
So even in uh, depressed markets.
I'm trying to retire or not go into hopeless job. I think he's already declined it officially too. So, um, so Mike, the, the, the, the 2 answers to the 2 businesses, you asked about are very different.
1 1 is an on grow ongoing, macro issue and that's architectural Europe. The other 1 is really kind of a tariff and
We can generate good earnings and good cash and we don't spend that cash within the business. We use that cash to supplement. What we're trying to do in some of our higher growth businesses. What's happening is the last couple years is, you know, the volume decline has has been, you know, pretty pronounced
Um, at this point last year, 1 of the things we missed frankly was we were, we were projecting, uh, some upside in the market.
Uh, you know, timestamp issue, and that's General Industrial. But let me talk about Architectural Europe. Um, it's been a depressed volume market for years, as has much of the European economy.
um,
2 years ago, I guess. 3 years ago now 2023 which was depressed
We are not projecting upside in the market. This year, we're saying flat flat-ish for the whole year, but we're not waiting, we're not sitting around waiting for this macro to improve.
So even in depressed markets, we can generate good earnings and good cash, and we don't spend that cash within the business. We use that cash to supplement what we're trying to do in some of our higher growth businesses. What's happened these last couple of years is, you know, the volume decline has been, you know, pretty pronounced. At this point last year, one of the things we missed, frankly, was we were projecting some upside in the market. We are not projecting upside in the market this year. We're saying flat, flat-ish for the whole year.
We generated uh, record earnings and record cash that goes all the way back to 2008.
So even in uh, depressed markets.
Tim Knavish: We use that cash to supplement what we're trying to do in some of our higher growth businesses. What's happened these last couple of years is, you know, the volume decline has been, you know, pretty pronounced. At this point last year, one of the things we missed, frankly, was we were projecting some upside in the market. We are not projecting upside in the market this year. We're saying flat, flat-ish for the whole year. But we're not waiting, we're not sitting around waiting for this macro to improve. It still makes good money for us, but with the actions we've started to take and will take throughout the year, we'll see margin expansion, cash generation expansion out of this business as we move through 2026.
We can generate good earnings and good cash, and we don't spend that cash within the business. We use that cash to supplement what we're trying to do in some of our higher growth businesses. What's happened in the last couple of years is, you know, the volume decline has been, you know, pretty pronounced.
Uh, it still makes good money for us, but with the actions, we've started to take and we'll take throughout the year. We'll see margin expansion. Cash generation expansion out of this business as we move through a 2026. So it's not you know, it's not our best growth business certainly but it can deliver has delivered good earnings, good cash in a challenging macro. Yeah. Before Tim goes on to Industrial Mike I just want to remind everybody that, you know, this is a maintenance cycle business.
Um, at this point last year, one of the things we missed, frankly, was we were projecting, uh, some upside in the market.
But we're not waiting, we're not sitting around waiting for this macro to improve. It still makes good money for us, but with the actions we've started to take and will take throughout the year, we'll see margin expansion, cash generation expansion out of this business as we move through 2026. So it's not, you know, it's not our best growth business, certainly, but it can deliver, has delivered good earnings, good cash in a challenging macro.
We are not projecting upside in the market. This year, we're saying flat, flat-ish for the whole year, but we're not waiting, we're not sitting around waiting for this macro to improve.
Tim Knavish: So it's not, you know, it's not our best growth business, certainly, but it can deliver, has delivered good earnings, good cash in a challenging macro.
We did have significant growth during Co so 2020 2021. So the maintenance cycle clock reset. Typically, this is a 5 to 6 year maintenance window. So, we're now getting to that fifth year. We're repaint typically what our current. So some of the volume declines, the past couple years really have been because we pulled forward maintenance into those into those Co years. Yeah, and Industrial very different. It's it's a bit more cyclical than than, uh, you know, probably our most cyclical businesses Auto second, most would probably be
Vince Morales: Yeah, before Tim goes on to industrial, Mike, I just wanna remind everybody that, you know, this is a maintenance cycle business. We did have significant growth during COVID, so 2020, 2021. So the maintenance cycle clock reset. Typically, this is a 5- to 6-year maintenance window, so we're now getting to that 5th year where repaint typically would occur. So some of the volume declines the past couple of years really have been because we pulled forward maintenance into those, into those COVID years.
Vincent Morales: Yeah, before Tim goes on to industrial, Mike, I just wanna remind everybody that, you know, this is a maintenance cycle business. We did have significant growth during COVID, so 2020, 2021. So the maintenance cycle clock reset. Typically, this is a 5- to 6-year maintenance window, so we're now getting to that 5th year where repaint typically would occur. So some of the volume declines the past couple of years really have been because we pulled forward maintenance into those, into those COVID years.
The actions, we've started to take and will take throughout the year. We'll see margin expansion cash generation expansion out of this business as we move through a 2026. So it's not you know, it's not our best growth business certainly but it can deliver has delivered good earnings, good cash in a challenging macro. Yeah. Before Tim goes on to Industrial Mike I just want to remind everybody that, you know, this is a maintenance cycle business.
Tim Knavish: Yeah, and industrial, very different. It's a bit more cyclical than you know, probably our most cyclical business is auto. Second most would probably be our general industrial, because you're essentially painting big hunks of metal that get moved around the world. And so with the tariff uncertainty and what that's done, the confidence of some of our customers, that's been dialed back, and then what that's done from consumer affordability, you know, so some of those folks are struggling. But we do see sequential improvement in this business. What's interesting is we see really good sequential improvement in places like Europe and Latin America, largely driven by share gain. We see sequential improvement in things like heavy duty equipment, not ag-related, but construction-related.
Timothy Knavish: Yeah, and industrial, very different. It's a bit more cyclical than you know, probably our most cyclical business is auto. Second most would probably be our general industrial, because you're essentially painting big hunks of metal that get moved around the world. And so with the tariff uncertainty and what that's done, the confidence of some of our customers, that's been dialed back, and then what that's done from consumer affordability, you know, so some of those folks are struggling.
We did have significant growth during COVID, so 2020, 2021. So the maintenance cycle clock reset. Typically, this is a five to six year maintenance window. So we're now getting to that fifth year. We're repainting typically what are current. So some of the volume declines the past couple years really have been because we pulled forward maintenance into those COVID years.
yeah, it's it's
But we do see sequential improvement in this business. What's interesting is we see really good sequential improvement in places like Europe and Latin America, largely driven by share gain. We see sequential improvement in things like heavy duty equipment, not ag-related, but construction-related. We see some sequential improvements in transportation and powder and in a broad category of general finishes.
Our general industrial because you're essentially painting big hunks of metal that get moved around the world and so with the uh, tariff uncertainty and what that's done, the confidence of some of our customers that's been dialed back and then what's that's done from consumer affordability, you know, so some of those folks are struggling, but we do see sequential Improvement in this business. Um,
China is exported to the us about 10% of what we do in China and think electronics and, uh, kitchen and bakeware those kind of things remain, um, you know, depressed, a bit. So the industrial story is more of a timing 1, and we are starting to see green shoots. We are starting to wind share, and we'll start to launch. Those share wins in as we move through 2026.
Tim Knavish: We see some sequential improvements in transportation and powder and in a broad category of general finishes. But we still see challenges in the US market, and we still see challenges in a small part of what we do in China is exported to the US, about 10% of what we do in China, and think electronics and kitchen and bakeware, those kind of things remain, you know, depressed a bit. So the industrial story is more of a timing one, and we are starting to see green shoots, we are starting to win share, and we'll start to launch those share wins in, as we move through 2026.
Your next question comes from the line of Jeff caucus with JP Morgan. Your line is open.
Uh, thanks very much.
Timothy Knavish: But we still see challenges in the US market, and we still see challenges in a small part of what we do in China is exported to the US, about 10% of what we do in China, and think electronics and kitchen and bakeware, those kind of things remain, you know, depressed a bit. So the industrial story is more of a timing one, and we are starting to see green shoots, we are starting to win share, and we'll start to launch those share wins in, as we move through 2026.
Your performance, codings Revenue expectation for 2026 is flat to upload single digits. And in that segment, you've got Aerospace. And you've got Auto refinish
If Aerospace grows at a high single digit rate.
In order to meet that guidance refinish has to contract at a high single digit rate or a mid to high single-digit. Rate is is that the correct conclusion to draw and for Vince? Um, how many shares did you buy back this quarter? And what did you spend?
What's interesting is we we we see really good sequential Improvement in places like Kira and Latin America, largely driven by share gain. We see sequential Improvement in things like heavy duty equipment, not a related, but construction related, we see some sequential improvements in transportation and powder and in a broad category of general finishes. Um, but we still see challenges in the US market and we still see challenges in a, a small part of what we do in China, is exported to the us about 10% of what we do in China and think electronics and, uh, kitchen and bakeware those kind of things remain, um, you know, depressed, a bit. So the industrial story is more of a timing 1, and we are starting to see green shoots. We are starting to wind share, and we'll start to launch. Those share wins in as we move through 2026.
Operator: Your next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open.
Operator: Your next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open.
Jeffrey Zekauskas: Thanks very much. Your performance coatings revenue expectation for 2026 is flat to up low single digits, and in that segment, you've got aerospace and you've got auto refinish. If aerospace grows at a high single digit rate, in order to meet that guidance, refinish has to contract at a high single digit rate or a mid to high single digit rate? Is that the correct conclusion to draw? And for Vince, how many shares did you buy back this quarter, and what did you spend?
Your next question comes from the line of Jeff with J.P. Morgan. Your line is open.
Jeffrey Zekauskas: Thanks very much. Your performance coatings revenue expectation for 2026 is flat to up low single digits, and in that segment, you've got aerospace and you've got auto refinish. If aerospace grows at a high single digit rate, in order to meet that guidance, refinish has to contract at a high single digit rate or a mid to high single digit rate? Is that the correct conclusion to draw? And for Vince, how many shares did you buy back this quarter, and what did you spend?
All right, thanks very much.
Your performance, codings Revenue expectation for 2026 is flat to upload single digits. And in that segment, you've got Aerospace. And you've got Auto refinish
If Aerospace grows at a high single digit rate.
Hey, Jeff, uh, I'll take the first 1. Um, I don't think we're we're seeing that much of a decline more like low to mid low to mid for refinishing the first half. Uh, if you think sequentially, uh, what did we see in Q3 Q4? We saw double digit. Then we saw High single digit. So I'd say you, you ought to say that, that that slope slope continued towards normalization as we move as we move through the quarter, you know? Remember, uh, I mean, traffics quite small there, but we also have a, a nice PMC business in there. That's, you know. That's, that's not small. That'll that'll contribute to some of the, the, the, the grand total of what we got guided to for the year.
Tim Knavish: ... Hey, Jeff, I'll take the first one. I don't think we're seeing that much of a decline, more like low to mid, low to mid for refinish in the first half. If you think sequentially, what did we see in Q3, Q4? We saw double digit, then we saw high single digit. So I'd say you ought to say that slope continued towards normalization as we move through the quarter. You know, remember, I mean, traffic's quite small there, but we also have a nice PMC business in there that's, you know, that's not small, that'll contribute to some of the grand total of what we guided to for the year.
Timothy Knavish: ... Hey, Jeff, I'll take the first one. I don't think we're seeing that much of a decline, more like low to mid, low to mid for refinish in the first half. If you think sequentially, what did we see in Q3, Q4? We saw double digit, then we saw high single digit. So I'd say you ought to say that slope continued towards normalization as we move through the quarter. You know, remember, I mean, traffic's quite small there, but we also have a nice PMC business in there that's, you know, that's not small, that'll contribute to some of the grand total of what we guided to for the year.
In order to meet that guidance refinish has to contract at a high single-digit rate or a mid to high single-digit rate is is that the correct conclusion to draw and for Vince? Um, how many shares did you buy back this quarter? And what did you spend?
Yeah. Jeff uh, for for us, for the share repurchase perspective, we bought just under 980,000 shares
at an average price of about $102 and we spent as we said in the press release around million dollars in the fourth quarter.
Your next question comes from the line of gum. Punjabi with Robert W, beard your line is open.
Thanks operator. Good morning everybody. Uh, Ben's congrats from our team as well. Um, wish you the best in retirement, um, you know, on raw materials.
Sorry.
I'm still here July, but thank you.
Yeah, I understand just an early congratulations on. Um,
Vince Morales: Yeah, Jeff, for us, from a share repurchase perspective, we bought just under 980,000 shares at an average price of about $102. And we spent, as we said in the press release, around $100 million in Q4.
Vincent Morales: Yeah, Jeff, for us, from a share repurchase perspective, we bought just under 980,000 shares at an average price of about $102. And we spent, as we said in the press release, around $100 million in Q4.
Hey, Jeff, uh, I'll take the first 1. Um, I don't think we're we're seeing that much of a decline more like low to mid low to mid for refinishing the first half. Uh, if you think sequentially, uh, what did we see in Q3 Q4? We saw double digit. Then we saw High single digit. So I'd say you, you ought to say that, that that slope slope slope continued towards normalization as we move as we move through the quarter, you know? Remember, uh, I mean, traffics quite small there, but we also have a, a nice PMC business in there. That's, you know. That's, that's not small. That'll that'll contribute to some of the, the, the, the grand total of what we got guided to for the year.
On the raw material side, you know, as it relates to guidance, can you just give us a bit more Colour as to the constituents? Um,
Yeah, Jeff, uh, for us, from the share repurchase perspective, we bought just under 980,000 shares.
At an average price of about $102 and we spent as we said in the press release around million dollars in the fourth quarter.
Do you think about you know some of the major ones that tio2 petrol is ETC. Um, looks like you got in flat for the year and also flat for the first quarter but some of the spot markets were weaker into the fourth from the fourth quarter of, um, 2025. So, just curious as to, which categories may be inflating as well. Thanks.
Operator: Your next question comes from the line of Ghansham Panjabi with Robert W. Baird. Your line is open.
Operator: Your next question comes from the line of Ghansham Panjabi with Robert W. Baird. Your line is open.
Ghansham Panjabi: Thanks, operator. Good morning, everybody. Vince, congrats from our team as well. Wish you the best in retirement. You know, I guess, last one on raw materials. Sorry?
Ghansham Panjabi: Thanks, operator. Good morning, everybody. Vince, congrats from our team as well. Wish you the best in retirement. You know, I guess, last one on raw materials. Sorry?
Your next question comes from the line of Gum Punjabi with Robert W. Baird. Your line is open.
Thanks. Good morning everybody. Uh, Ben, congrats from our team as well, um, wish you the best in retirement. Um, you know, the last 1 on raw materials.
Vince Morales: I'm still here till July, but thank you.
Vincent Morales: I'm still here till July, but thank you.
Ghansham Panjabi: Yeah, I understand. Just an early congratulations.
Ghansham Panjabi: Yeah, I understand. Just an early congratulations.
Sorry, I'm still here, July, but thank you. Yeah.
Yeah, you know, so far as gum and a, a public service announcement for everybody. This is not Vince's last earnings call and I don't want Vince to think it's his last earnings call. He's still got, he's still got 6 more months of work to do here. So, um, but thank you for the kind words and we'll have lots of kind words as we get closer to his actual actual date, but got some uh, high level. It's still a very long.
Vince Morales: Yeah, thanks.
Vincent Morales: Yeah, thanks.
Ghansham Panjabi: On the raw material side, you know, as it relates to guidance, can you just give us a bit more color as to the constituents, as you think about, you know, some of the major ones, the TiO2, Petros, et cetera. Looks like you've gotten flat for the year and also flat for Q1, but some of the spot markets were weaker into the fourth—from the fourth quarter of 2025. So just curious as to which categories may be inflating as well. Thanks.
Early.
Ghansham Panjabi: On the raw material side, you know, as it relates to guidance, can you just give us a bit more color as to the constituents, as you think about, you know, some of the major ones, the TiO2, Petros, et cetera. Looks like you've gotten flat for the year and also flat for Q1, but some of the spot markets were weaker into the fourth—from the fourth quarter of 2025. So just curious as to which categories may be inflating as well. Thanks.
Yeah, thanks on. Um,
Uh favorable to us Supply demand balance uh so across the board. That generally means good pricing for us but what offsets that a couple of things, um, I put them in 3, categories.
Epoxies are up a bit because of terrorists.
Tim Knavish: Yeah, you know, so first, Ghansham, and a public service announcement for everybody. This is not Vince's last earnings call, and I don't want Vince to think it's his last earnings call. He's still got, he's still got six more months of work to do here. So, but thank you for the kind words, and we'll have lots of kind words as we get closer to his actual, actual date. But Ghansham, high level, it's still a very long, favorable to us, supply-demand balance. So across the board, that generally means good pricing for us. But what offsets that, a couple of things, I put them in three categories. Epoxies are up a bit because of tariffs, right?
Timothy Knavish: Yeah, you know, so first, Ghansham, and a public service announcement for everybody. This is not Vince's last earnings call, and I don't want Vince to think it's his last earnings call. He's still got, he's still got six more months of work to do here. So, but thank you for the kind words, and we'll have lots of kind words as we get closer to his actual, actual date. But Ghansham, high level, it's still a very long, favorable to us, supply-demand balance. So across the board, that generally means good pricing for us. But what offsets that, a couple of things, I put them in three categories.
Petros, etc.—um, it looks like you're getting flat for the year and also flat for the first quarter, but some of the spot markets were weaker into the fourth, from the fourth quarter of, um, 2025. So just curious as to which categories may be inflating as well. Thanks.
Yeah, you know, so far as gum and a public service announcement for everybody—this is not Vince's last earnings call, and I don't want Vince to think it's his last earnings call. He's still going. He's still got six more months of work to do here. So, um, but thank you for the kind words, and we'll have lots of kind words as we get closer to his actual, actual date. But got some, uh, high level—it's still a very long.
Right? And that's that's included in our guide and you know, that obviously affects more the industrial businesses. So it doesn't affect Deco companies because most Deco products do not have epoxy. So when you compare to what others might say, um, the epoxies is 1. The second 1 is pigments, but let's not put tio2 in that. I'd say more the specialty pigments, we are seeing, uh, some inflation there, driven by tariffs because those things come from all over the world.
Uh favorable to us Supply demand balance uh so across the board that generally means good pricing for us but what offset to that a couple of things? Um,
Epoxies are up a bit because of tariffs, right? And that's included in our guide, and, you know, that obviously affects more the industrial businesses, so it doesn't affect deco companies, because most deco products do not have epoxy. So when you compare to what others might say, the epoxy is one. The second one is pigments, but let's not put TiO2 in that. I'd say more the specialty pigments. We are seeing some inflation there, driven by tariffs, because those things come from all over the world. Okay, and the other category that's up is metal packaging, and everybody knows what's happening on the, you know, aluminum and steel tariffs.
Tim Knavish: And that's included in our guide, and, you know, that obviously affects more the industrial businesses, so it doesn't affect deco companies, because most deco products do not have epoxy. So when you compare to what others might say, the epoxy is one. The second one is pigments, but let's not put TiO2 in that. I'd say more the specialty pigments. We are seeing some inflation there, driven by tariffs, because those things come from all over the world. Okay, and the other category that's up is metal packaging, and everybody knows what's happening on the, you know, aluminum and steel tariffs. Those are really the only categories that I can think of that are up in our guide. TiO2 is still pretty soft, just given the supply-demand. We've been doing some supplier consolidation.
I put them in three categories. Epoxies are up a bit because of terrorists.
That 1 is is still pretty soft. You know what oil's doing so that drives solvents to be and then across the board. Everything else is still still in a very long situation, add it all together.
And we come up with flat flat for q1 flat for the year.
Right? And that's included in our guide, and you know, that obviously affects more of the industrial businesses. So it doesn't affect the deco companies, because most deco products do not have epoxy. So when you compare to what others might say, the epoxy is one. The second one is pigments, but let's not put TiO2 in that. I'd say more of the specialty pigments. We are seeing some inflation there, driven by tariffs because those things come from all over the world.
Those are really the only categories that I can think of that are up in our guide. TiO2 is still pretty soft, just given the supply-demand. We've been doing some supplier consolidation. We've been, you know, working volume commitment deals for pricing. So that one is still pretty soft. You know what oil's doing, so that drives solvents to be... And then across the board, everything else is still in a very long situation. Add it all together, and we come up with flat for Q1, flat for the year.
Yeah, and I'll just remind everybody what we said at the outset. You know, we do have targeted pricing that we Institute either in the back, half of 2025 or will institute in 2026, including in q1. So we do expect higher pricing.
Uh, for 2026.
Your next question comes from the line of Josh Spectre with UBS. Your line is open.
Tim Knavish: We've been, you know, working volume commitment deals for pricing. So that one is still pretty soft. You know what oil's doing, so that drives solvents to be... And then across the board, everything else is still in a very long situation. Add it all together, and we come up with flat for Q1, flat for the year.
Okay, um, and the other category that that's up is metal packaging and everybody knows what's happening on the, um, you know, aluminum and steel tariffs. Those are really the only categories that I can think of that are up in our guide. Uh, tio2, we're is still pretty soft just given the supply demand. We've been doing some supplier consolidation. We've been, you know, working volume for volume commitment deals for pricing. So that 1 that 1 is is still pretty soft. You know, what oil's doing so that drives solvents to be and then across the board. Everything else is still still in a very long situation, add it all together.
Vince Morales: Yeah, I'll just remind everybody what we said at the outset. You know, we do have targeted pricing that we instituted in the back half of 2025, or we'll institute in 2026, including in Q1. So we do expect higher pricing for 2026.
Vincent Morales: Yeah, I'll just remind everybody what we said at the outset. You know, we do have targeted pricing that we instituted in the back half of 2025, or we'll institute in 2026, including in Q1. So we do expect higher pricing for 2026.
And we come up with flat for Q1, flat for the year.
Yeah. Hi, good morning. Um, I just wanted to ask a Mexico, I don't know if there's a way you can maybe index your volumes for where you are today in fourth quarter versus a year ago, because obviously there's some easy comps and first half with all the Liberation data disruptions, but it seems like the fourth quarter performance. Might say you're even above where you were coming into last year. So can you help us square that away a little bit? Be helpful. Thank you.
yeah, I let me give a give a high level and then I'll let Vince give give the details because, uh,
Yeah, and I'll just remind everybody what we said at the outset. You know, we do have targeted pricing that we instituted either in the back half of 2025, or we'll institute in 2026, including in Q1. So, we do expect higher pricing.
Uh, for 2026.
Operator: Your next question comes from the line of Josh Spector with UBS. Your line is open.
Operator: Your next question comes from the line of Josh Spector with UBS. Your line is open.
He's, he's doing the math in his head here. So we, we definitely, uh, finished pretty strong in in Mexico. And if you look kind of sequentially at how we move through the year,
Your next question comes from the line of Josh Spectre with UBS. Your line is open.
Josh Spector: Yeah, hi, good morning. I just wanted to ask on Mexico. I don't know if there's a way you can maybe index your volumes for where you are today in Q4 versus a year ago, because obviously there's some easy comps in first half with all the liberation day disruptions, but it seems like the Q4 performance might say you're even above where you were coming into last year. So can you help us square that away a little bit? It'd be helpful. Thank you.
Josh Spector: Yeah, hi, good morning. I just wanted to ask on Mexico. I don't know if there's a way you can maybe index your volumes for where you are today in Q4 versus a year ago, because obviously there's some easy comps in first half with all the liberation day disruptions, but it seems like the Q4 performance might say you're even above where you were coming into last year. So can you help us square that away a little bit? It'd be helpful. Thank you.
We're down uh, down call mids. Single digits in q1.
Up low single digits, Q2 up mid single digit, Q3 up high single digits Q4. Now, where that puts us relative to year, end 24, or I'll give that to give that events.
Yeah, Josh if you look at the fourth quarter as a standalone basis and again there's 2 parts of our Mexican businesses, the retail consumer segments,
Tim Knavish: Yeah, I'll let me give a high level, and then I'll let Vince give the details, 'cause he, he's doing the math in his head here. So we definitely finished pretty strong in Mexico. And if you look kinda sequentially at how we moved through the year, we're down called mid-single digits in Q1, up low single digits Q2, up mid-single digits Q3, up high single digits Q4. Now, where that puts us relative to year-end 2024, I'll give that to Vince.
Timothy Knavish: Yeah, I'll let me give a high level, and then I'll let Vince give the details, 'cause he, he's doing the math in his head here. So we definitely finished pretty strong in Mexico. And if you look kinda sequentially at how we moved through the year, we're down called mid-single digits in Q1, up low single digits Q2, up mid-single digits Q3, up high single digits Q4. Now, where that puts us relative to year-end 2024, I'll give that to Vince.
Yeah. Hi, good morning. Um, I just wanted to ask a Mexico, I don't know if there's a way you can maybe index your volumes for where you are today in fourth quarter, versus a year ago, because obviously there's some easy comps and first half with all the Liberation day disruptions, but it seems like the fourth quarter performance. Might say you're even above where you were coming into last year. So can you help us square that away a little bit? Be helpful. Thank you.
Yeah, let me give a high level, and then I'll let Vince give the details because, uh,
Uh, there's also the project segment, the, the retail segment has continued to grow the project segments, the 1 that had contracted the most in the first half of the Year fourth quarter over fourth quarter, just on the volume basis. We're we're right around mid single digits higher.
Again, some of that's recovery.
He's he's doing the math in his head here. So we we definitely, uh, finished pretty strong in in in Mexico. And if you look kind of sequentially at how we move through the year,
Uh and uh, we expect again in the first quarter, a good volume based on the easier comp.
You're down. Uh, down, down. Call mid-single digits in Q1.
Your next question comes from the line of lauron fog with BNP. Your line is open.
Vince Morales: Yeah, Josh, if you look at the fourth quarter as a standalone basis, and again, there's two parts of our Mexican business. There's the retail or consumer segments, there's also the project segment. The retail segment has continued to grow. The project segment's the one that had contracted the most in the first half of the year. Fourth quarter over fourth quarter, just on the volume basis, we're right around mid-single digits higher. Again, some of that's recovery, and we expect, again, in the first quarter, a good volume based on an easier comp.
Vincent Morales: Yeah, Josh, if you look at the fourth quarter as a standalone basis, and again, there's two parts of our Mexican business. There's the retail or consumer segments, there's also the project segment. The retail segment has continued to grow. The project segment's the one that had contracted the most in the first half of the year. Fourth quarter over fourth quarter, just on the volume basis, we're right around mid-single digits higher. Again, some of that's recovery, and we expect, again, in the first quarter, a good volume based on an easier comp.
Up low single digits, Q2 up mid single digits, Q3 up high single digits Q4. Now, where that puts us relative to year, end 24, where I'll give that the give that events.
Yeah, Josh, if you look at the fourth quarter on a standalone basis—and again, there are two parts of our Mexican business: there's the retail, our consumer segments,
Uh, there's also the project segment, the, the retail segment has continued to grow the project segments, the 1 that had contracted the most in the first half of the Year fourth quarter over fourth quarter, just on the volume basis. We're we're right around mid single digits higher.
Um, yes morning guys. Um, I want to go back to the um, I guess m&a discussion. I understand what you're saying on BuyBacks versus m&a. Um, but there are some pretty obvious situations with assets. Coming out of potentially coming out of the recent announcements in Germany, um, Amsterdam and Philly. Now I think it's unlikely that we have any Clarity before the second half of 2027. So am I right to assume that? This might be a very quiet here for BuyBacks as your way to get clarity on what's happening on those situations?
Again, some of that's recovery.
Uh and uh, we expect again in the first quarter, a good volume based on the easier comp.
No, you know, um, I, I, I wouldn't say that Laurent. I, I, I would say look, our our balance sheet is strong enough.
Operator: ... Your next question comes from the line of Laurent Favre with BNP. Your line is open.
Operator: ... Your next question comes from the line of Laurent Favre with BNP. Your line is open.
Your next question comes from the line of Laurel, father with BNP.
Laurent Favre: Yes, morning, guys. I want to go back to the, I guess, M&A discussion. I understand what you're saying on buybacks versus M&A, but there are some pretty obvious situations with assets coming out or potentially coming out of the recent announcements in Germany, Amsterdam, and Philly. Now, I think it's unlikely that we'll have any clarity before the second half of 2027. So am I right to assume that this might be a very quiet year for buybacks as you wait to get clarity on what's happening on those situations?
Laurent Favre: Yes, morning, guys. I want to go back to the, I guess, M&A discussion. I understand what you're saying on buybacks versus M&A, but there are some pretty obvious situations with assets coming out or potentially coming out of the recent announcements in Germany, Amsterdam, and Philly. Now, I think it's unlikely that we'll have any clarity before the second half of 2027. So am I right to assume that this might be a very quiet year for buybacks as you wait to get clarity on what's happening on those situations?
Your line is open.
That we've got optionality if something gets spit out of either of those 2 deals and if it makes sense to us at the right price we've got optionality to do something there in 2027 without an impacting. Our ability to um, to do Buybacks in 2000 and 2026. You know, we're
Tim Knavish: No, you know, I wouldn't say that, Laurent. I would say, look, our balance sheet is strong enough that we've got optionality if something gets spit out of either of those two deals, and if it makes sense to us at the right price, we've got optionality to do something there in 2027 without it impacting our ability to do buybacks in 2026. You know, we're. I think we're on 9 straight quarters of buybacks now, and, you know, we run a play, Vince, myself, our treasurer, and our corp development guys sit down every quarter and say, "What's the pipeline look like? What's the cash flow look like?" And we make a decision on buybacks.
Timothy Knavish: No, you know, I wouldn't say that, Laurent. I would say, look, our balance sheet is strong enough that we've got optionality if something gets spit out of either of those two deals, and if it makes sense to us at the right price, we've got optionality to do something there in 2027 without it impacting our ability to do buybacks in 2026. You know, we're. I think we're on 9 straight quarters of buybacks now, and, you know, we run a play, Vince, myself, our treasurer, and our corp development guys sit down every quarter and say, "What's the pipeline look like? What's the cash flow look like?" And we make a decision on buybacks.
I think we're on 9 straight quarters of BuyBacks now. And you know, we run a play. Uh, Vince myself our Treasurer and our our corporate development guy, sit down every quarter and say what's the pipeline look like, what's the cash flow look like. And we make a decision on BuyBacks, and we'll continue to do that.
because,
Even if we make a buyback and then all of a sudden, I get a phone call. Saying, hey, there's something on the table here from 1 of these deals that that's being uh, spun out. I, I I'm not worried about my ability to do both.
Your next question comes from the line of Frank Mitch with fermium Research LLC.
Your line is open.
And feeling. Now I think it's unlikely that we'll have any Clarity before the second half of 2027. So am I right to assume that? This might be a very quiet year for BuyBacks as your way to get clarity on what's happening on those situations know, you know? Um, I I, I wouldn't say that luron. I, I would say, look, our our balance sheet is strong enough that we've got optionality. If something gets spit out of either of those 2 deals. And if it makes sense to us at the right price, we've got optionality to do something there in 2027 without an impacting. Our ability to um, to do Buybacks in 2000 and 2026. You know, we're
Uh, thank you and, uh, and good morning Tim. I hope you can, uh, understand some of the confusion. We have regarding Vince's retirement date, uh, since many of us had already assumed that he was so, uh, appreciate your clarification there.
um, I I want to, um, I want to drill into a little bit about the first quarter here, um,
Tim Knavish: We'll continue to do that because even if we make a buyback and then all of a sudden I get a phone call saying, "Hey, there's something on the table here from one of these deals that, that's being spun out," I, I, I'm not worried about my ability to do both.
We'll continue to do that because even if we make a buyback and then all of a sudden I get a phone call saying, "Hey, there's something on the table here from one of these deals that, that's being spun out," I, I, I'm not worried about my ability to do both.
I think we're on 9 straight quarters of BuyBacks now. And you know, we run a play. Uh, Vince myself our Treasurer and our our corporate development guy, sit down every quarter and say what's the pipeline look like, what's the cash flow look like. And we make a decision on BuyBacks, and we'll continue to do that.
because,
Even if we make a buyback and then, all of a sudden, I get a phone call saying, hey, there's something on the table here from one of these deals that's being spun out. I'm not worried about my ability to do both.
Operator: Your next question comes from the line of Frank Mitsch with Fermium Research LLC. Your line is open.
Operator: Your next question comes from the line of Frank Mitsch with Fermium Research LLC. Your line is open.
Your next question comes from the line of Frank Mitch with Fermium Research LLC.
Frank Mitsch: Thank you, and good morning, Tim. I hope you can understand some of the confusion we have regarding Vince's retirement date, since many of us had already assumed that he was. So, appreciate your clarification there. I want to drill into a little bit about the first quarter here. You know, in the script, and not, not—I don't wanna make too big a deal about it, but, you know, in the script, you described the first half as being low single-digit EPS growth, and in your comments this morning, you talked about it being flat to low single digits in the first half of the year. Obviously, you didn't provide any Q1 guidance.
Frank Mitsch: Thank you, and good morning, Tim. I hope you can understand some of the confusion we have regarding Vince's retirement date, since many of us had already assumed that he was. So, appreciate your clarification there. I want to drill into a little bit about the first quarter here. You know, in the script, and not, not—I don't wanna make too big a deal about it, but, you know, in the script, you described the first half as being low single-digit EPS growth, and in your comments this morning, you talked about it being flat to low single digits in the first half of the year. Obviously, you didn't provide any Q1 guidance.
Your line is open.
Flat to low single digits in the first half of the year. Um, obviously you didn't, uh, provide any 1 Cube guidance. Um, you know, can you just speak to um, you know, your expectations in terms of um, in terms of 1 Q? I mean, I guess, I guess flat down modestly up all that's in the um all that's in the calculus as we sit here in uh, in late January.
Uh, thank you, and, uh, good morning, Tim. I hope you can, uh, understand some of the confusion we have regarding Vince's retirement date, uh, since many of us had already assumed that he was. So, uh, appreciate your clarification there.
Yeah. Uh if Frank I by the way I I made that clarification not only for you but I made that clarification for this too.
Um, I want to, um, I want to drill into a little bit about the first quarter here, um,
so, um, I appreciate and I will publicly acknowledged that, uh,
You were right a year ago, that Aaron Rodgers would be better with us than anything. He could do with the Jets, so we'll leave that out there. Um,
so, so
Frank Mitsch: You know, can you just speak to, you know, your expectations in terms of Q1? I mean, I guess, flat down, modestly up, all that's in the calculus as we sit here in late January?
You know, can you just speak to, you know, your expectations in terms of Q1? I mean, I guess, flat down, modestly up, all that's in the calculus as we sit here in late January?
You know, in the script, not, I don't want to make too big a deal about it, but, you know, uh, in the script you you described the first half as being, uh, low single digit EPS growth and then, um, uh, in your comments this morning, you talked about it being flat to low single digits in the first half of the year. Um, obviously you didn't, uh, provide any 1 Q guidance. Um, you know, can you just speak to
look, here's the easiest way to say it. We're going to ramp up in our EPS growth. Uh, I, I, I said flat to low single digits for, uh, the first half. So, I would interpret that as flat-ish for q1 low. Single digits is for Q2 and then stronger in the second half of the year.
Tim Knavish: Yeah, yeah, Frank, by the way, I made that clarification not only for you, but I made that clarification for Vince, too. So, appreciate it. And I will publicly acknowledge that you were right a year ago, that Aaron Rodgers would be better with us than anything he could do with the Jets, so we'll leave that out there. So, look, here's the easiest way to say it: We're gonna ramp up in our EPS growth. I said flat to low single digits for the first half, so I would interpret that as flat-ish for Q1, low single digits-ish for Q2, and then stronger in the second half of the year.
Timothy Knavish: Yeah, yeah, Frank, by the way, I made that clarification not only for you, but I made that clarification for Vince, too. So, appreciate it. And I will publicly acknowledge that you were right a year ago, that Aaron Rodgers would be better with us than anything he could do with the Jets, so we'll leave that out there. So, look, here's the easiest way to say it: We're gonna ramp up in our EPS growth. I said flat to low single digits for the first half, so I would interpret that as flat-ish for Q1, low single digits-ish for Q2, and then stronger in the second half of the year.
Um, you know, your expectations in terms of, um, in terms of Q1. I mean, I get, I guess, flat, down, modestly up— all that's in the, um, all that's in the calculus as we sit here in, uh, in late January.
Your next question comes from the line of Mike Harrison with Seaport research Partners. Your line is open.
Yeah. Uh if Frank I by the way I I made that clarification not only for you but I made that clarification for this too. So um, I appreciate it and I will publicly acknowledged that uh you were right. A year ago that Aaron Rodgers would be better with us than anything. He could do with the Jets, so we'll leave that out there.
so, so
Look, here's the easiest way to say it. We're going to ramp up in our EPS growth. Uh, I—I said flat to low single digits for, uh, the first half. So, I would interpret that as flat-ish for Q1, low single digits-ish for Q2, and then stronger in the second half of the year.
Operator: Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open.
Operator: Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open.
Laurent Favre: Hi, good morning. Tim, in response to one of the first questions you were asked on this call, about organic growth and kind of what was running ahead of expectation, I was surprised to hear you not specifically mention China. It sounded a little bit like Asia Pacific was ahead of expectation. Can you talk about what you're seeing in China, and like in particular, what are you seeing, you know, as we're kind of heading into the Lunar New Year and expectation of a recovery post Lunar New Year? Thank you.
Mike Harrison: Hi, good morning. Tim, in response to one of the first questions you were asked on this call, about organic growth and kind of what was running ahead of expectation, I was surprised to hear you not specifically mention China. It sounded a little bit like Asia Pacific was ahead of expectation. Can you talk about what you're seeing in China, and like in particular, what are you seeing, you know, as we're kind of heading into the Lunar New Year and expectation of a recovery post Lunar New Year? Thank you.
Your next question comes from the line of Mike Harrison with Seaport research Partners. Your line is open.
Hi, good morning.
Hi. Good morning. Uh, Tim in response to 1 of the first questions you were asked on this call uh about organic growth and kind of what was running ahead of expectations. Uh I was surprised to hear you back specifically mentioned China. Uh it sounded a little bit like a specific was ahead of expectation. Um can you talk about what you're seeing in China and I guess what do you see? You know as we're cutting new year new year. Thank you. Yeah. Hey Mike, I'm glad you asked that question because I want to clarify. I was I was responding by, by business by vertical, uh, not as much by geography. So it's appreciate the opportunity to do that. Um, despite all the headlines we're growing in China,
We we we grew, we grew in.
2 4, in China and we'll grow in 2026 in China. Uh, you know, it's because we have a, a strong position of local for local businesses where, well, positioned in the kind of the right Industries. Um,
but more broadly asia-pacific is very strong for us because
Tim Knavish: Yeah. Hey, Mike, I'm glad you asked that question because I want to clarify. I was responding by business, by vertical, not as much by geography, so I appreciate the opportunity to do that. Despite all the headlines, we're growing in China. We grew in Q4 in China and will grow in 2026 in China. You know, it's because we have a strong position of local for local businesses. We're well positioned in the kind of right industries. But more broadly, Asia Pacific is very strong for us because India is doing great for us, parts of Southeast Asia are doing great for us.
Timothy Knavish: Yeah. Hey, Mike, I'm glad you asked that question because I want to clarify. I was responding by business, by vertical, not as much by geography, so I appreciate the opportunity to do that. Despite all the headlines, we're growing in China. We grew in Q4 in China and will grow in 2026 in China. You know, it's because we have a strong position of local for local businesses. We're well positioned in the kind of right industries. But more broadly, Asia Pacific is very strong for us because India is doing great for us, parts of Southeast Asia are doing great for us.
In response to 1 of the first questions you were asked on this call uh about organic growth and kind of what was running ahead of expectations. I was surprised to hear you, not specifically mentioned China China it sounded a little bit like a specific um talk about what you're seeing in China and I guess regular, what do you see? You know, as we're New Year, New Year Eve? Yeah. Hey Mike, I'm glad you asked that question because I want to clarify. I was, I was responding by, by business by vertical, uh, not as much by geography. So it's appreciate the opportunity to do that. Um, despite all the headlines, we, we we're growing in China.
We grew, we grew.
India is doing great for us. Uh parts of Southeast Asia are doing great for us. So if you look at specifically China going forward and you know, we'll we'll see you know, low single digits kind of growth, maybe mid single digits kind of growth in 2026. So it's not the, it's not the growth of a decade ago, but it's also not the gloom and doom that you see, at least for our portfolio because we're in the right places with the right kind of offering for the customers. Um, you know, the if you move to India,
In 2024 in China, and we'll grow in 2026 in China. You know, it's because we have a strong position of local-for-local businesses where we're well positioned in the kind of the right industries.
But more broadly, Asia-Pacific is very strong for us because
You know, India is delivered double digit growth for us. Um, it throughout most of 2025, we expect that to continue into 2026. So part of that overall asia-pacific, um, story
Tim Knavish: So if you look at specifically China going forward, you know, we'll see, you know, low single digits kind of growth, maybe mid single digits kind of growth in 2026. So it's not the, it's not the growth of a decade ago, but it's also not the gloom and doom that you see, at least for our portfolio, because we're in the right places with the right kind of offering for the customers. If you move to India, you know, India has delivered double-digit growth for us throughout most of 2025. We expect that to continue into 2026. So part of that overall Asia Pacific story is China still putting up growth numbers, India contributing with double-digit growth numbers.
So if you look at specifically China going forward, you know, we'll see, you know, low single digits kind of growth, maybe mid single digits kind of growth in 2026. So it's not the, it's not the growth of a decade ago, but it's also not the gloom and doom that you see, at least for our portfolio, because we're in the right places with the right kind of offering for the customers. If you move to India, you know, India has delivered double-digit growth for us throughout most of 2025.
Is is our is China. Still putting up growth numbers?
India contributing with double digit growth numbers.
Your next question comes from the line of Eric with Eric. Your line is open. Your line is open.
Not the, it's not the growth of a decade ago, but it's also not the gloom and doom that you see, at least for our portfolio because we're in the right places with the right kind of offering for the customers.
Um, you know, the—if you move to India,
We expect that to continue into 2026. So part of that overall Asia Pacific story is China still putting up growth numbers, India contributing with double-digit growth numbers.
You know, India has delivered double-digit growth for us. Throughout most of 2025, we expect that to continue into 2026. So that's part of that overall Asia-Pacific story.
Thanks, good morning. Um, my question is my question is back to Arrow. Um, appreciate the intra business, mix breakdown is Arrow. Becomes a bigger percentage of the segment from a profitability and margin standpoint. How would you rank order Aero Coatings transparencies and sealants and then maybe also on customer mix military versus GNA commercial. And then I think you mentioned the the OEM Tailwind. But how do you see the product mix for transparency and sealants of evolving in 26 and Beyond, thanks.
Is China still putting up growth numbers?
India contributing with double-digit growth numbers.
Operator: ... Your next question comes from the line of Eric Boyd with Evercore ISI. Your line is open.
Operator: ... Your next question comes from the line of Eric Boyd with Evercore ISI. Your line is open.
Hey Eric, this is Vince uh as we've never done we don't give our inter business profitability by product.
Eric Boyd: Thanks. Good morning. My question is back to Aero. Appreciate the inter-business mix breakdown as Aero becomes a bigger percentage of the segment. From a profitability and margin standpoint, how would you rank order Aero coatings, transparencies, and sealants? And then maybe also on customer mix, military versus GNA commercial. And then I think you mentioned the OEM tailwinds, but how do you see the product mix for transparencies and sealants evolving in 2026 and beyond? Thanks.
Eric Boyes: Thanks. Good morning. My question is back to Aero. Appreciate the inter-business mix breakdown as Aero becomes a bigger percentage of the segment. From a profitability and margin standpoint, how would you rank order Aero coatings, transparencies, and sealants? And then maybe also on customer mix, military versus GNA commercial. And then I think you mentioned the OEM tailwinds, but how do you see the product mix for transparencies and sealants evolving in 2026 and beyond? Thanks.
Your next question comes from the line of Eric. Your line is open. Your line is open.
Or buy End Market, as Tim said in his opening remarks or in 1 of the Q&A questions, it's certainly 1 of our better performing businesses due to the technology and specification requirements.
Vince Morales: Hey, Eric, this is Vince. As we've never done, we don't give our inter-business profitability by product or by end market. As Tim said in his opening remarks from one of the Q&A questions, it's certainly one of our better performing businesses due to the technology and specification requirements. So, but we're not gonna give product-specific profitability.
Vincent Morales: Hey, Eric, this is Vince. As we've never done, we don't give our inter-business profitability by product or by end market. As Tim said in his opening remarks from one of the Q&A questions, it's certainly one of our better performing businesses due to the technology and specification requirements. So, but we're not gonna give product-specific profitability.
Thanks. Good morning. Um my question is my question back to Arrow. Um appreciate the in business, mixed breakdown is Arrow becomes a bigger percentage of the segment from a profitability and margin standpoint. How would you rank order Aero Coatings transparencies and sealants and then maybe also on customer mix military versus GMA and Commercial and then I think you mentioned the the OEM Tailwind. But how do you see the product mix for transparencies and sealants evolving in 26 and Beyond? Thanks.
Hey Eric, this is Vince uh as we've never done we don't give our inter business profitability by product.
Our Buy End Market, as Tim said in his opening remarks or in one of the Q&A questions, is certainly one of our better-performing businesses due to the technology and specification requirements.
Tim Knavish: Yeah, and as far as some of your other questions, mix of OEM, military, and general aviation, I think we provided that pie chart, and the growth rates among those three are very similar, which helps the portfolio. And to Vince's point, look, we're giving more detail on aerospace, because we don't believe it's fully understood, because we have a competitor that has a very good aerospace coatings business. I'll give them props, they've got a very good aerospace coatings business. This is much more than that, and as I said in my opening comments, coatings is actually the minority of our total profile here. So I don't know if I've addressed all your questions.
Timothy Knavish: Yeah, and as far as some of your other questions, mix of OEM, military, and general aviation, I think we provided that pie chart, and the growth rates among those three are very similar, which helps the portfolio. And to Vince's point, look, we're giving more detail on aerospace, because we don't believe it's fully understood, because we have a competitor that has a very good aerospace coatings business. I'll give them props, they've got a very good aerospace coatings business. This is much more than that, and as I said in my opening comments, coatings is actually the minority of our total profile here.
Pie chart and the growth rates among those 3 are very similar, uh, with which, which helps helps support folio. And to finish this point, look, we we get we're giving more detail on Aerospace, uh, because we don't believe it's fully understood because we have a competitor that has a very, I'll give them props. They've got a very good Aerospace Coatings business. This is much more than that, and as I said in my opening, comments, codings is actually the minority of of our total profile here. Um, so I don't know if I've addressed all your, all your questions. I, I know you're particularly interested here because I believe you're a pilot or a Air Force pilot. So uh we be happy to show you how we make f30 podcast canopies someday or F-16 canopies. Not sure which bird you flew.
yeah, and if you look again by and Market
Uh, we, we do sell to OEM, we sell to Military and general aviation.
All those markets right now are sold out.
All the products we have are sold out. Hence, the capital increase we've had the last couple of years,
Timothy Knavish: So I don't know if I've addressed all your questions. I know you're particularly interested here because I believe you're a pilot or an Air Force pilot. So, we're happy to show you how we make F-35 canopies someday, or F-16 canopies. Not sure which bird you flew.
Tim Knavish: I know you're particularly interested here because I believe you're a pilot or an Air Force pilot. So, we're happy to show you how we make F-35 canopies someday, or F-16 canopies. Not sure which bird you flew.
So, but we're not going to give product specific profitability. Yeah. As far as some of your other questions, um, mix of of OEM military and a or, uh, general aviation. I think we, we provided that pie chart and the growth rates among those 3 are very similar, uh, with which which, which helps helps support folio. And to finish this point look, we get we're giving more detail on Aerospace, uh, because we don't believe it's fully understood because we have a competitor that has a very, I'll give them props. They've got a very good Aerospace coding business. This is much more than that. And as I said in my opening, comments, codings is actually the minority of of our total profile here. Um, so I don't know if I've addressed all your, all your questions. I, I know you're particularly interested here because I believe you're a pilot or a Air Force pilot. So, uh,
Vince Morales: Yeah, and if you look again by end markets, we do sell to OEM, we sell to military and general aviation. All those markets right now are sold out. All the products we have are sold out, hence the capital increase we've had the last couple of years. Also the operating expense increases. We have folks trying to debottleneck our existing operations. These operations are specified and qualified, so they do require significant handholding as we change processes.
Vincent Morales: Yeah, and if you look again by end markets, we do sell to OEM, we sell to military and general aviation. All those markets right now are sold out. All the products we have are sold out, hence the capital increase we've had the last couple of years. Also the operating expense increases. We have folks trying to debottleneck our existing operations. These operations are specified and qualified, so they do require significant handholding as we change processes.
Be happy to show you how we make F-35 canopies someday, or F-16 canopies. Not sure which Spurr you flew.
Also, the operating expense increase as we have. Uh, folks trying to debottlenecking operations of these operations are are, are specified and qualified, so they they do require, uh, significant handholding as we change processes. Yeah. And 1 more point and then we can move on. But it's also significant R&D in this business. Uh, that's why we're able to command. Uh, a better margin better than better than risk of of or better than many parts of our portfolio because of the significant long cycle R&D investment that it takes to win in this space.
Yeah, if you look again by end market, uh, we do sell to OEM, we sell to military, and general aviation.
Your next question comes from the line of James Hooper with Bernstein. Your line is open.
All those markets right now are sold out.
All the products we have are sold out. Hence, the capital increase we've had the last couple of years.
Tim Knavish: Yeah, and one more point, and then we can move on, but it's also significant R&D in this business. That's why we're able to command a better margin, better than the rest of, or better than many parts of our portfolio, because of the significant long cycle R&D investment that it takes to win in this space.
Timothy Knavish: Yeah, and one more point, and then we can move on, but it's also significant R&D in this business. That's why we're able to command a better margin, better than the rest of, or better than many parts of our portfolio, because of the significant long cycle R&D investment that it takes to win in this space.
Also, the operating expenses increase as we have, uh, folks trying to debottlenecking operations. These operations are are are specified and qualified so they they do require uh, significant handholding as we change processes. Yeah. And 1 more point and then we can move on. But it's also significant R&D in this business.
Good morning guys. Thanks very much for for the question, my questions on auto OEM in the share games. There. Can you unpack a few more of the drivers for us? Please, um, is this to do with kind of your positioning in China, uh, or is, is it to do with your customers, gaining share of the auto market? And can you give us a little update about some of the technology offering there is? Is that a driver of share games? Thanks, yeah.
Uh, that's why we're able to command, uh, a better margin better than better than risks of of, for better than many parts of our portfolio because of the significant long cycle R&D investment that it takes to win in this space.
Operator: Your next question comes from the line of James Hooper with Bernstein. Your line is open.
Operator: Your next question comes from the line of James Hooper with Bernstein. Your line is open.
Your next question comes from the line of James Hooper with Bernstein. Your line is open.
James Hooper: Good morning, guys. Thanks very much for the question. My question's on auto OEM and the share gains there. Can you unpack a few more of the drivers for us, please? Is this to do with kind of your positioning in China, or is it to do with your customers gaining share of the auto OEM market? And can you give us a little update about some of the technology offering there? Is that a driver of share gains? Thanks.
James Hooper: Good morning, guys. Thanks very much for the question. My question's on auto OEM and the share gains there. Can you unpack a few more of the drivers for us, please? Is this to do with kind of your positioning in China, or is it to do with your customers gaining share of the auto OEM market? And can you give us a little update about some of the technology offering there? Is that a driver of share gains? Thanks.
Tim Knavish: Yeah. Yeah, thank you, James. It's a little bit of all of those. I mentioned there is some element of customer mix there, where one of our customers, where we have a fairly large share wallet, had a rough couple of years. They're recovering now, and that helps us to some degree. But most of what we're winning on, we've been introducing, you know, lower cure products. We've got a new electric coat product out there that is, you know, bring more productivity, and some sustainability benefits to our customers. We've been doing very well with automotive parts in that business.
Timothy Knavish: Yeah. Yeah, thank you, James. It's a little bit of all of those. I mentioned there is some element of customer mix there, where one of our customers, where we have a fairly large share wallet, had a rough couple of years. They're recovering now, and that helps us to some degree. But most of what we're winning on, we've been introducing, you know, lower cure products. We've got a new electric coat product out there that is, you know, bring more productivity, and some sustainability benefits to our customers. We've been doing very well with automotive parts in that business.
Good morning, guys. Thank you very much for the question. My questions on auto OEM and the share games there. Can you unpack a few more of the drivers for us? Please, um, is this to do with kind of your positioning in China, uh, or is, is it to do with your customers gaining share of the Autumn market? And can you give us a little update about some of the technology offering there is? Is that a driver of share games? Thanks, yeah.
Yeah. Thank you James. Uh, it's it's a little bit of all of those. Uh, I mentioned there is, is a some element of customer mix there where, uh, 1 of our customers, where we have a fairly large, share wallet at a rough couple of years. They're, they're, they're recovering now and that helps us, uh, to some degree. But most of what we're winning on, uh, we've been introducing, you know, lower cure products. We've got a, a new electric code product out there. That is, that is, that is, you know, bring more productivity, uh, and and so sustainability benefits to our to our customers. Uh, we've been doing very well with Automotive Parts. In that business. Uh, we've been doing well with, uh, particular large, EV manufacturer based in China who, uh, you know, despite despite some headlines of what's happening to the E, EV Market is doing very well both domestically and and exports. Uh, not to the
But to many many other countries. So it's a combination of some customer mix.
some new technology wins and some uh as as Alicia, who runs a business for us calls it
Targeting the win with the winners partnering with those that are going to win in the marketplace in developing and bringing them their best value proposition and a growing with them.
Tim Knavish: We've been doing well with particular large EV manufacturer based in China, who you know, despite, despite some headlines, what's happening to the EV, EV market, is doing very well, both domestically and, and exports, not to the US obviously, but to many, many other countries. So it's a combination of some customer mix, some new technology wins, and some, as, as Alisha, who runs the business for us, calls it, targeting the win with the winners, partnering with those that are gonna win in the marketplace, and developing and bringing them their best value proposition, and then growing with them.
We've been doing well with particular large EV manufacturer based in China, who you know, despite, despite some headlines, what's happening to the EV, EV market, is doing very well, both domestically and, and exports, not to the US obviously, but to many, many other countries. So it's a combination of some customer mix, some new technology wins, and some, as, as Alisha, who runs the business for us, calls it, targeting the win with the winners, partnering with those that are gonna win in the marketplace, and developing and bringing them their best value proposition, and then growing with them.
Out there that is, that is, that is, you know, bringing more productivity, uh, and, and so, sustainability benefits to our—to our customers. Uh, we've been doing very well with automotive parts in that business. Uh, we've been doing well with a particular large EV manufacturer based in China, who, uh, you know, despite, despite some headlines of what's happening to the EV market, is doing very well both domestically and—and exports, uh, not to the US, obviously, but to many, many other countries. So it's a combination of some customer mix.
Yeah, as we said all year we, we did pick up some significant share in South America, uh, as 1 of our competitors exited the market. Uh, We've realized a full quarterly benefit of that. In Q4, we had some benefit in Q3 full quarterly benefit in Q4, that'll carry over into the first half of 2026. We've also got, as I said, in my opening remarks, in addition to the carryover. There's a there's another significant double-digit Millions, share wins that will launch throughout 22 2026 that we want in late 2025.
Some new technology wins and some, uh, as as Alicia who runs a business Force calls it.
Your next question comes from the line of Patrick Cunningham with Citi group, your line is open.
Vince Morales: Yeah, as we said all year, we did pick up some significant share in South America, as one of our competitors exited the market. We've realized the full quarterly benefit of that in Q4. We had some benefit in Q3, full quarterly benefit in Q4. That'll carry over into the first half of 2026.
Vincent Morales: Yeah, as we said all year, we did pick up some significant share in South America, as one of our competitors exited the market. We've realized the full quarterly benefit of that in Q4. We had some benefit in Q3, full quarterly benefit in Q4. That'll carry over into the first half of 2026.
Targeting the win with the winners partnering with those that are going to win in the marketplace in developing and bringing them their best value proposition and a growing with them.
Across the platform.
Tim Knavish: We've also got, as I said in my opening remarks, in addition to the carryover, there's another significant double-digit millions share wins that will launch throughout 2026, that we won in late 2025.
Timothy Knavish: We've also got, as I said in my opening remarks, in addition to the carryover, there's another significant double-digit millions share wins that will launch throughout 2026, that we won in late 2025.
Yeah, as we said all here, we we did pick up some significant share in South America, uh, as 1 of our competitors exited the market. Uh, We've realized a full quarterly benefit of that. In Q4, we had some benefit in Q3 full quarterly benefit in Q4, that'll carry over into the first half of 2026. We've also got, as I said, in my opening remarks, in addition to the carryover. There's a there's another significant double-digit Millions, share wins that will launch throughout 2 202.
Yeah, Patrick this is Vince just really 2 factors there. You know, Tim mentioned, 11 consecutive quarters of of volume growth, organic growth, that that that's compounding. So we're running up against some very difficult comparables. Uh, this is a project-oriented business.
6 that we want in late 2025,
Operator: Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open.
Operator: Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open.
Eric Boyd: Hi, good morning. Thanks for taking my question. Just a quick one on protective and marine. You seem to call out normalization to industry growth rates. It seems like you still have some nice marine products that are ramping up, so are there any share losses offsetting in 2026?
Patrick Cunningham: Hi, good morning. Thanks for taking my question. Just a quick one on protective and marine. You seem to call out normalization to industry growth rates. It seems like you still have some nice marine products that are ramping up, so are there any share losses offsetting in 2026? And what would you expect this, the overall industry growth rate to be across the platform?
Your next question comes from the line of Patrick Cunningham with Croup. Your line is open.
So as projects roll off, we have to win new projects. Uh so so those are 2 of the factors. Uh, we do feel good about our technology as you mentioned, that's going to continue to allow us to carry the day and and do specifically mention
Marine is a particular area of strength for us right now.
Patrick Cunningham: ... And what would you expect this, the overall industry growth rate to be across the platform?
we've, uh, we've been disproportionately winning in, uh, aftermarket all, you know, dry docks because of our Sigma Glide, uh,
Technology.
Vince Morales: Yeah, Patrick, this is Vince. Just really two factors there. You know, Tim mentioned 11 consecutive quarters of volume growth, organic growth. That's compounding, so we're running up against some very difficult comparables. This is a project-oriented business, so as projects roll off, we have to win new projects. So those are two of the factors. We do feel good about our technology, as you mentioned, that's gonna continue to allow us to carry the day.
Vincent Morales: Yeah, Patrick, this is Vince. Just really two factors there. You know, Tim mentioned 11 consecutive quarters of volume growth, organic growth. That's compounding, so we're running up against some very difficult comparables. This is a project-oriented business, so as projects roll off, we have to win new projects. So those are two of the factors. We do feel good about our technology, as you mentioned, that's gonna continue to allow us to carry the day.
Hi, good morning. Thanks for taking my question. Uh, just a quick one on Protective, and Marine you seem to call out normalization to industry growth rates. It seems like you still have some nice Marine products that are ramping up. So, are there any share losses offsetting in 2026? And what would you expect this overall industry growth rate to be across the platform?
This year we've also been disproportionately winning in Asia new bills. So Marine continues to be a real strength for us as well. Been on the protective side. Some of our Specialty fireproofing Products.
Yeah, Patrick this is Vince just really 2 factors there. You know, Tim mentioned, 11 consecutive quarters of of volume growth, organic growth, that that that's compounding. So we're running up against some very difficult comparables. Uh, this is a projector oriented business.
Your next question comes from the line of Arun, vizo aeon, with RBC Capital markets. Your line is open.
Great. Thanks for taking my question. Uh, congrats on the impending retirement events. Great, great. We're working with you over the last several years. Um,
Tim Knavish: And you specifically mentioned marine. Marine is a particular area of strength for us right now. We've been disproportionately winning in aftermarket, also, you know, dry docks, because of our SigmaGlide technology. This year, we've also been disproportionately winning in Asia new builds. So marine continues to be a real strength for us as well, then on the protective side, some of our specialty fireproofing products.
Timothy Knavish: And you specifically mentioned marine. Marine is a particular area of strength for us right now. We've been disproportionately winning in aftermarket, also, you know, dry docks, because of our SigmaGlide technology. This year, we've also been disproportionately winning in Asia new builds. So marine continues to be a real strength for us as well, then on the protective side, some of our specialty fireproofing products.
so, I guess, first off, uh,
So as projects roll off, we have to win new projects. Uh so so those are 2 of the factors. Uh, we do feel good about our technology as you mentioned, that's going to continue to allow us to carry the day and and do specifically mention
marine marine is a particular area of strength for us right now, we've, uh, we've been disproportionately winning in, uh, aftermarket all, you know, dry docks because of our Sigma Glide, uh,
Technology.
This year we've also been disproportionately winning in Asia new bills. So Marine continues to be a real strength for us as well. Been on the protective side, some of our specialty bar proofing products.
Operator: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.
Operator: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.
Your next question comes from the line of Arun, vizo aeon, with RBC Capital markets.
Arun Viswanathan: Great. Thanks for taking my question. Congrats on the impending retirement, Vince. Great, great, we're working with you over the last several years. So I guess, first off, just, just wanted to dig back into the operating leverage and corporate expense question. So it looks like you're guiding to about 4% EPS growth. If I back into it, it looks like about 3% EBITDA growth, and, as you show on the slide, flat to low single digit up organic growth. So, I think you mentioned price would be slightly positive, so that would kind of imply flattish to maybe even slightly down volumes. Is that correct? And then, I guess, as a follow-on, is it really that volume number that we need to see go higher that would drive the operating leverage?
Arun Viswanathan: Great. Thanks for taking my question. Congrats on the impending retirement, Vince. Great, great, we're working with you over the last several years. So I guess, first off, just, just wanted to dig back into the operating leverage and corporate expense question. So it looks like you're guiding to about 4% EPS growth. If I back into it, it looks like about 3% EBITDA growth, and, as you show on the slide, flat to low single digit up organic growth. So, I think you mentioned price would be slightly positive, so that would kind of imply flattish to maybe even slightly down volumes. Is that correct?
Your line is open.
Great. Thanks for taking my question. Uh, congrats on the, uh, impending retirement events. Uh, great great work with you over the last several years. Um,
So, I guess, first off, uh,
Uh, just just wanted to dig back into the operating leverage and corporate expense. Uh, question. So it looks like you're guiding to about 4%, EPS growth. Um, if I back into it looks like about 3%, ebit dog growth. And, um, as you show on the slide flat to low single digit up uh, organic growth. So uh, I think you mentioned price would be slightly positive. So that would kind of imply flattish to maybe even slightly down volumes uh is that correct and then I guess um as a follow on uh is it really that volume number that we need to see go higher that would drive the operating leverage or are the corporate expenses going to be structurally higher and kind of mute that uh as you know, in in the foreseeable future. How how do we kind of get to the point where you do see kind of a lot of the the fruits of your labor um paying off. And and you see that, that actual EPS growth uh come through thanks.
Yeah. Yeah.
The first 1 fill in the details. You know, first we're not seeing structural change in our corporate expense going on, right? That's or going forward, then then we'll explain that. The biggest issue with
Arun Viswanathan: And then, I guess, as a follow-on, is it really that volume number that we need to see go higher that would drive the operating leverage? Or are the corporate expenses gonna be structurally higher and kind of mute that, as you know, in the foreseeable future? How do we kind of get to the point where you do see kind of a lot of the fruits of your labor paying off, and you see that actual EPS growth come through? Thanks.
Arun Viswanathan: Or are the corporate expenses gonna be structurally higher and kind of mute that, as you know, in the foreseeable future? How do we kind of get to the point where you do see kind of a lot of the fruits of your labor paying off, and you see that actual EPS growth come through? Thanks.
Uh, just just wanted to dig back into the operating leverage and corporate expense. Uh, question. So it looks like you're guiding to about 4%, EPS growth. Um, if I back into it looks like about 3%, ebit, dog growth. And, um, as you show on the slide flat to low single digit up uh, organic growth. So I I think you mentioned price would be slightly positive. So that would kind of imply flattish to maybe even slightly down volumes uh is that correct and then I guess um as a follow on uh is it really that volume number that we need to see go higher that would drive the operating leverage or are the corporate expenses going to be structurally higher and kind of mute that uh as you know, in in the foreseeable future. How how do we kind of get to the point where you do see kind of a lot of the, the fruits of your labor, um, paying off. And and you see that that actually EPS growth
Tim Knavish: Yeah, yeah. Thanks, Arun. I'll take it first, then Vince will fill in the details. You know, first, we're not seeing structural change in our corporate expense going on, right? That's, or going forward, Vince, Vince will explain that. The biggest issue with our lack of leverage with the volume growth that we're getting today is first, second, and third, the refinish destocking, because it's just such a strong margin for us that a lot of the other gains, until that stabilizes. And you'll see it in the second half of the year as normalization happens there. But that's like kind of number one, number two, and number three, as the reasons why you're not seeing more leverage. We'll continue to gain incremental volume going forward, and that'll bring incremental leverage. Pricing will bring incremental leverage.
Timothy Knavish: Yeah, yeah. Thanks, Arun. I'll take it first, then Vince will fill in the details. You know, first, we're not seeing structural change in our corporate expense going on, right? That's, or going forward, Vince, Vince will explain that. The biggest issue with our lack of leverage with the volume growth that we're getting today is first, second, and third, the refinish destocking, because it's just such a strong margin for us that a lot of the other gains, until that stabilizes. And you'll see it in the second half of the year as normalization happens there.
Come through, thanks.
Our, uh, our lack of Leverage with the volume growth that we're getting. Today, is first second and third, the refinished D stocking because it's just such a, such a strong margin for us that a lot of the other gains until that stabilizes. And you'll see it in the second second half of the year as normalization happens there. But that's that's like kind of number 1. Number 2, and number 3 is the reasons why you're not seeing more leverage, we'll continue to gain, um, incremental volume going forward and that'll bring incremental. Leverage pricing will bring incremental leverage. We've got the cost outs, which will continue bringing incremental, leverage, and the second half of 2025, all those happen, but they got overshadowed by 2 things.
Uh, 1, the refinished D stocking and 2.
Yeah, yeah. Thanks. I'll take it first Lynn pencil fill in the details. You know, first we're not seeing structural change in our corporate expense going on, right? That's or going forward, Vince will explain that the biggest issue with
Corporate and interest. So with that, let me throw out to Vince and fill in the details. Yeah. Rude. If you look at 2026 first 2025,
But that's like kind of number one, number two, and number three, as the reasons why you're not seeing more leverage. We'll continue to gain incremental volume going forward, and that'll bring incremental leverage. Pricing will bring incremental leverage. We've got the cost outs, which will continue, bringing incremental leverage. In the second half of 2025, all those happened, but they got overshadowed by two things. One, the refinish destocking, and two, corporate interest. So with that, let me throw it to Vince and fill in the details.
Couple. It's the segments are going to grow uh mid single digits are higher in aggregate in terms of segments earnings. Uh we do have higher interest costs like most companies, we have some very low-cost debt rolling off. We have 3 maturities 2, maturities in 2025, roll off.
Tim Knavish: We've got the cost outs, which will continue, bringing incremental leverage. In the second half of 2025, all those happened, but they got overshadowed by two things. One, the refinish destocking, and two, corporate interest. So with that, let me throw it to Vince and fill in the details.
Second half of the year as normalization happens there. But that's that's like kind of number 1. Number 2, and number 3 is the reasons why you're not seeing more leverage, we'll continue to gain, um, incremental volume going forward and that'll bring incremental. Leverage pricing will bring incremental leverage. We've got the cost outs, which will continue bringing incremental, leverage, and the second half of 2025, all those happen, but they got overshadowed by 2 things.
Uh, one, the refinished stocking, and two.
Vince Morales: Yeah, Arun, if you look at 2026 versus 2025, the segments are gonna grow mid-single digits or higher in aggregate in terms of segment earnings. We do have higher interest costs, like most companies. We have some very low cost debt rolling off. We have 3 maturities; 2 maturities in 2025 roll off. We have another maturity in early 2026 roll off. We're replacing that in kind in absolute dollars, but not at the same interest rate. So unfortunately, our interest costs are higher in 2026 versus 2025. In addition, most companies are also seeing this; we're seeing a slight increase in our tax rate, and that's driven around a variety of different factors, especially in different jurisdictions.
Vincent Morales: Yeah, Arun, if you look at 2026 versus 2025, the segments are gonna grow mid-single digits or higher in aggregate in terms of segment earnings. We do have higher interest costs, like most companies. We have some very low cost debt rolling off. We have 3 maturities; 2 maturities in 2025 roll off. We have another maturity in early 2026 roll off. We're replacing that in kind in absolute dollars, but not at the same interest rate. So unfortunately, our interest costs are higher in 2026 versus 2025.
Corporate and interest. So with that, let me throw out to Vincent and fill in the details. Yeah, rude. If you look at 2026 first 2025,
We have another maturity in early 26, roll off, we're replacing that in kind in absolute dollars, but not at the same interest rate. So unfortunately our interest costs are higher in 26 or 25 in addition, and most companies are also seeing this. We're seeing a slight increase in our tax rate, uh, and that's driven around a variety of different factors, especially in different jurisdictions. So the, those 2 items are are a bit of a detractor, but the segment results we are seeing growth in in, in year-over-year in 2026.
Your next question comes from the line of Lawrence Alexander with Jefferies LLC. Your line is open.
A couple of the segments are going to grow mid-single digits or higher in aggregate in terms of segment earnings. We do have higher interest costs. Like most companies, we have some very low-cost debt rolling off. We had three mature, two mature in 2025, roll off.
Good morning. Just, uh, 2 quick ones. Um, first on the AI Investments given its a large, your leveraging internal projects. Do you have enough data to see what your paybacks are like, on incremental Investments?
In addition, most companies are also seeing this; we're seeing a slight increase in our tax rate, and that's driven around a variety of different factors, especially in different jurisdictions. So those two items are a bit of a detractor, but the segment results, we are seeing growth year-over-year in 2026.
Contra cyclical. Um, you know, if if demand accelerates, you expect the rate of share, getting to accelerate,
Vince Morales: So those two items are a bit of a detractor, but the segment results, we are seeing growth year-over-year in 2026.
Yeah, yeah, Lawrence uh uh let me take both and Vince can fill in anything the AI. So first of all, I still it's still early days, right? We are um,
We have another maturity in early 26, roll off, we're replacing that in kind and absolute dollars, but not at the same interest rate. So unfortunately our interest costs are higher in 26 verse 25, in addition, and most companies are also seeing this. We're seeing a slight increase in our tax rate, uh, and that's driven around a variety of different factors, especially in different jurisdictions. So the, those 2 items are are a bit of a detractor, but the segment results we are seeing growth in in year-over-year.
Year in 2026.
Operator: Your next question comes from the line of Lawrence Alexander with Jefferies LLC. Your line is open.
Operator: Your next question comes from the line of Lawrence Alexander with Jefferies LLC. Your line is open.
Patrick Cunningham: Good morning. Just two quick ones. First, on the AI investments, given you're leveraging internal projects, do you have enough data to see what your paybacks are like on incremental investments? And secondly, on the share gains in industrial, do you expect those to be pro or contra cyclical? You know, if demand accelerates, you expect the rate of share gain to accelerate?
Laurence Alexander: Good morning. Just two quick ones. First, on the AI investments, given you're leveraging internal projects, do you have enough data to see what your paybacks are like on incremental investments? And secondly, on the share gains in industrial, do you expect those to be pro or contra cyclical? You know, if demand accelerates, you expect the rate of share gain to accelerate?
Your next question comes from the line of Lawrence Alexander with Jefferies LLC. Your line is open.
Yeah. Part of our increase in in operating expense and capital expense is because of the, the AI, we've got a few runs on the board that have
Good morning. Just, uh, 2 quick ones. Um, first on the AI Investments given its a, your leveraging internal projects. Do you have enough data to see what your paybacks are like, on incremental Investments?
Um, and secondly on the share gains in industrial, do you expect those to be Pro Contra cyclical? Um, you know, if if demand accelerates to expected rate of share, gain to accelerate
Tim Knavish: Yeah. Yeah, Lawrence. Let me take both, and Vince can fill in anything. The AI, so first of all, it's still, it's still early days, right? We are... Yeah, part of our increase in operating expense and capital expense is because of the AI. We've got a few runs on the board that have delivered millions to the bottom line, not yet material to the company, but very favorable early indicators relative to the investments that we made, that this will be a very good ROI for us as we go forward. And you consider the fact that we only, "only" optimize 50 formulas that are commercialized so far, and we've only launched one that was AI developed so far.
Timothy Knavish: Yeah. Yeah, Lawrence. Let me take both, and Vince can fill in anything. The AI, so first of all, it's still, it's still early days, right? We are... Yeah, part of our increase in operating expense and capital expense is because of the AI. We've got a few runs on the board that have delivered millions to the bottom line, not yet material to the company, but very favorable early indicators relative to the investments that we made, that this will be a very good ROI for us as we go forward.
delivered, Millions to the bottom line, not yet material to the company, but very favorable early indicators, relative to the Investments that we made, that this will be a very good Roi for us as we go forward. And you consider the fact that we've only only air quotes optimized 50 formulas that are commercialized so far. And we've only launched 1 that was AI developed so far. And if you look at the size of our pipeline, uh, the materiality is yet to come, but
Yeah, yeah, Lawrence uh uh, let me take both and Vince can fill in anything the AI. So first of all, I'm still it's still early days, right? We are um,
Even today, we are booking savings uh, to the bottom line uh with with what's already been launched. So very confident in the ROI going forward,
yeah, on the on the industrial side, Lawrence
Yeah, part of our increase in operating expense and capital expense is because of the AI. We've got a few runs on the board that have
Timothy Knavish: And you consider the fact that we only, "only" optimize 50 formulas that are commercialized so far, and we've only launched one that was AI developed so far. If you look at the size of our pipeline, the materiality is yet to come, but even today, we're booking savings to the bottom line with what's already been launched. So very confident in the ROI going forward.
Tim Knavish: If you look at the size of our pipeline, the materiality is yet to come, but even today, we're booking savings to the bottom line with what's already been launched. So very confident in the ROI going forward.
Delivered millions to the bottom line—not yet material to the company, but very favorable early indicators, relative to the investments that we made, that this will be a very good ROI for us as we go forward. And you consider the fact that we've only—only, air quotes—optimized 50 formulas that are commercialized so far. And we've only launched one. That was a
Uh, we would expect our share gains to be additive if there's a cyclical recovery here. As Tim mentioned earlier, this is 1 of our early warning, businesses both up and down, kind of the canary and the coal. Mine we have seen in past and expect at some point, green shoots in this business. And then with our share gains and Technology offerings, on top of that would expect it to be added.
There are no further questions at this time.
I will now turn the call back over to Alex Lopez.
Thank you Warren. We appreciate your interest and confidence in PPE. This concludes our fourth quarter earning School.
Vince Morales: Yeah, on the industrial side, Lawrence, we would expect our share gains to be additive if there's a cyclical recovery here. As Tim mentioned earlier, this is one of our early warning businesses, both up and down, kind of the canary in the coal mine. We have seen in past and expect at some point green shoots in this business, and then with our share gains and technology offerings on top of that, would expect it to be additive.
Vincent Morales: Yeah, on the industrial side, Lawrence, we would expect our share gains to be additive if there's a cyclical recovery here. As Tim mentioned earlier, this is one of our early warning businesses, both up and down, kind of the canary in the coal mine. We have seen in past and expect at some point green shoots in this business, and then with our share gains and technology offerings on top of that, would expect it to be additive.
Developed so far. And if you look at the size of our pipeline, the materiality is yet to come, but even today, we are booking savings to the bottom line with what's already been launched. So, very confident in the ROI going forward.
This concludes today's conference call, you may now disconnect
Yeah, on on the, on the industrial side. Lawrence
Uh, we would expect our share gains to be additive if there's a cyclical recovery here. As Tim mentioned earlier, this is one of our early warning businesses, both up and down, and kind of the canary in the coal mine. We have seen in the past and expect at some point green shoots in this business. And then with our share gains and technology—
Offerings. On top of that, would expect it to be out of it.
Operator: There are no further questions at this time. I will now turn the call back over to Alex Lopez.
Operator: There are no further questions at this time. I will now turn the call back over to Alex Lopez.
There are no further questions at this time.
Alex Lopez: Thank you, Warren. We appreciate your interest and confidence in PPG. This concludes our fourth quarter earnings call.
Alex Lopez: Thank you, Warren. We appreciate your interest and confidence in PPG. This concludes our fourth quarter earnings call.
I will now turn the call back over to Alex Lopez.
Thank you Warren. We appreciate your interest and confidence in PPE. This concludes our fourth quarter earning School.
Operator: This concludes today's conference call. You may now disconnect.
Operator: This concludes today's conference call. You may now disconnect.
This concludes today's conference call, you may now disconnect
