PPG Industries (PPG) 20 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

John Bruno	Director, Investor Relations
Michael McGarry	Chairman and Chief Executive Officer
Vince Morales	Senior Vice President and Chief Financial Officer
Tom Glinski	Goldman Sachs
John McNulty	BMO
Ghansham Panjabi	Baird
John Roberts	UBS
Frank Mitsch	Fermium Research
Michael Sison	Wells Fargo
Chris Parkinson	Credit Suisse
Kevin McCarthy	Vertical Research
David Begleiter	Deutsche Bank
P.J. Juvekar	Citi
Laurent Favre	Exane BNP Paribas
Jim Sheehan	Truist Securities
Jeff Zekauskas	JPMorgan
Arun Viswanathan	RBC Capital Markets
Vincent Andrews	Morgan Stanley
Duffy Fischer	Barclays
Stephen Byrne	Bank of America Securities
Kevin Hocevar	Northcoast Research
Mike Harrison	Seaport Global
Laurence Alexander	Jefferies

Call transcript

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Operator

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the PPG Industries’ Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to John Bruno, Director of Investor Relations. ahead. go Please

John Bruno

results and John Michelle PPG everyone. again, XXXX Once welcome Thank We good appreciate is financial quarter third Bruno. to in call. your this you you, our morning conference continued and interest

are Joining and McGarry, Morales, Vice Chief from Financial Chief Vince Chairman President and Michael and me Officer Officer. call on Senior the PPG Executive

Our on Monday, closed U.S. equity comments markets relate to XX, the XXXX. financial information released after October

ppg.com. additional Center The and commentary accompanying slides of detailed on our Investor webcast comments call website, the are posted for have We shortly. opening the slides on presentation will available support also this the make brief Michael site and to provide

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

SEC. please For to the refer additional PPG’s with filings information,

and introduce Now, Chairman PPG McGarry. Michael me let CEO,

Michael McGarry

and importantly, the have safe the quarter ones welcome world. to XXXX morning and and your remaining protecting third loved John beautifying focused purpose our and healthy. I good everyone you like you, would Thank of our we Throughout hope I earnings on pandemic, call. Most are to everyone.

customers. and and our our is This protect this our meant our First communities foremost, priority. remains to employees, highest

we results third the me financial of Now, quarter to XXXX released comments provide last supplement some detailed evening. let

from third were adjusted the record sales net $X.X $X.XX. and continuing operations quarter, about billion our were share a our For diluted per earnings

operating results organic results. coatings business. The volumes improved in sales well by double-digit compared our our strong architectural Our by business European sequentially were performed second led versus growth led exceptionally quarter global when

clearly addition, about and drove volumes volumes than more year sales with quarter-over-quarter XX% and the prior in advanced volumes XX% about positioning margins cost our segment these in In years. improvement notably coupled we strong XXX This the industrial X businesses. strong refinish global the achieved higher points on of still in technologies automotive in coatings have businesses. or most significant past delivered significant businesses The our leverage demand than demonstrates basis operating product that have management our to headwinds, were We the quarter sales facing margins and incremental were coatings OEM third automotive and achieved structural higher aggregate. savings in aerospace improvements and the cost attribute we with

quarter. the protective and volumes coatings, compared recovery This the prior coatings. in several industrial was automotive advance businesses, a of grew third our automotive continue robustly third quarter, by low-teen OEM, general to performance percentage where year in During refinish market to driven including above sales our China,

it demand other XXXX. was lower year-over-year global to of quarter in major the While still regions, improved was second vastly compared

million cost we management, cost cost savings, than little our structural on savings. $XX interim delivered of about $XX Specifically more million a of

we plan XXXX our report annual a working By profit going our results. of diligently to January process, interim made We savings have the are ensure catalysts more be full-year details in will the through we portion on will cost additional permanent. that when

by than on capital working an with the we pandemic. achieved of operating generated about of more flow, strong a of reduced than third in during higher Through we points results operating September the our quarter, XXX done cash $XXX have excellent million year-over-year working we comparison. quarter sales XXXX. basis what of teams job Coupled the have our third and XX, a uses also capital managing Our cash percent as

across to Looking activity ahead, geographic continue we to economic recover expect markets with use end differences and regions.

absolute low company, aggregate region. normal been business delivering the to our with be down some several sales businesses doesn’t quarter, the are projected seasonal that For sales volumes which do in third quarter differences versus mid of by in anticipate sequentially the growth. single-digit percentage result trend a and highest to fourth of have lower for We the

and more year-over-year deliver global the aggregate sales resilient We architectural to our higher in business organic again expect once quarter. remain fourth

in the softness and from to the U.S. in in maintenance continuing in somewhat experienced digital we’re the most levels capabilities impact expect begin continued and the product inventory to low levels, elevated to the coming very to anticipate we quarters. demand moderate automotive end activity markets. be expected businesses invest are use commercial demand The in global including more for segment, general Although increases digitalized industrial recent from to its the do-it-yourself continue, and our customer-facing coatings OEM

to to margin quarter’s impacting refinish earnings be demand improve. adjusted several the will We level lower our pandemic effective including sectors, other the continue end share provide the ongoing diluted share once aerospace manage through of challenged further higher matters. diluted about expansion still key more the in per we per than tax and We and opportunities results. heightened XX% rate expect to of adjusted quarter automotive of fourth with The begins geopolitical fourth excluding this projected XXXX, use uncertainty realized markets project earnings in coatings,

Our cash acquisitions. evaluating bolt-on and deployment earnings are liquidity notably strong accretive most we alternatives, position remains

essential the on services teams for products customers and businesses. our world rely have that providing Our around been the their

partnering mutual our value. As remain we pandemic, continue create the to manage through committed to to customers with

use our I to one managing and several our end markets. and are Finally, in team, as this key thank time prolonged extremely we want winning through effectively PPG, global challenging clearly of

that for your line PPG. stronger remarks. for questions? And you would you Thank prepared in testimony results confidence concludes an quarter our continued are we confidence third even emerge This Our please the to Michelle, company. open my as now, further will

Operator

first Yes. Sachs. Goldman question comes [Operator Your Bob Koort from from Instructions]

Your line is open.

Tom Glinski

on Good is Tom morning. Glinski for Bob. This

So question, another the this end round low ‘XX how first range? how you the do lockdowns XQ just your Does of your of Thank get then and you. take top of EPS in end frame would you to range?

Michael McGarry

tell you Well, are significant I any lockdowns. would that not assuming we

would we right a that. one have and Europe. view tell would as businesses Clearly, But We are number area France in it’s most to our be the balanced architectural watching important business largest our of us there it I pretty one is is of that one now you that closely.

Tom Glinski

it. on the to on caught to I expect on you of hadn’t And call, basis? the then a And recent most going out a price you’re thinking Got raw price raws remain secondly in that second follow-up, in next year? then a moderated Thank increase material the up as sequential you. raw formula you do XXXX for costs, calling quarter into – know just material you the XXXX. year-over-year but inflation XXXX how yet round long on side, raws you are how about called from

going side help buffer the pricing power, next industrial your this could Thank year? into on especially So, you.

Michael McGarry

be We X% continuing of had raising quarters have anticipate increases. price side. multiple to plus we in performance price successful Well, coating on

rolling all new the flat they side, although with to products price are will relatively with our improved be industrial in out, we expect that We come margins.

a come you look think bit that. materials you hurricanes. be will to to higher, little propylene oil, have have to the be the will look majeures through Raw paying little I that you to of you need So, at sequentially force attention have modestly a bit

So very Right moderate are materials. now, to paying just sequential anticipating we slight on are inflation all raw attention that. we moderate,

Tom Glinski

Great. Thank you.

Operator

from will John McNulty, question next your BMO. And come

open. is line Your

John McNulty

for question. my thanks taking Congratulations. Yes,

guess think little bit temporary a color can XXXX? cost restructuring flowing particular you about the through each and cuts how of one and I So, the cadence around give of XQ to the into ones in versus us

Michael McGarry

Well, would expense. are some of to John, temporary are cost think make going permanent the travel I about that cuts and say we

regular to that We are a learning how on deal basis. with

digital more structural we savings. into more So, trying initiatives plants you so a will and cost experiences, related productivity will Think completed so we drive closed savings, about are time permanent external to few cost cost get over think are people convert that’s and that turn continue to things more as more savings internal restructuring about digitally, the as When that we costs. have those well.

I our So, doing, exceeding I John. feel we in good about the think pace that or we meeting respect, that internal targets are are all

Vince Morales

$XX our guidance that in for out million cost to of restructuring-related gave $XX QX, so we improvements structural think you. in element sizes or million that I John, And

John McNulty

guess, And as just a Got helpful. it. That’s I follow-up question. then,

we the of see buybacks normally and kind M&A are really caught if back hasn’t in to that get didn’t So half time historically year, we the your solidly flows of see coming tend at more cash really on this as the into around. you least pretty and

So, a of of guess, give be can the is see little I’m this of chunkier just things pipeline I what that you color as curious, kind you if at? M&A you of a and reflection to point a as maybe looking that at might bit types

Michael McGarry

at. get But to have obviously looking – pipeline. we a into very not active we’re are the John, Yes, act what going we

in the in saw obviously announcement anticipate probably fourth the I a up. in there’ll Europe, sign be announcements an quarter, loosening and You second things first somebody that’s more quarter. of make further quarter

activity its for are always of one that just because look pipeline to it to like the been. that going priority, we in that anticipating we’re continue be our number So, to has

Vince Morales

participation at Maybe not as least just I in most typically one given we synergies these important the at similar, global all look it’s think competitors John our of markets, breadth, end our if deals. we have our more comment, in

we about price these So, shareholders. for assuming Michael our the pipeline, right with can going the pipeline, robust hopefully, talked participate are at forward

John McNulty

much Got guys. color it. very for Thanks the

Operator

And Ghansham question your from come from Baird. next Panjabi will

open. is line Your

Ghansham Panjabi

Good morning. guys. Hey,

Michael McGarry

Good morning.

Ghansham Panjabi

of shakeout auto XX% on Michael, that moderation volumes that should as then we the the see commercial of in other refinish, sub-segments the do that on XX%, how you XX%, in that for etcetera, volumes for portfolio anticipate you did off into going XQ includes in forward? any levels sort And referenced XXXX? building how aerospace, cycle rebound So, aggregate we of XQ the

Michael McGarry

destocking XX% think as of Well, is they But they I aerospace similar in and I now is anticipate gave right are aerospace can. kind clear that down what’s as in fast happening a we number pretty XQ. guidance

but get end double is to they assuming as improving catalyst demand, level not at should you more new forward, of only to back going So, levels. what the the say year, restocking have appropriate also a a

what talking people number to is, of COVID I see a fatigue, now right. So, right from

the – are be people anticipate holidays. at to going So, people traveling I

of to our MRO see back to to so half starting quarter And the the activity start up. are going on we pick

re-look at they will in inventory are may half not anything about how in they thinking the I levels at but they and anticipate their that year. they buy quarter Now, next fourth that first of re-look

you out recovery not until I’m pessimistic flow-through the I the aerospace, I folks gradual is some anticipate as there week as is vaccine. there are get TSA a pent-up think last vaccine, a demand. a We So, a highest people of there and of had on

I our is very think better business refinish, China saw, prior. doing what Now, than you well,

same volumes with office, on guidance this, back people factored there. as volumes. But refinish, the business SEM we COVID, a we as of people our working. they’re have continue, very and the light anticipate office, refinish to we now, Europe our thing have in within we start our will coatings amount a good we handle in industrial we have Right get people refinish a blooming moderation get slight So, then anticipate in in are back. better into level again starting and acquisition plus to the the congestion to are so We return saw

refinish. So, good mix we are by benefiting our within

So I that anticipate a gradual XXXX. all of recovery of

Ghansham Panjabi

cash you And the free as in question, part as the are on ferocious broadly inventory, sense of inventory of going the Just work rebuild the dynamic? levels more you along comment the that at kind trying And you that then of and have in sort Can reason us of very XQ? you how Okay. through made you just that you others a I seen Where onset is specifically? leverage were in that is? PPG then update flow to sustainable etcetera. are think to with that operating focused Thanks. to second your finished of get good you a terms at pandemic, maximizing inventory,

Vince Morales

of reasons inventory hard as against Yes, is for yes. current running the as the hold working our of operating demand us factories this flow. next We – year. It’s it’s indicate. balance that Ghansham, certainly to our our side, our cash and year hope year-over-year, on discipline the demand – through would cost inventory in we’re down actually one not actually strong our

inventories. So we’re rebuild intending not to our

our through more way in very to electronics inventories our most you appliance customers are lean, the lean – coated very of inventories, business broadly, is the auto is the look very If OEM very all lean, products consumer, lean. automotive

aerospace As Mike getting an think it’s we to, leaned alluded out.

an the also to So, in we but catalysts. if demand is or do only opportunity some do spike feel a second levels see there spike not inventory have demand for, improve, in that to we

Ghansham Panjabi

Thanks so much, Vince.

Vince Morales

Thank you.

Operator

next comes from question Roberts Your John UBS. from

Your open. line is

John Roberts

something Thank just in since you that car on problem It about? it’s the fire and car the might didn’t it But earnings. more discuss nice not for don’t think was that coatings. protection buyers story disappointing Journal companies morning lithium-ion to want that in had that bounce it coatings battery-powered mentioned back protection, is want that risk Street Wall need to fire this your including a cars. highlights a PPG

Michael McGarry

this make a news is, companies way the part in in The company the slightly batteries, every passive fire of I protection John, Well, different And electric them helps lot good think are every that. system and can of has a is, eliminate add are we a solution. batteries different come about that fashion. car that it

So, going good. really are the tell to be I going you, just forward would opportunities

shared to so you a out and with is I a think I China broader prior group, with for in call, standard. the come trying

exit is the that is event vehicle to in that PPG five vehicle a to of the standard, one fire. occupant the far minutes has So the allow only which passed

very I’m feeling good So, about that.

solved this have in great already technology. company. problem We’ve We other

hazard will, that. it’s by have it. or hardly and it in week opportunities an and doing U.S. if we now many see So somewhere, can about are in vehicles that and can solve Asia I a we we excited think safety electric that there. we in standard, certainly we job love a But feel in we’re think space, we would Every are we have confident whether right again. excellent win Clearly, super don’t participate mandated goes batteries that a – you we to government so fire really Europe, we

John Roberts

to be some PPG MoonWalk getting traction. gain? with it And is to then MoonWalk a seems change economics just adoption good share Do the or

Michael McGarry

there on Well, model MoonWalk. it’s both, So, right? we subscription have a out

go. us be MoonWalk on have of about we’re So XX% going software-as-a-service, would only been that going We’ve say, the to to thing we I think is – are all – MoonWalks about so been And to have making that’s revenue collecting as them. back you holding installed share gained.

making in the hit was We’re that’s pandemic. things it these by Southern hardest and where Europe,

time to ability spend is more shops, painting. getting all what are have the is the in more to nearly as productivity installed that allowing body over of about – and We’re their there drive XXX the is opportunities this their improving with But we pleased people Europe now. right in lot a have exceptionally them, them better productivity, and well as the painters that that’s performance

big the benefits. an wins done highlighting both are and our team two those excellent has So, job

John Roberts

thank Okay, you.

Operator

from Your next from Frank Fermium Research. question comes Mitsch

Your open. line is

Frank Mitsch

are the Good guess, ways in morning, than I more one. quarter. on gentlemen. going in better Nice job things Pittsburgh

Michael McGarry

Thanks, Frank.

Frank Mitsch

refinish, start map color you European gaining your flipping anticipate indicator than they can market? that a growing I if just to that showing fact the the thought second thought you market. would up MoonWalk are could market. that follow-up were would than it Michael, – little that volumes in at faster and that given you interesting auto that on be you bit that was provide gaining map in above were quarter I indicated you’re will share, that heat lower only year-over-year we we that be the that were When I heat have growing only would you

Michael McGarry

basis Well, justify as a Frank, gain. a hard quarter-to-quarter you know, to really on it’s market

But trumping see I tend very in our should are do And have very area. there. more we be aggressive doing being our wins. I little you results conservative seen Maybe be well good. so, we from as to what that tell bit we would we a

company’s – that little feeling I’ll a better that. better especially that average our than But for done very and to a all from for next Europe days, has standpoint, profitability able have I feel you we’re In comfortable feel better give obviously, I the and job. after Now, a be XX in more the report. doing excellent bit a an team

Our through we of that. market that’s we to Europe ICR but feel refinish We’ve opportunities. acquisition, we’re acquisition there, have Southern we how not Europe. continue going tick above value very that as clearly mid-tier over to that’s Eastern some that share in And that But confident allowed to do Europe. could get and off in us the the out expanded grow to

Frank Mitsch

just biggest much how industrial $XX down of by Alright. quarter That’s may opener for you these the a you driven And, temporary saw the the million very cost that coatings in by sustainability guess, talk I where have Can that, of the I of give – kind helpful. it the that the about line? us eye was savings? of So been the – flavor heading see margins.

Michael McGarry

more our done of got outstanding. segment really team super The has the Well, about of volume thing we tasks the a and The productivity about people light and in things different can were to biggest was an quarter efficiently. paint the has our job lot the excellent together do been industrial recovery think second plants. productivity how margins the they when

and paint to been drive thing. one the And so, that have been they number the able that’s throughout productivity plants

just line. So, more to further the to recovery bottom automotive in profit enhanced going lead any is to

going is Six Lean all most part Sigma being it’s driven that where forward you, comfortable am So, our and initiatives. I I would by tell feeling

Frank Mitsch

much. so Thanks

Operator

Fargo. from question comes next Wells from Your Michael Sison

open. is line Your

Michael Sison

win on… Hey, question just quick guys. quarter. on a But Sunday. Lucky Nice

Michael McGarry

barely So the we Mike. just covered spread,

Michael Sison

but you terms Barely, given October better, down? sales September But looks trends, it of win. trending And decent. and like the been trend looks quarter. in fourth a flattish are why bit guiding look nice pretty little sales Is in the curious down for couldn’t September have just

Michael McGarry

we you, were Mike, and tell X would minus I the low-single-digit. Well, to for X% minus quarter guided we

So, obviously, are trending number, number, that our I a I we trending at positively. profit is within a date regard regard our When have negatively. to as have as and we I that October would we all well don’t results look volume don’t guidance.

I So, the where going guidance. in at to are we that feel confident be above we or are

not not So, that the am and I about you concerned did. it I would characterize way

Vince Morales

couple of fell a Mike, last anomalies August, early Labor Day with September, year.

saw for late architectural of U.S. into were Most we Hurricane the around businesses August certainly Laura European to in in season that get some paint hit in some the So, some we August. that actually September inability the have Southeast year. build conservatism Labor had part in was XXXX of did inventory a snapback and some Day spill some XXXX. in projects. strong to There We September. holiday in

So quarter. call but out I the worked those all would in anomalies it month-to-month,

we quarter the think number more for representative XXXX. was So a

Michael Sison

and the stronger just just Should interim it a turn positive? earnings come up? feel your Great. some about growth EPS think when digits, turn for look looks double of the fourth volumes again. you volumes like be think How And your growth how quarter be third kind EPS double get or should you do in of when then if actually digits looks go quarter back cost

Vince Morales

we guiding volumes in Again, to are Yes. QX. still negative

growth. do expecting early I the little on guidance, future too haven’t But for still that, we any We think are strong Mike. was, incrementals last foreseeable XXXX comment volume very Michael’s to given

costs are in We check. holding

price a we Our at running raws And to very well. again, minimum. neutralized operations are expect be and

part too We are very in next expecting trajectory can’t the incrementals. volume the year. first of So, It’s early. again, tell we still good

Michael McGarry

add Mike, is, their aerospace, margins. very forward. are to of tailwind, don’t going ones our will recover, other that Yes. I the the thing our businesses, intended, be volumes pun that are When forget, to for two positive best that the be would and no tailwinds the refinish going

Michael Sison

you. Thank Great.

Operator

Chris from comes Parkinson Credit question from next Suisse. Your

Your open. line is

Chris Parkinson

you Thank much. very Great.

U.S. the we a are you I lot can DIY. So, the of EMEA commercial, your on that trade on there are versus interior/exterior current versus offsetting architectural down trends monitoring, ‘XX and businesses? just paint break mean, resi

Just your in of context what urbanization monitoring? are is that you. the team the Thank reverse biggest trends

Michael McGarry

their build reverse than I the tend shape Well, are that million They urbanization million I houses they a that Europe there homes would X.X have you U.S. tell you better Europe do – in you going to here. the would – does. not the they in U.S., tell here have like in maintain in But right? don’t you, to

– to trend next very And properties. during aggressive been have the been has on have a open pandemic, that last going think few for minus been So, volume stores – Europe in This that when anticipating been I several is has the have the they we the quarters maintaining are slight they to that for years. their been market continue.

uptick this once The lot is ones for surprise does for So least. a up. the concern be – construction new there completed, course, these in the buildings big pipeline us are new in to not doesn’t appear be the buildings, to the in coming U.S., of

that’s for issue bigger So the us.

Chris Parkinson

Thank ability pleasant there up sluggish, price you. is to in bit the drive have the any But markets, you overall are about the albeit solid like Thank and and other current we should we performance, EVs. price in job terms of product should low-single still to your mix positive be minimum I see volumes in in a industrial How surprise. given done of think you. a a there think moves which were holding digits considering And some raise industrial then most recovering. at you But launches new And is environment? we uplift? in Okay.

Michael McGarry

opportunity running. customers going so that a most on with forward. trying customers ensuring plants be capture value are product, some of we on are always we to margins the their new share or now, an the will so our creation, some right Well, are Anytime with obviously, mobility come focused attractive will the launched forward. going XX-XX Overall,

service are in teams high tech our demand. so, And

look service of is, four at the market help captured that reason three for we people tech are people they you to so sure automotive, regions. start projects to make our now the trying we look the And service to our wanted valued, critical, outperformed that them highly in customers if paint tech they them and uptime number keep shops. up our so where running at drive have highly a have are to more productivity – us they because in is and So, to run of asked their

now, So, are I uptime focus would that’s you, and they forward. tell and going primary right products where their on new is

Chris Parkinson

Thank you.

Vince Morales

We do expect positive price in QX, for price the company XXXX. in in aggregate, certainly, positive

For targeted year. aggregate, as the company negotiations in to both XXXX are the get pricing we segments exploring toward calendar

So, in again, our price both segments. in service, these to based opportunities technology of operating

Chris Parkinson

very much. helpful. very That’s you Thank

Operator

Kevin question next Your from Vertical from McCarthy comes Research.

open. line Your is

Kevin McCarthy

back talk those you was trends wanted of quarters? I the differences than expected wondering that down think could X to EMEA the by And said I you over think X you in do auto business. some ago. were so Good the the through have kind down morning. sales region. I months to I progress indicated question think My you relates digits. it collision you disparity, refinish if claims would trends come your mid-single of were or In or is to how wider next U.S., XX% few and months

Michael McGarry

for claustrophobic. Think were I people to people the what about to say, would people They In I of consistent Europe, wanted Kevin, pretty are work-from-home. trend U.S., expected. tell much the you would lot the – office. No. you are it’s a we easy back with the to get smaller. have homes work-from-home, big homes that and lines

they back they so, the could. to office And as the first move opportunity

it’s to every U.S., not there home. Here in work to there there’s various a the able downtown go are be of people to lot going is more work amazing, because million day from they I to going single in XXX U.S., the to work tends people but somewhat mean, conservatism. to cities

sales And X% gasoline like down or were so, only X%.

there driving, rush we but are have congestion as normally don’t that So hour. people have out that we to

catalyst pretty getting some It’s people totals into the people disparate will for back U.S., a have have you don’t. vaccine So, companies people hire the you the this. that approaching and Clearly, X%. how in be office, so a got office. more other back speeds But are get up are really companies in

gain now, really see lot share traffic right as much in our team are refinish and good right a on of now. we suburbs we know focused So and what areas. job traffic that’s what the not of downtown a But has is I done driving

Vince Morales

one the are in in there Europe public been we is here. utilization seeing utilized Europe Kevin, thing historically more other transportation, less is, of that’s versus

fear So there public is a of folks getting transportation. still on factor

the as were So, going people people as many – taking trend public past, opposed not even if transport. there’s the there driving as work they to driving to in more are

were We well. are We seeing China, the volumes finished up. same again, due effect. effect think in our as China And we largely to that

Kevin McCarthy

XXXX? range the think in rate That’s prepared the XX% to XX% is My more quarter, to I might that helpful you items remarks. the color. in perhaps And tax component there discrete is, with then fourth sustainable? your second you some rate Just for Vince, any I question thinking to about expect about the into how is trend wanted to regard mentioned ask

Vince Morales

tax certainly items are be rate next with tax at through and what hope at this QX U.S. year. of I will to we couple for call the happens those we interested elections to And here planning, point. structural our Kevin, what determine So, looking to wouldn’t we achieve see are

not those items forward in will So, items. And achieve to we quarter. give the we planning carry the that tax for some for January. But to hope referred more QX and in were guidance

Kevin McCarthy

much. Thank you very Okay.

Operator

from And your Deutsche next Bank. Begleiter question come from David will

line Your is open.

David Begleiter

Anything trade market. you Thank highlight I you. that as below know weather you were market segment. in Good you business morning. Michael highlighted September issues in the in just that – was that on map, your below quarter? had architectural, you U.S. why can September heat some to in else

Michael McGarry

two so markets on hurricanes, the a underperformed of we we or our over are index much Yes. are our that, do better, Texas that. keep and repaint hurts comfortable. we because bit would little res are biggest maintenance, when limited think repaint And, given that couldn’t repaint ability are us – res and are in about Florida, bit we industry, people we course, like the more consider on you where obviously say, doing open I under David, index things a little had hospitality and to stores we res

very exterior We index we in doing the did outperform. in don’t outperform so in are Canada. are in exterior, We did We break over winning and we We are there. Canada. U.S. up well

like below I were slightly So share like and Canada But market. markets we gained we felt minor some gained would Rico. share Puerto we in say, in we net-net, overall,

David Begleiter

just are these temporary cost XXXX XXXX savings, think as temporary year-over-year? a about And we how savings a those should going about thinking to to those Michael, think between or interim cost XXXX headwind bridge as a back we earnings, and we should about

Vince Morales

is Again, back we David, ratable those are Hey, volume. this costs we not see having at unless least Vince.

assume wouldn’t I XXXX. into a So those are going headwind

John Bruno

is John. this David,

in add Just versus had We less margins temporary QX that. to $XX of QX million savings on cost significantly those higher. our and were

to effectively. will So, think I be able manage it we

David Begleiter

Thank you.

Operator

Juvekar from Your will next from Citi. come P.J. question

open. is Your line

P.J. Juvekar

Yes, good morning.

Michael McGarry

Good morning, P.J.

P.J. Juvekar

the And talk the also – still the about expect Or up Michael, to the interior cooler? loss exterior turns DIY pent do there you summer versus demand months? business trends? is paint weather can in you the from down as business slow is it

Michael McGarry

Yes.

you one, easy a bad in is exterior/interior clearly, paint So, can’t weather.

really You it’s cold. when can’t paint

change whatever So, October, XX of at the but down, the slow first, have not seen through in today, to is is some we any demand point it pattern. days going that

comfortable across DIY interior having contractors are up, more their solid is remains in and the steady with picking that’s home. and board. So people

look saw So, or is Mexican I down at it And, team look an minus our up clearly in numbers we in of that Mexico, China, at look digits Europe. winning I share, in Australia, mid-single in you number that in economy were I course, X%. our at it X%

So, doing America, in we Brazil. America, Latin are Central

So, I would tell see you overall, I change yet. any don’t

right We are are point. don’t forever. so of far. sustainable some We anticipating continuation slow But this see it we a anticipating down our it’s think that will now at quarter we fourth what rate at

P.J. Juvekar

what or platforms minute platforms? mean? entire chains, what is of talk MROs Great. a you can of strategy where mostly about and it just it exactly PPG, Vince, Thank Vince, you and does it question for, investing take and – you And your Is digitization a supply you. – customer-facing are what digital including HR, can kind

Vince Morales

to platform Yes. really that to P.J., take our is where customer customer-facing experience are most you for tell the and would fulfillment us exciting trying process. I digitize we the platforms,

We are point. not have starting in about, with we starting investors a biggest is customer the think times many – we with are we talked chain, supply going the middle that’s into pain what decision, there of the

over somewhere with period industries – customer end digital We in to have in middle effective seen longer other of retail supply as of platforms to trying the those most a starting chain. time optimize opposed the the

So that’s where our biggest investments are.

to due on are to a are our – we but Europe, in we this America, spread. take to we use investment breadth simply so Australia, – of activity Latin able Canada, digital of U.S., to the global it America, get breadth, business Mexico, geographic hope again able not bigger We a our are because cost and only able bigger South

P.J. Juvekar

you. Thank Great.

Operator

Your next question Laurent from comes Favre.

open. is line Your

Laurent Favre

yes. taking Hi, question. thanks the and morning Good for

The first one side. the on is EV

talked on your the month just the you in slide line about pleased I Xx of sight perhaps longer launches. pack of us an foreseeable launches at the least last aspiration of product tell years released to Xx value EV. it next is the or could $XXX couple plus think those for new was if you on I per new product this wondering you Is actually for the term? value-add for

Vince Morales

just Laurent, the question, – for answer Yes. call. everybody Michael baseload I Michael the let a on will but

So, see coatings Xx Xx EV little in coatings a electric the in point be content to time, on did we EV, perspective of a vehicle there our do will combustion provide versus some market. We foretelling coming of gas traditional believe, at the we what bit from engine. the

so, everybody has. And And background we is the of the question. sure are that’s going the timing that, to Michael, that make

Michael McGarry

Yes.

are had clearly a wins So, Laurent, seeing basis. like on weekly early I on we mentioned

XX% cars You be EV. their know, XXXX China has of said by will that

at target And the California’s aspirational XX%. of course, an make same announcement. then, saw you Europe seen have You

have working there. company every everybody single would tell in you, So, we out space. initiatives is feverishly this I with

We guy one are automotive the number in OEM.

very We parts. are automotive strong also on

are We and marine. protective strong in very

we selling all now. people gas can together, fillers the we are So, this that right are bring and

that. are we on So

of trials We battery electric and have a going on sealant. adhesives as number well,

with to offering. product faster, think to very try have the that’s our also broad they inundated market approach they as get solutions-based with able what come all get has solutions, that with. and forward exciting be car want I a number minimizes be to to we them team a And to So, And companies they ideas come to because teams our have help people faster. would to with of the these new forward is people deal market and

Vince Morales

are adoption, by aware, percent are by seeing sales. fully in their fleet we probably target a are by this uptick to we trying of In to get EV this so as targets country, XXXX. year different much an you terms Europe, have Laurent, new of

PPG. So, the the in additional going really market the the of consumer drive by adoption to – is EV what’s by sales

Laurent Favre

you how a in out. Thank either night, the and they in And you all the to so that last if, speak. in, were some cost in as now were or you. for Vince, call, QX, those about talked number wondering follow-up maybe temporary I last savings back disclosed with the binary was of binary

Vince Morales

Okay.

We are back. bringing those by comes business region, by as volume in

binary John’s nature are for of come margins costs those earlier, To have have so, And in back. that have back we they volumes come when point come we that when they had back – QX.

some cost of margin to accretive, those QX back brought we QX. very though still even So, from

Laurent Favre

Sure. Thank you.

Operator

Sheehan question your next will Jim from And Securities. from Truist come

line Your is open.

Jim Sheehan

Thank you. Good morning.

XXXX of these coating some on? for due what talk guidance projects focused are about additional CapEx markets the to end projects types Can raised being You initiated. you

Michael McGarry

quarter, longer in Jim. those are second we ramping it no back the was and take industrial about space, is that That up. all in mostly guys Yes. one, down we will automotive you cost back, When obviously, I industrial so coatings. our the slowed the what automotive with think case,

we in did slow not did down I not we would business China. what and down investments slow we exceptionally did our slow what down in not is, investments any importantly that down We knew will tell did well. slow we be More vehicles, not any you doing packaging any investments electric in

very year. feel similar run fourth the standpoint, – third fourth from quarter coming be will comfortable what out and rate we quarter our to of that very is So, last we had that

Jim Sheehan

in And that a in XXXX and or you auto your teams. auto feature that’s that outperforming Is talked really builds see if could as OEM of Great. expect about technical you pricing service into do the ramp-up customer, next happening do your more discussions, are And sustainable pricing get as the critical leverage get into year? you also, to we to XXXX? if relate you to you that rapid

Michael McGarry

are need paint Well, I about us shop. think Jim, and the want paint discussions the aggressive us for they shop. need us when lot asking right on price less think that, there way now they if is And that, to a we on in in things have the

more it So what’s much discussion, that raw the a environment. instead material a makes forward-facing of

And so, ideas. they for for new well value looking and looking they’re they and productivity creation are looking for as are product

so, do And call, split more way you those of what that’s discussions pie. would have how can kind the when I you productive than

Jim Sheehan

you. Thank

Operator

JPMorgan. next question Jeff will your And Zekauskas come from from

is open. line Your

Jeff Zekauskas

to bill much. difference volumes? a PPG’s very year, domestic Thanks there If would that large make passed an appreciable next infrastructure were

Michael McGarry

an be from do think I our standpoint. there Well, infrastructure bill passed will

Jan is They January. positive the of us, think – take shovel because for the due environmental after really it these have Xst those either want will projects. shortly a things ready, do some but to term but diligence I will have a the use remember early or nothing to election you be ready come shovel It while.

that will bill for But be the be passed. I positive noticeable in you, a is after months few the would it net tell us. might it So not first

Jeff Zekauskas

XXXX? million split can likely cost of does spending how versus cuts, interim how your And goods year that between much sold? describe change $XX and incentive And in Okay. you SG&A is this compensation to of the

Michael McGarry

Vince let will I the half. back take

Jeff Zekauskas

Sure.

Vince Morales

Yes.

Jeff, our stock our If year around is incentive comp really reflective this the high-single-digit going on millions, return, total up be you TSR, year. to the It’s shareholder higher our of last look, price. in really than biggest change probably stock price

one-third In course. $XX bucket two-thirds terms goods would sold. be cost in in that our be million of of the are of would split, and Those numbers, SG&A round of

Jeff Zekauskas

you so much. Thank good. Okay,

Operator

Markets. Viswanathan Arun from come will question next from Capital RBC your And

Your line is open.

Arun Viswanathan

Great. you sequential it This just was very lot to cost QX. the margins are of better basis the deterioration is point headwinds are there and you morning. maybe for year, Thanks. that production should that Maybe next QX And margins. thought just, curious a I guess, by the Do structurally probably would maybe side? your aided to seems frame on you that Good guess, you basis like at decline deterioration XXX in kind now me in XXX QX. again, strong, chance QX? see be actions your of typical time of continued through too margins higher I XXX that the XXX guidance basis that taking persist this Thanks I have be some level to may that of kind years? sequential much on of the you a to Could margins, entered it implies something in a couple maybe margins. think was of basis described. seeing is margins in looks what we that on Usually points question. anywhere in from QX have the point my Obviously, and you robust points

Vince Morales

Yes.

in I at how provide look as are down in it QX year. couple around seeing moving go there going back viable think looking think Obviously, to are did to prior are historical things. this the What – much a say holidays lot so is a guidance, of they industrial segment, wouldn’t QX automakers The a the QX to much but the not is year pieces. provides some trends, automakers seasonality. at to going as quarter-to-quarter, we we don’t less from we I

performing in On Michael opening have comments businesses the seasonality. side of best, best of coin, his level as alluded higher one other our of of our some the

in So, impactful. they more going aggregate to for be company, are the

They architectural any well. seasonality seasonality. We have think traditional in there off the are performing So, been have typically businesses QX. would

don’t think So quarter-to-quarter I are it lot a you unfavorable the aggregate has there’s that bit Arun. just company, comments pieces. of is abnormal moving a anything of again on in talking an so, about, those, a for the impact

Arun Viswanathan

imagine more on larger to get leverage. And still guess Thanks, uncertainty towards any pipeline, the a Do know there, while? a I still of have to opportunity is the take portfolio see the I coming those M&A tilted what there kind I you next but side? little it that lot mainly is you on Okay. the do then, low is it general, in and Vince. just that out fruition to – bolt-ons? in relatively And of maybe going of

Michael McGarry

ones the happen. it for takes a bigger minds Well, to the that meeting of make

say, we cannot would predict I those. So,

I tight. just sit would say So,

bolt-ons. as to meaningful is are this has been economy. a is the portfolio downturn their what meaningful So looking there, there is. the out things the are we again, coatings that flex are that to twice them pretty the vast to illustrated best ability a of not is majority company are in years and XX some in past has bolt-ons as owning in okay, there But way where are pandemic, private looking robust their at, at the the people manage for maybe people And wealth ours the

row, of economy, that. quarter have a second record able earnings are a of in and the downturn private how quickly to that two had about think times this lot we the companies of you is out these do if coming So, not in

you, in are business opportunity earnings from an put their diversifying. into the pocket selling as to the their of they tell would I at some – maybe looking So, that

Arun Viswanathan

Okay. Thanks.

Operator

Andrews next Your from comes Morgan Vincent from question Stanley.

Your line is open.

Vincent Andrews

OEM Thank I follow-up you, to on everyone. morning, good and wanted just auto.

And is last expect the just that And conversation, from growth call, stickier. bit – Michael, quarter feel make the tech thinking maybe you sounds that finding bit to quarters. call, I on like some ways little of service, coming from in this that the the a the On know you outgrowth future to a that you market mentioned second sort of just the of share to some on more the going normalize case. it is that am I are wondering, And be structural? are you

Michael McGarry

going do continue to think is it I to grow. Well,

service tech teams into our turned business. have high We

have about start-ups, we and And of in charging so, they And up get them away could tech Missouri, service of paint like in faster, a for free. value the folks the environment pleased some been teams you, now, lot we creation to where it running our in people to services right of the tell for those I the shop these consistently times where – And willing period more service provide were the during the kind unusual more state, that many think so cases weekends usually that, we’re them. allows right tech they running Show-Me give see the were having but when now, and is it’s would are are to they’re run and like things beginning controlling frequently pay hypercritical. for

I So, think going there forward. is to more that going be stickiness on

Vincent Andrews

Okay, great.

do-it-yourself side equation, the are can’t rather decelerate, just but on the more the wondering not things may than customer own to trends the ask I into high. your Clearly, a retailers follow-up, inventory pace if it levels that like am just I forever, stores. at architectural seems say As be probably this want of

the regular big a a So, season? need versus and have have build actually the sort sort order spring to to into to manage to just of into trying of up pretty do just ship still customer. I’m you the season we to away what in bridge next downturn take

Michael McGarry

normally am in going inventories would have. are to I clearly Well, how what about say, customers try to not they QX. our customers are think would inventory below predict I to going levels that our But

to will tell you that wait manage inventories year. I decide are So, they next them to how low see we’ll just and

Vincent Andrews

very you much. Thank Okay.

Operator

question come Fischer Barclays. from from will Duffy next Your

Your line is open.

Duffy Fischer

Good Yes. morning.

was night be thinking much to than from last our and released into XX%. with XX%, you was of he going aerospace guy down after would input stronger was what thought aerospace. he volumes talking average Just see the were He provider I kind your things

come line? you’re business building is that what doing supplier see bit than the will there bit are it of and average better to inventory So, into down a comment that double-dip product where little is chance are closer we will the of a the can a your peers doing your input in little maybe later Or aerospace? on, customers you a are there – in,

Michael McGarry

don’t know I winning that see customers – a clearly a very specific Yes. I down. a of double-dip. on Duffy, see are have inventories number platforms. I we And taken

rollout, continue our going up. on, to as winning But tell would trend down being So I then quarter as we’re start to next I to volumes. from that overall, think XX% those that anticipating aerospace. helps well And the point it’s you, in platforms in

been more bigger military we our are strong bigger business. has a is not on where, Obviously, the every So, our business we Military year but space F-XX is have that in a plane. mix only with and there, because content winning are getting helping. we good

we’re that not rate also build just it’s the content the So, winning. it’s F-XX, the for additional

So, really for to people understand. that’s I think important

Vince Morales

And our Duffy, of mix conventional at business, if aerospace. we’re military, XX% look about you XX%

Duffy Fischer

Okay. biggest around out I’ll take cut the QX, And last then into backed look to at of kind you people I kind between guys incoming at years, pre-announcement bounced another it’s of been and XX this XX%. you have question But because gotten put your since margins. XX% your have if margins

couple higher than you now as several out as going this basis points best margin at the level and the basis years is ever So, turn is the margin – far hundred this do higher or think structural? goes higher this basis of look the really was of and something an of around bar this be from this and quarter, more Clearly, than or average had. that you’ve a points XXX anomaly to kind resets quarter get several When period. third quarter we

Michael McGarry

Duffy, Way we The the ago. PPG yesterday, the Way, we PPG every day. I than would of of that, one is, launched that today tenets answer two years way The But something called And better do is

in to our years and committed look So team PPG fully yesterday. at because anomaly today back Way than The not two that’s better doing is you’re this going to

going carry forward. that’s to So

Vince Morales

in if I refinish of this at recession. a aerospace would and most earlier, Yes. just business alluded QX and look some that, you add, Duffy technical Mike in to were remain our

fully not those two recovered, recovered, metrics and have should help the you those years talking businesses are now hopefully, from about. So,

Duffy Fischer

you, Thank guys. Terrific.

Operator

Securities. Bank question Stephen America Byrne Your from come will of from next

Your line is open.

Stephen Byrne

thank Yes, you.

So, SG&A but was R&D. sharply, was so down

items this reduction So, that presumably those cost interim big be drive cost enable to sustainable less up a of in buckets down are those two savings volumes stay lot interim than the they are do Other down? lower bucket. travel, you of costs cost this or them could are to in back what recover And need so line are part that to growth order bring much? when

Michael McGarry

currency. So, part first cost R&D, Stephen, I you When you to will take the of question. remember think about the thing that have is is

not have we that helped so, from been the with regard. currency And

Second, – R&D and had in third like our normal. in We four-day on had second reduction. is have quarter some – temporary some work we quarter, rate what did back salary run we the to the weeks we we the salary things

So all those are gone.

had right is same the So, spending what last year. at R&D the now on as level we

– continuing footprint. lab our optimize to So are but we

cost So savings. we’ll so that have less drives labs permanent

productivity. more drive to digital using are also We

savings. cost permanent a that’s So

the that is the would spending projects So, you big level, on tell but the better. I at efficiency same is

Stephen Byrne

through? allocate And how million restructuring you that it COGS, think on you R&D? roll between $XXX SG&A And will would how do program, the that to and take long

Vince Morales

facility – – Again, but SG&A I in and our me, don’t of have chain workforce supply – optimization supply of those I Steve. there, of but were or are Yes. those manufacturing. of majority front optimization chain of in was have workforce. vast numbers most not some those the most not our that We did were

Michael McGarry

is XX%, Yes. Steve, XX% circa SG&A.

Stephen Byrne

Thank you.

Operator

question Kevin next from Your Hocevar from Research. comes Northcoast

open. is line Your

Kevin Hocevar

morning, Good everybody. Hey.

Michael McGarry

Kevin. morning, Good

Kevin Hocevar

Maybe savings. of some one stab at other the interim cost

back quarter. third mid-single-digit, coming like looks be which be it better to of coming better what sounds be volume-dependent early similar expected are fourth them a – quarter, to is in the are little with those low- it So, down slightly bit some back portion than like going to you And volumes saw volume-dependent. to – the to

the it in $XX-ish So, million say what kind Is baked of the saved guidance? guidance what be still the is interim fourth fourth baked in the will Just that quarter? curious into you in quarter. savings to for have that the what’s fair

Vince Morales

Kevin, end, if look, cost that if brought low to we QX do you you I we the on sequentially, QX, volume. QX volume think We look back and Yes. higher some ratably hope – range. – with we volumes the on guess, QX,

in heading number, our we of accordingly. but large providing where we’ll that. QX We I So had a guidance million think cost not year. we and is manage that we’re could back embedded $XX thought into our But next in probably too retain

Kevin Hocevar

to average And volumes. headwind below you talked in refinish for company margin? and businesses improve being about aerospace So with that mix to holding were guess, those much those normalize a if much performing terms that How more average, in I with being as is how is businesses back and the line there have of margins room the you company recover?

Vince Morales

customers coatings But don’t are in those our as some W alluded earlier, the margins can of give to see and business. by typically business we businesses. most those value technical-based those

Kevin Hocevar

Great. Thank you.

Operator

Seaport your Harrison Mike from Global. question will And from next come

is open. Your line

Mike Harrison

Good Europe hearing in I you’re the business. some protective little customers there? Hi. delays bit What was mentioned from when a and protective you You about lasting business back can growth? morning. wondering talk marine project the marine the you and fourth quarter? those United States. through the see and and talk Can getting maybe to of Are significant you about if kind

Michael McGarry

first continue me very talking the low start side. spectrum. Marine on it let end from the builds the of to be Well, about marine

builds ship new are So down XX%.

are we advantaged our side, positive very here. the On mix,

in in stronger are much than are we We China Korea.

protective environment delayed better from because got how these business COVID. regard. I projects. working out save infrastructure business working doing so, have infrastructure think the we they that when on saw And industry Clearly, to lot and a that They to our than projects COVID figure are of marine is actually, of a were

think have are now. think been we they So we coming they but back delayed

Of into course, you winter. get the now

are projects we’re We be the launched say, going food nothing significant hold polyurea again. there. launching gas oil weak, put change to for would new a business. So some is But products. I some new of those on lot product and But

better. will to And that’s think for us. nice get going we economy win So, the overall, be a

I’m wins big into our is to so, will for Asia that as of the And anticipating that side maintenance refinery us. blossom start the in well. the And side

Mike Harrison

is speaking packaging business then Asia, weakness Asia up as market, the there? APAC piece is below what and And driving of that business, of how Alright. big the growing packaging shows

Michael McGarry

say, –, a Well, two-piece piece open to they easy not I cans. what well generation I is call ends call transition generation newer huge it as focused a of as company. We they it would would of on What’s it’s driving the a older newer the what generation. from to

And we’re from that standpoint, on of cans. focused so, highly the next-generation

And that a be losing in hasn’t share. and in so, little I that right of U.S. as has now as a we moved Europe, are the transition don’t as fast to regard it permanent. bit

share and are that think other I number are especially things in back, are think a about Asia, that made tuna that we because of products will global there get exported.

in hold then back. So, we’ll our get as those take Asia, global standards share

Mike Harrison

Alright. Thanks very much.

Operator

[Operator question comes from Laurence Jefferies. Instructions] Your from next Alexander

open. Your line is

Laurence Alexander

morning, Good guys.

the Asia So, or be think back just PPG market the the growing loss line rates, a follow-up as and on will that. in the will growth In XXXX the with North packaging America continue? about to architectural trade you share

Michael McGarry

market reason say package XXXX. be be see technologies rollout. definitely U.S., those for to would will I why I in Asia we the wouldn’t at no market will in growing back And because in

Laurence Alexander

great. Okay,

really market or should year XXXX board? So, at be the above market across

Michael McGarry

Yes. XXXX I going will haven’t assumption initial that done planning but mean, at right into our we now, process, be our market.

Laurence Alexander

Okay. Thank you.

Operator

further Bruno for over no call turn the Mr. to remarks. queue. closing in questions back have We I

John Bruno

your like your I’d this Michelle. you, everyone Thank interest morning in time PPG. for to thank and

please you. have you our Investor any further Relations third earnings concludes department. This call. If questions, our contact Thank quarter

Operator

conference conclude will This today’s everyone. you Thank call.

may You disconnect. now

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