PPG - Earnings call transcript Q2 2021

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Operator

Good morning. My name is Jason and I will be your conference operator today. At this time I would like to welcome everyone to the PPG’s Second Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. Instructions]. [Operator you. Thank like Bruno, now the over conference I President to of John Vice Investor to would turn Relations.

You may begin your conference.

John Bruno

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

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

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

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

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

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

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

Michael McGarry

to second loved call. XXXX I earnings you Most to healthy. remaining everyone. welcome your morning Thank you, quarter good John, I are and and our hope safe importantly, everyone ones would and like

supplement to comments some released results provide we detailed the me let last evening. financial Now

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

quarter second to of quarter, the pandemic than year's second higher various significantly was including last due XXXX, EPS adjusted Our partially impacts. related

similar XXXX being adjusted we're our that raw Looking back high quarter period, was pre-pandemic the sales period. results, volumes EPS in historical with inflation current the of to second levels dealing to material X% lower and than despite

of of a Coming an disruptions, quarter. Our year-over-year ones many the higher million. the including but have We that last from capability these impact reflect includes the despite sales market across our to closer and disruptions effects $XX was million; the partial quarter, better however, unfavorable achieved would recovery businesses strong significant manufacturing year, pandemic than estimated overall this $XX for of sales impact and in our also $XXX performance component customers. supply levels more expected to million these reduce we severe much actual of

estimate all-time April in supply up material experienced of high quarter disruptions record near that raw quarter EPS progressed. three transportation difference. on a original factors costs single teens adjusted the increase. versus basis impacted while mid forecast, percentage drove as we year-over-year material was percentage a a and unprecedented be of second the inflation to continually elevated to our our below the main Our levels raw Due high digit This to levels

sales during than million impacted that was higher more we less as the estimate or most expected million April. expected than about than from in X supply built, we significantly initially This by business were $XX quarter. OEM automotive disruptions, more cars our $XXX Our million than impacted

had $XXX raw Finally, million. actual impact materials. $XX to shortages million impact expected, $XX anticipated We of to was the certain disruptions as to supply the led million, an the we but closer

production deferred will elongate OEM this disruptions related the automotive the that to We later are to global confident and sales these quarters, recovery. be will highly

environment and achieve selling price solid and inflationary coming April, pace is in our price This expecting us across realization all increases into year-to-date year had ahead As our increases businesses. well to mentioned most prioritized I price Clearly the a cycle the inflation of an recent anyone much helped we're we're business-by-business cycle than and executing This quarter. continuing higher includes the to pricing on actions XXXX further raw additional this price anticipated in is and basis, inflation secure XXXX. third material working increase. during selling of

SG&A realizing structural XXX quarter second second basis is continuing quarter savings consecutive incremental As second our being prices. by our execution quarter savings the evidenced also $XX strong lower by a XXth percentage reminder, was programs, an sales million XXXX. cost This of of points being cost We're higher our selling than our supported in the ongoing on the our of as of a management XXXX quarter.

to combination giving increased of entering raw deployment historical our have performed business order We've million. book strong quarters. to about with acquisitions: highs our savings through XX% quarter. regards upcoming do of operating completed external continued third billion In We Tikkurila, traffic finalized quarter is $XXX our a ended In new with two acquisitions, other significant availability Cetelon. XXXX about the a targeted during which equivalents to and second expectations comprised the its the quarter, the despite and cash us to of cash flexibility by material yet borrowing in had another financing Ennis-Flint and full and funded cash performance solutions in acquisitions cash We in $X.X came we recently very our cash three year rate. which additional challenges quarter and had has acquisition the the at quarter the Worwag accretive attractive

already well performing project advantage technologies is Central the significant coatings to smaller due helped that us we acquired. while acquisition and America in win protective it's VersaFlex Our

company's PPG during clear first second we coatings was have quarter products accomplishment the overall President plans leading Global sustainable our our a ESG program. ever in our the and Another of further appointment the leader ESG notable industry been Sustainability. through to Vice market of has improve

initiatives quarters. in subsequent these updates provide We on will

at robust indicated their demand globally, strong second that order based to continue. to continuing of see demand outlook, including Moving that current books important very industrial many coatings broad markets anticipate the and exiting in used global pattern this most OEM customers end We activity our is trade our were high quarter. to in and and architectural U.S. levels have the we Many strong are

raw input or continuation shortages, experiencing the of to remain their production the schedules capabilities In is likely XXXX. addition, coatings be of outages expect our we throughout continue of of so occur with term also challenged an eventual quarter. later restocking spot we our expect PPG the inventory of year choppy to either to and in channels near component will third some selling customers materials. many or in this In direct

some a our from As the customers quarter. direct supply the third both some chain in unfavorable we expect result, and curtailment sales at disruptions production impacts of our

estimate due best the our issues. to in these are third million current Our expected sales to is $XXX quarter unfavorably about be by impacted

be will deferred sales quarters. these expect We largely subsequent to

also material at We elevated third remain raw costs expect the to levels in quarter.

estimate raw largest best by to that XX% of current as increases third be of will much compared experiencing quarter coatings in of the is the coatings. as due inflated those material types XXXX segment mix the to they our businesses Our industrial with

additional selling the to fourth a offset second fully inflation basis. on in result, a are quarter, experienced price and on in material increases. the significant run we in quarter raw cost businesses increases our expect anticipate quarter third As we all securing Due XXXX to rate the of now

recent will As in five very are is we operating $XXX I've and completed said available XXXX. acquisitions have our that temporary of third previously, about we conditions these sales add once there our million I'm these acquisitions strongly supply incremental company. to sufficient In December current pleased disruptions believe quarter chain capacity our normalize. since

that to earnings catalyst. be a meaningful we acquisitions, these start As we to continue strong realize integrate will will synergies

in overall be by to sales with XX% half also information flight prior the to over on website Including the post the of a year our to over to aerospace begin activity all growth in evening, aftermarket XXXX. region. sales our and low in projecting are will acquisitions, the domestic be digit We witnessing XXXX. commercial quarter compared the third In we're our volumes quarter percentage of the expect aggregate This business we third quarter world. up we to yesterday up benefit differences picking business compared second single

In when than the realized raw higher still compared expense $X.XX non-recurring and in volumes pandemic which other and significant is we $X.XX, year, expected adjusted about items XXXX. to material EPS recovered with be XXXX XXXX despite year to the be amortization inflationary we're XX% this sales full pressures would the adjusted the not from fully earnings, that dealing excluding are at addition, the midpoint fact

pleased a of I'm board about Finally, XX%. that increase very approved recently dividend our

share day consistently ability per is to dividend of of mark of line Thank shareholders anticipated increases and September PPG. PPG in continues payment for would our dividend. closing, you our Our your the company's more now XX today rewarding concludes serve will consecutive the that yesterday, our who proud doing dedication the continue helps coupled in December and XX,XXX beautify operating remarks another our to be generate of and you quarterly our confidence years grow protect Jason, our our not in annual I our world. for to board and communities the company's payment, better In now to cash prepared open the every of the and Their similar that many I in flow. around could world, testament the than commitment have confidence legacy employees This continued questions. please our and with customers, This ensure and a stakeholders.

Operator

Please first question Baird. [Operator you. Instructions].Our from Thank ahead. the Panjabi go Ghansham from comes

Ghansham Panjabi

morning. Good guys! Hey

Michael McGarry

morning. Good

Ghansham Panjabi

Can $XXX I mean as time are this just timeline at do what Yeah, give recovery so million And about there's for you XQ then see XQ more couple in quarters it market you be point. you to concern or I you Thanks the and what between slowdown what so to about been think non-OEM China. deferral in a is in real looks seeing know of guess, sort a of the total, on you us is some broadly, that that know based pulse just Michael the realistic say much. than longer you to in a just also region? production,

Michael McGarry

at the car million below pace there's peak builds, third at shortage, anticipating you a levels, overall you the of know if cars had we be going in the anticipated, because we're do and look tell Well to little vaccines of rate, in places over probably all world, around all Ghansham, But demand overall, slower a we because Europe bit would would have you Europe recovering, and continues say there. industry the of the but significant for chip still less recovering. of except of you demand they're but built originally pace about the than to now that I auto know first I anticipate right that quarter is

anticipate I we're a XXXX So a and half of strong have very to back that XXXX. going good very

below positioning on strong EVs that remains me So they're is still you range, strong up, build from most to inventories XX content. very China anticipate remain above that standpoint, be probably to continues whether at know pace XX you we are in EVs pick encouraging I standpoint, so low in are the average day that and the across quite rates are very lot, what's still a so slightly. our and specifically and in know as From levels, China a to and which of you continuing is optimistic. or inventories to industry Demand know U.S.

Vince Morales

this And Vince. is Ghansham,

More China, those know until growth seeing will account lower to XX% those auto we one in there on occur fleets. rental next while this seeing we good fleets. or know the many Michael's of that know expect chips replenish to builds is and those comments, annually, higher in XX% is the early typically at they going inventory a fleets we’re Just OEM, so sparse in markets. for XX% and particularly across year you fleets, U.S., benefit The growth car to of you rate, be available become end we later still dovetail look automotive year to a XX% car as other if rental are we forward broadly our

is think but solid rates, high what I off, accurate. very you growth The was information anecdotal the rate going has So referenced come forward. growth still

Operator

question from next McNulty from The John BMO. go comes Please ahead.

John McNulty

regard to you Yeah, catch thanks I you're and looking up and up think for. pricing with where my question. With material for raw the catch taking

you Is the you up price year. how possible levels. have the think in changes I forward. making enough these about you that, materials do guess from chain fourth might to actually about toward that in raw I right quarter getting the anything to And material supply to on tied coming assumptions be of about baked high and end off for going think your now raw you the environment that's thinking catch that exclusively or any said

Michael McGarry

is Hi John, Michael. this

in most material. We've able compounded there in is very a and First been transportation back at pretty severe is temporary look Typically lack I'd how say rate been if at to get hurricanes, by importantly think been have no but more dislocation. recovery the raw time back approaching to up the rates they've and quickly. it's this of we just We go change the and even This challenged this get our been period. suppliers are surprised actually the online full equipment, equipment, drivers. not significantly you

of that, of some where suppliers. go was number situations and challenging to we had our be get to because and to deliver So it a to trucks inability we’ve the had material of of spot out buy able

any any So into be to that, past raw if the changes. and be additional additional suppliers there saw there’d do, other the started we're as in decline. we some could know if forecasting change is provide you has to you the think mix flexibility, week say than might one I to I there brought don't major materials, ask the some is you But but that moderating oil, us overall be currently only oil me, would

price solvents oil So would parallel changes. [ph] the

only model. the our we So right one that’s now have in

Vince Morales

a the fourth And a – first a assuming that's would in quarter raws raws John, be assumption. assumptions on we similar fourth current on on quarter stay basis at your our in would similar the question third our the level, the and sequential that quarter,

Operator

from go ahead. question from David next comes Bank. Begleiter The Deutsche Please

David Begleiter

in and how Good be versus versus better QX can morning, Thank you. Thank you QX? price QX much Michael quantify or you be raws worse think Vin, much you. how QX, will in do versus they'll

Vince Morales

– this I David, think Vince. Okay is

the guidance we We was material that night did think question gave to Again, posted last John to or it’s slide XX% the out, include similar give I just raw inflation asked. in QX. in take website. our packet

to of of and And need. X% of to across initial Our our need XX% the of terms additional capturing pricing, expect coming minute doing comment between still you pricing X% the somewhere large inflation in full views buys looking well high. We to or those capture. a what actions XQ a some that XQ, throughout we list of of all to our pricing, to short still be recover John Bruno’s remove regions. ago, to spot looking price so inflation we fully, of our out currently. in at remain well capture businesses, We additional all expect price do and XX% pricing, know traditional price we in realization our views That’s we're typically we're will still are of XQ, to Those typically at are premium XQ.

is on to in our again target basis, rate run get XQ. offset So a fully

Operator

ahead. The from UBS. John comes from Roberts next go Please question

John Roberts

all what comments you seeing Asia? center. a maybe Could in you're to of more us material give the global logistical material be outlook raw raw and Europe and The view seem American in Thanks. North

Michael McGarry

leveled but to in there point rate this than not in great. for you're it. as Europe not Yeah at would kind that in if John, say raw material coming off in The Availability better by would quite thing have driven Chinese epoxies, in actually I Europe primarily increases China isocyanates inflation was that significant still the they're say China. China and pay this of time. so the were same That higher. but is Michael. in willing China. is we those actually is U.S., also the the I Availability or rapidity availability in challenging saw most was up, the

so If for material more kind volume, inflation. I from our pay So customers really with of it additional we’ve working been for extra spot, been to customers America, they And need contract, the want hard. market. mirrors to U.S. buy say additional raw they pushing and this than standpoint, our we've that would if that closely on Latin so for

Vince Morales

significantly add, has And we with John going could if some that been I freight, just ocean delayed. of seeing are

there's showing around, though availability time. even it's pulled in up So if a that's at not it's product being and

exasperating So of some that's again the issues.

demand issues is a seasonal have QX, logistical lot perspective. a QX global remind of lot begin these to expect of peak We quarter. we to for things lot the self-correct from third typically terms to moderate quarter companies, a again QX everybody in industries. the economic overall start to a of of in

of some self-correct. we again, expect to So this

John Roberts

you. Thank

Operator

next Stephen comes ahead. from The question from Bank of go Please Byrne America.

Stephen Byrne

bit Europe. wanted little Yes, to in a in rollout I thank the you. MOONWALK about gel

perspective? you this helpful accounts share How Any just the for through Is here. XX% Can are on that installations. surface targeting autobody this primarily new in a gains there be and put with scratching XXX expected many meaningful Europe? technology? is into gains the we XXX mentioned share or customers. you You shops would Are and comments outlook

Vince Morales

Yeah is Steve, Vince. this

you across percentage upon thousands universe. a small the relative This there's body is the thousands If to Europe shops. look and U.S., total

I us You make every we think to is for market know one can get most of exciting what's these immediately sold. and is,

We we have Europe. now to a moving US. now is the this – back in back orders order, This are significant

our existing We shops. are provides value their We that customers providing this for productivity. value speed paint that who the certainly

do productivity providing business shops, as are wins we prefer, think continue and around to are allotment customer with going their have roll body these MSOs them kind new to an this to opportunity We focused on purchase that’s are out shop premium I the wins, which XX/XX model. the that customer first, of we we this see strategy, of this but really the

and we with more forward. update pleased to exceptionally you the rollout continue devices will are we as go but here, is innings traction getting to and MOONWALK early continue still I So this

Operator

Fargo. from comes ahead. go Mike from Wells Please Sison next question Your

Mike Sison

good guys, Hey morning.

raw segments time terms any take pricing might closing In a other little to of pricing thoughts between and that to more some the each segments doing, in off of terms you Are a there both are get little the material gap. bit know getting of gap, close there or better bit that segments? are gap – the

Michael McGarry

Mike, this Michael. is Yeah

mean So, traditional I model PPG here. a it’s

it have gap second biggest announce price automotive and the pleased automotive most So inflationary in guys. it’s am in the every is, to get difficult to largest had one with increases I two that automotive for in the price region world. we the gap, reasons: the very is But gotten positive the

are progress ahead say the lot XXXX. and good XXXX, coatings our making inflationary were buy we also well So be we I there epoxies, of business. would in where would in industrial next isocyanates. They a

hit mix most have So there. probably is have we closed we aerospace place material impacted the to The The second been that’s the gap the business they difficult. that raw least is would the due architectural. have most

historically working We've was solutions. price the of is We’re traffic elevated hard solutions traffic very a secondary on also this our that that business business. and we've pace in a business in This been at thought. recovery pleased

don't continue were are So pleased – versus about any it's and it's where apart. cycle, we we've than push to that's seen I with gap our last we in years I'm think what this to in close the cycle really we're past, when automotive where in going think you customers, light I think and years that different hard to

Operator

go from comes ahead. Jeff Please question Zekauskas from next JPMorgan. The

Jeff Zekauskas

very Thanks much.

know quarter, did very the it When in of early – raw the Can June? and would or of did in the that realize last at between you how Was do very, earn the middle sources I at your were the you months? you of able in the way can rose couple talk quarter? quarter quickly share. history you to real that? that you it wouldn't issue of that of out quarter, what of Was might happened the it materials that be that? the over mis-assessment X.XX the And end a really end an something at thought the second turn information think the X.XX past assessed much you very or you quarter, you about you the the in

Vince Morales

is Yeah Jeff, Vince. this

this in were alluded from early in the So if point It you suppliers week directly were of one was time we and Texas. early the in in as reporters look, hearing April, to our Michael we multi we came would be out startup. earlier, event that At April. a weather after that

in of As higher materials, escalation in terms we time see period, raw the our we're the seeing progressed specifically especially in we June which continued outages is QX and to through estimates. quarter, raw June why material QX of and than

in have We continue our particularly around transportation. outages curtailments especially to from their Those perspective. spot see production continue worsen, customers and June continue to outages, to

were shortages for we in had as the we some impacted to of customers and in be year took heavily particular it So marked June, chip industry in lot by actually see continue market QX. a QX downtime automotive that who

we went quarter, the grow. the So as continue saw we difficulties through to

you that going at see things was So and look anticipating. some our not that these of into forward could to guidance for certainly the really carry were as the we quarter timeline, are third again QX, you

them anticipating even before in rectified are not point We QX. late mid-QX, certainly at some being

Michael McGarry

Jeff, I when say worse. get doesn't they quarter, disappointed and your to level to the continued they Michael. raw material just is going And XX this bank saying such get a suppliers you you. inflation you we're get that it seemed XX, help the on And and at are to throughout trucks that high would

own we material this our up accountability. So to and inflation that's miss raw

Operator

ahead. next question Prashant from Please comes The Citi. go Juvekar from

Prashant Juvekar

raw half second the Yes, next refinish. and paint that? morning. is chain; talk painting in And stores MSOs about materials, where below Can inventories window given be or sort Michael, supply are products? you do the at could to you cycle normal, sometime for if paint in shortage example of there of restocking year? or in hi! paint the Good enough in make able And your stand

Michael McGarry

tried in exceptionally our So levels at opening in businesses remarks, cover to are our inventory P.J. I that low level. all

June April, businesses they You out the went saw with much the and versus door that we made that of in out everything to of the amount in and share our May, actually virtually our working I've went made product door. how capital me asked numbers.

very in the inventories in customers know gone as So us. inventories well. see chain for you We our of have backwards low many

if you our at guys, they but lot, have look they So don't less. carry even typically architectural a

to had probably I've calls in years. the past you customers, or look customers more at quarter me had the from three the in If our past four I've industrial than directly

So customers think because course low I and trying bottom, what have inventories would afford at they to of inventory, aerospace well. say you anything increased will as ahead they do be couldn't demand. buy they of know in as restocking, they're to are rock stock anticipated now I previously, and so up

think really our can't single any customers. I shelf the at either kind inventory businesses a of of So one our or of that have on material

Vince Morales

And P.J., Vince. is this

will do we levels to it ahead, place, stock automotive safety look restock underlying many proxy of the a where demand there's earlier. our There's several we sales a again automotive normal you supply, just multiple in that very back steps we get There's inventory. from as being markets in we continuing that take quarters. about good talked to If think customer's see

product so sell So because strong our ability for feel next quite underlying we this sell the demand good or several to customers’ of the we about around some ability time the world. very to quarters than have product, for more

Operator

ahead. question from Fermium Frank Research. comes The next go from Please Mitsch

Frank Mitsch

call this cash deployment. Michael, to do you Hey, that accretive flexibility enough maintained during good you mentioned folks. morning

guys your very and transcript I'm on that this today And know in on there's as outlook. you you constructive release says, of so comments call listening, are number the a in

extent on as curious what you able buybacks? to opportunistic might So to be just be

Michael McGarry

take as over prefer at acquisitions Frank a we on you we know, Well the look Clearly, monthly the this basis. buyback. always a

strong $X.X finished We're with a of to billion about period we into year. back cash. of we that generate where half the our the coming lot cash very quarter the in saw $X.X You billion cash of

a cash I XX you been three quarters, the the in ago. the X.X, think standpoint from availability company as a six call position. that so so we're not our with know couple targets number months of last it is and good coatings it coming top There been in good of, in, taken current off has of last the ratio as four probably let's or is was board had

mind So you and balanced remain to keep know we open how right an now that in for deploy to cash. going we're we're going

our our saw increase like important, now order I dividend. say and going acquisition, you you stand, that was to is say a this significant You remain milestone certainly I that where that we log XX think balanced that but if would book increased viewpoint. of We will know years we dividend overall would right pipeline, we're I on

Operator

from comes Please question go from Exane Favre BNPP. next Your ahead. Laurent

Laurent Favre

comp, pricing, morning. that? on [inaudible] guidance down demand, the both some, good Americas and the if buckets you. materials, driving QX to availability etc. is volumes architectural question My could in on talk raw of Yes, Europe. guess what’s Thank you with about Is the it of wondering was DIY different and due it I I underlying is share loss

Michael McGarry

say share performing really We've been no would in architectural. certainly from there's pleased an with I Laurent, we're standpoint been loss. architectural how

numbers. are saw numbers the and strong Europe reported You the U.S., both we in

do looking eventually to to DIY they we're moving and So anticipated would as are stand. order on levels we weakness we're is outlook we DIY but that. the when what still pleased above in well you go with out to start their two, to combine from see increasing to that to the is trade as of would from point and offset a book so I start people what standpoint where We at and going vacation know you you shift spend our happen, hire on professionals the DIY, trade money, people come know is in XXXX

the performance architectural pleased with is are quite for strong quarter the third the we for know outlook and the I we think gave business. you of

Vince Morales

supply U.S. we materials I sales raw I ability in trade-in our to add, the for would one add the we one of so moderate third Vince. do key on is side, have in limiters the our terms some that to coatings of especially raw so supply other is material products, are from experience of quarter our in still supply, outlook. would so DIY, in is shortfalls – it The expecting this

Operator

Your from next Vincent go from Please Andrews question ahead. Stanley. Morgan comes

Vincent Andrews

much. Very

know you halfway wondering, through Just XXXX. we're

us you we're an came better maybe sense back much that and know of, give the sense how that’s when? know as of know you assessment COVID, Do that the halfway cost you avoid You of have able costs to you’re with now could to any out of come a going the year. you through

John Bruno

Yes, John. this is

at on we to continue of back So now. that bank quarterly but things million entertainment, just we said – open benefit an to million $XX felt savings. think we're another modest we kind $XX we stuff some the annualized be We [ph] of that up, basis basis second comes There quarter. might travel million a some Perry of $XX could on that in had as temp

So permanent this we'll something stage this ebb activity. just demand because talk more know now think made flow and much about, probably we've of I some more you these and our won't with reductions you at costs I volume we is think know and

Vincent Andrews

very much. Thanks

Vince Morales

Michael visible target for do earlier these out benefiting just that, have not that see lot we savings a for gave those And of this the of of some have savings of top for as dropping closed, but interim visible also although five that is targeted that, bottom target can in sales, dovetail We're be those call a a the now on administrative when we general at see and importantly percent just cost acquisitions. of are Vince. I you multi-year line, XXXX. more these, do will synergy savings the only and and the of the we've from also our introduced in us. significant a structural you savings could year. amount couple so On think acquisitions, more to as years We selling the on look a you to

Operator

go Vertical next from McCarthy comes Research from Our question Kevin Partners. Please ahead.

Kevin McCarthy

Yes, automotive you a moment, we negative many business. know your cost so, price relative to prior of have your more variance a source by automotive spread the demand Michael, other businesses across to was or good of I'm that disappointed that on would driven the there's would spread morning. lot focus care you side put the been was you and out expectations on of call if know as that a curious, for variances. if

Michael McGarry

to the businesses so most architectural were Kevin, was the two impacted traffic same that the solutions, automotive besides Yeah and emulsions due thing.

our a getting emulsions time from suppliers. and had we the resins hard So

paint demand. that despite of kind You were having mouth to on so those hand significant can't make and things, without we

you the If big of into or all would put the stores are on the that paint you struggling or to any our asking boxes all in go go shelves. suppliers the they DOTs, tell

but enough the number call we material So and it of it's whether a ones know become interesting, I track everybody show most was material it, think appliances number, heavy other But are think or other the that really duty number of I is know be to chips traffic because places architectural you out didn't equipment, things. been but didn't but a up, it the would say that would it to somewhat, two biggest has turn so didn't impacted I solutions. out, you

Vince Morales

traffic solutions obviously, two into Kevin, the get Yeah Michael of I’ll can businesses, mentioned, in even many architectural, we add our aerospace. automotive that just

fulfill. Some finish, have of know higher that exiting not a businesses we industrial we book order just could QX you our we

earlier book to with to So be very alluded availability. as our that strong. we able got is product We to order just fulfill

Operator

Markets. from from go RBC Capital The comes next Arun ahead. Viswanathan question Please

Arun Viswanathan

thanks for questions. taking my Alright,

I to items versus guess for little some back to potentially and bridge the ‘XX ’XX. of the question go I I guess bit wanted last a So just understand

So of you full accretion on have many year a the deals. of

price normalization hopefully You of in on your have you’re cost. volumes up kind of a and caught some all

cost levels. that made comment you fair to be a think your So on from when is to I is to think that ‘XX seen there double point well. you opportunities as and is about you ’XX ‘XX grow going a you cost in starting what side, that growth recover as the you've continue given Is just margins the digit there – EPS price spread Thanks. know ‘XX

Vince Morales

out economies look Yeah in fluidity Vince. at There's little A of to is want the a Arun, lot there. this just we longer do than this in time. point bit still

for acquisitions we’ve positive make early base, for get next the to call all you year good given strong a normal into that spread it's parlays looks to it's cost We along price have we etc. certainly Typically make synergies environment, like with with to going these just what know too chain about positive that hope demand. but better of too to into lay think cost when these on you think industry, normalize, very supply just all time at think the them. it'll not us come XXXX overall know a We demand the right tried outlook. optimistic some year. We are but now. do out bigger early PPG point the I but demand, know in you calls We the results, today we of store, things sales this specific, think the only that feel You

Operator

comes The Duffy go from Please Fischer next question ahead. Barclays. from

Duffy Fischer

we in I down guys. morning on particularly just to if good drill can. Yeah, wanted QX volume,

And Vince, of X.X% segments then in growth, to rolling would mean to about issues you called price, the all would is sales price Michael X% low because X%, another which kind that. the know add be which of your growth maybe I you than million of that's flat single that down. through and of kind volume You of relative to $XXX as kind know foregone digit both talked out mean might

the that kind light feels growth, is QX, what X%-ish in are the pretty it's we which how like looks of say early volume would given in rate cycle. run So

for volume in So QX set think you into just table and how continued this that growth the then year what can you the and then about the of underlying talk year. volume kind rest next businesses, is of growth your does

Vince Morales

this alluded still give Michael as try ability you order numbers constrained shot, Look, book. to, business Yeah know our on you in by a fully satisfy to a lot to our look we're Duffy, I'll of when there.

into through well if to QX continue We not expect QX. fully that

constrained is out the are end there. Some guidance lot to produce, of pass in an their industry be the of again demand supply going What a our pieces ability moving so able our we to that's not and still out that we're I'll level just there's growth you to of to as gave single confidence customers through well think we the organic again digit there QX. on low even of by

see traffic know strong, aerospace, recovery how still miles but in occurring starting together that's demand to strong these you QX aerospace, demand very we’ll determined, how come versus pick some QX, demand, occur So in in as underlying refinish up. pieces

underlying just demand confident got able there fulfill we're be there's to and just So to we it.

Operator

The next question comes from go Bob Koort from Please Goldman ahead. Sachs.

Bob Koort

to those scope having Vince, be hikes markets morning. next customers that is guys procurement. that about of Good How Is I hikes there the and impact going price you. think the price customers a spot sustained start that something for to and with tolerant basis that you. to spot into force some majeure to those hikes your as the normalize. as your you Mike market for to there pass on terms confidence just and can to year go are Thank talked suffer your own then use for price any you or retain happen? somehow you doesn't Thank along is you of

Michael McGarry

Bob, No Michael. this is

gone raw they charges have to you to material of if are, know that's freight want we spot orders, us to pay – asked have move that increase. overall aggressive and to to for a people. know customers pay but want our keep that, trying in get to running, to portion been them they additional In We buy the order the for you up them them from if

real know so even still these know the increases. without You XX% have to XX%, you spot been are we would

their not structure or well, things. they own to know having debate You so not seeing are as we're able whether cost they these are them in

but on there we’re earlier, we’re very alluded look know overall when to that some ahead have we XXXX, back increases and as of increase to know and about lot significant been like with we'd well out so. so I So think XX% making to a XXXX, Clearly get in need I of Vince that, of progress you the you regard. moved faster, we've

the understanding to think do and you have is what been to are market move XQ. customers that and of and this to often I to know it takes early XQ and continue out we've in whole we’ll very capture and the it

Vince Morales

are product our and facing coatings issues and And they are add, well. are Bob, of similar as I’ll customers their customers, know just most just they of you trying short supply to beyond

the So well know materials are you this and variety a pressures different of customers spaces is seeing pervasive inflationary from industrial a and known issue that's across our industries.

was industries level alluded it those in certainly again the of to past cycles. of as one Michael course is the acceptance so higher and We’re than today

Operator

ahead. go from comes The from Seaport next question Mike Harrison Partners. Research Please

Mike Harrison

on I question had the business. aerospace a Good Hi! morning.

maintenance have service. is some how aircrafts business, repainting situations or to aftermarket Within about where return business just these the of Maybe for before aftermarket been that mothballed a and several they do talk out. months significant playing even need bit have you recovery they little

Michael McGarry

side. be lessor, any, is easy the returned customer but in so had don't returned a need Yes, one the on They the repainting format. if say, they’d planes repaint if white those per planes, to a

we the have of during a So painting planes pandemic. white been lot

we stored, we're any see will that you because Also, so be do painting returned to heavy in before rebranding will are maybe maintenance events But the anticipating they historically if is need pick-up do big you are out going this, also that some be to it maintenance inventories service, not plane when it right so of don't service, happen back they XXXX. being that. the overall goes but But properly there there was white now, do we're of take now at like big what into Now exceptionally then they done, to cycles. XXXX, it a check will find they storage, have the right some on is after overall low. to

our book say in has improved book-to-bill or ratio aerospace. should order in significantly I – Our

get out have product is the in right now get Our labor enough backlog challenge has biggest to in we the so to our we our plants, business work able increased sure be labor, the making aerospace and to door. qualified the

the aerospace not We're side. yet So on MRO we're good very side. obviously the OEM about feeling very, there on

up slightly lack a up they of are of the the picking on flights. period are picking XXXX not we they that up bigger are because time until picking birds, the builds all seeing AXXX, don't for know XXX, slightly international up anticipate at and on range but pick You

Operator

Research. JD go from from Panjia On comes [ph] question Field ahead. next The Instructions] [Operator Please Investment

Unidentified Analyst

a Thanks lot.

really question the a around Just logistics.

So obviously increase China. a out container there's of rates significant in

because but or So a your if lot I of literally XX% you last let’s in expect do into volumes all in U.S. the some than rather call your out and down raw it of of quarter, as materials normalizes, sharp in has think basket, and some cut gone say materials. the logistic when Europe about rate situation a material and reversal the of more only are own coming China oil are their container gone raw sort doubled have it that up,

the lot. of dynamics? Thanks do you once material reversal a situation normalizes, sharp a rate raw container So see

Michael McGarry

a Hey It portion say been we're materials. is Certainly prices. spend. The container a the We QX don't think inflation I base but XX% so. its balance the QX, we’ll start only in now the balance in has that significant significantly, you prices raw not raw overall we has said in bigger our supply this for inflation of anticipating still Michael. in we the XXXX, I overall if base and material significant happy would could normalize supply-demand if back overall chain, is in with so would happening container rate supply-demand JD, will the get right when somewhat. escalated we're to have challenge the issue see

still we're for out, looking inflationary a You look as far know cycle. as can currently we pretty at

Vince Morales

a then so the sequence, higher again a some which by in not supply of priced. events I what here. systems shock only One the was was the obviously international got add, we've of seen chemical logistics, but the this chain. could by compounded got logistics then March were sequence, just That was compounded – compounding to out is Vince. If the Yeah, of is due

of materials is what events kind up. really raw these chain pushed these So

the out that of of season. we Some unwind get will as

of season, balance to I material do earlier, As year. peak for expect elevated raw but QX is we said the the the these remain costs

Operator

Edlain Please the Jefferies. from from comes Rodriguez question ahead. next go The

Edlain Rodriguez

guys. one Thank quick medium I you. quick one Good morning question. Michael, mean about volumes. a term

seeing, the So Do you when so? at do sense still of essentially below catch like the couple businesses a that more you they know and or up activity or pre-pandemic XXXX your it given get in XXXX levels. look are have is pace you you of when of there

Michael McGarry

business be in recovered not aerospace that my is only OEM. XXXX the Well, opinion by will

we XX% is see the up, we're miles So half out you back the refinish is in year you're back. what and aerospace will the the we as XXXX saw be the anticipating be anticipate back into of will vaccines suburbs. We from same military cities that in probably already Europe we when back a Refinish, MRO so opened they last Europe seeing Certainly very back. will strongly, thing saw already come the know of significantly Europe recover XX%-plus the actually refinish, all XXXX to hopefully recovered the little and normal. by we’re U.S. shift in at traffic get from

the back every see in back So allowed India and the snap a of U.S., to get see to again. the all and we China travel here in collisions normal, we are course month in improving folks you it's actually know whenever way

related, places vaccine is confident. so pretty it and we're most So

you the of back businesses, automotive. industrial we're at in go our If work, already back through mostly rest

have know to well next business another ahead, the in is packaging so year is business going year this packaging is strong, our aluminum record year. packaging Our very demand you and

in high at you they value to prices now continue start our these look the know that know you fields. I If to oil as PMC oil expect to that business, recover protective have protective, recovered, you protect as well assets

and So of XXXX strong XXXX. I'm have we're recovery back demand in very demand a that the continued for a half to going comfortable

Operator

the call There to back over are time. turn I this John no you. at Mr. Bruno, further questions

John Bruno

like you Jason. earnings our in their for I’d call. quarter second to PPG. interest everyone This time thank thank concludes and Yeah,

Operator

This concludes today's conference call.

You may now disconnect.

PPG Industries (PPG) 20 Jul 212021 Q2 Earnings call transcript