PPG - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Rocco, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full Year 2021 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 reminder, today's a being call and recorded. ladies as conference gentlemen, is And to over the now turn I'd like conference to Bruno. John ahead, go sir. Please

John Bruno

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

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

information released January financial U.S. Our markets Thursday, comments the relate on after XX, closed to XXXX.

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

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

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

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

Michael McGarry

to remaining the we to quarter morning, would and like supplement our evening. are healthy. earnings released and will ones I your detailed John, everyone. call. safe comments financial and some to last welcome good Thank you hope fourth I provide you, loved XXXX I everyone results

$X.X we raw the about but manufacturing were shortages, adjusted and per sales order versus we summarize record forecast, sales earnings challenges continuing quarter, favorable For the billion achieved supply diluted to quarter, and share had net customer patterns challenges. significant of intermittent due quickly material COVID-related staffing fourth operations To incurred our from our $X.XX.

aided lower-than-expected tax rate more Our favorable were as fourth items. adjusted we by quarter earnings the a discrete in recognize

tax production, the Excluding realization provided below end-use financial the guidance, and robust. from volume better-than-expected in solid adjusted than price favorable strong our in demand Fourth of to was XX% higher impact higher quarter our was Overall, selling the several guidance markets. EPS remains primarily we about we due OEM above-market global October. sales achieved sales automotive our as rate, in

sales improvements by excellent expected Solutions of business led marine in growth PPG-Comex again and the sales for portfolio. line our January, its industry our trend continue added and earnings XXXX, the record coatings to finished XXXX. and X,XXX its we builds and protective the This The marine Our and years. where top of business organic delivered this in results, Traffic products business grow had we year with concessionary for will for growth expand to full in its quarter and yet concessionaire locations another XX% network, next are strong network, to several recently continued time have

in awarded higher we selling were offering. differentiate full competition. share realized of And suite automotive also our we OEM new PPG We XXXX based business finally, our expanded automotive where our grow products globally. And continue increased our prices from to refinish mobility services Advantage upon in product and

the Lastly, fourth difficult operating the business record acquired any recently earnings Tikkurila and delivered despite for environment. sales quarter

fully consistently continuing been to have that have and strong manufacturing in us operate and hampered our to customer we up our COVID but would some books. of supply from facilities better, XX% disruptions experienced ability Recently, sales cases increase fully order our overall chain a businesses, out. had meeting and we mentioned, face exiting I traffic prevented As workforce in about sales U.S. backlog was In raw and quarter, solutions. certain their in our the of coatings industrial and continue Overall, on grew, notably the general material to businesses. our architectural and and several in aerospace biggest $XXX automotive total, refinish shortages impacts million most with significant

our expectations. did earnings segment Our not meet

rapid increased While supply we significant benefited disruptions from sufficient to and prices, by not COVID offset operational within it caused our cases inflation, higher the selling sales increase and in inefficiencies costs prior employee and drivers. base, material available due customers cost was XX% and and to those transportation spiked shortages suppliers. Raw of and year, to that inflation trucks approximately compared our was up

were costs we both increased has to customers' our actions quarter $X.XX due in These higher taking diversify in our the our supplier of COVID. operations mitigate to share facilities future operating manufacturing operating capability. performance. addition, during at and capability Once see and and the manufacturing manufacturing return in-house manufacturing has our from by impacted legacy resin we resin We've quickly absenteeism large-scale stemming costs that January. continued major XXXX to we region, able and quarter base are normalization, per our will strong expanding In to further internal increase risks. confident COVID-related PPG each we our in be progressively interruptions been some are

has sources resulted internally, which a minimal percentage high As X its disruptions. PPG-Comex residents example, in of

as high rising level to utilities. experiencing historically in of such areas addition costs commodity In raw material prices, labor also and other the we're

about fourth in additional to with first proactively a work quarter with industrial reporting price our to selling selling In expect quarter. increases We implement our segment. price was price in aggregate, our the in realization to X%, customers continue higher realization the

challenges record we chain Reflecting incurred. with faster supply remains excuse and growth price regions, me, cycles. acquisitions capture led of in pace good pace capture is and to $XX.X the broad, the all all various inflationary strong of -- of and we back strategic all-time price price than traction of XXXX, prior businesses pace despite by Our billion achieved of the the sales ongoing organic much XX%

delivered the coatings of XX% we cost again of by as in the industry of more $XXX delivering our recent than inflation sales raw material percentage million in EPS inflation once level record full by addition, aided decreasing about restructuring XXX about highest lowered with growth memory. SG&A a basis savings XXXX. for We XX% even points, In of year, in

customers' quarterly We XXXX had the XXth also acquisitions, a more advanced more to many repurchases Architectural for most notably including years. patterns our the number ingrained. we or on the consecutive businesses, Coatings transaction XX% In see XXX increased digital fourth XXXX, by digital our capabilities along achieved the become cash of in strong We're of a fewer sales among in quarter for platform compared than business accretive milestone, year. in share deployment, even made our we funding digital companies our as dividend that small paying with consecutive have and companies increase dividend this a

a percent sales material capital fourth historically low as though levels last working quarter. purchased to in Our more of than at the raw and comparable even typical remain we year,

our sheet Finally, and lowered our net ESG for debt about exited we balance took to bolster cash have future in actions funding accretive XXXX, a we by strong deployment. program. Throughout June with since optionality $XXX XXXX and million Tikkurila

our corporate structure. our As overall committees. an ESG define for under fourth further ESG accountability the We Board we strengthened example, efforts governance in elements oversight all and quarter, respective of major

materials. renamed the redefined is and on our Committee and risks also We a key Committee, Innovation and Sustainability presentation sustainability and Technology with tracking our and in reflecting defining our to opportunities. A included changes Environmental progress slide focus climate-related have the

in to robust continues deliver XXXX impacting demand disruptions expected evidenced our ahead, Looking to supply be Tightened most are manufacture in product. end-use fourth our to the continue quarter into the markets. quarter and ability first COVID-related of and of

second anticipate to be severe economic levels increases certain Olympics. first operating COVID the quarter. further during China quarter implement have Winter all in during soft activity restrictions been more are at further to imposed other plan increasing more favorable the and elevated and conditions and due materials in expect economic We recently the inflation We as to as selling our We areas. businesses remain raw cost in price in

cost will continue manage of and challenge. aggressively to to supply managing We cost of current minimize aspects impacts our structure the all are the

provided normal. EPS a guidance quarter we than has first The wider range that

the typical, our will quarterly March the be component of to largest is sales. month As

current half visibility quarter impacts is disruptions the and Omicron to due chain supply of the second the the various around Our limited globally. to of uncertainties

environment end-use and return future catalysts margins about earnings with remain consumer to problems, across supported general businesses collectively First, difficult of coatings progresses, While an them. experiencing the spend. Advantage we XX% many global which XXXX of and exceed recovery by these that availability. supply that levels will current and refinish, many XX% have I OEM are more to where markets remains opportunities businesses order This the and healthy account company for easing to chain operating for and remain very The economic to I rebuilding willing being by experience see includes: as capability in optimistic already our volume of our below improving is predict, pre-pandemic peak crimped to continued expect supply inventory to start reopenings we prior a aerospace broad we about automotive and pre-pandemic about flow sales businesses, technologies.

normalization time which moderate Second, improve. of over material dislocations costs, supply as raw commodity should

the now well world catalysts, all at Pro express many operate. around work market we the want path world for the This and you Every reasons remarks. company's commitment to on where And of and I closing, U.S. day, thanks at The from and we the these your market services. today our structure. employees are you strongly their asset-light we outgrow our Fourth, to all supporting XX,XXX technology for why acquisitions, recent and more Home and Depot our our future. This than a PPG. above please communities my least the than is and are distribution locations. appreciation our prepared in XXXX Thank protect the Considering driven X,XXX supported lower locations. including synergy the Paint Supply of by in XX% Together operating U.S. Assortment The to at our Advantage recent leading with sales and HD capture our cost opportunity to higher on growth Depot, growth and are leverage announcement increase the positioned launch with the with volumes Third, beautify organic our line customers to to to our organic believe $X and by would continued we positioned example XXXX. questions? purpose their finally, growth concludes synergy And our EPS XXXX supports Rocco, In target. in earnings An to have expanded on the in to serving delivering strategy original key initiative I confidence of by due dedication relationship of for brands, more a hard further Pro adding Home open year-over-year

Operator

[Operator question Deutsche today's Instructions]. comes first David from with And Bank. Begleiter

David Begleiter

QX out China the around guidance, what's manufacturing impacting details parse earnings more on happening bit it's how the just little a of disruptions you Michael, guidance? QX in the the and can U.S. and

Michael McGarry

we're lot we David, seeing quarter. not a the now, in I Well, right whole fourth between experienced difference what think, of

had we So manufacturing about deviation. negative of $X.XX

the to we If October, And out about November, quarantine had December really that to a Xx what we're had just And they people people amount exposure. of Omicron. if close you also Omicron, is Omicron with China. we about in but are gets have sick have worried includes not people who with think because and that January,

COVID about think plant And people. they you Tianjin, zero small our just there. recently, tested days, policy, and So China in they had PPG who in in outbreak and XX have a million is a if largest X

their Omicron zero were a have with could that effect. to China and COVID to get So they pretty if disruptive policy, continue

right to in started I it So very -- how come yet. but peaked we're And Omicron just this. has the look being down in think now, at U.S., I careful we hasn't

Vincent Morales

Yes, production Olympics. limited our the you think in if to had, limitations do be to David, we've somewhat guide concerns, that and China due we will the or QX about addition know

also logistics issues significant other of in the parts U.S. are world. the We in and experiencing

weeks. especially QX, the month on us, overall March into the to continue in And March visibility for first typically X economy to muted we to biggest our when the X issues by March quarter seasonally. improve is is far traditional. logistics issues month would, given the in we those past the as expect And of We starts seen than over we've have more

Operator

And from our comes Sachs. with question Koort second Bob today Goldman

Robert Koort

stability the gave material Have you compounding in seems and Are in give hitting outside to guide same inflation Can raw inflation the the you any any quarter suggest a raws? in availability maybe us down? a Omicron of those crest, Michael, bubble Do is that seen the the as the you past aspect to starting problems. obviously, you see come ones first any that inspiration the hit caused production such improved. trouble maybe you availability ceiling? issues, ones is

Michael McGarry

guide Bob, Obviously, off. looks have actually, pop think at XXs. for to we're the One, the factors. I X Yes, recent leveled in oil the our up quarter materials raw mid- first watching high

So right material to inflation. now, solvents. that But could XX% an on modeled raw have impact XX% we've

quarter, first price our the be same were going For we modeling that level inflation. as the also to material at raw is

So I be a think to us. that's good for going number

good. obviously, logistics. watching price seeing price think between we're so raw projecting are will And equal But anyway, I to inflation it's and logistics up misspoke, I X% I XX% are but costs, feeling XX%. to for QX. be pretty And think We we We're in material XX% QX.

Operator

today go question Chris from our Please Mizuho. Parkinson And next with comes ahead.

Chris Parkinson

goalposts moving lesser really appears slightly as those getting costs the the on on freight, But we have You I XXXX. material on a labor. been it quickly should balance XQ? hit about and guess, and raw half bit electricity you capacities the talking but extent, on I price, thinking a of about it's at seems both of on depending and that you've procurement be it can little how achieving first through to, cost Michael, geography those and just the variables know the it heading comment and to already other shortages, front. rates -- you the keep varying highlighted, really

So question. the short-term

your these The second and alleviate any just can that are to future? other potentially thing the strategic you is team in there take actions challenges

Michael McGarry

have challenge you not would we truck biggest showing Well, what drivers I now, tell is is single freight right up. the

loads. So then get buy have you having contract you That's you don't end spot one. the price up negotiated, to that

but we you as I roll although been that year have a labor another that an you, we'll in tell off this for one. are try tell Overall, that inflation. any space. warehousing That's anticipate long-term We always seeing I inflation, we would anticipated. contract, those though, do to looking be all of increase would

So we to haven't inflation. there's anticipated regards that that nothing in

our raw to we're looking get well Our very material and material as customers inflation and that in is with from team total raw discussions versed not well. customers, we've but been just our explicit inflation, those

to if don't that anything would there's first think So part. the I be I know, Vince, want you add.

Vincent Morales

Again, just cost stratify raw goods total the they're XX%, Chris, of to pools remain materials here. Yes, XX% cost significant, of our sold.

percent architectural and If sales, in you look at a Obviously, labor, little our a the businesses, costs it's a the higher. the stores of distribution lower. our some in businesses on like the a OEM is of we of single a digits architecture, a sales. percent is to lower given mid-single-digit business and feet little street, mid- higher, as little high Again, the OEM probably finish logistics little

smaller company. cost So They're much them while covering price. these for up, labor components we're and logistics and they're costs, with building the

Operator

question from with Ghansham next comes our Baird. Panjabi today And

Ghansham Panjabi

half constraints? back last shutdowns of of this the more How about the Omicron, the on point, and labor guess rolling Just the will side issues half because bottlenecks year you as think be at it of easing that? degrees be given first should think level, unfolds? and see customer homebuilder half you there'll logistical first way the OEM the various you auto at 'XX, high massive all have or than pressured level, the do in we I'm I disruptions asking

Michael McGarry

morning, They what an difficult a a the in be toughest just manager. I thing call let in plant many to is check see it people up, up picked example off manager. biggest then right job phone the the They work. give think didn't me sick, their many go how The now through plant to Omicron, and trucks about is how PPG get see Ghansham, how you dock then they to single then get are here's of didn't out customers my into wake about move to how batches and area going to we're area And we to smaller materials. lack people the find then it is them, if going they're because have of get supposed that in sales many the telling and was to me don't to impact. team supply the oh, they raw plant make that paint God, telling door, then receiving And the the go out they to. come chain

think to So by second contrary your the get to to getting handling shortage improving? it. marginally that chip a They're they get time of I to better issues. definitely they've is The I OEM going morning quarter see they I quarter What their when better. before meeting, automotive But the is desk, even improving. first have question. continue about do to at see

is right a positive. get Refinish, that So now that having we're better. this to going is clearly, winter

first China is approve to refinish to that, fully they the increase quarter. Boeing And so for anticipate that At is seeing, are approved booking to how And you've the a get be about already of to second is quarter talk build going Also, rates. airlines going point, better business CEOs some XXX we when and our positive because going the will Omicron. people post aerospace we are MAX. heard

aerospace So to quarter. first we quarter the to business to MRO our improve second continue expect of

of in XXXX. to new packaging for a There kind packaging push see strong of business, are we opening will sustainability. be continue plants a Our that number up

to from metal going And so away to single-use transition a to is be continuing, positive. that is plastic plastic packaging, from and

quarter second marine coming we to quarter builds that are positives but are to anticipate those up the first be So see in that China a event. going to that don't significant, I the be -- now. new Clearly,

half think of year. a I back that's the of more

Operator

Roberts comes with question UBS. John from Next today

John Roberts

pail their you XX% production. plastic it, had Michael, of bought I own resin Comex, in when think

What's other lot level for of right in lower regions. the PPG? the obviously a pack integration You're

Michael McGarry

Well, additional in tell answer to build capacity that, I the have the precise put balance that's resin you into capital it. not you you cost would a buying because to that of

And a to supply Europe. we're in not a actually bit getting so see capacity in we're it in us. adding don't because the U.S. need is is from more Asia, priority And good the us, for do capacity little more for availability pretty Europe the Mexico, in We that certainly

is a balance. it So

you tell source are in would resins 'XX and internally we'll I be So we higher and 'XX than that today.

Operator

Wells comes with today And our Fargo. Michael Sison Thank question next you. from

Michael Sison

Michael, just a volume, But the help of sort good will and suspect savings cost gap. pricing of then there of the that, on of sort and I raw curious closing if material portion you such? that much could bridge $X. to gap us be any that and how the gets walk us help

Vincent Morales

Yes, from and OEM, is Mike, to the I'll in normalcy patterns issue around see a a or those biggest Michael need aerospace to last this we XQ, is strong XXXX for XX% to some start down biggest few some businesses, XQ, businesses. color how just our some you in see businesses The add do to businesses of closer case those refinish, couple of Vince. talked can We the those more we've auto minutes demand XX% that we just gave XXXX. color. quarters ago return aerospace. the get but about Michael to get on that levels. versus of of $X, are And

XXXX. price we raw exposure had of is One other we all of negative the expect benefits

the are cresting business. raws we're As on to close getting Michael them, depending prices said, exceeding raws, on or

recovery out. we've $XXX of $XXX taken out cost And some of to then look via you there. another million structural about restructuring. Mike, expect cost We've of we million years, out overhead about couple over $XXX million the year-over-year past taken if So

than So we've volume expect historically. returns, had higher a we margin as incremental

get a the to the So those those. will biggest that pillars again, is And normalcy X us of return the of one of are $X. bigger

Michael McGarry

we're positive finally, And XXXX impacted about And wasn't there very return you obviously think time then us. Mike, think in bus at, that bigger is I use that just the like could a about good businesses will a for period. this add one be in the item or productivity. you would our external can in you when volume, and Productivity how sources and

Vince Morales

I'll this up X that total. targeting now add our We're more, Michael, taken we've million And synergies in quarter. $XXX in

$X. getting will that provide assistance in also some that to So

Operator

question Thank next you. And McNulty BMO. with from today our comes John

John McNulty

to about in maybe much you the help little bit there? had. give maybe can Michael, help terms maybe think that. us opportunity that is a help scale get fill big Can color you big us the of Also Home how win might you to initial Depot from of you incremental how and us

Michael McGarry

So extensive first we would way it the all, I test. a of had think John, very is, about

So out Tampa, Albany. in started we Denver,

about or expanded XX we exceptionally well. So that Detroit. We stores. New we then about added Indie, XX-plus that in That and Orleans had market. went to And another

to XXX pleased. they paint externally. optimize items, So were Depot data they buys in better job paint. Depot, but companies winning if We want a who PPG to that do purchase, pinpoint #X they'd into a that, between but not the that's Home to We also number comes And of be Home to about able share buys to as it, of sundry let's able very and productivity. that thing call internal we result who win who of and in stores. a is store what the target And is externally. buy were winning able are able do Depot, And comes Home were paint type in the not do their

is so us. And for significant going this to be a win

many We outpacing Depot. come to years of with support the be for growth the Home Pro will

in and So we've stores and share stores, Pro formed basically their them market. taken Paint network, this they're significantly allow the our will X,XXX-plus XXX to grow a

Vincent Morales

we know big with our digital size Depot. of Home brick-and-mortar. more to platforms strategy, of we if all probably existing our build for And able an compared CRMs data, could is consistent is we're using into strategically. distribution us both asset-light or Vince. of the couple The where heavy use And one for customer our and format that is as This I digital do things in alluded this also add, to model exciting consistent things This painters customers. A us with Michael that

always As Michael painters Paints buying alluded of sizes Depot today, they're going Home all all into are of but paint Pro for something. to, not all size,

So full we outlets different needs. retail X get to visit X alleviate their hope, to different this will, need or their

Michael McGarry

is will about. Which this Pro for what productivity all drive the Painter. That's

can the time painting less spend and So time stores. driving more they

Operator

Thank our today you. Stephen America at And next question Byrne from Securities. comes of Bank

Stephen Byrne

this Yes, I'd continue like on to Home relationship. this Depot discussion

Some digital containers, it service Home Is site of these to that? benefit the on really Does features if delivery X-gallon involved in or provide contractors whose going doesn't. will paint free and from from that you change? Depot large may that to job And your but from so, be your Depot will this? depend app stores provide provided is that Home stores

Michael McGarry

will Actually, Xs in store. Yes. we the have

Home into PPG the already Depot in now, store. go X-gallon you right you'll if So see a containers

turnaround We also a Home with course, Depot level are digital to that ordering fast has agreements as provide as their people delivery of on Depot will be our digitally. coordinating our well. apps Home stores own have already appropriate. to with on And And we service this

to So dynamic is how a this continue major Pro new paint to will in delivered be Painters. our

Operator

our BNP Exane. today from Thank you. with Favre And comes Laurence question next

Laurent Favre

X where architectural QX was businesses to the OEM is EMEA. in than slides, expected Michael, be QX, you highlighted better and

little a OEM. Could EMEA architectural bit more You've line? the about you auto a about talked say quite bit

Michael McGarry

Laurent. Sure,

Plus a not to expecting see small pattern lockdowns Painter there been Europe. it's though is really Europe, up. is in order even have growth have picking so that market. in normalized, Pro you what in kind far so has impacted And starting the of we European to amount growth is in the And DIY are the see And Tikkurila. are we but Pro of Europe in in continued that the

have call has we pretty line out -- good well. a and worked So sight they what to their preselling pretty season, of their that

expecting And quarter good so in architectural. to pretty quarter, first a European we're have second

Operator

with today next Fermium Our Mitsch question Research. Frank comes from

Frank Mitsch

quarters a path to you see returning couple gentlemen, Congrats, peak listening. see in morning, let the give glide outlined of that to you time or offer margin and quick a was a of compression. over mentioned couple you're the why could Good you Michael, the also And out last if we've Mr. a them. shout if wondering margin you seen exceeding the you path and me improvement release, next a I years? that prior margins to of operating kind Knavish. line

Michael McGarry

Frank, we margins. what that this improvement out, is start the point to should every Well, from quarter I about, think in think you see should

So anticipating we're flattening materials are right out raw now.

Our price increases continue. will

XX we've a of price. row So had positive quarters in

So out stacking XXXX well. we'll be there as

that's the behind well. be getting be so going us. behind be us And start of Those will manufacturing the issues it. as to We'll

less be So number want we a drive that paint into productivity, take will then to put the less we positive. labor programs, so capital to you And that door. have a of -- more need productivity business get to the out

be a also positive. that will So

we there over wouldn't in about So being I $X. why XXXX. know be don't we've talked

Vincent Morales

Frank, normalizing some recapture. hope quarters, the significant get X -- to we're X or over think we quarter. catch-up on In again, pricing. there challenges closer think, quarters, I successive we've we to just But playing -- faced Again, past the we to this parity that's been

So late John nice the big mentioned, tailwind. with X%, X We're neutral, we'll as at back to then down year. have down X% And -- driver we're next if are expect to And Bruno our that least at a probably businesses, those us not that of and versus capture significantly. to several of alluded normalize come this at I into manufacturing, latter XXXX part earlier, synergy going incrementals. as some for the The headwind QX, still is turn we real point, heading year a catch-up again, But volume. into we should early hope again, QX. in

be will sequentially these manner. stacked in So that

Operator

question Kevin from next comes Partners. Vertical our today at Research McCarthy And

Kevin McCarthy

making just good there. follow-up pricing, some on Michael, a progress you're

on first to the you an I quarter think mentioned for pricing. XX% outlook X% as

the level that how happy might that do So with X that you think work as be level raw X% XXXX expect progresses? the XX% are might you then to and might realizations about where the for where off? as think you parts: you a you higher pressure or Where we more to first do And in most do? have regress cool trend quarter, think sustained, move scenario Would to

Vincent Morales

is Kevin, Vince. this

in me X% if it's XX% XX% The to start. stack, closer the you to QX, XX%. it on to Let look a at X-year

to talk I a we're look in get forward, pricing So from to when we XXXX. at did on have stack because here traction going X-year going it think early pricing we about

lapping the year. go as So that we'll be we throughout

that, marker QX. expecting what again, I'll stack is X-year a talk businesses. And let again, the a X-year beginning on So to is better on stack And we're go-forward basis. that a different Michael probably XX% about XX% in

Michael McGarry

probably Yes. are Kevin, a our we've in say, been really you and China. get price working would able business, us challenge with refinish. what job I in right? except So proactively we've been in done PMC good the in and pretty to expect, PMC, much China for chasing people volume. we're a would consistently businesses refinish has

area we've I about done that the you concerns would be around then do regard. a say have that job consistently on So traction I'd to good would X we better gotten I no OEM. in. the think that need in that tell automotive we've you job world. when architectural, And a in

the average was company in company OEM quarter, the quarter. the in automotive so fourth very they And at be and expect to to the average close second

better. an little been side, we packaging to bit need that's the So improvement. do say a on would I

been epoxy the China because this We world is But pleased have the with the automotive thinking about side. packaging And has the OEM way of has most I've industrial it in been more component. around higher the challenging on always side. inflation

of are We pushing price. still have instead chasing that number a of competitors volume

So what's going on conscious we so there. see we're over that, and of

Vincent Morales

some on could I just businesses. of Yes, the add auto if

For we're going mission we're we customer getting If don't good our not doing value especially shed is competition, that. China products. know of businesses. value, to us, the see We of for our ensure in to the some is some

Our good, automotive marker a is profitable remain to business. solid,

Operator

you. Thank

from Vincent next today Andrews Our Morgan question with Stanley. comes

Vincent Andrews

cost was, it fold, there where like the acquisitions. on you've in year given how quarter, less brought seems the the couple M&A last to of well, things but I the maybe already your level? likely are just you think just was any year capital spread price businesses terms bid-ask A last or of the this allocation, And on please? then as One, getting there relationship company versus the time update doing into last

Michael McGarry

Okay.

Let's do by acquisitions. the these

one. the we'll little So with start

VersaFlex team. Cetelon exceptionally in pleased commitments and So Germany, made management The our ahead, Wörwag, that had the X unfortunately, before been prior with XXXX. well for time

So price will increases already the be in and buying is XXXX XXXX is place. good news this. is significant

lot. Tikkurila, out I really old paint. with pleased as had And They've finally, with we pricing And fourth starting well helped a a we're then been well. I've quarter, well. doing there the pleased, done number have think make the starting, the wait months team. that pleased good getting out for had shape And on and good I'm industry QX to Traffic obviously, as the has we're to the very realization we in solutions, a of in good that really job So about really changed not value They've happen. where that that. that's Ennis-Flint. we a things way are

net-net, a it. good prior I overall, couple businesses very due slow for feel commitments. So about management But XXXX, to of on

Vincent Morales

on just then cash and deployment. Yes,

First of as this certainly those proper in remains and we've least to at priority price I dilution continue available to flywheel. mop We'll year as to use active vet remainder still if all, acquisition on That for look cumulative we're the call do us. reviewing up a basis. and it's a tried years, would at the an prior what We'll pipeline.

But as do so that the we'll we we We go we'll balance for have accretion have as throughout now, shareholder some that and year. sheet, debt strong to right use a service, well.

Operator

you. Thank

question Our with Viswanathan Markets. comes RBC season today from Capital Arun with next

Arun Viswanathan

And drop would couple refinish, noticeable guess, of months that any because guess? guys in the of on for you well? reverse, I as so, a guess, have on has Just off last thoughts that seen you Omicron? I I similarly if offer curious, And happened could when aerospace,

Michael McGarry

and mostly very to MROs, And those airlines No. have finished aerospace U.S., especially the challenge anticipating but longer to to especially have has in us, good substantial Actually, to in backlogs. Europe so with a refinish, people. year Arun, people the has Winter of here enough helpful coatings both start in we been we refinish Inventories in XXXX. finished our low. on keep a the we're business businesses, U.S. backlogs. challenge in to It are the been been especially aerospace. hiring on substantial backlog in The were coatings. having lot transparencies. takes substantial able with train a ordering we're And and transparencies a up, transparencies, We build

get and in in those anticipate of first did than And you the that's XXXX. the of both bigger pretty backlog, year, going so businesses half they XXXX and I we doing better substantial that tell would in to only

Vincent Morales

is this Arun, again. Vince

of Michael of the almost economically that The very cars a things MRO, but dealer where distribution The know We an inventory visible one cars. stock. not in our businesses, are inventory market business, ad most low inventory only are matter is terms think where opening in light light. are inventory with repair, world, void also is very you need end talked to about of mix to in inventory, about current the in the safety the you the architectural needs complete light to comments, very channels in automotive of of a Michael aerospace markets is with in the lots depleted. one no is If be that Refinish alluded the replenish of replenished very to every level. extremely

industrial any low in markets, so if those safety all. And have stock, general some very at of

story we supply big labor we half the product. could QX, do very us to begin certainly sell in make QX of the we chain replenishment XXXX. product, a is availability will we're get to need feel, could shipping hopefully, issues back allow some comfortable resolve if for back. inventory and the So But we And of early

Michael McGarry

Yes.

you, so maybe thing it high, previously Arun, would used have other The totaled. with don't an car I is might get tell been repainting price people recognize that accident that cars that are people

historically, we're paint. are people so paint, cars used coming where a I'd of now have in painted. might value a call of a lot seeing And get that what number premium been And and demanding

business good refinish the So shape. in really is

Operator

Thank comes Duffy you. today Fischer question Barclays. from And next with our

Duffy Fischer

foregone A volumes. question around the

So your negative were X%. volumes

think the positive. number would didn't been I would have -- industry issues, that if have argue didn't have everybody or you

a is is, into there average carries foregone understand margin mix maybe selling? mix just maybe to carried my the higher-margin So But Or us in you're in help the question lower than volume. corporate different how that that, actually margin? able push what what's that and that was the you have foregone volume versus would the volume that those products volume? X%, resources maybe X%, Were stars X% or

Michael McGarry

probably first think extent would X that right there's take our an can probably minus exception have going is I'd the of out the on best getting minus are of little Duffy, plus. minus a I a a raw of standpoint, that now. bit have thing to been at or because issues To we going materials, X that's don't likely, door. to other that had I get think, shipping X And businesses product number market we most the challenged in a product. the from

substantially if get refinish fourth the been mix, we Clearly, ourselves we'd I'm not be have any significant more I would that But able to been quarter. And in we diluted out have have by honest. don't door, there. and accreted a out different have more We have or would been that us. it sure what really to demand for better shipped ourselves the mix transparencies think

Vincent Morales

in comp year. from XXXX, Duffy, COVID recovery a fourth the We add the businesses. the here, I'll automotive in our versus the our prior strong industrial businesses minus in and very saw quarter partial of X is

very So that in of we QX we strong were comping in XXXX. XXXX performance had against

in If refinish technology we're OEM last aerospace to. than typically still that you heavy favor And referring you're XXXX, more compare businesses again, down it's to the X%. would that

Operator

Citi. question next comes And today with the from Prashant Juvekar

Prashant Juvekar

Michael. emerging seems could be down, us control to be out is to you Olympics. Chinese COVID. activity industrial but well, couple Can tell dual like just slowed seem markets down. seems and Latin America Emerging that what so EV the to have I maybe happening secondly, questions, have of A as just parse down of due It sales industry. recently, exposure, and because have were OEM then or now. not you just you. you is OEM you good Because in underlying was think that down, I think markets? your should sure were talking why helped underperformed about And

Michael McGarry

with us. OEM. you we'll were business some we decided walk China, wanted I below our price, and when look slightly we come to willing we Yes, start you at And away. in that business were to because of would the will that that back tell we

about not all that. worried at So I'm

definitely gaining We section. the in are share mobility

be as up in the is protection growth brand-new started fire European And that doing will plant fact, well. well. support batteries, battery China, a in Europe expansions exceptionally XXX% and for we that's we and going similar In to

global they're XXXX. in bit production different growing as X%, they And right? we're some very are a emerging that's to to about as the smaller standpoint, So several elsewhere, not in China fast right confident X% talk customers China in grow. is OEM. price move an this be if used that, now up about I means but okay. feel their expecting committed we growing, fine. market still little soft, in getting that up From that And of They're business let's factors, but to

look expecting the you European in X% India I be We're when it is business months, tell And that up at X% year. past this Second, doing to would up high Eastern you them or exceptionally actually, well. was X single-digits. our

pleased well. that I'm major XXXX. now win grow going pretty in be with Russia to most what guy, largest in substantially an Russia. And about are business our that's the I architectural this is acquisition, for in us So long-term, is in excited opportunity coatings as a company won't And us we to we're Tikkurila win But to be our with going for and the share Russia. be products. long-term than a through Advantage bigger #X think it And

Vincent Morales

exceptionally have again. there, do lower here. done year for businesses Michael have through those automotive businesses builds as alleviate once we which as basis. and The were automotive chip shortages earlier, somewhat architectural, year-over-year there the the has us, on big by P.J., to the return We well Mexico, tempered a expect we pass in mentioned we And obviously, industrial

Operator

Harrison Partners. Seaport Research from with next The today question Mike

Michael Harrison

business. OEM the auto on I question a had

this coming were PPG? was higher quarter, challenges production production intermittent help explain but than and a Can it that you better little for operational bit noted the You into costs you was to anticipating intermittent. operating led why that

Michael McGarry

suppliers is I the you chips. great Mike. Sure, don't have they on the that when visibility don't mean have do or issue get

the confidence. Well, nowadays, order provide it, a at have schedule we at even And it a they XX-day XX% give advance in confidence. week order us, days, call let's out, XX days, And an would was confidence. then schedule. old So only XXX% XX% us to XX%

having would from about make year. being And in and But our a in what might produced lead having we're smaller to we're we're the this those you, And tell so a to to to XX XX inefficiencies million operations. forward, closer looking cars cars what million make, get next year. chip standpoint, we batches, million have industry and looking XX I that at to shipped

was XX So still million term from down peak, because is the and this us its cars. long substantial is peak, it for that a opportunity at

OEM automotive So there is space. in still more the runway

Vincent Morales

not as depleted have and been rental couple needs X car Michael fleets vehicles replenished they the to million in doesn't years. past replenish replenished. if company-owned We Yes, are the of can to Europe, XXXX that's fairly and at XX them as make we U.S. X And the million peak, alone in in those there's then include a think well the to have over lots. up mentioned million that of the dealer that the cars lot the fact cars

demand, multiple So in allow the for elevated other the automotive addition production we normal believe us capability, normal market an the elevated there's remain consumers, will to consumption from to production in that years. willing elements

Michael McGarry

put in I growth also mobility the model OEM Mike, And space. assume the in you've the

higher will So for there content vehicle more levels, back we per do when PPG. be at get

Operator

question today is next Jefferies. from our Rodriguez with And Edlain

Edlain Rodriguez

that. addressed already you if apologies again, Michael,

taking In longer? billion this event, terms and left of should timing? pace terms in $X allocation, have of Is buyback program. than share will a on we more current you capital take or the it be XXXX What

Vincent Morales

Yes, Edlain, past through few primarily at this still ago, we'll We to pipeline, sure, in debt XX for dilution servicing, look months. up is do likely mop the a assess going just year deploy year questions again. any we'll answer some transactions cash. to We're then smaller as the and that continue XX Vince. this to acquisitions, to we'll did excess a at this And we minimum. go where And we'll active

Operator

the question-and-answer for gentlemen, Thank like session. final your Ladies back the and turn over concludes remarks. I'd team any to to conference management this you.

John Bruno

PPG. Great, call. thank This like time interest to fourth We'd and good thank you, Rocco. quarter in earnings your our concludes everyone a for day. Have

Operator

and have Thank a may all lines, now you And concluded. conference Today's you, sir. disconnect has day. your wonderful

PPG Industries (PPG) 21 Jan 222021 Q4 Earnings call transcript