PPG - Earnings call 4 2023 | PPG Industries, Inc.

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Operator

Good morning. My name is Elliot, and I'll be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter PPG earnings conference call.

[Operator Instructions]

I'd now like to turn the conference over to Jonathan Edwards, Director of Investor Relations. Sir. ahead, go Please

Jonathan Edwards

call. and your everyone. and continued fourth results to Elliot, Edwards. welcome is We our conference financial XXXX appreciate interest quarter good you, This morning, Jonathan you Thank in PPG

Chairman Joining me on Officer; President Executive call from and Vice John Vince Senior Chief President and of Tim Morales, Finance. PPG Officer; and Chief are the Knavish, Financial Bruno, Vice

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

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

Q&A call PPG's the results during financial future session. and statements discussion Following view contain company's potential may actual commentary effect Both on differ. operating which may we perspective management's the a company's prepared this of statements and cause their to of results, involve current risks, and reflecting forward-looking events uncertainties the and These to will performance. move

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

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

Knavish. And now Tim PPG's let CEO, introduce and me Chairman

Timothy Knavish

XXXX and quarter highlights new on start to fourth will call. and to fourth Jonathan, our you, I'd I good and our earnings few full performance, your and on providing congratulations and XXXX then quarter Welcome a by morning, move year Thank our role, financial outlook. everyone. full year to like

growth. results, adjusted to quarter as per our PPG team sales consecutive fourth including fourth is from and sales share of quarter quarter, financial benefit the of sales we delivering diluted earnings continue of In This $X.X billion record $X.XX. strong organic delivered fourth the record

the quarter higher improvement be year-over-year driven aggregated by fourth as fourth segment of XXX margin on laser-focused EPS we to Our improvement. adjusted XXXX was to XX% quarter of margin compared driving points basis continue

reflect in PPG businesses, and quarter the and continuing businesses. fourth leading Mexico in sales Coatings execution advantage culminated Protective Aerospace, with and which and the our growth Automotive our Our Architectural technology record Automotive strong results in strong businesses several & Refinish performance in trends Marine OEM of

Our year-over-year trend sales compared less to volume quarters, year-over-year. than recent improved decreasing X%

architectural global lower soft especially experience along industrial European and for U.S. to continue products. We demand, with production DIY-related

was volume general where Notable high economy, our single-digit the lethargic country. of strong achieved businesses during China, for despite quarter in a the we percentage us growth, reflecting mix

in at year-over-year albeit we addition, volumes lower in economic stabilization Europe delivered In the absolute we see flat levels. demand region, as

led delivering price by selling both Our Performance X% with segment. higher were segments positive about the Coatings prices

company We modestly price selling implemented the as remain been XXXX expect prices businesses. to in new selling positive increases of our total in several of first quarter have

of downstream from further upstream and order supply our normalization as patterns. chains also both stabilization benefited experienced we We and operations of

have suppliers more fifth and increased sufficient aggregate of margins year-over-year quarter laser-focused improvement. I And XXXX. increased basis recovery consecutive started year XXX margin fourth supply quarter a year We fourth XXX year-over-year than as the the vast operating our basis our margin segment operating marked heading perspective, points. of and the quarter full capacity From segment majority into mentioned, on points

a $XXX our this by a includes a benefit significantly quarterly up We quarter, of total key reduction generation which our of during on of million year was from the the partial cash reduced excellent and priority year second billion. over $XXX fourth sequential also capital about over basis on by generation We record achieved a year-over-year delivering full million leading $XXX nearly of basis, the cash $X.X to inventory working million for levels.

However, we will inventory in and to a from raw still in perspective, reduce primarily levels ended with materials inventory of continue XXXX. historical higher the year the first half

The by $XX as the debt of variable to we compared drove expense net some cost repaid about cash reduction the quarter fourth interest in million generated strong high XXXX a quarter. during

which we repurchased in $XXX fourth the of Additionally, stock million offset quarter, dilution. essentially

customers' Now strengthening a XXXX, sustainability included and productivity at the as higher which of will result needs, full support we beginning in on our generation PPG few recovery, organic communicated comments capabilities of cash further the margin priorities XXXX, strong to year my our growth. and

would resilient out Coming these our during global into challenging year. prove high a economic anticipating that XXXX, we environment, had degree the of while business and played conviction a portfolio clearly

as For sales, full objectives year, execution against record strategic adjusted record operating delivery flow. in it our team's of I'm the proud record cash EPS resulted our and of

cost sales And was led price selling execution multiyear inflation. our offset performance by continued to significant

reductions earnings' from stemming by growth This selling initiatives. restructuring management driven and Our improved in costs was input margins coupled resulted cost year-over-year our both these with improved prices in structure segments. and cost moderating

products our Our set Coatings OEM, businesses our this value-added Refinish, Mexico Architectural & Automotive all-time Aerospace, several to the and delivered Auto innovative of businesses. sales enabled Protective solutions annual and and customers, to our Marine businesses and records, including

our sales gains selling first our growth as vehicles growth strong in products enterprise initiatives about from share electric million Our coatings. year, delivered the powder $XXX innovative for as incremental in well of including

include of body industry-leading customer Services and machines, net automotive mixing wins. focused of digital and both are tools which digital our moonwalk shop In tools are shop yielding body accelerated adoption our X,XXX on Link improving best-in-class These refinish, nearly productivity.

certain protective best-in-class network locations. our X,XXX the concessionaire nearly of further of In distribution valued Mexico, through including we and advanced coatings products, light industrial coatings cross-selling

including business. to product announced divestiture along the across Traffic strategic strong and of leading including the coatings the share the European portfolios an focus with our of several of our architectural businesses, assets business Australian review products several our both review customer Solutions and expansion on conducted non-core our silicas recently businesses product Finally, alternatives gains Walmart. we at Strategically, of drove ongoing

product also to we complexity our cases, drive us reduce improved of offering, working variety and down and allowing capital. simplified a In

actions $X.X of billion. these record plus sheet cash management XXXX generation resulted year Finally, strong balance in full

financial results overall, and in will improving higher Refinish, Auto benefits We and Protective we China, we base delivered We've positive XXXX, Coatings that the several India Marine achieved this in So from and are sales XXXX. gains businesses. including from anticipating including deliver businesses, volume remain XXXX confident Mexico. excellent in share in Packaging &

further solutions. more the powder products vehicle our initiatives, $XXX coatings, execute also further order in including benefits backlog Aerospace key growth will businesses our in in growth well-positioned drive Mexico We electric expand and than our on of and digital million

operating aided by of volume sales our manufacturing years We that the other productivity drive chain and several our growth supply leverage disruptions. will improvement margins of drive and initiatives further following

strong and which provides for shareholder balance share the a value Lastly, we appropriate entered further us acquisitions, creation going repurchases. forward, debt XXXX initiatives, flexibility growth sheet, with organic repayment including with funding

our on I'll outlook. comment Now quarter first

We of range. expect adjusted $X.XX of $X.XX EPS $X.XX of from in to XXXX, growth share in sequential an to midpoint per per increase QX a to deliver share XX% range of the the QX XXXX at

the the in anticipate quarter. by the will of be nonrecurring volume industrial customer year-over-year that million Also, the sales and occurred quarter first approximate impacted the Easter XXXX. our We remain second some soft, shift holiday timing Walmart of production $XX unfavorably sales performance load-in will global to into

volume sales year-over-year these items, aided first quarter we Marine positive overall growth & flat strong by We by will Auto Protective growth our solid drive project in solid our Coatings in producers. we led sales volume expect our volume our Pacific in and businesses. growth where be China, electric comparison difficult in Packaging Despite OEM the Asia positioning business OEM vehicle expect to with Aerospace,

we as by in platform. our anticipate than be related Performance industrial to portion customer-based some our index modest declines more to targeted selling sales Coatings Additionally, contracts our increases reporting Mexico overall segment best-in-class positive organic We price selling a segment. will growth company prices remain expect to deliver offset small in through of distribution

quarter by particular also pricing lower prices place costs were declines in European First period These indices for energy-related of energy our the certain put the facility. region. include high price in extremely declines in purchased during that energy are offset comparisons transitory and

price With benefits in somewhat XXXX. from XXXX, expected The remains of continue inventories with raw savings supply moderating materials, will various our offset net in further higher input costs selling stemming to regions. through commodity working we from especially inflation productivity realize progress higher to to along serve and initiatives emerging recognition regard ample, will down increases, we wage including as

supply We and chain and the supported growth will patterns. transitory items first I stable We order mentioned the of some to year-over-year associated diligently customer deliver expect and a earnings' manage our anticipate earlier. with moderate by more more productivity in quarter manufacturing costs gains

midpoint. guidance full for of we our deliver growth we However, forecast at commitment confident that around will are year XX% earnings' our

delivering I our results XXXX than making benefit happen your stakeholders. for Finally, in it Thank excellent and want financial of in growth the thank employees creation for and our prepared the to for this company remarks. confidence PPG. And all positioning XX,XXX XXXX beyond and concludes more continued you for value by

open please the questions. for line you would now And

Operator

Instructions] [Operator

question with First comes David Bank. Begleiter from Deutsche

David Begleiter

performance, do company box performance paint it's industrial. retailers up from that a to if seeing are is, be total expect 'XX? positive it your Vince, Within in and you Tim to than And prices? big presume pricing I you lower pressure

Timothy Knavish

the thanks question. Dave, for

Coatings We your for Again, XXXX. Performance from full will beyond year targeted positive to that. price company largely have point, more and

and pricing, significant so most year. a big wouldn't the box big as in contractual I far say that pricing of movement see is box that pricing throughout the you'll As

Operator

John question with Our comes from next BMO. McNulty

John McNulty

what little how that things it bit there thinking does of a Can held quarter, should you right guided to now? we that? Or that? dip relative it to like to also and the because the Because bit buying mid-single-digit a And more look just you of destocking. maybe lower speak for our front. how material up to be the XQ? is your FIFO are reported Is you in raw on it So materials that fourth raw you're much some more than about little color

Vincent Morales

Yes, Vince. is John, this

accrue moderation from of we If throughout of larger the you to raw materials. last look benefits year, all continued

raw amount. multiyear higher remind a will We on everybody by significant are material a still costs basis

As suppliers up ample than of our it's to pick Tim more capacity, certainly more and for have focus them mentioned, a volume. most

pricing. that some as We incrementally the beneficial expect materials, our go will eventually some and flow better expect invoice we P&L benefits raw then year. year-over-year, But through incrementally we invoice through from

Timothy Knavish

for we pretty just as add on would add issues is us that's from long this move of good us, just I availability it's Tim, the year still -- environment. that think through fundamentally, as Thanks John. upstream indicator question. for our I end I the well. And would and No a a

Operator

from Panjabi question next Baird. Our comes with Ghansham

Ghansham Panjabi

question back go to want asked that I pricing. to the about was Tim, earlier

is that bit, raw just enormity zoom as up since whole for a and price have and forth, on you lot of out XX% PPG changed been so significantly. a over and kind so of the XXXX, cycle of which to As material a has seems

confidence on allow so the being to there the is XXXX on is that, with beyond but on industry based even mix Aerospace and change or and Or in Your now price you something the doing forth? of in going doing. to that's pricing up that these increases, and the maybe hold partly structure portfolio [indiscernible] what unique so about holding enormity they're to on

Timothy Knavish

earlier, It's elevated. not all, another couple in issue just because extremely for peaks. to with increment. quite raws quarter point of even be talking more is a more to fourth of the Ghansham. a positive pleased -- off QX, very confidence continued Vince's still It's are of with I'm about mix closing hold level coming of out high how Again, We're X% price, things. first we've us, One, we'll

still say, elevated And they're from, so quite XXXX. but --

big as Performance through value-add significant deflation irrespective pure of So the of that small we're the we is because standpoint, unique we the outside deliver on well, deliver the the we don't what And we can customers raw where structure. environment I'll the their as Coatings. from move price characterize structure We as means. material year, a that cost you impact proposition almost confidence but such any get such would paint talk massive of our a -- by of level see I know we there cost in value Performance a part of the

for side, V-shaped long see just industrial a changing move dynamic raw So dramatically is through that's just more proportionate on the and us not as When decreases. example, increases or big you to maybe a And is a We it the about, very different consumer model upstream supply of year. don't China, there. China rebound of we material think raws. where having

So move moderate we as expect a more we through environment XXXX.

Operator

with Fischer Goldman from Duffy comes Sachs. question next Our

Patrick Fischer

Two questions.

if million. EBITDA, then commensurate hit EBITDA would be we to guided First should Auto expect QX. percent a coming flow $XXX move two, in guide one this digits the single you down cash Should flow midpoint you as of the is cash a up your OE year, be of in business, into about and low

did again, there. like up, QX, Auto You in better there's you digits than just in auto that some at the guiding conservatism? look when it is that be mid-single seems unless OE down pricing should Because numbers,

you can you're seeing about in OE QX So versus for just Auto talk what volume? price

Timothy Knavish

is Yes. one. I'll positioned for us do Auto year view recovery. Duffy, Vince what good one. for the cash versus Tim. are really last -- this we we and I'll the year, take as I'll well let had multiyear EBITDA auto a a do

on bullish as we be the year look XXXX. full into auto to continue personally I So

we're we I And as not we in and projecting lot that, I to of last and mentioned not up my QX, a When about and if digits year. impact. also, you strong QX, a has some, went move QX, have some index year, through there volumes were is single QX digit But from -- you double some would at that the yes, up in in go rolling I'm opening personally, we of back as in down back we auto pricing low XXXX. of mid-single digits look overconcerned our our remarks, do

builds is XXXX. last upside some I that through total were move think I believe we as XX-point-something to incremental there year.

Our good. share position is

you XX really will million the Our come China of good. auto million of XX out about as out builds, is new China. And position know,

So of overall, a little comp a soft bit There's point about off of and rolling year-over-year good auto. bit in QX. feeling pricing a little index

Vincent Morales

auto, us from Just acceleration well. to add, as China perspective we in talked EV helps as on an several Duffy, times,

EV So we we do have on otherwise. any more content than traditional

proxy PPG cash the or So cash for is in think question, in us yes, EBITDA serve a short for your flow that's answer would flow, a certainly plus typically To proper particular. I -- as minus.

couple the that movement we capital years basis. transitory years, last have working has helped We answer either the is flow a expanded last of the couple -- hurt cash of have or on had

dollars inventory. his as million a to to of We comments, hundred couple probably of do Tim down in XXXX. raw going have, alluded work opening We're excess in in that materials

what manner. and movement a I you're So should have in consistent. But implication a be that flow will be think in flow cash saying positive the should for us EBITDA generally, cash --

Timothy Knavish

across see going Yes. largely And that's come to Vince but I'm X/X And EV was headlines XXXX, the Duffy, content and made EVs this EV PPG additional on if as number, content are situation. you look in with Europe is -- back that U.S. know, the one at by China, Tim. of the the right mentioned the And we and for now. up average you EVs, XX%. space world's all

per XXXX. content EV our in by So built XX% up was

for well bodes that as So us well.

Operator

Our next from Lynch. Merrill of Bank Byrne comes with question America Stephen

Steve Byrne

Depot mind, than on how don't you forecast strategic SG&A like going for in Home It curious you hear relationship a it's whether there quarter. that, what that forward to just some really in going you worse this structuring on view XXXX? any forward? in your expected? better unusuals fourth comments can seemed comment in your with should jump to long Tim, potential And that XXXX? in involved partnership Were Any actions? in the with or And you've we for there if I'm had been time.

Timothy Knavish

and the Home by But that as morning, and our is we a Good one, own that we Pro have being going the And as a Vince take the on were Depot from standpoint frankly, is Home DIY offsetting second negatives unusuals there unfortunately, network. the are the part off expected. Glynn good relatively Depot the Depot DIY know, your small the the first brands challenges Pro as Omnichannel program -- Quite is it's was our will going on brand Home Omnichannel on forward. are the progress the answer on our growing side. the still strategy challenge denominator, have there it's There Steve. between and your relationship you offset still progress some quick and Olympic that. and question of critical that is volume DIY still

at yet. low just so challenges with If And perspective, look up one some despite Depot we better single out digits give to -- our the out I were Pro quarters our Omnichannel. QX, sell there, the Home on of our was

only in Omnichannel, includes our progress DIY our big we DIY making our not do we're the down. So with which Midwest, partner there. Home But but the remain Depot, what also

It's momentum it's but business -- times, So many a on miles a for brick-and-mortar as marathon. That's that's building we to grow. issue model the continue are off said sprint, kick the light continues a marathon, not to future. there, and the we the I've and

So good progress.

Vincent Morales

the About Steve, year. look always our whether There's it overhead, that in on between correlated within movement volume, a X/X price up of year or million. $XXX basis, at Yes, was overhead on about a increase just quarters I'm directly is full But be to sales, the year. FX. going the to whole

So related movement. you of on just if comparison, our the get a X/X percentage percents basis, that do sales directly to you about

performance-based much Another prior year, basis, to Tim compensation higher the of this remarks, that then that his did and in on opening compensation. we X/X reminder shareholder we and have in alluded lower year-over-year a based a had and the

et the would of of the initiatives final cetera. we programs so So on roughly the won some a effect inflation growth a or was growth, And including throughout for million year basis. remainder key that our and be the kind third, doubling $XXX year-over-year clinic's and of

Operator

Roberts question comes next Our Mizuho. with from John

John Roberts

of for out we're it the strength Or is of seeing China cars your that primarily exports China China? strong Is China?

Timothy Knavish

we stay world, exciting the China is in the vehicles vast producer China. I now is Chinese producer of EVs that side But both. the export in export. beginning largest mean to the majority of paint on part it's John, a in The the

So majority in that the of stay will just be but we China. in vast incremental paint China the cars upside that

Vincent Morales

think John, for see other XXXX, of and a XXXX, turned And heading at Yes. now the in to the of our was book especially the year. and again, kind some industrial starting corner tougher quarter I part business, of We're XXXX. fourth of businesses beginning our into it

Timothy Knavish

high we outside more coatings percentage One very the products in Bruno, John a in OEM, that for China of China. stay of job from auto are sell

Operator

comes Josh with question next UBS. Spector from Our

Joshua Spector

wanted I pricing. on follow to industrial So up

So modestly through it's XX, when of first do you're you quarter from of in decline? guess, the that, basis talking about the it year-on-year, level frame So the Or year? separating I it some pricing. index the maybe down kind energy give-back stabilized that at of maybe expect points, for -- does is that the XXX to

potential And this what at I the we the does segment? this guess the when for to the are you what still into Or play up term longer that current margins this Industrial more mean factors from year? level margin maybe normal incrementals from beyond then, raw for Are looking at here move that? look price

Vincent Morales

Yes, our released Josh, talked let people, me start, in we we and color in just to prepared But did. opening remarks and I'll evening. we comments remind let about Tim this add want last here. some I again,

through on reminder, organic day. segment. Tim in $XX about. of remainder Industrial this per in That that to gas Coatings to to half PPG companies, price is year the X/X in pass $XX depending decline included, the We're our the in QX QX in costs Most that that. is energy were based invoked last of Europe, was indices quarter the natural the on was that year. exceedingly And talking high. first MMBtu Just The those costs, a surcharges lapping

color some here? have you Tim,

Timothy Knavish

is the volume Vince COVID about pricing significant and leverage Industrial beyond think that the really I got expansion during that's hardest recovery. Yes, described margin what will the be because segment the COVID on hit the question in segment

by leverage. margin still And volume driven got so we've significant upside

had go other to years, about pre-COVID, of line digitize productivity Day that to automate, we back get sight $XXX in of we where not really, CEO were New if operations. back million we in pointed as to also gains million our our side, to just you coming in to The but the $XXX York, we May to manufacturing modernize,

the get in Industrial those the the that really on us levers horizon X be segment, largely Performance next So the also margin but will across Coatings somewhat to side.

Operator

with from comes Our Kevin next VRP. question McCarthy

Kevin McCarthy

reason embedded trending elaborate Tim, that's volumes I be volume would chemical your we've you real is from are guide? many companies volumes that suffer little you 'XX below well expect your flat up a to Part bit? outlook on Would the or seen GDP. ask in of

residual look there might that portfolio your in and you as across other more you that pockets XXXX? or do survey are so we'll headwinds and And destocking think see of Or ambitious? forecast, convergence make

Timothy Knavish

positive of a we single-digit would the have fourth the start higher XXXX volume to sorry, the low in on low letter So are lower there to the first going side. because digits. I all, single-digit volume think we're the the -- sales, will be on little might a going year. be for little to -- a be I putting said, price single our low have side up We will I'm and

X, But quarters we really now, little for X. momentum minus minus X, a have minus lighter, volume X

We're But it from Walmart actually the looking at the It Easter X. for QX. Our we -- of quarter minus one of next. to shift a X. rounded less includes impact fourth than -- minus It from quarter, that load-in. was includes X to the up the and

because of diversity we of the on momentum some and just throughout we've portfolio because have we've the of XXXX, picked to but initiatives it worked that it where volume, growth our of on up we kick that where this in some of start will share year. So participate

Coatings Industrial our our business, Coatings Refinish Coatings Packaging business, business. our about think I

of the it our momentum. and So we of much negative And for XXXX. do early see our they've on of growth positivity We front a on had portfolio of is even execution in in numbers one it's volume initiatives. have volume XXXX, strength really flipping though combination positioning them it's

Vincent Morales

expect which other of ran note, a destocking, a and feel We to a we -- course. experienced of that's XXXX, the stabilize, a especially just reflects its items lack of really we half couple destock. in first Europe of Kevin, And that

has a which basis Europe, us. the first XXXX light. negative again, been China was in stabilization for And on So half

us. us And the with opening of we hopefully uplift. is So are this again, to in -- effect we And Tim pandemic that as in we some as that that Aerospace. normalizes, do remarks -- provide normalizes backlog can that alluded the behind have

So continue backlog, more expect we continue half at that to to backlog sites to year products a is us. more manufacturing that our throughout a produce the grow and we year that to for work which down than

Operator

with from Our question comes next Michael Leithead Barclays.

Michael Leithead

ask I cash wanted deployment. around to

M&A million the the net Your been. about towards you're XQ, guess, you cash to year can I roughly target does how $XX leverage brief One, lower $XX shareholders questions. but million more in third, today, X ended the interest returning say, And Two, the maintain? look of it's for you then us market just very where to leverage of what this intend end year. remind guiding to year? relative I think to historically

more help that deployment. you So much? of up does why cash consideration I'm Could so takes into that just assuming clarify step that?

Timothy Knavish

start. I'll things. changes we in with execution the where strategy. a in Tim. it We're depending are on because we target time, portfolio don't some our doing of it's Mike, Target, pen write

the changes. environment we where very strong in now, our balance different announcements that as are but sheet, of strength right our And seen it would on regard. You've be some

some I great -- deal seeing on huge our and That continuing We're Nothing but focus #X, to a the strength it the flexibility. it come of going in proud in for of year, quiet did was we're throughout across, come balance generate consistent little now. desk sheet and a seeing what strong some across has those. us of we're cash. to last things what time. assets deployment, the on said M&A, very the we're some XXXX. Overall, evaluating gives I'm there pipeline, team with

we'll got good value Just clear, to did balance very time not dividends. need And you sitting do invest if some along, we'll we'll what cash the on shares. We'll can we've be if we then from do. let organic assured -- on do growth some accretive buying QX we We've to in cash by sheet, time. shareholder investments balance the a that in. And sit cash got what for first sheet. be acquisitions. Love to will doesn't do accretion We come in the return that some that, excess that's long

of but we're sitting we with now, QX, in a right consume significant Now lot cash cash typically QX.

we'll here a QX interest of. don't out us so we that let just And debt, be we should that, to you in beyond cash so there. cautious into But cost expect little high paying got back which get not the sit

Vincent Morales

Yes.

to me add. Due let today, we reemphasize we to don't just just sheet. a where the prefer cash want said, optionality Tim This balance Vince. I Let we need grow. it to is feel on the strong comment we key gives us many are fronts,

our through consume will cash That's seasonality businesses. traditional April. We our of

would on adding commercial significantly April. year, -- of now typically So balance us time as debt we're throughout markets At the That the normally the sits as from of allows not paper. to will this sheet, $X.X the enter commercial for end that the through we through billion paper consume April. we

in we'll of the uses. year, will be inventory we'll at back back That which as And will why half deplete QX we seasonal -- in look of the that's we're the interest we to cash then build. half the other interest use year, cash our lower So income. on is because strong generate the strong going that typically generate cash cost fund to then hand that cash in our

Operator

Our next JPMorgan. question from with comes Zekauskas Jeff

Jeffrey Zekauskas

make difference direction titanium inventories. could the on make your LIFO you comment prices? wondering between a fuss the over Secondly, of dioxide fuss was I a whether over or you you

So if you instead valued LIFO things of FIFO? would on

year-over-year payable have And accounts the is your line, might was And of end accrued benefit, then a increase, been the your it that million. at What was $XXX about difference and finally, in $XXX the maybe year? million. liabilities sequentially,

accounts disaggregate on many what's seems this payable much explain that Now other in you for it really many, you? liabilities. Can lower there you accounts payable companies the in worked direction from guys have going to and accrued don't year, had

Timothy Knavish

you see Tim. there. long very question. availability. finance-related more I'll We titanium take quite a Jeff, it's questions Vince, And the long. supply still good TiOX, dioxide of we can it's us, upstream see take chain

lower TiOX what as year. some have year, basket, so were we on where And we're modestly down it's seen It's would our last much than last other parts Jeff. definitely not some down but seeing as we from of pricing

continue our work year a research And team key do TiOX, sacrificing I in several per to on great We're reduce we part over And formulas any pricing, content and that have a performance. dioxide job mention that without to again the of formula we titanium XXXX. do is X% the last our in our done strategy to there. to addition in that about achieved down has every our years,

Vincent Morales

I'm income balance everybody, calculate moderation, if tens FIFO. I for raw we're cost FIFO, remind again, move calculate the that or to Yes, that sheet the Jeff, can't it precisely. dollars just on material invoice FIFO, questions, LIFO realizing the the of what millions we between, statement impact able a going we're We can not the is on on and of to XX% difference the fly to here. be so at

quarter. to relates fourth for As of the a we payables, items couple in had us, it

tax Our million the provisioning weekend. X-day about weekend on year higher. $XXX ended is -- We a

And had, There's basis. for as we on where a in So million quarter. you saw, accounts million FX number we the talked about spending. environmental fourth payable natural about an And of because compensation special in future is increase $XX for accrued $XX we the environmental that higher that. year-over-year our

payables are the in those our So a big basis. on year-over-year elements

Operator

question comes with Andrews Our Morgan Vincent Stanley. next from

Vincent Andrews

the first quarter, also this from me. an Easter, timing I extra day year. quick get shift of A ones In but had the February few

Chinese Easter any that then So have impact does not on these Europe? function patterns Chinese you offset much also guys TiOX, of investigation the you the it purchasing and how are And EU's a changed of how buying as in to imports? much days? is And TiOX

of think I the away the be similar And DIY being weakness than better strong now volumes. has it what's COVID other weak. seems of Pro but like just just should been to a than up there, driving fortunately, high about between being an so far there's enough we disconnect keeping a the have sort lot just a then business so lastly, that the Pro awful or what's from conversation business DIY, so demand And Pro forward a holding able -- in Architectural pull DIY because

So if you things, appreciate X help it. could with those I'd

Timothy Knavish

Tim. is this Vince, Okay,

Yes, On say you're February. is QX. in day I'd an extra correct. There the

parts of day the world. parts Europe, think -- do a after, before, Easter more good impacts month of have We the typically world, because some significantly negativity in time is particularly that the us I other of in X Easter some vacations vacations Mexico. for

And so correct. more X than are But significant day. it's you the

-- though, we QX load-in the and that we have issue that Easter mentioned addition mentioned the you in to energy customer pricing have Also Vince on earlier. impact, do that

pull of on Pro it, the On some yes, down. it, on remains put as stamp know I could post-COVID time inflation of remodeling now general you we it, confidence some DIY, people and did of don't a I hangover, home. of call but consumer lot it's it COVID first spending and -- And at more exactly general a if think forward, could all, DIY

some sellers it -- existing DIY too house. buyers house, And resale paint sellers home DIY is will their will where their paint of

So as hitting it's of having to inflation that related of I home do well. do make. happening average is and the existing overall they're think consumer's decisions I But some pocket sales some and just what's book the think to that combination how it it's and with

On weakness, things of done the some a see by holding in resale, remain not again, home maintenance. it's phenomenon, We a in of U.S. strength well. some well do see And only strong. pros that well. as as like why that's Pro think I but we commercial side, see it in up does that's existing that's and that's And phenomenon strength Europe areas we

Vincent Morales

TiOX.

Timothy Knavish

very that element. I'm watching the sorry, Europe, process Yes, I A Europe, we're of TiOX things. missed closely. this couple

Chinese of we're We diversity the dramatically it will a an process. buy And the our We from They're have part good think, of portfolio. watching We suppliers. in bit process this one, two, constantly we're TiOX we -- supply on supply important Number working number Europe. our have shifted. not very do else we be solely from supply lengthy China. And the can and again, and of we by various TiOX dependence there it sacrificing performance. our the including TiOX where flexibility in TiOX use a initiative base, made and significant continue that we've improvements our parts of base removing world, different of longer-term without the reducing formulations from on our

adapt upstream run point diversification we long being -- that I'm that things confident it between a watching in done, Again, and what need and the business. we're situation the we've work X those do very supply and to the we'll So our would to. we'll I closely,

Vincent Morales

to on world, X%, around years. multiyear, to in active very X last become And TiOX suppliers efficient. slurry we that efficiency, efficiency continue to the X add in more of capability, continuing at different and TiOX products expand to have mix which just And diversification X% we're allows a projects capabilities we or us the

our could Some recognizable our of -- be of terms of buy. in the those breadth

Operator

from Mitsch comes Our next Frank question Research. with Fermium

Frank Mitsch

back volume. you clarify it that. think at wanted levels, you the about positive Tim, Europe Jonathan. in you volume negative might the volumes. It Europe be Congrats flattish expect But net we positive low wondering we'd but role, I through that stabilizing stabilizing, basically, it that is your the as these was like see that. sounded of QX, would terms suggest year sounded of questions. of on in And probably QX, it's a sign. Vince, would in come I 'XX, the if math answer deteriorating which progress if parts when earlier obviously could 'XX, to I new if from the to mentioned

with with you I would Americas sort wondering as have particularly fantastic. the speak you was anticipate you indicated there, respect volumes well to could expecting I comments also the that? you're if be in So comps. And you that positive know what to of -- China, But any weak

Timothy Knavish

It's Frank, start. Okay. I'll Tim.

year, soon my you volume QX, think see should an and comments your then Positive uptick on. in for spot flattish are volume the of I interpretation thereafter.

So I lead of your Europe, year in do give very to question, environment think quick earnings Europe. had that's benign spot in on. Despite in XXXX I know in a on you a record to the we asked XXXX Europe. going I'm volume Vince

not top in team very really all record has earnings our executed we So the Arrow our have in all-time it's but Europe, in impact had yes, and is better-than-expected well line, it and a of strong year we had businesses -- Europe. volume. does that also, Europe. It's great And expect And particularly aftermarket. by had -- a do PMC, to Protective market, Europe driven with frankly, really mostly around year market European the Deco we saw Retail Deco the negative PMC continue. particularly in both Marine & that Auto

Vince. give I'd lead into So Europe that over it and hand to

Vincent Morales

we're Europe stabilizing say in Yes. as know, quarter-over-quarter, know we're Frank, 'XX, in and for business. we you Europe in coatings Deco, very our there seasonal business at When Europe, looking it I volumes stabilizing our a architectural

stabilization we So prior that to each quarter. year expect the -- quarter, respective last

folks, So seeing. full a remind always that expect Again, are large again, reflecting quarter-by-quarter. comp different, on what that view a year have is in we than We to I year-over-year we not architectural bit a to China. flat, of think, be markets basis, have our presence most do China

Again, is on housing market, for heaviest items and unfavorable exposure we're Industrial. the corner in of the little construction very Auto us. the China growing. turning One is

returning China starting is higher come because is to Refinish Aerospace back. in business of driven Our miles and

China have of the draws content, well. So architectural lot industry architectural again, helps businesses our mix of raw And the fact us. that as in that materials don't we a

fact supportive down is China. So of that's the earnings our that, in

Timothy Knavish

the well last to a volume? are P by holding up SAAR well. U.S. be doing at part Protective with what got know very U.S., very the PMC seeing this lot in doing spending of And days. inventories is Refinish year, only they're mostly question, We've the and I the energy ticked XX business, side, infrastructure side, but auto, up a the infrastructure traffic relative bit, spending on driven have stronger still we in will U.S. your the well. about the And

can So everything Aero, and those the we're make. -- be of selling we course, on would

at this might upside we side side, So positive the year, we there us. those is The U.S. negative least first The again, behind believe there. expect times, the only to said would we've DIY be half be soft multiple on space that of do destocking that ledger. be do in of the

And then would say industrial of still a That's in coatings and that the U.S. could all activity, soft just I driven be kinds painted. bit get this widgets general finally, by industrial

at ledger So home, that's Frank. negative a bit of a positive here and

Operator

with next comes from Our question Yefremov Aleksey KeyCorp.

Aleksey Yefremov

organic the to -- what and -- your you update that talked efforts goals? year? with broader strategic How provide lines your Can versus maybe an on 'XX where broaden growth Comex, are you just product update your on strategic last for initiatives plans any other you about are

Timothy Knavish

Yes, sure, Aleksey.

Deco of record up Mexico, was our adding Comex network. we PPG ability up, in Coatings May, introduce done in only also not we on powder, traffic, team initiatives Deco, I we've that again, that all Adding other this of on digits. portfolio concessionaire them, one they're just down space, that did single to robust sell and our and light strong protective that. So the the our in and letter, performance parts our key but double in returned, bullish together to sales were to up to And Protective high digit. industrial another these their and continue year, said concessionaires double-digit weekend growth coatings. of with I the And very there it, call was let's just sales had fourth but very traffic but past were meeting year,

We I and very was concessionaire that So got we're and network the off this exclusive and powder to week, of running. a literally brands dedicated believe specific introduced Monday on reception. and -- are that good just refinish it brands and

part strategy, of strategy. last we that with year the off on question kicked other as year I'd of pleased our Your execution growth initiatives enterprise growth very say I'm of enterprise the that first

incremental just first of remarks, the As initiatives, $XXX in about million those in the sales. opening generated we said year,

of initiatives initiatives than are in some those development. And still longer-term others and

up opportunity and powder, we up pleased that about, the very we talked far. Mexico and I'm EVs running per films, progress so vehicle. have all between just XX% with seen the that content They're So

Vincent Morales

little the talked Mexico on economy. And about if We I bullish May being could a broader just in commentary. add

us for space through in region. come that the has in think I

of Comex We that support into to our with certainly support continue -- We'll brand. activity we'll Mexico. industrial reshoring that see our industrial with

addition, in it position to talked And a it regional India and India. that's just other India supported as in well, by, Q&A, Tim the -- economy haven't good alluded the call outpacing I'll that the is opening comments, second but we shoring we've on that's In starting. or one a in us things economies about of is got we India haven't most it well into for reshoring

Operator

BNP with Favre Laurent from Paribas. comes question next Our

Laurent Favre

presentation, deal And to the at I the Tim, Have situation. you you how list the in of impacts And right such not yet? positive, ability talk side bit costs. restocking thing? on the guess, side, or Sea mentioned In you're chain just for of looking source there in in Could risks of terms wondering flip that of on about, out, I was on if you've anything could watch Red a seen the reason your now? potential big along the be customers? a a the there's on it Or the it a enough is positive

Timothy Knavish

Laurent, near Yes. anything this to material not it's to point. us really been

around the Coatings We're world. direct local local. do from very & all, don't our mostly Paint well for of products, First shipping

impact on direct minimal So our products.

their we -- but us. suppliers of inventory our that have our of their There's for some have in plenty plenty production in of And planning planning. capacity. upstream they're suppliers are suppliers, logistics seeing and Our delays accounting

to there impact. to few insignificant. us to frankly, we're small expecting impact surcharges seen a minor, this being implemented, So pretty any We've financial but not the point,

restocking, far. But Coatings inventory doubt that your we'll watching more piece we impact a the production that's missing if see European internal of if they've so where certain I the we was part & the world. our it critical Paints And significant than really on So from of parts, auto sourcing on scheduling, of around customers it watching that piece got impact. we're of they're we're any may particularly and not the To that maybe OEMs none think impact on reason this. the of impact of about as slide, any customer you listed seen that we're result build have any our

long how us of own will it But inventories think planning. upstream right again, with they're expecting be now, any movement I of not their more logistics fact issues. our and that the a we're pretty suppliers deal

Vincent Morales

days. just -- XX And Laurent, the is going to put to average not XX numbers through about the it. to Sea do to delay Typically, Red

So can on -- we raw for that plan our material certainly, purchases. plan

Timothy Knavish

And Laurent, me. one more for

the We quarter first the area. in for have nothing for guide this

Operator

next Our comes question from Patrick Citigroup. with Cunningham

Patrick Cunningham

maybe Refinish. Auto on seems there's It some normalization there. like Just

balance what's Refinish I claims structural my how think for you question of is first like about So total the guess year full should Is the outlook region? causing can collision anything lower we for there upwards? U.S.? point the to vehicles in And trending by

Timothy Knavish

-- a good this body take And results had thing was labor backlogs, still claims I'll only to and our is what strong. tough one. mostly record a Refinish even and shop of availability. at is year, we're the driven of off level. quarter, And Yes, I'll achieve our customers down up But have you body XXXX. activity versus by the comps. able most that Still tell Yes, in shop U.S. that down

a performing. good we're that more we revenue and of even largely year So had even year-over-year. watch though claims get the would really are from tools because our down we XXX% closely, tools, digital and than that add, we also share-gain up still digital was I those

today. here about year. as that into order feel sit book moving So good we a this good We've got we

more mouse-driven. Most of different. thing to. still and we The into and used crowded feel a as in positive confident is the coming I used overall, yes, driving the So about downtowns winning shops. our cities proposition, are is But can that are see moving than business bit claims we're I'm hypothesize value type not year. from watching to productivity, we be. as maybe they we this suburbia claims only We best-in-class

another have business. So really I Refinish of would say we expect our out to strong year

Vincent Morales

to Europe around plus minus for X the or Yes. regionally, and And the year. we then expect U.S. hang

a year as expect kind see said earlier, we of we full basis there. China a to As grow on reopening we

digital And are best-in-class. comment hit these the that's to our Tim's tools, we again, about So aspects. on regional just think are tools

X subscription on body productivity, model focus ago. have for We tools. didn't a exist or X that are those those us years And shop

Operator

Our Michael from Fargo. Wells Sison next question comes with

Michael Sison

about quite XX%? low Tim, a of EPS else guess know gets at the you you Is little drivers? sort bit that half, -- to that of is when volume of the growth anything deflation a achieving sort I of much growth question, more? the single you XX% think one down about can digits, just talked bit. break midpoint, you I sort key and how kind Maybe that the

Timothy Knavish

bit we'll time of guess I Mike, a extra Yes, little this have weekend. both

results. the So last on TV we based glued to won't be screen week's

a as So things. certainly earlier. have We'll wish have best number for the of We'll positive that. it's mentioned you some, I price,

growth the though of expect initiatives. that things And to million do we We enterprise in will beyond price on single by higher starting us. leverage $XXX our will that low guy we'll to them already inflation get bring which net be not good continue will about. Those year, of growth to better get even productivity second some in with positive benefit out volume, the but will kicking enterprise volume. -- piece finally just we that, that We some of expect, the manufacturing digits the those initiatives momentum that started I be mentioned margin half answered to what assets for I have a continued talked We'll of start bit see we happen dropping, a have but will of only manufacturing early on of it's have that. raws a do to say will on

Additionally, cash deployment. got we

But last certainly of last rebuilding be talked will paying as We there about that wasn't and down We another haven't year piece we that. equation didn't that were it talk about year. debt. the

Vincent Morales

a I of it's XX%. midpoint And important, just Mike, Yes. think

better are some world the results rates have operating Our companies most We to tax of than like up. have tax the do as will headwinds some around going be that. move

So higher we year-over-year rate. tax a to guided

-- -- above modestly by a offset higher results rate. XX%, tax operating So this offset tax

Operator

with Laurence question Jefferies. comes Alexander next from Our

Daniel Rizzo

if in there's in is the any on in of sales versus of terms good China? I This And India Rizzo competing the Dan importance Obviously, a wondering what where time on kind years versus is be China? coming just India for focus will for was but of Laurence. terms China reason,

John Bruno

this can in best Dan, India John of the has is Bruno. one this. been Most world I the take XXXX. in economies people know

have really there. a We good position

Paints. Asia We have with JV a

continued XX% was and sales we Our good XXXX, circa growth growth expect in XXXX. in

Timothy Knavish

our Yes. really there, are coatings, same the with We well of well. in which that partnership Asian perform is segments in and very across Paints doing the fantastic And world, India -- refinish, rest over protective automotive the strong were automotive to continues coatings. OEM, industrial

someone that So advantage global helps partnership partner really India. solutions to and our that's take best-in-class is someone world-class within and technology with us

And us, for in not really only a XXXX, story going so good but it's forward.

Vincent Morales

going India, automotive, I expanding again, footprint of their alluded aerospace. that earlier, again, as And industries multitude or are a to there's in forward, electronics, establishing some

industries are their global of footprint. multitude that a again, So expanding

Operator

Our next question with Viswanathan RBC. comes from Arun

Arun Viswanathan

the 'XX. on in results strong Congrats

So just a question on guidance. the

XXXX. growth it the you get So in are if sales hoping organic I to look low guidance, like to at looks single-digit

including would that that, confirm low be also volumes. single-digit to wanted Just

guidance mid-single how see if get want the if X% similarly, so, back in And do X% you digits growth in to you're you maybe QX of out your QX. earnings' playing flat to of kind then quarters, the and EPS cadence-wise -- guiding on that you half? And X% growth volumes the through in bridge, to to kind implies

and something through of items holds and kind through of onetime these QX that the XX%. mid-single think about the low more QX to require of in to order the growth EPS you double would low QX low maybe maybe digits sales your growth? that right way that QX double Is to some QX digits get on really digits in QX into QX, So back single in digits to QX, mid-teens it

Vincent Morales

on business. that talked lot a math have, we're Arun, already et QX, I accurate. definitely cetera. you a call factors the year, factors about think last is affect We the comparable seasonal some Again,

are QX architectural and large Deco QX our quarters very our They're large, larger very for traffic us, for businesses. even businesses. For

last we're a we those some earlier laundry through, went a those list that we'll seasonally, in year expecting those think, on businesses So higher items volumes. the I had see also different included leverage volume but businesses. Tim of again, in than tenor pickup

been also should and We we improved alluded throughout May our manufacturing grow that to manufacturing the on, we've CEO year. working expect update would that in

in to agree terms definitely of but up year-over-year QX half again, modestly, I a size. the a that So the grow of year, on expect basis, back we

Operator

Our comes Aron from Berenberg. next question with Ceccarelli

Aron Ceccarelli

second. go raw to would the materials cost to for of I like topic back a

Your guidance has been improving throughout XXXX.

inflationary. QX down raw You single I QX. were look slightly costs were still digit high XXXX, QX in When guiding your materials to at

margin, mid-single-digit So it this What why if Because you basis look when me are guiding changed, just year-over-year XXX gross QX. decline anything? for has in now? points looks It is I expanded to accelerating. at

So please? what mid-single-digit guidance for driving is QX, this

Vincent Morales

we of deplete as sequential we of us to building alluded inventories, the in we improvement expect in earlier, and business for materials inventories think inventories build I moderation QX. QX to raw QX. We're do And the mix in we QX. as

XXXX moderation a So -- But full moderation full year still the expect raw for versus for further the we that of has again, factor. materials year, XXXX.

Operator

Field with today Pandya from Research. comes final Jaideep Investment Our On question

Jaideep Pandya

because sector across you 'XX, is if in volume. asking question 'XX, given XXXX in but left value come us Maybe of not growth that spare it chain, wondering Coating investors beyond this what you it's like the volumes margin the are a given I'm will tell from and capacity have? basically lot relevant, the growth low are looks how like could the

in That's capacity days? the have spare question. system you first what wondering these is my Just the

we purchasing up The second volume to to maybe your question be you should X%, sync X. growth year? Do destock? Or up really is really with expect around be buy materials. volume shouldn't material say, And it in is, expect this growth let's your still X%, therefore, would if raw you raw

last really on the is And question Protective. Marine

firefighting You alluded to protective.

of area. one very strong competitors Now your that in is

gaining from therefore So Or very well? the is is that just new and have doing share launched you competitor? products market that

Timothy Knavish

Okay.

those Let on, Jaideep. Tim. me take It's

of capacity, all, got plenty capacity. we of First

versus We and say, capacity. have capacity peers would there's are volumes still industry XXXX. And suppliers, I since certainly we XXXX. And significantly frankly, taken capacity our haven't out -- down our

exactly right. you're So yes,

You volume volume, should as will get from improvement. as that leverage margin expect will comes that certainly, which we up, drop

do DOI have. a few Second like $XXX have question, we million million, higher raw would $XXX days still to that like we material We have inventories. raw than probably inventory more materials would to and

today. And ready Protective, we're a more the on seasonal we of season peak as raw answer yes, So but QX some that finally, links them paint what businesses, materials excess and be sitting and because on demand we will directly bit in is Marine buying to are yes. quick for that less get of than the maybe little

technologies We new have fire launched well in quite received the and strong some market. new protection being products, recently the that area by are

protection on NX, fire Steelguard a a is the well has received. product XXX very cellulosic called hydrocarbon well For fire called side, which also received PITT-CHAR being been and product very which is protection

-- delivering fantastic efficient technologies gain and separate new XXXX fire product on that's will protection, the and marine are market very share reap of Sigmaglide. of sustainable, share good really fuel -- we've for share that's a those dry a in those we'll from getting us. the beyond, really But got dock very called product So receptivity gains and benefits it's we've really side gains and that got be a lot drives

those it technology-driven So in is spaces.

Operator

no to over back further at questions time. the Jonathan are Edwards. I'll this turn now There call

Jonathan Edwards

Thank Have you, today. our good day. this We confidence a and interest done Well your call. concludes Elliot. quarter appreciate and PPG in earnings fourth

Operator

This concludes today's call. conference

may You now disconnect.

PPG Industries (PPG) 19 Jan 242023 Q4 Earnings call transcript