PPG Industries (PPG) 21 Jul 232023 Q2 Earnings call transcript

Good morning. My name is Carla, and I will be your conference operator for today. Welcome to the Second Quarter PPG Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Instructions] [Operator

like of conference ahead, Investor now Bruno, to sir. turn President Vice Relations. to would over the John I Please go

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

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

US to equity XX, relate financial the Thursday, released after closed comments July markets Our XXXX. information on

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

results perspective quarter, Q&A the the a to management's we move on session. company's for will Following

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

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

PPG CEO, introduce Knavish. and me let President Now, Tim

start results second million. generation and diluted earnings our second operations the our would outlook. quarter morning, few everyone. good including all-time I about from welcome $X.X record of $XXX by adjusted to share XXXX of to performance team $X.XX year-to-date second financial then in quarter, quarter cash providing call. earnings per on sales billion, record and I'll a John, our to highlights financial like you, continuing and move PPG Thank delivered The of And

than quarter $XXX million higher higher generation XX% about is the EPS XXXX and cash of adjusted second year-over-year. Our of

an consumer slower-than-expected brands. These achieved demand. cautious supported demand growth in strong financial of buying Europe operating reflecting Industrial our were use variable in Overall, several our economic of advantaged behavior in was were leading production China muted, and good results markets and environment despite businesses the global end recovery certain and in by trends in softening US. technology, results in

businesses. offsetting the is in refinish, two-year and business. half in aggregate and use price in led our of which these nine automotive, of strong stack five quarter PPG's end Aerospace, PPG markets automotive implemented is segment incremental sales Performance now marine cost historically positioning Coatings company record Comex inflation. year, We about high coatings the to increases second protective XX%, and pricing in the first the for our primarily our

We positive progresses. the increases anniversaries expect price XXXX, year year selling half prices remain the as recognizing prior reach in second will to

have investor toward made segment As May, progress year the priority. our we great briefing profile. near-term is at recovery historical I margins in top said this And CEO improving in margin my our

Performance highest Our since the of than aggregate XXXX. second higher quarter segment QX which about margins XXX included This XX%, the basis is in near margins XX%, were the of segment points XXXX. Coatings delivering

cash commodity and inventories the actions, supported this these plans reduction, half supply further our This been this operating first sequential are year. about a quarters cash was through has return improved raw our to generation. of the levels of but our availability delivered by priority million. about key Another elevated for strong generation over remain $XXX has the reduce by to our inventory levels record year, as we And net quarterly lowered to earnings, various inventory we on record of we Despite legacy material our $XXX significantly executing million also team next basis. several

to I'd drivers Now contributing our financial results excellent like minutes on key XXXX. in to spend few three are that a

global number industries markets of a of production best auto overall mix industrial OEM. demand end already resilience. aerospace challenging, second is great including recessionary our are the quarter performing while portfolio that and conditions, First, providing in use is of in business type were the industrial global Two in

our facilitating innovative much relied leading sustainably through We advantaged and each products services. have end markets of global upon established these positions customer in by and success

both levels. build years, We are lower remain rates. remain robust estimated deficit pre-pandemic for auto data builds below to the automotive demand resulted still XX% expect million are, demand our aerospace XXXX several cars over points XXXX global flights an OEM OEM about supply in levels of Two coatings versus have as products historical past below and they and international XX

strong quarterly driver second that The we activity aggregate -- lackluster production and demand. industrial consecutive deliver This earnings is key performance earnings as despite records to architectural we positioned been achieved strong in any topline regional accomplished to When Europe weak team's continue additional line bottom and degree, for region to our has solid by begins will this of PPG growth. management. margin cost and recover execution be well

consumer economic conditions solid The local appreciating related including robust growth nearshoring in key are an where drivers strong remain third Mexico positioning wealth and expansive currency. growth, current

investment for PPG the strengths, concessionaire architectural we for continue network. and of We in where our will underway distribution first and automotive then a our clear including and growth best-in-class other to in leverage Comex years, regional the to remains with PPG core capital Mexico have actions benefits increased OEM expect further nearshoring businesses through capture leader the employment. we number

business customer second grow growth on our deliver strategy is continued and to enterprise of wins. the win the with partner to driven and ahead new quarter, organic to sustainability. our with make also advancements excited value a In have sales. customers about opportunities several we I'd us I'm customer A earned this to to comment our service we of products more strategy. enhancing key and on and productivity like superior their pillar focus

updates some ESG about important Now quick initiatives. our

As validated targets science ESG by according been report, scope greenhouse timeframe. X we've that XXXX and we initiative. scope the absolute XX% climate greenhouse our reduce the within gas by We gas have science-based our same communicated in now to our plan gas XXXX by emissions greenhouse to emissions and X targets XX% XXXX introduced X scope reduction emissions through

Moving to our outlook.

where the at more to in resilient, improvement We global global certain remain modest activity production a expect expect in and including slowing on to similar sequential China. industries, are US aerospace positioned well and industrial demand We third basis. quarter, some the remain industry levels including lower in activity Europe, further do of pockets we in automotive

expect we solid. economic addition, to in In remain Mexico activity

and stabilize demand to at our remain prior demand lower to year-over-year repaint by In year. decline levels, sales. architectural In Europe, demand levels to geography. anticipate pro-contractor being the mixed home businesses, conditions residential volume backdrop we activity sales much anticipate in to at to sequentially existing resulting we DIY current modestly with the be the closer begin US, expect we of In will lower

Finally, in to Mexico, business organic we expect solid our PPG growth. post continue Comex to

majeures expect in about peak inputs. we the more from to XXX disruptions, supply in is now additional force our our XX, the is of quarter, benefits realize That In had global chain. supply which moderating through line of At than cost normalizing. the third norms. financial our full our end From levels. commodity than supply historical realization the chain input perspective, financial with yet benefit date, still of not were the costs a To recognized we XX% our June, pre-pandemic higher we have

earnings we further realize will additional As reduce benefit. we our inventories,

and expect restructuring work initiatives to announced in our benefit earnings year-over-year an quarter. previously on continue third We million $XX incremental the

paint the good quarter. the customer and that sales made in Annual new this prospects. pull from This is benefit the in Additionally, emerging we are premium we film and uniquely future has will million. $XXX business of recent this acquisition about of business positioned market end growth second

year raised earnings margins challenging aggregated basis the third on and for consecutive be guidance fourth quarter environment, will quarter. we segment Despite year-over-year expect have a full higher the our

Finally, every serve look is in day. and and world who do customers, gives helping around our to me that dedication It to successful better our our ways continued team future. their today our members support the I thank customers to yesterday than make communities want continually for commitment our confidence

best August, mark we still in believe firmly that XXXth remain us. days of anniversary ahead our As PPG's I

prepared your in for This confidence you would questions. PPG. continued now and you for our remarks concludes Thank the line open please

comes the of question from Christopher line first Your Instructions] Parkinson. [Operator

line is open. Your now

so Tim, for Great. Thank outlook dissect Coatings you little much. bit. can perhaps a the we just margins segment Industrial

Thank discussing of progress directions accruals, you per think Just for second just the is your year moving deck, things for price based peak? as your anything slide the of various XQ prior the mix, half certain outlook back towards and worthwhile market dichotomy in given comp you you so you're on much. what else seeing cost

and the businesses. Hey, still margins Chris. recovery take of for outlook on accruals, are journey. Segment the Industrial some let but I'll I'll Thanks. comp margins the answer Vince in segment

have we continued… So

Instructions] [Operator

Carla, are Hello? we there?

Carla, please line? the up can you open secondary

for worth. Hey still can guys, hear it's what we you

Okay.

Thank you.

Chris. Thanks,

of in continue So both good Industrial more segment room is on to that margins But the piece to improve as not certainly yet are recovery that to from margins volume. margins expect really I industrial we started standpoint. segment grow segment price will -- -- have other say, to okay, the and that the happened cost continue,

weakness weakness And then and packaging. in in strong, below pockets right OEM of XXXX. auto course, some Of is now but pockets still of got industrial certainly we've

will get margins segment we So stabilize. volumes those as

thing been is industrial event other mentioned largely challenge at segment. we our the in The May the have operational that

that so cost progress interest end segment, that's recovery. So pieces and those your question surprisingly to affordability. two improvements to price with and very inflation despite realized the been And be as has continuing time we Industrial make the the for will from everything initiatives, in then some world happening versus rates resilient, automotive those on the markets, add will

auto But for to last All be were as move auto. expect QX strong a stronger for had major we of overall, forward continue in which We'll China QX. we'll here. recovery automotive good see for we a double And digits based our lapping on year. volume strong QX up continued regions recovery

[Operator Instructions]

Powder recovery years sorry. come. to that -- We expect for mix to I'm a is continue

everyone. Instructions] [Operator Hi, Apologies.

have us with some [Technical second whilst a We with speaker reconnection lines. lines. issues Difficulty] Bear phone gain the with the we

our continue. now Please line. We connection have all. with speaker Hi,

trying We're We'll through these the now. continue sort everybody. call Apologies, issues. right to

are with to time long point continue answered The sales standpoint, Already a issue know we've And you to But as example for well. is are comp into our but segment segments we instruction Certain also volume that Packaging, do auto even for double and outlook both build our ‘XX been doing given from were recovery back. powder bag. appliance I'll for mixed. from are ‘XX. to be where of continue which soft, strong, inflation closer destocking beyond to growth segment demand think be difficulties, customer -- up very electronic we mixed I'm Chris. materials, expect standpoint. expect that to Industrial continue will Okay, had to margin the question. a sub-segments a is to consumer, weak COEX but an happened but auto, the then strategy. important May be QX packaging what's and China, from with your we whole will piece. solid has the that about technical event digits, and end and very positive to

the segment continue much bag. overall, are very improve. would So expecting summary industrial mixed to we be But to margins a

the to question, move We'll next Carla.

the comes Panjabi. from question line Ghansham of next Your

Your is open. line now

me? you Okay. Good Hey, hear guys. Can morning.

Ghansham. Yes,

moving and just for few comments, your Terrific. I to you destocking material building apart guess any businesses outlook on and XXXX a of reported to the your give just seeing by changed are last businesses way? on a us then inventory can the impacted since Okay. from previous you packaging, how there volume which the all time as being still relative of Tim, your separately, greatest given are macro has the just And kind variability sense last parts view? basis any in

It's just answer on don't side, lot I'll in pretty pretty is -- on side, the anyways. much not of then any and largely And even behind they performance your last much occurred our us. industrial is a a And really, Ghansham. Destocking carry destocking behind us. that's question most first, time. inventory

anticipated industrial so company, is So have at a the going than we're we measured a continued changed had slower recovery and China what things China in bit in albeit improvement what we expecting across that see pace forward. more activity, outlook wise the the

not what but as much of improving we as as a So previously sequentially -- shaped had projected. not V

and was Architectural driven of a in was which political say Europe, other one-off events I'd that Europe. is what the in than lower largest by that we of one in volume social one of kind QX. lot expected our markets But France,

I weak would we'll around call Europe, not soft. still last the more stronger was we So than start resilient -- believe very and then anticipated, up we half to year. stronger just than we US, be would the in refinish bottom DIY, to from architectural we out. world, than PMC was stronger do than lights our anticipated And architecture continues But lapping overall, stronger it say was anticipated, than has bouncing the shoot and continues got just outlooks. we portfolio Auto that's was positive I and US, aero the Mexico we comps anticipated,

thought little our that lot in the guide. a are positives of had there, previously than were a ones So we but those different what

Your next the line from Josh of ahead. question go Please comes Spector.

just on on I wanted assumptions. solid and question my taking here. XQ quarter your ask second for Thanks hi. questions to congrats some Yeah, a

SG&A my math maybe I XX% gross that of specifically, margins a guide, sales as of midpoint gross guess percent margin, or indicates your So and are lower.

about the in printed quarter and just XX% similarly the in second quarter. You first

So assumptions through of some margins what would your the in Thanks. drive moving material there? go you're to expecting raw some especially just benefit? when you Can down, walk pieces gross

couple have is in On return for of bucket that. Really SG&A, about XXXX. in including a than the did we did first. -- in comp as falls a year. on me basis. We compensation. SG&A talked this prior all QX, one of the Josh, have incentive SG&A let balance performance-based Vince. total take a We of non-cash to that elements Yeah, QX little higher shareholder pension We higher That for year-over-year higher expense the communicated bit

was increased QX of a and down see business a that. shut could You creates And SG&A. reminder, just sales of lot XXXX of in the China some our increased

those pushed our up three cost year-over-year. elements So SG&A

a was and item up comp incentive both the for QX. QX And catch

So again, that's SG&A component.

for we're quarter, percent, specifically have as profit operational don't volume pull-through you a we much would as gross pointed a did us. about is volume the on lower year-to-date. On quarter Europe. typically out, XX% higher averaging in QX we as We

So said our would to the as we deflation again, going capture. We volumes it's or prepared remarks, efficiency. I a do improved really our the delta affect in to. higher point But expect only lower manufacturing are

comes next Your Begleiter. line of from question the David

is Your line open. now

weakness weakness to actually you Where you the potential Thank you. Good morning. the and yet Pro. Tim backlogs come weakness fruition? -- Vince, today and mentioned are are in seeing that

tremendous are work I cases would describe backlog. Hey, having weakness some that be the A David, a the seen have question. getting But commercial lot painters that Pro some bit, thanks Pro remains to resilient. reduction for still labor. we down in the and difficulty sequentially amount. but But is still maintenance, not of honestly, in a pretty in

that. passing So there on of are they're jobs where because cases

the while seeing So seen backlogs. we've softness we're of significantly, PRO fairly bit DIY would in just down I say a just

Your from next Zekauskas. Jeffrey line question of comes the

open. Your now line is

state it that regions just United tariffs say Chinese script, China the too on enormous that And case that are inventories are you Can most XX% there's your you on the States? use FIFO. of your in were in the use it chloride-based in or is you I high in [Technical secondly, Difficulty]. And of in thought very that LIFO. material. about and inventories TiOX States of to talk the Thanks Two-part United product other Can and question. China much. industry your

it's the adjustments US need are tougher to that inventory the is your the offshore mean good markets that in in does make pretty abroad? control So inventory you really and that and

move our Asia. of regions in make America, do is are in in obviously to we fully US. able cost about your Vince. certainly South other have today TiOX that are But America, oversupply you and capabilities are take prices. that been effective TiOX on in other capitalizing utilizing quite to in those of do it and had for world we to there and think time, China. to Asia markets but are lower -- we tariffs the on We And a Europe, so some this Jeff, or And -- Chinese question, Yeah, asked break-up little TiOX the I outside that certainly utilizing Latin less

take Jeff, this I'll is the John. question. FIFO

our past with the sales have, acquisitions made the And sales So, in we the the in years first XX% in US. we've have the now US. about five, profile FIFO. as the US, start acquired in We're we've six been on companies

So we have not LIFO the moved them accounting. to

increased has we method due on incrementally those So have percentage over that of to just factors. time, FIFO the inventory the

To add there… just on

Sorry.

Sorry, Carla.

Just -- I apologize.

to Just apologies. add my on,

inventory, mentioned, add to we Just raw materials. in specifically as do excess John on,

excess we've we with the about level. to working that at look year year the So the our of months the material back historically, get the XX% in of portion balance inventory the trimmed you to other first we'll If six inventory historical trim into to raw came be our

Your of next question Stephen comes line from the V. Byrne.

now is line open. Your

If inventory you. XX% on of the to for take And I raws, purchased do just you through Vince, raws sitting you thank would and raws. be, was being that highlighted, My above about COGS? relative And, still excess be for to today, Tim, flow pre-pandemic? believe question you're I will what cost pre-pandemic. how that you COGS, would talked it think it in Yeah, correctly, understood you still long

here. Yeah, stab Steve. take at and first the will Tim some I'll that add color

on single-digit XX%, invoice remind seeing cost, we're materials we deflation low on today what some in raw maybe as So year-over-year, last certain said everybody mid quarter, I cases up invoice materials. XX%, XX%. raw would as to high invoice and to double-digit went

to would on XX single flow And the low double-digit multi-year low do or mid even So that raw through much seeing -- XX extended now. in a on year-over-year material. to days days depending typically a that's again, we're XX mid But declines stack, right high on on we're to you high still to higher. it to when invoices basis

so Yeah. you've work inventory got continue. And raw so with you through margin additional additional combined to combine or sequentially now, bottom that that confident inventory with that journey that I'm line, the million when got we've material why Steve, on sitting that will That's deflation $XXX of our recovery flowthrough. we're more

Your John question McNulty. from comes next

now is line Your open.

my for taking thanks Yeah, question.

us spoke your you guess about the the see through whether to in kind comps are how should of remarks, XQ you of year-over-year, guess prepared continuing thinking that? Tim, from XQ and I pricing second help I dramatic about we think pretty year. So, pricing to just going you're because sequentially the to to be half can

of of most XXXX most John, do going There'll But price of impact. see, be And in pricing Performance the a that carryover. what some here -- Yeah, you'll a point, see be what are lapping year. Coatings. last we is to we're of what lot we forward for remainder from quarters to going your some carryover targeted will strong

we printed -- if So X% look QX. X% for QX, you at for

So QX, QX, to happens other you'll take. probably but printed in we'll see need and little be still we it pricing low actions what early see we're positive, to a what single might digit in confident tell will

along expect we more inventories. as the we still -- pull just we prior to that to here, to down our delta expect more And we tag raw about talked -- is as the which material expand realize question, price the deflation

to thing, mean, holding of I that The teams nicely, has how the are executing up our very pricing other been regard. proud

in asked story, someone about earlier. what's versus guide earlier our so price different our And

were. Our price what than prior guides story our is stronger

of the line comes Andrews. question next Vincent Your from

is now open. line Your

you good Thank morning, and everyone.

Is how it Just of increases have you lap few the prior quarters. elevated flowthrough wage next a help just going little more benefits that a the there some getting. can to understand headwind because is the just -- you that materials is of on raw remain and in? a said question inflation from your wage if or And much it us you that the will bit, versus to you're quarters size

markets a XX%-ish -- we're good like workers X% that you expecting wage X% but a no Yeah, be material about that number than a higher could inflation versus call average, standpoint, normal mid I'd in do then still And down. single-digits raw frontline say would higher to but that. see we're from Vincent, have at on we pre-pandemic. QX store than that markets, inflation. And than mature higher workers, high average. Emerging to surprise,

those elevated So expect rest two sequentially keep still year. but to we at cost the combination we versus the improving the us of move of as pre-pandemic, through

process trend year seeing We out And we're as most increase in look wage or trends, the once decrease of merit of wages. change earlier lines, process would for employees. year terms do that a at our of typically our we we or and the of the in not increase a provided our

trend that year. for should So hold the balance the of

line Your Duffy next Fischer. question of comes from the

line Your now open. is

guys. morning, Good Yeah.

QX a question and guide around Just QX. implied the EPS for the and for the

$X.XX. for implied decline $X.XX accelerating up the price back improvement still guide QX, So and and $X.XX material guys and QX up In EPS the With half? you number then as you QX QX deflation your in year-over-year first $X.XX versus year-over-year is half would why up was midpoint the and commenting, for half in year-on-year. were The for back and the the raw

biggest would be year. The the for started price kick of Duffy. like us just increases that actions. price the in last Hey, QX larger of quarter-over-quarter to driver Most

top, difference. pricing you to will those So biggest and if that's the lap less adding the as really we new

comes from question line Cunningham. next the Your Patrick of

now Your open. line is

Thanks morning. taking for my Good Hi. question.

are a interest resi and in up rates and -- to existing about softness I showing non-resi. home little and repaint. cited sales bit So And you talk increasing clearly want

strong and, interest the to we to a higher in be remodeling maybe rate and back appears or it hanging and in commercial indices? should half environment in starting XXXX see the there, in about how commercial some While construction to deceleration risk think volumes given

those term, not backlog a short was particularly in there areas. not because the something the about -- we're in rest frankly ‘XX, concerned that's for say of I'd Well, such

you a bifurcation think happening. about activity really painting commercial had had happened tremendous maintenance that -- COVID, painting happening, you amount but of painting and virtually you of during If the resi no

demand in that -- that amount pent-up of space. there's a So still tremendous in

not for interest see longer just that in the -- eventually, and concern now happens major rates macros that's term. But right we're with what being Now us. a seeing we'll

comes of line from the question next Your Michael Leithead.

is Your now line open.

Good Thanks. morning, guys. Great.

from me on Just traffic solution. one question

I think single up to and low XQ, they sales you expected down in single were digits. be digits high

what talk you can you just the what delta So drove through in thought April? versus

Yeah.

So really had part QX And comp We strong business last bit. still a related. was market secondly, it as this say of we're QX, paint year it in learning picked where that we of temporary part still up. volumes new -- -- an business. is in I'd us And a for area and the a was it's did activities see some shift

expect we so we -- we next to year certainly the rest the move that forward get And expect into year. that and back as of through

in margin very that focused been that the last team has cash the a expected is in standpoint. and really is us, while come business the the a business there. generating volume job did bit have to that volumes good contributor cash enterprise lower for and I'll good thing than And good done We quarter, we for great a to heavily this from the say on over

Frank next comes Your from line the of question Mitsch.

now is line open. Your

you and begs the morning guys Any of there use first paydown thoughts appreciated. about know, right it. in right be the you've the you greatly Obviously on right would right cash buybacks versus But M&A? do price? Tim, talked property, the nice this time? seeing think cash. price, Is I about time? the how right is you Are strong question Good flow year, of part generated results. half some Debt the

Thanks, Frank. Yeah.

of as far this proud paid and so team, number said You're $XXX between this down to million of [narration] million some million pay we down pay And about the one you somewhere noted, earlier year. priority We great $XXX down year, debt. We our (ph). $XXX that would

side, more we've to I'll really got a remains for to going decisions seeing we're lot of based are we to going cash optionality. line, We're to a that on desks gives going going M&A So a use come clearly cash the cash down year, to we priority talk generation to of we're make year. deliver to And to value that really properties which the good do. have good shareholder our But us a really bottom cash some best not bit a we're time. there. going have on what We're specific pay across time And us. have about actions then more but year. good that to how see Probably tell on at But you, debt.

reiterate cash said just May balance going we to York, we're down this we on sheet. what let to in And in -- New going we're debt, the pay grow not after not

Your question Aleksey Yefremov. the of from comes line next

open. now is line Your

any seen spending? Thanks. deed residential in What in the Good morning, months? your all do here in you meaningful seeing recently US improved better Have everyone. infrastructure expectations business the in We've somewhat last new in on you construction at pickup then the market? see US this three your And separately, are

So but home with a we've a We've builders. new activity there couple of bit new it's construction. starting to home see nice in business, said small prior wins on overall little we our some fairly not part of And it's are on newbuilds, the recently better zero. had a calls,

So US, additional painted good for any that bottom get any us. That's Europe, upside Mexico, walls walls us. to in the -- is line, Australia

So that would be one. the first

of part question? your Second

Infrastructure.

Infrastructure.

What you think about US infrastructure.

Infrastructure. in projects, we of coatings products call active very late it, are I stage those last All our coatings Thank in specification right. the infrastructure, Thank you. see, we're to are starting and project that activity US ensuring upstream you. would side and or industrial in projects. paint whether coatings are Typically, traffic those architectural protective or sometimes stage coatings. well specified, or it's

very about growth but we're excited certainly for this now. We're seeing opportunity it and ‘XX is us, activity of a that it. happening with So active beyond more and upstream we're

I not a it's add, Mexico but could And comment. comment, US it's if

yield facilities significant as hundreds manufacturing put that painting as Mexico, us will as Those brand. We well ‘XX that Mexico in picks occur been in in facilitate PPG array of mentioned And certainly benefits Comex amount are businesses then for for have up a earlier, of seeing ‘XX full-fledged and place. once industrial to a we have in building permits near-shoring strong further is several as Tim requested. our of activity manufacturing

put of to about Mexico. just Yeah, billion $XX of some In Mexico nearshoring QX that in of metrics investments this nearshoring. XXXX. year, there's around three Xx, times QX That's

the are we side that and as seeing involved really well. were business pickup in of So specification that

comes Your next the Harrison. of question from line Mike

now is line open. Your

Wanted customer price where in Good on auto ask subsegments? more about you're instances to in the or that raw auto either pushback auto there. some you're material are related declines to And Is other still Hi. and morning. there starting pricing seeing OEM? to any any OEM there OEM see come to realization

Mike. Yeah, Vince. is This

start will me negotiate some our a for and inflation have customers, the as But we sure Tim at us it with an does, value to while typically provide. cycle taken get here. it's paid doing Let color I'm

So any a We're customers. the the any that we seeing environment to inflation customers. of had steady at We're effect cycle. but we're our trying grows, in inflation up that's lag -- in we a any that pushback would see the way not still margins in in OEM this capture a state point now. seeing Again, volume terms business, price lag We're trying the we're pushback our back as to on versus from not to capture still traditional

I segment, was unexpected But anything the seen material. to nothing pressure other we intense broader around the just core, significant, been market dynamics, haven't And question out competitive at or about normal the that of edges. your say would really normal. some nothing There's

comes Roberts. John from next Your question

is line open. Your

expected was and digit. up organic but expected, you. about don't expected? sales X%. was was what price single pricing better than when globally talk better were the or Refinish it Thank than flat I being segment better volumes was mid up volume you Performance up, Refinish than know

US goes side and the really is there side. the of in Yeah. was time expected. largest positive little than Hey, is here most volume And on watching But that we in see bit than the our that was for John. the China, course which but on of happens particularly -- slower quarter then US, would Volume critical market. a we improving sequentially a say, we're in what that Volume muted business, Volume we down than thought. and Europe And closely more bullish as recovery, expected. on. worse overall, I great Europe, because was most we better bit

customers. destock And there concluded some the destocking Europe think certain end a QX, refinish earlier And about call talked think with here. the We in was side, of by QX. that's in we we

get we half be of as again, the So the to volumes we the to sync. and demand more back the in would year, expect

Michael Your comes next from the of line Sison. question

line Your now open. is

quarter. Hey, guys. Nice

see in that's weak, quarter? the of those In seems portfolio look the you your when to outlook, you And volume just a think markets sort to I decline bottom quarter at down how your and or here fourth get of third terms that potentially are take half be thoughts on third of And, bottoming your I the then, do in year-over-year again. wanted unfolding. or

Yeah.

a for So of that were expected we're how forward. we thinking them volume markets I'll take what few and QX the going about lower than

some I but expected, as that close, down from clearly earlier. little comping Europe, upside France First than that expect we was QX we more a even were one, where -- last of maybe to at isolated pretty year. of start to that do mentioned I architectural was

the Europe used bouncing bottom I've off the there. maybe architectural bottom. the off of is So a little believe bit upside and that I do term bouncing

The about the out we we do the PPG QX, positive China we're just that recovery, expect but space in government industrial way that and stretches will for that is, improve. than be thinking to sequentially the any stimulus doubt, a positive slower no -- recovery does expected in real China the

main So and we saw potentially point what improving those and in would be as would QX QX in far as I out ones the beyond. two

a you there as look issue year-over-year And -- at is Mike. comparable volume. think comparable I Yeah,

in have improving mentioned to compared as Tim recovery QX. China volumes in But sequentially we So do from year QX. that shutdown last COVID was a

at improving year-over-year you look -- when mentioned against look again, challenges. to it's So again, China as we That's QX tough but comp. volume QX, you is -- a

comes of the McCarthy. Your next from question line Kevin

open. line now Your is

a Tim, you OEM auto two-part morning. on for Good question you. Thank volumes. Good. Yes.

First, of divergent outlook believed. are of like be for in of versus the example. the Europe to It to for looks could some speak back year you there's the Asia the trends consultants half quite

the view do of that the longer global units. amount you you be How some recovered you're of is So in curious time? million term, there. production? longer that implication XX needs supply then And the for to that period medium the term referenced deficit understand Is to baking to outlook what over

add start a in the Hey, let had year Vince. China last last -- Tim production. auto recovery again, just I'll the and I'll Kevin, this a reminder, is here. QX But just question. had question same in we

on skewed. look a the So numbers basis a when year-over-year bit again, are you

Yeah.

of interest So, Kevin, here's on the auto some of bullish and questions. rate And why. kind we're despite affordability

positively at -- number digit example, good drop predicting where China. when levels. but positive out of We China, in we're in was in surprised -- everybody than worse came [XX.X] continue yet which well a builds are seeing and of still and performance really anywhere below We're to sales macros The would numbers (ph), was surprise, see was nice remain builds that historical by USR, Double be growth a resilient. QX. starting the Europe to for

weird we mentioned, Vince but to have that QX, in As we situation a expect do little comp recover. here

So we're on auto. bullish

on We the term bullish and term. short auto are for medium both

the Now, math. million straight is just $XX

no going come need the before But and during COVID you not deficit happened take will it's take that of I That spread what average deficit. be. take with that it's deficit out be will $XX and make zero. going COVID six-year to up how million and you builds, have that how to idea long world, being average to annual cars the You you've road still fleets. old. be much world. have And countries you growth, in population developed you US, have or up in cars per Mature capita household because still per to is years lower than Europe, XX the up a in made car countries like parts still got XX or aging of many many

some stretched will fundamentals that some million to deficit part of made the $XX up. question So needs It's significant of that out be. say how be at a point,

question next [indiscernible]. comes the of line Your from

is now open. line Your

on question. one the I have for Thanks guys. Hi, segment margin.

So your QX really down. points initiatives, see going widening sector and past margins were terms expanded the raw XXX we the basis QX. expanded in gap of we XXX pricing -- XXX I start to in are but basis peak materials understand basis points in they

the talking in are the weak we of markets bottoming. some volumes And are

to QX could expansion again? in accelerate prevent terms what margins QX So expand -- and in to of

to of the May about margins We're volume talked pricing. well in help our this half We the a we some or little do the New see businesses, as again, the we we in We and do laid in York meeting. the year think improve especially expect, I call. P&L. manufacturing flow Tim to as, mentioned a back element as in through the XXXX starting that in earlier Yeah, -- as biggest manufacturing catalyst industrial incremental do, to deflation earlier, to PPG key our out lap

would be our back elements I that the margins in half the of to would key the would those point four year. So impact that

from question the next Alexander. Your of comes Laurence line

line Your open. is now

morning. Good

bridge quick a What's destocking how trying for net year? the kind about this for from into year? margins next doing drag the Just earnings of that think one. the and Just to you're translates

digit called invoices. again, math high realizing in doing is, mid my our question, our Laurence. through speak. we're the Interesting P&L. on to what we it's We're mid digit seeing single deflation single inflation I'm But as head

that's quarter. I'm to a $X.XX So guess to $X.XX going that

our my through would the to be delay. proper. here on not coming That's make sure a John at that Looking time math real But P&L. is basis into

the Viswanathan. comes from question line Arun next of Your

is line Your open. now

taking for question. my Great. Thanks

volume positively It trending like that to outlook continue. volumes wanted you to have Just obviously automotive kind understand sounds and OEM been overall. aerospace expect and of the

Now packaging you're weakness some in some of markets. and out the calling other

growth maybe aerospace. auto first next some there a given overall maybe persistence and easier in path by in year these a the and businesses comps is some to of positive half So volume of industrial volume of

next how So trends about volume thinking overall growth the Thanks. couple for of probably periods. I'm kind

question, will Great We've qualify a on a saying we expect volume based and optimistic that's tell I'm by fully to assumptions. Arun. aerospace I'll I a businesses auto first refinish stuff Yeah, pretty lot. lot around to about the and But all talked and our one it's to XXXX in happening early and talk continue still it nail about you given really world few we and macro And the perform. Mexico that those things.

about I've they're are businesses think us. In talked for small we addition a the few off to not businesses bottom that, and that bouncing

eventually, turn bouncing the positive. to off will So bottom

still with any China, But very Europe record you really expected. been last record in out printed up China. all-time has in been volume about that XXXX, QX, a one in I would earnings particularly And government China And if a the ramp stimulus. earnings for strong muted, point for think the we of that's have recovery first presence the while slower QX. we half all-time year, Europe. is than positive, in

job has standpoint. positioning team the of a cost So base a from and done great both margin

be us. So across any real of will those volume for in any incremental businesses positive uptick in Europe a

are lot little could for We'll that still earnings positive in the there point early. So, a to talk of call, but that XXXX. indicators us volume about a for more next

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

call. day. you, and a PPG. Thank Have earnings interest appreciate confidence ends our in good We quarter everybody's Carla. second This

conference This concludes call. today's

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