PPG Industries 10-Q 2024-09-30

Filed 2024-10-17. 8 sections, 192K characters. Original on sec.gov · Markdown · JSON

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 1-1687

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PPG INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

25-0730780

(I.R.S. Employer Identification No.)

Pennsylvania

(State or Other Jurisdiction of Incorporation or Organization)

One PPG Place, Pittsburgh, Pennsylvania

(Address of Principal Executive Offices)

15272

(Zip Code)

(412) 434-3131

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.66 2/3	PPG	New York Stock Exchange
0.875% Notes due 2025	PPG 25	New York Stock Exchange
1.875% Notes due 2025	PPG 25A	New York Stock Exchange
1.400% Notes due 2027	PPG 27	New York Stock Exchange
2.750% Notes due 2029	PPG 29A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of September 30, 2024, 232.0 million shares of the Registrant’s common stock, par value $1.66 2/3 per share, were outstanding.

PPG INDUSTRIES, INC. AND SUBSIDIARIES

INDEX


		PAGE
Part I. Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statement of Income	2
	Condensed Consolidated Statement of Comprehensive Income	3
	Condensed Consolidated Balance Sheet	4
	Condensed Consolidated Statement of Shareholders' Equity	5
	Condensed Consolidated Statement of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
Part II. Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		40

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Income (Unaudited)


	Three Months Ended September 30		Nine Months Ended September 30
($ in millions, except per share amounts)	2024	2023	2024	2023
Net sales	$4,575	$4,644	$13,680	$13,896
Cost of sales, exclusive of depreciation and amortization	2,663	2,752	7,842	8,214
Selling, general and administrative	1,062	1,047	3,203	3,108
Depreciation	97	102	298	287
Amortization	32	40	106	121
Research and development, net	105	108	325	322
Interest expense	67	64	184	190
Interest income	(48)	(39)	(135)	(96)
Pension settlement charge	—	—	—	190
Other (income)/charges, net	(14)	13	15	4
Income before income taxes	$611	$557	$1,842	$1,556
Income tax expense	137	121	422	350


Net income attributable to controlling and noncontrolling interests	$474	$436	$1,420	$1,206
Net income attributable to noncontrolling interests	(6)	(10)	(24)	(26)




Net income (attributable to PPG)	$468	$426	$1,396	$1,180




Earnings per common share (attributable to PPG)	$2.01	$1.80	$5.96	$5.00




Earnings per common share (attributable to PPG) - assuming dilution	$2.00	$1.79	$5.93	$4.97

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

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PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Comprehensive Income (Unaudited)


	Three Months Ended September 30		Nine Months Ended September 30
($ in millions)	2024	2023	2024	2023
Net income attributable to controlling and noncontrolling interests	$474	$436	$1,420	$1,206
Other comprehensive (loss)/income, net of tax:
Defined benefit pension and other postretirement benefits	(3)	(1)	17	138
Unrealized foreign currency translation adjustments	(113)	(174)	(561)	199

Other comprehensive (loss)/income, net of tax	($116)	($175)	($544)	$337
Total comprehensive income	$358	$261	$876	$1,543
Less: amounts attributable to noncontrolling interests:
Net income	(6)	(10)	(24)	(26)
Unrealized foreign currency translation adjustments	(1)	2	3	1
Comprehensive income attributable to PPG	$351	$253	$855	$1,518

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

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PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet (Unaudited)


($ in millions)	September 30, 2024	December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$1,251	$1,514
Short-term investments	71	75
Receivables, net	3,653	3,279
Inventories	2,263	2,127
Assets held for sale	237	—
Other current assets	438	436
Total current assets	$7,913	$7,431
Property, plant and equipment (net of accumulated depreciation of $4,854 and $4,963)	3,611	3,644
Goodwill	6,080	6,200
Identifiable intangible assets, net	2,203	2,424
Deferred income taxes	366	273
Investments	300	259
Operating lease right-of-use assets	805	832
Other assets	580	584
Total	$21,858	$21,647
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$4,342	$4,467
Restructuring reserves	46	87
Short-term debt and current portion of long-term debt	339	306
Current portion of operating le

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the condensed consolidated financial statements in Part I, Item 1, “Financial Statements,” of this report and in conjunction with the 2023 Form 10-K.

Highlights

Net sales were approximately $4.6 billion for the three months ended September 30, 2024, a decrease of 1.5% compared to the prior year, primarily due to the unfavorable impact of foreign currency translation and the divestitures of the non-North American portion of the traffic solutions business.

Income before income taxes was $611 million for the three months ended September 30, 2024, an increase of $54 million compared to the prior year. This increase was primarily due to improved manufacturing productivity, certain reductions in overhead, and lower depreciation, amortization and net interest costs, partially offset by wage and benefits inflation.

Results of Operations


	Three Months Ended September 30		Percent Change		Nine Months Ended September 30		Percent Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023		2024	2023	2024 vs. 2023
Net sales	$4,575	$4,644	(1.5)	%	$13,680	$13,896	(1.6)	%
Cost of sales, exclusive of depreciation and amortization	$2,663	$2,752	(3.2)	%	$7,842	$8,214	(4.5)	%
Selling, general and administrative	$1,062	$1,047	1.4	%	$3,203	$3,108	3.1	%
Depreciation	$97	$102	(4.9)	%	$298	$287	3.8	%
Amortization	$32	$40	(20.0)	%	$106	$121	(12.4)	%
Research and development, net	$105	$108	(2.8)	%	$325	$322	0.9	%
Interest expense	$67	$64	4.7	%	$184	$190	(3.2)	%
Interest income	($48)	($39)	23.1	%	($135)	($96)	40.6	%
Pension settlement charge	$—	$—	—	%	$—	$190	(100.0)	%

Other (income)/charges, net	($14)	$13	(207.7)	%	$15	$4	275.0	%

Net Sales by Region


	Three Months Ended September 30		Percent Change		Nine Months Ended September 30		Percent Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023		2024	2023	2024 vs. 2023
United States and Canada	$1,929	$1,941	(0.6)	%	$5,710	$5,776	(1.1)	%
EMEA	1,366	1,393	(1.9)	%	4,179	4,341	(3.7)	%
Asia Pacific	751	733	2.5	%	2,141	2,116	1.2	%
Latin America	529	577	(8.3)	%	1,650	1,663	(0.8)	%
Total	$4,575	$4,644	(1.5)	%	$13,680	$13,896	(1.6)	%

Three Months Ended September 30, 2024

Net sales decreased $69 million due to the following:

● Unfavorable foreign currency translation and divestiture-related sales (-1%)

For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.

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Cost of sales, exclusive of depreciation and amortization, decreased $89 million primarily due to improved manufacturing productivity.

Selling, general and administrative expense increased $15 million primarily due to wage and benefits inflation partially offset by certain overhead reductions.

Interest expense increased $3 million primarily due to higher interest rates. Interest income increased $9 million primarily due to higher interest rates.

Other (income)/charges, net increased by $27 million of income primarily due to the absence of a loss on the third quarter 2023 sale of the Company's legacy Russian industrial operations and an increase in realized foreign currency gains.

Nine Months Ended September 30, 2024

Net sales decreased $216 million due to the following:

● Lower sales volumes (-1%)

● Unfavorable foreign currency translation and divestiture-related sales (-1%)

For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.

Cost of sales, exclusive of depreciation and amortization, decreased $372 million primarily due to moderating raw material costs during the first six months of 2024 and lower sales volumes.

Selling, general and administrative expense increased $95 million primarily due to wage and benefits inflation and growth-related investments.

Depreciation expense increased $11 million primarily due to higher capital expenditures in recent periods.

Interest expense decreased $6 million primarily due to lower debt balances. Interest income increased $39 million primarily due to higher interest rates and higher intra-quarter cash and cash equivalents balances during the period.

A pension settlement charge of $190 million was recorded in the first quarter 2023 associated with the Company's purchase of group annuity contracts that transferred pension benefit obligations for certain of the Company’s retirees in the U.S. to third-party insurance companies. Refer to Note 10, "Pensions and Other Postretirement Benefits" in Part I, Item 1 of this Form 10-Q for additional information.

Other (income)/charges, net increased by $11 million of charges primarily due to a non-cash loss on the second quarter 2024 sale of the Argentina portion of the traffic solutions business and the absence of a first quarter 2023 insurance recovery related to hurricane damage at a southern U.S. factory, partially offset by the absence of a loss on the third quarter 2023 sale of the Company's legacy Russian industrial operations and an increase in realized foreign currency gains.

Effective Tax Rate and Earnings Per Diluted Share


	Three Months Ended September 30				Percent Change		Nine Months Ended September 30				Percent Change
($ in millions, except percentages and amounts per share)	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
Income tax expense	$137		$121		13.2	%	$422		$350		20.6	%
Effective tax rate	22.4	%	21.7	%	0.7	%	22.9	%	22.5	%	0.4	%
Adjusted effective tax rate, continuing operations*	22.5	%	19.5	%	3.0	%	23.2	%	22.0	%	1.2	%

Earnings per diluted share, continuing operations	$2.00		$1.79		11.7	%	$5.93		$4.97		19.3	%
Adjusted earnings per diluted share*	$2.13		$2.07		2.9	%	$6.49		$6.15		5.5	%
*See Regulation G Reconciliation below

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Adjusted earnings per diluted share for the three months ended September 30, 2024 increased year-over-year primarily due to improved manufacturing productivity and certain reductions in overhead, partially offset by wage and benefits inflation.

Adjusted earnings per diluted share for the nine months ended September 30, 2024 increased year-over-year primarily due to moderating raw material costs during the first six months of 2024, partially offset by wage and benefits inflation.

Regulation G Reconciliations - Results from Operations

PPG believes investors’ understanding of the Company’s performance is enhanced by the disclosure of net income from continuing operations, earnings per diluted share from continuing operations, PPG’s effective tax rate and segment income adjusted for certain items. PPG’s management considers this information useful in providing insight into the Company’s ongoing performance because it excludes the impact of items that cannot reasonably be expected to recur on a quarterly basis or that are not attributable to our primary operations. Net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate and segment income adjusted for these items are not recognized financial measures determined in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered a substitute for net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate, segment income or other financial measures as computed in accordance with U.S. GAAP. In addition, adjusted net income, adjusted earnings per diluted share and the adjusted effective tax rate may not be comparable to similarly titled measures as reported by other companies.

Income before income taxes from continuing operations is reconciled to adjusted income before income taxes from continuing operations, the effective tax rate from continuing operations is reconciled to the adjusted effective tax rate from continuing operations and net income from continuing operations (attributable to PPG) and earnings per share – assuming dilution (attributable to PPG) are reconciled to adjusted net income from continuing operations (attributable to PPG) and adjusted earnings per share – assuming dilution below.


	Three Months Ended September 30, 2024
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate		Net Income (attributable to PPG)	Earnings Per Diluted Share(a)
As reported, continuing operations	$611	$137	22.4	%	$468	$2.00
Adjusted for:
Acquisition-related amortization expense	32	8	24.4	%	24	0.10
Portfolio optimization(b)	10	2	24.3	%	8	0.03
Adjusted, continuing operations, excluding certain items	$653	$147	22.5	%	$500	$2.13


	Three Months Ended September 30, 2023
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate		Net Income (attributable to PPG)	Earnings Per Diluted Share(a)
As reported, continuing operations	$557	$121	21.7	%	$426	$1.79
Adjusted for:
Acquisition-related amortization expense	40	10	23.9	%	30	0.13
Portfolio optimization(b)	15	(12)	(77.2)	%	27	0.11
Business restructuring-related costs, net(c)	13	3	22.9	%	10	0.04
Adjusted, continuing operations, excluding certain items	$625	$122	19.5	%	$493	$2.07

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	Nine Months Ended September 30, 2024
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate		Net Income (attributable to PPG)	Earnings per Diluted share(a)
As reported, continuing operations	$1,842	$422	22.9	%	$1,396	$5.93
Adjusted for:
Acquisition-related amortization expense	106	26	24.5	%	80	0.33
Portfolio optimization(b)	42	12	28.6	%	30	0.13
Business restructuring-related costs, net(c)	15	5	32.5	%	10	0.04
Legacy environmental remediation charges(d)	20	5	24.3	%	15	0.06
Adjusted, continuing operations, excluding certain items	$2,025	$470	23.2	%	$1,531	$6.49


	Nine Months Ended September 30, 2023
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate		Net Income (attributable to PPG)	Earnings per Diluted share(a)
As reported, continuing operations	$1,556	$350	22.5	%	$1,180	$4.97
Adjusted for:
Pension settlement charge (e)	190	46	24.2	%	144	0.61
Acquisition-related amortization expense	121	30	24.3	%	91	0.39
Business restructuring-related costs, net (c)	27	6	23.5	%	21	0.09
Portfolio optimization(b)	22	(10)	(45.2)	%	30	0.12
Insurance recovery of expenses incurred due to a natural disaster (f)	(9)	(2)	24.3	%	(7)	(0.03)
Adjusted, continuing operations, excluding certain items	$1,907	$420	22.0	%	$1,459	$6.15

(a)Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.

(b)Portfolio optimization includes losses on the sale of non-core assets, including the loss recognized in the second quarter 2024 on the sale of the Company's traffic solutions business in Argentina and the loss recognized in the third quarter 2023 on the sale of the Company's legacy industrial Russian operations, which are included in Other (income)/charges, net in the condensed consolidated statement of income. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income. In 2023, net loss of $2 million was attributable to noncontrolling interests.

(c)Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other (income)/charges, net on the condensed consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the condensed consolidated statement of income, and other restructuring-related costs, which are included in Cost of sales, exclusive of depreciation and amortization and Selling, general and administrative on the condensed consolidated statement of income.

(d)Legacy environmental remediation charges represent environmental remediation costs at certain non-operating PPG manufacturing sites. These charges are included in Other (income)/charges, net in the condensed consolidated statement of income.

(e)In the first quarter 2023, PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the Company’s retirees in the U.S. to third-party insurance companies, resulting in a non-cash pension settlement charge.

(f)In the first quarter 2023, the Company received reimbursement under its insurance policies for damages incurred at a southern U.S. factory from a winter storm in 2020.

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Performance of Reportable Business Segments

Performance Coatings


	Three Months Ended September 30		$ Change	% Change		Nine Months Ended September 30		$ Change	% Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024 vs. 2023		2024	2023	2024 vs. 2023	2024 vs. 2023
Net sales	$2,921	$2,880	$41	1.4	%	$8,583	$8,549	$34	0.4	%
Segment income	$513	$452	$61	13.5	%	$1,485	$1,384	$101	7.3	%
Amortization expense	$22	$28	($6)	(21.4)	%	$74	$87	($13)	(14.9)	%
Segment income, excluding amortization expense	$535	$480	$55	11.5	%	$1,559	$1,471	$88	6.0	%

Three Months Ended September 30, 2024

Performance Coatings net sales increased due to the following:

● Higher sales volumes (+2%)

● Higher selling prices (+1%)

Offset by:

● Unfavorable foreign currency translation (-1%)

● Divestiture-related sales (-1%)

Architectural coatings - Americas and Asia Pacific net sales, excluding the impact of currency, acquisitions and divestitures ("organic sales") increased a low single-digit percentage compared to the prior-year third quarter driven by increased sales volumes in the U.S. and Canada coupled with higher prices. In the U.S. and Canada, growth initiatives through our partnership with The Home Depot® drove higher professional contractor sales volumes. In Mexico, the business benefited from our strong concessionaire network.

Architectural coatings – EMEA organic sales were flat year over year, as higher prices were offset by lower sales volumes. Consumer confidence remained weak during the quarter, and regional demand was uneven by country. Sales volumes were strong in central and eastern Europe offset by lower sales volumes in western Europe.

Automotive refinish coatings organic sales increased by a mid-single-digit percentage versus the prior year. In the U.S., sales volumes were higher compared to prior-year results even with lower industry-wide insurance claims. In Europe, organic sales increased year over year driven by price, and demand improved slightly in Latin America. In China, demand for refinish products is recovering and is expected to improve in the coming quarters.

Aerospace coatings organic sales increased by a double-digit percentage compared to the third quarter 2023, led by higher selling prices and sales volume. Demand remained strong as customer order backlogs are at similar levels to the prior quarter. Global air travel has improved year over year but remains about 3% below pre-pandemic levels for both domestic and international flights. The company remains focused on debottlenecking and expanding manufacturing capabilities to drive volume and earnings growth.

Protective and marine coatings organic sales increased by a low single-digit percentage compared to the prior-year third quarter driven by higher sales volumes in Europe and the Asia Pacific region partially offset by lower sales volumes in the United States. The third quarter was the sixth consecutive quarter with positive year-over-year sales volume growth. In Europe and the Asia Pacific region, increased sales volumes were driven by share gains in marine maintenance and repair, reflecting demand for PPG's sustainably advantaged products.

Traffic solutions organic sales increased by a low single-digit percentage compared with the prior-year third quarter primarily due to increased sales volumes offset by lower prices. Seasonally, second and third quarter sales in the traffic solutions business are typically more than twice the sales in the first and fourth quarter due to the difficulty of applying traffic markings in colder temperatures.

Segment income was $513 million, an increase of 13% versus the prior year, primarily due to higher sales volumes and selling prices, partially offset by wage inflation.

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Nine Months Ended September 30, 2024

Performance Coatings net sales were flat due to the following:

● Higher selling prices (+1%)

Partially offset by:

● Lower sales volumes and divestiture-related sales (-1%)

Architectural coatings - Americas and Asia Pacific organic sales were flat year-over-year with slightly higher selling prices offset by slightly lower sales volumes.

Architectural coatings – EMEA organic sales decreased by a low single-digit percentage year over year driven by lower sales volumes. Regional demand was uneven by country, with strong sales volumes in central and eastern Europe offset by lower sales volumes in western Europe.

Automotive refinish coatings organic sales were flat year over year as selling price increases offset lower sales volumes.

Aerospace coatings sales volumes increased by a high single-digit percentage as demand was strong in all regions. Sales also increased due to the benefit of higher selling prices.

Protective and marine coatings organic sales increased by a low single-digit percentage primarily due to strong demand in Europe and the Asia Pacific region.

Traffic solutions organic sales were flat as higher sales volumes in the U.S. were offset by lower selling prices.

Segment income increased $101 million year over year primarily due to higher selling prices, lower manufacturing costs and moderating raw material costs during the first six months of 2024, which more than offset wage and benefits inflation and higher growth-related spending.

Looking Ahead

In the fourth quarter, we expect demand to continue to be strong in aerospace coatings and expect growth in automotive refinish coatings above industry rates. We expect that consumer demand will remain tepid in Europe. Our architectural coatings - Americas and Asia Pacific business is anticipated to benefit from growth initiatives with The Home Depot® and from our strong concessionaire network.

Industrial Coatings


	Three Months Ended September 30		$ Change	% Change		Nine Months Ended September 30		$ Change	% Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024 vs. 2023		2024	2023	2024 vs. 2023	2024 vs. 2023
Net sales	$1,654	$1,764	($110)	(6.2)	%	$5,097	$5,347	($250)	(4.7)	%
Segment income	$199	$246	($47)	(19.1)	%	$707	$736	($29)	(3.9)	%
Amortization expense	$10	$12	($2)	(16.7)	%	$30	$34	($4)	(11.8)	%
Segment income, excluding amortization expense	$209	$258	($49)	(19.0)	%	$737	$770	($33)	(4.3)	%

Three Months Ended September 30, 2024

Industrial Coatings segment net sales decreased due to the following:

● Lower selling prices (-3%)

● Lower sales volumes (-3%)

Automotive OEM coatings organic sales decreased by a double-digit percentage compared to the third quarter 2023 driven by lower sales volumes and lower indexed-based selling prices for certain customer contracts. Overall global demand weakened in the third quarter. Sales volume declines in the U.S. and Europe were partially offset by sales volume increases in Latin America. In Western Europe and the U.S., automotive industry build rates were significantly lower than the third quarter 2023 with reduced demand and extended OEM downtime.

In the industrial coatings business, organic sales decreased by a mid-single-digit percentage compared to the prior year due to lower sales volumes and lower indexed-based prices. Overall, global industrial production remained

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sluggish, especially in Europe and the U.S. Sales volume declines in those regions more than offset strong growth in the Asia Pacific and Latin America regions.

Packaging coatings organic sales increased by a low single-digit percentage compared to the prior year with higher sales volumes partially offset by lower, index-driven prices. Global beverage demand remains strong, and PPG is well positioned to support the growth.

Specialty coatings and materials organic sales increased by a low single-digit percentage due to higher sales volumes partially offset by lower selling prices.

Segment income decreased $47 million year over year primarily due to lower index-based pricing, lower sales volumes and wage and benefits inflation, partially offset by lower overhead costs.

Nine Months Ended September 30, 2024

Industrial Coatings segment net sales decreased due to the following:

● Lower selling price (-3%)

● Lower sales volumes (-1%)

● Unfavorable foreign currency translation (-1%)

Automotive OEM coatings organic sales decreased by a high single-digit percentage year over year driven by lower sales volumes and lower index-based selling prices for certain customer contracts. Sales volume increases in the Asia Pacific and Latin America regions were more than offset by declines in Europe and the U.S.

In the industrial coatings business, organic sales decreased by a mid-single-digit percentage year over year driven by lower sales volumes and indexed-based prices. Softening global industrial demand resulted in lower sales volumes in all regions except Asia Pacific where sales volumes increased by a mid single-digit percentage.

Packaging coatings organic sales increased by a low single-digit percentage year over year as higher sales volumes were partially offset by lower selling prices in all regions.

Specialty coatings and materials organic sales increased by a mid-single-digit percentage primarily due to higher sales volumes, partially offset by the absence of European energy-related surcharge pricing in the prior year period.

Segment income decreased $29 million year over year primarily due to index-based selling price declines, partially offset by moderating raw material costs during the first six months of 2024.

Looking Ahead

In the fourth quarter, we expect both automotive production build rates and global industrial production to remain at low levels, especially in the U.S. and Europe. For the packaging coatings business, we expect continued strong growth in the Asia Pacific region.

Liquidity and Capital Resources

PPG had cash and short-term investments totaling $1.3 billion and $1.6 billion at September 30, 2024 and December 31, 2023, respectively.

The Company continues to believe that cash on hand and short-term investments, cash from operations and the Company's access to capital markets will be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans and contractual obligations.

Cash from operating activities

Cash from operating activities for the nine months ended September 30, 2024 and 2023 was $1,074 million and $1,513 million, respectively. The $439 million decrease in cash from operating activities was primarily due to unfavorable changes in working capital compared to the prior year.

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Operating Working Capital

Operating working capital is a subset of total working capital and represents (1) trade receivables – net of the allowance for doubtful accounts (2) FIFO inventories and (3) trade liabilities. We believe operating working capital represents the key components of working capital under the operating control of our businesses. A key metric we use to measure our working capital management is operating working capital as a percentage of sales (current quarter sales annualized).


($ in millions, except percentages)	September 30, 2024		December 31, 2023		September 30, 2023
Trade receivables, net	$3,223		$2,881		$3,213
Inventories, FIFO	2,498		2,376		2,479
Trade creditors’ liabilities	2,536		2,612		2,491
Operating working capital	$3,185		$2,645		$3,201
Operating working capital as a % of sales	17.4	%	15.2	%	17.2	%
Days sales outstanding	59		55		57

Environmental


	Three Months Ended September 30		Nine Months Ended September 30
($ in millions)	2024	2023	2024	2023
Cash outlays for environmental remediation activities	$6	$12	$19	$28


($ in millions)			Remainder of 2024						Annually 2025 - 2028
Projected future cash outlays for environmental remediation activities			$10 - $30						$20 - $75

Cash used for investing activities

Cash used for investing activities for the nine months ended September 30, 2024 and 2023 was $511 million and $399 million, respectively. The $112 million increase in cash used for investing activities was primarily due to higher capital expenditures compared to the prior year.

Total capital spending is expected to be approximately $650 million to $700 million in 2024 in support of future organic growth opportunities.

Cash used for financing activities

Cash used for financing activities for the nine months ended September 30, 2024 and 2023 was $617 million and $1,005 million, respectively. The $388 million decrease in cash used for financing activities was primarily due to higher net debt proceeds, partially offset by higher share repurchases compared to the prior year.

Credit Agreements

In April 2023, PPG entered into a €500 million term loan credit agreement (the "Term Loan"). The Term Loan provides the Company with the ability to increase the size of the loan by an amount not to exceed €250 million. The Term Loan contains covenants that are consistent with those in the Credit Agreement discussed below and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company’s ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan terminates and all amounts outstanding are payable in April 2026. In April 2023, PPG borrowed €500 million under the Term Loan. In December 2023, PPG obtained lender commitments sufficient to increase the size of the Term Loan by €250 million. In January 2024, PPG borrowed the additional €250 million.

In February 2021, PPG entered into a $2.0 billion Term Loan Credit Agreement (the "Term Loan Credit Agreement") to finance the Company’s acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. The Term Loan Credit Agreement provided the Company with the ability to borrow up to an aggregate principal amount of $2.0 billion on an unsecured basis. In addition to the amounts borrowed to finance the acquisition of Tikkurila, the Term Loan Credit Agreement allowed the Company to make up to eleven additional borrowings prior to December 31, 2021, to be used for working capital and general corporate purposes. The Term Loan Credit Agreement contains covenants that are consistent with those in the Credit Agreement discussed above and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the

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Company’s ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan Credit Agreement was scheduled to mature and all outstanding borrowings were to be due and payable on the third anniversary of the date of the initial borrowing under the Agreement. In June 2021, PPG borrowed $700 million under Term Loan Credit Agreement to finance the Company’s acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement. In 2022 and 2023, PPG repaid $300 million and $1.1 billion, respectively, of the Term Loan Credit Agreement using cash on hand. The Term Loan Credit Agreement was fully repaid as of December 31, 2023.

In March 2023, PPG amended its five-year credit agreement (the “Credit Agreement”) dated as of August 30, 2019. The amendments to the Credit Agreement replace the LIBOR-based reference interest rate option with a reference interest rate option based upon Term SOFR. The other terms of the Credit Agreement remained unchanged. In July 2023, PPG amended and restated the Credit Agreement, extending the term through July 27, 2028. The amended and restated Credit Agreement provides for a $2.3 billion unsecured revolving credit facility. The Company has the ability to increase the size of the Credit Agreement by up to an additional $750 million, subject to the receipt of lender commitments and other conditions precedent. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. There were $408 million commercial paper borrowings outstanding as of September 30, 2024 and no commercial paper borrowings outstanding as of December 31, 2023.

The Term Loan and the Credit Agreement require the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan and the Credit Agreement, of 60% or less; provided, that for any fiscal quarter in which the Company has made an acquisition for consideration in excess of $1 billion and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65% at any time. As of September 30, 2024, Total Indebtedness to Total Capitalization as defined under the Credit Agreement was 44%.

Other Debt Issued and Repaid

In August 2024, PPG's $300 million 2.4% notes matured, and the Company repaid this obligation using cash on hand.

In March 2023, PPG's $300 million 3.2% notes matured, and the Company repaid this obligation using cash on hand.

Other Liquidity Information

Restructuring

Aggregate restructuring savings were approximately $10 million in the third quarter 2024. Total restructuring savings are expected to be at least $35 million in 2024. In addition, the Company continues to review its cost structure to identify additional cost savings opportunities. Refer to Note 6, “Business Restructuring” in Part I, Item 1 of this Form 10-Q for further details on the Company's business restructuring programs. We expect cash outlays related to these actions in the range of $50 million to $60 million in 2024.

Global Silicas Business - Strategic Review

During the first quarter 2024, PPG announced that it would review strategic alternatives for its global silicas products business. During the third quarter 2024, PPG signed an agreement to sell its global silicas products business to QEMETICA S.A., a Warsaw, Poland-based, privately-held manufacturer of soda ash, silicates and other specialty chemicals for approximately $310 million in pre-tax proceeds. Refer to Note 3, "Divestitures" in Part I, Item 1 of this Form 10-Q for further detail related to this transaction.

United States and Canada Architectural Coatings Business - Strategic Review

During the first quarter 2024, PPG announced that it would review strategic alternatives for its architectural coatings U.S. and Canada business. On October 17, 2024, PPG announced that it had entered into a definitive agreement to sell 100% of its architectural coatings business in the U.S. and Canada at a transaction value of approximately $550 million to American Industrial Partners (AIP), an industrials investor. Refer to Note 18, "Subsequent Events" in Part I, Item 1 of this Form 10-Q for further detail related to this transaction.

Currency

Comparing spot exchange rates at September 30, 2024 and at December 31, 2023, the U.S. dollar strengthened against the currencies of many countries within the regions PPG operates, most notably the Mexican peso. As a result, consolidated net assets at September 30, 2024 decreased by $558 million compared to December 31, 2023.

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Comparing average exchange rates during the first nine months of 2024 to those of the first nine months of 2023, the U.S. dollar was relatively flat compared to the currencies of most countries where PPG operates. Changes in foreign exchange rates had an unfavorable impact on Income before income taxes for the nine months ended September 30, 2024 of $1 million from the translation of these foreign earnings into U.S. dollars.

New Accounting Standards

Refer to Note 2, “New Accounting Standards” in Part I, Item 1 of this Form 10-Q for further details on recently issued accounting guidance.

Commitments and Contingent Liabilities, including Environmental Matters

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. See Part II, Item 1, “Legal Proceedings” of this Form 10-Q and Note 14, “Commitments and Contingent Liabilities” in Part I, Item 1 of this Form 10-Q for a description of certain of these lawsuits.

As discussed in Part II, Item 1 and Note 14, although the result of any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG, including asbestos-related claims, will not have a material effect on PPG’s consolidated financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

As also discussed in Note 14, PPG has significant reserves for environmental contingencies. Refer to the Environmental Matters section of Note 14 for details of these reserves. It is PPG’s policy to accrue expenses for contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are generally not discounted. In management’s opinion, the Company operates in an environmentally sound manner and the outcome of the Company’s environmental contingencies will not have a material effect on PPG’s financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Management anticipates that the resolution of the Company’s environmental contingencies will occur over an extended period of time.

Critical Accounting Estimates

Management has evaluated the accounting policies used in the preparation of the financial statements and related notes presented in this Form 10-Q and believes those policies to be reasonable and appropriate. We believe that the most critical accounting estimates made in the preparation of our financial statements are those related to accounting for contingencies, under which we accrue a loss when it is probable that a liability has been incurred and the amount can be reasonably estimated, and to accounting for pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives because of the importance of management judgment in making the estimates necessary to apply these policies.

For a comprehensive discussion of the Company’s critical accounting estimates, see Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2023 Form 10-K. There were no material changes in the Company’s critical accounting estimates from the 2023 Form 10-K.

Forward-Looking Statements

Management’s Discussion and Analysis and other sections of this Quarterly Report contain forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast,” "looking ahead" and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the Securities and Exchange Commission ("SEC"). Also, note the following cautionary statements.

Many factors could cause actual results to differ materially from the Company’s forward-looking statements. Such factors include statements related to the global economic conditions, geopolitical issues in Europe, effects on our business of COVID-19, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, energy, labor and logistics, the ability to achieve selling price increases, the ability to recover margins, customer inventory levels, PPG inventory levels, our ability to maintain favorable supplier

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relationships and arrangements, the cost reduction program, including the timing and amounts of the expected future restructuring charges, accelerated depreciation, and cash costs and the timing and realization of anticipated cost savings from restructuring actions, the ability to identify additional cost savings opportunities, the timing and expected benefits of our acquisitions, difficulties in integrating acquired businesses and achieving expected synergies therefrom, the amount of future share repurchases, economic and political conditions in the markets we serve, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, the unpredictability of existing and possible future litigation, including asbestos litigation, and government investigations. However, it is not possible to predict or identify all such factors.

Consequently, while the list of factors presented here and in the 2023 Form 10-K under Item 1A is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in the results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or income, business disruption, operational problems, financial loss, legal liability to third parties, other factors set forth in Item 1A of the 2023 Form 10-K and similar risks, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction risk and currency translation risk. Certain foreign currency forward contracts outstanding during 2024 and 2023 served as a hedge of a portion of PPG’s exposure to foreign currency transaction risk. The fair value of these contracts was a net liability of $21 million and a net asset of $23 million as of September 30, 2024 and December 31, 2023, respectively. The potential reduction in PPG's Income before income taxes resulting from the impact of adverse changes in exchange rates on the fair value of its outstanding foreign currency hedge contracts of 10% for European and Canadian currencies and 20% for Asian and Latin American currencies was $446 million for the nine months ended September 30, 2024 and $402 million for the year ended December 31, 2023.

PPG had U.S. dollar to euro cross currency swap contracts with a total notional amount of $375 million and $475 million as of September 30, 2024 and December 31, 2023, respectively. The fair value of these contracts were net assets of $30 million and $33 million as of September 30, 2024 and December 31, 2023, respectively. A 10% increase in the value of the euro to the U.S. dollar would have had an unfavorable effect on the fair value of these swap contracts by reducing the value of these instruments by $38 million and $46 million at September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, PPG had non-U.S. dollar denominated borrowings outstanding of $3.6 billion and $3.3 billion, respectively. A weakening of the U.S. dollar by 10% against European currencies and by 20% against Asian and South American currencies would have resulted in unrealized translation losses on these borrowings of $396 million at September 30, 2024 and $363 million at December 31, 2023.

Interest Rate Risk

The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to minimize its interest costs. PPG has interest rate swaps which converted $375 million of fixed rate debt to variable rate debt as of both September 30, 2024 and December 31, 2023. The fair values of these contracts were a liability of $8 million and $14 million as of September 30, 2024 and December 31, 2023, respectively. An increase in variable interest rates of 10% would have lowered the fair values of these swaps and increased annual interest expense by $4 million and $5 million for the periods ended September 30, 2024 and December 31, 2023, respectively. Considering the debt balance outstanding at September 30, 2024 and December 31, 2023, a 10% increase in interest rates in the U.S., Canada, Mexico and Europe and a 20% increase in interest rates in Asia and South America would have increased annual interest expense associated with PPG's variable rate debt obligations by $5 million and by $2 million, respectively. Further a 10% reduction in interest rates would have increased the fair value of the Company's fixed rate debt by approximately $79 million and $96 million at September 30, 2024 and December 31, 2023, respectively; however, such changes would not have had an effect on PPG's Income before income taxes or cash flows.

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There were no other material changes in the Company’s exposure to market risk from December 31, 2023 to September 30, 2024. Refer to Note 12, “Financial Instruments, Hedging Activities and Fair Value Measurements” in Part I, Item 1 of this Form 10-Q for a description of our instruments subject to market risk.

Item 4. Controls and Procedures

a. Evaluation of disclosure controls and procedures. Based on their evaluation as of the end of the period covered by this Form 10-Q, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

b. Changes in internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. These lawsuits and claims may relate to contract, patent, environmental, product liability, asbestos exposure, antitrust, employment, securities and other matters arising out of the conduct of PPG’s current and past business activities. To the extent these lawsuits and claims involve personal injury, property damage and certain other claims, PPG believes it has adequate insurance; however, certain of PPG’s insurers are contesting coverage with respect to some of these claims, and certain insurers may contest coverage with respect to claims in the future. PPG’s lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental, asbestos and other matters.

From the late 1880’s until the early 1970’s, PPG owned property located in Cadogan and North Buffalo Townships, Pennsylvania which was used for the disposal of solid waste from PPG’s former glass manufacturing facility in Ford City, Pennsylvania. In October 2018, the Pennsylvania Department of Environmental Protection (the “DEP”) approved PPG’s cleanup plan for the Cadogan Property. In April 2019, PPG and the DEP entered into a consent order and agreement (“CO&A”) which incorporated PPG’s approved cleanup plan and a draft final permit for the collection and discharge of seeps emanating from the former disposal area. The CO&A includes a civil penalty of $1.2 million for alleged past unauthorized discharges. PPG’s former disposal area is also the subject of a citizens’ suit filed by the Sierra Club and PennEnvironment seeking remedial measures beyond the measures specified in PPG’s approved cleanup plan, a civil penalty in addition to the penalty included in the CO&A and plaintiffs’ attorneys fees. PPG and the plaintiffs settled plaintiffs’ claims for injunctive relief and PPG agreed to enhancements to the DEP approved cleanup plan and a $250,000 donation to a Pennsylvania nonprofit organization. This settlement has been memorialized by an amendment to the CO&A which was appended to a Consent Agreement between PPG and the plaintiffs which has been entered by the federal court. The remaining claims in the case for attorneys’ fees and a civil penalty are not affected by this settlement. A trial on the issue of a civil penalty under the Clean Water Act was held in June 2024. Following the trial, the Judge indicated that they will circulate a schedule for the submission of post-trial briefs. The Judge also indicated that they intend to appoint a Special Master to review the parties' positions on plaintiffs' fees. PPG believes that the remaining claims are without merit and intends to defend itself against these claims vigorously.

In 2006, a lawsuit was filed against PPG in a local court in Manaus, Brazil, captioned Di Gregório Navegação LTDA v. PPG Industries, Inc., Case No. 0644620-62.2020.8.04.0001 (“Di Gregório”) arising from a November 1998 fire on board a cargo ship off the coast of Brazil. The plaintiff was a charterer of the ship and brought claims for various alleged damages. The ship was transporting, among other cargo, products from PPG’s former commodity chemicals business. The Di Gregório litigation remained pending as of July 18, 2012 when PPG separated the assets and liabilities related to its former commodity chemicals business into a newly formed subsidiary structure, of which Eagle Spinco Inc. (“Eagle Spinco”) was the parent company. Axiall Corporation (“Axiall”) in 2013 acquired Eagle Spinco (including its subsidiaries) through a merger. In 2016, Westlake Corporation acquired Axiall through a merger (including Eagle Spinco and its subsidiaries) and succeeded to Eagle Spinco’s rights and obligations under

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the original 2012 Separation Agreement between PPG and Eagle Spinco. For convenience, Westlake Corporation, Axiall, and Eagle Spinco collectively are referred to as “Westlake.”

Under the 2012 Separation Agreement, Eagle Spinco entities assumed the specifically scheduled Di Gregório liability, and Eagle Spinco was required to remove PPG as an obligor for the Di Gregório liability. To the extent Eagle Spinco cannot or will not remove PPG as an obligor, the Separation Agreement provides that Eagle Spinco and Axiall must act as agents or subcontractors of PPG and pay any liability in the matter on PPG’s behalf. The Separation Agreement also provides PPG with uncapped rights of indemnification for any damages PPG incurs arising from the Di Gregório litigation and for any failure by Eagle Spinco related entities (now Westlake through its acquisition of Axiall) to satisfy its contractual obligations.

Since 2013, Westlake exclusively has controlled and continues to control the defense of the Di Gregório litigation. Nevertheless, PPG recently learned that Westlake failed ever to substitute itself into the case in place of PPG, remove PPG as the obligor, or otherwise inform the Brazilian court that it is the party in interest that assumed all liability for the matter. On May 30, 2024, Westlake informed PPG that the Brazilian court entered a May 21, 2024 award of more than $700 million, including compound prejudgment interest, fees and costs, against “PPG Industries, Inc.” as the originally named (albeit nominal) defendant in the case. More recently, Westlake informed PPG that it believes simple prejudgment interest applies to the judgment which would result in the award being less than $350 million. Westlake also informed PPG that while it will continue to defend the case and pursue an appeal of the award, it would not post any bond, pay any judgment, or take any steps to prevent the plaintiff from attempting to execute on the judgment against PPG.

On May 17, 2024, Eagle Spinco filed a lawsuit against PPG in Delaware Superior Court alleging breach of the Separation Agreement and requesting declaratory relief (the “Eagle Spinco Lawsuit”). In its lawsuit, Eagle Spinco sought to have the Di Gregório liability determined to be one in which its obligation is only to indemnify PPG for any damages it incurs in the case, net of any insurance coverage available from PPG’s insurers, rather than stand in the shoes of PPG in the first instance and respect the obligation as an assumed liability under the Separation Agreement for which it did not purchase the rights to PPG’s insurance assets.

Because the Di Gregório liability was a specifically scheduled assumed liability under the Separation Agreement and given that Westlake failed to remove PPG as the obligor, PPG separately filed a lawsuit against Westlake on June 13, 2024 in the Court of Chancery in Delaware (the “PPG Lawsuit”), asserting claims for specific performance, declaratory relief, breach of contract, and equitable estoppel. The PPG Lawsuit explains PPG’s belief that: (a) the Di Gregório case is an assumed liability of Westlake, (b) Westlake has a continuing duty to act as an agent of PPG to satisfy any award if it is unable or unwilling to remove PPG as an obligor in the case, (c) Westlake has the duty to pay in the first instance any award, bond, court fees and other costs regardless of whether the court ultimately determines the Di Gregório case to be an assumed or indemnifiable liability, and (d) PPG has uncapped rights of indemnification should Westlake fail to satisfy its obligations under the Separation Agreement. Eagle Spinco filed counterclaims in the PPG Lawsuit restating the claims it originally asserted in the Eagle Spinco Lawsuit. Accordingly, it dismissed its previously filed Eagle Spinco Lawsuit and now exclusively is asserting its position in the PPG Lawsuit.

PPG intends to vigorously enforce its rights and Westlake’s obligations under the 2012 Separation Agreement and to hold Westlake accountable for any damages PPG suffers as a result of Westlake’s refusal to honor its contractual obligations. The Delaware Court of Chancery has set a trial date of December 12, 2024 for the PPG Lawsuit. PPG believes that the risk of loss associated with this matter is remote.

For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos. For a description of asbestos litigation affecting the Company, see Note 14, “Commitments and Contingent Liabilities” in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

There were no material changes in the Company’s risk factors from the risks disclosed in the 2023 Form 10-K.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table summarizes the Company's stock repurchase activity for the three months ended September 30, 2024:


Month	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares That May Yet Be Purchased Under the Programs (1)
July 2024
Repurchase program	—	$—	—	25,283,292
August 2024
Repurchase program	814,215	$122.96	814,215	23,975,612
September 2024
Repurchase program	782,060	$127.87	782,060	22,726,533
Total quarter ended September 30, 2024
Repurchase program	1,596,275	$125.36	1,596,275	22,726,533

(1)In December 2017, PPG's Board of Directors approved a $2.5 billion share repurchase program. In April 2024, PPG's Board of Directors authorized the repurchase of an additional $2.5 billion of outstanding common stock. The remaining shares yet to be purchased under the share repurchase programs have been calculated using PPG’s closing stock price on the last business day of the respective month. The repurchase programs do not have an expiration date.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2024, none of the Company's directors or officers, as defined in Section 16 of the Securities Exchange Act of 1934, adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K of the Securities Exchange Act of 1934.

Business Restructuring

On October 16, 2024, the Company approved a comprehensive cost reduction program with anticipated annualized pre-tax savings of approximately $175 million once fully implemented, including savings of $60 million in 2025. The multi-year program is focused on reducing structural costs primarily in Europe and in certain other global businesses, along with other corporate costs following the two recently announced agreements to sell PPG’s silicas products business and the architectural coatings business in the U.S. and Canada. The program includes various facility closures and other targeted fixed cost reductions. The Company expects to record a pretax restructuring charge of approximately $250 million, based on current exchange rates, in PPG’s fourth quarter 2024 financial results. This charge represents employee severance and other cash costs. As a result of this program, the Company also expects to recognize a $120 million non-cash charge due to the recognition of accumulated currency losses related to the exit of certain international operations and to incur approximately $100 million of incremental non-cash accelerated depreciation expense over the life of the program for certain assets due to their reduced expected asset life. In addition, the Company expects to incur other cash costs of approximately $70 million over the duration of this program, consisting of incremental restructuring-related cash costs for certain items that are required to be recognized as period expense as incurred. The restructuring actions will result in the net reduction of approximately 1,800 positions, primarily in Europe and the U.S.

Item 6. Exhibits

See the Index to Exhibits on page 39.

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PPG INDUSTRIES, INC. AND SUBSIDIARIES

Index to Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.


†31.1						Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†31.2						Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
††32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
††32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						Inline XBRL Instance Document
101.SCH**						Inline XBRL Taxonomy Extension Schema Document
101.CAL**						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

† Filed herewith.

†† Furnished herewith.

*The instance document does not appear in the Interactive Data File because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document.

**Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL: (i) the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2024 and 2023, (ii) the Condensed Consolidated Balance Sheet at September 30, 2024 and December 31, 2023, (iii) the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2024 and 2023, and (iv) Notes to Condensed Consolidated Financial Statements for the nine months ended September 30, 2024.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			PPG INDUSTRIES, INC.
			(Registrant)

Date:	October 17, 2024	By:	/s/ Vincent J. Morales
			Vincent J. Morales
			Senior Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

		By:	/s/ Brian R. Williams
			Brian R. Williams
			Vice President and Controller (Principal Accounting Officer and Duly Authorized Officer)