PPG sees stronger Refinish demand in second half of 2026 amid momentum in pricing

PPG Chairman and CEO Tim Knavish announced that the company has "proactively made price adjustments globally and across all of our businesses," leading to a 2% selling price improvement in Q2. He stated in a press release that costs for raw materials, energy, logistics, and packaging have risen across the coatings value chain.

> In the second quarter, we covered about 90% of the cost of goods sold inflation and expect to cover 100% by the fourth quarter, one quarter ahead of our original commitment. This represents a faster rate of price realization than we achieved during previous cycles.

When asked why Performance Coatings saw a sequential drop, Knavish attributed it entirely to year-over-year Automotive Refinish Coatings comps. He clarified that other segments like Aerospace, Protective, Marine, and Traffic grew double-digit or mid-single-digit.

Refinish demand growth

Knavish anticipates Refinish will return to growth starting in Q3 and continue in Q4, highlighting strong top-line momentum across most businesses. He also noted the company's swift action on pricing allowed them to pull forward their break-even point.

On April 29, Knavish informed investors during the Q1 2026 earnings call that the actual realization of a global 20% price increase, announced two weeks prior, would be spread out based on customer size, products purchased, and cost impact. He reiterated on Thursday that while some factors are beyond PPG's control, they have demonstrated quick responsiveness to pricing to adapt to changes in the raw material environment.

> We are confident that Refinish destocking in the U.S. is behind us. The one business that didn’t grow is now going to start growing. When you add that, plus the momentum that we have in pricing, we feel really confident in our second-half guide.

He later added that PPG had previously projected significant destocking until mid-2026. Alex Lopez, PPG’s investor relations director, mentioned that Q1 price net inflation was positive, and neutral in Q2. Knavish expects it to be positive in Q3.

Performance Coatings sales

PPG reported a 7% increase in net sales for its Performance Coatings segment in Q2, driven by higher selling prices, favorable foreign currency translation, and acquisitions. Organic sales grew 3% year-over-year, primarily led by Aerospace, Protective and Marine Coatings, and Traffic Solutions, though partially offset by declines in Refinish sales volumes.

Segment EBITDA decreased by 5% and the margin declined by 300 basis points compared to Q2 2025, largely due to lower Refinish sales volumes. For Q3, PPG projects overall organic sales growth in the mid-to-high single-digit percentage range year-over-year (YoY). Adjusted EBITDA margin is expected to be flat or decline by 100 basis points YoY.

For the second half of 2026, PPG anticipates EBITDA margin expansion, buoyed by pricing actions and the stabilization of Refinish. Knavish identified Refinish, particularly collision repair, as one of PPG’s highest-margin businesses.

> When you have a big year-over-year comp delta on one of your top segments, it has a fairly sizable negative margin impact on the whole segment. Our confidence level going forward is a couple things. We are confident that the destocking in the United States is behind us. Our run rate going forward and our year-over-year comp rate going forward changes significantly.

Knavish assured that despite the impact of the Iran conflict on Refinish pricing, they will continue to drive pricing to restore gross margins. He believes the combination of destocking being over and continued pricing efforts will eliminate the margin delta, leading to sales growth, earnings growth, and a return to margin growth for the entire Performance Coatings segment from Q3 onwards.

In response to investor concerns about how Refinish sales are down compared to peak sales and potential mix shifts, Knavish explained that the U.S. market saw a downturn from mid-2024 through 2025. He noted that while that period was challenging for the market, PPG was expanding its total addressable market, pricing, and share.

> We have not seen a negative mix shift despite the challenging financials that some of our end users were under during that period. Frankly, quite the opposite, because what they value in good times, but particularly in bad times, is their own productivity and their own shop output. We sell outstanding coatings in that business, but we also bring best-in-class productivity tools through our digital ecosystem that help them reduce labor costs, increase throughput, reduce waste, and net get more cars out per week, which is really what drives their financial performance. We did not see a step-down from premium to value or anything like that during this period.

Market trends and pricing

Lopez added that a major factor was the escalation of insurance premiums, which rose 16-17% in both 2024 and 2025, creating a disconnect with miles driven. He indicated that U.S. insurance premiums began to decrease in Q2 2026, the first time since 2023.

Regarding balancing pricing with market share, Knavish stated that PPG has not lost business due to its pricing strategies.

> We don’t jam price with our customers. We collaborate with our customers. We’re not just selling them a product, right? We’re a part of their operations. We’re a part of their business success. It’s more of a collaborative approach. We respect the business they run; they respect the business we run.

He highlighted that PPG rarely loses share due to its collaborative pricing approach and continuous execution of the sales pipeline. When faced with significant increases in raw material costs, PPG’s approach involves both contractual agreements and collaboration to support their customers' businesses.

Another investor questioned the "messy" year-over-year Performance segment margins and why quarter-over-quarter sales only increased by $300 million. Knavish attributed this mainly to the year-over-year Refinish comp and varying price-cost neutrality. He explained that Q1 had a significant positive price-cost due to being largely pre-conflict, while Q2 had a slightly negative price-cost, which is expected to be positive going forward.

When asked about the sustainability of PPG's market share in Refinish and Automotive OEM Coatings, Knavish noted that Industrial Coatings achieved $100 million in share gains last year, with more expected this year and next.

> We’ve got a good line of sight to additional Auto OEM outperformance for the next several quarters. We feel good there. Refinish, there’s very few big share shifts in that industry. It’s more about singles and the occasional double every day. Despite what’s shown up on the P&L because of the de-stocking comp issue, we’ve continued to win those singles and doubles at more than our fair share. We feel good about kind of incremental share gains in Refinish, more step-change in Auto OEM.

• Net sales of $4.5 billion, a 7% increase year-over-year, with a 2% higher sales volume.
• Organic sales increased 4% YoY, with growth in 8 out of 9 businesses, led by aerospace.
• Sales volumes increased 2%, and selling prices increased 2%.
• Reported earnings per diluted share (EPS) of $1.96 and adjusted EPS of $2.23.
• Cash from operating activities was $600 million year to date, over $220 million higher YoY.
• Share repurchases totaled $75 million in the quarter and $175 million year to date.

PPG reaffirmed its full-year 2026 adjusted EPS guidance ranging from $7.70 to $8.10, reflecting momentum from share gains, self-help actions, and updated global economic activity, foreign exchange rates, and regional and business mix. At the end of Q2, PPG's cash and short-term investments totaled $1.6 billion, and net debt was $5.3 billion, down $415 million from Q2 2025.