PPG earnings analysis
What we found in PPG's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
PPG posted Q2 revenue of $4.495 billion, up 7.2% year over year and 14.4% sequentially, but reported EPS declined 1.0% to $1.96 as material cost inflation and automotive-refinish volume weakness constrained earnings. Gross margin fell 180 basis points year over year to 40.2% and operating margin fell about 135 basis points to 14.1%, although both revenue and operating margin improved from Q1. Strong aerospace, packaging, protective/marine and architectural results, along with $592 million of six-month operating cash flow, offset pressure in automotive refinish and a $600 million decline in cash.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 7.2% year over year
- Q2 sales rose $300 million, or 7.2%, year over year to $4.495 billion, led by 2% higher volume, 2% pricing, 2% favorable FX and 1% acquisitions. Revenue also increased 14.4% sequentially from $3.925 billion in Q1 2026.
- Adjusted EPS edged higher despite flat GAAP EPS
- Reported diluted EPS from continuing operations was $1.96 versus $1.98 a year ago, while adjusted EPS increased $0.01 to $2.23. Six-month reported EPS rose 1.4% to $3.66 and adjusted EPS increased 3.3% to $4.06.
- Architectural coatings profit accelerated
- Global Architectural Coatings delivered the strongest profit growth: sales increased $80 million to $1.098 billion and segment income climbed $25 million, or 15.6%, to $185 million. Favorable FX contributed 6 percentage points of segment sales growth.
- Industrial volumes and share gains supported sales
- Industrial Coatings sales increased $113 million, or 6.8%, to $1.778 billion, with volume contributing 5 percentage points. Automotive OEM volume growth outpaced declining global auto production by about 500 basis points, while packaging sales grew double digits.
- Operating cash flow improved materially
- Six-month operating cash flow increased $223 million to $592 million, versus $369 million a year earlier, principally from improved working-capital performance. Operating working capital/sales improved to 18.2% from 19.4% a year earlier.
- Management expects broad Q3 organic growth
- Management expects Q3 organic growth in all three segments, ranging from flat-to-low-single-digit in Architectural and Industrial to mid-to-high-single-digit in Performance Coatings. It also expects price and productivity actions to offset 100% of cost-of-goods-sold inflation by Q4 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Automotive refinish weakness pressured margins
- Performance Coatings segment income fell $27 million, or 7.6%, to $329 million despite 7.1% sales growth, as automotive refinish organic sales declined by a double-digit percentage and cost inflation persisted.
- Cost inflation compressed year-over-year margins
- Company gross margin declined to 40.2% from 42.0% a year ago as cost of sales rose 10.5%, faster than the 7.2% sales increase. Operating margin was about 14.1%, down from 15.5% in Q2 2025, although up from 13.4% in Q1 2026.
- Cash declined and working-capital balances rose
- Cash and short-term investments declined $600 million to $1.6 billion from $2.2 billion at December 31, 2025. Trade receivables increased $725 million to $3.508 billion, inventories rose $234 million to $2.411 billion, and days sales outstanding increased to 63 from 59.
- Brazil litigation award remains a contingent risk
- The filing reports no material changes to risk factors from the 2025 Form 10-K, but legal exposure remains notable: a Brazilian award against PPG could be approximately $350 million under simple prejudgment interest, while PPG states the risk of loss is remote and expects a final trial-court decision in 2026.
- FX exposure increased with foreign-currency debt
- Foreign-exchange and debt sensitivity increased with non-U.S.-dollar borrowings of $4.4 billion at June 30, 2026 versus $4.1 billion at year-end. A specified weakening of the U.S. dollar could produce $489 million of unrealized translation losses, versus $457 million at December 31, 2025.
- Environmental and legal costs increased
- Environmental and legal charges totaled $36 million in Q2 2026, comprising $25 million of legacy remediation charges and an $11 million legal settlement; cash environmental remediation outlays were $18 million in the first six months, versus $10 million a year ago.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $1.96
- Gross margin
- 40.2%
- Operating margin
- 14.1%
- Segment
- Global Architectural Coatings: $1.098 billion revenue, +7.9% year over year; segment income $185 million, +15.6%.
- Segment
- Performance Coatings: $1.619 billion revenue, +7.1% year over year; segment income $329 million, -7.6%.
- Segment
- Industrial Coatings: $1.778 billion revenue, +6.8% year over year; segment income $229 million, +0.9%.
What they said about what is next.
The 10-Q provides no numeric company-wide revenue or EPS outlook. For Q3, segment organic sales are expected to be flat to low-single-digit growth in Global Architectural Coatings, mid- to high-single-digit growth in Performance Coatings, and flat to low-single-digit growth in Industrial Coatings. Management anticipates selling prices and productivity will offset 100% of cost-of-goods-sold inflation by Q4 2026; 2026 capital spending is expected at $650 million-$700 million.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 29, 2026
- PPG Industries reported strong first-quarter results for 2026, with net sales of approximately $3.93 billion, marking a 7% increase year-over-year and exceeding revenue estimates of $3.84 billion. Although diluted EPS…
- 10-Q · April 30, 2025
- PPG reported quarterly net sales of $3,684 million (down $165 million vs. Q1 2024's $3,849 million) and diluted earnings per share attributable to PPG of $1.63 (down $0.07 vs. $1.70 in Q1 2024). Gross-profit dollars…
- 10-Q · October 17, 2024
- PPG reported Q3 net sales of $4,575 million, down $69 million (‑1.5%) versus Q3 2023, but delivered margin expansion and higher earnings: diluted EPS was $2.00 (vs. $1.79) and net income attributable to PPG was $468…
- 10-Q · July 19, 2024
- PPG reported Q2 net sales of $4,794 million (down $78 million vs Q2 2023) with net income attributable to PPG of $528 million and diluted EPS of $2.24. Gross profitability and operating margin improved versus the…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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