PPG provides investors with details on 20% increase, actual price realization

Following PPG’s April announcement of a global 20% increase in its paints, coatings, and specialty products portfolio, Chairman and CEO Tim Knavish told investors during its Q1 2026 earnings call that “the actual realization will be spread out.”

He said the spread depends on customer size, the products purchased, and the actual cost impact of the products.

“In order to offset the mid-single-digit cost of goods sold increase that we’re expecting for the remainder of the year, we need to realize low single digits to offset that as a total company,” he said.

His response was to an investor’s question on the increase, specifically, how investors should think about the realizations, and beyond the current spike in raw materials, the sustainability of the increases when oil prices and other fees, as well as input costs, come down.

“Then, we’re ready if the situation gets worse; if we have to flex more moving through the year, we’ll do more, and we’ll drift our price up to mid-single digits,” Knavish said. “Right now, based on today’s operating environment, net-net, we need to get solid low, single digits to offset mid-single-digit COGS [Cost Of Goods Sold] inflation. What happens if and when it comes down the other side? Just like there’s a lag going up, there’ll be a lag coming down. Also, what’s yet to be determined is the impact of the structural damage to petrochem facilities in the region; that may stretch out when things come back down.”

Senior Vice President and outgoing Chief Financial Officer Vince Morales said he wanted to remind investors that, “in prior cycles, in almost every business, we went out for more than one price increase as the situations developed.”

“This is not uncommon — that we price for what we know today, and then we adjust as necessary,” he said.

Knavish said later in the call that PPG expects to deliver price-cost realization much more rapidly than in previous inflation cycles.

“This realization will impact our Global Architectural Coatings and Performance Coatings segments first, and then flow through our Industrial Coatings segment,” he said. “The difference this cycle, from a volume standpoint, is for the last three years we’ve been building our organic growth muscle. We have tremendous, tremendous momentum from an organic growth standpoint that will help as we move forward with price increases. If you compare the last couple of cycles, the pre-COVID cycle of 2017/2018 took us about a year and a half to get to run rate neutrality. The 2021 cycle, which was post-COVID combined with the Texas freeze, took us about a year. Now we’re talking months.

“It’s a combination of two things: No. 1, we’ve always had a good pricing muscle, with each cycle we refine that. We learn, we get better, we get faster. From a volume standpoint, we’re combining it with positive momentum on the organic growth muscle that we’ve been building and demonstrating results through these last five quarters or so. We’re confident that we’re going to be able to strike the right balance between pricing and volume.”

Overall, Knavish reported that PPG delivered solid performance in Q1, “demonstrating our ability to maintain growth momentum in a challenging macro environment.”

PPG saw organic sales growth of 1%, marking its fifth consecutive quarter of higher year-over-year organic sales, he said.

“This growth was driven by higher selling prices, with further selling price increases announced, and expected price realization for the remainder of the year targeted to offset any inflationary impact much more quickly than prior inflation cycles,” Knavish said. “First quarter net sales totaled $3.9 billion, up 7% year-over-year, with adjusted earnings per share of $1.83 and an increase of 6% versus the prior year.”

Segment EBITDA margin was over 19%, which he said reflects solid share gains execution due to the benefits of PPG’s technology advantage products, strong brand recognition, and excellent commercial execution.

Meanwhile, Automotive Refinish organic sales decreased by double-digit percentage as sales volumes were lower, which Knavish said PPG expected, “reflecting customer order patterns stemming from our U.S. distributors during the first half of 2025.”

“On a positive note, we are seeing improvements in the U.S. industry accident claims,” he said. “February and March industry claims were down 1% year-over-year, which now makes three out of the last four months with low single-digit declines year-over-year, reinforcing a normalization trend after the high single-digit to double-digit declines most of last year.

“Another positive data point: we are seeing our U.S. distributor fulfillment orders sequentially improve… In Refinish, as we previously communicated, we expect year-over-year organic sales volume declines in the second quarter as we lap strong prior-year first-half order patterns.”

Knavish added that PPG anticipates volume growth during the second half of 2026. He said segment EBITDA was strong at 24%, driven by PPG’s Aerospace business strength.

From a business unit standpoint, PPG’s Automotive OEM business delivered flat sales volume in the Industrial Coatings segment, outpacing the global automotive industry production decline by about 300 basis points, he said.

“The industry decline was largely due to year-over-year comparisons in China, as the first quarter of 2025 was very strong and the first quarter of 2026 was tepid,” Knavish said. “Expectations for China industry comparisons are to improve in the coming quarters. For PPG, due to our strong product portfolio and commercial execution, we expect to continue outgrowing the market in the second quarter and for the full year in 2026.”

Segment EBITDA margin was negatively impacted by regional mix as China automotive production dropped compared to a particularly high level in Q1 2025, he added.

“Looking ahead, we expect sequential margin improvement driven by incremental industry and PPG sales volume growth, selling price realization, and aggressive cost management,” Knavish said. “With the impact of the Iran war, costs have risen for raw materials, energy, logistics, and packaging across the coatings value chain. In this rapidly evolving macro environment, we are focused on our ability to supply our technology-differentiated products and services to our customers, which will allow us to maintain our organic growth momentum. I am expecting the actions we are taking, combined with PPG’s portfolio strengths, to offset geopolitical-driven impacts.”

So far, PPG has experienced limited supply shortages using its global supply chain to securely source raw materials and drive competitive pricing, Knavish said.

“Additionally, we are leveraging our years of expertise in product formulation technology and our ability to maximize the use of AI to optimize products to drive reductions in our raw material costs,” he said. “Considering our procurement capabilities, our global footprint, our formula flexibility, our portfolio strengths, and the current macro environment, the impact of PPG is expected to be a mid-single digit percentage on the cost of goods sold for the remainder of the year. We expect to fully offset these costs, and we are proactively raising prices to secure raw materials for our customers.”

As for Q2 results, PPG expects strong growth in several segments, including Automotive OEM Coatings, with lower demand in others, including Automotive Refinish, compared to Q2 2025.

When asked how volumes might shape up during the second half of the year, Knavish said, “In everything, unfortunately, you kind of have to timestamp right now because it’s just so fluid out there.”

“Based on today’s environment, we feel good about the second half volume,” he said. “We had said all along that Refinish would have positive volume in the second half. It’s recovering a little earlier than we expected, and we got two really good sets of data points in U.S. collision claims rates, as well as improving U.S. distributor fulfillment orders.

“We have not seen any order book changes with the Iran conflict. Obviously, we’ve seen change in feedstock pricing, but when it comes to volume and order books, based on today’s current environment, we have not seen any negativity in our order books.”

Morales added that, in the base load, PPG had very strong Refinish activity in the first half of 2025.

“Distributors stocked up inventory,” he said. “We were well above market. [In] the second half, the patterns hurt us, so we have much easier comps. We still expect muted volumes in Refinish for the year. The comparisons are why Tim said we expect growth year-over-year in the second half.”

Knavish concluded that, as the market normalizes, Automotive Refinish will never be PPG’s highest-growth business, but “will be a nice low single digits growth business for us with really good margin and really good cash.”

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Featured image provided by PPG