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

PPG Chairman and CEO Tim Knavish shared Thursday that the company has “proactively made price adjustments globally and across all of our businesses,” leading to a 2% selling price improvement in Q2.

In a summary provided in a press release, he stated: “Costs have risen for raw materials, energy, logistics and packaging 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 during the company’s Q2 earnings call why Performance Coatings comps were “down so much sequentially,” Knavish said the drop in sales was entirely due to Automotive Refinish Coatings year-over-year comps.

“That’s really the quick answer,” he said. “We grew double-digit in Aerospace. We grew double-digit in Protective and Marine. We grew mid-single-digit in Traffic. The rest of that segment is growing. The delta in performance was purely Refinish comps.

“We had a great quarter on growth across the company, eight out of nine businesses, and we fully understand what happened on the ninth. That one’s going to return to growth starting in this quarter. Refinish will grow in Q3, and Refinish will grow in Q4. We’ve got great momentum on the top line. We’re beating the market across most of our businesses. Couldn’t be happier with how fast we came out of the gates on pricing, able to pull forward our break-even point. We’ve got strong momentum there.”

On April 29, two weeks after PPG announced a global 20% increase in its paints, coatings, and specialty products portfolio, Knavish told investors during its Q1 2026 earnings call that “the actual realization will be spread out.”

He said at the time that the spread would depend on customer size, the products purchased, and the actual cost impact of the products.

On Thursday, he said that while there are several factors outside of PPG’s control, “we’ve proven how quickly we can move on pricing to accommodate any other changes in what might happen on the raw material environment.”

“We are confident that Refinish destocking in the U.S. is behind us,” he said. “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 added later in the call that PPG shared in October it would be subject to significant destocking, meaning reducing the quantity of inventory held, until the middle of 2026.

“Now, the path forward here is net-net body shop wins, which we typically do very well at,” Knavish said. “Again, we feel great about our momentum.”

Alex Lopez, PPG’s investor relations director, added that Q1 price net inflation was positive, and in Q2 was neutral.

“It covered inflation, but it was positive in Q1, flat in Q2,” he said.

Knavish added that in Q3, it’ll be positive.

PPG reports that in Q2, its Performance Coatings segment net sales increased 7%, which it attributes to higher selling prices, “a benefit from foreign currency translation, and acquisitions.”

Organic sales improved 3% compared to the prior year, led by Aerospace, Protective and Marine Coatings, and Traffic Solutions, partially offset by year-over-year sales volume declines in Refinish.

Compared to Q2 2025, segment EBITDA decreased by 5%, and segment EBITDA margin declined 300 basis points, driven by lower Refinish sales volumes.

In Q3, PPG says it expects overall organic sales growth in the mid-single-digit 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.

In the second half of 2026, it expects EBITDA margin expansion driven by pricing actions and Refinish stabilization.

Knavish noted during the earnings call that Refinish is one of PPG’s top-margin businesses. The majority of PPG’s Refinish business is collision and is the highest-margin, he said.

“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,” he said. “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. …While we were out quickly on pricing in Refinish with the Iran conflict, we’ll continue to drive pricing to get that gross margin back where it needs to be. The combination of those two gives us confidence that, going forward, you won’t see that margin delta. In fact, if you look at the total Performance Coatings segment, you’ll see sales growth, you’ll see earnings growth, [and] we’ll return to margin growth as we move through Q3 and beyond.”

Amid concerns voiced by investors during the call, Knavish was asked how much Refinish sales are down compared to peak sales on a run-rate basis. The investor also asked if there has been a mix shift in PPG’s business within that segment. And specifically, “Are customers trading down because of the financial difficulties around insurance and paying for stuff? At this lower level of sales, how have structural margins been impacted within that business?”

Knavish responded that the U.S. market took a downturn in mid-2024 through 2025.

“I would surmise that our peak was around that 2024 area,” he said. “I have to caveat that with, even though that was market, you know very well that we were expanding our TAM [total addressable market], we were expanding our pricing, and we were expanding our share. There may be a little bit of a delta there.

“To your second point, 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.”

Lopez added that the big derailment was the effect of escalated insurance premiums on 2024-2025 annual sales. He said insurance premiums rose 16-17% both years.

“That’s what created the big disconnect with miles driven,” he said.

Lopez added that U.S. insurance premiums began going down in Q2 2026 for the first time since 2023.

Another investor asked Knavish how PPG is balancing “pushing through pricing and also going for share.”

“The reality is that we haven’t really seen any, frankly none that I know of, lost business as a result of our pricing efforts,” Knavish said. “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.

“We don’t really lose share typically when we approach pricing because of the way we approach pricing. The momentum that we have on sales growth is just continuous execution of [the] sales pipeline. When it comes time where you’ve got a dramatic increase in cost of goods sold inflation, some of them are contractual, a lot of them are just collaboration with our end customers in a way that we help their business, they help ours.”

Another investor called YoY Performance segment margins “messy” and asked what led to quarter-over-quarter sales increasing by $300 million since he expected it would’ve been higher.

“We already talked about the year-over-year comp in Refinish, which is the biggest part of it,” Knavish responded. “Price cost was not neutral for the whole quarter. In Q1, it was positive because that was largely before the war. We had a big positive price cost in Q1 and a slightly negative price cost in Q2, which will be positive going forward. Those two make up the vast majority. If I’m missing some minutiae, when I looked at it, those were really the explanations.”

When asked by another investor about the sustainability of PPG market share in Refinish and Automotive OEM Coatings, Knavish said Industrial Coatings saw $100 million in share gains last year, which is now showing up on its profit and loss report. More is expected this year and will roll into the next year, he said.

“We’ve got a good line of sight to additional Auto OEM outperformance for the next several quarters,” Knavish said. “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.”

Overall Q2 earnings data includes:

• • Net sales of $4.5 billion, an increase of 7% versus prior year due to higher sales volume of 2%.
  • Organic sales increased 4% YoY with growth in 8 of 9 businesses led by our differentiated aerospace business.
  • 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, more than $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 range of $7.70 to $8.10, which it says reflects momentum from share gains and self-help actions, as well as updated global economic activity, foreign exchange rates, and regional and business mix.

At the end of Q2, PPG reports that its cash and short-term investments totaled $1.6 billion. Net debt was $5.3 billion, down $415 million from Q2 2025.

The Q2 earnings presentation webcast and slides are available on PPG’s Investor Relations site here.

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