PPG Industries, Inc. (PPG) | The Buildout — AI Infrastructure

——Mkt cap — · 52-wk —–— · YTD — · delayed

Updated Aug 12, 2026Q2 FY2026 reviewed

PPG manufactures paints, coatings, and specialty products, including fire-protection and structural coatings for data centers.

Organic sales +4%

All 3 segments grew; 8 of 9 businesses grew organically.

Industrial +5% organic

Volume up in auto OEM, packaging, and general industrial.

Price-cost 90%

100% COGS coverage expected by Q4.

Refinish −double-digit

Destocking called over; growth promised Q3/Q4.

The Buildout Takeaway

PPG's broad-based organic growth and faster price-cost recovery are running ahead of the raw-material shock, but the story still leans on a promised Refinish rebound and margin conversion in Industrial. The open question is whether pricing sticks without volume loss before the cycle turns.

Analyst coverage

38 analysts·20 Buy16 Hold2 Sell

Coverage is thin — only 5 price estimates, so no target is shown

Management guidance

FY 2026 adjusted EPS $7.70 to $8.10 · Q3 2026 organic sales low-to-mid single-digit · Q3 adjusted EBITDA margin flat to down 100 bps y/y

Important: The Buildout is a data analytics platform. Content is generated by algorithms and AI agents using public filings, earnings transcripts, and market data. This is not personalized investment advice.

Our View

The Verdict

PPG manufactures paints, coatings, and specialty products for architectural, automotive, aerospace, marine, industrial, and infrastructure applications. Its clearest AI-infrastructure connection is an end-to-end data-center coatings offering covering fire protection, structural steel, flooring, insulative, and dielectric coatings. Management describes the data-center pipeline as active but has not quantified the revenue. The company is therefore an indirect materials supplier to AI-driven construction, not an AI compute beneficiary.

Market Cap	—
Revenue (TTM)	$16.4B
Revenue Growth	+12.3%
EBITDA Margin (TTM)	15.8%

Net Debt	$5.9B
Earnings Beats	3 of 7
P/E (TTM)	—
EV/EBITDA (TTM)	—

What We Like

Q2 2026 organic growth accelerated to +4%, the sixth consecutive quarter of growth, across all 3 segments and 8 of 9 businesses.
Industrial Coatings Q2 organic +5%, with auto OEM volumes outgrowing global auto production by about 500 bps and a stated ~$25M per quarter new-business run-rate.
Aerospace capacity program exceeds $0.5B: ~$380M Shelby, NC plant under construction plus ~$120M in existing-site debottlenecking.
Protective and Marine Coatings posted a 13th consecutive quarter of volume growth, with double-digit Q2 growth.
Global Architectural margin expanded 100 bps to 19.4%, and EMEA organic sales turned positive low single-digit.

What We’re Watching

Refinish recovery: Q2 organic sales still declined double-digit and Performance Coatings margin fell 300 bps y/y; Q3/Q4 growth is a commitment, not yet evidence.
Pricing volume trade-off: price increases were announced up to 20%, and management's statement that it was not concerned about losing share in any listed business covers roughly one quarter.
Industrial margin lag: management guides H2 EBITDA margin compression from index-based pricing timing even as volume/share grows.
Aerospace backlog decline: ~$350M to ~$300M in Q2; depends on whether output conversion is matched by new orders.

Bottom Line

PPG's operational thesis strengthened through H1 2026: organic growth accelerated, share gains broadened across 8 of 9 businesses, and price-cost recovery ran ahead of management's prior commitment. Refinish and Industrial margin conversion remain the two unproven legs. The key open question is whether 100% price-cost coverage by Q4 holds without volume/share loss.

Next upThe next catalyst is Q3 2026 earnings, which test the Refinish return to growth and a positive price-cost turn; management guided organic sales low-to-mid single-digit and adjusted EBITDA margin flat to down 100 bps y/y.

Last Quarter — Q2 FY2026

Earnings

PPG's Q2 FY2026 net sales were $4,495 million, up 7% y/y, with organic growth of +4% and gross margin of 40.2%. Adjusted EBITDA margin was over 17%, and adjusted EPS was $2.23 versus $2.22 a year earlier. The standout was breadth: all three segments grew, 8 of 9 businesses grew organically, and PPG said it outpaced the industry by 300 bps.

Metric	Q2 FY2026	Q1 FY2026	Q2 FY2025	YoY
Revenue	$4.5B	$3.9B	$4.2B	+7.2%
Gross margin	40.2%	42.1%	42.0%	-180bps
EBITDA	$770M	$657M	$785M	−1.9%
EPS	$1.95	$1.70	$1.98	−1.2%
Organic sales growth	+4%	+1%	n/a	QoQ acceleration from +1%

You'll recall in October, we told everyone on this call and we told the world that we recognized we were going to be subject to a significant destocking until the middle of '26. We're now in the middle of '26, and that significant destocking is behind us.— Tim Knavish, Chairman and CEO, 2026-07-29

Management tone: Management's tone turned more concrete and operational on the Q2 call: it called Refinish destocking 'behind us,' described an Industrial Coatings inflection, noted EMEA architectural margin expansion, and said price-cost coverage was one quarter ahead of its prior commitment. New CFO Jamie Beggs gave her first earnings-call remarks and answered cash-flow questions directly.

Management Guidance

For Q3 2026, management set organic sales growth of low-to-mid single-digit percentages and company adjusted EBITDA margin flat to down 100 bps y/y. Segment guidance includes Performance Coatings organic mid-to-high single-digit with H2 EBITDA margin expansion expected, Industrial Coatings organic flat to positive low single-digit with H2 margin compression expected, and Global Architectural Coatings organic flat to positive low single-digit with relatively flat margin. FY 2026 adjusted EPS guidance was reaffirmed at $7.70 to $8.10; cost guidance sees mid-to-high single-digit COGS inflation between Q2 and Q4, with pricing expected to cover 100% of COGS inflation by Q4.

Business Trajectory

Trajectory

Q2 FY2026 net sales were $4,495 million, up 7% y/y; organic growth accelerated to +4% from +1% in Q1. Gross margin was 40.2%, and adjusted EBITDA margin was over 17%. The top line is being carried by Industrial, Aerospace, Protective and Marine, and EMEA architectural, while Automotive Refinish remained the lone double-digit organic decline. Pricing covered about 90% of COGS inflation in Q2, with a 2% net selling-price gain and a 3% June exit run rate.

Revenue & Margin Trajectory

Gross margin as reported.

Share Price — 12 Months

52-week range $95–$129.

Share Price — 12 Months

52-week range $95–$129.

The Numbers

The Model

The model projects FY+1 revenue of $16,778 million and EBITDA of $2,919 million (17.4% margin); FY+2 revenue of $17,515 million and EBITDA of $3,240 million (18.5% margin). Near-term revenue is anchored by management's low-to-mid single-digit Q3 organic guide and Industrial volume growth across all three businesses. FY+2 margin expansion rests on 100% price-cost coverage by Q4 2026, Refinish recovery, and European restructuring savings.

Revenue & EBITDA Projections

Solid bars are reported actuals; outlined bars are model projections — not company guidance.

Metric	FY2025	Next FY (E)	Following FY (E)
Revenue	$15.9B	$16.8B	$17.5B
YoY Growth	—	+5.7%	+4.4%
EBITDA	$2.5B	$2.9B	$3.2B
EBITDA Margin	16.0%	17.4%	18.5%

Projections are the median of 5 independent model runs. The model’s revenue sits 1.6% above analyst consensus.

What Could Go Right — and Wrong

What good looks like

Refinish returns to growth in Q3 and Q4, converting Performance Coatings margin expansion and removing the largest drag.
Price-cost coverage reaches 100% by Q4 without volume/share loss, protecting EBITDA margin.
Industrial share gains of ~$25M per quarter convert to margin as index pricing catches up.
Aerospace debottlenecking converts the ~$300M backlog into output through late 2026 into 2027, with the ~$380M Shelby plant adding step-change volume around 2028.
European plant closures deliver ~$25M annual fixed-cost savings and support further architectural margin expansion.

What could go wrong

COGS inflation in the mid-to-high single-digit range through Q4 could outrun pricing and delay 100% coverage, pressuring EBITDA margin.
Aggressive price increases up to 20% could erode volume/share, weakening organic growth.
Refinish recovery could be slower than promised; Q2 organic sales were still down double-digit, and if Q3/Q4 growth does not materialize, Performance Coatings margin stays under pressure.
Industrial Coatings margin compression from index-based pricing timing could offset volume gains.
Aerospace backlog fell from ~$350M in Q1 to ~$300M in Q2; if order books soften before the >$0.5B capacity arrives, utilization and margin face pressure.

What’s Next

Looking Ahead

The next 12 months hinge on whether management's three stated commitments land: Refinish growth in Q3 and Q4, 100% COGS coverage by Q4 2026, and European plant closures around Q4 2026/Q1 2027. Aerospace debottlenecking output is expected to improve further late 2026 into 2027, while the Shelby, North Carolina plant is a 2028 step-change. Industrial share gains are guided to continue at about $25 million per quarter through 2027.

Catalysts

Q3 2026Q3 2026 results — Tests Refinish growth return and price-cost turn positive versus Q3 guidance.
Q4 2026100% price-cost coverage target — Management expects pricing to cover all COGS inflation by Q4.
Q4 2026 / Q1 2027European plant closures — Four plants close; annual fixed-cost savings expected.
Late 2026 into 2027Aerospace debottlenecking ramp — Huntsville, Mojave and other existing sites add incremental capacity.
2027Industrial share-gain launches — New customer wins continue; ~$25M/quarter run-rate extends into 2027.
2028 timeframeShelby aerospace plant online — ~$380M plant expected to deliver step-change volume output.

Numbers

Financials

Annual Summary

Metric	FY2024	FY2025	TTM	YoY
Revenue	$15.3B	$15.9B	$16.4B	+3.9%
Gross Margin	40.5%	40.5%	40.1%	5bps
EBITDA	$2.7B	$2.5B	$23.7B	-7.3%
EBITDA Margin	18.0%	16.0%	15.8%	193bps
Net Income	$1.1B	$1.6B	$1.6B	+41.2%
Free Cash Flow	$699M	$1.2B	$12.5B	—
Net Cash	—	—	—	—

Key Ratios (Trailing)

Valuation

P/E TTM—
EV/EBITDA TTM—
EV/Revenue TTM—
Price/FCF TTM—

Profitability

Gross Margin (TTM)40.1%
EBITDA Margin (TTM)15.8%
Net Margin (TTM)9.6%
ROIC11.3%
FCF Conversion54.4%
SBC / Revenue0.2%

Reference

The Company

PPG Industries manufactures and distributes paints, coatings, and specialty products across three reportable segments: Global Architectural Coatings, Performance Coatings, and Industrial Coatings. Product lines span DIY/retail paints, aerospace coatings and transparencies, automotive refinish, protective and marine coatings, traffic solutions, packaging coatings, metal pretreatments, TESLIN substrate, OLED materials, and optical lens materials. Its coatings enter factory OEM production, aftermarket repair, building and infrastructure construction, packaging, and increasingly physical data-center structures.

Operationally, PPG runs a global manufacturing and R&D footprint. The 10-K lists principal manufacturing and distribution facilities across North America, Europe, Latin America, and Asia Pacific, and principal R&D centers in the U.S., Netherlands, Thailand, South Korea, Germany, France, Italy, Brazil, Mexico, China, Poland, and Finland. Industrial Coatings is described as direct-to-factory and integrated into OEM operations; Architectural uses distribution networks; Performance focuses on aftermarket and select OEM products.

Business Segments

Global Architectural Coatings

Q2 net sales $1.1B, +8% y/y

DIY, trade, and retail paints, wood stains, adhesives, sealants, and purchased sundries.

Growth driver: EMEA organic turn and segment EBITDA margin +100 bps to 19.4%

Performance Coatings

Q2 net sales $1.6B, +7% y/y

Aerospace, automotive refinish, protective/marine, traffic, and pavement-marking products.

Growth driver: Aerospace and Protective & Marine double-digit

Industrial Coatings

Q2 net sales $1.8B, +7% y/y

Direct-to-factory OEM coatings, adhesives, sealants, metal pretreatments, paint films, TESLIN, OLED materials.

Growth driver: Q2 organic +5%; ~$25M per quarter new-business wins expected

Competitive Landscape

The 10-K lists competitors by segment: Akzo Nobel, Hempel, Jotun, Nippon Paint, and Sherwin-Williams compete in Global Architectural; those plus Axalta, BASF, Kansai, RPM, and 3M compete in Performance; and Industrial competitors include Akzo Nobel, Axalta, BASF, Kansai, Nippon Paint, and Sherwin-Williams. Management said it is not concerned about losing share in the businesses it listed, and described auto OEM coatings as hard to reverse engineer to the resin formulation.

The Sherwin-Williams Company
Listed in the 10-K as a competitor across all three PPG segments.
Akzo Nobel N.V.
Listed as a competitor across all three PPG segments.
Axalta Coating Systems Ltd.
Listed as a Performance Coatings and Industrial Coatings competitor.
BASF Corporation
Listed as a Performance Coatings and Industrial Coatings competitor.
RPM International Inc.
Listed as a Performance Coatings competitor.

Competitor names are drawn from the 10-K segment disclosures; no direct PPG commentary on individual competitors beyond those lists appears in the supplied material.

Supply Chain

PPG sits between raw-material suppliers and broad downstream end markets—automotive, aerospace, architectural, marine, infrastructure, and data-center construction. No neighbor transcript mentioned PPG by name.