Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 28, 2026 · Beat 3 of last 7 quarters
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PPG's strong aerospace growth and stable ~$300M backlog, supported by over $0.5B in capacity investments, underscore sustained demand for specialized coatings and sealants in commercial and military aviation—a key vertical in the AI infrastructure buildout. Additionally, growth in protective and marine coatings, including fire protection and data center-related coatings, ties directly to the construction of AI data centers and associated infrastructure.
PPG delivered 4% organic sales growth in Q2, with all three segments growing organically and 8 of 9 businesses positive. Net sales rose 7% to $4.5 billion, with adjusted EPS of $2.23. Aerospace grew double-digit, protective and marine grew double-digit for a 13th consecutive quarter of volume growth, and packaging coatings grew double-digit with volumes up over 20% on a two-year stack. Automotive refinish declined double-digit due to expected tough comparisons and destocking, but management noted U.S. insurance claims are improving and premiums declined for the first time in five years. The company covered ~90% of COGS inflation with pricing and repurchased $75 million of shares in the quarter.
Management reaffirmed full-year 2026 adjusted EPS guidance of $7.70–$8.10, expressing confidence in second-half momentum. They expect Q3 organic sales growth of low-to-mid single digits, with strength in aerospace, Latin American architectural, and packaging coatings. EBITDA margin in Q3 is guided flat to down 100 bps year-over-year, with Performance Coatings expected to return to margin expansion in the second half as refinish stabilizes and pricing actions flow through. Management expects to reach 100% price/cost coverage by Q4, one quarter ahead of schedule, and anticipates COGS inflation of mid-to-high single digits between Q2 and Q4. They also expect refinish sales to return to growth in Q3 and Q4, and industrial segment share gains to continue launching through 2026 and into 2027.
“We outpaced the industry by a 300 basis points, achieving organic growth in all 3 segments and in 8 of our 9 businesses, demonstrating our ability to accelerate momentum in a complex and rapidly evolving environment.”
on Organic growth outperformance
“We are confident that the destocking in the United States is behind us. And so our run rate going forward and our year-over-year comp rate going forward changes significantly.”
on Refinish recovery
“We have also proactively made price adjustments globally and across all of our businesses, resulting in a net 2% selling price improvement in the quarter with an exit run rate of 3% for the month of June.”
on Pricing actions
Why was Performance Coatings down so much sequentially, and what gives you confidence the business can accelerate in 2H given raw material headwinds?
Tim Knavish explained the drop was entirely due to refinish year-over-year comps; all other businesses in the segment grew double-digit. He expressed confidence that refinish will return to growth in Q3 and Q4, and that pricing momentum plus the end of U.S. destocking will drive margin recovery. Alex Lopez added that price net inflation in Q1 was positive but flat in Q2, with Q3 expected positive.
Can you unpack the volume growth trajectory in Industrial Coatings and why Q3 sales guide looks decelerated?
Tim Knavish said the segment's 5% volume growth was the best in five years, driven by share gains launching from prior wins. He noted ~$25 million of new business wins per quarter are hitting the P&L across auto, packaging, and industrial. The Q3 guide reflects tougher comps in packaging (stacking double digits) and some wins not launching until 2027, but he expects continued growth in the segment.
When was peak sales for refinish, how much are we down, and has there been a mix shift or structural margin impact?
Tim Knavish said peak was around 2024, but noted PPG was expanding TAM, pricing, and share. He said there has been no negative mix shift; customers value productivity tools in tough times. Alex Lopez added that the derailment was driven by insurance premiums rising 16-17% annually, but Q2 saw the first decline in premiums since 2023.