ppg-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

–––––––––––––––––––––––––––––––––––––––––––––––––

FORM 10-Q

–––––––––––––––––––––––––––––––––––––––––––––––––

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 1-1687

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

PPG INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

25-0730780

(I.R.S. Employer Identification No.)

Pennsylvania

(State or Other Jurisdiction of Incorporation or Organization)

One PPG Place, Pittsburgh, Pennsylvania

(Address of Principal Executive Offices)

15272

(Zip Code)

(412) 434-3131

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.66 2/3

PPG

New York Stock Exchange

0.875% Notes due 2025

PPG 25

New York Stock Exchange

1.875% Notes due 2025

PPG 25A

New York Stock Exchange

1.400% Notes due 2027

PPG 27

New York Stock Exchange

2.750% Notes due 2029

PPG 29A

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of March 31, 2024, 234.5 million shares of the Registrant’s common stock, par value $1.66 2/3 per share, were outstanding.

PPG INDUSTRIES, INC. AND SUBSIDIARIES

INDEX


		PAGE
Part I. Financial Information
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statement of Income	2
	Condensed Consolidated Statement of Comprehensive Income	3
	Condensed Consolidated Balance Sheet	4
	Condensed Consolidated Statement of Shareholders' Equity	5
	Condensed Consolidated Statement of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
Part II. Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
Signatures		34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Income (Unaudited)


	Three Months Ended March 31
($ in millions, except per share amounts)	2024	2023
Net sales	$4,311	$4,380
Cost of sales, exclusive of depreciation and amortization	2,445	2,596
Selling, general and administrative	1,064	992
Depreciation	103	92
Amortization	38	41
Research and development, net	109	104
Interest expense	55	59
Interest income	(42)	(25)
Pension settlement charge	—	190

Other charges/(income), net	1	(22)
Income before income taxes	$538	$353
Income tax expense	129	80


Net income attributable to controlling and noncontrolling interests	$409	$273
Net income attributable to noncontrolling interests	(9)	(9)




Net income (attributable to PPG)	$400	$264




Earnings per common share (attributable to PPG)	$1.70	$1.12




Earnings per common share (attributable to PPG) - assuming dilution	$1.69	$1.11

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

Table of Contents

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Comprehensive Income (Unaudited)


	Three Months Ended March 31
($ in millions)	2024	2023
Net income attributable to controlling and noncontrolling interests	$409	$273
Other comprehensive (loss)/income, net of tax:
Defined benefit pension and other postretirement benefits	—	139
Unrealized foreign currency translation adjustments	(14)	264

Other comprehensive (loss)/income, net of tax	($14)	$403
Total comprehensive income	$395	$676
Less: amounts attributable to noncontrolling interests:
Net income	(9)	(9)
Unrealized foreign currency translation adjustments	2	(1)
Comprehensive income attributable to PPG	$388	$666

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

Table of Contents

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet (Unaudited)


($ in millions)	March 31, 2024	December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$1,181	$1,514
Short-term investments	54	75
Receivables, net	3,581	3,279
Inventories	2,331	2,127
Other current assets	524	436
Total current assets	$7,671	$7,431
Property, plant and equipment (net of accumulated depreciation of $4,995 and $4,963)	3,633	3,644
Goodwill	6,140	6,200
Identifiable intangible assets, net	2,399	2,424
Deferred income taxes	340	273
Investments	275	259
Operating lease right-of-use assets	808	832
Other assets	601	584
Total	$21,867	$21,647
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$4,351	$4,467
Restructuring reserves	89	87
Short-term debt and current portion of long-term debt	311	306
Current portion of operating lease liabilities	192	194
Total current liabilities	$4,943	$5,054
Long-term debt	5,940	5,748
Operating lease liabilities	600	622
Accrued pensions	608	588
Other postretirement benefits	448	450
Deferred income taxes	554	508
Other liabilities	648	654
Total liabilities	$13,741	$13,624
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock	$969	$969
Additional paid-in capital	1,222	1,202
Retained earnings	21,747	21,500
Treasury stock, at cost	(13,746)	(13,600)
Accumulated other comprehensive loss	(2,251)	(2,239)
Total PPG shareholders’ equity	$7,941	$7,832
Noncontrolling interests	185	191
Total shareholders’ equity	$8,126	$8,023
Total	$21,867	$21,647

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

Table of Contents

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Shareholders' Equity (Unaudited)


($ in millions)	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total PPG	Non-controlling Interests	Total
January 1, 2024	$969	$1,202	$21,500	($13,600)	($2,239)	$7,832	$191	$8,023
Net income attributable to controlling and noncontrolling interests	—	—	400	—	—	400	9	409
Other comprehensive loss, net of tax	—	—	—	—	(12)	(12)	(2)	(14)
Cash dividends	—	—	(153)	—	—	(153)	—	(153)
Purchase of treasury stock	—	—	—	(152)	—	(152)	—	(152)
Issuance of treasury stock	—	31	—	6	—	37	—	37
Stock-based compensation activity	—	(11)	—	—	—	(11)	—	(11)
Dividends paid on subsidiary common stock to noncontrolling interests	—	—	—	—	—	—	(2)	(2)
Reductions in noncontrolling interests	—	—	—	—	—	—	(11)	(11)
March 31, 2024	$969	$1,222	$21,747	($13,746)	($2,251)	$7,941	$185	$8,126


($ in millions)	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total PPG	Non-controlling Interests	Total
January 1, 2023	$969	$1,130	$20,828	($13,525)	($2,810)	$6,592	$117	$6,709
Net income attributable to controlling and noncontrolling interests	—	—	264	—	—	264	9	273
Other comprehensive income, net of tax	—	—	—	—	402	402	1	403
Cash dividends	—	—	(146)	—	—	(146)	—	(146)

Issuance of treasury stock	—	21	—	10	—	31	—	31
Stock-based compensation activity	—	(1)	—	—	—	(1)	—	(1)
Dividends paid on subsidiary common stock to noncontrolling interests	—	—	—	—	—	—	(1)	(1)
Reductions in noncontrolling interests	—	—	—	—	—	—	(15)	(15)
March 31, 2023	$969	$1,150	$20,946	($13,515)	($2,408)	$7,142	$111	$7,253

The accompanying notes to the condensed consolidated financial statements are an integral part of this condensed consolidated statement.

Table of Contents

PPG INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Cash Flows (Unaudited)


	Three Months Ended March 31
($ in millions)	2024	2023
Operating activities:
Net income attributable to controlling and noncontrolling interests	$409	$273


Adjustments to reconcile net income to cash (used for)/from operations:
Depreciation and amortization	141	133

Pension settlement charge	—	190





Stock-based compensation expense	12	17


Deferred income taxes	(45)	(131)

Cash used for restructuring actions	(10)	(16)
Change in certain asset and liability accounts (net of acquisitions):
Receivables	(344)	(277)
Inventories	(229)	(308)
Other current assets	(66)	(88)
Accounts payable and accrued liabilities	(10)	175
Taxes and interest payable	88	111
Noncurrent assets and liabilities, net	7	(39)
Other	(13)	45


Cash (used for)/from operating activities	($60)	$85
Investing activities:
Capital expenditures	($256)	($120)








Other	17	56


Cash used for investing activities	($239)	($64)
Financing activities:
Net proceeds from commercial paper and short-term debt	$—	$638
Net change in borrowing with maturities of three months or less	4	190
Proceeds from Term Loan, net of fees	274	—

Repayment of Term Loan Credit Agreement	—	(100)



Repayment of long-term debt	—	(300)

Purchase of treasury stock	(149)	—

Dividends paid on PPG common stock	(153)	(146)


Other	(11)	(5)


Cash (used for)/from financing activities	($35)	$277
Effect of currency exchange rate changes on cash and cash equivalents