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PPG Industries Inc.

19/07/2024 | Press release | Distributed by Public on 20/07/2024 01:09

Quarterly Report for Quarter Ending June 30, 2024 (Form 10-Q)

ppg-20240630

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: June 30, 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 June 30, 2024, 233.3 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	7
Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
Part II. Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	36
Item 6.	Exhibits	36
Signatures	38

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 June 30	Six Months Ended June 30
($ in millions, except per share amounts)	2024	2023	2024	2023
Net sales	$4,794	$4,872	$9,105	$9,252
Cost of sales, exclusive of depreciation and amortization	2,734	2,866	5,179	5,462
Selling, general and administrative	1,077	1,069	2,141	2,061
Depreciation	98	93	201	185
Amortization	36	40	74	81
Research and development, net	111	110	220	214
Interest expense	62	67	117	126
Interest income	(45)	(32)	(87)	(57)
Pension settlement charge	-	-	-	190
Other charges/(income), net	28	13	29	(9)
Income before income taxes	$693	$646	$1,231	$999
Income tax expense	156	149	285	229
Net income attributable to controlling and noncontrolling interests	$537	$497	$946	$770
Net income attributable to noncontrolling interests	(9)	(7)	(18)	(16)
Net income (attributable to PPG)	$528	$490	$928	$754

Earnings per common share (attributable to PPG)	$2.25	$2.08	$3.95	$3.20

Earnings per common share (attributable to PPG) - assuming dilution	$2.24	$2.06	$3.93	$3.18

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 June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Net income attributable to controlling and noncontrolling interests	$537	$497	$946	$770
Other comprehensive (loss)/income, net of tax:
Defined benefit pension and other postretirement benefits	20	-	20	139
Unrealized foreign currency translation adjustments	(434)	109	(448)	373
Other comprehensive (loss)/income, net of tax	($414)	$109	($428)	$512
Total comprehensive income	$123	$606	$518	$1,282
Less: amounts attributable to noncontrolling interests:
Net income	(9)	(7)	(18)	(16)
Unrealized foreign currency translation adjustments	2	-	4	(1)
Comprehensive income attributable to PPG	$116	$599	$504	$1,265

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)	June 30, 2024	December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$1,131	$1,514
Short-term investments	61	75
Receivables, net	3,845	3,279
Inventories	2,299	2,127
Other current assets	448	436
Total current assets	$7,784	$7,431
Property, plant and equipment (net of accumulated depreciation of $4,996 and $4,963)	3,636	3,644
Goodwill	6,047	6,200
Identifiable intangible assets, net	2,266	2,424
Deferred income taxes	319	273
Investments	295	259
Operating lease right-of-use assets	812	832
Other assets	570	584
Total	$21,729	$21,647
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$4,332	$4,467
Restructuring reserves	60	87
Short-term debt and current portion of long-term debt	639	306
Current portion of operating lease liabilities	194	194
Total current liabilities	$5,225	$5,054
Long-term debt	5,765	5,748
Operating lease liabilities	604	622
Accrued pensions	587	588
Other postretirement benefits	436	450
Deferred income taxes	509	508
Other liabilities	658	654
Total liabilities	$13,784	$13,624
Commitments and contingent liabilities (Note 13)
Shareholders' equity:
Common stock	$969	$969
Additional paid-in capital	1,235	1,202
Retained earnings	22,123	21,500
Treasury stock, at cost	(13,897)	(13,600)
Accumulated other comprehensive loss	(2,663)	(2,239)
Total PPG shareholders' equity	$7,767	$7,832
Noncontrolling interests	178	191
Total shareholders' equity	$7,945	$8,023
Total	$21,729	$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
Net income attributable to the controlling and noncontrolling interests	-	-	528	-	-	528	9	537
Other comprehensive loss, net of tax	-	-	-	-	(412)	(412)	(2)	(414)
Cash dividends	-	-	(152)	-	-	(152)	-	(152)
Purchase of treasury stock	-	-	-	(152)	-	(152)	-	(152)
Issuance of treasury stock	-	3	-	1	-	4	-	4
Stock-based compensation activity	-	10	-	-	-	10	-	10
Dividends paid on subsidiary common stock to noncontrolling interests	-	-	-	-	-	-	(13)	(13)
Other	-	-	-	-	-	-	(1)	(1)
June 30, 2024	$969	$1,235	$22,123	($13,897)	($2,663)	$7,767	$178	$7,945

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

Table of Contents


($ 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
Net income attributable to the controlling and noncontrolling interests	-	-	490	-	-	490	7	497
Other comprehensive income/(loss), net of tax	-	-	-	-	109	109	-	109
Cash dividends	-	-	(146)	-	-	(146)	-	(146)
Purchase of treasury stock	-	-	-	-	-	-	-	-
Issuance of treasury stock	-	7	-	3	-	10	-	10
Stock-based compensation activity	-	9	-	-	-	9	-	9
Dividends paid on subsidiary common stock to noncontrolling interests	-	-	-	-	-	-	(10)	(10)
Acquisition of noncontrolling interests	-	-	-	-	-	-	70	70
June 30, 2023	$969	$1,166	$21,290	($13,512)	($2,299)	$7,614	$178	$7,792

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)


Six Months Ended June 30
($ in millions)	2024	2023
Operating activities:
Net income attributable to controlling and noncontrolling interests	$946	$770
Adjustments to reconcile net income to cash from operations:
Depreciation and amortization	275	266
Pension settlement charge	-	190
Stock-based compensation expense	22	34
Deferred income taxes	(44)	(112)
Cash used for restructuring actions	(27)	(29)
Change in certain asset and liability accounts (net of acquisitions):
Receivables	(638)	(528)
Inventories	(217)	(176)
Other current assets	(43)	(61)
Accounts payable and accrued liabilities	41	156
Taxes and interest payable	(5)	51
Noncurrent assets and liabilities, net	39	(77)
Other	(44)	137
Cash from operating activities	$305	$621
Investing activities:
Capital expenditures	($374)	($242)
Business acquisitions, net of cash balances acquired	(27)	(106)
Proceeds from the settlement of cross currency swap contracts	10	52
Other	21	6
Cash used for investing activities	($370)	($290)
Financing activities:
Net proceeds from commercial paper and short-term debt	$171	$100
Net change in borrowing with maturities of three months or less	11	(12)
Proceeds from Term Loan, net of fees	274	550
Repayment of Term Loan Credit Agreement	-	(300)
Repayment of long-term debt	-	(300)
Purchase of treasury stock	(312)	-
Dividends paid on PPG common stock	(305)	(292)
Other	(24)	(12)
Cash used for financing activities	($185)	($266)
Effect of currency exchange rate changes on cash and cash equivalents	(133)	64
Net (decrease)/increase in cash and cash equivalents	($383)	$129
Cash and cash equivalents, beginning of period	1,514	1,099
Cash and cash equivalents, end of period	$1,131	$1,228

Supplemental disclosures of cash flow information:
Interest paid, net of amount capitalized	$134	$130
Taxes paid, net of refunds	$343	$270

Supplemental disclosure of noncash investing activities:
Capital expenditures accrued within Accounts payable and accrued liabilities at period-end	$73	$73

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

1.Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared following the requirements of the Securities and Exchange Commission (the "SEC") and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim reporting. Under these rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. These statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position and shareholders' equity of PPG as of June 30, 2024 and the results of its operations and cash flows for the three and six months ended June 30, 2024 and 2023. All intercompany balances and transactions have been eliminated. Material subsequent events are evaluated through the report issuance date and disclosed where applicable. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in PPG's 2023 Annual Report on Form 10-K (the "2023 Form 10-K").

Net sales, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results of operations for the three and six months ended June 30, 2024 and the trends in these unaudited condensed consolidated financial statements may not necessarily be indicative of the results to be expected for the full year.

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on our previously reported Net income, total assets, cash flows or shareholders' equity.

2.New Accounting Standards

Recently Adopted Accounting Standards

Effective January 1, 2024, PPG adopted Accounting Standards Update ("ASU") No. 2023-02, "Investment - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." This ASU permits reporting entities to elect to account for tax equity investments under the proportional amortization method, regardless of the tax credit program from which the income tax credits are received, if certain conditions are met. Adoption of this ASU did not have a material impact on PPG's consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07 "Improvements to Reportable Segment Disclosures (Topic 280)". This ASU updates current reportable segment disclosure requirements to require disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. This ASU will be effective for the annual period ending December 31, 2024. Adoption of this ASU will result in additional disclosure, but it will not impact PPG's consolidated financial position, results of operations or cash flows.

In December 2023, the FASB issued ASU No. 2023-09 "Improvements to Income Tax Disclosures (Topic 740)". This ASU updates current income tax disclosure requirements to require disclosures of specific categories of information within the effective tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. This ASU will be effective for the annual period ending December 31, 2025. Adoption of this ASU will result in additional disclosure, but it will not impact PPG's consolidated financial position, results of operations or cash flows.

3. Inventories


($ in millions)	June 30, 2024	December 31, 2023
Finished products	$1,293	$1,197
Work in process	257	236
Raw materials	693	640
Supplies	56	54
Total Inventories	$2,299	$2,127

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Most U.S. inventories are valued using the last-in, first-out method. These inventories represented approximately 16% and 20%of total inventories at June 30, 2024 and December 31, 2023, respectively. If the first-in, first-out ("FIFO") method of inventory valuation had been used, inventories would have been $247 million and $249 million higher as of June 30, 2024 and December 31, 2023, respectively.

4. Goodwill and Other Identifiable Intangible Assets

The Company tests indefinite-lived intangible assets and goodwill for impairment by performing either a qualitative evaluation or a quantitative test at least annually, or more frequently if an indication of impairment arises. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than its carrying amount.

The Company did not identify an indication of goodwill impairment for any of its reporting units or an indication of impairment of any of its indefinite-lived intangible assets during the six months ended June 30, 2024.

The change in the carrying amount of goodwill attributable to each reportable segment for the six months ended June 30, 2024 was as follows:


($ in millions)	Performance Coatings	Industrial Coatings	Total
January 1, 2024	$4,994	$1,206	$6,200
Acquisitions, including purchase accounting adjustments	2	-	2
Foreign currency impact	(127)	(28)	(155)
June 30, 2024	$4,869	$1,178	$6,047

As of both June 30, 2024 and December 31, 2023, accumulated goodwill impairment losses totaled $158 million.

A summary of the carrying value of the Company's identifiable intangible assets is as follows:


	June 30, 2024	December 31, 2023
($ in millions)	Gross Carrying Amount	Accumulated Amortization	Net	Gross Carrying Amount	Accumulated Amortization	Net
Indefinite-Lived Identifiable Intangible Assets
Trademarks	$1,370	$-	$1,370	$1,442	$-	$1,442
Definite-Lived Identifiable Intangible Assets
Acquired technology	$837	($688)	$149	$845	($678)	$167
Customer-related	1,877	(1,259)	618	1,933	(1,259)	674
Trade names	308	(181)	127	319	(180)	139
Other	49	(47)	2	50	(48)	2
Total Definite-Lived Intangible Assets	$3,071	($2,175)	$896	$3,147	($2,165)	$982
Total Identifiable Intangible Assets	$4,441	($2,175)	$2,266	$4,589	($2,165)	$2,424

The Company's identifiable intangible assets with definite lives are being amortized over their estimated useful lives.

As of June 30, 2024, estimated future amortization expense of identifiable intangible assets is as follows:


($ in millions)	Future Amortization Expense
Remaining six months of 2024	$73
2025	$128
2026	$107
2027	$96
2028	$83
2029	$78
Thereafter	$331

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5. Business Restructuring

The Company records restructuring liabilities that represent charges incurred in connection with consolidations of certain operations, including both operations from acquisitions and headcount reduction programs. These charges consist primarily of severance costs and certain other cash costs. As a result of these programs, the Company also incurs incremental non-cash accelerated depreciation expense for certain assets due to their reduced expected useful life. These charges are not allocated to the Company's reportable business segments. Refer to Note 15, "Reportable Business Segment Information" for additional information.

The following table summarizes restructuring reserve activity for the six months ended June 30, 2024 and 2023:


Total Reserve
($ in millions)	2024	2023
January 1	$113	$169
Approved restructuring actions	-	12
Release of prior reserves and other adjustments(a)	(1)	(15)
Cash payments	(27)	(29)
Foreign currency impact	(2)	2
June 30	$83	$139

(a)Certain releases were recorded to reflect the current estimate of costs to complete planned business restructuring actions.

The majority of the approved business restructuring actions and associated cash outlays are expected to be completed in the next twelve months.

6. Borrowings

Credit Agreements

In April 2023, PPG entered into a €500 million term loan credit agreement (the "Term Loan"). The Term Loan provides the Company with the ability to increase the size of the loan by an amount not to exceed €250 million. The Term Loan contains covenants that are consistent with those in the Credit Agreement discussed below and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company's ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan terminates and all amounts outstanding are payable in April 2026. In April 2023, PPG borrowed €500 million under the Term Loan. In December 2023, PPG obtained lender commitments sufficient to increase the size of the Term Loan by €250 million. In January 2024, PPG borrowed the additional €250 million. The Term Loan is denominated in euro and has been designated as a hedge of the net investment in the Company's European operations. For more information, refer to Note 11 "Financial Instruments, Hedging Activities and Fair Value Measurements."

In March 2023, PPG amended its five-year credit agreement (the "Credit Agreement") dated as of August 30, 2019. The amendments to the Credit Agreement replace the LIBOR-based reference interest rate option with a reference interest rate option based upon Term SOFR. The other terms of the Credit Agreement remained unchanged. In July 2023, PPG amended and restated the Credit Agreement, extending the term through July 27, 2028. The amended and restated Credit Agreement provides for a $2.3 billion unsecured revolving credit facility. The Company has the ability to increase the size of the Credit Agreement by up to an additional $750 million, subject to the receipt of lender commitments and other conditions precedent. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. There were no amounts outstanding under the Credit Agreement as of June 30, 2024 and December 31, 2023.

Borrowings under the Credit Agreement may be made in U.S. Dollars or in euros. The Credit Agreement provides that loans will bear interest at rates based, at the Company's option, on one of two specified base rates plus a margin based on certain formulas defined in the Credit Agreement. Additionally, the Credit Agreement contains a Commitment Fee, as defined in the Credit Agreement, on the amount of unused commitments under the Credit Agreement ranging from 0.060% to 0.125% per annum.

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The Credit Agreement also supports the Company's commercial paper borrowings which are classified as long-term based on PPG's intent and ability to refinance these borrowings on a long-term basis. There were $171 million commercial paper borrowings outstanding as of June 30, 2024 and no commercial paper borrowings outstanding as of December 31, 2023.

The Credit Agreement contains usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company's ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Credit Agreement also requires the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Credit Agreement, of 60% or less; provided, that for any fiscal quarter in which the Company has made an acquisition for consideration in excess of $1 billion and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65% at any time. As of June 30, 2024, Total Indebtedness to Total Capitalization as defined under the Credit Agreement was 44%.

The Credit Agreement contains, among other things, customary events of default that would permit the lenders to accelerate the loans, including the failure to make timely payments when due under the Credit Agreement or other material indebtedness, the failure to satisfy covenants contained in the Credit Agreement, a change in control of the Company and specified events of bankruptcy and insolvency.

Other Long-term Debt Activities

In March 2023, PPG's $300 million 3.2% notes matured, and the Company repaid this obligation using cash on hand.

In May 2022, PPG completed a public offering of €300 million 1.875% Notes due 2025 and €700 million 2.750% Notes due 2029. These notes were issued pursuant to PPG's existing shelf registration statement and pursuant to an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented (the "2022 Indenture"). The 2022 Indenture governing these notes contains covenants that limit the Company's ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company's assets. The terms of these notes also require the Company to make an offer to repurchase Notes upon a Change of Control Triggering Event (as defined in the 2022 Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest. The Company may issue additional debt from time to time pursuant to the Indenture. The aggregate cash proceeds from the notes, net of discounts and fees, was $1,061 million. The notes are denominated in euro and have been designated as hedges of net investments in the Company's European operations. Refer to Note 11 "Financial Instruments, Hedging Activities and Fair Value Measurements." for additional information.

In March 2022, PPG privately placed a 15-year €50 million 1.95% fixed interest note. This note contains covenants materially consistent with the 1.875% notes discussed above. This debt arrangement is denominated in euros and has been designated as a net investment hedge of the Company's European operations. Refer to Note 11 "Financial Instruments, Hedging Activities and Fair Value Measurements" for additional information.

In February 2021, PPG entered into a $2.0 billion Term Loan Credit Agreement (the "Term Loan Credit Agreement") to finance the Company's acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. The Term Loan Credit Agreement provided the Company with the ability to borrow up to an aggregate principal amount of $2.0 billion on an unsecured basis. In addition to the amounts borrowed to finance the acquisition of Tikkurila, the Term Loan Credit Agreement allowed the Company to make up to eleven additional borrowings prior to December 31, 2021, to be used for working capital and general corporate purposes. The Term Loan Credit Agreement contains covenants that are consistent with those in the Credit Agreement discussed above and that are usual and customary restrictive covenants for facilities of its type, which include, with specified exceptions, limitations on the Company's ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan Credit Agreement was scheduled to mature and all outstanding borrowings were to be due and payable on the third anniversary of the date of the initial borrowing under the Agreement. In June 2021, PPG borrowed $700 million under Term Loan Credit Agreement to finance the Company's acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement. In 2022 and 2023, PPG repaid $300 million and $1.1 billion, respectively, of the Term Loan Credit Agreement using cash on hand. The Term Loan Credit Agreement was fully repaid as of December 31, 2023.

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Restrictive Covenants and Cross-Default Provisions

As of June 30, 2024, PPG was in full compliance with the restrictive covenants under its various credit agreements, loan agreements and indentures.

Additionally, the Company's Credit Agreement contains customary cross-default provisions. These provisions provide that a default on a debt service payment of $100 million or more for longer than the grace period provided under another agreement may result in an event of default under this agreement. None of the Company's primary debt obligations are secured or guaranteed by the Company's affiliates.

Letters of Credit and Surety Bonds

The Company had outstanding letters of credit and surety bonds of $231 million and $232 million as of June 30, 2024 and December 31, 2023, respectively.

7. Earnings Per Common Share

The effect of dilutive securities on the weighted average common shares outstanding included in the calculation of earnings per diluted common share for the three and six months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30	Six Months Ended June 30
(number of shares in millions)	2024	2023	2024	2023
Weighted average common shares outstanding	234.5	236.0	235.1	235.9
Effect of dilutive securities:
Stock options	0.4	0.6	0.5	0.5
Other stock compensation plans	0.8	0.7	0.7	0.7
Potentially dilutive common shares	1.2	1.3	1.2	1.2
Adjusted weighted average common shares outstanding	235.7	237.3	236.3	237.1

Dividends per common share	$0.65	$0.62	$1.30	$1.24

Antidilutive securities(a):
Stock options	1.1	0.4	0.7	0.9

(a)Excluded from the computation of earnings per diluted share due to their antidilutive effect.

8. Income Taxes


Six Months Ended June 30
2024	2023
Effective tax rate on pretax income	23.2	%	22.9	%

Income tax expense for the six months ended June 30, 2024 and 2023 is based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax income or loss. During the year, PPG management regularly updates forecasted annual pretax results for the various countries in which PPG operates based on changes in factors such as prices, shipments, product mix, raw material inflation and manufacturing operations. To the extent that actual 2024 pretax results for U.S. and foreign income or loss vary from estimates, the actual Income tax expense recognized in 2024 could be different from the forecasted amount used to estimate Income tax expense for the six months ended June 30, 2024.

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9. Pensions and Other Postretirement Benefits

In March 2023, the Company purchased group annuity contracts that transferred to third-party insurance companies pension benefit obligations for certain of the Company's retirees in the U.S. who were receiving their monthly retirement benefit payments from the U.S. pension plan. The amount of each affected retiree's annuity payment is equal to the amount of such individual's pension benefit. The purchase of group annuity contracts was funded directly by the assets of the U.S. plans. By transferring the obligations and assets to the insurance companies, the Company reduced its overall pension projected benefit obligation by $309 million and recognized a non-cash Pension settlement charge of $190 million.

The service cost component of net periodic pension and other postretirement benefit cost is included in Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative, and Research and development, net in the accompanying condensed consolidated statement of income. Except for the Pension settlement charge in the quarter ended March 31, 2023, all other components of net periodic benefit cost are recorded in Other charges/(income), net in the accompanying condensed consolidated statement of income.

Net periodic pension benefit cost and other postretirement benefit cost for the three and six months ended June 30, 2024 and 2023 was as follows:


Pension
Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Service cost	$2	$2	$4	$4
Interest cost	26	24	52	55
Expected return on plan assets	(27)	(24)	(54)	(55)
Amortization of actuarial losses	5	3	11	10
Settlements	8	1	8	191
Net periodic benefit cost	$14	$6	$21	$205


	Other Postretirement Benefits
	Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Service cost	$1	$1	$2	$2
Interest cost	6	6	12	13
Amortization of actuarial gains	(1)	(1)	(1)	(1)
Amortization of prior service credit	-	(1)	(2)	(3)
Net periodic benefit cost	$6	$5	$11	$11

Net periodic pension cost was lower for the six months ended June 30, 2024 compared to 2023 primarily due to the Pension settlement charge recognized in the first quarter 2023.

PPG expects 2024 full year net periodic pension expense of approximately $35 million and net periodic other postretirement expense of approximately $21 million.

Contributions to Defined Benefit Pension Plans


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Non-U.S. defined benefit pension mandatory contributions	$1	$1	$2	$2

PPG expects to make mandatory contributions to its defined benefit pension plans in the range of $10 million to $20 million during the remaining six months of 2024. In addition to any mandatory contributions, PPG may elect to make voluntary contributions to its defined benefit pension plans in 2024 and beyond.

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10. Accumulated Other Comprehensive Loss (AOCL)


($ in millions)	Foreign Currency Translation Adjustments(a)	Pension and Other Postretirement Benefit Adjustments, net of tax(b)	Unrealized Gain on Derivatives, net of tax	Accumulated Other Comprehensive Loss
January 1, 2023	($2,254)	($557)	$1	($2,810)
Current year deferrals to AOCL	371	(11)	-	360
Reclassifications from AOCL to net income	1	150	-	151
June 30, 2023	($1,882)	($418)	$1	($2,299)

January 1, 2024	($1,746)	($494)	$1	($2,239)
Current year deferrals to AOCL	(444)	8	-	(436)
Reclassifications from AOCL to net income	-	12	-	12
June 30, 2024	($2,190)	($474)	$1	($2,663)

(a)The tax cost related to unrealized foreign currency translation adjustments on net investment hedges was $75 million and $58 million as of June 30, 2024 and 2023, respectively.

(b)The tax benefit related to the adjustment for pension and other postretirement benefits was $6 million and $47 million for the six months ended June 30, 2024 and 2023, respectively. Reclassifications from AOCL are included in the computation of net periodic benefit cost (See Note 9, "Pensions and Other Postretirement Benefits").

11. Financial Instruments, Hedging Activities and Fair Value Measurements

Financial instruments include cash and cash equivalents, short-term investments, cash held in escrow, marketable equity securities, accounts receivable, company-owned life insurance, accounts payable, short-term and long-term debt instruments, and derivatives. The fair values of these financial instruments approximated their carrying values at June 30, 2024 and December 31, 2023, in the aggregate, except for long-term debt instruments.

Hedging Activities

The Company has exposure to market risk from changes in foreign currency exchange rates and interest rates. As a result, financial instruments, including derivatives, have been used to hedge a portion of these underlying economic exposures. Certain of these instruments may qualify as fair value, cash flow, and net investment hedges upon meeting the requisite criteria, including effectiveness of offsetting hedged or underlying exposures. Changes in the fair value of derivatives that do not qualify for hedge accounting are recognized in Income before income taxes in the period incurred.

PPG's policies do not permit speculative use of derivative financial instruments. PPG enters into derivative financial instruments with high credit quality counterparties and diversifies its positions among such counterparties in order to reduce its exposure to credit losses. The Company did not realize a credit loss on derivatives during the three and six months ended June 30, 2024 and 2023.

All of PPG's outstanding derivative instruments are subject to accelerated settlement in the event of PPG's failure to meet its debt or payment obligations under the terms of the instruments' contractual provisions. In addition, if the Company would be acquired and its payment obligations under its derivative instruments' contractual arrangements are not assumed by the acquirer, or if PPG would enter into bankruptcy, receivership or reorganization proceedings, its outstanding derivative instruments would also be subject to accelerated settlement.

There were no derivative instruments de-designated or discontinued as hedging instruments during the three and six months ended June 30, 2024 and 2023, and there were no gains or losses deferred in Accumulated other comprehensive loss on the condensed consolidated balance sheet that were reclassified to Income before income taxes in the condensed consolidated statement of income in the six months ended June 30, 2024 and 2023 related to hedges of anticipated transactions that were no longer expected to occur.

Fair Value Hedges

The Company uses interest rate swaps from time to time to manage its exposure to changing interest rates. When outstanding, the interest rate swaps are typically designated as fair value hedges of certain outstanding debt obligations of the Company and are recorded at fair value.

PPG has interest rate swaps which converted $375 million of fixed rate debt to variable rate debt as of both June 30, 2024 and December 31, 2023. These swaps are designated as fair value hedges and are carried at fair value.

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Changes in the fair value of these swaps and changes in the fair value of the related debt are recorded in interest expense in the accompanying condensed consolidated statement of income. The fair value of these interest rate swaps were liabilitiesof $21 million and $14 million at June 30, 2024 and December 31, 2023, respectively.

Cash Flow Hedges

At times, PPG designates certain foreign currency forward contracts as cash flow hedges of the Company's exposure to variability in exchange rates on third party transactions denominated in foreign currencies.There were no outstanding cash flow hedges at June 30, 2024 and December 31, 2023.

Net Investment Hedges

PPG uses cross currency swaps and foreign currency euro-denominated debt to hedge a significant portion of its net investment in its European operations, as follows:

PPG had U.S. dollar to euro cross currency swap contracts with total notional amounts of $475 millionas of both June 30, 2024 and December 31, 2023, and designated these contracts as hedges of the Company's net investment in its European operations. During the term of these contracts, PPG will receive payments in U.S. dollars and make payments in euros to the counterparties. As of June 30, 2024 and December 31, 2023, the fair value of the U.S. dollar to euro cross currency swap contracts were net assets of $44 million and $33 million, respectively.

AtJune 30, 2024 and December 31, 2023, PPG had designated €3.2 billion and €3.0 billion, respectively,of euro-denominated borrowings as hedges of a portion of its net investment in the Company's European operations. The carrying value of these instruments were$3.4 billionand $3.3 billion as of June 30, 2024 and December 31, 2023, respectively.

Other Financial Instruments

PPG uses foreign currency forward contracts to manage certain net transaction exposures that either have not been elected, or do not qualify for hedge accounting; therefore, the change in the fair value of these instruments is recorded in Other charges/(income), net in the condensed consolidated statement of income in the period of change. Underlying notional amounts related to these foreign currency forward contracts were $2.6 billion and $2.5 billion at June 30, 2024 and December 31, 2023, respectively. The fair values of these contracts were net liabilities of $1 million as of June 30, 2024 and net assets of $23 million as of December 31, 2023.

Gains/Losses Deferred in Accumulated Other Comprehensive Loss

The following table summarizes the amount of gains and losses deferred in Other comprehensive income ("OCI") and the amount and location of gains and losses recognized within the condensed consolidated statement of income related to derivative and debt financial instruments for the six months ended June 30, 2024 and 2023. All amounts are shown on a pretax basis.


June 30, 2024	June 30, 2023	Caption In Condensed Consolidated Statement of Income
($ in millions)	Gain Deferred in OCI	Gain/(Loss) Recognized	Loss Deferred in OCI	Gain/(Loss) Recognized
Economic
Foreign currency forward contracts	$-	$26	$-	$25	Other charges/(income), net
Fair Value
Interest rate swaps	-	(5)	-	(4)	Interest expense
Total forward contracts and interest rate swaps	$-	$21	$-	$21
Net Investment
Cross currency swaps	$11	$5	($11)	$7	Interest expense
Foreign denominated debt	96	-	(51)	-
Total Net Investment	$107	$5	($62)	$7

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Fair Value Measurements

The Company follows a fair value measurement hierarchy to measure its assets and liabilities. As of June 30, 2024 and December 31, 2023, the assets and liabilities measured at fair value on a recurring basis were cash equivalents, equity securities and derivatives. In addition, the Company measures its pension plan assets at fair value (see Note 14, "Employee Benefit Plans" under Item 8 in the 2023 Form 10-K for further details). The Company's financial assets and liabilities are measured using inputs from the following three levels:

Level 1 inputs are quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date. Level 1 inputs are considered to be the most reliable evidence of fair value as they are based on unadjusted quoted market prices from various financial information service providers and securities exchanges.

Level 2 inputs are directly or indirectly observable prices that are not quoted on active exchanges, which include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. The fair values of the derivative instruments reflect the instruments' contractual terms, including the period to maturity, and uses observable market-based inputs, including forward curves.

Level 3 inputs are unobservable inputs employed for measuring the fair value of assets or liabilities. The Company did not have any recurring financial assets or liabilities recorded in its condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 that were measured using Level 3 inputs.

Assets and liabilities reported at fair value on a recurring basis


June 30, 2024	December 31, 2023
($ in millions)	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Assets:
Other current assets:
Marketable equity securities	$9	$-	$-	$9	$-	$-
Foreign currency forward contracts(a)	$-	$13	$-	$-	$28	$-
Cross currency swaps(b)	$-	$4	$-	$-	$2	$-
Investments:
Marketable equity securities	$86	$-	$-	$74	$-	$-
Other assets:
Cross currency swaps(b)	$-	$40	$-	$-	$31	$-
Liabilities:
Accounts payable and accrued liabilities:
Foreign currency forward contracts(a)	$-	$14	$-	$-	$5	$-
Other liabilities:
Interest rate swaps (c)	$-	$21	$-	$-	$14	$-

(a)Derivatives not designated as hedging instruments

(b)Net investment hedges

(c)Fair value hedges

Long-Term Debt


($ in millions)	June 30, 2024 (a)	December 31, 2023 (b)
Long-term debt - carrying value	$6,381	$6,042
Long-term debt - fair value	$6,117	$5,781

(a)Excludes finance lease obligations of $8 million and short-term borrowings of $15 million as of June 30, 2024.

(b)Excludes finance lease obligations of $8 million and short-term borrowings of $4 million as of December 31, 2023.

The fair values of the debt instruments were measured using Level 2 inputs, including discounted cash flows and interest rates then currently available to the Company for instruments of the same remaining maturities.

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12. Stock-Based Compensation

The Company's stock-based compensation includes stock options, restricted stock units ("RSUs") and grants of contingent shares that are earned based on achieving targeted levels of total shareholder return ("TSR"). All current grants of stock options, RSUs and contingent shares are made under the PPG Industries, Inc. Amended and Restated Omnibus Incentive Plan ("PPG Amended Omnibus Plan"), which was amended and restated effective April 21, 2016.


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Stock-based compensation expense	$10	$17	$22	$34
Income tax benefit recognized	$2	$3	$4	$7

Grants of stock-based compensation during the six months ended June 30, 2024 and 2023 were as follows:


Six Months Ended June 30
2024	2023
Shares	Fair Value	Shares	Fair Value
Stock options	426,939	$43.83	410,001	$38.55
Restricted stock units	235,633	$135.49	276,897	$125.49
Contingent shares(a)	51,543	$142.65	52,389	$129.03

(a)The number of contingent shares represents the target value of the award.

Stock options are generally exercisable 36 months after being granted and have a maximum term of 10 years. Compensation expense for stock options is recorded over the vesting period based on the fair value on the date of grant. The fair value of the stock options granted during the six months ended June 30, 2024 was calculated with the following weighted average assumptions:


Weighted average exercise price	$142.65
Risk-free interest rate	4.3	%
Expected life of option in years	6.5
Expected dividend yield	1.7	%
Expected volatility	28.4	%

The risk-free interest rate is determined by using the U.S. Treasury yield curve at the date of the grant and using a maturity equal to the expected life of the option. The expected life of options is calculated using the average of the vesting term and the maximum term, as prescribed by accounting guidance on the use of the simplified method for determining the expected term of an employee share option. The expected dividend yield and volatility are based on historical stock prices and dividend amounts over past time periods equal in length to the expected life of the options.

Time-based RSUs generally vest over the three-year period following the date of grant, unless forfeited, and will be paid out in the form of stock, cash or a combination of both at the Company's discretion at the end of the vesting period. Performance-based RSUs vest based on achieving specific annual performance targets for adjusted earnings per share growth and cash flow return on capital over the three calendar year-end periods following the date of grant. Unless forfeited, the performance-based RSUs will be paid out in the form of stock, cash or a combination of both at the Company's discretion at the end of the three-year performance period if PPG meets the performance targets.

The amount paid upon vesting of performance-based RSUs may range from 0% to 200% of the original grant, based upon the level of adjusted earnings per share growth achieved and frequency with which the annual cash flow return on capital performance target is met over the three calendar year periods comprising the vesting period. Performance against the earnings per share growth and the cash flow return on capital target is calculated annually, and the annual payout for each goal is weighted equally over the three-year period.

The Company also provides grants of contingent shares to selected key executives that may be earned based on PPG's TSR over the three-year period following the date of grant. Contingent share grants (referred to as "TSR awards") are made annually and are paid out at the end of each three-year period based on the Company's stock

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performance. Performance is measured by determining the percentile rank of the total shareholder return of PPG common stock in relation to the TSR of the S&P 500 Index for the three-year period following the date of grant. This comparison group represents the entire S&P 500 Index as it existed at the beginning of the performance period, excluding any companies that were removed from the index because they ceased to be publicly traded. The payment of awards following the three-year award period is based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0% to 200% of the initial grant. A payout of 100% is earned if target performance is achieved. Contingent share awards earn dividend equivalents for the award period, which are paid to participants or credited to the participants' deferred compensation plan accounts with the award payout at the end of the period based on the actual number of contingent shares that are earned. Any payments made at the end of the award period may be in the form of stock, cash or a combination of both. The TSR awards are classified as liability awards, and compensation expense is recognized over the three-year award period based on the fair value of the awards (giving consideration to the Company's percentile rank of TSR) remeasured in each reporting period until settlement of the awards.

13. Commitments and Contingent Liabilities

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. These lawsuits and claims may relate to contract, patent, environmental, product liability, antitrust, employment and other matters arising out of the conduct of PPG's current and past business activities. To the extent that these lawsuits and claims involve personal injury, property damage and certain other claims, PPG believes it has adequate insurance; however, certain of PPG's insurers are contesting coverage with respect to some of these claims, and certain insurers may contest coverage with respect to claims in the future. PPG's lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental, asbestos and other matters.

The results of any current or future litigation and claims are inherently unpredictable. However, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG will not have a material effect on PPG's consolidated financial position or liquidity; however, such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

Asbestos Matters

As of June 30, 2024, the Company was aware of certain asbestos-related claims pending against the Company and certain of its subsidiaries. The Company is defending these asbestos-related claims vigorously. The asbestos-related claims consist of claims against the Company alleging:

•exposure to asbestos or asbestos-containing products manufactured, sold or distributed by the Company or its subsidiaries ("Products Claims");

•personal injury caused by asbestos on premises presently or formerly owned, leased or occupied by the Company ("Premises Claims"); and

•asbestos-related claims against a subsidiary the Company acquired in 2013 ("Subsidiary Claims").

The Company monitors and reviews the activity associated with its asbestos claims and evaluates, on a periodic basis, its estimated liability for such claims and all underlying assumptions to determine whether any adjustment to the reserves for these claims is required. Additionally, as a supplement to its periodic monitoring and review, the Company conducts discussions with counsel and engages valuation consultants to analyze its claims history and estimate the amount of the Company's potential liability for asbestos-related claims. As of June 30, 2024 and December 31, 2023, the Company's asbestos-related reserves totaled $46 million and $48 million, respectively.

The Company believes that, based on presently available information, the total reserves of $46 million for asbestos-related claims will be sufficient to encompass all of the Company's current and estimable potential future asbestos liabilities. These reserves, which are included within Other liabilities on the accompanying consolidated balance sheets, involve significant management judgment and represent the Company's current best estimate of its liability for these claims.

The amount reserved for asbestos-related claims by its nature is subject to many uncertainties that may change over time, including (i) the ultimate number of claims filed; (ii) whether closed, dismissed or dormant claims are reinstituted, reinstated or revived; (iii) the amounts required to resolve both currently known and future unknown claims; (iv) the amount of insurance, if any, available to cover such claims; (v) the unpredictable aspects of the tort system, including a changing trial docket and the jurisdictions in which trials are scheduled; (vi) the outcome of any trials, including potential judgments or jury verdicts; (vii) the lack of specific information in many cases concerning

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exposure for which the Company is allegedly responsible, and the claimants' alleged diseases resulting from such exposure; and (viii) potential changes in applicable federal and/or state tort liability law. All of these factors may have a material effect upon future asbestos-related liability estimates. While the ultimate outcome of the Company's asbestos litigation cannot be predicted with certainty, the Company believes that any financial exposure resulting from its asbestos-related claims will not have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations.

Environmental Matters

In management's opinion, the Company operates in an environmentally sound manner and the outcome of the Company's environmental contingencies will not have a material effect on PPG's financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Management anticipates that the resolution of the Company's environmental contingencies will occur over an extended period of time.

As remediation at certain environmental sites progresses, PPG continues to refine its assumptions underlying the estimates of the expected future costs of its remediation programs. PPG's ongoing evaluation may result in additional charges against income to adjust the reserves for these sites. In 2024 and 2023, certain charges have been recorded based on updated estimates to increase existing reserves for these sites. Certain other charges related to environmental remediation actions are expensed as incurred.

As of June 30, 2024 and December 31, 2023, PPG had reserves for environmental contingencies associated with PPG's former chromium manufacturing plant in Jersey City, New Jersey ("New Jersey Chrome"), glass and chemical manufacturing sites, and for other environmental contingencies, including current manufacturing locations and National Priority List sites. These reserves are reported as Accounts payable and accrued liabilities and Other liabilities in the accompanying condensed consolidated balance sheet.


Environmental Reserves
($ in millions)	June 30, 2024	December 31, 2023
New Jersey Chrome	$63	$53
Glass and chemical	56	54
Other	117	120
Total environmental reserves	$236	$227
Current portion	$47	$52

Pretax charges against income for environmental remediation costs are included in Other charges/(income), net in the accompanying condensed consolidated statement of income. The pretax charges and cash outlays related to such environmental remediation for the three and six months ended June 30, 2024 and 2023 were as follows:


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Environmental remediation pretax charges	$21	$10	$24	$13
Cash outlays for environmental remediation activities	$5	$7	$13	$16

In the second quarter 2024, the Company recognized pretax environmental remediation charges of $20 million related to certain legacy PPG manufacturing sites. These legacy environmental remediation charges primarily relate to an increase in the expected cost of groundwater remediation and monitoring at the New Jersey Chrome site and a remedial action design change for the solid waste disposal area at the Ford City, Pennsylvania site.

Remediation: New Jersey Chrome

In June 2009, PPG entered into a settlement agreement with the New Jersey Department of Environmental Protection ("NJDEP") and Jersey City, New Jersey (which had asserted claims against PPG for lost tax revenue) which was in the form of a Partial Consent Judgment (the "Consent"). Under the Consent, PPG accepted sole responsibility for the remediation activities at its former chromium manufacturing location in Jersey City and a number of additional surrounding sites. Remediation of the New Jersey Chrome sites requires PPG to remediate soil and groundwater contaminated by hexavalent chromium, as well as perform certain other environmental remediation activities. The most significant assumptions underlying the estimate of remediation costs for all New Jersey Chrome sites relate to the extent and concentration of chromium in the soil.

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PPG regularly evaluates the assessments of costs incurred to date versus current progress and the potential cost impacts of the most recent information, including the extent of impacted soils and groundwater, and engineering, administrative and other associated costs. Based on these assessments, the reserve is adjusted accordingly. As of June 30, 2024 and December 31, 2023, PPG's reserve for remediation of all New Jersey Chrome sites was $63 million and $53 million, respectively. The major cost components of this liability are related to excavation of impacted soil as well as groundwater remediation. These components each account for approximately 55% and 25% of the amount accrued at June 30, 2024, respectively.

There are multiple, future events yet to occur, including further remedy selection and design, remedy implementation and execution and applicable governmental agency or community organization approvals. Considerable uncertainty exists regarding the timing of these future events for the New Jersey Chrome sites. Further resolution of these events is expected to occur over the next several years. As these events occur and to the extent that the cost estimates of the environmental remediation remedies change, the existing reserve for this environmental remediation matter will continue to be adjusted.

Remediation: Glass, Chemicals and Other Sites

Among other sites at which PPG is managing environmental liabilities, remedial actions are occurring at a chemical manufacturing site in Barberton, Ohio where PPG has completed a Facility Investigation and Corrective Measure Study under the United States Environmental Protection Agency's Resource Conservation and Recovery Act Corrective Action Program. PPG has also been addressing the impacts from a legacy plate glass manufacturing site in Kokomo, Indiana under the Voluntary Remediation Program of the Indiana Department of Environmental Management and a site associated with a legacy plate glass manufacturing site near Ford City, Pennsylvania under the Pennsylvania Land Recycling Program under the oversight of the Pennsylvania Department of Environmental Protection. PPG is currently performing additional investigation and remedial activities at these locations.

With respect to certain other waste sites, the financial condition of other potentially responsible parties also contributes to the uncertainty of estimating PPG's final costs. Although contributors of waste to sites involving other potentially responsible parties may face governmental agency assertions of joint and several liability, in general, final allocations of costs are made based on the relative contributions of wastes to such sites. PPG is generally not a major contributor to such sites.

Remediation: Reasonably Possible Matters

In addition to the amounts currently reserved for environmental remediation, the Company may be subject to loss contingencies related to environmental matters estimated to be as much as $100 million to $200 million. Such unreserved losses are reasonably possible but are not currently considered to be probable of occurrence. These reasonably possible unreserved losses relate to environmental matters at a number of sites, none of which are individually significant. The loss contingencies related to these sites include significant unresolved issues such as the nature and extent of contamination at these sites and the methods that may have to be employed to remediate them.

The impact of evolving programs, such as natural resource damage claims, industrial site re-use initiatives and domestic and international remediation programs, also adds to the present uncertainties with regard to the ultimate resolution of this unreserved exposure to future loss. The Company's assessment of the potential impact of these environmental contingencies is subject to considerable uncertainty due to the complex, ongoing and evolving process of investigation and remediation, if necessary, of such environmental contingencies, and the potential for technological and regulatory developments.

14. Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company's sales. For most transactions, control passes in accordance with agreed upon delivery terms.

The Company delivers products to company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires and independent distributors, company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third-party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. Accounts receivable are recognized when there is an unconditional right to consideration. Payment terms vary from customer to customer, depending on creditworthiness, prior payment history and other considerations.

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The Company also provides services by applying coatings to customers' manufactured parts and assembled products and by providing technical support to certain customers. Performance obligations are satisfied over time as critical milestones are met and as services are provided. PPG is entitled to payment as the services are rendered. For the three and six months ended June 30, 2024 and 2023, service revenue constituted less than 5% of total revenue.

Net sales by segment and region for the three and six months ended June 30, 2024 and 2023 were as follows:


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Performance Coatings
United States and Canada	$1,405	$1,397	$2,526	$2,520
Europe, Middle East and Africa ("EMEA")	981	990	1,865	1,890
Asia Pacific	289	291	530	547
Latin America	373	363	741	712
Total	$3,048	$3,041	$5,662	$5,669
Industrial Coatings
United States and Canada	$634	$662	$1,255	$1,315
EMEA	473	530	948	1,058
Asia Pacific	445	445	860	836
Latin America	194	194	380	374
Total	$1,746	$1,831	$3,443	$3,583
Total Net Sales
United States and Canada	$2,039	$2,059	$3,781	$3,835
EMEA	1,454	1,520	2,813	2,948
Asia Pacific	734	736	1,390	1,383
Latin America	567	557	1,121	1,086
Total PPG	$4,794	$4,872	$9,105	$9,252

Allowance for Doubtful Accounts

All trade receivables are reported on the condensed consolidated balance sheet at the outstanding principal amount adjusted for any allowance for doubtful accounts and any charge-offs. PPG provides an allowance for doubtful accounts to reduce trade receivables to their estimated net realizable value equal to the amount that is expected to be collected. This allowance is estimated based on historical collection experience, current regional economic and market conditions, the aging of accounts receivable, assessments of current creditworthiness of customers and forward-looking information. The use of forward-looking information is based on certain macroeconomic and microeconomic indicators, including, but not limited to, regional business environment risk, political risk, and commercial and financing risks.

PPG reviews its allowance for doubtful accounts on a quarterly basis to ensure the estimate reflects regional risk trends as well as current and future global operating conditions.

The following table summarizes the activity for the allowance for doubtful accounts for the six months ended June 30, 2024 and 2023:


Trade Receivables Allowance for Doubtful Accounts
($ in millions)	2024	2023
January 1	$25	$31
Bad debt expense	5	6
Write-offs and recoveries of previously reserved trade receivables	(4)	(7)
Other	-	(2)
June 30	$26	$28

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15. Reportable Business Segment Information

PPG is a multinational manufacturer with 10 operating segments (which the Company refers to as "strategic business units") that are organized based on the Company's major products lines. The Company's reportable business segments include the following two segments: Performance Coatings and Industrial Coatings. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution.

The Performance Coatings reportable business segment is comprised of the automotive refinish coatings, aerospace coatings, architectural coatings - Americas and Asia Pacific, architectural coatings - EMEA, protective and marine coatings and traffic solutions operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings, adhesives, sealants and finishes, along with paint strippers, stains and related chemicals, pavement marking products, transparencies and transparent armor and paint films.

The Industrial Coatings reportable business segment is comprised of the automotive original equipment manufacturer ("OEM") coatings, industrial coatings, packaging coatings and specialty coatings and materials operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, metal pretreatment products, optical monomers and coatings, low-friction coatings, paint films, precipitated silicas and other specialty materials.

Reportable business segment net sales and segment income for the three and six months ended June 30, 2024 and 2023 were as follows:


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Net sales:
Performance Coatings	$3,048	$3,041	$5,662	$5,669
Industrial Coatings	1,746	1,831	3,443	3,583
Total	$4,794	$4,872	$9,105	$9,252
Segment income:
Performance Coatings	$570	$537	$972	$932
Industrial Coatings	259	250	508	490
Total	$829	$787	$1,480	$1,422
Corporate unallocated	(69)	(85)	(152)	(152)
Interest expense, net of interest income	(17)	(35)	(30)	(69)
Business restructuring-related costs, net (a)	(4)	(14)	(15)	(14)
Portfolio optimization (b)	(26)	(7)	(32)	(7)
Legacy environmental remediation charges(c)	(20)	-	(20)	-
Pension settlement charge (d)	-	-	-	(190)
Insurance recovery (e)	-	-	-	9
Income before income taxes	$693	$646	$1,231	$999

(a)Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other charges/(income), net on the condensed consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the condensed consolidated statement of income and other restructuring-related costs, which are included in Cost of sales, exclusive of depreciation and amortization and Selling, general and administrative on the condensed consolidated statement of income.

(b)Portfolio optimization includes losses on the sale of non-core assets, including the loss recognized on the sale of the Company's traffic solutions business in Argentina which was completed during the second quarter 2024, which is included in Other charges/(income), net in the condensed consolidated statement of income. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income.

(c)Legacy environmental remediation charges represent environmental remediation costs at certain non-operating PPG manufacturing sites. These charges are included in Other charges/(income), net in the condensed consolidated statement of income.

(d)In the first quarter 2023, PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the Company's retirees in the U.S. to third-party insurance companies, resulting in a non-cash pension settlement charge.

(e)In the first quarter 2023, the Company received reimbursement under its insurance policies for damages incurred at a southern U.S. factory from a winter storm in 2020.

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16. Supplier Finance Programs

PPG has certain voluntary supply chain finance programs with financial intermediaries which provide participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. PPG's responsibility is limited to making payments on the terms originally negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. The range of payment terms PPG negotiates with suppliers are consistent, regardless of whether a supplier participates in a supply chain finance program. These amounts are included within Accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheet.

The rollforward of outstanding obligations confirmed as valid under the supplier finance programs for the six months ended June 30, 2024 is as follows:


($ in millions)	2024
January 1	$301
Invoices confirmed	320
Confirmed invoices paid	(362)
Currency impact	(8)
June 30	$251

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes thereto included in the condensed consolidated financial statements in Part I, Item 1, "Financial Statements," of this report and in conjunction with the 2023 Form 10-K.

Highlights

Net sales were approximately $4.8 billion for the three months ended June 30, 2024, a decrease of 1.6% compared to the prior year, primarily due to the unfavorable impact of foreign currency translation and the divestitures of the non-North American portion of the traffic solutions business.

Income before income taxes was $693 million for the three months ended June 30, 2024, an increase of $47 million compared to the prior year. This increase was primarily due to the impact of moderating raw material costs partially offset by wage inflation.

Results of Operations


Three Months Ended June 30	Percent Change	Six Months Ended June 30	Percent Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024	2023	2024 vs. 2023
Net sales	$4,794	$4,872	(1.6)	%	$9,105	$9,252	(1.6)	%
Cost of sales, exclusive of depreciation and amortization	$2,734	$2,866	(4.6)	%	$5,179	$5,462	(5.2)	%
Selling, general and administrative	$1,077	$1,069	0.7	%	$2,141	$2,061	3.9	%
Depreciation	$98	$93	5.4	%	$201	$185	8.6	%
Amortization	$36	$40	(10.0)	%	$74	$81	(8.6)	%
Research and development, net	$111	$110	0.9	%	$220	$214	2.8	%
Interest expense	$62	$67	(7.5)	%	$117	$126	(7.1)	%
Interest income	($45)	($32)	40.6	%	($87)	($57)	52.6	%
Pension settlement charge	$-	$-	-	%	$-	$190	(100.0)	%
Other charges/(income), net	$28	$13	115.4	%	$29	($9)	(422.2)	%

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Net Sales by Region


Three Months Ended June 30	Percent Change	Six Months Ended June 30	Percent Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024	2023	2024 vs. 2023
United States and Canada	$2,039	$2,059	(1.0)	%	$3,781	$3,835	(1.4)	%
EMEA	1,454	1,520	(4.3)	%	2,813	2,948	(4.6)	%
Asia Pacific	734	736	(0.3)	%	1,390	1,383	0.5	%
Latin America	567	557	1.8	%	1,121	1,086	3.2	%
Total	$4,794	$4,872	(1.6)	%	$9,105	$9,252	(1.6)	%

Three Months Ended June 30, 2024

Net sales decreased $78 million due to the following:

● Unfavorable foreign currency translation (-1%)

● Divestiture-related sales (-1%)

For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.

Cost of sales, exclusive of depreciation and amortization, decreased $132 million primarily due to moderating raw material costs.

Selling, general and administrative expense increased $8 million primarily due to wage inflation and growth-related investments.

Interest expense decreased $5 million primarily due to lower debt balances. Interest income increased $13 million primarily due to higher interest rates.

Other charges/(income), net increased by $15 million primarily due to higher environmental remediation charges and a non-cash loss on the sale of the traffic solutions business in Argentina, partially offset by an increase in realized foreign currency gains.

Six Months Ended June 30, 2024

Net sales decreased $147 million due to the following:

● Lower sales volumes (-1%)

● Divestiture-related sales (-1%)

For specific business results, see the Performance of Reportable Business Segments section within Item 2 of this Form 10-Q.

Cost of sales, exclusive of depreciation and amortization, decreased $283 million primarily due to moderating raw material costs.

Selling, general and administrative expense increased $80 million primarily due to wage inflation and growth-related investments.

Depreciation expense increased $16 million primarily due to higher accelerated depreciation related to previously approved restructuring actions.

Interest expense decreased $9 million primarily due to lower debt balances. Interest income increased $30 million primarily due to higher interest rates.

A pension settlement charge of $190 million was recorded in the first quarter 2023 associated with the Company's purchase of group annuity contracts that transferred pension benefit obligations for certain of the Company's retirees in the U.S. to third-party insurance companies. Refer to Note 9, "Pensions and Other Postretirement Benefits" in Part I, Item 1 of this Form 10-Q for additional information.

Other charges/(income), net increased by $38 million primarily due to higher environmental remediation charges, a non-cash loss on the sale of the Argentina portion of the traffic solutions business and the absence of a first quarter 2023 insurance recovery related to hurricane damage at a southern US. factory, partially offset by an increase in realized foreign currency gains.

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Effective Tax Rate and Earnings Per Diluted Share


Three Months Ended June 30	Percent Change	Six Months Ended June 30	Percent Change
($ in millions, except percentages and amounts per share)	2024	2023	2024 vs. 2023	2024	2023	2024 vs. 2023
Income tax expense	$156	$149	4.7	%	$285	$229	24.5	%
Effective tax rate	22.5	%	23.1	%	(0.6)	%	23.2	%	22.9	%	0.3	%
Adjusted effective tax rate, continuing operations*	23.1	%	23.2	%	(0.1)	%	23.5	%	23.2	%	0.3	%

Earnings per diluted share, continuing operations	$2.24	$2.06	8.7	%	$3.93	$3.18	23.6	%
Adjusted earnings per diluted share*	$2.50	$2.25	11.1	%	$4.36	$4.08	6.9	%
*See Regulation G Reconciliation below

Adjusted earnings per diluted share for both the three and six months ended June 30, 2024 increased year-over-year primarily due to moderating raw material costs, partially offset by wage inflation.

Regulation G Reconciliations - Results from Operations

PPG believes investors' understanding of the Company's performance is enhanced by the disclosure of net income from continuing operations, earnings per diluted share from continuing operations, PPG's effective tax rate and segment income adjusted for certain items. PPG's management considers this information useful in providing insight into the Company's ongoing performance because it excludes the impact of items that cannot reasonably be expected to recur on a quarterly basis or that are not attributable to our primary operations. Net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate and segment income adjusted for these items are not recognized financial measures determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and should not be considered a substitute for net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate, segment income or other financial measures as computed in accordance with U.S. GAAP. In addition, adjusted net income, adjusted earnings per diluted share and the adjusted effective tax rate may not be comparable to similarly titled measures as reported by other companies.

Income before income taxes from continuing operations is reconciled to adjusted income before income taxes from continuing operations, the effective tax rate from continuing operations is reconciled to the adjusted effective tax rate from continuing operations and net income from continuing operations (attributable to PPG) and earnings per share - assuming dilution (attributable to PPG) are reconciled to adjusted net income from continuing operations (attributable to PPG) and adjusted earnings per share - assuming dilution below.


Three Months Ended June 30, 2024
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate	Net Income (attributable to PPG)	Earnings Per Diluted Share(a)
As reported, continuing operations	$693	$156	22.5	%	$528	$2.24
Adjusted for:
Acquisition-related amortization expense	36	9	24.6	%	27	0.11
Business restructuring-related costs, net(b)	4	2	46.0	%	2	0.01
Portfolio optimization(c)	26	8	31.3	%	18	0.08
Legacy environmental remediation charges(d)	20	5	24.3	%	15	0.06
Adjusted, continuing operations, excluding certain items	$779	$180	23.1	%	$590	$2.50

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Three Months Ended June 30, 2023
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate	Net Income (attributable to PPG)	Earnings Per Diluted Share(a)
As reported, continuing operations	$646	$149	23.1	%	$490	$2.06
Adjusted for:
Acquisition-related amortization expense	40	10	24.6	%	30	0.13
Business restructuring-related costs, net(b)	14	3	24.0	%	11	0.05
Portfolio optimization(c)	7	2	24.3	%	3	0.01
Adjusted, continuing operations, excluding certain items	$707	$164	23.2	%	$534	$2.25


Six Months Ended June 30, 2024
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate	Net Income (attributable to PPG)	Earnings per Diluted share(a)
As reported, continuing operations	$1,231	$285	23.2	%	$928	$3.93
Adjusted for:
Acquisition-related amortization expense	74	18	24.6	%	56	0.23
Business restructuring-related costs, net(b)	15	5	31.5	%	10	0.04
Portfolio optimization(c)	32	10	31.3	%	22	0.10
Legacy environmental remediation charges(d)	20	5	24.3	%	15	0.06
Adjusted, continuing operations, excluding certain items	$1,372	$323	23.5	%	$1,031	$4.36


Six Months Ended June 30, 2023
($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Tax Expense	Effective Tax Rate	Net Income (attributable to PPG)	Earnings per Diluted share(a)
As reported, continuing operations	$999	$229	22.9	%	$754	$3.18
Adjusted for:
Pension settlement charge (e)	190	46	24.3	%	144	0.61
Acquisition-related amortization expense	81	20	24.6	%	61	0.26
Business restructuring-related costs, net(b)	14	3	24.0	%	11	0.05
Portfolio optimization(c)	7	2	24.3	%	3	0.01
Insurance recovery of expenses incurred due to a natural disaster (f)	(9)	(2)	24.3	%	(7)	(0.03)
Adjusted, continuing operations, excluding certain items	$1,282	$298	23.2	%	$966	$4.08

(a)Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.

(b)Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other charges/(income), net on the condensed consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the condensed consolidated statement of income, and other restructuring-related costs, which are included in Cost of sales, exclusive of depreciation and amortization and Selling, general and administrative on the condensed consolidated statement of income.

(c)Portfolio optimization includes losses on the sale of non-core assets, including the loss recognized on the sale of the Company's traffic solutions business in Argentina which was completed during the second quarter 2024, which is included in Other charges/(income), net in the condensed consolidated statement of income. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income. In 2023, net loss of $2 million was attributable to noncontrolling interests.

(d)Legacy environmental remediation charges represent environmental remediation costs at certain non-operating PPG manufacturing sites. These charges are included in Other charges/(income), net in the condensed consolidated statement of income.

(e)In the first quarter 2023, PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the Company's retirees in the U.S. to third-party insurance companies, resulting in a non-cash pension settlement charge.

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(f)In the first quarter 2023, the Company received reimbursement under its insurance policies for damages incurred at a southern U.S. factory from a winter storm in 2020.

Performance of Reportable Business Segments

Performance Coatings


Three Months Ended June 30	$ Change	% Change	Six Months Ended June 30	$ Change	% Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024 vs. 2023	2024	2023	2024 vs. 2023	2024 vs. 2023
Net sales	$3,048	$3,041	$7	0.2	%	$5,662	$5,669	($7)	(0.1)	%
Segment income	$570	$537	$33	6.1	%	$972	$932	$40	4.3	%
Amortization expense	$25	$28	($3)	(10.7)	%	$52	$58	($6)	(10.3)	%
Segment income, excluding amortization expense	$595	$565	$30	5.3	%	$1,024	$990	$34	3.4	%

Three Months Ended June 30, 2024

Performance Coatings net sales were flat due to the following:

● Higher selling prices (+2%)

Offset by:

● Unfavorable foreign currency translation (-1%)

● Divestiture-related sales (-1%)

Architectural coatings - Americas and Asia Pacific net sales, excluding the impact of currency, acquisitions and divestitures ("organic sales") increased by a low single-digit percentage compared to the prior-year second quarter driven by increased sales volumes in the U.S. and Latin America and higher prices. In Mexico, the business benefited from sales through our strong concessionaire network.

Architectural coatings - EMEA organic sales decreased by a low single-digit percentage year over year driven by lower sales volumes. Consumer confidence remained weak during the quarter, and regional demand was uneven by country, with strong sales volumes in central and eastern Europe offset by lower sales volumes in other parts of Europe.

Automotive refinish coatings organic sales decreased a mid-single-digit percentage compared to the prior year as higher prices were more than offset by lower sales volumes. In the U.S., sales volumes declined compared to record prior year results due to moderating body shop activity. In Europe, demand was comparable to the same quarter last year, and organic sales declined slightly in Latin America. In China, organic sales increased slightly as demand continues to recover.

Aerospace coatings organic sales increased by a double-digit percentage compared to the second quarter 2023, driven by higher price and sales volumes. Demand remained strong as customer order backlogs increased.

Protective and marine coatings organic sales were flat compared with the prior-year second quarter due to higher sales volumes in Europe and the Asia Pacific region offset by lower sales volumes in other regions.

Traffic solutions organic sales increased by a low-single-digit percentage compared with the prior-year second quarter due to increased sales volumes stemming from share gains. Seasonally, second quarter and third quarter sales in the traffic solutions business are typically more than 50% higher than the first quarter and fourth quarter due to the difficulty of applying traffic markings in colder temperatures.

Segment income was $570 million, an increase of 6% versus the prior year, primarily due to higher selling prices and moderating raw material costs, partially offset by higher growth-related spending and wage inflation.

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Six Months Ended June 30, 2024

Performance Coatings net sales were flat due to the following:

● Higher selling prices (+2%)

Partially offset by:

● Lower sales volumes (-2%)

Architectural coatings - Americas and Asia Pacific organic sales decreased by a low single-digit percentage driven by lower sales volumes. In Mexico, PPG Comex architectural coatings organic sales increased compared to the prior year driven by selling price increases and continued strong demand in the concessionaire network.

Architectural coatings - EMEA organic sales decreased by a low single-digit percentage year over year driven by lower sales volumes. Regional demand was uneven by country, with strong sales volumes in central and eastern Europe offset by lower sales volumes in other parts of Europe.

Automotive refinish coatings organic sales decreased by a low single-digit percentage year over year as lower sales volumes in most regions more than offset selling price increases.

Aerospace coatings sales volumes increased by a high single-digit percentage as demand was strong in most regions. Sales also increased due to the benefit of higher selling prices.

Protective and marine coatings organic sales increased by a low single-digit percentage primarily due to strong demand in Europe and the Asia Pacific region.

Traffic solutions organic sales were flat as higher sales volumes in the U.S. were offset by lower selling prices.

Segment income increased $40 million year over year primarily due to higher selling prices and moderating raw material costs, which more than offset lower sales volumes and higher growth-related spending.

Looking Ahead

In the third quarter, we expect demand in Mexico to remain robust and consumer sentiment in Europe to be tepid. We anticipate continued strong demand in aerospace coatings and a benefit of summer seasonal sales in traffic solutions. Automotive refinish coatings sales are expected to benefit from incremental price increases and improved sales volume. Aggregate organic sales are anticipated to increase by a mid-single-digit percentage compared to the third quarter 2023.

Industrial Coatings


Three Months Ended June 30	$ Change	% Change	Six Months Ended June 30	$ Change	% Change
($ in millions, except percentages)	2024	2023	2024 vs. 2023	2024 vs. 2023	2024	2023	2024 vs. 2023	2024 vs. 2023
Net sales	$1,746	$1,831	($85)	(4.6)	%	$3,443	$3,583	($140)	(3.9)	%
Segment income	$259	$250	$9	3.6	%	$508	$490	$18	3.7	%
Amortization expense	$11	$12	($1)	(8.3)	%	$20	$23	($3)	(13.0)	%
Segment income, excluding amortization expense	$270	$262	$8	3.1	%	$528	$513	$15	2.9	%

Three Months Ended June 30, 2024

Industrial Coatings segment net sales decreased due to the following:

● Lower selling prices (-3%)

● Unfavorable foreign currency translation (-1%)

● Other (-1%)

Automotive OEM coatings organic sales decreased by a high single-digit percentage year over year driven by lower sales volumes and lower index-based selling prices for certain customer contracts. Sales volume increases in the Asia Pacific and Latin America regions were more than offset by declines in the U.S. and Europe. In Western Europe, automotive industry build rates were lower than prior year in the second quarter. In China, automotive retail sales activity continued to be solid, along with exports, which have grown compared to last year.

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In the industrial coatings business, organic sales decreased by a low single-digit percentage compared to the prior year due to lower sales volumes and lower indexed-based prices. Overall, global industrial production remained sluggish resulting in lower sales volumes in all regions except Asia Pacific, where volumes increased by a mid-single-digit percentage.

Packaging coatings organic sales increased a mid-single-digit percentage compared to the prior year with higher sales volumes partially offset by lower, index-driven prices.

Specialty coatings and materials organic sales increased by a high single-digit percentage due to higher sales volumes partially offset by the absence of European energy-related surcharge pricing in the prior year period.

Segment income increased $9 million year over year primarily due to moderating input costs, partially offset by lower prices due to certain index-based customer contracts and wage cost inflation.

Six Months Ended June 30, 2024

Industrial Coatings segment net sales decreased due to the following:

● Lower selling price (-3%)

● Unfavorable foreign currency translation (-1%)

Automotive OEM coatings organic sales decreased by a mid-single-digit percentage year over year driven by lower sales volumes and lower index-based selling prices for certain customer contracts. Sales volume increases in the Asia Pacific and Latin America regions were more than offset by declines in the U.S. and Europe.

In the industrial coatings business, organic sales decreased by a mid-single-digit percentage year over year driven by lower sales volumes and indexed-based prices. Softening global industrial demand resulted in lower sales volumes in all regions except Asia Pacific where sales volumes increased by a high single-digit percentage.

Packaging coatings organic sales increased by a low single-digit percentage year over year as higher sales volumes were partially offset by lower selling prices in all regions.

Specialty coatings and materials organic sales increased by a high single-digit percentage primarily due to higher sales volumes, partially offset by the absence of European energy-related surcharge pricing in the prior year period.

Segment income increased $18 million year over year primarily due to moderating input costs which more than offset certain index-based selling price declines.

Looking Ahead

In the third quarter, global industrial production is expected to remain at a low level with improvement in the Asia Pacific and Latin America regions offset by sluggishness in Europe and the U.S. Automotive industry build rates are expected to decline in the third quarter with growth in Latin America more than offset by declining builds in all other regions. Additionally, packaging coatings is expected to have positive sales volume growth in all regions compared to the prior-year quarter. Aggregate organic sales are anticipated to decline a low single digit percentage compared to the third quarter 2023.

Liquidity and Capital Resources

PPG had cash and short-term investments totaling $1.2 billion and $1.6 billion at June 30, 2024 and December 31, 2023, respectively.

The Company continues to believe that cash on hand and short-term investments, cash from operations and the Company's access to capital markets will be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans and contractual obligations.

Cash from operating activities

Cash from operating activities for the six months ended June 30, 2024 and 2023 was $305 million and $621 million, respectively. The $316 million decrease in cash from operating activities was primarily due to unfavorable changes in working capital in the second quarter 2024 compared to the prior year.

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Operating Working Capital

Operating working capital is a subset of total working capital and represents (1) trade receivables - net of the allowance for doubtful accounts (2) FIFO inventories and (3) trade liabilities. We believe operating working capital represents the key components of working capital under the operating control of our businesses. A key metric we use to measure our working capital management is operating working capital as a percentage of sales (current quarter sales annualized).


($ in millions, except percentages)	June 30, 2024	December 31, 2023	June 30, 2023
Trade receivables, net	$3,418	$2,881	$3,426
Inventories, FIFO	2,546	2,376	2,776
Trade creditors' liabilities	2,700	2,612	2,717
Operating working capital	$3,264	$2,645	$3,485
Operating working capital as a % of sales	17.0	%	15.2	%	17.9	%
Days sales outstanding	59	55	57

Environmental


Three Months Ended June 30	Six Months Ended June 30
($ in millions)	2024	2023	2024	2023
Cash outlays for environmental remediation activities	$5	$7	$13	$16


($ in millions)	Remainder of 2024	Annually 2025 - 2028
Projected future cash outlays for environmental remediation activities	$30 - $50	$20 - $75

Cash used for investing activities

Cash used for investing activities for the six months ended June 30, 2024 and 2023 was $370 million and $290 million, respectively. The $80 million increase in cash used for investing activities was primarily due to higher capital expenditures compared to the prior year.

Total capital spending is expected to be approximately $600 million to $650 million in 2024 in support of future organic growth opportunities.

Cash used for financing activities

Cash used for financing activities for the six months ended June 30, 2024 and 2023 was $185 million and $266 million, respectively. The $81 million decrease in cash used for financing activities was primarily due to higher net debt proceeds, partially offset by higher share repurchases compared to the prior year.

Credit Agreements

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Company's ability to create liens or other encumbrances, to enter into sale and leaseback transactions and to enter into consolidations, mergers or transfers of all or substantially all of its assets. The Term Loan Credit Agreement was scheduled to mature and all outstanding borrowings were to be due and payable on the third anniversary of the date of the initial borrowing under the Agreement. In June 2021, PPG borrowed $700 million under Term Loan Credit Agreement to finance the Company's acquisition of Tikkurila, and to pay fees, costs and expenses related thereto. In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement. In 2022 and 2023, PPG repaid $300 million and $1.1 billion, respectively, of the Term Loan Credit Agreement using cash on hand. The Term Loan Credit Agreement was fully repaid as of December 31, 2023.

In March 2023, PPG amended its five-year credit agreement (the "Credit Agreement") dated as of August 30, 2019. The amendments to the Credit Agreement replace the LIBOR-based reference interest rate option with a reference interest rate option based upon Term SOFR. The other terms of the Credit Agreement remained unchanged. In July 2023, PPG amended and restated the Credit Agreement, extending the term through July 27, 2028. The amended and restated Credit Agreement provides for a $2.3 billion unsecured revolving credit facility. The Company has the ability to increase the size of the Credit Agreement by up to an additional $750 million, subject to the receipt of lender commitments and other conditions precedent. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. There were $171 million commercial paper borrowings outstanding as of June 30, 2024 and no commercial paper borrowings outstanding as of December 31, 2023.

The Term Loan and the Credit Agreement require the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan and the Credit Agreement, of 60% or less; provided, that for any fiscal quarter in which the Company has made an acquisition for consideration in excess of $1 billion and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65% at any time. As of June 30, 2024, Total Indebtedness to Total Capitalization as defined under the Credit Agreement was 44%.

The Credit Agreement also supports the Company's commercial paper borrowings which are classified as long-term based on PPG's intent and ability to refinance these borrowings on a long-term basis. There were no commercial paper borrowings outstanding as of June 30, 2024 and December 31, 2023.

Other Debt Issued and Repaid

In March 2023, PPG's $300 million 3.2% notes matured, and the Company repaid this obligation using cash on hand.

Other Liquidity Information

Restructuring

Aggregate restructuring savings were approximately $10 million in the second quarter 2024. Total restructuring savings are expected to be at least $35 million in 2024. In addition, the Company continues to review its cost structure to identify additional cost savings opportunities. Refer to Note 5, "Business Restructuring" in Part I, Item 1 of this Form 10-Q for further details on the Company's business restructuring programs. We expect cash outlays related to these actions of approximately $60 million in 2024.

Strategic Reviews

During the first quarter 2024, PPG announced that it would review strategic alternatives for its architectural coatings U.S. and Canada business and its global silicas products business. Through these strategic reviews, PPG will assess whether some or all of these businesses are better suited to grow faster with a partner or different owner, or may be better suited to operate as a core business within another company, as a standalone entity, or in a joint venture. PPG is executing on the strategic reviews and will communicate the path forward once determined.

Currency

Comparing spot exchange rates at June 30, 2024 and at December 31, 2023, the U.S. dollar strengthened against the currencies of many countries within the regions PPG operates, most notably the Mexican peso. As a result, consolidated net assets at June 30, 2024 decreased by $444 million compared to December 31, 2023.

Comparing average exchange rates during the first six months of 2024 to those of the first six months of 2023, the U.S. dollar weakened against the currencies of certain countries where PPG operates, including the Mexican peso, partially offset by strengthening against the Chinese yuan. This had a favorable impact on Income before income taxes for the six months ended June 30, 2024 of $6 million from the translation of these foreign earnings into U.S. dollars.

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New Accounting Standards

Refer to Note 2, "New Accounting Standards" in Part I, Item 1 of this Form 10-Q for further details on recently issued accounting guidance.

Commitments and Contingent Liabilities, including Environmental Matters

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. See Part II, Item 1, "Legal Proceedings" of this Form 10-Q and Note 13, "Commitments and Contingent Liabilities" in Part I, Item 1 of this Form 10-Q for a description of certain of these lawsuits.

As discussed in Part II, Item 1 and Note 13, although the result of any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG, including asbestos-related claims, will not have a material effect on PPG's consolidated financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

As also discussed in Note 13, PPG has significant reserves for environmental contingencies. Refer to the Environmental Matters section of Note 13 for details of these reserves. It is PPG's policy to accrue expenses for contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are generally not discounted. In management's opinion, the Company operates in an environmentally sound manner and the outcome of the Company's environmental contingencies will not have a material effect on PPG's financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Management anticipates that the resolution of the Company's environmental contingencies will occur over an extended period of time.

Critical Accounting Estimates

Management has evaluated the accounting policies used in the preparation of the financial statements and related notes presented in this Form 10-Q and believes those policies to be reasonable and appropriate. We believe that the most critical accounting estimates made in the preparation of our financial statements are those related to accounting for contingencies, under which we accrue a loss when it is probable that a liability has been incurred and the amount can be reasonably estimated, and to accounting for pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives because of the importance of management judgment in making the estimates necessary to apply these policies.

For a comprehensive discussion of the Company's critical accounting estimates, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2023 Form 10-K. There were no material changes in the Company's critical accounting estimates from the 2023 Form 10-K.

Forward-Looking Statements

Management's Discussion and Analysis and other sections of this Quarterly Report contain forward-looking statements that reflect the Company's current views with respect to future events and financial performance. You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words "aim," "believe," "expect," "anticipate," "intend," "estimate," "project," "outlook," "forecast," "looking ahead" and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the Securities and Exchange Commission ("SEC"). Also, note the following cautionary statements.

Many factors could cause actual results to differ materially from the Company's forward-looking statements. Such factors include statements related to the expected effects on our business of COVID-19, global economic conditions, geopolitical issues in Europe, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, energy, labor and logistics, the ability to achieve selling price increases, the ability to recover margins, customer inventory levels, PPG inventory levels, our ability to maintain favorable supplier relationships and arrangements, the timing of and the realization of anticipated cost savings from restructuring initiatives, the ability to identify additional cost savings opportunities, the timing and expected benefits of our acquisitions, difficulties in integrating acquired businesses and achieving expected synergies therefrom, the amount of future share repurchases, economic and political conditions in the markets we serve, the ability to penetrate

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existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, the unpredictability of existing and possible future litigation, including asbestos litigation, and government investigations. However, it is not possible to predict or identify all such factors.

Consequently, while the list of factors presented here and in the 2023 Form 10-K under Item 1A is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in the results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or income, business disruption, operational problems, financial loss, legal liability to third parties, other factors set forth in Item 1A of the 2023 Form 10-K and similar risks, any of which could have a material adverse effect on the Company's consolidated financial condition, results of operations or liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction risk and currency translation risk. Certain foreign currency forward contracts outstanding during 2024 and 2023 served as a hedge of a portion of PPG's exposure to foreign currency transaction risk. The fair value of these contracts was a net liability of $1 million and a net asset of $23 million as of June 30, 2024 and December 31, 2023, respectively. The potential reduction in PPG's Income before income taxes resulting from the impact of adverse changes in exchange rates on the fair value of its outstanding foreign currency hedge contracts of 10% for European and Canadian currencies and 20% for Asian and Latin American currencies was $416 million for the six months ended June 30, 2024 and $402 million for the year ended December 31, 2023.

PPG had U.S. dollar to euro cross currency swap contracts with a total notional amount of $475 million as of both June 30, 2024 and December 31, 2023. The fair value of these contracts were net assets of $44 million and $33 millionas of June 30, 2024 and December 31, 2023, respectively. A 10% increase in the value of the euro to the U.S. dollar would have had an unfavorable effect on the fair value of these swap contracts by reducing the value of these instruments by $42 million and $46 million at June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, PPG had non-U.S. dollar denominated borrowings outstanding of $3.4 billionand $3.3 billion, respectively. A weakening of the U.S. dollar by 10% against European currencies and by 20% against Asian and South American currencies would have resulted in unrealized translation losses on these borrowings of $383 million at June 30, 2024 and $363 million at December 31, 2023.

Interest Rate Risk

The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to minimize its interest costs. PPG has interest rate swaps which converted $375 million of fixed rate debt to variable rate debt as of both June 30, 2024 and December 31, 2023.The fair values of these contracts was a liability of $21 million and $14 millionas of June 30, 2024 and December 31, 2023, respectively. An increase in variable interest rates of 10% would have lowered the fair values of these swaps and increased annual interest expense by $5 million for both the periods ended June 30, 2024 and December 31, 2023, respectively. Considering the debt balance outstanding at June 30, 2024 and December 31, 2023, a 10% increase in interest rates in the U.S., Canada, Mexico and Europe and a 20% increase in interest rates in Asia and South America would have increased annual interest expense associated with PPG's variable rate debt obligations by $5 million and by $2 million, respectively. Further a 10% reduction in interest rates would have increased the fair value of the Company's fixed rate debt by approximately $91 million and $96 million at June 30, 2024 and December 31, 2023, respectively; however, such changes would not have had an effect on PPG's Income before income taxes or cash flows.

There were no other material changes in the Company's exposure to market risk from December 31, 2023 to June 30, 2024. Refer to Note 11, "Financial Instruments, Hedging Activities and Fair Value Measurements" in Part I, Item 1 of this Form 10-Q for a description of our instruments subject to market risk.

Item 4. Controls and Procedures

a. Evaluation of disclosure controls and procedures.Based on their evaluation as of the end of the period covered by this Form 10-Q, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and

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reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

b. Changes in internal control over financial reporting.There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. These lawsuits and claims may relate to contract, patent, environmental, product liability, asbestos exposure, antitrust, employment, securities and other matters arising out of the conduct of PPG's current and past business activities. To the extent these lawsuits and claims involve personal injury, property damage and certain other claims, PPG believes it has adequate insurance; however, certain of PPG's insurers are contesting coverage with respect to some of these claims, and certain insurers may contest coverage with respect to claims in the future. PPG's lawsuits and claims against others include claims against insurers and other third parties with respect to actual and contingent losses related to environmental, asbestos and other matters.

From the late 1880's until the early 1970's, PPG owned property located in Cadogan and North Buffalo Townships, Pennsylvania which was used for the disposal of solid waste from PPG's former glass manufacturing facility in Ford City, Pennsylvania. In October 2018, the Pennsylvania Department of Environmental Protection (the "DEP") approved PPG's cleanup plan for the Cadogan Property. In April 2019, PPG and the DEP entered into a consent order and agreement ("CO&A") which incorporated PPG's approved cleanup plan and a draft final permit for the collection and discharge of seeps emanating from the former disposal area. The CO&A includes a civil penalty of $1.2 million for alleged past unauthorized discharges. PPG's former disposal area is also the subject of a citizens' suit filed by the Sierra Club and PennEnvironment seeking remedial measures beyond the measures specified in PPG's approved cleanup plan, a civil penalty in addition to the penalty included in the CO&A and plaintiffs' attorneys fees. PPG and the plaintiffs settled plaintiffs' claims for injunctive relief and PPG agreed to enhancements to the DEP approved cleanup plan and a $250,000 donation to a Pennsylvania nonprofit organization. This settlement has been memorialized by an amendment to the CO&A which was appended to a Consent Agreement between PPG and the plaintiffs which has been entered by the federal court. The remaining claims in the case for attorneys' fees and a civil penalty are not affected by this settlement. A trial on the issue of a civil penalty under the Clean Water Act was held in June 2024. Following the trial, the Judge indicated that they will circulate a schedule for the submission of post-trial briefs. The Judge also indicated that they intend to appoint a Special Master to review the parties' positions on plaintiffs' fees. PPG believes that the remaining claims are without merit and intends to defend itself against these claims vigorously.

In 2006, a lawsuit was filed against PPG in a local court in Manaus, Brazil, captioned Di Gregório Navegação LTDA v. PPG Industries, Inc., Case No. 0644620-62.2020.8.04.0001 ("Di Gregório") arising from a November 1998 fire on board a cargo ship off the coast of Brazil. The plaintiff was a charterer of the ship and brought claims for various alleged damages. The ship was transporting, among other cargo, products from PPG's former commodity chemicals business. The Di Gregório litigation remained pending as of July 18, 2012 when PPG separated the assets and liabilities related to its former commodity chemicals business into a newly formed subsidiary structure, of which Eagle Spinco Inc. ("Eagle Spinco") was the parent company. Axiall Corporation ("Axiall") in 2013 acquired Eagle Spinco (including its subsidiaries) through a merger. In 2016, Westlake Corporation acquired Axiall through a merger (including Eagle Spinco and its subsidiaries) and succeeded to Eagle Spinco's rights and obligations under the original 2012 Separation Agreement between PPG and Eagle Spinco. For convenience, Westlake Corporation, Axiall, and Eagle Spinco collectively are referred to as "Westlake."

Under the 2012 Separation Agreement, Eagle Spinco entities assumed the specifically scheduled Di Gregório liability, and Eagle Spinco was required to remove PPG as an obligor for the Di Gregório liability. To the extent Eagle Spinco cannot or will not remove PPG as an obligor, the Separation Agreement provides that Eagle Spinco and Axiall must act as agents or subcontractors of PPG and pay any liability in the matter on PPG's behalf. The Separation Agreement also provides PPG with uncapped rights of indemnification for any damages PPG incurs arising from the Di Gregório litigation and for any failure by Eagle Spinco related entities (now Westlake through its acquisition of Axiall) to satisfy its contractual obligations.

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Since 2013, Westlake exclusively has controlled and continues to control the defense of the Di Gregório litigation. Nevertheless, PPG recently learned that Westlake failed ever to substitute itself into the case in place of PPG, remove PPG as the obligor, or otherwise inform the Brazilian court that it is the party in interest that assumed all liability for the matter. On May 30, 2024, Westlake informed PPG that the Brazilian court entered a May 21, 2024 award of more than $700 million, including prejudgment interest, fees and costs, against "PPG Industries, Inc." as the originally named (albeit nominal) defendant in the case. Westlake also informed PPG that while it will continue to defend the case and pursue an appeal of the award, it would not post any bond, pay any judgment, or take any steps to prevent the plaintiff from attempting to execute on the judgment against PPG.

On May 17, 2024, Eagle Spinco filed a lawsuit against PPG in Delaware Superior Court alleging breach of the Separation Agreement and requesting declaratory relief (the "Eagle Spinco Lawsuit"). In its lawsuit, Eagle Spinco seeks to have the Di Gregório liability determined to be one in which its obligation is only to indemnify PPG for any damages it incurs in the case, net of any insurance coverage available from PPG's insurers, rather than stand in the shoes of PPG in the first instance and respect the obligation as an assumed liability under the Separation Agreement for which it did not purchase the rights to PPG's insurance assets.

Because the Di Gregório liability was a specifically scheduled assumed liability under the Separation Agreement and given that Westlake failed to remove PPG as the obligor, PPG separately filed a lawsuit against Westlake on June 13, 2024 in the Court of Chancery in Delaware (the "PPG Lawsuit"), asserting claims for specific performance, declaratory relief, breach of contract, and equitable estoppel. The PPG Lawsuit explains PPG's belief that: (a) the Di Gregório case is an assumed liability of Westlake, (b) Westlake has a continuing duty to act as an agent of PPG to satisfy any award if it is unable or unwilling to remove PPG as an obligor in the case, (c) Westlake has the duty to pay in the first instance any award, bond, court fees and other costs regardless of whether the court ultimately determines the Di Gregório case to be an assumed or indemnifiable liability, and (d) PPG has uncapped rights of indemnification should Westlake fail to satisfy its obligations under the Separation Agreement.

PPG intends to vigorously enforce its rights and Westlake's obligations under the 2012 Separation Agreement and to hold Westlake accountable for any damages PPG suffers as a result of Westlake's refusal to honor its contractual obligations. PPG believes that the risk of loss associated with this matter is remote.

For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos. For a description of asbestos litigation affecting the Company, see Note 13, "Commitments and Contingent Liabilities" in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

There were no material changes in the Company's risk factors from the risks disclosed in the 2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table summarizes the Company's stock repurchase activity for the three months ended June 30, 2024:


Month	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares That May Yet Be Purchased Under the Programs(1)
April 2024
Repurchase program	-	$-	-	26,047,728
May 2024
Repurchase program	563,558	$132.95	563,558	24,999,862
June 2024
Repurchase program	582,408	$128.60	582,408	25,501,109
Total quarter ended June 30, 2024
Repurchase program	1,145,966	$130.74	1,145,966	25,501,109

(1)In December 2017, PPG's Board of Directors approved a $2.5 billion share repurchase program. In April 2024, PPG's Board of Directors authorized the repurchase of an additional $2.5 billion of outstanding common stock. The remaining shares yet to be purchased under the share repurchase programs have been calculated using PPG's closing stock price on the last business day of the respective month. The repurchase programs do not have an expiration date.

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Item 5. Other Information

Rule 10b5-1 Trading Plans

The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our directors and executive officers during the three months ended June 30, 2024, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans:


Name and Title	Action	Date of Action	Scheduled Expiration Date (1)	Aggregate Number of Securities to be Purchased or Sold (2)
Timothy M. Knavish Chairman and Chief Executive Officer	Adopt	5/14/2024	2/14/2025	Sale of up to 4,800 shares of common stock upon the exercise of a stock option expiring on February 17, 2025.

(1)This trading plan may also expire prior to the scheduled expiration date if all transactions under the trading plan are completed before the scheduled expiration date.

(2)Aggregate number of shares in this column includes shares that may be forfeited or withheld to satisfy exercise price and tax obligations at the time of exercise.

Item 6. Exhibits

See the Index to Exhibits on page 37.

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PPG INDUSTRIES, INC. AND SUBSIDIARIES

Index to Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.


3.1	Articles of Amendment to the Restated Articles of Incorporation of PPG Industries, Inc., effective April 29, 2024, was filed as Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on April 23, 2024 .
†31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
†31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
††32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
††32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document
101.SCH**		Inline XBRL Taxonomy Extension Schema Document
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

† Filed herewith.

†† Furnished herewith.

*The instance document does not appear in the Interactive Data File because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document.

**Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL: (i) the Condensed Consolidated Statement of Income for the three and six months ended June 30, 2024 and 2023, (ii) the Condensed Consolidated Balance Sheet at June 30, 2024 and December 31, 2023, (iii) the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2024 and 2023, and (iv) Notes to Condensed Consolidated Financial Statements for the six months ended June 30, 2024.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PPG INDUSTRIES, INC.
(Registrant)

Date:	July 19, 2024	By:	/s/ Vincent J. Morales
Vincent J. Morales
	Senior Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

By:	/s/ Brian R. Williams
Brian R. Williams
Vice President and Controller (Principal Accounting Officer and Duly Authorized Officer)

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Quarterly Report for Quarter Ending June 30, 2024 (Form 10-Q)

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