PPG (PPG) Q3 2026 Earnings Call Transcript

DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations and Operational Finance - Alejandro Lopez
• Chairman and Chief Executive Officer - Timothy Knavish
• Senior Vice President and Chief Financial Officer - Jamie Beggs

TAKEAWAYS

• Net Sales -- $4,353 million, an increase of 7% year over year driven by higher selling prices and organic volume growth.
• Adjusted EPS -- $2.25, representing a record third quarter and a 6% increase compared to the prior year.
• Organic Sales -- Increased 5% year over year, marking the seventh consecutive quarter of organic growth for the company.
• Industry Outperformance -- 300 basis points, reflecting the company's ability to outpace the broader coatings industry.
• Aerospace Revenue -- Exceeding $2 billion annually for the first time, with organic sales growth averaging above 10% over the last 22 quarters.
• Aerospace Backlog -- Near $300 million, reflecting robust demand for aircraft cockpit and passenger windows.
• Global Architectural Segment Sales -- $1,055 million, an increase of 4% year over year supported by 2% organic sales growth.
• Architectural EBITDA Margin -- 24.0%, expanding 300 basis points due to higher selling prices and productivity actions in Mexico and Europe.
• Performance Coatings Segment Sales -- $1,554 million, up 10% year over year with 8% organic sales growth led by the aerospace and refinish businesses.
• Performance Coatings EBITDA Margin -- 23.9%, an expansion of 220 basis points reflecting improved sales mix and commercial pricing actions.
• Industrial Coatings Segment Sales -- $1,744 million, a 5% increase driven by new business wins and share gains in packaging.
• Industrial EBITDA Margin -- 14.4%, a decrease of 260 basis points as inflation on cost of goods sold outpaced the timing of index-based pricing.
• Packaging Coatings Volume -- Grew more than 20% on a two-year stack basis, driven by share gains in BPA non-intent technologies.
• Operating Cash Flow -- $1,158 million for the first nine months, an increase of $100 million compared to the same period last year.
• Share Repurchases -- $150 million during the quarter, bringing year-to-date repurchases to $320 million.
• Net Debt -- $5.2 billion, a reduction of approximately $200 million from the third quarter of the prior year.
• Adjusted EPS Guidance -- $7.90 to $8.10 for the full year, representing an increase at the midpoint of the previous range.
• COGS Inflation -- High-single-digit percentage expected for the fourth quarter, which management plans to offset through continued pricing actions.
• Productivity and Restructuring -- $100 million target for 2026 and 2027 combined, focused on plant closures and efficiency in Europe and the Americas.
• Mexico Peso Benefit -- $15 million to $20 million, contributing to margin strength in the architectural segment during the quarter.
• U.S. Collision Claims -- Improved sequentially from a 6% decline in the second quarter to a 4% decline in the third quarter.
• Net Leverage -- 1.8x net debt to adjusted EBITDA, providing financial flexibility for organic investment and shareholder returns.
• Data Center Sales -- Tripled since 2025, supported by increased demand for electrical infrastructure coatings.
• Automotive OEM Volumes -- Outpaced global automotive industry production despite a low-single-digit percentage decline in organic sales.

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RISKS

• Knavish stated, "S and P has reduced their builds projection to China for something like -8%," which management cited as a primary driver for more modest growth assumptions in the fourth quarter.
• Knavish noted that violence in France has resulted in "logistics impacts" and could negatively affect consumer confidence and construction activity in the region.
• Beggs warned that the "raw material basket continues to escalate," causing management to remain cautious about potential margin tailwinds in the short term.

SUMMARY

PPG Industries, Inc. (NYSE:PPG) reported record adjusted earnings for the third quarter, driven by 5% organic sales growth and the successful offset of cost of goods sold inflation within six months. Management highlighted significant outperformance in the aerospace segment, which has become a primary growth engine with a multiyear order backlog and expanding manufacturing capacity. While industrial margins faced temporary compression due to the lagging nature of index-based pricing contracts, the company reported neutrality in price-to-cost at the enterprise level. The company is actively optimizing its global footprint through restructuring actions, including four planned plant closures in Europe, to sustain 20%-plus EBITDA margins in its architectural business.

• Management reported that "outside the can" productivity solutions for customers are growing three times faster than the company's average portfolio growth rate.
• CEO Knavish stated, "The destocking is behind us," referring to the normalization of inventory levels in the automotive refinish business.
• The company is investing $70 million to expand its aerospace transparencies operations in Huntsville, Alabama, to meet increasing demand for aircraft windows.
• Management attributed the volume challenges in the European architectural market to reduced consumer confidence rather than price elasticity.
• The industrial coatings subsegment achieved its best organic growth performance in four years, led by double-digit growth in powder coatings and data center infrastructure.
• CFO Beggs noted that more than 50% of current productivity and restructuring initiatives are targeted at the global architectural coatings business.
• CEO Knavish indicated that the company achieved price-cost neutrality in one-third the time required during the 2016 inflation cycle through improved commercial excellence.

INDUSTRY GLOSSARY

• Aerospace Transparencies: Advanced aircraft windows and cockpit canopies designed to withstand extreme pressure and temperature variations.
• BPA Non-Intent: Packaging coatings manufactured without the intentional use of Bisphenol A, responding to global regulatory shifts and health standards.
• FDI (Foreign Direct Investment): Investment made by a firm or individual in one country into business interests located in another country, cited as a growth driver in Mexico.
• Index-Based Pricing: Contractual pricing mechanisms that adjust based on specific commodity or raw material cost indices, often with a one-to-two-quarter lag.
• Refinish Coatings: Paints and materials used by body shops to repair and paint vehicles after collisions or for refurbishment.
• USMCA: The United States-Mexico-Canada Agreement, a trade pact that impacts automotive and industrial manufacturing dynamics in North America.

Full Conference Call Transcript

Operator: Good morning. My name is Warren and I will be your conference operator today. At this time, I would like to welcome everyone to the third Quarter 26 PPG Earnings Conference Call. All lines have been placed on mute to prevent any background noise. I ask that you please pick up your handset to improve the quality of sound on the call. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.

To allow everyone an opportunity to ask a question, the company requests that each analyst ask only 1 question Thank you. I would now like to turn the conference over to Alex Lopez, vice president of investor relations and operational finance. Please go ahead, sir.

Alejandro Lopez: Thank you, Warren, and good morning, everyone. This is Alex Lopez. Joining me today from PPG are Timothy Knavish. Chairman and CEO and Jamie Beggs, Senior Vice President and CFO. Our remarks relate to the financial information release on October 27, 2026. Supporting materials are available in the investor center at ppg.com. And we will take questions following our prepared remarks. Both the prepared commentary and the discussion during this call may include forward looking statements and non GAAP financial measures. Forward looking statements involve uncertainties and risks, that may cause actual results to differ. Please read our cautionary statement on slide 2 of the presentation materials.

Please refer to our presentation materials and SEC filings available at their Investor Center website for additional information and reconciliations of non GAAP financial measures. Timothy, over to you.

Timothy Knavish: Thank you, Alex. Good morning, everyone. Welcome to our third quarter 26 earnings call. I will begin with highlights from our record third quarter, and then we will share our outlook for the remainder of the year. Before reviewing our results, I would like to once again thank our employees for their dedication and resilience during this challenging period in many regions of the world. Please continue to prioritize your safety and the safety of your families above all else. This was an outstanding quarter for PPG. We delivered record third quarter earnings, and our teams around the world executed with exceptional discipline. Driving a 5% increase in organic sales including 2% volume growth.

This marks our 7th consecutive quarter of organic sales growth. We outpaced the industry by 300 basis points, clear evidence of the quality of our businesses our innovation, our technology, and the value that we deliver to our customers. As we discussed over the past several quarters, we have been systematically building our organic growth muscle and the results are now clearly visible. Our strategy to deliver product innovation and productivity solutions for our customers is accelerating our momentum. Third quarter net sales grew 7% year-over-year to $4.4 billion, Adjusted earnings per share increased 6% to $2.25, a third quarter record. And total company adjusted EBITDA margin was above 18%.

Exceptional results in our differentiated aerospace and architectural coatings Latin America businesses led this performance. Importantly, our commercial actions fully offset cost of goods sold inflation during the quarter. A significant milestone for us. We achieved this in just 6 months, half the time it took in the 2021 inflation cycle and 1/3 the time it took in the 2016 cycle. We remain focused on achieving appropriate value for our unique products and solutions with targeted actions where necessary to address inflation and market dynamics all enabled by the innovative solutions that we provide to our customers.

We also repurchased approximately $150 million worth of shares during the quarter and our year to date operating cash flow is approximately $1.2 billion about a $100 million higher than last year. Jamie will provide more detail on our balance sheet and cash shortly. Turning to our segment performance. Global Architectural Coatings grew net sales 4% year-over-year to approximately $1.1 billion Organic sales increased 2% driven by higher selling prices in all regions. Lower sales volumes in Europe, were offset by solid growth in Mexico. Organic sales for Architectural Coatings Latin America and Asia Pacific increased by a mid-single-digit percentage driven by higher selling prices and volume growth in Latin America.

In Mexico, retail sales were robust, and project related sales grew at a moderate pace as foreign direct investment sequentially recovers. In EMEA, organic sales increased by a low-single-digit percentage as higher selling prices more than offset lower sales volumes. Our European architectural business continues to benefit from strong execution of our strategy. Productivity enhancements, footprint optimization, and structural cost actions are improving efficiency and are driving year to date earnings and margin expansion. Segment EBITDA grew 19% and EBITDA margin expanded 300-basis-points to 24%. Looking ahead, we expect fourth quarter organic sales to range from flat to growth of low-single-digit percentage year-over-year along with EBITDA margin expansion versus prior year.

Our Performance Coatings segment delivered net sales growth of 10%, to $1.6 billion Organic sales increased an outstanding 8% led by 5% sales volume growth. Aerospace delivered another exceptional quarter with double-digit organic sales growth and our order backlog remained at near $300 million. Demand for our unique aerospace products remains robust, And shortly, I will go into more detail about the investments we are making to support this outstanding growth for today and well into the future. Automotive Refinish organic sales increased by a mid-single-digit percentage driven by both higher selling prices and higher sales volumes. In The US, collision claims versus prior improved sequentially from -6% in the second quarter to -4% in the third quarter.

Protective and marine coatings organic sales increased by a high-single-digit percentage, extending this business's streak to 14 consecutive quarters of sales volume growth. This included above market marine volume growth in Asia Pacific driven by our innovative technologies. Segment EBITDA grew 21% and EBITDA margin expanded 220 basis points to 23.9%. In the quarter, we in the fourth quarter, we expect organic sales growth in the range of low- to mid-single-digit percentage year over year with further EBITDA margin expansion versus prior year. Now turning to aerospace, this business is a significant growth engine for PPG, delivering its 22nd consecutive quarter of organic sales growth with quarterly year over year growth during that period averaging above 10%.

This year, we expect to generate more than $2 billion in sales, making it 1 of our larger businesses. We are investing more than $500 million to expand capacity and improve productivity across the business. This includes a recently announced $70 million expansion of our aerospace trans transparencies operations Huntsville, Alabama. This project will increase operational efficiency and create manufacturing capacity to support growing customer demand for aircraft cockpit and passenger windows. In addition to this CapEx, we continue to invest in aerospace R&D to further expand our technology offering.

These ongoing investments, combined with our broad portfolio of highly specified products technology leadership, and global footprint, and deep customer relationships reinforce our confidence in the long term growth outlook for this unique business. In the industrial coatings segment, third quarter's net sales grew 5% to approximately $1.7 billion. Organic sales increased 4% with equal contributions from higher selling prices and sales volumes. Reflecting the benefits of new business wins and successful launches. In automotive OEM coatings, organic sales declined by a low-single-digit percentage as a result of lower industry builds. Importantly, our team drove a sales volume performance that outpaced global automotive industry production.

Industrial coatings delivered strong organic sales growth of a high-single-digit percentage driven by sales volume and selling price growth in all regions. This marks the second consecutive quarter of growth for this business with strength in heavy duty equipment and general finishes including electrical infrastructure for data centers. Packaging coatings deliver outstanding double digit organic sales growth with sales volumes now up more than 20% on a 2-year stack basis. PPG is benefiting from share gains driven by our advantage BPA non-intent technologies. Our global manufacturing footprint, and our long standing technical partnerships with our customers.

Industrial segment EBITDA declined 11% and EBITDA margin decreased 260 basis points to 14.4% as cost of goods sold inflation outpaced the timing of index based pricing. Higher selling prices and volumes partially offset that pressure and we are now beginning to realize the benefits of index price. In the fourth quarter, we expect segment organic sales essentially flat year over year. We expect the pace of EBITDA margin compression to moderate sequentially as index based pricing and our productivity initiatives take hold. In our industrial segment, our team continues to win additional business driven by our technology solutions that enable our customer success.

With that, I will turn the call over to Jamie Beggs, our Senior Vice President and Chief Financial Officer, to discuss our balance sheet and cash flow as well as our fourth quarter and full year financial outlook. Jamie?

Jamie A. Beggs: Thank you, Timothy, and good morning, everyone. Our robust balance sheet continues to provide financial flexibility to invest in our businesses and return cash to shareholders. We ended the quarter with cash and short-term investments of $1.6 billion Net debt was $5.2 billion a decrease of approximately $200 million from the third quarter of last year. Year to date cash from operating activities was approximately $1.2 billion, about $100 million higher year over year. As a result, our net leverage moved lower to 1.8x net debt to adjusted EBITDA.

We repurchased approximately $150 million of shares during the quarter bringing year to date repurchases to $320 million We also pay $480 million in dividends through the first 9 months of the year. Our cash deployment remains focused on maximizing shareholder value creation and maintaining a strong balance sheet. Looking ahead, our organic growth momentum in commercial actions position us well for the remainder of the year. For the fourth quarter, we expect organic sales growth of a low-single-digit percentage led by aerospace, architectural coatings in Latin America, and packaging coatings. We expect total company adjusted EBITDA margin to range from a flat to an increase of 100-basis-points year over year.

Within the segments, we expect global architectural coatings organic sales to be in the range of flat to up a low-single-digit percentage. Performance coatings organic sales are expected to grow by a low- to mid-single-digit percentage while industrial coatings organic sales are expected to be in the range of down to up a low-single-digit percentage. We expect cost of goods sold inflation to be in the high-single-digit range in the fourth quarter. We plan to offset this pressure through our pricing actions as we realize appropriate value for the unique products and productivity solutions we provide to our customers.

Considering our strong growth momentum, and the execution of productivity programs, we are raising the midpoint of our full year adjusted earnings per share outlook and narrowing the guidance range to $7.90 to $8.10 per share. With that, I will turn it back to Timothy for closing remarks.

Timothy Knavish: Thank you, Jamie. In closing, we delivered record third quarter earnings, which reinforces our confidence in PPG's strategy and the strength of our business model. We delivered outstanding organic sales growth driven by both volume and price, fully offset cost of goods sold inflation expanded earnings, delivered adjusted company EBITDA margin above 18%, and generated robust cash flow through disciplined execution across our portfolio. Additionally, our outside the can productivity solutions for PPG's customers are growing at 3x faster than the average growth rate of our portfolio. And with a higher margin profile and now represent a solid double digit percentage of our total sales. Customers greatly value the innovative solutions that we provide.

Our investments in technology, brands, customer relationships differentiate us and enable us to solve some of our customers' hardest problems. Our field service capabilities and installed base keep us close to those customers. While our channel access and global reach provide a strong foundation to serve them with world class effectiveness. Combined with our flexible cost structure and solid financial position, these capabilities give us the capacity to invest and win. We see meaningful opportunities to drive further organic growth through innovation, share gains, continued investment in our differentiated businesses. We will also selectively consider portfolio to accelerate our strategy and drive shareholder returns.

We are focused on creating long term shareholder value by both investing organically and by evaluating opportunities to enhance our mix of high growth and high margin businesses. We will continue to allocate capital with discipline balancing investments in growth with maintaining a strong financial position and returning cash to our shareholders. Thank you to our PPG team around the world for their focus and execution. Their dedication enables us to serve our customers and deliver on our purpose every day: we protect and beautify the world. And we appreciate your continued confidence in PPG. That concludes our prepared remarks. Warren, we are now ready to begin the question-and-answer session. Please open the line for our first question.

Operator: At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q and A roster. Your first question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

David Begleiter: Good morning. Timothy, on industrial coatings, 2 things. Can you talk to when you expect the index based pricing to catch up to the COGS inflation In terms of Q4 guide of roughly flat organic sales growth versus up 4% in Q3, Can you talk to what is driving that more modest assumption in Q4? Thank you.

Timothy Knavish: Sure, David. Thank you. So on industrial coatings index pricing, we started to see a little bit of that benefit in Q3 and Q4. But most of that benefit will come in, Q1 and Q2 of next year just because of the structure of our contracts. In. across our businesses. That said, we expect the margin compression to you know, to moderate as we move through Q4. And beyond that, as far as when it exactly matches neutrality in that segment while we have met neutrality across the company.

We will have to see what our 2027 guide is and what happens to inflation in Q1 and Q2, But right now, our Q4 outlook is margin compression to be slightly better than it was in Q3. As for volumes, most of that is based on automotive builds. And as you know, we use S&P's IHS, and they have reduced their builds in Q4 and in particular in China. And most of what you see, the delta between Q3 and Q4 growth for that segment comes from that factor.

Operator: Your next question comes from the line of John McNulty with BMO Capital Markets. Your line is open.

John McNulty: Thanks for taking my question. So wanted to unpack the Refinish business a little bit. You did largely, as you would called out, I think you would said you expected to kind of see an inflection. But clearly, industry did not. I mean, I think you cited claims were down 4% still and yet you were up. That seems like a bigger outperformance than what we normally see even from your Refinish business. So I guess can you help us to understand what drove that on the volume front If there were any major account wins or if it was just some of the. Maybe some of the inventory timing.

Maybe just a little perspective on what drove that significant, looks like mid-single-digit, outperformance?

Timothy Knavish: Yeah, John. First of all, you are right. it is. This has played out, it is been a painful 4 quarters for us since we first raised this issue last year that we would see, 4 quarters worth of destocking, and that is behind us now. And I would say that internally here, the quarter played out a little bit better than we expected, but not a huge amount better than we expected. it is a couple of things. 1, the destocking, is behind us, so you do have some more normalization of purchase orders. You know, body shop activity while still below where it was, you know, pre COVID. Incrementally, sequentially improving a bit.

You know, from a share shift standpoint, this business always has share shifts You know, we track net body shop wins. And while we cannot really point to anything huge for us, I know there is some other stuff happening out there. You know, we still win a couple hundred net body shops a month. But more than anything, it is the normalization of both the inventory and slight normalization of the industry. You know, in a way I would summarize Refinish going forward right now, clearly, activity levels at the end user are not back to where they were pre COVID. We had throughout 2025 US collision claims down, like, an average of 10% every single quarter.

Q1 of 2026, -6%; Q3, -4%. So it is still an industry that is below 2019 activities. But some signs of normalization. The destocking is behind us. We have got net body shop share wins, positive price, We. This is 1 of our business where we have a lot of outside the can solutions that drive additional revenue for us. The other thing that is normalized, John, and then I will move on, is another factor that was really impacting 2025 was high auto insurance rates, and you have started to see those come down a bit. So a number of factors point to modest sequential normalization, our inventory issues behind us, and net, we are winning. And.

But all in all, this was a little bit better than we expected but not a ton.

Operator: Your next question comes from the line of Kevin McCarthy with Vertical Research Partners. Your line is open.

Kevin McCarthy: Yes. Thanks very much, and good morning. Timothy, I was wondering if you could elaborate on the industrial sub segment within your industrial coatings segment. As I look at slide 8, you flagged that industrial, posted high single digit growth at the subsegment level there. And if I am not mistaken, I think that is probably the best in 4 years or so. So wondering if you could unpack how much of that is price acceleration versus volume acceleration? And what your outlook is for that piece of the company?

Timothy Knavish: Yeah. First, Kevin, you just, you just made the day of Uliana Heffel who runs that business for us by calling out the best in 4 years. So thank you for that. Yeah. This. I am really proud of this team for sequential improvement here. In Q1, minus low single digits. Q2, up mid single digits, and Q3 up high single digits, and we feel really good about new business wins and pipeline going forward. So in the. As far as the blend of how the team achieved that org, organic sales, it is almost it is almost exactly half volume and price. So we have got good momentum in the various pieces that of that sub seg.

Or I am sorry, of that business. Think about powder, for example. We had double digit growth in powder. We called out heavy duty equipment, mostly in the nonag area. Transportation, we have got a nice little specialty business in there that is doing well. You know, all regions grew. And we did get some nice bumps from data center related electrical infrastructure. So it is it is it is fairly widespread, and it is it is not like we have seen, as you know, any big hockey stick improvement in industrial production.

I would say a lot of this is just execution of know, the selling machine, the commercial excellence that this team has been working on for a number of years. And now we are starting to see it on the p and l.

Operator: Your next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open.

Michael Harrison: Hi. Good morning. I have kind of a 2 part question on the global architectural coatings business. First of all, does strength in margin there just wondering if the 24% EBITDA margin is something that you feel like you can sustain going forward in these seasonally stronger Q2 and Q3 quarters, Or was there something unusual that helped to drive the margin strength and maybe suggest this is a high watermark? And then just digging in on architectural EMEA, curious on how the situation in France is potentially gonna affect volumes and demand into Q4. Thanks.

Timothy Knavish: Yeah. Hey, Mike. On the first 1, you know, we have said and I. I have consistently said that our global architectural business should be consistently 20%-plus EBITDA business, and I believe that strongly. Q3 was a combination of 2 things. Yes. We had great execution by the team. You know, we have got really strong brands, really strong innovative products. Great relationships with our distribution partners, and that helped us from a mix standpoint as well as a price standpoint. So that definitely helped and that was the biggest contributor to the--the strong margin you saw. Full transparency, if you look at our Mexico business here, we buy in dollars and we sell in pesos.

So we did get some help in Q3, from, from the stronger peso. So going forward. And I do not like to say high watermark because that implies that there is a cap on what we can do. But what I will say is we. Our aspiration is this, in total, is a 20%-plus EBITDA business but we did have a bit of help in Q3 that you just you know, watch the peso, and that will give you a little indication of how much headwind or tailwind we will have in our in our Mexico margin. Now as far as France, obviously, it is it is terrible to watch on television and see the violence and destruction.

So far, fortunately, none of our stores have been affected You know, obviously, it is not it is not likely to be a boost to consumer confidence or to, you know, construction activity, but so far, we have not seen a demand impact, but we are watching that closely. We are seeing, logistics impacts some ability to move product around. So I would say in the short term, Mike, that is. that is all we are seeing. Obviously, longer term, it is not it is not great for first of all, the safety of the people on the ground there, but it is also not great for consumer confidence.

Operator: Your next question comes from the line of James Hooper with Bernstein. Your line is open.

James Hooper: Hi. Good morning. I wanted to ask a little bit about industry consolidation. So clearly, the merger going on in your space has a couple of disposals been announced. How are you thinking about those in M&A? And just maybe as a follow on, are your team seeing any changes to the competitive dynamics on the ground as we move towards these mergers completing? Thanks.

Timothy Knavish: Okay. Hey, James. So the first part, you there is what is happened, what is happened in Brazil, I think it was last year. Obviously, what is happened with Cerventes and the legacy BSF business, and then you have the pending merger of Axalta. So far. And, again, we are not. We do not have a deco business in Brazil. We have tiny little boutique business, basically, in 1 state in the South. But nationally, we do not have a presence, so we are not really involved in whatever's going on there. And from Cervantes, so far, we really have not seen any change in behavior in the marketplace.

And then, of course, it is still early days on Axalta because they are not officially together yet, so we have not really seen any change there. You know, it is obviously you know, we will do what we can to take advantage of any distraction. We have been through those acquisitions ourselves in the past. So we will do what we can to help customers that may be looking for opportunities. But I would say so far, not much changing on the ground. As for dispositions, you know, I think the. You know, just. it is still fairly recent. So we will see how that plays out over time. Nothing active now.

With, you know, with Axalta, we really were not interested in their India business, were not interested in their deco Southeast Asia business. And the only thing that is we are aware kind of unofficially is wood here in The US and frankly does not fit our enterprise growth strategy. I know there is some rumors about another part of their business in Europe, if and when those rumors become a reality, we will take a look at it. But it is not what I think about every night or every morning.

Operator: Your next question comes from the line of Ghansham Panjabi with Baird. Your line is open.

Ghansham Panjabi: Yeah. Thank you. And first off, congrats on a strong, 3Q So Timothy, as you zoom out a little bit and think about 2027, you know, how are we thinking about the trend line for volumes across your major end markets? Obviously, interest rates have gone up significantly since you last reported. And growth in some of the international geographies seem a bit more challenged from a macroeconomic perspective in. You know, including in markets like China. So how does that net out for PPG at this point, in the way you see it at this point? In context of some of the advantaged growth verticals you have, including in aerospace? Thank you.

Timothy Knavish: Hey Ghansham, first of all, thank you for the comment. I am sure my team will appreciate it because they worked really hard, not only in the quarter, but the last couple of years building up this muscle. So appreciate that. Look. it is early for us to give our 2027 guide. You will hear that from me and Jamie at the end of January. But what you should. You know, first of all, we are not. You are not gonna hear from us that we are expecting any significant hockey stick recovery across any of our markets. So from an end market standpoint, sitting here today, China more of the same.

But on the positive side, you should expect our organic growth momentum to continue, and we see that in our pipelines. You should expect our margin expansion to continue. As, you know, we continue to execute the commercial actions continue to drive a richer a richer mix, and we are confident in not only the technologies out there today, but the technologies that are in our r and d pipeline. So while we are not going to count on anything, any macro help, unless something changes between now and mid January.

The key themes will be organic growth momentum will continue, margin expansion momentum will continue, rest of it will depend on what we learn in the next couple of months regarding inflation.

Operator: Your next question comes from the line of Aleksey Yefremov with Barclays. Your line is open.

Analyst: Thanks. Good morning, Timothy. Could you provide us an update on what has been achieved? you have achieved in terms of cost actions in architectural EMEA overall? And what do you expect to happen for the remainder of this year and in 2027?

Timothy Knavish: Yeah. So first, I will, I will talk overall. I will start there. In a high level, what you should expect in 2026 and 2027. Is about a $100 million combined between restructuring and productivity actions, And the mix between restructuring, may shift a little bit, but that is that is how I think of it, Aleksey, is about $100 million total between those 2 for 2026 and 2027. Now architectural EMEA specifically, we have been working on productivity throughout most of this year, and that is what is delivered some of our year to date margin expansion. But the bigger step change for us will be execution of the 4 plant closures that we talked about earlier this year.

You will not see much of that benefit in 2026. But as you are modeling out, 2027, you should expect a significant portion of that restructuring benefit that I just mentioned to come out of that business in the first half of 2027.

Operator: Your next question comes from the line of John Roberts with Mizuho. Your line is open.

John Roberts: Thanks, and congrats as well on a nice quarter. Could I ask what your highest priced house paint is in Europe currently? And I ask that because before the pandemic, I think we went a couple decades without volumes in the DIY business moving up or down more than a low single digit percent. All the cyclicality was in the pro business because it is new construction and high labor cost. But maybe it is not just this pull forward, maybe prices are now high enough that we have got some demand elasticity.

Timothy Knavish: Yeah. I would not say we have demand elasticity. I do not feel that is what is driving. I think it is it is more the, underlying macro, John, that. that is driving the volume challenges. As far as price point on the shelf, and this is not just for PPG for industry, you know, having traveled over there and looked at the looked at the products on the shelves in different countries, that the first of all, the formulation cost and the preference of the local painters varies country to country. Surprisingly enough.

Even in the Benelux, if you look at the difference between what a what a painter in The Netherlands prefers versus a painter in Belgium is different. And as a result, without going through all of the countries we operate in off the top of my head, the highest price point would probably be in The Netherlands. And it is based on the frankly, the higher formulation cost in The Netherlands.

Alejandro Lopez: And hey, John. This is Alejandro. Just an additional data point. If you look at the savings rates of European consumers today versus pre COVID level, 2.5x, 3x higher. So really the issue that Timothy is mentioning it is not that much the elasticity. it is the consumer confidence.

Timothy Knavish: Yeah.

Operator: Next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.

Analyst: Good morning. I am going to be a bit annoying and ask a 3-parter, but I think it kind of gets out what most investors we are talking with and I guess myself are maybe struggling with or wanna know for the quarter. So architectural EBIT up $40 million year over year. And I know you mentioned the peso benefit. Right? But it is, so, if you have a billion of sales and price is 4%, that is $40 million So that kind of covers the growth, but you also had higher raw material costs. Which is maybe most of that $40 million and a 2% drop in revenues. So it is almost like back to square 1.

I would almost look at that and say the peso benefit in of itself could be $40 million. And I do not know if that is right or not, but that is kind of the hole that I am looking at filling. And I can almost run the same math on performance, but there you have good volumes. Right? So I can think of incremental margins of almost 80% And I know Refinish is a big incremental margin business, and that is growing again. But is that am I in the right ballpark? And then last 1, I know you talked about volumes and auto builds decelerating in 4Q, but you have implied volumes decelerating basically across the board.

In your business for 4Q. Like, how should we read this? Is this more conservatism given the macro crosscurrents? I mean, it is particularly interesting in performance because some of these markets are conceptually more durable. Right? But you are going from high single digit to low mid on the guidance. And so I think clarity on all these topics would be helpful.

Timothy Knavish: Okay. Matthew, let me do my best at that, and I will I will look for my teammates to help me here. But first of all, architectural coatings, EBIT, the walk you described, the $40 million was not the benefit of the peso. It would be significantly lower than that. Right? And so that plug, I think, would be would be a bit off. I would say the big drivers there are volume in Mexico, mix in Mexico, price in Mexico, price in Europe, and cost out in Europe. Those would be the biggest drivers, and then we got a little bit of help from the Mexico peso. On performance, 2 things I would say.

Jamie A. Beggs: First of all, your thesis on you know, kind of refinish being a very rich business, dropping good EBIT to the bottom. Yes. You are you are correct there. You know, aerospace is also a very. Good business for us. So their growth drops at a good a good margin for us.

Timothy Knavish: But your point on volume being a bit softer there, remember, we have 2 businesses there that are lapping multiple double-digit quarters, multiple double-digit Q4s. So just by the laws of big denominators, it starts to get it starts to get a little, you know, a little more high single digits and mid single digits. Volumes overall in Q4 it is it is it is largely 2 things. Automotive builds pretty significant reduction you look at just China alone, Matthew, you know, China roughly builds 1/3 of all the new cars in the world.

And S and P has reduced their builds projection to China for something like -8% And you might have seen the journal article this morning, and while export China is helping us pretty significantly, domestic China is a true headwind. That. that is the biggest. And then the second 1 is contributing to overall volumes you know, just uncertainty in Europe. The European--to the previous question--the problem is not only in Frank. there is problems across the continent affecting consumer confidence. And so we have built some of that concern into our Q4 guide.

Jamie A. Beggs: So, Hopefully, team, did I miss anything that Jamie Sure. Yeah. Let me just go back to architectural for just a moment. I think Timothy highlighted a couple of the great things that business is doing between both Europe and Mexico. Part of it is pricing appropriately to cover inflation, The other part of it is about more than 50% of our productivity initiatives and restructuring actions are actually happening in the architectural business. So that is another reason for the uplift. And now you know, Timothy mentioned earlier of getting that.

To that sustained 20% EBITDA margin, which I do think based on what we are trying to do with the cost structure also allows us to be able to main. Those. Maintain those types of margins. He also mentioned that the peso dynamic was a benefit to the quarter. that is about $15 million to $20 million of the bridge that we are talking about. It definitely did impact the quarter. But like I said, the majority of that had to do with other pricing initiatives as well as, you know, some of those productivity initiatives.

And if I just touch real quickly on the performance segment, half of that sales increase was related to volume, the other half related to price. And as you have seen and heard us talk about aerospace and also, you know, the impact of our refinish business, there is a really nice healthy mix associated with that. And that is another reason why those margins continue to improve on a year over year basis. And then lastly, what I would say with those 2 segments in particular, we were able to cover net cost of goods sold inflation with our pricing initiatives. Which I think is really important.

The 1 that is slower based on index dynamics and pricing of a contract is industrial, and that is the only segment that has not yet covered at this at this point.

Timothy Knavish: Great. Thanks, Jamie. Look. Just to put a bow on it, Matthew, because I can read with all your questions a bit concerned over Q4. Our Q4 guide, while not as strong as our Q3 performance, is not a weak guide. It is in a world of difficult macro, We are gonna deliver organic growth deliver EBITDA margin expansion. And we will deliver at our midpoint double digit EPS growth. So despite some of these comp challenges and you know, auto builds and a little anxiety over Europe, it is still a good quarter for us.

Operator: Your next question comes from the line of Jeffrey Zekauskas with JPMorgan. Your line is open.

Jeffrey Zekauskas: Thanks very much. I have a 2 part question. You talked about strength in the industrial coatings subcategory. So if what we did is we excluded the performance of the auto OEM business from industrial coatings, you have constraints because of index based pricing would industrial coatings operating income would it have been up year over year in the quarter or down? And secondly, you know, various companies seem to wanna buy architectural coatings businesses in Europe. You know, is that a business that you would consider you know, monetizing at the right price? Or is it strategic and it holds a particular strong position within the overall PPG portfolio.

How do you regard that business in the world we are in now?

Timothy Knavish: Yeah, thanks, Jeffrey. I will take it and then if Jamie or Alex wants to fill in gaps, fine. But look on industrial coatings subcategories I have already talked about. Your question around if it were not for the challenges in automotive OEM, would EBITDA have grown in that segment? The answer is yes. Okay? But I will caution a little bit because auto OEM is not the only 1 that has index pricing there. Packaging does as well. Packaging started to see some of their indices kick in, Jeffrey. Where autos really will come in Q1 and Q2.

And even while we had positive price in both packaging and industrial, because of the structure of those contracts, even those 2 still have more work to do relative to the rest of our portfolio. So a high level answer is yes. You are correct. But I wanna give you a little more a little more color there. And on Architectural Europe, so we like this business, and here's why it is in our portfolio. It delivers really good earnings for us, really good cash for us, Clearly not a growth driver for us, Jeffrey, and you know that, and that is been the case for years.

But the role in the portfolio is get the margin to where we believe it should be, and get us great earnings and great cash like we did just not that long ago, think 2023 in a pretty difficult macro. We were spitting out records. And so the role in the portfolio is while it is not a great growth business for us, it is a. It should be. it is a good margin business, should be a great business. it is a good cash generator for us, should be a great cash generator for us. And that helps us fund a lot of what we need to do in our high growth, high margin businesses like aerospace.

You know, we are spending a lot of cash there. I got to get it I gotta get it from somewhere. That said, every day our job is to maximize long term shareholder value. And, you know, I think you saw with what we did with architectural US, there is nothing that is sacred if we believe that we can we can maximize shareholder value some other way. Now, earlier this year, I lose track of time. There was talk of another architectural Europe business and the implied multiple that was being thrown around at that time would not have added long term shareholder value vis a vis our organic strategy there.

So every business has to earn its right to stay in the portfolio every day. And. But every business also you know, at the right price, if it if it makes sense for long term shareholder value, you know, that is that is certainly a path we will consider like we did with Architectural Americas.

Operator: Next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.

Analyst: Yes. Good morning, guys. Question just on COGS and raw materials. So last quarter, you saw the forward quarter up high single digits in the year up mid single digits on inflation. it is basically the same view today. But since that period, oil is up 30%. So do you think that just your suppliers are gonna eat that oil hit and that raw materials will roughly be similar to what you thought 90 days ago? Or is there some inflation yet to come, do you think, in the raw materials if oil stays up at this $110 level and that will be a bigger issue?

So maybe just kind of a view into the first half of next year if oil stays flat, you know, roughly what kind of raw material increase will you guys be looking at next year?

Timothy Knavish: Yeah. Hey, Duffy. First of all, we were projecting in our last guide for Q3, we projected high single digits and we actually came in at mid single digits for actual Q3. Some of that is you know, business and region mix. And some of that is know, procurement excellence, arbitrage abilities of our team, that was able to bring that in lower than we had estimated. We are guiding high single digits for the fourth quarter.

A bit early for us to guide for 2027, but just you know, just mathematically, given that most of this inflation did not really start kicking in until Q4, From a comp standpoint, you know, we will we will have some significant year over year inflation in Q1, and beyond that, it is really hard for me to project Duffy. I do not know what is gonna happen in The Middle East, what is gonna happen the price of oil, what is going to happen to other supply demand. But what I will say is with our industry, the macro macroeconomic conditions always provide a bit of a shock of absorber for coatings.

In that when macros are down, that typically drives some pressure for suppliers to go after volume. So that can be a bit of a hedge to some of what you see on the news. But, you know, right now, I cannot give you a guide yet for 2027. I will give you that in January. But just mathematically, we will see high single digits in Q4 It will be relatively high in Q1 just from a comp standpoint. And from there, we will see how the year plays out.

Operator: Your next question comes from the line of Frank Mitsch with Fermium Research. Your line is open.

Frank Mitsch: Thank you, and good morning. Timothy, in the prepared remarks and in the press release, you would spoke about the performance I am sorry, the Protective and Marine business. With a special emphasis on the marine side. We have heard from others, speaking about the protective side being a key area of growth. I wanted to give you an opportunity to expand upon all that might be going on the protective side and the sustainability of the growth that you might see there? Thank you.

Timothy Knavish: Yeah. Thanks, Frank. Look, we are we are we are performing on both sides of the business. We called out the marine particularly in Marine Asia. Because, I would call it strong outperformance. And it is given that it is mostly technology driven with some of our anti fouling and fouling release technologies, that. that is super exciting to us. But Protective is doing well too around the world. You know, infrastructure, Everybody talks about data centers. You know, we are doing well there. You may have seen our article in the times the other day. We are doing well with the infrastructure investments across United States and other countries.

So it is it is it is a mix of both. But if I were to rack and stack looking at our own results, marine new build, marine dry dock are our 2 strongest sub segments Data centers, yes, strong, but it is off a fairly small denominator. So even as good as the pipeline is, and I think we tripled our sales from 2025, it is off a small number. You know, in total, data center, protection, coating sales are still low single digit percent of our whole company. So that is exciting and fun to talk about. But with scale right now, it is marine new build and marine dry dock.

Operator: Your next question comes from the line of Joshua Spector with UBS. Your line is open.

Joshua Spector: Yeah. Hi. Good morning. I wanted to ask a couple of follow ups if I could, kind of going down the line that Matthew was going down. Just thinking about overall COGS and inflation, it looks like in 3Q your COGS inflation was up less than what it was in 2Q. Even though raw material inflation accelerated, albeit it sounds a little bit less than what you thought. Was there anything in there other than FX that would be a callout, either tariffs or LIFO or something else because it just does not seem to fit the narrative that we are seeing. And then just a quick follow-up on FX. We are talking about that a lot in 3Q.

It looks like the benefit would have been similar, maybe even better in the first half. So I am not sure kind of what changed if there is a bigger impact now. So maybe you can help unpack that a little bit more, please.

Timothy Knavish: Sure, Joshua. You know, I might need some help from my team on this 1 because my recollection is, Q2 cost inflation, We saw mid single digits Q3, we thought we were going to see high, but we saw mid again. And the only unique factor that I can think of that would have held Q3 down was the peso's strength. As I mentioned on the previous question, you know, our procurement team, I will put it against anyone as far as their ability to get the best deal and use our global footprint and our global. So there may have been a little bit of that as well.

But the only 1 that hits my radar screen is some specifically Mexican peso FX because most of our businesses other than that 1 buy and sell in the same currency, Joshua. So it is really, you know, the peso, if you wanna see an impact on our net raw material inflation, the Mexican peso is the 1 that we should watch.

Alejandro Lopez: Yeah. And in reality, Joshua, this is Alejandro. The impact that we saw in Q2 mid single digit inflation, let's call it solid mid single digits versus Q3, on the high-end range of mid single digits. So it is higher in Q3 than Q2. Probably without the peso, it would have been on the high single. Based just in pure math. So it is it is it is really the pricing action accelerated. If you look at pricing, Q2 to Q3, pricing accelerated, and we expect similar acceleration going into Q4.

Operator: Your next question comes from the line of Salvatore Tiano with KeyBanc Capital Markets. Your line is open.

Analyst: Yes. Thank you very much. So I want to drill down a little bit more on the price cost situation. And, firstly, you said you reached net neutrality when you are taking into account commercial actions. So I wanted to clarify, is this purely pricing, or are there any other things that were taken in the mix when we think about the neutrality? And given that you have already reached the price cost neutrality at this point, if Q3, does this mean in the next few quarters, we are going to get a tailwind from price-cost?

Or you know, as you are seeing the acceleration in raws a little bit later, I guess, than you expected, we are gonna stay at that neutral place for Q4 and Q1.

Timothy Knavish: Yes. Hey, Salvatore. First of all, the commercial actions are well over 90% price. Okay? So that is that you can clear that 1 off the--there is a little bit of other mix elements in there, but it is well over 90% price. Now as far as how to think about a going forward, you know, we are at neutrality for COGS inflation as a total enterprise. But you heard me say mostly in the industrial segment. We have still got some catching up to do within individual businesses, and we will be holding in others depending on what happens to inflation. So we.

We have still got some catching up to do, but I would not expect a tailwind you know, again, depending on what happens in inflation. And we just do not know that yet 2027. But I would certainly not assume price inflation to be a tailwind in the short term because we still got some we still got some work to do.

Jamie A. Beggs: And the raw material basket continues to escalate. So the commercial teams are very focused on initiating new actions as needed as the dynamic environment continues to unfold. So we are a little cautious, I think, on saying there is a tailwind. Obviously, that would happen if raw materials stabilize, but that is not what we are seeing today.

Operator: Your next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.

Vincent Andrews: Thank you and good morning. Timothy, I was wondering if you could comment a little bit about the European Union is set to put some quotas on Chinese automobile imports, and I know you obviously paint cars in both geographies, so there is probably a little bit of a wash on volume. But maybe you could just talk about what, if any, effect on PPG that will have, whether it is from a mix perspective or margin perspective or just any thoughts on that?

Timothy Knavish: Yeah. Hey, Vincent. So I would say very little impact on us because to your point where well represented in every car producing country in the world. And, what we care most about is net vehicle sales off a lot because that is what drives--that is what drives the painting, of course. The only asterisk I would put is EV penetration. Because per our earlier discussions, EVs give us content opportunity And so to the extent that EV penetration accelerates as it is in some parts of the world, not here, but most parts of the world, it is. That. that is a content opportunity for us.

But as far as whether the car is produced in China or Europe or Latin America or US, Canada, pretty agnostic to that.

Operator: Your next question comes from the line of Eric Boyes with Evercore. Your line is open.

Analyst: Good morning and thanks. Maybe another 1 on Refinish. Could rebates thresholds or year end purchasing be cushioning some of the stabilization there? And what does that mean for comps in first quarter or first half for our expectations? Thanks.

Timothy Knavish: it is a good question, a great question, Eric. because we really do not know how a lot of our distributors are going to play out at year-end, Because while the major destocking is behind us, you know, each of these folks are independent private business owners, and they manage their own cash flow. And so if they are if they are within striking distance, of a rebate, they might. They may buy a lot in Q4. If they are not, they may say, you know what? I will just hold off till Q1 and make my 2027 rebate. So that is dynamic that we watch very closely. it is still pretty early in the quarter for.

Here for us to say how that is gonna play out. We have given the best guide we could possibly give. But you have nailed on a subject that always affects Q4. But it could bring in some variability, some additional variability this Q4 given the 2 dynamics that we talked about earlier. 1, the previous destocking in the first half of this year, And second, the really close monitoring that everybody is doing on what is happening with actual body shop activity and US collision claims. So that is a. it is a good call out. it is a watch closely. We have built the. Our best possible estimate into our guide.

Operator: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.

Arun Viswanathan: Great. Thanks for taking my question. If I could just maybe get your thoughts on maybe some initial framework for 2027. So it sounds like you know, you are implementing price increases that will flow through maybe in the low to mid single digit range, maybe mid single digit range. And then you know, your volumes, it seems like your business wins and then strength in a in a few categories, maybe aerospace and packaging could lead you to also consolidated low digit volume growth And so that could put you maybe in the mid to high single digit EBIT growth. And then maybe with some capital deployment, you get to high single digit EPS growth.

Is that is that a fair framework that we can keep in mind, maybe just any help on that would be appreciated. Thanks a lot.

Timothy Knavish: Yeah. Arun, I said a couple times, it is a bit early for us to give a granularity on our 2027 guide. You know, we are just early in a in a in a fourth quarter here, which in a world that has more volatility than normal from both a demand side, a geopolitical side, and an inflation side. So cannot get into granularity yet, but the themes I mentioned earlier that I do feel confident in is we will continue our. I mean, based on what we know today without something falling off a cliff, we will continue our organic growth because we have got a good pipeline.

We will continue our margin expansion because we have some catch up to do on pricing in some businesses. And we have got significant productivity in restructuring actions that will drive some margin enhancements for us. Across the business. So we are expecting top line top line growth, and we are expecting EBITDA expansion. Too early for me to quantify that. And if you look by business, I can talk about the ones that we have great certainty over and, you know, aerospace will continue to grow. I. I have got backlog that will last for years, unfortunately. I wish I could sell it all today. But that will continue to grow for us.

Now when you lap 22 quarters of averaging double digit, maybe it goes from double digit to the higher mid, but that will that will still grow for us. Our packaging business, same thing. Confident in our Mexico business because we have got retail sales being pretty robust, And while I mentioned in my opening remarks that we have seen sequential recovery in FDI, it is still not back to where it was pre tariff and USMCA uncertainty. So there is still upside in Mexico that is a potential as those things release.

And the other businesses are a little more uncertain at this point until we see how consumer demand is, till we see how auto production is, So net, confident in the growth, confident in the EBITDA expansion, and, the rest of it, we will share with you in January.

Operator: Your next question comes from the line of Abigail Eberts with Wells Fargo. Your line is open.

Abigail Eberts: Hi. Thanks for taking my question. Just a quick 1 on traffic solutions. Anything worth calling out there or was the mid single digit organic growth decline mainly weather related?

Timothy Knavish: Yeah. Hey, Abigail. 2 things. You nailed part of it. Now this is a business. First of all, it is by far our most seasonal business, so you really need to watch it in the summer months. that is when we make all of our money, and there is you could call it 1 summer month in the quarter. And then it is it is a pretty volatile base because you got a small denominator as you move through September, October. That was 1 piece. It was you know, the. it is.

We do not like to call it weather because I do not like to be 1 of those people that blame things on weather. and then not take credit for it when weather's good. But the cycle of our customers actually their buying patterns were different than what you know, last Q3 would have been, which is what drove the minus mid single digits.

Alejandro Lopez: Yeah. And if you look at those buying patterns, big in the first half, traffic solutions was very strong, So I think that some of those customers were taking advantage of that nice spring we Your next question comes from the line of Laurence Alexander with Jefferies.

Operator: Your line is open.

Laurence Alexander: Good morning. Just very quickly, most of our discussion in the past few years about price versus cost has been about innovation or demand. Helping you get through pricing faster and be it a offset cost inflation. But can you talk a little bit about what is happening structurally? That is when we look at moves in the oil price, the amount of inflation that flows through to you, is there anything that has strategically changed or is improving? Or are there moves that you can do over the several years that could structurally change the sensitivity that you have to the kind of underlying moves in the raw commodities?

Timothy Knavish: Yeah. A couple of things. You know, we have moved. We have been able to move much faster this time for a number of reasons. 1, we learn. We learn from prior cycles, done well, do betters. Our commercial excellence is much, much better than it was historically. Our selling machine--we are on top of what is happening to our COGS. We are we are armed to have earlier and better conversations with our customers. Another reason I will point to is, you know, our r and d investments eventually lead to better innovation. Better innovation leads to a better offering for our customer to help their businesses be more successful.

So that is a very different discussion than just pure price versus inflation. So we. We have kind of progressed all of those things as we have moved over the last couple of years, Laurence. But fundamentally, we are still gonna be tied to certain commodity chemicals You know, like, do not want to do anything that, you know, links 100% of our pricing directly to those chemicals because we have innovative products that provide value far beyond the combination of raw materials. So we focus mostly on innovation excellence, to bring value to our customers, commercial excellence to articulate that value to our customers.

And that enables a much different discussion when you do have inflation and you are delivering productivity to our customers and enables us to capture it faster. And I think that it is structurally Laurence, the industry. The chemical industry is still long. Still excess capacity. So we. Our procurement team is working on diversified supplier base to have better you know, better supplier for PPE. And then 1 last thing I will say because it is exciting and fun to talk about is I mentioned on 1 of my calls a couple quarters ago what we are doing with AI formulation. We use AI to optimize our raw material combinations without sacrificing performance for our customers.

And, 100 years' worth of formulas scattered across 100 labs around the world, and AI has brought us that capability. And you know, we are we are over 150 formulas now that we have done that with, and that delivers us good offsets to what happens out there from an inflationary standpoint.

Operator: Your next question comes from the line of Christopher Parkinson with Wolfe Research. Your line is open.

Christopher Parkinson: Hey, guys. This is Harris Fine on for Christopher. Just a quick 1 for me. You outpaced the industry by 300-basis-points in the quarter. I guess how much of that was you being aligned with the right existing customers, new incremental share gains that you can point to flowing through? And you know, across the portfolio, how much in the past, you have called out like, dollar amounts on share gains that you see in the pipe. Just how much in terms of share gains do you have visibility to that still has not flowed through yet? Thanks.

Timothy Knavish: Yeah. So it is it is both, Harris. We have a 'win with the winners' strategy where that cuts across many of our businesses and you know, credit Alicia who started it in automotive, but we have spread it across many of our businesses where, you know, we try to pick the winners and deliver our value proposition to them and then ride their growth. Right? So that is part of it.

But we also have talked about some pretty significant share wins, chunky ones, that is largely in the industrial segment just because of the nature of the customer If you think about an architectural coatings customer, that takes, you know, hundreds and thousands of micro wins and that is what we are fighting every day. Whereas industrial segment, where you are factory to factory larger chunky wins, I think we have said we have we have got a pipeline that will get about $25 million a quarter of new industrial segment wins, and that is been that is been our run rate, and that is what you should expect to continue to see over the next several quarters.

Operator: Your next question comes from the line of Sean Gilmartin with Bloomberg Intelligence Research. Your line is open. There are no further questions at this time. I will now turn the call back over to Alex Lopez.

Alejandro Lopez: Thank you, Warren. We appreciate your interest and confidence in PPG. This concludes our third quarter earnings call.

Operator: This concludes today's conference call. You may now disconnect.

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