PPG Industries, Inc.

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 2026 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 speaker's 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 one on your telephone keypad. If you would like to withdraw your question, press star one again. To allow everyone an opportunity to ask a question, the company requests that each analyst ask only one 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.

Thank you, Warren, and good morning, everyone. This is Alex Lopez. Joining me today from PPG are Tim Knavish, Chairman and CEO, and Jamie Beggs, Senior Vice President and CFO. Our remarks relate to the financial information released 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 two of the presentation materials. Please refer to our presentation materials and SEC filings available on the Investor Center website for additional information and reconciliations of non-GAAP financial measures.

Team, over to you. Thank you, Alex. Good morning, everyone. Welcome to our third quarter 2026 earnings call. I will begin with highlights from our record third quarter, and then we'll share our outlook for the remainder of the year. Before reviewing our results, I'd 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 PBG. 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 seventh consecutive quarter of organic sales growth. We outpace 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. Thank you for joining us. Importantly, our commercial actions fully offset cost of goods sold inflation during the quarter, a significant milestone for us. We achieved this in just six months, half the time it took in the 2021 inflation cycle and one-third 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 $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. 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 coding 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 U.S., collision claims versus prior improved sequentially from negative 6% in the second quarter to negative 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 Segment EBITDA grew 21% and EBITDA margin expanded 220 basis points to 23.9%. 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. 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 in aerospace, making it one 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 transparencies operations in Huntsville, Alabama. This project will increase operational efficiency and create additional 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 coating segment, third quarter 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 two-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 pricing. In the fourth quarter, we expect segment organic sales essentially flat year over year, Thank you for joining us.