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What changed in PPG Industries's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PPG Industries's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+263 added−216 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-15)

Top changes in PPG Industries's 2024 10-K

263 paragraphs added · 216 removed · 176 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

40 edited+5 added−5 removed24 unchanged
Biggest changePPG’s business is comprised of two reportable business segments: Performance Coatings and Industrial Coatings as described below: 2023 PPG ANNUAL REPORT AND FORM 10-K 3 PERFORMANCE COATINGS Strategic Business Unit Products Primary Customers / End-uses Main Distribution Methods Primary Brands Aerospace Coatings Coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, packaging and chemical management services for the aerospace industry Commercial, military, regional jet and general aviation aircraft Direct to customers and company-owned distribution network PPG® Architectural Coatings Americas and Asia Pacific Paints, wood stains, adhesives, sealants and purchased sundries Painting and maintenance contractors and consumers for decoration and maintenance of residential and commercial building structures Company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires, independent distributors and direct to consumers PPG®, GLIDDEN®, COMEX®, OLYMPIC®, DULUX® (in Canada), PPG PITTSBURGH PAINTS®, MULCO®, FLOOD®, LIQUID NAILS®, SICO®, RENNER®, TAUBMANS®, WHITE KNIGHT®, BRISTOL® and HOMAX® Architectural Coatings Europe, Middle East and Africa (EMEA) SIGMA®, HISTOR®, SEIGNEURIE®, GUITTET®, PEINTURES GAUTHIER®, RIPOLIN®, JOHNSTONE’S®, LEYLAND®, PRIMALEX®, DEKORAL®, TRILAK®, PROMINENT PAINTS®, GORI®, BONDEX®, DANKE!® and TIKKURILA® Automotive Refinish Coatings Coatings, solvents, adhesives, sealants, purchased sundries, software and paint films Automotive and commercial transport/fleet repair and refurbishing, light industrial coatings and specialty coatings for signs Independent distributors and direct to customers PPG®, SEM®, SPRINT® Protective and Marine Coatings Coatings and finishes for the protection of metals and structures Metal fabricators, heavy duty maintenance contractors and manufacturers of ships, bridges and rail cars Direct to customers, company-owned architectural coatings stores, independent distributors and concessionaires PPG® Traffic Solutions Paints, thermoplastics, pavement marking products and other advanced technologies for pavement marking Government, commercial infrastructure, painting and maintenance contractors Direct to customers, government agencies and independent distributors Ennis-Flint® Segment Overview This reportable business segment primarily supplies a variety of protective and decorative coatings, adhesives, sealants and finishes along with pavement marking products, paint strippers, stains and related chemicals, transparencies, transparent armor and paint films.
Biggest changePPG’s business is comprised of three reportable business segments: Global Architectural Coatings, Performance Coatings and Industrial Coatings as described below: 2024 PPG ANNUAL REPORT AND FORM 10-K 3 GLOBAL ARCHITECTURAL COATINGS Strategic Business Unit Products Primary Customers / End-uses Main Distribution Methods Primary Brands Architectural Coatings Latin America and Asia Pacific Paints, wood stains, adhesives, sealants and purchased sundries Painting and maintenance contractors and consumers for decoration and maintenance of residential and commercial building structures Company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires, independent distributors and direct to consumers COMEX®, PPG®, GLIDDEN®, MERIDIAN®, POLYFORM®, RENNER®, TAUBMANS® and WHITE KNIGHT® Architectural Coatings Europe, Middle East and Africa (EMEA) SIGMA®, HISTOR®, SEIGNEURIE®, GUITTET®, PEINTURES GAUTHIER®, RIPOLIN®, JOHNSTONE’S®, LEYLAND®, PRIMALEX®, DEKORAL®, TRILAK®, GORI®, BONDEX®, DANKE!® and TIKKURILA® Segment Overview This reportable business segment primarily supplies a variety of decorative coatings, adhesives, sealants and finishes along with paint strippers, stains and related chemicals.
Demand for our architectural coatings and traffic solutions products is typically the strongest in the second and third quarters due to higher home improvement, maintenance and construction activity during the spring and summer months in the U.S., Canada and Europe. The Latin American paint season is the strongest in the fourth quarter.
Demand for our architectural coatings in Europe and traffic solutions products in the U.S and Canada is typically the strongest in the second and third quarters due to higher home improvement, maintenance and construction activity during the spring and summer months. The Latin American paint season is the strongest in the fourth quarter.
PPG supplies paints, coatings and specialty materials to customers serving a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish and aftermarket; pavement marking products; as well as coatings for other industrial and consumer products.
PPG supplies paints, coatings and specialty products to customers serving a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish and aftermarket; pavement marking products; as well as coatings for other industrial and consumer products.
We typically experience fluctuating prices for energy and raw materials driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, government regulation, and global supply and demand factors.
We typically experience fluctuating prices for energy and raw materials driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, government regulation, tariffs, and global supply and demand factors.
PPG is committed to using resources efficiently and driving sustainability throughout our entire value chain, including continued focus on reducing greenhouse gas emissions, water withdrawal and total energy use. During 2023, PPG announced its near-term 2030 sustainability goals, including greenhouse gas (“GHG”) emissions targets that have been validated by the Science Based Targets initiative.
PPG is committed to using resources efficiently and driving sustainability throughout our entire value chain, including continued focus on reducing greenhouse gas emissions, water withdrawal and total energy use. In 2023, PPG announced its near-term 2030 sustainability goals, including greenhouse gas (“GHG”) emissions targets that have been validated by the Science Based Targets initiative.
Item 1. Business PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings and specialty materials. PPG was incorporated in Pennsylvania in 1883. PPG’s vision is to be the first-choice partner to meet our customers’ evolving needs for innovative paints, coatings and surface solutions to protect and beautify the world.
Item 1. Business PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings and specialty products. PPG was incorporated in Pennsylvania in 1883. PPG’s vision is to be the first-choice partner to meet our customers’ evolving needs for innovative paints, coatings and surface solutions to protect and beautify the world.
These strategies in the areas of culture and purpose, employee engagement, development and pay equity are overseen by the Human Capital Management and Compensation Committee of our Board of Directors. We are committed to ensuring our employees are safe, healthy, enabled, engaged and valued for the diverse talents they bring to PPG.
These strategies in the areas of culture and purpose, employee engagement, development and pay equity are overseen by the Human Capital Management and Compensation Committee of our Board of Directors. We are committed to ensuring our employees are safe, healthy, enabled, engaged and valued for the unique talents they bring to PPG.
Raw Materials, Energy and Logistics PPG uses a wide variety of complex raw materials that serve as the building blocks of our manufactured products. The Company’s most significant raw materials include resins, reactants, solvents, titanium dioxide, epoxy and emulsions. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide.
Raw Materials, Energy and Logistics PPG uses a wide variety of complex raw materials that serve as the building blocks of our manufactured products. The Company’s most significant raw materials include resins, solvents, reactants, titanium dioxide, additives and epoxy. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide.
PPG has a proud heritage with a demonstrated commitment to innovation, sustainability, community engagement and development of leading-edge paint, coatings and specialty materials technologies. Through dedication and industry-leading expertise, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. PPG is a global leader with manufacturing facilities and equity affiliates in more than 70 countries.
PPG has a proud heritage with a demonstrated commitment to innovation, sustainability, community engagement and development of leading-edge paint, coatings and specialty products. Through dedication and industry-leading expertise, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. PPG is a global leader with manufacturing facilities and equity affiliates in more than 70 countries.
The Vice President, Global Sustainability works with PPG’s Sustainability Committee, a committee of management consisting of senior corporate executives, to establish and monitor our sustainability goals, policies, programs and procedures that incorporate sustainability into our business practices, including resource management, climate change impacts, innovation, community engagement, communications, procurement, manufacturing and employee wellness. Our dedication to innovation is intertwined with sustainability.
The Vice President, Global Sustainability works with PPG’s Sustainability Committee, a committee of management consisting of senior corporate executives, to establish and monitor our sustainability goals, policies, programs and procedures that incorporate sustainability into our business practices, including resource management, innovation, community engagement, communications, procurement, manufacturing and employee wellness. Our dedication to innovation is intertwined with sustainability.
The Company has numerous collective bargaining agreements throughout the world. We observe local customs, laws and practices in labor relations when negotiating collective bargaining agreements. There were no significant work stoppages in 2023.
The Company has numerous collective bargaining agreements throughout the world. We observe local customs, laws and practices in labor relations when negotiating collective bargaining agreements. There were no significant work stoppages in 2024.
For the year ended December 31, 2023, 44% of sales were from sustainably-advantaged products and processes that we have defined as addressing multiple sustainability benefits, including lower emissions, lower toxicity, energy efficiency, use of renewable raw materials or extending durability.
For the year ended December 31, 2024, 41% of sales were from sustainably-advantaged products and processes that we have defined as addressing multiple sustainability benefits, including lower emissions, lower toxicity, energy efficiency, use of renewable raw materials or extending durability.
These products include compact automotive paint processes and low temperature cure capabilities that save energy and reduce water usage at customer manufacturing sites; sustainably-advantaged waterborne coatings formulations; sustainably-advantaged powder coatings; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; antimicrobial products; coatings that contain reduced materials of concern; architectural coatings that contain lower carbon content raw materials; silica products for tires that improve vehicle fuel economy; and solutions for autonomous and battery-powered vehicles.
These products include compact automotive paint processes and low temperature cure capabilities that save energy and reduce water usage at customer manufacturing sites; sustainably-advantaged waterborne coatings formulations; sustainably-advantaged powder coatings; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; antimicrobial products; coatings that contain reduced materials of concern; architectural coatings that contain lower carbon content raw materials; and solutions for autonomous and battery-powered vehicles.
In support of our decarbonization efforts, we are increasing the amount of renewable energy secured for our operating facilities and increasingly evaluating alternative raw materials that offer sustainable benefits and support the circular economy, including recycled and renewable feedstocks.
In support of our decarbonization efforts, we continue to increase the amount of renewable energy secured for our operating facilities, and we are increasingly evaluating alternative raw materials that offer sustainable benefits and support the circular economy, including recycled and renewable feedstocks.
More information about PPG’s human capital management strategies and our workforce can be found in the Proxy Statement for our 2024 Annual Meeting of Shareholders and in our ESG Report located at http://sustainability.ppg.com. Environmental Matters PPG is committed to operating in a sustainable and productive manner and to helping our customers meet their sustainability goals.
More information about PPG’s human capital management strategies and our workforce can be found in the Proxy Statement for our 2025 Annual Meeting of Shareholders and in our Sustainability Report located at http://sustainability.ppg.com. 2024 PPG ANNUAL REPORT AND FORM 10-K 8 Environmental Matters PPG is committed to operating in a sustainable and productive manner and to helping our customers meet their sustainability goals.
While PPG faced certain raw material shortages and logistical challenges during 2022, raw material and logistics availability continued to improve throughout 2023 and is now comparable to pre-pandemic conditions. We continue to focus on improving our competitive cost position and expanding our supply of high-quality raw materials, including strategic initiatives to qualify multiple sources of supply.
While PPG faced certain raw material shortages and logistical challenges during 2021 and 2022, raw material and logistics availability improved in 2023 and 2024 and is now comparable to pre-pandemic conditions. We continue to focus on improving our competitive cost position and expanding our supply of high-quality raw materials, including strategic initiatives to qualify multiple sources of supply.
PPG® Packaging Coatings Specifically formulated coatings Metal cans, closures, and plastic and aluminum tubes for food, beverage and personal care, and promotional and specialty packaging PPG® Specialty Coatings and Materials Amorphous precipitated silicas, TESLIN® substrate, Organic Light Emitting Diode (OLED) materials, optical lens materials and photochromic dyes Silicas - Tire, battery separator and other end-uses TESLIN - Labels, e-passports, drivers’ licenses, breathable membranes, loyalty cards and identification cards OLED - displays and lighting Lens materials - optical lenses, coatings and color-change products PPG® TESLIN® (a) Original equipment manufacturer (OEM) Segment Overview 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, precipitated silicas and other specialty materials.
Packaging Coatings Specifically formulated coatings Metal cans, closures, and plastic and aluminum tubes for food, beverage and personal care, and promotional and specialty packaging Specialty Products TESLIN® substrate, Organic Light Emitting Diode (OLED) materials, optical lens materials and photochromic dyes TESLIN® - Labels, including blood bag labels, e-passports, drivers’ licenses, breathable membranes, loyalty cards and identification cards OLED - displays and lighting Lens materials - optical lenses, coatings and color-change products (a) Original equipment manufacturer (OEM) Segment Overview 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 and other specialty products.
We measure progress against our health and safety goals using the injury and illness rate, which is calculated as the number of illness and injury incidents per 200,000 work hours.
We measure progress against our health and safety goals using the injury and illness rate, which is calculated as the number of illness and injury incidents per 200,000 work hours. For 2024, our injury and illness rate was 0.31.
Global Competitors Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Kansai Paints, Nippon Paint and The Sherwin-Williams Company Principal Manufacturing and Distribution Facilities Barberton, Ohio; Cheonan, South Korea; Cieszyn, Poland; Circleville, Ohio; Cleveland, Ohio; Delfzijl, Netherlands; Lake Charles, Louisiana; Oak Creek, Wisconsin; Quattordio, Italy; San Juan del Rio, Mexico; Springdale, Pennsylvania; Sumaré, Brazil; Weingarten, Germany; and Tianjin and Zhangjiagang, China. 2023 PPG ANNUAL REPORT AND FORM 10-K 5 Research and Development ($ in millions, except percentages) 2023 2022 2021 Research and development costs, including depreciation of research facilities $456 $470 $463 % of annual net sales 2.5 % 2.7 % 2.8 % Technology innovation has been a hallmark of PPG’s success throughout its history.
Global Competitors Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Kansai Paints, Nippon Paint and The Sherwin-Williams Company Principal Manufacturing and Distribution Facilities Barberton, Ohio; Cheonan, South Korea; Cieszyn, Poland; Circleville, Ohio; Cleveland, Ohio; Monroeville, Pennsylvania; Oak Creek, Wisconsin; Quattordio, Italy; San Juan del Rio, Mexico; Springdale, Pennsylvania; Sumaré, Brazil; Weingarten, Germany; and Tianjin and Zhangjiagang, China. 2024 PPG ANNUAL REPORT AND FORM 10-K 6 Research and Development ($ in millions, except percentages) 2024 2023 2022 Research and development costs, including depreciation of research facilities $447 $446 $457 % of annual net sales 2.8 % 2.7 % 2.9 % Technology innovation has been a hallmark of PPG’s success throughout its history.
The PPG Global Supplier Code of Conduct clarifies our global expectations in the areas of business integrity, labor practices, 2023 PPG ANNUAL REPORT AND FORM 10-K 6 associate health and safety, and environmental management. Our Supplier Sustainability Policy builds upon our Global Supplier Code of Conduct by establishing expectations for sustainability within our supply chain.
The PPG Global Supplier Code of Conduct clarifies our global expectations in the areas of business integrity, labor practices, associate health and safety, and environmental management. Our Supplier Sustainability Policy builds upon our Global Supplier Code of Conduct by establishing expectations for sustainability within our supply chain.
Major Competitive Factors Product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition Global Competitors Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Benjamin Moore, Hempel A/S, Kansai Paints, the Jotun Group, Masco Corporation, Nippon Paint, RPM International Inc., The Sherwin-Williams Company and 3M Company Principal Manufacturing and Distribution Facilities Amsterdam, Netherlands; Birstall, United Kingdom; Busan, South Korea; Carrollton, Texas; Clayton, Australia; Delaware, Ohio; Deurne, Belgium; Ennis, Texas; Gonfreville, France; Greensboro, North Carolina; Huntsville, Alabama; Huron, Ohio; Kunshan, China; Little Rock, Arkansas; Milan, Italy; Mojave, California; Nykvarn, Sweden; Oakwood, Georgia; Ontario, Canada; Ostrow Wielkopolski, Poland; Ruitz, France; Shildon, United Kingdom; Sylmar, California; Stowmarket, United Kingdom; Tepexpan, Mexico; Vantaa, Finland; and Wroclaw, Poland. 2023 PPG ANNUAL REPORT AND FORM 10-K 4 INDUSTRIAL COATINGS Strategic Business Unit Products Primary Customers / End-uses Main Distribution Methods Primary Brands Automotive OEM (a) Coatings Specifically formulated coatings, adhesives and sealants, metal pretreatments and paint films Automotive original equipment, including combustion engine, commercial, and electric vehicles, and automotive parts and accessories, including battery-related components Direct to manufacturing companies and various coatings applicators PPG® Industrial Coatings Specifically formulated coatings, adhesives and sealants and metal pretreatments; services and coatings application Appliances, agricultural and construction equipment, consumer electronics, building products (including residential and commercial construction), kitchenware, transportation vehicles and numerous other finished products; On-site coatings services within several customer manufacturing locations as well as at regional service centers.
Major Competitive Factors Product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition Global Competitors Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Hempel A/S, Kansai Paints, the Jotun Group, Nippon Paint, RPM International Inc., The Sherwin-Williams Company and 3M Company Principal Manufacturing and Distribution Facilities Amsterdam, Netherlands; Birstall, United Kingdom; Busan, South Korea; Clayton, Australia; Delaware, Ohio; Deurne, Belgium; Ennis, Texas; Gonfreville, France; Greensboro, North Carolina; Huntsville, Alabama; Kunshan, China; Little Rock, Arkansas; Milan, Italy; Mojave, California; Nykvarn, Sweden; Ontario, Canada; Ostrow Wielkopolski, Poland; Ruitz, France; Shildon, United Kingdom; Sylmar, California; Stowmarket, United Kingdom; Tepexpan, Mexico; Vantaa, Finland; and Wroclaw, Poland. 2024 PPG ANNUAL REPORT AND FORM 10-K 5 INDUSTRIAL COATINGS Strategic Business Unit Products Primary Customers / End-uses Main Distribution Methods Primary Brands Automotive OEM (a) Coatings Specifically formulated coatings, adhesives and sealants, metal pretreatments and paint films; technical services and coatings applications Automotive original equipment manufacturers and tier supplier network, including combustion engine, commercial, and electric vehicles, and automotive parts and accessories, including battery-related components; On-site coatings services within several customer manufacturing locations as well as at regional service centers.
Our experience to date regarding environmental matters leads us to believe that we will have continuing expenditures for compliance with provisions regulating the protection of the environment and for present and future remediation efforts at waste and plant sites.
Our experience to date regarding environmental matters leads us to believe that we will have continuing expenditures for compliance with provisions regulating the protection of the environment and for present and future remediation efforts at waste and plant sites. Management anticipates that such expenditures will occur over an extended period of time.
Actual future capital expenditures may differ from expectations due to the inherent uncertainties involved in estimating future environmental remediation compliance costs, including possible technological, regulatory and enforcement developments, the results of environmental studies and other factors.
Actual future capital expenditures may differ from expectations due to the inherent uncertainties involved in estimating future environmental remediation compliance costs, including possible technological, regulatory and enforcement developments, the results of environmental studies and other factors. Available Information The Company’s website address is www.ppg.com .
Our ongoing, global product stewardship efforts are directed at maintaining our compliance with these standards. We anticipate that the number of chemical registration regulations will continue to increase globally, and we have implemented programs to track and comply with these regulations. Our commitment to sustainability extends to our suppliers as an extension of our internal focus on sustainability.
We anticipate that the number of chemical registration regulations will continue to increase globally, and we have implemented programs to track and comply with these regulations. Our commitment to sustainability extends to our suppliers as an extension of our internal focus on sustainability.
There is a wide range of cost estimates for cleanup of these sites, due largely to uncertainties as to the nature and extent of their condition and the methods that may have to be employed for their remediation.
Generally, however, a final allocation of costs is made based on relative contributions of wastes to the site. There is a wide range of cost estimates for cleanup of these sites, due largely to uncertainties as to the nature and extent of their condition and the methods that may have to be employed for their remediation.
These cyclical activity levels result in the collection of outstanding receivables and lower inventory on hand in the fourth quarter generating higher Cash from operating activities. Human Capital The average number of people employed by PPG during 2023 was approximately 53,000, of which approximately 16,300 were in the United States and approximately 36,700 were elsewhere in the world.
These cyclical activity levels result in the collection of outstanding receivables and lower inventory on hand in the fourth quarter generating higher Cash from operating activities. Human Capital As of December 31, 2024, PPG employed approximately 46,000 people, of which approximately 11,700 were in the United States and approximately 34,300 were elsewhere in the world.
PPG competes in its primary markets with the world’s largest coatings companies, most of which have global operations, and with many regional coatings companies.
PPG competes in its primary markets with the world’s largest coatings companies, most of which have global operations, and with many regional coatings companies. In December 2024, PPG completed the sale of 100% of its architectural coatings business in the U.S. and Canada.
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 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.
While PPG is not generally a major contributor of wastes to these offsite waste disposal locations, each potentially responsible party may face governmental agency assertions of joint and several liability. Generally, however, a final allocation of costs is made based on relative contributions of wastes to the site.
PPG is negotiating with various government agencies concerning current and former manufacturing sites and offsite waste disposal locations, including certain sites on the National Priority List. While PPG is not generally a major contributor of wastes to these offsite waste disposal locations, each potentially responsible party may face governmental agency assertions of joint and several liability.
At the management level, day-to-day implementation of our environmental, social and governance (“ESG”) initiatives is led by our Vice President, Global Sustainability, who is responsible for coordinating PPG’s ESG and sustainability programs and for communicating our ESG progress with our customers, shareholders and other stakeholders.
At the management level, day-to-day implementation of our sustainability initiatives is led by our Vice President, Global Sustainability who coordinates PPG’s sustainability programs, integrates these programs into our business and communicates the benefits of our sustainably advantaged products to our customers, shareholders and other stakeholders.
While raw material costs declined during 2023, the Company continues to incur wage inflation, and anticipates further wage inflation impacts in 2024. We are subject to existing and evolving standards relating to the regulation and registration of chemicals which could potentially impact the availability and viability of some of the raw materials we use in our production processes.
We are subject to existing and evolving standards relating to the regulation and registration of chemicals which could potentially impact the availability and viability of some of the raw materials we use in our production processes. Our ongoing, global product stewardship efforts are directed at maintaining our compliance with these standards.
This policy reinforces our expectations that our suppliers, as well as their subcontractors, will comply fully with applicable laws and adhere to internationally recognized environmental, social and corporate-governance standards. Global Operations PPG has significant non-U.S. operations. This broad geographic footprint serves to lessen the significance to us of economic impacts occurring in any one region of the world.
These policies reinforce 2024 PPG ANNUAL REPORT AND FORM 10-K 7 our expectations that our suppliers, as well as their subcontractors, will comply fully with applicable laws and adhere to internationally recognized environmental, social and corporate-governance standards. Global Operations PPG has significant non-U.S. operations.
As a result of our global footprint, we are subject to certain inherent risks, including economic and political conditions in international markets, trade protection measures and fluctuations in foreign currency exchange rates. During 2023, favorable foreign currency translation increased Net sales by approximately $102 million and Income before income taxes by approximately $25 million.
This broad geographic footprint serves to lessen the significance to us of economic impacts occurring in any one region of the world. As a result of our global footprint, we are subject to certain inherent risks, including economic and political conditions in international markets, trade protection measures and fluctuations in foreign currency exchange rates.
Their unique perspectives enable us to meet challenges quickly, creatively and effectively, providing a significant competitive advantage in today’s global economy. To ensure our people feel valued and respected, we are committed to providing a workplace that embraces a culture of diversity and inclusion and is free from harassment and bullying.
We are committed to promoting from within wherever possible while also bringing in new ideas, thoughts and insights. One of PPG’s greatest strengths is our people. Their talents and unique perspectives enable us to meet challenges quickly, creatively and effectively, providing a significant competitive advantage in today’s global economy.
Refer to Note 15, “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K for additional information related to environmental matters and our accrued liability for estimated environmental remediation costs. Available Information The Company’s website address is www.ppg.com .
Refer to Note 15, “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K for additional information related to environmental matters and our accrued liability for estimated environmental remediation costs. 2024 PPG ANNUAL REPORT AND FORM 10-K 9 ($ in millions) 2024 2023 2022 Capital expenditures for environmental control projects $24 $26 $21 We believe that the amount spent on capital expenditures for environmental control projects in 2025 will be similar to 2024.
We are committed to promoting from within wherever possible while also bringing in new ideas, thoughts and insights. Our environmental, health and safety policy and standards define our expectations, and we implement programs and initiatives to reduce health and safety risk in our operations.
To ensure our people feel valued and respected, we are committed to providing a workplace that embraces a culture of collaboration and is free from harassment and bullying. Our environmental, health and safety policy and standards define our expectations, and we implement programs and initiatives to reduce health and safety risk in our operations.
In management’s opinion, the Company operates in an environmentally sound manner and is well positioned, relative to environmental matters, within the industries in which it operates. PPG is negotiating with various government agencies concerning current and former manufacturing sites and offsite waste disposal locations, including certain sites on the National Priority List.
We are subject to existing and evolving standards relating to the protection of the environment. In management’s opinion, the Company operates in an environmentally sound manner and is well positioned, relative to environmental matters, within the industries in which it operates.
In 2023 raw material costs remained high compared to historic levels, but moderated compared to 2022 levels, resulting in a decrease to our operating costs of more than $500 million.
In 2024, raw material costs remained high compared to historic levels, but moderated compared to 2022 levels, resulting in a low single-digit percentage decrease to cost of goods sold compared to 2023. The Company expects raw material costs to increase by a low single-digit percentage during 2025, primarily due to already enacted tariffs.
Management anticipates that such expenditures will occur over an extended period of time. 2023 PPG ANNUAL REPORT AND FORM 10-K 8 In addition to the $227 million currently reserved for environmental remediation efforts, we may be subject to loss contingencies related to environmental matters estimated to be approximately $100 million to $200 million.
In addition to the $222 million currently reserved for environmental remediation efforts, we may be subject to loss contingencies related to environmental matters estimated to be approximately $100 million to $200 million. These reasonably possible unreserved losses relate to environmental matters at a number of sites, none of which are individually significant.
We are marketing an ever-growing variety of products and services that protect the environment and provide safety and other benefits to our customers. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste.
In 2024, PPG continued to innovate and deliver sustainably-advantaged solutions based on our customers’ desire to improve their productivity and to reduce overall value chain environmental impacts. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste.
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Given the uncertainty associated with the various factors that drive raw material prices, we are not able to predict the 2024 full-year impact of changes in raw material costs versus 2023; however, we do not currently expect to incur significant raw material inflation during 2024.
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Accordingly, the Company’s consolidated results of operations and cash flows have been recast to present the results of the architectural coatings business in the U.S. and Canada as discontinued operations for all periods presented, and the Company’s December 31, 2023 balance sheet has been recast to present the assets and liabilities of the U.S. and Canada architectural coatings business as held for sale.
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For 2023, our injury and illness rate was 0.32. 2023 PPG ANNUAL REPORT AND FORM 10-K 7 One of PPG’s greatest strengths is the diversity of our people, who represent wide-ranging nationalities, cultures, languages, religions, ethnicities, and professional and educational backgrounds.
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Refer to Note 2, “Divestitures” under Item 8 of this Form 10-K for further information relating to this transaction.
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In connection with our focus on diversity, equity and inclusion, PPG operates eight Employee Resource Networks (“ERNs”). These ERNs are open to all employees and are intended to provide an opportunity for in-depth discussion, focus and recommendations on how PPG can deliver higher growth and performance by creating a more diverse, equitable and inclusive organization.
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Major Competitive Factors Product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition Global Competitors Akzo Nobel N.V., BASF Corporation, Hempel A/S, Nippon Paint, the Jotun Group, The Sherwin-Williams Company Principal Manufacturing and Distribution Facilities Amsterdam, Netherlands; Birstall, United Kingdom; Debica, Poland; Mexico City, Mexico; Moreuil, France; Nykvarn, Sweden; Ruitz, France; San Juan del Rio, Mexico; Tepexpan, Mexico; Vantaa, Finland; and Wroclaw, Poland. 2024 PPG ANNUAL REPORT AND FORM 10-K 4 PERFORMANCE COATINGS Strategic Business Unit Products Primary Customers / End-uses Main Distribution Methods Primary Brands Aerospace Coatings Coatings, sealants, transparencies, adhesives, engineered materials, packaging and chemical management services for the aerospace industry Commercial, military, regional jet and general aviation aircraft Direct to customers and company-owned distribution network PPG® Automotive Refinish Coatings Coatings, solvents, adhesives, sealants, purchased sundries, digital solutions and paint films Automotive and commercial transport/fleet repair and refurbishing, light industrial coatings and specialty coatings for signs Independent distributors and direct to customers PPG®, SEM®, SPRINT® Protective and Marine Coatings Coatings and finishes for the protection of metals and structures Metal fabricators, heavy duty maintenance contractors and manufacturers of ships, bridges and rail cars Direct to customers, company-owned architectural coatings stores, independent distributors and concessionaires PPG®, SIGMA® Traffic Solutions Paints, thermoplastics, raised pavement markers and other advanced technologies for pavement marking Government, commercial infrastructure, painting and maintenance contractors Direct to customers, government agencies and independent distributors Ennis-Flint® Segment Overview This reportable business segment primarily supplies a variety of protective coatings, adhesives, sealants and finishes along with pavement marking products and related chemicals, transparencies and paint films.
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More information about PPG’s sustainability values, efforts, goals and data and our community and employee engagement programs can be found in our ESG Report located at http://sustainability.ppg.com. We are subject to existing and evolving standards relating to the protection of the environment.
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Direct to manufacturing companies and various coatings applicators PPG® Industrial Coatings Specifically formulated coatings, adhesives and sealants and metal pretreatments Appliances, agricultural and construction equipment, consumer electronics, building products (including residential and commercial construction), kitchenware, transportation vehicles and numerous other finished products.
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($ in millions) 2023 2022 2021 Capital expenditures for environmental control projects $26 $22 $17 We believe that capital expenditures for environmental control projects will be slightly higher in 2024 compared to 2023.
Added
During 2024, unfavorable foreign currency translation decreased Net sales by approximately $70 million and Income before income taxes by approximately $20 million.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePPG is involved in a number of lawsuits and claims, both actual and potential, in which substantial monetary damages are sought. Those 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.
Biggest changeThose 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. Any such claims, whether with or without merit, could be time consuming and expensive to defend and could divert management’s attention and resources.
Any non-compliance or such improper actions or allegations could damage our reputation and subject us to civil or criminal investigations and shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory costs.
Any non-compliance, improper actions or allegations of such could damage our reputation and subject us to civil or criminal investigations and shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory costs.
We compete with other companies both within and outside of our industry for talented personnel in a highly competitive labor market, and we may face challenges attracting or retaining qualified employees. If we are unable to effectively attract, develop and retain a qualified workforce, our businesses, financial condition and results of operations could be adversely affected. Item 1B.
We compete with other companies both within and outside of our industry for talented personnel in a highly competitive labor market, and we may face challenges attracting or retaining qualified employees. If we are unable to effectively attract, develop and retain a qualified workforce, our businesses, financial condition and results of operations could be adversely affected.
Item 1A. Risk Factors As a global manufacturer of paints, coatings and specialty materials, we operate in a business environment that includes risks. Each of the risks described in this section could adversely affect our results of operations, financial position and liquidity.
Item 1A. Risk Factors As a global manufacturer of paints, coatings and specialty products, we operate in a business environment that includes risks. Each of the risks described in this section could adversely affect our results of operations, financial position and liquidity.
Unexpected events, including supply disruptions, temporary plant and/or power outages, work stoppages, natural disasters and severe weather events, including those potentially due to climate change, significant public health issues, computer system disruptions, challenges implementing, upgrading or transitioning enterprise resource planning systems, fires, war or terrorist activities, could increase the cost of doing business or otherwise harm the operations of PPG, our customers and our suppliers.
Unexpected events, including supply disruptions, temporary plant and/or power outages, work stoppages, natural disasters and severe weather events, significant public health issues, computer system disruptions, challenges implementing, upgrading or transitioning enterprise resource planning systems, fires, war or terrorist activities, could increase the cost of doing business or otherwise harm the operations of PPG, our customers and our suppliers.
There is a high level of uncertainty surrounding future global economic conditions due to a number of factors, including the impact of higher interest rates, geopolitical uncertainty, including the international impacts of the ongoing wars in Ukraine and Israel and increasing tensions between China and the United States, commodity market volatility, potential changes to international trade agreements, the imposition of tariffs and the threat of additional tariffs, and labor shortages in certain regions of the world.
There is a high level of uncertainty surrounding future global economic conditions due to a number of factors, including the impact of higher interest rates, geopolitical uncertainty, including the international impacts of the ongoing wars in Ukraine and Israel and increasing tensions between China and the United States, commodity market volatility, potential changes to international trade agreements, the imposition of tariffs and the threat of additional tariffs, 2024 PPG ANNUAL REPORT AND FORM 10-K 10 and labor shortages in certain regions of the world.
If raw material costs increase and we are unable to offset these higher costs in a timely manner, this would adversely impact Income from continuing operations and Cash from operating activities. 2023 PPG ANNUAL REPORT AND FORM 10-K 9 The pace of economic growth and level of economic and geopolitical uncertainty could have a negative impact on our results of operations and cash flows.
If raw material costs increase and we are unable to offset these higher costs in a timely manner, this would adversely impact Income from continuing operations and Cash from operating activities. The pace of economic growth and level of economic and geopolitical uncertainty could have a negative impact on our results of operations and cash flows.
As a result of our operations outside the U.S., we are subject to certain inherent risks, including political and economic uncertainty, inflation rates, exchange rates, trade protection measures, local labor conditions and laws, restrictions on foreign investments and repatriation of 2023 PPG ANNUAL REPORT AND FORM 10-K 11 earnings, and weak intellectual property protection.
As a result of our operations outside the U.S., we are subject to certain inherent risks, including political and economic uncertainty, inflation rates, exchange rates, trade protection measures, local labor conditions and laws, restrictions on foreign investments and repatriation of earnings, and weak intellectual property protection.
It is not possible for us to predict the occurrence or consequence of any such events. However, such events could reduce our ability to supply products, reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers or to deliver products to customers.
It is not possible for us to predict the occurrence or consequence of any such events. However, such events could reduce our 2024 PPG ANNUAL REPORT AND FORM 10-K 12 ability to supply products, reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers or to deliver products to customers.
Due to economic and political conditions, tax rates in these various jurisdictions may be subject to significant changes. For example, the Organisation for Economic Co-operation and Development has proposed modernizing international tax rules, including global minimum tax standards, which could cause an increase to our effective tax rate or result in higher cash tax liabilities.
Due to economic and political conditions, tax rates in these various jurisdictions may be subject to significant changes. For example, the Organisation for Economic Co-operation and Development has proposed modernizing international tax rules, including global minimum tax standards (referred to as Pillar 2), which has caused an increase to our effective tax rate.
Preventative and protective actions taken by public health officials, governments and PPG with respect to the public health crises have and may continue to adversely impact our business, suppliers, distribution channels, and customers, including business shutdowns, reduced workforce availability, reduced ability to supply products, or reduced demand for our products.
Preventative and protective actions taken by public health officials, governments and PPG in response to public health crises could adversely impact our business, suppliers, distribution channels, and customers, due to business shutdowns, reduced workforce availability, reduced ability to supply products, or reduced demand for our products.
Recently, there has been an increase in global geopolitical uncertainty due to a number of factors, including the international impacts of the ongoing wars in Ukraine and Israel and increasing tensions between China and the United States. During 2023, approximately 63% of the Company’s total net sales were recognized outside of the United States.
Recently, there has been an increase in global geopolitical uncertainty due to a number of factors, including the international impacts of the ongoing wars in Ukraine and Israel and increasing tensions between China and the United States.
An inability to develop such solutions and our customer’s pace of adoption of those solutions could negatively affect our business or the market demand for our products. We manage our innovation pipeline and introduction of new products through a rigorous stage gate process.
Additionally, the development of customer-facing digital channels has and will continue to transform certain retail industries. An inability to develop such solutions and our customer’s pace of adoption of those solutions could negatively affect our business or the market demand for our products. We manage our innovation pipeline and introduction of new products through a rigorous stage gate process.
Future environmental laws and regulations, including rules requiring expanded reporting of certain environmental, safety and governance information, may require substantial capital expenditures or may require or cause us to modify or curtail our operations, which may have a material adverse impact on our business, financial condition and results of operations. 2023 PPG ANNUAL REPORT AND FORM 10-K 10 We are involved in a number of lawsuits and claims, and we may be involved in future lawsuits and claims, in which substantial monetary damages are sought.
Future environmental laws and regulations, including rules requiring expanded reporting of certain environmental, safety and governance information, may require substantial capital expenditures or may require or cause us to modify or curtail our operations, which may have a material adverse impact on our business, financial condition and results of operations.
In addition, because the techniques, tools and tactics used in cyber-attacks frequently change and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack.
The techniques, tools and tactics used in cyber-attacks evolve rapidly, including from emerging technologies such as advanced automation or artificial intelligence and may be difficult to detect for periods of time. As a result we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack.
Any such claims, whether with or without merit, could be time consuming and expensive to defend and could divert management’s attention and resources. We maintain insurance against some, but not all, of these potential claims, and the levels of insurance we maintain may not be adequate to fully cover any and all losses.
We maintain insurance against some, but not all, of these potential claims, and the levels of insurance we maintain may not be adequate to fully cover any and all losses.
Nonetheless, the results of any future litigation or claims are inherently unpredictable, and such outcomes could have a material adverse effect on our results of operations, Cash from operating activities or financial condition. We are subject to a variety of laws and regulations, which could increase our compliance costs and could adversely affect our results of operations.
Nonetheless, the results of any future litigation or claims are 2024 PPG ANNUAL REPORT AND FORM 10-K 11 inherently unpredictable, and such outcomes could have a material adverse effect on our results of operations, Cash from operating activities or financial condition.
Our business relies on continued global demand for our brands and products. To achieve our business goals, we must develop and sell products that appeal to customers.
Our ability to understand our customers’ specific preferences and requirements, and to innovate, develop, produce and market products that meet customer demand is critical to our business results. Our business relies on continued global demand for our brands and products. To achieve our business goals, we must develop and sell products that appeal to customers.
These risks or other challenges encountered in connection with our past or future acquisitions and joint ventures could cause delays in realizing the anticipated benefits of such acquisitions or joint ventures, or such anticipated benefits may never be realized, which could adversely affect our results of operations, Cash from operating activities or financial condition. 2023 PPG ANNUAL REPORT AND FORM 10-K 12 Our ability to understand our customers’ specific preferences and requirements, and to innovate, develop, produce and market products that meet customer demand is critical to our business results.
These risks or other challenges encountered in connection with our past or future acquisitions and joint ventures could cause delays in realizing the anticipated benefits of such acquisitions or joint ventures, or such anticipated benefits may never be realized, which could adversely affect our results of operations, Cash from operating activities or financial condition.
Competitive pressures may not only reduce our margins but may also impact our revenues and our growth which could adversely affect our results of operations. Public health crises, including pandemics and the measures taken by public health and government authorities to address them, have adversely impacted and could continue to adversely impact our financial condition and results of operations.
Public health crises, including pandemics and the measures taken by public health and government authorities to address them, have adversely impacted our financial condition and results of operations in the past, and could adversely impact us in the future.
In addition, through the introduction of new technologies, new business models or new methods of travel, such as ridesharing, the number of automotive OEM new-builds may decline, potentially reducing demand for our automotive OEM coatings and related automotive parts. Additionally, the development of customer-facing digital channels has and will continue to transform certain retail industries.
In addition, through the introduction of new technologies, new 2024 PPG ANNUAL REPORT AND FORM 10-K 13 business models or new methods of travel, such as ridesharing, the number of automotive OEM new-builds may decline, potentially reducing demand for our automotive OEM coatings and related automotive parts.
Our financial condition, liquidity and results of operations were adversely affected by the COVID-19 pandemic, including impacts from efforts by public health officials to mitigate the spread of COVID-19. The effects of this public health crisis interfered with the ability of PPG, our suppliers, our customers, and others to conduct business and negatively affected consumer confidence and the global economy.
The effects of public health crises could interfere with the ability of PPG, our suppliers, our customers, and others to conduct business and negatively affect consumer confidence and the global economy.
Removed
While we cannot reasonably predict the duration or scope of current and future public health crises, our results of operations, financial position and liquidity have been and may continue to be adversely impacted by the COVID-19 pandemic or any other future health-related crises.
Added
Additionally, the cost of raw materials fluctuates due to a number of factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, government regulation, tariffs, and global supply and demand factors, any of which could drive an increase in raw material costs.
Removed
Business disruptions could have a negative impact on our results of operations and financial condition.
Added
Competitive pressures may not only reduce our margins but may also impact our revenues and our growth which could adversely affect our results of operations.
Added
Our financial condition, liquidity and results of operations were adversely impacted by public health crises in the past, including impacts from efforts by public health officials to contain the public health crises.
Added
We are involved in a number of lawsuits and claims, and we may be involved in future lawsuits and claims, in which substantial monetary damages are sought. PPG is involved in a number of lawsuits and claims, both actual and potential, in which substantial monetary damages are sought.
Added
We are subject to a variety of laws and regulations, which could increase our compliance costs and could adversely affect our results of operations.
Added
In 2024, PPG completed the divestiture of its U.S. and Canada Architectural Coatings business, which further increases the percentage of sales recognized outside the U.S. During 2024, approximately 68% of the Company’s total net sales were recognized outside of the United States. Business disruptions could have a negative impact on our results of operations and financial condition.
Added
PPG is committed to developing and selling sustainably-advantaged products, which are designed to help our customers achieve their sustainability goals, including by reducing the amount of materials used in their processes.
Added
We expect that our focus on sustainably-advantaged products will drive future sales growth; however, as customers transition to sustainably-advantaged products, this could adversely impact our sales volumes as customers may require a lower quantity of our products due to reduced customer waste, extended durability and other similar impacts of using our sustainably-advantaged products.
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PPG’s aerospace coatings business depends, in part, on our ability to successfully meet customer demand, production targets and commitments. PPG is currently under contract to supply transparencies, coatings and sealants for use on existing and new commercial, general aviation and military aircraft manufactured by many of the largest global and regional aerospace manufacturers.
Added
Our aerospace business is currently experiencing a backlog resulting in product shortages to certain of our customers. In addition, many of our contracts contemplate production increases over the next several years.
Added
If we fail to meet production targets and commitments, or encounter difficulty or unexpected costs in meeting such levels, it could have a material effect on our reputation, business, operating results, or financial condition.
Added
Similarly, to the extent demand for our products increases rapidly and significantly in future periods, we may not be able to ramp up production quickly enough to meet the demand, which could result in production delays at our customers, lost opportunities for growth and adversely affect our business, financial condition, results of operations or competitive position.
Added
Additionally, delivery delays by us due to production interruptions or delays may subject us to liability from customer claims that such delay resulted in losses to the customer. Item 1B. Unresolved Staff Comments None.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed16 unchanged
Biggest changeOur cybersecurity program includes: • ongoing employee cybersecurity awareness and training activities, which include frequent phishing testing; • access management and access controls intended to implement Principle of Least Privilege (PoLP) access; • protection of certain data through encryption at rest and in transit; • monitoring and protection software; • a vulnerability management program that includes managing the risk of third-party software; • a cyber incident response plan that provides controls and procedures to support appropriate containment, response, investigation, reporting and recovery of cybersecurity incidents; • periodic testing of our cybersecurity posture, including by independent third-party consultants; and • integrating cybersecurity requirements and other provision into various contracts.
Biggest changeOur cybersecurity program includes: • ongoing employee cybersecurity awareness and training activities, which include frequent phishing testing; • access management and access controls intended to implement Principle of Least Privilege (PoLP) access; • protection of certain data through encryption at rest and in transit; • monitoring and protection software; • a vulnerability management program that includes managing the risk of third-party software; • a cyber incident response plan that provides controls and procedures to support appropriate containment, response, investigation, reporting and recovery of cybersecurity incidents; 2024 PPG ANNUAL REPORT AND FORM 10-K 14 • periodic testing of our cybersecurity posture, including by independent third-party consultants; and • integrating cybersecurity requirements and other provisions into various contracts.
We have significantly increased our cybersecurity investments over the last five years and have implemented cybersecurity safeguards designed to detect 2023 PPG ANNUAL REPORT AND FORM 10-K 13 and prevent cybersecurity events that may have a material adverse effect on the Company.
We have significantly increased our cybersecurity investments over the last five years and have implemented cybersecurity safeguards designed to detect and prevent cybersecurity events that may have a material adverse effect on the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur headquarters, certain distribution centers and substantially all company-owned paint stores are located in facilities that are leased while our other facilities are generally owned. Our facilities are considered to be suitable and adequate for the purposes for which they are intended and overall have sufficient capacity to conduct business in the upcoming year.
Biggest changeOur headquarters, certain distribution centers and substantially all company-owned paint stores are located in facilities that are leased while our other facilities are generally owned.
The Company’s principal research and development centers are located in Allison Park, Pa.; Tianjin, China; Cleveland, Oh.; Springdale, Pa.; Milan, Italy; Monroeville, Pa.; Harmar, Pa.; Ingersheim, Germany; Marly, France; Oak Creek, Wi.; Sumare, Brazil; Amsterdam, Netherlands; Vantaa, Finland; Tepexpan, Mexico; Burbank, Ca.; Zhangjiagang, China; Cheonan, Republic of Korea; Wroclaw, Poland; Bangplee, Thailand; and Sylmar, Ca.
The Company’s principal research and development centers are located in Allison Park, Pa.; Tianjin, China; Cleveland, Oh.; Springdale, Pa.; Milan, Italy; Monroeville, Pa.; Ingersheim, Germany; Marly, France; Oak Creek, Wi.; Sumare, Brazil; Amsterdam, Netherlands; Vantaa, Finland; Tepexpan, Mexico; Burbank, Ca.; Zhangjiagang, China; Cheonan, Republic of Korea; Wroclaw, Poland; Bangplee, Thailand; and Sylmar, Ca.
Added
Our facilities are considered to be suitable and adequate for the purposes for which they are intended and overall have sufficient capacity to conduct business in the upcoming year. 2024 PPG ANNUAL REPORT AND FORM 10-K 15

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePPG’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. 2023 PPG ANNUAL REPORT AND FORM 10-K 14 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.
Biggest changeFrom 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.
Morales served as Vice President, Finance from June 2016 through February 2017. From June 2015 through June 2016, he served as Vice President, Investor Relations and Treasurer and from October 2007 through May 2015 he served as Vice President, Investor Relations. (d) Effective May 1, 2023, Mr.
Morales served as Vice President, Finance from June 2016 through February 2017. From June 2015 through June 2016, he served as Vice President, Investor Relations and Treasurer and from October 2007 through May 2015 he served as Vice President, Investor Relations. (d) Mr.
Bergström was named Senior Vice President, Architectural Coatings, Latin America, EMEA and Asia Pacific. Mr. Bergström served as Vice President, Architectural Coatings, Latin America, EMEA and Asia Pacific from February 2022 through April 2023 and as Vice President Architectural Coatings, Latin America from April 2017 through January 2022. (e) Effective May 1, 2023, Mr.
Bergström served as Vice President, Architectural Coatings, Latin America, EMEA and Asia Pacific from February 2022 through April 2023 and as Vice President Architectural Coatings, Latin America from April 2017 through January 2022. (e) Effective October 1, 2024, Mr. Braun was named Senior Vice President, Operations. Mr.
Braun was named Senior Vice President, Industrial Coatings Segment. Mr. Braun served as Vice President, Global Industrial Coatings from January 2020 through April 2023 and as Vice President, Industrial Coatings, Americas from September 2013 through December 2019. (f) Ms. Ericson served as Senior Vice President, Packaging Coatings from July 2018 through December 2022.
Braun served as Senior Vice President, Industrial Coatings Segment from May 2023 through September 2024, Vice President, Global Industrial Coatings from January 2020 through April 2023 and as Vice President, Industrial Coatings, Americas from September 2013 through December 2019. (f) Ms. Ericson served as Senior Vice President, Packaging Coatings from July 2018 through December 2022.
He previously served as Executive Vice President from October 2019 through February 2022, Senior Vice President, Architectural Coatings and President, PPG EMEA from January 2019 through September 2019, Senior Vice President, Industrial Coatings from October 2017 through December 2018, Senior Vice President, Automotive Coatings from March 2016 through September 2017, Vice President, Protective and Marine Coatings from August 2012 through February 2016 and Vice President, Automotive Coatings, Americas from March 2010 through July 2012.
Knavish served as Chief Operating Officer from March 2022 through December 2022, Executive Vice President from October 2019 through February 2022, Senior Vice President, Architectural Coatings and President, PPG EMEA from January 2019 through September 2019, Senior Vice President, Industrial Coatings from October 2017 through December 2018, Senior Vice President, Automotive Coatings from March 2016 through September 2017, Vice President, Protective and Marine Coatings from August 2012 through February 2016 and Vice President, Automotive Coatings, Americas from March 2010 through July 2012.
Knavish (a) 58 Chairman and Chief Executive Officer since October 2023 Anne M. Foulkes (b) 61 Senior Vice President and General Counsel since September 2018 Vincent J. Morales (c) 58 Senior Vice President and Chief Financial Officer since March 2017 K.
Name Age Title Timothy M. Knavish (a) 59 Chairman and Chief Executive Officer since October 2023 Anne M. Foulkes (b) 62 Senior Vice President and General Counsel since September 2018 Vincent J. Morales (c) 59 Senior Vice President and Chief Financial Officer since March 2017 K.
She served as President of SUEZ Chemical Monitoring and Solutions from 2017 until 2018, President of General Electric Water Services Company from 2015 to 2017 and President and Chief Executive Officer of Alstom SA’s U.S. business from 2013 to 2015. (g) Effective May 1, 2023, Mr. Hagerty was named Senior Vice President, Automotive Refinish Coatings. Mr.
She served as President of SUEZ Chemical Monitoring and Solutions from 2017 until 2018, President of General Electric Water Services Company from 2015 to 2017 and President and Chief Executive Officer of Alstom SA’s U.S. business from 2013 to 2015. (g) Mr.
Henrik Bergström (d) 51 Senior Vice President, Architectural Coatings, Latin America, EMEA and Asia Pacific since May 2023 Kevin D. Braun (e) 55 Senior Vice President, Industrial Coatings Segment since May 2023 Amy R. Ericson (f) 58 Senior Vice President, Protective and Marine Coatings since January 2023 Chancey E.
Henrik Bergström (d) 52 Senior Vice President, Architectural Coatings, Latin America, EMEA and Asia Pacific since May 2023 Kevin D. Braun (e) 56 Senior Vice President, Operations since October 2024 Amy R. Ericson (f) 59 Senior Vice President, Protective and Marine Coatings since January 2023 Chancey E.
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.
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.
For a description of asbestos litigation affecting the Company, see Note 15, “Commitments and Contingent Liabilities” to the accompanying consolidated financial statements in Part I, Item 8 of this Form 10-K.
For a description of asbestos litigation affecting the Company, see Note 15, “Commitments and Contingent Liabilities” to the accompanying consolidated financial statements in Part I, Item 8 of this Form 10-K. 2024 PPG ANNUAL REPORT AND FORM 10-K 17 Information About Our Executive Officers Set forth below is information related to the Company’s executive officers as of February 20, 2025.
Hagerty (g) 50 Senior Vice President, Automotive Refinish Coatings since May 2023 Ramaprasad Vadlamannati (h) 61 Senior Vice President, Operations since January 2023 (a) On September 26, 2023, Mr. Knavish was elected Chairman and Chief Executive Officer, effective October 1, 2023. Mr. Knavish served as President and Chief Executive Officer from January 1, 2023 until September 30, 2023. Mr.
Hagerty (g) 51 Senior Vice President, Automotive Refinish Coatings since May 2023 (a) Mr. Knavish served as President and Chief Executive Officer from January 2023 until September 2023. Mr.
Hagerty served as Vice President, Global Automotive Refinish Coatings from January 2020 through April 2023 and as Vice President, Global Industrial Coatings from January 2019 through December 2019. (h) Mr.
Hagerty served as Vice President, Global Automotive Refinish Coatings from January 2020 through April 2023 and as Vice President, Global Industrial Coatings from January 2019 through December 2019. Item 4. Mine Safety Disclosures Not Applicable. 2024 PPG ANNUAL REPORT AND FORM 10-K 18 Part II
PPG believes that the remaining claims are without merit and intends to defend itself against these claims vigorously. For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos.
The Delaware Court of Chancery has set a trial date of May 6, 2025 for the PPG Lawsuit. PPG believes 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.
Removed
The CO&A includes a civil penalty of $1.2 million for alleged past unauthorized discharges.
Added
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.
Removed
In the past, the Company and others have been named as defendants in several cases in various jurisdictions claiming damages related to exposure to lead and remediation of lead-based coatings applications. PPG has been dismissed as a defendant from most of these lawsuits and has never been found liable in any of these cases.
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A trial on the issue of a civil penalty under the Clean Water Act was held in June 2024. Following the trial, the parties filed Proposed Findings of Fact and Conclusions of Law and the matter is now ready for a decision by the Court.
Removed
After having not been named in a new lead-related lawsuit for 15 years, PPG was named as a defendant in two Pennsylvania state court lawsuits filed by Montgomery County and Lehigh County in the respective counties on October 4, 2018 and October 12, 2018.
Added
With regard to plaintiffs’ motion for attorneys’ fees, the Court appointed a Special Master to review the parties' positions regarding the amount of fees that should be awarded. In 2006, a lawsuit was filed in Manaus, Brazil, captioned Di Gregório Navegação LTDA v. PPG Industries, Inc. (the “Di Gregório litigation”).
Removed
Both suits sought declaratory relief arising out of alleged public nuisances in the counties associated with the presence of lead paint on various buildings constructed prior to 1980.
Added
The lawsuit asserted claims arising from a November 1998 fire on a cargo ship off the coast of Brazil; the lawsuit alleges the fire was caused by PPG chemical products that were part of the ship’s cargo. The plaintiff, a charterer of the ship, brought claims for various alleged damages.
Removed
By Opinion and Order dated May 5, 2023, the Pennsylvania Commonwealth Court reversed rulings of the lower trial courts, unanimously ruling that the Counties failed to plead valid causes of action, and remanding both cases to their respective trial courts for dismissal. On June 5, 2023, the Counties filed Petitions for Allowance of Appeal with the Pennsylvania Supreme Court.
Added
This litigation was pending as of July 18, 2012 when PPG and Eagle Spinco Inc. (“Eagle Spinco”) signed a Separation Agreement setting forth the separation of the assets and liabilities of PPG’s commodity chemicals business to an entity to be later identified by Eagle Spinco.
Removed
On November 20, 2023, the Pennsylvania Supreme Court denied the Counties’ Petitions and, as such, dismissal of the lawsuit is now final. 2023 PPG ANNUAL REPORT AND FORM 10-K 15 Information About Our Executive Officers Set forth below is information related to the Company’s executive officers as of February 15, 2024. Name Age Title Timothy M.
Added
The assets and liabilities identified in the Separation Agreement specifically included all liabilities relating to the Di Gregório litigation. On January 22, 2013, PPG and Eagle US 2, LLC (“Eagle US 2”) signed a Contribution Agreement, by which PPG transferred to Eagle US 2 the assets and liabilities as set forth in the Separation Agreement.
Removed
Knavish served as Chief Operating Officer from March 2022 through December 2022.
Added
Georgia Gulf Corporation then acquired Eagle Spinco and Eagle US 2 in a merger transaction after which Georgia Gulf was renamed Axiall Corporation (“Axiall”). Thereafter, Axiall owned Eagle Spinco and Eagle US 2. Under the terms of the Contribution Agreement, Eagle US 2 acquired the assets and liabilities as defined in the Separation Agreement, including the Di Gregório litigation.
Removed
Vadlamannati served as Senior Vice President, Protective and Marine Coatings and President PPG EMEA from October 2019 through December 2022, Senior Vice President, Protective and Marine Coatings from March 2016 through September 2019, Vice President, Architectural Coatings, EMEA and Asia Pacific from August 2014 through February 2016, Vice President, Architectural Coatings, EMEA from February 2012 through July 2014, Vice President, Architectural Coatings, EMEA for Region Western Europe from March 2011 through January 2012 and Vice President, Automotive Refinish, EMEA from September 2010 through February 2011.
Added
In 2016, Westlake Corporation acquired Axiall and its subsidiaries, including Eagle Spinco and Eagle US 2.
Removed
Item 4. Mine Safety Disclosures Not Applicable. 2023 PPG ANNUAL REPORT AND FORM 10-K 16 Part II
Added
For convenience, Westlake Corporation, Axiall, Eagle Spinco, and Eagle US 2 collectively are referred to as “Westlake.” Under the Separation Agreement and Contribution Agreement, Eagle US 2 assumed the Di Gregório litigation liability, and Eagle Spinco and Eagle US 2 were required to remove PPG as an obligor for this liability.
Added
To the extent PPG was not removed 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.
Added
The Separation Agreement also provides PPG an uncapped right of indemnification for all damages PPG incurs arising from the Di Gregório litigation and for any breach of the Separation Agreement or Contribution Agreement. Since 2013, Westlake exclusively has controlled the defense of the Di Gregório litigation.
Added
In 2024, PPG learned that Westlake never substituted itself into the case in place of PPG or otherwise informed the Brazilian court that Westlake is the real party in interest and assumed all liability for the matter.
Added
On May 30, 2024, Westlake informed PPG that the Brazilian court entered an award against PPG (which remains the nominal defendant) that with prejudgment interest, fees, and costs would total over $700 million. More recently, Westlake informed PPG that it believes simple prejudgment interest applies to the judgment which would result in the final award being approximately $350 million.
Added
Westlake informed PPG that although it will continue to defend the case and pursue an appeal of the award, it will not post any bond, pay any judgment, or take any steps to prevent the plaintiff from attempting to execute on the judgment against PPG. 2024 PPG ANNUAL REPORT AND FORM 10-K 16 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”).
Added
In its lawsuit, Eagle Spinco sought to have the Di Gregório liability determined to be one in which its obligation is only to indemnify PPG for any damages PPG incurs net of any insurance coverage available from PPG’s insurers.
Added
On June 13, 2024, PPG filed a lawsuit against Westlake in the Court of Chancery in Delaware (the “PPG Lawsuit”), asserting claims for specific performance, declaratory relief, breach of contract, and equitable estoppel.
Added
The PPG Lawsuit asserts: (a) Westlake assumed all liability for the Di Gregório litigation, (b) Westlake is obligated to remove PPG as an obligor in the litigation and has a continuing duty to act as PPG’s agent to satisfy any award if PPG is not removed as an obligor in the case, (c) Westlake has the duty to pay any award, bond, court fees and other costs awarded in the Di Gregório litigation, (d) Westlake’s obligations are unconditional and not contingent upon the recovery of any insurance proceeds and Westlake did not acquire any right to PPG’s insurance assets, and (e) PPG has an uncapped right of indemnification if Westlake fails to satisfy its obligations under the Separation Agreement and Contribution Agreement.
Added
Eagle Spinco filed counterclaims in the PPG Lawsuit restating the claims originally asserted in the Eagle Spinco Lawsuit, and dismissed the Eagle Spinco Lawsuit. PPG intends to vigorously enforce its rights under the Separation Agreement and Contribution Agreement and to hold Westlake accountable for any damages PPG suffers as a result of Westlake’s breach of contract.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged
Biggest changeThe remaining shares yet to be purchased under the program has been calculated using PPG’s closing stock price on the last business day of the respective month. This repurchase program has no expiration date. Item 6. [Reserved]
Biggest changeIn 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 program has 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. Item 6. [Reserved]
Issuer Purchases of Equity Securities - Fourth Quarter 2023 Month Total Number of Shares Purchased Avg. Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Max.
Issuer Purchases of Equity Securities - Fourth Quarter 2024 Month Total Number of Shares Purchased Avg. Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Max.
Number of Shares That May Yet Be Purchased Under the Programs (1) October 2023 Repurchase program — $— — 9,043,759 November 2023 Repurchase program — $— — 7,819,581 December 2023 Repurchase program 673,638 $148.61 673,638 6,754,871 Total quarter ended December 31, 2023 Repurchase program 673,638 $148.61 673,638 6,754,871 (1) In December 2017, PPG's board of directors approved a $2.5 billion share repurchase program.
Number of Shares That May Yet Be Purchased Under the Programs (1) October 2024 Repurchase program — $— — 24,177,629 November 2024 Repurchase program — $— — 24,204,845 December 2024 Repurchase program 2,034,464 $122.92 2,034,464 23,108,291 Total quarter ended December 31, 2024 Repurchase program 2,034,464 — 2,034,464 23,108,291 (1) In December 2017, PPG's board of directors approved a $2.5 billion share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+50 added−23 removed39 unchanged
Biggest change($ 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 (1) Year-ended December 31, 2023 As reported, continuing operations $1,748 $439 25.1 % $1,270 $5.35 Includes: Acquisition-related amortization expense 161 40 24.8 % 121 0.51 Business restructuring-related costs, net (2) 43 9 20.9 % ` 34 0.14 Impairment and other related charges, net (3) 160 — — % 160 0.67 Portfolio optimization (4) 53 (7) (13.2 %) 58 0.24 Environmental remediation charges, net (5) 30 7 23.3 % 23 0.10 Argentina currency devaluation losses (6) 20 (4) (20.0 %) 24 0.10 Insurance recoveries (7) (16) (4) 25.0 % (12) (0.05) Pension settlement charge (8) 190 46 24.2 % 144 0.61 Adjusted, continuing operations, excluding certain items $2,389 $526 22.0 % $1,822 $7.67 ($ 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 (1) Year-ended December 31, 2022 As reported, continuing operations $1,381 $325 23.5 % $1,028 $4.33 Includes: Acquisition-related amortization expense 166 40 24.1 % 126 0.53 Business restructuring-related costs, net (2) 75 19 25.3 % 56 0.24 Impairment and other related charges, net (3) 245 31 12.7 % 214 0.90 Portfolio optimization (4) 10 (2) (20.0 %) 12 0.05 Adjusted, continuing operations, excluding certain items $1,877 $413 22.0 % $1,436 $6.05 (1) Earnings per diluted share is calculated based on unrounded numbers.
Biggest change($ 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 (1) Year-ended December 31, 2024 As reported, continuing operations $1,852 $475 25.6 % $1,344 $5.72 Includes: Acquisition-related amortization expense 132 32 24.2 % 100 0.42 Business restructuring-related costs, net (2) 377 53 14.1 % 324 1.39 Portfolio optimization (3) 59 (6) (10.2 %) 65 0.28 Legacy environmental remediation charges (4) 24 6 25.0 % 18 0.07 Insurance recoveries (7) (4) (1) 25.0 % (3) (0.01) Adjusted, continuing operations, excluding certain items $2,440 $559 22.9 % $1,848 $7.87 ($ 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 (1) Year-ended December 31, 2023 As reported, continuing operations $1,690 $428 25.3 % $1,223 $5.16 Includes: Acquisition-related amortization expense 154 39 25.3 % 115 0.48 Business restructuring-related costs, net (2) 41 8 19.5 % 33 0.14 Portfolio optimization (3) 53 (7) (13.2 %) 58 0.24 Legacy environmental remediation charges (4) 24 7 29.2 % 17 0.07 Impairment and other related charges, net (5) 160 — — % 160 0.67 Argentina currency devaluation losses (6) 20 (4) (20.0 %) 24 0.10 Insurance recoveries (7) (16) (4) 25.0 % (12) (0.05) Pension settlement charge (8) 190 46 24.2 % 144 0.61 Adjusted, continuing operations, excluding certain items $2,316 $513 22.2 % $1,762 $7.42 2024 PPG ANNUAL REPORT AND FORM 10-K 24 ($ 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 (1) Year-ended December 31, 2022 As reported, continuing operations $1,355 $320 23.6 % $1,007 $4.24 Includes: Acquisition-related amortization expense 145 35 24.1 % 110 0.46 Business restructuring-related costs, net (2) 72 18 25.3 % 54 0.23 Portfolio optimization (3) 10 (2) (20.0 %) 12 0.05 Impairment and other related charges, net (5) 231 29 12.7 % 202 0.86 Adjusted, continuing operations, excluding certain items $1,813 $400 22.1 % $1,385 $5.84 (1) Earnings per diluted share is calculated based on unrounded numbers.
Impairment and other related charges, net During 2023, as a result of its annual impairment testing performed in the fourth quarter, the Company recorded Impairment and other related charges, net of $158 million due to the goodwill impairment recognized for the traffic solutions reporting unit and $2 million to reduce the carrying value of certain indefinite-lived trademarks.
During 2023, as a result of its annual impairment testing performed in the fourth quarter, the Company recorded Impairment and other related charges, net of $158 million due to the goodwill impairment recognized for the traffic solutions reporting unit and $2 million to reduce the carrying value of certain indefinite-lived trademarks.
Refer to Note 18, “Other Charges/(Income), Net” in Item 8 of this Form 10-K for additional information.
Refer to Note 18, “Other (Income)/Charges, Net” in Item 8 of this Form 10-K for additional information.
(2) 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 consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the 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 consolidated statement of income.
(2) Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Business restructuring, net on the consolidated statement of income, accelerated depreciation of certain assets, which is included in Depreciation on the 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 consolidated statement of income.
Liquidity and Capital Resources During the past two years, PPG had sufficient financial resources to meet its operating requirements, to fund our capital spending, including acquisitions, share repurchases and pension plans, and to pay increasing dividends to shareholders.
Liquidity and Capital Resources During the past two years, PPG had sufficient financial resources to meet its operating requirements, to fund capital spending, including acquisitions, share repurchases and pension plans, and to pay increasing dividends to shareholders.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2024, 2023 and 2022.
Accounting Standards to be Adopted in Future Years Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes accounting pronouncements that have been promulgated prior to December 31, 2023 but are not effective until a future date.
Accounting Standards to be Adopted in Future Years Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes accounting pronouncements that have been promulgated prior to December 31, 2024 but are not effective until a future date.
This range is the Company’s best estimate and represents an increase compared to the 2023 adjusted effective tax rate driven by higher rates in certain countries, including the impact of recent global minimum tax standards, and the geographic mix of earnings.
This range is the Company’s best estimate and represents an increase compared to the 2024 adjusted effective tax rate driven by higher rates in certain countries, including the impact of recent global minimum tax standards, and the geographic mix of earnings.
Management anticipates that the resolution of the Company’s environmental contingencies will occur over an extended period of time. Accounting Standards Adopted in 2023 Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes the Company’s recently adopted accounting pronouncements.
Management anticipates that the resolution of the Company’s environmental contingencies will occur over an extended period of time. Accounting Standards Adopted in 2024 Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes the Company’s recently adopted accounting pronouncements.
We believe that the amounts recorded in the financial statements in Item 8 of this Form 10-K related to these contingencies, pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives are based on the best estimates and judgments of the appropriate PPG management, although actual outcomes could differ from our estimates.
We believe that the amounts recorded in the financial statements in Item 8 of this Form 10-K related to these contingencies, pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives are based on the best estimates and judgments of the appropriate members of PPG’s management, although actual outcomes could differ from our estimates.
Packaging coatings organic sales decreased by a mid-single-digit percentage year over year due to lower sales volume in all regions driven by broad demand weakness. These sales volume decreases were partially offset by higher selling prices in most regions.
Packaging coatings organic sales decreased by a mid-single-digit percentage year over year due to lower sales volumes in all regions due to broad demand weakness. These sales volume decreases were partially offset by higher selling prices in most regions.
The Term Loan Credit Agreement 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 Credit Agreement contained 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 included, 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.
PPG does not expect a significant tax payment related to these obligations within the next year. The Company is unable to make a reasonably reliable estimate as to if, or when, any significant cash settlements with tax authorities may occur.
PPG does not expect a significant tax p ayment related to these obligations within the next year. The Company is unable to make a reasonably reliable estimate as to if, or when, any significant cash settlements with tax authorities may occur.
As of December 31, 2023, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 42%. In addition to the amounts available under lines of credit, the Company maintains access to the capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.
As of December 31, 2024, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 45%. In addition to the amounts available under lines of credit, the Company maintains access to the capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity.
Interest income Interest income increased $86 million primarily due to strong cash generation, resulting in higher levels of cash and cash equivalents, as well as the favorable impact of higher interest rates.
Interest income increased $86 million in 2023 versus 2022 primarily due to strong cash generation, resulting in higher levels of cash and cash equivalents, as well as the favorable impact of higher interest rates.
Net payments on commercial paper were zero and $440 million for the years ended December 31, 2023 and December 31, 2022, respectively. Credit agreements and lines of credit In April 2023, PPG entered into a €500 million term loan credit agreement (the "Term Loan").
Net payments on commercial paper were zero for both the years ended December 31, 2024 and December 31, 2023 and $440 million for the year ended December 31, 2022. Credit agreements and lines of credit In April 2023, PPG entered into a €500 million term loan credit agreement (the "Term Loan").
Currency Comparing spot exchange rates at December 31, 2023 and at December 31, 2022, the U.S. dollar weakened against the currencies of many countries within the regions PPG operates, most notably the Mexican peso. As a result, consolidated net assets at December 31, 2023 in cr eased by $508 million from December 31, 2022.
Comparing spot exchange rates at December 31, 2023 and at December 31, 2022, the U.S. dollar weakened against the currencies of many countries within the regions PPG operates, most notably the Mexican peso. As a result, consolidated net assets at December 31, 2023 increased by $508 million from December 31, 2022.
Such factors include statements related to the effects on our business of COVID-19, global economic conditions, geopolitical issues, 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, 2023 PPG ANNUAL REPORT AND FORM 10-K 28 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 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.
Such factors include statements related to global economic conditions, geopolitical issues, 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 imposition of tariffs, the ability to penetrate 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, cybersecurity events, global human health issues, the unpredictability of existing and possible future 2024 PPG ANNUAL REPORT AND FORM 10-K 34 litigation, including asbestos litigation, and government investigations.
In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including: third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment; third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations; and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.
In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including: third-party appraisals for the estimated value and lives of identifiable 2024 PPG ANNUAL REPORT AND FORM 10-K 33 intangible assets and property, plant and equipment; third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations; and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.
The Term Loan Credit Agreement matures and all outstanding borrowings are 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 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 was scheduled to mature and all outstanding borrowings were due and payable on the third anniversary of the date of the initial borrowing under the Agreement. In June 2021, PPG borrowed $700 million under the Term Loan Credit Agreement to finance the Company’s acquisition of Tikkurila, and to pay fees, costs and expenses related thereto.
(3) In the fourth quarter 2023, the Company recorded Impairment and other related charges, net due to goodwill impairment recognized for the traffic solutions reporting unit as a result of its annual goodwill impairment test.
(5) In the fourth quarter 2023, the Company recorded impairment and other related charges due to a non-cash goodwill impairment recognized for the Traffic Solutions reporting unit as a result of its annual goodwill impairment test.
Cash used for financing activities % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Cash used for financing activities ($1,550) ($409) 279.0% 2023 vs. 2022 The $1,141 million increase in cash used for financing activities was primarily due to repayments of long-term debt and lower proceeds from the issuance of debt, partially offset by the absence of net payments on commercial paper.
Cash used for financing activities % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cash used for financing activities $1,425 $1,550 $409 (8.1)% 279.0% 2024 vs. 2023 The $125 million decrease in cash used for financing activities was primarily due to lower repayments of long-term debt, partially offset by higher share repurchases. 2023 vs. 2022 The $1,141 million increase in cash used for financing activities was primarily due to repayment of long-term debt and lower proceeds from the issuance of debt, partially offset by the absence of net payments on commercial paper.
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.
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.
Other liquidity matters At December 31, 2023, the total amount of unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was $135 million. Th e timing of payments will depend on the progress of examinations by tax authorities.
Other liquidity matters At December 31, 2024, the total amount of unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of ta x benefits, was $152 million. The timing of payments will depend on the progress of examinations by tax authorities.
The Company expects strong cash generation in 2024. 2023 PPG ANNUAL REPORT AND FORM 10-K 20 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.
The Company expects strong cash generation in 2025. 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.
In general, most end-use markets do not have significant excess inventories, and any demand improvement should lead to a faster ramp-up of sales volumes. Significant other factors During the year, PPG successfully executed on various strategic initiatives to strengthen the company, including key actions to position PPG for higher organic growth.
In general, most end-use markets do not have significant excess inventories, and any demand improvement should lead to a faster ramp-up of sales volumes. Significant other factors During the year, PPG successfully executed various strategic initiatives to strengthen the company.
As discussed in Item 3 and Note 15, 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. 2023 PPG ANNUAL REPORT AND FORM 10-K 23 As also discussed in Note 15, PPG has significant reserves for environmental contingencies.
As discussed in Item 3 and Note 15, 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.
The Company raised its per-share quarterly dividend by approximately 5% to $0.65 per share in July 2023. 2023 PPG ANNUAL REPORT AND FORM 10-K 25 Debt issued and repaid Debt Issued (net of premium/discount and issuance costs) Year $ in millions Term Loan Credit Agreement, due 2026 2023 $550 1.875% notes (€300) due 2025 2022 $319 2.750% notes (€700) due 2029 2022 $742 1.95% note (€50) due 2037 2022 $55 Debt Repaid Year $ in millions 3.2% notes ($300) 2023 $300 Term Loan Credit Agreement, due 2024 2023 $1,100 Term Loan Credit Agreement, due 2024 2022 $300 Acquired debt 2022 $2 The Company’s commercial paper borrowings are classified as long-term debt based on PPG’s intent and ability to refinance these borrowings on a long-term basis.
Debt issued and repaid Debt Issued (net of premium/discount and issuance costs) Year $ in millions Term Loan Credit Agreement, due 2026 2024 $274 Term Loan Credit Agreement, due 2026 2023 $550 1.875% notes (€300) due 2025 2022 $319 2.750% notes (€700) due 2029 2022 $742 1.95% note (€50) due 2037 2022 $55 Debt Repaid Year $ in millions 2.4% notes ($300) 2024 $300 3.2% notes ($300) 2023 $300 Term Loan Credit Agreement, due 2024 2023 $1,100 Term Loan Credit Agreement, due 2024 2022 $300 Acquired debt 2022 $2 2024 PPG ANNUAL REPORT AND FORM 10-K 31 The Company’s commercial paper borrowings are classified as long-term debt based on PPG’s intent and ability to refinance these borrowings on a long-term basis.
These insurance recoveries are included in Other charges/(income), net in the consolidated statement of income. (8) 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.
(8) 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.
Results were supported by the breadth and diversity of the business portfolio, as the company benefited from higher prices in all businesses and favorable foreign currency translation, which offset lower sales volumes.
Results were supported by the breadth and diversity of the business portfolio, as the Company benefited from higher prices in several businesses which was more than offset by unfavorable foreign currency translation, divestitures and lower sales volumes.
Other charges/(income), net Other charges/(income), net was higher in 2023 compared to the prior year primarily due to an increase in the non-service cost components of pension and other postretirement benefit expense, an increase in environmental remediation costs and foreign currency losses recognized in Argentina related to a central bank adjustment to official foreign currency rates, partially offset by a decrease in net business restructuring expense.
Other (income)/charges, net was lower in 2023 compared to 2022 due to an increase in the non-service cost components of pension and other postretirement benefit expense, an increase in environmental remediation costs and foreign currency losses recognized in Argentina related to a central bank adjustment to official foreign currency rates.
Architectural coatings – EMEA organic sales were flat year over year, with higher selling prices offset by lower sales volumes. Regional demand remains uneven by country, and positive sales trends occurred in some countries, including the United Kingdom, Poland and the Netherlands.
Architectural coatings EMEA organic sales were flat year over year, with higher selling prices offset by lower sales volumes. Regional demand remained uneven by country, and positive sales trends occurred in some countries, including the United Kingdom, Poland and the Netherlands. Architectural coatings Latin America and Asia Pacific organic sales increased during the year due to selling price increases.
There were no amounts outstanding under the Credit Agreement as of December 31, 2023 and December 31, 2022. 2023 PPG ANNUAL REPORT AND FORM 10-K 26 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.
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.
Automotive OEM coatings organic sales increased by a high single-digit percentage year over year driven by higher selling prices and strong sales volume growth in most regions. Sales volume growth was led by the EMEA and Asia Pacific regions, where retail sales and industry build rates are beginning to return to pre-pandemic levels.
Automotive OEM coatings organic sales increased by a high single-digit percentage year over year driven by higher selling prices and strong sales volume growth in most regions. Sales volume growth was led by the EMEA and Asia Pacific regions.
This strong organic sales growth was achieved despite global air travel remaining below pre-pandemic levels. Demand remained strong in all major product categories throughout the year. Protective and marine coatings organic sales increased by a mid-single-digit percentage driven by solid selling price realization and higher sales volumes.
This strong organic sales growth was achieved despite global air travel remaining below pre-pandemic levels. Protective and marine coatings organic sales increased by a mid-single-digit percentage driven by solid selling price realization and higher sales volumes. Traffic solutions organic sales decreased by a mid-single-digit percentage year over year, with sales volume declines in all regions.
These costs are included in Selling, general and administrative expense in the consolidated statement of income. (5) Environmental remediation charges represent environmental remediation costs at certain legacy PPG manufacturing sites. These charges are included in Other charges/(income), net in the consolidated statement of income.
(4) Legacy environmental remediation charges represent environmental remediation costs at certain non-operating PPG manufacturing sites. These charges are included in Other (income)/charges, net in the consolidated statement of income.
The adjusted effective tax rate was 22.0% for the years ended December 31, 2023 and 2022. Earnings per diluted share from continuing operations for the year ended December 31, 2023 increased year over year primarily due to increased selling prices, moderating raw material cost inflation and favorable foreign currency translation impact, partially offset by lower sales volumes.
Earnings per diluted share from continuing operations for the year ended December 31, 2023 increased year over year primarily due to increased selling prices, moderating raw material cost inflation and favorable foreign currency translation impact, partially offset by lower sales volumes. Refer to the Regulation G Reconciliations - Results from Operations for additional information.
Share repurchase activity ($ in millions, except number of shares) 2023 2022 Number of shares repurchased (millions) 0.6 1.5 Cash paid for shares repurchased $86 $190 The Company has approximately $1.0 billion remaining under the current authorization from the Board of Directors, which was approved in December 2017. The current authorized repurchase program has no expiration date.
Share repurchase activity ($ in millions, except number of shares) 2024 2023 2022 Number of shares repurchased (millions) 5.8 0.6 1.5 Cash paid for shares repurchased $752 $86 $190 The Company has approximately $2.8 billion remaining under the current authorization from the Board of Directors.
Refer to the Environmental Matters section of Note 15 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.
As also discussed in Note 15, PPG has significant reserves for environmental contingencies. Refer to the Environmental Matters section of Note 15 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.
To accomplish this, we make extensive use of assumptions about inflation, investment returns, mortality, turnover, medical costs and discount rates. The Company has established a process by which management reviews and selects these assumptions annually. Refer to Note 14, “Employee Benefit Plans” in Item 8 of this Form 10-K for information on these plans and the assumptions used.
The Company has established a process by which management reviews and selects these assumptions annually. Refer to Note 14, “Employee Benefit Plans” in Item 8 of this Form 10-K for information on these plans and the assumptions used.
Over the past five years, the Company used over $800 million of cash to repurchase approximately six million shares of PPG stock, including using $86 million to repurchase shares of PPG stock during 2023. The Company ended the year with approximately $1 billion remaining under its current share repurchase authorization.
Over the past four years, the Company used nearly $1.3 billion of cash to repurchase approximately nine million shares of PPG stock, including using $752 million to repurchase shares of PPG stock during 2024. The Company ended the year with approximately $2.8 billion remaining under its current share repurchase authorization.
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.
In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement to be used for working capital and general corporate purposes. 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.
Specialty coatings and materials organic sales decreased by a mid-single-digit percentage primarily due to lower sales volumes, partially offset by higher selling prices. Segment income increased $323 million year over year primarily due to higher selling prices and moderating raw material costs, partially offset by wage and other cost of sales inflation and lower sales volumes.
Segment income increased $172 million year over year primarily due to higher selling prices and moderating raw material costs, partially offset by wage and other cost inflation and lower sales volumes.
Borrowings of $1.1 billion were outstanding under the Term Loan Credit Agreement as of December 31, 2022. In March 2023, PPG amended its five-year credit agreement (the “Credit Agreement”) dated as of August 30, 2019. The amendments to the Credit Agreement replace the LIBOR-based reference interest rate option with a reference interest rate option based upon Term SOFR.
In March 2023, PPG amended its five-year credit agreement (the “Credit Agreement”) dated as of August 30, 2019. The amendments to the Credit Agreement replaced the LIBOR-based reference interest rate option with a reference interest rate option based upon Term SOFR. The other terms of the Credit Agreement remained unchanged.
Dividends paid to shareholders ($ in millions) 2023 2022 Dividends paid to shareholders $598 $570 PPG has paid uninterrupted annual dividends since 1899, and 2023 marked the 52nd successive year of increased annual per-share dividend payments to shareholders.
Dividends paid to shareholders ($ in millions) 2024 2023 2022 Dividends paid to shareholders $622 $598 $570 PPG has paid uninterrupted annual dividends since 1899, and 2024 marked the 53rd successive year of increased annual per-share dividend payments to shareholders. The Company raised its per-share quarterly dividend by approximately 5% to $0.68 per share in July 2024.
(6) In December 2023, the central bank of Argentina adjusted the official foreign currency exchange rate for the Argentine peso, significantly devaluing the currency relative to the United States dollar.
In 2022, the Company recorded impairment and other related charges due to the wind down of the Company’s operations in Russia. (6) In December 2023, the central bank of Argentina adjusted the official foreign currency exchange rate for the Argentine peso, significantly devaluing the currency relative to the United States dollar.
Performance Overview Net Sales by Region % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 United States and Canada $7,488 $7,383 1.4% Europe, Middle East and Africa (EMEA) 5,616 5,458 2.9% Asia Pacific 2,874 2,824 1.8% Latin America 2,268 1,987 14.1% Total $18,246 $17,652 3.4% Net sales increased $594 million due to the following: ● Higher selling prices (+5%) Partially offset by: ● Lower sales volumes (-2%) 2023 PPG ANNUAL REPORT AND FORM 10-K 17 For specific business results, see the Performance of Reportable Business Segments section within Item 7 of this Form 10-K.
Performance Overview Net Sales by Region % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 United States and Canada $5,352 $5,485 $5,346 (2.4)% 2.6% Europe, Middle East and Africa (EMEA) 5,386 5,617 5,458 (4.1)% 2.9% Asia Pacific 2,912 2,873 2,824 1.4% 1.7% Latin America 2,195 2,267 1,986 (3.2)% 14.1% Total $15,845 $16,242 $15,614 (2.4)% 4.0% 2024 vs. 2023 Net sales decreased $397 million due to the following: ● Lower sales volumes (-1%) ● Unfavorable foreign currency translation and divestitures (-1%) 2024 PPG ANNUAL REPORT AND FORM 10-K 19 For specific business results, see the Performance of Reportable Business Segments section within Item 7 of this Form 10-K. 2023 vs. 2022 Net sales increased $628 million due to the following: ● Higher selling prices (+5%) ● Favorable foreign currency translation (+1%) Partially offset by: ● Lower sales volumes (-2%) For specific business results, see the Performance of Reportable Business Segments section within Item 7 of this Form 10-K.
In 2023, foreign currency rates were volatile, with the U.S. dollar strengthening against certain currencies and weakening against other currencies in the countries within the regions where PPG operates, resulting in a net favorable impact to net income of $25 million.
In 2024, foreign currency exchange rates were volatile, with the U.S. dollar strengthening in the second half of the year against certain currencies in the countries within the regions where PPG operates, resulting in a net unfavorable impact to net income from continuing operations of approximately $20 million.
During 2023, the Company deployed $109 million for acquisitions, $549 million for capital expenditures and $598 million for dividends. In 2023, PPG marked the 52nd annual per share dividend increase and the 124th successive year of annual dividend payments. PPG ended 2023 with approximately $1.6 billion in cash and short-term investments.
During 2024, the Company deployed $721 million for capital expenditures, $622 million for dividends and $31 million for acquisitions. In 2024, PPG marked the 53rd annual per share dividend increase and the 125th successive year of annual dividend payments. 2024 PPG ANNUAL REPORT AND FORM 10-K 23 PPG ended 2024 with approximately $1.4 billion in cash and short-term investments.
Cost of sales, exclusive of depreciation and amortization % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Cost of sales, exclusive of depreciation and amortization $10,745 $11,096 (3.2)% Cost of sales as a % of net sales 58.9 % 62.9 % (4.0)% Cost of sales, exclusive of depreciation and amortization, decreased $351 million due to the following: ● Moderating raw material costs ● Lower sales volume Partially offset by: ● Wage and other cost inflation Selling, general and administrative expenses % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Selling, general and administrative expenses $4,222 $3,842 9.9% Selling, general and administrative expenses as a % of net sales 23.1 % 21.8 % 1.3% Selling, general and administrative expenses increased $380 million primarily due to: ● Wage and other cost inflation ● Unfavorable foreign currency translation ● Higher performance-based compensation expense ● Selling, general and administrative expenses from acquired businesses Partially offset by: ● Restructuring cost savings Other charges and other income % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Interest expense $247 $167 47.9% Interest income ($140) ($54) 159.3% Impairment and other related charges, net $160 $245 (34.7)% Pension settlement charge $190 $— N/A Other charges/(income), net $83 ($27) (407.4)% Interest expense Interest expense increased $80 million 2023 versus 2022 primarily due to the unfavorable impact of higher interest rates on PPG’s variable rate debt obligations.
Cost of sales, exclusive of depreciation and amortization % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cost of sales, exclusive of depreciation and amortization $9,252 $9,678 $9,975 (4.4)% (3.0)% Cost of sales as a % of net sales 58.4 % 59.6 % 63.9 % (1.2)% (4.3)% 2024 vs. 2023 Cost of sales, exclusive of depreciation and amortization, decreased $426 million due to the following: ● Moderating raw material costs ● Lower sales volume 2023 vs. 2022 Cost of sales, exclusive of depreciation and amortization, decreased $297 million due to the following: ● Moderating raw material costs ● Lower sales volume Partially offset by: ● Wage and other cost inflation Selling, general and administrative expenses % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Selling, general and administrative expenses $3,391 $3,401 $3,037 (0.3)% 12.0% Selling, general and administrative expenses as a % of net sales 21.4 % 20.9 % 19.5 % 0.5% 1.4% 2024 vs. 2023 Selling, general and administrative expenses decreased $10 million primarily due to: ● Restructuring cost savings ● Lower performance-based compensation Partially offset by: ● Wage and other cost inflation 2023 vs. 2022 Selling, general and administrative expenses increased $364 million primarily due to: ● Wage and other cost inflation ● Unfavorable foreign currency translation ● Higher performance-based compensation expense 2024 PPG ANNUAL REPORT AND FORM 10-K 20 ● Selling, general and administrative expenses from acquired businesses Partially offset by: ● Restructuring cost savings Other charges and other income % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Interest expense $241 $247 $167 (2.4)% 47.9% Interest income ($177) ($140) ($54) 26.4% 159.3% Business restructuring, net $233 ($2) $33 N/A N/A Impairment and other related charges, net $146 $160 $231 (8.8)% (30.7)% Pension settlement charge $— $190 $— N/A N/A Other charges/(income), net ($8) $80 ($66) N/A N/A Interest expense Interest expense decreased $6 million in 2024 versus 2023 primarily due to lower debt balances.
In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries 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 December 31, 2024, December 31, 2023 and December 31, 2022.
During 2024, capital expenditures, which are expected to be approximately $600 million, will support future organic growth opportunities. The Company will continue to deploy cash focused on shareholder value creation, with a preference for business acquisitions, coupled with prudent debt reduction to enhance financial flexibility.
During 2025, capital expenditures, which are expected to be approximately $725 million to $775 million, will support future organic growth opportunities. The Company will continue to deploy cash focused on shareholder value creation.
We approved business restructuring actions to reduce costs and improve the profitability of our overall business portfolio during 2023, as well as made significant progress on the global restructuring programs that were announced in 2021 and 2022. Total restructuring savings, including the impact of acquisition synergies, was approximately $60 million in 2023.
PPG made significant progress to reduce costs and improve the profitability of the overall business portfolio through the global restructuring programs that were announced in 2022 and 2023. Total restructuring savings were approximately $40 million in 2024.
Effective tax rate and earnings per diluted share, continuing operations % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Income tax expense $439 $325 35.1% Effective tax rate 25.1 % 23.5 % 1.6% Adjusted effective tax rate, continuing operations* 22.0 % 22.0 % —% Earnings per diluted share, continuing operations $5.35 $4.33 23.6% Adjusted earnings per diluted share, continuing operations* $7.67 $6.05 26.8% *See the Regulation G reconciliations - results of operations The effective tax rate for the year-ended December 31, 2023 was 25.1%, an increase of 1.6% from the prior year due in part to the goodwill impairment charge, for which there was no tax benefit.
Effective tax rate and earnings per diluted share, continuing operations % Change % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Income tax expense $475 $428 $320 11.0% 33.8% Effective tax rate 25.6 % 25.3 % 23.6 % 0.3% 1.7% Adjusted effective tax rate, continuing operations* 22.9 % 22.2 % 22.1 % 0.7% 0.1% Earnings per diluted share, continuing operations $5.72 $5.16 $4.24 10.9% 21.7% Adjusted earnings per diluted share, continuing operations* $7.87 $7.42 $5.84 6.1% 27.1% *See the Regulation G reconciliations - results of operations The effective tax rate on continuing operations for the year ended December 31, 2024 was 25.6%, an increase of 0.3% compared to the prior year.
The most important contingencies impacting our financial statements are those related to environmental remediation, to pending, impending or overtly threatened litigation against the Company and to the resolution of matters related to open tax years.
The most important contingencies impacting our financial statements are those related to environmental remediation, to pending, impending or overtly threatened litigation against the Company and to the resolution of matters related to open tax years. For more information on these matters, see Note 15, “Commitments and Contingent Liabilities” and Note 13, “Income Taxes” in Item 8 of this Form 10-K.
We achieved selling price improvement across all businesses in 2023, reflecting the Company’s efforts to offset various inflationary pressures. The Company will carefully monitor all costs during 2024 and assess the need for additional selling price increases.
We achieved selling price improvement across several businesses in 2024 stemming from our advantaged products and solutions. The Company will carefully monitor all costs during 2025 and assess the need for additional selling price increases.
Argentina currency devaluation losses represent foreign currency translation losses recognized during December 2023 related to the devaluation of the Argentine peso, which is included in Other charges/(income), net in the consolidated statement of income.
Argentina currency devaluation losses represent foreign currency translation losses recognized during December 2023 related to the devaluation of the Argentine peso, which is included in Other charges/(income), net on the consolidated statement of income. (7) In the fourth quarter 2024 and the fourth quarter 2023, the Company received reimbursement for previously approved insurance claims under policies covering legacy asbestos-related matters.
($ in millions, except percentages) 2023 2022 Trade receivables, net $2,881 $2,824 Inventories, FIFO 2,376 2,544 Trade creditors’ liabilities 2,612 2,538 Operating working capital $2,645 $2,830 Operating working capital as a % of fourth quarter sales, annualized 15.2 % 16.9 % Trade receivables, net as a % of fourth quarter sales, annualized 16.6 % 16.9 % Days sales outstanding 55 56 Inventories, FIFO as a % of fourth quarter sales, annualized 13.7 % 15.2 % Inventory turnover 4.4 4.5 2023 PPG ANNUAL REPORT AND FORM 10-K 24 Environmental expenditures ($ in millions) 2023 2022 Cash outlays related to environmental remediation activities $36 $78 We expect cash outlays for environmental remediation activities in 2024 to be between $40 million and $60 million.
($ in millions, except percentages) 2024 2023 Trade receivables, net $2,477 $2,622 Inventories, FIFO 2,015 2,117 Trade creditors’ liabilities 2,161 2,438 Operating working capital $2,331 $2,301 Operating working capital as a % of fourth quarter sales, annualized 15.6 % 14.7 % Trade receivables, net as a % of fourth quarter sales, annualized 16.6 % 16.8 % Days sales outstanding 51 55 Inventories, FIFO as a % of fourth quarter sales, annualized 13.5 % 13.5 % Inventory turnover 4.5 4.2 Environmental expenditures ($ in millions) 2024 2023 2022 Cash outlays related to environmental remediation activities $28 $31 $73 We expect cash outlays for environmental remediation activities to be between $20 million to $60 million annually from 2025 through 2029.
Segment income increased $310 million year over year primarily due to higher selling prices and moderating raw material costs, partially offset by wage and other cost inflation and lower sales volumes. 2023 PPG ANNUAL REPORT AND FORM 10-K 22 Looking Ahead In the first quarter 2024, demand for aerospace coatings, protective and marine coatings and products sold in Mexico is expected to remain robust.
Segment income increased $322 million year over year primarily due to higher selling prices and moderating raw material costs, partially offset by wage and other cost of sales inflation and lower sales volumes. 2024 PPG ANNUAL REPORT AND FORM 10-K 28 Looking Ahead In the first quarter 2025, global industrial production is expected to remain at a relatively low level with improvement in the Asia Pacific and Latin America regions offset by sluggishness in Europe and in the U.S.
In Mexico, architectural coatings organic sales increased compared to the prior year, as concessionaire network demand continued to be strong throughout 2023 and further selling price increases were implemented. Automotive refinish coatings organic sales increased a low single-digit percentage year over year.
In Mexico, architectural coatings organic sales increased compared to the prior year, as concessionaire network demand continued to be strong throughout 2024.
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 2023 PPG ANNUAL REPORT AND FORM 10-K 21 and other costs to effect divestitures and other portfolio optimization exit actions.
Portfolio optimization 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 consolidated statement of income.
Cash requirements We continue to believe that our cash on hand and short-term investments, cash from operations and the Company’s access to capital markets will continue to be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans, and PPG’s significant cash requirements.
Refer to Note 10, “Borrowings and Lines of Credit” in Item 8 of this Form 10-K for information regarding notes entered into and repaid as well as details regarding the use and availability of committed and uncommitted lines of credit, letters of credit and debt covenants. 2024 PPG ANNUAL REPORT AND FORM 10-K 32 Cash requirements We continue to believe that our cash on hand and short-term investments, cash from operations and the Company’s access to capital markets will continue to be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans, and PPG’s significant cash requirements.
Looking Ahead In the first quarter 2024, global industrial production is expected to remain at lower levels. Aggregate organic sales are anticipated to decrease by a low single-digit percentage compared to the first quarter 2023.
Aggregate organic sales for the segment are anticipated to decrease by a mid-single-digit percentage to a low single-digit percentage compared to the first quarter 2024.
(7) 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. In the fourth quarter 2023, the Company received reimbursement for a previously approved insurance claim under a policy covering legacy asbestos-related matters.
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. These insurance recoveries are included in Other charges/(income), net on the consolidated statement of income.
The Company increased net sales led by growth in aerospace coatings and automotive OEM coatings despite lower global industrial production and soft demand conditions in Europe. Income before income taxes was $1,748 million in 2023, an increase of $367 million compared to the prior year.
Despite decreased sales due to lower industry demand in automotive OEM coatings, industrial coatings and architectural coatings in Europe, results were supported by record sales in aerospace coatings and growth in several other key technology-driven businesses. Income before income taxes was $1,852 million in 2024, an increase of $162 million compared to the prior year.
Cash and cash equivalents and short-term investments ($ in millions) 2023 2022 Cash and cash equivalents $1,514 $1,099 Short-term investments 75 55 Total $1,589 $1,154 Cash from operating activities - continuing operations ($ in millions, except percentages) % Change 2023 2022 2023 vs. 2022 Cash from operating activities $2,411 $963 150.4% 2023 vs. 2022 The $1,448 million increase in Cash from operating activities - continuing operations was primarily due to higher net income driven by higher selling prices and moderating raw material costs and favorable changes in working capital compared to the prior year.
Cash and cash equivalents and short-term investments ($ in millions) 2024 2023 Cash and cash equivalents $1,270 $1,493 Short-term investments 88 75 Total $1,358 $1,568 Cash from operating activities - continuing operations ($ in millions, except percentages) % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cash from operating activities - continuing operations $1,391 $2,294 $1,000 (39.4)% 129.4% 2024 vs. 2023 The $903 million decrease in Cash from operating activities - continuing operations was primarily due to unfavorable changes in working capital compared to the prior year.
Demand for PPG products was mixed by end-use market and geographic region. In the U.S. and Canada, demand was strong for aerospace coatings and protective and marine coatings but declined for most other businesses.
Despite the lower demand, PPG outperformed the market in both Latin America and Asia Pacific. In the U.S. and Canada, demand was strong for aerospace coatings, packaging coatings and traffic solutions but declined for most other businesses.
(4) Portfolio optimization includes losses on the sale of non-core assets, including the losses recognized on the sales of the Company's European and Australian traffic solutions businesses in the fourth quarter 2023, which are included in Other charges/(income), net in the consolidated statement of income, accelerated amortization expense recognized related to the exit of a non-core business, which is included in Amortization in the consolidated statement of income, and the impact for the step up to fair value of inventory acquired in certain acquisitions, which is included in Cost of sales, exclusive of depreciation and amortization in the consolidated statement of income.
(3) Portfolio optimization includes gains and losses related to the sale of certain assets, which are included in Other (income)/charges, net on the consolidated statement of income, including the gain of $129 million on the sale of the Company's silicas products business in the fourth quarter 2024, and the losses on the sales of the Company's traffic solutions business in Argentina in the second quarter 2024, the Company's European and Australian Traffic Solutions businesses in the fourth quarter 2023 and the Company's legacy industrial Russian operations in the third quarter 2023.
In Latin America, demand was solid throughout the year with steady demand for architectural products and growth in automotive OEM products, protective and marine coatings and automotive refinish coatings. The PPG Comex business made strong contributions, expanding the number of concessionaire locations during 2023 to nearly 5,200 locations.
In Latin America, demand was solid throughout the year with steady demand for architectural products and growth in automotive OEM products and packaging coatings. The PPG Comex business made strong contributions, supported by a focus on its omnichannel sales approach. Demand was soft in Europe with the largest impact on the automotive OEM coatings business and the architectural coatings business.
This increase was primarily due to higher selling prices and lower raw material costs, partially offset by higher selling, general and administrative expense and lower sales volumes.
This increase was primarily due lower raw material costs, lower performance-based compensation costs and restructuring savings, partially offset by overhead inflation and the impact of lower sales volumes.
PPG experiences fluctuating energy and raw material costs driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, and global supply and demand factors. In 2023, supply chain and pandemic-related disruptions experienced from 2020 through 2022 have eased, resulting in ample supply of commodity-related raw materials in all regions.
Raw materials are the Company’s most significant input cost. PPG experiences fluctuating energy and raw material costs driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, and global supply and demand factors. In 2024, the company incurred wage inflation, which adversely impacted operating costs compared to 2023.
Adjusted earnings per diluted share was $7.67, up 27% compared to $6.05 in 2022. Combined, segment income increased by more than 30%. Aggregate segment margins were 310 basis points higher than the prior year, driven by strong selling price realization and moderating raw material costs, partially offset by higher selling, general and administrative costs and lower sales volumes.
Earnings per diluted share from continuing operations was $5.72, compared to $5.16 in the prior year. Adjusted earnings per diluted share was $7.87, up 6% compared to $7.42 in 2023. Combined, segment income increased by 2%. Aggregate segment margins were 70 basis points higher than the prior year, driven by sales of our technology-advantaged products and strong brands.
The Company also recorded impairment charges of $14 million related to the sale of certain small, non-strategic businesses and $4 million to reduce the carrying value of certain indefinite-lived trademarks based on the results of the annual impairment test. 2023 PPG ANNUAL REPORT AND FORM 10-K 18 Refer to Note 6, “Goodwill and Other Identifiable Intangible Assets and Note 7 ”Impairment and Other Related Charges, Net” in Item 8 of this Form 10-K for additional information.
During 2022, the Company recorded Impairment and other related charges, net of $231 million primarily related to the wind down of the Company’s operations in Russia. Refer to Note 6, “Goodwill and Other Identifiable Intangible Assets” and Note 7 ”Impairment and Other Related Charges, Net” in Item 8 of this Form 10-K for additional information.
Industrial Coatings $ Change % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 2023 vs. 2022 Net sales $7,082 $6,958 $124 1.8% Segment income $966 $643 $323 50.2% Amortization expense $46 $43 $3 7.0% Segment income, excluding amortization expense $1,012 $686 $326 47.5% Industrial Coatings segment net sales increased due to the following: ● Higher selling prices (+4%) Partially offset by: ● Lower sales volumes (-2%) In 2023, all businesses within the Industrial Coatings reportable business segment achieved higher selling prices, which helped to offset a decrease in sales volumes driven by lower global industrial production.
Segment income decreased $75 million year over year primarily due to lower selling prices, lower sales volumes and wage and other cost inflation, partially offset by moderating raw material costs and lower overhead costs, including restructuring savings. 2023 vs. 2022 Industrial Coatings net sales increased due to the following: ● Higher selling prices (+4%) Partially offset by: ● Lower sales volumes (-2%) In 2023, all businesses within the Industrial Coatings reportable business segment achieved higher selling prices, which helped to offset a decrease in sales volumes driven by lower global industrial production.
Net sales, excluding the impact of currency, acquisitions, divestitures and the wind down of Russia operations ("organic sales") increased 3% during the year driven by continued strong growth in our aerospace coatings and automotive OEM coatings businesses.
Net sales, excluding the impact of currency, acquisitions and divestitures ("organic sales") decreased 1% during the year with continued strong growth in our aerospace coatings business, which was more than offset by declines in the industrial coatings and automotive OEM coatings businesses. On a regional basis, sales volumes were modestly higher in the Asia Pacific and Latin America regions.
However, the Company generally purchases raw materials, incurs manufacturing costs and sells finished goods in the same currency, so we typically incur only modest foreign currency transaction-related impacts. The 2024 effective tax rate from continuing operations is expected to be in the range of 23% to 24%, varying by quarter.
We expect that foreign currency exchange rates will have a net unfavorable impact on net income from continuing operations in 2025; however, the Company generally purchases raw materials, incurs manufacturing costs and sells finished goods in the same currency, which reduces foreign currency transaction-related impacts to net income.
For more information on these matters, see Note 15, “Commitments and Contingent Liabilities” and Note 13, “Income Taxes” in Item 8 of this Form 10-K. 2023 PPG ANNUAL REPORT AND FORM 10-K 27 Defined Benefit Pension and Other Postretirement Benefit Plans Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works.
Defined Benefit Pension and Other Postretirement Benefit Plans Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, we make extensive use of assumptions about inflation, investment returns, mortality, turnover, medical costs and discount rates.
Capital expenditures, including business acquisitions % Change ($ in millions, except percentages) 2023 2022 2023 vs. 2022 Capital expenditures (1) $549 $518 6.0% Business acquisitions, net of cash balances acquired $109 $114 (4.4)% Total capital expenditures, including acquisitions $658 $632 4.1% Capital expenditures, excluding acquisitions, as a % of sales 3.0 % 2.9 % 3.4% (1) Includes modernization and productivity improvements, expansion of existing businesses and environmental control projects.
Cash used for investing activities - continuing operations % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cash used for investing activities - continuing operations $399 $525 $430 (24.0)% 22.1% 2024 vs. 2023 The $126 million decrease in cash used for investing activities - continuing operations was primarily due to proceeds from the sale of our silicas products business, partially offset by higher capital expenditures. 2023 vs. 2022 The $95 million increase in cash used for investing activities was primarily due to higher capital expenditures and lower proceeds from asset sales. 2024 PPG ANNUAL REPORT AND FORM 10-K 30 Capital expenditures, including business acquisitions % Change ($ in millions, except percentages) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Capital expenditures (1) $721 $516 $486 39.7% 6.2% Business acquisitions, net of cash balances acquired $31 $109 $114 (71.6)% (4.4)% Total capital expenditures, including acquisitions $752 $625 $600 20.3% 4.2% Capital expenditures, excluding acquisitions, as a % of sales 4.6 % 3.2 % 3.1 % 43.8% 3.2% (1) Includes modernization and productivity improvements, expansion of existing businesses and environmental control projects.
Obligations Due In: ($ in millions) Total 2024 2025-2026 2027-2028 Thereafter Long-term debt $6,050 $302 $2,239 $1,446 $2,063 Interest payments (1) $966 $134 $239 $192 $401 Operating leases (2) $896 $216 $313 $183 $184 Unconditional purchase commitments (3) $343 $136 $157 $36 $14 (1) Interest on all outstanding debt. (2) Includes interest payments.
Obligations Due In: ($ in millions) Total 2025 2026-2027 2028-2029 Thereafter Long-term debt $5,808 $933 $2,095 $1,888 $892 Interest payments (1) $832 $127 $220 $153 $332 Operating leases (2) $653 $144 $208 $127 $174 Unconditional purchase commitments (3) $218 $108 $82 $23 $5 (1) Interest on all outstanding debt. (2) Includes interest payments.
For 2023 versus 2022, raw material costs moderated, resulting in a favorable impact to our operating costs. We expect manufacturing efficiencies to improve as the year progresses in 2024. While raw material costs declined during the current year, the Company continues to incur wage inflation, and anticipates further wage inflation impacts in 2024.
There was an ample supply of commodity-related raw materials in all regions, and raw material costs were a favorable impact to our operating costs for 2024 versus 2023. In 2025, we anticipate that increased raw material costs and enacted tariffs will result in low single-digit percentage inflation. Additionally, we expect manufacturing efficiencies to improve as the year progresses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 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 of $363 million and $293 million as of December 31, 2023 and 2022, respectively.
Biggest changeAs of both December 31, 2024 and 2023, PPG had non-U.S. dollar denominated debt outstanding of $3.3 billion. 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 of $369 million and $363 million as of December 31, 2024 and 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 for the years ended December 31, 2023 and 2022 would have been $402 million and $304 million, 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 for the years ended December 31, 2024 and 2023 would have been $429 million and $402 million, 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 $46 million and $73 million at December 31, 2023 and 2022, 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 $31 million and $46 million at December 31, 2024 and 2023, respectively.
Considering the debt balance outstanding as of December 31, 2023 and 2022, 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 $2 million and by $4 million, respectively.
Considering the debt balance outstanding as of December 31, 2024 and 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 $3 million and by $2 million, respectively.
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 and $525 million of fixed rate debt to variable rate debt as of December 31, 2023 and December 31, 2022, respectively.
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 December 31, 2024 and December 31, 2023, respectively.
Further, a 10% reduction in interest rates would have increased the fair value of the Company’s fixed rate debt by approximately $96 million and $116 million as of 2023 PPG ANNUAL REPORT AND FORM 10-K 29 December 31, 2023 and 2022, respectively; however, such changes would not have had an effect on PPG’s annual Income before income taxes or cash flows. 2023 PPG ANNUAL REPORT AND FORM 10-K 30
Further, a 10% reduction in interest rates would have increased the fair value of the Company’s fixed rate debt by approximately $77 million and $96 million as of December 31, 2024 and 2023, respectively; however, such changes would not have had an effect on PPG’s annual Income before income taxes or cash flows. 2024 PPG ANNUAL REPORT AND FORM 10-K 35
Certain foreign currency forward contracts outstanding during 2023 and 2022 served as a hedge of a portion of PPG’s exposure to foreign currency transaction risk. The fair value of these contracts were net assets of $23 million and $24 million as of December 31, 2023 and December 31, 2022, respectively .
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 were net liabilities of $53 million and net assets of $23 million as of December 31, 2024 and December 31, 2023, respectively .
The fair values of these contracts were liabilities of $14 million and $20 million as of December 31, 2023 and 2022, respectively. An increase in variable interest rates of 10% would have lowered the fair values of these swaps and increased interest expense by $5 million and $7 million for the periods ended December 31, 2023 and 2022.
The fair values of these contracts were liabilities of $16 million and $14 million as of December 31, 2024 and 2023, respectively. An increase in variable interest rates of 10% would have lowered the fair values of these swaps and increased interest expense by $5 million for both the periods ended December 31, 2024 and 2023.
PPG had U.S. dollar to euro cross currency swap contracts with a total notional amount of $475 million and $775 million as of December 31, 2023 and December 31, 2022, respectively . The fair value of these contracts were net assets of $33 million and $88 million as of December 31, 2023 and 2022, respectively.
PPG had U.S. dollar to euro cross currency swap contracts with a total notional amount of $375 million and $475 million as of December 31, 2024 and December 31, 2023, respectively . The fair value of these contracts were net assets of $50 million and $33 million as of December 31, 2024 and 2023, respectively.
Removed
As of December 31, 2023 and 2022, PPG had non-U.S. dollar denominated debt outstanding of $3.3 billion and $2.6 billion, respectively.

Other PPG 10-K year-over-year comparisons