PPG 10-K & 10-Q changes, risk factors and insider trading

PPG continues to undertake actions to maintain supply arrangements adequate to meet planned operating requirements. However, raw material supply chain disruptions, including logistical and transportation challenges, could adversely impact our ability to procure raw materials. An inability to obtain certain critical raw materials has adversely impacted our ability to produce certain products in the past and could do so in the future. Additionally, the cost of raw materials fluctuates due to a number of factors, including changes in supplier feedstock costs and inventories, changes in the production capacity of suppliers, global industry activity levels, foreign currency exchange rates, government regulation, tariffs, export constraints and global supply and demand factors, any of which could drive an increase in raw material costs. If raw material costs increase and we are unable to offset these higher costs in a timely manner, this would adversely impactour Income from continuing operations and Cash from operating activities.activities would be adversely impacted.

Demand for our products and services depends, in part, on the general economic conditions affecting the countries and markets in which we do business. Weak economic conditions in certain geographies and changing supply and demand balances in the markets we serve have negatively impacted demand for our products and services in the past and may do so in the future. There is a high level of uncertainty surrounding future global economic conditions due to a number of factors, including the impact of higherfluctuating 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. PPG provides products and services to a variety of end-use markets in many geographies. This broad end-use market exposure and expanded geographic presence lessens the significance of any individual decrease in activity levels; nonetheless, lower demand levels may result in lower sales, which would adversely impact Income from continuing operations and Cash from operating activities.

We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses into U.S. dollars at the average exchange rate during each reporting period, as well as assets and liabilities into U.S. dollars at exchange rates in effect at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other currencies will affect our Net sales, Net income and the value of balance sheet items denominated in foreign currencies. We may use derivative financial instruments to reduce our net exposure to currency exchange rate fluctuations related to foreign currency transactions. However, fluctuations in foreign currency exchange rates, particularly the strengthening or weakening of the U.S. dollar 2025 PPG ANNUAL REPORT AND FORM 10-K 10 against major currencies, could adversely or positively affect our financial condition and results of operations which are expressed in U.S. dollars.

PPG 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. 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 believe that, in the aggregate, the outcome of all current lawsuits and claims involving PPG, including those described in Note 15, “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K, will not have a material effect on PPG’s consolidated financial position or liquidity; however, such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. 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.

For example, regulations concerning the composition, use and transport of chemical products continue to evolve. Developments concerning these regulations could potentially impact the availability or viability of some of the raw materials we use in our product formulations and/or our ability to supply certain products to some customers or markets. Import/export sanctions and regulations also continue to evolve and could result in increased compliance costs, slower product movements or additional complexity in our supply chains.

As a multinational corporation, we are subject to various taxes in both the U.S. and non-U.S. jurisdictions. Due to economic and political conditions, tax rates in these various jurisdictions may be subject to significant changes. For example, a number of countries have enacted legislation to implement the Organisation for Economic Co-operation and Development has proposed modernizing international tax rules, includingDevelopment’s global minimum tax standards (referred to as Pillar 2), which has caused an increase to our effective tax rate. Our effective income tax rate is also affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets, the introduction of new taxes and changes in tax laws or their interpretation. If our effective income tax rate were to increase, our Cash from operating activities, financial condition and results of operations would be adversely affected. Although we believe that our tax filing positions are appropriate, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and accruals. If future audits find that additional taxes are due, we may be subject to incremental tax liabilities, possibly including interest and penalties, which could have a material adverse effect on our Cash from operating activities, financial condition and results of operations.

PPG has a significant investment in global operations. This broad geographic footprint serves to lessen the significance of economic impacts occurring in any one region. Notwithstanding the benefits of geographic diversification, our ability to achieve and maintain profitable growth in international markets is subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many countries. 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. Recently, there has been an increase in global geopolitical uncertainty due to a number of factors, including the international impacts of the ongoing warswar in Ukraine and Israel and increasing tensions between China and the United States. 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 2024,2025, approximately 68%70% of the Company’s total net sales were recognized outside of the United States.

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. 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.

Numerous and evolving information security threats, including advanced persistent threats and ransomware, pose a risk to the security of our systems, networks and services, as well as to the confidentiality, availability and integrity of our data and of our critical business operations. The techniques, tools and tactics used in cyber-attacks evolve rapidly, including 2025 PPG ANNUAL REPORT AND FORM 10-K 12 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. Our information technology systems, networks and services have been, and will likely continue to be, subject to cybersecurity attacks. We have implemented and operate a cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of our networks and systems as well as information that we own or is in our care. Notwithstanding our cybersecurity preparedness activities, we cannot guarantee that our security efforts or the security efforts of our third-party service providers will prevent all cybersecurity events. A material cybersecurity event could result in negative publicity, theft or other financial loss, modification or destruction of proprietary information or key information, manufacture of defective products, theft of personally identifiable information, and/or production downtimes and operational disruptions, which could adversely affect our results of operations.

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. This is dependent on a number of factors, including our ability to produce and deliver products that meet the quality, performance and price expectations of our customers and our ability to develop effective sales, advertising and marketing programs.

We believe the automotive industry will experience significant and continued change in the coming years, including an increase in the production of electric vehicles. Vehicle manufacturers continue to develop new safety features such as collision avoidance technology and self-driving vehicles that may reduce vehicle collisions in the future, potentially 2025 PPG ANNUAL REPORT AND FORM 10-K 13 lowering demand for our automotive refinish coatings. 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.

PPG is committed to developing and selling sustainably-advantaged products, which are designed to help our customers achieve their business and sustainability goals, including by reducing the amount of materials used in their processes. 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.

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. 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. If we fail to meet production targets and commitments, or encounter difficulty or unexpected costs in meeting such levels, it could have aan materialadverse effect on our reputation, business, operating results, or financial condition. 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. 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.

Income before income taxes was $1,852$2,045 million in 2024,2025, an increase of $162$193 million compared to the prior year. This increase was primarily due lower raw material costs,to lower performance-basedbusiness compensationrestructuring costscharges and impairment and other related charges, higher selling prices, improved manufacturing productivity and restructuring savings, partially offset by overhead inflation and the impact of lowerunfavorable sales volumes.mix and overhead and other cost inflation.

Cost of sales, exclusive of depreciation and amortization, decreasedincreased $426$64 million due to the following:

● Restructuring cost savings

DuringIn 2022,2025, the Company recordedrecognized Impairmentpretax net impairment and other related charges, netcharges of $231$24 million primarily related to a consolidated joint venture in the windPerformance downCoatings segment. The charges primarily represented the impairment of thedefinite-lived Company’sidentified operationsintangible in Russia.assets.

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.

Other charges/(income)/charges,, net

Other charges/(income)/charges,, net was higher in 20242025 compared to 20232024 primarily due to a net charge related to the anticipated resolution of an outstanding tax matter that includes both income taxes and non-income taxes and the absence of a gain recognized in 2024 on the divestiture of the silicas products business, partially offset by the recognition of accumulated foreign currency translation losses related to the Company’s exit of its Argentina operations.business. Refer to Note 18, “Other Charges/(Income)/Charges,, Net” in Item 8 of this Form 10-K for additional information.

The effective tax rate on continuing operations for the year ended December 31, 20242025 was 25.6%,22.4%, ana increasedecrease of 0.3%3.2% compared to the prior year.year, primarily due to the absence of the 2024 impairment charge, which had no associated income tax benefit, and a reduction in the provision for uncertain tax positions. The adjusted effective tax rate was 22.9%,23.5%, which was slightly higher than the prior year adjusted effective tax rate in part due to the adverse impact of the Pillar 2 global minimum tax.rate.

Net sales were approximately $3.9$4.5 billion for the three months ended MarchJune 31,30, 2026, an increase of 7% compared to the prior year primarily due to higher selling prices, higher sales volumes and the favorable impact of foreign currency translation and higher selling prices.translation.

Income before income taxes was $517$569 million for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $15$29 million compared to the prior year,year. primarilyEarnings duegrowth to higher selling prices,in the favorable impact of foreign currency translation,aerospace and cost-controlarchitectural measures,coatings partiallyLatin America businesses was offset by higherlower netsales interestvolumes costsin andautomotive higherrefinish depreciation expense.coatings.

● Higher sellingsales pricesvolumes (+1%2%)

Cost of sales, exclusive of depreciation and amortization, increased $133$255 million primarily due to higher sales volumes, raw material cost inflation and the unfavorable impact of foreign currency translation.

DepreciationNet expensesales increased $16$546 million primarily due to higherthe capital spending in 2025.following:

BothFor Earningsthe three months ended June 30, 2026, earnings per diluted share, continuing operations anddeclined Adjustedslightly while adjusted earnings per diluted share forincreased slightly, as the three months ended March 31, 2026 increased year over year due to higher selling prices, the favorable impact of foreignlower currencyearnings translation,was cost-controloffset actions andby lower adjusted weighted average common shares outstanding due to share repurchases.

(b)Business restructuring-related costs, net include business restructuring charges, offset by releases related to previously approved programs, which are included in Other income,charges, 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, Selling, general and administrative and Other income,charges, net on the consolidated statement of income.

(c)Portfolio optimization includes a $6 million charge related to the step‑up of acquired inventory in the first quarter 2026. Portfolio optimization also includes a $7 million gain recognized on the sale of a business in the first quarter 2025. There was no tax expense associated with that gain. Portfolio optimization also includes advisory, legal, accounting, valuation, other professional or consulting fees, and certain internal costs directly incurred to effect acquisitions, as well as similar fees and other costs to effect divestitures and other portfolio optimization exit actions. These costs are included in Selling, general and administrative expense on the condensed consolidated statement of income. Portfolio optimization also includes charges related to the step-up of acquired inventory. These costs are included in Cost of sales, exclusive of depreciation and amortization on the condensed consolidated statement of income. Portfolio optimization also includes a $7 million gain recognized on the sale of a business in the first quarter 2025, which is included in Other charges, net on the condensed consolidated statement of income. There was no tax expense associated with that gain.

(de)In the firstsecond quarter 2025,2026, the Company received reimbursement under its insurance policies for damages incurred atsettled a southernlegal U.S.matter. factoryThe fromrelated a winter storm in 2021, whichcharge is included in Other income,charges, net on the condensed consolidated statement of income.

Architectural coatings – EMEA net sales, excluding the impact of currency, acquisitions and divestitures ("organic sales") decreasedwere by a low single-digit percentageflat compared to the prior year with higher selling prices more than offset by lower sales volumes. Overall demand for architectural coatings in Europe was mixed by country.

Architectural coatings - Latin America and Asia Pacific organic sales increased by a mid-single-digit percentage comparedyear toover the prior-year quarteryear driven by strengthvolume growth in Latin America.America and higher selling prices. In Mexico, retail sales volumes were solid in the quarter,solid, reflecting strong consumer demand, while project-related spending recovered somewhatimproved with increased government and local investment. Economic uncertainty continues to temper foreign direct business investment.

Segment income of $155$340 million was 31%22% higher than the prior year. The increase was driven by higher selling prices, favorable foreign currency translation and thecost-control positiveactions impactpartially offset by cost of cost-controlgoods actions.sold inflation.

In the secondthird quarter of 2026, the company expects further year-over-year strengthening in retail sales and a modest recovery of project-related spending in Mexico,Mexico. whileWhile consumer sentiment in Europe is anticipated to remain mixed.mixed, we expect higher prices and self-help actions to increase earnings. Quarterly aggregate organic sales for the segment are expected to be in the range of flat to growth of a positive low single-digit percentage compared to the secondthird quarter 2025.

● Lower sales volumevolumes (-2%-1%)

Automotive refinish coatings organic sales decreased by a double-digit percentage versus the prior year. As expected, results were impacted by lower organic sales, reflecting a difficult comparison to the prior year when customer order patterns were heavily weighted to the first half of 2025.2025 Automotiveand refinishslower coatings organic sales are anticipated to improve for PPGrecovery in theunderlying secondindustry half of the year, and we are already seeing early signs of demand improvement in the U.S. refinish market. Automotive insurance claims have been down a low single digit percentage in February and March, which reflects a more normalized level for the industry.demand.

Aerospace coatings organic sales increased by a double-digit percentage compared to the firstprior quarter 2025,year, led by higher selling prices and sales volumes. Demand is robust, and customer order backlogs remained strong,strong even with improved manufacturing output stemming from growth-related debottlenecking investments. Global international and domestic air travel improved year over year, and combined are above pre-pandemic levels. As demand for our technology-advantaged products grows, the company is focused on further manufacturing debottlenecking and capacity expansion through greenfield investment to drive additional volume growth in this resilient business.

Protective and marine coatings organic sales increased by a high single-digitdouble-digit percentage compared to the prior-year first quarter driven by higher sales volumes. Increased sales volumes were driven by share gains in both protective and marine, reflecting demand for PPG's sustainably-advantaged products.

Segment income was $288$617 million, ana increasedecrease of 5%2% versus the prior year, primarily due toas higher selling prices,prices partiallywere more than offset by the impact of lower automotive refinish coatings sales volumes and highercost growth-relatedof investmentgoods spendingsold in aerospace coatings and protective and marine coatings.inflation.