Threading the 2Q Prints

Research evidence excerpt

Threading the 2Q Prints

PPG: Narrative improves + numbers hold, but better 2H credibility is the

real test

Modestly constructive. End-market momentum is stacking – aero, China autos, Comex –

with estimates in-line. 2H margin improvement is the debate, but valuation margin of

safety.

Multiple end-markets humming. Aerospace is compounding MSD-HSD with backlog

expanding and additional investment set to unlock greater capacity. China auto ticked positive

with May builds improving sequentially off a -10% 1Q, and BYD back in the green after nine

consecutive down months. Comex (Mexico) is recovering on both retail and project spend.

Together with marine, OEM, and packaging, the sequential 2Q-over-1Q read is positive –

partially offset by Euro architectural, refinish, and industrial still down y/y.

2H refinish normalization is more comp driven. A history of refinish recovery head-fakes

breeds healthy investor skepticism. However, beyond insurance data suggesting normalizing

claims frequency and potentially an uptick in severity, we note the mechanical comp path

(3Q25/4Q25 were down DD/HSD) supports significant improvement/normalization regardless.

With 1Q margin flat y/y and 2Q guided -100 bps to flat, all promised FY margin progress must

land in 2H. That PPG only needs +LSD price to offset +MSD raws inflation (with a third of price-

conscious Industrial now contractually inflation-linked) supports delivery. Our model math

comfortably works, with FY27 EBITDA of $3.19B (vs cons $3.17B) and EPS of $7.94 ($7.70-8.10

guide, cons $7.88). We expect mgmt call commentary to validate a 2H cadence on track.

Watch + Guide

Auto refinish color. Vehicle accident rates have historically declined 1-2% per year with claims

staying within 100-150 bps of accidents.