PPG Industries, Inc (PPG) Q4 2025 Earnings Call Transcript

PPG Industries, Inc (NYSE: PPG) Q4 2025 Earnings Call dated Jan. 28, 2026

Corporate Participants:

Alex Lopez — Director of Investor Relations

Tim Kaniewicz — Chairman and Chief Executive Officer

Vince Morales — Senior Vice President and CFO

Analysts:

Chris Parkinson — Analyst

Alexei Yefremov — Analyst

Kevin McCarthy — Analyst

Vincent Andrews — Analyst

David Begleiter — Analyst

John Roberts — Analyst

John McNulty — Analyst

Matthew Dio — Analyst

Michael Sisson — Analyst

Jeff Zakaukis — Analyst

Gancham Punjabi — Analyst

Josh Spector — Analyst

Laurent Favre — Analyst

Frank Mitch — Analyst

Mike Harrison — Analyst

Eric Boyes — Analyst

James Hooper — Analyst

Patrick Cunningham — Analyst

Arun Viswanathan — Analyst

Lawrence Alexander — Analyst

Presentation:

operator

Good morning. My name is Warren and I will be your conference operator today. At this time I would like to welcome everyone to the fourth quarter and full year 2025 PPG earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. To allow everyone an opportunity to ask a question, the Company requests that each analyst ask only one question.

Thank you. I would now like to turn the conference over to Alex Lopez, Director of Investor Relations. Please go ahead, sir.

Alex Lopez — Director of Investor Relations

Thank you, Warren and good morning everyone. This is Alex Lopez. We appreciate your continued interest in PPG and welcome you to our fourth quarter 2025 earnings conference call. Joining me today from PPG are Tim Canavich, Chairman and Chief Executive Officer and Vince Morales, Senior Vice President and Chief Financial Officer. Our comments relate to the financial information released at After U.S. equity markets closed on Tuesday, January 27, 2026, we have posted detailed commentary and the accompanying presentation slides on the Investor center of our website, ppg.com following management’s perspective on the Company’s results, we will move to a Q and A session.

Both the prepared commentary and discussions during this call may contain forward looking statements reflecting the Company’s current view of future events and their potential effect on PPE’s operating and financial performance. These statements involve uncertainties and risks which may cause actual results to differ. The Company is under no obligation to provide subsequent updates to these forward looking statements. The presentation also contains certain non GAAP financial measures the Company has provided in the appendix of the presentation materials which are available on our website. Reconciliations of these non GAAP financial measures to the most directly comparable GAAP financial measures.

For additional information, Please refer to PPE’s filings with the SEC. Now let me introduce PPE Chairman and CEO Tim Canavich.

Tim Kaniewicz — Chairman and Chief Executive Officer

Thanks Alex. Good morning everyone. Welcome to our fourth quarter and full year 2025 earnings call. I’ll start off by providing some highlights on Q4 and full year 2025 and then I’ll move on to our 2026 guidance. I’m pleased to report that 2025 was a year of solid commercial operational innovation and financial performance for ppg. The year also demonstrated the strength and resilience of our diversified portfolio as well as the dedication of our PPG global team despite a very mixed and dynamic macroeconomic environment. Throughout the year we delivered consistent organic growth, both volume and price, capping the year off with our strongest organic growth of over 3% in the quarter.

We also continued our legacy of driving structural cost improvements for our self help actions and maintained our heritage of strong cash flow generation and disciplined cash deployment including returning cash to our shareholders. For the full year, net sales totaled 15.9 billion with 2% organic growth which was driven by a combination of higher selling prices and volume gains across our segments. Our adjusted earnings per share came in at $7.58, underscoring our ability to maintain solid profitability in a dynamic environment. Our cash from operations totaled 1.9 billion, up about half a billion dollars year over year, supporting a robust free cash flow yield of 5%.

This strong cash performance enabled us to return 1.4 billion to shareholders through dividends and share repurchases. Our segment EBITDA margin for the year was a healthy 19% reflecting ongoing operational efficiency and cost discipline. I’m pleased that we have delivered on our organic growth commitment with sales volume and selling price growth resulting in a full year increase of 2% in organic sales which outpaced the estimated market decline of negative 0.2%. This is the result of our productivity solutions for our customers as well as the share gains in our core technologies. Turning to the fourth quarter, we further accelerated our growth momentum.

Net sales were 3.9 billion, up 5% year over year with 3% organic growth driven by positive sales volume growth across all regions. We achieved record aerospace coating sales and earnings led by strong demand for our technology advanced products out of OEM. Net sales increased 6%, well outpacing the industry driven by share gains and customer mix. Architectural coatings in Latin America delivered high single digit organic sales growth aided by the sequential quarterly recovery of project related sales and continued strong retail performance. We delivered positive sales volume growth in all regions with Asia Pacific leading the package achieving mid single digit percentage followed by low single digit percentage in the us, Latin America and Europe.

Our segment EBITDA margin for the quarter was 18% reflecting solid execution despite some macro headwinds that impacted certain end markets. Adjusted EPS for The quarter was $1.51 as the improved organic growth and improved operational performance were more than offset by higher interest costs and increased corporate expenses. Now looking at each of our segments in the global architectural coating segment, fourth quarter net sales rose 8% to 951 million with 2% organic growth. This was driven by Mexico’s strong retail performance and sequential improvement in project related spending as well as for favorable foreign currency Translation Project related spending was weak in the first half of 2025 driven by uncertainties related to tariffs.

However, in the second half of 2025 we experienced consistent recovery and expect this to extend into 2026 based on leading indicators and discussions with our customers. Architectural coatings demand in Europe was mixed low single digit percentage decline which was partially offset by favorable pricing. We have now delivered positive pricing for 39 consecutive quarters in this business segment. In Segment income increased 16% driven by improved pricing and cost management and EBITDA margins improved nearly 100 basis points. We expect positive organic sales and margin momentum to continue in the first quarter of 2026. In this business, the Performance Coating segment delivered 5% net sales growth to $1.3 billion, led by double digit organic growth in aerospace and consistent gains in our protective and marine coatings business which now has delivered 11 consecutive quarters of volume growth.

As expected, automotive refinish organic sales decreased by a high single digit percentage as sales volumes were lower reflecting customer order patterns. Order patterns stemming from distributors more heavily weighting their purchases to the first half of 2025. However, one closely watched data point in the industry is US Accident claims and the December year over year claims were down only 2% compared to high single digit or low double digit declines throughout the year. As we communicated in our third quarter earnings call, the industry claims normalization and our 2025 distributor order patterns will result in a difficult sales comparison For PPG in 1H26, but incremental volume growth during the second half of 2026 segment EBITDA margin decreased driven by the lower automotive refinish coating sales and higher growth related investment spending in aerospace and protective and marine coatings partly offset by higher selling prices and we expect margin contraction for the segment during the first half of 2026 with margin growth during the second half of the year.

As you know, our aerospace business is an important growth engine for the company and I want to take I want to take a moment to talk about the momentum in industry growth and the demand for our highly specialized qualified products. The business is equally weighted to OEM and aftermarket customers with margins that are accretive to the overall reporting segment and has a strong presence in commercial, military and general aviation. During our second quarter earnings call, we presented the significant expected aerospace OEM growth given the increased builds forecast for the next several years. In addition to the OEM growth, the forecast for higher aftermarket demand translates into sales growth CAGR of high single digit percentage growth for the foreseeable future for PPG this is a business that is more than just coatings with the majority of the portfolio being represented by transparencies, sealants and adhesives, and service and materials.

For each one of these verticals, we compete with peers that do not have a strong presence in overlapping technologies. This makes our business very unique with a much stronger segment presence than any traditional competitor in our space. Moving to the industrial coating segment fourth quarter net sales grew 3% to 1.6 billion with organic growth fueled by share gains that led to 5% sales volume growth, well outpacing industry demand as we realized the full run rate benefit of share gains with strength in automotive OEM coatings and packaging coatings. From a business unit perspective, our automotive OEM business delivered 6% increase in net sales with growth above market.

As a result of our share gains, we expect to outgrow the market in the first quarter and for the full year in 2026. In this business, organic sales for our industrial coatings business were flat as sales volumes growth in Europe and Asia Pacific region offset lower index based pricing packaging coatings organic sales increased by a double digit percentage year over year, growing significantly above industry rates. These results reflect the positive momentum in share gains led by Europe and the US As a result of the technology shift favoring our sustainable product portfolio segment. EBITDA was up 6% year over year and EBITDA margin improved by 30 basis points to 15.1% reflecting the leverage from the organic sales growth along with our manufacturing productivity and strong cost control actions.

Now looking ahead, we expect some softness in global industrial and automotive demand to impact organic sales and margins in the first quarter 2026. Now let me talk about our balance sheet and cash. Strong cash flow generation remains a key pillar of our strategy. As I said, our operating cash flow increased by over half a billion dollars year over year to 1.9 billion in 2025. We returned 1.4 billion to shareholders through dividends of 630 million and share repurchases of 790 million which represents about 3% of our outstanding shares. We ended the year with a strong cash balance of $2.2 billion and a net debt position of 5.1 billion, with 700 million of debt maturing in the first quarter of 2026 which we intend to pay from our current cash position.

Our balance sheet is strong which continues to provide us with financial flexibility and we remain committed to using this strength and flexibility to drive shareholder value. Our capital expenditures for the year total approximately $780 million reflecting our investment and growth initiatives including expansions in aerospace and Mexico and our digital and AI capabilities. 2025 will represent the high watermark of these growth investments and we expect to sequentially pace back to our historical levels of approximately 3% of sales by 2027. Looking ahead, I’m encouraged by our organic growth momentum and what we will achieve in 2026. We anticipate that demand in Europe and global industrial end use markets will remain challenged.

However, despite the macroeconomic environment. We expect sales volume growth will be driven by aerospace architectural coatings in Mexico and about 100 million of share gains in the industrial coatings segment that will be realized in 2026, including 50 million of carryover share gains announced last year. We expect overall price for the company to be positive with strength from our performance and architectural coating segments which will partially offset by modest contraction in the industrial coatings segment. This will result in organic sales growth in the range of flat to positive low single digit percentage raw material basket remains favorable to coatings producers and we are consolidating our supplier base which will help us offset the impacts of already enacted tariffs resulting in expected overall flat raw material costs for the year.

Finally, during 2026 we expect growing benefits from operational and excellence programs, reducing our costs by another $50 million. This, combined with the leverage from acceleration and volume growth is expected to drive earnings per share growth that at the midpoint of our guidance represents a mid single digit percentage increase. We expect earnings per share to be flat to growth of low single digit percentage during the first half of the year and increasing the high single digit percentage in the second half of the year. In closing, I’m excited about the increasing momentum we have demonstrating during fourth quarter that allows us to start 2026 on strong footing.

We are laser focused on executing our enterprise growth strategy which emphasizes high margin business growth, strong cash flow generation, disciplined capital allocation and operational excellence. Our portfolio pruning completed in 2024 enables us to more effectively win with our customers and drive shareholder value. Additionally, we are investing in customer innovation including digital and AI capabilities to maintain our technology leadership, encoding sealants, specialty materials and productivity solutions for our customers. As always, we remain disciplined with our cash deployment to drive shareholder value. We’re confident in our strategy and the strength of our business model to deliver sustainable long term growth.

Thank you to our PPG team around the world who make it happen and deliver on our purpose every day. We appreciate your continued confidence in ppg. I look forward to discussing our results and outlook in more detail during today’s call. Warren, please open the line for questions.

Questions and Answers:

operator

At this time I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We’ll pause for just a moment to compile the Q and A roster. Your first question comes from the line of Chris Parkinson with Wolff Research. Your line is open.

Chris Parkinson

Most of us would still call the macro muted or even meager. And yet your organic growth, with maybe one exception, has been pretty solid across a lot of the substrates and the fastest you’ve been focusing on the last few years. Could you just add a little bit of insight on what you saw in the fourth quarter and how you’re thinking about, you know, everything in 2026 in terms of breaking that growth down? Is, was the macro actually slightly better than you anticipated? Is it all share gain? Is it new product introductions? If you could kind of just break that down and how, you know, that breakdown would actually lead you to think about your 26 guidance, that’d be particularly helpful.

Thank you.

Tim Kaniewicz

Yeah. Hey Chris, I guess a high level answer and I’ll get in some details for you here. The high level answer is the macro is not better than we expected. And to your questions about is our growth based on macro, share gain or technology introductions, the answer is yes, yes and yes. So the spaces where we’re seeing macro help, you know, aerospace, right, that continues to crush it for us. The sequential improvement in Mexico, that helps us and you know, I’d say still a pretty strong robust PMC market when you look across the rest of our businesses.

Well, and those businesses, if you think about auto OEM, you know, S P has Q1 down the rest of the year, call it flat ish, but we’re committed to outperforming that and we will grow. Packaging industry is very mixed bag and we’re crushing it there with multiple quarters of double digit and that’s largely share gain. And I will tell you largely Europe where we’re doing, we’re doing quite well, quite well there. You know, if you look at the other businesses, architectural Europe still flat, ish, industrial or general industrial, which as you know, is the catch all.

It’s, you know, some segments are up, some are down. Overall I still call it pretty flat. So really there’s a few markets where we’re getting macro help. Most of our businesses were getting share gain help. And to the technology question, a lot of the share that we’re gaining in packaging is technology driven. A lot of the share that we’re gaining in refinish, even though the, you know, the destocking is Covering this right now, a lot of the share gain is driven by the productivity tools that we launch. So it’s really a combination of all three.

But high level. I don’t think anything has changed significantly with our view of the macro.

operator

Your next question comes from the line of Alexei Yefremov with Keybanc Capital Markets. Your line is open.

Alexei Yefremov

Good morning. Thanks for providing all the color on end markets. I was hoping you could just give us some details on total volumes and price for organic growth in 26.

Tim Kaniewicz

Sure. Let me do the easy one first. And that’s pricing. You should expect to see a positive price in virtually all of the protective businesses, I’m sorry performance businesses and the architectural businesses. You know, you heard my even our most challenged region for architectural in Europe, we’ve gotten price 39 straight quarters. I don’t see us breaking, breaking that streak. And of course our position, our strength in Mexico will capture price there. So you, you’ll see price there refinish aerospace to a lesser degree pmc. So those two segments will definitely have positive price. Now in industrial segments I would call it flat ish.

But we do have two slight negatives. We still do have a little bit of index pricing carryover and automotive, frankly automotive in China we see some low single digit price declines frankly that are offset by lower raw materials than we expected in China. But all in, you’ll see performance and architectural offset a little bit of decline in industrial volume wise we’re on a pretty good trend. You’ll continue to see volume growth in aerospace, PMC packaging, modest volume growth in architectural, you’ll see volume growth in Ottawa oem. Frankly we’ve had second two quarters in a row beating market there and we’re optimistic about doing that throughout 2026.

And that’s driven by share gains. And then as we move through the year, I think you’ll start to see some more in general industrial where some of the share gain wins that we’ve had will actually come to launch. So thank you, thank you for the question. Alexis.

operator

Your next question comes from the line of Kevin McCarthy with vertical research Partners. Your line is open.

Kevin McCarthy

Yes, thank you and good morning. Tim, it was nice to see you finish up the year at plus 3% on organic sales growth. If I look at the EBITDA line though, it was relatively flat and so I was wondering if you could walk us through your thoughts on operating leverage. It seems though as though raw materials are pretty benign and you’ve been taking costs out of the company as per your restructuring and so maybe why Did EBITDA not grow more in the quarter? And more importantly, how do you see that trending as 2026 progresses?

Tim Kaniewicz

Yeah, hey Kevin, there’s, there’s several contributors but the, the one that by far drives that math is, is the refinish destocking. As you know that refinish is one of our higher margin businesses. So when it’s down you’ve got destocking. I think, I think we were down double digits in Q3, high single digits in Q4. That just, it overwhelms the positivity of the other, other businesses, organic growth, just given its margin profile. So what we, what you should expect to see there, unfortunately you’ll see some of that in Q1 and Q2. I think you’ll see it sequentially get better as the other businesses kick it in more and more, pricing kicks in more, more of our cost out and productivity kick in.

But really where you’ll see that flip is once we get back to the normal buying patterns which will be the second half of the year.

Vince Morales

Yeah, Kevin, this is Vince. Just let me remind everybody our segment earnings did grow in the fourth quarter so they were up about 20 million year over year.

operator

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

Vincent Andrews

Thank you and good morning. I wanted to dig in a little bit more on refinish. If I think of some of the metrics that have been discussed over the last couple of calls. I think third quarter claims were down mid single digits but 4Q claims are back down high singles. Though you noted, Tim, that December was only down 2%. And I believe in the answer to Kevin’s question, you’re still anticipating, you know, the sort of second half recovery in normalization of customer shipments. So could you just help us tie all that together with sort of the latest update and what you’re hearing from customers as well as not just.

And now you’re interpreting all that claims data.

Tim Kaniewicz

Yeah, thanks Vincent. And if you don’t mind, I’m going to, I’m going to take a rather holistic answer here, try to answer all the refinished questions here. So I want to make sure we leave time to get to everything in the portfolio here. So I’m going to answer maybe your question in and more when it comes to refinish. So the headline I’d say is there’s nothing that indicates a huge change for us versus what we told you at the end of Q3 relative to the industry and to our trajectory. However we are seeing what I would Call some reinforcing green shoots as we move through quarter.

Okay, so you know, we still, we’re still very confident in our best in class productivity solutions to grow share and that’s happening. We have market share momentum that’s happening largely in the US but also also across Europe. You know, this is and will be a very good business for PPG as we work through this transitory kind of, kind of period. You know, just given the strength of our position versus others. I will also add that there is clearly industry anxiety out there, partly driven by the pressure that body shops have been on for the last 18 months, but also driven by consolidations, divestitures in this industry and what all of those anxieties play to our strength.

One, because of the strength of our productivity offering, but second, because of the, the certainty of continuity that we provide. Insurance rate spikes were really the key driver to this disproportionate drop in claims over the last year and a half or so. Okay. And that led to multi or leading to multi quarter destocking in our channel. I mentioned last time how it ties to our rebate structure, et cetera. And we said at the last quarter we expect normalization of buying patterns from our distributors in the second half of 2026. And normal, I’ll remind everybody, would be kind of low single digit claims down.

And that’s very good. Normal is very good for PPG because our track record for decades shows that at that kind of level we can put up record after record because of strength of our, of our offering. Now if you look at our guide, I remind you to everybody that we had a very strong first half of 2025 combined with a pretty weak second half of 2025. So when you combine that with what we’re saying now, which is okay, destocking for 2/4 sales volume and EBIT growth in Q3 and 4, that really explains a lot of the, you know, the EPS difference between the first half of the year and the second half of the year.

So that’s kind of the fundamentals now updates. Everything we’re seeing and hearing from our customers since we last spoke is playing out as expected. Distributors are destocking as we expected. Body shops are starting to see the beginning signs of normalization as we expected and thus we reinforced our guide today. The few points of reinforcement and green shoots because of two things, strength of our productivity offering and the anxieties in the marketplace that I mentioned, we’re winning a lot of share. You saw one public announcement yesterday. There’s a lot of Other ones happening that are not publicly announced and there are more to come.

Second, insurance premiums are normalizing. Okay so kind of the catalyst for this whole cycle is beginning to normalize. We continue to reinforce the strength of our productivity offering. Two things we did just this quarter. We launched the next chapter of digital tools for the body shops. You know beyond Moonwalk, beyond Link, beyond visualized. We launched a new digital tool tool called Mix and Shake which drives further body shop productivity savings and that’s being well received. And we also launched our first AI formulated product in refinish to again to help body shops be more productive. So the industry is playing out as we expected.

We’re winning share with our solutions. That reinforces our guide to see destocking in first half normalized order pattern second half. Two other things that happened notably in December you did see the -2% claims. One data point I get, I get that. But you got to start somewhere. So let’s watch that closely. Closely as we move through 1H26 and we did start to see what we call fill in orders from our distributors. Okay so this multi quarter destocking, you know you can only destock so far before you’ve got to supply the body shops and that’s when you start seeing fill in orders and we did start to see those in December.

So another reinforcing sign. So all that added up we expect a muted first half for continued destocking, second half return to sales and EBIT growth for a finish and a more normalized distributor buying pattern. So you know just one other thing more, more for the segment and to speak to the strength of our portfolio despite a challenging back half of the year in one of our best margin businesses, you know the performance coating segment still put up a record record sales year and record earnings year for the, for the full year 25. So the strength of our portfolio just, just really comes through there when things like pmc, aerospace and traffic can offset this transitory period of refinish.

So hope I answered your question and more on refinish. It’s playing out as we expected and obviously more data points to come as we move through Q1 and Q2.

operator

Your next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

David Begleiter

Thank you. Good morning, I’m Tim on aerospace. Can you tell us what the growth, the sales growth was in 2025 and are you at all capacity constrained in 26 ahead of the new supply capacity coming on next year?

Tim Kaniewicz

Yeah, we. Thanks David. The growth rate for 2025 was double digit by the way. It was 20 double digit and 24 as well. So we expect continued growth. You’re starting to lap double digit on top of double digit. Denominators are getting bigger by the way. This business is almost the same size as refinish now. So the denominator is getting bigger and bigger as you start lapping multiple double digits. So we’re guiding high single digits for 2026. I think for aerospace we are capacity constrained, no doubt about it. That’s why our Capex has been above our historical norm for the last couple of years.

Round numbers. I approved about 120 million of capex last year that I would call incremental aerospace debottlenecking capex expansion. We’ve also brought in a number of consultants to help us just with debottlenecking on the expense side. And that’s why you see some of the margin challenges that I think Kevin asked about. And in addition to that 120 or so we announced $380 million new factory that’ll take about two years to bring online for the sealants and coating side of the business. And we’re working on some other capacity expansions. I can’t get ahead of my board here but you know we’re not done.

We’re positioned. This business will be growing likely for the rest of the of my career and hopefully that’s longer than Mr. Morales career here. But so we see that coming as far as our forecasts go.

operator

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

John Roberts

Thanks and congrats on a long career Vince and best wishes.

Tim Kaniewicz

Thank you.

John Roberts

John, could you talk a little bit more about the depth of the AI reformulation activity going on? You launched the first product in refinish and how broad is this across the industry? Does PPG have a differentiated position or are the consultants sort of bringing AI to all the coatings companies?

Tim Kaniewicz

Yeah. Hey John, we’re super excited about this. There are things in AI that consultants are bringing to everybody and I would say that’s more kind of back office customer service, the finance, transaction processing. Those are things that are kind of table stakes that everybody’s doing formulation AI. This is internally developed, working with a few partners but it’s organically internally developed and we believe it’s a differentiator now. I’m guessing our competitors are out there trying to work on it and catch up but we believe we’re definitely out front here and we’ve launched commercialized A refinish clear coat that optimizes performance of the end coating as well as productivity in the body shop for our customers.

We launched that was the first product fully developed using AI. But it’s not based on anything public. It’s based on scraping all of our internal formulations that We’ve developed over 100 years and optimizing so that is commercialized. Beyond that, we’ve launched another 50 products already where they were existing products in the marketplace that we’ve used AI to optimize both from a product performance standpoint and a cost to PPG standpoint. 50 products already since we made that first announcement. Going forward, we’ll continue to both optimize existing formulations, but we’ve got development projects like we did in refinish across virtually all of our businesses.

So more to come there and hope you hear a little kick in my step on this one, John, because I’m pretty, pretty excited not only about where we are, but where we’re going.

Vince Morales

Hey, John, this is Vince. Let me add a little here. The precursor to this was really the scraping of the data that Tim described. So we were fortunate. A couple years ago we digitized a lot of our data so that we think that puts us in maybe the poll position, certainly in the front row in the industry because of that activity was very time consuming. And we did it a couple years ago that allowed us to now take advantage of that digitized data.

operator

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

John McNulty

Yeah, thanks for taking my question. So, Tim, over the last couple of years you’ve dialed back investment in inorganic growth. You’ve really focused internally and it seems like it’s delivered. You’ve gotten share gains, you know, like you were saying, from technology, from service, the whole nine yards. And it seems like you’re, you’re able to outpace your markets right now. I guess as we look forward, just given the strength of the balance sheet, the strength of the cash flows, is that still pretty much the main focus where, look, inorganic growth really isn’t necessary for PPG going forward and you keep focusing on the internal opportunities or have you played a lot of that out and now that you’re in a stronger position and do you start looking maybe a little bit more aggressively at acquisitions? I guess.

How should we be thinking about that?

Tim Kaniewicz

So, hey, John, great question. So they’re both important to us, but the tip of the spear, as I always say, continues to be building this organic growth and margin engine because I believe in many, if not most of the cases, we can deliver better shareholder returns by making those investments in organic growth, organic productivity, organic cost out, et cetera. Now, we still will do acquisitions, either bolt ons or someday transformational. We still believe that the industry needs some consolidation and we’re supporters of that. We still believe there are acquisitions that will add value to PPG’s, customers and shareholders that can be tuck ins from a technology standpoint or reinforce our position somewhere.

But I would say that it’s organic first. We still look at every opportunity. We put it through a filter of is it the right asset that’s consistent with our enterprise growth strategy where it gives us a strong number one or number two or reinforces a strong number one or number two, Is it the right asset? Is it the right time, given everything else that we have going on so that we can ensure that we can not fall back in the trap? Where we had this, we had built this excellent inorganic muscle, but not an excellent organic muscle.

So is it the right time that we can still do. Do both, if you will. And most importantly, is it the right price? You know, especially given where our, our depressed or undervalued stock price is. When you do the mathematics and say, well, okay, it’s organic first. Then on some of these inorganics, man, I’m better off buying shares. So I want to make sure everybody recognizes that all of those are on the table. Organic investment, inorganic investment, share repos. But we run them through this filter to make sure that all of our decisions are maximizing shareholder value.

operator

Your next question comes from the line of Matthew Dio with Bank of America. Your line is open.

Matthew Dio

Yeah. Good morning everyone. And you know, I’d also echo John’s comments that congrats on the career and the retirement. I want to walk through some of the corporate cost inflation and bucket some of this stuff out across potential sources. I mean, you’re not the only coatings company to talk about health care inflation, and I get that, but where is that coming in and kind of related? Does it make sense to align compensation fully to organic growth if there isn’t commensurate EBIT accretion? Because it’s helping the top line, but it also seems to exacerbate the headwinds from some of the other unabsorbed fixed costs.

Tim Kaniewicz

Yeah, Matt, I’ll take this first and I’ll let my short timer CFO here take it from there. The leading answer here is medical claims in Q4. Vince will explain it. We’re a pay as you go company. The they exceeded our expectations. The second piece is incentive comp. Now remember, some of that’s a year over year comp issue, right? Because we were drawn down our incentive Comp accruals in Q4 of last year because of overall performance. And in this year we had done the same. But then we came in stronger in Q4, much stronger in Q4 on two of our three metrics that guide our incentive payout.

Our short term incentive payout. It’s an important point. The short term versus long term. I’ll get to that in a second. So our short term incentives are based on three metrics. Organic growth, EPS growth and cash cash flow. So on two of those three we finished better than expected. So that increases the payout. But a lot of that all came in Q4 so we had to catch up for the full year. Right? So when you compare that to last year’s comp it looks like, looks like a big number. I want to reinforce though, we are not overpaying ourselves or our team because the total payout is still less than target.

Now another point to your point about, you know, kind of how do you balance all these different metrics? If you look at the grand total compensation for our executives, including myself, you know the TSR payout which is an important factor, if you look, look through our proxy, you know that is not paying out. We have not performed there. The other one is on our restricted shares, you know we did not meet our EPS growth for that payout. So some of our longer term payouts for the year will be significantly below target. But that kind of just explains how and why you see that Delta in the Q4.

Vince Morales

Yeah Matt, I’ll just add a good summary by Tim. The prior year again we lowered our Q4 incentive comp as we ended the year lower than we expected. When we came into the Q4 this year, strong fourth quarter organic growth exceeded strong strong cash flow especially the latter part of December in receivables welcomed and our cash from ops was 500 million higher than the prior year. As Tim mentioned, we did not hit our EPS target. So we are not getting target payout for that. Flipping back to the medical we are a company that’s pay as you go.

As I talk to my peers in the industry, we do see folks we think pulling some medical expenses into 2025 ahead of some potential inflation in 2026. So our medical costs year over year are up significantly in Q4 and particularly in December. So hopefully that answers some of the, some of the questions you had on corporate expenses.

operator

Your next question comes from the line of Michael Sisson with Wells Fargo. Your line is open.

Michael Sisson

Hey guys, a couple quick questions on architectural emi. You know, that’s a business that has struggled to grow. I mean end markets. I understand, but you know, why is that a good business for y’ all to keep longer term and maybe what’s the growth algorithm there? And maybe similar on industrial coating. Again, I understand end markets have been tough, but you know, how do you see those two businesses grow longer term and then, and just curious Events is going to take the Browns coaching job because I don’t think anybody else wants it.

Vince Morales

Let me answer that question first, Mike. I think that’s a hopeless job. So I’m trying to retire, not go into a hopeless job.

Tim Kaniewicz

I think he’s already declined it officially too. So Mike, the two answers to the two businesses you asked about are very different. One is an ongoing macro issue and that’s Architectural Europe. The other one is really kind of a tariff and time stamped issue and that’s general industrial. But let me talk about Architectural Europe. It’s been a depressed volume market for years, as has much of the European economy. Two years ago, I guess three years ago now, 2023, which was depressed, we generated record earnings and record cash. It goes all the way back to 2008.

So even in depressed markets, we can generate good earnings and good cash and we don’t spend that cash within the business. We use that cash to supplement what we’re trying to do in some of our higher growth businesses. What’s happened these last couple years is the volume decline has been pretty pronounced at this point last year. One of the things we missed, frankly was we were, we were projecting some upside in the market. We are not projecting upside in the market this year. We’re saying flat, flat ish for the whole year. But we’re not waiting, we’re not sitting around waiting for this macro to improve.

It still makes good money for us, but with the actions we’ve started to take and will take throughout the year, we’ll see margin expansion, cash generation expansion out of this business as we move through 2026. So it’s not, you know, it’s not our best growth business certainly, but it can deliver, has delivered good earnings, good cash in a challenging macro.

Vince Morales

Yeah. Before Tim goes on to industrial Mike, I just want to remind everybody that this is a maintenance cycle business. We did have significant growth during COVID So 2020, 2021. So the maintenance cycle clock reset. Typically this is a five to six year maintenance window. So we’re now getting to that fifth year or repaint typically would occur. So some of the volume declines the past couple years really have been because we pulled forward maintenance into those, into those Covid years.

Tim Kaniewicz

Yeah, industrial very different. It’s a bit more cyclical than probably our most cyclical business is auto. Second most would probably be our general industrial because you’re essentially painting big hunks of metal that get moved around the world. And so with the tariff uncertainty and what that’s done, the confidence of some of our customers that’s been dialed back and then what’s that done from consumer affordability, you know, so some of those folks are struggling. But we do see sequential improvement in this business. What’s interesting is we see really good sequential improvement in places like Europe and Latin America, largely driven by share gain.

We see sequential improvement in things like heavy duty equipment, not ag related, but construction related. We see some sequential improvements in transportation and powder and in a broad category of general finishes. But we still see challenges in the US market and we still see challenges in a small part of what we do in China is exported to the US about 10% of what we do in China. And think electronics and kitchen and bakeware, those kind of things remain depressed a bit. So the industrial story is more of a timing one. And we are starting to see green shoots.

We are starting to win share and we’ll start to launch those share wins as we move through 2026.

operator

Your next question comes from the line of Jeff Zakaukis with JP Morgan. Your line is open.

Jeff Zakaukis

Thanks very much. Your performance coatings revenue expectation for 2026 is flat to up low single digits. And in that segment you’ve got aerospace and you’ve got auto refinish. If aerospace grows at a high single digit rate, in order to meet that guidance, refinish has to contract at a high single digit rate or a mid to high single digit rate. Is that the correct conclusion to draw? And for Vince, how many shares did you buyback this quarter and what did you spend?

Tim Kaniewicz

Hey Jeff, I’ll take the first one. I don’t think we’re seeing that much of a decline. More like low to mid, low to mid for a finish in the first half. If you think sequentially, what did we see in Q3, Q4? We saw double digit, then we saw a high single digit. So I’d say you ought to say that, that that slope, slope continued towards normalization as we move, as we move through the quarter. You know, remember, I mean traffic’s quite small there, but we also have a nice PMC business in there. That’s. That’s not small. That’ll. That’ll contribute to some of the grand total of what we guided to for the year.

Vince Morales

Yeah. Jeff, for us, from a share repurchase perspective, we bought just under 980,000 shares at an average price of about $102. And we spent, as we said in the press release, around $100 million in the fourth quarter.

operator

Your next question comes from the mind of Gancham Punjabi with Robert W. Baird. Your line is open.

Gancham Punjabi

Thanks, operator. Good morning, everybody. Vince, congrats from our team as well. Wish you the best in retirement. A quick one on raw materials.

Vince Morales

Sorry I’m still here till July, but thank you.

Tim Kaniewicz

Yeah, I understand. Just an early congratulations.

Vince Morales

Thanks. On the raw materials side, you know, as it relates to guidance, can you just give us a bit more color as to the constituents as you think about, you know, some of the major ones that TiO2 Petros, et cetera. Looks like you’re guiding. Flat for the year and also flat for the first quarter, but some of the spot markets were weaker into the fourth from the fourth quarter of 2025. So just curious as to which categories may be inflating as well. Thanks.

Tim Kaniewicz

Yeah. You know, so first Gonsham and a public service announcement for everybody. This is not Vince’s last earnings call, and I don’t want Vince to think it’s his last earnings call. He’s still got, he’s still got six more months of work to do here, so. But thank you for the kind words and we’ll have lots of kind words as we get closer to his actual, actual, actual date. But gunchem, high level, it’s still a very long favorable to U.S. supply, demand, balance. So across the board, that generally means good pricing for us. But what offsets that? A couple of things.

I put them in three categories. Epoxies are up a bit because of tariffs. Right. And that’s, that’s included in our guide. And you know, that obviously affects more the industrial businesses, so it doesn’t affect deco companies because most deco products do not have epoxy. So when you compare to what others might say, the epoxies is 1. The second one is pigments, but let’s not put TiO2 in that. I’d say more the specialty pigments. We are seeing some inflation there driven by tariffs because those things come from all over the world. Okay. And the other category that’s up is metal packaging.

And everybody knows what’s happening on the aluminum and steel tariffs? Those are really the only categories that I can think of that are up in our guide. Tio2 is still pretty soft, just given the supply demand. We’ve been doing some supplier consolidation. We’ve been, you know, working volume for volume commitment deals for pricing. So that one, that one is still pretty soft. You know what oil’s doing. So that drives solvents to be. And then across the board, everything else is still, still in a very long situation. Add it all together and we come up with flat.

Flat for Q1, flat for the year.

Vince Morales

Yeah. I’ll just remind everybody what we said at the outset. You know, we do have targeted pricing that we institute either in the back half of 2025 or we’ll institute in 2026, including in Q1. So we do expect higher pricing for 2026.

operator

Your next question comes from the line of Josh Spector with ubs. Your line is open.

Josh Spector

Yeah, hi, good morning. I just wanted to ask on Mexico, I don’t know if there’s a way you can maybe index your volumes for where you are today in fourth quarter versus a year ago because obviously there’s some easy comps in first half with all the Liberation Day disruptions, but it seems like the fourth quarter performance might say you’re even above where you were coming into last year. So can you help us square that away a little bit? It’d be helpful, thank you.

Tim Kaniewicz

Yeah. Let me give a. Do a high level and then I’ll let Vince give, give the details because he’s doing the math in his head here. So we, we definitely finished pretty strong in, in Mexico. And if you look kind of sequentially at how we move through the year, we’re down, down called mid single digits in Q1, up low single digits, Q2, up mid single digits, Q3, up high single digits, Q4. Now where that puts us relative to year end 24. I’ll give that to. Give that to Vince.

Vince Morales

Yeah. Josh, if you look at the fourth quarter as a standalone basis, and again, there’s two parts of our Mexican business. There’s the retail or consumer segment. There’s also the project segment. The retail segment has continued to grow. The project segment’s the one that had contracted the most in the first half of the year, fourth quarter over fourth quarter, just on the volume basis, we’re right around mid single digits higher. Again, some of that’s recovery and we expect again in the first quarter a good volume based on easier computer.

operator

Your next question comes from the line of Laurent Favre with bnp. Your line is open.

Laurent Favre

Yes. Morning, guys. I want to go back to the M and A discussion. I understand what you’re saying on buybacks versus M&A. There are some pretty obvious situations with assets coming out or potentially coming out of the recent announcements in Germany, Amsterdam and Philly. Now, I think it’s unlikely that we’ll have any clarity before the second half of 2027. So am I right to assume that this might be a very quiet year for buybacks as your way to get clarity on what’s happening on those situations?

Tim Kaniewicz

No, you know, I wouldn’t say that, Laurent. I would say, look, our balance sheet is strong enough that we’ve got optionality. If something gets spit out of either of those two deals and if it makes sense to us at the right price, we’ve got optionality to do something there in 2027 without it impacting our ability to, to do buybacks in 2026. You know, we’re, I think we’re on nine straight quarters of buybacks now. And you know, we run a play. Vince, myself, our treasurer and our, our corp development guys sit down every quarter and say, what’s the pipeline look like? What’s cash flow look like? And we make a decision on buybacks and we’ll continue to do that because even if we make a buyback and then all of a sudden I get a phone call saying, hey, there’s something on the table here from one of these deals that’s being spun out.

I’m not worried about my ability to do both.

operator

Your next question comes from the line of Frank Mitch with Fermium Research llc. Your line is open.

Frank Mitch

Thank you and good morning, Tim. I hope you can understand some of the confusion we have regarding Vince’s retirement date since many of us had already assumed that he was so appreciate your clarification there. I want to drill into a little bit about the first quarter here. You know, in the script, I don’t want to make too big a deal about it, but you know, in the script you just, you described the first half as being low single digit EPS growth. And in your comments this morning you talked about it being flat to low single digits in the first half of the year.

Obviously you didn’t provide any1q guidance. You know, can you just speak to, you know, your expectations in terms of, in terms of 1Q? I mean, I get, I guess flat down, modestly up. All that’s in the, all that’s in the calculus as we sit here in.

Tim Kaniewicz

In late January Yeah, Frank, I. By the way, I made that clarification not only for you, but I made that clarification. So. And I will publicly acknowledge that you were right a year ago that Aaron Rodgers would be better with us than anything he could do with the Jets. So we’ll leave that out there. So, look, here’s the easiest way to say it. We’re going to ramp up in our EPS growth. I said flat to low single digits for the first half. So I would interpret that as flat ish for Q1, low single digits ish for Q2, and then stronger in the second half of the year.

operator

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

Mike Harrison

Hi, good morning, Tim. In response to one of the first questions you were asked on this call about organic growth and kind of what was running ahead of expectations, I was surprised to hear you not specifically mention China. It sounded a little bit like Asia Pacific was ahead of expectations. Can you talk about what you’re seeing in China in particular? What are you seeing, you know, as we’re cutting Lunar New Year, expectation of a recovery. Thank you.

Tim Kaniewicz

Yeah. Hey, Mike, I’m glad you asked that question because I want to clarify. I was responding by, by business, by vertical, not as much by geography. So I appreciate the opportunity to do that. Despite all the headlines, we’re growing in China. We grew in Q4 in China and will grow in 2026 in China. It’s because we have a strong position of local, for local businesses. We’re well positioned in the kind of the right industries. But more broadly, Asia Pacific is very strong for us because India is doing great for us. Parts of Southeast Asia are doing great for us.

So if you look at specifically China going forward, you know, we’ll see, you know, low single digits kind of growth, maybe mid single digits kind of growth in 2026. So it’s not the, it’s not the growth of a decade ago. But it’s also not the gloom and doom that you see, at least for our portfolio because we’re in the right places with the right kind of offering for the customers. You know, if you move to India, you know, India is delivered double digit growth for us throughout most of 2025. We expect that to continue into 2026.

So part of that overall Asia Pacific story is China still putting up growth numbers, India contributing with double digit growth numbers.

operator

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

Eric Boyes

Thanks. Good morning. My question is back to Arrow. Appreciate the Intra business mix breakdown as arrow becomes a bigger percentage of the segment from a profitability and margin standpoint, how would you rank order arrow coatings, transparencies and sealants and then maybe also on customer mix, military versus G and A and commercial. And then I think you mentioned the OEM tailwinds. But how do you see the product mix for transparencies and sealants evolving in 26 and beyond? Thanks.

Vince Morales

Hey Eric, this is Vince. As we’ve never done, we don’t give our inter business profitability by product or by end market. As Tim said in his opening remarks or in one of the Q and A questions, it’s certainly one of our better performing businesses due to the technology and specification requirements. So. But we’re not going to give product specific profitability.

Tim Kaniewicz

Yeah. As far as some of your other questions, mix of oem, military and general aviation, I think we provided that pie chart and the growth rates among those three are very similar which helps the portfolio. And to Vince’s point, look, we’re giving more detail on aerospace because we don’t believe it’s fully understood because we have a competitor that has a very. I’ll give them props. They’ve got a very good aerospace coatings business. This is much more than that. And as I said in my opening comments, coatings is actually the minority of our total profile here.

So I don’t know if I’ve addressed all your all your questions. I know you’re particularly interested here because I believe you’re a pilot or air Force pilot. So be happy to show you how we make F35 canopies someday or F16 canopies. Not sure which bird you flew.

Vince Morales

Yeah, if you look again, by end market, we do sell to oem. We sell to military and general aviation. All those markets right now are sold out. All the products we have are sold out. Hence the capital increase we’ve had the last couple years. Also the operating expense increase as we have folks trying to debottleneck our existing operations. These operations are specified and qualified so they do require significant hand holding as we change processes.

Tim Kaniewicz

Yeah, and one more point and then we can move on. But it’s also significant R and D in this business. That’s why we’re able to command a better margin. Better than, better than rest of or better than many parts of our portfolio because of the significant long cycle R and D investment that it takes to win in this space.

operator

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

James Hooper

Good morning guys. Thanks very much for the question, my question’s on auto OEM and the share gains there. Can you unpack a few more of the drivers for us, please? Is this to do with kind of your positioning in China or is it to do with your customers gaining share of the auto OEM market? And can you give us a little update about some of the technology offering there? Is that a driver of share gains?

Tim Kaniewicz

Thanks. Yeah, yeah, thank you, James. It’s a little bit of all of those I mentioned. There is some element of customer mix there where one of our customers, where we have a fairly large share wallet had a rough couple of years. They’re recovering now and that helps us to some degree. But most of what we’re winning on, we’ve been introducing lower cure products. We’ve got a new electric coat product out there that is, that brings more productivity and some sustainability benefits to our customers. We’ve been doing very well with automotive parts in that business. We’ve been doing well with particular large EV manufacturer based in China who, despite some headlines, what’s happening to the EV market is doing very well both domestically and and export.

Not to the US obviously, but to many, many other countries. So it’s a combination of some customer mix, some new technology wins and some, as Alicia, who runs a business for us, calls it, targeting the win with the winners, partnering with those that are going to win in the marketplace and developing and bringing them their best value proposition and then growing with them.

Vince Morales

Yeah, as we said all year, we did pick up some significant share in South America as one of our competitors exited the market. We realized the full quarterly benefit of that in Q4. We had some benefit in Q3, full quarterly benefit in Q4 that’ll carry over into the first half of 2026.

Tim Kaniewicz

We’ve also got, as I said in my opening remarks, in addition to the carryover, there’s another significant double digit millions share wins that will launch throughout 2026 that we want in late 2025.

operator

Your next question comes from the line of Patrick Cunningham with Citigroup. Your line is open.

Patrick Cunningham

Hi, good morning. Thanks for taking my question. Just a quick one on protective and marine. You seem to call out normal yellow to industry growth rates. It seems like you still have some nice marine products that are ramping up. So are there any share losses offsetting in 2026 and what would you expect this overall industry growth rate to be across the platform?

Vince Morales

Yeah, Patrick, this is Vince, just really two factors there. You know, Tim mentioned 11 consecutive quarters of volume growth, organic growth that’s compounding. So we’re running up against some very difficult comparables. This is a project oriented business. So as projects roll off, we have to win new projects. So those are two of the factors. We do feel good about. Our technology, as you mentioned, that’s going to continue to allow us to carry the deck.

Tim Kaniewicz

And you specifically mentioned marine. Marine is a particular area of strength for us right now. We’ve been disproportionately winning in aftermarket dry docks because of our Sigma Glide technology. This year we’ve also been disproportionately winning in Asia new builds. So marine continues to be a real strength for us as well. Then on the protective side, some of our specialty fireproofing products.

operator

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

Arun Viswanathan

Great, thanks for taking my question. Congrats on the impending retirement events. Great, great. We’re working with you over the last several years. So I guess first off just wanted to dig back into the operating leverage and corporate expense question. So it looks like you’re guiding to about 4% EPS growth. If I back into it, it looks like about 3% EBITDA growth. And as you show on the slide, flat to low single digit up organic growth. So I think you mentioned price would be slightly positive. So that would kind of imply flattish to maybe even slightly down volumes, is that correct? And then I guess as a follow on, is it really that volume number that we need to see go higher that would drive the operating leverage or are the corporate expenses going to be structurally higher and kind of mute that as you know, in the foreseeable future, how do we kind of get to the point where you do see kind of a lot of the fruits of your labor paying off and you see that actual EPS growth come through.

Thanks.

Tim Kaniewicz

Yeah, yeah, thanks Roon. I’ll take it first, Lynn. Vince will fill in the details first. We’re not seeing structural change in our corporate, corporate expense going on. Right. That’s or going forward. Vince will explain that the biggest issue with our, our lack of leverage with the volume growth that we’re getting today is first, second and third, the refinish destocking because it’s just such a, such a strong margin for us that a lot of the other gains until that stabilizes and you’ll see it in a second, second half of the year as normalization happens there. But that’s, that’s like kind of number one, number two and number three as the reasons why you’re not seeing more leverage.

We’ll continue to gain incremental volume going forward and that’ll bring incremental leverage. Pricing will bring incremental leverage. We’ve got the cost outs which will continue bringing incremental leverage. And the second half of 2025, all those happen. But they got overshadowed by two things. One, the refinished destocking and two, corporate interest. So with that, let me throw it to Vince and fill in the details.

Vince Morales

Yeah, rude. If you look at 2026 versus 2025 couple, the segments are going to grow mid single digits or higher in aggregate in terms of segment earnings. We do have higher interest costs. Like most companies. We have some very low cost debt rolling off. We had three maturities, two maturities in 2025 roll off. We have another maturity in early 26 roll off. We’re replacing that in kind in absolute dollars but not at the same interest rate. So unfortunately our interest costs are higher in 26 versus 25 in addition. And most companies are also seeing this, we’re seeing a slight increase in our tax rate and that’s driven around on a variety of different factors, especially in different jurisdictions.

So the those two items are a bit of a detractor. But the segment results we are seeing growth in year over year in 2026.

operator

Your next question comes from the line of Lawrence Alexander with Jefferies llc. Your line is open.

Lawrence Alexander

Good morning. Just two quick ones. First on the AI investments, given it’s a lot you’re leveraging internal projects. Do you have enough data to see what your paybacks are like on incremental investments? And secondly on the share gains in industrial do you expect those to be pro or contra cyclical? You know, if demand accelerates to expect the rate of share gain to accelerate.

Tim Kaniewicz

Yeah, yeah. Lawrence, let me take both and Vince can fill in anything the AI. So first of all, it’s still early days, right? We are, yeah. Part of our increase in operating expense and capital expense is because of the AI. We’ve got a few runs on the board that have delivered millions to the bottom line. Not yet material to the company, but very favorable early indicators relative to the investments that we made that this will be a very good ROI for us as we go forward. And you consider the fact that we only only air quotes optimized 50 formulas that are commercialized so far and we’ve only launched one that was AI developed so far.

And if you look at the size of our pipeline, the materiality is yet to come. But even today we are booking savings to the bottom line with, with what’s already been launched. So very confident in the ROI going forward.

Vince Morales

Yeah. On the, on the industrial side, Lawrence, we would expect our share gains to be additive if there’s a cyclical recovery here. As Tim mentioned earlier, this is one of our early warning businesses both up and down, kind of the canary in the coal mine we have seen in past and expect some point green shoots in this business. And then with our share gains and technology offerings on top of that, we’d expect it to be additive.

operator

There are no further questions at this time. I will now turn the call back over to Alex Lopez.

Alex Lopez

Thank you, Warren. We appreciate your interest and confidence in ppg. This concludes our four quarter earnings call.

operator

This concludes today’s conference call. You may now disconnect. You may now disconnect.