PPG Industries PPG · USD

Reportable Business Segment Information PPG is a multinational manufacturer with 10 operating segments (which the Company refers to as “strategic business units”) that are organized based on the Company’s major products lines. The operating segments are aggregated into reportable business segments based on their similar economic characteristics, including similar nature of products, production processes, end-use markets and methods of distribution.The Global Architectural Coatings reportable business segment is comprised of the architectural coatings EMEA and architectural coatings Latin America and Asia Pacific operating segments. This reportable business segment primarily supplies paints, wood stains, adhesives, sealants and purchased sundries.The Performance Coatings reportable business segment is comprised of the automotive refinish coatings, aerospace coatings, protective and marine coatings and traffic solutions operating segments. This reportable business segment primarily supplies a variety of coatings, solvents, adhesives, sealants and finishes, along with pavement marking products, transparencies and paint films.The Industrial Coatings reportable business segment is comprised of the automotive OEM coatings, industrial coatings, packaging coatings, and the specialty products operating segments. 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, paint films and other specialty products. Production facilities and sales for PPG’s reportable business segments are global and each segment continues to pursue opportunities to further develop their global reach. Each of the reportable business segments in which PPG is engaged is highly competitive. The diversification of product lines and the worldwide sales tend to minimize the impact on PPG’s business of changes in demand in a particular industry or in a particular geographic area.PPG’s chief operating decision maker is its Executive Committee, which is comprised of the Chief Executive Officer, the Chief Financial Officer and General Counsel.

Revenue Recognition The Company recognizes revenue when control of the promised goods or services is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. For most transactions, control passes in accordance with agreed upon delivery terms.The Company delivers products to company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires and independent distributors, company-owned distribution networks, and directly to manufacturing companies and retail customers. Each product delivered to a third party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. Accounts receivable are recognized when there is an unconditional right to consideration. Payment terms vary from customer to customer, depending on creditworthiness, prior payment history and other considerations.The Company also provides services by applying coatings to customers' manufactured parts and assembled products and by providing technical support to certain customers. Performance obligations are satisfied over time as critical milestones are met and as services are provided. PPG is entitled to payment as the services are rendered. For the years ended December 31, 2025, 2024 and 2023, service revenue constituted less than 5% of total revenue.

Commitments and Contingent Liabilities PPG is involved in a number of lawsuits and claims, both actual and potential, including some that it has asserted against others, in which substantial monetary damages are sought. These lawsuits and claims may relate to contract, patent, environmental, product liability, antitrust, employment and other matters arising out of the conduct of PPG’s current and past business activities. To the extent that these lawsuits and claims involve personal injury, property damage and certain other claims, PPG believes it has adequate insurance; however, certain of PPG’s insurers are contesting coverage with respect to some of these claims, and other insurers may contest coverage with respect to some claims in the future. 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.The results of any current or future litigation and claims are inherently unpredictable. However, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG 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.Asbestos Matters As of December 31, 2025, the Company was aware of certain asbestos-related claims pending against the Company and certain of its subsidiaries. The Company is defending these asbestos-related claims vigorously. The asbestos-related claims consist of claims against the Company alleging:•exposure to asbestos or asbestos-containing products manufactured, sold or distributed by the Company or its subsidiaries (“Products Claims”);•personal injury caused by asbestos on premises presently or formerly owned, leased or occupied by the Company (“Premises Claims”); and•asbestos-related claims against a subsidiary the Company acquired in 2013 (“Subsidiary Claims”).The Company monitors and reviews the activity associated with its asbestos claims and evaluates, on a periodic basis, its estimated liability for such claims and all underlying assumptions to determine whether any adjustment to the reserves for these claims is required.

Income Taxes The provision for income taxes by taxing jurisdiction and by significant components consisted of the following:($ in millions)202520242023Current U.S. federal$62 $67 $95 U.S. state and local4 15 14 Foreign419 490 506 Total current income tax expense$485 $572 $615 Deferred U.S. federal($30)($2)($156)U.S. state and local(3)(8)(15)Foreign6 (87)(16)Total deferred income tax benefit($27)($97)($187)Total income tax expense$458 $475 $428 The following table is a reconciliation of the statutory U.S. corporate federal income tax rate to the Company’s effective tax rate for 2025 in accordance with the guidance in ASU 2023-09:2025($ in millions, except percentages)AmountPercentU.S. federal income tax rate$429 21.0%Foreign tax effectsMexicoTax rate differential55 2.7 Nontaxable inflationary effect(23)(1.1)Other adjustments34 1.6 SingaporeNontaxable gain on sale(45)(2.2)Other adjustments(2)(0.1)SwitzerlandNondeductible loss on sale45 2.2 Other adjustments(11)(0.6)Other foreign jurisdictions61 3.0 Tax credits(33)(1.6)Changes in unrecognized tax benefits(39)(1.9)Other adjustmentsReturn to provision(25)(1.2)Other adjustments12 0.6 Effective income tax rate$458 22.4%The following table is a reconciliation of the statutory U.S. corporate federal income tax rate to the Company’s effective tax rate for 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:20242023U.S. federal income tax rate21.0%21.0%Changes in rate due to: Taxes on non-U.S. earnings4.8 4.3 Change in valuation allowance reserves3.5 3.6 Other foreign tax effects(4.7)(2.8)Pillar 2 global minimum tax0.8 — Impairment and other related charges, net(0.2)2.0 Uncertain tax positions1.2 (1.8)U.S. tax cost/(benefit) on foreign operations0.9 (0.9)U.S. tax incentives(0.8)(0.8)Tax benefits from equity awards— (0.2)U.S. state and local taxes0.3 — Other(1.2)0.9 Effective income tax rate25.6%25.3%Income/(loss) before income taxes of the Company’s U.S. operations for 2025, 2024 and 2023 was $293 million, $210 million and $(129) million, respectively. Income before income taxes of the Company’s foreign operations for 2025, 2024 and 2023 was $1,752 million, $1,642 million and $1,819 million, respectively.

Stock-Based Compensation The Company’s stock-based compensation includes stock options, restricted stock units (“RSUs”) and grants of contingent shares that are earned based on achieving targeted levels of total shareholder return. All current grants of stock options, RSUs and contingent shares are made under the PPG Industries, Inc. Amended and Restated Omnibus Incentive Plan (“PPG Amended Omnibus Plan”), which was amended and restated effective April 21, 2016.($ in millions)202520242023Total stock-based compensation$46 $42 $56 Income tax benefit recognized$10 $9 $11 Stock Options PPG has outstanding stock option awards that have been granted under the PPG Amended Omnibus Plan. Under the PPG Amended Omnibus Plan, certain employees of the Company have been granted options to purchase shares of common stock at prices equal to the fair market value of the shares on the date the options were granted. The options are generally exercisable 36 months after being granted and have a maximum term of 10 years. Upon exercise of a stock option, shares of Company stock are issued from treasury stock.The fair value of stock options issued to employees is measured on the date of grant and is recognized as expense, net of estimated forfeitures, over the requisite service period. PPG estimates the fair value of stock options using the Black-Scholes option pricing model. The risk-free interest rate is determined by using the U.S. Treasury yield curve at the date of the grant and using a maturity equal to the expected life of the option. The expected term assumption is estimated based on the weighted average term of historical stock option grants. The expected dividend yield and volatility are based on historical stock prices and dividend amounts over past time periods equal in length to the expected life of the options. PPG applies an estimated forfeiture rate that is calculated based on historical activity. The following weighted average assumptions were used to calculate the fair values of stock option grants in each year:202520242023Weighted average exercise price$114.39 $142.65 $130.17 Risk-free interest rate4.2%4.3%3.9%Expected life of option in years5.56.56.5Expected dividend yield1.8%1.7%1.7%Expected volatility29.4%28.4%27.8%The weighted average fair value of options granted was $32.93 per share, $43.83 per share and $38.55 per share for the years ended December 31, 2025, 2024, and 2023, respectively.

Leases PPG leases certain retail paint stores, warehouses, distribution facilities, office space, fleet vehicles and equipment. The components of lease expense for the years ended December 31, 2025, 2024 and 2023 were as follows:($ in millions)Classification in the Consolidated Statement of Income202520242023Operating lease costCost of sales, exclusive of depreciation and amortization$49 $47 $45 Operating lease costSelling, general and administrative150 141 138 Total operating lease cost$199 $188 $183 Finance lease cost:Amortization of right-of-use assetsDepreciation$1 $1 $1 Interest on lease liabilitiesInterest expense1 1 1 Total finance lease cost$2 $2 $2 Total lease cost$201 $190 $185 Total operating lease cost for the years ended December 31, 2025, 2024 and 2023 is inclusive of the following:($ in millions)202520242023Variable lease costs$10 $9 $9 Short-term lease costs$19 $20 $19 The lease amounts included in the consolidated balance sheet as of December 31, 2025 and 2024 were as follows:($ in millions)Classification on the Consolidated Balance Sheet20252024Assets:OperatingOperating lease right-of-use assets$604 $597 Finance(1)Property, plant, and equipment, net15 12 Total leased assets$619 $609 Liabilities:CurrentOperatingCurrent portion of operating lease liabilities$138 $126 FinanceShort-term debt and current portion of long-term debt2 2 NoncurrentOperatingOperating lease liabilities450 454 FinanceLong-term debt5 5 Total lease liabilities$595 $587 (1)Net of accumulated depreciation of $16 million and $14 million as of December 31, 2025 and 2024, respectively.Supplemental cash flow information related to leases for the years ended December 31, 2025, 2024 and 2023 was as follows: ($ in millions)202520242023Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows paid for operating leases$168 $157 $155 Operating cash flows paid for finance leases$1 $1 $1 Financing cash flows paid for finance leases$2 $2 $2 Right-of-use assets obtained in exchange for lease obligations:Operating leases$109 $184 $119 Finance leases$2 $1 $1 Lease terms and discount rates as of December 31, 2025, 2024 and 2023 were as follows:202520242023Weighted-average remaining lease term (in years)Operating leases6.36.96.8Finance leases10.48.19.3Weighted-average discount rateOperating leases3.6%3.6%3.0%Finance leases6.7%6.8%6.

The Audit Committee receives bi-annual reports and periodic briefings on cybersecurity matters, including key risks to the Company, recent developments, and risk mitigation activities from our Vice President and Chief Information Officer (“CIO”) and our Chief Information Security Officer (“CISO"), who are both responsible for overseeing our cybersecurity program. In addition, the full Board receives bi-annual briefings from our CIO on our cybersecurity program. The Board and the Audit Committee also periodically review the results of exercises performed by our advisors as part of an independent assessment of PPG’s cybersecurity program and internal preparedness.In addition, the Enterprise Risk Committee, a committee of senior executives who identify and monitor the risks to PPG and are responsible for our ERM program, receives updated information on cybersecurity risks at each of its meetings.As part of their oversight of our cybersecurity program, our CIO and our CISO oversee a team of cybersecurity professionals and are responsible for assessing and managing our material risks from cybersecurity threats. Our CIO and CISO are trained information technology professionals, each of whom has earned degrees in information systems and business administration and has many years of experience in or managing global enterprise information technology at various organizations. PPG maintains an internal communication hierarchy that is designed to communicate the occurrence of certain cybersecurity events and/or incidents into our systems to our CISO, our CIO, our company crisis response team, and, as appropriate, to certain members of senior management. This communication hierarchy includes protocols for informing the Audit Committee and the full Board of certain cybersecurity events or incidents and for determining the materiality thereof.

Investments ($ in millions)20252024Investments in equity affiliates$151 $141 Marketable equity securities (See Note 11)79 85 Other102 105 Total$332 $331 Investments in equity affiliates represent PPG’s ownership interests in entities between 20% and 50% that manufacture and sell coatings and certain chemicals.PPG’s share of undistributed net earnings of equity affiliates was $19 million, $20 million and $21 million in 2025, 2024 and 2023, respectively. Dividends received from equity affiliates were $12 million, $14 million and $17 million in 2025, 2024 and 2023, respectively.