Reportable Business Segment Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Reportable Business Segment Information

Reportable Business Segment Information

Segment Organization and Products

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 Company’s reportable business segments include the following two segments: Performance Coatings and Industrial Coatings. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution.

The Performance Coatings reportable business segment is comprised of the automotive refinish coatings, aerospace coatings, architectural coatings – Americas and Asia Pacific, architectural coatings – EMEA, protective and marine coatings and traffic solutions operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings, sealants and finishes, along with paint strippers, stains and related chemicals, pavement marking products, transparencies and transparent armor.

The Industrial Coatings reportable business segment is comprised of the automotive OEM coatings, industrial coatings, packaging coatings, and the specialty coatings and materials 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, precipitated silicas and other specialty materials.

Production facilities and sales for Performance Coatings and Industrial Coatings are global. PPG’s reportable business segments continue to pursue opportunities to further develop their global reach, including efforts in Asia, Eastern Europe and Latin America. Each of the reportable business segments in which PPG is engaged is highly competitive. The diversification of our 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.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (see Note 1, “Summary of Significant Accounting Policies”). The Company allocates resources to operating segments and evaluates the performance of operating segments based upon segment income, which is income before interest expense – net, income taxes, and noncontrolling interests and excludes certain charges which are considered to be unusual or non-recurring. The Company also evaluates performance of operating segments based on working capital reduction, selling price increases and sales volume growth.

Corporate unallocated costs include the costs of corporate staff functions not directly associated with the operating segments, certain legal matters, net of related insurance recoveries, the cost of certain insurance and stock-based compensation programs and certain other unusual or non-recurring items. The service cost component of net periodic pension expense related to current employees of each reportable business segment is allocated to that reportable business segment and the remaining portion of net periodic pension expense is included in the Corporate unallocated costs.

Product movement between Performance Coatings and Industrial Coatings is limited, is accounted for as an inventory transfer, and is recorded at cost plus a mark-up, the impact of which is not significant to the net sales or segment income of the reportable business segments.

($ in millions)	2021	2020	2019
Net sales to external customers
Performance Coatings	$10,333	$8,495	$9,034
Industrial Coatings	6,469	5,339	6,112
Total Net sales	$16,802	$13,834	$15,146
Segment income
Performance Coatings	$1,491	$1,359	$1,409
Industrial Coatings	680	750	862
Total Segment income	$2,171	$2,109	$2,271
Corporate / Non-Segment Items
Corporate unallocated	(194)	(233)	(198)
Interest expense, net of interest income	(95)	(115)	(100)
Acquisition-related costs, net(1)	(86)	(9)	(17)
Pension settlement charge	(50)	—	—
Environmental remediation charges, net	(35)	(26)	(61)
Business restructuring-related costs, net(2)	(27)	(224)	(222)
Impairment charges(3)	(21)	(93)	—
Expense incurred due to natural disasters(4)	(17)	(17)	—
Change in allowance for doubtful accounts related to COVID-19	14	(30)	—
Income from legal settlements	22	—	—
Asbestos-related claims reserve adjustment(5)	133	—	(12)
Total Income before income taxes	$1,815	$1,362	$1,661

($ in millions)	2021	2020	2019
Depreciation and amortization
Performance Coatings	$308	$251	$255
Industrial Coatings	212	200	194
Corporate / Non-Segment Items	41	58	62
Total	$561	$509	$511
Share of net earnings of equity affiliates
Performance Coatings	$5	$3	$1
Corporate / Non-Segment Items	10	5	10
Total	$15	$8	$11
Segment assets(6)
Performance Coatings	$13,395	$11,551	$10,636
Industrial Coatings	5,807	5,040	4,912
Corporate / Non-Segment Items	2,149	2,965	2,160
Total	$21,351	$19,556	$17,708
Investment in equity affiliates
Performance Coatings	$33	$31	$33
Industrial Coatings	15	15	14
Corporate / Non-Segment Items	78	74	82
Total	$126	$120	$129
Expenditures for property (including business acquisitions)
Performance Coatings	$1,698	$1,293	$483
Industrial Coatings	784	166	510
Corporate / Non-Segment Items	26	14	63
Total	$2,508	$1,473	$1,056

($ in millions)	2021	2020	2019
Geographic Information
Segment income
United States and Canada	$865	$855	$1,073
EMEA	612	572	569
Asia Pacific	354	382	342
Latin America	340	300	287
Total	$2,171	$2,109	$2,271
Property, plant and equipment — net
United States and Canada	$1,377	$1,351	$1,300
EMEA	1,069	857	836
Asia Pacific	702	623	538
Latin America	294	296	309
Total	$3,442	$3,127	$2,983

(1)Acquisition-related costs, net include advisory, legal, accounting, valuation, other professional or consulting fees, and certain internal costs directly incurred to effect acquisitions. These costs are included in Selling, general and administrative expense in the consolidated statement of income. Acquisition-related costs, net also include the impact for the step up to fair value of inventory acquired in certain acquisitions which are included in Cost of Sales, exclusive of depreciation and amortization in the consolidated statement of income.

(2)Included in business restructuring-related costs, net are business restructuring charges, accelerated depreciation of certain assets and other related costs, offset by releases related to previously approved programs and a $34 million gain on the sale of certain assets in 2021 in connection with the Company’s manufacturing footprint consolidation plans and associated restructuring programs. This gain is included in Other income in the consolidated statement of income.

(3)In 2021 and 2020, impairment charges were recorded for the write-down of certain assets related to the previously planned sale of certain smaller entities in non-strategic regions. Also in 2020, an impairment charge was recorded to reduce the carrying value of an indefinite-lived trademark.

(4)In 2020, two hurricanes damaged a southern U.S. factory supporting the Company's specialty coatings and materials business. In early 2021, a winter storm further damaged that factory as well as other company factories in the southern U.S. Incremental expenses incurred due to these storms included costs related to maintenance and repairs of damaged property, freight and utility premiums and other incremental expenses directly related to the impacted areas.

(5)In the fourth quarter 2021, the reserve for asbestos-related claims was reduced to reflect the Company’s current estimate of potential liability for these claims.

(6)Segment assets are the total assets used in the operation of each segment. Corporate assets are principally cash and cash equivalents, cash held in escrow, short term investments and deferred tax assets.