UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 1-1687

 

PPG INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania			25-0730780
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One PPG Place	Pittsburgh	Pennsylvania	15272
(Address of principal executive offices)			(Zip code)
Registrant’s telephone number, including area code:			412	434-3131

 Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock – Par Value $1.66 2/3	PPG	New York Stock Exchange
0.875% Notes due 2025	PPG 25	New York Stock Exchange
1.400% Notes due 2027	PPG 27	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.  Yes  ☐    No   ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐    No  ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act).  Yes  ☐    No  ☒

The aggregate market value of common stock held by non-affiliates as of June 30, 2021, was $40,246 million.

As of January 31, 2022, 235,998,952 shares of the Registrant’s common stock, with a par value of $1.66 2/3 per share, were outstanding. As of that date, the aggregate market value of common stock held by non-affiliates was $36,817 million.

 DOCUMENTS INCORPORATED BY REFERENCE

Document	Incorporated By Reference In Part No.
Portions of PPG Industries, Inc. Proxy Statement for its 2022 Annual Meeting of Shareholders	III

2021 PPG ANNUAL REPORT AND FORM 10-K 1

PPG INDUSTRIES, INC.

AND CONSOLIDATED SUBSIDIARIES

As used in this report, the terms “PPG,” “Company,” “Registrant,” “we,” “us” and “our” refer to PPG Industries, Inc., and its subsidiaries, taken as a whole, unless the context indicates otherwise.

TABLE OF CONTENTS

		Page
Part I
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	13
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	15
Part II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	[Reserved]	16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8.	Financial Statements and Supplementary Data	30
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	72
Item 9A.	Controls and Procedures	72
Item 9B.	Other Information	72
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	72
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	72
Item 11.	Executive Compensation	72
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	72
Item 13.	Certain Relationships and Related Transactions, and Director Independence	73
Item 14.	Principal Accounting Fees and Services	73
Part IV
Item 15.	Exhibits, Financial Statement Schedules	73
Item 16.	Form 10-K Summary	76
Signatures		77

Note on Incorporation by Reference

Throughout this report, various information and data are incorporated by reference from the Company’s 2021 Annual Report (hereinafter referred to as “the Annual Report”). Any reference in this report to disclosures in the Annual Report shall constitute incorporation by reference only of that specific information and data into this Form 10-K.

     2021 PPG ANNUAL REPORT AND 10-K 2

Part I

Item 1. Business

PPG Industries, Inc. manufactures and distributes a broad range of paints, coatings and specialty materials. PPG was incorporated in Pennsylvania in 1883. PPG’s vision is to be the world’s leading coatings company by consistently delivering high-quality, innovative and sustainable solutions that customers trust to protect and beautify their products and surroundings. 

PPG has a proud heritage and demonstrated commitment to innovation, sustainability, community engagement and developing leading-edge paint, coatings and specialty materials technologies. Through dedication and industry-leading expertise, we solve our customers’ biggest challenges, collaborating closely to find the right path forward. PPG is a global leader, supplying customers in construction, consumer products, industrial and transportation markets and aftermarkets with manufacturing facilities and equity affiliates in more than 75 countries.

PPG supplies coatings and specialty materials to customers in a wide array of end-uses, including industrial equipment and components; packaging material; aircraft and marine equipment; automotive original equipment; automotive refinish; pavement marking products; as well as coatings for other industrial and consumer products. PPG also serves commercial and residential new build and maintenance customers by supplying coatings to painting and maintenance contractors and directly to consumers for decoration and maintenance.

The coatings industry is highly competitive and consists of several large firms with global presence and many firms supplying local or regional markets. PPG competes in its primary markets with the world’s largest coatings companies, most of which have global operations, and many regional coatings companies.

PPG’s business is comprised of two reportable business segments: Performance Coatings and Industrial Coatings as described below:

2021 PPG ANNUAL REPORT AND FORM 10-K 3

PERFORMANCE COATINGS

Strategic Business Unit	Products	Primary End-uses	Main Distribution Methods	Primary Brands
Aerospace Coatings	Coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, packaging and chemical management services for the aerospace industry	Commercial, military, regional jet and general aviation aircraft	Direct to customers and company-owned distribution network	PPG®
Architectural Coatings Americas and Asia Pacific	Paints, wood stains, adhesives and purchased sundries	Painting and maintenance contractors and consumers for decoration and maintenance of residential and commercial building structures	Company-owned stores, home centers and other regional or national consumer retail outlets, paint dealers, concessionaires, independent distributors and direct to consumers	PPG®, GLIDDEN®, COMEX®, OLYMPIC®, DULUX® (in Canada), PPG PITTSBURGH PAINTS®, MULCO®, FLOOD®, LIQUID NAILS®, SICO®, RENNER®, TAUBMANS®, WHITE KNIGHT®, BRISTOL®, HOMAX® among others
Architectural Coatings Europe, Middle East and Africa (EMEA)				SIGMA®, HISTOR®, SEIGNEURIE®, GUITTET®, PEINTURES GAUTHIER®, RIPOLIN®, JOHNSTONE’S®, LEYLAND®, PRIMALEX®, DEKORAL®, TRILAK®, PROMINENT PAINTS®, GORI®, BONDEX®, DANKE!® and TIKKURILA® among others
Automotive Refinish Coatings	Coatings, solvents, adhesives, sealants, purchased sundries, software	Automotive and commercial transport/fleet repair and refurbishing, light industrial coatings and specialty coatings for signs	Independent distributors and direct to customers	PPG®, SEM®, SPRINT®
Protective and Marine Coatings	Coatings and finishes for the protection of metals and structures	Metal fabricators, heavy duty maintenance contractors and manufacturers of ships, bridges and rail cars	Direct to customers, company-owned architectural coatings stores, independent distributors and concessionaires	PPG®
Traffic Solutions	Paints, thermoplastics, pavement marking products and other advanced technologies for pavement marking	Government, commercial infrastructure, painting and maintenance contractors	Direct to customers, government agencies and independent distributors	Ennis-Flint®

Segment Overview	This reportable business segment primarily supplies a variety of protective and decorative coatings, sealants and finishes along with pavement marking products, paint strippers, stains and related chemicals, as well as transparencies and transparent armor.
Major Competitive Factors	Product performance, technology, quality, technical and customer service, price, customer productivity, distribution and brand recognition
Global Competitors	Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Benjamin Moore, Hempel A/S, Kansai Paints, the Jotun Group, Masco Corporation, Nippon Paint, RPM International Inc, the Sherwin-Williams Company and 3M Company
2021 Strategic Acquisitions	Tikkurila, VersaFlex. Refer to Note 2, “Acquisitions and Divestitures” in Item 8 of this Form 10-K for more information.
Average Number of Employees in 2021	27,500
Principal Manufacturing and Distribution Facilities	Amsterdam, Netherlands; Birstall, United Kingdom; Busan, South Korea; Carrollton, Texas; Clayton, Australia; Delaware, Ohio; Deurne, Belgium; Ennis, Texas; Gonfreville, France; Huntsville, Alabama; Huron, Ohio; Kunshan, China; Little Rock, Arkansas; Mexico City, Mexico; Milan, Italy; Mojave, California; Nykvarn, Sweeden; Oakwood, Georgia; Ontario, Canada; Ostrow Wielkopolski, Poland; Ruitz, France; Shildon, United Kingdom; Sylmar, California; Stowmarket, United Kingdom; Tepexpan, Mexico; Vantaa, Finland; Waxahachie, Texas; and Wroclaw, Poland.

     2021 PPG ANNUAL REPORT AND 10-K 4

INDUSTRIAL COATINGS

Strategic Business Unit	Products	Primary End-uses	Main Distribution Methods	Primary Brands
Automotive OEM(a) Coatings	Specifically formulated coatings, adhesives and sealants and metal pretreaments	Automotive original equipment and automotive parts and accessories	Direct to manufacturing companies and various coatings applicators	PPG®
Industrial Coatings	Specifically formulated coatings, adhesives and sealants and metal pretreaments; services and coatings application	Appliances, agricultural and construction equipment, consumer electronics, building products (including residential and commercial construction), kitchenware, transportation vehicles and numerous other finished products; On-site coatings services within several customer manufacturing locations as well as at regional service centers.		PPG®
Packaging Coatings	Specifically formulated coatings	Metal cans, closures, and plastic tubes for food, beverage and personal care, and promotional and specialty packaging		PPG®
Specialty Coatings and Materials	Amorphous precipitated silicas, TESLIN® substrate, Organic Light Emitting Diode (OLED) materials, optical lens materials and photochromic dyes	Silicas - Tire, battery separator and other end-uses TESLIN - Labels, e-passports, drivers’ licenses, breathable membranes, loyalty cards and identification cards OLED - displays and lighting Lens materials - optical lenses and color-change products		PPG® TESLIN®

(a) Original equipment manufacturer (OEM)

Segment Overview	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, precipitated silicas and other specialty materials.
Alliances	PPG has established alliances with Kansai Paints to serve Japanese-based automotive OEM customers in North America and Europe and Asian Paints Ltd. to serve certain aftermarket customers and automotive OEM customers in India.
Major Competitive Factors	Product performance, technology, quality, technical and customer service, price, customer productivity and distribution.
Global Competitors	Akzo Nobel N.V., Axalta Coating Systems Ltd., BASF Corporation, Kansai Paints, Nippon Paint and the Sherwin-Williams Company
2021 Strategic Acquisitions	Tikkurila, Wörwag, Cetelon. Refer to Note 2, “Acquisitions and Divestitures” in Item 8 of this Form 10-K for more information.
Average Number of Employees in 2021	16,000
Principal Manufacturing and Distribution Facilities	Barberton, Ohio; Busan, South Korea; Cieszyn, Poland; Cleveland, Ohio; Delfzijl, Netherlands; Lake Charles, Louisiana; Oak Creek, Wisconsin; Quattordio, Italy; San Juan del Rio, Mexico; Springdale, Pennsylvania; Sumaré, Brazil; Weingarten, Germany; and Suzhou, Tianjin and Zhangjiagang, China.

2021 PPG ANNUAL REPORT AND FORM 10-K 5

Research and Development

($ in millions)	2021		2020		2019
Research and development costs, including depreciation of research facilities	$463		$401		$456
% of annual net sales	2.8	%	2.9	%	3.0	%

Technology innovation has been a hallmark of PPG’s success throughout its history. The Company seeks to optimize its investment in research and development to create new products to drive profitable growth. We align our product development with the macro trends in the markets we serve and leverage core technology platforms to develop products for unmet market needs. Additionally, we operate laboratories in close geographic proximity to our customers and we customize our products for our customers' end-use applications. Our history of successful technology introductions is based on a commitment to an efficient and effective innovation process and disciplined portfolio management. We have obtained government funding for a small portion of the Company’s research efforts, and we will continue to pursue government funding, where appropriate.

We own and operate several facilities to conduct research and development for new and improved products and processes. In addition to the Company’s centralized principal research and development centers (see Item 2. “Properties” of this Form 10-K), operating segments manage their development through centers of excellence. As part of our ongoing efforts to manage our formulations and raw material costs effectively, we operate global competitive sourcing laboratories. Because of our broad array of products and customers, we are not materially dependent upon any single technology platform.

Raw Materials, Energy and Logistics

PPG uses a wide variety of complex raw materials that serve as the building blocks of our manufactured products. The Company’s most significant raw materials are epoxy and other resins, titanium dioxide and other pigments, and solvents in the coatings businesses and sand and soda ash in the specialty coatings and materials business. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide. These raw materials represent PPG’s single largest production cost component.

Most of the raw materials and energy used in production are purchased from outside sources, and the Company has made, and plans to continue to make, supply arrangements to meet our planned operating requirements for the future. Supply of critical raw materials and energy is managed by establishing contracts with multiple sources and identifying alternative materials or technology whenever possible. Our raw materials include bio-based materials as part of a product renewal strategy. While prices for certain raw materials typically fluctuate with energy prices and global supply and demand changes, such fluctuations are impacted by the fact that the manufacture of our raw materials is several steps downstream from crude oil, natural gas, and other key feedstocks.

Through effective management of raw materials, energy and logistics, the Company maintains a competitive cost position and ensures ongoing security of supply. Security of a sufficient supply of high-quality raw materials is important to PPG’s continued success as it allows the Company to increase production as necessary to keep pace with customer demand. In 2021, we experienced shortages of certain raw materials, which negatively impacted our ability to fully meet customer demand. We are continuing our aggressive sourcing initiatives to improve our competitive cost position and broaden our supply of high-quality raw materials. These initiatives include qualifying multiple sources of supply, within Asia and other lower cost regions of the world, continuing to diversify our resin supply, including actions to expand our on-site resin manufacturing capabilities, and reducing the amount of titanium dioxide used in our product formulations.

We are subject to existing and evolving standards relating to the regulation and registration of chemicals which could potentially impact the availability and viability of some of the raw materials we use in our production processes. Our ongoing, global product stewardship efforts are directed at maintaining our compliance with these standards. Changes to chemical registration regulations have been proposed or implemented in the European Union and many countries, including China, Canada, the United States (“U.S.”), the United Kingdom (“U.K.”), Brazil, Mexico and South Korea. Because implementation of many of these programs has not been finalized, the financial impact cannot be estimated at this time. We anticipate that the number of chemical registration regulations will continue to increase globally, and we have implemented programs to track and comply with these regulations.

At PPG, our commitment to sustainability extends to our suppliers as an extension of our internal focus on sustainability. Our Global Supplier Code of Conduct clarifies our global expectations in the areas of business integrity, labor practices, associate health and safety, and environmental management. Our Supplier Sustainability Policy builds upon our Global Supplier Code of Conduct by establishing expectations for sustainability within our supply chain. This policy reinforces our expectations that our suppliers, as well as their subcontractors, will comply fully with applicable laws and adhere to internationally recognized environmental, social and corporate-governance standards.

     2021 PPG ANNUAL REPORT AND 10-K 6

In 2020, PPG engaged EcoVadis™, a leading global corporate social responsibility and sustainability ratings company, to leverage assessment processes, tools, resources and insights to drive sustainability standards and practices throughout PPG's global supply base. The EcoVadis sustainability intelligence suite assists PPG in providing broad-scale supply chain risk screening and mapping, more reliable supplier sustainability metric scorecards with actionable ratings, and complete audit and improvement management capabilities. In 2021, PPG earned a Gold rating from EcoVadis underscoring our ongoing commitment to corporate social responsibility (CSR) and our efforts to manage our economic, social and environmental impact.

We typically experience fluctuating prices for energy and raw materials driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, government regulation, and global supply and demand factors. For 2021 versus 2020, we experienced increases in our operating costs of more than $1.0 billion led by raw material cost inflation. The increases in raw material costs were primarily driven by ongoing supply constraints, including various force majeure declarations, higher energy prices, maintenance outages at many of our suppliers, energy surcharges in Europe, labor availability challenges, transportation shortages and higher ocean freight costs. Also in 2021, we experienced increases in other logistics costs, driven by supply chain disruptions, logistical challenges, labor shortages and manufacturing interruptions at both our factories and those of our suppliers and customers. Based on the distribution nature of many of our businesses, logistics and distribution costs are significant.

Given the uncertainty presented by COVID’s impact on supply chains globally and the global economic recovery, we are not able to predict the 2022 full-year impact of changes in raw material pricing versus 2021; however, we expect the negative impact of raw material inflation to lessen as 2022 progresses.

Global Operations

PPG has a significant investment in non-U.S. operations. This broad geographic footprint serves to lessen the significance to us of economic impacts occurring in any one region of the world. As a result of our global footprint, we are subject to certain inherent risks, including economic and political conditions in international markets, trade protection measures and fluctuations in foreign currency exchange rates. During 2021, favorable foreign currency translation increased Net sales by approximately $345 million and Income before income taxes by approximately $60 million.

Our net sales in the developed and emerging regions of the world for the years ended December 31st are summarized below:

($ in millions)	2021	2020	2019
Net sales
United States, Canada, Western Europe	$10,918	$9,218	$10,191
Latin America, Central and Eastern Europe, Middle East, Africa, Asia Pacific	5,884	4,616	4,955
Total	$16,802	$13,834	$15,146

Refer to Note 19, “Revenue Recognition” in Item 8 of this Form 10-K for additional geographic information pertaining to sales and Note 20, “Reportable Business Segment Information” in Item 8 of this Form 10-K for geographic information related to PPG’s property, plant and equipment.

Seasonality

PPG’s Income before income taxes has typically been greater in the second and third quarters and Cash from operating activities has been greatest in the fourth quarter due to end-use market seasonality, primarily in our architectural coatings and traffic solutions businesses. Demand for our architectural coatings and traffic solutions products is typically the strongest in the second and third quarters due to higher home improvement, maintenance and construction activity during the spring and summer months in the U.S., Canada and Europe. The Latin America paint season is the strongest in the fourth quarter. These cyclical activity levels result in the collection of outstanding receivables and lower inventory on hand in the fourth quarter generating higher Cash from operating activities.

Employee Relations

The average number of people employed by PPG during 2021 was approximately 49,300, of which approximately 14,800 were in the United States and approximately 34,500 were elsewhere in the world. The Company has numerous collective bargaining agreements throughout the world. We observe local customs, laws and practices in labor relations when negotiating collective bargaining agreements. There were no significant work stoppages in 2021. While we have experienced occasional work stoppages as a result of the collective bargaining process and may experience some work stoppages in the future, we believe that we will be able to negotiate all labor agreements on satisfactory terms. To date, these work stoppages have not had a significant impact on our results of operations. Overall, we believe we have good relationships with our employees.

2021 PPG ANNUAL REPORT AND FORM 10-K 7

Human Capital

The PPG Way is how we enable, empower and engage each employee to implement the strategies needed to strengthen our position as an industry leader. It guides our employees and leaders as we strive to achieve our purpose of protecting and beautifying the world. Employee engagement is a measure of how authentically we are living our culture. We conduct employee surveys to increase dialogue among teams and implement meaningful action to improve results.

Our human capital management strategies provide the foundation for our teams to thrive and deliver exceptional performance. These strategies in the areas of culture and purpose, employee engagement, development and pay equity are overseen by the Human Management and Compensation Committee of our Board of Directors. We are committed to ensuring our employees are safe, healthy, enabled, engaged and valued for the diverse talents they bring to PPG. We believe that having quality dialogue with our people, recognizing the value they bring and championing an authentic culture generates engaged employees and a company that is more innovative, productive and competitive. Our focus on and investment in learning and development are crucial to ensuring we keep our people engaged, productive and successful at every stage of their careers. We are committed to promoting from within wherever possible while also bringing in new ideas, thoughts and insights.

Our environmental, health and safety policy and standards define our expectations, and we implement programs and initiatives to reduce health and safety risk in our operations. We measure progress against our health and safety goals using the injury and illness rate, which is calculated as the number of illness and injury incidents per 200,000 work hours. For both 2021 and 2020, our injury and illness rate was 0.26.

One of PPG’s greatest strengths is the diversity of our people, who represent wide-ranging nationalities, cultures, languages, religions, ethnicities, lifestyles, and professional and educational backgrounds. Their unique perspectives enable us to meet challenges quickly, creatively and effectively, providing a significant competitive advantage in today’s global economy. To ensure our people feel valued and respected, we are committed to providing a workplace that embraces a culture of diversity and inclusion and is free from harassment and bullying. In connection with our focus on diversity, equity and inclusion, PPG operates eight Employee Resource Networks (“ERNs”). These ERNs are open to all employees and are intended to provide an opportunity for in-depth discussion, focus and recommendations on how PPG can deliver higher growth and performance by creating a more diverse, equitable and inclusive organization.

More information about PPG’s human capital management strategies and our workforce can be found in the Proxy Statement for our 2022 Annual Meeting of Shareholders and our Sustainability Report and on our sustainability website at http://sustainability.ppg.com.

Environmental Matters

PPG is committed to operating in a sustainable manner and to helping our customers meet their sustainability goals. Our sustainability efforts are led by the Sustainability and Innovation Committee (formerly known as the Technology and Environment Committee) of our Board of Directors. At the management level, day-to-day implementation of our environmental, social and governance (“ESG”) initiatives is led by our Vice President, Global Sustainability, a new position created in 2021 to coordinate PPG’s ESG and sustainability programs and to communicate our ESG progress with our customers, shareholders and other stakeholders. The Vice President, Global Sustainability works with PPG’s Sustainability Committee, a committee of management consisting of senior corporate executives, to establish and monitor our sustainability goals, policies, programs and procedures that incorporate sustainability into our business practices, including resource management, climate change impacts, innovation, community engagement, communications, procurement, manufacturing and employee wellness.

Our dedication to innovation is intertwined with sustainability. Once again, we increased the percent of our sales from sustainable products to 38% in 2021 from 35% in 2020. We are marketing an ever-growing variety of products and services that protect the environment and provide safety and other benefits to our customers. Our products contribute to lighter, more fuel-efficient vehicles, airplanes and ships, and they help our customers reduce their energy consumption, conserve water and reduce waste. These products include a compact automotive paint process that saves energy and reduces water usage; sustainable, waterborne coatings formulations; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; antimicrobial products; and solutions for autonomous and battery-powered vehicles.

The Company’s commitment to sustainability continues to yield tangible results. In 2021, we again made significant progress reducing our energy intensity, greenhouse gas emissions intensity and waste intensity. More information about PPG’s sustainability values, efforts, goals and data and our community and employee engagement programs can be found in our Sustainability Report and on our sustainability website at http://sustainability.ppg.com.

We are subject to existing and evolving standards relating to the protection of the environment. In management’s opinion, the Company operates in an environmentally sound manner and is well positioned, relative to environmental matters, within the industries in which it operates. PPG is negotiating with various government agencies concerning current and

     2021 PPG ANNUAL REPORT AND 10-K 8

former manufacturing sites and offsite waste disposal locations, including certain sites on the National Priority List. While PPG is not generally a major contributor of wastes to these offsite waste disposal locations, each potentially responsible party may face governmental agency assertions of joint and several liability. Generally, however, a final allocation of costs is made based on relative contributions of wastes to the site. There is a wide range of cost estimates for cleanup of these sites, due largely to uncertainties as to the nature and extent of their condition and the methods that may have to be employed for their remediation. The Company has established reserves for onsite and offsite remediation of those sites where it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Our experience to date regarding environmental matters leads us to believe that we will have continuing expenditures for compliance with provisions regulating the protection of the environment and for present and future remediation efforts at waste and plant sites. Management anticipates that such expenditures will occur over an extended period of time.

In addition to the $282 million currently reserved for environmental remediation efforts, we may be subject to loss contingencies related to environmental matters estimated to be approximately $100 million to $200 million. These reasonably possible unreserved losses relate to environmental matters at a number of sites, none of which are individually significant. The loss contingencies related to these sites include significant unresolved issues such as the nature and extent of contamination at these sites and the methods that may have to be employed to remediate them.

($ in millions)	2021	2020	2019
Capital expenditures for environmental control projects	$17	$12	$15

It is expected that capital expenditures for such projects in 2022 will be in the range of $20 million to $30 million. Although future capital expenditures are difficult to estimate accurately because of constantly changing regulatory standards and policies, it is likely that environmental control standards will become increasingly stringent and the cost of compliance will increase.

Management believes that the outcome of these environmental contingencies will not have a material adverse effect on PPG’s financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Refer to Note 14, “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K for additional information related to environmental matters and our accrued liability for estimated environmental remediation costs.

Available Information

The Company’s website address is www.ppg.com. The Company posts, and shareholders may access without charge, the Company’s recent filings and any amendments of its annual reports on Form 10-K, quarterly reports on Form 10-Q and its proxy statements as soon as reasonably practicable after such reports are filed with the Securities and Exchange Commission (“SEC”). The Company also posts all financial press releases, including earnings releases, to its website. All other reports filed or furnished to the SEC, including reports on Form 8-K, are available via direct link on PPG’s website to the SEC’s website, www.sec.gov. Reference to the Company’s, the SEC’s or other websites herein does not incorporate by reference any information contained on those websites, and such information should not be considered part of this Form 10-K.

Item 1A. Risk Factors

As a global manufacturer of paints, coatings and specialty materials, we operate in a business environment that includes risks. Each of the risks described in this section could adversely affect our results of operations, financial position and liquidity. While the factors listed here are considered to be the more significant factors, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles which may adversely affect our businesses and our results of operations, financial position and liquidity.

Economic Risks

The effects of COVID-19 have negatively impacted and are continuing to adversely impact our financial condition and results of operations.

The effects of the public health crisis caused by COVID-19 have interfered with the ability of PPG, our suppliers, customers, and others to conduct business and have negatively affected consumer confidence and the global economy. Public health officials have recommended or mandated certain precautions to mitigate the spread of COVID-19, including prohibitions on congregating in groups, shelter-in-place orders, vaccination requirements or similar measures. Preventative and protective actions that public health officials, governments or PPG have taken with respect to COVID-19 have and will continue to adversely impact our business, suppliers, distribution channels, and customers, including business shutdowns or disruptions for an indefinite period of time, reduced operations, reduced workforce availability, reduced ability to supply products, or reduced demand for our products. Our financial condition, liquidity and results of operations have been and will continue to be adversely impacted by these preventative actions and the disruption to our

2021 PPG ANNUAL REPORT AND FORM 10-K 9

business and that of our suppliers and customers. As we cannot predict the duration or scope of COVID-19, the negative financial impact to our business cannot be reasonably estimated, but could be material.

Increases in prices and declines in the availability of raw materials could negatively impact our financial results.

Our financial results are significantly affected by the cost of raw materials. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide. These raw materials represent PPG’s single largest production cost component.

While not our customary practice, we also import raw materials and intermediates, particularly for use at our manufacturing facilities in the emerging regions of the world. In most cases, those imports are priced in the currency of the supplier and, therefore, if that currency strengthens against the currency of our manufacturing facility, our margins may be lower.

Most of our raw materials are purchased from outside sources, and the Company has made, and plans to continue to make, supply arrangements to meet the planned operating requirements for the future. Adequate supply of critical raw materials is managed by establishing contracts, procuring from multiple sources, and identifying alternative materials or technology whenever possible. The Company is continuing its aggressive sourcing initiatives to effectively broaden our supply of high quality raw materials. These initiatives include qualifying multiple and local sources of supply, within Asia and other lower cost regions of the world, diversification of our resin supply including adding on-site resin production at certain manufacturing locations, and a reduction in the amount of titanium dioxide and other raw materials used in our product formulations. Our raw materials include bio-based materials as part of a product renewal strategy. Despite our actions undertaken to maintain supply arrangements adequate to meet planned operating requirements, raw material supply chain disruptions, including logistical and transportation challenges in many regions, have adversely impacted, and may continue to adversely impact, our financial results.

An inability to obtain critical raw materials would adversely impact our ability to produce products. Increases in the cost of raw materials may have an adverse effect on our Income from continuing operations or Cash from operating activities in the event we are unable to offset these higher costs in a timely manner.

The pace of economic growth and level of uncertainty could have a negative impact on our results of operations and cash flows.

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. Recently, global economic uncertainty has increased due to a number of factors, including COVID-19, consumer sentiment and commodity market volatility, disruption in supply chains globally, potential changes to international trade agreements, the imposition of tariffs and the threat of additional tariffs, 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 result in reduced Income from continuing operations and Cash from operating activities.

Fluctuations in foreign currency exchange rates could affect our financial results.

We earn revenues, pay expenses, own assets and incur liabilities in countries using 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 against major currencies, could adversely or positively affect our financial condition and results of operations expressed in U.S. dollars.

The industries in which we operate are highly competitive.

With each of our businesses, an increase in competition may cause us to lose market share, lose customers, or compel us to reduce prices to remain competitive, which could result in reduced margins for our products. Additionally, our ability to increase prices may impact the overall economics for the products we offer. Competitive pressures may not only reduce our margins but may also impact our revenues and our growth which could adversely affect our results of operations.

     2021 PPG ANNUAL REPORT AND 10-K 10

Legal, Regulatory, and Tax Risks

We are subject to existing and evolving standards relating to the protection of the environment.

Environmental laws and regulations control, among other things, the discharge of pollutants into the air and water, the handling, use, treatment, storage and clean-up of hazardous and non-hazardous waste, and the investigation and remediation of soil and groundwater affected by hazardous substances. In addition, various laws regulate health and safety matters. The environmental laws and regulations we are subject to impose liability for the costs of, and damages resulting from, cleaning up current sites, past spills, disposals and other releases of hazardous substances. Violations of these laws and regulations can also result in fines and penalties. Future environmental laws and regulations may require substantial capital expenditures or may require or cause us to modify or curtail our operations, which may have a material adverse impact on our business, financial condition and results of operations.

We are involved in a number of lawsuits and claims, and we may be involved in future lawsuits and claims, in which substantial monetary damages are sought.

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 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 do 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 14, “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 inherently unpredictable, and such outcomes could have a material adverse effect on our results of operations, Cash from operating activities or financial condition.

We are subject to a variety of complex U.S. and non-U.S. laws and regulations, which could increase our compliance costs and could adversely affect our results of operations.

We are subject to a wide variety of complex U.S. and non-U.S. laws and regulations, and legal compliance risks, including securities laws, tax laws, environmental laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, and laws governing improper business practices, including bribery. We are affected by new laws and regulations and changes to existing laws and regulations, as well as interpretations by courts and regulators. These laws and regulations effectively expand our compliance obligations and costs.

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 regulations also continue to evolve and could result in increased compliance costs, slower product movements or additional complexity in our supply chains.

Further, although we believe that we have appropriate risk management and compliance programs in place, we cannot guarantee that our internal controls and compliance systems will always protect us from improper acts committed by employees, agents, business partners or businesses that we acquire. Any non-compliance or such improper actions or allegations could damage our reputation and subject us to civil or criminal investigations and shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory costs.

Changes in the tax regimes and related government policies and regulations in the countries in which we operate could adversely affect our results and our effective tax rate.

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. Our future effective income tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation. Further, PPG may continue to refine its estimates to incorporate new or better information as it becomes available. Recent developments, including potential U.S. or international tax reform, the European Commission’s investigations on illegal state aid as well as the Organisation for Economic Co-operation and Development project on Base Erosion and Profit Shifting may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities. If our effective income tax rate was 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

2021 PPG ANNUAL REPORT AND FORM 10-K 11

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.

Operational and Strategic Risks

Our international operations expose us to additional risks and uncertainties that could affect our financial results.

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. Our percentage of sales generated in 2021 by products sold outside the U.S. was approximately 65%.

Business disruptions could have a negative impact on our results of operations and financial condition.

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, 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 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.

Integrating acquired businesses into our existing operations.

Part of the Company’s strategy is growth through acquisitions. Over the last decade, we have successfully completed more than 50 acquisitions, and we will likely acquire additional businesses and enter into additional joint ventures in the future. Growth through acquisitions and the formation of joint ventures involve risks, including:

•difficulties in assimilating acquired companies and products into our existing business;

•delays in realizing the benefits from the acquired companies or products;

•diversion of our management’s time and attention from other business concerns;

•difficulties due to lack of or limited prior experience in any new markets we may enter;

•unforeseen claims and liabilities, including unexpected environmental exposures, product liability, or existing cyber vulnerability;

•unexpected losses of customers or suppliers of the acquired or existing business;

•difficulty in conforming the acquired business’ standards, processes, procedures and controls to those of our operations; and

•difficulties in retaining key employees of the acquired businesses.

These risks or other problems encountered in connection with our past or future acquisitions and joint ventures could cause delays in realizing the anticipated benefits of such acquisitions or joint ventures, or such anticipated benefits may never be realized, which could adversely affect our results of operations, Cash from operating activities or financial condition.

Our ability to understand our customers’ specific preferences and requirements, and to innovate, develop, produce and market products that meet customer demand is critical to our business results.

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 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. 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 lowering demand for our automotive refinish coatings. In addition, through the introduction of new technologies, new business models or new methods of travel, such as

     2021 PPG ANNUAL REPORT AND 10-K 12

ridesharing, the number of automotive OEM new-builds may decline, potentially reducing demand for our automotive OEM coatings and related automotive parts.

Additionally, the development of customer-facing digital platforms has and will continue to transform certain retail industries. An inability to develop such solutions and our customer’s pace of adoption of those solutions could negatively affect our business or the market demand for our products.

Our future growth will depend on our ability to continue to innovate our existing products and to develop and introduce new products. If we fail to keep pace with product innovation on a competitive basis or to predict market demands for our products, our businesses, financial condition and results of operations could be adversely affected.

The security of our information technology systems could be compromised, which could adversely affect our ability to operate.

Increased global information technology security requirements, threats and sophisticated and targeted computer crime pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data. Despite our efforts to protect sensitive information and confidential and personal data, our facilities and systems may be vulnerable to security breaches. This could lead to negative publicity, theft or other financial loss, modification or destruction of proprietary information or key information, manufacture of defective products, production downtimes and operational disruptions, which could adversely affect our reputation, competitiveness and results of operations.

In 2018, we concluded that previously issued financial statements as detailed below should not be relied upon and restated those previously issued financial statements, which led to, among other things, shareholder litigation, investigations by the SEC and the U.S. Attorney’s office, a settlement by the Company with the SEC and unanticipated costs for accounting and legal fees, and which may result in certain other risks.

As discussed in the Explanatory Note, Note 2, “Restatement of Previously Reported Consolidated Annual Financial Statements” and in Note 19, “Quarterly Financial Information (unaudited)” in Item 8 of the 2017 Form 10-K/A, in 2018 we concluded that our previously issued financial statements as of December 31, 2017 and 2016, and for each of the quarterly and year-to-date periods in 2017, and the final quarterly and year-to-date period in 2016, should no longer be relied upon. The determination that the applicable financial statements should no longer be relied upon and that these financial statements would be restated was made following the identification of misstatements. Although the Company restated these financial statements, remediated the material weakness in the Company’s internal control over financial reporting, reached a settlement with the SEC and is no longer the subject of an investigation by the U.S. Attorney’s Office, we continue to be subject to risks and uncertainties relating to these events, including advancement of legal expenses and potential indemnification obligations to certain current and former employees who are responding to investigations by the SEC and U.S. Attorney’s Office for alleged violations of the securities laws relating to the restatement described above, potential loss of investor confidence, potential reputational harm and a potential negative impact on our stock price.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

PPG’s corporate headquarters is located in the United States in Pittsburgh, Pa. The Company’s manufacturing facilities, sales offices, research and development centers and distribution centers are located throughout the world. Refer to Item 1. “Business” of this Form 10-K for the principal manufacturing and distribution facilities by reportable business segment.

The Company’s principal research and development centers are located in Allison Park, Pa.; Tianjin, China; Cleveland, Oh.; Springdale, Pa.; Milan, Italy; Monroeville, Pa.; Harmar, Pa.; Ingersheim, Germany; Marly, France; Oak Creek, Wi.; Sumare, Brazil; Amsterdam, Netherlands; Vantaa, Finland; Tepexpan, Mexico; Burbank, Ca.; Zhangjiagang, China; Cheonan, Republic of Korea; Wroclaw, Poland; Bangplee, Thailand; and Sylmar, Ca.

Our headquarters, certain distribution centers and substantially all company-owned paint stores are located in facilities that are leased while our other facilities are generally owned. Our facilities are considered to be suitable and adequate for the purposes for which they are intended and overall have sufficient capacity to conduct business in the upcoming year.

Item 3. Legal Proceedings

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, asbestos exposure, antitrust, employment, securities and other matters arising out of the conduct of PPG’s current and past business activities. To the extent 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. PPG’s lawsuits

2021 PPG ANNUAL REPORT AND FORM 10-K 13

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.

As previously disclosed, the SEC is conducting a non-public investigation of accounting matters described in the Explanatory Note and in Note 2, “Restatement of Previously Reported Consolidated Annual Financial Statements" in Item 8 of the Company’s 2017 Form 10-K/A. On September 26, 2019, PPG announced a final settlement with the SEC as to the Company. Without admitting or denying the findings in the SEC’s administrative cease-and-desist order, the Company consented to the entry of the order, which imposed no financial penalty. The Company continues to cooperate fully with the SEC’s ongoing investigation relating to these accounting matters. The Company is also cooperating fully with an investigation into the same accounting matters commenced by the U.S. Attorney’s Office for the Western District of Pennsylvania (“USAO”). As previously disclosed, the USAO has informed PPG that it will not pursue any action as to the Company.

From the late 1880’s until the early 1970’s, PPG owned property located in Cadogan and North Buffalo Townships, Pennsylvania which was used for the disposal of solid waste from PPG’s former glass manufacturing facility in Ford City, Pennsylvania. In October 2018, the Pennsylvania Department of Environmental Protection (the “DEP”) approved PPG’s cleanup plan for the Cadogan Property. In April 2019, PPG and the DEP entered into a consent order and agreement (“CO&A”) which incorporated PPG’s approved cleanup plan and a draft final permit for the collection and discharge of seeps emanating from the former disposal area. The CO&A includes a civil penalty of $1.2 million for alleged past unauthorized discharges. PPG’s former disposal area is also the subject of a citizens’ suit filed by the Sierra Club and PennEnvironment seeking remedial measures beyond the measures specified in PPG’s approved cleanup plan, a civil penalty in addition to the penalty included in the CO&A and plaintiffs’ attorneys fees. PPG and the plaintiffs settled plaintiffs’ claims for injunctive relief and PPG agreed to enhancements to the DEP approved cleanup plan and a $250,000 donation to a Pennsylvania nonprofit organization. This settlement has been memorialized by an amendment to the CO&A which was appended to a Consent Agreement between PPG and the plaintiffs which has been entered by the federal Court. The remaining claims in the case for attorneys’ fees and a civil penalty are not affected by this settlement. PPG believes that the remaining claims are without merit and intends to defend itself against these claims vigorously.

For many years, PPG has been a defendant in lawsuits involving claims alleging personal injury from exposure to asbestos. For a description of asbestos litigation affecting the Company, see Note 14, “Commitments and Contingent Liabilities” to the accompanying consolidated financial statements in Part I, Item 8 of this Form 10-K.

In the past, the Company and others have been named as defendants in several cases in various jurisdictions claiming damages related to exposure to lead and remediation of lead-based coatings applications. PPG has been dismissed as a defendant from most of these lawsuits and has never been found liable in any of these cases. After having not been named in a new lead-related lawsuit for 15 years, PPG was named as a defendant in two Pennsylvania state court lawsuits filed by Montgomery County and Lehigh County in the respective counties on October 4, 2018 and October 12, 2018. Both suits seek declaratory relief arising out of alleged public nuisances in the counties associated with the presence of lead paint on various buildings constructed prior to 1980. The Company believes these actions are without merit and intends to defend itself vigorously.

     2021 PPG ANNUAL REPORT AND 10-K 14

Information About Our Executive Officers

Set forth below is information related to the Company’s executive officers as of February 17, 2022. 

Name	Age	Title
Michael H. McGarry (a)	63	Chairman and Chief Executive Officer since September 2016
Anne M. Foulkes (b)	59	Senior Vice President and General Counsel since September 2018
Timothy M. Knavish (c)	56	Executive Vice President since October 2019
Rebecca B. Liebert (d)	54	Executive Vice President since October 2019
Vincent J. Morales (e)	56	Senior Vice President and Chief Financial Officer since March 2017
Amy R. Ericson (f)	56	Senior Vice President, Packaging Coatings since July 2018
Ramaprasad Vadlamannati (g)	59	Senior Vice President, Protective and Marine Coatings and President PPG EMEA since October 2019

(a)Mr. McGarry served as President and Chief Executive Officer from September 2015 through August 2016, President and Chief Operating Officer from March 2015 through August 2015; Chief Operating Officer from August 2014 through February 2015; Executive Vice President from September 2012 through July 2014; and Senior Vice President, Commodity Chemicals from July 2008 through August 2012.

(b)Ms. Foulkes served as Senior Vice President, General Counsel and Secretary from August 2018 to September 2018, Vice President and Associate General Counsel and Secretary from March 2016 through July 2018 and Assistant General Counsel and Secretary from April 2011 through February 2016.

(c)On December 9, 2021, Mr. Knavish was appointed Chief Operating Officer, effective March 1, 2022. Mr. Knavish served as Senior Vice President, Architectural Coatings and President, PPG EMEA from January 2019 through September 2019, Senior Vice President, Industrial Coatings from October 2017 through December 2018, Senior Vice President, Automotive Coatings from March 2016 through September 2017, Vice President, Protective and Marine Coatings from August 2012 through February 2016 and Vice President, Automotive Coatings, Americas from March 2010 through July 2012.

(d)Ms. Liebert served as Senior Vice President, Automotive Coatings from June 2018 to September 2019. She previously served as President and Chief Executive Officer of Honeywell UOP from 2016 to 2018, Senior Vice President and General Manager, Catalyst Adsorbents and Specialties of Honeywell UOP from 2015 to 2016 and Senior Vice President and General Manager, Gas Processing and Hydrogen of Honeywell UOP from 2012 to 2015.

(e)Mr. Morales served as Vice President, Finance from June 2016 through February 2017. From June 2015 through June 2016, he served as Vice President, Investor Relations and Treasurer and from October 2007 through May 2015 he served as Vice President, Investor Relations.

(f)Ms. Ericson was appointed Senior Vice President, Packaging Coatings in July 2018 when she joined PPG from SUEZ SA. She previously served as President of SUEZ Chemical Monitoring and Solutions from 2017 until 2018, President of General Electric Water Services Company from 2015 to 2017 and President and Chief Executive Officer of Alstom SA’s U.S. business from 2013 to 2015.

(g)Mr. Vadlamannati served as Senior Vice President, Protective and Marine Coatings from March 2016 through September 2019, Vice President, Architectural Coatings, EMEA and Asia/Pacific from August 2014 through February 2016, Vice President, Architectural Coatings, EMEA from February 2012 through July 2014, Vice President, Architectural Coatings, EMEA for Region Western Europe from March 2011 through January 2012 and Vice President, Automotive Refinish, EMEA from September 2010 through February 2011.

Item 4. Mine Safety Disclosures

Not Applicable.

2021 PPG ANNUAL REPORT AND FORM 10-K 15

Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The information required by Item 5 regarding market information, including PPG’s stock exchange listing and quarterly stock market prices, dividends, holders of common stock, and the stock performance graph is included in Exhibit 13.1 filed with this Form 10-K and is incorporated herein by reference.

Issuer Purchases of Equity Securities - Fourth Quarter 2021
Month	Total Number of Shares Purchased	Avg. Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Programs	Max. Number of Shares That May Yet Be Purchased Under the Programs(1)
October 2021
Repurchase program	247,000	$161.97	247,000	9,157,071
November 2021
Repurchase program	246,000	$158.24	246,000	9,284,708
December 2021
Repurchase program	1,028,765	$166.39	1,028,765	7,308,344
Total quarter ended December 31, 2021
Repurchase program	1,521,765	$164.35	1,521,765	7,308,344

(1)In December 2017, PPG's board of directors approved a $2.5 billion share repurchase program. The remaining shares yet to be purchased under the program has been calculated using PPG’s closing stock price on the last business day of the respective month. This repurchase program has no expiration date.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2021 and 2020. A discussion of changes in our results of operations for the year ended December 31, 2020 as compared to the year ended December 31, 2019 has been omitted from this Form 10-K, but may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2020 Form 10-K, filed with the Securities and Exchange Commission on February 18, 2021.

Performance Overview

Net Sales by Region

			% Change
($ in millions, except percentages)	2021	2020	2021 vs. 2020
United States and Canada	$6,676	$5,668	17.8%
Europe, Middle East and Africa (EMEA)	5,436	4,328	25.6%
Asia Pacific	2,977	2,431	22.5%
Latin America	1,713	1,407	21.7%
Total	$16,802	$13,834	21.5%

Net sales increased $2,968 million due to the following:

● Acquisition-related sales (+9%)

● Higher sales volumes (+5%)

● Higher selling prices (+5%)

● Favorable foreign currency translation (+2%)

Net sales increased versus prior year driven by higher sales volumes in each major region and higher selling prices across all businesses. Additionally, the five recent acquisitions (Ennis-Flint, VersaFlex, Cetelon, Wörwag and Tikkurila) increased net sales in 2021.

Foreign currency translation increased net sales by approximately 2% as the U.S. dollar, on an average basis, weakened against most foreign currencies versus the prior year, most notably the euro, the Chinese yuan, and the Mexican peso.

For specific business results, see the Performance of Reportable Business Segments section within Item 7 of this Form 10-K.

     2021 PPG ANNUAL REPORT AND 10-K 16

Cost of sales, exclusive of depreciation and amortization

					% Change
($ in millions, except percentages)	2021		2020		2021 vs. 2020
Cost of sales, exclusive of depreciation and amortization	$10,286		$7,777		32.3%
Cost of sales as a % of net sales	61.2	%	56.2	%	5.0%

Cost of sales, exclusive of depreciation and amortization, increased $2,509 million due to the following:

● Raw material and logistics cost inflation

● Cost of sales attributable to acquired businesses

● Higher sales volumes

● Unfavorable foreign currency inflation

Selling, general and administrative expenses

					% Change
($ in millions, except percentages)	2021		2020		2021 vs. 2020
Selling, general and administrative expenses	$3,780		$3,389		11.5%
Selling, general and administrative expenses as a % of net sales	22.5	%	24.5	%	(2.0)%

Selling, general and administrative expenses increased $391 million primarily due to:

● Selling, general and administrative expenses from acquired businesses

● Wage and other cost inflation

● Unfavorable foreign currency inflation

Partially offset by:

● Cost savings initiatives, including restructuring actions     

Other charges and other income

			% Change
($ in millions, except percentages)	2021	2020	2021 vs. 2020
Interest expense, net of Interest income	$95	$115	(17.4)%
Impairment charges	$21	$93	(77.4)%
Asbestos-related claims reserve adjustment	($133)	$—	N/A
Business restructuring, net	$31	$174	(82.2)%
Pension settlement charge	$50	$—	N/A
Other charges	$29	$104	(72.1)%
Other income	($172)	($68)	152.9%

Interest expense, net of Interest income

Interest expense, net of Interest income decreased $20 million in 2021 versus 2020 primarily due to more favorable interest rates on outstanding debt.

Impairment charges

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. Refer to Note 2, ”Acquisitions and Divestitures” and Note 6, “Goodwill and Other Identifiable Intangible Assets” in Item 8 of this Form 10-K for additional information.

Asbestos-related claims reserve adjustment

In 2021, the reserve for asbestos-related claims was reduced to reflect the Company’s current estimate of potential liability for these claims. Refer to Note 14 “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K for additional information.

Business restructuring, net

Pretax restructuring charges of $54 million related to recent acquisitions were recorded in 2021, partially offset by certain changes in estimates to complete previously recorded programs of $23 million. Pretax restructuring charges of $203 million were recorded in 2020, offset by certain changes in estimates to complete previously recorded programs of $29 million. Refer to Note 7, "Business Restructuring" in Item 8 of this Form 10-K for additional information.

2021 PPG ANNUAL REPORT AND FORM 10-K 17

Pension settlement charge

In December 2021, the Company purchased group annuity contracts that transferred pension benefit obligations for certain of the Company’s retirees in Canada to a third-party insurance company. This transaction resulted in a pension settlement charge of $50 million. Refer to Note 13, “Employee Benefit Plans" in Item 8 of this Form 10-K for additional information.

Other charges

Other charges were lower in 2021 as compared to the prior year primarily due to lower non-service components of net periodic pension cost.

Other income

Other income was higher in 2021 than prior year primarily due to a $34 million gain on the sale of a production facility in connection with the Company’s manufacturing footprint consolidation plans and associated restructuring programs, as well as favorable legal settlements.

Effective tax rate and earnings per diluted share, continuing operations

					% Change
($ in millions, except percentages)	2021		2020		2021 vs. 2020
Income tax expense	$374		$291		28.5%
Effective tax rate	20.6	%	21.4	%	(0.8)%
Adjusted effective tax rate, continuing operations*	20.0	%	22.6	%	(2.6)%
Earnings per diluted share, continuing operations	$5.93		$4.44		33.6%
Adjusted earnings per diluted share, continuing operations*	$6.77		$6.12		10.6%
*See the Regulation G reconciliations - results of operations

The effective tax rate for the year-ended December 31, 2021 was 20.6%, a decrease of 0.8% from the prior year primarily driven by a benefit from releases of reserves for uncertain tax positions.

Earnings per diluted share and adjusted earnings per diluted share from continuing operations for the year ended December 31, 2021 increased year-over-year, driven by increased net sales in 2021 due to acquisition-related sales, higher sales volumes and higher selling prices. The impact of higher net sales on earnings was partially offset by higher raw material costs due to ongoing supply constraints and higher transportation costs driven by supply chain disruptions related to COVID-19. Refer to the Regulation G Reconciliations - Results from Operations for additional information.

Regulation G Reconciliations - Results from Operations

PPG believes investors’ understanding of the Company’s performance is enhanced by the disclosure of net income from continuing operations, earnings per diluted share from continuing operations, PPG’s effective tax rate and segment income adjusted for certain items. PPG’s management considers this information useful in providing insight into the Company’s ongoing performance because it excludes the impact of items that cannot reasonably be expected to recur on a quarterly basis or that are not attributable to our primary operations. Net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate and segment income adjusted for these items are not recognized financial measures determined in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered a substitute for net income from continuing operations, earnings per diluted share from continuing operations, the effective tax rate, segment income or other financial measures as computed in accordance with U.S. GAAP. In addition, adjusted net income, adjusted earnings per diluted share and the adjusted effective tax rate may not be comparable to similarly titled measures as reported by other companies.

Income before income taxes from continuing operations is reconciled to adjusted income before income taxes from continuing operations, the effective tax rate from continuing operations is reconciled to the adjusted effective tax rate from continuing operations and net income from continuing operations (attributable to PPG) and earnings per share – assuming dilution (attributable to PPG) are reconciled to adjusted net income from continuing operations (attributable to PPG) and adjusted earnings per share – assuming dilution below.

     2021 PPG ANNUAL REPORT AND 10-K 18

($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate		Net income from continuing operations (attributable to PPG)	Earnings per diluted share(1)
Year-ended December 31, 2021
As reported, continuing operations	$1,815	$374	20.6	%	$1,420	$5.93
Includes:
Acquisition-related amortization expense(2)	172	42	24.4	%	130	0.55
Acquisition-related costs, net(3)	86	17	19.8	%	69	0.29
Pension settlement charge	50	14	26.6	%	36	0.15
Net charges related to environmental remediation	35	9	24.3	%	26	0.11
Net tax charge related to UK statutory rate change	—	(22)	N/A		22	0.09
Net charges related to business restructuring-related costs(4)	27	7	25.9	%	20	0.08
Expenses incurred due to natural disasters(5)	17	4	24.3	%	13	0.06
Impairment charge(6)	21	6	29.2	%	12	0.05
Decrease in allowance for doubtful accounts related to COVID-19	(14)	(3)	24.7	%	(11)	(0.05)
Income from legal settlements	(22)	(5)	24.3	%	(17)	(0.07)
Asbestos-related claims reserve adjustment(7)	(133)	(32)	24.3	%	(101)	(0.42)
Adjusted, continuing operations, excluding certain items	$2,054	$411	20.0	%	$1,619	$6.77

($ in millions, except percentages and per share amounts)	Income Before Income Taxes	Income Tax Expense	Effective Tax Rate		Net income from continuing operations (attributable to PPG)	Earnings per diluted share(1)
Year-ended December 31, 2020
As reported, continuing operations	$1,362	$291	21.4	%	$1,056	$4.44
Includes:
Acquisition-related amortization expense(2)	132	33	25.0	%	99	0.42
Net charges related to business restructuring-related costs(4)	224	58	25.9	%	166	0.70
Impairment charges(6)	93	25	26.9	%	64	0.27
Increase in allowance for doubtful accounts related to COVID-19	30	7	23.2	%	23	0.10
Net charges related to environmental remediation	26	7	24.7	%	19	0.08
Expenses incurred due to natural disasters(5)	17	4	24.7	%	13	0.06
Acquisition-related costs(3)	9	2	21.6	%	7	0.03
Debt extinguishment charge	7	2	24.3	%	5	0.02
Adjusted, continuing operations, excluding certain items	$1,900	$429	22.6	%	$1,452	$6.12

(1)    Earnings per diluted share is calculated based on unrounded numbers. Figures in the table may not recalculate due to rounding.

(2)    Beginning in 2021, the Company reports adjusted earnings per diluted share excluding amortization expense relating to intangible assets from completed acquisitions. Adjusted earnings per diluted share for 2020, as shown in the table above, has been recast to exclude acquisition-related amortization expense.

(3)    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.

(4)    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.

(5)    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.

(6)    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. In 2021 and 2020, net loss of $3 million and $4 million, respectively, was attributable to noncontrolling interests.

(7)    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.

2021 PPG ANNUAL REPORT AND FORM 10-K 19

Performance of Reportable Business Segments

Performance Coatings

			$ Change	% Change
($ in millions, except percentages)	2021	2020	2021 vs. 2020	2021 vs. 2020
Net sales	$10,333	$8,495	$1,838	21.6%
Segment income	$1,491	$1,359	$132	9.7%
Amortization expense	$126	$92	$34	37.0%
Segment income, excluding amortization expense	$1,617	$1,451	$166	11.4%

Performance Coatings net sales increased due to the following:

● Acquisition-related sales (+12%)

● Higher selling prices (+4%)

● Higher sales volumes (+3%)

● Favorable foreign currency translation (+3%)

In 2021, the acquisitions of Ennis-Flint, Tikkurila and VersaFlex increased net sales in the Performance Coatings segment versus prior year.

Architectural coatings – Americas and Asia Pacific net sales increased a mid-single-digit percentage during the year with differences by channel and region. Despite a strong first quarter, the remaining nine months of the year were negatively impacted by raw material shortages. Favorable foreign currency benefited net sales due to the strengthening of the Mexican peso and certain currencies in the Asia Pacific region. In Mexico, PPG Comex architectural coatings business net sales, excluding the impact of currency and acquisitions (organic sales) increased by about 10% compared to the prior year as the concessionaire network sell-out of PPG products continued to be strong.

Architectural coatings – EMEA net sales increased about 25% versus prior year largely driven by acquisition-related sales from Tikkurila and higher selling prices. Favorable foreign currency translation benefited net sales compared to the prior year. Sales volumes were strong in the first half of the year but were negatively impacted by raw material shortages in the second half.

Net sales for automotive refinish coatings increased over 20%, with significant growth in each region versus prior year driven by an increase in global miles driven and traffic density in most of the world coupled with higher selling prices.

Aerospace coatings net sales increased a low-single-digit percentage during the year primarily due to favorable foreign currency translation. Sales volumes were flat compared to prior year as a modest increase in demand for the Company’s military applications was offset by a decline in commercial OEM.

Net sales in the protective and marine coatings business increased over 35% versus prior year due to higher selling prices, strong demand in the Asia Pacific region and acquisition-related sales from VersaFlex.

Segment income increased $132 million year-over-year due to higher selling prices, higher sales volumes, acquisition-related earnings and savings from previously approved restructuring actions, partially offset by raw material and logistics cost inflation.

Looking Ahead: First Quarter 2022

In the Performance Coatings reportable business segment, supply chain and manufacturing disruptions are expected to continue as the first quarter 2022 progresses. The supply of several key inputs remains tight, which will continue to constrain sales. Further selling price increases have been secured or are being initiated during the quarter for all businesses. The Company will continue to execute against various cost-savings initiatives. Aggregate sales volumes in the first quarter are anticipated to be lower by a mid-single-digit percentage compared to the first quarter 2021, which still exhibited elevated architectural do-it-yourself (“DIY”) demand in many regions. First quarter 2022 acquisition-related sales are estimated to be between $150 million and $170 million from Tikkurila and VersaFlex. Historically, Tikkurila sales improve sequentially in the first quarter compared to the fourth quarter as it supports building inventory in its distribution channel.

     2021 PPG ANNUAL REPORT AND 10-K 20

Industrial Coatings

			$ Change	% Change
($ in millions, except percentages)	2021	2020	2021 vs. 2020	2021 vs. 2020
Net sales	$6,469	$5,339	$1,130	21.2%
Segment income	$680	$750	($70)	(9.3)%
Amortization expense	$46	$40	$6	15.0%
Segment income, excluding amortization expense	$726	$790	($64)	(8.1)%

Industrial Coatings segment net sales increased due to the following:

● Higher sales volumes (+9%)

● Acquisition-related sales (+5%)

● Higher selling prices (+5%)

● Favorable foreign currency translation (+2%)

In 2021, the acquisitions of Wörwag, Tikkurila and Cetelon increased net sales in the Industrial Coatings segment versus prior year.

Automotive OEM coatings sales volumes increased by a mid-single-digit percentage year-over-year, with declines in the second half of the year. During the year, industry-wide production disruptions worsened at many automotive OEM customers due to semiconductor chip shortages. In the U.S., automotive OEM dealer inventories remained at historically low levels as consumer demand remained very robust while production levels were constrained.

For the industrial coatings business, organic sales increased by a high-teen-percentage year-over-year as global industrial production continued to improve in most regions. Selling prices and sales volumes were higher in all regions versus prior year, and growth was led by the appliance and heavy-duty equipment sub-segments.

Packaging coatings organic sales increased by a mid-teen-percentage year-over-year due to higher selling prices and sales volume growth, including strong growth across the canned beverage segment partially offset by softening demand for the canned food segment compared to elevated levels in the prior year.

Specialty coatings and materials net sales increased by about 35% versus the prior year driven by higher sales volumes in the U.S. and Europe.

Segment income decreased $70 million year-over-year due to raw material cost inflation, partially offset by higher selling prices, higher sales volumes and savings from previously approved restructuring actions.

Looking Ahead: First Quarter 2022

Aggregate sales volumes for the Industrial Coatings reportable business segment for the first quarter 2022 are expected to be lower by a mid-single-digit percentage compared to the prior-year first quarter, due to ongoing impacts from customer supply disruptions and coatings raw material shortages, along with continuing COVID-related operational challenges. Many of these factors are also expected to lead to additional raw material cost inflation in the first quarter sequentially versus the fourth quarter. The Company continues to prioritize working with customers to secure further selling price increases in all businesses. Segment margins are expected to begin improving on a sequential basis in the first half 2022. The Company will also continue to aggressively manage costs, which will include executing against various cost-savings initiatives. The acquisitions of Wörwag and Cetelon are expected to deliver sales of about $100 million in the first quarter, with margins below the segment’s average.

Review and Outlook

During 2021, supply disruptions, severe cost inflation, and continuing impacts from COVID-19 significantly impacted net sales and earnings and the Company’s ability to meet robust aggregate customer demand. There was partial recovery in end-use markets that were significantly impacted by mobility restrictions in 2020, such as automotive refinish coatings and aerospace coatings, but both remained below 2019 global demand levels. Demand for architectural products was mixed as DIY gradually moderated to pre-pandemic levels. This was partially offset by strong recovery in do-it-for-me (“DIFM”) activity as professional paint contractor project work improved from lower levels in 2020, supported by a strong U.S. housing market. A significant shortage of semiconductor chips developed as the year progressed which constrained automotive OEM manufacturers’ production, despite strong underlying demand in many regions. Raw material cost inflation trended higher throughout the year, finishing the fourth quarter about 30% above the prior year fourth quarter. Some other key costs continued to increase in 2021, such as logistics, employee wage and benefit costs. The Company took swift action to collaborate with its customers and increase selling prices to help mitigate the elevated input costs which drove a 5% increase in selling prices compared to 2020. PPG’s net sales, excluding foreign currency translation impact, increased approximately 19% versus the prior year and were a record $16.8 billion. Organic sales were up by about 10% and acquisition-related sales contributed 9% to net sales growth compared to prior year. The Company

2021 PPG ANNUAL REPORT AND FORM 10-K 21

benefited from five strategic acquisitions that were completed between December 2020 and June 2021. Foreign currency translation was favorable for the year and impacted net sales by about 2%.

U.S. and Canada

In 2021, economic activity rebounded sharply from depressed levels experienced due to pandemic related restrictions in 2020. For the full year, U.S. GDP and industrial production both increased by nearly 6%. Demand in the residential and commercial construction markets also significantly improved during 2021. New home starts advanced by a low-teen percentage in 2021 versus approximately 8% in 2020. Residential remodeling was up by about 9% in 2021 versus 2020 supported by strong housing fundamentals. Commercial construction was down approximately 10% compared to 2020. Market demand for architectural paint shifted significantly back to DIFM from the DIY channel during the year as lower U.S. unemployment and increased mobility resulted in consumers choosing to hire professional paint contractors. Architectural coatings sales volumes in the U.S. and Canada were negatively impacted by severe raw material shortages that prevented the Company from meeting the demand for its architectural products. Despite strong demand for automotive OEM products, the semiconductor chip shortage constrained production. Automotive OEM industry builds were similar to 2020 and remain about 20% below 2019 production levels. The aerospace coatings business began what is expected to be a multi-year recovery to regain 2019 activity levels. Before the pandemic, the Company’s sales mix was approximately 70% commercial and 30% military. During the pandemic and through 2021, sales volumes for military applications remained solid, in part due to specification of PPG products with advantaged technology. The commercial segment remains down about 40% due to lower passenger miles flown and significantly fewer international flights. The commercial aftermarket segment did show a strong recovery in the second half of 2021 as domestic flight activity improved throughout the world. The automotive refinish coatings business also experienced gradual improvement through the year as miles driven and collision claims trended toward pre-pandemic levels. Packaging coatings was favorably impacted by new business wins at a number of new packaged beverage can factories and overall solid demand for the Company’s sustainable products. Higher acquisition-related sales were mostly related to the Ennis-Flint acquisition which is now the traffic solutions business. Overall sales volumes in the region were higher by a mid-single-digit percentage compared to the prior year. Solid year-over year increases in automotive refinish, industrial, automotive OEM and packaging coatings businesses were partially offset by lower year-over-year sales volumes in architectural and aerospace coatings. Aggregate regional sales volumes remain about 10% lower than the fourth quarter 2019. The U.S. and Canada remained PPG’s largest region, representing approximately 40% of 2021 net sales.

Europe, Middle East and Africa

European economic activity improved in 2021, but was constrained by supply disruptions. Industrial production and manufacturing rates in the region were higher than 2020. Activity in this region was negatively impacted by mobility restrictions associated with COVID-19 and by the U.K.’s exit from the European Union which further disrupted logistics, especially to and from the U.K. Semiconductor chip shortages negatively impacted automotive OEM sales volumes versus prior year, despite strong demand. Architectural coatings – EMEA net sales were higher driven by strong demand by professional paint contractors and the June 2021 acquisition of Tikkurila, partially offset by lower demand for architectural DIY products from elevated levels in 2020. Net sales were aided by partial recovery in the aerospace and automotive refinish coatings businesses. Demand for packaging coatings and general industrial products was solid.

EMEA represented approximately 32% of PPG’s 2021 net sales, modestly higher than 2020. Net sales, excluding the impact of foreign currency translation, increased over 20%, led by higher selling prices and acquisition-related sales. Regional sales volumes were up a mid-single-digit percentage compared to 2020, but remain 8% below 2019.

Asia Pacific and Latin America

The emerging regions of Asia Pacific and Latin America represented 28% of PPG’s 2021 net sales in aggregate, similar to the prior year.

Asia Pacific remained the largest emerging region, with net sales of nearly $3 billion, led by China, which remained PPG’s second largest country by revenue. Net sales in 2021 were more than 20% higher than 2020 driven by strong organic growth that was up a mid-teen-percentage compared to 2020. The sales volume growth was led by recovering demand for coatings products from softer economic activity in 2020 and demand for the Company’s technologically advantaged products. Sales volumes were the strongest in the protective and marine, industrial, and packaging coatings businesses. Sales volumes in the automotive OEM end-use market were positive and above industry build rates, but were constrained by semiconductor chip shortages. Sales volumes in the region were slightly higher compared to 2019.

Overall, demand in Latin America sharply increased year-over-year driven by improved economic activity in most end-use markets. Organic sales were higher by a high-teen-percentage as compared to 2020. Strong contributions were made by the PPG Comex business, which continued to outpace the industry and added over 150 new concessionaire locations during 2021. Additionally, all the businesses in the industrial coatings reportable segment delivered strong year over year sales growth. Foreign currency translation finished about 3% favorable compared to 2020, principally driven by a weaker

     2021 PPG ANNUAL REPORT AND 10-K 22

U.S. dollar compared to currencies, including the Mexican peso and Brazilian real. Sales volumes in the region were up a low-single-digit percentage compared to 2019.

Outlook

We expect solid global market growth in 2022 that will likely be uneven by region and end-use. As 2022 progresses, we expect demand for coatings products to benefit from more economic re-opening, an easing of supply chain problems, general inventory rebuilding across many end-use markets, and healthy consumer spending. Continued recovery is expected in the automotive refinish, automotive OEM and aerospace coatings businesses, which collectively accounted for about 40% of the Company’s pre-pandemic sales, and where the Company has broad global businesses supported by advantaged technologies.

The heightened supply and COVID-related disruptions experienced in the fourth quarter 2021 are expected to continue into the first quarter of 2022, impacting the Company’s ability to manufacture and deliver product. We anticipate more favorable economic conditions in the second quarter.

We anticipate that PPG’s U.S. and Canada regional growth will be led by aerospace and automotive OEM coatings as both end-use markets continue their recovery to pre-pandemic demand levels. Automotive OEM industry builds in the region are expected to be higher by a mid-teen-percentage compared to 2021. Architectural DIY demand is expected to remain at more moderate levels during 2022 and similar to 2019. Traffic solutions demand should be aided later in 2022 as infrastructure activity gains momentum.

We expect industry demand trends in 2022 in Europe to gradually improve from those experienced in 2021, particularly in the automotive OEM and refinish coatings businesses. The integration of Tikkurila will continue, and synergies from recent acquisitions should aid earnings growth. Regional growth is expected to remain mixed by sub-region and country. Favorable end-use trends are expected to continue in packaging, protective and marine, and general industrial coatings. Overall demand is expected to be similar but mixed by country in the architectural coatings business. Raw material availability is expected to gradually improve as the year progresses. We continue to monitor the economic environment in the U.K., as its exit from the European Union progresses and impacts consumer sentiment, logistics, labor availability and coatings demand.

In Asia Pacific, we expect economic activity to be soft in China during the first quarter as more severe operating restrictions have recently been imposed due to COVID and the Winter Olympics. The region is expected to receive stimulus support that should help aid economic activity as the year progresses. Economic output in Southeast Asia and India is still below 2019 levels, but is expected to improve in 2022. In China, we expect continued growth above the global average despite challenges in the real estate market and heightened risks as the Chinese economy continues to rely more on domestic consumption. The recovery in marine coatings new-build demand is expected to gain momentum as order books for large vessels and container ships is at multi-year highs.

In Latin America, we anticipate slightly better economic conditions in Mexico, most of Central America and South America compared to 2021. We expect continued strong demand in the PPG Comex architectural coatings business.

Significant other factors

We made significant progress on the global restructuring programs that were announced in April 2018, June 2019 and June 2020. The April 2018 program has been substantially completed. In the fourth quarter 2021, the Company approved business restructuring plans related to recent acquisitions. Aggregate restructuring savings related to the 2020, 2019 and 2018 programs was approximately $135 million in 2021. Aggregate restructuring savings is expected to be at least $70 million in 2022, including the impact of acquisition synergies. We will continue to monitor and aggressively manage the Company’s cost structure to ensure alignment with the overall demand environment.

Raw materials are our most significant input cost. PPG experiences fluctuating energy and raw material costs driven by various factors, including changes in supplier feedstock costs and inventories, global industry activity levels, foreign currency exchange rates, and global supply and demand factors.

In aggregate, average raw material costs were significantly higher in 2021 versus 2020. The increases in raw material costs were primarily driven by ongoing supply constraints, including various force majeure declarations, higher energy prices, maintenance outages at many of our suppliers, energy surcharges in Europe, labor availability challenges, transportation shortages and higher ocean freight costs. PPG currently expects raw material costs to be between 25% and 30% higher on a year-over-year basis in the first quarter 2022. Cost inflation is expected in several other areas, including wage, benefit and logistics costs in 2022.

We achieved selling price improvement across all businesses in 2021, reflecting the Company’s efforts to offset various inflationary pressures. The Company will continue to prioritize additional selling price increases in the first quarter 2022 and will seek additional increases throughout the year as necessary.

2021 PPG ANNUAL REPORT AND FORM 10-K 23

In 2021, we experienced favorable foreign currency translation throughout the year. We expect unfavorable year-over-year foreign currency translation in 2022. The foreign currency environment continues to be volatile, and the impact on 2022 net sales and income before income taxes could differ from this expectation. The Company generally purchases raw materials, incurs manufacturing costs and sells finished goods in the same currency, so we typically incur only modest foreign currency transaction-related impacts.

The 2022 effective tax rate from continuing operations is expected to be in the range of 22% to 23%, varying by quarter. This range represents the Company’s best estimate.

Over the past five years, the Company used over $3 billion of cash to repurchase approximately 27 million shares of PPG stock, including $210 million in 2021. The Company ended the year with approximately $1.3 billion remaining under its current share repurchase authorization. During 2021, the Company deployed $2.1 billion for acquisitions, $371 million for capital expenditures and $536 million for dividends. In 2021, PPG marked the 50th annual per share dividend increase and the 122nd successive year of annual dividend payments.

PPG ended 2021 with approximately $1.1 billion in cash and short-term investments. The Company expects continued strong cash generation in 2022.

Commitments and Contingent Liabilities, including Environmental Matters

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. Refer to Item 3. “Legal Proceedings” and Note 14, “Commitments and Contingent Liabilities” in Item 8 of this Form 10-K for a description of certain of these lawsuits.

As discussed in Item 3 and Note 14, although the result of any future litigation of such lawsuits and claims is inherently unpredictable, management believes that, in the aggregate, the outcome of all lawsuits and claims involving PPG, including asbestos-related claims, will not have a material effect on PPG’s consolidated financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.

As also discussed in Note 14, PPG has significant reserves for environmental contingencies. Refer to the Environmental Matters section of Note 14 for details of these reserves. It is PPG’s policy to accrue expenses for contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Reserves for environmental contingencies are exclusive of claims against third parties and are generally not discounted. In management’s opinion, the Company operates in an environmentally sound manner and the outcome of the Company’s environmental contingencies will not have a material effect on PPG’s financial position or liquidity; however, any such outcome may be material to the results of operations of any particular period in which costs, if any, are recognized. Management anticipates that the resolution of the Company’s environmental contingencies will occur over an extended period of time.

Accounting Standards Adopted in 2021

Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes the Company’s recently adopted accounting pronouncements.

Accounting Standards to be Adopted in Future Years

Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K describes accounting pronouncements that have been promulgated prior to December 31, 2021 but are not effective until a future date.

Liquidity and Capital Resources

During the past two years, PPG had sufficient financial resources to meet its operating requirements, to fund our capital spending, including acquisitions, share repurchases and pension plans, and to pay increasing dividends to shareholders.

Cash and cash equivalents and short-term investments

($ in millions)	2021	2020
Cash and cash equivalents	$1,005	$1,826
Short-term investments	67	96
Total	$1,072	$1,922

Cash from operating activities - continuing operations

($ in millions, except percentages)			% Change
	2021	2020	2021 vs. 2020
Cash from operating activities	$1,562	$2,129	(26.6)%

     2021 PPG ANNUAL REPORT AND 10-K 24

2021 vs. 2020

The $567 million decrease in Cash from operating activities - continuing operations was primarily due to increases in working capital, excluding the impact of business acquisitions.

Operating working capital

Operating working capital is a subset of total working capital and represents (1) receivables from customers, net of allowance for doubtful accounts, (2) inventories, and (3) trade liabilities. Refer to Note 3, “Working Capital Detail” in Item 8 of this Form 10-K for further information related to the components of the Company’s operating working capital. We believe operating working capital represents the key components of working capital under the operating control of our businesses.

A key metric we use to measure our working capital management is operating working capital as a percentage of sales (fourth quarter sales annualized). 

($ in millions, except percentages)	2021		2020
Trade receivables, net	$2,687		$2,412
Inventories, FIFO	2,345		1,845
Trade creditors’ liabilities	2,734		2,259
Operating working capital	$2,298		$1,998
Operating working capital as a % of fourth quarter sales, annualized	13.7	%	13.3	%
Trade receivables, net as a % of fourth quarter sales, annualized	16.0	%	16.1	%
Days sales outstanding	53		54
Inventories, FIFO as a % of fourth quarter sales, annualized	14.0	%	12.3	%
Inventory turnover	4.9		4.2

Environmental expenditures

($ in millions)	2021	2020
Cash outlays related to environmental remediation activities	$56	$60

We expect cash outlays for environmental remediation activities in 2022 to be between $80 million and $100 million.

Cash used for investing activities

($ in millions, except percentages)			% Change
	2021	2020	2021 vs. 2020
Cash used for investing activities	$2,404	$1,447	66.1%

2021 vs. 2020

The $957 million increase in cash used for investing activities, was primarily due to higher spending on business acquisitions and capital expenditures, partially offset by proceeds from the sale of a production facility in connection with the Company’s manufacturing footprint consolidation plans and associated restructuring programs.

Capital expenditures, including business acquisitions

($ in millions, except percentages)					% Change
	2021		2020		2021 vs. 2020
Capital expenditures (1)	$371		$304		22.0%
Business acquisitions, net of cash balances acquired	$2,137		$1,169		82.8%
Total capital expenditures, including acquisitions	$2,508		$1,473		70.3%
Capital expenditures, excluding acquisitions, as a % of sales	2.2	%	2.2	%	—%

(1)Includes modernization and productivity improvements, expansion of existing businesses and environmental control projects.

Capital expenditures related to modernization and productivity improvements, expansion of existing businesses and environmental control projects is expected to be in the range of $475 million to $525 million in 2022 in support of future organic growth opportunities and reflecting lower capital spending in the past two years due to COVID-19 constraints.

In 2022, the Company will continue cash deployment focused on shareholder value creation, with a preference for business acquisitions, coupled with debt reduction to enhance financial flexibility.

2021 PPG ANNUAL REPORT AND FORM 10-K 25

Cash from financing activities

			% Change
($ in millions, except percentages)	2021	2020	2021 vs. 2020
Cash from/(used for) financing activities	$93	($59)	N/A

2021 vs. 2020

The $152 million increase in cash from financing activities, was primarily due the issuance of long-term debt in 2021, partially offset by higher repayments of long-term debt, purchases of treasury stock and dividends paid year-over-year.

Share repurchase activity

($ in millions, except number of shares)	2021	2020
Number of shares repurchased (millions)	1.3	—
Cash paid for shares repurchased	$210	$—

The Company has approximately $1.3 billion remaining under the current authorization from the Board of Directors, which was approved in December 2017. The current authorized repurchase program has no expiration date.

Dividends paid to shareholders

($ in millions)	2021	2020
Dividends paid to shareholders	$536	$496

PPG has paid uninterrupted annual dividends since 1899, and 2021 marked the 50th successive year of increased annual per-share dividend payments to shareholders. The Company raised its per-share quarterly dividend by more than 9% to $0.59 per share paid in December 2021.

Debt issued and repaid

Debt Issued (net of premium/discount and issuance costs)	Year	$ in millions
Term Loan Credit Agreement, due 2024	2021	$1,399
$700 million 1.200% Notes due 2026	2021	$692
$100 million 3.75% Notes due 2028	2020	$119
$300 million 2.55% Notes due 2030	2020	$296
$1.5 billion 364-Day Term Loan	2020	$1,500

Debt Repaid	Year	$ in millions
0.875% notes (€600)	2021	$677
9% non-callable debentures ($134)	2021	$134
Repayment of acquired debt	2021	$207
Non-U.S.debt (€30)	2021	$36
$1.5 billion 364-Day Term Loan	2021	$400
$1.5 billion 364-Day Term Loan	2020	$1,100
3.6% Notes ($500)	2020	$500

Credit agreements and lines of credit

In February 2021, PPG entered into a $2.0 billion Term Loan Credit Agreement (the "Term Loan Credit Agreement"). The Term Loan Credit Agreement provided the Company with the ability to borrow up to an aggregate principal amount $2.0 billion on an unsecured basis prior to December 31, 2021 as further discussed in Note 9, "Borrowings and Lines of Credit" in Item 8 of this Form 10-K. In June 2021, PPG borrowed $700 million under the $2.0 billion Term Loan Credit Agreement. In December 2021, PPG borrowed an additional $700 million under the Term Loan Credit Agreement.

In August 2019, PPG amended and restated its five-year credit agreement (the “Credit Agreement”) with several banks and financial institutions as further discussed in Note 9, "Borrowings and Lines of Credit" in Item 8 of this Form 10-K. The Credit Agreement amends and restates the Company's existing five year credit agreement dated as of December 18, 2015. The Credit Agreement provides for a $2.2 billion unsecured revolving credit facility. The Credit Agreement will terminate on August 30, 2024. In March 2020, PPG borrowed $800 million under the Credit Agreement and repaid that amount in full in April 2020. There were no amounts outstanding under the credit agreement as of December 31, 2021 and December 31, 2020.

     2021 PPG ANNUAL REPORT AND 10-K 26

The Credit Agreement also supports the Company’s commercial paper borrowings which are classified as long-term based on PPG’s intent and ability to refinance these borrowings on a long-term basis. As of December 31, 2021 and 2020, there were $440 million and $250 million of commercial paper borrowings outstanding, respectively.

The Term Loan Credit Agreement and Credit Agreement require the Company to maintain a ratio of Total Indebtedness to Total Capitalization, as defined in the Term Loan Credit Agreement and Credit Agreement, of 60% or less; provided, that for any fiscal quarter in which the Company has made an acquisition for consideration in excess of $1 billion and for the next five fiscal quarters thereafter, the ratio of Total Indebtedness to Total Capitalization may not exceed 65% at any time. As of December 31, 2021, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 48%.

In addition to the amounts available under lines of credit, the Company maintains access to the capital markets and may issue debt or equity securities from time to time, which may provide an additional source of liquidity. 

Refer to Note 9, “Borrowings and Lines of Credit” in Item 8 of this Form 10-K for information regarding notes entered into and repaid as well as details regarding the use and availability of committed and uncommitted lines of credit, letters of credit and debt covenants.

Cash Requirements

We continue to believe that our cash on hand and short term investments, cash from operations and the Company’s access to capital markets will continue to be sufficient to fund our operating activities, capital spending, acquisitions, dividend payments, debt service, share repurchases, contributions to pension plans, and PPG’s significant cash requirements. The Company’s significant cash requirements include the following contractual obligations and commitments.

		Obligations Due In:
($ in millions)	Total	2022	2023-2024	2025-2026	Thereafter
Long-term debt	$6,135	$3	$1,997	$1,378	$2,757
Commercial paper	$440	—	$440	—	—
Interest payments(1)	$1,103	$134	$252	$193	$524
Operating leases(2)	$958	$210	$303	$183	$262
Unconditional purchase commitments(3)	$346	$122	$143	$52	$29

(1)Interest on all outstanding debt.

(2)Includes interest payments.

(3)The unconditional purchase commitments are principally take-or-pay obligations related to the purchase of certain materials, including industrial gases and electricity, consistent with customary industry practice.

The Company’s off-balance sheet arrangements include unconditional purchase commitments disclosed in the “Liquidity and Capital Resources” section in the cash requirements table as well as letters of credit as discussed in Note 9, “Borrowings and Lines of Credit” in Item 8 of this Form 10-K.

Other liquidity matters

At December 31, 2021, the total amount of unrecognized tax benefits for uncertain tax positions, including an accrual of related interest and penalties along with positions only impacting the timing of tax benefits, was $175 million. The timing of payments will depend on the progress of examinations with tax authorities. PPG does not expect a significant tax payment related to these obligations within the next year. The Company is unable to make a reasonably reliable estimate as to if, or when, any significant cash settlements with taxing authorities may occur.

Critical Accounting Estimates

Management has evaluated the accounting policies used in the preparation of the financial statements and related notes presented in Item 8 of this Form 10-K and believes those policies to be reasonable and appropriate. We believe that the most critical accounting estimates made in the preparation of our financial statements are those related to accounting for contingencies, under which we accrue a loss when it is probable that a liability has been incurred and the amount can be reasonably estimated, and to accounting for pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives because of the importance of management judgment in making the estimates necessary to apply these policies.

Contingencies

Contingencies, by their nature, relate to uncertainties that require management to exercise judgment both in assessing the likelihood that a liability has been incurred as well as in estimating the amount of potential loss. The most important contingencies impacting our financial statements are those related to environmental remediation, to pending, impending or

2021 PPG ANNUAL REPORT AND FORM 10-K 27

overtly threatened litigation against the Company and to the resolution of matters related to open tax years. For more information on these matters, see Note 14, “Commitments and Contingent Liabilities” and Note 12, “Income Taxes” in Item 8 of this Form 10-K.

Defined Benefit Pension and Other Postretirement Benefit Plans

Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, we make extensive use of assumptions about inflation, investment returns, mortality, turnover, medical costs and discount rates. The Company has established a process by which management reviews and selects these assumptions annually. Refer to Note 13, “Employee Benefit Plans” in Item 8 of this Form 10-K for information on these plans and the assumptions used.

Business Combinations

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition. The excess costs of acquired businesses over the fair values of the assets acquired and liabilities assumed will be recognized as goodwill. The valuations of the acquired assets and liabilities will impact the determination of future operating results. In addition to using management estimates and negotiated amounts, the Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities including: third-party appraisals for the estimated value and lives of identifiable intangible assets and property, plant and equipment; third-party actuaries for the estimated obligations of defined benefit pension plans and similar benefit obligations; and legal counsel or other experts to assess the obligations associated with legal, environmental and other contingent liabilities.

The business and technical judgment of management was used in determining which acquired intangible assets have indefinite lives and in determining the useful lives of acquired finite-lived intangible assets in accordance with the accounting guidance for goodwill and other intangible assets.

Goodwill and Intangible Assets

The Company tests indefinite-lived intangible assets and goodwill for impairment by either performing a qualitative evaluation or a quantitative test at least annually, or more frequently if an indication of impairment arises. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than its carrying amount. In the quantitative test, fair values are estimated using a discounted cash flow model. Key assumptions and estimates used in the discounted cash flow model include discount rates, tax rates, future revenues, operating cash flows and capital expenditures. For more information on these matters, see Note 1, “Summary of Significant Accounting Policies” in Item 8 of this Form 10-K.

We believe that the amounts recorded in the financial statements in Item 8 of this Form 10-K related to these contingencies, pensions, other postretirement benefits, business combinations, goodwill and other identifiable intangible assets with indefinite lives are based on the best estimates and judgments of the appropriate PPG management, although actual outcomes could differ from our estimates.

Currency

Comparing spot exchange rates at December 31, 2021 and at December 31, 2020, the U.S. dollar strengthened against certain currencies in the countries where PPG operates, driven primarily by the euro and Mexican peso. As a result, consolidated net assets at December 31, 2021 decreased by $325 million from December 31, 2020.

Comparing average exchange rates during 2021 to those of 2020, the U.S. dollar weakened against currencies of the countries within the regions PPG operates. This had a favorable impact of approximately $60 million on full year 2021 income before Income taxes from the translation of this foreign income into U.S. dollars.

Forward-Looking Statements

Management’s Discussion and Analysis and other sections of this Annual Report contain forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “outlook,” “forecast” and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the SEC. Also, note the following cautionary statements.

Many factors could cause actual results to differ materially from the Company’s forward-looking statements. Such factors include statements related to the expected effects on our business of COVID-19, global economic conditions, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, the ability to

     2021 PPG ANNUAL REPORT AND 10-K 28

achieve selling price increases, the ability to recover margins, customer inventory levels, our ability to maintain favorable supplier relationships and arrangements, the timing of and the realization of anticipated cost savings from restructuring initiatives, the ability to identify additional cost savings opportunities, the timing and expected benefits of our acquisitions, difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and political conditions in the markets we serve, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions, the effectiveness of our internal control over financial reporting, the results of governmental investigations, and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors.

Consequently, while the list of factors presented here and in Item 1A is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

Consequences of material differences in the results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or income, business disruption, operational problems, financial loss, legal liability to third parties, other factors set forth in Item 1A of this Form 10-K and similar risks, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

PPG is exposed to market risks related to changes in foreign currency exchange rates and interest rates. The Company may enter into derivative financial instrument transactions in order to manage or reduce these market risks. A detailed description of these exposures and the Company’s risk management policies are provided in Note 10, “Financial Instruments, Hedging Activities and Fair Value Measurements” in Item 8 of this Form 10-K.

The following disclosures summarize PPG’s exposure to market risks and information regarding the use of and fair value of derivatives employed to manage its exposure to such risks. Quantitative sensitivity analyses have been provided to reflect how reasonably possible, unfavorable changes in market rates could impact PPG’s consolidated results of operations, cash flows and financial position.

Foreign Currency Risk

We conduct operations in many countries around the world. Our results of operations are subject to both currency transaction and currency translation risk. Certain foreign currency forward contracts outstanding during 2021 and 2020 served as a hedge of a portion of PPG’s exposure to foreign currency transaction risk. The fair value of these contracts was a net asset of $24 million and $2 million as of December 31, 2021 and December 31, 2020, respectively. The potential reduction in PPG’s Income before income taxes resulting from the impact of adverse changes in exchange rates on the fair value of its outstanding foreign currency hedge contracts of 10% for European and Canadian currencies and 20% for Asian and Latin American currencies for the years ended December 31, 2021 and 2020 would have been $306 million and $226 million, respectively.

As of December 31, 2021 and December 31, 2020, PPG had U.S. dollar to euro cross currency swap contracts with notional amounts of $775 million and $875 million, respectively. The fair value of these contracts was a net asset of $50 million and a net liability of $8 million as of December 31, 2021 and 2020, respectively. A 10% increase in the value of the euro to the U.S. dollar would have had an unfavorable effect on the fair value of these swap contracts by reducing the value of these instruments by $77 million and $95 million at December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, PPG had non-U.S. dollar denominated debt outstanding of $1.6 billion and $2.4 billion, respectively. A weakening of the U.S. dollar by 10% against European currencies and by 20% against Asian and South American currencies would have resulted in unrealized translation losses of $178 million and $273 million as of December 31, 2021 and 2020, respectively.

Interest Rate Risk

The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to minimize its interest costs. In the first quarter of 2018, PPG entered into interest rate swaps which converted $525 million of fixed rate debt to variable rate debt. The fair value of these contracts was an asset of $36 million and $67 million as of December 31, 2021 and 2020, respectively. An increase in variable interest rates of 10% would lower the fair value of these swaps and increase interest expense $1 million for the periods ended December 31, 2021 and 2020. A 10% increase in interest rates in the U.S., Canada, Mexico and Europe and a 20% increase in interest rates in Asia and South America would have an insignificant effect on PPG’s variable rate debt obligations and interest expense for the periods ended December 31, 2021 and 2020, respectively. Further, a 10% reduction in interest rates would have increased the fair value of the Company’s fixed rate debt by approximately $56 million and $48 million as of December 31, 2021 and 2020, respectively; however, such changes would not have had an effect on PPG’s annual Income before income taxes or cash flows.

2021 PPG ANNUAL REPORT AND FORM 10-K 29

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of PPG Industries, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of PPG Industries, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2021 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Establishing and Maintaining Adequate Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in the Management Report on Establishing and Maintaining Adequate Internal Control Over Financial Reporting, management has excluded Tikkurila Oyj (“Tikkurila”) from its assessment of internal control over financial reporting as of December 31, 2021, because it was acquired by the Company in a purchase business combination during 2021. We have also excluded Tikkurila from our audit of internal control over financial reporting. Tikkurila is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are

     2021 PPG ANNUAL REPORT AND 10-K 30

recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Quantitative Goodwill Impairment Testing

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $6,248 million as of December 31, 2021, of which a portion was subject to a quantitative goodwill impairment test. Management tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test, at least annually, or more frequently if an indication of impairment exists. Management’s quantitative goodwill impairment testing, if deemed necessary, is performed during the fourth quarter of each year by comparing the estimated fair value of an associated reporting unit as of September 30 to its carrying value. Fair value is estimated using a discounted cash flow model. Key assumptions and estimates used in the discounted cash flow model include projected future revenues, discount rates, operating cash flows, capital expenditures and tax rates.

The principal considerations for our determination that performing procedures relating to quantitative goodwill impairment testing is a critical audit matter are (i) the significant judgment by management when developing the fair value of a reporting unit where a quantitative test was performed; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the projected future revenues and discount rate where a quantitative test was performed; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s quantitative goodwill impairment test, including controls over the valuation of any reporting units where a quantitative test was performed. These procedures also included, among others, testing management’s process for developing the fair value estimate. This included evaluating the appropriateness of the discounted cash flow model, testing the completeness and accuracy of underlying data used, and evaluating the reasonableness of management’s significant assumptions related to the projected future revenues and discount rate where a quantitative test was performed. Evaluating management’s significant assumptions related to projected future revenues involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the Company’s significant assumption related to the discount rate where a quantitative test was performed.

/s/ PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania

February 17, 2022

We have served as the Company’s auditor since 2013.

2021 PPG ANNUAL REPORT AND FORM 10-K 31

Management Report

Responsibility for Preparation of the Financial Statements and Establishing and Maintaining Adequate Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this evaluation, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). In June 2021, the Company acquired Tikkurila Oyj (“Tikkurila”). The scope of the Company's assessment of the design and effectiveness of PPG's internal control over financial reporting for the year ended December 31, 2021 excluded this acquired business. Tikkurila, a wholly-owned subsidiary whose total assets and total revenues are excluded from our assessment, represented 2% of PPG's consolidated total assets and total revenue as of and for the year ended December 31, 2021. This acquired business will be included in management’s assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2022. Based on this evaluation we have concluded that, as of December 31, 2021, the Company’s internal control over financial reporting were effective.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has issued their report, included on pages 30-31 of this Form 10-K, regarding the Company’s internal control over financial reporting.

/s/ Michael H. McGarry	/s/ Vincent J. Morales
Michael H. McGarry Chairman and Chief Executive Officer February 17, 2022	Vincent J. Morales Senior Vice President and Chief Financial Officer February 17, 2022

     2021 PPG ANNUAL REPORT AND 10-K 32

Consolidated Statement of Income

	For the Year
($ in millions, except per share amounts)	2021	2020	2019
Net sales	$16,802	$13,834	$15,146
Cost of sales, exclusive of depreciation and amortization	10,286	7,777	8,653
Selling, general and administrative	3,780	3,389	3,604
Depreciation	389	371	375
Amortization	172	138	136
Research and development, net	439	379	432
Interest expense	121	138	132
Interest income	(26)	(23)	(32)
Pension settlement charge	50	—	—
Asbestos-related claims reserve adjustment	(133)	—	12
Impairment charges	21	93	—
Business restructuring, net	31	174	176
Other charges	29	104	86
Other income	(172)	(68)	(89)
Income before income taxes	$1,815	$1,362	$1,661
Income tax expense	374	291	392
Income from continuing operations	$1,441	$1,071	$1,269
Income from discontinued operations, net of tax	19	3	—
Net income attributable to the controlling and noncontrolling interests	$1,460	$1,074	$1,269
Less: Net income attributable to noncontrolling interests	21	15	26
Net income (attributable to PPG)	$1,439	$1,059	$1,243
Amounts attributable to PPG
Income from continuing operations, net of tax	$1,420	$1,056	$1,243
Income from discontinued operations, net of tax	19	3	—
Net income (attributable to PPG)	$1,439	$1,059	$1,243
Earnings per common share
Income from continuing operations, net of tax	$5.98	$4.46	$5.25
Income from discontinued operations, net of tax	0.08	0.01	—
Net income (attributable to PPG)	$6.06	$4.47	$5.25
Earnings per common share - assuming dilution
Income from continuing operations, net of tax	$5.93	$4.44	$5.22
Income from discontinued operations, net of tax	0.08	0.01	—
Net income (attributable to PPG)	$6.01	$4.45	$5.22

Consolidated Statement of Comprehensive Income

		For the Year
($ in millions)		2021	2020	2019
Net income attributable to the controlling and noncontrolling interests		$1,460	$1,074	$1,269
Other comprehensive income/(loss), net of tax
	Defined benefit pension and other postretirement benefits	174	(213)	(156)
	Unrealized foreign currency translation adjustments	(330)	(36)	106
	Derivative financial instruments	—	—	(1)
Other comprehensive loss, net of tax		(