Reportable Business Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Reportable Business Segment Information

Reportable Business Segment Information

PPG is a multinational manufacturer with 10 operating segments (which the Company refers to as “strategic business units”) that are organized based on the Company’s major products lines. The Company’s reportable business segments include the following two segments: Performance Coatings and Industrial Coatings. The operating segments have been aggregated based on economic similarities, the nature of their products, production processes, end-use markets and methods of distribution.

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

The Industrial Coatings reportable business segment is comprised of the automotive original equipment manufacturer ("OEM") coatings, industrial coatings, packaging coatings and specialty coatings and materials operating segments. This reportable business segment primarily supplies a variety of protective and decorative coatings and finishes along with adhesives, sealants, metal pretreatment products, optical monomers and coatings, precipitated silicas and other specialty materials.

Reportable business segment net sales and segment income for the three and nine months ended September 30, 2023 and 2022 were as follows: 

	Three Months Ended September 30		Nine Months Ended September 30
($ in millions)	2023	2022	2023	2022
Net sales:
Performance Coatings	$2,880	$2,705	$8,549	$8,204
Industrial Coatings	1,764	1,763	5,347	5,263
Total	$4,644	$4,468	$13,896	$13,467
Segment income:
Performance Coatings	$452	$362	$1,384	$1,127
Industrial Coatings	246	192	736	488
Total	$698	$554	$2,120	$1,615
Corporate	(88)	(59)	(240)	(166)
Interest expense, net of interest income	(25)	(32)	(94)	(80)
Pension settlement charge (a)	—	—	(190)	—
Business restructuring-related costs, net (b)	(13)	(45)	(27)	(67)
Transaction-related costs (c)	(15)	—	(22)	(10)
Insurance recovery of expenses incurred due to a natural disaster (d)	—	—	9	—
Impairment and other related charges, net (e)	—	—	—	(230)
Income before income taxes	$557	$418	$1,556	$1,062

(a)In the first quarter 2023, PPG purchased group annuity contracts that transferred pension benefit obligations for certain of the Company’s retirees in the U.S. to third-party insurance companies, resulting in a non-cash pension settlement charge.

(b)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.

(c)Transaction-related costs include losses on the sale of certain assets, which are included in Other charges/(income), net in the condensed consolidated statement of income, including the loss recognized in the third quarter 2023 on the sale of the Company’s legacy industrial Russian operations, resulting primarily from the recognition of accumulated foreign currency translation losses upon the divestiture. Transaction-related costs also include advisory, legal, accounting, valuation, other professional or consulting fees, and certain internal costs directly incurred to effect acquisitions, which are included in Selling, general and administrative expense in the condensed consolidated statement of income, and the impact for the step up to fair value of inventory acquired in certain acquisitions, which is included in Cost of sales, exclusive of depreciation and amortization in the condensed consolidated statement of income.

(d)The Company incurred expenses due to damages at a southern U.S. factory resulting from a winter storm in 2020. In the first quarter 2023, the Company received reimbursement under its insurance policies related to the damages incurred at this factory due to this storm.

(e)In 2022, the Company recorded impairment and other related charges due to the wind down of the Company’s operations in Russia.