Good morning. My name is Sam, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter PPG earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key. To allow everyone an opportunity to ask a question, the company requests that each analyst ask only one question. Thank you. I would now like to turn the conference over to John Bruno. Please go ahead, sir. Thank you, Sam, and good morning, everyone. Once again, this is John Bruno. We appreciate your continued interest in PPG and welcome you to our Q1 2022 financial results conference call. Joining me on the call from PPG are Michael McGarry, Chairman and Chief Executive Officer, Tim Knavish, Chief Operating Officer, and Vince Morales, Senior Vice President and Chief Financial Officer. Our comments relate to the financial information released after U.S. equity markets closed on Thursday, April 21st, 2022. We have posted detailed commentary and accompanying presentation slides on the investor site of our website, ppg.com. The slides are also available on the webcast site for this call and provide additional support to the brief opening comments Michael will make shortly. Following management's perspective on the company's results for the quarter, we will move to a Q&A session. Both the prepared commentary and discussion during the call may contain forward-looking statements reflecting the company's current view of future events and their potential effect on PPG's operating and financial performance. These statements involve uncertainties and risks which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. This presentation also contains certain non-GAAP financial measures that the company has provided in the appendix of the presentation materials, which are available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For more information, please refer to PPG's filings with the SEC. Now, let me introduce PPG Chairman and CEO, Michael McGarry. Thank you, John, and good morning, everyone. I'd like to welcome everyone to our first quarter 2022 earnings call. I hope you and your loved ones are remaining safe and healthy. To say that these have been difficult and challenging times for so many would be a massive understatement. Since the beginning of the war in Ukraine, we've been focused on protecting the health and safety of our employees and their families from Ukraine, as well as our employees in Russia. PPG and the PPG Foundation have also committed more than $800,000 to humanitarian relief, as well as longer term recovery support. In addition, PPG employees have also been providing direct support to those in need, including taking refugee families into their homes. The war has also made it necessary to scale back and now wind down our operations in Russia. As a result, we recorded a pre-tax charge of $290 million for impairment of substantially all of our company assets related to our Russian operations. For context, net sales in Russia represented approximately 1% of total PPG net sales for the year ending December 31st, 2021. We will continue to closely monitor developments in the region. Before I provide the regular quarterly review of our results, I'd like to provide a concise summary of the key issues impacting our business in the quarter as we look ahead. During the first quarter, we had two major events, the Ukraine-Russia crisis and increased COVID-19 restrictions in China, which have created some new uncertainties about overall regional demand and possible global carry-on effects. You will see, due to these increased uncertainties, we have widened our earnings guidance range we provided for the second quarter. Notwithstanding these two major events, there are other longer-standing global impacts which have affected our financial results for several quarters, and which are abating or ratably improving. Specifically, we continue to experience improvements in our supply chain and our raw material availability. Additionally, outside of China, COVID restrictions have continued to decrease in many parts of the world. As a company, we have continued to improve our pricing realization in both pace and cadence. This has been necessary to battle the persistence and breadth of inflation. Our price capture this cycle is much faster, and we are now pricing in the second quarter for second quarter inflation impacts, so we are basically pricing in real time. We continue to deliver good earnings leverage when we have improving volumes. While many of our businesses and regions have not fully recovered from the pandemic, as a matter of fact, we are still down about 5% in aggregate. However, when a business does deliver volume improvement, we are realizing good bottom line gains. This reflects the hard work from our teams on managing our operating costs and SG&A. Finally, we had a very solid month of March from a financial returns perspective. We've stated many times that March is the most important month in the first quarter, given the seasonality of our businesses. Our month of March financial returns were the best returns since the second quarter of 2021. I will now move to provide some comments to supplement the detailed financial results we released last evening. Comments to supplement the detailed financial results we released last evening. For the first quarter, we delivered record net sales of $4.3 billion, and our adjusted earnings per diluted share from continuing operations were $1.37. To quickly summarize the quarter, our sales performance was better than our January guidance, despite unexpected impacts from the crisis in Europe, COVID-related disruptions in China, and continuing logistics bottlenecks. More than offsetting these unexpected macro issues was stronger than expected demand across many of our businesses as regional economies and end-use markets continue to recover from the pandemic impacts. Above-market sales volumes were achieved in several of our end-use markets, including our PPG Comex business, which during the quarter opened their 5,000th concessionary location in Mexico. First quarter sales in Latin America were a record. In addition, our automotive refinish business performed well with strong sales volumes in the U.S. and Europe. Also, our aerospace business benefited from year-over-year initial improvements in the market, and we expect further industry demand growth as we are still well below pre-pandemic levels. Our adjusted earnings were significantly above the upper end of our January financial guide as we delivered strong earnings leverage on the higher than expected sales volumes. This leverage was a result of improving manufacturing performance as COVID-19-related absenteeism subsided significantly as we progressed through the quarter, and we experienced increasing raw material availability. In addition, our selling price increases increased through the quarter. In addition, our selling price increases increased 10% year-over-year, marking the 20th consecutive quarter of higher selling prices. Our selling prices are up over 12% on a two-year stacked basis versus the first quarter of 2020, reflecting our continued actions to offset generationally high inflation. Our recent acquisitions also performed well, including the realization of targeted synergies. The Tikkurila business delivered year-over-year sales growth of more than 10%, excluding our Russian operations. Our Traffic Solutions business also achieved greater than 10% sales growth, and our first quarter sales were a record, and the business continued to have a large order backlog as we enter the second quarter. During the quarter, we also launched a significantly expanded pro painter initiative with The Home Depot, and despite continuing raw material constraints restricting our ability to fully load inventory, we now have our full pro paint assortment available in about 60% of their stores. We expect to have all The Home Depot stores loaded in the coming months. We're excited about the growth opportunities that this initiative provides and have already recognized some significant new professional painter business gains. Our earnings and margins continue to be impacted by elevated levels of inflation and supply disruptions. In the first quarter, our selling prices did offset year-over-year raw material inflation, but did not offset inflation from other sources, including logistics, energy, and labor, and we did not fully recover prior year inflation. Sequentially versus the fourth quarter of 2021, our overall margins improved by more than 200 basis points. We are targeting continued quarterly sequential margin improvement in the second quarter as well, despite further increases in raw material and logistics inflation. We have continued to optimize our commercial processes the last two years, and as mentioned, are now closer to real-time pricing relative to inflation. Due to higher crude oil and energy prices, we're implementing incremental selling price increases in the second quarter and expect that we will exit the second quarter offsetting all inflation categories on a run rate basis. This drives our expectations for operating margins to sequentially improve further as the year progresses. This drives our expectations for operating margins to sequentially improve further as the year progresses. In several businesses, we continue to face certain raw material shortages, resulting in our overall sales backlog growing to about $180 million exiting the quarter. The order backlogs are the highest in our Aerospace and Automotive refinish businesses. Additionally, these are two of our many industries we supply where inventory levels are extremely low all the way to the end consumer. We've continued to control our controllables and once again lowered our SG&A as a percentage of sales, decreasing by about 40 basis points compared to the first quarter of 2021. This included delivery of an additional $15 million in cost savings from recent restructuring programs and acquisition synergies. This is also despite expanding our multi-year investment in our advanced digital capabilities, and we're experiencing growing digital adoption from our customers, most notably in the architectural coatings business. In the first quarter, our net debt increased mainly due to the higher dollar value of inventory reflecting inflationary effects. This seasonal working capital increase in the quarter was consistent with pre-pandemic years. We expect our cash flow generation to match prior year-end trends, accounting for inflationary effects. We expect our cash flow generation to match prior year-end trends, which is to consume cash early in the year and generate strong cash flow as we progress through the end of the year. Strategically, on April 1st, we completed the acquisition of Arsonsisi's powder coatings business, continuing our focus on growing our powder coatings manufacturing capabilities. In addition, we divested some Architectural Coatings businesses in Africa as we continue with our legacy evaluating all regional businesses and product lines to ensure that they continue to have strategic value and meet our financial hurdles. In the first quarter, we continued to take additional measurable steps to further advance our ESG program by issuing our inaugural DE&I report. While I'm proud of what we have achieved, we know that there is more work to do and additional areas of opportunity to focus on. If you've not already done so, I would encourage you to read our report and learn more about what we have done and our aspirational goals for the future, which are outlined in our presentation materials. Looking ahead, while our underlying demand continues to be solid in most of our end-use markets and regions, second quarter economic activity, in particular in Europe, has started to soften as consumers remain cautious based on the current geopolitical issues in the region. In addition, manufacturing supply chains have been recently impacted in China just based on the current geopolitical issues in the region. In addition, manufacturing supply chains have been recently impacted in China due to severe restrictions for rising COVID cases. In the last few weeks, up to five of our smaller manufacturing sites have been mandated to shut down due to restrictions, plus our principal protective and marine coatings production facility. We're working in both of these regions to manage our operations and costs are reflective of these current macro challenges. We're also assessing impacts, both positive and negative, these challenges may have on raw material supply and costs. As mentioned earlier, we expect further sequential inflationary pressures on raw materials, logistics, and energy. Our two-year stacked raw materials inflation expected to exceed 35%, but only up low to mid-single digit sequentially versus the first quarter. We're implementing further selling price increases in all of our businesses and expect a quicker offset versus historical lags. Due to the heightened levels of uncertainty, our earnings guidance considers a wider range of outcomes for the second quarter. More generally, our guidance assumes that restrictions in China ease somewhat in May, and that geopolitical issues do not expand beyond the current Russia, Ukraine boundaries. While the current environment remains difficult to predict, I expect that as 2022 progresses, we'll begin to experience an easing of supply chain disruptions. General inventory rebuilding across many end-use markets, and still a healthy consumer willing to spend, especially in North America. The future PPG earnings catalysts that I referenced on the January earnings call remain intact, and we certainly see a path to return to prior peak operating margins with opportunities to exceed them. This includes continued recovery in the automotive refinish, OEM, and Aerospace Coatings businesses. Normalization of commodity raw material costs, which should moderate over time given supply dislocations are improving, and there is a softening in certain regional economies. As demonstrated this past quarter and supported by our lower cost structure, strong operating leverage on any sales volumes growth. Accretive earnings growth from our recent acquisitions, both their historical base earnings and further synergy capture. Above market organic growth driven by our advantage and leading brands, technologies, and services. In closing, as we look ahead, I remain confident about the company's future. I strongly believe in our team of 50,000 employees as we work to do better today than yesterday, every day. The way our employees have dealt with the pandemic and are helping during the Ukraine humanitarian crisis and are navigating through a very challenging business environment are a prime example of how the team is making it happen. Thank you for your continued confidence in PPG. This concludes our prepared remarks. Now, Sam, would you please open the line for questions? Absolutely. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Christopher Parkinson with Mizuho. Christopher, you can proceed with your question. Great. Thank you so much. Can you quickly give us a more granular update on the various inputs as it pertains to, I would say, 2Q and the second half inflation outlooks and as well as the persistence, excuse me, of certain input shortages on a quarter-to-quarter basis. Thank you. Chris, what I would tell you is that our input shortages remain consistent with what we've seen previously. Emulsions tend to be at the top of the list. We've had some intermittent because of manufacturing issues with TiO2. Those issues have all been resolved. Force majeures, you know, when we had the last call, they were over 100. We're down to about 50 now. We've seen improved reliability in Europe. We've seen improved reliability exclusive of the Shanghai area for Asia. We're still seeing some challenges with trucking here in the U.S. Sequentially, you know, we do see the pace of inflation coming down. What's most important is that our pricing is accelerating and is on a much more real-time basis. Your next question comes from the line of Ghansham Panjabi of Baird. Ghansham, please proceed. Thank you. Good morning, everybody. Could you just give us a bit more color on a real-time basis in terms of what you're seeing both in Europe and China, both from a demand and supply chain standpoint, and in particular, which businesses are being most impacted? Related to that, you know, just given all the complexity in the world and your strong capital position, how are you now thinking about share buybacks at this point in context of, you know, obviously the boost of the stock and your peers this year? Any changes to that versus, you know, acquisitions? Thanks. Okay. Ghansham, let's start with the share buyback question first. You know, we're always gonna look to optimize shareholder value. Our pipeline of acquisitions remains active. Obviously, at this share price, we're gonna balance what's most accretive to the shareholders. We're looking at both. In regards to China and Europe, what I would tell you is, you know, the car situation in China is being impacted probably a little bit more than some of the other markets. We do regard that as transitory. We are fully expecting, as we've seen in other instances, people are gonna be much more interested in driving themselves versus taking mass transit. We do expect car recovery in Europe. It is the largest car market in the world. They are also shifting from internal combustion engines to electric vehicles faster than some of the other markets. Of course, as you know, we have more content on electric vehicles than we do internal combustion engines. We feel optimistic about that. Clearly, we're concerned about the rising number of COVID-19 cases. Cases have plateaued in the last two or three days. We have gotten all but two of our plants back up and operating. We expect to get the other two plants up and operating in the next three to five days, I would say, you know, being a little bit optimistic here. Overall demand in China remains good. I don't think the Chinese economy can afford to have GDP in the low single digits. That's not good for them. I do expect the government to be aggressive in providing a business-friendly environment coming out of this most recent GDP in the low single digits. That's not good for them. I do expect the government to be aggressive in providing a business-friendly environment coming out of this most recent COVID situation. Then in regards to Europe, clearly the most concerning area for Europe is DIY. You know, we had predicted this. This is consistent with what we have told. We continue to have a strong pro painter backlog, but DIY and traffic through the big box stores in Europe is the one indicator that we're watching out. Ghansham, this is Vince. I think if we think more broadly as we put together our Q2 forecast, you know, we do expect some of the COVID restrictions to ease in the early part of May and continue to ease through the balance of the quarter. But they're certainly restrictive right now. We know there'll be some carry-on effects with respect to logistics and transportation and port availability well into May. So that's baked into our guidance. In Europe, transportation and port availability well into May. So that's baked into our guidance. In Europe, again, we're concerned about maybe overly concerned, but we're concerned about the effect on consumer. Again, we're concerned about maybe overly concerned, but we're concerned about the effect on consumer of energy prices and just the overall environment. Our forecast has baked some of that pessimism, consumer pessimism into Q2. We hope we're being a bit bearish, but that's what we've forecasted, and we'll see how the cards fall as we go through the quarter. Thank you, Ghansham. The next question is from the line of David Begleiter of Deutsche Bank. David, please proceed. Thank you. Good morning, Michael and Vince. Guys, just on U.S. Architectural, are you seeing any discounting by your competitors? If so, how are you responding to this more competitive pricing environment potentially? Thank you. Okay, David, we have Tim here. I'm gonna let Tim handle that question. Hi, David. Tim Knavish here. Look, in our Architectural U.S. business, in fact, Architectural businesses around the world, we continue to get increasing sequential pricing. You know, that pricing, while never easy to get, is being accepted by our customers. You know, our customers have to remain competitive every day. So, you know, we can assume that we're seeing that same kind of behavior from others in the market. So we have not seen what you call discounting in the market. I think the industry realizes what's going on upstream of us and acting accordingly. Thank you, David. The next question is from John McNulty of BMO. John, please proceed. Yeah, thanks for taking my question. On the pricing front, Michael, you kind of indicated you're almost at a point where it's real-time pricing. I guess, what are the mechanisms in place that you've put so that we can actually see that real-time pricing? I guess to that also, when the raw materials eventually or hopefully subside, do you give back some of that pricing in real time, or is that something where, you know, we may see the more traditional lag or even, you know, side. Do you give back some of that pricing in real time, or is that something where, you know, we may see the more traditional lag or even stability when it comes to price? I guess, how should we be thinking about that? Well, John, first of all, we're not gonna be giving this pricing back. As you know, we are still lagging if you look at this on a 2.5-year stack. So there's plenty of recovery. And the reason that we're able to get more real-time pricing than ever before is it's impossible for our customers to argue with what's going on, right? They fully see the same things that we're seeing. They're seeing energy prices go up. They see raw materials that we buy, they can see it in their own systems going up. They can see transportation going up, they're paying for transportation. They also cannot argue that our competitors are not pricing. From that standpoint, most of the bullets that they usually try to fire at us that our salespeople try to avoid, that's not happening. Now it's not a matter of can we take a price increase? Now it's about how much of a price increase are you gonna take? The other thing that we've done, much more aggressively than we ever have, is withhold shipments. We're telling people, take a price increase. We're telling people, this is the new price, and if you don't like it, please don't place purchase orders. If the purchase orders come in without the new price on it, we're sending those purchase orders back. That has gotten, you know, the attention of our customers, and they understand that we need relief, and we need relief now. You could see that, you know, there is a palpable energy in the air to get price increases as we're doing it. When you see oil at $107, you know our customers are getting priced like that. I'm really pleased our sales teams have gotten much better at pricing than ever in the history of the company. Thanks, John. The next question is with Steve Byrne of Bank of America. Steve, please proceed. Yes, thanks. I'd like to drill in a little more on this relationship with Home Depot. Michael, you mentioned the 60% level of a particular metric. I didn't catch what that was, but I'm sure there's, you know, many, many steps involved in the rollout of that relationship. A couple I wanted to ask you about was, you know, how many of those 2,300 Home Depot stores does PPG actually have a distribution center available in the vicinity to fulfill orders? Then maybe another one would be: How many of those stores have a facility to fulfill orders? Maybe another one would be: How many of those stores have your reps already started to reach out to contractors that are buying materials in The Home Depot, but not paint, as identified by those respective pro desks at those respective Home Depots? Okay, Steve, I'm gonna just tell you the 60% referred to, we've only been able to stock 60% of their 2,300 stores, and I'll let Tim add additional color to it. Steve, look, the program is while it's in 60% of the stores, will continue to ramp up as we move throughout the next several months as supply situation improves and we continue to build inventory. We've got our full pro trade workforce engaged across what's now an omni-channel between our own network and the THD network. We're beginning to see customer conversions already. You know, that will continue to grow as we learn, as The Home Depot associates learn, and as the supply continues to build, and we'll pivot as necessary. We expect this to continue to grow throughout the year through a combination of load in and conversion of contractors. We expect this to be a long-term multi-year growth initiative for both us and The Home Depot in the pro category. Yeah. Steve, again, just more broadly, we talked about this on our January earnings call. We think this relationship and this extended partnership really gives us considerably higher market access. Again, we're really targeting availability for the professional painter on a daily basis. As Tim mentioned, that omni-channel approach, they can come to our stores, they can go to our dealers, or they can go to Home Depot, and that's all within a close proximity of their job site. Hi, and Steve, this is Michael. The last thing I would add is, look, at the end of the day, every time we go into a new market with Home Depot, we get substantial new wins right out the gate. What that does is it builds excitement among the Home Depot team, and their confidence level grows because what they do is they start trading these winning stories across each of the different markets. That's the most exciting thing about it. Thank you for the question, Steve. Your next question is from Vincent Andrews of Morgan Stanley. Vincent, please proceed. Thank you very much. Michael, I'd be curious to get your updated thoughts on sort of the home improvement market, just given, you know, since our last call, there's been a big move in interest rates and the housing market seems tight, still. How do you think the rising interest rates matters at all in terms of, you know, architectural paint demand and renovation? Or how should we be thinking about the evolving housing market? Okay, Vincent, I'll let Tim comment on this. Yeah. You know, look, there, right now, there's such a strong backlog, particularly on the residential side. There's so many walls to be painted yet that it's certainly not any near-term concern for ours. Even, you know, obviously, rising interest rates, there's gonna be some mortgage and affordability impact there. There's such a shortage of overall housing and multi-unit housing. You know, multi-unit housing continues to climb despite the interest rate rises. Residential permits continue to climb here in U.S. despite the interest rate rises. Absolutely, it's something that we're watching, but you know, we're certainly bullish on that for at least the rest of this year, and we'll see beyond that. Vincent, this is Michael. The one thing I would add to that is that we do a pro painter survey, and that pro painter survey continues to show a very strong backlog of our professional painters. We're very concerned about affordability more than interest rates. At the end of the day, our pro painters still show a pretty good backlog. In fact, our last pro painter survey, which we just wrapped up, 75% of the painters had a backlog that was at least as big or higher than what they had 90 days and a year ago. Certainly no impact on the short to medium term. Thank you, Vincent. Your next question is with Josh Spector of UBS. Josh, please proceed. Yeah. Hi, guys. Thanks for taking my question. You know, a lot of investors are focused on your comments last call about EPS in 2023, perhaps greater than $9 per share. You didn't necessarily reiterate that today. Just curious, based on what you're seeing from a price cost dynamic, but also a demand environment, is that something that's still achievable? And is that achievable in a scenario that you lay out where China lockdown impacts perhaps fade over the next couple quarters, but Europe perhaps enters into a minor recession? Yeah, Josh, I would tell you that the dynamics for $9 remain valid, right? We're gonna have an improving refinish market. That's a great business for us. Miles driven, we're actually almost back to 2019 levels in the U.S. We see miles driven improving in Europe as well. From that dynamic, Refinish is in solid shape. You see the numbers for EVs in the U.S.. You see the numbers for Aerospace. TSA bookings are all up. Aerospace has continued to get stronger. You probably noticed yesterday, Boeing said, they were going to start rebuilding, or building 787s again. That's a positive. There's a strong backlog of planes. Our share with Airbus has continued to grow. You know, I think that's excellent. You know, we're only producing probably about 80 million cars this year. You know, when you think about what the run rate of cars should be, we're still very bullish that car builds in the U.S. have been muted because of lack of chips, lack of parts, and so this is gonna get better. Overall, I would tell you that we're in good shape. You know, our synergies are going to be continuing to come in. Productivity is continuing to improve. I feel very good, feel very comfortable around $9. And the price raws, you know, we're gonna be past that in the second quarter. You know, we're gonna be pricing past all of it, and then we're gonna be catching up on the early 2021 kind of inflation second quarter. You know, we're on the right track. Thank you. Next question is from Michael Sison of Wells Fargo. Michael, please proceed. Hey, guys. Nice start to the year. You know, historically, third quarter tends to sort of seasonally decline from 2Q, but it sounds, you know, like the pricing raws is going to get better as you noted. Is this year going to be a little bit different where you should continue to see EPS improvement? I understand it's kind of tough to guide beyond one quarter, but you know, kind of given sort of the potential for improving volumes and your sort of pricing mechanism, is that something that likely happens this year versus, you know, historical patterns? Yeah, Mike, this is Vince. Probably one of the most important metrics we're watching is sequential margin improvement. I think from Q4 to Q1, you saw our margins move up, you know, 200-300 basis points, depending on the segment. We think that's the true indicator of how well we're doing, how well the industry is doing. It's really hard year-over-year at this point to compare. Again, we're looking sequentially. We're very proud with our performance Q4 to Q1. We do expect, again, there's a lot of noise in 2021. There'll be additional noise this year. We do expect, as you've heard Michael in the opening, some improvement in demand as we go through the year, especially as China comes back. We are seeing Refinish, Aerospace, etc. It's really gonna be hard to compare versus historical patterns. We're just looking sequentially, are our margins getting better? Q4- Q1, Q1- Q2 versus historical patterns, and that's really our marker. The next question is with Frank Mitsch of Fermium Research. Frank, please proceed. Yeah. Good morning. Need to give props to John on slide five. It tells a very helpful story as to what you're facing. Obviously, a lot of questions already on price. Michael, I was just curious, you know, what the absolute number you're expecting in 2Q would be, you know, versus that 10% in 1Q. Noted in the comments that your Tikkurila sales were up low teens, excluding Russia. I'm curious, how much of that was volume? Frank, first of all, we try to give you a guide on that second quarter. If you take John's little dotted line on that chart. You're gonna dotted line up to around 12%. That's probably a pretty good number. We certainly, you know, are internally pushing the team for more than that, but I think that's a realistic outcome. I think the Tikkurila volume was in that low single digits, if I remember correctly. The beauty about what we're seeing with the Tikkurila team is that we're teaching them how to price. That is something that they historically have not done a lot of. This has been a wonderful thing for us, as we've talked about before, we think Tikkurila can look just like what Comex has. We get more growth in the local markets and we get better value for what we're selling, and that leads to an ever improving return on our investment that we invested in buying Tikkurila. Yeah. Frank, since you brought up Tikkurila, you know, one of the other businesses that performed really well in Q1 was our Traffic Solutions business, the prior Ennis-Flint acquisition. You know, we saw around 25% organic growth year-over-year in that business. It was a seasonally light quarter. But again, we still ended the quarter with a very strong backlog, and now we're going into a very strong quarter. Hey, Frank, it's Tim. Just to add one more thing on that other large acquisition for us. Vince mentioned 25% top line growth, all-time record quarter for that business. Much like what Michael described with Tikkurila, you know, the prior Ennis-Flint business pricing discipline was very different than how we execute at PPG, and we also achieved double-digit price increase in that business for Q1. Really pleased with both of the large acquisitions and how they perform for us. Thank you, Frank. The next question is from Arun Viswanathan of RBC. Arun, please proceed. Great. Thanks for taking my question. I just wanted to again drill into some of the drivers of maybe Q3 and Q4, understanding that your visibility is, you know, relatively dynamic. When you think about the raw material inflation that you saw in Q1 and Q2 or are seeing now, are your current price increases sufficient to carry you into Q3 or will you have to raise your prices even more? And if you do have to raise prices even more, could you also comment on the availability of raws and if that has improved greatly from last year? Thanks. Yeah. Arun, this is Vince. You know, honestly, our visibility is, in terms of, all the dynamics that play into inflation, is probably 60 to 90 days. Going out to Q3 or Q4 is difficult. What we could tell you is we are seeing better supply, well, in Europe, certainly better supply in the U.S.. China's obviously we're going through a transitory period due to the restrictions, but we do expect supply to normalize for the balance of the year. As we said many times, we do feel there's enough structural supplier capacity to easily satisfy global coatings demand. We have a lot of other noise going on right now, but at some point, we'll normalize across supply demand based on historical patterns. Just too hard to predict Q3, Q4 right now. We do have good pricing going in, as Michael said, in Q2, which is enough to compensate for the sequential increase in raw materials. If we see more raw materials in the back half of the year, we'll put in that real-time pricing engine again. Thank you, Arun. Next question is with Jeff Zekauskas of JP Morgan. Jeff, please proceed. Thanks very much. It seems that your packaging coatings business has slowed down. You know, when we look at beverage can demand, globally, it seems pretty strong. What's the dynamic that's going on there? In auto refinish, what were the volumes in the quarter year-over-year? Yeah. First of all, let me touch on the packaging. Look, we've picked up new share at, I would say, 70% of the new beverage can plant. We're in very good shape from that going forward. Second, you know, when you look at the packaging numbers, you have to remember we had phenomenal comps last year, and that will make it more difficult. Our packaging overall growth this year is gonna be quite good. I feel very good about our position in our packaging coatings business. I would also tell you that, you know, when I think about that business, it's not just the volume, it's also the price that we're realizing as well. Hey, Jeff, this is John. I'll just comment on refinish. If you look at the U.S. and Europe, on a year-over-year basis, volumes were up about a mid-single digit, and that's off of a tough comp from last first quarter. It was a good quarter, especially in the U.S. Asia was off a little bit, mainly driven by what we talked about. The Winter Olympics slowed activity down, and there was obviously some restrictions in March. Thank you, Jeff. Your next question is from Kevin McCarthy with Vertical Research Partners. Kevin, please proceed. Good morning, everyone. Two questions on manufacturing variance and CapEx. First on the manufacturing side, back in January, I think you talked about a $0.20 EPS drag in the fourth quarter. I'd like to know if that number declined in the first quarter, and if so, how much, and what your crystal ball might say for the second quarter. On the CapEx side, you know, if I read the numbers right, it looked like your first quarter spend was $194 million versus $80 million last year. Just was wondering if there's anything unusual in terms of cadence or any change in your annual range of $475 million-$525 million for CapEx this year. Yeah. We'll take the easy one first, CapEx. We had CapEx spending in December that we don't pay for until January. The January number was probably a little bit inflated, but our overall spend for the year is not gonna change, and we're still looking at that 3%, $500 million kind of range. We feel good about that. As you know, a little bit of that is catch up from the underspending in 2020 and a little bit of early 2021. From a manufacturing standpoint, we had about $0.20 in Q4. We probably had $0.20 and a little bit of early 2021. From a manufacturing standpoint, we had about $0.20 in Q4. We probably had about half that in Q1. You know, the problem is it's not that we having challenges making things, it's we're having challenges scheduling things because of raw materials predictability, what comes in, and if you're missing one item, you know, you can't make the paint. That's a bigger issue. Of course, some of it is also unexpected additional inflation on energy at the plant. As you can imagine, going into Q1, we had a certain natural gas number for Europe, and we're well in excess of that once the war broke out. I would tell you, overall, the manufacturing is getting better. I'd say for Q2, you should anticipate another 50% improvement in that number. Thank you, Kevin. Next question, PJ Juvekar of Citi. PJ, please proceed. Yes, good morning. Michael, I know you've been back integrating into resin capacity in the past. You know, just kind of how did that help you during this, you know, crazy period of energy inflation and all that? Second question for Vince. Vince, you mentioned sequential margin improvement. Given your, you know, sort of first quarter that you reported, the second quarter guidance, you know, first half is gonna be down year-over-year. If you continue to improve margins sequentially, do you think you can grow earnings this year? Thank you. Okay. PJ, I'll take the emulsions question. We, as part of our Traffic Solutions or Ennis-Flint acquisition, it came with a small resins plant. We're making more emulsions there. We think we can increase the size of that facility, so the team is working to do that as well. Not only we're gonna use the asset, it was running five days a week, one shift. You know, now it's running 24 hours a day, 7 days a week. You know, we're gonna improve the size of that. You know, we are able to get BA and some of these other raw materials that go into making the emulsion, so the availability is better there. We feel comfortable that we're going to continue to improve the utilization of that facility. Yeah. PJ, on the margins, I'm glad you brought that issue back up because I do feel it's really the measurement stick because of all the noise last year. Our first quarter last year was very strong, benefited by some pandemic recovery. Then as we got through the balance of the year, our second half of 2021 was very, very weak. We're not gonna give full year guidance on the call here today, but again, the trajectory of margins sequentially for each of these quarters I think is the true marker for our industry. We do expect, again, from some of the reasons Michael mentioned, abating supply shortages, improvement in our manufacturing, and catch up on pricing. We do expect our margins to improve sequentially versus historical patterns for the foreseeable future. Thank you. Next question, Laurence Alexander with Jefferies. Laurence, please go ahead. Hi, everyone. This is Kevin Estok on for Laurence Alexander. I just had a quick question about the credit market. I guess given the moves and like, and also the Fed's tightening cycle, I guess I was wondering if there's been any shift in how you think about financial leverage, and I guess how much you plan or expect that you could flex your balance sheet going forward? Our long-term financial discipline hasn't changed. We're, you know, in kind of the mid-2s in terms of debt to EBITDA. We do expect to pay down some debt this year. If we see anything strategically we want to execute on, you know, we'll act accordingly. We're not gonna shift our strategies. Again, if you look at our blended interest rate, it's the best in class of our space or close to the best in class. Again, no change in our strategy or outlook in the near term. Thank you. Next question, Mike Harrison of Seaport Research Partners. Mike, please go ahead. Hi, good morning. A couple questions on the auto OEM business. First of all, you had been dealing with some operational inefficiencies there. Has that improved either in terms of customer behavior or your ability to manage what's going on in that space? Maybe an update on electric vehicle application wins with some of your innovative offerings. Have you seen some wins come through, and are you concerned at all about battery shortages impacting EV growth this year? Okay, let's start with the manufacturing. I would say the auto guys have gotten better at knowing what chips are coming in and when they're coming in. So they're much better. They're having much less scheduled or unscheduled downtime, is the way it should be phrased. So, you know, our manufacturing has gotten better because their predictability of running has gotten better. The one question nobody asked, so I'm gonna throw the answer out there and make sure you know it, is our automotive team has priced higher than company average. I feel really good about that, where we are in that space. From an EV standpoint, we don't see battery shortages this year. It's certainly a longer-term trend that we're gonna be paying close attention to. Right now, you know, when I think about where we're winning in that space, you know, our protective coatings that go into battery has been a huge win for us. Where we're winning in that space. We just picked up two world-class customers this quarter. Dielectric powders is another area that we're winning in, and so I feel very comfortable about that. One of the top five guys, we are also running a long-term cathode binder study with. That's a you know more like a three-five year program, but the fact that they came to us to do that is really a good sign about how they see us playing in this space long term. I'm very comfortable with the pace of the EVs are growing and our ability to service that market. Mike, I just want to. I'm glad you brought the question up again because I do want to talk a little bit more broadly about auto builds. Michael mentioned targets from third-party consultants this year is around 80 million builds. Again, we think the market on a run rate basis is typically over 90. So there's at least let's call it a 10%-12%, 15% catch up that'll occur in the next, you pick the number of quarters or months, 12-18 months. On top of that, we think there's a fleet rebuild that has to occur for things like car rental fleets. You know, we peg that at another 3%-4% of the market. There, on top of that, there's an inventory replenishment cycle for, in the U.S., for example, dealer lots. Very long runway. They're certainly getting better chip availability and more consistency, and there's more chips to come in the back half of the year in early 2023. Very instrumental in our recovery, and we feel very strong about the underlying demand that supports that. Thanks, Mike. Next question is from Jaideep Pandya of On Field Investment Research. Jaideep, please go ahead. Thanks. The first question really is around your protective and marine business. Appreciate you guys are bigger in China these days, but you know, how do you see your backlogs evolving now that you know, oil prices are high, gas prices are high, and also some of the marine end markets are doing extremely well in terms of cash generation? You know, do you think that the next two years we should see a material improvement in this area? The second question really is around auto, the auto business of yours. I appreciate, Vince, what you just said, but like, you know, if we go by the theory that there is cannibalization where EVs are eating into the ICEs, just wanna understand your fixed cost structure. So in a sense, in the next five years, if we have 90 million cars, but 25 million or 20 million of them are EVs, can you actually reduce your fixed costs in your traditional ICE-based auto OEMs? And on the other hand, obviously win in EVs. Are you looking at any bolt-on acquisitions, for instance, in EV-related coatings for batteries? Or do you have already exposure there? Thanks a lot. Okay, Jaideep. We'll start with the new builds. Our marine business is up substantially, and it's gonna continue to grow. New builds are up 20% year-over-year. It's up strongest in China, which is where we're strongest. This is a good market for us. The oil and gas assets that are gonna be built because of the Russia war on Ukraine are also gonna increase. So that's really good for us. LNG tankers are really good for us. An area where pool fires lead to a product that we sell that we're best in class. You know, I have high hopes for our PMs, our protective marine business over time that it's continued to do well. When you talk about the auto business, fixed cost, you know, we actually paint EV cars just like you paint an internal combustion car. You know, we're gonna still have all that business. Actually, your fixed, you know, your cost structure improves as the volume goes through, the transition from that business, plus you sell additional paint for the battery box. The transition from internal combustion engines to batteries or is actually a good trend for us. We are leading in the space in this area. We're doing, I'd say, better than our typical market share on internal combustion engines. Now, will we look at acquisition in that space? We're always looking for things that add shareholder value. I would tell you that we're always interested. It is a highly competitive space right now. There's a number of people playing in it, whether it's the protective coatings, whether it's films, whether it's powders, whether it's thermal gap fillers. There's a variety of different applications on how you win in that space. We feel very good about this. Thank you, Jaideep. There are no further questions waiting at this time, so I'd like to hand the call back over to John Bruno. Thank you, Sam. Before we wrap up the call today, I wanted to let everyone know that Mary Anne Bendzsuk will be retiring in the second quarter, and this will be her last quarterly earnings call. I think a lot of people on the call have dealt with Mary Anne, and she's been a valued team member here at PPG for many years and provided excellent support to the investment community, supporting investor relations for more than 20 years. We wanna thank Mary Anne and wish her and her family all the best in retirement. That concludes today's call. If anybody has any other questions, please, give our area a call. Thank you very much. That concludes the PPG Q1 2022 earnings call. Thank you all for your participation. You may now disconnect your lines.