UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 20212022

Commission File Number 1-1687

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

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):

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 andwith a demonstrated commitment to innovation, sustainability, community engagement and developingdevelopment of 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 7570 countries.

PPG supplies paints, coatings and specialty materials to customers inserving 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 with many regional coatings companies.

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

PERFORMANCE COATINGS

INDUSTRIAL COATINGS

(a) Original equipment manufacturer (OEM)

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, including a focus on sustainability, and leverage core technology platforms to develop products forto address 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.

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 areinclude resins, reactants, solvents, titanium dioxide, 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.emulsions. Raw materials include both organic, primarily petroleum-derived, materials and inorganic materials, including titanium dioxide. These rawmaterials. 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 continuecontinues 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. OurIn support of our decarbonization efforts, we are increasing the amount of renewable energy secured for our operating facilities and increasingly evaluating alternative raw materials includethat offer sustainable benefits and support the circular economy, including recycled, bio-based, materials as partbio-circular feedstocks and biomass balance products. Prices for certain of a product renewal strategy. While prices for certainour raw materials typically fluctuate with energy prices and global supply and demand changes, such fluctuations arechanges; however, pricing may be 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 maintainsaims to maintain a competitive cost position and ensuresensure 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 2021,2022, we experiencedcontinued to experience shortages of certain raw materials, which negatively impacted our ability to fully meet customersome of our customers’ demand. We are continuing our aggressive sourcing initiativescontinue to improvefocus on improving our competitive cost position and broadenexpanding our supply of high-quality raw materials. Thesematerials, including strategic initiatives include qualifyingto qualify multiple sources of supply.

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 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 useddemand factors. For 2022 versus 2021, we experienced increases in our product formulations.operating costs of more than $1 billion, including significant raw material and energy cost inflation. The increases in raw material costs were primarily driven by higher supplier feedstock costs, higher energy prices, labor availability challenges, transportation shortages and higher ocean freight costs. Also in 2022, 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.

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.

Our commitment to sustainability extends to our suppliers as an extension of our internal focus on sustainability. OurThe PPG 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.

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, favorable2022, unfavorable foreign currency translation increaseddecreased Net sales by approximately $345$775 million and Income before income taxes by approximately $60$85 million.

Refer to Note 19,20, “Revenue Recognition” in Item 8 of this Form 10-K for additional geographic information pertaining to sales and Note 20,21, “Reportable Business Segment Information” in Item 8 of this Form 10-K for geographic information related to PPG’s property, plant and equipment.

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 AmericaAmerican 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.

The average number of people employed by PPG during 20212022 was approximately 49,300,52,000, of which approximately 14,80015,600 were in the United States and approximately 34,50036,400 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 2021.2022. 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.

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 Capital 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 both2022 and 2021, and 2020, our injury and illness rate was 0.26.0.30 and 0.26, respectively.

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 20222023 Annual Meeting of Shareholders and in our SustainabilityESG Report and on our sustainability websitelocated at http://sustainability.ppg.com.

PPG is committed to operating in a sustainable manner and to helping our customers meet their sustainability goals. Our sustainability efforts are ledgoverned 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 coordinatewho is responsible for coordinating PPG’s ESG and sustainability programs and to communicatefor communicating 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 processprocesses and low cure capabilities that savessave energy and reducesreduce water usage;usage at customer manufacturing sites; sustainable, waterborne coatings formulations; sustainable powder coatings; lightweight sealants and coatings for aircraft; coatings that cool surfaces; coatings for recyclable metal packaging; antimicrobial products; coatings that contain reduced materials of concern; architectural coatings that contain lower carbon content raw materials; silica products for tires that improve vehicle fuel economy; and solutions for autonomous and battery-powered vehicles. Sales from sustainable products represented 39% of the Company’s total Net sales for the year ended December 31, 2022.

The Company’s commitmentPPG is committed to using resources efficiently and driving sustainability continues to yield tangible results. In 2021, we again made significant progressthroughout our entire value chain, including continued focus on reducing our energy intensity, greenhouse gas emissions, intensitywater withdrawal and waste intensity.total energy use. More information about PPG’s sustainability values, efforts, goals and data and our community and employee engagement programs can be found in our SustainabilityESG Report and on our sustainability websitelocated 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

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$217 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.

It is expected that capital expenditures for such projects in 20222023 will be in the range of $20$25 million to $30$35 million. AlthoughActual future capital expenditures are difficultmay differ from expectations due to estimate accurately becausethe inherent uncertainties involved in estimating future environmental remediation compliance costs, including possible technological, regulatory and enforcement developments, the results of constantly changing regulatory standardsenvironmental studies and policies, it is likely that environmental control standards will become increasingly stringent and the cost of compliance will increase.other factors.

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 14,15, “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.

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 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

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 ability to procure raw materials, adversely impacting our financial results.

An inability to obtain certain critical raw materials wouldhas adversely impactimpacted our ability to produce products.certain products and could do so in the future. 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.

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 the war in Ukraine, 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.

We earn revenues, payare exposed to foreign currency exchange rate risk with respect to our sales, expenses, ownprofits, assets and incur liabilities denominated 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 which are 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.

Legal, Regulatory, and Tax Risks

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.

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 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. 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 14,15, “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 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 sanctions and 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.

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 waswere 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

Operational and Strategic Risks

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 20212022 by products sold outside the U.S. was approximately 65%60%.

Unexpected events, including supply disruptions, temporary plant and/or power outages, work stoppages, natural disasters and severe weather events, including those potentially due to climate change, 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.

PartGrowth through acquisitions is an important component of the Company’s strategy is growth through acquisitions.strategy. 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:

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 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.years, including an increase in the production of electric vehicles. 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

Additionally, the development of customer-facing digital platformschannels 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.

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 informationintellectual property 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.

None.

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

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 14,15, “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.

Set forth below is information related to the Company’s executive officers as of February 17, 2022.16, 2023. 

Item 4. Mine Safety Disclosures

Not Applicable.

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.

The following discussion includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 20212022 and 2020.2021. A discussion of changes in our results of operations for the year ended December 31, 20202021 as compared to the year ended December 31, 20192020 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 20202021 Form 10-K, filed with the Securities and Exchange Commission on February 18, 2021.17, 2022.

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

Selling, general and administrative expenses increased $391$62 million primarily due to:

Interest expense netincreased $46 million 2022 versus 2021 primarily due the unfavorable impact of higher interest rates on PPG’s variable rate debt obligations and slightly higher levels of debt in the current year.

Interest expense, net of Interest income decreased $20increased $28 million in 2021 versus 2020 primarily due to more favorablehigher interest rates on outstanding debt.rates.

In 2021 and 2020, impairment charges werethe fourth quarter 2022, the Company 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 recordedof $4 million to reduce the carrying value of ancertain indefinite-lived trademark. trademarks based on the results of the annual impairment test.

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.

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 13,14, “Employee Benefit Plans" in Item 8 of this Form 10-K for additional information.

Pretax restructuring charges of $84 million related to recent acquisitions were recorded in 2022, partially offset by certain changes in estimates to complete previously recorded programs of $51 million. Pretax restructuring charges of $54 million were recorded in 2021, offset by certain changes in estimates to complete previously recorded programs of $23 million. Refer to Note 8, "Business Restructuring" in Item 8 of this Form 10-K for additional information.

Other (income)/charges, net was lower in 2021 as2022 compared to the prior year primarily due to lower non-service components of net periodic pension cost.

The effective tax rate for the year-ended December 31, 20212022 was 20.6%23.5%, a decreasean increase of 0.8%2.9% from the prior year primarily driven by charges associated with PPG’s operations in Russia along with a benefit from releasesreduction in the release of reserves for uncertain tax positions.positions compared to the prior year.

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 20212022 decreased year over year primarily due to acquisition-related sales, higherraw material cost inflation, lower sales volumes, unfavorable foreign currency translation impact and higher selling prices. The impact of higher net sales on earnings wasmanufacturing costs related to supply and labor disruptions, 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.increased selling prices. Refer to the Regulation G Reconciliations - Results from Operations for additional information.

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.

In 2021, the acquisitions of Ennis-Flint, Tikkurila and VersaFlex increased net sales in2022, all businesses within the Performance Coatings reportable business segment versusachieved higher selling prices consistent with our focus on mitigating raw material and other cost inflation. These price increases also helped to offset softer demand conditions in Europe due in part to geopolitical issues, the impact of pandemic-related restrictions in China, softening do-it-yourself (“DIY”) demand and unfavorable foreign currency translation.

Architectural coatings – EMEA net sales, excluding the impact of currency, acquisitions, divestitures and the wind down of Russia operations (“organic sales”) were flat compared to prior year.year as selling price increases were offset by lower sales volumes. Sales were negatively impacted by geopolitical uncertainty, including the war in Ukraine, lower demand for DIY paint products and unfavorable foreign currency translation.

Architectural coatings – Americas and Asia Pacific netorganic sales increased a mid-single-digit percentage during the year with differences by channelprimarily due to selling price increases that more than offset lower sales volumes. Sales in the U.S. and region. Despite a strong first quarter, the remaining nine months of the yearCanada were negativelyunfavorably impacted by raw material shortages. Favorable foreign currency benefited net sales due toavailability, which improved as the strengthening of the Mexican pesoyear progressed, and certain currencies in the Asia Pacific region.softening DIY demand. In Mexico, PPG Comex architectural coatings business netorganic 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 productsdemand continued to be strong.strong throughout 2022 and further selling price increases were implemented.

ArchitecturalAutomotive refinish coatings – EMEA netorganic sales increased about 25% versus prior year largely driven by acquisition-related sales from Tikkurilaa high-single-digit percentage due to selling price increases in all regions and higher selling prices. Favorable foreign currency translation benefited net sales compared to the prior year. Sales volumes were strongvolume growth in the first half of the year butU.S. stemming from higher miles driven, increased collision claims and more people returning to office work versus 2021. Sales were negatively impacted by raw material shortagessofter demand in Europe and the second half.

Aerospace coatings netorganic sales increased by a low-single-digit percentage during the year primarilyhigh-teen-percentage due to favorable foreign currency translation.increased selling prices and sales volumes in all regions. Sales volumes were flatincreased in all regions compared to prior year, as a modest increase inbut still remain below pre-pandemic levels. Net sales benefited from continued strong demand for the Company’s military applications was offset by a decline in commercial OEM.and for PPG’s technology-advantaged products.

NetOrganic sales in the protective and marine coatings business increased over 35% versus prior yearwere higher by a mid-single-digit percentage due to selling price increases in all regions. Sales were negatively affected by pandemic-related restrictions in China.

Traffic solutions organic sales increased by a low-teen-percentage as higher selling prices strong demandand solid volume growth in the U.S. and Latin America were partially offset by lower sales volumes in Europe and the Asia Pacific region and acquisition-related sales from VersaFlex.region.

Segment income increased $132decreased $92 million year-over-yearyear over year primarily due to raw material and logistics cost inflation, lower sales volumes and the impact of unfavorable foreign currency translation, partially offset by 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.acquisition-related earnings.

In the Performance Coatings reportable business segment, supply chainfirst quarter 2023, demand conditions in Europe and manufacturing disruptionsChina are expected to continue asremain similar to the firstfourth quarter 2022, progresses. The supply of several key inputs remains tight, which willincluding potential pandemic-related disruptions. Raw material and transportation availability continue to constrain sales. Further selling price increases have been secured or are being initiated duringimprove, with the quarter for all businesses. The Company will continue to execute against various cost-savings initiatives.biggest challenges remaining in the aerospace coatings business. Aggregate sales volumes in the first quarter are anticipated to be lower by a mid-single-digit percentage compared to the first quarter 2021,2022 driven by the unfavorable impacts in Europe and China and continued soft architectural coatings DIY demand. The impact of divestiture-related sales and sales related to the Russia business, 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 sequentiallythe Company is in the first quarter comparedprocess of winding down, are anticipated to the fourth quarter as it supports building inventory in its distribution channel.reduce sales by about $40 million. The Company will continue to focus on executing various existing cost-savings initiatives.

In 2021, the acquisitions of Wörwag, Tikkurila and Cetelon increased net sales in2022, all businesses within the Industrial Coatings reportable business segment versus prior year.achieved higher selling prices consistent with our focus on mitigating raw material and other cost inflation. These price increases also helped to offset softer demand conditions in Europe due in part to geopolitical issues, the impact of pandemic-related restrictions in China and unfavorable foreign currency translation.

Automotive OEM coatings organic sales increased by more than 10% led by higher selling prices in all regions and higher sales volumes increased by a mid-single-digit percentage year-over-year, with declines in the second half of the year. During the year,U.S. and Latin America. Sales were unfavorably impacted by industry-wide production disruptions worsened at many automotive OEM customers due to semiconductor chip shortages. Inshortages, which continued in 2022 but improved as the U.S.,year progressed. Sales volumes were also impacted by lower automotive OEM dealer inventories remained at historically low levels as consumer demand remained very robust whileindustry production levels were constrained.due to the geopolitical uncertainty in Europe and the impact of pandemic-related disruptions in China.

For the industrial coatings business, organic sales increased by a high-teen-percentage year-over-yearhigh-single-digit percentage year over year as global industrial production continued to improve in most regions. Selling prices and sales volumes were higherstrong selling price increases in all regions versus prior year, and solid volume growth was ledin the U.S. and Latin America were partially offset by the appliancereduced sales volumes in China and heavy-duty equipment sub-segments.Europe reflecting lower economic activity in those regions.

Packaging coatings organic sales increased by a mid-teen-percentage year-over-yearhigh-single-digit percentage year over year due to higher selling prices and sales volume growth, includingin all regions. Sales volumes were 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.U.S. but were negatively impacted by geopolitical uncertainty in Europe and pandemic-related restrictions in China.

Specialty coatings and materials netorganic sales increased by about 35%nearly 20% versus the prior year driven by higher sales volumesselling prices in the U.S.all regions and volume growth in Europe.

Segment income decreased $70$37 million year-over-yearyear over year primarily due to raw material and logistics cost inflation, lower sales volumes and the impact of unfavorable foreign currency translation, partially offset by higher selling prices higher sales volumes and savings from previously approved restructuring actions.

In the first quarter 2023, global industrial production is expected to remain at lower levels. In China, pandemic-related disruptions are expected to continue into the first quarter. Aggregate sales volumes for the Industrial Coatings reportable business segment for the first quarter 2022 are expectedanticipated to be lowerdecline 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 factors2022. Sales volumes are also expected to leadbe similar to additional raw material cost inflationthe prior year quarter in the automotive OEM coatings business but lower in the industrial coatings, packaging coatings, and specialty coatings and materials businesses. Positive selling price is expected to continue, although some of the strong selling prices realized in 2022 will begin to reach their anniversary 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. SegmentYear-over-year segment margins are expected to begin improvingcontinue to improve on a sequential basis in the first half 2022.quarter 2023. The Company will also continue to aggressively manage costs, which will includefocus on executing against various existing 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.

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%10% versus the prior year and were a record $16.8$17.7 billion. Organic sales were upincreased by about 10% and acquisition-related8% driven by higher selling prices, partially offset by lower sales volumes. Acquisition-related sales contributed 9%3% to net sales growth compared to prior year. Theyear as the Company

In 2021,2022, economic activity rebounded sharplyremained robust and continued to recover from depressedthe lower demand levels experienced in 2021 due to pandemic related restrictions in 2020.pandemic-related restrictions. For the full year, U.S. GDPgross domestic product (“GDP”) and industrial production both increased by nearly 6%.approximately 2% and 4%, respectively. Demand in the residential and commercial construction markets also significantly improved during 2021.was strong at the beginning of the year but softened as interest rates increased as the year progressed. New home starts advanceddecreased by a low-teenmid-single-digit percentage in 20212022 versus approximately 8%a mid-teen percentage increase in 2020.2021. Residential remodeling was updown by about 9%approximately 10% in 2022 versus 2021 versus 2020 supportedas solid housing fundamentals were offset by strong housing fundamentals.the impact of higher interest rates. Commercial construction was down approximately 10% compared to 2020.2021. Market demand for architectural paint shifted significantlycontinued to shift back to DIFMdo-it-for-me (“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. Earnings were aided by strong selling price increases, but negatively impacted by higher levels of inflation, including historically high raw material cost inflation and higher than normal salary and wage increases due to the high level of employment in the U.S. 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 strongproducts, mostly impacting the higher demand for automotive OEM products, the semiconductor chip shortage constrained production. periods of spring and summer.

Automotive OEM industry builds were similarup nearly 10% compared to 20202021 as component shortages began to moderate and remain about 20% below 2019 production levels.underlying demand for new automobiles was solid. The aerospace coatings business begancontinued what is expected to be a multi-year recovery to regainreturn to 2019 activity levels. Before the pandemic, the Company’s sales mix was approximately 70% commercial and 30% military. During the pandemic and through 2021,2022, 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 to15%, as overall improved flying activity still remains below 2019 levels, mostly impacted by lower passenger miles flown and significantly fewer international flights. Theactivity in China. With the lifting of pandemic-related restrictions in China, it is expected that global commercial aftermarket segment did show a strong recoveryand new build demand will continue to improve in the second half of 2021 as domestic flight activity improved throughout the world.2023. The automotive refinish coatings business also experienced gradual improvementstrong demand through the year as miles driven and collision claims trended towardcloser to pre-pandemic levels. PackagingSales were constrained due to ongoing supply disruptions, which has led to lower industry inventory levels. The packaging coatings business was favorably impacted by new business wins at a number ofseveral new packaged beverage can factoriescustomers and overall solid demand for the Company’s sustainable products. Higher acquisition-related sales were mostly related toThe traffic solutions business, which represents the Ennis-Flint acquisition which is now the traffic solutions business. Overallcompleted in December 2020, made good progress realizing synergies and achieved a low-teen percentage growth in organic sales.

U.S. and Canada organic sales volumesincreased by more than 10% compared to 2021 driven by higher selling prices in all businesses. Solid year-over-year sales volume increases in the region were higher by a mid-single-digit percentage compared to the prior year. Solid year-over year increases inaerospace, automotive refinish, industrial, automotive OEM and packaging coatings businesses were partially offset by lower year-over-year sales volumes in the architectural and aerospace coatings.protective and marine coatings businesses. Aggregate regional sales volumes remain aboutmore than 10% lower than the fourth quarter 2019. The U.S. and Canada remained PPG’s largest region, with sales of $7.4 billion, representing approximately 40%42% of 20212022 net sales.

European economicdemand for coatings softened in 2022, mostly impacted by geopolitical issues and high levels of inflation. Supply chain disruptions lessened during 2022 but continued to impact certain end-use markets, most notably automotive OEM. In the first quarter, 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-19pandemic-related disruptions. While the impact of the pandemic eased throughout the year, consumer confidence worsened as the year progressed due to elevated costs and by the U.K.’s exit from the European Unionwar in Ukraine, which further disrupted logistics, especiallysignificantly impacted demand for coating products. Component shortages continued to and from the U.K. Semiconductor chip shortages negatively impactedconstrain automotive OEM sales volumes versus prior year, despite strong demand.volumes. Automotive builds in 2022 were at similar levels as 2021. Architectural coatings – EMEA netorganic sales were higher drivenflat compared to the prior year as selling price increases were offset by strong demand by professional paint contractors andlower sales volumes. Net sales for architectural DIFM products improved as compared to the prior year. Integration of the June 2021 acquisition of Tikkurila partially offset by lower demandcontinued with good progress toward realizing targeted

synergies. In addition, the integration efforts continued for architectural DIY products from elevated levelsthe two automotive OEM acquisitions made in 2020.2021, Wörwag and Cetelon, with PPG continuing to realize acquisition-related synergies and leverage acquired product technologies to drive sales growth. Net sales were aided by partial recovery in the aerospace and automotive refinish coatings businesses. Demand was soft for architectural coatings, packaging coatings and general industrial products was solid.coatings products.

EMEA net sales of $5.5 billion represented approximately 32%31% of PPG’s 20212022 net sales, modestly higher than 2020.2021. Organic sales improved by a mid-single-digit percentage compared to 2021 led by higher selling prices and acquisition-related sales, which were partially offset by lower sales volumes. Net sales, excluding the impact of foreign currency translation, increased over 20%, led by higher selling prices and acquisition-related sales. Regional salesa low-teen percentage. Sales volumes in the region were updown a mid-single-digitmid-teen percentage compared to 2020, but remain 8% below 2019.

The emerging regions of Asia Pacific and Latin America represented 28%27% of PPG’s 20212022 net sales in aggregate, similar to the prior year.

Net sales were $2.8 billion in the 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 2022 decreased by 5% compared to 2021 as higher selling prices and solid sales volume growth in India were more than 20% higher than 2020 drivenoffset by strong organic growth thatlower sales volumes in China due to pandemic-related restrictions and the impact of unfavorable foreign currency translation. Sales activity was upmost impacted in China during a mid-teen-percentage comparedperiod of heightened mandated shut-downs in the second quarter and during the fourth quarter as the country began to 2020. The sales volume growth was led by recoveringmove away from its zero-COVID policy. In China, demand for coatings products from softer economic activityis expected to improve in 20202023 driven by stronger domestic consumption and demand forfewer mobility restrictions. In the Company’s technologically advantaged products. Salesregion, sales volumes were the strongestmost unfavorable in the protective and marine, industrial, automotive refinish and packaging coatings businesses. Sales volumesIn 2022, there were periods of strong automotive retail sales activity, partially due to government stimulus and strong sales of electric vehicles in China. During 2022, sales volume growth was strongest in India as the automotive OEM end-use market were positive and above industry build rates, but were constrained by semiconductor chip shortages.easing of pandemic-related restrictions led to increased economic activity. Sales volumes in the region were slightly higherlower by about 10% compared to 2021 and were lower by a mid-teen-percentage compared to 2019.

Net sales in Latin America in 2022 were $2.0 billion, representing a 16% increase compared to 2021. Overall, demand in Latin America sharplythe region increased year-over-yearyear over year driven by improved economic activity in most end-use markets. Organic sales were higher by a high-teen-percentage asmid-teen-percentage compared to 2020. Strong contributions were made by the2021 due to higher selling prices and sales volumes. The PPG Comex business made strong contributions, which continued to outpace the industry andindustry. The business added over 150 newmore concessionaire locations during 2021.2022, bringing the total to over 5,100 locations. Additionally, all the businesses in the industrial coatingsboth reportable segmentsegments delivered strong year over year sales growth. Foreign currency translation finished about 3% favorable compared to 2020, principally driven byvolume growth on a weaker

We expect solidsoftening global market growtheconomic activity in 20222023 that will likely be uneven by region and end-use. As 20222023 progresses, we expect demand for architectural coatings products in the U.S. to benefitbe negatively impacted by higher interest rates, while we anticipate demand to gradually improve in China as it transitions away from more economic re-opening, an easing ofzero-COVID policies and supply chain problems,disruptions continue to ease. In Europe, we expect demand to remain soft due to ongoing geopolitical issues and inflation. In general, inventory rebuilding across manymost end-use markets do not have significant excess inventories, and healthy consumer spending.any demand improvement should lead to a faster ramp-up of sales volumes. 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 supplySupply chain and COVID-relatedpandemic-related disruptions experienced induring the fourth quarter 2021past three years are expected to continue into the first quarterease as 2023 progresses, which should allow for ample supply of 2022, impactingcommodity-related raw materials in all regions. We also expect the Company’s ability to manufacture and deliver product. We anticipate more favorable economic conditions inproduct to improve as the second quarter.year progresses, leading to better manufacturing efficiencies.

We anticipate that PPG’s growth in the U.S. and Canada regional growth will be led by the aerospace coatings, automotive refinish coatings and automotive OEM coatings as both end-use markets continue their recovery to pre-pandemic demand levels.traffic solutions businesses. Automotive OEM industry builds in the region are expected to be higher by a mid-teen-percentageincrease slightly compared to 2021.2022. Architectural DIYcoatings demand is expected to remain at more moderate levels during 2022 and similarmay fall as the year progresses due to 2019.higher interest rates, lower single-family home construction and lower sales of existing homes. Traffic solutions and protective coatings demand should be aided later in 20222023 as infrastructure activity gainsspending continues to gain momentum.

We expect European industry demand trends in 2022 in Europe2023 to gradually improve fromremain similar to those experienced in 2021, particularlythe second half of 2022. Automotive OEM builds are expected to increase modestly from historical lows, and aerospace demand is expected to continue to recover from its pandemic lows. Overall demand is expected to be similar to 2022 but mixed by country in the automotive OEM and refinisharchitectural coatings businesses.business. 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-useUnfavorable demand trends are expected to continue into impact the packaging, protective and marine, and general industrial coatings. Overall demand is expectedcoatings businesses. We will continue to be similar but mixed by countrymonitor the impacts of higher energy prices and challenges with respect to energy procurement in the architectural coatings business.Europe and adapt our footprint, as necessary, to best serve our

customers. Raw material availability is expected to graduallycontinue to improve as the year progresses. A new cost savings program was announced in the third quarter 2022, which has a higher concentration of initiatives focused on Europe. We continue to monitor the economic environment in the U.K., as its exit from the European Union progresses, andincluding monitoring the impacts on consumer sentiment, logistics, labor availability and coatings demand. To date, the U.K.'s exit from the European Union has not had a material impact on the Company's operations.

In the Asia Pacific region, we expect economic activity to be softimprove in China duringafter the first quarter as more severe operating restrictions have recently been imposed duesupply chain activity and mobility levels move closer to COVID and2019 levels. Stimulus support is expected in the Winter Olympics. The region to aid economic activity. Economic output in India is expected to receive stimulus support that should help aid economicremain robust, and activity as the year progresses. Economic output in Southeast Asia and India is still below 2019 levels, but is expected to improve in 2022.benefit from the reopening of China’s borders. 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 marinegrowth of China’s electric vehicle subsegment, including significant opportunities for export activity, should benefit the Company’s automotive OEM business. Marine coatings new-build demand is expected to gain momentumbe stable as order books for large vessels and container ships is atremain close to multi-year highs.

In Latin America, we anticipate slightly bettercontinued stable economic conditions in Mexico, most of Central America and South America compared to 2021.2022. We expect continued strong demand in the PPG Comex architectural coatings business.

We made significant progress on the global restructuring programs that were announced in April 2018, June2019, 2020 and 2021. The 2019 and June 2020. The April 2018 program has2020 programs have been substantially completed. In the fourththird quarter 2021,2022, the Company approved a business restructuring plans relatedplan which included actions to recent acquisitions. Aggregatereduce its global cost structure in response to current economic conditions. Total restructuring savings, related toincluding the 2020, 2019 and 2018 programsimpact of acquisition synergies, was approximately $135$65 million in 2021. Aggregate2022. Total restructuring savings isare expected to be at least $70$60 million in 2022, including the impact of acquisition synergies.2023. 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.

InOn an aggregate basis, average raw material costs were significantly higher in 20212022 versus 2020.2021. The increases in raw material costs were primarily driven by ongoing supply constraints, including various force majeure declarations, higher energy prices, maintenanceproduction 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 by a low-single-digit percentage on a year-over-year basis in the first quarter 2022. Cost2023; however, we expect the negative impact of raw material inflation is expected in several other areas, including wage, benefit and logistics costs in 2022.to lessen as 2023 progresses.

We achieved selling price improvement across all businesses in 2021,2022, reflecting the Company’s efforts to offset various inflationary pressures. The Company will continue to prioritizecarefully monitor all costs during 2023 and assess the need for additional selling price increases in the first quarter 2022 and will seek additional increases throughout the year as necessary.

In 2021,2022, we experienced favorableunfavorable foreign currency translation throughout the year. Weyear, and we expect unfavorable year-over-yearthat foreign currency translation in 2022. The foreign currency environment continuesrates will continue to be volatile, andvolatile. However, 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 20222023 effective tax rate from continuing operations is expected to be in the range of 22% to 23%24%, varying by quarter. This range represents the Company’s best estimate.

Over the past five years, the Company used over $3$2 billion of cash to repurchase approximately 2721 million shares of PPG stock, including $210using $190 million in 2021.to repurchase shares of PPG stock during 2022. The Company ended the year with approximately $1.3$1.1 billion remaining under its current share repurchase authorization. During 2021,2022, the Company deployed $2.1 billion$114 million for acquisitions, $371$518 million for capital expenditures and $536$570 million for dividends. In 2021,2022, PPG marked the 50th51st annual per share dividend increase and the 122nd123rd successive year of annual dividend payments.

PPG ended 20212022 with approximately $1.1$1.2 billion in cash and short-term investments. The Company expects continued strong cash generation in 2022.2023.

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 14,15, “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 14,15, 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 14,15, PPG has significant reserves for environmental contingencies. Refer to the Environmental Matters section of Note 1415 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.

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

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, 20212022 but are not effective until a future date.

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.

The $567$599 million decrease in Cash from operating activities - continuing operations was primarily due to increasesa larger increase in working capital excludingin 2022 compared to the prior year, which reflects the impact of business acquisitions.higher raw material costs on inventories and higher selling prices on trade receivables.

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). 

We expect cash outlays for environmental remediation activities in 20222023 to be between $80$40 million and $100$60 million.

The $957$1,943 million increasedecrease 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.prior year acquisition of Tikkurila.

CapitalDuring 2023, capital expenditures, related to modernization and productivity improvements, expansion of existing businesses and environmental control projects iswhich are expected to be in the range of $475$500 million to $525$550 million, in 2022 inwill support of future organic growth opportunities and reflecting lower capital spending in the past two years due to COVID-19 constraints.

The Company has approximately $1.3$1.1 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

PPG has paid uninterrupted annual dividends since 1899, and 20212022 marked the 50th51st successive year of increased annual per-share dividend payments to shareholders. The Company raised its per-share quarterly dividend by more than 9%5% to $0.59$0.62 per share paid in December 2021.September 2022.

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 9,10, "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 2022, PPG repaid $300 million of the Term Loan Credit Agreement using cash on hand.

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 9,10, "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, 20212022 and December 31, 2020.

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, 2021,2022, Total Indebtedness to Total Capitalization as defined under the Credit Agreement and the Term Loan was 48%49%.

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 9,10, “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.

We continue to believe that our cash on hand and short termshort-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.

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 9,10, “Borrowings and Lines of Credit” in Item 8 of this Form 10-K.

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, 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

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 13,14, “Employee Benefit Plans” in Item 8 of this Form 10-K for information on these plans and the assumptions used.

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.

Comparing average exchange rates during 20212022 to those of 2020,2021, the U.S. dollar weakenedstrengthened against the currencies of themany countries within the regions PPG operates.operates, including most of the countries in the EMEA region. This had a favorablean unfavorable impact of approximately $60$86 million on full year 20212022 income before Income taxes from the translation of this foreign income into U.S. dollars.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. 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 lookingforward-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, geopolitical issues in Europe, increasing price and product competition by our competitors, fluctuations in cost and availability of raw materials, energy, labor and logistics, the ability to

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. PPG undertakes no obligation to update any forward-looking statement, except as otherwise required by applicable law.

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 10,11, “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.

As of December 31, 20212022 and 2020,2021, PPG had non-U.S. dollar denominated debt outstanding of $1.6$2.6 billion and $2.4$1.6 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$293 million and $273$178 million as of December 31, 2022 and 2021, and 2020, respectively.

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 intohas interest rate swaps which converted $525 million of fixed rate debt to variable rate debt. The fair valuevalues of these contracts was a liability of $20 million and an asset of $36 million and $67 million as of December 31, 20212022 and 2020,2021, respectively. An increase in variable interest rates of 10% would lowerhave lowered the fair valuevalues of these swaps and increaseincreased interest expense by $7 million and $1 million for the periods ended December 31, 20212022 and 2020.2021. 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’sincreased annual interest expense associated with PPG's variable rate debt obligations by $4 million and interest expenseby less than $1 million for the periods ended December 31, 20212022 and 2020,2021, respectively. Further, a 10% reduction in interest rates would have increased the fair value of the Company’s fixed rate debt by approximately $56$116 million and $48$56 million as of December 31, 20212022 and 2020,2021, respectively; however, such changes would not have had an effect on PPG’s annual Income before income taxes or cash flows.

Report of Independent Registered Public Accounting Firm

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.

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

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.

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.

As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $6,248$6,078 million as of December 31, 2021,2022, 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 the quantitative goodwill impairment testingtest is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of athe reporting unit where a quantitative test was performed; and (ii) thea high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptionsassumption 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.revenues.

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 anythe reporting unitsunit where a quantitative test was performed. These procedures also included, among others (i) testing management’s process for developing the fair value estimate. This includedestimate of the reporting unit where a quantitative test was performed; (ii) evaluating the appropriateness of the discounted cash flow model,model; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of management’s significant assumptionsassumption related to the projected future revenues and discount rate where a quantitative test was performed.revenues. Evaluating management’s significant assumptionsassumption related to projected future revenues involved evaluating whether the significant assumptionsassumption used by management werewas 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 wereassumption was 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.

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.

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.

Consolidated Statement of Income