PPG Industries, Inc. · NYSE:PPG
PPG Industries — Investor Presentation (July 2022)
46 slides from PPG Industries's investor presentation, July 2022
Slide 1: PPG Investor Overview
PPG Investor Overview July, 2022
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking Such factors include global economic However, it is not possible to predict or identify statements that reflect the Company’s current conditions, increasing price and product all such factors. Consequently, while the list of views
Slide 3: Content Overview
Content Overview PPG Overview and Competitive Advantages Innovation and Growth Opportunities PPG Segment, Business Unit, and Other Information Appendix 3
Slide 4: PPG: industry-leading, global maker of paints, coatings and specialty materials
PPG: industry-leading, global maker of paints, coatings and specialty materials Diverse Portfolio *Sales *Adj. EPS *Cash Flow $16.8B $6.77 ~$1.6B Aerospace Architectural +21% YOY +11% YOY $1.7B of Continuing to Strong cash Auto Refinish Protective & Marine acquired lead in new generation: annual sal
Slide 5: Many levers for profitable growth
Many levers for profitable growth Specialty Highly Growing High percentage Strong pipeline of Successful products and Diversified portfolio of of sales to Innovative acquirer of solutions with key global coatings Sustainable Aftermarket products coatings assets: functional value company products end
Slide 6: PPG provides attractive investment fundamentals
PPG provides attractive investment fundamentals Attractive positioning Global footprint 1 (specialty chemicals) 2 and capabilities 3 Innovative • Customer reach across every • Commitment to investment; R&D • High functional value products major region spend ~3% of sales • Stable earnings/cash flow •
Slide 7: Balanced cash deployment
Balanced cash deployment $210 $370 18% Capital $540 Spending* 28% Acquisitions Approximate Dividends Past 10 2021 Years (~$24B) Cash Uses Share (2012 – 2021) Repurchases 17% 37% 10-Year Cash Use Summary: Grow Business ~55% $2,140 Return to Shareholders ~45% Legacy of consistent and prudent cash depl
Slide 8: Increasing acquisition synergy earnings targets, +margin growth
Increasing acquisition synergy earnings targets, +margin growth Cumulative Synergies by Year Original Target ($) Revised Target Range ($) Acquisitions $MM Original Synergies % of Sales Revised Synergies % of Sales 160 10% 140 9% 8% 120 7% 100 6% 80 5% 60 4% 3% 40 2% 20 1% - 0% 2021 2022 Run Rate Tar
Slide 9: PPG has delivered significant cost savings
PPG has delivered significant cost savings SG&A % of Sales Restructuring Programs 25.3%* Cumulative expected savings of ~$380MM Peer Average Included in both SG&A and Cost of Sales • April ’18 – savings ~$85MM: largely centered around the 24.1% U.S. architectural coatings DIY business • June ’19 – s
Slide 10: PPG is well positioned in attractive coatings segments
PPG is well positioned in attractive coatings segments % of PPG outside sales ’21 to ’24 growth indicators Growth drivers 34% Architectural +3% Global total construction spending1 General Industrial +4% Global industrial production2 17% PPG segments Pavement poised for GDP+ Markings +4% Real GDP3 gr
Slide 11: PPG is positioned to drive margin expansion
PPG is positioned to drive margin expansion Drivers: Opportunity to expand segment margins above prior peak levels 1• Price / cost normalization 4 3 2• Acquisition synergies Prior peak ~17%* 2 3• Lower cost structure, enabling higher operating leverage 1 4• ~40% of the business portfolio poised for
Slide 12: PPG has demonstrated a history of innovation
PPG has demonstrated a history of innovation United States Coatings Patents PPG Innovation Awards 5 year average (2016 – 2020) Award Year Recognition 75 70 Yearly 12 wins since 2016 50 PR-2930 High Strength 47 2020 Adhesive 25 33 B1:B2™ Compact Paint 2019 System 15 0 2013 ANDARO tint dispersions PPG
Slide 13: Global LV Production Shift to EV Creates Growth Opportunity
Global LV Production Shift to EV Creates Growth Opportunity Electric Vehicles (EV) poised to grow PPG Solutions Create Mutual Sustainable Value Stated 2025 Regional Electric Vehicle Targets 3 Battery EUROPE ~25 Cylindrical CHINA ~20% % 5 4 Pack Battery ANODE Sourced from IHS Markit & EV Volume Build
Slide 14: PPG ESG Recent Progress
PPG ESG Recent Progress Environmental Social Governance Resilience Responsibility $20MM committed by 2025 to 24% electricity from Shareholder approval to declassify advance racial equity renewable sources board and remove supermajority 37.5% waste disposal voting requirements $10MM funding for Color
Slide 15: PPG ESG Current Priorities
PPG ESG Current Priorities Environmental Social Governance Resilience Responsibility Committed to Science Based Achieve 34% to 36% representation Target initiative in May 2022. New of non-frontline, global female Strong Board oversight of ESG 2030 goals to be announced in professionals by 2025 prio
Slide 16: ESG Update: PPG Published Inaugural Diversity, Equity & Inclusion Report
ESG Update: PPG Published Inaugural Diversity, Equity & Inclusion (DE&I) Report Key Goals & Progress Achieve 34% to 36% representation Increase headcount of Black, Latinx • Conclusion Nexttotal Achieve Steps global(2022) employee and Asian employees by 45% to 55% of non-frontline, global female acro
Slide 17: PPG ESG: framework for board oversight
PPG ESG: framework for board oversight Environmental Social Governance Sustainability and Nominating and Innovation Committee PPG Board Governance Committee of Directors Employee health and safety Corporate governance oversight Environmental programs Government affairs and political activities Produ
Slide 18: Innovation levers at PPG link to sustainability advantages
Innovation levers at PPG link to sustainability advantages Driving innovation across all aspects of coatings technology Safety Energy Reduction Useful Lifetime Waste Reduction Toxicity Reduction Innovation Levers PPG BFP-SE Premium Powercron® 160 PPG Clean Overspray Free Battery Fire Compact Anodic
Slide 19: Global paint and coatings industry (~$170B)
Global paint and coatings industry (~$170B) Strong fundamentals • Stable earnings/cash • Growth potential • Low capital intensity • Technology and service • Consolidating industry Competitive Landscape PPG has completed ~30 strategic acquisitions since the beginning of 2015 Other 19 Source: Orr & Bo
Slide 20: Acquisitions contribute to sales growth
Acquisitions contribute to sales growth Notable Acquisitions: Acquisition Sales (USD MM) Growth Versus Prior Year 2014/5: Partial years $1,600 $1,400 2021: $1,200 $1,000 2021: $800 $600 $400 $200 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Acquisitions supplement organic growth/ ~4% average
Slide 21: Overview of recently announced acquisitions
Overview of recently announced acquisitions Date of Closing December 2020 June 2021 February 2021 May 2021 April 2021 Estimated Annual Revenue ~$600MM ~$700MM ~$70MM ~$260MM ~$40MM Key Attributes Geographic Expansion Product Line Extension Complimentary Technology ESG Benefits Strong regional Waterb
Slide 22: Coatings geographic mix
Coatings geographic mix 6% 10% 19% 18% 40% PPG opportunities to expand in Asia and globally 46% 30% 32% U.S. and Canada Europe, Middle East Asia-Pacific Latin America (USCA) and Africa (EMEA) (AP) (LA) Coatings Industry PPG Coatings Geographic Geographic Sales Mix Net Sales Mix PPG data is for full
Slide 23: Coatings end-uses
Coatings end-uses Architectural General Pavement Automotive Refinish / Protective Packaging Aerospace Industrial Markings OEM Collision & Marine 14% 18% 28% 17% 10% Industry End PPG is in line with the PPG Coatings Use Demand global coatings End-Use (~$160B Sales Value) industry end-use mix Net Sale
Slide 24: PPG global end-use positions
PPG global end-use positions Position by Coatings Vertical Global Architectural General Protective Automotive Refinish / Packaging Aerospace Pavement Position Industrial & Marine OEM Collision Markings PPG #2 #2 #3 #3 #1 #2 #2 #1 #1 Sherwin- #1 Williams AkzoNobel #3 Nippon #4 RPM #5 Axalta #6 BASF #
Slide 25: PPG's portfolio reporting through two segments
PPG’s portfolio reporting through two segments Aerospace Coatings Architectural Coatings* Automotive Refinish Coatings Protective & Marine Coatings Performance Coatings ~60% Traffic Solutions Automotive OEM Coatings Industrial Coatings Packaging Coatings Specialty Coatings ~40% & Materials Industria
Slide 26: Performance Coatings segment
Performance Coatings segment Automotive Protective and Architectural Aerospace Traffic Solutions Refinish Coatings Marine Coatings Coatings* Segment Traits 2021 Net Sales by Geography • Distribution focus • After-market and maintenance component • Consistent cash generation • Stable industries • Ent
Slide 27: Automotive Refinish Coatings
Automotive Refinish Coatings Industry trends PPG competitive advantages and ESG highlights 1) Value-added programs and training PPG’s Platinum program and training offerings 2) Emerging region growth – growing car-park Leading products and positions in China and India 3) Continuing technology shift
Slide 28: Aerospace
Aerospace Industry trends PPG competitive advantages and ESG highlights Ability to develop products to meet complex technical and 1) Recovery continues – leisure travel to recover first sustainability requirements (e.g., light-weighting) Industry leader in tailoring products to optimize customer 2)
Slide 29: Architectural Coatings
Architectural Coatings* Industry trends PPG competitive advantages and ESG highlights Employing digital solutions; rapidly increasing omni-channel 1) Increasing adoption of digital tools / e-commerce engagement Strong water-based product portfolio with adoption of recycled 2) Strong focus on sustain
Slide 30: Architectural Coatings is diversified globally and well positioned
Architectural Coatings is diversified globally and well positioned Region Strength / Focus Brands • Services / Delivery U.S. • Digitalization and Canada • Optimized Pro offering & distribution • Strong local brands EMEA • Leading positions in many countries • Optimize footprint • Leading brand recog
Slide 31: Architectural Coatings
Architectural Coatings* PPG approximate sales mix (2021) 2021 net sales by geography Company Independent National Region Stores Dealers Retailers USCA 45% 15% 40% LA ~1% 90% 10% AP 10% 40% 50% EMEA 45% 30% 25% USCA EMEA LA AP Stores Worldwide 35% 35% 30% 34% 43% 18% 5% ~800 ~5,000** ~50 * Architectu
Slide 32: Traffic Solutions
Traffic Solutions Industry trends PPG competitive advantages and ESG highlights 1) Increasing road safety concerns R&D capabilities 2) Government initiatives supporting infrastructure Access to/understanding of autonomous vehicle value chain 3) Safety for non-vehicular road users, e.g. bicyclists U.
Slide 33: Protective and Marine Coatings
Protective and Marine Coatings Industry trends PPG competitive advantages and ESG highlights Comprehensive portfolio to address infrastructure segment 1) Significant infrastructure investments in many countries enhanced by VersaFlex acquisition 2) Investment shifting to renewable energy Leverage lon
Slide 34: Industrial Coatings segment
Industrial Coatings segment Automotive Industrial Packaging Specialty Coatings OEM Coatings Coatings & Materials Segment traits 2021 Net Sales by Geography • Technology-advantaged products • Mix of global and local customers • High quality product performance • Global customer footprint • Customers
Slide 35: Automotive OEM Coatings
Automotive OEM Coatings Industry trends PPG competitive advantages and ESG highlights 1) Transition to electric vehicles / mobility Largest breadth of coatings products for battery pack and cell 2) Sustainable solutions Low-temperature cure / lower water and energy utilization 3) Automated manufactu
Slide 36: Industrial Coatings
Industrial Coatings Industry trends PPG competitive advantages and ESG highlights 1) Large fragmented global industry Broad geographic coverage and strong service capabilities 2) Shift toward waterborne liquid and powder technologies Global leader in waterborne coatings; investing in powder 3) Growt
Slide 37: Packaging Coatings
Packaging Coatings Industry trends PPG competitive advantages and ESG highlights Consumer preference for metal packaging driven by Continued new product introduction for sustainably and advantaged 1) sustainability, portability, performance, and safety solutions Record demand translates to record cu
Slide 38: Specialty Coatings & Materials
Specialty Coatings & Materials Industry trends PPG competitive advantages and ESG highlights Increased fuel efficiency requirements and increased durability 1) Silica enables a fuel efficient and durable tire for EV’s 2) LCD to OLED shift in mobile, TV and Automotive Unmatched high purity / small-sc
Slide 39: Coatings cost comparison
Coatings cost comparison Raw material basket and manufacturing/distribution costs are different Average Average Architectural Coatings Industrial Coatings Distribution - Final Distribution - Final Packaging Distribution - Manufacturing Intermediate Additives Packaging Manufacturing Solvents and Pigm
Slide 40: Strong and growing Asia-Pacific presence (excl. Japan)
Strong and growing Asia-Pacific presence (excl. Japan) Industry coatings demand in Asia* PPG Asia Net Sales mix (2021) Korea ANZ Broad, full range coatings business portfolio 4% 6% SE Asia Performance 11% India 18% 61% China Industrial Sales from Acquisitions 2019 – 2021 ($MM) Many leading Asian mar
Slide 41: PPG operating cash flow trends
PPG operating cash flow trends Cash From Operations* $ Billions USD $2.1 $2.1 $1.8 $1.8 $1.2 $1.6 $1.6 Adjusted + $1.5 '14 '15 '16 '17 '18 '19 '20 '21 Robust cash generation over time; +2 billion per year capability * As originally reported, not adjusted for business divestitures 41 + Adjusted Cash
Slide 42: PPG financial hallmarks
PPG financial hallmarks Capital Spending as % of Sales Long-Term Debt Maturity Schedule (As originally reported, not adjusted for $ in millions business divestitures) 2000 13% EUR Notes Last 5 years 1500 USD Notes Average = ~2.4% 7% 1000 Term Loan 3% 4% 3% 2% 2% 3% 3% 3% 2% 500 0 1980 || 1990 || '05
Slide 43: Additional materials and appendix
Additional materials and appendix
Slide 44: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation $ in millions, except EPS Total PPG Full Year 2021 Net Income EPS(a) Net Income from Continuing Operations, As Reported $ 1,420 $ 5.93 Acquisition-related amortization expense 130 0.55 Acquisition-related costs, net(b) 69 0.29 Pension settlement charges 36 0.15 Environmen
Slide 45: Notes
Notes 45
Slide 46: ppc
ppc We protect and beautify the world”