PPG Industries, Inc. · NYSE:PPG
PPG Industries — Investor Day (June 2022)
73 slides from PPG Industries's investor day presentation, Jun 9, 2022
Slide 1: Welcome to PPG’s Investor Day
Welcome to PPG’s Investor Day Helsinki, Finland June 9, 2022
Slide 2: Presentation Agenda
Presentation Agenda 01 Introduction - John Bruno 02 Tikkurila - Tim Knavish, Meri Vainikka 03 ESG - Diane Kappas 04 Acquisition update - Tim Knavish 05 Q&A 2
Slide 3: Forward-looking statements
Forward-looking statements This presentation contains 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. Fo
Slide 4: PPG speakers and attendees
PPG speakers and attendees Tim Knavish Vince Morales Diane Kappas Meri Vainikka John Bruno Chief Senior Vice Vice President, Vice President, Vice President, Operating Officer President and Global Architectural Investor Relations Chief Sustainability Coatings EMEA Financial Officer North & East 4
Slide 5: PPG investor relations “Deep Dive” program
PPG investor relations “Deep Dive” program (#14) Year Topic(s) Location 2006 Transitions Tampa, Florida 2007 PPG Aerospace PPG aerospace facility Huntsville, AL 2008 SigmaKalon Acquisition Overview Florida 2010 PPG Asia and PPG Auto OEM Coatings BMW facility Greenville, SC 2011 PPG Automotive Refini
Slide 6: Tikkurila Agenda
Tikkurila Agenda Welcome and introduction to Tikkurila Sustainable premium brands Geographic and portfolio fit Synergies 6
Slide 7: PPG acquired a leading global paint and coatings company
PPG acquired a leading global paint and coatings company Tikkurila Revenue by Geography Tikkurila Attributes Sweden • Leading brands and regional producer Finland Poland • New geography for PPG Baltics China • Strong culture of sustainability Other • Complementary culture • Cross-selling opportuniti
Slide 8: Tikkurila and Comex acquisitions have similar attributes
Tikkurila and Comex acquisitions have similar attributes Company Attributes Market position Geographic expansion Complimentary technology Sustainability emphasis Distribution network Leading brands Color advantages Tikkurila is the “cold weather” Comex 8
Slide 9: 160 years of experience: older than PPG
160 years of experience: older than PPG 1862 1920 - 1950 1960 - 1990 2000 - 2020 1862 1920s 1960s 2010s An oil press founded Manufacturing of Entered the Tikkurila listed on by Anders Lorentz paints and lacquers Scandinavian market Nasdaq Helsinki in Munsternhjelm on the began in 1919. through Swede
Slide 10: Tikkurila in brief
Tikkurila in brief 3 premium brands Products available 160 in more than 40 Tikkurila now the largest PPG years of architectural brand in experience EMEA countries 4 5 1,800 2021 Revenue production key markets: dedicated facilities in ~480 Finland, Sweden, Poland, Baltics professionals 5 Million EUR
Slide 11: Tikkurila Architectural and Industrial Coatings
Tikkurila Architectural and Industrial Coatings Architectural Coatings Industrial Coatings ~85% of revenue ~15% of revenue DIY Professional Wood Metal Core decorative * Core Industrial brands * See slide #12 brands Leading brands trusted by consumers and professionals 11
Slide 12: Finland facts
Capital: Finland facts Helsinki Population: Land of forests Home of: 5.5 million and lakes: Santa Claus 74% • GDP: • Nokia of country is forested • Linux $271 billion with 187, 888 lakes • Moomins Paint business The world’s in Finland: highest Weather conditions Long coffee demand high quality produ
Slide 13: Tikkurila is the market leader in Finland
Tikkurila is the market leader in Finland Top customers: €160 million market with Sales mix: stable growth Channels: 60% Interior, 40% Exterior 90%+ 60% DIY 60% Residential, 40% Non-residential retailers 40% Pro #1 Strong #1 160 Awareness brand image and preference #1 years of history market since L
Slide 14: Sweden facts
Sweden facts Founded around 1350 Home of: Population: Finland under Capital: Abba 10.4 million Sweden from 1200 until 1809 • • IKEA Stockholm (Largest of the Union with Norway • Spotify Nordic countries) 1814–1905 • Volvo Paint business in By land area, Sweden is the Winter temperature Member of the
Slide 15: Tikkurila Sweden a market leader growing faster than competition
Tikkurila Sweden a market leader growing faster than competition €300 million Top customers: Channels: market, Tikkurila growth exceeding the market 50% Sales mix: 65% Pro Independent Paint Stores 70% Interior, 30% 35% DIY 30% Exterior 70% Residential, Home Centers 30% Non-residential Two strong #1
Slide 16: Poland facts
Poland facts Largest vodka Population: 8th producer in EU 40 million largest economy in EU Home to the Vodka in Polish GDP: pre-pandemic world’s is wódka, meaning little water GDP growth ~5% $594 billion biggest castle by land area Paint business in 5th Poland: Growing demand for largest population
Slide 17: Tikkurila and PPG Poland accelerate profitable growth
Tikkurila and PPG Poland accelerate profitable growth Top 5 customers: €800 million Channels: market, above market growth 50% Sales mix: 75% Interior, Paint Stores 50% DIY 40% 25% Exterior 65% Residential, Home Centers 50% Pro 35% Non-residential Combining Consistent forces growth #1 of two companie
Slide 18: Estonia, Latvia and Lithuania facts
Estonia, Latvia and Lithuania facts Three countries Latvia with unique language Estonia capital: Tallinn Population 1.9 million and culture Latvia capital: Riga Old city of Independent since Digital Transformation 1991 Lithuania capital: Vilnius by 2027 Tallinn Estonia Paint business in Lithuania Ba
Slide 19: Tikkurila and PPG Baltics accelerate profitable growth
Tikkurila and PPG Baltics accelerate profitable growth Top 5 customers: Sales mix: Channels: 60% Pro €80 million 40% DIY market, 90%+ 60% Interior Faster growth than the market retailers 40% Exterior #1 #1 Awareness Successful 30 premiumization and market years of history #1 customer acquisition sin
Slide 20: Tikkurila Industrial Coatings is a leader in select segments
Tikkurila Industrial Coatings is a leader in select segments Tikkurila Industrial Coatings business Revenue ~15% of Tikkurila • Metal: Infrastructure, OEM Primary Segments • Wood Interior and exterior: moldings, panels, doors, boards, cladding, windows Wooden school building in Sweden • 70% waterbor
Slide 21: Tikkurila Agenda
Tikkurila Agenda Welcome and introduction to Tikkurila Sustainable premium brands Geographic and portfolio fit Synergies 21
Slide 22: Tikkurila’s long history and commitment to sustainability
Sustainability Strong Brands Premiumization Tikkurila’s long history and commitment to sustainability DE-FOSSILIZATION DE-TOXIFICATION = ENVIRONMENTAL IMPACT & = HEALTH IMPACT RAW MATERIAL DESIGN RECYCLING MANU- FACTURING POINT OF SALE TRANS- PORTATION Tikkurila focuses on our environment and health
Slide 23: Sustainability as a key driver of premiumization
Sustainability Strong Brands Premiumization Sustainability as a key driver of premiumization The share of waterborne paints as % of Tikkurila’s net sales from AC paints The share of 89.5% ecolabeled products 48% (2021) 84% 83% 83% 82% 78% The share of waterborne paints 89.5% (2021) Over 350 third pa
Slide 24: Tikkurila R&D delivers sustainable products
Sustainability Strong Brands Premiumization Tikkurila R&D delivers sustainable products Bio-Based Wood and Terrace Oils Bio-Based Interior Wall Paint • Alkyd emulsion made of • Partly bio-based full- tall oil; a “waste” product matte interior paint from Nordic paper with less fossil industry content
Slide 25: Tikkurila brands strengthen PPG’s architectural portfolio
Sustainability Strong Brands Premiumization Tikkurila brands strengthen PPG’s architectural portfolio 3 premium strategic brands Tikkurila has: * • 3 premium brands • 8 prominent local brands *See slide #12 • More than 1,500 products Local brands • Core brands in architectural coatings: Alcro, Tikku
Slide 26: Tikkurila’s three premium strategic brands
Sustainability Strong Brands Premiumization Tikkurila’s three premium strategic brands * Inspiring. Easy. Reliable. By Painting a bigger picture. Surface upgrades made easier For those who see the difference *See slide #12 Each premium brand has clear, competitive and distinct positioning 26
Slide 27: Tikkurila Agenda
Tikkurila Agenda Welcome and introduction to Tikkurila Sustainable premium brands Geographic and portfolio fit Synergies 27
Slide 28: PPG architectural EMEA and China footprint
Geography Channels Technology Cross-selling Culture PPG architectural EMEA and China footprint + China Tikkurila expands PPG’s Architectural EMEA and China footprint 28
Slide 29: PPG and Tikkurila are stronger together in the combined distribution channels
Geography Channels Technology Cross-selling Culture PPG and Tikkurila are stronger together in the combined distribution channels In Poland, the distribution Tikkurila has in its core is complementary. Tikkurila is markets strong consumer The combined company well positioned demand whereas PPG is no
Slide 30: Tikkurila’s strong technical capabilities drive growth
Geography Channels Technology Cross-selling Culture Tikkurila’s strong technical capabilities drive growth Waterborne Chemistry Wood Leadership Microbiology Sustainable Products Color Expertise R&D Capabilities Strategic focus on sustainability enables growth and premium margin 30
Slide 31: Cross-selling opportunities enabling global growth
Geography Channels Technology Cross-selling Culture Cross-selling opportunities enabling global growth Examples of Tikkurila Possibilities to strengthen products launched in industrial position other markets in the Nordic region PPG Rostex Super Akva Tikkurila waterborne Strong anticorrosive primer
Slide 32: Building a One PPG team with highly complementary cultures
Geography Channels Technology Cross-selling Culture Building a One PPG team with highly complementary cultures • Complementary organizational cultures • Teams embracing change • Excellent employee engagement • Tikkurila and PPG Way highly aligned • Organization structure aligned as One PPG Highly en
Slide 33: Tikkurila Agenda
Tikkurila Agenda Welcome and introduction to Tikkurila Sustainable premium brands Geographic and portfolio fit Synergies 33
Slide 34: PPG will accelerate Tikkurila margin expansion
PPG will accelerate Tikkurila margin expansion PPG Architectural EBITDA growth Tikkurila EBITDA since SigmaKalon acquisition growth projection 2008 2012 2016 2020E 2020E 2022 2024 2026 2028 2030 EBITDA margin expanded by ~1,000 bps Projecting strong EBITDA margin expansion 34
Slide 35: Tikkurila synergy capture
Tikkurila synergy capture Sources of Synergy Capture Cost Synergies Manufacturing and Distribution 5% ~€45MM Raw Materials ~€30MM 45% ~€10MM Overhead 50% 2021 2022 Full Achievement • Revenue upside ~€20MM to €30MM (EBIT) • Working capital upside ~€20MM (Cash) Reaffirming original level of Tikkurila
Slide 36: Tikkurila acquisition will drive profitable growth and sustainability expansion
Tikkurila acquisition will drive profitable growth and sustainability ✓ Premium brands ✓ Sustainability ✓ Tikkurila is an and leading focus excellent technologies will complements strategic fit drive margin PPG’s ESG expansion strategy ✓ Excellent ✓ Cross-selling ✓ Significant cost platform opportun
Slide 37: PPG ESG Update
PPG ESG Update Diane M. Kappas VP, Global Sustainability
Slide 38: Today’s agenda
Today’s agenda PPG Purpose and ESG Vision Social: DEI report and Colorful Communities Governance: Board alignment and recent progress Environmental: • Sustainability report highlights • Innovating sustainable solutions for our customers • Path forward 38
Slide 39: PPG is committed to being a leader in ESG
PPG is committed to being a leader in ESG Our ESG vision Awards and recognition To fulfill our purpose to Protect and Beautify the World, we are committed to delivering lasting value for all stakeholders. As One PPG, we operate "Significant Positive Impact" with integrity, work safely, on ISS SDG Im
Slide 40: Recently launched inaugural DE&I report and goals
Recently launched inaugural DE&I report and goals Goal: Goal: Goal: Approximately: Increase headcount of Black, Latinx and Asian 46% Achieve 34% to employees by 45% to Achieve total 36% representation 55% across non- global employee of non-frontline, frontline, U.S.- resource network global female b
Slide 41: Invest in our communities
We continue to Invest in our communities 386 38,000+ Gallons of PPG paint $8.8MM+ Community products (143,000 liters) in PPG funding projects in total 18,000+ 120,000+ 7.4MM+ Volunteer hours People in 42 countries Employee and community impacted volunteers Our community activities engage PPG employe
Slide 42: Governance: Framework for board oversight of ESG
Governance: Framework for Environmental Social Governance board oversight of ESG Sustainability and Nominating and Innovation Committee PPG Board Governance Committee of Directors Employee health and safety Corporate governance oversight Environmental programs Recommending new directors and executiv
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Slide 44: PPG 2025 sustainability goals and 2021 progress
PPG 2025 sustainability goals and 2021 progress 15% 25% 15 % 25 % reduction in green-house reduction in reduction in energy of total electrical energy gas emissions intensity waste intensity consumption intensity usage from renewable energy sources 2021 Progress: 9.7% 37.5% 0.5% 24.0% Sales from pro
Slide 45: PPG committed to reducing greenhouse gas emissions across the value chain
PPG committed to reducing greenhouse gas emissions across the value chain Scopes 1 and 2 Emission Reduction Roadmap Energy Renewable Asset efficiency energy sourcing electrification • New energy management • Direct Investment • Conversion of technologies system standard • Power Purchase Agreements t
Slide 46: PPG energy projects continuing to reduce carbon emissions
PPG energy projects continuing to reduce carbon emissions PPG Oak Creek, Wisconsin plant PPG Carrollton, Texas plant PPG Quattordio, Italy plant • Agreement with WE Energies • 10-year agreement with • Invested in tri-generation for solar energy supply Constellation Energy to use power plant (combine
Slide 47: TCFD framework being integrated into business strategy
TCFD framework being integrated into business strategy • TCFD assessment outcomes reported in 2021 ESG Governance report • Incorporating into business strategy planning process • Climate-related risks evaluated at 261 PPG sites Strategy globally • Resiliency plans being developed for most strategic
Slide 48: European Green Deal
European Green Deal Closely following legislative Evaluating gaps against Seeking opportunities to initiatives, including the our current sustainability participate in the development Chemical Strategy initiatives and focus of laws, regulations and policies for Sustainability to support the deal’s o
Slide 49: PPG sustainable innovation highlights
PPG sustainable innovation highlights 1960-90s 2000s 2010s 2020s 1963 2000 2014 2020 Developed electrocoat ENVIROPRIME® BPA-NI needs Introduced Passive (E-coat) technology, the global lead-free met with INNOVEL Fire Protection coatings gold standard in auto electrocoat launched. HPS® coatings for fo
Slide 50: PPG Copper Armor antimicrobial coating, powered by Corning Guardiant
PPG Copper Armor antimicrobial coating, powered by Corning Guardiant Corning® Guardiant® • Made with naturally-occurring copper, known to have antimicrobial efficacy PPG Copper Armor • Kills bacteria and viruses on the painted surface in two hours • Provides protection on the surface for up to five
Slide 51: Promoting circularity through recycled materials
Promoting circularity through recycled materials COMEX® TOP by PPG paint improves building energy efficiency • Provides thermal insulation and waterproofing performance • Helps to drive building energy efficiency which reduces greenhouse gas emissions and generates cost savings • Recycled tires are
Slide 52: Cool coatings: functionality via pigment-light interactions
Cool coatings: functionality via pigment-light interactions Utilized special pigments to reflect light, instead of converting to heat • The assets remain cooler, reducing air conditioning needs • Enables darker colors without absorbing as much heat Airplane fuselage Total solar reflectance for darke
Slide 53: PPG Innovel PRO non-BPA internal can coating
PPG Innovel® PRO non-BPA internal can coating Industry-leading non-bisphenol coating for beverage cans Achieved Provides low Reliable in Gold Material migration relative varying plant health to epoxy spray conditions certification and mimic around solutions the world Since 2015, coated 150 billion+
Slide 54: Enabling a sustainable automotive paint shop
Enabling a sustainable automotive paint shop Lower cure temperature Wet-on-wet processes Reduce overspray • Lower energy consumption • Cure multiple layers • Reduces waste • Greater process flexibility simultaneously • Enables precision • Enables heavier car frames • Remove ovens applications for el
Slide 55: Refinish waterborne basecoat: Envirobase
Refinish waterborne basecoat: Envirobase™ First commercially successful waterborne refinish product Sustainable advantages Color Eliminates waste 1 matches the first time Reduces Low volatile chemical organic contact compound PPG provides solutions for the entire refinish paint process; 1,000th unit
Slide 56: PPG is an industry leader in ESG, creating value for customers and stakeholders
PPG is an industry leader in ESG, creating value for customers and stakeholders PPG will: • Publish new 2030 ESG goals later in 2022 • Define decarbonization strategy resulting from commitment to Science Based Target initiative • Create shareholder value via product innovations with sustainable adva
Slide 57: Recent PPG Acquisitions
rid* We protect and beautify the wo Recent PPG Acquisitions
Slide 58: Ennis-Flint acquisition – Traffic Solutions
Ennis-Flint acquisition – Traffic Solutions Summary Demographics / Growth A leading global manufacturer of • 22 manufacturing facilities pavement marking products: • 1,100 employees • Paint and thermoplastics • Growth: • Preformed functional and decorative shapes • Aiding improved safety and linked
Slide 59: Leveraging our strengths
Leveraging our strengths PPG strengthens Ennis-Flint Ennis-Flint strengthens PPG Leader in R&D and Leader in road safety technical service markings Vast global footprint Thermoplastic manufacturing; resin capacity and capability Ability to drive growth in adjacent markets Customer relationships Acce
Slide 60: Industry background
Industry background Marking materials comprise 1% of total US road spending 1 lane mile of road = ~$6,800 / year maintenance $200 of maintenance is striping $100 of striping is paint 60 Data from American Road Transportation Builders Association and PPG estimates
Slide 61: Stable demand through economic cycles
Stable demand through economic cycles Traffic pavement markings Decorative pavement markings Airport / Military markings Primary markets Provide traffic control and convey Durable and aesthetically Highly visible, long-lasting markings read regulations/warnings to all road users pleasing, decorative
Slide 62: Traffic Solutions customers
Traffic Solutions customers Transportation Pavement marking Commercial Engineers / Architects agencies applicators • Governments • Contractors • Shopping centers • Engineers • City planners • Subcontractors • Restaurants • Architects • Traffic engineers • Office parks • Airport authorities • Industr
Slide 63: Proposed standards change 4” to 6” markings
Proposed standards change 4” to 6” markings Proposed updates to manual: Benefits of 6” wide lines: • Using 6" wide markings on interstates, • Provides more visibility freeways, and expressways • Increases detection rates of • Using 6" wide edge lines on camera technology, facilitating conventional t
Slide 64: Various growth opportunities
Various growth opportunities 1. US backlogs from COVID disruptions 4. Advanced driver assistance systems (ADAS) 2. Infrastructure investment: US / Global 5. Global expansion / leveraging PPG footprint 3. Safety improvements through wider markings 6. Future acquisitions Resilient business with multi-
Slide 65: VersaFlex - bolt-on acquisition in growth technology
VersaFlex - bolt-on acquisition in growth technology Strategic Rationale: Well-respected • Complementary to current industry brands portfolio in U.S. • Enhances presence in polyurea, epoxy and polyurethane Water • Increases presence in water / Infrastructure wastewater, flooring, and infrastructure
Slide 66: Automotive parts acquisitions
Automotive parts acquisitions Strategic rationale: • Leading position in aluminum wheels coatings • Leading waterborne technology for plastic parts • PPG product portfolio extension • Expansion in higher growth China / emerging regions • Leading position at global OEMs • Unique painted film technolo
Slide 67: PPG growing in powder with recent acquisitions
PPG growing in powder with recent acquisitions Opportunity Powder represents 35% of total industry = $10B* Powder forecasted to grow faster than liquid Forecasted Technology Growth Rates PPG powder sales = CAGR: ‘21-’25 5% of industry** 5% 4% PPG Other 2% PPG focused on doubling our Powder sales by
Slide 68: Powder acquisition strategy
Powder acquisition strategy Strategic focus: • Expand in under-represented geographies and segments • Enhance product offering in low-cure and metallic capabilities • Build operating capabilities in bonding, small batch and acrylic products Recent powder acquisitions Revenue ~$10MM ~$250MM ~$15MM En
Slide 69: Synergy earnings targets – recent acquisitions
Synergy earnings targets – recent acquisitions Cumulative synergies by year Acquisitions 160 10% 140 9% 8% 120 7% 100 6% 80 5% 60 4% 3% 40 2% 20 1% - 0% 2021 2022 Run Rate Original Target $MM Revised Target Range ($) Original Synergies % of Sales Revised Synergies % of Sales 69 Revised targets reaff
Slide 70: Today’s conclusions
Today’s conclusions PPG overall: • Tikkurila acquisition has many • Strong and continually similar attributes to Comex improving ESG program • Strong brands – Tikkurila & Alcro • Acquired two top 25 global coatings • Leading country positions – companies; with key leadership Sweden, Finland, Poland,
Slide 71: Introduction to Autoklinikka
Introduction to Autoklinikka 71
Slide 72: Introduction to Kesko (K-Rauta Home Center)
Introduction to Kesko (K-Rauta Home Center) 1,800 stores in 7 countries + online stores and digital services Three business divisions - Grocery trade 55%, Building technology trade 35%, Car trade 10% Ranked as most sustainable grocery trading company in the world for seven consecutive years 80+ year
Slide 73: PPc
PPc We protect and beautify the world”