PPG Industries, Inc. · NYSE:PPG
PPG Industries — Investor Presentation (August 2024)
40 slides from PPG Industries's investor presentation, August 2024
Slide 1: PPG Investor Overview
PPG Investor Overview August 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. This presentation contains forward-looking statements that reflect the Company’s current views with respect to future events and
Slide 3: Content Overview
Content Overview PPG Overview and Competitive Advantages Innovation, ESG and Growth Opportunities PPG Segment and Business Unit Highlights Appendix 3
Slide 4: PPG: Industry Leading Global Coatings Company
PPG: Industry Leading Global Coatings Company 1883 Globally Diverse Portfolio Founded 2023 Net Sales Performance Coatings 70+ 12% Countries Architectural LA Aerospace ~60% 53,000 16% Automotive AP Employees Refinish Industrial Coatings 41% Protective Industrial US & & Marine $18.2B Automotive Canada
Slide 5: PPG: A Compelling Long-Term Investment
PPG: A Scaling leading positions in attractive markets Compelling Innovating to enable customer productivity and sustainability Long-Term Accelerating margin expansion Accelerated Investment Value Creation Driving operational improvement off a low-cost structure Purposeful Profitable Growth Continui
Slide 6: Framework to Deliver Purposeful Profitable Growth
Framework to Deliver Purposeful Profitable Growth To be the first-choice partner to meet customers’ evolving needs Vision for innovative paints, coatings and surface solutions Portfolio Poised Industry-Leading Operations as Disciplined for Growth Innovation Core Advantage Capital Allocation Focusing
Slide 7: PPG Well Situated for Volume Recovery
PPG Well Situated for Volume Recovery Market Segments Regions PPG #1 #2 #3+ Position Aero Auto US Traffic Auto General Architectural Packaging Protective & U.S. & EMEA LA AP OEM Solutions Refinish Industrial Marine Canada Size ($B) $5B $16B $1B $6B $41B $93B $4B $22B $38B $50B $14B $86B Aircraft Car
Slide 8: PPG is Positioned Well in Global End-use Markets
PPG is Positioned Well in Global End-use Markets Position by Coatings Vertical Global Protective Traffic Architectural Industrial Auto OEM Auto Refinish Packaging Aerospace Position & Marine Solutions PPG #2 #2 #2 #3+ #1 #2 #2 #1 #1 Sherwin- #1 Williams AkzoNobel #3 Nippon #4 RPM #5 Axalta #6 BASF #
Slide 9: PPG Positioned to Grow in Attractive Coatings Segments
PPG Positioned to Grow in Attractive Coatings Segments Global Air Traffic Forecast Global Protective and Marine Volume +HSD% +MSD% CAGR CAGR 2023-2026E 2023-2026E 2019 2020 2021 2022 2023 2024E 2025E 2026E 2019 2020 2021 2022 2023 2024E 2025E 2026E 9 Source: PPG estimates; Jefferies Airtraffic Forec
Slide 10: Strong and Growing Presence in Emerging Regions
Strong and Growing Presence in Emerging Regions Latin America Asia Pacific Leveraging expanding distribution network to grow refinish, Leading positions in China protective and marine, industrial and traffic businesses Presence in India through joint ventures with Asian Paints #1 ~1600 Mexican Paint
Slide 11: PPG Expects to Drive Further Margin Expansion
PPG Expects to Drive Further Margin Expansion Opportunity to expand segment margins above prior peak levels Drivers 1 Price / cost normalization Business portfolio poised for volume growth, 2 including higher margin businesses Operational improvement of $150-200MM 3 (2024-2026) 4 Restructuring savin
Slide 12: 2023 Record Operating Cash Flow
2023 Record Operating Cash Flow 2023 Activity Operating cash flow ($ in millions) 3,000 $2.4B $1.6B Operating Cash Flow Cash Balance 2,500 December 31, 2023 2.5x YOY 2,000 1,500 1,000 $4.5B 500 Net Debt December 31, 2023 0 Reduced net debt ~$1.2B YOY 2019 2020 2021 2022 2023 Reduced net interest exp
Slide 13: Balanced Cash Deployment
Balanced Cash Deployment Legacy of consistent, accretive and prudent cash deployment $85MM 19% Capital Spending 26% Acquisitions $550MM ~$23B Approximate Dividends 2023 Past 10 Years Share (2014 – 2023) $600MM Cash Uses Repurchases 20% 35% $110MM Return to Grow the Shareholders Business ~46% ~54% 13
Slide 14: Growing the Business
Growing the Business Investment in Acquisitions Capital Spending as Percentage of Net Sales ($ in millions) Notable Acquisitions Last 5 years Average = 2.6% $2,500 $2,000 3.0% 2.9% 3.0% 2.8% 2.7% $1,500 2.2% 2.2% $1,000 $500 $0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Avg. Avg. 2019 2020 20
Slide 15: Returning Cash to Shareholders
Returning Cash to Shareholders Long Heritage of Dividend Growth PPG Annual Dividend $3.00 $2.50 $2.00 52 Years $1.50 of Consecutive Annual Dividend $1.00 Increases $0.50 $0.00 1983 1988 1993 1998 2003 2008 2013 2018 2023 PPG Share Repurchases 124 Years of Uninterrupted Dividends $ in millions $1,800
Slide 16: PPG Debt Maturity Profile – December 2023
PPG Debt Maturity Profile – December 2023 $ in millions $2,000 2.7% $1,750 Weighted Average Cost of Debt $1,500 Dec 31, 2023 $1,250 $1,000 552 $2.3B Available Revolver $750 861 Capacity Through 2028, Currently Undrawn $500 994 800 700 662 $250 $0 300 300 300 55 176 250 132 1.5x 2024 2025 2026 2027 2
Slide 17: PPG Innovation Levers Link to Sustainable Advantages
PPG Innovation Levers Link to Sustainable Advantages We are driving innovation across all aspects of coatings technology Energy Reduction Circularity Waste Reduction Toxicity Reduction Safety Seigneurie Evolutex SIGMAGLIDE® 2390 Low carbon product Envirocron® Innovel Pro® PPG Comex biocide-free foul
Slide 18: Mobility: BEV Growth at ~30% CAGR
Mobility: Traditional External and Internal Coatings BEV Growth at ~$120/Vehicle ~30% CAGR P R E S E N T Provides Additional 2023 BEV Electric Vehicle Coatings TAM Battery Pack Opportunities ~$2B ~$70/Vehicle 2023-26 F U T U R E Other Electrification CAGR: ~30% Components ~$80-170/Vehicle 18 Note: A
Slide 19: In 2023, PPG Continued Making Sustainability Progress
In 2023, PPG Continued Making Sustainability Progress 12% 13% Reduction in Reduction in Water Intensity at Priority Sites Scope 3 in Water Scarce GHG Emissions Communities 10% 44% Reduction in Sales from Sustainably Scope 1 and 2 Advantaged Products GHG Emissions 97% 45% Key Suppliers Assessed to Pr
Slide 20: PPG's Ambitious 2030 Sustainability Targets
PPG’s Ambitious 2030 Sustainability Targets Validated SBTs 50% 30% 15% 25% 100% reduction in Scope 1 reduction in Scope 3 reduction in water of process waste to reuse, and 2 GHG emissions GHG emissions intensity at priority sites reduction in waste intensity recycle or recovery 50% $5MM 100% 100% 5%
Slide 21: Governance: Framework for Board Oversight of ESG
Governance: Framework for Board Oversight of ESG Environmental Social Governance 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
Slide 22: Clear Roadmap to Drive Strong Results and Create Shareholder Value
Clear Roadmap to Drive Strong Results and Create Shareholder Value Deliver 8% to 12% Annual Adjusted EPS Growth through 2026 Portfolio Poised Industry-Leading Operations as Disciplined for Growth Innovation Core Advantage Capital Allocation Operating Cash Flow ~3% of Net Sales R&D Conversion of >80%
Slide 23: Performance Coatings Segment
Performance Coatings Segment Automotive Aerospace Protective and Architectural Traffic Solutions Refinish Coatings Coatings Marine Coatings Coatings* Segment Traits 2023 Net Sales by Geography • Stable industries • Distribution focus • After-market and maintenance component • Consistent cash generat
Slide 24: Automotive Refinish Coatings
Automotive Refinish Coatings Industry Est. Size1 2023 Global Liquid Collision Coatings ~$6B Industry Trends PPG Competitive Advantages PPG’s Platinum program, digital and service offerings such Body-shop efficiency as MoonWalkTM and LINQTM Growing car parcs in emerging regions Leading products and p
Slide 25: Aerospace Coatings
Aerospace Coatings Industry Est. Size1 2023 PPG Sales Mix 2023 Global OEM Military Transparencies 30% 50% 50% Coatings ~$5B 70% Sealants Aftermarket Commercial Engineered materials Industry Trends PPG Competitive Advantages Recovery continues – international travel still trailing 2019 Advantaged tec
Slide 26: Architectural Coatings
Architectural Coatings* Industry Est. Size1 2023 Global Coatings ~$93B Industry Trends PPG Competitive Advantages Increasing adoption of digital tools / e-commerce Excellent digital solutions and customer service Leading water-based product portfolio and low carbon Strong focus on sustainability pro
Slide 27: Architectural Coatings is Diversified with Global Positions
Architectural Coatings is Diversified with Global Positions PPG’s local brands provide opportunities for growth 2023 Architectural Strength / Focus Net Sales • Strong local brands 40% • Leading positions in many countries • Best-in-class sustainability offerings EMEA • Strong PRO offering & distribu
Slide 28: Protective & Marine Coatings
Protective & Marine Coatings Industry Est. Size1 2023 PPG Sales Mix 2023 Global Coatings Marine Coatings ~$22B Protective Coatings Industry Trends PPG Competitive Advantages Significant infrastructure investments in many countries Global footprint with a comprehensive portfolio Investment in renewab
Slide 29: Traffic Solutions
Traffic Solutions Industry Est. Size1 2023 Americas Coatings Traffic Paint Thermoplastic Markers ~$1B Preformed Thermoplastic Industry Trends PPG Competitive Advantages Safety for automobiles and non-vehicular road users, such as bicyclists Expertise in R&D and technical service support Leading posi
Slide 30: Industrial Coatings Segment
Industrial Coatings Segment Automotive Industrial Packaging Specialty Coatings OEM Coatings Coatings Coatings & Materials Segment Traits 2023 Net Sales by Geography • Technology advantaged products • High quality product performance • Mix of global and local customers • Customers seeking sustainable
Slide 31: Automotive OEM Coatings
Automotive OEM Coatings Industry Est. Size1 2023 Global Coatings ~$16B Industry Trends PPG Competitive Advantages Broad portfolio for battery pack coatings to improve safety, Transition to electric vehicles / mobility durability, and thermal management Automation and sustainability AI and machine le
Slide 32: Industrial Coatings
Industrial Coatings Industry Est. Size1 2023 Global Coatings ~$41B Industry Trends PPG Competitive Advantages Improved coating performance Strong global R&D organization Shift toward sustainable coatings Global leader in waterborne coatings; investing in powder Focus on new products and applications
Slide 33: Packaging Coatings
Packaging Coatings Industry Est. Size1 2023 Global Coatings ~$4B Industry Trends PPG Competitive Advantages Strong R&D organization; PPG products that exceed Regional regulation of coatings’ composition international food contact regulation requirements Sustainability focus on resources used in prod
Slide 34: Specialty Coatings & Materials
Specialty Coatings & Materials Industry Trends PPG Competitive Advantages Increased automotive fuel efficiency and durability Silica products support more fuel efficient and durable tires LCD to OLED shift in mobile, TV and automotive High purity / small-scale manufacturing of OLED materials Increas
Slide 35: Appendix
Appendix
Slide 36: 2023 Net Sales Bridge and Currency Exposure
2023 Net Sales 2023 Net Sales Bridge and 12% Currency Exposure LA 16% 41% AP US & Canada Net Sales 31% 5% $18.2B EMEA 0% 0% $17.7B -2% PPG Currency Exposure % of 2023 Net Sales U.S. Dollar ~40% Euro ~20% Chinese Yuan ~10% 2022 Price Volume Currency Acquistions 2023 Mexican Peso ~10% and Canadian Dol
Slide 37: PPG SG&A % of Net Sales Below Peer Average
PPG SG&A % of Net Sales Below Peer Average Cost savings and focused initiatives will support improved operating leverage as volumes recover SG&A % of Net Sales 35% Key initiatives • Execute restructuring plans 30% • Achieve acquisition synergies • Reduce global cost structure with focus on 25% reduc
Slide 38: Raw Material Coatings Cost Comparison
Raw Material Coatings Cost Comparison Spend averages about 65% of cost of goods sold Average Average Performance Coatings Industrial Coatings Packaging Packaging Packaging Packaging Additives Additives Additives Additives Solvents and Pigments Sovents and Pigments Sovents Solventsand andPigments Pig
Slide 39: Adjusted EBITDA - 2023
Reconciliation: Adjusted EBITDA - 2023 $ in millions Total PPG Full Year 2023 Income before income taxes, as reported $ 1,748 Acquisition-related amortization expense 161 Business restructuring-related costs, net(a) 43 Impairment and other related charges(b) 160 Portfolio optimization costs(c) 53 En
Slide 40: We protect and beautify the world
We protect and beautify the world®