Ppg Industries, Inc. · NYSE:PPG
Ppg Industries — Investor Day (May 2023)
71 slides from Ppg Industries's investor day presentation, May 24, 2023
Slide 1: PPG CEO Investor Briefing
PPG CEO Investor Briefing Purposeful Profitable Growth May 24, 2023 1
Slide 2: 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 3: Join us in Welcoming…
Join us in Welcoming… Tim Knavish Vince Morales Chancey Hagerty President and Chief Senior Vice President and Senior Vice President, Executive Officer Chief Financial Officer Automotive Refinish Coatings
Slide 4: Agenda
Agenda 8:30 AM Welcome John Bruno 8:40 AM Purposeful Profitable Growth Tim Knavish 9:40 AM Unlocking Earnings Potential Vince Morales 10:10 AM Summary and Conclusion Tim Knavish 10:25 AM Break 10:40 AM Auto Refinish Technology Demonstration Chancey Hagerty 11:00 AM Q&A Tim Knavish and Vince Morales
Slide 5: PPG: Industry Leading Global Coatings Company
PPG: Industry Leading Global Coatings Company 1883 Globally Diverse Portfolio Founded 2022 Net Sales Performance Coatings 70+ 11% Countries Architectural LA Aerospace ~60% 52,000 16% Refinish / AP Employees Collision Industrial Coatings General 42% Protective Industrial US & & Marine $17.7B Automoti
Slide 6: Attractive Coatings Industry
Attractive Coatings Industry Large Industry; Consolidation Opportunities Diverse End-Use Applications Traffic Solutions Packaging TAM ~$185B Specialty Coatings & Materials Aerospace Refinish Architectural Auto OEM Others Protective 54% & Marine Industrial Strong Fundamentals and Attractive Growth Op
Slide 7: PPG: A Compelling Long-Term Investment
PPG: A Scaling Leading Positions in Attractive Markets Compelling Innovating to Enable Customer Productivity and Sustainability Long-Term Accelerated Accelerating Margin Expansion Driving Operational Improvement off a Low-Cost Structure Investment Value Creation Continuing Balanced and Accretive Cap
Slide 8: Purposeful Profitable Growth
Purposeful Profitable Growth Tim Knavish President and Chief Executive Officer
Slide 9: PPG Purpose
PPG Purpose We protect and beautify the world® 9
Slide 10: Past & Future – Poised for Organic Growth
Past & Future – Poised for Organic Growth 2023 & Beyond Achieve Full 2015-2022 Potential Strengthen 2005-2015 Positions Streamline Purposeful Portfolio Profitable Growth Build Scale Conglomerate to Pure Play 10
Slide 11: Leverage our Strengths, Re-focus for Growth
Leverage our Strengths, Re-focus for Growth What Will be Preserved at PPG..... Our Purpose and Values Delivering Customer Value What Will be Different at PPG..... Leading Positions and Innovation Elevated Customer Partnerships Purposeful Strong Operational and Cost Focus Profitable More Intentional
Slide 12: Well Positioned to Deliver Consistent Organic Growth
Well Positioned to Deliver Consistent Organic Growth Assumptions Growth Catalysts Current Global Macroeconomic and Core Market Recovery (short / medium-term) Geopolitical Environment Remains Scale Leading Positions 2% to 4% Global Energy Pricing Stability Elevating Customer Partnerships Stable Curre
Slide 13: Unlocking Drivers of Consistent Organic Growth
Unlocking Drivers of Consistent Organic Growth Strategic Framework to Deliver Core Market Purposeful Recovery + Profitable Short / Medium-term Growth c Portfolio Poised for Growth Industry-Leading Innovation Operations as Core Advantage Disciplined Capital Allocation 13
Slide 14: PPG Well Positioned for Recovery to Deliver Above-Market Growth
PPG Well Positioned for Recovery to Deliver Above-Market Growth Segments Regions PPG #1 #2 #3+ Position Aero Auto US Traffic Refinish General Decorative Packaging Protective US & EMEA LA AP OEM Solutions Collision Industrial & Marine Canada Size ($B) $4B $15B $1B $6B $41B $92B $4B $21B $38B $49B $13
Slide 15: Returning to Above Global Growth (China)
China Returning to Above Global Growth PPG China at-a-glance Leading Industrial Coatings Supplier in China Industry Growth Momentum After Pandemic Lockdown % of PPG CAGR China Coatings Industry Volumes China Non-Decorative 95% MSD Decorative 5% LSD MSD 1% CAGR “Local for Local” 15 95% Manufacturing
Slide 16: Earnings Growth Compounder for PPG (Europe)
Europe Earnings Growth Compounder PPG Europe at-a-glance for PPG Leading Positions #1 or #2 Demand Impacted by Geopolitical Events Auto OEM, Architectural Aerospace, Refinish in 15 Countries European Coatings Industry Volumes -11% PPG Delivering EBIT Growth LSD Despite Environment CAGR ~60% 2012 201
Slide 17: PPG is a Critical Supplier with Leading Technologies
Aerospace Industry PPG is a Critical Supplier with PPG Aerospace at-a-glance Leading Technologies Leading Position Within All Segments Military Commercial Aftermarket Backlog and Resumption of Travel is a Catalyst for Growth Aviation Aviation Global Commercial Aircraft Builds Global Commercial Airli
Slide 18: PPG Well Positioned for Multi-Year Growth
Automotive OEM Industry PPG Well Positioned for PPG Automotive OEM at-a-glance Multi-Year Growth Leading with Innovation Focused on Sustainability and Productivity Aging Fleet and 40MM Unit Build Deficit is Catalyst for Growth Lowering Emissions Global Light Vehicle Automotive Builds B1:B2 Compact P
Slide 19: PPG's Advantaged Technologies
Refinish Industry PPG’s Advantaged Technologies PPG Refinish at-a-glance Support Growth Advantaged Position in Liquid Collision Coatings Car Parc and Miles Driven Returning to Historical Levels Strong Base Refinish Coatings Global Demand 80,000+ PPG body shops -6% LSD CAGR $6B Large Opportunity 450,
Slide 20: Unlocking Drivers of Consistent Organic Growth
Unlocking Drivers of Consistent Organic Growth Strategic Framework to Deliver Core Market Purposeful Recovery c + Profitable Short / Medium-term Growth Portfolio Poised for Growth Industry-Leading Innovation Operations as Core Advantage Disciplined Capital Allocation 20
Slide 21: 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 22: Strategic Framework Deployment
Strategic Framework Deployment Portfolio Industry- Poised for Leading Growth Innovation Operations as Disciplined Core Advantage Capital Allocation 22
Slide 23: Intentional Focus on Advantaged Growth Areas
Intentional Focus on Within these areas Advantaged Growth Areas we will….. Disciplined Criteria to Drive Focused Resource Investment Ability to Capture Value for the Innovation We Bring 1 Scale Leading Positions Growing and/or Stable Macro Economic Dynamics Above Market Growth 2 Elevating Customer P
Slide 24: Long-Term Value Creation
Unlocking Full Potential of Portfolio Long-Term Value Creation High Execute Accelerate Moderate Optimize Enhance Moderate High Growth 24
Slide 25: Focusing Innovation on Productivity and Sustainability
Focusing Innovation on Enabling customers to realize sustainability goals and meet regulatory requirements Productivity and Sustainability Providing innovation and digital solutions that enhance customer productivity Supporting organic sales and earnings growth Delivering gross margin premium Buildi
Slide 26: Delivering Productivity and Sustainability to Customers
Delivering Productivity and Sustainability to Customers PPG ENVIRO PRIME® SEIGNEURIE EVOLUTEX® PPG INNOVEL® PRO EPIC 200 and 300 biobased wall paints Electrocoat expanded bake Non-bisphenol Differentiated low carbon window product line ~10% reduction in carbon In use on over 70 billion cans. Provide
Slide 27: PPG Announces New, More Ambitious 2030 Sustainability Targets
PPG Announces New, More 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%
Slide 28: Strategic Framework Deployment
Strategic Framework Deployment 1 Scale Leading Positions 2 Elevating Customer Partnerships Portfolio Industry- Poised for Leading 3 Capitalize on Megatrends Growth Innovation Operations as Disciplined Core Advantage Capital Allocation 28
Slide 29: PPG Comex: Expanding World-Class Model Beyond Deco
Case Example | Scale Leading Positions PPG Comex: Expanding World-Class Model Beyond Deco at-a-glance Further Opportunities in Refinish, PMC, Industrial and Traffic Solutions World-Class Distribution Network Room to Grow in Attractive Market #1 99% Mexican Paint Mexico Brand Company Awareness 5,000+
Slide 30: Refinish: Best-in-Class "Key-to-Key"
Case Example | Scale Leading Positions Refinish: Best-in-Class “Key-to-Key” at-a-glance Value Proposition PPG MoonWalkTM Units ~30% CAGR 2022 2026E Currently in >1,500 Shops Existing New Business Business ~100% 35% Customer New Body Stickiness Shops Refinish Liquid $6B Collision Coatings TAM Support
Slide 31: Strategic Framework Deployment
Strategic Framework Deployment 1 Scale Leading Positions 2 Elevating Customer Partnerships Portfolio Industry- Poised for Leading 3 Capitalize on Megatrends Growth Innovation Operations as Disciplined Core Advantage Capital Allocation 31
Slide 32: Omni-Channel Expansion to ~10,000 US Locations
Case Example | Elevating Customer Partnerships Omni-Channel Expansion to ~10,000 US Locations Recently Announced Architectural US Programs Full range of PPG’s Pro products offered at GLIDDEN® Home Depot and HD Supply offered at 2,000+ Home Depot along with PPG Paint Stores and Dealers 3,800+ Walmart
Slide 33: Leveraging an Acquired Technology for New Applications
Case Example | Elevating Customer Partnerships Leveraging an Acquired Technology Program at-a-glance for New Applications Leading North American Bathware Supplier Disruptive Coatings Technology Displaced Acquired 2021 $1B Application TAM Polyester Technology with Polyurea >95% reduction in VOCs Sust
Slide 34: Strategic Framework Deployment
Strategic Framework Deployment 1 Scale Leading Positions 2 Elevating Customer Partnerships Portfolio Industry- Poised for Leading 3 Capitalize on Megatrends Growth Innovation Operations as Disciplined Core Advantage Capital Allocation 34
Slide 35: PPG is Positioned to Capitalize on Megatrends
PPG is Positioned to Capitalize on Megatrends Trends & Drivers Today’s Case Examples Climate Change Powder Polyurea Sustainability Emerging Regulations Circular Economy Mobility Paint Films Electrification EV Builds Mobility and Alternative Urban Mobility Energy Legislation Artificial Intelligence L
Slide 36: Powder: Intentional Focus on Premium Segments to Create Customer Value
Case Example | Capitalize on Megatrends Powder: Intentional Focus on Premium Segments to Create Customer Value Improved Appearance Capabilities Unlocks “New Powder” Global Powder Coatings Market Powder Coatings Fully reclaimed during application, reducing waste $5B Market Sales Sustainability Premiu
Slide 37: Powder: Focused Investment Yielding Above Market Growth
Case Example | Capitalize on Megatrends Powder: Focused Investment PPG Powder at-a-glance Yielding Above Market Growth PPG Powder Sales 21 Powder Plants Globally ~20% CAGR +42% Powder Resin Global R&D Development Center Invested over Capabilities $150MM + in capacity and capability Full-Service Prov
Slide 38: US Infrastructure Act: PPG Uniquely Positioned to Benefit
Case Example | Capitalize on Megatrends US Infrastructure Act: PPG Uniquely Positioned to Benefit Traffic Refinish / New Physical Infrastructure Component PMC Industrial Architectural Solutions Auto OEM Roads, bridges and safety Public transit / passenger service Transportation Rail, freight Airport
Slide 39: Mobility: BEV Growth at ~30% CAGR
Case Example | Capitalize on Megatrends Mobility: Traditional External and Internal Coatings BEV Growth at ~$120/Vehicle P R E S E N T ~30% CAGR Provides Electric Vehicle Additional 2022 BEV Battery Pack TAM Coatings ~$2B ~$70/Vehicle Opportunities 2022-26 F U T U R E Other Electrification CAGR: ~30
Slide 40: Mobility: Partnership with Leading Chinese BEV Manufacturer
Case Example | Capitalize on Megatrends Leading Chinese BEV Mobility: Partnership with Leading Manufacturer at-a-glance Chinese BEV Manufacturer Integrated BEV supplier Exclusive on 5 Platforms #1 #1 Conventional Coatings + New Innovations Auto Sedan & E-coat, decorative, sealants, powder, battery,
Slide 41: Paint Films: Emerging Industry White Space
Case Example | Capitalize on Megatrends Paint Films: Emerging Industry White Space Growth Supported by Strong Drivers PPG is Ahead of the Industry in Areas of Early Adoption Sustainability Reduced VOCs and Carbon Emissions Auto OEM and Aftermarket ~$1B channel strength TAM in the Reduced Energy Use
Slide 42: Paint Films: Collaborating with Customers on New Technology
Case Example | Capitalize on Megatrends Paint Films: Collaborating with Customers on New Technology Penske and Jaguar Land Rover Programs PPG’s Unique Position Valued partner through expertise in color, application and in-house film capabilities Benefits Reliable replication of customer’s desired co
Slide 43: Yields Above Market Growth
1 Scale Leading Positions Yields 2 Elevating Customer Partnerships Above Market 3 Capitalize on Megatrends Growth 43
Slide 44: Unlocking Earnings Potential
Unlocking Earnings Potential Vince Morales Senior Vice President and Chief Financial Officer
Slide 45: Strategic Framework Deployment: Operations as Core Advantage
Strategic Framework Deployment 1 Recovering from Disruptions Related to Supply Chain 2 Modernize, Simplify and Digitize Operations: Drive Sustainable Margin Benefit Operations as Core Advantage Operations as Portfolio Poised Industry-Leading Core Advantage Disciplined for Growth Innovation Capital A
Slide 46: EPS Growth Enhanced by Operational Improvement
EPS Growth Enhanced by Operational Improvement Assumptions Growth Catalysts Stable Raw Material Availability Improving Incremental Margins $150 to Wage and General Inflation Similar to Historical Levels Recovering from Disruptions 200MM Modernizing, Simplifying and Digitizing Operations Expected Tot
Slide 47: PPG Returning to Legacy of Delivering Annual Manufacturing Productivity
PPG Returning to Legacy of Delivering Annual Manufacturing Productivity Supply Chain is Normalizing 4Q 21 1Q 23 $100MM to Raw material availability Severe shortages 125MM* Logistics Severe shortages Benefit of Recovering From Disruptions U.S. labor availability Heightened shortages U.S. COVID labor
Slide 48: Strategic Framework Deployment: Operations as Core Advantage
Strategic Framework Deployment 1 Recovering from Disruptions Related to Supply Chain 2 Modernize, Simplify, and Digitize Operations: Drive Sustainable Margin Benefit Operations as Core Advantage Operations as Portfolio Poised Industry-Leading Core Advantage Disciplined for Growth Innovation Capital
Slide 49: Modernizing, Simplifying and Digitizing Operations
Modernizing, Simplifying and Digitizing Operations Optimizing Our Operations to Gain Capacity Leverage and Enhance Margins Complexity Reduction Resin localization to support customers Product portfolio simplification to increase operational leverage Advantaged Capabilities Advanced manufacturing pro
Slide 50: Complexity Reduction
Recent Deployment Example | Modernizing, Simplifying and Digitizing Operations Complexity Reduction Localization Focus to Increase Supply Chain Flexibility Resin Localization Opportunity Solution Outcomes Enable supply Fully utilizing acquired Increased resin flexibility: capabilities longer term fo
Slide 51: Advantaged Capabilities
Recent Deployment Example | Modernizing, Simplifying and Digitizing Operations Advantaged Capabilities Intake Alternatives for a Key Raw Material Category TiO2 Slurry Project Opportunity Solution Outcomes TiO2 is key raw material Plants recently Allows multi-supplier intake converted: Brazil Quality
Slide 52: Digital Tools
Recent Deployment Example | Modernizing, Simplifying and Digitizing Operations Digital Tools Significantly Reducing Cycle Time of Basecoat Production AI / ML Batch Project Opportunity Solution Outcomes Hundreds of SKUs are Artificial Intelligence / Unlocks capacity and adjusted for color on a Machin
Slide 53: Strategic Framework Deployment: Disciplined Capital Allocation
Strategic Framework Deployment 1 Optimized Shareholder Value 2 Targeted M&A Strategy Portfolio Poised Industry-Leading Operations as for Growth Innovation Core Advantage Disciplined Capital Allocation 53
Slide 54: Consistently Strong Cash Generation
Consistently Strong Cash Generation Assumptions Growth Catalysts Current Interest Rate and Global Operating Cash Flow Conversion >80% Liquidity Environment Prioritize Targeted / Accretive M&A ~ $1B* Stable Effective Tax Rate Expected Annual Free Cash Flow (Operating Cash Flow less Capital Expenditur
Slide 55: Strong Cash Generation Enables Optimized Shareholder Value
Strong Cash Generation Share Buybacks Capital Spending Enables Optimized 28% 18% PPG 5-Year Average Shareholder Value Operating Cash Flow Return to Past Growth Committed to ~$1.6B Share- holders 10 Years ~$25B Focused Balanced Capital Allocation ~55% ~45% 5-Year Average Operating Cash Dividends Acqu
Slide 56: Rewarding Shareholders Through Dividends
Rewarding Shareholders 51 Years Through Dividends of Consecutive Long Heritage of Dividend Growth Annual Dividend Increases $2.80 $2.40 $2.00 Portfolio $1.60 Shift to 124 Years Pure-Play of Uninterrupted $1.20 Dividends $0.80 ~7% $0.40 5-Year CAGR $0.00 1982 1987 1992 1997 2002 2007 2012 2017 2022 5
Slide 57: Strategic Framework Deployment: Targeted M&A Strategy
Strategic Framework Deployment 1 Optimized Shareholder Value 2 Targeted M&A Strategy Portfolio Poised Industry-Leading Operations as for Growth Innovation Core Advantage Disciplined Capital Allocation 57
Slide 58: Targeted M&A to Enable Organic Growth
Targeted M&A to Enable Organic Growth LEGACY FUTURE Focused on Building Global Scale Focused M&A to Augment Leadership Positions Aligned Strategic Fit Financial Criteria Leading Position in ROC > WACC Advantaged Areas Earnings Accretive Enables Leadership Through Synergistic Productivity and Sustain
Slide 59: Clear Roadmap to Drive Strong Results and Create Shareholder Value
Clear Roadmap to Drive Strong Results and Create Shareholder Value Expected Expected Expected Annual Annual Free 2% to 4% Annual Organic 8% to 12% Adjusted EPS ~ $1B Cash Flow Sales Growth Growth (Operating Cash Flow less Capital Expenditures and Dividends) Assumptions Growth Catalysts • Current Glo
Slide 60: Closing Remarks
Closing Remarks Tim Knavish President and Chief Executive Officer 60
Slide 61: Leverage our Strengths, Re-focus for Growth
Leverage our Strengths, Re-focus for Growth What Will be Preserved at PPG..... Our Purpose and Values Delivering Customer Value What Will be Different at PPG..... Leading Positions and Innovation Elevated Customer Partnerships Purposeful Strong Operational and Cost Focus Profitable More Intentional
Slide 62: 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 63: Chancey Hagerty
Chancey Hagerty Senior Vice President, Automotive Refinish Coatings
Slide 64: Refinish: Best-in-Class "Key-to-Key"
Case Example | Scale Leading Positions Refinish: Best-in-Class “Key-to-Key” at-a-glance Value Proposition PPG MoonWalkTM Units ~30% CAGR 2022 2026E Currently in >1,500 Shops Existing New Business Business ~100% 35% Customer New Body Stickiness Shops Refinish Liquid $6B Collision Coatings TAM Support
Slide 65: Refinish: Delivering 15% "Key-to-Key" Productivity Improvement
Case Example | Scale Leading Positions Refinish: Delivering 15% “Key-to-Key” Productivity Improvement Standard Process Process Color Easy-to-use from any internet- 10-15 min 1 min Identification connected device Formula Reduces rework, eliminates need 20-60 min 2 min Selection for spray-out cards Pa
Slide 66: Refinish: Differentiating Through Digital Solutions
Case Example | Scale Leading Positions Refinish: Differentiating Through Digital Solutions PPG LINQ™ DIGITAL ECOSYSTEM PPG DigiMatch™ PPG VisualizID™ PPG LINQ™ Color PPG MoonWalk™ PPG MagicBox™ Advanced Color Exceptional Color Confidence in Revolutionary Mixing Made Matching Visualization Color Sele
Slide 67: Thank You
Thank You We protect and beautify the world”
Slide 68: 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 69: Appendix
Appendix
Slide 70: Other Key 2023 Assumptions
Other Key 2023 Assumptions Corporate Expense $300MM to $325MM Net Interest Expense $140 to $160 Million Adjusted Effective Tax Rate 22% to 24% 70 Note: Baseline is 2023 FY. All figures are annual unless otherwise stated.
Slide 71: We are ONE PPG
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