PPG Industries, Inc. · NYSE:PPG
PPG Industries — Investor Presentation (August 2021)
43 slides from PPG Industries's investor presentation, August 2021
Slide 1: PPG Investor Overview
PPG Investor Overview August 2021
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: 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 $13.8B $6.12 ~$2.1B Aerospace Architectural $1.7B of Continuing to Strong cash Auto Refinish Protective & Marine acquired lead in new generation: annual sales product deploye
Slide 4: PPG strong financial metrics through economic cycle and pandemic
PPG strong financial metrics through economic cycle and pandemic EBITDA % Return on Capital SG&A 15,500 3,700 100.0% 98.0% 96.0% 11,000 94.0% 92.0% 90.0% 10,000 15,000 3,600 17% 17% 88.0% 86.0% 84.0% 17% 82.0% 80.0% 78.0% 9,000 76.0% 74.0% 72.0% 8,000 16% 70.0% 14,500 3,500 68.0% 66.0% 64.0% 62.0% 6
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 ESG 2020 Progress
PPG ESG 2020 Progress ENVIRONMENTAL SOCIAL GOVERNANCE RESILIENCE RESPONSIBILITY 21% electricity from renewable sources 34% waste disposal intensity reduction 2 independent directors 15% water intensity reduction Appointed PPG’s First appointed in 2021 Global Leader of DE&I vs. 2017 baseline (Marvin
Slide 7: PPG ESG Current Priorities
PPG ESG Current Priorities ENVIRONMENTAL SOCIAL GOVERNANCE RESILIENCE RESPONSIBILITY TCFD being integrated into business strategic planning Target 2022 launch of first Appointed PPG’s First VP, Global Diversity Report with 5-Year Sustainability (Diane Kappas) Science based targets under DEI Strategy
Slide 8: 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 9: PPG – Demonstrated History of Innovation
PPG – Demonstrated History of Innovation US Coatings Patents: 5 year Average PPG Innovation Awards 80 Award Year Recognition 73 60 Yearly 9 wins since 2016 40 41 38 PR-2930 High Strength 2020 Adhesive 20 20 B1:B2™ Compact Paint 2019 0 System PPG Competitor 1 Competitor 2 Competitor 3 PPG has a found
Slide 10: Innovation levers at PPG
Innovation levers at PPG Driving innovation across all aspects of coatings technology Customer Application Functionality Functionality Environmental Experience Innovation Levers LIQUID NAILS® Premium Powercron® 160 PPG Clean Overspray Free Fuze*It® Compact Anodic Epoxy Surface Paint Application Adhe
Slide 11: Shift to EV Creates Growth Opportunity
Global Light Vehicle Production Shift to EV Creates Growth Opportunity Higher PPG product content per vehicle Stated 2025 Regional Electric Vehicle Targets 3 20% 4 CHINA EUROPE 25% 1 2 5 Outlook for Annual Global Vehicle Sales 2 Global ICE *Global EV EV share PPG TECHNOLOGIES 3 Corrosion & Impact Pr
Slide 12: Balanced cash deployment
Balanced cash deployment $300 19% $500 Capital Spending 33% Acquisitions* Approximate Dividends Past 10 2020 Years (~$23B) Cash Uses Share (2011 – 2020) Repurchases 30% 10-Year Cash Use Summary: Grow Business ~50% 18% $1,200 Return to Shareholders ~50% Legacy of consistent and prudent cash deploymen
Slide 13: Acquisitions contribute to sales growth
Acquisitions contribute to sales growth Notable Acquisitions: Acquisition Sales Growth Over Prior Year 2013: $1,600 (USD MM) $1,400 North America $1,200 +3% average 2014/5: $1,000 sales growth Partial years $800 from acquisitions 2020: $600 $400 $200 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 14: Overview of Recently Announced Acquisitions
Overview of Recently Announced Acquisitions Date of Announcement November 30, 2020 December 18, 2020 January 5, 2021 January 11, 2021 April 19, 2021 Date of Closing December 2020 June 2021 February 2021 May 2021 April 2021 Estimated Annual Revenue ~$600MM ~$700MM ~$70MM ~$260MM ~$40MM Key Attributes
Slide 15: Global paint and coatings industry (~$140B)
Global paint and coatings industry (~$140B) 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 15 Source: IPPIC, Co
Slide 16: Coatings geographic mix
Coatings geographic mix 7% 10% 18% PPG opportunities to expand 18% 41% 45% in Asia and globally 30% 31% 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 y
Slide 17: Coatings end-uses
Coatings end-uses Architectural General Automotive Refinish / Protective Packaging Aerospace Industrial OEM Collision & Marine 16% 19% 15% 29% Industry End PPG is in line with the PPG Coatings 14% Use Demand (~$140B Sales global coatings End-Use Value) industry end-use mix Net Sales Mix 38% 41% 28%
Slide 18: PPG global end-use positions
PPG global end-use positions Position by Coatings Vertical Global Architectural General Protective Automotive Refinish / Packaging Aerospace Position Industrial & Marine OEM Collision PPG #2 #2 #3 #3 #1 #2 #2 #1 Sherwin-Williams #1 AkzoNobel #3 Nippon #4 RPM #5 Axalta #6 BASF #7 Meaningful presence
Slide 19: 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 & Materials Industrial Coa
Slide 20: Performance Coatings segment
Performance Coatings segment Segment traits • Distribution focus • After-market and maintenance component • Consistent cash generation • Stable industries Automotive Aerospace Protective and Architectural • Entered Traffic Solutions market Refinish Coatings Marine Coatings Coatings* Net Sales with R
Slide 21: Automotive Refinish
Automotive Refinish Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: +2% ’19-’20*: -14% USCA EMEA AP LA '15 '16 '17 '18 '19 '20 Key Industry Trends PPG Global Waterborne Paint Shops 3-Year • Color complexity CAGR ~ 3% • Emerging region growth • Continuing technology shift to waterborne • Value a
Slide 22: Aerospace
Aerospace Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: ~+8% ’19-’20*: -22% USCA EMEA AP '15 '16 '17 '18 '19 '20 Key Industry Trends Net Sales Mix • Airlines adjusting fleet mix for longer term demand outlook (2019: pre-COVID) OEM Military • Single aisle aircraft driving future growth 50% 30%
Slide 23: Protective & Marine Coatings (PMC)
Protective & Marine Coatings (PMC) Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: ~+4% ’19-’20*: -6% USCA EMEA AP LA '15 '16 '17 '18 '19 '20 Key Industry End Uses PPG Net Sales Mix • Infrastructure ($4.0B) 100% Marine New Build Marine New Marine • Energy ($3.8B) 80% Build Aftermarket Marine •
Slide 24: Architectural Coatings
Original slide. Will be reformatted. Architectural Coatings* Net Sales 2020 Net Sales by Geography ’15-’19 CAGR**: 0% ’19-’20**: ~+3% Region Stores USCA EMEA AP LA USCA ~850 LA ~5,000*** AP ~50 EMEA ~700 '15 '16 '17 '18 '19 '20 PPG Net Sales Mix Strong Local Architectural Brands Region Company Store
Slide 25: Architectural Coatings is diversified globally and well positioned
Architectural Coatings is diversified globally and well positioned Region Strength / Focus Brands • Services / Delivery U.S. • Digitalization and Canada • Organic Growth in Trade & DIY • Strong local brands • One of the leading positions EMEA in most countries • Optimize footprint • Strong brand rec
Slide 26: Industrial Coatings segment
Industrial Coatings segment Segment traits • Technology-advantaged products • Mix of global and local customers • High quality product performance • Global customer footprint Automotive Industrial Packaging Specialty Coatings OEM Coatings Coatings & Materials Net Sales with ROS ($ Billions) 2020 Net
Slide 27: Automotive OEM
2019 Net Sales by Geography Automotive OEM Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: 0% ’19-’20*: -15% USCA EMEA AP LA '15 '16 '17 '18 '19 '20 Key Industry Trends Customer Mix Global Auto OEM Production ’15-’19 CAGR: -1% ’19-’20: -17% U.S. Based All Top 7 PPG Remaining Automotive Customer
Slide 28: Industrial Coatings
Industrial Coatings Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: ~+10% ’19-’20*: -9% USCA EMEA AP LA '15 '16 '17 '18 '19 '20 Key Industry End Uses Asia Net Sales • Heavy-duty Equipment • Automotive Accessories ’15-’19 CAGR*: 7% ’19-’20*: 1% • Appliances • Transportation • Electronic Material
Slide 29: Packaging Coatings
Packaging Coatings Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: ~+3% ’19-’20*: 0% USCA EMEA AP LA '15 '16 '17 '18 '19 '20 Key Industry Trends Metal Packaging Industry • Global investments in new metal can capacity Segments • Metal packaging industry growth driven by sustainability, Other Bev
Slide 30: Specialty Coatings & Materials
Specialty Coatings & Materials Net Sales 2020 Net Sales by Geography ’15-’19 CAGR*: 1% ’19-’20*: -23% USCA EMEA AP '15 '16 '17 '18 '19 '20 Key Industry Trends Net • 2020 sales decline driven by Silicas and Teslin Sales Mix OLED materials • Rapid conversions in mobile, TV, laptops and Beverage wearab
Slide 31: 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 32: Total PPG Europe, Middle East & Africa
Total PPG Europe, Middle East & Africa PPG EMEA Net Sales Mix (€MM) Architectural Coatings EMEA Margin History ’14-’19 CAGR*: 3% ’19-’20*: -7% 4,500 Architectural Coatings EMEA Other PPG Businesses 16% 4,000 3,500 14% 3,000 12% 2,500 10% 2,000 1,500 8% 1,000 6% 500 0 4% '14 '15 '16 '17 '18 '19 '20 2
Slide 33: PPG Asia Pacific financials
PPG Asia Pacific financials 2,516 2,433 2,431 2,523 2,618 2,542 2,431 Consolidated Net Sales $MM - USD '14 '15 '16 '17 '18 '19 '20 359 382 361 342 382 318 306 Segment Income $MM - USD '14 '15 '16 '17 '18 '19 '20 2020 net sales impacted by COVID-19 income and margin back to peak levels 33
Slide 34: 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 (2020) Broad, full range coatings business portfolio ANZ Korea 6% 4% Performance SE Asia 13% 14% Industrial 63% India China Coatings Industry in Asia remains fragmented* Many leading Asian
Slide 35: PPG cash trends
PPG cash trends Cash From Operations* Approximate Cash and $ Billions USD Short-Term Investments $ Billions USD $2.1 $2.1 $1.2 $1.9 $1.9 $1.8 $1.8 $1.8 $1.7 Adjusted + $1.6 $1.5 $1.5 $1.5 $1.3 $1.2 $1.0 '13 '14 '15 '16 '17 '18 '19 '20 '13 '14 '15 '16 '17 '18 '19 '20 Robust cash generation over time
Slide 36: 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) 1000 EUR Notes 13% Last 5 years 800 USD Notes Average = ~3.0% 600 7% 400 3% 4% 3% 2% 2% 3% 3% 3% 2% 200 0 1980 || 1990 || '04 '06 '08
Slide 37: Additional materials and appendix
Additional materials and appendix
Slide 38: PPG EBITDA Reconciliation
PPG EBITDA Reconciliation EBITDA as % of Sales (excluding specials): 2020 2019 2018 2017 Currency USD USD USD USD Sales 13,834 15,146 15,374 14,748 Income before taxes 1,362 1,661 1,693 2,005 Unusual or Infrequent Charges 406 312 189 20 Interest, net 115 100 95 85 Depreciation & Amortization 509 511
Slide 39: PPG Adjusted Return on Capital Reconciliation
PPG Adjusted Return on Capital Reconciliation 2020** 2019** 2018** 2017** 2016** (in millions, except percentages) Currency USD USD USD USD USD Net Earnings as Reported 1,056 1,243 1,323 1,369 543 Total Net Adjustments, after-tax 297 237 126 142 956 Adjusted Net Earnings 1,353 1,480 1,449 1,511 1,49
Slide 40: PPG Reported and Adjusted EPS
PPG Reported and Adjusted EPS $ in millions, except EPS Second Half Second Half 2020 2019 Net Income EPS(a) Net Income EPS(a) Reported net income from continuing operations $ 714 $ 3.00 $ 661 $ 2.77 Impairment charges(b) 64 0.27 — — Business restructuring-related costs, net(c) 28 0.12 28 0.12 Expens
Slide 41: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation $ in millions, except EPS Total PPG Full Year 2020 Net Income EPS(a) Net Income from Continuing Operations, As Reported $ 1,056 $ 4.44 Business restructuring-related costs, net(b) 166 0.70 Acquisition-related amortization expense 99 0.42 Impairment charges(c) 64 0.27 Incr
Slide 42: Notes
Notes 42
Slide 43: We protect and beautify the world
pPc We protect and beautify the world”