PPG Protecting and Michael Beautifying H. McGarry the World Chairman and Chief Executive Officer Citi Michael Basic Materials H. McGarry Conference New York Nov. 28, 2017
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 financial performance. You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words aim, believe, expect, anticipate, intend, estimate, project, outlook, forecast and other expressions that indicate future events and trends. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward looking statement, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our reports to the Securities and Exchange Commission. Also, note the following cautionary statements: Many factors could cause actual results to differ materially from the Company s forward-looking statements. Such factors include ongoing impacts of the natural disasters and their length and severity, any currently unanticipated future impacts from the natural disasters, global economic conditions, increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials, the ability to maintain favorable supplier relationships and arrangements, the timing of and the realization of anticipated cost savings from restructuring initiatives, difficulties in integrating acquired businesses and achieving expected synergies therefrom, economic and political conditions in international markets, the ability to penetrate existing, developing and emerging foreign and domestic markets, foreign exchange rates and fluctuations in such rates, fluctuations in tax rates, the impact of future legislation, the impact of environmental regulations, unexpected business disruptions and the unpredictability of existing and possible future litigation. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here and under Item 1A of PPG s 2016 Form 10-K is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in the results compared with those anticipated in the forward-looking statements could include, among other things, lower sales or earnings, business disruption, operational problems, financial loss, legal liability to third parties, other factors set forth in Item 1A of PPG s 2016 Form 10-K and similar risks, any of which could have a material adverse effect on the Company s consolidated financial condition, results of operations or liquidity. All of this information speaks only as of November 28, 2017, and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information. PPG undertakes no obligation to update any forward-looking statement, except as otherwise required by applicable law. 2
PPG Overview Global supplier of paints, coatings, and specialty materials Annual revenue approaching $15 billion Participates in all coatings end-use markets including: Construction Consumer products Industrial and transportation markets and after-markets Leading innovator of coatings industry advanced technologies Strong free cash flow generator; increased dividend 46 consecutive years Consistent cash deployment to support earnings growth Active, disciplined participant of coatings industry consolidation 3 PPG well positioned for future growth
Business Portfolio Finalized a multi-year strategic portfolio transformation with the sale of U.S. fiber glass business Percentage of Sales (as originally reported) 4 ~$11.2B (2007) ~$14.8B (2016)
PPG Business Segments Performance Coatings Automotive Refinish Aerospace Protective & Marine Architectural Coatings Americas & Asia Architectural Coatings EMEA (Europe, Middle-East and Africa) 2016 PPG Net Sales & EBIT Margin* Industrial Coatings Automotive OEM Industrial Coatings Packaging Specialty Coatings & Materials Coatings Services 5 Broad coatings industry participation within each coatings vertical *from continuing operations
Coatings End-Use Markets Industry End-Market Demand (~$130B* Sales Value) PPG Coatings End-Use Net Sales* Mix Architectural Coatings Refinish 6% Auto OEM 8% Architectural 43% General Industrial 28% General Industrial Protective & Marine Packaging Source: Kusumgar, Nerlfi, & Growney; Company Annual Reports; PPG estimates; *2016 IPPIC report 6 *from continuing operations PPG is in line with the global coatings industry end-use mix
PPG: Shareholder Value Creation Driven By: Sales Growth Operational Excellence Cash Deployment 7
PPG Global Operations PPG Presence 2016 Sales Mix* Operations in ~70 countries Global footprint delivers balanced coatings portfolio and opportunities for growth 8 *from continuing operations
Growth Levers Innovation Growth Economic Growth Acquisition Growth Technology-led organic growth Leverage expertise across coatings end-use markets European volumes ~15% below 2008 levels Strong incremental margins due to cost management Proven track record of successful integrations Active pipeline of global acquisition targets 9 Growth opportunities in many areas
Sustainable Growth by Design Environmental regulation and raw material inflation create opportunities 2016 R&D 100 Winner ENVIROBASE 2017 R&D 100 Finalist ENVIRO-PRIME EPIC ENVIROCRON Extreme Protection 2016 R&D 100 Winner Equipment Supplier 2017 R&D 100 Finalist AEROCRON 2100, first e-coat primer for the aerospace industry 10 We partner with suppliers, applicators, and end users to innovate
11 Broad regional footprint to supply demand recovery
Strong Operating Leverage on Mixed Organic Growth PPG Coatings Volume Trend* (Indexed to 2008) Europe *Earnings (MM ) Solid growth in NA / emerging regions; Significant regional earnings improvement despite lack of volume growth in Europe * As originally reported, not adjusted for segment reporting changes. 12
Operational Excellence Focused on execution and results across operations and functions Selling price initiatives helping recover margins On target to achieve savings from December 2016 restructuring: $125 million by 2019 Continued strong cost management: SGA% of sales reduced by 100 bps in 2017 Manufacturing and supply chain productivity: generating over $75 million annually Have aggressively reduced working capital by over 300 bps in three years Margin recovery expected to continue 13
Cash deployment Cash Deployment Levels Have Expanded Adjusted cash flow from operations grew +6% 2016 2017 YTD $1.5B returned to shareholders $1.1B repurchases $0.4B dividends Per share dividend increase 11% in April Achieved top end of 2 year cash deployment target ($2.5B) $MM Established $2.5B - $3.5B target Updated target to a minimum of $3.5B (July): 2017 and 2018 combined Per share dividend increase 13% in July (46th consecutive year) Strong balance sheet remains Commitment to utilize balance sheet for earnings accretion Average ~$400MM ~$1.9MM ~$1.0B M&A ~$900MM Share repurchases 14 M&A Share repurchases
Coatings Industry is Consolidating (~$130B) Competitive Landscape 2016 Data Source: Source: Kusumgar, Nerlfi, & Growney; Company Annual Source: Reports; Orr and PPG Boss; estimates Company Annual Reports; PPG estimates Recent Notable Coatings Transaction/Consolidation Activity: PPG SigmaKalon (2008) PPG AkzoNobel N.A. Architectural Coatings (2013) PPG Comex Mexico (2014) PPG Revocoat, Metokote, Crown, LJF, Univer, Futian (2015/2016/2017) AkzoNobel ICI (2008), BASF Industrial Europe (2016) Valspar Wattyl, Ace, Inver, Quest (2010/2013/2013/2015) Sherwin Williams Comex (U.S. and Canada only); Valspar (2017) BASF - Chemetall (2016) Axalta Valspar Wood Coatings (2017) PPG is a leader in industry consolidation with many smaller competitors 15
Balanced Cash Deployment Past 10 Years (~$20B) (2007 2016) Share Repurchases Dividends Millions of USD As reported, not adjusted for business divestitures Cash Use Summary: Grow Business ~60% Return to Shareholders ~40% 16 Strong balance sheet will be used to support growth
Summary Strong and balanced portfolio of coatings, paints, and specialty materials businesses to drive organic growth Continue to invest in technology to differentiate and support our customers growth Margin recovery is expected to continue into 2018 Disciplined deployment of free cash flow focused on accretive acquisitions and share repurchases Well positioned for earnings growth and strong free cash flow generation 17
Thank you for your interest in PPG Industries, Inc. Contact Information: Investors: John Bruno phone: +1.412.434.3466 email: jbruno@ppg.com Media: Mark Silvey phone: +1.412.434.3046 email: silvey@ppg.com