-
Board of Directors concludes, with the assistance of full reviews by
two separate, independent financial advisors, that PPG’s current
business portfolio presents the best opportunity to maximize long-term
shareholder value -
An additional operational and growth investment review of the U.S. and
Canada architectural coatings business was completed by
globally-recognized independent consulting firm -
Comprehensive internal operational assessment identifies further
opportunities to improve profitability of the overall business
portfolio, including approximately $125 million of additional run-rate
savings
PITTSBURGH–(BUSINESS WIRE)–PPG (NYSE: PPG) today announced that two separate and independent
reviews of its business portfolio were completed by Goldman Sachs & Co.
LLC and Morgan Stanley & Co. LLC, with each firm independently
conducting multi-faceted evaluations of PPG’s business portfolio,
including potential separation opportunities.
PPG’s Board of Directors and executive management team recently received
a full report from each advisor with respect to their independent
reviews. Based on these reports and its own evaluation, the Board has
determined that maintaining the company’s current business portfolio
composition, including its architectural and industrial coatings
businesses, provides the best opportunity to maximize long-term
shareholder value.
“PPG’s Board of Directors commissioned a strategic review process by two
independent advisors, with a focus on long-term shareholder value, along
with the guidance of ‘nothing is sacred,’” said Hugh Grant, PPG’s lead
independent director. “The independent findings made clear, and after
its own review of these findings the Board concluded that, the current
business portfolio provides the best opportunity to drive long-term
shareholder value. The Board and management team remain strongly aligned
and accountable for delivering on the company’s current year commitments
and future growth potential.”
“The two independent advisors performed thorough reviews and their
similar conclusions clearly indicate the value of maintaining our
current business portfolio, including architectural and industrial
coatings, as the best strategic path to maximize shareholder value. By
maintaining our current portfolio, we avoid negative commercial,
operational and procurement impacts and preserve full strategic
flexibility for the future,” said Michael H. McGarry, PPG chairman and
chief executive officer. “As we have done consistently, we will continue
our ongoing strategic assessment of all our businesses, ensuring each
business continually earns its place in our portfolio based on current
performance and future expectations.
“In addition, we recently concluded an engagement by a
globally-recognized consulting firm focused on operational and growth
investment reviews for our U.S. and Canada architectural coatings
business, targeting full and rapid earnings recovery following the prior
year customer assortment changes. Recommendations from this engagement
include driving certain commercial network optimizations, implementing
further cost structure improvements, utilizing additional sales
effectiveness tools and adopting new digital technologies. We are
executing these initiatives with the goals of achieving full recovery of
our profitability next quarter and positioning the business for
continued success,” McGarry added.
“Also, while we remain a top quartile performer in our overhead and
corporate cost structures, we conducted a rigorous internal operational
and organizational review and identified certain opportunities for the
company to further improve operating efficiency and maintain commercial
excellence,” McGarry said. “As a result, we are working to finalize a
new cost savings program with targeted full year run rate savings of
about $125 million. We expect to provide additional detail with the
release of our second quarter financial results; however, the final
program is expected to include:
- Further manufacturing optimization
- Targeted pruning of low profit business in certain regions
-
Exiting certain smaller product lines that are not meeting
profitability objectives -
Reorganization of certain business unit cost structures based on
current economic climate - Certain redundancy actions related to recent acquisitions
-
Second quarter charge in the range of $185 to $200 million, excluding
certain non-cash items
“Finally, I would like to thank our shareholders for their continued
feedback and support. I remain confident that we are well positioned
strategically and that we are taking the appropriate long-term actions
to drive operational excellence and increase shareholder value,” McGarry
concluded.
The company will hold a conference call to provide further information
on the review today at 9 a.m. ET. Visit http://dpregister.com/10131836
to register for the conference call at any time before or during the
call. Upon registering to participate, you will receive a dial-in number
and a unique PIN. (If unable to pre-register, visit the Investor
Center section of www.ppg.com for
dial-in details.)
PPG: WE PROTECT AND BEAUTIFY THE WORLD™
At PPG (NYSE:PPG), we work every day to develop and deliver the paints,
coatings and materials that our customers have trusted for more than 130
years. Through dedication and creativity, we solve our customers’
biggest challenges, collaborating closely to find the right path
forward. With headquarters in Pittsburgh, we operate and innovate in
more than 70 countries and reported net sales of $15.4 billion in 2018.
We serve customers in construction, consumer products, industrial and
transportation markets and aftermarkets. To learn more, visit www.ppg.com.
Forward-Looking Statements
Statements contained herein relating to matters that are not historical
facts are forward-looking statements reflecting PPG’s current view with
respect to future events and financial performance. These matters within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
involve risks and uncertainties that may affect PPG Industries’
operations, as discussed in the company’s filings with the Securities
and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of
the Exchange Act, and the rules and regulations promulgated thereunder.
Accordingly, many factors could cause actual results to differ
materially from the forward-looking statements contained herein. Such
factors include global economic conditions, increasing price and product
competition by foreign and domestic competitors, fluctuations in cost
and availability of raw materials, the ability to achieve selling price
increases, the ability to recover margins, customer inventory levels,
the ability to maintain favorable supplier relationships and
arrangements, the timing of realization of anticipated cost savings from
restructuring initiatives, the ability to identify additional cost
savings opportunities, 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, the unpredictability of existing and
possible future litigation, including asbestos litigation, and
governmental investigations. Consequently, while the list of factors
presented here and in our Annual Report on Form 10-K are 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
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 and similar risks, any of which could have a
material adverse effect on PPG’s consolidated financial condition,
results of operations or liquidity.
All information in this release speaks only as of May 21, 2019, and any
distribution of this release after that date is not intended and will
not be construed as updating or confirming such information. PPG
Industries undertakes no obligation to update any forward-looking
statement, except as otherwise required by applicable law.
Contacts
PPG Media Contact:
Mark Silvey
Corporate Communications
+1-412-434-3046
[email protected]
PPG Investor Contact:
John Bruno
Investor Relations
+1-412-434-3466
[email protected]
investor.ppg.com
