PPG Industries, Inc.

Third Quarter 2014 Financial Results

Earnings Brief October 16, 2014
Third Quarter Financial Summary
PPG net sales from continuing operations for
the third quarter were $3.94 billion, an
increase of 4 percent versus the prior year.
Higher year-over-year volumes contributed 3
percent, a level consistent with the 2014
second quarter change. Volumes advanced
in all major regions, led by North America and
Asia, with a modest increase in Europe.
Selling prices improved modestly, reflecting
efforts to offset slight cost inflation, including
higher logistics costs and higher natural gas
costs in the Glass segment. Aggregate
currency translation impacts were minimal,
with translation impacts varying by currency.
Year-over-year adjusted diluted earnings per share from continuing operations increased by 22
percent, establishing a new third quarter record of $2.82 aided by higher sales volumes, improved
business mix and continued aggressive cost management. Earnings improved in each major
region led by Europe which was up 17 percent versus the prior year.
PPG continued to execute on a variety of strategic and earnings-accretive cash deployment
actions. Strategically in the quarter, work continued on customary actions relating to the pending
Comex acquisition. The original anticipated timeline for the acquisition was 4 -to- 6 months after
the June 30, 2014 announcement date, and we continue to expect that this acquisition will close
in the fourth quarter.
We continue to have financial flexibility as our balance sheet remains strong with cash and shortterm investments of $3 billion. We have a very active acquisition pipeline and expect share
repurchases to remain an integral part of our cash deployment in the fourth quarter. The
company completed $150 million of share repurchases in the third quarter, bringing the year-todate total to $450 million.
Including the pending Comex acquisition, we will likely spend at or above the top-end of our
previously communicated range of $3 -to- $4 billion of cash deployment in 2014 and 2015, on a
combination of acquisitions and share
repurchases.
PPG Third Quarter Net Sales
Total third quarter net sales from continuing
operations of $3.94 billion were up 4 percent
versus the previous years $3.77 billion.
Pricing improved almost 1 percent, with a
focus on countering wage, transportation and
energy cost inflation.
Currency translation was a slight negative,
with results remaining mixed by currency.

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Versus the prior year, the 3-month average Euro conversion rate weakened slightly against the
U.S. dollar, with weakening more pronounced in the month of September. Other currencies were
mixed against the dollar. Based on current exchange rates, foreign currency translation will have
a larger impact on sales in the fourth quarter.
Volumes grew by about 3 percent versus the prior years third quarter. The pace of growth was
similar to the previous quarter despite a more difficult comparison period due to solid sales
improvement in last years third quarter. Growth remained uneven by end-use market and region.
PPGs growth was led by aerospace, automotive OEM and automotive refinish, with growth rates
in those businesses matching or exceeding prior quarters.
Net Sales Volume Trends - Coatings
Segments
Global aggregate coatings segment volume
growth continued and was led by a 4 percent
gain in the United States and Canada
reflecting ongoing, moderate economic
expansion in the region. The pace of growth
was generally consistent with the second
quarter, and both quarters grew despite more
difficult comparison periods. Regional growth
was most prominent in the automotive OEM,
aerospace, and automotive refinish
businesses, and was coupled with solid
growth contributions in many of the general
industrial coatings, specialty coatings and
materials end-use markets.
Year-over-year European volumes also advanced, but by less than 1 percent. The 2014 third
quarter growth rate was lower than the second quarter growth rate of 3 percent, as European
sales trends improved in each quarter during 2013 making the third quarter a more difficult
comparison. Overall demand in the region was mixed by country with some regions or end-use
markets improving and others weakening. From an end-use market perspective, aerospace and
automotive OEM delivered the largest gains, while architectural coatings volumes were down
about 1 percent.
Emerging region volume growth accelerated slightly versus the prior quarter, with improved
performance in both Asia and Latin America. Most businesses in Asia achieved volume growth,
including marine new-build. In Latin America, growth occurred in automotive OEM despite
regional industry declines, but was partly offset by declines in other end-use markets in the
region.
PPG Earnings
PPG pre-tax segment earnings improved in all
regions. Earnings in Europe grew by 17
percent reflecting benefits from improved
business mix and a lower cost base stemming
from previous, aggressive cost reduction
actions.
Earnings in the United States and Canada
advanced 10 percent, aided by higher

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volumes, improved business mix and further realization of acquisition-related earnings synergies.
Emerging regions also improved 10 percent, driven by higher volumes and strong cost
management.
Third quarter adjusted diluted earnings per share from continuing operations of $2.82 established
a new third quarter record for the company. The figure is up 50 cents, or 22 percent, versus the
prior-year record. The 2014 adjusted figure excludes after-tax gains on asset dispositions of 52
cents, and charges of 61 cents for an increase to legacy environmental reserves, 2 cents for
acquisition-related costs and 1 cent for certain pension settlement losses. The 2013 adjusted
figure excludes adjustments totaling 91 cents as detailed in the presentation materials appendix.
The tax rate on ongoing earnings was about 24 percent in both years. We expect the tax rate to
remain at 24 percent for the balance of the year.
PPGs Earnings Trend
Over the past two years, PPG has completed
several significant portfolio changes, including
the separation of the former commodity
chemical business, the acquisition of
AkzoNobels North American architectural
coatings business, and divestiture of our 51
percent interest in the Transitions Optical joint
venture and sunlens business. The
companys earnings growth rate has
accelerated based on this revised business
portfolio.
Year-to-date, PPGs adjusted per share
earnings from continuing operations are up 27
percent versus the comparative year-to-date 2013 results. These strong growth results are in
addition to a 31 percent increase in full year 2013 adjusted earnings per share.
All the figures have been recast to reflect results from PPGs current business portfolio and also
to reflect the benefits of our ongoing earnings-accretive cash deployment.
Performance Coatings
Reviewing the Performance Coatings segment
results for the third quarter, net sales were
$2.26 billion, up 3 percent versus the prior
year. The net sales gains resulted from
improved volumes, higher selling prices and
modest acquisition-related gains. Aggregate
currency translation impacts were minimal.
Segment volumes advanced 1 percent with
gains in North America and emerging regions,
offsetting a 1 percent decline in Europe.
Third quarter segment earnings were $345
million, up $20 million or 6 percent year-overyear, driven by higher sales, improved business mix and the benefit from additional acquisitionrelated synergies. These gains were partly offset by cost inflation, including increased
transportation costs.

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From a business unit perspective, aerospace and automotive refinish both delivered mid-single
digit percentage sales growth globally. Aerospace continues to benefit from industry new-build
expansion coupled with PPG specific new products. The automotive refinish business continues
to benefit from the expansion of the vehicle parc in Asia and higher North American demand.
These trends are expected to continue for both businesses in the fourth quarter.
Architectural coatings EMEA volumes declined 1 percent in comparison with strengthening prioryear levels. Activity levels remained inconsistent within the region with several countries
experiencing flat or reduced demand. Other regions, including Eastern Europe and the United
Kingdom, had healthy demand growth. These uneven trends will likely continue in the fourth
quarter.
North American architectural coatings net sales improved low single-digit percentages, including
benefits from increased end-use market demand. As with previous quarters, sales results
remained mixed by architectural distribution channel.
Low single-digit percentage growth occurred in the national DIY (Do-It-Yourself) retail channel,
including initial benefit from several new PPG products that were introduced throughout the
quarter.
Same store sales for PPGs legacy company-owned stores open for more than 12 months,
improved mid-to-high single digit percentages, with results strengthening throughout the quarter.
These gains were partly offset by reduced sales resulting from the planned redundant or nonprofitable closures of stores acquired in 2013, most of which occurred in the second half of 2013.
The improved profitability as a result of these planned store closures is a meaningful element of
the achieved year-over-year acquisition-related synergies. Overall acquisition synergy capture
remains ahead of schedule, with nearly all commercial actions expected to be completed by the
end of 2014, which would be one year ahead of the original timeline.
Lastly, architectural coatings sales to independent distributors declined by low single-digit
percentages, primarily due to weaker Canadian demand.
In the fourth quarter modest North American architectural coatings market demand growth is
expected, with growth in both residential and non-residential end-markets. Additionally, we will
reach the anniversary of the majority of the acquired company-owned store closures during the
fourth quarter, resulting in a reduced negative year-over-year sales impact.
Aggregate protective and marine coatings net sales were up slightly in the quarter, including
higher North American volumes aided by increased building and maintenance for infrastructure
and energy-related demand growth. Additionally, we achieved modest growth in the marine newbuild end-use market, following several quarters of negative activity trends in that industry. This
business is expected to deliver comparable volume growth in the fourth quarter.
Looking forward, this segment has the most pronounced sales and earnings seasonality, given
the nature of the businesses that comprise the segment. We expect traditional seasonal sales
declines in the fourth quarter. Additionally, based on current exchange rates, foreign currency
translation is expected to be a large factor in sequential and year-over-year sales comparisons.
In fourth quarter 2013, the dollar weakened versus the Euro when compared with the third quarter
2013. The dollar has strengthened against the Euro when compared with the fourth quarter of
2013 and the third quarter of 2014.

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Industrial Coatings
Industrial Coatings segment net sales for the
third quarter were $1.4 billion, up $89 million in
comparison with the previous year. The
higher net sales were due to 7 percent volume
growth, led by North America and emerging
regions, along with solid but more modest
growth in Europe. Third quarter segment
earnings grew 17 percent, to $240 million, as
a result of increased net sales and
manufacturing cost improvements.
PPGs global automotive OEM business grew
volumes in all regions by high single-digit
percentages year-over-year in comparison
with global industry demand growth of about 3.5 percent in the quarter.
Industry growth occurred in all regions, highlighted by 10 percent growth in China. European
industry production also grew against strengthening prior year comparable results. Growth in the
Americas was led by North America, primarily the United States and Mexico, which offset lower
South American production.
Year-over-year industry growth for auto production is forecasted to continue in the fourth quarter
in all major regions, although growth rates are expected to moderate in comparison to recent
quarters. We expect PPG to grow at an above-market pace including benefits from technology,
service, customer mix and our global breadth which provides access to additional growth
opportunities.
Global but uneven industry demand growth has continued in many general industrial and
specialty coatings and materials end-use markets. These markets include, among others,
electronics, durable goods, coil extrusion, auto parts and accessories, and heavy duty equipment.
PPGs aggregate year-over-year sales into these markets grew mid-single digit percentages in
the third quarter, a pace at -or- above previous quarters. Results in each major region were
similar to overall global results driven by several factors including increased middle-class durable
goods consumption in China and initial improvement in commercial construction in North America
which positively impacted coil extrusion demand. Looking ahead, these overall general industrial
trends are expected to continue, but growth rates will likely moderate based on strong prior year
global industrial growth and in certain end-use markets, such as auto parts and accessories due
to moderating global automotive production.
Finally, global packaging coatings volumes were down modestly due to continued softness in
Europe. However, PPGs volume trend in this business improved versus the previous quarters in
2014.
The packaging industry is beginning a shift to new interior can coatings technologies for beverage
and food containers, with certain European markets shifting to these new technologies in January,
2015. As a result of this technology change, PPG will have greater access to a much larger
portion of the packaging coatings market as PPG previously had minimal sales for interior
packaging coatings. PPG continues to complete significant development activities and trials with
customers, and that work will continue into the fourth quarter as customers move from pilot trials
to commercial production.
Lastly, with regards to overall segment results, currency translation is expected to negatively
impact fourth quarter year-over-year sales comparisons based on current exchange rates.

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Glass
Third quarter net sales for the Glass segment
were $283 million, up $5 million versus the
third quarter 2013. The 2 percent net sales
growth was due primarily to higher volumes
and pricing in flat glass stemming from
improvement in residential and non-residential
end-market demand, partly countered by
currency translation related to the Canadian
dollar. Flat glass demand improvement was
most prominent in our value-added and
specialty glass products, producing favorable
product mix for the segment.
These volume gains were countered by lower
fiber glass volumes due to reduced product availability stemming from weaker manufacturing
performance.
Segment earnings in the quarter were $33 million, up $12 million, as the benefit of the improved
flat glass product mix and manufacturing cost improvements offset moderate freight and natural
gas cost inflation.
Looking ahead, lower seasonal demand is anticipated in both businesses, and will also result in
lower manufacturing utilization. Seasonally adjusted year-over-year demand growth is expected
to continue in flat glass, as is the favorable value-added product mix. Efforts are underway to
improve fiber glass manufacturing performance and related product availability.
As previously announced during the third quarter, PPG sold one of its flat glass facilities and
recognized a gain on that sale. We expect to
incur some modest one-time expenses as we
exit that facility in the fourth quarter.
Cash and Cash Deployment
PPG ended the quarter with $3.0 billion in
cash and short-term investments. Cash
generated from continuing operations was
$732 million in the quarter and $1.24 billion
year-to-date. Traditionally, the fourth quarter
is a large cash generation quarter due to the
seasonality of our businesses.
Uses of cash during the third quarter and
year-to-date were as follows:

Capital expenditures were $126 million in the quarter and $358 million year-to-date.
Anticipated 2014 capital spending remains in the range of 3.0 -to- 4.0 percent of sales.

Dividends paid were $92 million in the quarter and $269 million in the first nine months of
2014.

Cash spending for acquisitions which have closed totaled $90 million in the quarter and
$114 million year-to-date.
PPG announced on June 30 the agreement to acquire Comex, and expectations remain
for that transaction to close in the fourth quarter, within the originally anticipated 4 -to- 6
month timeline.

PPG stock repurchases totaled $150 million in the quarter and $450 million year-to-date.
The company still has about $2.0 billion remaining under its current share repurchase
authorization as of quarter-end, and share repurchases are expected to remain an integral
part of cash deployment in the fourth quarter.

The company remains focused on earnings-accretive cash deployment. Including the pending
Comex acquisition, the company now expects to spend at or above the top end of its previously
announced $3 -to- $4 billion of cash in years 2014 and 2015 combined, on acquisitions and share
repurchases.
Summary
In summary, our strong financial performance
continued in the third quarter. Year-over-year
sales growth was achieved in each region led
by gains in North America and Asia. Sales
grew 4 percent in aggregate, a rate consistent
with the previous quarter despite being
compared against a more difficult, improving
2013 third quarter sales level. Volume
advanced 3 percent and was the principal
factor in the sales growth. Continued
customer adoption of our leading technologies
in several businesses was a key contributing
factor to the higher volumes.
Adjusted earnings per share of $2.82 were a record for any third quarter surpassing the prior year
figure by 22 percent. We once again delivered higher earnings in all major regions led by a 17
percent gain in Europe. We continued to realize excellent earnings contributions from the
improved demand, coupled with improved business mix and ongoing, disciplined cost
management. Acquisition-related synergies also positively impacted earnings, as we remain
ahead of our timeline to complete all the synergy actions from our 2013 North American
architectural coatings acquisition. We currently anticipate completing most of these actions by the
end of this year, nearly one year ahead of schedule.
With regards to strategic actions, we have continued to work on actions relating to our pending
Comex acquisition and expect that acquisition to close in the fourth quarter. Additionally, we
completed the divestiture of a North American flat glass facility, and our automotive glass equity
affiliate sold one if its businesses. Both of these assets divestitures generated one-time gains in
the quarter.
We had strong cash generation of about $730 million, and the fourth quarter is historically our
strongest cash generation period due to the seasonal nature of our businesses. We ended the
third quarter with increased cash and short-term investments which totaled $3 billion.
We remained focused on cash deployment for earnings accretion. Our acquisition pipeline is very
active. Also in the quarter, we completed an additional $150 million in share repurchases bringing
our year-to-date total to $450 million. We now anticipate spending at the top end of our
previously communicated range of $3 -to- $4 billion, in years 2014 and 2015 combined, for
acquisitions and share repurchases.

Forward-Looking Statements
Statements contained herein relating to matters that are not historical facts are forward-looking
statements reflecting PPGs 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 PPGs operations, as discussed in PPGs 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 maintain favorable
supplier relationships and arrangements, 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, including litigation that could result if the asbestos
settlement discussed in PPGs filings with the Securities and Exchange Commission does not
become effective. The presentation also includes statements about the expected effects on PPG
of the Comex acquisition (the Transaction), the anticipated timing and benefits of the
Transaction, including expected synergies, the expected methods of financing the Transaction,
PPGs expected financial flexibility, future cash deployment plans, and all other statements that
are not historical facts. Such risks, uncertainties and assumptions include: the satisfaction of the
conditions to the Transaction and other risks related to the completion of the Transaction and
actions related thereto; the parties ability to complete the Transaction on the anticipated terms
and schedule, including the ability to obtain regulatory approvals; risks relating to any unforeseen
liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic
performance, indebtedness, financial condition, losses and future prospects; business and
management strategies and the expansion and growth of PPGs operations; PPGs ability to
integrate the acquired business successfully after the closing of the Transaction and to achieve
anticipated synergies; and the risk that disruptions from the Transaction will harm PPGs
businesses. However, it is not possible to predict or identify all such factors. Consequently, while
the list of factors presented here and in PPGs 2013 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, business disruption,
operational problems, financial loss, legal liability to third parties and similar risks, any of which
could have a material adverse effect on PPGs consolidated financial condition, results of
operations or liquidity. All information in this presentation speaks only as of October 16, 2014, 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 forwardlooking statement, except as otherwise required by applicable law.