4q 07 earnings slides

21
Fourth Quarter and Full Year 2007 Financial Results Charles E. Bunch, Chairman and Chief Executive Officer William H. Hernandez, Sr. Vice President and Chief Financial Officer January 17, 2008

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Page 1: 4Q 07 EARNINGS SLIDES

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Fourth Quarter and Full Year 2007 Financial Results

Charles E. Bunch, Chairman and Chief Executive Officer

William H. Hernandez, Sr. Vice President and Chief Financial Officer

January 17, 2008�

Page 2: 4Q 07 EARNINGS SLIDES

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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 involve risks and uncertainties that may affect PPG’s operations, as discussed in PPG’s filings with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c) or 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Accordingly, many factors may cause actual results to differ materially from the forward-looking statements contained herein. Such factors include increasing price and product competition by foreign and domestic competitors, fluctuations in cost and availability of raw materials and energy, the ability to maintain favorable supplier relationships and arrangements, economic and political conditions in international markets, foreign exchange rates and fluctuations in such rates, integration of acquisitions and achievement of expected synergies therefrom, 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 PPG’s filings with the Securities and Exchange Commission does not become effective. However, it is not possible to predict or identify all such factors. Consequently, while the list of factors presented here 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 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 PPG’s consolidated financial condition, operations or liquidity. All information in this presentation speaks only as of January 17, 2008, and any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information.

Page 3: 4Q 07 EARNINGS SLIDES

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�Opening Remarks

�Financial Review

�Strategic Update & 2008 Perspectives

�Question & Answer Session

Page 4: 4Q 07 EARNINGS SLIDES

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� All-time record sales� Record sales in all six coatings

businesses

� Record sales in Optical and Silicas

� Best organic growth in three years

� Record earnings per share

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� All-time record sales� Record sales in all six coatings

businesses, Optical, Silicas, Chlor-Alkali & Derivatives and Performance Glazings

� Record coatings and Optical & Specialty Materials earnings

� Record earnings per share

� $1B in cash from operations

� Two dividend increases

Fourth Quarter Full Year

Page 5: 4Q 07 EARNINGS SLIDES

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Consistent Growth Led by Coatings and Optical & Specialty#

4th Quarter Year-to-Date % %

Sales 2007 2006 Change 2007 2006 ChangePerformance Coatings 1,019$ 836$ 22% 3,811$ 3,088$ 23%Industrial Coatings 933 847 10% 3,646 3,236 13%Optical & Specialty Mtls. 243 214$ 14% 1,029 904 14%Commodity Chemicals 388 339 14% 1,539 1,483 4%Glass 291 264 10% 1,181 1,150 3%

Total PPG 2,874$ 2,500$ 15% 11,206$ 9,861$ 14%

$MM (USD)

Page 6: 4Q 07 EARNINGS SLIDES

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erce

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From Prior Year Quarter

-6

-4-2

02

46

810

12

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

20062005 2007200420032002

U.S.Hurricanes

Best Organic Growth in Three Years)

Page 7: 4Q 07 EARNINGS SLIDES

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2007 2006Million EPS Million EPS

Income from continuing operations, as reported 193$ 1.17$ 150$ 0.90$

Net income includes the following charges:Asbestos settlement - net 1$ 0.01$ 3$ 0.02$

Adjusted income from continuing operations 194$ 1.18$ 153$ 0.92$

2007 2006Million EPS Million EPS

Income from continuing operations, as reported 193$ 1.17$ 150$ 0.90$ Income from discontinued operations, as reported 7$ 0.04$ 7$ 0.04$

Net income, as reported 200$ 1.21$ 157$ 0.94$

Page 8: 4Q 07 EARNINGS SLIDES

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Fourth Quarter� Solid volume growth �5% � Aerospace volumes �15%� Architectural paints

volumes flat � 7% earnings growth

Full Year� 23% sales growth� ’06 & ’07 acquisitions

contributing� Aerospace volumes �13%� Architectural paints

volumes �1%� 10% earnings growth

$MM (USD) Q407 Q406 Chg % 2007 2006 Chg %

Sales 1,019 836 183 22% 3,811 3,088 723 23%

Earnings 143 134 9 7% 563 514 49 10%

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Page 9: 4Q 07 EARNINGS SLIDES

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� Double-digit sales growth� Strong global growth more

than offsetting slower U.S.� Diverse, expanding global

footprint� Auto OEM volumes �

outperform industry

$MM (USD) Q407 Q406 Chg % 2007 2006 Chg %

Sales 933 847 86 10% 3,646 3,236 410 13%

Earnings 77 71 6 8% 370 349 21 6%

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PPG OEM CoatingsN.A. Volume Growth vs. N.A. Vehicle Production

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%2003 2004 2005 2006 2007

N.A. OEM Industry PPG OEM Coatings

.

Page 10: 4Q 07 EARNINGS SLIDES

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Fourth Quarter� Double-digit sales growth� Reduction in Generation

V customer inventories� $9MM incremental ad

costs

Full Year� 14% sales growth� Gen VI roll-out in early

2008

$MM (USD) Q407 Q406 Chg % 2007 2006 Chg %

Sales 243 214 29 14% 1,029 904 125 14%

Earnings 46 44 2 5% 235 217 18 8%

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Page 11: 4Q 07 EARNINGS SLIDES

Q3 Q4

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Fourth Quarter� 51% Y-o-Y earnings

improvement� Higher Q-o-Q gas costs

($0.50)� ECU price increase

announced mid-quarter

$MM (USD) Q407 Q406 Chg % 2007 2006 Chg %

Sales 388 339 49 14% 1,539 1,483 56 4%

Earnings 53 35 18 51% 243 285 -42 -15%

Commodity Chemical Y-O-Y Earnings Change

-43-29

1218

Q1 Q2

$MM USD

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Page 12: 4Q 07 EARNINGS SLIDES

Glass Y-O-YEarnings Change

-16-4

38

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Fourth Quarter� Strong volume growth

in Fiber Glass and Performance Glazings

� Improved Fiber Glass operating margins

Full Year� Solid volume results� Improved second half

results

Q407 Q406 Chg % 2007 2006 Chg %

Sales 291 264 27 10% 1,181 1,150 31 3%

Earnings 28 20 8 40% 90 99 -9 -9%

Q3 Q4

Q1 Q2

$MM USD

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Page 13: 4Q 07 EARNINGS SLIDES

Consistent and Strong Cash Generation

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Share Repurchases

Dividends Capital Spending

Acquisitions

Returned to Shareholders

Strengthened Businesses

Page 14: 4Q 07 EARNINGS SLIDES

-5.0% 0.0% 5.0% 10.0% 15.0%

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Segment Organic Volume Growth (2007)

Select SBU and Region Volume Growth (2007)

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Page 15: 4Q 07 EARNINGS SLIDES

2007Sales Growth

0.0% 20.0% 40.0% 60.0%

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2007 Sales

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Page 16: 4Q 07 EARNINGS SLIDES

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U.S. & Canada

49%

Western Europe

30%

Asia

10%

ROW

5%

Eastern Europe

6%

� Completed acquisition on January 2, 2008

� Final purchase price less than 9x 2007 EBITDA

� Q108 interest costs on interim financing are incremental ~$40MM (USD)

� Q108 estimated intangible amortization ~$20MM (USD)

� Integration underway

2007 Pro-forma Sales

Includes Full Year of SigmaKalon

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Page 17: 4Q 07 EARNINGS SLIDES

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Thank you for your interest in PPG Industries, Inc.

InvestorsVince Morales (412) 434-3740

MediaJack Maurer (412) 434-2181

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Page 18: 4Q 07 EARNINGS SLIDES

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Page 19: 4Q 07 EARNINGS SLIDES

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4Q 2007(change from 4Q 2006) Sales Vol. Price Curr. Acq.Other

Performance Coatings 22% 5% 1% 6% 10%Industrial Coatings 10% 3% 0% 7% 0%Optical & Specialty Materials 14% 8% 1% 5% 0%Commodity Chemicals 14% 9% 4% 1% 0%Glass 10% 8% -1% 3% 0%

Year 2007(change from 2006) Sales Vol. Price Curr. Acq.Other

Performance Coatings 23% 3% 1% 4% 15%Industrial Coatings 13% 3% 0% 6% 4%Optical & Specialty Materials 14% 8% 1% 4% 1%Commodity Chemicals 4% 9% -5% 0% 0%Glass 3% 3% -2% 2% 0%

Page 20: 4Q 07 EARNINGS SLIDES

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From Prior Year Quarter

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10

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2004 2005 2006 20072002 2003

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Page 21: 4Q 07 EARNINGS SLIDES

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From Prior Year Quarter

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1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

2004 2005 2006 20072002 2003

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