TAGS: Architectural Coatings
PPG announces that it has engaged Goldman Sachs as financial advisor to assist in a review of strategic alternatives for its architectural coatings business in the U.S. and Canada. PPG is a supplier of paints, coatings and specialty materials.
Architectural Coatings Driven by Innovation & Brands
PPG’s architectural coatings business in the U.S. and Canada operates within the company’s performance coatings segment. The business is an industry supplier of residential and commercial architectural coatings. Its well-known portfolio of brands includes GLIDDEN®, OLYMPIC®, LIQUID NAILS®, HOMAX®, PITTSBURGH PAINTS & STAINS®, Manor Hall®, FLOOD®, DULUX® (in Canada), and SICO®, among others.
The business manufactures and sells interior and exterior paints, stains, caulks, repair products, adhesives and sealants for homeowners and professionals. It also includes certain light-duty protective coatings products that are primarily sold through company-owned stores and manufactured through a common factory footprint.
In 2023, the architectural coatings business in the U.S. and Canada represented approximately 10% of PPG’s total net sales.
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The architectural coatings business in the U.S. and Canada has a well-established position in a growing market, known brands, proven innovation, established customers and dedicated employees,” said Tim Knavish, chairman and chief executive officer, PPG.
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We have made considerable progress over the past several years in modernizing the architectural coatings business model to better position the business for continued success. This has included instituting value-added customer-facing digital tools, revamping our manufacturing and distribution footprint, transitioning towards an asset-light distribution model, and introducing innovative products that enhance customer productivity and sustainability,” continued Knavish.
Strategic Review for Growth
Despite the business delivering flat sales volumes in 2023, on a 3-year pro forma basis PPG’s overall company sales volume results would have improved cumulatively by over 200 basis points excluding the architectural coatings U.S. and Canada business.
Also, the company’s performance coatings segment operating (EBIT) income, excluding the U.S. and Canada architectural coatings EBIT and the associated growth-related investments we have made, would have resulted in an approximately 300-basis point improvement in segment margins in 2023.
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We are exploring this strategic review now given the positive momentum in the business, with the intent of ensuring its continued growth and success while also maximizing the value for PPG and its shareholders. We will assess whether some or all of the business could be better suited to grow faster with a partner or different owner or may be better suited to operate as a core business within another company, as a standalone entity, or in a joint venture,” stated Knavish.
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Our review will help to determine if any of these alternative structures will provide the business with more speed and accelerated growth capability. Throughout this process, we will continue to fully support the business, our employees, and our architectural coatings customers throughout the U.S. and Canada,” added Kavish.
The timing and outcome of the strategic review is uncertain. There is no assurance that the review will result in any transaction or other outcome. PPG does not intend to disclose developments or provide updates on the progress or status of the review unless and until it deems further disclosure is appropriate or required.
Product Manufacturing & Distributing Facilities
PPG’s strategic review of its architectural coatings business in the U.S. and Canada does not include its architectural coatings businesses in the other regions around the world, including in Latin America, Europe and Asia Pacific, where PPG holds strong number 1 or number 2 positions in a number of key countries.
The architectural coatings business in the U.S. and Canada manufactures and distributes products through dedicated facilities in:
- Manufacturing: East Point, GA; Oakwood, GA; Louisville, KY; Huron, OH; Reno, NV; Carrollton, TX; Temple, TX; Delta, BC (Canada); and Vaughan, ON (Canada)
- Distribution: Huron, OH; Oakwood, GA; Reno, NV; Aurora, IL; Flower Mound, TX; Riverside, CA; Reading, PA; Carolina, PR (Puerto Rico); Calgary, AB (Canada); Delta, BC (Canada); Toronto, ON (Canada); and Moncton, NB (Canada)
The architectural coatings business’ footprint in the U.S. and Canada includes approximately 750 company owned stores in the U.S. (including Puerto Rico) and Canada.
Source: PPG Industries