Welcome to the PPG Industries Strategic Business Review Update conference call. My name is Nicole, and I will be your conference specialist today. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to John Bruno, Director of Investor Relations. Please go ahead.
Thank you, Nicole, and good morning, everyone. Once again, this is John Bruno, Director of Investor Relations. Thank you for joining us this morning to discuss the completion of the strategic review of PPG's business portfolio. If you recall, in January, we communicated that PPG would complete a strategic review of its business portfolio by the end of the second quarter. Today, we will provide the results of that review, as well as to cover a few other substantive topics. Joining me on the call from PPG are Michael McGarry, Chairman and Chief Executive Officer, and Vince Morales, Senior Vice President and Chief Financial Officer. Michael will walk through a few slides, which are being presented on this webcast and currently available on our website, ppg.com. Following Michael's review of the presentation, we will move to the Q&A session.
Both the prepared commentary and discussion during this call may contain forward-looking statements reflecting the company's current view of the future events and their potential effect on PPG's operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. This presentation also contains certain non-GAAP financial measures. The company has provided, in the appendix of the presentation materials, which are available on our website, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information, please refer to PPG's filings with the SEC. Now, let me introduce PPG Chairman and CEO, Michael McGarry.
Thank you, John, and good morning, everyone. We appreciate your participation on today's call. The focus of today's call is to communicate the details and the results from the assessment of our strategic business portfolio review. As John mentioned, we will also take this opportunity to cover the results of two additional reviews focused on further improving the operational performance of PPG as a whole, as well as specifically with respect to our U.S. and Canadian architectural coatings business. These reviews were conducted in addition to the strategic review of our business portfolio as part of our commitment to continuous operational improvement and our focus on shareholder value. Turning to the presentation slides. First, on slide three. I'll remind everyone of the commitments and targets we communicated during our fourth quarter earnings call in January 2019.
From a financial perspective, we are reiterating our full-year financial targets, including 3%-5% sales growth and 7%-10% EPS growth. Both of these figures exclude foreign currency translation impacts. Embedded in these targets is $70 million of cost savings from our previously announced cost savings programs of 2016 and 2018. We've continued all management to a very high standard and will maintain a minimum of 10% EPS growth for variable long-term management compensation. During 2019, we will recommend to our board of directors a per-share dividend increase, continuing PPG's long legacy of rewarding our shareholders with dividend increases. One of our commitments relates to enhancing our governance structure. Along those lines, we included in our proxy statement management proposals to eliminate our supermajority voting and classified board requirements.
This marks the third and fourth time, respectively, in the last seven years that we have put these proposals forward for a shareholder vote. PPG's bylaws require an affirmative vote of 80% of PPG's outstanding shares to approve these proposals. To aid in reaching this threshold, we hired a highly regarded proxy solicitation firm to seek additional shareholder votes by both telephone and mail. Despite these extensive efforts, the two proposals did not receive sufficient shareholder support to pass. We will review the outcome of this year's vote and potential future steps later this year. I'd like to move to the principal part of our call. It's important to remind everyone that we have a long history of actively managing our portfolio, and as illustrated on slide four, we've completed a number of acquisitions and divestitures over the past five years.
We've taken decisive actions with regard to our cost structure with a focus on business and regions that are facing sluggish demand, and opportunities to reduce administrative costs, capturing synergies we commit to for our acquisitions, and responding to specific market or business unit conditions. This slide depicts these actions for only the past five years. If we widen the timeframe, you would see that we've consistently completed value-creating acquisitions, divested various non-core businesses or product lines regardless of size, and acted aggressively on costs. All these actions over the past several decades are a result of ongoing and well-known PPG strategic review process that is action-biased. We fully intend to continue reviewing our businesses to ensure each is consistent with our strategy, meeting our expectations, and creating appropriate shareholder value. Moving to slide five, which details the three recently completed assessments.
Two independent third-party financial advisors, Goldman Sachs and Morgan Stanley, were engaged to perform an independent strategic review under the direction of the board of directors. These advisors completed separate and independent evaluations of our business portfolio and balance sheet opportunities with a focus on maximizing shareholder value. To these two independent strategic reviews, we concluded a separate engagement by another globally recognized and well-regarded consulting firm focused on our U.S. and Canadian architectural coatings business. The primary objective of this engagement was to establish and execute an action plan following the customer assortment changes that occurred in mid-2018 to rapidly return this business to its prior earnings level. Consistent with PPG's constant focus on operating excellence, we completed a comprehensive internal review and organizational assessment.
As these three separate initiatives progressed, we had regular process updates with our board of directors, who were deeply engaged and provided oversight and feedback throughout the process. The clear focus was on creating the most value for our shareholders, and the board's instructions were to hold nothing sacred during the reviews. Now let me discuss the details and results of these assessments. Slide six summarizes the scope and key considerations for the strategic reviews conducted by the two independent financial advisors. The scope of the reviews included reviewing various alternatives to separate the Architectural Coatings and Industrial Coatings businesses, reviewing other portfolio and strategic options, and completing a balance sheet and related cost deployment analysis focused on value creation opportunities.
Key considerations including net value creation for PPG shareholders, pro forma equity market valuation estimates, implications on business competitiveness, customers, and ongoing growth potential, value of synergies or dis-synergies, and other financial impacts resulting from portfolio adjustments, tax implications, balance sheet effects, liability assignments, and cash deployment considerations. The reviews were very thorough, and each financial advisor analyzed various scenarios. Ensuring independence, the advisors utilized external financial estimates as the anchor for their financial analysis, and PPG management wasn't directly involved in their analysis, except to answer occasional advisor questions, to provide requested company specific details that are not publicly available, and to receive updates as to the timing of the expected completion. Also, the advisors worked completely independently of each other, with neither advisor having access to the other advisor's work. Once again, these were thorough and rigorous reviews that took multiple months to complete.
Slide seven is an assessment summary of this work. Despite running two parallel and independent analyses, both advisors were consistent in their findings and recommended we stay the course with our current strategy and business portfolio as the best opportunity to maintain strategic optionality, minimize risk, and maximize shareholder value. The following are the key findings from the financial advisors. A split of the entire global Architectural Coatings business or a large component of the Architectural Coatings business is not likely to result in value uplift for PPG shareholders. A change in the portfolio would likely create potential meaningful dis-synergies, incremental costs, and potential tax leakage. Even excluding any potential dis-synergies, a separation isn't likely to result in a material shareholder uplift. A split or separation would reduce overall strategic flexibility and lower potential strategic synergies available in the future acquisitions.
Both advisors recommend that we continue to pursue accretive acquisitions as the primary use of our cash. The assessment took into account PPG's excellent track record of executing accretive acquisitions, including our disciplined process. The measure of a successful acquisition process is shareholder value creation, in our opinion, the ultimate measure of that return on capital. As illustrated on slides 18 and 19 in the appendix, our return on capital from acquisition averages about 2 times our weighted cost of capital. Cumulatively, PPG's adjusted return on capital has been consistently in the mid-to-high teen % and remains one of the highest in our sector. This is measurable proof that we've been successful in deploying capital in a disciplined manner and effectively integrating the over 60 acquisitions that we've completed in the past 20 years.
We're very cognizant that acquisitions utilize shareholder money, and we're very proud to deliver these returns consistently for our shareholders. As detailed on slide eight, after reviewing the assessment of the independent financial advisors, our board concluded that maintaining our current business portfolio supports competitiveness versus all major coatings peers, nearly all of which have mixed business portfolios. Retains investment flexibility via access to a broader M&A pipeline for future value creation opportunities with neither business being capital constrained. Maintain financial flexibility via diversified earning streams, a robust balance sheet, and strong cash flow. Preserve operational and synergy benefits, including supply chain, R&D, operational footprint, and top quartile SG&A. The company will continue to focus on innovation and operational excellence as primary levers for organic shareholder value creation. We will continue to deploy capital in the disciplined manner which you have come to expect from PPG.
Consistent with many generation of PPG leaders, we will continue to review our business portfolio and take appropriate actions regarding underperforming product lines, businesses, or regions. I say to our PPG team all the time, "You have to continually earn your way into our portfolio." We'll move to slide nine, summarizing our second initiative, the consulting engagement we conducted to assess the operations and growth investment opportunities for our U.S. and Canadian architectural coatings business. The focus of this review was centered on identifying and executing on action plans to fully and rapidly recover our earnings following the customer assortment changes we experienced in 2018, and to position the business for success going forward, including implementing leading-edge business analysis tools, world-class management teams practices, and accelerated development of digital and e-commerce strategies.
Because much of this review gets to the core of our strategic and commercial direction for this business going forward, we are not going to discuss the actions and recommendations publicly due to competitive reasons. What I can say is that we had a full and in-depth review, both internally and with our board, of the business growth strategies and operations. The most immediate outcome was the establishment of a project management office to provide ongoing real-time measurements and guidance on the opportunities identified to return this business to the prior earnings level. This includes the execution of the restructuring program we announced in mid-2018. This is only one of the many elements of the project management office.
We have continued to strategically implement the findings from this engagement, and I'm pleased to report that we are on pace to deliver in the upcoming third quarter, in the short period of 12 months, business earnings that are consistent with the pre-customer assortment level change. On slide 10, is our third initiative, which was an internal in-depth assessment of our business and product array by region across a variety of financial measures, including sales growth, profitability, and cash flow. As evidenced by both our business and product line divestitures on page three, this has historically been a strong competency for PPG. At a minimum, we complete annual strategic reviews of our business units, major regions, and also of our support functions. This year we completed sub-region reviews and product segment reviews. These line-by-line reviews were vetted against our current and future economic expectations.
To the degree possible, we also rolled these reviews, our recently completed acquisitions, with the obvious limitation that we just closed three acquisitions within the past six months. The outcome of this detailed review is a set of decisive strategic action plans to optimize our operating footprint. This includes exiting certain modest business lines or small regional product positions, and approaching certain markets with different business models. This also includes right-sizing certain businesses based on the end-use demand, where our customers are doing the same thing. It also covers various regional elements given today's demand environment. While we are taking certain redundancy actions associated with our recent acquisitions to begin to realize the targeted synergies, I will stress that at PPG, we don't consider synergies to be just from the acquired company.
Many of our acquisitions have their own best practices, we will adopt these acquired best practices throughout PPG. As a result of these actions, we expect to take a charge in the second quarter of $185 million-$200 million, although we are still working to finalize the final details. This charge excludes certain non-cash items, such as accelerated depreciation on certain manufacturing footprint adjustments that we will incur ratably, and other associated expenses that will be recognized as incurred based on accounting guidelines. We expect to provide more detail about these items on our second quarter earnings call as they occur over the next several quarters. We are targeting annual run rate savings from these actions of about $125 million once fully implemented. We expect the majority of these savings to benefit years 2020 and 2021.
We will begin to work on many of these structural actions immediately, will take multiple quarters to implement those resulting in a more modest impact on 2019. Slide 11 summarizes the conclusions of these three separate reviews. Finally, I'd like to thank our shareholders and employees for their continued feedback and support. This concludes our prepared remarks. Once again, we appreciate your interest in PPG. Nicole, would you please open the line for questions?
Thank you. We will now begin the question and answer session. Please limit your questions to one question and one follow-up. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Matthew Krueger of Robert W. Baird. Please go ahead.
Hi. Good morning, everyone. How are you doing today?
Good morning, Matthew.
My first question is: What criteria did the strategic review process prioritize as it related to analyzing the business under a variety of economic scenarios, just given the significant end market diversity across PPG as a company?
Matthew, as Michael alluded to in the prepared remarks, the financial estimates that the advisors were anchored to were external estimates, obvious estimates that would include certainly the current year as well as the forward-looking years, and embedded in those would be the equity investor assumptions on the global economy.
Okay. Got you. That makes sense. Just a second question. After the strategic review, have you arrived at any different or more focused conclusions on your M&A priorities or future business expansion opportunities as it relates to growing your footprint, just given some of the commentary around kind of pruning less profitable businesses and lines and things like that?
No, Matthew, this is Michael. No, I don't think it changes anything. As you can see in the appendix, we've been very successful on acquisitions, whether it's been in Europe or the U.S. or Latin America. Many of the acquisitions we've done recently come with facilities in China, which has allowed us to continue to grow faster than the market. I think we're pleased with where we are.
Our next question comes from John Roberts of UBS. Please go ahead.
Thank you. You've got at least four non-paint businesses, Silicas, eyeglass resins, OLED materials, and airplane windscreens. Did the review evaluate the roles of these businesses in the portfolio?
Thanks, John. This is Michael. The review covered all of PPG, and what I would tell you about those businesses you referenced, they all have returns above the company average.
Okay. I had the impression that you moved up this announcement from what was originally expected to be the end of the quarter. Was there a reason for the timing shift?
No. We wanted to complete it before the end of the quarter, and once the advisors were done, our internal work had already been done. The timing was, we didn't feel a reason to hold it till the end of the quarter.
Our next question comes from Frank Mitsch of Fermium Research. Please go ahead.
Good morning, gentlemen, thanks for the comprehensive review this morning. Just curious, have these findings been shared with any shareholders prior to the press release going out this morning?
Zero.
Thank you. I was wondering if you might be able to size some of the buckets, or areas where you're expecting the cost savings program, the $125 million, and the charges of $185 million-$200 million that you're taking. On those charges, are some of the expenses associated with the strategic review, the consultants, et cetera, buried in that, or it is not buried, included in that? How can you help us kind of bucket what is going on with this latest cost savings program?
Hey, Frank, this is Vince. All the restructuring charges relate to curtailments of businesses or business activities. There are no charges in those buckets related to work done for this assessment. The three primary buckets we have for restructuring, we are going to continue to optimize our manufacturing footprint, first and foremost. We are also looking at getting some small product lines or some places around the world where we have very small positions, where we have not been proven to grow at levels consistent with our strategies. We are obviously looking at the economic backdrop today and making some decisions around how that looks going forward and starting to evaluate the sizes of certain regions or businesses. Those would be all the work we are doing from a restructuring perspective. As Michael alluded to in the prepared remarks, we are not done with that analysis yet.
We will be completed by the end of the second quarter, in our July conference call, we can provide some more granular details.
Our next question comes from Kevin McCarthy of VRP. Please go ahead.
Yes, good morning. Michael, of the various strategic alternatives that the board considered, did any of them receive meaningful support other than the course of action that you've outlined this morning? Just wondering whether the board is unanimous in its approach or whether there was any alternative opinions put forth.
The board was unanimous. I think when you go through the detail that the advisors put forward, plus the internal review, the conclusions were pretty obvious. There was zero opinions that we should do anything different besides what we're announcing today.
Okay. It sounds like some pruning of smaller product lines will be in the cards going forward. Can you address what criteria you'll look at in determining whether to keep or separate business lines or product lines with subpar profitability?
The first one, of course, is cash flow return. That would be one. Second is our future outlook on the ability to grow. If we're looking at a region that we've had two or three years in a row of what I would call minimal to no profitability, and if we anticipate that the economic conditions in those regions or sub-regions would continue, we're looking to trim support in that area.
Our next question comes from Michael Sison of KeyBanc. Please go ahead.
Hey, guys. Michael, I think you mentioned that your goal for EPS growth is 10%. Can you maybe walk us through the variables that get you there longer term, and if that goal is an all straight up 10% goal, or is it ex currency and such?
Well, as we said in our prepared remarks, it's ex currency. The goal for us is to continue to drive growth in the various businesses. Capital deployment, the growth from the acquisitions, cost savings, are all part of that metric.
Mike, the other thing we're obviously working on is recapturing our margins. That price raw mixture that has been unfavorable the past couple of years, we're working to get that back in our favor in 2019.
Okay, great. You reiterate your guidance for this year, any sort of update near term, how trends are going in terms of sales growth and for that thus far here in Q2?
No, we can confirm our two quarter guidance.
Yes, we gave guidance with a range in Q2. The quarter is shaping up as we had envisioned when we gave the guidance about five weeks ago. The guidance had a little bit of a range due to some of the geopolitical and economic uncertainty out there, but we're comfortable where we stand today. When we gave that guidance in mid-April, we did have visibility for three or four weeks in most of our businesses that grant us that visibility. Again, we're comfortable right now with the guidance we put forth in Q2.
Our next question comes from David Begleiter of Deutsche Bank. Please go ahead.
Thank you. Good morning. Michael and Vince, of the $120 million of cost savings, are any going to come from U.S. and Canada Architectural?
Nothing of materiality.
Very good.
We have a separate program that Michael McGarry talked about in the opening remarks, really focused on that recovery of that business's profitability. There are certainly some smaller items in all of our businesses that we're tackling. The majority of the restructuring comes from other regions or other businesses.
David, just to add to that, this is a reminder, when we announced the assortment change, we said that we were going to be taking plants down, and we have closed four plants since that period of time. All those actions have been taken. That's why we're confident that our earnings in 3Q will be at or better than the prior earnings before the assortment change.
Very good. Just on the charge for this current program, how much is cash versus non-cash?
$185 million-$200 million is primarily cash. Again, as we said in the prepared remarks, there are non-cash charges that we'll incur ratably as we accelerate depreciation on certain assets. Again, we'll give some of that information out as we hit the 2Q call. There are also certain cash charges beyond the $185 million-$200 million that we'll expense as we incur per the accounting guidelines. Again, we'll size that in 2Q earnings call, but that's not a significant amount.
Our next question comes from Christopher Parkinson of Credit Suisse. Please go ahead.
Thanks. As far as the realignment's concerned, to what extent do you believe there are kind of incremental opportunities for the, let's say, the future portfolio, whether that be cross-selling Powder and Liquid into industrial customers? Any other opportunities, even something on the services front for aero and/or industrial? Just can we get an update there? Thank you.
Well, we do cross-selling all the time. I think one of the reasons why the advisors continue to recommend the acquisitions as well as the fact that we have internally recommended is that if you look at our Protective Marine business, when we go into a new market with architectural footprint, we're able to increase the size of our Protective Marine business. We're able to do some additional cross-selling with industrial, light industrial products. Those are two examples of where that happens. We always look for opportunities in our automotive space to sell other products in our industrial. Obviously, we just bought Whitford, and with the low friction coating they have, we have a very good automotive team that will be trying to sell more of those coatings into the automotive and heavy-duty equipment market. Cross-selling opportunities abound in this coating space.
Chris, if I could just add, the other opportunities we have is really pushing R&D across the portfolio. There are customer demands in different coatings verticals that we try to meet each year. We find either that same year or another point in time, those customer demands, they pop up somewhere else in our portfolio, in another region, in another business. We're able to very quickly redeploy our R&D across, again, our entire portfolio in a similar vein of cross-selling, but certainly at the technology scale.
Great. You hit on this a little, but can you further break down the $185 million-$200 million 2Q charge, the non-cash items, and just can you help us reconcile that versus the $125 million? Is there any chance that savings will be material higher when it's all said and done? Thank you.
Thanks, Chris. We're still working through the final details of the charge. Again, our target is $125 million in savings. The cash outlay is going to be between $185 million and $200 million, again, plus some other costs that will be recognized as incurred. That's the information we have today. Again, we'll provide some more granular details on that in the July earnings call.
Our next question comes from P.J. Juvekar of Citi. Please go ahead.
Yes. Hi, good morning, Michael and Vince.
Morning, P.J.
Morning.
Did this architectural study evaluate your channel strategy? What I mean by that is, would you de-emphasize a particular channel like the dealer network or maybe open more stores? Was there any finding there that looked at your channel strategy and how to grow organically?
Yes. They looked very carefully at all phases, whether it's company-owned stores, dealers, or the big boxes, and they were very comfortable with our current strategy, and they validated that. Obviously, they have a few tweaks that they suggested that we consider, but by and large, it was consistent with what we're doing.
Secondly, by eliminating some product lines, are you moving up the price ladder? Meaning, would your price mix move up in the subsequent quarters?
That would be a good assumption, P.J. I think, though, when you think about finding some of these are going to be small products in small countries. The answer is yes, but it's not going to be something you would probably find quickly.
P.J., Vince again. Again, normal process here is we look at profitability by business, by region. There's always a tail of products and customers and regions where you try to work on that tail year in and year out. You should assume these are the lower profit portions of the tail, and we're trying to act on those. Some of those were put in place in the past as potential growth opportunities that didn't materialize. We're trying to make sure we react based on current environment.
Our next question comes from Arun Viswanathan of RBC Capital Markets. Please go ahead.
Great, thanks. Good morning. Just wondering about the volume side of your business. Volumes have been weak, and obviously, there's been the macro pressures. Did the review include any new initiatives from a company standpoint that would drive extra volume growth? Is there anything that you could do internally to accelerate and potentially recover some of that volume?
Yeah. I'd say two things, Arun. One, our internal review, as well as, again, the IGS estimates, have certain assumptions in them. We definitely are focused on our cost savings programs around our views of the economy in certain regions, et cetera. With respect to the current environment, it is certainly a bit choppy out there. Again, that was assumed in our Q2 guidance and our full-year guidance, there's no change there. We do have a significant amount of work underway in our U.S. architectural business around the consultant feedback to try to increase our volume growth there. In all of our businesses, frankly, significant actions around volume growth, even in an amiable volume environment. There's nothing out of this study, other than the architectural work, that's specific to that.
Again, we have significant organic R&D efforts underway that have been underway for quite some time, and we're executing against those.
On the cash deployment side, did it also include maybe some consideration of larger scale M&A? It seems like that's been something that you would have considered before. Where do you stand on whether that would be additive to shareholder value? Thanks.
Yeah. Arun, they did make specific recommendations. Obviously, I don't think this is the environment which to go through which ones they did do. Let's just say they didn't turn up anybody that we were not fully aware of.
Yeah. Again, I think we've been talking about for the last year, that it's a very active M&A space right now. Michael McGarry mentioned we closed three deals in the last six months. There's been another three deals done really in the last six weeks. Some of those have been large deals, several billions of dollars. We continue to look at our pipeline. We continue to vet opportunities. We still feel that's a very good use of shareholder cash at the right price. We will have remained disciplined. The pipeline's active now. If we don't have an opportunity to close on certain deals, we'll look at share repurchase as a lever to return cash to our shareholders.
Our next question comes from Andrew Keches of Barclays. Please go ahead.
Hi. Good morning, everyone. Just a couple or two questions on the balance sheet. The first, leverage has certainly ticked up over the last year and a half. Is there a debt metric or perhaps a ratings target that you'd like to maintain through the cycle? I think as a follow-up, you clearly highlight preserving financial flexibility for opportunities. Is it possible to frame up maybe how much balance sheet capacity you would have for such opportunities? Said differently, I guess, are A-minus credit ratings sacred to the business?
Andrew, we've been pretty consistent in saying we want to maintain our investment credit rating. We also said we would stretch for a really good acquisition, which we did try a year and a half ago. Those parameters remain in place. If it's a really good one, we're happy to stretch. Right now, investment grade is where we're comfortable being.
Thanks.
Our next question comes from Don Carson of Susquehanna Financial Group. Please go ahead.
A question on your consultant work on the U.S. and Canadian Architectural. What recommendations do they have in terms of your future investment in the business? Is this something where you're just going to not invest capital, or you're going to be more aggressive in store openings or branding, such as it may seem like they'd be pushing the PPG brands? Can you just talk about your willingness to invest in that business?
We're going to continue to invest to grow that business. I always remind people, we run a global Architectural business, so when we look at store openings, we look at where we're going to have the best bang for the buck. Obviously, Mexico has been a high return environment for us. U.K. and France have been high return environments. We're going to continue to invest selectively in the stores in the U.S. where it makes the most amount of sense.
As a follow-up, how big a factor was the tax leakage from separating out Architectural and Industrial?
Don, this is Vince. It depends on your view of what the value of the business is. We're not going to give out specific numbers on the call here, in different scenarios, tax leakage comes into effect on any company's portfolio. It wasn't the biggest decision driver. The biggest decision driver was, as earmarked on one of the slides, was the dyssynergies. That was a much bigger factor in terms of the analysis.
Our next question comes from John McNulty of BMO. Please go ahead.
Good morning. Thanks for taking my question. With regard to the returns analysis that you did on the M&A, the results coming in at two times your cost of capital is impressive. Does it make you think you should be even more aggressive with M&A going forward, considering how high the returns have been on the acquisitions you've done?
Well, John, that was a point that was debated by the advisors. We're going to be diligent and make sure we're disciplined. When we look at all these things, sometimes we do have better returns because the raw material synergies pop a little higher or the sales synergies pop a little higher. I think our approach has been consistent. I think you raise a valid point and the advisors also raised a valid point.
Make no mistake, all those decisions are with the backdrop that it's shareholder money. I'd rather have a little higher batting average and continue to return value to our shareholders. By the same token, it's a very valid question.
Fair enough. Then just a follow-up. On the buckets that you have on page, I think it's 17, where it shows the technology, geography, scale, and adjacency buckets in terms of the types of acquisitions you've done. Are there any that stand out, any of those buckets that stand out where the returns were noticeably either higher or lower than what you were talking to in the total corporate average?
No, not really, no.
It's more the property, John, more the ability for us to strike, obviously, a good acquisition price and then obviously the synergy level. Those are typically the key parameters that drive the returns.
Our next question comes from Jeff Zekauskas of J.P. Morgan. Please go ahead.
Thanks very much. Will the Goldman and Morgan Stanley studies be disclosed?
Sorry, Jeff. No.
Okay.
Jeff, they contain a lot of proprietary information that's non-public from a company perspective.
Okay. Second, in the assessment of the value of breaking the company into two pieces, an industrial piece and an architectural piece, was there also an examination of the strategic possibilities of the two smaller companies? That is, if there were merger possibilities or sale possibilities or divestiture possibilities that were weighed against the dyssynergies that would come from splitting the company into two pieces, or was it simply a simpler analysis of looking at the big company versus two smaller companies and their valuation in the public markets with raw material dyssynergies? How complex was the analysis?
Yes. The advisors did a thorough analysis, more of the former of what you talked about. Again, there's multiple permutations everybody can go through, but they try to do the perspective from our shareholder. If the shareholder has a RemainCo and a SpinCo, what that means. Again, there's certainly a lot of assumptions that go into these analyses, but I do believe the advisors tried to do is their perspective based on the shareholder value creation, the ultimate shareholder value creation.
Our next question comes from Steve Byrne of Bank of America. Please go ahead.
Yes, thank you. Did your strategic review lead you down the path of reassessing your current structure of your segments? For example, is two optimal? What about three? Why are five businesses in one and four in the other? Could you have pulled architectural out? Anything along those lines also assessed in the review?
Yes, Steve. Our reporting structure was not part of the deliberations here. It's something we control as a company. We have that reporting structure that really separates distribution type businesses versus B2B type businesses. We're comfortable with that reporting structure as it exists. This analysis was not inclusive of that.
A question on your Home Depot business. Have you increased your commercial investment in that relationship? Are you seeing any traction as of now in that investment?
Well, all I will tell you is that we've been very happy with our relationship in Home Depot. We've grown with the various DIY segments better than our underlying customers. I won't get into a specific customer, we've been very pleased with our growth in that area.
Our next question comes from Dmitry Silversteyn of Buckingham Research. Please go ahead.
Yes, good morning. I just wanted to follow up on Arun's question from earlier. Was there anything in this review process that sort of identified the source of the difficulty that you have of growing the business organically, even in line with your markets, let alone exceeding the market growth rate? If so, what are some of the steps that you're going to be taking in the near and the midterm to speed up your organic growth performance?
Dmitry, the primary focus of this was the performance of the company and then the separation of it. Clearly, they had some commentary that they provided us, again, as we've mentioned on our earlier remarks, it gets into the strategic part of how we're going to run the company. I think we'll pass on getting into further detail on that.
Okay. Thank you.
Our next question comes from Jim Sheehan of SunTrust. Please go ahead.
Thank you. Good morning. On the $125 million in cost savings, how will you apportion that by segment, Performance Coatings versus Industrial Coatings?
Jim, we'll give some more details on our 2Q call. As Michael alluded to in the opening remarks, the material of that will occur in 2020 and 2021. We will have a sliver of that that we'll recognize the savings of in 2019. Again, all those details are forthcoming.
Thank you.
Our next question comes from Bob Koort of Goldman Sachs. Please go ahead.
Thank you. Good morning. On slide 17, where you show your returns on capital, is that a left to right timescale? Secondly, the bars where you've been able to get a lot more in the post-completion returns, have there been commonalities that have driven that superior return from what you first estimated?
No, they're not by time. They're by just different acquisitions. A lot of the returns have to do with the price we paid, obviously. You can see, like acquisition two, it was a very creative price, and some of the other ones were more competitive. They are a variety of end markets and variety of regions and a variety of products.
Yeah, Bob, every acquisition is different in the criteria. Every acquisition is different in terms of the synergy capability and opportunity. Obviously, there's execution that we do on each one of these. It's really hard to overall have a rule of thumb. There are certain averages that we follow and seem to come true over time, each one is a different entity.
I'm curious if the advisors gave you some ideas maybe that you could do around the edges, and you are fairly active in your productivity goals. Was there anything uncovered that you didn't expect or that was new to you? Maybe the external view gave you some new perspective?
Let me start, I'll let Michael finish here. I think in the Architectural study, again, I think it's always good to get an outside perspective and a refresh on different things, management tools, management cadence, different analysis tools. So that perspective was very helpful. In the separation review, again, the advisors bounced off a lot of different ideas that were informative. As Michael alluded to, they all ran to the same result at the end, but it certainly gave us a different thing to think about as we go through individual strategic reviews of our businesses or regions. Those would be the two I'd pinpoint.
The one thing I would point to, Bob, one of the items that they were able to track in, I would say, better real time than we were doing it before, was pricing. The tools that they brought, I would say, accelerated our viewpoint on pricing by a week or two. We might know it mid-month or end of month. They would know it more on a real-time basis. They complemented what we were doing, but they certainly thought they could accelerate the insight.
Got it. Thank you very much.
Thanks, Bob.
This concludes our question and answer session. I would like to turn the conference back over to John Bruno for any closing remarks.
Thank you, Nicole. I'd like to thank everyone for their time and interest in PPG. If you have any further questions, please contact our investor relations department. This concludes our call.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.