Axalta Coating Systems Ltd. (NYSE:AXTA) Q1 2024 Earnings Conference Call May 1, 2024 8:00 AM ET Company Participants Chris Evans - Vice President of Investor Relations Chris Villavarayan - President & Chief Executive Officer Carl Anderson - Chief Financial Officer Conference Call Participants David Huang - Deutsche Bank Harris Fein - Wolfe Capital Aleksey Yefremov - KeyBanc Capital Markets Matthew Krueger - Baird Mike Harrison - Seaport Research Rock Hoffman - Bank of America Michael Sison - Wells Fargo Joh ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-36733 AXALTA COATING SYSTEMS LTD. (Exact name of registrant as specified in its charter) Bermuda 2851 98-1073028 (State or other jurisdi ...

Axalta Coating Systems (AXTA) came out with quarterly earnings of $0.48 per share, beating the Zacks Consensus Estimate of $0.40 per share. This compares to earnings of $0.35 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 20%. A quarter ago, it was expected that this high-performance coating system maker would post earnings of $0.43 per share when it actually produced earnings of $0.43, delivering no surprise.Over the last fo ...

[First Quarter 2024 Financial Results](index=1&type=section&id=First%20Quarter%202024%20Financial%20Results) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) Axalta achieved record first-quarter **Adjusted EBITDA of $259 million**, with a **20.0% margin**, despite a **$22 million GAAP Net Income decline** due to restructuring charges Q1 2024 Key Financial Metrics (YoY) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.3 billion | $1.28 billion | +0.8% | | Net Income | $39 million | $61 million | -36.1% | | Adjusted EBITDA | $259 million | $213 million | +21.6% | | Adjusted EBITDA Margin | 20.0% | 16.6% | +340 bps | | Diluted EPS | $0.18 | $0.27 | -33.3% | | Adjusted Diluted EPS | $0.48 | $0.35 | +37.1% | - The decline in net income was primarily driven by **$55 million in pre-tax restructuring charges** related to the 2024 Transformation Initiative[2](index=2&type=chunk)[3](index=3&type=chunk) - The company announced a '2024 Transformation Initiative' which is expected to generate approximately **$75 million in annual run-rate savings by 2026**[2](index=2&type=chunk) - **Adjusted Net Income improved by $27 million** year-over-year, driven by variable cost deflation that offset higher fixed operating expenses[3](index=3&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) Both segments drove earnings growth, with Performance Coatings achieving **record Adjusted EBITDA of $196 million** and Mobility Coatings' **Adjusted EBITDA surging 43%** [Performance Coatings](index=1&type=section&id=Performance%20Coatings) Performance Coatings maintained **flat net sales at $848 million** but achieved **record Adjusted EBITDA of $196 million**, with margins expanding to **23.1%** Performance Coatings Q1 2024 Results (YoY) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $848 million | $848 million | 0% | | Adjusted EBITDA | $196 million | $169 million | +16.0% | | Adjusted EBITDA Margin | 23.1% | 20.0% | +310 bps | - Refinish net sales grew **4% year-over-year**, driven by positive price-mix and the André Koch acquisition[4](index=4&type=chunk) - Industrial net sales decreased due to softer market activity and strategic prioritization of higher-margin business[4](index=4&type=chunk) [Mobility Coatings](index=2&type=section&id=Mobility%20Coatings) Mobility Coatings' net sales increased **2% to $446 million**, with **Light Vehicle sales up 4%**, driving a **43% surge in Adjusted EBITDA to $63 million** Mobility Coatings Q1 2024 Results (YoY) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $446 million | $437 million | +2.1% | | Adjusted EBITDA | $63 million | $44 million | +43.2% | | Adjusted EBITDA Margin | 14.2% | 10.1% | +410 bps | - Light Vehicle net sales improved by **4% year-over-year**, driven by strong volume growth in China[5](index=5&type=chunk) - Commercial Vehicle net sales decreased by **4% year-over-year**, impacted by a **12% decline in Class 8 production** in North and Latin America[5](index=5&type=chunk) [Financial Position and Capital Management](index=1&type=section&id=Financial%20Position%20and%20Capital%20Management) Axalta strengthened its balance sheet, reducing net leverage to **2.8x** and approving a new **$700 million share repurchase program** - The total net leverage ratio improved to **2.8x** at quarter-end, down from **3.7x** as of March 31, 2023[3](index=3&type=chunk) - The company paid down an additional **$75 million of term loan principal** during the quarter[3](index=3&type=chunk) - In April 2024, the Board of Directors approved a new **$700 million share repurchase program**[2](index=2&type=chunk)[3](index=3&type=chunk) Cash Flow Summary (YoY) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash from Operating Activities | $34 million | ($52 million) | | Free Cash Flow | $15 million | ($88 million) | [Financial Outlook](index=2&type=section&id=Financial%20Outlook) [Second Quarter And Full Year 2024 Outlook](index=2&type=section&id=Second%20Quarter%20And%20Full%20Year%202024%20Outlook) Axalta raised its full-year 2024 guidance, projecting **Adjusted EBITDA of $1,050 - $1,080 million** and **Adjusted Diluted EPS of $1.90 - $2.00** - The company increased its full-year 2024 outlook for Adjusted EBITDA, Adjusted EPS, and Free Cash Flow[2](index=2&type=chunk)[5](index=5&type=chunk) Q2 and Full Year 2024 Guidance | Item | Q2 2024 Projection | FY 2024 Projection | | :--- | :--- | :--- | | Net Sales YoY% | 3% - 5% | +LSD (low single digit) | | Adjusted EBITDA | ~$275 million | $1,050 - $1,080 million | | Adjusted Diluted EPS | ~$0.50 | $1.90 - $2.00 | | Free Cash Flow | - | $425 - $475 million | [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Axalta reported **net sales of $1,294 million** but a decline in **net income to $41 million** due to increased 'Other operating charges' Q1 2024 Statement of Operations Highlights (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $1,294 | $1,284 | | Cost of goods sold | $865 | $902 | | Other operating charges | $61 | $7 | | Income from operations | $121 | $125 | | Net income attributable to common shareholders | $41 | $61 | | Diluted net income per share | $0.18 | $0.27 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, Axalta reported **total assets of $7,089 million**, with **long-term debt at $3,407 million** and **shareholders' equity at $1,775 million** Balance Sheet Highlights (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $624 | $700 | | Total assets | $7,089 | $7,272 | | Long-term debt | $3,407 | $3,478 | | Total liabilities | $5,314 | $5,499 | | Total shareholders' equity | $1,775 | $1,773 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated **$34 million in cash from operating activities** and **$15 million in positive free cash flow**, a significant improvement year-over-year Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash provided by (used for) operating activities | $34 | ($52) | | Cash used for investing activities | ($19) | ($6) | | Cash used for financing activities | ($82) | ($88) | | Decrease in cash | ($67) | ($146) | | Cash at end of period | $627 | $515 | [Reconciliation of Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) Net Income of **$39 million** was reconciled to **Adjusted EBITDA of $259 million** in Q1 2024, with a significant margin expansion to **20.0%** Q1 2024 Reconciliation of Net Income to Adjusted EBITDA (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income | $39 | $61 | | Interest, Taxes, D&A | +$142 | +$133 | | EBITDA | $181 | $194 | | Termination benefits & other employee costs | +$55 | $0 | | Other Adjustments | +$23 | +$19 | | **Adjusted EBITDA** | **$259** | **$213** | [Reconciliation of Net Income to Adjusted Net Income](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) Adjusted Net Income for Q1 2024 reached **$106 million**, leading to an **Adjusted Diluted EPS of $0.48**, up from **$0.35** in the prior year Q1 2024 Reconciliation to Adjusted Net Income (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income attributable to common shareholders | $41 | $61 | | Termination benefits & other employee costs | $55 | $0 | | Step-up depreciation and amortization | $12 | $16 | | Total adjustments | $77 | $25 | | Income tax provision impacts | $12 | $7 | | **Adjusted net income** | **$106** | **$79** | | **Adjusted diluted net income per share** | **$0.48** | **$0.35** | [Reconciliation of Cash Flow to Free Cash Flow](index=10&type=section&id=Reconciliation%20of%20Cash%20Flow%20to%20Free%20Cash%20Flow) Axalta generated **$15 million in Free Cash Flow** in Q1 2024, a **$103 million year-over-year improvement** from negative free cash flow Q1 2024 Free Cash Flow Reconciliation (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Cash provided by (used for) operating activities | $34 | ($52) | | Purchase of property, plant and equipment | ($22) | ($42) | | Interest proceeds on swaps | $3 | $6 | | **Free cash flow** | **$15** | **($88)** | [Reconciliation of Income from Operations to Adjusted EBIT](index=11&type=section&id=Reconciliation%20of%20Income%20from%20Operations%20to%20Adjusted%20EBIT) Income from Operations of **$121 million** was reconciled to **Adjusted EBIT of $190 million**, with the company transitioning to Adjusted EBITDA as its primary segment metric Q1 2024 Reconciliation to Adjusted EBIT (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Income from operations | $121 | $125 | | Other expense, net | $8 | $1 | | Termination benefits & other employee costs | $55 | $0 | | Step-up depreciation and amortization | $12 | $16 | | **Adjusted EBIT** | **$190** | **$149** | - Axalta is transitioning to using Adjusted EBITDA as the primary measure to evaluate financial performance of its operating segments, but will continue to publish segment Adjusted EBIT through 2024 for historical trend analysis[14](index=14&type=chunk)[31](index=31&type=chunk)

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Investors with an interest in Chemical - Specialty stocks have likely encountered both Axalta Coating Systems (AXTA) and CSW Industrials (CSWI) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven ...

Axalta Coating Systems (AXTA) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on May 1, 2024, might help the stock move higher if these key numbers are better ...

PHILADELPHIA, April 23, 2024 (GLOBE NEWSWIRE) -- Axalta Coating Systems (NYSE:AXTA), a leading global coatings company, announced today that it has won three 2024 Edison Awards™. Axalta Irus Mix won silver in the Environmental and Industrial Solutions category. Axalta's Voltatex® 7345 A ECO Wire Enamel and its Low Carbon Footprint Sustainable Coating System with Hyperdur® Primer and Chromadyne® Colorcoat won silver and bronze, respectively, in the Coatings and Manufacturing category. This is the sixth conse ...

 PHILADELPHIA, April 15, 2024 (GLOBE NEWSWIRE) -- Axalta Coating Systems (NYSE:AXTA), a leading global coatings company, was recognized by General Motors as a top global supplier of 2023 during its annual Supplier of the Year recognition event last week in Miami. In total, 86 suppliers were recognized with a Supplier of the Year award. "We are proud to be recognized by General Motors again as a 2023 Supplier of the Year," said Hadi Awada, President, Global Mobility Coatings, Axalta. "Through our strong rela ...

Investors looking for stocks in the Chemical - Specialty sector might want to consider either Axalta Coating Systems (AXTA) or CSW Industrials (CSWI) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphas ...