Core Insights - Axalta Coating Systems (AXTA) reported quarterly earnings of $0.64 per share, exceeding the Zacks Consensus Estimate of $0.61 per share, and showing an increase from $0.57 per share a year ago, resulting in an earnings surprise of +4.92% [1] - The company posted revenues of $1.31 billion for the quarter ended June 2025, which was below the Zacks Consensus Estimate by 1.33% and a decrease from $1.35 billion year-over-year [2] - Axalta's shares have declined approximately 16.1% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.66 on revenues of $1.34 billion, and for the current fiscal year, it is $2.50 on revenues of $5.29 billion [7] - The estimate revisions trend for Axalta was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Chemical - Specialty industry, to which Axalta belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, suggesting that the industry outlook may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

July 30, 2025 Axalta Coating Systems Q2 2025 Financial Results 1 Sensitivity: Business Internal Legal Notices Forward-Looking Statements This presentation and the oral remarks made in connection herewith may contain certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding Axalta and its subsidiaries including, but not limited to, our outlook and/or guidance, which includes net sales growth, net sales, Adjusted EBITDA, Adjusted Diluted EPS, ...

[Company Information & Release Details](index=1&type=section&id=Company_Info_Release) This section provides contact details for investors and media, along with the announcement of Axalta Coating Systems Ltd.'s Q2 2025 financial results [Contact Information](index=1&type=section&id=Contact_Info) This section provides the investor and media contact details for Axalta Coating Systems Ltd - Investor Contact: **Colleen Lubic**, D +1 610-999-9407, Colleen.Lubic@axalta.com[1](index=1&type=chunk) - Media Contact: **Corporate Communications**, axalta-media-relations@axalta.com[1](index=1&type=chunk) [Release Announcement](index=1&type=section&id=Release_Announcement) Axalta Coating Systems Ltd. announced its financial results for the second quarter ended June 30, 2025, on July 30, 2025 - Axalta Coating Systems Ltd. (NYSE:AXTA) released its financial results for the second quarter ended June 30, 2025, on **July 30, 2025**[1](index=1&type=chunk) [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Q2_2025_Performance_Highlights) This section summarizes Axalta's Q2 2025 financial performance, including CEO remarks, consolidated results, and cash flow achievements [CEO Statement](index=1&type=section&id=CEO_Statement) CEO Chris Villavarayan highlighted an excellent quarter with new records for Adjusted EBITDA and Adjusted Diluted EPS, attributing the performance to operational excellence and commitment to financial targets through the A Plan objectives - CEO Chris Villavarayan stated that Axalta delivered an 'excellent quarter,' setting new records for **Adjusted EBITDA** and **Adjusted Diluted EPS**[3](index=3&type=chunk) - Performance reflects Axalta's drive for operational excellence and commitment to financial targets and value creation through **A Plan objectives**[3](index=3&type=chunk) [Consolidated Financial Results Overview](index=1&type=section&id=Consolidated_Financial_Results_Overview) Axalta reported a 3% year-over-year decrease in net sales to $1.3 billion, primarily due to volume declines in Performance Coatings. Despite this, the company achieved record Adjusted EBITDA of $292 million and Adjusted Diluted EPS of $0.64, driven by lower operating expenses and improved variable costs Q2 2025 Consolidated Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------- | :------ | :------ | :--------- | | Net Sales | $1.3 billion | $1.351 billion | -3% | | Net Income | $110 million | $113 million | -3% | | Net Income Margin | 8.4% | 8.4% | 0 bps | | Adjusted Net Income | $139 million | $135 million | +$4 million | | Adjusted EBITDA | $292 million | $291 million | +$1 million | | Adjusted EBITDA Margin | 22.4% | 21.5% | +90 bps | | Diluted EPS | $0.50 | $0.51 | -2% | | Adjusted Diluted EPS | $0.64 | $0.61 | +5% | - Net sales decreased **3% year over year**, primarily due to volume declines in Performance Coatings, partially offset by the CoverFlexx acquisition and favorable currency translation[3](index=3&type=chunk) - Net income decreased **3%** due to restructuring costs, partially offset by lower operating expenses, interest, and tax expense[4](index=4&type=chunk) [Cash Flow Performance](index=1&type=section&id=Cash_Flow_Performance) Axalta significantly improved cash provided by operating activities by 25% year-over-year to $142 million and increased free cash flow to $101 million, reflecting a focus on margin expansion and operational discipline Q2 2025 Cash Flow Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Cash provided by operating activities | $142 million | $114 million | +25% | | Free Cash Flow | $101 million | $95 million | +$6 million | - The increase in cash provided by operating activities reflects the company's focus on **margin expansion** and **operational discipline**[5](index=5&type=chunk) - Free cash flow was driven by stronger operating performance, partially balanced by increases in strategic capital expenditures[5](index=5&type=chunk) [Segment Results Discussion](index=1&type=section&id=Segment_Results_Discussion) This section details the financial performance of Axalta's Performance Coatings and Mobility Coatings segments for Q2 2025 [Performance Coatings](index=1&type=section&id=Performance_Coatings) The Performance Coatings segment experienced a 6% year-over-year net sales decline to $836 million, primarily due to organic volume declines in Refinish and Industrial, partially offset by the CoverFlexx acquisition and favorable currency. Adjusted EBITDA decreased to $200 million, but the segment maintained a healthy Adjusted EBITDA margin of 23.8% due to cost management Performance Coatings Q2 2025 Results | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net Sales | $836 million | $887 million | -6% | | Refinish Net Sales | $514 million | N/A | -6% | | Industrial Net Sales | $322 million | N/A | -6% | | Adjusted EBITDA | $200 million | $223 million | -$23 million | | Adjusted EBITDA Margin | 23.8% | N/A | N/A | - Organic net sales decline in North America predominantly drove the **Refinish net sales decrease**[6](index=6&type=chunk) - Industrial net sales decreased due to lower volumes, despite positive price-mix and favorable foreign currency translation[6](index=6&type=chunk) [Mobility Coatings](index=2&type=section&id=Mobility_Coatings) The Mobility Coatings segment saw a 1% increase in net sales to $469 million, driven by organic growth in Light Vehicle, despite declines in Commercial Vehicle volumes. The segment delivered exceptional performance with Adjusted EBITDA increasing significantly to $92 million and margin expanding to 19.8% due to positive price-mix and disciplined cost management Mobility Coatings Q2 2025 Results | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net Sales | $469 million | N/A | +1% | | Light Vehicle Net Sales | N/A | N/A | +2% | | Commercial Vehicle Net Sales | $107 million | N/A | -4% | | Adjusted EBITDA | $92 million | $68 million | +$24 million | | Adjusted EBITDA Margin | 19.8% | 14.8% | +500 bps | - Light Vehicle net sales were up **2% year over year** due to organic net sales growth in three out of four regions[9](index=9&type=chunk) - Commercial Vehicle net sales decreased due to lower volumes from Class 8 builds and foreign currency translation headwinds, partially mitigated by positive price-mix[9](index=9&type=chunk) [Outlook and Guidance](index=2&type=section&id=Outlook_Guidance) This section provides Axalta's financial projections and guidance for the third quarter and full year 2025 [Third Quarter and Full Year 2025 Projections](index=2&type=section&id=Q3_FY2025_Projections) Axalta provided projections for Q3 and full year 2025, anticipating low single-digit net sales growth for Q3, with full-year net sales expected between $5,200 - $5,275 million. Adjusted EBITDA is projected to be $290 - $300 million for Q3 and $1,140 - $1,165 million for the full year Q3 and Full Year 2025 Projections | Item | Q3 2025 Projections | FY 2025 Projections | | :-------------------------- | :------------------ | :------------------ | | Net Sales (YoY % growth for Q3 2025) | (LSD) | $5,200 - $5,275 million | | Adjusted EBITDA | $290 - $300 million | $1,140 - $1,165 million | | Adjusted Diluted EPS | $0.63 - $0.67 | $2.45 - $2.55 | | Free Cash Flow | N/A | $475 - $500 million | | Depreciation and Amortization | N/A | ~$290 million | | Tax Rate, As Adjusted | N/A | ~25% | | Diluted Shares Outstanding | N/A | ~218 million | | Interest Expense | N/A | ~$180 million | | Capex | N/A | $175 - $190 million | LSD = low single digit percentage [Additional Information](index=2&type=section&id=Additional_Information) This section provides details on the conference call, forward-looking statements, non-GAAP measures, and company background [Conference Call Information](index=2&type=section&id=Conference_Call_Details) Axalta held a conference call on July 30, 2025, to discuss Q2 2025 results, with webcast and replay options available for investors - A live webcast of the conference call was available online at **www.axalta.com/investorcall**, with a replay accessible through **July 30, 2026**[12](index=12&type=chunk) - Dial-in phone number for the conference call was **1-800-225-9448** with conference ID **AXALTA**[12](index=12&type=chunk) [Cautionary Statement Concerning Forward-Looking Statements](index=2&type=section&id=Forward_Looking_Statements) This section advises that the release contains forward-looking statements, including those related to the 2026 A Plan and financial outlook, which are subject to inherent uncertainties and risks that could cause actual results to differ materially - Statements regarding the **2024-2026 strategy** (the '2026 A Plan') and financial outlook are forward-looking[13](index=13&type=chunk) - These statements are based on management's expectations, estimates, and assumptions, which are inherently uncertain and involve risks and uncertainties[13](index=13&type=chunk) - More information on potential factors affecting financial results is available in Axalta's **Form 10-K** and **10-Q** filings with the SEC[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non_GAAP_Financial_Measures) Axalta uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Diluted EPS, and Free Cash Flow to evaluate financial and operating performance, believing they provide meaningful information for understanding underlying business trends and liquidity, despite their limitations compared to GAAP measures - Non-GAAP measures include **Adjusted EBITDA**, **Adjusted EBITDA margin**, **Adjusted Diluted EPS**, adjusted net income, **Free Cash Flow**, tax rate, as adjusted, and **Adjusted EBIT**[15](index=15&type=chunk) - Management uses these measures to analyze financial and operating performance, evaluate underlying business trends, liquidity, debt servicing ability, and strategic capital allocation[15](index=15&type=chunk) - Axalta does not provide forward-looking reconciliation for certain non-GAAP estimates due to the unavailability of necessary information without unreasonable effort[15](index=15&type=chunk) [Organic Net Sales](index=3&type=section&id=Organic_Net_Sales_Definition) Organic net sales are calculated by excluding the impact of changes in average exchange rates and net sales from the CoverFlexx acquisition, providing a clearer view of underlying sales performance - Organic net sales exclude the impact of changes in average exchange rates and net sales of **CoverFlexx**[16](index=16&type=chunk) - This measure assists investors in evaluating sales performance without the impact of foreign exchange rates and recent acquisitions/divestitures[16](index=16&type=chunk) [Non-GAAP Reporting Changes](index=3&type=section&id=Non_GAAP_Reporting_Changes) Axalta made changes to the presentation of adjusted net income and Adjusted EBIT, effective from Q4 and full year 2024, with further details available in a Form 8-K filed on January 21, 2025 - Changes were made to the presentation of **adjusted net income** and **Adjusted EBIT**, effective from **Q4 and full year 2024 results**[17](index=17&type=chunk) - More details are available in the Current Report on **Form 8-K** furnished to the SEC on **January 21, 2025**[17](index=17&type=chunk) [Segment Financial Measures](index=3&type=section&id=Segment_Financial_Measures_Definition) Adjusted EBITDA is the primary measure of segment operating performance, used by management to evaluate business performance against budgets, forecasts, and prior year results, reflecting Axalta's core operating performance - **Adjusted EBITDA** is the primary measure of segment operating performance[18](index=18&type=chunk) - Management uses Adjusted EBITDA to evaluate business performance in comparison to budgets, forecasts, and prior year financial results[18](index=18&type=chunk) [Defined Terms & Rounding](index=4&type=section&id=Defined_Terms_Rounding) This section clarifies that all capitalized terms not defined in the release are defined in SEC filings and notes that certain amounts may not precisely foot or crossfoot due to rounding - All capitalized terms not defined in this release have been previously defined in **Axalta's SEC filings**[19](index=19&type=chunk) - Certain amounts in the financial tables may not foot or crossfoot, and percentages may not recalculate due to rounding[20](index=20&type=chunk) [About Axalta Coating Systems](index=4&type=section&id=About_Axalta_Coating_Systems) Axalta is a global leader in the coatings industry with over 150 years of experience, providing innovative, sustainable coating solutions for various applications to over 100,000 customers in more than 140 countries - Axalta is a global leader in the coatings industry, offering innovative, colorful, beautiful, and sustainable coatings solutions[21](index=21&type=chunk) - The company has over **150 years of experience** and serves more than **100,000 customers** in over **140 countries**[21](index=21&type=chunk) - Coatings are designed for light vehicles, commercial vehicles, refinish applications, electric motors, building facades, and other industrial applications to prevent corrosion, increase productivity, and enhance durability[21](index=21&type=chunk) [Financial Statement Tables](index=5&type=section&id=Financial_Statement_Tables) This section presents Axalta's unaudited condensed consolidated financial statements and non-GAAP reconciliations [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Consolidated_Statements_of_Operations) This table presents Axalta's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, detailing net sales, cost of goods sold, operating expenses, net income, and earnings per share Condensed Consolidated Statements of Operations (Unaudited) | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $1,305 | $1,351 | $2,567 | $2,645 | | Cost of goods sold | 848 | 891 | 1,677 | 1,756 | | Selling, general and administrative expenses | 208 | 213 | 410 | 420 | | Other operating charges | 12 | 2 | 26 | 63 | | Research and development expenses | 20 | 18 | 37 | 36 | | Amortization of acquired intangibles | 24 | 22 | 48 | 44 | | Income from operations | 193 | 205 | 369 | 326 | | Interest expense, net | 45 | 50 | 89 | 104 | | Other expense (income), net | 5 | (1) | 8 | 7 | | Income before income taxes | 143 | 156 | 272 | 215 | | Provision for income taxes | 33 | 43 | 63 | 63 | | Net income | 110 | 113 | 209 | 152 | | Less: Net income (loss) attributable to noncontrolling interests | 1 | 1 | 1 | (1) | | Net income attributable to common shareholders | $109 | $112 | $208 | $153 | | Basic net income per share | $0.50 | $0.51 | $0.96 | $0.70 | | Diluted net income per share | $0.50 | $0.51 | $0.95 | $0.69 | | Basic weighted average shares outstanding | 217.6 | 219.9 | 217.9 | 220.2 | | Diluted weighted average shares outstanding | 218.3 | 220.9 | 218.9 | 221.2 | [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Consolidated_Balance_Sheets) This table provides Axalta's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets (Unaudited) | (In millions, except per share data) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | **Assets** | | | | Current assets: | | | | Cash and cash equivalents | $625 | $593 | | Restricted cash | 3 | 3 | | Accounts and notes receivable, net | 1,348 | 1,248 | | Inventories | 831 | 734 | | Prepaid expenses and other current assets | 180 | 145 | | Total current assets | 2,987 | 2,723 | | Property, plant and equipment, net | 1,255 | 1,181 | | Goodwill | 1,775 | 1,640 | | Identifiable intangibles, net | 1,167 | 1,149 | | Other assets | 597 | 556 | | Total assets | $7,781 | $7,249 | | **Liabilities, Shareholders' Equity** | | | | Current liabilities: | | | | Accounts payable | $764 | $659 | | Current portion of borrowings | 20 | 20 | | Other accrued liabilities | 622 | 675 | | Total current liabilities | 1,406 | 1,354 | | Long-term borrowings | 3,395 | 3,401 | | Accrued pensions | 241 | 220 | | Deferred income taxes | 163 | 151 | | Other liabilities | 265 | 167 | | Total liabilities | 5,470 | 5,293 | | **Shareholders' equity:** | | | | Common shares, $1.00 par, 1,000.0 shares authorized, 255.0 and 254.5 shares issued at June 30, 2025 and December 31, 2024, respectively | 255 | 255 | | Capital in excess of par | 1,610 | 1,599 | | Retained earnings | 1,885 | 1,677 | | Treasury shares, at cost, 38.4 and 36.4 shares at June 30, 2025 and December 31, 2024, respectively | (1,102) | (1,037) | | Accumulated other comprehensive loss | (383) | (582) | | Total Axalta shareholders' equity | 2,265 | 1,912 | | Noncontrolling interests | 46 | 44 | | Total shareholders' equity | 2,311 | 1,956 | | Total liabilities and shareholders' equity | $7,781 | $7,249 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Consolidated_Statements_of_Cash_Flows) This table presents Axalta's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------- | :------------------------------- | :------------------------------- | | **Operating activities:** | | | | Net income | $209 | $152 | | Depreciation and amortization | 144 | 136 | | Amortization of deferred financing costs and original issue discount | 4 | 4 | | Debt extinguishment and refinancing-related costs | — | 3 | | Deferred income taxes | 11 | 8 | | Realized and unrealized foreign exchange losses, net | 29 | 12 | | Stock-based compensation | 13 | 14 | | Interest income on swaps designated as net investment hedges | (7) | (7) | | Other non-cash, net | 6 | 5 | | Changes in operating assets and liabilities: | | | | Trade accounts and notes receivable | (47) | (35) | | Inventories | (56) | (22) | | Prepaid expenses and other assets | (89) | (91) | | Accounts payable | 65 | 7 | | Other accrued liabilities | (111) | (62) | | Other liabilities | (3) | 24 | | Cash provided by operating activities | 168 | 148 | | **Investing activities:** | | | | Acquisition, net of cash acquired | (6) | — | | Purchase of property, plant and equipment | (88) | (45) | | Interest proceeds on swaps designated as net investment hedges | 7 | 7 | | Other investing activities, net | 4 | 2 | | Cash used for investing activities | (83) | (36) | | **Financing activities:** | | | | Proceeds from long-term borrowings | — | 292 | | Payments on short-term borrowings | — | (5) | | Payments on long-term borrowings | (10) | (188) | | Financing-related costs | — | (4) | | Purchases of common stock | (65) | (50) | | Net cash flows associated with stock-based awards | (2) | 2 | | Other financing activities, net | (1) | 1 | | Cash used for financing activities | (78) | 48 | | Increase in cash | 7 | 160 | | Effect of exchange rate changes on cash | 25 | (20) | | Cash at beginning of period | 596 | 703 | | Cash at end of period | $628 | $843 | | **Cash at end of period reconciliation:** | | | | Cash and cash equivalents | $625 | $840 | | Restricted cash | 3 | 3 | | Cash at end of period | $628 | $843 | [Reconciliation of Non-GAAP Measures](index=8&type=section&id=Reconciliation_Non_GAAP_Measures) This section provides detailed reconciliations of various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and Adjusted EBIT, to their most directly comparable GAAP measures for the reported periods [Net Income to EBITDA and Adjusted EBITDA](index=8&type=section&id=Net_Income_to_EBITDA_Adjusted_EBITDA) Reconciliation of Net Income to EBITDA and Adjusted EBITDA | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $110 | $113 | $209 | $152 | | Interest expense, net | 45 | 50 | 89 | 104 | | Provision for income taxes | 33 | 43 | 63 | 63 | | Depreciation and amortization | 74 | 68 | 144 | 136 | | **EBITDA** | **262** | **274** | **505** | **455** | | Debt extinguishment and refinancing-related costs | — | — | — | 3 | | Termination benefits and other employee related costs | 9 | 1 | 20 | 56 | | Acquisition and divestiture-related costs | 4 | 2 | 6 | 4 | | Site closure costs | 2 | — | 5 | 1 | | Foreign exchange remeasurement losses | 4 | 3 | 7 | 8 | | Long-term employee benefit plan adjustments | 3 | 2 | 6 | 5 | | Stock-based compensation | 8 | 8 | 13 | 14 | | Environmental charge | — | — | — | 4 | | Other adjustments | — | 1 | — | — | | **Adjusted EBITDA** | **$292** | **$291** | **$562** | **$550** | | Net sales | $1,305 | $1,351 | $2,567 | $2,645 | | Net income margin | 8.4% | 8.4% | 8.1% | 5.7% | | Adjusted EBITDA margin | 22.4% | 21.5% | 21.9% | 20.8% | | **Segment Adjusted EBITDA:** | | | | | | Performance Coatings | $200 | $223 | $397 | $419 | | Mobility Coatings | 92 | 68 | 165 | 131 | | Total | $292 | $291 | $562 | $550 | [Net Income to Adjusted Net Income](index=9&type=section&id=Net_Income_to_Adjusted_Net_Income) Reconciliation of Net Income to Adjusted Net Income | (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $110 | $113 | $209 | $152 | | Less: Net income (loss) attributable to noncontrolling interests | 1 | 1 | 1 | (1) | | Net income attributable to common shareholders | 109 | 112 | 208 | 153 | | Debt extinguishment and refinancing-related costs | — | — | — | 3 | | Termination benefits and other employee-related costs | 9 | 1 | 20 | 56 | | Acquisition and divestiture-related costs | 4 | 2 | 6 | 4 | | Accelerated depreciation and site closure costs | 3 | 1 | 7 | 2 | | Environmental charge | — | — | — | 4 | | Other adjustments | 2 | — | 1 | — | | Amortization of acquired intangibles | 24 | 22 | 48 | 44 | | Total adjustments | 42 | 26 | 82 | 113 | | Income tax provision impacts | 12 | 3 | 22 | 18 | | **Adjusted net income** | **$139** | **$135** | **$268** | **$248** | | Adjusted diluted net income per share | $0.64 | $0.61 | $1.23 | $1.12 | | Diluted weighted average shares outstanding | 218.3 | 220.9 | 218.9 | 221.2 | [Cash Provided by Operating Activities to Free Cash Flow](index=10&type=section&id=Cash_Provided_by_Operating_Activities_to_Free_Cash_Flow) Reconciliation of Cash Provided by Operating Activities to Free Cash Flow | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Cash provided by operating activities | $26 | $34 | $142 | $114 | $168 | $148 | | Purchase of property, plant and equipment | (43) | (22) | (45) | (23) | (88) | (45) | | Interest proceeds on swaps designated as net investment hedges | 3 | 3 | 4 | 4 | 7 | 7 | | **Free cash flow** | **$(14)** | **$15** | **$101** | **$95** | **$87** | **$110** | [Income from Operations to Adjusted EBIT](index=11&type=section&id=Income_from_Operations_to_Adjusted_EBIT) Reconciliation of Income from Operations to Adjusted EBIT | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Income from operations | $193 | $205 | $369 | $326 | | Other expense (income), net | 5 | (1) | 8 | 7 | | Total | 188 | 206 | 361 | 319 | | Debt extinguishment and refinancing-related costs | — | — | — | 3 | | Termination benefits and other employee-related costs | 9 | 1 | 20 | 56 | | Acquisition and divestiture-related costs | 4 | 2 | 6 | 4 | | Accelerated depreciation and site closure costs | 3 | 1 | 7 | 2 | | Environmental charge | — | — | — | 4 | | Other adjustments | 2 | — | 1 | — | | Amortization of acquired intangibles | 24 | 22 | 48 | 44 | | **Adjusted EBIT** | **$230** | **$232** | **$443** | **$432** |

Core Insights - Axalta Coating Systems Ltd. reported a decrease in net sales by 3% year over year to $1.3 billion for Q2 2025, primarily due to volume declines in Performance Coatings, despite contributions from the CoverFlexx acquisition and favorable currency translation [3][4] - The company achieved a record Adjusted EBITDA of $292 million, reflecting a slight year-over-year increase, and an Adjusted EBITDA margin expansion of 90 basis points to 22.4% [4][8] - Axalta's net income decreased by 3% year over year to $110 million, resulting in a net income margin of 8.4%, influenced by restructuring costs [4][8] Financial Performance - Net sales for Q2 2025 were $1.3 billion, down from $1.35 billion in the prior year [8] - Adjusted net income improved by $4 million year over year to $139 million, driven by lower operating expenses and reduced interest expense [4][33] - Diluted earnings per share decreased by 2% to $0.50, while adjusted diluted earnings per share increased by 5% to $0.64 [4][33] Cash Flow and Capital Management - Cash provided by operating activities increased by 25% year over year to $142 million, reflecting the company's focus on margin expansion [5][36] - Free cash flow for the quarter was $101 million, up from $95 million in the prior year, supported by stronger operating performance [5][36] - The company executed $65 million in share repurchases during the quarter [8] Segment Performance - Performance Coatings segment net sales were $836 million, down from $887 million in the prior year, with a 6% decline in Refinish net sales [6][7] - Mobility Coatings segment net sales increased by 1% year over year to $469 million, with light vehicle net sales up 2% [9][10] - The Mobility Coatings segment achieved an Adjusted EBITDA of $92 million, significantly up from $68 million in the prior year, with an Adjusted EBITDA margin expansion to 19.8% [10] Outlook - For Q3 2025, Axalta projects low single-digit percentage growth in net sales, with full-year net sales expected to be between $5.2 billion and $5.275 billion [11] - Adjusted EBITDA for Q3 is projected to be between $290 million and $300 million, with full-year expectations of $1.14 billion to $1.165 billion [11]

Core Viewpoint - Axalta Coating Systems is set to release its second quarter 2025 financial results on July 30, 2025, at 6 a.m. ET, with a conference call scheduled for 8 a.m. ET on the same day to discuss the financial performance [1][2]. Company Overview - Axalta is a global leader in the coatings industry, providing innovative and sustainable coatings solutions for various applications, including light vehicles, commercial vehicles, and industrial uses [4]. - The company has over 150 years of experience in the coatings industry and serves more than 100,000 customers in over 140 countries [4].

Core Viewpoint - The article discusses the investment potential of Axalta Coating Systems (NYSE: AXTA), highlighting its past performance and future earnings growth as key factors influencing its valuation multiples [1]. Group 1: Company Performance - Axalta Coating Systems has been a mediocre performer in recent years, but earnings growth has contributed to a reduction in valuation multiples over time [1]. Group 2: Investment Opportunities - The investing group "Value In Corporate Events" provides members with opportunities to capitalize on significant corporate events such as IPOs, mergers & acquisitions, and earnings reports, covering about 10 major events a month [1].

Core Insights - Axalta Coating Systems announced that Dr. Lei Qiao has been recognized as one of the 100 Leading Women in the North American Auto Industry by Automotive News, highlighting her significant impact in the automotive field [1][3] - Dr. Qiao leads the Mobility technology team at Axalta's Global Innovation Center in Philadelphia, overseeing technology growth initiatives in the Mobility business unit [2] - The recognition of Dr. Qiao is part of a broader initiative that included a rigorous nomination and judging process, showcasing the contributions of female leaders across various sectors in the automotive industry [3] Company Overview - Axalta is a global leader in the coatings industry, providing innovative and sustainable coatings solutions for various applications, including light vehicles, commercial vehicles, and industrial uses [4] - The company has over 150 years of experience and serves more than 100,000 customers in over 140 countries, focusing on enhancing durability and productivity through its products [4]

[PART I: Financial Information](index=3&type=section&id=PART%20I%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) Q1 2025 saw decreased net sales but significantly higher net income, asset growth, and lower operating cash flow [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Despite lower Q1 2025 net sales, net income more than doubled due to reduced costs and operating charges Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $1,262 | $1,294 | | Cost of goods sold | $829 | $865 | | Other operating charges | $14 | $61 | | Income from operations | $176 | $121 | | Net income attributable to common shareholders | $99 | $41 | | Diluted net income per share | $0.45 | $0.18 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Q1 2025 comprehensive income turned positive to $161 million, driven by favorable currency translation adjustments Q1 2025 vs Q1 2024 Comprehensive Income (in millions) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $99 | $39 | | Foreign currency translation adjustments | $62 | $(44) | | Comprehensive income (loss) attributable to common shareholders | $161 | $(3) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $7.41 billion as of March 31, 2025, with a corresponding increase in shareholders' equity Balance Sheet Overview (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,821 | $2,723 | | Total assets | $7,411 | $7,249 | | Total current liabilities | $1,330 | $1,354 | | Total liabilities | $5,289 | $5,293 | | Total shareholders' equity | $2,122 | $1,956 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 operating cash flow decreased due to working capital changes, while investing cash use increased Q1 2025 vs Q1 2024 Cash Flows (in millions) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $26 | $34 | | Cash used for investing activities | $(44) | $(19) | | Cash used for financing activities | $(8) | $(82) | | Decrease in cash | $(26) | $(67) | | Cash at end of period | $578 | $627 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail a $9 million acquisition, transformation initiative costs, a lower tax rate, and segment sales data - In Q1 2025, the company completed a strategic acquisition in the Performance Coatings segment for aggregate consideration of **$9 million**[30](index=30&type=chunk) - The 2024 Transformation Initiative resulted in pre-tax charges of **$6 million for Q1 2025**, primarily for employee severance and exit costs[34](index=34&type=chunk) - The effective tax rate for Q1 2025 was **23.0%**, a decrease from 33.9% in Q1 2024, due to favorable tax benefit changes and prior-year initiative impacts[53](index=53&type=chunk) Net Sales by Segment (in millions) | Segment | Q1 2025 Net Sales | Q1 2024 Net Sales | | :--- | :--- | :--- | | Performance Coatings | $822 | $848 | | Mobility Coatings | $440 | $446 | | **Total** | **$1,262** | **$1,294** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 2.5% net sales decrease due to currency and volume, offset by improved profitability [Overview](index=24&type=section&id=Overview) Axalta is a global coatings manufacturer with two operating segments and a presence in over 140 countries - The company operates in two segments: **Performance Coatings** (refinish and industrial) and **Mobility Coatings** (light and commercial vehicle OEMs)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Axalta has a global presence with **43 manufacturing facilities**, 4 technology centers, 45 customer training centers, and serves over 140 countries[109](index=109&type=chunk) [Business Highlights](index=25&type=section&id=Business%20Highlights) Q1 2025 net sales fell 2.5% due to currency headwinds and lower volume, despite acquisition contributions Net Sales by End-Market (in millions) | End-Market | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Refinish | $511 | $519 | (1.5)% | | Industrial | $311 | $329 | (5.6)% | | Light Vehicle | $340 | $342 | (0.8)% | | Commercial Vehicle | $100 | $104 | (3.2)% | | **Total** | **$1,262** | **$1,294** | **(2.5)%** | - The **2.5% decrease in net sales** was driven by a 2.7% headwind from foreign currency and a 1.5% volume decline, partially offset by a 1.1% acquisition contribution and 0.6% from price/mix[113](index=113&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Lower cost of sales, reduced operating charges, and decreased interest expense improved Q1 2025 profitability - Net sales decreased by **$32 million (-2.5%)** due to unfavorable currency effects (-2.7%) and lower volume (-1.5%), partially offset by acquisition (+1.1%) and price/mix improvements (+0.6%)[119](index=119&type=chunk) - Cost of sales as a percentage of net sales **decreased from 66.8% to 65.7%**, driven by lower variable input costs and favorable price/mix[120](index=120&type=chunk)[122](index=122&type=chunk) - Other operating charges **decreased by $47 million**, primarily due to a $44 million reduction in costs related to the 2024 Transformation Initiative[124](index=124&type=chunk)[126](index=126&type=chunk) - Interest expense, net, **decreased by $10 million** due to lower principal and decreased variable interest rates on term loans[128](index=128&type=chunk) [Segment Results](index=29&type=section&id=Segment%20Results) Performance Coatings' margin improved despite lower sales, while Mobility Coatings' Adjusted EBITDA grew 14.5% Performance Coatings Segment Results (in millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $822 | $848 | (3.1)% | | Adjusted EBITDA | $197 | $196 | 1.0% | | Adjusted EBITDA Margin | 24.1% | 23.1% | N/A | Mobility Coatings Segment Results (in millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $440 | $446 | (1.3)% | | Adjusted EBITDA | $73 | $63 | 14.5% | | Adjusted EBITDA Margin | 16.5% | 14.2% | N/A | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $778 million available and expects savings from its transformation initiative - As of March 31, 2025, availability under the Revolving Credit Facility was **$778 million**[140](index=140&type=chunk) - The 2024 Transformation Initiative is expected to result in total cash expenditures of **$105-115 million** and yield annualized net savings of approximately **$75 million** once fully executed[144](index=144&type=chunk) - The company believes cash flow from operations, cash on hand, and available borrowing capacity will be **adequate to meet liquidity needs** for the next twelve months[155](index=155&type=chunk) Cash Flow Summary (in millions) | Activity | Three Months Ended March 31, 2025 | | :--- | :--- | | Net Cash Provided by Operating Activities | $26 | | Net Cash Used for Investing Activities | $(44) | | Net Cash Used for Financing Activities | $(8) | [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risks were reported from the previous year-end Form 10-K disclosure - There have been **no material changes** in the market risks previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[164](index=164&type=chunk) [Controls and Procedures](index=34&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal control - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were **effective as of March 31, 2025**[165](index=165&type=chunk) - **No changes occurred** in the Company's internal control over financial reporting during Q1 2025 that have materially affected, or are reasonably likely to materially affect, these controls[166](index=166&type=chunk) [PART II: Other Information](index=35&type=section&id=PART%20II%20Other%20Information) [Legal Proceedings](index=35&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not involved in any material litigation outside the ordinary course of business - The company is not involved in any litigation other than that which has arisen in the ordinary course of business and **does not expect any pending lawsuits to have a material adverse effect**[167](index=167&type=chunk) [Risk Factors](index=36&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes in risk factors were reported from the previous year-end Form 10-K disclosure - There have been **no material changes** in our risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024[169](index=169&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[170](index=170&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[171](index=171&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[172](index=172&type=chunk) [Other Information](index=36&type=section&id=ITEM%205.%20Other%20Information) No material other information was reported, and no new director or officer trading plans were adopted - During the three months ended March 31, 2025, **no director or officer** of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement[173](index=173&type=chunk) [Exhibits](index=36&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements and required certifications

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $270 million, representing a 4% increase year over year, marking a record for the first quarter [8][20] - Adjusted diluted EPS grew by 16% year over year to $0.59, marking the seventh consecutive quarter of growth [10][22] - Net sales decreased by approximately 3% year over year to $1.26 billion, primarily due to unfavorable foreign currency impact and lower volumes [20][22] Business Line Data and Key Metrics Changes - Performance Coatings net sales declined 3% year over year to $822 million, driven by lower volumes and unfavorable foreign currency impacts [22] - Refinish net sales decreased 2% to $511 million, with contributions from CoverFlex partially offsetting declines [22] - Mobility Coatings net sales were $440 million, a decrease of 1% from the prior year, but grew 2% on a constant currency basis [24] Market Data and Key Metrics Changes - Three of the four end markets showed macro declines, but the company generated positive organic net sales in mobility end markets [12] - Light vehicle organic net sales increased by 2%, aligning with global auto production growth of 1% [13] - Commercial vehicle organic net sales grew by 2%, despite a 17% drop in Class eight heavy-duty production in North America [14] Company Strategy and Development Direction - The company is focused on driving A Plan initiatives, improving operations, and reinvesting in the business [9] - The strategy includes expanding into the economy segment and accelerating accessory growth, with a focus on adding new body shops [28][67] - The company aims to mitigate tariff impacts through various means, including sourcing raw materials locally and reformulating products [18][75] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment remains uncertain, with recent industry data showing softer trends than previously forecasted [26] - The company expects the Refinish industry to decline low single to mid single digits year over year, with insurance claims data continuing to decline [27] - Despite challenges, management remains confident in achieving four of five financial objectives a year ahead of schedule [34] Other Important Information - The company received two Edison Awards and a Big Innovation Award for its products, highlighting its commitment to innovation [10][11] - Capital expenditures nearly doubled compared to Q1 of 2024, aimed at enhancing productivity [9] Q&A Session Summary Question: Can you provide more detail on cost execution, share gains, and price discipline in the current economic environment? - Management emphasized that the A Plan continues to drive operational excellence and growth, with significant progress made despite market changes [38] Question: How does the team view the decline in collision claims and body shop activity in the Refinish business? - Management acknowledged the structural changes affecting the market but noted potential stabilization in the second half of the year [45][49] Question: What is the status of the margin expansion target for the Industrial segment? - Management indicated that they are on track to exceed the 400 basis points margin improvement target set previously [55] Question: Can you clarify the free cash flow guidance and the impact of restructuring expenses? - Management explained that the range for free cash flow was introduced due to higher restructuring cash outlays anticipated for the year [99] Question: How is the Refinish value segment performing relative to the broader market? - Management reported that the Refinish value segment is growing faster than the overall Refinish business, despite weaker consumer confidence [104]

Axalta Coating Systems (AXTA) Q1 2025 Earnings Call May 07, 2025 08:00 AM ET Speaker0 Ladies and gentlemen, thank you for standing by. Welcome to the Axalta Coating Systems Q1 twenty twenty five Earnings Call. All participants will be in a listen only mode. A question and answer session will follow the presentation by management. Today's call is being recorded and a replay will be available through May 14. Those listening after today's call should please note that information provided in the recording will ...