Core Insights - The "2025 Global Industrial Paint Brand Top 30" list was published by Coatings World, ranking brands based on their industrial paint sales revenue for the fiscal year 2024, with a minimum entry threshold of $260 million [1][10] - The total sales revenue of the listed companies reached $53.9394 billion, accounting for 51.60% of the global industrial paint market [1][10] - The top ten brands generated a total sales revenue of $44.068 billion, a decrease of $2.989 billion from the previous year, representing 42.17% of the global market share, down 1.89 percentage points [1][15] Market Overview - The global industrial paint market is valued at approximately $104.5 billion in 2024, showing a decline compared to the previous year [3] - The market remains fragmented, with a CR10 of less than 43%, indicating no monopoly [17] - High concentration exists in specific segments such as automotive, marine, and aerospace coatings, with the top 10 brands holding 89% and 92% of the respective markets [17] Brand Performance - PPG Industries leads the ranking with sales of $10.9 billion, followed by Sherwin-Williams at $8.05 billion and AkzoNobel at $6.731 billion [12][14] - Other notable brands include Axalta, BASF, Nippon Paint, Kansai, Jotun, and Hempel, with revenues ranging from $5.276 billion to $2.623 billion [14][24] - Chinese brands such as Xiangjiang Paint, Dewey, and Megachem have made significant strides, with Xiangjiang Paint maintaining its position as the top Chinese brand at $530.7 million [21][22][23] Regional Distribution - The majority of top brands are located in developed countries, with the U.S. having six brands, Japan five, and Germany four [18] - China's industrial paint sector is robust, with a total revenue of approximately 408.903 billion yuan ($56.4 billion) in 2024, with industrial paint accounting for over 70% [20] Financial Highlights - PPG's industrial paint revenue decreased by 5.7% to $6.687 billion, while Sherwin-Williams' industrial paint revenue grew by 0.63% to approximately $8.0503 billion [3][4] - AkzoNobel's industrial paint revenue fell by 2% to $2.036 billion, while other brands like Kansai and Jotun reported growth in their industrial paint segments [4][6][7] - Megachem reported a remarkable growth of 87.56% in revenue, reaching $2.139 billion, driven by strong demand in the container paint market [23]

Core Insights - Axalta Coating Systems reported revenue of $1.31 billion for the quarter ended June 2025, a decrease of 3.4% year-over-year, with EPS at $0.64, up from $0.57 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $1.32 billion, resulting in a surprise of -1.33%, while the EPS exceeded the consensus estimate of $0.61 by 4.92% [1] Financial Performance - Total sales in Performance Coatings were $836 million, below the average estimate of $872.1 million, reflecting a year-over-year decline of 5.8% [4] - Total sales in Mobility Coatings reached $469 million, slightly above the average estimate of $463.08 million, marking a year-over-year increase of 1.1% [4] - Sales in Mobility Coatings for commercial vehicles were $107 million, compared to an estimate of $100.02 million, showing a decline of 2.7% year-over-year [4] - Sales in Performance Coatings for industrial applications were $322 million, below the average estimate of $327.45 million, representing a year-over-year decrease of 5.6% [4] - Sales in Mobility Coatings for light vehicles were $362 million, slightly below the estimate of $363.06 million, with a year-over-year increase of 2.3% [4] - Sales in Performance Coatings for refinish applications were $514 million, below the average estimate of $544.4 million, reflecting a year-over-year decline of 5.9% [4] - Adjusted EBIT for Mobility Coatings was $92 million, exceeding the estimate of $74.79 million [4] - Adjusted EBIT for Performance Coatings was $200 million, below the average estimate of $209.59 million [4] Market Performance - Axalta Coating Systems' shares have returned -5.9% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.4% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

PART I FINANCIAL INFORMATION This section presents Axalta's unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents Axalta's unaudited condensed consolidated financial statements and notes for Q2 and YTD 2025 [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales decreased for Q2 and YTD 2025, while YTD net income attributable to common shareholders significantly increased | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | $1,305 | $1,351 | $2,567 | $2,645 | | Income from operations | $193 | $205 | $369 | $326 | | Net income | $110 | $113 | $209 | $152 | | 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 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased for Q2 and YTD 2025, driven by favorable currency translation adjustments | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $110 | $113 | $209 | $152 | | Foreign currency translation adjustments | $128 | $(29) | $190 | $(73) | | Other comprehensive income (loss), net of tax | $136 | $(29) | $200 | $(73) | | Comprehensive income | $246 | $84 | $409 | $79 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity increased as of June 30, 2025, driven by receivables, inventories, and goodwill | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :-------------------------- | :------------------------------ | | Cash and cash equivalents | $625 | $593 | | Accounts and notes receivable, net | $1,348 | $1,248 | | Inventories | $831 | $734 | | Total current assets | $2,987 | $2,723 | | Property, plant and equipment, net | $1,255 | $1,181 | | Goodwill | $1,775 | $1,640 | | Total assets | $7,781 | $7,249 | | Accounts payable | $764 | $659 | | Total current liabilities | $1,406 | $1,354 | | Total liabilities | $5,470 | $5,293 | | Total shareholders' equity | $2,311 | $1,956 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased from December 2024 to June 2025, from net income and currency translation | Metric | December 31, 2024 (in millions) | March 31, 2025 (in millions) | June 30, 2025 (in millions) | | :-------------------------------- | :------------------------------ | :--------------------------- | :-------------------------- | | Balance at period start | $1,956 | $2,122 | $2,122 | | Net income | $99 (Q1) | $109 (Q2) | $208 (YTD) | | Foreign currency translation | $61 (Q1) | $136 (Q2) | $197 (YTD) | | Total comprehensive income | $163 (Q1) | $246 (Q2) | $409 (YTD) | | Common stock purchases | — | $(65) | $(65) | | Balance at period end | $2,122 | $2,311 | $2,311 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased for YTD 2025; investing and financing used more cash for acquisitions and buybacks | Cash Flow Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $168 | $148 | | Net cash used for investing activities | $(83) | $(36) | | Net cash used for financing activities | $(78) | $48 | | Effect of exchange rate changes on cash | $25 | $(20) | | Net increase in cash | $32 | $140 | | Cash at end of period | $628 | $843 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations for the financial statements, covering policies, revenue, assets, liabilities, and segment information [(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=(1)%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Interim financial statements are unaudited, with ASU 2023-07 adopted and future ASUs under evaluation for impact - Adopted ASU 2023-07, Segment Reporting, in January 2024, expanding disclosures without impacting financial position, results, or cash flows[23](index=23&type=chunk) - ASU 2023-09, Income Taxes, effective for fiscal years beginning after December 15, 2024, will enhance income tax disclosures[24](index=24&type=chunk) - ASU 2024-03, Expense Disaggregation Disclosures, effective for fiscal years beginning after December 15, 2026, is being evaluated for impact on financial statements[25](index=25&type=chunk) [(2) REVENUE](index=9&type=section&id=(2)%20REVENUE) Contract assets and Business Incentive Plan (BIP) carrying values increased as of June 30, 2025 | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------- | :-------------------------- | :------------------------------ | | Contract asset balances | $45 | $36 | | BIPs carrying value | $193 | $169 | - BIPs amortization (net of clawbacks) reduced net sales by **$16 million** for Q2 2025 and **$31 million** for YTD 2025[27](index=27&type=chunk) [(3) GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS](index=10&type=section&id=(3)%20GOODWILL%20AND%20IDENTIFIABLE%20INTANGIBLE%20ASSETS) Goodwill and identifiable intangible assets increased, primarily due to foreign currency translation and acquisitions | Metric | December 31, 2024 (in millions) | June 30, 2025 (in millions) | | :-------------------------- | :------------------------------ | :-------------------------- | | Goodwill | $1,640 | $1,775 | | Identifiable intangibles, net | $1,149 | $1,167 | - Goodwill increased by **$132 million** due to foreign currency translation and **$2 million** from acquisitions in Performance Coatings[30](index=30&type=chunk) Estimated Amortization Expense | Year | Estimated Amortization Expense (in millions) | | :---------------- | :----------------------------------------- | | Remainder of 2025 | $50 | | 2026 | $100 | | 2027 | $99 | | 2028 | $85 | | 2029 | $80 | | 2030 | $80 | [(4) RESTRUCTURING](index=11&type=section&id=(4)%20RESTRUCTURING) The 2024 Transformation Initiative targets workforce reduction and is expected to incur approximately $82 million in pre-tax charges - 2024 Transformation Initiative targets workforce reduction of over **500 employees** globally[33](index=33&type=chunk) - Expected total pre-tax charges of approximately **$82 million**, with **$76 million** for severance and **$6 million** for accelerated depreciation[33](index=33&type=chunk) - Total cash expenditures related to the initiative are expected to be approximately **$105-115 million**, including **$30-40 million** for capital expenditures[33](index=33&type=chunk) | Metric | December 31, 20

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were reported at $1,300 million, a decrease of approximately 3% year over year, primarily due to lower volumes in Performance Coatings [19][21] - Adjusted EBITDA reached a record $292 million, slightly up from the previous year, with an adjusted EBITDA margin expanding by 90 basis points to 22.4% [20][21] - Cash flow from operations increased by 25% year over year, totaling $142 million, while free cash flow was reported at $101 million [10][21] Business Line Data and Key Metrics Changes - Performance Coatings net sales declined 6% year over year to $836 million, driven by lower volumes and unfavorable price mix, particularly in North America [21][22] - Refinish net sales decreased 6% to $514 million, with organic sales down in high single digits due to industry softness and distributor inventory corrections [22] - Mobility Coatings reported net sales of $469 million, a 1% increase from the prior year, with organic sales contributing approximately 2% growth [24][25] Market Data and Key Metrics Changes - The Refinish market in North America faced challenges, with claims reported through Q1 significantly lower, leading to a decline in volumes despite stable collision rates [11][12] - Inflationary pressures are beginning to moderate, particularly in repair expenses and insurance premiums, which may positively impact future claims [13] - The commercial vehicle market is expected to decline by 25% to 30%, while Axalta anticipates a 1% to 2% increase in its commercial vehicle sales due to strong performance in the commercial transportation solutions business [70] Company Strategy and Development Direction - The company remains focused on its A Plan strategy, emphasizing operational excellence and cost management, which has driven approximately $40 million in cost savings [15][17] - Axalta is committed to innovation, with plans to launch new products and expand into underrepresented geographies, particularly in the Mobility segment [33][36] - The company aims to strengthen its leadership in the Refinish market and expand into adjacencies through strategic bolt-on M&A [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stabilization of the Refinish market, anticipating improvements in consumer confidence and repair environments by 2026 [14][46] - The company expects net sales to decline in Q3 but anticipates a record Q3 performance due to stabilization in the marketplace [46][30] - For the full year, adjusted EBITDA is projected to be between $1,140 million and $1,165 million, reflecting disciplined execution and pricing resilience [30][31] Other Important Information - Axalta executed $65 million in share repurchases during the quarter and plans to maintain this pace throughout the year [10][26] - The company has improved its safety record by 55% year over year, reinforcing its commitment to achieving zero incidents [15][16] - Total net leverage ratio remains at 2.5 times, consistent with A Plan targets, providing flexibility for capital deployment [28] Q&A Session Summary Question: Assessment of the Refinish market and future outlook - Management noted that while accidents are down 1% to 2%, claims are lower due to rising repair costs and insurance premiums, but they expect stabilization in the market by 2026 [41][42][46] Question: Update on cost improvement and margin expectations - Management highlighted that they are ahead of plan in cost management and operational excellence, with significant opportunities for further margin improvement [49][50][53] Question: Organic net sales performance relative to industry - Mobility segment performed well, with growth in three out of four markets, while Refinish faced challenges but continued to outperform in Europe and other regions [58][61] Question: Guidance for Q4 and visibility on Refinish - Management expressed confidence in sequential stability for Refinish and anticipates a positive inflection in Q4, supported by new business wins and market stabilization [100][98] Question: Pricing dynamics in Performance Coatings - Management explained that the decline in price mix was due to a shift towards mainstream and economy segments, which have lower price points but are strategically important for growth [104][105]

Financial Data and Key Metrics Changes - Axalta reported net sales of just over $1.3 billion, in line with guidance, with adjusted EBITDA reaching $292 million and margins exceeding 22%, marking the fifth consecutive quarter of adjusted EBITDA margins at or above the 21% target [7][17][28] - Adjusted diluted earnings per share increased by 5% to $0.64, driven by lower interest expenses and reduced shares outstanding due to share repurchases [19][28] - Cash flow from operations increased by 25% year over year, resulting in free cash flow of $101 million [8][19] Business Line Data and Key Metrics Changes - Performance Coatings net sales declined by 6% year over year to $836 million, primarily due to lower volumes and unfavorable price mix in North America [20] - Refinish net sales decreased by 6% to $514 million, with organic sales down in high single digits due to industry softness and distributor inventory corrections [20][21] - Mobility Coatings reported net sales of $469 million, a 1% increase from the prior year, with organic sales contributing approximately 2% growth [23] Market Data and Key Metrics Changes - The Refinish market in North America faced challenges, with collision claims reported through Q1 significantly lower, despite collision frequency remaining stable [9][10] - Inflationary pressures are beginning to moderate, particularly in repair expenses and insurance premiums, which may lead to an improved repair environment [12] - The company continues to gain market share, adding 1,600 net new body shops year to date, building on over 2,800 wins in 2024 [11][32] Company Strategy and Development Direction - Axalta remains focused on its A Plan strategy, emphasizing operational excellence and cost management, which has driven approximately $40 million in cost savings [14][29] - The company is committed to achieving zero incidents in safety, improving its safety record by 55% year over year [14] - Axalta plans to expand its digital platform, Nimbus, to 40,000 body shops by 2026, enhancing customer engagement and operational efficiency [32] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the softer demand environment will persist longer than previously expected, with net sales projected to decline in the low single digits for Q3 [26][28] - The company expects adjusted EBITDA margins to remain around 22% or above for the full year, reflecting disciplined execution and pricing resilience [28] - Management remains optimistic about the long-term growth trajectory, particularly in the Refinish and Mobility segments, despite current market challenges [30][34] Other Important Information - Axalta executed $65 million in share repurchases during the quarter and plans to maintain this pace throughout the year [8][25] - The company has streamlined operations by closing three manufacturing plants in the last year, positioning itself for growth when industry volumes rebound [14][34] Q&A Session Summary Question: Assessment of the Refinish market challenges - Management noted that while accidents are down 1% to 2%, claims are lower due to rising insurance costs and repair expenses, but they expect stabilization in the market by 2026 [39][41][44] Question: Update on cost improvement and margin story - Management expressed optimism about ongoing cost improvements and operational excellence, indicating that there is still significant potential for margin growth [46][49][52] Question: Organic net sales performance relative to industry - Axalta's organic sales were down about 3%, with Mobility performing well, while Refinish faced challenges primarily in North America [56][59] Question: Impact of auto sales pull forward on production - Management indicated that while North America faced some customer shutdowns, growth continued in China and Latin America, with expectations for consistent volumes moving forward [64][66] Question: Incremental revenue from new body shop wins - Management highlighted that they have added 1,600 new body shops year to date, with a strong focus on mainstream and economy segments, which aligns with their growth strategy [70][72] Question: Concerns about Refinish top-line performance - Management reassured that the current performance is temporary, with ongoing wins in Refinish and expectations for market improvement [75][76] Question: Future growth opportunities and portfolio adjustments - Management plans to provide a new A Plan by early next year, outlining growth opportunities and potential portfolio adjustments [84][85]

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].