Axalta ting Systems .(AXTA) - 2025 Q2 - Quarterly Results

Company Information & Release Details 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 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] - Media Contact: Corporate Communications, axalta-media-relations@axalta.com[1] 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] Second Quarter 2025 Performance Highlights This section summarizes Axalta's Q2 2025 financial performance, including CEO remarks, consolidated results, and cash flow achievements 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] - Performance reflects Axalta's drive for operational excellence and commitment to financial targets and value creation through A Plan objectives[3] 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] - Net income decreased 3% due to restructuring costs, partially offset by lower operating expenses, interest, and tax expense[4] 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] - Free cash flow was driven by stronger operating performance, partially balanced by increases in strategic capital expenditures[5] Segment Results Discussion This section details the financial performance of Axalta's Performance Coatings and Mobility Coatings segments for Q2 2025 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] - Industrial net sales decreased due to lower volumes, despite positive price-mix and favorable foreign currency translation[6] 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] - 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] Outlook and 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 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 This section provides details on the conference call, forward-looking statements, non-GAAP measures, and company background Conference Call Information 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] - Dial-in phone number for the conference call was 1-800-225-9448 with conference ID AXALTA[12] Cautionary Statement Concerning 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] - These statements are based on management's expectations, estimates, and assumptions, which are inherently uncertain and involve risks and uncertainties[13] - More information on potential factors affecting financial results is available in Axalta's Form 10-K and 10-Q filings with the SEC[14] 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] - Management uses these measures to analyze financial and operating performance, evaluate underlying business trends, liquidity, debt servicing ability, and strategic capital allocation[15] - Axalta does not provide forward-looking reconciliation for certain non-GAAP estimates due to the unavailability of necessary information without unreasonable effort[15] Organic Net Sales 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] - This measure assists investors in evaluating sales performance without the impact of foreign exchange rates and recent acquisitions/divestitures[16] 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] - More details are available in the Current Report on Form 8-K furnished to the SEC on January 21, 2025[17] Segment Financial Measures 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] - Management uses Adjusted EBITDA to evaluate business performance in comparison to budgets, forecasts, and prior year financial results[18] 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] - Certain amounts in the financial tables may not foot or crossfoot, and percentages may not recalculate due to rounding[20] 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] - The company has over 150 years of experience and serves more than 100,000 customers in over 140 countries[21] - 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] Financial Statement Tables This section presents Axalta's unaudited condensed consolidated financial statements and non-GAAP reconciliations Condensed Consolidated Statements of Operations (Unaudited) 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) 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) 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 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 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 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 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 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 |