Axalta ting Systems .(US:AXTA)2025-10-29 16:33Financial Performance - Net sales decreased by 2.8% for the nine months ended September 30, 2025, compared to the same period in 2024, driven by lower sales volumes of 3.8% and partially offset by a 0.7% contribution from the CoverFlexx Acquisition [123]. - Performance Coatings segment net sales decreased by 4.8% for the nine months ended September 30, 2025, primarily due to lower sales volumes of 5.2% and lower average selling prices [128]. - Mobility Coatings segment net sales increased by 1.2% for the nine months ended September 30, 2025, driven by higher average selling prices and favorable product mix of 3.2% [128]. - The net sales for the total company for the nine months ended September 30, 2025, were $3.855 billion, down from $3.965 billion in 2024 [123]. - Performance Coatings Segment net sales decreased by $49 million (5.6%) to $828 million for the three months ended September 30, 2025, compared to $877 million in 2024 [154]. - Mobility Coatings Segment net sales increased by $17 million (4.0%) to $460 million for the three months ended September 30, 2025, compared to $443 million in 2024 [157]. Cost and Expenses - Cost of sales decreased by 3.8% for the nine months ended September 30, 2025, compared to the same period in 2024, with cost of sales as a percentage of net sales at 65.2% [132]. - Selling, general and administrative expenses decreased by $14 million (6.6%) for the three months ended September 30, 2025, and by $24 million (3.8%) for the nine months ended September 30, 2025, primarily due to lower operating expenses and contributions from savings initiatives [136]. - Other operating charges decreased by $9 million (60.0%) for the three months ended September 30, 2025, and by $46 million (59.0%) for the nine months ended September 30, 2025, driven by lower sales volumes and decreased costs related to ERP system implementation [137][138]. - Interest expense, net decreased by $9 million (16.7%) for the three months ended September 30, 2025, and by $24 million (15.2%) for the nine months ended September 30, 2025, primarily due to lower principal and decreased variable interest rates [144]. - Research and development expenses remained consistent at $18 million for the three months ended September 30, 2025, and $55 million for the nine months ended September 30, 2025, with minimal impacts from currency translation [142]. - Amortization of acquired intangibles increased by $1 million (4.2%) for the three months ended September 30, 2025, and by $5 million (7.4%) for the nine months ended September 30, 2025 [143]. - Termination benefits and other employee-related costs decreased by $9 million for the three months ended September 30, 2025, primarily due to higher costs associated with the 2024 Transformation Initiative in the prior year [140]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2025 was $305 million, compared to $342 million in 2024 [166]. - Net cash used for investing activities for the nine months ended September 30, 2025 was $122 million, primarily for property, plant, and equipment purchases of $138 million [168]. - Net cash used for financing activities for the nine months ended September 30, 2025 was $195 million, including $165 million for common stock purchases [169]. - Cash and cash equivalents as of September 30, 2025, were $606 million, up from $593 million at December 31, 2024 [175]. - The company maintains $498 million in non-U.S. jurisdictions as of September 30, 2025, indicating a stable international cash position [175]. - The company believes cash flow from operations and available cash will be adequate to service debt and fund capital expenditures for the next twelve months [176]. - The company’s liquidity sources include cash on hand, cash flow from operations, and available borrowing capacity under Senior Secured Credit Facilities [176]. - The company’s ability to generate cash from operations is subject to various external factors beyond its control [177]. Strategic Initiatives - The 2024 Transformation Initiative was announced to simplify the organizational structure and improve financial performance [125]. - The company expects to realize $75-90 million in annualized savings from the 2024 Transformation Initiative in 2025 [165]. Currency Impact - The company experienced unfavorable impacts of currency translation of 2.7% for the three months ended September 30, 2025, primarily due to fluctuations of the Euro compared to the U.S. Dollar [136][139]. - Currency exchange impacts on cash for the nine months ended September 30, 2025 were favorable by $26 million, primarily due to fluctuations of the Euro, Brazilian Real, and Mexican Peso [170]. - Unfavorable currency exchange impacts on cash for the nine months ended September 30, 2024, amounted to $10 million, primarily due to fluctuations in the Mexican Peso and Brazilian Real against the U.S. Dollar [174]. Company Overview - The company operates in two segments: Performance Coatings and Mobility Coatings, serving over 140 countries with a diverse global footprint [119]. - The company has a total of 42 manufacturing facilities and approximately 12,600 team members globally [119]. - Availability under the Revolving Credit Facility was $772 million as of September 30, 2025, compared to $778 million at December 31, 2024 [180]. - The company’s indebtedness includes Senior Secured Credit Facilities and Senior Notes, with potential refinancing challenges due to high leverage [178]. - There have been no material changes in the company's contractual obligations and cash requirements since the last annual report [181]. - No material changes in market risks have been disclosed since the previous annual report [185].