Axalta ting Systems .(US:AXTA)2023-10-31 16:00Sales Performance - Net sales increased by 6.6% for the nine months ended September 30, 2023, driven by a 7.4% increase in average selling price and product mix, partially offset by a 1.3% decrease in volumes [102]. - Performance Coatings segment net sales increased by 2.0%, with a 8.2% increase in average selling price and product mix, while volumes decreased by 7.0% [102]. - Mobility Coatings segment net sales increased by 16.5%, driven by an 11.3% increase in sales volumes and a 5.3% increase in average selling price and product mix [102]. - Total net sales for the third quarter of 2023 were $1,309.0 million, compared to $1,238.7 million in the same period of 2022, reflecting a 5.7% increase [103]. - Net sales for the three months ended September 30, 2023, increased to $1,309.0 million, a 5.7% increase from $1,238.7 million in the same period of 2022 [113]. - Net sales for the nine months ended September 30, 2023, reached $3,886.8 million, reflecting a 6.6% increase from $3,647.7 million in the prior year [113]. - Net sales in the Performance Coatings segment reached $856.1 million for the three months ended September 30, 2023, a 2.2% increase from $838.0 million in the same period of 2022 [128]. - The absence of a $20.3 million reduction in the prior year period from the Customer Contract Restructuring contributed to the increase in net sales for the nine months ended September 30, 2023 [113]. - Net sales for the three months ended September 30, 2023, increased to $452.9 million, a 13.0% increase from $400.7 million in the same period of 2022 [130]. - For the nine months ended September 30, 2023, net sales reached $1,327.6 million, up 16.5% from $1,139.5 million in the same period of 2022 [130]. Financial Performance - Cost of sales for the three months ended September 30, 2023, was $885.5 million, a 1.0% increase from $876.6 million in the same period of 2022 [115]. - Selling, general and administrative expenses for the three months ended September 30, 2023, rose to $209.0 million, a 12.1% increase from $186.4 million in the same period of 2022 [117]. - Research and development expenses for the three months ended September 30, 2023, increased to $18.5 million, a 12.1% increase from $16.5 million in the same period of 2022 [120]. - Amortization of acquired intangibles decreased by 31.3% to $20.9 million for the three months ended September 30, 2023, compared to $30.4 million in the same period of 2022 [122]. - Adjusted EBIT for the Performance Coatings segment increased to $135.0 million for the three months ended September 30, 2023, up 10.8% from $121.8 million in the prior year [128]. - Adjusted EBIT margin for the Performance Coatings segment improved to 15.8% for the three months ended September 30, 2023, compared to 14.5% in the same period of 2022 [128]. - Income before income taxes for the three months ended September 30, 2023 was $102.6 million, compared to $85.1 million in the prior year [125]. - Adjusted EBIT for the three months ended September 30, 2023, rose to $39.8 million, reflecting a significant increase of 1,005.6% compared to $3.6 million in the prior year [130]. - Adjusted EBIT margin for the nine months ended September 30, 2023, improved to 6.6%, compared to 0.6% in the same period of 2022 [130]. Operational Challenges - The company experienced temporary operational disruptions in North America due to ERP system implementation, impacting net sales in the Performance Coatings segment [104]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2023, was $289.3 million, a significant increase from $48.2 million in the same period of 2022 [135]. - Net cash used for investing activities for the nine months ended September 30, 2023, was $64.5 million, primarily for purchases of property, plant, and equipment [136]. - Net cash used for financing activities for the nine months ended September 30, 2023, totaled $252.7 million, including voluntary prepayments of $150.0 million on the 2029 Dollar Term Loans [137]. - Cash and cash equivalents at September 30, 2023, were $605.8 million, down from $645.2 million at the end of 2022 [142]. - The company had $529.7 million available under the Revolving Credit Facility as of September 30, 2023 [132]. - The company continues to maintain sufficient liquidity to meet cash requirements, including debt service obligations and working capital needs [144]. Debt and Financing - The company prepaid $150.0 million of the outstanding principal amount of the 2029 Dollar Term Loans during the nine months ended September 30, 2023 [105]. - Total borrowings, net decreased from $3,704.3 million as of December 31, 2022 to $3,542.6 million as of September 30, 2023, a reduction of approximately 4.4% [144]. - Long-term debt decreased from $3,673.3 million as of December 31, 2022 to $3,510.6 million as of September 30, 2023, a decline of approximately 4.4% [144]. - The interest rate spread for the 2029 Dollar Term Loans was lowered from 3.00% to 2.50% effective July 1, 2023, resulting in a $4.0 million loss on financing-related costs [144]. - The company recorded a write-off of $2.1 million related to unamortized deferred financing costs and original issuance discount due to the repricing of loans [144]. Currency and Market Impact - Raw material costs reflected deflationary benefits during the three and nine months ended September 30, 2023, compared to previous periods [107]. - The impact of currency translation on net sales was favorable, primarily due to the strengthening of the Euro, Mexican Peso, Brazilian Real, and British Pound [113]. - Currency exchange impacts on cash for the nine months ended September 30, 2023, were unfavorable by $18.9 million, primarily due to fluctuations in the Euro and Russian Ruble [138]. - No material changes in market risks have been disclosed since the last annual report [150]. Leadership Changes - Leadership transitions included the appointment of Carl Anderson as the new Chief Financial Officer effective August 14, 2023 [108].