Axalta Coating Systems (NYSE:AXTA) Q4 2025 Earnings call February 10, 2026 08:00 AM ET Company ParticipantsCarl Anderson - CFOChris Parkinson - Managing DirectorChris Villavarayan - CEO and PresidentColleen Lubic - VP of Investor RelationsConference Call ParticipantsDavid Begleiter - Equity Research AnalystEdlain Rodriguez - Equity Research AnalystGhansham Panjabi - Senior Research AnalystHakeem Olorun-Owe - Equity Research AnalystKevin McCarthy - Equity Research AnalystLaurent Favre - Senior Research Analy ...

Financial Data and Key Metrics Changes - In Q4 2025, Axalta reported net sales of approximately $1.3 billion, with adjusted EBITDA of $272 million and a margin of 21.5%, an improvement of 50 basis points year-over-year [5][12] - For the full year 2025, adjusted EBITDA reached $1.13 billion, a growth of $317 million from 2024, with margins expanding over 500 basis points to 22% [7][18] - Adjusted diluted EPS for Q4 was $0.59, roughly flat year-over-year, while for the full year, it increased approximately 55% to $2.49 [7][18] Business Line Data and Key Metrics Changes - Mobility Coatings achieved record net sales of $471 million in Q4 2025, a 1% increase from the prior year, with adjusted EBITDA rising 20% to $92 million [15][16] - Performance Coatings saw a 6% decline in Q4 net sales to $791 million, primarily due to lower volumes and unfavorable price mix [15] - Refinish net sales decreased 7% to $509 million in Q4, reflecting low claim activity and adjusted order patterns [15] Market Data and Key Metrics Changes - North America faced significant macro headwinds, impacting all business lines, with a noted 30% decline in Class 8 builds [10][12] - In Asia-Pacific, the Industrial segment delivered 5% net sales growth despite weaker macro conditions [9] - The overall demand in North America and Europe for Industrial coatings was significantly weaker than anticipated [10] Company Strategy and Development Direction - Axalta is focused on operational excellence, cost management, and strategic investments to enhance productivity and service levels [8][9] - The company announced a merger of equals with AkzoNobel, expected to create a global leader in performance coatings with significant synergy potential of $600 million [26][27] - The strategy includes maintaining a strong balance sheet while investing in productivity and returning capital to shareholders [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro challenges but expressed confidence in the company's resilience and ability to manage costs effectively [11][18] - For 2026, the company anticipates a slower start but expects recovery in the second half driven by various catalysts, including interest rate reductions and improved consumer affordability [22][23] - Management emphasized the importance of operational actions taken to strengthen the business and protect margins in preparation for market recovery [11][12] Other Important Information - Axalta achieved record cash generation in Q4, with free cash flow of $290 million, driven by improved working capital and lower interest payments [14][21] - The company reduced gross debt by approximately $230 million, lowering the net leverage ratio to 2.3 times, the lowest in its history [19] Q&A Session Summary Question: Status of global refinish markets - Management noted destocking trends were slightly worse than expected, but growth was seen in South America, Europe, and Asia [31][32] Question: Conviction in achieving $600 million in synergies - Management indicated improving investor sentiment and emphasized the creation of a large global performance coatings company with significant revenue and EBITDA potential [38][39] Question: Performance of Industrial segment - Management acknowledged lower sales in Industrial but highlighted growth in Asia and expected improvements driven by policy changes [49][50] Question: Margin assumptions for the year - Management expects to maintain EBITDA margins above 22% with cost actions and productivity improvements contributing positively [56] Question: Refinish strategy evolution post-merger - Management highlighted complementary strengths in refinish and mobility segments, indicating opportunities for growth in various regions [62]

Core Insights - PPG Industries reported a fourth-quarter 2025 profit of $302 million or $1.34 per share, a significant increase from $2 million or a penny per share a year ago, but adjusted earnings per share of $1.51 fell short of the Zacks Consensus Estimate of $1.57 [1][9] - The company's revenues reached $3,914 million, reflecting a 5% year-over-year increase and surpassing the Zacks Consensus Estimate of $3,744.6 million [2][9] Segment Review - The Global Architectural Coatings segment experienced an 8% year-over-year sales increase to $951 million, exceeding estimates due to higher selling prices and favorable foreign currency translation, partially offset by the divestiture of the architectural coatings business in Russia [3] - The Performance Coatings segment saw a 5% year-over-year sales rise to $1,322 million, driven by higher selling prices and favorable currency impacts, despite reduced sales volumes; organic sales grew 3% year over year [4] - The Industrial Coatings segment's sales grew 3% year-over-year to $1,641 million, benefiting from foreign currency translation gains and improved volumes, surpassing estimates [5] Financials - As of the end of the quarter, PPG had $2,163 million in cash and cash equivalents, a 70% increase year over year; long-term debt rose to $6.6 billion, up 35% from the prior-year quarter [6] Outlook - PPG anticipates adjusted earnings per share of $7.70 to $8.10 for full-year 2026, citing ongoing soft global industrial production and mixed regional demand; organic sales are expected to show flat to low single-digit percentage growth [7][9] Price Performance - PPG shares have declined by 11.7% over the past year, contrasting with a 0.4% rise in its industry [8]

Fourth Quarter 2025 Financial Results January 27, 2026 Forward-Looking Statements This presentation contains forward-looking statements that reflect the Company's current views with respect to future events and financial performance. You can identify forward-looking statements by the fact that they do not relate strictly to current or historic facts. Forward-looking statements are identified by the use of the words "aim," "believe," "expect," "anticipate," "intend," "estimate," "project," "outlook," "foreca ...

Core Viewpoint - PPG Industries reported a revenue of $3.91 billion for Q4 2025, marking a 5% year-over-year increase, but the EPS of $1.51 showed a decline from $1.61 a year ago, indicating mixed performance against market expectations [1]. Financial Performance - Revenue of $3.91 billion exceeded the Zacks Consensus Estimate of $3.74 billion by 4.52% [1]. - EPS of $1.51 was below the consensus estimate of $1.57, resulting in a surprise of -3.82% [1]. - PPG Industries' shares returned +8.1% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change [3]. Segment Performance - Performance Coatings generated net sales of $1.32 billion, surpassing the four-analyst average estimate of $1.27 billion, with a year-over-year change of +4.8% [4]. - Global Architectural Coatings achieved net sales of $951 million, exceeding the average estimate of $906.28 million [4]. - Industrial Coatings reported net sales of $1.64 billion, slightly above the average estimate of $1.6 billion, with a year-over-year change of +3.5% [4]. - Segment Income for Performance Coatings was $246 million, above the average estimate of $235.86 million [4]. - Segment Income for Global Architectural Coatings reached $137 million, exceeding the average estimate of $124.12 million [4]. - Segment Income for Industrial Coatings was $200 million, below the average estimate of $208.55 million [4].

Core Insights - RPM International reported $1.91 billion in revenue for the quarter ended November 2025, a year-over-year increase of 3.5% [1] - The EPS for the same period was $1.20, down from $1.39 a year ago, and did not meet the consensus estimate of $1.41 [1] - The reported revenue fell short of the Zacks Consensus Estimate of $1.93 billion, resulting in a surprise of -1.01% [1] Revenue Performance - Net Sales for the Construction Products Group (CPG) were $737.44 million, compared to the estimated $744.6 million, reflecting a year-over-year increase of +6.9% [4] - Net Sales for the Consumer Segment reached $638.65 million, below the estimated $657.21 million, with a year-over-year change of +8.2% [4] - Net Sales for the Performance Coatings Group (PCG) were $533.81 million, exceeding the estimated $529.3 million, and showing a significant year-over-year increase of +40.4% [4] Earnings Before Interest and Taxes (EBIT) Performance - Adjusted EBIT for the Consumer Segment was $90 million, below the average estimate of $103.51 million [4] - Adjusted EBIT for the Performance Coatings Group (PCG) was $82.83 million, slightly below the estimated $84.28 million [4] - Adjusted EBIT for the Construction Products Group (CPG) was $98.63 million, compared to the average estimate of $114.24 million [4] - Adjusted EBIT for Corporate/Other was -$44.82 million, worse than the average estimate of -$36.68 million [4] Stock Performance - RPM International's shares returned +0.3% over the past month, while the Zacks S&P 500 composite increased by +0.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - PPG Industries reported strong earnings and revenue for Q3 2025, surpassing estimates, but there are concerns about future performance due to a downward trend in estimates [3][4][10]. Financial Performance - Q3 2025 profit was $444 million or $1.96 per share, compared to $444 million or $1.90 per share a year ago [3]. - Adjusted earnings per share were $2.13, up from $2.03 year-over-year, exceeding the Zacks Consensus Estimate of $2.09 [3]. - Revenues for the quarter were approximately $4.08 billion, reflecting a 1.2% year-over-year increase and beating the Zacks Consensus Estimate of $4.04 billion [4]. Segment Review - Global Architectural Coatings segment sales rose 1% year-over-year to $1.01 billion, exceeding estimates due to higher selling prices and favorable foreign currency translation, despite a divestiture in Russia [5]. - Performance Coatings segment sales increased 3% year-over-year to $1.41 billion, but missed estimates, driven by higher selling prices and favorable foreign currency translation, offset by lower sales volumes [6]. - Industrial Coatings segment sales remained flat at around $1.65 billion, missing estimates, impacted by a divestiture and lower pricing [7]. Financial Position - The company had approximately $1.83 billion in cash and cash equivalents at the end of the quarter, with net debt increasing to $5.4 billion, up $228 million from the prior year [8]. Outlook - PPG expects adjusted earnings per share of $7.60 to $7.70 for full-year 2025, driven by share gains and cost initiatives, but anticipates softer demand in certain segments [9]. - There has been a downward trend in consensus estimates, with a shift of -9.01% noted [10]. - The stock has a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [13].

Transaction Overview - AkzoNobel and Axalta will combine in an all-stock merger of equals[21] - Axalta shareholders will receive 06539 shares of AkzoNobel common shares for each Axalta common share owned[21] - AkzoNobel expects to pay a special cash dividend to AkzoNobel shareholders equal to €25 billion minus regular dividends in 2026[21] - Pro forma ownership will be 55% AkzoNobel shareholders and 45% Axalta shareholders[21] Financial Benefits - The combination is expected to create ~$600 million in actionable cost and operational synergies[20, 39, 40] - The combined company's 2024A revenue is $169 billion[29] - The combined company's adjusted EBITDA is $33 billion, with a margin of ~195%[48] - The combined company's adjusted free cash flow is $15 billion[48] Strategic Advantages - The merger creates a top-tier portfolio with leading positions across key end-markets and globally recognized brands[20] - The combined company will have extensive scale, bringing global capabilities to local customers[20, 31] - The combined company will have a cutting-edge R&D and innovation platform, with ~$400 million in combined annual R&D spend[20, 34]

Core Viewpoint - PPG Industries exceeded Wall Street expectations for third-quarter profit, attributed to increased sales and prices in its performance coatings and global architectural coatings segments [1] Group 1: Financial Performance - The company reported higher sales and prices, contributing to a strong performance in the third quarter [1] - PPG Industries' profit surpassed analyst forecasts, indicating robust demand in its key segments [1] Group 2: Market Segments - The performance coatings segment showed significant growth, driven by increased sales [1] - Global architectural coatings also experienced higher sales and pricing, enhancing overall profitability [1]

Financial Data and Key Metrics Changes - Net sales were approximately $1.3 billion, down 2% year over year primarily due to macro headwinds in North America [12] - Adjusted EBITDA reached a record $294 million with a margin of 22.8%, marking 12 consecutive quarters of year-over-year growth [6][7] - Adjusted diluted EPS was $0.67, up 6% compared to the previous year [8][12] - Net leverage was maintained at 2.5 times, the lowest level in Axalta's history [8] Business Line Data and Key Metrics Changes - Performance Coatings segment net sales declined 6% year over year to $828 million, with adjusted EBITDA of $211 million and a margin of 25.5% [14][15] - Mobility Coatings net sales increased 4% to $460 million, with adjusted EBITDA rising 20% year over year to $83 million and a margin of 18% [15][16] - Refinish segment net sales were $517 million, slightly up sequentially but down year over year due to lower body shop activity [14] Market Data and Key Metrics Changes - Global auto production forecast for 2025 is approximately 91 million builds, a 2% increase from 2024 [6] - The broader macro environment remains challenging, particularly in North America, while trends in Europe are more stable [5][6] Company Strategy and Development Direction - The company aims to achieve its A plan target, focusing on enhanced profitability and operational excellence [8][10] - Plans to repurchase up to $250 million of stock in the fourth quarter, reflecting confidence in future growth [17][19] - The company is positioned for growth in the refinish market as claims stabilize and destocking headwinds abate [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that while the external environment in North America and Europe did not improve as expected, they remain focused on execution and operational excellence [18][19] - The company anticipates a significant increase in free cash flow in the fourth quarter, projecting around $450 million for the year [19] - Expectations for 2026 include improved refinish demand and stable light vehicle production [20][21] Other Important Information - The company executed $100 million in share repurchases, reducing shares outstanding by over 3% since 2023 [7][17] - Interest expense decreased by 15% year to date, contributing to adjusted diluted EPS performance [10][16] Q&A Session Summary Question: Regarding the auto refinish component's decline - Management indicated that the market is down mid to high single digits, with destocking also contributing to the decline [24][25] Question: On cost management and future strategies - Management highlighted ongoing cost discipline and structural reductions, with expectations for continued improvement in margins [30][34] Question: Expectations for other end markets - Management expects muted performance in commercial vehicles and stable conditions in industrial markets, with potential growth in Latin America and China [38][40] Question: Discussion on dividends and capital allocation - Management noted that share repurchases are currently prioritized over dividends, with discussions ongoing regarding future capital allocation strategies [44][46] Question: Drivers in the refinish business - Management reported that accident rates are stable, but insurance premiums have increased, impacting claims and overall demand [50][51] Question: On raw material costs and tariffs - Management indicated that raw material costs are stable, with expectations of continued stability in the coming quarters [72][74] Question: Expectations for refinish revenue and volume - Management expects volumes to turn positive in Q2 2026, driven by new body shop wins and stabilization in the market [76][78] Question: On market share gains and competition - Management expressed confidence in maintaining market share and leveraging strengths in the refinish space despite competitive pressures [84][86]