Axalta Releases Third Quarter 2015 results

Axalta Coating Systems Ltd. (NYSE:AXTA) (“Axalta”), a leading global coatings company, announced its financial results for the third quarter ended September 30, 2015 .

Charles W. Shaver , Axalta’s Chairman and Chief Executive Officer, commented that “Axalta produced a solid third quarter, including ongoing volume growth and margin expansion, which enabled us to exceed the mid-point of our Adjusted EBITDA guidance for the period. This result was delivered notwithstanding persistent foreign exchange headwinds for our global businesses, which masked otherwise strong profit growth in nearly all segments and regions. Although we also faced some challenges in the quarter from the slowdown in the Chinese economy, including automotive end-markets, we are encouraged that demand indicators now show signs of recovery.”

“Regarding our 2015 operating and financial goals, we are pleased with the progress we have made to date, and we continue to execute our plan in a disciplined way with the goal of creating shareholder value through profitable revenue growth, strong cash generation, and effective capital allocation,” Mr. Shaver continued. “We made good progress on our growth and productivity initiatives in the third quarter, including our first realized savings from The Axalta Way program.”

Third Quarter Consolidated Financial Results

Net sales of $1.0 billion for the third quarter of 2015 increased 3.1% year-over-year excluding unfavorable foreign currency translation, while declining 9.8% on an as-reported basis. Net sales growth excluding currency was driven by 2.1% volume increases, indicating continued underlying strength in our global coatings markets. Higher average selling prices in the quarter added modestly to net sales, while unfavorable foreign currency translation reduced net sales by 12.9% compared to the third quarter last year.

Adjusted EBITDA of $216.9 million for the third quarter compared with $228.0 million in Q3 2014, while Adjusted EBITDA margins in the quarter expanded to 21.7% from 20.6% reported last year. Margin improvement was driven by several factors including increased volumes, improved mix and pricing, as well as lower costs resulting from our operating improvement initiatives. These factors were offset by negative foreign currency translation and incremental investments to support growth of key businesses.

Performance Coatings Results

Net sales in Performance Coatings of $600.6 million for Q3 2015 represented a 5.1% year-over-year increase excluding foreign currency translation, and a decrease of 9.5% on an as-reported basis. Net sales growth drivers included volume growth of 3.4% and higher average selling prices of 1.7% in the period, more than offset by 14.6% unfavorable currency translation. Refinish end-market Q3 net sales increased 5.2% on a constant currency basis (decreased 10.7% as-reported), while our Industrial end-market posted 4.7% growth excluding the impact of currency (decreased 6.3% as-reported).

The Performance Coatings segment generated Adjusted EBITDA of $139.0 million in the third quarter, a 6.4% year-over-year decrease. Positive volume and pricing contributions, coupled with variable cost savings, were more than offset by negative foreign currency translation and incremental investments in growth initiatives. Performance Coatings segment Adjusted EBITDA margin of 23.1% for the third quarter reflected a 70 basis point increase compared to the corresponding quarter of the prior year.

Transportation Coatings Results

The Transportation Coatings segment reported net sales of $399.7 million in the third quarter, largely flat excluding foreign currency translation, and a decrease of 10.3% on an as-reported basis versus third quarter 2014. Volume and price combined for 0.2% net sales growth, offset by 10.5% unfavorable foreign currency translation versus the prior year. Light Vehicle end-market net sales declined slightly by 0.9% on a constant currency basis compared to the third quarter of 2014 (decreased 11.3% as-reported). Our Commercial Vehicle end-market reported net sales growth of 4.0% on a constant currency basis versus last year (decreased 6.7% as-reported). While North America continued to experience solid volume growth in both Light Vehicle and Commercial end-markets, this growth was partially offset by lower demand in regions of Latin America impacted by an ongoing economic recession, as well as a slowdown in China vehicle production during the quarter.

The Transportation Coatings segment generated Adjusted EBITDA of $77.9 million , a decrease of 2.0% compared to the third quarter of 2014 with positive volume, price, and variable cost initiatives more than offset by unfavorable foreign currency translation and moderate incremental investments. The Transportation Coatings segment generated an Adjusted EBITDA margin of 19.5%, an increase of 170 basis points compared to 17.8% in Q3 2014.

Balance Sheet and Cash Flow Highlights

We ended the quarter with cash and cash equivalents of $411.6 million . Our net debt was $3.1 billion as of September 30, 2015 , which resulted in Net Debt to latest twelve month Adjusted EBITDA of 3.7x, consistent with our last quarter.

Third quarter operating cash flow was $159 million versus $46 million in the corresponding quarter of 2014. Free cash flow after capital expenditures of $37 million totaled $122 million .

“Axalta’s financial progress in the third quarter remained on track with our goals for the year,” said Robert W. Bryant , Axalta’s Executive Vice President and Chief Financial Officer. “We continue to drive profitable volume growth, ongoing margin expansion and solid free cash flow generation, which enabled us to prepay $100 million on our Term Loan in October 2015.”

2015 Outlook

We are updating our outlook for the full year 2015, including:

  • Net sales growth of 5-7% in constant currency; down mid-single digits including currency impacts versus our previous assumption of down low- to mid-single digits;
  • Adjusted EBITDA of $870-$900 million , with currency translation headwinds anticipated to drive Adjusted EBITDA to the lower end of the range; and
  • Other guidance assumptions remain unchanged including normalized effective tax rate of 27-29%, capital expenditures of approximately $150 million , and net working capital of 13-15% of net sales, excluding non-recurring items.

Conference Call Information

As previously announced, Axalta will hold a conference call to discuss its third quarter 2015 financial results on Wednesday, October 28th, at 8:00 a.m. EDT . The U.S. dial-in phone number for the conference call is (877) 407-0784 and the international dial-in number is +1 (201) 689-8560. A live webcast of the conference call will also be available online at http://ir.axaltacs.com. For those unable to participate in the conference call, a replay will be available through November 4, 2015 . The U.S. replay dial-in phone number is (877) 870-5176 and the international replay dial-in number is +1 (858) 384-5517. The replay passcode is 13621709.

Cautionary Statement Concerning Forward-Looking Statements

This release may contain certain forward-looking statements regarding Axalta and its subsidiaries including those relating to our 2015 full year outlook, net sales growth, Adjusted EBITDA, effective tax rate, capital expenditures and net working capital. All of these statements are based on management’s expectations as well as estimates and assumptions prepared by management that, although they believe to be reasonable, are inherently uncertain. These statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of Axalta’s control that may cause its business, industry, strategy, financing activities or actual results to differ materially. Axalta undertakes no obligation to update or revise any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

The historical financial information included in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including constant currency net sales growth, Adjusted EBITDA, free cash flow, Net Debt and Adjusted Net Income. Management uses these non-GAAP financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Our use of the terms constant currency net sales growth, Adjusted EBITDA, Net Debt and Adjusted Net Income may differ from that of others in our industry. Constant currency net sales growth, Adjusted EBITDA, free cash flow, Net Debt and Adjusted Net Income should not be considered as alternatives to net sales, net income (loss), income (loss) before operations or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Constant currency net sales growth, Adjusted EBITDA, operating free cash flow, net free cash flow, Net Debt and Adjusted Net Income have important limitations as analytical tools and should be considered in conjunction with, and not as substitutes for, our results as reported under GAAP. This presentation includes a reconciliation of certain non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.

About Axalta Coating Systems

Axalta is a global leader in the coatings industry, providing customers with innovative, colorful, beautiful and sustainable coatings solutions. From light vehicles, commercial vehicles and refinish applications to electric motors, building facades and other industrial applications, our coatings are designed to prevent corrosion, increase productivity and enhance durability. With more than 150 years of experience in the coatings industry, the 12,800 people of Axalta continue to find ways to serve our more than 120,000 customers in 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter.

Axalta Coating Systems Ltd. (NYSE:AXTA) (“Axalta”), a leading global coatings company, announced its financial results for the third quarter ended September 30, 2015 .

Charles W. Shaver , Axalta’s Chairman and Chief Executive Officer, commented that “Axalta produced a solid third quarter, including ongoing volume growth and margin expansion, which enabled us to exceed the mid-point of our Adjusted EBITDA guidance for the period. This result was delivered notwithstanding persistent foreign exchange headwinds for our global businesses, which masked otherwise strong profit growth in nearly all segments and regions. Although we also faced some challenges in the quarter from the slowdown in the Chinese economy, including automotive end-markets, we are encouraged that demand indicators now show signs of recovery.”

“Regarding our 2015 operating and financial goals, we are pleased with the progress we have made to date, and we continue to execute our plan in a disciplined way with the goal of creating shareholder value through profitable revenue growth, strong cash generation, and effective capital allocation,” Mr. Shaver continued. “We made good progress on our growth and productivity initiatives in the third quarter, including our first realized savings from The Axalta Way program.”

 

Third Quarter Consolidated Financial Results

 

Net sales of $1.0 billion for the third quarter of 2015 increased 3.1% year-over-year excluding unfavorable foreign currency translation, while declining 9.8% on an as-reported basis. Net sales growth excluding currency was driven by 2.1% volume increases, indicating continued underlying strength in our global coatings markets. Higher average selling prices in the quarter added modestly to net sales, while unfavorable foreign currency translation reduced net sales by 12.9% compared to the third quarter last year.

Adjusted EBITDA of $216.9 million for the third quarter compared with $228.0 million in Q3 2014, while Adjusted EBITDA margins in the quarter expanded to 21.7% from 20.6% reported last year. Margin improvement was driven by several factors including increased volumes, improved mix and pricing, as well as lower costs resulting from our operating improvement initiatives. These factors were offset by negative foreign currency translation and incremental investments to support growth of key businesses.

 

Performance Coatings Results

 

Net sales in Performance Coatings of $600.6 million for Q3 2015 represented a 5.1% year-over-year increase excluding foreign currency translation, and a decrease of 9.5% on an as-reported basis. Net sales growth drivers included volume growth of 3.4% and higher average selling prices of 1.7% in the period, more than offset by 14.6% unfavorable currency translation. Refinish end-market Q3 net sales increased 5.2% on a constant currency basis (decreased 10.7% as-reported), while our Industrial end-market posted 4.7% growth excluding the impact of currency (decreased 6.3% as-reported).

The Performance Coatings segment generated Adjusted EBITDA of $139.0 million in the third quarter, a 6.4% year-over-year decrease. Positive volume and pricing contributions, coupled with variable cost savings, were more than offset by negative foreign currency translation and incremental investments in growth initiatives. Performance Coatings segment Adjusted EBITDA margin of 23.1% for the third quarter reflected a 70 basis point increase compared to the corresponding quarter of the prior year.

 

Transportation Coatings Results

 

The Transportation Coatings segment reported net sales of $399.7 million in the third quarter, largely flat excluding foreign currency translation, and a decrease of 10.3% on an as-reported basis versus third quarter 2014. Volume and price combined for 0.2% net sales growth, offset by 10.5% unfavorable foreign currency translation versus the prior year. Light Vehicle end-market net sales declined slightly by 0.9% on a constant currency basis compared to the third quarter of 2014 (decreased 11.3% as-reported). Our Commercial Vehicle end-market reported net sales growth of 4.0% on a constant currency basis versus last year (decreased 6.7% as-reported). While North America continued to experience solid volume growth in both Light Vehicle and Commercial end-markets, this growth was partially offset by lower demand in regions of Latin America impacted by an ongoing economic recession, as well as a slowdown in China vehicle production during the quarter.

The Transportation Coatings segment generated Adjusted EBITDA of $77.9 million , a decrease of 2.0% compared to the third quarter of 2014 with positive volume, price, and variable cost initiatives more than offset by unfavorable foreign currency translation and moderate incremental investments. The Transportation Coatings segment generated an Adjusted EBITDA margin of 19.5%, an increase of 170 basis points compared to 17.8% in Q3 2014.

 

Balance Sheet and Cash Flow Highlights

 

We ended the quarter with cash and cash equivalents of $411.6 million . Our net debt was $3.1 billion as of September 30, 2015 , which resulted in Net Debt to latest twelve month Adjusted EBITDA of 3.7x, consistent with our last quarter.

Third quarter operating cash flow was $159 million versus $46 million in the corresponding quarter of 2014. Free cash flow after capital expenditures of $37 million totaled $122 million .

“Axalta’s financial progress in the third quarter remained on track with our goals for the year,” said Robert W. Bryant , Axalta’s Executive Vice President and Chief Financial Officer. “We continue to drive profitable volume growth, ongoing margin expansion and solid free cash flow generation, which enabled us to prepay $100 million on our Term Loan in October 2015.”

 

2015 Outlook

 

We are updating our outlook for the full year 2015, including:

  • Net sales growth of 5-7% in constant currency; down mid-single digits including currency impacts versus our previous assumption of down low- to mid-single digits;
  • Adjusted EBITDA of $870-$900 million , with currency translation headwinds anticipated to drive Adjusted EBITDA to the lower end of the range; and
  • Other guidance assumptions remain unchanged including normalized effective tax rate of 27-29%, capital expenditures of approximately $150 million , and net working capital of 13-15% of net sales, excluding non-recurring items.

 

Conference Call Information

 

As previously announced, Axalta will hold a conference call to discuss its third quarter 2015 financial results on Wednesday, October 28th, at 8:00 a.m. EDT . The U.S. dial-in phone number for the conference call is (877) 407-0784 and the international dial-in number is +1 (201) 689-8560. A live webcast of the conference call will also be available online at http://ir.axaltacs.com. For those unable to participate in the conference call, a replay will be available through November 4, 2015 . The U.S. replay dial-in phone number is (877) 870-5176 and the international replay dial-in number is +1 (858) 384-5517. The replay passcode is 13621709.

Cautionary Statement Concerning Forward-Looking Statements

This release may contain certain forward-looking statements regarding Axalta and its subsidiaries including those relating to our 2015 full year outlook, net sales growth, Adjusted EBITDA, effective tax rate, capital expenditures and net working capital. All of these statements are based on management’s expectations as well as estimates and assumptions prepared by management that, although they believe to be reasonable, are inherently uncertain. These statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of Axalta’s control that may cause its business, industry, strategy, financing activities or actual results to differ materially. Axalta undertakes no obligation to update or revise any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

The historical financial information included in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including constant currency net sales growth, Adjusted EBITDA, free cash flow, Net Debt and Adjusted Net Income. Management uses these non-GAAP financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Our use of the terms constant currency net sales growth, Adjusted EBITDA, Net Debt and Adjusted Net Income may differ from that of others in our industry. Constant currency net sales growth, Adjusted EBITDA, free cash flow, Net Debt and Adjusted Net Income should not be considered as alternatives to net sales, net income (loss), income (loss) before operations or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. Constant currency net sales growth, Adjusted EBITDA, operating free cash flow, net free cash flow, Net Debt and Adjusted Net Income have important limitations as analytical tools and should be considered in conjunction with, and not as substitutes for, our results as reported under GAAP. This presentation includes a reconciliation of certain non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.

 

About Axalta Coating Systems

 

Axalta is a global leader in the coatings industry, providing customers with innovative, colorful, beautiful and sustainable coatings solutions. From light vehicles, commercial vehicles and refinish applications to electric motors, building facades and other industrial applications, our coatings are designed to prevent corrosion, increase productivity and enhance durability. With more than 150 years of experience in the coatings industry, the 12,800 people of Axalta continue to find ways to serve our more than 120,000 customers in 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter.

Axalta's Steven Markevich Promoted to Executive Vice President

Axalta Coating Systems has announced that Steve Markevich has been promoted to the position of Executive Vice President. In this new role, Mr. Markevich will continue as President of the company's transportation coatings business and now also be responsible for all of Axalta's operations in greater China.

China presents many opportunities for the sustained growth of coatings applications. It is an important market for the production of both light and commercial vehicles. These vehicles fuel the need for Axalta’s refinish coatings that serve the collision repair industry and commercial fleet owners. China’s development also requires a variety of industrial coatings that are used in electrical systems, construction, hundreds of commercial applications and in vehicles as well. Mr. Markevich will be able to promote Axalta’s China growth strategy by integrating the contributions that Axalta’s many coatings technologies can provide to multiple industries.

Before joining Axalta in 2013, Mr. Markevich was Chief Executive Officer of GKN Driveline based in the United Kingdom. Prior to that, he was President, GKN Sinter Metals, which engineers and manufactures precision automotive components for engine, transmission and body chassis applications for major OEMs and top tier customers. He also served as President, Sinter Metals North American Operations and as Vice-President, Sales & Marketing. While at GKN, Mr. Markevich oversaw operations in over 22 countries. At Siegel-Robert Automotive, one of the largest exterior trim suppliers to automotive and commercial truck manufacturers, he led the company’s commercial strategy, sales, account and program management initiatives. At Guardian Automotive, he served in numerous leadership roles and was responsible for all senior level customer relationships. Mr. Markevich started his career with Deloitte & Touche consulting and the National Steel Corporation. He received a finance degree from University of Michigan’s Ross School of Business and is a Certified Public Accountant.

Read more at: http://www.coatingsworld.com/contents/view_breaking-news/2015-10-05/axaltas-steven-markevich-promoted-to-executive-vice-president/

Axalta Introduces Corlar 821CR Epoxy Primer for Commercial Vehicle Industry

Axalta Coating Systems, a leading global manufacturer of liquid and powder coatings, introduces a new non-sanding, chromate-containing epoxy primer, Corlar® 821CR, for use in the commercial vehicle industry.

Axalta’s Corlar 821CR Epoxy Primer may be used by commercial vehicle shops who desire a product designed for excellent adhesion and corrosion resistance over metal substrates. This new primer-sealer should be used with two new activators, 822S standard and 823S slow, to help achieve greater application flexibility.

Corlar 821CR Epoxy Primer is recommended for use on OEM replacement parts, properly sanded or prepared steel, aluminum, galvanized steel or stainless steel, and under Axalta commercial vehicle primers and topcoats.

For more information about Corlar products, please visit axalta.us/transportation.

About Axalta Coating Systems

Axalta is a leading global company focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, commercial vehicles and refinish applications to electric motors, buildings and pipelines, our coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With nearly 150 years of experience in the coatings industry, the 12,800 people of Axalta continue to find ways to serve our more than 120,000 customers in more than 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter and on LinkedIn.

Axalta Introduces New Rival Epoxy Primer for Economy Commercial Vehicle Market

Axalta Coating Systems, a leading global manufacturer of liquid and powder coatings, developed Rival™ RV450™ Epoxy Primer to provide customers with a wider variety of its popular economy paint brand. It is designed for high performance, color capability and appearance.

Rival RV450 Epoxy Primer is formulated to provide maximum adhesion and corrosion resistance on properly treated substrates. This product is a two-component, high solids, non-sanding, epoxy primer-sealer with a 3.5 lbs/gallon volatile organic compounds (VOC) level. It is recommended to be used with Rival topcoat products.

“As we continue to assemble Axalta’s commercial transportation economy portfolio, the introduction of RV450 epoxy primer brings a workhorse product into the Rival offering,” said Jim Fawcett, Axalta Commercial Transportation Product Manager.

The Rival brand was introduced in 2013 with a single stage polyurethane enamel as a cost-effective finish for dealers, independent shops, fleets and municipalities. Rival topcoat is available in solid and metallic colors to give shops the flexibility to choose just the right Axalta product needed for the job. In May 2015, Axalta released a urethane primer and polyurethane clearcoat to enhance the product offering for the economy commercial vehicle market.

For more information about Rival, please visit axalta.us/transportation.

About Axalta Coating Systems

Axalta is a leading global company focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, commercial vehicles and refinish applications to electric motors, buildings and pipelines, our coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With nearly 150 years of experience in the coatings industry, the 12,800 people of Axalta continue to find ways to serve our more than 120,000 customers in more than 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter and on LinkedIn.

Axalta Introduces Refinish Plastics Products for Commercial Vehicle Industry

Axalta Coating Systems, a leading global manufacturer of liquid and powder coatings, introduces 830S™ Adhesion Promoter and 835S™ Plastic Cleaner for the commercial vehicle industry. These new products are both ready-to-use and VOC compliant.

Axalta’s 830S™ Adhesion Promoter is formulated to enhance the adhesion of Axalta’s commercial vehicle products on unprimed polyolefin or non-polyolefin unprimed plastic parts. 835S™ Plastic Cleaner is specifically designed to remove mold release agents and surface contaminants from unprimed plastic parts. The use of an Axalta commercial vehicle primer and topcoat is recommended over the plastic products for optimal system performance.

For more information on Axalta coatings for the commercial vehicle industry, please visit axalta.us/transportation.

 

About Axalta Coating Systems

Axalta is a leading global company focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, commercial vehicles and refinish applications to electric motors, buildings and pipelines, our coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With nearly 150 years of experience in the coatings industry, the over 12,800 people of Axalta continue to find ways to serve our more than 120,000 customers in 130 countries better every day with the finest coatings, application systems and technology. For more information visit axaltacoatingsystems.com and follow us @axalta on Twitter and on LinkedIn.

 

Read more at: http://www.businesswire.com/news/home/20150923005064/en/