Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Q2 2023 Earnings Presentation
25 slides from Axalta Coating Systems's earnings presentation, Aug 2, 2023
Slide 1: Q2 2023 Financial Results
Q2 2023 Financial Results August 1, 2023 1
Slide 2: Legal Notices
Legal Notices Forward-Looking Statements This presentation and the oral remarks made in connection herewith may contain certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding Axalta and its subsidiaries including, but not limited
Slide 3: Axalta Announces New Leadership Appointments
Axalta Announces New Leadership Appointments Carl Anderson Kevin Stein Incoming Incoming Chief Financial Board Member Officer Effective September 1, Effective August 14, 2023 2023 3
Slide 4: Q2 2023 Key Highlights & FY Update
Q2 2023 Key Highlights & FY Update ■ Adj. EBIT (Adj. EBITDA) within guidance range at $155 ($227) million despite ERP related operational delays ■ Pricing momentum continued in all end-markets resulting in an overall price-mix increase of 7% (17% two-year stack) ■ Continued positive market dynamics
Slide 5: North America ERP Implementation Completed
North America ERP Implementation Completed NA Launch Effective May 1st Limited Operational Disruptions Resolved Sales Backlog ■ New ERP enhances productivity and efficiency 6% Expect backlogs to 1 normalize in second ▪ Roadmap to consolidate six ERP solutions to one +1 ▪ Replacement of legacy 25 yea
Slide 6: Q2 Volume Trends
Q2 Volume Trends PERFORMANCE COATINGS Europe, AP ex. Greater Americas Middle East Greater China(2) Refinish & Africa China(2) Industrial REFINISH (18)% (1.2)% (3.4)% 5.4% $3.4B in Net Sales(1) INDUSTRIAL (20.2)% (11.8)% 9.7% 10.1% MOBILITY COATINGS LIGHT VEHICLE 3.6% 18.1% 49.9% (20.6)% COMMERCIAL V
Slide 7: Refinish Business Review
Refinish Business Review Introducing Axalta Irus Mix GLOBAL LEADER IN AFTERMARKET AUTO COATINGS AND ACCESSORIES ▪ 10% price-mix growth YoY more than offset elevated labor, materials and freight costs ▪ Stable demand environment, however volumes lower in North America given ERP-related operational de
Slide 8: Industrial Business Review
Industrial Business Review EXPANDING SALES PIPELINE ACROSS DIVERSIFIED GROWTH PLATFORM ▪ 7% price-mix growth YoY; positive YoY price-cost for third consecutive quarter ▪ 15% volume decline YoY driven by softer global demand; signs of stabilization in EMEA ▪ General Industrial Most regions are lower
Slide 9: Mobility Coatings Business Review
Mobility Coatings Business Review MARGIN RECOVERY THROUGH VOLUME AND PRICE-MIX GROWTH LIGHT VEHICLE 2016-2025 GLOBAL LV BUILDS(1) ▪ Volume growth of 15% YoY led by robust (Builds in millions) growth in Asia Pacific 95 ▪ Price-mix growth of 2% YoY 90 85 ▪ Eighth consecutive quarter of positive YoY pr
Slide 10: Q2 Consolidated Results
Q2 Consolidated Results Financial Performance Commentary ($ in millions, except Q2 % Change Net sales growth year over year driven by strong price-mix per share data) 2023 2022 Incl. F/X Excl. F/X and Mobility Coatings volume improvement Performance Coatings 856 856 —% (0.2%) ▪ 7% price-mix growth (
Slide 11: Q2 Performance Coatings Results
Q2 Performance Coatings Results Financial Performance Commentary Q2 % Change Net sales flat year over year as robust price-mix growth in ($ in millions) 2023 2022 Incl. F/X Excl. F/X both end-markets was offset by lower volumes Refinish 521 491 6.0 % 5.7 % ▪ Refinish volumes declined by 8% YoY, larg
Slide 12: Q2 Mobility Coatings Results
Q2 Mobility Coatings Results Financial Performance Commentary Q2 % Change Net sales growth of 16% led by robust volume growth and ($ in millions) 2023 2022 Incl. F/X Excl. F/X strong price-mix in both end-markets Light Vehicle 330 283 16.7 % 17.3 % ▪ Light Vehicle growth supported by ongoing market
Slide 13: Debt and Liquidity Summary
Debt and Liquidity Summary Capitalization Commentary ($ in millions) Interest @ 6/30/2023 Maturity Focused capital allocation Cash and Cash Equivalents $ 518 Revolver ($550 million capacity) Variable — 2026 ▪ Voluntarily paid down $75 million of long-term debt in the period First Lien Term Loan (USD
Slide 14: Financial Guidance & Market Commentary
Financial Guidance & Market Commentary Axalta does not provide a reconciliation for non-GAAP estimates for Adjusted EBIT, Adjusted EBITDA, Adjusted Diluted EPS, tax rate, as adjusted, and free cash flow on a forward-looking basis because the information necessary to calculate a meaningful or accurat
Slide 15: Appendix
Appendix 15
Slide 16: Q3 and Full Year 2023 Assumptions
Q3 and Full Year 2023 Assumptions Macroeconomic Assumptions Q3 2023 Currency Assumptions Q3 2023 Q3 2022 % Axalta Q3 2022 USD % Impact of Indicator Q3 2023 FY 2023 Currency Average Rate Net Sales Average Rate FX Rate Change Assumption Global GDP Growth(1) ~2.2% ~1.9% US$ per Euro ~22% 1.01 1.10 9.2%
Slide 17: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation ($ in millions) Q2 2023 Q2 2022 Income from operations $ 137.6 $ 103.6 Other expense, net 8.5 7.2 Total $ 129.1 $ 96.4 A Debt extinguishment and refinancing-related costs (benefits) 1.2 (0.2) B Termination benefits and other employee-related costs 2.3 2.7 C Acquisition a
Slide 18: Adjusted EBIT Reconciliation (cont'd)
Adjusted EBIT Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance. B Represents expenses and associated changes to est
Slide 19: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in millions, except per share data) Q2 2023 Q2 2022 Net income $ 61.1 $ 44.1 Less: Net income attributable to noncontrolling interests 0.2 — Net income attributable to controlling interests $ 60.9 $ 44.1 A Debt extinguishment and refinancing-related costs (benef
Slide 20: Adjusted Net Income Reconciliation (cont'd)
Adjusted Net Income Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance. B Represents expenses and associated changes
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in millions) Q2 2023 Q1 2023 YTD 2023 Q2 2022 Q1 2022 YTD 2022 Cash provided by (used for) operating activities $ 131.0 $ (51.8) $ 79.2 $ 12.2 $ (43.9) $ (31.7) Purchase of property, plant and equipment (32.5) (41.4) (73.9) (29.5) (42.5) (72.0) Interest proceeds on s
Slide 22: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation LTM ($ in millions) 6/30/2023 Q2 2023 Q1 2023 Q2 2022 Q1 2022 FY 2022 Net income $ 228.8 $ 61.1 $ 60.5 $ 44.1 $ 40.9 $ 192.2 Interest expense, net 176.5 54.6 48.2 33.5 32.6 139.8 Provision for income taxes 64.0 13.4 15.3 18.8 11.0 65.1 Depreciation and amortization 283
Slide 23: Adjusted EBITDA Reconciliation (cont'd)
Adjusted EBITDA Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance. B Represents expenses and associated changes to e
Slide 24: Step-Up Depreciation & Amortization Decrease Relative to 2022
Step-Up Depreciation & Amortization Decrease Relative to 2022 ($ in millions) Q3 Q4 Full Year Step-Up Depreciation & Amortization 2023 Guidance(1) $13 $13 $55 2022 (As Reported) $23 $23 $93 Variance(2) ($10) ($10) ($38) Total AXTA 2023 Adj. EBIT Impact(3) $— $— $— Approximate segment allocation of S
Slide 25: Thank You
Thank You Investor Relations Contact: Chris Evans Christopher.Evans@axalta.com 484-724-4099 25
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