Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Investor Presentation (May 2015)
34 slides from Axalta Coating Systems's investor presentation, May 20, 2015
Slide 1: Axalta Investor Presentation
May 20, 2015 Axalta Investor Presentation Axalta Coating Systems
Slide 2: Notice Regarding Forward Looking Statements, Non-GAAP Financial Measures and Defined Terms
Notice Regarding Forward Looking Statements, Non-GAAP Financial Measures and Defined TermsForward-Looking Statements This presentation and the oral remarks made in connection herewith may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of
Slide 3: Axalta – A Global Leader in Coatings
Axalta – A Global Leader in Coatings Body Shops Electrical Insulation, Architectural, General Industrial Net Sales1 $4,362 million Adjusted EBITDA1,2 $841 million Adjusted EBITDA Margin2 19.3% Light Vehicle / Automotive OEMs Heavy Duty Truck, Bus, Rail, Agriculture & Construction OEMs Net Sales: $1,
Slide 4: Investment Highlights
Investment Highlights Global Market Leader in an Attractive Industry Sustainable Competitive Advantages Technology Leader Profitable Growth Initiatives 5 Strong Financial Profile 4 3 2 1Axalta Coating Systems
Slide 5: Axalta's Global Scale
Axalta Coating Systems 5 Axalta’s Global Scale 1. Mexico is included in Latin America throughout the presentation. 2. Includes nine joint venture manufacturing facilities. • 35 manufacturing facilities, 45 customer training centers and 7 technology centers • ~12,600 employees, serving customers loca
Slide 6: Strong Coatings Growth Outlook
Axalta Coating Systems Global Market Leader in an Attractive Industry Strong Coatings Growth Outlook 7.6 8.6 7.7 8.9 3.4 3.9 20.6 25.3 39.4 46.8 2014E 2017E Commercial Vehicle Light Vehicle Refinish Industrial 7.1% 4.8% 5.0% 4.1% CAGR Our Coatings are Critical to Look & Durability, at a Relatively L
Slide 7: Sustainable Competitive Advantages
Axalta Coating Systems 7 Sustainable Competitive Advantages Differentiated Technical Support Extensive Color Strong Brands Library • Over 4 million color variations • Deep coatings heritage since 1866 • Broad brand portfolio Global Technology Leader • Patents: 1,200+ issued and 500+ pending • 250+ t
Slide 8: Technology Leader
Axalta Coating Systems Technology Leader Industry Trends Axalta Technologies OEM Light-Weighting of Vehicles • Broad substrate applicability for next generation materials (e.g., carbon fiber, aluminum and composites) Growth in Multi-Shop Operators (“MSO”) • Waterborne technology improves productivit
Slide 9: Profitable Growth Initiatives
Axalta Coating Systems Profitable Growth Initiatives Visible Growth Supported by Recent Business Wins Accelerating Growth in Emerging Markets Globalizing Existing Products to Reach Underserved Markets Optimizing Procurement Streamlining Operations Enhancing Productivity Sales Growth Strategies Cost
Slide 10: Refinish: Strong Momentum Driven by Customer-Centric Approach
Axalta Coating Systems 10 Refinish Source: Management estimates Strong Momentum Driven by Customer-Centric Approach 4 Axalta MSO Market Share 2013 Today Light Vehicle New Wins Visible Growth Supported by New Contract Wins • Axalta is driving market share gains by partnering with key industry consoli
Slide 11: Accelerating Growth in Emerging Markets
Axalta Coating Systems $14.3 $15.6 $17.1 $18.5 $20.1 2014E 2015E 2016E 2017E 2018E 35.0 41.3 48.3 57.7 69.8 83.0 98.1 114.6 132.3 150.7 169.0 2008A 2010A 2012A 2014E 2016E 2018E Emerging Markets, 31% Accelerating Growth in Emerging Markets 11 4 China Example Light Vehicles, Per 1,000 People China Ca
Slide 12: Globalizing Existing Products to Reach Underserved Markets
Axalta Coating Systems Globalizing Existing Products to Reach Underserved Markets 12 Source: LMC Automotive. Heavy Duty Truck Axalta, AkzoNobel PPG BASF Other #1 North American Heavy Duty Truck Market 4 (Vehicles in Thousands) Heavy Duty Truck Production 342 1,220 North America China Meaningful Grow
Slide 13: Cost Initiatives to Enhance Profitability
Axalta Coating Systems Cost Initiatives to Enhance Profitability 13 Operating Initiatives Expected To Enhance Profit Over 3 Years 4 Fit For Growth (Europe): $100 million targeted savings • Wage & benefit restructuring • Rationalize manufacturing and logistics, invest in automation • Right-size staff
Slide 14: Strong Financial Profile
Axalta Coating Systems Strong Financial Profile 14 Strong Improvement in Adj. EBITDA1 Net Leverage ($ in Millions, % Adj. EBITDA margin) $570 $662 $738 $841 13% 16% 17% 19% 2011A 2012A 2013A 2014A Source: Company filings and presentations. Note: Our pro forma Adjusted EBITDA for the year ended 12/31
Slide 15: Strong Earnings Momentum with Potential Upside
Axalta Coating Systems Strong Earnings Momentum with Potential Upside 15 Underlying Market Growth Axalta Growth Initiatives Operational Improvements Attractive Potential Upside Strong underlying demand growth Robust industry trends favor global suppliers Strong momentum driven by customer-centric ap
Slide 16: Financial Overview
AXALTA Financial Overview
Slide 17: Strong Performance With Future Upside
Axalta Coating Systems Strong Performance With Future Upside 17 Key Observations Building a Track Record of Strong Profitable Growth Axalta’s Achievements To Date 3.4% 2.7% 4.0% 2012 2013 2014 Robust Net Sales Growth (YoY Net Sales, Excl. FX) $662 $738 $841 2012 2013 2014 Solid Adjusted EBITDA Growt
Slide 18: Q1 2015 Consolidated Results
Axalta Coating Systems Q1 2015 Consolidated Results 18 Financial Performance Net sales increased 5.2% excluding currency • Volume growth led by North America and Asia-Pacific • Moderate price increases in select regions • 10.8% unfavorable currency impact Adjusted EBITDA margin up 60 bps • Improveme
Slide 19: Full Year 2015 Guidance
Axalta Coating Systems Full Year 2015 Guidance 19 • Net Sales Growth: + 5-7% excluding F/X; flat to slightly down on an as-reported basis – Growth across all regions and end-markets, excluding F/X impact, which is a significant headwind, though primarily translational with production and sales fairl
Slide 20: Appendix A: Segment Overviews
Confidential Appendix A: Segment Overviews
Slide 21: Refinish Market Overview
Axalta Coating Systems Refinish Market Overview • Volume drivers: Size of car parc, miles driven, resulting collisions – Global car parc to grow from 1,019 M to 1,176 M cars from 2013-17E, with significant growth in China • Industry structure & technological improvements enable annual price increase
Slide 22: Refinish Process
Axalta Coating Systems Refinish Process Consumer Body Shop • Incident occurs, vehicle not totaled • Consumer contacts insurance company • May be directed to “preferred” shops nearby • Consumer drops off car • Often provided a rental car by insurance Accident Call Insurance Drop Off Car at Body Shop
Slide 23: General Industrial Market
Axalta Coating Systems General Industrial Electrical Insulation Architectural Extrusions Automotive Components Oil & Gas Coil Industrial Market Industrial Applications Key Trends Projected Industry Sales 23 ($ in billions) ’14E – ‘17E CAGR Asia Pacific EMEA North America 5.4% 8.8% 5.0% 3.2% 7.1% $2.
Slide 24: Light Vehicle Market
Axalta Coating Systems Light Vehicle Market Key Trends • Industry Growth – Vehicle builds expected to grow 3-4% annually – Asia Pacific and Latin America have most growth potential • Globalization – Global expansion with common product specifications and processes – Standardization of color developm
Slide 25: Light Vehicle Products and Process
Axalta Coating Systems Light Vehicle Products and Process Layers on a Vehicle Key Products & Processes 25 Vehicle Coating Process • Capital intensive process • Large energy & environmental footprint • Incoming raw material converted to finished product on-site • Process prone to rework & finesse Sur
Slide 26: Commercial Vehicle Market
Axalta Coating Systems Commercial Vehicle Market 26 Global HDT & Bus Share Position Key Trends Projected Industry Sales ($ in millions) Asia Pacific EMEA North America 5.0% 6.5% 3.8% 3.1% 4.8% $860 $899 $922 $943 $954 $993 $1,025 $1,068 $1,243 $1,330 $1,419 $1,503 $347 $372 $387 $402 2014E 2015E 201
Slide 27: Commercial Vehicle Products and Brands
Axalta Coating Systems Commercial Vehicle Products and Brands 27 Imron® Elite™ Basecoat Imron® Elite™ Clearcoat AquaEC™ Electrocoat Imron® Chassis undercarriage coatings Imron® Chassis Paint Alesta® Powder Coatings Used in OEM and Aftermarket applications Corlar® Primer
Slide 28: Appendix B: Financial Supplement & Disclosures
Confidential Appendix B: Financial Supplement & Disclosures
Slide 29: Full Year 2015 Assumptions
Axalta Coating Systems Full Year 2015 Assumptions 29 Currency % Axalta Net Sales 2014 Avg. Rate 2015 Avg. Guidance Rate % Change in F/X Rate US$ per Euro ~30% 1.33 1.10 (17.3%) Chinese Yuan per US$ ~11% 6.17 6.25 (1.3%) Mexican Peso per US$ ~6% 13.33 15.00 (12.5%) Brazilian Real per US$ ~5% 2.36 2.9
Slide 30: Q1 2015 Performance Coatings Results
Axalta Coating Systems Q1 2015 Performance Coatings Results 30 Financial Performance Net sales increased 2.5% excluding currency • Refinish end market increased volumes and price, offset partly by continued volume pressure in specific EMEA countries • Industrial volumes showed solid growth; Powder i
Slide 31: Q1 2015 Transportation Coatings Results
Axalta Coating Systems Q1 2015 Transportation Coatings Results 31 Financial Performance Commentary Net sales increased 9.1% excluding currency • Light Vehicle net sales increases led by Asia Pacific and North America from new business and strong car builds. Asia Pacific volumes up over 20% • Commerc
Slide 32: Adjusted EBITDA Reconciliation
Axalta Coating Systems Adjusted EBITDA Reconciliation 32 Note: Numbers might not foot due to rounding. 1. The Pro Forma results for the year ended December 31, 2013 represent the addition of the Predecessor period January 1 through January 31, 2013 and the Successor year ended December 31, 2013. The
Slide 33: Adjusted EBITDA Reconciliation Notes
Axalta Coating Systems 33 A. During the Successor year ended December 31, 2013, we recorded a non-cash fair value adjustment associated with our acquisition accounting for inventories. These amounts increased cost of goods sold by $104 million. B. In connection with the Acquisition, we incurred $28
Slide 34: Adjusted EBITDA Reconciliation Notes (continued)
Axalta Coating Systems 34 I. Represents costs associated with the IPO, including a $13.4 million pre-tax charge associated with the termination of the management agreement with Carlyle Investment Management, L.L.C., an affiliate of Carlyle, upon the completion of the IPO. See note L below. J. Repres
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