Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Q3 2023 Earnings Presentation
32 slides from Axalta Coating Systems's earnings presentation, Nov 1, 2023
Slide 1: Axalta Coating Systems Q3 Investor Overview
Axalta Coating Systems Q3 Investor Overview
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: Compelling Investment Thesis
Compelling Investment Thesis Strong core markets and unique positioning in coatings industry Above market growth in profitable segments Driving margins to pre COVID-19 levels supported by productivity and pricing execution Delivering cash; returning to normalized unlevered cash conversion levels Tar
Slide 4: Axalta's Transformation Is Just Beginning
Axalta’s Transformation Is Just Beginning Productivity Initiatives Supporting Adjusted EBITDA and Margin Trend ($ in millions) Operational Improvement ■ Effectively priced for value ■ Achieved mid-teens % price realization over last two years ■ Focused on cost optimization ■ Actions driving HSD% var
Slide 5: A Leading Global Coatings Company With A 150 Year Legacy
A Leading Global Coatings Company With A 150 Year Legacy REFINISH INDUSTRIAL M O B I L I T Y C O AT I N G S Largest Provider of Aftermarket Total Coatings Solution Provider Coatings Solutions for Future Auto Coatings and Accessories Across a Diverse and Global Mobility in Light and Commercial Custom
Slide 6: Strategic and Complementary Businesses
Strategic and Complementary Businesses 2022 NET SALES $4.9B BY GEOGRAPHY Latin America Refinish Light Vehicle 11% North 40% 41% America 24% Asia Pacific 15% 8% Commercial 28% Vehicle 33% EMEA Industrial Performance Coatings Mobility Coatings Refinish Industrial Light Vehicle Commercial Vehicle ▪ Ind
Slide 7: Driving Innovation With Some Of The Most Iconic Brands In The Coatings Industry
Driving Innovation With Some Of The Most Iconic Brands In The Coatings Industry KEY STATISTICS 50+ BRANDS 150+ 140+ Years in Coatings Countries ~1,300 25 Scientists, technical Global Laboratories experts and engineers ~80% Of new technology to ~12,000 have sustainable benefit Employees by 2030 ~750
Slide 8: Growth and Diversity from M&A Program
Growth and Diversity from M&A Program Track Record of Successful Acquisitions 26 Acquisitions Since 2015 ~$1.5B Total M&A spend 2016-2023 ~$830M Annual Revenues1 2015 2016 2017 2018 2019 2020 2021 2022 2023 (1) Annual Revenues based on TTM at time of closing 8
Slide 9: Well-Positioned For Favorable Macro Trends And Drivers
Well-Positioned For Favorable Macro Trends And Drivers Trends 2022 Net Sales Total Addressable Market Position1 Market1 ▪ Robust multi-year outlook driven by a return to #1 1 secular growth and aided by share gains with fast REFINISH growing customers $1.9B $6.8B ▪ Expansion into mainstream/economy
Slide 10: Refinish Overview
Refinish Overview BREAKDOWN BY CUSTOMER SEGMENT1 P $2.8B 40% AXTA 65% AXTA SIZE SHARE NET SALES PREMIUM M $2.2B 19% AXTA 25% AXTA SIZE SHARE NET SALES M AI N S T R E AM DRIVERS NEAR TERM LONG TERM E $1.8B 9% AXTA 10% AXTA SIZE SHARE NET SALES ECONOMY OFFICE GROWING VOLUME PER PREMIUM ACCESSORIES OCC
Slide 11: Industrial Overview
Industrial Overview BREAKDOWN BY SEGMENT1 $43B 4% 65% GI SIZE AXTA SHARE INDUSTRIAL 2022 NET SALES G E N E R AL Total solution provider: leading powder, liquid, and I N D U S T R I AL e-coat $10B 4% 25% BP SIZE AXTA INDUSTRIAL 2022 SHARE NET SALES BUILDING PRODUCTS Broad range of sustainable interio
Slide 12: Mobility Coatings Overview
Mobility Coatings Overview BREAKDOWN BY SEGMENT1 LV $9B 76% $1.2B LIGHT 2022 MOBILITY 2022 SIZE NET SALES NET SALES VEHICLE CV 24% $377M $4B 2022 MOBILITY 2022 C O M M E R C I AL SIZE NET SALES NET SALES VEHICLE 2016 – 2025 Global LV Builds(2) 2022 – 2026 CV Builds Class 4-8(2)(3) (Builds in million
Slide 13: Select Financial Metrics
Select Financial Metrics Adj. EBITDA Free Cash Flow ($ in millions) COVID-19 WEAKNESS & RAWS HYPERINFLATION 937 939 475 455 885 848 442 811 415 760 362 163 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Cumulative Price-Cost(1) Navigating Unprecedented Headwinds 2020-2022 ($ in millions
Slide 14: Debt And Liquidity Summary & Capital Allocation Priorities
Debt And Liquidity Summary & Capital Allocation Priorities Total Net Leverage Ratio Debt Maturity Profile Targets & Long-Term Goals Progression ($ in billions) Term ■ Total Net Leverage Ratio of 2.0x - 2.5x1 Loan ■ Total Gross Leverage Ratio of 2.5x - 3.0x2 Revolver Senior (Undrawn) Notes Senior Sen
Slide 15: Select Q3 2023 Slides
Select Q3 2023 Slides
Slide 16: Key Highlights
Key Highlights ■ Record Net Sales $1.3B $188M 14.3% Net Sales Adjusted EBIT Adjusted EBIT Margin ■ Double-digit organic sales growth in +6% YoY +27% YoY +240 bps YoY Mobility Coatings ■ Strong price-mix realization across all end-markets ■ Significant Adj. EBIT margin improvement $182M $50M 3.2x Fre
Slide 17: Q3 2023 Consolidated Results
Q3 2023 Consolidated Results Financial Results Net Sales Variance ($ in millions) ($ in millions, except per share data) Q3 2023 Q3 2022 % Change (2.8%) 6.3% 2.2% 5.7% Net Sales 1,309 1,239 6% Income From Ops 163 124 32% Adjusted EBIT 188 148 27% % margin 14.3% 11.9% 240 bps Adjusted EBITDA 261 210
Slide 18: Q3 2023 Performance Coatings Results
Q3 2023 Performance Coatings Results Financial Results Net Sales Variance ($ in millions) ($ in millions) Q3 2023 Q3 2022 % Change (6.6%) 6.3% 2.5% 2.2% Refinish 529 499 6% Industrial 327 339 (4%) Organic Sales Net Sales 856 838 2% Refinish: +LSD% Industrial: (MSD%) Adjusted EBIT 135 122 11% % margi
Slide 19: Q3 2023 Mobility Coatings Results
Q3 2023 Mobility Coatings Results Financial Results Net Sales Variance ($ in millions) ($ in millions) Q3 2023 Q3 2022 % Change 5.1% 6.2% 1.7% 13.0% Light Vehicle 342 303 13% Commercial Vehicle 111 98 14% Organic Sales Net Sales 453 401 13% LV: +LDD% CV: +LDD% Adjusted EBIT 40 4 1,006% % margin 8.8%
Slide 20: Raising 2023 Guidance
Raising 2023 Guidance Net Sales Adjusted EBIT Adjusted EBITDA (% Change YoY) ($ in millions) ($ in millions) Q4 2023 FY 2023 Q4 2023 FY 2023 Q4 2023 FY 2023 +LSD +MSD ~$180 ~$670 ~$250 ~$950 + Stable Refinish environment + Favorable Light Vehicle build rates + Front-half weighted benefit from lower
Slide 21: Appendix
Appendix
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Year Ended December 31, ($ in millions) 2017 2018 2019 2020 2021 2022 Cash provided by operating activities $540 $496 $573 $509 $559 $294 Purchase of property, plant and equipment (125) (143) (113) (82) (122) (151) Interest proceeds on swaps designated as net investment
Slide 23: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation ($ in millions) Q3 2023 Q3 2022 Income from operations $ 163.4 $ 123.5 Other expense, net 5.7 3.4 Total $ 157.7 $ 120.1 A Debt extinguishment and refinancing-related costs (benefits) 4.0 (0.4) B Termination benefits and other employee-related costs 11.5 5.0 C Acquisition
Slide 24: 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 25: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation (in millions, except per share data) Q3 2023 Q3 2022 Net income $ 73.3 $ 63.3 Less: Net income attributable to noncontrolling interests 0.4 0.9 Net income attributable to controlling interests $ 72.9 $ 62.4 A Debt extinguishment and refinancing-related costs (benef
Slide 26: 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 27: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in millions) Q3 2023 Q2 2023 Q1 2023 YTD 2023 Q3 2022 Q2 2022 Q1 2022 YTD 2022 Cash provided by (used for) operating activities $ 210.1 $ 131.0 $ (51.8) $ 289.3 $ 79.9 $ 12.2 $ (43.9) $ 48.2 Purchase of property, plant and equipment (31.4) (32.5) (41.4) (105.3) (35.5
Slide 28: Adjusted EBITDA Reconciliation (2017-2021)
Adjusted EBITDA Reconciliation (2017-2021) 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
Slide 29: Adjusted EBITDA Reconciliation (2022-2023)
Adjusted EBITDA Reconciliation (2022-2023) LTM ($ in millions) 9/30/2023 Q3 2023 Q2 2023 Q1 2023 Q3 2022 Q2 2022 Q1 2022 FY 2022 Net income $ 238.8 $ 73.3 $ 61.1 $ 60.5 $ 63.3 $ 44.1 $ 40.9 $ 192.2 Interest expense, net 196.6 55.1 $ 54.6 48.2 35.0 $ 33.5 32.6 139.8 Provision for income taxes 71.5 29
Slide 30: 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 31: Capitalization Table
Capitalization Table ($ in millions) Interest @ 9/30/2023 Maturity Cash and Cash Equivalents $ 606 Debt: Revolver ($550 million capacity) Variable — 2026 First Lien Term Loan (USD) Variable 1,815 2029 Total Senior Secured Debt $ 1,815 Senior Unsecured Notes (EUR) Fixed 471 2025 Senior Unsecured Note
Slide 32: Thank You
Thank You Investor Relations Contact: Chris Evans Christopher.Evans@axalta.com 484-724-4099
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