Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Investor Day (May 2021)
139 slides from Axalta Coating Systems's investor day presentation, May 5, 2021
Slide 1: Capital Markets Day
Capital Markets Day May 5, 2021 A X A LTA COAT I N G SY S T EM S 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 our 2021 outlook
Slide 3: Agenda
Agenda 8:30 am Welcome and Opening Remarks 10:15 am Break Chris Mecray VP, Investor Relations and Treasury 10:20 am Industrial Growth Vectors Shelley Bausch SVP, Global Industrial Coatings Creating a Value Compounder Robert Bryant CEO Mobility Growth Vectors Hadi Awada SVP, Global Mobility Innovatin
Slide 4: Creating a Value Compounder
Creating a Value Compounder Robert Bryant | CEO A X A LTA COAT I N G SY S T EM S 4
Slide 5: Key Messages
Key Messages Entering a new dawn focused on unlocking Axalta’s full 1 potential and creating substantial stakeholder value Driving innovation as the foundation of market leadership, 2 positive disruption and growth Accelerating growth fueled by new organic and inorganic 3 strategic growth vectors Co
Slide 6: Strategic and Complementary Businesses
Strategic and Complementary Businesses 2021E NET SALES ~$4.5B BY GEOGRAPHY Latin America Refinish Light Vehicle 9% North 26% 39% 38% America Asia Pacific 16% 8% Commercial 28% Vehicle 36% EMEA Industrial Performance Coatings Mobility Coatings Refinish Industrial Light Vehicle Commercial Vehicle In
Slide 7: Well-Established Coatings Industry Innovator
Well-Established Coatings Industry Innovator #4 Player in $160B Coatings Market KEY STATISTICS 50+ BRANDS 150+ 130+ Years in Coatings Countries 4% 28 R&D and Technical Global Laboratories Service Investment 50+ ~13,000 New Product Platforms Employees per Year ~30M 47 Vehicles Coated per Year Manufac
Slide 8: A New Dawn: Streamlined Growth Platform
A New Dawn: Streamlined Growth Platform Near-Term Strategic Priorities Ongoing White space opportunities in Focus Areas coatings markets where we have capabilities and technologies 2020: Set Foundation Playing to win Emerging markets expansion for Growth Constantly innovating End-market di
Slide 9: Our Sustainable Competitive Advantages
Our Sustainable Competitive Advantages Leading Coatings Technology & Innovation Capabilities Resilient & Partnering Flexible with Customers Business on Applied Science Access Unique Digital to Markets Tools & Data via Sales & for Customer Distribution Productivity Networks Best-in-Class Technical Se
Slide 10: Vision and Strategic Imperatives
Vision and Strategic Imperatives To be the preferred coatings supplier for customers seeking the most innovative products and services, delivered by the most talented team in the industry Innovation Growth Execution People Rapid new product Accelerate above-market Continuous improvement Driv
Slide 11: Shareholder Value Creation Algorithm
S h a r e h o l d e r Va l u e C r e a t i o n A l g o r i t h m Strategic Imperatives Advance Grow Above Innovation Market CREATING A VALUE COMPOUNDER Inspire Drive People Execution A X A LTA COAT I N G SY S T EM S 11
Slide 12: Creating a Value Compounder: Advance Innovation
C r e a t i n g a Va l u e C o m p o u n d e r PRODUCT Rapid new product development and commercialization Advance • Color aesthetics, sustainability, productivity and performance Innovation SERVICE Expand service offerings to enhance value to customers • Innovative service models via digitizati
Slide 13: Creating a Value Compounder: Grow Above Market
C r e a t i n g a Va l u e C o m p o u n d e r GEOGRAPHIC EXPANSION Accelerate growth in underpenetrated markets Grow Above (e.g., China / Asia Pacific) Market DIVERSIFICATION Grow current business verticals and add new industrial end markets CUSTOMER REACH Expand market access via distributio
Slide 14: Well-Positioned for Favorable Macro Trends and Drivers
Well-Positioned for Favorable Macro Trends and Drivers Near-Term Trends 2021E Net Sales Total Addressable Market Position1 Market Benefits from ongoing traffic recovery REFINISH accelerated by the COVID-19 vaccination rollout, creating a 1–2-year demand tailwind $1.7B $7.0B #1 INDUSTRIAL Global indu
Slide 15: Active Pipeline with Proactive Approach to Strategic M&A
Active Pipeline with Proactive Approach to Strategic M&A Track Record 24 >$635M >$125M Acquisitions since 2015 Annual Revenues1 Incremental EBITDA1 Attractive Markets Technology / Capability Acquisition Benefits: Strategic Growth and cost synergies Bolt-ons Systematic Globalization of regional p
Slide 16: Creating a Value Compounder: Drive Execution
C r e a t i n g a Va l u e C o m p o u n d e r Drive METRICS DRIVEN Execution Safety, quality, service, cost, people development OPERATIONAL AND COMMERCIAL EXCELLENCE Drive productivity; Axalta Operational Excellence roll out Metrics driven accountability GLOBAL PRODUCTIVITY Axalta Way produ
Slide 17: Axalta Way | Culture of Continuous Improvement
A x a l t a Wa y | C u l t u r e o f C o n t i n u o u s I m p r o v e m e n t Progress Made Pivoted to global business unit Near-Term Priorities operating model Further complexity reduction Streamlined and right-sized Footprint and AOE maturity overhead cost structure Supply Chain & Procu
Slide 18: Creating a Value Compounder: Inspire People
C r e a t i n g a Va l u e C o m p o u n d e r TALENT DEVELOPMENT Refreshed leadership team and added new board members with diverse, relevant skill sets Inspire People CULTURE Performance-driven culture that fosters empowerment, innovation and calculated risk taking ACCOUNTABILITY Driving own
Slide 19: Deep and Experienced Leadership Team
D e e p a n d E x p e r i e n c e d L e a d e r s h i p Te a m Robert Bryant Shelley Bausch Hadi Awada Troy Weaver Sean Lannon Barry Snyder Chief Executive Officer SVP, Global Industrial SVP, Global Mobility SVP, Global Refinish SVP and Chief Financial SVP and Chief Operations Joined: 2013 Coatings
Slide 20: Engaged and Diverse Board of Directors
Engaged and Diverse Board of Directors Board Skills Matrix Senior Leadership Management 100% M&A and Strategy Global 100% Finance Finance& Accounting 89% Mark Garret Robert Bryant Steven Chapman William Cook Chairman of the Board CEO Former Group VP China and Former Exec. Chairman, and CEO Axalta Ru
Slide 21: Accelerating Sustainability and ESG Initiatives
Accelerating Sustainability and ESG Initiatives Environmental Social Governance Global Responsible Care® and ISO Top-decile safety performance in our Global commitment to ethical business certifications for manufacturing sites1 industry conduct; no material compliance issues in Axalta history
Slide 22: Mid-Term Portfolio Focus through 24
M i d - Te r m P o r t f o l i o F o c u s t h r o u g h 2 0 2 4 Targeting above market organic growth and a more diversified portfolio through strategic M&A Annual Targets Growth Drivers Market recovery tailwinds through 2023 4-5%+ Organic Innovation driven growth from new products Growth CAGR
Slide 23: Innovating for the Future
Innovating for the Future R o b e r t R o o p | V P, C h i e f Te c h n o l o g y O f f i c e r A X A LTA COAT I N G SY S T EM S 23
Slide 24: Key Messages | Innovating for the Future
Key Messages | Innovating for the Future World-class technology organization optimized for speed of 1 delivery Global scope and scale with expertise in markets, regional 2 requirements and customer applications 3 Innovative culture solves complex customer problems 4 Rich new product pipeline enablin
Slide 25: World-Class Technology Organization
W o r l d - C l a s s Te c h n o l o g y O r g a n i z a t i o n Global Infrastructure and Coatings Expertise Wuppertal Detroit Philadelphia Shanghai Global Innovation Center Regional Technology Center Regional Laboratory Global technology community of Focused teams for product Focus on color techno
Slide 26: Technology Investment is Axalta's Foundation
Te c h n o l o g y I n v e s t m e n t i s A x a l t a ’s F o u n d a t i o n Global Hub Global Innovation Center (GIC) Philadelphia, USA Regional Technology Centers Asia Pacific Technology Center (APTC) America’s Technology Center (ATC) European Technology Center (ETC) Detroit, USA Wuppertal, Germa
Slide 27: Axalta's Global Innovation Center
A x a l t a ’s G l o b a l I n n o v a t i o n C e n t e r A X A LTA COAT I N G SY S T EM S 27
Slide 28: Innovation | Strategic Approach
Innovation | Strategic Approach Focus on Invest Innovation Customer Needs for Growth Advantage Deep understanding of Market leading Accelerated organic market and customer investment growth needs Leading products and Sustainable solutions Focused projects to technologies Preferred supp
Slide 29: Axalta Innovation Process & Governance
Axalta Innovation Process & Governance Idea Pipeline Refinement Innovation Portfolio Generation & Selection Management Gate Gate Gate Product A B C Launch Customer Needs Customer Concepts Feasibility Proof of Scale-up and & Market Direction Collaboration & Assessment Concept Commercialize Ideation C
Slide 30: Axalta's Technology Aligns with Customer Priorities
A x a l t a ’s Te c h n o l o g y A l i g n s w i t h C u s t o m e r P r i o r i t i e s Unique Style and Flair Reduced Emissions Color & Sustainability Lower Usage Visually Interesting Aesthetics Reduced Energy Expanded Color Palette Cycle Time Improvement Durability Productivity
Slide 31: Our Fundamental Building Blocks to Deliver Innovation
Our Fundamental Building Blocks to Deliver Innovation New and unique visual appearances and Pigments & improved color match that efficiently deliver Color Modeling >20,000 new color formulas per year to our customers Resin Unique resins deliver superior performance Platforms attributes Applicati
Slide 32: Building Blocks for Innovation
Building Blocks for Innovation A X A LTA COAT I N G SY S T EM S 32
Slide 33: Product Innovation Drives Organic Growth
Product Innovation Drives Organic Growth > 50 New Platform Innovations Per Year 2021 Technology Investment >500/yr Product Modifications $188M/year R&D and technical services investment Investment across all business ~20,000/yr segments Service Requests Introduce over 50 new product platforms
Slide 34: Differentiated Technology Across End-Markets
D i f f e r e n t i a t e d Te c h n o l o g y A c r o s s E n d - M a r k e t s Industry leading color capability Refinish Most productive waterborne basecoat technology Develop tailored technology for Premium, Mainstream and Economy segments Low emission electrical insulation materials for
Slide 35: New Product Development Roadmap
New Product Development Roadmap Advanced Products for the future New Next-generation products Improve Constant innovation for continuous improvement Defend Defend strong market position in key businesses A X A LTA COAT I N G SY S T EM S 35
Slide 36: Defend | Technology Case Study
D e f e n d | Te c h n o l o g y C a s e S t u d y Market Need Axalta Innovation: Imron™ Elite Customers in heavy duty truck segment Shorter cure time focused on productivity and energy Reduced bake temperature consumption Full color capability Improve appearance Outcomes Sustainable solut
Slide 37: Improve | Technology Case Study
I m p r o v e | Te c h n o l o g y C a s e S t u d y Market Need Axalta Innovation: LV Color Basecoats Innovative color choices and increasing New pigments performance characteristics for each Novel “effects” new model year in light vehicle market Meets new demanding performance criteria for a
Slide 38: New | Technology Case Study
N e w | Te c h n o l o g y C a s e S t u d y Market Need Axalta Innovation: Spies Hecker 8200 A sustainable waterborne clearcoat for Low VOC1 the Refinish market Waterborne technology Excellent appearance and hardness First introduced in China, Korea and Japan It’s time to go waterborne! Des
Slide 39: Advanced | Technology Case Study
A d v a n c e d | Te c h n o l o g y C a s e S t u d y Power Market Need Axalta Innovation: Voltatex® 4224 Management Battery Pack Electric Bus Bars Greater electric motor efficiency for EVs Improve thermal conductivity Motor to maximize range Lowers operating temperatures Improve efficiency
Slide 40: Innovation Beyond Products
Innovation Beyond Products Processes – Changing Services – Unique ways to meet Digitalization – Exploiting new approach to increase efficiency diverse customer needs digital tools to improve efficiency INNOVATION IS OUR DIFFERENTIATOR AND A TRUE COMPETITIVE ADVANTAGE A X A LTA COAT I N G SY S T EM S
Slide 41: Innovation Beyond Products | Digitization
Innovation Beyond Products | Digitization A X A LTA COAT I N G SY S T EM S 41
Slide 42: Innovation | Key Takeaways
I n n o v a t i o n | K e y Ta k e a w a y s 1 World-class technology organization with facilities optimized for speed of delivery 2 Global scope and scale with expertise in markets, regional requirements and customer applications 3 Innovative culture solves complex customer problems 4 Rich new prod
Slide 43: Refinish Growth Vectors
Refinish Growth Vectors T r o y W e a v e r | S V P, G l o b a l R e f i n i s h A X A LTA COAT I N G SY S T EM S 43
Slide 44: Key Messages | Refinish Growth Vectors
K e y M e s s a g e s | R e f i n i s h G r o w t h Ve c t o r s Building on #1 Market Position in attractive Refinish coatings 1 industry Driving innovation including digitization to effectively 2 address evolving customer needs 3 Accelerating growth to further expand our global leadership Focusing
Slide 45: #1 Market Position in an Attractive Industry
#1 Market Position in an Attractive Industry Refinish Market Established & Emerging Markets 130bps market share expansion over the past three years Emerging Other Peers | 20% 26% Markets AXTA 23% MARKET SHARE Peer D | 10% $6.8B $1.7B Addressable Net Sales Market1 Well-established 77% Markets Pee
Slide 46: Undisputed Leadership in Premium Segment
Undisputed Leadership in Premium Segment Refinish Customers P M E Premium Mainstream Economy Larger growth-oriented shops Smaller single location shops with some Small and less sophisticated competing for insurance workflow insurance workflow while relying on shops providing low-cost (ex. MSOs and D
Slide 47: Sustainable Competitive Advantages
Sustainable Competitive Advantages Breadth of Extensive Global Scale to Support Offering and Innovation Distribution Network Broad Customer Base Industry leading brand and product Strong position with national / Largest field organization portfolio across all customer segments multi-line distributor
Slide 48: Anticipating Customer Needs
Anticipating Customer Needs Market Trends… …Drive Customer Requirements Body Shop Consolidation Premium Customers Workflow allocation by insurers favorable to MSOs1 MSOs speeding up growth through acquisitions Push for Performance Cost Savings in Process And Materials Digital Business Mode
Slide 49: Innovation Leadership for Premium Segment
Innovation Leadership for Premium Segment Single Visit Application Digital Color Match And Data Integration To Waterborne System Automated Color Mix Optimize Customer Support 55% 30% 50% 25% 30,000+ Orders Per Month 250,000+ 5,000+ Shop Painters Faster Than Less Materials Faster Than More Accurate 2
Slide 50: Targeted Innovation for Mainstream / Economy
Ta r g e t e d I n n o v a t i o n f o r M a i n s t r e a m / E c o n o m y Revolutionary Waterborne System for Mainstream Customers Engineered to deliver ease of use throughout every step of the collision repair Shorter learning curve making transition from solventborne to waterborne simpler
Slide 51: Key Strategies to Accelerate Growth
Key Strategies to Accelerate Growth Increase Market Access Add distribution points in underrepresented geographies Expand Premium Leadership Leverage industry-leading value proposition to increase market share Gain Share in Mainstream / Economy Leverage product offering and market access to tap grow
Slide 52: Increase Market Access
Increase Market Access Expand Distribution Footprint In China Opportunity across several key provinces and especially in Tier 3 / Tier 4 Cities to increase coverage and grow faster Leverage strong product portfolio to sign up new distribution partners and accelerate growth Market Access High Med
Slide 53: Expand Premium Leadership
Expand Premium Leadership Market Segmentation Benefit from Market Shift and Grow with MSOs in NA M E 52% M E Market leader and well positioned to 64% benefit from shift towards premium customers (especially MSOs) due to P 48% P 36% insurance coverage I I Our value proposition will enable premium
Slide 54: Gain Share in Mainstream / Economy
Gain Share in Mainstream / Economy Capitalize on Shift to Grow in Central and Eastern Europe VOC Compliant Coatings in Asia 1.0% WE CEE 3.0% Market Growth ’19A-’24E CAGR 79% 21% Market Growth ’19A-’24E CAGR of Europe Sales of Europe Sales 3 $700M 46% Markets with Market Market Share of VOC Regul
Slide 55: Investing in Digital Innovation to Accelerate Growth
Investing in Digital Innovation to Accelerate Growth Streamline and Automate Manual Processes Invest to Expand Sales Force Capabilities MONTHLY MANUAL TRANSACTIONS Sales Pipeline Management 5,000+ 500+ 3,200+ Increase accountability and leads conversion rate Distributor Distributor Customer Purchase
Slide 56: Refinish | Key Takeaways
R e f i n i s h | K e y Ta k e a w a y s 1 Global market leader with significant growth opportunities 2 New product offerings targeted at mainstream/economy customers 3 Expanding market access in under-represented geographies 4 Investing in digital innovation to accelerate growth A X A LTA COAT I N
Slide 57: Q&A
Q&A A X A LTA COAT I N G SY S T EM S 57
Slide 58: Break
Break A X A LTA COAT I N G SY S T EM S 58
Slide 59: Industrial Growth Vectors
Industrial Growth Vectors S h e l l e y B a u s c h | S V P, G l o b a l I n d u s t r i a l C o a t i n g s A X A LTA COAT I N G SY S T EM S 59
Slide 60: Key Messages | Industrial Growth Vectors
K e y M e s s a g e s | I n d u s t r i a l G r o w t h Ve c t o r s 1 Strong and growing global market presence with a wide range of customers 2 Clear sustainability tailwinds across the portfolio Expansive growth opportunities within attractive end markets and in 3 targeted adjacencies Well-positi
Slide 61: Industrial Coatings Snapshot
Industrial Coatings Snapshot General Industrial Building Products Energy Solutions Appliances Doors, Frames, and Trim Distribution Transformers 14,000+ Architectural Extrusions Furniture Electric Vehicles Customers Coil Coatings Kitchen Cabinets Energy Storage Heavy Machinery R
Slide 62: Significant Growth Opportunities Across All Markets
Significant Growth Opportunities Across All Markets Global Industrial Coatings Market Energy Solutions Packaging 3% 7% General Protective 19% General Market Position Expansion $65.0B 48% Industrial Successful track record of organic and inorganic 7% growth; ~5% organic growth CAGR 2016-2019 Marine
Slide 63: Sustainable Solutions are a Macro Growth Driver
Sustainable Solutions are a Macro Growth Driver Increased demand for sustainability and Powder Coatings Advantages climate improvement is creating new markets No VOCs and recommended by EPA High transfer efficiency and reclaim/reuse of overspray Reduction in cost and energy use with single coa
Slide 64: Our Sustainability Advantage | Powder Coatings
Our Sustainability Advantage | Powder Coatings Industry leading brands in #2 numerous end markets The most complete suite of thermoset and thermoplastic chemistries for Player virtually any end-market application Globally Decorative powder coatings FBE powder coatings 16 Manufacturing sites Global f
Slide 65: Clear Growth Strategy
Clear Growth Strategy Innovation Growth algorithm starts with voice of the customer Driven Growth Investments in new product and service platforms to address key customer challenges Targeted Significant white space across all served markets with options to diversify into other markets Markets
Slide 66: Innovation Platforms Driving Growth
Innovation Platforms Driving Growth General Industrial Building Products Energy Solutions GLOBAL GROWTH Asia & Adjacent Market Expansion Expansion in Europe and Asia Expand with Market Acceleration FOCUS - Construction and Structural Steel - Doors, Frames and Trim - Electrification demands in - Gene
Slide 67: Expansive Growth Opportunities within Focused Markets
Expansive Growth Opportunities within Focused Markets General Industrial Building Products Energy Solutions Global Market Size $31B $10B $2B 2021E Net Sales ~$890M ~$270M ~$138M % Share 2.9% 2.7% 6.9% Market Drivers Commercial building, Single and multi-family Electrical industry production co
Slide 68: Significant Opportunity to Grow Geographically
Significant Opportunity to Grow Geographically MARKET AXALTA Net Sales Net Sales $65.0B 2021E $1.3B 13% Asia Pacific Asia Pacific market largest and fastest growing 61% 37% Eastern Europe, MENA and Mexico strong growth areas Must leverage our global products; search and reapply Inorganic opp
Slide 69: M&A | By the Numbers
M&A | By the Numbers ADDED ON-BOARDED INTEGRATED ~$490M ~3,000 14 in Annual Net Sales New Customers Manufacturing Sites since 2016 CHINA Leading producer of wire enamel products for the China market NA Leading independent supplier of coil coatings in NA NA Leading regional manufacturer of industrial
Slide 70: Key Markets for Growth
Key Markets for Growth Commercial Construction Building Products Energy Solutions AX A AL XA T A COAT LTA C O ATI INNGG SY S YSSTTEM E MSS 70 70
Slide 71: Industrial Coatings: Construction
Industrial Coatings CONSTRUCTION A X A LTA COAT I N G SY S T EM S 71
Slide 72: Our Winning Playbook | Construction
Our Winning Playbook | Construction SMALL / MID SCALE LARGE SCALE COMMERCIAL CONSTRUCTION COMMERCIAL CONSTRUCTION WHERE Apartment / Multi- Office and Retail High Rise Buildings Hotels / Resorts / WE PLAY Family Housing Municipal Buildings / Higher Education Casinos Aviation (Airports)
Slide 73: Case Study | Abcite Flame Spray
C a s e S t u d y | A b c i t e® F l a m e S p r a y Client/Industry Need Unique Axalta Capabilities On-site powder coating solution for Abcite® Flame Spray provides unique environmentally Infrastructure large metal structure protection friendly thermoplastic powder solution (infrastructure, Oil
Slide 74: Our Winning Playbook | Building Products
Our Winning Playbook | Building Products RESIDENTIAL BUILDING KITCHEN CABINETS FURNITURE WHERE Siding, Exterior Molding, Doors Stock Semi-Custom and and Home, School and Office Furniture and Panels Custom Cabinets Hospitality WE PLAY Wood and Vinyl Flooring Bathroom Vanities Luxury Jet
Slide 75: Case Study | Unrivaled Pre-Finish System
Case Study | Unrivaled Pre-Finish System Client/Industry Need Unique Axalta Capabilities Aftermarket building pre-finish market 35+ year history with leading siding OEMS struggles with application issues, Extensive exposure testing program on multiple substrates claims for weatherability and c
Slide 76: Our Winning Playbook | Energy Solutions
Our Winning Playbook | Energy Solutions Wind Turbines Distribution Transformers Storage Batteries Electric Vehicles WHERE WE PLAY OPPORTUNITIES Global leader in impregnating Wire enamels and impregnating Approved supplier of e-coat and Leading supplier in impregnating resins used in multiple
Slide 77: Market Trends and Opportunities for Energy Solutions
M a r k e t Tr e n d s a n d O p p o r t u n i t i e s f o r E n e r g y S o l u t i o n s TREND END USES SOLUTIONS AND IMPACT Impregnating Resins and Casting Compounds Electric Vehicles New Mobility Public Transportation Avoidance Health and of Electrical Steel Coatings Safety Emissions Air C
Slide 78: Case Study | Motor Coatings
Case Study | Motor Coatings Client/Industry Need Unique Axalta Capabilities Thermally Conductive Impregnating Resins and Casting Electric motor efficiency Compounds improvements and fail-safe operation Dielectric Powder for skateboard coatings Corona resistant Wire Enamels with long lifetime
Slide 79: Industrial | Key Takeaways
I n d u s t r i a l | K e y Ta k e a w a y s 1 Strong and growing global market presence with a wide range of customers 2 Clear sustainability tailwinds across the portfolio 3 Expansive growth opportunities within attractive end markets and in targeted adjacencies 4 Well-positioned to capture new ma
Slide 80: Mobility Growth Vectors
Mobility Growth Vectors H a d i A w a d a | S V P, G l o b a l M o b i l i t y A X A LTA COAT I N G SY S T EM S 80
Slide 81: Key Messages | Mobility Growth Vectors
K e y M e s s a g e s | M o b i l i t y G r o w t h Ve c t o r s Strong team in place to grow above market and capture substantial growth 1 in underserved markets Well-positioned with leading technology portfolio aligned to given mega 2 trends and growing addressable markets Significant opportunity
Slide 82: Mobility At A Glance
Mobility At A Glance 3,500 20 4 #1 #2 Employees Manufacturing Technology / in Truck & Bus in Light Vehicle Facilities R&D Centers 2021E Net Sales by Segment 2021E Net Sales by Region APAC Commercial Vehicle 15% 25% $1.5B $1.5B EMEA 27% 58% Americas 75% Light Vehicle A X A LTA COAT I N G SY S T EM S
Slide 83: Current Mobility Market Represents ~$12B Today
C u r r e n t M o b i l i t y M a r k e t R e p r e s e n t s ~ $ 1 2 B To d a y $6B ~ $2B $900M $700M $600M Total $500M $500M Market ~$12B $400M $200M Body Auto Plastic Builders Specialty Recreational LV OEM Truck Bus Components +Trailers Rail OEM Aviation Marine Customer Segment Core Developing Op
Slide 84: Megatrends Drive $5B of Market Opportunities by 2030
Megatrends Drive $5B of Market Opportunities by 2030 $3.5B SUSTAINABILITY $300M AUTONOMOUS DRIVING $150M SHARED MOBILITY $400M CUSTOMIZATION & PERSONALIZATION $650M INDUSTRY 4.0 A X A LTA COAT I N G SY S T EM S 84
Slide 85: Sustainability
Sustainability ↑ CO 2 ~ 30 25 R E G U L AT I O N S MILLION S TAR T- U P O E M s driving auto industry Battery EVs by 2030 for vehicles Challenges: 2030 Additional Market Opportunity Batteries and electric motors need protection to enhance performance Achieving lower greenhouse gas footprint ~$3.
Slide 86: Autonomous Driving
Autonomous Driving FULL AV ~$30 BILLION UP TO 29 (e.g., robo-taxis) spent on AV sensors sensors in an AV2 adoption ↑ ~2035 and ADAS components1 Challenge: 2030 Additional Market Opportunity Autonomous Vehicles must “see and be seen” under all conditions while maintaining exterior aesthetics ~$300M
Slide 87: Shared Mobility
Shared Mobility DISRUPTED ~ 16% ↑ CO 2 BY PANDE MI C of miles traveled R E G U L AT I O N S in 20401 driving auto industry Challenges: 2030 Additional Market Interior surfaces that are safe from disease-causing microbes Opportunity Color and branding options to help Mobility-as-a-Service provide
Slide 88: Customization & Personalization
Customization & Personalization 2x >80% SPECIALTY & D E M AN D of two-tone demand CUSTOM COLORS vs. current two-tone linked to black roof and on demand roof sales1 pillars configuration 2030 Additional Market Challenge: Opportunity ~$400M 2 Market demand for customization is unmet due to paint sho
Slide 89: Industry 4.0
Industry 4.0 DIGITIZ AT I O N OF DATA ↑ paint shop efficiency $600 Average paint shop cost to ↑ Improved sustainability paint a vehicle Challenges: 2030 Additional Market Decline in paint shop expertise from reduced investment and attrition Opportunity Mobility upstarts rush to build their paint
Slide 90: Creating Value Beyond Color and Protection
C r e a t i n g Va l u e B e y o n d C o l o r a n d P r o t e c t i o n Advanced Mobility Solutions Core Mobility Solutions Specialized Solutions Customization Beautification / Color Digital paint Basecoats Two tone Clearcoats Enhanced Functionality LiDAR & Radar Corrosion Protection
Slide 91: Core Mobility Solutions
Core Mobility Solutions Proven Science Is Our Core Excellence: Engaged and dedicated employees that react quickly to customers’ needs Expertise: Decades of experience at OEM sites globally; 150+ years of coatings innovation and service solutions Highly engineered paint systems including conv
Slide 92: Driving Growth with Advanced Mobility Solutions
Driving Growth with Advanced Mobility Solutions Coatings Solutions for Future Mobility Services Provided: For the paint shop: Addressing mobility needs both inside and outside of the paint shop Sustainable via CO2 and energy modeling Functional and beautiful product solutions Personalization via
Slide 93: Axalta Advantage
Axalta Advantage Delivering World Class Customer Service Leading global supplier to OEMs and tiers Customers value Axalta technology, footprint and service capability o #1 ranked service team1 with industry leading problem solving and execution Axalta Advantage Key Capabilities: Competence, tran
Slide 94: Well-Positioned to Capture Growth
Well-Positioned to Capture Growth Mobility Coatings Market Growth $20B Axalta Line Service Excellence $1B Advantage Paint shop cost / CO2 Modeling $4B EV motor/battery Advanced Broad Bake E-coat $12B Digital Paint Mobility Solutions Radar/Lidar compatible coatings Color-on-demand $15B
Slide 95: Mobility | Key Takeaways
M o b i l i t y | K e y Ta k e a w a y s Organic Growth Opportunity 1 Growth opportunities via existing customer base and products China growth through improved COEM relationships and partnerships Trends 2 Market trends are favorable to coatings, opening $5B in additional market opportunities
Slide 96: Enabling Growth with Operational Excellence
Enabling Growth with Operational Excellence Barry Snyder | SVP & Chief Operations and Supply Chain Officer A X A LTA COAT I N G SY S T EM S 96
Slide 97: Key Messages | Enabling Growth with Operational Excellence
Key Messages | Enabling Growth with Operational Excellence 1 Strong foundation and capabilities for growth Enabling growth through global network and rapid new 2 product introduction Continuous improvement focus to drive operational 3 excellence and improving cost, quality and service Creating a fle
Slide 98: Global and Diverse Operating Footprint
Global and Diverse Operating Footprint Wuppertal Mt Clemens Front Royal Jiading Largest Manufacturing Sites Manufacturing Sites Current State Opportunities 30 liquid paint manufacturing sites Deepen footprint in Asia 8 resin manufacturing sites (1 Integrate and simplify acquired networks sta
Slide 99: Procurement Is a Competitive Advantage
Procurement Is a Competitive Advantage Total Procurement Spend: ~$2.3B1 Raw Material Spend Top 10 raw materials represent ~15% of overall direct procurement spend ~1,000 vendors and 5,000+ SKUs Packaging and Logistics Other Additives managed 13% 12% Resins Differentiated Approach Solvents 17%
Slide 100: Journey of Continuous Improvement
Journey of Continuous Improvement 2019-2021 Future Advance safety journey Maintain top quintile safety record Quality fundamentals improve Quality tailored to customer expectations Safety & Quality In-process / statistical quality End-to-end quality Restructured leadership team Deepe
Slide 101: AOE | Deploying Axalta Way into Operations
A O E | D e p l o y i n g A x a l t a Wa y i n t o O p e r a t i o n s Progress Made AOE suite of tools defined and deployed to major sites resulting in rapid problem resolution Continuous improvement portfolio driven within manufacturing processes Axalta Operational Portfolio of footprint and
Slide 102: Operations Strategy Connects Key Deliverables to Business Growth
Operations Strategy Connects Key Deliverables to Business Growth 2019-2020 2021-2022 Top-decile safety performance in 2020 Mature culture, systems, and processes Safety & Quality Significant improvement in customer satisfaction Evolve to quality culture across the enterprise Axalta Operati
Slide 103: Footprint and Distribution Optimization
Footprint and Distribution Optimization Challenge Phase 1 ✓ Completed Mechelen Sub-optimized manufacturing footprint closure and transfer and distribution infrastructure of production Genk warehouse used to consolidate Mechelen, BE Mechelen and Wuppertal production for Paint & Resin distributi
Slide 104: Wuppertal Optimization
Wuppertal Optimization Challenge: Phase 1: Factory-in-Factory Concept Phase 2: Industry’s Largest paint Implement Factory-in- Site De-Bottlenecking and and resin facility Factory Concept Process Improvement Higher cost facility and Structural change improved line Value-stream mapping across hi
Slide 105: Operations Network Strategy | Powder Thermosetting EMEA
Operations Network Strategy | Powder Thermosetting EMEA Challenge: Solution: EMEA Powder Manufacturing Network Complex and dispersed EMEA Desegregate powder factories powder manufacturing network Optimize asset utilization to bring Powder factories segregated by production closer to customer
Slide 106: Supply Chain Optimization for Enhanced Customer Service
Supply Chain Optimization for Enhanced Customer Service Challenge Solution Service Level Target Highly complex and relatively Improved demand planning inefficient tools in place to manage Enhanced inventory management tools supply chain Retooled business policies Outcome Improved operating r
Slide 107: Procurement Savings from Technology Collaboration
P r o c u r e m e n t S a v i n g s f r o m Te c h n o l o g y C o l l a b o r a t i o n CATEGORY OPPORTUNITY STRATEGY OUTCOME Expand supply Supplier New supplier improved security of supply and reduced Isocyanates base Development raw material costs by >$20M Local equipment Standardize and Leverage
Slide 108: Continuous Improvement Mindset
Continuous Improvement Mindset Safety & Quality Driving Perfect Quality Operational Excellence & Drive Working Capital Continuous Improvement Efficiency Network ~$80M Cost Savings1 Supply Chain and Driving Perfect Procurement Service 1. Estimate for 2019-2024; with >25% completed to date A X A LTA C
Slide 109: Operational Excellence | Key Takeaways
O p e r a t i o n a l E x c e l l e n c e | K e y Ta k e a w a y s 1 Strong foundation and capabilities for growth 2 Enabling growth through global network and rapid new product introduction 3 Driving focus on operational excellence to improve cost, quality and service 4 Creating a flexible platform
Slide 110: Growth Guideposts and Capital Allocation Priorities
Growth Guideposts and Capital Allocation Priorities Sean Lannon | CFO A X A LTA COAT I N G SY S T EM S 110
Slide 111: Key Messages | Growth Guideposts and Capital Allocation Priorities
Key Messages | Growth Guideposts and Capital Allocation Priorities Continuing solid financial execution track record by leveraging 1 Axalta Way to further drive profitable growth and free cash flow Executing disciplined capital allocation framework with clear 2 priorities: organic investment, strate
Slide 112: Well-Positioned for Growth Given Demand Tailwinds through 2024
Well-Positioned for Growth Given Demand Tailwinds through 2024 Industry Demand Trends Net Sales Net Sales (CAGR ‘19-’24) (CAGR ‘20-’24) REFINISH $1.7B1 Market recovery aligned with traffic normalization and GDP growth; 2–year tailwind expected ~3.5% ~9.5% INDUSTRIAL $1.3B1 Global industrial producti
Slide 113: Full Year 2021 Guidance
F u l l Ye a r 2 0 2 1 G u i d a n c e 2021 TARGETS Variable Contribution Margin vs. Strong Sales Includes ~3% FX and ~1% M&A Brent Oil Spot Price Net Sales: up ~20-22% Growth benefit vs. 2020 Brent Oil Spot Variable Contribution Price ($/bbl) Margin (%) $120 100% 2021 EBIT and EPS growth at mid
Slide 114: Resilient Financial Performance
Resilient Financial Performance Net Sales Adj. EBITDA & Margin Adj. EPS ($M) ($M) 120 0 $4,696 $4,525 29% $4,482 $970 $2.03 $4,377 $937 $939 $902 $885 100 0 $1.80 27% $4,093 $1.70 $760 $3,738 800 $864 25% $3,968 $1.33 22% 23% 21% 21% 600 20% 20% 20% 21% 400 19% 200 17% 0 15% 2016 2017 2018 2019 2020
Slide 115: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation ($M) $475 $475 500 100% $442 Key Points $423 450 90% $415 400 80% Targeting FCF conversion of 45-50% $362 350 70% Robust and consistent free cash flow 58% bolstered by relatively low capital intensity 300 60% 51% 49% 250 47% 47% 50% Anticipate improving convers
Slide 116: Discipline on Incremental Investment Dollars
WIP: Update based on 2020 data; update footnotes Discipline on Incremental Investment Dollars Pretax Return on Invested Capital1 Key Points 26%+ Invested capital is net of cash with implied upside to returns from deployment Drivers of ROIC improvement: 18.5%2 Remains focused on improving ROIC; a
Slide 117: Continued Focus on Deleveraging
Continued Focus on Deleveraging Leverage Trends1 Interest Coverage (Adj. EBITDA)2 65.0% 62.0% 60.5% 62.5% 4.5x 55.1% 48.5% 4.0x 55.0% 6.0x 5.9x 3.5x 5.8x 45.0% 3.6x 3.4x 3.3x 3.0x 5.1x 5.1x 35.0% 3.0x 3.0x 2.5x 25.0% 2.0x 2016 2017 2018 2019 2020 2021E Net Debt / Total Capital Net Debt / Adj. EBITDA
Slide 118: Disciplined Capital Allocation Framework
Disciplined Capital Allocation Framework Uses of Cash 2016-2020 Capital Allocation Priorities Debt CapEx Paydown ─ Maintenance CapEx of $30-50M per annum M&A 18% ─ Ongoing productivity and footprint optimization ─ S/4HANA implementation 35% M&A Share Repurchases 20% ~$2.2B ─ Disciplined approach
Slide 119: Active Pipeline with Proactive Approach to Strategic M&A
Active Pipeline with Proactive Approach to Strategic M&A Track Record 24 >$635M >$125M Attractive Markets Technology / Acquisitions since 2015 Annual Revenues Incremental EBITDA Capability Strategic Bolt-ons Systematic Financial Filters High-Growth Filters Adjacencies Earnings Accretive within Fir
Slide 120: Net Sales Bridge 2021 to 2024
Net Sales Bridge 2021 to 2024 Key Points ~$250M ~$110M ~$5.6B Refinish ~$340M Market recovery continues through 2022 ~$350M Growth in premium as leader and share gain in $4.5B mainstream and economy Industrial $3.7B Industrial production to remain supportive coupled with share gain Accelerat
Slide 121: 4-Year Financial Outlook to 2024
4 - Ye a r F i n a n c i a l O u t l o o k t o 2 0 2 4 2024 TARGETS Ongoing market recovery and share opportunities (~45%) Increased revenue from new markets and products (~30%) 4-5% Organic Growth Net Sales Increased revenue from emerging markets (~25%) (CAGR ‘19-’24) M&A: strategic bolt-on
Slide 122: Growth Guideposts | Key Takeaways
G r o w t h G u i d e p o s t s | K e y Ta k e a w a y s 1 Continuing solid financial execution track record by leveraging Axalta Way to further drive profitable growth and free cash flow 2 Executing disciplined capital allocation framework with clear priorities: organic investment, strategic M&A an
Slide 123: Closing Remarks
Closing Remarks Robert Bryant | CEO A X A LTA COAT I N G SY S T EM S 123
Slide 124: Invest With Us
Invest With Us 1 Axalta occupies a unique and highly profitable position in the coatings industry Axalta’s businesses are aligned with megatrends and macro industry trends that we believe 2 will benefit greatly from the COVID rebound, which should create a strong growth trajectory through 2024 3 We
Slide 125: Q&A
Q&A A X A LTA COAT I N G SY S T EM S 125
Slide 126: Appendix
Appendix A X A LTA COAT I N G SY S T EM S 126
Slide 127: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation Year Ended December 31, A Represents expenses and associated changes to estimates related to the prepayment, restructuring, and ($ in millions) 2018 2019 2020 refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance. Incom
Slide 128: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation Year Ended December 31, A Represents expenses and associated changes to estimates related to the prepayment, restructuring, and ($ in millions) 2018 2019 2020 refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.
Slide 129: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Year Ended December 31, A Represents expenses and associated changes to estimates related to the prepayment, restructuring, ($ in millions) 2016 2017 2018 2019 2020 and refinancing of our indebtedness, which are not considered indicative of our ongoing operating perfor
Slide 130: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Year Ended December 31, ($ in millions) 2016 2017 2018 2019 2020 Cash provided by operating activities $559.3 $540.0 $496.1 $573.1 $509.3 Purchase of property, plant and equipment (136.2) (125.0) (143.4) (112.5) (82.1) Interest proceeds on swaps designated as net invest
Slide 131: ROIC Reconciliation
ROIC Reconciliation ($ in millions) Year Ended December 31, 2018 2019 2020 Adjusted EBIT 674.5 706.0 536.9 Numerator 674.5 706.0 536.9 As of December 31, 2017 2018 2019 Add: Total debt 3,915.6 3,864.0 3,834.1 Axalta shareholders' equity 1,276.1 1,205.1 1,354.2 Less: Cash and cash equivalents 769.8 6
Slide 132: Speaker Biographies
Speaker Biographies A X A LTA COAT I N G SY S T EM S 132
Slide 133: Robert Bryant
Robert Bryant Chief Executive Officer Mr. Bryant is Chief Executive Officer of Axalta Coating Systems. Previously, Mr. Bryant served as Axalta's Chief Financial Officer. Prior to joining Axalta, Mr. Bryant served as Chief Financial Officer and Senior Vice President of Roll Global LLC. Before joining
Slide 134: Hadi Awada
Hadi Aw ada S V P, G l o b a l M o b i l i t y Hadi Awada is Senior Vice President, Global Mobility of Axalta Coating Systems. Mr. Awada was previously President, Faurecia Clean Mobility – North America, where he also served as a member of Faurecia’s North American Board of Management and President,
Slide 135: Shelley Bausch
Shelley Bausch S V P, G l o b a l I n d u s t r i a l C o a t i n g s Ms. Bausch is Senior Vice President, Global Industrial Coatings at Axalta. She leads Axalta’s Industrial Coatings businesses, which include energy solutions, coil, wood, general industrial and powder coatings, and drives expansion
Slide 136: Sean Lannon
Sean Lannon SVP & Chief Financial Officer Mr. Lannon is Senior Vice President and Chief Financial Officer at Axalta. Previously, he served as Axalta's Vice President, Corporate Finance and Global Controller. Prior to joining Axalta, Mr. Lannon served as Vice President, Global Controller of Trinseo a
Slide 137: Robert Roop
Robert Roop V P & C h i e f Te c h n o l o g y O f f i c e r Dr. Roop is Vice President and Chief Technology Officer. Dr. Roop has been with Axalta since 2013 in expanding roles of responsibility in the technology organization. He began at Axalta as Technology Director, North America and most recent
Slide 138: Barry Snyder
Barry Snyder S V P, C h i e f O p e r a t i o n s a n d S u p p l y C h a i n O f f i c e r Dr. Snyder is Senior Vice President and Chief Operations and Supply Chain Officer at Axalta. He previously served as the Company's Senior Vice President and Chief Technology Officer. Before joining Axalta, Dr
Slide 139: Troy Weaver
Tr o y W e a v e r S V P, G l o b a l R e f i n i s h Mr. Weaver is Senior Vice President, Global Refinish at Axalta and leads the Company’s Refinish strategy and innovation. Prior to this, Mr. Weaver led North America Refinish where he was responsible for Axalta's high performing Refinish Business