Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Q3 2022 Earnings Presentation
25 slides from Axalta Coating Systems's earnings presentation, Oct 25, 2022
Slide 1: Q3 2022 Financial Results
Exhibit 99.2 Q3 2022 Financial Results October 25, 2022 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 outlook and/
Slide 3: Q3 2022 Key Messages
Q3 2022 Key Messages Earnings solidly within guidance range despite incremental headwinds in Europe, slower 1 China recovery, and currency impacts 9% volume growth year-over-year; market gains and recovery in Refinish and Mobility offset by 2 pockets of declines for Russia-Ukraine and Industrial in
Slide 4: Strategic Priorities
Strategic Priorities Near-Term Execution is Fundamental to Achieving Goals ▪ Price-Cost recovery Enhance ▪ Raw material cost productivity/improvements Profitability ▪ Operational & supply chain excellence Strategic Priorities Remain Unchanged Strengthen ▪ Protect leading value proposition through pe
Slide 5: Q3 Volume Trends
Q3 Volume Trends PERFORMANCE COATINGS Europe, AP ex. Greater Americas Middle East Greater China(3) Refinish & Africa China(3) Industrial REFINISH 9.7% (0.3)% 1.2% 3.7% $3.3B in Net Sales(1) INDUSTRIAL 3.9% (14.4)% (25.0)% 32.3% MOBILITY COATINGS LIGHT VEHICLE 17.9% 32.5% 72.5% 38.9% COMMERCIAL VEHIC
Slide 6: Volume Growth Continues to Outpace Markets
Volume Growth Continues to Outpace Markets ▪ AXTA volumes have increased vs. 2019 reflecting company-wide share gains despite the majority of end-market activity still below pre-COVID 2019 levels ▪ Recessionary headwinds to be balanced by deferred demand and on-going post-COVID end-market normalizat
Slide 7: Refinish Business Review
Refinish Business Review GLOBAL LEADER IN AFTER-MARKET AUTO COATINGS AND ACCESSORIES ▪ 4% volume growth year-over-year driven by high single digit percent growth in North America ▪ Normal seasonality in EMEA led to mid-single digit percent lower sequential volume quarter-over- quarter, in line with
Slide 8: Industrial Business Review
Industrial Business Review EXPANDING SALES PIPELINE ACROSS DIVERSIFIED GROWTH PLATFORM ▪ Achieved 12% year-over-year and 2% quarter-over-quarter price-mix improvement in Q3 2022 • Profitability recovery remains among our highest priorities as the business is actively pursuing targeted actions to rec
Slide 9: Mobility Business Review
Mobility Business Review PENT UP DEMAND TO SUPPORT MARKET RECOVERY AS PRODUCTION CONSTRAINTS ALLEVIATE LIGHT VEHICLE 2016-2025 GLOBAL LV BUILDS(1) ▪ Q3 year-over-year volume growth of 32% (Builds in millions) surpassed the 27% improvement in global auto 95 production 90 ▪ Sequential volume growth of
Slide 10: Prioritizing Margin Recovery
Prioritizing Margin Recovery ($ in millions) Cumulative Price-Cost(1) Accelerating Price to Offset Cost Price Cost ▪ 10% year-over-year price-mix (14% 2-year stacked); 3% sequential price improvement Performance reflects continued emphasis on cost recovery Coatings ▪ 20% year-over-year variable cost
Slide 11: Q3 Consolidated Results
Q3 Consolidated Results Financial Performance Commentary ($ in millions, except Q3 % Change 20% constant currency sales growth driven by strong per share data) 2022 2021 Incl. F/X Excl. F/X Performance Coatings 838 779 7.5 % 14.4 % pricing and volume recovery Mobility Coatings 401 309 29.5 % 34.6 %
Slide 12: Q3 Performance Coatings Results
Q3 Performance Coatings Results Financial Performance Commentary Q3 % Change 14% constant currency sales growth driven by pricing ($ in millions) 2022 2021 Incl. F/X Excl. F/X and M&A contribution Refinish 499 443 12.5 % 19.9 % ▪ Refinish volume growth partially offset by declines in Industrial 339
Slide 13: Q3 Mobility Coatings Results
Q3 Mobility Coatings Results Financial Performance Commentary Q3 % Change ($ in millions) 2022 2021 Incl. F/X Excl. F/X Global auto production recovery, new business wins, and better pricing led to 35% constant currency sales Light Vehicle 303 235 28.8 % 34.5 % growth Commercial Vehicle 98 74 31.8 %
Slide 14: Debt and Liquidity Summary
Debt and Liquidity Summary Capitalization Commentary ($ in millions) Interest @ 9/30/2022 Maturity ▪ Over $1.0 billion in available liquidity at September 30, Cash and Cash Equivalents $ 517 2022, including Revolver ($550 million capacity) Variable — 2026 First Lien Term Loan (USD) Variable 2,013 20
Slide 15: Financial Guidance Update
Financial Guidance Update Q4 2022 Guidance ▪ Net Sales: ~6%-8% including: – Anticipate mid single-digit volume and nearly double- digit price-mix growth – ~(7%) from FX ▪ Adjusted EBIT: $120-145 million, correlating to Adjusted EBITDA of $185-210 million ▪ Adjusted Diluted EPS: $0.31-0.39; inclusive
Slide 16: Appendix
Appendix AXALTA COATING SYSTEMS
Slide 17: Q4 and Full Year 2022 Assumptions
Q4 and Full Year 2022 Assumptions Macroeconomic Assumptions Q4 2022 Currency Assumptions ▪ Global GDP growth of ~1.7% for Q4 2022 and Q4 2022 Q4 2021 % Q3 2022 USD % Impact ~2.9% for FY 2022 Currency Axalta Net Q4 2021 Average Average of YOY FX Average Rate Rate Sales Rate Rate Change Assumption ▪ G
Slide 18: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation ($ in millions) Q3 2022 Q3 2021 Income from operations $ 123.5 $ 124.7 Other expense (income), net 3.4 (2.4) Total $ 120.1 $ 127.1 A Termination benefits and other employee related costs 5.0 9.6 B Strategic review and retention costs — 2.1 C Acquisition and divestiture-r
Slide 19: Adjusted EBIT Reconciliation (cont’d)
Adjusted EBIT Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes costs related to the transition of our CEO. Employee termination benefits are primarily associated with Axalta Way
Slide 20: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation ($ in millions, except per share data) Q3 2022 Q3 2021 Net income $ 63.3 $ 68.9 Less: Net income attributable to noncontrolling interests 0.9 (0.2) Net income attributable to controlling interests $ 62.4 $ 69.1 A Termination benefits and other employee related cost
Slide 21: Adjusted Net Income Reconciliation (cont’d)
Adjusted Net Income Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes costs related to the transition of our CEO. Employee termination benefits are primarily associated with Axal
Slide 22: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in millions) Q3 2022 Q2 2022 Q1 2022 YTD 2022 Q3 2021 Q2 2021 Q1 2021 YTD 2021 Cash provided by (used for) operating activities $ 79.9 $ 12.2 $ (43.9) $ 48.2 $ 142.9 $ 107.5 $ 39.6 $ 290.0 Purchase of property, plant and equipment (35.5) (29.5) (42.5) (107.5) (38.4)
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation LTM ($ in millions) 9/30/2022 Q3 2022 Q2 2022 Q1 2022 Q3 2021 Q2 2021 Q1 2021 FY 2021 Net income $ 201.7 $ 63.3 $ 44.1 $ 40.9 $ 68.9 $ 126.4 $ 15.7 $ 264.4 Interest expense, net 134.6 35.0 $ 33.5 32.6 33.8 $ 33.4 33.5 134.2 Provision for income taxes 60.8 21.8 $ 18.8 1
Slide 24: Adjusted EBITDA Reconciliation (cont’d)
Adjusted EBITDA Reconciliation (cont’d) A Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes costs related to the transition of our CEO. Employee termination benefits are primarily associated with Axalta W
Slide 25: Thank you
Thank you Investor Relations Contact: Chris Evans Christopher.Evans@axalta.com 484-724-4099 25
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