Axalta Coating Systems Ltd. · NYSE:AXTA
Axalta Coating Systems — Q3 2023 Earnings Presentation
23 slides from Axalta Coating Systems's earnings presentation, Nov 1, 2023
Slide 1: Axalta Coating Systems Q3 2023 Financial Results
Axalta Coating Systems Q3 2023 Financial Results November 1, 2023
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: 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 $50M 3.2x Fre
Slide 4: Axalta Announces Board Transition
Axalta Announces Board Transition Steve Chapman Mary Zappone Stepping down from Incoming the Board of Directors Board Member Effective at 2024 AGM Effective October 25, 2023 4
Slide 5: Business Highlights
Business Highlights Acquired André Koch AG in October Announced Refinish Partnership with BMW Group Named exclusive supplier of BMW Group’s private label paint system in potentially 730 body shops across 15 European countries and South Africa Introduced Axalta NextJetTM Digital Paint Technology Emer
Slide 6: Axalta's Transformation Is Just Beginning
Axalta’s Transformation Is Just Beginning Productivity Initiatives Supporting Adjusted EBITDA and Margin Trend Operational Improvement ($ in millions) $261 $227 $213 $210 $208 $213 20% ■ Effectively priced for value $180 17% 18% ■ Achieved mid-teens % price realization over last 17% 17% 17% two year
Slide 7: Q3 2023 Consolidated Results
Q3 2023 Consolidated Results Financial Results Net Sales Variance ($ in millions) ($ in millions, except per share data) Q3 2023 Q3 2022 % Change (2.8%) 6.3% 2.2% 5.7% $1,309 Net Sales 1,309 1,239 6% $1,239 Income From Ops 163 124 32% Adjusted EBIT 188 148 27% % margin 14.3% 11.9% 240 bps Q3 2022 Vo
Slide 8: Q3 2023 Performance Coatings Results
Q3 2023 Performance Coatings Results Financial Results Net Sales Variance ($ in millions) ($ in millions) Q3 2023 Q3 2022 % Change (6.6%) 6.3% 2.5% 2.2% Refinish 529 499 6% $838 $856 Industrial 327 339 (4%) Organic Sales Net Sales 856 838 2% Refinish: +LSD% Industrial: (MSD%) Adjusted EBIT 135 122 1
Slide 9: Q3 2023 Mobility Coatings Results
Q3 2023 Mobility Coatings Results Financial Results Net Sales Variance ($ in millions) ($ in millions) Q3 2023 Q3 2022 % Change 5.1% 6.2% 1.7% 13.0% $453 Light Vehicle 342 303 13% $401 Commercial Vehicle 111 98 14% Organic Sales Net Sales 453 401 13% LV: +LDD% CV: +LDD% Adjusted EBIT 40 4 1,006% % m
Slide 10: Debt And Liquidity Summary & Capital Allocation Priorities
Debt And Liquidity Summary & Capital Allocation Priorities Total Net Leverage Ratio Debt Maturity Profile Targets & Long-Term Goals Progression ($ in billions) ■ Total Net Leverage Ratio of 2.0x - 2.5x1 4.1x 4.2x 4.1x $2.0 Term Loan 3.8x 3.7x 3.6x 3.2x 2 ■ Total Gross Leverage Ratio of 2.5x - 3.0x R
Slide 11: Raising 2023 Guidance
Raising 2023 Guidance Net Sales Adjusted EBIT Adjusted EBITDA (% Change YoY) ($ in millions) ($ in millions) Q4 2023 FY 2023 Q4 2023 FY 2023 Q4 2023 FY 2023 +LSD +MSD ~$180 ~$670 ~$250 ~$950 (+) Stable Refinish environment (+) Favorable Light Vehicle build rates (+) Front-half weighted benefit from
Slide 12: Appendix
Appendix
Slide 13: Full Year 2023 Modeling Assumptions
Full Year 2023 Modeling Assumptions Axalta does not provide a reconciliation for non-GAAP estimates for tax rate, as adjusted, free cash flow or Adjusted Diluted EPS on a forward-looking basis because the information necessary to calculate a meaningful or accurate estimation of reconciling items is
Slide 14: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation ($ 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 15: 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 16: 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 17: 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 18: 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 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 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 29.3 $ 13.4 15
Slide 20: 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 21: 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 22: Expected Step-Up Depreciation & Amortization Decrease Relative To 2022
Expected Step-Up Depreciation & Amortization Decrease Relative To 2022 ($ in millions) Q4 Full Year Step-Up Depreciation & Amortization 2023 Guidance(1) $13 $55 2022 (As Reported) $23 $93 Variance(2) ($10) ($38) Total AXTA 2023 Adj. EBIT Impact(3) $— $— Approximate segment allocation of Step-Up Depr
Slide 23: Thank You
Thank You Investor Relations Contact: Chris Evans Christopher.Evans@axalta.com 484-724-4099
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