Slide 1: Axalta Coating Systems Ltd. Investor Presentation Second Quarter 2020
Axalta Coating Systems Ltd. Investor Presentation Second Quarter 2020 Sensitivity: Business Internal
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 regarding Axalta and its subsidiaries including our outlook, which includes net sales growth, currency effects, acquisition or divestment impacts
Slide 3: Axalta's Customer Focused Organization
Axalta’s Customer Focused Organization PERFORMANCE COATINGS TRANSPORTATION COATINGS SEGMENTS $2.9 Billion, 65% of Sales $1.6 Billion, 35% of Sales Refinish $1.8 B SALES BY END (39%) Light Industrial MARKET $1.2 B Vehicle (26%) $1.2 B (27%) Comml Vehicle $0.4 B (8%) ▪ Powder ▪ Heavy duty truck (HDT)
Slide 4: COVID-19 Impact: The Demand Environment
COVID-19 Impact: The Demand Environment Performance Coatings Net Sales(1) Performance Commentary ▪ Refinish impact began in February for China, mid-March for other regions ▪ Miles driven declining to trough of 45-50% in many geographies starting in March; moderating in late April ▪ Industrial demand
Slide 5: COVID-19 Impact and Response
COVID-19 Impact and Response Mitigation Actions ▪ Axalta executing on aggressive cost structure reduction plan ✓ Actions across discretionary spend, salary reductions, furloughs, and other items ✓ Over $100 million expected benefit for 2020 ▪ Emphasis on cash flow to bolster liquidity position ✓ Red
Slide 6: Debt and Liquidity Summary
Debt and Liquidity Summary Leverage Trends Interest Coverage (Adj. EBITDA) 75.0% 4.4x 6.5x 69.8% 60.5% 62.5% 6.0x 5.9x 65.0% 4.0x 65.4% 5.8x 3.8x 55.0% 62.0% 55.1% 3.6x 5.5x 3.4x 5.1x 45.0% 3.0x 3.6x 3.2x 3.4x 3.0x 4.4x 4.5x 35.0% 2.8x 3.8x 25.0% 2.4x 2014 2015 2016 2017 2018 2019 3.5x 2014 2015 201
Slide 7: Free Cash Flow Strong and Improving; Deployment Accelerating
Free Cash Flow Strong and Improving; Deployment Accelerating Free Cash Flow Capital Deployment ($ millions) ($ millions) 24 Cumulative: 22 11 $2,328 785 825 821 58 415 475 38 $417 423 890 802 854 580 272 362 411 $606 254 564 313 312 288 (173) (169) (130) (163) (162) 160 $822 (62) 72 (52) (39) (125)
Slide 8: Axalta's Global Presence
Axalta’s Global Presence 13,000 People 47 Manufacturing Sites Darlington Farnham Västervik Zuidland Moscow West Bromwich Minneapolis Hilliard Houthwaite Wuppertal Ajax Tewkesbury Guntramsdorf Changchun Cornwall Mt. Clemens Landshut Cerkezkoy Sacramento Montbrison Ft. Madison Bulle Orrville 54 Jackso
Slide 9: Why Invest in Axalta Today?
Why Invest in Axalta Today? Strong Free Focused End- Consolidation ROIC Growth Significant Axalta Way Cash Flow Markets, Opportunity with Focus, China Growth Driving Generation and Structural Proven M&A Shareholder Opportunity Productivity Allocation Volume Growth Strategy Value Alignment Process PR
Slide 10: Axalta is a Global Leader in Many of Our Markets
Axalta is a Global Leader in Many of Our Markets… Performance Coatings: Refinish Transportation Coatings: Light Vehicle #1 Other Axalta Other Peer 1 Peer 3 Peer 1 Peer 3 Axalta* Peer 2 #2 Peer 2 *Tied with peer Performance Coatings: Industrial Transportation Coatings: Commercial Vehicle Core CV Mark
Slide 11: But We also have Substantial White Space Growth Opportunities
…But We also have Substantial White Space Growth Opportunities Refinish – Regional Car Parc Growth Light Vehicle – Cars Per Capita (in thousands) ’17-’22E CAGR 0.75 500 Growth in China 2% Penetration rate gap will 400 1% narrow across regions 300 13% 200 4% 0.37 100 5% 0.18 - 0.11 0.08 NA EMEA LA Ch
Slide 12: China Represents a Huge Growth Opportunity
China Represents a Huge Growth Opportunity Refinish Industrial ▪ Car parc growth ▪ China consumes >40% of global industrial coatings today ▪ Mainstream and economy segment growth ▪ Shift from export end users to domestic consumers ▪ Follow market to Tier 2-4 cities ▪ Importance of local production a
Slide 13: China Represents a Huge Growth Opportunity, Cont'd
China Represents a Huge Growth Opportunity, Cont’d Light Vehicle Commercial Vehicle ▪ Adding business with domestic OEMs ▪ Huge truck market >1 million vehicles per year production ▪ Automotive fleet penetration per capita drives market ▪ Modernization of fleet drives demand for quality coatings gro
Slide 14: Focus on Operating Excellence, Axalta Way Savings Continue with Phase II
Focus on Operating Excellence, Axalta Way Savings Continue with Phase II ▪ Achieved Phase I $200 million target achieved Axalta Way II ▪ Axalta Way II target: $200 million from 2018 through 2021 Axalta Operating ▪ Lean implementation in Wuppertal, Germany and Mt. Clemens, MI Excellence (AOE) ▪ Globa
Slide 15: M&A Program Has Delivered Growth and Diversification
M&A Program Has Delivered Growth and Diversification Track Record of Successful Acquisitions 2015 2016 2017 2018 2019 23 Acquisitions since 2015 Refinish ~$100mm ~$600mm Annual sales added Wood ~$250mm ~$120mm Incremental EBITDA Powder ~$25mm Coil Integrated manufacturing ~$85mm 13 locations General
Slide 16: Axalta Generates Strong Free Cash Flow; Disciplined Allocation
Axalta Generates Strong Free Cash Flow; Disciplined Allocation Strong Adjusted EBITDA Margins A Sound Capital Allocation Process 21% ▪ Axalta is the margin leader and generates substantial 19% free cash flow 16% 13% 12% ▪ We have organic and inorganic investment opportunities that we expect will enh
Slide 17: Axalta is Squarely Focused on Shareholder Value Creation
Axalta is Squarely Focused on Shareholder Value Creation Growth Productivity ▪ Technology and innovation ▪ Axalta Way II drivers ▪ Axalta Operating Excellence ▪ Evolution of culture and (AOE) rollout incentives ▪ Inflation offset as starting point ▪ Clear strategies by end-market with accountability
Slide 18: Sustainability at Axalta
Sustainability at Axalta Environment Social Governance ▪ Global Environment, Health and Safety policies ▪ Commitment to workplace safety: Driving ▪ Ethics and integrity compliance programs, with well defined Perfect Performance annual training for all employees on Axalta Code of Business Conduct and
Slide 19: Sustainability Awards and Recognition
Sustainability Awards and Recognition Axalta received Ducks Unlimited Corporate Conservation Axalta received the General Motors Gold Level Supplier Achievement Award in 2019 for exceptional contributions Diversity Award for exceeding diversity spend target and to wetlands conservation and environmen
Slide 20: Financial Overview
Financial Overview Sensitivity: Business Internal
Slide 21: Q1 Consolidated Results
Q1 Consolidated Results Financial Performance Commentary ($ in millions, except Q1 % Change Net sales down high single digits ex-FX and M&A; per share data) 2020 2019 Incl. F/X Excl. F/X continued price-mix improvement Performance 648 713 (9.2)% (7.3)% ▪ Volume reductions globally driven in large pa
Slide 22: Focus on Capital Allocation
Focus on Capital Allocation Yes Debt Reduction Organic Investment Leverage in Capex / R&D No Investment Yes Free Cash excess of target opportunity that and no immediate exceeds hurdle Flow investment? rate? M&A Excess No Share Repurchases - Offset dilution Share price - Opportunistic buys greater th
Slide 23: Effective Capital Allocation Should Drive Improved Returns
Effective Capital Allocation Should Drive Improved Returns Return on Invested Capital (ROIC) Commentary NOPAT ROIC (FY 2019) ▪ Axalta’s total capital in the ROIC excludes the PP&E 14% and intangible asset “step up” balances from the 13% 2013 LBO under purchase price accounting 12% 11% ▪ Drivers of R
Slide 24: Net Sales to Date Show Solid Growth and Portfolio Diversification
Net Sales to Date Show Solid Growth and Portfolio Diversification Net Sales Net Sales by Region ($ Billions) 2013 2019 North North Asia Pacific Asia Pacific 5.4 America America 15% 15% Latin 5.2 40% 29% America 10% 17% 5.0 +3.3% Latin America 4.8 39% 35% 4.6 EMEA EMEA 4.4 Net Sales by End-Market 201
Slide 25: Adjusted EBITDA Results to Date Show Strong Core Progress
Adjusted EBITDA Results to Date Show Strong Core Progress Adjusted EBITDA(1) Growth Drivers ▪ Adjusted EBITDA margins increased from 17% in 2013 to 21% in 2019 $937 $939 ▪ Pricing actions positively contributed to margin $864 $902 $885 expansion $835 ▪ Volume growth and share gain provided operating
Slide 26: Segment Overview
Segment Overview Sensitivity: Business Internal
Slide 27: Performance Coatings
Performance Coatings Summary Statistics Refinish Industrial Global leader – #1 player with 25% market #2 positions globally in Powder and ✓ share ✓ FY 2019 Net Sales Industrial E-coat $2.9bn ✓ Strong record of realizing value through ✓ #2 position in North America in Wood world class service, brand
Slide 28: Transportation Coatings
Transportation Coatings Summary Statistics Light Vehicle Commercial Vehicle ✓ #2 Light Vehicle coatings supplier ✓ #1 Heavy Duty Truck (“HDT”) and bus FY 2019 Net Sales coatings supplier $1.6bn ✓ Strong multi-decade customer relationships ✓ IMRONTM is best-in-class for customer Light Vehicle: $1.2bn
Slide 29: Investor Contact
Investor Contact: Chris Mecray - VP, Investor Relations, Treasury & Strategy christopher.mecray@axalta.com (215) 255-7970 Sensitivity: Business Internal
Slide 30: Adjusted EBIT Reconciliation
Adjusted EBIT Reconciliation ($ in millions) FY 2019 FY 2018 Q1 2020 Q1 2019 Income from operations $ 488 $ 442 $ 65 $ 99 Other (income) expense, net (4) 15 1 (1) EBIT $ 492 $ 427 $ 64 $ 100 A Debt extinguishment and refinancing related costs — 10 2 — B Termination benefits and other employee relate
Slide 31: Adjusted EBIT Reconciliation (cont'd)
Adjusted EBIT Reconciliation (cont’d) Represents expenses related to the restructuring and refinancing of our indebtedness, which are not considered indicative of our ongoing operating A performance. Represents expenses and associated changes to estimates related to employee termination benefits and
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Successor Predecessor Combined Feb-Dec ($ in millions) FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 2013 Jan 2013 FY 2013 Net income (loss) $ 253 $ 213 $ 48 $ 45 $ 96 $ 32 $ (222) $ 9 $ (213) Interest expense, net 163 160 147 178 197 218 215 — 215 Provision (benefit
Slide 33: Adjusted EBITDA Reconciliation (cont'd)
Adjusted EBITDA Reconciliation (cont’d) Represents expenses related to the restructuring and refinancing of our indebtedness, including $25 million of commitment fees expensed in 2013 related to a terminated Bridge Facility in conjunction with the A issuance of the Senior Notes and entry into the Se
Slide 34: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation ($ in millions) FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Cash provided by operating activities 251 410 559 540 496 573 Purchase of property, plant and equipment (188) (138) (136) (125) (143) (113) Interest proceeds on swaps designated as net investment hedges - -
Slide 35: Thank You!
Thank You! Sensitivity: Business Internal