Bermuda |
001-36733 |
98-1073028 |
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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Common Shares, $1.00 par value | AXTA | New York Stock Exchange | ||||||||||||
(Title of class) | (Trading symbol) | (Exchange on which registered) |
Exhibit No. | Description | |||||||
99 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
AXALTA COATING SYSTEMS LTD. | |||||||||||
Date: | May 1, 2024 | By: | /s/ Carl D. Anderson II | ||||||||
Carl D. Anderson II | |||||||||||
Senior Vice President and Chief Financial Officer |
Exhibit 99 | |||||||||||
News Release | |||||||||||
Axalta Coating Systems
1050 Constitution Avenue
Philadelphia, PA 19112
USA
|
Investor Contact
Christopher Evans
D +1 484 724 4099
Christopher.Evans@axalta.com
|
Media Contact
Robert Donohoe
D +1 267-756-3803
Robert.Donohoe@axalta.com
|
(in millions, except %’s and per share data) | Projection | ||||||||||
Item | Q2 2024 | FY 2024 | |||||||||
Net Sales YoY% | 3% - 5% | +LSD |
|||||||||
Adjusted EBITDA | ~$275 | $1,050 - $1,080 | |||||||||
Adjusted Diluted EPS | ~$0.50 | $1.90 - $2.00 | |||||||||
Free Cash Flow | $425 - $475 | ||||||||||
D&A (step-up D&A) | ~$280 ($50) | ||||||||||
Tax Rate, As Adjusted | ~25% | ||||||||||
Diluted Shares Outstanding | ~222 | ||||||||||
Interest Expense | ~$210 | ||||||||||
Capex | ~$165 | ||||||||||
Financial Statement Tables | ||||||||||||||
AXALTA COATING SYSTEMS LTD. | ||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||
(In millions, except per share data) | ||||||||||||||
Three Months Ended March 31, |
||||||||||||||
2024 | 2023 | |||||||||||||
Net sales | $ | 1,294 | $ | 1,284 | ||||||||||
Cost of goods sold | 865 | 902 | ||||||||||||
Selling, general and administrative expenses | 207 | 206 | ||||||||||||
Other operating charges | 61 | 7 | ||||||||||||
Research and development expenses | 18 | 19 | ||||||||||||
Amortization of acquired intangibles | 22 | 25 | ||||||||||||
Income from operations | 121 | 125 | ||||||||||||
Interest expense, net | 54 | 48 | ||||||||||||
Other expense, net | 8 | 1 | ||||||||||||
Income before income taxes | 59 | 76 | ||||||||||||
Provision for income taxes | 20 | 15 | ||||||||||||
Net income | 39 | 61 | ||||||||||||
Less: Net loss attributable to noncontrolling interests | (2) | — | ||||||||||||
Net income attributable to common shareholders | $ | 41 | $ | 61 | ||||||||||
Basic net income per share | $ | 0.18 | $ | 0.27 | ||||||||||
Diluted net income per share | $ | 0.18 | $ | 0.27 | ||||||||||
Basic weighted average shares outstanding | 220.3 | 221.2 | ||||||||||||
Diluted weighted average shares outstanding | 221.3 | 222.1 | ||||||||||||
AXALTA COATING SYSTEMS LTD. | ||||||||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||||||
(In millions, except per share data) | ||||||||||||||
March 31, 2024 | December 31, 2023 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 624 | $ | 700 | ||||||||||
Restricted cash | 3 | 3 | ||||||||||||
Accounts and notes receivable, net | 1,242 | 1,260 | ||||||||||||
Inventories | 751 | 741 | ||||||||||||
Prepaid expenses and other current assets | 140 | 117 | ||||||||||||
Total current assets | 2,760 | 2,821 | ||||||||||||
Property, plant and equipment, net | 1,174 | 1,204 | ||||||||||||
Goodwill | 1,554 | 1,591 | ||||||||||||
Identifiable intangibles, net | 1,087 | 1,130 | ||||||||||||
Other assets | 514 | 526 | ||||||||||||
Total assets | $ | 7,089 | $ | 7,272 | ||||||||||
Liabilities, Shareholders’ Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 721 | $ | 725 | ||||||||||
Current portion of borrowings | 20 | 26 | ||||||||||||
Other accrued liabilities | 591 | 677 | ||||||||||||
Total current liabilities | 1,332 | 1,428 | ||||||||||||
Long-term borrowings | 3,407 | 3,478 | ||||||||||||
Accrued pensions | 241 | 252 | ||||||||||||
Deferred income taxes | 155 | 162 | ||||||||||||
Other liabilities | 179 | 179 | ||||||||||||
Total liabilities | 5,314 | 5,499 | ||||||||||||
Shareholders’ equity: | ||||||||||||||
Common shares, $1.00 par, 1,000.0 shares authorized, 254.2 and 253.7 shares issued at March 31, 2024 and December 31, 2023, respectively | 254 | 254 | ||||||||||||
Capital in excess of par | 1,575 | 1,568 | ||||||||||||
Retained earnings | 1,327 | 1,286 | ||||||||||||
Treasury shares, at cost, 33.6 shares at March 31, 2024 and December 31, 2023 | (937) | (937) | ||||||||||||
Accumulated other comprehensive loss | (488) | (444) | ||||||||||||
Total Axalta shareholders’ equity | 1,731 | 1,727 | ||||||||||||
Noncontrolling interests | 44 | 46 | ||||||||||||
Total shareholders’ equity | 1,775 | 1,773 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 7,089 | $ | 7,272 |
AXALTA COATING SYSTEMS LTD. | ||||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||||||
(In millions) | ||||||||||||||
Three Months Ended March 31, |
||||||||||||||
2024 | 2023 | |||||||||||||
Operating activities: | ||||||||||||||
Net income | $ | 39 | $ | 61 | ||||||||||
Adjustment to reconcile net income to cash provided by (used for) operating activities: | ||||||||||||||
Depreciation and amortization | 68 | 70 | ||||||||||||
Amortization of deferred financing costs and original issue discount | 2 | 2 | ||||||||||||
Debt extinguishment and refinancing-related costs | 3 | 2 | ||||||||||||
Deferred income taxes | 6 | 2 | ||||||||||||
Realized and unrealized foreign exchange losses, net | 9 | 5 | ||||||||||||
Stock-based compensation | 6 | 6 | ||||||||||||
Impairment charges | — | 7 | ||||||||||||
Interest income on swaps designated as net investment hedges | (3) | (6) | ||||||||||||
Other non-cash, net | 2 | 3 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Trade accounts and notes receivable | 4 | (92) | ||||||||||||
Inventories | (20) | 39 | ||||||||||||
Prepaid expenses and other assets | (40) | (30) | ||||||||||||
Accounts payable | 11 | (22) | ||||||||||||
Other accrued liabilities | (75) | (96) | ||||||||||||
Other liabilities | 22 | (3) | ||||||||||||
Cash provided by (used for) operating activities | 34 | (52) | ||||||||||||
Investing activities: | ||||||||||||||
Purchase of property, plant and equipment | (22) | (42) | ||||||||||||
Interest proceeds on swaps designated as net investment hedges | 3 | 6 | ||||||||||||
Settlement proceeds on swaps designated as net investment hedges | — | 29 | ||||||||||||
Other investing activities, net | — | 1 | ||||||||||||
Cash used for investing activities | (19) | (6) | ||||||||||||
Financing activities: | ||||||||||||||
Proceeds from short-term borrowings | — | 9 | ||||||||||||
Proceeds from long-term borrowings | 107 | — | ||||||||||||
Payments on short-term borrowings | (5) | (14) | ||||||||||||
Payments on long-term borrowings | (183) | (76) | ||||||||||||
Financing-related costs | (2) | (6) | ||||||||||||
Net cash flows associated with stock-based awards | 1 | 5 | ||||||||||||
Deferred acquisition-related consideration | — | (7) | ||||||||||||
Other financing activities, net | — | 1 | ||||||||||||
Cash used for financing activities | (82) | (88) | ||||||||||||
Decrease in cash | (67) | (146) | ||||||||||||
Effect of exchange rate changes on cash | (9) | 6 | ||||||||||||
Cash at beginning of period | 703 | 655 | ||||||||||||
Cash at end of period | $ | 627 | $ | 515 | ||||||||||
Cash at end of period reconciliation: | ||||||||||||||
Cash and cash equivalents | $ | 624 | $ | 512 | ||||||||||
Restricted cash | 3 | 3 | ||||||||||||
Cash at end of period | $ | 627 | $ | 515 |
Twelve Months Ended March 31, 2024 |
Three Months Ended March 31, |
Year Ended December 31, 2023 |
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2024 | 2023 | |||||||||||||||||||||||||
Net income | $ | 247 | $ | 39 | $ | 61 | $ | 269 | ||||||||||||||||||
Interest expense, net | 219 | 54 | 48 | 213 | ||||||||||||||||||||||
Provision for income taxes | 91 | 20 | 15 | 86 | ||||||||||||||||||||||
Depreciation and amortization | 274 | 68 | 70 | 276 | ||||||||||||||||||||||
EBITDA | 831 | 181 | 194 | 844 | ||||||||||||||||||||||
Debt extinguishment and refinancing-related costs (a) |
11 | 3 | 2 | 10 | ||||||||||||||||||||||
Termination benefits and other employee-related costs (b) |
73 | 55 | — | 18 | ||||||||||||||||||||||
Acquisition and divestiture-related costs (c) |
4 | 2 | 1 | 3 | ||||||||||||||||||||||
Site closure costs (d) |
7 | 1 | 1 | 7 | ||||||||||||||||||||||
Impairment charges (e) |
8 | — | 7 | 15 | ||||||||||||||||||||||
Foreign exchange remeasurement losses (f) |
26 | 5 | 2 | 23 | ||||||||||||||||||||||
Long-term employee benefit plan adjustments (g) |
10 | 3 | 2 | 9 | ||||||||||||||||||||||
Stock-based compensation (h) |
26 | 6 | 6 | 26 | ||||||||||||||||||||||
Environmental charge (i) |
4 | 4 | — | — | ||||||||||||||||||||||
Other adjustments (j) |
(3) | (1) | (2) | (4) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 997 | $ | 259 | $ | 213 | $ | 951 | ||||||||||||||||||
Net sales | $ | 5,194 | $ | 1,294 | $ | 1,284 | $ | 5,184 | ||||||||||||||||||
Net income margin | 4.8 | % | 3.0 | % | 4.8 | % | 5.2 | % | ||||||||||||||||||
Adjusted EBITDA margin | 19.2 | % | 20.0 | % | 16.6 | % | 18.4 | % | ||||||||||||||||||
Segment Adjusted EBITDA: | ||||||||||||||||||||||||||
Performance Coatings | $ | 769 | $ | 196 | $ | 169 | $ | 742 | ||||||||||||||||||
Mobility Coatings | 228 | 63 | 44 | 209 | ||||||||||||||||||||||
Total | $ | 997 | $ | 259 | $ | 213 | $ | 951 |
(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 estimates related to employee termination benefits, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. These amounts are not considered indicative of our ongoing operating performance. | ||||
(c) | Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance. | ||||
(d) | Represents costs related to the closure of certain manufacturing sites, which we do not consider indicative of our ongoing operating performance. | ||||
(e) | Represents impairment charges, which are not considered indicative of our ongoing operating performance. The losses recorded during the year ended December 31, 2023 were primarily due to the decision to demolish assets at a previously closed manufacturing site during the three months ended June 30, 2023 and the then anticipated exit of a non-core business category in the Mobility Coatings segment during the three months ended March 31, 2023. | ||||
(f) | Represents foreign exchange losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. | ||||
(g) | Represents the non-cash, non-service cost components of long-term employee benefit costs. | ||||
(h) | Represents non-cash impacts associated with stock-based compensation. | ||||
(i) | Represents costs related to certain environmental remediation activities, which are not considered indicative of our ongoing operating performance. | ||||
(j) | Represents certain non-operational or non-cash gains, unrelated to our core business and which we do not consider indicative of our ongoing operating performance. | ||||
Three Months Ended March 31, |
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2024 | 2023 | |||||||||||||
Net income | $ | 39 | $ | 61 | ||||||||||
Less: Net loss attributable to noncontrolling interests | (2) | — | ||||||||||||
Net income attributable to common shareholders | 41 | 61 | ||||||||||||
Debt extinguishment and refinancing-related costs (a) |
3 | 2 | ||||||||||||
Termination benefits and other employee-related costs (b) |
55 | — | ||||||||||||
Acquisition and divestiture-related costs (c) |
2 | 1 | ||||||||||||
Impairment charges (d) |
— | 7 | ||||||||||||
Environmental charge (e) |
4 | — | ||||||||||||
Other adjustments (f) |
1 | (1) | ||||||||||||
Step-up depreciation and amortization (g) |
12 | 16 | ||||||||||||
Total adjustments | 77 | 25 | ||||||||||||
Income tax provision impacts (h) |
12 | 7 | ||||||||||||
Adjusted net income | $ | 106 | $ | 79 | ||||||||||
Adjusted diluted net income per share | $ | 0.48 | $ | 0.35 | ||||||||||
Diluted weighted average shares outstanding | 221.3 | 222.1 | ||||||||||||
(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 estimates related to employee termination benefits, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. These amounts are not considered indicative of our ongoing operating performance. | ||||
(c) | Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance. | ||||
(d) | Represents impairment charges, which are not considered indicative of our ongoing operating performance. The amount recorded during the three months ended March 31, 2023 relates to a loss recorded due to the then anticipated exit of a non-core business category in the Mobility Coatings segment. | ||||
(e) | Represents costs related to environmental remediation activities, which are not considered indicative of our ongoing operating performance. | ||||
(f) | Represents certain non-operational or non-cash losses (gains), unrelated to our core business and which we do not consider indicative of our ongoing operating performance. | ||||
(g) | Represents the incremental step-up depreciation and amortization expense associated with the acquisition of DuPont Performance Coatings by Axalta. We believe this will assist investors in performing meaningful comparisons of past, present and future operating results and better highlight the results of our ongoing operating performance. | ||||
(h) | The income tax impacts are determined using the applicable rates in the taxing jurisdictions in which expense or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure. Additionally, the income tax impact includes the removal of discrete income tax impacts within our effective tax rate which were expenses of $3 million and benefits of $2 million for the three months ended March 31, 2024 and 2023, respectively. The tax adjustments for the three months ended March 31, 2024 and 2023 include the deferred tax benefit ratably amortized into our adjusted income tax rate as the tax attribute related to a January 1, 2020 intra-entity transfer of certain intellectual property rights is realized. | ||||
Three Months Ended March 31, |
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2024 | 2023 | |||||||||||||
Cash provided by (used for) operating activities | $ | 34 | $ | (52) | ||||||||||
Purchase of property, plant and equipment | (22) | (42) | ||||||||||||
Interest proceeds on swaps designated as net investment hedges | 3 | 6 | ||||||||||||
Free cash flow | $ | 15 | $ | (88) | ||||||||||
Three Months Ended March 31, |
||||||||||||||
2024 | 2023 | |||||||||||||
Income from operations | $ | 121 | $ | 125 | ||||||||||
Other expense, net | 8 | 1 | ||||||||||||
Total | 113 | 124 | ||||||||||||
Debt extinguishment and refinancing-related costs (a) |
3 | 2 | ||||||||||||
Termination benefits and other employee-related costs (b) |
55 | — | ||||||||||||
Acquisition and divestiture-related costs (c) |
2 | 1 | ||||||||||||
Impairment charges (d) |
— | 7 | ||||||||||||
Environmental charge (e) |
4 | — | ||||||||||||
Other adjustments (f) |
1 | (1) | ||||||||||||
Step-up depreciation and amortization (g) |
12 | 16 | ||||||||||||
Adjusted EBIT | $ | 190 | $ | 149 | ||||||||||
Segment Adjusted EBIT (1): |
||||||||||||||
Performance Coatings | $ | 135 | $ | 109 | ||||||||||
Mobility Coatings | 43 | 24 | ||||||||||||
Total | 178 | 133 | ||||||||||||
Step-up depreciation and amortization (g) |
12 | 16 | ||||||||||||
Adjusted EBIT | $ | 190 | $ | 149 |
(1) | During the three months ended December 31, 2023, Axalta transitioned to using Adjusted EBITDA as the primary measure to evaluate financial performance of the operating segments and allocate resources. We will continue publishing segment Adjusted EBIT through 2024 to allow for historical trend analyses. | ||||
(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 estimates related to employee termination benefits, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. These amounts are not considered indicative of our ongoing operating performance. | ||||
(c) | Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance. | ||||
(d) | Represents impairment charges, which are not considered indicative of our ongoing operating performance. The amount recorded during the three months ended March 31, 2023 relates to a loss recorded due to the then anticipated exit of a non-core business category in the Mobility Coatings segment. | ||||
(e) | Represents costs related to environmental remediation activities, which are not considered indicative of our ongoing operating performance. | ||||
(f) | Represents certain non-operational or non-cash losses (gains), unrelated to our core business and which we do not consider indicative of our ongoing operating performance. | ||||
(g) | Represents the incremental step-up depreciation and amortization expense associated with the acquisition of DuPont Performance Coatings by Axalta. We believe this will assist investors in performing meaningful comparisons of past, present and future operating results and better highlight the results of our ongoing operating performance. | ||||