Axalta Achieves Strong Q3 Sales Despite Mobility Sector Slowdown

Axalta Posts Strong Sales Despite Slow Mobility Sector

Image courtesy of Axalta.

Axalta Coating Systems Ltd., a leading global coatings company, announced financial results for the third quarter ending Sept. 30, 2024.

Third Quarter 2024 Highlights

Record net sales of $1.32 billion
Net income rose 40% year over year to $102 million, with a 7.7% net income margin
Record adjusted EBITDA of $291 million, with adjusted EBITDA margin up 220 basis points to 22.1%
Diluted earnings per share increased 39% year over year to $0.46, while adjusted diluted EPS grew 31% to $0.59
Repurchased $50 million in common shares

Consolidated Financial Results

Third-quarter net sales increased 0.8% year over year to a record $1.32 billion, driven by the CoverFlexx acquisition and volume growth, which were partially offset by raw material index impacts and mix headwinds. Net income rose 40% to $102 million, with adjusted net income improving by $31 million to $129 million due to lower variable costs and reduced operating expenses. Adjusted EBITDA grew 12% to $291 million, with an adjusted EBITDA margin of 22.1%. Diluted EPS rose 39% to $0.46, and adjusted diluted EPS improved 31% to $0.59.

Operating cash flow was $194 million, down from $210 million a year earlier, mainly due to higher working capital. Cash and cash equivalents stood at $567 million, with total liquidity exceeding $1.2 billion. Axalta’s net debt to trailing 12-month adjusted EBITDA ratio was 2.7x at quarter-end, compared to 3.2x a year earlier. The company repurchased over 1.4 million common shares for $50 million during the quarter.

Segment Results

Performance Coatings: Net sales in the Performance Coatings segment were $877 million, up 2% from the prior year. Refinish net sales grew 5% to $554 million, driven by the CoverFlexx acquisition and new body shop wins, offset by mix headwinds and lower body shop activity. Industrial net sales declined by 1% to $323 million, with positive pricing offset by lower volumes. Adjusted EBITDA for the segment reached $221 million, with a margin of 25.3%, up from 23.3% last year, due to lower variable costs and reduced operating expenses.

Mobility Coatings: The Mobility Coatings segment reported net sales of $443 million, a 2% decrease year over year. Light Vehicle net sales were flat, with 5% volume growth offset by raw material pass-through impacts and foreign exchange headwinds. Commercial Vehicle net sales fell 8% to $103 million, impacted by lower volumes due to an anticipated decline in Class 8 builds in North and Latin America. The segment's adjusted EBITDA rose to $70 million, with a margin of 15.7%, up from 13.4%, supported by lower variable costs, new business wins, and decreased operating costs.

“Our results in the third quarter were exceptional,” said Chris Villavarayan, Axalta CEO and president. “I am extremely proud of the commitment and dedication from each of our employees to deliver a record third quarter for the company in net sales and adjusted EBITDA, despite macroeconomic headwinds. As One Axalta, we are executing on our 2026 A Plan and outperforming industry benchmarks, staying focused on our full earnings potential.”

Full-Year 2024 Outlook

Axalta’s outlook for full-year 2024 includes approximately $5.275 billion in net sales, adjusted EBITDA of about $1.115 billion, adjusted diluted EPS of $2.15, free cash flow of around $500 million, and capital expenditures totaling approximately $140 million. The company projects an adjusted tax rate of roughly 25%.