Axalta releases Q1 2024 results

Axalta Coating Systems Ltd., a leading global coatings company, announced its financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights:

• Net sales increased 0.8% year-over-year to $1.3 billion
• Announced 2024 Transformation Initiative with an estimated annual $75 million run-rate savings expected in 2026
• Net income declined $22 million year-over-year to $39 million primarily due to $55 million of restructuring charges
• Adjusted EBITDA increased $46 million year-over-year to $259 million with Adjusted EBITDA margin improving 340 basis points year-over-year to 20.0%
• Diluted EPS declined by $0.09 year-over-year, or 33% to $0.18 and Adjusted Diluted EPS increased $0.13 year-over-year, or 37%, to $0.48
• Total net leverage ratio of 2.8x and paid down $75 million of principal on term loan
• Board approved $700 million share repurchase authorisation in April 2024
• Increased full year 2024 earnings and free cash flow outlook

Discussion of Segment Results

Performance Coatings first quarter 2024 net sales were $848 million, flat relative to the prior year period. Refinish net sales grew 4% year-over-year driven by positive price-mix and a strong contribution from the André Koch acquisition that closed in the fourth quarter 2023. Industrial net sales decreased year-over-year due to softer market activity and the prioritization of higher margin business.

Performance Coatings generated a first quarter record Adjusted EBITDA of $196 million in the current period compared to $169 million in the prior year period, with associated margins of 23.1% and 20.0%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven by variable cost deflation and Refinish net sales growth.

Mobility Coatings first quarter 2024 net sales were $446 million, up 2% from the prior year period. Light Vehicle net sales improved by 4% year-over-year, driven by strong volume growth in China. Price and product mix was roughly flat in Light Vehicle despite modest headwinds from raw material indexed contracts. Commercial Vehicle net sales decreased by 4% year-over-year driven by lower Class 8 production, which was down 12% across North America and Latin America year-over-year.

The Mobility Coatings segment generated Adjusted EBITDA of $63 million in the first quarter compared to $44 million in the prior year period, with associated margins of 14.2% and 10.1%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven by raw material deflation and solid sales growth in Light Vehicle.

“This was another strong quarter for Axalta,” said Chris Villavarayan, Axalta’s CEO and President. “We are executing well and I am confident in our trajectory this year as we target record earnings for the second consecutive year. We also remain focused on driving strategic actions intended to accelerate long-term value creation and unlock earnings power. As a result, we are raising our full year 2024 Adjusted EBITDA, Adjusted EPS, and Free Cash Flow guidance.”

A full breakdown of results can be found here.