10/30/2024 | Press release | Distributed by Public on 10/30/2024 11:43
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | 2851 | 98-1073028 |
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
Common Shares, $1.00 par value | AXTA | New York Stock Exchange |
(Title of class) | (Trading symbol) | (Exchange on which registered) |
PART I
|
Financial Information
|
|
ITEM 1.
|
Financial Statements (Unaudited)
|
3
|
Condensed Consolidated Statements of Operations
|
3
|
|
Condensed Consolidated Statements of Comprehensive Income
|
4
|
|
Condensed Consolidated Balance Sheets
|
5
|
|
Condensed Consolidated Statements of Changes in Shareholders' Equity
|
6
|
|
Condensed Consolidated Statements of Cash Flows
|
8
|
|
Notes to Condensed Consolidated Financial Statements
|
9
|
|
ITEM 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
26
|
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
40
|
ITEM 4.
|
Controls and Procedures
|
40
|
PART II
|
Other Information
|
|
ITEM 1.
|
Legal Proceedings
|
41
|
ITEM 1A.
|
Risk Factors
|
41
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
41
|
ITEM 3.
|
Defaults Upon Senior Securities
|
41
|
ITEM 4.
|
Mine Safety Disclosures
|
41
|
ITEM 5.
|
Other Information
|
41
|
ITEM 6.
|
Exhibits
|
42
|
Signatures
|
43
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Net sales | $ | 1,320 | $ | 1,309 | $ | 3,965 | $ | 3,887 |
Cost of goods sold | 858 | 886 | 2,614 | 2,692 | ||||
Selling, general and administrative expenses | 211 | 209 | 631 | 625 | ||||
Other operating charges | 15 | 13 | 78 | 22 | ||||
Research and development expenses | 19 | 18 | 55 | 56 | ||||
Amortization of acquired intangibles | 24 | 20 | 68 | 66 | ||||
Income from operations | 193 | 163 | 519 | 426 | ||||
Interest expense, net | 54 | 55 | 158 | 158 | ||||
Other (income) expense, net | (3) | 5 | 4 | 15 | ||||
Income before income taxes | 142 | 103 | 357 | 253 | ||||
Provision for income taxes | 40 | 30 | 103 | 58 | ||||
Net income | 102 | 73 | 254 | 195 | ||||
Less: Net income attributable to noncontrolling interests | 1 | 1 | - | 1 | ||||
Net income attributable to common shareholders | $ | 101 | $ | 72 | $ | 254 | $ | 194 |
Basic net income per share | $ | 0.46 | $ | 0.33 | $ | 1.15 | $ | 0.88 |
Diluted net income per share | $ | 0.46 | $ | 0.33 | $ | 1.15 | $ | 0.87 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Net income | $ | 102 | $ | 73 | $ | 254 | $ | 195 |
Other comprehensive income (loss), before tax: | ||||||||
Foreign currency translation adjustments | 74 | (67) | 1 | (21) | ||||
Unrealized loss on derivatives | (2) | (1) | (2) | (2) | ||||
Unrealized gain on pension and other benefit plan obligations | - | - | 2 | 1 | ||||
Other comprehensive income (loss), before tax | 72 | (68) | 1 | (22) | ||||
Income tax benefit related to items of other comprehensive income | (4) | - | (2) | - | ||||
Other comprehensive income (loss), net of tax | 76 | (68) | 3 | (22) | ||||
Comprehensive income | 178 | 5 | 257 | 173 | ||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | 2 | - | 1 | (1) | ||||
Comprehensive income attributable to common shareholders | $ | 176 | $ | 5 | $ | 256 | $ | 174 |
September 30, 2024 | December 31, 2023 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 567 | $ | 700 |
Restricted cash | 4 | 3 | ||
Accounts and notes receivable, net | 1,298 | 1,260 | ||
Inventories | 818 | 741 | ||
Prepaid expenses and other current assets | 151 | 117 | ||
Total current assets | 2,838 | 2,821 | ||
Property, plant and equipment, net | 1,188 | 1,204 | ||
Goodwill | 1,718 | 1,591 | ||
Identifiable intangibles, net | 1,207 | 1,130 | ||
Other assets | 549 | 526 | ||
Total assets | $ | 7,500 | $ | 7,272 |
Liabilities, Shareholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 708 | $ | 725 |
Current portion of borrowings | 20 | 26 | ||
Other accrued liabilities | 694 | 677 | ||
Total current liabilities | 1,422 | 1,428 | ||
Long-term borrowings | 3,505 | 3,478 | ||
Accrued pensions | 244 | 252 | ||
Deferred income taxes | 163 | 162 | ||
Other liabilities | 215 | 179 | ||
Total liabilities | 5,549 | 5,499 | ||
Commitments and contingent liabilities (Note 6) | ||||
Shareholders' equity: | ||||
Common shares, $1.00 par, 1,000.0 shares authorized, 254.4 and 253.7 shares issued at September 30, 2024 and December 31, 2023, respectively
|
254 | 254 | ||
Capital in excess of par | 1,590 | 1,568 | ||
Retained earnings | 1,540 | 1,286 | ||
Treasury shares, at cost, 36.4 and 33.6 shares at September 30, 2024 and December 31, 2023, respectively
|
(1,037) | (937) | ||
Accumulated other comprehensive loss | (442) | (444) | ||
Total Axalta shareholders' equity | 1,905 | 1,727 | ||
Noncontrolling interests | 46 | 46 | ||
Total shareholders' equity | 1,951 | 1,773 | ||
Total liabilities and shareholders' equity | $ | 7,500 | $ | 7,272 |
Common Stock | |||||||||||||||
Number of Shares | Par/Stated Value | Capital In Excess Of Par | Retained Earnings | Treasury Shares, at cost | Accumulated Other Comprehensive Loss | Non controlling Interests | Total | ||||||||
Balance at December 31, 2023 | 220.1 | $ | 254 | $ | 1,568 | $ | 1,286 | $ | (937) | $ | (444) | $ | 46 | $ | 1,773 |
Comprehensive income: | |||||||||||||||
Net income | - | - | - | 41 | - | - | (2) | 39 | |||||||
Long-term employee benefit plans, net of tax of $0 million
|
- | - | - | - | - | 1 | - | 1 | |||||||
Foreign currency translation, net of tax of $1 million
|
- | - | - | - | - | (45) | - | (45) | |||||||
Total comprehensive income (loss) | - | - | - | 41 | - | (44) | (2) | (5) | |||||||
Recognition of stock-based compensation | - | - | 6 | - | - | - | - | 6 | |||||||
Shares issued under compensation plans | 0.5 | - | 1 | - | - | - | - | 1 | |||||||
Balance at March 31, 2024 | 220.6 | $ | 254 | $ | 1,575 | $ | 1,327 | $ | (937) | $ | (488) | $ | 44 | $ | 1,775 |
Comprehensive income: | |||||||||||||||
Net income | - | - | - | 112 | - | - | 1 | 113 | |||||||
Long-term employee benefit plans, net of tax of $0 million
|
- | - | - | - | - | 1 | - | 1 | |||||||
Foreign currency translation, net of tax of $1 million
|
- | - | - | - | - | (30) | - | (30) | |||||||
Total comprehensive income (loss) | - | - | - | 112 | - | (29) | 1 | 84 | |||||||
Recognition of stock-based compensation | - | - | 8 | - | - | - | 8 | ||||||||
Shares issued under compensation plans | 0.1 | - | 1 | - | - | - | - | 1 | |||||||
Common stock purchases | (1.4) | - | - | - | (50) | - | - | (50) | |||||||
Balance at June 30, 2024 | 219.3 | $ | 254 | $ | 1,584 | $ | 1,439 | $ | (987) | $ | (517) | $ | 45 | $ | 1,818 |
Comprehensive income: | |||||||||||||||
Net income | - | - | - | 101 | - | - | 1 | 102 | |||||||
Net realized and unrealized loss on derivatives, net of tax benefit of $0 million
|
- | - | - | - | - | (2) | - | (2) | |||||||
Foreign currency translation, net of tax benefit of $4 million
|
- | - | - | - | - | 77 | 1 | 78 | |||||||
Total comprehensive income | - | - | - | 101 | - | 75 | 2 | 178 | |||||||
Recognition of stock-based compensation | - | - | 7 | - | - | - | - | 7 | |||||||
Shares issued under compensation plans | 0.1 | - | (1) | - | - | - | - | (1) | |||||||
Common stock purchases | (1.4) | - | - | - | (50) | - | - | (50) | |||||||
Dividends declared to non-controlling interest | - | - | - | - | - | - | (1) | (1) | |||||||
Balance at September 30, 2024 | 218.0 | $ | 254 | $ | 1,590 | $ | 1,540 | $ | (1,037) | $ | (442) | $ | 46 | $ | 1,951 |
Common Stock | |||||||||||||||
Number of Shares | Par/Stated Value | Capital In Excess Of Par | Retained Earnings | Treasury Shares, at cost | Accumulated Other Comprehensive Loss | Non controlling Interests | Total | ||||||||
Balance at December 31, 2022 | 220.6 | $ | 252 | $ | 1,537 | $ | 1,019 | $ | (887) | $ | (467) | $ | 46 | $ | 1,500 |
Comprehensive income: | |||||||||||||||
Net income | - | - | - | 61 | - | - | - | 61 | |||||||
Net realized and unrealized loss on derivatives, net of tax of $0 million
|
- | - | - | - | - | (2) | - | (2) | |||||||
Foreign currency translation, net of tax of $0 million
|
- | - | - | - | - | 46 | (1) | 45 | |||||||
Total comprehensive income | - | - | - | 61 | - | 44 | (1) | 104 | |||||||
Recognition of stock-based compensation | - | - | 6 | - | - | - | - | 6 | |||||||
Shares issued under compensation plans | 0.9 | 1 | 4 | - | - | - | - | 5 | |||||||
Balance at March 31, 2023 | 221.5 | $ | 253 | $ | 1,547 | $ | 1,080 | $ | (887) | $ | (423) | $ | 45 | $ | 1,615 |
Comprehensive income: | |||||||||||||||
Net income | - | - | - | 61 | - | - | - | 61 | |||||||
Net realized and unrealized gain on derivatives, net of tax of $1 million
|
- | - | - | - | - | - | - | - | |||||||
Long-term employee benefit plans, net of tax of $0 million
|
- | - | - | - | - | 1 | - | 1 | |||||||
Foreign currency translation, net of tax benefit of $0 million
|
- | - | - | - | - | 2 | - | 2 | |||||||
Total comprehensive income | - | - | - | 61 | - | 3 | - | 64 | |||||||
Recognition of stock-based compensation | - | - | 8 | - | - | - | - | 8 | |||||||
Shares issued under compensation plans | 0.2 | - | 2 | - | - | - | - | 2 | |||||||
Balance at June 30, 2023 | 221.7 | $ | 253 | $ | 1,557 | $ | 1,141 | $ | (887) | $ | (420) | $ | 45 | $ | 1,689 |
Comprehensive income (loss): | |||||||||||||||
Net income | - | - | - | 72 | - | - | 1 | 73 | |||||||
Foreign currency translation, net of tax of $0 million
|
- | - | - | - | - | (67) | (1) | (68) | |||||||
Total comprehensive income (loss) | - | - | - | 72 | - | (67) | - | 5 | |||||||
Recognition of stock-based compensation | - | - | 5 | - | - | - | - | 5 | |||||||
Shares issued under compensation plans | 0.2 | 1 | (1) | - | - | - | - | - | |||||||
Common stock purchases | (1.8) | - | - | - | (50) | - | - | (50) | |||||||
Balance at September 30, 2023 | 220.1 | $ | 254 | $ | 1,561 | $ | 1,213 | $ | (937) | $ | (487) | $ | 45 | $ | 1,649 |
Nine Months Ended September 30, |
||||
2024 | 2023 | |||
Operating activities: | ||||
Net income | $ | 254 | $ | 195 |
Adjustment to reconcile net income to cash provided by operating activities: | ||||
Depreciation and amortization | 207 | 207 | ||
Amortization of deferred financing costs and original issue discount | 6 | 7 | ||
Debt extinguishment and refinancing-related costs | 3 | 7 | ||
Deferred income taxes | 10 | (8) | ||
Realized and unrealized foreign exchange losses, net | 12 | 21 | ||
Stock-based compensation | 21 | 19 | ||
Impairment charges | - | 15 | ||
Interest income on swaps designated as net investment hedges | (10) | (9) | ||
Other non-cash, net | 5 | 25 | ||
Changes in operating assets and liabilities: | ||||
Trade accounts and notes receivable | (16) | (213) | ||
Inventories | (54) | 66 | ||
Prepaid expenses and other assets | (106) | (68) | ||
Accounts payable | (18) | 17 | ||
Other accrued liabilities | (2) | 9 | ||
Other liabilities | 30 | (1) | ||
Cash provided by operating activities | 342 | 289 | ||
Investing activities: | ||||
Acquisitions, net of cash acquired | (290) | - | ||
Purchase of property, plant and equipment | (78) | (105) | ||
Interest proceeds on swaps designated as net investment hedges | 10 | 9 | ||
Settlement proceeds on swaps designated as net investment hedges | - | 29 | ||
Payments for loans to customers | (21) | (1) | ||
Other investing activities, net | 5 | 3 | ||
Cash used for investing activities | (374) | (65) | ||
Financing activities: | ||||
Proceeds from short-term borrowings | - | 9 | ||
Proceeds from long-term borrowings | 292 | 197 | ||
Payments on short-term borrowings | (5) | (40) | ||
Payments on long-term borrowings | (273) | (359) | ||
Financing-related costs | (5) | (9) | ||
Purchases of common stock | (100) | (50) | ||
Net cash flows associated with stock-based awards | 1 | 7 | ||
Deferred acquisition-related consideration | - | (8) | ||
Other financing activities, net | - | 1 | ||
Cash used for financing activities | (90) | (252) | ||
Decrease in cash | (122) | (28) | ||
Effect of exchange rate changes on cash | (10) | (19) | ||
Cash at beginning of period | 703 | 655 | ||
Cash at end of period | $ | 571 | $ | 608 |
Cash at end of period reconciliation: | ||||
Cash and cash equivalents | $ | 567 | $ | 606 |
Restricted cash | 4 | 2 | ||
Cash at end of period | $ | 571 | $ | 608 |
Note | Page |
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
10
|
(2) REVENUE
|
11
|
(3) ACQUISITIONS
|
11
|
(4) GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
|
12
|
(5) RESTRUCTURING
|
13
|
(6) COMMITMENTS AND CONTINGENCIES
|
13
|
(7) LONG-TERM EMPLOYEE BENEFITS
|
14
|
(8) STOCK-BASED COMPENSATION
|
15
|
(9) OTHER (INCOME) EXPENSE, NET
|
16
|
(10) INCOME TAXES
|
16
|
(11) NET INCOME PER COMMON SHARE
|
17
|
(12) ACCOUNTS AND NOTES RECEIVABLE, NET
|
17
|
(13) INVENTORIES
|
17
|
(14) PROPERTY, PLANT AND EQUIPMENT, NET
|
18
|
(15) SUPPLIER FINANCE PROGRAMS
|
18
|
(16) BORROWINGS
|
19
|
(17) FINANCIAL INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
|
20
|
(18) SEGMENTS
|
22
|
(19) ACCUMULATED OTHER COMPREHENSIVE LOSS
|
25
|
July 2, 2024 | ||
Cash | $ | 1 |
Accounts and notes receivable, net | 17 | |
Inventories | 23 | |
Prepaid expenses and other current assets, net | 1 | |
Property, plant and equipment, net | 9 | |
Identifiable intangible assets | 144 | |
Other assets | 5 | |
Accounts payable and other accrued liabilities | (6) | |
Other liabilities | (6) | |
Deferred income taxes | (7) | |
Net assets before goodwill from acquisition | 181 | |
Goodwill from acquisition | 109 | |
Net assets acquired | $ | 290 |
Performance Coatings |
Mobility Coatings |
Total | ||||
Balance at December 31, 2023 | $ | 1,513 | $ | 78 | $ | 1,591 |
Goodwill from acquisitions | 109 | - | 109 | |||
Foreign currency translation | 18 | - | 18 | |||
Balance at September 30, 2024 | $ | 1,640 | $ | 78 | $ | 1,718 |
September 30, 2024 |
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
Weighted average amortization periods (years) |
|||
Technology | $ | 161 | $ | (92) | $ | 69 | 11.1 |
Trademarks-indefinite-lived | 264 | - | 264 | Indefinite | |||
Trademarks-definite-lived | 160 | (69) | 91 | 14.0 | |||
Customer relationships | 1,312 | (529) | 783 | 19.1 | |||
Total | $ | 1,897 | $ | (690) | $ | 1,207 |
December 31, 2023 |
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
Weighted average amortization periods (years) |
|||
Technology | $ | 162 | $ | (88) | $ | 74 | 11.2 |
Trademarks-indefinite-lived | 264 | - | 264 | Indefinite | |||
Trademarks-definite-lived | 142 | (60) | 82 | 14.5 | |||
Customer relationships | 1,194 | (484) | 710 | 19.0 | |||
Total | $ | 1,762 | $ | (632) | $ | 1,130 |
Remainder of 2024 | $ | 25 |
2025 | 97 | |
2026 | 97 | |
2027 | 96 | |
2028 | 82 | |
2029 | 78 |
2024 Activity | ||
Balance at December 31, 2023 | $ | 16 |
Expenses, net of changes to estimates | 65 | |
Payments made | (21) | |
Foreign currency translation | 1 | |
Balance at September 30, 2024 | $ | 61 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Components of net periodic benefit cost:
|
||||||||
Net periodic benefit cost: | ||||||||
Service cost | $ | 1 | $ | 1 | $ | 5 | $ | 4 |
Interest cost | 6 | 5 | 15 | 15 | ||||
Expected return on plan assets | (3) | (2) | (9) | (8) | ||||
Amortization of actuarial loss, net | - | - | 2 | - | ||||
Net periodic benefit cost | $ | 4 | $ | 4 | $ | 13 | $ | 11 |
Stock Options |
Awards (in millions) |
Weighted Average Exercise Price |
Aggregate Intrinsic Value (in millions) |
Weighted Average Remaining Contractual Life (years) |
||
Outstanding at January 1, 2024 | 0.5 | $ | 28.33 | |||
Exercised | (0.2) | $ | 27.58 | |||
Forfeited / Expired (1)
|
- | $ | 32.50 | |||
Outstanding at September 30, 2024
|
0.3 | $ | 28.69 | |||
Vested and expected to vest at September 30, 2024
|
0.3 | $ | 28.69 | $ | 2 | 2.63 |
Exercisable at September 30, 2024
|
0.3 | $ | 28.69 | $ | 2 | 2.63 |
Restricted Stock Units |
Units (in millions) |
Weighted Average Fair Value |
|
Outstanding at January 1, 2024 | 1.3 | $ | 28.71 |
Granted | 0.5 | $ | 32.51 |
Vested | (0.7) | $ | 28.20 |
Forfeited | (0.1) | $ | 29.67 |
Outstanding at September 30, 2024 | 1.0 | $ | 30.88 |
Performance Share Units |
Units (in millions) |
Weighted Average Fair Value |
|
Outstanding at January 1, 2024 | 0.8 | $ | 33.20 |
Granted | 0.4 | $ | 38.52 |
Vested (1)
|
- | $ | 29.53 |
Forfeited | (0.3) | $ | 31.26 |
Outstanding at September 30, 2024 | 0.9 | $ | 35.84 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Foreign exchange losses, net | $ | - | $ | 7 | $ | 8 | $ | 19 |
Debt extinguishment and refinancing-related costs (1)
|
- | 4 | 3 | 7 | ||||
Other miscellaneous income, net | (3) | (6) | (7) | (11) | ||||
Total | $ | (3) | $ | 5 | $ | 4 | $ | 15 |
Nine Months Ended September 30, |
||||
2024 | 2023 | |||
Effective Tax Rate | 28.9 | % | 22.9 | % |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
(In millions, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||
Net income to common shareholders | $ | 101 | $ | 72 | $ | 254 | $ | 194 |
Basic weighted average shares outstanding | 218.9 | 221.0 | 219.8 | 221.3 | ||||
Diluted weighted average shares outstanding | 219.9 | 221.9 | 220.8 | 222.1 | ||||
Net income per common share (1):
|
||||||||
Basic net income per share | $ | 0.46 | $ | 0.33 | $ | 1.15 | $ | 0.88 |
Diluted net income per share | $ | 0.46 | $ | 0.33 | $ | 1.15 | $ | 0.87 |
September 30, 2024 | December 31, 2023 | |||
Accounts receivable - trade, net (1)
|
$ | 1,068 | $ | 1,043 |
Notes receivable | 88 | 79 | ||
Other (2)
|
142 | 138 | ||
Total | $ | 1,298 | $ | 1,260 |
September 30, 2024 | December 31, 2023 | |||
Finished products | $ | 455 | $ | 405 |
Semi-finished products | 128 | 126 | ||
Raw materials | 204 | 182 | ||
Stores and supplies | 31 | 28 | ||
Total | $ | 818 | $ | 741 |
September 30, 2024 | December 31, 2023 | |||
Property, plant and equipment | $ | 2,507 | $ | 2,454 |
Accumulated depreciation | (1,319) | (1,250) | ||
Property, plant and equipment, net | $ | 1,188 | $ | 1,204 |
September 30, 2024 | December 31, 2023 | |||
2029 Dollar Term Loans | $ | 1,702 | $ | 1,786 |
Revolving Credit Facility | 105 | - | ||
2027 Dollar Senior Notes | 500 | 500 | ||
2029 Dollar Senior Notes | 700 | 700 | ||
2031 Dollar Senior Notes | 500 | 500 | ||
Short-term and other borrowings | 55 | 62 | ||
Unamortized original issue discount | (13) | (17) | ||
Unamortized deferred financing costs | (24) | (27) | ||
Total borrowings, net | 3,525 | 3,504 | ||
Less: | ||||
Short-term borrowings | 3 | 7 | ||
Current portion of long-term borrowings | 17 | 19 | ||
Long-term debt | $ | 3,505 | $ | 3,478 |
Remainder of 2024 | $ | 4 |
2025 | 21 | |
2026 | 21 | |
2027 | 521 | |
2028 | 22 | |
Thereafter | 2,973 | |
Total borrowings | 3,562 | |
Unamortized original issue discount | (13) | |
Unamortized deferred financing costs | (24) | |
Total borrowings, net | $ | 3,525 |
September 30, 2024 | December 31, 2023 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||
Assets: | ||||||||||||||||
Prepaid expenses and other current assets: | ||||||||||||||||
Cross-currency swaps (1)
|
$ | - | $ | 8 | $ | - | $ | 8 | $ | - | $ | 8 | $ | - | $ | 8 |
Other assets: | ||||||||||||||||
Investments in equity securities
|
1 | - | - | 1 | 1 | - | - | 1 | ||||||||
Liabilities: | ||||||||||||||||
Other accrued liabilities: | ||||||||||||||||
Interest rate swaps (1)
|
- | 1 | - | 1 | - | - | - | - | ||||||||
Cross-currency swaps (1)
|
- | 8 | - | 8 | - | 8 | - | 8 | ||||||||
Contingent consideration | - | - | 12 | 12 | - | - | 8 | 8 | ||||||||
Other liabilities: | ||||||||||||||||
Cross-currency swaps (1)
|
- | 35 | - | 35 | - | 38 | - | 38 | ||||||||
Long-term borrowings: | ||||||||||||||||
2029 Dollar Term Loans | - | 1,709 | - | 1,709 | - | 1,794 | - | 1,794 | ||||||||
2027 Dollar Senior Notes | - | 496 | - | 496 | - | 487 | - | 487 | ||||||||
2029 Dollar Senior Notes | - | 656 | - | 656 | - | 633 | - | 633 | ||||||||
2031 Dollar Senior Notes | - | 534 | - | 534 | - | 527 | - | 527 |
Fair Value Using Significant Unobservable Inputs (Level 3) |
||
Beginning balance at December 31, 2023
|
$ | 8 |
Change in fair value | 4 | |
Foreign currency translation | - | |
Ending balance at September 30, 2024
|
$ | 12 |
Three Months Ended September 30, |
|||||||||
2024 | 2023 | ||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of Loss (Gain) Recognized in Income on Derivatives | Net Amount of Loss Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | Net Amount of Gain Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | ||||
Interest rate swaps | Interest expense, net | $ | 3 | $ | - | $ | - | $ | - |
Cross-currency swaps
|
Interest expense, net | 34 | (3) | (14) | (2) |
Nine Months Ended September 30, |
|||||||||
2024 | 2023 | ||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of Loss (Gain) Recognized in Income on Derivatives | Net Amount of Loss (Gain) Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | Net Amount of Gain Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | ||||
Interest rate swaps | Interest expense, net | $ | 2 | $ | - | $ | (2) | $ | (3) |
Cross-currency swaps
|
Interest expense, net | (14) | (11) | - | (8) |
Derivatives Not Designated as Hedging Instruments under ASC 815 |
Location of Loss (Gain) Recognized in Income on Derivatives |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||
2024 | 2023 | 2024 | 2023 | ||||||
Foreign currency forward contracts | Other (income) expense, net | $ | - | $ | 4 | $ | (4) | $ | (3) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Net sales (1):
|
||||||||
Refinish | $ | 554 | $ | 529 | $ | 1,619 | $ | 1,547 |
Industrial | 323 | 327 | 993 | 1,012 | ||||
Total Net sales Performance Coatings | 877 | 856 | 2,612 | 2,559 | ||||
Light Vehicle | 340 | 342 | 1,036 | 1,001 | ||||
Commercial Vehicle | 103 | 111 | 317 | 327 | ||||
Total Net sales Mobility Coatings | 443 | 453 | 1,353 | 1,328 | ||||
Total Net sales | $ | 1,320 | $ | 1,309 | $ | 3,965 | $ | 3,887 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Segment Adjusted EBITDA (1):
|
||||||||
Performance Coatings | $ | 221 | $ | 200 | $ | 640 | $ | 550 |
Mobility Coatings | 70 | 61 | 201 | 151 | ||||
Total | 291 | 261 | 841 | 701 | ||||
Interest expense, net | 54 | 55 | 158 | 158 | ||||
Depreciation and amortization | 71 | 71 | 207 | 207 | ||||
Debt extinguishment and refinancing-related costs (a)
|
- | 4 | 3 | 7 | ||||
Termination benefits and other employee-related costs(b)
|
11 | 12 | 67 | 14 | ||||
Acquisition and divestiture-related costs (c)
|
4 | 1 | 8 | 1 | ||||
Site closure costs (d)
|
- | 2 | 1 | 4 | ||||
Impairment charges (e)
|
- | - | - | 15 | ||||
Foreign exchange remeasurement losses (f)
|
- | 7 | 8 | 19 | ||||
Long-term employee benefit plan adjustments (g)
|
3 | 3 | 8 | 7 | ||||
Stock-based compensation (h)
|
7 | 5 | 21 | 19 | ||||
Environmental charge (i)
|
- | - | 4 | - | ||||
Other adjustments (j)
|
(1) | (2) | (1) | (3) | ||||
Income before income taxes | $ | 142 | $ | 103 | $ | 357 | $ | 253 |
(1) | The primary measure of segment operating performance is Segment Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation, amortization and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Segment Adjusted EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company's core operating performance, which represents EBITDA adjusted for the select items referred to above. |
(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 nine months ended September 30, 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 costs for 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. |
Unrealized Currency Translation Adjustments |
Pension Adjustments |
Unrealized Loss on Derivatives |
Accumulated Other Comprehensive (Loss) Income |
|||||
Balance, December 31, 2023
|
$ | (374) | $ | (70) | $ | - | $ | (444) |
Current year deferrals to AOCI | (41) | - | - | (41) | ||||
Reclassifications from AOCI to Net income | (4) | 1 | - | (3) | ||||
Net Change | (45) | 1 | - | (44) | ||||
Balance, March 31, 2024
|
(419) | (69) | - | (488) | ||||
Current year deferrals to AOCI | (26) | - | - | (26) | ||||
Reclassifications from AOCI to Net income | (4) | 1 | - | (3) | ||||
Net Change | (30) | 1 | - | (29) | ||||
Balance, June 30, 2024
|
(449) | (68) | - | (517) | ||||
Current year deferrals to AOCI | 80 | - | (2) | 78 | ||||
Reclassifications from AOCI to Net income
|
(3) | - | - | (3) | ||||
Net Change | 77 | - | (2) | 75 | ||||
Balance, September 30, 2024
|
$ | (372) | $ | (68) | $ | (2) | $ | (442) |
Unrealized Currency Translation Adjustments |
Pension Adjustments |
Unrealized Gain (Loss) on Derivatives |
Accumulated Other Comprehensive (Loss) Income |
|||||
Balance, December 31, 2022
|
$ | (434) | $ | (36) | $ | 3 | $ | (467) |
Current year deferrals to AOCI | 50 | - | 1 | 51 | ||||
Reclassifications from AOCI to Net income | (4) | - | (3) | (7) | ||||
Net Change | 46 | - | (2) | 44 | ||||
Balance, March 31, 2023
|
(388) | (36) | 1 | (423) | ||||
Current year deferrals to AOCI | 4 | 1 | 1 | 6 | ||||
Reclassifications from AOCI to Net income | (2) | - | (1) | (3) | ||||
Net Change | 2 | 1 | - | 3 | ||||
Balance, June 30, 2023
|
(386) | (35) | 1 | (420) | ||||
Current year deferrals to AOCI | (65) | - | - | (65) | ||||
Reclassifications from AOCI to Net income
|
(2) | - | - | (2) | ||||
Net Change | (67) | - | - | (67) | ||||
Balance, September 30, 2023
|
$ | (453) | $ | (35) | $ | 1 | $ | (487) |
(In millions) |
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | ||||||||
2024 | 2023 | % change | 2024 | 2023 | % change | |||||||
Performance Coatings | ||||||||||||
Refinish | $ | 554 | $ | 529 | 4.7 | % | $ | 1,619 | $ | 1,547 | 4.6 | % |
Industrial | 323 | 327 | (1.3) | % | 993 | 1,012 | (1.8) | % | ||||
Total Net sales Performance Coatings | 877 | 856 | 2.4 | % | 2,612 | 2,559 | 2.1 | % | ||||
Mobility Coatings | ||||||||||||
Light Vehicle | 340 | 342 | (0.4) | % | 1,036 | 1,001 | 3.6 | % | ||||
Commercial Vehicle | 103 | 111 | (7.7) | % | 317 | 327 | (3.1) | % | ||||
Total Net sales Mobility Coatings | 443 | 453 | (2.2) | % | 1,353 | 1,328 | 1.9 | % | ||||
Total Net sales | $ | 1,320 | $ | 1,309 | 0.8 | % | $ | 3,965 | $ | 3,887 | 2.0 | % |
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Net sales
|
$ | 1,320 | $ | 1,309 | $ | 11 | 0.8 | % | $ | 3,965 | $ | 3,887 | $ | 78 | 2.0 | % |
Volume effect | 0.6 | % | 1.8 | % | ||||||||||||
Impact of CoverFlexx | 1.6 | % | 0.5 | % | ||||||||||||
Price/Mix effect | (1.1) | % | (0.2) | % | ||||||||||||
Exchange rate effect | (0.3) | % | (0.1) | % |
Net sales primarily increased due to the following:
|
n Contributions from the CoverFlexx acquisition
|
n Higher sales volumes including the contribution from the André Koch acquisition
|
Partially offset by:
|
n Lower average selling prices and product mix driven by Mobility Coatings
|
n Unfavorable impacts of currency translation driven by fluctuations of the Mexican Peso and Brazilian Real, partially offset by fluctuations of the Euro, Chinese Yuan and British Pound, compared to the U.S. Dollar
|
Net sales increased primarily due to the following:
|
n Higher sales volumes including the contribution from the André Koch acquisition and partially driven by lower volumes in the prior year period in connection with production constraints associated with our multi-year enterprise resource planning ("ERP") system implementation in North America
|
n Contributions from the CoverFlexx acquisition
|
Partially offset by:
|
n Lower average selling prices and product mix driven by Mobility Coatings, partially offset by higher average selling prices and product mix in Performance Coatings
|
n Impacts of currency translation were immaterial driven by offsetting currency fluctuations
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Cost of sales | $ | 858 | $ | 886 | $ | (28) | (3.2) | % | $ | 2,614 | $ | 2,692 | $ | (78) | (2.9) | % |
% of net sales | 65.0 | % | 67.7 | % | 65.9 | % | 69.3 | % |
Cost of sales decreased primarily due to the following:
|
n Lower variable input costs as a result of deflationary benefits
|
n Decreased costs of $13 million related to our multi-year ERP system implementation and productivity programs
|
n Lower operating expenses
|
n Favorable impacts of currency translation of 0.5% driven by fluctuations of the Mexican Peso and Brazilian Real, partially offset by fluctuations of the Euro and Chinese Yuan, compared to the U.S. Dollar
|
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing
|
Partially offset by:
|
n Higher sales volumes including contributions from the André Koch and CoverFlexx acquisitions
|
n Higher operating expenses due primarily to increased labor costs
|
Cost of sales as a percentage of net sales decreased primarily due to the following:
|
n Lower variable input costs as a result of deflationary benefits
|
n Decreased costs of $13 million related to our multi-year ERP system implementation and productivity programs
|
n Lower operating expenses
|
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing
|
Partially offset by:
|
n Lower average selling prices and product mix driven by Mobility Coatings
|
Cost of sales decreased primarily due to the following:
|
n Lower variable input costs as a result of deflationary benefits
|
n Decreased costs of $23 million related to our multi-year ERP system implementation and productivity programs
|
n $8 million impairment charge in the prior year due to the decision to demolish assets at a previously closed manufacturing site
|
n Favorable impacts of currency translation of 0.2% driven by fluctuations of the Chinese Yuan and Brazilian Real, partially offset by fluctuations of the Euro, British Pound and Polish Zloty, compared to the U.S. Dollar
|
n Decreased expense of $3 million associated with utilization at certain manufacturing sites
|
Partially offset by:
|
n Higher sales volumes including contributions from the André Koch and CoverFlexx acquisitions
|
n Higher operating expenses due primarily to increased labor costs
|
Cost of sales as a percentage of net sales decreased primarily due to the following:
|
n Lower variable input costs as a result of deflationary benefits
|
n Decreased costs of $23 million related to our multi-year ERP system implementation and productivity programs
|
n $8 million impairment charge in the prior year due to the decision to demolish assets at a previously closed manufacturing site
|
n Decreased expense of $3 million associated with utilization at certain manufacturing sites
|
Partially offset by:
|
n Higher operating expenses due primarily to increased labor costs
|
n Lower average selling prices and product mix driven by Mobility Coatings, partially offset by higher average selling prices and product mix in Performance Coatings
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Selling, general and administrative expenses | $ | 211 | $ | 209 | $ | 2 | 1.0 | % | $ | 631 | $ | 625 | $ | 6 | 1.0 | % |
Selling, general and administrative expenses increased primarily due to the following:
|
n Higher operating expenses due primarily to increased labor costs
|
Partially offset by:
|
n Decrease of $5 million in commissions resulting from changes to certain contractual arrangements
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Selling, general and administrative expenses increased primarily due to the following:
|
n Higher operating expenses due primarily to increased labor costs
|
Partially offset by:
|
n Decrease of $16 million in commissions resulting from changes to certain contractual arrangements
|
n Favorable impacts of currency translation of 0.2% driven by fluctuations of the Chinese Yuan compared to the U.S. Dollar
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Other operating charges | $ | 15 | $ | 13 | $ | 2 | 15.4 | % | $ | 78 | $ | 22 | $ | 56 | 254.5 | % |
Other operating charges increased primarily due to the following:
|
n Increase of $9 million in termination benefits and other employee-related costs associated with the 2024 Transformation Initiative
|
n Increase of $2 million in acquisition-related costs
|
Partially offset by:
|
n $10 million third-party consultant costs in the prior year period related to productivity programs
|
Other operating charges increased primarily due to the following:
|
n Increase of $63 million in termination benefits and other employee-related costs associated with the 2024 Transformation Initiative
|
n Increase of $6 million in acquisition-related costs
|
n $4 million in environmental remediation costs recognized in the current year period
|
Partially offset by:
|
n $10 million third-party consultant costs in the prior year period related to productivity programs
|
n $7 million impairment charge recognized in the prior year period related to the exit of a non-core business category in the Mobility Coatings segment
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Research and development expenses | $ | 19 | $ | 18 | $ | 1 | 5.6 | % | $ | 55 | $ | 56 | $ | (1) | (1.8) | % |
Research and development expenses remained generally consistent:
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Research and development expenses remained generally consistent:
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Amortization of acquired intangibles | $ | 24 | $ | 20 | $ | 4 | 20.0 | % | $ | 68 | $ | 66 | $ | 2 | 3.0 | % |
Amortization of acquired intangibles increased due to the following:
|
n Increased amortization of $3 million associated with assets acquired in the past 12 months
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Amortization of acquired intangibles increased primarily due to the following:
|
n Increased amortization of $6 million associated with assets acquired in the past 12 months
|
Partially offset by:
|
n Reduced amortization of $5 million from certain intangible assets reaching the end of their useful lives during 2023 and 2024, primarily relating to intangibles from the 2013 DuPont Performance Coatings acquisition
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Interest expense, net | $ | 54 | $ | 55 | $ | (1) | (1.8) | % | $ | 158 | $ | 158 | $ | - | - | % |
Interest expense, net remained generally consistent primarily due to the following:
|
n Favorable impact of $6 million attributable to lower principal on our 2029 Dollar Term Loans, primarily as a result of $125 million of prepayments during the twelve months ended September 30, 2024, partially offset by the increased variable interest rate
|
•Favorable impact of $5 million attributable to the redemption in November 2023 of our Euro-denominated Senior Notes due in 2025
|
Nearly entirely offset by:
|
•Unfavorable impact of $9 million attributable to our 2031 Dollar Senior Notes which were issued in November 2023
|
•Unfavorable impact of $2 million attributable to the borrowings against our Revolving Credit Facility during June 2024
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Interest expense, net remained generally consistent primarily due to the following:
|
n Favorable impact of $15 million attributable to lower principal on our 2029 Dollar Term Loans, primarily as a result of $125 million of prepayments during the twelve months ended September 30, 2024, partially offset by the increased variable interest rate
|
•Favorable impact of $15 million attributable to the redemption in November 2023 of our Euro-denominated Senior Notes due in 2025
|
n Impacts of currency translation were immaterial when compared to the prior year period
|
Offset by:
|
•Unfavorable impact of $28 million attributable to our 2031 Dollar Senior Notes which were issued in November 2023
|
•Unfavorable impact of $2 million attributable to the borrowings against our Revolving Credit Facility during June 2024
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Other (income) expense, net | $ | (3) | $ | 5 | $ | (8) | 160.0 | % | $ | 4 | $ | 15 | $ | (11) | 73.3 | % |
Other (income) expense, net changed due to the following:
|
n Favorable impact of foreign exchange gains and losses of $7 million when compared with the prior year period, including expenses from the remeasurement of net monetary assets denominated in the Argentinian Peso and Turkish Lira due to a significant devaluation in the prior year period
|
n $4 million debt extinguishment and refinancing-related costs recognized in the prior year period as part of the repricing of our 2029 Dollar Term Loans
|
Partially offset by:
|
n Decreased miscellaneous income, net of $3 million
|
Other expense, net decreased due to the following:
|
n Favorable impact of foreign exchange gains and losses of $11 million when compared with the prior year period, including expenses from the remeasurement of net monetary assets denominated in the Argentinian Peso and Turkish Lira due to a significant devaluation in the prior year period.
|
n Decreased debt extinguishment and refinancing-related costs of $4 million driven by $3 million in expenses for prepayments and repricing of our 2029 Dollar Term Loans in the current year compared to the $7 million in expenses for prepayments and repricing on our 2029 Dollar Term Loans in the prior year period
|
Partially offset by:
|
n Decreased miscellaneous income, net of $4 million
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2024 | 2023 | 2024 | 2023 | |||||
Income before income taxes | $ | 142 | $ | 103 | $ | 357 | $ | 253 |
Provision for income taxes | 40 | 30 | 103 | 58 | ||||
Statutory U.S. Federal income tax rate
|
21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % |
Effective tax rate
|
28.6 | % | 28.6 | % | 28.9 | % | 22.9 | % |
Effective tax rate vs. statutory U.S. Federal income tax rate | 7.6 | % | 7.6 | % | 7.9 | % | 1.9 | % |
(Favorable) Unfavorable Impact | ||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
Items impacting the effective tax rate vs. statutory U.S. federal income tax rate
|
2024 | 2023 | 2024 | 2023 | ||||
Earnings generated in jurisdictions where the statutory rate is different from the U.S. Federal rate (1)
|
$ | (2) | $ | (8) | $ | (17) | $ | (23) |
Changes in valuation allowance (2)
|
(30) | 7 | - | 20 | ||||
Foreign exchange losses (gains), net | 7 | 1 | (1) | 1 | ||||
Non-deductible expenses and interest
|
2 | 1 | 4 | 3 | ||||
Changes in unrecognized tax benefits | 7 | 4 | 11 | (1) | ||||
Other - net (3)
|
24 | 1 | 22 | 1 |
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Net sales
|
$ | 877 | $ | 856 | $ | 21 | 2.4 | % | $ | 2,612 | $ | 2,559 | $ | 53 | 2.1 | % |
Impact of CoverFlexx | 2.4 | % | 0.8 | % | ||||||||||||
Volume effect | (0.2) | % | 0.7 | % | ||||||||||||
Price/Mix effect | - | % | 0.5 | % | ||||||||||||
Exchange rate effect | 0.2 | % | 0.1 | % | ||||||||||||
Adjusted EBITDA | $ | 221 | $ | 200 | $ | 21 | 11.0 | % | $ | 640 | $ | 550 | $ | 90 | 16.3 | % |
Adjusted EBITDA Margin | 25.3 | % | 23.3 | % | 24.5 | % | 21.5 | % |
Net sales increased primarily due to the following:
|
n Contributions from the CoverFlexx acquisition
|
n Favorable impacts of currency translation due primarily to fluctuations of the Euro and British Pound, partially offset by fluctuations of the Mexican Peso and Brazilian Real, compared to the U.S. Dollar
|
Partially offset by:
|
n Lower sales volumes driven by unfavorable macro trends, partially offset by new body shop wins
|
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:
|
n Decreased variable input costs due to deflationary benefits
|
n Decreased costs of $8 million related to our multi-year ERP system implementation and productivity programs
|
n Contributions from the CoverFlexx acquisition
|
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing
|
Partially offset by:
|
n Lower sales volumes driven by unfavorable macro trends, partially offset by new body shop wins
|
n Less effective coverage of fixed costs as a result of lower sales volume
|
Net sales increased primarily due to the following:
|
n Contributions from the CoverFlexx acquisition
|
n Higher sales volumes including the contribution from the André Koch acquisition, new body shop wins and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America
|
n Higher average selling prices and product mix driven by the refinish end-market
|
n Impacts of currency translation were immaterial driven by offsetting currency fluctuations
|
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:
|
n Decreased variable input costs due to deflationary benefits
|
n Decreased costs of $15 million related to our multi-year ERP system implementation and productivity programs
|
n Higher average selling prices and product mix driven by the refinish end-market
|
n Contributions from the CoverFlexx acquisition
|
n Decrease of $4 million in inventory charges related to obsolescence, quality and yield loss in manufacturing
|
Three Months Ended September 30, |
2024 vs 2023 |
Nine Months Ended September 30, |
2024 vs 2023 | |||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||
Net sales | $ | 443 | $ | 453 | $ | (10) | (2.2) | % | $ | 1,353 | $ | 1,328 | $ | 25 | 1.9 | % |
Volume effect | 2.1 | % | 3.8 | % | ||||||||||||
Price/Mix effect | (3.0) | % | (1.4) | % | ||||||||||||
Exchange rate effect | (1.3) | % | (0.5) | % | ||||||||||||
Adjusted EBITDA | $ | 70 | $ | 61 | $ | 9 | 14.3 | % | $ | 201 | $ | 151 | $ | 50 | 33.8 | % |
Adjusted EBITDA Margin | 15.7 | % | 13.4 | % | 14.9 | % | 11.3 | % |
Net sales decreased primarily due to the following:
|
n Lower average selling prices and product mix driven by contractual raw material pass-through impacts in the light vehicle end-market
|
n Unfavorable impacts of currency translation driven by fluctuations of the Brazilian Real and Mexican Peso, partially offset by fluctuations of the Euro and Chinese Yuan, compared to the U.S. Dollar
|
Partially offset by:
|
n Higher sales volumes driven by the light vehicle end-market
|
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:
|
n Decreased variable input costs due to deflationary benefits
|
n Decreased costs of $5 million related to our multi-year ERP system implementation and productivity programs
|
n Higher sales volumes driven by new business wins in the current period
|
Partially offset by:
|
n Lower average selling prices and product mix driven by contractual raw material pass-through impacts in the light vehicle end-market
|
Net sales increased primarily due to the following:
|
n Higher sales volumes partially driven by new business wins in the current period and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America
|
Partially offset by:
|
n Lower average selling prices and product mix across both end-markets, including raw material pass-through impacts in the light vehicle end-market
|
n Unfavorable impacts of currency translation driven by fluctuations of the Brazilian Real and Chinese Yuan, partially offset by fluctuations of the Euro, compared to the U.S. Dollar
|
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:
|
n Decreased variable input costs due to deflationary benefits
|
n Higher sales volumes partially driven by new business wins in the current period and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America
|
n Decreased costs of $8 million driven by our multi-year ERP system implementation and productivity programs
|
n Decreased expense of $2 million associated with utilization at certain manufacturing sites
|
Partially offset by:
|
n Lower average selling prices and product mix across both end-markets, including raw material pass-through impacts in the light vehicle end-market
|
n Increase of $3 million in inventory charges related to obsolescence, quality and yield loss in manufacturing
|
Nine Months Ended September 30, |
||||
(In millions) | 2024 | 2023 | ||
Net cash provided by (used for): | ||||
Operating activities: | ||||
Net income | $ | 254 | $ | 195 |
Depreciation and amortization | 207 | 207 | ||
Amortization of deferred financing costs and original issue discount | 6 | 7 | ||
Debt extinguishment and refinancing-related costs | 3 | 7 | ||
Deferred income taxes | 10 | (8) | ||
Realized and unrealized foreign exchange losses, net | 12 | 21 | ||
Stock-based compensation | 21 | 19 | ||
Impairment charges | - | 15 | ||
Interest income on swaps designated as net investment hedges | (10) | (9) | ||
Other non-cash, net | 5 | 25 | ||
Net income adjusted for non-cash items | 508 | 479 | ||
Changes in operating assets and liabilities | (166) | (190) | ||
Operating activities | 342 | 289 | ||
Investing activities | (374) | (65) | ||
Financing activities | (90) | (252) | ||
Effect of exchange rate changes on cash | (10) | (19) | ||
Net increase (decrease) in cash | $ | (132) | $ | (47) |
(In millions) | September 30, 2024 | December 31, 2023 | ||
2029 Dollar Term Loans | $ | 1,702 | $ | 1,786 |
Revolving Credit Facility | 105 | - | ||
2027 Dollar Senior Notes | 500 | 500 | ||
2029 Dollar Senior Notes | 700 | 700 | ||
2031 Dollar Senior Notes | 500 | 500 | ||
Short-term and other borrowings | 55 | 62 | ||
Unamortized original issue discount | (13) | (17) | ||
Unamortized deferred financing costs | (24) | (27) | ||
Total borrowings, net | 3,525 | 3,504 | ||
Less: | ||||
Short-term borrowings | 3 | 7 | ||
Current portion of long-term borrowings | 17 | 19 | ||
Long-term debt | $ | 3,505 | $ | 3,478 |
(in millions, except per share data) | ||||||
Period |
Total Number of Shares Purchased(1)
|
Average Price Paid per Share(1)
|
Total Number of Shares Purchased as Part of Publicly Announced Programs(1)
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans of Programs(1)
|
||
July 1 - July 31, 2024 | - | $ | - | - | $ | 650.0 |
August 1 - August 31, 2024 | 0.6 | 34.61 | 0.6 | 630.0 | ||
September 1 - September 30, 2024 | 0.8 | 34.95 | 0.8 | 600.0 | ||
Total | 1.4 | $ | 34.82 | 1.4 | $ | 600.0 |
EXHIBIT NO.
|
DESCRIPTION OF EXHIBITS
|
31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1† |
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2† |
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101 | INS - Inline XBRL Instance Document. The document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document |
101 | SCH - Inline XBRL Taxonomy Extension Schema Document |
101 | CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101 | DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document |
101 | LAB - Inline XBRL Taxonomy Extension Label Linkbase Document |
101 | PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
† | This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
AXALTA COATING SYSTEMS LTD. | ||
Date: | October 30, 2024 | By: /s/ Chris Villavarayan |
Chris Villavarayan | ||
Chief Executive Officer and President | ||
(Principal Executive Officer) | ||
Date: | October 30, 2024 | By: /s/ Carl D. Anderson II |
Carl D. Anderson II | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
Date: | October 30, 2024 | By: /s/ Anthony Massey |
Anthony Massey | ||
Vice President and Global Controller | ||
(Principal Accounting Officer) |