Axalta Coating Systems Q4 and Full Year 2025 Financial Results 1 February 10, 2026 Legal Notices This presentation and the oral remarks made in connection herewith contain financial information that is not presented in accordance with generally accepted accounting principles in the United States ("GAAP"), including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Diluted EPS, Adjusted Net Income, Free Cash Flow, total net leverage ratio (or "net leverage ratio"), total gross leverage ratio, ROIC, tax rate, ...

Financial Performance - Fourth quarter 2025 net sales decreased 4% year over year to $1,262 million, primarily due to lower volumes from a challenging economic environment[5] - Net income for the fourth quarter was $60 million, resulting in a net income margin of 4.8%, down from $137 million in the prior year period[6] - Adjusted EBITDA for the fourth quarter was $272 million, with an Adjusted EBITDA margin of 21.5%, a 50 basis point increase year over year[7] - Full year 2025 net sales totaled $5,117 million, a decrease of 3% compared to the previous year, with volume declines primarily in North America[14] - Full year net income was $379 million, maintaining a net income margin of 7.4%, despite a $12 million decrease from 2024[15] - Record full year Adjusted EBITDA reached $1,128 million, with an Adjusted EBITDA margin improvement of 80 basis points to 22.0%[16] - The company reported a basic net income per share of $0.28 for Q4 2025, down from $0.63 in Q4 2024[41] - Net income for the year ended December 31, 2025, was $379 million, a decrease of 3% from $391 million in 2024[45] - EBITDA for the year ended December 31, 2025, increased to $1,017 million, up 3.7% from $981 million in 2024[46] - Adjusted EBITDA margin improved to 22.0% for the year ended December 31, 2025, compared to 21.2% in 2024[46] - Free cash flow for the year ended December 31, 2025, was $466 million, compared to $451 million in 2024, reflecting a slight increase[59] Cash Flow and Debt - Cash provided by operating activities for the full year was $649 million, an increase of $73 million, marking the highest in company history[18] - Cash provided by operating activities for the year ended December 31, 2025, was $649 million, an increase of 12.6% from $576 million in 2024[45] - Cash at the end of the period increased to $660 million in 2025 from $596 million in 2024[45] - The company made payments of $230 million on long-term borrowings in 2025, down from $420 million in 2024[45] - The company ended 2025 with a net debt to trailing twelve-month Adjusted EBITDA ratio of 2.3x, the lowest in its history[17] Assets and Equity - Total assets increased to $7,599 million as of December 31, 2025, compared to $7,249 million in 2024[43] - Shareholders' equity rose to $2,393 million in 2025, up from $1,956 million in 2024[43] - Long-term borrowings decreased to $3,179 million in 2025 from $3,401 million in 2024[43] - Axalta's total current liabilities were $1,369 million as of December 31, 2025, compared to $1,354 million in 2024[43] Mergers and Acquisitions - Axalta announced a merger of equals with AkzoNobel, expected to close in late 2026 or early 2027, aimed at creating a premier global coatings company[19] - The company incurred $48 million in acquisitions net of cash acquired in 2025, significantly lower than $301 million in 2024[45] - Merger and acquisition-related costs for Q4 2025 amounted to $21 million, significantly higher than $3 million in Q4 2024[60] Operational Performance - Income from operations for Q4 2025 was $162 million, a decrease of 13.3% from $187 million in Q4 2024[60] - Adjusted EBIT for the year ended December 31, 2025, was $882 million, slightly down from $883 million in 2024[60] - The company reported a total adjusted EBIT of $208 million for Q4 2025, compared to $215 million in Q4 2024[60] Research and Development - Research and development expenses for the year ended December 31, 2025, were $71 million, a slight decrease from $74 million in 2024[41] Employee and Other Expenses - Employee-related costs, including termination benefits, totaled $23 million for the year 2025, down from $67 million in 2024[60] - Total other expenses for the year 2025 were $13 million, up from $5 million in 2024[60] - Environmental charges for the year 2025 were $2 million, down from $4 million in 2024[64] Future Projections - For Q1 2026, Axalta projects net sales growth of (MSD)% and Adjusted EBITDA between $240 million and $250 million[20] - The company aims to enhance its market position through innovative coatings solutions across various applications[39]

Core Viewpoint - Axalta Coating Systems Ltd. reported record earnings for 2025, showcasing business resilience and successful execution of its 2026 A Plan despite a challenging macroeconomic environment [2][3]. Fourth Quarter 2025 Highlights - Fourth quarter net sales decreased by 4% year over year to $1,262 million, primarily due to lower volumes, partially offset by favorable foreign currency translation and positive price-mix in Mobility Coatings [5]. - Net income for the fourth quarter was $60 million, with a net income margin of 4.8%, down from $137 million in the prior year, mainly due to higher income tax expenses and increased merger and acquisition-related costs [6]. - Adjusted net income was $128 million, with Adjusted EBITDA of $272 million and an Adjusted EBITDA margin of 21.5%, reflecting a 50 basis point increase year over year [7]. - Record cash provided by operating activities reached $344 million, an increase of $110 million compared to the same period last year, and free cash flow also set a record at $290 million, up $113 million year over year [8]. Fiscal Year 2025 Highlights - For the full year, net sales totaled $5,117 million, a decrease of 3% compared to the previous year, with volume declines primarily in North America [15]. - Net income for the year was $379 million, a decrease of $12 million from 2024, maintaining a net income margin of 7.4% [16]. - Adjusted EBITDA reached a record $1,128 million, with an Adjusted EBITDA margin of 22.0%, driven by operational excellence and strong cost management [17]. - Diluted EPS for the year was $1.74, while Adjusted Diluted EPS improved by 6% to a record $2.49 [17]. Capital Allocation - Axalta ended 2025 with a net debt to trailing twelve-month Adjusted EBITDA ratio of 2.3x, the lowest in company history, and prioritized gross debt reduction by paying down $204 million against its term loan [18]. - Cash and cash equivalents at year-end were $657 million, with total liquidity exceeding $1.4 billion [18]. - The company returned $165 million to shareholders through share repurchases and paid down $230 million in gross debt [19]. Merger Announcement - In November 2025, Axalta announced a merger of equals with AkzoNobel, aimed at creating a premier global coatings company, enhancing global scale and profitability, and realizing substantial long-term value creation [20][21]. Financial Guidance - For Q1 2026, Axalta projects net sales growth in the mid-single digits and Adjusted EBITDA between $240 million and $250 million, with an Adjusted Diluted EPS of approximately $0.50 [22].

On Jan. 22, 2026, Trinity Street Asset Management LLP disclosed in an SEC filing that it sold out its entire stake in Axalta Coating Systems (NYSE:AXTA), an estimated $22.1 million transaction based on quarterly average pricing. What happened According to a SEC filing dated Jan. 22, 2026, Trinity Street Asset Management LLP liquidated its entire holding of 770,919 shares in Axalta Coating Systems. The estimated transaction value was $22.06 million based on the average share price during the quarter. The ...

Group 1 - Axalta Coating Systems (NYSE:AXTA) is considered a strong investment opportunity in the Materials sector according to hedge funds [1] - RBC Capital analyst Arun Viswanathan raised the price target for Axalta from $30 to $33 while maintaining a Sector Perform rating [1][2] - Viswanathan's price target revision is based on S&P's projections for global auto production, indicating a slight sectoral recovery [2] Group 2 - Axalta's Q4 EBITDA is forecasted to be $284 million, contributing to a total EBITDA of $1.14 billion for 2025, with an expected increase to $1.18 billion in 2026 [2] - The forward EV/EBITDA valuation multiple has been increased from 8.5x to 9x [2] - Kevin McCarthy from Vertical Research downgraded Axalta's rating from Buy to Hold but set a price target of $37, indicating an upside potential of over 11% [3] Group 3 - Axalta Coating Systems specializes in high-performance coating systems for various applications, including construction, industrial, mobility, and energy [4] - The company operates in two segments: performance coatings and mobility coatings, and also provides products for vehicle repair and OEMs [4]

Core Insights - Axalta Coating Systems has received six Business Intelligence Group Innovation Awards for its commitment to product innovation in sustainability, productivity, and safety [1][3] Group 1: Product Innovations - Axalta's six awarded innovations span across its three business units: Refinish, Mobility Coatings, and Industrial Coatings [3] Refinish - The Spies Hecker Permahyd® Hi-TEC 8260 Premium Waterborne Clearcoat reduces solvent emissions by over 65%, has low odor, and minimizes application defects, helping body shops meet stringent emission regulations [4] Mobility Coatings - The Axalta OEM Low-Bake Integrated Metal Body and Plastics Coatings Technology allows for energy savings of up to 40% and a reduction of CO2 emissions by approximately 343 tons per year in a plant producing 100,000 vehicles annually, alongside potential annual maintenance cost savings of up to $40 million [5] - The Lumeera 3250 Low Bake Clearcoat cures at 80°C, reducing CO2 emissions by at least 20% or about 16 kg CO2 per vehicle, enhancing manufacturing efficiency [6] Industrial Coatings - Alesta® e-PRO FG Black is a flame and heat-resistant coating that enhances safety for electric vehicle battery enclosures by improving flame and smoke containment [7] - Axalta's Total Cabinet Coating Solution features a 100% solids UV-cure roll coat enamel with zero VOCs, improving operational efficiency and supporting sustainability goals [8] - Voltatex® 1255 Electrical Steel Coating enhances high-speed bonding processes for electric motors, resulting in more powerful and efficient e-motors [9]

Core Insights - Axalta Coating Systems has received six Business Intelligence Group Innovation Awards for its commitment to product innovation in sustainability, productivity, and safety [1][3] Product Innovations Refinish - The Spies Hecker Permahyd® Hi-TEC 8260 Premium Waterborne Clearcoat reduces solvent emissions by over 65%, has low odor, and minimizes application defects, helping body shops comply with stringent emission regulations [4] Mobility Coatings - The Axalta OEM Low-Bake Integrated Metal Body and Plastics Coatings Technology allows for simultaneous painting of metal and plastic parts, potentially saving up to 40% in energy and reducing CO2 emissions by approximately 343 tons annually, equivalent to the carbon absorption of 350,000 square meters of pine forest [5] - The Lumeera 3250 Low Bake Clearcoat cures at 80°C, reducing CO2 emissions by at least 20% or about 16 kg CO2 per vehicle, while increasing manufacturing efficiency [6][7] Industrial Coatings - Alesta® e-PRO FG Black is a flame and heat-resistant coating that enhances safety for electric vehicle battery enclosures by improving flame and smoke containment [8] - Axalta's Total Cabinet Coating Solution features a 100% solids UV-cure roll coat enamel with zero VOCs, improving operational efficiency and supporting sustainability goals [9] - The Voltatex® 1255 Electrical Steel Coating enhances high-speed bonding processes for electric motors, resulting in more powerful and efficient e-motors [10]

Core Thesis - Axalta Coating Systems Ltd is facing a bearish outlook due to its underperformance relative to market benchmarks and a highly cyclical business model that exacerbates industry downturns [2][7] Company Overview - Axalta operates in the specialty chemicals subindustry, primarily focusing on automotive paints and coatings, with approximately 76% of its revenue derived from automotive coatings [2][3] - The company has achieved record adjusted EBITDA growth over twelve consecutive quarters, but its stock remains unexciting, trading at mid-range levels with a forward P/E of around 15 [3] Financial Performance - Axalta's trailing and forward P/E ratios are 15.78 and 11.90 respectively, indicating a valuation that may not reflect strong growth potential [1] - The company has a high institutional ownership of 98%, primarily due to index inclusion rather than strong investor conviction [3] Strategic Developments - Axalta is preparing for an all-stock merger with European company Axonobyl, projected to close between late 2026 and early 2027, with combined 2024 revenue estimated at $17 billion and anticipated synergies of $600 million over three years [4] - Operational pressures include declining volumes and pricing constraints, although a recovering automotive repair environment is expected to support modest growth in refinish revenue beginning in 2026 [4] Market Insights - While not positioned as a growth investment, Axalta provides strategic insights into the coatings market, raw material dynamics, and automotive repair trends, which could inform broader industrial investment decisions [5] - The company's low volatility and defensive traits during automotive downturns may offer niche hedging opportunities for industry-linked portfolios [5]

Core Insights - Axalta Coating Systems has announced its 2026 Global Automotive Color of the Year, named Solar Boost, which is a vibrant orange designed to resonate with modern consumer preferences for expressive colors and finishes [1][3]. Group 1: Color Significance - Vehicle color significantly influences buyers' perceptions regarding safety, sportiness, elegance, and resale value, with over 80% of buyers considering it a key factor in their purchasing decision [3]. - Solar Boost reflects a trend towards individualistic design, appealing particularly to younger and trend-conscious consumers who desire vehicles that express personal identity [3][4]. Group 2: Global Color Trends - Orange is emerging as a globally significant color, symbolizing warmth and optimism in North America, vibrancy in Latin America, and individuality in the Asia Pacific region, particularly in the context of electric vehicles [4]. - The color Solar Boost captures a shared sense of positivity and momentum, making it a powerful statement for drivers seeking to reflect their individuality and confidence [4]. Group 3: Expertise and Innovation - The development of Solar Boost is based on Axalta's extensive experience in color science, human psychology, and popular culture, ensuring that the color is manufacturable, beautiful, durable, and sustainable [5]. - This marks the 12th year Axalta has recognized an Automotive Color of the Year, showcasing its 160 years of expertise in color design and innovation [5].

Core Insights - Axalta Coating Systems has announced its 2026 Global Automotive Color of the Year, named Solar Boost, which is a vibrant orange tone designed for modern vehicles [1][3] Group 1: Color Significance - Vehicle color significantly influences buyer perception regarding safety, sportiness, elegance, and resale value, with over 80% of buyers considering it a key factor in their purchasing decision [3] - Solar Boost reflects a trend towards individualistic design choices, appealing particularly to younger and trend-conscious consumers who prefer expressive colors over traditional neutrals [3][4] Group 2: Global Color Trends - Orange is emerging as a globally significant color, evoking warmth and optimism in North America, vibrancy in Latin America, and gaining traction in Asia Pacific, especially in electric vehicles [4] - The color Solar Boost captures a shared sense of positivity and individuality, making it a powerful statement for drivers [4] Group 3: Expertise and Innovation - The development of Solar Boost is based on Axalta's extensive experience in color science, human psychology, and popular culture, ensuring the color is manufacturable, beautiful, durable, and sustainable [5] - This marks the 12th year Axalta has recognized an Automotive Color of the Year, showcasing its 160 years of expertise in color design and innovation [5]