Financial Data and Key Metrics Changes - Net sales were approximately $1.3 billion, down 2% year over year, primarily due to macro headwinds in North America [11] - Adjusted EBITDA reached a record $294 million with a margin of 22.8%, marking 12 consecutive quarters of adjusted EBITDA and margin growth year over year [5][6] - Adjusted diluted EPS was $0.67, up 6% compared to the previous year, reflecting robust earnings power and a commitment to returning capital to shareholders [7][11] - Operating cash flow was $137 million, and free cash flow totaled $89 million, with expectations for significant improvement in the fourth quarter [11][12] Business Line Data and Key Metrics Changes - Performance Coatings segment net sales declined 6% year over year to $828 million, driven by trends in North America [12] - Mobility Coatings net sales increased 4% to $460 million, with light vehicle net sales up 7% due to growth in Latin America and China [13] - Adjusted EBITDA for the Mobility segment increased 20% year over year to $83 million, with an adjusted EBITDA margin expanding to 18% [14] Market Data and Key Metrics Changes - Global auto production forecast for 2025 is approximately 91 million builds, a 2% increase from 2024 [5] - The broader macro environment remains challenged, particularly in North America, while industry trends in Europe are more stable [5][11] Company Strategy and Development Direction - The company remains focused on achieving its A plan target, with a priority on enhancing profitability and operational excellence [7][10] - The strategy includes disciplined capital allocation, with $100 million in share repurchases executed in Q3 2025, reducing shares outstanding by over 3% since 2023 [6][16] - The company anticipates an improved refinish demand environment in North America in 2026, with expectations for stable light vehicle global production [19][40] Management's Comments on Operating Environment and Future Outlook - Management noted that while the external environment in North America and Europe did not improve as expected, they remain on track to achieve record adjusted EBITDA and EPS for the full year [18][19] - The company expects to continue generating sustainable earnings growth and strong free cash flow, with a projected adjusted diluted EPS of $2.50 for the full year 2025, a 6% increase versus 2024 [18][19] Other Important Information - The company has increased capital expenditures by approximately 50% compared to the third quarter of last year, with plans to repurchase up to $250 million of stock in the fourth quarter [16][18] - The company is well-positioned to capitalize on volume upside once demand rebounds, with a focus on cost discipline and operational improvements [9][19] Q&A Session Summary Question: How would you disaggregate the auto refinish component decline between industry volumes and inventory destocking? - Management indicated that market volumes are down mid to high single digits, with destocking also around that mid single digits number, while new body shop wins have been strong [22][24] Question: Can you provide context on ongoing cost progress and expectations for 2026? - Management highlighted that significant structural cost reductions have been achieved, with expectations for continued improvements in cost efficiency [28][32] Question: What are the expectations for the industrial and commercial vehicle markets in 2026? - Management expects the commercial vehicle market to remain muted, while industrial markets may see slight growth depending on interest rate trends [40][41] Question: What are the internal discussions regarding dividends and capital allocation? - Management noted that share repurchases are currently prioritized due to perceived stock value, with discussions about dividends ongoing [44][46] Question: What are the underlying drivers affecting the refinish business? - Management pointed to stable accident rates and a decline in insurance premiums as positive indicators for the refinish market moving forward [48][50] Question: How are raw material costs and tariffs impacting the business? - Management reported stable raw material costs with expectations for continued stability in the near term, indicating effective management of tariff-related costs [70][72]

Core Insights - Axalta Coating Systems reported quarterly earnings of $0.67 per share, exceeding the Zacks Consensus Estimate of $0.64 per share, and showing an increase from $0.59 per share a year ago, resulting in an earnings surprise of +4.69% [1] - The company posted revenues of $1.29 billion for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 1.05% and a decrease from $1.32 billion year-over-year [2] - Axalta's shares have declined approximately 15.1% year-to-date, contrasting with the S&P 500's gain of 16.9% [3] Earnings Outlook - The future performance of Axalta's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.61 on revenues of $1.33 billion, and for the current fiscal year, it is $2.49 on revenues of $5.2 billion [7] Industry Context - The Chemical - Specialty industry, to which Axalta belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Axalta's stock performance [5][6]

October 28, 2025 Axalta Coating Systems Q3 2025 Financial Results Sensitivity: Business Internal 1 Legal Notices Forward-Looking Statements This presentation and the oral remarks made in connection herewith may contain certain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding Axalta and its subsidiaries including, but not limited to, our outlook and/or guidance, which includes net sales growth, net sales, Adjusted EBITDA, Adjusted Diluted EP ...

Financial Performance - Net sales for Q3 2025 were $1.3 billion, a decrease of 2% year over year[4] - Net income increased by $8 million year over year to $110 million, resulting in a net income margin of 8.5%, an increase of 80 basis points[5] - Adjusted EBITDA reached a record of $294 million, up $3 million year over year, with an Adjusted EBITDA margin of 22.8%, an increase of 70 basis points[5] - Diluted EPS increased by 11% to $0.51, while adjusted diluted EPS improved by 6% to $0.67[5] - Mobility Coatings net sales were $460 million, a record for Q3, increasing 4% from the prior year[10] - Performance Coatings net sales totaled $828 million, down from $877 million in the prior-year period[7] - Net sales for the three months ended September 30, 2025, were $1,288 million, a decrease of 2.4% from $1,320 million in the same period of 2024[26] - Net income attributable to common shareholders increased to $110 million for the three months ended September 30, 2025, compared to $101 million in the prior year, representing an increase of 8.9%[26] - Basic net income per share rose to $0.51 for the three months ended September 30, 2025, up from $0.46 in the same period of 2024, reflecting an increase of 10.9%[26] - Adjusted EBITDA for the three months ended September 30, 2025, was $294 million, slightly up from $291 million in the same period of 2024, indicating a growth of 1.0%[31] - The net income margin for the three months ended September 30, 2025, was 8.5%, compared to 7.7% in the same period of 2024, reflecting an improvement of 1.0 percentage points[31] - Net income for Q3 2025 was $110 million, up from $102 million in Q3 2024, representing an increase of 7.8%[35] - Adjusted net income for Q3 2025 reached $144 million, compared to $139 million in Q3 2024, reflecting a growth of 3.6%[35] - Adjusted diluted net income per share increased to $0.67 in Q3 2025 from $0.63 in Q3 2024, a rise of 6.3%[35] Cash Flow and Share Repurchases - Free cash flow was $89 million, compared to $164 million a year ago, reflecting lower cash provided by operating activities[6] - The company executed $100 million in share repurchases during the quarter[9] - The company plans to deploy up to $250 million towards share repurchases in Q4 2025[12] - Free cash flow for Q3 2025 was $89 million, compared to $164 million in Q3 2024, indicating a decrease of 45.4%[41] - The company reported cash provided by operating activities of $137 million for Q3 2025, down from $194 million in Q3 2024, a decline of 29.4%[41] Assets and Liabilities - Total assets increased to $7,760 million as of September 30, 2025, compared to $7,249 million at December 31, 2024, marking a growth of 7.0%[28] - Total liabilities increased to $5,435 million as of September 30, 2025, from $5,293 million at December 31, 2024, an increase of 2.7%[28] - The company reported a decrease in cash at the end of the period to $610 million as of September 30, 2025, compared to $571 million at the end of the same period in 2024[30] Operational Performance - Income from operations for Q3 2025 was $204 million, up from $193 million in Q3 2024, marking an increase of 5.7%[43] - Adjusted EBIT for Q3 2025 was $231 million, slightly down from $236 million in Q3 2024, a decrease of 2.1%[43] - The company incurred $5 million in acquisition-related costs during Q3 2025, compared to $4 million in Q3 2024[43] Research and Development - Research and development expenses remained stable at $18 million for the three months ended September 30, 2025, compared to $19 million in the same period of 2024[26]

Core Insights - Axalta Coating Systems Ltd. reported strong financial results for Q3 2025, achieving record Adjusted EBITDA and Adjusted Diluted EPS, reflecting operational excellence despite macroeconomic challenges [3][4]. Financial Performance - Net sales for Q3 2025 decreased by 2% year-over-year to $1.3 billion, with favorable foreign currency translation and organic net sales in Mobility partially offsetting declines in Performance Coatings [4]. - Net income increased by $8 million year-over-year to $110 million, resulting in a net income margin of 8.5%, an increase of 80 basis points compared to the previous year [5]. - Adjusted EBITDA reached a record $294 million, up $3 million year-over-year, with an Adjusted EBITDA margin expanding by 70 basis points to 22.8% [5][9]. - Diluted EPS increased by 11% to $0.51, while adjusted diluted EPS improved by 6% to $0.67, primarily due to lower interest expense and a reduction in shares outstanding [5][9]. Segment Results - Performance Coatings reported net sales of $828 million, down from $877 million in the prior-year period, with a decline in Refinish net sales by 7% year-over-year [7]. - Mobility Coatings achieved record net sales of $460 million, a 4% increase from the prior year, driven by positive price-mix and favorable foreign currency translation [9][10]. - Adjusted EBITDA for Mobility Coatings was $83 million, up 20% compared to the prior-year period, with an Adjusted EBITDA margin improvement of 230 basis points to 18.0% [11]. Cash Flow and Capital Allocation - Cash provided by operating activities was $137 million in Q3 2025, down from $194 million in the prior-year period, primarily due to higher working capital [6]. - Free cash flow decreased to $89 million compared to $164 million a year ago, reflecting lower cash from operating activities and higher capital expenditures [6]. - The company executed $100 million in share repurchases during the quarter and plans to accelerate its capital allocation strategy with up to $250 million for share repurchases in Q4 2025 [12]. Outlook - For Q4 2025, Axalta projects net sales growth in the mid-single digits and expects Adjusted EBITDA of approximately $284 million [13]. - The full-year 2025 outlook includes net sales exceeding $5.1 billion and Adjusted EBITDA of approximately $1.14 billion [13].

Core Viewpoint - Axalta Coating Systems Ltd. is set to release its third quarter 2025 financial results on October 28, 2025, at 6 a.m. ET, with supporting materials available on its Investor Relations site [1] Financial Results Announcement - The financial performance review will be conducted by CEO Chris Villavarayan and CFO Carl Anderson during a conference call at 8 a.m. ET on the same day [2] - A live webcast of the conference call will be accessible, and a replay will be available shortly after the call until October 28, 2026 [2] Conference Call Details - The dial-in number for the conference call is 1-800-245-3047, with the conference ID being AXALTA [3] - For those unable to attend, a replay will be available until November 4, 2025, with the replay dial-in number being 1-844-512-2921 and the passcode 11160096 [3] Company Overview - Axalta is a global leader in the coatings industry, offering innovative and sustainable coating solutions across various applications, including vehicles and industrial uses [4] - The company has over 150 years of experience and serves more than 100,000 customers in over 140 countries [4]

Core Insights - Axalta Coating Systems Ltd. is launching two innovative products, Alesta® e-PRO FG Black and Alesta® e-PRO Dielectric Gray, at The Battery Show North America, aimed at enhancing safety and performance in electric vehicle (EV) battery applications [1][8] Product Features - Alesta® e-PRO FG Black is designed for extreme heat protection, capable of withstanding temperatures up to 1200°C, and helps delay fire propagation in EV battery systems [5][6] - Alesta® e-PRO Dielectric Gray provides superior electrical insulation in high-voltage environments, improving reliability in EV battery packs and stationary energy storage systems [5][6] Testing and Compliance - Both products have undergone rigorous testing, with Alesta® e-PRO Dielectric Gray meeting UL 94 V0 and IEC 60243-1 standards, while Alesta® e-PRO FG Black has been tested for direct flame exposure and thermal runaway scenarios [6][8] - Alesta® e-PRO FG Black produces no smoke and does not ignite during thermal events at 1200°C, ensuring safety under extreme conditions [6][7] Market Context - The global EV market is projected to exceed 20 million units in 2025, representing over a quarter of cars sold worldwide, indicating a growing demand for advanced battery safety solutions [8] - Axalta's commitment to innovation is reflected in its partnerships with leading OEMs and Tier 1 suppliers who are conducting additional testing for these new coatings [8] Recognition - Axalta has been recognized in TIME magazine's list of America's Best Midsize Companies of 2025, highlighting its performance in employee satisfaction, revenue growth, and sustainability transparency [9]

Core Viewpoint - Artisan Partners' "Artisan Select Equity Fund" underperformed the S&P 500 Index in Q2 2025, with returns of 6.77%, 6.76%, and 6.80% for its Investor, Advisor, and Institutional Classes respectively, compared to the S&P 500's 10.94% return [1] Group 1: Axalta Coating Systems Ltd. Overview - Axalta Coating Systems Ltd. (NYSE:AXTA) is a manufacturer and distributor of coatings systems, with a market capitalization of $6.084 billion [2] - As of September 26, 2025, Axalta's stock closed at $28.09 per share, experiencing a one-month return of -10.14% and a 52-week decline of 22.38% [2] Group 2: Financial Performance and Market Conditions - In Q2 2025, Axalta's net sales totaled $1.3 billion, reflecting a year-over-year decrease of approximately 3% [4] - The company reported a 10% decline in shares, with Q1 earnings deemed satisfactory despite a 2% overall sales decline [3] - The performance coatings division faced challenges due to market weakness, with increased insurance premiums and repair costs impacting consumer behavior [3] - Industrial sales were weak due to sluggish industrial activity, and the mobility business saw a slight revenue decline linked to OEM vehicle production drops [3] Group 3: Investment Perspective - Despite the weak top-line performance, Axalta managed to grow profits through variable cost reductions and effective expense management [3] - Axalta trades at a modest earnings multiple of 11X, compared to the S&P 500 Index's multiple of over 20X, indicating potential undervaluation [3] - The company is not among the top 30 most popular stocks among hedge funds, with 44 hedge fund portfolios holding its stock at the end of Q2, unchanged from the previous quarter [4]

Core Insights - Axalta Coating Systems has honored Dr. Delson Trindade with the title of Axalta Fellow, the highest recognition for scientists and engineers within the company, due to his significant contributions in scientific accomplishments, technical leadership, and commercial impact throughout his career [1][3]. Company Achievements - Dr. Trindade has nearly 40 years of experience in coating technologies, showcasing exceptional expertise and leadership that have been vital across all of Axalta's business sectors [3]. - He has played a key role in expanding Axalta's technical capabilities and enhancing customer engagement through various initiatives, including co-inventing the multi-layer "3-Wet" coating processes for the automotive industry and advancing silanated clearcoat platforms [4]. Technical Contributions - Dr. Trindade has contributed to the development of a formulation toolbox for the electrification sector and has been involved in over 100 patent filings, highlighting his innovative impact on the industry [4]. - His work emphasizes Axalta's commitment to innovation, sustainability, and market leadership, as he is an integral member of the Fellows Forum, which promotes scientific excellence within the company [5]. Professional Background - Dr. Trindade's career with Axalta began in Brazil, and he has worked in various countries including Germany, Argentina, and the U.S., currently based in Philadelphia at the Global Headquarters and Innovation Center [6]. - He holds a doctorate in Physical Chemistry from the University of São Paulo and an MBA in Technology & Innovation from Harvard University and the University of São Paulo [6]. Company Overview - Axalta is a global leader in the coatings industry, providing innovative and sustainable coating solutions across various applications, including light vehicles, commercial vehicles, and industrial uses [7]. - With over 150 years of experience, Axalta serves more than 100,000 customers in over 140 countries, focusing on preventing corrosion, increasing productivity, and enhancing durability through its products [7].

Core Insights - Axalta Coating Systems Ltd. has reported two quarterly results since February, which were below expectations [1] - The focus is on value investing, particularly in sectors such as chemicals, homebuilders, building materials, industrials, and metals & mining [1] - The investment strategy emphasizes acquiring stocks that are undervalued and have near-term catalysts, with a typical investment horizon of one quarter to two years [1] Company Performance - The recent quarterly results of Axalta were disappointing compared to prior expectations [1] - The company operates in the coatings industry, which is influenced by various sectors including construction and manufacturing [1] Investment Strategy - The investment approach is centered on fundamental research and identifying stocks that are available at a low price [1] - The analyst has over three years of active investing experience, including roles as a buy-side analyst [1]