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Axalta Reports Fourth Quarter and Full Year 2014 Results

Published on 2015-03-17. Author : SpecialChem

 PHILADELPHIA -- Axalta Coating Systems Ltd. (“Axalta”), one of the leading global coatings companies, announced its financial results for the fourth quarter and full year ended December 31, 2014.

Key Fourth Quarter 2014 Highlights:

• Net sales of $1.1 billion, an increase of 5.1% excluding negative foreign currency impacts compared to the fourth quarter of 2013

• Adjusted EBITDA of $205 million, an increase of 3.7% over prior year

• Net Debt to Adjusted EBITDA of 4.0x as of December 31, 2014, a reduction of 0.7x versus prior year

• Successfully completed IPO in November 2014

Key Full Year 2014 Highlights:

• Net sales of $4.4 billion, an increase of 4.0% excluding negative foreign currency impacts compared to prior year Pro Forma results

• Adjusted EBITDA of $841 million, an increase of 14.0% over prior year Pro Forma results

• Completed with transition-related activities and associated costs from DuPont

“We are pleased with the results that we achieved in the fourth quarter and for the full year. While we experienced significant currency headwinds in the fourth quarter, net sales increased as a result of growth in volume and price. We continue to focus on optimizing our business and are excited about the progress that we have made with our European cost-initiative and our global commercial and productivity initiative called The Axalta Way that we launched this year,” said Charles Shaver, Axalta’s Chairman and Chief Executive Officer. “As we look forward in 2015, we anticipate favorable underlying demand trends across our key end-markets, which combined with our optimization efforts, should drive Adjusted EBITDA growth despite substantial currency headwinds.”

Fourth Quarter Consolidated Financial Results

Net sales were $1.1 billion for the fourth quarter of 2014, an increase of 5.1%, excluding negative foreign currency impacts, or a decrease of 1.3% on an as-reported basis, compared to the fourth quarter of 2013. Net sales growth was primarily driven by volume increases, which contributed 3.1% in net sales growth, driven by increases in North America, Latin America, and Asia Pacific and slightly lower volumes in EMEA. Higher average selling prices contributed 2.0% in net sales growth with moderate price increases in select regions. Growth from volume and pricing was more than offset by unfavorable currency translation, primarily due to the Euro and currencies in Latin America, which reduced net sales growth by 6.4%.

Adjusted EBITDA was $205 million for the fourth quarter of 2014, an increase of 3.7% compared to the fourth quarter of 2013. Adjusted EBITDA growth was driven by higher volumes and favorable pricing. As a percentage of net sales, Adjusted EBITDA expanded by 90 basis points to 19.0%.

Performance Coatings Results

The Performance Coatings segment generated net sales of $640.4 million during the fourth quarter of 2014, an increase of 6.3%, excluding negative foreign currency impacts, or a decrease of 0.8% on an as-reported basis, compared to the fourth quarter of 2013. Increased volumes contributed 4.8% in net sales growth and higher average selling prices contributed 1.5% in net sales growth. These factors were more than offset by unfavorable currency translation, which reduced net sales by 7.1%. Net sales from our refinish and industrial end-markets contracted by 0.1% and 2.4% on an as-reported basis, respectively, and grew by 7.6% and 2.9% on a constant currency basis, respectively, compared to the fourth quarter of 2013.

Performance Coatings generated Adjusted EBITDA of $137.9 million, a decrease of 1.5% compared to the fourth quarter of 2013. Performance Coatings Adjusted EBITDA was driven by higher net sales, offset by higher operating expenses from investments in growth initiatives. As a result, Performance Coatings Adjusted EBITDA margin of 21.5% contracted 20 basis points compared to the fourth quarter of 2013.

Transportation Coatings Results

The Transportation Coatings segment generated net sales of $438.4 million in the fourth quarter of 2014, an increase of 3.2%, excluding negative foreign currency impacts, or a decrease of 2.1% on an as-reported basis, compared to the fourth quarter of 2013. Higher average selling prices contributed 2.6% in net sales growth and increased volumes contributed 0.6% in net sales growth. Similar to our other segment, these positive factors were more than offset by unfavorable currency translation, which reduced net sales by 5.3% compared to the prior year. Net sales from our light vehicle end-market contracted by 3.9% on an as-reported basis and grew by 1.4% on a constant currency basis, compared to the fourth quarter of 2013. Our commercial vehicle end-market generated net sales growth of 4.8% on an as-reported basis and 10.2% on a constant currency basis, compared to the prior year. Light vehicle production increases in Asia Pacific were offset by lower volume in Latin America due to economic challenges and in North America due to planned customer plant outages. Strong commercial truck volumes were realized across North America, Latin America and Asia Pacific.

Transportation Coatings generated Adjusted EBITDA of $66.8 million, an increase of 16.4% compared to the fourth quarter of 2013. Transportation Coatings Adjusted EBITDA growth was driven by price increases and cost efficiencies from our operational improvement initiatives. Transportation Coatings generated an Adjusted EBITDA margin of 15.2%, which represented an expansion of approximately 240 basis points compared to the fourth quarter of 2013.

Balance Sheet and Cash Flow Highlights

Axalta has ended the quarter with cash and cash equivalents of $382.1 million. Its debt, net of cash was $3,333 million as of December 31, 2014 which resulted in a full year Net Debt to Adjusted EBITDA ratio of 4.0x.

Full year and fourth quarter cash flow for 2014 was strong despite significant transition and one-time expenses as well as capital expenditures associated with its information technology transitions from DuPont and completion of our global office relocations.

“We ended 2014 with the financial flexibility to continue to execute on our growth initiatives,” said Robert Bryant, Axalta’s Executive Vice President and Chief Financial Officer. “Additionally, we have reduced our net leverage ratio in every quarter since becoming an independent company in early 2013 and anticipate further progress in the coming years.”

Non-GAAP Financial Measures

The historical financial information included in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including EBITDA and Adjusted EBITDA. Additionally, management utilizes Unaudited Pro Forma results when referring to full year 2013 results within this presentation. Management uses these non-GAAP financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Our use of the terms EBITDA and Adjusted EBITDA may differ from that of others in our industry. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows or as measures of liquidity. EBITDA and Adjusted EBITDA have important limitations as analytical tools and should be considered in conjunction with, and not as substitutes for, our results as reported under GAAP. This presentation includes a reconciliation of certain non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP.

About Axalta Coating Systems


Axalta is one of the leading global companies focused solely on coatings and providing customers with innovative, colorful, beautiful and sustainable solutions. From light OEM vehicles, automotive refinish and commercial vehicles to electric motors, buildings and pipelines, its coatings are designed to prevent corrosion, increase productivity and enable the materials we coat to last longer. With more than 145 years of experience in the coatings industry, the 12,000 people of Axalta continue to find ways to serve its more than 120,000 customers in 130 countries better every day with the finest coatings, application systems and technology. 

Source: Axalta Coating Systems




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