Axalta Releases Results for Second Quarter
PHILADELPHIA – Paint and coating manufacturer Axalta Coating Systems Ltd. released its financial results for the second quarter ended June 30, 2015.
“We are very pleased with our second quarter results, which beat our expectations in most business areas as we continue to execute our strategy of unlocking Axalta’s growth potential while also maximizing overall business efficiency and profitability. Progress on both of these core goals was made during the quarter, with volumes growing solidly and our productivity plans on target. In spite of a challenging economic backdrop in certain countries and ongoing volatility in foreign currency, Axalta’s key end-markets remain fundamentally stable and supportive in most areas,” said Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer. “Given our solid first half results, we continue to expect to meet our financial goals for 2015 and have raised the low-end of our Adjusted EBITDA guidance as a reflection of this performance to date.”
Net sales of $1.1 billion for the second quarter of 2015 represented an 8.2 percent increase year-over-year excluding negative foreign currency translation, and a decrease of 2.9 percent on an as-reported basis. This net sales growth was driven by 4.8 percent volume increases, including growth in all regions and strong double-digit growth in Asia-Pacific, reflecting the ongoing ramp-up in China new vehicle builds related to new business for Axalta. Higher average selling prices in the quarter added 3.4 percent to net sales, while unfavorable foreign currency translation reduced net sales by 11.1 percent.
Net sales in Performance Coatings of $638.8 million for the second quarter of 2015 represented an 8.2 percent increase year-over-year excluding negative foreign currency translation, and a decrease of 3.9 percent on an as-reported basis. Net sales growth drivers included volume growth of 2.0 percent and higher average selling prices of 6.2 percent in the period, more than offset by 12.1 percent unfavorable currency translation impact. Refinish end-market net sales increased 10.0 percent on a constant currency basis in the second quarter (decreased 2.3 percent as-reported), while the company’s Industrial end-market posted 3.8 percent growth excluding the impact of currency (decreased 7.9 percent as-reported).
The Transportation Coatings segment generated net sales of $455.3 million in the second quarter of 2015, an increase of 8.1 percent excluding foreign currency impacts, and a decrease of 1.4 percent on an as-reported basis, compared to the second quarter of 2014. Volume growth of 8.8 percent was the principal contributor to net sales growth, offset by unfavorable foreign currency translation that impacted net sales by 9.5 percent versus the prior year. Light Vehicle end-market net sales increased 5.5 percent on a constant currency basis compared to the second quarter of 2014 (decreased 4.5 percent as-reported). The company’s Commercial Vehicle end-market reported strong net sales growth of 17.9 percent on a constant currency basis versus last year (10.1 percent as-reported). Similar to the first quarter of 2015, Light Vehicle net sales growth was particularly robust in Asia-Pacific and North America, with stable performance in Latin America and EMEA. Asia-Pacific volume growth of over 25 percent was led by the continued ramp-up of volumes in China, where Axalta continues to launch business with customers based on contracts won over the previous two years. In the Commercial Vehicle end-market, strong heavy-duty truck production continued to drive solid growth from North America, while volumes continue to ramp strongly with relatively newer customers in Asia-Pacific.
The company is updating its outlook for the full year 2015, including:
- Net sales growth of 5-7 percent in constant currency and down low- to mid-single digits versus previous expectation of flat-to-slightly down including currency impacts;
- Adjusted EBITDA expectation of $870-$900 million up from $860-$900 million with an Adjusted EBITDA margin of approximately 20 percent; Q3 Adjusted EBITDA as a percentage of full year Adjusted EBITDA is expected to be 23-25 percent; and
- Other guidance assumptions remain unchanged including normalized effective tax rate of 27-29 percent, capital expenditures of approximately $150 million, and net working capital of 13-15 percent of net sales, excluding non-recurring items.