PHILADELPHIA - Axalta Coating Systems Ltd. announced its financial results for the third quarter ended September 30, 2015.
Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer, commented, “Axalta produced a solid third quarter, including ongoing volume growth and margin expansion, which enabled us to exceed the mid-point of our adjusted EBITDA guidance for the period. This result was delivered notwithstanding persistent foreign exchange headwinds for our global businesses, which masked otherwise strong profit growth in nearly all segments and regions. Although we also faced some challenges in the quarter from the slowdown in the Chinese economy, including automotive end-markets, we are encouraged that demand indicators now show signs of recovery.”
“Regarding our 2015 operating and financial goals, we are pleased with the progress we have made to date, and we continue to execute our plan in a disciplined way with the goal of creating shareholder value through profitable revenue growth, strong cash generation and effective capital allocation,” Shaver continued. “We made good progress on our growth and productivity initiatives in the third quarter, including our first realized savings from The Axalta Way program.”
Net sales of $1.0 billion for the third quarter of 2015 increased 3.1 percent year-over-year excluding unfavorable foreign currency translation, while declining 9.8 percent on an as-reported basis. Net sales growth excluding currency was driven by 2.1 percent volume increases, indicating continued underlying strength in the company’s global coatings markets. Higher average selling prices in the quarter added modestly to net sales, while unfavorable foreign currency translation reduced net sales by 12.9 percent compared to the third quarter last year.
Adjusted EBITDA of $216.9 million for the third quarter compared with $228.0 million in the third quarter of 2014, while adjusted EBITDA margins in the quarter expanded to 21.7 percent from 20.6 percent reported last year. Margin improvement was driven by several factors including increased volumes, improved mix and pricing, as well as lower costs resulting from the company’s operating improvement initiatives. These factors were offset by negative foreign currency translation and incremental investments to support growth of key businesses.
Net sales in Performance Coatings of $600.6 million for the third quarter of 2015 represented a 5.1 percent year-over-year increase excluding foreign currency translation, and a decrease of 9.5 percent on an as-reported basis. Net sales growth drivers included volume growth of 3.4 percent and higher average selling prices of 1.7 percent in the period, more than offset by 14.6 percent unfavorable currency translation. Refinish end-market third-quarter net sales increased 5.2 percent on a constant currency basis (decreased 10.7 percent as-reported), while the company’s Industrial end-market posted 4.7 percent growth excluding the impact of currency (decreased 6.3 percent as-reported).
The Transportation Coatings segment reported net sales of $399.7 million in the third quarter, largely flat excluding foreign currency translation, and a decrease of 10.3 percent on an as-reported basis versus third quarter 2014. Volume and price combined for 0.2 percent net sales growth, offset by 10.5 percent unfavorable foreign currency translation versus the prior year. Light Vehicle end-market net sales declined slightly by 0.9 percent on a constant currency basis compared to the third quarter of 2014 (decreased 11.3 percent as-reported). The company’s Commercial Vehicle end-market reported net sales growth of 4.0 percent on a constant currency basis versus last year (decreased 6.7 percent as-reported). While North America continued to experience solid volume growth in both Light Vehicle and Commercial end-markets, this growth was partially offset by lower demand in regions of Latin America impacted by an ongoing economic recession, as well as a slowdown in China vehicle production during the quarter.
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