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Exhibit 99.1 | ||
News Release | ![]() | |
Axalta Coating Systems 2001 Market Street Suite 3600 Philadelphia, PA 19103 USA | Contact Christopher Mecray D +1 215 255 7970 Christopher.Mecray@axalta.com |
• | Net sales of $1,139.3 million increased 4.4% year-over-year and 6.9% ex-FX impact |
• | Net loss attributable to Axalta of $13.1 million versus net income of $54.9 million in Q3 2017; Adjusted net income attributable to Axalta of $77.5 million increased 19.2% versus $65.0 million in Q3 2017 |
• | Adjusted EBITDA of $234.7 million increased 12.0% from $209.5 million in Q3 2017 |
• | Continued sequential price capture in Performance Coatings, coupled with robust Refinish volume growth compared with Q3 2017 |
• | Net sales growth of ~8% as-reported; ~7% ex-FX, including acquisition contribution of ~3% |
• | Adjusted EBITDA of $935-950 million |
• | Interest expense of ~$165 million |
• | Income tax rate, as adjusted, of 18-20% |
• | Free cash flow range of $330-350 million |
• | Capital expenditures of ~$160 million |
• | Depreciation and amortization of ~$370 million |
• | Diluted shares outstanding of ~244 million |
Financial Statement Tables | ||||||||||||
AXALTA COATING SYSTEMS LTD. | ||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||
(In millions, except per share data) | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net sales | $ | 1,139.3 | $ | 1,091.8 | $ | 3,511.6 | $ | 3,188.1 | ||||
Other revenue | 6.7 | 4.5 | 18.6 | 16.5 | ||||||||
Total revenue | 1,146.0 | 1,096.3 | 3,530.2 | 3,204.6 | ||||||||
Cost of goods sold | 759.1 | 702.5 | 2,328.9 | 2,033.9 | ||||||||
Selling, general and administrative expenses | 293.4 | 246.5 | 745.8 | 717.1 | ||||||||
Venezuela deconsolidation charge | — | — | — | 70.9 | ||||||||
Research and development expenses | 17.0 | 16.6 | 54.3 | 48.6 | ||||||||
Amortization of acquired intangibles | 28.7 | 26.8 | 86.9 | 72.3 | ||||||||
Income from operations | 47.8 | 103.9 | 314.3 | 261.8 | ||||||||
Interest expense, net | 39.8 | 37.7 | 118.5 | 109.1 | ||||||||
Other expense, net | 5.5 | 7.8 | 11.4 | 27.9 | ||||||||
Income before income taxes | 2.5 | 58.4 | 184.4 | 124.8 | ||||||||
Provision for income taxes | 14.1 | 2.1 | 47.9 | 21.5 | ||||||||
Net income (loss) | (11.6 | ) | 56.3 | 136.5 | 103.3 | |||||||
Less: Net income attributable to noncontrolling interests | 1.5 | 1.4 | 4.8 | 5.1 | ||||||||
Net income (loss) attributable to controlling interests | $ | (13.1 | ) | $ | 54.9 | $ | 131.7 | $ | 98.2 | |||
Basic net income (loss) per share | $ | (0.05 | ) | $ | 0.23 | $ | 0.55 | $ | 0.41 | |||
Diluted net income (loss) per share | $ | (0.05 | ) | $ | 0.22 | $ | 0.54 | $ | 0.40 | |||
Basic weighted average shares outstanding | 238.7 | 240.7 | 239.9 | 240.5 | ||||||||
Diluted weighted average shares outstanding | 238.7 | 245.8 | 244.2 | 246.2 |
AXALTA COATING SYSTEMS LTD. | ||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||
(In millions, except per share data) | ||||||
September 30, 2018 | December 31, 2017 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 588.1 | $ | 769.8 | ||
Restricted cash | 2.8 | 3.1 | ||||
Accounts and notes receivable, net | 958.2 | 870.2 | ||||
Inventories | 618.6 | 608.6 | ||||
Prepaid expenses and other | 128.5 | 63.9 | ||||
Total current assets | 2,296.2 | 2,315.6 | ||||
Property, plant and equipment, net | 1,325.0 | 1,388.6 | ||||
Goodwill | 1,248.0 | 1,271.2 | ||||
Identifiable intangibles, net | 1,388.1 | 1,428.2 | ||||
Other assets | 503.5 | 428.6 | ||||
Total assets | $ | 6,760.8 | $ | 6,832.2 | ||
Liabilities, Shareholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 533.5 | $ | 554.9 | ||
Current portion of borrowings | 42.5 | 37.7 | ||||
Other accrued liabilities | 455.3 | 489.6 | ||||
Total current liabilities | 1,031.3 | 1,082.2 | ||||
Long-term borrowings | 3,852.0 | 3,877.9 | ||||
Accrued pensions | 271.0 | 279.1 | ||||
Deferred income taxes | 149.3 | 152.9 | ||||
Other liabilities | 111.1 | 32.3 | ||||
Total liabilities | 5,414.7 | 5,424.4 | ||||
Commitments and contingencies | ||||||
Shareholders’ equity | ||||||
Common shares, $1.00 par, 1,000.0 shares authorized, 246.7 and 243.9 shares issued at September 30, 2018 and December 31, 2017, respectively | 245.1 | 242.4 | ||||
Capital in excess of par | 1,399.4 | 1,354.5 | ||||
Retained earnings (Accumulated deficit) | 123.2 | (21.4 | ) | |||
Treasury shares, at cost 7.1 and 2.0 shares at September 30, 2018 and December 31, 2017, respectively | (211.9 | ) | (58.4 | ) | ||
Accumulated other comprehensive loss | (312.4 | ) | (241.0 | ) | ||
Total Axalta shareholders’ equity | 1,243.4 | 1,276.1 | ||||
Noncontrolling interests | 102.7 | 131.7 | ||||
Total shareholders’ equity | 1,346.1 | 1,407.8 | ||||
Total liabilities and shareholders’ equity | $ | 6,760.8 | $ | 6,832.2 |
AXALTA COATING SYSTEMS LTD. | ||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||
(In millions) | ||||||
Nine Months Ended September 30, | ||||||
2018 | 2017 | |||||
Operating activities: | ||||||
Net income | $ | 136.5 | $ | 103.3 | ||
Adjustment to reconcile net income to cash used for operating activities: | ||||||
Depreciation and amortization | 274.9 | 255.9 | ||||
Amortization of deferred financing costs and original issue discount | 5.8 | 6.1 | ||||
Debt extinguishment and refinancing related costs | 8.4 | 13.0 | ||||
Deferred income taxes | (1.8 | ) | (21.7 | ) | ||
Realized and unrealized foreign exchange (gains) losses, net | 16.2 | (1.4 | ) | |||
Stock-based compensation | 27.5 | 30.5 | ||||
Asset impairments | — | 7.6 | ||||
Loss on deconsolidation of Venezuela | — | 70.9 | ||||
Net interest income on swaps designated as net investment hedges | (5.9 | ) | — | |||
Other non-cash, net | (3.9 | ) | 6.9 | |||
Changes in operating assets and liabilities: | ||||||
Trade accounts and notes receivable | (119.5 | ) | (44.5 | ) | ||
Inventories | (51.8 | ) | (37.6 | ) | ||
Prepaid expenses and other | (127.9 | ) | (79.9 | ) | ||
Accounts payable | 45.4 | 34.2 | ||||
Other accrued liabilities | (33.6 | ) | (27.8 | ) | ||
Other liabilities | 75.2 | (9.1 | ) | |||
Cash provided by operating activities | 245.5 | 306.4 | ||||
Investing activities: | ||||||
Acquisitions | (79.2 | ) | (559.3 | ) | ||
Investment in non-controlling interest | (26.9 | ) | — | |||
Purchase of property, plant and equipment | (109.5 | ) | (87.2 | ) | ||
Reduction of cash due to Venezuela deconsolidation | — | (4.3 | ) | |||
Purchase of intangibles | — | (0.5 | ) | |||
Net interest proceeds on swaps designated as net investment hedges | 5.9 | — | ||||
Other investing activities | 5.2 | 4.6 | ||||
Cash used for investing activities | (204.5 | ) | (646.7 | ) | ||
Financing activities: | ||||||
Proceeds from long-term borrowings | 468.9 | 456.4 | ||||
Payments on short-term borrowings | (33.8 | ) | (7.0 | ) | ||
Payments on long-term borrowings | (505.1 | ) | (12.4 | ) | ||
Financing-related costs | (4.9 | ) | (9.9 | ) | ||
Dividends paid to noncontrolling interests | (1.0 | ) | (2.7 | ) | ||
Purchase of treasury stock | (147.8 | ) | (58.4 | ) | ||
Proceeds from option exercises | 17.2 | 19.9 | ||||
Deferred acquisition-related consideration | (6.0 | ) | (5.2 | ) | ||
Cash (used for) provided by financing activities | (212.5 | ) | 380.7 | |||
Decrease in cash | (171.5 | ) | 40.4 | |||
Effect of exchange rate changes on cash | (10.5 | ) | 13.5 | |||
Cash at beginning of period | 772.9 | 538.1 | ||||
Cash at end of period | $ | 590.9 | $ | 592.0 | ||
Cash at end of period reconciliation: | ||||||
Cash and cash equivalents | $ | 588.1 | $ | 588.9 | ||
Restricted cash | 2.8 | 3.1 | ||||
Cash at end of period | $ | 590.9 | $ | 592.0 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net income (loss) | $ | (11.6 | ) | $ | 56.3 | $ | 136.5 | 103.3 | ||||
Interest expense, net | 39.8 | 37.7 | 118.5 | 109.1 | ||||||||
Provision for income taxes | 14.1 | 2.1 | 47.9 | 21.5 | ||||||||
Depreciation and amortization | 92.8 | 88.6 | 274.9 | 255.9 | ||||||||
EBITDA | 135.1 | 184.7 | 577.8 | 489.8 | ||||||||
Debt extinguishment and refinancing related costs (a) | — | 0.6 | 8.4 | 13.0 | ||||||||
Foreign exchange remeasurement losses (b) | 7.0 | 3.5 | 8.7 | 8.3 | ||||||||
Long-term employee benefit plan adjustments (c) | (0.4 | ) | (0.1 | ) | (1.4 | ) | 0.4 | |||||
Termination benefits and other employee related costs (d) | 82.4 | 5.8 | 80.2 | 6.6 | ||||||||
Transition-related costs (e) | — | 1.9 | (0.2 | ) | 5.8 | |||||||
Offering and transactional costs (f) | 0.8 | 0.5 | 1.1 | 6.1 | ||||||||
Stock-based compensation (g) | 9.4 | 9.2 | 27.5 | 30.5 | ||||||||
Other adjustments (h) | 0.4 | 0.8 | 1.2 | 3.5 | ||||||||
Dividends in respect of noncontrolling interest (i) | — | (1.8 | ) | (1.0 | ) | (2.7 | ) | |||||
Deconsolidation and site closure related impacts (j) | — | 4.4 | — | 78.5 | ||||||||
Adjusted EBITDA | $ | 234.7 | $ | 209.5 | $ | 702.3 | $ | 639.8 |
(a) | During the nine months ended September 30, 2018 and September 30, 2017, we refinanced our term loans, which resulted in losses of $8.4 million and $13.0 million, respectively, including changes to estimates of $0.6 million for the three months ended September 30, 2017. We do not consider these to be indicative of our ongoing operating performance. |
(b) | Eliminates foreign exchange losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. |
(c) | Eliminates the non-cash, non-service cost components of long-term employee benefit costs. |
(d) | Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes Axalta CEO recruitment fees. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance. |
(e) | Represents integration costs and associated changes to estimates related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar. These amounts are not considered indicative of our ongoing operating performance. |
(f) | Represents acquisition-related expenses, including changes in the fair value of contingent consideration, which are not considered indicative of our ongoing operating performance. |
(g) | Represents non-cash costs associated with stock-based compensation. |
(h) | Represents certain non-operational or non-cash gains and losses unrelated to our core business and which we do not consider indicative of ongoing operations, including indemnity losses associated with the acquisition by Axalta of the DuPont Performance Coatings business, gains and losses from the sale and disposal of property, plant and equipment, gains and losses from the remaining foreign currency derivative instruments and from non-cash fair value inventory adjustments associated with our business combinations. |
(i) | Represents the payment of dividends to our joint venture partners by our consolidated entities that are not 100% owned, which are reflected to show the cash operating performance of these entities on Axalta's financial statements. |
(j) | During the nine months ended September 30, 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary and a non-cash impairment charge related to a real estate investment of $70.9 million. During the three and nine months ended September 30, 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of $4.4 million and $7.6 million, respectively. We do not consider these to be indicative of our ongoing operating performance. |
Three Months Ended September 30, | Nine months Ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net income (loss) | $ | (11.6 | ) | $ | 56.3 | $ | 136.5 | $ | 103.3 | |||
Less: Net income attributable to noncontrolling interests | 1.5 | 1.4 | 4.8 | 5.1 | ||||||||
Net income (loss) attributable to controlling interests | (13.1 | ) | 54.9 | 131.7 | 98.2 | |||||||
Debt extinguishment and refinancing related costs (a) | — | 0.6 | 8.4 | 13.0 | ||||||||
Foreign exchange remeasurement losses (b) | 7.0 | 3.5 | 8.7 | 8.3 | ||||||||
Termination benefits and other employee related costs (c) | 82.4 | 5.8 | 80.2 | 6.6 | ||||||||
Transition-related costs (d) | — | 1.9 | (0.2 | ) | 5.8 | |||||||
Offering and transactional costs (e) | 0.8 | 0.5 | 1.1 | 6.1 | ||||||||
Deconsolidation and site closure related impacts (f) | 4.2 | 4.4 | 4.2 | 83.3 | ||||||||
Other (g) | — | 1.2 | — | 3.7 | ||||||||
Total adjustments | 94.4 | 17.9 | 102.4 | 126.8 | ||||||||
Income tax provision impacts (h) | 3.8 | 7.8 | 4.1 | 21.5 | ||||||||
Adjusted net income | $ | 77.5 | $ | 65.0 | $ | 230.0 | $ | 203.5 | ||||
Diluted adjusted net income per share | $ | 0.32 | $ | 0.26 | $ | 0.94 | $ | 0.83 | ||||
Diluted weighted average shares outstanding (1) | 242.4 | 245.8 | 244.2 | 246.2 |
(a) | During the nine months ended September 30, 2018 and September 30, 2017, we refinanced our term loans, which resulted in losses of $8.4 million and $13.0 million, respectively, including changes to estimates of $0.6 million for the three months ended September 30, 2017. We do not consider these to be indicative of our ongoing operating performance. |
(b) | Eliminates foreign exchange losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. |
(c) | Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes Axalta CEO recruitment fees. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance. |
(d) | Represents integration costs and associated changes to estimates related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar. These amounts are not considered indicative of our ongoing operating performance. |
(e) | Represents acquisition-related expenses, including changes in the fair value of contingent consideration, which are not considered indicative of our ongoing operating performance. |
(f) | During the nine months ended September 30, 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary and a non-cash impairment charge related to a real estate investment of $70.9 million. We recorded accelerated depreciation of $4.2 million during the three and nine months ended September 30, 2018 related to the anticipated closure of our Belgium manufacturing facility, and accelerated depreciation of $4.3 million during the nine months ended September 30, 2017 related to other manufacturing facilities previously announced for closure. During the three and nine months ended September 30, 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of $4.4 million and $7.6 million, respectively, and an impairment from an abandoned in-process research and development asset of $0.5 million for the nine months ended September 30, 2017. We do not consider these to be indicative of our ongoing operating performance. |
(g) | Represents certain non-operational and non-cash costs, including fair value inventory adjustments associated with our business combinations, which we do not consider indicative of ongoing operations. |
(h) | The income tax impacts are determined using the applicable rates in the taxing jurisdictions in which expense or income occurred and includes both current and deferred income tax expense (benefit) based on the nature of the non-GAAP performance measure. Additionally, the income tax impact includes the removal of discrete income tax impacts within our effective tax rate which were expenses of $9.6 million and $7.8 million for the three and nine months ended September 30, 2018, respectively. There were no discrete items removed from our income tax expense for the three and nine months ended September 30, 2017. |
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Ticker: AXTAEvents:
CIK: 1616862
Form Type: 8-K Corporate News
Accession Number: 0001616862-18-000066
Submitted to the SEC: Thu Oct 25 2018 6:48:40 AM EST
Accepted by the SEC: Thu Oct 25 2018
Period: Thursday, October 25, 2018
Industry: Paints Varnishes Lacquers Enamels And Allied Prods