05.07.15
Axalta Coating Systems Ltd. has announced its financial results for the first quarter ended March 31, 2015.
“We have started 2015 with a solid quarter that met our net sales and exceeded our Adjusted EBITDA expectations, in spite of significant currency headwinds on a sequential and year-over-year basis. The global automotive refinish markets remain stable and supportive, while growing global new vehicle production has offered us opportunities to expand our business rapidly in emerging economies. We remain focused on transforming Axalta into a growth platform while making solid progress on our existing and new cost and productivity initiatives,” said Charles Shaver, Axalta’s Chairman and Chief Executive Officer. “With a fundamentally stable economic backdrop, we look forward to meeting our financial goals for 2015 with the help of proactive and managed cost reductions and in spite of our expectation for ongoing currency headwinds.”
The company announced the following results:
First Quarter Consolidated Financial Results
Net sales were $1.0 billion for the first quarter of 2015, an increase of 5.2% excluding negative foreign currency translation, or a decrease of 5.6% on an as-reported basis. Drivers of net sales growth included 4.8% volume increases, reflecting strong growth in all regions except EMEA, which saw a modest decline in the period largely from lower sales in Russia and Eastern Europe. Higher average selling prices contributed to a modest 0.4% net sales growth, while unfavorable currency translation reduced net sales by 10.8% primarily due to weakness of the Euro and certain currencies in Latin America compared to the U.S. dollar.
Adjusted EBITDA of $182 million for the first quarter of 2015 decreased 2.5% compared to the first quarter of 2014. The decline resulted from negative foreign currency translation and certain operating investments made to support future volumes across multiple regions, including the Jiading, China plant ramp-up. These factors were partially offset by strong volume and price effects. Adjusted EBITDA margin expanded 60 basis points to 18.4% from the year ago period, benefiting from cost reductions achieved over the last year and modest operating leverage.
Performance Coatings Results
The Performance Coatings segment generated net sales of $557.2 million during the first quarter of 2015, an increase of 2.5% excluding foreign currency impacts, and a decrease of 9.6% on an as-reported basis, compared to the first quarter of 2014. Increased volumes contributed 1.9% while higher average selling prices added 0.6% to net sales growth. These factors were more than offset by a 12.1% unfavorable currency translation impact. Net sales from our refinish end-market grew 2.7% on a constant currency basis compared to the first quarter of 2014, while our industrial end-market reported 1.9% growth excluding the impact of currency.
The Performance Coatings segment generated Adjusted EBITDA of $107.1 million, a decrease of 14.0% compared to the first quarter of 2014. This result reflected negative foreign currency translation on positive volumes and pricing growth contributions, offset by higher operating expenses from investments in growth initiatives. Performance Coatings segment Adjusted EBITDA margin of 19.2% reflected a 100 basis point decrease compared to the first quarter of 2014.
Transportation Coatings Results
The Transportation Coatings segment generated net sales of $432.0 million in the first quarter of 2015, an increase of 9.1% excluding foreign currency impacts, and essentially flat at 0.2% growth on an as-reported basis, compared to the first quarter of 2014. Volume and slightly higher average selling prices contributed 9.1% to net sales growth, while unfavorable currency translation reduced net sales by 8.9% compared to the prior year. Net sales from our light vehicle end-market grew by 7.4% on a constant currency basis compared to the first quarter of 2014. Our commercial vehicle end-market saw substantial net sales growth of 15.4% on a constant currency basis versus last year. Strong growth in light vehicle net sales in Asia Pacific and North America was offset in part by flatter performance in other regions. Strong heavy-duty truck volumes continue to drive solid double digit growth from all regions except EMEA, where a recovery has been slower to take shape to date.
The Transportation Coatings segment generated Adjusted EBITDA of $74.9 million, an increase of 20.4% compared to the first quarter of 2014. Adjusted EBITDA growth was driven by solid volume and price effects as well as productivity benefits from our operational improvement initiatives, partially offset by the negative impact of foreign currency translation. The Transportation Coatings segment generated an Adjusted EBITDA margin of 17.3%, an increase of 290 basis points compared to the first quarter of 2014.
Balance Sheet and Cash Flow Highlights
We ended the quarter with cash and cash equivalents of $222.9 million. Our net debt was $3,402.6 million as of March 31, 2015, which resulted in a first quarter Net Debt to Adjusted EBITDA ratio of 4.1x.
First quarter operating cash flow was a use of $98.7 million versus a use of $67.2 million in the year-ago quarter, reflecting normal seasonal working capital swings coupled with payments relating to transition-related activities incurred in 2014. We continue to expect solid operating cash flow for the full year 2015.
“Our financial flexibility remains excellent as of the end of the first quarter 2015,” said Robert Bryant, Axalta’s Executive Vice President and Chief Financial Officer. “We expect to generate solid free cash flow in 2015, while continuing to invest in high return productivity and expansion projects.”
2015 Outlook
We are reiterating our outlook for the full year 2015, including:
“We have started 2015 with a solid quarter that met our net sales and exceeded our Adjusted EBITDA expectations, in spite of significant currency headwinds on a sequential and year-over-year basis. The global automotive refinish markets remain stable and supportive, while growing global new vehicle production has offered us opportunities to expand our business rapidly in emerging economies. We remain focused on transforming Axalta into a growth platform while making solid progress on our existing and new cost and productivity initiatives,” said Charles Shaver, Axalta’s Chairman and Chief Executive Officer. “With a fundamentally stable economic backdrop, we look forward to meeting our financial goals for 2015 with the help of proactive and managed cost reductions and in spite of our expectation for ongoing currency headwinds.”
The company announced the following results:
First Quarter Consolidated Financial Results
Net sales were $1.0 billion for the first quarter of 2015, an increase of 5.2% excluding negative foreign currency translation, or a decrease of 5.6% on an as-reported basis. Drivers of net sales growth included 4.8% volume increases, reflecting strong growth in all regions except EMEA, which saw a modest decline in the period largely from lower sales in Russia and Eastern Europe. Higher average selling prices contributed to a modest 0.4% net sales growth, while unfavorable currency translation reduced net sales by 10.8% primarily due to weakness of the Euro and certain currencies in Latin America compared to the U.S. dollar.
Adjusted EBITDA of $182 million for the first quarter of 2015 decreased 2.5% compared to the first quarter of 2014. The decline resulted from negative foreign currency translation and certain operating investments made to support future volumes across multiple regions, including the Jiading, China plant ramp-up. These factors were partially offset by strong volume and price effects. Adjusted EBITDA margin expanded 60 basis points to 18.4% from the year ago period, benefiting from cost reductions achieved over the last year and modest operating leverage.
Performance Coatings Results
The Performance Coatings segment generated net sales of $557.2 million during the first quarter of 2015, an increase of 2.5% excluding foreign currency impacts, and a decrease of 9.6% on an as-reported basis, compared to the first quarter of 2014. Increased volumes contributed 1.9% while higher average selling prices added 0.6% to net sales growth. These factors were more than offset by a 12.1% unfavorable currency translation impact. Net sales from our refinish end-market grew 2.7% on a constant currency basis compared to the first quarter of 2014, while our industrial end-market reported 1.9% growth excluding the impact of currency.
The Performance Coatings segment generated Adjusted EBITDA of $107.1 million, a decrease of 14.0% compared to the first quarter of 2014. This result reflected negative foreign currency translation on positive volumes and pricing growth contributions, offset by higher operating expenses from investments in growth initiatives. Performance Coatings segment Adjusted EBITDA margin of 19.2% reflected a 100 basis point decrease compared to the first quarter of 2014.
Transportation Coatings Results
The Transportation Coatings segment generated net sales of $432.0 million in the first quarter of 2015, an increase of 9.1% excluding foreign currency impacts, and essentially flat at 0.2% growth on an as-reported basis, compared to the first quarter of 2014. Volume and slightly higher average selling prices contributed 9.1% to net sales growth, while unfavorable currency translation reduced net sales by 8.9% compared to the prior year. Net sales from our light vehicle end-market grew by 7.4% on a constant currency basis compared to the first quarter of 2014. Our commercial vehicle end-market saw substantial net sales growth of 15.4% on a constant currency basis versus last year. Strong growth in light vehicle net sales in Asia Pacific and North America was offset in part by flatter performance in other regions. Strong heavy-duty truck volumes continue to drive solid double digit growth from all regions except EMEA, where a recovery has been slower to take shape to date.
The Transportation Coatings segment generated Adjusted EBITDA of $74.9 million, an increase of 20.4% compared to the first quarter of 2014. Adjusted EBITDA growth was driven by solid volume and price effects as well as productivity benefits from our operational improvement initiatives, partially offset by the negative impact of foreign currency translation. The Transportation Coatings segment generated an Adjusted EBITDA margin of 17.3%, an increase of 290 basis points compared to the first quarter of 2014.
Balance Sheet and Cash Flow Highlights
We ended the quarter with cash and cash equivalents of $222.9 million. Our net debt was $3,402.6 million as of March 31, 2015, which resulted in a first quarter Net Debt to Adjusted EBITDA ratio of 4.1x.
First quarter operating cash flow was a use of $98.7 million versus a use of $67.2 million in the year-ago quarter, reflecting normal seasonal working capital swings coupled with payments relating to transition-related activities incurred in 2014. We continue to expect solid operating cash flow for the full year 2015.
“Our financial flexibility remains excellent as of the end of the first quarter 2015,” said Robert Bryant, Axalta’s Executive Vice President and Chief Financial Officer. “We expect to generate solid free cash flow in 2015, while continuing to invest in high return productivity and expansion projects.”
2015 Outlook
We are reiterating our outlook for the full year 2015, including:
- Net sales growth of 5-7% in constant currency and flat to slightly down including the impact of currency;
- Adjusted EBITDA of $860-$900 million with an Adjusted EBITDA margin of approximately 20%; and
- Normalized effective tax rate of 27-29%, capital expenditures of approximately $150 million, and net working capital of 13-15% of net sales.