Axalta Releases Fourth Quarter, Full Year 2017 Results

Axalta Coating Systems Ltd.  announced its financial results for the fourth quarter and full year ended Dec. 31, 2017.

Fourth Quarter 2017 Highlights:

• Net sales of $1,164.8 million, up 13.4 percent as-reported and 9.9 percent on a constant currency basis versus Q4 2016, including 8.6 percent from acquisition contribution;
• Net loss driven by U.S. tax reform impacts, severance charges and acquisition-related costs;
• Adjusted EBITDA growth largely driven by acquisition contribution and incremental productivity savings, offset partly by higher raw material prices;
• Operating cash flow of $233.6 million in Q4 versus $228.0 million in Q4 2016; free cash flow of $195.8 million in Q4 versus $187.1 million in Q4 2016

Full Year 2017 Highlights:

• Net sales of $4,352.9 million, up seven percent versus 2016, largely driven by acquisition contribution;
• Net income muted by impacts of U.S. tax reform, Venezuela deconsolidation, severance charges and acquisition-related costs;
• Slightly lower Adjusted EBITDA due to moderate pricing pressure in Transportation Coatings, lower volumes in Performance Coatings, raw material inflation and natural disasters;
• Operating cash flow of $540 million in 2017 versus $559.3 million in 2016; free cash flow of $415 million versus $423.1 million in 2016

“Axalta’s fourth quarter demonstrated a return to solid growth following our more challenged third quarter result, with net sales and Adjusted EBITDA performance both at or above our revised guidance ranges,” said Chairman and CEO Charles W. Shaver. “Our stated expectation of improved financial performance beginning in the fourth quarter was met and was supported by broad based market strength and sound execution by our business teams.

Performance Coatings net sales were $732.3 million in Q4 2017, an increase of 20.7 percent year-over-year including 4.2 percent favorable foreign currency contribution. Constant currency net sales increased 16.5 percent, driven by a 14.5 percent acquisition contribution and 2.5 percent higher average selling prices.

The Transportation Coatings segment produced net sales of $432.5 million in Q4 2017, an increase of 2.8 percent versus fourth quarter 2016. Constant currency net sales increased 0.2 percent year-over-year, driven by a 2.4 percent increase in volumes, largely offset by 2.2 percent lower average selling prices.

Axalta ended the year with cash and cash equivalents of $769.8 million. Its net debt was $3.1 billion as of year-end, compared to $3.3 billion as of Sept. 30, 2017.

• Net sales growth of 8-9 percent as reported, or 6-7 percent excluding FX tailwinds;
• Adjusted EBITDA of $940-980 million;
• Interest expense of ~$165 million;
• Income tax rate, as adjusted, of 19-21 percent reflecting the anticipated benefit of the enactment of the U.S. Tax Cuts and Jobs Act legislation;
• Free cash flow of $420-460 million;
• Capital expenditures of ~$160 million;
• Depreciation and amortization of ~$365 million;
• Diluted shares outstanding of ~249 million

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