02.04.25
Axalta Coating Systems announced its financial results for the fourth quarter and full year ended December 31, 2024.
Net income increased 85% year over year to $137 million, resulting in a net income margin of 10.5%, driven by favorable price-mix contribution, lower income tax expense due to a $27 million deferred tax benefit recognition in the quarter, lower variable costs and benefits from the 2024 Transformation Initiative partially offset by volume declines and labor inflation. Adjusted net income improved by $30 million year over year to $131 million and does not include the previously mentioned deferred tax benefit. Adjusted EBITDA increased by 10% to $275 million compared to $251 million in the prior year period. Adjusted EBITDA margin expanded by 170 basis points to 21.0%. Diluted earnings per share increased by 91% to $0.63 compared to $0.33 in the prior year period. Adjusted diluted earnings per share improved by 30% to $0.60.
Fourth quarter 2024 cash provided by operating activities was $234 million versus $286 million in the same period last year, with free cash flow totaling $177 million compared to $254 million in the prior year period. The year-over-year decrease in free cash flow was driven primarily by higher working capital and increased capital expenditures.
The company's net debt to trailing twelve-month ("LTM") Adjusted EBITDA ratio (total net leverage ratio) was 2.5x at quarter-end versus 2.9x as of December 31, 2023. In the quarter, the company prioritized gross debt reduction, paying down the full $105 million remaining balance of the revolver draw used to finance the acquisition of CoverFlexx. Cash and cash equivalents at year end were $593 million, and total liquidity was $1.4 billion.
The Performance Coatings segment generated Adjusted EBITDA of $198 million in the fourth quarter compared to $192 million in the prior year period, with Adjusted EBITDA margins of 23.5% and 22.6%, respectively. Lower variable costs, favorable price-mix and contributions from CoverFlexx drove the increases in segment Adjusted EBITDA and Adjusted EBITDA margin.
Mobility Coatings fourth quarter 2024 net sales were $468 million, up 4% from the prior year period. Growth was driven predominantly by strong Light Vehicle volume performance in China and Latin America and favorable price-mix partially offset by declines in Commercial Vehicle volumes and foreign currency translation headwinds. Light Vehicle net sales increased 9% year over year driven by 6% volume growth and 5% favorable price-mix impact, which more than offset headwinds from foreign exchange translation. Commercial Vehicle net sales decreased by 10% year over year to $99 million led by anticipated lower volumes from Class 8 builds in North America and Latin America and foreign currency headwinds.
Mobility Coatings generated Adjusted EBITDA of $77 million in the fourth quarter compared to $59 million in the prior year period, with Adjusted EBITDA margins of 16.4% and 13.2%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven primarily by positive price-mix contribution, volume growth and savings from the 2024 Transformation initiative partially offset by labor inflation.
Net income improved to $391 million versus $269 million in 2023, resulting in a net income margin of 7.4%, an increase of 220 basis points versus the prior year. The net income increase was driven primarily by lower variable costs, sales growth inclusive of contributions from acquisitions, lower consulting and enterprise resource planning system implementation spending and savings from the 2024 Transformation Initiative partially offset by labor inflation and increased restructuring costs. Adjusted net income improved by $144 million year over year to $518 million. Adjusted EBITDA improved to $1,116 million, increasing 17% when compared to fiscal year 2023. Adjusted EBITDA margin improved by 280 basis points to 21.2% versus the prior year with expansion in both segments. Diluted EPS per share increased by 47% to $1.78 compared to $1.21 in the prior year period. Adjusted Diluted EPS improved by 40% to $2.35.
Fiscal year 2024 cash provided by operating activities was $576 million versus $575 million in the prior year as earnings growth was mostly offset by higher working capital. Free cash flow totaled $451 million compared to $447 million in 2023, an increase of $4 million.
“Axalta's 2024 financial results were exceptional. We delivered record net sales and Adjusted EBITDA for the fourth quarter and full year in a challenging macro environment,” said Chris Villavarayan, Axalta’s CEO and President. “Consistent outperformance in Refinish and Light Vehicle and excellent execution across the company, resulted in an Adjusted EBITDA margin of over 21% as we continue down the path to delivering against our commitments outlined in the 2026 A Plan.”
Fourth Quarter 2024 Highlights
- Record fourth quarter net sales of $1.3 billion
- Net income increased 85% year over year to $137 million, with net income margins of 10.5%, a year over year improvement of 480 basis points
- Record fourth quarter Adjusted EBITDA of $275 million
- Adjusted EBITDA margin improved 170 basis points year over year
- Diluted EPS increased 91% to $0.63 and Adjusted Diluted EPS increased 30% to $0.60
Fiscal Year 2024 Highlights
- Record full year net sales of $5.3 billion
- Record net income of $391 million, a 45% increase year over year, with net income margins of 7.4%, a year over year improvement of 220 basis points
- Record full year Adjusted EBITDA of $1,116 million, with Adjusted EBITDA margins of 21.2%
- Diluted EPS increased 47% to $1.78 and Adjusted Diluted EPS increased 40% to $2.35
Fourth Quarter 2024 Consolidated Financial Results
Fourth quarter 2024 net sales increased 1% year over year to $1.3 billion, inclusive of a 1% foreign currency headwind.Net income increased 85% year over year to $137 million, resulting in a net income margin of 10.5%, driven by favorable price-mix contribution, lower income tax expense due to a $27 million deferred tax benefit recognition in the quarter, lower variable costs and benefits from the 2024 Transformation Initiative partially offset by volume declines and labor inflation. Adjusted net income improved by $30 million year over year to $131 million and does not include the previously mentioned deferred tax benefit. Adjusted EBITDA increased by 10% to $275 million compared to $251 million in the prior year period. Adjusted EBITDA margin expanded by 170 basis points to 21.0%. Diluted earnings per share increased by 91% to $0.63 compared to $0.33 in the prior year period. Adjusted diluted earnings per share improved by 30% to $0.60.
Fourth quarter 2024 cash provided by operating activities was $234 million versus $286 million in the same period last year, with free cash flow totaling $177 million compared to $254 million in the prior year period. The year-over-year decrease in free cash flow was driven primarily by higher working capital and increased capital expenditures.
The company's net debt to trailing twelve-month ("LTM") Adjusted EBITDA ratio (total net leverage ratio) was 2.5x at quarter-end versus 2.9x as of December 31, 2023. In the quarter, the company prioritized gross debt reduction, paying down the full $105 million remaining balance of the revolver draw used to finance the acquisition of CoverFlexx. Cash and cash equivalents at year end were $593 million, and total liquidity was $1.4 billion.
Discussion of Segment Results
Performance Coatings fourth quarter 2024 net sales were $843 million, down 1% from the prior year period as the contribution from CoverFlexx was more than offset by lower volumes and unfavorable impacts from foreign currency translation. Refinish net sales grew 2% year over year to $545 million driven by contributions from the CoverFlexx acquisition, favorable price-mix contribution, and net new body shop wins, partially offset by lower volumes in Europe and negative impacts from foreign currency translation. Industrial net sales decreased by 5% year over year to $298 million as favorable pricing was more than offset by lower volume from weak demand across most end businesses and foreign currency translation headwinds.The Performance Coatings segment generated Adjusted EBITDA of $198 million in the fourth quarter compared to $192 million in the prior year period, with Adjusted EBITDA margins of 23.5% and 22.6%, respectively. Lower variable costs, favorable price-mix and contributions from CoverFlexx drove the increases in segment Adjusted EBITDA and Adjusted EBITDA margin.
Mobility Coatings fourth quarter 2024 net sales were $468 million, up 4% from the prior year period. Growth was driven predominantly by strong Light Vehicle volume performance in China and Latin America and favorable price-mix partially offset by declines in Commercial Vehicle volumes and foreign currency translation headwinds. Light Vehicle net sales increased 9% year over year driven by 6% volume growth and 5% favorable price-mix impact, which more than offset headwinds from foreign exchange translation. Commercial Vehicle net sales decreased by 10% year over year to $99 million led by anticipated lower volumes from Class 8 builds in North America and Latin America and foreign currency headwinds.
Mobility Coatings generated Adjusted EBITDA of $77 million in the fourth quarter compared to $59 million in the prior year period, with Adjusted EBITDA margins of 16.4% and 13.2%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven primarily by positive price-mix contribution, volume growth and savings from the 2024 Transformation initiative partially offset by labor inflation.
Fiscal Year 2024 Consolidated Financial Results
For the full year 2024, net sales increased 2% year over year to $5.3 billion.Net income improved to $391 million versus $269 million in 2023, resulting in a net income margin of 7.4%, an increase of 220 basis points versus the prior year. The net income increase was driven primarily by lower variable costs, sales growth inclusive of contributions from acquisitions, lower consulting and enterprise resource planning system implementation spending and savings from the 2024 Transformation Initiative partially offset by labor inflation and increased restructuring costs. Adjusted net income improved by $144 million year over year to $518 million. Adjusted EBITDA improved to $1,116 million, increasing 17% when compared to fiscal year 2023. Adjusted EBITDA margin improved by 280 basis points to 21.2% versus the prior year with expansion in both segments. Diluted EPS per share increased by 47% to $1.78 compared to $1.21 in the prior year period. Adjusted Diluted EPS improved by 40% to $2.35.
Fiscal year 2024 cash provided by operating activities was $576 million versus $575 million in the prior year as earnings growth was mostly offset by higher working capital. Free cash flow totaled $451 million compared to $447 million in 2023, an increase of $4 million.
“Axalta's 2024 financial results were exceptional. We delivered record net sales and Adjusted EBITDA for the fourth quarter and full year in a challenging macro environment,” said Chris Villavarayan, Axalta’s CEO and President. “Consistent outperformance in Refinish and Light Vehicle and excellent execution across the company, resulted in an Adjusted EBITDA margin of over 21% as we continue down the path to delivering against our commitments outlined in the 2026 A Plan.”