EXHIBIT 99.2
Published on October 27, 2016
A X A L T A C O A T I N G S Y S T E M S
Q3 2016 FINANCIAL RESULTS
October 27, 2016
Exhibit 99.2
AXALTA COATING SYSTEMS
Forward-Looking Statements
This presentation and the oral remarks made in connection herewith may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of
1995, including those relating to 2016 financial projections, including execution on our 2016 goals as well as 2016 net sales, constant currency net sales, Adjusted EBITDA, Adjusted
EBITDA margin, interest expense, income tax rate, as adjusted, diluted shares, capital expenditures, depreciation and amortization, working capital, cost savings and related assumptions.
Any forward-looking statements involve risks, uncertainties and assumptions. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,”
“target,” “project,” “forecast,” “seek,” “will,” “may,” “should,” “could,” “would,” or similar expressions. These statements are based on certain assumptions that we have made in light of our
experience in the industry and our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances
as of the date hereof. Although we believe that the assumptions and analysis underlying these statements are reasonable as of the date hereof, investors are cautioned not to place undue
reliance on these statements. We do not have any obligation to and do not intend to update any forward-looking statements included herein, which speak only as of the date hereof. You
should understand that these statements are not guarantees of future performance or results. Actual results could differ materially from those described in any forward-looking statements
contained herein or the oral remarks made in connection herewith as a result of a variety of factors, including known and unknown risks and uncertainties, many of which are beyond our
control including, but not limited to, the risks and uncertainties described in "Non-GAAP Financial Measures," and "Forward-Looking Statements" as well as "Risk Factors" in our Annual
Report on Form 10-K for the year ended December 31, 2015..
Non-GAAP Financial Measures
The historical financial information included in this presentation includes financial information that is not presented in accordance with generally accepted accounting principles in the
United States (“GAAP”), including constant currency net sales, Adjusted Net Income, EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt. Management uses these non-GAAP
financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Adjusted EBITDA consists of
EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items that are included in net income and EBITDA that we do not
consider indicative of our ongoing performance and (iii) certain unusual or nonrecurring items impacting results in a particular period. We believe that making such adjustments provides
investors meaningful information to understand our operating results and ability to analyze financial and business trends on a period-to-period basis. Our use of the terms constant
currency net sales, EBITDA, Adjusted EBITDA, Free Cash Flow, and Net Debt may differ from that of others in our industry. Constant currency net sales, EBITDA, Adjusted EBITDA and
Free Cash Flow should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP as measures of operating
performance or operating cash flows or as measures of liquidity. Constant currency net sales, EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt have important limitations as
analytical tools and should be considered in conjunction with, and not as substitutes for, our results as reported under GAAP. This presentation includes a reconciliation of certain non-
GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP. Axalta does not provide a reconciliation for non-GAAP estimates for
net income or income tax rate, as-reported on a forward-looking basis because the information necessary to calculate a meaningful or accurate estimation of reconciling items is not
available without unreasonable effort. For example, such reconciling items include the impact of foreign currency exchange gains or losses, gains or losses that are unusual or
nonrecurring in nature, as well as discrete taxable events. We cannot estimate or project those items and they may have a substantial and unpredictable impact on our US GAAP results.
Segment Financial Measures
The primary measure of segment operating performance is Adjusted EBITDA, which is a key metric that is used by management to evaluate business performance in comparison to
budgets, forecasts, and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance. As we do not measure segment
operating performance based on Net Income, a reconciliation of this non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP
is not available.
Defined Terms
All capitalized terms contained within this presentation have been previously defined in our filings with the United States Securities and Exchange Commission.
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Legal Notices
AXALTA COATING SYSTEMS
Q3 2016 Highlights
Q3 financial results
Net sales of $1,023.4 million – volume and price up 4.4% YoY, offset by 2.1% negative foreign
currency translation impact – includes 2.6% growth from acquisitions
Net loss attributable to Axalta of $10.7 million including refinancing charges of $81.9 million
versus net income of $35.1 million in Q3 2015
Adjusted EBITDA of $233.2 million increased from $216.9 million in Q3 2015
Operating & innovation progress highlights
Launched new Syrox mainstream waterborne refinish product; launched early sanding primer
in EMEA
Productivity improvement initiatives on track for full year target savings of $60 million
Balance sheet & cash flow progress
Cash from operations of $144.5 million versus $158.8 million last year
Two refinancing transactions significantly reduce interest expense, extend maturities and shift
secured debt to unsecured
$150 million U.S. Term Loan pre-payment made in October
M&A activity
Closed on three previously announced transactions and integration well on track
Guidance updated
Slower trends in Europe and Latin America impact Q4 volume expectations; expect full year to
come in at the lower end of our previously communicated range for Adjusted EBITDA,
including acquisitions
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AXALTA COATING SYSTEMS
Q3 Consolidated Results
Financial Performance Commentary
Net Sales Variance
$1,000 $1,023
Volume Q3 2015 Q3 2016 FX Price
4
Net sales growth drivers
Positive pricing contribution from both
segments, led by Performance
Coatings and most notably from Latin
America
Volume growth across both segments
within Asia Pacific, with EMEA and
North America Light Vehicle also
contributing; emerging market
volumes remain pressured
2.6% acquisition contribution to
volumes
2.1% unfavorable currency impact
shows moderating impact versus
prior quarters
+2.5% +1.9% (2.1%) +2.3%
($ in millions) 2016 2015 Incl. F/X Excl. F/X
Performance 619 601 3.1% 5.8%
Transportation 404 400 1.1% 2.3%
Net Sales 1,023 1,000 2.3% 4.4%
Net Income (Loss) (1) (11) 35
Adjusted EBITDA 233 217 7.5%
(1) Represents Net Income attributable to Axalta
Q3 % Change
AXALTA COATING SYSTEMS
Q3 Performance Coatings Results
Financial Performance Commentary
Net Sales Variance
5
Net sales led by Industrial including
acquisition contribution
Pricing led by Refinish; Industrial
remained stable
Volume growth includes 3.4% from
acquisitions
2.7% unfavorable currency impact,
principally from Latin America
Adjusted EBITDA margin strong
Adjusted EBITDA margin remains
strong, benefiting from favorable
price realization, some ongoing
variable margin benefits, offset by
currency translation impact and
increased operating expense to
support growth
$601
Price FX
$619
Q3 2015 Volume Q3 2016
+2.9% +2.9% (2.7%) +3.1%
Q3
($ in millions) 2016 2015 Incl. F/X Excl. F/X
Refinish 435 427 1.8% 4.9%
Industrial 185 174 6.4% 8.2%
Net Sales 619 601 3.1% 5.8%
Adjusted EBITDA 149 139 6.8%
% margin 24.0% 23.1%
% Change
AXALTA COATING SYSTEMS
Q3 Transportation Coatings Results
Financial Performance Commentary
Net Sales Variance
6
Net sales pressured by Commercial
volumes
Solid volume growth in Light Vehicle
led by Asia Pacific and North America,
offset in part by slower EMEA; lower
volumes in Commercial Vehicle driven
by heavy duty truck and other markets
Acquisitions contributed 1.3% to
volumes
1.2% unfavorable FX impact largely
from emerging market exposures
Adjusted EBITDA margin up 150 bps
Adjusted EBITDA margin benefited
from price improvement and some
additional variable cost savings, offset
by foreign currency exchange impact
and increased operating investment
spending to support growth initiatives
Price Q3 2016 FX
$400
Q3 2015
$404
Volume
+1.8% +0.5% (1.2%) +1.1%
($ in millions) 2016 2015 Incl. F/X Excl. F/X
Light Vehicle 321 304 5.7% 6.7%
Commercial Vehicle 83 96 (13.5%) (11.9%)
Net Sales 404 400 1.1% 2.3%
Adjusted EBITDA 85 78 8.7%
% margin 21.0% 19.5%
Q3 % Change
AXALTA COATING SYSTEMS
Debt and Liquidity Summary
Capitalization
7
Net Leverage
(1) Assumes exchange rate of $1.12 USD/Euro
(2) Indebtedness per balance sheet less cash & cash equivalents divided by LTM Q3 2016 Adjusted EBTIDA
(3) Total Net Debt = Total Debt – Cash and Cash Equivalents
($ in millions) @ 9/30/2016 Maturity
Cash and Cash Equivalents $528
Debt:
Revolver ($400 million capacity) - 2021
First Lien Term Loan (USD) 1,887 2020
First Lien Term Loan (EUR) (1) 206 2020
Total Senior Secured Debt $2,093
Senior Unsecured Notes (USD) 489 2024
Senior Unsecured Notes (EUR) (1) 369 2024
Senior Unsecured Notes (EUR) (1) 495 2025
Other Borrowings 37
Total Debt $3,482
Total Net Debt $2,954
LTM Adjusted EBITDA $893
Credit Statistics:
Total Net Leverage (2) 3.3x
5.6x
5.1x
5.0x
4.6x
4.5x
4.3x
4.1x
3.8x
4.0x
3.7x 3.7x
3.4x
3.5x
3.3x 3.3x
At
LBO
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014 2015 2016
AXALTA COATING SYSTEMS
Capitalization Summary
Capitalization
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Refinancing extended debt maturities while decreasing average
borrowing rate from ~4.7% to ~4.0%
Extended revolver maturity to 2021 with favorable drawn pricing
Shift in structure from secured to unsecured borrowings
Table excludes $150 million U.S. Term Loan pay-down in October
(1) Reflects gross principal outstanding
(2) Assumes exchange rate of $1.12 USD/Euro
Pre-Refinancing @ 9/30/2016
($ in millions)
Interest
Rate Maturity USD
Interest
Rate Maturity USD
Revolver ($400mm Capacity) L + 325 2/1/2018 - L + 225 8/1/2021 -
First Lien Term Loan - USD (1) L + 275 2/1/2020 1,925 L + 275 2/1/2020 1,925
First Lien Term Loan - EUR (1)(2) L + 300 2/1/2020 433 L + 300 2/1/2020 210
Senior Secured Notes - EUR (1)(2) 5.750% 2/1/2021 279 -
Total Senior Secured Debt $2,637 $2,135
Senior Unsecured Notes - USD (1) 7.375% 5/1/2021 750 -
Senior Unsecured Notes - USD (1) 4.875% 8/15/2024 500
Senior Unsecured Notes - EUR (1)(2) 4.250% 8/15/2024 376
Senior Unsecured Notes - EUR (1)(2) 3.750% 1/15/2025 505
Notes Payable and Other Borrowings 37 37
Deferred Financing & OID (68) (70)
Total Debt $3,356 $3,482
AXALTA COATING SYSTEMS
Full Year 2016 Guidance
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2016 Benefits from Ongoing Growth and Maturity of Productivity Programs
Net sales expected to be flat to down
slightly, as-reported, based on anticipated
currency headwinds; net sales, ex-FX,
expected to come in at lower end of 4-6%
guidance, including acquisitions
Margin expansion expected to continue,
driven by volume, price, and cost reduction
Tailwinds from ongoing input cost savings
and additional productivity savings
Tax rate, as adjusted, expected to come
down in 2016 from specific actions
completed
Working capital stable in 2016, with free
cash flow expected to rise
Capex is consistent; includes large
discretionary component
($ millions) 2015A 2016E
Net Sales, ex FX +5% 4-6%
Working Capital / Sales 12% 11-13%
Tax Rate, As Adjusted 30% 24-26%
Diluted Shares (millions) 240 242-244
Comments on Drivers
Capital Expenditures $138 ~$150
Interest Expense $197 $180
Adjusted EBITDA $867 ~$900
D&A $308 $320
Net Sales -6% ~0%
Appendix
AXALTA COATING SYSTEMS
Key Goals For 2016
Stated Objective Comments
Grow the Business
Productivity Initiatives to Improve
Cost Structure
Focus on Operating Improvement
Extend Core Strengths & Globalize
• Flat net sales; growth at lower end of ~4-6% ex-
currency, including acquisitions
• Expect to outgrow our end-markets
• $60 million in combined 2016 cost savings
• Axalta Way expected to ramp up in 2016
• New capacity ramps continue, opportunity to
refine our operating strengths
• Strong global foundation, see opportunity to
extend further
Continue High IRR Investment
Projects
• Expansion projects largely completed
• Productivity & growth capex remain in high gear
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M&A Interest Increasing • Continue to participate in attractive bolt-on M&A
FCF & Debt Paydown Still A
Priority
• Expect solid progress in reducing our leverage
ratios
AXALTA COATING SYSTEMS
Full Year 2016 Assumptions
Global GDP growth of
approximately 2.4%
Global industrial production
growth of approximately
1.1%
Global auto build growth of
approximately 2.8%
Modest benefit from lower oil
prices given the extended
supply chain in key raw
materials and category-
specific supply and demand
dynamics
Currency
2015
% Axalta
Net Sales
Rates Used in
Initial 2016
Guidance
Rates Used in
Current 2016
Guidance
% Change
in F/X Rate
US$ per Euro ~27% 1.05 1.11 5.7%
Chinese Yuan per
US$
~13% 6.60 6.62 (0.3%)
US$ per British
Pound
~3% 1.54 1.36 (11.7%)
Brazilian Real per
US$
~3% 4.30 3.51 22.5%
Venezuelan
Bolivar per US$
~3% 237.50 498.77 (52.4%)
Mexican Peso per
US$
~2% 17.00 18.53 (8.3%)
Russian Ruble per
US$
~1% 70.00 67.53 3.7%
Currency Assumptions Macroeconomic Assumptions
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AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation
Note: Numbers might not foot due to rounding.
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LTM
($ in millions) FY 2015 Q1 2015 Q2 2015 Q3 2015 Q1 2016 Q2 2016 Q3 2016 9/30/2016
Net Income (Loss) $98 $47 (24) $36 $31 $50 (10) $110
Interest Expense 197 50 49 51 50 48 43 188
Provision for Income Taxes 63 1 30 18 15 20 - 49
Depreciation & Amortization 308 73 78 75 76 79 81 318
Reported EBITDA $665 $171 $132 $180 $171 $197 $114 $664
A Debt extinguishment and refinancing related costs 3 - - - - 2 82 87
B Foreign exchange remeasurement losses 94 9 58 24 8 18 5 34
C Long-term employee benefit plan adjustments - - - (1) 1 1 1 4
D Termination benefits and other employee related costs 36 4 15 1 2 7 16 41
E Consulting and advisory fees 24 3 7 7 3 3 3 16
F Transition-related costs (3) - - - - - - (3)
G Offering and transactional costs (1) (4) - 1 - 1 3 6
H Stock-based compensation 30 2 12 8 10 11 10 39
I Other adjustments (6) 1 2 (4) 2 2 1 -
J Dividends in respect of noncontrolling interest (5) (4) (1) - (2) - (2) (4)
K Asset impairment 31 - 31 - - 11 - 11
Total Adjustments $202 $11 $124 $37 $24 $56 $119 $229
Adjusted EBITDA $867 $182 $255 $217 $195 $253 $233 $893
AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation (cont’d)
A. During FY 2015, 2Q 2016 and 3Q 2016, we prepaid outstanding principal on our Term Loans, resulting in non-cash pre-tax losses on extinguishment of $3
million, $2 million and $5 million, respectively. During 3Q 2016, we amended the terms of our Credit Agreement, resulting in a non-cash pre-tax loss on
extinguishment of $2 million. In connection with the refinancings of our Senior Notes during 3Q 2016, we recorded a non-cash pre-tax loss on
extinguishment of $19 million and incurred call premiums and other fees of $57 million. We do not consider these items 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. Exchange effects attributable to the remeasurement of our Venezuelan subsidiary
represented gains of $1 million for both 1Q 2015 and 3Q 2015 and losses of $56 million, $7 million, $16 million and $1 million for the periods 2Q 2015, 1Q
2016, 2Q 2016 and 3Q 2016, respectively.
C. Eliminates the non-cash non-service cost components of long-term employee benefit costs.
D. Represents expenses primarily related to employee termination benefits and other employee-related costs including our initiative to improve overall cost
structure within the European region as well as costs associated with our Axalta Way initiatives, which are not considered indicative of our ongoing operating
performance.
E. Represents fees paid to consultants for professional services primarily related to our Axalta Way initiatives, which are not considered indicative of our
ongoing operating performance.
F. Represents non-recurring charges associated with the transition from DuPont to a standalone entity, including branding and marketing costs, information
technology related costs and facility transition costs.
G. Represents costs associated with the secondary offerings of our common shares by Carlyle, acquisition-related costs, including a $5 million gain recognized
during 1Q 2015 resulting from the remeasurement of our previously held interest in an equity method investee upon the acquisi tion of a controlling interest,
and costs associated with changes in the fair value of contingent consideration associated with our acquisitions, all of which are not considered indicative of
our ongoing operating performance.
H. Represents non-cash costs associated with stock-based compensation, including $8 million of expense during 2Q 2015 attributable to the accelerated
vesting of all issued and outstanding stock options issued under the 2013 Plan as a result of the Change in Control.
I. Represents costs for 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 equity investee dividends, indemnity losses (gains) associated with the Acquisition, losses (gains) on sale and disposal of
property, plant and equipment, losses (gains) on the remaining foreign currency derivative instruments and non-cash fair value inventory adjustments
associated with our business combinations.
J. Represents the payment of dividends to our joint venture partners by our consolidated entities that are not wholly owned, which are reflected to show cash
operating performance of these entities on Axalta’s financial statements.
K. As a result of currency devaluations in Venezuela, we recorded non-cash impairment charges relating to a real estate investment of $31 million and $11
million during Q2 2015 and Q2 2016, respectively. We do not consider these impairments to be indicative of our ongoing operat ing performance.
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Thank you