EXHIBIT 99.2
Published on April 26, 2017
Axalta Coating Systems
Q1 2017 FINANCIAL RESULTS
April 26, 2017
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 2017 financial projections, including execution on our 2017 goals as well as 2017 net sales, net sales excluding FX, Adjusted EBITDA,
interest expense, tax rate, as adjusted, free cash flow, capital expenditures, depreciation and amortization, diluted shares outstanding, cost savings, contributions from
acquisitions, raw material cost increases, 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, 2016.
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 net sales excluding FX, EBITDA, Adjusted EBITDA, Free Cash Flow, tax rate, as adjusted, 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 net sales excluding FX, EBITDA, Adjusted EBITDA, Free Cash Flow, tax rate, as adjusted, and Net Debt may differ from that of others in our industry. Net sales
excluding FX, 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. Net sales excluding FX, EBITDA, Adjusted EBITDA,
Free Cash Flow, tax rate, as adjusted, 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 sales excluding FX, EBITDA, Adjusted EBITDA, Free Cash Flow or
tax rate, as adjusted, 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 Axalta’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.
2
Legal Notices
AXALTA COATING SYSTEMS
Q1 2017 Highlights
Q1 financial results
Net sales of $1,007.8 million – volume growth of 8.9% YoY includes 4.5% acquisition
contribution
Net income attributable to Axalta of $64.1 million versus $30.9 million in Q1 2016
Adjusted net income attributable to Axalta of $63.1 million versus $43.0 million in Q1 2016
Adjusted EBITDA of $203.1 million versus $194.8 million in Q1 2016
Operating & innovation progress highlights
New products include key technology in Commercial Vehicle as well as multiple industrial
applications
Productivity improvement initiatives on track – Key actions include facility closures
Balance sheet & cash flow progress
Free Cash Flow use: $38.8 million versus $53.6 million last year
Improvement includes normal seasonal working capital use plus funding for two acquisitions
Capital deployment & M&A activity
Agreement to purchase Valspar’s North American Industrial Wood Coatings business for
~$420 million
Acquisitions of Ellis Paints and Century Industrial Coatings enhance North American Industrial
and Refinish portfolios
Announced $675 million share repurchase program authorization
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AXALTA COATING SYSTEMS 4
Key Goals & Priorities For 2017
Outgrow our End-markets
Drive Superior Customer Service &
Innovation
Maintain Active Operating Cost
Discipline
Execute on Structural Savings with
Productivity Programs
• New product introductions, broader global
market penetration, benefit from consolidation in
key end-markets and regions
• Begin rollout of global operating model,
complexity reduction, active cyclical cost
discipline, and footprint optimization
• Complete our programs for $200 million total
savings (run-rate by end of 2017)
Disciplined Capital Allocation
• Three deals announced to date providing over
$270 million incremental net sales (annualized)
• Authorized share buyback provides incremental
value creation optionality
Continue Free Cash Flow and Balance
Sheet Focus
• Focus on FCF and effective capital allocation
while maintaining our balance sheet discipline
Stated Objective Results Expected
• Maintain focus on customer productivity; offer a
broad and deep product selection as
differentiator
Status
AXALTA COATING SYSTEMS
Q1 Consolidated Results
Financial Performance Commentary
Net Sales Variance
$1,008
$956
FXQ1 2016 Q1 2017PriceVolume
5
Net sales led by volume growth
Solid volume growth across both
segments in all regions
Acquisitions contributed 4.5% to
overall volume growth
Positive pricing contribution from
Refinish offset by pricing concessions
and product mix across other end-
markets
2.2% unfavorable currency impact
shows moderating impact versus prior
two years
+8.9% (1.2%) (2.2%) +5.5%
($ in millions) 2017 2016 Incl. F/X Excl. F/X
Performance 586 543 8.0% 11.0%
Transportation 421 413 2.1% 3.2%
Net Sales 1,008 956 5.5% 7.7%
Net Income (1) 64 31
Adjusted EBITDA 203 195 4.3%
(1) Represents Net Income attri utable to Axalta
Q1 % Change
AXALTA COATING SYSTEMS
Q1 Performance Coatings Results
Financial Performance Commentary
Net Sales Variance
6
Net sales led by Industrial including
acquisition contribution
Strong volume growth in both
Industrial and Refinish in most
regions
Volume growth includes 6.7% from
acquisitions
Price flat as pricing gains in Refinish
offset by Industrial
3.0% unfavorable currency impact
from Euro, Renminbi and Mexican
Peso
Adjusted EBITDA margin steady
Margin off slightly due to mixed
impact of volume growth and early
acquisition contribution as well as
increased business investment
expense
$543
$586
VolumeQ1 2016 Q1 2017FXPrice
+11.0% 0.0% (3.0%) +8.0%
Q1
($ in millions) 2017 2016 Incl. F/X Excl. F/X
Refinish 389 379 2.6% 5.7%
Industrial 198 164 20.4% 23.3%
Net Sales 586 543 8.0% 11.0%
Adjusted EBITDA 117 110 6.2%
% margin 19.9% 20.3%
% Change
AXALTA COATING SYSTEMS
Q1 Transportation Coatings Results
Financial Performance Commentary
Net Sales Variance
7
Net sales driven by Light Vehicle
Solid volume growth in Light Vehicle
across all regions and modest
increase in Commercial Vehicle
Acquisitions contributed 1.5% to
volume growth
Decrease in price across all regions
except Latin America
1.1% unfavorable currency impact
largely from the Renminbi and Euro
Adjusted EBITDA margin flat
Adjusted EBITDA margin remains
strong due to benefit from lower
variable costs and volume growth,
despite impact of unfavorable
price/mix and increased operating
investment
FXPriceQ1 2016
$421
Volume Q1 2017
$413
+6.1% (2.9%) (1.1%) +2.1%
($ in millions) 2017 2016 Incl. F/X Excl. F/X
Light Vehicle 340 329 3.2% 4.0%
Commercial Vehicle 81 83 (2.2%) 0.1%
Net Sales 421 413 2.1% 3.2%
Adjusted EBITDA 86 85 1.8%
% margin 20.5% 20.5%
Q1 % Change
AXALTA COATING SYSTEMS
Debt and Liquidity Summary
Capitalization
8
Comments
(1) Assumes exchange rate of $1.073 USD/Euro
(2) Total Net Debt = Total Debt minus Cash and Cash Equivalents
(3) Total Net Leverage = Total Net Debt / LTM Adjusted EBITDA
($ in millions) @ 3/31/2017 Maturity
Cash and Cash Equivalents $439
Debt:
Revolver ($400 million capacity) - 2021
First Lien Term Loan (USD) 1,514 2023
First Lien Term Loan (EUR) (1) 425 2023
Total Senior Secured Debt $1,939
Senior Unsecured Notes (USD) 490 2024
Senior Unsecured Notes (EUR) (1) 353 2024
Senior Unsecured Notes (EUR) (1) 474 2025
Capital Leases 40
Other Borrowings 11
Total Debt $3,307
Total Net Debt (2) $2,868
LTM Adjusted EBITDA $915
Credit Statistics:
Total Net Leverage (3) 3.1x
Debt principal levels consistent with
December 31, 2016
Interest rate hedges: New caps
executed in March become effective
when current swaps/caps mature at Q3
end – in place through December 2019
AXALTA COATING SYSTEMS
Full Year 2017 Guidance
Net sales growth includes incremental M&A
contribution of 2-3% from completed
transactions
Margin expansion driven by volume, price,
and ongoing cost reduction initiatives
Headwinds to margins from moderate input
cost inflation, modest sales mix changes,
and foreign currency
Tax rate, as adjusted, benefits from full year
effect of actions completed in 2016
Free cash flow expansion from Adjusted
EBITDA growth and lower interest expense;
slightly offset by employee separation
payments
($ millions) 2016A 2017E
Net Sales, ex FX 4.3% 4-6%
Tax Rate, As Adjusted 24% 22-24%
Free Cash Flow $423 $440-480
Cash flow from operations less capex
Comments on Drivers
Interest Expense $178 ~$150
Adjusted EBITDA $907 $930-980
Net Sales (0.3%) 1-3%
Capex $136 ~$160
9
Diluted Shares (millions)(1) 244 246-249
D&A $322 $335
(1) Reflects adoption of ASU 2016-09, which contributed 1.7 million shares of dilution
Appendix
AXALTA COATING SYSTEMS
Full Year 2017 Assumptions
Global GDP growth of
approximately 2.9%
Global industrial production
growth of approximately 2.9%
Global auto build growth of
approximately 2.0%
Modest headwinds from
higher oil prices given the
extended supply chain in key
raw materials and category-
specific supply side
constraints and feedstock
price developments
Currency
2016
% Axalta
Net Sales
2016 Average
Rate
2017 Average
Rate
Assumption
% Change
in F/X Rate
US$ per Euro ~28% 1.11 1.05 (4.8%)
Chinese Yuan per
US$
~13% 6.65 6.90 (3.6%)
Brazilian Real per
US$
~3% 3.49 3.22 8.2%
Mexican Peso per
US$
~2% 18.68 19.85 (5.9%)
US$ per British
Pound
~2% 1.36 1.22 (9.6%)
Venezuelan
Bolivar per US$
~1% 493.57 1,003.83 (50.8%)
Russian Ruble per
US$
~1% 67.03 58.18 15.2%
Currency AssumptionsMacroeconomic Assumptions
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AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation
Note: Numbers might not foot due to rounding.
12
($ in millions) FY 2016 Q1 2016 Q1 2017
LTM
3/31/2017
Net Income $48 $32 $66 $82
Interest Expense, net 178 50 36 164
Provision for Income Taxes 40 13 10 37
Depreciation & Amortization 322 76 82 328
Reported EBITDA $588 $171 $194 $611
A Debt extinguishment and refinancing related costs 98 - - 98
B Foreign exchange remeasurement (gains) losses 31 8 (1) 22
C Long-term employee benefit plan adjustments 2 1 - 1
D Termination benefits and other employee related costs 62 2 1 61
E Consulting and advisory fees 10 3 - 7
F Offering and transactional costs (gains) 6 - (1) 5
G Stock-based compensation 41 10 10 41
H Other adjustments 5 2 - 3
I Dividends in respect of noncontrolling interest (3) (2) - (1)
J Asset impairment 68 - - 68
Total Adjustments $319 $24 $9 $304
Adjusted EBITDA $907 $195 $203 $915
AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation (cont’d)
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A. During the year ended December 31, 2016 we prepaid principal on our term loans, resulting in non-cash extinguishment losses of $10 million. Additionally,
we amended our Credit Agreement and refinanced our indebtedness, resulting in additional losses of $88 million. We do not consider these items to be
indicative of our ongoing operating performance.
B. Eliminates foreign exchange (gains) and 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 losses of $2 million, $7 million and $24 million for 1Q 2017, 1Q 2016 and year ended December 31, 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 including our initiative to improve the 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 costs associated with the secondary offerings of our common shares by Carlyle, acquisition-related costs, including changes in the fair value of
contingent consideration associated with our acquisitions, all of which are not considered indicative of our ongoing operating performance.
G. Represents non-cash costs associated with stock-based compensation.
H. Represents costs for certain non-operational or non-cash (gains) 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.
I. 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.
J. As a result of currency devaluations in Venezuela, we recorded non-cash impairment charges relating to a real estate investment of $11 million during the
year ended December 31, 2016. Additionally, during the year ended December 31, 2016, we recorded a $58 million non-cash impairment on long-lived
assets associated with our Venezuela operations. We do not consider these impairments to be indicative of our ongoing operating performance.
Thank you
Investor Relations Contact:
Chris Mecray
Christopher.Mecray@axaltacs.com
215-255-7970