EXHIBIT 99.1
Published on August 24, 2017
Axalta Coating Systems Ltd.
Investor Presentation
Second Quarter 2017
Exhibit 99.1
PROPRIETARYAXALTA COATING SYSTEMS 2
Legal Notices
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 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017.
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.
PROPRIETARYAXALTA COATING SYSTEMS
2014-2017
November 2014 IPO (NYSE: AXTA)
Expand capacity in China, Germany,
Mexico and Brazil
Build Asia-Pacific Technology Center in
Shanghai
Acquire Valspar’s Wood business (N.A.),
Dura Coat (U.S.), Spencer (U.K.) & other
smaller transactions
Announce Global Innovation Center in
Philadelphia, PA
Announce investment in India to double
capacity
Introduce Ganicin™ corrosion-resistant
coating system for industrial applications
Launch AquaEC 6100
Enhance powder coating facility in
Montbrison, France
Introduce SyroxTM mainstream waterborne
coatings solution1866
Herberts founded - the
original producer of
Standox® paints
2000-2012
Formulate super-high solids coatings for OEMs
Introduce Imron® Elite finishes
Launch ChromaPremier® Pro system for high-volume
customers
Acquire Plus™ EFX spectrophotometer to enhance accuracy in
color matching
1900-1970s
1900s: Begin nitrocellulose lacquer manufacture; permanent colors®
- first breakthrough enamel technology
1920s: Duco® paints (U.S.) and Permaloid®paints manufactured by
Spies Hecker® (Germany) introduced as sprayables
1950s: Standox® paints launch premium line; First to develop L,a,b
color equations: The foundation of modern color science
1980-1990s
Imron® enamel introduced
Alesta® powder coatings launched
Introduced 1st spectrophotometer
First waterborne OEM coatings in U.S.
Cromax® waterborne refinish basecoat introduced
Acquires Herberts coatings businesses (EMEA)
2013
Axalta Coating Systems becomes an
independent company
New global headquarters in Philadelphia, PA
Replacement of key executive leadership
positions
Introduction of end-market focus and
leadership
Axalta: Celebrating 150+ Years Of Coatings Excellence
2
0
1
4
3
PROPRIETARYAXALTA COATING SYSTEMS
Axalta’s Corporate Transformation: Carve-out & The First Two Years
Completed separation
New leadership team
Initial growth strategy
Incentives realigned
Global re-branding
N
o
n
-Core
D
iv
is
io
n
The Carve Out
Run & Maintain
Regional Structure
Capital Constrained
Risk Aversion,
Low Growth
Predecessor
Company
~2000 - 2012 2013 - 2014
4
Major Cap-Ex Projects
MSO Strategy for Refinish
End-Market Leadership
Key Early Decisions
PROPRIETARYAXALTA COATING SYSTEMS
Post Carve-Out: Ongoing Transformation
O
perati
n
g
T
ransformat
io
n Focused on Profitable Growth
The Axalta Way
First M&A Deals
Pushing Through Roadblocks
New Operations Leadership
2015 - 2017
5
Carlyle Sell-down /
New Ownership Base
Board Transformation
Leadership Evolution /
Organization Maturity
Significant Progress During Period of Emerging Markets and FX Turmoil
Corpo
rate
T
ransformat
io
n
PROPRIETARYAXALTA COATING SYSTEMS
Refinish
$1.7 B
(41%)
Industrial
$0.7 B
(18%)
Body Shops
Light
Vehicle
$1.3 B
(33%)
CV
$0.4 B (8%)
Performance Coatings
General Industrial,
Electrical Insulation, Architectural
Transportation Coatings
Adjusted EBITDA1,2 - $554 M (23% Margin) Adjusted EBITDA1,2 - $353 M (21% Margin)
Light Vehicle / Automotive OEMs Truck, Bus, Rail, Off-road OEMs
____________________________________________________________________________________________________________
1. Financials for FY 2016, all sales data refers to Net Sales 2. Consolidated Adjusted EBITDA reconciliation can be found in the Appendix
Axalta – A Global Leader In Coatings
$2.4 Billion, 59% of Sales $1.7 Billion, 41% of Sales
6
PROPRIETARYAXALTA COATING SYSTEMS
Axalta’s Future State: A Global High-Performing Coatings Leader
Consistent
Growth
Margin
Expansion
Effective
Capital
Allocation
Enhanced
Shareholder
Returns
Axalta’s Vision
To maximize our customers’ productivity and product functionality by offering them innovative
coatings solutions and best-of-class service
7
PROPRIETARYAXALTA COATING SYSTEMS
Grow The Business, Refine The Cost Structure
Growth Supported by Clear Strategies,
Greater Resources
Market Share Gains in Core Markets
From Innovation, Service Execution
Emerging Markets Focus for Long Term
Opportunity
Globalizing Existing Products to Reach
Underserved Markets
Optimizing Procurement
Streamlining Organization
Refining Operating Model
Global Fit-For-Purpose Cost Structure
Profitable Growth Underpinned by Both Top and Bottom Line Initiatives
8
Enhance ProductivitySet a Cadence of Growth
PROPRIETARYAXALTA COATING SYSTEMS
Cost Initiatives To Enhance Productivity & Efficiency
Fit-For-Growth (Europe): $100 million targeted savings
• Right-size staffing levels + wage & benefit restructuring
• Rationalize manufacturing and logistics
• Invest in automation
Initial carve-out actions:
• Restructure EMEA
• Globalize Procurement
• Eliminate Stranded Costs
The Axalta Way: $100 million targeted savings
• Axalta’s permanent business process for continuous improvement
• Implement Lean tools to enhance productivity and improve ROIC
• Opportunities in commercial excellence, procurement, SG&A
2013 2017
~$50 million
incremental
savings
Completing Axalta Way Phase I in 2017 with Remaining ~$50 million in Productivity Savings
9
PROPRIETARYAXALTA COATING SYSTEMS
Key Goals For 2017
Outgrow our End-markets
Stated Objective Expected Results
Drive Excellent Customer Service &
Innovation
Maintain Active Operating Cost
Discipline
Execute on Structural Savings
Disciplined Capital Allocation
Continue FCF & Financial Discipline
New product introductions, broader global market penetration, benefit
from consolidation in key end-markets
Begin rollout of global operating model, complexity reduction, active
cyclical cost discipline, and footprint optimization
Continue to execute on structural cost savings through productivity
initiatives
Target more bolt-on M&A deals
Focus on FCF and maintain leverage goals; begin to accelerate
alternative capital allocation beyond debt reduction
Maintain focus on customer productivity and offering a broad and deep
product choice
10
PROPRIETARYAXALTA COATING SYSTEMS
Axalta Operates Fundamentally Strong Businesses
Global Market Leadership Positions
Significant Competitive Advantages
A Service-Led Business Model
Structurally Attractive Global End Markets
Highly Variable Cost Structure & Low Capital Intensity
11
PROPRIETARYAXALTA COATING SYSTEMS
Global Market Leadership Positions
Axalta’s Global Scale Enables Market Leadership
_______________________________________________
Information as of FY 2016, all sales data refers to Net Sales
1. Mexico is included in Latin America
2. Includes 12 JV facilities.
50 manufacturing
facilities
48 customer
training sites
4 technology
centers
~13,600
employees, ~130
countries
North America1
35% Sales
Latin America1
11% of Sales
Asia Pacific
18% of Sales
EMEA
36% of Sales
Manufacturing Facility2 Technology Center
12
PROPRIETARYAXALTA COATING SYSTEMS
Global Market Leadership Positions
Peer 1
Axalta
Peer 2
Peer 3
Other
~90% of Sales from Markets Where Axalta Has #1 or #2 Global Share
Axalta
Peer 1
Peer 2
Peer 3
Other
Performance Coatings: Refinish Transportation Coatings: Light Vehicle
#1
__________________________________
Source: Orr & Boss, Axalta estimates (2016)
#2
Performance Coatings: Industrial Transportation Coatings: Commercial Vehicle
#2 in powder coatings globally
#2 in industrial wood coatings in North America
#2 in energy solutions coatings globally
#2 in industrial e-coat globally
#1 supplier to North America heavy duty truck market
Leading supplier to other offroad vehicle niches
13
PROPRIETARYAXALTA COATING SYSTEMS
Significant Competitive Advantages
Differentiated Franchise with Global Scale and Strong Competitive Advantages
4+ million color variations
Hundreds of formulations in
automotive & industrial
Deep coatings heritage
since 1866
Broad global brand
portfolio
1,300+ technology employees
600+ patents, 350+ trademarks
$165+ million annual spend
50 plants on 5 continents
Significant legacy capital
investment
Process technology is
hard to replicate
Dedicated employees in OEM
plants
Technical support to body
shops
Technology
Innovation
Extensive Formulation
Database
Deep Process
Technology Knowledge
Go-To-Market
With Strong Brands
Differentiated
Technical Support
Product Process Distribution & Technical Services
14
PROPRIETARYAXALTA COATING SYSTEMS
Industry Trends Axalta Technologies
OEM Vehicle Light-Weighting Broad substrate coating applicability for next generation materials
Growth in Multi-Shop
Operators (MSO)
Axalta’s waterborne technology improves MSO shop productivity and our national
coverage enables high service levels
Significant Competitive Advantages
More Complex Colors
Integration with OEMs grows color library
Advanced color matching technologies critical to body shop supplier selection
Our technology enables OEMs to reduce capital intensity, footprint, and energy use
OEMs Seek Continuous
Productivity Improvement
Government Regulation:
VOC Limits
Complete VOC compliant portfolio for both Refinish and OEM
Broad Technology Portfolio Well-Positioned to Benefit From Industry Trends
15
PROPRIETARYAXALTA COATING SYSTEMS
A Service-Led Business Model
Critical Functionality at a Relatively Low Cost
1
Compelling Value Proposition Where Product Cost is Not the Main Driver
Light & Commercial
Vehicle: <1% of a new
vehicle’s cost
Industrial: Critical to
function, durability,
safety & compliance
Refinish: 5%-10% of
total repair cost
Body Shop
OEM Plant
Service is Key in Both Refinish and OEM End-Markets
Painter Training
Shop Productivity
Shop Layout
Paint Mixing
Line Service
Technical Services
16
PROPRIETARYAXALTA COATING SYSTEMS
Structurally Attractive Global End-Markets
Strong Coatings Growth Outlook
Long Term Alignment With Global Growth
Refinish: Car parc, miles driven, and collision rates
Light Vehicle: Emerging economies and middle
classes; ongoing consumer strength in developed
markets
Commercial Vehicle: Global consumer markets
expanding; infrastructure growth; professionalized
logistics management
Industrial: Global GDP and industrial production;
application sophistication with enhanced
functionality and durability
Diverse Industry Growth Drivers
Commercial
Vehicle
Light
Vehicle
Refinish
Industrial
5.4%
3.8%
2.9%
2.7%
CAGR
Coatings Industry Sales
($ in Billions)
_____________________________
Source: Orr & Boss (2016), Axalta estimates
7.7 8.6
7.775
8.725
3.3
3.8
23.3
28.8
2016 2020E
17
PROPRIETARYAXALTA COATING SYSTEMS
Highly Variable Cost Structure & Low Capital Intensity
~45-55% of COGS come from variable raw
material inputs
Utilize temporary labor to enable wage structure
flexibility
Toggle other costs as needed in a downturn,
including both variable and semi-fixed
Low Capital Intensity
Capex at $136 million is 3.3% of sales, but only
1.2% for maintenance capex
Batch production process is inherently flexible
Capacity additions are very modular to minimize
stranded cost impacts
Variable Cost Structure
Well Positioned to React to Cyclical Downturns
18
PROPRIETARYAXALTA COATING SYSTEMS
Axalta’s Evolution Is Grounded In Fundamental Goals
Focus on operational excellence and foster a culture of accountability
Axalta’s Strategy
Grow in targeted industrial coatings segments via organic growth and selective acquisitions
Move into attractive adjacencies by leveraging our global technology and service capabilities
Grow in existing markets with our industry-leading products and services
19
PROPRIETARYAXALTA COATING SYSTEMS
Axalta’s Strategy: Grow Core Products & Markets
Refinish
____________________
Source: Axalta estimates
Strong Momentum Driven by Customer-Centric Approach
Axalta MSO Market Share
2013 Today
Light Vehicle
Axalta is gaining share by partnering
with market winners
Our value proposition remains strong
with all refinish market channels
Heavy Duty Truck
AxaltaPeer 1
Peer 2
Peer 3 Other
#1
North America Heavy Duty Truck Market
(Vehicles in Thousands)
Heavy Duty Truck Production
201
707
North America China
The China
market is
~3.5x North
America
_____________________________
Source: Orr & Boss, Axalta estimates
___________________________
Source: LMC Automotive (2017E)
Axalta has demonstrated growth with
key business wins
20
PROPRIETARYAXALTA COATING SYSTEMS
Emerging
Markets,
29%
Axalta’s Strategy: Accelerate Growth In Emerging Markets
China Example
Light Vehicles, Per 1,000 People China Car Parc
(thousands)
743
263
230
129
61
19
United States
Central &
Eastern Europe
Mexico
Brazil
China
India
Damaged Vehicles Per 1M km Driven
(2011)
Axalta 2016 Net Sales Emerging Market Growth
Coatings Market
($ Billions)
Significant Emerging Markets Growth Opportunity
Significant Opportunity
Rapid growth of middle-classes in emerging
economies
Increased vehicle penetration per capita
Expansion of car parc
Elevated collision rates vs. developed
markets
United States
Brazil
China___________________________Source: Orr & Boss (2016)
_________________________________________
Source: LMC Automotive (2013), World Bank (2013)
____________________
Source: Axalta estimates
___________________________
Source: LMC Automotive (2016)
$21.1 $22.4 $23.8
$25.3 $26.8
2016 2017E 2018E 2019E 2020E
21
136
156
176
197
219
242
267
291
317
2013A 2015A 2017E 2019E 2021E
PROPRIETARYAXALTA COATING SYSTEMS
Architectural
Axalta’s Strategy: Targeted Industrial Coatings Expansion
Growth from Leveraging Our Product Portfolio in Underserved Markets
Strong product portfolio in wood, powder, liquid, and e-coat
Implemented global end-market business structure to capitalize on opportunities
Leveraging existing technology and enhanced sales organization to grow
A Broad Industrial Portfolio
Electrical
Insulation
Agricultural,
Construction, &
Earthmoving (ACE)
Oil & Gas Coil
22
Industrial
Wood
PROPRIETARYAXALTA COATING SYSTEMS
Ongoing productivity – The Axalta Way
Operating system design and rollout
R&D / Innovation enablers
Salesforce refinement & investment
Balanced manufacturing footprint
Enhanced IT tools
Complexity reduction
Leadership & Culture
Tone set by senior leaders
Independence with accountability
Leadership stabilized across the matrix
Supporting and educating our people
Talent roadmaps to sustain and grow
Refining the culture deeper in the company
Organization & Operations
Employees Feel the Effect of Our Focus and Accountability
23
Axalta’s Strategy: Focus On Operating Excellence
Financial Overview
PROPRIETARYAXALTA COATING SYSTEMS
Axalta Today: Shifting Gears To Larger Projects
Underlying Market Growth
Core Market Growth
Operational Improvements Tuck-in
Organic Levers For
Growth
Inorganic / M&AMargin Levers
Growth + Margins + Allocation Focus = Best-in-class Shareholder Returns
25
Optimized Capital
Allocation & ROIC
Axalta Way Bolt-on
Strategic
Partnerships
Geographic Expansion
Globalize Local Products
Innovation / New Products
Business Mix Shifts
Complexity Reduction
AXALTA COATING SYSTEMS
Q2 Consolidated Results
Commentary
26
Net sales led by acquisition growth
Net sales pressured by lower volumes in Latin America
Refinish and EMEA Light Vehicle, partly offset by solid
growth in Industrial and Commercial Vehicle end-
markets
Pricing concessions in Light Vehicle and unfavorable
price and product mix in Performance Coatings drove
lower net sales in North America and EMEA
1.5% unfavorable currency impact shows moderating
impact versus prior two years
Financial Performance
($ in millions) 2017 2016 Incl. F/X Excl. F/X
Performance 663 631 5.1% 6.9%
Transportation 426 433 (1.7%) (0.7%)
Net Sales 1,089 1,064 2.3% 3.8%
Net Income (Loss) (1) (21) 51
Adjusted EBITDA 227 251 (9.5%)
(1) Represents Net Income (L s ) attributable to controlling interests
Q2 % Change
Net Sales Variance
$1,064
$1,089
Q2 2017Acq.PriceVolume FXQ2 2016
(0.3%) (2.4%) (1.5%) +6.5% +2.3%
PROPRIETARYAXALTA COATING SYSTEMS
Cumulative Productivity Savings
($ millions)
The Axalta Way: “A focused approach to doing business that drives profitability by improving our efficiency,
productivity, and growth opportunities every day, wherever we do business”
2017E20162015 2018E2014
~$150
$89
~$200
$37
Continued progress
27
The Axalta Way: Driving Towards World Class Productivity
PROPRIETARYAXALTA COATING SYSTEMS
Major Capex projects completed in 2016
Asia Pacific Technology Center
Argentina – New Manufacturing Site
Major Capex projects planned for 2017
Global Innovation Center
Jiading – WB Expansion
Savli – OEM Manufacturing & Laboratory
Capital Expenditures
Capex by Year and Category
($ in millions)
Commentary
$59 $60 $53 $50
$35
$12
$53
$39 $48 $80
$38
$75
$46 $39
$15 $109
$188
$138 $136 $130
2013 2014 2015 2016 2017E
Maintenance Growth Productivity
28
Prioritization Of Capital Spending; Focus On High IRR Capex
PROPRIETARYAXALTA COATING SYSTEMS
Notes: 1) ROIC = Net Operating Profit After Tax (NOPAT) / (Total Debt + Preferred
Stock + Minority Interest + Equity); 2) AXTA total capital excludes identified intangible
assets; 3) Data as of LTM Q4 2016
Axalta’s ROIC is penalized by the February 2013 LBO and
related asset step-up from purchase price accounting
Drivers of ROIC upside:
Growth in NOPAT from ongoing business execution
Effective capital allocation: Organic investments,
return accretive M&A, and focus on asset efficiency
We believe that over time we can achieve returns in
excess of the peer group averages
Return on Invested Capital (ROIC) Commentary
NOPAT ROIC (LTM)
34.2%
19.2%
17.0% 16.7%
12.9%
SHW PPG VAL RPM AXTA
29
Effective Capital Allocation Should Drive Improved Returns
PROPRIETARYAXALTA COATING SYSTEMS
Debt Reduction
Organic Investment
Capex / R&D
M & A
Dividends
- No current dividend
Share Repurchases
- Offset dilution
- Opportunistic buys
Leverage in
excess of
target and no
immediate
investment?
Investment
opportunity that
exceeds hurdle
rate?
Share price
greater than
fair value?
Free Cash
Flow
No
Excess
Yes
Yes
Yes
No
30
Axalta Today: Focus On Capital Allocation
AXALTA COATING SYSTEMS
Debt and Liquidity Summary
Capitalization
31
Comments
Upsized and modified USD Term Loan to
finance the acquisition of Valspar’s North
American Industrial Wood Coatings
business and Spencer Coatings Group and
to take advantage of favorable market
conditions
Reduced LIBOR spread by 50 basis
points; maturity extended by one year
Leverage ratio increased due to
incremental borrowing for acquisitions and
higher Euro denominated balances from
stronger Euro
Leverage ratio reflects only one month
contribution of recent acquisitions in LTM
Adjusted EBITDA
(1) Assumes exchange rate of $1.142 USD/Euro
(2) Total Net Debt = Total Debt minus Cash and Cash Equivalents
(3) Total Net Leverage = Total Net Debt / LTM Adjusted EBITDA
($ in millions) @ 6/30/2017 Maturity
Cash and Cash Equivalents $482
Debt:
Revolver ($400 million capacity) - 2021
First Lien Term Loan (USD) 1,977 2024
First Lien Term Loan (EUR)(1) 451 2023
Total Senior Secured Debt $2,428
Senior Unsecured Notes (USD) 490 2024
Senior Unsecured Notes (EUR)(1) 377 2024
Senior Unsecured Notes (EUR)(1) 505 2025
Capital Leases 46
Other Borrowings 13
Total Debt $3,859
Total Net Debt(2) $3,377
LTM Adjusted EBITDA $885
Total Net Leverage (3) 3.8x
AXALTA COATING SYSTEMS 32
Selected Acquisitions
GeographyEnd-Market Company OverviewTarget
Leading local producer of refinish coatings in Malaysia and Indonesia
Leading North America supplier of automotive interior coatings; strong position in North
American OEM’s
Leading independent supplier of coil coatings in North America
Refinish
Light Vehicle
Industrial
Asia Pacific
NA / LA / AP
North America
North AmericaInd/Ref
North AmericaIndustrial
Leading niche California-based industrial and refinish coatings manufacturer
Texas-based storage tank, hardboard, structure steel, wood and OEM coatings manufacturer
NA / LAIndustrial Leading provider of coatings for the OEM and aftermarket Industrial Wood Markets
EMEA / AP / NAIndustrial
Leading manufacturer of coatings for heavy duty equipment, general industrial, O&G and glass
coatings
EMEARefinish Leading importer and distributor throughout Switzerland of Spies Hecker
Axalta’s exclusive distributor for Spies Hecker in the Netherlands and FlandersRefinish EMEA
EMEAIndustrial Leading supplier of thermoplastic powder coatings based in the United Kingdom
Cleveland-based refinish manufacturer focused on mainstream and economy segmentsNorth AmericaRefinish
AXALTA COATING SYSTEMS
Full Year 2017 Guidance*
Net sales growth includes incremental M&A
contribution of 6-7% from completed
acquisitions
Headwinds to margins from input cost
inflation, certain pricing and customer mix
changes, and foreign currency
Tax rate, as adjusted, benefits from full year
effect of actions completed in mid-2016
Free cash flow expectation imbeds
assumed core working capital improvement
year-over-year, with acquisitions offsetting
lower organic Adjusted EBITDA
Interest expense savings from refinancing
offset by incremental borrowings to fund
recent acquisitions
D&A increased somewhat from acquisitions
Comments on Revised Guidance
33
(1) Reflects adoption of ASU 2016-09, which contributed 1.7 million shares of dilution
* Guidance provided as of August 3, 2017
($ millions) Original Revised
Net Sales, ex FX 4-6% 8-9%
Tax Rate, As Adjusted 22-24% 22-24%
Free Cash Flow $440-480 $440-480
Cash flow from operations less capex
Interest Expense ~$150 ~$150
Adjusted EBITDA $930-980 $940-970
Net Sales 1-3% 7-8%
Capex ~$160 ~$130
Diluted Shares (millions)(1) 246-249 246-249
D&A $335 $350
Performance Coatings: Refinish
PROPRIETARYAXALTA COATING SYSTEMS
Projected Industry Sales
($ in billions)
Asia Pacific
EMEA
North America
4.7%
3.4%
1.5%
2.3%
’16–‘20E CAGR
___________________________________
Source: Orr & Boss; Axalta estimates
Latin America
2.7%
Axalta Global Refinish Dynamics
Strong heritage through Herberts acquisition in 1999
Diverse region with both mature and developing markets
Environmental regulations drive waterborne coatings adoption
MSOs gaining share and Axalta benefits directly
Continued strong core products serve the entire collision market
Leading VOC-compliant products meet environmental regulation shifts
Growth driven primarily by expansion of the Chinese car parc
Significant OEM influence in collision repair industry
Opportunity for growth in mainstream and economy product lines
Mexico and Brazil represent Axalta’s largest markets
Price increases help offset inflation and currency devaluation
Under-representation in the economy segment represents opportunity
E
M
E
A
N
A
A
P
A
C
L
a
t
A
m
$2.2 $2.3 $2.4 $2.4 $2.4
$2.8 $2.9 $2.9 $3.0
$3.0
$0.9 $1.0 $1.0
$1.0 $1.1
$1.7 $1.8
$1.9 $2.0
$2.1
2016 2017E 2018E 2019E 2020E
$7.7 $7.9
$8.2 $8.4
$8.6
35
The Global Refinish Market Is Growing
PROPRIETARYAXALTA COATING SYSTEMS
Global Share Position Key Market Trends
Refinish Industry Sales: ~$7.7 billion
Drivers include size of car parc, miles driven, and accident rates
Industry dynamics favor stable competition in most markets
Focus on innovation and service to increase body shop productivity
Increasing environmental regulation drives technically advanced
high-productivity coatings adoption
Grow our leadership position in premium product segments
Increase market share in under-represented countries and markets
Expand mainstream and economy product penetration
Leverage customer consolidation trends in key regions
Focus on strengthening and expanding our distribution channel
relationships
Axalta’s Strategies For Growth
Axalta
25%
Peer 1
19%
Peer 2
11%
Peer 3
11%
Peer 4
4%
Other
30%
#1
36
Axalta Has A Very Strong Position In Refinish Globally
___________________________________
Source: Orr & Boss (2016); Axalta estimates
PROPRIETARYAXALTA COATING SYSTEMS
Refinish Products: The Paint Layers & Process
Clearcoat: Protects basecoat from the elements,
gives automobile its lustrous look
Basecoat: Creates automobile’s color and
aesthetics
Primer Surfacer: Protects automobile from visible
and UV light, improves surface smoothness,
increases topcoat adhesion
The Refinish Paint Process
37
Performance Coatings: Industrial Coatings
PROPRIETARYAXALTA COATING SYSTEMS
’16-’20E CAGR($ in billions)
Asia Pacific
EMEA
North America
6.7%
5.2%
3.2%
3.2%
5.4%
_____________________________
Source: Orr & Boss; Axalta estimates
Latin America
The Overall Industrial Coatings Market is Expected to Grow
39
The Industrial Coatings Market
$3.3 $3.5 $3.6 $3.7 $3.8
$5.3 $5.5 $5.6 $5.8
$6.0
$0.8 $0.9 $0.9
$1.0 $1.0
$13.9
$14.8
$15.8
$16.9
$18.0
2016 2017E 2018E 2019E 2020E
$28.8
$27.3
$25.9
$23.3
$24.6
PROPRIETARYAXALTA COATING SYSTEMS
General
Industrial
$15.0
Electrical
Insulation
$2.0
Architectual
$1.5
ACE $1.5
Coil $4.5
Oil & Gas
$3.5
Product Examples Market Drivers
General Industrial Metal furniture
Appliances
Shelving/ racking
Electrical boxes
GDP
Industrial production
Electrical Insulation Electric motors
Transformers
Electric motor production
Power transmission
production
Architectural Commercial building windows and
curtain walls
Residential windows and doors
Commercial construction
Residential construction
starts
ACE Construction equipment
Agricultural equipment
Mining equipment
GDP
Industrial production
Coil Commercial / residential siding
Garage doors
Gutters, downspouts, lighting
housings
Appliances
GDP
Construction
Oil & Gas Deep sea pipelines
Oil well conveyance lines
Infrastructure growth
Population growth
Pipeline projects
Source: Coatings World, Axalta estimates
($ billions)
40
Industrial Coatings: A $28B Market Opportunity For Axalta
PROPRIETARYAXALTA COATING SYSTEMS
Industrial Coatings Drivers
Volume growth driven by global GDP and Industrial Production
China drives >40% of global industrial coatings consumption
Commercial architectural market has seen ongoing recovery
Coatings suppliers are consolidating
Consolidation driven by scale advantages and globalization of some end-markets; many niches remain
regional and fragmented
Technology innovation is a catalyst for growth
Drivers include demand for environmentally sustainable products, customer focus on productivity,
improved corrosion and wear resistance and enhanced color choices
Customers are globalizing
Local product must meet global specifications consistently across regions
Global infrastructure growth is driving demand
High temperature resistance required for energy applications
Demand for electrical insulation products linked to infrastructure
41
Axalta’s Industrial Business Today
PROPRIETARYAXALTA COATING SYSTEMS
Growth Priorities & Strategies
Agricultural,
Construction &
Earthmoving
Equipment
(ACE)
Expand
approval
portfolio with
multiple
coatings
technologies
Utilize global
footprint to
target new
business in all
regions
Architectural
Market our
powder
coatings to
architects
(as an
environmentally
friendly
alternative)
Expand color
range to
compete with
liquid
alternatives
Electrical
Insulation
Systems (EIS)
Continue to build
global capability
Target sub-
segments with
above average
growth rates
Oil & Gas
Build on leading
technology
position for
exterior pipe
coatings
Establish strong
global network
to service end
users /
specifiers
General
Industrial
Accelerate
globalization of
key GI sub-
segments
Develop
industry
leadership in
high durability,
corrosion –
resistant
coatings
Coil
A top 4 player
in U.S. market
Focus on
value added
premium
segments
where
customers
value durability
and long
product life
42
Axalta Industrial: Where We Are Going…
Wood
Expand product
line, channel
access
Broaden
geographic
reach
Transportation Coatings Overview
PROPRIETARYAXALTA COATING SYSTEMS
Global co-lead
supplier to OEMs
Transportation
Light Vehicle
Original Equipment
Manufacturers
Plastics and
composite materials
Metal coatings
#1 global supplier to
heavy duty truck and
bus segments
Commercial Vehicle
Commercial trucks
Rail
Bus
Utility trucks
Recreational / off-road
and pleasure craft
General aviation
Synergies
Global OEM
Alliances
Focused
Support Models
Market Drivers
44
Segment Overview
PROPRIETARYAXALTA COATING SYSTEMS
17% global light vehicle market
share with strong OEM
relationships in all regions
#1 player globally in heavy duty
truck and bus
Extensive portfolio of technologies
fit for purpose in each market
Showing results to date through
business wins and global
launches
Strong earnings contribution
underscores focus on profitable
growth
Capacity investments to support
growth in all regions
Moved from regional structure to
global leadership
Improved alignment with strategic
and underserved customers
Building capability and footprint in
high growth regions
Expanding global brand strategy
Demand drivers include
Global GDP
Vehicle replacement cycles
Growth in emerging markets
Infrastructure spending
The global transportation market
is projected to grow ~3.4% CAGR
through 2019
Axalta is actively transforming its
business for profitable growth
Axalta is a leading global OEM
coatings provider
Progress to date has been
strong
45
Transportation Summary
PROPRIETARYAXALTA COATING SYSTEMS
Market Growth: Light Vehicle Market Growth: Commercial Vehicle
_____________________________
Source: Orr & Boss; Axalta estimates
Asia Pacific
Latin America
EMEA
North America
3.9%
3.1%
2.3%
1.5%
2.9%
($ in billions) ’16–‘20E CAGR ($ in millions)
Asia Pacific
EMEA
North America
3.7%
5.9%
2.9%
3.5%
3.8%
’16–‘20E CAGR
_____________________________
Source: Orr & Boss; Axalta estimates
Latin America
$1.5 $1.5 $1.5 $1.6 $1.6
$2.3 $2.3 $2.4 $2.5 $2.5
$0.5 $0.5 $0.6
$0.6 $0.6
$3.5 $3.6
$3.7 $3.9
$4.0
2016 2017E 2018E 2019E 2020E
$8.7
$8.5$8.2$8.0
$7.8
$781 $799 $830 $862 $896
$588 $602 $620
$639 $658
$378 $398
$424 $472
$475
$1,519 $1,576
$1,634
$1,695 $1,756
2016 2017E 2018E 2019E 2020E
$3,785
$3,668$3,508
$3,375$3,265
46
Structurally Growing Markets
PROPRIETARYAXALTA COATING SYSTEMS
Volatile organic
compounds (VOCs)
Toxic substances
Coatings for new
lightweight materials
to improve fuel
economy
Government
Regulations
Emerging Markets Industry Globalization
Demand for
Productivity
Color and Protection
Near-term uncertainty
(Brazil, Russia,
China)
Long-term growth
Global vehicle
platforms
Global color palettes
Global (and local)
coating approvals
Improved first time
quality
Energy, capital, labor,
materials savings for
customers
Consumers demand
aesthetics and style
Extended vehicle life
/ warranty
47
Key Market Trends
PROPRIETARYAXALTA COATING SYSTEMS
Global Share
Axalta
31%
Axalta is a global leader in transportation coatings
Globalizing and harmonizing our coatings technology
Bringing brighter colors and more effects to color design
Aligning global R&D and product management around voice-of-customer
We are customer focused and growth oriented
Strong global leadership team and local capability
Global customer account teams implemented with clear growth metrics
Building senior level customer relationships
Strong launch capability and execution
Robust business systems and competitive analysis implemented
Creating a culture and infrastructure to support growth
HDT
and
Bus
Axalta
17%
Light
Vehicle
48
Transforming A Global Coatings Supplier
PROPRIETARYAXALTA COATING SYSTEMS
Gain share with existing customers
Grow underserved customers and regions
Align product technology to evolving
customer and market needs
Increase content per vehicle
Leverage “what good looks like” into new
regions, customers, and markets
Strategies Key Tactics / Programs
Build capabilities in global and regional roles
Expand decorative and functional coatings
Best-in-class line service excellence
Localize supply chain ensuring competitive
cost structure
Drive complexity management discipline
The Axalta Way: “run it like we own it”
49
Vision Is Above-Market Growth
PROPRIETARYAXALTA COATING SYSTEMS
Light Vehicle HDT
Specialty
OEM
Bus Rail
General
Aviation
Body Builders
& Trailers
Estimated
Market Size
$7,800M $600M $550M $200M $600M $45M $400M
Product
Examples
Passenger cars
Pick-ups / SUVs
Light commercial
vehicles
Component parts
EM class 4-8
truck
manufacturing
RV
Truck caps
Power sports
2 & 3 Wheelers
Specialty LV
Bus – OEM
Bus repair /
refurbishment
Locomotive
passenger rail
Metros
Streetcars
Fixed wing
propeller
Helicopters
Business jets
Trailers
Truck body
builders
Global
EMEA
APLA
NAFTA EMEA
APLA
NAFTA EMEA
APLA
NAFTAEMEA
APLA
NAFTA
_______________________________________
Source: Orr & Boss (2016), IRFAB, and Axalta estimates
Leading
Top 5
Below top 5
EMEA
APLA
NAFTA EMEA
APLA
NAFTA EMEA
APLA
NAFTA
50
Segmenting Our Markets
PROPRIETARYAXALTA COATING SYSTEMS
China expansion to mainstream and economy
segments
Leverage high speed rail success
SprayFlex FSTM interior floor coatings
Leverage global accounts
Gain share in tier part suppliers
China growth via Kinlita JV
China HDT volume is three times NA
Leverage Imron® branded offering
Differentiation through strong HDT color leverage
Developing a segment-focused distribution
strategy
Grow in automotive parts market
China expansion through domestic OEMs
AP expansion beyond China
Gain approvals with underserved customers
Strengthen service capability
Expand 2-wheeler success in Brazil to other regions
Leverage Imron® branded offering
Segment-focused color strategy
Light Vehicle
Specialty OEM
General Aviation
Heavy Duty Truck (HDT)
Bus and Rail
Body Builders / Trailers
Leverage approvals with Textron, Gulfstream, etc.
Expand color palette for high value applications
Align Imron® brands and offerings to segment
Strategic alignments and capabilities
51
We Are Growing With Segment Specific Strategies In Our Target Markets
PROPRIETARYAXALTA COATING SYSTEMS
Light Vehicle
Coatings
delivered to OEM
E-Coat applied
after pre-treat
Primer, Basecoat &
Clearcoat applied
Quality inspections
between layers
52
The OEM Paint Process
APPENDIX
AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation
Note: Numbers might not foot due to rounding.
54
($ in millions) FY 2016 Q1 2016 Q2 2016 Q1 2017 Q2 2017
LTM
6/30/2017
Net Income (loss) $45 $33 $52 $66 (19) $7
Interest Expense, net 178 50 48 36 36 152
Provision for Income Taxes 38 14 17 10 10 27
Depreciation & Amortization 322 76 79 82 84 333
Reported EBITDA $583 $173 $195 $194 $111 $520
A Debt extinguishment and refinancing related costs 98 - 2 - 12 108
B Foreign exchange remeasurement (gains) losses 31 8 18 (1) 6 10
C Long-term employee benefit plan adjustments 2 1 1 - - -
D Termination benefits and other employee related costs 62 2 7 1 - 54
E Consulting and advisory fees 10 3 3 - - 4
F Transition-related costs - - - - 4 4
G Offering and transactional costs 6 - 1 (1) 7 11
H Stock-based compensation 41 10 11 10 11 41
I Other adjustments 5 2 2 - 3 4
J Dividends in respect of noncontrolling interest (3) (2) - - (1) (2)
K Deconsolidation impacts and impairments 68 - 11 - 74 131
Total Adjustments $319 $24 $56 $9 $116 $364
Adjusted EBITDA $902 $196 $251 $203 $227 $885
AXALTA COATING SYSTEMS
Adjusted EBITDA Reconciliation (cont’d)
55
A. During the year ended December 31, 2016 we amended our Credit Agreement and refinanced our indebtedness, resulting in losses of $88 million, and prepaid principal on our term loans, resulting in non-
cash extinguishment losses of $10 million. In 2Q 2016, we prepaid $100 million of the outstanding principal on the 2023 Dollar Term Loans and recorded a non-cash loss on extinguishment of $2 million.
In connection with the refinancing of our Dollar Term Loans during 2Q 2017, we recorded losses of $12 million. We do not consider these 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 impacts of our foreign currency instruments used to
hedge our balance sheet exposures.
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 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 integration costs related to the acquisition of the Industrial Wood business that was a carve-out business from Valspar. These amounts are not considered indicative of our ongoing operating
performance.
G. Represents acquisition-related expenses, including changes in the fair value of contingent consideration, as well as costs associated with the 2016 secondary offerings of our common shares by Carlyle,
both of which are not considered indicative of our ongoing operating performance.
H. Represents non-cash costs associated with stock-based compensation.
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, during the year ended December 31, 2016, we recorded non-cash impairment charges relating to a real estate investment for $11 million and long-lived
assets for $58 million. In conjunction with the deconsolidation of our Venezuelan subsidiary during 2Q 2017, we recorded a loss on deconsolidation of $71 million. In addition, during 2Q 2017, we recorded
non-cash impairment charges related to a manufacturing facility previously announced for closure of $3 million. We do not consider these to be indicative of our ongoing operating performance.
Thank you!
Investor Contact:
Chris Mecray, VP IR
Christopher.Mecray@axaltacs.com
215-255-7970