Form: 8-K

Current report filing

February 22, 2018

Documents

Investor Presentation First Quarter 2018 Axalta Coating Systems Ltd. Exhibit 99.1

 
2P R O P R I E T A R Y 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 2018 financial projections, including 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, 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-cash items included within net income, (ii) items Axalta does not believe are indicative of ongoing operating performance or (iii) nonrecurring, unusual or infrequent items that have not occurred within the last two years or Axalta believes are not reasonably likely to recur within the next two years. 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 sales, 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.

 
3P R O P R I E T A R Y 2014-2017 ▪ November 2014 IPO (NYSE: AXTA) ▪ Expand capacity in China, Germany, Mexico, Brazil, India and Argentina; upgrade multiple other facilities ▪ Build Asia-Pacific Technology Center in Shanghai and Global Innovation Center in Philadelphia, PA ▪ Acquire Valspar’s Wood business (N.A.), Dura Coat (U.S.), Spencer (U.K.) & other smaller transactions ▪ Introduce Ganicin™ corrosion-resistant coating system for industrial applications ▪ Launch AquaEC 6100 e-coat ▪ Introduce SyroxTM mainstream waterborne refinish solution 1866 Herberts founded - original Standox® paints producer 2000-2012 ▪ Super-high solids OEM coatings introduced ▪ Imron® Elite finishes introduced ▪ ChromaPremier® Pro high productivity system launched ▪ Acquire Plus™ EFX spectrophotometer launched 1900-1970s 1900s: Permanent colors® manufactured, the first breakthrough lacquer enamel technology 1920s: Duco® paints (U.S.) and Spies Hecker® (Germany) introduced as sprayables 1950s: Standox® paints launches 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 ▪ First spectrophotometer introduced ▪ First waterborne OEM coatings in U.S. ▪ Cromax® waterborne basecoat introduced ▪ Herberts coatings (EMEA) acquired 2013 ▪ Axalta Coating Systems becomes an independent company ▪ New global headquarters in Philadelphia, PA with substantially new executive leadership ▪ Introduction of end-market focus and leadership Axalta: 150+ Years Of Coatings Excellence 2 0 1 4

 
4P R O P R I E T A R Y Axalta’s Ongoing Transformation Early Transformation 2015 - 2016 Significant Progress During Period of Emerging Markets and FX Turmoil 2013 - 2014 Carve Out ▪ Completed separation ▪ New leadership team ▪ Initial growth strategy ▪ Incentives realigned ▪ Global re-branding Ongoing Transformation 2017 + ▪ Focus on profitable growth ▪ Early productivity progress ▪ First M&A transactions ▪ PE sell-down & board transformation completed ▪ Ongoing cultural shift to focus on profitable growth ▪ Maturity of organization / team ▪ The Axalta Way - ongoing ▪ Continued M&A ▪ Focus on capital allocation

 
5P R O P R I E T A R Y Refinish $1.7 B (38%) Industrial $1.0 B (24%) Body Shops Light Vehicle $1.3 B (30%) Comml Vehicle $0.4 B (8%) Performance Coatings $2.7 Billion, 62% of Sales General Industrial, Electrical Insulation, Architectural Transportation Coatings $1.7 Billion, 38% of Sales Adjusted EBITDA1,2 - $564 M (21% Margin) Adjusted EBITDA1,2 - $321 M (19% Margin) Light Vehicle / Automotive OEMs Truck, Bus, Rail, Off-road OEMs ____________________________________________________________________________________________________________ 1. Financials for FY 2017, all sales data refers to Net Sales 2. Consolidated Adjusted EBITDA reconciliation can be found in the Appendix Axalta: A Global Leader In Coatings

 
6P R O P R I E T A R Y 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 Enhance ProductivitySet a Cadence of Growth

 
7P R O P R I E T A R Y Key Goals For 2018 Key Objectives for Growth & Value Creation Axalta’s Vision To maximize our customers’ productivity and product functionality by offering them innovative coatings solutions and best-of-class service ▪ Outgrow our End-markets ▪ Focus on Achieving Price Offsets to Significant Raw Material Inflation ▪ Enhanced Cost Actions to Narrow Price-Cost Gap ▪ Drive Differentiated Customer Technical Service & Product Innovation ▪ Disciplined Capital Allocation With Ongoing Bolt-on M&A as Focus ▪ Continue Balance Sheet & Cash Flow Discipline

 
8P R O P R I E T A R Y Select Acquisitions GeographyEnd-Market Company OverviewTarget Leading producer of refinish coatings in Malaysia and Indonesia Leading N.A. supplier of automotive interior coatings; strong position with N.A. OEM’s Leading independent supplier of coil coatings in N.A. 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 Industrial Leading provider of coatings for the OEM and aftermarket Industrial Wood Markets EMEA / AP / NAIndustrial Leading manufacturer of coatings for heavy equipment, general industrial, O&G & glass 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 segmentNorth AmericaRefinish Wood Coatings North America

 
9P R O P R I E T A R Y Axalta Operates Fundamentally Strong Businesses 9 Global Market Leadership Positions Significant Competitive Advantages A Service-Led Business Model Structurally Attractive Global End Markets Highly Variable Cost Structure & Low Capital Intensity

 
10P R O P R I E T A R Y Global Market Leadership Positions Axalta’s Global Scale Enables Market Leadership _______________________________________________ Net Sales as of FY 2017 1. Mexico is included in Latin America 2. Includes 13 JV facilities. ✓ 49 manufacturing facilities ✓ 47 customer training sites ✓ 4 technology centers ✓ ~13,300 employees, ~130 countries North America1 37% Sales Latin America1 11% of Sales Asia Pacific 17% of Sales EMEA 35% of Sales Manufacturing Facility2 Technology Center

 
11P R O P R I E T A R Y 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

 
12P R O P R I E T A R Y 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 ▪ Broad global brand portfolio ▪ 1,300+ technology employees ▪ $165+ million annual spend ▪ Leading productivity ▪ 50 plants on 5 continents ▪ Significant legacy capital investment ▪ Process technology has solid competitive barriers ▪ Dedicated employees in OEM plants ▪ Technical support to body shops Technology Innovation Extensive Formulation Database Deep Process Technology Knowledge Leading Brands Differentiated Technical Support Product Process Service

 
13P R O P R I E T A R Y Industry Trends Axalta Technologies Vehicle Light-Weighting ▪ Broad substrate coating solutions for next generation materials Body Shop Consolidation ▪ Axalta coatings technology and service drives customer shop productivity Significant Competitive Advantages Color Complexity ▪ OEMs linkage grows color library, advanced color matching a Refinish differentiator ▪ Axalta innovations reduce capital intensity, footprint, and energy use for customersOEM Productivity Requirements Environmental Regulation ▪ Complete VOC-compliant portfolio for both Refinish and OEM Broad Technology Portfolio Well-Positioned to Benefit From Industry Trends

 
14P R O P R I E T A R Y ▪ Painter training ▪ Shop productivity ▪ Ongoing support 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 new vehicle’s cost Industrial: Critical to function, durability, safety & compliance Refinish: ~5% of total repair cost Axalta’s First Product is Service ▪ Paint mixing ▪ Line service ▪ Technical services Refi n is h T ranspo rta tio n

 
15P R O P R I E T A R Y 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 markets & middle class growth; developed markets consumer strength ▪ Commercial Vehicle: Global consumer markets expanding; infrastructure growth; professionalized logistics management ▪ Industrial: Global GDP and IP; technical & application sophistication with enhanced functionality and durability Diverse Industry Growth Drivers Commercial Vehicle Light Vehicle Refinish Industrial Coatings Industry Sales ($ 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

 
16P R O P R I E T A R Y Highly Variable Cost Structure & Low Capital Intensity ▪ ~45-55% of COGS come from variable raw material inputs ▪ Utilize temporary labor to maximize flexibility ▪ Toggle other costs as needed in a downturn & high cost inflation period, including both variable and semi-fixed Low Capital Intensity ▪ 2017 Capex at $125 million was 2.9% of sales, but only ~1% 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

 
17P R O P R I E T A R Y 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

 
18P R O P R I E T A R Y Axalta’s Strategy: Grow Core Products & Markets Performance Coatings Strong Momentum Driven by Customer-Centric Approach Transportation Coatings Geography Product Breadth Customer Consolidation Premium Mainstream Economy Existing Customers Under-served Customers Global CV Markets

 
19P R O P R I E T A R Y Axalta’s Strategy: Accelerate Growth In Emerging Markets China Car Parc (thousands) Emerging Market Growth Coatings Market ($ Billions) Significant Emerging Markets Growth Opportunity Growth Drivers ▪ Growth of middle-classes in emerging economies ▪ Increased vehicle penetration per capita & expansion of car parc ▪ Elevated collision rates vs. developed markets ___________________________ Source: Orr & Boss (2016) ___________________________ Source: LMC Automotive (2016) $21.1 $22.4 $23.8 $25.3 $26.8 2016 2017E 2018E 2019E 2020E 136 156 176 197 219 242 267 291 317 2013A 2015A 2017E 2019E 2021E ▪ China opportunity to extend mainstream and economy refinish presence ▪ LV share remains under-represented with domestic OEMs ▪ Asia ex-China broader opportunity to grow across product lines ▪ Opportunity to broaden geographic presence in South America, leverage distribution strength in Mexico to cross-sell industrial products ▪ Refinish opportunity to extend presence in mainstream and economy products ▪ Underpenetrated in W. Europe periphery, E. Europe, Africa, Middle East ▪ Concentration at premium end implies opportunity in growing mainstream segment E M E A A me ri ca s A P A C

 
20P R O P R I E T A R Y Architectural Axalta’s Strategy: Targeted Industrial Coatings Expansion Growth from Leveraging Our Product Portfolio in Underserved Markets ▪ Targeting mid-single digit growth CAGR ▪ Double digit growth in new customer adds 2015-17 ▪ Added significant infrastructure and investment over 4 years A Broad Industrial Portfolio Electrical Insulation Agricultural, Construction, & Earthmoving (ACE) Oil & Gas Coil Industrial Wood Organic Growth Inorganic Growth ▪ Targeting significant growth from acquisitions ▪ Completed 6 transactions with ~$350+ million in net sales ▪ M&A leverages procurement, distribution and R&D resources

 
21P R O P R I E T A R Y ▪ Ongoing Axalta Way productivity ▪ Axalta Operating Excellence (AOS) rollout ▪ R&D / Innovation enablers ▪ Salesforce investment ▪ Manufacturing footprint balancing ▪ Enhanced IT tools ▪ Product 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 Axalta’s Strategy: Focus On Operating Excellence

 
Financial Overview

 
23P R O P R I E T A R Y 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 Optimized Capital Allocation & ROIC Axalta Way Bolt-on Strategic Partnerships Geographic Expansion Globalize Local Products Innovation / New Products Business Mix Shifts Complexity Reduction

 
24P R O P R I E T A R Y Q4 Consolidated Results CommentaryFinancial Performance Net Sales Variance Net sales growth driven by acquisitions, positive organic volumes across most regional end-markets ▪ Acquisitions provided +8.6% growth in Performance Coatings, mainly in North America and EMEA ▪ Strong volume growth in Commercial Vehicle and Industrial, partially offset by Refinish distribution- focused volume pressure in North America and stable Light Vehicle ▪ Refinish and Industrial increasing average prices; Light Vehicle average price is less negative in Q4 sequentially ▪ 3.5% favorable currency impact driven by stronger Euro ($ in millions) 2017 2016 Incl. F/X Excl. F/X Performance 732 607 20.7% 16.5% Transportation 433 421 2.8% 0.2% Net Sales 1,165 1,027 13.4% 9.9% Net Loss (1) (62) (37) Adjusted EBITDA 245 225 9.3% (1) Represents Net Loss attributable to controlling interests Q4 % Change $1,027 Q4 2017FX Acq.VolumeQ4 2016 $1,165 Price +0.7% +0.6% +3.5% +8.6% +13.4%

 
25P R O P R I E T A R Y Cumulative Productivity Savings ($ millions) “A focused approach to doing business that drives profitability by improving our efficiency, productivity, and growth opportunities every day, wherever we do business” 201720162015 2018E2014 ~$150 $89 ~$200 $37 Continued progress The Axalta Way: Driving Towards World Class Productivity Commercial Operations / Procurement / Technology SG&A ▪ Manufacturing support function review ▪ Technology organization restructuring ▪ Logistics and network optimization ▪ Overhead expense reduction including step-up for inflation offset in 2018 ▪ Salesforce coverage realignment ▪ Increased focus on functional cost layers ▪ Commercial process excellence ▪ Dynamic pricing and consistent terms ▪ Improved salesforce training / capability

 
26P R O P R I E T A R Y Capital Expenditures Capex by Year ($ millions) Commentary 2013 2014 2015 2016 2017 2018E Prioritization Of Capital Spending; Focus On High IRR Capex ▪ Major Capex projects ongoing in 2017 ✓ Philadelphia – Global Innovation Center ✓ Nanjing – Land & Authorizations ✓ Jiading – WB Expansion ✓ Savli – OEM Manufacturing & Laboratory ▪ Major Capex projects during 2018 ✓ Philadelphia – Global Innovation Center ✓ Nanjing – Greenfield Expansion ✓ Acquisitions – Integration & Expansion Projects $109 $188 $138 $136 $125 $160

 
27P R O P R I E T A R Y 13.2% 12.4% 11.6% 10.2% 10.2% PPG RPM AKZA SHW AXTA 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 Q3 2017 ▪ 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) Effective Capital Allocation Should Drive Improved Returns

 
28P R O P R I E T A R Y 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 Axalta Today: Focus On Capital Allocation

 
29P R O P R I E T A R Y Debt and Liquidity Summary Capitalization Comments (1) Assumes exchange rate of $1.193 USD/Euro (2) Total Net Debt = Total Debt minus Cash and Cash Equivalents (3) Total Net Leverage = Total Net Debt / 2017 Adjusted EBITDA ($ in millions) @ 12/31/2017 Maturity Cash and Cash Equivalents $770 Debt: Revolver ($400 million capacity) - 2021 First Lien Term Loan (USD) 1,939 2024 First Lien Term Loan (EUR)(1) 469 2023 Total Senior Secured Debt $2,408 Senior Unsecured Notes (USD) 491 2024 Senior Unsecured Notes (EUR)(1) 394 2024 Senior Unsecured Notes (EUR)(1) 529 2025 Capital Leases 54 Other Borrowings 41 Total Debt $3,916 Total Net Debt(2) $3,146 2017 Adjusted EBITDA $885 Total Net Leverage (3) 3.6x ▪ Leverage ratio improvement compared to Q3 2017 due to… ✓ Cash build in the quarter ✓ Improved LTM EBITDA …Partially offset by ✓ Higher Euro debt balances due to stronger Euro

 
30P R O P R I E T A R Y Full Year 2018 Guidance Comments($ millions) 2017A 2018E ▪ Net sales growth includes incremental M&A contribution of ~3% from completed transactions in 2017 ▪ Adjusted EBITDA contribution driven by volume, price, acquisition contribution, and net productivity ▪ Margin headwind from input cost inflation, offset largely by price and cost actions ▪ 2018 tax rate, as adjusted, benefits slightly from U.S. Tax Reform; 2017 Tax rate benefited from 4.1% on stock comp windfall benefits not forecasted for 2018 ▪ Free cash flow growth primarily from Adjusted EBITDA growth offset slightly from Capex, severance, and Euro and variable interest headwinds ▪ Capex predominately for growth and high- IRR productivity projects Net Sales, ex FX +6.6% ~6-7% Tax Rate, As Adjusted 16.2% 19-21% Free Cash Flow $415 $420-460 Cash flow from operations less capex Interest Expense $147 ~$165 Adjusted EBITDA $885 $940-980 Net Sales +7.0% ~8-9% Capex $125 ~$160 Diluted Shares (millions) 246 ~249 D&A $348 ~$365

 
Performance Coatings: Refinish

 
32P R O P R I E T A R Y Refinish Axalta Refinish Overview 25% Global Market Share Service Led Business Innovation Drives Leadership Global Strategy & Support

 
33P R O P R I E T A R Y Projected Industry Sales ($ billions) APAC EMEA N.A. ___________________________________ Source: Orr & Boss; Axalta estimates Lat. Am. 2016 2017E 2018E 2019E 2020E $7.7 $7.9 $8.2 $8.4 $8.6 The Global Refinish Market Is Growing Key Market Trends ▪ Growing car fleet, miles driven, and accident rates ▪ Globally stable competitive dynamics ▪ Body shop consolidation & professionalization ▪ Environmental regulation drives high-productivity coatings adoption ▪ Extend leadership position in premium segments ▪ Increase share in under-represented markets ▪ Expand mainstream and economy products ▪ Leverage customer consolidation trends ▪ Focus on expanding our distribution partnerships Axalta’s Strategies For Growth

 
34P R O P R I E T A R Y Global Share Position Refinish Industry Sales: ~$7.7 billion Axalta 25% Peer 1 19% Peer 2 11% Peer 3 11% Peer 4 4% Other 30% #1 Axalta Has A Very Strong Position In Refinish Globally ___________________________________ Source: Orr & Boss (2016); Axalta estimates Axalta Global Refinish Dynamics ▪ Strong heritage through 1999 Herberts acquisition ▪ Diverse region with both mature and developing markets ▪ Leading 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 ▪ Chinese car parc drives growth for region ▪ Significant OEM influence in collision repair industry ▪ Opportunity for growth in mainstream and economy product lines ▪ Mexico and Brazil represent Axalta’s largest markets ▪ Economy segment represents growth opportunity longer-term ▪ Strong local manufacturing base for Axalta products EM EA N A A PA C La t A m

 
35P R O P R I E T A R Y The Refinish Process At A Glance Consumer Body Shop Accident Call Insurance Car to Body Shop Repair Performed Vehicle Returned Prepare Surface Primer Surfacer Color Match Basecoat Clearcoat Paint Mixed Customer Satisfaction Depends on Quick, High-Quality, Cost-Effective Repairs

 
Performance Coatings: Industrial Coatings

 
37P R O P R I E T A R Y Axalta Industrial Overview Wood Powder Coatings Coil Energy Solutions Industrial Coating Systems #2 North America Wood Coatings Supplier Global Supplier of Powder Coatings Global Supplier to the Electrical Insulation Sector Global Supplier of Industrial E-Coat POWDER LIQUID E-COAT

 
38P R O P R I E T A R Y ($ in billions) APAC EMEA N. A. _____________________________ Source: Orr & Boss; Axalta estimates Lat. Am. Projected Industry Sales The Industrial Coatings Market 2016 2017E 2018E 2019E 2020E $28.8 $27.3 $25.9 $23.3 $24.6 ▪ Wood: Expand product line, channel access; expand segments (furniture, distribution); broaden geographic reach ▪ Powder Coatings: Expand distribution and marketing channels; Expand color range to compete with liquid alternatives; build metallic capability to world class level ▪ Electrical Insulation Systems (EIS): Continue to build global capability; extend into mainstream markets; target attractive sub- segments; add product lines (i.e. compounds, lubricants) ▪ General Industrial: Accelerate globalization of acquired liquid products and niche markets; develop industry leadership in key value-added coatings; win approvals in agriculture, construction and earthmoving (ACE) markets ▪ Coil: A top 4 player in U.S. market; globalize; focus on value- added premium segments Strategies For Growth

 
39P R O P R I E T A R Y General Industrial $12.0 Electrical Insulation $2.0 Architectual Extrusions $1.5 ACE $1.5 Oil & Gas $3.5 Coil $4.5 Wood $4.5 *Coil and Wood North America only ($ billions) Industrial Coatings: A $28B Market Opportunity For Axalta Volume growth driven by global GDP and Industrial Production ▪ China drives >40% of global industrial coatings consumption ▪ Building construction is a key driver Coatings suppliers are consolidating ▪ Driven by scale advantages and globalization; some niches remain fragmented Technology innovation is a catalyst for growth ▪ Global increase in demand for electric vehicles, alternative energy sources, and environmentally friendly coatings across all end user segments Customers are globalizing ▪ Local product must meet global specifications consistently Global infrastructure growth is driving demand ▪ High temperature resistance required for energy applications ▪ Demand for electrical insulation products linked to infrastructure ▪ Increased construction in developing markets Oil and gas pipeline expansion ▪ Boost in pipeline construction to connect existing infrastructure Market DriversCurrently Served Sub-Markets

 
40P R O P R I E T A R Y Leading In Product Innovation HydroponTMGlass Coating Anti-Shatter Alesta® Lync Matte Clear technology Voltahyd 2250 waterborne series ICONICA Collection

 
41P R O P R I E T A R Y Monumental 2017 Wins Transbay Transit Center Decor Cabinet Company Amazon warehouse Philharmonie De Paris Concert Hall Lucid Motors Qualiform Metals

 
Transportation Coatings Overview

 
43P R O P R I E T A R Y #2 global 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 ▪ General aviation Synergies Global OEM Alliances Focused Support Models Market Drivers Axalta’s Transportation Segment

 
44P R O P R I E T A R Y Projected Industry Sales: Light Vehicle Projected Industry Sales: Commercial Vehicle _____________________________ Source: Orr & Boss; Axalta estimates ($ billions) ($ millions) _____________________________ Source: Orr & Boss; Axalta estimates $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 Structurally Growing Markets APAC EMEA N. A. Lat. Am. APAC EMEA N. A. Lat. Am.

 
45P R O P R I E T A R Y ▪ 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 ▪ Significant improvement in profit contribution from restructuring ▪ Capacity investments to support growth in all regions ▪ Technology & innovation progress underlies our strategy ▪ Building capability and footprint in high growth regions ▪ Expanding global brand strategy ▪ Solidifying global account management ▪ Demand drivers include ✓ Global GDP ✓ Vehicle replacement cycles ✓ Growth in emerging markets ✓ Infrastructure spending The global transportation market is projected to grow ~2.9% CAGR through 2020 Axalta is actively transforming its business for profitable growth Axalta is a leading global OEM coatings provider​ Progress to date has been strong Transportation Summary

 
46P R O P R I E T A R Y ▪ 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 Key Market Trends

 
47P R O P R I E T A R Y Global Share Significant Progress Made… Axalta 31% HDT and Bus Axalta 17% Light Vehicle Transforming A Global OEM Coatings Supplier ▪ Must continue to align technology with customer needs in key target areas ▪ Axalta needs to continue to refine cost structure to meet future challenges ▪ Opportunity remains to penetrate underserved customers ▪ Axalta must focus on both quality and productivity to maximize returns …But Opportunities Still Remain ▪ Successfully added share with existing customers ▪ Added significant business in China since carve-out ▪ Added interior coatings to portfolio ▪ Reduced cost structure substantially in lower margin areas ▪ Numerous capacity investments addressed bottlenecks ▪ Began implementation of Lean Enterprise

 
APPENDIX

 
49P R O P R I E T A R Y Adjusted EBITDA Reconciliation Note: Numbers might not foot due to rounding. ($ in millions) FY 2017 FY 2016 Q4 2017 Q4 2016 Net Income (loss) $48 $45 (56) (35) Interest Expense, net 147 178 38 37 Provision for Income Taxes 142 38 120 15 Depreciation & Amortization 347 322 92 87 Reported EBITDA $684 $583 $194 $104 A Debt extinguishment and refinancing related costs 14 98 1 13 B Foreign exchange remeasurement (gains) losses 7 31 (1) 1 C Long-term employee benefit plan adjustments 1 2 1 (1) D Termination benefits and other employee related costs 35 62 29 37 E Consulting and advisory fees (1) 10 - 2 F Transition-related costs 8 - 2 - G Offering and transactional costs 18 6 12 2 H Stock-based compensation 39 41 8 10 I Other adjustments 4 5 - (1) J Dividends in respect of noncontrolling interest (3) (3) (1) - K Deconsolidation impacts and impairments 79 68 - 58 Total Adjustments $201 $319 $51 $121 Adjusted EBITDA $885 $902 $245 $225

 
50P R O P R I E T A R Y Adjusted EBITDA Reconciliation (cont’d) A. During FY 2017, Q4 2016 and FY 2016 we refinanced our indebtedness, resulting in losses of $13 million, $10 million and $88 million, respectively. During Q4 2017, FY 2017, Q4 2016 and FY 2016 we prepaid outstanding principal on our term loans, resulting in non-cash extinguishment losses of $1 million, $1 million, $3 million and $10 million, respectively. We do not consider these items to be indicative of our ongoing operative 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. Exchange effects attributable to the remeasurement of our Venezuelan subsidiary represented losses of zero and $2 million for Q4 2017 and FY 2017, respectively, and gains of $1 million and losses of $24 million for Q4 2016 and FY 2016, respectively. C. Eliminates the non-cash, non-service 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, and associated true-ups to estimates, 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, which 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 $10 million of costs associated with contemplated merger activities during the Q4 2017 and costs associated with the 2016 secondary offerings of our common shares by Carlyle, all 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. During FY 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary of $71 million. During Q4 2016 and FY 2016, we recorded non-cash impairments at our Venezuela subsidiary of $58 million and $68 million, respectively, associated with our operational long-lived assets and a real estate investment. Additionally, during FY 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of $8 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