PHILADELPHIA--(BUSINESS WIRE)--
Axalta Coating Systems Ltd. (NYSE:AXTA), a leading global coatings
company, announced its financial results for the quarter ended
September 30, 2014. The results contained in this earnings release
reflect the results previously filed in our Form 10-Q on November 14,
2014.
Key highlights:
-
Third quarter net sales of $1.1 billion, an increase of 3.2% versus
prior year
-
Third quarter Adjusted EBITDA of $228 million, an increase of 17.5%
year-over-year
-
Continued progress on previously announced capital expansions with
initial commissioning at our Jiading waterborne expansion and ground
breaking at our Wuppertal waterborne facility
“We are pleased to report solid results for the third quarter driven by
year-over-year net sales growth in both our Performance Coatings and
Transportation Coatings segments as a result of favorable volume and
pricing trends. We also continued to expand our Adjusted EBITDA margins
compared to the third quarter last year. We remain focused on executing
our revenue, cost, and efficiency initiatives and are encouraged with
the progress during the quarter towards our longer term growth plans,”
said Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer.
“We are excited about our recent IPO which we believe provides Axalta
with increased visibility and is an important milestone for the Company.”
Consolidated Financial Results
Net sales were $1.1 billion for the third quarter of 2014, an increase
of 3.2% compared to the third quarter of 2013. Net sales growth was
primarily driven by volume increases, which contributed 2.8% in net
sales growth, as North America and Asia volume increases were slightly
offset by volume declines in the other regions, particularly Latin
America where the economic environment remains weak. Higher average
selling prices contributed 1.9% in net sales growth. Growth from volume
and pricing was partially offset by unfavorable currency translation,
which reduced net sales by 1.5%.
Adjusted EBITDA was $228 million for the third quarter of 2014, an
increase of 17.5% compared to the third quarter of 2013. Adjusted EBITDA
growth was driven by higher sales, improved product mix, lower raw
material costs and benefits from operational improvement initiatives. As
a percentage of net sales, Adjusted EBITDA expanded by 250 basis points
to 20.6%.
Performance Coatings Results
The Performance Coatings segment generated net sales of $663.5 million
during the third quarter of 2014, an increase of 3.1% compared to the
third quarter of 2013. Increased volumes contributed 3.3% in net sales
growth and higher average selling prices contributed 1.5% in net sales
growth. These factors were partially offset by unfavorable currency
translation, which reduced net sales by 1.7%. Net sales from our
refinish and industrial end markets grew by 3.4% and 2.3%, respectively,
compared to the third quarter of 2013.
Performance Coatings generated Adjusted EBITDA of $148.5 million, an
increase of 0.8% compared to the third quarter of 2013. Performance
Coatings Adjusted EBITDA growth was primarily driven by higher net
sales, partially offset by higher operating expenses from investments in
growth initiatives. As a result, Performance Coatings Adjusted EBITDA
margin of 22.4% contracted 50 basis points compared to the third quarter
of 2013.
Transportation Coatings Results
The Transportation Coatings segment generated net sales of $445.4
million, an increase of 3.4% compared to the third quarter of 2013.
Higher average selling prices contributed to 2.5% net sales growth and
increased volumes contributed to 2.1% net sales growth. These factors
were partially offset by unfavorable currency translation, which reduced
net sales by 1.2% compared to the prior year. Net sales from our light
vehicle and commercial vehicle end markets grew by 0.8% and 13.0%,
respectively, compared to the third quarter of 2013. Light vehicle
production increases in Asia Pacific and increased commercial truck
volumes in North America were largely offset by significantly lower
light vehicle volumes in Latin America.
Transportation Coatings generated Adjusted EBITDA of $79.5 million, an
increase of 69.9% compared to the third quarter of 2013. Transportation
Coatings Adjusted EBITDA growth was driven by increased sales and lower
fixed manufacturing costs, partially resulting from our operational
improvement initiatives. Transportation Coatings generated an Adjusted
EBITDA margin of 17.8%, representing approximately a 700 basis point
increase compared to the third quarter of 2013.
Balance Sheet Highlights
We ended the quarter with cash and cash equivalents of $233.3 million.
Our net debt was $3,499 million as of September 30, 2014 which results
in a net debt to LTM Adjusted EBITDA ratio of 4.2 times.
“Our balance sheet, cash flow generation, and borrowing capacity provide
us with the flexibility to fund our business and invest for growth,”
said Robert W. Bryant, Axalta’s Executive Vice President and Chief
Financial Officer. “Additionally, we lowered our cash interest expense
compared to same period in 2013 which was a result of the refinancing of
our Senior Secured Credit facilities which we completed in February 2014
and an additional step-down in interest rates in the third quarter 2014
on our term loans as a result of our improved net leverage metrics.”
Conference Call Information
As previously announced, Axalta will hold a conference call to discuss
its third quarter 2014 financial results on Thursday December 4, at 8:00
a.m. EST. The U.S. dial-in phone number for the conference call is
(877) 407-0784 and the international dial-in number is +1
(201) 689-8560. A live webcast of the conference call will also be
available online at http://ir.axaltacs.com.
For those unable to participate in the conference call, a replay will be
available through December 18, 2014. The U.S. replay dial-in phone
number is (877) 870-5176 and the international replay dial-in number is
+1 (858) 384-5517. The replay passcode is 13596038.
Cautionary Statement Concerning Forward-Looking Statements
This release may contain certain forward-looking statements regarding
Axalta and its subsidiaries. All of these statements are based on
management’s expectations as well as estimates and assumptions prepared
by management that, although they believe to be reasonable, are
inherently uncertain. These statements involve risks and uncertainties,
including, but not limited to, economic, competitive, governmental and
technological factors outside of Axalta’s control that may cause its
business, industry, strategy, financing activities or actual results to
differ materially. Axalta undertakes no obligation to update or revise
any of the forward looking statements contained herein, whether as a
result of new information, future events or otherwise.
Financial Statements Tables
|
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated (Successor) and DuPont Performance Coatings
Combined (Predecessor)
|
|
Statements of Operations (Unaudited)
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
Three Months
|
|
Nine Months
|
|
Period from
|
|
|
|
Ended
|
|
Ended
|
|
January 1, 2013
|
|
|
|
September 30,
|
|
September 30,
|
|
through January 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
2013
|
|
Net sales
|
|
$
|
1,108.9
|
|
|
$
|
1,074.6
|
|
|
$
|
3,282.9
|
|
$
|
2,858.2
|
|
|
$
|
326.2
|
|
Other revenue
|
|
|
6.9
|
|
|
|
8.2
|
|
|
|
21.6
|
|
|
21.9
|
|
|
|
1.1
|
|
Total revenue
|
|
|
1,115.8
|
|
|
|
1,082.8
|
|
|
|
3,304.5
|
|
|
2,880.1
|
|
|
|
327.3
|
|
Cost of goods sold
|
|
|
728.1
|
|
|
|
739.1
|
|
|
|
2,174.1
|
|
|
2,066.7
|
|
|
|
232.2
|
|
Selling, general and administrative expenses
|
|
|
249.4
|
|
|
|
276.7
|
|
|
|
746.7
|
|
|
673.7
|
|
|
|
70.8
|
|
Research and development expenses
|
|
|
13.4
|
|
|
|
12.5
|
|
|
|
36.8
|
|
|
31.0
|
|
|
|
3.7
|
|
Amortization of acquired intangibles
|
|
|
20.9
|
|
|
|
21.0
|
|
|
|
63.3
|
|
|
59.0
|
|
|
|
—
|
|
Merger and acquisition related expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
28.1
|
|
|
|
—
|
|
Income from operations
|
|
|
104.0
|
|
|
|
33.5
|
|
|
|
283.6
|
|
|
21.6
|
|
|
|
20.6
|
|
Interest expense, net
|
|
|
52.6
|
|
|
|
62.7
|
|
|
|
166.5
|
|
|
153.2
|
|
|
|
—
|
|
Bridge financing commitment fees
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
25.0
|
|
|
|
—
|
|
Other (income) expense, net
|
|
|
62.2
|
|
|
|
(9.3
|
)
|
|
|
65.1
|
|
|
49.7
|
|
|
|
5.0
|
|
Income (loss) before income taxes
|
|
|
(10.8
|
)
|
|
|
(19.9
|
)
|
|
|
52.0
|
|
|
(206.3
|
)
|
|
|
15.6
|
|
Provision (benefit) for income taxes
|
|
|
7.5
|
|
|
|
(26.3
|
)
|
|
|
18.2
|
|
|
(34.4
|
)
|
|
|
7.1
|
|
Net income (loss)
|
|
|
(18.3
|
)
|
|
|
6.4
|
|
|
|
33.8
|
|
|
(171.9
|
)
|
|
|
8.5
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
1.6
|
|
|
|
1.4
|
|
|
|
4.2
|
|
|
3.7
|
|
|
|
0.6
|
|
Net income (loss) attributable to controlling interests
|
|
$
|
(19.9
|
)
|
|
$
|
5.0
|
|
|
$
|
29.6
|
|
$
|
(175.6
|
)
|
|
$
|
7.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
229.5
|
|
|
|
228.1
|
|
|
|
229.2
|
|
|
228.1
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
229.5
|
|
|
|
228.1
|
|
|
|
229.3
|
|
|
228.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
(0.09
|
)
|
|
$
|
0.02
|
|
|
$
|
0.13
|
|
$
|
(0.75
|
)
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
(0.09
|
)
|
|
$
|
0.02
|
|
|
$
|
0.13
|
|
$
|
(0.75
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
|
(Dollars in millions, except share data)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
233.3
|
|
|
$
|
459.3
|
|
|
Restricted cash
|
|
|
4.3
|
|
|
|
—
|
|
|
Accounts and notes receivable, net
|
|
|
919.1
|
|
|
|
865.9
|
|
|
Inventories
|
|
|
580.4
|
|
|
|
550.2
|
|
|
Prepaid expenses and other assets
|
|
|
61.7
|
|
|
|
50.2
|
|
|
Deferred income taxes
|
|
|
39.1
|
|
|
|
30.0
|
|
|
Total current assets
|
|
|
1,837.9
|
|
|
|
1,955.6
|
|
|
Net property, plant, and equipment
|
|
|
1,556.2
|
|
|
|
1,622.6
|
|
|
Goodwill
|
|
|
1,046.9
|
|
|
|
1,113.6
|
|
|
Identifiable intangibles, net
|
|
|
1,339.5
|
|
|
|
1,439.6
|
|
|
Deferred financing costs
|
|
|
95.4
|
|
|
|
110.6
|
|
|
Deferred income taxes
|
|
|
275.6
|
|
|
|
271.9
|
|
|
Other assets
|
|
|
230.5
|
|
|
|
223.2
|
|
|
Total assets
|
|
$
|
6,382.0
|
|
|
$
|
6,737.1
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
487.9
|
|
|
$
|
478.5
|
|
|
Current portion of borrowings
|
|
|
35.5
|
|
|
|
46.7
|
|
|
Deferred income taxes
|
|
|
7.9
|
|
|
|
5.5
|
|
|
Other accrued liabilities
|
|
|
386.6
|
|
|
|
472.7
|
|
|
Total current liabilities
|
|
|
917.9
|
|
|
|
1,003.4
|
|
|
Long-term borrowings
|
|
|
3,696.1
|
|
|
|
3,874.2
|
|
|
Deferred income taxes
|
|
|
259.2
|
|
|
|
280.4
|
|
|
Other liabilities
|
|
|
296.2
|
|
|
|
367.3
|
|
|
Total liabilities
|
|
$
|
5,169.4
|
|
|
$
|
5,525.3
|
|
|
Commitments and contingent liabilities
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
Common stock, $1.00 par, 1,000,000,000 shares authorized,
229,779,626 and 229,069,356
shares issued and outstanding at
September 30, 2014 and December 31, 2013, respectively
|
|
$
|
229.8
|
|
|
$
|
229.1
|
|
|
Capital in excess of par
|
|
|
1,141.9
|
|
|
|
1,133.7
|
|
|
Accumulated deficit
|
|
|
(224.3
|
)
|
|
|
(253.9
|
)
|
|
Accumulated other comprehensive (loss) income
|
|
|
(0.2
|
)
|
|
|
34.0
|
|
|
Total stockholders’ equity
|
|
|
1,147.2
|
|
|
|
1,142.9
|
|
|
Noncontrolling interests
|
|
|
65.4
|
|
|
|
68.9
|
|
|
Total stockholders’ equity and noncontrolling interests
|
|
|
1,212.6
|
|
|
|
1,211.8
|
|
|
Total liabilities, stockholders’ equity and noncontrolling interests
|
|
$
|
6,382.0
|
|
|
$
|
6,737.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated (Successor) and DuPont Performance Coatings
Combined (Predecessor)
|
|
Statements of Cash Flows (Unaudited)
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
|
|
|
|
|
Period from
|
|
|
|
Nine Months
|
|
Nine Months
|
|
January 1, 2013
|
|
|
|
Ended September 30,
|
|
Ended September 30,
|
|
through January 31,
|
|
|
|
2014
|
|
2013
|
|
2013
|
|
Operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
33.8
|
|
|
$
|
(171.9
|
)
|
|
$
|
8.5
|
|
|
Adjustment to reconcile net (loss) income to cash provided by (used
for) operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
229.1
|
|
|
|
228.0
|
|
|
|
9.9
|
|
|
Amortization of deferred financing costs and original issue discount
|
|
|
15.7
|
|
|
|
13.3
|
|
|
|
—
|
|
|
Fair value step up of acquired inventory sold
|
|
|
—
|
|
|
|
103.7
|
|
|
|
—
|
|
|
Bridge financing commitment fees
|
|
|
—
|
|
|
|
25.0
|
|
|
|
—
|
|
|
Loss on extinguishment and modification of debt
|
|
|
6.1
|
|
|
|
—
|
|
|
|
—
|
|
|
Deferred income taxes
|
|
|
(15.9
|
)
|
|
|
(71.5
|
)
|
|
|
9.1
|
|
|
Unrealized (gains) losses on derivatives
|
|
|
3.1
|
|
|
|
(5.7
|
)
|
|
|
—
|
|
|
Realized and unrealized foreign exchange (gains) losses, net
|
|
|
46.7
|
|
|
|
55.9
|
|
|
|
4.5
|
|
|
Stock-based compensation
|
|
|
6.1
|
|
|
|
2.9
|
|
|
|
—
|
|
|
Other non-cash, net
|
|
|
(26.0
|
)
|
|
|
4.5
|
|
|
|
(3.9
|
)
|
|
Decrease (increase) in operating assets:
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
|
|
(109.7
|
)
|
|
|
(57.2
|
)
|
|
|
25.8
|
|
|
Inventories
|
|
|
(50.6
|
)
|
|
|
27.1
|
|
|
|
(19.3
|
)
|
|
Prepaid expenses and other assets
|
|
|
(47.7
|
)
|
|
|
(46.6
|
)
|
|
|
3.1
|
|
|
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
52.4
|
|
|
|
62.9
|
|
|
|
(29.9
|
)
|
|
Other accrued liabilities
|
|
|
(74.2
|
)
|
|
|
101.0
|
|
|
|
(43.8
|
)
|
|
Other liabilities
|
|
|
(9.5
|
)
|
|
|
(7.5
|
)
|
|
|
(1.7
|
)
|
|
Cash provided by (used for) operating activities
|
|
|
59.4
|
|
|
|
263.9
|
|
|
|
(37.7
|
)
|
|
Investing activities:
|
|
|
|
|
|
|
|
Acquisition of DuPont Performance Coatings (net of cash acquired)
|
|
|
—
|
|
|
|
(4,827.6
|
)
|
|
|
—
|
|
|
Purchase of property, plant and equipment
|
|
|
(155.6
|
)
|
|
|
(50.4
|
)
|
|
|
(2.4
|
)
|
|
Investment in real estate property
|
|
|
—
|
|
|
|
(26.3
|
)
|
|
|
|
Purchase of interest rate cap
|
|
|
—
|
|
|
|
(3.1
|
)
|
|
|
|
Settlement of foreign currency contract
|
|
|
—
|
|
|
|
(19.4
|
)
|
|
|
—
|
|
|
Restricted cash
|
|
|
(4.3
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Purchase of intangibles
|
|
|
(0.2
|
)
|
|
|
—
|
|
|
|
(6.3
|
)
|
|
Purchase of interest in affiliates
|
|
|
(6.5
|
)
|
|
|
—
|
|
|
|
(1.2
|
)
|
|
Proceeds from sale of assets
|
|
|
17.6
|
|
|
|
0.7
|
|
|
|
1.6
|
|
|
Cash used for investing activities
|
|
|
(149.0
|
)
|
|
|
(4,926.1
|
)
|
|
|
(8.3
|
)
|
|
Financing activities:
|
|
|
|
|
|
|
|
Proceeds from Senior Secured Credit Facilities (net of original
issue discount)
|
|
|
—
|
|
|
|
2,817.3
|
|
|
|
—
|
|
|
Issuance of Senior Notes
|
|
|
—
|
|
|
|
1,089.4
|
|
|
|
—
|
|
|
Proceeds from short-term borrowings
|
|
|
23.7
|
|
|
|
38.8
|
|
|
|
—
|
|
|
Payments on short-term borrowings
|
|
|
(30.9
|
)
|
|
|
(23.0
|
)
|
|
|
—
|
|
|
Payments of deferred financing costs and bridge commitment fees
|
|
|
—
|
|
|
|
(151.0
|
)
|
|
|
—
|
|
|
Payments of long-term debt
|
|
|
(114.1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Dividends paid to noncontrolling interests
|
|
|
(1.6
|
)
|
|
|
(4.1
|
)
|
|
|
—
|
|
|
Debt modification fees
|
|
|
(3.0
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Stock option exercises
|
|
|
2.9
|
|
|
|
—
|
|
|
|
—
|
|
|
Equity contribution
|
|
|
2.5
|
|
|
|
1,350.0
|
|
|
|
—
|
|
|
Net transfer from DuPont
|
|
|
—
|
|
|
|
—
|
|
|
|
43.0
|
|
|
Cash provided by (used for) financing activities
|
|
|
(120.5
|
)
|
|
|
5,117.4
|
|
|
|
43.0
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(210.1
|
)
|
|
|
455.2
|
|
|
|
(3.0
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
(15.9
|
)
|
|
|
(8.0
|
)
|
|
|
—
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
459.3
|
|
|
|
—
|
|
|
|
28.7
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
233.3
|
|
|
$
|
447.2
|
|
|
$
|
25.7
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
To supplement our financial information presented in accordance with
generally accepted accounting principles in the United States (“U.S.
GAAP”), we use the following additional non-GAAP financial measures to
clarify and enhance an understanding of past performance: EBITDA and
Adjusted EBITDA. We believe that the presentation of these financial
measures enhances an investor’s understanding of our financial
performance. We further believe that these financial measures are useful
financial metrics to assess our operating performance from
period-to-period by excluding certain items that we believe are not
representative of our core business. We use certain of these financial
measures for business planning purposes and in measuring our performance
relative to that of our competitors. We utilize Adjusted EBITDA as the
primary measure of segment performance.
EBITDA consists of net income (loss) before interest, taxes,
depreciation and amortization. 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
operating 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.
We believe these financial measures are commonly used by investors to
evaluate our performance and that of our competitors. However, our use
of the terms EBITDA and Adjusted EBITDA may vary from that of others in
our industry. These financial measures should not be considered as
alternatives to operating income (loss), net income (loss), earnings per
share or any other performance measures derived in accordance with U.S.
GAAP as measures of operating performance.
EBITDA and Adjusted EBITDA have important limitations as analytical
tools and you should not consider them in isolation or as substitutes
for analysis of our results as reported under U.S. GAAP. Some of these
limitations are:
-
EBITDA and Adjusted EBITDA:
-
do not reflect the significant interest expense on our debt,
including the Senior Secured Credit Facilities and the Senior
Notes (each as defined in our quarterly report on Form 10-Q for
the period ended September 30, 2014 filed with the SEC);
-
eliminate the impact of income taxes on our results of operations;
-
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced
in the future, and EBITDA and Adjusted EBITDA do not reflect any
expenditures for such replacements; and
-
other companies in our industry may calculate EBITDA and Adjusted
EBITDA differently than we do, limiting their usefulness as
comparative measures.
We compensate for these limitations by using EBITDA and Adjusted EBITDA
along with other comparative tools, together with U.S. GAAP
measurements, to assist in the evaluation of operating performance. Such
U.S. GAAP measurements include operating income (loss), net income
(loss), earnings per share and other performance measures.
In evaluating these financial measures, you should be aware that in the
future we may incur expenses similar to those eliminated in this
presentation. Our presentation of EBITDA and Adjusted EBITDA should not
be construed as an inference that our future results will be unaffected
by unusual or nonrecurring items.
The following table reconciles the EBITDA and Adjusted EBITDA
calculations discussed above to net income (loss) for the periods
presented (for definitions of defined terms used herein, refer to our
quarterly report on Form 10-Q for the period ended September 30, 2014
filed with the SEC):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
Predecessor
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
January 1
through
January 31,
|
|
($ in millions)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2013
|
|
Net income (loss)
|
|
$
|
(18.3
|
)
|
|
$
|
6.4
|
|
|
$
|
33.8
|
|
|
$
|
(171.9
|
)
|
|
$
|
8.5
|
|
Interest expense, net
|
|
|
52.6
|
|
|
|
62.7
|
|
|
|
166.5
|
|
|
|
153.2
|
|
|
|
—
|
|
Provision (benefit) for income taxes
|
|
|
7.5
|
|
|
|
(26.3
|
)
|
|
|
18.2
|
|
|
|
(34.4
|
)
|
|
|
7.1
|
|
Depreciation and amortization
|
|
|
76.2
|
|
|
|
87.4
|
|
|
|
229.1
|
|
|
|
228.0
|
|
|
|
9.9
|
|
EBITDA
|
|
|
118.0
|
|
|
|
130.2
|
|
|
|
447.6
|
|
|
|
174.9
|
|
|
|
25.5
|
|
Inventory step up (a)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
103.7
|
|
|
|
—
|
|
Merger and acquisition related costs (b)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28.1
|
|
|
|
—
|
|
Financing costs and extinguishment (c)
|
|
|
3.0
|
|
|
|
—
|
|
|
|
6.1
|
|
|
|
25.0
|
|
|
|
—
|
|
Foreign exchange remeasurement (gains) losses (d)
|
|
|
59.6
|
|
|
|
(9.7
|
)
|
|
|
45.1
|
|
|
|
49.9
|
|
|
|
4.5
|
|
Long-term employee benefit plan adjustments (e)
|
|
|
(4.7
|
)
|
|
|
1.8
|
|
|
|
(0.2
|
)
|
|
|
4.8
|
|
|
|
2.3
|
|
Termination benefits and other employee related costs (f)
|
|
|
3.2
|
|
|
|
47.6
|
|
|
|
9.1
|
|
|
|
64.8
|
|
|
|
0.3
|
|
Consulting and advisory fees (g)
|
|
|
8.8
|
|
|
|
11.3
|
|
|
|
29.5
|
|
|
|
33.2
|
|
|
|
—
|
|
Transition-related costs (h)
|
|
|
36.7
|
|
|
|
8.8
|
|
|
|
84.2
|
|
|
|
16.2
|
|
|
|
—
|
|
Other adjustments (i)
|
|
|
2.6
|
|
|
|
3.2
|
|
|
|
13.6
|
|
|
|
2.9
|
|
|
|
0.1
|
|
Dividends in respect of noncontrolling interest (j)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.6
|
)
|
|
|
(4.1
|
)
|
|
|
—
|
|
Management fee expense (k)
|
|
|
0.8
|
|
|
|
0.9
|
|
|
|
2.4
|
|
|
|
2.2
|
|
|
|
—
|
|
Adjusted EBITDA
|
|
$
|
228.0
|
|
|
$
|
194.1
|
|
|
$
|
635.8
|
|
|
$
|
501.6
|
|
|
$
|
32.7
|
|
|
|
|
|
(a)
|
|
During the Successor nine months ended September 30, 2013, we
recorded a non-cash fair value adjustment associated with our
acquisition accounting for inventories. These amounts increased cost
of goods sold by $103.7 million.
|
|
(b)
|
|
In connection with the Acquisition, we incurred $28.1 million of
merger and acquisition costs during the Successor nine months ended
September 30, 2013. These costs consisted primarily of investment
banking, legal and other professional advisory services costs.
|
|
(c)
|
|
On August 30, 2012, we signed a debt commitment letter which
included the Bridge Facility. Upon the issuance of the Senior Notes
and the entry into the Senior Secured Credit Facilities, the
commitments under the Bridge Facility terminated. Commitment fees
related to the Bridge Facility of $21.0 million and associated fees
of $4.0 million were expensed upon the termination of the Bridge
Facility. In connection with the refinancing of the Senior Secured
Credit Facilities in February 2014, we recognized $3.1 million of
costs. In addition the refinancing, we also incurred a $3.0 million
loss on extinguishment of debt recognized during the three months
ended September 30, 2014, which resulted directly from the pro-rata
write off of unamortized deferred financing costs and original issue
discounts associated with the prepayment of $100.0 million of
principal on the New Dollar Term Loan.
|
|
(d)
|
|
Eliminates foreign exchange gains and losses resulting from the
remeasurement of assets and liabilities denominated in foreign
currencies, including a $19.4 million loss related to the
Acquisition date settlement of a foreign currency contract used to
hedge the variability of Euro-based financing.
|
|
(e)
|
|
For the Successor periods ended September 30, 2014 and 2013,
eliminates the non-service cost components of employee benefit
costs. Additionally, we deducted a pension curtailment gain of $6.6
million recorded during the three months ended September 30, 2014.
For the Predecessor period January 1, 2013 through January 31, 2013,
eliminates (1) all U.S. pension and other long-term employee benefit
costs that were not assumed as part of the Acquisition and (2) the
non-service cost component of the pension and other long-term
employee benefit costs.
|
|
(f)
|
|
Represents expenses primarily related to employee termination
benefits, including our initiative to improve the overall cost
structure within the European region, and other employee-related
costs. Termination benefits include the costs associated with out
headcount initiatives for establishment of new roles and elimination
of old roles and other costs associated with cost saving
opportunities that were related to our transition to a standalone
entity.
|
|
(g)
|
|
Represents fees paid to consultants, advisors, and other third-party
professional organizations for professional services rendered in
conjunction with the transition from DuPont to a standalone entity.
|
|
(h)
|
|
Represents charges associated with the transition from DuPont to a
standalone entity, including branding and marketing, information
technology related costs, and facility transition costs, as well as
costs associated with the IPO.
|
|
(i)
|
|
Represents costs for certain unusual or non-operational (gains) and
losses and the non-cash impact of natural gas and currency hedge
losses allocated to DPC by DuPont, stock-based compensation, asset
impairments, equity investee dividends, indemnity (income) losses
associated with the Acquisition, gains resulting from amendments to
long-term benefit plans and loss (gain) on sale and disposal of
property, plant and equipment.
|
|
(j)
|
|
Represents the payment of dividends to our joint venture partners by
our consolidated entities that are not wholly owned.
|
|
(k)
|
|
Pursuant to Axalta’s management agreement with Carlyle Investment
Management, L.L.C., an affiliate of Carlyle, for management and
financial advisory services and oversight provided to Axalta and its
subsidiaries, Axalta is required to pay an annual management fee of
$3.0 million and out-of-pocket expenses. This agreement was
terminated upon consummation of the IPO.
|
|
|
|
|
Source: Axalta Coating Systems Ltd.