-
Net sales of $1.1 billion, an increase of 8.2% versus Q2 2014
excluding negative foreign currency translation
-
Adjusted EBITDA of $255.5 million increased 15.6% from $221.1 million
in Q2 2014, with an Adjusted EBITDA margin of 23.4% up from 19.6% in
Q2 2014
-
Volume growth of 5% year-over-year overall with growth in all regions
and all segments
PHILADELPHIA--(BUSINESS WIRE)--
Axalta Coating Systems Ltd. (NYSE:AXTA) (“Axalta”), a leading global
coatings company, announced its financial results for the second quarter
ended June 30, 2015.
“We are very pleased with our second quarter results, which beat our
expectations in most business areas as we continue to execute our
strategy of unlocking Axalta’s growth potential while also maximizing
overall business efficiency and profitability. Progress on both of these
core goals was made during the quarter, with volumes growing solidly and
our productivity plans on target. In spite of a challenging economic
backdrop in certain countries and ongoing volatility in foreign
currency, Axalta’s key end-markets remain fundamentally stable and
supportive in most areas,” said Charles W. Shaver, Axalta’s Chairman and
Chief Executive Officer. “Given our solid first half results, we
continue to expect to meet our financial goals for 2015 and have raised
the low-end of our Adjusted EBITDA guidance as a reflection of this
performance to date.”
Second Quarter Consolidated Financial Results
Net sales of $1.1 billion for the second quarter of 2015 represented an
8.2% increase year-over-year excluding negative foreign currency
translation, and a decrease of 2.9% on an as-reported basis. This net
sales growth was driven by 4.8% volume increases, including growth in
all regions and strong double-digit growth in Asia Pacific, reflecting
the ongoing ramp-up in China new vehicle builds related to new business
for Axalta. Higher average selling prices in the quarter added 3.4% to
net sales, while unfavorable foreign currency translation reduced net
sales by 11.1%.
Adjusted EBITDA of $255.5 million for the second quarter represented an
increase of 15.6% year-over-year while Adjusted EBITDA margins expanded
to 23.4% from 19.6% reported in Q2 2014. This result reflected the
positive effect of volume growth across both of our segments, pricing
benefits in select end-markets, as well as a moderate benefit from lower
operating and raw material costs given continued progress on our
productivity and procurement initiatives. These factors were partially
offset by negative foreign currency impacts and costs associated with
certain operating investments made to support future growth across our
businesses.
Performance Coatings Results
Net sales in Performance Coatings of $638.8 million for the second
quarter of 2015 represented an 8.2% increase year-over-year excluding
negative foreign currency translation, and a decrease of 3.9% on an
as-reported basis. Net sales growth drivers included volume growth of
2.0% and higher average selling prices of 6.2% in the period, more than
offset by 12.1% unfavorable currency translation impact. Refinish
end-market net sales increased 10.0% on a constant currency basis in the
second quarter (decreased 2.3% as-reported), while our Industrial
end-market posted 3.8% growth excluding the impact of currency
(decreased 7.9% as-reported).
The Performance Coatings segment generated Adjusted EBITDA of $162.1
million in the second quarter, an 18.6% year-over-year increase. This
result reflected positive volumes and pricing growth contributions,
offset in part by negative foreign currency translation and modestly
higher operating expenses from growth investments. Performance Coatings
segment Adjusted EBITDA margin of 25.4% for the second quarter reflected
a 480 basis point increase compared to the corresponding quarter of the
prior year.
Transportation Coatings Results
The Transportation Coatings segment generated net sales of $455.3
million in the second quarter of 2015, an increase of 8.1% excluding
foreign currency impacts, and a decrease of 1.4% on an as-reported
basis, compared to the second quarter of 2014. Volume growth of 8.8% was
the principal contributor to net sales growth, offset by unfavorable
foreign currency translation which impacted net sales by 9.5% versus the
prior year. Light Vehicle end-market net sales increased 5.5% on a
constant currency basis compared to the second quarter of 2014
(decreased 4.5% as-reported). Our Commercial Vehicle end-market reported
strong net sales growth of 17.9% on a constant currency basis versus
last year (10.1% as-reported). Similar to the first quarter of 2015,
Light Vehicle net sales growth was particularly robust in Asia Pacific
and North America, with stable performance in Latin America and EMEA.
Asia Pacific volume growth of over 25% was led by the continued ramp-up
of volumes in China, where Axalta continues to launch business with
customers based on contracts won over the previous two years. In the
Commercial Vehicle end-market, strong heavy-duty truck production
continued to drive solid growth from North America, while volumes
continue to ramp strongly with relatively newer customers in Asia
Pacific.
The Transportation Coatings segment generated Adjusted EBITDA of $93.4
million, an increase of 10.7% compared to the second quarter of 2014.
Adjusted EBITDA growth was driven largely by positive volume effects as
well as increased productivity from our operational improvement
initiatives, partially offset by the impact of unfavorable foreign
currency translation. The Transportation Coatings segment generated an
Adjusted EBITDA margin of 20.5%, an increase of 223 basis points
compared to the second quarter of 2014.
Balance Sheet and Cash Flow Highlights
We ended the quarter with cash and cash equivalents of $307.8 million.
Our net debt was $3,251.5 million as of June 30, 2015, which resulted in
a second quarter Net Debt to LTM Adjusted EBITDA ratio of 3.7x.
Second quarter operating cash flow was $103.7 million versus $80.9
million in the corresponding quarter of the prior year. Free cash flow
after capital expenditures of $25.1 million totaled $78.6 million.
“We are pleased with our overall financial position as of the end of the
second quarter 2015,” said Robert W. Bryant, Axalta’s Executive Vice
President and Chief Financial Officer. “We are on track to generate
solid free cash flow in 2015 and are making good progress on our growth
and productivity-oriented capital investment projects that we expect to
provide strong returns on investment.”
2015 Outlook
We are updating our outlook for the full year 2015, including:
-
Net sales growth of 5-7% in constant currency and down low- to
mid-single digits versus previous expectation of flat-to-slightly down
including currency impacts;
-
Adjusted EBITDA expectation of $870-$900 million up from $860-$900
million with an Adjusted EBITDA margin of approximately 20%; Q3
Adjusted EBITDA as a percentage of full year Adjusted EBITDA is
expected to be 23%-25%; and
-
Other guidance assumptions remain unchanged including normalized
effective tax rate of 27-29%, capital expenditures of approximately
$150 million, and net working capital of 13-15% of net sales,
excluding non-recurring items.
Conference Call Information
As previously announced, Axalta will hold a conference call to discuss
its second quarter 2015 financial results on Tuesday, August 4th, at
8:00 a.m. EDT. 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 August 18, 2015. 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 13615105.
Cautionary Statement Concerning Forward-Looking Statements
This release may contain certain forward-looking statements regarding
Axalta and its subsidiaries including those relating to our 2015 full
year outlook, net sales growth, Adjusted EBITDA, effective tax rate,
free cash flow, capital expenditures and net working capital. 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.
Non-GAAP Financial Measures
The historical financial information included in this presentation
includes financial information that is not presented in accordance with
generally accepted accounting principles in the United States (“GAAP”),
including constant currency net sales growth, Adjusted EBITDA, Net Debt
and Adjusted Net Income. 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. Our use of the terms constant currency net sales growth,
Adjusted EBITDA, Net Debt and Adjusted Net Income may differ from that
of others in our industry. Constant currency net sales growth, Adjusted
EBITDA, Net Debt and Adjusted Net Income should not be considered as
alternatives to net sales, net income (loss), income (loss) before
operations or any other performance measures derived in accordance with
GAAP as measures of operating performance or operating cash flows or as
measures of liquidity. Constant currency net sales growth, Adjusted
EBITDA, Net Debt and Adjusted Net Income 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.
About Axalta Coating Systems
Axalta is a leading global company focused solely on coatings and
providing customers with innovative, colorful, beautiful and sustainable
solutions. From light OEM vehicles, commercial vehicles and refinish
applications to electric motors, buildings and pipelines, our coatings
are designed to prevent corrosion, increase productivity and enable the
materials we coat to last longer. With more than 150 years of experience
in the coatings industry, the 12,600 people of Axalta continue to find
ways to serve our more than 120,000 customers in 130 countries better
every day with the finest coatings, application systems and technology.
For more information visit axaltacoatingsystems.com
and follow us @axalta on Twitter.
|
|
|
Financial Statement Tables
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated Statements of Operations (Unaudited)
|
|
(In millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Sixth Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net sales
|
|
$
|
1,094.1
|
|
|
$
|
1,126.6
|
|
|
$
|
2,083.3
|
|
|
$
|
2,174.0
|
|
Other revenue
|
|
7.0
|
|
|
7.7
|
|
|
15.3
|
|
|
14.7
|
|
Total revenue
|
|
1,101.1
|
|
|
1,134.3
|
|
|
2,098.6
|
|
|
2,188.7
|
|
Cost of goods sold
|
|
679.7
|
|
|
742.5
|
|
|
1,329.5
|
|
|
1,446.0
|
|
Selling, general and administrative expenses
|
|
245.5
|
|
|
250.6
|
|
|
458.5
|
|
|
497.3
|
|
Research and development expenses
|
|
12.8
|
|
|
12.1
|
|
|
25.7
|
|
|
23.4
|
|
Amortization of acquired intangibles
|
|
20.1
|
|
|
21.3
|
|
|
40.1
|
|
|
42.4
|
|
Income from operations
|
|
143.0
|
|
|
107.8
|
|
|
244.8
|
|
|
179.6
|
|
Interest expense, net
|
|
49.2
|
|
|
54.9
|
|
|
99.2
|
|
|
113.9
|
|
Other (income) expense, net
|
|
88.6
|
|
|
(1.6
|
)
|
|
92.5
|
|
|
2.9
|
|
Income before income taxes
|
|
5.2
|
|
|
54.5
|
|
|
53.1
|
|
|
62.8
|
|
Provision (benefit) for income taxes
|
|
29.5
|
|
|
(1.3
|
)
|
|
30.7
|
|
|
10.7
|
|
Net income (loss)
|
|
(24.3
|
)
|
|
55.8
|
|
|
22.4
|
|
|
52.1
|
|
Less: Net income attributable to noncontrolling interests
|
|
0.8
|
|
|
2.0
|
|
|
2.4
|
|
|
2.6
|
|
Net income (loss) attributable to controlling interests
|
|
$
|
(25.1
|
)
|
|
$
|
53.8
|
|
|
$
|
20.0
|
|
|
$
|
49.5
|
|
Basic net income (loss) per share
|
|
$
|
(0.11
|
)
|
|
$
|
0.23
|
|
|
$
|
0.09
|
|
|
$
|
0.22
|
|
Diluted net income (loss) per share
|
|
$
|
(0.11
|
)
|
|
$
|
0.23
|
|
|
$
|
0.08
|
|
|
$
|
0.22
|
|
Basic weighted average shares outstanding
|
|
232.3
|
|
|
229.1
|
|
|
231.1
|
|
|
229.1
|
|
Diluted weighted average shares outstanding
|
|
232.3
|
|
|
229.3
|
|
|
238.1
|
|
|
229.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
|
(In millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
307.8
|
|
|
$
|
382.1
|
|
|
Restricted cash
|
|
2.8
|
|
|
4.7
|
|
|
Accounts and notes receivable, net
|
|
869.5
|
|
|
820.4
|
|
|
Inventories
|
|
555.0
|
|
|
538.3
|
|
|
Prepaid expenses and other
|
|
78.0
|
|
|
62.9
|
|
|
Deferred income taxes
|
|
50.7
|
|
|
64.5
|
|
|
Total current assets
|
|
1,863.8
|
|
|
1,872.9
|
|
|
Property, plant and equipment, net
|
|
1,425.1
|
|
|
1,514.1
|
|
|
Goodwill
|
|
944.0
|
|
|
1,001.1
|
|
|
Identifiable intangibles, net
|
|
1,233.2
|
|
|
1,300.0
|
|
|
Other assets
|
|
464.7
|
|
|
482.6
|
|
|
Total assets
|
|
$
|
5,930.8
|
|
|
$
|
6,170.7
|
|
|
Liabilities, Shareholders’ Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
445.5
|
|
|
$
|
494.5
|
|
|
Current portion of borrowings
|
|
50.7
|
|
|
40.1
|
|
|
Deferred income taxes
|
|
6.3
|
|
|
7.3
|
|
|
Other accrued liabilities
|
|
334.6
|
|
|
404.8
|
|
|
Total current liabilities
|
|
837.1
|
|
|
946.7
|
|
|
Long-term borrowings
|
|
3,508.6
|
|
|
3,574.2
|
|
|
Accrued pensions and other long-term employee benefits
|
|
272.1
|
|
|
306.4
|
|
|
Deferred income taxes
|
|
179.4
|
|
|
208.2
|
|
|
Other liabilities
|
|
21.4
|
|
|
23.2
|
|
|
Total liabilities
|
|
4,818.6
|
|
|
5,058.7
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
Common shares, $1.00 par, 1,000.0 shares authorized, 235.6 and 229.8
shares issued and outstanding at June 30, 2015 and December 31,
2014, respectively
|
|
234.6
|
|
|
229.8
|
|
|
Capital in excess of par
|
|
1,204.5
|
|
|
1,144.7
|
|
|
Accumulated deficit
|
|
(206.5
|
)
|
|
(226.5
|
)
|
|
Accumulated other comprehensive loss
|
|
(190.1
|
)
|
|
(103.3
|
)
|
|
Total Axalta shareholders’ equity
|
|
1,042.5
|
|
|
1,044.7
|
|
|
Noncontrolling interests
|
|
69.7
|
|
|
67.3
|
|
|
Total shareholders’ equity
|
|
1,112.2
|
|
|
1,112.0
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
5,930.8
|
|
|
$
|
6,170.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
(In millions)
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
Operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
22.4
|
|
|
$
|
52.1
|
|
|
Adjustment to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
150.1
|
|
|
152.9
|
|
|
Amortization of financing costs and original issue discount
|
|
10.2
|
|
|
10.3
|
|
|
Debt modification costs
|
|
—
|
|
|
3.1
|
|
|
Deferred income taxes
|
|
(7.1
|
)
|
|
(14.1
|
)
|
|
Unrealized loss on derivatives
|
|
1.3
|
|
|
3.8
|
|
|
Realized and unrealized foreign exchange (gains)/losses, net
|
|
66.5
|
|
|
(19.2
|
)
|
|
Stock-based compensation
|
|
14.2
|
|
|
3.8
|
|
|
Asset impairment
|
|
30.6
|
|
|
—
|
|
|
Other non-cash, net
|
|
2.3
|
|
|
(7.5
|
)
|
|
Decrease (increase) in operating assets and liabilities:
|
|
|
|
|
|
Trade accounts and notes receivable
|
|
(124.9
|
)
|
|
(112.3
|
)
|
|
Inventories
|
|
(41.1
|
)
|
|
(24.3
|
)
|
|
Prepaid expenses and other assets
|
|
(46.0
|
)
|
|
(41.4
|
)
|
|
Accounts payable
|
|
(16.2
|
)
|
|
59.5
|
|
|
Other accrued liabilities
|
|
(42.0
|
)
|
|
(47.6
|
)
|
|
Other liabilities
|
|
(15.3
|
)
|
|
(5.4
|
)
|
|
Cash provided by operating activities
|
|
5.0
|
|
|
13.7
|
|
|
Investing activities:
|
|
|
|
|
|
Acquisition of controlling interest in investment affiliate (net
of cash acquired)
|
|
(3.1
|
)
|
|
—
|
|
|
Purchase of property, plant and equipment
|
|
(56.6
|
)
|
|
(100.8
|
)
|
|
Restricted cash
|
|
1.9
|
|
|
(1.9
|
)
|
|
Proceeds from sale of affiliate
|
|
2.3
|
|
|
—
|
|
|
Investment in equity affiliate
|
|
(1.6
|
)
|
|
—
|
|
|
Other investing activities
|
|
0.2
|
|
|
(0.1
|
)
|
|
Cash used for investing activities
|
|
(56.9
|
)
|
|
(102.8
|
)
|
|
Financing activities:
|
|
|
|
|
|
Proceeds from short-term borrowings
|
|
3.1
|
|
|
16.7
|
|
|
Payments on short-term borrowings
|
|
(13.7
|
)
|
|
(17.2
|
)
|
|
Payments on long-term debt
|
|
(13.6
|
)
|
|
(7.1
|
)
|
|
Dividends paid to noncontrolling interests
|
|
(4.1
|
)
|
|
(1.6
|
)
|
|
Debt modification fees
|
|
—
|
|
|
(3.0
|
)
|
|
Proceeds from option exercises
|
|
45.2
|
|
|
—
|
|
|
Tax windfall due to option exercises
|
|
6.7
|
|
|
—
|
|
|
Other financing activities
|
|
(0.2
|
)
|
|
—
|
|
|
Cash provided by (used for) financing activities
|
|
23.4
|
|
|
(12.2
|
)
|
|
Decrease in cash and cash equivalents
|
|
(28.5
|
)
|
|
(101.3
|
)
|
|
Effect of exchange rate changes on cash
|
|
(45.8
|
)
|
|
(7.7
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
382.1
|
|
|
459.3
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
307.8
|
|
|
$
|
350.3
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the net income (loss) to EBITDA and
Adjusted EBITDA calculations discussed above to net income (loss) for
the periods presented (in millions):
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
Net income (loss)
|
|
$
|
(24.3
|
)
|
|
$
|
55.8
|
|
|
|
$
|
22.4
|
|
|
$
|
52.1
|
|
|
Interest expense, net
|
|
49.2
|
|
|
54.9
|
|
|
|
99.2
|
|
|
113.9
|
|
|
Provision (benefit) for income taxes
|
|
29.5
|
|
|
(1.3
|
)
|
|
|
30.7
|
|
|
10.7
|
|
|
Depreciation and amortization
|
|
77.5
|
|
|
71.8
|
|
|
|
150.1
|
|
|
152.9
|
|
|
EBITDA
|
|
131.9
|
|
|
181.2
|
|
|
|
302.4
|
|
|
329.6
|
|
|
Inventory step-up (a)
|
|
0.5
|
|
|
—
|
|
|
|
0.5
|
|
|
—
|
|
|
Financing costs (b)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
3.1
|
|
|
Foreign exchange remeasurement losses (gains) (c)
|
|
57.8
|
|
|
(14.6
|
)
|
|
|
66.5
|
|
|
(14.5
|
)
|
|
Long-term employee benefit plan adjustments (d)
|
|
0.2
|
|
|
2.2
|
|
|
|
0.4
|
|
|
4.5
|
|
|
Termination benefits and other employee related costs (e)
|
|
14.8
|
|
|
2.7
|
|
|
|
18.5
|
|
|
5.9
|
|
|
Consulting and advisory fees (f)
|
|
6.8
|
|
|
7.7
|
|
|
|
9.9
|
|
|
20.7
|
|
|
Transition-related costs (g)
|
|
—
|
|
|
33.6
|
|
|
|
—
|
|
|
47.5
|
|
|
Secondary offering costs (h)
|
|
0.3
|
|
|
—
|
|
|
|
1.7
|
|
|
—
|
|
|
Other adjustments (i)
|
|
13.2
|
|
|
8.2
|
|
|
|
11.1
|
|
|
11.0
|
|
|
Dividends in respect of noncontrolling interest (j)
|
|
(0.6
|
)
|
|
(0.7
|
)
|
|
|
(4.1
|
)
|
|
(1.6
|
)
|
|
Management fee expense (k)
|
|
—
|
|
|
0.8
|
|
|
|
—
|
|
|
1.6
|
|
|
Asset impairment (l)
|
|
|
30.6
|
|
|
|
—
|
|
|
|
|
30.6
|
|
|
|
—
|
|
|
Adjusted EBITDA
|
|
$
|
255.5
|
|
|
$
|
221.1
|
|
|
|
$
|
437.5
|
|
|
$
|
407.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
During the three and six months ended June 30, 2015, we recorded a
non-cash fair value inventory adjustment associated with an
acquisition. These amounts increased cost of goods sold by $0.5
million.
|
|
|
|
|
|
(b)
|
|
In connection with an amendment to the Senior Secured Credit
Facilities in February 2014, we recognized $3.1 million of costs
during the six months ended June 30, 2014.
|
|
|
|
|
|
(c)
|
|
Eliminates foreign exchange gains and losses resulting from the
remeasurement of assets and liabilities denominated in foreign
currencies.
|
|
|
|
|
|
(d)
|
|
Eliminates the non-service cost components of long-term employee
benefit costs.
|
|
|
|
|
|
(e)
|
|
Represents expenses primarily related to employee termination
benefits and other employee-related costs. Termination benefits
include the costs associated with our headcount initiatives
associated with cost saving opportunities that were related to our
transition to a standalone entity and our Axalta Way cost savings
initiatives in 2015.
|
|
|
|
|
|
(f)
|
|
Represents fees paid to consultants, advisors, and other third-party
professional organizations for professional services. Amounts
incurred for the three and six months ended June 30, 2015 primarily
relate to our Axalta Way cost savings initiatives. Amounts incurred
for the three and six months ended June 30, 2014 relate to our
transition from DuPont to a standalone entity.
|
|
|
|
|
|
(g)
|
|
Represents charges associated with the transition from DuPont to a
standalone entity, including branding and marketing, information
technology related costs, and facility transition costs.
|
|
|
|
|
|
(h)
|
|
Represents costs associated with the offerings of our common shares
by Carlyle that closed in April 2015.
|
|
|
|
|
|
(i)
|
|
Represents costs for certain unusual or non-operational (gains) and
losses, including a $5.4 million gain recognized during the six
months ended June 30, 2015 resulting from the remeasurement of our
previously held interest in an equity method investee upon the
acquisition of a controlling interest, stock-based compensation,
equity investee dividends, indemnity losses associated with the
Acquisition, 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
for management and financial advisory services and oversight
provided to Axalta and its subsidiaries, Axalta was required to pay
an annual management fee of $3.0 million and out-of-pocket expenses.
This agreement terminated upon completion of the IPO in November
2014.
|
|
|
|
|
|
(l)
|
|
As a result of the currency devaluation in Venezuela, we evaluated
the carrying values of our long-lived assets for impairment and
recorded an impairment charge relating to a real estate investment
of $30.6 million.
|
|
|
|
|
The following table reconciles the net income (loss) to adjusted net
income for the periods presented (in millions):
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
Net income (Loss)
|
|
$
|
(24.3
|
)
|
|
$
|
55.8
|
|
|
|
$
|
22.4
|
|
|
$
|
52.1
|
|
|
Inventory step-up (a)
|
|
0.5
|
|
|
—
|
|
|
|
0.5
|
|
|
—
|
|
|
Financing Costs (b)
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
3.1
|
|
|
Foreign exchange remeasurement losses (gains) (c)
|
|
57.8
|
|
|
(14.6
|
)
|
|
|
66.5
|
|
|
(14.5
|
)
|
|
Termination benefits and other employees related costs (d)
|
|
14.8
|
|
|
2.7
|
|
|
|
18.5
|
|
|
5.9
|
|
|
Consulting and advisory fees (e)
|
|
6.8
|
|
|
7.7
|
|
|
|
9.9
|
|
|
20.7
|
|
|
Transition-related costs (f)
|
|
—
|
|
|
33.6
|
|
|
|
—
|
|
|
47.5
|
|
|
Secondary offering costs (g)
|
|
0.3
|
|
|
—
|
|
|
|
1.7
|
|
|
—
|
|
|
Other adjustments (h)
|
|
9.2
|
|
|
6.2
|
|
|
|
5.3
|
|
|
7.2
|
|
|
Management fee expense (i)
|
|
—
|
|
|
0.8
|
|
|
|
—
|
|
|
1.6
|
|
|
Asset impairment (j)
|
|
30.6
|
|
|
—
|
|
|
|
30.6
|
|
|
—
|
|
|
Total Adjustments
|
|
120.0
|
|
|
36.4
|
|
|
|
133.0
|
|
|
71.5
|
|
|
Income tax impacts (k)
|
|
13.4
|
|
|
29.8
|
|
|
|
32.5
|
|
|
35.9
|
|
|
Adjusted net income
|
|
$
|
82.3
|
|
|
$
|
62.4
|
|
|
|
$
|
122.9
|
|
|
$
|
87.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
During the three and six months ended June 30, 2015, we recorded a
non-cash fair value inventory adjustment associated with an
acquisition. These amounts increased cost of goods sold by $0.5
million.
|
|
|
|
|
|
(b)
|
|
In connection with an amendment to the Senior Secured Credit
Facilities in February 2014, we recognized $3.1 million of costs
during the six months ended June 30, 2014.
|
|
|
|
|
|
(c)
|
|
Eliminates foreign exchange gains and losses resulting from the
remeasurement of assets and liabilities denominated in foreign
currencies.
|
|
|
|
|
|
(d)
|
|
Represents expenses primarily related to employee termination
benefits and other employee-related costs. Termination benefits
include the costs associated with our headcount initiatives
associated with cost saving opportunities that were related to our
transition to a standalone entity and our Axalta Way cost savings
initiatives in 2015.
|
|
|
|
|
|
(e)
|
|
Represents fees paid to consultants, advisors, and other third-party
professional organizations for professional services. Amounts
incurred for the three and six months ended June 30, 2015 primarily
relate to our Axalta Way cost savings initiatives. Amounts incurred
for the three and six months ended June 30, 2014 relate to our
transition from DuPont to a standalone entity.
|
|
|
|
|
|
(f)
|
|
Represents charges associated with the transition from DuPont to a
standalone entity, including branding and marketing, information
technology related costs, and facility transition costs.
|
|
|
|
|
|
(g)
|
|
Represents costs associated with the offerings of our common shares
by Carlyle that closed in April 2015.
|
|
|
|
|
|
(h)
|
|
Represents costs for certain unusual or non-operational (gains) and
losses, including a $5.4 million gain recognized during the six
months ended June 30, 2015 resulting from the remeasurement of our
previously held interest in an equity method investee upon the
acquisition of a controlling interest, the acceleration of
stock-based compensation expense of $8.2 million, indemnity losses
associated with the Acquisition, and loss (gain) on sale and
disposal of property, plant and equipment.
|
|
|
|
|
|
(i)
|
|
Pursuant to Axalta’s management agreement with Carlyle Investment
for management and financial advisory services and oversight
provided to Axalta and its subsidiaries, Axalta was required to pay
an annual management fee of $3.0 million and out-of-pocket expenses.
This agreement terminated upon completion of the IPO in November
2014.
|
|
|
|
|
|
(j)
|
|
As a result of the currency devaluation in Venezuela, we evaluated
the carrying values of our long-lived assets for impairment and
recorded an impairment charge relating to a real estate investment
of $30.6 million.
|
|
|
|
|
|
(k)
|
|
Represents income tax impact associated with the pre-tax adjustments
as well as the impact of the removal of discrete income tax impacts
within our effective tax rate.
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804005540/en/
Source: Axalta Coating Systems Ltd.