Second Quarter 2016 Highlights:
-
Strong net sales of $1,065.1 million driven by volume and pricing
growth of 4.2%, offset by foreign currency translation
-
Net income attributable to Axalta of $48.5 million versus a net loss
attributable to Axalta of $25.1 million in Q2 2015; Adjusted EBITDA
of $252.6 million versus $255.5 million in Q2 2015
-
Operating cash flow of $197.3 million in Q2 versus $103.7 million in
the same quarter last year
-
Announced three tuck-in acquisitions in June and July which extend
product technology and geographic reach with strong anticipated
returns on investment
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, 2016.
“Our strong second quarter results demonstrated solid execution and
ongoing fundamental strength in our key end-markets in the face of
ongoing demand challenges in certain emerging economies,” said Charles
W. Shaver, Axalta’s Chairman and Chief Executive Officer. “We met or
exceeded expectations for growth and profitability across each of our
end-markets.” Mr. Shaver added, “We have been pleased to announce three
bolt-on acquisitions in the last month, including the largest private
coil coatings company in North America, one of the major automotive
interiors coatings businesses in North America, and a strong refinish
and industrial player in Southeast Asia. All three of these acquisitions
have attractive expected return profiles based on clearly identified
synergies.”
Second Quarter Consolidated Financial Results
Net sales of $1,065.1 million for the second quarter of 2016 benefited
from volume and pricing growth, but decreased 2.7% year-over-year as a
result of 6.9% negative impact from foreign currency translation.
Constant currency net sales increased 4.2% compared to the year-ago
quarter, driven by 2.8% volume increases, augmented by 1.4% higher
average selling prices. Similar to the first quarter, the strongest
contributors to net sales were the EMEA and North America regions,
offset by challenging conditions in South America.
Net income attributable to Axalta was $48.5 million for the second
quarter of 2016 compared with a net loss attributable to Axalta of $25.1
million in Q2 2015. The increase in net income was primarily driven by a
reduction in non-operating losses from our Latin America region.
Adjusted net income of $81.5 million for the second quarter of 2016
decreased $0.4 million from $81.9 million in Q2 2015.
Adjusted EBITDA of $252.6 million for the second quarter compared with
$255.5 million in Q2 2015. This result benefitted from volume and
pricing contributions, as well as lower variable costs and savings from
our operating improvement initiatives. These factors were slightly
offset by negative foreign currency translation and moderate ongoing
operational expenditures for planned growth initiatives.
Performance Coatings Results
Performance Coatings net sales were $632.1 million in Q2 2016, a
decrease of 1.0% year-over-year as a result of an 8.8% unfavorable
foreign currency translation impact. Constant currency net sales
increased 7.8%, driven by a 5.9% increase in volumes and higher average
selling prices of 1.9% in the period. Refinish end-market net sales
decreased 2.5% in Q2 2016 (increased 9.3% excluding foreign currency
translation), while our Industrial end-market increased 2.6% (increased
3.7% excluding foreign currency translation).
The Performance Coatings segment generated Adjusted EBITDA of $157.3
million in the second quarter, a 3.0% year-over-year decrease. Positive
volume and pricing contributions, coupled with variable cost savings,
were more than offset by negative foreign currency translation and
incremental operating expense to support growth initiatives. Segment
Adjusted EBITDA margin of 24.9% in Q2 2016 reflected a 50 basis point
decrease compared to the corresponding prior year quarter.
Transportation Coatings Results
The Transportation Coatings segment produced net sales of $433.0 million
in the second quarter, a decrease of 4.9% versus second quarter 2015,
largely driven by negative currency translation. Constant currency net
sales decreased by 0.7%, including a 1.5% decrease in volume offset
partially by 0.8% positive contribution from price. Unfavorable foreign
currency translation impacted net sales by 4.2% in the quarter.
Transportation Coatings Q2 net sales included lower growth Light Vehicle
performance coupled with an ongoing pullback in Commercial Vehicle in
North and South America. Light Vehicle net sales decreased 0.8%
year-over-year (increased 1.5% excluding foreign currency translation),
with ongoing growth in North America and EMEA offset largely by weaker
volumes in Latin America and Asia Pacific. Commercial Vehicle net sales
decreased 18.0% versus last year (decreased 8.3% excluding foreign
currency translation), driven by a combination of slower heavy truck
production as well as weaker demand from some non-truck product types
served.
The Transportation Coatings segment generated Adjusted EBITDA of $95.3
million in Q2 2016, an increase of 2.0% compared to the second quarter
of 2015, with positive price and variable cost contributions partially
offset by unfavorable foreign currency translation, lower volume
effects, and moderate ongoing operating expense increases to support
planned growth. Segment Adjusted EBITDA margin of 22.0% in Q2 2016
represented a 150 basis point increase from 20.5% in the prior year
quarter.
Balance Sheet and Cash Flow Highlights
We ended the quarter with cash and cash equivalents of $480.1 million
which reflects $100 million usage for debt prepayment in the quarter.
Our net debt was $2.9 billion as of June 30, 2016. This compared to $3.3
billion as of the same quarter 2015.
Second quarter operating cash flow was $197.3 million versus $103.7
million in the corresponding quarter of 2015, reflecting lower working
capital use. Free cash flow, calculated as operating cash flow less
capital expenditures, totaled $172.8 million based on capital
expenditures of $24.5 million.
“We are pleased that our balance sheet and cash flow metrics continued
to improve, including significantly increased free cash flow in the
second quarter versus last year,” said Robert W. Bryant, Axalta’s
Executive Vice President and Chief Financial Officer. “We are also
pleased that we have been able to identify additional tuck-in
acquisitions which we expect to generate returns well above our cost of
capital. We will continue to pursue similar transactions, while planning
to apply excess cash flow after capital expenditures and acquisitions to
further debt reduction.”
2016 Guidance Update
We are reiterating our outlook for the full year 2016 as follows:
-
Largely flat net sales, up 4-6% on a constant currency basis
-
Adjusted EBITDA of $900-940 million
-
Interest expense of $180-190 million
-
Income tax rate, as adjusted, of 25-27%
-
Diluted shares of 242-245 million
-
Working capital as a percentage of net sales of 11-13%
-
Capital expenditures of ~$150 million
-
Depreciation and amortization of ~$320 million
Conference Call Information
As previously announced, Axalta will hold a conference call to discuss
its second quarter 2016 financial results on Tuesday, July 26th, 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 5, 2016. 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 13635701.
Cautionary Statement Concerning Forward-Looking Statements
This release may contain certain forward-looking statements regarding
Axalta and its subsidiaries including those relating to returns
generated by acquisitions and our plans for excess cash as well as our
2016 full year outlook, including net sales growth, Adjusted EBITDA,
interest expense, income tax rate, as adjusted, diluted shares
outstanding, working capital, capital expenditures and depreciation and
amortization. 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, income tax rate, as
adjusted, EBITDA, Adjusted EBITDA, free cash flow, 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. 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. Adjusted Net Income shows
the adjusted value of Net Income attributable to controlling interests
after removing the items that are determined by management to be unusual
or nonrecurring in nature or items that we do not consider indicative of
our ongoing operating performance. Our use of the terms constant
currency net sales growth, income tax rate, as adjusted, EBITDA,
Adjusted EBITDA, free cash flow, net debt and Adjusted Net Income may
differ from that of others in our industry. Constant currency net sales
growth, income tax rate, as adjusted, EBITDA, Adjusted EBITDA, free cash
flow, 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, income tax
rate, as adjusted, EBITDA, Adjusted EBITDA, free cash flow, 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. The company does not provide a reconciliation for non-GAAP
estimates on a forward-looking basis where it is unable to provide a
meaningful or accurate calculation or estimation of reconciling items
and the information is not available without unreasonable effort.
About Axalta Coating Systems – Celebrating 150 Years in the Coatings
Industry
Axalta is a global leader in the coatings industry, providing customers
with innovative, colorful, beautiful and sustainable coatings solutions.
From light vehicles, commercial vehicles and refinish applications to
electric motors, building facades and other industrial applications, our
coatings are designed to prevent corrosion, increase productivity and
enhance durability. With more than 150 years of experience in the
coatings industry, the 12,800 people of Axalta continue to find ways to
serve our more than 100,000 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.
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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,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
|
|
$
|
1,065.1
|
|
$
|
1,094.1
|
|
|
$
|
2,020.7
|
|
$
|
2,083.3
|
Other revenue
|
|
|
|
7.0
|
|
|
7.0
|
|
|
|
13.0
|
|
|
15.3
|
Total revenue
|
|
|
|
1,072.1
|
|
|
1,101.1
|
|
|
|
2,033.7
|
|
|
2,098.6
|
Cost of goods sold
|
|
|
|
649.0
|
|
|
679.7
|
|
|
|
1,255.4
|
|
|
1,329.5
|
Selling, general and administrative expenses
|
|
|
|
237.7
|
|
|
245.5
|
|
|
|
456.8
|
|
|
458.5
|
Research and development expenses
|
|
|
|
14.1
|
|
|
12.8
|
|
|
|
26.7
|
|
|
25.7
|
Amortization of acquired intangibles
|
|
|
|
20.3
|
|
|
20.1
|
|
|
|
40.5
|
|
|
40.1
|
Income from operations
|
|
|
|
151.0
|
|
|
143.0
|
|
|
|
254.3
|
|
|
244.8
|
Interest expense, net
|
|
|
|
47.8
|
|
|
49.2
|
|
|
|
97.9
|
|
|
99.2
|
Other expense, net
|
|
|
|
32.8
|
|
|
88.6
|
|
|
|
40.8
|
|
|
92.5
|
Income before income taxes
|
|
|
|
70.4
|
|
|
5.2
|
|
|
|
115.6
|
|
|
53.1
|
Provision for income taxes
|
|
|
|
20.3
|
|
|
29.5
|
|
|
|
34.9
|
|
|
30.7
|
Net income (loss)
|
|
|
|
50.1
|
|
|
(24.3
|
)
|
|
|
80.7
|
|
|
22.4
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
1.6
|
|
|
0.8
|
|
|
|
2.5
|
|
|
2.4
|
Net income (loss) attributable to controlling interests
|
|
|
$
|
48.5
|
|
$
|
(25.1
|
)
|
|
$
|
78.2
|
|
$
|
20.0
|
Basic net income (loss) per share
|
|
|
$
|
0.20
|
|
$
|
(0.11
|
)
|
|
$
|
0.33
|
|
$
|
0.09
|
Diluted net income (loss) per share
|
|
|
$
|
0.20
|
|
$
|
(0.11
|
)
|
|
$
|
0.32
|
|
$
|
0.08
|
Basic weighted average shares outstanding
|
|
|
|
237.7
|
|
|
232.3
|
|
|
|
237.4
|
|
|
231.1
|
Diluted weighted average shares outstanding
|
|
|
|
242.4
|
|
|
232.3
|
|
|
|
242.0
|
|
|
238.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
Condensed Consolidated Balance Sheets (Unaudited)
|
(In millions, except per share data)
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
480.1
|
|
|
$
|
485.0
|
|
Restricted cash
|
|
|
|
3.1
|
|
|
|
2.7
|
|
Accounts and notes receivable, net
|
|
|
|
838.6
|
|
|
|
765.8
|
|
Inventories
|
|
|
|
519.7
|
|
|
|
530.7
|
|
Prepaid expenses and other
|
|
|
|
62.1
|
|
|
|
63.6
|
|
Deferred income taxes
|
|
|
|
58.2
|
|
|
|
69.5
|
|
Total current assets
|
|
|
|
1,961.8
|
|
|
|
1,917.3
|
|
Property, plant and equipment, net
|
|
|
|
1,358.5
|
|
|
|
1,382.9
|
|
Goodwill
|
|
|
|
931.1
|
|
|
|
928.2
|
|
Identifiable intangibles, net
|
|
|
|
1,152.8
|
|
|
|
1,191.6
|
|
Other assets
|
|
|
|
431.6
|
|
|
|
434.2
|
|
Total assets
|
|
|
$
|
5,835.8
|
|
|
$
|
5,854.2
|
|
Liabilities, Shareholders’ Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
|
438.2
|
|
|
|
454.7
|
|
Current portion of borrowings
|
|
|
|
55.1
|
|
|
|
50.1
|
|
Deferred income taxes
|
|
|
|
6.8
|
|
|
|
6.6
|
|
Other accrued liabilities
|
|
|
|
350.0
|
|
|
|
370.2
|
|
Total current liabilities
|
|
|
|
850.1
|
|
|
|
881.6
|
|
Long-term borrowings
|
|
|
|
3,298.1
|
|
|
|
3,391.4
|
|
Long-term employee benefits
|
|
|
|
243.4
|
|
|
|
252.3
|
|
Deferred income taxes
|
|
|
|
160.9
|
|
|
|
165.5
|
|
Other liabilities
|
|
|
|
28.5
|
|
|
|
22.2
|
|
Total liabilities
|
|
|
|
4,581.0
|
|
|
|
4,713.0
|
|
Commitments and contingencies
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
Common shares, $1.00 par, 1,000.0 shares authorized, 239.1 and 237.9
shares issued and outstanding at June 30, 2016 and December 31,
2015, respectively
|
|
|
|
237.9
|
|
|
|
237.0
|
|
Capital in excess of par
|
|
|
|
1,272.1
|
|
|
|
1,238.8
|
|
Accumulated deficit
|
|
|
|
(54.6
|
)
|
|
|
(132.8
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(268.9
|
)
|
|
|
(269.3
|
)
|
Total Axalta shareholders’ equity
|
|
|
|
1,186.5
|
|
|
|
1,073.7
|
|
Noncontrolling interests
|
|
|
|
68.3
|
|
|
|
67.5
|
|
Total shareholders’ equity
|
|
|
|
1,254.8
|
|
|
|
1,141.2
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
5,835.8
|
|
|
$
|
5,854.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXALTA COATING SYSTEMS LTD.
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
(In millions)
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
Operating activities:
|
|
|
|
|
|
Net income
|
|
|
$
|
80.7
|
|
|
$
|
22.4
|
|
Adjustment to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
154.6
|
|
|
|
150.1
|
|
Amortization of financing costs and original issue discount
|
|
|
|
10.1
|
|
|
|
10.2
|
|
Debt extinguishment
|
|
|
|
2.3
|
|
|
|
-
|
|
Deferred income taxes
|
|
|
|
(6.8
|
)
|
|
|
(7.1
|
)
|
Realized and unrealized foreign exchange losses, net
|
|
|
|
26.0
|
|
|
|
66.5
|
|
Stock-based compensation
|
|
|
|
21.6
|
|
|
|
14.2
|
|
Asset impairment
|
|
|
|
10.5
|
|
|
|
30.6
|
|
Other non-cash, net
|
|
|
|
(2.9
|
)
|
|
|
3.6
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Trade accounts and notes receivable
|
|
|
|
(89.7
|
)
|
|
|
(124.9
|
)
|
Inventories
|
|
|
|
13.4
|
|
|
|
(41.1
|
)
|
Prepaid expenses and other
|
|
|
|
(20.2
|
)
|
|
|
(46.0
|
)
|
Accounts payable
|
|
|
|
4.0
|
|
|
|
(16.2
|
)
|
Other accrued liabilities
|
|
|
|
(17.9
|
)
|
|
|
(42.0
|
)
|
Other liabilities
|
|
|
|
(6.4
|
)
|
|
|
(15.3
|
)
|
Cash provided by operating activities
|
|
|
|
179.3
|
|
|
|
5.0
|
|
Investing activities:
|
|
|
|
|
|
Business acquisitions (net of cash acquired)
|
|
|
|
-
|
|
|
|
(3.1
|
)
|
Purchase of property, plant and equipment
|
|
|
|
(64.8
|
)
|
|
|
(56.6
|
)
|
Restricted cash
|
|
|
|
(0.4
|
)
|
|
|
1.9
|
|
Other investing
|
|
|
|
(2.4
|
)
|
|
|
0.9
|
|
Cash used for investing activities
|
|
|
|
(67.6
|
)
|
|
|
(56.9
|
)
|
Financing activities:
|
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
|
-
|
|
|
|
3.1
|
|
Payments on short-term borrowings
|
|
|
|
(5.5
|
)
|
|
|
(13.7
|
)
|
Payments on long-term borrowings
|
|
|
|
(113.7
|
)
|
|
|
(13.6
|
)
|
Dividends paid to noncontrolling interests
|
|
|
|
(1.5
|
)
|
|
|
(4.1
|
)
|
Proceeds from option exercises and associated tax benefits
|
|
|
|
12.6
|
|
|
|
51.9
|
|
Other financing
|
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
Cash provided by (used for) financing activities
|
|
|
|
(108.3
|
)
|
|
|
23.4
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
3.4
|
|
|
|
(28.5
|
)
|
Effect of exchange rate changes on cash
|
|
|
|
(8.3
|
)
|
|
|
(45.8
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
485.0
|
|
|
|
382.1
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
480.1
|
|
|
$
|
307.8
|
|
|
|
|
|
|
|
The following table reconciles net income (loss) to EBITDA and Adjusted
EBITDA for the periods presented (in millions):
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income (loss)
|
|
|
$
|
50.1
|
|
$
|
(24.3
|
)
|
|
$
|
80.7
|
|
|
$
|
22.4
|
|
Interest expense, net
|
|
|
|
47.8
|
|
|
49.2
|
|
|
|
97.9
|
|
|
|
99.2
|
|
Provision for income taxes
|
|
|
|
20.3
|
|
|
29.5
|
|
|
|
34.9
|
|
|
|
30.7
|
|
Depreciation and amortization
|
|
|
|
78.6
|
|
|
77.5
|
|
|
|
154.6
|
|
|
|
150.1
|
|
EBITDA
|
|
|
|
196.8
|
|
|
131.9
|
|
|
|
368.1
|
|
|
|
302.4
|
|
Debt extinguishment (a)
|
|
|
|
2.3
|
|
|
-
|
|
|
|
2.3
|
|
|
|
-
|
|
Foreign exchange remeasurement losses (b)
|
|
|
|
18.0
|
|
|
57.8
|
|
|
|
25.5
|
|
|
|
66.5
|
|
Long-term employee benefit plan adjustments (c)
|
|
|
|
0.7
|
|
|
0.2
|
|
|
|
1.3
|
|
|
|
0.4
|
|
Termination benefits and other employee related costs (d)
|
|
|
|
7.0
|
|
|
14.8
|
|
|
|
8.9
|
|
|
|
18.5
|
|
Consulting and advisory fees (e)
|
|
|
|
2.6
|
|
|
6.8
|
|
|
|
5.6
|
|
|
|
9.9
|
|
Offering and transactional costs (f)
|
|
|
|
1.4
|
|
|
0.3
|
|
|
|
1.4
|
|
|
|
(3.7
|
)
|
Stock-based compensation (g)
|
|
|
|
11.4
|
|
|
12.4
|
|
|
|
21.6
|
|
|
|
14.2
|
|
Other adjustments (h)
|
|
|
|
1.9
|
|
|
1.3
|
|
|
|
3.7
|
|
|
|
2.8
|
|
Dividends in respect of noncontrolling interest (i)
|
|
|
|
-
|
|
|
(0.6
|
)
|
|
|
(1.5
|
)
|
|
|
(4.1
|
)
|
Asset impairment (j)
|
|
|
|
10.5
|
|
|
30.6
|
|
|
|
10.5
|
|
|
|
30.6
|
|
Adjusted EBITDA
|
|
|
$
|
252.6
|
|
$
|
255.5
|
|
|
$
|
447.4
|
|
|
$
|
437.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
In April 2016, we prepaid $100.0 million of the outstanding
principal on the New Dollar Term Loan and recorded a non-cash
pre-tax loss on extinguishment of $2.3 million for the three and six
months ended June 30, 2016.
|
|
|
(b)
|
|
Eliminates foreign exchange gains and losses resulting from the
remeasurement of assets and liabilities denominated in foreign
currencies, net of gains associated with our foreign currency
instruments used to hedge our balance sheet exposures. Exchange
losses attributable to the remeasurement of our Venezuelan
subsidiary represented $15.6 million and $22.7 million for the three
and six months ended June 30, 2016, respectively, and $55.6 million
and $54.8 million for the three and six months ended June 30, 2015,
respectively.
|
|
|
(c)
|
|
Eliminates the non-cash, non-service cost components of long-term
employee benefit costs.
|
|
|
(d)
|
|
Represents expenses primarily related to employee termination
benefits and other employee-related costs including our initiative
to improve overall cost structure within the European region as well
as costs associated with our Axalta Way initiatives, which are not
considered indicative of our ongoing operating performance.
|
|
|
(e)
|
|
Represents fees paid to consultants for professional services
primarily related to our Axalta Way initiatives, which are not
considered indicative of our ongoing operating performance.
|
|
|
(f)
|
|
Represents costs associated with the secondary offerings of our
common shares by Carlyle, acquisition-related costs, including 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 and costs associated with changes in the fair
value of contingent consideration associated with our acquisitions,
all of which are not considered indicative of our ongoing operating
performance.
|
|
|
(g)
|
|
Represents non-cash costs associated with stock-based compensation,
including $8.2 million of expense during the three and six months
ended June 30, 2015 attributable to the accelerated vesting of all
issued and outstanding stock options issued under the 2013 Plan as a
result of the Change in Control.
|
|
|
(h)
|
|
Represents costs for certain unusual or non-operational (gains) and
losses, 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 2015 acquisitions.
|
|
|
(i)
|
|
Represents the payment of dividends to our joint venture partners by
our consolidated entities that are not wholly owned, which are not
considered indicative of our ongoing operating performance.
|
|
|
(j)
|
|
As a result of currency devaluations in Venezuela, we recorded
non-cash impairment charges relating to a real estate investment of
$10.5 million and $30.6 million during both the three and six months
ended June 30, 2016 and 2015, respectively.
|
|
|
|
|
|
The following table reconciles net income (loss) to adjusted net income
for the periods presented (in millions):
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income (loss)
|
|
|
$
|
50.1
|
|
$
|
(24.3
|
)
|
|
$
|
80.7
|
|
$
|
22.4
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
1.6
|
|
|
0.8
|
|
|
|
2.5
|
|
|
2.4
|
|
Net income (loss) attributable to controlling interests
|
|
|
|
48.5
|
|
|
(25.1
|
)
|
|
|
78.2
|
|
|
20.0
|
|
Debt extinguishment (a)
|
|
|
|
2.3
|
|
|
-
|
|
|
|
2.3
|
|
|
-
|
|
Foreign exchange remeasurement losses (b)
|
|
|
|
18.0
|
|
|
57.8
|
|
|
|
25.5
|
|
|
66.5
|
|
Termination benefits and other employee related costs (c)
|
|
|
|
7.0
|
|
|
14.8
|
|
|
|
8.9
|
|
|
18.5
|
|
Consulting and advisory fees (d)
|
|
|
|
2.6
|
|
|
6.8
|
|
|
|
5.6
|
|
|
9.9
|
|
Offering and transactional costs (e)
|
|
|
|
1.4
|
|
|
0.3
|
|
|
|
1.4
|
|
|
(3.7
|
)
|
Other adjustments (f)
|
|
|
|
-
|
|
|
9.7
|
|
|
|
-
|
|
|
11.2
|
|
Asset impairment (g)
|
|
|
|
10.5
|
|
|
30.6
|
|
|
|
10.5
|
|
|
30.6
|
|
Total Adjustments
|
|
|
|
41.8
|
|
|
120.0
|
|
|
|
54.2
|
|
|
133.0
|
|
Income tax impacts (h)
|
|
|
|
8.8
|
|
|
13.0
|
|
|
|
9.1
|
|
|
32.1
|
|
Adjusted net income
|
|
|
$
|
81.5
|
|
$
|
81.9
|
|
|
$
|
123.3
|
|
$
|
120.9
|
|
Diluted adjusted net income per share
|
|
|
$
|
0.34
|
|
$
|
0.34
|
|
|
$
|
0.51
|
|
$
|
0.51
|
|
Diluted weighted average shares outstanding (1)
|
|
|
|
242.4
|
|
|
239.3
|
|
|
|
242.0
|
|
|
238.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For the three months ended June 30, 2015, represents what diluted
shares would have been compared to the as reported 232.3 million
shares if the period had been in a net income position versus the
reported loss.
|
|
|
(a)
|
|
In April 2016, we prepaid $100.0 million of the outstanding
principal on the New Dollar Term Loan and recorded a non-cash
pre-tax loss on extinguishment of $2.3 million for the three and six
months ended June 30, 2016.
|
|
|
(b)
|
|
Eliminates foreign exchange gains and losses resulting from the
remeasurement of assets and liabilities denominated in foreign
currencies, net of gains associated with our foreign currency
instruments used to hedge our balance sheet exposures. Exchange
losses attributable to the remeasurement of our Venezuelan
subsidiary represented $15.6 million and $22.7 million for the three
and six months ended June 30, 2016, respectively, and $55.6 million
and $54.8 million for the three and six months ended June 30, 2015,
respectively.
|
|
|
(c)
|
|
Represents expenses primarily related to employee termination
benefits and other employee-related costs including our initiative
to improve overall cost structure within the European region as well
as costs associated with our Axalta Way initiatives, which are not
considered indicative of our ongoing operating performance.
|
|
|
(d)
|
|
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.
|
|
|
(e)
|
|
Represents costs associated with the secondary offering of our
common shares by Carlyle, acquisition-related costs, 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 and costs associated with changes in the fair
value of contingent consideration associated with our acquisitions,
all of which are not considered indicative of our ongoing operating
performance.
|
|
|
(f)
|
|
Represents costs for certain unusual or non-operational (gains) and
losses, including indemnity losses associated with the Acquisition,
losses (gains) on sale and disposal of property, plant, and
equipment, the acceleration of stock-based compensation expense of
$8.2 million during the three and six months ended June 30, 2015
attributable to the accelerated vesting of all issued and
outstanding stock options issued under the 2013 Plan as a result of
the Change in Control, losses (gains) on the remaining foreign
currency derivative instruments and non-cash fair value inventory
adjustments associated with our 2015 acquisitions.
|
|
|
(g)
|
|
As a result of currency devaluations in Venezuela, we recorded
non-cash impairment charges relating to a real estate investment of
$10.5 million and $30.6 million during both the three and six months
ended June 30, 2016 and 2015, respectively.
|
|
|
(h)
|
|
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/20160726005295/en/
Source: Axalta Coating Systems Ltd.