Axalta Coating Systems (AXTA) Updates Q3 Gudiance

Axalta Coating Systems Ltd. (NYSE: AXTA) (“Axalta”), a leading global coatings provider, has updated its third quarter and 2017 full year financial guidance to incorporate several factors expected to impact results. These include the expected impact of the recent natural disasters, distributor working capital adjustments in Axalta’s Performance Coatings segment, and the projected widening of the gap between raw material input costs and offsetting near-term customer price increases. Axalta now expects third quarter and 2017 full year Adjusted EBITDA to be in a range of $205-$215 million and $870-$900 million, respectively. Net sales for third quarter 2017 are expected to be between $1.08-$1.10 billion, while full year net sales are expected to grow between 6%-7%.

(Street sees Q3 revenue of $1.13 billion)

Charles W. Shaver, Axalta’s Chairman and CEO, commented that “We have seen and expect moderate effects on our business from recent hurricanes and the earthquake in Mexico, largely in terms of lost near-term volume opportunity. We believe that much of this impact will be made up during the course of 2018, and hence see these impacts as largely transitory.” Mr. Shaver continued, “After recent discussions with certain Performance Coatings distribution partners, we are incorporating the expected impact of a focused reduction in distributor working capital levels for the balance of the year. Following this adjustment, we expect volumes for the segment to return to more normal levels during the fourth quarter.” Mr. Shaver further commented that “We also continue to see impacts across coatings markets from tight supply conditions for raw material inputs, and given time lags to recovery via pricing adjustments, we have factored in a wider price-cost gap into our 2017 outlook. We expect to close the gap caused by raw material price pressure over the coming year.”

Robert W. Bryant, EVP and CFO, added, “Although we never like to see business impacts of these sorts, we believe the majority of the effects we have described are largely one-time in nature, and much of these are expected to be recovered through the course of 2018. We continue to have confidence in the underlying business climate, and note that the economics in each of our end-markets remain stable as we look forward. We are also revisiting and will increase our plans for cost reduction and productivity measures that should incrementally benefit Axalta in 2018.”

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