Attached files
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| EX-99.1 - EXHIBIT 99.1 - Axalta Coating Systems Ltd. | a201612158-k.htm |
| 8-K - 8-K - Axalta Coating Systems Ltd. | a201612158.htm |
Axalta Coating Systems
2017 Financial Results Outlook Call
December 15, 2016
Exhibit 99.2
2 PROPRIETARYAXALTA COATING SYSTEMS
2
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 2016 and 2017 financial projections, including execution on our 2017 goals as well as 2017 net sales, constant
currency net sales, Adjusted EBITDA, interest expense, income tax rate, as adjusted, 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, 2015 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016.
Non-GAAP Financial Measures
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, Adjusted EBITDA, Free Cash Flow, Income 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-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 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. Our use of the terms constant currency net sales, Adjusted EBITDA, Free Cash Flow, and Net Debt may differ from that of others in our industry.
Constant currency net sales, Adjusted EBITDA and Free Cash Flow should not be considered as alternatives to 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. Constant currency net sales,
Adjusted EBITDA, Free Cash Flow 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. Axalta does not provide a reconciliation for non-GAAP estimates for constant currency net sales, Adjusted EBITDA, Free Cash
Flow, or income tax rate, as-adjusted 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.
Defined Terms
All capitalized terms contained within this presentation have been previously defined in our filings with the United States Securities and Exchange Commission.
3 PROPRIETARYAXALTA COATING SYSTEMS
Full Year 2017 Guidance
2017 Benefits from Accelerated Productivity Improvement
Net sales growth includes incremental M&A
contribution of 1-2% from completed
transactions
Margin expansion driven by volume, price,
and ongoing cost reduction initiatives
Headwinds to margins from moderate input
cost inflation, modest sales mix changes,
and foreign currency
Tax rate, as adjusted, benefits from full year
effect of actions completed in 2016
Free cash flow expansion from EBITDA
growth, lower interest expense and modest
year-over-year working capital
improvement
Capex ~$160 million
($ millions) 2016A 2017E
Net Sales, ex FX ~4.5% 3-5%
Tax Rate, As Adjusted 24-26% 22-24%
Free Cash Flow 360-380 440-480
Cash flow from operations less capex
Comments on Drivers
Interest Expense ~180 ~150
Adjusted EBITDA ~900* 930-980
Net Sales ~(1)-0% 0-2%
* ‘Lower end’ of previous guidance range, as
stated on Q3 2016 earnings call
4 PROPRIETARYAXALTA COATING SYSTEMS
2017 End-market Commentary
Refinish
Industrial
LV OEM
Commercial
Axalta
Consolidated
% Sales
Market
Climate Management Planning Construct
Expect modest market growth and ongoing share gain
New product introductions, focus on underserved and
mainstream markets
Marginal M&A tailwind from HIPIC
Expect tepid market backdrop but continued Axalta growth
from focused efforts to expand products and geography
Dura Coat adds M&A tailwind
~1-2% global auto production growth, driven by Asia-Pacific
offsetting slightly lower NA + EMEA
Modest market outgrowth based on company specific
opportunities, most notably in Asia-Pacific
Truck and non-truck end-markets remain pressured but likely
milder headwind versus the 2016 production step-down
Modest market outgrowth from new customer additions,
growth in Asia-Pacific, Latin America stabilization
Refinish provides solid foundation for stability and growth
End-market focus should pay off with overall share gain
2017 set up as a modest year but opportunity to outperform
exists, while M&A offers additional upside
42%
32%
16%
10%
5 PROPRIETARYAXALTA COATING SYSTEMS
5
Key Goals & Priorities For 2017
Outgrow our End-markets
Drive Excellent Customer Service &
Innovation
Maintain Active Operating Cost
Discipline
Execute on Structural Savings with
Axalta Way
• New product introductions, broader global market penetration,
benefit from consolidation in key end-markets
• Begin rollout of global operating model, complexity reduction,
active cyclical cost discipline, and footprint optimization
• Continue to execute on structural cost savings program
Disciplined Capital Allocation
• Target more bolt-on M&A deals for $100+ million in
cumulative spend
Continue FCF and Balance Sheet Focus
• Focus on FCF and expect to hit net debt leverage ratio
(debt minus cash & cash equivalents) goal of 2.5-3.0x
Stated Objective Results Expected
• Maintain focus on customer productivity and offering a
broad and deep product choice