Axalta Coating Systems (axta) First Quarter 2021 Financial Results
Adjusted EBITDA. Axalta closed the quarter with total liquidity of over $1.6 billion. During first quarter,
Axalta repurchased $64 million of common shares under its share repurchase program at an average
price of $27.94.
Subsequent to the end of the quarter, Axalta announced the acquisition of Anhui Shengran Insulating
Materials Co. Ltd., a Chinese producer of wire enamels used in electric motors. The deal is a
substantial bolt-on boost to the Energy Solutions business within Industrial.
Business Conditions: First quarter 2021 continued to see overall improvement across most industrial
coatings markets given the solid recovering pace of the global economy from the pandemic.
Recovering demand was evident in most businesses served, and volumes increased in all end-markets
year-over-year. In Refinish, demand was largely stable despite pandemic-related restrictions beginning
in late November and continuing through the quarter. Some ongoing pressure in western markets was
offset by recovery from China which saw some Refinish impact due to COVID during Q1 2020.
Industrial end-market demand remained intact, with nearly all end-businesses showing year-over-year
growth and increases even excluding estimated impacts from COVID in the prior year period. Light
Vehicle demand conditions also continued to improve, though the impact of the semiconductor chip
shortage weighed on total production in the period. Commercial Vehicle demand also remained robust
through the quarter, with notable strength in North America production and demand and heavy truck
orders nearing record levels in the last few months.
Cost Structure: Axalta continued to benefit from a combination of structural and temporary cost
savings through first quarter, including temporary cost savings in the period above our initial guidance
in addition to building Axalta Way structural savings as anticipated. The company continues to expect
to see benefit from carry-over savings from 2020 classified as temporary as Axalta maintains cost
discipline and overall activities including travel remain subdued relative to pre-pandemic levels. It is
expected, however, that the majority of costs held out during 2020 will flow back in along with
resumption of normal volume and business activity during the course of the next year plus.
Regarding cost inflation, the impact of variable cost pressures was fairly neutral during first quarter, but
Axalta expects to see the impact of ramping input costs during second quarter, and for such cost
inflation to further ramp through the balance of the year. In aggregate, Axalta expects to see high single
digit inflation during 2021 versus the prior year and is working diligently to offset such inflation via both
passing through pricing in channels served as well as through ongoing cost measures as required.
Sensitivity: Business Internal
2View entire presentation