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Mar 31, 2023
Axalta Q1 2023 Earnings Report
Axalta's earnings exceeded guidance, driven by margin recovery and Mobility Coatings volume growth.
Key Takeaways
Axalta Coating Systems reported a strong first quarter with earnings above the guidance range. Net sales increased by 9.4% year-over-year, driven by better pricing and volume growth. The company saw improvements in operating margins and Adjusted EBIT margins, with significant contributions from Mobility Coatings.
Net sales increased by 9.4% year-over-year (12.1% ex-FX) due to better pricing and volume growth.
Price-mix grew by 9.4% year-over-year, with contributions from every end-market.
Income from operations was $125.3 million, compared to $86.3 million in Q1 2022.
Operating margins improved by 240 bps to 9.8%, and Adjusted EBIT margins improved by 140 bps to 11.6% versus Q1 2022.
Forward Guidance
Axalta anticipates continued improvement in operating income, driven by price-cost momentum and earnings recovery in Mobility Coatings. The company expects Refinish to have another record year, while Industrial markets may be softer, balanced by price-cost normalization and share gains. Axalta is committed to driving operating income and cash flow growth in 2023.
Positive Outlook
- Expect sequential operating income improvement across all four end-markets
- Improving raw material environment with pockets of pressure anticipated to continue in specialties and labor; expect low-single-digit % YoY raw material benefit
- Expect momentum to continue in Refinish after record 2022 profitability
- Expect strong sales and margin recovery in Mobility Coatings
- Potentially softer Industrial markets to be balanced by contribution from price-cost normalization and share gains
Challenges Ahead
- Adj. EBIT and Adj. EBITDA ranges assume ~$15 million in costs associated with our enterprise resource planning system implementation
- Adj. EBIT and Adj. EBITDA ranges assume ~$15 million in fees for third-party consultants focused on improvement within procurement and operations
Historical Earnings Impact
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Avg. Return Before/After Earnings
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