Axalta Q2 2021 Earnings Report
Key Takeaways
Axalta Coating Systems reported a significant rebound in Q2 2021 compared to the COVID-19 impacted Q2 2020. Net sales increased by 72.6% year-over-year to $1,126.8 million. The company saw improvements across all businesses, with strong growth in Industrial coatings and solid recovery in Refinish. Diluted EPS was $0.54, compared to a loss of $(0.35) in the same quarter last year.
Net sales increased 72.6% year-over-year to $1,126.8 million, driven by higher volumes and prices.
Income from operations was $190.4 million, a significant improvement from a loss of $64.5 million in Q2 2020.
Diluted EPS reached $0.54, compared to a loss of $(0.35) in Q2 2020.
Net debt to LTM Adjusted EBITDA was 2.6x at June 30, 2021, with strong cash flow from operations of $107.5 million.
Axalta
Axalta
Forward Guidance
Axalta provided full year 2021 financial guidance, expecting net sales to increase by approximately 20-22%, including benefits from FX and M&A. They anticipate ongoing demand improvement in Refinish and continued strength in the Industrial end-market. However, light vehicle coatings demand is expected to be negatively impacted by component shortages for the remainder of the year. Variable cost inflation is expected to increase year-over-year, with efforts to offset headwinds via pricing mechanisms.
Positive Outlook
- Ongoing demand improvement in Refinish expected for the balance of the year.
- Continued demand strength in the Industrial end-market.
- Expect higher than normal customer production rates to replenish back orders once component shortages abate.
- Capital deployment and M&A deals undertaken year-to-date with strong expected returns.
- Anticipate continued cash uses and deployment with positive implications for shareholder value creation.
Challenges Ahead
- Demand for light vehicle coatings is expected to be negatively impacted by customer component shortages for the remainder of the year.
- Increase in the rate of variable cost inflation expected to increase year-over-year in the mid-teens.
- Pricing mechanisms may not fully offset inflation headwinds during the current fiscal year.
- Semiconductor chip shortages primarily impacting Light Vehicle production globally.
- Production curtailment associated with this global supply chain issue is currently expected to continue through the second half of the year.