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Jun 30, 2022
Axalta Q2 2022 Earnings Report
Axalta's Q2 2022 performance was driven by record pricing and strong volume growth.
Key Takeaways
Axalta Coating Systems reported a 9.6% increase in net sales year-over-year, driven by record pricing and solid volume growth. Mobility Coatings delivered significant above-market sales performance. However, income from operations decreased due to variable cost inflation, foreign currency headwinds, and elevated expenses.
Net sales increased 9.6% year-over-year (14.5% ex FX) led by record pricing and solid volume growth; Mobility Coatings delivered significant above-market sales performance.
Realized record 10.0% price-mix growth with double-digit year-over-year gains in Mobility and Industrial Coatings.
Volume increased 2.7% driven by 8.4% growth in North America and 14.8% in Latin America with strong contributions from both segments.
Income from operations of $103.6 million versus $190.4 million in Q2 2021; Adjusted EBIT of $150.6 million compared with $173.4 million in Q2 2021 despite $23 million of headwinds associated with the Russia-Ukraine conflict, China lockdowns, and FX.
Forward Guidance
Axalta anticipates net sales to increase by 15-17% in Q3 2022, including a negative 6% foreign currency impact and a positive 2% acquisition benefit. Adjusted EBIT is expected to be $140-165 million, and adjusted diluted EPS is projected to be $0.37-0.45.
Positive Outlook
- Net Sales: ~+15-17%, including, ~(6)% foreign currency impact and ~+2% acquisition benefit; pricing and volume expected to be up high single-digits year-over-year
- Adjusted EBIT: $140-165 million
- Adjusted Diluted EPS: $0.37-0.45; including a $0.05 year-over-year headwind from foreign currency and the Russia-Ukraine conflict
- Raw material inflation in the high teens versus Q3 2021
- Likelihood that company will be able to recover the majority of the cumulative price-cost gap by year-end
Challenges Ahead
- Foreign currency impact of ~(6)%
- Adjusted Diluted EPS includes a $0.05 year-over-year headwind from foreign currency and the Russia-Ukraine conflict
- Interest Expense: ~$35 million
Historical Earnings Impact
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Avg. Return Before/After Earnings
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