Axalta Coating Systems (NYSE:AXTA) Announces Quarterly Earnings Results, Misses Expectations By $0.07 EPS

Key Points

• Axalta missed quarterly expectations: EPS was $0.63 versus the $0.70 consensus, while revenue of $1.31 billion fell short of $1.33 billion but increased 1.8% year over year.
• Management reduced its full-year outlook due to weaker European Refinish volumes and greater macroeconomic uncertainty, forecasting full-year adjusted EBITDA of approximately $1.10 billion–$1.11 billion.
• Mobility Coatings and balance-sheet metrics remained strong: Mobility sales rose 7% and adjusted EBITDA increased 13%, while year-to-date free cash flow grew 25% and net leverage improved to a record-low 2.1 times.

Axalta Coating Systems (NYSE:AXTA - Get Free Report) issued its earnings results on Thursday. The specialty chemicals company reported $0.63 earnings per share for the quarter, missing the consensus estimate of $0.70 by ($0.07), Zacks reports. Axalta Coating Systems had a net margin of 6.78% and a return on equity of 22.35%. The company had revenue of $1.31 billion for the quarter, compared to analysts' expectations of $1.33 billion. During the same quarter in the prior year, the company earned $0.67 earnings per share. The company's revenue was up 1.8% compared to the same quarter last year.

Here are the key takeaways from Axalta Coating Systems' conference call:

• Full-year outlook was reduced after weaker-than-expected European Refinish volumes and increased macroeconomic uncertainty. Axalta now expects fourth-quarter sales to be roughly flat year over year, fourth-quarter adjusted EBITDA of $254 million–$264 million, and full-year adjusted EBITDA of approximately $1.10 billion–$1.11 billion.
• Mobility Coatings delivered a record quarter, with sales up 7% to $493 million and adjusted EBITDA up 13% to $94 million. Commercial Vehicle sales surged 24%, while Light Vehicle volumes remained roughly flat despite global production declining nearly 2%.
• Third-quarter adjusted EBITDA declined 4% to $282 million, pressured by lower European Refinish volumes, freight costs rising more than 15%, higher raw-material costs, and investments to convert major body-shop wins. Management also expects near-term margin pressure as those conversions accelerate.
• Cash generation and leverage improved significantly: year-to-date free cash flow rose 25% to $220 million, while gross debt fell below $3 billion and net leverage reached a record-low 2.1 times. Excluding merger-related costs, underlying free cash flow was up nearly 50%.
• The proposed AkzoNobel merger remains on track for an early-2027 closing, with regulatory clearance secured in two-thirds of required jurisdictions. Management continues to target approximately $600 million of annual run-rate cost synergies, with about 90% expected within three years after closing.

Axalta Coating Systems Trading Down 3.4%

AXTA traded down $1.17 during midday trading on Thursday, reaching $33.48. 1,932,073 shares of the company's stock traded hands, compared to its average volume of 2,446,342. The firm has a fifty day moving average of $34.08 and a two-hundred day moving average of $32.34. The stock has a market capitalization of $7.16 billion, a price-to-earnings ratio of 20.71, a P/E/G ratio of 1.85 and a beta of 1.26. The company has a debt-to-equity ratio of 0.99, a current ratio of 1.53 and a quick ratio of 1.12. Axalta Coating Systems has a 52 week low of $24.94 and a 52 week high of $38.61.

Analysts Set New Price Targets

Several brokerages have weighed in on AXTA. Weiss Ratings upgraded Axalta Coating Systems from a "hold (c)" rating to a "hold (c+)" rating in a research report on Friday, October 16th. Mizuho raised their target price on shares of Axalta Coating Systems from $32.00 to $39.00 and gave the stock an "outperform" rating in a report on Wednesday, July 1st. Barclays initiated coverage on shares of Axalta Coating Systems in a research note on Monday, October 12th. They issued an "overweight" rating and a $45.00 target price on the stock. Royal Bank Of Canada upped their price target on shares of Axalta Coating Systems from $34.00 to $36.00 and gave the company a "sector perform" rating in a report on Wednesday, July 8th. Finally, UBS Group dropped their price target on shares of Axalta Coating Systems from $39.00 to $36.00 and set a "neutral" rating for the company in a research report on Monday, October 5th. One analyst has rated the stock with a Strong Buy rating, four have given a Buy rating and eight have assigned a Hold rating to the company. According to data from MarketBeat.com, the company currently has an average rating of "Hold" and a consensus target price of $38.18.

About Axalta Coating Systems

Axalta Coating Systems Ltd. NYSE: AXTA develops, manufactures and sells coatings and coating technologies designed to protect, enhance and improve the appearance of vehicles, equipment and industrial products. Its offerings include liquid, powder and electrocoat products, along with related color-management tools, application technologies and technical services.

The company serves several markets, including automotive original equipment manufacturers, automotive refinish businesses, commercial transportation, industrial equipment, architecture and general manufacturing.

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