# Axalta Coating Systems Ltd. (AXTA) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/AXTA/thesis · /stocks/AXTA/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: AXTA
step: "04"
title: Financial Snapshot
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### Three-Year Income Statement Summary

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Net Sales | $4,972M | $5,037M | $5,075–5,100M |
| Gross Profit | ~$1,740M | ~$1,900M | ~$2,000–2,050M |
| Gross Margin | ~35.0% | ~37.7% | ~39–40% |
| Adjusted EBITDA | ~$775M | ~$900M | ~$950–1,000M |
| Adj. EBITDA Margin | ~15.6% | ~17.9% | ~18.8–19.5% |
| D&A | ~$300M | ~$300M | ~$300M |
| Adjusted EBIT | ~$475M | ~$600M | ~$650–700M |
| Interest Expense | ~$190M | ~$195M | ~$195–200M |
| Adj. Net Income | ~$220M | ~$310M | ~$360–400M |
| Reported Net Income | ~$(100M) | ~$200M | ~$250–280M |
| Adj. Diluted EPS | ~$0.95 | ~$1.35 | ~$1.60–1.75 |

*Note: FY2022 reported net income was impacted by goodwill impairment charges and restructuring. FY2024E based on company guidance and analyst consensus as of Q3 2024 reporting.*

#### Key Margin Analysis

##### Gross Margin Trajectory

Gross margin expanded from ~35% in FY2022 to ~38% in FY2023 and is tracking toward ~39–40% in FY2024, driven by:
1. **Raw material cost normalization**: TiO2 prices (key white pigment input) peaked in H2 2022 and declined ~20-30% through 2023-2024. Epoxy resin costs also moderated.
2. **Price retention**: Surcharges and price increases implemented in 2021-2022 were retained into 2023-2024 as Axalta absorbed only modest customer pushback.
3. **Volume leverage**: Fixed manufacturing costs spread over stable/growing volumes improve absorption.

##### EBITDA Margin Trajectory

Adjusted EBITDA margin of ~17.9% in FY2023 represents approximately 230 bps improvement from FY2022's 15.6%. The improvement reflects:
- Raw material tailwinds (~$80-100M EBITDA benefit)
- Pricing power retention
- SG&A leverage (cost savings from 2022 restructuring program)
- Partially offset by: FX headwinds (~$20-30M) and volume softness in China/EU OEM

**Long-term target**: Axalta management has guided toward 20%+ Adjusted EBITDA margins, implying ~100-150 bps of further upside from current levels. Path includes additional raw material normalization, mix shift toward higher-margin Performance Coatings, and operational efficiency initiatives.

#### Reported vs. Adjusted Earnings

Axalta's reported GAAP results include significant non-cash charges:
- **Amortization of acquisition intangibles**: ~$110-120M/year (from original Carlyle LBO in 2013; declining over time)
- **Restructuring charges**: Periodic (2022 program was ~$25-30M)
- **Stock-based compensation**: ~$35-45M/year
- **Brazil indirect tax claim**: One-time items related to Brazilian tax proceedings

Adjusted EBITDA and Adjusted Net Income are the primary metrics used by management, the investment community, and debt covenants.

#### Cash Flow Generation

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Adj. EBITDA | ~$775M | ~$900M | ~$975M |
| CapEx | ~$(130M) | ~$(135M) | ~$(140M) |
| Interest Paid (cash) | ~$(175M) | ~$(180M) | ~$(190M) |
| Cash Taxes | ~$(50M) | ~$(70M) | ~$(80M) |
| Working Capital Change | Variable | ~$(10M) | ~$(10M) |
| **Free Cash Flow (approx.)** | **~$400–420M** | **~$505–520M** | **~$550–575M** |

FCF conversion from Adjusted EBITDA is approximately 55-60%, which is solid for a capital-intensive specialty chemicals company. The main drags are interest expense (elevated due to LBO debt), cash taxes, and moderate CapEx needs.

#### Balance Sheet Snapshot (Most Recent)

| Item | FY2023 | Q3 2024E |
|------|--------|---------|
| Cash & Equivalents | ~$750M | ~$700-800M |
| Total Debt | ~$4,050M | ~$3,900-4,000M |
| Net Debt | ~$3,300M | ~$3,100-3,200M |
| Net Leverage (Adj. EBITDA) | ~3.7x | ~3.2-3.4x |
| Total Equity (book) | ~$1,150M | ~$1,300M |
| Goodwill + Intangibles | ~$3,200M | ~$3,100M |
| Tangible Book Value | Negative (legacy LBO) | Negative |

#### Debt Structure

- Axalta has a senior secured term loan B structure (term loan + revolving credit facility)
- Notes outstanding: Mix of dollar and euro-denominated senior notes at 3.375-4.75% coupon range (refinanced at attractive rates in 2020-2021 low-rate environment)
- **Debt maturity**: Extended maturity profile; no material near-term maturities (term loan maturities in 2028-2029 range)
- **Covenant-lite**: Standard institutional term loan structure; financial maintenance covenants only on revolver when drawn

#### Key Financial Ratios

| Ratio | FY2022 | FY2023 | FY2024E |
|-------|--------|--------|---------|
| EV/EBITDA | ~11x | ~9.5x | ~8.5x |
| P/E (Adjusted) | ~35x | ~25x | ~20x |
| Net Debt/EBITDA | ~4.3x | ~3.7x | ~3.2x |
| Gross Margin | 35.0% | 37.7% | ~39.5% |
| EBITDA Margin | 15.6% | 17.9% | ~19.0% |
| FCF Yield | ~5.5% | ~6.5% | ~7.0% |
| ROIC | ~8% | ~11% | ~13% |

#### Key Financial Observations

1. **Raw material normalization is the dominant profit driver in 2023-2024.** Axalta's financials are disproportionately sensitive to TiO2 and epoxy resin costs; a $10/ton move in TiO2 price has ~$20-25M EBITDA impact.

2. **Margin gap to PPG**: PPG generates ~22-24% EBITDA margins in coatings vs. Axalta's ~18-19% — the gap primarily reflects PPG's diversification into industrial/architectural and operational efficiency.

3. **Valuation has de-rated appropriately**: At ~8-9x forward EBITDA, Axalta trades at a 20-30% discount to PPG/SHW, which is arguably justified given higher leverage but also creates upside if deleveraging proceeds.

4. **FCF inflection**: FCF per share is growing at ~15-20% annually as leverage declines and interest costs moderate; this is the core bull case.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/AXTA/fundamental

## Navigation

- Overview: /stocks/AXTA
- Financials (this page): /stocks/AXTA/financials
- Thesis: /stocks/AXTA/thesis
- Investment Memo: /stocks/AXTA/memo
- Coverage universe: /stocks