QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2851 | ||||||||||||||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
(Title of class) | (Trading symbol) | (Exchange on which registered) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of goods sold | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Other operating charges | ||||||||||||||||||||||||||
Research and development expenses | ||||||||||||||||||||||||||
Amortization of acquired intangibles | ||||||||||||||||||||||||||
Income from operations | ||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
Other (income) expense, net | ( | |||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Provision for income taxes | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests | ||||||||||||||||||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
Basic net income per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive income (loss), before tax: | ||||||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ||||||||||||||||||||||||
Unrealized loss on derivatives | ( | ( | ( | ( | ||||||||||||||||||||||
Unrealized gain on pension and other benefit plan obligations | ||||||||||||||||||||||||||
Other comprehensive income (loss), before tax | ( | ( | ||||||||||||||||||||||||
Income tax benefit related to items of other comprehensive income | ( | ( | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | ||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | ( | |||||||||||||||||||||||||
Comprehensive income attributable to common shareholders | $ | $ | $ | $ |
September 30, 2024 | December 31, 2023 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts and notes receivable, net | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Identifiable intangibles, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities, Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Current portion of borrowings | |||||||||||
Other accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term borrowings | |||||||||||
Accrued pensions | |||||||||||
Deferred income taxes | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingent liabilities (Note 6) | |||||||||||
Shareholders’ equity: | |||||||||||
Common shares, $ | |||||||||||
Capital in excess of par | |||||||||||
Retained earnings | |||||||||||
Treasury shares, at cost, | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Axalta shareholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par/Stated Value | Capital In Excess Of Par | Retained Earnings | Treasury Shares, at cost | Accumulated Other Comprehensive Loss | Non controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Long-term employee benefit plans, net of tax of $ | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Long-term employee benefit plans, net of tax of $ | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Common stock purchases | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on derivatives, net of tax benefit of $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax benefit of $ | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Common stock purchases | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends declared to non-controlling interest | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Par/Stated Value | Capital In Excess Of Par | Retained Earnings | Treasury Shares, at cost | Accumulated Other Comprehensive Loss | Non controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on derivatives, net of tax of $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $ | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on derivatives, net of tax of $ | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Long-term employee benefit plans, net of tax of $ | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax benefit of $ | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax of $ | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Recognition of stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued under compensation plans | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Common stock purchases | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | |||||||||||||
Operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustment to reconcile net income to cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Amortization of deferred financing costs and original issue discount | ||||||||||||||
Debt extinguishment and refinancing-related costs | ||||||||||||||
Deferred income taxes | ( | |||||||||||||
Realized and unrealized foreign exchange losses, net | ||||||||||||||
Stock-based compensation | ||||||||||||||
Impairment charges | ||||||||||||||
Interest income on swaps designated as net investment hedges | ( | ( | ||||||||||||
Other non-cash, net | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Trade accounts and notes receivable | ( | ( | ||||||||||||
Inventories | ( | |||||||||||||
Prepaid expenses and other assets | ( | ( | ||||||||||||
Accounts payable | ( | |||||||||||||
Other accrued liabilities | ( | |||||||||||||
Other liabilities | ( | |||||||||||||
Cash provided by operating activities | ||||||||||||||
Investing activities: | ||||||||||||||
Acquisitions, net of cash acquired | ( | |||||||||||||
Purchase of property, plant and equipment | ( | ( | ||||||||||||
Interest proceeds on swaps designated as net investment hedges | ||||||||||||||
Settlement proceeds on swaps designated as net investment hedges | ||||||||||||||
Payments for loans to customers | ( | ( | ||||||||||||
Other investing activities, net | ||||||||||||||
Cash used for investing activities | ( | ( | ||||||||||||
Financing activities: | ||||||||||||||
Proceeds from short-term borrowings | ||||||||||||||
Proceeds from long-term borrowings | ||||||||||||||
Payments on short-term borrowings | ( | ( | ||||||||||||
Payments on long-term borrowings | ( | ( | ||||||||||||
Financing-related costs | ( | ( | ||||||||||||
Purchases of common stock | ( | ( | ||||||||||||
Net cash flows associated with stock-based awards | ||||||||||||||
Deferred acquisition-related consideration | ( | |||||||||||||
Other financing activities, net | ||||||||||||||
Cash used for financing activities | ( | ( | ||||||||||||
Decrease in cash | ( | ( | ||||||||||||
Effect of exchange rate changes on cash | ( | ( | ||||||||||||
Cash at beginning of period | ||||||||||||||
Cash at end of period | $ | $ | ||||||||||||
Cash at end of period reconciliation: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Cash at end of period | $ | $ |
Note | Page | |||||||
July 2, 2024 | ||||||||
Cash | $ | |||||||
Accounts and notes receivable, net | ||||||||
Inventories | ||||||||
Prepaid expenses and other current assets, net | ||||||||
Property, plant and equipment, net | ||||||||
Identifiable intangible assets | ||||||||
Other assets | ||||||||
Accounts payable and other accrued liabilities | ( | |||||||
Other liabilities | ( | |||||||
Deferred income taxes | ( | |||||||
Net assets before goodwill from acquisition | ||||||||
Goodwill from acquisition | ||||||||
Net assets acquired | $ |
Performance Coatings | Mobility Coatings | Total | ||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | |||||||||||||||||
Goodwill from acquisitions | ||||||||||||||||||||
Foreign currency translation | ||||||||||||||||||||
Balance at September 30, 2024 | $ | $ | $ |
September 30, 2024 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||||||||||||||||||
Technology | $ | $ | ( | $ | ||||||||||||||||||||||
Trademarks—indefinite-lived | — | Indefinite | ||||||||||||||||||||||||
Trademarks—definite-lived | ( | |||||||||||||||||||||||||
Customer relationships | ( | |||||||||||||||||||||||||
Total | $ | $ | ( | $ |
December 31, 2023 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||||||||||||||||||
Technology | $ | $ | ( | $ | ||||||||||||||||||||||
Trademarks—indefinite-lived | — | Indefinite | ||||||||||||||||||||||||
Trademarks—definite-lived | ( | |||||||||||||||||||||||||
Customer relationships | ( | |||||||||||||||||||||||||
Total | $ | $ | ( | $ |
Remainder of 2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
2029 |
2024 Activity | ||||||||
Balance at December 31, 2023 | $ | |||||||
Expenses, net of changes to estimates | ||||||||
Payments made | ( | |||||||
Foreign currency translation | ||||||||
Balance at September 30, 2024 | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||||||||
Net periodic benefit cost: | ||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of actuarial loss, net | ||||||||||||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
Stock Options | Awards (in millions) | Weighted Average Exercise Price | Aggregate Intrinsic Value (in millions) | Weighted Average Remaining Contractual Life (years) | ||||||||||||||||||||||
Outstanding at January 1, 2024 | $ | |||||||||||||||||||||||||
Exercised | ( | $ | ||||||||||||||||||||||||
Forfeited / Expired (1) | $ | |||||||||||||||||||||||||
Outstanding at September 30, 2024 | $ | |||||||||||||||||||||||||
Vested and expected to vest at September 30, 2024 | $ | $ | ||||||||||||||||||||||||
Exercisable at September 30, 2024 | $ | $ |
Restricted Stock Units | Units (in millions) | Weighted Average Fair Value | ||||||||||||
Outstanding at January 1, 2024 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested | ( | $ | ||||||||||||
Forfeited | ( | $ | ||||||||||||
Outstanding at September 30, 2024 | $ |
Performance Share Units | Units (in millions) | Weighted Average Fair Value | ||||||||||||
Outstanding at January 1, 2024 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested (1) | $ | |||||||||||||
Forfeited | ( | $ | ||||||||||||
Outstanding at September 30, 2024 | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Foreign exchange losses, net | $ | $ | $ | $ | ||||||||||||||||||||||
Debt extinguishment and refinancing-related costs (1) | ||||||||||||||||||||||||||
Other miscellaneous income, net | ( | ( | ( | ( | ||||||||||||||||||||||
Total | $ | ( | $ | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | |||||||||||||
Effective Tax Rate | % | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(In millions, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Net income to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||||||||||||||
Net income per common share (1): | ||||||||||||||||||||||||||
Basic net income per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ |
September 30, 2024 | December 31, 2023 | |||||||||||||
Accounts receivable - trade, net (1) | $ | $ | ||||||||||||
Notes receivable | ||||||||||||||
Other (2) | ||||||||||||||
Total | $ | $ |
September 30, 2024 | December 31, 2023 | |||||||||||||
Finished products | $ | $ | ||||||||||||
Semi-finished products | ||||||||||||||
Raw materials | ||||||||||||||
Stores and supplies | ||||||||||||||
Total | $ | $ |
September 30, 2024 | December 31, 2023 | |||||||||||||
Property, plant and equipment | $ | $ | ||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Property, plant and equipment, net | $ | $ |
September 30, 2024 | December 31, 2023 | |||||||||||||
2029 Dollar Term Loans | $ | $ | ||||||||||||
Revolving Credit Facility | ||||||||||||||
2027 Dollar Senior Notes | ||||||||||||||
2029 Dollar Senior Notes | ||||||||||||||
2031 Dollar Senior Notes | ||||||||||||||
Short-term and other borrowings | ||||||||||||||
Unamortized original issue discount | ( | ( | ||||||||||||
Unamortized deferred financing costs | ( | ( | ||||||||||||
Total borrowings, net | ||||||||||||||
Less: | ||||||||||||||
Short-term borrowings | ||||||||||||||
Current portion of long-term borrowings | ||||||||||||||
Long-term debt | $ | $ |
Remainder of 2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total borrowings | ||||||||
Unamortized original issue discount | ( | |||||||
Unamortized deferred financing costs | ( | |||||||
Total borrowings, net | $ |
September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in equity securities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other accrued liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cross-currency swaps (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Contingent consideration | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cross-currency swaps (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term borrowings: | ||||||||||||||||||||||||||||||||||||||||||||||||||
2029 Dollar Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
2027 Dollar Senior Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||
2029 Dollar Senior Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||
2031 Dollar Senior Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Using Significant Unobservable Inputs (Level 3) | ||||||||
Beginning balance at December 31, 2023 | $ | |||||||
Change in fair value | ||||||||
Foreign currency translation | ||||||||
Ending balance at September 30, 2024 | $ | |||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of Loss (Gain) Recognized in Income on Derivatives | Net Amount of Loss Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | Net Amount of Gain Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | |||||||||||||||||||||||||||
Interest rate swaps | Interest expense, net | $ | $ | $ | $ | |||||||||||||||||||||||||||
Cross-currency swaps | Interest expense, net | ( | ( | ( |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of Loss (Gain) Recognized in Income on Derivatives | Net Amount of Loss (Gain) Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | Net Amount of Gain Recognized in OCI on Derivatives | Amount of Gain Recognized in Income | |||||||||||||||||||||||||||
Interest rate swaps | Interest expense, net | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Cross-currency swaps | Interest expense, net | ( | ( | ( |
Derivatives Not Designated as Hedging Instruments under ASC 815 | Location of Loss (Gain) Recognized in Income on Derivatives | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
Foreign currency forward contracts | Other (income) expense, net | $ | $ | $ | ( | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Net sales (1): | ||||||||||||||||||||||||||
Refinish | $ | $ | $ | $ | ||||||||||||||||||||||
Industrial | ||||||||||||||||||||||||||
Total Net sales Performance Coatings | ||||||||||||||||||||||||||
Light Vehicle | ||||||||||||||||||||||||||
Commercial Vehicle | ||||||||||||||||||||||||||
Total Net sales Mobility Coatings | ||||||||||||||||||||||||||
Total Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Segment Adjusted EBITDA (1): | ||||||||||||||||||||||||||
Performance Coatings | $ | $ | $ | $ | ||||||||||||||||||||||
Mobility Coatings | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Debt extinguishment and refinancing-related costs (a) | ||||||||||||||||||||||||||
Termination benefits and other employee-related costs (b) | ||||||||||||||||||||||||||
Acquisition and divestiture-related costs (c) | ||||||||||||||||||||||||||
Site closure costs (d) | ||||||||||||||||||||||||||
Impairment charges (e) | ||||||||||||||||||||||||||
Foreign exchange remeasurement losses (f) | ||||||||||||||||||||||||||
Long-term employee benefit plan adjustments (g) | ||||||||||||||||||||||||||
Stock-based compensation (h) | ||||||||||||||||||||||||||
Environmental charge (i) | ||||||||||||||||||||||||||
Other adjustments (j) | ( | ( | ( | ( | ||||||||||||||||||||||
Income before income taxes | $ | $ | $ | $ |
(1) | The primary measure of segment operating performance is Segment Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation, amortization and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Segment Adjusted EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company's core operating performance, which represents EBITDA adjusted for the select items referred to above. | ||||
(a) | Represents expenses and associated changes to estimates related to the prepayment, restructuring, and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance. | ||||
(b) | Represents expenses and associated changes to estimates related to employee termination benefits, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. These amounts are not considered indicative of our ongoing operating performance. | ||||
(c) | Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance. | ||||
(d) | Represents costs related to the closure of certain manufacturing sites, which we do not consider indicative of our ongoing operating performance. | ||||
(e) | Represents impairment charges, which are not considered indicative of our ongoing operating performance. The losses recorded during the nine months ended September 30, 2023 were primarily due to the decision to demolish assets at a previously closed manufacturing site during the three months ended June 30, 2023 and the then anticipated exit of a non-core business category in the Mobility Coatings segment during the three months ended March 31, 2023. | ||||
(f) | Represents foreign exchange losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. | ||||
(g) | Represents the non-cash, non-service cost components of long-term employee benefit costs. | ||||
(h) | Represents non-cash impacts associated with stock-based compensation. | ||||
(i) | Represents costs related to certain environmental remediation activities, which are not considered indicative of our ongoing operating performance. | ||||
(j) | Represents costs for certain non-operational or non-cash losses (gains), unrelated to our core business and which we do not consider indicative of our ongoing operating performance. | ||||
Unrealized Currency Translation Adjustments | Pension Adjustments | Unrealized Loss on Derivatives | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||||||||||
Balance, December 31, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Current year deferrals to AOCI | ( | ( | ||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ||||||||||||||||||||||||
Net Change | ( | ( | ||||||||||||||||||||||||
Balance, March 31, 2024 | ( | ( | ( | |||||||||||||||||||||||
Current year deferrals to AOCI | ( | ( | ||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ||||||||||||||||||||||||
Net Change | ( | ( | ||||||||||||||||||||||||
Balance, June 30, 2024 | ( | ( | ( | |||||||||||||||||||||||
Current year deferrals to AOCI | ( | |||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ||||||||||||||||||||||||
Net Change | ( | |||||||||||||||||||||||||
Balance, September 30, 2024 | $ | ( | $ | ( | $ | ( | $ | ( |
Unrealized Currency Translation Adjustments | Pension Adjustments | Unrealized Gain (Loss) on Derivatives | Accumulated Other Comprehensive (Loss) Income | |||||||||||||||||||||||
Balance, December 31, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Current year deferrals to AOCI | ||||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ( | |||||||||||||||||||||||
Net Change | ( | |||||||||||||||||||||||||
Balance, March 31, 2023 | ( | ( | ( | |||||||||||||||||||||||
Current year deferrals to AOCI | ||||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ( | |||||||||||||||||||||||
Net Change | ||||||||||||||||||||||||||
Balance, June 30, 2023 | ( | ( | ( | |||||||||||||||||||||||
Current year deferrals to AOCI | ( | ( | ||||||||||||||||||||||||
Reclassifications from AOCI to Net income | ( | ( | ||||||||||||||||||||||||
Net Change | ( | ( | ||||||||||||||||||||||||
Balance, September 30, 2023 | $ | ( | $ | ( | $ | $ | ( |
(In millions) | Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | ||||||||||||||||||||||||||||||||||
2024 | 2023 | % change | 2024 | 2023 | % change | |||||||||||||||||||||||||||||||||
Performance Coatings | ||||||||||||||||||||||||||||||||||||||
Refinish | $ | 554 | $ | 529 | 4.7 | % | $ | 1,619 | $ | 1,547 | 4.6 | % | ||||||||||||||||||||||||||
Industrial | 323 | 327 | (1.3) | % | 993 | 1,012 | (1.8) | % | ||||||||||||||||||||||||||||||
Total Net sales Performance Coatings | 877 | 856 | 2.4 | % | 2,612 | 2,559 | 2.1 | % | ||||||||||||||||||||||||||||||
Mobility Coatings | ||||||||||||||||||||||||||||||||||||||
Light Vehicle | 340 | 342 | (0.4) | % | 1,036 | 1,001 | 3.6 | % | ||||||||||||||||||||||||||||||
Commercial Vehicle | 103 | 111 | (7.7) | % | 317 | 327 | (3.1) | % | ||||||||||||||||||||||||||||||
Total Net sales Mobility Coatings | 443 | 453 | (2.2) | % | 1,353 | 1,328 | 1.9 | % | ||||||||||||||||||||||||||||||
Total Net sales | $ | 1,320 | $ | 1,309 | 0.8 | % | $ | 3,965 | $ | 3,887 | 2.0 | % |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 1,320 | $ | 1,309 | $ | 11 | 0.8 | % | $ | 3,965 | $ | 3,887 | $ | 78 | 2.0 | % | ||||||||||||||||||||||||||||||||||
Volume effect | 0.6 | % | 1.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Impact of CoverFlexx | 1.6 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Price/Mix effect | (1.1) | % | (0.2) | % | ||||||||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (0.3) | % | (0.1) | % |
Net sales primarily increased due to the following: | ||
n Contributions from the CoverFlexx acquisition | ||
n Higher sales volumes including the contribution from the André Koch acquisition | ||
Partially offset by: | ||
n Lower average selling prices and product mix driven by Mobility Coatings | ||
n Unfavorable impacts of currency translation driven by fluctuations of the Mexican Peso and Brazilian Real, partially offset by fluctuations of the Euro, Chinese Yuan and British Pound, compared to the U.S. Dollar |
Net sales increased primarily due to the following: | ||
n Higher sales volumes including the contribution from the André Koch acquisition and partially driven by lower volumes in the prior year period in connection with production constraints associated with our multi-year enterprise resource planning ("ERP") system implementation in North America | ||
n Contributions from the CoverFlexx acquisition | ||
Partially offset by: | ||
n Lower average selling prices and product mix driven by Mobility Coatings, partially offset by higher average selling prices and product mix in Performance Coatings | ||
n Impacts of currency translation were immaterial driven by offsetting currency fluctuations |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Cost of sales | $ | 858 | $ | 886 | $ | (28) | (3.2) | % | $ | 2,614 | $ | 2,692 | $ | (78) | (2.9) | % | ||||||||||||||||||||||||||||||||||
% of net sales | 65.0 | % | 67.7 | % | 65.9 | % | 69.3 | % |
Cost of sales decreased primarily due to the following: | ||
n Lower variable input costs as a result of deflationary benefits | ||
n Decreased costs of $13 million related to our multi-year ERP system implementation and productivity programs | ||
n Lower operating expenses | ||
n Favorable impacts of currency translation of 0.5% driven by fluctuations of the Mexican Peso and Brazilian Real, partially offset by fluctuations of the Euro and Chinese Yuan, compared to the U.S. Dollar | ||
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing | ||
Partially offset by: | ||
n Higher sales volumes including contributions from the André Koch and CoverFlexx acquisitions | ||
n Higher operating expenses due primarily to increased labor costs | ||
Cost of sales as a percentage of net sales decreased primarily due to the following: | ||
n Lower variable input costs as a result of deflationary benefits | ||
n Decreased costs of $13 million related to our multi-year ERP system implementation and productivity programs | ||
n Lower operating expenses | ||
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing | ||
Partially offset by: | ||
n Lower average selling prices and product mix driven by Mobility Coatings |
Cost of sales decreased primarily due to the following: | ||
n Lower variable input costs as a result of deflationary benefits | ||
n Decreased costs of $23 million related to our multi-year ERP system implementation and productivity programs | ||
n $8 million impairment charge in the prior year due to the decision to demolish assets at a previously closed manufacturing site | ||
n Favorable impacts of currency translation of 0.2% driven by fluctuations of the Chinese Yuan and Brazilian Real, partially offset by fluctuations of the Euro, British Pound and Polish Zloty, compared to the U.S. Dollar | ||
n Decreased expense of $3 million associated with utilization at certain manufacturing sites | ||
Partially offset by: | ||
n Higher sales volumes including contributions from the André Koch and CoverFlexx acquisitions | ||
n Higher operating expenses due primarily to increased labor costs | ||
Cost of sales as a percentage of net sales decreased primarily due to the following: | ||
n Lower variable input costs as a result of deflationary benefits | ||
n Decreased costs of $23 million related to our multi-year ERP system implementation and productivity programs | ||
n $8 million impairment charge in the prior year due to the decision to demolish assets at a previously closed manufacturing site | ||
n Decreased expense of $3 million associated with utilization at certain manufacturing sites | ||
Partially offset by: | ||
n Higher operating expenses due primarily to increased labor costs | ||
n Lower average selling prices and product mix driven by Mobility Coatings, partially offset by higher average selling prices and product mix in Performance Coatings |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | $ | 211 | $ | 209 | $ | 2 | 1.0 | % | $ | 631 | $ | 625 | $ | 6 | 1.0 | % |
Selling, general and administrative expenses increased primarily due to the following: | ||
n Higher operating expenses due primarily to increased labor costs | ||
Partially offset by: | ||
n Decrease of $5 million in commissions resulting from changes to certain contractual arrangements | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Selling, general and administrative expenses increased primarily due to the following: | ||
n Higher operating expenses due primarily to increased labor costs | ||
Partially offset by: | ||
n Decrease of $16 million in commissions resulting from changes to certain contractual arrangements | ||
n Favorable impacts of currency translation of 0.2% driven by fluctuations of the Chinese Yuan compared to the U.S. Dollar | ||
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Other operating charges | $ | 15 | $ | 13 | $ | 2 | 15.4 | % | $ | 78 | $ | 22 | $ | 56 | 254.5 | % | ||||||||||||||||||||||||||||||||||
Other operating charges increased primarily due to the following: | ||
n Increase of $9 million in termination benefits and other employee-related costs associated with the 2024 Transformation Initiative | ||
n Increase of $2 million in acquisition-related costs | ||
Partially offset by: | ||
n $10 million third-party consultant costs in the prior year period related to productivity programs | ||
Other operating charges increased primarily due to the following: | ||
n Increase of $63 million in termination benefits and other employee-related costs associated with the 2024 Transformation Initiative | ||
n Increase of $6 million in acquisition-related costs | ||
n $4 million in environmental remediation costs recognized in the current year period | ||
Partially offset by: | ||
n $10 million third-party consultant costs in the prior year period related to productivity programs | ||
n $7 million impairment charge recognized in the prior year period related to the exit of a non-core business category in the Mobility Coatings segment |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Research and development expenses | $ | 19 | $ | 18 | $ | 1 | 5.6 | % | $ | 55 | $ | 56 | $ | (1) | (1.8) | % |
Research and development expenses remained generally consistent: | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Research and development expenses remained generally consistent: | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangibles | $ | 24 | $ | 20 | $ | 4 | 20.0 | % | $ | 68 | $ | 66 | $ | 2 | 3.0 | % |
Amortization of acquired intangibles increased due to the following: | ||
n Increased amortization of $3 million associated with assets acquired in the past 12 months | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Amortization of acquired intangibles increased primarily due to the following: | ||
n Increased amortization of $6 million associated with assets acquired in the past 12 months | ||
Partially offset by: | ||
n Reduced amortization of $5 million from certain intangible assets reaching the end of their useful lives during 2023 and 2024, primarily relating to intangibles from the 2013 DuPont Performance Coatings acquisition | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Interest expense, net | $ | 54 | $ | 55 | $ | (1) | (1.8) | % | $ | 158 | $ | 158 | $ | — | — | % | ||||||||||||||||||||||||||||||||||
Interest expense, net remained generally consistent primarily due to the following: | ||
n Favorable impact of $6 million attributable to lower principal on our 2029 Dollar Term Loans, primarily as a result of $125 million of prepayments during the twelve months ended September 30, 2024, partially offset by the increased variable interest rate | ||
•Favorable impact of $5 million attributable to the redemption in November 2023 of our Euro-denominated Senior Notes due in 2025 | ||
Nearly entirely offset by: | ||
•Unfavorable impact of $9 million attributable to our 2031 Dollar Senior Notes which were issued in November 2023 | ||
•Unfavorable impact of $2 million attributable to the borrowings against our Revolving Credit Facility during June 2024 | ||
n Impacts of currency translation were immaterial when compared to the prior year period |
Interest expense, net remained generally consistent primarily due to the following: | ||
n Favorable impact of $15 million attributable to lower principal on our 2029 Dollar Term Loans, primarily as a result of $125 million of prepayments during the twelve months ended September 30, 2024, partially offset by the increased variable interest rate | ||
•Favorable impact of $15 million attributable to the redemption in November 2023 of our Euro-denominated Senior Notes due in 2025 | ||
n Impacts of currency translation were immaterial when compared to the prior year period | ||
Offset by: | ||
•Unfavorable impact of $28 million attributable to our 2031 Dollar Senior Notes which were issued in November 2023 | ||
•Unfavorable impact of $2 million attributable to the borrowings against our Revolving Credit Facility during June 2024 |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Other (income) expense, net | $ | (3) | $ | 5 | $ | (8) | 160.0 | % | $ | 4 | $ | 15 | $ | (11) | 73.3 | % |
Other (income) expense, net changed due to the following: | ||
n Favorable impact of foreign exchange gains and losses of $7 million when compared with the prior year period, including expenses from the remeasurement of net monetary assets denominated in the Argentinian Peso and Turkish Lira due to a significant devaluation in the prior year period | ||
n $4 million debt extinguishment and refinancing-related costs recognized in the prior year period as part of the repricing of our 2029 Dollar Term Loans | ||
Partially offset by: | ||
n Decreased miscellaneous income, net of $3 million |
Other expense, net decreased due to the following: | ||
n Favorable impact of foreign exchange gains and losses of $11 million when compared with the prior year period, including expenses from the remeasurement of net monetary assets denominated in the Argentinian Peso and Turkish Lira due to a significant devaluation in the prior year period. | ||
n Decreased debt extinguishment and refinancing-related costs of $4 million driven by $3 million in expenses for prepayments and repricing of our 2029 Dollar Term Loans in the current year compared to the $7 million in expenses for prepayments and repricing on our 2029 Dollar Term Loans in the prior year period | ||
Partially offset by: | ||
n Decreased miscellaneous income, net of $4 million |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
Income before income taxes | $ | 142 | $ | 103 | $ | 357 | $ | 253 | ||||||||||||||||||
Provision for income taxes | 40 | 30 | 103 | 58 | ||||||||||||||||||||||
Statutory U.S. Federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||||||
Effective tax rate | 28.6 | % | 28.6 | % | 28.9 | % | 22.9 | % | ||||||||||||||||||
Effective tax rate vs. statutory U.S. Federal income tax rate | 7.6 | % | 7.6 | % | 7.9 | % | 1.9 | % |
(Favorable) Unfavorable Impact | ||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Items impacting the effective tax rate vs. statutory U.S. federal income tax rate | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Earnings generated in jurisdictions where the statutory rate is different from the U.S. Federal rate (1) | $ | (2) | $ | (8) | $ | (17) | $ | (23) | ||||||||||||||||||
Changes in valuation allowance (2) | (30) | 7 | — | 20 | ||||||||||||||||||||||
Foreign exchange losses (gains), net | 7 | 1 | (1) | 1 | ||||||||||||||||||||||
Non-deductible expenses and interest | 2 | 1 | 4 | 3 | ||||||||||||||||||||||
Changes in unrecognized tax benefits | 7 | 4 | 11 | (1) | ||||||||||||||||||||||
Other - net (3) | 24 | 1 | 22 | 1 |
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 877 | $ | 856 | $ | 21 | 2.4 | % | $ | 2,612 | $ | 2,559 | $ | 53 | 2.1 | % | ||||||||||||||||||||||||||||||||||
Impact of CoverFlexx | 2.4 | % | 0.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Volume effect | (0.2) | % | 0.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Price/Mix effect | — | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | 0.2 | % | 0.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 221 | $ | 200 | $ | 21 | 11.0 | % | $ | 640 | $ | 550 | $ | 90 | 16.3 | % | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA Margin | 25.3 | % | 23.3 | % | 24.5 | % | 21.5 | % |
Net sales increased primarily due to the following: | ||
n Contributions from the CoverFlexx acquisition | ||
n Favorable impacts of currency translation due primarily to fluctuations of the Euro and British Pound, partially offset by fluctuations of the Mexican Peso and Brazilian Real, compared to the U.S. Dollar | ||
Partially offset by: | ||
n Lower sales volumes driven by unfavorable macro trends, partially offset by new body shop wins |
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: | ||
n Decreased variable input costs due to deflationary benefits | ||
n Decreased costs of $8 million related to our multi-year ERP system implementation and productivity programs | ||
n Contributions from the CoverFlexx acquisition | ||
n Decrease of $5 million in inventory charges related to obsolescence, quality and yield loss in manufacturing | ||
Partially offset by: | ||
n Lower sales volumes driven by unfavorable macro trends, partially offset by new body shop wins | ||
n Less effective coverage of fixed costs as a result of lower sales volume |
Net sales increased primarily due to the following: | ||
n Contributions from the CoverFlexx acquisition | ||
n Higher sales volumes including the contribution from the André Koch acquisition, new body shop wins and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America | ||
n Higher average selling prices and product mix driven by the refinish end-market | ||
n Impacts of currency translation were immaterial driven by offsetting currency fluctuations | ||
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: | ||
n Decreased variable input costs due to deflationary benefits | ||
n Decreased costs of $15 million related to our multi-year ERP system implementation and productivity programs | ||
n Higher average selling prices and product mix driven by the refinish end-market | ||
n Contributions from the CoverFlexx acquisition | ||
n Decrease of $4 million in inventory charges related to obsolescence, quality and yield loss in manufacturing | ||
Three Months Ended September 30, | 2024 vs 2023 | Nine Months Ended September 30, | 2024 vs 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 443 | $ | 453 | $ | (10) | (2.2) | % | $ | 1,353 | $ | 1,328 | $ | 25 | 1.9 | % | ||||||||||||||||||||||||||||||||||
Volume effect | 2.1 | % | 3.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Price/Mix effect | (3.0) | % | (1.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||
Exchange rate effect | (1.3) | % | (0.5) | % | ||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 70 | $ | 61 | $ | 9 | 14.3 | % | $ | 201 | $ | 151 | $ | 50 | 33.8 | % | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA Margin | 15.7 | % | 13.4 | % | 14.9 | % | 11.3 | % |
Net sales decreased primarily due to the following: | ||
n Lower average selling prices and product mix driven by contractual raw material pass-through impacts in the light vehicle end-market | ||
n Unfavorable impacts of currency translation driven by fluctuations of the Brazilian Real and Mexican Peso, partially offset by fluctuations of the Euro and Chinese Yuan, compared to the U.S. Dollar | ||
Partially offset by: | ||
n Higher sales volumes driven by the light vehicle end-market |
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: | ||
n Decreased variable input costs due to deflationary benefits | ||
n Decreased costs of $5 million related to our multi-year ERP system implementation and productivity programs | ||
n Higher sales volumes driven by new business wins in the current period | ||
Partially offset by: | ||
n Lower average selling prices and product mix driven by contractual raw material pass-through impacts in the light vehicle end-market |
Net sales increased primarily due to the following: | ||
n Higher sales volumes partially driven by new business wins in the current period and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America | ||
Partially offset by: | ||
n Lower average selling prices and product mix across both end-markets, including raw material pass-through impacts in the light vehicle end-market | ||
n Unfavorable impacts of currency translation driven by fluctuations of the Brazilian Real and Chinese Yuan, partially offset by fluctuations of the Euro, compared to the U.S. Dollar |
Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: | ||
n Decreased variable input costs due to deflationary benefits | ||
n Higher sales volumes partially driven by new business wins in the current period and lower volumes in the prior year period in connection with production constraints associated with our multi-year ERP system implementation in North America | ||
n Decreased costs of $8 million driven by our multi-year ERP system implementation and productivity programs | ||
n Decreased expense of $2 million associated with utilization at certain manufacturing sites | ||
Partially offset by: | ||
n Lower average selling prices and product mix across both end-markets, including raw material pass-through impacts in the light vehicle end-market | ||
n Increase of $3 million in inventory charges related to obsolescence, quality and yield loss in manufacturing |
Nine Months Ended September 30, | ||||||||||||||
(In millions) | 2024 | 2023 | ||||||||||||
Net cash provided by (used for): | ||||||||||||||
Operating activities: | ||||||||||||||
Net income | $ | 254 | $ | 195 | ||||||||||
Depreciation and amortization | 207 | 207 | ||||||||||||
Amortization of deferred financing costs and original issue discount | 6 | 7 | ||||||||||||
Debt extinguishment and refinancing-related costs | 3 | 7 | ||||||||||||
Deferred income taxes | 10 | (8) | ||||||||||||
Realized and unrealized foreign exchange losses, net | 12 | 21 | ||||||||||||
Stock-based compensation | 21 | 19 | ||||||||||||
Impairment charges | — | 15 | ||||||||||||
Interest income on swaps designated as net investment hedges | (10) | (9) | ||||||||||||
Other non-cash, net | 5 | 25 | ||||||||||||
Net income adjusted for non-cash items | 508 | 479 | ||||||||||||
Changes in operating assets and liabilities | (166) | (190) | ||||||||||||
Operating activities | 342 | 289 | ||||||||||||
Investing activities | (374) | (65) | ||||||||||||
Financing activities | (90) | (252) | ||||||||||||
Effect of exchange rate changes on cash | (10) | (19) | ||||||||||||
Net increase (decrease) in cash | $ | (132) | $ | (47) |
(In millions) | September 30, 2024 | December 31, 2023 | ||||||||||||
2029 Dollar Term Loans | $ | 1,702 | $ | 1,786 | ||||||||||
Revolving Credit Facility | 105 | — | ||||||||||||
2027 Dollar Senior Notes | 500 | 500 | ||||||||||||
2029 Dollar Senior Notes | 700 | 700 | ||||||||||||
2031 Dollar Senior Notes | 500 | 500 | ||||||||||||
Short-term and other borrowings | 55 | 62 | ||||||||||||
Unamortized original issue discount | (13) | (17) | ||||||||||||
Unamortized deferred financing costs | (24) | (27) | ||||||||||||
Total borrowings, net | 3,525 | 3,504 | ||||||||||||
Less: | ||||||||||||||
Short-term borrowings | 3 | 7 | ||||||||||||
Current portion of long-term borrowings | 17 | 19 | ||||||||||||
Long-term debt | $ | 3,505 | $ | 3,478 |
(in millions, except per share data) | ||||||||||||||||||||||||||
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share(1) | Total Number of Shares Purchased as Part of Publicly Announced Programs(1) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans of Programs(1) | ||||||||||||||||||||||
July 1 - July 31, 2024 | — | $ | — | — | $ | 650.0 | ||||||||||||||||||||
August 1 - August 31, 2024 | 0.6 | 34.61 | 0.6 | 630.0 | ||||||||||||||||||||||
September 1 - September 30, 2024 | 0.8 | 34.95 | 0.8 | 600.0 | ||||||||||||||||||||||
Total | 1.4 | $ | 34.82 | 1.4 | $ | 600.0 |
EXHIBIT NO. | DESCRIPTION OF EXHIBITS | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1† | ||||||||
32.2† | ||||||||
101 | INS - Inline XBRL Instance Document. The document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document | |||||||
101 | SCH - Inline XBRL Taxonomy Extension Schema Document | |||||||
101 | CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101 | DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101 | LAB - Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101 | PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
† | This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
AXALTA COATING SYSTEMS LTD. | |||||||||||
Date: | October 30, 2024 | By: /s/ Chris Villavarayan | |||||||||
Chris Villavarayan | |||||||||||
Chief Executive Officer and President | |||||||||||
(Principal Executive Officer) | |||||||||||
Date: | October 30, 2024 | By: /s/ Carl D. Anderson II | |||||||||
Carl D. Anderson II | |||||||||||
Senior Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer) | |||||||||||
Date: | October 30, 2024 | By: /s/ Anthony Massey | |||||||||
Anthony Massey | |||||||||||
Vice President and Global Controller | |||||||||||
(Principal Accounting Officer) |
By: | /s/ Chris Villavarayan | ||||
Name: | Chris Villavarayan | ||||
Title: | Chief Executive Officer and President |
By: | /s/ Carl D. Anderson II | ||||
Name: | Carl D. Anderson II | ||||
Title: | Senior Vice President and Chief Financial Officer |
By: | /s/ Chris Villavarayan | ||||
Name: | Chris Villavarayan | ||||
Title: | Chief Executive Officer and President |
By: | /s/ Carl D. Anderson II | ||||
Name: | Carl D. Anderson II | ||||
Title: | Senior Vice President and Chief Financial Officer |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Income Statement [Abstract] | ||||
Net sales | $ 1,320 | $ 1,309 | $ 3,965 | $ 3,887 |
Cost of goods sold | 858 | 886 | 2,614 | 2,692 |
Selling, general and administrative expenses | 211 | 209 | 631 | 625 |
Other operating charges | 15 | 13 | 78 | 22 |
Research and development expenses | 19 | 18 | 55 | 56 |
Amortization of acquired intangibles | 24 | 20 | 68 | 66 |
Income from operations | 193 | 163 | 519 | 426 |
Interest expense, net | 54 | 55 | 158 | 158 |
Other (income) expense, net | (3) | 5 | 4 | 15 |
Income before income taxes | 142 | 103 | 357 | 253 |
Provision for income taxes | 40 | 30 | 103 | 58 |
Net income | 102 | 73 | 254 | 195 |
Less: Net income attributable to noncontrolling interests | 1 | 1 | 0 | 1 |
Net income attributable to common shareholders | $ 101 | $ 72 | $ 254 | $ 194 |
Basic net income per share (in dollars per share) | $ 0.46 | $ 0.33 | $ 1.15 | $ 0.88 |
Diluted net income per share (in dollars per share) | $ 0.46 | $ 0.33 | $ 1.15 | $ 0.87 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 102 | $ 73 | $ 254 | $ 195 |
Other comprehensive income (loss), before tax: | ||||
Foreign currency translation adjustments | 74 | (67) | 1 | (21) |
Unrealized loss on derivatives | (2) | (1) | (2) | (2) |
Unrealized gain on pension and other benefit plan obligations | 0 | 0 | 2 | 1 |
Other comprehensive income (loss), before tax | 72 | (68) | 1 | (22) |
Income tax benefit related to items of other comprehensive income | (4) | 0 | (2) | 0 |
Other comprehensive income (loss), net of tax | 76 | (68) | 3 | (22) |
Comprehensive income | 178 | 5 | 257 | 173 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 2 | 0 | 1 | (1) |
Comprehensive income attributable to common shareholders | $ 176 | $ 5 | $ 256 | $ 174 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common shares authorized (in shares) | 1,000.0 | 1,000.0 |
Common shares issued (in shares) | 254.4 | 253.7 |
Treasury shares, at cost (in shares) | 36.4 | 33.6 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
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Statement of Stockholders' Equity [Abstract] | ||||||
Long-term employee benefit plans, net of tax expense (benefit) | $ 0 | $ 0 | $ 0 | |||
Foreign currency translation, tax expense (benefit) | $ 4 | $ 1 | $ 1 | $ 0 | 0 | $ 0 |
Gain on derivatives, tax expense (benefit) | $ 0 | $ 1 | $ 0 |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The interim condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position and shareholders' equity of Axalta Coating Systems Ltd., a Bermuda exempted company limited by shares, and its consolidated subsidiaries ("Axalta," the "Company," "we," "our" and "us") at September 30, 2024, the results of operations, comprehensive income and changes in shareholders' equity for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine months then ended. All intercompany balances and transactions have been eliminated. These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The interim unaudited condensed consolidated financial statements include the accounts of Axalta and its subsidiaries, and entities in which a controlling interest is maintained. Certain of our entities are accounted for on a one-month lag basis, the effect of which is not material. In the current year, we changed the presentation in our condensed consolidated financial statements to whole millions from our historical presentation of tenths of millions and, as a result, any necessary rounding adjustments have been made to prior year disclosed amounts. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year ended December 31, 2024 or any future period(s). Summary of Significant Accounting Policies Updates Recently Adopted Accounting Guidance In January 2023, we adopted Accounting Standards Update ("ASU") 2022-04, Liabilities – Supplier Finance Programs, which codifies disclosure requirements for supplier financing programs. This ASU does not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. Upon adoption of this ASU, we incorporated the required disclosures in Note 15. In addition to the disclosures included in Note 15, ASU 2022-04 requires a rollforward of activity for each supplier financing program beginning with annual reporting for the year ended December 31, 2024, at which time we will incorporate the required rollforward disclosure. Accounting Guidance and Disclosure Rules Issued But Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280), to expand the disclosures about a public entity's reportable segments and address requests from investors for additional, more detailed information about a reportable segment's expenses. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this ASU will result in additional disclosure, but it will not impact our consolidated financial position, results of operations or cash flows. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures. The new standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of ASU 2023-09 on our financial statements. In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules under SEC Release No. 34-99678 and No. 33-11275 (the "Final Rules"), The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and annual reports. The Final Rules require, among other things, disclosures in the notes to the audited financial statements relating to the effects of severe weather events and other natural conditions, subject to certain thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates in certain circumstances. The financial statement disclosure requirements of the Final Rules were to be effective for fiscal years beginning in 2025. In April 2024, the SEC stayed the effectiveness of the Final Rules. We are currently evaluating the impact of the Final Rules.
|
Revenue |
9 Months Ended |
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Sep. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE Consideration for products in which control has transferred to our customers that is conditional on something other than the passage of time is recorded as a contract asset within prepaid expenses and other current assets on the condensed consolidated balance sheets. The contract asset balances at September 30, 2024 and December 31, 2023 were $39 million and $39 million, respectively. We provide certain customers with incremental up-front consideration, subject to clawback provisions, including Business Incentive Plan assets ("BIPs"), which is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement as a reduction of net sales. We do not receive a distinct service or good in return for these BIPs, but rather receive volume commitments and/or sole supplier status from our customers over the life of the contractual arrangements, which approximates a five-year weighted average useful life. Substantially all of the termination clauses in these contractual arrangements include standard clawback provisions that are designed to enable us to collect monetary damages in the event of a customer's failure to meet its commitments under the relevant contract. BIPs are assessed for recoverability annually or more frequently when certain circumstances arise. At September 30, 2024 and December 31, 2023, the total carrying value of BIPs were $171 million and $149 million, respectively, and are presented within other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2024 and 2023, $16 million, $44 million, $18 million and $49 million, respectively, was amortized and reflected as reductions of net sales in the condensed consolidated statements of operations. See Note 18 for disaggregated net sales by end-market.
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Acquisitions |
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Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS The pro-forma impacts on our results of operations, including the pro-forma effect of events that are directly attributable to the following acquisition, were not significant. Acquisition of The CoverFlexx Group On July 2, 2024, we completed the acquisition of The CoverFlexx Group ("CoverFlexx") from Transtar Holding Company for an aggregate purchase price of $290 million. The acquisition of CoverFlexx, a leading aftermarket coatings business focused on economy customers in North America, strengthens Axalta's position in the refinish economy customer segment and supports its broader growth strategy. The results of the business have been reported within our Performance Coatings segment since the acquisition date. The CoverFlexx acquisition was recorded as a business combination under FASB Accounting Standards Codification ("ASC") 805, Business Combinations, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values as of the acquisition date. At September 30, 2024, we have not finalized the purchase accounting related to the CoverFlexx acquisition and these amounts represent preliminary values. The allocation of the purchase price may be modified up to one year from the closing date of the acquisition as more information is obtained about the fair value of assets acquired and liabilities assumed. The preliminary purchase price allocation is as follows:
Goodwill was recognized as the excess of the purchase price over the net identifiable assets recognized. The goodwill is primarily attributed to the assembled workforce and the anticipated future economic benefits of the business and is allocated to our refinish reporting unit, which is part of our Performance Coatings operating segment. The goodwill recognized at September 30, 2024 that is expected to be deductible for income tax purposes is $95 million. We incurred and expensed acquisition-related transaction costs for the CoverFlexx acquisition of $3 million, included within other operating charges on the condensed consolidated statements of operations for the three and nine months ended September 30, 2024. The fair value associated with definite-lived intangible assets is $144 million, which comprises $123 million in customer relationships, $16 million in trademarks and $5 million in developed technology. The definite-lived intangible assets will be amortized over an average term of 18.4 years.
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Goodwill and Identifiable Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Identifiable Intangible Assets | GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS Goodwill The following table shows changes in the carrying amount of goodwill from December 31, 2023 to September 30, 2024 by reportable segment:
Identifiable Intangible Assets The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2024 and each of the succeeding five years is:
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Restructuring |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | RESTRUCTURING During February 2024, we announced a global transformation initiative intended to simplify the Company’s organizational structure and enable us to be more proactive, responsive, and agile and to better serve our customers and to lower our cost base and improve financial performance and cash flow generation (the "2024 Transformation Initiative"). The 2024 Transformation Initiative actions, certain of which are subject to the satisfaction of local law requirements in various jurisdictions, commenced in the first quarter of 2024 and we expect them to be completed by 2026. The 2024 Transformation Initiative is expected to result in a net reduction to our workforce of approximately 600 employees globally and total pre-tax charges of $75-110 million in the aggregate, of which $65-90 million represents severance and other exit-related costs and $10-20 million represents non-cash accelerated depreciation charges. Future cash expenditures related to the 2024 Transformation Initiative are expected to be approximately $95-135 million, inclusive of $30-45 million for capital expenditures to, among other things, shift manufacturing capacity or capabilities. The 2024 Transformation Initiative resulted in pre-tax charges of $68 million for the nine months ended September 30, 2024, which primarily relates to employee severance and other exit costs. The majority of the termination benefits were accounted for in accordance with the applicable guidance for Accounting Standards Codification ("ASC") 712, Nonretirement Postemployment Benefits, whereby we accounted for termination benefits and recognized liabilities when the loss was considered probable that employees were entitled to benefits and the amounts could be reasonably estimated. During the three and nine months ended September 30, 2024 and 2023, we incurred costs of $10 million, $65 million, $1 million and $2 million, respectively, for termination benefits, net of changes in estimates. The majority of our termination benefits are recorded within other operating charges in the condensed consolidated statements of operations. The remaining payments associated with these actions are expected to be substantially completed within 24 months. The following table summarizes the activity related to the termination benefit reserves and expenses from December 31, 2023 to September 30, 2024:
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Commitments and Contingencies |
9 Months Ended |
---|---|
Sep. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Guarantees We guarantee certain of our customers’ obligations to third parties, whereby any default by our customers on their obligations could force us to make payments to the applicable creditors ("Customer Obligation Guarantees"). At September 30, 2024 and December 31, 2023, we had outstanding Customer Obligation Guarantees of $22 million and $10 million, respectively, excluding certain outstanding Customer Obligation Guarantees secured by letters of credit under the Revolving Credit Facility discussed further in Note 16. Excluding Customer Obligation Guarantees secured by letters of credit under the Revolving Credit Facility, substantially all of our Customer Obligation Guarantees do not have specified expiration dates. We monitor the Customer Obligation Guarantees to evaluate whether we have a liability at the balance sheet date. We did not have any liabilities related to our outstanding Customer Obligation Guarantees recorded at either September 30, 2024 or December 31, 2023. Operational Matter In January 2021, we became aware of an operational matter affecting certain North America Mobility Coatings customer manufacturing sites. The matter involves the use and application of certain of our products in combination with and incorporated within third-party products. The matter occurred over a discrete period during the fourth quarter of 2020. We concluded that losses from this matter were probable and that a majority of losses would be covered under our insurance policies, subject to deductible and policy limits as defined in our policies. During each of the three and nine months ended September 30, 2024 and 2023, expenses recorded relating to the operational matter were immaterial. At September 30, 2024 and December 31, 2023, we had $29 million and $36 million, respectively, recorded for estimated insurance receivables within accounts and notes receivable, net in the condensed consolidated balance sheets. Liabilities of $28 million and $31 million are recorded as other accrued liabilities in the condensed consolidated balance sheets at September 30, 2024 and December 31, 2023, respectively. The recorded probable losses remain an estimate, and actual costs arising from this matter could be materially lower or higher depending on the actual costs incurred to repair the impacted products as well as the availability of additional insurance coverage. Other We are subject to various pending lawsuits, legal proceedings and other claims in the ordinary course of business, including civil, regulatory and environmental matters. These matters may involve third-party indemnification obligations and/or insurance covering all or part of any potential damage incurred by us. All of these matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate outcome of the proceedings and other claims at this time. The potential effects, if any, on our condensed consolidated financial statements will be recorded in the period in which these matters are probable and estimable. Except as set forth in the "Operational Matter" section above, we believe that any sum we may be required to pay in connection with proceedings or claims in excess of the amounts recorded would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis but could have a material adverse impact in a particular quarterly reporting period. We are involved in environmental remediation and ongoing compliance activities at several sites. The timing and duration of remediation and ongoing compliance activities are determined on a site by site basis depending on local regulations. The liabilities recorded represent our estimable future remediation costs and other anticipated environmental liabilities. We have not recorded liabilities at sites where a liability is probable but a range of loss is not reasonably estimable. We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis but could have a material adverse impact in a particular quarterly reporting period.
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Long-term Employee Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Employee Benefits | LONG-TERM EMPLOYEE BENEFITS Components of Net Periodic Benefit Cost The following table sets forth the pre-tax components of net periodic benefit costs for our defined benefit plans for the three and nine months ended September 30, 2024 and 2023:
All non-service components of net periodic benefit cost are recorded in other (income) expense, net within the accompanying condensed consolidated statements of operations.
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Stock-based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | STOCK-BASED COMPENSATION During each of the three and nine months ended September 30, 2024 and 2023, we recognized $7 million, $21 million, $5 million, and $19 million in stock-based compensation expense, which was allocated between cost of goods sold and selling, general and administrative expenses in the condensed consolidated statements of operations. We recognized tax benefits on stock-based compensation of $1 million, $2 million, $0 million and $2 million for the three and nine months ended September 30, 2024 and 2023. 2024 Activity A summary of stock option award activity as of and for the nine months ended September 30, 2024 is presented below.
(1) Activity during the nine months ended September 30, 2024 rounds to zero. Cash received by the Company upon exercise of options for the nine months ended September 30, 2024 was $6 million. No excess tax benefits or shortfall expenses were recorded related to these exercises. At September 30, 2024, there was no unrecognized expense relating to unvested stock options.
Tax expenses on the vesting of restricted stock units during the nine months ended September 30, 2024 were immaterial. At September 30, 2024, there was $15 million of unamortized expense relating to unvested restricted stock units that is expected to be amortized over a weighted average period of 1.4 years.
(1) Activity during the nine months ended September 30, 2024 rounds to zero. Our performance share units allow for participants to vest in zero to 200% of the targeted number of shares granted. At September 30, 2024, there was $19 million of unamortized expense relating to unvested performance share units that is expected to be amortized over a weighted average period of 1.9 years. The forfeitures include portions of performance share unit grants that were determined to not have vested during the period as a result of not meeting established financial performance thresholds.
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Other (Income) Expense, Net |
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Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (Income) Expense, Net | OTHER (INCOME) EXPENSE, NET
(1) Debt extinguishment and refinancing-related costs include third-party fees incurred and the loss on extinguishment associated with the write-off of unamortized deferred financing costs and original issue discounts in conjunction with the refinancing of our long-term borrowings, as discussed further in Note 16.
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Income Taxes |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Our effective income tax rates for the nine months ended September 30, 2024 and 2023 are as follows:
The higher effective tax rate for the nine months ended September 30, 2024 was primarily due to the tax impacts of the 2024 Transformation Initiative pre-tax charges, as well as the 2023 favorable impact of changes in unrecognized tax benefits, which did not repeat in 2024. The effective tax rate for the nine months ended September 30, 2024 differs from the U.S. Federal statutory rate due to various items that impacted the effective rate both favorably and unfavorably. We recorded unfavorable impacts for changes in the valuation allowance and for increases in unrecognized tax benefits. These adjustments were primarily offset by the favorable adjustments for earnings in jurisdictions where the statutory rate is lower than the U.S. Federal statutory rate. The Organization for Economic Cooperation and Development’s (“OECD”) Pillar Two framework that imposes, among other items, a minimum tax rate of 15% has been implemented by several jurisdictions in which we operate, with effect from January 1, 2024. The effect of enacted Pillar Two taxes did not have a significant impact on our condensed consolidated financial statements. We will continue to monitor the implementation of Pillar Two by additional jurisdictions and will evaluate the potential impact on our consolidated financial statements. We anticipate that it is reasonably possible our unrecognized tax benefits will decrease by $47 million, exclusive of interest and penalties, within the next 12 months mainly due to the expiration of statutes of limitations in various countries and the expected final assessment from the 2010-2013 German income tax audit which concluded in 2021.
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Net Income Per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common Share | NET INCOME PER COMMON SHARE Basic net income per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share includes the effect of potential dilution from the hypothetical exercise of outstanding stock options and vesting of restricted stock units and performance share units. A reconciliation of our basic and diluted net income per common share is as follows:
(1) Basic earnings per share and diluted earnings per share are calculated based on full precision. Figures in the table may not recalculate due to rounding. The number of anti-dilutive shares that have been excluded in the computation of diluted net income per share for the three and nine months ended September 30, 2024 and 2023 were 0.2 million, 0.1 million, 0.5 million and 0.5 million, respectively.
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Accounts and Notes Receivable, Net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Notes Receivable, Net | ACCOUNTS AND NOTES RECEIVABLE, NET Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses by applying historical loss percentages, combined with reasonable and supportable forecasts of future losses, to respective aging categories. Management considers the following factors in developing its current estimate of expected credit losses: customer credit-worthiness; past transaction history with the customer; current economic industry trends; changes in market or regulatory matters; changes in geopolitical matters; and changes in customer payment terms, as well as other macroeconomic factors.
(1) Allowance for doubtful accounts was $25 million and $25 million at September 30, 2024 and December 31, 2023, respectively. (2) Includes $29 million and $36 million at September 30, 2024 and December 31, 2023, respectively, of insurance recoveries related to an operational matter discussed further in Note 6. Bad debt expense of $2 million, $7 million, $2 million, and $7 million was included within selling, general and administrative expenses for the three and nine months ended September 30, 2024 and 2023, respectively, and benefits of $0 million, $1 million, $1 million, and $2 million related to sanctions imposed on Russia in response to the conflict with Ukraine was included in other operating charges for the three and nine months ended September 30, 2024 and 2023, respectively.
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Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES
Inventory reserves were $22 million and $27 million at September 30, 2024 and December 31, 2023, respectively.
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Property, Plant and Equipment, Net |
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Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET
Depreciation expense amounted to $32 million, $94 million, $31 million and $90 million for the three and nine months ended September 30, 2024 and 2023, respectively.
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Supplier Finance Programs |
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Sep. 30, 2024 | |
Payables and Accruals [Abstract] | |
Supplier Finance Programs | SUPPLIER FINANCE PROGRAMS We have a supplier financing program in China that is utilized to finance the purchases of goods and services from our suppliers through local banking institutions. The payment terms under the program vary, but the program has a weighted average maturity date that is approximately 90 days from each respective financing inception. These financing arrangements are included in the current portion of borrowings within the condensed consolidated balance sheets and at the time of issuance each transaction is treated as a non-cash financing activity within the condensed consolidated statements of cash flows. Upon settlement of the financing, the cash outflow is classified as a financing activity within the condensed consolidated statements of cash flows. Amounts outstanding under this program were $8 million at September 30, 2023, including an immaterial amount related to purchases of property, plant and equipment. There were no balances outstanding under this program at September 30, 2024. Cash outflows under this program were $4 million and $34 million for the nine months ended September 30, 2024 and 2023, respectively. We maintain a voluntary supply chain financing ("SCF") program with a global financial institution that allows a select group of suppliers to sell their receivables to the participating financial institution at the discretion of both parties on terms that are negotiated between the supplier and the financial institution. The supplier invoices that have been confirmed as valid under the program are paid by us to the financial institution according to the terms we have with the supplier. Amounts outstanding under the SCF program were $26 million and $28 million at September 30, 2024 and December 31, 2023. We also participate in a virtual card program with a global financial institution, in which we pay supplier invoices on the due date using a Virtual Card Account ("VCA") and subsequently pay the balance in full 25 days after the billing statement date of the VCA. The program allows for suppliers to receive accelerated payments for a fee at each supplier's discretion. Fees paid by our suppliers are negotiated directly with the financial institution without our involvement. Amounts outstanding under the VCA program were $5 million and $8 million at September 30, 2024 and December 31, 2023, respectively. The payment terms we have with our suppliers who participate in the SCF and VCA programs are consistent with the typical terms we have with our suppliers who do not participate. These financing arrangements are included in accounts payable within the condensed consolidated balance sheets and the associated payments are included in operating activities within the condensed consolidated statements of cash flows.
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Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | BORROWINGS Borrowings are summarized as follows:
Our senior secured credit facilities (the "Senior Secured Credit Facilities") consist of a term loan due 2029 (the "2029 Dollar Term Loans") and a revolving credit facility due 2029 (the "Revolving Credit Facility") that is governed by a credit agreement (as amended, the "Credit Agreement"). Revolving Credit Facility During June 2024, we borrowed $185 million against the Revolving Credit Facility. At both September 30, 2024 and December 31, 2023, letters of credit issued under the Revolving Credit Facility totaled $22 million which reduced the availability under the Revolving Credit Facility as of such dates. Availability under the Revolving Credit Facility was $673 million and $528 million at September 30, 2024 and December 31, 2023, respectively. The outstanding borrowings on the Revolving Credit Facility bears interest at a rate based on the Secured Overnight Financing Rate ("SOFR") plus a margin of 1.50% and are due June 2029. The letters of credit issued under the Revolving Credit Facility include $14 million that secures Customer Obligation Guarantees at both September 30, 2024 and December 31, 2023. Significant Transactions During the nine months ended September 30, 2024, we prepaid $75 million of the outstanding principal amount of the 2029 Dollar Term Loans. As a result of these prepayments, we recorded a loss on extinguishment of debt of $1 million for the nine months ended September 30, 2024, which comprised the proportionate write-off of unamortized deferred financing costs and original issue discounts. During March 2024, we entered into the Fourteenth Amendment to the Credit Agreement (the "Fourteenth Amendment") to lower the interest rate spread applicable to the 2029 Dollar Term Loans, which continues to be based on SOFR, from 2.50% to 2.00% and to make related changes to effect such repricing. The other material terms of the Credit Agreement, including the outstanding principal amount and maturity date of the 2029 Dollar Term Loans, remained unchanged. As a result of the repricing, we recorded a $2 million loss on financing-related costs during the nine months ended September 30, 2024 related to the write-off of unamortized deferred financing costs and original issue discount and fees incurred to complete the repricing. During June 2024, we entered into the Fifteenth Amendment to the Credit Agreement (the "Fifteenth Amendment"), to among other things, increase commitments available pursuant to the Revolving Credit Facility from $550 million to $800 million and extend the maturity of the Revolving Credit Facility from May 2026 to June 2029, provided that such date would be accelerated in certain circumstances as set forth in the Credit Agreement and the Fifteenth Amendment. As a result, we recorded $4 million of incremental deferred financing costs to other assets within the condensed consolidated balance sheets during the nine months ended September 30, 2024. Future repayments Below is a schedule of required future repayments of all borrowings outstanding at September 30, 2024.
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Financial Instruments, Hedging Activities and Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments, Hedging Activities and Fair Value Measurements | FINANCIAL INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS Fair value of financial instruments Equity securities with readily determinable fair values - Balances of equity securities are recorded within other assets, with any changes in fair value recorded within other (income) expense, net. The fair values of equity securities are based upon quoted market prices, which are considered Level 1 inputs. Long-term borrowings - The estimated fair values of these borrowings are based on recent trades, as reported by a third-party pricing service. Due to the infrequency of trades, these inputs are considered to be Level 2 inputs. Derivative instruments - The Company’s interest rate swaps, cross-currency swaps and foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are included in the Level 2 hierarchy. Fair value of contingent consideration Contingent consideration is valued using a probability-weighted expected payment method that considers the timing of expected future cash flows and the probability of whether key elements of the contingent event are completed. The fair value of contingent consideration is valued at each balance sheet date, until amounts become payable, with adjustments recorded within other (income) expense, net in the condensed consolidated statements of operations. Due to the significant unobservable inputs used in the valuations, these liabilities are categorized within Level 3 of the fair value hierarchy. The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at September 30, 2024 and December 31, 2023.
(1) Net investment hedge The table below presents a roll forward of activity for the Level 3 liabilities for the nine months ended September 30, 2024.
Derivative Financial Instruments We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange rates and interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes. Derivative Instruments Qualifying and Designated as Net Investment and Cash Flow Hedges Cross-Currency Swaps Designated as Net Investment Hedges One fixed-for-fixed cross-currency swap with a notional amount of $150 million, previously executed in 2023, was set to mature on March 31, 2024. We extended the maturity on this cross-currency swap to September 30, 2025 and reset the terms. Under the terms of this reset cross-currency swap agreement, we notionally exchanged $150 million at an interest rate of 6.692% for €142 million at an interest rate of 4.899%. The cross-currency swap is designated as a net investment hedge. This cross-currency swap is marked to market at each reporting date and any unrealized gains or losses are included in unrealized currency translation adjustments, within accumulated other comprehensive loss ("AOCI"). Interest Rate Swaps Designated as Cash Flow Hedges An interest rate swap with a notional amount of $150 million, which was previously executed in 2023 and set to expire on March 31, 2024, was terminated early on March 27, 2024. Concurrently, we entered into an interest rate swap with a notional amount of $150 million to hedge interest rate exposures associated with the 2029 Dollar Term Loans. Under the terms of the interest rate swap agreement, the Company is required to pay the counter-party a stream of fixed interest payments at a rate of 4.692% on $150 million of notional value, and in turn, receives variable interest payments based on 3-month SOFR from the counter-party subject to a floor of 0.5%. The interest rate swap is designated as a cash flow hedge and expires on September 30, 2025. This interest rate swap is marked to market at each reporting date and any unrealized gains or losses are included in AOCI and reclassified to interest expense in the same period or periods during which the hedged transactions affect earnings. Gains and losses for hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The following table sets forth the locations and amounts recognized during the three and nine months ended September 30, 2024 and 2023 for the Company's cash flow and net investment hedges.
Derivative Instruments Not Designated as Cash Flow Hedges We periodically enter into foreign currency forward and option contracts to reduce market risk and hedge our balance sheet exposures and cash flows for subsidiaries with exposures denominated in currencies different from the functional currency of the relevant subsidiary. These contracts have not been designated as hedges and all gains and losses are marked to market through other (income) expense, net in the condensed consolidated statements of operations. Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that have not been designated for hedge accounting treatment under ASC 815, Derivatives and hedging, are recorded in earnings as follows:
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | SEGMENTS The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information. We have two operating segments, which are also our reportable segments: Performance Coatings and Mobility Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines. Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to both large regional and global original equipment manufacturers ("OEMs") and to a fragmented and local customer base. These customers comprise independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets and reporting units within this segment are refinish and industrial. Through our Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle OEMs. These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. These OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets and reporting units within this segment are light vehicle and commercial vehicle. Adjusted EBITDA is the primary measure used by our CODM to evaluate financial performance of the operating segments and allocate resources and is therefore our measure of segment profitability in accordance with GAAP under ASC 280, Segment Reporting. Asset information is not reviewed or included with our internal management reporting. Therefore, we have not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
(1)The Company has no intercompany sales between segments. The following table reconciles our segment operating performance to income before income taxes for the periods presented:
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Accumulated Other Comprehensive Loss |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS
The cumulative income tax benefit related to the adjustments for foreign exchange at September 30, 2024 was $3 million. The cumulative income tax benefit related to the adjustments for pension benefits at September 30, 2024 was $29 million. The cumulative income tax expense related to the adjustments for the unrealized gain on derivatives at September 30, 2024 was immaterial. See Note 17 for classification within the condensed consolidated statements of operations of the gains and losses on derivatives reclassified from AOCI.
The cumulative income tax benefit related to the adjustments for foreign exchange at September 30, 2023 was $1 million. The cumulative income tax benefit related to the adjustments for pension benefits at September 30, 2023 was $14 million. The cumulative income tax expense related to the adjustments for the unrealized gain on derivatives at September 30, 2023 was immaterial. See Note 17 for classification within the condensed consolidated statements of operations of the gains and losses on derivatives reclassified from AOCI.
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Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
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Pay vs Performance Disclosure | ||||
Net income to common shareholders | $ 101 | $ 72 | $ 254 | $ 194 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2024 | |
Accounting Policies [Abstract] | |
Recently Adopted Accounting Guidance and Accounting Guidance and Disclosure Rules Issued But Not Yet Adopted | Recently Adopted Accounting Guidance In January 2023, we adopted Accounting Standards Update ("ASU") 2022-04, Liabilities – Supplier Finance Programs, which codifies disclosure requirements for supplier financing programs. This ASU does not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. Upon adoption of this ASU, we incorporated the required disclosures in Note 15. In addition to the disclosures included in Note 15, ASU 2022-04 requires a rollforward of activity for each supplier financing program beginning with annual reporting for the year ended December 31, 2024, at which time we will incorporate the required rollforward disclosure. Accounting Guidance and Disclosure Rules Issued But Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280), to expand the disclosures about a public entity's reportable segments and address requests from investors for additional, more detailed information about a reportable segment's expenses. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of this ASU will result in additional disclosure, but it will not impact our consolidated financial position, results of operations or cash flows. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid disclosures. The new standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of ASU 2023-09 on our financial statements. In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules under SEC Release No. 34-99678 and No. 33-11275 (the "Final Rules"), The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and annual reports. The Final Rules require, among other things, disclosures in the notes to the audited financial statements relating to the effects of severe weather events and other natural conditions, subject to certain thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates in certain circumstances. The financial statement disclosure requirements of the Final Rules were to be effective for fiscal years beginning in 2025. In April 2024, the SEC stayed the effectiveness of the Final Rules. We are currently evaluating the impact of the Final Rules.
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Acquisitions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The preliminary purchase price allocation is as follows:
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Goodwill and Identifiable Intangible Assets (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table shows changes in the carrying amount of goodwill from December 31, 2023 to September 30, 2024 by reportable segment:
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Schedule of Finite-lived and Indefinite-lived Intangible Assets by Major Class | The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
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Schedule of Finite-lived Intangible Assets, Future Amortization Expense | The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2024 and each of the succeeding five years is:
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Restructuring (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs | The following table summarizes the activity related to the termination benefit reserves and expenses from December 31, 2023 to September 30, 2024:
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Long-term Employee Benefits (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table sets forth the pre-tax components of net periodic benefit costs for our defined benefit plans for the three and nine months ended September 30, 2024 and 2023:
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Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Roll Forward | A summary of stock option award activity as of and for the nine months ended September 30, 2024 is presented below.
(1) Activity during the nine months ended September 30, 2024 rounds to zero.
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Schedule of Restricted Stock Units and Restricted Stock Awards Roll Forward |
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Schedule of Performance Stock Roll Forward |
(1) Activity during the nine months ended September 30, 2024 rounds to zero.
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Other (Income) Expense, Net (Tables) |
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other (Income) Expense, Net |
(1) Debt extinguishment and refinancing-related costs include third-party fees incurred and the loss on extinguishment associated with the write-off of unamortized deferred financing costs and original issue discounts in conjunction with the refinancing of our long-term borrowings, as discussed further in Note 16.
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | Our effective income tax rates for the nine months ended September 30, 2024 and 2023 are as follows:
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Net Income Per Common Share (Tables) |
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Sep. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Net Income Per Common Share | A reconciliation of our basic and diluted net income per common share is as follows:
(1) Basic earnings per share and diluted earnings per share are calculated based on full precision. Figures in the table may not recalculate due to rounding.
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Accounts and Notes Receivable, Net (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable |
(1) Allowance for doubtful accounts was $25 million and $25 million at September 30, 2024 and December 31, 2023, respectively. (2) Includes $29 million and $36 million at September 30, 2024 and December 31, 2023, respectively, of insurance recoveries related to an operational matter discussed further in Note 6.
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory |
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Property, Plant and Equipment, Net (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment |
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Borrowings (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Borrowings are summarized as follows:
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Schedule of Maturities of Long-term Debt | Below is a schedule of required future repayments of all borrowings outstanding at September 30, 2024.
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Financial Instruments, Hedging Activities and Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at September 30, 2024 and December 31, 2023.
(1) Net investment hedge
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Schedule of Fair Value, Liability Activity | The table below presents a roll forward of activity for the Level 3 liabilities for the nine months ended September 30, 2024.
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Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table sets forth the locations and amounts recognized during the three and nine months ended September 30, 2024 and 2023 for the Company's cash flow and net investment hedges.
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Schedule of Derivatives Not Designated as Hedging Instruments | Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that have not been designated for hedge accounting treatment under ASC 815, Derivatives and hedging, are recorded in earnings as follows:
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Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table presents relevant information of our reportable segments.
(1)The Company has no intercompany sales between segments.
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Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following table reconciles our segment operating performance to income before income taxes for the periods presented:
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss |
|
Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
Revenue from Contract with Customer [Abstract] | |||||
Contract with customer, asset | $ 39 | $ 39 | $ 39 | ||
Contractual arrangements, useful life (in years) | 5 years | 5 years | |||
Capitalized contract cost, net | $ 171 | $ 171 | $ 149 | ||
Capitalized contract cost, amortization | $ 16 | $ 18 | $ 44 | $ 49 |
Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Jul. 02, 2024 |
Dec. 31, 2023 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill from acquisition | $ 1,718 | $ 1,591 | |
CoverFlexx Group | |||
Business Acquisition [Line Items] | |||
Cash | $ 1 | ||
Accounts and notes receivable, net | 17 | ||
Inventories | 23 | ||
Prepaid expenses and other current assets, net | 1 | ||
Property, plant and equipment, net | 9 | ||
Identifiable intangible assets | $ 144 | 144 | |
Other assets | 5 | ||
Accounts payable and other accrued liabilities | (6) | ||
Other liabilities | (6) | ||
Deferred income taxes | (7) | ||
Net assets before goodwill from acquisition | 181 | ||
Goodwill from acquisition | 109 | ||
Net assets acquired | $ 290 |
Goodwill and Identifiable Intangible Assets - Schedule of Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2024
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 1,591 |
Goodwill from acquisitions | 109 |
Foreign currency translation | 18 |
Goodwill, ending balance | 1,718 |
Performance Coatings | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 1,513 |
Goodwill from acquisitions | 109 |
Foreign currency translation | 18 |
Goodwill, ending balance | 1,640 |
Mobility Coatings | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 78 |
Goodwill from acquisitions | 0 |
Foreign currency translation | 0 |
Goodwill, ending balance | $ 78 |
Goodwill and Identifiable Intangible Assets - Schedule of Finite-lived Intangible Assets, Future Amortization Expense (Details) $ in Millions |
Sep. 30, 2024
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2024 | $ 25 |
2025 | 97 |
2026 | 97 |
2027 | 96 |
2028 | 82 |
2029 | $ 78 |
Restructuring - Schedule of Restructuring and Related Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | $ 16 | |||
Expenses, net of changes to estimates | $ 10 | $ 1 | 65 | $ 2 |
Payments made | (21) | |||
Foreign currency translation | 1 | |||
Ending balance | $ 61 | $ 61 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
Maximum exposure | $ 22 | $ 22 | $ 10 | ||
Current carrying value | 0 | 0 | 0 | ||
Operational matter | 0 | $ 0 | 0 | $ 0 | |
Insurance receivable | 29 | 29 | 36 | ||
Loss recorded as a liability | $ 28 | $ 28 | $ 31 |
Long-term Employee Benefits - Schedule of Net Benefit Costs (Details) - Pension Plan - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Net periodic benefit cost: | ||||
Service cost | $ 1 | $ 1 | $ 5 | $ 4 |
Interest cost | 6 | 5 | 15 | 15 |
Expected return on plan assets | (3) | (2) | (9) | (8) |
Amortization of actuarial loss, net | 0 | 0 | 2 | 0 |
Net periodic benefit cost | $ 4 | $ 4 | $ 13 | $ 11 |
Stock-based Compensation - Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) shares in Millions |
9 Months Ended |
---|---|
Sep. 30, 2024
$ / shares
shares
| |
Units (in millions) | |
Beginning balance (in shares) | shares | 1.3 |
Granted (in shares) | shares | 0.5 |
Vested (in shares) | shares | (0.7) |
Forfeited (in shares) | shares | (0.1) |
Ending balance (in shares) | shares | 1.0 |
Weighted Average Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 28.71 |
Granted (in dollars per share) | $ / shares | 32.51 |
Vested (in dollars per share) | $ / shares | 28.20 |
Forfeited (in dollars per share) | $ / shares | 29.67 |
Ending balance (in dollars per share) | $ / shares | $ 30.88 |
Stock-based Compensation - Schedule of Performance Shares Award Outstanding Activity (Details) - Performance Shares shares in Millions |
9 Months Ended |
---|---|
Sep. 30, 2024
$ / shares
shares
| |
Units (in millions) | |
Beginning balance (in shares) | shares | 0.8 |
Granted (in shares) | shares | 0.4 |
Vested (in shares) | shares | 0.0 |
Forfeited (in shares) | shares | (0.3) |
Ending balance (in shares) | shares | 0.9 |
Weighted Average Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 33.20 |
Granted (in dollars per share) | $ / shares | 38.52 |
Vested (in dollars per share) | $ / shares | 29.53 |
Forfeited (in dollars per share) | $ / shares | 31.26 |
Ending balance (in dollars per share) | $ / shares | $ 35.84 |
Other (Income) Expense, Net - Schedule of Other (Income) Expense, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Other Income and Expenses [Abstract] | ||||
Foreign exchange losses, net | $ 0 | $ 7 | $ 8 | $ 19 |
Debt extinguishment and refinancing-related costs | 0 | 4 | 3 | 7 |
Other miscellaneous income, net | (3) | (6) | (7) | (11) |
Total | $ (3) | $ 5 | $ 4 | $ 15 |
Income Taxes (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Effective Tax Rate | 28.90% | 22.90% |
Settlement with Taxing Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Amount reasonable possible to settle of unrecognized tax benefits | $ 47 |
Net Income Per Common Share - Schedule of Basic and Diluted Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Earnings Per Share [Abstract] | ||||
Net income to common shareholders | $ 101 | $ 72 | $ 254 | $ 194 |
Basic weighted average shares outstanding (in shares) | 218.9 | 221.0 | 219.8 | 221.3 |
Diluted weighted average shares outstanding (in shares) | 219.9 | 221.9 | 220.8 | 222.1 |
Net income per common share | ||||
Basic net income per share (in dollars per share) | $ 0.46 | $ 0.33 | $ 1.15 | $ 0.88 |
Diluted net income per share (in dollars per share) | $ 0.46 | $ 0.33 | $ 1.15 | $ 0.87 |
Net Income Per Common Share - Additional Information (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.2 | 0.5 | 0.1 | 0.5 |
Accounts and Notes Receivable, Net - Schedule of Accounts, Notes, Loans, and Financing Receivable (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable - trade, net | $ 1,068 | $ 1,043 |
Notes receivable | 88 | 79 |
Other | 142 | 138 |
Total | 1,298 | 1,260 |
Allowance for doubtful accounts | 25 | 25 |
Insurance receivable | $ 29 | $ 36 |
Accounts and Notes Receivable, Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Bad debt expense (benefit) net of recoveries | $ 2 | $ 2 | $ 7 | $ 7 |
Russia Conflict with Ukraine | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Bad debt expense (benefit) net of recoveries | $ 0 | $ (1) | $ (1) | $ (2) |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 455 | $ 405 |
Semi-finished products | 128 | 126 |
Raw materials | 204 | 182 |
Stores and supplies | 31 | 28 |
Total | $ 818 | $ 741 |
Inventories - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Inventory reserves | $ 22 | $ 27 |
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | $ 2,507 | $ 2,454 |
Accumulated depreciation | (1,319) | (1,250) |
Property, plant and equipment, net | $ 1,188 | $ 1,204 |
Property, Plant and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 32 | $ 31 | $ 94 | $ 90 |
Supplier Finance Programs (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
Supplier Finance Program [Line Items] | |||
Short-term borrowings | $ 3 | $ 7 | |
Cash outflows | $ 5 | $ 40 | |
Supplier Financing Arrangements | |||
Supplier Finance Program [Line Items] | |||
Debt term (in days) | 90 days | ||
Short-term borrowings | $ 0 | 8 | |
Cash outflows | 4 | 34 | |
SCF Program | |||
Supplier Finance Program [Line Items] | |||
Supplier finance program, obligation | 26 | 28 | |
VCA Program | |||
Supplier Finance Program [Line Items] | |||
Supplier finance program, obligation | $ 5 | $ 8 | |
Supplier financing program obligation, payment term (in days) | 25 days | ||
Property, Plant and Equipment Purchases | Supplier Financing Arrangements | |||
Supplier Finance Program [Line Items] | |||
Short-term borrowings | $ 0 |
Borrowings - Schedule of Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Short-term and other borrowings | $ 55 | $ 62 | |
Unamortized original issue discount | (13) | (17) | |
Unamortized deferred financing costs | (24) | (27) | |
Total borrowings, net | 3,525 | 3,504 | |
Short-term borrowings | 3 | 7 | |
Current portion of long-term borrowings | 17 | 19 | |
Long-term debt | 3,505 | 3,478 | |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility | 105 | $ 185 | 0 |
2029 Dollar Term Loans | |||
Debt Instrument [Line Items] | |||
Term loan | 1,702 | 1,786 | |
2027 Dollar Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes | 500 | 500 | |
2029 Dollar Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes | 700 | 700 | |
2031 Dollar Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 500 | $ 500 |
Borrowings - Additional Information (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 29, 2024 |
Mar. 31, 2024 |
Sep. 30, 2024 |
Jun. 30, 2024 |
May 31, 2024 |
Dec. 31, 2023 |
|
2029 Dollar Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 2.50% | 2.00% | ||||
Prepayment of debt | $ 75 | |||||
Loss on extinguishment of debt | 1 | |||||
Loss on financing-related costs | 2 | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit facility | 105 | $ 185 | $ 0 | |||
Letters of credit outstanding, amount | 22 | 22 | ||||
Line of credit facility, remaining borrowing capacity | $ 673 | 528 | ||||
Debt instrument, basis spread on variable rate | 1.50% | |||||
Line of credit facility, maximum borrowing capacity | $ 800 | $ 550 | ||||
Incremental deferred financing costs | $ 4 | |||||
Revolving Credit Facility | Customer Obligation Guarantees | ||||||
Debt Instrument [Line Items] | ||||||
Letters of credit outstanding, amount | $ 14 | $ 14 |
Borrowings - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Debt Disclosure [Abstract] | ||
Remainder of 2024 | $ 4 | |
2025 | 21 | |
2026 | 21 | |
2027 | 521 | |
2028 | 22 | |
Thereafter | 2,973 | |
Total borrowings | 3,562 | |
Unamortized original issue discount | (13) | $ (17) |
Unamortized deferred financing costs | (24) | (27) |
Total borrowings, net | $ 3,525 | $ 3,504 |
Financial Instruments, Hedging Activities and Fair Value Measurements - Schedule of Liability Activity (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2024
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 8 |
Change in fair value | 4 |
Foreign currency translation | 0 |
Ending balance | $ 12 |
Financial Instruments, Hedging Activities and Fair Value Measurements - Schedule of Instruments Not Designated as Hedge (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Foreign currency forward contracts | Other (income) expense, net | ||||
Derivative [Line Items] | ||||
Derivatives not designated as hedging | $ 0 | $ 4 | $ (4) | $ (3) |
Segments - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2024
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,320 | $ 1,309 | $ 3,965 | $ 3,887 |
Intercompany sales between segments | 0 | 0 | 0 | 0 |
Performance Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 877 | 856 | 2,612 | 2,559 |
Mobility Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 443 | 453 | 1,353 | 1,328 |
Refinish | Performance Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 554 | 529 | 1,619 | 1,547 |
Industrial | Performance Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 323 | 327 | 993 | 1,012 |
Light Vehicle | Mobility Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 340 | 342 | 1,036 | 1,001 |
Commercial Vehicle | Mobility Coatings | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 103 | $ 111 | $ 317 | $ 327 |
Accumulated Other Comprehensive Loss - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2024 |
Sep. 30, 2023 |
---|---|---|
Equity [Abstract] | ||
Cumulative income tax benefit on foreign exchange adjustments | $ 3 | $ 1 |
Cumulative income tax benefit on pension and postretirement benefit plans | 29 | 14 |
Cumulative income tax expense on derivatives | $ 0 | $ 0 |
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