Axalta Coating Systems Ltd.

Previous wording

Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “expect,” “expected,” “believe,” “intended,” “estimate,” “estimated,” “designed to,” “likely”, “could,” “would,” “may,” “will,” “future,” “plans,” and “potential,” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including related to any new or existing tariffs imposed by the U.S. and retaliatory actions from other countries, geopolitical and technological factors outside of our control, as well as risks related to the execution of, and assumptions underlying, our capital allocation strategy and future share repurchases, the 2024 Transformation Initiative, and our previously-announced three-year 2024-2026 strategy, that may cause our business, industry, strategy, financing activities or actual results to differ materially. The timing and amount of share repurchases (if any) will be determined by us based on our evaluation of market conditions and other factors and our stated plans do not obligate us to acquire any particular amount of shares and may be suspended or discontinued at any time. More information on potential factors that could affect our financial results is available in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”), and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are bas…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “expect,” “expects,” “expected,” “believe,” “intended,” “estimate,” “estimated,” “designed to,” “likely,” “could,” “would,” “may,” “will,” “future” and “plans,” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including related to any new or existing tariffs imposed by the U.S. and any retaliatory actions from other countries, geopolitical (including the current conflict in the Middle East and related effects on commodity prices) and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the Merger and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, capital allocation strategy and future share repurchases (if any), our previously-announced global transformation initiative (the “2024 Transformation Initiative”), and our previously-announced three-year 2024-2026 strategy, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”), and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these for…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a leading global manufacturer, marketer and distributor of high-performance coatings systems and products. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 42 manufacturing facilities, four technology centers, 46 customer training centers and approximately 12,600 team members, inclusive of team members added from recent acquisitions, allows us to meet the needs of customers in over 140 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through approximately 5,000 independent, locally based distributors.

Current wording

We are a leading global manufacturer, marketer and distributor of high-performance coatings systems and products. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 42 manufacturing facilities, four technology centers, 50 customer training centers and approximately 12,300 team members allows us to meet the needs of customers in over 140 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through over 5,000 independent, locally based distributors.

Previous wording

Our net sales decreased 2.8%, including an offsetting 0.2% benefit from favorable foreign currency translation, for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024. The decreased net sales were driven by lower sales volumes of 3.8%, partially offset by contributions of 0.7% from the acquisition of The CoverFlexx Group completed in July 2024 (the “CoverFlexx Acquisition”) and higher average selling prices and favorable product mix of 0.1%. The following trends impacted our segment net sales performance for the nine months ended September 30, 2025:

Current wording

Our net sales decreased 0.6%, including a 5.7% benefit from favorable foreign currency translation, for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The decreased net sales were driven by lower sales volumes of 6.2%, furthered by lower average selling prices and unfavorable product mix of 1.1%, partially offset by contributions of 1.0% from acquisitions completed during 2025 and 2026 in the Performance Coatings segment (the “Recent Acquisitions”). The following trends impacted our segment net sales performance for the three months ended March 31, 2026:

Previous wording

•Performance Coatings: Net sales decreased 4.8% for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024. The decreased net sales were driven by lower sales volumes of 5.2% and furthered by lower average selling prices and unfavorable product mix of 1.4%, partially offset by contributions of 1.1% from the CoverFlexx Acquisition and favorable foreign currency translation of 0.7% driven by favorable fluctuations of the Euro, partially offset by unfavorable fluctuations of the Mexican Peso, in each case compared to the U.S. Dollar.

Current wording

•Performance Coatings: Net sales decreased 2.4% for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The decreased net sales were driven by lower sales volumes of 7.9%, furthered by lower average selling prices and unfavorable product mix of 1.8%, partially offset by contributions of 1.6% from the Recent Acquisitions and favorable foreign currency translation of 5.7% driven by fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar.

Previous wording

•Mobility Coatings: Net sales increased 1.2% for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024. The increased net sales were driven by higher average selling prices and favorable product mix of 3.2%, partially offset by lower sales volumes of 1.1% and unfavorable foreign currency translation of 0.9% driven by unfavorable fluctuations of the Mexican Peso and Brazilian Real, partially offset by favorable fluctuations of the Euro, in each case compared to the U.S. Dollar.

Current wording

•Mobility Coatings: Net sales increased 2.8% for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The increased net sales were driven by favorable foreign currency translation of 5.8% driven by fluctuations of the Euro, Mexican Peso, Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar, and furthered by higher average selling prices and favorable product mix of 0.1%, partially offset by lower sales volumes of 3.1%.

Previous wording

Our business serves four end-markets globally with net sales for the three and nine months ended September 30, 2025 and 2024, as follows:

Current wording

Our business serves four end-markets globally with net sales for the three months ended March 31, 2026 and 2025, as follows:

Previous wording

During the three months ended September 30, 2025, we prepaid $10 million of the outstanding principal amount of the 2029 Dollar Term Loans. See Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

During the three months ended March 31, 2026, we prepaid $50 million of the outstanding principal amount of the 2029 Dollar Term Loans. See Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

n Favorable impacts of currency translation driven by fluctuations of the Euro compared to the U.S. Dollar

Current wording

n Favorable impacts of currency translation driven by fluctuations of the Euro, Mexican Peso, Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar

Previous wording

n Decrease of $45 million in termination benefits and other employee-related costs primarily as a result of significantly higher costs associated with the 2024 Transformation Initiative in the prior year period

Current wording

n Decrease of $7 million in termination benefits and other employee-related costs primarily as a result of significantly higher costs associated with the 2024 Transformation Initiative in the prior year period

Previous wording

n Research and development expenses remained generally consistent and impacts of currency translation were immaterial compared to the prior year periods

Current wording

n Research and development expenses remained generally consistent and impacts of currency translation were immaterial compared to the prior year period

Previous wording

Amortization of acquired intangibles increased due to the following:

Current wording

Amortization of acquired intangibles increased primarily due to the following:

Previous wording

n Increased amortization of $5 million associated with assets acquired in the past 12 months

Current wording

n Increased amortization of $1 million associated with assets acquired in the past 12 months

Previous wording

n Favorable impact of $6 million attributable to lower principal and decreased variable interest rate on our 2029 Dollar Term Loans

Current wording

n Favorable impact attributable to lower principal and decreased variable interest rate on our 2029 Dollar Term Loans

Previous wording

n Amortization of acquired intangibles remained generally consistent and impacts of currency translation were immaterial compared to the prior year period

Current wording

n Other expense, net remained generally consistent and impacts of currency translation were immaterial when compared to the prior year period.

Previous wording

(2) For the three and nine months ended September 30, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, Germany, Switzerland, and the United States. For the three and nine months ended September 30, 2024, earnings generated in jurisdictions where the statutory rate is different from the U.S. federal rate is primarily related to earnings in Bermuda, Germany, Luxembourg, and Switzerland.

Current wording

(1) For the three months ended March 31, 2026, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, Germany, and the United States. For the three months ended March 31, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda statutory tax rate is primarily related to earnings in the United States and Switzerland.

Previous wording

n Lower sales volumes driven primarily by Performance Coatings

Current wording

n Lower sales volumes across both end-markets due primarily to unfavorable macro trends in North America

Previous wording

Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:

Current wording

Adjusted EBITDA and Adjusted EBITDA margin decreased primarily due to the following:

Previous wording

At September 30, 2025, availability under the Revolving Credit Facility was $772 million, net of $28 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the Credit Agreement or the indentures governing our senior notes (the “Senior Notes”). Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $62 million at September 30, 2025.

Current wording

At March 31, 2026, availability under the Revolving Credit Facility was $770 million, net of $30 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the Credit Agreement or the indentures governing our senior notes (the “Senior Notes”). Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $63 million at March 31, 2026.

Previous wording

We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine.

Current wording

We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Our 2027 Dollar Senior Notes have a principal amount of $500 million, bear interest at 4.750% and are due on June 15, 2027. Considering current market interest rates and the proposed merger with AkzoNobel, we may intentionally not repay or refinance these Senior Notes prior to June 15, 2026 which would require these 2027 Dollar Senior Notes to be classified as current liabilities on our condensed consolidated balance sheets beginning with the period ending June 30, 2026. Regardless of this decision, we expect to repay or refinance the 2027 Dollar Senior Notes prior to or on their maturity date.

Previous wording

We have various supplier finance programs in place around the world. We partner with large banking institutions and utilize these programs to enhance our liquidity profile. Depending on the program, the liabilities under the program are classified either as accounts payable or current portion of borrowings on our unaudited condensed consolidated balance sheets. Our supplier financing programs are more fully described in Note 14 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

We have various supplier finance programs in place around the world. We partner with large banking institutions and utilize these programs to enhance our liquidity profile. Depending on the program, the liabilities under the program are classified either as accounts payable or current portion of borrowings on our unaudited condensed consolidated balance sheets. Our supplier finance programs are more fully described in Note 14 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2025 was $305 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $620 million. This was partially offset by net uses of working capital of $315 million, for which the most significant drivers were increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $132 million, $53 million and $48 million, respectively, as well as decreases in other accrued liabilities and accounts payable of $71 million and $15 million, respectively. These outflows were driven primarily by payments of BIPs and rebates, decreased sales volumes and timing of collections from customers and payments to vendors.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $68 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $182 million. This was partially offset by changes in operating assets and liabilities of $114 million, for which the most significant drivers were decreases in other accrued liabilities of $96 million as well as increases in accounts and notes receivable, prepaid expenses and other assets and inventories of $32 million, $27 million and $20 million, respectively. These outflows were driven primarily by seasonal cash payments for variable incentive compensation, payments of BIPs and rebates, timing of collections from customers and decreased sales volumes. These outflows were partially offset by increases in accounts payable of $90 million driven by the timing of payments to vendors.

Previous wording

Net cash used for investing activities for the nine months ended September 30, 2025 was $122 million. The primary uses were for purchases of property, plant and equipment of $138 million and a business acquisition of $6 million, partially offset by proceeds of $10 million from the sales of two previously closed manufacturing sites and proceeds of $9 million from interest proceeds from swaps designated as net investment hedges, which are discussed further in Note 16 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Net cash used for investing activities for the three months ended March 31, 2026 was $53 million. The primary uses were for purchases of property, plant and equipment of $50 million and business acquisitions of $8 million, partially offset by $4 million of payments received on customer loans and $3 million from interest proceeds from swaps designated as net investment hedges, which are discussed further in Note 16 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net cash used for financing activities for the nine months ended September 30, 2025 was $195 million. The primary use was for purchases of our common shares of $165 million, prepayments of $10 million of the outstanding principal amount of the 2029 Dollar Term Loans, and contractual debt repayments of $15 million.

Current wording

Net cash used for financing activities for the three months ended March 31, 2026 was $61 million. The primary use was for prepayments of $50 million of the outstanding principal amount of the 2029 Dollar Term Loans, cash outflows of $6 million primarily due to stock-based compensation withholding tax settlements and contractual debt repayments of $5 million.

Previous wording

Currency exchange impacts on cash for the nine months ended September 30, 2024 were unfavorable by $10 million, which was driven primarily by fluctuations of the Mexican Peso and Brazilian Real, in each case compared to the U.S. Dollar.

Current wording

Currency exchange impacts on cash for the three months ended March 31, 2026 were unfavorable by $3 million, which was driven primarily by fluctuations of the Euro and Indian Rupee, partially offset by fluctuations in the Brazilian Real, in each case compared to the U.S. Dollar.

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2024 was $342 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $508 million. This was partially offset by net uses of working capital of $166 million, for which the most significant drivers were increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $106 million, $54 million and $16 million, respectively, as well as decreases in accounts payable of $18 million. These outflows were driven primarily by payments of BIPs, increased production and timing of collections from customers and payments to vendors. These outflows were partially offset by increases in other liabilities of $30 million largely driven by accruals related to the 2024 Transformation Initiative.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $26 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $188 million. This was partially offset by changes in operating assets and liabilities of $162 million, for which the most significant drivers were decreases in other accrued liabilities of $106 million, as well as increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $59 million, $37 million and $18 million, respectively. These outflows were driven primarily by seasonal cash payments for variable incentive compensation, payments of BIPs and rebates, increased production and timing of collections from customers. These outflows were partially offset by increases in accounts payable of $66 million driven by the timing of payments to vendors.

Previous wording

Net cash used for investing activities for the nine months ended September 30, 2024 was $374 million. The primary uses were $290 million for the CoverFlexx Acquisition, purchases of property, plant and equipment of $78 million and $21 million for the disbursements to customers for loans which primarily have a repayment period of five years, partially offset by proceeds of $10 million from interest proceeds from swaps designated as net investment hedges.

Current wording

Net cash used for investing activities for the three months ended March 31, 2025 was $44 million. The primary uses were for purchases of property, plant and equipment of $43 million and a business acquisition of $6 million, partially offset by proceeds of $3 million from interest proceeds from swaps designated as net investment hedges.

Previous wording

Currency exchange impacts on cash for the nine months ended September 30, 2025 were favorable by $26 million, which was driven primarily by fluctuations of the Euro, Brazilian Real and Mexican Peso, in each case compared to the U.S. Dollar.

Current wording

Currency exchange impacts on cash for the three months ended March 31, 2025 were favorable by $8 million, which was driven primarily by the fluctuations of the Euro and Brazilian Real, in each case compared to the U.S. Dollar.

Previous wording

We had cash and cash equivalents at September 30, 2025 and December 31, 2024 of $606 million and $593 million, respectively. Of these balances, $498 million and $497 million were maintained in non-U.S. jurisdictions as of September 30, 2025 and December 31, 2024, respectively. We believe at this time our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational and working capital needs.

Current wording

We had cash and cash equivalents at March 31, 2026 and December 31, 2025 of $608 million and $657 million, respectively. Of these balances, $489 million and $555 million were maintained in non-U.S. jurisdictions as of March 31, 2026 and December 31, 2025, respectively. We believe at this time our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational and working capital needs.

Previous wording

Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Current wording

Our ability to make scheduled or pre-payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations and is subject to restrictions in the Merger Agreement. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Previous wording

We believe that we continue to maintain sufficient liquidity to meet our cash requirements, including our debt service obligations as well as our working capital needs. Availability under the Revolving Credit Facility was $772 million and $778 million at September 30, 2025 and December 31, 2024, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.

Current wording

We believe that we continue to maintain sufficient liquidity to meet our cash requirements, including our debt service obligations as well as our working capital needs. Availability under the Revolving Credit Facility was $770 million at both March 31, 2026 and December 31, 2025, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.