| Segments
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Performance Coatings | Transportation Coatings | Total | |||||||
December 31, 2014 | $ | 933.6 | $ | 67.5 | $ | 1,001.1 | |||
Goodwill from acquisition | 12.5 | — | 12.5 | ||||||
Foreign currency translation | (64.8 | ) | (4.8 | ) | (69.6 | ) | |||
June 30, 2015 | $ | 881.3 | $ | 62.7 | $ | 944.0 |
June 30, 2015 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 411.7 | $ | (96.8 | ) | $ | 314.9 | 10.0 | ||
Trademarks - indefinite-lived | 284.4 | — | 284.4 | Indefinite | ||||||
Trademarks - definite-lived | 41.9 | (6.8 | ) | 35.1 | 14.8 | |||||
Customer relationships | 684.1 | (86.2 | ) | 597.9 | 19.4 | |||||
Non-compete agreements | 1.9 | (1.0 | ) | 0.9 | 4.6 | |||||
Total | $ | 1,424.0 | $ | (190.8 | ) | $ | 1,233.2 |
December 31, 2014 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 411.8 | $ | (76.3 | ) | $ | 335.5 | 10.0 | ||
Trademarks—indefinite-lived | 284.4 | — | 284.4 | Indefinite | ||||||
Trademarks—definite-lived | 41.8 | (5.5 | ) | 36.3 | 14.8 | |||||
Customer relationships | 713.9 | (71.3 | ) | 642.6 | 19.4 | |||||
Non-compete agreements | 2.0 | (0.8 | ) | 1.2 | 4.6 | |||||
Total | $ | 1,453.9 | $ | (153.9 | ) | $ | 1,300.0 |
Remainder of 2015 | $ | 40.0 | |
2016 | $ | 79.9 | |
2017 | $ | 79.6 | |
2018 | $ | 79.6 | |
2019 | $ | 79.6 |
|
Restructuring Rollforward | 2015 Activity | ||
Balance at December 31, 2014 | $ | 48.5 | |
Expense Recorded | 16.7 | ||
Payments Made | (22.5 | ) | |
Foreign Currency Changes | (4.1 | ) | |
Balance at June 30, 2015 | $ | 38.6 |
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|
Pension Benefits | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Net periodic benefit cost: | ||||||||||||
Service cost | $ | 3.3 | $ | 3.8 | $ | 6.4 | $ | 8.4 | ||||
Interest cost | 4.6 | 6.0 | 9.2 | 12.0 | ||||||||
Expected return on plan assets | (3.6 | ) | (3.7 | ) | (7.3 | ) | (7.4 | ) | ||||
Amortization of actuarial (gain) loss, net | 0.2 | (0.1 | ) | 0.5 | (0.2 | ) | ||||||
Amortization of prior service credit, net | — | — | (0.1 | ) | — | |||||||
Net periodic benefit cost | $ | 4.5 | $ | 6.0 | $ | 8.7 | $ | 12.8 |
Other Long-Term Employee Benefits | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Components of net periodic benefit (gain) cost: | ||||||||||||
Net periodic benefit (gain) cost: | ||||||||||||
Service cost | $ | — | $ | 0.1 | $ | — | $ | 0.1 | ||||
Interest cost | — | — | — | 0.1 | ||||||||
Amortization of prior service credit | (1.0 | ) | — | (1.9 | ) | — | ||||||
Net periodic benefit (gain) cost | $ | (1.0 | ) | $ | 0.1 | $ | (1.9 | ) | $ | 0.2 |
|
2015 Grants | 2014 Grants | 2013 Grants | ||||
Expected Term | 6.00 years | 7.81 years | 7.81 years | |||
Volatility | 22.24 | % | 28.28 | % | 28.61 | % |
Dividend Yield | — | — | — | |||
Discount Rate | 1.79 | % | 2.21 | % | 2.13 | % |
Awards/Units (millions) | Weighted- Average Exercise Price | Aggregate Intrinsic Value (millions) | Weighted Average Remaining Contractual Life (years) | ||||||
Outstanding at January 1, 2015 | 17.1 | $ | 9.38 | ||||||
Granted | 1.2 | $ | 31.91 | ||||||
Exercised | (5.0 | ) | $ | 9.45 | |||||
Forfeited | — | $ | — | ||||||
Outstanding at June 30, 2015 | 13.3 | $ | 11.34 | ||||||
Vested and expected to vest at June 30, 2015 | 13.3 | $ | 11.34 | $ | 289.5 | 8.26 | |||
Exercisable at June 30, 2015 | 12.1 | $ | 9.35 | $ | 288.1 | 8.11 |
Awards (millions) | Weighted-Average Fair Value | ||||
Outstanding at January 1, 2015 | — | $ | — | ||
Granted | 1.7 | $ | 32.33 | ||
Vested | — | $ | — | ||
Forfeited | — | $ | — | ||
Outstanding at June 30, 2015 | 1.7 | $ | 32.33 |
|
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Exchange (gains) losses, net | $ | 57.8 | $ | (14.6 | ) | $ | 66.5 | $ | (14.5 | ) | ||
Management fees and expenses | — | 0.8 | — | 1.6 | ||||||||
Impairment of real estate investment | 30.6 | — | 30.6 | — | ||||||||
Other miscellaneous | 0.2 | 12.2 | (4.6 | ) | 15.8 | |||||||
Total | $ | 88.6 | $ | (1.6 | ) | $ | 92.5 | $ | 2.9 |
|
Six Months Ended June 30, | ||||
2015 | 2014 | |||
Effective Tax Rate | 57.8 | % | 17.0 | % |
|
June 30, 2015 | December 31, 2014 | |||||
Accounts receivable—trade, net | $ | 702.7 | $ | 638.3 | ||
Notes receivable | 47.2 | 45.5 | ||||
Other | 119.6 | 136.6 | ||||
Total | $ | 869.5 | $ | 820.4 |
|
June 30, 2015 | December 31, 2014 | |||||
Finished products | $ | 312.3 | $ | 323.7 | ||
Semi-finished products | 91.9 | 81.3 | ||||
Raw materials and supplies | 150.8 | 133.3 | ||||
Total | $ | 555.0 | $ | 538.3 |
|
June 30, 2015 | December 31, 2014 | |||||
Property, plant and equipment | $ | 1,835.0 | $ | 1,858.2 | ||
Accumulated depreciation | (409.9 | ) | (344.1 | ) | ||
Property, plant, and equipment, net | $ | 1,425.1 | $ | 1,514.1 |
|
June 30, 2015 | December 31, 2014 | |||||
Dollar Term Loan | $ | 2,154.0 | $ | 2,165.5 | ||
Euro Term Loan | 439.2 | 481.0 | ||||
Dollar Senior Notes | 750.0 | 750.0 | ||||
Euro Senior Notes | 280.1 | 305.3 | ||||
Short-term and other borrowings | 27.4 | 12.9 | ||||
Unamortized original issue discount | (16.4 | ) | (18.3 | ) | ||
Unamortized deferred financing costs, net | (75.0 | ) | (82.1 | ) | ||
$ | 3,559.3 | $ | 3,614.3 | |||
Less: | ||||||
Short term borrowings | $ | 23.2 | $ | 12.2 | ||
Current portion of long-term borrowings | 27.5 | 27.9 | ||||
Long-term debt | $ | 3,508.6 | $ | 3,574.2 |
Period | Euro Notes Percentage | |
2016 | 104.313 | % |
2017 | 102.875 | % |
2018 | 101.438 | % |
2019 and thereafter | 100.000 | % |
Period | Dollar Notes Percentage | |
2016 | 105.531 | % |
2017 | 103.688 | % |
2018 | 101.844 | % |
2019 and thereafter | 100.000 | % |
Remainder of 2015 | $ | 19.6 | |
2016 | 36.7 | ||
2017 | 29.6 | ||
2018 | 28.4 | ||
2019 | 27.7 | ||
Thereafter | 3,500.2 | ||
$ | 3,642.2 |
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June 30, 2015 | December 31, 2014 | |||||
Other assets: | ||||||
Interest rate swaps | $ | 0.8 | $ | 5.9 | ||
Total assets | $ | 0.8 | $ | 5.9 | ||
Other liabilities: | ||||||
Interest rate swaps | $ | 2.2 | $ | 1.5 | ||
Total liabilities | $ | 2.2 | $ | 1.5 |
June 30, 2015 | December 31, 2014 | |||||
Other assets: | ||||||
Interest rate cap | $ | 0.1 | $ | 0.1 | ||
Foreign currency contracts | 0.7 | — | ||||
Total assets | $ | 0.8 | $ | 0.1 |
Amount of (Gain) Loss Recognized in OCI on Derivatives (Effective Portion) | Location of (Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of (Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) | Location of (Gains) Losses Recognized in Income on Derivatives (Ineffective Portion) | Amount of (Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | ||||||||||||||
Interest rate contracts | $ | (0.3 | ) | $ | 5.5 | Interest expense, net | $ | 1.6 | $ | 1.6 | Interest expense, net | $ | 0.2 | $ | (0.6 | ) |
Amount of (Gain) Loss Recognized in OCI on Derivatives (Effective Portion) | Location of (Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of (Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) | Location of (Gains) Losses Recognized in Income on Derivatives (Ineffective Portion) | Amount of (Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | ||||||||||||||
Interest rate contracts | $ | 4.5 | $ | 5.0 | Interest expense, net | $ | 3.2 | $ | 3.2 | Interest expense, net | $ | 1.4 | $ | 0.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
Derivatives Not Designated as Hedging Instruments under ASC 815 | Location of (Gain) Loss Recognized in Income on Derivatives | 2015 | 2014 | 2015 | 2014 | ||||||||
Foreign currency forward contract | Other (income) expense, net | $ | (0.1 | ) | $ | 0.7 | $ | (1.9 | ) | $ | 1.9 | ||
Interest rate cap | Interest expense, net | (0.1 | ) | 1.3 | (0.1 | ) | 3.1 | ||||||
$ | (0.2 | ) | $ | 2.0 | $ | (2.0 | ) | $ | 5.0 |
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Performance Coatings | ||||||||||||
Refinish | $ | 460.1 | $ | 471.1 | $ | 853.3 | $ | 906.3 | ||||
Industrial | 178.7 | 193.9 | 342.7 | 374.8 | ||||||||
Total Net sales Performance Coatings | 638.8 | 665.0 | 1,196.0 | 1,281.1 | ||||||||
Transportation Coatings | ||||||||||||
Light Vehicle | 347.2 | 363.4 | 680.4 | 703.0 | ||||||||
Commercial Vehicle | 108.1 | 98.2 | 206.9 | 189.9 | ||||||||
Total Net sales Transportation Coatings | 455.3 | 461.6 | 887.3 | 892.9 | ||||||||
Total Net sales | $ | 1,094.1 | $ | 1,126.6 | $ | 2,083.3 | $ | 2,174.0 |
Three Months Ended June 30, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 638.8 | $ | 455.3 | $ | 1,094.1 | $ | 665.0 | $ | 461.6 | $ | 1,126.6 | ||||||
Equity in earnings in unconsolidated affiliates | 0.2 | 0.2 | 0.4 | 0.2 | — | 0.2 | ||||||||||||
Adjusted EBITDA (2) | 162.1 | 93.4 | 255.5 | 136.7 | 84.4 | 221.1 | ||||||||||||
Investment in unconsolidated affiliates | 5.7 | 6.8 | 12.5 | 8.3 | 8.0 | 16.3 |
Six Months Ended June 30, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 1,196.0 | $ | 887.3 | $ | 2,083.3 | $ | 1,281.1 | $ | 892.9 | $ | 2,174.0 | ||||||
Equity in earnings in unconsolidated affiliates | 0.3 | 0.5 | 0.8 | 0.5 | 0.3 | 0.8 | ||||||||||||
Adjusted EBITDA (2) | 269.2 | 168.3 | 437.5 | 261.2 | 146.6 | 407.8 | ||||||||||||
Investment in unconsolidated affiliates | 5.7 | 6.8 | 12.5 | 8.3 | 8.0 | 16.3 |
(1) | The Company has no intercompany sales between segments. |
(2) | The primary measure of segment operating performance is Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization and other unusual items impacting operating results. 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. Reconciliation of Adjusted EBITDA to income (loss) before income taxes follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Income before income taxes | $ | 5.2 | $ | 54.5 | $ | 53.1 | $ | 62.8 | ||||
Interest expense, net | 49.2 | 54.9 | 99.2 | 113.9 | ||||||||
Depreciation and amortization | 77.5 | 71.8 | 150.1 | 152.9 | ||||||||
EBITDA | 131.9 | 181.2 | 302.4 | 329.6 | ||||||||
Inventory step-up (a) | 0.5 | — | 0.5 | — | ||||||||
Financing costs (b) | — | — | — | 3.1 | ||||||||
Foreign exchange remeasurement losses (gains) (c) | 57.8 | (14.6 | ) | 66.5 | (14.5 | ) | ||||||
Long-term employee benefit plan adjustments (d) | 0.2 | 2.2 | 0.4 | 4.5 | ||||||||
Termination benefits and other employee related costs (e) | 14.8 | 2.7 | 18.5 | 5.9 | ||||||||
Consulting and advisory fees (f) | 6.8 | 7.7 | 9.9 | 20.7 | ||||||||
Transition-related costs (g) | — | 33.6 | — | 47.5 | ||||||||
Secondary offering costs (h) | 0.3 | — | 1.7 | — | ||||||||
Other adjustments (i) | 13.2 | 8.2 | 11.1 | 11.0 | ||||||||
Dividends in respect of noncontrolling interest (j) | (0.6 | ) | (0.7 | ) | (4.1 | ) | (1.6 | ) | ||||
Management fee expense (k) | — | 0.8 | — | 1.6 | ||||||||
Asset impairment (l) | 30.6 | — | 30.6 | — | ||||||||
Adjusted EBITDA | $ | 255.5 | $ | 221.1 | $ | 437.5 | $ | 407.8 |
(a) | During the three and six months ended June 30, 2015, we recorded a non-cash fair value inventory adjustment associated with an acquisition. These amounts increased cost of goods sold by $0.5 million. |
(b) | In connection with an amendment to the Senior Secured Credit Facilities in February 2014, we recognized $3.1 million of costs during the six months ended June 30, 2014. |
(c) | Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies. |
(d) | Eliminates the non-service cost components of long-term employee benefit costs. |
(e) | Represents expenses primarily related to employee termination benefits and other employee-related costs. Termination benefits include the costs associated with our headcount initiatives associated with cost saving opportunities that were related to our transition to a standalone entity and our Axalta Way cost savings initiatives in 2015. |
(f) | Represents fees paid to consultants, advisors, and other third-party professional organizations for professional services. Amounts incurred for the three and six months ended June 30, 2015 primarily relate to our Axalta Way cost savings initiatives. Amounts incurred for the three and six months ended June 30, 2014 relate to our transition from DuPont to a standalone entity. |
(g) | Represents charges associated with the transition from DuPont to a standalone entity, including branding and marketing, information technology related costs, and facility transition costs. |
(h) | Represents costs associated with the offerings of our common shares by Carlyle that closed in April 2015. |
(i) | Represents costs for certain unusual or non-operational (gains) and losses, including a $5.4 million gain recognized during the six months ended June 30, 2015 resulting from the remeasurement of our previously held interest in an equity method investee upon the acquisition of a controlling interest, stock-based compensation, equity investee dividends, indemnity losses associated with the Acquisition, and loss (gain) on sale and disposal of property, plant and equipment. |
(j) | Represents the payment of dividends to our joint venture partners by our consolidated entities that are not wholly owned. |
(k) | Pursuant to Axalta’s management agreement with Carlyle Investment for management and financial advisory services and oversight provided to Axalta and its subsidiaries, Axalta was required to pay an annual management fee of $3.0 million and out-of-pocket expenses. This agreement terminated upon completion of the IPO in November 2014. |
(l) | As a result of the currency devaluation in Venezuela, we evaluated the carrying values of our long-lived assets for impairment and recorded an impairment charge relating to a real estate investment of $30.6 million. See Note 9 for more information. |
|
Unrealized Currency Translation Adjustments | Pension and Other Long-term Employee Benefit Adjustments | Unrealized Gain (Loss) on Securities | Unrealized Gain (Losses) on Derivatives | Accumulated Other Comprehensive Income (loss) | |||||||||||
December 31, 2014 | $ | (72.1 | ) | $ | (31.2 | ) | $ | (0.2 | ) | $ | 0.2 | $ | (103.3 | ) | |
Current year deferrals to AOCI | (82.1 | ) | (3.1 | ) | 0.4 | 0.4 | (84.4 | ) | |||||||
Reclassifications from AOCI to Net income | — | 0.8 | — | (3.2 | ) | (2.4 | ) | ||||||||
Net Change | (82.1 | ) | (2.3 | ) | 0.4 | (2.8 | ) | (86.8 | ) | ||||||
June 30, 2015 | $ | (154.2 | ) | $ | (33.5 | ) | $ | 0.2 | $ | (2.6 | ) | $ | (190.1 | ) |
Unrealized Currency Translation Adjustments | Pension and Other Long-term Employee Benefit Adjustments | Unrealized Loss on Securities | Unrealized Gain (Loss) on Derivatives | Accumulated Other Comprehensive Income | |||||||||||
December 31, 2013 | $ | 24.3 | $ | 7.5 | $ | (0.9 | ) | $ | 3.1 | $ | 34.0 | ||||
Current year deferrals to AOCI | (9.9 | ) | 4.7 | 0.8 | 0.1 | (4.3 | ) | ||||||||
Reclassifications from AOCI to Net income | — | (0.8 | ) | — | (3.2 | ) | (4.0 | ) | |||||||
Net Change | (9.9 | ) | 3.9 | 0.8 | (3.1 | ) | (8.3 | ) | |||||||
June 30, 2014 | $ | 14.4 | $ | 11.4 | $ | (0.1 | ) | $ | — | $ | 25.7 |
|
|
Performance Coatings | Transportation Coatings | Total | |||||||
December 31, 2014 | $ | 933.6 | $ | 67.5 | $ | 1,001.1 | |||
Goodwill from acquisition | 12.5 | — | 12.5 | ||||||
Foreign currency translation | (64.8 | ) | (4.8 | ) | (69.6 | ) | |||
June 30, 2015 | $ | 881.3 | $ | 62.7 | $ | 944.0 |
June 30, 2015 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 411.7 | $ | (96.8 | ) | $ | 314.9 | 10.0 | ||
Trademarks - indefinite-lived | 284.4 | — | 284.4 | Indefinite | ||||||
Trademarks - definite-lived | 41.9 | (6.8 | ) | 35.1 | 14.8 | |||||
Customer relationships | 684.1 | (86.2 | ) | 597.9 | 19.4 | |||||
Non-compete agreements | 1.9 | (1.0 | ) | 0.9 | 4.6 | |||||
Total | $ | 1,424.0 | $ | (190.8 | ) | $ | 1,233.2 |
December 31, 2014 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 411.8 | $ | (76.3 | ) | $ | 335.5 | 10.0 | ||
Trademarks—indefinite-lived | 284.4 | — | 284.4 | Indefinite | ||||||
Trademarks—definite-lived | 41.8 | (5.5 | ) | 36.3 | 14.8 | |||||
Customer relationships | 713.9 | (71.3 | ) | 642.6 | 19.4 | |||||
Non-compete agreements | 2.0 | (0.8 | ) | 1.2 | 4.6 | |||||
Total | $ | 1,453.9 | $ | (153.9 | ) | $ | 1,300.0 |
Remainder of 2015 | $ | 40.0 | |
2016 | $ | 79.9 | |
2017 | $ | 79.6 | |
2018 | $ | 79.6 | |
2019 | $ | 79.6 |
|
Restructuring Rollforward | 2015 Activity | ||
Balance at December 31, 2014 | $ | 48.5 | |
Expense Recorded | 16.7 | ||
Payments Made | (22.5 | ) | |
Foreign Currency Changes | (4.1 | ) | |
Balance at June 30, 2015 | $ | 38.6 |
|
Pension Benefits | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Net periodic benefit cost: | ||||||||||||
Service cost | $ | 3.3 | $ | 3.8 | $ | 6.4 | $ | 8.4 | ||||
Interest cost | 4.6 | 6.0 | 9.2 | 12.0 | ||||||||
Expected return on plan assets | (3.6 | ) | (3.7 | ) | (7.3 | ) | (7.4 | ) | ||||
Amortization of actuarial (gain) loss, net | 0.2 | (0.1 | ) | 0.5 | (0.2 | ) | ||||||
Amortization of prior service credit, net | — | — | (0.1 | ) | — | |||||||
Net periodic benefit cost | $ | 4.5 | $ | 6.0 | $ | 8.7 | $ | 12.8 |
Other Long-Term Employee Benefits | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Components of net periodic benefit (gain) cost: | ||||||||||||
Net periodic benefit (gain) cost: | ||||||||||||
Service cost | $ | — | $ | 0.1 | $ | — | $ | 0.1 | ||||
Interest cost | — | — | — | 0.1 | ||||||||
Amortization of prior service credit | (1.0 | ) | — | (1.9 | ) | — | ||||||
Net periodic benefit (gain) cost | $ | (1.0 | ) | $ | 0.1 | $ | (1.9 | ) | $ | 0.2 |
|
2015 Grants | 2014 Grants | 2013 Grants | ||||
Expected Term | 6.00 years | 7.81 years | 7.81 years | |||
Volatility | 22.24 | % | 28.28 | % | 28.61 | % |
Dividend Yield | — | — | — | |||
Discount Rate | 1.79 | % | 2.21 | % | 2.13 | % |
Awards/Units (millions) | Weighted- Average Exercise Price | Aggregate Intrinsic Value (millions) | Weighted Average Remaining Contractual Life (years) | ||||||
Outstanding at January 1, 2015 | 17.1 | $ | 9.38 | ||||||
Granted | 1.2 | $ | 31.91 | ||||||
Exercised | (5.0 | ) | $ | 9.45 | |||||
Forfeited | — | $ | — | ||||||
Outstanding at June 30, 2015 | 13.3 | $ | 11.34 | ||||||
Vested and expected to vest at June 30, 2015 | 13.3 | $ | 11.34 | $ | 289.5 | 8.26 | |||
Exercisable at June 30, 2015 | 12.1 | $ | 9.35 | $ | 288.1 | 8.11 |
Awards (millions) | Weighted-Average Fair Value | ||||
Outstanding at January 1, 2015 | — | $ | — | ||
Granted | 1.7 | $ | 32.33 | ||
Vested | — | $ | — | ||
Forfeited | — | $ | — | ||
Outstanding at June 30, 2015 | 1.7 | $ | 32.33 |
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Exchange (gains) losses, net | $ | 57.8 | $ | (14.6 | ) | $ | 66.5 | $ | (14.5 | ) | ||
Management fees and expenses | — | 0.8 | — | 1.6 | ||||||||
Impairment of real estate investment | 30.6 | — | 30.6 | — | ||||||||
Other miscellaneous | 0.2 | 12.2 | (4.6 | ) | 15.8 | |||||||
Total | $ | 88.6 | $ | (1.6 | ) | $ | 92.5 | $ | 2.9 |
|
Six Months Ended June 30, | ||||
2015 | 2014 | |||
Effective Tax Rate | 57.8 | % | 17.0 | % |
|
June 30, 2015 | December 31, 2014 | |||||
Accounts receivable—trade, net | $ | 702.7 | $ | 638.3 | ||
Notes receivable | 47.2 | 45.5 | ||||
Other | 119.6 | 136.6 | ||||
Total | $ | 869.5 | $ | 820.4 |
|
June 30, 2015 | December 31, 2014 | |||||
Finished products | $ | 312.3 | $ | 323.7 | ||
Semi-finished products | 91.9 | 81.3 | ||||
Raw materials and supplies | 150.8 | 133.3 | ||||
Total | $ | 555.0 | $ | 538.3 |
|
June 30, 2015 | December 31, 2014 | |||||
Property, plant and equipment | $ | 1,835.0 | $ | 1,858.2 | ||
Accumulated depreciation | (409.9 | ) | (344.1 | ) | ||
Property, plant, and equipment, net | $ | 1,425.1 | $ | 1,514.1 |
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June 30, 2015 | December 31, 2014 | |||||
Dollar Term Loan | $ | 2,154.0 | $ | 2,165.5 | ||
Euro Term Loan | 439.2 | 481.0 | ||||
Dollar Senior Notes | 750.0 | 750.0 | ||||
Euro Senior Notes | 280.1 | 305.3 | ||||
Short-term and other borrowings | 27.4 | 12.9 | ||||
Unamortized original issue discount | (16.4 | ) | (18.3 | ) | ||
Unamortized deferred financing costs, net | (75.0 | ) | (82.1 | ) | ||
$ | 3,559.3 | $ | 3,614.3 | |||
Less: | ||||||
Short term borrowings | $ | 23.2 | $ | 12.2 | ||
Current portion of long-term borrowings | 27.5 | 27.9 | ||||
Long-term debt | $ | 3,508.6 | $ | 3,574.2 |
Remainder of 2015 | $ | 19.6 | |
2016 | 36.7 | ||
2017 | 29.6 | ||
2018 | 28.4 | ||
2019 | 27.7 | ||
Thereafter | 3,500.2 | ||
$ | 3,642.2 |
Period | Euro Notes Percentage | |
2016 | 104.313 | % |
2017 | 102.875 | % |
2018 | 101.438 | % |
2019 and thereafter | 100.000 | % |
Period | Dollar Notes Percentage | |
2016 | 105.531 | % |
2017 | 103.688 | % |
2018 | 101.844 | % |
2019 and thereafter | 100.000 | % |
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Amount of (Gain) Loss Recognized in OCI on Derivatives (Effective Portion) | Location of (Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of (Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) | Location of (Gains) Losses Recognized in Income on Derivatives (Ineffective Portion) | Amount of (Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | Three Months Ended June 30, 2015 | Three Months Ended June 30, 2014 | ||||||||||||||
Interest rate contracts | $ | (0.3 | ) | $ | 5.5 | Interest expense, net | $ | 1.6 | $ | 1.6 | Interest expense, net | $ | 0.2 | $ | (0.6 | ) |
Amount of (Gain) Loss Recognized in OCI on Derivatives (Effective Portion) | Location of (Gain) Loss Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of (Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) | Location of (Gains) Losses Recognized in Income on Derivatives (Ineffective Portion) | Amount of (Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | Six Months Ended June 30, 2015 | Six Months Ended June 30, 2014 | ||||||||||||||
Interest rate contracts | $ | 4.5 | $ | 5.0 | Interest expense, net | $ | 3.2 | $ | 3.2 | Interest expense, net | $ | 1.4 | $ | 0.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
Derivatives Not Designated as Hedging Instruments under ASC 815 | Location of (Gain) Loss Recognized in Income on Derivatives | 2015 | 2014 | 2015 | 2014 | ||||||||
Foreign currency forward contract | Other (income) expense, net | $ | (0.1 | ) | $ | 0.7 | $ | (1.9 | ) | $ | 1.9 | ||
Interest rate cap | Interest expense, net | (0.1 | ) | 1.3 | (0.1 | ) | 3.1 | ||||||
$ | (0.2 | ) | $ | 2.0 | $ | (2.0 | ) | $ | 5.0 |
June 30, 2015 | December 31, 2014 | |||||
Other assets: | ||||||
Interest rate swaps | $ | 0.8 | $ | 5.9 | ||
Total assets | $ | 0.8 | $ | 5.9 | ||
Other liabilities: | ||||||
Interest rate swaps | $ | 2.2 | $ | 1.5 | ||
Total liabilities | $ | 2.2 | $ | 1.5 |
June 30, 2015 | December 31, 2014 | |||||
Other assets: | ||||||
Interest rate cap | $ | 0.1 | $ | 0.1 | ||
Foreign currency contracts | 0.7 | — | ||||
Total assets | $ | 0.8 | $ | 0.1 |
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Performance Coatings | ||||||||||||
Refinish | $ | 460.1 | $ | 471.1 | $ | 853.3 | $ | 906.3 | ||||
Industrial | 178.7 | 193.9 | 342.7 | 374.8 | ||||||||
Total Net sales Performance Coatings | 638.8 | 665.0 | 1,196.0 | 1,281.1 | ||||||||
Transportation Coatings | ||||||||||||
Light Vehicle | 347.2 | 363.4 | 680.4 | 703.0 | ||||||||
Commercial Vehicle | 108.1 | 98.2 | 206.9 | 189.9 | ||||||||
Total Net sales Transportation Coatings | 455.3 | 461.6 | 887.3 | 892.9 | ||||||||
Total Net sales | $ | 1,094.1 | $ | 1,126.6 | $ | 2,083.3 | $ | 2,174.0 |
Three Months Ended June 30, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 638.8 | $ | 455.3 | $ | 1,094.1 | $ | 665.0 | $ | 461.6 | $ | 1,126.6 | ||||||
Equity in earnings in unconsolidated affiliates | 0.2 | 0.2 | 0.4 | 0.2 | — | 0.2 | ||||||||||||
Adjusted EBITDA (2) | 162.1 | 93.4 | 255.5 | 136.7 | 84.4 | 221.1 | ||||||||||||
Investment in unconsolidated affiliates | 5.7 | 6.8 | 12.5 | 8.3 | 8.0 | 16.3 |
Six Months Ended June 30, | ||||||||||||||||||
2015 | 2014 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 1,196.0 | $ | 887.3 | $ | 2,083.3 | $ | 1,281.1 | $ | 892.9 | $ | 2,174.0 | ||||||
Equity in earnings in unconsolidated affiliates | 0.3 | 0.5 | 0.8 | 0.5 | 0.3 | 0.8 | ||||||||||||
Adjusted EBITDA (2) | 269.2 | 168.3 | 437.5 | 261.2 | 146.6 | 407.8 | ||||||||||||
Investment in unconsolidated affiliates | 5.7 | 6.8 | 12.5 | 8.3 | 8.0 | 16.3 |
(1) | The Company has no intercompany sales between segments. |
(2) | The primary measure of segment operating performance is Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization and other unusual items impacting operating results. 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. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Income before income taxes | $ | 5.2 | $ | 54.5 | $ | 53.1 | $ | 62.8 | ||||
Interest expense, net | 49.2 | 54.9 | 99.2 | 113.9 | ||||||||
Depreciation and amortization | 77.5 | 71.8 | 150.1 | 152.9 | ||||||||
EBITDA | 131.9 | 181.2 | 302.4 | 329.6 | ||||||||
Inventory step-up (a) | 0.5 | — | 0.5 | — | ||||||||
Financing costs (b) | — | — | — | 3.1 | ||||||||
Foreign exchange remeasurement losses (gains) (c) | 57.8 | (14.6 | ) | 66.5 | (14.5 | ) | ||||||
Long-term employee benefit plan adjustments (d) | 0.2 | 2.2 | 0.4 | 4.5 | ||||||||
Termination benefits and other employee related costs (e) | 14.8 | 2.7 | 18.5 | 5.9 | ||||||||
Consulting and advisory fees (f) | 6.8 | 7.7 | 9.9 | 20.7 | ||||||||
Transition-related costs (g) | — | 33.6 | — | 47.5 | ||||||||
Secondary offering costs (h) | 0.3 | — | 1.7 | — | ||||||||
Other adjustments (i) | 13.2 | 8.2 | 11.1 | 11.0 | ||||||||
Dividends in respect of noncontrolling interest (j) | (0.6 | ) | (0.7 | ) | (4.1 | ) | (1.6 | ) | ||||
Management fee expense (k) | — | 0.8 | — | 1.6 | ||||||||
Asset impairment (l) | 30.6 | — | 30.6 | — | ||||||||
Adjusted EBITDA | $ | 255.5 | $ | 221.1 | $ | 437.5 | $ | 407.8 |
(a) | During the three and six months ended June 30, 2015, we recorded a non-cash fair value inventory adjustment associated with an acquisition. These amounts increased cost of goods sold by $0.5 million. |
(b) | In connection with an amendment to the Senior Secured Credit Facilities in February 2014, we recognized $3.1 million of costs during the six months ended June 30, 2014. |
(c) | Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies. |
(d) | Eliminates the non-service cost components of long-term employee benefit costs. |
(e) | Represents expenses primarily related to employee termination benefits and other employee-related costs. Termination benefits include the costs associated with our headcount initiatives associated with cost saving opportunities that were related to our transition to a standalone entity and our Axalta Way cost savings initiatives in 2015. |
(f) | Represents fees paid to consultants, advisors, and other third-party professional organizations for professional services. Amounts incurred for the three and six months ended June 30, 2015 primarily relate to our Axalta Way cost savings initiatives. Amounts incurred for the three and six months ended June 30, 2014 relate to our transition from DuPont to a standalone entity. |
(g) | Represents charges associated with the transition from DuPont to a standalone entity, including branding and marketing, information technology related costs, and facility transition costs. |
(h) | Represents costs associated with the offerings of our common shares by Carlyle that closed in April 2015. |
(i) | Represents costs for certain unusual or non-operational (gains) and losses, including a $5.4 million gain recognized during the six months ended June 30, 2015 resulting from the remeasurement of our previously held interest in an equity method investee upon the acquisition of a controlling interest, stock-based compensation, equity investee dividends, indemnity losses associated with the Acquisition, and loss (gain) on sale and disposal of property, plant and equipment. |
(j) | Represents the payment of dividends to our joint venture partners by our consolidated entities that are not wholly owned. |
(k) | Pursuant to Axalta’s management agreement with Carlyle Investment for management and financial advisory services and oversight provided to Axalta and its subsidiaries, Axalta was required to pay an annual management fee of $3.0 million and out-of-pocket expenses. This agreement terminated upon completion of the IPO in November 2014. |
(l) | As a result of the currency devaluation in Venezuela, we evaluated the carrying values of our long-lived assets for impairment and recorded an impairment charge relating to a real estate investment of $30.6 million. See Note 9 for more information. |
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Unrealized Currency Translation Adjustments | Pension and Other Long-term Employee Benefit Adjustments | Unrealized Loss on Securities | Unrealized Gain (Loss) on Derivatives | Accumulated Other Comprehensive Income | |||||||||||
December 31, 2013 | $ | 24.3 | $ | 7.5 | $ | (0.9 | ) | $ | 3.1 | $ | 34.0 | ||||
Current year deferrals to AOCI | (9.9 | ) | 4.7 | 0.8 | 0.1 | (4.3 | ) | ||||||||
Reclassifications from AOCI to Net income | — | (0.8 | ) | — | (3.2 | ) | (4.0 | ) | |||||||
Net Change | (9.9 | ) | 3.9 | 0.8 | (3.1 | ) | (8.3 | ) | |||||||
June 30, 2014 | $ | 14.4 | $ | 11.4 | $ | (0.1 | ) | $ | — | $ | 25.7 |
Unrealized Currency Translation Adjustments | Pension and Other Long-term Employee Benefit Adjustments | Unrealized Gain (Loss) on Securities | Unrealized Gain (Losses) on Derivatives | Accumulated Other Comprehensive Income (loss) | |||||||||||
December 31, 2014 | $ | (72.1 | ) | $ | (31.2 | ) | $ | (0.2 | ) | $ | 0.2 | $ | (103.3 | ) | |
Current year deferrals to AOCI | (82.1 | ) | (3.1 | ) | 0.4 | 0.4 | (84.4 | ) | |||||||
Reclassifications from AOCI to Net income | — | 0.8 | — | (3.2 | ) | (2.4 | ) | ||||||||
Net Change | (82.1 | ) | (2.3 | ) | 0.4 | (2.8 | ) | (86.8 | ) | ||||||
June 30, 2015 | $ | (154.2 | ) | $ | (33.5 | ) | $ | 0.2 | $ | (2.6 | ) | $ | (190.1 | ) |
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