Axalta cuts 2026 profit forecast, misses Q3 estimates

Axalta Coating Systems Ltd. (AXTA) reported third-quarter 2026 results on Oct. 29 in a press release furnished to the SEC. It cut its full-year forecast for adjusted EBITDA, adjusted diluted earnings per share and free cash flow.

Adjusted diluted earnings were 63 cents per share, missing the 71 cents consensus estimate compiled by Finnhub. Revenue of $1.31 billion also fell short of the $1.36 billion estimate.

Net sales rose 2% from a year earlier, the company said. It attributed the increase to volume growth in three of four regions, favorable currency translation, acquisitions and positive price mix, partly offset by volume declines primarily in Europe.

Chris Villavarayan, Chief Executive Officer and President of Axalta, said: “Axalta delivered another quarter of revenue growth, strong cash generation and robust profitability despite a more challenging operating environment.”

Here's how the company did:

• Net sales: $1.31 billion vs. $1.29 billion a year earlier, $1.36 billion expected, according to Finnhub
• Adjusted diluted EPS: 63 cents vs. 67 cents a year earlier, 71 cents expected, according to Finnhub
• GAAP diluted EPS: 44 cents vs. 51 cents a year earlier
• Net income: $95 million vs. $110 million a year earlier
• Adjusted EBITDA: $282 million vs. $294 million a year earlier, with a margin of 21.5% vs. 22.8%

Segment results

Performance Coatings net sales were $818 million, down $10 million. Refinish sales fell 2% to $504 million, mainly on lower volumes in Europe, while Industrial sales rose 1% to $314 million on volume growth in Asia Pacific.

Performance Coatings adjusted EBITDA was $188 million, against $211 million a year earlier. The company cited lower volumes, variable cost inflation and investments supporting recently awarded business wins. Its adjusted EBITDA margin was 23.0%, compared with 25.5%.

Mobility Coatings reached record quarterly net sales of $493 million, up 7%. Light Vehicle sales rose 2%, driven mainly by favorable currency translation. Commercial Vehicle sales rose 24% to $119 million, on higher Class 8 production in North America.

Mobility Coatings adjusted EBITDA was $94 million, a third-quarter record. Its margin was 19.0%, reflecting 100 basis points of expansion year over year.

Costs and cash

Net income fell $15 million, the company said, mainly because merger and acquisition-related costs were $19 million, against $5 million a year earlier. Adjusted net income fell 6% to $136 million.

Cash provided by operating activities was $135 million, in line with the prior year. Free cash flow rose 3% to $92 million, including about $21 million of incremental merger and acquisition-related cash costs in the quarter.

Total net leverage was 2.1 times, which the company described as the lowest in Axalta's history.

2026 guidance

For the fourth quarter, the company expects net sales to be roughly flat. It forecast adjusted EBITDA of $254 million to $264 million and adjusted diluted EPS of about 55 cents.

For the full year, the company now expects net sales growth in the low single digits in percentage terms, adjusted EBITDA of $1,100 million to $1,110 million, and adjusted diluted EPS of about $2.45. In its July 28 release, it had forecast adjusted EBITDA of $1,140 million to $1,170 million and adjusted diluted EPS of $2.55 to $2.70.

Free cash flow is now expected at about $450 million, down from the more than $500 million it forecast in July. That figure includes about $80 million of merger and acquisition-related cash costs.

Capital expenditures are now expected at about $200 million, against a range of $180 million to $200 million previously. Interest expense is still expected at about $150 million.

Axalta does not provide a forward-looking reconciliation for its non-GAAP estimates, the release said, because the necessary information is not available without unreasonable effort.

Proposed combination with AkzoNobel

Shareholders of Axalta and AkzoNobel voted in favor of all resolutions related to the Proposed Merger on Aug. 5, according to the release. Villavarayan said the company is “confident in the significant value creation opportunity associated with our proposed combination with AkzoNobel.”

The company scheduled a conference call to discuss the results for 8:00 a.m. ET on Oct. 29.