Business Context and Reporting Period
Company: Axalta Coating Systems Ltd.
Filing Type: Form 8-K (Current Report)
Date: January 21, 2025
Subject: Regulation FD Disclosure regarding changes to Non-GAAP financial metrics presentation.
Key Financial Metrics
This filing does not report specific revenue, profit, cash flow, or debt figures for a completed period. Instead, it details adjustments to the calculation methodology for the following non-GAAP metrics effective with the Q4 and full-year 2024 results:
- Adjusted EBIT
- Adjusted Net Income
- Return on Invested Capital (ROIC)
- Adjusted Diluted EPS
Material Changes Versus Prior Period
The Company is altering its non-GAAP reconciliation methodology to align with peer practices and resolve an SEC comment letter:
- Cessation of Adjustment: Axalta will no longer adjust for step-up depreciation and amortization related to the DuPont Performance Coatings acquisition in Adjusted EBIT and Adjusted Net Income calculations.
- New Adjustment: The Company will begin adjusting for the amortization of all acquired intangibles in the calculation of Adjusted EBIT and Adjusted Net Income.
- Historical Recasting: Revised reconciliations and calculations for 2023 and 2024 fiscal quarters are provided in Exhibit 99.
Guidance, Outlook, and Management Commentary
2026 A Plan Targets: Management confirmed that the strategic targets announced in May 2024 remain unchanged despite the metric adjustments:
- ROIC Target (2026): Approximately 15%.
- Adjusted Diluted EPS Growth: Greater than 60% growth through 2026 compared to 2023.
Updated Baseline: The 2023 baseline for the Adjusted Diluted EPS growth target has been updated to $1.68 per share. This implies a 2026 Adjusted Diluted EPS target of approximately $2.69.
Forward-Looking Risks: The filing includes standard cautionary statements regarding economic, competitive, and technological factors that could cause actual results to differ from the 2026 A Plan targets.
Investor Verification Checklist
- Review Exhibit 99 for the recast non-GAAP tables to understand the specific financial impact of the methodology change on 2023 and 2024 results.
- Verify the updated 2023 Adjusted Diluted EPS baseline of $1.68 against the new calculation methodology.
- Monitor the upcoming Q4 and full-year 2024 earnings release for progress updates against the 2026 A Plan.
- Confirm that the removal of the step-up depreciation adjustment and the inclusion of all acquired intangible amortization align with peer company reporting standards.