PHILADELPHIA, March 24, 2020 /PRNewswire/ -- Axalta
Coating Systems Ltd. (NYSE: AXTA) ("Axalta" or the
"Company") today provided an update regarding the impact of
the coronavirus (COVID-19) pandemic on its business and actions the
Company is taking to protect its communities, employees, customers,
and shareholders.
Robert W. Bryant, Axalta's
President and CEO, commented, "First and foremost, we are focused
on protecting public health and the health and safety of our
employees and customers, consistent with guidance issued by
relevant authorities. Where possible, our employees are working
remotely, and we have instituted global travel restrictions for all
employees. We are taking steps to promote social distancing
and have instituted robust on-site hygiene practices and
restrictions on visits to our facilities. We are continuing to
monitor the situation closely and will take further action as
appropriate."
Additionally, given inherent uncertainty in the outlook for
customer demand, Axalta is withdrawing previous financial guidance
for 2020, which did not reflect the impact of the coronavirus.
Management expects to provide updated guidance when it has more
visibility into demand.
Management has taken swift action to both plan and address the
near-term impact on the decline in demand in certain areas of
Axalta's business. The focus is on dynamically adjusting the
Company's cost structure as needed and has already included initial
actions related to reducing discretionary spend across the
organization.
Bryant added, "The fundamentals of our business remain strong.
From a manufacturing standpoint, we continue to operate and meet
customer demand around the world. We are also activating
contingency plans designed to ensure our ability to continue to
serve our customers in the event of possible operational
limitations and also exploring ways to 'flex' as demand from
customers changes. While near-term demand is uncertain and has
caused us to withdraw our financial guidance for 2020, we are
confident that we can continue serving our customers in a manner
that is safe, compliant, and meets customer needs globally."
Bryant concluded, "The coatings industry in general has a very
high variable cost structure, and Axalta is no exception—our costs
are approximately 64% variable at the cost of goods sold level.
Through a combination of variable and directed fixed cost structure
actions, coupled with a strong balance sheet, we believe we are
well positioned to weather near-term reductions in customer demand
and come out of this crisis an even stronger company."
Supply Chain Impact
Axalta is actively monitoring and managing supply chain
challenges, including logistics, but thus far, there have been no
significant disruptions. Axalta's supply chain team is coordinating
with the Company's suppliers to identify and mitigate potential
areas of risk and manage inventories.
Financial Profile
Axalta continues to maintain a strong balance sheet. As of
year-end 2019, Axalta had $1.02
billion in cash and cash equivalents and $3.8 billion in total debt, giving effect to net
debt of $2.8 billion. This translated
to total net leverage of 3.0x (net debt to 2019 full year Adjusted
EBITDA). In January 2020, the Company
voluntarily prepaid $300 million of
its Term Loan B debt using excess cash on the balance sheet. Axalta
maintains an undrawn $400 million
revolver and the nearest debt maturities on both our Term Loans and
Unsecured Notes are 2024. There are no affirmative financial
covenants on the Company's current outstanding debt. Any draw
greater than 30% of the Company's revolving credit commitments
would be subject to a first lien net leverage covenant of 5.5:1.0
on secured debt. Axalta's first lien net leverage ratio at
December 31, 2019 was 1.47x. Given
this balance sheet profile and liquidity, Axalta believes it is
well positioned to operate in a challenging near-term demand
environment.
Regarding cash flow, Axalta is assessing potential means to
maximize free cash flow, including modifying previous plans for
capital spending as well as reducing working capital intensity
across the business. Axalta believes these actions can help to
significantly offset operating profit reductions in the near
term.
About Axalta Coating Systems
Axalta is a leading global company focused solely on coatings
and providing customers with innovative, colorful, beautiful and
sustainable solutions. From light OEM vehicles, commercial vehicles
and refinish applications to electric motors, buildings and
pipelines, our coatings are designed to prevent corrosion, increase
productivity and enable the materials we coat to last longer. With
more than 150 years of experience in the coatings industry, the
14,000 people of Axalta continue to find ways to better serve our
more than 100,000 customers in over 130 countries better every day
with the finest coatings, application systems and technology. For
more information visit axalta.com and follow us on
Twitter @axalta and on LinkedIn.
Cautionary Statement Concerning Forward-Looking Statements
This release may contain certain forward-looking statements
regarding Axalta, including those relating to Axalta's supply
chain, indebtedness, liquidity, cash flow, cost savings
opportunities, customer demand, 2020 guidance and the effects of
coronavirus (COVID-19) on Axalta's business. Forward-looking
statements are based on management's expectations as well as
estimates and assumptions prepared by management that, although
they believe to be reasonable, are inherently uncertain. These
statements may involve risks and uncertainties, including, but not
limited to, our ability to maximize cash flow and generate cost
savings and the effects of coronavirus on the geographies in which
we operate and the end-markets that we serve. Axalta undertakes no
obligation to update or revise any of the forward-looking
statements contained herein, whether as a result of new
information, future events or otherwise.
Contact
Christopher Mecray
D +1 215 255 7970
Christopher.mecray@axalta.com
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SOURCE Axalta Coating Systems Ltd.