XML 51 R27.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Segments | 12 Months Ended
--- | ---
Dec. 31, 2018
Segment Reporting [Abstract] |
Segments | SEGMENTS The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information. We have two operating segments, which are also our reportable segments: Performance Coatings and Transportation Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines. Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to a fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial. Through our Transportation Coatings segment, we provide advanced coating technologies to OEMs of light and commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-effective, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle. Our business serves four end-markets globally as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Performance Coatings |  |  |  |  |  |
Refinish |  | $ | 1,754.2 |  |  | $ | 1,645.2 |  |  | $ | 1,679.7 |
Industrial |  | 1,271.5 |  |  | 1,029.9 |  |  | 718.8 |
Total Net sales Performance Coatings |  | $ | 3,025.7 |  |  | $ | 2,675.1 |  |  | $ | 2,398.5 |
Transportation Coatings |  |  |  |  |  |
Light Vehicle |  | $ | 1,290.2 |  |  | $ | 1,322.8 |  |  | $ | 1,337.7 |
Commercial Vehicle |  | 353.8 |  |  | 355.0 |  |  | 332.6 |
Total Net sales Transportation Coatings |  | $ | 1,644.0 |  |  | $ | 1,677.8 |  |  | $ | 1,670.3 |
Total Net sales |  | $ | 4,669.7 |  |  | $ | 4,352.9 |  |  | $ | 4,068.8 |
Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.
|  | Performance Coatings |  | Transportation Coatings |  | Total
For the Year ended December 31, 2018 |  |  |  |  |  |
Net sales (1) |  | $ | 3,025.7 |  |  | $ | 1,644.0 |  |  | $ | 4,669.7 |
Equity in earnings in unconsolidated affiliates |  | 0.4 |  |  | (0.1 | ) |  | 0.3 |
Adjusted EBITDA (2) |  | 668.3 |  |  | 268.9 |  |  | 937.2 |
Investment in unconsolidated affiliates |  | 2.7 |  |  | 12.7 |  |  | 15.4 |
|  | Performance Coatings |  | Transportation Coatings |  | Total
For the Year ended December 31, 2017 |  |  |  |  |  |
Net sales (1) |  | $ | 2,675.1 |  |  | $ | 1,677.8 |  |  | $ | 4,352.9 |
Equity in earnings (losses) in unconsolidated affiliates |  | 0.3 |  |  | 0.7 |  |  | 1.0 |
Adjusted EBITDA (2) |  | 564.2 |  |  | 321.0 |  |  | 885.2 |
Investment in unconsolidated affiliates |  | 2.9 |  |  | 12.6 |  |  | 15.5 |
|  | Performance Coatings |  | Transportation Coatings |  | Total
For the Year ended December 31, 2016 |  |  |  |  |  |
Net sales (1) |  | $ | 2,398.5 |  |  | $ | 1,670.3 |  |  | $ | 4,068.8 |
Equity in earnings in unconsolidated affiliates |  | (0.2 | ) |  | 0.4 |  |  | 0.2 |
Adjusted EBITDA (2) |  | 549.7 |  |  | 352.7 |  |  | 902.4 |
Investment in unconsolidated affiliates |  | 2.5 |  |  | 11.1 |  |  | 13.6 |
(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 before interest, taxes, depreciation and amortization and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (i) non-cash items included within net income, (ii) items the Company does not believe are indicative of ongoing operating performance or (iii) nonrecurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. 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, which represents EBITDA adjusted for the select items referred to above. Reconciliation of Adjusted EBITDA to income before income taxes follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Income before income taxes |  | $ | 267.5 |  |  | $ | 189.6 |  |  | $ | 82.7 |
Interest expense, net |  | 159.6 |  |  | 147.0 |  |  | 178.2 |
Depreciation and amortization |  | 369.1 |  |  | 347.5 |  |  | 322.1 |
EBITDA |  | $ | 796.2 |  |  | $ | 684.1 |  |  | $ | 583.0 |
Debt extinguishment and refinancing related costs (a) |  | 9.5 |  |  | 13.4 |  |  | 97.6 |
Foreign exchange remeasurement losses (b) |  | 9.2 |  |  | 7.4 |  |  | 30.6 |
Long-term employee benefit plan adjustments (c) |  | (1.9 | ) |  | 1.4 |  |  | 1.5 |
Termination benefits and other employee related costs (d) |  | 81.7 |  |  | 35.3 |  |  | 61.8 |
Consulting and advisory fees (e) |  | — |  |  | (0.1 | ) |  | 10.4 |
Transition-related costs (f) |  | (0.2 | ) |  | 7.7 |  |  | — |
Offering and transactional costs (g) |  | 1.2 |  |  | 18.4 |  |  | 6.0 |
Stock-based compensation (h) |  | 37.3 |  |  | 38.5 |  |  | 41.1 |
Other adjustments (i) |  | 5.2 |  |  | 3.6 |  |  | 5.0 |
Dividends in respect of noncontrolling interest (j) |  | (1.0 | ) |  | (3.0 | ) |  | (3.0 | )
Deconsolidation and site closure related impacts (k) |  | — |  |  | 78.5 |  |  | 68.4 |
Adjusted EBITDA |  | $ | 937.2 |  |  | $ | 885.2 |  |  | $ | 902.4 |
(a) | During the years ended December 31, 2018, 2017 and 2016 we refinanced and restructured our term loans and senior notes, which resulted in losses of $9.5 million, $13.0 million and $88.0 million, respectively. In addition, during the years ended December 31, 2017 and 2016 we prepaid outstanding principal on our term loans, resulting in non-cash losses on extinguishment of $0.4 million and $9.6 million, respectively. We do not consider these items to be indicative of our ongoing operating performance.
(b) | Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. Exchange effects attributable to the remeasurement of our Venezuelan subsidiary represented losses of $1.8 million and $23.5 million for the years ended December 31, 2017 and 2016, respectively.
(c) | Eliminates the non-cash, non-service components of long-term employee benefit plans.
(d) | Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes Axalta CEO recruitment fees. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
(e) | Represents fees paid to consultants, and associated true-ups to estimates, for professional services primarily related to our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance.
(f) | Represents integration costs and associated changes to estimates related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar. We do not consider these items to be indicative of our ongoing operating performance.
(g) | Represents acquisition-related expenses, including changes in the fair value of contingent consideration, as well as $10.0 million of costs associated with contemplated merger activities during the three months ended December 31, 2017 and costs associated with the 2016 secondary offerings of our common shares by Carlyle, all of which are not considered indicative of our ongoing operating performance.
(h) | Represents non-cash costs associated with stock-based compensation.
(i) | Represents certain non-operational or non-cash gains and losses unrelated to our core business and which we do not consider indicative of ongoing operations, including indemnity losses associated with the Acquisition, gains and losses from the sale and disposal of property, plant and equipment, gains and losses from the remaining foreign currency derivative instruments and from non-cash fair value inventory adjustments associated with our business combinations.
(j) | Represents the payment of dividends to our joint venture partners by our consolidated entities that are not 100% owned, which are reflected to show the cash operating performance of these entities on Axalta's financial statements.
(k) | During the year ended December 31, 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary of $70.9 million. During the year ended December 31, 2016 we recorded non-cash impairments at our Venezuelan subsidiary of $68.4 million associated with our operational long-lived assets and a real estate investment (See Note 21). Additionally, during the year ended December 31, 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of $7.6 million. We do not consider these to be indicative of our ongoing operating performance.
Geographic Area Information: The information within the following tables provides disaggregated information related to our net sales and long-lived assets. Net sales by region were as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
North America |  | $ | 1,783.6 |  |  | $ | 1,607.7 |  |  | $ | 1,426.7 |
EMEA |  | 1,658.1 |  |  | 1,538.3 |  |  | 1,455.3 |
Asia Pacific |  | 758.2 |  |  | 748.1 |  |  | 723.9 |
Latin America (a) |  | 469.8 |  |  | 458.8 |  |  | 462.9 |
Total (b) |  | $ | 4,669.7 |  |  | $ | 4,352.9 |  |  | $ | 4,068.8 |
Net long-lived assets by region were as follows:
|  | Year Ended December 31,
|  | 2018 |  | 2017
North America |  | $ | 477.4 |  |  | $ | 457.9 |
EMEA |  | 439.1 |  |  | 507.4 |
Asia Pacific |  | 246.1 |  |  | 258.9 |
Latin America (a) |  | 135.6 |  |  | 164.4 |
Total (c) |  | $ | 1,298.2 |  |  | $ | 1,388.6 |
(a) | Includes Mexico
(b) | Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented approximately 11%, 12% and 13% of the total for the years ended December 31, 2018, 2017 and 2016, respectively. Sales to external customers in Germany represented approximately 8%, 8% and 9% of the total for the years ended December 31, 2018, 2017 and 2016, respectively. Mexico represented 6% of the total for the years ended December 31, 2018, 2017 and 2016. Canada, which is included in the North America region, represents approximately 4% of total net sales for the years ended December 31, 2018, 2017 and 2016, respectively.
(c) Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $243.6 million and $279.0 million in the years ended December 31, 2018 and 2017, respectively. China long-lived assets amounted to $203.8 million and $217.2 million in the years ended December 31, 2018 and 2017, respectively. Brazil long-lived assets amounted to approximately $58.0 million and $78.6 million in the years ended December 31, 2018 and 2017, respectively. Canada long-lived assets, which are included in the North America region, amounted to approximately $25.1 million and 25.8 million in the years ended December 31, 2018 and 2017, respectively.

X
- References No definition available. + Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
Name: | us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration