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Segments | 9 Months Ended
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Sep. 30, 2019
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. During the nine months ended September 30, 2019, Axalta transitioned to using Adjusted EBIT as the primary measure to evaluate financial performance of the operating segments and allocate resources. Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Net sales (1): |  |  |  |  |  |  |  |
Refinish |  | $ | 441.5 |  |  | $ | 441.3 |  |  | $ | 1,294.3 |  |  | $ | 1,303.9 |
Industrial |  | 282.2 |  |  | 314.9 |  |  | 899.4 |  |  | 969.3 |
Total Net sales Performance Coatings |  | 723.7 |  |  | 756.2 |  |  | 2,193.7 |  |  | 2,273.2 |
Light Vehicle |  | 295.7 |  |  | 303.7 |  |  | 917.7 |  |  | 990.2 |
Commercial Vehicle |  | 87.6 |  |  | 86.1 |  |  | 272.4 |  |  | 266.8 |
Total Net sales Transportation Coatings |  | 383.3 |  |  | 389.8 |  |  | 1,190.1 |  |  | 1,257.0 |
Total Net sales |  | $ | 1,107.0 |  |  | $ | 1,146.0 |  |  | $ | 3,383.8 |  |  | $ | 3,530.2 |
Equity in earnings in unconsolidated affiliates: |  |  |  |  |  |  |  |
Performance Coatings |  | $ | 0.2 |  |  | $ | 0.2 |  |  | $ | 0.4 |  |  | $ | 0.3 |
Transportation Coatings |  | (0.1 | ) |  | — |  |  | (0.1 | ) |  | 0.3 |
Total |  | $ | 0.1 |  |  | $ | 0.2 |  |  | $ | 0.3 |  |  | $ | 0.6 |
|  |  |  |  |  | September 30, 2019 |  | December 31, 2018
Investment in unconsolidated affiliates: |  |  |  |  |  |  |  |
Performance Coatings |  |  |  |  |  | $ | 2.3 |  |  | $ | 2.7 |
Transportation Coatings |  |  |  |  |  | 12.5 |  |  | 12.7 |
Total |  |  |  |  |  | $ | 14.8 |  |  | $ | 15.4 |
(1) | The Company has no intercompany sales between segments.
(2) | Net sales by segment for the three and nine months ended September 30, 2018 were recast to include amounts previously classified as other revenue. See Note 1 for further information on the reclassification.
The following table reconciles our segment operating performance to income before income taxes for the periods presented:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Segment Adjusted EBIT (1): |  |  |  |  |  |  |  |
Performance Coatings |  | $ | 124.9 |  |  | $ | 104.1 |  |  | $ | 331.1 |  |  | $ | 289.0 |
Transportation Coatings |  | 37.2 |  |  | 25.6 |  |  | 111.8 |  |  | 108.9 |
Total (2) |  | 162.1 |  |  | 129.7 |  |  | 442.9 |  |  | 397.9 |
Interest expense, net |  | 40.2 |  |  | 39.8 |  |  | 122.5 |  |  | 118.5 |
Debt extinguishment and refinancing related costs (a) |  | — |  |  | — |  |  | 0.2 |  |  | 8.4 |
Termination benefits and other employee related costs (b) |  | 29.2 |  |  | 82.4 |  |  | 33.3 |  |  | 80.2 |
Consulting and advisory (c) |  | 3.0 |  |  | — |  |  | 3.8 |  |  | — |
Offering and transactional costs (d) |  | 0.1 |  |  | 0.8 |  |  | 0.9 |  |  | 0.9 |
(Gain) loss on divestiture (e) |  | (0.5 | ) |  | — |  |  | 3.4 |  |  | — |
Accelerated depreciation (f) |  | 5.4 |  |  | 4.2 |  |  | 18.2 |  |  | 4.2 |
Indemnity (income) losses (g) |  | — |  |  | — |  |  | (0.2 | ) |  | 0.9 |
Change in fair value of equity investments (h) |  | — |  |  | — |  |  | — |  |  | 0.4 |
Income before income taxes |  | $ | 84.7 |  |  | $ | 2.5 |  |  | $ | 260.8 |  |  | $ | 184.4 |
(1) | The primary measure of segment operating performance is Adjusted EBIT, which is defined as net income before interest, taxes and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, 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 EBIT 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 Adjusted EBIT adjusted for the select items referred to above.
(2) | Does not represent Axalta’s Adjusted EBIT referenced elsewhere by the Company.
(a) | Represents expenses associated with the restructuring and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.
(b) | Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
(c) | Represents legal and advisory fees pertaining to our previously announced comprehensive review of strategic alternatives. These amounts are not considered indicative of our ongoing performance.
(d) | Represents acquisition and divestiture-related expenses, all of which are not considered indicative of our ongoing operating performance.
(e) | Represents the impacts recognized on the sale of our interest in a joint venture business, which is not considered indicative of our ongoing operating performance.
(f) | Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.
(g) | Represents indemnity (income) losses associated with the acquisition by Axalta of the DuPont Performance Coatings business, which we do not consider indicative of our ongoing operating performance.
(h) | Represents mark to market impacts of our equity investments, which we do not consider to be indicative of our ongoing operating performance.

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- 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
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