XML 40 R25.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Segments
 3 Months Ended
Mar. 31, 2024
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 Mobility 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 both large regional and global original equipment manufacturers ("OEMs") and to a fragmented and local customer base. These customers comprise independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. 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 Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle OEMs. These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. The OEMs require efficient, 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.
Adjusted EBITDA is the primary measure used by our CODM to evaluate financial performance of the operating segments and allocate resources and is therefore our measure of segment profitability in accordance with GAAP under ASC 280, Segment Reporting. Asset information is not reviewed or included with our internal management reporting. Therefore, we have not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
Three Months Ended
March 31,
20242023
Net sales (1):
Refinish$519 $498 
Industrial329 349 
Total Net sales Performance Coatings848 847 
Light Vehicle342 329 
Commercial Vehicle104 108 
Total Net sales Mobility Coatings446 437 
Total Net sales$1,294 $1,284 
(1)The Company has no intercompany sales between segments.
The following table reconciles our segment operating performance to income before income taxes for the periods presented:
Three Months Ended
March 31,
20242023
Segment Adjusted EBITDA (1):
Performance Coatings$196 $169 
Mobility Coatings63 44 
Total259 213 
Interest expense, net54 48 
Depreciation and amortization68 70 
Debt extinguishment and refinancing-related costs (a)
3 2 
Termination benefits and other employee-related costs (b)
55 — 
Acquisition and divestiture-related costs (c)
2 1 
Impairment charges (d)
— 7 
Foreign exchange remeasurement losses (e)
5 2 
Long-term employee benefit plan adjustments (f)
3 2 
Stock-based compensation (g)
6 6 
Environmental charge (h)
4 — 
Other adjustments (i)
— (1)
Income before income taxes$59 $76 
(1)The primary measure of segment operating performance is Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation, amortization 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 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 Adjusted EBITDA adjusted for the select items referred to above.
(a)Represents expenses and associated changes to estimates related to the prepayment, 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, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. These amounts are not considered indicative of our ongoing operating performance.
(c)Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance.
(d)Represents impairment charges, which are not considered indicative of our ongoing operating performance. The amount recorded during the three months ended March 31, 2023 relates to a loss recorded due to the then anticipated exit of a non-core business category in the Mobility Coatings segment.
(e)Represents foreign exchange 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.
(f)Represents the non-cash, non-service cost components of long-term employee benefit costs.
(g)Represents non-cash impacts associated with stock-based compensation.
(h)Represents costs related to certain environmental remediation activities, which are not considered indicative of our ongoing operating performance.
(i)Represents costs for certain non-operational or non-cash gains, unrelated to our core business and which we do not consider indicative of our ongoing operating performance.