Why Specialty Chemical Company Axalta Coating Shares Are Seeing Blue Skies Today

Axalta Coating Systems Ltd. AXTA shares are trading higher after the company reported better-than-expected first-quarter results and raised guidance.

Revenue rose 0.8% Y/Y to $1.3 billion, which was in line with the consensus.

The company witnessed growth within the company’s end-markets, which was led by a 4% Y/Y improvement in both Refinish and Light Vehicle, offset partially by a decline in net sales in Industrial and Commercial Vehicle.

By segment, revenue from the Performance Coatings segment remained flat Y/Y at $848 million, and Mobility Coatings rose 2% Y/Y to $446 million in the quarter.

Adjusted EBITDA increased to $259 million from $213 million a year ago, with adjusted EBITDA margin improving 340 basis points Y/Y to 20.0%

Adjusted EPS improved 37% Y/Y to $0.48, beating the consensus of $0.40.

As of quarter end, cash and equivalents stood at $627 million. Total liquidity was over $1.1 billion. 

Repurchase: In April 2024, Axalta’s Board of Directors approved a $700 million share repurchase program, which replaces the prior share repurchase program.  

Outlook: The company expects Q2 adjusted EPS of ~$0.50 (vs. consensus: $0.47), net sales growth of 3%-5% Y/Y, and adjusted EBITDA of ~$275 million.

For FY24, Axalta Coating raised its adjusted EPS outlook to $1.90-$2.00 (from $1.80-$1.95 prior) versus the consensus of $1.89.

The company still sees FY24 sales growth in low single digits Y/Y and revised adjusted EBITDA forecast to $1.050 billion – $1.080 billion.

Chris Villavarayan, CEO and President, said, “We are executing well and I am confident in our trajectory this year as we target record earnings for the second consecutive year. We also remain focused on driving strategic actions intended to accelerate long-term value creation and unlock earnings power. As a result, we are raising our full year 2024 Adjusted EBITDA, Adjusted EPS, and Free Cash Flow guidance.”

Investors can gain exposure to the stock via ProShares Smart Materials ETF TINT.

Price Action: AXTA shares are up 7.63% at $33.84 at the last check Wednesday.

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