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Axalta (AXTA) Earnings Lag Estimates, Revenues Beat in Q4

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Axalta Coating Systems Ltd. AXTA posted earnings (as reported) of 23 cents per share in fourth-quarter 2021 compared with 30 cents in the year-ago quarter.

Barring one-time items, earnings were 30 cents per share in the reported quarter. It missed the Zacks Consensus Estimate of 31 cents.

The company’s revenues rose 5.8% year over year to $1,137.2 million in the quarter. The top line beat the Zacks Consensus Estimate of $1,136.8 million. Gains in the Performance Coatings unit were partly offset by a decline in Mobility Coatings due to continued OEM production constraints from semiconductor chip and other supply chain shortages. The company also benefited from higher average price and product mix. However, it faced headwinds from limitations in the availability for major raw materials.

Axalta Coating Systems Ltd. Price, Consensus and EPS Surprise

Axalta Coating Systems Ltd. Price, Consensus and EPS Surprise
Axalta Coating Systems Ltd. Price, Consensus and EPS Surprise

Axalta Coating Systems Ltd. price-consensus-eps-surprise-chart | Axalta Coating Systems Ltd. Quote

Segment Review

Sales from the Performance Coatings unit rose 14.2% year-over-year to $804 million in the reported quarter, aided by price and product mix benefit, higher volumes and contributions from mergers and acquisitions. Refinish net sales went up 12.8% year-over-year to $470.9 million as volumes increased on the back of strong customer demand. Industrial net sales rose 16.3% to $333.1 million, supported by volume growth and higher average price and product mix.

The Mobility Coatings unit recorded sales of $333.2 million in the fourth quarter, down 10.1% year over year, hurt by lower volumes due to significant customer supply constraint impacts. Light Vehicle net sales fell 14.4% to $254.9 million on sustained customer supply limitations. Commercial Vehicle net sales rose 7.6% to $78.3 million, aided by the stability in global production rate and strong global demand across most vehicle end-businesses served, particularly in truck and recreational vehicle.

FY21 Results

Earnings for full-year 2021 were $1.14 per share compared with 52 cents per share a year ago. Net sales went up 18.2% year over year to $4,416.2 million.

Financials

Axalta ended 2021 with cash and cash equivalents of $840.6 million, down 38.2% year over year. Long-term debt was $3,749.9 million at the end of the year, down 2.3%.

The company generated cash flow from operations of $558.6 million in 2021, up 9.7% year over year. It repurchased 1 million shares of its common stock during the fourth quarter for $30 million. It also bought back shares worth $243.7 million in 2021.

Outlook

The company expects adjusted earnings per share of 22-29 cents for the first quarter of 2022. It also sees net sales to increase around 5% in the quarter.

For full-year 2022, Axalta envisions growth in Performance Coatings from continued Refinish recovery and sustained strong organic growth within Industrial Coatings. It also expects an improvement in global auto production and growth in Mobility Coatings to be solidly ahead of global production levels.

The company also anticipates raw material inflation at low double digits in 2022. It expects price-mix to offset cumulative raw material inflation.

Axalta also sees year-over-year growth in adjusted EBIT in 2022 on strong volumes and higher pricing, partly offset by inflationary pressure, which is expected to moderate in the second half of the year.

Price Performance

Shares of Axalta have gained 7.6% in a year, outperforming the industry’s decline of 11.4%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Other Key Picks

Axalta currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks worth considering in the basic materials space include Commercial Metals Company CMC, Albemarle Corporation ALB and AdvanSix Inc. ASIX.

Commercial Metals, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 39.5% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has rallied around 64% in a year.

Albemarle, carrying a Zacks Rank #1, has an expected earnings growth rate of 51.3% for the current year. ALB's consensus estimate for the current year has been revised 5.4% upward over the past 60 days.

Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB shares have gained around 30% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 5.3% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 82% in a year.


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