ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda | 2851 | 98-1073028 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Common Shares, $1.00 par value | New York Stock Exchange | |||
(title of class) | (Exchange on which registered) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net sales | $ | 1,206.5 | $ | 1,088.5 | $ | 2,372.3 | $ | 2,096.3 | ||||
Other revenue | 5.7 | 6.1 | 11.9 | 12.0 | ||||||||
Total revenue | 1,212.2 | 1,094.6 | 2,384.2 | 2,108.3 | ||||||||
Cost of goods sold | 793.8 | 690.0 | 1,569.8 | 1,331.4 | ||||||||
Selling, general and administrative expenses | 224.6 | 246.0 | 452.4 | 470.6 | ||||||||
Venezuela deconsolidation charge | — | 70.9 | — | 70.9 | ||||||||
Research and development expenses | 18.0 | 16.4 | 37.3 | 32.0 | ||||||||
Amortization of acquired intangibles | 29.3 | 23.8 | 58.2 | 45.5 | ||||||||
Income from operations | 146.5 | 47.5 | 266.5 | 157.9 | ||||||||
Interest expense, net | 39.3 | 35.6 | 78.7 | 71.4 | ||||||||
Other expense, net | 8.1 | 21.3 | 5.9 | 20.1 | ||||||||
Income (loss) before income taxes | 99.1 | (9.4 | ) | 181.9 | 66.4 | |||||||
Provision for income taxes | 22.0 | 9.5 | 33.8 | 19.4 | ||||||||
Net income (loss) | 77.1 | (18.9 | ) | 148.1 | 47.0 | |||||||
Less: Net income attributable to noncontrolling interests | 2.2 | 1.9 | 3.3 | 3.7 | ||||||||
Net income (loss) attributable to controlling interests | $ | 74.9 | $ | (20.8 | ) | $ | 144.8 | $ | 43.3 | |||
Basic net income (loss) per share | $ | 0.31 | $ | (0.09 | ) | $ | 0.60 | $ | 0.18 | |||
Diluted net income (loss) per share | $ | 0.31 | $ | (0.09 | ) | $ | 0.59 | $ | 0.18 | |||
Basic weighted average shares outstanding | 240.3 | 240.9 | 240.6 | 240.4 | ||||||||
Diluted weighted average shares outstanding | 244.6 | 240.9 | 245.2 | 246.5 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net income (loss) | $ | 77.1 | $ | (18.9 | ) | $ | 148.1 | $ | 47.0 | |||
Other comprehensive income (loss), before tax: | ||||||||||||
Foreign currency translation adjustments | (112.4 | ) | 27.2 | (69.3 | ) | 67.8 | ||||||
Unrealized (loss) on securities | — | (0.3 | ) | — | (0.3 | ) | ||||||
Unrealized gain (loss) on derivatives | 4.7 | (1.9 | ) | 12.6 | (1.3 | ) | ||||||
Unrealized gain (loss) on pension plan obligations | (1.6 | ) | 8.8 | (1.3 | ) | 9.3 | ||||||
Other comprehensive income (loss), before tax | (109.3 | ) | 33.8 | (58.0 | ) | 75.5 | ||||||
Income tax provision related to items of other comprehensive income (loss) | 0.4 | 2.4 | 1.7 | 2.6 | ||||||||
Other comprehensive income (loss), net of tax | (109.7 | ) | 31.4 | (59.7 | ) | 72.9 | ||||||
Comprehensive income (loss) | (32.6 | ) | 12.5 | 88.4 | 119.9 | |||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | (0.6 | ) | 2.0 | 1.4 | 4.7 | |||||||
Comprehensive income (loss) attributable to controlling interests | $ | (32.0 | ) | $ | 10.5 | $ | 87.0 | $ | 115.2 |
June 30, 2018 | December 31, 2017 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 551.1 | $ | 769.8 | ||
Restricted cash | 2.7 | 3.1 | ||||
Accounts and notes receivable, net | 974.5 | 870.2 | ||||
Inventories | 599.9 | 608.6 | ||||
Prepaid expenses and other | 129.5 | 63.9 | ||||
Total current assets | 2,257.7 | 2,315.6 | ||||
Property, plant and equipment, net | 1,340.3 | 1,388.6 | ||||
Goodwill | 1,241.6 | 1,271.2 | ||||
Identifiable intangibles, net | 1,409.1 | 1,428.2 | ||||
Other assets | 447.5 | 428.6 | ||||
Total assets | $ | 6,696.2 | $ | 6,832.2 | ||
Liabilities, Shareholders’ Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 537.7 | $ | 554.9 | ||
Current portion of borrowings | 39.9 | 37.7 | ||||
Other accrued liabilities | 416.3 | 489.6 | ||||
Total current liabilities | 993.9 | 1,082.2 | ||||
Long-term borrowings | 3,842.2 | 3,877.9 | ||||
Accrued pensions | 267.7 | 279.1 | ||||
Deferred income taxes | 155.9 | 152.9 | ||||
Other liabilities | 30.6 | 32.3 | ||||
Total liabilities | 5,290.3 | 5,424.4 | ||||
Commitments and contingencies (Note 7) | ||||||
Shareholders’ equity | ||||||
Common shares, $1.00 par, 1,000.0 shares authorized, 246.0 and 243.9 shares issued at June 30, 2018 and December 31, 2017, respectively | 244.5 | 242.4 | ||||
Capital in excess of par | 1,384.5 | 1,354.5 | ||||
Retained earnings (Accumulated deficit) | 136.3 | (21.4 | ) | |||
Treasury shares, at cost 5.4 and 2.0 shares at June 30, 2018 and December 31, 2017 | (162.2 | ) | (58.4 | ) | ||
Accumulated other comprehensive loss | (299.6 | ) | (241.0 | ) | ||
Total Axalta shareholders’ equity | 1,303.5 | 1,276.1 | ||||
Noncontrolling interests | 102.4 | 131.7 | ||||
Total shareholders’ equity | 1,405.9 | 1,407.8 | ||||
Total liabilities and shareholders’ equity | $ | 6,696.2 | $ | 6,832.2 |
Six Months Ended June 30, | ||||||
2018 | 2017 | |||||
Operating activities: | ||||||
Net income | $ | 148.1 | $ | 47.0 | ||
Adjustment to reconcile net income to cash used for operating activities: | ||||||
Depreciation and amortization | 182.1 | 167.3 | ||||
Amortization of deferred financing costs and original issue discount | 3.9 | 4.2 | ||||
Debt extinguishment and refinancing related costs | 8.4 | 12.4 | ||||
Deferred income taxes | 4.0 | (12.9 | ) | |||
Realized and unrealized foreign exchange (gains) losses, net | 6.1 | (2.4 | ) | |||
Stock-based compensation | 18.1 | 21.3 | ||||
Asset impairments | — | 3.2 | ||||
Loss on deconsolidation of Venezuela | — | 70.9 | ||||
Other non-cash, net | 3.5 | 2.8 | ||||
Changes in operating assets and liabilities: | ||||||
Trade accounts and notes receivable | (133.5 | ) | (128.9 | ) | ||
Inventories | (31.8 | ) | (5.1 | ) | ||
Prepaid expenses and other | (59.7 | ) | (60.9 | ) | ||
Accounts payable | 37.0 | (6.3 | ) | |||
Other accrued liabilities | (60.6 | ) | (13.4 | ) | ||
Other liabilities | (4.6 | ) | (5.1 | ) | ||
Cash provided by operating activities | 121.0 | 94.1 | ||||
Investing activities: | ||||||
Acquisitions | (78.2 | ) | (533.3 | ) | ||
Investment in non-controlling interest | (26.9 | ) | — | |||
Purchase of property, plant and equipment | (74.6 | ) | (57.4 | ) | ||
Reduction of cash due to Venezuela deconsolidation | — | (4.3 | ) | |||
Other investing activities | 5.3 | (0.3 | ) | |||
Cash used for investing activities | (174.4 | ) | (595.3 | ) | ||
Financing activities: | ||||||
Proceeds from long-term borrowings | 468.9 | 456.4 | ||||
Payments on short-term borrowings | (23.0 | ) | (4.4 | ) | ||
Payments on long-term borrowings | (498.5 | ) | (6.1 | ) | ||
Financing-related costs | (4.5 | ) | (8.9 | ) | ||
Dividends paid to noncontrolling interests | (1.0 | ) | (0.9 | ) | ||
Purchase of treasury stock | (103.8 | ) | (8.3 | ) | ||
Proceeds from option exercises | 10.5 | 12.9 | ||||
Deferred acquisition-related consideration | (5.9 | ) | (3.4 | ) | ||
Cash provided by (used for) financing activities | (157.3 | ) | 437.3 | |||
Decrease in cash | (210.7 | ) | (63.9 | ) | ||
Effect of exchange rate changes on cash | (8.4 | ) | 10.8 | |||
Cash at beginning of period | 772.9 | 538.1 | ||||
Cash at end of period | $ | 553.8 | $ | 485.0 | ||
Cash at end of period reconciliation: | ||||||
Cash and cash equivalents | $ | 551.1 | $ | 482.1 | ||
Restricted cash | 2.7 | 2.9 | ||||
Cash at end of period | $ | 553.8 | $ | 485.0 |
December 31, 2017 | Adjustments due to ASU 2014-09 | January 1, 2018 | |||||||
Assets | |||||||||
Inventories | $ | 608.6 | $ | (22.7 | ) | $ | 585.9 | ||
Prepaid expenses and other (1) | 63.9 | 41.7 | 105.6 | ||||||
Other assets (2) | 428.6 | (1.9 | ) | 426.7 | |||||
Liabilities | |||||||||
Other accrued liabilities (3) | $ | 489.6 | $ | 1.9 | $ | 491.5 | |||
Deferred income taxes | 152.9 | 3.0 | 155.9 | ||||||
Equity | |||||||||
Accumulated deficit | $ | (21.4 | ) | $ | 12.1 | $ | (9.3 | ) | |
Noncontrolling interests | 131.7 | 0.1 | 131.8 |
(1) | Includes the impact to contract assets resulting from the modified retrospective adoption of the new revenue standard. |
(2) | Includes the impacts to deferred income taxes resulting from the modified retrospective adoption of the new revenue standard. |
(3) | Includes the impacts of estimated variable consideration on certain arrangements in our refinish end-market. |
For the three months ended June 30, 2018 | |||||||||
As reported | Prior to ASU 2014-09 | Increases / (Decreases) | |||||||
Net sales | $ | 1,206.5 | $ | 1,208.1 | $ | (1.6 | ) | ||
Cost of goods sold | 793.8 | 779.2 | 14.6 | ||||||
Selling, general and administrative expenses | 224.6 | 239.3 | (14.7 | ) | |||||
Provision for income taxes | 22.0 | 22.2 | (0.2 | ) | |||||
Net income | 77.1 | 78.4 | (1.3 | ) | |||||
Less: Net income attributable to noncontrolling interests | 2.2 | 2.2 | — | ||||||
Net income attributable to controlling interests | $ | 74.9 | $ | 76.2 | $ | (1.3 | ) |
For the six months ended June 30, 2018 | |||||||||
As reported | Prior to ASU 2014-09 | Increases / (Decreases) | |||||||
Net sales | $ | 2,372.3 | $ | 2,368.1 | $ | 4.2 | |||
Cost of goods sold | 1,569.8 | 1,539.2 | 30.6 | ||||||
Selling, general and administrative expenses | 452.4 | 480.8 | (28.4 | ) | |||||
Provision for income taxes | 33.8 | 33.4 | 0.4 | ||||||
Net income | 148.1 | 146.5 | 1.6 | ||||||
Less: Net income attributable to noncontrolling interests | 3.3 | 3.1 | 0.2 | ||||||
Net income attributable to controlling interests | $ | 144.8 | $ | 143.4 | $ | 1.4 |
At June 30, 2018 | |||||||||
As reported | Prior to ASU 2014-09 | Increases / (Decreases) | |||||||
Assets | |||||||||
Inventories | $ | 599.9 | $ | 623.9 | $ | (24.0 | ) | ||
Prepaid expenses and other | 129.5 | 85.0 | 44.5 | ||||||
Other assets | 447.5 | 449.9 | (2.4 | ) | |||||
Liabilities | |||||||||
Other accrued liabilities | $ | 416.3 | $ | 414.4 | $ | 1.9 | |||
Deferred income taxes | 155.9 | 153.1 | 2.8 | ||||||
Equity | |||||||||
Retained earnings | $ | 136.3 | $ | 122.8 | $ | 13.5 | |||
Accumulated other comprehensive loss | (299.6 | ) | (299.2 | ) | (0.4 | ) | |||
Noncontrolling interests | 102.4 | 102.1 | 0.3 |
• | Refinish - We develop, market and supply a complete portfolio of innovative coatings systems and color matching technologies to facilitate faster automotive collision repairs relative to competing technologies. Our refinish products and systems include a range of coatings layers required to match the vehicle’s color and appearance, producing a repair surface indistinguishable from the adjacent surface. |
• | Industrial - The industrial end-market is comprised of liquid and powder coatings used in a broad array of end-market applications. We are also a leading global developer, manufacturer and supplier of functional and decorative liquid and powder coatings for a large number of diversified applications in the industrial end-market. We provide a full portfolio of products for applications including architectural cladding and fittings, automotive coatings, general industrial, job coaters, electrical insulation coatings, HVAC, appliances, industrial wood, coil, rebar and oil & gas pipelines. |
• | Light Vehicle - Light vehicle original equipment manufacturers ("OEMs") select coatings providers on the basis of their global ability to deliver advanced technological solutions that improve exterior appearance and durability and provide long-term corrosion protection. Customers also look for suppliers that can enhance process efficiency to reduce overall manufacturing costs and provide on-site technical support. |
• | Commercial Vehicle - Sales in the commercial vehicle end-market are generated from a variety of applications including non-automotive transportation (e.g., heavy duty truck, bus and rail) and Agricultural, Construction and Earthmoving, as well as related markets such as trailers, recreational vehicles and personal sport vehicles. This end-market is primarily driven by global commercial vehicle production, which is influenced by overall economic activity, government infrastructure spending, equipment replacement cycles and evolving environmental standards. Commercial vehicle OEMs select coatings providers on the basis of their ability to consistently deliver advanced technological solutions that improve exterior appearance, protection and durability and provide extensive color libraries and matching capabilities at the lowest total cost-in-use, while meeting stringent environmental requirements. |
June 1, 2017 (As Initially Reported) | Measurement Period Adjustments | June 1, 2017 (As Adjusted) | |||||||
Accounts and notes receivable—trade | $ | 23.3 | $ | — | $ | 23.3 | |||
Inventories | 24.9 | (0.2 | ) | 24.7 | |||||
Prepaid expenses and other | 0.2 | — | 0.2 | ||||||
Property, plant and equipment | 23.0 | 0.1 | 23.1 | ||||||
Identifiable intangibles | 254.2 | 4.9 | 259.1 | ||||||
Accounts payable | (22.4 | ) | 0.2 | (22.2 | ) | ||||
Other accrued liabilities | (5.1 | ) | 0.4 | (4.7 | ) | ||||
Net assets acquired before goodwill on acquisition | 298.1 | 5.4 | 303.5 | ||||||
Goodwill on acquisition | 132.6 | (5.8 | ) | 126.8 | |||||
Net assets acquired | $ | 430.7 | $ | (0.4 | ) | $ | 430.3 |
For the six months ended | |||
(in millions, except per share data) | June 30, 2017 | ||
Net sales | $ | 2,197.6 | |
Net income | 53.8 | ||
Net income attributable to controlling interests | 50.1 | ||
Net income per share (Basic) | 0.21 | ||
Net income per share (Diluted) | 0.20 |
Performance Coatings | Transportation Coatings | Total | |||||||
December 31, 2017 | $ | 1,189.2 | $ | 82.0 | $ | 1,271.2 | |||
Purchase accounting adjustments | (0.2 | ) | — | (0.2 | ) | ||||
Foreign currency translation | (27.5 | ) | (1.9 | ) | (29.4 | ) | |||
June 30, 2018 | $ | 1,161.5 | $ | 80.1 | $ | 1,241.6 |
June 30, 2018 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 548.8 | $ | (235.4 | ) | $ | 313.4 | 10.4 | ||
Trademarks - indefinite-lived | 270.9 | — | 270.9 | Indefinite | ||||||
Trademarks - definite-lived | 101.4 | (20.8 | ) | 80.6 | 15.8 | |||||
Customer relationships | 930.8 | (198.6 | ) | 732.2 | 19.1 | |||||
Other | 17.2 | (5.2 | ) | 12.0 | 4.8 | |||||
Total | $ | 1,869.1 | $ | (460.0 | ) | $ | 1,409.1 |
December 31, 2017 | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Weighted average amortization periods (years) | ||||||
Technology | $ | 498.0 | $ | (213.6 | ) | $ | 284.4 | 10.5 | ||
Trademarks—indefinite-lived | 277.2 | — | 277.2 | Indefinite | ||||||
Trademarks—definite-lived | 102.6 | (17.7 | ) | 84.9 | 15.9 | |||||
Customer relationships | 945.1 | (176.8 | ) | 768.3 | 19.0 | |||||
Other | 16.6 | (3.2 | ) | 13.4 | 4.8 | |||||
Total | $ | 1,839.5 | $ | (411.3 | ) | $ | 1,428.2 |
Remainder of 2018 | $ | 57.4 | |
2019 | 114.6 | ||
2020 | 114.4 | ||
2021 | 113.8 | ||
2022 | 111.5 | ||
2023 | 71.8 |
2018 Activity | |||
Balance at December 31, 2017 | $ | 71.5 | |
Changes to estimates | (1.5 | ) | |
Payments made | (34.3 | ) | |
Foreign currency translation | (0.7 | ) | |
Balance at June 30, 2018 | $ | 35.0 |
Sale-leaseback obligations | |||
Remainder of 2018 | $ | 2.6 | |
2019 | 5.3 | ||
2020 | 5.4 | ||
2021 | 5.5 | ||
2022 | 5.8 | ||
Thereafter | 83.2 | ||
Total minimum payments | $ | 107.8 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Net periodic benefit cost: | ||||||||||||
Service cost | $ | 2.2 | $ | 2.1 | $ | 4.5 | $ | 4.2 | ||||
Interest cost | 3.4 | 3.3 | 6.8 | 6.7 | ||||||||
Expected return on plan assets | (4.1 | ) | (3.5 | ) | (8.3 | ) | (7.0 | ) | ||||
Amortization of actuarial loss, net | 0.3 | 0.3 | 0.6 | 0.8 | ||||||||
Amortization of prior service credit, net | (0.1 | ) | — | (0.1 | ) | — | ||||||
Net periodic benefit cost | $ | 1.7 | $ | 2.2 | $ | 3.5 | $ | 4.7 |
Stock Options | Awards/Units (in millions) | Weighted- Average Exercise Price | Aggregate Intrinsic Value (in millions) | Weighted Average Remaining Contractual Life (years) | |||||
Outstanding at January 1, 2018 | 8.1 | $ | 16.54 | ||||||
Granted | 0.8 | 29.84 | |||||||
Exercised | (0.9 | ) | 11.58 | ||||||
Forfeited | (0.1 | ) | 28.92 | ||||||
Outstanding at June 30, 2018 | 7.9 | $ | 18.35 | ||||||
Vested and expected to vest at June 30, 2018 | 7.9 | $ | 18.35 | $ | 96.1 | 6.39 | |||
Exercisable at June 30, 2018 | 6.2 | $ | 15.66 | $ | 93.2 | 5.73 |
Restricted Stock Awards and Restricted Stock Units | Awards (millions) | Weighted-Average Fair Value | |||
Outstanding at January 1, 2018 | 1.9 | $ | 29.32 | ||
Granted | 0.6 | 30.13 | |||
Vested | (1.1 | ) | 30.17 | ||
Forfeited | — | — | |||
Outstanding at June 30, 2018 | 1.4 | $ | 29.04 |
Performance Stock Awards and Performance Share Units | Awards (millions) | Weighted-Average Fair Value | |||
Outstanding at January 1, 2018 | 0.6 | $ | 31.17 | ||
Granted | 0.3 | 33.77 | |||
Vested | — | — | |||
Forfeited | — | — | |||
Outstanding at June 30, 2018 | 0.9 | $ | 32.08 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Foreign exchange losses, net | $ | 1.7 | $ | 6.0 | $ | 1.7 | $ | 4.8 | ||||
Impairments of property | — | 3.2 | — | 3.2 | ||||||||
Debt extinguishment and refinancing related costs | 8.4 | 12.4 | 8.4 | 12.4 | ||||||||
Other miscellaneous income, net | (2.0 | ) | (0.3 | ) | (4.2 | ) | (0.3 | ) | ||||
Total | $ | 8.1 | $ | 21.3 | $ | 5.9 | $ | 20.1 |
Six Months Ended June 30, | ||||
2018 | 2017 | |||
Effective Tax Rate | 18.6 | % | 29.2 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In millions, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||
Net income (loss) to common shareholders | $ | 74.9 | $ | (20.8 | ) | $ | 144.8 | $ | 43.3 | |||
Basic weighted average shares outstanding | 240.3 | 240.9 | 240.6 | 240.4 | ||||||||
Diluted weighted average shares outstanding | 244.6 | 240.9 | 245.2 | 246.5 | ||||||||
Net income (loss) per common share: | ||||||||||||
Basic net income (loss) per share | $ | 0.31 | $ | (0.09 | ) | $ | 0.60 | $ | 0.18 | |||
Diluted net income (loss) per share | $ | 0.31 | $ | (0.09 | ) | $ | 0.59 | $ | 0.18 |
June 30, 2018 | December 31, 2017 | |||||
Accounts receivable - trade, net | $ | 861.8 | $ | 748.2 | ||
Notes receivable | 27.8 | 29.4 | ||||
Other | 84.9 | 92.6 | ||||
Total | $ | 974.5 | $ | 870.2 |
June 30, 2018 | December 31, 2017 | |||||
Finished products | $ | 321.4 | $ | 347.5 | ||
Semi-finished products | 101.3 | 95.5 | ||||
Raw materials and supplies | 177.2 | 165.6 | ||||
Total | $ | 599.9 | $ | 608.6 |
June 30, 2018 | December 31, 2017 | |||||
Property, plant and equipment | $ | 2,204.1 | $ | 2,193.6 | ||
Accumulated depreciation | (863.8 | ) | (805.0 | ) | ||
Property, plant, and equipment, net | $ | 1,340.3 | $ | 1,388.6 |
June 30, 2018 | December 31, 2017 | |||||
2024 Dollar Term Loans | $ | 2,423.9 | $ | 1,960.0 | ||
2023 Euro Term Loans | — | 472.5 | ||||
2024 Dollar Senior Notes | 500.0 | 500.0 | ||||
2024 Euro Senior Notes | 387.1 | 399.7 | ||||
2025 Euro Senior Notes | 520.0 | 536.9 | ||||
Short-term and other borrowings | 98.1 | 94.8 | ||||
Unamortized original issue discount | (13.7 | ) | (9.1 | ) | ||
Unamortized deferred financing costs | (33.3 | ) | (39.2 | ) | ||
$ | 3,882.1 | $ | 3,915.6 | |||
Less: | ||||||
Short-term borrowings | $ | 15.6 | $ | 12.9 | ||
Current portion of long-term borrowings | 24.3 | 24.8 | ||||
Long-term debt | $ | 3,842.2 | $ | 3,877.9 |
Period | 2024 Dollar Senior Notes Percentage | |
2019 | 103.656 | % |
2020 | 102.438 | % |
2021 | 101.219 | % |
2022 and thereafter | 100.000 | % |
Period | 2024 Euro Senior Notes Percentage | |
2019 | 103.188 | % |
2020 | 102.125 | % |
2021 | 101.063 | % |
2022 and thereafter | 100.000 | % |
Period | 2025 Euro Senior Notes Percentage | |
2020 | 102.813 | % |
2021 | 101.875 | % |
2022 | 100.938 | % |
2023 and thereafter | 100.000 | % |
Remainder of 2018 | $ | 28.4 | |
2019 | 26.1 | ||
2020 | 25.2 | ||
2021 | 25.2 | ||
2022 | 52.0 | ||
Thereafter | 3,756.6 | ||
$ | 3,913.5 |
June 30, 2018 | December 31, 2017 | |||||
Prepaid expenses and other: | ||||||
Interest rate caps (cash flow hedges) | $ | 3.2 | $ | — | ||
Cross-currency swaps (net investment hedges) | 12.2 | — | ||||
Other assets: | ||||||
Interest rate caps (cash flow hedges) | 6.6 | 1.2 | ||||
Interest rate swaps (cash flow hedges) | 3.7 | — | ||||
Cross-currency swaps (net investment hedges) | 8.9 | — | ||||
Total assets | $ | 34.6 | $ | 1.2 | ||
Other accrued liabilities: | ||||||
Interest rate caps (cash flow hedges) | $ | — | $ | 2.6 | ||
Interest rate swaps (cash flow hedges) | 0.7 | — | ||||
Total liabilities | $ | 0.7 | $ | 2.6 |
For the Three Months Ended June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of (Gain) Loss Reclassified from AOCI into Income | Net Amount of (Gain) Loss Recognized in OCI on Derivatives | Amount of (Gain) Loss Reclassified from AOCI to Income | Net Amount of (Gain) Loss Recognized in OCI on Derivatives | Amount of (Gain) Loss Reclassified from AOCI to Income | ||||||||
Interest rate caps | Interest expense, net | $ | (2.4 | ) | $ | (0.8 | ) | $ | 2.2 | $ | 0.6 | ||
Interest rate swaps | Interest expense, net | (2.5 | ) | 0.4 | — | — | |||||||
Cross-currency swaps | Interest expense, net | (23.9 | ) | 2.9 | — | — |
For the Six Months Ended June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Derivatives in Cash Flow and Net Investment Hedges | Location of (Gain) Loss Reclassified from AOCI into Income | Net Amount of (Gain) Loss Recognized in OCI on Derivatives | Amount of (Gain) Loss Reclassified from AOCI to Income | Net Amount of (Gain) Loss Recognized in OCI on Derivatives | Amount of (Gain) Loss Reclassified from AOCI to Income | ||||||||
Interest rate caps | Interest expense, net | $ | (10.4 | ) | $ | (0.7 | ) | $ | 3.7 | $ | 2.7 | ||
Interest rate swaps | Interest expense, net | (2.5 | ) | 0.4 | — | — | |||||||
Cross-currency swaps | Interest expense, net | (23.9 | ) | 2.9 | — | — |
June 30, 2018 | December 31, 2017 | |||||
Prepaid expenses and other: | ||||||
Foreign currency forward contracts | $ | 0.2 | $ | — | ||
Total assets | $ | 0.2 | $ | — | ||
Other accrued liabilities: | ||||||
Foreign currency forward contracts | $ | — | $ | 0.7 | ||
Total liabilities | $ | — | $ | 0.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
Derivatives Not Designated as Hedging Instruments under ASC 815 | Location of (Gain) Loss Recognized in Income on Derivatives | 2018 | 2017 | 2018 | 2017 | ||||||||
Interest rate caps | Interest expense, net | $ | — | $ | 0.1 | $ | — | $ | 0.4 | ||||
Foreign currency forward contracts | Other expense, net | (6.0 | ) | 4.8 | (4.6 | ) | 7.2 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Performance Coatings | ||||||||||||
Refinish | $ | 447.1 | $ | 421.2 | $ | 859.7 | $ | 809.8 | ||||
Industrial | 337.4 | 241.7 | 653.5 | 439.5 | ||||||||
Total Net sales Performance Coatings | 784.5 | 662.9 | 1,513.2 | 1,249.3 | ||||||||
Transportation Coatings | ||||||||||||
Light Vehicle | 329.4 | 334.3 | 678.9 | 674.3 | ||||||||
Commercial Vehicle | 92.6 | 91.3 | 180.2 | 172.7 | ||||||||
Total Net sales Transportation Coatings | 422.0 | 425.6 | 859.1 | 847.0 | ||||||||
Total Net sales | $ | 1,206.5 | $ | 1,088.5 | $ | 2,372.3 | $ | 2,096.3 |
Three Months Ended June 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 784.5 | $ | 422.0 | $ | 1,206.5 | $ | 662.9 | $ | 425.6 | $ | 1,088.5 | ||||||
Equity in earnings in unconsolidated affiliates | — | 0.4 | 0.4 | 0.1 | 0.1 | 0.2 | ||||||||||||
Adjusted EBITDA (2) | 176.5 | 71.1 | 247.6 | 146.8 | 80.4 | 227.2 | ||||||||||||
Investment in unconsolidated affiliates | 3.0 | 13.2 | 16.2 | 3.0 | 11.8 | 14.8 |
Six Months Ended June 30, | ||||||||||||||||||
2018 | 2017 | |||||||||||||||||
Performance Coatings | Transportation Coatings | Total | Performance Coatings | Transportation Coatings | Total | |||||||||||||
Net sales (1) | $ | 1,513.2 | $ | 859.1 | $ | 2,372.3 | $ | 1,249.3 | $ | 847.0 | $ | 2,096.3 | ||||||
Equity in earnings in unconsolidated affiliates | 0.1 | 0.3 | 0.4 | 0.2 | 0.2 | 0.4 | ||||||||||||
Adjusted EBITDA (2) | 319.7 | 147.9 | 467.6 | 263.7 | 166.6 | 430.3 | ||||||||||||
Investment in unconsolidated affiliates | 3.0 | 13.2 | 16.2 | 3.0 | 11.8 | 14.8 |
(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 (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 EBITDA adjusted for the select items referred to above. Reconciliation of Adjusted EBITDA to income before income taxes follows: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Income (loss) before income taxes | $ | 99.1 | $ | (9.4 | ) | $ | 181.9 | $ | 66.4 | |||
Interest expense, net | 39.3 | 35.6 | 78.7 | 71.4 | ||||||||
Depreciation and amortization | 90.2 | 84.9 | 182.1 | 167.3 | ||||||||
EBITDA | 228.6 | 111.1 | 442.7 | 305.1 | ||||||||
Debt extinguishment and refinancing related costs (a) | 8.4 | 12.4 | 8.4 | 12.4 | ||||||||
Foreign exchange remeasurement losses (b) | 1.7 | 6.0 | 1.7 | 4.8 | ||||||||
Long-term employee benefit plan adjustments (c) | (0.5 | ) | 0.1 | (1.0 | ) | 0.5 | ||||||
Termination benefits and other employee related costs (d) | (0.9 | ) | — | (2.2 | ) | 0.8 | ||||||
Consulting and advisory fees (e) | — | — | — | (0.1 | ) | |||||||
Transition-related costs (f) | — | 3.9 | (0.2 | ) | 3.9 | |||||||
Offering and transactional costs (g) | 0.1 | 6.6 | 0.3 | 5.6 | ||||||||
Stock-based compensation (h) | 9.7 | 10.9 | 18.1 | 21.3 | ||||||||
Other adjustments (i) | 0.5 | 2.6 | 0.8 | 2.8 | ||||||||
Dividends in respect of noncontrolling interest (j) | — | (0.5 | ) | (1.0 | ) | (0.9 | ) | |||||
Deconsolidation impacts and impairments (k) | — | 74.1 | — | 74.1 | ||||||||
Adjusted EBITDA | $ | 247.6 | $ | 227.2 | $ | 467.6 | $ | 430.3 |
(a) | During both the three and six months ended June 30, 2018 and 2017 we refinanced our term loans, which resulted in losses of $8.4 million and $12.4 million, respectively. We do not consider these to be indicative of our ongoing operating performance. |
(b) | Eliminates 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. |
(c) | Eliminates the non-cash, non-service cost components of long-term employee benefit costs. |
(d) | Represents expenses and associated changes to estimates primarily related to employee termination benefits and other employee-related costs associated with our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance. |
(e) | Represents expenses and associated changes 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. These amounts are not considered indicative of our ongoing operating performance. |
(g) | Represents acquisition-related expenses, including changes in the fair value of contingent consideration, 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 by Axalta of the DuPont Performance Coatings business, gains and losses from the sale and disposal of property, plant and equipment, 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 the entities on Axalta's financial statements. |
(k) | In conjunction with the deconsolidation of our Venezuelan subsidiary during the three and six months ended June 30, 2017, we recorded a loss on deconsolidation of $70.9 million. During the three and six months ended June 30, 2017 we recorded non-cash impairment charges related to a manufacturing facility previously announced for closure of $3.2 million. We do not consider these to be indicative of our ongoing operating performance. |
Total Axalta | Noncontrolling Interests | Total | |||||||
Balance at December 31, 2017 | $ | 1,276.1 | $ | 131.7 | $ | 1,407.8 | |||
Cumulative effect of an accounting change | 12.1 | 0.1 | 12.2 | ||||||
Balance at January 1, 2018 | $ | 1,288.2 | $ | 131.8 | $ | 1,420.0 | |||
Net income | 144.8 | 3.3 | 148.1 | ||||||
Other comprehensive loss, net of tax | (57.8 | ) | (1.9 | ) | (59.7 | ) | |||
Recognition of stock-based compensation | 18.1 | — | 18.1 | ||||||
Exercise of stock options | 11.1 | — | 11.1 | ||||||
Treasury share repurchases | (103.8 | ) | — | (103.8 | ) | ||||
Non-controlling interests of acquired subsidiaries | 2.9 | (29.8 | ) | (26.9 | ) | ||||
Dividends paid to noncontrolling interests | — | (1.0 | ) | (1.0 | ) | ||||
Balance at June 30, 2018 | $ | 1,303.5 | $ | 102.4 | $ | 1,405.9 |
Total Axalta | Noncontrolling Interests | Total | |||||||
Balance at December 31, 2016 | $ | 1,125.1 | $ | 121.5 | $ | 1,246.6 | |||
Net income | 43.3 | 3.7 | 47.0 | ||||||
Other comprehensive income, net of tax | 71.9 | 1.0 | 72.9 | ||||||
Recognition of stock-based compensation | 21.3 | — | 21.3 | ||||||
Exercise of stock options | 12.9 | — | 12.9 | ||||||
Treasury share repurchases | (8.3 | ) | — | (8.3 | ) | ||||
Dividends paid to noncontrolling interests | — | (0.9 | ) | (0.9 | ) | ||||
Balance at June 30, 2017 | $ | 1,266.2 | $ | 125.3 | $ | 1,391.5 |
Unrealized Currency Translation Adjustments | Pension Adjustments | Unrealized Gain (Loss) on Securities | Unrealized Gain (Losses) on Derivatives | Accumulated Other Comprehensive Income (Loss) | |||||||||||
Balance at December 31, 2017 | $ | (208.8 | ) | $ | (31.4 | ) | $ | 0.8 | $ | (1.6 | ) | $ | (241.0 | ) | |
Cumulative effect of an accounting change | — | — | (0.8 | ) | — | (0.8 | ) | ||||||||
Balance at January 1, 2018 | (208.8 | ) | (31.4 | ) | — | (1.6 | ) | (241.8 | ) | ||||||
Current year deferrals to AOCI | (67.4 | ) | (1.5 | ) | — | 10.9 | (58.0 | ) | |||||||
Reclassifications from AOCI to Net income (loss) | — | 0.5 | — | (0.3 | ) | 0.2 | |||||||||
Net Change | (67.4 | ) | (1.0 | ) | — | 10.6 | (57.8 | ) | |||||||
Balance at June 30, 2018 | $ | (276.2 | ) | $ | (32.4 | ) | $ | — | $ | 9.0 | $ | (299.6 | ) |
Unrealized Currency Translation Adjustments | Pension Adjustments | Unrealized Gain (Loss) on Securities | Unrealized Gain (Loss) on Derivatives | Accumulated Other Comprehensive Income (Loss) | |||||||||||
Balance at December 31, 2016 | $ | (292.2 | ) | $ | (56.6 | ) | $ | 0.4 | $ | (2.0 | ) | $ | (350.4 | ) | |
Current year deferrals to AOCI | 66.8 | — | (0.3 | ) | (2.4 | ) | 64.1 | ||||||||
Reclassifications from AOCI to Net income | — | 6.2 | — | 1.6 | 7.8 | ||||||||||
Net Change | 66.8 | 6.2 | (0.3 | ) | (0.8 | ) | 71.9 | ||||||||
Balance at June 30, 2017 | $ | (225.4 | ) | $ | (50.4 | ) | $ | 0.1 | $ | (2.8 | ) | $ | (278.5 | ) |
• | adverse developments in economic conditions and, particularly, in conditions in the automotive and transportation industries; |
• | volatility in the capital, credit and commodities markets; |
• | our inability to successfully execute on our growth strategy; |
• | increased competition; |
• | weather conditions or severe storms that may temporarily reduce the demand for some of our products; |
• | reduced demand for some of our products as a result of improved safety features on vehicles and insurance company influence; |
• | risks of the loss or change in purchasing levels of any of our significant customers or the consolidation of MSOs, distributors and/or body shops; |
• | our reliance on our distributor network and third-party delivery services for the distribution and export of certain of our products; |
• | credit risk exposure from our customers; |
• | price increases or interruptions in our supply of raw materials; |
• | failure to develop and market new products and manage product life cycles; |
• | business disruptions, security threats and security breaches, including cyber security risks to our information technology systems; |
• | risks associated with our outsourcing strategies; |
• | risks associated with our non-U.S. operations; |
• | currency-related risks; |
• | terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations; |
• | failure to comply with the anti-corruption laws of the United States and various international jurisdictions; |
• | failure to comply with anti-terrorism laws and regulations and applicable trade embargoes; |
• | risks associated with protecting data privacy; |
• | significant environmental liabilities and costs as a result of our current and past operations or products, including operations or products related to our business prior to our acquisition of DuPont Performance Coatings; |
• | transporting certain materials that are inherently hazardous due to their toxic nature; |
• | litigation and other commitments and contingencies; |
• | our ability to recruit and retain the experienced and skilled personnel we need to compete; |
• | unexpected liabilities under any pension plans applicable to our employees; |
• | work stoppages, union negotiations, labor disputes and other matters associated with our labor force; |
• | our ability to protect and enforce intellectual property rights; |
• | intellectual property infringement suits against us by third parties; |
• | our ability to realize the anticipated benefits of any acquisitions and divestitures; |
• | our joint ventures’ ability to operate according to our business strategy should our joint venture partners fail to fulfill their obligations; |
• | risk that the insurance we maintain may not fully cover all potential exposures; |
• | the risk of impairment charges related to goodwill, identifiable intangible assets and fixed assets; |
• | risks associated with changes in tax rates or regulations, including unexpected impacts of the new U.S. Tax Cuts and Jobs Act legislation, which may differ with further regulatory guidance and changes in our current interpretations and assumptions; |
• | our substantial indebtedness; |
• | our ability to obtain additional capital on commercially reasonable terms may be limited; |
• | any statements of belief and any statements of assumptions underlying any of the foregoing; |
• | other factors disclosed in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2017 and our other filings with the Securities and Exchange Commission; and |
• | other factors beyond our control. |
• | Performance Coatings: Net sales increased 21.1% driven primarily by stronger volumes in our industrial end-market, including the impacts of acquisitions combined with organic volume growth in all regions except for Latin America. |
• | Transportation Coatings: Net sales increased 1.4% driven primarily by favorable foreign currency translation and higher volume across all regions except for Europe within the commercial vehicle end market, offset by slightly lower selling prices in both our light vehicle and commercial vehicle end-markets. |
(In millions) | Three Months Ended June 30, | 2018 vs 2017 | Six Months Ended June 30, | 2018 vs 2017 | ||||||||||||
2018 | 2017 | % change | 2018 | 2017 | % change | |||||||||||
Performance Coatings | ||||||||||||||||
Refinish | $ | 447.1 | $ | 421.2 | 6.1 | % | $ | 859.7 | $ | 809.8 | 6.2 | % | ||||
Industrial | 337.4 | 241.7 | 39.6 | % | 653.5 | 439.5 | 48.7 | % | ||||||||
Total Net sales Performance Coatings | 784.5 | 662.9 | 18.3 | % | 1,513.2 | 1,249.3 | 21.1 | % | ||||||||
Transportation Coatings | ||||||||||||||||
Light Vehicle | 329.4 | 334.3 | (1.5 | )% | 678.9 | 674.3 | 0.7 | % | ||||||||
Commercial Vehicle | 92.6 | 91.3 | 1.4 | % | 180.2 | 172.7 | 4.3 | % | ||||||||
Total Net sales Transportation Coatings | 422.0 | 425.6 | (0.8 | )% | 859.1 | 847.0 | 1.4 | % | ||||||||
Total Net sales | $ | 1,206.5 | $ | 1,088.5 | 10.8 | % | $ | 2,372.3 | $ | 2,096.3 | 13.2 | % |
• | EBITDA and Adjusted EBITDA: |
• | do not reflect the significant interest expense on our debt, including the Senior Secured Credit Facilities and the New Senior Notes (as defined herein); and |
• | eliminate the impact of income taxes on our results of operations; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements; and |
• | other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Net income (loss) | $ | 77.1 | $ | (18.9 | ) | $ | 148.1 | $ | 47.0 | |||
Interest expense, net | 39.3 | 35.6 | 78.7 | 71.4 | ||||||||
Provision for income taxes | 22.0 | 9.5 | 33.8 | 19.4 | ||||||||
Depreciation and amortization | 90.2 | 84.9 | 182.1 | 167.3 | ||||||||
EBITDA | 228.6 | 111.1 | 442.7 | 305.1 | ||||||||
Debt extinguishment and refinancing related costs (a) | 8.4 | 12.4 | 8.4 | 12.4 | ||||||||
Foreign exchange remeasurement losses (b) | 1.7 | 6.0 | 1.7 | 4.8 | ||||||||
Long-term employee benefit plan adjustments (c) | (0.5 | ) | 0.1 | (1.0 | ) | 0.5 | ||||||
Termination benefits and other employee related costs (d) | (0.9 | ) | — | (2.2 | ) | 0.8 | ||||||
Consulting and advisory fees (e) | — | — | — | (0.1 | ) | |||||||
Transition-related costs (f) | — | 3.9 | (0.2 | ) | 3.9 | |||||||
Offering and transactional costs (g) | 0.1 | 6.6 | 0.3 | 5.6 | ||||||||
Stock-based compensation (h) | 9.7 | 10.9 | 18.1 | 21.3 | ||||||||
Other adjustments (i) | 0.5 | 2.6 | 0.8 | 2.8 | ||||||||
Dividends in respect of noncontrolling interest (j) | — | (0.5 | ) | (1.0 | ) | (0.9 | ) | |||||
Deconsolidation impacts and impairments (k) | — | 74.1 | — | 74.1 | ||||||||
Adjusted EBITDA | $ | 247.6 | $ | 227.2 | $ | 467.6 | $ | 430.3 |
(a) | During both the three and six months ended June 30, 2018 and 2017 we refinanced our term loans, which resulted in losses of $8.4 million and $12.4 million, respectively. We do not consider these to be indicative of our ongoing operating performance. |
(b) | Eliminates 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. |
(c) | Eliminates the non-cash, non-service cost components of long-term employee benefit costs. |
(d) | Represents expenses and associated changes to estimates primarily related to employee termination benefits and other employee-related costs associated with our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance. |
(e) | Represents expenses and associated changes 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. These amounts are not considered indicative of our ongoing operating performance. |
(g) | Represents acquisition-related expenses, including changes in the fair value of contingent consideration, 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 by Axalta of the DuPont Performance Coatings business, gains and losses from the sale and disposal of property, plant and equipment, 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 the entities on Axalta's financial statements. |
(k) | In conjunction with the deconsolidation of our Venezuelan subsidiary during the three and six months ended June 30, 2017, we recorded a loss on deconsolidation of $70.9 million. During the three and six months ended June 30, 2017 we recorded non-cash impairment charges related to a manufacturing facility previously announced for closure of $3.2 million. We do not consider these to be indicative of our ongoing operating performance. |
Three Months Ended June 30, | ||||||
(In millions) | 2018 | 2017 | ||||
Net sales | $ | 1,206.5 | $ | 1,088.5 | ||
Other revenue | 5.7 | 6.1 | ||||
Total revenue | 1,212.2 | 1,094.6 | ||||
Cost of goods sold | 793.8 | 690.0 | ||||
Selling, general and administrative expenses | 224.6 | 246.0 | ||||
Venezuela deconsolidation charge | — | 70.9 | ||||
Research and development expenses | 18.0 | 16.4 | ||||
Amortization of acquired intangibles | 29.3 | 23.8 | ||||
Income from operations | 146.5 | 47.5 | ||||
Interest expense, net | 39.3 | 35.6 | ||||
Other expense, net | 8.1 | 21.3 | ||||
Income (loss) before income taxes | 99.1 | (9.4 | ) | |||
Provision for income taxes | 22.0 | 9.5 | ||||
Net income (loss) | 77.1 | (18.9 | ) | |||
Less: Net income attributable to noncontrolling interests | 2.2 | 1.9 | ||||
Net income (loss) attributable to controlling interests | $ | 74.9 | $ | (20.8 | ) |
Six Months Ended June 30, | ||||||
(In millions) | 2018 | 2017 | ||||
Net sales | $ | 2,372.3 | $ | 2,096.3 | ||
Other revenue | 11.9 | 12.0 | ||||
Total revenue | 2,384.2 | 2,108.3 | ||||
Cost of goods sold | 1,569.8 | 1,331.4 | ||||
Selling, general and administrative expenses | 452.4 | 470.6 | ||||
Venezuela deconsolidation charge | — | 70.9 | ||||
Research and development expenses | 37.3 | 32.0 | ||||
Amortization of acquired intangibles | 58.2 | 45.5 | ||||
Income from operations | 266.5 | 157.9 | ||||
Interest expense, net | 78.7 | 71.4 | ||||
Other expense, net | 5.9 | 20.1 | ||||
Income before income taxes | 181.9 | 66.4 | ||||
Provision for income taxes | 33.8 | 19.4 | ||||
Net income | 148.1 | 47.0 | ||||
Less: Net income attributable to noncontrolling interests | 3.3 | 3.7 | ||||
Net income attributable to controlling interests | $ | 144.8 | $ | 43.3 |
Three Months Ended June 30, | ||||||
(In millions) | 2018 | 2017 | ||||
Net Sales | ||||||
Performance Coatings | $ | 784.5 | $ | 662.9 | ||
Transportation Coatings | 422.0 | 425.6 | ||||
Total | $ | 1,206.5 | $ | 1,088.5 | ||
Segment Adjusted EBITDA | ||||||
Performance Coatings | $ | 176.5 | $ | 146.8 | ||
Transportation Coatings | 71.1 | 80.4 | ||||
Total | $ | 247.6 | $ | 227.2 |
Six Months Ended June 30, | ||||||
(In millions) | 2018 | 2017 | ||||
Net Sales | ||||||
Performance Coatings | $ | 1,513.2 | $ | 1,249.3 | ||
Transportation Coatings | 859.1 | 847.0 | ||||
Total | $ | 2,372.3 | $ | 2,096.3 | ||
Segment Adjusted EBITDA | ||||||
Performance Coatings | $ | 319.7 | $ | 263.7 | ||
Transportation Coatings | 147.9 | 166.6 | ||||
Total | $ | 467.6 | $ | 430.3 |
Six Months Ended June 30, | ||||||
(In millions) | 2018 | 2017 | ||||
Net cash provided by (used for): | ||||||
Operating activities: | ||||||
Net income | $ | 148.1 | $ | 47.0 | ||
Depreciation and amortization | 182.1 | 167.3 | ||||
Amortization of deferred financing costs and original issue discount | 3.9 | 4.2 | ||||
Debt extinguishment | 8.4 | 12.4 | ||||
Deferred income taxes | 4.0 | (12.9 | ) | |||
Realized and unrealized foreign exchange (gains) losses, net | 6.1 | (2.4 | ) | |||
Stock-based compensation | 18.1 | 21.3 | ||||
Asset impairment | — | 3.2 | ||||
Loss on deconsolidation of Venezuela | — | 70.9 | ||||
Other non-cash items | 3.5 | 2.8 | ||||
Net income adjusted for non-cash items | 374.2 | 313.8 | ||||
Changes in operating assets and liabilities | (253.2 | ) | (219.7 | ) | ||
Operating activities | 121.0 | 94.1 | ||||
Investing activities | (174.4 | ) | (595.3 | ) | ||
Financing activities | (157.3 | ) | 437.3 | |||
Effect of exchange rate changes on cash | (8.4 | ) | 10.8 | |||
Net decrease in cash and cash equivalents | $ | (219.1 | ) | $ | (53.1 | ) |
(In millions) | June 30, 2018 | December 31, 2017 | ||||
2024 Dollar Term Loans | $ | 2,423.9 | $ | 1,960.0 | ||
2023 Euro Term Loans | — | 472.5 | ||||
2024 Dollar Senior Notes | 500.0 | 500.0 | ||||
2024 Euro Senior Notes | 387.1 | 399.7 | ||||
2025 Euro Senior Notes | 520.0 | 536.9 | ||||
Short-term and other borrowings | 98.1 | 94.8 | ||||
Unamortized original issue discount | (13.7 | ) | (9.1 | ) | ||
Unamortized deferred financing costs | (33.3 | ) | (39.2 | ) | ||
$ | 3,882.1 | $ | 3,915.6 | |||
Less: | ||||||
Short-term borrowings | $ | 15.6 | $ | 12.9 | ||
Current portion of long-term borrowings | 24.3 | 24.8 | ||||
Long-term debt | $ | 3,842.2 | $ | 3,877.9 |
(In millions) | |||
Remainder of 2018 | $ | 28.4 | |
2019 | 26.1 | ||
2020 | 25.2 | ||
2021 | 25.2 | ||
2022 | 52.0 | ||
Thereafter | 3,756.6 | ||
Total | $ | 3,913.5 |
(in thousands, except per share data) | ||||||||||
Month | Total Number of Shares Purchased1 | Average Price Paid per Share1 | Total Number of Shares Purchased as Part of Publicly Announced Programs2 | Approximate Dollar Value of Shares That May Yet Be Purchased Under Our Share Repurchase Agreement2 | ||||||
April 2018 | 723.3 | $ | 29.96 | 723.3 | $ | 591,617.9 | ||||
May 2018 | 1,710.5 | 31.21 | 1,592.3 | 541,937.9 | ||||||
June 2018 | 834.4 | 30.40 | 834.4 | 516,569.4 | ||||||
Total | 3,268.2 | $ | 30.73 | 3,150.0 | $ | 516,569.4 |
EXHIBIT NO. | DESCRIPTION OF EXHIBITS |
10.67 | |
31.1 | |
31.2 | |
32.1†† | |
32.2†† | |
101† | INS - XBRL Instance Document |
101† | SCH - XBRL Taxonomy Extension Schema Document |
101† | CAL - XBRL Taxonomy Extension Calculation Linkbase Document |
101† | DEF - XBRL Taxonomy Extension Definition Linkbase Document |
101† | LAB - XBRL Taxonomy Extension Label Linkbase Document |
101† | PRE - XBRL Taxonomy Extension Presentation Linkbase Document |
† | In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
†† | This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
AXALTA COATING SYSTEMS LTD. | |||
Date: | July 26, 2018 | By: /s/ Charles W. Shaver | |
Charles W. Shaver | |||
Chairman of the Board and Chief Executive Officer | |||
Date: | July 26, 2018 | By: /s/ Robert W. Bryant | |
Robert W. Bryant | |||
Executive Vice President and Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date: | July 26, 2018 | By: /s/ Sean M. Lannon | |
Sean M. Lannon | |||
Vice President, Corporate Finance and Global Controller | |||
(Principal Accounting Officer) |
(a) | As used in this Agreement: |
(b) | If to the Company to |
1. | I have reviewed this quarterly report on Form 10-Q of Axalta Coating Systems Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Charles W. Shaver |
Name: | Charles W. Shaver |
Title: | Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Axalta Coating Systems Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Robert W. Bryant |
Name: | Robert W. Bryant |
Title: | Executive Vice President and Chief Financial Officer |
(1) | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Charles W. Shaver |
Name: | Charles W. Shaver |
Title: | Chairman of the Board and Chief Executive Officer |
(1) | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Robert W. Bryant |
Name: | Robert W. Bryant |
Title: | Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 20, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Axalta Coating Systems Ltd. | |
Trading Symbol | AXTA | |
Entity Central Index Key | 0001616862 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus (i.e. Q1,Q2,Q3,FY) | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 240,592,922 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Net sales | $ 1,206.5 | $ 1,088.5 | $ 2,372.3 | $ 2,096.3 |
Other revenue | 5.7 | 6.1 | 11.9 | 12.0 |
Total revenue | 1,212.2 | 1,094.6 | 2,384.2 | 2,108.3 |
Cost of goods sold | 793.8 | 690.0 | 1,569.8 | 1,331.4 |
Selling, general and administrative expenses | 224.6 | 246.0 | 452.4 | 470.6 |
Venezuela deconsolidation charge | 0.0 | 70.9 | 0.0 | 70.9 |
Research and development expenses | 18.0 | 16.4 | 37.3 | 32.0 |
Amortization of acquired intangibles | 29.3 | 23.8 | 58.2 | 45.5 |
Income from operations | 146.5 | 47.5 | 266.5 | 157.9 |
Interest expense, net | 39.3 | 35.6 | 78.7 | 71.4 |
Other expense, net | 8.1 | 21.3 | 5.9 | 20.1 |
Income (loss) before income taxes | 99.1 | (9.4) | 181.9 | 66.4 |
Provision for income taxes | 22.0 | 9.5 | 33.8 | 19.4 |
Net income (loss) | 77.1 | (18.9) | 148.1 | 47.0 |
Less: Net income attributable to noncontrolling interests | 2.2 | 1.9 | 3.3 | 3.7 |
Net income (loss) attributable to controlling interests | $ 74.9 | $ (20.8) | $ 144.8 | $ 43.3 |
Basic net income (loss) per share (dollars per share) | $ 0.31 | $ (0.09) | $ 0.60 | $ 0.18 |
Diluted net income (loss) per share (dollars per share) | $ 0.31 | $ (0.09) | $ 0.59 | $ 0.18 |
Basic weighted average shares outstanding (in shares) | 240.3 | 240.9 | 240.6 | 240.4 |
Diluted weighted average shares outstanding (in shares) | 244.6 | 240.9 | 245.2 | 246.5 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 1.00 | $ 1.00 |
Common shares authorized (in shares) | 1,000,000,000.0 | 1,000,000,000.0 |
Common shares issued (in shares) | 243,000,000 | 240,500,000 |
Treasury shares, at cost | 5,400,000 | 2,000,000 |
Basis of Presentation of the Condensed Consolidated Financial Statements |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation of the Condensed Consolidated Financial Statements | BASIS OF PRESENTATION OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The interim condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position of Axalta Coating Systems Ltd., a Bermuda exempted company limited by shares, and its consolidated subsidiaries ("Axalta," the "Company," "we," "our" and "us") at June 30, 2018 and December 31, 2017, the results of operations and comprehensive income (loss) for the three and six months ended June 30, 2018 and 2017, and their cash flows for the six months then ended. All intercompany balances and transactions have been eliminated. These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The interim unaudited condensed consolidated financial statements include the accounts of Axalta and its subsidiaries, and entities in which a controlling interest is maintained. Certain of our joint ventures are accounted for on a one-month lag basis, the effect of which is not material. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for a full year. Accounting Standards - Reclassifications During the six months ended June 30, 2018, we adopted various accounting standards that had impacts to the accompanying condensed consolidated financial statements, one of which resulted in reclassifications to amounts previously reported for the three and six months ended June 30, 2017. Refer to Note 2 for further information. |
Recent Accounting Guidance |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Guidance | RECENT ACCOUNTING GUIDANCE Recently Adopted Accounting Guidance In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2017-12, "Derivatives and Hedging," which modifies the presentation and disclosure of hedging results and provides partial relief on the timing of certain aspects of hedge documentation including the elimination of the requirement to recognize hedge ineffectiveness separately in earnings. We elected to early adopt this standard on January 1, 2018 using the modified retrospective approach. We recorded a cumulative adjustment for previously recognized ineffectiveness to retained earnings at January 1, 2018. This did not result in a material impact to our financial statements. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits," which requires that an employer report the service cost component of net periodic pension costs in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost to be presented in the statement of operations separately from the service cost component and outside a subtotal of income from operations. On January 1, 2018 we retrospectively adopted this standard, which resulted in a reclassification on the condensed consolidated statements of operations of $0.1 million and $0.5 million for the three and six months ended June 30, 2017, respectively, from income from operations to other expense, net. On January 1, 2018, we adopted ASU 2017-01, "Clarifying the Definition of a Business," which sets forth the accounting guidance that assists in the determination of whether a set of transferred assets and activities is a business. This new guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business; whereas, if the threshold is not met, the entity evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The standard also narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue guidance. On January 1, 2018, we adopted ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which requires equity investments in unconsolidated entities, excluding those accounted for using the equity method of accounting, to be remeasured at exit price fair value, with changes recorded in the statement of operations. This standard was adopted using the modified retrospective application resulting in a cumulative adjustment to retained earnings at January 1, 2018. This did not result in a material impact to our financial statements. On January 1, 2018, we adopted ASU 2014-09, "Revenue from Contracts with Customers,” and all related amendments comprising ASC 606 (the “new revenue standard”), electing to use the modified retrospective method. We also elected to apply certain practical expedients, including the application of the modified retrospective method to open contracts at December 31, 2017. Comparative information has not been recasted and continues to be reported under historical U.S. GAAP in effect to those applicable periods. The following table summarizes the cumulative effect made to our condensed consolidated balance sheet as a result of the adoption to this standard.
The impacts to the balance sheet as of the adoption date represent the acceleration of revenue for certain arrangements, primarily within our light vehicle end-market, for which we determined our performance obligation has been satisfied, as discussed further in Note 3. Specifically, we concluded that the transfer of control to the customer, as defined under the new revenue standard, occurs at a date prior to consumption. Additionally, certain costs historically reported in selling, general and administrative expenses under historical U.S. GAAP related to technical support services that are not considered material in the context of our contracts with certain customers are now reported within cost of goods sold on the condensed consolidated statements of operations, as they represent costs incurred in satisfaction of performance obligations. See Note 3 for further discussion. Accounting Guidance Issued But Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which eliminates the second step in the goodwill impairment test requiring an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019, with early adoption permitted. This standard is not expected to have a material impact on our financial statements unless an impairment indicator is identified in our reporting units. In February 2016, the FASB issued ASU 2016-02, "Leases," which, together with amendments comprising ASC 842, requires lessees to identify arrangements that should be accounted for as leases and generally recognize, for operating and finance leases with terms exceeding twelve months, a right-of-use asset and lease liability on the balance sheet. In addition to this main provision, this standard included a number of additional changes to lease accounting. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted prior to this date. We are currently undertaking a process to quantify the impact that this standard will have on our consolidated financial statements and will provide further detail as we progress in our quantification. We are in process of reviewing our lease arrangements, as well as working through implementation steps and assessing our procedural and policy requirements. At a minimum, in the period the ASU is adopted, in addition to the expanded disclosures regarding leases, total assets and total liabilities will increase and our build-to-suit leases accounted for as sale-leaseback financing transactions will be analyzed for possible derecognition and treatment as either operating or financing leases. |
Revenue Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE We recognize revenue at the point our contractual performance obligations with our customers are satisfied. This occurs at the point in time when control of our products transfers to the customer based on considerations of right to payment, transfer of legal title, physical possession, risks and rewards of ownership and customer acceptance. For the majority of our revenue, control transfers upon shipment of our products to our customers. Our remaining revenue is recorded upon delivery or consumption for our product sales or as incurred for services provided and royalties earned. Revenue is measured as the amount of consideration we expect to receive in exchange for our products or services. Our contracts, including those subject to standard terms and conditions under multi-year agreements, are largely short-term in nature and each customer purchase order typically represents a contract with the delivery of coatings representing the only separate performance obligation. For certain customer arrangements within our light vehicle, industrial and commercial vehicle end-markets, revenue is recognized upon shipment, as this is the point in time we have concluded that control of our product has transferred to our customer based on our considerations of the indicators of control in the contracts, including right of use and risk and reward of ownership. For consignment arrangements, revenue is recognized upon actual consumption by our customers, as this represents the point in time that control is determined to have transferred to the customer based on the contractual arrangement. In our refinish end-market, our product sales are typically supplied through a network of distributors. Control transfers and revenue is recognized when our products are delivered to our distribution customers. Variable consideration in the form of price, less discounts and rebates, are estimated and recorded, as a reduction to net sales, upon the sale of our products based on our ability to make a reasonable estimate of the amounts expected to be received or incurred. The estimates of variable consideration involve significant assumptions based on the best estimates of inventory held by distributors, applicable pricing, as well as the use of historical actuals for sales, discounts and rebates, which may result in changes in estimates in the future. The timing of payments associated with the above arrangements may differ from the timing associated with the satisfaction of our performance obligations. The period between the satisfaction of the performance obligation and the receipt of payment is dependent on terms and conditions specific to the customers. All costs incurred directly in satisfaction of our performance obligations associated with revenue are reported in cost of goods sold on the statements of operations. We also incur incremental up-front costs in order to obtain contracts with certain customers, including Business Incentive Plan assets ("BIPs"), which are capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement as a reduction of net sales. The Company receives volume commitments and/or sole supplier status from its customers over the life of the contractual arrangements, which approximates a five-year weighted average useful life. The termination clauses in these contractual arrangements include standard clawback provisions that enable the Company to collect monetary damages in the event of a customer’s failure to meet its commitments under the relevant contract. At June 30, 2018 and December 31, 2017, the total carrying value of BIPs were $174.7 million and $173.0 million, respectively, and are presented within other assets on the condensed consolidated balance sheets. For the three and six months ended June 30, 2018, $16.8 million and $33.1 million, respectively, were amortized and reflected as reductions of net sales in the condensed consolidated statements of operations, while $16.1 million and $33.0 million were amortized during the three and six months ended June 30, 2017, respectively. We do not incur any other incremental direct costs to obtain a contract. We accrue for sales returns and other allowances based on our historical experience, as well as expectations based on current information relevant to our customers. We include the amounts billed to customers for shipping and handling fees in net sales and include costs incurred for the delivery of goods as cost of goods sold in the statement of operations. Recognition of licensing and royalty income occurs at the point in time when agreed upon performance obligations are satisfied, the amount is fixed or determinable, and collectability is reasonably assured. Consideration for products in which control has transferred to our customers that is conditional on something other than the passage of time is recorded as a contract asset within prepaid expenses and other on the balance sheet. The contract asset balances at June 30, 2018 and January 1, 2018 were $44.5 million and $41.7 million, respectively. The arrangements discussed above that have changed under the new revenue standard have resulted in a difference in timing of revenue recognition and classification of associated costs compared to historical U.S. GAAP. In addition to the application of the modified retrospective method to open contracts at the date of adoption (discussed in Note 2), we have applied certain other policy elections upon adoption of the new revenue standard beginning January 1, 2018, including accounting for shipping and handling costs as contract fulfillment costs, as well as excluding from the transaction price any taxes imposed on and collected from customers in revenue producing transactions. Other practical expedients associated with the new revenue standard were assessed by management and concluded to be not applicable, including the application of a portfolio approach, costs to obtain a contract, existence of significant financing components, contract modifications and right to invoice. The following tables summarizes the impact to our condensed consolidated statements of operations and balance sheets in accordance with the new revenue standard:
Revenue Streams Our revenue streams are disaggregated based on the types of products and services offered in contracts with our customers, which are depicted in each of our four end-markets.
We also have other revenue streams which include immaterial revenues relative to the net sales of our four end-markets, comprised of sales of royalties and services, primarily within our light vehicle and refinish end-markets. See Note 19 for net sales by end-market. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS Acquisition of The Valspar Corporation's North American Industrial Wood Coatings Business On June 1, 2017, the Company completed its acquisition from The Valspar Corporation ("Valspar") of certain assets constituting its North American Industrial Wood Coatings business (the "Industrial Wood" business), for a purchase price of $420.0 million, subject to working capital adjustments. No material adjustments were recorded during the three and six months ended June 30, 2018, as we finalized our purchase accounting during the respective measurement period, one year following the closing date. After all required adjustments, the Company paid an aggregate purchase price of $430.3 million, which was comprised of the following:
Supplemental Pro Forma Information The following supplemental pro forma information represents the results of operations as if the Company had acquired the Industrial Wood business on January 1, 2016:
The 2017 supplemental pro forma net income was adjusted to exclude $5.3 million ($3.3 million, net of pro forma income tax impact) of acquisition-related costs incurred in 2017 and $2.3 million ($1.4 million, net of pro forma income tax impact) of non-recurring expense related to the fair market value adjustment to acquisition date inventory. The unaudited pro forma consolidated information does not necessarily reflect the actual results that would have occurred had the acquisition taken place on January 1, 2016, nor is it meant to be indicative of future results of operations of the combined businesses under the ownership and operation of the Company. Other Acquisitions During the six months ended June 30, 2018, we successfully completed two strategic acquisitions in North America which operate within our Performance Coatings segment ("2018 Acquisitions"). Our 2018 aggregate spending for these acquisitions was $75.4 million. The overall impacts to our condensed consolidated financial statements were not considered to be material, either individually or in the aggregate. The fair value associated with identifiable intangible assets from the 2018 Acquisitions was $61.6 million, comprised primarily of technology assets, which will be amortized over an average term of approximately 9 years. At June 30, 2018, for the 2018 Acquisitions treated as business combinations and any business combination completed after June 30, 2017, we have not finalized the related purchase accounting and the amounts recorded represent preliminary values. We expect to finalize our purchase accounting during the respective measurement periods which will be no later than one year following the closing dates. In addition, during the six months ended June 30, 2018, as part of the Stock Purchase Agreement for a joint venture acquired during the year ended December 31, 2016, we were required to purchase an additional 24.5% interest for $26.9 million, increasing our total ownership percentage to 75.5%. |
Goodwill and Identifiable Intangible Assets |
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Goodwill and Identifiable Intangible Assets | GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS Goodwill The following table shows changes in the carrying amount of goodwill from December 31, 2017 to June 30, 2018 by reportable segment:
Identifiable Intangible Assets The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2018 and each of the succeeding five years is:
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Restructuring |
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Restructuring | RESTRUCTURING In accordance with the applicable guidance for Nonretirement Postemployment Benefits, we accounted for termination benefits and recognized liabilities when it was considered probable that employees were entitled to termination benefits and the amounts could be reasonably estimated. We have incurred costs in connection with involuntary termination benefits associated with our productivity initiatives, including our transition to a standalone entity and cost-saving opportunities associated with our Fit For Growth and Axalta Way initiatives. During the three and six months ended June 30, 2018, we made changes in estimates that resulted in benefits of $0.6 million and $1.5 million, respectively. During the three and six months ended June 30, 2017, we incurred restructuring costs of $0.4 million and $1.4 million, respectively. These amounts are recorded within selling, general and administrative expenses in the condensed consolidated statements of operations. The payments associated with these actions are expected to be substantially completed within 12 to 15 months from the balance sheet date. The following table summarizes the activities related to the restructuring reserves and expenses from December 31, 2017 to June 30, 2018:
Restructuring charges incurred during 2017 included actions to reduce operational costs through activities to rationalize our manufacturing footprint. The impact to earnings from accelerated depreciation related to these manufacturing assets for the three and six months ended June 30, 2017 was $2.1 million and $4.3 million, respectively. During both the three and six months ended June 30, 2017, we also recorded impairment losses of $3.2 million associated with these manufacturing facilities based on market price estimates recorded within other expense, net. |
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Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Sale-Leaseback Obligations We have two lease arrangements that are treated as sale-leaseback financing transactions. The lessors' building costs are depreciated over an estimated useful life beginning at the commencement of the rental terms, at which point such lease assets recorded in property, plant and equipment had a corresponding offset within long-term borrowings. The table below reflects the total remaining cash payments related to both transactions during the rental term as of June 30, 2018:
Guarantees We guarantee certain of our customers’ obligations to third parties, whereby any default by our customers on their obligations could force us to make payments to the applicable creditors. At June 30, 2018 and December 31, 2017, we had outstanding bank guarantees of $14.5 million and $15.2 million, respectively, which expire between 2018 and 2022. We monitor the obligations to evaluate whether we have a liability at the balance sheet date, for which none existed at June 30, 2018 and December 31, 2017. Other We are subject to various pending lawsuits, legal proceedings and other claims in the ordinary course of business, including civil, regulatory and environmental matters. These litigation matters may involve third-party indemnification obligations and/or insurance covering all or part of any potential damage against us. All of these matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate outcome of the proceedings and other claims at this time, although management does not believe that such proceedings, individually or in the aggregate, will have a material adverse effect on the unaudited condensed consolidated financial statements of Axalta. The potential effects, if any, on such condensed consolidated financial statements will be recorded in the period in which these matters are probable and estimable. |
Long-term Employee Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Employee Benefits | LONG-TERM EMPLOYEE BENEFITS Components of Net Periodic Benefit Cost The following table sets forth the components of net periodic benefit cost for the three and six months ended June 30, 2018 and 2017:
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Stock-based Compensation |
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Stock-based Compensation | STOCK-BASED COMPENSATION During the three and six months ended June 30, 2018, we recognized $9.7 million and $18.1 million, respectively, in stock-based compensation expense which was allocated between costs of goods sold and selling, general and administrative expenses on the condensed consolidated statements of operations. We recognized a tax benefit of $1.9 million and $3.4 million for the three and six months ended June 30, 2018, respectively. Forfeitures are recorded in the period they occur. During the three and six months ended June 30, 2017, we recognized $10.9 million and $21.3 million, respectively, in stock-based compensation expense which was allocated to cost of goods sold and selling, general and administrative expenses on the condensed consolidated statements of operations. We recognized a tax benefit of $3.4 million and $6.3 million for the three and six months ended June 30, 2017, respectively. 2018 Activity In February 2018, we granted non-qualified service-based stock options, restricted stock awards, restricted stock units, performance stock awards and performance share units to certain employees and directors. All awards were granted under the Company's 2014 Incentive Award Plan (the "2014 Plan"). A summary of award activity by type for the six months ended June 30, 2018 is presented below.
Cash received by the Company upon exercise of options for the six months ended June 30, 2018 was $11.0 million. Tax benefits on these exercises were $3.9 million. At June 30, 2018, there is $6.8 million of unrecognized expense relating to unvested stock options that is expected to be amortized over a weighted average period of 1.5 years.
Tax benefits on the vesting of restricted stock during the six months ended June 30, 2018 were $0.2 million. At June 30, 2018, there is $23.8 million of unamortized expense relating to unvested restricted stock and restricted stock units that is expected to be amortized over a weighted average period of 1.7 years.
At June 30, 2018, there is $16.9 million of unamortized expense relating to unvested performance stock awards and performance share units that is expected to be amortized over a weighted average period of 2.1 years. |
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Other (Income) Expense, Net | OTHER EXPENSE, NET
Debt extinguishment and refinancing related costs include third-party fees incurred in conjunction with the refinancing of the Dollar Term Loans during 2017 and 2018, as well as the loss on extinguishment associated with the write-off of unamortized deferred financing costs and original issue discounts associated with the 2023 Euro Term Loans for the three and six months ended June 30, 2018, as discussed further in Note 16. |
Income Taxes |
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Income Taxes | INCOME TAXES Our effective income tax rates for the six months ended June 30, 2018 and 2017 are as follows:
The lower effective tax rate for the six months ended June 30, 2018 was primarily due to the absence of the unfavorable impact of the Venezuelan deconsolidation charge for the six months ended June 30, 2017, the net favorable impact of earnings where the statutory rate is lower than the U.S. Federal statutory rate and the impact of the U.S. Tax Cuts and Jobs Act ("U.S. TCJA"), offset by a decrease in excess tax benefits related to stock-based compensation of $4.1 million compared to $8.9 million for the six months ended June 30, 2018 and 2017, respectively. On December 22, 2017, the U.S. TCJA legislation was enacted into law and as a result we recorded a provisional tax charge at December 31, 2017 of $107.8 million. As of June 30, 2018, we have reviewed additional guidance released by the Department of the Treasury and reduced the tax charge by $12.4 million related to the realizability of certain interest carryforwards. Our net provisional tax charge recorded to date is based on our present understanding of the U.S. TCJA and may be further adjusted as additional guidance is released. The benefit related to the reduction to the U.S. TCJA provisional tax charge was largely offset by the impact of tax discrete items for the six months ended June 30, 2018 related to other tax initiatives. The effective tax rate for the six months ended June 30, 2018 differs from the U.S. Federal statutory rate due to various items that impacted the effective rate both favorably and unfavorably. We recorded favorable adjustments for earnings in jurisdictions where the statutory rate is lower than the U.S. Federal statutory rate, currency exchange losses, revisions to the provisional charge related to the U.S. TCJA discussed above and current year excess tax benefits related to stock-based compensation. These adjustments were offset by the unfavorable impact of pre-tax losses attributable to jurisdictions where a tax benefit is not expected to be realized, unrecognized tax benefits and non-deductible expenses and interest. |
Earnings (Loss) Per Common Share |
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Earnings (Loss) Per Common Share | NET INCOME (LOSS) PER COMMON SHARE Basic net income per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share includes the effect of potential dilution from the hypothetical exercise of outstanding stock options and vesting of restricted shares and performance shares. A reconciliation of our basic and diluted net income per common share is as follows:
The number of anti-dilutive shares that have been excluded in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2018 were 2.7 million and 2.6 million, respectively. The number of anti-dilutive shares that have been excluded in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2017 were 11.6 million and 1.7 million, respectively. |
Accounts and Notes Receivable, Net |
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Accounts and Notes Receivable, Net | ACCOUNTS AND NOTES RECEIVABLE, NET
Accounts and notes receivable are carried at amounts that approximate fair value. Accounts receivable - trade, net are net of allowances of $15.2 million and $15.9 million at June 30, 2018 and December 31, 2017, respectively. Bad debt expense, within selling, general and administration expenses for the three and six months ended June 30, 2018, was $0.6 million and $0.8 million, respectively, and $1.7 million and $2.4 million for the three and six months ended June 30, 2017, respectively. |
Inventories |
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Inventories | INVENTORIES
Stores and supplies inventories of $21.8 million and $20.8 million at June 30, 2018 and December 31, 2017, respectively, were valued under the weighted average cost method. |
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Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Depreciation expense amounted to $42.7 million and $89.1 million for the three and six months ended June 30, 2018, respectively, and $44.7 million and $88.0 million for the three and six months ended June 30, 2017, respectively.
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Borrowings |
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Borrowings | BORROWINGS Borrowings are summarized as follows:
Senior Secured Credit Facilities, as amended On December 15, 2016, Axalta Coating Systems Dutch B B.V. (“Dutch B B.V.”) and its indirect 100% owned subsidiary, Axalta Coating Systems U.S. Holdings Inc. (“Axalta US Holdings”) executed the fourth amendment (the "Fourth Amendment") to the credit agreement (the “Credit Agreement”) governing our Senior Secured Credit Facilities (as defined below). The Fourth Amendment (i) converted all of the outstanding U.S. dollar term loans ($1,775.3 million) into a new tranche of term loans issued at par with principal of $1,545.0 million (the "2023 Dollar Term Loans"), (ii) converted all of the outstanding Euro Term Loans (€199.0 million) into a new tranche of term loans issued at par with principal of €400.0 million (the "2023 Euro Term Loans" and, together with the 2023 Dollar Term Loans, the "2023 Term Loans"). On June 1, 2017, Dutch B B.V. and Axalta US Holdings executed the fifth amendment to the Credit Agreement (the "Fifth Amendment"). The Fifth Amendment converted all of the outstanding 2023 Dollar Term Loans into a new tranche of term loans with principal of $2,000.0 million (the "2024 Dollar Term Loans"). The 2024 Dollar Term Loans were issued at 99.875% of par, or a $2.5 million discount. On April 11, 2018, Dutch B B.V. and Axalta US Holdings executed the sixth amendment to the Credit Agreement (the "Sixth Amendment"). The Sixth Amendment repriced the 2024 Dollar Term Loans by increasing its aggregate principal balance by $475.0 million to $2,430.0 million. The increased principal balance of the 2024 Dollar Term Loans under the Sixth Amendment was issued at 99.750% of par or $6.0 million discount. Proceeds from the Sixth Amendment, along with cash on the balance sheet, were used to extinguish the existing 2023 Euro Term Loans. The 2024 Dollar Term Loans together with the Revolving Credit Facility as defined herein, are referred to as the "Senior Secured Credit Facilities." Interest was and is payable quarterly on both the 2023 Term Loans and 2024 Dollar Term Loans. The 2024 Dollar Term Loans are subject to a floor of zero plus an applicable rate of 1.75% per annum for Eurocurrency Rate Loans as defined in the Credit Agreement and 0.75% per annum for Base Rate Loans as defined in the Credit Agreement. Prior to the Sixth Amendment, interest on the 2024 Dollar Term Loans was subject to a floor of zero, plus an applicable rate. The applicable rate for such 2024 Dollar Term Loans was 2.00% per annum for Eurocurrency Rate Loans as defined in the Credit Agreement and 1.00% per annum for Base Rate Loans as defined in the Credit Agreement. Prior to the Fifth Amendment, interest on the 2023 Dollar Term Loans was subject to a floor of 0.75%, plus an applicable rate. The applicable rate for such 2023 Dollar Term Loans was 2.50% per annum for Eurocurrency Rate Loans as defined in the Credit Agreement and 1.50% per annum for Base Rate Loans as defined in the Credit Agreement. The 2023 Euro Term Loans were also subject to a floor of 0.75%, plus an applicable rate of 2.25% per annum for Eurocurrency Rate Loans. The 2023 Euro Term Loans may not be Base Rate Loans. Any indebtedness under the Senior Secured Credit Facilities may be voluntarily prepaid in whole or in part, in minimum amounts, subject to the provisions set forth in the Credit Agreement. Such indebtedness is subject to mandatory prepayments amounting to the proceeds of asset sales over $75.0 million annually, proceeds from certain debt issuances not otherwise permitted under the Credit Agreement and 50% (subject to a step-down to 25.0% or 0% if the First Lien Leverage Ratio falls below 4.25:1.00 or 3.50:1.00, respectively) of Excess Cash Flow. The Senior Secured Credit Facilities are secured by substantially all assets of Axalta Coating Systems Dutch A B.V. ("Dutch A B.V.") and the guarantors. The 2024 Dollar Term Loans mature on June 1, 2024. Principal is paid quarterly based on 1% per annum of the original principal amount outstanding on the most recent amendment date with the unpaid balance due at maturity. We are subject to customary negative covenants in addition to the First Lien Leverage Ratio financial covenant for purposes of determining any Excess Cash Flow mandatory payment. Further, the Senior Secured Credit Facilities, among other things, include customary restrictions (subject to certain exceptions) on the Company's ability to incur certain indebtedness, grant certain liens, make certain investments, declare or pay certain dividends, or repurchase shares of the Company's common stock. As of June 30, 2018, the Company is in compliance with all covenants under the Senior Secured Credit Facilities. Revolving Credit Facility On August 1, 2016 (the "Third Amendment Effective Date"), Dutch B B.V. and Axalta US Holdings executed the third amendment to the Credit Agreement (the "Third Amendment"). The Third Amendment impacted the Revolving Credit Facility by (i) extending the maturity of the Revolving Credit Facility to five years from the Third Amendment Effective Date, or August 1, 2021, provided that such date will be accelerated to the date that is 91 days prior to the maturity of the term loans borrowed under the Credit Agreement if the maturity of such term loans precedes the maturity of the Revolving Credit Facility, (ii) decreasing the applicable interest margins, and (iii) amending the financial covenant applicable to the Revolving Credit Facility to be applicable only when greater than 30% (previously 25%) of the Revolving Credit Facility (including letters of credit not cash collateralized to at least 103%) is outstanding at the end of the fiscal quarter. If such conditions are met, the First Lien Net Leverage Ratio (as defined by the Credit Agreement) at the end of the quarter is required to be greater than 5.50:1.00. At June 30, 2018, the financial covenant is not applicable as there were no borrowings. Under the Third Amendment, interest on any outstanding borrowings under the Revolving Credit Facility is subject to a floor of zero for Adjusted Eurocurrency Rate Loans (as defined in the Credit Agreement) plus an applicable rate of 2.75% (previously 3.50%) subject to an additional step-down to 2.50% or 2.25%, if the First Lien Net Leverage Ratio falls below 3.00:1.00 or 2.50:1.00, respectively. For Base Rate Loans, the interest is subject to a floor of the greater of the federal funds rate plus 0.50%, the Prime Lending Rate or an Adjusted Eurocurrency Rate plus 1%, plus an applicable rate of 1.75% (previously 2.50%), subject to an additional step-down to 1.50% or 1.25%, if the First Lien Net Leverage Ratio falls below 3.00:1.00 and 2.50:1.00, respectively. Under circumstances described in the Credit Agreement, we may increase available revolving or term facility borrowings by up to $400.0 million plus an additional amount subject to the Company not exceeding a maximum first lien leverage ratio described in the Credit Agreement. There have been no borrowings on the Revolving Credit Facility since the issuance of the Senior Secured Credit Facilities. At June 30, 2018 and December 31, 2017, letters of credit issued under the Revolving Credit Facility totaled $43.2 million and $35.5 million which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was $356.8 million and $364.5 million at June 30, 2018 and December 31, 2017, respectively. Significant Terms of the Senior notes On August 16, 2016, Axalta Coating Systems, LLC ("U.S. Issuer") issued $500.0 million in aggregate principal amount of 4.875% Senior Unsecured Notes (the “2024 Dollar Senior Notes”) and €335.0 million in aggregate principal amount of 4.250% Senior Unsecured Notes (the “2024 Euro Senior Notes”), each due August 2024 (collectively the “2024 Senior Notes”). The 2024 Senior Notes are fully and unconditionally guaranteed by Dutch B B.V. (“Parent Guarantor”). On September 27, 2016, Dutch B B.V. (the "Dutch Issuer" and together with the U.S. Issuer, the "Issuers"), issued €450.0 million in aggregate principal amount of 3.750% Euro Senior Unsecured Notes due January 2025 (the “2025 Euro Senior Notes” and together with the 2024 Senior Notes, the "Senior Notes"). The indentures governing the Senior Notes contain covenants that restrict the ability of the Issuers and their subsidiaries to, among other things, incur additional debt, make certain payments including payment of dividends or repurchase equity interest of the Issuers, make loans or acquisitions or capital contributions and certain investments, incur certain liens, sell assets, merge or consolidate or liquidate other entities, and enter into transactions with affiliates. (i) 2024 Dollar Senior Notes The 2024 Dollar Senior Notes were issued at 99.951% of par, or $2.0 million discount, and are due August 15, 2024. The 2024 Dollar Senior Notes bear interest at 4.875% which is payable semi-annually on February 15 and August 15. We have the option to redeem all or part of the 2024 Dollar Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after August 15 of the years indicated:
Notwithstanding the foregoing, at any time and from time to time prior to August 15, 2019, we may at our option redeem in the aggregate up to 40% of the original aggregate principal amount of the 2024 Dollar Senior Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the 2024 Dollar Senior Notes) at a redemption price of 104.875% plus accrued and unpaid interest, if any, to the redemption date. At least 50% of the original aggregate principal of the notes must remain outstanding after each such redemption. Upon the occurrence of certain events constituting a change of control, holders of the 2024 Dollar Senior Notes have the right to require us to repurchase all or any part of the 2024 Dollar Senior Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. The 2024 Dollar Senior Notes, subject to local law limitations, will initially be jointly and severally guaranteed on a senior unsecured basis by each of the Parent Guarantor’s existing and future direct and indirect subsidiaries that is a borrower under or that guarantees the Senior Secured Credit Facilities. Under certain circumstances, the guarantors may be released from their guarantees without the consent of the holders of the applicable series of notes. The indebtedness issued through the 2024 Dollar Senior Notes is senior unsecured indebtedness of the U.S. Issuer, is senior in right of payment to all future subordinated indebtedness of the U.S. Issuer and guarantors and is equal in right of payment to all existing and future senior indebtedness of the U.S. Issuer and guarantors. The 2024 Dollar Senior Notes are effectively subordinated to any secured indebtedness of the U.S. Issuer and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness. (ii) 2024 Euro Senior Notes The 2024 Euro Senior Notes were issued at par and are due August 15, 2024. The 2024 Euro Senior Notes bear interest at 4.250% which is payable semi-annually on February 15 and August 15. We have the option to redeem all or part of the 2024 Euro Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after August 15 of the years indicated:
Notwithstanding the foregoing, at any time and from time to time prior to August 15, 2019, we may at our option redeem in the aggregate up to 40% of the original aggregate principal amount of the 2024 Euro Senior Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the 2024 Euro Senior Notes) at a redemption price of 104.250% plus accrued and unpaid interest, if any, to the redemption date. At least 50% of the original aggregate principal of the notes must remain outstanding after each such redemption. Upon the occurrence of certain events constituting a change of control, holders of the 2024 Euro Senior Notes have the right to require us to repurchase all or any part of the 2024 Euro Senior Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. The 2024 Euro Senior Notes, subject to local law limitations, will initially be jointly and severally guaranteed on a senior unsecured basis by each of the Parent Guarantor’s existing and future direct and indirect subsidiaries that is a borrower under or that guarantees the Senior Secured Credit Facilities. Under certain circumstances, the guarantors may be released from their guarantees without the consent of the holders of the applicable series of notes. The indebtedness issued through the 2024 Euro Senior Notes is senior unsecured indebtedness of the U.S. Issuer, is senior in right of payment to all future subordinated indebtedness of the U.S. Issuer and guarantors and is equal in right of payment to all existing and future senior indebtedness of the U.S. Issuer and guarantors. The 2024 Euro Senior Notes are effectively subordinated to any secured indebtedness of the U.S. Issuer and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness. The indebtedness issued through the 2024 Euro Senior Notes is senior unsecured indebtedness of the U.S. Issuer, is senior in right of payment to all future subordinated indebtedness of the U.S. Issuer and guarantors and is equal in right of payment to all existing and future senior indebtedness of the U.S. Issuer and guarantors. The 2024 Euro Senior Notes are effectively subordinated to any secured indebtedness of the U.S. Issuer and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness. (iii) 2025 Euro Senior Notes The 2025 Euro Senior Notes were issued at par and are due January 15, 2025. The 2025 Euro Senior Notes bear interest at 3.750% which is payable semi-annually on January 15 and July 15. We have the option to redeem all or part of the 2025 Euro Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after January 15 of the years indicated:
Notwithstanding the foregoing, at any time and from time to time prior to January 15, 2020, we may at our option redeem in the aggregate up to 40% of the original aggregate principal amount of the 2025 Euro Senior Notes with the net cash proceeds of one or more Equity Offerings (as defined in the indenture governing the 2025 Euro Senior Notes) at a redemption price of 103.750% plus accrued and unpaid interest, if any, to the redemption date. At least 50% of the original aggregate principal of the notes must remain outstanding after each such redemption. Upon the occurrence of certain events constituting a change of control, holders of the 2025 Euro Senior Notes have the right to require us to repurchase all or any part of the 2025 Euro Senior Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. The 2025 Euro Senior Notes, subject to local law limitations, will initially be jointly and severally guaranteed on a senior unsecured basis by each of the Dutch Issuer’s existing and future direct and indirect subsidiaries that is a borrower under or that guarantees the Senior Secured Credit Facilities. Under certain circumstances, the guarantors may be released from their guarantees without the consent of the holders of the applicable series of notes. The indebtedness issued through the 2025 Euro Senior Notes is senior unsecured indebtedness of the Dutch Issuer, is senior in right of payment to all future subordinated indebtedness of the Dutch Issuer and guarantors and is equal in right of payment to all existing and future senior indebtedness of the Dutch Issuer and guarantors. The 2025 Euro Senior Notes are effectively subordinated to any secured indebtedness of the Dutch Issuer and guarantors (including indebtedness outstanding under the Senior Secured Credit Facilities) to the extent of the value of the assets securing such indebtedness. Future repayments Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2018.
The table above excludes $15.6 million of debt associated with our sale-leaseback financings that will not be settled with cash. |
Fair Value Accounting |
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Fair Value Disclosures [Abstract] | |
Fair Value Accounting | FAIR VALUE ACCOUNTING Fair value of financial instruments Equity securities with readily determinable fair values - The fair values of equity securities with readily determinable fair values at June 30, 2018 and December 31, 2017 were $0.7 million and $4.3 million, respectively. These balances are recorded within other assets, with any changes in fair value recorded within other expense, net. The exit price fair value was based upon either Level 1 inputs when the securities are actively traded with quoted market prices or Level 2 when the securities are not frequently traded. Long-term borrowings - The fair values of the 2024 Dollar Senior Notes, 2024 Euro Senior Notes and 2025 Euro Senior Notes at June 30, 2018 were $496.9 million, $402.1 million and $534.3 million, respectively. The fair values at December 31, 2017 were $524.4 million, $427.7 million and $571.8 million, respectively. The estimated fair values of these notes are based on recent trades, as reported by a third-party pricing service. Due to the infrequency of trades of the Senior Notes, these inputs are considered to be Level 2 inputs. The fair values of the 2024 Dollar Term Loans and the 2023 Euro Term Loans at June 30, 2018 were $2,402.7 million and zero, respectively. The fair values at December 31, 2017 were $1,967.4 million and $475.5 million, respectively. The estimated fair values of the term loans are based on recent trades, as reported by a third-party pricing service, and due to the infrequency of the trades, these inputs are considered to be Level 2 inputs. Fair value of contingent consideration The fair value of contingent consideration associated with acquisitions completed in current and prior years are valued at each balance sheet date, until amounts become payable, with adjustments recorded within selling, general and administrative expenses on the condensed consolidated statement of operations. The fair value of contingent consideration was zero and $8.9 million at June 30, 2018 and December 31, 2017, respectively. During the three and six months ended June 30, 2017 the Company recorded gains of $2.2 million and $3.9 million associated with the changes to fair value, respectively. Adjustments made to fair value were immaterial for the three and six months ended June 30, 2018. Due to the significant unobservable inputs used in the valuations, these liabilities are categorized within Level 3 of the fair value hierarchy. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | DERIVATIVE FINANCIAL INSTRUMENTS We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange rates and interest rates. The use of derivatives is intended for hedging purposes only and we do not enter into derivative instruments for speculative purposes. A description of each type of derivative used to manage risk is included in the following paragraphs. Derivative Instruments Qualifying and Designated as Cash Flow and Net Investment Hedges Interest Rate Caps Designated as Cash Flow Hedges During the year ended December 31, 2017, we entered into four 1.5% interest rate caps with aggregate notional amounts totaling $850 million to hedge the variable interest rate exposures on our 2024 Dollar Term Loans. Three of these interest rate caps, comprising $600 million of the notional value, expire December 31, 2019 and had a deferred premium of $8.6 million at inception. The fourth interest rate cap, comprising the remaining $250 million of the notional value, expires December 31, 2021 and had a deferred premium of $8.1 million at inception. All deferred premiums will be paid quarterly over the term of the respective interest rate caps. Interest Rate Swaps Designated as Cash Flow Hedges During the three months ended June 30, 2018, we entered into three interest rate swaps with aggregate notional amounts totaling $475.0 million to hedge interest rate exposures related to variable rate borrowings under the Senior Secured Credit Facilities. Under the terms of the interest rate swap agreements, the Company is required to pay the counter-parties a stream of fixed interest payments at a rate of 2.72% and in turn, receives variable interest payments based on 3-month LIBOR from the counter-parties. The interest rate swaps are designated as cash flow hedges and expire on March 31, 2023. Cross-Currency Swaps Designated as Net Investment Hedges During the three months ended June 30, 2018, we entered into three fixed-for-fixed cross-currency swaps with aggregate notional amounts totaling $475.0 million to hedge the variability of exchange rate impacts between the U.S. Dollar and Euro. Under the terms of the cross-currency swap agreements, the Company has notionally exchanged $475.0 million at a weighted average interest rate of 4.47% for €387.2 million at a weighted average interest rate of 1.95%. The cross-currency swaps are designated as net investment hedges and expire on March 31, 2023. The following table presents the location and fair values using Level 2 inputs of derivative instruments that qualify and have been designated as cash flow and net investment hedges included in our condensed consolidated balance sheets:
For derivative instruments that qualify and are designated as cash flow or net investment hedges, the gains or losses on the derivatives are reported as components of accumulated other comprehensive loss, within unrealized gains (losses) on derivatives in the same period or periods during which the hedged transactions affect earnings. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The following tables set forth the locations and amounts recognized during the three and six months ended June 30, 2018 and 2017 for these cash flow and net investment hedges.
Over the next 12 months, we expect amounts of $1.0 million pertaining to cash flow hedges to be reclassified from accumulated other comprehensive income into earnings. Derivative Instruments Not Designated as Cash Flow Hedges We periodically enter into foreign currency forward and option contracts to reduce market risk and hedge our balance sheet exposures and cash flows for subsidiaries with exposures denominated in currencies different from the functional currency of the relevant subsidiary. These contracts have not been designated as hedges and all gains and losses are marked to market through other expense, net in the condensed consolidated statement of operations. During the year ended December 31, 2017, we purchased a 1.25% interest rate cap with a notional amount of €388.0 million to hedge the variable interest rate exposures on our 2023 Euro Term Loans. We paid a premium equal to $0.6 million for the interest rate cap which is effective through December 31, 2019. Changes in the fair value of the derivative instrument are recorded in current period earnings and are included in interest expense. The fair value of this interest rate cap at June 30, 2018 was zero. The following table presents the location and fair values using Level 2 inputs of derivative instruments that have not been designated as hedges included in our condensed consolidated balance sheets:
Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that have not been designated for hedge accounting treatment are recorded in earnings as follows:
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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:
Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | SHAREHOLDERS' EQUITY The following tables present the change in total shareholders’ equity for the six months ended June 30, 2018 and 2017, respectively.
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Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE LOSS
The income tax benefit related to the changes in pension benefits for the six months ended June 30, 2018 was $0.3 million. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2018 was $13.3 million. The income tax provision related to the change in the unrealized loss on derivatives for the six months ended June 30, 2018 was $2.0 million. The cumulative income tax provision related to the adjustments for unrealized loss on derivatives at June 30, 2018 was $1.4 million.
Included in the reclassification from AOCI to net income (loss) was a pension plan adjustment related to the deconsolidation of our Venezuelan subsidiary and the corresponding write-off of the accumulated actuarial loss on our Venezuela pension plan. This resulted in a decrease of $5.9 million in AOCI, inclusive of $2.6 million of tax benefits, and is discussed further in Note 22. The income tax benefit related to the changes in pension benefits for the six months ended June 30, 2017 was $0.5 million. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2017 was $16.0 million. The income tax benefit related to the change in the unrealized loss on derivatives for the six months ended June 30, 2017 was $0.5 million. The cumulative income tax benefit related to the adjustments for unrealized loss on derivatives at June 30, 2017 was $1.6 million. |
Venezuela |
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Foreign Currency [Abstract] | |
Venezuela | VENEZUELA Due to the challenging economic conditions and political unrest in Venezuela, which have resulted in increasingly restrictive foreign exchange control regulations and reduced access to U.S. dollars through official currency exchange markets, during the three months ended June 30, 2017, we concluded there was an other-than-temporary lack of exchangeability between the Venezuelan bolivar and the U.S. dollar. This lack of exchangeability restricted our Venezuelan subsidiary's ability to pay dividends or settle intercompany obligations, which severely limited our ability to realize the benefits from earnings of our Venezuelan operations and access the resulting liquidity provided by those earnings. Based on the fact that this lack of exchangeability, the continued political unrest, the recent drop in demand for our business and the losses incurred, we concluded that we no longer met the accounting criteria of control in order to continue consolidating our Venezuelan operations and accounted for our investments in our Venezuelan subsidiary under the cost method of accounting. As a result of this change, we recorded a loss of $70.9 million on our condensed consolidated statement of operations during the three months ended June 30, 2017. This loss was comprised of the subsidiary's net assets for $30.0 million, counterparty intercompany receivables with our Venezuela subsidiary for $35.0 million and unrealized actuarial losses associated with pension plans in accumulated other comprehensive income of $5.9 million. The value of the cost investment and all previous intercompany balances were zero as of June 30, 2017. Further, our consolidated balance sheet and statement of operations excludes the results of our Venezuelan operations. We will recognize income only to the extent that we are paid for inventory we sell or receive cash dividends from our Venezuelan legal entity. Prior to the deconsolidation, for the three and six months ended June 30, 2017, our Venezuelan subsidiary's net sales represented $0.7 million and $2.5 million of our consolidated net sales, respectively. |
Recent Accounting Guidance (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements, Policy | Recently Adopted Accounting Guidance In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2017-12, "Derivatives and Hedging," which modifies the presentation and disclosure of hedging results and provides partial relief on the timing of certain aspects of hedge documentation including the elimination of the requirement to recognize hedge ineffectiveness separately in earnings. We elected to early adopt this standard on January 1, 2018 using the modified retrospective approach. We recorded a cumulative adjustment for previously recognized ineffectiveness to retained earnings at January 1, 2018. This did not result in a material impact to our financial statements. In March 2017, the FASB issued ASU 2017-07, "Compensation—Retirement Benefits," which requires that an employer report the service cost component of net periodic pension costs in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. It also requires the other components of net periodic pension cost to be presented in the statement of operations separately from the service cost component and outside a subtotal of income from operations. On January 1, 2018 we retrospectively adopted this standard, which resulted in a reclassification on the condensed consolidated statements of operations of $0.1 million and $0.5 million for the three and six months ended June 30, 2017, respectively, from income from operations to other expense, net. On January 1, 2018, we adopted ASU 2017-01, "Clarifying the Definition of a Business," which sets forth the accounting guidance that assists in the determination of whether a set of transferred assets and activities is a business. This new guidance requires an entity to first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business; whereas, if the threshold is not met, the entity evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The standard also narrows the definition of outputs by more closely aligning it with how outputs are described in the new revenue guidance. On January 1, 2018, we adopted ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities," which requires equity investments in unconsolidated entities, excluding those accounted for using the equity method of accounting, to be remeasured at exit price fair value, with changes recorded in the statement of operations. This standard was adopted using the modified retrospective application resulting in a cumulative adjustment to retained earnings at January 1, 2018. This did not result in a material impact to our financial statements. On January 1, 2018, we adopted ASU 2014-09, "Revenue from Contracts with Customers,” and all related amendments comprising ASC 606 (the “new revenue standard”), electing to use the modified retrospective method. We also elected to apply certain practical expedients, including the application of the modified retrospective method to open contracts at December 31, 2017. Comparative information has not been recasted and continues to be reported under historical U.S. GAAP in effect to those applicable periods. The following table summarizes the cumulative effect made to our condensed consolidated balance sheet as a result of the adoption to this standard.
The impacts to the balance sheet as of the adoption date represent the acceleration of revenue for certain arrangements, primarily within our light vehicle end-market, for which we determined our performance obligation has been satisfied, as discussed further in Note 3. Specifically, we concluded that the transfer of control to the customer, as defined under the new revenue standard, occurs at a date prior to consumption. Additionally, certain costs historically reported in selling, general and administrative expenses under historical U.S. GAAP related to technical support services that are not considered material in the context of our contracts with certain customers are now reported within cost of goods sold on the condensed consolidated statements of operations, as they represent costs incurred in satisfaction of performance obligations. See Note 3 for further discussion. Accounting Guidance Issued But Not Yet Adopted In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which eliminates the second step in the goodwill impairment test requiring an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019, with early adoption permitted. This standard is not expected to have a material impact on our financial statements unless an impairment indicator is identified in our reporting units. In February 2016, the FASB issued ASU 2016-02, "Leases," which, together with amendments comprising ASC 842, requires lessees to identify arrangements that should be accounted for as leases and generally recognize, for operating and finance leases with terms exceeding twelve months, a right-of-use asset and lease liability on the balance sheet. In addition to this main provision, this standard included a number of additional changes to lease accounting. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted prior to this date. We are currently undertaking a process to quantify the impact that this standard will have on our consolidated financial statements and will provide further detail as we progress in our quantification. We are in process of reviewing our lease arrangements, as well as working through implementation steps and assessing our procedural and policy requirements. At a minimum, in the period the ASU is adopted, in addition to the expanded disclosures regarding leases, total assets and total liabilities will increase and our build-to-suit leases accounted for as sale-leaseback financing transactions will be analyzed for possible derecognition and treatment as either operating or financing leases. |
Recent Accounting Guidance Recent Accounting Guidance (Tables) |
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table summarizes the cumulative effect made to our condensed consolidated balance sheet as a result of the adoption to this standard.
The following tables summarizes the impact to our condensed consolidated statements of operations and balance sheets in accordance with the new revenue standard:
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table summarizes the cumulative effect made to our condensed consolidated balance sheet as a result of the adoption to this standard.
The following tables summarizes the impact to our condensed consolidated statements of operations and balance sheets in accordance with the new revenue standard:
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Acquisitions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | After all required adjustments, the Company paid an aggregate purchase price of $430.3 million, which was comprised of the following:
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Business Acquisition, Pro Forma Information | The following supplemental pro forma information represents the results of operations as if the Company had acquired the Industrial Wood business on January 1, 2016:
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Goodwill and Identifiable Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table shows changes in the carrying amount of goodwill from December 31, 2017 to June 30, 2018 by reportable segment:
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Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class | The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2018 and each of the succeeding five years is:
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Restructuring (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table summarizes the activities related to the restructuring reserves and expenses from December 31, 2017 to June 30, 2018:
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Commitments and Contingencies Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Sale Leaseback Transactions | The table below reflects the total remaining cash payments related to both transactions during the rental term as of June 30, 2018:
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Long-term Employee Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table sets forth the components of net periodic benefit cost for the three and six months ended June 30, 2018 and 2017:
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Stock-based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Roll Forward | A summary of award activity by type for the six months ended June 30, 2018 is presented below.
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Schedule of Restricted Stock Units and Restricted Stock Awards Roll Forward |
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Schedule of Performance Stock Roll Forward |
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Other Expense, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Nonoperating Income (Expense) |
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Income Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | Our effective income tax rates for the six months ended June 30, 2018 and 2017 are as follows:
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Earnings (Loss) Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of our basic and diluted net income per common share is as follows:
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Accounts and Notes Receivable, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable |
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Inventories (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current |
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Property, Plant and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
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Borrowings (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Borrowings are summarized as follows:
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Schedule of Maturities of Long-term Debt | Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2018.
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2024 Dollar Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument Redemption | We have the option to redeem all or part of the 2024 Dollar Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after August 15 of the years indicated:
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2024 Euro Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument Redemption | We have the option to redeem all or part of the 2024 Euro Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after August 15 of the years indicated:
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2025 Euro Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument Redemption | We have the option to redeem all or part of the 2025 Euro Senior Notes at the following redemption prices (expressed as percentages of principal amount) on or after January 15 of the years indicated:
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Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following tables set forth the locations and amounts recognized during the three and six months ended June 30, 2018 and 2017 for these cash flow and net investment hedges.
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location | Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that have not been designated for hedge accounting treatment are recorded in earnings as follows:
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Designated as Hedging Instrument [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location and fair values using Level 2 inputs of derivative instruments that qualify and have been designated as cash flow and net investment hedges included in our condensed consolidated balance sheets:
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Not Designated as Hedging Instrument [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the location and fair values using Level 2 inputs of derivative instruments that have not been designated as hedges included in our condensed consolidated balance sheets:
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Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | Our business serves four end-markets globally as follows:
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Schedule of Segment Reporting Information, by Segment |
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated |
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Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity | The following tables present the change in total shareholders’ equity for the six months ended June 30, 2018 and 2017, respectively.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income |
|
Revenue - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jan. 01, 2018 |
Dec. 31, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||||||
Amortization period | 5 years | |||||
Capitalized contract cost, net | $ 174.7 | $ 174.7 | $ 173.0 | |||
Capitalized contract cost, amortization | 16.8 | $ 16.1 | 33.1 | $ 33.0 | ||
Contract with customer, asset | $ 44.5 | $ 44.5 | $ 41.7 |
Acquisitions - Pro Forma Information (Details) - Industrial Wood Acquisition [Member] $ / shares in Units, $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
$ / shares
| |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Net sales | $ 2,197.6 |
Net income | 53.8 |
Net income attributable to controlling interests | $ 50.1 |
Net income per share (Basic) (in dollars per share) | $ / shares | $ 0.21 |
Net income per share (Diluted) (in dollars per share) | $ / shares | $ 0.20 |
Goodwill and Identifiable Intangible Assets - Schedule of Goodwill (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 1,271.2 |
Purchase Accounting Adjustments | (0.2) |
Foreign currency translation | (29.4) |
Goodwill, ending balance | 1,241.6 |
Performance Coatings [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 1,189.2 |
Purchase Accounting Adjustments | (0.2) |
Foreign currency translation | (27.5) |
Goodwill, ending balance | 1,161.5 |
Transportation Coatings [Member] | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 82.0 |
Purchase Accounting Adjustments | 0.0 |
Foreign currency translation | (1.9) |
Goodwill, ending balance | $ 80.1 |
Goodwill and Identifiable Intangible Assets - Schedule of Expected Amortization Expense (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2018 | $ 57.4 |
2019 | 114.6 |
2020 | 114.4 |
2021 | 113.8 |
2022 | 111.5 |
2023 | $ 71.8 |
Restructuring - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring costs | $ (0.6) | $ 0.4 | $ (1.5) | $ 1.4 |
Accelerated depreciation | $ 2.1 | $ 4.3 | ||
Impairment charge on manufacturing facility | $ 3.2 | $ 3.2 | ||
Minimum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Payment term (in months) | 12 years | |||
Maximum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Payment term (in months) | 15 years |
Restructuring - Restructuring Reserve (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning balance | $ 71.5 | |||
Expenses, net of adjustments to estimates | $ (0.6) | $ 0.4 | (1.5) | $ 1.4 |
Payments made | (34.3) | |||
Foreign currency translations | (0.7) | |||
Ending balance | $ 35.0 | $ 35.0 |
Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 2.6 |
2019 | 5.3 |
2020 | 5.4 |
2021 | 5.5 |
2022 | 5.8 |
Thereafter | 83.2 |
Total minimum payments | $ 107.8 |
Commitments and Contingencies - Additional Information (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Maximum exposure | $ 14,500,000 | $ 15,200,000 |
Current carrying value | $ 0 | $ 0 |
Long-term Employee Benefits - Schedule of Net Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Net periodic benefit cost: | ||||
Service cost | $ 2.2 | $ 2.1 | $ 4.5 | $ 4.2 |
Interest cost | 3.4 | 3.3 | 6.8 | 6.7 |
Expected return on plan assets | (4.1) | (3.5) | (8.3) | (7.0) |
Amortization of actuarial loss, net | 0.3 | 0.3 | 0.6 | 0.8 |
Amortization of prior service cost | (0.1) | 0.0 | (0.1) | 0.0 |
Net periodic benefit (gain) cost | $ 1.7 | $ 2.2 | $ 3.5 | $ 4.7 |
Stock-based Compensation - Schedule of Restricted Stock Awards and Restricted Stock Units (Details) - Restricted Stock and Restricted Stock Units [Member] shares in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Awards (in millions) | |
Beginning Balance | shares | 1.9 |
Granted (in shares) | shares | 0.6 |
Vested (in shares) | shares | (1.1) |
Forfeited (in shares) | shares | 0.0 |
Ending Balance | shares | 1.4 |
Weighted Average Exercise Price (usd per share) | |
Beginning Balance (usd per share) | $ / shares | $ 29.32 |
Granted (usd per share) | $ / shares | 30.13 |
Vested (usd per share) | $ / shares | 30.17 |
Forfeited (usd per share) | $ / shares | 0.00 |
Ending Balance (usd per share) | $ / shares | $ 29.04 |
Stock-based Compensation - Schedule of Performance Shares Award Outstanding Activity (Details) - Performance Shares [Member] shares in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Awards (in millions) | |
Beginning Balance | shares | 0.6 |
Granted (in shares) | shares | 0.3 |
Vested (in shares) | shares | 0.0 |
Forfeited (in shares) | shares | 0.0 |
Ending Balance | shares | 0.9 |
Weighted Average Exercise Price (usd per share) | |
Beginning Balance (usd per share) | $ / shares | $ 31.17 |
Granted (usd per share) | $ / shares | 33.77 |
Vested (usd per share) | $ / shares | 0.00 |
Forfeited (usd per share) | $ / shares | 0.00 |
Ending Balance (usd per share) | $ / shares | $ 32.08 |
Other Expense, Net - Schedule of Other Non-operating Income (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Other Income and Expenses [Abstract] | ||||
Foreign exchange losses, net | $ 1.7 | $ 6.0 | $ 1.7 | $ 4.8 |
Impairments of property | 0.0 | 3.2 | 0.0 | 3.2 |
Debt extinguishment and refinancing related costs | 8.4 | 12.4 | 8.4 | 12.4 |
Other miscellaneous income, net | (2.0) | (0.3) | (4.2) | (0.3) |
Total | $ 8.1 | $ 21.3 | $ 5.9 | $ 20.1 |
Income Taxes (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||
Effective income tax rate, percent | 18.60% | 29.20% | |
Tax benefit on share-based compensation | $ 4.1 | $ 8.9 | |
Tax Cuts And Jobs Act Of 2017, Incomplete Accounting, Provisional Income Tax Expense (Benefit) | $ 12.4 | $ 107.8 |
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) to common shareholders | $ 74.9 | $ (20.8) | $ 144.8 | $ 43.3 |
Basic weighted average shares outstanding (in shares) | 240.3 | 240.9 | 240.6 | 240.4 |
Diluted weighted average shares outstanding (in shares) | 244.6 | 240.9 | 245.2 | 246.5 |
Net income (loss) per common share: | ||||
Basic net income (loss) per share (dollars per share) | $ 0.31 | $ (0.09) | $ 0.60 | $ 0.18 |
Diluted net income (loss) per share (dollars per share) | $ 0.31 | $ (0.09) | $ 0.59 | $ 0.18 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 2.7 | 11.6 | 2.6 | 1.7 |
Accounts and Notes Receivable, Net - Schedule of Accounts, Notes, Loans, and Financing Receivable (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Accounts receivable - trade, net | $ 861.8 | $ 748.2 |
Notes receivable | 27.8 | 29.4 |
Other | 84.9 | 92.6 |
Total | $ 974.5 | $ 870.2 |
Accounts and Notes Receivable, Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Receivables [Abstract] | |||||
Allowance for doubtful accounts | $ 15.2 | $ 15.2 | $ 15.9 | ||
Bad Debt Expense Net Of Recoveries | $ 0.6 | $ 1.7 | $ 0.8 | $ 2.4 |
Inventories - Schedule of Inventory (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Finished products | $ 321.4 | $ 347.5 | |
Semi-finished products | 101.3 | 95.5 | |
Raw materials and supplies | 177.2 | 165.6 | |
Inventories | $ 599.9 | $ 585.9 | $ 608.6 |
Inventories - Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Stores and supplies inventories | $ 21.8 | $ 20.8 |
Property, Plant and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 42.7 | $ 44.7 | $ 89.1 | $ 88.0 |
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Property, plant and equipment | $ 2,204.1 | $ 2,193.6 |
Accumulated depreciation | (863.8) | (805.0) |
Property, plant, and equipment, net | $ 1,340.3 | $ 1,388.6 |
Borrowings - Schedule of Debt (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Apr. 11, 2018 |
Dec. 31, 2017 |
Jun. 01, 2017 |
Aug. 16, 2016 |
---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||
Short-term and other borrowings | $ 98.1 | $ 94.8 | |||
Unamortized original issue discount | (13.7) | (9.1) | |||
Unamortized deferred financing costs | (33.3) | (39.2) | |||
Debt and Capital Lease Obligations | 3,882.1 | 3,915.6 | |||
Short-term borrowings | 15.6 | 12.9 | |||
Current portion of long-term borrowings | 24.3 | 24.8 | |||
Long-term debt | 3,842.2 | 3,877.9 | |||
2024 Dollar Term Loans [Member] | |||||
Debt Instrument [Line Items] | |||||
Term loan | 2,423.9 | 1,960.0 | |||
Unamortized original issue discount | $ (6.0) | $ (2.5) | |||
2023 Euro Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Term loan | 0.0 | 472.5 | |||
2024 Dollar Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior Notes | 500.0 | 500.0 | |||
Unamortized original issue discount | $ (2.0) | ||||
2024 Euro Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior Notes | 387.1 | 399.7 | |||
2025 Euro Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior Notes | $ 520.0 | $ 536.9 |
Borrowings - Schedule of Maturities of Long-term Debt (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2018 | $ 28.4 |
2019 | 26.1 |
2020 | 25.2 |
2021 | 25.2 |
2022 | 52.0 |
Thereafter | 3,756.6 |
Long-term debt | $ 3,913.5 |
Derivative Financial Instruments - Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Interest Expense [Member] | Interest Rate Cap [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
(Gain) loss on instruments not designated as hedges, net | $ 0.0 | $ 0.1 | $ 0.0 | $ 0.4 |
Other Nonoperating Income (Expense) [Member] | Foreign Exchange Contract [Member] | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
(Gain) loss on instruments not designated as hedges, net | $ (6.0) | $ 4.8 | $ (4.6) | $ 7.2 |
Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 1,206.5 | $ 1,088.5 | $ 2,372.3 | $ 2,096.3 |
Equity in earnings in unconsolidated affiliates | 0.4 | 0.2 | 0.4 | 0.4 |
Adjusted EBITDA | 247.6 | 227.2 | 467.6 | 430.3 |
Investment in unconsolidated affiliates | 16.2 | 14.8 | 16.2 | 14.8 |
Performance Coatings [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 784.5 | 662.9 | 1,513.2 | 1,249.3 |
Equity in earnings in unconsolidated affiliates | 0.0 | 0.1 | 0.1 | 0.2 |
Adjusted EBITDA | 176.5 | 146.8 | 319.7 | 263.7 |
Investment in unconsolidated affiliates | 3.0 | 3.0 | 3.0 | 3.0 |
Transportation Coatings [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 422.0 | 425.6 | 859.1 | 847.0 |
Equity in earnings in unconsolidated affiliates | 0.4 | 0.1 | 0.3 | 0.2 |
Adjusted EBITDA | 71.1 | 80.4 | 147.9 | 166.6 |
Investment in unconsolidated affiliates | $ 13.2 | $ 11.8 | $ 13.2 | $ 11.8 |
Accumulated Other Comprehensive Income (Loss) - Additional Information (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Equity [Abstract] | ||
Pension and other postretirement benefit plans, tax benefit (expense) | $ (0.3) | $ (0.5) |
Cumulative pension and other postretirement benefit plans, tax expense (benefits) | 13.3 | 16.0 |
Unrealized gain (loss) on derivatives, income tax expense (benefit) | (2.0) | 0.5 |
Cumulative unrealized gain (loss) on derivatives, income tax expense (benefit) | $ 1.4 | 1.6 |
Loss due to deconsolidation of Venezeula, net of tax | 5.9 | |
Tax benefit on loss due to deconsolidation of Venezuela | $ 2.6 |
Venezuela (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Intercompany Foreign Currency Balance [Line Items] | |||||
Venezuela deconsolidation charge | $ 0 | $ 70,900,000 | $ 0 | $ 70,900,000 | |
Assets | 6,696,200,000 | 6,696,200,000 | $ 6,832,200,000 | ||
Accounts and notes receivable, net | 974,500,000 | 974,500,000 | $ 870,200,000 | ||
Net sales | $ 1,206,500,000 | 1,088,500,000 | $ 2,372,300,000 | 2,096,300,000 | |
Subsidiaries [Member] | |||||
Intercompany Foreign Currency Balance [Line Items] | |||||
Venezuela deconsolidation charge | 70,900,000 | ||||
VENEZUELA | Subsidiaries [Member] | |||||
Intercompany Foreign Currency Balance [Line Items] | |||||
Venezuela deconsolidation charge | 70,900,000 | ||||
Assets | 30,000,000 | 30,000,000 | |||
Accounts and notes receivable, net | 35,000,000 | 35,000,000 | |||
Benefit obligation, actuarial loss | 5,900,000 | ||||
Investments in subsidiaries | 0 | 0 | |||
Net sales | $ 700,000 | $ 2,500,000 |
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