Segments (Tables)

12 Months Ended

Dec. 31, 2019



	Year Ended December 31,
	2019			2018 ⁽²⁾			2017 ⁽²⁾
Net sales ⁽¹⁾:
Refinish	$	1,760.4		$	1,759.6		$	1,651.6
Industrial	1,163.0			1,273.5			1,031.7
Total Net sales Performance Coatings	2,923.4			3,033.1			2,683.3
Light Vehicle	1,208.4			1,307.2			1,337.1
Commercial Vehicle	350.4			355.7			356.6
Total Net sales Transportation Coatings	1,558.8			1,662.9			1,693.7
Total Net sales	$	4,482.2		$	4,696.0		$	4,377.0
Equity in earnings in unconsolidated affiliates:
Performance Coatings	$	0.4		$	0.4		$	0.3
Transportation Coatings	(0.1		)	(0.1		)	0.7
Total	$	0.3		$	0.3		$	1.0

	December 31, 2019			December 31, 2018			December 31, 2017
Investment in unconsolidated affiliates:
Performance Coatings	$	2.4		$	2.7		$	2.9
Transportation Coatings	12.7			12.7			12.6
Total	$	15.1		$	15.4		$	15.5


(1)	The Company has no intercompany sales between segments.

(2)

Net sales by segment for the years ended December 31, 2018 and 2017 were recast to include amounts previously classified as other revenue. See Note 1 for further information on the reclassification.

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

The following table reconciles our segment operating performance to income before income taxes for the periods presented:



	Year Ended December 31,
	2019			2018		2017
Segment Adjusted EBIT ⁽¹⁾:
Performance Coatings	$	449.1		$	399.5	$	309.3
Transportation Coatings	137.4			134.9		190.8
Total ⁽²⁾	586.5			534.4		500.1
Interest expense, net	162.6			159.6		147.0
Debt extinguishment and refinancing related costs ^(a)	0.2			9.5		13.4
Termination benefits and other employee related costs^(b)	35.2			81.7		35.2
Strategic review and retention costs ^(c)	13.4			—		—
Offering and transactional costs ^(d)	1.0			1.0		26.1
Loss on divestiture, impairment and deconsolidation ^(e)	21.1			—		77.9
Pension special events ^(f)	(0.9		)	—		1.2
Accelerated depreciation ^(g)	24.3			10.3		6.0
Indemnity (income) losses ^(h)	(0.4		)	4.3		(0.1		)
Change in fair value of equity investments ⁽ⁱ⁾	—			0.5		—
Step-up inventory ^(j)	—			—		3.8
Income before income taxes	$	330.0		$	267.5	$	189.6



(1)	The primary measure of segment operating performance is Adjusted EBIT, which is defined as net income before interest, taxes and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (1) non-cash items included within net income, (2) items the Company does not believe are indicative of ongoing operating performance or (3) non-recurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Adjusted EBIT is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance, which represents Adjusted EBIT adjusted for the select items referred to above.

(2)	Does not represent Axalta’s Adjusted EBIT referenced elsewhere by the Company.

(a)	Represents expenses related to the restructuring and refinancing of our indebtedness, which are not considered indicative of our ongoing operating performance.

(b)	Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.

(c)	Represents costs for legal, tax and other advisory fees pertaining to our previously announced comprehensive review of strategic alternatives, as well as retention awards for certain employees. These amounts are not considered indicative of our ongoing performance.

(d)	Represents acquisition and divestiture-related expenses, all of which are not considered indicative of our ongoing operating performance. For the year ended December 31, 2017, the amount includes $7.7 million of 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.

(e)	Represents the impacts recognized on the sale of our interest in a joint venture business, deconsolidation of a subsidiary, and the impairments of certain manufacturing facilities (see Note 5 for further information) which are not considered indicative of our ongoing operating performance. The amount for the year ended December 31, 2017 includes $7.6 million of impairments recorded to other (income) expense, net in the consolidated statements of operations. See Note 10 for further information.

(f)	Represents pension charges incurred from our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.

(g)	Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments, which we do not consider indicative of our ongoing operating performance.

(h)	Represents indemnity (income) losses associated with the acquisition by Axalta of the DuPont Performance Coatings business, which we do not consider indicative of our ongoing operating performance.

(i)	Represents mark to market impacts of our equity investments, which we do not consider to be indicative of our ongoing operating performance.

(j)	Represents costs for non-cash fair value inventory adjustments associated with our business combinations, which we do not consider indicative of ongoing operating performance.

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

Net sales by region were as follows:



	Year Ended December 31,
	2019		2018 ⁽¹⁾		2017 ⁽¹⁾
North America	$	1,795.1	$	1,787.0	$	1,610.5
EMEA	1,577.2		1,677.5		1,555.1
Asia Pacific	653.5		759.6		750.4
Latin America ⁽²⁾	456.4		471.9		461.0
Total ⁽³⁾	$	4,482.2	$	4,696.0	$	4,377.0

Net long-lived assets by region were as follows:



	Year Ended December 31,
	2019		2018
North America	$	480.8	$	477.4
EMEA	403.1		439.1
Asia Pacific	209.2		246.1
Latin America ⁽²⁾	129.9		135.6
Total⁽⁴⁾	$	1,223.0	$	1,298.2


(1)	Net sales by region for the years ended December 31, 2018 and 2017 were recast to include amounts previously classified as other revenue. See Note 1 for further information on the reclassification.


(2)	Includes Mexico

(3)

Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented approximately 9%, 11% and 12% of the total for the years ended December 31, 2019, 2018 and 2017, respectively. Sales to external customers in Germany represented approximately 8% of the total for the years ended December 31, 2019, 2018 and 2017, respectively. Mexico represented 6% of the total for the years ended December 31, 2019, 2018 and 2017. Canada, which is included in the North America region, represents approximately 4% of total net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

(4)

Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $233.6 million and $243.6 million in the years ended December 31, 2019 and 2018, respectively. China long-lived assets amounted to $171.0 million and $203.8 million in the years ended December 31, 2019 and 2018, respectively. Brazil long-lived assets amounted to approximately $51.9 million and $58.0 million in the years ended December 31, 2019 and 2018, respectively. Canada long-lived assets, which are included in the North America region, amounted to approximately $25.0 million and $25.1 million in the years ended December 31, 2019 and 2018, respectively.