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Segments
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segments SEGMENTS
The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information.
We have two operating segments, which are also our reportable segments: Performance Coatings and Mobility Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to 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 Mobility Coatings segment, we provide coatings technologies while focusing on supporting the accelerating demand for e-mobility and the evolving coatings needs of established and emerging light and commercial vehicle OEMs, fleet owners and shared mobility providers. These global customers are faced with evolving megatrends in sustainability, personalization and autonomous driving that require a high level of technical support coupled with productive, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.
Adjusted EBIT is the primary measure to evaluate financial performance of the operating segments and allocate resources. Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment. The following table presents relevant information of our reportable segments.
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net sales (1):
Refinish$491.1 $463.1 $952.5 $862.1 
Industrial364.7 342.7 717.7 651.0 
Total Net sales Performance Coatings855.8 805.8 1,670.2 1,513.1 
Light Vehicle282.9 243.9 558.5 522.8 
Commercial Vehicle96.2 77.1 180.3 154.5 
Total Net sales Mobility Coatings379.1 321.0 738.8 677.3 
Total Net sales$1,234.9 $1,126.8 $2,409.0 $2,190.4 
Depreciation and amortization expense (2):
Performance Coatings$57.7 $56.4 $115.7 $110.4 
Mobility Coatings19.6 22.6 39.3 45.0 
Total Depreciation and amortization expense$77.3 $79.0 $155.0 $155.4 
(1)The Company has no intercompany sales between segments.
(2)Depreciation and amortization expenses relating to assets used within the operations of a specifically identifiable segment are recorded to the appropriate segment, while depreciation and amortization expenses relating to assets shared in our integrated supply chain are allocated to the appropriate segments on a consistent basis reflecting their use.
The following table reconciles our segment operating performance to income before income taxes for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Segment Adjusted EBIT (1):
Performance Coatings$125.2 $139.7 $219.8 $256.9 
Mobility Coatings2.3 5.7 2.8 44.9 
Total (2)
127.5 145.4 222.6 301.8 
Interest expense, net33.5 33.4 66.1 66.9 
Termination benefits and other employee related costs (a)
2.7 22.7 5.1 25.5 
Strategic review and retention costs (b)
— 2.2 — 7.6 
Acquisition and divestiture-related costs (c)
2.2 1.5 2.6 1.7 
Accelerated depreciation and site closure costs (d)
1.8 0.5 3.1 1.1 
Operational matter (e)
0.1 (71.8)0.2 22.6 
Brazil indirect tax (f)
— (8.3)— (8.3)
Russia sanction-related impacts (g)
0.3 — 6.1 — 
Commercial agreement restructuring impacts (h)
25.0 — 25.0 — 
Other adjustments (i)
(1.0)0.1 (0.4)0.1 
Income before income taxes$62.9 $165.1 $114.8 $184.6 
(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 Adjusted EBIT referenced elsewhere by the Company as there are additional adjustments that are not allocated to the segments.
(a)Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs. Employee termination benefits are primarily associated with Axalta Way initiatives. These amounts are not considered indicative of our ongoing operating performance.
(b)
Represents costs for legal, tax and other advisory fees pertaining to our review of strategic alternatives that was concluded in March 2020, as well as retention awards for certain employees that were earned over a period of 18-24 months, which ended in September 2021. These amounts are not considered indicative of our ongoing performance.
(c)Represents acquisition and divestiture-related expenses and integration activities associated with our business combinations, all of which are not considered indicative of our ongoing operating performance.
(d)Represents incremental depreciation expense resulting from truncated useful lives of the assets impacted by our manufacturing footprint assessments and costs related to the closure of certain manufacturing sites, which we do not consider indicative of our ongoing operating performance.
(e)Represents expenses, changes in estimates and insurance recoveries for probable liabilities related to an operational matter in the Mobility Coatings segment discussed further in Note 6, which we do not consider indicative of our ongoing operating performance.
(f)Represents non-recurring income related to a law change with respect to certain Brazilian indirect taxes which was recorded within other expense (income), net.
(g)Represents expenses related to sanctions imposed on Russia in response to the conflict with Ukraine as a result of incremental reserves for accounts receivable, incremental inventory obsolescence and business incentive payments, which we do not consider indicative of our ongoing operating performance.
(h)
Represents a forgiveness of a portion of up-front customer incentives with repayment features, contingent upon our customer completing a recapitalization and restructuring of its indebtedness and the execution of a new long-term exclusive sales agreement with us. These amounts are not considered to be indicative of our ongoing operating performance.
(i)Represents costs for certain non-operational or non-cash (gains) and losses, unrelated to our core business and which we do not consider indicative of ongoing operations.