Segments (Tables)

6 Months Ended

Jun. 30, 2022

Schedule of Segment Reporting Information, by Segment

The following table presents relevant information of our reportable segments.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales (1):
Refinish	$	491.1	$	463.1	$	952.5	$	862.1
Industrial	364.7		342.7		717.7		651.0
Total Net sales Performance Coatings	855.8		805.8		1,670.2		1,513.1
Light Vehicle	282.9		243.9		558.5		522.8
Commercial Vehicle	96.2		77.1		180.3		154.5
Total Net sales Mobility Coatings	379.1		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 Coatings	19.6		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.

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:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Segment Adjusted EBIT (1):
Performance Coatings	$	125.2	$	139.7	$	219.8	$	256.9
Mobility Coatings	2.3		5.7		2.8		44.9
Total (2)	127.5		145.4		222.6		301.8
Interest expense, net	33.5		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.