Axalta Cuts Its 2017 Outlook

This morning, Axalta Coating Systems (AXTA) updated its Q3 guidance in light of the hurricanes. The company now sees Q3 and full-year EBITDA in the range of $205-$215 million and $870-$900 million, respectively.

Sales for Q3 should be between $1.08-$1.10 billion while full-year sales are to expected to grow between 6% and 7%.

Charles W. Shaver, Axalta’s Chairman and CEO, commented that “We have seen and expect moderate effects on our business from recent hurricanes and the earthquake in Mexico, largely in terms of lost near-term volume opportunity. We believe that much of this impact will be made up during the course of 2018, and hence see these impacts as largely transitory.” Mr. Shaver continued, “After recent discussions with certain Performance Coatings distribution partners, we are incorporating the expected impact of a focused reduction in distributor working capital levels for the balance of the year. Following this adjustment, we expect volumes for the segment to return to more normal levels during the fourth quarter.” Mr. Shaver further commented that “We also continue to see impacts across coatings markets from tight supply conditions for raw material inputs, and given time lags to recovery via pricing adjustments, we have factored in a wider price-cost gap into our 2017 outlook. We expect to close the gap caused by raw material price pressure over the coming year.”

Robert W. Bryant, EVP and CFO, added, “Although we never like to see business impacts of these sorts, we believe the majority of the effects we have described are largely one-time in nature, and much of these are expected to be recovered through the course of 2018. We continue to have confidence in the underlying business climate, and note that the economics in each of our end-markets remain stable as we look forward. We are also revisiting and will increase our plans for cost reduction and productivity measures that should incrementally benefit Axalta in 2018.”

The stock is down about 4.4% this morning.

Posted by on October 9th, 2017 at 11:12 am


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