Axalta Coating Systems Ltd. (NYSE:AXTA) announced net sales increased 5.7% year-over-year in the third quarter ended September 30, and 3.5% excluding foreign currency translation, to $1.3 billion. The increase in net sales was driven primarily by 6.3% higher average price-mix and a modest foreign currency translation benefit of 2.2%. Volumes declined by 2.8% as strong growth in Mobility Coatings was more than offset by declines in Performance Coatings.
Income from operations increased by 32% year-over-year in the third quarter of 2023 to $163 million versus $124 million in the prior year period. The increase in income from operations was driven primarily by strong price-mix and improved variable costs offset partially by higher labor expense and costs related to productivity investments. Operating margin of 12.5% improved by 250 bps compared to the prior year period. Adjusted earnings before interest and taxes (EBIT) improved to $188 million from $148 million in the third quarter of 2023. Adjusted EBIT margin of 14.3% improved by 240 bps compared to the same period last year.
Net income attributable to controlling interests in the third quarter of 2023 was $73 million, or $0.33 per diluted share, compared to $62 million, or $0.28 per diluted share, in the same period last year. Adjusted net income in the third quarter of 2023 was $99 million, or $0.45 per diluted share, compared to $86 million, or $0.39 per diluted share, in the same period last year. The increase is primarily driven by higher income from operations, partially offset by the increase in interest expense.
“This was a solid quarter for Axalta,” said Chris Villavarayan, Axalta’s CEO and President. “We came together as one global team and executed very well. I am extremely proud of the team’s efforts and earnings results for the quarter, but I want to reiterate that Axalta’s transformation journey is just beginning. We have made investments into the business this year, which will begin to unlock the earnings power of the enterprise.”
Axalta also announced that subsequent to the end of the quarter, it acquired André Koch AG, a long-term Refinish distribution partner in Switzerland.
Performance Coatings third quarter 2023 net sales were $856 million, up 2.2% from the prior year period. The increase in net sales was driven primarily by 6.3% better price-mix and foreign currency translation benefit of 2.5% with a 6.6% offset from lower volumes.
Refinish sales for the third quarter were $529 million, up 6% from $499 million in the third quarter last year. Refinish volumes were modestly lower year-over-year, as stability in our premium segment was more than offset by the deprioritization of certain low-margin products. Industrial volumes declined by high single digits year-over-year, largely attributable to softer macroeconomic conditions and continued de-stocking principally in North America building products.
The Performance Coatings segment generated Adjusted EBIT of $135 million in the third quarter compared to $122 million in the same period last year, with associated margins of 15.8% and 14.5%, respectively. The increase in segment Adjusted EBIT and margin were driven by strong pricing and variable cost deflation, which more than offset higher labor expense.
Mobility Coatings third quarter 2023 net sales were $453 million, up 13.0% from the same period a year ago. The increase in net sales was driven primarily by price-mix growth of 6.2% and volume improvement of 5.1%. Volume improvement was led mainly by above market growth in Greater China. Global demand continued to be robust for Light Vehicle and Commercial Vehicle as reflected in improved 2023 auto production forecasts.
The Mobility Coatings segment generated Adjusted EBIT of $40 million in the third quarter compared to $4 million in the prior year period, with associated margins of 8.8% and 0.9%, respectively. The increase in segment Adjusted EBIT and margin was driven by strong pricing, variable cost deflation and volume improvement. Third quarter 2023 marked the seventh consecutive quarter of sequential earnings improvement for Mobility Coatings.