Axalta Coating Systems Ltd. (NYSE:AXTA) reported net sales decreased 3% year-over-year to $1.26 billion in the first quarter of 2025, inclusive of a 3% headwind from foreign currency translation. Contributions from the CoverFlexx acquisition and favorable price-mix were offset by volume declines primarily in Performance Coatings.
Net income increased by 154% year over year to $99 million resulting in a net income margin of 7.8%. According to the company, the improvement was largely due to the $55 million of expenses recorded in the prior year period related to its 2024 Transformation Initiative.
Adjusted net income improved by $16 million year over year to $129 million driven by lower operating and variable costs. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 4% to $270 million compared to $259 million in the prior year period.
“We’re pleased to report another strong quarter of financial results, or a first quarter record for adjusted EBITDA and adjusted diluted,” said Chris Villavarayan, CEO and President. “I want to thank exultant employees for rallying together to deliver our eight plan priorities and maintaining our strong execution and resilient performance.”
Refinish Segment Performance
Axalta’s automotive refinish segment faced industry headwinds but outperformed the broader market. Refinish sales were $511 million in the first quarter, down 2% from $519 million in the first quarter last year. Refinish constant currency net sales grew 1% year over year driven by contributions from CoverFlexx.
During an earnings call with the investment community discussing the quarter’s results, Villavarayan explained, “In refinish, organic net sales decreased by 1% while the industry was down mid-single digits. Based on industry metrics that we tracked. The external demand pressures experienced in 2024 continue to affect collision claims and body shop repair activity. In the first quarter. These factors are driven by insurance premium inflation, increasing repair costs, and waning consumer confidence.”
Despite these challenges, the company added approximately 900 new body shops in the first quarter, grew adjacencies, and expanded further in the economy segment.
Looking ahead, the company has adjusted its market expectations for refinish, Carl Anderson, Senior Vice President and Chief Financial Officer, explained, “In our global refinish business, we now expect the industry to be down low single to mid-single digits on a year over year basis compared to flat to down low single digits previously. Insurance claims data continues to post declines in both North America and Europe. Repair costs have increased by over 10% and to 2022, and the average age of the car park is approaching 13 years. In North America. These industry drivers, along with higher distribution inventory levels in North America, are expected to offset an increase in miles driven.”
Anderson continued, “Our strategy remains unchanged as we continue to add new body shops, expand further into the economy segment, accelerate accessory growth and look to add bolt on M&A, as evidenced by our execution during the quarter. Overall, we expect our refinish results to outpace industry trends and deliver strong adjusted EBITDA again this year.”
2025 Outlook
For the full year 2025, Axalta now expects overall net sales at the company to be in the range of $5.3 billion to $5.375 billion.
The company is actively managing tariff impacts, which are estimated to cost approximately $50 million annually, with about $25 million expected to impact 2025. Mitigation strategies include in-sourcing raw materials, local reformulation of products, strategic inventory management, and pricing adjustments.
As Villavarayan concluded his prepared remarks, “While the macro environment remains uncertain, the strategic actions we have taken enable us to be more stable and resilient through the cycles. We have consistently demonstrated our confidence for strong execution, meaningful cost actions and margin expansion.”