Axalta Coating Systems Ltd. announced its financial results for the fourth quarter and full year ended Dec. 31, 2021.

Full year 2021 net sales were $4,416.2 million, an increase of 18.2% year-over-year. Income from operations was $462.4 million versus $305.5 million in 2020. Adjusted EBIT of $623.2 million increased 16.1% versus 2020 despite substantial cost inflation. Cash flow from operations was $558.6 million compared to $509.3 million in 2020.

Fourth quarter net sales of $1,137.2 million increased 5.8% year-over-year, inclusive of a 1.2% foreign currency headwind, driven by 3.6% higher average price and product mix and a 3.9% M&A contribution.

Performance Coatings recorded a 14.2% net sales increase, including double-digit growth rates from both the Refinish and Industrial end-markets. The 10.1% net sales decrease for Mobility Coatings included a 14.4% decrease from Light Vehicle due to continued OEM customer production constraints from ongoing semiconductor chip and other supply chain shortages.

This was partly offset by solid 7.6% net sales growth from Commercial Vehicle given supportive demand and customer production rates despite moderate supply chain issues also impacting that end-market.

Substantial price and product mix realization of 3.6% within both Performance Coatings and Mobility Coatings came from pricing adjustments implemented to offset broad-based inflationary pressure, while product mix was a moderate headwind for the period.

Net sales were also broadly constrained during the fourth quarter by limitations in availability for key raw materials due to both supply availability and transportation bottlenecks seen during the period.

Net income to common shareholders was $53.2 million for the quarter compared with $69.7 million in 2020, and diluted earnings per share was $0.23 compared with $0.30 in Q4 2020. Cash flow from operations was $268.6 million compared to $278.4 million in Q4 2020.

“Axalta’s fourth quarter results underscored strong continued operating execution during 2021,” said Robert W. Bryant, Axalta’s president and CEO. “The business produced strong cash flow and managed well through a challenging environment marked by extensive cost inflation and supply chain headwinds, and also recent pandemic-driven labor constraints impacting Axalta and customer production sites.

“We continue to take active steps to offset these headwinds by implementing pricing and cost actions, though, exiting the year, a gap remains between cost inflation and realized offsets,” added Bryant. “As such, we are implementing additional price actions as required to offset cost increases across our enterprise. Our current expectation is that, in aggregate, remaining uncovered inflation from 2021 as well as incremental inflation expected this year will be offset fully during the course of 2022.”

Full Year Consolidated Financial Results

Net sales of $4,416.2 million for 2021 increased 18.2%, including a 1.8% foreign currency benefit and a 1.9% M&A contribution compared with 2020. Constant currency organic net sales increased 14.5% in the period over 2020, driven by 10.5% higher volume as a result of recovery from COVID-19 impacts and 4.0% higher average price and product mix, with positive contribution from both segments.

Despite reported net sales growth from 2020, volumes in Light Vehicle were significantly impacted during 2021 by customer supply chain constraints, and Light Vehicle net sales for the year were 16.2% below 2019 levels.

Income from operations increased 51.4% to $462.4 million for 2021 from $305.5 million in 2020. Net income to common shareholders was $263.9 million for the year compared with $121.6 million in 2020, and diluted earnings per share was $1.14 compared with $0.52 in 2020.

“2021 was a year that began with strong overall demand and pandemic recovery tailwinds but which quickly ran into macro roadblocks from cost inflation and supply constraints,” Bryant said. “Despite these factors, Axalta’s execution was strong, and the company delivered an increase in operating earnings and also robust overall cash flow. This was highlighted by excellent ongoing organic growth coming from the portfolio of businesses in our Industrial end-market and by excellent traction seen in achieving pricing offsets to inflationary cost pressures.

“For 2022, we expect a year of continued solid end-market demand, and anticipate potential stabilized raw material cost inflation after the first quarter of 2022, which is expected to also be a peak quarter for inflation rates despite expectations for low double-digit inflation to be recorded this year,” Bryant stated.

2030 Sustainability Goals Announced

On Jan. 25, 2022, Axalta announced its commitment to an absolute reduction of 50% of Scope 1 and 2 greenhouse gas (GHG) emissions by 2030, on its way to becoming carbon neutral in its operations by 2040. In addition, the company has made 10 new sustainability commitments for 2030. Key among these is the commitment to produce sustainability benefits from 80% of Axalta’s new technology and innovation developments.

“Along with our pursuit of growth and value creation, we are very excited to announce our commitment to building a more sustainable future and to share our 2030 Sustainability Goals, which are detailed in full at axalta.com/sustainability,” Bryant reported. “Aligned with these new goals, we have rolled out a new strategic ESG construct. Structured under three pillars – Planet Solutions, Business Solutions, and People Solutions – this construct will guide us from a strategic, customer partnership, and employee engagement perspective.”