Axalta Coating Systems Ltd. announced its financial results for the first quarter ended March 31, 2024.

First quarter 2024 net sales increased 0.8% year-over-year to $1.3 billion. Growth within the company’s end-markets was driven by a 4% improvement in both Refinish and Light Vehicle, offset partially by lower net sales in Industrial and Commercial Vehicle.

Net income decreased by $22 million year-over-year to $39 million, mainly as a result of $55 million of pre-tax charges incurred in the first quarter of 2024 as part of the previously announced 2024 Transformation Initiative. Adjusted net income improved by $27 million year-over-year to $106 million with contributions from both segments driven by variable cost deflation that more than offset higher fixed operating expense.

Adjusted EBITDA of $259 million was a first quarter record, compared to $213 million in the prior year period. Adjusted EBITDA margin increased by 340 basis points to 20.0%.

First quarter 2024 cash provided by operating activities was $34 million versus cash used for operating activities of $52 million in the prior year period with free cash flow totaling $15 million compared to free cash flow cash use of $88 million in the same period last year.

Net debt to trailing twelve month (LTM) adjusted EBITDA ratio (total net leverage ratio) was 2.8x at quarter-end versus 3.7x as of March 31, 2023. The company paid down an additional $75 million of term loan principal in the quarter.

Discussion of Segment Results

Performance Coatings first quarter 2024 net sales were $848 million, flat relative to the prior year period. Refinish net sales grew 4% year-over-year driven by positive price-mix and a strong contribution from the André Koch acquisition that closed in the fourth quarter 2023. Industrial net sales decreased year-over-year due to softer market activity and the prioritization of higher margin business.

Performance Coatings generated a first quarter record adjusted EBITDA of $196 million in the current period compared to $169 million in the prior year period, with associated margins of 23.1% and 20.0%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven by variable cost deflation and Refinish net sales growth.

Mobility Coatings first quarter 2024 net sales were $446 million, up 2% from the prior year period. Light Vehicle net sales improved by 4% year-over-year, driven by strong volume growth in China. Price and product mix was roughly flat in Light Vehicle despite modest headwinds from raw material indexed contracts. Commercial Vehicle net sales decreased by 4% year-over-year driven by lower Class 8 production, which was down 12% across North America and Latin America year-over-year.

The Mobility Coatings segment generated adjusted EBITDA of $63 million in the first quarter compared to $44 million in the prior year period, with associated margins of 14.2% and 10.1%, respectively. The increases in segment Adjusted EBITDA and Adjusted EBITDA margin were driven by raw material deflation and solid sales growth in Light Vehicle.

“This was another strong quarter for Axalta,” said Chris Villavarayan, Axalta’s CEO and president. “We are executing well and I am confident in our trajectory this year as we target record earnings for the second consecutive year.”