Axalta Cuts 2026 Profit Outlook After A European Refinish Stumble, Keeps $600 Million Synergy Target
The coatings maker now sees full-year adjusted EBITDA of $1.1 billion to $1,110 million while holding its AkzoNobel merger timeline.
Axalta Coating Systems, which makes paints and finishes for vehicles and industrial products, lowered its 2026 profit outlook on its third-quarter call Thursday, blaming weak European refinish volumes. CEO Chrishan Anton S. Villavarayan said the merger with AkzoNobel is still on track to close in early 2027.
The reset in numbers
For the full year, Axalta now expects adjusted EBITDA of $1.1 billion to $1,110 million and adjusted diluted earnings per share of about $2.45. Fourth-quarter adjusted EBITDA is guided to $254 million to $264 million, with adjusted earnings per share of about $0.55.
Fourth-quarter net sales are now seen roughly flat from a year earlier, versus a prior forecast of up 3%. Chief Financial Officer Carl Anderson said free cash flow should be about $450 million, reflecting the lower EBITDA and higher merger-related costs. Excluding deal costs, he said, it would exceed $500 million.
Third-quarter net sales rose 2% to $1.3 billion, while adjusted EBITDA of $282 million was down 4% from a year earlier. Adjusted earnings per share were $0.63, down 6%.
Europe's distributors hit pause
Refinish, the coatings used by body shops to repair vehicles, was the problem. Anderson said European refinish volumes fell about mid-single digits in the quarter. Villavarayan said indirect distributors, who normally stock up for the fourth quarter, paused inventory orders in late August and September.
Management had expected European growth of 2% to 3% after five straight record quarters. Villavarayan noted the region is still up 5% for the year to date. Anderson called the slump inventory timing and said October is tracking to expectations.
Freight added to the pressure: costs were up over 15% from a year earlier on higher diesel prices, and Anderson said a $5 million to $6 million headwind had not yet been recovered through pricing. Axalta is also spending to onboard new body shop wins, almost $8 million in the fourth quarter.
Mobility Coatings was the bright spot, with record sales of $493 million, up 7%. Commercial Vehicle sales grew 24%. Axalta said it has won about 2,600 net new body shops through September, including two top-10 multi-shop operators.
AkzoNobel deal stays on schedule
Villavarayan said regulatory clearance has come in two-thirds of the required jurisdictions. The divestitures of AkzoNobel's European refinish business and Axalta's North America building products business are underway. Shareholders of both companies approved the merger of equals on August 5.
Axalta also kept its roughly $600 million annual run-rate cost-synergy target, with about 90% captured within three years of closing. Asked by BNP Paribas analyst Laurent Favre about roughly $500 million of sales pulled for remedies, Villavarayan said Axalta found offsets using headroom, so $600 million remains "the floor."
The combined company will be called Axanzo and trade on the New York Stock Exchange as AXZ. Wood coatings, a separate unit being sold, is in second-round bidding.
The remaining one-third of regulatory clearances and the two divestitures now stand between Axalta and the early-2027 close.
Sources
- 425 — Axalta Coating Systems Ltd. re: Axalta Coating Systems Ltd. (AXTA) — SEC EDGAR
- Axalta Coating Systems Ltd. (AXTA) Merger With Akzo Nobel Offers Cost-Saving Potential, Ariel Global Fund Says — Yahoo Finance
- Axalta Coating Systems Ltd. Q3 2026 Earnings Call Summary — Yahoo Finance
- Axalta Coating Systems misses top-line and bottom-line estimates;gives Q4 and updates FY26 | Seeking Alpha — seekingalpha.com
- Axalta Coating Systems: Q3 Earnings Snapshot – WTOP News — wtop.com
- Axalta Coating Systems (AXTA) Q3 Earnings and Revenues Miss Estimates — Yahoo Finance
