Despite a 3% decrease in total revenue in the first quarter of 2025, Axalta (NYSE: AXTA) posted record Q1 adjusted EBITDA of $270 million, an increase of 4% year-over-year, as well as a net income increase of 154% since Q1 2024. The Philadelphia-based paint coating and tint manufacturing company on May 7 announced year-over-year decreases in its refinish, mobility coatings, performance coatings, and industrial units in Q1 2025.
Net sales dropped 3% year-over-year to $1.26 billion, which included a 3% “headwind” from foreign currency translation.
Axalta’s 154% year-over-year net-income increase to $99 million in Q1 resulted in a net income margin of 7.8%. The jump was largely due to $55 million in expenses recorded in Q1 2024 related to Axalta’s 2024 Transformation Initiative.
This initiative was “intended to simplify the company’s and its subsidiaries’ organizational structure, enable the company to be more proactive, responsive and agile and to better serve its customers and to lower the company’s cost base, improve financial performance and cash flow generation,” according to a February 2024 Axalta filing with the Securities and Exchange Commission.
In its filing, Axalta projected the initiative would result in the termination of about 600 employees worldwide, approximately 5% of the company’s total workforce. The company expects that initiative to complete by 2026.
It appears this strategy contributed to Axalta’s higher Q1 profit, despite its lower revenue. Adjusted net income rose $16 million year-over-year to $129 million, “driven by lower operating and variable costs,” according to Axalta’s May 7 announcement.
But shareholders benefited from Axalta’s earnings.
For Axalta in Q1 2025, adjusted EBITDA rose by 4% to $270 million compared to $259 million in Q1 2024. Diluted earnings per share spiked by 150% to $0.45 compared to $0.18 in Q1 2024. Further, adjusted diluted earnings per share increased by 16% to $0.59.
Though profits rose, sales generally declined.
Volume declines and foreign currency transitions primarily drove the 3% earnings decline in Axalta’s performance coatings segment. That unit posted a Q1 2025 net sales of $822 million.
A 3% currency “headwind” contributed to a 2% year-over-year decrease in refinish net sales. That segment posted $511 million in total Q1 sales, Axalta noted.
Further, Axalta’s mobility coatings segment dropped 1% in net sales in Q1 2025 compared to the same period a year ago, largely driven by a lower rate of light vehicle net sales and foreign currency transition.
Finally, industrial net sales fell 6% year-over-year to $311 million, significantly driven by lower sales volumes and foreign currency transition rates, Axalta noted.
