Axalta Coating Systems (AXTA 30.53) manufactures coatings designed to prevent corrosion, increase productivity and enhance durability. Those coatings are applied in a lot of industrial applications ranging from light vehicles to building facades. Axalta warned today that it is tempering its outlook due to several factors that it thinks are largely transitory.
Axalta cited three factors in particular:
- The impact of the recent hurricanes and the earthquake in Mexico
- Distributor working capital adjustments in its Performance Coatings segment; and
- A widening gap between raw material input costs and offsetting near-term customer price increases
The combined impact of those items leads Axalta to believe it will report third quarter and full-year adjusted EBITDA in the range of $205-$215 million and $870-$900 million, respectively. Net sales, the company said, are expected to be between $1.08-$1.10 billion for the third quarter and up 6%-7% for the full year.
Following its second quarter report in August, Axalta projected full-year adjusted EBITDA of $940-$970 million and net sales growth of 7%-8%.
Axalta expects to make up much of the impact from the natural disasters during the course of 2018 and it expects volumes for the Performance Coatings segment to return to more normal levels during the fourth quarter. It will take some time to close the cost-price gap produced by raw material price pressure, yet that gap is anticipated to close over the coming year as Axalta makes pricing adjustments.
The company continues to see stable economics for each of its end-markets, yet it is planning to take another look at its plans for cost reduction and productivity measures as part of a plan to improve Axalta's performance in 2018.
Shares of AXTA are little changed in pre-market trading and are up 12.2% year-to-date.