Axalta Coating Systems Ltd., also known as AXTA, showcased a robust performance in the fourth quarter of 2023, with its earnings meeting expectations and revenues surpassing estimates. The company posted earnings (as reported) of 33 cents per share, demonstrating significant growth from 20 cents in the previous year’s corresponding quarter.
Bolstered by a 5% year-over-year surge, the firm’s revenues soared to $1,297.3 million, beating the Zacks Consensus Estimate of $1,282.5 million. This remarkable feat was fueled by higher prices, an improved product mix, and increased sales volumes in both the Performance Coatings and Mobility Coatings units.
Axalta’s Revenue Performance
The revenue from the Performance Coatings unit climbed 4% year-over-year to $849 million, outstripping the consensus estimate of $844 million. This impressive growth was attributed to the benefit of price and product mix, with slightly higher refinish volumes while industrial volumes experienced a bit of a decline due to challenging macroeconomic conditions in North America.
On the other hand, the Mobility Coatings unit recorded sales of $449 million, marking a 7% year-over-year uptick. This surge was driven by robust volumes across all regions, particularly exceeding global auto production, notably in China.
Full-Year 2023 Performance
The financial report for the full-year 2023 depicted the company’s earnings per share soaring to $1.21 from 86 cents in the prior year, while net sales witnessed a commendable 6% year-over-year rise to $5.2 billion. These numbers further underscore the company’s resilience and growth trajectory.
Financial Stability and Future Outlook
Axalta Coating Systems managed to bolster its cash reserves with cash and cash equivalents amounting to $699.8 million, a significant 8% increase from the previous year. Meanwhile, the long-term debt also witnessed a downward trend, resting at $3,478.5 million, down approximately 5% year-over-year.
Looking ahead, the company is optimistic about its prospects, forecasting adjusted earnings per share of around 40 cents for the first quarter of 2024, with net sales expected to remain steady year-over-year. For the entire fiscal year 2024, Axalta envisions adjusted earnings to range between $1.80 and $1.95 per share, while the adjusted EBITDA is predicted to fall between $1,010 and $1,050 million.
Market Performance and Analyst Insights
Despite a year-over-year rise of 7%, Axalta’s shares lagged behind the industry’s surge of 17.9%. Analysts have given the stock a Zacks Rank #3 (Hold), suggesting a cautious outlook.
Analyst Recommendations
While Axalta holds steady at a Zacks Rank #3 (Hold), several other stocks in the basic materials space are gaining attention. Companies like Cameco Corporation (CCJ), Carpenter Technology Corporation (CRS), and Alpha Metallurgical Resources Inc. (AMR) are currently in the limelight.
Cameco Corporation, boasting a Zacks Rank #1 (Strong Buy), has seen a phenomenal 50% increase in its stock price over the past year. Similarly, Carpenter Technology Corporation, also carrying a Zacks Rank #1, has achieved a 26% surge in its shares over the same period. Alpha Metallurgical Resources Inc., with a Zacks Rank #1, has experienced an astounding 125% rise in its stock value in the past year, underscoring its growth potential and market confidence.
Axalta’s Q4 earnings report provides a compelling narrative of resilience and growth. As the company sets its sights on the evolving market landscape, investors are keenly watching its strategic moves, spurred by the optimistic outlook for the future.
