PHILADELPHIA, PA — Axalta Coating Systems Ltd. (NYSE: AXTA) reported a 14% decline in third-quarter profit despite higher revenue, as weaker European demand, rising material costs and expenses tied to its proposed combination with AkzoNobel pressured earnings at the Philadelphia-based coatings manufacturer.
Net income fell to $95 million, or 44 cents per diluted share, for the quarter ended September 30, 2026, compared with $110 million, or 51 cents per share, a year earlier. Net sales increased 2% to approximately $1.3 billion.
The earnings decline was primarily driven by an additional $14 million in merger and acquisition-related expenses, along with lower sales volumes in the company’s Performance Coatings business and higher raw material and freight costs.
Adjusted earnings before interest, taxes, depreciation and amortization declined 4% to $282 million, with the adjusted EBITDA margin falling to 21.5%.
Adjusted net income decreased 6% to $136 million, while adjusted diluted earnings per share fell 6% to 63 cents. Lower operating expenses, favorable pricing and reduced interest costs partially offset the pressure on profitability.
The results reflected diverging performance across Axalta’s two principal businesses, with record revenue in automotive-related coatings offsetting weaker demand for vehicle refinishing products, particularly in Europe.
Performance Coatings generated $818 million in quarterly sales, down $10 million from the prior year.
Within the segment, Refinish sales declined 2% to $504 million as lower European volumes outweighed acquisition contributions and favorable pricing.
Industrial coatings sales increased 1% to $314 million, supported primarily by volume growth in Asia Pacific.
Regional trends remained uneven. Performance Coatings sales declined by a low-single-digit percentage in North America but increased by high-single-digit percentages in both Latin America and Asia Pacific.
The segment’s adjusted EBITDA fell to $188 million from $211 million, while its margin contracted to 23% from 25.5%.
Axalta attributed the decline to lower volumes, higher variable costs and spending to support recently awarded business, partially offset by operating expense reductions, pricing actions and acquisition contributions.
Mobility Coatings provided a counterweight, generating record quarterly revenue of $493 million, an increase of 7% from a year earlier.
Commercial Vehicle sales surged 24% to $119 million, driven by higher production of Class 8 trucks in North America. Light Vehicle sales increased 2%, primarily reflecting favorable currency translation.
Mobility Coatings adjusted EBITDA reached a third-quarter record of $94 million, with the segment’s margin expanding one percentage point to 19%.
Higher volumes and lower operating expenses more than offset increased variable costs and an unfavorable sales mix.
Axalta’s overall revenue growth also benefited from favorable foreign exchange movements, acquisitions and pricing, although declining volumes in Europe limited the increase.
Chief Executive Officer Chris Villavarayan pointed to the company’s profitability and balance-sheet position despite the more difficult operating environment.
“We maintained Adjusted EBITDA margin above 20%, further strengthened our balance sheet and achieved record quarterly net sales in Mobility Coatings,” Villavarayan stated.
Cash provided by operating activities totaled $135 million, approximately unchanged from the prior-year quarter.
Free cash flow increased 3% to $92 million, despite approximately $21 million in incremental cash expenses associated with merger and acquisition activity.
Axalta reported total net leverage of 2.1 times adjusted EBITDA, its lowest level on record. Reduced borrowing costs contributed to the company’s adjusted earnings performance.
The financial results come as Axalta pursues its proposed combination with AkzoNobel, a transaction that remains a strategic priority for management.
Villavarayan expressed confidence in the “significant value creation opportunity” associated with the proposed combination.
The quarter’s results underscore the financial pressures facing Axalta’s Performance Coatings operations while stronger commercial vehicle demand and lower leverage support the company’s earnings and cash generation.
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