AXTA 10-K & 10-Q changes, risk factors and insider trading
Axalta Coating Systems Ltd. · NYSE · Paints, Varnishes, Lacquers, Enamels & Allied Prods · CIK 1616862 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risk Factors Summary”
New heading “Risks Related to the Proposed Merger with Akzo Nobel N.V.”
New heading “Risks Related to our Global Operations”
New heading “Risks Related to Legal and Regulatory Compliance and Litigation”
New heading “Risks Related to Human Resources”
New heading “Risks Related to Intellectual Property”
New heading “Risks Related to Other Aspects of our Business”
New heading “Risks Related to our Indebtedness”
New heading “Risks Related to Ownership of our Common Shares”
New heading “General Risk Factors”
New heading “Risks Related to the Proposed Merger with Akzo Nobel N.V.”
New heading “The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.”
New heading “Failure to consummate the Merger could negatively impact the share price and the future business and financial results of the Company.”
New heading “The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Merger.”
New heading “Because the value of the Company and AkzoNobel ordinary shares may fluctuate, our shareholders cannot be sure of the value of the Merger Consideration they will receive.”
New heading “The Merger Agreement subjects us to restrictions on business activities prior to the effective time of the Merger.”
New heading “While the Merger is pending, the Company will be subject to business uncertainties which could adversely affect the Company’s business, results of operations, financial condition and cash flows.”
New heading “If completed, the Merger may not achieve its intended results.”
New heading “After the Merger, our shareholders will have a significantly lower ownership and voting interest in the Combined Company than they currently have in the Company.”
New heading “The ordinary shares of the Combined Company will have different rights from our common shares and the market price of the Combined Company ordinary shares may be affected by factors different from those currently affecting the market price of our common shares.”
New heading “The Company and AkzoNobel may be targets of legal proceedings that could result in substantial costs and may delay or prevent the Merger from being completed.”
New heading “The Company and AkzoNobel have incurred, and will incur additional, substantial transaction fees and costs in connection with the Merger.”
New heading “Risks Related to our Business Risks Related to Execution of our Strategic and Operating Plans”
Removed heading “Despite our current level of indebtedness and restrictive covenants, we and our subsidiaries may incur additional indebtedness. This could further exacerbate the risks associated with our substantial financial leverage.”
Largest changes
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.see in full comparisonInvestor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.Recently adopted disclosure requirements related toESG,sustainability, includingthe Final SEC Climate Rules,the EU’s CSRD and CSDDD and the California Climate Laws, have already and will continue to increase ourESG-relatedsustainability-related compliance costs, which could result in increases to our overall operational costs. New government regulations could also result in new or more stringent forms ofESGsustainability oversight, including increased limitation on, or required reduction of, GHG emissions, and the expansion of mandatory and voluntary reporting, diligence, and disclosure regardingESGsustainability matters. In addition, we may be subject to heightened scrutiny, negative publicity, boycotts, lawsuits or demands from activists, politicians or other individuals or organizations opposed toESG regarding our human capital and diversity and ESG initiatives, including those discussed in the following paragraph,sustainability, and the expectations of these individuals or organizations may conflict with regulatory requirements or stakeholder expectations.Public statements with respect to ESG matters are also increasingly becoming subject to heightened scrutiny from shareholders and governmental authorities related to the risk of potential “greenwashing,” or misleading information or false claims overstating potential ESG benefits.Failure to adapt to or comply with regulatory requirements or investor, employee, customer, or other stakeholder expectations, including any perceived failure, could negatively impact our reputation, ability to do business with certain customers, and our stockprice and could lead to novel forms of litigation, including shareholder litigation and governmental investigations or enforcement actions related to ESG matters.price.
“Although, currently, we are not aware of any legal proceedings having been brought against the Company or AkzoNobel in connection with the Merger, securities class action lawsuits, derivative lawsuits and other legal proceedings are often brought against public companies that have entered into merger agreements. Even if such legal proceedings are without merit, defending against these claims can result in substantial costs and divert management attention, time and resources. …”see in full comparison
“Despite our current level of indebtedness and restrictive covenants, we and our subsidiaries may incur additional indebtedness. This could further exacerbate the risks associated with our substantial financial leverage.”see in full comparison
“Risks Related to Legal and Regulatory Compliance and Litigation”see in full comparison
see in full comparisonWeWhileexpectthetoMerger Agreement contains certain restrictions in this regard, we may continue to seek to grow through acquisitions, joint ventures or other arrangements. Our due diligence reviews in these transactions may not sufficiently identify allofproblems,the issues necessary to accurately estimate the costcosts orpotential loss contingenciesliabilities with respect to a particulartransaction,transactionincludingandpotential exposure to regulatory sanctions resulting from a counterparty's previous activities. Wewe may incur unanticipated costs orexpenses, including post-closing asset impairment charges orexpensesassociated with eliminating redundant facilities orfrom litigation and other liabilities. We mayalsoface regulatory scrutiny as a result of perceived concentration in certain markets, which could cause additional delay or prevent us from completing certain acquisitions that would be beneficial to our business. We may also encounter difficulties in integrating acquisitions with ouroperations, applying our internal controls processes to these acquisitions or managing strategic investments.operations. Additionally, we may not achieve the benefits, including synergies and cost savings,as well as the growth and the fit with our existing businesses,we anticipate when we first enter into a transaction in the amount or on the timeframe anticipated. Any of the foregoing could adversely affect our business and results of operations.In addition, accounting requirements relating to business combinations, including the requirement to expense certain acquisition costs as incurred, may cause us to experience greater earnings volatility and generally lower earnings during periods in which we acquire new businesses.Furthermore, we have in the past made and may in the future make divestitures from time to time. These divestitures may result in continued financial involvement in the divested businesses, such as through indemnities, guarantees or other financialarrangements.arrangements,These arrangementsand couldresultultimatelyinimpose additional financial obligationsimposedupon us,reduceaffecting ournet sales and profitability and could affect our futurefinancial condition, results of operations and cash flows. Acquisitions and divestitures may also require us to devote significant internal resources and could divert management's attention away from operating our business.
“The completion of the Merger is subject to the satisfaction or waiver of certain conditions as set forth in the Merger Agreement (the “Closing Conditions”) and there can be no assurance that such conditions will be satisfied or waived. The failure to timely satisfy the Closing Conditions could delay the completion of the Merger for a significant period of time or prevent the completion of the Merger from occurring at all. …”see in full comparison
Full comparison: every changed paragraph (169)
As a global manufacturer, marketer and distributor of high-performance coatings systems, we operate in a business environment that includes risks. If any of the events contemplated by the following discussion of risks should occur, our business, results of operations, financial condition and cash flows could suffer materially and adversely. While the factors listed here are considered to be the more significant factors,factors facing our business, they should not be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors, including those described in other documents we file from time to time with the SEC, may materially and adversely affect our business, results of operations, financial condition and cash flows.
Risk Factors Summary
The following is a summary of the material risks that could adversely affect our business, results of operations, financial condition and cash flows.
Risks Related to the Proposed Merger with Akzo Nobel N.V.
•The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.
•Failure to consummate the Merger could negatively impact the share price and the future business and financial results of the Company.
•The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Merger.
•Because the value of the Company and AkzoNobel ordinary shares may fluctuate, our shareholders cannot be sure of the value of the Merger Consideration they will receive.
•The Merger Agreement subjects us to restrictions on business activities prior to the effective time of the Merger.
•While the Merger is pending, the Company will be subject to business uncertainties.
•If completed, the Merger may not achieve its intended results.
•After the Merger, our shareholders will have a significantly lower ownership and voting interest in the Combined Company than they currently have in the Company.
•The ordinary shares of the Combined Company will have different rights from our common shares and the market price of the Combined Company ordinary shares may be affected by factors different from those currently affecting the market price of our common shares.
•The Company and AkzoNobel may be targets of legal proceedings that could result in substantial costs and may delay or prevent the Merger from being completed.
•The Company and AkzoNobel have incurred, and will incur additional, substantial transaction fees and costs in connection with the Merger.
•Our financial position, results of operations and cash flows could be materially adversely affected by difficult economic conditions and/or significant volatility in the capital, credit and commodities markets.
•Improved safety features on vehicles, commercialization of autonomous vehicles, insurance company influence, the introduction of new business models or new methods of travel, and weather conditions may reduce the demand for some of our products.
•The loss of, or reduced purchases by, or our failure to meet our obligations to, any of our largest customers, or the consolidation of any of our customers, could adversely affect our business, financial condition, results of operations and cash flows.
Risks•We Relatedmay be unable to Executionsuccessfully ofexecute on our Strategicgrowth andinitiatives Operatingor Planstargets, business strategies or operating plans.
•We rely on our distributor network and third-party delivery services for the distribution and export of our products.
•Price increases, business and supply chain interruptions, declines in the supply of raw materials or disruptions to our major tolling arrangements could have a significant impact on our ability to grow or sustain earnings.
•We rely on certain of our manufacturing facilities to make a significant amount of product, and certain products can only be made at specific facilities.
•Failure to develop and market new products and manage product life cycles could impact our competitive position.
Risks Related to our Global Operations
•We are subject to risks associated with our non-U.S. operations and U.S. and foreign trade policy.
Risks Related to Legal and Regulatory Compliance and Litigation
•Our failure to comply with the anti-corruption laws of the United States and various international jurisdictions could negatively impact our reputation and results of operations.
•Evolving environmental, safety, product stewardship, consumer protection or other regulations and laws could have a material adverse effect on our business and consolidated financial condition.
•As a result of our current and past operations and/or products, including operations and/or products related to our businesses prior to the Acquisition, we could incur significant environmental liabilities and costs.
•We handle and transport certain materials that are inherently hazardous due to their toxic nature.
•Our results of operations could be adversely affected by litigation and claims.
Risks Related to Human Resources
•If we are required to make unexpected payments to any pension plans applicable to our employees, our financial condition may be adversely affected.
•We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs.
•We may not be able to recruit and retain the experienced and skilled personnel we need to compete.
Risks Related to Intellectual Property
•Our inability to protect and enforce our intellectual property rights could adversely affect our financial results.
•If we are sued for infringing intellectual property rights of third parties, it could harm our business.
Risks Related to Other Aspects of our Business
•We may continue to engage in acquisitions and divestitures, and may encounter difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations.
•Our joint ventures may not operate according to our business strategy.
•EIDP, Inc.’s potential breach of its obligations in connection with the Acquisition (as defined below), including failure to comply with its indemnification obligations, may materially affect our business and operating results.
•We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our common shares.
Risks Related to our Indebtedness
•We have substantial indebtedness, which could have a material adverse effect on us.
•To service all of our indebtedness, we will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.
•We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs.
•Our ability to obtain additional capital on commercially reasonable terms may be limited.
•Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could have a material adverse effect on our business, financial condition, results of operations and cash flows.
•We are subject to risks associated with the current interest rate environment.
Risks Related to Ownership of our Common Shares
•Axalta Coating Systems Ltd. is a holding company with no operations of its own and is largely dependent on the receipt of distributions and dividends or other payments from subsidiaries and joint ventures for cash to fund operations and expenses.
•The price of our common shares has fluctuated, and may in the future fluctuate, significantly.
•We do not expect to pay dividends on our common shares and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares.
•Future sales of our common shares could lower our share price and may dilute your ownership in us.
•We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers.
•Bermuda law differs from the laws in effect in the U.S. and may afford less protection to our shareholders.
•We have anti-takeover provisions in our bye-laws that may discourage a change of control.
General Risk Factors
•Interruption, interference with, or failure of our information technology and communications systems could hurt our ability to effectively provide our products and services.
Management's Discussion & Analysis (MD&A)
New heading “Proposed Merger with Akzo Nobel N.V.”
New heading “Provision for income taxes”
New heading “Provision for income taxes”
New heading “Year Ended December 31, 2025”
Removed heading “CoverFlexx Acquisition”
Removed heading “President, Global Industrial Coatings”
Removed heading “Year Ended December 31, 2023”
Largest changes
“In 2025, as a result of the time lapsed since our last quantitative evaluation in 2022, we bypassed the qualitative evaluation and tested for impairment of the goodwill of our reporting units and our indefinite-lived intangible assets by performing a quantitative evaluation. The quantitative analysis concluded that all reporting units and indefinite-lived intangible assets had fair values substantially in excess of their carrying values.”see in full comparison
“Net cash used for financing activities for the year ended December 31, 2023 was $315 million. …”see in full comparison
Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Annual Report on Form 10-K that are not statements of historical fact, including statements about our beliefs and expectations, aresee in full comparison"“forward-looking statements"” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “anticipate,anticipate”, “anticipates,” “anticipated,” “expect,” “expects,” “expected,” “believe,” “believes,” “intend,” “intended,” “estimate,” “estimated,” “projections,” “could,” “would,” “should,” “may,” “will,” “future,” “goals,” “targets,” “can,” “assumptions,” “plans,” “projected,” “proposed,” “potential,” “potentially,” “possible,” “strategy,” “threatened,” “seek,seek” and “forecasts” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Annual Report on Form 10-K, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, includingtherelated to any new or existing tariffsrecentlyimposed by the U.S.Government on Canada, Mexico and Chinaand any retaliatoryactions,actions from other countries, geopolitical and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the proposed transaction and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, the 2024 TransformationInitiativeInitiative, and the 2026 A Plan, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as “Risk Factors” in this Annual Report on Form 10-K and in other documents that we have filed with, or furnished to, the SEC, and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors, including, but not limited to, those described in “Risk Factors,” could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections.
Full comparison: every changed paragraph (65)
Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Annual Report on Form 10-K that are not statements of historical fact, including statements about our beliefs and expectations, are "“forward-looking statements"” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “anticipate,anticipate”, “anticipates,” “anticipated,” “expect,” “expects,” “expected,” “believe,” “believes,” “intend,” “intended,” “estimate,” “estimated,” “projections,” “could,” “would,” “should,” “may,” “will,” “future,” “goals,” “targets,” “can,” “assumptions,” “plans,” “projected,” “proposed,” “potential,” “potentially,” “possible,” “strategy,” “threatened,” “seek,seek” and “forecasts” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Annual Report on Form 10-K, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including therelated to any new or existing tariffs recently imposed by the U.S. Government on Canada, Mexico and China and any retaliatory actions,actions from other countries, geopolitical and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the proposed transaction and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, the 2024 Transformation InitiativeInitiative, and the 2026 A Plan, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as “Risk Factors” in this Annual Report on Form 10-K and in other documents that we have filed with, or furnished to, the SEC, and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors, including, but not limited to, those described in “Risk Factors,” could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections.
We are a leading global manufacturer, marketer and distributor of high-performance coatings systems and products. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 4442 manufacturing facilities, four technology centers, 4548 customer training centers and approximately 12,800 team members, inclusive of12,300 team members added from recent acquisitions, allows us to meet the needs of customers in over 140 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through approximatelyover 5,000 independent, locally based distributors.
Through our Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle OEMs. These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. TheThese OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.
Our net sales increaseddecreased 1.8%,3.0%, including a 0.4%1.1% headwindbenefit from foreign currency translation, for the year ended December 31, 20242025 compared with the year ended December 31, 2023.2024. The increaseddecreased net sales were driven by higherlower volumes of 1.1%,4.6%, includingpartially offset by contributions of 0.5% from the André Koch acquisition completed in October 2023, contributions of 0.7% from theThe CoverFlexx acquisitionGroup completed in July 2024 and(the higher“CoverFlexx average selling price and product mix of 0.4%.acquisition”). The following trends have impacted our segment net sales performance:
•Performance Coatings: Net sales increased 1.4% for the year ended December 31, 2024 compared with the year ended December 31, 2023. The increased net sales were driven by contributions of 1.1% from the CoverFlexx acquisition and higher average selling price and product mix of 0.6%, partially offset by lower sales volumes of 0.2%, including contributions from the André Koch acquisition completed in October 2023, and impacts from foreign currency fluctuations.
•MobilityPerformance Coatings: Net sales increaseddecreased 2.5%5.2% for the year ended December 31, 20242025 compared with the year ended December 31, 2023.2024. The increaseddecreased net sales were driven by higherlower sales volumes of 3.4%,5.8% and furthered by lower average selling prices and unfavorable product mix of 1.7%, partially offset by a headwind from unfavorablefavorable foreign currency translation of 0.9%1.5% primarilydriven due toby the weakeningstrengthening of the BrazilianEuro Real,and Swiss Franc, partially offset by unfavorable fluctuations of the Mexican PesoPeso, andin Chineseeach Yuancase compared to the U.S. Dollar.Dollar, Price-mixand impactscontributions wereof flat0.8% yearfrom overthe year.CoverFlexx acquisition.
•Mobility Coatings: Net sales increased 1.1% for the year ended December 31, 2025 compared with the year ended December 31, 2024. The increased net sales were driven by higher average selling prices and favorable product mix of 3.2%, and favorable foreign currency translation of 0.2% driven by the strengthening of the Euro, partially offset by unfavorable fluctuations of the Mexican Peso and Brazilian Real, in each case compared to the U.S. Dollar, and lower sales volumes of 2.3%.
Proposed Merger with Akzo Nobel N.V.
During November 2025, we entered into a Merger Agreement with Akzo Nobel N.V., a public company with limited liability incorporated under the laws of the Netherlands (“AkzoNobel”) providing for the combination of the Company and AkzoNobel in an all-stock merger. See Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
On January 23, 2025, the Company announced that Tim Bowes was appointed President, Global Industrial Coatings, effective January 27, 2025. Mr. Bowes succeeded Shelley Bausch who stepped down from the role and left the Company.
CoverFlexx Acquisition
During July 2024, we completed the acquisition of CoverFlexx. See Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
During the year ended December 31, 2024, we prepaid $75 million of the outstanding principal amount of the 2029 Dollar Term Loans (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). See Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
During the year ended December 31, 2024,2025, we repurchased 2.85.3 million shares of our common stock for total consideration of $100$165 million aspursuant weto executed against theour $700 million share repurchase programprogram. approvedWe byhave $435 million remaining available under the Boardauthorization. The Merger Agreement prohibits us from repurchasing shares, whether under the repurchase program or otherwise, without the prior written consent of Directors in April 2024.AkzoNobel.
During March,the Juneyear andended NovemberDecember 2024,31, 2025, we enteredprepaid into$210 million of the Fourteenth,outstanding Fifteenthprincipal andamount Sixteenth Amendments, respectively, toof the Credit2029 AgreementDollar Term Loans (as defined in Note 1918 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). The Fourteenth and Sixteenth Amendments cumulatively reduced the interest rate spread applicable to the 2029 Dollar Term Loans from 2.50% to 1.75% when bearing interest at a rate based on SOFR. The Fifteenth Amendment increased commitments available pursuant to the Revolving Credit Facility from $550 million to $800 million, while extending the maturity of the Revolving Credit Facility from May 2026 to June 2029. See Note 1918 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
During October 2025, we entered into the Seventeenth Amendment to the Credit Agreement (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) to permit the use of borrowings under the Credit Agreement to fund repurchases of our common shares subject to the conditions set forth therein.
President, Global Industrial Coatings
On January 23, 2025, the Company announced that Tim Bowes has been appointed President, Global Industrial Coatings, effective January 27, 2025. Mr. Bowes succeeded Shelley Bausch who stepped down from the role.
•changes in the mix of products we offer and sell to our customers;
•changes in buying habits of our customers (including our distributors); and
•overall vehicle repair costs; and
Our other operating charges include termination benefits and other employee-related costs, acquisitionacquisition, merger and divestiture-related costs, impairment charges, charges related to an operational matter, which is discussed further in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, certain environmental charges, and gains or losses on sales of facilities, details of which are included in our reconciliations of segment operating performance to income before income taxes as shown in Note 2120 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Provision for income taxes
Provision for income taxes
(1)The Government of Bermuda enacted the Bermuda Corporate Income Tax Act 2023 (“Bermuda CITA”), which imposes a 15% corporate income tax effective for tax years beginning on or after January 1, 2025. Prior to January 1, 2025, the Government of Bermuda did not impose a corporate income tax rate. For the year ended December 31, 2025, the statutory income tax rate reflects the Bermuda statutory income tax rate. For the year ended December 31, 2024, the statutory income tax rate reflects the U.S. federal statutory income tax rate.
(2)For the year ended December 31, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, China, Germany, Switzerland, and the United States. For the year ended December 31, 2024, earnings generated in jurisdictions where the statutory rate is different from the U.S. federal rate is primarily related to earnings in Bermuda, Germany, Luxembourg, and Switzerland.
(3)For the year ended December 31, 2025, earnings generated in jurisdictions where the statutory rate is different from the statutory rate includes $16 million of foreign state and local income taxes generated in Switzerland, Germany, and the United States.
(1) Primarily related to earnings in Bermuda, Germany and Switzerland.
(24) Changes in valuation allowance primarily relates to operations in Luxembourg, the Netherlands, and the United Kingdom,Kingdom includingand taxBermuda, impactsas ofdiscussed foreignin exchangeitem losses.7 Activity during the year ended December 31, 2024 includes a $26 million favorable impact related to the write off of an expired Netherlands net operating loss carryforward.below.
(5)For the year ended December 31, 2025, changes in unrecognized tax benefits is net of associated changes in valuation allowance.
(6)For the year ended December 31, 2025, the domestic state taxes represent Bermuda operations; Bermuda has no state corporate income tax. For the years ended December 31, 2024, the domestic state taxes represent U.S. operations.
(7)For the year ended December 31, 2024, the Company recorded adjustments to recognize the impacts of Bermuda CITA, effective January 1, 2025, resulting in a net deferred tax benefit of $27 million. For the year ended December 31, 2025, the Company recorded a valuation allowance of $19 million, offsetting a portion of the deferred tax benefit recognized in 2024 as a result of Bermuda CITA (8)For the year ended December 31, 2024, the Company recorded tax expense of $26 million in the Netherlands related to the write off of an expired net operating loss carryforward, which was fully offset by tax benefit of $26 million for a decrease to the valuation allowance.
(3) In 2024, the Company recorded adjustments to recognize the impacts of Bermuda Corporate Income Tax Act 2023 (“Bermuda CITA”), effective January 1, 2025, resulting in a net deferred tax benefit of $27 million. See Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
(4) In 2024, the Company recorded tax expense of $26 million in the Netherlands related to the write off of an expired net operating loss carryforward.
At December 31, 2024,2025, availability under the Revolving Credit Facility was $778$770 million, net of $22$30 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes. At December 31, 2024, we had no outstanding borrowings under other lines of credit. Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $102$63 million at December 31, 2024.2025.
We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine.
During February 2024, we announced the 2024 Transformation Initiative intended to simplify the Company’s organizational structure and enable us to be more proactive, responsive, and agile and to better serve our customers and to lower our cost base and improve financial performance and generate greater cash flows. Total cash expenditures related to the 2024 Transformation Initiative are expected to be approximately $100-110$105-115 million. We estimate that, once fully executed, the 2024 Transformation Initiative will yield net savings, inclusive of non-labor savings and costs for backfilling certain roles, of approximately $75$90 million on an annualized basis. We have realized approximately $20 million and $50 million of the run-rate savings from the 2024 Transformation Initiative in 2024, which was better than expected,2024 and 2025, respectively and we expect $30-40approximately $20 million to be realized in 2025 with the full run-rate previously forecasted to be realized during 2026. See Note 54 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Year Ended December 31, 2025
Net cash provided by operating activities for the year ended December 31, 2025 was $649 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $776 million. This was partially offset by net uses of working capital of $127 million, for which the most significant drivers were increases in prepaid expenses and other assets of $129 million and decreases in accounts payable and other accrued liabilities of $77 million and $64 million, respectively. These outflows were driven primarily by timing of payments of Business Incentive Plan assets (“BIPs”) and payments to vendors. These outflows were partially offset by decreases in accounts and notes receivable and inventories of $97 million and $33 million, respectively, driven primarily by the timing of collections and decreased production.
Net cash used for investing activities for the year ended December 31, 2025 was $212 million. The primary uses were $196 million for purchases of property, plant and equipment and $48 million for the acquisitions discussed in Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, net of cash acquired, partially offset by proceeds of $21 million from the sale of assets and $13 million from settlements and interest proceeds from swaps designated as net investment hedges, which are discussed further in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Net cash used for financing activities for the year ended December 31, 2025 was $401 million. The primary uses were prepayments of $210 million of the outstanding principal amounts of the 2029 Dollar Term Loans, purchases of our common stock of $165 million and contractual debt repayments of $20 million.
Currency exchange impacts on cash for the year ended December 31, 2025 were favorable by $28 million, which was driven primarily by the fluctuations of the Euro, Chinese Renminbi and Mexican Peso, in each case compared to the U.S. Dollar.
Net cash provided by operating activities for the year ended December 31, 2024 was $576 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $699 million. This was partially offset by net uses of working capital of $123 million, for which the most significant drivers were increases in prepaid expenses and other assets of $130 millionmillion, and decreases in accounts payable of $49 million. These outflows were driven primarily by the timing of payments of Business Incentive Plan assets (“BIPs”),BIPs, timing of purchasing and payments to vendors. These outflows were partially offset by increases in other accrued liabilities of $36 million largely driven by accruals related to the 2024 Transformation Initiative and customer rebates.
Net cash used for investing activities for the year ended December 31, 2024 was $440 million. The primary uses were $301 million for the acquisitions discussed in Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K net of cash acquired, $140 million for purchases of property, plant and equipment and $22 million for the disbursements to customers for loans which primarily have a repayment period of five years, partially offset by proceeds of $15 million from settlements and interest proceeds from swaps designated as net investment hedges, which are discussed further in Note 2019 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Net cash used for financing activities for the year ended December 31, 2024 was $201 million. The primary uses were prepayments of $75 million for the 2029 Dollar Term Loans, purchases of our common stock of $100 million, contractual debt repayments of $17 million, payments of $6 million for fees associated with repricing our 2029 Dollar Term Loans in March 2024 and November 2024 and increasing borrowing capacity and extending the maturity date of our Revolving Credit Facility in June 2024 and payments totaling $6 million for deferred acquisition-related consideration. The two repricings of the 2029 Dollar Term Loans completed in 2024 resulted in an aggregate $148 million of constructive financing cash inflows and corresponding constructive financing cash outflows. The primary financing inflow was from borrowing $185 million against our Revolving Credit Facility, which hashad been repaid as of December 31, 2024.
Year Ended December 31, 2023
Net cash provided by operating activities for the year ended December 31, 2023 was $575 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $630 million. This was partially offset by net uses of working capital of $55 million, for which the most significant drivers were increases in accounts and notes receivable and prepaid expenses and other assets of $119 million and $71 million, respectively, driven primarily by increased price-mix, the timing of collections and payments of BIPs. These outflows were partially offset by decreases in inventories of $103 million as a result of management of inventory levels and increases in other accrued liabilities of $29 million.
Net cash used for investing activities for the year ended December 31, 2023 was $206 million. The primary uses were for purchases of property, plant and equipment of $138 million, and for business acquisitions of $106 million discussed further in Note 3 to the consolidated financial statements included in the 2023 Annual Report on Form 10-K, partially offset by proceeds of $39 million from settlements and interest proceeds from swaps designated as net investment hedges, which are discussed further in Note 20 to the consolidated financial statements included elsewhere in the 2023 Annual Report on Form 10-K.
Net cash used for financing activities for the year ended December 31, 2023 was $315 million. The primary uses were prepayments of $200 million of the outstanding principal amount of the 2029 Dollar Term Loans, contractual repayments of $57 million on borrowings, which includes $42 million for our China supplier financing program, purchases of our common stock totaling $50 million, payments of $17 million for fees associated with refinancing our 2024 Dollar Term Loans (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K), repricing our 2029 Dollar Term Loans and the issuance of the 2031 Dollar Senior Notes and payments totaling $8 million for deferred acquisition-related consideration. Partially offsetting the outflows were proceeds of $9 million from a short-term borrowing and $8 million net cash received primarily from stock option exercises. Our China supplier financing program and our 2024 Dollar Term Loan refinancing are discussed further in Note 18 and Note 19, respectively, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Currency exchange impacts on cash for the year ended December 31, 2023 were unfavorable by $6 million, which was driven primarily by the fluctuations of the Euro, Argentinian Peso and Turkish Lira, partially offset by the Mexican Peso and British Pound, in each case compared to the U.S. Dollar.
Our ability to make scheduled paymentsor pre-payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations.operations and is subject to restrictions in the Merger Agreement. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
During October 2025, we entered into the Seventeenth Amendment to the Credit Agreement (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) to permit the use of borrowings under the Credit Agreement to fund repurchases of our common shares. The Merger Agreement prohibits us from repurchasing shares, whether under the repurchase program or otherwise, without the prior written consent of AkzoNobel.
During March, June and November 2024, we entered into the Fourteenth, Fifteenth and Sixteenth Amendments, respectively, to the Credit Agreement. The Fourteenth and Sixteenth Amendments cumulatively reduced the interest rate spread applicable to the 2029 Dollar Term Loans from 2.50% to 1.75% when bearing interest at a rate based on SOFR. The Fifteenth Amendment increased commitments available pursuant to the Revolving Credit Facility from $550 million to $800 million, while extending the maturity of the Revolving Credit Facility from May 2026 to June 2029. See Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
During June 2024, in connection with the acquisition of CoverFlexx discussed in Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we borrowed $185 million against the Revolving Credit Facility.
The following table details our borrowings outstanding, average effective interest rates and the associated interest expense for the years ended December 31, 20242025 and 2023.2024. Interest expense is inclusive of the amortization of debt issuance costs, debt discountsdiscounts, and the impact of derivative instruments for the years ended December 31, 20242025 and 2023,2024, respectively:
After giving effect to our cross-currency and interest rate hedges, our borrowings denominated in U.S. Dollars as of December 31, 20242025 and 20232024 were $2,440$2,184 million and $2,532$2,440 million, respectively, with weighted average interest rates of 5.5%5.2% and 6.5%,5.5%, respectively. After giving effect to our cross-currency and interest rate hedges, borrowings denominated in Euros as of December 31, 20242025 and 20232024 were $1,041 million and $1,016 million with weighted average interest rates of 4.2%4.0% and 4.3%,4.2%, respectively.
The fair value of noncontrolling interests, when applicable, are estimated by applying an income approach and is based on significant inputs that are not observable in the market. Key assumptions in the valuation of a noncontrolling interest include a discount rate, a terminal value based on a range of long-term sustainable growth rates and adjustments because of the lack of control that market participants would consider when measuring the fair value of the noncontrolling interests.
See Notes 1, 31 and 43 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
In 2025, as a result of the time lapsed since our last quantitative evaluation in 2022, we bypassed the qualitative evaluation and tested for impairment of the goodwill of our reporting units and our indefinite-lived intangible assets by performing a quantitative evaluation. The quantitative analysis concluded that all reporting units and indefinite-lived intangible assets had fair values substantially in excess of their carrying values.
In 2024, we performed a qualitative evaluation for impairment over our reporting units and indefinite-lived intangible assets and concluded that it was not more likely than not that the fair values are less than the respective carrying amounts.
What changed in the latest 10-Q
Risk Factors
There have been no material changes in our risk factors from those previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025”
New heading “Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025”
Largest changes
“Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025”see in full comparison
“Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025”see in full comparison
We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Our 2027 Dollar Senior Notes have a principal amount of $500 million, bear interest at 4.750% and are due on June 15, 2027.see in full comparisonConsideringWecurrent market interest rates and the proposed merger with AkzoNobel, we mayhave intentionally notrepayrepaid orrefinancerefinancedthese Senior Notes prior to June 15, 2026 which would require thesethe 2027 Dollar Senior Notestoasbeof June 30, 2026; therefore, the related balances are classified as current liabilities on our condensed consolidated balance sheetsbeginning with the period endingat June 30, 2026.Regardless of this decision, weWe expect to repay or refinance the 2027 Dollar Senior Notes prior to or on their maturity date.
“(3) Non-deductible expenses and interest includes tax impacts of $7 million and $12 million for the three and six months ended June 30, 2026, respectively, related to merger and acquisition-related costs, driven by the proposed Merger with AkzoNobel (4) The Company recorded tax of $27 million and $12 million for the three and six months ended June 30, 2026, respectively, related to unrecognized tax benefit adjustments resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits. …”see in full comparison
“•Performance Coatings: Net sales decreased 2.4% for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The decreased net sales were driven by lower sales volumes of 7.9%, furthered by lower average selling prices and unfavorable product mix of 1.8%, partially offset by contributions of 1.6% from the Recent Acquisitions and favorable foreign currency translation of 5.7% driven by fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar.”see in full comparison
Our net salessee in full comparisondecreasedincreased0.6%,1.3%,includingdriven by a5.7%4.2% benefit from favorable foreign currency translation, for thethreesix months endedMarchJune31,30, 2026 compared with thethreesix months endedMarchJune31,30, 2025. Thedecreasedincreased net sales weredriven by lower sales volumes of 6.2%,furtheredby lower average selling prices and unfavorable product mix of 1.1%, partially offsetby contributions of1.0%0.9% from acquisitions completed during 2025 and 2026 in the Performance Coatings segment (the “Recent Acquisitions”)., partially offset by lower sales volumes of 3.5% and unfavorable average selling prices and product mix of 0.3%. The following trends impacted our segment net sales performance for thethreesix months endedMarchJune31,30, 2026:
Full comparison: every changed paragraph (31)
Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “expect,” “expects,” “expected,” “believe,” “intended,” “estimate,” “estimated,” “designed to,” “likely,” “could,” “would,” “may,” “will,” “futurewill” and “plans,future” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including related to any new or existing tariffs imposed by the U.S. and any retaliatory actions from other countries, geopolitical (including the current conflict in the Middle East and related effects on commodity prices) and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the Merger and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, capital allocation strategy and future share repurchases (if any), our previously-announced global transformation initiative (the “2024 Transformation Initiative”), and our previously-announced three-year 2024-2026 strategy, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”), and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors, including, but not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections.
Our net sales decreasedincreased 0.6%,1.3%, includingdriven by a 5.7%4.2% benefit from favorable foreign currency translation, for the threesix months ended MarchJune 31,30, 2026 compared with the threesix months ended MarchJune 31,30, 2025. The decreasedincreased net sales were driven by lower sales volumes of 6.2%, furthered by lower average selling prices and unfavorable product mix of 1.1%, partially offset by contributions of 1.0%0.9% from acquisitions completed during 2025 and 2026 in the Performance Coatings segment (the “Recent Acquisitions”)., partially offset by lower sales volumes of 3.5% and unfavorable average selling prices and product mix of 0.3%. The following trends impacted our segment net sales performance for the threesix months ended MarchJune 31,30, 2026:
•Performance Coatings: Net sales decreased 2.4% for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The decreased net sales were driven by lower sales volumes of 7.9%, furthered by lower average selling prices and unfavorable product mix of 1.8%, partially offset by contributions of 1.6% from the Recent Acquisitions and favorable foreign currency translation of 5.7% driven by fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar.
•MobilityPerformance Coatings: Net sales increased 2.8%1.0% for the threesix months ended MarchJune 31,30, 2026 compared with the threesix months ended MarchJune 31,30, 2025. The increased net sales were driven by favorable foreign currency translation of 5.8%3.8% driven by fluctuations of the Euro,Euro and Mexican Peso, Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar, and furthered by higher average selling prices and favorable product mixcontributions of 0.1%,1.4% from the Recent Acquisitions. The increased net sales were partially offset by lower sales volumes of 3.1%.4.1% and unfavorable average selling prices and product mix of 0.1%.
•Mobility Coatings: Net sales increased 1.9% for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increased net sales were driven by favorable foreign currency translation of 4.9% driven by fluctuations of the Chinese Yuan, Brazilian Real, Euro and Mexican Peso, in each case compared to the U.S. Dollar, partially offset by lower sales volumes of 2.3% and unfavorable average selling prices and product mix of 0.7%.
Our business serves four end-markets globally with net sales for the three and six months ended MarchJune 31,30, 2026 and 2025, as follows:
During November 2025, we entered into a Merger Agreement with AkzoNobel,AkzoNobel (as amended on May 27, 2026 and on July 23, 2026), providing for the combination of the Company and AkzoNobel in an all-stock merger. See Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
The conflict in the Middle East withininvolving Iran has increased the level of economic and political uncertainty globally. While our operations in the Middle East region do not constitute a material portion of our business, a significant escalation or expansion of economic disruption, countries subject to sanctions or the conflict'sconflict’s current scope, or a prolonged continuation of the conflict’s current scope, could have a material adverse effect on our results of operations, financial condition and cash flows. We are actively monitoring the broader global economic impact on commodities from the current conflict, including the price and supply of raw materials, transportation costs and utilities, among others.
During the threesix months ended MarchJune 31,30, 2026, we prepaid $50$125 million of the outstanding principal amount of the 2029 Dollar Term Loans. See Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025
Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025
Other (income) expense, net
(1) For the three and six months ended MarchJune 31,30, 2026, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, Germany, and the United States. For the three and six months ended MarchJune 31,30, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda statutory tax rate is primarily related to earnings in Germany, Switzerland, and the United States and Switzerland.States.
(2) Changes in valuation allowance primarily relate to operations in Luxembourg, the Netherlands, and the United Kingdom. During the three months ended June 30, 2026, the Company released $25 million of valuation allowance which is fully offset by changes in unrecognized tax benefits.
(3) Non-deductible expenses and interest includes tax impacts of $7 million and $12 million for the three and six months ended June 30, 2026, respectively, related to merger and acquisition-related costs, driven by the proposed Merger with AkzoNobel (4) The Company recorded tax of $27 million and $12 million for the three and six months ended June 30, 2026, respectively, related to unrecognized tax benefit adjustments resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits. The increase to unrecognized tax benefits for the three and six months ended June 30, 2026 is partially offset by changes in valuation allowance.
(5) Foreign taxes includes Pillar Two top-up taxes primarily attributable to Swiss operations of $2 million, $4 million, $2 million and $3 million for the three and six months ended June 30, 2026 and June 30, 2025, respectively.
(3) During the three months ended March 31, 2026, the Company recorded a tax benefit of $15 million related to the release of unrecognized tax benefits resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits.
At MarchJune 31,30, 2026, availability under the Revolving Credit Facility was $770$768 million, net of $30$32 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the Credit Agreement or the indentures governing our senior notes (the “Senior Notes”). Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $63$20 million at MarchJune 31,30, 2026.
We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Our 2027 Dollar Senior Notes have a principal amount of $500 million, bear interest at 4.750% and are due on June 15, 2027. ConsideringWe current market interest rates and the proposed merger with AkzoNobel, we mayhave intentionally not repayrepaid or refinancerefinanced these Senior Notes prior to June 15, 2026 which would require thesethe 2027 Dollar Senior Notes toas beof June 30, 2026; therefore, the related balances are classified as current liabilities on our condensed consolidated balance sheets beginning with the period endingat June 30, 2026. Regardless of this decision, weWe expect to repay or refinance the 2027 Dollar Senior Notes prior to or on their maturity date.
ThreeSix months ended MarchJune 31,30, 2026
Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 was $68$220 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $182$368 million. This was partially offset by changes in operating assets and liabilities of $114$148 million, for which the most significant drivers were decreases in other accrued liabilities of $96 million as well as increases in accounts and notes receivable, prepaid expenses and other assets and inventories of $32$109 million, $27$58 million and $20$53 million, respectively.respectively, as well as a decrease in other accrued liabilities of $40 million. These outflows were driven primarily by timing of collections from customers, seasonal cash payments for variable incentive compensation, payments of BIPs and rebates, timing of collections from customersrebates and decreasedseasonal salesinventory volumes.builds. These outflows were partially offset by increases in accounts payable of $90$139 million driven by the timing of payments to vendors.
Net cash used for investing activities for the threesix months ended MarchJune 31,30, 2026 was $53$97 million. The primary uses were for purchases of property, plant and equipment of $50$98 million and business acquisitions of $8 million, partially offset by $4 million of payments received on customer loans and $3$6 million from interest proceeds from swaps designated as net investment hedges,hedges whichand $5 million from payments received on customer loans. Details of the interest proceeds from swaps designated as net investment hedges are discussed further in Note 16 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Net cash used for financing activities for the threesix months ended MarchJune 31,30, 2026 was $61$143 million. The primary use was for prepayments of $50$125 million of the outstanding principal amount of the 2029 Dollar Term Loans, contractual debt repayments of $10 million and cash outflows of $6 million primarily due to stock-based compensation withholding tax settlements and contractual debt repayments of $5 million.settlements.
Currency exchange impacts on cash for the threesix months ended MarchJune 31,30, 2026 were unfavorable by $3$4 million, which was driven primarily by fluctuations of the Euro and Indian Rupee, partially offset by fluctuations in the Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar.
ThreeSix months ended MarchJune 31,30, 2025
Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2025 was $26$168 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $188$409 million. This was partially offset by changesnet in operating assets and liabilitiesuses of $162working capital of $241 million, for which the most significant drivers were decreases in other accrued liabilities of $106$111 million,million as well as increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $59$89 million, $37$56 million and $18$47 million, respectively. These outflows were driven primarily by seasonal cash payments for variable incentive compensation, payments of BIPs and rebates, increased production and timing of collections from customers. These outflows were partially offset by increases in accounts payable of $66$65 million driven by the timing of payments to vendors.
Net cash used for investing activities for the threesix months ended MarchJune 31,30, 2025 was $44$83 million. The primary uses were for purchases of property, plant and equipment of $43$88 million and a business acquisition of $6 million, partially offset by proceeds of $3$7 million from interest proceeds from swaps designated as net investment hedges.
Net cash used for financing activities for the threesix months ended MarchJune 31,30, 2025 was $8$78 million. The primary use was for purchases of our common stock of $65 million and contractual debt repayments of $5$10 million.
Currency exchange impacts on cash for the threesix months ended MarchJune 31,30, 2025 were favorable by $8$25 million, which was driven primarily by the fluctuations of the EuroEuro, Brazilian Real and BrazilianMexican Real,Peso, in each case compared to the U.S. Dollar.
We had cash and cash equivalents at MarchJune 31,30, 2026 and December 31, 2025 of $608$633 million and $657 million, respectively. Of these balances, $489$544 million and $555 million were maintained in non-U.S. jurisdictions as of MarchJune 31,30, 2026 and December 31, 2025, respectively. We believe at this time our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational and working capital needs.
We believe that we continue to maintain sufficient liquidity to meet our cash requirements, including our debt service obligations as well as our working capital needs. Availability under the Revolving Credit Facility was $768 million and $770 million at bothJune March 31,30, 2026 and December 31, 2025, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.
AXTA insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-19 | Tablin-Wolf Alex |
Option exercise | 4,877 | — | — |
| 2026-09-19 | Tablin-Wolf Alex |
Shares withheld for tax | 2,255 | $32.20 | $72.6K |
| 2026-09-19 | Tufano Amy |
Option exercise | 3,658 | — | — |
| 2026-09-19 | Tufano Amy |
Shares withheld for tax | 1,680 | $32.20 | $54.1K |
| 2026-08-14 | Anderson Carl Douglas Ii |
Option exercise | 20,657 | — | — |
| 2026-08-14 | Anderson Carl Douglas Ii |
Shares withheld for tax | 9,485 | $37.31 | $353.9K |
| 2026-08-01 | Massey Anthony |
Option exercise | 2,071 | — | — |
| 2026-08-01 | Massey Anthony |
Shares withheld for tax | 641 | $35.81 | $23.0K |
Well-known investors holding AXTA (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 6,547,107 | $224.0M | 0.14% | Added 28% |
| Millennium Management (Israel Englander) | 2026-06-30 | 5,466,995 | $187.1M | 0.13% | Added 31% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 1,456,234 | $49.8M | 0.12% | Added 281% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,162,734 | $39.4M | 0.01% | Reduced 77% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 488,586 | $13.5M | — | Sold out |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 334,718 | $11.5M | 0.02% | Reduced 48% |
| Two Sigma Investments | 2026-06-30 | 80,900 | $2.8M | 0.0% | Reduced 11% |
| Bridgewater Associates | 2026-06-30 | 50,914 | $1.7M | 0.01% | Reduced 54% |
| Baupost Group (Seth Klarman) | 2026-06-30 | 1,274,356 | $43.6K | 0.81% | New position |