Key Highlights

  • Adjusted EPS of USD 0.63 fell 6% year over year and landed below the consensus estimate of USD 0.70.
  • Net sales rose 2% to USD 1.311 billion, below the consensus estimate of USD 1.33 billion; GAAP EPS USD 0.44.
  • Mobility Coatings set a record with net sales of USD 493 million, and Commercial Vehicle sales grew 24%.
  • Adjusted EBITDA was USD 282 million at a 21.5% margin, and total net leverage reached a record low of 2.1x.

Axalta Coating Systems Ltd. (NYSE:AXTA) reported third quarter 2026 adjusted diluted earnings per share of USD 0.63, below a consensus estimate of USD 0.70 and down 6% from a year earlier. GAAP diluted EPS was USD 0.44 versus USD 0.51. Net sales rose USD 23 million to USD 1.311 billion, below a consensus estimate of USD 1.33 billion. Net income was USD 95 million compared with USD 110 million, and income from operations fell to USD 165 million from USD 204 million.

Refinish Europe Softness Offsets a Record Mobility Quarter

Chief Executive Officer Chris Villavarayan said results fell short of internal plans mainly because of weaker Refinish volumes in Europe, where distributors ordered more cautiously after five consecutive record sales quarters. Performance Coatings sales slipped 1% to USD 818 million, with Refinish at USD 504 million, down 2%, and Industrial at USD 314 million, up about 1%. Segment Adjusted EBITDA fell 11% to USD 188 million at a 23% margin, reflecting lower volumes, higher raw material and freight costs, and added spending to convert newly won body shop business.

Mobility Coatings sales rose 7% to a quarterly record of USD 493 million, with Light Vehicle at USD 374 million, up 2%, and Commercial Vehicle at USD 119 million, up 24%. Segment Adjusted EBITDA rose 13% to USD 94 million and margin widened 100 basis points to 19%. Companywide freight costs rose more than 15% from a year earlier on higher diesel prices.

Revised Near Term Targets and the AkzoNobel Merger

Management revised its outlook. Fourth quarter net sales are projected roughly flat year over year, compared with a prior projection of 3% growth. The company guides to fourth quarter Adjusted EBITDA of USD 254 to 264 million and adjusted EPS of about USD 0.55. For 2026 it guides to Adjusted EBITDA of USD 1.1 billion to USD 1.110 billion, adjusted EPS of about USD 2.45 and free cash flow of about USD 450 million, and above USD 500 million excluding deal costs.

On the all-stock merger with AkzoNobel, shareholders of both companies approved the deal on August 5, 2026, and regulatory clearance has been secured in two thirds of the required jurisdictions. The company said closing is anticipated in early 2027, targets about USD 600 million of annual run rate cost synergies with roughly 90% captured within three years, and plans to divest its North American Building Products business. The combined company, named Axanzo, is slated to list on the New York Stock Exchange under the symbol AXZ.

Signposts Before the Merger Closes

Several data points frame the next report. Fourth quarter Adjusted EBITDA guidance of USD 254 to 264 million and adjusted EPS of about USD 0.55 set the near term reference. Refinish Europe volumes, the source of the miss, remain the key operating variable, alongside Refinish pure price of 4.8%. Free cash flow of USD 92 million in the quarter, including about USD 21 million of merger costs, and total net leverage of 2.1x mark balance sheet progress. Regulatory clearances beyond the current two thirds and the early 2027 closing date remain open items.