10q10k10q10k.net

What changed in Axalta Coating Systems Ltd.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Axalta Coating Systems Ltd.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+409 added−365 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-13)

Top changes in Axalta Coating Systems Ltd.'s 2025 10-K

409 paragraphs added · 365 removed · 307 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

64 edited+9 added−5 removed62 unchanged
Biggest changeWe may also incur significant additional costs as a result of contamination that is discovered and/or government required remediation obligations that are imposed at these or other facilities in the future. 11 Table of Contents In addition, we are, or may become, subject to various climate disclosure regimes regulating the disclosure of GHG emissions and related information, such as the Securities and Exchange Commission’s (“SEC”) final rules under SEC Release No. 34-99678 and No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Final SEC Climate Rules”), European Union’s (“EU”) Corporate Sustainability Reporting Directive (“CSRD”) and California’s Climate Corporate Data Accountability Act and Climate Related Financial Risk Act (together, the “California Climate Laws”).
Biggest changeIn addition, we are, or may become, subject to various climate disclosure regimes regulating the disclosure of greenhouse gas (“GHG”) emissions, climate-related risks and opportunities and related information, such as the European Union’s (“EU”) Corporate Sustainability Reporting Directive (“CSRD”) and California’s Climate Corporate Data Accountability Act (also known as “SB 253”) and Climate Related Financial Risk Act (also known as “SB 261”, and together with SB 253, the “California Climate Laws”).
These trademarks include Abcite ® , Alesta ® , AquaEC ® , Audurra ® , Axalta Irus Mix™ , Axalta Irus Scan™, Axalta NextJet™, Axalta Nimbus™, Centari ® , Ceranamel ® , Challenger ® , Chemophan TM , ColorNet ® , Corlar ® , Cromax ® , Cromax Mosaic ® , Durapon 70 ® , Duxone ® , Harmonized Coating Technologies ® , Hydropon ® , Imron ® , Imron Elite TM , Imron ExcelPro TM , Lutophen TM , Nap-Gard ® , Nason ® , Raptor ® , Rival ® , Spies Hecker ® , Standox ® , Stollaquid TM , Syntopal TM , Syrox TM , U-POL ® , Vermeera TM and Voltatex ® , which are protected under applicable intellectual property laws and are the property of us and our subsidiaries.
These trademarks include Abcite ® , Alesta ® , AquaEC ® , Audurra ® , Axalta Irus Mix™ , Axalta Irus Scan™, Axalta NextJet™, Axalta Nimbus™, Centari ® , Ceranamel ® , Challenger ® , Chemophan TM , ColorNet ® , Corlar ® , Cromax ® , Cromax Mosaic ® , Durapon 70 ® , Duxone ® , Harmonized Coating Technologies ® , Hydropon TM , Imron ® , Imron Elite TM , Imron ExcelPro TM , Lutophen TM , Nap-Gard ® , Nason ® , Raptor ® , Rival ® , Spies Hecker ® , Standox ® , Stollaquid TM , Syntopal TM , Syrox TM , U-POL ® , Vermeera TM and Voltatex ® , which are protected under applicable intellectual property laws and are the property of us and our subsidiaries.
We strive to assure that all our manufacturing and distribution facilities are operated in compliance in all material respects with applicable environmental requirements. Investigation, remediation, operation and maintenance costs associated with environmental compliance and management of sites are a normal recurring part of our operations.
We strive to assure that all of our manufacturing and distribution facilities are operated in compliance in all material respects with applicable environmental requirements. Investigation, remediation, operation and maintenance costs associated with environmental compliance and management of sites are a normal recurring part of our operations.
Architects and designers can benefit from the advice of our in-house color experts, superior technical service and the latest trend collections available in our dedicated color experience rooms and digital tools. • Battery Solutions: New innovative technologies in liquid and powder coatings for battery performance, insulation and conduction to enable innovation in the electrification and energy transition market.
Architects and designers can benefit from the advice of our in-house color experts, superior technical service and the latest trend collections available in our dedicated color experience rooms and digital tools. • Energy & Battery Solutions: Innovative technologies in liquid and powder coatings for battery performance, insulation and conduction to enable innovation in the electrification and energy transition market.
In addition to the Axalta Irus Scan™, we offer customers several other color matching tools, including our VINdicator ® database, which identifies vehicle color based on its vehicle identification number, and traditional color matching fan decks. We have launched a completely hands-free mixing machine for our automotive refinish customers, Axalta Irus Mix™.
In addition to the Axalta Irus Scan™, we offer customers several other color matching tools, including our VINdicator ® database, which identifies vehicle color based on its vehicle identification number, and traditional color matching fan decks. We have launched a completely automated and hands-free mixing machine for our automotive refinish customers, Axalta Irus Mix™.
These new innovative technologies complement our existing solutions to insulate copper wire used in motors and transformers and our coatings insulate sheets forming magnetic circuits of motors and transformers, computer elements and other electrical devices to provide increased motor and power efficiency. • Transportation: Key provider of liquid and powder coatings for vehicle components, chassis, and agricultural, construction, and earth moving equipment, that protect against corrosion, provide increased durability, and deliver a superior appearance. • General Metal Finishing: Global provider of multiple technologies for a wide array of applications, including racking and shelving, metal furniture, appliances, protective coating, pipes and tubes, metal enclosures and fencing, industrial components, gutters, garage and entry doors, HVAC systems, metal wall panels, and power storage and electrical boxes.
These innovative technologies complement our solutions to insulate copper wire used in motors and transformers and our coatings insulate sheets forming magnetic circuits of motors and transformers, computer elements and other electrical devices to provide increased motor and power efficiency. • Transportation: Key provider of liquid and powder coatings for vehicle components, chassis, and agricultural, construction, and earth moving equipment, that protect against corrosion, provide increased durability, and deliver a superior appearance. • General Metal Finishing: Global provider of multiple technologies for a wide array of applications, including racking and shelving, metal furniture, appliances, protective coating, pipes and tubes, metal enclosures and fencing, industrial components, gutters, garage and entry doors, HVAC systems, metal wall panels, and power storage and electrical boxes.
Our Environment, Health, Safety (“EHS”) and Sustainability policies and standards are a key element of the foundation upon which we develop, market, manufacture, and distribute products and services to our global customers. In 2017, we established a Board-level committee responsible for the oversight of our EHS and Sustainability policies, performance, strategy and compliance matters.
Our Environment, Health, Safety (“EHS”) and Sustainability policies and standards are a key element of the foundation upon which we develop, market, manufacture, and distribute products and services to our global customers. In 2017, we established the EHS&S Committee, a Board-level committee responsible for the oversight of our EHS and Sustainability policies, performance, strategy and compliance matters.
Mobility Coatings End-Markets Light Vehicle Demand for light vehicle products is driven by regional light vehicle production. Light vehicle OEMs select coatings providers based on their global ability to deliver core and advanced technological solutions that improve exterior appearance and durability and provide long-term corrosion protection.
Mobility Coatings End-Markets Light Vehicle Demand for light vehicle coatings is driven by regional light vehicle production. Light vehicle OEMs select coatings providers based on their global ability to deliver core and advanced technological solutions that improve exterior appearance and durability and provide long-term corrosion protection.
These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. The OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed.
These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. These OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed.
Over the course of our history we have remained at the forefront of our industry by continually developing innovative coatings technologies designed to enhance the performance, appearance and sustainability attributes of our customers' products, while improving their productivity and profitability.
Over the course of our history we have remained at the forefront of our industry by continually developing innovative coatings technologies and services designed to enhance the performance, appearance and sustainability attributes of our customers’ products, while improving their productivity and profitability.
Axalta's ability to attract, develop and retain highly skilled talent requires us to focus on the engagement, growth and well-being of each team member. As a global coatings company, we have a diverse group of employees, including but not limited to management professionals, scientists, technicians, engineers, sales representatives, operators, supply chain experts, and administrative and customer service professionals.
Axalta’s ability to attract, develop and retain highly skilled talent requires us to focus on the engagement, growth and well-being of each team member. As a global coatings company, we have a dynamic group of employees, including but not limited to management professionals, scientists, technicians, engineers, sales representatives, operators, supply chain experts, and administrative and customer service professionals.
We operate our business in two operating segments, Performance Coatings and Mobility Coatings, serving four end-markets globally as highlighted below. The table above reflects numbers for the year ended December 31, 2024. 3 Table of Contents Net sales for our four end-markets and four regions for the year ended December 31, 2024 are highlighted below: Note: Latin America includes Mexico.
We operate our business in two operating segments, Performance Coatings and Mobility Coatings, serving four end-markets globally as highlighted below. The table above reflects numbers for the year ended December 31, 2025. 3 Table of Contents Net sales for our four end-markets and four regions for the year ended December 31, 2025 are highlighted below: Note: Latin America includes Mexico.
Our end-markets are among the most demanding in the coatings industry with high levels of required product performance that continuously evolve, with increasing expectations for productivity on customer lines and environmentally responsible products.
Our end-markets are among the most demanding in the coatings industry with high levels of product performance requirements that continuously evolve, with increasing expectations for productivity on customer lines and environmentally responsible products.
Performance Coatings Sales, Marketing and Distribution We leverage a large global refinish sales and technical support team to effectively serve our broad refinish customer base of approximately 93,000 body shops. Most of our products are supplied by our network of approximately 5,000 independent local distributors.
Performance Coatings Sales, Marketing and Distribution We leverage a large global refinish sales and technical support team to effectively serve our broad refinish customer base of approximately 96,000 body shops. Most of our products are supplied by our network of over 5,000 independent local distributors.
Performance Coatings Customers Within our Performance Coatings segment, we sell coatings to customers in more than 140 countries. Our top ten customers accounted for approximately 20% of our Performance Coatings net sales during the year ended December 31, 2024. In our industrial and refinish end-markets we serve both large OEMs and a broad, fragmented local customer base.
Performance Coatings Customers Within our Performance Coatings segment, we sell coatings to customers in more than 140 countries. Our top ten customers accounted for approximately 17% of our Performance Coatings net sales during the year ended December 31, 2025. In our industrial and refinish end-markets we serve both large OEMs and a broad, fragmented local customer base.
We actively apply for and obtain U.S. and foreign patents and trademarks on new products and process innovations and as of December 31, 2024, approximately 220 patent applications were pending throughout the world. Our primary purpose in obtaining patents is to protect the results of our research for use in operations and licensing.
We actively apply for and obtain U.S. and foreign patents and trademarks on new products and process innovations and as of December 31, 2025, approximately 240 patent applications were pending throughout the world. Our primary purpose in obtaining patents is to protect the results of our research for use in operations and licensing.
Our industrial end-market comprises a wide variety of industrial manufacturers, while our refinish end-market primarily comprises approximately 93,000 body shops, including: • Independent Body Shops: Single location body shops that utilize premium, mainstream or economy brands based on the local market. • Multi-Shop Operators (“MSOs”): Body shops with more than five locations focused on providing premium paint jobs with industry leading efficiency.
Our industrial end-market comprises a wide variety of industrial manufacturers, while our refinish end-market primarily comprises approximately 96,000 body shops, including: • Independent Body Shops: Single location body shops that utilize premium, mainstream or economy brands based on the local market. • Multi-Shop Operators ( “ MSOs”): Body shops with more than five locations focused on providing premium paint jobs with industry leading efficiency.
Mobility Coatings Customers We provide our products and services to light and commercial vehicle customers at over 220 assembly plants worldwide, including all the top ten global automotive manufacturers. We have a stable customer base and believe we are well positioned with the fastest growing OEMs in both the developed and emerging markets.
Mobility Coatings Customers We provide our products and services to light and commercial vehicle customers at over 200 assembly plants worldwide, including nine of the top ten global automotive manufacturers. We have a stable customer base and believe we are well positioned with the fastest-growing OEMs in both the developed and emerging markets.
Axalta strives to provide a wide variety of growth opportunities for our employees, including online trainings, on-the-job experience, education tuition assistance and financial counseling. We also aim to provide competitive compensation and benefits across all global locations. Safety is paramount and the well-being of our employees is our greatest responsibility.
Axalta strives to provide a wide variety of growth opportunities for our employees, including online training, on-the-job experiences, tuition assistance and financial counseling. We also aim to provide competitive compensation and benefits across all global locations. Safety is paramount and the well-being of our employees is our greatest responsibility.
Our refinish products and systems comprise a range of coatings layers, as well as fillers, aerosols, and adhesives required to match the vehicle's color and appearance, producing a repair surface indistinguishable from the adjacent surface. We provide systems that enable body shops to match more than 220,000 color variations, using a database with more than four million formulations, globally.
Our refinish products and systems comprise a range of coatings layers, as well as fillers, aerosols, and adhesives required to match the vehicle’s color and appearance, producing a repair surface indistinguishable from the adjacent surface. 5 Table of Contents We provide systems that enable body shops to match approximately 230,000 color variations, using a database with more than four million formulations, globally.
As of December 31, 2024, we had approximately 1,300 team members dedicated to technology development. We operate four major technology centers throughout the world where we develop and align our technology investments with regional business needs complemented by approximately 25 regional laboratories which provide local connection to our global customer base.
As of December 31, 2025, we had approximately 1,300 team members dedicated to technology development. We operate four major technology centers throughout the world where we develop and align our technology investments with regional business needs complemented by more than 20 development laboratories which provide local connection to our global customer base.
See Part I, Item 1A, “Risk Factors—Risks Related to our Business—Risks Related to Other Aspects of our Business—Our joint ventures may not operate according to our business strategy if our joint venture partners fail to fulfill their obligations.” 10 Table of Contents HUMAN CAPITAL RESOURCES We believe our success is realized through the engagement and commitment of our people .
See Part I, Item 1A, “Risk Factors—Risks Related to our Business—Risks Related to Other Aspects of our Business—Our joint ventures may not operate according to our business strategy if our joint venture partners fail to fulfill their obligations”. HUMAN CAPITAL RESOURCES We believe our success is realized through the engagement and commitment of our people .
Our top ten customers accounted for approximately 62% of our Mobility Coatings net sales during the year ended December 31, 2024. Mobility Coatings Competition We primarily compete against large multi-national suppliers such as AkzoNobel, BASF and PPG, as well as a few regional suppliers, in the light and commercial vehicle end-markets.
Our top ten customers accounted for approximately 61% of our Mobility Coatings net sales during the year ended December 31, 2025. 9 Table of Contents Mobility Coatings Competition We primarily compete against large multi-national suppliers such as AkzoNobel, BASF and PPG, as well as a few regional suppliers, in the light and commercial vehicle end-markets.
In 2024, Axalta's injury and illness performance resulted in a 0.30 OSHA Total Recordable Incident Rate (“TRIR”), compared to the 2.4 OSHA TRIR for the Paint and Coating Manufacturing Industry as a whole (according to the US Bureau of Labor Statistics 2023 data).
In 2025, Axalta’s injury and illness performance resulted in a 0.18 OSHA Total Recordable Incident Rate (“TRIR”), compared to the 2.6 OSHA TRIR for the Paint and Coating Manufacturing Industry as a whole (according to the US Bureau of Labor Statistics 2024 data).
The interpretation and enforcement of such climate disclosure regimes remains uncertain, and compliance may require the investment of significant resources, increase our costs, disrupt our business operations and pose reputational and other risks. Non-U.S.
The interpretation, timing, requirements and enforcement of such climate disclosure regimes remains uncertain, and compliance may require the investment of significant resources, increase our costs, disrupt our business operations and pose reputational and other risks.
Our fully consolidated joint venture-related net sales were $62 million, $62 million, and $79 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Our fully consolidated joint venture-related net sales were $63 million, $62 million, and $62 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Body shops look for manufacturers with productivity enhancements, regulatory compliance, consistent quality, the presence of ongoing technical support and exact color match technologies.
Body shops look for coatings manufacturers with productivity enhancements, regulatory compliance, consistent quality, the presence of ongoing technical support, an attractive service portfolio and exact color match technologies.
The proprietary nature of a coatings supplier's color systems, the substantial inventory needed to support a body shop and the body shop's familiarity with an established brand lead to high levels of customer retention.
The proprietary nature of a coatings supplier’s color systems, the substantial inventory needed to support a body shop and the body shop’s familiarity with an established brand lead to high levels of customer retention. Our customer retentions have been and continue to be strong.
We use our investor relations page at ir.axalta.com as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (or Reg. FD).
We also post all financial press releases, including earnings releases, to our website. We use our investor relations page at ir.axalta.com as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (or Reg. FD).
JOINT VENTURES At December 31, 2024, we were party to seven joint ventures, of which three were focused in the light vehicle end-market, two were focused in the refinish end-market and two were focused in the industrial end-market. At December 31, 2024, we were the majority shareholder, and/or exercised control, in five joint ventures, which we consolidated.
JOINT VENTURES At December 31, 2025, we were party to six joint ventures, of which three were focused in the light vehicle end-market, one was focused in the refinish end-market and two were focused in the industrial end-market. At December 31, 2025, we were the majority shareholder, and/or exercised control, in four joint ventures, which we consolidated.
This includes our Global Innovation Center located in Philadelphia, Pennsylvania, which opened in 2018 for global research, product development and technology initiatives and now serves as our global headquarters. PATENTS, LICENSES AND TRADEMARKS As of December 31, 2024, we had a global portfolio of approximately 680 issued patents and more than 520 trademarks.
This includes our Global Innovation Center located in Philadelphia, Pennsylvania, which opened in 2018 for global research, product development and technology initiatives and since 2024, has served as our global headquarters. PATENTS, LICENSES AND TRADEMARKS As of December 31, 2025, we had a global portfolio of approximately 610 issued patents and approximately 520 trademarks.
Our major industrial brands include Imron® Industrial, Tufcote™ Industrial, Corlar™ Industrial, Strenex™ Industrial, PercoTop®, Voltatex®, AquaEC™, Durapon®, Hydropon™, UNRIVALED™, and Ceranamel® for liquid coatings and Alesta®, Teodur®, Nap-Gard®, Abcite® and Plascoat® for powder coatings.
Our major industrial brands include Imron® Industrial, Tufcote™ Industrial, Corlar™ Industrial, Strenex™ Industrial, PercoTop®, Voltatex®, AquaEC™, Durapon70®, Ceranamel™, UNRIVALED™, Zenamel™ and Cerulean™ for liquid coatings and Alesta® series, Nap-Gard®, Abcite® and Plascoat® for powder coatings.
These characteristics may vary significantly, even for vehicles of the same make, model and original color, due to a variety of factors, including a vehicle's age, plant at which it was assembled, weather conditions and operating history.
The Axalta Irus Scan™ reads the vehicle color, evaluating both the unique flake and color characteristics of the specific vehicle. These characteristics may vary significantly, even for vehicles of the same make, model and original color, due to a variety of factors, including a vehicle’s age, plant at which it was assembled, weather conditions and operating history.
The interpretation and enforcement of such regulations are continuously evolving and there may be uncertainty with respect to how to comply with them. Noncompliance with GDPR and other data protection laws could result in damage to our reputation and payment of significant monetary penalties. WHERE YOU CAN FIND MORE INFORMATION Our website address is www.axalta.com.
The interpretation and enforcement of such regulations are continuously evolving and there may be uncertainty with respect to how to comply with them. Noncompliance with GDPR and other data protection laws could result in damage to our reputation and payment of significant monetary penalties.
Our sales force also helps to drive shop productivity improvements and to install or upgrade body shop color matching and mixing equipment to improve shop profitability. Once a coating and color system is installed, a body shop almost exclusively uses its specific supplier's products.
We currently have 48 customer training centers established globally, which helps to deepen our customer relationships. Our sales force also helps to drive shop productivity improvements and to install or upgrade body shop color matching and mixing equipment to improve shop profitability. Once a coating and color system is installed, a body shop almost exclusively uses its specific supplier’s products.
As of December 31, 2024, we had approximately 12,800 team members, inclusive of team members added from recent acquisitions, with 26% of our team members based in the U.S. and 74% based in international locations. Our workforce is distributed globally, with approximately 45% in the Americas, 37% in EMEA and 18% in Asia Pacific.
As of December 31, 2025, we had approximately 12,300 team members, inclusive of team members added from recent acquisitions, with 25% of our team members based in the U.S. and 75% based in international locations. Our workforce is distributed globally, with approximately 45% in the Americas, 36% in EMEA and 19% in Asia Pacific.
Cash provided by operating activities has typically been the greatest in the fourth quarter primarily driven by the timing of collections from our customers and payments to our vendors.
Cash provided by operating activities has typically been the greatest in the fourth quarter primarily driven by the timing of collections from our customers and payments to our vendors. Economic and weather conditions have altered, and could continue to alter, seasonal patterns.
Performance Coatings End-Markets Refinish Sales in the refinish end-market are driven by the number of vehicle collisions, owners' propensity to repair their vehicles, the number of miles vehicle owners drive and the size of the car parc.
The end-markets within this segment are refinish and industrial. 4 Table of Contents Performance Coatings End-Markets Refinish Sales in the refinish end-market are driven by the number of vehicle collisions, owners’ and insurers’ willingness to repair vehicles, the number of miles vehicle owners drive and the size of the car parc.
We post, and shareholders may access without charge, our recent filings and any amendments thereto of our annual reports on Form 10-K, quarterly reports on Form 10-Q and proxy statements as soon as reasonably practicable after such reports are filed with the SEC. We also post all financial press releases, including earnings releases, to our website.
We post, and shareholders may access without charge, our recent filings and any amendments thereto of our annual reports on Form 10-K, quarterly reports on Form 10-Q and proxy statements as soon as reasonably practicable after such reports are filed with the U.S. Securities and Exchange Commission (the “SEC”).
Sustainability is another important component of coatings supplier selection as the current market trend is for products that are inherently more environmentally friendly and use less energy, such as our specially-formulated waterborne and our high solids solventborne products that improve productivity and performance, while reducing the impact on the environment. 4 Table of Contents We develop, market and supply a complete portfolio of innovative coatings systems and color matching technologies to facilitate faster automotive collision repairs relative to competing technologies.
Sustainability is another important component of coatings supplier selection as the current market trend is for products that are inherently more environmentally friendly and use less energy, such as our specially-formulated waterborne and our high solids solventborne products that improve productivity and performance, while reducing the impact on the environment.
Where possible, we work to mitigate risks to our raw material supply through alternative sourcing strategies, strategic supplier relationships and maintaining strategic inventories. Raw materials represent our single largest production cost component. Prices for our raw materials generally fluctuate with supplier feedstock prices as well as supply and demand dynamics of the given raw material market.
Raw materials represent our single largest production cost component. Prices for our raw materials generally fluctuate with supplier feedstock prices as well as supply and demand dynamics of the given raw material market.
We own or otherwise have rights to the trademarks, service marks, copyrights and trade names used in conjunction with the marketing and sale of our products and services.
We have a significant number of trademarks and trademark registrations in the U.S. and in other countries, as described below. 10 Table of Contents We own or otherwise have rights to the trademarks, service marks, copyrights and trade names used in conjunction with the marketing and sale of our products and services.
In certain countries, we utilize importers that buy directly from us and actively market our products to body shops. Our relationships with our top ten distributors are longstanding and continue to contribute to our success in the global refinish market.
In certain countries, we utilize importers that buy directly from us and actively market our products to body shops.
As part of our efforts to drive cultural change and promote employee engagement, Axalta captures employee feedback via an annual engagement survey that is designed to provide insights into how employees can perform at their best.
As part of our efforts to promote employee engagement, Axalta captures employee feedback via an annual engagement survey that is designed to provide insights into how employees can perform at their best. Since its inception, employee participation in the survey has continued to increase, reaching an all-time high of 96% in 2025 and measures of engagement have steadily improved.
When health and safety incidents do occur, we work to determine the causes and eliminate the potential for future similar incidents.
We have further committed to employee safety by continuing to make significant safety-related capital investments at our sites. When health and safety incidents do occur, we work to determine the causes and eliminate the potential for future similar incidents.
Widely recognized in the industry for our advanced and patented technologies, we believe our products not only increase productivity and profitability for OEMs but also produce attractive and durable finishes. Our light vehicle coatings portfolio is one of the broadest in the industry.
Our products are designed to enhance the styling and appearance of a vehicle’s exterior while providing protection from the elements, extending the life of the vehicle. Widely recognized in the industry for our advanced and patented technologies, we believe our products not only increase productivity and profitability for OEMs but also produce attractive and durable finishes.
The coatings operation is a critical component of the light vehicle assembly process, requiring a high degree of precision, speed and productivity. The paint shop process typically includes a dip process, three application zones and three high-temperature ovens that cure each coating layer at temperatures ranging from 320°F to 400°F (i.e., “high bake”).
The paint shop process typically includes a dip process, three application zones and three high-temperature ovens that cure each coating layer at temperatures ranging from 320°F to 400°F (i.e., “high bake”). Our key products consist of the four main coatings layers: electrocoat (AquaEC ® ), primer (HyperDur™), basecoat (ChromaDyne™) and clearcoat (Lumeera™).
Industrial The industrial end-market comprises liquid, e-coat and powder coatings used in a broad array of end-business applications.
It would be time-consuming and costly for a new entrant to create such an extensive color inventory. Industrial The industrial end-market comprises liquid, e-coat and powder coatings used in a broad array of end-business applications.
Particularly for HDT applications, truck owners demand a significant variety of custom colors and advanced product technologies to enable custom designs. Our strong competitive position and growth are driven by our ability to provide customers with our market-leading brand, Imron ® , as well as leveraging our global product lines, regional knowledge and customer service.
Our strong competitive position and growth are driven by our ability to provide customers with our market-leading brand, Imron ® , as well as leveraging our global product lines, regional knowledge and customer service. 8 Table of Contents Mobility Coatings Products and Brands We develop and supply a complete coatings product line for light vehicle OEMs.
With that in mind, we have developed coatings technologies, including 3-Wet™, Eco-Concept™ and 2-Wet Monocoat™, that help our OEM customers lower costs by reducing energy consumption and increasing productivity. 8 Table of Contents In today's existing mobility ecosystem, coatings provide essential beauty and color to vehicle bodies while extending the useful life of the vehicle via durability-related properties such as chemical resistance and chip and corrosion protection.
In today’s existing mobility ecosystem, coatings provide essential beauty and color to vehicle bodies while extending the useful life of the vehicle via durability-related properties such as chemical resistance and chip and corrosion protection.
Our color matching technology provides Axalta-specific formulations that enable body shops to accurately match thousands of vehicle colors, regardless of vehicle brand, color, age or supplier of the original paint during production. It would be time-consuming and costly for a new entrant to create such an extensive color inventory.
We develop, market and supply a complete portfolio of innovative coatings systems and color matching technologies to facilitate faster automotive collision repairs relative to competing technologies. Our color matching technology provides Axalta-specific formulations that enable body shops to accurately match thousands of vehicle colors, regardless of vehicle brand, color, age or supplier of the original paint during production.
Our customer retentions have been and continue to be strong. 6 Table of Contents Our large direct sales team in industrial serves its end customers, driving demand which is then primarily filled directly or through channels of distribution and e-commerce.
Our large direct sales team in industrial serves its end customers, driving demand which is then primarily filled directly or through channels of distribution and e-commerce. We leverage this dedicated sales force and technical service team to provide regional support and identify global innovation projects to meet evolving market needs.
Economic and weather conditions have altered, and could continue to alter, seasonal patterns. 9 Table of Contents KEY RAW MATERIALS We use thousands of different raw materials, which fall into six broad categories: resins, pigments, solvents, monomers, isocyanates and additives. We purchase raw materials from a diverse group of global suppliers.
KEY RAW MATERIALS We use thousands of different raw materials, which fall into six broad categories: resins, pigments, solvents, monomers, isocyanates and additives. We purchase raw materials from a diverse group of global suppliers. Where possible, we work to mitigate risks to our raw material supply through alternative sourcing strategies, strategic supplier relationships and maintaining strategic inventories.
Our large refinish sales force manages relationships directly with our end-customers to drive demand for our products, which in turn are purchased through customers in our distributor network. Due to the local nature of the refinish industry, our sales force operates on a regional/country basis to provide clients with responsive customer service and local insight.
Our relationships with our top ten distributors are longstanding and continue to contribute to our success in the global refinish market. 6 Table of Contents Our large refinish sales force manages relationships directly with our end-customers to drive demand for our products, which in turn are purchased through customers in our distributor network.
The color matching process begins with a technician scanning a damaged vehicle with one of our advanced color matching tools, such as our Axalta Irus Scan™ hand-held spectrophotometer. The Axalta Irus Scan™ reads the vehicle color, evaluating both the unique flake and color characteristics of the specific vehicle.
Our color matching and retrieval systems allow customers to quickly match any color, reducing the need for body shop technicians to repeat the color matching process, which saves time and materials. The color matching process begins with a technician scanning a damaged vehicle with one of our advanced color matching tools, such as our Axalta Irus Scan™ hand-held spectrophotometer.
We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.
These customers comprise, among others, independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems.
We have a large color library and several well-known, long-standing premium brands, including Cromax ® , Standox ® , Spies Hecker ® , Syrox™, and Raptor ® , as well as other regional and local brands. 5 Table of Contents Our color matching and retrieval systems allow customers to quickly match any color, reducing the need for body shop technicians to repeat the color matching process, which saves time and materials.
We have a large color library and several well-known, long-standing premium brands, including Cromax ® , Standox ® , Spies Hecker ® , Syrox™, and Raptor ® , as well as other regional and local brands.
Over recent years, employee participation in the survey has increased significantly and measures of engagement have steadily improved, which we believe reflects our continued focus on addressing employee feedback and the needs of our global workforce, including our ongoing efforts to enhance internal communications, career development, and learning and development opportunities.
We believe these continued improvements reflect our commitment to focusing on addressing employee feedback and the needs of our global workforce, including a robust engagement in action program that has focused on enhancing internal communications, career development, and learning and development opportunities.
REGULATORY COMPLIANCE Our business is subject to significant regulations in all of the markets that we operate in and we are committed to operating our business in compliance with all applicable laws and regulations.
The Environment, Health, Safety and Sustainability Committee of our Board (the “EHS&S Committee”) has oversight of the Company’s policies to protect the health and safety of our employees and contractors (among others), and this committee regularly reviews data on our safety metrics and performance. 11 Table of Contents REGULATORY COMPLIANCE Our business is subject to significant regulations in all of the markets that we operate in and we are committed to operating our business in compliance with all applicable laws and regulations.
We are also party to a substantial number of patent licenses and other technology licensing agreements. We have a significant number of trademarks and trademark registrations in the U.S. and in other countries, as described below.
We are also party to patent licenses and other technology licensing agreements.
As part of their coverage efforts, salespeople introduce new products to body shops and provide technical support and ongoing training. We currently have 45 customer training centers established globally, which helps to deepen our customer relationships.
Due to the local nature of the refinish industry, our sales force operates on a regional/country basis to provide clients with responsive customer service and local insight. As part of their coverage efforts, salespeople introduce new products to body shops and provide technical support and ongoing training.
EMEA represents Europe, Middle East and Africa. SEGMENT OVERVIEW Performance Coatings Through our Performance Coatings segment, we provide high-quality sustainable liquid and powder coating solutions to both large regional and global customers and to a fragmented and local customer base. These customers comprise, among others, independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers.
See Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. SEGMENT OVERVIEW Performance Coatings Through our Performance Coatings segment, we provide high-quality sustainable liquid and powder coating solutions to both large regional and global customers and to a fragmented and local customer base.
The Compensation Committee of our Board of Directors (“Board”) has oversight of the Company's human capital management efforts. The Environment, Health, Safety and Sustainability Committee of our Board has oversight of the Company's policies to protect the health and safety of our employees and contractors, and this committee regularly reviews data on our safety metrics and performance.
These efforts have resulted in a recent recognition from the National Safety Council (“CEOs Who Get It”), honoring companies that demonstrate a commitment to worker safety and health. The Compensation Committee of our Board of Directors (“Board”) has oversight of the Company’s human capital management efforts.
One Axalta is a mindset where we focus on what is best for the overall organization, align and execute on our top priorities, act with speed and urgency, prioritize and simplify to eliminate unnecessary complexities, and break down silos to tackle our biggest challenges. We believe that focus on the One Axalta mindset positions us well for future success.
Axalta fosters a performance-driven culture rooted in the One Axalta way of working. One Axalta reflects our commitment to doing what is best for the enterprise, aligning and executing on top priorities, acting with speed and urgency, simplifying to eliminate unnecessary complexity, and breaking down silos to address our biggest challenges together.
Removed
We leverage this dedicated sales force and technical service team to provide regional support and identify global innovation projects to meet the evolving market needs.
Added
EMEA represents Europe, Middle East and Africa. Proposed Merger with Akzo Nobel N.V. During November 2025, we entered into a Merger Agreement (the “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 (the “Merger”).
Removed
Mobility Coatings Products and Brands We develop and supply a complete coatings product line for light vehicle OEMs. Our products are designed to enhance the styling and appearance of a vehicle's exterior while providing protection from the elements, extending the life of the vehicle.
Added
Particularly for HDT applications, truck owners demand a significant variety of custom colors and advanced product technologies to enable custom designs.
Removed
Our key products consist of the four main coatings layers: electrocoat (AquaEC ® ), primer (HyperDur™), basecoat (ChromaDyne™) and clearcoat (Lumeera™). The coatings process accounts for a majority of the total energy consumed during the light vehicle manufacturing process.
Added
Our light vehicle coatings portfolio is one of the broadest in the industry. The coatings operation is a critical component of the light vehicle assembly process, requiring a high degree of precision, speed and productivity.
Removed
In 2024, Axalta began a journey to foster a unified performance-driven culture across the organization rooted in a One Axalta mindset.
Added
The coatings process accounts for a majority of the total energy consumed during the light vehicle manufacturing process. With that in mind, we have developed coatings technologies, including 3-Wet™, Eco-Concept™ and 2-Wet Monocoat™, that help our OEM customers lower costs by reducing energy consumption and increasing productivity.
Removed
To accelerate adoption of this new way of working, a company-wide training goal was established for all employees, which included, among other things, training modules around our purpose and values and the One Axalta mindset.
Added
We believe this enterprise-wide approach positions Axalta well for future success. To embed this way of working, we have provided training to all employees focused on our purpose, values, and One Axalta principles.
Added
We may also incur significant additional costs as a result of contamination that is discovered and/or government-required remediation obligations that are imposed at these or other facilities in the future.
Added
For additional information, see Part I, Item 1A, “Risk Factors—Risks Related to Legal and Regulatory Compliance and Litigation—Evolving environmental, safety, product stewardship, consumer protection or other regulations and laws, including with respect to disclosure of metrics related to such areas, could have a material adverse effect on our business and consolidated financial condition”. Non-U.S.
Added
For additional information, see Part I, Item 1A, “Risk Factors—Risks Related to our Global Operations - As a global business, we are subject to risks associated with our non-U.S. operations and U.S. and foreign trade policy”.
Added
For additional information, see Part I, Item 1A, “Risk Factors—General Risk Factors - We are subject to complex and evolving data privacy laws”. WHERE YOU CAN FIND MORE INFORMATION Our website address is www.axalta.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

123 edited+75 added−32 removed144 unchanged
Biggest changeThese conditions include, but are not limited to, changes in a country's or region's social, economic or political conditions, military conflicts, including the current conflicts between Russia and Ukraine and in the Middle East, geopolitical disputes, including as a result of China-Taiwan relations, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, 15 Table of Contents semiconductor chip shortages, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, trapped cash issues, burdensome taxes and tariffs and other trade barriers, as well as the imposition of economic or other trade sanctions, each of which could impact our ability to do business in certain jurisdictions or with certain persons.
Biggest changeOur financial results could be affected by factors including, but not limited to, changes in trade, monetary and fiscal policies, laws and regulations, activities of U.S. and non-U.S. governments, agencies and similar organizations, changes in a country's or region's social, economic or political conditions, military conflicts, including the current conflicts between Russia and Ukraine and in the Middle East, geopolitical disputes, including as a result of China-Taiwan relations, trade regulations affecting production, pricing and marketing of products, local labor conditions and regulations, semiconductor chip shortages, reduced protection of intellectual property rights, changes in the regulatory or legal environment, restrictions on currency exchange activities, trapped cash issues, burdensome taxes and tariffs and other trade barriers, as well as the imposition of economic or other trade sanctions or other protectionist policies, each of which could impact our ability to do business in certain jurisdictions or with certain persons. 20 Table of Contents The U.S. government has taken actions or made proposals that are intended to address trade imbalances or trade practices and encourage increased production in the United States, including through measures such as the imposition of higher tariffs on imports into the U.S., the renegotiation of some U.S. trade agreements and other government regulations affecting trade between the U.S. and other countries where we conduct our business.
If our lenders are unable or unwilling to fund borrowings under their credit commitments or we are unable to borrow, it could negatively impact our business. We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs.
We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our lenders are unable or unwilling to fund borrowings under their credit commitments or we are unable to borrow, it could negatively impact our business.
A significant escalation or expansion of economic disruption or countries subject to sanctions or the scope of any of these conflicts could have a material adverse effect on our business, financial condition, results of operations and cash flows and could result in, among other things, supply chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign exchange rates, rising interest rates or heightened cybersecurity risks, any of which may adversely affect the Company’s business.
A significant escalation or expansion of economic disruption, countries subject to sanctions or the scope of any of these conflicts could have a material adverse effect on our business, financial condition, results of operations and cash flows and could result in, among other things, supply chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign exchange rates, rising interest rates or heightened cybersecurity risks, any of which may adversely affect the Company’s business.
Our accruals for costs and liabilities at sites where contamination is being investigated or remediated may not be adequate because the estimates on which the accruals are based depend on a number of factors, including the nature and extent of contamination, the outcome of discussions with regulatory agencies, available technology, site-specific information, remediation alternatives and, at multi-party sites, other Potentially Responsible Parties (“PRPs”) and the number and financial viability of the other PRPs.
Our accruals for costs and liabilities at sites where contamination is being investigated or remediated may not be adequate because the estimates on which the accruals are based depend on a number of factors, including the nature and extent of contamination, the outcome of discussions with regulatory agencies, available technology, site-specific information, remediation alternatives and, at multi-party sites, other Potentially Responsible Parties ("PRPs") and the number and financial viability of the other PRPs.
For example, it could: • limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, general corporate purposes or other purposes; • require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness; • expose us to the risk of high interest rates, as, over the term of our debt, the interest cost on a significant portion of our indebtedness is subject to changes in interest rates; • limit our ability to repurchase our common shares or pay dividends; • limit our flexibility in managing our business through our obligation to comply with customary financial and other covenants in the instruments governing our indebtedness, including the indentures governing our Senior Notes (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and the credit agreement governing our Senior Secured Credit Facilities (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K), which covenants are described in further detail in Note 19 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K; and • increase our vulnerability to and limit our flexibility in planning for, or reacting to, downturns in general economic conditions or in one or more of our businesses.
For example, it could: • limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, general corporate purposes or other purposes; • require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness; • expose us to the risk of high interest rates, as, over the term of our debt, the interest cost on a significant portion of our indebtedness is subject to changes in interest rates; • limit our ability to repurchase our common shares or pay dividends; • limit our flexibility in managing our business through our obligation to comply with customary financial and other covenants in the instruments governing our indebtedness, including the indentures governing our Senior Notes (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) and the credit agreement governing our Senior Secured Credit Facilities (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K), which covenants are described in further detail in Note 18 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K; and • increase our vulnerability to and limit our flexibility in planning for, or reacting to, downturns in general economic conditions or in one or more of our businesses.
Governmental inquiries or requirements involving PFAS could cause us to incur liability for damages or other costs, civil proceedings, including personal injury claims, class actions, the imposition of fines and penalties, or other remedies, as well as restrictions on or added costs for our business operations going forward.
Governmental inquiries or requirements involving PFAS and microplastics could cause us to incur liability for damages or other costs, civil proceedings, including personal injury claims, class actions, the imposition of fines and penalties, or other remedies, as well as restrictions on or added costs for our business operations going forward.
There is also heightened scrutiny by governments, regulators and potential plaintiffs on the usage of per- and polyfluoroalkyl substances (“PFAS”) in products, the role of PFAS in the contamination of soil, air and water and health concerns related to the use of products containing PFAS.
There is also heightened scrutiny by governments, regulators and potential plaintiffs on the usage of per- and polyfluoroalkyl substances (“PFAS”) and microplastics in products, the role of PFAS and microplastics in the contamination of soil, air and water and health concerns related to the use of products containing PFAS and microplastics.
In the event of such un-waived default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our Revolving Credit Facility (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation.
In the event of such un-waived default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our Revolving Credit Facility (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K) could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our ESG practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our sustainability practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their ESG practices and disclosure.
The loss of, or reduced purchases by, or our failure to meet our obligations to, any of our largest customers, or the consolidation of MSOs, distributors and/or body shops, could adversely affect our business, financial condition, results of operations and cash flows.
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, including MSOs, distributors and/or body shops, could adversely affect our business, financial condition, results of operations and cash flows.
For example, failure to meet customer expectations or contractual obligations related to the quality of our products has previously resulted in liabilities or indemnification claims, including those resulting from the operational matter discussed in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K; any such future failures may result in a material adverse impact on our business, financial condition, results of operations and cash flows.
For example, failure to meet customer expectations or contractual obligations related to the quality of our products has previously resulted in liabilities or indemnification claims, including those resulting from the operational matter discussed in Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K; any such future failures may result in a material adverse impact on our business, financial condition, results of operations and cash flows.
We face risks arising from various litigation matters and other claims that have been asserted against us or that may be asserted against us in the future, including, but not limited to, claims for product liability, patent and trademark infringement, antitrust, warranty, contract and third-party property damage or personal injury, including claims arising from the matters described in Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We face risks arising from various litigation matters and other claims that have been asserted against us or that may be asserted against us in the future, including, but not limited to, claims for product liability, patent and trademark infringement, antitrust, warranty, contract and third-party property damage or personal injury, including claims arising from the matters described in Note 5 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
I. du Pont de Nemours and Company (now known as EIDP, Inc., a subsidiary of Corteva, Inc.) (“EIDP”), including certain assets of DPC and all of the capital stock and other equity interests of certain entities engaged in the DPC business (the “Acquisition”), we could incur substantial costs, including costs relating to remediation and restoration activities and third-party claims for property damage or personal injury.
I. du Pont de Nemours and Company (now known as EIDP, Inc., a subsidiary of Corteva, Inc.) (“EIDP”), including certain assets of DPC and all of the capital stock and other equity interests of certain entities engaged in the DPC business (the "Acquisition"), we could incur substantial costs, including costs relating to remediation and restoration activities and third-party claims for property damage or personal injury.
During periods of volatility in the credit markets, there is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including, but not limited to, extending credit up to the maximum permitted by a credit facility, or allowing access to additional credit features.
During periods of volatility in the credit markets, there is risk that any lender, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including, but not limited to, extending credit up to the maximum permitted by a credit facility, or allowing access to additional credit features.
For example, during February 2024, we announced a global 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 cash flow generation (the “2024 Transformation Initiative”) and, at our Strategy Day in May 2024, we announced our three-year 2024-2026 strategy (the “2026 A Plan”).
For example, during February 2024, we announced a global 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 cash flow generation (the "2024 Transformation Initiative") and, at our Strategy Day in May 2024, we announced our three-year 2024-2026 strategy (the “2026 A Plan”).
While we attempt to limit the impact of fluctuations in the prices of raw materials by implementing raw material price adjustment mechanisms based on index pricing in certain of our contractual arrangements, such mechanisms may be ineffective and often lag market price changes and we can provide no assurance that we will be able to secure such contractual terms in future contracts or renewals of existing contracts.
While we attempt to limit the impact of such fluctuations by implementing raw material price adjustment mechanisms based on index pricing in certain of our contractual arrangements, such mechanisms may be ineffective and often lag market price changes and we can provide no assurance that we will be able to secure such contractual terms in future contracts or renewals of existing contracts.
Lastly, a tightening of credit markets and a high interest rate environment make it more difficult for our customers to borrow to fund construction activity, manufacturing operations and other capital projects, which in turn reduces demand for our products and could have a material adverse impact on our business, financial condition, results of operations and cash flows.
In addition, a tightening of credit markets and a high interest rate environment make it more difficult for our customers to borrow to fund construction activity, manufacturing operations and other capital projects, which in turn reduces demand for our products and could have a material adverse impact on our business, financial condition, results of operations and cash flows.
As of December 31, 2024, substantially all of our U.S. workforce was not unionized and approximately half of our workforce outside the U.S. was unionized or otherwise covered by labor agreements. Consequently, we have been and may in the future be subject to union campaigns, work stoppages, union negotiations and other labor disputes.
As of December 31, 2025, substantially all of our U.S. workforce was not unionized and approximately half of our workforce outside the U.S. was unionized or otherwise covered by labor agreements. Consequently, we have been and may in the future be subject to union campaigns, work stoppages, union negotiations and other labor disputes.
Any disruption of operations at one of these facilities, like those that occurred in North America in the second quarter of 2023 due to production constraints following our implementation of a new enterprise resource planning system (“ERP”) in the region in the quarter, have in the past and could in the future significantly affect our production, distribution or our ability to fulfill our contractual obligations, including to our largest customers, which have in the past and could in the future damage our customer relationships, and our business, financial condition, results of operations and cash flows could be adversely affected.
Any disruption of operations at one of these facilities, like that which occurred in North America in the second quarter of 2023 due to production constraints following our implementation of a new enterprise resource planning system ("ERP") in the region in the quarter, have in the past and could in the future significantly affect our production, distribution or our ability to fulfill our contractual obligations, including to our largest customers, which have in the past and could in the future damage our customer relationships, and our business, financial condition, results of operations and cash flows could be adversely affected.
Based on the market price of our common shares and the composition of our income, assets and operations, we do not expect to be treated as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes for the current taxable year or in the foreseeable future.
Based on the market price of our common shares and the composition of our income, assets and operations, we do not expect to be treated as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes for the current taxable year or in the foreseeable future.
We cannot assure you that we will be able to enter into these confidentiality agreements or that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information.
We cannot assure you that we will be able to enter into these confidentiality agreements or that they will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure.
Our existing patents will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect our competitive advantage stemming from the applicable products and 18 Table of Contents technologies.
Our existing patents will all eventually expire, after which we will not be able to prevent our competitors from using our previously patented technologies, which could materially adversely affect our competitive advantage stemming from the applicable products and 23 Table of Contents technologies.
When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of 23 Table of Contents any shareholders by other shareholders or by the company.
When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company's affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.
New government regulations could also result in new or more stringent forms of ESG oversight, including increased limitation on, or required reduction of, GHG emissions, and the expansion of mandatory and voluntary reporting, diligence, and disclosure regarding ESG matters.
New government regulations could also result in new or more stringent forms of sustainability oversight, including increased limitation on, or required reduction of, GHG emissions, and the expansion of mandatory and voluntary reporting, diligence, and disclosure regarding sustainability matters.
While we maintain safeguards to mitigate the effects of such incidents, we cannot be certain that such safeguards would be effective. These safeguards are reviewed periodically and modified to enable greater mitigation of such risks. See Part I, Item 1C, “Cybersecurity.” In addition, we rely extensively on information systems and technology to manage our business and summarize operating results.
While we maintain safeguards to mitigate the effects of such incidents, we cannot be certain that such safeguards would be effective. These safeguards are reviewed periodically and modified to enable greater mitigation of such risks. See Part I, Item 1C, “Cybersecurity”. In addition, we rely extensively on information systems and technology to manage our business and summarize operating results.
Several of the end-markets we serve are cyclical, and macroeconomic and other factors beyond our control have in the past and could in the future reduce demand from these end-markets for our products, including as a result of depressed demand for our customers' products or services, and materially adversely affect our business, financial condition, results of operations and cash flows.
Several of the end-markets we serve are cyclical, and macroeconomic and other factors beyond our control have in the past and could in the future reduce demand from these end-markets for our products, including as a result of depressed demand for 17 Table of Contents our customers' products or services, and materially adversely affect our business, financial condition, results of operations and cash flows.
There can be no assurance as to the outcome of these examinations. If our effective tax rates were to increase, or if the ultimate determination of the taxes owed by us is for an amount in excess of amounts previously accrued, our financial condition, operating results and cash flows could be adversely affected.
There can be no assurance as to the outcome of these examinations. If our effective tax rates were to 31 Table of Contents increase, or if the ultimate determination of the taxes owed by us is for an amount in excess of amounts previously accrued, our financial condition, operating results and cash flows could be adversely affected.
As described below in “Risks Related to Ownership of our Common Shares,” our ability to generate cash is dependent on the earnings and receipt of funds from our subsidiaries and joint ventures, which businesses are subject to prevailing economic and competitive conditions, and to financial, business, legislative, regulatory and other factors beyond our control.
As described below in "Risks Related to Ownership of our Common Shares", our ability to generate cash is dependent on the earnings and receipt of funds from our subsidiaries and joint ventures, which businesses are subject to prevailing economic and competitive conditions, and to financial, business, legislative, regulatory and other factors beyond our control.
Although we believe we have clearly reflected the economics of these transactions and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the 26 Table of Contents adequacy of our provision for taxes.
Although we believe we have clearly reflected the economics of these transactions and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes.
In addition, as a result of our operations and/or products, including our past operations and/or products related to our businesses prior to the acquisition of DuPont Performance Coatings (“DPC”), a business formerly owned by E.
In addition, as a result of our operations and/or products, including our past operations and/or products related to our businesses prior to the acquisition of DuPont Performance Coatings ("DPC"), a business formerly owned by E.
See Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on on guarantees of our customers' obligations to third parties.
See Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on guarantees of our customers’ obligations to third parties.
If these differences cause the joint ventures to deviate from our business strategy, our results of operations could be materially adversely affected. EIDP's potential breach of its obligations in connection with the Acquisition, including failure to comply with its indemnification obligations, may materially affect our business and operating results.
If these differences cause the joint ventures to deviate from our business strategy, our results of operations could be materially adversely affected. 24 Table of Contents EIDP’s potential breach of its obligations in connection with the Acquisition, including failure to comply with its indemnification obligations, may materially affect our business and operating results.
If our lenders are unable or unwilling to fund borrowings under their revolving credit commitments or we are unable to borrow from them, it could be difficult in such environments to obtain sufficient liquidity to meet our operational needs. Our ability to obtain additional capital on commercially reasonable terms may be limited.
If our lenders are unable or unwilling to fund borrowings under their revolving credit commitments or we are unable to borrow from them, it could be difficult to obtain sufficient liquidity to meet our operational needs. Our ability to obtain additional capital on commercially reasonable terms may be limited.
Further, our continued implementation of these programs may disrupt our operations and performance. We have in the past, and may in the future, fail to realize the full extent of the anticipated benefits from, or targets related to, such efforts and we cannot assure you that we will realize these benefits or targets.
Fu rther, our continued implementation of these programs may disrupt our operations and performance. We have in the past, and may in the future, fail to realize the full extent of the anticipated benefits from, or targets related to, such efforts and we cannot assure you that we will realize these benefits or targets.
Furthermore, many of our local businesses import or buy raw materials in a currency other than their functional currency, which can impact the operating results for these 25 Table of Contents operations if we are unable to mitigate the impact of the currency exchange fluctuations.
Furthermore, many of our local businesses import or buy raw materials in a currency other than their functional currency, which can impact the operating results for these operations if we are unable to mitigate the impact of the currency exchange fluctuations.
If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness, and we may not be able to obtain waivers of such defaults from our lenders.
If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments on our indebtedness, or if we otherwise fail to comply with the various covenants in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness, and we may not be able to obtain waivers of such defaults from our lenders.
As of December 31, 2024, we had approximately $3.4 billion of indebtedness on a consolidated basis. As of December 31, 2024, we were in compliance with all of the covenants under our outstanding debt instruments. We are more leveraged than some of our competitors, which could adversely affect our business plans. Our substantial indebtedness could have important consequences to you.
As of December 31, 2025, we had approximately $3.2 billion of indebtedness on a consolidated basis. As of December 31, 2025, we were in compliance with all of the covenants under our outstanding debt instruments. We are more leveraged than some of our competitors, which could adversely affect our business plans. Our substantial indebtedness could have important consequences to you.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our Senior Secured Credit Facilities in an amount sufficient to enable us to pay the principal, premium, if any, and interest on our indebtedness, or to fund our other liquidity needs, including planned capital expenditures.
Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our Senior 25 Table of Contents Secured Credit Facilities in an amount sufficient to enable us to pay the principal, premium, if any, and interest on our indebtedness, or to fund our other liquidity needs, including planned capital expenditures.
See Part III, Item 13, “Certain Relationships and Related Transactions and Director Independence.” We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers. We are a Bermuda exempted company.
See Part III, Item 13, "Certain Relationships and Related Transactions and Director Independence." We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive officers. We are a Bermuda exempted company.
The Organization for Economic Cooperation and Development (“OECD”), which represents a coalition of member countries glo bally, is supporting changes to numerous long-standing tax principles through its base erosion and profit shifting (“BEPS”) project.
The Organization for Economic Cooperation and Development (“OECD”), which represents a coalition of member countries globally, is supporting changes to numerous long-standing tax principles through its base erosion and profit shifting (“BEPS”) project.
Further, the loss of any of our large customers or significant changes in their level of purchases, as a result of changes in business conditions, working capital levels, product requirements, consolidation, inventory destocking or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Further, the loss of any of our large customers or significant changes in their level of purchases, as a result of changes in business conditions, working capital levels, product requirements, work stoppages, consolidation, inventory rationalization or otherwise, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If we cannot service our indebtedness, we may have to take actions 20 Table of Contents such as selling assets, issuing additional equity or reducing or delaying capital expenditures, strategic acquisitions and investments. Such actions, if necessary, may not be effected on commercially reasonable terms or at all.
If we cannot service our indebtedness, we may have to take actions such as selling assets, issuing additional equity or reducing or delaying capital expenditures, strategic acquisitions and investments. Such actions, if necessary, may not be effected on commercially reasonable terms or at all.
If we are found to have infringed on the patents, trademarks or other intellectual property rights of others, we may be subject to substantial claims for damages, which could materially impact our business, financial condition, results of operations and cash flow.
If we are found to have infringed on the intellectual property rights of others, we may be subject to substantial claims for damages, which could materially impact our business, financial condition, results of operations and cash flow.
Acquisitions and divestitures may also require us to devote significant internal resources and could divert management's attention away from operating our business. 19 Table of Contents Our joint ventures may not operate according to our business strategy if our joint venture partners fail to fulfill their obligations.
Acquisitions and divestitures may also require us to devote significant internal resources and could divert management's attention away from operating our business. Our joint ventures may not operate according to our business strategy if our joint venture partners fail to fulfill their obligations.
Risks Related to our Global Operations As a global business, we are subject to risks associated with our non-U.S. operations and U.S. and foreign trade policy. We conduct our business on a global basis, with approximately 65% of our 2024 net sales occurring outside the United States.
Risks Related to our Global Operations As a global business, we are subject to risks associated with our non-U.S. operations and U.S. and foreign trade policy. We conduct our business on a global basis, with approximately 69% of our 2025 net sales occurring outside the United States.
In addition, certain key customers have substantial purchasing power and leverage in negotiating contractual arrangements with us. These customers have demanded and may in the future demand contract terms that differ considerably from our standard terms and conditions.
In addition, certain key customers have substantial purchasing power and leverage in negotiating contractual arrangements with us. These customers have demanded and may in the future demand contract terms that differ considerably from our 18 Table of Contents standard terms and conditions.
We may be subject to changes in our tax rates and the adoption of tax legislation or exposure to additional tax liabilities that may adversely affect our results of operations. We are subject to taxes in the U.S. and non-U.S. jurisdictions where our subsidiaries are organized.
We may be subject to changes in our tax rates, the adoption of tax legislation or additional tax liabilities, each of which may adversely affect our results of operations. We are subject to taxes in the U.S. and non-U.S. jurisdictions where our subsidiaries are organized.
While we have certain plans in place that are 14 Table of Contents intended to mitigate the risks of such manufacturing concentration, we cannot be certain that such contingency plans would be effective.
While we have certain plans in place that are intended to mitigate the risks of such manufacturing concentration, we cannot be certain that such contingency plans would be effective.
For example: • under difficult market conditions there can be no assurance that borrowings under our Revolving Credit Facility would be available or sufficient to meet our operational needs, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all; • in order to respond to market conditions, we may need to seek waivers from the applicability of various provisions in the credit agreement governing our Senior Secured Credit Facilities or the indentures governing our Senior Notes, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all; 21 Table of Contents • market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly; and • market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.
For example: • under difficult market conditions there can be no assurance that borrowings under our Revolving Credit Facility would be available or sufficient to meet our operational needs, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all; • in order to respond to market conditions, we may need to seek waivers from the applicability of various provisions in the credit agreement governing our Senior Secured Credit Facilities or the indentures governing our Senior Notes, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all; and • market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly.
Recently adopted disclosure requirements related to ESG, including the Final SEC Climate Rules, the EU’s CSRD and CSDDD and the California Climate Laws, have already and will continue to increase our ESG-related compliance costs, which could result in increases to our overall operational costs.
Recently adopted disclosure requirements related to sustainability, including the EU’s CSRD and CSDDD and the California Climate Laws, have already and will continue to increase our sustainability-related compliance costs, which could result in increases to our overall operational costs.
We have some customers that purchase a large amount of products from us and we are also reliant on distributors to assist us in selling our products. Our largest single customer accounted for approximately 5% of our 2024 net sales and our largest distributor accounted for approximately 3% of our 2024 net sales.
We have some customers that purchase a large amount of products from us and we are also reliant on distributors to assist us in selling our products and servicing certain customers. Our largest single customer accounted for approximately 5% of our 2025 net sales and our largest distributor accounted for approximately 2% of our 2025 net sales.
The payment of future dividends, if any, will be at the discretion of our Board and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other relevant considerations.
The payment of future dividends, if any, will be at the discretion of our Board and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends (including pursuant to the Merger Agreement during the pendency of the Merger) and other relevant considerations.
These factors include, among others: delays in the anticipated timing of activities related to such growth initiatives, strategies and operating plans, including those related to actions needed to satisfy legal requirements in certain jurisdictions; increased difficulty and cost in implementing these efforts; adverse legal, reputational and financial effects on the Company resulting from such efforts; and the incurrence of other unexpected costs associated with operating the business.
These factors include, among others: delays in the anticipated timing of activities related to such growth initiatives, strategies and operating plans, including those related to actions needed to satisfy legal requirements in certain jurisdictions; adverse changes in demand for our products; increased difficulty and cost in implementing these efforts; adverse legal, reputational and financial effects on the Company resulting from such efforts; the incurrence of other unexpected costs associated with operating the business; and management’s time and attention paid to the Merger.
As described in greater detail in the “Performance Coatings Competition” section on page 7 and the “Mobility Coatings Competition” section on page 9, we face substantial competition from many international, national, regional and local competitors of various sizes in the manufacturing, distribution and sale of our coatings and related products.
As described in greater detail in the "Performance Coatings Competition" section on page 7 and the "Mobility Coatings Competition" section on page 10, we face substantial competition from many international, national, regional and local competitors of various sizes in the manufacturing, distribution and sale of our coatings and related products.
For example, consolidation among distributors, like that seen within the refinish end-market in 2024, may create larger enterprises with greater negotiating power, resulting in changes to purchasing behaviors (including if the resulting business engages in inventory destocking measures) or the loss of our customers if the resulting business 13 Table of Contents chooses to use one of our competitors for the consolidated business.
For example, consolidation among distributors, like that seen within the refinish end-market in 2024 and 2025, may create larger enterprises with greater negotiating power and has resulted, and may in the future result in changes to purchasing behaviors (including inventory rationalization measures) or the loss of our customers if the resulting business chooses to use one of our competitors for the consolidated business.
We use systems and tools that incorporate technologies based on AI, including systems and tools that may include generative AI for customers and our workforce. As with many new and emerging technologies, AI presents numerous risks and challenges that could adversely affect our business.
Artificial intelligence (“AI”) technologies may enable disruption in our industry and threaten our competitive positioning. We use systems and tools that incorporate technologies based on AI, including systems and tools that may include generative AI for customers and our workforce. As with many new and emerging technologies, AI presents numerous risks and challenges that could adversely affect our business.
Russia's conflict with Ukraine, conflicts in the Middle East and the sanctions and other measures imposed by various governments in response to these conflicts (including the additional sanctions against Belarus that became effective during 2024) have increased the level of economic and political uncertainty globally.
Russia's conflict with Ukraine, conflicts in the Middle East and the sanctions and other measures imposed by various governments in response to these conflicts have increased the level of economic and political uncertainty globally.
This volatility has had a significant impact on the market price of securities issued by many companies, including us and other companies in our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies.
In addition, over the past several years, the stock markets have experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including us and other companies in our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies.
If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected. We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved.
We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors and have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved.
These divestitures may result in continued financial involvement in the divested businesses, such as through indemnities, guarantees or other financial arrangements. These arrangements could result in financial obligations imposed upon us, reduce our net sales and profitability and could affect our future financial condition, results of operations and cash flows.
These divestitures may result in continued financial involvement in the divested businesses, such as through indemnities, guarantees or other financial arrangements, and could ultimately impose additional financial obligations upon us, affecting our financial condition, results of operations and cash flows.
If our lenders are unable to fund borrowings under their credit commitments or we are unable to borrow from them for any reason, our business could be negatively impacted.
We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our lenders are unable to fund borrowings under their credit commitments or we are unable to borrow from them for any reason, our business could be negatively impacted.
Geopolitical tensions or conflicts may further heighten the risk of cyber attacks, and the emergence and maturation of artificial intelligence capabilities may also lead to more sophisticated methods of attack.
In addition, these attacks may increase in frequency or intensity during the pendency of the Merger. Geopolitical tensions or conflicts may further heighten the risk of cyber attacks, and the emergence and maturation of artificial intelligence capabilities may also lead to more sophisticated methods of attack.
This has in the past and could in the future cause a related decline in demand for our automotive refinish coatings because, as the age of a vehicle increases, the propensity of car owners to pay for cosmetic repairs generally decreases. Also, during difficult economic times, car owners may refrain from seeking repairs for their damaged vehicles.
This has in the past and could in the future cause a related decline in demand for our automotive refinish coatings because, as the age of a vehicle increases, the propensity of car owners to pay for cosmetic repairs generally decreases.
Our manufacturing activities and products, both inside and outside of the U.S., are subject to regulation by various federal, state, provincial and local laws, regulations and government agencies, including the EPA, as well as other authorities both inside and outside of the U.S.
Our manufacturing activities and products, both inside and outside of the U.S., are subject to regulation by various federal, state, provincial and local laws, regulations and government agencies, including the EPA, as well as other authorities both inside and outside of the U.S. Legal and regulatory systems in emerging and developing markets may be less developed and less consistent.
The potential for future terrorist acts, conflicts, wars, adverse weather conditions, natural disasters, power outages, pandemics or other public health crises and environmental incidents and the national and international responses to such events or perceived threats or potential conflicts relating to or arising out of such events may create economic and political uncertainties and challenges for us, our customers, suppliers and logistic partners that could have a materially adverse effect on our business, financial condition, results of operations and cash flows.
The potential for such events, the national and international responses to such events, or perceived threats or potential conflicts relating to or arising out of such events may create economic and political uncertainties and challenges for us, our customers, suppliers and logistic partners that could have a materially adverse effect on our business, financial condition, results of operations and cash flows.
An adverse outcome in any one or more of these matters could be material to our business, financial condition, results of operations and cash flows. 17 Table of Contents 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.
A future adverse ruling or unfavorable development in any one or more of these matters could result in future charges that could have a material adverse effect on us or could be material to our business, financial condition, results of operations and cash flows. 22 Table of Contents 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.
In addition, legal and regulatory systems in emerging and developing markets may be less developed and less consistent. Laws and regulations, and the interpretation and enforcement thereof, may change as a result of a variety of factors, including political, economic, regulatory or social events or in response to climate change.
Laws and regulations, and the interpretation and enforcement thereof, may change as a result of a variety of factors, including political, economic, regulatory or social events or in response to climate change.
In addition to the risks associated with raw materials prices, supplier capacity constraints, supplier production disruptions, including supply disruptions from our sole source or other key suppliers, supply chain and logistics congestion and disruptions, increasing costs for energy and freight, the unavailability of certain raw materials or disruptions to our key tolling arrangements could result in harm to our manufacturing capabilities or supply imbalances that may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Supplier capacity constraints, supplier production disruptions, including as a result from work stoppages, supply chain and logistics congestion and disruptions, the unavailability of certain raw materials or disruptions to our key tolling arrangements could also result in harm to our manufacturing capabilities or supply imbalances that may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Although we continually seek to improve our countermeasures to prevent such events, we may be unable to anticipate every scenario and it is possible that certain cyber threats or vulnerabilities will be undetected or unmitigated in time to prevent an attack on us and our customers.
Although we continually seek to improve our countermeasures to prevent such events, we may be unable to anticipate every scenario and it is possible that certain cyber threats or vulnerabilities will be undetected or unmitigated in time to prevent an attack on us and our customers, which risk is especially heightened when demands of management’s attention are heightened in other areas such as the Merger.
In addition, we may be subject to heightened scrutiny, negative publicity, boycotts, lawsuits or demands from activists, politicians or other individuals or organizations opposed to ESG regarding our human capital and diversity and ESG initiatives, including those discussed in the following paragraph, and the expectations of these individuals or organizations may conflict with regulatory requirements or stakeholder expectations.
In addition, we may be subject to heightened scrutiny, negative publicity, boycotts, lawsuits or demands from activists, politicians or other individuals or organizations opposed to sustainability, and the expectations of these individuals or organizations may conflict with regulatory requirements or stakeholder expectations.
The price of our common shares has and may in the future fluctuate significantly, and you could lose all or part of your investment. Volatility in the market price of our common shares may prevent you from being able to sell your common shares at or above the price you paid for your common shares.
Volatility in the market price of our common shares may prevent you from being able to sell your common shares at or above the price you paid for your common shares.
There is no guarantee that our common shares will appreciate in value or even maintain the price at which our shareholders have purchased their shares.
Therefore, the success of an investment in our common shares will depend upon any future appreciation in their value. There is no guarantee that our common shares will appreciate in value or even maintain the price at which our shareholders have purchased their shares.
In particular, we are exposed to the Euro, the Brazilian Real, the Chinese Yuan, the British Pound, the Australian Dollar, the Turkish Lira, the Mexican Peso, the Polish Zloty and the Argentinian Peso.
In particular, we are exposed to the Euro, the Brazilian Real, the Chinese Yuan, the British Pound, the Australian Dollar, the Turkish Lira, the Mexican Peso, the Indian Rupee, the Swedish Krona, the Swiss Franc and the Argentinian Peso, among others.
Failure to develop and market new products and manage product life cycles could impact our competitive position and have a material adverse effect on our business, financial condition, results of operations and cash flows.
Moreover, rising costs of freight, logistics, energy or labor may increase our cost of sales and reduce our profitability. Failure to develop and market new products and manage product life cycles could impact our competitive position and have a material adverse effect on our business, financial condition, results of operations and cash flows.
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.
Additionally, we may not achieve the benefits, including synergies and cost savings, 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. Furthermore, we have in the past made and may in the future make divestitures from time to time.
From time to time, we may commence operations at new manufacturing facilities, such as the Mobility Coatings manufacturing facility we opened in 2023 in Jilin City, Jilin Province, China, and cease operations at existing manufacturing facilities, including through relocating, eliminating or utilizing alternative sources for such operations.
From time to time, we may commence operations at new manufacturing facilities and cease operations at existing manufacturing facilities, including through relocating, eliminating or utilizing alternative sources for such operations.
If any of our key distributors or third-party delivery providers experiences a significant disruption, our products may not be timely delivered. Distributors may also decide to reduce their levels of inventory with respect to our products, which could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Distributors may also decide to reduce their levels of inventory with respect to our products, which could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Such changes could increase the price we pay for certain raw materials we import from such countries, for which we may not able to obtain alternative supply at equivalent or lower prices, reduce demand for our products in other countries and adversely impact the U.S. economy or certain sectors thereof or the economy of other countries in which we conduct operations, our industry and supply chain, all of which could have a material adverse effect on our business, financial condition and results of operations.
In addition, these changes could reduce demand for our products in other countries and adversely impact the U.S. economy or certain sectors thereof or the economy of other countries in which we conduct operations, our industry and supply chain, all of which could have a material adverse effect on our business, financial condition and results of operations.
Difficult global economic conditions, including significant volatility in the capital, credit and commodities markets, low levels of business and consumer confidence and high levels of unemployment in certain parts of the world, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Difficult global economic conditions, including significant volatility in the capital, credit and commodities markets, low levels of business and consumer confidence and high levels of unemployment in certain parts of the world, could affect our business in a number of ways.
Terrorist acts, conflicts, wars, natural disasters, pandemics and other health crises, among other events beyond our control, may materially adversely affect our business, financial condition, results of operations and cash flows.
Accordingly, fluctuations in foreign exchange rates may have an adverse effect on our financial condition, results of operations and cash flows. 30 Table of Contents Terrorist acts, conflicts, wars, natural disasters, pandemics and other health crises, among other events beyond our control, may materially adversely affect our business, financial condition, results of operations and cash flows.

… 150 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−0 removed8 unchanged
Biggest changeTo facilitate the success of this program, multidisciplinary teams throughout the Company are deployed to address cybersecurity threats and to respond to cybersecurity incidents in accordance with the Company’s policies. These teams report to an incident response governance team, which is composed of members of the Company’s senior leadership team.
Biggest changeTo facilitate the success of this program, multidisciplinary teams throughout the Company are deployed to address cybersecurity threats and to respond to cybersecurity incidents in accordance with the Company’s policies. These teams report to an incident response governance team, which is composed of members of the Company’s senior leadership team, including the CIO.
For additional information regarding how cybersecurity threats have affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition, see Part I, Item 1A, “Risk Factors—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, which could harm our reputation, financial condition, operating results and cash flows.” 28 Table of Contents
For additional information regarding how cybersecurity threats have affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition, see Part I, Item 1A, “Risk Factors—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, which could harm our reputation, financial condition, operating results and cash flows.” 33 Table of Contents
Throughout the year, the Audit Committee receives relevant updates from management on cybersecurity matters, which address a wide range of topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the overall threat environment, technological trends, global employee training and efforts to enhance the Company’s cybersecurity capabilities and preparedness.
Throughout the year, the Audit Committee receives regular updates from management on cybersecurity matters, which address a wide range of topics including, for example, recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the overall threat environment, technological trends, global employee training and efforts to enhance the Company’s cybersecurity capabilities and preparedness.
The CIO has 24 years of experience in the information technology and cybersecurity field, including previous roles in security architecture, audit, compliance, and governance. Under the oversight of the GDISC, members of the Company’s Information Technology and Compliance departments administer the Company's cybersecurity response policies, including assessing cybersecurity incidents as they occur and determining the severity of any cybersecurity incidents.
The CIO has 25 years of experience in the information technology and cybersecurity field, including previous roles in security architecture, audit, compliance, and governance. Under the oversight of the GDISC, members of the Company’s Information Technology and Compliance departments administer the Company’s cybersecurity response policies, including assessing cybersecurity incidents as they occur and determining the severity of any cybersecurity incidents.
The GDISC has 22 years of experience in the information technology and cybersecurity field, including previous roles in cybersecurity leadership, governance, and technology architecture and engineering. The GDISC reports to the Company’s Chief Information Officer (the “CIO”), who reports directly to the Senior Vice President, Chief Financial Officer.
The GDISC has 23 years of experience in the information technology and cybersecurity field, including previous roles in cybersecurity leadership, governance, and technology architecture and engineering. The GDISC reports to the Company’s Chief Information Officer (the “CIO”), who reports directly to the Senior Vice President, Chief Financial Officer.
The Company periodically engages assessors, consultants, auditors and other third parties to assess our cybersecurity programs, including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness. The Company attempts to adjust its cybersecurity policies, standards, processes and practices as necessary based on the information provided by the assessments, audits and reviews.
The Company periodically engages assessors, consultants, auditors and other third parties to assess our cybersecurity programs, including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness. The Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by the assessments, audits and reviews.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−1 removed0 unchanged
Biggest changeThe table below presents summary information regarding our facilities as of December 31, 2024. Type of Facility/Country Location Segment Manufacturing Facilities North America Canada Cornwall, ON Performance Milton, ON Performance United States of America Brighton, MI Performance Fridley, MN Performance Front Royal, VA (1) Performance; Mobility Ft.
Biggest changeType of Facility/Country Location Segment Manufacturing Facilities North America Canada Cornwall, ON Performance Milton, ON Performance United States of America Brighton, MI Performance Fridley, MN Performance Front Royal, VA (1) Performance; Mobility Ft. Madison, IA Performance; Mobility High Point, NC Performance Houston, TX Performance Jacksonville, TX Performance Madison, AL Performance Mt.
Clemens, MI (1) Performance; Mobility Orrville, OH Performance Riverside, CA Performance Sacramento, CA (1) Performance Latin America Brazil Guarulhos Performance; Mobility Colombia Cartagena de Indias Performance Guatemala Amatitlan Performance Mexico Apodaca Performance Ocoyoacac Performance Tlalnepantla Performance; Mobility EMEA Austria Guntramsdorf Performance; Mobility France Montbrison Performance Germany Landshut Performance Wuppertal Performance; Mobility Netherlands Zuidland Performance Sweden Västervik Performance Switzerland Bulle Performance Turkey Gebze Performance; Mobility Çerkezköy Performance United Kingdom Darlington Performance Farnham Performance Huthwaite Performance Wellingborough Performance United Arab Emirates Ras Al Khaimah Performance Asia Pacific China Jilin Performance; Mobility Jiading Performance; Mobility Qingpu Performance Ma'anshan Performance India Savli Performance; Mobility Malaysia Shah Alam Performance Shah Alam Performance Thailand Bangplee Performance; Mobility 29 Table of Contents Type of Facility/Country Location Segment Joint Venture Manufacturing Facilities Indonesia Cikarang Performance Joint Venture Partner Manufacturing Facilities South Africa Port Elizabeth Mobility Technology Centers China Shanghai Performance; Mobility Germany Wuppertal Performance; Mobility United States of America Mt.
Clemens, MI (1) Performance; Mobility Orrville, OH Performance Riverside, CA Performance Sacramento, CA (1) Performance Latin America Brazil Guarulhos Performance; Mobility Colombia Cartagena de Indias Performance Guatemala Amatitlan Performance Mexico Apodaca Performance Ocoyoacac Performance Tlalnepantla Performance; Mobility EMEA Austria Guntramsdorf Performance; Mobility France Montbrison Performance Germany Wuppertal Performance; Mobility Netherlands Zuidland Performance Sweden Västervik Performance Switzerland Bulle Performance Turkey Gebze Performance; Mobility United Kingdom Darlington Performance Farnham Performance Huthwaite Performance Wellingborough Performance United Arab Emirates Ras Al Khaimah Performance Asia Pacific China Jilin Performance; Mobility Jiading Performance; Mobility Qingpu Performance Ma’anshan Performance India Savli Performance; Mobility Malaysia Shah Alam Performance Shah Alam Performance Thailand Bangplee Performance; Mobility 34 Table of Contents Type of Facility/Country Location Segment Joint Venture Manufacturing Facilities Indonesia Cikarang Performance Joint Venture Partner Manufacturing Facilities South Africa Port Elizabeth Mobility Technology Centers China Shanghai Performance; Mobility Germany Wuppertal Performance; Mobility United States of America Mt.
Clemens, MI Performance; Mobility Philadelphia, PA Performance; Mobility Customer Training Centers Location by Region Number of Facilities North America 11 Latin America 2 EMEA 15 Asia Pacific 17 (1) Subject to a mortgage under our Senior Secured Credit Facilities.
Clemens, MI Performance; Mobility Philadelphia, PA Performance; Mobility Customer Training Centers Location by Region Number of Facilities North America 11 Latin America 2 EMEA 18 Asia Pacific 17 (1) Subject to a mortgage under our Senior Secured Credit Facilities.
We own 28 of our manufacturing facilities, two of our technology centers, and 12 of our customer training centers, while the rest of the facilities and centers are leased. We believe that our properties as currently constituted are suitable, adequate and provide sufficient productive capacity for our current operations.
We own 27 of our manufacturing facilities, two of our technology centers, and 12 of our customer training centers, while the rest of the facilities and centers are leased. We believe that our properties as currently constituted are suitable, adequate and provide sufficient productive capacity for our current operations.
ITEM 2. PROPERTIES In February 2024, we moved our corporate headquarters from Glen Mills, PA to Philadelphia, PA. Our extensive geographic footprint comprises 44 manufacturing facilities (including two manufacturing sites operated by our joint ventures), four major technology centers and 45 customer training centers supporting our global operations.
ITEM 2. PROPERTIES Our extensive geographic footprint comprises 42 manufacturing facilities (including two manufacturing sites operated by our joint ventures), four major technology centers and 48 customer training centers supporting our global operations. The table below presents summary information regarding our facilities as of December 31, 2025.
Removed
Madison, IA Performance; Mobility High Point, NC Performance Houston, TX Performance Jacksonville, TX Performance Madison, AL Performance Mt.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeWe do not expect that any currently pending lawsuits will have a material adverse effect on us as discussed in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Biggest changeWe do not expect that any currently pending lawsuits will have a material adverse effect on us as discussed in Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

11 edited+0 added−0 removed12 unchanged
Biggest changeVillavarayan currently serves as a Director on the Board of Franklin Electric and Focus: HOPE, a Detroit-based non-profit organization. Mr. Villavarayan earned his B.S. in civil engineering from McMaster University and completed the Wharton Executive Education Advanced Finance Program. Carl D. Anderson II Mr.
Biggest changeVillavarayan currently serves as a Director on the Board of Franklin Electric. Mr. Villavarayan earned his B.S. in civil engineering from McMaster University and completed the Wharton Executive Education Advanced Finance Program. Carl D. Anderson II Mr. Anderson has served as Senior Vice President and Chief Financial Officer at Axalta since August 14, 2023.
Tufano has been with Axalta since 2021, joining the company as Vice President of Human Resources ("HR") for the global Operations and Technology organizations. Previously, Ms. Tufano served in HR leadership roles at Campbell Soup Company and Northrop Grumman. She earned an M.B.A. from Loyola Marymount University and a B.A. in Business Administration from Flagler College. Alex Tablin-Wolf Mr.
Tufano has been with Axalta since 2021, joining the company as Vice President of Human Resources (“HR”) for the global Operations and Technology organizations. Previously, Ms. Tufano served in HR leadership roles at Campbell Soup Company and Northrop Grumman. She earned an M.B.A. from Loyola Marymount University and a B.A. in Business Administration from Flagler College. Alex Tablin-Wolf Mr.
Tablin-Wolf was a corporate attorney at Blank Rome LLP and Fox Rothschild LLP, where he concentrated his practice on mergers and acquisitions, venture capital and general corporate counseling. Mr. Tablin-Wolf earned a B.S. in Psychology from Santa Clara University and a J.D., cum laude, from the Temple University Beasley School of Law. 32 Table of Contents PART II
Tablin-Wolf was a corporate attorney at Blank Rome LLP and Fox Rothschild LLP, where he concentrated his practice on mergers and acquisitions, venture capital and general corporate counseling. Mr. Tablin-Wolf earned a B.S. in Psychology from Santa Clara University and a J.D., cum laude, from the Temple University Beasley School of Law. 37 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of the Company are appointed by the Board. The following table provides information regarding our executive officers: Name Age* Position Chris Villavarayan 54 Chief Executive Officer and President Carl D. Anderson II 55 Senior Vice President and Chief Financial Officer Troy D.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of the Company are appointed by the Board. The following table provides information regarding our executive officers: Name Age* Position Chris Villavarayan 55 Chief Executive Officer and President Carl D. Anderson II 56 Senior Vice President and Chief Financial Officer Troy D.
In those roles, Mr. Awada ran a multibillion-dollar business and led efforts to develop and deploy an operational turnaround and transform the product line to focus on new technologies for customers seeking sustainability and innovation. Previously at Faurecia, he worked in Europe where he led sales and programs for many international customers.
In those roles, Mr. Awada ran a multi-billion dollar business and led efforts to develop and deploy an operational turnaround and transform the product line to focus on new technologies for customers seeking sustainability and innovation. Previously at Faurecia, he worked in Europe where he led sales and programs for many international customers.
Awada started his career after earning his B.A. from the University of Toledo, serving the Ford Motor Company in various roles within the Ford customer service division. Tim Bowes Mr. Bowes has served as our President, Global Industrial Coatings since January 2025. Prior to that, Mr.
Awada started his career after earning his B.A. from the University of Toledo, serving the Ford Motor Company in various roles within the Ford customer service division. 36 Table of Contents Tim Bowes Mr. Bowes has served as our President, Global Industrial Coatings since January 2025. Prior to that, Mr.
Bowes has lived and worked in Asia and Europe and holds an M.B.A. from Wayne State University in Detroit, Michigan and a B.S. from Lawrence Technological University in Southfield, Michigan. 31 Table of Contents Amy Tufano Ms. Tufano has served as our Senior Vice President and Chief Human Resources Officer since September 2023. Ms.
Bowes has lived and worked in Asia and Europe and holds an M.B.A. from Wayne State University in Detroit, Michigan and a B.S. from Lawrence Technological University in Southfield, Michigan. Amy Tufano Ms. Tufano has served as our Senior Vice President and Chief Human Resources Officer since September 2023. Ms.
Anderson has served as Senior Vice President and Chief Financial Officer at Axalta since August 14, 2023. Previously, he served as the Chief Financial Officer for XPO, Inc., a leading provider of freight transportation services, from November 2022 to August 2023. Prior to XPO, Mr. Anderson was Senior Vice President and CFO at Meritor from March 2019 to October 2022.
Previously, he served as the Chief Financial Officer for XPO, Inc., a leading provider of freight transportation services, from November 2022 to August 2023. Prior to XPO, Mr. Anderson was Senior Vice President and CFO at Meritor from March 2019 to October 2022. Throughout his 16-year tenure with Meritor, Mr.
Weaver 53 President, Global Refinish Hadi H. Awada 46 President, Global Mobility Coatings Tim Bowes 61 President, Global Industrial Coatings Amy Tufano 44 Senior Vice President and Chief Human Resources Officer Alex Tablin-Wolf 41 Senior Vice President, General Counsel & Corporate Secretary *As of February 13, 2025 30 Table of Contents Chris Villavarayan Mr.
Weaver 54 President, Global Refinish Hadi H. Awada 47 President, Global Mobility Coatings Tim Bowes 62 President, Global Industrial Coatings Amy Tufano 45 Senior Vice President and Chief Human Resources Officer Alex Tablin-Wolf 42 Senior Vice President, General Counsel & Corporate Secretary *As of February 13, 2026 35 Table of Contents Chris Villavarayan Mr.
Throughout his 16-year tenure with Meritor, Mr. Anderson also served as Group Vice President, Finance; Treasurer; Assistant Treasurer; and Director, International Capital Markets, Risk Management and Corporate Insurance. Earlier, he held treasury and financial planning roles at General Motors Acceptance Corporation after beginning his career with First Chicago Corporation. Mr.
Anderson also served as Group Vice President, Finance; Treasurer; Assistant Treasurer; and Director, International Capital Markets, Risk Management and Corporate Insurance. Earlier, he held treasury and financial planning roles at General Motors Acceptance Corporation after beginning his career with First Chicago Corporation. Mr. Anderson earned an M.B.A. from Wayne State University and a B.A. in Economics from Michigan State University.
Anderson earned an M.B.A. from Wayne State University and a B.A. in Economics from Michigan State University. Troy D. Weaver Mr. Weaver has served as our President, Global Refinish since January 2024. Prior to that, Mr.
Troy D. Weaver Mr. Weaver has served as our President, Global Refinish since January 2024. Prior to that, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed2 unchanged
Biggest changeITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Share Information Our common shares are traded on the New York Stock Exchange under the symbol “AXTA.” As of February 6, 2025, there were three registered holders of record of Axalta's common shares as shown on the records of the Company's transfer agent.
Biggest changeITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Share Information Our common shares are traded on the New York Stock Exchange under the symbol “AXTA.” As of February 6, 2026, there were three registered holders of record of Axalta’s common shares as shown on the records of the Company’s transfer agent.
This graph assumes an investment of $100 in our common shares and each index (with all dividends reinvested) on December 31, 2019. ITEM 6. RESERVED 33 Table of Contents
This graph assumes an investment of $100 in our common shares and each index (with all dividends reinvested) on December 31, 2020. ITEM 6. RESERVED 38 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+18 added−19 removed71 unchanged
Biggest changeDollar Other operating charges Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Other operating charges $ 79 $ 28 $ 51 182.1 % Other operating charges increased primarily due to the following: n Increase of $61 million in termination benefits and other employee-related costs primarily associated with our 2024 Transformation Initiative n Increase of $6 million in acquisition-related costs n Increase of $4 million in environmental remediation costs Partially offset by: n $12 million of third-party consultant costs in the prior year related to productivity programs n $7 million of impairment charges recognized in the prior year related to the exit of a non-core business category in the Mobility Coatings segment 39 Table of Contents Research and development expenses Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Research and development expenses $ 74 $ 74 $ — — % Research and development expenses remained generally consistent: n Impacts of currency translation were immaterial when compared to the prior year Amortization of acquired intangibles Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Amortization of acquired intangibles $ 92 $ 88 $ 4 4.5 % Amortization of acquired intangibles increased primarily due to the following: n Increased amortization of $8 million associated with assets acquired during 2024 and the fourth quarter of 2023 Partially offset by: n Reduced amortization of $5 million from certain intangible assets reaching the end of their useful lives during 2023 and 2024, primarily relating to intangibles from the 2013 DuPont Performance Coatings acquisition n Impacts of currency translation were immaterial when compared to the prior year Interest expense, net Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Interest expense, net $ 205 $ 213 $ (8) (3.8) % Interest expense, net decreased primarily due to the following: n Favorable impact of $24 million attributable to lower interest rates and lower principal on our 2029 Dollar Term Loans, primarily as a result of $125 million of prepayments during 2024 and the fourth quarter of 2023 n Favorable impact of $17 million attributable to the redemption in November 2023 of our Euro-denominated Senior Notes due in 2025 n Favorable impact of $3 million attributable to our derivative instruments used to hedge the variable interest rate exposure on certain debt arrangements Partially offset by: n Unfavorable impact of $32 million attributable to our 2031 Dollar Senior Notes which were issued in November 2023 n Unfavorable impact of $2 million attributable to the borrowings against our Revolving Credit Facility during 2024 Other expense, net Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Other expense, net $ 5 $ 20 $ (15) (75.0) % Other expense, net decreased primarily due to the following: n Favorable impact of foreign exchange gains and losses of $12 million when compared with the prior year, including expenses from the remeasurement of net monetary assets denominated in the Argentinian Peso and Turkish Lira due to a significant devaluation in the prior year n Decreased debt extinguishment and refinancing related costs of $5 million driven by $5 million in expenses for the prepayments and repricings of our 2029 Dollar Term Loans in the current year compared to the $10 million in expenses for prepayments, repricing of the 2029 Dollar Term Loans and issuance of the 2031 Dollar Senior Notes in the prior year n $2 million benefit from pension settlements and curtailments Partially offset by: n Increased miscellaneous expense, net of $4 million 40 Table of Contents Provision for income taxes Year Ended December 31, 2024 2023 Income before income taxes $ 496 $ 355 Provision for income taxes 105 86 Statutory U.S.
Biggest changeDollar n Increased expenses related to the CoverFlexx acquisition and various other immaterial acquisitions Other operating charges Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Other operating charges $ 53 $ 79 $ (26) (32.9) % Other operating charges decreased primarily due to the following: n Decrease of $44 million in termination benefits and other employee-related costs primarily as a result of higher costs associated with the 2024 Transformation Initiative in the prior year period n Gains of $6 million from the sale of assets in 2025 Partially offset by: n Increase of $22 million in merger and acquisition-related costs Research and development expenses Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Research and development expenses $ 71 $ 74 $ (3.0) (4.1) % Research and development expenses decreased primarily due to the following: n Lower operating expenses, inclusive of contributions from savings initiatives n Impacts of currency translation were immaterial when compared to the prior year 44 Table of Contents Amortization of acquired intangibles Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Amortization of acquired intangibles $ 98 $ 92 $ 6 6.5 % Amortization of acquired intangibles increased primarily due to the following: n Increased amortization of $5 million associated with assets acquired in the past 18 months n Impacts of currency translation were immaterial when compared to the prior year Interest expense, net Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Interest expense, net $ 176 $ 205 $ (29) (14.1) % Interest expense, net decreased primarily due to the following: n Favorable impact of $24 million attributable to lower principal and decreased variable interest rate on our 2029 Dollar Term Loans Other expense, net Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Other expense, net $ 13 $ 5 $ 8 160.0 % Other expense, net increased primarily due to the following: n Decreased miscellaneous income of $5 million compared to the prior year period n Unfavorable impact of foreign exchange losses of $4 million compared to the prior year period Partially offset by: n Decreased debt extinguishment and refinancing-related costs of $3 million compared to the prior year due to the repricing, prepayment and amendment activity associated with our debt agreements explained in more detail in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information 45 Table of Contents Provision for income taxes Year Ended December 31, 2025 2024 Income before income taxes $ 546 $ 496 Provision for income taxes 167 105 Statutory income tax rate (1) 15.0 % 21.0 % Effective tax rate 30.5 % 21.1 % Effective tax rate vs. statutory income tax rate (1) 15.5 % 0.1 % (Favorable) Unfavorable Impact Items impacting the effective tax rate vs. statutory income tax 2025 2024 Earnings generated in jurisdictions where the statutory rate is different from the statutory rate (2) (3) $ 17 $ (25) Changes in valuation allowance (4) (5) (7) (8) 23 14 Foreign exchange gains and losses 13 (14) Tax credits (11) (7) Non-deductible expenses and interest 12 7 Change in unrecognized tax benefits (5) 23 13 State taxes (6) — 6 Foreign taxes 20 8 Bermuda CITA (7) — (27) Other - net (8) (12) 26 (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.
Key assumptions in the valuation of 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.
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.
Key assumptions in the valuation of contingent consideration liabilities include discount rates, expected terms, volatility rates and operating results as applicable based on the targets identified in the respective acquisition agreements. See Notes 1, 3 and 4 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Key assumptions in the valuation of contingent consideration liabilities include discount rates, expected terms, volatility rates and operating results as applicable based on the targets identified in the respective acquisition agreements. See Notes 1 and 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
For more information about risks relating to our business, see Part I, Item 1A, “Risk Factors—Risks Related to our Business.” Cost of goods sold (“cost of sales”) Our cost of sales consists principally of the following: • Production materials costs . These include costs of the materials needed to manufacture products for distribution.
For more information about risks relating to our business, see Part I, Item 1A, “Risk Factors—Risks Related to our Business.” Cost of goods sold ( “ cost of sales”) Our cost of sales consists principally of the following: • Production materials costs . These include costs of the materials needed to manufacture products for distribution.
Our indebtedness, including the Senior Secured Credit Facilities, Senior Notes and short-term borrowings, is more fully described in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 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.
Our indebtedness, including the Senior Secured Credit Facilities, Senior Notes and short-term borrowings, is more fully described in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 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.
Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which liabilities could have been settled, rate of increase in future compensations levels, and mortality rates. These assumptions are updated annually and are disclosed in Note 8 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In accordance with U.S.
Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which liabilities could have been settled, rate of increase in future compensations levels, and mortality rates. These assumptions are updated annually and are disclosed in Note 7 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In accordance with U.S.
These risk factors are discussed in Part I, Item 1A, “Risk Factors,” included elsewhere in this Annual Report on Form 10-K. 47 Table of Contents Goodwill and indefinite-lived intangible assets The Company tests indefinite-lived intangible assets and goodwill for impairment annually by either performing a qualitative evaluation or a quantitative test.
These risk factors are discussed in Part I, Item 1A, “Risk Factors,” included elsewhere in this Annual Report on Form 10-K. 52 Table of Contents Goodwill and indefinite-lived intangible assets The Company tests indefinite-lived intangible assets and goodwill for impairment annually by either performing a qualitative evaluation or a quantitative test.
FORWARD-LOOKING STATEMENTS 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 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.
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 20 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The primary uses were $301 million for acquisitions 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 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Recent Accounting Guidance See Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a summary of recent accounting guidance. 46 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements.
Recent Accounting Guidance See Note 1 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a summary of recent accounting guidance. 51 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements.
In instances where we are in a three-year cumulative loss, we assess all positive and negative factors, including any potential aberrational items that may be included within our taxable results. The aberrational items that have impacted our results include debt extinguishment, refinancing and certain global restructuring costs.
In instances where we are in a three-year cumulative loss, we assess all positive and negative factors, including any potential aberrational items that may be included within our taxable results. The aberrational items that have impacted our results include merger and acquisition, debt extinguishment, refinancing and certain global restructuring costs.
Selling, general and administrative expenses (“SG&A”) Our SG&A expenses consist of all expenditures incurred in connection with the sales and marketing of our products, as well as technical support for our customers and administrative overhead costs, including: • compensation and benefit costs for management, sales personnel and administrative staff, including share-based compensation expense.
Selling, general and administrative expenses ( “ SG&A”) Our SG&A expenses consist of all expenditures incurred in connection with the sales and marketing of our products, as well as technical support for our customers and administrative overhead costs, including: • compensation and benefit costs for management, sales personnel and administrative staff, including share-based compensation expense.
The most important contingencies impacting our financial statements at this time are those related to the operational matter, as described in Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K (the “Operational Matter”), environmental remediation, pending or threatened litigation against the Company and the resolution of matters related to open tax years as discussed in Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The most important contingencies impacting our financial statements at this time are those related to the operational matter, as described in Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K (the “Operational Matter”), environmental remediation, pending or threatened litigation against the Company and the resolution of matters related to open tax years as discussed in Note 10 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Off Balance Sheet Arrangements See Note 6 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for disclosure of our guarantees of certain customers' obligations to third parties.
Off Balance Sheet Arrangements See Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for disclosure of our guarantees of certain customers’ obligations to third parties.
See Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on our accounting for income taxes. 49 Table of Contents Sales deductions In our refinish end-market, our product sales are typically supplied through a network of distributors.
See Note 10 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on our accounting for income taxes. 54 Table of Contents Sales deductions In our refinish end-market, our product sales are typically supplied through a network of distributors.
Our overall net sales are generally impacted by the following factors: • fluctuations in overall economic activity within the geographic markets in which we operate; • underlying growth (or lack thereof) in one or more of our end-markets, either worldwide or in particular geographies in which we operate; • the type of products used within existing customer applications, or the development of new applications requiring products similar to ours; • changes in product sales prices (including volume discounts, cash discounts for prompt payment and impacts from raw material indexing); • changes in the level of competition faced by our products, including price competition, quality competition and the launch of new products by competitors; • our ability to successfully develop and launch new products and applications; • changes in buying habits of our customers (including our distributors); and • fluctuations in foreign exchange rates.
Our overall net sales are generally impacted by the following factors: • fluctuations in overall economic activity within the geographic markets in which we operate; • underlying growth (or lack thereof) in one or more of our end-markets, either worldwide or in particular geographies in which we operate; • the type of products used within existing customer applications, or the development of new applications requiring products similar to ours; • changes in product sales prices (including volume discounts, cash discounts for prompt payment and impacts from raw material indexing); • changes in the level of competition faced by our products, including price competition, quality competition and the launch of new products by competitors; • changes in the mix of products we offer and sell to our customers; • our ability to successfully develop and launch new products and applications; • changes in buying habits of our customers (including our distributors); • overall vehicle repair costs; and • fluctuations in foreign exchange rates.
These costs generally increase on an aggregate basis as production volumes increase, but materials prices are also influenced by changes in market dynamics. A significant amount of the materials used in production are purchased on a global lowest-cost basis. • Employee costs .
These costs generally increase on an aggregate basis as production volumes increase, but materials prices are also influenced by changes in market dynamics. A significant amount of the materials used in production are purchased on a global lowest-cost basis. 41 Table of Contents • Employee costs .
See Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
See Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
See Note 21 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
See Note 20 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
See Notes 1 and 9 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on stock-based compensation. 48 Table of Contents Retirement Benefits The amounts recognized in the consolidated financial statements related to pension benefits are determined from actuarial valuations.
See Notes 1 and 8 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further detail on stock-based compensation. 53 Table of Contents Retirement Benefits The amounts recognized in the consolidated financial statements related to pension benefits are determined from actuarial valuations.
This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for 2024 and 2023. For the comparison of 2023 and 2022, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2023 Annual Report on Form 10-K, filed with the SEC on February 15, 2024.
This discussion and analysis deals with comparisons of material changes in the consolidated financial statements for 2025 and 2024. For the comparison of 2024 and 2023, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2024 Annual Report on Form 10-K, filed with the SEC on February 13, 2025.
Availability under the Revolving Credit Facility was $778 million and $528 million at December 31, 2024 and December 31, 2023, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.
Availability under the Revolving Credit Facility was $770 million and $778 million at December 31, 2025 and December 31, 2024, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.
The required reserves may change in the future due to new developments in each matter. For more information on these matters, see Note 6 and Note 11 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 50 Table of Contents
The required reserves may change in the future due to new developments in each matter. For more information on these matters, see Note 5 and Note 10 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 55 Table of Contents
After giving effect to our cross-currency and interest rate hedges, our borrowings denominated in U.S. Dollars as of December 31, 2024 and 2023 were $2,440 million and $2,532 million, respectively, with weighted average interest rates of 5.5% and 6.5%, respectively.
After giving effect to our cross-currency and interest rate hedges, our borrowings denominated in U.S. Dollars as of December 31, 2025 and 2024 were $2,184 million and $2,440 million, respectively, with weighted average interest rates of 5.2% and 5.5%, respectively.
Total cash expenditures related to the 2024 Transformation Initiative are expected to be approximately $100-110 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 million on an annualized basis.
Total cash expenditures related to the 2024 Transformation Initiative are expected to be approximately $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 $90 million on an annualized basis.
Contractual Obligations See Note 7 and Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for disclosure of our material contractual obligations.
Contractual Obligations See Note 6 and Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for disclosure of our material contractual obligations.
After giving effect to our cross-currency and interest rate hedges, borrowings denominated in Euros as of December 31, 2024 and 2023 were $1,016 million with weighted average interest rates of 4.2% and 4.3%, respectively.
After giving effect to our cross-currency and interest rate hedges, borrowings denominated in Euros as of December 31, 2025 and 2024 were $1,041 million and $1,016 million with weighted average interest rates of 4.0% and 4.2%, respectively.
GAAP, actual results that differed from the assumptions are accumulated and amortized over future periods and therefore affect expense recognized in future periods. The estimated impact of either a 100 basis point increase or decrease of the discount rate to the net periodic benefit cost for 2025 would be immaterial.
GAAP, actual results that differed from the assumptions are accumulated and amortized over future periods and therefore affect expense recognized in future periods. The estimated impact of either a 100 basis point increase or decrease of the discount rate or the expected return on assets assumption to the net periodic benefit cost for 2026 would be immaterial.
At December 31, 2024 and 2023, deferred income taxes of approximately $14 million and $13 million, respectively, have been provided on such subsidiary earnings. At December 31, 2024 and 2023, we have not recorded a deferred tax liability related to withholding taxes of approximately $95 million and $38 million, respectively, on unremitted earnings of subsidiaries that are permanently invested.
At December 31, 2025 and 2024, deferred income taxes of approximately $16 million and $14 million, respectively, have been provided on such subsidiary earnings. At December 31, 2025, and 2024, we have not recorded a deferred tax liability related to withholding taxes of approximately $147 million and $95 million, respectively, on unremitted earnings of subsidiaries that are permanently invested.
At December 31, 2024 and 2023, the Company had gross unrecognized tax benefits, excluding interest and penalties, for both domestic and foreign operations of $107 million and $96 million, respectively.
At December 31, 2025 and 2024, the Company had gross unrecognized tax benefits, excluding interest and penalties, for both domestic and foreign operations of $99 million and $107 million, respectively.
These statements often include words such as “anticipate,” “anticipates,” “anticipated,” “expect,” “expected,” “believe,” “believes,” “intend,” “intended,” “estimate,” “estimated,” “projections,” “could,” “would,” “should,” “may,” “will,” “future,” “goals,” “targets,” “can,” “assumptions,” “plans,” “potential,” “possible,” “strategy,” “threatened,” “seek,” and “forecasts” and the negative of these words or other comparable or similar terminology.
These statements often include words such as “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” and “forecasts” and the negative of these words or other comparable or similar terminology.
Property, plant and equipment are stated at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. 36 Table of Contents • Other .
Property, plant and equipment are stated at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. • Other .
Other operating charges Our other operating charges include termination benefits and other employee-related costs, acquisition 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 21 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Other operating charges Our other operating charges include termination benefits and other employee-related costs, acquisition, merger and divestiture-related costs, impairment charges, 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 20 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Our recorded deferred tax asset balance as of December 31, 2024 is $13 million, which is net of valuation allowances of $250 million. The Company records a valuation allowance if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Our recorded deferred tax liability balance as of December 31, 2025 is $52 million, which is net of valuation allowances of $337 million. The Company records a valuation allowance if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Financial Condition We had cash and cash equivalents at December 31, 2024 and 2023 of $593 million and $700 million, respectively. Of these balances, $497 million and $462 million were maintained in non-U.S. jurisdictions as of December 31, 2024 and 2023, respectively.
Financial Condition We had cash and cash equivalents at December 31, 2025 and 2024 of $657 million and $593 million, respectively. Of these balances, $555 million and $497 million were maintained in non-U.S. jurisdictions as of December 31, 2025 and 2024, respectively.
See Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. CoverFlexx Acquisition During July 2024, we completed the acquisition of CoverFlexx.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 4 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Interest expense is inclusive of the amortization of debt issuance costs, debt discounts and the impact of derivative instruments for the years ended December 31, 2024 and 2023, respectively: Years Ended December 31, 2024 2023 (In millions) Principal Average Effective Interest Rate Interest Expense Principal Average Effective Interest Rate Interest Expense Term Loans $ 1,702 7.6% $ 118 $ 1,786 8.2% $ 144 Revolving Credit Facility (1) — 7.3% 5 — N/A 3 Senior Notes 1,700 5.1% 82 1,700 4.2% 67 Short-term and other borrowings 54 Various 4 62 Various 5 Capitalized interest N/A N/A (4) N/A N/A (6) Total $ 3,456 $ 205 $ 3,548 $ 213 (1) The computation for Average Effective Interest Rate excludes undrawn revolver fees.
Interest expense is inclusive of the amortization of debt issuance costs, debt discounts, and the impact of derivative instruments for the years ended December 31, 2025 and 2024, respectively: Years Ended December 31, 2025 2024 (In millions) Principal Average Effective Interest Rate Interest Expense Principal Average Effective Interest Rate Interest Expense Term Loans $ 1,475 6.3% $ 91 $ 1,702 7.6% $ 118 Revolving Credit Facility (1) — N/A 3 — 7.3% 5 Senior Notes 1,700 5.1% 85 1,700 5.1% 82 Short-term and other borrowings 50 Various 4 54 Various 4 Capitalized interest N/A N/A (7) N/A N/A (4) Total $ 3,225 $ 176 $ 3,456 $ 205 (1) The computation for Average Effective Interest Rate excludes undrawn revolver fees.
Dollar. Year Ended December 31, 2023 Net Cash Provided by Operating Activities 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.
Year Ended December 31, 2024 Net Cash Provided by Operating Activities 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.
Capital and Liquidity Highlights 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).
During the year ended December 31, 2025, we prepaid $210 million of the outstanding principal amount of the 2029 Dollar Term Loans (as defined in Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. The 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.
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. These OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed.
Net Cash Used for Investing Activities Net cash used for investing activities for the year ended December 31, 2024 was $440 million.
Net Cash Used for Investing Activities Net cash used for investing activities for the year ended December 31, 2025 was $212 million.
Other Impacts on Cash 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.
Other Impacts on Cash Currency exchange impacts on cash for the year ended December 31, 2024 were unfavorable by $42 million, which was driven primarily by the fluctuations of the Euro, Mexican Peso and Brazilian Real, in each case compared to the U.S. Dollar.
At December 31, 2024, availability under the Revolving Credit Facility was $778 million, net of $22 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.
At December 31, 2025, availability under the Revolving Credit Facility was $770 million, net of $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.
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.
Bowes succeeded Shelley Bausch who stepped down from the role and left the Company. 40 Table of Contents 2024 Transformation Initiative 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.
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 following trends have impacted our segment net sales performance: • Performance Coatings: Net sales decreased 5.2% for the year ended December 31, 2025 compared with the year ended December 31, 2024.
The breadth of our operations and the global complexity of tax regulations require us to make assessments in estimating taxes we may ultimately pay factoring in various uncertainties.
The breadth of our operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes we will ultimately pay.
Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. 45 Table of Contents If required, our ability to raise additional financing and our borrowing costs may be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios.
If required, our ability to raise additional financing and our borrowing costs may be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios.
Interest expense, net also includes the amortization of debt issuance costs and debt discounts associated with our Senior Secured Credit Facilities, Senior Notes and other indebtedness. 37 Table of Contents Other expense, net Other expense, net represents costs incurred on various non-operational items including costs incurred in conjunction with our debt refinancing and extinguishment transactions, interest income, as well as foreign exchange gains and losses and non-operational impairment losses unrelated to our core business.
Other expense, net Other expense, net represents costs incurred on various non-operational items including costs incurred in conjunction with our debt refinancing and extinguishment transactions, interest income, as well as foreign exchange gains and losses and non-operational impairment losses unrelated to our core business.
Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Senior Secured Credit Facilities and other existing lines of credit will be adequate to service debt, fund our cost saving initiatives, meet liquidity needs and fund necessary capital expenditures for the next twelve months.
Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Senior Secured Credit Facilities and other existing lines of credit will be adequate to service debt, fund our cost saving initiatives, meet liquidity needs and fund necessary capital expenditures for the next twelve months. 50 Table of Contents Our ability to make scheduled or 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 and is subject to restrictions in the Merger Agreement.
We serve our customer base through an extensive sales force and technical support organization, as well as through approximately 5,000 independent, locally based distributors. We operate our business in two operating segments, Performance Coatings and Mobility Coatings. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.
We serve our customer base through an extensive sales force and technical support organization, as well as through over 5,000 independent, locally based distributors. We operate our business in two operating segments, Performance Coatings and Mobility Coatings.
Leadership Transition 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.
Leadership Transition On January 23, 2025, the Company announced that Tim Bowes was appointed President, Global Industrial Coatings, effective January 27, 2025. Mr.
Income taxes The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid.
Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the period.
See Note 5 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 43 Table of Contents Cash Flows Years ended December 31, 2024 and 2023 Years Ended December 31, (In millions) 2024 2023 Net cash provided by (used for): Operating activities: Net income $ 391 $ 269 Depreciation and amortization 280 276 Amortization of deferred financing costs and original issue discount 7 9 Debt extinguishment and refinancing-related costs 5 10 Deferred income taxes (17) (8) Realized and unrealized foreign exchange losses, net 11 21 Stock-based compensation 28 26 Impairment charges — 15 Interest income on swaps designated as net investment hedges (15) (10) Other non-cash, net 9 22 Net income adjusted for non-cash items 699 630 Changes in operating assets and liabilities (123) (55) Operating activities 576 575 Investing activities (440) (206) Financing activities (201) (315) Effect of exchange rate changes on cash (42) (6) Net (decrease) increase in cash $ (107) $ 48 Year Ended December 31, 2024 Net Cash Provided by Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 was $576 million.
Cash Flows Years ended December 31, 2025 and 2024 Years Ended December 31, (In millions) 2025 2024 Net cash provided by (used for): Operating activities: Net income $ 379 $ 391 Depreciation and amortization 295 280 Amortization of deferred financing costs and original issue discount 8 7 Debt extinguishment and refinancing-related costs 2 5 Deferred income taxes 45 (17) Realized and unrealized foreign exchange losses, net 31 11 Stock-based compensation 25 28 Impairment charges 1 — Interest income on swaps designated as net investment hedges (13) (15) Other non-cash, net 3 9 Net income adjusted for non-cash items 776 699 Changes in operating assets and liabilities (127) (123) Operating activities 649 576 Investing activities (212) (440) Financing activities (401) (201) Effect of exchange rate changes on cash 28 (42) Net increase (decrease) in cash $ 64 $ (107) Year Ended December 31, 2025 Net Cash Provided by Operating Activities Net cash provided by operating activities for the year ended December 31, 2025 was $649 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.
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. 49 Table of Contents Net Cash Used for Financing Activities Net cash used for financing activities for the year ended December 31, 2025 was $401 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 million and decreases in accounts payable of $49 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 million, and decreases in accounts payable of $49 million. These outflows were driven primarily by the timing of payments of BIPs, timing of purchasing and payments to vendors.
Dollar Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: n Decreased variable input costs due to deflationary benefits n Higher sales volumes driven in the light vehicle end-market, partially offset by lower sales volumes in the commercial vehicle end-market n Decreased costs of $9 million related to our multi-year ERP system implementation and productivity programs compared to the prior year n Decrease of $2 million in inventory charges from obsolescence, quality and yield loss from manufacturing compared to the prior year LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash on hand, net cash provided by operating activities and available borrowing capacity under our Senior Secured Credit Facilities.
Dollar Partially offset by: n Lower sales volumes across both end-markets due primarily to unfavorable macro trends in North America Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: n Higher average selling prices and favorable product mix across both end-markets n Decreased operating expenses, inclusive of lower incentive compensation and contributions from savings initiatives n Decreased variable input costs n Decreased costs of $6 million related to our multi-year ERP system implementation and productivity programs compared to the prior year Partially offset by: n Lower sales volumes across both end-markets due primarily to unfavorable macro trends in North America LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash on hand, net cash provided by operating activities and available borrowing capacity under our Senior Secured Credit Facilities.
Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.
The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.
The inputs utilized in a quantitative analysis are classified as Level 3 inputs within the fair value hierarchy as defined in Accounting Standards Codification (“ASC”) 820, Fair Value Measurement .
The quantitative analysis concluded that all reporting units and indefinite-lived intangible assets had fair values substantially in excess of their carrying values. The inputs utilized in a quantitative analysis are classified as Level 3 inputs within the fair value hierarchy as defined in Accounting Standards Codification (“ASC”) 820, Fair Value Measurement .
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 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 had been repaid as of December 31, 2024.
(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. 41 Table of Contents SEGMENT RESULTS The Company's products and operations are managed and reported in two operating segments: Performance Coatings and Mobility Coatings.
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. 46 Table of Contents SEGMENT RESULTS The Company’s products and operations are managed and reported in two operating segments: Performance Coatings and Mobility Coatings.
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.
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 42 manufacturing facilities, four technology centers, 48 customer training centers and approximately 12,300 team members allows us to meet the needs of customers in over 140 countries.
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.
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.
BUSINESS HIGHLIGHTS General Business Highlights Our net sales increased 1.8%, including a 0.4% headwind from foreign currency translation, for the year ended December 31, 2024 compared with the year ended December 31, 2023.
The end-markets within this segment are light vehicle and commercial vehicle. BUSINESS HIGHLIGHTS General Business Highlights Our net sales decreased 3.0%, including a 1.1% benefit from foreign currency translation, for the year ended December 31, 2025 compared with the year ended December 31, 2024.
These outflows were driven primarily by the timing of payments of Business Incentive Plan assets (“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.
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 Net cash used for investing activities for the year ended December 31, 2024 was $440 million.
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 the tariffs recently imposed by the U.S.
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 provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.
Deferred taxes result from differences between the financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled.
The primary financing inflow was from borrowing $185 million against our Revolving Credit Facility, which has been repaid as of December 31, 2024. 44 Table of Contents Other Impacts on Cash Currency exchange impacts on cash for the year ended December 31, 2024 were unfavorable by $42 million, which was driven primarily by the fluctuations of the Euro, Mexican Peso and Brazilian Real, in each case compared to the U.S.
Other Impacts on Cash 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.
Performance Coatings Segment Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Net sales $ 3,455 $ 3,408 $ 47 1.4 % Impact of CoverFlexx 1.1 % Price/Mix effect 0.6 % Volume effect (0.2) % Exchange rate effect (0.1) % Adjusted EBITDA $ 838 $ 742 $ 96 13.0 % Adjusted EBITDA Margin 24.3 % 21.8 % Net sales increased primarily due to the following: n Contributions from the CoverFlexx acquisition n Higher average selling prices and product mix driven by the refinish end-market Partially offset by: n Lower sales volumes in the industrial end-market driven by unfavorable demand trends, partially offset by new body shop wins and contributions from the André Koch acquisition in the refinish end-market n Impacts of currency translation were immaterial and the result of offsetting currency fluctuations Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following: n Decreased variable input costs due to deflationary benefits n Higher average selling prices and product mix driven by the refinish end-market n Decreased costs of $17 million related to our multi-year ERP system implementation and productivity programs compared to the prior year n Decrease of $11 million in inventory charges from obsolescence, quality and yield loss from manufacturing compared to the prior year n Contributions from the CoverFlexx acquisition Partially offset by: n Lower sales volumes in the industrial end-market driven by unfavorable demand trends, partially offset by new body shop wins and contributions from the André Koch acquisition in the refinish end-market n Less effective coverage of fixed costs as a result of lower sales volumes 42 Table of Contents Mobility Coatings Segment Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Net sales $ 1,821 $ 1,776 $ 45 2.5 % Volume effect 3.4 % Exchange rate effect (0.9) % Adjusted EBITDA $ 278 $ 209 $ 69 32.6 % Adjusted EBITDA Margin 15.3 % 11.8 % Net sales increased primarily due to the following: n Higher sales volumes driven in the light vehicle end-market, partially offset by lower sales volumes in the commercial vehicle end-market Partially offset by: n Unfavorable impacts of currency translation primarily due to the weakening of the Brazilian Real, Mexican Peso and Chinese Yuan, in each case compared to the U.S.
Dollar n Contributions from the CoverFlexx acquisition Adjusted EBITDA and Adjusted EBITDA margin decreased primarily due to the following: n Lower sales volume across both end-markets due primarily to unfavorable macro trends in North America, including lower body shop activity n Unfavorable geographic and product mix, partially offset by positive price actions Partially offset by: n Decreased operating expenses, inclusive of lower incentive compensation and contributions from savings initiatives n Decreased variable input costs n Decreased costs of $11 million related to our multi-year ERP system implementation and productivity programs compared to the prior year 47 Table of Contents Mobility Coatings Segment Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Net sales $ 1,840 $ 1,821 $ 19 1.1 % Price/Mix effect 3.2 % Exchange rate effect 0.2 % Volume effect (2.3) % Adjusted EBITDA $ 340 $ 278 $ 62 22.4 % Adjusted EBITDA Margin 18.5 % 15.3 % Net sales increased primarily due to the following: n Higher average selling prices and favorable product mix across both end-markets n Favorable impacts of currency translation 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.
We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial. 34 Through our Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle OEMs.
These customers comprise, among others, independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.
The increased net sales were driven by higher sales volumes of 3.4%, partially offset by a headwind from unfavorable foreign currency translation of 0.9% primarily due to the weakening of the Brazilian Real, Mexican Peso and Chinese Yuan compared to the U.S. Dollar. Price-mix impacts were flat year over year.
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%.
Interest expense, net Interest expense, net consists primarily of interest expense on institutional borrowings and other financing obligations and changes in fair value of interest rate derivative instruments, net of capitalized interest expense.
Research and development expenses Research and development expenses represent costs incurred to develop new products, services, processes and technologies or to generate significant improvements to existing products, services or processes. 42 Table of Contents Interest expense, net Interest expense, net consists primarily of interest expense on institutional borrowings and other financing obligations and changes in fair value of interest rate derivative instruments, net of capitalized interest expense.
We have various supplier finance programs in place around the world. We partner with large banking institutions and utilize these programs to enhance our liquidity profile. Depending on the program, the liabilities under the program are classified either as accounts payable or current portion of borrowings on our consolidated balance sheets.
Depending on the program, the liabilities under the program are classified either as accounts payable or current portion of borrowings on our consolidated balance sheets.
The following table details our borrowings outstanding, average effective interest rates and the associated interest expense for the years ended December 31, 2024 and 2023.
The Merger Agreement prohibits us from repurchasing shares, whether under the repurchase program or otherwise, without the prior written consent of AkzoNobel. The following table details our borrowings outstanding, average effective interest rates and the associated interest expense for the years ended December 31, 2025 and 2024.
During March, June and November 2024, we entered into the Fourteenth, Fifteenth and Sixteenth Amendments, respectively, to the Credit Agreement (as defined in Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).
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.
Net sales Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Net sales $ 5,276 $ 5,184 $ 92 1.8 % Volume effect 1.1 % Impact of CoverFlexx 0.7 % Price/Mix effect 0.4 % Exchange rate effect (0.4) % Net sales increased primarily due to the following: n Higher sales volumes including the contribution from the André Koch acquisition, growth in our light vehicle end-market and impacts from lower volumes in the prior year in connection with production constraints associated with our multi-year ERP system implementation in North America n Contributions from the CoverFlexx acquisition n Higher average selling prices and product mix in Performance Coatings Partially offset by: n Unfavorable impacts of currency translation primarily due to the weakening of the Brazilian Real, Mexican Peso and Chinese Yuan, partially offset by the fluctuations of the British Pound, in each case compared to the U.S.
Net sales Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Net sales 5,117 5,276 $ (159) (3.0) % Volume effect (4.6) % Impact of CoverFlexx 0.5 % Exchange rate effect 1.1 % Net sales decreased primarily due to the following: n Lower sales volumes driven primarily by Performance Coatings as a result of unfavorable macro trends in North America Partially offset by: n Favorable impacts of currency translation primarily due to the strengthening of the Euro and Swiss Franc, partially offset by unfavorable fluctuations of the Mexican Peso and Brazilian Real, in each case compared to the U.S.
Government on Canada, Mexico and China and any retaliatory actions, geopolitical and technological factors outside of our control, as well as risks related to the execution of, and assumptions underlying, the 2024 Transformation Initiative and the 2026 A Plan , that may cause our business, industry, strategy, financing activities or actual results to differ materially.
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 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 Initiative, and the 2026 A Plan, that may cause our business, industry, strategy, financing activities or actual results to differ materially.
Dollar 38 Table of Contents Cost of sales Year Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change Cost of sales $ 3,478 $ 3,566 $ (88) (2.5) % % of net sales 65.9 % 68.8 % Cost of sales decreased primarily due to the following: n Lower variable input costs as a result of deflationary benefits n Favorable currency translation impacts of approximately 0.5% due to the weakening of the Brazilian Real, Mexican Peso and Chinese Yuan, partially offset by the fluctuations of the British Pound, in each case compared to the U.S.
Dollar n Contributions from the CoverFlexx acquisition 43 Table of Contents Cost of sales Year Ended December 31, 2025 vs 2024 2025 2024 $ Change % Change Cost of sales $ 3,355 $ 3,478 $ (123) (3.5) % % of net sales 65.6 % 65.9 % Cost of sales decreased primarily due to the following: n Lower sales volume in North America driven primarily by Performance Coatings n Lower operating expenses, inclusive of lower incentive compensation and contributions from savings initiatives n Decreased costs of $17 million related to our multi-year ERP system implementation and productivity programs n Lower variable input costs Partially offset by: n Unfavorable impacts of currency translation of 3.7% primarily due to the strengthening of the Euro and Swiss Franc, partially offset by unfavorable fluctuations of the Mexican Peso and Brazilian Real, in each case compared to the U.S.
(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.
(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.
Our business serves four end-markets globally with net sales for the years ended December 31, 2024 and 2023 as follows: (In millions) Year Ended December 31, 2024 vs 2023 2024 2023 % change Performance Coatings Refinish $ 2,164 $ 2,084 3.8 % Industrial 1,291 1,324 (2.4) % Total Net sales Performance Coatings 3,455 3,408 1.4 % Mobility Coatings Light Vehicle 1,405 1,340 4.8 % Commercial Vehicle 416 436 (4.7) % Total Net sales Mobility Coatings 1,821 1,776 2.5 % Total Net sales $ 5,276 $ 5,184 1.8 % 2024 Transformation Initiative 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.
Our business serves four end-markets globally with net sales for the years ended December 31, 2025 and 2024 as follows: (In millions) Year Ended December 31, 2025 vs 2024 2025 2024 % change Performance Coatings Refinish $ 2,051 $ 2,164 (5.2) % Industrial 1,226 1,291 (5.1) % Total Net sales Performance Coatings 3,277 3,455 (5.2) % Mobility Coatings Light Vehicle 1,438 1,405 2.3 % Commercial Vehicle 402 416 (3.1) % Total Net sales Mobility Coatings 1,840 1,821 1.1 % Total Net sales $ 5,117 $ 5,276 (3.0) % Proposed Merger with Akzo Nobel N.V.
Through our Performance Coatings segment, we provide high-quality sustainable liquid and powder coating solutions to both large regional and global customers and to a fragmented and local customer base. These customers comprise, among others, independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers.
Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines. 39 Table of Contents Through our Performance Coatings segment, we provide high-quality sustainable liquid and powder coating solutions to both large regional and global customers and to a fragmented and local customer base.

… 44 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−1 removed11 unchanged
Biggest changeAdditionally, in order to fund the purchase price for certain assets of DPC and the capital stock and other equity interests of certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In certain instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries.
Biggest changeIn certain instances, intercompany loans are used to fund our operations and they are denominated in currencies other than the functional currency of the affected subsidiaries.
Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries' functional currency against other currencies will affect our results of operations. 51 Table of Contents Commodity price risk While our raw material pricing fluctuates based on underlying feedstocks movements, we are also subject to supply and demand dynamics, or other macro-level factors, and also to changes in our cost of sales caused by movements in underlying commodity prices, such as oil and natural gas, among others, for energy spend and certain purchased raw materials, including monomers, resins and solvents.
Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will affect our results of operations. 56 Table of Contents Commodity price risk While our raw material pricing fluctuates based on underlying feedstocks movements, we are also subject to supply and demand dynamics, or other macro-level factors, and also to changes in our cost of sales caused by movements in underlying commodity prices, such as oil and natural gas, among others, for energy spend and certain purchased raw materials, including monomers, resins and solvents.
For further detail on our use of derivative instruments, see Note 20 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Foreign exchange rates risk We are exposed to foreign currency exchange risk by virtue of the translation of our international operations from local currencies into the U.S. Dollar.
For further detail on our use of derivative instruments, see Note 19 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Foreign exchange rates risk We are exposed to foreign currency exchange risk by virtue of the translation of our international operations from local currencies into the U.S. Dollar.
A one-eighth percent change in the applicable interest rate for borrowings under the Senior Secured Credit Facilities (assuming the Revolving Credit Facility is undrawn ) would have an annual impact of approxim ately $2 million o n c ash interest expense considering the impact of our hedging positions currently in place.
A one-eighth percent change in the applicable interest rate for borrowings under the Senior Secured Credit Facilities (assuming the Revolving Credit Facility is undrawn ) would have an annual impact of approxim ately $1 million o n c ash interest expense considering the impact of our hedging positions currently in place.
A hypothetical 10% increase in the value of the U.S. Dollar relative to all foreign currencies would have increased the cumulative translation loss in the current year by $312 million. This sensitivity analysis is inherently limited as it assumes that rates of multiple foreign currencies are moving in the same direction relative to the value of the U.S. Dollar.
A hypothetical 10% increase in the value of the U.S. Dollar relative to all foreign currencies would have increased the cumulative translation loss in the current year by $355 million. This sensitivity analysis is inherently limited as it assumes that rates of multiple foreign currencies are moving in the same direction relative to the value of the U.S. Dollar.
We earn significant revenues and incur significant costs in foreign currencies including the Euro, Mexican Peso, Brazilian Real, Chinese Yuan, British Pound, Turkish Lira, Argentinian Peso and the British Pound. As a result, movements in exchange rates could cause our revenues and expenses to materially fluctuate, impacting our future profitability and cash flows.
We earn significant revenues and incur significant costs in foreign currencies including the Euro, Swiss Franc, Mexican Peso, Brazilian Real, Chinese Yuan, Turkish Lira, Argentinian Peso and the British Pound. As a result, movements in exchange rates could cause our revenues and expenses to materially fluctuate, impacting our future profitability and cash flows.
The majority of our net sales for the years ended December 31, 2024, 2023 and 2022 were from operations outside the United States. At December 31, 2024 and 2023, the accumulated other comprehensive loss account in the consolidated balance sheets included a cumulative translation loss of $517 million and $374 million, respectively.
The majority of our net sales for the years ended December 31, 2025, 2024 and 2023 were from operations outside the United States. At December 31, 2025 and 2024, the accumulated other comprehensive loss account in the consolidated balance sheets included a cumulative translation loss of $312 million and $517 million, respectively.
Treasury policy Our treasury policy seeks to ensure that adequate financial resources are available for the development of our businesses while managing our currency and interest rate risks. Our policy is to not engage in speculative transactions. Our policies with respect to the major areas of our treasury activity are set forth above. 52 Table of Contents
Treasury policy Our treasury policy seeks to ensure that adequate financial resources are available for the development of our businesses while managing our currency and interest rate risks. Our policies with respect to the major areas of our treasury activity are set forth above. 57 Table of Contents
Removed
We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes.

Other AXTA 10-K year-over-year comparisons