On February 10, Axalta Coating Systems announced its financial results for the fourth quarter and full year of 2025.
For the full year 2025, Axalta reported net sales of $5.117 billion, representing a 3% year-on-year decline. Lower volumes in North America were largely offset by new business wins, favorable foreign exchange translation, and positive pricing across three of the company’s four business segments. Overall volumes declined 4.6%.
Full-year net income totaled $379 million, down 3.1% from the prior year, while the net profit margin remained stable at 7.4%. The decline in net income was mainly driven by lower sales volumes and higher income tax expenses. These pressures were partially offset by a 5% reduction in selling, general and administrative (SG&A) expenses, lower interest expense, and reduced variable costs compared with the prior year.
Adjusted net income increased by $22 million year over year to $540 million. Adjusted EBITDA reached a record $1.128 billion, up 1.1%, supported by strong operational execution and disciplined cost control. Adjusted EBITDA margin expanded by 80 basis points to 22.0%, the highest level in the company’s history. Diluted earnings per share declined 2% to $1.74, while adjusted diluted EPS rose 6% to a record $2.49.
In the fourth quarter of 2025, Axalta’s net sales declined 4% year over year to $1.262 billion, primarily due to lower volumes caused by a challenging economic environment. This decline was partially offset by favorable foreign exchange translation in the Mobility Coatings business and positive pricing.
Fourth-quarter net income was $60 million, with a net margin of 4.8%, compared with $137 million in the prior-year period. The decrease was mainly attributable to higher income tax expense, lower net sales, and increased acquisition-related costs. These were partially offset by lower SG&A expenses and reduced interest costs. Income tax expense increased by $57 million, reflecting a one-time deferred tax benefit recognized in the fourth quarter of the prior year and a higher valuation allowance recorded in the current quarter.
Adjusted net income totaled $128 million, slightly lower than the prior year. Adjusted EBITDA was $272 million, with an adjusted EBITDA margin of 21.5%, up 50 basis points year over year. Diluted EPS was $0.28, compared with $0.63 a year earlier, while adjusted diluted EPS was $0.59, versus $0.60 in the prior-year period.
Cash flow from operating activities reached a record $344 million in the fourth quarter, an increase of $110 million year over year. Free cash flow also hit a quarterly record of $290 million, up $113 million, driven mainly by improved working capital from strong cash collections and lower interest and tax payments.
For the full year, operating cash flow totaled $649 million, up $73 million year over year and the highest level in Axalta’s history. Capital expenditures increased to $196 million from $140 million in 2024, primarily due to investments in manufacturing facilities to improve productivity. Free cash flow amounted to $466 million, compared with $451 million in the prior year. In 2025, Axalta returned $165 million to shareholders through share repurchases and repaid $230 million of total debt.
At year-end 2025, Axalta’s net debt-to-LTM adjusted EBITDA ratio fell to a record low of 2.3x. During the quarter, the company prioritized debt reduction, repaying $204 million of long-term loans. Cash and cash equivalents totaled $657 million, with total liquidity exceeding $1.4 billion.
Adjusted EBITDA for the segment was $180 million, compared with $198 million a year earlier. Adjusted EBITDA margin declined to 22.8% from 23.5%, with lower volumes and unfavorable pricing partially mitigated by reduced fixed operating costs, improved foreign exchange rates, and lower variable costs.
Looking ahead, Villavarayan added that Axalta will continue to build on its strong foundation to further enhance financial performance. He emphasized the company’s solid balance sheet and its ability to navigate various operating environments, positioning Axalta to deliver meaningful shareholder value in the next phase of its partnership with AkzoNobel.
In November 2025, Axalta announced it had entered into a definitive agreement to merge with AkzoNobel through an all-stock, equal-value transaction, creating a global leader in the coatings industry. The merger will combine two highly complementary product portfolios, expand global scale, and offer enhanced profitability, significant synergy opportunities, and long-term value creation. The transaction remains subject to shareholder and regulatory approvals and other customary closing conditions, and is expected to close in late 2026 or early 2027.
Axalta expects low single-digit percentage sales growth in 2026, with:
Adjusted EBITDA of $1.14 billion to $1.17 billion
Adjusted diluted EPS of $2.55 to $2.70
Free cash flow exceeding $500 million
