Axalta Coating Systems Ltd.

Previous wording

Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “expect,” “expects,” “expected,” “believe,” “intended,” “estimated,” “designed to,” “likely,” “could,” “would,” “may,” “will” and “future” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including related to any new or existing tariffs imposed by the U.S. and any retaliatory actions from other countries, geopolitical (including the current conflict in the Middle East and related effects on commodity prices) and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the Merger and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, capital allocation strategy and future share repurchases (if any), our previously-announced global transformation initiative (the “2024 Transformation Initiative”), and our previously-announced three-year 2024-2026 strategy, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission (the “SEC”), and you should not place undue reliance on these forward-looking statements or projections. Although we believe that these forward-looking statement…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. These statements often include words such as “expect,” “expects,” “expected,” “believe,” “intended,” “estimated,” “designed to,” “likely,” “could,” “would,” “may,” “will,” “plans” and “future” and the negative of these words or other comparable or similar terminology. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks and uncertainties, including, but not limited to, economic, competitive, governmental, including related to any new or existing tariffs imposed by the U.S. and any retaliatory actions from other countries, geopolitical (including the current conflict in the Middle East and related effects on raw material and freight prices, as well as mitigation strategies developed in response thereto) and technological factors outside of our control, as well as risks related to the proposed Merger with AkzoNobel (including our ability to consummate the Merger and realize the anticipated benefits thereof), execution of, and assumptions underlying, our tariff mitigation strategies, capital allocation strategy and future share repurchases (if any), our planned divestiture of our North America Building Products business, our previously-announced global transformation initiative (the “2024 Transformation Initiative”), and our previously-announced three-year 2024-2026 strategy, that may cause our business, industry, strategy, financing activities or actual results to differ materially. More information on potential factors that could affect our financial results is available in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in other documents that we have filed with, or furnished to, the U.S. Securities and Exchange Commission …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a leading global manufacturer, marketer and distributor of high-performance coatings systems and products. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 42 manufacturing facilities, four technology centers, 52 customer training centers and approximately 12,200 team members allows us to meet the needs of customers in over 140 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through over 5,000 independent, locally based distributors.

Current wording

We are a leading global manufacturer, marketer and distributor of high-performance coatings systems and products. We have over a 150-year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by market-leading technology and customer service. Our diverse global footprint of 42 manufacturing facilities, four technology centers, 52 customer training centers and approximately 12,100 team members allows us to meet the needs of customers in over 140 countries. We serve our customer base through an extensive sales force and technical support organization, as well as through over 5,000 independent, locally based distributors.

Previous wording

Our net sales increased 1.3%, driven by a 4.2% benefit from favorable foreign currency translation, for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increased net sales were furthered by contributions of 0.9% from acquisitions completed during 2025 and 2026 in the Performance Coatings segment (the “Recent Acquisitions”), partially offset by lower sales volumes of 3.5% and unfavorable average selling prices and product mix of 0.3%. The following trends impacted our segment net sales performance for the six months ended June 30, 2026:

Current wording

Our net sales increased 1.5%, driven primarily by a 3.1% benefit from favorable foreign currency translation, for the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025. The increased net sales were furthered by contributions of 0.9% from acquisitions completed during 2025 and 2026 in the Performance Coatings segment (the “Recent Acquisitions”), partially offset by lower sales volumes of 2.4% and unfavorable average selling prices and product mix of 0.1%. The following trends impacted our segment net sales performance for the nine months ended September 30, 2026:

Previous wording

•Performance Coatings: Net sales increased 1.0% for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increased net sales were driven by favorable foreign currency translation of 3.8% driven by fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar, furthered by contributions of 1.4% from the Recent Acquisitions. The increased net sales were partially offset by lower sales volumes of 4.1% and unfavorable average selling prices and product mix of 0.1%.

Current wording

•Performance Coatings: Net sales increased 0.3% for the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025. The increased net sales were driven by favorable foreign currency translation of 2.5% driven by fluctuations of the Euro, Mexican Peso and Chinese Yuan, in each case compared to the U.S. Dollar, furthered by contributions of 1.4% from the Recent Acquisitions and favorable average selling prices and product mix of 0.3%. The increased net sales were partially offset by lower sales volumes of 3.9%.

Previous wording

•Mobility Coatings: Net sales increased 1.9% for the six months ended June 30, 2026 compared with the six months ended June 30, 2025. The increased net sales were driven by favorable foreign currency translation of 4.9% driven by fluctuations of the Chinese Yuan, Brazilian Real, Euro and Mexican Peso, in each case compared to the U.S. Dollar, partially offset by lower sales volumes of 2.3% and unfavorable average selling prices and product mix of 0.7%.

Current wording

•Mobility Coatings: Net sales increased 3.6% for the nine months ended September 30, 2026 compared with the nine months ended September 30, 2025. The increased net sales were driven by favorable foreign currency translation of 4.1% driven by fluctuations of the Chinese Yuan, Brazilian Real, Mexican Peso and Euro, in each case compared to the U.S. Dollar, and higher sales volumes of 0.2%. The increased net sales were partially offset by unfavorable average selling prices and product mix of 0.7%.

Previous wording

Our business serves four end-markets globally with net sales for the three and six months ended June 30, 2026 and 2025, as follows:

Current wording

Our business serves four end-markets globally with net sales for the three and nine months ended September 30, 2026 and 2025, as follows:

Previous wording

During November 2025, we entered into a Merger Agreement with AkzoNobel (as amended on May 27, 2026 and on July 23, 2026), providing for the combination of the Company and AkzoNobel in an all-stock merger. See Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

During November 2025, we entered into a Merger Agreement with AkzoNobel (as amended on May 27, 2026 and on July 23, 2026), providing for the combination of the Company and AkzoNobel in an all-stock merger. On August 5, 2026, the Company’s shareholders approved and adopted the Merger Agreement and the transactions contemplated therein at a special general meeting of shareholders held for that purpose, and AkzoNobel’s shareholders approved the Merger on the same date. The completion of the Merger remains subject to the satisfaction or waiver of other customary closing conditions, including receipt of required regulatory approvals. On October 20, 2026, the Company announced it plans to divest its North American Building Products business to address regulatory requirements. See Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

The conflict in the Middle East involving Iran has increased the level of economic and political uncertainty globally. While our operations in the Middle East region do not constitute a material portion of our business, a significant escalation or expansion of economic disruption, countries subject to sanctions or the conflict’s current scope, or a prolonged continuation of the conflict’s current scope, could have a material adverse effect on our results of operations, financial condition and cash flows. We are actively monitoring the broader global economic impact on commodities from the current conflict, including the price and supply of raw materials, transportation costs and utilities, among others.

Current wording

The conflict in the Middle East involving Iran has increased the level of economic and political uncertainty globally. While our operations in the Middle East region do not constitute a material portion of our business, during the three months ended September 30, 2026, we were negatively impacted by the broader economic impact on raw material and freight costs, which were partially offset by mitigation strategies developed in response to these pressures. We will continue to monitor these conditions and take actions that we believe will help mitigate costs.

Previous wording

During the six months ended June 30, 2026, we prepaid $125 million of the outstanding principal amount of the 2029 Dollar Term Loans. See Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

During the nine months ended September 30, 2026, we prepaid $195 million of the outstanding principal amount of the 2029 Dollar Term Loans. See Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

n Favorable impacts of currency translation due primarily to fluctuations of the Euro compared to the U.S. Dollar

Current wording

n Favorable impacts of currency translation driven by the strengthening of the Chinese Yuan and Mexican Peso, partially offset by the weakening of the Euro, in each case compared to the U.S. Dollar

Previous wording

n Favorable impacts of currency translation driven by fluctuations of the Chinese Yuan, Mexican Peso, Euro and Brazilian Real, in each case compared to the U.S. Dollar

Current wording

n Favorable impacts of currency translation driven by fluctuations of the Euro, Chinese Yuan, Mexican Peso and Brazilian Real, in each case compared to the U.S. Dollar

Previous wording

n Decrease of $4 million in bad debt expense

Current wording

n Decrease of $6 million in bad debt expense

Previous wording

n Increase of $31 million in merger and acquisition-related costs, primarily driven by the proposed Merger with AkzoNobel

Current wording

n Increase of $14 million in merger and acquisition-related costs, primarily driven by the proposed Merger with AkzoNobel

Previous wording

n Decrease of $7 million in termination benefits and other employee-related costs

Current wording

n Increase of $3 million in termination benefits and other employee-related costs

Previous wording

n Increase of $52 million in merger and acquisition-related costs, primarily driven by the proposed Merger with AkzoNobel

Current wording

n Increase of $65 million in merger and acquisition-related costs, primarily driven by the proposed Merger with AkzoNobel

Previous wording

n Decrease of $14 million in termination benefits and other employee-related costs primarily as a result of significantly higher costs associated with the 2024 Transformation Initiative in the prior year period

Current wording

n Decrease of $11 million in termination benefits and other employee-related costs primarily as a result of significantly higher costs associated with the 2024 Transformation Initiative in the prior year period

Previous wording

Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025

Current wording

Three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025

Previous wording

n Assets acquired in the past 12 months contributed $2 million

Current wording

n Assets acquired in the past 12 months contributed $3 million

Previous wording

Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025

Current wording

Three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025

Previous wording

The change in other (income) expense, net was primarily due to the following:

Current wording

The change in other expense (income), net was primarily due to the following:

Previous wording

The change in other (income) expense, net was primarily due to the following:

Current wording

The change in other expense (income), net was primarily due to the following:

Previous wording

n $8 million related to government incentive income in China recognized in the current year period

Current wording

n $9 million related to government incentive income in China recognized in the current year period

Previous wording

n Favorable impact of foreign exchange gains of $1 million compared to the prior year period

Current wording

n Favorable impact of foreign exchange gains of $4 million compared to the prior year period

Previous wording

(1) For the three and six months ended June 30, 2026, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, Germany, and the United States. For the three and six months ended June 30, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda statutory tax rate is primarily related to earnings in Germany, Switzerland, and the United States.

Current wording

(1) For the three and nine months ended September 30, 2026, earnings generated in jurisdictions where the statutory rate is different from the Bermuda rate is primarily related to earnings in Brazil, Germany, and the United States. For the three and nine months ended September 30, 2025, earnings generated in jurisdictions where the statutory rate is different from the Bermuda statutory tax rate is primarily related to earnings in Brazil, Germany, Switzerland, and the United States.

Previous wording

(2) Changes in valuation allowance primarily relate to operations in Luxembourg, the Netherlands, and the United Kingdom. During the three months ended June 30, 2026, the Company released $25 million of valuation allowance which is fully offset by changes in unrecognized tax benefits.

Current wording

(2) Changes in valuation allowance primarily relate to operations in Luxembourg, the Netherlands, and the United Kingdom. During the nine months ended September 30, 2026, the Company released $25 million of valuation allowance which is fully offset by changes in unrecognized tax benefits.

Previous wording

(3) Non-deductible expenses and interest includes tax impacts of $7 million and $12 million for the three and six months ended June 30, 2026, respectively, related to merger and acquisition-related costs, driven by the proposed Merger with AkzoNobel

Current wording

(3) Non-deductible expenses and interest includes tax impacts of $3 million and $15 million for the three and nine months ended September 30, 2026, respectively, related to merger and acquisition-related costs, driven by the proposed Merger with AkzoNobel.

Previous wording

(4) The Company recorded tax of $27 million and $12 million for the three and six months ended June 30, 2026, respectively, related to unrecognized tax benefit adjustments resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits. The increase to unrecognized tax benefits for the three and six months ended June 30, 2026 is partially offset by changes in valuation allowance.

Current wording

(4) The Company recorded tax of $0 million and $12 million for the three and nine months ended September 30, 2026, respectively, related to unrecognized tax benefit adjustments resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits. The increase to unrecognized tax benefits for the nine months ended September 30, 2026 is partially offset by changes in valuation allowance.

Previous wording

(5) Foreign taxes includes Pillar Two top-up taxes primarily attributable to Swiss operations of $2 million, $4 million, $2 million and $3 million for the three and six months ended June 30, 2026 and June 30, 2025, respectively.

Current wording

(5) Foreign taxes includes Pillar Two top-up taxes primarily attributable to Swiss operations of $2 million, $6 million, $0 million and $3 million for the three and nine months ended September 30, 2026 and September 30, 2025, respectively.

Previous wording

n Unfavorable average selling prices and product mix in the refinish end-market

Current wording

n Favorable average selling prices and product mix primarily in the refinish end-market

Previous wording

n Unfavorable average selling prices and product mix in the refinish end-market

Current wording

n Favorable average selling prices and product mix primarily in the refinish end-market

Previous wording

n Favorable impacts of currency translation driven by fluctuations of the Brazilian Real, Chinese Yuan, Mexican Peso and Euro, in each case compared to the U.S. Dollar

Current wording

n Favorable impacts of currency translation driven by fluctuations of the Chinese Yuan, Brazilian Real, Mexican Peso and Euro, in each case compared to the U.S. Dollar

Previous wording

n $6 million of benefit related to government incentive income in China

Current wording

n $7 million of benefit related to government incentive income in China

Previous wording

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 unaudited condensed consolidated balance sheets. Our supplier finance programs are more fully described in Note 14 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

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. The liabilities under the programs are classified as accounts payable on our unaudited condensed consolidated balance sheets. Our supplier finance programs are more fully described in Note 14 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2026 was $220 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $368 million. This was partially offset by changes in operating assets and liabilities of $148 million, for which the most significant drivers were increases in accounts and notes receivable, prepaid expenses and other assets and inventories of $109 million, $58 million and $53 million, respectively, as well as a decrease in other accrued liabilities of $40 million. These outflows were driven primarily by timing of collections from customers, seasonal cash payments for variable incentive compensation, payments of BIPs and rebates and seasonal inventory builds. These outflows were partially offset by increases in accounts payable of $139 million driven by timing of payments to vendors.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2026 was $355 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $542 million. This was partially offset by changes in operating assets and liabilities of $187 million, for which the most significant drivers were increases in accounts and notes receivable, inventories, and prepaid expenses and other assets of $132 million, $99 million, and $75 million, respectively. These outflows were driven primarily by timing of collections from customers, decreased sales volumes, higher variable costs and payments of BIPs. These outflows were partially offset by increases in accounts payable of $146 million, driven by timing of payments to vendors.

Previous wording

Net cash used for investing activities for the six months ended June 30, 2026 was $97 million. The primary uses were for purchases of property, plant and equipment of $98 million and business acquisitions of $8 million, partially offset by $6 million from interest proceeds from swaps designated as net investment hedges and $5 million from payments received on customer loans. Details of the interest proceeds from swaps designated as net investment hedges are discussed further in Note 16 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Net cash used for investing activities for the nine months ended September 30, 2026 was $138 million. The primary uses were for purchases of property, plant and equipment of $144 million and business acquisitions of $8 million, partially offset by $9 million from interest proceeds from swaps designated as net investment hedges and $8 million from payments received on customer loans. Details of the interest proceeds from swaps designated as net investment hedges are discussed further in Note 16 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Net cash used for financing activities for the six months ended June 30, 2026 was $143 million. The primary use was for prepayments of $125 million of the outstanding principal amount of the 2029 Dollar Term Loans, contractual debt repayments of $10 million and cash outflows of $6 million primarily due to stock-based compensation withholding tax settlements.

Current wording

Net cash used for financing activities for the nine months ended September 30, 2026 was $221 million. The primary use was for prepayments of $195 million of the outstanding principal amount of the 2029 Dollar Term Loans, contractual debt repayments of $16 million and cash outflows of $7 million primarily due to stock-based compensation withholding tax settlements.

Previous wording

Currency exchange impacts on cash for the six months ended June 30, 2026 were unfavorable by $4 million, which was driven primarily by fluctuations of the Euro and Indian Rupee, partially offset by fluctuations in the Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar.

Current wording

Currency exchange impacts on cash for the nine months ended September 30, 2026 were immaterial.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2025 was $168 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $409 million. This was partially offset by net uses of working capital of $241 million, for which the most significant drivers were decreases in other accrued liabilities of $111 million as well as increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $89 million, $56 million and $47 million, respectively. These outflows were driven primarily by seasonal cash payments for variable incentive compensation, payments of BIPs and rebates, increased production and timing of collections from customers. These outflows were partially offset by increases in accounts payable of $65 million driven by timing of payments to vendors.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2025 was $305 million. Net income before deducting depreciation, amortization and other non-cash items generated cash of $620 million. This was partially offset by net uses of working capital of $315 million, for which the most significant drivers were increases in prepaid expenses and other assets, inventories and accounts and notes receivable of $132 million, $53 million and $48 million, respectively, as well as decreases in other accrued liabilities and accounts payable of $71 million and $15 million, respectively. These outflows were driven primarily by payments of BIPs and rebates, decreased sales volumes and timing of collections from customers and payments to vendors.

Previous wording

Net cash used for investing activities for the six months ended June 30, 2025 was $83 million. The primary uses were for purchases of property, plant and equipment of $88 million and a business acquisition of $6 million, partially offset by proceeds of $7 million from interest proceeds from swaps designated as net investment hedges.

Current wording

Net cash used for investing activities for the nine months ended September 30, 2025 was $122 million. The primary uses were for purchases of property, plant and equipment of $138 million and a business acquisition of $6 million, partially offset by proceeds of $10 million from the sales of two previously closed manufacturing sites and proceeds of $9 million from interest proceeds from swaps designated as net investment hedges.

Previous wording

Net cash used for financing activities for the six months ended June 30, 2025 was $78 million. The primary use was for purchases of our common stock of $65 million and contractual debt repayments of $10 million.

Current wording

Net cash used for financing activities for the nine months ended September 30, 2025 was $195 million. The primary use was for purchases of our common shares of $165 million, prepayments of $10 million of the outstanding principal amount of the 2029 Dollar Term Loans, and contractual debt repayments of $15 million.