A Global Leader In Our Markets Performance Coatings: Refinish Transportation Coatings: Light Vehicle #1 Axalta Peer 1 Other Other Peer 3 Axalta Peer 1 Peer 3 #2 Peer 2 Peer 2 Performance Coatings: Industrial Transportation Coatings: Commercial Vehicle #2 in powder coatings globally #1 supplier to North America heavy duty truck market #2 in energy solutions coatings globally Leading supplier to other offroad vehicle niches #2 in industrial e-coat globally ~90% of Sales from Markets Where Axalta Has #1 or #2 Global Share __________________________________ Source: Orr & Boss, Axalta estimates (2016) 8 PROPRIETARY AXALTA COATING SYSTEMS
Structurally Attractive Global End-Markets Strong Coatings Growth Outlook Diverse Industry Growth Drivers Coatings Industry Sales ($ in Billions) Refinish : Car parc, miles driven and collision rates CAGR Light Vehicle : Emerging economies and middle classes; ongoing consumer strength in developed markets 5.3% 29.7 Commercial Vehicle : Global consumer markets 24.1 Industrial expanding; infrastructure growth; professionalized logistics management 3.8% 3.8 Commercial 3.3 Vehicle Industrial : Global GDP and industrial production; 8.7 2.9% 7.8 Light Vehicle application sophistication with enhanced functionality and durability 7.7 2.7% 6.9 Refinish 2016E 2020E _____________________________ Source: Orr & Boss, Axalta estimates Long Term Alignment With Global Growth 9 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Foundation: A Product Development Timeline Acquisitions with 14+ Brands L, a, b color equations Herberts Dulux New tinting technology 2016 1866 1900s 1950s 2000 2013 1 st Color popularity report 2014 Sand mills NYSE: AXTA revolutionize pigment dispersion Acquire EFX spectrophotometer Axalta offers >30 coatings brands for 100,000+ customers in 130 countries 10 PROPRIETARY AXALTA COATING SYSTEMS
Key Achievements in 2016 Stated Objective Results Net sales growth 4% ex-currency, including acquisitions Grow the Business Outgrew our end-markets Extend our strong global foundation Extend Core Strengths & Globalize Focus on Operating Improvement Success in refining our operating model Exceeded expectations with $64 million in combined Productivity Initiatives Improve Cost Structure 2016 cost savings Productivity & growth capex remain in high gear - $136 M Continue High IRR Investments spend in 2016A Completed 6 bolt-on M&A deals in our core end-markets Active M&A Pipeline Leverage ratios lowered to 3.0x (2.5-3.0x goal) ahead of FCF & Debt Paydown A Priority schedule 11 PROPRIETARY AXALTA COATING SYSTEMS
2016 Consolidated Results Financial Performance Key Financial Accomplishments FY % Change 2016 2015 Incl. F/X Excl. F/X ($ in millions) 4.3% net sales growth, ex-FX Performance 2,403 2,385 0.8% 6.6% Transportation 1,670 1,702 (1.9%) 1.1% 110 basis point Adjusted EBITDA margin expansion Net Sales 4,074 4,087 (0.3%) 4.3% Strong continued progress on productivity initiatives Net Income (1) 42 94 Significant free cash flow generation Adjusted EBITDA 907 867 4.6% Cash Flow (2) Six acquisitions completed 423 261 (1) Represents Net Income attributable to Axalta Completed exit of the Carlyle Group ownership stake (2) Cash Flow from Operations less Capital Expenditures Net Sales Variance Comprehensive debt refinancing; additional debt paydown +1.7% +2.6% (4.6%) (0.3%) Ratings upgrades from S&P and Moody’s $4,087 $4,074 Lower adjusted book income tax rates from key structural initiatives 2015 Volume Price FX 2016 12 PROPRIETARY AXALTA COATING SYSTEMS
2016 Highlights Wins 28 million OEM vehicles painted 100+ OEM coating systems launched 900+ new Industrial accounts Continued gains with multi-shop and independent refinish customers Products 225+ new products, line extensions or fit-for- purpose technology applications Added 15+ brands from acquisitions 6100 Hydropon Recognition Multiple customer awards for technology, service and support Customer and industry awards for innovation and sustainable technologies 13 PROPRIETARY AXALTA COATING SYSTEMS
Key Goals For 2017 Stated Objective Expected Results New product introductions, broader global market penetration, benefit from Outgrow our End-markets consolidation in key end-markets Execute on Structural Savings Continue to execute on structural cost savings through productivity initiatives Begin rollout of global operating model, complexity reduction, active cyclical Maintain Active Operating Cost Discipline cost discipline, and footprint optimization Maintain focus on customer productivity and offering a broad and deep Drive Excellent Customer Service & Innovation product choice Disciplined Capital Allocation Target more bolt-on M&A deals for $100+ million in cumulative spend Focus on FCF and maintain leverage goals; begin to accelerate alternative Continue FCF and Financial Discipline capital allocation beyond debt reduction 14 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Journey For Shareholder Value Creation G ROWTH C APITAL ALLOCATION T ECHNOLOGY & I NNOVATION Re-invest in the business Seeking highest return on our The heart of Axalta Adapt culture & incentives spend Driver of growth, margin, Driving decision making at competitive moat Focus on customer corporate level Shifting culture at operating level P RODUCTIVITY M&A “Fit -for- growth” initial Ongoing consolidation in savings coatings = opportunity Axalta Way broader Bolt-on deals minimize risk, global effort maximize returns New operating system Add products, technology, for 2017 market access Imbedded Lean culture Returns enhanced by operating model with built-in synergies Growing cadence and experience 15 PROPRIETARY AXALTA COATING SYSTEMS
Grow the Business; Invest to Outgrow our End-markets Invest in Capacity Meet and anticipate global demand for liquid and powder coatings 7 major completed projects 2 projects in the pipeline 7 new or expanded customer training centers C HINA USA W ATERBORNE PRODUCTION EXPANSION R EFINISH WATERBORNE PRODUCTION Invest in Technology Reorganized global team of more than 1,300 scientists, engineers and technicians Focused on technology for product, process enhancements and customer technical support $165+ million in R&D spend in 2016 C HINA USA Building or expanding four facilities A SIA -P ACIFIC T ECHNOLOGY C ENTER G LOBAL I NNOVATION C ENTER - 2018 16 PROPRIETARY AXALTA COATING SYSTEMS
Continue to Adapt our Culture & Incentives Employee Values and Behaviors to Drive Performance Clear Values Expected Behaviors We put our customers first Service to our customers drives our work We take ownership in everything we do Clear accountability Code of Business Conduct & We are driven to perform every day Get results, apply metrics Ethics Incentives and metrics We innovate with purpose Commercial technology focus We succeed as a united team Inspires and builds capabilities 17 PROPRIETARY AXALTA COATING SYSTEMS
We Are Driving Long Term Growth Axalta Annual Sales ($ billions) Comments Mid-single digit core growth assumed in the period ~11% CAGR $6+ Seeking to redeploy growing free cash flow in return accretive opportunities 0.45 0.45 Improving ROIC from strong capital allocation in $4+ internal investment, M&A, and maximizing productivity M&A: Seeking better than market hurdle rates of 1.72 return from bolt-on deals Inorganic Growth Organic Growth 1.65 2016 2020 Transportation Refinish Industrial Revenue Revenue _____________________________________________ Note: Assuming constant currency in growth projections Organic Growth + FCF Deployment = Strong Topline Growth 18 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Journey For Shareholder Value Creation G ROWTH C APITAL ALLOCATION T ECHNOLOGY & I NNOVATION Re-invest in the business Seeking highest return on our The heart of Axalta Adapt culture & incentives spend Driver of growth, margin, Focus on customer Driving decision making at competitive moat corporate level Shifting culture at operating level P RODUCTIVITY M&A “F IT - FOR - GROWTH ” INITIAL SAVINGS Ongoing consolidation in coatings = opportunity A XALTA W AY BROADER GLOBAL Bolt-on deals minimize risk, EFFORT maximize returns N EW OPERATING SYSTEM FOR 2017 Add products, technology, I MBEDDED L EAN CULTURE market access Returns enhanced by operating model with built-in synergies Growing cadence and experience 19 PROPRIETARY AXALTA COATING SYSTEMS
The Axalta Way: Driving Towards World Class Productivity Cumulative Productivity Savings ($ millions) Continued progress ~$200 ~$150 $89 $37 2014 2015 2016 2017E 2018E The Axalta Way: “A focused approach to doing business that drives profitability by improving our efficiency, productivity and growth opportunities every day, wherever we do business” 20 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Journey For Shareholder Value Creation C APITAL ALLOCATION G ROWTH T ECHNOLOGY & I NNOVATION S EEKING HIGHEST RETURN ON OUR SPEND Re-invest in the business The heart of Axalta D RIVING DECISION MAKING AT Adapt culture & incentives Driver of growth, margin, CORPORATE LEVEL Focus on customer competitive moat S HIFTING CULTURE AT OPERATING LEVEL P RODUCTIVITY M&A “Fit -for- growth” initial Ongoing consolidation in savings coatings = opportunity Axalta Way broader Bolt-on deals minimize risk, global effort maximize returns New operating system Add products, technology, for 2017 market access Imbedded Lean culture Returns enhanced by operating model with built-in synergies Growing cadence and experience 21 PROPRIETARY AXALTA COATING SYSTEMS
Capital Allocation: Optimizing our Deployment Debt Reduction Yes Organic Investment EBITDA Leverage in Capex / R&D Investment - Cash interest expense excess of target No Yes opportunity that - Cash taxes and no - Net working capital exceeds hurdle immediate - Non-Discretionary Capex rate? investment? = Free Cash Flow M & A No 2.5 – 3.0x Net leverage Target Yes Dividends $2,729 Current Net Debt Share price greater than fair value? LTM EBITDA $907 Share Repurchases Current Net Leverage 3.0x No 22 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Journey For Shareholder Value Creation G ROWTH C APITAL ALLOCATION T ECHNOLOGY & I NNOVATION Re-invest in the business Seeking highest return on our The heart of Axalta Adapt culture & incentives spend Driver of growth, margin, Focus on customer Driving decision making at competitive moat corporate level Shifting culture at operating level P RODUCTIVITY M&A O NGOING CONSOLIDATION IN COATINGS = “Fit -for- growth” initial savings OPPORTUNITY Axalta Way broader B OLT - ON DEALS MINIMIZE RISK , MAXIMIZE global effort RETURNS New operating system A DD PRODUCTS , TECHNOLOGY , MARKET ACCESS for 2017 R ETURNS ENHANCED BY OPERATING MODEL Imbedded Lean culture WITH BUILT - IN SYNERGIES G ROWING CADENCE AND EXPERIENCE 23 PROPRIETARY AXALTA COATING SYSTEMS
M&A: Leveraging a Consolidating Coatings Sector 2015 Acquisitions Provide access to new technologies, products, customers, and markets Leverage combined supply chains & distribution channels Develop process and marketing efficiencies and globalize products ChemSpec - North America Duwest - Central America Metalak - Benelux Refinish Refinish Refinish • Industrial • Architectural 2016 2017 YTD High Performance Coatings United Paint Dura Coat Ellis Paint Century Industrial Coatings Southeast Asia North America North America North America North America Refinish Automotive Interiors Industrial Coil Coatings Refinish • Industrial Industrial 24 PROPRIETARY AXALTA COATING SYSTEMS
M&A: Leveraging a Consolidating Coatings Sector Benefits of Coatings Deals Examples of Technology Acquired Immediate & medium-term synergies from Solvent- and waterborne rigid plastic coating systems procurement & supply chain, R&D, and access to new for a variety of substrates markets Economy segment refinish formulations and capacity Potential to globalize previously regional products Low VOC paint systems for value segments Ability to access new markets at appropriate cost Low VOC refinish poly-primer (sprayable) structure Sector-leading durability and low VOC industrial coil Potential to leverage acquired facilities for additional coatings production Acceleration of new product introduction plans Capital structure and human resource upgrade potential 25 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Journey For Shareholder Value Creation G ROWTH C APITAL ALLOCATION T ECHNOLOGY & I NNOVATION T HE HEART OF A XALTA Re-invest in the business Seeking highest return on our Adapt culture & incentives spend D RIVER OF GROWTH , Focus on customer Driving decision making at MARGIN , COMPETITIVE MOAT corporate level Shifting culture at operating level P RODUCTIVITY M&A “Fit -for- growth” initial Ongoing consolidation in savings coatings = opportunity Axalta Way broader Bolt-on deals minimize risk, global effort maximize returns New operating system Add products, technology, for 2017 market access Imbedded Lean culture Returns enhanced by operating model with built-in synergies Growing cadence and experience 26 PROPRIETARY AXALTA COATING SYSTEMS
Significant Competitive Advantages Product Process Distribution & Technical Services Extensive Formulation Go-To-Market Deep Process Technology Differentiated Technical Technology Innovation Database With Strong Brands Knowledge Support • • 46 plants on 5 continents Dedicated employees in OEM 4+ million color variations Deep coatings heritage 1,300+ technology employees • • Hundreds of formulations in Significant legacy capital 800+ patents, 365+ plants since 1866 automotive & industrial Technical support to body Broad global brand trademarks investment • Process technology is $165+ million annual spend portfolio shops hard to replicate Differentiated Franchise with Global Scale and Strong Competitive Advantages 27 PROPRIETARY AXALTA COATING SYSTEMS
What Is The Role of Technology at Axalta? June Maximize Technology Leverage Technology is Axalta’s Backbone 2013 2014 2014 Fuels the growth pipeline Technology can drive enhanced Value Creation returns, not just defend the castle Maintains the competitive edge by ensuring quality, consistency and Measure, refine, maximize ROI process improvement From cost-center to strategic Growth and ROIC Helps drive customer productivity partner and loyalty 2016 Refocus on the customer vs. Informs capital investment reward for patents developed decisions THE MOAT Conserve capital for maximum Drives strategic direction impact projects Products Process Productivity Develop fit-for-market products to serve emerging economies Technology & Innovation Technology is the Axis of Value Creation for Axalta 28 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Future Rests On A Foundation Of Technology Investment Significant technology investment We have an active product pipeline We will introduce >250 products in 2017 >800 new products to be introduced over the next 3 years Technology Investment As % Net Sales 4.4% We continue to invest for growth 3.3% 3.3% Philadelphia Global R&D Center – 2018 New China facility - phased ramp-up of storage, Refinish, OEM & Industrial 2.3% production 1.3% Other capacity expansions in Argentina, India, France, others 1.3% Technology & service drives our growth VAL PPG Akzo RPM SHW Record total refinish shop conversions in 2016 New refinish technology enhances productivity moat for premium shops Note: Peer data is FY 2015; Axalta is FY 2016 Success in OEM productivity gains continues Industrial is generating growth from tailored products and services offered Axalta Success is Driven by the Axis of Product Systems and Focus on the Customer 29 PROPRIETARY AXALTA COATING SYSTEMS
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Technology Drives Axalta’s Performance Barry Snyder SVP, Chief Technical Officer
Technology Is The Foundation Of Axalta’s Success We Innovate with Purpose 150+ year track record of coatings innovation ~4% of sales is invested in technology annually Technology at Axalta is 4-year Vitality Index >45% based on converting chemistry, physics, and Comprehensive product range materials science into ~10,000 SKUs tailored to customer needs practical solutions to solve Broad and deep offering in automotive, commercial, industrial real world problems that improve our customers’ Deep capabilities to meet customers’ needs businesses. Applications know-how Color technology Polymer and formulation chemistry Our Strong Market Share is Based on a Foundation of Technology and Innovation 32 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Automotive Coatings: We Build Performance Into Each Layer Axalta Technologies Performance Benefits Appearance Resin technology Clearcoat Mar and UV resistance Proprietary additives Dispersion processes Color and effect delivery Basecoat Proprietary resins & additives Productivity Color modeling Resin technology Adhesion Primer Dispersion processes Chip protection Catalyst technology Corrosion resistance Electrocoat Proprietary additives Appearance 33 PROPRIETARY AXALTA COATING SYSTEMS
Technology Strategy - Driving Differentiation World- class capabilities… …aligned with businesses to grow… …and build the future Infrastructure Fit-for-purpose products Future technology pipeline Tailored solutions Next generation Facilities Tools and processes Rapid turnaround Lighthouse Organization Customer support New capabilities Color delivery Process technology Capabilities Focus Raw materials Market extensions Core strengths Retooled approach Technology translation Product/technology Complexity management Color acquisitions Polymer chemistry External innovation Customer applications 34 PROPRIETARY AXALTA COATING SYSTEMS
Technology Investment Is Our Foundation Primary Laboratory Facilities Globally 1,300+ scientists, engineers and staff $165+ million annual spend; ~4% of net sales Product Research & Technology development Development Product development Process Manufacturing process Production & Raw improvement Materials Technology Cost reduction Service Product optimization Customer Technical Global Innovation Center (Philadelphia, 2018) Customer technical service Support Shanghai, China Mt. Clemens MI Wuppertal, Germany 30 Country Facilities & Centers of Excellence 35 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Connects Technology Innovation To Evolving Customer Requirements Axalta Technology Benefits Created At Two Value Chain Steps End-User Customer Product Ease of use Appearance Process Productivity Durability Compliance Protection Service Value Creation Stems From the Integration of Products, Quality, Consistency, and Customer Support 36 PROPRIETARY AXALTA COATING SYSTEMS
Unique Technology Capabilities Create Competitive Advantage Capabilities Advantages Proprietary resins and additives Differentiated products Product Over 800 patents Unique solutions Leading formulation capabilities Global leverage Process modeling Lower cost Manufacturing process Improved asset utilization and Process development capital deployment Design for quality Quality improvements Application equipment and Customer intimacy and experience relationship Service Line design and interactions Tailored solutions Simulation capabilities Rapid response 37 PROPRIETARY AXALTA COATING SYSTEMS
Improving Axalta’s Technology Function Current State Assessment Infrastructure Approach Processes & Systems Innovation Philosophy Laboratory Footprint Metrics Technology Base Organization & People Quality Business Integration Process Improvement Globalization Competitiveness Evolving Maturing Developing Balance portfolio Integrated facilities with Processes and metrics centers of excellence drive performance Close capabilities gaps Focused organizational Quality by design Partner with businesses units Global technologies/local Complete product lines Delivery mentality products Significant Opportunity to Build on our Solid Foundation 38 PROPRIETARY AXALTA COATING SYSTEMS
The Axalta Way: Improving Technology Capabilities and Operations Processes Productivity Output Portfolio Management Integrated Facilities Flawless Launch Project Management Global Platforms Design for Quality Change Management Complexity Management Shanghai, China Technology Center 39 PROPRIETARY AXALTA COATING SYSTEMS
Portfolio Management & Roadmaps Drive Axalta Innovation Current Generation Next Generation Lighthouse 65-75% of effort 20-30% of effort 3-6% of effort Product Extensions New product line New concepts/applications Tailored Solutions Major advancement New attributes Color/Appearance Protection Performance Productivity Application Compliance Cost High Solids 3-Wet Plastics Adhesion Promoter Examples Spies Hecker™ Filler Nap-Guard Imron ™ Elite Spectrophotometers Balanced Approach to Delivering Solutions for Today’s and Tomorrow’s Customer Needs 40 PROPRIETARY AXALTA COATING SYSTEMS
Metrics Drive Performance Improvement In Technology Output Input Productivity Products Launched Budget Project On-Time Delivery Colors Developed Strategic Focus Resource Intensity Growth Cost Reductions Defense Modifications Next Generation Improve Notice of Invention Goals and Tools Cost control Improved execution Growth & customer impact Align investments with Improve efficiency with Increased innovation growth targets and Axalta standardized work practices Way business improvement 41 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Coating Technologies – Tailored Solutions To Meet Customer Needs Refinish Transportation Coatings Industrial Coatings Coatings Liquid Coatings Light Vehicle 1 and 2 Component Water- and Solventborne 1 and 2 Component Water- and Solventborne Oligomer Chemistry Low VOC, Waterborne, Medium and Acrylic, Urethane, Proprietary Epoxy, Fluoropolymers, Alkyds, High Solids Solvent-borne Compositions Polyamideimide, Urethanes, Polyesters Urethanes, Acrylics, Melamine, Silane- Solid, Effect and High Chroma Anti Corrosive Technology, Zinc-rich functional Dispersions Systems Conventional and Harmonized Coatings Electrodeposition Technologies™ Color Tools Powder Coatings Commercial Vehicle Color Modeling 100% Solids Water- and Solventborne Effect Modeling Functional Epoxies, Fluoropolymers, Acrylic, Urethane, Silane Match and Formulation Algorithms Acrylics Functionality Spectrophotometric Systems Bonded Metallics Fast Cure and Low Temperature Cure Heat Reflective Rheology Control 42 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Technology Is Driving Hundreds Of Product Launches Refinish Industrial Coatings Transportation Coatings Mainstream Easy Application Waterborne Basecoat Productive Coating Systems Premium Clear Coat Low VOC Solventborne Basecoat Plastics and Interiors Carbon Fiber Coatings Polishing System Series 6100 Electrocoat Economy Basecoat High Chroma Colors Ultra Productive Primer 43 PROPRIETARY AXALTA COATING SYSTEMS
Technology Summary Technology investment is our foundation Axalta connects technology innovation to evolving customer requirements Axalta builds performance into each coating layer Technology drives business growth, enhanced returns, and protects our competitive moat 44 PROPRIETARY AXALTA COATING SYSTEMS
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Refinish Technology Michael Carr VP, President, North America
Axalta Is The Leader In Global Refinish Coatings Refinish End-Market Share A Strong Position in a Growing Industry $6.9 Billion Sales Leading market share position; industry estimated to grow at ~3% CAGR through 2020 Axalta, 25% Other, 28% We are the Refinish technology leader, driving productivity #1 and value for our customers Segment, market and competitive forces support favorable profit dynamic Broad and diverse brand presence that fits all customer Peer 4, 5% needs across the value spectrum Peer 1, 20% Strong global presence drives diverse growth opportunities Peer 3, 11% Peer 2, 11% Source: Orr & Boss (2017) 47 PROPRIETARY AXALTA COATING SYSTEMS
The Global Refinish Market Is Attractive And Dynamic Industry Dynamics Align with our Core Competencies Refinish Industry Sales by Region ($ Billions) Growing eco-regulations require innovations Performance needs drive technology improvements Consolidation trend supported by field sales model Market Requires Innovation to Drive Growth Color requirements continue to increase Productivity demands innovation Targeted channel strategies aligned to customers 3.6% CAGR 2016-2020 Field service addresses training challenges EMEA North America AP ex. Greater China Latin America Greater China 2.0% 3.0% 6.1% 4.5% 6.7% Source: Orr & Boss (2017) 48 PROPRIETARY AXALTA COATING SYSTEMS
The Market Opportunity In Global Refinish North America EMEA Asia Pacific Latin America Strong market access Axalta benefits from MSO Growth driven primarily by Mexico and Brazil represent through leading brands and consolidation expansion of the Chinese car Axalta’s largest Latin distributors parc America markets Leading VOC-compliant Diverse region with both products meet Significant OEM influence in Price increases help offset mature and developing environmental regulation collision repair and inflation and currency markets shifts insurance industry devaluation Environmental regulations Opportunity for growth in Opportunity for growth in Opportunity for growth in driving waterborne value product lines value product lines value product lines adoption 49 PROPRIETARY AXALTA COATING SYSTEMS
The Refinish Process At A Glance Repair Performed Vehicle Returned Accident Call Insurance Car to Body Shop Consumer Color Paint Clearcoat Prepare Surface Primer Surfacer Basecoat Match Mixed Body Shop Customer Satisfaction Depends on Quick, High-Quality, Cost-Effective Repairs 50 PROPRIETARY AXALTA COATING SYSTEMS
The Refinish Market Uses A Sell-Through Model Product & Product flow service flow Distributors Logistics Inventory management Body shops Axalta maintains direct body shop relationships Field service team facilitates shop conversions Technical team provides training, performance management Call center manages customer inquiries & requests Service flow 51 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Had Many Successes In 2016 Launched Innovative Products and Services to Address Customer Challenges Ultra-Productive, Low-Energy Clearcoats 40,000th Spectrophotometer Shipped Easy Application Waterborne Basecoat Ultra-Productive Primer New Training Center in Charlotte MSO Growth Drives Axalta Market Share Gain Motorsports Partnerships Drive Customer Engagement 52 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Product Technology Addresses Customer Challenges Customer Challenges Axalta’s Product Innovation Response Industry leading productivity Insurance KPI performance 50% less coats to hide Cycle time (car delivery) Easy, non stop wet-on-wet process Productivity and facility utilization Fast clears/primers Organic growth (same store sales) Color Rapid match via spectrophotometer Quality – customer satisfaction Most OE approvals in the market Color Match and final Appearance Labor shortage Painter turnover and learning Curve Environmental Environmental and regulatory compliance VOC compliant products Energy savings 53 PROPRIETARY AXALTA COATING SYSTEMS
Refinish Product Example High Productivity Primer Axalta primer improving productivity by close to 3x Direct to metal application improves cycle time Axalta primer improves profitability and sustainability 54 PROPRIETARY AXALTA COATING SYSTEMS
55 PROPRIETARY AXALTA COATING SYSTEMS
Refinish Product Example High Productivity Clearcoat Clearcoat technology requires 33% less energy Axalta cure time is 66% less than competitive products Superior appearance appeals to customers; won Renault supplier award Gained significant market share in first two years 56 PROPRIETARY AXALTA COATING SYSTEMS
57 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Refinish Service Model Delivers Innovation Customer Challenges Service & Digital Innovation Insurance KPI performance Cycle time (car delivery) FOCUSED DATA Productivity and facility utilization PERFORMANCE INTEGRATION SOLUTIONS PROCESSES Organic growth (same store sales) Quality – customer satisfaction Color Match and final appearance Labor shortage DEDICATED Painter Turnover and learning curve PERFORMANCE TEAMS Environmental and regulatory compliance 58 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Differentiates Through Services and Support Leverage Information Technology to Improve Productivity PROFITNET ACQUIRE PLUS EFX COLORNET PBE EXCHANGE Management System Read Color and Flake Color Retrieval System Ordering System Collect Sales Data Fastest way to find right match Find and Match Color Fast Inventory and Budget Control Key Input for Performance Mix Calculator based on Sales Consumption Based Purchase Proprietary Information Systems Improve Productivity and Lower Customer Costs 59 PROPRIETARY AXALTA COATING SYSTEMS
Refinish Service Example Color Match Most critical customer attribute Simple color retrieval for painters Improves cycle time and productivity Best in Class spectrophotometers allow fast, easy access to color formulas 60 PROPRIETARY AXALTA COATING SYSTEMS
61 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Differentiates Through Services and Support End Customer Focused Performance Management Process TRAINING P&M SCORECARD AREAS OF FOCUS RESOURCES Performance Dashboard P&M Profitability Focus on Account Management In Shop or On Demand SOPs Implementation Act on data not collect data Real Time Data Collection Tailored Content by Customer Drive Resource Deployment Estimatics Improvement Process and Product Usage Technical and Business Top Line Sales Growth Productivity and Consumption Online Content with Usage Uniform Shop Management, Training Processes, and the Largest Technical Sales Force 62 PROPRIETARY AXALTA COATING SYSTEMS
The Future Roadmap Color & Aesthetics Productivity Environmental 10 Years Ago Today Next generation productive Environmentally friendly waterborne Perfect color match for new vibrant basecoats product lines colors Faster cure clearcoats and primers Products with reduced energy Unique pigments consumption Lower complexity, easy to use spray Improved gloss Renewable raw materials systems 63 PROPRIETARY AXALTA COATING SYSTEMS
M&A Activities and Accomplishments Targeted M&A To Complement Organic Growth Global M&A is a key component of the Axalta growth strategy Target profile: Attractive, bolt-on businesses offering new technology, incremental channels and/or expanded market access 64 PROPRIETARY AXALTA COATING SYSTEMS
Refinish Summary Axalta is the global market leader in the growing refinish market Our strong market presence enables growth opportunities in every region Innovative product technology differentiates Axalta and drives body shop productivity Customer-focused service offering addresses evolving body shop challenges Targeted M&A complements organic growth 65 PROPRIETARY AXALTA COATING SYSTEMS
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Performance Coatings: Industrial Michael Cash SVP, President, Industrial
Industrial Coatings: A $28 Billion Market Opportunity For Axalta Industrial Coatings Drivers Volume growth driven by global GDP and Industrial Production China drives >40% of global industrial coatings consumption Coil $4.5 Commercial architectural market has seen ongoing recovery Coatings suppliers are consolidating Consolidation driven by scale advantages and globalization of some end-markets; many niches remain regional and fragmented Oil & Gas $3.5 Technology innovation is a catalyst for growth Drivers include demand for environmentally sustainable products, General customer focus on productivity, improved corrosion and wear Industrial $15.0 resistance and enhanced color choices ACE $1.5 Customers are globalizing Local product must meet global specifications consistently across regions Architectural $1.5 Electrical Global infrastructure growth is driving demand Insulation $2.0 High temperature resistance required for energy applications Demand for electrical insulation products linked to infrastructure Source: Coatings World, Axalta estimates 68 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Industrial Business Today Product Examples Market Drivers Net Sales by Segment Metal furniture GDP General Industrial Appliances Industrial Production Shelving/racking Electrical boxes Coil, 7% Oil & Gas Electric motors Electric motor Electrical Insulation 4% Transformers production ACE Power transmission 8% production Commercial building windows Commercial construction Architectural Residential construction and curtain walls Residential windows and starts Electrical General doors Insulation Industrial 12% 50% Construction equipment GDP ACE Agricultural equipment Industrial production Mining equipment Deep sea pipelines Infrastructure growth Oil & Gas Oil well conveyance lines Population growth Pipeline projects Architectural Commercial/residential siding GDP 19% Coil Garage doors Construction starts Gutters, downspouts, lighting housings ($ billions) Appliances 69 PROPRIETARY AXALTA COATING SYSTEMS
Industrial Coatings: Axalta’s Currently Served Markets Established Target Segments Electrical Coil Oil & Gas General Industrial Architectural ACE Insulation POWDER LIQUID E-COAT #2 #2 #2 Global Powder Coatings Global Electrical Motor Global Industrial Supplier Sector Supplier E-Coat Supplier 70 PROPRIETARY AXALTA COATING SYSTEMS
Industrial Coatings: Source of Revenue by Product Technology Axalta Revenue Per Segment Electrical Coil Oil & Gas General Industrial Architectural ACE Insulation 60% Liquid 30% Liquid 99% Liquid 99% Liquid 10% Liquid 10% Liquid 25% Powder 70% Powder 1% Powder 1% Powder 90% Powder 65% Powder 15% E-coat 25% E-coat 71 PROPRIETARY AXALTA COATING SYSTEMS
Industrial Coatings: Key Business Drivers New Accounts New Products 1000 140 120 135 800 932 100 817 600 95 80 70 60 400 541 40 200 20 0 0 2014 2015 2016 2014 2015 2016 72 PROPRIETARY AXALTA COATING SYSTEMS
Our Competitive Advantages: The Moat Product Process Service Global reach, scale and Highly engaged technical Product innovation to meet service team consistency exacting customer specs Sales teams considered Wide range of sustainable Streamlined technical partners in customer approval and launch product solutions Breadth of technology for objectives process Rapid response time OEM’s and sub -suppliers Fit-for-purpose products 73 PROPRIETARY AXALTA COATING SYSTEMS
Agricultural, Construction, and Earthmoving (ACE) Equipment AGCO Family of Products Case New Holland Tractor 2016 Highlights Looking Forward 75+ active development and approval projects Topcoats approved for Direct-to-Plastics around the world targeted at top global ACE Tufcote epoxy primer for local China market manufacturers 21 new approvals from global OEMs to increase our total Launch of Alesta Lync dry-on-dry powder coating to 99 achieved to-date # system for high durability applications Launched AquaEC 6100 : Tin-free, low-bake, low-temp Anti-skid/Anti-slip coatings curing solution Gaining traction with sub-suppliers to the Big 5, as well as regional manufacturers 74 PROPRIETARY AXALTA COATING SYSTEMS
Oil & Gas Sinopec Plant FBE Powder Coated Pipe ADM Transport Tanks Sui Northern Gas Pipelines 2016 Highlights Looking Forward 100% solids liquid epoxy for pipeline applications Adapted Abcite technology to supply to water pipe 3-Layer PP primer for deep water pipelines projects (Berlin) Expanding our liquid protective coatings offering Successfully launched Nap-Gard ID internal pipe coating Higher temperature resistant pipe coatings for Awarded Pakistan 3LPE project due to global transmission pipelines responsiveness Launched Procor HS (Pemex) Awarded pipeline projects for CNPC in China 75 PROPRIETARY AXALTA COATING SYSTEMS
76 PROPRIETARY AXALTA COATING SYSTEMS
Electrical Insulation Sany Wind Turbines REA Magnet Wire Coating Sam Dong Production Plant 2016 Highlights Looking Forward Build upon innovation leadership with: Maintained flow of product innovation - 50 active Waterborne impregnating resin for stator development projects application Built leading position in the Electric Vehicle (EV) market Low formaldehyde C3 electrical steel coating Introduced two new impregnating resin product lines, Corona resistant wire enamel including Voltahyd , the first waterborne IR line on the Introducing Voltaprem impregnating resin for high market voltage application Commercialized Voltatex formvar wire enamel product # FBE powder magnet wire insulation line 77 PROPRIETARY AXALTA COATING SYSTEMS
General Industrial Ameristar Fences Schutt Sports Helmets Rio 2016 Olympic Torch Roberti Rattan Outdoor Furniture Looking Forward 2016 Highlights Coated Rio Olympic torches which became NSF approval for AquaEC 6100 inspiration for Alesta Iconica collection Powder primer launch for automotive OEM body Introduced next-gen Nap-Gard FBE Rebar products Powder clear coat for aluminum wheels Expanded offering for metal auto parts Damage-resistant rebar coating Awarded business for unique two-layer application Waterborne epoxy one-layer system for metal auto parts of our AquaEC 6100 and Aqua EC 5100 technology # Launched FlexBase plastic coating system 78 PROPRIETARY AXALTA COATING SYSTEMS
79 PROPRIETARY AXALTA COATING SYSTEMS
Architectural Signature Tower in Kuala Lumpur King Abdulaziz International Airport Looking Forward 2016 Highlights Launched Global Warranty program for Alesta Anodic color range Awarded 25+ major building projects around the world Sublimation products Acquired brands to add liquid technology to our Broader powder and liquid portfolio of product architectural portfolio solutions for Architects Investment in France and China facilities to create world- Introduce designed Alesta Iconica collection of class bonded metallic capability colors, which will be produced in new bonding facilities 80 PROPRIETARY AXALTA COATING SYSTEMS
81 PROPRIETARY AXALTA COATING SYSTEMS
Coil Coatings Schneider Transport Trailer Alcoa Aluminum Panels Precoat Metals Lighting White Products Calgary Hospital Durapon 70 Looking Forward 2016 Highlights Anti-mottling PVDF coating Introduced Kryptstone wrinkle finishes for steel HS Spray PVDF roofing Ceranamel XT-40 super polyester coating Launched high durability acrylic system DurAcryl Universal primer system and became leading supplier of coil coatings in the Leverage our global capability to launch Dura Coat truck, trailer and RV siding industry technology and products to other regions Spray PVDF for improved flow and ease of # Hydropon innovative waterborne PVDF coating system application Introduced high reflectance lighting white products Launched high gloss Durapon 70 product line 82 PROPRIETARY AXALTA COATING SYSTEMS
83 PROPRIETARY AXALTA COATING SYSTEMS
The Role of M&A Acquisitions Structural steel coatings Low-VOC top coats Industry leading coil and Industrial top coats Extensive Industrial primers architectural extrusion coating products 84 PROPRIETARY AXALTA COATING SYSTEMS
The Future Roadmap for Industrial Coatings The Product Innovation Pipeline Market Drivers Less energy consumption Low cure powder coating for plastic substrates Lower VOC emissions Smart coating systems for underground pipelines Adhesive properties for electrical motor coatings Grain-oriented electrical steel coating systems Coatings to enable longer lasting products Powder coating technology for magnetic wire Easier access to colors and broader color ranges applications Improved corrosion resistant systems Systems to withstand high heat elements (eg. pipelines, tractors, electric motors) Digital color applications to be available globally 85 PROPRIETARY AXALTA COATING SYSTEMS
Thank You
Transportation Coatings Steven R. Markevich EVP, President, Transportation and Greater China
Segment Overview Axalta Transportation Synergies Light Vehicle Commercial Vehicle Original Commercial trucks Equipment Rail Manufacturers Market Bus Drivers Plastics and composite Utility trucks materials Recreational / off- Metal coatings road, pleasure Global OEM craft Interior coatings Alliances General aviation Accessories Focused #2 global supplier #1 global supplier Support to light vehicle to heavy duty truck Models OEMs and bus segments 88 PROPRIETARY AXALTA COATING SYSTEMS
Transportation Global Coatings Market Global Share Position Market Insights 2016 Industry Sales: $10 billion Axalta has leading positions across our markets Customer focused global teams with single point of contact for quick, coordinated responses The global leader in consolidated coating systems The global leader in heavy duty truck and bus A global leader in on-site color customization Based on Orr & Boss Proven track record of delivering success Projected Industry Sales Axalta is well positioned for megatrends Emerging market growth Global requirements New materials and lightweighting Productivity demands 89 PROPRIETARY AXALTA COATING SYSTEMS
Our Vision Is Above Market Growth Strategies Key Tactics / Programs Build capabilities in global and regional roles Gain share with existing customers Expand customer and third party relationships Grow underserved regions and customers including JOEMs, KOEMs, domestic OEMs Fit-for-purpose decorative and functional coatings Redefine and increase content per vehicle Localize supply chain ensuring competitive cost structure Leverage “what good looks like” into new regions, Best-in-class Line Service Excellence customers and markets Drive complexity management discipline Align product technology to evolving customer and Axalta Way: “Run it like we own it” market needs including VOC, ambient flash, more M&A in adjacent markets (interior, components, etc.) 90 PROPRIETARY AXALTA COATING SYSTEMS
Transportation | Recent Wins And Launches 2016 Wins by Strategic Focus (% of revenue) Emerging Markets Mature Markets Underserved Customers Established Customers Harmonized Coatings Traditional Systems New / Conquest Awards Existing Business Won business around the world. . . Focused Growth New business underscores key customer value drivers: Global service capability and consistency Productive systems Energy and waste reduction Flawless launch execution Higher value-add through innovation Relationships from the senior suite to the paint shop . . .and launched products at 100 sites 91 PROPRIETARY AXALTA COATING SYSTEMS
Transition To Growth: Customer Recognition Best Quality 2014 & 2015 China National Daimler Global Supplier Supplier Aligned Excellence Worldwide Best Supplier Coatings Excellence in Masters of Quality Business Awards in Supplier of the in Brazil Industry Brazil Quality Award Performance Framework Germany, Year Recognition China “Back -to- Back” China National Coatings Daimler Masters of Quality Honda Preferred Supplier GM Supplier of the Year Industry Top 100 Award 92 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Value Is More Than A “Can Of Paint” Product Engineered to demanding Multi-layered system solutions requirements Global consistency and color Environmentally responsible capability Process First run defect free Optimized for customers’ Energy efficient solutions environment and processes Flawless launch Service Increased productivity Line Service Excellence Best in class finished vehicle Continuous improvement and appearance problem solving capability 93 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Value Proposition Case Studies 94 PROPRIETARY AXALTA COATING SYSTEMS
The Leader In Harmonized Coatings Technologies™ CONVENTIONAL Market Share 2-Bake PRIMER CLEAR BASE PRIMER SAND COAT COAT FLASH BAKE TRANSFER BAKE 30% 3-Wet 3-WET BASE CLEAR PRIMER COAT BASECOAT COAT (2 nd Coat) FLASH FLASH BAKE HARMONIZED Primerless BASE CLEAR 18 Harmonized Coatings patents in COAT COAT the United States and Europe BAKE FLASH 3 Automotive News PACE Award recognitions 2-Wet MONO PRIMER COAT FLASH BAKE 95 PROPRIETARY AXALTA COATING SYSTEMS
High Solid Solvent borne 3-Wet: Video 96 PROPRIETARY AXALTA COATING SYSTEMS
Harmonized Coatings Technologies Drive Efficiency In China 3-Wet technology jointly developed with the customer 30% reduction in material consumption 50% reduction in VOC emissions Lowered energy consumption Earned SURCAR 2016 award for environmental footprint including air emissions GLOBALLY PROVEN SEVEN U.S. ELIMINATES PRIMER OVEN REMOVES 50% 20% ENERGY SYSTEM PATENTS AND SANDING DECK PRIMER APPLICATORS REDUCTION 97 PROPRIETARY AXALTA COATING SYSTEMS
Axalta Provides Mass Color Customization Solutions Coating Manufactured Color Selected Custom Formulation Vehicle Painted Custom Results Premium product Quick delivery Brand Color Formula library Engineered intermediates Meets consumer Sprayed in Favorite from past Color formulating needs customer system algorithms Standard process Favorite object Repair product Original Equipment Proprietary Strict quality Select from Axalta readily available standards formula software criteria library of colors We use science to help our customers deliver color and confidence to their consumers 98 PROPRIETARY AXALTA COATING SYSTEMS
Imron Elite EY- Video 99 PROPRIETARY AXALTA COATING SYSTEMS
Axalta’s Imron ™ Is The Choice For Ambulance Builder Axalta’s Imron ™ brand adds value to the customer’s offering Manufacturer increased line production without an increased footprint Reduced emissions by 40 percent; lower oven temperature saves costs and energy Color capability provides customer confidence to meet any requirement Industry leading appearance helps differentiate Braun in the marketplace 100 PROPRIETARY AXALTA COATING SYSTEMS
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