Adjusted EBITDA hit a record $305M in Q2, margin widened to 22.7%. The August 5 shareholder vote on the AkzoNobel merger will test whether that momentum translates into deal approval.
Axalta Coating Systems posted a record quarterly adjusted EBITDA of $305 million in the second quarter, a 5% year-over-year increase that landed at the high end of the paint maker's forecast range. The company's better-than-expected margin performance came as the August 5 shareholder vote on its merger with AkzoNobel approaches.
Net sales rose $41 million to $1.35 billion, driven by favorable currency translation, contributions from acquisitions and positive price mix. Adjusted EBITDA margin improved 30 basis points to 22.7%. The company cited lower variable costs and reduced operating expenses, particularly in its Performance Coatings segment, which delivered a 25.1% margin, up 130 basis points from a year ago.
Axalta's results are the last quarterly report shareholders will see before voting on the proposed merger of equals with AkzoNobel. The $6 billion-plus deal, structured as a stock-for-stock transaction, would create what the companies project as the world's leading coatings group by revenue. Axalta CEO Chris Villavarayan called the combination "compelling" in prepared remarks, pointing to "significant value creation opportunities" for shareholders.
The Mobility Coatings division, which supplies paint to auto makers and commercial-vehicle manufacturers, hit a record quarterly sales level of $474 million. Commercial Vehicle net sales climbed 7% year over year with volume growth across all four operating regions. Light Vehicle net sales slipped slightly on lower organic volumes, though the decline was partly offset by favorable foreign-exchange rates.
Adjusted diluted EPS came in at $0.72, a record and up 13% from the prior year, helped by the margin improvement and lower interest expense. GAAP net income fell to $89 million from $110 million a year earlier, dragged down by $31 million in merger-related costs.
Free cash flow totaled $107 million, up $6 million from the prior year quarter, despite the headwind from the merger expenses. Cash from operations rose 7% year over year to $152 million.
Axalta's special general meeting is scheduled for August 5. The deal requires approval from holders of a majority of the company's outstanding shares.
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