We posted our third quarter 2025 financial results and earnings release this morning. We're pleased to report another strong quarter with record adjusted EBITDA and record adjusted diluted EPS driven by our disciplined execution. Global auto production was again a bright spot with current forecast ticking up in October to approximately 91 million builds for the full year 2025, a 2% increase versus 2024. We posted adjusted EBITDA of $294 million with a margin of 22.8%.
This marks 12 consecutive quarters of adjusted EBITDA and adjusted EBITDA margin growth year-over-year. To that point, we expanded the adjusted EBITDA margin in both segments. Performance Coatings adjusted EBITDA increased by 20 basis points from the prior year period to 25.5%, up 170 basis points from the second quarter of 2025. Net sales in Mobility increased 4% to the third quarter record of $460 million due to sustained growth in China and Latin America.
The team's focus on new business wins, margin stabilization and operational rigor resulted in an adjusted EBITDA margin of 18% for the segment, an expansion of 230 basis points compared to last year. This reflects our robust earnings power and our commitment to returning capital to our shareholders. This quarter marks the sixth consecutive period with an adjusted EBITDA margin above our A-plan target of 21%. The consistency of our adjusted EBITDA margin performance speaks to the foundational improvements we have made to our business.
What went well
- Record adjusted EBITDA of $294 million (22.8% margin), up $3 million year-over-year and the 12th consecutive quarter of year-over-year EBITDA margin growth
- Record adjusted diluted EPS of $0.67, up 6% year-over-year, aided by lower interest expense and fewer shares outstanding
- Both segments expanded margins; Performance Coatings adjusted EBITDA margin reached 25.5% (up 20 bps year-over-year, up 170 bps sequentially)
- Mobility set a third-quarter net-sales record of $460 million (up 4%), with adjusted EBITDA up 20% to $83 million and margin up 230 bps to 18%
- Sixth consecutive quarter with an adjusted EBITDA margin above the 21% A-Plan target
- Net leverage held at a record-low 2.5x; interest expense down 15% year-to-date (17% in the quarter)
- Refinish added more than 2,200 net new body shops and roughly $90 million of incremental year-to-date net sales, including CoverFlexx integration
- Repurchased $100 million of stock in the quarter ($165 million year-to-date); operating cash flow of $137 million
- Industrial exceeded its 2026 A-Plan profitability target a year early despite mid-single-digit sales declines
What went wrong
- Net sales declined 2% year-over-year to about $1.3 billion on macro headwinds, especially in North America
- Performance Coatings net sales fell 6% year-over-year to $828 million; Refinish organic sales declined on lower body-shop activity and destocking
- Industrial net sales declined 4% to $311 million on North America industrial and building/construction weakness
- Commercial vehicle net sales fell 7% on lower Class 8 production
- Free cash flow fell year-over-year to $89 million on roughly 50% higher capital expenditures and higher working capital (inventory held for tariff uncertainty)
- Cut full-year guidance to net sales down mid-single digits after the expected third-quarter North America and Europe demand pickup did not materialize
- New full-year outlook set at the low end: revenue above $5.1 billion, adjusted EBITDA about $1.14 billion, adjusted EPS about $2.50; Q4 EBITDA about $284 million and EPS about $0.60
- Temporary industry-wide supply challenges expected to weigh on the fourth quarter
More on Axalta Coating Systems Ltd.
Reported 2025-10-28 · figures from the Axalta Coating Systems Ltd. Q3 2025 earnings call.