Axalta Coating to reduce workforce about 5% in transformation initiative

In a regulatory filing last night, Axalta Coating Systems disclosed that it committed to a transformation initiative intended to simplify the company’s and its subsidiaries’ organizational structure, enable the company to be more proactive, responsive, and agile and to better serve its customers and to lower the company’s cost base, improve financial performance and cash flow generation. The 2024 Transformation Initiative includes a reduction in workforce which is expected to result in the termination of approximately 600 employees globally, representing approximately 5% of Axalta’s global workforce. The company expects the 2024 Transformation Initiative actions, certain of which are subject to the satisfaction of local law requirements in various jurisdictions, to commence in the first quarter of 2024 and be completed by 2026. In connection with the 2024 Transformation Initiative, the company estimates that it will incur pre-tax costs of approximately $75M-$110M in the aggregate, of which $65M-$90M represents severance and other exit-related costs and $10M-$20M represents non-cash accelerated depreciation charges. Future cash expenditures related to the 2024 Transformation Initiative are expected to be approximately $95M-$135M, inclusive of $30M-$45M for capital expenditures to, among other things, shift manufacturing capacity or capabilities. Axalta estimates that, once fully executed, the 2024 Transformation Initiative will yield net savings, inclusive of non-labor savings and costs for backfilling certain roles, of approximately $75M on an annualized basis. “We expect $10M of the run-rate savings from the 2024 Transformation Initiative to be realized in 2024 with the full run-rate expected to be realized during 2026,” the company added.