Axalta Coating Systems AXTA Form 10-Q filing Q2 FY2026

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the financial position and shareholders’ equity of Axalta Coating Systems Ltd., a Bermuda exempted company limited by shares, and its consolidated subsidiaries (“Axalta,” the “Company,” “we,” “our” and “us”) at June 30, 2026, the results of operations, comprehensive income and changes in shareholders' equity for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months then ended. All intercompany balances and transactions have been eliminated.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).

The interim unaudited condensed consolidated financial statements include the accounts of Axalta and its subsidiaries, and entities in which a controlling interest is maintained. Certain of our entities are accounted for on a one-month lag basis, the effect of which is not material.

The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full year ended December 31, 2026 or any future period(s).

Proposed Merger with Akzo Nobel N.V.

During November 2025, we entered into a Merger Agreement (the “Original Merger Agreement”) with Akzo Nobel N.V., a public company with limited liability incorporated under the laws of the Netherlands (“AkzoNobel”), providing for the combination of the Company and AkzoNobel in an all-stock merger (the “Merger”). The combined company (“MergeCo”) will be dual-headquartered in Amsterdam, the Netherlands and Philadelphia, Pennsylvania. The obligations of the Company and AkzoNobel to consummate the Merger are conditioned on the satisfaction or waiver of certain conditions, including regulatory and shareholder approval for both companies. The shareholder vote for approval is scheduled for August 5, 2026. The Company expects the transaction to close in late 2026 to early 2027.

On May 27, 2026, the Company and AkzoNobel entered into Amendment No. 1 to the Merger Agreement (the “First Amendment”) to, among other things, implement certain changes intended to optimize the tax integration of Axalta and AkzoNobel and provide that any of the independent directors to be jointly nominated by Axalta and AkzoNobel to the MergeCo Board of Directors (the “MergeCo Board”) will, to the extent designated by Axalta and AkzoNobel after the date of the first publication of AkzoNobel’s or Axalta’s special meeting materials, either (a) be appointed as a temporary replacement director effective as of closing of the Merger until his or her appointment as a director at a general meeting of MergeCo’s shareholders following closing of the Merger to serve as a director until the first annual general meeting of MergeCo’s shareholders held after the third anniversary of closing of the Merger or (b) be nominated for appointment as members of the MergeCo Board in any subsequent general meeting of AkzoNobel prior to closing of the Merger.

On July 23, 2026, the Company, AkzoNobel and the other parties party thereto, entered into Amendment No. 2 to the Merger Agreement (the “Second Amendment”; the Original Merger Agreement as amended by the First Amendment and the Second Amendment is referred to herein as the “Merger Agreement”) to provide for (i) annual re-election of all MergeCo directors following the initial three-year period after closing of the Merger and (ii) a revised approval threshold applicable during the initial three-year period after closing of the Merger of two-thirds of MergeCo non-executive directors for (a) any proposal to the general meeting regarding the appointment and dismissal of MergeCo directors, (b) the appointment and removal of the CEO, Deputy CEO and CFO, (c) designation of the Chair and Vice Chair titles and (d) amendments to the remuneration policy.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger, each outstanding and issued ordinary share of the Company, par value $1.00 per share (other than any shares owned by the Company as treasury shares and any shares owned by AkzoNobel or any direct or indirect wholly owned subsidiary of AkzoNobel), will be automatically converted into the right to receive 0.6539 AkzoNobel ordinary shares, par value of €0.50 per share.

In the event of a termination of the Merger Agreement by the Company, the Company may be required to pay AkzoNobel a termination fee equal to €150 million. In the event of a termination of the Merger Agreement by AkzoNobel, AkzoNobel may be required to pay the Company a termination fee equal to €150 million.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Summary of Significant Accounting Policies Updates

Accounting Guidance and Disclosure Rules Issued But Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to improve disclosures about a public business entity’s expenses and require more detailed information about the types of expenses in commonly presented expense captions, such as cost of sales, selling, general and administrative expense and research and development. The new standard is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact of ASU 2024-03 on our financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40), to enhance guidance for recognizing and measuring capitalizable costs associated with the development of internal-use software. The new standard is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of ASU 2025-06 on our financial statements.

(2) REVENUE

Consideration for products in which control has transferred to our customers that is conditional on something other than the passage of time is recorded as a contract asset within prepaid expenses and other current assets in the condensed consolidated balance sheets. The contract asset balances at June 30, 2026 and December 31, 2025 were $43 million and $40 million, respectively.

We provide certain customers with incremental up-front consideration, subject to clawback provisions, including Business Incentive Plan assets (“BIPs”), which is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement as a reduction of net sales. We do not receive a distinct service or good in return for these BIPs, but rather receive volume commitments and/or sole supplier status from our customers over the life of the contractual arrangements, which approximates a five-year weighted average useful life. The termination clauses in these contractual arrangements generally include standard clawback provisions that are designed to enable us to collect monetary damages in the event of a customer's failure to meet its commitments under the relevant contract. At June 30, 2026 and December 31, 2025, the total carrying values of BIPs were $208 million and $191 million, respectively, and are presented within other assets in the condensed consolidated balance sheets. For the three and six months ended June 30, 2026 and 2025, $17 million, $34 million, $16 million and $31 million, respectively, was amortized net of clawbacks and reflected as reductions of net sales in the condensed consolidated statements of operations.

See Note 17 for disaggregated net sales by end-market.

(3) GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

During the six months ended June 30, 2026, we completed two acquisitions in our Performance Coatings segment. These acquisitions were accounted for as business combinations with consolidated aggregate consideration of $13 million, of which $8 million was paid, net of $1 million of cash acquired, during the six months ended June 30, 2026. The overall impacts to our unaudited condensed consolidated financial statements were not considered to be material. The fair value attributable to identifiable intangible assets was $6 million, pertaining to customer relationship assets, which will be amortized over a weighted average term of approximately 10 years.

Goodwill

The following table shows changes in the carrying amount of goodwill from December 31, 2025 to June 30, 2026 by reportable segment:

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Identifiable Intangible Assets

The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class:

The estimated amortization expense related to the fair value of acquired intangible assets for the remainder of 2026 and each of the succeeding five years is:

(4) RESTRUCTURING

In accordance with the applicable guidance for Accounting Standards Codification (“ASC”) 712, Nonretirement Postemployment Benefits, we accounted for termination benefits and recognized liabilities when the loss was considered probable that employees were entitled to benefits and the amounts could be reasonably estimated.

During the three and six months ended June 30, 2026 and 2025, we incurred costs of $2 million, $6 million, $9 million and $20 million, respectively, for termination benefits, net of changes in estimates. The majority of our termination benefits are recorded within other operating charges in the condensed consolidated statements of operations. The remaining payments associated with these actions are expected to be substantially completed within 12 months from June 30, 2026.

The following table summarizes the activity related to the termination benefit reserves and expenses from December 31, 2025 to June 30, 2026:

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(5) COMMITMENTS AND CONTINGENCIES

Guarantees

We guarantee certain of our customers’ obligations to third parties, whereby any default by our customers on their obligations could force us to make payments to the applicable creditors ("Customer Obligation Guarantees"). At June 30, 2026 and December 31, 2025, we had outstanding Customer Obligation Guarantees of $25 million and $24 million, respectively, excluding certain outstanding Customer Obligation Guarantees secured by letters of credit under the Revolving Credit Facility discussed further in Note 15. Excluding Customer Obligation Guarantees secured by letters of credit under the Revolving Credit Facility, substantially all of our Customer Obligation Guarantees do not have specified expiration dates. We monitor the Customer Obligation Guarantees to evaluate whether we have a liability at the balance sheet date. We did not have any liabilities related to our outstanding Customer Obligation Guarantees recorded at either June 30, 2026 or December 31, 2025.

Other

We are subject to various pending lawsuits, legal proceedings and other claims in the ordinary course of business, including civil, regulatory and environmental matters. These matters may involve third-party indemnification obligations and/or insurance covering all or part of any potential damage incurred by us. All of these matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate outcome of the proceedings and other claims at this time. The potential effects, if any, on our condensed consolidated financial statements will be recorded in the period in which these matters are probable and estimable. We believe that any sum we may be required to pay in connection with proceedings or claims in excess of the amounts recorded would likely not have a material adverse effect on our results of operations, financial condition or cash flows on a consolidated annual basis but could have a material adverse impact in a particular quarterly reporting period. However, there can be no assurance that any such sum would not have a material adverse effect on our results of operations, financial condition or cash flows on a consolidated annual basis.

We are involved in environmental remediation and ongoing compliance activities at several sites. The timing and duration of remediation and ongoing compliance activities are determined on a site by site basis depending on local regulations. The liabilities recorded represent our estimable future remediation costs and other anticipated environmental liabilities. We have not recorded liabilities at sites where a liability is probable but a range of loss is not reasonably estimable. We believe that any sum we may be required to pay in connection with environmental remediation matters in excess of the amounts recorded would likely occur over a period of time and would likely not have a material adverse effect upon our results of operations, financial condition or cash flows on a consolidated annual basis but could have a material adverse impact in a particular quarterly reporting period.

(6) LONG-TERM EMPLOYEE BENEFITS

Components of Net Periodic Benefit Cost

The following table sets forth the pre-tax components of net periodic benefit costs for our defined benefit plans for the three and six months ended June 30, 2026 and 2025:

All non-service components of net periodic benefit cost are recorded in other (income) expense, net within the accompanying condensed consolidated statements of operations.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(7) STOCK-BASED COMPENSATION

During the three and six months ended June 30, 2026 and 2025, we recognized $8 million, $15 million, $8 million and $13 million in stock-based compensation expense, respectively, which was allocated between cost of goods sold and selling, general and administrative expenses in the condensed consolidated statements of operations. We recognized immaterial tax benefits on stock-based compensation for both the three and six months ended June 30, 2026 and 2025.

2026 Activity

(1) Activity during the six months ended June 30, 2026 rounds to zero.

At June 30, 2026, there was $29 million of unamortized expense relating to unvested restricted stock units that is expected to be amortized over a weighted average period of 1.6 years. Tax benefits on the vesting of restricted stock units during the six months ended June 30, 2026 were immaterial.

(1) Activity during the six months ended June 30, 2026 represents portions of performance share units that vested above the 100% performance threshold.

Our performance share units allow for participants to vest in zero to 200% of the target number of shares granted. At June 30, 2026, there was $8 million of unamortized expense relating to unvested performance share units that is expected to be amortized over a weighted average period of 1.4 years. Tax benefits on the vesting of performance share units during the six months ended June 30, 2026 were immaterial.

Stock Options

The Black-Scholes option pricing model was used to estimate the fair values for options as of their grant date. There have been no options granted since 2019. There are currently 0.1 million options outstanding, all of which are vested and exercisable, with an average exercise price of $28.52, a weighted average contractual life of 1.8 years and a $1 million aggregate intrinsic value.

Cash received by the Company upon exercise of options for the six months ended June 30, 2026 was $1 million. There were immaterial tax expenses on these exercises.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(8) OTHER (INCOME) EXPENSE, NET

(1) Debt extinguishment and refinancing-related costs include the loss on extinguishment associated with the write-off of unamortized deferred financing costs and original issue discounts in conjunction with the prepayments on our long-term borrowings.

(2) Other miscellaneous (income) expense, net for the three and six months ended June 30, 2026 includes $8 million of benefit related to government incentive income in China.

(9) INCOME TAXES

Our effective income tax rates for the six months ended June 30, 2026 and 2025 are as follows:

The higher effective tax rate for the six months ended June 30, 2026 was primarily due to the unfavorable impact of foreign currency exchange losses in 2026. Also during 2026, the release of unrecognized tax benefits resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits was partially offset by the $57 million of pre-tax merger and acquisition-related costs, primarily driven by the proposed Merger with AkzoNobel, for which no corresponding tax benefit was recognized.

The effective tax rate for the six months ended June 30, 2026 differs from the Bermuda statutory rate due to various items that impacted the effective rate both favorably and unfavorably, including net unfavorable impacts for increases in unrecognized tax benefits resulting from ongoing discussions with tax authorities in jurisdictions where we have open audits, non-deductible merger and acquisition-related costs and foreign taxes. These adjustments were primarily offset by favorable impacts for changes in the valuation allowance.

(10) NET INCOME PER COMMON SHARE

Basic net income per common share excludes the dilutive impact of potentially dilutive securities and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share includes the effect of potential dilution from the hypothetical exercise of outstanding stock options and vesting of restricted stock units and performance share units. A reconciliation of our basic and diluted net income per common share is as follows:

(1) Basic earnings per share and diluted earnings per share are calculated based on full precision. Figures in the table may not recalculate due to rounding.

The number of anti-dilutive shares that have been excluded in the computation of diluted net income per share for the three and six months ended June 30, 2026 were immaterial, and for the three and six months ended June 30, 2025 were 0.3 million and 0.2 million, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(11) ACCOUNTS AND NOTES RECEIVABLE, NET

Trade accounts receivable are stated at the amount we expect to collect. We maintain allowances for doubtful accounts for estimated losses by applying historical loss percentages, combined with reasonable and supportable forecasts of future losses, to respective aging categories. Management considers the following factors in developing its current estimate of expected credit losses: customer credit-worthiness, past transaction history with the customer, current economic industry trends, changes in market or regulatory matters, changes in geopolitical matters, changes in customer payment terms, and other macroeconomic factors.

(1) Allowance for doubtful accounts was $30 million and $29 million at June 30, 2026 and December 31, 2025, respectively.

Bad debt expense of $1 million, $2 million, $3 million and $6 million was included within selling, general and administrative expenses for the three and six months ended June 30, 2026 and 2025, respectively.

(12) INVENTORIES

Inventory reserves were $23 million and $22 million at June 30, 2026 and December 31, 2025, respectively.

(13) PROPERTY, PLANT AND EQUIPMENT, NET

Depreciation expense amounted to $34 million, $67 million, $33 million and $64 million for the three and six months ended June 30, 2026 and 2025, respectively.

(14) SUPPLIER FINANCE PROGRAMS

We maintain a voluntary supply chain financing (“SCF”) program with a global financial institution, which allows a select group of suppliers to sell their receivables to the participating financial institution at the discretion of both parties on terms that are negotiated between the supplier and the financial institution. The supplier invoices that have been confirmed as valid under the program are paid by us to the financial institution according to the terms we have with the supplier. Amounts outstanding under the SCF program were $36 million and $23 million at June 30, 2026 and December 31, 2025, respectively.

We also participate in a virtual card program with a global financial institution, in which we pay supplier invoices on the due date using a Virtual Card Account (“VCA”) and subsequently pay the balance in full 25 days after the billing statement date of the VCA. The program allows for suppliers to receive an accelerated payment for a fee at each supplier’s discretion. Fees paid by our suppliers are negotiated directly with the financial institution without our involvement. Amounts outstanding under the VCA program were $7 million and $6 million at June 30, 2026 and December 31, 2025, respectively.

The payment terms we have with our suppliers who participate in the SCF and VCA programs are consistent with the typical terms we have with our suppliers who do not participate. These financing arrangements are included in accounts payable within the condensed consolidated balance sheets and the associated payments are included in operating activities within the condensed consolidated statements of cash flows.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(15) BORROWINGS

Borrowings are summarized as follows:

(1) This includes our 2027 Dollar Senior Notes which have a principal amount of $500 million, bear interest at 4.750%, and are due on June 15, 2027. For additional information, refer to Liquidity and Capital Resources within the Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q.

Our senior secured credit facilities (the “Senior Secured Credit Facilities”) consist of a term loan due in 2029 (the “2029 Dollar Term Loans”) and a revolving credit facility that matures in 2029 (the “Revolving Credit Facility”) that are governed by a credit agreement (as amended, the “Credit Agreement”).

The Merger, if consummated, will constitute a “Change of Control” under the Credit Agreement. Pursuant to the Merger Agreement, AkzoNobel agreed to, in consultation with Axalta, use reasonable best efforts to obtain funds to, among other things, refinance the 2029 Dollar Term Loans prior to consummation of the Merger.

Revolving Credit Facility

At June 30, 2026 and December 31, 2025, letters of credit issued under the Revolving Credit Facility totaled $32 million and $30 million, respectively, which reduced the availability under the Revolving Credit Facility as of such dates. Availability under the Revolving Credit Facility was $768 million and $770 million at June 30, 2026 and December 31, 2025, respectively. The letters of credit issued under the Revolving Credit Facility include $14 million that secures Customer Obligation Guarantees at both June 30, 2026 and December 31, 2025.

Other Activity

During the six months ended June 30, 2026, we prepaid $125 million of the outstanding principal amount of the 2029 Dollar Term Loans. As a result of these prepayments, we recorded a $1 million loss on extinguishment of debt for the six months ended June 30, 2026, which comprised the proportionate write-off of unamortized deferred financing costs and original issue discounts.

Future repayments

Below is a schedule of required future repayments of all borrowings outstanding at June 30, 2026.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(16) FINANCIAL INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS

Fair value of financial instruments

Equity securities with readily determinable fair values - Balances of equity securities are recorded within other assets, with any changes in fair value recorded within other (income) expense, net. The fair values of equity securities are based upon quoted market prices, which are considered Level 1 inputs.

Long-term borrowings - The estimated fair values of these borrowings are based on recent trades, as reported by a third-party pricing service. Due to the infrequency of trades, these inputs are considered to be Level 2 inputs.

Derivative instruments - The Company’s interest rate swaps, cross-currency swaps and foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are included in the Level 2 hierarchy.

Fair value of contingent consideration

Contingent consideration is valued using a probability-weighted expected payment method that considers the timing of expected future cash flows and the probability of whether key elements of the contingent event are completed. The fair value of contingent consideration is valued at each balance sheet date, until amounts become payable, with adjustments recorded within other operating charges in the condensed consolidated statements of operations. Due to the significant unobservable inputs used in the valuations, these liabilities are categorized within Level 3 of the fair value hierarchy.

The table below presents the fair values of our financial instruments measured on a recurring basis by level within the fair value hierarchy at June 30, 2026 and December 31, 2025.

(1) Cash flow hedge

(2) Net investment hedge

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

The table below presents a roll forward of activity for the Level 3 liabilities for the six months ended June 30, 2026.

Derivative Financial Instruments

We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange rates and interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes.

Derivative Instruments Qualifying and Designated as Cash Flow and Net Investment Hedges

The following table sets forth the locations and amounts recognized during the three and six months ended June 30, 2026 and 2025 for the Company's cash flow and net investment hedges.

Over the next 12 months, we expect a gain of $1 million pertaining to cash flow hedges to be reclassified from AOCI into earnings, related to our interest rate swaps.

Derivative Instruments Not Designated as Cash Flow or Net Investment Hedges

We periodically enter into foreign currency forward and option contracts to reduce market risk and hedge our balance sheet exposures and cash flows for subsidiaries with exposures denominated in currencies different from the functional currency of the relevant subsidiary. These contracts have not been designated as hedges and all gains and losses are marked to market through other (income) expense, net in the condensed consolidated statements of operations.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that have not been designated for hedge accounting treatment are recorded in earnings as follows:

(17) SEGMENTS

The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that has available discrete financial information.

We have two operating segments, which are also our reportable segments: Performance Coatings and Mobility Coatings. The CODM reviews financial information at the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.

Through our Performance Coatings segment, we provide high-quality liquid and powder coatings solutions to both large regional and global customers and to a fragmented and local customer base. These customers comprise independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets and reporting units within this segment are refinish and industrial.

Through our Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle original equipment manufacturers (“OEMs”). These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. The OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets and reporting units within this segment are light vehicle and commercial vehicle.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Segment Adjusted EBITDA is the primary measure used by our CODM to evaluate financial performance of the operating segments and allocate resources and is therefore our measure of segment profitability in accordance with GAAP under ASC 280, Segment Reporting. Asset information is not reviewed or included with our internal management reporting. Therefore, we have not disclosed asset information for each reportable segment. The following tables present relevant information of our reportable segments.

(1) The Company has no intercompany sales between segments.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

The following tables reconcile net sales to Segment Adjusted EBITDA for the periods presented:

(1) Certain amounts included in cost of goods sold on the consolidated statements of operations are excluded from Segment cost of goods sold regularly provided to the CODM.

(2) Other segment items for both segments include certain cost of goods sold not regularly provided to the CODM, selling, general and administrative expenses, research and development expenses, and other (income) expense, net. Certain amounts included in Segment cost of goods sold, including depreciation, are excluded from Segment Adjusted EBITDA and are adjusted for in other segment items.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

The following table reconciles Segment Adjusted EBITDA to income before income taxes for the periods presented:

(1) The primary measure of segment operating performance is Segment Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation, amortization and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (i) non-cash items included within net income, (ii) items the Company does not believe are indicative of ongoing operating performance or (iii) non-recurring, unusual or infrequent items that have not occurred within the last two years or the Company believes are not reasonably likely to recur within the next two years. Segment Adjusted EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company's core operating performance, which represents Segment EBITDA adjusted for the select items referred to above.

(a) Represents expenses and associated changes to estimates related to employee termination benefits, consulting, legal and other employee-related costs associated with restructuring programs and other employee-related costs. We do not consider these amounts indicative of our ongoing operating performance.

(b) Represents merger and acquisition-related expenses, including costs related to financial, tax and legal advisory services, associated with both consummated and unconsummated transactions, all of which we do not consider indicative of our ongoing operating performance.

(c) Represents costs related to the closure of certain manufacturing sites, including impairment charges, which we do not consider indicative of our ongoing operating performance.

(d) Represents foreign exchange losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures.

(e) Represents the non-cash, non-service cost components of long-term employee benefit costs.

(f) Represents non-cash impacts associated with stock-based compensation.

(g) Represents costs for certain non-operational or non-cash losses, net, unrelated to our core business and which we do not consider indicative of our ongoing operating performance.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

Geographic Area Information:

The following tables provide disaggregated information related to our net sales and long-lived assets.

Net sales by region were as follows:

Net long-lived assets by region were as follows:

(1) Includes Mexico.

(2) Net sales are attributed to countries based on the customer’s location. Net sales to customers in China represented approximately 11% of the total for the three and six months ended June 30, 2026 and 11% and 12% of the total for the three and six months ended June 30, 2025, respectively. Germany represented approximately 7%, 8%, 7% and 7% of the total for the three and six months ended June 30, 2026 and 2025, respectively. Mexico represented approximately 6% of the total for the three and six months ended June 30, 2026 and 2025. Brazil represented approximately 6%, 5%, 4% and 4% of the total for the three and six months ended June 30, 2026 and 2025, respectively. Canada, which is included in the North America region, represented approximately 3% of the total for the three and six months ended June 30, 2026 and 2025.

(3) Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $222 million and $230 million at June 30, 2026 and December 31, 2025, respectively. China long-lived assets amounted to approximately $156 million at both June 30, 2026 and December 31, 2025. Mexico long-lived assets amounted to approximately $96 million and $92 million at June 30, 2026 and December 31, 2025, respectively. Canada long-lived assets, which are included in the North America region, amounted to approximately $6 million at both June 30, 2026 and December 31, 2025.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In millions, unless otherwise noted)

(18) ACCUMULATED OTHER COMPREHENSIVE LOSS

The cumulative income tax expense related to the adjustments for foreign exchange at June 30, 2026 was $1 million. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2026 was $29 million. The cumulative income tax expense related to the adjustments for the unrealized gain on derivatives at June 30, 2026 was immaterial. See Note 16 for classification within the condensed consolidated statements of operations of the gains and losses on derivatives reclassified from AOCI.

The cumulative income tax benefit related to the adjustments for foreign exchange at June 30, 2025 was $7 million. The cumulative income tax benefit related to the adjustments for pension benefits at June 30, 2025 was $27 million. The cumulative income tax expense related to the adjustments for the unrealized loss on derivatives at June 30, 2025 was immaterial. See Note 16 for classification within the condensed consolidated statements of operations of the gains and losses on derivatives reclassified from AOCI.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the interim unaudited condensed consolidated financial statements and the condensed notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

conference calls and webcasts, as information posted on that page could be deemed to be material information.

OVERVIEW

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.

We operate our business in two operating segments, Performance Coatings and Mobility Coatings. Our segments are based on the type and concentration of customers served, service requirements, methods of distribution and major product lines.

Through our Performance Coatings segment, we provide high-quality sustainable liquid and powder coating solutions to both large regional and global customers and to a fragmented and local customer base. These customers comprise, among others, independent or multi-shop operator body shops as well as a wide variety of industrial manufacturers. We are one of only a few suppliers with the technology to provide precise color matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.

Through our Mobility Coatings segment, we provide coatings technologies for light vehicle and commercial vehicle OEMs. These global customers are faced with evolving megatrends in electrification, sustainability, personalization and autonomous driving that require a high level of technical expertise. The OEMs require efficient, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The end-markets within this segment are light vehicle and commercial vehicle.

BUSINESS HIGHLIGHTS

General Business Highlights

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:

• 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%.
• 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%.

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

Proposed Merger with Akzo Nobel N.V.

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.

Middle East Conflict

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.

Capital and Liquidity Highlights

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.

FACTORS AFFECTING OUR OPERATING RESULTS

There have been no changes in the factors affecting our operating results previously disclosed under such heading in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the accompanying unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Our historical results of operations summarized and analyzed below may not necessarily reflect what will occur in the future.

Net sales

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

Net sales increased primarily due to the following:

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

n Contributions from the Recent Acquisitions

n Favorable average selling prices and product mix in Performance Coatings

Partially offset by:

n Lower sales volumes driven primarily by North America Performance Coatings

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Net sales increased primarily due to the following:

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

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower sales volumes driven primarily by North America Performance Coatings

n Unfavorable average selling prices and product mix primarily in Mobility Coatings

Cost of sales

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

Cost of sales increased primarily due to the following:

n Unfavorable impacts of currency translation of 2.6% driven by fluctuations of the Chinese Yuan, Mexican Peso, Brazilian Real and Euro, in each case compared to the U.S. Dollar

n Increased freight costs

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower variable input costs

n Lower sales volumes driven primarily by North America Performance Coatings

Cost of sales as a percentage of net sales increased primarily due to the following:

n Less effective coverage of fixed costs as a result of lower sales volumes

n Increased freight costs

Partially offset by:

n Favorable average selling prices and product mix in Performance Coatings

n Lower variable input costs

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Cost of sales increased primarily due to the following:

n Unfavorable impacts of currency translation of 4.0% driven by fluctuations of the Euro, Mexican Peso, Chinese Yuan and Brazilian Real, in each case compared to the U.S. Dollar

n Contributions from the Recent Acquisitions

n Increased freight costs

Partially offset by:

n Lower sales volumes driven primarily by North America Performance Coatings

n Lower variable input costs

Cost of sales as a percentage of net sales increased primarily due to the following:

n Less effective coverage of fixed costs as a result of lower sales volumes

n Increased freight costs

n Unfavorable average selling prices and product mix primarily in Mobility Coatings

Partially offset by:

n Lower variable input costs

Selling, general and administrative expenses

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

Selling, general and administrative expenses increased primarily due to the following:

n Unfavorable impacts of currency translation of 2.4% due primarily to fluctuations of the Euro and Chinese Yuan, in each case compared to the U.S. Dollar

n Contributions from the Recent Acquisitions

Partially offset by:

n Decrease of $2 million in bad debt expense

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Selling, general and administrative expenses increased primarily due to the following:

n Unfavorable impacts of currency translation of 3.9% due primarily to fluctuations of the Euro, Chinese Yuan and Mexican Peso, in each case compared to the U.S. Dollar

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower operating expenses, inclusive of contributions from savings initiatives

n Decrease of $4 million in bad debt expense

Other operating charges

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

Other operating charges increased primarily due to the following:

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

n Increase of $4 million driven by an impairment on a previously closed manufacturing site

Partially offset by:

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

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Other operating charges increased primarily due to the following:

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

n Increase of $2 million driven by an impairment on a previously closed manufacturing site

Partially offset by:

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

Research and development expenses

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

n Research and development expenses remained generally consistent and impacts of currency translation were immaterial compared to the prior year period

Amortization of acquired intangibles

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

Amortization of acquired intangibles increased primarily due to the following:

n Assets acquired in the past 12 months contributed $1 million

n Unfavorable impacts of currency translation of 1.5% due primarily to fluctuations of the Euro compared to the U.S. Dollar

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Amortization of acquired intangibles increased primarily due to the following:

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

n Unfavorable impacts of currency translation of 2.9% due primarily to fluctuations of the Euro compared to the U.S. Dollar

Interest expense, net

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

Interest expense, net decreased primarily due to the following:

n Favorable impact attributable to lower principal and decreased variable interest rate on our 2029 Dollar Term Loans

Other (income) expense, net

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

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

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

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

Partially offset by:

n $1 million debt extinguishment and refinancing-related costs associated with prepayments on our 2029 Dollar Term Loans

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

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

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

n Favorable impact of foreign exchange gains of $2 million compared to the prior year period

Partially offset by:

n $1 million debt extinguishment and refinancing-related costs associated with prepayments on our 2029 Dollar Term Loans

Provision for income taxes

(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.

(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.

(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

(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.

(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.

SEGMENT RESULTS

The Company’s products and operations are managed and reported in two operating segments: Performance Coatings and Mobility Coatings. See Note 17 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Performance Coatings Segment

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

Net sales increased primarily due to the following:

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

n Favorable average selling prices and product mix in both end-markets

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower sales volumes due primarily to unfavorable macro trends in North America

Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the following:

n Favorable average selling prices and product mix in both end-markets

n Lower operating expenses, inclusive of contributions from savings initiatives

n Lower variable input costs

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

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower sales volumes due primarily to unfavorable macro trends in North America

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Net sales increased primarily due to the following:

n Favorable impacts of currency translation due primarily to fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar

n Contributions from the Recent Acquisitions

Partially offset by:

n Lower sales volumes across both end-markets due primarily to unfavorable macro trends in North America

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

Adjusted EBITDA and Adjusted EBITDA margin remained relatively consistent due to the following:

n Lower operating expenses, inclusive of contributions from savings initiatives

n Favorable impacts of currency translation due primarily to fluctuations of the Euro and Mexican Peso, in each case compared to the U.S. Dollar

n Lower variable input costs

n Contributions from the Recent Acquisitions

Offset by:

n Lower sales volumes across both end-markets due primarily to unfavorable macro trends in North America

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

Mobility Coatings Segment

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

Net sales increased primarily due to the following:

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

Partially offset by:

n Lower sales volumes in the light vehicle end-market

n Unfavorable average selling prices and product mix across both end-markets

Adjusted EBITDA and Adjusted EBITDA margin decreased primarily due to the following:

n Unfavorable average selling prices and product mix across both end-markets

n Lower sales volumes in the light vehicle end-market

Partially offset by:

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

n Lower variable input costs

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

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

Net sales increased primarily due to the following:

n Favorable impacts of currency translation 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:

n Lower sales volumes in the light vehicle end-market

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

Adjusted EBITDA and Adjusted EBITDA margin remained relatively consistent due to the following:

n Lower variable input costs

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

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

Offset by:

n Lower sales volumes in the light vehicle end-market

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

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash on hand, net cash provided by operating activities and available borrowing capacity under our Senior Secured Credit Facilities.

At June 30, 2026, availability under the Revolving Credit Facility was $768 million, net of $32 million of letters of credit outstanding. All such availability may be utilized without violating any covenants under the Credit Agreement or the indentures governing our senior notes (the “Senior Notes”). Our remaining available borrowing capacity under other lines of credit in certain non-U.S. jurisdictions totaled $20 million at June 30, 2026.

We, or our affiliates, at any time and from time to time, may purchase shares of our common stock or the Senior Notes, and may prepay our 2029 Dollar Term Loans or other indebtedness. Any such purchases of our common stock or Senior Notes may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more redemptions, tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Our 2027 Dollar Senior Notes have a principal amount of $500 million, bear interest at 4.750% and are due on June 15, 2027. We have intentionally not repaid or refinanced the 2027 Dollar Senior Notes as of June 30, 2026; therefore, the related balances are classified as current liabilities on our condensed consolidated balance sheets at June 30, 2026. We expect to repay or refinance the 2027 Dollar Senior Notes prior to or on their maturity date.

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.

Cash Flows

Six months ended June 30, 2026

Net Cash Provided by Operating Activities

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.

Net Cash Used for Investing Activities

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.

Net Cash Used for Financing Activities

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.

Other Impacts on Cash

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.

Six months ended June 30, 2025

Net Cash Provided by Operating Activities

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.

Net Cash Used for Investing Activities

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.

Net Cash Used for Financing Activities

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.

Other Impacts on Cash

Currency exchange impacts on cash for the six months ended June 30, 2025 were favorable by $25 million, which was driven primarily by fluctuations of the Euro, Brazilian Real and Mexican Peso, in each case compared to the U.S. Dollar.

Financial Condition

We had cash and cash equivalents at June 30, 2026 and December 31, 2025 of $633 million and $657 million, respectively. Of these balances, $544 million and $555 million were maintained in non-U.S. jurisdictions as of June 30, 2026 and December 31, 2025, respectively. We believe at this time our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational and working capital needs.

Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our Senior Secured Credit Facilities in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs, including planned capital expenditures. In such circumstances, we may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, selling additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. Our primary sources of liquidity are cash on hand, cash flow from operations and available borrowing capacity under our Senior Secured Credit Facilities. Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Senior Secured Credit Facilities and other existing lines of credit will be adequate to service debt, fund our cost saving initiatives, meet liquidity needs and fund necessary capital expenditures for the next twelve months.

Our ability to make scheduled or pre-payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations and is subject to restrictions in the Merger Agreement. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

If required, our ability to raise additional financing and our borrowing costs may be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by certain credit metrics such as interest coverage and leverage ratios. Our highly leveraged nature may limit our ability to procure additional financing in the future and elevated interest rate environments may increase our interest expense and weaken our financial condition.

Our indebtedness, including the Senior Secured Credit Facilities, Senior Notes and short-term borrowings, is more fully described in Note 15 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and in Note 18 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025.

We believe that we continue to maintain sufficient liquidity to meet our cash requirements, including our debt service obligations as well as our working capital needs. Availability under the Revolving Credit Facility was $768 million and $770 million at June 30, 2026 and December 31, 2025, respectively, all of which may be borrowed by us without violating any covenants under the Credit Agreement or the indentures governing the Senior Notes.

Contractual Obligations

Information related to our material contractual obligations and cash requirements can be found in Note 6 and Note 18 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in the Company’s contractual obligations and cash requirements as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

See Note 5 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for disclosure of our guarantees of certain customers’ obligations to third parties.

Recent Accounting Guidance

See Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a summary of recent accounting guidance.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. The preparation of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q requires us to make estimates and judgments that affect the amounts reported in the financial statements. We base our estimates and judgments on historical experiences and assumptions believed to be reasonable under the circumstances and re-evaluate them on an ongoing basis. Actual results could differ from our estimates under different assumptions or conditions. There have been no material changes to our critical accounting policies and estimates previously disclosed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the market risks previously disclosed in Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

As required by Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. No matter how well designed and operated, disclosure controls and procedures can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.

Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time to time party to legal proceedings that arise in the ordinary course of business. We are not involved in any litigation other than that which has arisen in the ordinary course of business. We do not expect that any currently pending lawsuits will have a material adverse effect on us as discussed in Note 5 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Consistent with SEC rules, we use a threshold of $1 million for such proceedings. At this time, the Company is not aware of any matters that exceed this threshold and that meet the other conditions for disclosure pursuant to this requirement.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) None.

(b) None.

(c) During the three months ended June 30, 2026, no director or “officer” of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

ITEM 6. EXHIBITS

EXHIBIT NO. DESCRIPTION OF EXHIBITS

2.1* Amendment No. 1 to Merger Agreement, by and among Akzo Nobel N.V. and Axalta Coating Systems Ltd., dated May 27, 2026 (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K (File No. 001-36733) filed with the SEC on May 28, 2026) 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1† Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2† Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (101) INS - Inline XBRL Instance Document. The document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document (101) SCH - Inline XBRL Taxonomy Extension Schema Document (101) CAL - Inline XBRL Taxonomy Extension Calculation Linkbase Document (101) DEF - Inline XBRL Taxonomy Extension Definition Linkbase Document (101) LAB - Inline XBRL Taxonomy Extension Label Linkbase Document (101) PRE - Inline XBRL Taxonomy Extension Presentation Linkbase Document (104) Cover Page Interactive Data File (embedded within the Inline XBRL document)

• Previously filed. † This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. Section 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

40