Financial Analysis

"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 tim …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

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 Restricted Stock Units Units (in millions) Weighted Average Fair Value Outstanding at January 1, 2026 0.9 $ 32.91 Granted 0.9 $ 31.68 Vested (0.4) $ 32.56 Forfeited (1) $ 33.38 Outstanding at June 30, 2026 1.4 $ 32.22 (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. Performance Share Units Units (in millions) Weighted Average Fair Value Outstanding at January 1, 2026 1.0 $ 37.94 Granted (1) 0.1 $ 29.51 Vested (0.4) $ 33.74 Forfeited (0.1) $ 41.12 Outstanding at June 30, 2026 0.6 $ 39.13 (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 fo …

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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 Companys 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 valuation …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

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: Performance Coatings Mobility Coatings Total Balance at December 31, 2025 $ 1,714 $ 81 $ 1,795 Goodwill from acquisitions 6 6 Foreign currency translation (32) (2) (34) Balance at June 30, 2026 $ 1,688 $ 79 $ 1,767 Identifiable Intangible Assets The following tables summarize the gross carrying amounts and accumulated amortization of identifiable intangible assets by major class: June 30, 2026 Gross Carrying Amount Accumulated Amortization Net Book Value Weighted average amortization periods (years) Technology $ 153 $ (109) $ 44 11.1 Trademarksindefinite-lived 268 268 Indefinite Trademarksdefinite-lived 161 (91) 70 14.1 Customer relationships 1,369 …

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INCOME TAXES Our effective income tax rates for the six months ended June 30, 2026 and 2025 are as follows: Six Months Ended June 30, 2026 2025 Effective Tax Rate 24.7 % 23.2 % 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.

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BORROWINGS Borrowings are summarized as follows: June 30, 2026 December 31, 2025 2029 Dollar Term Loans $ 1,342 $ 1,475 2027 Dollar Senior Notes 500 500 2029 Dollar Senior Notes 700 700 2031 Dollar Senior Notes 500 500 Other borrowings 48 50 Unamortized original issue discount (8) (9) Unamortized deferred financing costs (14) (17) Total borrowings, net 3,068 3,199 Less: Short-term borrowings (1) 502 3 Current portion of long-term borrowings 17 17 Long-term debt $ 2,549 $ 3,179 (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 Managements 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 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

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 entitys 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. …

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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: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Components of net periodic benefit cost: Net periodic benefit cost: Service cost $ 1 $ 2 $ 3 $ 3 Interest cost 5 5 11 9 Expected return on plan assets (2) (3) (5) (5) Amortization of actuarial loss, net 1 1 2 2 Net periodic benefit cost $ 5 $ 5 $ 11 $ 9 All non-service components of net periodic benefit cost are recorded in other (income) expense, net within the accompanying condensed consolidated statements of operations.

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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: 2026 Activity Balance at December 31, 2025 $ 26 Expenses, net of changes to estimates 6 Payments made (25) Balance at June 30, 2026 $ 7 …

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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 millio …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

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 segme …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing