# DEAR FELLOW SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_AXTA_2021/NYSE_AXTA_2021.mmd` · pages 3-9_

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DEAR FELLOW SHAREHOLDERS,

As I reflect on 2021, I am impressed by what our talented team of nearly 12,000 employees accomplished. Together, we faced another year of a global pandemic and global supply chain disruptions that continue to have far-reaching impacts for our business, our customers, our communities, and our people. Despite these challenges, we had several noteworthy achievements as we stayed focused on growth, innovation, operational excellence, and execution.

## Business Highlights

In 2021, we remained disciplined on executing our growth strategy — a strategy founded in our deep-rooted belief that partnering with customers to solve their problems and deliver innovative, sustainable solutions creates value for customers, shareholders, and communities.

Despite unparalleled challenges, including continued global supply chain constraints and persistent inflation pressure across our business, Axalta's year-over-year net sales grew 18% with income from operations and diluted net income per share increasing 51% and 119%, respectively, while we also delivered another strong free cash flow result of \(455 million. Our strong free cash flow allows us to invest in our business through both organic initiatives and targeted acquisitions that can further our growth and deliver significant value over time. We also continued with share repurchases, totaling \)244 million in 2021, which we believe is an attractive use of our free cash flow as we look to drive shareholder value. We spent approximately 4% of net sales on R&D and technical services to sustain our leading market positions as well as to grow into new markets, particularly within Industrial Coatings. This year, we faced increased raw material inflation costs of over $200 million, which represented a 15% year-over-year increase. We were able to partially offset this through substantial incremental price actions in 2021 and are continuing to execute on pricing to fully offset the increased costs our business is experiencing. We also delivered over $50 million in cost savings for the full year that helped offset persistently high fixed cost inflation during 2021.

We completed two acquisitions for a combined investment of $649 million. To strengthen our product offerings and business in the Refinish Coatings end-market, we acquired U-POL Holdings Limited — a leading global supplier of repair and refinish products for the automotive aftermarket, as well as protective coatings. We also acquired Anhui Shengran Insulating Materials Co., a leading Chinese producer of high-quality wire enamels used in a wide range of consumer electronics, electric vehicle, and industrial applications. To further our ambitious growth strategy in Asia, we also broke ground on construction of a state-of-the-art coatings facility in northern China that will support growing demand for light vehicles, commercial vehicles, and automotive plastic components.

Ensuring a strong senior leadership bench is a key aspect of my role. In 2021, Axalta welcomed three new leaders to our management team — Shelley Bausch, SVP, Global Industrial Coatings, Jeremy Rohen, SVP, Strategy and Business Development, and Jacqueline Scanlan, SVP and Chief Human Resources Officer. In early 2022, we also added Dr. Keith Silverman to our management team as SVP and Chief Operations and Supply Chain Officer. In addition, Tyrone Michael Jordan (TJ) joined our Board of Directors in June 2021. As an accomplished leader in the global mobility and aerospace industries, TJ brings a strong international and innovation background that

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complements the diverse skills and expertise of our Board. In August 2021, Bill Cook succeeded Mark Garrett as Board Chair. Bill brings to the role deep experience as a Board Chair as well as a successful career as a CEO in the industrial sector.

Creating Sustainable Solutions for Our Planet, Our Business, and Our People

Axalta embraces our responsibility to deliver solutions that help create a more sustainable environment and business. In 2021, we conducted a comprehensive environmental, social, and governance materiality assessment with internal and external stakeholders. Based on the assessment, we created our new 2030 Sustainability Goals. These goals reflect what is at the heart of Axalta's operations and success — meaningful environmental progress, inclusive social values, and strong corporate governance. At the core of our commitment to environmental sustainability is a goal to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2030, on

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Axalta embraces our responsibility to deliver solutions that help create a more sustainable environment and business.

our way to our aim of achieving carbon neutrality in our operations by 2040. We also help our customers with their own sustainability efforts through our product innovation. In March 2021, we launched our Spies Hecker \( ^{®} \)  Waterborne Full System in China. This new auto refinish coating system brings world-class technology to the Chinese refinishing industry by providing a sustainable collision repair system including a waterborne primer, basecoat, and clearcoat solution.

Our full 2030 Sustainability Goals are available on Axalta.com/sustainability, and we plan to release our next Sustainability Report later this year.

## Fostering Learning — Inside and Outside of Our Walls

Axalta is committed to fostering an inclusive environment where our people can thrive — where they can learn, develop, and achieve their career aspirations. Based on feedback from our 2021 Employee Engagement Survey, we launched Aspire, our new digital learning platform for all employees to access learning and development resources.

In September 2021, we announced the winners of Axalta's first-annual Bright Futures Scholarship Program designed to support the next generation of industry innovators. The program provides financial assistance to students in STEM or vocational programs at eligible schools located near Axalta facilities. The program also provides opportunities for the students to interact and network with Axalta technology and business leaders. Generating Momentum for 2022 and Beyond Looking ahead, we have confidence in our team, our products, and our innovative solutions. We are focused on accelerating our growth strategy by:

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Fast-tracking our innovation efforts aligned with customer and end-market trends, including sustainability and electrification

Pursuing opportunities to enter new industrial coatings markets through both organic and inorganic means

Continuing to enhance operational excellence across all areas of our business to improve customers' experience while advancing our commitment to safety, quality, and reliability

Investing in our workplace culture and the development of our people so we continue to attract and retain the talent needed to meet today's demands while innovating for the future

On behalf of the Board and our global team, thank you for your continued interest and investment in Axalta. We are excited for what lies ahead and look forward to accelerating growth and delivering value for our people, customers, shareholders, and other stakeholders.

Sincerely,

## Robert W. Bryant

Robert W. Bryant