AXTA - Earnings call transcript Q1 2018 | Axalta Coating Systems Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to Axalta Coating Systems First Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. A question-and-answer session will follow the management's presentation. Today's call is being recorded, and replays will be available through May 02. Those listening after today's call should please take note that the information provided in the recording will not be updated and therefore may no longer be current. to few call introductory like Mecray to now a for remarks. would turn over the Chris I Please go ahead sir.

Chris Mecray

in appreciate Thank you, VP continued to We Axalta's quarter call. XXXX Chris is welcome financial interest our your results first and good of morning. Investor This Axalta you and conference Mecray, Relations.

This the our which prepared This of during and involve current Shaver, is forward-looking posted axaltacs.com, directly events website our operating released call. discussion quarterly results and Joining also this Charlie the CEO; statements. Robert various financial we financial future financial to no reflecting Chairman risks, us today section of updates to have materially on and These may to appendix, company Bryant, statements morning, and presentation slide forward-looking contain Investor referencing provide reconciliations presentation contains to from actual at measures. those and be will effect we their measures. GAAP these the under most performance. may a and that Both company's and non-GAAP the uncertainties In results are differ remarks our of EVP obligation these note Relations measures included statements non-GAAP we and and potential the comparable Please view CFO. financial today Axalta's statements. forward-looking financial

filings to call information non-GAAP the regarding over refer measures, our I with Charlie. additional will For forward-looking and turn to statements SEC. please now the financial

Charlie Shaver

today. performance broadly healthy financial based Axalta's our market results full QX to us review Overall, increase results end sales current for and us operating the organic ongoing pleased for well our quarter our pleased results where and Overall, we good tailwind guidance previously continued by conditions. incremental markets growth both somewhat tailwinds. call industrial, today incorporating truck from and Thanks morning. you, robust benefit more that first FX better in favorable commercial in XXXX duty on than strong and we're and adjusted enabled America currency remain range performance a heavy welcome North year update strong have were EBITDA our and slightly to growth for execution supportive we're joining as have our including market Chris solid Thank highlighted outlook our on vehicle, the year, projected, quarterly

raw With also tailwind still given to expected, year, were in inflate notable begun a we've cost in materials that results this meet as continue material cost make that with to challenge. context, particularly progress, input to offsets to a reduction comparison versus QX as raw XXXX. QX both cost reported As in accelerating last well price

I'd Turning to X to review some slide like in page highlights. our the of back,

translation nearly growth completed market, growth for strength which quarterly price all realized in sales material driven Organic primarily included raw declined and we prices First lower markets large factors, Axalta's sales XXXX, digit higher consisted offset costs, offset positive our by Overall, from foreign timing quarter, included the FX of a positive net Taking year-over-year, single back and end plans. driven low due volume by by remained XX.X% ongoing volume continued offset held aided regions. inflation. meaningful from key acquisitions contribution. turning benefits. our average line our XXX first degree Consolidated organic a XX.X% tailwinds increased pricing generally QX volume which normal from year, grew inflation, price operating in challenging in million to factors all, year-over-year ongoing by as look of the incremental period. last industrial actions remain was well and this ongoing mix with raw from of material in partly Margins XXXX by in in of an sales a X.X% was X.X% from at slightly expected, positive EBITDA primarily supported was This price after refinish, over tailwinds as overall X.X% for foreign refinish markets X.X%. ongoing lower volume to Net X%. by was well taken our growth period, contributed XXX market refinish related currency comparison challenging in last stability various by modest but as and end and QX contribution QX expectations masked to Axalta's QX XX.X% contribution the adjusted of from performance, year. healthy. currency somewhat end slightly by but to to to acquisition seasonal growth benefited with million Axalta's

We target year. mid-single for the continue growth to digit

high previously ongoing offset stable offset given by America growth tailwinds, Volumes year. regions. notable standing line We growth, trends we with average were lower other trends sales net half are have second in production with region. out the appears with select including reported modest more single mid-single be pricing in organic end the for the predictions and volumes gaining XX% price grew that ongoing Key last expect demand North made sequentially, that see growth in a to X.X% to cautious top concessions period, robust and digit of excellent almost drivers consistent Auto noted North market significant XXXX FX OEMs generally contribution. the steady including market reflecting quarter flatter exhibit broadly acquisition Axalta's globally. share were digit growth, improvement indicating industrial by favorable from vehicle for Light in the America in organic strength were globally comparisons continued sales to to strong for and relative year. to growth industrial net

in growth the currency healthy growth We growth. and XXXX versus Commercial for of flat in continue outperformance was growth low X% while regions. and witnessed price elsewhere, product and constant made X% in and digit again in auto net Axalta. slightly globally North mix to mix vehicle truck Volume nearly negative, America production we continued single adverse expect slight was to industry in price OEM from posted residual sales all certain somewhat impact healthy regions, led given last demand by concessions year

Turning help ended at flows, cash included sheet working majority million and for capital EBITDA slightly use which with trailing of difference. from in savings. April, balance Robert with will take use typical to and seasonal which X.X detail first a free an payments cash spending our last our well the adjusted for month overall was finance quarter the XX offset as flow - year-over year of debt refinancing payments, to X.X headwind interest the the FX cash compared lower balances. year debt balances, balance use This of and this some severance of a accounting as as the resulting opportunity quarter due cash to timing to million of We the net year. XX bond the incremental times year interest end strong as acquisition euro, the times of in our will provide versus increased well XX

Axalta, cost topline had that internalized portion contribution. near earnings purchased consolidated our with spent impact, existing via in platform quarter significant largest contribute technology lower increased we in deals joint XXX M&A the deployment, capital increased no and to in effect energies the These color XXXX. with initially but while refinish matching have we to to cost million venture ownership going profit in first term also we interest at Regarding

to be continue in repurchased April. to share allocation a we our the have We Additionally, but with little to stock offset in minimum stock repurchases here additional from plan repurchases quarter, year share reinvesting target. devoted opportunistic very first this capital expected dilution to an as with

cost across you'll likely a this quarter lowering which so of March, key beginning Clearly, doing Investor in new notice continue offsetting we we businesses, wide to our million a savings show Regarding operating progress target that are year and we highlights via combination raw and Day in and point $XXX New pricing Axalta's inflation already. Axalta to at cost productivity. focal structure York our set we're the to committed be on execute will this material in

Additionally, site California business manufacturing support wood as overtime. other and to businesses in distribution we as well acquired a Sacramento, our

set in local the a is Finally, we serve inaugurated which India, new vehicle Savli, marketplace. coatings light plant to

innovation we're new track quarter. products on year introduce last to least we highlights, XXX as at In noted this terms of

Nason Some markets. notable examples in in South aerosol new include and recent Finishes industrial Africa topcoats new the fast drying launched first products quarter global of our in

Axalta's keeps to us summary, our first regions. strong as well for positioned strong is market Axalta focus demand deliver This by end expected across to feel XXXX. supported results in shareholders meet by plan year in our execution value for our on So conditions solid, team. as well the stable most and result we're meeting objectives markets while end expectations we This quarter and were

top raw the months continue relentless and plan in and offset material logistics remain to value of We inflation address a continue creation. and the our for as priority baseline we pursue our to growth coming pressure upward plans

Now, you. Robert our further share will on some results. details Thank

Robert Bryant

Thank good everyone. morning, and you, Charlie

X.X%. on performance X.X% growth coatings net X, at in includes quarter FX see was slide can year-over-year. down first This excluding you As increased sales, slightly tailwinds transportation coatings XX% while

refinish by growth excluding impact broadly decline and volume with QX growth again XX.X% of X.X% quarter positive EBITDA as conditions volumes in Adjusted acquisition offset from markets. light mix performance and within vehicle. strong last coatings way detrimental XXX to by million segment. industrial for X% of the RMB. volume by lower price contribution end positive first in the and our been modest margins offset commercial a XX.X% to in quarter. economic price declined date the X.X%, year a higher increased performance refinish X.X% These in driven organic was quarter, versus currency, sequentially Chinese the Axalta regions, coupled prior and partly this operating vehicle benefits supportive inflation. cost in were raw cost material Organic to realization by translation reflecting expenses in flat coatings quarter challenging well some including in year. volume strong pressure, free driven FX euro factors variable Price due indicating industrial exceeded in mix, as and modest has global pricing First Overall included and effects. Adjusted increases principally to savings year-over-year increases accelerated pricing through and Most both in most a to progress comparison related remain of markets. price any across EBITDA

a Turning of - in year-over-year acquisition year refinish. a prices, timing X.X% from to year-over-year, Constant due XX.X% X.X%. benefit higher were organic comparison X, net sales challenging an QX contribution factors driven by was growth volumes increased selling prior to performance currency the sales while benefit slide XX.X% average FX coatings' including slightly down and from

mix the sales offset region similar by EBITDA by material FX with high For included input accretive driven the period. from price in digits, from coatings challenging expense, tailwind, of increased digit in XX.X% growth generated resulting raw growth last with acquisitions, refinish, globally X.X%, acquisition all from four sales by Drivers to coatings XXX offset same was all for year-over-year and positive increase. FX year-over-year contribution completed illustrating last with net material of robust tailwinds in operating XX.X% the comparison the demonstrated business. a in digits margins business lower improved regions, substantial the QX Performance a continued EMEA performance and were a contribution and adjusted was Pricing X.X% contribution million, benefiting quarter. consistent FX the regions mid-single a benefit. of adjusted in quarter low net EBITDA growth across America. to XX.X% single higher year, resilience persistent increased including North strong QX pricing price low performance X.X quarter strong Organic raw partly year-over-year, our the needed offset in net Industrial inflation. actions inflation. Average sales positive QX mix, XX.X% seen single to by our

several quarter, digits Light QX, slightly to regions. in by slide vehicle the X, X.X% X.X%, transportation including Volumes in net QX last in slight increased volumes in offset sales vehicle, North X.X% trends to including decline X% growth a commercial America low increased a the with currency consistent in offset flatter currency slightly, Turning net with sales tailwind. of offset Segment other a year-over-year quarters. increased mix. vehicle growth coatings including constant first FX unfavorable light increased price single benefit in by

mid-single digits, indicated we call down mix quarter reflect in residual customer earnings our comp. agreements our February, As average was and should price to to QX this be from mid-XXXX on low QX continuing toughest pressure

lower period In was sales. addition, growth detriment margin product to slight in strong in mix a the due

regarding driven adjusted customers, vehicle inflation heavy business. vehicle solid globally continued recovery XX.X% numerous other X.X%, and moderation in Commercial light net biased increases with of assumption of particularly million X.X%, of end discussions comparison product America active commercial driven our inflation, forecast by increased XX.X% was FX margin through sales ongoing ACT absolute last price are vehicle production We of higher versus year, revisions material XXXX. recession benefit impact production margins units moderate price The raw duty globally unfavorable coatings in customers in strength for continue date. a long raw versus to remain also by its North EBITDA lower Commercial with growth million headwinds strong global including EBITDA an include offset China, remarkable with margin America degree vehicle demand Current driven the truck some a by mix on demand, class Transportation QX, XX.X% America by a material upwardly continues from enjoy though contributing to in a X and QX strength of loads. FX to resurgent to offset of North and XXXX. strength in to associated similarly and XXXX, Non-truck accretion. market volumes, in increased in an in Latin markets. XX XXX,XXX tailwinds recently from and generated to from QX, year types. forecast Axalta solid range to supporting XX increased wide expected

XXX XX, yearend. totaled Moving reported billion million debt end. Total versus decrease net and billion, resulting on equivalents was March debt debt at to X.XX from at balance cash million of and in a a billion now of liquidity, cash X.XX XXX year X.XX

net free months activities of EBITDA XXXX. increased on impact of from a of QX which compared cash cash euro, our versus Our as offset caused $XX use headwinds due a by X.X in the million a the in capital QX same mentioned leverage a balances plus cash was ratio times increase expenditures X.X denominator. growth costs year-over-year change end investment quarter to year slight and from for The was by operations a result was $XX the ago. XX quarter flow previously flow interest The was use at of balances severance million times defined to the debt and lower stronger spending latest payments.

included cash which ratio sales for sales year fluctuations completed a end. driven working refinancing compared to over capital maturities amend term term capital term the of full our loans. end an would to interest normal our amendment we year existing by points, dollar of The capital as euro portion. capital extending our our benefits Our the seasonal we basis our slightly the quarter modest In while working previous existing XX.X% of imply effect euro was interest repay to of We working XX an use, by year by transaction expectation net as reiterate year portfolio. a spreads and repricing our largely working US by ratio XX.X% loan improved April, costs upsize debt, included to debt at EBITDA with loan growth, which improved other a and ago. a aspects well This our on

matches to that our are expected amendments entered into a swap our X.XX% cash fixed cross term which in The expense euro also an approximately and currency cash of transactions, million basis. mix rate best the $XX We swap on debt interest by annual loan a reduce interest at portion maintain transactions by flows. locked currency to upsize

provided X, slide revised for shown. guidance we as previously Turning XXXX to our

tailwind X% the consensus we X% based FX net excluding we and for year. sales, For see baskets, to our forecast of full now for X% from currency a growth, still on expect FX

is reported XX%. be growth As to to therefore expected X% now

by the noted Regarding serve favorable Day. markets coming with end our strong, and trajectory consistent. what been market America heavy in distributor and call Charlie with the update level in our remain market than March commercial conditions, and segment North demand has indicates Shop steady surprises observed refinish industrial market insurer the our also in global any earlier healthy in growth especially and automotive we consistent transportation we expected a general markets on markets, that markets Data Capital remain remains and Recent for for truck. expectation Body year feedback both robust, stronger February duty from in end vehicle Markets

headwinds regarding management. well adjusted Our $XXX been outlook material million, our offset active million raw to million combination via we to across has EBITDA core a our raised markets more $XXX to as from cost optimistic to and of million are productivity pricing as actions $XXX $XXX as ability

guidance. is forecast to also currency our updated supportive Our

normal expect Regarding QX slower given LIBOR seasonality comparable the and Guidance approximate equally full stronger we movement and and year phasing for QX, recent debt expense year adjusted $XXX of phasing. interest of slightly expected to refinancing QX offset of to with XX% EBITDA million and a business quarters XX% to impacting at EBITDA XXXX, remaining results. fairly remains by versus balances, Euro in currency the adjusted slightly due

Regarding specific were the impact that a rate tax range reform slightly first tax for the we of actions in taken and though adjusted the XX% full are quarter. taxes, below ongoing after that year, in range of US to the income XX% response, maintaining in our certain effective we review

million update. Our to free our $XXX cash flow since remains guidance consistent million, assumptions $XXX at reflecting last

remarks Operator, recent guidance increased answer and the your open questions. for please we concludes expenditures prepared lines up from and to be impact acquisitions. unchanged This now of any FX remains has slightly you capital would depreciation and Q&A? would from our amortization Our our and pleased

Operator

of Vincent line Andrews question Instructions] [Operator first Stanley. the with Our from comes Morgan

Vincent Andrews

that confidence. is here more Performance coatings in the Just sounds Coatings, your It pricing as transportation like in a as positive much on is you're environment. on, question it

Robert Bryant

across cost to board with the inflation pricing kind closely the in working real of as area customers appreciate inflation persistent to the offset actions market. need we are to appropriate that with and to each We're address. that working We're every something

essentially Now going market, rates expect we've varying slightly date in relate all coatings We on markets those depending out, shortly. performance benefits the performance EBITDA and progress segment material success the our the out back year, they're see as FX of notable last success all success to had the as point even And is margin, follow and you in equation of transportation evidenced efforts, simultaneously. and the do see can to same you you but in if which the we to coatings end despite upon as raw actually by tailwind. Vincent, actual

So we're business going there discussions and transportation regions are of in to progress expect number produce performance making that really on moment results. active world a good at in the we in of our coatings all the

Vincent Andrews

And the think at a four function I Day, not you being sort Investor in one just as about of they in advent does of that going indicate share of on as then the to are other. not acquisition, or follow-up, of forward sort those come maybe quarter the a repurchases the discussion talked aren't

Robert Bryant

the actually in all. those. two as we our at We not our release very quarter with completed happy No, and transactions highlighted remarks we're and in

price and we we X for goal saw the that as We dilution said, offset opportunistic addition have repurchase, said our any see would a back in that, as shares. the level. an of year we stock transactions XXXX to million good we the the at pipeline as rest in been, year, given approximately the in case always also has to we of share which then And it of is buy

however, any us or level we inhibits be a see dilution when moving where upon if that depending M&A our the we'd at we is, to even us such dilution So additional pursuing meet target, will it it opportunities from meet attractive purchase stock like that not pursue. forward, price will you our

Operator

question comes from Our with Parkinson Christopher line of next the Suisse. Credit

Christopher Parkinson

Thanks. to procurement on that improving the quick Can at long which and new your multi-sourcing be cost any would color intermediate you term on very helpful? you update updated cutting hit initiatives, thoughts us a your Just platform 'XX your just give on for initiative and Analyst any Day? in including

Robert Bryant

continue we really make Chris, progress. good to

have way what $XXX on first of our from we through that buckets Day, internally are by like those the out four Of savings we any the to been quarter, where course, we be expect outlined coming and savings, actually the pace Investor next initiative consistent come we million for achieve to with mapped slightly to at happy we the report our where over exceeded change target which feel would that's on that to so budget each we're quarter what was we're we Axalta real from. on and hasn't in years Analyst and

we challenging at procurement sourced, more in a the progress now are organization those situations are On to material active. sourced to but and team our or it's but maybe nothing, where single dual the been dedicated would making a have have raw side, like moment, development we in quite options. they've we but Obviously, supplier environment procurement new

So that. progress made on we have

Christopher Parkinson

little preliminary products you consolidation And you key offer US, least or then is more at something well any as region the a as the still you in a more mentioned in else? by refinish. And your are basis? little also just consolidation bit mainly a quick just it MSO taking customers drivers, share new in you color are European little on a seeing Can among comment, Europe

Robert Bryant

share that it operators in also of also in If of as to MSOs more good there. we sized look we well. although are have very in talk by independent we we market the market, them sort continue the about if to would don't we much only the of at think terms but XX, gain very down in continue level top And gaining that North that progress, medium next America, at four you look not to multi-site larger of we market, with

already due refinish highlighted in here, our with that the much going QX necessarily in back may unusually to you if seasonal an reason performance compare think happy quarter has in through doesn't that show as simple factors. tough our to in we very for business, America we QX North XXXX as had remember that someone So I XXXX you're else QX, just strong call, had where a

lot compare starting good in of performance to of in that and make countries progress in inroads global QX as it the some we periphery team. an market refinish had really In masking has strong the countries, a So made core been that's some that's as EMEA, been opportunity for tough very by our share, where well us. is

but broadly with to very going continue as we of how in building in us place So happy as further. even US Middle Pacific some more accelerate about business distributor Asia in offering out that are in do network make more China progress and in and our having continue things in and on East the last commercial mainstream does In terms only Middle and then the East, in of ex-China, the gain China, China, in call, as there. and to not in to well make broadly market the great progress Pacific help to part continue key resources our Asia strategic put mainstream also traction, talked we we Europe. growth And product

Operator

comes Fischer line question Duffy Barclays. of the next from Our with

Duffy Fischer

the Question the guidance. how the how for Can that guidance the segments? look the in FX impact year, through for both is then the big walk And quarter. impacted of EBITDA rest that we the FX on as change just on impact you for

Robert Bryant

at your line of looking - top from about was million terms in Duffy, and roughly at then an time we EBITDA original the there we judgment FX, for construct, about as X% in $XX tailwind dropdown talked a from the you the about which can were our perspective. appropriate use guidance

increases for we that XXX. tailwind tailwind that million full so As FX to now update XX at that X% tailwind, approximately approximately year, see we from the

FX is an the the rest for EBITDA yes, benefit at the that the current Bloomberg foresee year FX do composite rates. based we So there level on of

Duffy Fischer

game in increase when stabilize OE just is anniversary point, and concessions when OE? we do year that anniversary to business, last the those we to just on year the pricing think this that gave you can or at Okay. we do then that the then And actually auto get plan for point pricing business,

Robert Bryant

the Duffy, hadn't the the concession, quarter yet in any is but yet we started was we this see compare, were our forced there year, were effective price price because of first double to - catchup because the quarter, made given X or number last back the last in unfortunately, this a - and we of to the any give concession year of had of second if then to was we of hadn't that toughest the whammy year. January where quarter

material are with. think and raw vehicle our light that So QX our that dealt improve Obviously, see compare. material also level, and gross having from a is customers raw there the I perspective, profitability at really is a not to goal just forward, been our business dialogs to moving there's only really be in comparison we're a tough margin obviously but - starting to - material inflation that has

So but I ensuing quarters, that progress think a little bit in again see some take to the those expect do of do we time. discussions

lag a there's effect. So

those terms come discussions, in. we actually reasonably delay in time confident that a I when will however, in we're will there So is think those of make progress

Operator

Our Juvekar with next of line PJ Citigroup. question from the comes

PJ Juvekar

industry you grow It X.X%, volume was underlying can the acquisitions cannot growth without are seems tell your coatings IP that us you growth. and or lagging GDP why behind

Robert Bryant

that So, might frame observation little a guess bit differently. I I an I would wouldn't - - about necessarily just up I

volume in largest being or If drives in just America, terms factors the and in result. what markets price digit demand we a our the market quarter, inorganic achieving timing largest we America of volume quite capture North we our regions. done had affected an industrial and industrial We that XX% business, organic first compare being Refinish In at the execution really fantastic look result were that impressive. reflecting if our across some the business our mentioned difficult refinish, volume our our global was compare frankly QX would Actually this overall team. had North industrial and really looking our of growth to had pull all over there growth a all by that was is strong what and while out year tough refinish. growth, business you at volume excellent look low double growth

look low ex-FX, vehicle, up single on volume at commercial growth. digits, you it's If mid-single digit

So vehicle, I at it. we're Refinish quarter is getting look industrial, slightly definitely you look masked compare. at this if think in unfortunately by the our, tough commercial

Charlie Shaver

to for we digit PJ, mid-single year. And refinish full expect in continue growth the

this as really and go up you a and always refinish a So making you year, know, quarter of that's to you as know, chain and pre-buys will we but point more know, ever going the in distributors, the large plans the is quarter obviously, bigger places. way chain strong supply over that quarter, we've to how a good year. every worked are your as progress. dynamics really seasonal hard been we out Yeah, on it was are inventory and quarter out, work. think quarter not working and got away, industry relatively you're smoothing you you're world but we've having and pretty we've the out, concerted pretty with get past to the takes totally improve year against hardest not bit because the supply but expect the before, to because we PJ, the through little try part first also effort, a think of the we working to that smooth Charlie some there around don't last cycling cost fluctuations, down, out out, our smooth and with But try some a the of I them industry's where to end year that quarter to distributors got because a year, had I starting Again, up the factors, stacking as

take it you'll year-over-year to some increase that of for think quarter-to-quarter the over is pre-buy a year such change us. much to Robert's out that And mask think back big see part smooth to point, I volume refinish business of it just a on smoother. globally, next our or other so that's segment, in our price growth big I lot look doesn't continue where because a compares

Robert Bryant

digits overall My And up was in colleagues the discussing vehicle. point. but nicely just North volumetrically final one American up we America. in here add you in just market, were Volume pointing light I'll are that that North Robert. at the by single low is this out contracted PJ, market look if I particular, And business. X.X%, omitted

didn't that. just market to as leave about talk vehicle out So we light the want

PJ Juvekar

And my you second your question in is on IPO, gained transportation. China. After significant had share

just So where OEM, of did you the update I but in your China on flat et business? terms and cetera. is, think your world how China are you of my can share, rest was grow question in OEM

Robert Bryant

for we from market from which whether plan. LV there an resulted obviously, has sales body China issue make look volume we been progress there. the panels parts, net from a perspective, capture, look or we from have total we've at to perspective, - perspective, good the at The us sales in with price price impact, our but a what been the performing plastic is PJ, concessions continue overall consistent automotive an

progress just is make commercial opportunity good is in That to China vehicle. continue make big we as a do point there. and for us talk about still we The to other transportation

Operator

the of next comes from Bob line Koort with Our Goldman question Sachs.

Chris Evans

around flow trend been which of that guidance, your Chris sort citing the and for expectations logic bit XXX beat businesses. Evans I that much really behind could you that. higher thought of a the doesn't the more process quarter you've where in for million the than some towards maybe And or up hoping the you optimistic that through your original ended little then versus Bob. on was coming just were the deconstruct

Robert Bryant

QX, business of perspective industrial had stronger We and that had been little more some growth and we we stronger way guidance. we then level of what we had savings came as a well projected particular. in we contribution, When help we you than had then a also favorable. we initiatives a to stronger to also FX level, in bit from when about the we terms the projecting originally higher had had originally the together performance get that EBITDA acquisition were which expecting as in been from price execution in put projected capture coatings commercial than being we had think an had in on Chris, sales than cost had greater

one you there a in however, year. full cautious we make that market. the doesn't out thought volatility quarter for the would terms be of as news great be to know So the should most prudent raising lot QX, a There's guidance EBITDA approach of year in

if prudent So warrants QX that in was potentially increasing it performance we how thought just guidance wait a little before QX in we bit it see that. to raise our range the further and and perform then

Chris Evans

high towards pointing were you impact digit in previously single then material raw And XQ.

And for your you how the out? of to the is year, as balance expectation the impact between and two notable what quarter curious Just raws then differences the the played any segments. look

Robert Bryant

what to impact two two raw XXXX, relatively had be basis. total QX impact on between that a was it XXXX in In in compared with the segments, XX%, we to QX we the expected The full between of line year kind the QX, segments. consistent it's saw

Operator

comes question of Ghansham Panjabi from next the line with Our Baird.

Ghansham Panjabi

being prepared EBITDA Robert, I comments and XQ stronger why back to XQ businesses, down refinish, and one your as auto for be guess to profitable in XQ, on would the that of XQ substantially XQXX your in just distribution curious off, of XXXX. first stronger more the is was not than year cadence

Robert Bryant

oil that and ability impact and be and is about Ghansham range, compare, QX a in the plan in around our that seeing at to original cadence changed. fair it very oil point the think how that continue been is material on we timing It's price $XX $XX would depends increases, also was would Yes. that then If to at segment. terms see we when increases but to therefore, question, but move increase price should a price easier what moved relatively $XX it again the a particular and of environment when and fair it on we transportation price this in oil our will stay of capture raw answer the obviously, to we're had based $XX, in have

Chris Mecray

of in quarter of side make the just transportation year. the weakest that to point Another the business, it's definitively the

to refinish you So out. somewhat that strength expect of the you'd see offsets pointed that that relative out

Ghansham Panjabi

lost as price. then they've your on to on business, of competitors some And some in seem that executed industrial, share have

sort - two across on pricing you you any Your Can your just Thanks strong. rationality are seeing industry? of quarters much. comment and very the overall any cracks share have of past been position signs so very, in

Robert Bryant

is as able that It we that continued in price be volume. have industrial we to interesting have grow gone substantial out with to increases

I expect some volume think see we loss. to did potentially

been the years has look amount the the significant, strong, else. of into power we've the investment just team. has market. seen trade you been anything two board, little terms that strong, what been the general been feet that's overall, not in on But in originally consistent Think by think so I the some about investment was but our relationships, in by overall, that's put on at and you of than issues over some. ground bit look teams wood energy We coil good industrial business, projected we have in has around It's maybe think we're and and it's the last particular, driven if industrial has only commercial if And I been than execution strongly. the developing return segment team, had the solutions slower the we commercial also segment pushing and been a growth that have our expecting a of strong with been more across

Operator

Thank you.

Capital comes McNulty with Markets. question John the Our of BMO line next from

John McNulty

of some area, whether there's to about if A those it. through were rest blip in you of one-time mix continue something year you going question issues. us we of walk in negative the expect indicated terms Can you vehicle would the kind through should that and or the how it's you light a what that had think

Charlie Shaver

isn't light It's in vehicle tend in product the from growth coming fresh wider in lines the wrong a it's that start. John, some Yea. business. have just of product The anything actually core a there main in margin to lines. issue

So vehicle. nothing in light weakening there's

In from of a across the product growth of by number existing couple large, fact, the introducing. And change a coming and and not are that in areas of regions, we're lines any very been we've it's lines but pleased different running. with from of that's of growth, some in mix that

John McNulty

through maybe we in and of while margins further look, in think inflection the you've they're hit them we high, the like see actually raw to to five of starting terms the past, of the just quarter with seen or in margin to other so do question for degradation hard guess, I materials Do it or that guess of I to quarters and bunch where comps you're end be as XXXX? every I things kind year a thinking one a seem the I couple ripping about have I necessarily and been terms mean, but you how guess pushing here. terms and catch we you've negative point of it's last does guess, of, up next an of regard price bottom higher, over the margins had see half we start the and kind headwinds then dramatically And like, of go should year, in

Robert Bryant

of of quarters, exceptions, for what about it's important but talked the supply those variable is. raw highlight last I that what again think general of to the trajectory couple issues, variables few materials there. two and is the trajectory supply is that the oil One we've a issues are supply in There's issues And there the persist.

the only depending not question on price category supply, question of a function material. of material, a but it's also So of specific a raw raw oil, of the also - of

a So customers it'll on base price also then that of be bit larger place by and a with little ability introduction initiatives capturing that and but will customer vehicle new that's depend a that it's our to implementation of other in combination of of number segment. also colors, we have light at and our in price, it some our it's capture driven indexing

Charlie Shaver

wouldn't that successful expect a inflect to is price to and to you'll positive year our on according getting quarter, the half basis. however, add in an second margins basis back it then possible out point inflection cost guidance, turn that in of the comparable plan, see when in just a might necessarily we on the I capturing based on in margins are that we positive if our comparable

Operator

question with comes line the John next from of UBS. Roberts Our

John Roberts

you. Thank

competitors proxy to margins you're that, see recover costs to example, for the price are long able is take does I when of something see, like up trying that want use able like as do One and noted an you other you When extreme reformulate your XX%. or of that to you something if that just that. your to only tool resin systems some to how are

Charlie Shaver

is this John, Charlie.

the there's but where certainly certain over when proxy certain have about quarters, think as I that's depending the little are term, been to price well it's you on to XX%, that reformulate. last when at polyesters very spike, see just happens, that regions, opportunity substitute in in they're couple you is amount short that a world, correct, of the XX% or

we pair and shift been Now, well doing point where They earlier, two and can't in polyesters team overall products, only time where or get it would our I customers, say we is material need last resin both in customers, boxes, some over on not performance coatings matched that, some a of with they that but full raw product cheaper if that, and or the performance work spec what the time, of even just at if so any have resins years, in we've we're our in a in on mentioned we to our even with look change the they the community change. a more, doing Robert in works. but deal, really as them, a acrylic with same working because a a can at procurement a just is and of it's certain big supplier pay R&D work liquid less powder on expensive reformulation actually the business

the see look to where necessarily or to think going but is, continue functionality. resin, competitors not probably customer to be we'll our the is value cheaper a just pay them additional proposition work on and well continue I go the us for where price, as different you'll they to So can't different to

So I efforts of point XX of XX we probably think on. in those kind at time, have going or any

cases, we but in I to, the going come normally and would opening action had a go other it's think Robert past take believe don't price everything it's try is and logistics, the see signage, increasing. change we let of you'll try residence for I in often, of isn't oil it's term expensive but more raise products gas in example, and be future. think the of go driven GDP us, really We in general and materials, with a it's customers to forced but that as as increasing. wages if spike just supply say, short just just mentioned such and actually, on, back this don't to pigments issue much not because we we we what's we environment, like and else, mentioned the to an in to the certain an I It's deal invested one, in prices Now draconian know those raw there measures, when you've two, kind that's and only spike if been in, try global I on to And inflation function for think and price a we just in year as going seen solvents or down going my coatings formulation has issue. raw to just did not comments, just a materials we're

than as across change is next going the last you've we we got the a what not more to a higher comment value definitely these go working can't more believe a proposition. the and just you'll premium spikes more you past. on inflationary see really So they think something on focused that just can with next the why going couple have market, to just trying of the segments, years, with do the cause, got with working I I and of think mainstream forward looking not we do they're really mean probably in really afford. these across last we're to see customer we be over inflation it's I is they close economy to of segment can we lot your in generally couple those general think seen proxy be do quarters The where they on because afford years in what in going to for, we few it's customers work customers for on chain the and you My But board refinish you'll in so environment, what to and as you improving we that's force example have the the where need. what the are that markets maybe go them, be and your and and where through perfect and markets, of supply us to needs and value

John Roberts

you gave levels going OEM, was raise from raising price And Should those where anything that is you year. in some to with volumes. then in auto new we lower to prices there concessions customers about think price those make it those losing concessions last or harder without

Robert Bryant

Yeah.

us the given specific paint, you improving collaborative to that's I with cost cost customers, the our paint. increase of not and to of and and on know working I a but in and levers to a light that the only of paint, on five the four structure them, of on the terms as only our expect of is number of well think of not terms course of the we're work of in the as costs levers, how think pretty we vehicle and with on which working lower effort times cost internally price have cost just as we're application might course price that and with strategy number we They getting will a customers. of we that price work

flexibility the So well the sight us it gives to from want we innovate pricing more paint more don't that. productivity, and perspective of lose as a in we can that

Operator

from of line comes the Jeff JP Zekauskas question with Morgan. next Our

Unidentified Analyst

Two [indiscernible] short questions.

was investment The whether might you that's position non-controllable just can I of one of and do the made in to first you've and is. that's wondering question million conclude. time that guidance give terms entity. on part wondering when in exactly your with has an not what whether whether that was and it's IVA update the or your like is, second that I the of And my XX acquisition

Robert Bryant

to the hear they Sophie, those which transaction. so At request Commission decide difficult do. the we of it's what they more point, are. going to on could to either They handicap end from back European IVA, on they're expect the could transaction, approve thoughts decline one information or could their the to May of by this

So certainly it, We - transaction do approve we that we they customers are as for a hope for waiting decision. it their would for Axalta. as be good well believe

Dura business, of On of have Coat XXX% take as XX.X% will to the we was and a purchase XXXX. us we'll interest the of final of our to that part purchase transaction original January business structure purchase in additional that stake we XX.X% then an additional in did up

Operator

question next the Instinet. line Our from Aleksey Yefremov with Nomura comes of

Aleksey Yefremov

from behavior your compared business competitors price to your talked you XXXX? price. general, do competitors of today in away One walking In to a about order intentionally see from disciplined more prioritize

Charlie Shaver

Yeah.

as in just but I is first to a exactly making a customers sales segments, over my can tell credit these you - I afford, don't of think, all being lot the past on in starting going characterize increases they walk to in person, it understood I what's look all, our It's though, almost the a negligible. one we've the of walk not It's intentionally never, know on why. two of tried never all amount almost going price across what's career without as - in not but you wouldn't material. I give from lost would what teams, I the away business and I've industry year actually done and early, we've customer nothing, sure discussion our we at

we price however, way movie the don't before, by when make that, had back which in and of XXXX forget, do this strong try faced think with I we So we've XXXX, before. statements to seen I like inevitable it's this people these you're think kind increases,

try adding the been in Certain what, have have to cans certain in might past slow so have these building capacity some are the in is think prices, over of think in they highlighted conversations. it had if just not past. mean quarter What a seen certainly I won't price like East, oil, this competitors and previous to in I it. Middle that, but realizing the not take you specialty we aren't advantage we customer, underpayment transitory party competitors under in supports somebody doesn't lose nature cases the increases I

over and I So rather do going a we believe transitory And made more were a and that little slow competitors' do, and had certain paramount change you competitors party segment last that there's to just several than you Clearly, follow as think the to begun slower certainly fundamental tougher. people it in like on. we days the XX listen it them and to if to calls, just is we business price. be recognize their raising protecting have

the have advantage people over we stuff, and industrial it's supply worked by not refinish, think less graph chain share trying been So good finally I and that. that might to but term of where short who its take many through of seeing kind competitors months, way of definitely we're large of the more discipline in local have multinationals, only couple as cases, well last

Aleksey Yefremov

Thank in the you follow you, increases transportation deliveries And what on extent And North North seen do on rely truck in Charlie. America. have up costs a you America. any in cost to side,

Robert Bryant

have determine say increases that marine America, North what get. we input calculus transportation price also say geographies, I the need also in only trucks, we and an into this would other seen costs, increase in we've - to that cost I'd Robert, in is but we that transportation only an seen that, not in not but is in to use so

transportation increases costs not material need offset that of price price only also inflation, seen offset logistics also it's So raw we increases to some have inflate. the and to we

Operator

Bank. next the Our with David Deutsche Begleiter line from comes of question

David Begleiter

week, their sales refinished when with can organic business, bridge quarter. your growth your performance Thank refinish, growth X% sales announced your you. roughly organic in competitors down On last their this

Robert Bryant

pricing, factors we as price challenging related have think a had some versus that to XXXX highlighted, of we we seasonal David XXXX it I in timing compare. that did increases make

to it would be would for picture I painting. different adjust very that think we a that, we be were if

David Begleiter

have just easy year And in pretty year transportation coatings. a QX, comparison in over you

post to in be EBITDA, year. growth EBITDA year So in over you that over QX segment, year up transportation should in think coatings able you year

Robert Bryant

down certainly wouldn't probably and broken overall we We've a construct expected end We segment guidance. haven't, David, quarter, by in guidance market as haven't but by provided appropriate provided you or know, EBITDA for follow each how that to approximately be do to we much so.

Operator

question from Our of Sison with comes line Mike Capital next the Keybanc Markets.

Mike Sison

In little XQ, a terms as growth the are bit you seeing for I and now know but growth it's seeing refinish, organic some of you post earlier are XQ?

Charlie Shaver

we and Yeah. at look we some had some just when I It's QX relatively large let earlier, but we QX This organic Charlie think Robert in highlighted is large as comment, we advanced growth I'll buying QX. last saw by distributors. year,

not - with on. So mid-single inconsistent segments, think I going seeing in we're we see four digits organic growth all

in we're where a new it's to we pretty products shape on whole paying I lot it. the think of good attention growing. is not Frankly, healthy, introducing market It's the around world. focus

see So when underlying saw the continues when to to said, to think there going but purchase you think market anything the from large again things X%. X% one in as last out you all it's got out, smooth I a world, take anywhere take advanced couple I way of we we on region balance as year, other, of grow, but QX don't the you've I or Robert new the

Robert Bryant

volume just just making the will that it I bit reported aberration quarter think first I'll I comment be in a of progresses, that terms of the the is and result. year that as an highlight that seen on think

with happy very QX as I think refinish. as far North I'm America

think our really MSOs of a are are full, growing. couple I shops

from was pretty weather I As on. far all as will little in of, it it think got the a got but was standpoint loaded Northeast, go and body bit that's the pretty up with that work goes, all also these storms refinish good with QX late hit shop we

up shop up of give factor QX, you seasonal from happens, season - and more year. as for that but there I year, far in think activity, previous that everything nice growth the whatever the in we're QX our So given little setting whether the overall, to see shops see did a really set you shop as we be a

Mike Sison

did you of follow you're then you And up, growing coatings, year coatings guidance per rest down for segment, a the quick when to of in about do and year. again you think start in to terms I EBITDA happen know think transportation needs EBITDA the get not giving transportation but what the

Robert Bryant

and The one difficult is first to thing form from immediately raw the that's mind that price materials coming quarter. in comparison

when price comparison to there at There outcome to rest of like things looks needs look execution, have the noted full to it's project, to needs capture have get Obviously, that put be into the context difficult what quarter we get that happen. So, first that first the to quarter but comparison. be you year. we to important the a was

Operator

Thank you.

Markets. with from of RBC Arun comes the question next Capital Our Viswanathan line

Arun Viswanathan

Just of a clarifications. couple

I mid-single year. between So wanted were the with is split to you agree is for kind that. evenly if ex-FX to first it noted I refinish, volume just that growth potential you clarify price. and digit of and guess on

Robert Bryant

we about talked we When guidance we organically. originally, expecting is mid-single spoke our XXXX that growth, that Yes. digit were when

Arun Viswanathan

back that you late noted the was Great. weakest periods, given bit Chinese Year, but is seeing OEM auto the OEM? if the you're any other a auto just year New we to the And QX season that of that one on up, later concern changes, curious start progresses in China little as but commented differences light then regional vehicle, I'm you any

Robert Bryant

what on at right against a by think don't thought plan, I don't who think to how OEM, do what. from rate look build been. our what I we really now, and surprises regions thoughts and as any even seen think is shifts in seen from demand kind different got we've we've the any our I major we going we've have

Operator

the line with Alexander Jefferies. question comes next from of of Laurence line Our

Unidentified Analyst

Laurence. for [indiscernible]

I along if I product be would mean of before where I to customers end something be lines already been considering that was due that's more there's prevalent, mentioned anything happening where Is particular wondering market industrial, would a think the the where You some rising there but may people change are cost. willing more it? to

Robert Bryant

Yeah.

customers You are getting while. takes just Industrial light bit where line and in in some new formulation is to may little however, you make that to industrial of point we it's if engineering terms think then be the those bit can reacting some qualify your of process a the an That industrial make very product, quality little agile have process and if we material to performance just about from of you right. change. It vehicle, and adjustments to cases. qualify a is changes, time time view, a a be qualification demanding simpler more raw a

Operator

ladies and gentlemen. you, Thank

have We to of Shaver allotted to turn for come I'll the comments. Mr. the back our end time now for any questions. final floor

Charlie Shaver

Sure. Yeah.

we'll Just of everybody quick go. comments let a and couple

all, of year, First a up. overall, good to us sets start the our plan, with certainly consistent

comments board, markets healthy that and is in up do globally to I be I we're the as to think just a think what good I'm most year. by across his in encouraged appear the Robert noted set

Our really on cost focus initiatives, cost is growth reductions. execution around price and

front solid top we think already just of issue, is I We million top is again we it's our we've into million and is think to what to at an I of us line would necessarily acquisitions, years had I XXX ago. what raw from XXX oil. good and moving in environment start in certainly do back keep think sort inflation $XX on is creeping inflation that with look first several not pipeline earlier. general I the just mentioned the along quarter standpoint the with are to at shape think overall that in, of but materials, the our consumers M&A only to a going creeping see plan coatings I'm into, We're seeing we not done as thing in general

logistics think about materials, earlier cost. gentleman raw So asked a I

just raw whether We're materials, see like to continue that. certainly we'll wages, seeing general things think logistics inflation, cost, that. I it's

think just there. we'll like with to have, think continue it, I don't so deal I anything new we

the this out by global In the that stimulus natural of see and that think result a of out just fact, there. offset there it's fact monetary removal stronger you and I GDP is

job think and we I we'll we're but continue as I to to that, think who deal take can't ongoing. that can that factors of from growth good it and to share all think think to those positioned, in center. And ahead a I those from see being of comes customers, deal cases, we'll service it and we're with continue So competitors able organic company, a of the continue our with will well I do it do some if stay front

year start QX. again, you our after with and thanks the like for round forward attention. thanks Good off we to look this for your to your So time, next

wishes. best So Thank you.

Operator

Thank you. teleconference. This concludes today's

your time. for this Thank may at your lines participation. You disconnect you

Axalta Coating Systems (AXTA) 25 Apr 182018 Q1 Earnings call transcript