AXTA - Earnings call transcript Q4 2024 | Axalta Coating Systems Ltd.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Axalta Coating Systems Q4 2024 Earnings Call.

[Operator Instructions] Today's call is being recorded, and a replay will be available through February 11. Those listening after today's call should please note that the information provided in the recording will not be updated and therefore, may no longer be current. I will now turn the call over to Colleen Lubic, Vice President, Investor Relations. ahead. go Please

Colleen Lubic

full good of and in is Lubic, quarter Colleen and call. results Thank Relations. morning. We President and fourth our Investor you interest XXXX appreciate Vice financial welcome conference you, to This year your Axalta, continued

Officer. are and Financial we posted Relations presentation the released me a Anderson, today President; section Carl results during this referencing Investor website be which Villavarayan, slide will Chris Joining our at of and financial CEO and Chief We morning axalta.com, our this to call.

today prepared contain current slide Our and differ Axalta's the company presentation those remarks, future that these financial These Please of note statements and under statements. is forward-looking their company's materially our from provide and statements the statements. and discussion effect results on operating involve uncertainties may updates the forward-looking reflecting potential events forward-looking performance. obligation risks, no to and to may view actual

slide various financial SEC measures. financial information. to presentation most more GAAP measures comparable Our non-GAAP remarks filings with directly our also to these measures. and non-GAAP We've a of contains for the the reconciliation included the financial Refer

our in X-K the did turn call measures we note XX. will to January certain I we Please the over Chris. described now the the that presentation furnished for as current of that report recently to Form update non-GAAP on SEC on

Chrishan Anthon Villavarayan

everyone. Colleen, and morning, good Thanks,

our made I that the These to year X outperformed off EBITDA and to appreciation X. highest brought global history. end that has one express of EBITDA. with great share the focus. in of another these to team markets, the excited XXXX efforts culture our we paid outstanding our end all we X adjusted adjusted The results this by Slide year for in that sales weakness into fourth want their to and consistently collective largest have Vehicle clearly Refinish, the full markets, A established I'm plan and net our move Axalta. results. throughout we our sales Axalta Despite team Let's across quarter that has possible as record net year priorities our were achieved Light represented with my dedication

We a net delivered company currency and currency We quarter quarter of new body EBITDA from the by Economy represents headwinds. Vehicle this record net growth. quarter company in billion. increased CoverFlexx result delivered fourth prior softer fourth our million. despite year-over-year our of quarter consecutive tenth $XXX record and $X.X environment acquisition above-industry anticipated meaningful Contributions sales our macroeconomic foreign Light year-over-year than to fourth This XX% Adjusted growth of guidance. a not segment, offset foreign wins more headwinds shop in in the adjusted Refinish EBITDA in

deliver on EBITDA XXXX Adjusted mix, and lower which, Light our was improved costs, from of was proud year growth. favorable We're initiative variable expansion transformation basis advance date. from price know, in by to margins revenue Plan. target volume our the in A savings driven well conversion XXX the Margin our XX%, to impacts Vehicle from as objectives by set points margin this prior versus result you

chart, year-over-year to this As you great in XX% can story $X.XX another see EPS for growing on quarter. Axalta, adjusted diluted was the

declining our set Plan. continues or high range net in end quarter eighth leverage to ratio the another sheet X.Xx, with we balance for our improve that of A company the of record consecutive addition, the In total

the the strength results of operational accountability, move our tenets execution we Slide demonstrated X. the Let's We of aligned around financial and is have culture transformation, as at of to excellence. the organization foundation our by

achieved we and to strive everything injury X This committed a TRIR reduced rate ago. in by and are do to XX% we that approximately years X X.X compared safety of We year, towards our incidents.

streamlined our the under we Navy Philadelphia. and addition, together Yard in in operations our at corporate and investments made engineering, optimized and organizational structure roof our one In brought employees

excellence, improved in product creating work and profitability in good progress efficiency, and optimize of common enhanced manufacturing manufacturing complexity improved improve across sites. chain. off. Combined and X%, our reduced our the in costs and delivery began This We by reducing operations, reduced our across sites our Specific across America the inputs sites, and to operations in variable paying raw the of fixed our is portfolio. SKUs Europe, we will operational which and times costs costs. XX% by while we management supply efforts procurement manufacturing made other reduced number X Notably, one closure North

Our Growth transformation as ahead approximately already of savings our plan pillar $XX in million the A million Plan. is achieved XXXX towards $XX the Plan. goal of our in are A having described of major

all business where body year our the markets new which Group, positions efforts, segment. outperformance down of executed their in teams approximately new secured digits. win to and net in Our X,XXX fast-growing wins CoverFlexx and economy in industry Refinish were acquisition plans strategic the deliver of Due single us we shop end well the to a completed

decline accretive at net and up builds. to XXXX. ramp business, vehicle increased we earned of We in auto $XX in run growth new sales full full Coatings, global will which X% And a rate drove in year Industrial around margins our light despite million

years. accretive growth responsible point, to pivoting profitability moment like and it valuable to She over thank and in towards President take At the as her a returning to Axalta Bausch Shelley is business past business for industrial contribution macro. a challenging would for Industrial of the this I the few

and this that growth at business margin excellent Axalta Senior a strong who an Chief of Shelley. forward. is may announced Transformation couple weeks Officer Vice down her Shelley take was a and transformation. Bowes, succeed know, we at you of ago record President business As Tim role Tim most recently will stepping was He to from track Axalta. choice driving has

pillar is Plan of innovation, key leader makes what sustainable Axalta the global is a which A in coatings. Another

widely have for been to end continue boundaries We efforts. and recognized the push markets these all in

have talked game-changing our We machine. Irus Axalta the expected Mix benefits of about

well of to We with are date. the installing adoption technology, XXX this progressing new

expect Irus this and Nimbus customers. faster color nearly more shop driving Scan double and combined XXXX. to effectiveness accurately package and with mix measure our in number a This to cutting-edge Axalta machine, that Axalta full delivers We body of tools and efficiency

Dürr believe January, step experience. vehicle technology Vehicle Light Axalta's Dürr paint delivering important In the integrator digital in driving an robotics with for solutions NextJet technology. digital paint and as Dürr's agreement serve or is customers' groundbreaking future combining desire strategic for robotic a with the customization announced automotive Axalta's we partnership this the OEMs. is I will of

prestigious awards X recognized with X X for demonstrates commitment over industry and BIG awards last for was innovative total Edison, our During customers. to technology X the developing R&D and XX Axalta's innovation, our bring XXXX, Axalta years achievements innovation solutions XXX. X to These and and smarter

EPS to expanded of EBITDA $X.X I'm all year encouraged the for XX%. highest measures, Slide an the time for history excellent and net our We By billion and in company. X. Let's XXXX fourth the diluted in exceeded by Axalta. sales by annual the adjusted was year turn for With creation. adjusted proving quarter first when have the strong released EBITDA full we performance creation. We to had and Plan, for place which we great long-term we're and is margins framework a significant since our foundation in a self-help XXXX value results XX% strong commercial value at be demonstrated May playbook, our programs A adjusted working in financial a establishing

Carl to results I financial will and to now go over through call guidance. turn XXXX the our

Carl Anderson

and Thank you, good morning, Chris, everyone.

for Before an letter, on comment X-K order amortization SEC depreciation income that financial the to changes adjusted to on with Coatings are note announced more and an with practice, well of we adjusted acquisition fourth step-up XXXX. in of adjust as quarter of net peers comment calculation resolution beginning and the of our to in Performance ceasing our the and DuPont January wanted the of XX. from I non-GAAP we align closely EBIT to performance, following I market our measures certain In as

the the reported will Concurrently, at we through to and information share. of on is capital reflect invested per intangibles metrics. the beginning comparable of these changes These available are impact return axalta.com. earnings today in computation acquired metrics The of all same diluted changes also historical calculation adjusted adjust amortization those and

For the $XX the was full amortization from and and million, all XXXX, acquired step-up year of Performance DuPont $XX depreciation acquisition million. Coatings amortization intangibles was the of

Improvement currency quarter for billion, the impact $X.X to offset a by X increased review acquisition points costs. basis Slide XX% and net fourth volumes. driven the X% operations were by turn margins was translation a price/mix Please from results. year increase $XX and Fourth and XXX increased partially the price/mix contributions income foreign X% period, driven sales by in an variable lower our lower quarter million. of quarter CoverFlexx, by primarily of prior Gross while of from year-over-year to

additional some benefit expenses raw last energy and material, compared the in from fourth quarter. lower year when experienced freight to We

which we we project inflation in materials the continues In in full low single-digit For primary for in for declined higher certain fixed sectors productivity operating experience first raw programs. X%. offset we in transformation but We in excess quarter factor the see full our in from the of the XXXX, overall inflation expenses be anticipate was and the year year, initiatives impact to flat costs quarter. prices. variable Currently, came areas, labor XXXX, our inflation will ahead remain material costs. that minimal supply which disciplined benefits roughly plan, many raw last and of to compared we managing our programs SG&A in productivity year the as expect to the minimized with

year, $X.XX lower million, to expectations, million, and per quarter Adjusted up we cash decrease operating XX% primarily share driven share, our investments activities $XXX fourth as planned than year-over-year by increased provided capital free XXXX tax diluted was interest XX% per totaled was expense. into earnings flow cash was marking $XXX by better primarily focus expenditures and quarter scaling our in Fourth on The the to increased last by EBITDA a record. continue driven exceeding Adjusted $XXX million. business. quarter our

by Additionally, higher-than-anticipated receivable driven primarily timing was reductions. resulting and account capital working payables from inventory lower

fourth partially quarter. foreign fourth $XXX million X% increased CoverFlexx of net offset from from volume markets. were wins to in Industry quarter, America Slide North and shop declined primarily from compared declines, foreign $XXX trends. the year-over-year X. currency lower translation. net continue Refinish acquisition sales to end first sales predominantly X% through period. by year These to quarter net headwinds the acquisitions this to year-over-year price/mix demand the both Coatings the quarter XXXX. and due body declined expect to of million, $XXX contributions to contributions net industry unfavorable mitigate weakness the in in remained Performance X% to we volume declines Moving million Incremental and by headwinds volumes help Industrial and currency positive soft driven sales conditions because and in prior

Despite quarter to $XXX exceed points basis the the Fourth to EBITDA conditions, basis driven expanded EBITDA million. A year-over-year Performance are and the XXX variable XX lower points set Adjusted improvement to basis X% margin adjusted EBITDA contributions this favorable from year by adjusted track objective macro Coatings XX.X%, in price-mix by increased we CoverFlexx. and approximately primarily costs, increased Plan. by margin on margins XXX point

mobility to X. Slide Let's on move Coatings results

Vehicle Vehicle North than quarter, in and quarter X% framework. America a fourth an year-over-year declines when year. auto guidance The tailwind production Price-mix America pricing down as XX% X% prior net by Light offset China increase and net last Europe. in X net the XX% and a of fourth declined to million, mid-single-digit global consistent in in primarily $XXX of drop predominantly compared of the volume driven with year XXXX year-over-year, quarter driven increased Coatings which in sales period. grew Class was sales from Commercial the growth sales quarter. the production America, by America, timing were North was was benefits driven fourth Latin Latin was Volumes anticipated more by X%. X% even the which the prior Mobility

XXX adjusted $XX quarter at a million, last XX% by the the Coatings in points Mobility improved year, million EBITDA improved to versus increase XX.X%. fourth in year-over-year. quarter $XX coming Adjusted from margin basis EBITDA of

Mobility adjusted EBITDA the our Through year have business operational EBITDA and full margin we the than Coatings at XX.X%. years. X addition, of more courage year excellence, the commercial doubled adjusted margins In ended Mobility in

volume by improvement results. record. growth Turning and light to The for $X.X review of X was X% partially full Mobility up full Performance new largely company Slide year-over-year acquisitions single-digit were basis Coatings offset headwinds a as grew a billion, foreign our a Coatings. in Net by translation year year low contributions driven vehicle to sales modestly from fourth was on offset by growth the Volumes currency in impacting quarter. decline a

achieved approximate $XX adjusted $X.XXX early of year also transformation We driven an million price/mix from announced record billion, by in full our XXXX. and variable initiative costs, lower EBITDA a predominantly positive benefit

next Adjusted and remain earlier drive the double-digit in XXX expect disciplined achieving target EBITDA the which We full margin years. several deployment, $X.XX. points X than XX% margin over A increased by capital XXXX outlined to strategic with planned. per share earnings and by to plan years will diluted the near improved Adjusted EPS XX.X% basis Plan, year to we growth

by to capital. year offset higher the finally, cash of higher free were $XXX And working flat was roughly earnings as prior flow million

Turning to Slide XX.

we to almost line turn with a are year target. announce that the our X.Xx, is a leverage a of which We better is end half top ago net in XXXX with year of the ended Plan excited A and than ratio

Our deploy going capital balance provides value. forward sheet shareholder to stronger greater which position, now much in we optionality how a in can create is

reduction million are approximately $XXX we opportunities share Plan, drive to million million help with as to debt liquidity, the increase In in ended approximately in approximately $XXX was $XX intend including We Capital year balance that of we total as XXXX, A M&A, CapEx significant of gross billion $XXX cash to million borrowings there million to $X.X deployed million in outlays outlined million. expenditures, acquisition. in In repurchases. our with a revolver million remaining amounted and paid the the XXXX capital the fourth of investment in million to off to the $XXX CoverFlexx we operations. in productivity approximately $XXX $XXX $XXX used believe $XXX for quarter, finance

we have sight in We accretive In line ROIC on of we M&A in target year. have our points remaining return evaluate which invested potentially basis our $XXX and a continue target to pipeline repurchase to of we progress excellent finally, XX.X% opportunities, And XX%. XXXX, make XXX XXXX. share capital by million this authority to of and to expanded plan on achieve

and The U.S. have to a new our turn challenging by view on Canada, in Let's these put demand and XXXX potential produce. environment. trade we our remain XX The the where ultimate actions local global the uncertain. place government Slide the trade duration guidance. impacts within the a to of create tariffs Mexico Axalta, raw Specific for into China of of to majority materials global are borders bought

less purchases production and the of from have imported China and in XX% our Mexico U.S. raw material than we materials from addition, In Canada. are minimal raw used

our will of are as and We material evaluating actively actions buy some resourcing explore appropriate. direct pricing

are to obviously situation, shift $XX a we assessed believe single forecasting is grow We However, this in excess impact fluid certain demand also sales still if by that guidance. year customers adjusted impact Understanding with EBITDA customers required. that of for is there through XXXX the believe some we capacity a in U.S. The production discussions tariffs, in million being still is which net will our digits. included is low full from

full segments. contributions $X.X year, the be of positive $X.XX from both in the with expect to to For billion, revenue billion range we

extend America our remain plans be XXXX expecting both business, strategy. into in to to to volatility We are to macro Refinish and percentages industry down we execute and agile volumes single-digit against expect EMEA. low and our North flat have In

continue the in value we full accessories from to industry and do-it-yourself sales should of volume that plan gain decline. offset increased retail, Shop more than harness regions to and share expecting are to CoverFlexx Body We from both in gains,

planning to continue conditions half driving on In volumes addition, be net we dynamics our effect gaining focus we A on growth, challenged, In with we across to least another Industry we continue versus plan will strategy. and global in that margin through expect to business. still which single-digit in pricing take Plan are Refinish industry of first March. are customers actions percent expect improvement all regions consistent at record to XXXX. Industry low sales XXXX. we aside, will accretive flat Overall, years up Industrial, Europe the for in

current in global we Vehicle, Light forecast builds. with of million production assume For auto will industry line approximately be XX

Our volumes should due continue in new customer business America. Latin China to outpace to global and trends mix primarily and wins

year is production America below compared assume to ramp up North XXXX. in vehicle, remain back Lastly, Overall be prior will demand builds in flat and XXXX. forecast second we commercial X the half to before into Class

per full the Adjusted $X.XX expected at per increase of the and EBITDA and is earnings $X.XXX of of translating year, we be an to XX%. which margin XXXX between For adjusted $X.XX an above is billion diluted the be share, X% greater to expect range. than EBITDA between adjusted share billion approximately midpoint $X.XXX to

Our flat million approximately costs. in direct XXXX guidance $XX versus variable tariff includes costs plus

initiative will benefit also drive from We incremental inflation. our year, that labor to million transformation headwinds $XX million of expect $XX mitigating this

expected call Full provide cash cash assumes XXXX, I will be offset hand to $XXX partially is now free interest. Plan to back year against XX an Chris our increased approximately million capital by Slide flow A and review update to in expenditures, the which targets. reduced

Chrishan Anthon Villavarayan

anticipate. accelerating forward the our job Thanks, to Carl. favorable A in have an more opportunity We is environment we did if XXXX Plan performance macroeconomic a tremendous and pull than

within initiatives the and be for the than against to adjusted at deliver to year stay more than growth year execute control. focused expect diluted EBITDA margins XXXX will and our achieve key another XX% We in next XX% This greater midpoint. adjusted EPS

concludes to open the lines story for you us. Thank please ready for prepared and remarks. XXXX joining Operator, is This believe Our will be poised powerful Q&A. prove us today. for I our team another and

Operator

We'll from [Operator first Instructions] Barclays. with Mike our take Leithead question

Michael Leithead

Two questions on me for Mobility.

First, in a Vehicle, number. volume is X% big Light growth

your share? market you that So coatings of market. winning the share also like-for-like customers is that are as us Or mostly like segment got seems of Is better And mostly how Or a there? dynamic in X% you then number. second, the help understand mix big of winning a well dynamic? just price-mix

Chrishan Anthon Villavarayan

of Happy -- a it's start one, I'll New Well, Carl. over to first with and Specific Mobility turn I'll and Mike, I'll with combination wins, the to and start Year, the second one both. the actually

over the choices First, see, special that we seeing in as right new as can X the wins players, as we're primarily China, local and partnering you with last with made quarters, in well LatAm. the

And so customers and I market quarter-over-quarter. -- we can beyond winning what call gaining would that significantly we're share market see we're here

Especially we've you chose growth EV picked the as the that that as be look we play last the beyond out if that at ICE to had is we've well, overall the growing When in are market year. are the that you that we China to customers as well many market the growing. players double-digit see especially what over China customers really worked with, of look China, through quarters forward has in players growing, share are can market

that we've and Zealand. our exports well. is how China, market the customers New they're partnered Asia. Lanka, with only whether even on as partnered doing, is really this right Southeast growing also we in well And Indonesia, believe beyond. into as We're And not it's well players seeing in their performance growth share we've by but X areas, It's driven the Sri Malaysia, their in Australia playing early with

Carl Anderson

businesses fourth year. just last on is in, the we year products related, the different to mix that this came and in your of with And quarter question, Mike, part it just price-mix compared

provides price-mix what quarter The of component little to the -- year comparison There you ago. a was XXXX. in bit also a year higher ago happened when it a was fourth compare other the

Operator

Research. Our Wolfe next comes from question Chris Parkinson with

Christopher Parkinson

know in or look the U.S., fully First pretty Can relative outperforming. market monitoring the X step we you what's us of you guys. very perceive in how few, how at decent what on adopted the gillbirds decent at some We some happening be want just has to When claims penetrating [ all, that Refinish obligatory primary ]. look last Irus your kind the in the Hopefully, on over we data just you're triangulate and clearly you're should outperformance? in customers. you geographies take give back of customers city Europe. Philadelphia to a of and and additional sized your just XX the next And over the confirm well some months investment color performance you community

Chrishan Anthon Villavarayan

Chris. with X with we as geographies in X no is we looking that was I adjacencies, Europe what were pillars pillars Thanks, strategy market on the Yes. driving certainly 'XX, Those yes, a okay, into at as well out different market. set and into America. a shop forward this and low did focused 'XX but wins, a drove continued major as M&A, CoverFlexx. retail the across And declining X look as we body weekend, it to as lot the we of And segment our moving driving is North defined in you've what

our from to a us. X forward. Last about. we're across X,XXX be focused is perspective, going talked elements what story was We've wins on we've those shop great body going always averaged year for So

did over XX,XXX. X,XXX. years, As Chris, X we and But you last year, we've know, done last the

win staying the if to we're above well -- first so year, is drive plan, at that body you on And continuing next shop team thing. very that's look the focused very, and

push story CoverFlexx allowed one, in for go into The acquisition Ag, more ago, us, to And going distribution of accretive continue Koch that to us on retail great second X.X in we're adjacencies. stores, certainly a great part. we're going that, been Andre look has a terms through M&A. top Europe of our to years played at an to

of another acquisition. that out we we -- of certainly and we've That's and things terms putties can in what that, U-POL our push got like fillers element. So got

this is final the the part of Irus And really Mix launch.

we last did XXX year. So

that. in mostly that year, can continue Europe this double to to is drive expectation so Our we

defined flat between consumers say different to essentially as or destocking, would different. the a is I X have But insurance mean, we years? it's that expect rates the weaker. pulling the be market claims would you way to QX with weather when something as has that are and the snow say we 'XX West on snowstorms down compare the the I to weather Obviously, the along those East whether facing. Coast, and We are high been in all weather in as the is it little the we're from challenges out, what Florida different. to way seeing I well Coast. insurance What's weaker devastation the all pocketing

seen it. will it watching not as through. that haven't QX, in comes something We We're certainly tailwind expecting a But for. through if that's be we

Christopher Parkinson

certain That's also very seem it last about spoke helpful. And seems as though dynamics a be about little raise follow-up, be your Street quick you how throughout Day just you a you were a you SKU substrates and quick and as schedule well of 'XX. at ahead better to lot to just midyear, certain should a industrial than rationalization Analyst able year, the bit previously thinking on were perhaps those on price into things update us give Could anticipating.

Chrishan Anthon Villavarayan

basis I on a plan story, in points XXX get great certainly the story A us, And we ago just on a I bit. industrial. the XXX points. listen just May, when to the From X that. then margin And Carl's into I'll the accomplished essentially focused and Chris. story that. great basis Tim XXX has of margin improvement. will done believe a job do a accomplish margin I believe if margin Plan had of basis That's And driving story, script, purely for released we sales points in story a the you months get we've there's upside actually Shelley out to

have by just continuing we A Plan defined focus believe what can the get So better here. we I to than margin on in

we're up to half million go a be that From my improve should year $XX to And slightly. we where of even thing we rationalization all focus with the involve market perspective next the see able on. What's that is My something to does the which we Number focused to for flat of play. the is only And new interesting little year, driving were it's a business. of to with back market, two, be expectation the actually -- drive, we'll the of incremental the bit one defining more portfolio, expect expectation up is as areas towards economy. on number one. administration's get

in we work products North my America, up really from that as the seeing inside Energy well we building customer the is pick and half China entering would in industrial businesses Energy that perspective getting with So back a that expectations business market EV pulled play our towards as that in Solutions. especially Solutions, business. our all sit are those

we So battery coatings all coatings is year. see my and motors, some what of we motors growth would industrial resins the in impregnating as for such And half expectation our business. do for more in sits there the back

Operator

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

John McNulty

to accelerate of you've think any year. this about guess, I us $XX there that I are pull, you come initiative, can got transformation $XX the different or worse expected to that million things I if a of help efficiency if get you pull million, can to are the part as you issues in, levers XXXX. especially to Do numbers a think that to So guess additional maybe bit bigger little have expected? adjust from it as it or we faster tariff macro bit than look get little through

Carl Anderson

do our disposal, working that would it's fair we on. additional have characterization actively we're levers think I a that and at is have Yes, we

the cost of it's if probably think do see lot in is is significant talked we I we that So freight a to of potentially. plans bit and really that well. that of of forward impact the could there's we've can a us would in more you about year for energy think team tell as trying the whether have -- transformation there's 'XX, a and our to little -- think it bit I logistic doing, you really as But work pull but 'XX kind that have little we into us for beyond this I the activities probably some previously some about other areas

for big I inside to our productivity think think that focus the us, Also, very, company plant for a continues us. about network, with within be as very we

we it, in year. see can step-up You expenditures have pretty capital significant a this

get you run but hopefully about those So year. rate, little some think there's this a the of may more for some upside levers full not as bit we

John McNulty

it. Got

Okay. No, guess is the just just And question on I helpful. the second sheet. that's balance then

know sounds kind sheet to of out may opportunities again? as So kind some somewhat couple you've expected, success pipeline be I if of they you it solid primarily I guess, you you're starting like that years, reopen executed balance things It seeing you've goes pretty closed. I in speak perspective? assume you had M&A even when guess, should doesn't towards an what of the you last buybacks? the shape. markets to can over there? what of from And happen, got don't it the in if materialize, terms seeing up are M&A But were we

Chrishan Anthon Villavarayan

where bounce exceptional back at down our This Yes. here at is. plan. years ahead of also my Plan. that and an job a finance forth end and us I off the I look leverage But great of something have X.X A is perspective, getting From X.Xx John. a as the certainly place from it Carl the from top and we're And Carl team marketplace to here, where certainly, done here

M&A from return see the couple long of next to do hits think is -- you more best as targets think is characterize the can way front marketplace M&A for We targets. the our hear in opportunity I as for this the current us. And quarters. our this expect more should I ROIC or the in certainly opportunities do it on to I more creating in us I that volatility would actually

-- more what are an certainly with to can performed continue how taking And it operationally, value. that. helped as bolt-ons opportunity can here. create where see company continue environment, The do at have But us where I we we structurally do certainly especially this the has that can that we this in X look to last we

Operator

with Wells Our next question comes from Mike Fargo. Sison

Michael Sison

of year. market. question had on end Refinish a the Nice I guess, the I

we But grow are the years. couple have to grow Is through you of where a I -- over you've of it market suspect a a years? although noted kind of of don't of Refinish market? the we really next this year. sort do be can couple peaked growth hasn't You flattish that not lot, market the able the it here. would in It in lot think been helped you last over

Just the challenging dynamics the flip that give some of in maybe And just over the risk macro 'XX could us years? see side, market on that you the the next help you of seems again? see couple do as grow what

Chrishan Anthon Villavarayan

Yes. Good question, Mike.

flat as little a to see, market for for forecasting what be I think can bit. we're down to is it you the

wait to to you had X back in X X to And think all right? remember need essentially we're confidence the for were And that And would go 'XX would normalized right? inflation to X structural, think Insurance those where would wait backlogs folks to actually as so call us to argue lot or is it's minor where call factors backlogs, that way car are if I I the that to will I edge now, I why more essentially have, especially my I'm tailwind to so? we cars factors it you a have I be There I'm consumers rates the backlogs change any rates. Also it, just what's a you would in you making car. conditions weeks. as were can Right elements think driving a are that factors. And companies I and of fixing off watch I believe insurance not you're have are buy where with up back are shops, weeks. there's I to either I write with spending body if ask see got to calls consumer weeks to fix of mean car, mean the that and cash getting I terms on so work is when groceries, on to other where it, something are and to -- there to in well drop are I certainly are which transitory. and and their collision that going right transitory. deciding you pull just insurance X also factors

out which say consolidating, lot I the plays we of there that do see coming that you the how would optimized large Elements elements wait a that this destocking their are 'XX, transitory. I distributors and are and see to we is believe have probably saw platform. seen X So marketplace, we've in they've would in together obviously very that that inventory

coming And so that Probably back? see you not. do

we're things are So time. balancing those that over the

fact when start taking to work if States, going are at do driving the if at that we're elements return and together, plus you believe, I to those up. the you United look My expectation all all is transitory look all miles, that what you the

we be time, is over down is, overperformed. 'XX change. this as to expectation flat market my did in so forecasting to we're the So to we will that this it just way expect But

So of the seen in haven't that And that on market, be teams But our that comes will That we you where this again, we weather, is not And that and top is this 'XX, QX. then of again, later that all at putting we're Mike's or this this weather so in as in question, first that we on which see could be tracked even a have something QX our that even upside. forecast in overperforming something year. anything we're as tailwind. a this answered keep if this counting again, with point. usually significant quarter I

Operator

from comes Stanley. Vincent Morgan with Our next Andrews question

Vincent Andrews

bit touch free a little more can you if on cash the flow. Wondering

XQ. free raised the cash at guidance You flow

think wind So the I coming in up prior million, and you $XXX think about guidance. I below

it guided XQ? think things for back I of was were year, to year. to XQ between and going could bridge see thought where then this to year? in be that you what you how you're shortfall what up million, this XQ, you So make expecting can do you that next you much And happened of but us kind just $XXX

all just if great. would us XQ could that next year, So through you the be way help from

Carl Anderson

working free just Vincent. was cash this for really perspective. for think us, flow Yes, Yes. I capital from a timing

you if than what $XX a and as a this million of ago. on at -- of of higher is capital -- We year-over-year look a what kind year we if working comparison -- of year kind had about So well. capital happened type of kind kind did we working this

just really and And so collections guide, of some relative the the to timing relates receivables of as that. the it to it's

account as X payables, look if probably I X the at days Our quarter. my in well DPOs, we're to down

free the as do of the We flow on, point. as expect at we the itself starting think $XXX million be we XXXX. with look just a throughout conditions. But lot So cash into a market that should will would that obviously, I the back and kind definitely go and of did I we would come as business, forward go of reverse drive year, depending that hopefully floor up

Vincent Andrews

as a cited performance or that had those the on last you've been follow-up, better been trend than notable in of base X Have two? on XX vehicle, think wins industry in Or And they light the contracts? the Okay. you I between fixed index-based are quarters. no wins contracts

Carl Anderson

wins on far say, It's of on those a both, I as that had as to would date. type combination of we've

about think very, where a us, still strong the index-based, I are think kind are really Vincent. as some very on was But point upside and do jurisdiction go Latin significant some on the end we pretty it Obviously, America customer a So we that's we as for it forward. and that, have not. quarter, depends of

this total be beginning to in, XXXX. increase in and the wins did wins were additional coming that we will that So come

million So seeing number. $XX we're that kind $XX million $XX we think of to a gave I originally, now million

that here be rolling the out will next over So XX business months.

we're market. excited So very seeing the about Brazil just what specifically we're in

Chrishan Anthon Villavarayan

that, of jurisdictions. Just add terms to Vincent, maybe only in

of XX%, we mobility regions. depends the it on XX% As RMI you in moved indexing our of just know, and our about total from of over north

-- so customers you or indexing example, volatility, if much in having pace or because are used we faster much America other at RMI -- avoid there's like we North conversations to stay we because For LatAm, were Europe. regions something the having a than in

Operator

John next comes Roberts Our from Mizuho. question with

John Ezekiel Roberts

in you'll target? A nice quarter targets Do a once the on providing you be you've Plan Congrats new guidance. all XXXX hit multiyear of think

Chrishan Anthon Villavarayan

we're improvement Absolutely in the if be really 'XX. from help My we perspective up this at our macro, last macros we of accelerate wasn't look and it's FX. our that where -- something year, [ just of down of the be A if you really look sales, can the $XXX And it would Page XX. but on slight with you is bit little more look in through May the Plan million you John Mike all and ton (sic) we are ], if a at against of if this finishing industrial, performance forecasting at of to even just for a released sales with

year, you this date this it. do with company can I of by end my release in our plan, certainly so with is next of go this by but great hope year, that -- the show can we've And do maybe the had believe the the we future. there's I'm company. of to with that we and And next beginning what guys with where upside performance absolutely else we thrilled that we

John Ezekiel Roberts

thinking and how quarter EBITDA. both apologize but FX are March this, sales about I the missed 'XX, And full for you I both if and

Carl Anderson

Yes. Yes.

$XX on headwinds basis. we're to FX as about million think, think year-over-year I between million somewhere full we John, of planning year, $XXX a

call $X close quarter to were we year to the actually, of of And million, is out we year-over-year to in of kind you headwinds kind million likely October, did that we In probably -- that $X impact quarter. our comparison. for headwind that, $XX another quarter, go X% a $XX when first the close FX on year, around, and on back X.X% in that it's the that of guide have had QX. QX to to we're basis, really think similar range, last for pretty most about million even say, first So EBITDA relative FX which maybe probably the us guide just a you in if into the put on from seeing move the if EBITDA fourth against was also million

Operator

next Goldman with go Sachs. Fischer Duffy We'll to

Patrick Fischer

and that? average on the like, average through then economics then a what over Or Refinish, win X,XXX Help with look do a roll in Like be would into Do us Question, those had just the couple when year you a last you it and on below you numbers and sales about we of like come what let's do guys wins the margins model? say, those initially? in how grow take talk the years?

Chrishan Anthon Villavarayan

But the take break to the in So can level overall, accretive if year-over-year, be it at don't I see detail. in we you say is the coming would of performance bit out margins can out Refinish see the one it's mean, business. -- that or of would you what is a pricing, to that even you thing as I for business

of think I you average this per we to way that. shop best the way have. But that what losses you also don't we to provide one break that's is right? at in includes a or -- look -- is out thing other for this inclusive So for sales Duffy. characterize the sense. So is an net this another provide But number, we

at always look sales that's just number, this coming us into at look for incremental you time portfolio. as every So the it

a And that for and so on coming pricing business, can for you quickly that you do year-over-year can you business. the to see overall in the the sense in you business at as of slightly average we or it's and get accretive improvement margin that know take the what the

Carl Anderson

look Obviously, of component is just for during total go at with the there with XXX new that, expansion year wins year, when you was which on, we coming with industrial, part margin consistent you that Duffy, larger about was market. the even was Yes. the we that 'XX, how think Refinish basis see if to could still these all Coatings, but of being expansion Performance And in points. the

Patrick Fischer

inclusive already Epoxy getting are of that materials inclusive Europe antidumping. number kind Canada on incremental hit not the the are And for gave that Mexico of or roughly, out these tariffs about into being on that the has TiOX the it's raw of in anti-dumping talked just on you is have if that some that $XX of And that big kind China, the like things tariffs, been just that or then those, of is occurred? the million how

Carl Anderson

Yes.

did attempting incorporate Duffy, were what preparing well we fluid think the million saw from reprieve So as XX-day The there's with situation. I yesterday the a that. we Obviously, looked on was obviously, as really Canada in what to China both Mexico yesterday. in XX% we as at, we and $XX

our But So think relates other Canada outlook already a it's now, of it than to we as from $XX as it bit at probably about of off kind fully into that's and some little less loaded Mexico. just based what this million we're TiOX, seeing anti-dumping point. those

we I we're that's think through alternative around some initiatives the teams managing that about executing. job a sources, as that have think whether productivity good done on other whether in that's just

Chrishan Anthon Villavarayan

Just one last Duffy. thing you, for

On about year full a couple -- for I mean, week. It's a obviously in the the million. known we found $XX Saturday, this view of coming tariffs the tariffs on last or obviously, it's like out here. were is months and as team. we've not

One of on of having -- in onshoring in making some or strategic States. our we have continent inventories working and are is the at the sure the also looking suppliers things that United

there's believe end that we towards that number do our from on of mitigation just weekend, so we activities that. thought And drive top so the that's what can our but certainly we certainly, based

Operator

And we'll Ghansham Panjabi next go to with Baird.

Ghansham Panjabi

called then 'XX out of a summarize at you 'XX sort price specifics of of a Axalta. excluding million base for lot obviously, progress terms your some look and then savings million $XX and cost million But plus you of bit Can impact. what know are items? just or to volume tariff $XX the basis, minus. bridge a CoverFlexx. core on you you embedding I just let's Chris, for in year. initiatives second the $XX in of to of of, versus EBITDA say, XXXX my self-improvement Carl, can improvement terms a share on forward Maybe in last question, should we what And

Chrishan Anthon Villavarayan

So I'm Ghansham, and for Happy going to New the Year. question, start. Thanks

to that 'XX, of accomplished and the self-help We what our if initiatives, full had million of $XX saw we we look had initiative, reduce how things announced is the SG&A. X up or overall year. a plan in X% broke into transformation if had it So the quarter, of one million. X the first $XX target I our our about a last for at under salaried to workforce I of or for the we around you We XXX last folks it as year with think

be and schedule in this we close, that might call on about hit or place, still for our target Our of of let's but to we conceptually X $XX is upside, North with is that inclusive $XX the, in Europe America put that are million there expectation it, bit little and to million. a the we negotiations year plants had

here. was are very volumes this And what chain. the in still with opportunity, and other Overall, terms strong dynamics moving, the this about we're we million, that current things again, of the certainly we going over we other that's a and to see plan, had something drive $XX that to continue terms X-year this remains initiatives, In across of certainly can something drive. and supply as to very, the one where are continue

is think I if in to cash impact, And that QX, free one -- really about doubled terms is our actually doing to we're the elements within start Now capital question next from our noticed, investing is you our flow or productivity capital in plants. in the plants productivity. And question, the to working of what QX. one our impact driving

of certainly sustaining needed but it into not into investments fruit half capital half that towards of levels of to did quickly back I we spot year going a quarter -- that in is productivity this that my needed be -- to COVID, 'XX lot But investment 'XX. going will in was would the not a another a initiatives. lot through going of half make. We the driven in certainly putting. we was that's of come of a would to say, of because or investments -- is because there that that I call Now it about, expectation it's come we're different we're And

for the left 'XX. are look 'XX us -- will the are as markets heading those the in what's certainly elements front right self-help I for are keep So that I on the still believe path that to where going

Carl Anderson

on it's looking at and year-over-year, relatively the the way that straightforward it. EBITDA just just simple we're Ghansham, bridge

that million XX% on will $XX of million, being I incremental the higher guide, the so the to $XXX call end would say kind else which so So convert or to at revenue, of to of us that to get low you XX%, of the you $XX million equal. expect kind midpoint, everything at at should

transformation that to labor the will to we are As believe expecting inflation with the million, somewhat offset relates $XX the million this we well initiatives of from potential as that it $XX tariffs. be year impact as

to get where I a are bit opportunity opportunity could think would the that to a now, there environment there's kind right we get the of end If of and above variable us flattish basis. higher the of raw would range. COG further help net or again, actually beyond be on there material a be, assuming that, to point little upper

And as Chris said, it's productivity.

well. as more on if we're could think tailwind execution some the items bit I that the a productivity, again, provide of successful little

Operator

Aleksey from Markets. take Yefremov Capital We'll question KeyBanc from our next

Aleksey Yefremov

mainstream I versus wanted evolving? on additional and back coming M&A to market is market use premium come to you ask Any refinish strategy. to this your mainstream you enhance this market the there quarters. maybe update in about strategy how Could

Chrishan Anthon Villavarayan

Yes.

wins, And us given And side. into Aleksey. thanks. for these very a you an New the opportunity on really the have look if you premium the again, entry thanks body lot and has So question, focused the CoverFlexx segment, been terms The to with mainstream in too. Happy shop Year very, at just the of premium economy. of

well a and weaker the rates with deal has in everything said, lot it's it. on helping adjacencies, putties of whether consumers very with bring else where versus that whether strengthen all it's it's essentially line buying Axalta the established we that how the it's of case would our insurance I that pocketing where working, it's everything and or would can market. parties provides more is terms market say out investing But third obviously we fact that here, say that's tapes or claim strong getting from are that been that really played in that So us I really their we're dynamics slightly fixed. whether we fillers, based largely consumer in drive cars is the pressures, in well the business is the and insurance

but that to other we So believe, Asia, Aleksey, next opportunities there opportunities are obviously the more here that started regions, do going think there X here with and do about that right? and far in in believe adjacencies I these America, the quarters. is we're are North have I things more be we here, Europe especially focused as and

Aleksey Yefremov

the Great. million $XXX And Can maybe any details on You FX? follow-up already revenue. on provide price? to the on gave answer you volume of Carl's versus us

Carl Anderson

expect I do of it kind as at we volumes look new percent at in pricing I in wins. we in be up for kind as the beginning think look down executing offsets business some of total, X% X% think full little we to be the to going Yes. March. in Refinish price-mix said expecting, mean positive, year. remarks, some to as about a being that are team our prepared I I probably We bit If actions type with is it

on I in we're think to that's kind XX% range. And to I total. I just at conversion it about if So why incremental managing the the look that that XX% -- of think you into revenue bridge, mean, obviously tend

Operator

with go Harrison next Seaport Mike to Research We'll Partners.

Michael Harrison

in, Vehicle positioned consolidated. over about It pretty an within than different are could your threat with. look are just XXX as you're thinking I a on view that be with guys as time more bit a guys you or sounds what little there's at you nice we Do about customers guys a you Light talk market. little Chinese car hoping could longer-term Maybe you how Vehicle Chris, quarter. there, brands China But Congrats -- this in position the bit them of seeing if on market. lot more a a the opportunity. like Light dig that happy was the you're

Chrishan Anthon Villavarayan

of it -- marketplace. a for and which I'll why enables I a maybe the the also it parts in Mike. is give Thanks view move bit up which market will we break believe dynamics customer question, because growth of little dynamics, Maybe Okay. you X this into then strongly first into and

the customer ICE What get some from X the folks largest us, So enabled we factors. with a us as of on in think, early EV in was what the that partnered space well. are and I are especially dynamics, players, side China the to in really, differentiated here

just early as out with or that enabled we opposed were local we starting we started very, outside. on us first The to that very companies focused was -- were this partnership and build worked entrenched many off players to one years. -- the from And market over the

in The plans. second be one to it us their and embedded enabled

that been just that for So amazing plans a has around boundaries, job and boundaries. folks our provide we've done of customers' breaks an their second element and teams building an the time theirs lot timely quality, the in of job color the something relationships our just and just to is developing and in the demand of that's between amazing over really colors, it has The done there. always China the work service, just relationship. delivery within response And the breaking

we the capacity expanded had the and as we they And element We were enabled that grow. of these believe, many a as plant I X, all to work last in and plant. through capacity, of put before new is, this built We others growing. a really us

is with consolidation, there. expectation a any lot large we the point, will the there of have if a the So players good and consolidation, have is that we large lead that players the your to strength place my

vehicles played that specific it's coming the a of of new growth been Obviously, market with and just just part their to the specific really on this but that and demand, Southeast has the have Asia. especially side, is in capability the helped, not a think is the stimulus electronics the The seeing demand China second part certainly interaction the only EV a vehicles dynamics. but I China out it part of story. The we're

mean, Lanka because New said, pushing demand standpoint for I I China again, demand for, we is Bangladesh, also refinish supply manufacturing Indonesia, even I from Australia, a think these that and become as the us Zealand, hub Sri and has Malaysia, customers. So

sure that beyond to So drive great X to this in is well China demand And that going the this us is make both think all has forward. on play stimulus And I been is do relationship those will this going in fronts. expectation strong final the industry specific stays of to for 'XX.

Michael Harrison

All right. could how that this commercialization this And talk digital about talk Dürr Maybe next little the accelerate can partnership on agreement a help more then about the of you with I you paints. jet also was hoping product line. bit

Chrishan Anthon Villavarayan

XX% credit us essentially mobility mean in is a I plants to done us to a work them robotics the at car. is on tone something and OE question of just that the proud putting leaders two the of one. for systems and leader. they've the true the are and for together, Thanks coat Great. ability from team over they're the paint coatings the that Sure. and and there X certainly together putting have driving team. they Dürr this. side and Hadi, great This this his and a we who is President

absolutely it's through I to main technology, to bringing believe had put proud on something But line. two that's and what a able And paint a and or toning black great hood, it's and through this of. paint done off-line through black just as process been we've is to you an not and something off do technology putting pulled this the car, whatever essentially able strong process, something process, or off inefficiencies it putting It's a X we're and do mainline specific a if creates cost. imagine creates that it So it the hoods. we're a to process the companies paint And normal goes in a is that coat together. roof change or a of write want terms logo you that it

negligible. from standpoint, here a this the is additional is from feature The sustainability coming overspray

and be that the So future. terms overspray reducing of drive in for will paint that well is the OEs I great in amount we think win something as a

Operator

JPMorgan. We'll next go Jeff with Zekauskas to

Jeffrey Zekauskas

flow million order cash your next $XXX for to In operations don't has year, or questions. I know, to rise $XXX your Two target million. free cash from flow by, hit

it So do a piece that principal increasing accounts I'm is you one sorry, secondly. way go I of And increase? big ahead. would that Is take payable. that

Carl Anderson

to I question, just working first I specifically Yes, Yes, couple different answer Jeff. of a there's think think things. within capital, maybe the it's

reference, did more one I kind the a they I lot lower as our fourth did of, quarter, in would DPOs is abnormally. say, dip think

normalize that So would that. would we -- probably

X, call it, that's, X So days.

a So of that's go as managing about receivables, there be continues account think forward. for be to some think we of kind continue story. inventory that And in opportunities definitely piece to again, on course, be as us. to further then we going And the of will I focus

I a very did we think consistent need the to year, I think about we good the as but 'XX. see job in performance teams think a late

Jeffrey Zekauskas

affect And that there car really price that do And of then how a do car the in Chris, tariffs if production? were turned made and out it do the you Canada it you think what for would XX% would on to Mexico, U.S. think

Chrishan Anthon Villavarayan

look Axalta, were in in from think -- certainly since -- we maybe perspective very, first, it first, So kind at terms of the weekend, bring we and I'll much about terms I If then at looking our I of maybe in. very this built focused cars if And revenue. X% that number reality, of our think X% of I how in about Canada, an affect would on of this Mexico would impact in about and to us. the of are have and

per of terms about per car. would in a Now car, have the impact $X,XXX this impact

said, is months. However, track We've something about couple not tariffs as of the of for a this I new. known

part with OEs we've Mobility as to moving associated look strategy working a at in the -- then offset our to certainly are plans you that -- least the brought about because that the of what looking the we've then U.S. specifics OEs been what's and at certainly of can teams think been back. an look at have they making started also have ones with shipped to this. actually to So components there built And when Mexico lot do assembly are overall built production,

on we -- is over And to But our this. say, offset. we impact on X,XXX, the I be to with that based is So will expectation focused and significantly have find would we but about absolutely time customers we're that over overall, time, have measures are the around the is the that. a elements sure car OEs my what of there driving make them help

Operator

Byrne last of Bank comes from our And question America. with Steve

Rock Hoffman Blasko

Rock is on Hoffman for Byrne. This Steve

Just this Refinish market Mix? wins, what Irus potential the facilities? shop And technology adopting for of fraction beyond within into your net view drilling the are body has high-end those expanded X,XXX of premium

Chrishan Anthon Villavarayan

are just still very Irus might Europe. X,XXX, using have we're we're is they the it of of launching next Irus in We're actually doubling There of the our high-end been long with time, And sure is customers would premium probably have those starting that with the without this Mix. premium that No. Europe. a installations. on most first. focused the in the access X,XXX chance and year, to say We're the a those I a the making those, for lot good Again, but customers facilities. equipment with of number starting time that us have some at that Mix the

to to this been level. and clearly optimize team we To this Axalta. think to common a period at all excited have want say made have years did at great improvement minute I'm that's really happening really I shows we're company since we worked The I perform and X It's close, closely I've about take Marco, incredible then, A together over and on it. this joined towards what's goal areas a here So a that something. Plan of higher that since

you my sales EBITDA without from flow X%, everybody, company working EPS increased expectation thankful and more with to improved This single been you employee and And every by we we're am years, Happy by dedication It's New have not the XXXX. XXX%, Year, in basis show amazing by in to X margins going XXX by leverage exceeded ride, would to it's year. what you. be way. this for here, cash and an I the absolutely I forward look can't pride points, than XX%, to Thank of that. X.Xx. and I do possible expanded wait X.Xx every single free and In

Operator

your does participation. This for conclude you today's program. Thank

any at time. may disconnect You

Axalta Coating Systems (AXTA) 4 Feb 252024 Q4 Earnings call transcript