Axalta Coating Systems (AXTA) 3 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Axalta's First Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's call is being recorded and a replay will be available through May 10. Those listening to 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 Chris Evans. sir. ahead, go Please

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

and Joining Lannon, and CFO. Villavarayan, Sean President; me Chris today are CEO

presentation section be Yesterday afternoon, of at which we'll slide our during quarterly commentary this to and posted financial website we with results the referencing call. released a our along Investor Relations axalta.com,

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

we've In non-GAAP financial to comparable remarks the contains various most the measures. Our non-GAAP GAAP presentation, reconciliations presentation also directly financial the the appendix and measures to included measures. of slide slide financial these

financial regarding non-GAAP with statements and the refer please For additional our information SEC. to forward-looking measures, filings

I the to call Chris. will over turn now

Thank Chris. you,

start driving first we all highlights proud to global markets and improving we're to like accelerating everyone commendable of and across the the first most efforts quarter XXXX execution our pricing, outpacing our operations. in serve, on our of teams, discussing our margin welcome call, earnings we'll Slide I'd X. very growth by key quarter incremental I'm recovery performance. Through

of which performance with the I $X.XX, EBIT this guidance remain team's was $XXX encouraged of top Our quarter. range. with exceeded our million, diluted adjusted first EPS Overall, adjusted quarter end the of both

quarter point and cost rebound pleased we to consecutive improvement post-COVID-XX year-over-year an is year-over-year margin a historically To in basis XXX increase high growth inflation in from that Axalta's begin XX% EBIT second adjusted to adjusted of This as EBIT and margins. end, impressive impacts. I'm report

adjusted Margin Mobility basis biggest was mix which up margins. This X% over two mix driven quarter EBIT new actions. price more largely growth in a and carryover price improvement increase the a had growth, profitability our with consecutive improvement of is ninth year-over-year XXX from years. growth over Coatings than in point XX% year-over-year is by

another was along year-over-year driven in improving Volume macro X% double-digit Refinish. a Vehicle volume from and growth was spot a by in Light declines unfavorable growth industrial with in bright the modest the from X% quarter, gain headwind impact conflict. in Vehicle, Commercial despite Volume led and Russia-Ukraine nearly

are most believe of grow end We the our macroeconomic markets that in uniquely current positioned to environment.

believe have expect We seeing portfolio. capabilities upside markets still two the in refinish investments market market activity. truck continue the to certain technical us increase customer production and growth people, to normalization as in we exists last an the auto following strategic made in body we're Today, in shop outpace mobility this have quarters. end-market I in and demonstrated as partnerships. and in from benefits well We considerable the

Edison talent announced innovative achievement. outstanding we in this recognition attribute Axalta recipient consecutive leading We February, XXXX solutions. be this was in our to making leadership For this that industry that fifth with the three year example, technical to honored prestigious the is and Awards, of our base

to multi-shop productivity of is is and capabilities are labor a share uniquely industry, require Our collision who Refinish which I business needs offer. operators large constraint gaining aligned positioned repair believe with the benefits, Axalta incremental

opportunities solution in breadth and our deepened most market industrial, many share challenges, have we provide diverse technical of automakers EV the Vehicle, for our a solve capabilities growth creating platforms. relationships deeply Light with offerings us. total to ICE attractive and the some of fastest-growing And In of

since focus Axalta main drive Please joining turn execution CEO the X. has as improved company. to been Slide across My to

in largest operations We cost margin the areas shareholders positive It recovery specifically, initiatives productivity recovery, prioritizing price accelerate intent with currently and for and underway. is better the our procurement impact to are cash conversion.

you specifics. me Let some give

is our steady industrial cost where and totaled actions cumulatively to in and million opportunity pricing than through carryover since I'm variable expand recovery the will there Light First, margin businesses, XXXX. that significant confident $XXX more has Vehicle year. targeted inflation drive contributions margin

billion cost in underway. D&A another in we costs. On variable net basis, of has roughly productivity, activity a lot an of and $X.X fixed have On billion annual Axalta costs, $X.X

earnings. a Given the yield large scale drop-through small to to improvements nice spending, of even we anticipate

to dynamics operations. is programs focused structurally market on Our independent reduce through and productivity of costs, goal procurement

have results. we are positive tests most our seeing of date, launched and for already market spend To variable

removing freight around our reduced addition, organization best marketplace. bottlenecks are cases, supply in formulas flexibility. production creating We're working in suppliers competitive technology supply We're dependable and rates new practices qualifying a reinstituting to promote chains our and to increased suppliers product spec planning and In and some more process. reformulate new with

drive to freight labor volume improvements have in production for persistent years. which and issues and expect We the low productivity, been us in recent behaviors, expedited inefficient

We're historically for in a supports order QX, Despite levels to our our doubling reduced volume This period. an down inventory inventory X% XXXX. flow and start high on inventory we the management seasonal unwind in the growth our to in good drive management better in inventory to year with is promising early decline cash atypical levels, goal results. leading to

fixed in and included guidance. improve see as our in expedite as modest drive significant our costs, expertise enlisted To free to which a midyear we have the reduce increase have variable support expense we of external well performance, to that opportunity flow. will cash I

half and prepared will realized of may for year. mindful to actions that of this company, expect every environment, play to outcome proactive start we're be investments Like in these out. be whatever uncertain on taking the the economic returns We back we're

by X% results portfolio. the in and color year-over-year, improved gains I have now on driven will recovery X, coatings to share first you by Globally, back the performance. market Moving volume within on volumes give quarter Slide mobility more

economic softened headwind larger forecast, to we climate commercial the for consistent. business forecasted. and end our our the industrial markets a than remains largely across remains creating had environment difficult this residential quarter U.S. commercial While construction

Elsewhere, given body a as activity and we environment heavy- markets of that robust medium-duty largely auto the for strengthening earlier. favorable in key trucks refinish production, the in and shop highlighted see recovery I've markets

improved shortages Moving QX now I In off expectations. start XX% cover Parts is of better return activity customer in Market XXXX. pockets ahead to inflation. ended will offset another largely the of and consistent to results our new we premium while continue region. with work constrain XXXX dynamics Refinish the we Slide than X, to labor actions contributions are was strong business. with Refinish from Price/mix to mix incremental the every year-over-year executed as to by were in prior pricing quarter, period. up marginally

acquired growth customers. aerosols. expansion are adjacent the Volumes new company-owned added that of our targets quarter, Accessory U-POL core of positions. leadership our markets growing which outside and XXXX and economy growth of new for stock for Refinish Refinish while XXX we target mainstream our is points also continued were MSO In premium favorable, fillers our initiatives, like execution we XXX locations driven in brands products. stores by and the QX, budget sales shops body in in body driving exceeded in

to new U-POL attractive and Exciting that DIY March the the also automotive the to the retail AutoZone market. We us brings the was and business. significant is consumer with XXXX channel to towards a protective team us locations. XXXX the ahead. solutions position ability U.S. horizons coatings existing see Axalta on believe record RAPTOR partnerships still XX,XXX market-leading pivot It performance. drive we aerosol highly fast-growing lies this allowed team, across to grow puts O'Reilly, believe month Refinish opportunity U-POL multiple pace for has Refinish execute for nearly with aerosols our to volumes more in really record its to expand our growth than upon triple and XXXX. It exciting and versus in retail

a Constant the Let's to the offset executed volume our very industrial X offset performance. cost increased in Price/mix at volume price/mix more net to management, than the X% of modestly decline sequentially which well XX% go decline. growth on sales team The as recovery. of margin quarter to team strong improved as currency helped prioritized year-over-year X%. Slide industrial look also

but in volumes starts our activity In EMEA, over past quarters slowed, business. the has construction feeling few somewhat Products destocking or now are expect the American challenged. we that we customer in we Building sentiment, see believe housing we remain will North weak shift Until from impact a building

areas on kitchen Awards with focused new both winning attractive rewarded. that in is our coatings business our In self-priming AbsideXXXX technology Edison we earlier. recognized recently and were leadership where the mentioned cabinet I are meantime,

production than better but improved the Vehicle, and to Coatings Mobility improvement continue volume volume project XXXX exceeded good fixed all on as year. performance pricing, Coatings forecasts This modestly expected. now is a slightly the nearly were margin year-to-date. to Industry over incremental more driving XX cost Mobility our growth X% representing Moving I and expectations global million We're of Light rest X. margins growth bills than in forecasters business. through trajectory, steadily as show have expect we on XXXX. improved Slide

believe results consistent. business. Vehicle, been the robust is We Commercial outlook there for have a In multiyear

some with Elsewhere, softness X remain XXXX OEM drive backlogs there help better Class America. market. to XXXX. another North pent-up strong in in in rail backlogs expectations mixed For and balanced RV and expect medium-duty I especially trends by demand elevated, year the are

that, turn for With the our review I'll financial of performance. to Sean call a over

and Chris, you, good morning. Thank

XX%, in volume year four $XXX quarter $XXX year-over-year. exceeded and Constant targets. Adjusted increased EBIT sales to from an strong improved markets. the million driven Net guidance in in currency three prior our X% of net the million largely by of billion, sales our pricing and increase end growth were $X.X

EBIT margin better our and volume driven the in favorable meaningfully this to was Both and Performance higher-than-expected in Coatings in quarter of The outperformance segments was The year-over-year performance Coatings. quarter. by largest growth Mobility driver realization, adjusted earnings growth price the contributed price/cost. improvement largely

Our was X% year-over-year in than more growth X%. variable offset inflation, which cost roughly price-mix

positive this corner we basis XXXX. EBIT This is from an have turned journey benchmark a recovery nice price hit early interim a important in to quarter cumulative We normalized as on is which cost, our the milestone margins. now on

combined Chris markets, However, focused as meaningful our we gap across $XXX two earlier, end still a million on addressing. of detailed which we remain have

but year-over-year, costs expectations up sequentially. from were Variable material is in historic Raw cost levels. our moderating with line were inflation

in many procurement markets Softness supply/demand more a is commodity adjacent across creating inputs balances and favorable environment. loosening

costs. cost plant from fixed contributions price spending higher and prior year volume by lower meant to driven partly offset by achievement our rates cost inflation, external were productivity production EBIT growth and temporary higher Operating accelerate expenses programs of labor were Positive the goals. versus

included in the $X we can in roughly pretax generate to leverage non-core which returns. associated Lastly, charge strategic prioritize a we adjusted a coatings, where our million focus not performance our in business from strengths the took mobility our meant quarter, exit with and decision operating was within This attractive metrics. anticipated markets

last X% Turning or EBIT adjusted volumes was both XX. the trajectory, million year on growth stable net Coatings year-over-year end ex-FX, Refinish QX driven driven in Coatings same in Refinish. in to EBIT Performance it price/mix sales another record and the million favorable Performance growth believe Slide by $XX QX increased Refinish and year. stronger-than-anticipated was industrial in $XXX versus a XXXX. a good double-digit markets year-over-year X% we contribution starting period earnings. and will Adjusted deliver performance by is

adjusted offset the weakening pricing points the quarter. to XX.X% margin inflationary managing reverse pressures margins actions in construction we are actively team XXX Segment and Industrial, driving is to targeted improved by markets. basis to cost help EBIT In

XX. Moving volumes. better by increased sales Coatings quarter, the XX% to net by led Mobility currency first constant XX% Slide in

growth quarter. market above-market and deliver performance above certain enabled customers this wins with customer again us New to

prior Price-mix adjusted from by targeted to in taken recovery. largest of was and increased million EBIT inclusive price/cost year and driver volume improved Growth to X%, being a by margin $X $XX price driven year-over-year net favorable improvement. the in period. Segment benefit the QX considerably the actions new accelerate million of

levels. the to in inflation Segment are adjusted points the now mobility the X.X% improved global for EBIT significant rates team, margins more auto cost XXX basis most production normal by especially quarter. approaching Offsetting that represents opportunity still variable

We to a balance ended Slide XX. turning debt $XXX total million. summary sheet over quarter liquidity, Now Axalta's and billion and liquidity with in balance including our slightly profile of very healthy. cash liquidity the $X on remained

quarter, net Our the from ratio of at reflecting end the was X.Xx XX. improvement an leverage December at X.Xx

should to expect basis. drive momentum We our the and strong performance Cash that the balance throughout operating gross of year. our on in flow aid should deleveraging both improvement deleveraging also sequential further net a sheet begin

expect and decisions of a X.Xx and investments. target ratio long-term the target to net allocation by continue absent between end meaningful will capital year-end, be of outside we high any Xx to We organic leverage close the

confidence first performance we higher in to us work quarterly the principal as down $XX impact $XX to our gave million strong on quarter, of of the loan principal Our and we another interest continue pay million during the to rates. April term in offset paid

to the with as Gross and free M&A potential continue debt flow will with in our be for themselves. a opportunities reduction XXXX balanced attractive will they be bolt-on cash present for priority

XX, Slide guidance On commentary. will we framework review our and

Performance stronger in pressures For Coatings an macro This pricing comparisons but material to framework coatings, and expect in overall by approximate modest XX% mobility offset QX, both partly continued and between assumes given and labor sales year-over-year, Industrial. in costs, growth of by we strong year prior X% volume headwind. Refinish X% offset FX in led tough segments inclusive growth softness raw

expect million EBITDA or to million $XXX EBIT $XXX adjusted generate in quarter. We adjusted to $XXX to in the million second approximately $XXX million of

profitability expect pricing, strong typical expenses. by in and improve, partly we seasonal volume, to operating increases led raw continue Sequentially, material offset the in modest to by step-up deflation

the anticipate share, $X.XX adjusted range $X.XX to for we of quarter. a second For per earnings and

our framework quarter that with assisting spending temporary Chris mentioned costs the approximately implementation SAP guidance of million addition with second includes consultants earlier. that certain $XX third-party Note for S/XHANA in our projects productivity to ERP associated

elevated operations during transition the ensure customers. have We ERP the there maintenance our for planned support to no business impact was to or to

stable lower costs which to year-over-year, from single-digit On of as low impact quarter. two second hyperinflation are years expecting the in we size a to [ROCE], shift we

currently CapEx. historically we move of sales source with in This, XXXX, focused inventory approximately of be improving As million for be high on to represents which meaningful along will is into of $XXX $XXX year further flow cash a potential of balances. We improvement free cash capital profitability the as we percentage XXXX. of working release through million, inclusive the assume a

I would back remarks. like Chris to closing to over for hand the call

Sean. Thanks,

technology this conclude actions, well we growth put, will channels efforts in Axalta want Combined thank Before is getting their many our industry. I first the productivity various the excellent leadership, evident market Simply we the remarks, financial formula future. our we strong that have yield prepared has proposition. quarter. in value in and the strong the initiatives with and play, to performance. our an best for We're I which team talent gains into believe the have for traction

With lines to open that, questions. we're answer any pleased please Operator, the for Q&A.

Christopher [Operator question. Instructions] with Our Please Parkinson your first Mizuho. with question comes from proceed

much. to on the your just specifically so so over you're little just you more the don't you you intermediate second cadence touch term? much. I it's want into the if discuss of dig we how to where Thank longer-term back but your margin health know Great. get recovery and thoughts the the in Vehicle. of volume given within long the terms Can first a half Light Thank mobility process of Sean's. half well Could of bit we question, Chris, as mobility, growth any thinking as in favorite essentially it's on about imagine I to

Absolutely, Chris. Good morning.

start to for and love anything missed. I'd I'll to a I've Sean give So cover that chance

we also continued So if first, pricing you have had carryover you can mobility we our look great we see pricing, of on QX, a as majority into the the a through but And with QX. had incremental space. cadence,

of in some get we headwinds. Obviously, a that that are have some continue the seeing of modest we material to to? driving And end the costs, through as I this want the see raw yes, baskets we year. pricing are do improvements the will but of of factors back Where the cadence is going the lot

know, headwinds we in labor. you have As

have We in headwinds energy.

certain specialty in headwinds raws. have We TiOX

are So certainly focused something that we on.

cost And we back a whether about industrial. price going across had it again $XXX of markets, mobility be these to gap QX, or million two of

drive certainly more So back certainly, back level the year. intend half the for the of continue of of to the us customers, to we our to to service pricing end through provide

So those cadence the I've to is continue addressed. areas we that's will specific that the And that focus. pricing

more Sean to over anything it for turn I'll specific. Now

really fourth pricing. at $XX on declare about mean, I We Yes. By means stage. million $X this EBIT progress. the in quarter, million was which of did we're Chris, we victory the of inclusive an with no in happy catch-up

So rest move we the margin for expect do year, we pretty margin that as outperform you and as to back we the year. as increases market, recovery far the given the actually impressive us from rebound expect out, to through absolute market we'll outperforming to the it's first as sequentially, volume EBIT continue the as of growth and see well quarter, quarter to just fourth the continue

helpful. best amongst you questions been of But well. consistently to versus market volume like top should customers Refinish. again, It your the cadence longer-term a a some quick would XXXX about Can helpful. to as for then any been That's getting Obviously, the think be steadily in of discussing there of levels. conversion you've slightly thought back markets seems performance lot consolidation U.S. Once much. we let's Thank the advantageous, that your are There's the just MSOs. just And optionality. but say, demand, 'XX? of progression of pent-up you follow-up, Great. the for so lot some debatable. slowly also a some XX as how that And speak within

growth through quality QX if really did great -- Again, side. believe that's have the some job. stable opportunity the there's do And through sessions I from Chris. look of driving rest the software But year, and you in a look past. the seen team Absolutely, what's here great as we business even QX we the business Sure. on our to more

top grew XXX talked distribution that the fact about they of on points. body shops If the think QX, XXX you we about

fillers the -- opportunity And gives the we that aerosol. it's to put with U-POL able and discussed with the pivoting end. the in is proof and which I my really AutoZone the see back us XX,XXX also been into the what But we entry to in acquisition, comments, an think into growing the through incremental business retail beyond to opportunity towards is the DIY additional body see that, space get have when us with opportunity adjacencies O'Reilly's I've what and really on really and shelves

over more quarters. So talking I to X the forward that to next look about you

to add to still North although market. X% Europe opposite continue other outperform would X%. only about down America the The sort and X% XXXX, recovery. we that, X% market just be around is down Chris, is to to still of

So XXXX we growth to continue when the nice to upside be to market going We're algorithm. expect levels, not should it's you recovery. exactly but think that back get about calling some as

Our comes question. Partners. with Kevin Research with Vertical from next your Please proceed McCarthy question

rates? Good that Or Yes. you ICE in difference nearly any When it compare rates you electric for those identical the is morning. observed have are collision to categories? two vehicles vehicles, meaningful case collision

Kevin I think it's too the question. - good thanks and for morning,

make I on a that. think to too call it's early

the have the through with are what's body where shops. think seen what coming far, I through volumes so we

bit the players future, space. EV on whether think a And the teams largest new some where well going it's about the as early is have too North in is China make mobility it's of you the America to also side. EV the we've think some I am What in great of with wins, or in technology the had the on how winning call. really been proud I

And I bit early think of in how call. of I a too point, proud at very this to call transition that it market that. is would terms So

Okay.

well what I decision? in impact that to Can may. why you a charge if As from business to a I exit exiting took believe as the mobility. you're and sales as a speak you follow-up,

Absolutely.

and something is we plastics we So appropriately. It's scale XXXX. that had our our business, It that was this not something is and is small were APC components which automotive acquired just not did in this not core. was something And that focused from our on business. perspective,

of In terms or million it's million. sales, between $X $X

really an will us. meaningful that's somebody area for impact do business. growth, that is opportunity So our I else this for but it's it's of drive to not an some focus certainly believe But nothing

- million the to This in not - but add year for about it material from XXXX. $X is was and And Chris' small us. Kevin, not a to high Yes. segment just a clearly just million $X APC within just just sales million point, strategic margin, segment. to $X in And it it a wasn't perspective,

Panjabi Our with next Please question. question comes Ghansham proceed your Baird. from with

a off, kind macroeconomic Hi inventory we broader hold, the guys, with to thinking a guess, assume morning. with the good look How some projection cadence? about on still through take replenishment builds global a of slowdown of XXXX, your XXXX risk have there's I you I'm are nice and nice XXXX. the first estimated chart about improvement thoughts impacting of curious beyond? Slide vehicle will sort you light to I recovery in that as out that but as X,

- just I'll to me jump you again, start view. good morning let So just off you perspective, Sean and in. on short-term can the maybe a to give But give

think I at XX%. a as think looking been I bit approach, conservative our we've about

Our to the XX% in at just coming or forecasters forecast markets, XX% north of being external the heading with XX.X%. is

about do on as - through a a think believe and I your on where to we auto 'XX. question, the side, going the more we're tailwind more of long-term So but bit there's

Ghansham and I the are say would lows. where inventory there's we still I think where channel more at is - through levels are the historic channel. with

So there's out. I more believe do builds this that opportunity an as of

can some about SG&A provide looking some is ensuring remarks, we're investing our talked prepared that at the In - why our in cushion. a we're operations we our and terms cost the recession, of primary of as soft possibility have recession so one in of drivers this in we we

everything back the GM's side, driving of end. also results. the a - for it's seeing well see heavy performing, how soft possibility with all again, the But recession year. auto on is strong from are with OEMs everything can the all, to cushioning And a also you in But we're whether we're

auto by characterized of million month, to $XX we're the add, for years, builds. always year three last bit more goes And for I the XXXX, recession essentially normal given fact global mean, it just million year this It's auto the next industry far be but as forecasters years. bullish pretty will we expecting next builds. to that as a four than the we're XXXX that years. matter just of to to Ghansham, $XX But for in we've a five for the the certainly global gaining are see little going we've been build confidence better good, outlook a pace, recovery And few feel Yes. every

given And on be then material second cetera, for cost perfect. the because for ERP, basically progression quarters margin And your Will the is Okay my quarter. for back implementation we'll two half after the into million the question, just of quarter? spillover year? $XX the second spillover - the that third et yes. saw any one-off cost the quarter there second any phase, I'm there asking into just

implementation. not we're going the to ERP in We're meaningful quarter month. this expecting in spillover actually any live regards third the Yes,

will will be wrapped over cost. as but it the far So carry up it to largely support June, then as

are happy a midpoint. margin the up the perspective, the margin the from at margin over $XX.X XX% back looking range million, and these of adding jumping midpoint million with to from and progression, We really EBITDA we're up at $XX

with So we that seeing. are we're really the happy progression

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

for questions. Yes, good taking morning, my thanks

last year how the does looking over assume terms kind only I a working capital and once, come I guess in much year since public, below Because be back guess went regard with guys release. of that target. your a so to basically, million this in I capital $XXX So you've of yielding from flow, release? free cash working so million you $XXX big that free to expect I would think cash flow maybe

help can to you connect that? on of kind us So dots the

Yes.

sort is year. John, of construct anomalies creeping $XXX So and after to this guidance there's which few of under million, that's, in three our up spending. CapEx a years

year. to we last If you go $XXX million, million jumped to did was back $XX up $XXX it XXXX, million

than catch-up And of year bit expense CapEx bit we implementation, this So out. as a then a which well have call other the as years. interest except higher is S/X little is big a the driving normal

the million $XX to is seeing fairly as We're net capital, will a full percentage of working about going down. contributions perspective. working year, some working to on overall is, capital of expense. going expectation cash accounts But Specific receivable. capital due far to sales which interest see as come incremental we're an minimal outflow growth level partly free from to of be you're for the expecting cash that's flow as And

it. Got

helpful. start. Can China, it the already this no, us opening you to a being to something a locked slow Refinish that's like of to bit, was on later that with the come year? work, would to start on people I think, down, Have up update that's kind Okay like is China off that cetera, going And back business started a et then an more should or give sounds for in it on not as how progressing? see recovery there. you has started, you

start is our of China. QX some small guide. the overall as growth XX% I say looking us again, Yes, we for month, nice to we're our we're remember, a John, It's China, in plan would we're in - seeing revenue. - giving as And what component. first

So something it way. is a something that overall in big but that's doesn't meaningful, business, it our meaning impact

it the Europe. are on focused that markets when to obviously comes are our Refinish I We America North markets largest am - and

well QX. the getting in see the as some incremental are for as performance medium economy the really I the these if we're or markets sales markets are great to QX well you through good jump then as as a saw driving that - on QX, what's and And our adjacencies driving the results, that's in and guide look at also two we QX

comes Our Begleiter question. Bank. question with next Deutsche David proceed Please your from with

begin mentioned quantify you Good you potential opportunity in areas? Chris, to or you. the opportunity in Could about and those two Thank operations. talk morning. the procurement

which Sure. is we jumping for that's the work of off costs. as And just large for backup. left top, for maybe hurts and where S/X one-time But $XX have we the team A amount about great is the for launch Sean talked here to implementation some this million we North I majority quarter that job for never excellent - an us doing month. have it of preparing have because tremendous American business, this a IS the our think

so now. spend team starting most accelerate at primarily out, opportunities where what those But perspective whether of outcome the quarters certainly groups to inventory look quarter but or I'd and a And optimization results. giving having what forward another supply by out and be the the we you from plants, just comes like management. see what to cost is that in our two the I in take those better right procurement, is that's to looking do now? quarter are it are or a So at the next chain And the is from look of

we we're that And qualitatively, are a the spending payback, expecting doing Yes. investment John, just the quarter. in in the quick second so

period. the into back elements August We of expect year. half early some as benefit more we give Chris' time this to get to July, in But the we'll point,

you. or XXX Understood. some And wins, Thank the last shop just did provide win Chris, many last how context even buy on you year? quarter could you

is our what's it to market contribute perspective, year outperformance. last that, was mean and John, continuing I for this to Xx

proceed with next Aleksey Please Yefremov comes Markets. Capital KeyBanc question. question Our with from your

Thanks lot time, of have morning operations one you has expand why just everyone. and history on long stand-alone procurement focus. Could for a for room a of a improvement? productivity been good Chris, and Axalta company

situation. well think Europe followed the more I not Russia specific chain if absolutely. I Axalta, the supply think in to specifically it broader COVID space Ukraine through Sure the as as from but the starting lockdowns that as in disruptions with well as And Aleksey

operational there's element, strain and been system. amount of I stress an in think the an from enormous

operations. absolute we So said quarter as focus ago, the - a what is on

And when it you break and performance can you take that where we drive the down in and organization. really the

As I the my impact. two said buckets most there remarks, that are significant in have prepared

billion. costs Our about variable are $X.X

down drives results. costs here small our meaningful billion. fixed about drop we that are $X.X a do even Anything Our to -

So I'm very focused these very, areas are the two on.

There chain is that's again, as still had thought. through all the issues operational as here, my opportunity of I have strong say upside there would in days, And put, launch. here. than in teams is first but I the operational We well XX going S/X more simply the terms supply originally

end the forward to teams and get really now. that by enablers and the - to doubling focus back effort strong in a you about help from here, teams we in so as we those quarter is to more which I talking get look - putting And down to

Could this, Chris. you how us I you've the announced, other quarters and on those for several more is ramping wins. you are in U.K. also European And about update Thanks past talked the several your contracts MSO wins Refinish think to turning and won how over strategy progressing? wins. And in potentially Refinish growth

Sure.

Let perspective. with me just off start a

in U-POL acquisition the was on as as of Europe well again, So top that.

because in is I Just more stores are this helping growth, quarter retail you top in we the a growth our really in opportunity I from of have to about seeing there's that us bit front. now, drive more do of that, even we in the Europe. Europe talk on fact believe a European do business. more On the But this to terms plan

down opportunity and enormous four and Refinish. breaking just going performance to through I'm seat, business really months through units now time the and does really understanding is obviously, in piece-by-piece have where your value created. spending point, what doing Again, right it Axalta And the three is an

this bit we're grow something also augment we how find at become is that our regions looking this and more business outside really can, being responsive So market, obviously, bit more really opportunities in America. little resilient, a a this strongest little North to

Vincent comes question. proceed Stanley. with next Andrews with your Our Please from question Morgan

morning, Thank good everyone. you, and

Good morning.

but what rank file Chris, obviously, the terms And you'll team, bit in perspective message leadership and your what need restructuring more from what's you've need a to the with and giving already to buying cultural of not internally, you're talked them? you of that drive we sort about been from a that? to the comes just trying all here

you the with the uptake might providing? energy the differently have and been think And But been that that the you're message there? level do you've else what's And organization? pleased have is seeing there anything in you you

have great thank first through my that take and the QX. question, people if you the of equation, lot we a out really has reinforced XXX love customers In are much And Axalta that belief that the can even sense, Vincent. days I to products see Yes, very grow you quarter, we want. right And doing excellent my this has you price our the through for going things. it. continuing

And financially. learn as which is as Axalta very, incredibly about what you long competitive you're very well customer-centric, performing is quickly excellent that and we're

with profitability. started drive the on the whether to ensure that focus focus to is Rakesh if it time prior actually execution we my So here,

Sean QX I deliver. the at organization on And on it's one if focus the execution, short-term the see take certainly as have and great those up them that we if it's through, execution. to strategy, we're and focus to you just out is at price-mix, results look continue when And X% strategy look of to whether short-term metric come certainly, pointed you And focus the they

So, on focus we're the drive going to price.

on going the we And mobility around supply share, most here, cost our are of the operations, us, around our end to helping of questions through then, We're to volume. the three four it's have are increasing chain. whether focus obviously, on markets execution cost. helping. its the and And drive side, whether refinish around And purely tailwinds it's on purchasing that

from the pre-pandemic. across of the back that the saw drive as it's bought operations get And QX up So, well I'm if to certainly you two driving. can being results, on we see focus that's as by markets, Certainly across. the end message we as pricing to team. profitability the you normalized will execution And continue certainly our

we it the should XQ and half we it that sort thinking different incremental? as the of year, be in in obviously, be should margins? scenarios balance should the we in raws step half, back thinking year? more but volume move back about follow-up, how favorable Or become a how the thinking up Is over should through implied we what Sean, what guidance? should as Is about just be about And of the Okay. incremental presumably the as

Yes.

clearly full I is providing So not I things. mean can but here, year signal guidance what we're two

sort expect from in second other perspective. half expecting end margin an continue of be year the the stronger key we overall the year should And market. than point in of is sequentially data You recovery we the through as are move every half EBITDA the to first to

Mike from Leithead with Barclays. with comes question. question next your proceed Please Our

thanks good morning guys. Great,

one with me row Just of in for a ahead on the mobility, of obviously, well volume growth. strong auto a couple quarters

when drill from difference transit platform new shake about again, we out? your build customer the year to help So us is relative specific outside And Is there? rates internally, how trend should broadly mix? the just volumes there wins? that your it to you industry Just into think this however,

Yes.

of is certainly going But that to has I job really more million are terms the start bit Sean can I'm So growth and we year a give back XXXX. margins. done going starting of volume - market. in talked to remarks, of the it's last and through about seeing growth incremental team outpacing color an we've as growth, excellent $XXX And then this, in little on think the volumes prepared driving

P&L seeing already is that down volume you're in And into what dropping our QX.

'XX. continue expect run in target rate the and of So million $XXX we to to growth hit that

the a great has there. job done So, team

wins on are where that... as they growth in North well platforms, We're the but certainly specifically Now some board? as and EV the strong in traditional great Europe China, across platforms. some wins ICE seeing with America also And

Yes.

our of side. add, just have in lot I on a things favor Just the we mobility to mean, going

recovery, some was new that have just market. customers, down and wins outperforming XX% China, key point their is And clearly platforms share of You you you've about and have then X%. our got probably the almost are a actually case in up market we're market

we're some China. a to that, pricing we better the there market just overall on. We're that's of margin have time. of in On outpacing nice part And recovery over of big that so, of that is top - all part the tailwinds yielding that platforms

Great, thank you.

comes Please with question. proceed Duffy with Our next your Fischer question from Goldman Sachs.

Good morning.

question First materials. raw is just around

single-digits to think the the rate capture you if I in that year a made half? was comment expected back But in end that actually the if understand about of the at half. second you I or your didn't exit much

from single-digits expecting We and Yes, will the We're but perspective. expectation give so to quarter. in that second we're half, specific second QX low raws year-over-year the but our sort calling regards not any guidance data QX. actually was of a to moderate, any to didn't continue points is on

dime. eight QX And to QX, Thank Xx $X.XX QX below basically from And averaged years, Okay. the you you sequentially only two you. about QX. to last look take then it when the years, has COVID if you out improvement a over been a

what that this seasonally, has million of historic it even walk kind to to a still from triangulate your changed? So looks through for $XX can adjust Is relative like if because it's you QX QX, step-up QX history. at Or you year? move of seasonality the and versus kind looking you're weak maybe

million. closer And the Duffy, then expense really effective up the up is from from quite compare to gone got rate around expecting year. when run you million in is prior Yes. XX% second this tax XX%. two to $XX frankly, years a happening $XX and quarter anomalies to quarter bit are quite that to We're interest Historically, XX% you taxes jumping. first we've picking

for to you're So apples you're apples. while a not probably there, two call-outs

Okay. Great. guys. you, Thank

Welcome.

Byrne with from Steve with of question. question proceed your America. comes Our next Please Bank

you. It you that get EBIT think five it's a revenue you get years been Thank And EBIT this like to had XX% quarter. mobility? since then, do you can segment margin a you think you in in when your looks margin, mobility Back back you there? posted do a can double-digit had

we margin. certainly can to Well, mobility a that believe get double-digit I

be the be cost will first focused we're the certainly, I focus an And a look get. XXX Steve, that driving go opportunity will even is absolutely we a standpoint, is that that here, my in from team. from days of actions and believe certainly that a pricing If the standpoint, on that, at you

the the that productivity, the to what in real of of here that as initiatives. in about, this question. the algorithm. that well talked stick we as you look as and out timing, if A on happen There procurement just the much as is how have think really on big a opportunities as material focus a be of should with cost lean have be raw get lot I more much and terms pricing will the at how the we deflation mean we In we where the will it's bid, pricing the our will I has part volatility targeted economy figuring side which the have -- whether programs that's of plants. always well of --

get that. So question the timing to our what is, is

when time give better I of you to hope an exact get you this I can't At So give we'll perspective. a point, there.

to And a some drill productivity experience? your outside forth, has and this benchmarking so opportunity is you then, initiative . there Is this meaningful the Is looking what that what and bringing help led Is gives comps. this this analysis? that here? a operations into at this? Chris, and have to you And you conviction

It's a those. of bit all of

going comps It's of my the back from purely view I past. more importantly, something a fact levels. broken experience Axalta. bit pre-pandemic at don't the think that It's I to it's want had that obviously we the be and performance that a there to the just is

as end. have and did. the I are down there we many We requirements back some opportunities challenging supply us here And COVID drive believe that need performance times went doubling that of the the just do through the team chain that incredibly will in efforts an through disruptions that strong

where that's the getting focus that there's a here. So I'm conviction

old to on thing by drive is down are help, welcoming around can quite the doubling the analytics procurement that frankly, The the the the outcomes. and the guy teams on driving welcome value the do realization. here, about one team team. with especially being RFP helping we is, to side, Steve, Anything add, table accelerate all procurement resources

a drive improvement. it's teaming been effort to So here nice

you. Thank

welcome. You're

Arun with next from Capital Markets. your question. Our Please proceed with Viswanathan RBC comes question

you your first -- can of much there your forward? and expect expense refi I going any is off, and maybe guess Great. Thanks for to taking year, kind paydown deleveraging to my down just advantage opportunities targets wanted bring clarify I question. of for take gross how interest debt you this maybe

Yes.

Barn, to capital Xx. don't we're significant in the high to end. remarks, of over we I perspective. do time, So I And my X.X expect a targeting from allocation covered mean we be sort still as at anything

actually as markets, just the We looking market But of as are vast be the expected flow, the expectation as be majority be the year. open right things free down But cash to the by gross refinancing are both majority, closer is will far are actively of we'll X.Xx to at at the to debt. used looking pay we now. the sort not as well spot excess end

next have how to of take volume you're any that optimization on just years. that, much of of that the the does $X.X say, programs of Out add there depend over structurally cost similar programs. -- you side, do out implementing is And are And prior Okay. couple on can billion to that you fixed costs, Axalta of would you these recovers? some think as the back Way volume

But what would here, being not aligns how from sure Axalta from it's I to not heard not way. the very similar. and with I've say also Well, Sean, listening it from I'm

focus I first teams of just the -- starting all, are our out. think

teams exactly 'XX all That really that million is to or you opportunity historic to last on would early that if forward through opportunity, the of to what I is, driving as cost Again, XX% said, years fact but in call, in are is Sean bit this not to -- defining XX existence. side. about in question, being cost think of of $XXX the So variable we the last incremental something say, the the took alluded Axalta little over looking and the a 'XX increase is purchasing that some too especially the

driving the focus bottom line. that out pull So of there will that drive of to some can meaningful ensure we first to costs again, the that's

Thanks.

You're welcome.

question from Mike comes Wells Fargo. your with next with proceed question. Sison Our Please

you Nice sure right. Hi, make to to just Sean, I the good year. start heard morning. wanted I

be the the the In was demand half? terms it of say that's than in case, the could And if the than you really second environment difficult first half the it first? half did just more is be going adjusted to second better EBIT,

you have No, it flipped. Mike,

in first half be more The the favorable second should half.

price Okay. and just the half And better the bit a drivers demand? for the would better little second raws

right. That's exactly

you. Thank Great.

welcome. You're

the reached session. you concludes end question-and-answer This for your Thank have We today's conference. of participation. our

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