Axalta Coating Systems (AXTA) 1 Nov 232023 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Axalta's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's call is being recorded and the replay will be available through November 8. Those listening after today's call should please note that the information provided in the recording will not be updated and therefore may not longer be current.

the to turn Evans. now will call Chris over I Please go ahead.

and good and your Chris Axalta, our morning. Conference Evans, Financial you, Quarter continued you XXXX Third VP in appreciate is Call. We This Thank Results to Relations. of interest welcome Investor

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

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

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

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

over call Chris. I turn will now the to

the with exceptional and delivering back is the global Thank report in Call. this thank proud I'm Third team I track on quarter. efforts welcome you, pleased I'm began for tremendous an a morning, entire momentum year. Chris. Quarter earlier that Good everyone, on to want to our their to XXXX Earnings result. great we Axalta third

facility for North experienced resolved Virginia quarter ERP are of quarter pleased rates. accomplishments the implementation issues that Refinish volumes have now ahead in we operationally, you. Both American commercially and notable many are production our that this I particularly highlight pre-implementation at I'm and we last will made

with Mobility $X.X led year-over-year Coatings, was increased a solid sales net X% improvement from was end company quarter Price-mix by for every double-digit market. sales increased contributions organic by outcome top team. net The new X% line from billion, growth. the This to strong which year-over-year great a delivered QX record. a by

We forward recover pre-pandemic pressure and to going level. costs discipline face our will as labor higher to margins from strive maintain pricing we

EBITDA of $XXX XX%, the business increased were earnings, $XXX million million EBIT Coatings Adjusted record an segment margin great and drove respectively, with in adjusted the the XX% is of levels. done wins now of and and majority The by of and a Mobility XXXX prioritizing near at both team improvement attractive high-growth consistent job book in areas. rate building also while quarterly has a run levels. recovery year-over-year,

a basis remains material by target raw heading Company into EBIT improvement XXX deflation, pricing largely This effort. for key improvement will continued an going us points XXXX. Sustained priority margins adjusted forward and margin stems cost to XX.X%. improved and discipline remain from year-over-year important

approximately $XXX year-over-year We Free reduce free $XXX direct positioned the we full to our believe for year million cash a $XXX flow is to of This that are trend deliver positive increased focus ongoing by flow of working million. million result well capital. cash XXXX. to

lower degree leverage year. this net improve ratio sheet Axalta's continues growth, strengthened now last Given considerably. is and cash balance earnings flow of has our significantly to QX and than of

updated have deliver Given in XXXX. our record financial forecast to commercial us EBITDA increased full we adjusted performance, operational pace year our This on and puts strong guidance.

XXXX, the briefly pivotal to quarter, significant to of has operational experience, pandemic Axalta's journey has coming been wealth you specifically But pandemic chosen his updates seek played and gratitude at extend Steve are a through want post a We over for on insight, the to last giving Directors. of years. global several navigating His Chapman, who our on color Director contributions his leadership reelection. Axalta. dynamics not to our pieces discuss I Steve role more Axalta. together has The Board before the since

will CEO Group serve she a I'm we're Health, since October a Also, proven Sustainability of will Service Mary contribution on than team energy Safety brings Audit Champ. and position the manufacturer delighted design more meaningful the and relevant to industries experience our a CEO She and compressors to mission-critical with effective that positions is in leadership Brace Axalta. decades pumps senior our to and Sundyne, XXXX. markets, record industrial Environment, of of the leader confident to X welcome held in Zappone Mary Board our Industrial make Mary Committees. of to has XX. has currently for wealth Mary the including a in and and directly she Board. a chemical,

also neatly Let's a In strategy of expand accretive to welcome refinish go Slide team with the Axalta. our presence we quarter. Switzerland, André It notable Refinish Koch, long-term now several for to Koch our region excited and increases partner. this attractive We're aligns with acquired diversify André X highlights us. October, our This acquisition immediately offerings. accomplishments to and is an to the distribution in

agreement to were exclusive named XXX franchise shops XX includes repair the and We're the relationships highest and the regions. efficiency this BMW's existing Group paint relationship. recently standards of in strength thrilled Refinish supplier the dedication we expanded to deep the other European countries and South for It speaks private to plus Next, sustainability. agreements Africa. dealership network our quality, in supplier with of team's Group's BMW label adds This BMW of customer with

This why of partnership long Xaar an advanced new Axalta's introduce allows NextJet, term. of our placement. to health with customization that paint critical schemes, striping. application tool for emerging precise I'm paint is and Innovation the This is including business enables in-line two-toning to about excited technology our color

customers developing meet working limited needs. understand tested NextJet in use to we customers our to XXXX. to being requirements today, is example it with to plan and we excellent bring how is those an with of This their and commercial are technology

highlight for space. OEM want new our the official continued the facility Adding Lastly, and long-term sustained demands enables site local we manufacturing Mobility market, the growth. capacity Jilin, automotive meet to in see This of and have China. expand to the growing opening solventborne Axalta for China our I to produces waterborne position Coatings where coatings

Let's Slide X. joining main move to performance been drive My to focus the and since efficiency improved Axalta portfolio. has across

improvements beginning the driving Our to is financial price. across performance are the underway including that initiatives reflect operational enterprise, managing these

the more rigorous select well, approach, pursued markets. and materials. and We across pressures raw labor in is helping as to margins are target given have remain will end which a being instituted of we opportunity all levels return pricing Pockets inflationary disciplined

have on Next, we cost been focused optimization.

initially of favorable incurred have given driven last out and is earlier the result more prioritized environment. our X costs than savings. a past and we of We billion X/X the we direct this months, have substantial consulting we X of have This have place put the spend the total In years in buying bid initiative our opportunity $X.X procurement, year. in in this

We our in have capabilities. invested manufacturing

and ERP As I our great are said plant made at reducing backlog. earlier, Production pre-implementation our our the of progress North ahead Virginia American making implementation. good we're rates, operations strides at volumes have following

drive to levels inventory better free improved have we finally, cash flow. And

is another investment. million year-to-date. by initiative $XX have This great return we that have consulting seen We reduced yet approximately inventory on

plan our underway. this sharing all be for with has year. store more what at and our the strategic Day be Axalta not Markets I look early next the could effort progress, an stakeholders. but I'm pleased will I excited in to for forward our our actions company for Capital with more future ongoing

performance. I will Carl turn financial for to our now call review the of over a

our Chris, good is morning, to incredible potential. thrilled forward you, look drive company this working I talent have Axalta stakeholders. value as opportune joined unlock the our and the to set at out Axalta, There moment to with team to I and Thank entire at am everyone. full we and transform for

by to Performance the turn in net in X% both a sales Slide quarter, end in offset was price-mix XX.X%, points $XXX declines price-cost X. now $XXX year Adjusted in a increase. the margin basis step-up Adjusted Volumes with a end market. in on every EBIT million Mobility price-cost improved by growth are improvement recovery. billion, All EBIT to positive In prior increased X% improved from Let's XXXX. $X.X and to XX% contributions Coatings from Coatings. basis lower positive year-over-year strong cumulative to XXX sales markets were segments million led as significant from third period, by

material Raw consecutive factors. a was the quarter second consequence deflation a a as of benefit few for

with have to teams a benefits. done negotiating savings job significant They solidify great contract First, terms and have mentioned, improved these driven suppliers. as help our Chris

have markets and many categories. seen are favor EMEA of North arbitrage Asia remain into alongside Second, in moved Pacific quarter. the On to global regional basis, relief be a expect forward. softening we Axalta adjacent balanced these to has much markets of in across Trends favorable expected demand input fourth going and our across of supply-demand considerable America balances in improved

discipline pricing quarter, remains our incur the was million implementation, labor to headwind relief. we with persists the investments globally inflation raws productivity a in ERP offsetting quarter, which totaled continued critical and of a portion as this $XX again addition, and significant costs In In the period. also associated

start will mostly XXXX. down and into we We in cross us trending expect the to quarter these behind costs as fourth be

the result. Free despite of from change an in expense Adjusted share $XXX headwind diluted tax an to per the the of XXXX, rate. quarter compared net interest year-over-year in working flow cash million third $XX improvements XXX%. this Targeted in earnings capital to $X.XX and were totaled increased quarter million driver XX% approximate the $X.XX primary increase

Performance improvement sales Slide net X. year-over-year. third $XXX Moving a to million, Coatings quarter X% were

This enrichment segments strong near-term mainstream our low sales by categories, above from the core Refinish led single premium low-margin well this strength by by organic Volumes in improved in price-mix product and modest of such customer was quarter. driven as growth as expectations, thinners, EMEA. mix as year-over-year. deprioritization digits given were net

to declines and reported lower in the year-over-year customer economy segment Refinish. noncore in volumes led areas However,

and as markets. by Refinish is mainstream the economy We for mentioned continue our earnings in to again record a remain for exemplified on pace ongoing share well market favorable earlier, We and BMW win see opportunities XXXX. services. This industry-leading adjacent segments products backdrop in as

Industrial despite building organic than and job areas, stabilization, volumes down teams great challenges like as by price-mix softer costs In products are still the business, We of construction-related headwinds. better facing our net sectors. certain more as profitability customer in the but managing decline. doing were offset increasing meantime, are sales volume destocking see signs was a persisted year-over-year

price-cost third Performance higher allocations period earnings Coatings million as than and to associated segment year. quarter project. was $XXX improved volumes, versus more cost markets same better contributed labor the last productivity Both with $XXX offset million in dynamics adjusted EBIT end lower enterprise

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

quarter solid a Mobility. was As Chris this told for you,

XX% balance Third by organic quarter UAW of we multiyear driven the volumes up were million, net year-over-year, very by sales impact fastest-growing benefit. in and had the better by XX%, Volumes in percentage in modest North strike. limited price-mix. builds performance above-market net sales quarter, a of continued by increased OEM. In align organic from by Price/mix a to a the a to auto year-over-year the strong led mix improved mid-teens as America, resilient XX%. The of by was customer quarter increased strategy were very with inclusive and supported vehicle $XXX sales growth execution China. Light X%

Our we are and the in should be further enabled by was investments growth region. making China noteworthy in

quarter North in by important guidance mix, We growth and increasingly been it closely driven strike the are our has UAW XXXX, America, reflects in diversity regional fourth of a recognize But other and is which modest sales global the in to our impact. regions. monitoring

by and versus increased driven The period. year prior North Commercial Vehicle a strong sales mid-single-digit in XX% organic volume. was by America year-over-year improvement the in improvement net price-mix

ago, selling XXX Mobility to costs. a points represents higher run increased basis $XX X.X%. from and input variable to levels. prices also significant Adjusted year rate million EBIT million Coatings by lower adjusted a margin a XXXX and improvement EBIT This consistent $X with is improved by driven pre-pandemic

reflected $X.X as with million the that of balances. and billion acquisition our the Chris balance to million. cash XX. Note total date occurred be the a after mentioned earlier liquidity, by cash ended inclusive close, of André of will $XXX closing fourth quarter $XXX approximately We Koch in Turning quarter result, a Slide of outlay in third the cash quarter

full turn net total X.Xx and last year reflecting ago. now ratio an Our from quarter X.Xx a a improvement leverage almost is from

Additionally, year a inclusive to we among still leverage ratio, from Xx our the the highest balance expect priorities. at of to finish our acquisition. impact sheet the is strengthen Continuing

ratio of of deleveraging generation. a ratio gross X.Xx leverage combination net Xx to a leverage continued natural a X.X X of targeting and are We to and cash from

value in we'll opportunistic Axalta we as equity shares. operational incremental $XX million repurchased to capital CapEx This and shareholder we strong deployment value prioritization of worth today our prioritize We for see need the support to return. quarter, also This remain drive includes objectives.

will we internal accelerate CapEx a begins ranges investments from with down. wind annual to forward, recent as a Going modest ERP-related step-up spending

We on invested areas return across of focused improving capital investment. are on all

call now an back XXXX update to over Chris our quarter fourth guidance. turn the I for will financial to and

In in Carl. muted slight sales Thanks, up project an Coatings. in in to we the improvement be decline with QX, both segments. due with a volume to year-over-year QX Mobility expect in net growth be Coatings growth We Performance to

slight sales a are with sequential the in We to expect the impact typical sales seasonal fourth the stable Refinish driven UAW quarter from decline remain to exception strong of with strike. by expected cyclicality. forecasted global mobility remain

that On initiatives offset labor drive fourth be and the single-digit by deflation will we higher are cost significant material a Margins the benefit cost improved quarter, year-over-year. anticipate expected high raw to greatly in expense. side, partially

a modest headwind margin expect from headwind QX mix seasonal drive likely is we QX. to quarter-over-quarter, However, a which to typical

year $XXX is are Fourth now adjusted EBITDA to in expected $XXX EBITDA. pleased $XXX implies Full about approximately to a million, adjusted our be million record year-end. adjusted respectively. be with and year-over-year We're trajectory million XX% $XXX or growth full EBIT earnings approximately year projected and of our potential At million levels, these and the quarter EBITDA. into guidance adjusted EBIT adjusted

margin look As to see year XXXX, growth ahead opportunity yet and another of for we expansion. solid we

should expect a in Industrial volumes in end potentially demand Refinish and We offset market, Truck in resilient environment supportive outpace together lower Heavy expect and Vehicle to our robust we which Light market.

the contracts. of from a We the RMI-linked benefit see slightly weighted year offset the select for first raw in material costs also potential by lower half

and The of to are actions is bring that this the company. committed the for confident We are transforming results, we're just we change are implementing positive beginning that strategy will Axalta. we the already showing a want

prepared for our remarks. concludes This open Operator, lines the Q&A. please

Our Instructions] McNulty John from Markets. with first [Operator question Capital BMO comes

one just So pricing. be guess I first the on would

pricing areas, it's to flow that better. You've some -- how like If should environment going strong index. had even continued you the and it? Excluding really we on some guess, pricing, through. to I forward think gotten anything, looks are how it it's can pieces in speak about the

about of guess, an automatic pass-through the, I a XQ business, a with rest think thing. first into go that's say, should of half thinking bit But that I the of dynamic and -- 'XX? we type little look, we lag the when as how about be you the the into think pricing

Yes. Thanks, John.

X at the I certainly, an year, think if all has last you the job exceptional at team done pricing across segments. look

Axalta again, index to -- look RMI And as about at as well it, I indexing you But a in as think that about as XXXX, said, represents of preparing XX% XX%. Mobility QX your is for on RMI. business, point, if our whole,

of the certainly it, we going, think labor as let's opportunity And select the will the freight, you well as raw call is the to where as as basket, I about have materials some price. pricing. there see well continue as to rest need be So as,

as So will we single-digit believe do pricing continue going 'XX that base. into our I low

nicely. and like little some pricing, have up looking they're to price may back kind in I think back levels you a you opportunity as least ahead. then to guess snapped bit some I Got lower, of really going the strong raws it to cost about mean, it. follow-up, dynamic like margins gross sounds continue just a at when your And you're XQ. come still

you speak of get XX% volume there you And Or there with you need you're and you cost of the I margin help cuts how so you're can some the get XXXX XXXX, trajectory? do to without there? volumes? thinking that you the initiatives? where was can gross Can you about Can get doing to of the guess productivity or the or to kind the really levels, get it better?

significant quarter, it's and I to there that already I We've this time. there more structural are question do a enhancements that and underway seen come. Well, more is certainly that improvement of think believe are

put also are some reversal structural of We billion cyclical X shifted initiatives. But our quarters we factors from bidding. as I certainly of obviously let's we spend And $X.X purchasing benefiting some prepared look deflation. did hyperinflation that's it, seeing we of, call my of in you the to if said but certainly at under it, remarks, deflation, some are

that in 'XX. believe seen, benefits And into I continue do single-digit say, I have so performance. will we And material would

So we're probably Carl X some I'll the see it the put quarters say, this that where it, comments more do And And last as opportunity. I in over I base. more would let's to to on call performing one. there's turn

just to commentary. John, Yes, add to Chris'

at to expenditures, capital profiles look in will margin forward. there's on especially our move our help I network as and increase that actually As drive plants our productivity well in plans we next our more accelerate we year, think as -- opportunity

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

Your distribution Switzerland, not your Could I Europe strategy? for believe is how acquisition fit company. it's owning distribution other first in North and perhaps you America the necessary for it not in Why or the in in European there discuss, does regions? one

Refinish strong call business into last terms of I've it, investing a just the business. story senses. the for we're Great an question. business. strong quarters, always certainly in million. investing us profile talked thrilled the margin André comes Koch. $XX Switzerland, It's André in Refinish in is, It's business, -- in many And X to in absolutely One for over let's I the think announce exceptional about our at, And it's accretive. margins,

about quarter, the And we last Irus talked Mix.

sense, essentially the ability in easily do of more And terms XXX probably to the closer distribution that is Europe, us gets think our an we This us get closer distribution getting dynamics. in customers. to with over in ability to our quarter, customers to can I just

So that's here. certainly of reasons one the we played main

can a Net over is Another as market, called coatings and the -- from the reason accretive investor Europe believe really [ network insurance expand we growing play has And European we in something a Repair system André a us the as pulls on for provider. extremely as which profile is this sorry, that together shops Koch well Axalta is margin ] through time. providers, the body

on -- were distributor or And just they this Axalta other unique to distributing may suppliers who just there the Was off to this. deal? paint, were clarify after fall

There they are but distributed are opportunity to here. Yes. suppliers for also that other in They've us do other grow the paints. Axalta in the also cover -- obviously provides decades, That X an profile.

Our next with Ghansham Panjabi Baird. from question comes

This in Krueger is Ghansham. for actually Matt sitting

projects? cash these on that things groundwork a we've basis Specifically, been specific Just off, that to then then the company made about you of to that talk of lot laid about the kick to expect add made maybe additional future you've returns some types great. outlays in would some and the of years. some 'XX multiyear talked detail on and have you you've of of power Can a and the earnings also allow the XXXX some Both be those investments into in investments.

Sure. Matt. Absolutely,

'XX. the I'll So that how off, we with through it you let we walk I'm that into to the the going going spend and forward kick and and kicked see X investments off Carl projects

first it's we're at backlog which as seeing the us helped primary kicked our prepared on from gains off, the the remarks, and QX. that Refinish, reduce certainly projects have implementation, which is in performance ERP obviously, I efficiency look progressing was well X the to drivers of one So certainly we one my

into is purchasing on And was performance of single-digit and one bid. QX see primary the 'XX. we material deflation, tailwind for we're out one a in second at portion our improvement QX And the significant feeding obviously, put which year, top us again, I is the here, performance improvement call of spend on single-digit would see that of we And our coming in puts what material here, to drivers The which how initiative. for seeing out. I high should mid-single-digit

of And that, off kicked initiative top last on that the we inventory. focused was on

million to the here, down was have that that on As had one we million I pandemic. out the in, reducing to of over coming had date, seen taking things coming on X last wanted here. an of to the of improvement focused we we we close work quarters initiative of inventory And $XX buildup inventory. $XXX looked And the seen

So us that's certainly a helping significant targets. with free flow cash our driver

to Now on you numbers. I'll the to specifics give Carl turn it over

to Yes, Matt, just add to it.

costs. at through X look $XX as much down you of in consulting months get S/X stepping pretty that in as spent by of year, be we kind if that will look related quarter. forward. you into far about of And forward we So as implementation it see well as as the half completely total, this going compare as the million of had fourth XXXX, we quarter, kind we third us to as most And behind

really said, activities. allowed relates horsepower of and strategic. very It more a So it these as it company as Chris velocity to lot -- have add the to was

So we go XXXX setting forward. are up as for we ourselves

to into margins run the we what XQ 'XX? And for to or impressive. we wouldn't Got that see on very EBIT expect level that's expect double-digit hold follow should that going to that just That's helpful. it? Can unique it. recur? rate a there Mobility currently? up we're business Should is profitability something that improvement expect Or in on levels we profitability. And at Obviously, into of close on to the we was something

overall happened as there of us. of direction a impacted No. well. appears here little off business. moving the we on has a in a UAW will this behind. America in as for impact as of kind will as about with that fourth the But October in characterized really, quarter The No, far what job as the which you be discipline done month for again, on cost a smaller based it definitely Matt, just team strike, kind North Obviously, year think to well really to pricing bit strong I think, be be be

we to -- is But that, that to able XXXX. we as forward, continue get grow margin go we do especially profile, as into expect that to be Mobility

next comes Citi. with Our Patrick Cunningham question from

the previous it guidance expectations from maybe backlog in you whether price-cost the the additional the other any Just of XQ release, factors? can quantify conservatism And given there be outlook? or changes magnitude normalization, into raise, rank-order or baked the biggest is

an So break for hitting regions would I X certainly exceptional we're all it's down the on quarter, and segments, all Whether all say. to cylinders. But it maybe you.

our consulting First, whether material. efficiency and production, as initiative Refinish the the performance, really improvement to then And that our tailwind obviously, ahead in material material from backlog. well together, put the the well structural well as enabled reduce this you ERP globally. was the sales initiatives as which the had it's OE third was of we from as those the projections, And quarter when on deflation

And the as sentiment at that strength that basis in a questions, extremely quarter an QX, to points look I had jump quarter-over-quarter. year-over-year, And China. in we basis jump point XXX seen and earlier Mobility. Mobility XXX in strong over exists And have we

there. performance great So

that driving initiatives. cost as All initiatives well the you let's been have put, it, as we the pricing said, call

quarters Carls' the markets remarks, XXXX. X price-cost just all since first be in had to time X positive As we've end for

body and shops volume partnership, But earnings Group maybe us BMW the the the then from on into just then those that partnership? timing And can help understand looks very you potential promising. getting of it. it and penetration Got

in to 'XX. time certainly be going some It's Yes.

more we have going true testament a we're see every quarter to these convert those group. more year, shops. converting to in we -- So shops our and on as to certainly the work It's next it of

net look at it, done the body job I has If I team on as X,XXX an the X path shops. win we're winning year, last years, at shops. This to look body XX,XXX exceptional

get-go So up right is great off we're a the set XXX and XXXX. how for step this

with question next from comes Our Joshua UBS. Spector

Spin on for Luke Josh. ] [ is This

I So wanted back get could. we Refinish, to if just to

us quarter? And please comment in of to sort of was And low-margin growth we just what like the highlight exits for of as there to So is as of of much the base XXXX? could now kind you sort of on left impact region? well, go how that volume by into roll the the kind

I I related it call through it, if would call what And look lot are a is, if next to let's from it year, quarter, But seeing say at market. volumes. So to look X% Refinish we into what from this -- next flat. we're I quarter that I we a obviously a essentially remain decline going we of quarter-over-quarter, And our in flat. basis, with into would expect this went volume

our QX. Just as We dynamic a primarily to S/X with QX us But opportunity, Again, explaining the prepping and quarter-over-quarter, QX burning there's the about more I implementation. driven us from obviously, for made step-up. large still, of think more backlog year. next

and heading year to to be QX But be into flat QX, we expect flat. overall next volumes to

that and stable. then region South the Europe I would North soft America, be by break sorry, China -- continuing somewhat America on were you say And to region, Refinish side. If to

bridge wanted about next I to talk kind then sort onetime And just year. items of Great. going the into of

know. So with you what we in of where terms stand like now just

sort exits, the of million to consultant that's other factors, the highlighted But sort you in we contract have spending change not the pricing. of like the occur. availability So $XX in then low-margin going the product

could sort that's known if of else kind walk through us anything highlight for time, please? of like you'd Just to you this that at us that,

Yes.

said think Chris to add of what his I earlier in just comments. some

about we half will a can we to the more little other Refinish into some as verticals about bridge at in as first year-over-year least as well basis, especially for us. you through least As we bit at do the think continue well think as a And trend the do XXXX. expect we XXXX, of favorably, pricing think what COGS, in on also especially of the

where be 'XX So the you primary of to think will bridge we will up. the those help would end areas that walk

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

seeing Chris, like raw regard in lot color where into material the you made the you've outlook Can and little input costs? a most deflation most it you're cost with initiatives. or a heading your the stickiness more sounds provide XXXX, of bit on purchasing progress to your perhaps

to. love Sure,

QX we material. think tailwind. I mid-single-digit opportunity would I would look also say, into on us So going and to at is it a still This provide I 'XX, as call

Now in -- terms factors. of -- is there outlying a one few

epoxies, well certainly this We at all seeing point, oil impact that -- again, are trending no key our this solvents favorably. isocyanates in think we time. But as downstream and factor at pressure if But does a are on we But market. monitoring are any oil seeing about play freight. we as and we're not but resins

about I still think material performance. -- in would see 'XX, standpoint, say where I we as we opportunity from planning So mid-single-digit our

on -- Chris, Okay. well specific used about you as of auto I the I missed provide builds? see guidance. as as it backdrop? But for through then for think thinking Axalta some you to fairly can you're talk And what it. your that, I maybe outlook fourth XXXX to relates production didn't kind would unless comment, numerical quarter

quarter, look also going to China for and I we at going QX. the around and fourth obviously, is gangbusters QX seems So at world. just growing. Europe forecast look to as be stable our if

and China. through of million a our just top on of end also The wins. team done but certainly the in growth, has back P&L back new also talked rebounding running look the 'XX, of a at ago, share seeing we If market wins the about of year $XXX only stellar we job our not we're

markets the way. I say, trending So and far, QX seem globally, would to I be right the at look as QX,

strike. Specific minimal saw down in with -- -- certainly we We a step UAW impact America, saw obviously, in the QX. the from strike the to North

that But of to are I strike. see being possibly here, you that some can based gets of from guiding there would resolved discussions revenue QX, see our performance. as in our the where from we're the our on going, we guide As X% if do In impacted say opportunity level well.

at your looking Now building point, start all are indications, 'XX, to are up. that going to markets

for [ see going So global builds the ]. -- XX million up we to that builds,

it, to heading numbers pre-pandemic. saw, a certainly, we positive the So there call trend back let's

on outlier The side. Vehicle one is the Commercial

of going the now we're right markets Commercial has I down at to Obviously, XXX,XXX. would XXX,XXX ACT side, well say north Vehicle running at XXX,XXX, builds. On

But that with cost new continuing there. think 'XX. overall that risk into and said, a driving business should actions, to the we winning improve and of is I margin also bit a there's team see price doing So well

Our Bank comes Byrne Stephen with question America. next of from

Thanks. wanted bit to Refinish. drill I little on in a

post with the Would in XXXX? given gains third which and a in the Group got these the to you initiatives; XXXX, your you pricing partner, MSO mixing little keeps organic Koch recent quarter in BMW single-digit organic you low Refinish bolstered higher the have modest, seems have are expect by Your sales in these acquisitions André acquiring; you all technology. automated perhaps sales

Yes.

me ways. Let X it address in

I And think going from quarter standpoint. let questions think this also had and the I it me a last address to quarter. first, volume back we

a primary step drivers of that's But a the driving from we a notice focused perspective, back. would we've volume you primarily bit because taking of been One on that been the have margin.

call it's decided products. exit it, we business we have thinners that And certain the higher-margin South to, capacity our a ensure the that for and driving these in made had whether ensuring architectural let's or America, to what done in businesses South we were is, margin to we decision in in America,

was a to margins. we grew make that maintained was, decision that focus So made the and we because again, sure

well, at it, and well. look on 'XX 'XX your And terms to as sales. that the to acquisition to opportunity as team of, yes, announced. see growth that, we To has just let's the done will with the as be we drive continuing a of especially will do call job we growth that I trajectory win net continue we great win, top continue point, In sales, as into

would somewhat been thinners ex, South the decision flat. call have made let's I ex and in volumes say, America, it, we our But

from And like anything else, acquisition down. the not there's going from if growth standpoint, both as a only sales opportunity it's the 'XX. wins we're as for So well net

technology, then two-tone technology view? to in in business the you technology attribute how new technology, is what Is game And what for you How benefits better wins your this And you're this about? this talking would significant a perhaps that is Mobility, that that an opportunity NextJet. customer? of significant new your it? is have

into break up Well, let things. me it X

China, has in relationships built service in the it's and the has the China this building. also And has -- wins it's wins pure X I an the X region, are The a around here, I done and I the in team about the specific think America, team has focus and the a that job done, to incredible been wins wins year things. globally. would ago also customers. purely And North not and I are significant -- in Mobility a that to that the Europe. this say with if credit technology, Mobility service the relationships back go team the talk it's Certainly but

relationship of we announcement made terms or Xaar in the today. the NextJet Now

about for to the line we to you opportunity pull Here, it if this roof the the two-tone paint or And the shop not do color from car, separate and you technology. roof a to vehicle. separate think technology what with of take have body the them the rest the with our provide roof, rest is customers paint is out of the a process Mustang a them a different of or where

-- the to cars, We enormous apply in through from levels OE it paint which believe painting. of provides the have That the we expensive for and both cars we opportunity applications partners away And two-tone are shop need time. our same gets run cars. process, essentially drive provide enormous and are these ability custom will that these off-line these productivity very at an

provide of a is customers an lot forward. going will believe our So we that I this for opportunity value think

Sison Michael next Our from comes with Fargo. Wells question

Mike. is This Abigail for on

Refinish in this and been mostly -- think Do believe I touched loss? to you a I already on that? the was have you but response last some have your gains, have Have space a share in you experiencing noticed any quarter. So I mean, bit, share the of peers

back thinking trends you. for you has the December, market the your in How changed Day twofold, in being last year growth then to key given that last new Refinish a macroeconomic And region? mentioned as for Europe

win So shop And and customers. lose on the certainly also question, some question. Abigail. net track we're body is X,XXX can for year this we Thanks say wins. I many We for great think -- but I what

at overall, exceptional looking team would an body continue X with has say And to job this net years, done shops. So I the last win. we XX,XXX back

the that, the team in hit sales. record in record team you joining the perspective at broader thing going, going And I fact the think at this sales measuring has 'XX, 'XX. this the the rates of Refinish had year-over-year is if they're I company, can record Refinish the 'XX, look is in best sales. And about In to in talk they're team 'XX, Refinish and --

exceptional the team. an this talking beautifully win just the And 'XX up year new the starting about So out XXX BMW year. about as shops early in sets think with I body

the say So to I to positioned team well grow. continue would is

and strategy kicked our And second actually of And And things. hadn't today, that to is Europe ago team Europe; point, aligns impacts one Europe. in announcement, shows Day, it mostly with your BMW year growth focus and the day attention about actually Troy the there. growth our a acquisition role. and again to even One Refinish my we is, best part it -- the announced the I André off in in which the which Koch, and all the is the growth was X talked our in the been I the first at we and Axalta

right both quarter to ahead. think in So is team and net-net, across of positioned in these, actually a the absolutely 'XX grow are Europe Refinish steps I taking the

Stanley. from Andrews Our Morgan Vincent next comes question with

that away but other the maybe you've would of kind of great. just of additional Haynes kind ask portfolio you'd about in areas is pruning? Steve walked going M&A And Vincent. of you're that be just pipeline This any that a on Refinish, think to on I how kind that, there the the and some are from wanted on flip business quick forward. about side And thinking of thoughts on question maybe for

Yes. is This Carl.

yes, on October. term allocation a ratio. are what forward in accomplished just obviously, pipeline, So the look capital in net near here André a here we on just Koch the we lot, leverage least our with focused as we M&A talked Chris really here, from But perspective, at

more a where you really company new in year. has have do, that we done we set out And in we saw ratio. the net achieve deck, great to this we have Xx finish as net As debt job think The an especially of XXXX potentially even the a leverage end to our on X.Xx. can targets, objective maybe slide that opportunity on top delevering leverage we we a and lot

and will M&A, continue primary the looking bit will back But and I inward look in delever think evaluate we point, that, this to more said little at we also those having But continue as we overall the pipeline as a reinvest business. opportunities. be to at focus the

from Research question comes next Partners. with Seaport Harrison Our Mike

Congrats on a quarter. nice

that's opening the Maybe business China. to facility grow additional provide help Mobility the does for noted you little a China? more facility you give that You on Jilin manufacturing you? in of Can there what detail in in how bit going the capabilities

wins, I our growth but that side And about is looking yes, -- us, EV the numbers China, it, of the is the some side, I best in million it's was $XXX if Mike. net in are last that the -- we growth the about only is -- question, China. the more faster not part as is EV. that China an our skewed for Thanks China, at towards ICE of night, And growth growing little And think for think incredible market than higher. bit Certainly. our on market and X% on an important a for we

And we're growth. for as that at that, certainly you look positioned

to us as And which market both so a us on sense the waterborne that side. us solventborne protects -- ability ready the make products, trend towards Refinish waterborne in gives products. region. the gives the it extra it And obviously It's growth the gets capacity more in the what starts facility provides it for -- both to and capacity, great us

and say, official we're a facility this would I grow. We board, And to capability 'XX. again, next to the us across where up through year provides continue So this story I think production opening going, just ramps our as last great had as the certainly just week. about the

of be what some like you the into And accelerating through in? then you're you're of right. your might some year. key next it walk projects investing Can that All also capital curious, sounded investments going

Yes.

you'll I But replaced XXXX. get down and productivity will overall as with So the as thing bit prepared is on that the in the investment ERP a will focused really -- on just trend and referenced network. little more S/X remarks, in we be expenditures, into capital see system primary investments my the even our probably one

to a network. we so and And really overall invest those we believe closer look productivity there's just the opportunity efficient, for taking so we're to more facilities be our across at drive get where global to dollars going an can entire improvements

question comes Mike next Barclays. Leithead with from Our

joining Board just one just a few for past refreshments, or any to speak or Board Carl and There's you yourself Or in is refresh looking Board qualities Chris, enhance the been the addition Great. new Can the sort maybe joiners specific to table? the to to say, number Axalta. of higher-level of going forward? months me. question really what attributes bring

to, Mike. love I'd Sure.

TransDigm. have want Kevin the for obviously have of And terms Stein, a work me the Kevin, looking Board at base obviously, the the of And just forward, at through to journey. that gone the is has is I think a lot pandemic. looking story And continue done. value we one of as them look company things which to we TransDigm they walked also Board drive members, has CEO the with, a this -- of amazing both CEOs I what is announcements, and value to great of also a fact and new provide bring -- accretion. two with starting through in sitting that last creation that one sitting to an will

just And in what is as and job Sundyne, background Boards, a look -- background. quite just bring on Kevin with and of helps, on in, engineering. done from Mary both this being as private a also Alcoa. previously in only with in And at side public value. or obviously she's of I a bit it's is done doing certainly and with them chemical but of chemical Tyco, an And with driving both chemistry the PhD Sundyne equity standpoint what incredible well at brings not as the she experience Exxon also Mary

have And we from whether structure that it's currently operational, certainly, So -- at of finance. off our all it I just aspects, for are certainly, that round folks the this with board right that Board. that mix I CEOs. -- an also have certainly, incredible have, think as look sitting we have we talent they're been And

Great.

investors I would near TransDigm's think if very you are, can get anywhere happy. where very, be margins your

That's fact. you the There goal. go. That's a

Our next question comes with BNP. from Laurent Favre

talk could times Chris, it those? side? you've on do something you is Or I solve you of the still? was about about backlog. wondering couple the talked a your to bottlenecks. And I customer that if Is guess, on side, can what

Yes.

absolutely. So

the just job an We've the on bottlenecks QX just backlog say in the that one Virginia. would I bringing done So facility our have to from business, bottleneck the we QX. down -- is with place this exceptional the just Refinish and is

believe -- guide, our this reduce we we guide, were say And noted QX performance that I in obviously Refinish the we'll business year. is focused will in as tracked and see more through normalized has in of the QX this would And conservative with, did can obviously see and back we better to that that. if we to we There being QX. out, backlog be driving the in be and we as we next take to do we of backlogs

And in just drive backlogs with have opportunities still just is efficiencies answer and our we it's S/X. still some still, So through question, there to business. to the QX, Refinish

through I talked as into next more year. said, I investments the talks can we're efficiencies that productivity that that in drive do that that this to investments going company. entire 'XX, And Carl believe look about the there all operationally, we to drive are And

is it we the to backlog, on combine outperform assumption on should products. a wasn't assume you next the Refinish that of comment if fair compared I pruning your fact stable the volumes, this market the year? on great year for that the meaningfully And volumes ERP, mean, to

Yes.

overall, up as But the to a front focus other in additional the us, XXXX. the some think in we But in strong to of of more Refinish, as as out but bit -- continue well, commentary next here only I 'XX couple get so provide right there's we'll coming finish months. and Axalta especially we XXXX in upside now, think not about the think beyond. into year position really verticals I of think and little we is for what's obviously

This conference call. concludes today's

participation, You a disconnect your lines may you have at Thank for day. this time. and your great