Axalta Coating Systems (AXTA) 1 Aug 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Axalta Coating Systems Q2 2024 Earnings Call. [Operator Instructions]

Today's call is being recorded and a replay will be available through August 8. Those listening after today's call should please note that the information provided in the recording will not be updated and therefore may no longer be current.

the Relations. to Please turn President Lubic, now Investor of go will call Colleen over Vice I ahead.

you I'm Thank is you, your Second to continued Relations. to welcome We Conference Call. Quarter Colleen This my join excited our Lubic, Vice interest earnings and President of appreciate good call. today for morning. XXXX you Results first and Investor Financial

Carl are Financial Anderson, Villavarayan, President; Senior Officer. President today CEO Chris me and Joining Chief Vice and and

financial morning axalta.com, of during and quarterly will slide results to the section a referencing our Relations presentation our released We this this call. be which posted Investor at website we

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

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

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

turn call now over the will I to Chris.

Thank everyone. you, morning, Colleen, good and

them us that new relations. our in formerly Axalta's the A congratulate Evans, role positions. for in Investor joined XXXX Colleen to Vice Chris an has their group, of Global I Strategy has Before Plan. announce we where pleased investor taken our both started, get of Relations, he'll lead in driving I'm Lubic important President play

quarter. together and a done executing want macro as job I flawlessly for of our to this in to beat the Axalta team targets, an and the recognize organization amazing raise The entire achieve has demonstrated by soft exceed working environment.

in quarterly adjusted for strengthen net consecutive the quarter margins EBITDA end. with at highest our sales increased quarter, leverage company's the and the net low to to the EBITDA Adjusted for second we continues had record XX.X%, Axalta eighth and another declining recorded In history. sheet to quarter balance

world, the managing in result believe proud success well. have is the capital last placed priority Momentum XX the our been the over the to the ability has I'm I demonstrated execute first months absolutely returns. Around decisions of XXXX. making commercial productivity, and organization, team's on our tightly and we of a accomplishment building throughout we smart of half improving

focus. X% quarter increased markets. quarter, the for $XXX with to XXX by million Volumes EBITDA the by sales all by million, year-over-year $X.XX year-over-year. was by segments from net cost Adjusted billion. increased end representing largely year-over-year. a increase Both basis material EBITDA For $XX X% profitability and improved contributions points to driven second positive our improved Adjusted four showed XX.X%, margin

I'm led to confident share in cash per our EBITDA, for diluted increase free and earnings our adjusted trajectory, XXXX has guidance us flow. adjusted again which

potential tremendous believe you, company the organizational with technology capabilities. we're I transform just to and our of shared the I've beginning unlock products, As and

business. with as In performance. up had year-over-year, North were XXth grow X% new America, improved sales net Refinish excellent quarter straight top continue quarter an this sales XX% of line making win and to net the growing we

constraints of quarter benefited our to with We in with from North American also last comparison associated ERP production year favorable connection implementation. the second

customers. real-time productivity great match following be fully win we we Year-to-date, factors: a expect is hands-free the we focus now for the year. net three our a automated that productivity based the second, we optimizing body waterborne system; launch includes our segment First, already shop key Strategically, to over and on premium can customer in mixing of have through tools digital believe growth for of another of finally, key and host this single-visit delivered remains wins, end-to-end Irus Mix; us support color body where which our X,XXX and shop monitoring application

is in important Expansion customers North applications the acquisition offers for refinish This us strategy potential Group, manufacturing a on to growth to of serve accessories. business we the of to commercial segment as believe team. our The with pillar Axalta aftermarket for Plan. coatings for excited the fillers economy brand's I'm A welcome in range where great July, we that paint entire wide well our the coatings provides completed manufactures capabilities America. Refinish which another the in and and access we we have focused CoverFlexx as In outlined economy aerosols, the acquisition group the and growth. shop also segment, economy CoverFlexx automotive

sales increased by net driven year-over-year, American X% Industrial in volume North building by increased products.

that positioned improvement is and the second has net year-over-year market sales is construction in The believe out we which first for when marked global improves. signal bottomed in quarter X Industrial activity a quarters, recovery for

to attractive year-over-year proposition driving industrial our part such we job demand through have a products, Zenamel coatings, cabinet and as muted, relatively segments and global gaining where return. of stellar Although regions Innovative improvement of an and cost had traction generate significant strong new value are margin a commercial done management prioritize are remains clear can team portfolio and strategy optimization.

production Volume growth with another was a for builds quarter. had spot again growth volume us nearly regional of with versus bright better Vehicle X% Light growth. outpaced year-over-year rates. significantly auto China XX% rates strong global

team on expect the OEMs to Globally, growth margin building lasting continue. partnerships Based we with fastest-growing the above-market is at attractive this, levels.

forecasts in the X% a most of year, to year Vehicle the now the half of first are to projecting be the environment Light industry year-over-year lower Europe. approximately build half declines with second the in Following X% flat of

of in to the production strong before sales Commercial America North leading slowdown by half XXXX and XXXX. X net ramps X% We a Class second from benefited up Volumes expect stronger-than-anticipated production Vehicle a still increased modest LatAm. it year-over-year. in in XXXX,

unique In A will of X. the exceptional performance Slide our introduced accelerate XXXX the the plan to industry five the I elements transform of us move a performance. we achieve levels May, Axalta allow to new strategy Plan, expect multiyear to and Let's in company. differentiate and

First, is culture and our faster, more mindset, One by a driven creating responsive. that effective are Axalta more we

Second is excellence. operational

We will continue corporate, the journey we in more have control started and to drive chain. controllable and efficiencies supply the operations

to actions these XXXX. $XXX run expect annualized rate in We yield million in approximately savings

on Next, our with businesses. strengths it's and driving a through portfolio focus growth core profitable optimization

of innovation, Irus best products creating are NextJet world's for color. efficiency Fourth is Mix. the is sustainable and which Examples this and the sustainability,

focus business the our to And shareholders. returning and finally, in capital on allocation, where we value to investing plan

with year, As and see we're performance XXXX on of our half our our first you in the targets. can of achieving well this way

Carl call the our quarter for view financial a more turn second now detailed performance. of will I to

Thank you, good Chris, and morning, everyone.

turn Let's to Slide X.

X% X% end $X.XX growth quarter billion, by of all sales to four by driven Second net contributions markets. year-over-year primarily volume with from increased

flat not last impacts. supported costs, in was margin repeat Price/mix costs variable points offset price second from XXX Gross improved the by ERP were contractual second strong management This basis material positive as pass-through actions X% year-over-year did by quarter by raw was improvement that and year. lower cost the XX%. quarter to

freight materials, versus Our delivered quarter all procurement lower expenses with and costs year prior raw great energy the period. team another

We which attractive return. year programs have generated continue an to benefit last from our executed productivity

stemming supplied continue remain inflation transitory experience More we where well supply at from we Regarding long lead supply tight this to basket view markets for and broadly, except specialty our only as commodity we solvents. time with in of pigments, namely most in the times. balanced issues, raws, pockets

material remains environment benefit Our forecast of unchanged, second in deflation stable a raw anticipate full mid-single-digit a half. we and from year the cost

to lower percentage management last sales, aligned earlier our of roughly to expenses $XX compared this from a effective efforts second million Operating these modestly and by $XX the as quarter million with flat this should initiative year. achieve annualized XXXX be year. that were cost of still actions of We savings with transformation realized underscoring introduced the expect year

to of earnings $XXX effective $X.XX, expense, lower from second quarter earnings Adjusted than EBITDA XX% per the XX% improved by million, driven tax year. which rate. Adjusted above headwind and modest a in share a diluted was quarter offset increased more last interest higher

and improvement highlights A On which representing a XX.X%, emphasis invested to targeting year compared good we return of exceptional are Overall, by our our on to capital, point which, incredible capital on Axalta of key of delivered basis we One a Plan heightened dedication the and last trailing XXXX. XX-month progress our was is all invested a A XXX our results talent basis, is due XX% for goal. towards component on team. return businesses, across

million $XXX X% million. North year-over-year $XXX a increased $XXX sales Moving supported X% sales growth X. from were Koch volume up Coatings quarter strong Industrial contribution to to acquisition. year-over-year Slide America net the X% sales to million. net increased Performance Refinish net André by and solid to in second year-over-year

The continues of improve to new environment the softer business. margins despite macroeconomic deprioritization through lower-margin a and accretive wins team

In upside this basis fact, positions XXX points we from expand margins Overall, over we be strategy last expect improves. considerable track demand to by for to Industrial on believe year. when us global

by $XXX XXX to strong margin by cost volume EBITDA adjusted primarily increased lower XX% increased variable control. costs, increased Coatings EBITDA basis Adjusted million. points, Performance year-over-year and driven

America in end China. to $XXX on X sales Let's Slide Coatings to year-over-year in particularly in move results improvement in X. better-than-expected were showed Class Commercial growth volume production strong auto regions, Coatings markets. to North rates the growth vehicle quarter, Vehicle production outpacing America. in both Mobility volumes net Light Latin X% Mobility increased with million, all and due

to improvement improved growth China driven variable to management year-over-year lower EBITDA initiatives. by Light $XX XXX and by primarily Vehicle, XX.X% adjusted margin Coatings Mobility basis strong with million. EBITDA the by in XX% market points costs, Adjusted cost in strong expanded

second total X. Turning over quarter $X.X to the liquidity. billion We Slide ended with in

July. intend we $XXX quarter we Our credit cash to we revolver a date. And which closed repayment the the acquisition million cash the early $XXX CoverFlexx, as for facility allocation to capital remainder revolving on have repaid million already at fact, end includes free to prioritize in of of year. of standpoint, From $XX the to finance generate a draw balance our flow of million that

increased million and the extended to During facility million date credit to maturity $XXX the quarter, from our $XXX XXXX. we capacity on revolving our

our programmatic equity strong in remain expect the Additionally, we shares going and to We $XX a repurchased of buyer forward. see million in Axalta value quarter.

quarter was turn record a year. last leverage quarter of X.Xx Total second below of net the a company and full at end

year of acquisition. end X.Xx, We at expect or inclusive the better to than the recent

During we billion M&A. accretive over value can with us flow. of $X cumulative creation to provide the repurchases opportunity X an drive operating and will we supplement cash next This share years, believe through

further to savings expense balance our gross expect of interest debt also $XX target We reduce by million we as XXXX.

update an and for our Chris to XXXX financial back third year call guidance. quarter the on turn now will I full

Thanks, Carl.

Slide turn XX. Let's to

expect sales the net year. be low third to to single-digit We in up percentage quarter compared last to flat

another share good to quarter, and from acquisition expect contribution Refinish distributor and our should pricing gains, from market, we have consolidation. mitigate mix and impacts

Industrial sales the in net priority highest Margin are modestly. current Industrial, soft In to growth will remain our be environment. expected up in macro

expected Vehicle as volume globally Light raw be by offset growth partially contractual solid flat, are net sales material be pass-throughs. to will

business Industrial continue for ensure Mobility We and appropriate to value the are products. our we our receiving price in both to

North Vehicle, in the by production in in sales Commercial we influenced America. Class forecasted anticipate Lastly, lower X decline

single-digits full sales year. grow low to is forecast Our last to year net compared

EBITDA to $XXX Third year-over-year X% million. projected quarter is to increase adjusted

XX% earnings diluted adjusted per to to quarter by roughly is approximately $X.XX. Third estimated increase share

to for increase quarter diluted XXXX our of full be a EPS have guide. versus the Axalta, midpoint billion, to share, to increase per adjusted million to $X.XX Full solid which a another increased $X.XX $X.X Following an is last guidance. year billion prior expected approximately our EBITDA $XX we translates XX% adjusted year. year This of compared our is

to million raised a $XX at cash $XXX $XXX representing a to the We XXXX free have million, also guidance midpoint. flow million increase of our range

and shaping is XXXX the up ever had. be to most profitable has highest-revenue the Overall, year Axalta

at we stages the with are of capturing potential. our performance, early our While we that believe we are full pleased

prepared our lines Operator, Thank you please for open concludes the remarks. joining us for today. This Q&A.

question We take from Instructions] Aleksey with Yefremov your Markets. [Operator first Capital will KeyBanc

I expectations consolidation, mentioned color sort that on you just ask for volumes wanted to And the distributor and on Refinish as as and that, market second a demand to half. follow-up in second of quarter could if you for you elaborate well. any the

growth, gaining Sure. growth back into Refinish, in driving really about the top shops. QX. the but feel plan. really of line about focusing We up that four driven more body Starting stepping maybe by elements X%, more off, It good in specifically was X% the on went

to shops XXX body in XXX date, gained we premium. and economy in So X,XXX and main

Koch the our But we driving closing And top into space, with then And finally, of growth on the the terms closed driving we on last year Europe André top that, providing really primarily beyond model. great of our our stores a And of been has strategy. been focused acquisition so a -- then and that, and also expanded in doing wallet. deal we on share We're expanding of adjacency executing have that, ahead tailwind. that really acquisition really in of retail CoverFlexx.

of So all market, have growth heard. I'm can the the flat, job has plan elements driving as But been elements. been I just the the has done you growth team four -- The would driving of say, sure really stellar as story. a you've

little more a Europe, stable market soft. a seeing we're bit If America. in I of QX, North softness a stable market a at that or look what is see say little bit We in more would I is

has see to In as of in But little driven some continued QX with QX what we bit been all, that I've driving we America all believe growth the destocking. because Europe, North consolidation, single-digit softer distributor by market. the even we're we going a in see still in plan are even in the have -- as elements growth low of all said.

long-term for overall would growth. still I say, dynamics the the And show, business

So from we strong X% seeing to growth our look for us perspective, that year. at full X% story the organic sticking still we're as

million looking Based And EBITDA about bridge could sequentially? you're the guidance, second decline. to your $XX you at question, try EBITDA on

the components are of OEM, in what seasonality, indexing, auto et price terms cetera? So

Aleksey, Carl. is Yes. this

QX really I the the on compared at look just would line. we QX, guide As to it's focus top

EBITDA conversion sequentially be $XX $XX you million So around if downside a And bit it a essentially well you to $XXX most little would to down there's it that the just would of to of we expect guide would think mix of explain that QX. about of kind little be normally million revenue, expect that, down really as probably that for that million. and you gets

Carl's the -- and on our XX%, actually forecasting Commercial that The down is, three our we're kind you adding point. you margin across look down thing our businesses. into we And business, the -- just half. Vehicle that the what stabilization look at that performing as of the means really is we've half, it of strongest shows Maybe we're built is one if is second that noticed essentially other you that which businesses, strong about back one at

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

to wins it volumes having how So able some against Light the sounds and to seeing well hold looking pretty kind that? what mid-single guess, Vehicle, the to pressure like that can about least you're speak as offsets much I down in digits. and of going at you to at are that of you're you're the be how consultants pricing attributable

beginning what forecast right of for we did I'll and I the builds. and at down. we with it, start a builds. at million off in hand But I year, of I'll back say it the provided trended off Carl. was maybe that's to full year look of Well, But starting as it's what over line now the would in we the XX it's come overall, terms forecasted up John,

growth, in growth. of, profitable our in terms and Mobility, But again, is about really it's about story even

And about at of -- we've in quarter, credit to at we've of actually running you -- almost what team quarters growth. we're truly last terms If the It's X it's look of accomplished. gotten XX points the margin. I just

around quarter, regions in show last And driving able market one I being significant growth X% we down, being about and were the China growth, the second to and was incremental quarter. two go If slightly that the really it's to were would I to really say back LatAm. flat one

a weakness we in bit There in a at of contractually, managing place. all business as for in teams at good digits. were see marketplace. in say that XX%. the forward. pressure coming feel go And accretive were to up the great China, growth almost a double really point, the And lot we new is and Europe, Again, us, that is coming are offsetting we're pricing. specific that you the I in this LatAm, And but we is incremental up pricing of pricing, at in the would that's And we

it. Got

helpful Okay. just initiatives. color. then really And No, that's the question a cost on

I think, loaded. fair? back-half back-end loaded of $XX the year, throughout to of I that's help us assume that I Is hit the flows you Can $XX million how million initiative, year? believe. mostly it's about that think through supposed about or to this

the equally Yes, initiative flowing the back pretty first since the announced beginning about quarter. John, -- we it's been through in of

million of really probably as and million this year. It's we been get be kind all we when the expectation. we you get modeling as $XX in even, rate somewhere a $XX should then the think into And run along we forward guide that's million. the $XX of XXXX our from would think embedded So between that in full the into 'XX, perspective. for And

Our next with Wolfe Research. Chris question comes from Parkinson

did we You stand plans. of on well for Industrial that where the of macro in your some you also should It's a initiatives our think the businesses onwards? environment. you've Could quick just with quarter about begin terms choppy you in 'XX been in a those update divesting us give to despite rationalization lower-margin pretty how them and understanding

they've what done done The Industrial also our in look if a has the of across not improvement been at a the improving businesses great of flow, margin, in grown accomplish. proud they've largest margin Really were essentially to but able has looked job at I Chris. team team to only QX business. I Thanks, Yes. in QX what actually sales, If QX. four our

our point market pick macro volume up As a we're by environment, -- about soft X%. your seeing sales to

doing is primarily, this whole the started stellar team really ago, over the X.X to focus right grow. process And job. the just So as it's was years a we earning

team, a the down that the the get focus that right right Shelly, to leads to certainly around we're I had grow. who would plan. think executing to I say And spot and let's shrink earn

didn't from And able agreements that so and we right that what customer businesses, powder in a -- to we get value the we did certain are with we of and We point customer. And that. equate our low-profitable sense out as were certain obviously just consolidate as businesses well value do? to the certainly markets customers portfolio. got provide we get that come to that in level of pricing We can for believe we our the make

products conversion really that change going that I'm do in residential the of on markets very with or the that we grew business, a in one thing can as because in levels we some The see at our team any really the markets it, construction good residential construction at believe a sales of let's we're mentioned, see an SG&A look great at of or this convert the margin is point proud Business. -- the future sign that that the the last areas some point we is, gotten upside if you performance at when our we Building at call in, getting we've I on the and improvement the of or I margin the upside forward. quarter,

Got just it. quick And a follow-up.

of a in the back Refinish. Just lot been growth There remarks interesting have about to your dynamics. organic going

can we collision hand, claims. track all one the On

insurance national a rates from tech in your On facing. terms the customers look are you shortage when at other companies, of reimbursement what hand,

trying terms value-add is kind Or those on penetration a potential your basis up the have benefit day-to-day portfolio? what a to in a selling argument? already how you're or of ultimate of hypothetical what's Irus understand had in like and the that are more potential you've will your from of -- industry of coming this in negotiations Is narratives much on you just going into. sell-side product I'm

this in It it's segment, in we Refinish if the labor well in of And Chris. question, lead In is Axalta's from business, a with is the strength, really it great cost. point the premium as put on a premium efficiency huge a absolutely the the perspective claim. That's all are your the as impact costs you cost going and impact to segment. perspective in -- about is and a insurance paint where shop,

we we certainly Mix. the that provide right over can have XXX positive, and anything for So that's cost Mix. best requests Irus provides a productivity part and Irus I efficiency the of in mean, now,

We install will year. have this XXX that

X,XXX objective by is end Our get about of year. the to next

or a cars body the efficiency, benefit. XX only provides of between the But hours that. a paint it's shop, certainly shop, not our just what's tools it of in efficiency And Mix, depending solution it's on helping through Irus It's or whole a X to provides the host a whether going waterborne and the number that it that week provides that's single-coat it's provides it's digital win. a there is application certainly us our tools that

year, the said, we I are wins that of our the provide about of that you segment. As the the share we half it half about think first at tells And portfolio look the just strength the products fact already I if have of there, the of market you customers. if XX% the premium in

Our next comes Barclays. from question with Leithead Mike

you're terms given XXXX, the this done in a just back but year Can business I ask how how Just then directionally, you of revenue year-to-date? so one us just in know you've talk understand and the has contributes for half wanted EBITDA? can done how there. much it's CoverFlexx, couple I help of about it far in you And just of assuming things around me. us to

if the at the assuming Yes, you Mike, quarter, second kind say, the for it's overall about good would forecast in what's don't the half for as Performance come of CoverFlexx. while And you give margin from the we're around on half. for embedded of think that the impact of proxy pretty us look a million Coatings we probably second look that, to for $XX in margin exact details at it, I how revenue would us,

and really business, even not excited of cost far the the the seeing, month the with ownership And but well. as in as I only as some on that forward we're look that first think with well we're as as commercially, as very opportunities -- with we side

to So forward. our is a good a growing here activities, economy really as start we're expectation to help going this I off is The is space lot that very go of really think start. we jump

comes Begleiter question Deutsche next with David Bank. from Our

I Huang of versus if David on for here is at follow trying the total the of guess, the business? Dave. a guess, maybe gap look margin between then away percentage I industrial. a scope first, This from just to up you're the sales? low-margin businesses, deprioritization your businesses And I of as walk What's your highest-margin these portfolio today, what's

Yes.

business at of whether looked we changes, maybe and as we well those As is that was exit looking the XX% potentially strategy customers as some we business, there our overall in some could Industrial at we where today, were make to of as the it. for about outlined certain that price

So has that's the the been on. journey team that

extremely gone Chris I has execution to, the date, alluded as think well. to

on but top the can that overall -- is this first getting in -- also you're last benefit from from profile year. you're to Industrial. the some remarks, we're increase deprioritization. XXX we this benefit basis the that, seeing referenced over I getting my margin in of and positively from actually And quarter performance you're you Industrial line And prepared are inflecting expecting that as a points And

execute to as So get and really team. the good into We believe continue from on more we there's we'll that and beyond. a to 'XX start definitely go,

you momentum Refinish guess EBITDA the Coatings up and in just in then QX? QX Industrial, EBITDA margin. margin Performance I expect given on improvement to be versus do sequentially And

margins to to a of well. QX as little attributable total, of of QX. the seasonality of There's drive as also kind quick say, There's again, I components that. that mix And as you Performance Well, the kind differences into well sequentially basis considerations segment from bit be some if in would it perspective QX. get type totality a from down at Coatings I we mean, some kind look that be would run margin you the when math, consolidated from in a will

Our next from question Panjabi with Baird. comes Ghansham

This is in Ghansham. Matt sitting Krueger for

been year? lower self-help how the through a second release presentation, should expect move has cited for with what remainder does are a compare initiatives. that you or offsetting What benefit to price/cost basis? doing of and expectations of on inflation and we the the labor for through that given the What in XQ year-to-date So And costs the job half? variable nice the you're other as and your then we

thanks I question. mean, Yes. for the

As we kind look at differential, we've think just kind lot at of look you price a of done by if of that work business. I of kind cost

the pricing. comes move obviously for steady of something that's some as So it's mix There's kind Refinish within of get kind components kind us, -- you we're around year. business Generally into single always the that in pretty can every as that of look quarter-by-quarter well.

managing that done a as job also environment. far As Chris team very also outlined, as has good Industrial the

of course, in seeing with it's mix what And of a are higher inflation kind some of -- that, and labor. coming to the offsets some we're of

I especially So in overall, where think board, as prices impact in we're about a team I think Mobility from good as at that's I And the done RMI feel Coatings get far very have has job indices as pretty as we we're on place. business, what least that it's the we -- it's we that, neutral to the think think across mitigate as that. some well increase of helping that seeing seeing some continuing the appropriate, to of Performance

perspective. of as expect in we're a a can ] business looking very go we third for But at of quarter. you we see, for the little this solid just think a margin across And as overall, basis And so not as relates get increasing kind what bit points full this be from to in company. there about but the year I up are will we across XXX margins, only quarter, the movement going results the to having full overall, [ will be year it the to the board year

just Carl. to little bit Maybe a add to

guide, our margin in see as seems our was hitting macro about somewhat going we we and see margin we Plan. be that -- or that forward. QX. you soft even getting targets to in see if the from it see you'll Our in look -- in volatile, through XXXX that what the at have us and you in full the back And environment can And cost A the changes to year, stability focus and work in pricing we -- what and we see, doing you this either our protect really stabilization half is can ensuring actions. And we're as you'll accomplished our what raw are that our material through drive margins that's that's in with what we

this That's digging a Have then you from in into momentum which initiatives through the And teams expect initiatives is at greatest then it. XXXX? to cost-savings initiatives the about opportunity future talk deeper. businesses opportunity And the further most for Can cost-savings helpful. where gained initiative, Got the have -- just or uncovered you bit the remaining you any point? you iterations? benefit little as

roles significant relates get doing we're was look total kind at we as as as we corporate-related savings some that amount in the expect of as of drive $XXX total, XXXX, outlined, as of a well. it mean, about through to that what very I Yes. with of we we million to

I you're of see as think far as that kind So the BUs across that of impact. all going to spread

driving million. that Again, categories that productivity will strategic you that's in we very we our for of as of other about think because And see well that all we of a BUs believe savings is that benefit the as in model about our big just have two $XX us network. the as type productivity then And that start. out kind we important far priority as

I in XXXX even as kind we of seeing think beyond. more out start should that get you increase and

And Again, then is the us opportunities the we with of units. we for other big optimization as kind about freight just the network, affects move the some that category consolidation of some really around of business all think how warehouses.

than as I wouldn't them. there's say So we outsized more one about that's others think

Our next Stanley. Vincent Andrews Morgan from with comes question

of the I side on for Haynes Steve wanted question guide is on ask on This a Vincent. the EBITDA to things.

flow your quarter really of back from maybe for a the doesn't based prior comments, the of leave half. beat ton through kind you think I the and in $XX once million-or-so upside it on CoverFlexx second

missing up bridge? why why it at the -- coming is Is there as conservatively kind point? this positioned back So be in guess, of there well? might that Or some isn't half just not offset that I

I X mean, quarter that Well, the and we've the yes, kind the put first at just if year. what months we really of I'd forth, have you with look maybe start of

which same number of $XXX million I to million, of months so $XXX seeing can of we're the around delivered we running, kind And million year, environment, XXXX. If $XXX what guide. this So especially EBITDA, first EBITDA step-up. compare was $XXX that of is about kind type million a in that it last X in of you're

very I about actually, excited performance. so of we're think this And type

You billion, could see be at overall of the at increase $XXX $X.X year-on-year kind our top end range, in would EBITDA. of we which it have penciled in about million

kind of just going to per if share, be then off I great earnings $X.XX, importantly, what a full based And over for quarter, doing of the this and with year-on-year. XX% we're about up XX% And we're think then year. year, up so --

necessarily So say I wouldn't conservative.

I and excited to think we're it on, to at. the focus execution we continue about that just we're where speaks

Steve, And to from add just to sales standpoint. maybe a that,

of As mid-, and down showing the X% volumes back you in know, of digits. has sales low-single of actually forecast coming most our most coming X%. We're the segments year, to down growth half of the

some. and essentially So that we're offsetting growing

we is back in half margins, back So do half. to to and pointed the through the to out, drive Carl we're maintaining that -- level of need as be growth what

actually that we guide with there. out So the comfortable have quite we're

Our comes with Josh question UBS. from next Spector

maybe quarter. kind but EBITDA focused on here, question of on Maybe more fourth cadence the similar a

typically, that's stepping more say in your assumption there is I up? mean, that you I down I bit a So little than seasonally, guess, other cost savings think is some that drives the would that? implied guide. Or

to there's some as bit cost think kind at a I of we of expect savings we continue little on. kind look it, piece of that of

QX, as imply fourth quarter well implicitly up where that -- was. that we're bit when the from to revenue kind steps what a As in -- that you of for saw guiding little as does

assuming guide. conversion the on -- we're in that So we're that the revenue overall we also have incremental

also well year. -- line the with you as have think having of also this of of I top we're yes, -- coming CoverFlexx about it's remember -- with as But to kind we also the we're overall that's helping think kind rest in,

you And programmatic Or buybacks, should level? what just quick and opportunistic you if where that $XX is be about million follow-up I talk we could versus just can the on what's level ask a talked in being That programmatic. expecting? about you did programmatic XQ,

Yes.

million. going we we're authority Board, quarter have the to from on execute that the announce last did $XXX of think which we I

did So of $XX right out the kind we of gate. I think million

I finance we're said in acquisition. revolver million draw we help prepared short I the paying fund remarks, my the We and that of that also did back CoverFlexx $XX As paid say would looking at to already. term,

of the kind But amount to our without go years. as dollar forward, several really forward it, next to buyer of our and as go continue a a million we kind exercise to of up use the is $XXX putting we able will, we expectation be on here over be and stock

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

of Commercial business. questions couple A Vehicle the on

in First of and stronger of bit in like than again that all, prebuy was ahead expected, expecting then you're this 'XX sounds second quarter to but sounds a the little big it in improve start you half weaken it the to like 'XX.

sure So I that correctly. to I just want make understand

opportunity? of Asia I you've the in see heavy in on but you can North the production historically then America. place business? Is And that comment lot that an on believe think takes that focused there, a you I truck opportunity been pretty also

Yes.

the Thanks I'll maybe So start. question. for

in right your forecast. you're First,

that customers in we North at think X think QX were America our pulling And continue than Most what -- North come the of -- lot I in in stronger as So in still really looked forecasted fleets rates came America. we I pull was that in a saw strong trucks. we production QX, strong. at Class to

the that was the will be at 'XX, a forecasting higher think about again, we And this where we And we're are the forecasts believe much a certainly know, are drop strong. of about in where quarters. overall, as down X part and the and XX% see are our the bit. we customers prebuy backlog But market 'XX to going point. than emissions you do change You down do as next and market aligned where with 'XX with

future. side, Another announcing look Commercial some strong a market for us on I and there, was Vehicle really agreements. especially LatAm, here to we're see in win forward job the great new to doing team continuing I the the LatAm.

doing So a I are teams job think stellar here. the

that, tougher in China one reasons is, much talk a to with. that bit Probably There environment. Specific you customers certain the perspective, that market. heard margin it our of working we the as said, the a drive that provide to our we it's a is overall, ensure But it's get for value goal always environment, that that products market harder. in and And we margin is are from little us to work a haven't about are bit I've just customers. we little stability it

first some All where look of you've the of your second maybe second in to additional right. little decline in the specifically any of that a Light rationalize the levels relative business, those curious from the is some mentioned downtime half you the a back production And been levels or bit then Vehicle half. in what the for hearing customers as summer are. about to on customers market half on I'm inventory throttling forecast

I -- market And America. the show show of I actually are deal I -- our have we X/X customers, of, customers But are specific are would call say say I inventory we in America, decline. them it, there North there's to would our think we about not a stable as customers a pretty -- let's don't on a would to specific significant building bit say with So North lots. --

is. -- Europe, regions. the the driven is call all I us the offsetting us all what business the that's really if volume seeing weakness as thing is are growth it much is the in to everybody that, by really story our volume And I that's is across three I pretty growth, globe is -- across think look interesting The We and coming being the winning all four for the specific in QX, helping that business growth. across, the regions, And growth. really up that's our would driving the is

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

your away is, seasonality? versus any was about business growth from have Steve ERP should in first Hoffman normal volume You XQ? that My on this Byrne. of year-over-year volume how year-over-year volume you given goes comparison implementation-related production think indications easier the in And give could as for we Rock comparison XQ beneficial question in constraints, growth how sequentially

is that XX%, we say we to that to if was think because North -- want million. that you would implementation about about percentage X%. comp we by we ERP that make is, $XX of said one lost in there's I that impacted I is America, that element $XX North revenue the year Well, the in last was QX America of grew million and an of I sure -- There that this look understanding sales at the

what And to strong drive shows Refinish just those of that us and back and really get driving there of back customers it The with to teams get. our team the we impressed I'm and sit are drove wait I'm initiative that, resiliency target, team. of up and And really with our doesn't to the the us. work sales. for strength provide, is just a back show products revenue and that team back with And that the accomplishing the come proud working for the customers really,

really turned So with overall, just pleased out. how that

in any wonder Great. could to Irus And Mixing rollout updates Refinish? you if provide the

going a it's question. got XXX-plus great. Rock. That's We've this mean, out there I Thanks, Yes. year. great

could would say to the he Troy, get he there. out talk business, who runs X,XXX he If you wishes

by of next to about year. get rollout is target X,XXX The going end Our good. is the

quarter. some to in you Europe -- And the to the The the the interest see talk really customers customers can I've had opportunity product. -- in last are in

starting in objective we've mostly America. get -- and the to the Europe, year. rollout And is we're the transition started out next also end North so in to about of X,XXX by get into And

with Our next question comes Roberts Mizuho from Securities. John

for Chris, Rodriguez Edlain on for a one M&A. me quick is This just John.

talk about pipeline seeing new And you recently. Can the are bolt-ons You've opportunities couple for still acquisitions? you of there? done in a

Yes. Thanks absolutely We for question. the are.

we're a pivot laid we're seen certainly going margin entire of as focus business, quarter year, across out in the pivot, on since through to and Plan out back we've the ago, we prove growth. the to to As going we here especially stabilization the that obviously our A idea half

million And target for a $XXX we have growth.

As I to we've look accomplished million this $XXX million at $XXX about already that. of year,

to A over And the million organic through get the X other as in through half half So we Plan, the have years. positioned that, of still and do next was we was $XXX to growth. it M&A

teams go are we opportunities the from we do highlighted in bolt-ons do are year. able business, to highlighting as more But and we're to look parts as also accretive and want I do And want here. you'll we the Refinish, And go areas over next of forward something we've the we to those at as that that Vehicle, that were in the we believe there hear that I on keep Commercial forward. focused the

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

This Hettwer McCarthy. is Matt for on Kevin

at cut's question to your for in increasingly all? meeting rates one FOMC you And see looking businesses? impacting become likely your given impact do lower How the like on guide touch recent lower do rates built have September. going you and me. Just the a to rates wanted interest of I into

So impact from lower the the today, do we in guide. not rates have

is point around or September. a cut moving think I consensus expectations in basis XX

in if think into I and affect the you cuts year, consumer would helping longer categories that helpful next be term, I importantly, where kind consumer be get will more that that as very potentially come will think vehicles, on business, little our the rate different tailwind could If business across be continue of that's overall. a there. I that industrial would our in new bit material be a whether those cuts rate think be that purchasing of would XXXX, that's whether in housing,

from would how we're like I perspective, balance floating our expense sheet XX% interest I us, think our with of about debt. for which positioned be debt an on rate

So begin to little pickup or if of actually a we rates do get when decline. would bit

Mike comes Fargo. question Our Sison from Wells next with

growth, would Not demand great of in raise quarter in each And that Nice the tracking Chris, good total, you up next in improvement think pretty markets when how picks do think do there. volume growth single-digits. in a businesses you improve, you you're think you do year? a low have year environment? If and about volume this and 'XX year, demand. the overall

see a We absolutely and business the any so would proud been the we've expect making that, margin building what of perspective What growth, say. really, point accomplish, good that we a foundation sure really I if from able to Mike, it I'm is at really is converts underlying well.

here good in what the accomplished XXX believe And I of, days really that elements gross the get driving really I the if gotten believe that's we proud two we've struggled a will over our accretive. overall, businesses I we that portfolio ago. So And at growth X incrementally SG&A our at margin We've is through anything all what point, last back, can is businesses across be and portfolio. that all spot look back quarters. start of going a good the I'm

great. only drives decline because happens any rates construction that from into that automotive CoverFlexx even our the have XX% business, Refinish more segment share. with we here grow or business; us just where gets acquisition to did the we economy opportunity just is markets terms -- point, anything The rates we a in from where in mobility; interest and interest see even perspective as on that industrial So Carl's or of improving to of of

So the growth with And what segments, engine. in are great focused as sales. that's they're is about teams driving towards all any I growth opportunity all pivoting the upside and on, I see think the

Q&A our conference disconnect as all at well call. may and your this our as you for you you. participation, Thank will session Thank conclude any time. And