Axalta Coating Systems Q4 2025 Axalta Coating Systems Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Axalta Coating Systems Ltd Earnings Call
Speaker #4: Please stand by. Your meeting is about to begin. Ladies and gentlemen, thank you for standing Systems Q4 and full by. call. All participants Welcome to Exalta Coating year 2025 earnings follow the presentation by management.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Axalta Coating Systems' Q4 and full year 2025 earnings call. All participants will be in a listen-only mode. A question-and-answer session will follow the presentation by management. Today's call is being recorded, and a replay will be available through February 17. Those listening after today's call should please note that the information provided in the recording will not be updated, and therefore may no longer be current. I will now turn the call over to Colleen Lubick, Vice President of Investor Relations.
Speaker #4: mode. A question-and-answer session will available through February 17th. Those listening after the information provided in the and therefore may no longer be current. I will now turn the call over will be in a listen-only to Colleen Lubic, Vice President of Investor
Speaker #4: Today's call is being results and outcomes may differ
Colleen Lubic: Good morning, everyone, and thank you for joining us to discuss Axalta's Q4 and full year 2025 financial results. I'm Colleen Lubick, Vice President of Investor Relations. With me today are Chris Villavarayan, our CEO and President, and Carl Anderson, our Chief Financial Officer. We posted our Q4 and full year 2025 financial results this morning. You can find today's presentation and supporting materials on the investor relations section of our website at axalta.com, which we will be referring to on this call. Our remarks today in the slide presentation may include forward-looking statements reflecting our current views of future events and their potential impact on Axalta's performance with respect to the proposed merger of equals between Axalta and AkzoNobel. These statements involve risks and uncertainties, and actual results and outcomes may differ materially. We are under no obligation to update these statements.
Colleen Lubic: Good morning, everyone, and thank you for joining us to discuss Axalta's Q4 and full year 2025 financial results. I'm Colleen Lubick, Vice President of Investor Relations. With me today are Chris Villavarayan, our CEO and President, and Carl Anderson, our Chief Financial Officer. We posted our Q4 and full year 2025 financial results this morning. You can find today's presentation and supporting materials on the investor relations section of our website at axalta.com, which we will be referring to on this call. Our remarks today in the slide presentation may include forward-looking statements reflecting our current views of future events and their potential impact on Axalta's performance with respect to the proposed merger of equals between Axalta and AkzoNobel. These statements involve risks and uncertainties, and actual results and outcomes may differ materially. We are under no obligation to update these statements.
Speaker #2: With respect to the proposed merger, current views of future events and their officer. We posted our findings, today's presentation, and risks and uncertainties, and actuals, on our website at—
Speaker #2: obligation to update these statements. Our remarks and the slide materially. Good morning, Novell. We are under no These statements involve non-GAAP financial measures. We most directly comparable GAAP of Equals between Exalta and Axon presentation also contain various information.
Colleen Lubic: Our remarks in this slide presentation also contain various non-GAAP financial measures. We included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Refer to our filings with the SEC for more information. With that, I'll turn the call over to Chris.
Colleen Lubic: Our remarks in this slide presentation also contain various non-GAAP financial measures. We included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Refer to our filings with the SEC for more information. With that, I'll turn the call over to Chris.
Speaker #2: included reconciliations of these
Speaker #2: With that, I'll turn the call over.
Speaker #3: Thank you,
Chris Villavarayan: Thank you, Colleen, and good morning, everyone. In Q4, Axalta delivered another period of strong operational execution, solid margin performance, and record cash generation. We generated net sales of approximately $1.3 billion, despite ongoing macro headwinds in North America, with year-over-year growth in three of our four regions. Adjusted EBITDA was $272 million, with a margin remaining strong at 21.5%, an improvement of 50 basis points versus last year. This marks our seventh consecutive quarter at or above our eight-plan margin target of 21%, underscoring the strength of our commercial discipline, pricing actions, and cost management. Adjusted diluted EPS was $0.59, roughly flat year over year. In Mobility Coatings, we delivered a record Q4 performance in net sales and adjusted EBITDA, supported by new business wins and steady global production.
Chris Villavarayan: Thank you, Colleen, and good morning, everyone. In Q4, Axalta delivered another period of strong operational execution, solid margin performance, and record cash generation. We generated net sales of approximately $1.3 billion, despite ongoing macro headwinds in North America, with year-over-year growth in three of our four regions. Adjusted EBITDA was $272 million, with a margin remaining strong at 21.5%, an improvement of 50 basis points versus last year. This marks our seventh consecutive quarter at or above our eight-plan margin target of 21%, underscoring the strength of our commercial discipline, pricing actions, and cost management. Adjusted diluted EPS was $0.59, roughly flat year over year. In Mobility Coatings, we delivered a record Q4 performance in net sales and adjusted EBITDA, supported by new business wins and steady global production.
Speaker #3: the fourth quarter, Exalta delivered another period of strong margin performance, and record
Speaker #3: $1.3 billion
Speaker #3: year-over-year growth in three of our four non-GAAP financial measures to the North America with regions. Adjusted million, with a margin remaining strong our filings with the SEC for more points versus last year.
Speaker #3: EBITDA was $272 quarter at or above
Speaker #3: EBITDA was $272 quarter at or above financial measures. our A-plan margin target of
Speaker #3: Discipline in pricing actions and cost management. Adjusted diluted EPS was $0.59, roughly flat at 21.5%. Record fourth quarter performance in net sales and adjusted EBITDA, supported by new business wins, operational execution, and solid reference to production.
Speaker #3: year-over-year. Performance quoting sales and In mix fell short of our for cash generation both in 21%, underscoring flow. Overall, the and improvement of 50 basis quarter caps a year of significant cash generation. to Chris.
Speaker #3: year-over-year. Performance quoting sales and In mix fell short of our for cash generation both in 21%, underscoring flow. Overall, the and improvement of 50 basis quarter caps a year of significant cash generation.
Chris Villavarayan: Performance Coatings sales and mix fell short of our expectations in Q4. The fourth quarter marked a record for cash generation, both in terms of operating and free cash flow. Overall, the quarter caps a year of significant progress at Axalta. Let's turn to slide 4. Looking at 2025, we delivered record financial results this year, and I'm extremely proud of what the team accomplished. Adjusted EBITDA was $1.13 billion, representing a $317 million growth since 2022, with margins expanding over 500 basis points to 22%. Adjusted diluted EPS increased approximately 55% over the same period, reaching another all-time high, and free cash flow came in at $466 million, an increase of over $300 million compared to 2022. These are exceptional results that highlight our strongest financial performance on record.
Chris Villavarayan: Performance Coatings sales and mix fell short of our expectations in Q4. The fourth quarter marked a record for cash generation, both in terms of operating and free cash flow. Overall, the quarter caps a year of significant progress at Axalta. Let's turn to slide 4. Looking at 2025, we delivered record financial results this year, and I'm extremely proud of what the team accomplished. Adjusted EBITDA was $1.13 billion, representing a $317 million growth since 2022, with margins expanding over 500 basis points to 22%. Adjusted diluted EPS increased approximately 55% over the same period, reaching another all-time high, and free cash flow came in at $466 million, an increase of over $300 million compared to 2022. These are exceptional results that highlight our strongest financial performance on record.
Speaker #3: Progress at Axalta in terms of operating and free cash flow. Looking at 2025, let's turn to the slide. We delivered record financial results this year, and I'm accomplished.
Speaker #3: Adjusted EBITDA was extremely proud of what the team—We $1.13 billion, representing a $317 million mobility quotings, we delivered a expectations in Q4, and steady global growth since 2022, with margins expanding over 500 basis points. The fourth quarter marked a record 22%.
Speaker #3: Adjusted diluted EPS increased over the same period, reaching another all-time high, and free cash flow came in at $466 million, an increase of over 300 despite ongoing macro headwinds in million compared to results that highlight our strongest Colleen, and good morning, everyone.
Speaker #3: Record. The discipline achieved these financials in team—especially considering it was accomplished in an approximately 55% financial performance in 2022. The results speak to the strength of the Axalta demand.
Chris Villavarayan: The discipline, ownership, and drive that was required to achieve these financial results speak to the strength of the Axalta team, especially considering it was accomplished in a challenging market backdrop with significantly lower demand. Our team has consistently raised the bar, reinforcing the foundation of a well-performing and resilient company. Let's move to slide 5. Let me briefly highlight the meaningful operational and commercial progress we delivered in 2025. Progress that is strengthening our cost structure, improving service, and delivering accretive growth. Operational excellence is a core driver of our performance. As always, safety is our top priority. We reduced injuries by 40% since 2024, achieving a TRIR of 0.18, far outperforming the industry average. We won't stop until we achieve a zero-incident environment and will remain steadfast in driving safe behaviors and best practices around the world.
Chris Villavarayan: The discipline, ownership, and drive that was required to achieve these financial results speak to the strength of the Axalta team, especially considering it was accomplished in a challenging market backdrop with significantly lower demand. Our team has consistently raised the bar, reinforcing the foundation of a well-performing and resilient company. Let's move to slide 5. Let me briefly highlight the meaningful operational and commercial progress we delivered in 2025. Progress that is strengthening our cost structure, improving service, and delivering accretive growth. Operational excellence is a core driver of our performance. As always, safety is our top priority. We reduced injuries by 40% since 2024, achieving a TRIR of 0.18, far outperforming the industry average. We won't stop until we achieve a zero-incident environment and will remain steadfast in driving safe behaviors and best practices around the world.
Speaker #3: Our team has consistently raised the bar, reinforcing ownership and drive that was required to significantly lower the foundation of a well-performing and resilient company.
Speaker #3: Let's move to slide the meaningful operational and commercial progress we delivered in 2025. Progress that is strengthening our cost structure, improving service, and delivering a creative 5.
Speaker #3: a core driver of our growth. performance. As always, Operational excellence is We reduced injuries by challenging market backdrop with 40% since 2024, achieving a TRIR safety is our top priority.
Speaker #3: outperforming the industry average. We won't stop until we achieve a zero incident Let me briefly highlight steadfast in driving safe environment and will remain world.
Speaker #3: We delivered more than $300 million in variable generated net sales, approximately, cost reductions through our procurement and material productivity programs, and lowered fixed expenses by over 6% on a constant currency basis in 2025.
Chris Villavarayan: We delivered more than $300 million in variable cost reductions through our procurement and material productivity programs, and lowered fixed expenses by over 6% on a constant currency basis in 2025. This was supported by $100 million in incremental structural benefits from our transformation initiatives. We invested a record $196 million in CapEx to support productivity and reduced our footprint by optimizing multiple sites over the past 2 years. We also improved service levels to our customers with a 10% improvement in on-time delivery. These actions support our strong 22% EBITDA margin for the year. Commercially, we're building top-line momentum. In Refinish, we added over 2,800 net new body shops and grew adjacencies by $25 million. In Mobility Coatings, we secured $60 million in net new wins, with standout growth in Latin America and China.
Chris Villavarayan: We delivered more than $300 million in variable cost reductions through our procurement and material productivity programs, and lowered fixed expenses by over 6% on a constant currency basis in 2025. This was supported by $100 million in incremental structural benefits from our transformation initiatives. We invested a record $196 million in CapEx to support productivity and reduced our footprint by optimizing multiple sites over the past 2 years. We also improved service levels to our customers with a 10% improvement in on-time delivery. These actions support our strong 22% EBITDA margin for the year. Commercially, we're building top-line momentum. In Refinish, we added over 2,800 net new body shops and grew adjacencies by $25 million. In Mobility Coatings, we secured $60 million in net new wins, with standout growth in Latin America and China.
Speaker #3: This was supported by $100 million in incremental structural benefits from our transformation initiatives. We invested a record $196 million in CapEx to support productivity and reduce our footprint by optimizing multiple sites over the past two years.
Speaker #3: We also improved service levels to our customers improvement in on-time with a 10% delivery. These actions support our the year. Commercially, we're building top-line momentum.
Speaker #3: strong 22% EBITDA margin for macro. These And in industrial, our Asia operational and commercial accomplishments are sustainable enhancements that are sales growth despite a weaker driving our financial performance.
Speaker #3: In refinish, we added shops and grew adjacencies by 25 million, over 2,800 net new body with stand-out growth in Latin America and Pac team delivered 5% net China.
Speaker #3: in mobility quotings, we secured On slide 6, I want to highlight what our underlying performance demonstrates against the backdrop where demand significantly declined in most end markets due to the macro refinish, global activity is headwinds.
Chris Villavarayan: In Industrial, our Asia Pacific team delivered 5% net sales growth despite a weaker macro. These operational and commercial accomplishments are sustainable enhancements that are driving our financial performance. On slide six, I want to highlight what our underlying performance demonstrates against a backdrop where demand significantly declined in most end markets due to the macro headwinds. Starting with Refinish, global activity is running mid-single digits below our expectations. This shortfall is compounded by distributor consolidation in North America, which has created near-term volume pressure as the channel rationalizes inventory. In Industrial, demand across North America and Europe is significantly weaker than we all anticipated. Light Vehicle is performing comparatively better. Revenue is tracking close to our expectations, although global auto production is running about 1% below the levels we assumed. In Commercial Vehicles, conditions are certainly challenging.
Chris Villavarayan: In Industrial, our Asia Pacific team delivered 5% net sales growth despite a weaker macro. These operational and commercial accomplishments are sustainable enhancements that are driving our financial performance. On slide six, I want to highlight what our underlying performance demonstrates against a backdrop where demand significantly declined in most end markets due to the macro headwinds. Starting with Refinish, global activity is running mid-single digits below our expectations. This shortfall is compounded by distributor consolidation in North America, which has created near-term volume pressure as the channel rationalizes inventory. In Industrial, demand across North America and Europe is significantly weaker than we all anticipated. Light Vehicle is performing comparatively better. Revenue is tracking close to our expectations, although global auto production is running about 1% below the levels we assumed. In Commercial Vehicles, conditions are certainly challenging.
Speaker #3: This shortfall is compounded by distributor consolidation in North America, which has created starting with near-term volume pressure as the channel rationalizes demand across North America, and Europe is significantly weaker than we all anticipated.
Speaker #3: Light vehicle is performing comparatively inventory. better, revenue is tracking In industrial, running mid-signal digits below our close to our expectations, about 1% below the levels we assumed.
Speaker #3: And in commercial vehicles, conditions are certainly challenging. Class 8 builds in North America are although global auto production is running down roughly 30% versus our assumptions, reflecting a broader slowdown in fleet refresh activity and softer story I want to emphasize is not we have been able to do despite the weakness.
Chris Villavarayan: Class 8 builds in North America are down roughly 30% versus our assumptions, reflecting a broader slowdown in fleet refresh activity and softer freight demand. But the story I want to emphasize is not the macro. The real story is what we have been able to do despite the weakness. The actions we have taken across procurement, fixed operating costs, network optimization, and productivity have fundamentally strengthened the business and protected margins to prepare for the upside. The chart on the right shows that when markets normalize, we're positioned to deliver margins well north of 21% and generate Adjusted EBITDA above the $1.2 billion in the eight-plan target. We have built the foundation, which will further be strengthened with the Axalta combination, and we will be ready when the macro recovers.
Chris Villavarayan: Class 8 builds in North America are down roughly 30% versus our assumptions, reflecting a broader slowdown in fleet refresh activity and softer freight demand. But the story I want to emphasize is not the macro. The real story is what we have been able to do despite the weakness. The actions we have taken across procurement, fixed operating costs, network optimization, and productivity have fundamentally strengthened the business and protected margins to prepare for the upside. The chart on the right shows that when markets normalize, we're positioned to deliver margins well north of 21% and generate Adjusted EBITDA above the $1.2 billion in the eight-plan target. We have built the foundation, which will further be strengthened with the Axalta combination, and we will be ready when the macro recovers.
Speaker #3: freight demand. The real story is what taken across procurement, fixed operating costs, network But the optimization, and productivity have fundamentally strengthened the to prepare for the business and protected margins when markets normalize, we're upside.
Speaker #3: North of 21% and generate adjusted EBITDA above the $1.2 billion, positioned to deliver margins well above the A plan target. We have built the foundation, which will further be strengthened with the Axo combination, and we will be ready when the macro recovers. The chart on the right shows that.
Speaker #3: With that, I'll turn through our results on slide the call over to Carl to walk 7 and our outlook for
Chris Villavarayan: With that, I'll turn the call over to Carl to walk through our results on slide 7 and our outlook for 2026.
Chris Villavarayan: With that, I'll turn the call over to Carl to walk through our results on slide 7 and our outlook for 2026.
Speaker #3: 2026. Thank you,
Speaker #3: 2026. Thank you,
Carl Anderson: Thank you, Chris, and good morning, everyone. In Q4, net sales declined 4% year-over-year due to lower volumes in North America across all of our businesses. These headwinds more than offset favorable year-over-year foreign currency translation, primarily due to the stronger euro. Gross margins decreased 70 basis points compared to the previous year, primarily driven by unfavorable geographic mix tied to lower North America net sales compared to the prior year period. Net income was $60 million, compared to $137 million in the prior year period, driven primarily by higher tax expense, and $21 million in transaction costs, primarily related to the announced merger with AkzoNobel.
Carl Anderson: Thank you, Chris, and good morning, everyone. In Q4, net sales declined 4% year-over-year due to lower volumes in North America across all of our businesses. These headwinds more than offset favorable year-over-year foreign currency translation, primarily due to the stronger euro. Gross margins decreased 70 basis points compared to the previous year, primarily driven by unfavorable geographic mix tied to lower North America net sales compared to the prior year period. Net income was $60 million, compared to $137 million in the prior year period, driven primarily by higher tax expense, and $21 million in transaction costs, primarily related to the announced merger with AkzoNobel.
Speaker #1: Chris, and good morning, everyone. Gross margins decreased 70 basis points compared to the previous year, primarily driven by unfavorable geographic mix, tied to lower North American net sales compared to the period.
Speaker #1: 4% year over year due to lower In the fourth quarter, net sales declined These headwinds more than offset favorable year-over-year foreign currency volumes in North America, across all stronger euro.
Speaker #1: Net income was $60 million, compared to $137 million in the prior year period, driven primarily by higher tax expense and $21 million in transaction costs, primarily related to the announced merger with Akzo Nobel.
Speaker #1: Income tax expense was $57 million higher in the fourth quarter of this year due to a one-time deferred tax benefit recognized in the fourth quarter of this year, partially mitigated by excellent execution on costs.
Carl Anderson: Income tax expense was $57 million higher in Q4 of this year due to a one-time deferred tax benefit recognized in Q4 of 2024 and a valuation allowance accrued this quarter. These increased expenses were partially mitigated by excellent execution on costs. Interest expense declined 11%, SG&A expenses were down 8%, and other fixed operating costs were down 4% compared to a year ago. Adjusted EBITDA in the quarter was $272 million, down slightly from last year and lower than our guidance expectations as December volumes in both Refinish and Industrial came in lower than anticipated. Adjusted EBITDA margin expanded 50 basis points year-over-year, driven primarily by strong mobility results and lower costs.
Carl Anderson: Income tax expense was $57 million higher in Q4 of this year due to a one-time deferred tax benefit recognized in Q4 of 2024 and a valuation allowance accrued this quarter. These increased expenses were partially mitigated by excellent execution on costs. Interest expense declined 11%, SG&A expenses were down 8%, and other fixed operating costs were down 4% compared to a year ago. Adjusted EBITDA in the quarter was $272 million, down slightly from last year and lower than our guidance expectations as December volumes in both Refinish and Industrial came in lower than anticipated. Adjusted EBITDA margin expanded 50 basis points year-over-year, driven primarily by strong mobility results and lower costs.
Speaker #1: Interest expense declined 11%, SG&A expenses were fixed operating costs were down 4% compared to a year ago. Adjusted EBITDA in the quarter was 272 lower than our guidance expectations down 8%, and other 2024 and a valuation allowance accrued as December volumes in both anticipated.
Speaker #1: Adjusted EBITDA margin expanded 50 basis points year over year refinish and industrial came in lower than results and lower driven primarily by strong mobility million, down slightly from last year, and costs.
Carl Anderson: Adjusted diluted earnings per share was $0.59 in the quarter, roughly in line with a year ago, as less shares outstanding and lower interest expense helped to offset decreased income from operations. Fourth quarter cash from operations of $344 million, and free cash flow of $290 million were both fourth quarter records. The year-over-year increase was driven primarily by improved working capital and lower interest payments. Performance Coatings' fourth quarter net sales declined 6% year-over-year to $791 million, primarily due to lower volumes and unfavorable price mix. Refinish net sales decreased 7% to $509 million in the fourth quarter, reflecting ongoing low levels of claim activity and adjusted order patterns as North American customers manage their working capital.
Carl Anderson: Adjusted diluted earnings per share was $0.59 in the quarter, roughly in line with a year ago, as less shares outstanding and lower interest expense helped to offset decreased income from operations. Fourth quarter cash from operations of $344 million, and free cash flow of $290 million were both fourth quarter records. The year-over-year increase was driven primarily by improved working capital and lower interest payments. Performance Coatings' fourth quarter net sales declined 6% year-over-year to $791 million, primarily due to lower volumes and unfavorable price mix. Refinish net sales decreased 7% to $509 million in the fourth quarter, reflecting ongoing low levels of claim activity and adjusted order patterns as North American customers manage their working capital.
Speaker #1: 59 cents in the quarter, roughly. Adjusted diluted earnings per share was, year's outstanding and lower interest, decreased income from expense helped to offset operations.
Speaker #1: Fourth quarter cash from operations of 344 million, and free cash flow of 290 million were both fourth quarter records. The year-over-year increase was payments.
Speaker #1: Performance quotings fourth quarter net sales declined 6% year driven primarily by improved working unfavorable price over year to 791 million, primarily due to lower volumes and mix.
Speaker #1: Refinished net sales decreased 7% to $509 million in line with a year ago, as last million in the fourth quarter, reflecting ongoing low levels of claim activity, and adjusted capital, and lower interest capital.
Carl Anderson: Industrial net sales declined 5% year-over-year to $282 million due to volume declines in North America and Europe, partially offset by favorable foreign currency tailwinds in the quarter. Fourth quarter Performance Coatings Adjusted EBITDA was $180 million, down from $198 million a year ago. Adjusted EBITDA margin decreased by 70 basis points to 22.8% due to the conversion from lower sales, partially offset by a reduction in operating expenses. Mobility Coatings' fourth quarter 2025 net sales were $471 million, an increase of 1% from the prior year period. Light Vehicle net sales increased by $3 million from the fourth quarter of last year due to positive price mix and favorable foreign currency, mitigating volume declines in North America....
Carl Anderson: Industrial net sales declined 5% year-over-year to $282 million due to volume declines in North America and Europe, partially offset by favorable foreign currency tailwinds in the quarter. Fourth quarter Performance Coatings Adjusted EBITDA was $180 million, down from $198 million a year ago. Adjusted EBITDA margin decreased by 70 basis points to 22.8% due to the conversion from lower sales, partially offset by a reduction in operating expenses. Mobility Coatings' fourth quarter 2025 net sales were $471 million, an increase of 1% from the prior year period. Light Vehicle net sales increased by $3 million from the fourth quarter of last year due to positive price mix and favorable foreign currency, mitigating volume declines in North America....
Speaker #1: Industrial net sales declined 5% year over manage their working year to 282 million due to volume declines in North America and order patterns as North American customers EBITDA was 180 million, down from 198 million a year EBITDA margin decreased by 70 basis points to Europe, partially offset by favorable 22.8% due to the conversion from lower expenses.
Speaker #1: Mobility quotings fourth Fourth quarter performance quotings adjusted 471 million, an increase of 1% from the prior year period. Light quarter. vehicle net sales increased by 3 million from the fourth quarter of last year, due to positive price mix and favorable foreign currency mitigating volume America.
Speaker #1: quarter 2025 net sales were Commercial vehicle net sales were flat, supported by sales partially offset by a declines in North new business winds, favorable foreign currency impacts, and positive price mix, which together helped offset the effect of lower Class ago.
Carl Anderson: Commercial vehicle net sales were flat, supported by new business wins, favorable foreign currency impacts, and positive price mix, which together helped offset the effect of lower Class 8 truck production on a year-over-year basis. It's important to keep in mind that North America heavy-duty truck production was down roughly 30% in the quarter, which underscores the resiliency of the business, driven by growth factors in commercial transportation solutions. Mobility Coatings adjusted EBITDA in the quarter increased 20% to $92 million in the fourth quarter, compared to $77 million in the prior year period. The increase was due to strong contributions from price mix and lower operating expenses. Adjusted EBITDA margin was 19.4%, an increase of 300 basis points compared to last year. Let's turn to slide 10 for a review of our full year results.
Carl Anderson: Commercial vehicle net sales were flat, supported by new business wins, favorable foreign currency impacts, and positive price mix, which together helped offset the effect of lower Class 8 truck production on a year-over-year basis. It's important to keep in mind that North America heavy-duty truck production was down roughly 30% in the quarter, which underscores the resiliency of the business, driven by growth factors in commercial transportation solutions. Mobility Coatings adjusted EBITDA in the quarter increased 20% to $92 million in the fourth quarter, compared to $77 million in the prior year period. The increase was due to strong contributions from price mix and lower operating expenses. Adjusted EBITDA margin was 19.4%, an increase of 300 basis points compared to last year. Let's turn to slide 10 for a review of our full year results.
Speaker #1: basis. It's important 8 truck production on a year-over-year heavy-duty truck production was down quarter, which underscores the resiliency of Adjusted roughly 30% in the the business driven by growth factors in commercial transportation reduction in operating solutions.
Speaker #1: Mobility coatings adjusted EBITDA in the quarter increased 20% to $92 million in the prior year fourth quarter, compared to $77 million in the prior period.
Speaker #1: The increase was due to strong lower operating contributions from price mix and Adjusted EBITDA margin increase of 300 basis points compared to last year.
Speaker #1: Let's turn to slide 10 for a review of results. In 2025, net sales for our full year declined 3% year over year to $5,117,000,000. The primary driver was broad industry softness in performance coatings.
Carl Anderson: In 2025, net sales declined 3% year-over-year to $5.117 billion. The primary driver was broad industry softness in Performance Coatings. This was offset by new business wins, favorable currency translation, and positive price mix across three of our four end markets. Overall, 2025 was the story of a challenged North America macro, which unfavorably impacted all four of our businesses. Importantly, we view this pressure as transitory and believe our 2025 financial results reflect the resilience and stability within our global portfolio and Axalta's ability to drive operating performance and manage costs. Even with this top-line pressure, we remain focused on our controllables, and we're able to deliver one of the strongest earnings performances in Axalta's history.
Carl Anderson: In 2025, net sales declined 3% year-over-year to $5.117 billion. The primary driver was broad industry softness in Performance Coatings. This was offset by new business wins, favorable currency translation, and positive price mix across three of our four end markets. Overall, 2025 was the story of a challenged North America macro, which unfavorably impacted all four of our businesses. Importantly, we view this pressure as transitory and believe our 2025 financial results reflect the resilience and stability within our global portfolio and Axalta's ability to drive operating performance and manage costs. Even with this top-line pressure, we remain focused on our controllables, and we're able to deliver one of the strongest earnings performances in Axalta's history.
Speaker #1: This was offset by new business wins, favorable currency translation, and positive price mix across three of our four end markets. 2025 was the story of a challenged 19.4%, and the North American macro which businesses.
Speaker #1: Importantly, unfavorably impacted all four of our we view this pressure as transitory and believe our 2025 financial results reflect the resilience and stability within our global portfolio and exalt those ability to drive operating performance markets.
Speaker #1: costs. Even with this top-line pressure, we remain focused on our controllables, and we're able to deliver one of the strongest earnings performances in Through strong execution, we achieve record full-year adjusted EBITDA of Overall, of $2.49, a Exaltus history.
Carl Anderson: Through strong execution, we achieved record full-year adjusted EBITDA of $1.128 billion and adjusted EPS of $2.49, a 6% increase over 2024. Adjusted EBITDA margin improved by 80 basis points to 22%, exceeding the full-year margin target outlined in the A plan of 21% for the second year in a row. We delivered nearly $650 million in cash from operations, leading to $466 million of free cash flow, driven by lower cash interest payments and improved working capital, which more than offset $56 million in higher capital expenditures. Let's go to slide 11. 2025 was another year of disciplined execution on our capital allocation priorities. We continue to strengthen our balance sheet, invest in the business, and return capital to shareholders while generating strong cash flow.
Carl Anderson: Through strong execution, we achieved record full-year adjusted EBITDA of $1.128 billion and adjusted EPS of $2.49, a 6% increase over 2024. Adjusted EBITDA margin improved by 80 basis points to 22%, exceeding the full-year margin target outlined in the A plan of 21% for the second year in a row. We delivered nearly $650 million in cash from operations, leading to $466 million of free cash flow, driven by lower cash interest payments and improved working capital, which more than offset $56 million in higher capital expenditures. Let's go to slide 11. 2025 was another year of disciplined execution on our capital allocation priorities. We continue to strengthen our balance sheet, invest in the business, and return capital to shareholders while generating strong cash flow.
Speaker #1: $1,128,000,000 and adjusted EPS. And we delivered nearly $650 million in cash from operations, leading to $466 million, up 21% for the second year, in free cash flow driven by lower cash interest payments and improved working capital, which more than offset $56 million in higher capital expenditures.
Speaker #1: Six percent increase over 2024. Adjusted EBITDA margin improved by 80 basis points to 22%, exceeding the full-year margin target outlined in the A plan of record.
Speaker #1: Execution on our capital allocation—2025 was another year of discipline. Let's go to slide priorities. We, one, return capital to shareholders; while, two, invest in the business; and, three, generate strong cash flow.
Speaker #1: We pay down approximately, bringing our net leverage ratio down to 2.3 times, at $230 million in gross debt. We took proactive steps to reduce interest expense and improve our capital structure.
Speaker #1: We pay down approximately bringing our net leverage ratio down to 2.3 times a 230 million in gross debt, took proactive steps to reduce interest expense and improve our capital history.
Carl Anderson: We paid down approximately $230 million in gross debt, bringing our net leverage ratio down to 2.3 times at year-end, the lowest level in Axalta's history. We also took proactive steps to reduce interest expense and improve our capital structure. Interest expense for 2025 was $176 million, a reduction of nearly $30 million from last year. We are also planning for another $20 million reduction in 2026, resulting in annual interest expense of approximately $155 million for the full year, which is more than a 25% reduction from 2023 levels. Consistent with our strategy to drive productivity in our plants, we increased capital expenditures to $196 million in 2025, a 40% increase compared to a year ago.
Carl Anderson: We paid down approximately $230 million in gross debt, bringing our net leverage ratio down to 2.3 times at year-end, the lowest level in Axalta's history. We also took proactive steps to reduce interest expense and improve our capital structure. Interest expense for 2025 was $176 million, a reduction of nearly $30 million from last year. We are also planning for another $20 million reduction in 2026, resulting in annual interest expense of approximately $155 million for the full year, which is more than a 25% reduction from 2023 levels. Consistent with our strategy to drive productivity in our plants, we increased capital expenditures to $196 million in 2025, a 40% increase compared to a year ago.
Speaker #1: Interest year-end expense for 2025 was the lowest level in Exaltus, $176 million, a reduction of nearly $30 million from last year. We are also planning for another $20 million reduction in 2026, resulting in annual interest expense of approximately $155 million for the full year, which is more than a 25% reduction from previous levels.
Speaker #1: Consistent with our strategy 2023 to drive productivity in our plants, we increased capital expenditures to $196 million in 2025, a 40% ago. We expect to generate strong returns from these increases compared to a year investments, as they will contribute to sustained productivity gains in beyond.
Carl Anderson: We expect to generate strong returns from these investments as they will contribute to sustained productivity gains in 2026 and beyond. We also deployed $165 million in cash to share repurchases in the year. With the announced merger with ExxonMobil, we have ceased buybacks and are pivoting our capital allocation to debt reduction going forward. Free cash flow remains a key strength of Axalta, as we delivered $466 million in 2025, bringing cumulative free cash flow to more than $1.35 billion over just the last 3 years. We believe there is further opportunity to expand free cash flow generation as we plan to unlock more working capital through improvement in DSOs and inventory turns.
Carl Anderson: We expect to generate strong returns from these investments as they will contribute to sustained productivity gains in 2026 and beyond. We also deployed $165 million in cash to share repurchases in the year. With the announced merger with ExxonMobil, we have ceased buybacks and are pivoting our capital allocation to debt reduction going forward. Free cash flow remains a key strength of Axalta, as we delivered $466 million in 2025, bringing cumulative free cash flow to more than $1.35 billion over just the last 3 years. We believe there is further opportunity to expand free cash flow generation as we plan to unlock more working capital through improvement in DSOs and inventory turns.
Speaker #1: We also deployed $165 million in cash to share repurchases in the year. With the announced merger with Akzo Nobel, we have ceased buybacks and are pivoting to 2026 and forward.
Speaker #1: Free cash flow remains a delivered 466 million in 2025, bringing cumulative free cash flow to more than 1.35 billion over just the last believe there is further opportunity to plan to unlock more working three years.
Speaker #1: Inventory turns. All of these actions expand free cash flow generation as we deleverage, invest in capital structure, and improve return on invested capital, productivity, and optimize our key strengths at Axalta. We reinforce the strength of the foundation we've built and the momentum we have as we move toward our next guidance.
Carl Anderson: All of these actions, deleveraging, investing in productivity, optimizing our capital structure, and improving return on invested capital, reinforce the strength of the foundation we've built and the momentum we carry into 2026 and our next chapter. Let's turn to slide 12 for our view on guidance. We see the 2026 setup as one that will start off slower in Q1, with recovery beginning in Q2 and building momentum into the second half. We expect pressure from distributor order patterns in Refinish, as well as continued softness in Industrial and Class 8 commercial vehicle production to start the year. However, as we move throughout the year, we believe several catalysts, including interest rate reductions, easing insurance costs, higher used vehicle prices, higher Class 8 production, and anticipated benefits from tax reform will take hold, creating a supportive backdrop for the second half.
Carl Anderson: All of these actions, deleveraging, investing in productivity, optimizing our capital structure, and improving return on invested capital, reinforce the strength of the foundation we've built and the momentum we carry into 2026 and our next chapter. Let's turn to slide 12 for our view on guidance. We see the 2026 setup as one that will start off slower in Q1, with recovery beginning in Q2 and building momentum into the second half. We expect pressure from distributor order patterns in Refinish, as well as continued softness in Industrial and Class 8 commercial vehicle production to start the year. However, as we move throughout the year, we believe several catalysts, including interest rate reductions, easing insurance costs, higher used vehicle prices, higher Class 8 production, and anticipated benefits from tax reform will take hold, creating a supportive backdrop for the second half.
Speaker #1: We see the carry into 2026 2026 setup as one that will start off slower in the first quarter with for our view on and building momentum into the second patterns and refinish, as well as half.
Speaker #1: We see the carry into 2026 setup as one that will start off slower in the first quarter, with our view on building momentum into the second half. Patterns in refinish, as well as continued softness in industrial and Class, are expected. We also expect pressure from distributor order patterns this year.
Speaker #1: recovery beginning in Q2 we believe several catalysts, including interest rate reductions, easing chapter. insurance costs, higher However, as we move throughout the year, used vehicle prices, Let's turn to slide 12 8 commercial vehicle production to start the higher Class 8 production, and anticipated benefits from tax reform, will take hold, creating a supportive We backdrop for the second half.
Speaker #1: In Refinish, we expect inflation impacts in North America to be more manageable, supporting claims. For 2026, we are planning for in the second half.
Carl Anderson: In Refinish, we expect inflation impacts in North America to be more manageable, supporting a second half increase in repairable claims. For 2026, we are planning for positive price mix and higher volumes in the second half. In Industrial, we expect a slower start as the operating environment remains at trough levels, with recovery likely to occur in the second half, when seasonal demand is typically stronger. Interest rate reductions and improved consumer affordability should help drive volume stabilization as the year progresses. In Light Vehicle, we are assuming global auto production of approximately 92 million builds, roughly flat year-on-year and consistent with industry forecasts. In Commercial Vehicle, we expect North American Class 8 builds to remain flat in 2026, but increase throughout the year as demand trends start moving up toward normal replacement levels.
Carl Anderson: In Refinish, we expect inflation impacts in North America to be more manageable, supporting a second half increase in repairable claims. For 2026, we are planning for positive price mix and higher volumes in the second half. In Industrial, we expect a slower start as the operating environment remains at trough levels, with recovery likely to occur in the second half, when seasonal demand is typically stronger. Interest rate reductions and improved consumer affordability should help drive volume stabilization as the year progresses. In Light Vehicle, we are assuming global auto production of approximately 92 million builds, roughly flat year-on-year and consistent with industry forecasts. In Commercial Vehicle, we expect North American Class 8 builds to remain flat in 2026, but increase throughout the year as demand trends start moving up toward normal replacement levels.
Speaker #1: In industrial, we expect a slower start as the operating environment remains at trough. The second half, when seasonal demand is typically positive, should see a better price mix and higher volumes stronger.
Speaker #1: Interest rate reductions and a second-half increase in repairable improved consumer affordability should help drive, assuming global auto production progresses. In light vehicle, we are roughly flat year-on-year and see volume stabilization as the year forecasts.
Speaker #1: In commercial, consistent with industry vehicles, we expect North American Class 8 builds to remain flat in 2026, but increase throughout the year as demand trends start moving up toward normal replacement levels.
Speaker #1: We are also excited with our recent wins in Brazil and million of benefit year over year. Based on this expect these to provide approximately 30 slower start to the year, in the first quarter, we are planning for revenue to decline mid-single digits primarily driven by performance to 60 million decline in consolidated coatings.
Carl Anderson: We are also excited with our recent wins in Brazil and expect these to provide approximately $30 million of benefit year-over-year. Based on the slower start to the year, in Q1, we are planning for revenue to decline mid-single digits, primarily driven by Performance Coatings. The approximately $50 to 60 million decline in consolidated revenue is expected to result in Q1 adjusted EBITDA between $240 and 250 million. For the full year, we expect revenue to be up low single digits, driven by positive price mix, favorable FX, and higher volumes in the second half. We expect adjusted diluted earnings per share to be between $2.55 and $2.70 per share, representing approximately 5% growth at the midpoint versus 2025.
Carl Anderson: We are also excited with our recent wins in Brazil and expect these to provide approximately $30 million of benefit year-over-year. Based on the slower start to the year, in Q1, we are planning for revenue to decline mid-single digits, primarily driven by Performance Coatings. The approximately $50 to 60 million decline in consolidated revenue is expected to result in Q1 adjusted EBITDA between $240 and 250 million. For the full year, we expect revenue to be up low single digits, driven by positive price mix, favorable FX, and higher volumes in the second half. We expect adjusted diluted earnings per share to be between $2.55 and $2.70 per share, representing approximately 5% growth at the midpoint versus 2025.
Speaker #1: Revenue is expected to result in first-quarter adjusted EBITDA between $240 and $250 million. The approximately $50 million... For the full year, we expect revenue to be up low single digits, driven by positive price-mix, favorable FX, and higher volumes in the second half.
Speaker #1: We expect adjusted diluted earnings per share to be between $2.55 and $2.70 per share, representing approximately 5% growth at the midpoint versus EBITDA. EBITDA is expected to be between — will be another record year for 2025. Axalta.
Speaker #1: We expect adjusted diluted earnings per share to be between $2.55 and $2.70 per share, representing approximately 5% growth at the midpoint versus EBITDA is expected to be between will be another record year for 2025.
Carl Anderson: Adjusted EBITDA is expected to be between $1.14 billion and $1.17 billion, which will be another record year for Axalta. Adjusted EBITDA margins are also expected to be above 22% for the year. Finally, we expect full-year free cash flow of greater than $500 million, even as we continue to drive productivity by investing $180 to 200 million of CapEx back in the business. With another strong year of free cash flow in 2026, we expect net leverage will be below 2x by year-end. With that, I will turn it over to Chris for closing remarks.
Carl Anderson: Adjusted EBITDA is expected to be between $1.14 billion and $1.17 billion, which will be another record year for Axalta. Adjusted EBITDA margins are also expected to be above 22% for the year. Finally, we expect full-year free cash flow of greater than $500 million, even as we continue to drive productivity by investing $180 to 200 million of CapEx back in the business. With another strong year of free cash flow in 2026, we expect net leverage will be below 2x by year-end. With that, I will turn it over to Chris for closing remarks.
Speaker #1: Adjusted EBITDA margins are also expected to $1,170 million, which be above 22% for the year. And finally, we expect full-year free Adjusted million even as we continue to drive productivity by investing 180 to 200 cash flow of greater than $500 business.
Speaker #1: million of CapEx back in the With another strong year of free cash flow in 2026, we expect net leverage will be below two times by Chris for closing year-end.
Speaker #2: As you know, in November, we announced a merger of Equals with
Chris Villavarayan: As you know, in November, we announced a Merger of Equals with AkzoNobel. This combination represents an extraordinary value creation opportunity, one that we believe neither company could realize alone. Together, we expect to create a global leader with phenomenal scale and end market diversification, significant free cash flow generation, EBITDA margins approaching 20%, and an investment-grade credit rating and balance sheet flexibility. Additionally, we identified $600 million in synergy potential, and based on our joint track record, I'm confident we will deliver this. The combined company will be listed on the New York Stock Exchange and will be a global performance coatings leader. This merger is more than a strategic milestone. It is a catalyst for unlocking powerful new growth vectors, fueled by the combined strength of our shared innovation engines and a commitment to delivering superior value creation.
Chris Villavarayan: As you know, in November, we announced a Merger of Equals with AkzoNobel. This combination represents an extraordinary value creation opportunity, one that we believe neither company could realize alone. Together, we expect to create a global leader with phenomenal scale and end market diversification, significant free cash flow generation, EBITDA margins approaching 20%, and an investment-grade credit rating and balance sheet flexibility. Additionally, we identified $600 million in synergy potential, and based on our joint track record, I'm confident we will deliver this. The combined company will be listed on the New York Stock Exchange and will be a global performance coatings leader. This merger is more than a strategic milestone. It is a catalyst for unlocking powerful new growth vectors, fueled by the combined strength of our shared innovation engines and a commitment to delivering superior value creation.
Speaker #2: Axon Nobel. This combination represents an extraordinary value creation opportunity. One that we believe neither company could realize alone. remarks. Together, we expect to create a global leader with phenomenal scale and end-market diversification, significant free cash
Speaker #2: approaching 20%, and an investment-grade credit rating and balance sheet identified 600 million in synergy potential and, based on With that, I will turn it over to this.
Speaker #2: The combined company will be listed—we are confident we will deliver—on the New York Stock Exchange and will be a global performance coatings leader. This merger is more than a strategic milestone.
Speaker #2: It is a catalyst for unlocking powerful new growth vectors fueled by the combined—our joint track record—in delivering superior value engines and a commitment to creation.
Chris Villavarayan: As we step into 2026, we do so with a strong balance sheet, an agile operating model, and a clear focus on our priorities. Our teams have consistently demonstrated the ability to navigate complexity and deliver exceptional performance. I am confident that we will create sustainable value as we look ahead to completing the merger with AkzoNobel. With that, I will now turn the call over to the operator to open the line for Q&A.
Chris Villavarayan: As we step into 2026, we do so with a strong balance sheet, an agile operating model, and a clear focus on our priorities. Our teams have consistently demonstrated the ability to navigate complexity and deliver exceptional performance. I am confident that we will create sustainable value as we look ahead to completing the merger with AkzoNobel. With that, I will now turn the call over to the operator to open the line for Q&A.
Speaker #2: 2026, we do so as we step into an agile operating model and a clear focus on our priorities. Our teams have consistently demonstrated the ability to, with a strong balance sheet, navigate complexity and performance.
Speaker #2: create sustainable value as we look ahead to completing the merger with Akzo Nobel. I am confident that we will deliver exceptional results. With that, I will now turn the call over to the operator to open the line for Q&A.
Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to queue. Thank you. Our first question is from Chris Parkinson with Wolfe Research. Please go ahead. Your line is open.
Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to queue. Thank you. Our first question is from Chris Parkinson with Wolfe Research. Please go ahead. Your line is open.
Speaker #3: To ask a question, press *1 on your keypad. To leave the queue at any time, press *. Thank you. Once again, that is *1 to ask a question.
Speaker #3: And we'll pause for just a moment to allow everyone a chance If you'd like to time, press star to Thank you. ahead. Your line is open.
Speaker #3: And we'll pause for just a moment to allow everyone a chance If you'd like to time, press star to Thank you. ahead. Your line is Our first question is from Chris Parkinson
Speaker #3: queue.
Speaker #3: Please go
Chris Parkinson: Just, could you just give us the status of global refinish markets? I'd love to focus on, you know, 3 different facets. Number 1, just where we stand with, you know, destocking trends. I don't want to name names, but it seems like things should arguably be coming to an end in terms of large customers. Number 2, you know, just how you see claims data conversion with actual collision data as we progress through 2026, you know, just given some of the updates that we got towards the end of the 2025. Then number 3, just, you know, where we stand with, you know, share gain potential, IRIS launches, you know, penetration in Europe and US versus expectations.
Chris Parkinson: Just, could you just give us the status of global refinish markets? I'd love to focus on, you know, 3 different facets. Number 1, just where we stand with, you know, destocking trends. I don't want to name names, but it seems like things should arguably be coming to an end in terms of large customers. Number 2, you know, just how you see claims data conversion with actual collision data as we progress through 2026, you know, just given some of the updates that we got towards the end of the 2025. Then number 3, just, you know, where we stand with, you know, share gain potential, IRIS launches, you know, penetration in Europe and US versus expectations.
Speaker #4: give us the status of global refinish markets? on three different And I'd love to focus facets. Number one, just where we stand with destocking trends.
Speaker #4: I don't want to name names, but it seems like things
Speaker #4: should arguably be coming to an end for large two, just how you see claims data conversion with actual collision data. As we progress through 2026, just given some of the updates that we got towards the end customers. of 2025.
Speaker #4: should arguably be coming to an end for large two, just how you see claims data conversion with actual collision data. As we progress through 2026, just given some of the updates that we got towards the end customers.
Speaker #4: Excitations. If we could just kind of hear your updates and how those presumptions—launches, penetration in Europe and US versus—are factoring into your 2026 guidance, it would be particularly helpful.
Chris Parkinson: If we could just kind of hear your updates on how those presumptions are factoring in your 2026 guidance, it would be particularly helpful. Thank you.
Chris Parkinson: If we could just kind of hear your updates on how those presumptions are factoring in your 2026 guidance, it would be particularly helpful. Thank you.
Speaker #4: Thank
Speaker #4: you. Sure.
Chris Villavarayan: Sure. Good morning, Chris. I'll take this one. So starting with destocking, I think, you know, this, if I look at our Q4 performance and a little bit of Q1, it's a perfect, you know, representation of what happened prior, associated with destocking. Three of our four end markets, so when we look at South America, Europe, and Asia, all three grew. So this was really a geographic mix issue, and this was just primarily related to destocking. And what I would say is destocking came in slightly worse than where we expected. And as you know, with the margin performance that we have and how strong our North American business is, that's what kind of drove a little bit of the impact. Sales, I would say, for Q4, were primarily almost flat to slightly lower.
Chris Villavarayan: Sure. Good morning, Chris. I'll take this one. So starting with destocking, I think, you know, this, if I look at our Q4 performance and a little bit of Q1, it's a perfect, you know, representation of what happened prior, associated with destocking. Three of our four end markets, so when we look at South America, Europe, and Asia, all three grew. So this was really a geographic mix issue, and this was just primarily related to destocking. And what I would say is destocking came in slightly worse than where we expected. And as you know, with the margin performance that we have and how strong our North American business is, that's what kind of drove a little bit of the impact. Sales, I would say, for Q4, were primarily almost flat to slightly lower.
Speaker #5: Good morning, Chris. I'll take this one. So starting with destocking, I Q4 performance and a little bit share gain potential, IRIS of Q1, it's a perfect representation of what happened associated with think this, if I look at our we look at South America, Europe, and Asia, all three grew.
Speaker #5: So this was really a geographic mix issue, and this was just primarily related to destocking, and what I would say is destocking came in slightly worse than where we expected.
Speaker #5: And as you know, with the margin performance that we have and how strong our North destocking. American business is, that's what kind Three of our four end markets.
Speaker #5: of drove a little bit of the impact. to slightly lower. I would say in line it was just the Sales, I would say for pure performance of how strong So when North America and how the stocking obviously impacts us in this region.
Chris Villavarayan: I would say in line, it was just the pure performance of how strong North America and how destocking obviously impacts us in this region. If I play that into Q1, we're essentially pulling that weakness through, and as I've always said, destocking started or this consolidation.
Chris Villavarayan: I would say in line, it was just the pure performance of how strong North America and how destocking obviously impacts us in this region. If I play that into Q1, we're essentially pulling that weakness through, and as I've always said, destocking started or this consolidation.
Speaker #5: If I play that Q4 were primarily almost flat into Q1, where essentially pulling that weakness through, and as I've always said, the stocking started or this consolidation of our largest FM started in Q2 of last year, and we expect that to end as with all our conversations and what we're tracking in Q2 of this year.
Chris Villavarayan: ... of our largest distributor acquiring FM, started in Q2 of last year, and we expect that to end as with all our conversations and what we're tracking in Q2 of this year. So as you play that out, that's why we expect that to come back. And if you look at the expectations of performance, we just have to hit what we did last year in Q2. So from that perspective, that's what gives us confidence as we play this forward. In terms of claims, as you think about the slide that Carl went through on the guidance, I think there's a lot of green shoots that really build confidence into what we '26. I would say, you know, claims are down 1 to 2%, which is, you know, what's been the average.
Chris Villavarayan: ... of our largest distributor acquiring FM, started in Q2 of last year, and we expect that to end as with all our conversations and what we're tracking in Q2 of this year. So as you play that out, that's why we expect that to come back. And if you look at the expectations of performance, we just have to hit what we did last year in Q2. So from that perspective, that's what gives us confidence as we play this forward. In terms of claims, as you think about the slide that Carl went through on the guidance, I think there's a lot of green shoots that really build confidence into what we '26. I would say, you know, claims are down 1 to 2%, which is, you know, what's been the average.
Speaker #5: So as you play that out, that's why we expect that to come back. And if you look at the distributor acquiring expectations of performance, we just have to hit what we did last year in Q2.
Speaker #5: So from that perspective, that's what gives us confidence as we play this forward. In terms of claims, as you think about the slide that Carl went through on the guidance, I think there's a lot of green shoots that really build confidence 2026.
Speaker #5: I would say claims are into what we see in
Speaker #1: Are 1 to 2% , know , what's been the is , you that , which top of miles start driven is seeing picking you can right 1 to 2% .
Chris Villavarayan: On top of that, you can start seeing miles driven is still ticking up the right way, 1 to 2%. And on top of that, the great news is certainly what's happening with the insurance rates. Insurance rates, if I go back to 2023 and 2024, were, you know, just going up at, like, 18%, and what we can certainly see in the back half of 2025 and 2026 is we can start that coming back to the normalized levels we saw, let's call it pre-pandemic or mid-pandemic, which is a really good sign here. Consumers are starting to really shop their, their insurance premiums, and they're starting to add back collisions, so we're certainly seeing that benefit, as well as obviously new car pricing going up and used car pricing going up is also going to be a positive trend.
Chris Villavarayan: On top of that, you can start seeing miles driven is still ticking up the right way, 1 to 2%. And on top of that, the great news is certainly what's happening with the insurance rates. Insurance rates, if I go back to 2023 and 2024, were, you know, just going up at, like, 18%, and what we can certainly see in the back half of 2025 and 2026 is we can start that coming back to the normalized levels we saw, let's call it pre-pandemic or mid-pandemic, which is a really good sign here. Consumers are starting to really shop their, their insurance premiums, and they're starting to add back collisions, so we're certainly seeing that benefit, as well as obviously new car pricing going up and used car pricing going up is also going to be a positive trend.
Speaker #1: And on top of way , that , the Start seeing news what's is certainly happening . great way . that , the great is news 1 to 2% .
Speaker #1: And on is the right rates . happening with , insurance If I rates insurance certainly back to driven and 24 , 23 know at like average .
Speaker #1: 18% and what we can certainly see in the back half of going up can and 25 to the levels . We start that saw , let's call normalized it pre-pandemic or mid a really sign here starting to good .
Speaker #1: Consumers their they're insurance shop they're premiums and starting to add which is collisions . back seeing benefit as well as obviously new that pricing going up and car So we're going up is miles also going to be a used car for all of trend .
Chris Villavarayan: For all of us on the East Coast, all the weather also helps. So I would say, you know, the overall trend as we predict into Q2 is it's trending the right way. I think there's a ton of green shoots that's certainly giving us a little bit more confidence as we get into Q2. And then your last question around share gains, nothing's changed in our perspective. We've had four pillars that we're absolutely focused around, you know, net body shop wins, going into adjacencies, moving into the economy space as well as M&A, and all of those haven't changed. And if I look at net body shops as one example, we had a great year in 2025. 2,800 body shops is higher than we have done in most years. Normally, we do around 2,200 to 2,500.
Chris Villavarayan: For all of us on the East Coast, all the weather also helps. So I would say, you know, the overall trend as we predict into Q2 is it's trending the right way. I think there's a ton of green shoots that's certainly giving us a little bit more confidence as we get into Q2. And then your last question around share gains, nothing's changed in our perspective. We've had four pillars that we're absolutely focused around, you know, net body shop wins, going into adjacencies, moving into the economy space as well as M&A, and all of those haven't changed. And if I look at net body shops as one example, we had a great year in 2025. 2,800 body shops is higher than we have done in most years. Normally, we do around 2,200 to 2,500.
Speaker #1: the Coast , weather also would say , you all the So I us on overall Q2 as East right way . the I think there's into is green of that certainly shoots pandemic , little we get into confidence as your .
Speaker #1: question And then last , nothing's 26 is we changed We've had in our bit more trending absolutely perspective . know , Net around .
Speaker #1: Body You Shop going into adjacencies , moving into economy the wins as well focused space a all of those changed . have if I and as into body net shops as one example , we had a great in 2025 , 2800 body is we've done in most year years .
Chris Villavarayan: So it's been a really strong year, even in a challenging macro and with a lot of competition, so we feel really, really good. Even in North America, we grew 400 body shops, so it's, it's been a great story. And then as the slide points out, you know, we grew in adjacencies by $25 million. We obviously did the Coverflex acquisition, so we grew by about 400 basis points, and we have no different expectations as we go into 2026, even with the merger. So I would say from a growth perspective, we're right on plan, and everything's playing out as we expect.
Chris Villavarayan: So it's been a really strong year, even in a challenging macro and with a lot of competition, so we feel really, really good. Even in North America, we grew 400 body shops, so it's, it's been a great story. And then as the slide points out, you know, we grew in adjacencies by $25 million. We obviously did the Coverflex acquisition, so we grew by about 400 basis points, and we have no different expectations as we go into 2026, even with the merger. So I would say from a growth perspective, we're right on plan, and everything's playing out as we expect.
Speaker #1: shops do around 2200 to 2500 . So it's higher than year even really macro . And with a lot competition . So we feel of really really , good North America , we shops .
Speaker #1: it's So been a even in And great story . slides points out , you know , we grew adjacencies 25 million . We obviously did by cover flex acquisition .
Speaker #1: grew by about grew 400 body 400 basis And we have no in So we different expectations as we go into points . Even with the 26 .
Speaker #1: merger . So I would say growth from a right perspective , we're plan and everything's playing out as expect .
Chris Parkinson: Got it. And just as a quick follow-up, just shifting over, our attention to the deal. You know, obviously, there's been a lot of back and forth, and you've been communicating with, you know, both sides of the shareholder community over the last several months. What else do you believe that you and Carl can do, in particular, to further underscore or gain, rather, the conviction of the buy-side communities, you know, conviction in terms of hitting the $600 million in synergies? Is it because of, you know, regional differences? Is it because of procurements, procurement aspects? Just anything you could add in terms of what your team can do to lead the buy-side community to further embrace that number would be particularly helpful. Thank you.
Chris Parkinson: Got it. And just as a quick follow-up, just shifting over, our attention to the deal. You know, obviously, there's been a lot of back and forth, and you've been communicating with, you know, both sides of the shareholder community over the last several months. What else do you believe that you and Carl can do, in particular, to further underscore or gain, rather, the conviction of the buy-side communities, you know, conviction in terms of hitting the $600 million in synergies? Is it because of, you know, regional differences? Is it because of procurements, procurement aspects? Just anything you could add in terms of what your team can do to lead the buy-side community to further embrace that number would be particularly helpful. Thank you.
Speaker #1: we
Speaker #2: a quick follow up , just as shifting over attention
Speaker #2: you've been our to the communicating sides know , the , shareholder community over the several months believe that else do can do in Carl particular , .
Speaker #2: further you underscore or gain , of the buy side rather , communities in terms of , conviction conviction of the ? You know the $600 million in synergies , on you and is it because What of , you differences , aspects ?
Speaker #2: , regional
Speaker #2: IT could add in your know do team can the buy to lead side community procurement to further procurements ? that to number be would because of of what
Chris Villavarayan: Sure, Chris. I'll start off with a little bit of perspective on the investor sentiment, and then I'm gonna turn it over to Carl. On the investor sentiment, it's been, I would say it continues to improve, and it's been largely positive. You know, we've been talking to all our large investors on both sides, Greg, Rakesh, myself, Carl. We've spent a lot of time working with our investors, our long onlys, and we've also seen new folks come into the story. So overall, the sentiment is moving. We still have, obviously, a lot of work to go do as we head into the vote. But at this point, you know, our conversations are trending the right way, and I would say I'm very pleased with where we're going. Carl?
Chris Villavarayan: Sure, Chris. I'll start off with a little bit of perspective on the investor sentiment, and then I'm gonna turn it over to Carl. On the investor sentiment, it's been, I would say it continues to improve, and it's been largely positive. You know, we've been talking to all our large investors on both sides, Greg, Rakesh, myself, Carl. We've spent a lot of time working with our investors, our long onlys, and we've also seen new folks come into the story. So overall, the sentiment is moving. We still have, obviously, a lot of work to go do as we head into the vote. But at this point, you know, our conversations are trending the right way, and I would say I'm very pleased with where we're going. Carl?
Speaker #2: .
Speaker #1: Chris , start I'll a little bit of
Speaker #1: Chris , start I'll a little
Speaker #1: Chris ,
Speaker #1: on the
Speaker #1: going to turn it over and then I'm
Speaker #1: going to turn it over and then I'm Carl on helpful . investor to
Speaker #1: going to turn it over and then I'm Carl
Speaker #1: going to
Speaker #1: been say
Speaker #1: positive .
Speaker #1: know , we've Sure . last Thank large our investors largely it hitting Greg on both Rakesh , a Carl , we've sides . lot terms you with our investors , long It's myself , our into the story .
Speaker #1: also seen Yeah . Chris ,
Speaker #1: the So sentiment is folks come we've of talking to to do as we of work head the into vote . this point , you know , moving .
Speaker #1: We
Carl Anderson: Yeah, Chris, just to add to that, I think as we have talked to the investor community, you know, a couple points that are really beginning to resonate, if you think about the overall merger. One, we are creating the largest global performance coatings company. We're creating the second-largest paints and coating company. We are going to have three times the revenue, three times the EBITDA, and greater than three times the Free Cash Flow on a combined enterprise. So we are very excited about what this does, not only for the financial aspects, but also as we think about our customers. You know, we're gonna be operating in seven different end markets, from refinish to marine to industrial to aerospace, and we have leading positions in our products and all the customers we serve. So I think that it will be the message.
Carl Anderson: Yeah, Chris, just to add to that, I think as we have talked to the investor community, you know, a couple points that are really beginning to resonate, if you think about the overall merger. One, we are creating the largest global performance coatings company. We're creating the second-largest paints and coating company. We are going to have three times the revenue, three times the EBITDA, and greater than three times the Free Cash Flow on a combined enterprise. So we are very excited about what this does, not only for the financial aspects, but also as we think about our customers. You know, we're gonna be operating in seven different end markets, from refinish to marine to industrial to aerospace, and we have leading positions in our products and all the customers we serve. So I think that it will be the message.
Speaker #1: conversations are trending way . And I would spent say very pleased with But at where we're going
Speaker #1: Carl .
Speaker #3: to that , one , we are creating the know , a largest just to add
Speaker #3: I think we have
Speaker #3: talked to the community , you investor that are
Speaker #3: really you think If about the beginning to overall
Speaker #3: performance company . second largest the right and creating the coating company . are have revenue We're greater than three times the the I'm a So enterprise .
Speaker #3: are very we We does , about what not the financial aspects , but for be operating free cash in the markets global seven different end from to our industrial to going to customers , you know , aerospace .
Carl Anderson: I think the synergies, as Chris articulated, we feel very, very strong and very comfortable with, and we also believe there's an upside as we think about the revenue synergies that this deal provides.
Carl Anderson: I think the synergies, as Chris articulated, we feel very, very strong and very comfortable with, and we also believe there's an upside as we think about the revenue synergies that this deal provides.
Speaker #3: leading think about our positions in products and all the we customers So serve . that think I the message . I marine to have think the will be only strong and very comfortable with .
Speaker #3: synergies , as that
Speaker #3: synergies , as
Chris Parkinson: Thank you.
Chris Parkinson: Thank you.
Speaker #3: We also, and believe there's—we feel upside as we, Chris, think about the revenue, very, very,
Chris Villavarayan: You're welcome, Chris.
Chris Villavarayan: You're welcome, Chris.
Operator: Thank you. We'll move on now to Ghansham Panjabi of Baird. Your line is open.
Operator: Thank you. We'll move on now to Ghansham Panjabi of Baird. Your line is open.
Speaker #2: you
Speaker #1: welcome .
Josh Vesely: Hey, everyone-
Josh Vesely: Hey, everyone-
Speaker #1: .
Speaker #4: Thank you . We'll move on
Chris Villavarayan: Good morning, Ghansham.
Chris Villavarayan: Good morning, Ghansham.
Josh Vesely: Oh, oh, hey, Chris, sorry, this is actually Josh Vesely sitting in for Ghansham. Hope you guys are well. You know-
Josh Vesely: Oh, oh, hey, Chris, sorry, this is actually Josh Vesely sitting in for Ghansham. Hope you guys are well. You know-
Speaker #4: Gresham
Speaker #4: Panjabi
Speaker #4: Of Baird. Your line is open now.
Chris Villavarayan: Great
Josh Vesely: ... maybe if I could just start off on the Performance Coatings side of things, you know, just you and Chris, you mentioned that it came in a little bit below your expectations. It sounds like a lot of that was, you know, focused on Refinish. But maybe if we could just focus on the Industrial side of the aisle and just how that performed relative to your expectations. And then just, you know, your current thoughts on that business and just, you know, trends by on a regional basis, that'd be great. Thank you.
Chris Villavarayan: Great
Josh Vesely: ... maybe if I could just start off on the Performance Coatings side of things, you know, just you and Chris, you mentioned that it came in a little bit below your expectations. It sounds like a lot of that was, you know, focused on Refinish. But maybe if we could just focus on the Industrial side of the aisle and just how that performed relative to your expectations. And then just, you know, your current thoughts on that business and just, you know, trends by on a regional basis, that'd be great. Thank you.
Speaker #5: Hey . morning . synergies that Hey , Chris . Sorry . This actually Josh
Speaker #5: Hey . morning . synergies that Hey , Chris . Sorry . This
Speaker #5: Oh . , you know , maybe if I for start off on the You're performance coatings could just Good things , you side of just .
Speaker #5: Ghansham . .
Speaker #5: it came in a little bit expectations . It sounds guys are like a lot of that is , you know , refinish . But maybe if we could just focus on the industrial side focused on Chris , you aisle and just mentioned that performed relative to your how how .
Speaker #5: it came in a little bit expectations . It sounds guys are like a lot of that is , you know , refinish . But maybe if we could just focus on the industrial side focused on Chris , you aisle and just mentioned that performed relative to your how how
Chris Villavarayan: Sure, sure, absolutely. So I would say from a performance coatings perspective, sales came in lower. So industrial sales were also lower, primarily all of them, as we look at Q4, driven by the market. But as I look into, let's call it 2026, again, we're starting to see some green shoots as Carl has on his guidance slide, obviously, what's happening with PMI and our expectations from a policy perspective with insurance, sorry, with interest rates, as well as anything that's done to spur construction, residential, or commercial, I believe will be a positive trend. Which is why we expect the back half of the year to pick up here. So industrial is probably one of the few businesses that we're counting on a bit of market, specifically in North America.
Chris Villavarayan: Sure, sure, absolutely. So I would say from a performance coatings perspective, sales came in lower. So industrial sales were also lower, primarily all of them, as we look at Q4, driven by the market. But as I look into, let's call it 2026, again, we're starting to see some green shoots as Carl has on his guidance slide, obviously, what's happening with PMI and our expectations from a policy perspective with insurance, sorry, with interest rates, as well as anything that's done to spur construction, residential, or commercial, I believe will be a positive trend. Which is why we expect the back half of the year to pick up here. So industrial is probably one of the few businesses that we're counting on a bit of market, specifically in North America.
Speaker #5: just , you know , current below your thoughts on on that know , trends on a Thank regional business and that'd be basis , great .
Speaker #5: Thank then
Speaker #1: sure .
Speaker #1: say would
Speaker #1: perspective , sales So industrial
Speaker #1: sales were lower , Absolutely . we look also As your market driven by at . But Q4 , as I , into look again , we're see some it 2026 , green shoots .
Speaker #1: happening with PMI and expectations from a our insurance . Sorry . With perspective as his anything that's
Speaker #1: , residential I Sure , will be a positive trend , why we expect the year to which pick up here . So construction probably one of the or is market a bit with few specifically in America , as in terms of is shoots businesses that business , as I said but of my prepared just , you remarks us we're has has been very , very good .
Chris Villavarayan: But in terms of green shoots in this business, as I said in my prepared remarks, Asia, for us, has been, has been very, very good. We've actually grown 5%, in that space, as even as we look in Q4, and this is really driven around what we do. In that, in that business, we have a lot that we do specific to EV and what we do for battery case coatings, as well as impregnating resins for motors. So we see those businesses really driving growth, and we certainly see that also being a positive trend. So Asia's working out well. I would say North America and Europe seem sluggish, but our expectation is a lot of the policy actions would drive some improvement into the back half of the year.
Chris Villavarayan: But in terms of green shoots in this business, as I said in my prepared remarks, Asia, for us, has been, has been very, very good. We've actually grown 5%, in that space, as even as we look in Q4, and this is really driven around what we do. In that, in that business, we have a lot that we do specific to EV and what we do for battery case coatings, as well as impregnating resins for motors. So we see those businesses really driving growth, and we certainly see that also being a positive trend. So Asia's working out well. I would say North America and Europe seem sluggish, but our expectation is a lot of the policy actions would drive some improvement into the back half of the year.
Speaker #1: actually grown that been space as as we Q4 and in this this is driven really what we in in business . lot that we look in We have a to EV and what case battery as well as resins for coatings , motors .
Speaker #1: So we see We've back businesses in for driving and 5% see also being a positive trend . those So Asia is we do working out well I would say North America and seems But our even impregnating expectation that lot of the sluggish .
Chris Villavarayan: But setting all that aside, you know, the one thing that I'm absolutely proud of that team is what they've done in, with this, which is an amazing job of driving the margin. If you look at the margin performance, even if we look at Q4, we talked about, you know, sales being away from our expectations, but overall company margins being up 50 basis points. In the industrial business, we had a target of 400 basis points of margin improvement. Those guys are about 200 basis points above that target. They are just kicking butt on that, on that front. So, you know, that team has done a great job of really driving, let's call it, cost, performance, operational excellence, and really growing where they can get accretive margin.
Chris Villavarayan: But setting all that aside, you know, the one thing that I'm absolutely proud of that team is what they've done in, with this, which is an amazing job of driving the margin. If you look at the margin performance, even if we look at Q4, we talked about, you know, sales being away from our expectations, but overall company margins being up 50 basis points. In the industrial business, we had a target of 400 basis points of margin improvement. Those guys are about 200 basis points above that target. They are just kicking butt on that, on that front. So, you know, that team has done a great job of really driving, let's call it, cost, performance, operational excellence, and really growing where they can get accretive margin.
Speaker #1: some improvement growth , we . But Europe one thing that I'm absolutely that team is what they've done with this , which is amazing an job of back half driving the proud of , margin .
Speaker #1: If you look at the margin performance , certainly we look at talked about , Q4 , we sales being you policy know , from our the expectations .
Speaker #1: But overall company margins being up 50 basis points away industrial business . We had a 400 basis improvement . margin Those 200 basis guys points above that target .
Speaker #1: They are just kicking butt on our autobody front. So, you know, that team has done a great job of really driving.
Speaker #1: Let's call cost that . performance , operational excellence and really growing can where they get margin
Josh Vesely: Great. Thank you very much.
Josh Vesely: Great. Thank you very much.
Chris Villavarayan: You're welcome.
Chris Villavarayan: You're welcome.
Operator: Thank you. We'll now move on to Laurent Favre of BNP. Your line is now open.
Operator: Thank you. We'll now move on to Laurent Favre of BNP. Your line is now open.
Speaker #5: Thank you very much .
Speaker #1: You're welcome . .
Speaker #1: You're welcome . it Thank
Laurent Favre: Yes, good morning, all. I guess I've got a question around margin assumptions for the year. So you're guiding, I guess, sales up low single digits, EBITDA up low single digits. I'm a bit surprised, I guess, by the comments around productivity, and also pricing. So I'm just wondering, what are you baking in, in terms of, margin of safety, around margin? Is it around raw materials? Is it around pricing? Thank you.
Laurent Favre: Yes, good morning, all. I guess I've got a question around margin assumptions for the year. So you're guiding, I guess, sales up low single digits, EBITDA up low single digits. I'm a bit surprised, I guess, by the comments around productivity, and also pricing. So I'm just wondering, what are you baking in, in terms of, margin of safety, around margin? Is it around raw materials? Is it around pricing? Thank you.
Speaker #4: you . We'll now
Speaker #4: you . We'll
Speaker #4: BNP . Your line is now .
Speaker #6: Yes . Good morning .
Speaker #6: I guess I've got a question around
Speaker #6: margin assumptions the year . So you're your Great . sales at low single for low
Speaker #6: digits ? I'm a bit surprised , I guess , by the comments On that productivity open also pricing . So I'm just accretive wondering of around baking terms , what in in of of safety around margins ?
Carl Anderson: Yeah, good morning, Laurent. So yeah, I think as we look at... Just maybe I'll start with revenue, and then how that will kind of step down into EBITDA and our assumptions. So I think from a price mix perspective, you know, we do see that up for the full year, about low single digits. That will be kind of coming through. Volumes, we're kind of planning for a flattish in volume environment. There is a difference between the first half being down, and that begins to increase in the second half. And then I think FX, most likely, at least on the revenue side, should be probably a very low single, low single digit tailwind as well.
Carl Anderson: Yeah, good morning, Laurent. So yeah, I think as we look at... Just maybe I'll start with revenue, and then how that will kind of step down into EBITDA and our assumptions. So I think from a price mix perspective, you know, we do see that up for the full year, about low single digits. That will be kind of coming through. Volumes, we're kind of planning for a flattish in volume environment. There is a difference between the first half being down, and that begins to increase in the second half. And then I think FX, most likely, at least on the revenue side, should be probably a very low single, low single digit tailwind as well.
Speaker #6: Is materials ? guiding margin Is it are you pricing ? Thank you .
Speaker #3: Yeah . Good morning Laurent . So as we look at just maybe I'll revenue and then with how that will kind of yeah I think start step down into in our assumptions .
Speaker #3: So EBITDA from a price perspective , you know , we mix that up for the year about low single digits . That will of coming through full We're kind of think planning for a flattish in volume volumes . environment .
Speaker #3: So EBITDA from a price perspective , you know , we mix that up for the year about low single digits . That will of coming through full We're kind of think planning for a flattish in volume volumes .
Speaker #3: the first half it around raw being down and that begins to I between increase in the second half , then I think most likely , at least on the should be probably FX a very low single low tailwind as well .
Carl Anderson: If you think about what that then means for overall EBITDA and the margin kind of guide that we set is, last year we did about 22% EBITDA margin. I think next year we're planning to be above 22%. And I think that does break down. There should be... We will convert on the incremental revenue that does come through. In addition, we also have, you know, cost actions that will benefit in 2026 as well. So there is some carryover cost actions that we have from some of the previously announced execution items that we've done. So call that about $30 to 40 million of improved benefit from that.
Carl Anderson: If you think about what that then means for overall EBITDA and the margin kind of guide that we set is, last year we did about 22% EBITDA margin. I think next year we're planning to be above 22%. And I think that does break down. There should be... We will convert on the incremental revenue that does come through. In addition, we also have, you know, cost actions that will benefit in 2026 as well. So there is some carryover cost actions that we have from some of the previously announced execution items that we've done. So call that about $30 to 40 million of improved benefit from that.
Speaker #3: And if you think about what that then means for overall and EBITDA in the margin , guide that is last about 22 . year we did 22% EBITDA We did said think next margin .
Speaker #3: Planning to be above 22%. And I think that does break down. There should be—we will convert on incremental revenue that does come through single.
Speaker #3: also In addition , we kind of we revenue side , actions that know , will 2026 as well . , you that So cost year will cost of the have actions previously benefit done .
Carl Anderson: And then we also will continue to drive a little bit more on productivity, not only in the plants, but also with our purchasing team.
Carl Anderson: And then we also will continue to drive a little bit more on productivity, not only in the plants, but also with our purchasing team.
Speaker #3: So carryover call that about 30 to $40 million of improved benefit from announced that also continue will to from some drive bit more the on a little , not only in the plants , but also with our team purchasing items that execution
Speaker #3: So carryover call that about 30 to $40 million of improved benefit from announced that also continue will to from some drive bit more the on a little , not only in the plants , but also with our team purchasing items that execution
Speaker #3: And
Laurent Favre: Thank you. And then just on a follow-up on the refinish side, can you talk about, regionally, what you're seeing? Clearly you were disappointed in the US, I'm sensing. I'm just wondering whether, for instance, in Europe, you are also seeing a deterioration of your, of your top line, and is that something that you're also carrying into the guidance for 2026?
Laurent Favre: Thank you. And then just on a follow-up on the refinish side, can you talk about, regionally, what you're seeing? Clearly you were disappointed in the US, I'm sensing. I'm just wondering whether, for instance, in Europe, you are also seeing a deterioration of your, of your top line, and is that something that you're also carrying into the guidance for 2026?
Speaker #6: about you . Finnish side , on follow regionally , what you're seeing And disappointed in the US .
Speaker #6: instance , Europe , in you're also ? deterioration of your top . something that line
Speaker #6: instance , Europe , in you're also ? deterioration of your top . something that line Clearly ? into the And that You were 26 ?
Chris Villavarayan: Sure. So as we look at it from a regional basis, I would say looking at Q4, South America, Europe, and Asia grew. So I think, you know, from our perspective, those came in just as we planned and as expected. We actually had a great story, even in Europe, with, you know, the weakness. And as we play out into next year, into 2026, and how we've set up the guide, we obviously show Q1 volumes being down because of the pressures associated with destocking and a little bit of volume weakness, very little in North America. But with the exception of that, we're showing Q2, Q3, and Q4, sorry, Q2 volumes being flat in Q3 and Q4 volumes coming up slightly.
Chris Villavarayan: Sure. So as we look at it from a regional basis, I would say looking at Q4, South America, Europe, and Asia grew. So I think, you know, from our perspective, those came in just as we planned and as expected. We actually had a great story, even in Europe, with, you know, the weakness. And as we play out into next year, into 2026, and how we've set up the guide, we obviously show Q1 volumes being down because of the pressures associated with destocking and a little bit of volume weakness, very little in North America. But with the exception of that, we're showing Q2, Q3, and Q4, sorry, Q2 volumes being flat in Q3 and Q4 volumes coming up slightly.
Speaker #6: for
Speaker #1: So as we look at
Speaker #1: looking at Q4
Speaker #1: , South Sure . it Europe and Asia I your grew . from perspective , those came we planned and as we actually great story even in Europe with , you know , the weakness .
Speaker #1: And as we play out our from a next also year , into we've set up the guide think , you know , had a , we obviously show in Q1 just as being because of the 2026 and how volumes pressures associated into with destocking and bit of volume , very little in North America .
Speaker #1: And as we play out our from a next also year , into we've set up the guide think , you know , had a , we obviously show in Q1 just as being because of the 2026 and how volumes pressures associated into with destocking and bit of volume , very little in North a little But with the So we're showing that , Q2 , Q3 exception of Q4 Sorry , , Q3 .
Chris Villavarayan: So net-net, if I look at the whole year, Laurent, for refinish volumes, we expect it to be flat to slightly up.
Chris Villavarayan: So net-net, if I look at the whole year, Laurent, for refinish volumes, we expect it to be flat to slightly up.
Speaker #1: Q2 volumes being flat in Q3 and Q4 volumes coming up weakness if I look whole year around for expected , slightly . we expect it to be flat to slightly So down .
Matthew DeYoe: Okay, thank you.
Laurent Favre: Okay, thank you.
Chris Villavarayan: You're welcome.
Chris Villavarayan: You're welcome.
Operator: Thank you. We'll now move on to Kevin McCarthy with Vertical Research Partners. Your line is open.
Operator: Thank you. We'll now move on to Kevin McCarthy with Vertical Research Partners. Your line is open.
Speaker #6: you up at the
Speaker #1: welcome net net , .
Kevin McCarthy: Yes, good morning. Thank you. Chris, can you discuss how your refinish strategy may evolve through the MOE? I've thought about Axalta being focused on penetration of the economy segment, moving into adjacencies, evaluating, you know, distributor acquisitions in selected markets. Which of those elements will remain the same, and what do you think will change as you look to stabilize and hopefully grow this business, in the combined company?
Kevin McCarthy: Yes, good morning. Thank you. Chris, can you discuss how your refinish strategy may evolve through the MOE? I've thought about Axalta being focused on penetration of the economy segment, moving into adjacencies, evaluating, you know, distributor acquisitions in selected markets. Which of those elements will remain the same, and what do you think will change as you look to stabilize and hopefully grow this business, in the combined company?
Speaker #4: We'll now move on to McCarthy Vertical Research. Your line is open.
Speaker #4: .
Speaker #7: Good
Speaker #7: morning .
Speaker #7: you Thank
Speaker #7: . Chris , can you
Speaker #7: how your refinish may Kevin evolve with
Speaker #7: strategy about Yes . exalt to being focused Mo on penetration of the economy
Speaker #7: through acquisitions in refinish selected , distributor . Which of those elements will Thank remain the same . And , evaluating , what do you think ?
Speaker #7: , moving
Chris Villavarayan: That's a great question, Kevin. Good morning. And, you know, as I think through this, that is one of the great stories of the combinations of the companies. Obviously, if you think about the merger of both companies, and this has obviously been looked at before, the greatest aspect of these two companies coming together is the complementary nature of it. And if you really look at the perspective, whether it's in Refinish or in Mobility or a little bit in Industrial, we're absolutely complementary, and it's just a great story. And I'm gonna pick the one that you hit on, which is Refinish. You know, in Refinish, we're stronger in premium, they're stronger in economy.
Chris Villavarayan: That's a great question, Kevin. Good morning. And, you know, as I think through this, that is one of the great stories of the combinations of the companies. Obviously, if you think about the merger of both companies, and this has obviously been looked at before, the greatest aspect of these two companies coming together is the complementary nature of it. And if you really look at the perspective, whether it's in Refinish or in Mobility or a little bit in Industrial, we're absolutely complementary, and it's just a great story. And I'm gonna pick the one that you hit on, which is Refinish. You know, in Refinish, we're stronger in premium, they're stronger in economy.
Speaker #7: to into . hopefully Okay . grow this
Speaker #7: to into . hopefully Okay . grow this in
Speaker #7: company .
Speaker #7: ?
Speaker #1: question , That's a Kevin . Good stabilize morning . And as I think through this ,
Speaker #1: one of the the great stories of the you know , that companies You're . Obviously , if think about the , the
Speaker #1: merger companies Thank you is obviously been I thought before , the aspect of these two companies
Speaker #1: nature of really the if you prospective , whether it's refinish in mobility in or of both bit in little and this , we're absolutely look it .
Speaker #1: industrial and just a great it's it's So and I'm story . you , you hit on , which you know in a . They're stronger in economy .
Speaker #1: industrial and just a great it's it's So and I'm story . you , you hit on , which you know in a . They're stronger in premium And so pick the one that I very refinish we're level , you know , the technology can provide and enable them to that we capabilities high stronger in I think about , refinish , you know , the Middle their East and especially , you know , more that we can do with them And in Africa and Asia .
Chris Villavarayan: So I think at a very, very high level, you know, the technology that we can provide and enable them to grow their capabilities in distribution, as I think about, you know, the Middle East, and especially, you know, more that we can do with them in Africa and Asia, and then what we can do with bringing our capabilities, and then across the board with our joint distribution, with, let's call it the adjacencies products, with putties, fillers, that's the opportunity, to the point that Carl made, about 1% to 2% revenue opportunities. What we can provide our customers, you know, the ability to have, you know, one point of sale to bring together the products that they're getting from two different folks at this point, is just a great story.
Chris Villavarayan: So I think at a very, very high level, you know, the technology that we can provide and enable them to grow their capabilities in distribution, as I think about, you know, the Middle East, and especially, you know, more that we can do with them in Africa and Asia, and then what we can do with bringing our capabilities, and then across the board with our joint distribution, with, let's call it the adjacencies products, with putties, fillers, that's the opportunity, to the point that Carl made, about 1% to 2% revenue opportunities. What we can provide our customers, you know, the ability to have, you know, one point of sale to bring together the products that they're getting from two different folks at this point, is just a great story.
Speaker #1: And then we can do is with our and then in across the with distribution , , with what call it the as board product products adjacencies fillers .
Speaker #1: That's putties , the Carl made about 1 to 2% revenue What we can grow provide our opportunities . the point customers , you know , the ability our joint to have distribution one point of know , bringing bring together the sale to that , you getting from two different folks at this that point is just they're And so that I think especially , you know , great is so much regionally , there think opportunity , the East and Africa or whether products about Latin , let's America that , and then when you come story .
Chris Villavarayan: And so that, I think, you know, especially regionally, there is so much opportunity, whether you think about the Middle East and Africa or whether you think about Latin America. And then when you come into the two strong geographies of Europe and North America, we have complementary products that I think really enables us to grow. So that's refinish as one data point. On the mobility side, they're more into, let's call it, interior plastics or APC. We're more on the exterior. Again, the combination gives us the ability to really drive product, let's call it, enhanced value to our customers. So again, we're extremely complementary, which is a great story when you put these two companies together for not only our customers, but also our employees.
Chris Villavarayan: And so that, I think, you know, especially regionally, there is so much opportunity, whether you think about the Middle East and Africa or whether you think about Latin America. And then when you come into the two strong geographies of Europe and North America, we have complementary products that I think really enables us to grow. So that's refinish as one data point. On the mobility side, they're more into, let's call it, interior plastics or APC. We're more on the exterior. Again, the combination gives us the ability to really drive product, let's call it, enhanced value to our customers. So again, we're extremely complementary, which is a great story when you put these two companies together for not only our customers, but also our employees.
Speaker #1: Europe and North we you complementary we have products that enables us to America , So that's as one data point on the mobility side .
Speaker #1: that's I think into , really let's call refinish interior it plastics or we're the exterior . Again , more on combination gives us the to really drive product .
Speaker #1: Let's call it enhanced value customers . So we're extremely which is When you to our complementary , APC , only ability our put these employees , it customers , least our amount of disruption .
Chris Villavarayan: It creates the least amount of disruption, and I think this is why, as Greg and I looked at this, of obviously many options that both companies had, this is a great story of why these two things belong to, or do these two companies belong together.
Chris Villavarayan: It creates the least amount of disruption, and I think this is why, as Greg and I looked at this, of obviously many options that both companies had, this is a great story of why these two things belong to, or do these two companies belong together.
Speaker #1: two companies
Speaker #1: think this is why , Greg and I this And I of many options great companies had , as this great story of why these two things belong together .
Kevin McCarthy: Thank you for that. And then, secondly, with the turn of the calendar page into January, we've seen, you know, some of the commodity chemicals that we track start to percolate higher. Can you discuss what you're baking into your guide for the raw material basket in the first quarter and for the year, please?
Kevin McCarthy: Thank you for that. And then, secondly, with the turn of the calendar page into January, we've seen, you know, some of the commodity chemicals that we track start to percolate higher. Can you discuss what you're baking into your guide for the raw material basket in the first quarter and for the year, please?
Speaker #1: Or do these two companies—is that both belong?
Speaker #7: Thank you for that . And with the
Speaker #7: the and for the year ? Please in ?
Speaker #7: into January , we've some seen
Speaker #7: chemicals that percolate we track start higher . Can you discuss what you're baking into guide for the your
Carl Anderson: Yeah. Thanks, Kevin. Yeah, for raws, we're assuming overall that it's gonna be flat on a year-over-year basis at this point. I think, you know, I think second half, you may see that tick up a little bit, but that'll be offset by maybe some of what we're seeing kind of real time in the first half. So overall, what's embedded in our guide is a little bit of a flat environment for raws. I think as I look at the team and what we're being able to look to drive, you know, we will have additional productivity above and beyond that. So on a net basis, we still expect to outperform on a year-over-year basis in total for our raw materials.
Carl Anderson: Yeah. Thanks, Kevin. Yeah, for raws, we're assuming overall that it's gonna be flat on a year-over-year basis at this point. I think, you know, I think second half, you may see that tick up a little bit, but that'll be offset by maybe some of what we're seeing kind of real time in the first half. So overall, what's embedded in our guide is a little bit of a flat environment for raws. I think as I look at the team and what we're being able to look to drive, you know, we will have additional productivity above and beyond that. So on a net basis, we still expect to outperform on a year-over-year basis in total for our raw materials.
Speaker #3: Yeah . for not Yeah .
Speaker #3: for for Roz , we're
Speaker #3: year over year basis . At but also
Speaker #3: I think know , I may see looked at Kevin . , you this point . up a that tick but I'll little bit , by maybe be offset in , seeing kind of what we're in the first raw So overall , what's embedded in our is a to be of a flat first quarter , some of environment Roz .
Speaker #3: I think as I look half . at look to team and being able to drive , we will guide what we're productivity beyond that .
Kevin McCarthy: Thanks very much.
Kevin McCarthy: Thanks very much.
Speaker #3: So on a real time we still expect to above and outperform on a year over basis . In total basis , for our raw for our additional the year .
Carl Anderson: Thank you.
Carl Anderson: Thank you.
Operator: Thank you. We'll now move on to Matthew DeYoe of Bank of America. Your line is now open.
Operator: Thank you. We'll now move on to Matthew DeYoe of Bank of America. Your line is now open.
Speaker #3: materials So lean out more get too relates far as the on to that . I . margin combined say on would just at the companies , you know , coming together , we do expect overall margins to be that kind of range .
Speaker #7: Thanks very much .
Speaker #8: Thank you
Matthew DeYoe: Good morning, Hakeem, on for Matthew DeYoe. In terms of your 100 to 200 basis points of revenue synergies, where do you expect to achieve them, and what is the margin assumption on that? Thank you.
Matthew DeYoe: Good morning, Hakeem, on for Matthew DeYoe. In terms of your 100 to 200 basis points of revenue synergies, where do you expect to achieve them, and what is the margin assumption on that? Thank you.
Speaker #8: .
Speaker #4: Thank We'll you . now move on to
Speaker #4: Matthew is now Your line open
Speaker #9: Hakim on
Speaker #9: Dio for your 100 to 200 basis points of . Good morning synergies , where do you achieve you know , them and what expect to is the assumption that ?
Carl Anderson: Yeah, I think, you know, I think about the revenue synergies opportunities. We'll be providing, you know, probably much more detail as we get closer and closer in this process. So I don't wanna lean out too far as it relates to the implication on that. I would just say on a combined basis, if you look at the companies, you know, kind of coming together, we do expect overall margins to be in that 19 to 20 percent type of range. Again, just enormous opportunities that we think we'll be able to accomplish on synergies. We have very detailed plans across all of the different cost actions there, whether it's on SG&A, whether that's on our plants and from an operation perspective, whether it's on purchasing.
Carl Anderson: Yeah, I think, you know, I think about the revenue synergies opportunities. We'll be providing, you know, probably much more detail as we get closer and closer in this process. So I don't wanna lean out too far as it relates to the implication on that. I would just say on a combined basis, if you look at the companies, you know, kind of coming together, we do expect overall margins to be in that 19 to 20 percent type of range. Again, just enormous opportunities that we think we'll be able to accomplish on synergies. We have very detailed plans across all of the different cost actions there, whether it's on SG&A, whether that's on our plants and from an operation perspective, whether it's on purchasing.
Speaker #9: on Again ,
Speaker #9: on Again ,
Speaker #9: you .
Speaker #3: Yeah , I think about the revenue
Speaker #3: providing , you
Speaker #3: know , probably much detail In terms of as we closer closer this
Speaker #3: know , probably much detail In terms of as we closer
Speaker #3: enormous implication able to accomplish on synergies have very . that we plans across opportunities all of the different cost Thank I don't whether it's there , SG&A , on our whether in plants and just from an perspective , whether it's on we feel very , very purchasing .
Carl Anderson: So we feel very, very confident in our ability to deliver that, which will affect and drive, and be one of the best performing margin companies on a combined basis. So more details to come as we proceed.
Carl Anderson: So we feel very, very confident in our ability to deliver that, which will affect and drive, and be one of the best performing margin companies on a combined basis. So more details to come as we proceed.
Speaker #3: actions confident So ability to in our will affect drive and deliver that which be one of the best performing margin companies operation on a So more on details to come basis .
Speaker #3: and dual be listing .
Matthew DeYoe: ... Thank you. And as a quick follow-up, there had been discussion on keeping the dual listing for a period of time, but I see your slides are saying, New York Stock Exchange only listing. Is that, like, the certain path going forward? And kind of, can you give more color on that decision? Thank you.
Matthew DeYoe: ... Thank you. And as a quick follow-up, there had been discussion on keeping the dual listing for a period of time, but I see your slides are saying, New York Stock Exchange only listing. Is that, like, the certain path going forward? And kind of, can you give more color on that decision? Thank you.
Speaker #3: progress that's .
Speaker #9: And as a Thank you . quick , there have been discussion on keeping the dual listing period of
Speaker #9: time , but
Speaker #9: slides are saying New York Stock Exchange
Carl Anderson: Yeah, I think the intent of the slide was the New York Stock Exchange will be the primary listing. There probably will be at least maybe at 12 months where there'll be dual listing, but eventually, the combined company will be just listed on the New York Stock Exchange.
Carl Anderson: Yeah, I think the intent of the slide was the New York Stock Exchange will be the primary listing. There probably will be at least maybe at 12 months where there'll be dual listing, but eventually, the combined company will be just listed on the New York Stock Exchange.
Speaker #9: Can we get more color on that decision? Thank you.
Speaker #3: think intent the slide the was New York Stock Exchange will of this be the primary listing . There will be
Speaker #3: think intent the slide the was New York Stock Exchange will of this be the primary listing . There will be
Speaker #3: combined company will for a But be the on the New I see your Exchange just listed . York Stock
Operator: Thank you. We'll now move on to Joshua Spector with UBS. Your line is open.
Operator: Thank you. We'll now move on to Joshua Spector with UBS. Your line is open.
Speaker #4: Thank you. We'll now move on to Spector at UBS. Your line is open.
Lucas Beaumont: Good morning. This is Lucas Spong on for Josh. So just sort of gonna go back to the first quarter outlook, if we could. I mean, it seems to imply that the organic expectations are probably down mid to high single digits, depending on what you're sort of assuming on effects there. I mean, backing out the current rates, it looks like it'd be more in the kind of high single-digit decline range. So I guess just what's underlying that for each of the businesses, is it similar to what happened in the fourth quarter with Refinish down double digits, Industrial down high single, and Mobility down low single? Or what are you assuming there? Thanks.
Joshua Spector: Good morning. This is Lucas Spong on for Josh. So just sort of gonna go back to the first quarter outlook, if we could. I mean, it seems to imply that the organic expectations are probably down mid to high single digits, depending on what you're sort of assuming on effects there. I mean, backing out the current rates, it looks like it'd be more in the kind of high single-digit decline range. So I guess just what's underlying that for each of the businesses, is it similar to what happened in the fourth quarter with Refinish down double digits, Industrial down high single, and Mobility down low single? Or what are you assuming there? Thanks.
Speaker #6: Good morning . This is
Speaker #6: So just wanted to kind of go back to outlook . If we could seems to imply the it I mean organic expectations are down that mid to the high single Joshua digits depending of assuming on first quarter There .
Speaker #6: on what rates , like it'd attacks . the high single I decline range . So I guess mean , just what's underlying that for each of the businesses , is it it looks what kind of probably happened in the fourth quarter refinish down be more in with and mobility down low , single ?
Carl Anderson: Yeah, thanks. You know, as we think about the quarter and then maybe for the full year as it relates to kind of that question, I think, as we look at Refinish, it does all in, will be very similar to what we saw in Q4 as far as on, at least on a year-over-year comparison, as it relates to overall volumes at this point. I think our Industrial business also, as we think on a year-over-year basis, will also be down probably into that mid to high single digits percentages as well. And again, Mobility would be probably roughly flat as we think about on a year-over-year basis, specifically for Q1.
Carl Anderson: Yeah, thanks. You know, as we think about the quarter and then maybe for the full year as it relates to kind of that question, I think, as we look at Refinish, it does all in, will be very similar to what we saw in Q4 as far as on, at least on a year-over-year comparison, as it relates to overall volumes at this point. I think our Industrial business also, as we think on a year-over-year basis, will also be down probably into that mid to high single digits percentages as well. And again, Mobility would be probably roughly flat as we think about on a year-over-year basis, specifically for Q1.
Speaker #6: double
Speaker #6: Are you, or what, industrial there? Thanks.
Speaker #3: Yeah , similar to thanks . You think quarter and then the
Speaker #3: year as it relates full
Speaker #3: year as it relates full question , I
Speaker #3: as we look at refinish , we it maybe for all in will be down high , saw in the fourth quarter . As far similar to year on as at year comparison , as it very digit that at this I think our industrial business also , as on a year over year basis , will be down probably relates to into also that mid overall to high single digits percentages what we as volumes .
Speaker #3: And again well , mobility be would probably roughly flat as we think on a year point , basis . Specifically for the first quarter .
Carl Anderson: And then we start seeing inflection as we get a little bit in Q2, but as we said in our prepared remarks, you really start seeing that come through in Q3 and Q4, really across most of our businesses. And that's how we put together the overall guide for the year.
Carl Anderson: And then we start seeing inflection as we get a little bit in Q2, but as we said in our prepared remarks, you really start seeing that come through in Q3 and Q4, really across most of our businesses. And that's how we put together the overall guide for the year.
Speaker #3: And then we start seeing inflection as we begin a little bit in the second quarter . But in a as we said prepared remarks , you really start seeing that come through Q3 and , really across most businesses .
Lucas Beaumont: Right. Thanks. And then, you said you highlighted, I guess, where you thought the EBITDA could have been for the year in a steady state if, if macro was better in the $1.3 billion range. You know, that's about $150 million higher than where you're kind of pointing to for the guide. So I was wondering if you could kind of just talk us through where do you sort of see that earnings gap amongst the businesses? You know, is... I would assume Refinish is probably a large chunk of that, being kind of mid-single digits below trend, but also, I mean, Industrial as an example, volumes there are, have been down 4 years in a row and are down roughly 25% cumulatively.
Joshua Spector: Right. Thanks. And then, you said you highlighted, I guess, where you thought the EBITDA could have been for the year in a steady state if, if macro was better in the $1.3 billion range. You know, that's about $150 million higher than where you're kind of pointing to for the guide. So I was wondering if you could kind of just talk us through where do you sort of see that earnings gap amongst the businesses? You know, is... I would assume Refinish is probably a large chunk of that, being kind of mid-single digits below trend, but also, I mean, Industrial as an example, volumes there are, have been down 4 years in a row and are down roughly 25% cumulatively.
Speaker #3: And that's how we put together the overall guide for the year in about.
Speaker #6: then Great . Thanks . And you highlighted , I guess , where thought the EBITDA could have you said year in a If steady was better the 1.3 billion range , you know , it's about $150 million higher than where you're kind of pointing to for the guide .
Speaker #6: So I was wondering if you could through kind of just talk us you sort where do of see that gap amongst macro the is , I would businesses , you assume refinish is probably a chunk of that being kind of large mid-single below trend .
Speaker #6: digits , I mean , industrial is an earnings are But have volumes . been down for and are down row example roughly 25% cumulatively .
Lucas Beaumont: So maybe if you could kind of frame out for us where you think the different parts are and how we can see that come back in a recovery story?
Joshua Spector: So maybe if you could kind of frame out for us where you think the different parts are and how we can see that come back in a recovery story?
Speaker #6: years in a you could kind of for the parts different and are where you think can see that come back recovery story in a
Chris Villavarayan: Sure, Lucas. I think that you hit two of them, just one missing, which is the Commercial Vehicle. But just let me go through it. I think Refinish, for example, you know, if we look back over the last two years, I would call it, you know, down mid, mid to mid-single digits as an average, if you look year-on-year, 2024, 2025. So that's certainly one. But then beyond that, as I look at the next one, it's really Commercial Vehicle. Commercial Vehicle is down about 30%, 25% to 30% from where we predicted, and even if you play it out, you know, it's an incredibly cyclical business. 2026 was supposed to be a historic high because we were gonna have the fee buy driven by the emissions change.
Chris Villavarayan: Sure, Lucas. I think that you hit two of them, just one missing, which is the Commercial Vehicle. But just let me go through it. I think Refinish, for example, you know, if we look back over the last two years, I would call it, you know, down mid, mid to mid-single digits as an average, if you look year-on-year, 2024, 2025. So that's certainly one. But then beyond that, as I look at the next one, it's really Commercial Vehicle. Commercial Vehicle is down about 30%, 25% to 30% from where we predicted, and even if you play it out, you know, it's an incredibly cyclical business. 2026 was supposed to be a historic high because we were gonna have the fee buy driven by the emissions change.
Speaker #6: us Sure .
Speaker #6: ?
Speaker #1: I you
Speaker #1: the two of commercial which is But just let me go through hit refinish example , if , for over the last two years , I would call it , back you know , mid mid , mid single to as an average .
Speaker #1: it . If you I look year on year , 24 , 25 . So that's then that , as I beyond look at the next one , certainly one .
Speaker #1: vehicle But vehicles down So maybe if about 30% . it's digits we predicted . And commercial even if If out , you know , it's an play it cyclical incredibly 26 was be a business .
Chris Villavarayan: So we were supposed to be, let's call it on that 350 to 360 range, and replacement is actually 275, and we're, let's call it, around that 240 to 250 range. So we're significantly below even replacement. We do see that trend ticking back up. So to answer your question of where do I see recovery? For me, where do I see recovery is certainly in CV. I think, you know, based on just the cyclicality of that business and watching it for over 20 years from my past, I expect that to return to at least replacement levels in 2027. So that's one.
Chris Villavarayan: So we were supposed to be, let's call it on that 350 to 360 range, and replacement is actually 275, and we're, let's call it, around that 240 to 250 range. So we're significantly below even replacement. We do see that trend ticking back up. So to answer your question of where do I see recovery? For me, where do I see recovery is certainly in CV. I think, you know, based on just the cyclicality of that business and watching it for over 20 years from my past, I expect that to return to at least replacement levels in 2027. So that's one.
Speaker #1: Historically, we were commercial, going to high because the driven by the change. So, 25 to 30% from where emissions we were supposed—let's call it the 350 to 360 range.
Speaker #1: it on , supposed to be replacement is actually 275 . that . And call it we're around that . pre-buy 240 to 250 significantly to below even refinish We replacement .
Speaker #1: do see trend range . So to answer your question ticking back So we're of where do I see recovery for me . Where do I recovery is certainly in CV .
Speaker #1: I think , you just the know , cyclicality of based on that business watching let's and from my see expect that to return to at that it for least replacement in So the element of this obviously , 20 years think as you about other is levels specific issue with past , destocking , and I've 2027 .
Chris Villavarayan: The other element of this is obviously as you think about, Refinish, we have a specific issue with destockings, and I've always said this is not a V-shaped recovery, this is gonna be something that's U-shape, and we expect this to recover into Q2. And even if we get back to the numbers that we had when we had destocking in 2024 Q2, that's essentially what our guide is in, in pretty much in simplistic work-way perspective as I look at 2026. So I think that coming back will certainly be helpful. So those are the two. And then finally, in, in Industrial, we're counting on a little bit of, let's call it, just a return through some of the interest rate reductions and, and a little bit of maybe, policy changes that would drive in the back end.
Chris Villavarayan: The other element of this is obviously as you think about, Refinish, we have a specific issue with destockings, and I've always said this is not a V-shaped recovery, this is gonna be something that's U-shape, and we expect this to recover into Q2. And even if we get back to the numbers that we had when we had destocking in 2024 Q2, that's essentially what our guide is in, in pretty much in simplistic work-way perspective as I look at 2026. So I think that coming back will certainly be helpful. So those are the two. And then finally, in, in Industrial, we're counting on a little bit of, let's call it, just a return through some of the interest rate reductions and, and a little bit of maybe, policy changes that would drive in the back end.
Speaker #1: that's one recovery . This to be not a that's something U-shape . And we expect recover And even if Q2 . get back to the numbers always said had when we is going had destocking in 24 Q2 , that's essentially what our that we guide is in pretty much in simplistic this to word of As I perspective .
Speaker #1: look ways at 2026 . I that think back will helpful . So are the two . those And certainly be then finally in , we're counting in on a industrial of let's bit call just a it coming interest rate through some of reductions .
Chris Villavarayan: But again, we're not counting on much. This is really 2% to 3%. It's nothing significant. All that said, you know, as you can think about the cost actions we're driving, we obviously have plans to mitigate some of this if everything doesn't come back up.
Chris Villavarayan: But again, we're not counting on much. This is really 2% to 3%. It's nothing significant. All that said, you know, as you can think about the cost actions we're driving, we obviously have plans to mitigate some of this if everything doesn't come back up.
Speaker #1: , and a the of little bit So maybe policy changes drive in the back But again , we're not counting on that would much .
Speaker #1: It's really 2 to 3% . nothing little And all that said , you think cost actions the driving , we you can plans to And mitigate some of this .
Carl Anderson: Yeah, and Lucas, just one other point on that. I think the very simple way to think about it, on every incremental dollar of revenue, we are – we think we're gonna contribute close to 40% to EBITDA as we move forward, based off all the actions that we've executed over the last several years.
Carl Anderson: Yeah, and Lucas, just one other point on that. I think the very simple way to think about it, on every incremental dollar of revenue, we are – we think we're gonna contribute close to 40% to EBITDA as we move forward, based off all the actions that we've executed over the last several years.
Speaker #1: If if everything doesn't back up .
Speaker #3: And there's just think the very about on that , I it on think dollar revenue are , we every think we're
Speaker #3: of close to we contribute simple way to
Lucas Beaumont: Great. Thank you.
Joshua Spector: Great. Thank you.
Operator: Thank you. We'll now move on to Aleksey Yefremov of KeyBanc Capital Markets. Your line is open.
Operator: Thank you. We'll now move on to Aleksey Yefremov of KeyBanc Capital Markets. Your line is open.
Speaker #3: last several years significant . executed over the move . off
Speaker #6: Thank Right . you
Speaker #6: Thank Right . you
Aleksey Yefremov: ... Thanks. Good morning, guys. We got Ryan on for Aleksey. Just wanted to kind of level set, maybe, you know, a bridge from one Q, kind of through the balance of the year. I think, you know, looking at it, it's about maybe down high single digits, kind of in Q1, what you guys are kind of pointing to. And then, you know, is the right way to think about it on an EBITDA basis, maybe flat, kind of in Q2, and in the high single digit growth in the back half, kind of as Refinish and Industrial normalize a little bit, or just kind of any thoughts there would be helpful.
Aleksey Yefremov: ... Thanks. Good morning, guys. We got Ryan on for Aleksey. Just wanted to kind of level set, maybe, you know, a bridge from one Q, kind of through the balance of the year. I think, you know, looking at it, it's about maybe down high single digits, kind of in Q1, what you guys are kind of pointing to. And then, you know, is the right way to think about it on an EBITDA basis, maybe flat, kind of in Q2, and in the high single digit growth in the back half, kind of as Refinish and Industrial normalize a little bit, or just kind of any thoughts there would be helpful.
Speaker #4: Thank We'll
Speaker #4: Thank We'll now move to you . come on Yefremov Capital of is KeyBanc Markets .
Speaker #4: Thank We'll now move to you . come on Yefremov Capital of is KeyBanc Markets . Aleksey open
Speaker #10: Good morning You got as we on for Aleksey . Thanks . wanted to kind of set . level incremental you know , a bridge .
Speaker #10: Good morning You got as we on for Aleksey . Thanks . wanted to kind of set . level incremental you know , a bridge .
Speaker #10: guys .
Speaker #10: Ryan of through one Q kind the Maybe , year . I from from looking at it , Just maybe it's about digits what you guys are kind of to and then , you know , bounds of the is the right way to Your line think about it know , .
Speaker #10: On a kind of Q and high single back half, kind of refinish as and normalize a bit, or of any little there would in one. Helpful.
Speaker #10: On an kind of Q and high single back half , kind of refinish as and normalize a bit , or of any little there would in one .
Carl Anderson: Yeah. Hey, Ryan. Yeah, I think that's a good way to think about it. If you think about where we started the year for Q1, you can kind of see what we did last year in Q2, being in that, you know, low 290s. And then we kind of ramp as we get a little bit further in the second half. So that is the right way to think about it from a forecast and a model perspective.
Carl Anderson: Yeah. Hey, Ryan. Yeah, I think that's a good way to think about it. If you think about where we started the year for Q1, you can kind of see what we did last year in Q2, being in that, you know, low 290s. And then we kind of ramp as we get a little bit further in the second half. So that is the right way to think about it from a forecast and a model perspective.
Speaker #3: Yeah . Hey , Ryan . Yeah , I a good think it . If you start in the year for way to Q1 , you can
Speaker #3: what we year in that
Speaker #3: in then
Aleksey Yefremov: Okay, great. Thank you. And then just, I actually wanted to ask a little bit more about kind of CV. I think the last couple months worth of Class 8 orders in North America have actually shown, like, fairly positive growth. So is there maybe some, like, inventory that kind of needs to be worked through the chain before we kind of get back to a better build rate in the back half? We're just trying to understand some of the dynamics there. Thank you.
Aleksey Yefremov: Okay, great. Thank you. And then just, I actually wanted to ask a little bit more about kind of CV. I think the last couple months worth of Class 8 orders in North America have actually shown, like, fairly positive growth. So is there maybe some, like, inventory that kind of needs to be worked through the chain before we kind of get back to a better build rate in the back half? We're just trying to understand some of the dynamics there. Thank you.
Speaker #3: bit half . further in the second So is the right way to think about digit growth it from of see a
Speaker #3: And basis, model that think about perspective industrial.
Speaker #10: Okay , you . actually just I bit more about Q kind of I think great . the last couple of Thank And then of class eight orders in North America have actually shown CV .
Speaker #10: fairly positive growth . months is there
Speaker #10: So, if there needs to be inventory, that can kind of get back to be worked at a better build rate into maybe some back half? Just—we're trying to understand some of the dynamics there.
Speaker #10: So of needs to inventory that kind kind of get back be worked a better build rate in to maybe some back half ? just We're understand some of to dynamics the
Chris Villavarayan: Yeah, I wouldn't say that. I think, if I look at... it's a fair assessment, you know, one of our large customers just, you know, announced recently, and you can see the positive trends as they look at 26. On top of that, ACT, to your point, just, Ryan, just released and took it up to 270. But, you know, we obviously haven't seen that, you know, reflect in FTR. We're just being a little bit cautious here. Don't wanna jump ahead of the gun, but, that's a fair assessment, I would say. You know, there is probably more positive momentum in CV, which is a great story for us, just, you know, as you think about it, that it comes in at a higher margin, almost Performance Coatings margin in our Mobility business.
Chris Villavarayan: Yeah, I wouldn't say that. I think, if I look at... it's a fair assessment, you know, one of our large customers just, you know, announced recently, and you can see the positive trends as they look at 26. On top of that, ACT, to your point, just, Ryan, just released and took it up to 270. But, you know, we obviously haven't seen that, you know, reflect in FTR. We're just being a little bit cautious here. Don't wanna jump ahead of the gun, but, that's a fair assessment, I would say. You know, there is probably more positive momentum in CV, which is a great story for us, just, you know, as you think about it, that it comes in at a higher margin, almost Performance Coatings margin in our Mobility business.
Speaker #10: . I
Speaker #1: wouldn't say No , that . I think if chain I look at it's a and fair assessment one of our large just , you know , announced recently and you can
Speaker #1: see positive trends as think that's
Speaker #1: at
Speaker #1: On top of that
Speaker #1: To point , just just released customers and took it up to Ryan , did last But 270 . you know , we Q2 , being obviously that .
Speaker #1: seen know FTR . You in being a cautious We're just to jump Don't want haven't little bit ahead of you that's the before we assessment .
Speaker #1: , reflect is would say . You know , probably more I positive there momentum CV , a great story for us . But Just , it , that comes in at a as you higher margin think about coatings margin in our business mobility .
Chris Villavarayan: So, you know, there, there's probably some upside there, but again, we're going in with a realistic guide and wanna make sure that we first see that improvement come through. But in terms of inventory level, I would say inventory levels are probably at, you know, standard levels at this point. There's nothing that's driving, let's call it, excess inventory, sitting at OE, retail, footprint at this point.
Chris Villavarayan: So, you know, there, there's probably some upside there, but again, we're going in with a realistic guide and wanna make sure that we first see that improvement come through. But in terms of inventory level, I would say inventory levels are probably at, you know, standard levels at this point. There's nothing that's driving, let's call it, excess inventory, sitting at OE, retail, footprint at this point.
Speaker #1: you know So , , there's some there . But upside again , going in with a which is probably guide and we're we first see that improvement come But through .
Speaker #1: In inventory level, I’d say inventory levels are probably at standard levels, point. There’s nothing that’s driving at excess inventory, let’s call it.
Speaker #1: Sitting in terms of at retail point performance footprint. At
Operator: Thank you. We'll now move on to David Begleiter of Deutsche Bank. Your line is open.
Operator: Thank you. We'll now move on to David Begleiter of Deutsche Bank. Your line is open.
David Begleiter: Thank you. Good morning. Chris, on Refinish, can you discuss, just on pricing alone, what you got in 25 and what you expect to get in 26? Just, just pricing, no mix.
David Begleiter: Thank you. Good morning. Chris, on Refinish, can you discuss, just on pricing alone, what you got in 25 and what you expect to get in 26? Just, just pricing, no mix.
Speaker #4: Thank you . We'll now move on to David
Speaker #4: Deutsche Bank . Your line
Speaker #4: .
Speaker #11: Thank you . Good morning
Speaker #11: discuss pricing got just on in you would 25 and what refinish . alone 26 . Just just pricing , no mix this .
Chris Villavarayan: Yeah. No, no change in the strategy, David, but we, we got 2% in 2025, and the target for 2026 is to stay consistent with what we've done historically. So it's just 2% net is, is what we work towards, and that's, that's essentially what we're doing. Last year, we went out with, we priced twice, to hit the same target. This year, we're just gonna do our standard one pricing, so.
Chris Villavarayan: Yeah. No, no change in the strategy, David, but we, we got 2% in 2025, and the target for 2026 is to stay consistent with what we've done historically. So it's just 2% net is, is what we work towards, and that's, that's essentially what we're doing. Last year, we went out with, we priced twice, to hit the same target. This year, we're just gonna do our standard one pricing, so.
Speaker #1: No , no strategy David .
Speaker #1: No , no strategy David .
Speaker #1: 2% in in 2025 . And the target for change in the 2026 is to stay consistent with what . Yeah . it's done historically .
Speaker #1: just 2% . is Net what is So work we And that's towards . essentially what doing what you that's year we went . Last got out with we to hit the same year we're target .
David Begleiter: Very good. And on the, on the combination, Chris, when you look at Deco, any updated thoughts on your, on the role of Deco in the combined portfolio? And could we see some Deco divestitures down the road? Thank you.
David Begleiter: Very good. And on the, on the combination, Chris, when you look at Deco, any updated thoughts on your, on the role of Deco in the combined portfolio? And could we see some Deco divestitures down the road? Thank you.
Speaker #1: do our just going to standard This one priced So pricing . .
Speaker #11: the on the And on Very combination Chris ,
Speaker #11: the on the And on Very combination Chris , you look
Chris Villavarayan: Well, I think really that's a call for Greg and the Akzo team to make. Obviously, we're, we're... That's not a, let's call it, an end market that we're in. You know, again, as I look at it, and I think Carl hit on it, you know, the best part of this combination is really the three elements that Carl talked about, which is scale, innovation, and synergies. And I look at it as, you know, it's not, when you think about the scale, it's not the $17 billion of combined revenue. It's the fact that we approach seven different end markets and the complementary nature of where we do have, let's call it, an ability to service our customers better. I think that's just incredible.
Chris Villavarayan: Well, I think really that's a call for Greg and the Akzo team to make. Obviously, we're, we're... That's not a, let's call it, an end market that we're in. You know, again, as I look at it, and I think Carl hit on it, you know, the best part of this combination is really the three elements that Carl talked about, which is scale, innovation, and synergies. And I look at it as, you know, it's not, when you think about the scale, it's not the $17 billion of combined revenue. It's the fact that we approach seven different end markets and the complementary nature of where we do have, let's call it, an ability to service our customers better. I think that's just incredible.
Speaker #11: Deco in the combined portfolio could we see . And some Deco twice Thank road ? you the
Speaker #11: divestitures down
Speaker #1: think really
Speaker #1: and the for the team that's to make . we're good . that's Obviously not call it an end
Speaker #1: we're know we're as I look . at it again think Carl hit You a let's part this of combination is . really Well , I the three elements that Carl talked about , which is scale and synergies .
Speaker #1: And , innovation I , I look at it as , you know , it's it's not when you think about the scale , it's not the complete $17 billion of revenue .
Speaker #1: It's the approach we seven different end markets . And the complementary of nature where have , we do let's call it an ability to service our that customers better .
Chris Villavarayan: But underneath that, the scale is really around the financial strength that the combined company provides. You know, the joint Free Cash Flow is just great, and the leverage ratio is at a great spot that, you know, the leadership has the ability to then invest in certainly in parts that they define as growth vectors. And it could be Deco, it could be Refinish, it could be any of the seven end markets that you know strategically makes the most sense. And then beyond that, I look at the innovation capability. A joint company that has over 3,500 patents with almost 3,000 engineers, just the scale and, you know, what this organization can do in the future to create the best-in-class coatings for not only our customers, but for just changing the world forward.
Chris Villavarayan: But underneath that, the scale is really around the financial strength that the combined company provides. You know, the joint Free Cash Flow is just great, and the leverage ratio is at a great spot that, you know, the leadership has the ability to then invest in certainly in parts that they define as growth vectors. And it could be Deco, it could be Refinish, it could be any of the seven end markets that you know strategically makes the most sense. And then beyond that, I look at the innovation capability. A joint company that has over 3,500 patents with almost 3,000 engineers, just the scale and, you know, what this organization can do in the future to create the best-in-class coatings for not only our customers, but for just changing the world forward.
Speaker #1: I think that's just incredible . But that , the underneath scale is really around the financial strength that the combined company provides , you know , joint free the cash flow is great .
Speaker #1: And the leverage ratio is at a great spot . Spot that , you know , the leadership has the ability to then invest in in certainly just in parts that that they define as , as growth vectors .
Speaker #1: And it could be Deco . It could be refinish . It any of the markets seven end that , you know , strategically makes the most sense .
Speaker #1: And be could beyond that , I look at the innovation capability joint , a company that has 3500 patents with almost 3000 engineers , scale .
Speaker #1: the just And you know what organization can over do in future to create the the best in this class coatings for not only customers , just our changing but for forward .
Chris Villavarayan: It's just for me, it's just the joint strength of the combined company, and obviously, the last one being synergies, is that just the incremental value that automatically provides for our shareholders, and I think it's great. And I mean, Carl, anything to add?
Chris Villavarayan: It's just for me, it's just the joint strength of the combined company, and obviously, the last one being synergies, is that just the incremental value that automatically provides for our shareholders, and I think it's great. And I mean, Carl, anything to add?
Speaker #1: It's world it's for me , just the the combined company and obviously the one being synergies is the the just the incremental that value automatically provides for our shareholders .
Speaker #1: strength of
Carl Anderson: Yeah. And David, just, as you, as you saw from AkzoNobel, they had a really, really phenomenal transaction when they sold their India Deco business. If you look at the multiple they received on that, I think it was mid-twenties. So I do know there's some opportunities that the team is continuing to evaluate in Southeast Asia as well on Deco. But again, I think that's something that, you know, is kind of, you know, all part of the, their strategy as this thing goes forward.
Carl Anderson: Yeah. And David, just, as you, as you saw from AkzoNobel, they had a really, really phenomenal transaction when they sold their India Deco business. If you look at the multiple they received on that, I think it was mid-twenties. So I do know there's some opportunities that the team is continuing to evaluate in Southeast Asia as well on Deco. But again, I think that's something that, you know, is kind of, you know, all part of the, their strategy as this thing goes forward.
Speaker #1: And , and I think it's great . And I mean , anything to Karl , add .
Speaker #3: Yeah . And David , just as you , as you saw from Nobel , they Exxon really , had a phenomenal really transaction sold their India Deco when they business .
Speaker #3: If you look at the multiple they on that, I received think it was mid-20s. So, some I do opportunities know there are that the team is evaluate in Southeast Asia as continuing to well.
Speaker #3: Deco On . But again , I think that's something that , you know , is kind of , you know , all part of the strategy the as this thing goes .
David Begleiter: Thank you.
David Begleiter: Thank you.
Chris Villavarayan: You're welcome.
Chris Villavarayan: You're welcome.
Operator: Thank you. We'll move on now to John Roberts with Mizuho. Your line is now open.
Operator: Thank you. We'll move on now to John Roberts with Mizuho. Your line is now open.
Speaker #11: Thank you .
Speaker #8: You're welcome .
Edlain Rodriguez: Thank you. This is Evan Rodriguez for John. Chris, quick one for me on Refinish. Do you have a good sense of when claim activity should start to improve? And most importantly, what will be the key drivers of that improvement? Is it the consumer doing better? Like, is it something else? Like, what's gonna be the catalyst for that change in there?
Edlain Rodriguez: Thank you. This is Evan Rodriguez for John. Chris, quick one for me on Refinish. Do you have a good sense of when claim activity should start to improve? And most importantly, what will be the key drivers of that improvement? Is it the consumer doing better? Like, is it something else? Like, what's gonna be the catalyst for that change in there?
Speaker #4: Thank you now on to John . Mizuho .
Speaker #4: is now Your line open .
Speaker #4: is now Your line open
Speaker #12: Rodriguez for Edwin John . Chris quick one for me on refinish . have a Do you good sense when of activity
Speaker #12: to improve most importantly , what will be the key drivers of that improvement ? Is it the consumer doing better ? Like last .
Chris Villavarayan: Yeah, I think this is the big question. From our perspective, you know, to me, I think it's pretty straightforward. It is a lot to do with the consumer associated with really, you know, how you know, what happens with insurance claims and/or insurance rates and just getting, you know, the entire inflationary impact that they have faced, I think that abating over time. And this is. There's two elements to this. Obviously, just purely what's happening with insurance costs, which again, the green shoot is it's coming down to the, where we're not seeing increases as significant as what we saw in 2023 and 2024. But that doesn't take away from we. You know, to drive this, we should expect this to continue to go down, not just be flat. So that's one.
Chris Villavarayan: Yeah, I think this is the big question. From our perspective, you know, to me, I think it's pretty straightforward. It is a lot to do with the consumer associated with really, you know, how you know, what happens with insurance claims and/or insurance rates and just getting, you know, the entire inflationary impact that they have faced, I think that abating over time. And this is. There's two elements to this. Obviously, just purely what's happening with insurance costs, which again, the green shoot is it's coming down to the, where we're not seeing increases as significant as what we saw in 2023 and 2024. But that doesn't take away from we. You know, to drive this, we should expect this to continue to go down, not just be flat. So that's one.
Speaker #12: is it catalyst for that their change in .
Speaker #8: Yeah , I Think this
Speaker #8: Yeah , I Think this
Speaker #8: .
Speaker #1: big question from , from our perspective , you know , to me , I think it's it's pretty straightforward . It is a lot to do with the consumer
Speaker #1: With really, you know, how you know what happens to be with insurance claims, and, and, or insurance rates getting, you, and just the, you know, entire inflationary impact that they faced?
Speaker #1: I think that abating over time . And this is there's two elements to this obviously , just purely happening with insurance costs , which again , the green shoot is it's coming down to where we're not seeing increases significant as what we saw in 23 and 24 .
Chris Villavarayan: The second element of this is obviously repair costs. Repair costs is also an important aspect, and the cost of repairs have gone up, and that's caused a constraint. Again, there's green shoots here. Co- repair costs have also meant body shops don't have as much work, and I can start seeing that. I think, you know, folks are starting to essentially look at appropriately pricing to make sure that the body shops get work back in. So I do think that this trend is trending the right way, but in terms of when this returns, I think that's the million-dollar question.
Chris Villavarayan: The second element of this is obviously repair costs. Repair costs is also an important aspect, and the cost of repairs have gone up, and that's caused a constraint. Again, there's green shoots here. Co- repair costs have also meant body shops don't have as much work, and I can start seeing that. I think, you know, folks are starting to essentially look at appropriately pricing to make sure that the body shops get work back in. So I do think that this trend is trending the right way, but in terms of when this returns, I think that's the million-dollar question.
Speaker #1: But that doesn't take away, you know, to drive this. We should expect this to, what's going to continue to go down, not just be flat.
Speaker #1: that's So one the second element of this obviously is repair costs . Repair costs is also an important aspect . And the cost of have repairs gone up .
Speaker #1: And that's caused a constraint. Again, there are green shoots here. Repair costs have also meant body shops don't have as much work.
Speaker #1: And I can start as seeing that. I think, you know, folks are starting to essentially look at appropriately pricing to make sure that the body shops get work back in.
Speaker #1: So I do think that this trend is trending the right way . But in terms from we , of when this returns , I think that's million the dollar question
Edlain Rodriguez: Okay, perfect. Thank you.
Edlain Rodriguez: Okay, perfect. Thank you.
Chris Villavarayan: You're welcome.
Chris Villavarayan: You're welcome.
Operator: Thank you. We'll move on now to Mike Harrison with Seaport Research Partners. Your line is open.
Operator: Thank you. We'll move on now to Mike Harrison with Seaport Research Partners. Your line is open.
Speaker #1: .
Speaker #12: Perfect . Thank you Okay . .
Speaker #8: welcome You're .
Speaker #4: Thank you . We'll move on now to Mike Harrison with Seaport Research Partners . Your line is open .
Mike Harrison: Hi, good morning. Thanks for taking my question. Just in terms of the mix that you're seeing in Refinish, I'm curious if you can comment on the speed at which you're seeing growth in mainstream and economy versus premium, and if you expect that to continue to be a headwind to mix in 2026. And can you also comment on whether the combination with Akzo maybe enhances your Refinish opportunities in that mainstream and economy segment of the market?
Michael Harrison: Hi, good morning. Thanks for taking my question. Just in terms of the mix that you're seeing in Refinish, I'm curious if you can comment on the speed at which you're seeing growth in mainstream and economy versus premium, and if you expect that to continue to be a headwind to mix in 2026. And can you also comment on whether the combination with Akzo maybe enhances your Refinish opportunities in that mainstream and economy segment of the market?
Speaker #13: Hi. Good morning. Thanks for taking my question. Just in terms of the mix that you're seeing in Refinish, I'm curious if you can comment on the speed at which you're seeing growth in mainstream and economy versus premium.
Speaker #13: if you And expect that to continue to be a headwind to mix in 2026 . And can you also comment on whether the combination with Akzo maybe enhances your refinish opportunities in that mainstream and economy segment of the market ?
Chris Villavarayan: Sure. That's a great question, Mike. So you're absolutely right. You know, with the acquisition of Coverflex, we certainly, you know, last year was a record number of body shop wins in the economy space, so that certainly did help us. And so you can see a little bit of, let's call it, impact from us winning more. So from a Performance Coatings margin perspective, it's positive. Obviously, from a Refinish margin perspective, because, you know, we have more in premium, it does have a bit of an impact for the overall. But overall Axalta, overall Performance Coatings, we want this was part of the strategy. This is why we wanted to grow economy, because we only had, you know, about 9% market share here. We're now around that 11% market share.
Chris Villavarayan: Sure. That's a great question, Mike. So you're absolutely right. You know, with the acquisition of Coverflex, we certainly, you know, last year was a record number of body shop wins in the economy space, so that certainly did help us. And so you can see a little bit of, let's call it, impact from us winning more. So from a Performance Coatings margin perspective, it's positive. Obviously, from a Refinish margin perspective, because, you know, we have more in premium, it does have a bit of an impact for the overall. But overall Axalta, overall Performance Coatings, we want this was part of the strategy. This is why we wanted to grow economy, because we only had, you know, about 9% market share here. We're now around that 11% market share.
Speaker #1: Sure . That's a great question , Mike . So you're absolutely right . I you know , with the acquisition of flex , was a we certainly year , you know , record number of Body Shop in wins the in the economy space .
Speaker #1: So that's certainly did help us . And so you can a little see bit of let's call it impact from us winning more .
Speaker #1: So from a performance margin perspective it's positive obviously from a refinish margin perspective because you know we have more in in premium . It does have a bit of an impact for the overall .
Speaker #1: But overall Axalta overall performance Coatings this was part of the strategy . This is why we wanted to grow economy , because we only had , you know , about 9% market share here .
Chris Villavarayan: So it was certainly, certainly a driver, and it was something that we wanted. And so I would say, in that sense, it's... The strategy is working, and, you know, we certainly are seeing growth here, and nothing's changed in that perspective. And we're gonna continue to drive hard, even as I look at 2026, to make sure that we continue to grow in economy. Now, in terms of the overall merger, the one thing that I can say is it's complementary. So I think, you know, as we look at their capabilities versus our capabilities, it's pretty complementary, and I think this is, again, why this partnership makes so much sense.
Chris Villavarayan: So it was certainly, certainly a driver, and it was something that we wanted. And so I would say, in that sense, it's... The strategy is working, and, you know, we certainly are seeing growth here, and nothing's changed in that perspective. And we're gonna continue to drive hard, even as I look at 2026, to make sure that we continue to grow in economy. Now, in terms of the overall merger, the one thing that I can say is it's complementary. So I think, you know, as we look at their capabilities versus our capabilities, it's pretty complementary, and I think this is, again, why this partnership makes so much sense.
Speaker #1: We're now around that 11% market share . So it was certainly , certainly a Coatings driver . And it was something that we wanted .
Speaker #1: And so I would say in that sense , it's the strategy is working . And , you know , we certainly are seeing growth here .
Speaker #1: And nothing's changed in that perspective . And we're going to continue to hard , even as I look 26 , to at make sure that we grow in continue to in terms economy .
Speaker #1: Now , the overall merger , the one thing that I can say is it's it's So I think , you know , as we look at their capabilities versus our capabilities , it's pretty complimentary .
Mike Harrison: All right. And then, apologies if I missed this earlier, but I, I'm curious, in light vehicle, can you just talk a little bit about new business wins? And I guess if, if you're expecting to grow faster than underlying markets in 2026, is that, a result of, of business that you won last year and, and it's just flowing through this year? Or, have you seen some recent, new business wins that should be contributing in 2026? Thank you.
Michael Harrison: All right. And then, apologies if I missed this earlier, but I, I'm curious, in light vehicle, can you just talk a little bit about new business wins? And I guess if, if you're expecting to grow faster than underlying markets in 2026, is that, a result of, of business that you won last year and, and it's just flowing through this year? Or, have you seen some recent, new business wins that should be contributing in 2026? Thank you.
Speaker #1: And I think this is again , why this partnership makes so much sense .
Speaker #13: right . And All then apologies if I missed this earlier , but I'm curious in light vehicle can you just talk a little bit about new business wins .
Speaker #13: And I guess if you're expecting to grow faster than underlying markets in 2026 , is that result a of that you of won last year ?
Speaker #13: it's just flowing through And year or this have you some seen recent business new business wins that should be contributing in 26 ? Thank
Carl Anderson: Yeah. Yeah, thanks, Mike. I, I think if you look at the new business wins in mobility and specifically in light vehicle, a lot of that is coming from Brazil. So that is. So we, we announced that about a year ago, with up to over $70 million in new business wins. You will see about $30 million of that will carry over for this year, so that will be in the results in 2026. But the team continues to do a really great job of executing and winning in, in Asia and China, as well as in, as in North America as well. So I think those trend lines are very, very stable, and actually, we're seeing continued growth.
Carl Anderson: Yeah. Yeah, thanks, Mike. I, I think if you look at the new business wins in mobility and specifically in light vehicle, a lot of that is coming from Brazil. So that is. So we, we announced that about a year ago, with up to over $70 million in new business wins. You will see about $30 million of that will carry over for this year, so that will be in the results in 2026. But the team continues to do a really great job of executing and winning in, in Asia and China, as well as in, as in North America as well. So I think those trend lines are very, very stable, and actually, we're seeing continued growth.
Speaker #13: you .
Speaker #3: Mike . Yeah . I think if Thanks , you look at the new wins and business mobility especially and specifically in Lightfield , is coming from a lot of that Brazil .
Speaker #3: So so we that is announced that about ago with up a year to over $70 million of new wins . You will business about see carry 30 million of that will over for this year .
Speaker #3: So that will be in the results But the team in 2026 . continues to do a really job of great executing and winning .
Speaker #3: in and China , as well And Asia is in in North as America as well . So trend lines those are I think very , very stable .
Carl Anderson: And what we're really excited about within that business is just the overall margin performance and the consistency of that we have as within mobility.
Carl Anderson: And what we're really excited about within that business is just the overall margin performance and the consistency of that we have as within mobility.
Speaker #3: And actually we're seeing . And what continued growth excited about we're really within that business is just overall the margin the performance and consistency of we that that have mobility .
Speaker #3: . As within
Operator: Thank you. At this time, we've reached our allotted time for questions. I'll now turn the call back over to Chris Villavarayan.
Operator: Thank you. At this time, we've reached our allotted time for questions. I'll now turn the call back over to Chris Villavarayan.
Speaker #4: you we've reached Thank this time , our allotted time for . At I'll , questions . the call I'll now over to turn back Chris Vallavarayan
Chris Villavarayan: Well, thank you. Before we close the call, I really want to thank all of you and just say how I'm truly proud of the Axalta team for the performance in 2025, especially executing under such challenging circumstances. We have an incredibly exciting year ahead of us as we close the last year of the A Plan, and we all look forward to our journey with Akzo. With that, have a great day, and look forward to talking to you all soon. Thank you.
Chris Villavarayan: Well, thank you. Before we close the call, I really want to thank all of you and just say how I'm truly proud of the Axalta team for the performance in 2025, especially executing under such challenging circumstances. We have an incredibly exciting year ahead of us as we close the last year of the A Plan, and we all look forward to our journey with Akzo. With that, have a great day, and look forward to talking to you all soon. Thank you.
Speaker #1: Before we close
Speaker #1: the call , really want I to thank all of you . you and just say .
Speaker #1: how I'm of the Well , thank truly team proud for the performance in especially executing under such 2025 , challenging circumstances have an .
Speaker #1: incredibly exciting year We ahead of close the us as of the A we all and plan look last year forward to our Axo , with that , with great day and look to forward to you all soon .
Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Speaker #1: you talking Thank .
Speaker #4: you . us to This brings Thank the end meeting . We of today's appreciate your time and participation . You may now disconnect .
