Axalta Coating Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Exalta's Q4 and full year 2023 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 15th. 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 Chris Evans. Please go ahead, sir.

Thank you and good morning. This is Chris Evans, VP of Investor Relations. We appreciate your continued interest in Exalta and welcome you to our fourth quarter and full year 2023 Financial Results Conference Call. Joining me today are Chris Villavarayan, CEO and President, and Carl Anderson, CFO. We released our quarterly financial results this morning and posted a slide presentation to the investor relations section of our website at Exalta.com, which we will be referencing during this call. Our prepared remarks, the slide presentation, and our discussion today may contain forward-looking statements reflecting the company's current view of future events and their potential effect on Exalta's operating and financial performance. These statements involve uncertainties and risks. and actual results may differ materially from those forward-looking statements. Please note that the company is under no obligation to provide updates to these forward-looking statements. Our remarks and this slide presentation also contain various non-GAAP financial measures. In the appendix to the slide presentation, we've included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information regarding forward-looking statements and non-GAAP financial measures, please refer to our filings with the SEC. I will now turn the call over to Chris.

Thank you, Chris, and good morning, everyone. This was another great quarter for Exalta. I'm pleased that we met or exceeded all targets for our full-year guidance, and I want to thank the entire global team for their dedication and strong execution. Q4 net sales increased 5% year-over-year to $1.3 billion, with positive contributions from both segments. Volumes improved 2% year-over-year, led by a 9% growth in mobility coatings. This represents our seventh consecutive quarter of mobility volumes growth as auto productions have normalized from historic lows and we have successfully repositioned our portfolio with some of the fastest-growing automotive OEMs. Price mix was a 1% year-over-year improvement, with pure pricing approximately 3% better year-over-year when excluding mixed effects and one-time pricing realization. All end markets contributed to better year-over-year pricing gains. This was a great achievement for our commercial teams and a demonstration on our ongoing emphasis on pricing realization. Going forward, we will remain disciplined as we face pressure from higher labor costs and strive to restore margins to historical levels. Adjusted EBITDA increased 21% year over year to $251 million and adjusted EBITDA margins improved by 250 basis points to 19.3%. I would like to now review some of our key accomplishments from the past year on slides four and five. 2023 was a tremendous year for Exalta in which we achieved record net sales and adjusted EBITDA. 2023 net sales were $5.2 billion 6% better versus 2022 with all end markets reporting positive price mix growth. Mobility coatings volumes growth of 10.6% was supported by normalization of global auto production and further supplemented by new business wins, particularly in China. We have made substantial investments to support growth with local Chinese OEMs over the past several years as exemplified with the opening of our new manufacturing site in Jilin. We continue to see this region as an attractive long-term opportunity for the business. However, strong growth in mobility coatings was balanced by volume weakness in performance coatings that were centered around soft construction activity within our industrial end market. Yet, Refinish remains a very attractive and resilient market. The team delivered another excellent year with over 2,500 net body shop wins, expanding on our leading position. Altogether, we remain focused on what we can control and are committed to profitable growth initiatives that reinforce the foundation of Exalta. To that end, I'm excited that during 2023, the technology team was honored with several awards for the incredible new innovations we produced for our customers. New offerings such as Exalta Iris and Nextjet are critical to support our long-term growth ambitions. And lastly, we completed the acquisition of Andre Co., a Swiss refinish distributor. This strategic acquisition positions us well in the attractive Swiss auto aftermarket and gets us closer to our body shop customers. Early results have been promising. We're on track with the integration plan and see lots of opportunity for growth including in non-paint accessories. My main focus since joining Exalta has been to drive improved efficiency and performance across the enterprise. We have made progress on both these fronts this year. I'm excited to report record annual adjusted EBITDA of $951 million and improvement of 17% year-over-year. This was an incredible achievement for the team and an early reflection of the transformational journey underway. All four end markets delivered improved earnings and profitability versus 2022. Refinish had another solid performance with the third consecutive year achieving record sales and earnings. In both light and commercial vehicle, we have made incredible progress after several years of market challenges. Mobility Coding's second-half adjusted EBITDA is now consistent with 2019 run rates, setting us up well for 2024. And lastly, industrial earnings improved versus 2022, despite volumes being almost 20% below 2021 levels. The entire enterprise is delivering on our stated goal to drive profitable growth, and we're making progress towards a return to historic margins. Full-year adjusted EBITDA margins improved by 180 basis points to 18.4%. During the year, we drove urgency and speed with our productivity and purchasing initiatives, which we believe accelerated the capture of incremental benefits in addition to deflationary gains. We're driving growth in areas with attractive returns while selectively shedding others that don't meet our margin thresholds. Free cash flow was another bright spot. We ended the year at near record levels and drove inventory reduction and benefited from increased operating earnings. 2023 adjusted diluted EPS of $1.57 improved by 6% year over year. For the first time in the history of Exalta, we ended the fiscal year with net leverage below three times and plan to continue to strengthen the balance sheet going forward. We demonstrated significant improvements in our operating performance and ended the year significantly more profitable than we started. While Exalta's transformation is just beginning, I'm encouraged by the pace of progress. Our teams are focused on the right objectives and we're winning together as one Exalta. As we exit 2023, I'm encouraged by the trajectory of our core markets and excited about the investments being made across the business. I believe we're well set up as we head into 2024 after a solid fourth quarter and a transformational 2023. I will now hand the call off to Carl to review our financial results.