Axalta Coating Systems Ltd.

Please stand by, your program is about to begin. Ladies and gentlemen, thank you for standing by. Welcome to the Exalta Coding Systems Q2 2024 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 August 8th. 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. Please go ahead.

Thank you and good morning. This is Colleen Lubick, Vice President of Investor Relations. I am excited to join you today for my first earnings call. We appreciate your continued interest and welcome you to our second quarter, 2024, Financial Results Conference Call. Joining me today are Chris Villavarian, CEO and President, and Carl Anderson, Senior Vice President and Chief Financial Officer. We've released our quarterly financial reports 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, Colleen, and good morning, everyone. Before we get started, I'm pleased to announce that Chris Evans, formerly Exaltus Vice President of Investor Relations, has joined our Global Strategy Group, where he'll play an important role in driving our 2026 A-Plan. Colleen Lubick has taken the lead for us in Investor Relations. I congratulate both of them in their new positions. The Exalta team has done an amazing job of working together to achieve and exceed our targets as demonstrated by the beat and raise this quarter. I want to recognize the entire organization for executing flawlessly in a soft macro environment. In the second quarter, we had the highest recorded quarterly net sales and adjusted EBITDA in the company's history. Adjusted EBITDA margins increased to 21.5% and our balance sheet continues to strengthen with net leverage declining for the eighth consecutive quarter to another record low for Exalta at quarter end. Around the world, we demonstrated our ability to execute well. I believe our success over the last 18 months has been a result of the priority we have placed on improving productivity making smart commercial decisions, and tightly managing capital returns. Momentum is building throughout the organization, and I'm absolutely proud of the team's accomplishment in the first half of 2024. For the quarter, net sales increased by 4% to $1.35 billion. Volumes increased by 5% year over year, with positive contributions from all four end markets. Adjusted EBITDA for the second quarter was 291 million, representing a 64 million increase year-over-year. Adjusted EBITDA margin improved by 400 basis points to 21.5%, largely driven by our material and cost focus. Both segments showed improved profitability year-over-year. I'm confident in our trajectory. which has led us to again increase our guidance for 2024 adjusted EBITDA, adjusted diluted earnings per share, and free cash flow. As I've shared with you, I believe we're just beginning to transform the company and unlock the tremendous potential of our products, technology, and organizational capabilities. Refinish had an excellent quarter with net sales growing 5% year over year, making this the 14th straight quarter of improved top line performance. In North America, net sales were up 13% as we continue to grow and win new business. We also benefited from favorable comparison to the second quarter of last year in connection with production constraints associated with our North American ERP implementation. Strategically, a key focus for us remains growth in the premium segment where we believe we can win based on three key factors. First, the productivity of our single visit application waterborne system. Second, our end-to-end fully automated color match that now includes hands-free mixing following the launch of Iris Mix. And finally, through a host of digital tools, which is optimizing customer support and real-time productivity monitoring for our body shop customers. Year-to-date, we have already delivered over 1,200 net body shop wins, and we expect this to be another great year. Expansion in the economy segment is another important pillar for our refinish growth strategy that we outlined in our A-Plan. In July, we completed the acquisition of the CoverFlex Group, which manufactures coatings for automotive refinish and aftermarket applications focused on economy customers in North America. The business offers a wide range of coatings as well as aerosols, fillers, and paint shop accessories. This acquisition also provides us with the brand's commercial access and manufacturing capabilities to serve the economy segment where we believe we have great potential for growth. I'm excited to welcome the entire CoverFlex group to the Exalta team. Industrial net sales increased by 2% year-over-year, driven by increased volume in North American building products. The second quarter marked the first year-over-year improvement in net sales for industrial in six quarters. which we believe is a signal that market activity has bottomed out and is positioned for recovery when global construction improves. Although global industrial demand remains relatively muted, our team has done a stellar job of driving significant year-over-year margin improvement through cost management and portfolio optimization. Innovative new products such as enamel cabinet coatings are gaining traction and are part of a clear commercial strategy to prioritize segments and regions where we have strong value proposition and can generate an attractive return. LightVehicle had another strong quarter. Volume growth of 7% year-over-year significantly outpaced global auto bills with better growth rates versus regional production rates. China was a bright spot for us again with nearly 30% volume growth. Globally, the team is building lasting partnerships with the fastest growing OEMs at attractive margin levels. Based on this, we expect above market growth to continue. Following a flat light vehicle build environment in the first half of the year, Industry forecasts are now projecting the second half of the year to be approximately 3% to 4% lower year-over-year, with most of the declines in Europe. Commercial vehicle net sales increased by 3% year-over-year. Volumes benefited from stronger-than-anticipated Class VIII production in North America and LATAM. We still expect a modest production slowdown in the second half of 2024 before it ramps up in 2025, leading to a strong 2026. Let's move to slide five. In May, we introduced our 2026 A Plan, a multi-year strategy to accelerate performance and transform the company. I expect the five unique elements of the plan will differentiate Exalta in the industry and allow us to achieve new levels of exceptional performance. First, driven by our one Exalta mindset, we are creating a culture that is faster, more effective, and more responsive. Second is operational excellence. we will continue the journey we have started to control the controllable and drive more efficiencies in corporate operations and supply chain. We expect these actions to yield approximately $125 million in annualized run rate savings in 2026. Next, it's driving growth through portfolio optimization with a focus on our core strengths and profitable businesses. Fourth, is sustainable innovation, which is creating the world's best products for sustainability, efficiency, and color. Examples of this are Nextjet and the Iris Mix. And finally, capital allocation, where we plan to focus on investing in the business and returning value to our shareholders. As you can see with our performance in 2023 and the first half of this year, we're well on our way of achieving our targets. I will now turn the call to Carl for a more detailed view of our second quarter financial performance.