Axalta Coating Systems Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to Exalta Coding Systems third quarter 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 the replay will be available through November 6th. 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.

Colleen Lubick Thank you and good morning. This is Colleen Lubick, Vice President of Investor Relations. We appreciate your continued interest in the Exalta story and welcome you to our third quarter 2024 financial results conference call. Today, our Chief Executive Officer, Chris Villarion, and our Chief Financial Officer, Carl Anderson, will provide a financial review of the third quarter and an update to our 2024 outlook. 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 not obligated to update these forward-looking statements. During the discussion, references may be made to non-GAAP financial measures. Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and applicable reconciliations. 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.

Thanks, Colleen, and good morning, everyone. Let's move to slide three. This was an exceptional quarter for Exalta, demonstrating our ability to execute our priorities and control the controllable. I would like to thank our employees who helped drive a company record for third quarter net sales and adjusted EBITDA. Adjusted EBITDA margins also expanded each quarter this year. In the quarter, net sales increased to 1.32 billion. This represents the 15th consecutive quarter of net sales growth year over year. Share gains, mix management, and contributions from recent acquisitions more than offset a softer macroeconomic environment. Adjusted EBITDA increased by 30 million year-over-year to a third-quarter company record of 291 million. This outstanding result represents the ninth consecutive quarter of adjusted EBITDA growth year-over-year. Adjusted EBITDA margin was 22%, an improvement of 220 basis points from the same period last year. Margin expansion was a result of lower variable costs, contributions from acquisitions, and a reduction in operating expenses due to our transformation actions introduced earlier this year. Growth is a primary objective for the 2026 A Plan. This quarter, we had several achievements that should contribute to achieving our growth target. First, we were excited to begin converting a top five refinish MSO in North America. This new award was driven by the outstanding technology and efficiency of our product portfolio. In building products, we continue to be awarded business with strategic customers, reinforcing our position as a leader in this space. Finally, we're growing volumes in Light Vacuum with new wins that are margin accretive This growth should be a nice tailwind in the second half of 2025 to help offset expected softening in the industry. We were awarded this new business due to our color technology and our ability to expand capacity to meet our customers' expectations. In terms of innovations that we expect will expand our business, we recently launched Exalta Nimbus and Exalta Iris Scans. These are great examples of us bringing new and innovative tools to the market. IrisScan is an advanced handheld tool that scientifically measures vehicle color for accurate readings. Upon retrieving data from IrisScan, Nimbus digitally compares and delivers a highly accurate color formula that ensures a perfect match each and every time. These tools are leading technologies that enable body shops to improve efficiency, enhance productivity, and deliver consistent quality, leading to higher profitability. In building products, we launched Cerulean, an extension of our water-based platform for interior finishes, including cabinets. Water-based coatings for wood substrates have historically had issues with the way coatings set on the surface. Our technology offers a smoother coatings from a visual and touch perspective. We developed this new product line using our expertise in performance coatings and are pleased that it extends our commitment to developing sustainable solutions. Within Mobility, our customer collaboration extends from the early stages of product development to working alongside OEM in their paint shops. We are incredibly excited that great customers like BYD, Daimler, Ford, and General Motors have recognized our efforts and awarded us multiple honors. This speaks to the excellence of our product, quality, service, and customer relationships. This quarter's results demonstrate our resolve to deliver on our commitments and expand profitability with a clear focus on priorities and alignment across the company. Given our better-than-expected third quarter results, we're confident that our full-year 2024 adjusted EBITDA will exceed $1.1 billion. As such, we're pleased to increase the 2024 full-year outlook for adjusted EBITDA as well as for adjusted diluted EPS and free cash flow, reflecting the underlying strength of the business. Let's move to slide four. The refinish business posted another strong quarter with net sales growing 5% year over year. We have achieved 15 quarters of net sales growth year over year with a soft macro environment. Year to date, we have outperformed the industry by mid single digits driven by net new body shop wins, M&A and pricing. As we have shared, we're focused on expanding our position in the premium segment driving growth in the economy segment, and delivering innovative and efficiency-enhancing solutions to our customers. This year, we have won over 2,100 net new body shops. And with the recent CoverFlex acquisition, we expanded our position in North America's economy segment. While it is still early in the integration, CoverFlex results exceeded our expectations in the quarter. We also had another excellent quarter in light vehicle, outpacing build rates in all four regions. Year to date, we have delivered 5% volume growth year over year against production rates that declined 2% in the same period. This type of outperformance is not new to Exalta as our volume growth has outpaced light vehicle builds in nine of the last 10 quarters. Our China and LATAM strategy have diversified our customer base and brought a creative business into the portfolio. I'm very proud of the results we have seen in revenue growth and margin expansion. I'm also pleased with the focus we have maintained on a healthy balance between price and cost. By reducing some of the volatility caused by the commodity cycle through raw material indexing, the team has been able to dedicate their time in delivering exceptional products and services. This has enabled us to build and expand excellent customer relationships. Despite the volatility we expect in the auto industry over the next few quarters, our diversified customer base and significant new business wins should help us weather these headwinds. Let's move to slide five. The A plan is the absolute focus. We believe our strategy is achievable as shown so far this year with our financial results. We're well on our way to delivering the plan earlier than anticipated. This is the consistent performance we're aiming to deliver going forward. As we approach the end of the calendar year, I want to thank Exalta's global employees for coalescing around the A plan and executing flawlessly thus far in 2024. I could not be prouder of this great team, and I look forward to closing out the year strong. and preparing for 2025. With that, I'll turn the call over to Carl.