Axalta Coating Systems Ltd.

Please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero. Ladies and gentlemen, thank you for standing by. Welcome to Exalta's Coding Systems Q4 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 February 11th. 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 Lubeck, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. This is Colleen Lubeck, Vice President of Investor Relations. We appreciate your continued interest in Exalta and welcome you to our fourth quarter and full year 2024 Financial Results Conference Call. Joining me today are Chris Villa-Varion, CEO and President, and Carl Anderson, Chief Financial Officer. We released our 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. We've included reconciliations of these non-GAAP financial measures in the most directly comparable GAAP financial measures. Refer to our filings with the SEC for more information. Please note that we did recently update the presentation for certain of our non-GAAP measures as described in the current report on Form 8K that we furnished the SEC on January 21st. I will now turn the call over to Chris.

Thanks, Colleen, and good morning, everyone. Let's move to slide three. I'm excited to share that we achieved another record fourth quarter of full-year net sales and adjusted EBITDA. 2024 represented the highest net sales and adjusted EBITDA in our history. These outstanding results were made possible by the collective efforts of our global team as One Exalta, the culture that we have established with our aid plan that has brought our priorities into focus. Despite weakness across all our four end markets, we outperformed consistently this year in light vehicle and refinish, our two largest end markets, I want to express my appreciation to the Exalta team for their dedication throughout the year that has clearly paid off with these great results. We delivered fourth quarter company record net sales of $1.3 billion. Contributions from the CoverFlex acquisition in our refinish economy segment, net new body shop wins, and above industry growth in light vehicle more than offset a softer macroeconomic environment. and foreign currency headwinds. Adjusted EBITDA increased by 10% year-over-year to a fourth quarter company record of $275 million. We delivered this result despite meaningful foreign currency headwinds in our fourth quarter not anticipated in our prior guidance. This represents the 10th consecutive quarter of year-over-year adjusted EBITDA growth. Adjusted EBITDA margins improved by 170 basis points versus the prior year to 21%, which, as you know, was the margin objective set in our 2026 A-Plan. We're proud to deliver this result well in advance of our target date. Margin expansion was driven by favorable impacts from price mix, lower variable costs, savings from our transformation initiative, and conversion on revenue from light vehicle volume growth. As you can see on this chart, adjusted diluted EPS was another great story for Exalta, growing 30% year-over-year to $0.60 in the quarter. In addition, our balance sheet continued to improve, with total net leverage ratio declining for the eighth consecutive quarter for another company record of 2.5 times, the high end of the range that we set in our A plan. Let's move to slide four. Culture is at the foundation of our transformation. As demonstrated by the strength of our financial results, we have aligned the organization around the tenets of accountability, execution, and operational excellence. We are committed to safety in everything that we do and strive towards zero incidents. This year we achieved a TRIR of 0.3 and reduced our injury rate by approximately 50% compared to two years ago. In addition, we made investments in our operations and engineering, streamlined and optimized our organizational structure, and brought our corporate employees together under one roof at the Navy Yard in Philadelphia. Specific to operational excellence, we enhanced efficiency, reduced costs, and improved profitability across our manufacturing sites and supply chain. Notably, we reduced variable costs by 7%, improved delivery times by 10%, and began the closure of two manufacturing sites, one in North America and the other in Europe, which will optimize our operations and improve our fixed costs. Combined efforts across operations, procurement, and product management reduced complexity in our manufacturing sites. We made good progress in reducing the number of SKUs while creating common raw inputs across our portfolio. This work is paying off. Our transformation savings are already ahead of plan. having achieved approximately $20 million in 2024 towards their goal of $75 million as described in the A Plan. Growth is a major pillar of our A Plan. Our teams executed strategic plans to win new business and deliver industry outperformance in a year where all of our end markets were down single digits. Due to their efforts, we secured approximately 2,800 net new body shop wins in refinish and completed the acquisition of the CoverFlex Group, which positions us well in the fast-growing economy segment. We drove full-year light vehicle net sales growth of 5% despite a decline in global auto bills. And in industrial coatings, we increased our margins and earned accretive new business, which will ramp up to around $40 million at full run rate in 2025. At this point, I would like to take a moment and thank Shelley Bausch for her valuable contributions to Exalta as president of the industrial business over the past few years. She is responsible for returning the industrial business to profitability and pivoting it towards accretive growth in a challenging macro. As you may know, we announced a couple of weeks ago that Shelly is stepping down from her role at Exalta. Tim Bose, who most recently was Senior Vice President and Chief Transformation Officer at Exalta, will succeed Shelly. Tim has a strong track record of driving margin growth and business transformation. He was an excellent choice to take this business forward. Another key pillar of the A-Plan is sustainable innovation, which is what makes Exalta a global leader in coatings. We continue to push the boundaries in all end markets and have been widely recognized for these efforts. We have talked about the expected benefits of our game-changing Exalta Iris Mix Machine. We are progressing well with the adoption of this new technology, installing 300 to date, We expect this number to nearly double in 2025. This machine, combined with Exalta Iris Scan and Exalta Nimbus, delivers a full package of cutting-edge tools that measure and mix color faster and more accurately, driving efficiency and effectiveness to our Body Shop customers. In January, we announced a strategic partnership with DERR. or automotive digital paint solutions, combining Exalta's groundbreaking technology with Dura's robotic experience. Dura will serve as the robotics integrator for Exalta's NextJet or light vehicle OEMs. I believe this agreement is an important step in delivering the vehicle customization customers desire and is driving the future of digital paint technology. During 2024, Exalta was recognized with six prestigious industry awards for technology and innovation, three Edison, two Big, and one R&D 100. These achievements bring Exalta's total to 24 innovation awards over the last five years and demonstrates our commitment to developing smarter and innovative solutions for our customers. Let's turn to slide five. By all measures, 2024 was an excellent year for Exalta. We had the highest fourth quarter and annual net sales in the history of the company. We exceeded $1.1 billion in adjusted EBITDA for the first time and expanded our full-year adjusted diluted EPS by 40%. I'm encouraged by the significant performance we have demonstrated in our financial results since May, when we released our 2026 A-Plan, which is proving to be a great framework for value creation. With adjusted EBITDA margins at 21%, self-help programs in place and working, and a strong commercial playbook, we're establishing a strong foundation for long-term value creation. I will now turn the call over to Carl to go through our financial results and 2025 guidance.