Axalta Coating Systems Ltd. (AXTA) Earnings Call Transcript & Summary

Good morning, and thank you for joining us for Axalta's 2021 Capital Markets Day. This is our fourth such event but the first in 3 years and the first with this leadership team in place. As a virtual event, the format is new for us, and we regret that we can't be in person with you today. Still, we hope to do so next time and look forward to more in-person meetings as the year progresses. I know Robert, Sean and the team are excited to share with you our thoughts on Axalta's current business portfolio and the competitive advantages that we hold as well as our plans to accelerate growth and further optimize Axalta's cost structure. Our focus is on shareholder value creation, and we have a solid plan in place to create significant value over time. In pursuit of this goal, we've already substantially reshaped both the leadership team and our fundamental business processes. But there's more work to come, and we look forward to sharing some of the goals as well as some guideposts that you can use to measure our along the way. Our agenda this morning will be to hear from 3 speakers first, then conduct a Q&A session, followed by 4 more speakers and a longer Q&A session at the end. I'll be conducting Q&A via the chat window, and we'll read out your questions as submitted and identifying the questioner. So feel free to populate the Q&A window during the course of the presentations. The slides from today's sessions will be posted on Axalta's website following this event, and the webcast will be available as well for future reference. With that, I'd like to get us started and I'm please to turn the mic over to our first speaker today, Axalta's Chief Executive Officer, Robert Bryant. [Presentation]

Good morning. Thank you for joining us for our 2021 Capital Markets Day. My team and I are thrilled to share with you the exciting directions we plan to take the company over the next 4 years and how we plan to create our own future. Despite the magnitude of the challenges we faced last year, we finished 2020 in a great position. Both before the pandemic and since the trough last year, we've had the opportunity to refine our vision and strategy for the company. We've used this time to cement our goals and to make several key changes to ensure strong execution against our aspirations. As a result, we have a clearer sense of who we are as a company and our true potential. The Axalta management team and I are eager to share with you today where we are now and, even more importantly, where we're going. Axalta has never been better positioned for future growth. We have a set of strong, high-margin, cash-generative businesses. We've established a significant track record of executing on business optimization initiatives. Now we are clearly focused on accelerating growth and allocating our capital efficiently. We believe Axalta will become a value compounder for our investors. We look forward to sharing some of the drivers behind this expectation with you today. Axalta's future is bright, and 2021 is something of a new dawn. I'm thrilled to be leading a team of energized and engaged executives, many of whom are new to the company who will take Axalta to a new level. Together, we have a clear set of goals to execute, and we're doing so from a position of strength. Axalta has always been driven by innovation, which remains the foundation of our market strength and will enable our long-term growth. Our commitment to innovation is stronger than ever. Dr. Robert Roop and our business leaders will provide you with tangible, impactful examples about how we are out-innovating our competition. For most of last year, we laid the groundwork for growth acceleration. We now have the building blocks in place to deliver substantial organic growth. We're also ramping up our strategic M&A efforts. And as you saw announced on April 21, we have re-upped our share repurchase program and expect a faster pace of stock buybacks over the coming years. While we're focused on growth, we're working to ensure steady and reliable execution. We're doubling down on the Axalta Way as a true continuous improvement program. We have significant opportunity to leverage operational excellence as a key driver. Barry Snyder will walk you through why operations will continue to create additional value for years to come. So now let's talk about where we are and how you can expect us to create substantial shareholder value going forward. Here's a snapshot of Axalta. Performance Coatings represents 66% of our sales and serves 2 distinct end markets, refinish, the automotive aftermarket collision repair space; and industrial coatings, which in many ways is best understood as a portfolio of specialized coatings companies. Troy and Shelley will speak with you a little later about these 2 great businesses. Mobility Coatings is 34% of our sales where we serve OEMs and Tier 1 suppliers in both light and commercial segments. Hadi will explain why we decided to reposition this business and why secular tailwinds and innovation will drive our growth. We're market leaders. More than 90% of our revenues come from markets where Axalta is either a #1 or a #2 market position. Our businesses are global, and they have scale to compete. We have the breadth, depth and ability to be more nimble and more effective than our larger peers. Today, coatings represents a complex, highly segmented $160 billion global market where 6 key players, including Axalta, capture roughly 40% of total revenue. There's a lot of white space and fragmentation, and that means that smaller participants will undoubtedly be challenged by difficult conditions, whether it's the pandemic, shifts in global trade patterns, increasing environmental regulation or the emergence of transformational technologies. Everyone faces a dynamic set of business challenges. For us, these challenges are opportunities that we embrace. With our global scale and breadth and our legacy of innovation, we could not be more excited about the opportunities in front of us. Our platform and our industry-leading brands are a perfect launching off point. We've proven the ability to gain share, and we're focused on further changes to accelerate top line growth. This is a topic you'll hear a lot about today throughout the presentations. Axalta's strong brands are a key advantage and enabler with a reputation for innovation, quality and value. We've long earned customer trust and, therefore, the ability to retain and grow relationships with win-win economics. Finally, our brand power allows us to extend reach, leveraging established brands to migrate within markets, including adjacencies. We are entering a new dawn at Axalta. Behind us are the headwinds in global automotive markets, emerging market recessions, U.S. dollar appreciation and even business model shifts in certain end markets. One fact is quite impressive. We navigated those challenges well, producing steady improvement in underlying cash flow and sustaining our profit structure, all while gaining share in key businesses. 2020 was obviously a challenging macroeconomic environment, but our response actions helped set the stage for our future growth. After navigating initial pandemic response actions, we made several fundamental strategic changes. We shifted from a complex matrix organizational structure to a global business unit structure. We quickly and substantially removed a layer of excess cost. We added new and highly competent global P&L business leaders and functional leaders with experience in our end markets. And we began changing our culture, from playing not to lose to playing to win. This included more aggressive growth goals, further changes to compensation structures, rewarding calculated risk-taking and pushing even harder on our innovation pipeline. As we look to the future, Axalta is unlocking strategic opportunities. There's tremendous white space opportunity in coatings. We see untapped growth from emerging markets, and we see new adjacent markets to compete in where we can leverage our existing core competencies. We will do both through organic innovation and M&A. One reason I believe so strongly in the future potential of Axalta is that we have a set of competitive advantages that differentiates our company. In simple terms, our current strengths mean that we can out-innovate our competition, outgrow our end markets and generate superior returns. We've identified 6 differentiators here. Some of them won't surprise you, but I think some will. All 6 levers are within our control and applying them across our businesses should deliver the growth and returns our stakeholders expect. First, having the best technology means having the best products, developing solutions to customers' problems and innovating to meet industry changes. Axalta has a best-in-class R&D program where we invest more than 4% of sales in R&D and technical services each and every year. What does this investment do for us? We introduce over 50 new product platforms a year to the markets we serve. We have an impressive 4-year pipeline mapped out to keep Axalta on the leading edge of coatings technology. The pipeline also includes groundbreaking technologies that will enable growth by actually shifting the landscape, giving customers entirely new options. Axalta innovation is all about driving exciting science into the hands of our customers. There's also a critical applied science component to our work. Our extraordinary scientists are constantly exploring new ideas that have direct applications. This aspect drives complexity, which, in turn, drives solutions-based work. Our team seeks to perfect application technology. So our customers, in turn, find our products predictable, easy to use, and thus, more efficient. Axalta is constantly searching for ways to solve real-world use case problems in hundreds of markets and for thousands of applications globally. Well, if great science is the table stakes, now let me identify a related differentiator that I think is underappreciated, data. Companies with great technology win, but technology needs to be informed by timely market-facing data. To make relevant products, we need to understand our customers' challenges in plant processes and applications. Our data informs the products and services necessary to offer continuous improvement on the customer line, which, in turn, enhances our own competitive advantage. Each of our businesses is collecting, analyzing and acting on data for multiple proprietary sources. This is true in thousands of body shops, in OEM line operations at over 400 sites and on thousands of industrial coatings lines and field applications globally. So the physical coatings sale is actually just the beginning. Capturing and analyzing data and using it to focus our R&D gives Axalta the ability to stay ahead of the curve. This process allows us to deliver our customers unique and valuable insights and to cement Axalta's relationship with them. Here's another underappreciated market truth. Winners in coatings can't just sell products. They must be customer intimate partners. In fact, our most important product is actually service. Driving customer productivity means that Axalta isn't just a vendor. It means we're a service provider. We're really a business partner. Axalta works with our customers to lower total process cost through updates to products and applications. We're constantly enhancing our service offerings. But great products don't go very far unless you have the infrastructure to get them to customers globally and then to support those customers daily on a global basis. Axalta works with over 4,000 distributors around the world on top of our own direct distribution points. This market access is another of our key competitive advantages. Finally, business flexibility is also a key differentiator. We've demonstrated adaptability when required, and this has created lot of value over time. We've closed markets and exited businesses prudently. We've invested in as well as acquired technology where we saw an opportunity. We've listened carefully to customers as a true technology partner. In the last year, we also drilled deep into our cost structure while maintaining spend in key areas like R&D and safety to ensure our financial stability. The key takeaway is that our competitive advantages uniquely enable Axalta to provide tailored solutions for our customers today and in the future. Axalta operates from a shared core vision, to be the preferred coatings supplier for customers seeking the most innovative products and services delivered by the most talented team in the industry. Translating this vision into shareholder value comes from 4 equally critical elements. We'll win because of our focus on innovation, growth and execution, all of which is driven by our people. Innovation is at our core. We're focused on rapid product development and commercialization as well as anticipating and working with our customers on the most critical opportunities and challenges to address with our solutions. Regarding growth, all of our businesses expect to outgrow their markets and take share by leading products as well as customer service offerings and globalization initiatives. We also expect to see considerable growth from M&A given the ongoing consolidation in our end markets. Alongside this growth, though, we must deliver on the benefits of the operational efficiencies we've already identified. Finally, none of this would be possible without world-class talent in a diverse and engaged workforce. We have made several outstanding additions to our team at all levels over the last 9 months, and we're driving talent development and diversity to ensure, among other things, that we are the company of choice for future coatings leaders. We know that our markets are growing today. So what are some of the reasons for that? How are we going to take advantage of that opportunity? I'm going to go deeper now into how our team is focusing on each of these strategic pillars to create a value compounder over time. Let's start with advanced innovation. We're driving innovation across our entire enterprise. Of course, it starts with products. We're filling our growth pipeline and focusing on innovation with even greater speed. We're shortening our development cycles, and we're doing more experimentation. We're refining our focus on platforms with substantial growth potential, and on technology, with more step change opportunity, not just incremental improvement. We're innovating with service. Our service models are the envy of the industry in markets where we lead. We're focused on applying digital tools to enhance service offerings. Some of these will be game changers. We're also innovating with business models, focusing on new ways to add value to the customer. This is clear in Mobility Coatings, for example, with the new services we are offering to save customers' money via productivity, all leveraging data. Finally, we're innovating with process. We're introducing new process technology at our plants to enable scale production of next-generation technology. This also includes tools like SAP S/4 HANA to enable efficiencies across the enterprise. Our mantra at Axalta is all about innovation, and this is all geared toward enabling growth. Moving onto growth above market. As we think about the quality of our products, the value of our brands and the potential for value-added service offerings, we're confident we will see accelerated organic growth as our customers reward our efforts and we continue to gain share. We have strong share in most of our chosen end markets, markets that are themselves growing over time due to infrastructure and consumer trends. Our strong competitive advantages have put us in this position, and we intend to extend our lead. That said, white space abounds in the massive global coatings market. We expect to grow by pushing into new geographies with our existing offerings as well as diversifying our offerings both organically and inorganically. We intend to explore multiple product and service categories where we can expect the application of our strengths to produce significant synergy. And we'll continue to use our strong brand portfolio to allow us to move into new markets, both in terms of new geographies as well as market segments such as mainstream and economy offerings in addition to premium. We're also leveraging new distribution channels, such as online direct-to-consumer sales efforts in certain refinish markets. And as I said earlier, a key driver for us will be the addition of service offerings to help our customers improve their own productivity in operations. These offerings will be enabled by digitalization and automation. And we have examples to share today where this is already happening. There are a lot of directions for us to grow, and we're pushing in all of them. I want to be clear that there are a set of developing and powerful change trends that Axalta is already capitalizing on. In refinish, as you will hear from Troy shortly, we're expecting a 2-year demand tailwind from ongoing traffic recovery in line with the global vaccination rollout and an expected preference for personal versus public transportation. Refinish has already come back strongly from the trough last April but plateaued in the fall with renewed COVID restrictions. Looking ahead, the recovery should be a powerful volume driver for Axalta, and our top global market share will help us capitalize on this. In industrial coatings, there's a vast increase required in global infrastructure spend to both preserve and upgrade legacy assets as well as develop new ones. Shelley is going to detail this, but we're in the very early innings of a significant spend cycle for infrastructure, and it's all going to need to be coated. Recently, the push for sustainable solutions is also shaping the type of coatings that are demanded, and we already have the solutions in hand. Sustainability is a theme and a demand driver that you'll hear more about today. In Mobility Coatings, as Hadi will detail for us today, transformational changes are an opportunity for our business. Advanced lightweight coatings, coatings that are designed specifically for electric vehicle environments, demands for increased productivity and performance and a desire for vehicle customization, all weigh heavily in Axalta's favor. These drivers supply tailwinds to market growth forecasts that already call for expansion in 2021 through at least to 2024. We've already shown that we have the financial flexibility and the experience in operational acuity to profitably participate in coatings consolidation when the opportunity presents itself. We've done 24 deals to date and deployed over $800 million in capital and good returns for the company. After a substantial pause due to the strategic review in 2019 and part of 2020, we are back in the game and closed our first deal this year in April for Anhui Shengran, boosting our presence in electric motor coating solutions in China. Looking ahead, we will continue to buy good assets and make them stronger as part of Axalta. As I said earlier, the landscape of opportunity is vast. The coatings industry has only a handful of truly global players, including Axalta. And as a reminder, that captures roughly 40% of the spend. The balance of the market, over $70 billion of revenue, is fragmented and localized. But the complexities of our industry, in other words, the requisite investment in science, in data, in operational footprint, the need to provide services are demands that we believe will ultimately overwhelm smaller competitors. When we acquire a company, it immediately benefits from each of the 6 competitive differentiators I laid out earlier. We have a pipeline of targets identified that we closely monitor. And if the timing and the value are right, we will act. You should expect us to continue to deploy capital to M&A. I could see closing several incremental bolt-on transactions in the coming year. And with more to follow as we ramp up our business development efforts under Jeremy Rohen's leadership. The third pillar of our compounder algorithm is execution. Axalta has a track record of strong operating execution, and it remains a top priority. Since Axalta's exception in 2013, our execution story has had 2 chapters. The first was spent organizing our business post carve-out and removing some excess cost layers. We also deployed over $800 million in capital to acquire 21 businesses. Now the second phase is really focused on the application of a metrics-driven approach, greater focus on game-changing innovation to drive growth and maximize return on capital, a big part of execute and constantly improving operational and commercial excellence. The basic concepts have been applied for years, but we're doubling down and formalizing this process company-wide. The Axalta Way has transitioned from its early days as a cost reduction program to a fully functioning, continuous improvement process. But the journey is just beginning. In the last 2 years, we looked at every aspect of our cost structure and our operational footprint and processes. We ask ourselves a lot of hard questions about how to optimize these often complex networks. We've identified cost opportunities that we're executing on now that will deliver substantial savings over the next several years. I know that our cost improvement has not always been easy to track to the bottom line due to offsetting macro impacts. Rest assured, though, we have made real progress since 2019, driving stronger earnings power, and we are poised to continue this success story. We expect to migrate a good portion of these savings to the bottom line. When it comes to execution, we have been executing. Axalta has best-in-class EBITDA margins, and we've delivered hundreds of millions of dollars in cumulative gross cost savings to date. The second is we're not done. We've set ambitious targets for ourselves. That includes everything from incremental cost targets, to expanding business line margins, to improving cash flow conversion, reducing financial leverage and ultimately expanding return on invested capital. Sean Lannon will later walk you through our historical financial performance and our future value creation algorithm. Execution on this is enabled by our culture of continuous improvement, which we've recently codified for most to be a high-performance, customer-focused culture. Our growth will always come from solving customer problems. We offer solutions and win by bringing the best technology and services to the customer. To win, we need to focus on execution enablers. This has been a top priority of mine, and we're driving them hard. We've made concrete changes to drive accountability, foster an entrepreneurial mindset and leverage data to be more effective. We see real opportunities to go further, and our potential is tremendous. We will continue to address complexity reduction, reduce our asset intensity and optimize data availability and quality, among many other priorities. We're beginning this journey from a position of strength. We are differentiated. As I mentioned before, Axalta has the highest adjusted EBITDA margins of our peers and very strong free cash flow. The Axalta Way over time will support and enhance both. Axalta's people are the key to everything we do, and we spend a lot of energy making sure our talent is the best and best prepared that it can be. In nurturing our human capital, we've made significant progress. In talent development, we've enhanced our bench from the board to the shop floor. We've also invested deeply in training and developed career pathing in recent years. As I mentioned earlier, we've worked hard to create a culture that inspires employees and is aligned with our long-term strategy. We aim to reinforce a culture that's performance driven and that fosters empowerment, innovation and calculated risk-taking. This will be a multiyear journey, but we are well on our way. Given our focus on accountability, we've adjusted our incentive compensation programs and introduced metrics designed to align employee priorities with Axalta's goals and strategy. Finally, regarding behaviors, we continue to stress an ownership mindset as a key enabler of success. And our goal is for every employee to embrace a commitment to safety, ethical behavior and sustainability. Building on our solid business foundation is a terrific leadership team. We've made key additions to our senior leadership team in the last 7 months, bringing fresh energy, new perspectives and incremental skill sets, rounding out the talent base that I envisioned since becoming CEO in late 2018. Today, you'll hear from a number of these leaders, both new to Axalta as well as newly appointed to key roles after years of exemplary service. Behind our operating team is an impressive and engaged Board. Over the last 2 years, we've made several additions, incorporating critical perspectives in areas aligned with our growth focus. Bill Cook brings a full suite of senior management capabilities and end market experience as a CEO and as a Chairman of multiple companies. Steve Chapman brings valuable experience regarding growing businesses in emerging markets, especially in China. Finally, Rakesh Sachdev adds deep experience in the automotive and chemicals industries in both CEO and Chairman roles. These new Board members have helped balance and strengthen our overall skills makeup, as you can see. In 2018, the Board added an environmental, health, safety and sustainability committee. And Axalta is committed to accelerating our sustainability and ESG initiatives. Good governance and an ethical foundation have always been core to Axalta. Still, we recognize that we can always do better. So we've sharpened our focus, and we're now measuring our progress in enhancing our reporting on all aspects to ensure results. Axalta is naturally aligned to creating a greener future from an environmental standpoint. Our products enable greater sustainability for our customers. Our waterborne and powder products are naturally replacing older solvent borne technologies. We partner with our customers to reduce energy usage and waste discharge. Further, our coatings technologies helps enable vehicle lightweighting and result in fuel economy benefits. Axalta has also continued to serve our communities. Last year, we provided both PPE and sanitizing fluid directly to many communities around the world. We've actively supported STEM education initiatives as the long-term pipeline of our own future talent. We've also funded conservation efforts and other activities that support local communities where we live and work. We also appreciate that people are the source of our strength, and a safe, diverse and inclusive working environment are critical to long-term success for our global business. Finally, at our foundation, we maintain a commitment to ethical conduct and strong governance. Our organization and practices have been refined to ensure proper oversight, management and strategic alignment across the entire organization. We've talked about execution and implementation as an advantage. Let me translate that now into our actual financial targets. We are committed to growing the business at a mid-single-digit rate organically over the next 4 years, though growth rates are expected to be higher in 2021 and 2022 given the market recovery from depressed 2020 levels. If the global economy accelerates from here, we may be able to exceed that target because our baseline assumption remains market outgrowth. Upside from organic growth can come from a number of sources: continued share gains in markets that we serve today; the white space for markets we don't serve; and the adoption of high-value services by our customers, just to name a few. We have an opportunity in front of us to significantly diversify Axalta's business portfolio with M&A. Independent of our guidance construct today, I note that we can easily extend our growth rate to 9% to 10% with acquisitions without even tapping incremental leverage. We could acquire around $1.5 billion in sales and generate nearly 10% growth all in over the 4-year period using only excess cash on hand and our anticipated free cash flow. Such an outcome would have a substantial impact on our portfolio, as you can appreciate. It's certainly not the limit of potential either given our substantial untapped borrowing capacity. So with an appetite to grow and a capacity to make it happen, I would encourage you to stay tuned. We look forward to reporting on our progress against these milestones and look forward to creating value for you, our stakeholders, as our top priority. Thank you for your attention. I will now turn the presentation over to Robert Roop, our Chief Technology Officer.

Good morning. My name is Robert Roop, and I have the pleasure of leading the R&D and technology team at Axalta. I have more than 30 years’ experience in the chemical and materials industry, and half of that directly in coatings technology. Today, I'd like to share with you some of the exciting new innovations that the R&D team is doing to help enable growth for our community and industry, working in state-of-the-art facilities. We are located around the world close to our customers. We thrive on solving the most challenging problems, award-winning products, and we innovate beyond the coating product itself. So let's start by talking about who the team is and where they do their work. Our people [ they ] most value the asset. Since coatings is an intersection of numerous disciplines, we have a diverse team of subject matter experts. These include chemists, engineers, polymer scientists, material scientists, color [ and physicist ], all clear leaders in their field. And where are they located? Around the globe, we have 32 labs in every major region of the world. Close to our markets, close to our customers. If we dive a little deeper, of the 32 labs, there are 4 large technology centers where the bulk of the activity happens. 3 of these large technology centers, one in each major region, is where we take the product platforms and adapt them to the local customer requirements and regulations. They are in the market, close to our customers, close to the markets. Our global hub, our global innovation center in Philadelphia, is a new state-of-the-art facility where the fundamental science and technology for our global products platforms are developed. Let's take a closer look. [Presentation]

So what is our strategic approach to innovation? First, we are market-driven. We have a clear understanding of the key market drivers and our specific customer needs. Second, we invest for growth. As Robert Bryant mentioned, we invest more in R&D and technology than any other company in the coatings industry. We invest more, and we get more. We have award-winning products in all of our businesses. And finally, these products give us a unique competitive advantage to drive organic growth. Just a word about our innovation process. The key aspect of the process is the inputs. We have inputs from our customers; the market; our partnering with our suppliers; internal, external experts and all these will go to generate many relevant ideas, and then we follow a disciplined process to develop and launch new product solutions. And of course, we constantly seek customer feedback. As I mentioned, we work hard to align our efforts with our customer's priorities. So what do our customers want? They want color and aesthetics. They want sustainable solutions. They want productivity. And of course, they want performance. For color and aesthetics, they want unique, visually interesting appearances that align with selling trends or in the case of refinish, perfect reproduction. For sustainable solutions, low emissions from our waterborne technologies or our powder technologies, lower usage and consumption and reduced energy usage for improved sustainability. For productivity, cycle time improvement is always in main focus. So fast-drying, fast-curing technologies, technologies that allow mass customization easily. Productivity enhancements for our customers are critical. And finally, performance. Durability -- all aspects of durability. This includes UV resistance, chemical resistance, scratch resistance, chip resistance. For certain customers, coating multiple substrates capability, and, of course, electrical modal insulation for key energy solutions customers. Overall, we intentionally align our efforts to these priorities. So the question is, how do we deliver solutions for these customer needs? What do we do back in the lab? For new and unique colors, we work with the latest pigments and dispersion technologies. This opens the door to new visually interesting colors and appearance. We also develop sophisticated mathematical models that enable perfect color match. To improve productivity, we drive enhanced performance. We invent and scale up new polymers and resins. The solution to many customer challenges is new resin or polymer technology and a key part of intellectual property. And to make sure these technologies can be used efficiently by our customers, we simulate and optimize all types of application technologies, hand spray, robotic spray, roller coating, dip coating and many others. Let's take a closer look. [Presentation]

In the end, we invest in these activities to deliver real solutions to our customers' challenges. We invest almost $200 million in R&D and technology. This includes pure R&D, product development, scale-up and alignment in our manufacturing plants and ongoing customer support. The output is more than 50 new product platforms every year, which we can extend around the world. For example, our Voltatex 5000 product enables high-voltage performance in electric motors, and this product was recognized externally as a leading innovation product with a Silver Edison Award. We make hundreds of product modifications and address thousands of service requests. And we deliver more than 20,000 new colors each year. And in fact, we have color library of millions of colors. So this leads us to my most important slide, where do we stand? For refinish, we are the leader in color match, and we have the most productive collision repair system in the industry, period. Nobody even comes close. We can paint any car, any color, anywhere in the world, better and faster than anybody else. For industrial, we have the most advanced energy management coatings and varnishes for the electric motors available. Our cabinetry products are unmatched, and our super durable architectural extrusion products lead the industry. For light vehicle, we are the leader in consolidated systems. We have harmonized coating systems for all types of customer paint shops. Nobody can match that. And of course, our clearcoats are recognized as the best-in-class for appearance and durability. And our new broad temperature-baked E-Coats enables the new electric vehicle platforms. And finally, for commercial vehicle, we are the undisputed leader in heavy-duty truck, period. Best color, best appearance and best performance. These are bold statements, but I think you'll hear our business leaders echo this sentiment. Let me provide some specific examples. Our product road maps cover 4 main focus areas: defending our current position with our valued customers; continuously improving our product every day; developing next-generation products for upcoming customer needs; and driving advanced innovation to have new products ready to address the needs of the future. The next couple of slides provide an example of each of these. In our commercial vehicle business, we have a market-leading position in heavy-duty truck with our Imron products. While we provide a clear, differentiated value to our customers, we developed and launched Imron Elite to provide improved productivity without impacting appearance and, at the same time, reduce the bake temperature. This technology allows us to defend our competitive position in this market far into the future. In our light vehicle business, every year, we have the opportunity to bring new improved colors and appearance by combining pigments and new resins. In addition, with the growth of autonomous vehicles, we have used our science and technology know-how to develop specialized resins that lock metallic pigments into place, thus allowing LiDAR and radar sensors to work. This technology was recently recognized with an Edison Award for product innovation. One of my favorite examples of next-generation products is our new waterborne clearcoat for the refinish business. Extending waterborne technology into clearcoats is difficult because a clearcoat layer is relatively [ slick ]. Through patented resin technology, we developed and launched the first premium waterborne clearcoat in the refinish market, just in time to meet new demanding sustainability requirements in Asia Pacific. And finally, as the market demand for electric vehicles has continued to expand, we developed a new impregnating resin, Voltatex 4224, that provides a step change in thermal management inside electric motors. This advanced technology allows electric motors to operate at lower temperatures and higher efficiencies, and it allows the same output with a smaller engine, thereby reducing the weight and extending the range of electric vehicles. This technology was recognized externally with an R&D 100 Award and a Gold Edison Award. Up until now, we've been talking about product innovation, but innovation at Axalta goes beyond our coatings products. We also innovate in processes, in services as well as digital innovation. A couple of examples of innovation processes include our award-winning LiDAR reflectivity measurement process, which allows us to design LiDAR-compatible coatings or our process development in our paint manufacturing plants that improves quality, consistency and capacity. And our digital paint technology is the most advanced application process in the industry and provides an overspray-free application process for easy customization. Service is another area that we innovate. For example, our customer solution centers allow customers to experience color as part of their design process. And our Daisy Wheel mixing machine for our refinish customers is the only fully automatic mixing machine available in the market. Others in the market are only semi-automatic and still require paint shop labor. And finally, in the area of digital, we are constantly exploiting the latest digital tools. For example, we're using virtual reality to bring our laboratory scientists into our customers' plant for support without having the time delay for traveling. And of course, we use apps to make it easier for our customers to interface with. Let's take a closer look. [Presentation]

So my key message is we have the best people working in world-class facilities around the world close to our customers. We love innovating to solve our customers' most challenging problems. We have award-winning products in the market and we're constantly launching new ones to drive growth. And we innovate beyond coatings products, including processes and services and implementation of digital tools. Thank you so much. And now I'd like to turn it over to Troy Weaver, the leader of our global Refinish business.

Good morning. My name is Troy Weaver and I'm proud to lead the Refinish business. I love this business. I've been working at Axalta for 28 years, where I've held a number of diverse roles in this great business. In 2013, I had the opportunity to lead the newly created MSO business segment, delivering rapid market share growth. After that, I went on to lead in North America Refinish business. And almost 2 years ago, I assumed responsibility for global Refinish. I'm excited to give you an overview of our Refinish business and highlight our significant growth opportunities. My key points for today include: number one, Axalta is a global leader in a very attractive refinish market, and we continue to leverage our strengths to solidify and expand our current position; number two, the refinish market is evolving. And we are leveraging our investments in innovation to support our customers and rapidly bring new industry-leading product and service offerings to market; three, we see significant opportunities to expand our global leadership in underrepresented geographies in underserved customer segments. We have clear plans in place to accelerate our growth trajectory over the next 4 years and beyond; number four, this is a people-intensive business, and it's critical to maximize our sales force productivity. We're leveraging digital innovation to remove time-consuming manual processes and enable our sales team to focus on our customers and on executing our strategic growth plans. This is a great business with significant growth potential, and I am personally excited about our future. Now I'd like to walk you through each of these key points. Refinish market is very stable and growing across all geographies. We expect the current addressable market of $6.8 billion to grow about 2.5% annually over the next several years. As you can see on the slide, Axalta is a global leader with 26% market share, which we have grown about 130 basis points over the past 3 years. We hold the #1 position in the 2 largest and most well-established refinish markets, North America and EMEA. We hold the #2 or #3 position in growing and emerging refinish markets: Latin America, Asia Pacific and China. Emerging markets represent a clear opportunity for us to rapidly grow and build on our global leadership position by expanding our distribution footprint and leveraging our innovation capabilities. When you think about our customer base, we're the undisputed market leader in the premium segment with 40% market share due to our innovative and industry-leading product offerings. We generate 65% of our sales in the premium segment. We are under-indexed in the mainstream segment with 19% market share and in the economy segment with only 9% share. These 2 customer segments represent additional opportunities for us to capture market share and accelerate growth. The bottom line here is we are the market leader in a very attractive industry, and we are well positioned to seize opportunities with both mainstream and economy customers to capture share, accelerate growth and further expand our global leadership position. A growing and stable market like refinish is very attractive, but it takes breadth and scale to effectively compete in this market. On this slide, we highlight some sustainable competitive advantages that keep Axalta well positioned to win. First, we have the industry's leading brands and product portfolio. What really sets us apart from our competition is the fact that our offering is the strongest in the industry for all 3 customer segments: premium, mainstream and economy. For premium body shops, we offer an ultra-productive, single-visit application system under the iconic Spies Hecker brand. This innovative solution provides meaningful productivity to our customers, it's 55% faster than our next closest competitor. Over the past 3 years, we have expanded our product offering, launching over 90 new products. We also expanded our color offering, adding over 60,000 new color formulations to our already extensive color database. For mainstream and economy shops, we designed, developed and brought to market new refinish coating systems specifically to support these customer requirements. We remain well positioned to address customer needs across all segments, enabling the execution of our growth opportunities. Second, we have the most extensive global distribution network across the industry. Refinish is a highly fragmented market and local access to our products is critical for our customers. A strong distribution network is built by attracting the right distribution partners in each market. Axalta's product and service offerings are attractive for distributors because it gives them the opportunity to grow across all customer segments. As a result, we have over 8,000 stock points around the world, giving our customers local access to products and giving Axalta a strong platform to successfully grow. The third key competitive advantage and another reason we win is the scale we have to support our broad and expanding customer base. Over the past 3 years, we strategically invested infrastructure to better serve our customers, including opening new training centers in the United States, Australia, China, Dubai and India. We also localized product manufacturing in India and Malaysia to source products closer to our customers in emerging markets. In addition, we have the largest field sales organization in the industry, which enables us to deliver high-value services and to command a premium for our products. The key takeaway here is we are the market leader, and we continue to invest in innovation, people and market access to support our customers and accelerate our growth trajectory. The refinish market is constantly evolving. We see 4 major trends that are reshaping customer needs in the years ahead. First, body shop consolidation is happening across most regions but especially in North America and Europe. Since insurance companies pay for 90% of all repairs, they influence where cars get repaired and they allocate workflow based on body shop performance. The better they perform, the more cars they get to repair. Multiple shop operators, otherwise known as MSOs, are best positioned to deliver against the insurance company key performance indicators. As a result, MSOs are outpacing the market in terms of growth in well-established markets. MSOs put a high value on short cycle times and operational consistency for a quality repair. This way, they can continue to deliver against insurance company KPIs and earn more workflow. The second market trend impacting well-established markets is labor shortage. The number of paint technicians has been declining over the years, leading to an increase in employee turnover and negatively impacting consistency. Since consistent repair quality is key to our premium customers performance, there is a growing need for automation. The third trend to highlight is sustainability. Sustainability is growing in importance, especially in emerging markets such as China, Korea and Japan. This trend is well established in markets like Europe, Canada and several states in the U.S., where we've seen a mandated use of more sustainable coatings. The growth of economy segment is a fourth major trend. Emerging markets like China and Asia Pacific are growing at a faster pace than well-established markets. This trend is increasing the demand for mainstream and economy coatings. Economy customers are cost conscious, but not willing to compromise repair quality. They work on a cost per repair basis and want to make sure that every single repair is within budget. Economy customers expect product training and technical support at the time of repair. They are also seeking more environmentally-friendly paint systems that are easy to use, shortening the learning curve and minimizing the impact of change. All of these market trends are important because Axalta is uniquely positioned to anticipate changing customer needs for premium, mainstream and economy customers. The main point here is we are leveraging our investments in innovation to effectively address evolving customer needs and continue to bring industry-leading offerings to the refinish market. Our undisputed leadership position in the premium segment is fueled by our ability to anticipate customer needs and leverage our innovation capabilities to create industry-leading product and service offerings to help them outperform their competition. The cornerstone of our offering is the Edison Award-winning ultra-productive single-visit application waterborne system that I mentioned earlier is 55% faster than our next closest competitor. So what does this mean for our customers? A typical repair of several layers, a primer, a sealer, a basecoat and a clearcoat, and each layer requires multiple coats to be applied. Competitors' products require a painter to wait for each coat to dry before applying the next. Our single-visit application system eliminates the need to wait between coats and greatly improves the productivity of our customers. The result is twofold: it gives our premium customers the ability to repair more cars; and since it reduces cycle time, it also positions them to earn more workflow from insurance companies. Another clear advantage is our digital color match in automated color mix. A perfect color match is what makes a collision repair invisible to the car owner. Color matching is typically done manually by highly skilled painters with years of experience and it could be time consuming. Axalta's color science and technology allows a less skilled painter to achieve an excellent color match. Our Edison Award-winning Acquire Quantum EFX spectrophotometer can read a vehicle's color and flake size. We use this data to search hundreds of thousands of colors in our ColorNet cloud database in seconds to display a formula to compare the color match. The painter can digitally fine-tune the formula on screen to produce the best color match. Once the best color match is identified, it has to be mixed. This is typically a manual process and is subject to mistakes. Our fully automated mixing process is a highly precise process that eliminates manual mixing errors and ensures an accurately mix color. It also allows painters to focus on other critical tasks while the paint is automatically mixed. The result of this innovation is less people-dependent process that according to our estimate is 50% faster and 25% more precise than the industry standard. Now I'm going to shift gears into something that is very unique to the Refinish industry and discuss our data integration solution. Each of our premium customers has a profitability and productivity target. And they rely on us to help them hit that number on a monthly basis. Data is not readily available in our industry. The industry standard here is to manually collect data from multiple sources. This process typically happens at month end and takes days to complete. By the time the data is collected and analyzed, it's too late to change the outcome of a performance period. This is very reactive, ineffective and it's not scalable. Axalta's proprietary data integration solution connects multiple sources of data, ranging from paint labor hours, paint consumption to purchase orders. All this data is automatically collected in near real time, cleansed and analyzed. The output of our proprietary data system is a real-time paint profitability performance management system. Axalta is the only player with a real-time and fully automated performance management system. So what does all this mean? At any given time, we can see how each one of our premium customer locations are performing versus their paint profitability targets. We can now deploy resources in a very targeted way. We know where to send our product specialists, to whom he or she needs to speak to and what to train a painter on. This makes us extremely efficient in utilizing our resources and helping our customers to improve productivity and profitability. As a result, our proprietary data integration solution creates deep customer loyalty and supports premium pricing. The important message here is our leadership position in the premium segment didn't happen by accident. It is a result of understanding and anticipating customer needs and innovating to bring powerful product and service solutions. Mainstream and economy segments are growing and represent an opportunity for Axalta to capture share and accelerate growth. With that in mind, over the past 3 years, we expanded our product and service offerings with innovation targeted at these 2 critical customer segments. Let's start with our easy-to-use waterborne technology. Environmental compliance in countries like Japan, Korea and China are forcing mainstream customers to adopt a waterborne basecoat, a trend that will continue to grow globally. Our mainstream waterborne-based coat technology was designed to be easy to mix, easy to match and easy to apply, shortening the learning curve to convert from solvent borne basecoat to waterborne basecoat. We went 1 step further and made additional adjustments to our technology based on local requirements. We brought Cromax EZ to Japan, Syrox to Europe and WONDER MATCH to China. For the economy segment, we developed a complete collision quality refinish system that delivers full color match capability at the right price point. This was made possible by a combination of innovation inside the paint formulation and also innovation outside the can in paint manufacturing. Similar to what we did with our easy-to-use waterborne technology, we also made adjustments to our core technology to bring to market different offerings by region like Bikapa Plus in Latin America, NasonXL Low VOC in North America, and Pamake brand in Asia Pacific, to name a few. Mainstream and economy customers represent a broad and fragmented customer base. These customers have a need for technical support at the time of repair, which represents a challenge for the industry. Our solution was to leverage Axalta's ColorNet cloud platform to provide real-time, on-demand technical support. Through ColorNet cloud, our customers can troubleshoot problems with on-demand content, talk to a virtual agent through a video chat or enroll in virtual training. Customers [indiscernible] when and where they need it to ensure a quality repair. The bottom line here is innovation targeted at mainstream and economy customers positions Axalta to capture share across these growing and underserved customer segments. We made significant progress driving innovation to effectively address evolving customer needs across our premium, mainstream and economy segments. Now let me talk about our key strategies to leverage our industry-leading product and service offerings. First, we will increase market access by adding distribution points in underrepresented geographies. Refinish is a highly fragmented business and local access to our products is critically important. We will leverage our strong product offering to attract more distribution partners and expand our distribution network. The more customers who have access to our products, the more we grow. Second, we will expand our premium leadership by leveraging our unique value proposition. As I mentioned, we are focused on driving innovation to support our customers in this segment. Our single-visit application waterborne system, digital color match and automated color mix and data integration provide significant value for our customers. While we are the undisputed leader in the premium segment, we still have room to grow. And third, we are aggressively gaining share in mainstream and economy segments, which are growing across all regions. We will leverage our newly launched product and service offerings and our strong distribution network to speed up market penetration. Let's take a closer look at these growth strategies in action. A great example of how market access can accelerate growth is our distribution footprint expansion in China. There's a strong correlation between distribution coverage and growth performance. As you can see, we have significant opportunity to increase our presence across China. If we want to grow in China, the first and most critical step is to increase coverage by adding stock points, especially in Tier 3 and Tier 4 cities. We recently created a dedicated sales team focused on capturing new distribution partners to carry our complete product offering. This will allow us to grow organically in key provinces. And I'm excited to report we're far ahead of our plans. We are also actively working on partnerships, joint ventures and M&A opportunities to expand our footprint and capabilities in the region. The key takeaway here is we are focused on white space market opportunities to accelerate growth. The faster we expand our distribution footprint in China, the faster we will grow in this attractive market. Our premium leadership in North America positions us well to benefit from market shift towards premium customers and outpace market growth by about 200 basis points. Insurance companies are allocating more workflow to premium shops. As a result, the premium segment is expected to be nearly 50% of the North American Refinish market by 2024. Not only is the market shifting towards premium customers, it's also shifting more aggressively towards the top 10 MSOs that is expected to be more than 40% of the North American market by 2024. While Axalta is the market leader in a premium segment with 40% market share, we are even better positioned with the top 10 MSOs. We are the coating supplier for 7 of the top 10 MSOs with nearly 60% market share. We will continue to support our premium customers and MSO customers with products and services that help them to outperform their competition every single day and earn more workflow. The more our customers outgrow their competitors, the more we outgrow the market. The main message here is our decision to aggressively target, win and expand our leadership position with MSO customers in North America over the past 3 years has positioned us well to outgrow this very attractive market. Importantly, we're also executing our plans to aggressively gain share in the growing mainstream and economy segments across all regions, and I would like to highlight 2 of them. First, there's a shift towards sustainable coatings in China, Japan and South Korea. These 3 countries together represent $700 million refinish market and that is growing. These refinish markets have a distinct competitive advantage with several small local paint manufacturers with almost half the combined market share. Environmentally friendly refinish systems require more sophisticated and innovative paint formulations than current refinish systems. Some small paint manufacturers may not have the scale, capabilities or resources to make the necessary investments in innovation. As a result, their emerging customer needs create a unique opportunity for Axalta. We are going to leverage our easy-to-use waterborne technology and our WONDER MATCH and Syrox offerings to rapidly penetrate these markets during this transition to more sustainable coatings. Similarly, in Europe, we will accelerate growth by capturing share in the faster-growing mainstream and economy segments. In the Western European markets, these segments are about 20% of the market, and they are growing 120 basis points faster than the premium segment. Central and Eastern European markets are around 20% of the overall refinish market in Europe, and they are growing at about 3% per year. Mainstream and economy segments represent 75% of this market and they are growing at an even faster pace. We recently launched the Syrox brand to address the needs of this growing segment. This easy-to-use waterborne system is a perfect fit for the segment. And we will continue to leverage our strong distribution network to further penetrate this underserved market. The important message here is the mainstream and economy segments represent significant opportunity to accelerate growth, and we have clear plans in place to achieve this growth as the global market is evolving towards our strengths in sustainable coatings. Another of our key strengths is that we have the largest field sales team in the industry. This allows us to provide high-value services to our customers and to price accordingly for that added value. That said, we are focused on ways to further maximize our sales force productivity. Last year, we launched BUYAXALTA 2.0 platform to enhance our support of our distribution partners and customers. This platform was carefully designed to streamline and automate transactions. Since we launched BUYAXALTA 2.0, we are processing over 5,000 distributor purchase orders per month, over 500 distributor credits per month and over 3,200 customer rebates per month automatically. This innovative platform is freeing up 10% to 15% of our salespeople's time, allowing them to focus on executing our growth plans. Over the past 2 years, we also invested in improving our sales force capabilities. We brought more visibility to sales pipelines to drive accountability, deal management to speed up decision-making and selling tools that clearly articulate our industry-leading value proposition. The result of these investments is a focused and disciplined sales force playing to win. The main point here is we have solid growth plan. We also have a highly productive and capable sales team that is focused on and measured by disciplined execution of our plans, which has resulted in a 10% to 15% increase in sales force productivity. In conclusion, I'll wrap up with a summary of key takeaways. Number one, we're building on our #1 market position and see significant growth opportunities; and two, we're driving innovation with new product offerings to address evolving customer needs; three, we're accelerating growth by expanding market access in underrepresented geographies, especially Asia; and four, we're focused on execution, including increasing sales force productivity by investing in digital innovation to accelerate growth. With that, let me turn it back to Chris to start our first Q&A session. Thank you.

All right, everybody. Thanks for watching those presentations. I hope you got a lot out of them. Really excited to get into some Q&A with you for the next 15 minutes. Our first question actually comes from Kevin McCarthy of Vertical. It's a 2-part question and it's directed to Troy Weaver. The first part is, would you address the paint mixing steps specifically and compare and contrast the Daisy Wheel versus PPG's MoonWalk and other competitors' offerings. The second part of the question is please discuss the value proposition in refinish. And for example, if you were to approach a new potential customer, what would that sales pitch sound like in terms of how Axalta delivers incremental value versus our competitors? Troy?

Yes. Let me talk about the mixing process first. Axalta is the market leader in semi-automated and automated mixing already. We've had our expert semi-automated mixing system in North America for over 10 years. We have hundreds and hundreds of placements of that semi-automated system. What's really unique and new is the hundreds of installations we have of our Daisy Wheel system, which is the only fully automated mixing system on the market today. That's the real difference between what some of our competitors are talking about and Axalta. We have both. We have the semi-automated version like our competitors have, but we also have a fully automated version, the Daisy Wheel. A little more context around this. Shops, when you think about semi-automated or automated mixing, the reality of it is these are great systems. But from a time perspective, mixing by hand versus one of these machines is 3 to 7 minutes. And although that savings is important, not all shops are willing to make the investment in those types of equipment. What shops really value is around paint booth cycle time. It's one of the biggest capital investments they make in a body shop, and maximizing that capital investment is one of the most critical things body shops look for. And that's where Axalta comes in and performs best. Our single-visit application technology, which is 55% faster than our next closest competitor, saves a tremendous amount of booth time. So let me put that in maybe some context of minutes. For each car cycle through that booth, our product can cycle that car 35 to 40 minutes faster than our next closest competitor. As one can imagine, that is a big savings for body shop and also helps them generate additional revenue, which speaks to really the second part of the question, what is Axalta's value proposition? It does vary by customer segment, will vary targeted at each customer segment, whether it's economy, mainstream or premium. But for the premium segment, if I talk about value proposition, it's really around 3 things: productivity, profitability of the paint department and also sustainability, all of which Axalta is the leader in all 3 areas. I talked about the productivity of our paint system and paint booth utilization. The second part of this is around paint profitability. As I mentioned in my presentation, we have the only automated digital paint performance management system in the industry. And what does that mean? Again, that means we can see how each repair and each painter is actually performing with our product in near real time. That allows us to address any performance gaps, again, in almost near real time. That is a big advantage for our customer and a significant advantage for Axalta in how we utilize our human capital. And lastly, on sustainability, our waterborne system, whether it's our newly launched waterborne sealer, our waterborne basecoat, which is the fastest in the industry. And as Robert Roop mentioned, our new waterborne clearcoat. We're very excited about our offering to market. And we do have the leading value proposition for all customer segments. Chris, back to you.

Thanks, Troy. Our next question is for Robert from Josh Spector, UBS. Can you elaborate on what changes Axalta's made in incentives that would enable higher growth? Have you seen any changes in behavior since making those changes?

Well, you can't talk about incentives and compensation without talking about culture. And as you heard me talk about in my opening remarks and you'll hear more about from our presenters today, Axalta has gone through a pretty radical cultural change over the last 2.5 years. We're really focusing the company on top line sales growth, and we're really focusing the company on being much more commercially oriented and much more commercially aggressive than we've been in the past. We've also made a much greater emphasis on innovation. And that will be a theme that you'll hear about through all the presentations today. Specifically with regard to changes in our compensation, we've made changes in compensation to ferment top line sales growth at all levels of the company. Starting with the executive team, over the years, we have pushed a greater percentage of long-term incentive compensation into performance shares that are directly linked to our long-term performance and EBITDA, adjusted earnings per share and return on invested capital, which are really only generated from exceptional sales growth. And then more importantly, in mid-level management and our sales teams that are actually out on the street, we've removed previous caps that we had on their incentive compensation. So their incentive compensation in most cases now is fully uncapped. And frankly, some of our commercial hunters out there earn more than anybody on the senior management team, that is a great thing to see out there happening.

Thanks, Robert. We have a question from Vincent Andrews, which is somewhat linked and an interesting one. Can you give some examples of calculated risk taking?

There are a multitude of areas in the company where we're taking more calculated risks. It's commercially, it's innovation and it's the day-to-day operation of the company. So again, commercially, sometimes we'll make in customer investments or we'll put additional feet on the street or we'll incur additional expense before we actually have the sales opportunity fully laid out and fully confirmed. Previously in Axalta, you sort of had to have the opportunity in hand before you could go after that. So we're giving people some latitude and really managing an entire business unit budget from gross sales all the way down to free cash flow and the ability to take some more of those calculated risks on the commercial side. On the innovation side, you don't get breakthrough innovation and breakthrough changes and radical disruptive technology without placing some bets. And so over the last 2.5 years in our technology organization and also in our digital and information technology organization, we have made some investments, sometimes $250,000, sometimes $500,000 that are essentially very rapid development cycle type projects, where over the course of 3 months, 6 months, 9 months, we know if we have something or not. And so we've been making some of those bets. Some of those have worked out and some of those are in the process of working out, and we believe will really be an impetus to power sales and to power some disruption in each one of our end markets as we go forward. So we're very excited about that. And I think people now feel the liberty and the ability to bring forward ideas. And that's really the internal process that we had talked about. So in terms of more calculated risk taking, we're also trying to get more ideas from all levels throughout the organization. So we now have a system where all employees around the globe can put in ideas that they have for major changes of the company that they think could be game changers. And then we have a group of people made up of people from all levels in the organization that go through those ideas and actually pick out the ones where we want to take some calculated risks and make some bets.

Thank you, Robert. The next question from Ghansham Panjabi is kind of the what's different question. And I'm going to paraphrase this a little bit to shorten the question, but he says many of the competitive advantages and strategic imperatives that we've highlighted have been true for a long time and we've highlighted them before. So what's really different now about them? Is it higher confidence on organic growth? The platform that includes a more holistic contribution from acquisitions. What do you think?

Well, there are a number of things that are different, and I'll kind of categorize them into external elements as well as internal elements. On the external side, if you look at each one of our end markets, each one of our end markets, from this point as we go forward, they have secular tailwinds in each one of our end markets that we didn't have previously. I think that's point number one. Point number two is that in addition to those secular trends, we're focusing on areas that have the highest potential for growth. And those areas also happen to coincide with what we expect to happen in the global macro economy over the next several years. So we're keenly focused on growing our industrial business, which is our highest potential growth business in the portfolio currently and that also syncs up with some of the megatrends. The other area where we're focused is Asia Pacific, a smaller percentage of Axalta sales today but with the most growth potential. And you'll see a number of announcements as we go forward, both in terms of building out our organization there, building out our footprint. You may have seen an announcement this morning we made where we doubled our waterborne capacity at our plant in Shanghai. And you'll see some other announcements coming out regarding additional investment that we'll be making not only in China but across Asia Pacific. So some of those external elements are aligning with Axalta's future. Additionally, some of the headwinds that we've had in the past, so for example, foreign currency or the high percentage that quite volatile Latin America represented of our sales or some of the structural business changes that we made, such as Refinish back in 2017, we don't expect to have those headwinds as we go forward. Internally, there have also been a number of changes. First and foremost, you saw that we changed our organizational structure. So we went from a complex matrix structure that frequently required 3 people to have to agree before we could make even simple decisions to now a truly global business unit structure where global business units are empowered to make decisions to run their businesses, supported by really strong global functional leaders. So that's faster decision-making, it's greater customer intimacy and it also allows us for more accountability. And then finally, somewhat driven internally but somewhat driven externally, when you look at the world we're in today, where you see regulation only getting tighter and you see the focus on sustainability only becoming greater and greater and greater, that really favors a company like Axalta given how sustainable and environmentally friendly our products are. And we think that will also further differentiate us from some of the mid-tier and lower tier competitors and even some of the top-tier competitors as well as we go forward. So I think we feel quite confident that we'll be able to achieve the organic growth targets that we've set out for ourselves.

Thanks, Robert. I have a couple of questions for Troy here. I'm actually going to combine a few. Bob Koort and John McNulty both asked a similar question. So I'll read this one first. Can you talk about the relative growth rates between refinish regions and the premium versus mainstream and economy categories? How does Axalta's profitability vary across regions and product categories?

Yes. Let me start with the growth rates across the regions. So as you would imagine, in a more developed regions such as North America and EMEA, you're in the low single digits for market growth. And in higher-growth emerging markets such as China, Asia Pacific, you're in the mid-single digits from a market growth perspective. When you think about profitability across our premium, mainstream and economy segments, let me first start with saying, Refinish margins in any segment, in any geography are quite attractive for a coatings company. But back to the specific question. In our mainstream segment, we typically have similar EBITDA margins, although the dollars because the initial price point is slightly lower, but the margin percentages are very, very similar. In the economy segment, as you would imagine, the price points are slightly lower and our gross margins are slightly lower. However, we don't see that as a negative. In fact, this can be a positive for delivering solid incremental contribution from these segments. In addition, what I'd say is, from an overall net margin perspective, we have key initiatives in place to increase our overall margins. And it has to do with our operating leverage. As we penetrate the mainstream and economy segments, we're naturally going to get operating leverage from that additional volume. In addition, from an SG&A perspective, I talked about our digital innovations and how we're leveraging digital and premium, but we're also leveraging digital and mainstream and economy. We're reaching these customers without human capital, in many cases, which again, is going to help our overall margin profile in mainstream and economy long term. I'll finish with, overall, we see significant top line and bottom line growth by targeting and winning in the mainstream and economy segments.

So Troy, just a follow-up to that from John McNulty. He really wants to know how we can effectively target what appears to be big underpenetrated markets in these segments. And I think he's specifically referring to mainstream and economy. How are we going after those globally?

Yes. So one of the things that Axalta has done differently than our competitors or what I should say is an old industry practice. Historically, what we've seen major paint companies do is go after these segments with older premium technologies. And there's a fundamental challenge with that. Because they were older premium technologies that you're now trying to price lower into a segment like mainstream and economy, you carry along with it a higher variable cost and a higher paint conversion cost. What we did differently, thanks to Dr. Roop and Dr. Snyder, both in the R&D side and the manufacturing side, we engineered our newest technology for these segments with gross margin in mind and customer needs in mind. And what we did is we engineered and innovated our variable cost structure and our holistic paint conversion cost structure into new technologies that we just launched 6 months ago. So that's given us the margin profile and the structure and the products we needed to address those segments effectively. We're actively gaining new distribution points. As I mentioned, we're outsizing our targets already for adding new distribution points, and that's primarily in the mainstream and economy segments in underrepresented geographies such as China, Southeast Asia and Latin America. So very exciting times for Axalta and very differentiated approach to this segment. That's really what's changed from Axalta years ago.

That's right. I'm going to throw a question to Robert Roop now from Michael Harrison. You referenced e-coat and clearcoat as leading technologies. How common is it for a customer to utilize Axalta for its entire system, whether it be e-coat, primer or basecoat? Do you view increasing penetration among light vehicle customers as an opportunity?

Chris, we -- of course, we recommend it. Our light vehicle customers use our total system, starting with our outstanding e-coat, our primers, our basecoats and our clearcoats would -- can pass together as a system. It is true in the marketplace, however, that many times, this is not the case, and our customers will choose to mix the systems, maybe award e-coat to 1 supplier and maybe the primer, basecoat, clearcoat to another. So -- and then even in some regions, specific colors are split between suppliers. So while I think this is absolutely an opportunity for us to penetrate customers that we already service in areas that maybe currently other suppliers are supplying. So I think this does truly give us an opportunity to grow in existing customer base in light vehicle.

Thank you, Robert. I'm going to throw 1 more to Troy, if I may. This is from Alex Yefremov. He says Axalta has been targeting growth for economy refinish for some time. Can you discuss your approach to growing -- how your approach to growing this segment has changed in the last few years?

Yes. I would just like to reiterate, really the innovation we've put into the product portfolio that we now have and recently launched 6 months ago, it is a big differentiator in what we'd engineered into this segment. And we didn't stop investing in innovation during COVID-19. In fact, we doubled down, particularly in our newest technology related to targeting this segment. And we've launched a number of new brands, whether it's Bikapa Plus in Latin America, WONDER MATCH in China, Cromax EZ in Asia and North America and Syrox in Europe. So we've brought the right products to market that allows us to price at a competitive price point. However, it still allows us to make very attractive margins in that economy space. So the real big difference from where we were years ago was around our offering and making sure we had the right product at the right price point with the right customer attributes so that we could address those customer needs in those particular segments. In addition, we're leveraging our breadth in our distribution platform to make sure our distribution base is carrying our full product offering and allowing them to compete in all customer segments, which is good for them and certainly is good for Axalta, our shareholders and investors.

Great. Thanks, Troy. One more for Robert Bryant from John McNulty. When you think about M&A growth, can you talk about the potential size and scale of the targets and our ability to manage multiple targets at the same time? And finally, what the addition of Jeremy Rohen is doing to change our M&A process?

Well, we have a great track record of M&A at Axalta, and we've shown the ability to do multiple transactions. Many of those transactions, of course, have been simultaneous. So there's no question there on our ability to execute. I think in terms of our focus, we are continuing and we'll always look at bolt-on acquisitions. In general, however, we're looking to do fewer, larger transactions that really move the needle. Because if we're going to get to the sales numbers that we believe we can achieve over the next 4 years, it's going to require larger-scale M&A. And there are opportunities within coatings, especially industrial coatings out there, that can help us get to that level. But we've also been doing a lot of work over the past 18 months on adjacencies, adjacencies where we have the core competencies as well as have the talent as well as have the access to market, where those adjacencies could be highly value-accretive to Axalta and add some additional diversity to the business portfolio. So over time, you would expect to see us also invest in some very close adjacencies. So some of the things that we do today, but there are areas where we think the return on invested capital would be extremely high for our company.

Thanks, Robert. With that, we've wrapped up the early Q&A session here. We have a little bit less than 15 minutes for a break here, and we look forward to seeing you back shortly. Thank you. [Break]

Good morning. I'm Shelley Bausch, Senior Vice President of our Industrial Coatings business, and I'm very happy to be talking with you today. Although I joined Axalta just a few months ago, I have spent 34 years in specialty chemicals driving growth, and I'm looking forward to doing the same with our team here. As you saw in the video, the Industrial Coatings business serves many markets, and we have multiple opportunities to grow within them and around them, and that's what I'd like to share with you today. Over the next 20 minutes, I'll give you a flavor for our opportunities, but the bottom line is we have a strong position, diversified across a broad customer base; sustainability trends support expansion of our powder technology; we have a large opportunity for share gain within our current markets and in segments we don't participate in today. And finally, we have strong innovation platforms and technical service to capture those opportunities. Let me talk a bit about our business today. We're focused on 3 areas: General Industrial, Building Products and Energy Solutions. Of course, General Industrial covers a broad range of markets, including wheels, metal furniture, appliances and of course, commercial construction with coil, extrusion and structural steel segments. Building Products focuses on residential construction. While Energy Solutions targets electrical motors and energy storage and distribution applications. Our Energy Solutions business continues to expand as new energy sources are being developed, and that fuels needs for energy storage and the ability to make stored electrical energy available when needed. In all 3, we offer total solutions to our customers, powder, liquid and E-Coat products. And we've established strong positions as shown here, #2 in North America building products and $4 in Energy Solutions. So we have a strong position in many areas, but we also have room for significant expansion. The market for Industrial Coatings, as we've shown here, is USD 65 billion. Our position, with estimated sales in 2021 of $1.3 billion, puts us at less than 3% market share. We intend to grow and change that position organically and inorganically. We've demonstrated we can do this with a historic CAGR of 5%. Going forward, we will help accelerate that rate based on the strong end markets we participate in, our innovation and technology portfolio that's focused on both functionality and sustainability, a laser focus on Asia and expansion into adjacent markets. Now I've mentioned sustainability several times already. And I do want to take just a few minutes to reinforce the role it plays and will play in industrial and specifically in our powder coating product line. We all know that through legislation and the current social orientation, the demand for sustainable solutions will continue to grow, requiring both the same or improved functional performance but with sustainability in both the product itself and in its application. Axalta has a full portfolio of sustainable options for our customers with parallel investments in waterborne, high solids and UV cure technologies to meet those needs. However, because of the unique characteristics of powder technology, it is well positioned to serve this growing demand. Powder technology has no VOCs, there is high transfer efficiency in application and you can recycle and reuse any overspray. There is a reduction in energy use through single coat and low-temperature cure products. And the durability of the coating itself allows the substrate to last longer, leading to a more sustainable product from an end-use standpoint. Some examples of how this plays out are listed here, from a recycling program of overspray collection to a substitution for PVC coatings, to technology that actually reduces heat accumulation in buildings, which reduces the need for cooling energy. So it's an exciting time for powder and as such, an exciting time for Axalta to leverage our strong position. Our #2 position is based on an incredibly broad line of thermoplastic and thermoset products that serve our customers' needs in a variety of applications. Our fusion bonded epoxy products serve the oil and gas and other critical pipe coating markets. Our Plascoat acquisition gives us fantastic technology in thermoplastic products, opening up additional application areas due to their inherent chemistry and the ability to remelt, repair and recycle. Because of our extensive operational footprint, we have the capabilities to serve powder customers around the world. And for our product offering, we have strong brands with proven performance, which gives our customers confidence in achieving their performance and sustainability goals. So the overall market size and market diversity and this tailwind of sustainability gives a backdrop to the growth opportunity in front of us. Our strategy to deliver this growth is based on innovation that's focused on customer market needs; the targeting of specific opportunities within our current markets while leveraging into adjacencies; expanding geographically, particularly in Asia; and leveraging our strong historical success in M&A to grow inorganically in these strategic areas. So let's talk first about innovation. In general industrial, our focus is to grow our position in current markets, extend into new segments and expand in Asia. To do that, we have continued to accelerate platforms in primers, top coats and direct to metal coatings that optimize productivity, provide ease of application and improve weatherability and corrosion resistance. We continue to invest in metallics as demand continues for specific appearance requirements, and we are driving both product and process innovation to deliver those aesthetics while improving functional durability. And our E-Coat innovation continues with a focus on improved edge protection, a critical performance requirement, while improving sustainability of the product through tin-free product development and reduced water usage in application. For building products, our focus is on growth in Asia and Europe and leveraging our strong North American position. Our technology platforms are designed around multiple substrates as the trend continues towards composite materials. In fact, about 30% of our sales are on non-wood materials today, and it's the fastest-growing area. And this not only affects our innovation in liquid products, but also with the use of powder technology for both performance and sustainability. We also continue to evolve and leverage our color choice system, which offers an unlimited number of custom color options for our customers. Beyond just the color selection and design, it offers rapid, precise and consistent color dispensing and mixing capabilities. For Energy Solutions, the market is expanding rapidly, and our focus is on accelerating the technology solutions needed to meet these evolving needs. Key platforms here are in areas of heat management and thermal conductivity, motor efficiency and heat containment coatings. The drivers for this are energy efficiency as well as safety and our focus on improved wire enamels, casting compounds, impregnating resins and electrical steel coatings support this. In addition, leveraging our powder with its dielectric properties adds to our portfolio. While innovation is a key driver of continued growth, we also have opportunities to grow today based on the strong markets we participate in. As you can see by the market size and our overall share position, there is ample room to expand. And these market areas are supported by strong growth trends. As an example, in General Industrial, growth is supported by strong forecast in commercial construction and infrastructure. In Building Products, there is some carryover from commercial construction, but the key drivers here are strong housing starts, existing home sales and the trend that started during the pandemic and continues, remodel and repair activities. And of course, Energy Solutions is tied to several key megatrends in electricity, electrification, wind and solar energy. We have developed focused segment strategies and teams to drive business development in the electrified powertrain and in renewable energy generation and distribution, all supported by strong market drivers. You'll hear even more about these trends and the associated market opportunities during the mobility presentation that's coming next on the agenda. Innovation and market focus are critical. But third, we have an aggressive focus on geographic expansion. On this slide, you will see the first chart summarizes where the market for industrial coatings is today. And you can see that over 60% of it is in Asia Pacific. It also happens to be the fastest-growing. You can then see our position in the second chart. And clearly, we have the opportunity to expand. We have the products and solutions, and we know the markets and customers. We just need to leverage them effectively in new geographies. This is what we call search and reapply. To accelerate our success, we will also target inorganic opportunities. Our most recent example of this is the recently announced acquisition of Anhui Shengran, now Axalta Insulating Materials in China. That acquisition is at the top of this list of what has been a highly successful M&A history in Industrial Coatings. We have added almost $500 million in sales to our business, and we will continue to build our position in adjacent segments through acquisitions. The focus will be on strategic growth areas, adding technology, footprint, our market capabilities that complement our current offering, and we will drive successful integration with the Axalta core team. So those are a few highlights of the 4 growth areas. Now let's talk further about the focus we have within the end markets I highlighted earlier: commercial construction and general industrial, building products and energy solutions. We'll start with construction and a short video that will give you a bit of perspective on how we participate in this end market today. [Presentation]

As you can see from the video, we serve many parts of the construction market with our liquid E-Coat and powder technologies. The current market demand is driven by growth in small, mid- and large-scale construction, and we play in all of these areas. We provide total solutions and a strong product portfolio, including powder, which gives advantages in sustainability to the application and to the overall building project. Our technical and application support provide for customized solutions, including color expertise, which is a continued and growing trend. And that plays out globally and our ability to work as a team, supporting and connecting architectural design and specification firms with trends in color development while providing local support for execution, which is critical. Our goal is to bring technology, application and service together to serve our customers and grow our business. A great example of bringing this together is our recent launch of Abcite Flame Spray. This is indeed a total solution for the customer, driven by a critical need for on-site application and on-site repair with a technology that's easy to use, more cost-effective and provides better corrosion protection overall. This is a result of a partnership with an equipment supplier, where we jointly developed an application method to enable this technology and benefit the customer. This is a service to our customers, and this is the approach we take to our business. Our building product solutions serve customers across residential construction, kitchen cabinets and in a variety of furniture applications. We win by providing customers coatings that perform across a variety of substrates. As I said earlier, over 30% of the business is on non-wood substrates. We have a strong platform of sustainable technologies, including waterborne and UV cure products. One critical aspect of our product lines is that they have to deliver the same look and performance on the end product, even when a customer is producing it at different sites and on different substrates. As an example, your kitchen may have components that were produced at 5 different plants using varied substrates, but they need to look and perform the same way when they are installed in your home. And finally, as I mentioned with our construction value proposition, application engineering is critical in terms of product optimization, color execution and next-generation product development. A great example of that application engineering in practice is the development and launch of our unrivaled system. Because of application challenges and coverage issues with prior coatings, customers were struggling with weatherability performance and color retention. Through formulation and process work, our new product addresses those issues, improving coverage and giving uniform film fitness in peaks and valleys across a variety of substrates. And because of this, it gives our customers confidence in offering 30-year warranties, covering peel, flake, blister, chalk and excessive fade, which their customers demand. The third market focus is our Energy Solutions business, which covers wind energy, power distribution, batteries and electric motors. We supply a variety of liquid products, wire enamels, electrical steel coatings and impregnating resins while also providing E-Coat and powder solutions for electric vehicles and the evolving battery applications. For wind energy, we supply multiple parts of the turbine. And for the generator, we have developed products with higher voltage stability and better thermal behavior. For power distribution, the key needs there are to decrease downtime and improve power quality. And our electrical steel coatings, along with our impregnating resins, contribute to that and are used in the transformers to improve the design and reduce failure. With battery applications, we are now an improved supplier of multiple technologies, including both E-Coat and powder products in battery cases and cells. Our products support the needs for insulation, dielectric properties, increased safety and rapid charging capabilities. And finally, in electric motors, we are a critical supplier today to most OEMs of impregnating resin and corona-resistant wire nails. Without our product, the electric motor would not be as efficient and reliable as it is. Our focus is on maintaining that performance while driving improvements on safety and reduced environmental impact. It's an exciting time for this business as our products provide key benefits that are critical in today's energy environment, where the key drivers are increased efficiency, power continuity, increased safety and ultimately, reduce greenhouse gas emissions. As I mentioned, you will hear more on key megatrends in the Mobility presentation, but these same trends are driving the growth of the electrification and energy markets for which we have these functional solutions. Electric vehicles and mobility are front of mind for all of us, but the trends in heating, cooling, urbanization and urban living and home appliances, all demand improved thermal insulation and thermal management. And the drive to renewable energy to power all of these is driving the need for further product innovation and performance in these areas. To show how our technologies come together to provide a total solution addressing many of these needs, here are some examples of innovations that enable higher motor efficiencies and performance. You heard Robert Roop mention Voltatex 4224 earlier. This award-winning product enables a 10% higher motor efficiency through heat management as compared to a standard impregnating resin. With our self-bonded electrical steel coatings, we can reduce current loss and shorten production times. And we have developed products with our customers for thin steel adhesives and coatings, which gives a very powerful approach to further efficiency gains. Our wire enamels are used in the harshest environments where they significantly reduce corona effects. This paves the way for the 800-volt technology in electric vehicles and gives a new and exciting technology for better performance and for faster charging times. And finally, we contribute to the safety aspects of the battery with solutions to protect during the use of the battery as well as in moments where it is most important, to help protect the passengers. As you can see, we have developed a set of products that can be selected by the battery or motor designer to provide the most optimal performance so that their goals can be achieved. This might mean smaller batteries or longer-range options, improved safety and ultimately, increased motor efficiency, which means reduced greenhouse gas emissions, which is good for all of us. These are just examples of the opportunities we have in Industrial Coatings. The bottom line is that we are well positioned to deliver this growth. First, our strong and growing position gives us a foundation; second, we are a leader in sustainable solutions for our customers; third, our current markets are strong and growing, and we have many adjacencies to explore; fourth, by leveraging our innovation, our total solutions approach and our focus on servicing the customers, our growth and success will continue. Thank you for your time and attention. And next, you'll hear from Hadi Awada on Mobility.

Hello, everybody. I'm Hadi Awada, Senior Vice President for Mobility Coatings at Axalta. I've been with Axalta for just about 7 months now. I'm a product of the automotive industry. I was raised through the backyard mechanical garages and after college, joined a large OEM manufacturer, working in the Customer Service division. From there, I sought opportunity through the Tier 1s, where I worked for a top 10 Tier 1 focusing on clean mobility. I'm thrilled to be presenting today the Mobility business, which has recently been rebranded. As the world changes, it's really affected how mobility is viewing the growth vectors. Not only do we have to focus on what's happening for products and technology today, but it's even more important to know where the mega trends are taking us. As I entered Axalta, what I noticed was we had a strong team in place. We've recently added a few enhancements to ensure we had better visibility and thought around the automotive industry as well as the commercial vehicle industry. These team members are strategically positioned so that we can capture substantial growth in the underserved markets. While we're well positioned with our leading technology portfolio, this was another thing that was very interesting. I understood that not only are we focused on what we had today, but now I am confident that these technologies are in line with where the mega trends are taking us. The megatrends are quite disruptive and Axalta has focused on the right innovation and technology so that we cannot only be successful today, but benefit from what the megatrends are bringing to us tomorrow. There is still significant opportunity in monetization of our service sector with what we're calling now the Axalta Advantage. I'll walk through that a little bit later in the presentation. And while a lot of our concentration has been in the Americas, there's still organic growth opportunity through existing customer base, especially as we look at China and Asia Pacific. Today, as you can see, we're 3,500 employees strong, we're represented very strategically around 20 different manufacturing facilities and we have 4 technical and R&D centers that are located in the local areas that require their support. And despite being #1 in truck and bus, there's plenty of opportunity to be better distributed in our sales portfolio between light vehicle and commercial vehicle. At the same time, being #2 in the light vehicle segment, we have a strong concentration in Americas and nothing but significant opportunity in APAC. Today's mobility market represents $12 billion of market potential. And although Axalta plays well in most of these segments, we're focused and concentrated on the largest one specifically, and our technologies are agnostic enough to come across the board. But I don't want you to focus only on the $12 billion. As we start to look forward and what the megatrends will do, this market starts to take a turn to help us look at larger potentials so that we can have more addressable possibilities. Speaking of the mega trends, if we look at just the 5 that are widely known in the industry today by 2030, an additional $5 billion of market opportunities start to present themselves. Now although the distribution of those opportunities are different by megatrend, Axalta is uniquely positioned with our technologies to address them all. Let me tell you what I mean by that. For sustainability, this is the largest disruptor out of all the megatrends. CO2 regulations are drastically increasing. Millions of battery electric vehicles are popping up. And while many different start-up companies are starting to address this market, the current customer base is not going to be left alone. They're also going to come with their products as well. A lot of challenges come up as a result of this. Those batteries and electric motors, they'll need to be protected. And achieving lower greenhouse gas footprint is all of our responsibilities. Our solutions are well positioned, not only in advanced mobility, to address enhanced functionality of EV system coatings and broad bake E-Coats for electric vehicles, but also for greenhouse gas footprint with best-in-class waterborne consolidated systems. As artificial intelligence accelerates autonomous driving, we start to see billions of investments coming into this industry. The conclusion for us is that there'll be plenty more of sensors that need to be coated. The sensors are what help the vehicle see and be seen. The challenge is how do we coat those things so that our end-user customers don't see those sensors at all in the vehicle but still maintain functionality so that they can see and be seen as well. Our award-winning system to create LiDAR-compatible coatings as well as our multilayer modeling technology helps us and our customer formulate the best product to apply to these sensors. So not only do we have the product, but we have all the analytical tools that are proprietary that will help our customer achieve that. Disruption from the pandemic has created a lot of unknowns around shared mobility. At the same time, as vaccinations start to roll out throughout the world, the uptick in shared mobility appears to be returning. People still do want, however, post-pandemic, interior surfaces that are safe from disease-causing microbes. And our customers' customer, they want the opportunity to brand themselves and differentiate themselves. In this market, our technologies with Axalta as we're focused on developing antimicrobial coatings as well as creating these type of aesthetic differentiators for specialty fleet colors that will allow our customers' customer to show themselves differently from their competition. Really excited about the technology that's to come with shared mobility. We start to see that consumers want 2-tone colors on the exterior of their vehicle. Lots of different OEMs have already taken this route. Commercial vehicles industry has invented this almost with the multicolor approach for all of their rigs. But the market demand for this customization is unmet due to the paint shop capacity constraints. We talked a lot about advancing the process of overspray in digital paint through Robert Roop's presentation. This is something that we're an industry leader on, and it's currently something that we're working on with many, many high-level customers that appreciate this kind of technology. In addition to digital paint applications, color on demand within existing paint shops is something that we've got in our arsenal today. And on one pass using solvent-borne monocoats, this is another technology that will help us improve the capacity to be met for customization in the industry today. And it's not just happening in one part of the world, we see it happening in Asia Pacific, in EMEA as well as in the Americas. Axalta has always been on the forefront to assist our customers' prime productivity. We're starting to see how Industry 4.0 is not just an internal facing measure to find internal productivity, but how we can actually apply this to our customers' paint shop. Today, the paint shop represents a large footprint within our customers' manufacturing facility. It also is the biggest consumer and all of the consumption of the plant as well. So as we start to look at digitization of data, we can start to help our customer optimize that footprint as well as reduce the consumption within their fixed cost structure. This is a service that we plan to roll out with the Axalta Advantage. The evolution of mobility creates tremendous opportunities for OEMs, but it also requires them to undertake a lot of shifts in how they design and produce their vehicles. By leveraging 150 years of our coating experience and coupled with our culture of agility, we're in a unique position to help these customers navigate the complex challenges facing the industry and to support their needs now and in the future. As part of our mobility rebranding, Axalta Mobility is now unveiling a new solutions portfolio. This is going to bring together the best of Axalta's experiences and innovations into 3 categories: Core Mobility Solutions, Advanced Mobility Solutions and the Axalta Advantage. For the Core Mobility Solutions, this comprises of Axalta's best-in-class basecoats, clearcoats. These are for color and beautification as long as with the primers and electric coats with powder applications for surface protection. For the Advanced Mobility Solutions, these encompass products and applications for mass customization, specifically on 2-tone color and digital paint. It also includes coatings with enhanced functionality that improve LiDAR and RADAR performance and thermal management solutions from Axalta's Industrial Coatings portfolio for electric motor and components. The Axalta Advantage features expert services and consulting to improve productivity in and outside the paint shop, including application design, process improvement, cost and CO2 modeling and troubleshooting. Axalta Mobility Coatings will look forward to also implementing a key account model to respond to customers with greater agility and support them through every step of this mobility journey. To bring together everything we just saw, the takeaway is a $12 billion market becomes a $20 billion market for us to focus our technology and innovation on as well as do what we do best and what we've done over the last 150 years: advance in underserved markets for Core Mobility; focus our Advanced Technology Solutions on the Advanced Mobility Solutions as well as the service sector for Axalta Advantage. As the market opportunities grow and the addressable market grows, we're well positioned not only in technology, but also in region so that we can take advantage and capture growth. It's been really great to talk to all of you today. And the key takeaways for Mobility are that we still have a lot of organic growth opportunity. We saw that in the first initial slides where we've been heavily concentrated in Americas, but we've got great room to grow in China and Asia Pacific. These market trends, they're favorable for us. They're not disruptive whatsoever. And since we've focused on key innovation and technologies, that $5 billion market that opens up becomes a benefit for us tomorrow. And for the Axalta Mobility team, we're well positioned in all of the regions. We've got a very talented team that's ready to achieve our vision. And our shift to Mobility not only positions us with technology for our needs customers today, but our customers' needs for tomorrow as well. But we couldn't do this without an operational excellence backbone. And for that, we would like to introduce our next speaker, Barry Snyder, who will walk you through that. Thank you all again for your time today.

Good morning. I'm Barry Snyder. I lead our manufacturing, supply chain and procurement functions here at Axalta. I'm delighted to be here today to have a chance to tell you a little bit about the progress that we've made in the last couple of years and the plans that we have as we go forward to drive future improvement. We successfully manufacture, on a global basis, some of the highest-performing products in the coatings industry. And we service across a wide and diverse range of incredibly challenging and demanding customers. As you've heard this morning from Troy, from Shelley, from Hadi about their markets, their customers, where they're going, what they're doing, you get a sense for the diversity of what it is that we are servicing. As you listen to what Robert Roop was talking about, you get a feeling for the hundreds of new products, the thousands of new colors that we're constantly introducing to the marketplace. All of that flows through our manufacturing supply chain organizations in order to service these customers. What drives us, what we're passionate about is how do we make it better, how do we constantly improve our cost structure, make sure that we're improving our quality and ultimately converting quality into customer experience and driving improvements in our service level. And finally, it's all about building on where we are today to create the future to enable us to drive the growth into the new markets, into the new applications and achieve those growth targets that Robert Bryant highlighted in his presentation. At the heart of all of this is our network. We operate 47 manufacturing facilities across the globe. We move our product through over 200 distribution points, warehouses and third-party warehouses around the world. This is a huge source of competitive advantage for us. It's extremely difficult to think about replicating on any kind of scale, the infrastructure and capabilities that we have around the world. At the same time, if you look at this map, there are a couple of things that you'll see. One is, as we think about our future growth opportunities, particularly in Asia, we need to deepen and broaden our infrastructure and our footprint in Asia to meet that future growth. And at the same time, you see the density of facilities that we have in Western Europe, in North America, heavily influenced by what we've done through acquisition, and there's an opportunity for us to continue to refine and optimize those networks. Procurement provides the fuel that actually flows through this manufacturing network into the products that we make and out to our customer base. We're purchasing thousands of raw materials from 1,000 vendors around the world. It's a highly complex endeavor, but it's critically important to assure that we actually provide the continuity of supply, the quality of the materials that we bring in-house as well as the cost structure that's so important for us to be successful. And what we've seen consistently as we've done acquisitions is that, in fact, we achieve or exceed the synergy targets that we've laid out for ourselves in procurement, which gives us an indication that what we're doing actually works extremely well. And the way we drive this, what's differentiated, we believe, is a couple of things. One is what we call our match payer concept. This is where we tightly link our technology organization and our procurement organization to assure that any strategies, any concepts that we have around procurement or procurement improvement are feasible and actionable and that we actually successfully can drive them into implementation. The other thing that we do is we're constantly working with our suppliers to help them to get better as well as, in some cases, actually create new supply base for ourselves to assure that we can either enhance our continuity of supply or enhance our cost position with new suppliers. And as I look to the future, we see further opportunities to continue to dig in, create new supply base, take more under our wing in terms of the scope of what we're actually managing from a procurement standpoint and continue to drive improvement in procurement as we go forward. Now we laid out a strategy for how do we drive the operations organization across the board. And it's centered around a few key pillars. The first is around driving improvement for our employees and for our customers; the second is all around how do we make sure that we get better every day, everywhere; the third is really around optimization of our network, of our footprint, of our cost structure to assure that we fully utilize the assets that we have; and then the final one is really about how do we make sure that we get excellence in our supply chain and in procurement. We laid out a set of programs and initiatives across each of these 4 strategic pillars and have made progress in the last couple of years on them and continue to see opportunities to drive over the coming years. For example, we've made great progress in safety and driving safety performance. And as we look to the future, it's all about maintaining our position in the top quintile of safety performance across our industry. As I look at my team, I've made significant changes in my team. And as we further deepen that, it will only enhance our capabilities to drive execution and improvement. As I look to the future, that's actually going to be augmented. And I'm really excited about the possibilities that will come as a result of us implementing our S/4HANA system to supplement the leadership capabilities that we've put in place. We've taken steps to improve our network, and we have a plan for further network enhancements and improvements, some of which are underway in North America, in China and in Europe. And then finally, standing up supply chain, pulling it out as a separate entity and driving improvements in supply chain is paying benefits for us today and will pay significant benefits for us in the future. At the core of enabling all of these changes and improvements that we're talking about is what we call Axalta Operational Excellence. It's the way we drive performance in our organization, and it starts at the shop floor with enabling our people to solve problems when they happen and where they happen quickly, providing them with the tools and capabilities to do that through how we drive continuous improvement offsetting inflation every year, to ultimately how, from a management perspective, we look across everything that we do to create step change improvement opportunities for ourselves. And then finally, how we take and extend these concepts and benefits into any new business that we acquire, any new facility that joins our network. We've seen great take-up in our facilities. We've introduced AOE into 17 of our largest facilities around the world and are seeing significant improvements in our operations as we drive AOE in with the idea that we will continue to drive this forward into the rest of our facilities. We've developed a portfolio and a pipeline of improvement opportunities, and we are, every year, working and finding ways to offset inflation as well as creating step change opportunities for ourselves as we look at how we operate, where we operate. And so I'm excited about the possibilities of what we're doing here, the improvements that we will continue to see in our cost structure as well as in the way we operate around the world. The proof is always in what you measure. And so if I look across these various strategic pillars, what I can see very clearly and what I'm highlighting here are some examples, where, as we look at our key performance indicators, our KPIs, we can see that we're achieving our targets and that we're actually getting good execution and deployment. I mentioned already about achieving in 2020 significant safety performance improvement, achieving in 2020 top decile safety performance, something I'm incredibly proud of and something that I think as we continue to refine and mature, we can evolve and improve upon. Safety is all about looking to our total customer experience and how do we increase our customer satisfaction. And we've, again, made great progress there. As I look to the future in terms of operational excellence, it's really about how do we get beyond the 17 sites that we've already deployed to and getting it to our entire organization and driving a mindset of lean execution and problem-solving everywhere. How do we continue to refine and optimize our assets. And finally, the benefits of standing up that supply chain have paid for themselves absolutely are shown the value through, for example, in 2020, a significant improvement in our inventory position. And what I can see going forward is, again, great opportunities to drive improvements in our working capital efficiency. So we are absolutely measuring and we are seeing the progress in our measurements as we go forward. So now I want to show you a little bit about what it takes to convert these concepts actually into action and share with you some examples of the things that we are -- we've been working on and are working on. The first of these is really what's going on with our European liquid paint manufacturing network. As we looked at this a few years ago, what we could see was that we had duplicative capabilities in 2 of our facilities. We were manufacturing product in Mechelen, Belgium and in Wuppertal, Germany, consolidating those productions by shipping everything into a single warehouse in Genk, Belgium. And then from that Genk, Belgium warehouse, actually shipping out to our distribution network across EMEA. This duplication in capabilities and additional infrastructure that we are adding to -- in order to consolidate and ship our product out into the network was adding extra cost and extra complexity to our business in EMEA. And so we devised a strategy to, on the one hand, shut down production in Mechelen and consolidate that production into Wuppertal. And then on the other, having done that, to look at how do we optimize our distribution network. And then as -- and a final step, how do we actually optimize the Wuppertal production facility. In 2019, we accomplished the closure successfully of Mechelen and the transfer to Wuppertal. And since that time, we've been taking steps to optimize that distribution network. Some of those actions were achieved in 2020. There's more going on in 2021 and more that will come as we look to the next couple of years. Having consolidated production in Wuppertal, it actually creates opportunities for us now to optimize the Wuppertal manufacturing facility. Now to put a little bit of perspective on it, Wuppertal is our largest, most complex facility. It's 270,000 square meters, 27 hectares, about 66 acres of land populated with over 50 buildings. It houses manufacturing, it houses warehousing and logistics, it houses laboratories, it houses offices and administration, highly complex integrated facility. We've taken a 2-step approach to driving improvement in Wuppertal. The first that we implemented in 2020 was to bring management down to a level where we could actually see and affect change. That's called our factory-in-factory concept. Having done that, we now get line of sight to the opportunities for improvement in each of the components of the factory and are driving debottlenecking throughout the facility. We've identified over 50 projects that we can execute for improvement and have started that execution in 2020 and will continue for the next couple of years. We're aiming at greater than 15% lower total cost in the facility, and we are seeing the benefits already from the actions that we've taken in 2020 starting to flow through. And beyond the 50 projects that we've identified, we can see that there's the potential for that much more going forward. So this is a work in process, but it's absolutely a tremendous project for us. Now similarly, we took a look at our powder manufacturing network in EMEA. We have a great position in terms of powder manufacturing with a geographic distribution close to our customers, enabling us to service the entire market from local production. Now we came from a place of each facility being highly specialized. And what that meant was that we were not just manufacturing locally and distributing locally, but actually manufacturing and shipping material from plant to plant across Europe, leading to excess cost and distribution as well as excess inventories in our network. So we're taking steps today and have taken steps to change or expand the capabilities of each of these facilities to broaden the scope of what they can do so that we can fully leverage our geographic dispersion in our footprint as well as the technical capabilities that we have in each of these. This will pay benefits in terms of lower shipping costs, lower inventories and actually be a tremendous asset in terms of enabling us to fully utilize our facilities to enable the growth in powder coatings in EMEA, something that, obviously, as you heard from Shelley, she's very, very focused on as an opportunity. I love this example. As we stood up an independent supply chain organization, it created significant opportunities for improvement for us. In one of our business areas, what we were facing was a challenge of achieving the service level expectations that our customers and our business have to be best-in-class in this particular area. And the historical perspective was that the only way you could actually achieve improved service levels was by dramatically increasing inventory levels. What we were able to do was through some improvements in our processes, some improvements in the way we're looking at the data, so working collaboratively between supply chain and our business partners to actually shift the model, drive significant step change improvement in customer service, you can see here between 2019, 2020, essentially no increase in inventory and the added benefit of actually simplifying our operations in production and in our warehouses. So really a triple win in terms of the benefits that we're able to create through optimizing our supply chain. Finally, I mentioned that procurement actually is critically important and is a source of differentiation for us. We deploy a variety of different strategies in procurement to achieve our goals. In our isocyanates category, one of the things that we did, we recognize that by introducing a new supplier, we could actually change the game for ourselves. And so we work collaboratively with a supplier, help them achieve the standard of performance that we need in order to be able to deliver product to our customers. And the benefit that came as a result of that was not just the $20 million cost reduction, but actually a dramatic improvement in security of supply by adding a new supplier, new facilities into the network of isocyanates that we source. More recently, we started to take a look at how do we standardize and consolidate some of our purchases. And one of the areas that we've dug into is in the site services that we use in all of our production facilities around the world. Historically, every site has defined and decided what they were going to use and who they're going to purchase from. And by using a third party, what we're able to do is standardize this, simplify it, consolidate our spend. And in the pilot deployment of this, we're seeing already the possibility of creating a 16% savings rate versus what we traditionally purchase at. And the notion is to actually take this and now deploy it much more broadly across all of our facilities. And then as we look at our resins area, one of the great things about having integrated resin capability is not only can we make our own, but we can actually use the understanding of what it is to be a resin manufacturer as well as a monomer buyer to negotiate and work with our resin supply base to assure that we're getting the best price, that we're actually buying the right things from the right parties and that we can optimize not just our cost position, but again, security in terms of our resin supply, which is so critical to our products. So if I roll all of this up and I look across, again, each of these strategic pillars, we're driving improvement. We're driving for perfection. And if I look at what that means to our customers and to our employees, it's really around how do we assure a great environment, perfect safety performance. But for our customers, driving a customer experience that comes out of perfect quality, truly being world-class in this area. As we drive continuous improvement in supply chain and in the way we operate our facilities, that will definitely lead to significant efficiencies in working capital and better deployment of our assets. We've laid out a portfolio of cost savings opportunities, some of which we've started to execute, that tally up to about $80 million worth of savings. We're excited, and we see absolutely line of sight to these savings as we continue to drive forward. And then finally, by standing up supply chain, by focusing in this area, we see the opportunity to drive service to levels that we've never been able to deliver before and enhancing, again, that customer experience in a way that we've never achieved and that will be a source of competitive differentiation and advantage for us. And so if I wrap this all up, I'm excited about where we are. I'm proud of how we operate today, but I hope that you've seen that through the actions that we're taking, the pipeline of opportunities that we're driving that we are seeing improvement, we do have opportunities to further improve. And that ultimately, what we're creating is the capability and a platform that we can build on and achieve the growth targets for the company. Thank you very much. And now I'll turn it over to Sean Lannon, who will share with you the financial view of how all of this rolls out.

Thank you, and good morning. I'm Sean Lannon, Axalta's Chief Financial Officer. I'm looking forward to spending a few minutes walking through the Axalta financial picture and hopefully bringing together the message you heard this morning on how we expect our priorities, the opportunities we see and the commercial and innovation focus to translate into our actual financial growth and profitability targets. With regards to the objectives from my section, the key messages will really be to share the following: first, how we expect to continue to drive financial execution in a coatings market that has a number of supportive industry elements; second, continue to drive solid capital allocation with clear capital priorities for the next 4 years; and third, focusing on consistent operating performance and financial outcomes to drive value and improve upon our returns on invested capital. I will touch on some of our historical financial elements in a few minutes. And clearly, Axalta has faced a number of macro headwinds over the last few years, including what we saw relating to COVID through most of 2020. However, the more recent macro environment has continued to rebound remarkably from the COVID pandemic lows we saw in both April and May of 2020. In fact, we're seeing both near-term and long-term industry trends that will favor Axalta and certainly help to be a further catalyst for the execution of the growth opportunities you've heard from our business leadership today. Just to touch on our end markets. Refinish has continued through the first quarter of 2021 to be the longest and most significantly impacted by COVID, given the impact on miles driven and collision rates resulting from stay-at-home measures. However, we're seeing a quick rebound as the vaccine rollouts progress around the world. 2021 will see a solid rebound in the back half of the year, and we should see a very strong growth in 2022 in what is expected to be a much more normal year, in fact, more similar to 2019 on overall market demands. Beyond 2022, this business will continue to grow at GDP plus 1% to 2%, given both pricing as well as opportunities to expand in mainstream and economy brands as well as picking up additional market share globally around our premium leadership. Industrial has been an outlier through most of 2020 and has shown its resilience throughout the pandemic. Given the markets we serve and our technologies, we expect to outpace the market given the opportunities and relative small share of wallet within the industrial markets we serve. Industrial production growth expectations, a strong U.S. housing market and underlying trends in electrification and within automotive will also be key in driving our growth. With regard to Mobility Coatings, the opportunity in growth over the next few years is as exciting as ever. Despite the supply chain challenges we saw in the first quarter, underlying demands and low inventory levels in the dealership channels we see globally, we are very optimistic about both the light vehicle and commercial vehicle industry trends. Industry forecasters are expecting the global automotive market to be increasing for at least the next 4 years, which sets us up very well for robust growth. Lastly, as a U.S. dollar reporter, we have faced a number of years of foreign translation headwinds. With the strengthening of the euro and the Chinese yuan, this should also provide a nice tailwind to our reported results. Most of you have probably already seen this. But on this slide, we've provided our full year 2021 financial guidance we released a little less than 2 weeks ago. Our first quarter 2021 financials showed a record first quarter earnings result for Axalta, which was supported by continued demand recovery and continued execution on our cost control measures. First quarter solid performance was a continuation of our record strong performance seen in the second half of 2020. Given supply challenges we continue to face in transportation as well as certain of our industrial businesses, coupled with lockdown and stay-at-home measures still impacting our Refinish business. Results were somewhat held back this quarter and could have actually been much stronger. However, demand remains very strong, which gives us confidence for the full year growth we expect. We are very excited about the growth we are expecting for 2021 in both top and bottom line as well as the expected performance on free cash flow of $475 million at the midpoint. With our expected performance, along with the liquidity on hand, this will give us a significant amount of flexibility around capital allocation in the near term. We've also included the other key elements of our full year guidance construct here, which are detailed in the slide presented. We have provided our historical income statement measures here. I'm not going to focus too much on the past. In short, we've had many challenges we have faced over the last few years and many positive actions the company has been able to deliver on. We have also seen growth looking back over the last 4 or 5 years, including a 6.1% CAGR within earnings per share through 2021's guidance at the midpoint. But certainly, we had our challenges in 2020 with COVID, in particular, in the second quarter. I believe we've exited 2020, in many ways, a much stronger company with an energized management team and 2 really strong quarters in the third and fourth quarter of 2020, giving us a significant amount of momentum to deliver on 2021 expected results you see across net sales, adjusted EBIT and earnings per share. Free cash flow remains a critical priority for us with a targeted free cash flow conversion from adjusted EBITDA at 45% to 50%, which we have been fairly consistent in delivering. 2020 was a banner year to showcase our financial flexibility to still yield a high cash flow result despite the unprecedented impacts from COVID on our top line results. The low required capital intensity of our operations was and is a huge part of our ability to drive a high free cash flow conversion. Further, our teams truly took advantage of the COVID pandemic to drive further sustainable benefits across all aspects of our working capital elements. 2021 expectations will see some outsized CapEx versus our historical run rates to catch up on some deferred productivity and growth CapEx from 2020 as well as our SAP S/4 HANA project, which will approximate $55 million to $60 million in 2021 as we begin rolling out our deployment plans this year, and that will continue through 2023. Maintaining discipline over our capital deployment is really what excites me and is a constant balancing act for our business priorities. This is a great slide to show we have made steady progress over the last few years, but I'm looking forward to driving significant step changes to our returns and ensuring we continually look to reprioritize our capital dollars internally to drive and maximize returns. Robert had mentioned this earlier, but back in 2019, we have made broad changes to our incentive compensation targets to focus more on EBIT versus strictly adjusted EBITDA, to ensure our teams fully appreciate the cost of capital through depreciation and amortization as well as moving management to a ROIC measure for long-term incentive compensation. Also, we have been making steady changes to our cost structure as well as looking to optimize our manufacturing footprint, which Barry highlighted many of the core focus areas. These underlying changes, along with the continual focus by our global teams in evaluating capital needs and opportunities, will be a true catalyst for improving ROIC metrics over the next 4 years. Although not a critical priority to delever by paying down gross debt, we continue to focus on our debt portfolio and balance sheet to ensure we have a capital structure that supports our longer-term objectives. 2020 statistics were clearly impacted by the COVID low second quarter 2020 results for interest coverage and net leverage trends. However, first quarter 2021 results saw a nice improvement, and we would expect sizable improvements once we lap our second quarter 2020 for our latest 12-month statistics. Our maturities on our long-term debt also remain very favorable. So near term, we'll look for opportunities to extend our term loan maturities as well as potentially look to refinance and extend maturities on our euro notes if the economic opportunity presents itself. We have been fairly balanced on capital allocation priorities with clearly internal capital expenditures and M&A taking the majority. This is a nice visual here, looking at the last 4 years of spend. With that said and what you will start to see is that we'll start to focus more heavily on M&A and share repurchases with an expectation to continue to drive towards a net leverage goal of 2.5x over time. Robert touched on M&A in his opening remarks. So I just wanted to hit on a few aspects. We've had a lot of distractions over the last 2 years, with the strategic review in 2019 as well as managing through the pandemic of COVID through most of 2020. With that said, we have a very healthy balance sheet and clear direction on where we'd like to grow through inorganic opportunities. Since 2015, we've done a sizable amount of deals, so we have a good track record of successfully getting deals done, integrated and realizing value for our shareholders. As everyone has seen from our announcement, we closed on our first deal in the month of April of 2021 with our wire enamels acquisition in China, which will continue to bolster our Energy Solutions business. It's important to note we will continue to focus and buy good assets that have a good strategic fit with Axalta. Further, we're going to remain disciplined on valuation and ensuring we're getting high-returning assets. We have an active pipeline of strategic bolt-ons that fit well into the core of our business, largely within our Performance Coatings segment. We're also thrilled to now have onboarded Jeremy to lead our strategy and business development efforts. And we're expecting to get a few more deals done in 2021 as we continue to work through our pipeline. Our organic growth picture is as exciting as it's ever been. With a supportive economic outlook across our industries we compete in, we really see a solid growth story across all of our end markets. Refinish is expected to see continued market recovery through 2022 as full year 2021, although recovering, still is lower than 2019 levels due to the lagging impacts of COVID and miles driven. Further, organic sales growth will be driven by expanding premium leadership, increasing market access and gaining share in mainstream and economy as Troy called out earlier. Industrial 2021 net sales growth is actually expected to exceed 2019 levels with continued growth expected in out years from Energy Solutions, building products and general industrial end businesses. Self-growth will continue to benefit from market growth, which clearly sees nice benefits from a strong housing market, auto and a strong industrial production backdrop. We also see share gain opportunities across all of our industrial verticals. Light vehicle sales growth will be achieved through share gain with both advanced and core products, in addition to growth within Axalta Advantage as light vehicle production builds recovery from 2020 production lows continue to solidly rebound for the next few years. Commercial vehicle markets also continue to recover through 2022, with continued growth in the out years as we still have market opportunities, in particular, in Asia and other transportation markets globally. The financial overview covers what I believe is a very robust financial outlook for Axalta. I've briefly touched on some of the elements earlier, but the aggregation of our organic opportunities and expectations for our global businesses is to outpace the markets we serve and growing at a compounded annual growth rate of 4% to 5% through 2024, off of a 2019 baseline period. We baseline 2019 given the impacts of the pandemic on volumes in 2020. We thought this was much more helpful for a somewhat normal benchmark year. Adjusted earnings per share growth is expected to grow at -- to $3 at the midpoint of our 2024 range, which reflects no additional M&A or share repurchases beyond our commitment to ensuring we deploy enough capital to buying back shares annually to offset share dilution. This compares to our full year 2019 result or earnings per share of $1.80 per share and $1.33 in 2020. Clearly, the top line growth and focused efforts around cost management through Axalta Way will assist in driving bottom line and margin improvement over time. Free cash flow continues to be a heavy focus for the team and something we will continue to focus as a priority. Our investment in SAP S/4 HANA will be a clear enabler for extending the ability to drive down working capital and deliver free cash flow for our shareholders. We expect to deliver approximately $2.4 billion over the next 4 years, which represents over 1/3 of our overall market capitalization at a $32 per share trading level. This forecasted result, coupled with our cash and liquidity on hand today will give us a significant amount of flexibility in driving capital allocation decisions. You have clearly heard the message today, but M&A and share repurchases will be the priorities as well as internal investments with hurdle rates of mid- to high-teen returns. M&A will continue to be targeted at least 50% of our free cash flow over the next 4 years. Share repurchases will continue to be viewed as opportunistic buying opportunities, but we are committed to at least offsetting dilution annually with a 1% to 2% annual target of repurchases of outstanding shares. Lastly, with our high free cash flow conversion and expectation, we will see a significant drop-off in our net leverage ratio after we fully lap the second quarter 2020 result, given the devastating impact of COVID on our second quarter 2020 adjusted EBITDA. We will quickly be approaching our goal of 2.5x net leverage in 2021. The near-term goal is to not necessarily get to investment grade, but will be dependent on the pace of M&A in the coming years, while keeping a focus on maintaining leverage over the long term at or near 2.5x. To wrap up my section, we are very optimistic on the future of Axalta. This starts with the leadership team you've seen today and our global teams, our strategy we have deployed and the macro environment that is expected to be supportive for our robust growth plans across all of our end markets. We look forward to delivering on our 2021 financial objective as well as meeting our longer-term projections we shared today, while we continue to focus on solid execution of both our organic and inorganic goals and ultimately delivering on value to our shareholders. Thanks for your time today. With that, I'll turn the call back to Robert for his closing remarks.

Before we move into the Q&A section of our day, I'd like to share a few concluding thoughts. Our company holds a very unique and highly profitable position in the coatings industry. We're focused on high technology, high value-added coatings, where we can leverage our comparative advantages. This focus, our leading position in the aftermarket refinish space and our relentless pursuit of helping our customers be as successful as they can be, has led us to have the highest margins in the coatings industry. In this next phase of Axalta's evolution, we look forward to balancing these margins with a much higher rate of top line growth. As we think about megatrends, like greater electrification of vehicles, vehicle lightweighting, the desire for more on-demand color customization, increased spend on infrastructure, increased spend on people's personal spaces like their homes and vehicles, greater leveraging of megadata, and the preference for sustainable and environmentally friendly products, Axalta is perfectly positioned with the technologies, channels to market and talent to take advantage of all of these megatrends. There are many attractive coatings verticals where Axalta doesn't play today or has a minimal presence. We plan to grow in those. Additionally, we have extensively evaluated some close adjacencies where Axalta has the core competencies and the talent to be successful. You should expect to see Axalta make acquisitions in both of these spaces in the coming years. These acquisitions will be highly value accretive. We not only have great technology. We have award-winning technology. As you recently saw, Axalta won 3 more Edison Awards, which are given for outstanding innovation in products or services. After winning an Edison Award the year before for our electric motor coatings, we plan to continue to drive innovation across all of our businesses, but we're especially excited about electrification and thermal materials, one of the major growth areas for the future. Finally, I firmly believe we have all the ingredients we need to take Axalta to a new level of growth and performance. We have a strengthened and highly motivated management team. We're striving for perfect execution every day. We're driving our Axalta Way management and continuous improvement mindset across our organization globally. All of these should result in greater growth, productivity and cash flow generation. We believe that what this means for investors is straightforward. Our 4-year plan using conservative assumptions would make Axalta a nearly $6 billion revenue generator before M&A, throwing off over $1.3 billion in adjusted EBITDA at a margin of over 23%. This is before full capital deployment, which may provide upside to that expectation. As I said at the beginning of this morning, I've never been more excited about Axalta than I am today. We are confident in our ability to create substantial stakeholder value over the next 4 years. Thank you for your time and interest in Axalta.

All right. Thanks, Sean. Appreciate your comments today, and we're back to Q&A. So we've got half an hour, maybe a little bit more to run through some more of your questions. It does look like we're not going to get to everybody, so I apologize in advance, but we'll do as many as we can here.

The first question is for Sean, and it comes from Josh Spector. And he asks, can you frame your next leg of productivity relative to inflation? What's your annual fixed cost inflation? And will productivity be significantly higher than that? Any risk of these actions clashing with your growth targets?

Yes. When we think about our fixed cost structure, it's about $2 billion. You back out depreciation and amortization of roughly $300 million, you're talking 3% inflation on that, which amounts to $40 million to $50 million of inflation that we need to overcome every single year. So what we committed to for 2021 from an Axalta Way perspective is at least offsetting that $50 million. And what we had announced back in July of 2020, we had roughly $50 million of incremental savings. We actually anticipate achieving about $30 million of that savings in 2021 from those initiatives. The other aspect largely will come from productivity CapEx, so of our $180 million of CapEx spend that we anticipate for 2021, roughly 20% of that is typically productivity driven. So that will be the large part that will make up the difference from an offset to inflation. Thanks, Chris.

Thank you. I'm going to flip the next one over to Barry. And this question is from Arun Viswanathan. Can you address and discuss specifics on capacity going forward? Do you see the need for either rationalization or expansion in either segment especially in light of the acquisitions that you've done to date?

Typically, when we look at making these investments, it fits within our productivity capital, so not a huge capital consumer. But just to kind of put a little bit more color on it, over the last couple of years, we highlighted, as I mentioned in my earlier comments, the closure of the Mechelen facility in Belgium, where we had duplication with our capabilities in Wuppertal. We actually took down our facility in Argentina and consolidated manufacturing back into our Brazilian facility. We're in the midst of actually closing -- we've announced the closure of our Ajax, Ontario, Canada manufacturing facility, leveraging our existing footprint in Mount Clemens, Michigan. And finally, we're actually actively simplifying our footprint in the U.K. from an acquired facility in West Bromwich, consolidating again into another facility in the U.K. So we're able to leverage, utilize fully our existing asset base. At the same time, we announced today the expansion of our Jiading, China facility. We've added waterborne capacity to Jiading, significant opportunity -- or for us to meet the growing needs of -- for waterborne, environmentally friendly products in China. We have plans in place to fully utilize and leverage the new facility that we've just purchased with Anhui to service the Energy Solutions business. And we have a number of other things that we're looking at in the pipeline either to simplify or to deepen capabilities where we see growth opportunities. As I said, this is something that we're always working on. And it's something that we will continue to work on. Certainly, as we continue to bolt more businesses on to Axalta, it always creates questions and opportunities for us. Back to you, Chris.

Thanks, Barry. The next question I have is for Shelley, and it comes from Ghansham Panjabi at Baird. I'm going to paraphrase this as well. The Industrial Coatings vertical has the widest latitude as it relates to M&A and could change the composition of the company materially as it relates to perceived cyclicality. Could future verticals that we're involved in include things that relate to paint as part of the housing ecosystem? That's number one. And secondly, can you talk about sustainability, again, a little bit as a theme? And what is sustainability relative to the current portfolio and does sustainability-related markets grow faster than other markets?

Yes. So first, I agree completely with the fact that the industrial market has plenty of opportunities to expand and that diversification of the markets and the customers can give us that kind of countercyclical approach to our business portfolio. And maybe Robert can comment on that a little bit after I'm done. We have a strong pipeline of M&A targets in the industrial market. That is a combination of geographic expansion, technology activity as well as market presence, and we'll continue that to help diversify within industrial, expand our business, but then also obviously gives that diversification across Axalta as well. Relative to where and is there an opportunity for, I think you said home paints, I would tell you that what we're doing right now and over the last few months as I've joined the team, we're looking at all the segments really in a focused way, identifying where those attractive segments are and where we have competencies today and where we can leverage that and where we need to fill a gap. One of the reasons that when I was considering joining the team at Axalta, I looked at -- we have a really broad product line. I think I mentioned in my presentation, we know the customers, we know the markets, we have the product and we need to leverage those. So whether that's in home paints or other areas in construction and protective coatings, that's what we're in the process of deciding and we will be very targeted in those activities. Relative to sustainability. This is a passion of mine, and it's why I wanted to talk for a few minutes about that during the presentation. Sustainability both in our product offering but also in the end markets that we participate in. When we talk about electrified powertrains and electric vehicles, which Hadi also talked about, that's a growth area, and coatings are going to provide a very critical component to the performance of these electric vehicles going forward. And thermal management, thermal conductivity and thermal protection, we have a very strong foundation to expand on and serve those markets. But the other element of sustainability, I'll just quickly mention, is that it's sustainability in the application also. So our innovation platforms are designed not just for aesthetics, which are important, but also for the functionality and that sustainability in applications so that the end products actually are more sustainable as well, which is good for our customers and good for the environment overall. Thanks, Chris.

And Chris, I would just add to what Shelley said. From a business portfolio perspective, I think there are 2 elements I'd highlight here. One is that coatings is a great business. We really like coatings. It's -- as I mentioned before, we've got some nice secular tailwinds and growth opportunities with the business portfolio we're in now. There are, however, also some adjacent markets to where we are that have even higher growth potential than some of the markets we're in. So as we think about our business portfolio over time, we're taking a hard look at what some of those adjacencies are and how we would approach them. And then secondly, I think as the question kind of indicated, over time, while we like our business portfolio, we would like to decrease the cyclicality of that portfolio over time and by including an additional business or 2 in some of these close adjacencies or within a new vertical within Industrial that's actually sizable enough that it's almost another stand-alone business unit, we think we can accomplish that.

Thank you, Robert. We have a couple of questions regarding the transition to EVs. And I'm going to throw this to Hadi, from both John McNulty and Dave Begleiter. Can you speak a little bit about the dollar content you have on traditional ICE vehicles and how that changes with the current electric vehicle portfolio? And where can that content go as megatrends that you've highlighted progress?

I'll say it this way. We have substantial incremental content today on EVs relative to ICE vehicles. Probably by the time global EV production globally reaches a significant level versus the 1% that we're at today, we're confident that our content will be higher, reaching levels that could be multiples of our current ICE production content.

Great. Thanks, Hadi. I'm going to throw it over to Robert Roop and others. Shelley may want to chime in on this as well. But from Steve Byrne, do you have an interest in metallic coatings either in industrial applications or electronics?

Thanks, Chris. Yes, I mean, metallic coatings aren't necessarily the core of our current business portfolio, but we're always looking for, again, as Robert mentioned, adjacent opportunities. And so our competency around application and end-use market needs is certainly be an area that we might consider extending into.

Yes. If I can comment on that, I would just reinforce that in the powder innovation area, metallics have been a growing area for aesthetic purposes and design, whether that's an architectural extrusion or it can be on vehicles as well. And so what we're looking at there is how to do that both for performance, aesthetics, functionality as well as then internally, our process and capabilities to deliver that in all parts of the world. So we do have innovation platforms focused on that right now from an end market-driven perspective, as Robert just said, and then internally from how do we do that in an operationally efficient and effective way.

Great. Thank you. And Shelley, here's a follow-on for you from Edlain Rodriguez. Your market share in general industrial and building products is collectively fairly small. Do you have a target in mind on how much you want to grow those? And essentially, could you elaborate on your growth in general industrial and building products?

Yes, sure. Yes, we have a target in mind. We've built that into our 5-year plan, and we are committed to delivering that. To give some kind of scope or scale to that, I would tell you that we intend to double the size of our business, and that's going to be coming from, of course, market growth, which we talked about the strength of those end markets but also share gain. And there are multiple share gain opportunities. I'll speak first about general industrial and particularly in Asia. So I mentioned search and reapplying. We have products that absolutely can meet the needs of the customers in China and across Southeast Asia. We need to take those and leverage those into these regions and for these customers. That will provide a critical share gain opportunity for us. If you remember the chart I showed talked about over 60% of the coatings market for general industrial is in Asia, and our share is very small today. So that will be a primary focus. We're going to be building the team and expanding. We're going to be looking very -- and have a laser focus on our acquisition targets there for market presence, geographical expansion footprint and technology. And that will be a very intentional set of actions that we'll execute going forward to deliver that share gain. That's not to say in building products where we have a very strong position in North America, we don't have the same kind of activities. That will actually be focused on both Asia as well as Europe and the share gain opportunities there also will help us deliver that 5-year plan that I mentioned.

Thank you, Shelley. A couple of questions came in for Sean on the financial projections. First of all, from Laurent Favre. Can you please frame the working capital optimization plans in terms of percentage of sales? Can you talk a little bit more about the change in incentives as the company seems to be focusing more on growth, not just for top management but also down the organization?

Yes. So maybe just starting with incentive comp metrics. Robert had commented this on a -- there was an earlier Q&A. But as we think about earnings per share and return on invested capital, we certainly have broadened the population where that's applicable to. So driving incentives, driving behaviors, driving questions around capital deployment, it's working extremely well. And when people are deploying capital, they're asking the right questions, they're thinking about returns. So what you see in the projections is partly that. You're seeing the benefit for that continued focus. Just talking about the financial projections -- sorry, can you go back to the first question again, Chris?

Yes. It was just on working capital optimization. And also, what can we do as a percentage of sales and working capital and then just the incentive?

Sure. So as it relates to the working capital, we have run the models at working capital as a percentage of sales at about 8%. We're in the middle of our S/4 SAP project. We do expect further productivity from that initiative in the amount of 1% to 2% as we continue to focus on accounts receivable and inventory. And Barry certainly covered that aspect as he continues to focus on productivity across all of operations. Inventory remains a big opportunity for us. But as far as the models and as we think about free cash flow generation over the next 4 years, we are targeting 8% as a percentage of net sales.

Great. And this one from Alex Yefremov, and it's for you or Robert or both. How do you think about long-term margins for Axalta? Is there a normalized margin that investors should think about? Or is this an ever-rising target for you? And what margins do you assume in your 2024 forecast?

I'll take the first part. Maybe Sean can take the second part. I think when we think about our business, we're thinking about overall return on invested capital. And so we're not focused on maximizing our EBITDA or our EBIT percentage across the organization. We're really focused on maximizing our return on invested capital. And so we really have a lot of mechanisms in place to make sure that how we deploy our capital and even how we deploy our cost and expenses internally are really oriented toward maximizing our return on invested capital. So again, you could see EBITDA margins move up or down slightly, just depending upon the growth in certain markets, geographic mix, some of the acquired businesses and so forth. But rest assured that the overall return on invested capital is really the focus, and that's why you saw such an aggressive target that Sean laid out in his section.

And when you think about the projections, we are expecting EBITDA margins to move north of 23%. We're not necessarily solving for an EBITDA margin. We're solving for absolute EBITDA dollar contribution. And so when you hear potential opportunities in mainstream and economy, if there's opportunities, if there's white space after there -- out there, we're going to go after it. But with the expectation that with strong recovery in Refinish with productivity, if we saw raw materials essentially stabilize and potentially decrease, there's opportunity for further expansion from an EBITDA margin perspective.

Thank you. There have been a number of questions that have come in related to M&A and particularly voicing some level of concern around the multiples that are being paid in the market today. Robert, perhaps you could just think about our M&A strategy and how we tackle that and what your thoughts are regarding the multiples that are out there and those that we're looking at?

Well, our M&A strategy is just reflective of our long-term corporate strategy. So we have laid out exactly what are the assets that we would like to go after in each one of our end markets. And we've also laid out in the adjacencies that we're considering what are the specific assets that we'd like to go buy. So you're going to see us be very deliberate in those acquisitions. One of the reasons I like to focus a lot on organic growth in addition to inorganic growth is because if you're growing organically, you don't have the pressure, the need to absolutely go out and do acquisitions as the only vehicle to grow your top line. So that's why at Axalta, we have a renewed focus on really top line organic growth, powered by innovation and as I said, powered by a much more commercially aggressive culture. When it comes specifically to valuations that are being paid, I think you have to be careful when you think about it as a multiple of EBITDA, for example. The way that we look at it is really cash-on-cash return for that investment. So there might be some transactions that could be at a 15x EBITDA margin, you might say it's a very rich multiple, but maybe you have a lot of synergies or it unlocks a whole new market for you or something like that. And so that could end up being a very profitable high IRR deal. Likewise, you could do an acquisition at 9 or 10x that looks like a great deal initially, but maybe you don't have the synergies. Maybe it doesn't have the same growth problem moving forward, and that will be a lower-return project. So I'd caution anyone against looking solely at the EBITDA multiples that are being paid. And I think when we look at some of the areas that we fish in versus some of our larger peers, some of those ponds overlap, but to a large extent, a lot of those ponds don't overlap. And since many of the M&A areas where we'd like to grow or markets that we're not in currently in particular, within industrial, we're actually a pretty attractive acquirer because we just don't have the same antitrust profile and divestiture need as many of our larger peers. So I think that's what's made us really an attractive acquirer. In addition to, as we approach companies and acquisitions, a lot of the companies -- I think most of the companies actually that we've acquired, we've kept the manufacturing assets. We've kept the management team. We've kept the sales force. We haven't gone in and slashed and burned because we've already been in that business to a large extent. I think that also makes us a unique and a very attractive acquirer.

Thank you, Robert. And one more for you from Vincent Andrews. He is interested in understanding when we are likely to see the full impact and the full benefits from the elimination of the matrix structure. And are there any particular systems implementations here that are critical to achieve that?

Well, I think we're -- without question, we're already seeing the benefits across the company of the elimination of the matrix structure and having a simplified organizational structure. The speed at which we're able to move, the speed at which we're able to make decisions internally, the speed at which we're able to respond to customer requests now compared to a year ago is really a night and day difference. So we're starting to see the benefits of that today. I think the trigger point really from a cost perspective is some of the legacy structure that we still have, even inside our global business units and our global functions, is a product of having a greater than 20-year-old SAP instance and frankly, still a lot of manual processes. What S/4 will enable us to do is to automate a number of those processes, and that will also create some additional efficiencies. But really, what S/4 is going to enable is a lot of connectivity to some more sophisticated data analytics as well as commercial tools that are more challenging to connect to our systems today that I think our business leadership and our operations teams are especially excited about.

Thank you. And since you mentioned SAP, there was a question that came in from Michael Harrison, and this is for Sean. Can you provide an update on SAP and the implementation process and talk about how it will help enable your digital and data integration efforts?

Yes. Thanks. And it's extremely timely. So we've been working very diligently on the SAP rollout. Actually, this weekend, we actually started the first rollout. We went live with our India and Indonesia operations the first of this week, and it's going extremely well after a lot of long hours, long nights over the last 1.5 years. But certainly, this is going to be an enabler. It's going to be a catalyst from a productivity perspective around all of our back office as far as creating digital opportunities with customer-facing as well as Robert pointed out, all the analytical capabilities. And we'll continue to roll out from here. The expectation is the Americas would actually start to roll out in early 2022 and then Europe following that.

Great. Thanks, Sean. This one is another question -- a financial question from Dave Begleiter at Deutsche Bank. And he asks, what are the key drivers of the ROIC improvement that you expect through 2024?

Yes. The biggest and most impactful area is just going to be around organic growth, driving that top line sales with already having a lot of the investments in place. We'll continue to drive that up as well as we continue to look at capital deployment, making sure we're getting high dollar returns. What is not in here is any sort of incremental inorganic opportunities around M&A. And certainly, to the extent we find highly synergistic deals, that ROIC calculation could actually go higher.

Great. Thanks, Sean. There were some questions on M&A relative to industrial and specific to Asia. Shelley, how do you feel about the pipeline overall for deals that are in your area? And how do you feel about Asia today? Maybe you could particularly touch on the deal that we just closed.

Sure. Thanks. I'll start with, first, our pipeline is active and it's progressing. And I think our opportunity, as I said a few minutes ago, with where the market is and where we are today, is ripe for our acceleration of our investment there to drive the results that we want. Yes, I'm very excited about the recent acquisition of Anhui Shengran, which is now Axalta Insulating Materials. And that acquisition is a great example of something that can bring us capacity and capability of footprint, a market presence with local customers in China, but also now a product line that complements our specialty products that we can take across Asia, including China, but across Asia as well, and really drive that growth across a multitude of end markets and end segments. And then ultimately leverage that to other parts of the world that also have business opportunities in those segments that we haven't been targeted -- targeting in the past. So that's an example of what I can tell you. You will see us do going forward, across Asia Pacific, with this pipeline that we are progressing and we're intentional about it, as Robert said a few minutes ago. We have the opportunity to be very strategic, targeted and then bring things in that complement what we have today because, frankly, we're small and we want to bring in highly capable and qualified teams, technologies and operation that can help Axalta win.

Great. Thanks, Shelley. And I'm going to throw it over to Troy, and this is from the team at UBS. I thought dry time and throughput limitations were issues that limited adoption of waterborne at smaller shops. Does Axalta technology address these issues? And based on your technology offerings, how would waterborne versus solvent borne compare on these metrics?

Yes. So our newest waterborne technology for the mainstream and economy segments do provide additional spray latitude than previous versions. Or maybe better said, our new waterborne technology can be used in less than ideal spray conditions. We have made significant advancements in dry time, throughput and ease of use for waterborne technology, so we would see additional adoption beyond what we've seen historically. I'd also like to expand here and just talk about an advantage that Axalta has, which is a real differentiator. Axalta offers environmentally compliant, environmentally friendly, solventborne systems, particularly targeted at the economy segment, which no one else has. This innovation was made possible actually by cross BU chemists. Our mobility chemists actually contributed to the development of this technology that enabled us to produce environmentally friendly coatings in a solventborne format. That's a great example of the nimbleness of Axalta. We can move things around quickly and address customer needs rapidly and leverage capabilities across BUs. And Axalta does offer the broadest product offering of any coatings manufacturer out there. Just as a couple of examples. I mentioned the single-visit application system for the premium segment, which is a waterborne product. We also newly launched Cromax XP also targeted at the premium segment, but it's a solventborne version with capabilities. We have mainstream waterborne technology with mainstream solventborne technology. We have economy waterborne. We have economy in waterborne, in economy, low VOC capabilities. Again, a very broad product offering that allows us to address customer needs across all customer segments. Thanks, Chris.

Thank you, Troy. Very helpful. I'm going to turn it over to Robert Bryant with one question from Bob Koort. If you think about the 4% to 5% organic revenue target, what's embedded in, if anything, for secular pricing? And how should they think about the mix between volume, price and mix within that 4% to 5% target?

As we go forward, I think the algorithm that we've had in the past of price capture, I think we would expect to continue to see that price capture. What you will see as we go forward is more volume growth, as we really drive top line sales across each one of our end markets. So I wouldn't really see a substantive change there on the pricing side. But on the volume side, I think you will -- given the focus that we've had most definitely see a change there as we go forward.

Okay. Thanks, folks. Well, we've come to the end at this point, and I just want to thank everybody for attending. I hope you got a lot out of the morning here. We're super excited about our outlook as a company and really, really excited to have brought you this event and give you a chance to meet and interact a little bit with some of our new leaders as well as our established team here. We look forward to following up with you and look forward to taking your questions off-line for any that didn't get answered here. Thank you all.