Ladies and gentlemen, thank you for standing by. Welcome to Axalta's Q4 and full year 2023 earnings call. All participants will be in a listen-only mode. A question and answer session will follow the presentation by management. Today's call is being recorded, and a replay will be available through February 15th, 2024. Those listening after today's call should please note that the information provided in the recording will not be updated and therefore may no longer be current. I will now turn the call over to Chris Evans. Please go ahead, sir. Thank you, and good morning. This is Chris Evans, VP of Investor Relations. We appreciate your continued interest in Axalta and welcome you to our fourth quarter and full year 2023 financial results conference call. Joining me today are Chris Villavarayan, CEO and President, and Carl Anderson, CFO. We released our quarterly financial results this morning and posted a slide presentation to the investor relations section of our website at axalta.com, which we will be referencing during this call. Our prepared remarks, the slide presentation, and our discussion today may contain forward-looking statements reflecting the company's current view of future events and their potential effect on Axalta's operating and financial performance. These statements involve uncertainties and risks, and actual results may differ materially from those forward-looking statements. Please note that the company is under no obligation to provide updates to these forward-looking statements. Our remarks and the slide presentation also contain various non-GAAP financial measures. In the appendix to the slide presentation, we've included reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information regarding forward-looking statements and non-GAAP financial measures, please refer to our filings with the SEC. I will now turn the call over to Chris. Thank you, Chris, and good morning, everyone. This was another great quarter for Axalta. I'm pleased that we met or exceeded all targets for our full year guidance, and I want to thank the entire global team for their dedication and strong execution. Q4 net sales increased 5% year-over-year to $1.3 billion, with positive contributions from both segments. Volumes improved 2% year-over-year, led by a 9% growth in Mobility Coatings. This represents our seventh consecutive quarter of Mobility volumes growth as auto productions have normalized from historic lows, and we have successfully repositioned our portfolio with some of the fastest-growing automotive OEMs. Price/mix was a 1% year-over-year improvement, with pure pricing approximately 3% better year-over-year when excluding mix effects and one-time pricing realization. All end markets contributed to better year-over-year pricing gains. This was a great achievement for our commercial teams and a demonstration on our ongoing emphasis on pricing realization. Going forward, we will remain disciplined as we face pressure from higher labor costs and strive to restore margins to historical levels. Adjusted EBITDA increased 21% year- over- year to $251 million, and adjusted EBITDA margins improved by 250 basis points to 19.3%. I would like to now review some of our key accomplishments from the past year on slides four and five. 2023 was a tremendous year for Axalta, in which we achieved record net sales and adjusted EBITDA. 2023 net sales were $5.2 billion, 6% better versus 2022, with all end markets reporting positive price mix growth. Mobility Coatings volumes growth of 10.6% was supported by normalization of global auto production and further supplemented by new business wins, particularly in China. We have made substantial investments to support growth with local Chinese OEMs over the past several years, as exemplified with the opening of our new manufacturing site in Jilin. We continue to see this region as an attractive long-term opportunity for the business. However, strong growth in Mobility Coatings was balanced by volume weakness in Performance Coatings that was centered around soft construction activity within our Industrial end market. Yet, Refinish remains a very attractive and resilient market. The team delivered another excellent year with over 2,500 net body shop wins, expanding on our leading position. Altogether, we remain focused on what we can control and are committed to profitable growth initiatives that reinforce the foundation of Axalta. To that end, I'm excited that during 2023, the technology team was honored with several awards for the incredible new innovations we produced for our customers. New offerings such as Axalta Irus and NextJet are critical to support our long-term growth ambitions. Lastly, we completed the acquisition of André Koch, a Swiss refinish distributor. This strategic acquisition positions us well in the attractive Swiss auto aftermarket and gets us closer to our body shop customers. Early results have been promising. We're on track with the integration plan and see lots of opportunity for growth, including in non-paint accessories. My main focus since joining Axalta has been to drive improved efficiency and performance across the enterprise. We have made progress on both these fronts this year. I'm excited to report record annual adjusted EBITDA of $951 million, an improvement of 17% year-over-year. This was an incredible achievement for the team and an early reflection of the transformational journey underway. All four end markets delivered improved earnings and profitability versus 2022. Refinish had another solid performance, with the third consecutive year achieving record sales and earnings. In both light and commercial vehicle, we have made incredible progress after several years of market challenges. Mobility Coatings second half adjusted EBITDA is now consistent with 2019 run rates, setting us up well for 2024. And lastly, Industrial earnings improved versus 2022, despite volumes being almost 20% below 2021 levels. The entire enterprise is delivering on our stated goal to drive profitable growth, and we're making progress towards a return to historic margins. Full year adjusted EBITDA margins improved by 180 basis points to 18.4%. During the year, we drove urgency and speed with our productivity and purchasing initiatives, which we believe accelerated the capture of incremental benefits in addition to deflationary gains. We're driving growth in areas with attractive returns, while selectively shedding others that don't meet our margin threshold. Free cash flow was another bright spot. We ended the year at near record levels and drove inventory reduction and benefited from increased operating earnings. 2023 adjusted diluted EPS of $1.57 improved by 6% year-over-year. For the first time in the history of Axalta, we ended the fiscal year with net leverage below 3x and plan to continue to strengthen the balance sheet going forward. We demonstrated significant improvements in our operating performance and ended the year significantly more profitable than we started. While Axalta's transformation is just beginning, I'm encouraged by the pace of progress. Our teams are focused on the right objectives, and we're winning together as one Axalta. As we exit 2023, I'm encouraged by the trajectory of our core markets and excited about the investments being made across the business. I believe we're well set up as we head into 2024 after a solid fourth quarter and a transformational 2023. I will now hand the call off to Carl to review our financial results. Thank you, Chris, and good morning, everyone. Before reviewing our financial results in more detail, I would like to highlight that we have changed our primary reporting metric from adjusted EBIT to adjusted EBITDA. The change was made to reflect the way we measure the financial performance of our two segments and allocate resources, as well as more closely align to the design of our long-term incentive plans. We have provided historical reconciliations in the appendix of the press release. Let's turn to slide six. Fourth quarter net sales increased 5% year-over-year to $1.3 billion, with positive sales contributions from both segments. Consolidated volumes were up 2% year-over-year, as strong Mobility Coatings growth more than offset declines in Performance Coatings. Price/ mix improved by 90 basis points compared to the prior year period. The pure pricing benefit was approximately 300 basis points higher compared to last year, but was partially offset by negative mix and a challenging comparison from the fourth quarter of 2022. Adjusted EBITDA in the quarter was $251 million, a 21% increase from $208 million in the prior year period. Adjusted EBITDA margin improved by 250 basis points to 19.3%. Unit rate variable costs were approximately 12% lower year-over-year, with improvements across nearly all categories, marking the third consecutive quarter of realized deflation. Supply-demand imbalances in isocyanates, monomers, and epoxy resins helped drive a large portion of the benefit. We are also pleased with the additional savings driven by the productivity initiatives we launched last year, which enabled us to improve negotiating flexibility in contract terms. We believe that the favorable raw material environment will continue into 2024, with comparisons strongly benefiting the first half of the year. Yet, as Chris highlighted earlier, we will remain disciplined in managing our cost structure as we go forward. And finally, adjusted diluted earnings per share increased 13% year-over-year to $0.43, despite significantly higher interest expense. Moving to slide seven. Performance Coatings' fourth quarter net sales improved by 4% year-over-year to $849 million. Refinish organic net sales improved by a mid-single-digit% compared to the prior year period, with positive price/ mix and volume. This was the 12th consecutive quarter of positive year-over-year net sales growth, and we ended the year with record annual Refinish earnings. Industrial organic net sales were mid single-digit lower year-over-year, as positive price/ mix was more than offset by lower volumes, principally due to weaker activity in the North America construction market and from the strategic decision to exit certain customers. We see early signs of stabilization. However, demand appears at this time to be relatively muted in the early parts of 2024. Despite lower reported volumes amid a soft macroeconomic backdrop, the Industrial team improved margins considerably year-over-year through cost management and pricing discipline. Performance Coatings' fourth quarter adjusted EBITDA was $192 million, versus $169 million in the prior year period, with solid contributions from both end markets. Segment adjusted EBITDA margins improved by 200 basis points, led by favorable price cost dynamics, which more than offset lower volumes in Industrial and higher variable labor costs. Turning to Mobility Coatings results on Slide eight. Fourth quarter Mobility Coatings net sales increased 7% to $449 million year-over-year. Light vehicle organic net sales increased by a mid-single-digit% compared to the prior year period. Volumes were once again very strong, led primarily by above-market growth in China. The UAW strike in North America ultimately had limited impact in the quarter. Our expectation for global light vehicle production in 2024 is relatively stable, following the strong recovery in builds over the past two years. Over this time, the team has done a great job in diversifying our sales mix and positioning us favorably with the fastest-growing OEMs. Price/ mix declined year-over-year, driven by negative mix impacts and the absence of a one-time price benefit we realized in the fourth quarter of 2022. However, pure pricing was up low single digits versus the prior year. Commercial vehicle organic net sales improved by a high single-digit percentage compared to the fourth quarter of 2022. The year-over-year improvement was led by low teens volume growth in Latin America, with sustained strong demand in North America. We expect North America Class 8 truck demand will decline modestly in 2024, as we are encouraged by elevated backlogs and positive comments from our large customers, who see less downside than third-party industry forecasters. Mobility Coatings adjusted EBITDA improved to $59 million from $39 million, a 50% increase year-over-year. Adjusted EBITDA margin improved by 380 basis points to 13.2%, driven by lower variable input costs and robust volume growth. Turning to Slide nine for a review of our full year results. Net sales grew 6% year-over-year to $5.2 billion, a new company record. Net sales improvement was driven primarily by positive price/ mix contributions across every end market. Volumes were down modestly on a full year basis, as growth in Mobility Coatings was offset by a slight decline in Performance Coatings. Adjusted EBITDA was $951 million, a $141 million improvement, and a new company record, as favorable price and raw material trends offset headwinds from increased productivity investments and higher variable labor expenses. The contribution from Mobility Coatings to adjusted EBITDA growth was substantial, improving by nearly $100 million versus the prior year period. Adjusted EBITDA margin improved by 180 basis points to 18.4%, with a notable step-up in the second half of the year to 19.6% versus 17% in the first half. Adjusted diluted earnings per share increased by 6% to $1.57, despite a $74 million interest expense headwind, a modestly higher tax expense, and $23 million in exchange losses stemming from revaluation of assets denominated principally in the Argentine peso and Turkish lira. We have recently taken action that is intended to help mitigate foreign exchange risk in Argentina going forward. Free cash flow of $447 million increased by 174% compared to the prior year, led by higher operating profit and targeted working capital reductions stemming from mid-year productivity initiatives. As a result of the stronger operating results, we ended the year with a substantially improved balance sheet. Turning to Slide 10, we ended the year with $1.2 billion in total liquidity, including a cash balance of approximately $700 million. Our total net leverage ratio ended the year at 2.9x, nearly a full turn below last year and our best ever year-end leverage ratio. Capital outlays in 2023 amounted to over $500 million, balanced between $214 million of gross debt reduction, $138 million in capital expenditures, $106 million in M&A, and $50 million in share repurchases. Going forward, we expect to modestly increase internal investments in CapEx, net of a significant decline in ERP-related spending in 2024, with an emphasis on improving return on invested capital. We see many value creation avenues for capital allocation, including further gross debt reduction, opportunistic share buybacks, and accretive M&A and strategic opportunities. During the fourth quarter, we refinanced our 2025 senior notes set to mature in January 2025, with approximately $500 million of new notes, with a maturity date of February 2031. As a result of this refinancing, we do not have another bond maturity until 2027. Our plan is to keep interest expenses flat in 2024, despite the net increase in interest associated with the bond refinancing. Available offsets include gross debt reduction, interest rate derivatives, and the option to reprice our term loan at potentially favorable rates. We intend to continue to strengthen our balance sheet and believe deleveraging is one of the most important value creation levers for Axalta in the near term. The high end of our target net leverage of 2.5x should be achievable in 2024 through natural deleveraging and disciplined capital allocation. I will now turn the call back to Chris for our 2024 financial guidance and closing remarks. Thanks, Carl. Let's turn to slide 11. I'm proud of the team for executing well and driving record 2023 financial performance. I see considerable opportunity to build from here and fully expect us to achieve another record year of earnings in 2024. Net sales in the first quarter are expected to be approximately flat year-over-year. We project volumes and price/ mix growth to be modest and roughly balanced for the period. First quarter adjusted EBITDA is projected to be roughly 13% year-over-year to approximately $240 million, with the majority of the improvements supported by margin growth. First quarter adjusted diluted EPS is expected to be roughly $0.40. Full year net sales are expected to grow by a low single-digit% year-over-year, with positive contributions from both segments. As for the end markets, we assume a stable refinish environment with upside opportunity for Axalta as we continue to drive body shop wins and further penetrate non-paint accessories. In Industrial, we expect volumes to remain at current run rates through the year, as we do not yet see signs of an upturn. For light vehicle, we assume flat global builds rates following a strong production recovery in 2023, and expect Axalta to slightly overperform, driven by the business wins and mix. Price/ mix is expected to be positive, net of any RMI impacts. Lastly, in commercial vehicle, we assume North American Class 8 builds will begin to slow mid-year before demand ramps back up in 2025 and 2026, ahead of new emission standards being implemented in 2027. Full year adjusted EBITDA is expected to be between $1.01 billion and $1.05 billion, equating to adjusted diluted EPS between $1.80 and $1.95. We foresee a typical quarterly earnings cadence with seasonal strength in the middle of the year. Guidance includes a mid single-digit variable cost deflation tailwind that is first half weighted. Full year free cash flow is expected to be between $400 million and $450 million in 2024. The midpoint of our range assumes increased capital expenditures and less of an improvement from working capital after a significant one-time benefit of reductions we saw in 2023. I believe that we are well positioned to deliver on these commitments as we continue to drive Axalta to new record levels of sales and earnings. I'd like to invite everyone to an event on May 15th, 2024, where we intend to introduce our three-year strategy. For more detail and registration information, please refer to our IR website and the save-the-date included in our Q4 presentation materials. Thank you for joining us today. This concludes our prepared remarks. Operator, please open the lines for Q&A. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we call for questions. Thank you. Our first question is from David Begleiter with Deutsche Bank. Please proceed with your question. Thank you. Good morning. Chris, can you discuss your Refinish expectations for pricing in 2024? Good morning, David. We're still planning to have, let's call it mid-single digits, low to mid-single digits pricing as we think about how we performed last year and where we see 2024. Very good. Can you discuss just also anywhere in the portfolio you're seeing pricing pressure that might impact 2024? That's a great question. So far, as I see the portfolio, I think, you know, we're seeing that the industry is being quite disciplined. I think we are all facing the same pressures, whether it's labor and also uncertainties going forward. And I think a lot of the recovery we have seen in pricing and making sure that we're all pricing for value, we can see that benefit. That said, I would say on the Industrial side, we are seeing some pressure in Europe, but you know, as I think about our portfolio, we're going to stay focused on driving for the value we provide for our customers. Thank you. Our next question is from John McNulty with BMO Capital Markets. Please proceed with your question. Yeah, good morning. Thanks for taking my question. Seems like, you know, in addition to the price/ raws mix, you've made some decent headway early on in kind of efficiency improvements and that type of thing. I guess, can you call out some of the bigger items there and how we should be thinking about how that may continue as we look through 2024? That, that's a great question, John. I think, you know, coming on board a year ago, we talked about, you know, some of the purchasing initiatives that we had in play, and that's certainly paid dividends, especially if you look at Q4 and our performance of 12% on material performance. And if you take a look at, let's call it, half of it being, you know, what the industry is calling as deflation, we certainly did better than that, and especially when I compare with our peers, that I would call being 3-4x our size. It's great to see the performance coming through, and was really worth the purchasing teams sitting down with our suppliers and driving some of that, those actions, to really price ourselves back to where we saw. As you know, we took about $650 million of incremental cost through the last two years, and it was really resetting a bit of that and driving that cost benefit through. Now, this started, I would call it, mid-year, and so as we talked about in previous calls, it was really about burning through that inventory, and we saw that benefit certainly hit us in Q4. As I think about 2024, it's really how are we structuring agreements so that we could be more resilient as we see, let's call it, fluctuations in the market, and that's certainly how we're playing it. But I would call it, you know, as you can see in our guide, what we're seeing is we're driving, I would call, mid single digits, low to mid-single digits expectations for deflation going through 2024. Got it. Fair enough. And then just maybe, like a small one, on the Industrial side, it sounds like you walked away from some business. I guess, how should we think about what that sales impact would be as we look at 2024? Is that something of note where it's a few percent, or is it kind of a rounding error? How should we think about it? I would call it low to flat to low mid-single digits. You know, as you can look at our guide and, you know, in terms of volume, we're essentially calling it, you know, overall, the business growing by flat to mid-single digits up, mostly mid-single digits up. And the difference there is, you know, we believe we'll continue to grow on Refinish. We'll certainly grow on auto. Even though the market is flat, we believe that on the auto side, we will gain in China as we continue to win there. But in Industrial, we expect that to be low single digits down, as well as the CV impact at the back end of the year. Got it. Thanks very much for the color. You're welcome. Our next question is from Kevin McCarthy with Vertical Research Partners. Please proceed with your question. Yes, good morning. Chris, can you speak to the amount of variable cost deflation in the fourth quarter, and what your outlook would be for raw materials and variable costs in 2024? So I'm gonna start and then probably hand it over to Carl. I mean, we certainly saw, I would call it, you know, low single digit... double-digit performance in variable cost performance, 12%, as I said in the prepared remarks, but I'll turn it over to Carl as to how we-- what we see going forward. Yeah, good morning, Kevin. Yeah, as we look for 2024, we're expecting, you know, probably about mid-single digits deflation in most of our commodity spend. And I think that will be front-weighted, so I think we'll probably do a little bit better in the front half of the year. And, you know, the comps will get tougher as we think about Q3 and Q4 going forward. But for the full year, we're, we are expecting about mid-single digits deflationary benefit from our spend. Very good. And then, as a second question, Carl, you noted in your prepared remarks, you know, the progress that you've made on the balance sheet. What are your latest thoughts on, on capital allocation, you know, in terms of, you know, kind of reinvigorating some repurchase activity, what you're seeing in the private market, but also, you know, potential to establish a common dividend at, at some point? Well, yeah, I think... Well, first, obviously, we're very pleased with having leverage sub 3 at 2.9x. I think if you just do, you know, look at the guidance we provided, you know, we'll be right in line at the top end of our target range by the end of this year. So it does provide us a little bit more flexibility and optionality in how we deploy capital. So we will, I think, share repurchases will definitely be part of the overall strategy, and as well as M&A. As Chris pointed out, we had the acquisition we did in the fourth quarter in Switzerland. And I think where we can see those type of very accretive deals, especially more in Refinish, we would look to deploy capital there as well. But we're overall just pleased because I think, the balance sheet now will provide us a lot of flexibility going forward. Thank you. Thank you. Our next question is from Steve Byrne with Bank of America. Please proceed with your question. Yes, thank you. Is the 9% EBIT margin in Mobility, or you know, presenting it as more of a 13% EBITDA margin, seems like it's back to where it was historically. Is this the new normal? Does this have some meaningful upside, in your view, from something other than just, you know, projecting auto build rates and, you know, commercial vehicle builds? If there's anything that you're doing in Mobility that could drive a real change, whether it's technology or some kind of a structural change that you're doing internally, anything that you would highlight as giving you more optimism than just a 9% EBIT margin? It's a great question, Steve. It's certainly. I wouldn't call it the new normal. You know, it just looking back at Axalta over the last four, five years, I would say, you know, we've grown by $1 billion of revenue, just under $1 billion of revenue. But the challenge has been to convert to historical margins. So if I look at that business, I do believe there's more upside in what we can do, both structurally, both in growth in other regions, as well as, you know, as you put the investment. You know, we've talked about a $35 million increase in capital investment, what we can do to drive productivity initiatives in this business. And so this is part of what we plan to discuss or show you in our May strat meeting, is what more we can do with this business. And then one question for you on, you know, the industrial exposure in construction. Do you have visibility into distributor inventory levels of products that your coatings were a part of? Do you have a view as to whether those inventory levels in the channel, you know, are normal now, or is there, you know, a share loss or gain? Anything that you can comment on that? Consistently, with the exception of the businesses we've decided to exit, I would say we are, our share has been, you know, pretty much in line with what, what we had previously. That said, inventories that are at our customers or at distributors are low from where we have seen historically. There's only... As I look at it, if this market picks up, especially in North America, there's only upside here. And the good news here is that, especially when we think about our wood coatings business, you know, you can see all our major customers investing heavily on capacity. I mean, if I look over the last, you know, six months to nine months, we have seen announcements of about $1 billion being put into investments to build plants. So as this market recovers, there's just all I see here, especially on our wood siding business, you just believe there's got to be upside with all the investment that is being put in place. And that's certainly what we're doing as well, is to prepare for this upturn at some point. Thank you. You're welcome. Our next question is from Ghansham Panjabi with Baird. Please proceed with your question. Thank you. Good morning, everyone. Hey, Chris, you know, can you just give us a sense as to the market conditions for auto refinish across your major regions? I know you, you know, commented about expecting a little bit of volume growth in 2024. You know, what's that being driven by? Is it just better uptake, easier comparisons, technology? What, what's going on across your major markets there? Well, I would say it's flat to up about, you know, 2%-3% is, is what we're predicting going forward into, into 2024. I'll just walk you through the markets to your question. Mm-hmm. North America is incredibly strong, but you know, limited in the sense of just, as you've always heard, you know, the ability for body shops to get labor. So, you know, there's inventory sitting at the body shops for work to be done. It's just getting the labor to be able to drive that. And that's a great case for Axalta, because you know, our story has consistently been the efficiency that we provide to our body shops. If I think about Europe, Europe is what I would call stable to flat. You know, as you if you look at our guide and what we are showing as a slight increase, it's really the new wins, whether it's the wins with BMW that we announced last quarter or with the André Koch acquisition, there's opportunity here to grow. And China or Asia has been weak or flat to down, is what we've seen. So but the only part of that is, China is also a small part of our business. But overall, you know, I would call it flat to slightly up, Ghansham. Okay, great. Thank you. You're welcome. And then in terms of, you know, the consumer uptake for EVs, I mean, the narrative seems to have shifted in the market just based on the trade press, et cetera, after all the outsized growth over the last few years. Can you just touch base on what you're seeing, you know, in terms of developments, et cetera, on EVs, and if that dynamic shift will impact you in any meaningful way? Yeah, absolutely. I think first of all, you know, there's the overall element for Axalta is we're EV-agnostic. I mean, I think most of our coatings are on the outside of cars, so we don't really care if it's EV or ICE. You know, in that sense, it's overall been not so much of an issue. The good news, though, for us is, you know, if we look at our growth, especially, you know, if you look at last quarter, you know, overall, Axalta growing by mid single digits, but Mobility growing by 9%, a lot of that is our growth also in China. And in China, we're growing at two to three times the rate of the overall market, and it's primarily because of our growth in EV. We're with a lot of local players that are in the EV space that are growing. And the great news there is, as you know, with China investing $70 billion in incentives over the next four years, that's driving the local market. But it's also creating a, like a great platform to use that to move into, let's call it, Southeast Asia. So we see that as a growth platform. And, you know, the other element that's helping us there is the fact that we've made, over the last few years, we put investment in there for manufacturing, whether it's waterborne capability at Jiading or our new plant that we just launched... last quarter with Jilin, with just the capacity and the ramp-up is just in line, so it's really driving the growth that we saw in Q4. Perfect. Thank you so much. You're welcome. Our next question is from Michael Sison with Wells Fargo. Please proceed with your question. Cheers, guys. I nice outlook for the year for 2024. In the pricing, you'd mentioned that it'd be positive for both segments, and a little bit of color, you know, fourth quarter was down from Mobility. You talked about a lot of ops there. So do you think turns the corner in the first quarter for pricing? And then actually, do you need to announce price increases, or are those already? Yeah, thanks, Michael. Good morning. Yeah, I think as we look at Mobility in the fourth quarter, I think as we referenced in the prepared remarks, a little bit more than half of that really related to a comparison we had from the fourth quarter of 2022, with the rest of that being mix as an impact. So as we fast forward for the first quarter and for the full year, we do see pricing being positive in both of our segments. And specifically, as we think about our Refinish business, the team has already a couple of weeks ago, actually launched and executed new pricing. So we're already beginning to see the benefits of that. Follow-up. In the first quarter, flat sales growth. That sales growth sort of moved throughout the year. Is it second quarter better, third quarter, fourth quarter better? Trying to get a feel of how we ramp up the low single digits. Yeah, you know, our expectations, you know, as you start getting into the second quarter, you should definitely see, you know, an increase kind of in that, low single-digit kind of percentage increases, which it would really kind of roughly carry in the next several quarters thereafter. So it's really just the first quarter where at least the initial guide is, we're holding it flat, but you should start seeing that step up in the second quarter. Thank you. Thank you. Our next question is from Aleksey Yefremov with KeyBanc Capital Markets. Please proceed with your question. Good morning, everyone. Could you give us some thoughts on, on your bridge for Q1 from Q4? You know, more often than not, EBITDA is about flat sequentially from Q1 to Q4, from Q4 to Q1, and, and you're guiding to flat sales. So what, what are some of the other factors here? Yeah, as we look at the bridge, you know, we're gonna be down, you know, about $11 million of EBITDA, Q4 to Q1. You, we referenced what we saw as it relates to just, revenue, being down slightly. Obviously, you have the conversion impact as it relates to that. And it's also really, it's just the seasonality that we have within our business, specifically in Refinish. So that tends, the first quarter for us tends to be the low point for Refinish, just based off of, especially what we see here in North America and a little bit more in Europe. So those are really... It's more of a, more of a mix story as well that impacts us on a sequential basis. And then we also have in China, you know, with the Chinese New Year, that also has an implication, too, for the first quarter, specifically for our light vehicle business there. Thanks. Turning to Industrial, you're talking about softer North American construction volumes. Could you maybe discuss residential, non-residential exposure, any potential benefit from infrastructure spending and any other factors? So yeah, absolutely. So I would call it a split between residential and non-residential, whether you look at it as our wood business or our building products business or our GI business. In terms of, you know, as we forecast forward, again, we're showing residential being muted or down, you know, with where interest rates and where we see, you know, building comps coming out. But that said, on the Industrial side, on the GI side, you know, the question is how infrastructure spend, especially this year with elections, would play out in the back end. At this point, we're forecasting this to be flat to down slightly, and it's primarily just to continue to drive the focus on, you know, building the foundation on the business and making sure that we have the right cost structure for when we pick up again. Thanks a lot. Our next question is from Mike Leithead with Barclays. Please proceed with your question. Great. Thanks. Good morning, guys. Good morning. Good morning. Morning. First question for Chris. I think you made a comment in the prepared remarks around potentially pruning some areas that don't meet your margin threshold. I guess, can you talk a little bit more? You've been there for about a year now, your observations about where your portfolio currently stands, and is it just pruning, or are there any, say, bigger portfolio actions worth exploring? No, it's just... I, I think the starting point is just pruning, and, you know, a perfect example of that is, you know, if you look, think about our light vehicle business. Last year, we announced, you know, getting out of, our plastics interiors business, a small portion of that, where obviously we didn't have scale. That said, you know, as I look forward in, into 2024, there are segments of the business within, let's call it, across all three portfolios, whether it's our Industrial, a bit of our Mobility, and then, even in some sense, in some of our regions, in Refinish, that we might be looking at. Again, you know, the focus for me is, as I think about it,... We grew by a billion, you know, billion dollars of revenue, if you think through the last four or five years. The first thing is just returning the base case to, you know, historical margins. That alone has about $100 million-$150 million of incremental opportunity. As you can see in what we've given as a guide for 2024, you know, heading north of $1 billion, we're on path to get back there, but we are not there yet. So for me, I think the first set is looking at all four end markets and seeing what more we can do to drive this back, and then we'll start thinking about if there is any portfolio mix beyond that. Great, that's super helpful. And then as a follow-up, I apologize, a bit of a technical question for Carl. I think earlier this year, Axalta took a fairly large charge from the Argentine peso that was included in your adjusted EBIT. I think you briefly mentioned an FX charge in the remarks, but I don't see it mentioned anywhere in the release. So did Axalta take a charge from Argentine peso deval this quarter, and was it included or excluded from your adjusted earnings results? Yeah. So, we did in for the fourth quarter, specifically for Argentina. So it's not included in EBITDA, but it is included in our EBIT, adjusted EBIT number, so which is in the reconciliation. Great. Thank you. Thank you. Our next question is from Jeff Zekauskas with JP Morgan. Please proceed with your question. Thanks very much. I think your SG&A was up by about 11% on an adjusted basis. Maybe it's 8% unadjusted, and your R&D was up a little bit more than 11%. Those are relatively high numbers. For 2024, do you have expectations about your growth in overhead costs? Yeah, good morning, Jeff. You know- Good morning If you look at SG&A, about half of that impact, for at least for 2024, whether you look at even the fourth quarter or the full year for SG&A, really related to variable compensation expense, with the remaining half of that being just kind of, you know, I would call it just more an inflationary labor type of cost. And so as we look forward into 2024, that is an area of focus for us, where we would be looking to drive that rate of increase down, considerably on a year-over-year basis. Great. Can you remind us what percentage of your light vehicle business, roughly, is China now? And maybe where it was two or three years ago? Yeah, it's about, you know, I'll maybe quote it in revenue basis. Sure. It's about, about $250 million of revenue for China. Okay, great. Thank you so much. Thank you. Our next question is from Mike Harrison with Seaport Research Partners. Please proceed with your question. Hi, good morning. Good morning. We saw the nice improvement that you guys delivered in inventory levels during 2023. Are those inventories where you want them to be at this point in the year? And I guess, is there any way for you to quantify the impact? Presumably, if you're working down inventory, you were running your plant more slowly. Can you quantify the impact of lower fixed cost absorption last year? And, and presumably, you'll make some of that up this year if you're running your plants a little bit harder. Sure. I'll take that. So in terms of, you know, as I think about quantifying the improvement, we certainly saw a significant one-time improvement. You know, if you take our improvement in free cash flow I would call it just less than half of that was driven by that performance. Looking forward into 2024, you know, we're not obviously signaling that we would get too much better than that, though, as there are pockets of the business that we can improve. Maybe I'll break it down by business. You know, if you look at the four end markets, you know, my perspective is especially, you know, with where we're forecasting volumes to be possibly lower, especially on our Industrial business, that is certainly something that we are looking at, further opportunities in inventory reduction as well. That's probably an area where we're also looking at, you know, fixed cost absorption. So that's something that, you know, the team, the Industrial team is very focused on as we look forward on what extra opportunity there is in terms of utilization of the facilities we have, with the understanding that this volume will obviously be needed at some point. So that's certainly something that we're focused on. Across the rest of the platform, I think we're at a good point in terms of efficiency. There is probably something more that we can do in terms of utilization, but that will be probably something that we would work through the year because we are showing two of the businesses going up slightly in volume. Yeah, Michael, and maybe just to add to that as well, you know, as I just look at the top of the house from, you know, our conversion on the incremental revenue. So in 2023, we had about $300 million of higher revenue, and our EBITDA was up $140 million. So it's about a 47% conversion on the incremental revenue. And as you look to 2024, you know, we're expecting to have, you know, conversion on the incremental revenue about 60%-65%, if you just look at what we put out for a guide perspective. So I do think, you know, as what Chris alluded to, we kind of like where, you know, where we are, but there's always more productivity and there's more efficiencies we can get, and I think you're seeing a pretty healthy conversion as we enter in this year. All right, thanks very much. And then, just curious, in that Refinish business, I don't see that there's an acquisition contribution line in there. Can you comment on how much of the volume that you saw in the quarter or revenue in the quarter was from that André Koch acquisition? Yeah, we had about $14 million of revenue in the fourth quarter that related to the recent acquisition of André Koch. Perfect. Thanks very much. Thank you. Our next question is from Arun Viswanathan with RBC Capital Markets. Please proceed with your question. Great, thanks for taking my question. Congrats on the 2023 progress. I guess I just wanted to get your perspective on where you are in your evolution. So I think you've mentioned long-term margin targets several times on this call, but that you're not necessarily there. So obviously had very good progress in 2023 up 100 basis points on a consolidated basis to the 18.4. And Refinish now, or at least Performance Coatings, I know it's being dragged down a little bit by Industrial, but it appears that you're potentially closer to that normalized level within Refinish, at least over 20%. So how much more do you think there is on the margin front? Do you expect to kind of approach 20% on a consolidated basis over the next couple of years? And is that $100 million that you referenced, kind of the, the main driver of that, coming back to you? That's, that's great. Good question, Arun. If I give you the answer to that, you might not show up in May, so, but I'll give it to you. I'll break it down a bit more. I think, you know, if you, to your point, you know, the progress in 2023, you know, we jumped up 100 basis points. If you take, you know, where we're heading for 2024, you know, it's that, call it 100 basis points. But, you know, I think there's been a lot of questions about Q1 to Q2, Q3 jump up. But if you look at, you know, how the guide would work through Q1 to Q2, Q3, and Q4, Q2 and Q3 have always been our stronger quarters as we have been somewhat cyclical. You would argue Q2 and Q3 would need to get to that 20% almost, to be able to hit where we've guided, to your point, that essentially means we're coming back very close. I still believe there's more opportunity here. You know, if we look at the earnings potential of this company, I you know, going back to just converting on the incremental sales, as you know, Carl answered to that last question, I do believe that there's more opportunity here, and that's what you will see in May. We want to lay out three-year target with what we are going to accomplish year-over-year, to see what more we can do to drive the earnings potential. And on top of that, even if we looked at, you know, let's call it this, low single- digits or mid single- digit growth, what more we can accomplish with that. And so across the growth and the earnings potential, I think there's a lot of value that we can drive to shareholders, and that's certainly what we'll lay out for you in May. That's great. Then, maybe I can just ask a similar question as a follow-up on free cash flow. So it—you know, you're converting over 40% of your EBITDA into free cash flow, and given what you've said so far, you know, with your incremental margins going up, it looks like you're probably gonna be headed higher on that conversion as well. So over the next couple of years, you know, with your leverage down under three now, and free cash flow may be approaching $500 million+ in the next couple of years, is that kind of normalized free cash flow? And if so, how do you expect to spend that, you know, once you reach that level? Yeah, I think we would view that as normalized cash flow, especially being over $500 million as we, you know, get into 2025 and beyond. I think we will be, as I mentioned, you know, leverage will be right where we want from a target perspective at the, almost at the end of this year. And so we will have optionality in front of us. And so I think we will be looking to deploy some of that capital, as in, in looking at share repurchases, as well as, you know, we will be evaluating and continue to evaluate, you know, M&A-related opportunities that we believe will be accretive for the company. So, so those are kind of the two areas that we will be focused on. And I think we're definitely gonna be, you know, looking to, you know, continue the momentum that we had in 2023 into 2024, and getting leverage where, you know, to the target range that we outlined. Thanks. Thank you. Our next question is from Vincent Andrews with Morgan Stanley. Please proceed with your question. Morning, this is Steve Haynes on for Vincent. Maybe I just wanted to come back to the guide for a sec. So I think, you know, historically, your first quarter is maybe 22% or 23% of what you do annually. So if we were to kind of use that to annualize your first quarter guide, it suggests something a bit above the midpoint of where you've guided the full year. So is there something different in the phasing this year, or are you being a bit conservative in the back half that's, I guess, maybe causing some of this? Or maybe there's just something else in the math that we're missing there? No, I think you're looking at it the right way. I mean, simplistically, if you take the $240 million EBITDA divide by 0.23, you get about $1.043 billion, which is kind of right in the guidance range that we provided, albeit a little bit at the higher end versus the midpoint. But no, I think the seasonality that we expect this quarter and for this full year is similar to what we've had in the past. Okay, and then also in the 2023 numbers, there's some elevated costs tied to ERP and other investment. What is the 2024 guide, I guess, in the bridge, in terms of further costs related to either of those things? Yeah. So we had about $40 million of costs related to ERP, as well as consulting costs for some of the productivity initiatives that we had this year. As we look into 2023, I would expect that to drop down by at least $30 million. So, you know, kind of that new run rate of costs in 2024 would be, you know, call it in that $10 million, maybe $5 million-$10 million type of range. Okay. Thank you. Appreciate. Thank you. Our next question is from Josh Spector with UBS. Please proceed with your question. Yeah, hi, good morning. If I go back earlier in the year, I mean, when you guys had the production issue that impacted Refinish, you talked about a $200 million backlog. Where is that now? Does that still exist? Does that really matter as we look into 2024? Yeah, Josh, I'll take this one. So I... You know, you certainly won't hear us talking about S/4 going forward, I think. You know, in terms of where we finished the year, I would say all our North American plants are back to pre-implementation run rates, and our facility in West Virginia has done a stellar job of bringing the backlog back to what we have, normalized pre the implementation of S/4. And as we think about, you know, going forward, as you think about Q1, we don't show, there is no upside, or we don't see any benefit from, let's call it, a backlog improvement. We're back to where we are. We do believe there's more efficiency that we can get from our S/4 system, so that is something that the IT and the operational teams are working on, but certainly not something that should drive something meaningful through, through, let's call it, the front half of the year. The objective there is just to get the efficiency and the system working great before we roll that out into smaller chunks into over the next several years in the rest of the world. Thanks. Just a quick follow-up on the acquisition. So, I mean, you sized it earlier as maybe a 1% or so of performance. Did you report that in volumes? And I guess, is that how you plan to report M&A forward? I guess, why not separate it out to make the organic volume more clear, so? Yeah, I mean, it is reported in volumes as well, and, you know, given the size of that particular acquisition, it was relatively small. Obviously, we, you know, depending on, you know, where we end up on the next one, we would, you know, we would have we would evaluate, and most likely break that out for you. Okay. Thank you. Thank you. Our next question is from John Roberts with Mizuho. Please proceed with your question. Thank you. Chris, I think the prior management switched from EBITDA to adjusted EBIT back in 2019 to get the organization focused on reinvestment and growth and to have some capital allocation in the earnings numbers. Why the switch back to EBITDA right now? Yeah, I'll start, and I'll this is Carl, I can turn it to Chris. You know, as we look at just how we manage the business, across our business units, it is on a, it's more on an EBITDA basis. I think one of the key items that we are really gonna be driving the organization is return on invested capital performance, and we will be kind of using that as we, as we approve new capital investments in the business, we're gonna be attacking that, if you would, on the front end of the process, as opposed to, you know. Especially given that, you know, all of the team now is in place. We have operations kind of running up and being run by each of the BU presidents. So, that, that's how we kind of run it. I would but I would tell you that we'll have a very keen interest and we will be highly focused on getting a return on invested capital to levels, candidly, the company has not achieved before. And maybe, I think Carl's captured most of it, but maybe just stepping out, and maybe just to level up and, you know, overall, the perspective I have is, you know, some of those choices that were made in the past of growth for the sake of growth is something that we have to change. And really, that ROIC metric and driving it into EBITDA became more significant as I thought, you know, as we repivot the company. And I think that's where we really drove the decision to first, you know, drive the operational teams into the P&L and have the BU's teams run it as one unit and be responsible for the choices that we make. And as we can see with our first acquisition under the Refinish team, we certainly are seeing that performance come through, and that's how we'd like to manage going forward. And then were powder coatings volumes up in the quarter, or were they down in line with the overall Industrial coatings segment? It was roughly in line with the overall segment itself. Thank you. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.