Ladies and gentlemen thank you for standing by and welcome to the Axalta First Quarter Earnings Conference 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 replays will be available through May 2nd. 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 would now like to turn the call over to Chris Mecray. Please go ahead sir.

Thank you and good morning. This is Chris Mecray, VP of Investor Relations. Thank you for joining the call today to review our first quarter 2019 financial results and for your interest in Axalta. Joining me today are Robert Bryant, CEO; and Sean Lannon, CFO. We released our 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. Sean will address this in more detail later, but I'd like to note that we changed basis of our profit guidance metrics to assume an incremental adjustment for the step-up of depreciation and amortization related to the February 2013 carve-out transaction. Our reported profit results referred to in this call have made this adjustment which will be further detailed in our 10-Q filing. Both our prepared remarks and discussion today may contain forward-looking statements reflecting the company's current view of future events and the 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. This presentation also contains various non-GAAP financial measures. In the appendix, 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'll now turn the call over to Robert.

Good morning. Today I'm pleased to review our first quarter financial results and some key operational highlights from the period. Our first quarter results met and slightly exceeded our previously communicated expectations for the quarter with $144 million in adjusted EBIT and $207 million in adjusted EBITDA putting us on track to deliver our full year financial expectations. During the quarter, the overall business climate for Axalta was mixed including some volume headwinds given unsteady economies, particularly in China and parts of EMEA. That said, average price mix in the quarter remained solidly positive and we continue to close the price/cost gap at a good pace including ongoing strong price recapture in Performance Coatings and continued progress seen in Light Vehicle within Transportation Coatings. There were also many examples in the quarter of new product innovation and launches and we continue to invest actively to promote long-term growth in our business with successes seen in many areas. Turning to slide 3, we grew first quarter net sales by 0.3% year-over-year excluding the 4.8% negative impact from foreign currency headwinds. The growth ex-FX was driven in large part by ongoing tailwinds from price mix across the business as we continue to make solid progress in closing the consolidated price/cost gap that widened substantially in 2017 and 2018 due to significant raw material inflation pressures. This growth progress was offset to a large extent by volume headwinds most notably in Light Vehicle where build rates slowed in most major markets we serve. Performance Coatings net sales increased 2.4% before FX with somewhat better overall growth from the refinish end market. This was largely driven by continued robust price mix capture in refinish and by moderate fundamental volume headwinds witnessed in global industrial markets during the period, particularly in Europe. In Transportation Coatings,…

Thanks, Robert and good morning. Turning to slide 4. First quarter net sales before FX impact increased 0.3% year-over-year including 2.4% growth in our Performance Coatings segment and a decrease of 3.1% in Transportation Coatings. Acquisitions this quarter were not a meaningful contributor. This result continues to reflect ongoing positive outcomes and price driven growth for Performance Coatings and offsetting volume pressure within Transportation Coatings from Light Vehicle. Importantly, we did see a positive price metric within Light Vehicle as a partial offset to OEM auto production declines in certain markets. FX translation shifted from a 6% tailwind in Q1 2018 to a 4.8% headwind in the current year first quarter. The drop through impact of this was a substantial driver for reported profit and a factor to consider as this is largely a translational impact. Key sources of pressure included the Euro, Renminbi and Real. Q1 adjusted EBIT of $144 million was 9% lower than the prior year and margins decreased 70 basis points to 12.9% in the first quarter. Drivers of this result included volume headwinds primarily in Light Vehicle, the FX impact noted, as well as the negative effect of low double digit inflation and input costs at the EBIT level against the relatively difficult comparison in the prior year quarter. It's worth highlighting that these comparisons for inflation ease as the year progresses given the pattern of increasing impact seen during the course of 2018. Turning to slide 5. Performance Coatings first quarter net sales increased 2.4% year-over-year excluding a 4.8% negative FX impact. This constant currency growth was led by 3.3% increase in average price mix, M&A contribution of 0.5%, offset partially by a 1.4% decrease in volumes. Refinish produced 3.5% first quarter constant currency net sales growth driven principally by improved price mix in…

[Operator Instructions] Our first question comes from the line of Mike Sison with KeyBanc Capital Markets. Please proceed with your question.

Hi, guys.

Good morning, Mike.

Good morning.

Sorry about that. Hey guys nice start to the year. In terms of Refinish, can you maybe talk about momentum potentially building in 2Q, 3Q, 4Q? It looks like the little bit weaker start, but sounds like you've got new products and market share potential as the year unfolds?

I think we're excited about our -- the potential of our Refinish business globally. We've actually been taking share and had some nice wins in particular in the Americas over the last six months that we expect to see start to flow through the results in the coming quarters and I think we're very excited about that. As you mentioned Mike, we do have a number of new products as well as variance on existing products in particular our mainstream waterborne coatings that we have launched and are now selling on a global basis. So overall, from a global Refinish perspective, we feel pretty good about the business and the direction that it's headed in for the full year.

Great. And then just a quick one on pricing continues to follow-through pretty well. Can you maybe talk about the gap a little bit? Are we -- are you getting close to closing it? And how does it look as we head into second half of the year with your raw material outlook?

I think it's pretty consistent with what we've highlighted in the past. We continue to close the gap between price and cost. And Performance Coatings of course we're pretty far along in that endeavor and in pretty good shape. And in Transportation, you would actually see even a little bit more than what's actually shown in the bridges in our financial results for the first quarter. We actually got a little bit more price than what the bridge actually shows, because we did have a slight negative mix effect for the first quarter. So I think we're very pleased with the price increases that we have already implemented as well as the price increases that we plan to implement moving forward.

Great. Thank you.

Thank you. Our next question comes from the line of Duffy Fischer with Barclays. Please proceed with your question.

Hey, guys. It's actually Mike Leithead on for Duffy this morning. Follow up on Refinish it seems like North American distributors have had a number of inventory or working capital fluctuations over the past year or two. I guess where do you think we are in that process for the distribution channel? And when do you think volumes then would be better representative of underlying demand quarter-to-quarter?

So a couple things, just as a reminder, there are certain structural factors Mike as you know that really would direct you to looking at net sales for the Refinish business. It's a better indicator in terms of how the business is performing, because structurally in the market, especially with the growth of MSOs, we will continue to see faster growth of waterborne versus solvent-borne products not only in North America, but also in other regions of the world. And since the waterborne products use less paint and since MSOs are more heavily indexed to waterborne compared to solvent-borne paint. There's a natural structural volume reduction that occurs there, that you make up for of course with the pricing and margin profile of waterborne being higher. In terms of the first quarter and also the past few quarters, I think we can say now that what we've seen is that large distributors have been focused on operational improvement and working capital management to increase cash flow, essentially to fund some of the acquisitions that they've made of other distributors and other businesses around the world and also with the increasing efficiency of MSOs. This is not the same as we saw in 2017. I mean in 2017, we changed our commercial terms and prebuy policies and that resulted in the inventory change that you saw in 2017. I think the trend that you're seeing now in 2018 and the start here to 2019 is not related really to any change that we're making, but rather pushes by distribution to become more efficient.

Got it. That's helpful. And then, question on the decision to strip out the step-up D&A related to 2013 DuPont transaction. First, I was wondering if you could talk a little bit more about what drove the decision to shift your reporting methodology now versus before. And second, it looks like step-up D&A expense was lower, call it, roughly 20% year-over-year. Should we expect that to continue to wind lower over the next couple of years?

So, the rational and the reason in the first quarter that we're changing, really go in January when we elected to start to change the prominence of our measures moving away from adjusted EBITDA to adjusted EPS and EBIT. There was a number of capital market participants that gave us feedback as far as thinking about this. We actually did heavy study as far as preference. And it's a fairly common practice for large carve-outs coming from multinational companies for SEC registrants to start adding this back, including a few in the actual coatings industry. So that was really the catalyst behind that. As far as the step down, after year six, we did see a fairly sizable step down. But for the next three to four years you could assume that it's a fairly stable D&A add back as it relates to step up.

Got it. Thank you.

Thank you. Our next question comes from the line of Christopher Parkinson with Credit Suisse. Please proceed with your question.

This is Harris Fein on for Chris. Just looking toward Industrial, are there any regions or end markets that you would highlight as outperforming or underperforming in the broader segment? And then, as we think about the M&A pipeline, are there any adjacencies that you see as you did with coil and wood that are attractive that you're not involved in today? Thank you.

Overall, in Industrial, the business continues to perform well. We did see a little bit of a sequential slowdown in Industrial, just given some of the softness that we saw in Europe in the first quarter. If we look at different submarkets, in general, we're seeing coil relatively consistent with what our expectations were at the beginning of the year. General Industrial, we are seeing a little bit of a weakness in North America, but in other parts of the world better performance so it varied slightly by geography. Our powder business continues to perform extremely well in most regions of the world, with the exception of Europe. Energy Solutions I'd say that in that business we're performing relatively well. We have seen the wind energy market slowdown somewhat and that has had an somewhat of an impact. However, in the other submarkets within Energy Solutions that part of the business is performing well. Then in wood, we had price increases that were put in place as part of contractual renewals and some of those are largely indexed to raw materials. So that is offsetting any of the slight volume challenges that the market as a whole is seeing just given some of the housing and other construction data here in the U.S. And then as far as adjacencies, there are several verticals within Industrial where we are not present at all or in a meaningful way today, where we would like to be. And those are focus areas from an M&A strategy perspective. We won't comment on which verticals those are specifically on this call for obvious reasons.

And then, could you just quickly walk through the movements that you've seen in some of the different raw materials buckets and where you're still seeing the biggest challenge? And then for resin specifically how do you see the basket evolving anything incremental versus your guidance in January? Thank you.

Yes. Overall, I'd say we saw -- we expected to see was somewhat of a peak in terms of purchased -- purchase value you might say in the fourth quarter. And then in the first quarter, we expected to start to see some relief which we did start to see a little bit of relief in terms of prices that we actually transacted at for raw materials. However, with the recent increase in the price of Brent now up to $74, it's come back to be a little bit more in line with what our original expectation was in terms of how we thought about our guidance. As we -- so we'll have to wait and see how the rest of the year plays out. If we continue to see oil at this level or near it, we potentially will have to go out for some additional price increases, as well as potential cost cuts. But at the level we're at currently was essentially the level that we had contemplated in our guidance. The two headwinds obviously that everybody is facing at the moment continue to be the tariff discussions and we talked about tariff and trade, we talked about what that amount was in our prepared remarks. In terms of categories, for the moment, we're seeing solvents being sort of relatively flat as an overall category. Monomers, we continue to see up low single digits. Liquid and powder resins, we continue to see up relatively speaking low single digits. Isocyanates, particularly HDI, continues to be a sore points that's up in the mid-teens from a lot of the data that we're seeing; and then pigments and additives which had been slightly flatter are now up in the low to mid single digits especially given the explosions and the impact in Jiangsu, China.

Great. Thank you.

Thank you. Our next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your question.

Good morning, guys. How you doing?

Hey, Arun. Good morning.

Good morning. Just a question on maybe Robert you can discuss some of the positive impacts you noted in China that gives you confidence on a potential second half recovery there? Thanks.

Yes. I think we have seen the decrease – we've seen the decrease in VAT. We've seen some of the efforts that obviously they are undertaking in terms of potential changes to boost the light vehicle sector in China. And I think we're hopeful that eventually, we are going to see a resolution in the trade discussions. And as we thought about it we were reasonably, I think fairly conservative as we thought about the year from what we expected out of China, especially given the exposure to light vehicle. However, what I would say is, if we do see additional stimulus put in place by the Chinese government and/or we see a resolution to the trade discussions that could be some upside to that market as we think about things. And as our business is there, I'd say that Light Vehicle is kind of performing as well as Commercial Vehicle pretty consistent with what we had expected for the year given the challenges there. As we highlighted in our prepared remarks, our Refinish business had a very good first quarter. And then Industrial given some of the conditions in the market there and our process of exiting our joint venture that business is relatively flat at the current time.

Great. Thanks. And then if I may just wanted to ask your thoughts on the guidance. I understand it's early in the year relatively favorable Q1 result. Maybe you can just give us some swing factors that would push you to the upper or lower end of the guidance maybe you can just bucket it out? You called out ongoing inventory issues in North American Refinish. Would that be a potential headwind? And then would raws and improving price cost be a potential tailwind? What would push you to the upper end of your guidance? Thanks.

This is Sean. I guess a few of the items that could push us to the higher end clearly FX has been a headwind for us in the first quarter. Certainly, with a stronger euro and Chinese Renminbi that could help push us toward the upper end. Raws given what's happening in the market today if we see that subsiding there could be some upside as Robert called out. The raws where they're at currently today as far as oil prices, it's largely aligned with our expectations for the full year, so certainly if you see some degradation there you could see some upside. As far as the inflection point, as far as the IHS data for auto builds we are expecting a strong rebound in the second quarter, if that was to pickup quicker. Again, we could see more upside as it relates to the expectations for the full year. As far as Refinish where we're seeing the market today and given first quarter results we actually feel pretty good. We're not seeing much as far as downside risk at this point. But certainly, on the auto production side if that inflection point does not happen in particular in Europe and China, we could see more of a downturn as it relates to Light Vehicle.

Great. Thanks.

Thank you. Our next question comes from the line of John Roberts with UBS. Please proceed with your question,

Thank you. Robert, the wood coatings position you acquired was relatively narrow geographically. Do you have any plans to expand your footprint globally?

We do. When we made that acquisition, I think our original thinking was a keen focus on the Americas. We have already made strides in terms of growing our wood business in Mexico and we have aspirations to glow that – to grow that business globally, where our most important current and potential future customers are. So, you should expect to see movement on that in the ensuing years.

Thank you.

Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Thank you. Robert just on auto OEM pricing one of your competitors referenced they got about 2.5% pricing in the quarter with their auto OEM customers. Are you experiencing or realizing similar types of price increases in that area?

In LV in certain markets we are obtaining pricing increases. Obviously, we endeavor to do everything we can from a cost production perspective and an innovation perspective so as not to have to increase prices to our customers. However, in – there are markets where we have gone in with price increases and we are getting price increases, because it's necessary given the raw material inflation that we have seen. And we're encouraged by the progress we've made.

Same subject, are you realizing higher prices in auto OEM in all regions or just some regions?

I think David on the question of price there I think getting any more detailed by region at this point is probably more information than we're willing to share. What I would say is that it's certainly at top of the list for everybody in all regions. However, not all regions are created equal in terms of the amount of raw material inflation that they've seen or the amount of cost inflation that they've seen. There are some regions that have seen more than others and therefore the amount of price increase that we're going after in those regions varies.

Thank you, very much.

Thank you. Our next question comes from the line of Ghansham Panjabi with Baird. Please proceed with your question.

Hi good morning. This is actually Matt Krueger sitting in for Ghansham. How are you doing?

Hey Matt, good morning.

Good morning. So understanding that mix can skew the optics of this a little bit, can you talk about the apparent moderation in pricing contributions across each of your segments? And then, should we expect pricing contributions on that price mix line to reaccelerate during the remainder of the year or remain kind of in line with 1Q?

So overall, with regard to the moderation, I think as we said before and in any given quarter, when you look at price capture and the performance side, there are timings of when price increases occur. There's timings -- there's some markets where you'll be increasing price only once a year, other times when you'll be increasing it multiple times a year depending on inflation and what jurisdiction that market is located. So sort of quarter-to-quarter variability on the performance side in particular, you're going to see that. And then in terms of Light Vehicle, as we begin to get full quarter's worth of the price increases that we had put in place, you should see that benefit. The other variable within Transportation of course is the amount of production that actually comes out of the individual companies or brands where we've increased prices. So obviously, if they produce less vehicles, even though we may have gotten the price increase, the actual amount of price that will flow through in absolute dollars could be somewhat less. Likewise if they produce more on those models, then we could see more price flow through.

Okay.

And as far as full year guidance -- full year guidance as far as pricing, you'll see as far as what we've reiterated 1% to 2% ex-FX. We've been fairly cautious as it relates to volume and price within the Transportation Segment, but you could expect larger of that 1% to 2% coming from the performance side and split it evenly between volume and price.

Okay. That's very helpful. And then just touching on demand a little bit, can you provide some added detail on the cadence of core growth performance across your business by month during the first quarter? And any comments on how that's progressed as we move into April could be helpful? I'm just trying to get a sense as to whether demand has accelerated as the year progressed or if there's been any volatility?

I'd say that the overall of the profile that we've seen in the first quarter is very similar to what we've seen in years passed. Typically January is one of the lightest months of the year. Things tend to pick back up as everybody comes back to work. In some jurisdictions or some countries, people come back more, the middle of January things pickup. And then really March is a critical month for anybody that's in our markets because it's such an oversized month compared to the full quarter. And then in terms of what we're seeing thus far through the month of April, I'd say that we continue to see conditions that are fairly similar to what we saw in the month of March.

Okay. That's very helpful. That’s it for me. Thanks.

Thank you. Our next question comes from the line of P.J. Juvekar with Citi. Please proceed with your question.

Yes, hi good morning. Robert, you are going from EBITDA reporting to EBIT. So you are adding a capital charge to your metrics and to compensation metrics of your people. How do you think that will change the behavior of your managers and salespeople?

So we've made -- certainly we've received feedback from investors and also just looking at our evolution as where we are as a company, one of the things that we're trying to focus much more as a management team in the broader organization is on return on invested capital and making sure that we are making always the right decisions in how we spend and how we allocate capital. So the move from more of a private equity carved out metric like EBITDA to EBIT, essentially you're including depreciation and amortization there. So when you think about whether customer -- whether your sales force or other people as they think about the assets that are actually going to be required to be put in place to effectuate sales or grow the business, whether those are financial assets in the form of customer incentives or whether those are physical assets in terms of expansions, we want everybody thinking in the company about that it's not free. All of those decisions do have a cost associated with them and we're happy to underwrite those costs, but there has to be an associated return with that. And I think that's going to go along the way in the culture and the evolution of the company to aligning the way management is compensated, and the way the broader organization thinks more in line with what long-term shareholders' expectations are in terms of how we think about and how we run our business.

Thank you. That's useful. And my second question is about your M&A pipeline. I know in the past you had complained about valuations expectations by the sellers. Has that changed or has the valuations sort of they -- have they moderated any at all? And how are you thinking about M&A versus buyback? Thank you.

Great question P.J. In terms of what we're seeing in the market, there were about three deals that we've looked at -- we took a hard look at over the past four, five months. And on those transactions the returns, the valuation and -- not much the valuation, but the associated return that we could achieve was not at a level that was more attractive than other internal options we had, whether putting money to work internally in the company and high productivity CapEx projects or in buying back our stock, which we felt was at a very attractive level, and thus we stepped up the rate out of buybacks. M&A is an integral part of our strategy in terms of building out our coverage globally, building out different verticals within each one of our end markets and we remain committed to M&A, but not M&A at any price. And so we will continue to be return-disciplined as we go forward and look at M&A transactions.

Okay. So correct me if I'm wrong, but you are saying that the sellers' expectations haven't changed much.

I wouldn't -- it depends on -- I'd say that the deals that have been in the market over the last five months to six months that we've looked at and there are others in the industry that have looked at those same transactions, the values that we were going to have to pay and that were eventually paid for those transactions -- for those companies were not values that generated a return that we felt was sufficient given other alternative uses that we had for our capital. So it's not to say that they were good deals or bad deals, we just had better opportunities for our money. In general, however, I would say in the marketplace, you are not seeing expectations come down meaningfully in terms of valuation. I would say, the one market where you're starting to see things come of a little bit is China. We're starting to see people have a little bit more reasonable expectations for their businesses. But in North America and in Europe valuations still remain relatively high.

Great. Thank you.

Thank you. Our next question comes from the line of Steve Byrne with Bank of America Merrill Lynch. Please proceed with your question.

Yes. Thank you. What do you view as the primary barriers to switching Refinish coating supplier for an auto body shop? What are those primary barriers? And what would you say is what led to your market share gains recently, was it your technology or may be perhaps investments like you've made in the past in some of these body shops?

And so our customers essentially, our goal in working with our body shop customers is always to help them be more efficient and to help them be more effective. We have the most productive waterborne paint system in the industry and that paint system has allowed us to penetrate a number of markets. And we've actually had tests of our product against competitors' products. And our system has been proven time and again to be the most efficient. And as we've seen customers that we didn't previously have or body shops maybe within customers that haven't sprayed our paint before, and they spray out paint, and they look at cost per labor hour, we're able to achieve a level of efficiency that's better than our competition. And as a result of that, we continue to grow our business. Additionally, the service that we're able to provide, we have one of the largest technical service support organizations in the industry not only for North America, but also for Europe and certain countries in Asia as well. And I think we're able to provide a level of service and a level of customer intimacy that is difficult to beat. In terms of recent share gains that we have made those have not been on the back of customer investments.

And for a customer to switch to your waterborne, do they need to invest or modify their paint booth? And how do you view your investments in these types of opportunities as opposed to using that capital and share repo?

It depends on the type of body shop. If it's a body shop that's -- that already has booths and that are appropriate to spray, waterborne coatings, then the switch doesn't require any capital investment. What it does require is new mixing machine, new computer balances as well as the training of painters. And that's really where the investment comes in is having our technical team work with and train the painters, because each paint manufacturer's spray system will stay differently and does have a learning curve associated with it. Now if it's a body shop that was historically spraying solvent-borne and they have to upgrade their paint booths or replace their paint booths in order to be able to spray waterborne. For those customers, they need to have a certain amount of volume over a breakeven level to have the investment as well as the higher cost of spraying waterborne makes sense. And that's really on a case-by-case basis. Most of the investment, if we make it in our customers, we try and link to specific targets, either related around acquiring additional body shops, or if they are planning to dramatically increase the size of the business that will set pretty aggressive performance targets. But those are really the two drivers of if there is a customer investment.

And the number of opportunities you...

And in terms of stock buybacks, just -- took the last part of your question there. I wouldn't say that we think about body shop conversions and doing more or less is having any material impact on stock buybacks.

Okay. Thank you.

Thank you. Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question.

Hi. Thanks very much. I think your light vehicle volumes were down some high single-digit rate in the quarter. But you said in the call that you thought that IHS global auto build this year, I think would be down 1%. So if IHS is correct and they are down about 1%, would that mean that your volumes in light vehicles would be down roughly 1% or would it be flat?

So, Jeff, we haven't provided that exact guidance. But we historically and follow for 2019 HIS, and we adjust it for our specific customers in specific regions. What we've said, and what we're reiterating, our volumes are fairly flat for 2018.

Volumes would be flat for 2018. And can you update us as to your cost reduction programs? How much you achieved this quarter? How much you expect to achieve for 2019 and for 2020?

So the phasing of Axalta Way II, sequentially it's $50 million a year when we announced it. We're still expecting to get $50 million in productivity. Largely that's going to offset inflationary impact. We haven't actually quantified the first quarter impact. But we're on track to hit that $50 million goal for this year.

Okay. Great. Thank you so much.

Thank you. Our next question comes from the line of John McNulty with BMO Capital Markets. Please proceed with your question.

Yes. Thanks for taking my question. Just on the distributor channel inventory management that seems to be going on, does that change how you have to do your business either helping you to reduce your own working capital need or do you have to even have them a little bit higher, because it seems like it's more of adjusting time model. I guess how should we be thinking about what the impact is on your business?

So basically in terms of how we run our business, it doesn't fundamentally change how we run our business on a day-to-day basis. If a given large distributor reduces the number of inventory locations that they have and consolidates inventory or if they decide to run at lower levels of inventory to reduce working capital and generate more cash, obviously that can have a slight impact on volume which we're seeing. However, in terms of how we run and organize our business, we're not seeing changes there.

Makes sense. And then, with regard to the share gains and account wins that you're seeing in the Refinish segment. I guess can you help us to think about quantifying that? I mean can it move the needle a point or two in terms of overall volumes, as we're kind of looking out to the back half of this year and into next year, or was that maybe too aggressive?

So the way to think about it is -- we're not providing specific insight into the numbers themselves. But typically what you'll see with -- when there is shop conversion, there'll be some initial spend in terms of, as I said, getting the painters up to speed and trained as well as some initial investment in the initial stock and mixing machines for a body shop, all of that is at the beginning. And then you see the gains from that filter in over time.

Got it. Thanks very much for the color.

Thank you. Ladies and gentlemen, this concludes our time allowed for questions. I'll turn the floor back to management for any final comments.

Thank you all for dialing in today. And look forward to any questions you have as follow-up. Thanks again.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.