Josh Vesely

Josh Vesely inquired about the performance of the Industrial segment relative to expectations, current trends, and regional dynamics, particularly after Chris Villavarayan mentioned Performance Coatings came in below expectations.

Answer

CEO Chris Villavarayan stated that Industrial sales were lower in Q4, driven by market conditions, but anticipated green shoots in 2026 from interest rate policies and construction. He noted strong 5% growth in Asia-Pac Industrial due to EV-related coatings. Villavarayan expressed pride in the Industrial team's margin performance, exceeding their 400 basis point target by 200 basis points.

Josh Vesely from Baird, on for Ghansham Panjabi, asked for a breakdown of Axalta's Q2 organic sales performance relative to its end markets and questioned the drivers behind the implied Q4 step-up in adjusted EBITDA guidance.

Answer

CFO Carl Anderson detailed that while consolidated organic sales were down ~3%, the Mobility segment outperformed, particularly in Commercial Vehicles, which was down only low-single-digits versus a market down 17%. He attributed the expected Q4 EBITDA strength to ongoing cost actions, a sequential revenue step-up in Mobility, and a positive inflection in the Refinish business, expressing confidence in delivering the full-year guidance.

Josh Vesely of Baird inquired about customer sentiment regarding end-market demand amid tariff discussions and asked for more detail on the near-term impact of tariff-related raw material inflation.

Answer

CEO Ole Rosgaard stated that customer sentiment is largely unchanged, with softness in housing and auto builds impacting chemical customers. He noted the direct tariff impact is not material and well below the $10 million worst-case scenario due to mitigation efforts. EVP & CFO Larry Hilsheimer added that resulting steel price hikes in the U.S. could create a temporary margin tailwind, potentially making the tariffs a net positive for Greif.