Oct 29, 2026 earnings call — European Refinish weakness and merger update
Q3 net sales were $1.311 billion and adjusted EBITDA was $282 million.
Revenue $1.3B (est $1.3B) · EPS $0.63 (est $0.70)
Key quotes
"Sales in the region were lower than anticipated following 5 consecutive quarters of record sales as a weakening macroeconomic environment led distributors to adopt more cautious ordering patterns during the quarter."
"Net sales increased 7% year-over-year to a quarterly record of $493 million."
"We have now secured regulatory clearance in 2/3 of the required jurisdictions and the divestitures of AkzoNobel's European Refinish business and Axalta's North America Building Products business are underway."
Analyst Q&A 16
Refinish insurance and light vehicle trends
Q (Caleb Boehnlein · BMO): How should we think about Refinish given insurance premiums and loss rates through 2027? Also, why did you outperform global auto builds in Q3 and what about Q4 with China stepping down?
A: Management said the shortfall versus expectations was driven by Europe, where performance beat their expectations. They noted insurance rates in Europe did not follow North America and that Refinish in Europe had five record quarters. For Light Vehicle, sales were flat despite builds slightly down because strength in Asia, Latin America, CV up 24%, and CTS wins offset North America and Europe softness.
"The difference here was our expectations versus what ended up in Europe." — Chrishan Anthon Villavarayan (CEO)
Price vs mix in Performance Coatings
Q (Kevin McCarthy · Vertical Research Partners): How much of Performance Coatings' improvement is pure price versus mix, outlook for Q4, and pricing differences between Refinish and Industrial Lines?
A: They said pure price for Refinish has been 4.8% and consolidated pure price is running at 2%. Price/mix remains positive for the year, but entering adjacencies and economy segments lowers margins versus Refinish. They noted Refinish sales near $2.1 billion and Performance Coatings margins this year around 23.5%.
"So pure price for Refinish has been 4.8%." — Chrishan Anthon Villavarayan (CEO)
Industrial sales and European distributor pause
Q (David Begleiter · Deutsche Bank): Why were your industrial sales more modest versus peers, and what caused the change in distributor behavior in European Refinish?
A: Management said much of their Industrial business is North America and tied to retail or residential, which is weak today due to interest rates and housing. They called Asia a bright spot, with electrical products and battery coatings growing for seven quarters. For Europe, they said distributors in the indirect channel paused filling inventory for Q4 because of macro and political uncertainty, which drove the Refinish delta.
"If you think about it, and the best way to describe our business is that there's a portion in Asia, but the majority of our business is North America and is tied to retail or residential." — Chrishan Anthon Villavarayan (CEO)
Macro demand outlook and Q4 guide
Q (Joshua S. Vesely · Baird): High-level view on demand across end markets and geographies given higher rates and cost inflation?
A: They guided that for Q4 sales are expected to be about flat year-over-year. Industrial should be roughly flat, Commercial Vehicle up year-over-year, and Light Vehicle down to flattish. They said Commercial Vehicle production is expected to increase in 2027 and they are increasingly bullish on Refinish in North America and Europe.
"I think very short term, if you look at the Q4, we are guiding to about flat sales." — Carl Anderson (CFO)
Body shop wins timing and costs
Q (Harris Fein · Wolfe): What is the timing for onboarding new body shop wins and where are those wins located geographically?
A: They said they have achieved about 2,600 body shop wins through the quarter and won two very large top-10 body shops in Q2. Most of the volume is in North America and implementations are accelerating, with many starts in Q4 and mostly in the front half of '27. They plan almost $8 million of investments in Q4 to onboard those customers.
"A lot of that will start up in Q4 and then mostly in the front half of '27." — Chrishan Anthon Villavarayan (CEO)
How much Refinish volumes fell
Q (Matthew DeYoe · BofA): How much did Refinish volumes fall in Europe and consolidated? Also, what is the likely market-share tailwind to volumes in 2027 from wins?
A: They said EMEA Refinish was down year-on-year by a double-digit percent. Consolidated Refinish volumes were down about mid-single digits. They estimated the incremental opportunity from wins in 2027 is in the same range the analyst suggested, depending on how the market evolves.
"Yes, EMEA specifically, we were down year-on-year double-digit percent." — Chrishan Anthon Villavarayan (CEO)
European margin hit and raw material outlook
Q (Patrick Fischer · Goldman Sachs): How much of the EBITDA decline was lost volume versus other factors, and if oil stays at current levels will raw material inflation increase into next year?
A: They said consolidated margin was down about $12 million year-over-year and that a $5 million to $6 million hit in the quarter came from freight increases they have not yet recovered. For raw materials, they said full-year inflation is tracking up about mid-single digits and they are finishing Q4 at a high single-digit inflation run rate. If that run rate holds, they expect to carry that into next year and will implement additional pricing and surcharges.
"As we assess it, for the full year, we're probably -- we're still tracking year-on-year to be up about mid-single digits." — Carl Anderson (CFO)
Will European decline carry into 1H
Q (Joshua Spector · UBS): Should we assume the European Refinish decline carries into the first half because of inventory timing, or will it normalize exiting this year?
A: They do not believe the decline will need to be annualized. They said the change was inventory timing and a pause in the direct channel, not broad destocking or a jump in claims. They noted year-to-date Refinish is still up 5% and they adjusted guidance for Q4 accordingly.
"From my perspective, I think this is just inventory timing and because especially when I look at our retail and in our direct channels, that's down slightly." — Chrishan Anthon Villavarayan (CEO)
Antitrust focus and Wood Coatings separation
Q (John Roberts · Mizuho): Did the antitrust review focus on Europe overall or country-by-country? Was Wood Coatings integrated and will separation have stranded costs?
A: They said the Europe remedy is the Axalta Refinish business divestiture, and those remedies are the two the companies are working on. On Wood Coatings, they said the business was integrated but has its own manufacturing and standalone P&L, making it a relatively clean separation that they started a month ago and are taking to second-round bids.
"As we've assessed it, as you see where we're -- what we've announced that specifically for Europe, it is the Axalta Refinish business that will be divested." — Chrishan Anthon Villavarayan (CEO)
Why only 2% pure price achieved
Q (Abigail Eberts · Wells Fargo): You achieved about 2% pure price overall despite raw material moves. Are you holding off pricing because of demand elasticity or is this a realization issue?
A: They clarified Q3 pure price was about 3% and the full year is about 2%. Refinish ran higher, close to 4% to 5% in Q3, while other businesses ran lower. They said they are looking at additional surcharges and will reassess pricing for next year while managing costs and SG&A holistically.
"Yes, specifically to the third quarter, we had about 3% pure price in the quarter for the full year." — Chrishan Anthon Villavarayan (CEO)
European Refinish differences and Mobility pricing
Q (Barclays): Why does your European Refinish view differ from peers, and what's the update on price/cost and margins in Mobility coatings?
A: They said differences stem from distribution models and where each company competes; Axalta plays premium while others play economy, and their full-year Refinish is up 5% despite the quarter. For Mobility, they said the short-term price/mix impact came more from CV mix than Light Vehicle, and they expect raw material pass-through timing to catch up in Q1 next year.
Were remedies assumed in $600m
Q (Laurent Favre · BNP): Did you always assume those two assets would be divested in the remedies, or did you use headroom to keep the $600 million unchanged?
A: They said it was headroom they had as they evaluated the remedies. They have consistently treated $600 million as the floor. After discussions with regulators and accounting for roughly $500 million of sales in remedies, they found offsets and still believe $600 million is the floor.
"Yes. It was the headroom that we had as we looked at this." — Chrishan Anthon Villavarayan (CEO)
Are figures net sales and destocking confidence
Q (KeyBanc): When you say up 5% year-to-date, is that net sales or volume? And how confident are you this was destocking that will recover versus true restocking effects? Also, how do CV vs Light Vehicle margins differ?
A: They said the percentages they quoted are pure sales numbers. They are calling for the European business and Refinish to be roughly flat year-over-year in Q4 and early October is tracking to those expectations. On mobility, they said CV margins look more like Refinish margins, and CV is about $500 million inside the mobility business, with strong growth in Commercial Transportation Solutions beyond Class 8 trucks.
"But as we look forward, even in the fourth quarter and with the implicit guidance, we are calling for our European business to be roughly flat and Refinish on a year-over-year basis." — Chrishan Anthon Villavarayan (CEO)
Premium vs economy mix and industrial strength
Q (Patrick Cunningham · Citibank): Are you seeing differences between premium, mainstream, and economy within Refinish and how will mix evolve? Also, where in Industrial is Asia strength coming from and building products volume trends?
A: They said Axalta is the premium leader with about 40% of that market and premium is growing less than economy, which affects mix and margin. They described Refinish as resilient after several market challenges and said volume is the main factor. For Industrial, Asia strength is in electrical products like impregnating resins for motors and coatings for battery enclosures, with seven quarters of growth; Europe is stable and North America remains weak.
"Axalta is #1, we have about 40% of this market." — Chrishan Anthon Villavarayan (CEO)
When will claims and collision normalize
Q (Arun Viswanathan · RBC): When do you expect claims and collision rates to normalize? Will that require deflation?
A: They said they are beginning to see stabilization in North America and year-on-year declines in claims are getting smaller. Collision rates are roughly in line with expectations, and they expect a pretty stable environment into Q4 and early next year. Europe did not have the same impact as North America, and their strategy of market share wins, adjacencies, retail, distribution, and pricing positions them well for next year.
"Specifically in that market, we are beginning to see that stabilize as we think about where claims are." — Carl Anderson (CFO)
Customer reaction to persistent inflation
Q (Laurence Alexander · Jefferies): Are customers preparing for inflation shocks to be recurring, and how are they changing value propositions on the industrial side?
A: They said pricing conversations now happen frequently, roughly quarterly or every six months, and these talks have become more straightforward, constructive and data-driven. Customers are increasingly passing pricing through to end consumers. Regionally, North America remains muted, Europe is more stable, and Asia demand stays strong because of EV and battery-related products.
"I think to your point, it feels like quarterly or at least maximum, it's 6 months where you're having a conversation on pricing." — Carl Anderson (CFO)