Chris Mecray - VP of IR Charlie Shaver - Chairman & CEO Robert Bryant - EVP & CFO.

Ghansham Panjabi - Robert W.

Baird Christopher Parkinson - Credit Suisse Arun Viswanathan - RBC Capital Markets Steve Byrne - Bank of America Merrill Lynch Duffy Fischer - Barclays Capital Chris Evans - Goldman Sachs Kevin McCarthy - Vertical Research Partners Aleksey Yefremov - Nomura Securities Matt Gingrich - Morgan Stanley David Begleiter - Deutsche Bank Laurence Alexander - Jefferies John Roberts - UBS PJ Juvekar - Citigroup Jeff Zekauskas - JPMorgan Mike Harrison - Seaport Global Securities.

Welcome to the Axalta Coating Systems' fourth quarter 2016 earnings conference call. Presenting today will be Charlie Shaver, Chairman and Chief Executive Officer and Robert Bryant, Executive Vice President and Chief Financial Officer. [Operator Instructions]. Today's call is being recorded and replays will be available through February 15.

Those listening after today's call should please take note that the information provided in the recording will not be updated and therefore may no longer be current. At this time, I would like to turn the call over to Chris Mecray for a few introductory comments. Please go ahead, sir. .

Thank you and good morning. This is Chris Mecray, Axalta's VP of Investor Relations. We appreciate your continued interest in Axalta and welcome you to our fourth quarter and full-year 2016 financial results conference call. Joining us today are Charlie Shaver, Chairman and CEO and Robert Bryant, EVP and CFO.

This morning, we released our quarterly financial results and posted a slide presentation to the Investor Relations section of our website at www.axaltacs.com which we'll be referencing during this call.

Both our prepared remarks and 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 these 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 will now turn the call over to Charlie. .

Thank you, Chris and good morning, everyone. Thanks for dialing in this morning and I'm pleased update you on our performance during the fourth quarter and the full year 2016 as well address our expectations for 2017. Overall, I'm very pleased with our results.

For the quarter, we posted mid single-digit top-line growth, ex-currency and high single-digit adjusted EBITDA growth year over year. Including strong EBITDA margins, up 80 basis points from last year. We also met our key milestones operationally, financially and strategically to close out the year on a very positive note.

As we look at the business a month into the new year, we continue to see a generally stable and supportive global business climate with solid demand in the majority of our customer segments in the countries that we serve.

The global coatings markets are relatively unchanged sequentially and we're somewhat encouraged by early signs of near term stabilization in certain Latin American countries that have been under intense pressure for several years.

All in all, we see 2017 developing as a reasonably solid year from a demand standpoint and we continue to take actions to ensure that we maximize shareholder returns from our existing business and the incremental investments that we've made.

I would now like to cover some of our fourth quarter highlights and 2017 goals and then turn it over to Robert to review our financial performance and outlook in more detail. So if you would, turn to slide 3 in our presentation.

Fourth quarter results slightly exceeded the expectation that we set on our last quarterly call which we reiterated in December. We executed well during the quarter to drive this result, with highlights seen in strong product mix and adjusted EBITDA margins, success of previously launched new products and excellent cash flow to lower our debt ratios.

Looking at fourth quarter net sales, we reported $1.03 billion. Which was up 2.6% year over year, but inclusive of a 3% hit from currency translations. So our constant currency growth was 5.6%. This included a 3.1% contribution from acquisitions, primarily from Duracoat and two other transactions we completed during the third quarter of 2016.

As with the full year, fourth quarter benefited from a slightly richer product mix. Overall organic volume though positive continues to be muted by weaker Latin America performance and lower commercial vehicle volumes in North America.

Refinish and light vehicle end-markets saw continued revenue growth in the mid-single-digits before negative FX and the benefit of acquisitions. Though refinish did see fairly global volume drag in Latin America from the ongoing recession in certain countries. Adjusted EBITDA grew 6.4% year over year to $227 million versus $213 million last year.

This was derived from modest volume leverage, acquisitions, more notable price and mix contribution and our ongoing progress in Axalta Way productivity goals, offset partly by continued operating investments to support growth. Adjusted EBITDA margins for the fourth quarter of 22% was very solid, up 80 basis points versus 21.2% last year.

For the full year, we're pleased to have slightly exceeded the low end of our previously guided $900 million adjusted EBITDA target, with $907 million comparing against $867 million in 2015.

This adjusted EBITDA result, of course, includes a notable negative impact from currency translation which reduced our dollar reported net sales by 4.6% and dropped down at a margin rate somewhat higher than corporate average due to geographic mix.

Sales for 2016 were posted at $4.1 billion, largely flat versus 2015 but inclusive of the 4.6% of FX impact. On a constant-currency basis, sales increased 4.3% for the year. Our product innovation initiatives continued to yield positive results in the fourth quarter as well. We saw new product introductions across end-markets and in multiple regions.

Highlights include our new Voltafram impregnated resin product for medium and heavy-duty electrical generator applications, our pro-core HP line of protective coatings for harsh environment in an architectural and industrial applications and our new Nap-Gard high-temperature protected internal pipe coatings for severe corrosion and down-hole pipe applications.

We also opened new Middle East headquarters in Dubai this quarter and launched our new major multi-year capacity expansion project in China. We're also pleased to note that we finished the year well in excess of our target of ongoing productivity initiatives, ending the year with close to $60 million in combined savings.

In the fourth quarter, we also booked an incremental restructuring charge of $37 million aimed at driving savings in 2017 and 2018. Similar to the third quarter, this charge is aimed at headcount reduction, primarily within our European operations though inclusive of two manufacturing closures outside of Europe.

As 2017 is last year of our three-year combined savings total of $200 million from our two productivity programs, I would like to note that we will continue to develop future goals for incremental productivity beyond 2017.

As I previously stated, we see ourselves in the middle innings of our overall opportunity in this regard and this remains the case. While the next phases of our productivity actions are likely to involve somewhat heavier lifting, we believe that the cadence of savings seen over the last few years should be sustainable for several more going forward.

We continue to refine these targets, but I believe the Axalta organization remains ripe with opportunity in a number of areas that we can address over time. And this should continue to produce incremental productivity in excess of fixed-cost inflation. Turning to the balance sheet. We made significant progress over the back half of 2016.

In the fourth quarter, we amended both of our U.S. dollar and euro term loans to take advantage of the low-interest-rate environment as well as extending their maturities. The combination of these refinancing transactions completed in the third and fourth quarters and the prepayment of $150 million in U.S.

dollar term loans in October has reduced our annual cash interest expense by approximately $35 million. Additionally, we also added attractive benefits to terms and structure. On the cash flow side, we posted notably strong cash from operations of $559 million in fourth quarter versus $410 million last year.

Driven by stronger working capital performance, as well as operating results. Our cash flow profile has changed significantly in the past year and in our guidance indicates this should continue in 2017. Regarding M&A, we closed a small transaction in the fourth quarter, bringing the total for the year to six.

As before, we remain confident in the financial performance of the deals completed based on results to date and our planned integration efforts which remain on track. We also recently closed on two additional acquisitions in the past month, subsequent to year end, including Ellis Paint and Century Industrial Coatings.

These two deals will continue to strengthen our industrial coatings and refinish offerings in North America. Wrapping up, we closed out a solid year with broadly strong financial results which continue to showcase our combined longer term goals of focusing on growth and also maximizing productivity and organizational effectiveness.

We believe we're establishing a cadence and a culture of performance as Company. This comes with an expectation of continued market outgrowth, persistent organizational refinement and a relentless focus on shareholder value creation.

We started the year with a specific growth objective of 4% to 6% top line ex-FX and $900 million and $940 million in adjusted EBITDA. We ended the year with 4.3% net sales growth, ex-FX and $907 million in adjusted EBITDA. It bears reminding however, that this result occurred despite a series of real headwinds during the year.

Which included incremental FX impact, weaker-than-expected Latin America volumes, slightly slower North America commercial vehicle production and also tapered volumes related to cycle industrial markets.

So we see this result in a context really highlighting Axalta's flexibility and responsiveness to achieve our plan, even when certain elements the business don't cooperate. The key source of positive offset last year include ongoing refinish and light vehicle growth, firm control on Axalta waste savings and execution on our M&A plan.

Turning to slide 4, I would like to briefly comment on our goals for 2017. Our key objectives for the year start with our focus on continuing to outgrow our end-markets.

We have a full slate of new products to launch, we have plans in place to continue our global market expansion and we continue to generate market share gains by seeking to align with the best customers in each end-market, including those who are active consolidators.

Axalta also remains a Company with proactive levers to pull as we continue to refine our organization and cost structure and drive productivity. We remain a 2017 objective of generating the remaining savings on our $200 million productivity goal and the targets we set back in 2014 and early 2015.

At the same, time we've initiated next steps and expect to make further progress on our cost structure throughout the business and in multiple regions. As mentioned last quarter, we're also focusing on operating cost discipline which comes after several years of actively investing in our growth infrastructure.

We seek to be good stewards of capital and recent investments must be evaluated for success and held accountable for hurdle rates. At Axalta, we remain focused on the customer and understand that success is built on a foundation of customer service and the intersection of product innovation and customer productivity.

In 2017, we continue to drive robust technology investment to maintain an edge in our markets. Among other initiatives, we're actively investing in R&D and tech services, with a budget that's over 4% of net sales.

And likewise, maintain the biggest commitment in customer technical service in our Company's history, including investing in additional training centers in multiple key markets around the world. As we look improve our returns on capital, we aim to refine our capital allocation discipline.

For 2017, we believe we can apply at least $100 million of excess capital to M&A and we're off to a good start already with the two transactions closed since year end.

The M&A pipeline remains quite full at present and we continue to evaluate a variety of transactions to broaden our global technology base, market access and product list while focusing on transactions with superior returns relative to current market averages.

Further, we're driving a culture of capital allocation awareness through the organization, seeking to evaluate our operating spend under a similar return on assets lends to make sure we make the most of all our resources.

Adjusting our goals with respect to balance sheet health have now been achieved and our net debt-to-adjusted-EBITDA ratio of 3 at year end and with a totally reshaped capital structure. We're now in a position to pursue broader capital allocations as we move through 2017. Finally, we're very proud of our performance to date including all of 2016.

We acknowledge the impact of intense translational FX pressure coupled with some economic changes have partially masked the full economic value of the improvements that we've instilled since inception.

We continue to see substantial room to improve our operating metrics and will continue to seek bolt-on deals to collectively drive incremental value creation with returns that exceed current public market deal averages. We appreciate all your support and look forward to driving the results for you in 2017.

With that, I will turn it over to Robert now to review our fourth quarter results in a little more detail. .

Thank you, Charlie and good morning, everyone. Please turn to slide 5 for a summary of our fourth quarter consolidated results. Constant currency in net sales in the quarter increased 5.6% year over year, driven by 7.7% growth in performance coatings and 2.7% growth in transportation coatings.

This growth was comprised of 3.4% volume growth, combined with a 2.2% average selling price in mixed realization. Negative foreign currency translation reduced as reported net sales by 3% in the fourth quarter, compared with an 11.5% impact in the same quarter a year ago and just 2.1% seen last quarter.

The majority of the FX impact relates to the devaluation of the Venezuelan bolivar, the British pound and the Mexican peso, offset in part by solid appreciation for the Brazilian real. Our largest [Technical Difficulty] currency exposures are detailed in the appendix to our earnings presentation.

Regarding Q4 sales volumes, Axalta generated 3.4% volume growth. Though similar to the third quarter organic volumes were only modestly positive, excluding acquisition contribution of 3.1%.

Performance Coatings organic volumes were slightly negative, including a drag from Latin America refinish demand as well as continued slowness in Latin America and North America late-cycle industrial markets, though notably with no apparent worsening in sequential quarters.

Transportation Coatings, much like last quarter, posted solid volume growth in light vehicle, offset by a persistent weakness in commercial vehicle sales in North America.

Positive price and mix contribution of 2.2% in Q4 was driven by similar trends as Q3, with moderate core price realization augmented by FX-driven pricing to offset inflation in certain jurisdictions. Product mix in refinish was also a positive factor.

Transportation Coatings and industrial price metrics were broadly flat, with some negative price realization in light vehicle as we previously noted as an expectation on our last call. Adjusted EBITDA in the fourth quarter of $227 million increased 6.4% from last year's $213 million.

This profit growth was supported by an 80 basis point jump in adjusted EBITDA margin to 22%. Driven largely by price and mix leverage, acquisitions, some variable cost savings, as well as savings from productivity enhancement, offset partially by foreign exchange impacts and ongoing operating investments. I also wanted to comment on our U.S.

GAAP net income results, given the elements which were reported during the fourth quarter. We initiated a significant restructuring effort which resulted in a $37 million charge, as well as a $13 million charge associated with our term loan prepayment and amendments to our credit facility.

Lastly, due to the continuing weakening in Venezuela, we recorded a $58 million non-cash impairment on the operating assets within the country. Although this represents a significant charge on our Q4 U.S. GAAP earnings, Venezuela represents less than 1% of both adjusted EBITDA and net sales within our consolidated 2017 guidance.

Down from close to 3% in 2016. Moving on to our Q4 2016 Performance Coatings results. Fourth quarter net sales in Performance Coatings increased 7.7%, ex-FX, year over year, driven by growth in both end-markets and all regions except Latin America.

Total volume growth of 2.5% was more than accounted for by 4.3% acquisition contribution, with core volumes in impacted largely by ongoing weakness in Latin America as well as slowness in North America industrial markets.

Average prices in the segment increased a solid 5.2%, led by increases in refinish and flatter average selling prices in industrial. Net sales growth as reported was offset by 4.3% currency translation impact. Refinished net sales increased 4.9%, ex-FX, versus last year's fourth quarter, driven principally by strong price and mix effects.

Net sales in refinished as reported at 0.1% increase included 4.8% negative FX effect. Constant currency net sales in our industrial end-market increased 14.8% year over year, including significant contribution from our Duracoat acquisition to volume growth.

Fourth quarter organic volumes in industrial remained weaker broadly in Latin America and in parts of North America, while other regions continued to show solid growth. The effective average selling prices was largely flat as expected. Performance Coatings generated adjusted EBITDA of $139 million in Q4 versus $131 million in Q4 2015, a 5.8% increase.

This result was driven by a positive contribution from price and mix, acquisitions, supportive variable cost leverage and partially offset by a negative currency translation impact and ongoing operational investment in the period.

Adjusted EBITDA margins of 22.7% compared to 22.2% in last year's Q4 was driven by price and mix and positive progress within our productivity initiatives. Switching now to our Q4, 2016 Transportation Coatings results. Net sales for the fourth quarter increased 2.7% year over year before a negative currency impact of 1.4%.

Net sales growth included 1.5% contribution from acquisitions in the period. Core growth in constant currency was driven by mid-single-digit light vehicle growth, offset by the ongoing downturn in the smaller commercial vehicle end-market.

Light vehicle net sales increased 6.6% in Q4 before foreign currency impacts with most regions contributing, offset by a weaker performance in EMEA including certain peripheral countries such as Turkey and Russia.

Asia-Pacific continued to benefit from stronger demand in the quarter against last year's weaker result, following the production slowdown that began in August of 2015. Commercial vehicle net sales declined 11.5%, ex-FX, driven by continued weaker production rates in both North America and Latin America heavy-duty trucks that began in Q4 2015.

Fourth quarter however, witnessed lower sequential decline rates as we lapped the downturn in 2015 and could suggest a bottoming process given more stable order trends in December and January. Broader commercial vehicle weakness and other non-truck end-markets such as agriculture and construction also continues however.

Transportation Coatings generated Q4 adjusted EBITDA of $88 million compared to $82 million a year ago. Benefiting from moderately positive net sales drop through, as well as stronger margin performance this year. Adjusted EBITDA margin increased 120 basis points to 20.9% from 19.7% in the fourth quarter from the prior year.

This included the benefit of both net sales drop through, as well as help from Axalta Way of productivity and moderate variable cost relief year over year. This was partially offset by investment spending to support regional growth plans. Turning now to slide 8 on our full-year consolidated results.

For the full-year 2016, Axalta net sales increased 4.3%, ex-FX, to $4.1 billion before a currency impact of 4.6%. Net sales for the full year included acquisition contribution of 2.2%.

The reported net sales decrease of negative 0.3% was comprised of 1.7% volume growth, 2.6% price and mix benefit, again offset by 4.6% negative translational currency impact. Performance Coatings posted full-year net sales growth of 6.6% on a constant currency basis before a 5.8% currency impact.

3.4% volume and price growth was recorded before a 3.2% contribution from acquisitions for the year. Transportation Coatings saw net sales growth of 1.1%, ex-FX, driven by flat volume and modest price and mix contribution. Negative translational currency impact of 3% for the year led to the reported net sales decline of 1.9%.

Adjusted EBITDA for the full year of $907 million increased 4.6% compared with the $867 million we achieved in 2015, with a margin of 22.3% versus 21.2% last year. This exceeded our target of at least 100 basis points of margin expansion for the year. Turning now to our balance sheet.

As of December 31, cash and equivalents totaled $535 million which is inclusive of the $150 million term loan prepayments we made in October. Total reported debt was $3.3 billion, resulting in a net debt balance of $2.7 billion. Our net debt to full year adjusted EBITDA ratio [Technical Difficulty] times at year end, down from 3.3 times last quarter.

Benefiting from strong cash-flow generation and partially from the devaluation of the euro. We're very pleased with our 2016 full year free cash flow generation, defined as cash flow from operations, less capital expenditures of $423 million. Compared to $272 million in 2015 and to the $360 million to the $360 million guidance we offered in December.

The strong working capital outcome this quarter and full year helped to drive our free cash flow result. We finished the year with a working-capital-to-net-sales ratio of 10.8%, with working capital defined as accounts receivable plus inventories, less accounts payable and accrued liabilities.

During the fourth quarter, we accomplished additional transactions to successfully complete a full refinancing of our long term capital structure within the second half of the year.

In December, we amended our term loans with new pricing, extended maturities, more balanced dollar and euro mix and other benefits and terms, reducing our cash interest expense by approximately $8 million annually. Compared with the second quarter and capital structure, we have lowered annual cash interest expense by just over $35 million.

Extended maturities significantly, rebalanced our dollar and euro notes to more closely match our business volumes and realized other benefits and terms. All this work has reduced our average cost of debt to approximately 3.8%, down from 4.8% a year ago which is a notable shift.

Regarding overall capital allocation, we've achieved our targeted net leverage ratio of 2.5 to 3 times this quarter. At this point, we've not removed further debt reductions from consideration as a possible use of future excess cash.

But we continue to evaluate best uses of our capital and would expect that debt reduction could be balanced with other uses. Assuming we continue to pursue high-return projects including attractive bolt-on M&A, internal investments and potentially other options including returning capital to shareholders over time.

Moving on to our 2017 full-year guidance. Today, we're reiterating the principal components of our guidance that we delivered in our December 15 outlook call, with minor upgrades for recently announced acquisitions which were not previously contemplated.

For net sales, we now expect net sales growth to be 1% higher than our December guidance, with as-reported net sales growth of 1% to 3% or 4% to 6% before currency impact. This ex-FX growth expectation is inclusive of now a 2% to 3% benefit from acquisitions already completed.

We've also updated our FX assumptions for the current forward consensus forecasts as indicated in the appendix to our earnings presentation. The primary sources of currency pressure expected this year include the euro, the pound and a basket of emerging market currencies.

The refinish end-market this year is expected to remain stable and to support low- to mid- single-digit core growth, with potential upside from share gain and geographic expansion efforts.

Our overall growth strategy in this business also includes active new product introduction and the benefit of continued consolidation by our end-customers, particularly in North America. Although we do not anticipate a significant rebound in Latin America this year, we do expect supportive markets in all other regions.

We expect our industrial end-market to also grow in 2017, in spite of pockets of slower demand witnessed in the second half of 2016, particularly in North America and Latin America. Our strategy continues to bear fruit.

Focused on expanded new account penetration, leveraging focused sales and marketing efforts coupled with new product introductions, fueled by innovation investment over the last few years. We added new accounts in 2016 at double-digit rates, though there were offsets in core account sales rates in areas that we have described.

We expect a similar environment in 2017, with upside possible if the North American outlook for new investment is realized including markets such as oil and gas that appear to be bottoming or possibly turning more positive in recent months. Gauged by such metrics as rig count and more supportive commodity prices.

Light vehicle net sales growth this year is anticipated to be up slightly, supported by global auto production up around 1% based on current forecasts by AIHS and others. And with upside possible from Axalta specific performance in areas where we're gaining new business.

Clearly, we're seeing more pressure on overall growth in this end-market given expected lower production rates in North America and slightly less growth in EMEA.

But Axalta's strategy remains bottom-up focused, we continue to pursue new opportunities to potentially enable above-market growth going forward after similar success in this regard in the last several years. The commercial vehicle market outlook remains constrained in 2017.

Though we anticipate less headwind relative to last year where we weathered significant downturns in heavy-duty truck, as well as some non-truck commercial customers. In 2017 we anticipate moderate additional reductions in North America class 8 production.

But a more supportive overall market picture to enable flat to slightly positive net sales growth outcomes through new account development and better performance in non-truck market segments. For adjusted EBITDA in 2017, we continue to expect a range of $930 million to $980 million.

In addition to the potential benefit of net sales growth with positive incremental drop through, we also stand to benefit from our expected Axalta Way of productivity savings.

This is partially offset by anticipated currently impacts which we believe should drop down to adjusted EBITDA at approximately a corporate average margin rate and continued incremental investment spend on growth, albeit at rates below the last several years as we leverage investment already in place.

For interest expense, full-year benefit of our refinancings has lowered our forecast to around $150 million versus $178 million in 2016. Consistent with our December guidance and including some expense associated with our interest-rate hedging portfolio, in addition to regular coupon interest.

Our adjusted income tax rate is still expected to be between 22% to 24%. We see capital expenditures of about $160 million, as timing factors make up for the slight underage of spend in 2016. Depreciation and amortization is expected to be approximately $335 million.

Including some increment from recent acquisitions, as well as accelerated depreciation from certain footprint rationalization actions we expect to take this year. Finally, we continue to expect free cash flow of $440 million to $480 million.

Unchanged from our last update and including the additional severance charge we took in the fourth quarter as we expect most of that cash outlay to incur in 2017. We anticipate cash restructuring spend in 2017 to approximate $55 million based on currently planned initiatives. This concludes our prepared remarks.

We would be pleased to answer any questions you may have. Operator, would you please open up the lines for Q&A. .

[Operator Instructions]. Our first question comes from the line of Ghansham Panjabi with Robert W. Baird. Please proceed with your question..

First off and looking back, what actually led to the EBITDA upside for 4Q? And also to clarify, did you have the accounting standard change embedded in your initial guidance? I think that added just under $3 million to net income for the quarter. .

Regarding our Q4 performance, we performed in line with our expectations and a little bit better, in particular in the area of refinish globally, as well as light vehicle in Asia-Pacific. Those are really the two main drivers of the outperformance in the fourth quarter.

And in terms of the adoption of our accounting standards, in the current guidance in terms of the changes to share count, we have not adopted yet the change for stock compensation for 2017. .

Okay. And the second question, going back to your outlook. Europe seems to be modestly better, based on comments out of your peer group. Just curious on what you're seeing from a macro perspective in the region? And also North American commercial trucks, you sounded a bit more positive as per your prepared comments.

Do you see an inflection there or do you still expect some lumpiness as we progress through 2017? Thanks so much. .

Ghansham, this is Charlie. Real quick on Europe, I think we see the same thing our competitors and our peers do, just slightly better conditions as we come into the first part of the year, not just in the core automotive markets, but industrial overall.

Certainly no effect from Brexit other than just emotion out there so far and Eastern Europe seems to be fairly stable. On commercial vehicle, I think we're responding to when you look at how the major producers have started off the first of the year.

Some of their bookings certainly seem to be a little bit up from what they originally thought back in October, November. But it's still pretty early to tell. .

Ghansham, on your previous question just a point of clarification. In 2016, since the standard was not yet instituted, the share count for 2016 would not include the adoption of the new accounting standard. However for 2017, our diluted share count of 246 million to 249 million does include the adoption of the new standard. .

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

You've clearly done a pretty solid job on your initial two cost-cutting initiatives. You mentioned some longer term broader initiatives that are still in the middle innings.

But can you really quickly comment generally on your cash learnings bridge over the next few years, obviously broadly? And how these initiatives across restructuring, spending, severance, et cetera are affecting that analysis? I assume things are dragging on cash flow for ops now.

But how could we think about the profit conversion in the intermediate to long term? Thank you. .

Chris, so going forward, we expect to update the market on our restructuring savings more on an annual cadence versus a multi-year commitment, given the complexity phasing of forward savings plan between individual years.

I think we've commented that we're in the middle innings of our overall opportunity and we continue to expect incremental savings ahead of inflation, assuming that moderate inflation continues.

For 2018, we expect -- we believe that this is a reasonable expectation and we're actively working on filling in all the details for our specific actions to realize the goal for this year. But I think a safe assumption for 2018 is that we would expect to see Axalta Way savings in excess of what we've achieved in 2017.

In terms of the cash cost associated with achieving that second part of your question, we will provide, as most companies would, an update on those actual costs as they are incurred as we enter a more stable reporting process. .

And very quickly on refinish volumes, it appears to the blind eye that core volumes are maybe a touch light versus expectations, given miles driven have been pretty solid in the developed world.

Can you generally comment on any trends you are seeing in waterborne paints in particular, how that affects your volumes? And also what you're seeing generally in emerging markets, let's say Latin America, Russia and China in particular? Thank you. .

Chris, this is Charlie. On your comment on waterborne, clearly our volume -- when you look at price mix, you certainly can see the effect of continuing waterborne conversions. Some of that's happening here in North America with the growth of MSOs and some of these other segments, but also in areas like China.

So I think we will continue to see these markets grow to waterborne. It's not so much driven regulatory as it is productivity wise and I think we will continue to see that trend as we go forward. .

On the subject of overall volumes, I think what maybe Robert had commented earlier was that we certainly saw strength in North America, we saw strength in Europe and in Asia offset by Latin America this past year. .

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

I had a question on the guidance, so it looks like you raised your top-line expectation for 2017.

Does that give you any more or less confidence in achieving the upper end of your EBITDA range?.

I think as we look at it in some of these acquisitions of course are smaller in nature and some of them only have a partial year impact. But the contribution that we expect from those acquisitions given some of the integration costs and so forth relative to the overall construct of the guidance was relatively immaterial.

And there are also some additional expenses that we may incur related to those acquisitions in 2017, so we felt that it was appropriate just to leave the EBITDA guidance as it had previously had been communicated in December. .

Then just some more details on the volume outlook. I know that your volumes were little bit low on Latin America refinish and that maybe dragged down performance.

So maybe you can expand on your refinish outlook a little bit for next year or for this year? And then similarly in transportation, it looks like you did a little bit better than expected in commercial and OEM. So again, maybe you can expand on that as well? Thanks. .

Regarding refinish in North America, we continue to see a very positive environment. Not only in the MSO segment of refinish, but also as we look at midsize MSOs as well as independent body shops.

In pretty much all segments of the market, we continue to see a very favorable environment, not only for our waterborne products but also our high-productivity solvent borne products. In Europe, we also see an overall favorable environment for refinish next year.

We've had some important share gains in some of the periphery countries in Europe that we think will continue to give us nice growth in that region. And then Asia-Pacific, our market share there relative to North America and Europe is a little bit lower.

So there we continue to have share gain opportunities as we grow into tier 2 and tier 3 cities and also as we expand our portfolio more mainstream products. In Latin America, we would divide it up I think into Mexico and South America. With regard to Mexico, we see -- we continue to see a very favorable market condition, somewhat similar to the U.S..

And then in South America in terms of the outlook for 2017, I think this year in terms of lapping some of those difficult comps as we look at performance coatings and refinish, I think we will lap some of those tough quarters last year.

So it should be less of a headwind when you look at the quarter-over quarter year-over-year comparisons, but we're not projecting a great deal of growth out of South America for this year. Hopefully, we will be surprised the other direction, but our base case in terms of our 2017 guidance is a pretty flat world in terms of refinish in Latin America.

As it pertains to Transportation, our overall -- I think our overall guidance construct pretty much mirrors what we're seeing in terms of overall builds globally, as well as by region.

And then we've made some adjustments there in terms of how we think about our guidance, given our customer mix, as well as some of the new business that we've won that really ramps up in 2017. .

Then on price, you did well. Maybe you can comment on that versus raws, because we have seen some inflation especially on the propylene side? Thanks.

I would say not only Performance of the business, but also in Transportation. We do expect to continue to get price and in a gradually inflating raw material environment. We will be discussing that with our customers. Obviously we make every effort from a productivity standpoint to offset as much of that raw material inflation as we can.

However, there is always a portion of that that we can't offset internally that we have to go externally and discuss with our customers. .

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

In the event that the border tax adjustments that's currently being considered in the house goes through, can you comment on where you think you might have some impact from that, whether it be your raws or your finished goods? But maybe more interestingly, how do think it might affect the competitiveness of some of your customers or competitors?.

Steve, this is Charlie. I think on the border tax at least a little bit, we know or look at when you look at our refinish and industrial markets, we produce in country and sell in country down there. So I don't think those markets get affected in any way.

As far as any competitors, clearly anybody who would be importing into Mexico against some of those markets might be affected. Most of our competition in those markets tends to be local players or multinationals who produce in country there.

So I don't think we see any affect there one way or the other, other than maybe just consumer sentiment and affect on Mexico economy. On our light vehicle business here North America, again we continue to study that. Most of our raw material agreements and our product agreements with those big players down there tend to originate back here in the us.

So we would have to work out for any paint we would produce down there, how that might affect vehicle production. And if they would ship that back to the U.S. for different models, then there would be no net affect of us. But I think right now, we don't really have a clear picture on whether that would really affect us any or a little bit.

I think you'd have to study -- we would have to study each vehicle manufacturer and what shifts they might take in car production and or parts coming or going back across the border.

I think short term, we don't -- certainly short term, we don't see any movements and any changes of them trying to predict that but I think we will just stay in close contact with them. .

And then, Robert, you referred to the productivity initiatives to continue post 2017, but I think you had a comment that it will require some more heavy lifting.

Is it that it will likely involve more footprint optimization and therefore maybe more physical structure consolidations and so forth?.

That's correct. You hit the nail on the head. We continue to have opportunities, not only in SG&A, in purchasing and in some of our commercial activities. But I think when we look at the first $200 million that we've taken out, we've gone through those categories pretty well. But there still remains opportunity there.

But as we move forward beyond that first $200 million and we really look at the next phase, in terms of looking at our overall operational network and that's not just plants. That's on supply chain side as well, distribution, sales offices, training centers, our overall physical footprint around the world.

That's really where we see some opportunities. I think you saw in the release as well as our comments, that we have decided to shut down one plant in Asia and another in North America. And within that as well, we're optimizing across some of our product lines within plants around the globe, so that's really what we meant by some more heavy lifting.

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

Just question, you talked about mix being positive last year.

Do you anticipate mix being positive again this year? And then if you break out your non-acquisition part of the guidance, the 4% to 6% minus the 2% to 3% from acquisitions, can you help us triangulate how much that's volume, mix, price in your thinking this year?.

On the mix side, Duffy, in terms of 2017, obviously in our guidance construct we've made certain assumptions there across each one of our end markets. But the regional mix and the year never ends up to be exactly as you would expect it to be. So how the mix will actually shake out at the end of the year is difficult to predict.

But I would say that we do continue through the use of business analytics and really focusing on our most profitable customers and our most profitable products, as well as decosting some of our products, continue to make a very concerted effort to manage mix and improve mix. So I think overall, it should be a positive trend for us.

But again, the geographic mix and the customer and specific product mix will of course have an impact on that. When you look at the pure organic growth that we expect in 2017, it's a fairly even split between volume growth, as well as price mix. .

And then two quick ones.

Your Investor Day coming up, what do you see as the focus, again without the details, but just what is it that you're going to want to convey to investors? And then could you flesh out in a little bit more you're thinking about potentially using a dividend?.

Duffy, it's Chris actually. One of the highlights at the Investor Day on February 22 is largely a somatic event. So we did the A to Z Axalta in December of 2015, the idea here is to really highlight how we see technology driving growth for the business.

And we're going to have Barry Snyder, our CTO, headlining the event discussing that and then we have each of our business leaders really noting how technology helps drive their business across the organization. With regard to a dividend, I think Charlie may want to chime in on that a little bit. .

So I'll just make a quick comment. I think the whole question of capital allocation, dividend, share repurchase, I think what we've said all along is we want to get to the point where we were in our desired leverage ratio which we're now within that range or at least that upper end of that range.

And as we go forward as a Board and a Management Team, we will look at what we might do during 2017. I think that's a Board decision. Our Board meets in a couple weeks and it's certainly on our agenda to be discussing that early here in 2017.

Whether we end up with a dividend or a share repurchase program and what the timing of that might be, I think it's too early to tell. But I think as we've talked with all of you on the call the last couple years, we've been -- this is certainly a point we've been looking forward to getting to and now we can have those discussions.

And as Robert has pointed out, with our free cash flow, when the back out our internal higher R projects or restructurings and our expected M&A spend, certainly there is available free board to start thinking about returning some of that cash to shareholders.

So I think you'll hear more as we go through this year, but I wouldn't want to get in front of the Board on these discussions. and it's also relatively new thinking over the past quarter to as we've gotten to this level, gotten our capital structure where it's in a great place to be able to think about these things as well on debt paydown. .

Our next question comes from the line of Robert Koort with Goldman Sachs. Please proceed with your question..

It's Chris Evans on for Bob.

I was wondering if you could give a little more context on your bolt-on M&A strategy? Maybe just some color around product lines, end markets or financial metrics that you guys are targeting?.

Sure. A little bit about that, we could probably talk for hours. But I think the short answer is, when we look at bolt-ons we primarily are looking over in the Performance Coatings area. We do find some attractive opportunities in Transportation.

But when you just look at the relative size, the relative profitability and growth characteristics, over in the performance area we already have core competencies around the world, both in refinish and the industrial segment, I think that's the more actionable side for us.

So what we look for in bolt ons and again we will look at everything, but I think for us bolt ons tend to be anywhere from $25 million to $100 million from a revenue standpoint. We're also looking at market access, technology product access and/or geographic reach when we look at these.

So if you look at the ones we've done in the past, that is the theme that they follow on. For example, the two most recent ones here in January. One of them was a combination mainstream refinish and industrial player in North America and the second one was in industrial player both in primers and base coats.

Waterborne and solvent borne and have a very attractive manufacturing footprint down in Texas. So from that standpoint, it met our criteria. I think as far as what we think about in paying for these bolt ons, I think each one of them is different. It really depends on the synergies.

I think we've paid very attractive free synergy multiples for all these acquisitions and I think we will continue to be disciplined in that arena. So there's not any one number we look for, but these have all been very fairly high hurdle rate acquisitions that these targets have met.

And then each one of them, we expect to -- we measure their performance, both pre and post synergies. And the synergies come from both operational raw materials, as well as targeted growth where we can take their products and move them into other markets.

And I think sometimes people forget that companies like Axalta, we have vast distribution network who's always looking for more products, more attractive products in industrial markets and in refinished products.

So that's - really if you look at success of a couple of these in the past two years, it's been taking their products and expanding them into distribution networks that we already have that deal in some of these industrial markets and we now have more of a product line.

So filling out the industrial product line is important for us, as well as continue to complement our global market presence in refinish. .

Thanks, Charlie. And maybe just switching to the capitalization, some impressive tweaks you've made over the year.

I'm just curious, given the scale of your term loans and the variable rate structure, is there any if -- or is there any risk of LIBOR inflation kicks into your interest rate numbers?.

We have a program where we've hedged out a significant portion of our variable interest rate exposure. And given some of the rejiggering of the capital structure that we've done, over the next month we will be tweaking our interest-rate hedging profile to continue to provide that same level of risk-weighted protection. .

Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question..

Charlie, I was wondering if you could comment on your expectations for the light vehicle market in China for 2017 and perhaps provide some color on how you see things shaping up in the early months of the year here in the first quarter?.

Sure. In regards to China, it was actually a really good year in 2016 as the China market was fairly stable and really you had nice growth in both the domestic, as well as the multinational. As I look at 2017, I think in China we would expect to see light vehicle and commercial vehicle to be around 28 million units or so.

That's going to be up anywhere from 10% to 15%, about 25 million of that will be light vehicle. So about another 10% to 15% rise with both multinationals and the domestic brands continuing to grow. So as we came through January, China dealer inventories looked pretty normal.

They are just coming back off Chinese New Year, so I think we will have to wait and see. But right now I think we're expecting a fairly good continued good year in China growth. Two years ago, we did an expansion in Shanghai for waterborne OEM coatings and we've about exhausted that capacity now and continue to incrementally expand it.

So we saw nice growth last year in our volumes there and we would expect to see continued this year. But I think overall, the big picture is dealer inventories look okay. And expecting probably 25 million car builds, light vehicle build, in China this year going forward. Again, as Robert is famous for saying, you never get there exactly like you think.

Different manufacturers do different things, but I think that's how we would shape up the year. .

That's helpful. I wanted to follow up also on pricing. Very impressive on the Performance side. On the Transportation side through, your price contribution appears to have decelerated in the fourth quarter to negative 2% from a positive figure in the third quarter.

I was wondering if you could comment on what drove that? Was it mix related and what's your outlook for 2017? Can you get back to positive territory do you think this year?.

Good question. And I think when looking at the sequential comparison of third quarter against fourth quarter, do you remember in the third quarter we actually highlighted some devaluation inflation-related catch ups.

That when those adjustments are made, they tend to come in all at once even though they may reflect several months of retroactive price adjustments. So that came in in the third quarter of last year.

And so what that did was in effect you might say when you look at a given quarter, artificially inflate slightly the amount of price realization we actually got in the third quarter. So when you do the sequential comparison, that does skew it a little bit.

And then as it relates specifically to fourth quarter, we highlighted before that given the downward trend in raw materials that we saw during most of 2016, we did have some price givebacks that we'd highlighted and that we had expected.

I think as we look forward in 2017 with a slightly rising raw material environment, again for our customers, we try and offset as much of that is we possibly can through our own internal productivity and cost reduction.

And we will continue to do that, but we won't be able to offset all of it and we will have to go back out to the market, including our light vehicle customers and get price. .

Our next question comes from the line of Aleksey Yefremov with Nomura Instinet. Please proceed with your question..

Turning to pricing and Performance Coatings, it was pretty robust, plus 5%. Was this mostly related to FX or you were raising prices in the U.S.

dollar terms as well, perhaps in a response to higher raw materials?.

In the case of Performance Coatings as it relates to price and mix, we actually, independent of any inflation-related pricing adjustments, we did achieve price in a couple of different geographies. .

And as it relates to raw materials and inflation, could you quantify what's in your guidance? What do you expect as far as either margin percentage impact or dollars?.

Overall, we expect a slightly inflationary raw material environment next year. I think we've seen that the deflation itself appears to have bottomed out and we do see some price pressure due to crude oil and derivative price uptick.

I think as we look at Q1 which is where we see -- or Q4 of last year, Q1 of this year, we're starting to see that come through in some of the raw material categories. I think on the short end of the cycle, we do expect solvents in 2017 to potentially move up slightly. We expect resins to potentially move up slightly.

When it comes to isocyanates, I think we expect prices to move down despite some supply issues. And then as it pertains to monomers and pigments, I think we would expect those two categories to be up slightly.

And then with regard to additives, I think we see that market as being relatively even with some puts and takes across the basket of products that we purchase. .

Our next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question..

This is Matt Gingrich on Vincent.

I was wondering if you could clarify your working-capital targets for both the near and longer term and specifically which buckets you see opportunity in?.

So as we look forward in 2017, I think we've made good progress in working capital. We still feel that it's an area of opportunity and that there's the opportunity for us to go forward. We ended the year at 10.8% of net sales from working capital, many of our peers are in the high single digits and that continues to be our long term goal.

As we think about working capital for this year, we're projecting to be in roughly the same level as we look at 2017 in that 10% to 11% range for working capital.

As we move forward however, some of the operational restructuring that we touched upon earlier in the call is really going to help facilitate some longer term structural improvement in working capital usage. .

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

Robert, just on the adoption of the new accounting standard, did the initial guidance in December include the standard? That's my question, I'm sorry. .

No, it did not include it for the share count number that we projected for the year 2016. .

How about on an EBITDA basis?.

No, not at that point. No. .

So just to be clear and the guidance you gave today does include the standard from -- on an EBITDA basis?.

Yes, it doesn't impact the -- from an EBITDA perspective. It's diluted share count as we think about the adoption of that standard, David. .

Okay, I will follow up on that.

And just on the cadence of the quarters, can you comment on how that might come about during the course of the year?.

We would expect, David, in terms of the quarterly results for this year, we would expect it largely to mimic what we've seen in previous years. Q1 is typically the low point -- the low point of year, Q2 and Q3 the stronger quarters and then Q4 in the range of Q2, Q3. A lot of that depends on as well as the timing of some of the cost saves.

So we could see this year Q4 be a little bit higher percentage than perhaps it has been in previous years given some of the structural cost-savings opportunities that we've been pursuing. .

Our next question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question. .

Two quick ones.

What do you think the run rate impact on the cash flow statement will be from ongoing products at the end restructuring? Secondly, if and when the commercial vehicle market recovers, how do you think about incremental margins in that business?.

You cut out there on our end here in terms of your first question.

Could you please repeat it?.

When you look at your going-forward restructuring productivity efforts, how much of a impact or leakage will be there be on the cash flow statement?.

As we think about overall cost, based on the initiatives that we've currently contemplated and laid out and discussed, we're anticipating approximately $55 million in cash outflow in 2017 for those activities. .

Laurence, to your other question on commercial vehicle. That segment, you can see the margins reported on the segment level. And in general terms, we're nicely profitable in commercial vehicles. But you should expect margins in and around that level to be our expectation going forward if we see volume recover. .

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

I've got two questions on the concerns about U.S. protectionism. If U.S.

parts or vehicle production is shifted between Mexico and the U.S., should we assume that paint would follow? And do you ship any material paint across the border?.

John, this is Charlie on that. We do not ship any paint across the border that goes from the OEM practice there. That's all produced in our facilities in Mexico, both parts and the OEM. There's times we might move stuff back or forth if there's supply chain issues or something like that, but as a rule we produce our OEM paints in Mexico. .

And then one of your Asian competitors is moving into the U.S. architectural market. They're also in the industrial coatings market. Are you seeing any foreign competitors get more aggressive in U.S. industrial paint markets, especially in light of the protectionism concerns? No, we haven't seen any of that yet.

I think certainly we'll be watching Nippon really close after their acquisition of Don. But I think that it's like anything, they've got to bring products in and they've got to make them here, they've got to get a distribution network. So I think it's something we will continue to watch, but certainly it's a served market in these industrial products.

It's already a very competitive market. So I don't think that they will be bringing technology or cost position, but it's certainly something we and I'm sure my peers will watch closely. But we haven't seen any effect yet. Thank you. .

Our next question comes from the line of PJ Juvekar with Citigroup. Please proceed with your question..

The commercial truck market has been stuck in a low gear for some time. What do you see there and when you see a turnaround? And then, Charlie, you mentioned slower late-cycle industrial markets.

I was wondering if you can elaborate on what those late-cycle markets are?.

So in North America heavy-duty truck, PJ, I think as we look at it, I think the market ended up with around 328,0000 builds in the U.S. and it's projected, according to the market forecasters, to be around 313,000 for 2017, so a slight degradation. But we do see a slowdown in the deceleration of that market.

We think that 2017 could potentially be the year of bottoming and then in the second half of the year potentially some growth. The other area that's been stressed from a heavy-duty truck component within commercial vehicle has been Latin America, excluding Mexico. I think again, we expect to see that market be relatively flat for the year.

But as we get through the year, in particular in Brazil, it's possible that we see a little bit of momentum there. In terms of Europe, I think we see Europe as relatively stable and somewhat similar to 2016 in terms of our outlook.

And then Asia-Pacific, again, we're a much smaller player in that market, but we see conditions there to be pretty favorable. .

On your question about some of these late-cycle general industrial. I think it's interesting that we certainly saw a little bit of a slowdown in the first part of the quarter. How much of that was just general pessimism, people adjusting inventory for year end, general pessimism around the election and everything else.

We certainly at the very end of the quarter and into January, one of the questions I've gotten is do you see affect the other way? And certainly as we've started the year, we saw some of those industrial counts come back pretty strong with orders.

But some of the segments I would mention are just trailer, bus, continue just general -- a lot of or powder accounts. These tend to be hundreds of account that do just small industrial production of parts, machinery, equipment, things like that. And then to a lesser extent, oil and gas remains subdued for us, both on the liquid and the powder side.

But again, I think we saw that in the quarter. I would just caution as a look forward to 2017 that as we started the year we saw some of them come back with relatively strong order book, whether that holds up or not I think it's too early to tell. .

There were several questions on raw materials. My question is if barometers are going up slowly, you can recover that in pricing, but barometers have spiked here, particularly propylene. Does that spike present an issue for you? Thank you. .

I will comment on that. I think overall most of our contracts that we have on raw materials, when we see quick spikes like that in propylene it takes a while for that to work through the system. Either in our pricing mechanisms and our contracts or just through the supply chain. It can take anywhere from 3 to 6 months.

But as Robert said, I think that we will go get price and we will get price in these markets. One of the things I think we talked about the last two years is that in many cases, we never saw a lot of our prices go as low as people would've hoped they would of seen it.

Just because where a lot of our -- if you look at the dispersions we buy, the additives we buy, the everything we buy, very little of that is just straight priced off a barrel of oil. It's more a supply/demand. So we actually really never saw prices go as low some people would've hoped.

And I think at the same time right now with oil at $53 a barrel here in the U.S., I don't think we're going to see a big spike the other way. Other than maybe just some of the raw solvents we use.

So I think as long as it's moderate and our projection for oil this year is somewhere between $50 and $60 a barrel, slowly rising, I think we will be able to recover all that. Clearly the biggest thing we've seen spike in the last year or the last six months has been TiO2.

As many of you know, we're not a big buyer of TiO2 and I think we have a good set of contracts around the supply that we do need.

But I think in the general industry, certainly it seems like there is more, although I don't follow that close, it certainly seems to be more disciplined among suppliers in that industry on pricing as we go into 2017 on TiO2. .

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

Your forecast of shares outstanding next year is 246 million to 249 million, why is there such a large band? Why isn't it more focused and what is the stock comp expense for next year?.

Jeff, the stock comp expense for next year is $41 million. And as we think about the share range, we don't know at the beginning of any year what options will or will not be exercised and that's really why we put in a range there. .

So the baseline expectation is that if very few options are exercised you're more at 246 million?.

That's correct. .

Our next question comes from the line of Mike Harrison with Seaport Global Securities. Please proceed with your question..

You mentioned the Shanghai facility being close to capacity and I know you just expanded your powder coating facility in Germany.

Can you discuss other areas where you may need to be adding capacity over the next couple years?.

Yes, just a couple comments. One area that we announced last year and we're in the middle of adding that expansion right now is in India, where we're adding OEM capacity. And then OEM capacities for both two and -- two to three wheelers, as well as four wheelers and cars.

So I think India we continue to see nice growth and we're adding to the fact that some of our big customers -- following some of our customers into India.

I think in China what I would comment is, you also saw last year we announced a multi-year project at Nanjing, however the majority of that project is really more 2018 on there's very little spending in 2017. Any capacity additions, we will do some capacity additions in China this year, but it's very incremental and within our normal capital budget.

As far as other capacity we're adding around the world, it tends to be smaller. We're doing some waterborne expansion here in North America. We just added a liquid and getting ready to add a powder line in Argentina, but no other major capacity changes expected over the next 12 to 18 months. We're happy with what we have in Europe.

We have some announced powder productivity projects that give us some additional product line capacity in Europe. Again, powder coatings business, really happy with the growth the last couple years in Europe there as we seem to have gotten our feet on the ground.

But all of that is fairly incremental and all of it is being managed within our $160 million in CapEx for this year. .

Then in terms of the industrial market, you mentioned some good new account gains.

Was just curious if you have any visibility on approvals with those new customers and when we might see that materialize into better growth? Is that something that could happen this year or is maybe more of a 2018 and beyond thing?.

No, I think a lot of that growth is 2017. It's really the culmination of a lot of product approval work we've done over the past two years, both in industrial e coat, industrial liquids and powder coatings.

I think you began to see some of the pickup last year when you looked at the performance in the industrial growth rates and I think a lot of our growth this year in those markets come from two things.

One, a lot of those new accounts that have come online, but then also some of the acquisitions where we're taking those products and putting them into new markets. .

I was about to turn it back to you for closing remarks. .

All right, thanks. We ran over little bit here, I appreciate everybody's perseverance with a few extra comments this year, because it was the year-end and a look at 2017. As always, we had a great year 2016 and I think we're all very happy with all the levers we've pulled in the business and I think we're well staged as we go into 2017.

I'm confident with everything going on out there politically that it will be a bumpy ride in some markets, but I think our markets as we start the year fundamentally look to be solid and I think we have good footing underneath them. So we're certainly looking forward to another exciting year for Axalta.

Appreciate all of your -- for those of you who are investors, thank you for your confidence in us and for all those of you who follow for asking all the good right questions. So thanks and look forward to seeing you on our next call. .

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day..