Carl Anderson: But just to add to that, just a little bit further. I think as we look forward, especially as we look on a year-over-year kind of comparison perspective, while we’re still going to be working on the portfolio, we are beginning to see some early signs where when we kind of compare year-on-year, we believe we’re going to be kind of bottoming out, at least as far as having that type of revenue headwind on quarterly basis, going forward.
Operator: Our next question comes from Kevin McCarthy from Vertical Research Partners.
Kevin McCarthy: Chris, within your Refinish business, you’ve got a lot of adjacent products, aerosols, bedliners, perhaps others. How big is that basket of what I would call kind of nontraditional Refinish products? And how fast do you think you might be able to grow that basket over the medium term versus body shop work, for example?
Chris Villavarayan: Sure, love to. So the business is about $700 million in total. And then I would say — $600 million to $700 million in total and I would call it, if you think about the overall market, it’s — the overall market is about $7 billion. So we do see that opportunity as something where we have a small portion that we play here. So we do see this as an area that we can continue to grow over time.
Kevin McCarthy: Okay. We’ll stay tuned for May 15. But I want to ask Carl about free cash flow, maybe a 2-part question. I guess — on the micro level, what is the cash cost associated with your new $75 million transformation initiative? And then more broadly, I think you raised your annual range by $25 million. So is that mainly just the earnings upside flowing through? Or are there other moving parts that you would care to call out there?
Carl Anderson: Yes. So maybe a couple of things on free cash flow. I think one, we’re off to a very good start for the year, having a positive free cash flow of about $15 million. So a really strong performance in working capital to help drive that, especially when you can kind of compare us on a year-over-year basis. Specific to your question on restructuring, in total, we expect the cash impact to be somewhere between $95 million to $135 million over — and that’s over a several year type of time period. And the bulk of that really does relate to severance costs. And then there’s also some additional costs, including there for capital expenditures as well. And so — but obviously, that will kind of be — we’ll have — some of that will come in this year, some of that will come in ’25 as well.
But the guide we gave you on free cash flow is not only incorporating the higher EBITDA in the raise that we have but also some of these cash costs or all these cash costs that will be coming in related to the restructuring this year as well.
Operator: And our next question comes from John McNulty from BMO.
Unidentified Analyst: This is Caleb [ph] on for John. So I saw your CapEx was about like $22 million in the quarter but you maintained your full year guide for about $165 million. So how are you guys thinking about how that sequences through the rest of the year?
Carl Anderson: Yes, it’s a good question. I think a lot of that is just due to timing. So we still are working very diligently in order to kind of be ramping up CapEx here for the next 9 months of the year. So I would expect that really to begin increasing quite significantly as we kind of get into the second quarter and that will kind of carry through for the rest of the year as well.
Unidentified Analyst: Okay. And then you talked a lot about the positives going on for you in Refinish right now, like the acquisition, U-Pol, et cetera. But maybe can you just talk a little bit more about how the Irus rollout is going? And kind of like what inning we’re in, in that? And then kind of your expectations for that over the next 2 to 3 years?
Chris Villavarayan: Absolutely, love it. So I think if we look here, we have about 90,000 body shops. There’s about 70,000 manual machines in most of those. We have about 2,000 semi-automatic machines from our past. And right now, we have 100 Irus machines installed. We have orders for 300. So as I look at the next couple of years, the objective is to get that up to 2,000 plus is what the team is driving right now.
Carl Anderson: And maybe if I could just add on to that and there was a question that was asked earlier, just about the accessory market, specifically in Refinish. That is around about $100 million, I guess, of an overall opportunity and overall market size. In total, as Chris referenced, previously, all of Refinish as we look at that all in, not only kind of what we do from a coatings perspective but also some of these accessories, we’re packing [ph] the market size of about $7 billion.
Operator: Our next question comes from Jeff Zekauskas from JPMorgan.
Jeff Zekauskas: How will you determine whether share repurchase is a good idea? In that, Axalta over a 5-year period has underperformed the market. There’s volatility in its share price because of its cyclicality. You get 5% in the debt markets. Why is it a good idea to spend your capital now to repurchase shares? And how will you determine whether it’s a good idea to have spent it?
Chris Villavarayan: Well, I think overall, as we look at our journey to this point, there — and just as you think about our quarter-over-quarter performance, I do believe that the underlying value of Axalta is not realized. And if there’s an opportunity for us to create that value, especially for shareholders, we certainly will. So I think that’s certainly one of our goals. As you look through the 4 elements of creating value, to your point, there’s an opportunity in how we look at the debt, there’s certainly an opportunity in how we look at M&A., there’s certainly an opportunity in how we look at CapEx. And then finally, there’s certainly an opportunity in how we look at share buybacks. But again, as we’ve played this journey out, we do believe that there is an underlying value in our share value and that we — that’s something that we should provide back to our shareholders. So it’s certainly an element that we’ll look at.
Operator: And this concludes our question-and-answer session as well as the conference. Thank you very much for attending today’s presentation. You may now disconnect. Have a great day.
