Kevin McCarthy: Perfect. Thank you so much.
Chris Villavarayan: You’re welcome.
Operator: Our next question comes from Stephen Byrne with Bank of America. Please go ahead.
Stephen Byrne: Thanks. I wanted to drill in a little bit on Refinish. Your low single-digit organic sales in the third quarter seems a little modest, given you have these pricing initiatives, you have the MSO partner keep acquiring, you got your automated mixing technology, would you expect organic sales in Refinish to post higher gains in 2024, perhaps bolstered by these recent acquisitions with the André Koch and the BMW Group, which you’re all in 2024?
Chris Villavarayan: Yes. Let me address it in two ways. I think first let me address it from a volume standpoint. And I think going back to the questions we had last quarter and also this quarter. One of the primary drivers from a volume perspective, you would notice that we’ve been taking a bit of a step back. But that’s primarily because we have been focused on driving the margin. And what we have done is whether it’s in thinners or in certain businesses in South America, our architectural business in South America, we decided to — let’s call it, made a decision to exit these to ensure that we were driving the margin and ensuring that we had the capacity for higher-margin products. So that was a decision we made because the focus was again to make sure that we maintained and grew margins.
In terms of, let’s call it, sales to your point, yes, we do see opportunity as we continue to win that we will continue to drive growth into 2024 as well especially with the acquisition we just announced. And on top of that, the team has done a great job continuing to win net sales and that will be the growth trajectory as I look at 2024 as well. But I would say ex thinners and ex, let’s call it, the decision we made in South America, our volumes have been somewhat flat. So it’s not like we’re going down. And if anything else there’s only opportunity from a growth standpoint. Both from the acquisition as well as the net sales wins for 2024.
Stephen Byrne: And then perhaps in Mobility, what would you attribute the new business wins that you’re talking about? Is this a technology game for you to have better technology that benefits your customer? And how significant is this new technology, this two-tone technology what is it NextJet? How significant of an opportunity is that in your view?
Chris Villavarayan: Well, let me break it up into two things. I think the — if I go back a year ago and talk about the wins that the Mobility team has done, I would say here, it’s a pure focus around service and the relationships that the Mobility team has built with the customers. And it’s not specific to a region. It’s globally. The wins are in North America. The wins are in China, significant wins in China and also in Europe. And this has been two — credit this to two things: certainly technology but also purely the service and the relationships that the team has done an incredible job building. Now in terms of the ZAR relationship or the NexJet announcement we made today. Here, it is technology. And if you think about if you think about Mustang or where you have a different color roof a two-tone roof with the rest of the car, what we do with this technology is provide the opportunity for our customers to not pull them out of the body shop or the paint line and take them to a separate process to paint the roof, separate from the rest of the vehicle.
We have — we provide the ability for our OE partners to essentially run it through the paint shop and apply these both applications at the same time. That provides enormous opportunity and gets away from an offline process, which we believe will drive enormous levels of productivity in cars that need to tone painting. And these are custom cars. These are very expensive cars. So I think this is an opportunity that we believe will provide a lot of value for our customers going forward.
Stephen Byrne: Thank you.
Chris Villavarayan: You’re welcome.
Operator: Our next question comes from Michael Sison with Wells Fargo. Please go ahead.
Unidentified Analyst: Hi. This is Abigail [ph] on for Mike. Thanks for taking my question. So I believe this has already touched on a bit, but some of your peers have noticed in the Refinish base share gains and I think mostly in the last quarter, do you have a response to that? Have you, I mean, have you been experiencing any share loss? And then two-fold thinking back to your Refinish Day last December, you mentioned Europe as being a key new market for growth for you. How has that changed in the last year given macroeconomic trends in the region?
Chris Villavarayan: So I think great question. Thanks for the question Abigail. We certainly win many and we also lose some customers. But what I can say is we’re on track this year for 2000 net body shop wins. So overall I would say we continue to win. And looking back at the last three years this team has done an exceptional job with 10,000 net body shops. And I think the broader perspective of measuring this year-over-year is in — if I look at the Refinish team and joining this company, the best thing you can talk about is the fact that in 2021, the Refinish team had record sales in 2022. The Refinish team has record sales and in 2023 at the rates they’re going, they’re going to hit record sales in 2023. So an exceptional team and talking about the BMW win this early in the year sets up beautifully as I think about 2024 with 730 new body shops just starting out the year.
So I would say the team is well-positioned to continue to grow. And it all aligns with the strategy that Troy and the team kicked off a year ago at Refinish Day, it was actually my first day in Axalta and actually hadn’t even been in the role. And to your point, we talked about the growth in Europe. And the best part is today we announced two things. One, is the BMW announcement, which mostly impacts our growth in Europe. And the second one is the acquisition of André Koch, which again shows our focus and our attention to Europe and the growth there. So net-net across both of these, I think the Refinish team is absolutely positioned to grow in 2024 in Europe and are actually taking the right steps a quarter ahead.
Unidentified Analyst: Got it. Thanks for the color.
Chris Villavarayan: You’re welcome.
Operator: Our next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.
Steve Haynes: This is Steve Haynes on for Vincent. I just wanted to maybe ask a quick question on the M&A pipeline, and how you’re thinking about that going forward? And on the flip side of that maybe you’ve kind of walked away from some business in Refinish, but are there other areas of the portfolio that you’d think about pruning? And just any kind of additional thoughts on that would be great. Thank you.
